United States Court of Appeals

For the Eighth Circuit

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No. 16-1069

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Martinizing International, LLC

lllllllllllllllllllll Plaintiff - Appellant

v.

BC Cleaners, LLC, et al.

lllllllllllllllllllll Defendants - Appellees

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Appeal from United States District Court 

for the District of Minnesota - Minneapolis

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 Submitted: December 12, 2016

 Filed: April 28, 2017

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Before LOKEN, MURPHY, and KELLY, Circuit Judges.

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LOKEN, Circuit Judge.

Martinizing International, LLC commenced this action against BC Cleaners,

LLC and two of its member-managers, Brent Lundell and Timothy Carver, asserting

claims of LanhamAct trademark infringement, see 15 U.S.C. § 1125(a), and violation

of the Minnesota Deceptive Trade Practices Act (MDTPA), see Minn. Stat.

§ 325D.44. Defendants failed to appear. The district court granted a default

judgment against BC Cleaners, concluding that it willfully infringed Martinizing’s
trademarks and engaged in a deceptive trade practice. Martinizing Int’l, LLC v. BC

Cleaners, LLC, 2015 WL 8483280 (D. Minn. Dec. 9, 2015). The court denied

Martinizing a default judgment against Lundell and Carver, concluding they were not

personally liable for trademark infringement or a deceptive trade practice. Id. at *3. 

Martinizing appeals, arguing the court erred when it denied a default judgment

against Lundell and Carver and reduced the award of attorneys’ fees for willful

infringement. Defendants have not appeared in this Court. We affirm the grant of a 

permanent injunction enjoining BC Cleaners from using Martinizing’s trademarks. 

We conclude Martinizing failed to prove willful infringement by BC Cleaners and

therefore reverse the award of damages, an accounting for profits, and attorneys’ fees. 

We affirm the denial of a default judgment against defendants Lundell and Carver. 

I. 

Martinizing’s amended complaint alleged that, in June 2011, it entered into two

franchise agreements with Markus Kanning, dba KM Cleaners, Inc., authorizing use

of Martinizing’s trademarks in operating dry-cleaning stores in Eagan and Inver

Grove Heights, Minnesota. The agreements prohibited Kanning as franchisee from

selling the franchise locations or assigning the franchise agreements without

Martinizing’s prior written consent. Martinizing learned that KM Cleaners and BC

Cleaners entered into an Asset Purchase Agreement dated August 22, 2014, without

Martinizing’s consent, and that defendants continued to operate the franchised stores,

using and displaying Martinizing’s trademarks without its approval. On January 15,

2015, counsel for Martinizing sent a letter to BC Cleaners and Lundell, demanding

that they sign a franchise agreement or refrain from using the trademarks, but

defendants continued to use Martinizing’s marks and trade dress. Martinizing

attached to the complaint copies of a document entitled “Asset Purchase Agreement

of Martinizing DryCleaners” between KM Cleaners, Inc. and BC Cleaners, LLC, and

the January 2015 “Cease and Desist” letter. The complaint generally alleged that

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Lundell and Carver were member-managers who “aided, abetted, directed and

controlled BC with respect to the wrongful conduct.”1

When a default judgment is entered, facts alleged in the complaint are taken as

true, but “it remainsfor the [district] court to consider whether the unchallenged facts

constitute a legitimate cause of action, since a party in default does not admit mere

conclusions of law.” Marshall v. Baggett, 616 F.3d 849, 852 (8th Cir. 2010)

(quotation omitted). Thus, after entry of default, Martinizing had to prove it was

entitled to the relief sought in its complaint against each defendant -- treble damages

under the Lanham Act, an injunction enjoining use of its trademarks and unfair

competition, prejudgment interest, costs, and attorneys’ fees. Whether Martinizing

met that burden is an issue of law we review de novo. Marshall, 616 F.3d at 853. 

In support of its motion for entry of default, Martinizing submitted two email

responses from defendants, neither of which was filed with the court. In a March 1,

2015 email, Lundellstated: “We will complywith [Martinizing’s demands]. Signage

will [be] handled by KM Cleaners and the landlord who are operating the stores. The

stores are no longer under our control.” In a June 23, 2015 email, Lundell wrote:

As an additional follow-up, BC Cleaners, LLC was never a franchisee

of Martinizing . . . . BC Cleaners was operating the units for KM

Cleaners, LLC along with an agreement to purchase the units from KM

Cleaners [that] was never fully executed.

