Court Opinion

ID: 4375027
Source: CourtListenerOpinion
Date Created: 2019-03-07 21:00:42.40683+00
Date Added: 2024-06-11T14:22:13.959872
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        MAR 7 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

WBS, INC.,                                      No.    17-55973

                Plaintiff-Appellant,            D.C. No.
                                                2:15-cv-07251-DDP-JC
 v.

JUAN CARLOS CROUCIER; et al.,                   MEMORANDUM*

                Defendants-Appellees.

WBS, INC.,                                      No.    17-56009

                Plaintiff-Appellee,             D.C. No.
                                                2:15-cv-07251-DDP-JC
 v.

JUAN CARLOS CROUCIER and
CROUCIER PRODUCTIONS, INC., a
California corporation,

                Defendants-Appellants,

and

ROB HOFFMAN; et al.,

                Defendants.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                   Appeal from the United States District Court
                      for the Central District of California
                   Dean D. Pregerson, District Judge, Presiding

                     Argued and Submitted February 6, 2019
                              Pasadena, California

Before: GOULD and NGUYEN, Circuit Judges, and MARBLEY,** District
Judge.

      This suit concerns a trademark dispute between original members of the

1980s heavy-metal band RATT. Plaintiff-Appellant and Cross-Appellee WBS,

Inc. asserted claims against Defendant-Appellees and Cross-Appellants Juan

Croucier and Croucier Productions, Inc. (“Croucier”) for trademark infringement

and dilution, unfair competition, and interference with economic relations.1 The

district court granted summary judgment for Croucier and against WBS on each of

those claims. Croucier then requested attorneys’ fees. The district court denied

that request. WBS and Croucier appealed. We affirm the district court on all

issues but one. We vacate the district court’s order concerning attorneys’ fees and

remand for further consideration.

      **
            The Honorable Algenon L. Marbley, United States District Judge for
the Southern District of Ohio, sitting by designation.
1
  WBS also asserted claims for tortious interference and conversion against
RATT’s former manager, Rob Hoffman, and related entities. The district court
granted summary judgment for Hoffman and against WBS on those claims.
Because WBS does not challenge any of the district court’s rulings with respect to
Hoffman on appeal, any challenges are waived. See, e.g., Smith v. Marsh, 194
F.3d 1045, 1052 (9th Cir. 1999).

                                         2
1.    WBS contends that the district court erred by permitting Croucier to amend

his answer to assert a counterclaim for declaratory relief. The district court did not

abuse its discretion. Croucier requested declaratory relief on issues that were

already being litigated. WBS has not shown that the amendment was prejudicial,

sought in bad faith, delayed the litigation, or was futile. See AmerisourceBergen

Corp. v. Dialysist West, Inc., 465 F.3d 946, 951 (9th Cir. 2006), as amended (Apr.

24, 2006 & Oct. 6, 2006).

2.    WBS next contends that the district court erred by denying WBS’s motion to

dismiss Croucier’s counterclaim for lack of standing and as untimely. The district

court did not err.

      As to standing, a party may seek a declaratory judgment concerning

trademark ownership or noninfringement if the party “has a real and reasonable

apprehension that he will be subject to liability . . . .” Chesebrough-Pond’s, Inc. v.

Faberge, Inc., 666 F.2d 393, 396 (9th Cir. 1982) (alteration in the original)

(quoting Societe de Conditionnement v. Hunter Eng’g Co., 655 F.2d 938, 944 (9th

Cir. 1981)). Because WBS sued Croucier for infringement, this standard was

satisfied. And Croucier sought declarations that he, personally, owned the RATT

trademarks and that he, personally, did not infringe. WBS points out that

“Croucier’s own allegations were that his ownership interest is in the RATT

Partnership, not the marks,” but WBS ignores Croucier’s further allegation that, as

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a partner, Croucier “owned an equal 20% share . . . in the RATT trademarks.” In

other words, Croucier alleged that he owned a share of the RATT trademarks

because he was a partner in the partnership. Croucier sought a declaration of that

right. He is the real party in interest, despite WBS’s contrary contention.

      As to timeliness, Croucier filed his counterclaim in June 2016. The parties

do not dispute that a four-year statute of limitations applies. Croucier’s claim was

untimely only if the statute of limitations began to run before June 2012.

Accepting the allegations in Croucier’s counterclaim as true, see Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556–57 (2007), no allegations demonstrate that Croucier

was aware of his cause of action before June 2012. The statute of limitations did

not begin to run before June 2012 and Croucier’s claim was timely. WBS cites

facts outside the four corners of Croucier’s complaint, but we do not consider those

facts at the motion-to-dismiss stage. See Lee v. City of L.A., 250 F.3d 668, 688

(9th Cir. 2001).

3.    WBS contends that the district court erred by granting summary judgment to

Croucier on the ground that WBS does not own the RATT trademarks. The district

court did not err. WBS admits in this litigation that Warren DeMartini was a

partner in the RATT partnership in 1997, when Croucier was purportedly expelled.

