Summary
entering judgment, including attorneys' fees and costs, for Patsy's Brand, Inc.
Summary of this case from Patsy's Italian Restaurant, Inc. v. BanasOpinion
99 Civ. 10175 (JSM)
October 1, 2001
Norman Zivin, Cooper Dunham L.L.P., New York, NY, For Plaintiff.
Darren Saunders, Pennie Edmonds, New York, NY, Frank H. Wright, New York, NY, Richard Feldman, Feldman Markman L.L.P., New York, NY, Andrew Spinnell, New York, NY, For Defendants.
OPINION and ORDER
In an Opinion and Order dated February 21, 2001, the Court granted Plaintiff summary judgment on its trademark claims and ordered Defendant I.O.B., its principal, Mr. Brijia and its then counsel to show cause why sanctions should not be imposed upon them. A hearing on the sanctions issue was held on June 8, 2001. Subsequent to the hearing Plaintiff also filed an application for counsel fees under the Lanham Act, 15 U.S.C. § 1117(a). Since further submissions are being prepared with respect to the sanctions issue as it relates to I.O.B.'s prior counsel, this Opinion and Order will not address that issue.
The Second Circuit has stated that "in a suit under the Lanham Act, attorney fees should be awarded only in `exceptional cases,' . . . and only `on evidence of fraud or bad faith.'" Gordon Breach Sci. Publishers S.A. v. Am. Instit. of Physics, 166 F.3d 438,439 (2d Cir. 1999) (quoting Twin Peaks Prod., Inc. v. Publications Int'l, Ltd., 996 F.2d 1366, 1383 (2d Cir. 1993).
In the Opinion granting Plaintiff summary judgment the Court found:
This lengthy opinion and much of the time and effort expended by Plaintiff's counsel would not have been necessary had I.O.B. and its principals simply told the truth and admitted that they did not begin selling sauce until after Plaintiff had launched its sauce business. Rather than admit this basic fact, I.O.B. submitted a fabricated document, made false assertions through counsel, and its principal, Mr. Brija, swore falsely on more than one occasion that he had created I.O.B. sauce labels in 1993 and 1994. Patsy's Brand, Inc. v. I.O.B. Realty, Inc., No. 99 CIV 10175, 2001 WL 170672, at *14 (S.D.N.Y Feb. 21, 2001).
This finding is more that sufficient to establish the bad faith necessary to justify an award to Plaintiff of the full amount of its attorneys' fees and costs. Since the record establishes that I.O.B.'s principals, Mr. Brija and Mr. Brecevich, were active participants in the Lanham Act violations and the fraudulent conduct in these proceedings, they are jointly and severally liable with the corporate defendants for the full amount of plaintiff's attorneys' fees and costs. The Court finds no merit to I.O.B. defendants' argument that they have limited resources and, therefore, their liability for attorneys' fees should be reduced. The I.O.B. defendants' fraudulent conduct in this litigation was so pervasive that they are not entitled to any sympathy from a court of equity.
The I.O.B. defendants are all defendants other than Nick Tsoulos.
There is equally no merit to I.O.B. defendants' argument that the amount of the requested fees is unreasonable. Given the complexity of the case, the amount of time spent by counsel and the hourly rates charged were reasonable.
An alternative basis for finding Mr. Brija liable for Plaintiff's attorneys' fees is found in his perjury during these proceedings. Nothing that he has submitted has caused the Court to change its finding that "Mr. Brija swore falsely on more than one occasion that he had created I.O.B. sauce labels in 1993 and 1994." Indeed, the Court is persuaded that Mr. Brija also shared responsibility for the submission of the false invoice from the party that allegedly printed the labels for I.O.B.'s sauce. Perjury and the knowing submission of fraudulent documents constitute contempt of court and it is therefore appropriate to sanction Mr. Brija for his contempt. See In re Weiss, 703 F.2d 653, 666-67 (2d Cir. 1983). The courts have recognized that an appropriate sanction for civil contempt is to require the contemnor to reimburse the injured party for the attorneys' fees that resulted from the contumacious conduct. See Weitzman v. Stein, 98 F.3d 717, 719 (2d Cir. 1996).
Had Mr. Brija filed a truthful affidavit in response to Plaintiff's motion for a preliminary injunction Plaintiff would not have incurred a large part of their attorneys' fees beginning October 27, 1999, the day Plaintiff's attorneys began reviewing the false affidavit of Mr. Brija and fraudulent documents submitted in response to the original order to show cause for a preliminary injunction. (Pl.'s Application for Attorneys' Fees Expenses, Ex.1.) Thus, as a sanction for his contempt Mr. Brija is ordered to reimburse Plaintiff for 50% of the legal fees and expenses it incurred starting on October 27, 1999. This is a joint and several liability with that imposed on the I.O.B. defendants under the Lanham Act.
