Kraljevich v. Courser Athletics, Inc.
- P. Castel
- 1:21-cv-09168
- U.S. District Court · Southern District of New York
- 18
In Kraljevich v. Courser Athletics, Judge Castel vacated defaults, denied default judgment, and transferred the case to Massachusetts under the employment agreement’s forum clause.
John Kraljevich, Michael Petry, and Laurie Spiro. The case was transferred from the Southern District of New York to the District of Massachusetts; the court did not decide the merits of Kraljevich’s copyright or implied-contract claims.
What happened
In Kraljevich v. Courser Athletics, Inc., John Kraljevich alleged that Michael Petry and Laurie Spiro infringed copyrights in his shoe designs and failed to pay him for work. Kraljevich sought a default judgment after the defendants initially failed to appear, while the defendants asked the court to set aside the defaults and dismiss the case.
The court found that service at the defendants’ New York apartment was proper, even though they were temporarily living in Florida. It also found that their failure to appear was not willful, that they had potentially complete defenses, and that setting aside the defaults would not substantially prejudice Kraljevich. The court therefore vacated the defaults and denied default judgment.
Judge Castel also enforced the employment agreement’s requirement that related disputes be brought in Massachusetts and transferred the action to the U.S. District Court for the District of Massachusetts. The court denied the service-of-process dismissal motion, denied the venue motion as such but granted it as a request to transfer, and did not decide whether the complaint stated a claim.
The detailed version
- Kraljevich v. Courser Athletics, Inc. · No. 1:21-cv-09168
- P. Castel
- Aug. 23, 2022
Background
John Kraljevich sued Courser Athletics, Inc., Michael Petry, Gregg Spiro, and Laurie Spiro. The claims that remained in this action were against Michael Petry and Laurie Spiro. Kraljevich alleged that he created shoe designs for the Courser brand, registered two related copyrights, and was not paid for his work. He asserted copyright claims against the Petrys and an implied-contract claim concerning unpaid compensation.
Kraljevich moved for default judgment under Rule 55(b) after the Petrys initially failed to appear. The Petrys moved under Rule 55(c) to vacate the Clerk’s Certificates of Default and moved to dismiss for insufficient service of process, improper venue, and failure to state a claim.
Default judgment and vacating the defaults
The court denied Kraljevich’s motion for default judgment and granted the Petrys’ motion to vacate the Certificates of Default. Applying the factors of willfulness, potentially meritorious defenses, and prejudice, the court found that the default was not willful. The Petrys stated that they had moved from New York to Florida before service, were living in temporary housing, and did not receive the summons and complaint. They appeared to defend the case shortly after the defaults were entered.
The court also identified potentially complete defenses, including the Petrys’ arguments that the shoe designs were works made for hire developed for Courser and that Michael Petry co-owned the copyrights because of his contributions. The court found little or no prejudice to Kraljevich because discovery had not begun, default judgment had not been entered, and the case was still in its early stages.
Service of process
The court denied the Petrys’ Rule 12(b)(5) motion based on insufficient service of process. The process server delivered the summons and complaint to the doorman at the Petrys’ New York apartment and mailed copies to that address. Although the Petrys had moved to Florida, the court found that the New York apartment remained their dwelling or usual place of abode at the time of service. The court noted that Michael Petry continued to list the apartment on government-issued identification and that the temporary Florida housing lacked sufficient permanence to qualify as their dwelling or usual place of abode.
Venue and transfer
The court found that venue in the Southern District of New York was proper based on the complaint’s allegations. However, it construed the Petrys’ venue motion as a motion to transfer under 28 U.S.C. § 1404(a), rather than as a basis to dismiss for improper venue.
The employment agreement contained a forum-selection clause stating that disputes arising from or relating to the agreement “shall” be brought in a court of competent jurisdiction in Massachusetts. The court held that the clause was reasonably communicated to Kraljevich, was mandatory, and covered the dispute. The copyright claims related to the agreement because the agreement addressed ownership of copyrightable works created during Kraljevich’s employment. The unpaid-compensation claim also related to the agreement because it addressed the terms of Kraljevich’s employment and compensation.
Although the Petrys were not signatories to the employment agreement, the court held that they were sufficiently closely related to Courser and Gregg Spiro to enforce the forum-selection clause. The court also found that Kraljevich had not shown that enforcing the clause would be unreasonable or unjust.
Disposition
Judge Castel granted the Petrys’ motion to vacate the Clerk’s Certificates of Default and denied Kraljevich’s motion for default judgment. The court denied the Petrys’ Rule 12(b)(5) motion. It denied the Rule 12(b)(3) motion as such, construed it as a motion to transfer under 28 U.S.C. § 1404(a), and granted the transfer motion. The action was ordered transferred to the U.S. District Court for the District of Massachusetts. The court did not reach the Petrys’ Rule 12(b)(6) motion arguing that the complaint failed to state a claim.
Read the full 18-page opinion on CourtListener, the free public archive maintained by the Free Law Project.