In support of its motion for default judgment, Martinizing submitted with an attorney

affidavit copies of its franchise agreements with Kanning, the purported Asset

Purchase Agreement and “Closing Documents” between KM Cleaners and BC

The Asset Purchase Agreement documents reveal that Lundell signed the

1

Agreement on behalf of BC Cleaners, and that Lundell and Carver personally

guaranteed BC Cleaners’ financial obligations under that Agreement. 

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Cleaners, the January 2015 Cease and Desist letter, photos of the dry-cleaning stores

showing use of the Martinizing trademarks, and documents supporting its claim for

an award of $18,592.92 in costs and attorneys’ fees. The attorney claimed personal

knowledge of facts supporting the claim for costs and attorneys’ fees, but no firsthand knowledge of facts relating to the underlying franchise transactions. 

II.

In our review of this abbreviated record, we found the most notable aspect to

be that the allegations of trademark infringement and deceptive trade practice by

defendants in the amended complaint are directly contradicted by the terms of the

Asset Purchase Agreement that was made part ofthe amended complaint. As relevant

here, the Agreement provided:

4. USE OF NAME

Seller will transfer to Buyer the rights it has to use the name

“Martinizing Dry Cleaners”, thru the assignment of the Franchise

agreement with Martinizing in conducting its business. Seller shall

execute any necessary documents to [e]ffect this consent upon receipt

of payment in full of the Promissory Note hereto attached Marked

Exhibit D.

5. MARTINIZING FRANCHISE

Seller will transfer its interest to the Buyer in the Martinizing franchise

for these locations upon payment in full of the attached Promissory Note

marked exhibit D. Buyer will pay Seller the prorated share of the annual

Franchise fee from September 1 thru November 30, 2014. This money

to be paid May 31, 2015. Buyer to pay the transfer fee upon transfer of

this Franchise to them.

Exhibit D is an interest-free $10,000 Promissory Note dated August 22, 2014,

personally guaranteed by Lundell and Carver, in which BC Cleaners promised to pay

KM Cleaners $5,000 on October 15, 2014, and $5,000 on November 30, 2014.

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From the plain meaning of these Asset Purchase Agreement provisions,

together with the other facts of record, we conclude the following:

First, the Asset Purchase Agreement contractually obligated Kanning and KM

Cleanersto assign the franchise agreementstoBC Cleaners. The Agreement deferred

Kanning’s assignment of his franchisee interest in the dry-cleaning stores until

November 30, 2014, after defendants finished paying the Exhibit D Promissory Note. 

In the interim period, the Agreement obligated KM Cleaners to continue paying the

annual franchise fee to Martinizing, with BC Cleaners agreeing to reimburse KM

Cleaners on May 31, 2015. KM Cleaners’ promise to assign valid franchise

agreements necessarily included obtaining Martinizing’s approval.

2

Second, until the franchised stores were transferred to BC Cleaners in

accordance with the Asset Purchase Agreement, Kanning and KM Cleanersremained

Martinizing’s authorized franchisee. Martinizing did not allege that it terminated the

franchise agreements. See Minn. Stat. § 80C.14, subd. 3. To prevail on its claim of

trademark infringement, Martinizing must prove that defendants’ conduct was “likely

to cause confusion” as to the origin or approval of products or services. See, e.g.,

Everest Capital Ltd. v. Everest Funds Mgmt., L.L.C., 393 F.3d 755, 759 (8th Cir.

2005), citing 15 U.S.C. § 1125(a)(1)(A). Here, continued operation of the stores

under franchise agreements that had not been terminated obviously caused no

customer confusion whatsoever. As Lundell put it in his second email, BC Cleaners

simply operated the stores “for KM Cleaners” during thisinterim period. Martinizing

does not allege that BC Cleaners wrongfully acted as KM Cleaners’ agent, and we

have trouble positing what that claim would be. If the interim arrangement violated

Under Minnesota law, a franchisor may not “unreasonably withhold consent” 2

to assignment of a franchise if the franchisee to be substituted meets the franchisor’s

“present qualifications and standards.” Minn. Stat. § 80C.14, subd. 5. 

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the unterminated franchise agreements, any claim would presumably be against

franchisee Kanning, not these defendants.

Third, unlike the categorical demand a trademark owner typically directs at an

infringing competitor, Martinizing’s January 2015Cease and Desist letter invited BC

Cleaners and Lundell to become “an authorized Martinizing franchisee.” Implicit in

this invitation was the grant of a reasonable period of time for defendants to decide

whether to accept. Meanwhile, the stores continued to operate under the KM

Cleaners franchise, causing no likelihood of customer confusion, only a possible

claim by Martinizing against Kanning for any unpaid franchise fees. 