Plaintiff also seeks attorneys' fee from Nick Tsoulos but that application is denied. There is no evidence that Mr. Tsoulos acted in bad faith at any time.
Finally, the I.O.B. defendants have the chutzpah to seek sanctions and attorneys' fees against the Plaintiff. This application is denied. There nothing in Plaintiff's conduct that would merit the relief that these defendants seek. It is clear from the record that a third-party, hired by Plaintiff to register domain names on its behalf, registered the domain name www.patsyspizza.com which then was linked to Plaintiff's website. There is no reason to believe that Plaintiff or their counsel was in any way responsible for this conduct. Thus, the I.O.B. defendants' motion for sanctions is frivolous as is their motion to alter and amend the judgment in this case. Those motions are denied.
The only serious question raised by the I.O.B. defendants' motions is whether I.O.B. and its counsel should be sanctioned for making these motions. Since I.O.B. and its principals are being ordered to pay Plaintiff all of its attorneys' fees, a sanction order against them would serve no useful purpose. Moreover, the fault with respect to these motions lies not so much with the I.O.B. defendants as with their counsel.
While the fact that Plaintiff had registered the www.patsyspizza.com domain name may have been marginally relevant and, therefore, counsel may have had a good faith basis for making the motion to amend the judgment, there never was a reasonable basis for seeking sanctions against Plaintiff's attorneys. Moreover, since Plaintiff's papers in response to Defendants' motion included an unequivocal affidavit of the party who registered the domain name that he was the one solely responsible for the registration, Defendants' counsel had no good faith basis for pursuing these motions.
This is the type of unprofessional conduct that the Court should publicly condemn and sanction. See Eastway Const. Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985) (Sanctions are appropriate "when it appears that a pleading has been interposed for any improper purpose, or where, after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law."); In re 60 East 80th Street Equities, Inc., 218 F.3d 109, 115-17 (2d Cir. 2000) (upholding sanctions on attorney who pursued an otherwise valid challenge after both the Bankruptcy Court and District Court were emphatic that the attorney's client lacked standing and the challenge was without basis in law or fact); see also Pierce v. F.R. Tripler Co., 955 F.2d 820, 830 (2d Cir. 1992).
While Mr. Spinnell's conduct would otherwise merit sanctions under Rule 11, Plaintiff's application for Rule 11 sanctions must be denied because Plaintiff did not comply with the safe harbor provision of Rule 11 by giving counsel 21 days notice to withdraw the offending motion. See Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1327-29 (2d Cir. 1995).
Plaintiff also seeks sanctions under 28 U.S.C. § 1927. Section 1927 provides for sanctions against a lawyer who "so multiplies the proceedings in any case unreasonably and vexatiously . . . ." 28 U.S.C. § 1927. In the Second Circuit, "[b]ad faith is the touchstone of an award under this statute." United States v. International Bhd. Of Teamsters, 948 F.2d 1338, 1344 (2d Cir. 1991). "`[A]n award under § 1927 is proper when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose. . . .'" Id. at 1345 (quoting Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986)).
The Court finds this section applicable here. The court is persuaded that Mr Spinnell, the attorney of the I.O.B. defendants, brought a sanction motion against opposing counsel that he knew to be without merit in order to prove to his client how tough he could be. For similar reasons, he continued to litigate the motions for sanctions against Plaintiff after it became apparent that there was no good faith basis for it. Since he multiplied "the proceedings in [this] case unreasonably and vexatiously," sanctions are appropriate.
Since Plaintiff has been awarded all of its cost against the I.O.B. defendants, the court will limit its sanction against Mr. Spinnell to requiring that he pay into the registry of the court the amount of $5,000 as a sanction for his improper conduct.
For the foregoing reasons, Plaintiff is awarded judgment against the defendants, I.O.B. Realty, Inc., Patsy's Inc., Frank Brija and John Brecevich for the full amount of its attorneys' fees and cost, $250,351.56; Frank Brija is found to be guilty of contempt of court and is ordered to pay to plaintiff 50% of the attorneys' fees and expenses it incurred as of October 27, 2001, amounting to $99,834.63; Andrew Spinnell is sanctioned in the amount of $5,000; and the I.O.B. defendants' motions for sanctions and to alter and amend the judgment are denied.
SO ORDERED.