Waterscape Resort LLC v. 70 West 45th Street Holding LLC

Background

The plaintiffs are Waterscape Resort LLC, Assa Realty LLC, and Gemstone Group LLC. They sued 70 West 45th Street Holding LLC and Waterscape Resort II, LLC over, among other things, an alleged breach of contract and trademark infringement involving the “Cassa” trademark. According to the plaintiffs, their license allowing the defendants to use the trademark expired on May 23, 2019, but the defendants continued using it afterward.

The plaintiffs moved for reconsideration of the court’s May 17, 2022 order setting aside a default entered against the defendants. In the alternative, they sought partial summary judgment, meaning a decision without a trial on part of a claim, as to liability on Waterscape’s breach-of-contract claim and Assa Realty’s and Gemstone’s trademark-infringement claims.

Reconsideration

The court denied the motion for reconsideration. It held that the plaintiffs filed the motion about a year and a half too late under Local Rule 6.3. Although the court could consider an untimely motion in the interest of justice, it found the plaintiffs’ explanations unpersuasive. The plaintiffs said they learned on September 18, 2023, that a declaration supporting the defendants’ position was false and had been made by someone without knowledge of the defense. The plaintiffs nevertheless waited almost two more months to file the motion without explaining the delay.

Waterscape’s Contract Motion

Waterscape sought partial summary judgment on liability for breach of contract. It argued that the parties did not dispute the existence of a contract, Waterscape’s performance, or the defendants’ continued use of “Cassa” after the contractual rights ended on May 23, 2019. The defendants did not dispute those points but argued that they had an implied license, that Waterscape had accepted or tolerated their continued use, or that the claim was barred by delay. They also argued that Waterscape had not shown damages.

The court denied Waterscape’s motion. It held that damages are an essential element of a breach-of-contract claim and that Waterscape had not provided evidence that it suffered any damages from the alleged breach. The court also declined to grant summary judgment on only the first three elements of the contract claim. The court stated that there appeared to be no genuine dispute about the contract’s existence, Waterscape’s performance, or the defendants’ breach, and that the trial was expected to focus on damages. The court noted that the defendants’ defenses of acquiescence and laches are equitable defenses not available in an action at law. It also stated that the defendants had not cited cases applying an implied-license defense in a breach-of-contract case, but because Waterscape had not moved for summary judgment on that defense or responded to the defendants’ arguments, the defendants could raise it at trial if there was a basis for doing so.

Trademark Motions

Assa Realty’s infringement claim covered the period from May 23, 2019, through November 9, 2019, when it assigned the trademark to Gemstone. Gemstone’s claim covered the period from November 9, 2019, through March 2020.

The court explained that a registered-trademark infringement claim requires proof that the plaintiff owns a protected mark, the defendant used it in commerce in connection with goods or services without consent, and the use was likely to cause confusion about the parties’ relationship or the source, sponsorship, or approval of the goods or services.

The plaintiffs argued that the defendants’ continued use of the trademark after their license expired established likely consumer confusion as a matter of law. The court agreed with that general rule, relying on decisions explaining that continued use by a former licensee creates a heightened risk that consumers will believe the former licensee remains authorized. The court rejected the defendants’ argument that their close business dealings eliminated any possibility of confusion, reasoning that those dealings could make consumers more likely to believe that the defendants remained authorized representatives.

The court granted Assa Realty’s and Gemstone’s motions for partial summary judgment on their trademark-infringement claims, subject to the defendants’ affirmative defenses of acquiescence and laches. Because neither side moved for summary judgment on those defenses, the court left them for resolution after trial.

Disposition

The court denied the plaintiffs’ motion for reconsideration. It denied Waterscape’s motion for partial summary judgment on its breach-of-contract claim. It granted Assa Realty’s and Gemstone’s motions for partial summary judgment on their trademark-infringement claims, subject to the defendants’ acquiescence and laches defenses. The Clerk of Court was directed to terminate the motions at Docket Entries 85 and 86.