The partnership agreement requires all current partners to unanimously consent to

expel a partner. WBS has not put forth any evidence that DeMartini voted to expel

                                          4
Croucier. The district court therefore correctly held that “no reasonable factfinder

could conclude that Croucier was ever expelled from the Partnership.” And

because Croucier was not expelled from the partnership, his vote was required to

transfer rights in the RATT trademarks. Because Croucier did not vote to transfer

the RATT trademarks to WBS, that assignment was invalid. WBS has no rights in

the RATT trademarks; summary judgment to Croucier was proper.

4.    Alternatively, WBS contends that issue preclusion or the Rooker-Feldman

doctrine bar Croucier from litigating ownership of the RATT trademarks. WBS

contends that, for that reason, the district court erred in granting summary

judgment to Croucier. However, WBS did not present these arguments or the

necessary state-court documents to the district court at the summary-judgment

stage, so they cannot provide a basis for WBS to claim error. See Lippi v. City

Bank, 955 F.2d 599, 604 (9th Cir. 1992) (“Our review is limited to the record

presented to the district court at the time of summary judgment.”). Nonetheless,

WBS raised these arguments on its motion for reconsideration. We construe

WBS’s briefing as challenging the district court’s denial of WBS’s motion for

reconsideration and proceed to the merits.

      Issue preclusion does not apply here. Under California law,2 “issue

2
 We apply California law because the judgment to be given preclusive effect is a
California state-court judgment. See Matsushita Elec. Indus. Co., Ltd. v. Epstein,
516 U.S. 367, 375 (1996).

                                          5
preclusion applies: (1) after final adjudication (2) of an identical issue (3) actually

litigated and necessarily decided in the first suit and (4) asserted against one who

was a party in the first suit or one in privity with that party.” DKN Holdings LLC

v. Faerber, 61 Cal. 4th 813, 825 (2015). Croucier was not a party to the state-court

litigation alleged to have preclusive effect; his purported partner, Stephen Pearcy,

was. Partnership alone is insufficient to establish privity, under California law, for

purposes of preclusion. See id. And WBS offers no other reason why Croucier

should be bound.

      The Rooker-Feldman doctrine is similarly inapplicable. It “does not bar

actions by nonparties to the earlier state-court judgment . . . .” Lance v. Dennis,

546 U.S. 459, 466 (2006).

5.    Finally, WBS contends that the district court erred by denying WBS’s

motion to modify the scheduling order to permit WBS to file a second summary-

judgment motion. WBS has not shown “good cause” to modify the scheduling

order. Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002). WBS

contends that it had good cause because the district court, in a related case, gave

some weight to a declaration from Stephen Pearcy “that he had never left the

RATT Partnership.” WBS asserts that this shows that Croucier and Pearcy were

partners in the partnership in 2002, and thus in privity for purposes of issue

preclusion, and that Croucier knew that the ownership of the RATT trademarks

                                           6
was being contested in 2002, which would allegedly trigger the statute of

limitations on Croucier’s counterclaim. This “new evidence” is immaterial. As

discussed, even if Croucier and Pearcy were partners at the time of the state-court

judgment, that does not establish privity for purposes of issue preclusion under

California law. And Pearcy’s declaration does not show that Croucier knew that

the ownership of the RATT trademarks was in dispute in 2002.

6.    Turning to Croucier’s challenges, Croucier first contends that the district

court erred by not entering the declaratory relief he requested. Whether to enter a

declaratory judgment is a decision within the district court’s sound discretion. See

Wilton v. Seven Falls Co., 515 U.S. 277, 288–89 (1995). Here, the district court

did not abuse its discretion. Croucier submitted a proposed judgment to the court

seeking the following declaration: “WBS, Inc. (‘WBS’), does not own the RATT

trademarks . . . as those trademarks were never properly assigned to it from the

RATT Partnership and thus remain the property of the RATT Partnership pursuant

to the written 1985 RATT Partnership Agreement.” The district court’s summary-

judgment decision held that WBS does not own the RATT trademarks. And at oral

argument, counsel for WBS conceded that if WBS does not own the RATT

trademarks, the RATT partnership does. The issues on which Croucier sought a

declaration have been adjudicated in Croucier’s favor. Accordingly, we see no

reason to vacate the judgment of the district court and remand for reconsideration.

                                         7
7.    Croucier also contends that the district court erred by denying his request for

attorneys’ fees. We review a district court’s decision on whether to award

attorneys’ fees for an abuse of discretion. SunEarth, Inc. v. Sun Earth Solar Power

Co., Ltd., 839 F.3d 1179, 1181 (9th Cir. 2016) (en banc) (per curiam). Where, as

here, a district court does not explain its decision, we may set that decision aside

“if the record does not support the district court’s decision.” Mattel, Inc. v.

Walking Mountain Prods., 353 F.3d 792, 815 (9th Cir. 2003). We do so here. In

light of the objectively unreasonable arguments WBS has advanced, its vexatious

approach to this litigation, and WBS’s repeated failures to follow procedural rules,

an award of attorneys’ fees to Croucier may be appropriate. We vacate the district

court’s decision denying Croucier’s motion for attorneys’ fees and remand to the

district court for further consideration. Id. In awarding or denying attorneys’ fees,

the district court should explain its reasoning in a manner sufficient for review.

      Croucier is entitled to costs on appeal.

      AFFIRMED IN PART, and VACATED AND REMANDED IN PART.

                                           8