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Uptown Grill, L.L.C. v. Camellia Grill Holdings, Inc.

United States Court of Appeals, Fifth Circuit

March 29, 2019

UPTOWN GRILL, L.L.C., Plaintiff - Appellee
v.
CAMELLIA GRILL HOLDINGS, INC., Defendant-Appellant CAMELLIA GRILL HOLDINGS, INC., Plaintiff - Appellant
v.
GRILL HOLDINGS, L.L.C.; CHARTRES GRILL, L.L.C., doing business as Grill; UPTOWN GRILL OF DESTIN, L.L.C.; RANO, L.L.C.; HICHAM KHODR; UPTOWN GRILL, L.L.C.; K & L INVESTMENTS, L.L.C.; ROBERT'S GUMBO SHOP, L.L.C., Defendants - Appellees CAMELLIA GRILL HOLDINGS, INC., Plaintiff - Appellant
v.
CHARTRES GRILL, L.L.C., doing business as Grill; RANO, L.L.C.; HICHAM KHODR; UPTOWN GRILL, L.L.C.; UPTOWN GRILL OF DESTIN, L.L.C.; K & L INVESTMENTS, L.L.C.; ROBERT'S GUMBO SHOP, L.L.C.; GRILL HOLDINGS, L.L.C., Defendants - Appellees

          Appeal from the United States District Court for the Eastern District of Louisiana

          Before CLEMENT, OWEN, and HO, Circuit Judges.

          EDITH BROWN CLEMENT, Circuit Judge.

         An attempt to simultaneously sell a restaurant and license associated intellectual property has led to ten years of litigation in state and federal court. Camellia Grill Holdings, Inc. ("CGH") appeals the district court's most recent attempt to adjudicate the dispute. We affirm in part and reverse in part.

         Facts and Proceedings

         Michael Shwartz and his family owned and operated the Camellia Grill restaurant on Carrollton Avenue (the "Carrollton restaurant") for decades. He operated the business-the single restaurant-through a wholly owned corporation, Camellia Grill, Inc. In 1999, Shwartz formed CGH for the sole purpose of owning federally registered Camellia Grill trademarks.[1]

         In 2006, Shwartz agreed to sell the Carrollton restaurant to Hicham Khodr.[2] On August 11, in the "Bill of Sale," Shwartz sold to Uptown Grill, L.L.C. all his "right, title and interest in and to the . . . tangible property located within or upon" the Carrollton restaurant, including "[a]ll furniture, fixtures and equipment, cooking equipment, kitchen equipment, counters, stools, tables, benches, appliances, recipes, trademarks, names, logos, likenesses, etc., and all other personal and/or movable property . . . located within or upon the property."[3]

         On August 27, in the "License Agreement," CGH licensed to The Grill Holdings, L.L.C. ("TGH") the right to use certain defined "Marks." These "Marks" included "[a]ll 'Camellia Grill' marks on file with the United States Patent and Trademark Office" and "[a]ll 'trade dress' associated with the 'Camellia Grill' Restaurant," as well as blueprints, menus, and recipes. Section 5 of the License Agreement provides that the "Licensee acknowledges and agrees that all of the Licensor's right, title and interest in and to the Marks shall remain the property of the Licensor." The License Agreement also bound TGH's affiliates and related companies.

         In 2009, Khodr opened a Camellia Grill location in Destin, Florida, which eventually failed. In 2010, Khodr opened a location on Chartres Street in New Orleans (the "Chartres restaurant").

         Following state court litigation that ended in the termination of the License Agreement, [4] Khodr filed a declaratory action to determine the parties' respective rights in the Camellia Grill trademarks within or upon the Carrollton restaurant. Shwartz filed a separate action asserting trademark and trade dress infringement claims and breach of contract claims based on the continued use of Camellia Grill-related intellectual property following the termination of the License Agreement. The cases were consolidated.

         Khodr moved for, and the district court granted, summary judgment on the question of ownership of trademarks within or upon the Carrollton restaurant. The district court held that the Bill of Sale transferred "ownership of the trademarks associated with the operation of the Camellia Grill restaurant on Carrollton Avenue to Uptown Grill." Uptown Grill, LLC v. Shwartz, 116 F.Supp.3d 713, 723 (E.D. La. 2015). The court also held sua sponte that the Bill of Sale transferred all Shwartz's rights in the Camellia Grill trademarks to Uptown Grill and entered judgment for Khodr on all claims. Id. at 726.

         Shwartz appealed, and this court affirmed the district court's first holding but reversed and remanded on its second. Uptown Grill, L.L.C. v. Shwartz, 817 F.3d 251, 260 (5th Cir. 2016). The court held that the Bill of Sale "clearly and unambiguously transfers to Uptown Grill the trademarks within or upon the Carrollton Avenue location." Id. at 258. However, because Khodr had not asked the district court to make its second holding, this court reversed and remanded for further proceedings. Id. at 260.

         On remand, the parties filed multiple cross-motions for partial summary judgment. The district court ultimately ruled that the Bill of Sale assigned all Camellia Grill trademark rights to Khodr, as well as trade dress rights associated with the Carrollton restaurant. The court then found that Shwartz was unable to sustain his trade dress infringement claim on the merits. Alternatively, the court held that even if Shwartz could sustain his trademark and trade dress infringement claims, he was not entitled to monetary damages.

         With respect to the Shwartz's breach of contract claims, the court found that the parties were still bound by the License Agreement. The court stated in a footnote that because "the parties have consistently treated the License Agreement as valid and binding," it would "give effect to their agreement to the extent permissible under the law." The court held that the use of the trademarks at the Chartres restaurant following the termination of the License Agreement was a breach of that contract. However, the court found that Shwartz could not prove breach of the agreement as to any putative trade dress.

         Finally, after a bench trial, the court found that the operation of the Chartres restaurant during two discrete time periods constituted a breach of the License Agreement. The court then found that Shwartz had not proved any compensable damages, so denied any such award. The court enjoined TGH, Uptown Grill, and the company that owned the Chartres restaurant (Chartres Grill, LLC) from employing the Camellia Grill trademarks identified in the License Agreement "at any location other than the Carrol[l]ton Location."

         Shwartz timely appealed the district court's various adverse rulings.

         Standards of Review

         We review a district court's grant of summary judgment de novo. Bridges v. Empire Scaffold, L.L.C., 875 F.3d 222, 225 (5th Cir. 2017). "Summary judgment is appropriate if 'there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Id. (quoting Fed.R.Civ.P. 56(a)). A court should enter summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The district court's finding of fact at the bench trial are reviewed for clear error and its legal conclusions de novo. Kona Tech. Corp. v. S. Pac. ...


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