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Fl Court Orders Auction Sale of Tabacalera Trademark to Satisfy Cuban Cigar's Judgment Lien
Cuban Cigar Brands, N. V. v. Tabacalera Popular Cubana, Inc., et al.
No. 02-23124-CIV, U.S. District Court for Southern District of Florida, 09/16/2008
Companies Mentioned: Cuban Cigar Brands, N.V., Max Rohr, Inc., Tabacalera Popular Cubana, Inc.
Holding
In this controversy relating to the "Popular" and "Tabacalera Popular Cubana" design and marks, the U.S. District Court for the Southern District of Florida ruled that a creditor could cause the seizure and auction sale of a debtor's trademarks to satisfy the latter's judgment debt. Here, the district court determined that defendants owned the marks in dispute and that plaintiffs Cuban Cigar Brands, N.V. and Max Rohr were able to comply with the requirement of Florida statute that as judgment holders, they must file an affidavit stating that they hold an unsatisfied judgment. With regard to the due process rights of the third-party trademarks licensee, the district court determined there was nothing in the record to indicate that any of the licensee's property rights would be directly altered if the trademark were to be seized and sold to the highest bidder at auction. Significantly, under the license agreement, defendants were entitled to sell or transfer their ownership rights in the trademarks without notifying the licensee in advance or obtaining its consent. On such basis, the district ordered the U.S. Marshall to seize the trademarks-at-issue for sale at a judicial auction to be applied toward the satisfaction of defendants' judgment debt.
Detailed Summary
Presented before the district court was plaintiffs’ motion for final summary judgment. After defendants failed to file a response within the time provided, plaintiffs filed a separate motion for final summary judgment by default. Order, p. 1.
By way of background, on November 26, 2003, plaintiffs obtained a final judgment against defendants in the amount of $900,000 . Id. Plaintiffs obtained Judgment Lien Certificates and unsatisfied Writs of Execution in recognition of the judgment. Plaintiffs filed the instant motion for summary judgment based on their argument that, as a matter of law, defendants’ trademarks must be seized and sold in order to satisfy defendants’ judgment debt. Id., p. 2.
Although defendants admitted the existence of the debt that they owed to plaintiffs by virtue of the final judgment, they denied that they control the trademark rights at issue or that the trademarks are owned by Tabacalera Popular Cubana, Inc.; they denied that plaintiffs are entitled to seize and sell the trademark rights; and, they denied that plaintiffs are entitled to proceedings supplementary, including the recovery of attorneys fees and costs pursuant to Florida Statute § 56.29.
The district court however determined that under Florida law, intangible assets, such as trademark rights, are amenable to execution. Id., pp. 4-5, citing Continental Cigar Corp. v. Edelman & Co., 297 So. 2d 957, 957-58 (Fla. 3d DCA 1981). Further, summary judgment may be entered to grant the relief plaintiffs sought in their motion for proceedings supplementary, including the seizure and sale of defendants’ valuable trademark rights. Id., p. 5, referring to Riley v. Crossings Community Church, Inc., 881 So. 2d 685, 685 (Fla. 5th DCA 2004).
Here, several factors favored the grant of plaintiffs’ motion to have an auction sale of defendants’ trademarks. Firstly, despite defendants’ suggestion otherwise, Tabacalera Popular Cubana, Inc. was listed as the owner of the trademarks at issue. In fact, plaintiffs provided copies of the trademark registrations, which were issued in the name of Tabacalera Popular Cubana, Inc. Second, defendants did not dispute this fact when it was addressed at the May 21, 2008 status conference before the Magistrate Judge.
Third, plaintiffs was able to comply with the requirement of Florida statute that as the judgment holder, plaintiffs in this case, must “file an affidavit” stating that the “person or entity holds an unsatisfied judgment.” Id., p. 6, citing Fla. Stat. § 56.29(1).
Finally, the fact that a third party held a pre-existing license to use a trademark at issue in this case did not preclude the issuance of summary judgment in plaintiffs’ favor. Id., pp. 7-8. Plaintiffs correctly pointed out that defendants failed to mention the existence of this license agreement in the three months in which this motion was pending, during which time defendants’ counsel appeared at three separate status conferences before the Magistrate Judge and said nothing to correct their previous statements. Regardless of this troubling fact, the district court concluded that the entry of summary judgment would not affect the due process rights of the third-party licensee in this case, Virginia Carolina Corporation, Inc. (“VCC”). Id.
At most, VCC’s rights may be tangentially affected as a consequence of the proceedings supplementary, but there was nothing in the record to indicate that any of VCC’s property rights would be directly altered if the trademark is seized from defendants and sold to the highest bidder at auction. Id., p. 10. Significantly, under the license agreement, defendants were entitled to sell or transfer their ownership rights in the trademark without notifying VCC in advance or obtaining VCC’s consent.
Thus, since defendants were free to sell their trademark rights at will for private pecuniary gain, there was no reason to require VCC’s involvement in connection with the sale of those trademark rights for the purpose of satisfying the judgment debt that defendants owed to plaintiffs. Id.
On the basis of the foregoing the district ordered the U.S. Marshall to seize the trademarks-at-issue for sale at a judicial auction to be applied toward the satisfaction of defendants’ judgment debt.
View a PDF of the judicial opinion.Service
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