Fourth, on March 1, 2015, Lundell and BC Cleaners replied to Martinizing’s

Cease and Desist letter. They declined to seek a franchise agreement, stated they

were no longer operating the stores, and agreed to comply with the cease and desist

demands in Martinizing’s January letter. Because BC Cleaners had been using

Martinizing’s trademarks without approval and agreed to stop, the district court did

not abuse its discretion in granting a permanent injunction enjoining BC Cleaners

“from any and all further use of [Martinizing’s] name and registered marks.”

Because the Lanham Act is grounded in equity and bars punitive remedies,

“relief in a Lanham Act case should be limited to an injunction if that is sufficient to

do equity.” Minnesota Pet Breeders, Inc. v. Schell & Kampeter, Inc., 41 F.3d 1242,

1247 (8th Cir. 1994) (citations omitted). Here, Martinizing argued to the district

court that it was entitled to money damages (indeed, treble damages) because BC

Cleaners operated the franchised stores “as if it were an authorized Martinizing

International franchisee,” ignoring plain language in the franchise agreements

requiring Martinizing’s consent. But the documentary record establishes only that

BC Cleaners (i) entered into an agreement to acquire the store assets and obtain a

valid assignment of the franchise agreements, (ii) operated the stores during the

period when the existing franchisee had promised to obtain Martinizing’s consent to

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the assignments, and then (iii) vacated the stores when the uncompleted deal fell

through. Whether a Lanham Act plaintiff must prove willful infringement to recover

money damages is an open question in this circuit after the Lanham Act amendments

in 1999. See Masters v. UHS of Del., Inc., 631 F.3d 464, 471 n.2 (8th Cir. 2011). 

But even if willful infringement is not a prerequisite, on this record we conclude

Martinizing failed to prove that BC Cleaners’ conduct makes this the kind of

exceptional case that would entitle Martinizing to damages, an accounting of

infringer profits, or attorneys’ fees, in addition to the injunctive relief we have upheld. 

See 15 U.S.C. § 1117(a); Minn. Stat. § 325D.45. For example, Martinizing made no

showing what franchise fees were not paid by Kanning during the months when BC

Cleaners was operating the stores under the unterminated agreements. 

Turning to the individual defendants, as member-managers of BC Cleaners, a

limited liability company, Lundell and Carver enjoyed limited liability for BC

Cleaners’ liabilities, debts, and obligations -- including torts. See Minn. Stat.

§ 322B.303, subd. 1. Thus, for Martinizing to prevail against Lundell and Carver,

“we must find a theory in the complaint to support imposing personal liability.” 

Marshall, 616 F.3d at 853. The general rule is that a corporate officer or limited

liability company member is personally liable for trademark infringement if he orshe

directly participates in the infringement. See, e.g., United States v. Washington Mint,

LLC, 115 F. Supp. 2d 1089, 1106 (D. Minn. 2000), and cases cited. Similarly, for

individual liability under the MDTPA, a corporate officer must participate in the

corporation’s deceptive trade practice. See Avery v. Solargizer Int’l, Inc., 427

N.W.2d 675, 683 (Minn. App. 1988); Ellingson v. World Amusement Serv. Ass’n,

222 N.W. 335, 339 (Minn. 1928). 

Here, Lundell and Carver were involved in BC Cleaners, but Martinizing

submitted no evidence addressing the extent oftheir involvement in the continued use

of Martinizing trademarks after BC Cleaners entered into the Asset Purchase

Agreement but prior to KM Cleaners completing the Agreement by assigning its

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franchise agreements to BC Cleaners. More importantly, as Martinizing failed to

prove that it was entitled to monetary remedies against BC Cleaners, these individual

defendants are likewise not liable for damages, an accounting for profits, and

attorneys’ fees. Nor did the district court abuse its discretion in not granting

injunctive relief against the individual defendants, as BC Cleaners had agreed to stop

using the trademarks. Therefore, we affirm the denial of a default judgment against

Lundell and Carver.

For the foregoing reasons, the judgment of the district court is affirmed in part

and reversed in part. The case is remanded with directions to enter an amended

judgment that retains paragraphs 1.a. and 5, modifies paragraphs 1.b. and 2, and

deletes paragraphs 3, 4, and 6 of the Judgment dated December 9, 2015. 

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