Opinion ID: 77915
Heading Depth: 2
Heading Rank: 1

Heading: Judgments as a Matter of Law

Text: We review de novo a district court's ruling on a motion for judgment as ; matter of law pursuant to Federal Rule of Civil Procedure 50. Doe v. Celebrity Cruises, Inc., 394 F.3d 891, 902 (11th Cir. 2004) (citation omitted). In so doing, we apply the same standard as the district court. Rankin v. Evans, 133 F.3d 1425, 1435 (11th Cir.1998). The district court may grant judgment as a matter of law at the close of evidence or, if timely renewed, after the jury has returned its verdict, as long as `there is no legally sufficient evidentiary basis for a reasonable jury to find for the non-moving party. Lipphardt v. Durango Steakhouse of Brandon, Inc., 267 F.3d 1183, 1186 (11th Cir. 2001) (quoting Fed.R.Civ.P. 50). In undertaking this analysis we examine all evidence in a light most favorable to the nonmoving party. Celebrity Cruises, 394 F.3d at 902 (citation omitted).
Aronowitz first challenges the court's judgment as a matter of law in favor of HealthChem as to breach of the 2002 Contract, citing the following points in support of his argument, that there was no novation: 1) the parties modified the final wording such that it terminated all financial obligations rather than all contractual obligations; 2) the assignment of the 2002 Contract provided for by the 2003 contract never actually occurred; and 3) the 2003 contract included a schedule of expenses which specifically allocated responsibility for expenses going forward, but did not mention debts still owed under the 2002 contract. A novation is a mutual agreement between the parties for the discharge of a valid existing obligation by the substitution of a new valid obligation. Jakobi v. Kings Creek Vill. Townhouse Ass'n, 665 So.2d 325, 327 (Fla.Dist.Ct.App. 1995). [4] Under Florida law, four elements are required to effectuate the novation of a binding contract: (1) a previously valid contract; (2) agreement of the parties to cancel that contract; (3) a new valid and binding contract; (4) agreement of the parties that the new contract will replace and extinguish the old one. Thompson v. Jared Kane Co., 872 So.2d 356, 361 (Fla. Dist.Ct.App.2004); Jakobi, 665 So.2d at 327. The parties concede that the only element at issue here is the intention of the parties as to the 2002 Contract. Intent may be inferred from the totality of the circumstances surrounding the transaction. Thompson, 872 So.2d at 361. The question of intent is generally a question of fact for a jury. Wolowitz v. Thoroughbred Motors Inc., 765 So.2d 920, 923 (Fla.Dist.Ct.App.2000). However, [w]here the terms of a written agreement are not in doubt, the question of whether it effects a novation is one of law for the court. S.N.W. Corp. v. Hauser, 461 So.2d 188, 189 (Fla.Dist.Ct.App.1984); see also Sink v. Abitibi-Price Sales Corp., 602 So.2d 1313, 1316 (Fla.Dist.Ct.App.1992) (finding novation as a matter of law where the parties entered into an entirely new and unambiguous agreement of equal or greater dignity to the agreement first made with respect to the same subject) (quoting Evans v. Borkowski, 139 So.2d 472, 474 (Fla.Dist.Ct.App.1962)). Here, the language of the 2003 contract states that the assignment for which it provides terminate[s] all obligations and stipulations of the [prior 2002] contract between Aronowitz and HealthChem Corporation, as of the date of the contract's execution. R1-31, Exh. G at 2. Further, the contract provides that even absent that assignment, the parties agree to terminate all financial obligations of [Health-Chem to Aronowitz] under the [2002 Contract]. Id. We agree with the district court that the only reasonable conclusion based on this language is that the parties intended to extinguish the 2002 Contract. Even if the contract's language were sufficiently ambiguous as to intent regarding the 2002 Contract to allow us to consider parol evidence, we find that the only reasonable conclusion to be drawn from the evidence at trial is that the parties intended novation. First, Aronowitz points out that, before execution of the contract, the draft provision which stated the parties agreed to ceas[e] all contractual obligations between HealthChem and Aronowitz, was altered to say ceas[e] all financial obligations. See Appellant's Br. at 33 (referring to R1-31, Exh. G at 2). Aronowitz asserts that this change suggests that the parties intended only to cut off Health-Chem's obligation to fund the TD Glucose patch division, not to extinguish all obligations under the 2002 Contract. We are not convinced, The context of the paragraph in which the change, was made suggests instead that the change was made for the sake of consistency in terms within the sentence rather than out of concern over significant difference in meaning. The entire sentence reads, in pertinent part: If the assignment . . . is not performed, nevertheless the parties agree to terminate all financial obligations of [HealthChem] to [Aronowitz] . . . including the termination of all employees of Health-Chem at the Diagnostic Division, and specifically but not exclusively ceasing all financial [originally contractual] obligations of Health Chem Corp with regard to the Diagnostic Division and its vendors and obligees, except as set forth in this agreement. R1-31, Exh. G at 2 (emphasis added). Accordingly, we do not find the replacement of the term contractual with the term financial, in that context, to have created any ambiguity, particularly since what Aronowitz asserts, in terms of breach, is a lingering financial obligation. Further, the failure of the parties to complete the assignment of the 2002 Contract is irrelevant in the face of the 2003 contract provision that the parties will terminate and ceas[e] all financial obligations between the parties even [i]f the assignment of the [2002] contract . . . is not performed. Id. Additionally, we find that the Cut-Off Payment and Expenses provision in the 2003 contract, assigning responsibility for payments and expenses over the period of transition does not establish that the parties intended the 2002 Contract to remain binding and in full effect. Any financial obligations not specifically mentioned were, by the plain language of the contract, to be terminated. In fact, it seems to us that the presence of a such a cut-off payment provision in the 2003 contract bolsters Health-Chem's contention that the 2003 contract was intended to effectuate a severance of the parties' business relationship. Accordingly, we find that the 2003 contract constituted an entirely new and unambiguous agreement of equal or greater dignity to the agreement first made with respect to the same subject. See Sink, 602 So.2d at 1316. As such, we agree with the district court that the only reasonable conclusion to be drawn from the evidence is that the 2003 contract constituted a novation of the 2002 Contract.
