Strobel v. Rusch

VOLKER STROBEL, HEIKE STROBEL, and HANS BAUR,in their individual capacities and on behalf of UNC Holdings LLC, Plaintiffs/Counterclaim Defendants, v. UWE RUSCH and DR. MABEL RUSCH, Defendants/Counterclaim Plaintiffs.

No. CIV 1:18-00656-RB-JFR

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

December 11, 2020

MEMORANDUM OPINION AND ORDER

Mr. Uwe Rusch began developing a brand of cordials in 1998 under the name CORDIALS V.I.P. Drinks. Mr. Rusch asserted ownership in the copyright to the brand and also registered the trademark to the brand's logo (the "Royal Logo"), which has been used to sell CORDIAL V.I.P. Drinks since 2005, primarily in Europe. In 2012, he formed UNC Holding LLC ("UNC-FL") in Florida to establish his business in the United States. In 2013 Mr. Volker Strobel, Mrs. Heike Strobel, Mr. Hans Baur, and Mr. Gregor Fischer agreed to invest money with Defendants in the CORDIALS V.I.P. Drinks business. At some point, their business relationship soured, and the parties agreed to dissolve UNC-FL. Plaintiffs contend that Defendants violated the parties' agreement and brought this lawsuit for a variety of tort and contract claims. Defendants filed multiple counterclaims and argue that Plaintiffs' actions infringed on their rights and made any purported contract unenforceable. Both parties move for summary judgment to dismiss the claims and counterclaims. The Court will deny both motions in part.

I. Statement of Facts¹

In or around 1998, Mr. Rusch began developing a line of cordials. (Doc. 145 (Am. Answer and Counterclaims) ¶ 10.) He registered the CORDIALS V.I.P. Drinks logo as an international trademark through the World Intellectual Property Organization (WIPO) and later transferred ownership of the V.I.P. Mark to his wife, Dr. Mabel Rusch. (Doc. 62 ¶ 13.)

In 2012, Mr. Rusch organized UNC, Holdings LLC (UNC-FL) (Doc. 114-3 at 5), and the next year he entered agreements with new investors, consisting of Volker Strobel, Heike Strobel, Hans Baur and Gregor Fischer. (Doc. 114-5 at 2-5.) The total investment of the parties was $450,000, with Volker Strobel, Heike Strobel, Hans Baur investing $350,000, and Gregor Fischer investing $100,000. (Id. at 2.) In connection with their investments, the parties set up two new companies in conjunction with UNC-FL: V.I.P. Drinks Bottling, LLC and V.I.P. Drinks Distribution, LLC. (Doc. 114-5 at 2.) The parties agreed that Mr. Rusch and the four new investors would own the following percentages of each of the three cordials business entities: Mr. Rusch—46 percent; Mr. Strobel—23 percent; Mrs. Strobel—5 percent; Mr. Baur—6 percent; Mr. Fischer—10 percent. (Doc. 114-5 at 2-3.) Mr. Rusch added Mr. Strobel as a manager of UNC-FL (Doc. 114-3 at 19), and Mr. Rusch and Mr. Strobel served as CEO and CFO, respectively. (Doc. 114-5 at 4.)

The membership was complete pursuant to the Partnership Agreement of UNC, Holdings LLC. (Doc. 41-1.) The agreement outlined the roles and responsibilities of all the parties and allowed for Mr. Strobel and Mr. Rusch to both "manage the Holding's business affairs as equal managing members." (Doc. 41-1 at 2.) As to Dr. Rusch, the contract stated that she was to "undertake[] to convey to the Holding all rights to the CORDIALS trademark and all rights to thedesign and logos of CORDIALS products . . . [and] [t]he transfer of ownership of these rights will be initiated immediately after the signing of this agreement."² (Id.) The contract declared that "[t]he costs of this transfer will be borne by [UNC, Holding LLC]." (Id.) In addition to the responsibilities demanded by the contract, Mr. Rusch also made an oral agreement to "transfer the trademark rights into the company." (Doc. 114-3 at 6.)

In August of 2013, Mr. Strobel sent an email to all members confirming that the transfer of the trademark by Dr. Rusch to UNC-FL had been initiated and confirmation would take a few weeks. (Docs. 115-2 at 3; 115-4 at 4.) Nearly a year later, in June of 2014, Mr. Strobel received an email from Mr. Rusch, forwarded from WIPO, explaining the fees to be paid by the Holding to transfer the trademark. (Doc 115-4 at 5.) During the same month, Dr. Rusch signed the WIPO Form MM5(E), titled Request for the Recording of a Change of Ownership. (Doc. 115-1.) Eventually, though, Dr. Rusch receive a letter from WIPO stating that the trademark would expire if not renewed. (Doc. 115-1 at 3, 16.) It soon became apparent to all parties that the V.I.P. mark had not been transferred to UNC-FL. (Doc. 115-2 at 3.) In the end, the trademark was never transferred to UNC-FL, and in 2017 Dr. Rusch renewed the registration of the mark in her name. (Doc. 62 ¶ 22.)

