Boulan South Beach Master Association, Inc. v. Think Properties, LLC

Case: 14-15616 Date Filed: 06/08/2015 Page: 1 of 9
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-15616
Non-Argument Calendar
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D.C. Docket No. 1:14-cv-23864-JEM
BOULAN SOUTH BEACH MASTER ASSOCIATION, INC.,
PARC PLACE DEVELOPMENT, LLC,
BOULAN SOUTH BEACH CONDOMINIUM ASSOCIATION, INC.,
COLLINS RENTALS, LLC,
Plaintiffs - Appellants,
versus
THINK PROPERTIES, LLC,
THINK HOSPITALITY, LLC,
THINK HOTEL GROUP, LLC,
THINK CONCIERGE, LLC,
Defendants - Appellees,
BOULAN 207 LLC, et al.,
Defendants.
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________________________
Appeal from the United States District Court
for the Southern District of Florida
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(June 8, 2015)
Before MARTIN, JILL PRYOR and ANDERSON, Circuit Judges.
PER CURIAM:
This is an interlocutory appeal from the denial of a preliminary injunction in
a dispute between commercial developers and their former licensees over the use
of trademarks and commercial property. The district court denied an injunction to
the developers on the basis that they failed to assert irreparable harm that was not
fully compensable by monetary damages. Because the district court evaluated the
developers’ motion for a preliminary injunction under an erroneous legal standard
for irreparable harm, we vacate the district court’s order and remand for
reconsideration of the developers’ motion.
I.
Appellants (collectively, the “developers”) include the developers and
owners of a mixed-use luxury beach community called Boulan South Beach,
located in Miami Beach, Florida. The developers engaged Appellees (collectively,
“Think”) to advertise units within a condominium property in Boulan South Beach
(the “Condominium”) and to manage rentals of various units in the Condominium
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by participating unit owners. To that end, the developers authorized Think to use
trademarks in the names BOULAN and BOULAN SOUTH BEACH (the
“BOULAN marks”), which Think primarily used in advertising on various
websites and social media. The developers also authorized Think to access and use
the Condominium’s front desk to facilitate Think’s management of the rental
program.
Eventually, the developers began to take issue with Think’s advertising and
management practices. According to the developers, Think advertised the
Condominium among a group of lower quality properties in promotional materials,
failed to maintain Condominium property properly, allowed unauthorized guests to
use Condominium property, and caused certain rental units to lose access to the
beach, all to the detriment of the BOULAN brand. For these reasons, the
developers attempted to revoke Think’s license to use the BOULAN marks in
September 2014. A month later, the developers also sent Think a letter revoking
its license to use the Condominium’s front desk. Nevertheless, Think continued to
use the marks and operate its rental program from the Condominium’s front desk
because it maintained that it had valid contracts with nearly all the non-developer
unit owners in the Condominium.
After Think refused to comply with their demands, the developers filed an
action in the district court for trademark infringement and trespass, among other
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claims, and later filed their first amended complaint in November 2014. At the
same time that they filed their operative complaint, the developers moved for a
temporary restraining order and preliminary injunction against (1) Think’s use of
the BOULAN marks and (2) Think’s alleged continuing trespass on the
Condominium property. 1 The district court held a hearing on the motion for a
preliminary injunction on December 4, 2014. Five days later, the district court
denied the motion on the ground that the developers’ asserted injuries were
“economic in nature” and thus could not constitute irreparable harm because
money damages could adequately compensate for those injuries. This appeal
followed.
II.
“We review the district court’s denial of a preliminary injunction generally
for an abuse of discretion, but we examine the legal conclusions on which the
denial is based de novo.” Bloedorn v. Grube, 631 F.3d 1218, 1229 (11th Cir.
2011). “A district court by definition abuses its discretion when it makes an error
of law.” United States v. Brown, 332 F.3d 1341, 1343 (11th Cir. 2003) (internal
quotation marks omitted). For a district court to grant a preliminary injunction, a
movant must establish four elements: “(1) [the movant] has a substantial
1
The district court granted a temporary restraining order against Think’s use of the
Condominium property on November 24, 2014, but, after a hearing on the order two days later,
set the order aside.
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likelihood of success on the merits; (2) irreparable injury will be suffered unless
the injunction issues; (3) the threatened injury to the movant outweighs whatever
damage the proposed injunction may cause the opposing party; and (4) if issued,
the injunction would not be adverse to the public interest.” Siegel v. LePore, 234
F.3d 1163, 1176 (11th Cir. 2000) (en banc).
III.
We consider first whether the district court abused its discretion in denying a
preliminary injunction against Think’s use of the BOULAN marks on the ground
that the developers failed to show irreparable harm. “Trademark actions are
common venues for the issuance of preliminary injunctions, and this Circuit has
held that a sufficiently strong showing of likelihood of confusion caused by
trademark infringement may by itself constitute a showing of a substantial threat of
irreparable harm.” McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1310 (11th
Cir. 1998) (alterations, citation, and internal quotation marks omitted). This is so
because a remedy at law for consumer confusion or reputational damage is
ordinarily inadequate, given “the potential difficulty of proof of plaintiff’s
damages” and “the impairment of intangible values.” Wynn Oil Co. v. Am. Way
Serv. Corp., 943 F.2d 595, 608 (6th Cir. 1991) (internal quotation marks omitted).