Aronowitz next challenges the court's grant of judgment as a matter of law declaring the $2.6 million in damages awarded by the jury for breach of the 2003 contract to be impermissibly speculative and awarding Aronowitz $1 nominal damages instead. In making this ruling, the district court apparently assumed the jury awarded damages solely in compensation for lost profits. Under Florida law, an award for expectation damages will not be permitted unless the expected amount can be established with reasonable certainty. Levitt-Ansca Towne Park P'ship v. Smith & Co., 873 So.2d 392, 396 (Fla.Dist.Ct.App. 2004); Lipscher v. LRP Publ'ns, Inc., 266 F.3d 1305, 1317 (11th Cir.2001) (applying Florida law). Although a business claiming lost profits is not required to show a successful operational track record, at a minimum, the lost profit damages amount must be determined by some reasonable standard or yardstick. W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd., 545 So.2d 1348, 1351 (Fla.Dist.Ct.App. 1989) (per curiam). We observe that an expectation of royalties on future net sales is merely a subset of lost future profits and therefore subject to the same burden of proof for damages as lost profits would be. Although we agree with the district court that the evidence presented was insufficient to provide any reasonable certainty by which to calculate damages due to lost royalties, we do not see that the damages award made by the jury was necessarily based solely upon lost royalties. During Aronowitz's closing argument, he asked specifically not only for $5 million in lost royalties, but also for $94,000 for the Weiss wands never purchased by Health-Chem and approximately $15,000 in connection with a payment from a third party erroneously made to and retained by Health-Chem after execution of the 2003 contract. Testimony presented by Aronowitz during the course of the trial also raised other possible smaller bases for compensatory damages. Because it is impossible, in the absence of interrogatories on the verdict form, for us to determine what factors the jury might have considered in calculating its $2.6 million verdict, we are unable to say that the entirety of that verdict was unsupported. [5] However, absent the impermissibly speculative damages claimed for lost royalties, the award could not have reached $2.6 million. Accordingly, we reverse the court's judgment as a matter of law reducing the damages to .$1, but we decline to reinstate the jury's verdict.