In 2014, Mr. Rusch filed Articles of Dissolution of UNC-FL with the Florida Secretary of State.³ (Doc. 114-3 at 20.) Mr. Strobel alleges that in April 2014 he and Mr. Rusch agreed to dissolve UNC-FL and to create a new company and relocate to New Mexico. (Doc. 114-5 at 2.) In that same year, Mr. Strobel filed Articles of Organization for UNC-NM with the New MexicoSecretary of State. (Id. at 22.) At some point in 2016, the business became insolvent (Docs. 62 ¶ 21; 114-3 at 2), and essentially lay dormant from 2016 until early 2018 with no customers or revenues. (Doc. 114-3 at 2, 3.)

II. Legal Standards

A. Standard for Cross Motions for Summary Judgment

"Summary judgment is proper if, viewing the evidence in the light most favorable to the non-moving party, there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Halley v. Huckaby, 902 F.3d 1136, 1143 (10th Cir. 2018), cert. denied, 139 S. Ct. 1347 (2019) (quoting McCoy v. Meyers, 887 F.3d 1034, 1044 (10th Cir. 2018)). A fact is "material" if it could influence the determination of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute over a material fact is "genuine" if a reasonable trier of fact could return a verdict for either party. Id. "The movant bears the initial burden of 'show[ing] that there is an absence of evidence to support the nonmoving party's case.'" Tanner v. San Juan Cty. Sheriff's Office, 864 F. Supp. 2d 1090, 1106 (D.N.M. 2012) (quoting Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991)) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Once the moving party meets this burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by [their] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324 (quotation marks omitted). The party opposing a motion for summary judgment "must set forth specific facts showing that there is a genuine issue for trial as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990) (citing Celotex, 477 U.S. at 324). Rule 56(c) provides that "[a] party asserting that a fact . . . is genuinely disputed must support theassertion by . . . citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials . . . ." Fed. R. Civ. P. 56(c)(1)(A). The respondent may not simply "rest on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 259. Nor can a party "avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation." Colony Nat'l Ins. Co. v. Omer, No. 07-2123-JAR, 2008 WL 2309005, at *1 (D. Kan. June 2, 2008) (citing Fed. R. Civ. P. 56(e); Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199 (10th Cir. 2006)). "In a response to a motion for summary judgment, a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 794 (10th Cir. 1988) (citations omitted).

"Cross motions for summary judgment are to be treated separately; the denial of one does not require the grant of another." Osuagwu v. Gila Reg'l Med. Ctr., 938 F. Supp. 2d 1142, 1146 (D.N.M. 2012) (quoting Buell Cabinet Co. v. Sudduth, 608 F.2d 431, 433 (10th Cir. 1979) (internal citations omitted)). "Even where the parties file cross motions pursuant to Rule 56, summary judgment is 'inappropriate if disputes remain as to material facts.'" Id. (quoting Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000)). "[W]hen faced with cross-motions for summary judgment, the Court is 'entitled to assume that no evidence needs to be considered other than that filed by the parties.'" AT & T Mobility Servs., LLC v. Vill. Of Corrales, 127 F. Supp. 3d 1169, 1172 (D.N.M. 2015) (quoting James Barlow Family Ltd. P'ship v. David M. Munson, Inc., 132 F.3d 1316, 1319 (10th Cir. 1997)).

III. The Court grants in part the Rusches' Motion for Summary Judgment

Plaintiffs bring an assortment of claims against Defendants—eight to be exact. They include allegations of Trademark Infringement, False Designation of Origin, Breach of Contract, Breach of Covenant of Good Faith and Fair Dealing, Breach of New Mexico Unfair Practices Act (NMUPA), Breach of Fiduciary Duty, Conversion, and Prima Facie Tort. In return, Defendants filed a Motion for Summary Judgment disputing these accusations. The Court grants Defendants' motion as to all claims but one—Breach of Contract by Dr. Rusch. There, the Court finds the issue of whether Dr. Rusch fulfilled her obligation to "undertake to convey" the mark as disputable. The Court will explain its reasoning as to all counts below.

a) Count I - Trademark Infringement

Defendants contend that Plaintiffs do not have a cause of action for common...