Accordingly, the district court erred in denying the motion for a preliminary
injunction on the ground that “the only injuries asserted” by the developers were
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“economic in nature and, therefore, monetary damages will adequately compensate
[the developers] for their alleged injuries.” See Boulan S. Beach Master Ass’n, Inc.
et al. v. Think Properties, LLC et al., No. 1:14-cv-23864-JEM, ECF No. 55 at 2
(S.D. Fl. Dec. 9, 2014) (the “Order”). The developers alleged in their amended
complaint and argued in support of their motion that Think’s use of the BOULAN
marks causes confusion and damage to their brand. 2 Our precedent recognizes
such confusion as an injury that ordinarily warrants injunctive relief. See
McDonald’s Corp., 147 F.3d at 1310. While a district court always has discretion
to assess the weight of evidence establishing a likelihood of irreparable harm, see
N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1227-28 (11th Cir.
2008) (citing eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)), there is no
indication here that the district court analyzed the potential for confusion or
reputational harm and decided that the evidence thereof was insufficient. Our
conclusion that the district court failed to perform this analysis is based, in large
part, on its failure to discuss any Eleventh Circuit precedent regarding standards
2
Without assessing the merit of the developers’ claims, we note we have previously
observed that “a strong risk of consumer confusion arises when a terminated franchisee
continues to use the former franchisor’s trademarks,” Burger King Corp. v. Mason, 710 F.2d
1480, 1492 (11th Cir. 1983), a situation that finds its analog to some degree in a terminated
agent’s continued use of the principal’s trademarks.
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for establishing irreparable harm in this context. 3 Instead, the district court, citing
to one Sixth Circuit case involving an injunction to force payment of owed
royalties rather than against the use of protected marks, considered only whether
the developers could “demonstrate that the viability of their business would be
seriously threatened” absent an injunction. Order at 2; see Performance Unlimited,
Inc. v. Questar Publishers, Inc., 52 F.3d 1373, 1375, 1382-83 (6th Cir. 1995).
While such a showing may have been sufficient to establish irreparable harm, it is
not a necessary showing under the law of our circuit. Because the district court
made an underlying error of law that distorted its exercise of discretion, see Brown,
332 F.3d at 1343, we vacate the district court’s denial of a preliminary injunction
against Think’s use of the BOULAN marks.
For essentially the same reasons, we also vacate the district court’s denial of
a preliminary injunction against Think’s alleged trespass. As set out in the
developers’ amended complaint, the trespass claims incorporate the allegedly
damaging effects of Think’s actions on the developers’ trademarks and reputation.
The developers’ argument that Think’s continued trespass at the Condominium’s
front desk could confuse guests or otherwise damage the developers’ brand is not
absurd on its face. See generally Atl. Coast Line R.R. Co. v. Feagin, 105 So. 141,
3
Our conclusion is bolstered by the district court’s insinuation at the hearing on the
motion that the developers’ assertion of reputational damage to their high-end brand was
“snooty” and that any such damage was not a cognizable harm. See Doc. 56 at 8-9.
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141 (Fla. 1925) (holding that trespass on property merits an injunction where “the
complainant’s title [is] legally established” and “the trespass [is] of such a nature
as to cause irreparable damage, not susceptible of complete pecuniary
compensation”). Given the district court’s failure to recognize such harms in the
context of trademark infringement, where they are more typical, we are convinced
that the court also failed to do so when considering the trespass claims. Again,
although the district court may exercise its discretion in weighing evidence of
irreparable harm — and it may conclude that any trespass is unlikely to cause
significant consumer confusion or reputational damage — it was error to assume
that these harms were not cognizable. Thus, we vacate the district court’s denial of
an injunction against Think’s alleged trespass.
Because the district court’s denial of a preliminary injunction rested entirely
on an error of law, the district court “failed to support its actions with proper
findings of fact and conclusions of law.” Canal Auth. of State of Fla. v. Callaway,
489 F.2d 567, 576 (5th Cir. 1974). 4 In such circumstances, “the district court is in
a better position to evaluate [the evidence], having heard the evidence and
arguments in the first instance, [and] we think it more appropriate to remand to that
court for reconsideration than attempt it ourselves.” Id.; see also Speer v. Miller,
4
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this
Court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior
to October 1, 1981.
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15 F.3d 1007, 1010-11 (11th Cir. 1994). We express no opinion on the merits of
the developers’ motion.
IV.
The district court’s order denying the developers’ motion for a preliminary
injunction is VACATED, and the case is REMANDED for reconsideration of the
motion in the light of this opinion.
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