Aronowitz also appeals the district court's denial of his motion for judgment as a matter of law on the trademark infringement counterclaim. A successful cause of action for trademark infringement requires the evidence to establish that the infringer 1) used the mark in commerce, without consent; and 2) that the use was likely to cause confusion. John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 972 (11th Cir.1983). Aronowitz does not contest the allegation that he used the shorter mark Health-Chem on his company's website, but argues that Health-Chem did not and cannot show a likelihood of confusion. Appellant's Br. at 51. We have recognized seven factors to be considered as to the likelihood of confusion: (1) type of mark; (2) similarity of mark; (3) similarity of the products the marks represent; (4) similarity of the parties' retail outlets and customers; (5) similarity of advertising media; (6) defendant's intent; and (7) actual confusion. Frehling Enters. v. Int'l Select Group, Inc., 192 F.3d 1330, 1335 (11th Cir.1999). Of these, the type of mark and the evidence of actual confusion are the most important, Id. There are four recognized types of mark, ranging from weakest to strongest: generic, descriptive, suggestive and arbitrary. Id. The stronger the mark, the greater the scope of protection accorded it. Id. A mark's strength is enhanced where there is little or no third-party use of that mark. Id. at 1336. With regard to actual confusion, we have specifically accorded substantial weight to evidence that actual customers were confused by the use of a mark as opposed to other categories of people. Safeway Stores, Inc. v. Safeway Disc. Drugs, 675 F.2d 1160, 1167 (11th Cir.1982). Here, the parties apparently agree that the Health-Chem mark is a suggestive mark, thus putting it in the second strongest category, meriting a higher level of protection than if it were categorized as generic or descriptive. See Frehling, 192 F.3d at 1335-36. Additionally, the only mention of any third-party usage of the Health-Chem mark is contained in a question Aronowitz's attorney asked Ken Brody, Health-Chem's chief financial officer, about a company in California that might be using the same name. Brody did not confirm it. Thus, there is no positive testimony or other evidence that any third party uses the mark, thereby according it even more strength and meriting further protection. See Frehling, 192 F.3d at 1336. Finally, the record contains evidence of actual confusion. First, there was testimony that potential Health-Chem customers who had been to the Health-Chem Diagnostics website looking for Health-Chem's transdermal pharmaceutical patches ex: pressed confusion about whether Health-Chem had a facility in Florida, about whether Health-Chem still made the patches they were looking for, and about whether Aronowitzwho was associated with the failure of a previous company was associated with Health-Chem. There was also testimony that a potential employee of Health-Chem was concerned, after looking at the Health-Chem Diagnostics website, about having to relocate to Florida, and that a major customer was concerned about the discrepancy between the products described on the website and those Health-Chem claimed to produce. On the other hand, an interrogatory on the verdict form indicates that the jury found that Aronowitz did not intend to infringe on Health-Chem's mark. We find no evidence in the record to controvert this finding. Accordingly this factor weighs in favor of Aronowitz. We agree with the district court that the remaining four factors favor. neither side. [6] In consideration of all relevant factors, we conclude that because the two most important factors in determining the likelihood of confusion type of mark and actual confusion weighed in favor of finding such confusion, there was sufficient evidence to support a reasonable jury's finding of infringement. Accordingly, the district court did not err in denying Aronowitz's motion for judgment as a matter of law. [7]
Aronowitz has also challenged the jury's $25,000 damages award as to trademark infringement on the ground that Health-Chem has not demonstrated the value of its mark, made use of its mark, or spent any money on corrective advertising. Under the. Lanham Act, damages for trademark infringement may include (1) the defendant's profits, (2) any damages sustained by the plaintiff, and (3) the cost of the action. Ramada Inns, Inc. v. Gadsden Motel Co., 804 F.2d 1562, 1564 (11th Cir.1986) (citing 15 U.S.C. § 1117). Further, the Lanham Act confers upon district courts wide discretion in determining a just amount of recovery for trademark infringement. Id. at 1564-65. Unlike in the case of future lost profits caused by breach of contract, Lanham Act damages may be awarded even when they are not susceptible to precise calculations. Id. at 1565. Finally, as the jury was instructed, damages sustained by the plaintiff include all elements of injury to the business of the trademark owner proximately resulting from the infringer's wrongful acts such as the costs of corrective advertising or injury to business reputation or goodwill. Id. at 1564-65. Brody testified that confusion engendered by Aronowitz's website among Health-Chem's customers and potential employees caused concern, which cost Health-Chem both time and money to explain away on an individual basis. He explained several specific corrective actions that could be used to address the problem generally. Based on his personal experience, with Health-Chem and Hereon Laboratories, one of Health-Chem's manufacturing subsidiaries, he offered estimates of the cost of each such action: (1) developing a corrective website would cost between $10,000 and $25,000; running ads in trade publications would cost between $15,000 and $20,000; and attending two or three industry trade shows to reestablish Health-Chem's identity in the market would cost between $50,000 and $75,000. Altogether, this results in a range of the cost of corrective advertising of between $75,000 and $120,000. We therefore conclude that there was more than sufficient evidence in the record for a jury to find that corrective advertising was necessary and to award at least $25,000 on that basis. Even if this were not the case, as with the $2.6 million verdict for breach of contract, the verdict form contained no interrogatories to indicate how the jury calculated its damages award for trademark infringement. However, our review of the record reveals evidence of alternative bases for an award. In addition to the evidence and estimates provided for corrective advertising, there was also testimony regarding damage to Health-Chem's reputation and goodwill. Brody testified that some of Health-Chem's larger customers had expressed trepidation about the possibility of a continued relationship between Health-Chem and Aronowitz because of his association with a failed business. This testimony could have figured into the jury's consideration of the damages instruction it was given which called for assessment of any injury or loss to Health-Chem's reputation, goodwill, general business reputation, sales, or deception of customers, as well as corrective advertising. The jury in this case awarded only a small percentage of the up to $120,000 requested by Health-Chem in connection with its trademark infringement claim. We find sufficient evidence in the record to support this award for corrective advertising or other damages.