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Wine & Canvas Development, LLC v. Muylle

United States Court of Appeals, Seventh Circuit

August 17, 2017

Wine & Canvas Development, LLC, Anthony Scott, Tamara McCracken, and Donald McCracken, Plaintiffs-Appellants,
v.
Christopher Muylle, Theodore Weisser, YN Canvas LLC d/b/a Art Uncorked, Art Uncorked, LLC, and Weisser Management Group, LLC, Defendants-Appellees.

          Argued November 9, 2016

         Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 11-cv-01598 - Tanya Walton Pratt, Judge.

          Before Bauer and Kanne, Circuit Judges, and Feinerman, District Judge. [*]

          FEINERMAN, DISTRICT JUDGE.

         Wine and Canvas Development, LLC, Anthony Scott, Tamara McCracken, and Donald McCracken sued Christopher Muylle, Theodore Weisser, YN Canvas CA, LLC, Art Uncorked LLC, and Weisser Management Group LLC, bringing federal trademark and state law claims. Muylle brought several counterclaims, including one for abuse of process under Indiana law. Weisser defaulted, and it appears that Weisser and Muylle were the only members of the defendant LLCs, so practically speaking the case ultimately amounted to Plaintiffs against Muylle. Pretrial motions disposed of much of the case, and the jury found for Muylle on Plaintiffs' trademark infringement and false designation of origin claims and on Muylle's abuse of process counterclaim. Plaintiffs appeal, and we affirm.

         I. Background

         Wine & Canvas is a business that specializes in hosting events colloquially known as "painting nights." These are social evenings where patrons, following a teacher's instructions, create a painting while enjoying wine and other adult beverages. Wine & Canvas operated locations in Indianapolis, Bloomington, and Oklahoma City.

         In 2008, Muylle befriended Scott, who was already acquainted with Weisser. They discussed a franchise arrangement under which Muylle and Weisser would move from Indiana to San Francisco to open a Wine & Canvas operation there. Muylle and Weisser signed a license agreement on behalf of their entity, YN Canvas CA, LLC.

         On August 10, 2011, Muylle and Weisser launched their Wine & Canvas location in San Francisco. Tamara McCracken and Scott were present at the launch, and McCracken taught the first class that day. McCracken also worked with Muylle and Weisser to approve paintings they would use at their events. Plaintiffs lent additional support by giving company email addresses to Muylle and Weisser and by advertising the San Francisco operation on the Wine & Canvas website.

         Disagreements soon arose over how the San Francisco operation would be structured and what degree of ownership Plaintiffs would hold. These disagreements continued without resolution. Finally on November 18, 2011, Muylle and Weisser gave notice that they were terminating the license agreement. At that point, they changed the name of the business to "Art Uncorked" and ceased using the Wine & Canvas name or other marks.

         On November 28, 2011, Plaintiffs filed a complaint in Indiana state court alleging trademark infringement under the Lanham Act, 15 U.S.C. § 1051 et seq., and other claims. Defendants timely removed the suit to federal court, and Muylle answered and filed several counterclaims. His initial counterclaims invoked California franchise law, but he later added federal trademark cancellation and Indiana law abuse of process counterclaims.

         From the beginning, the proceedings were slow-moving, principally due to the conduct of Plaintiffs and their attorneys. Plaintiffs failed to serve written discovery responses on their initial due date, March 20, 2013. They then failed to meet the extended deadline of May 1, 2013, leading Muylle to file a motion to compel, which was granted. After Plaintiffs failed to respond by early June, the district court imposed sanctions and ordered them to serve their responses by June 14, 2013, a deadline that later was extended to June 17. Plaintiffs served woefully incomplete responses on June 17 at 11:55 p.m., and "final" responses at 4:10 a.m. the next day. Muylle asserted that the "final" responses were not only late, but also incomplete because they did not itemize Plaintiffs' damages, and he moved for further sanctions. Citing the responses' tardiness and also their incompleteness, the magistrate judge recommended sanctions in the amount of $2, 156, the costs to Muylle of filing the sanctions motion, and the district court adopted the recommendation. By the end of the case, Plaintiffs had been sanctioned three times. Summarizing their conduct, the district court observed that they had "flooded the Court with filings ... and ... filed numerous claims that the court has found to be without merit." 2014 WL 4053928, at *15 (S.D. Ind. Aug. 15, 2014).

         Meanwhile, the district court dismissed the California franchise law counterclaims, and both sides then moved for summary judgment. The court granted Plaintiffs summary judgment on Muylle's trademark cancellation counterclaim, but his abuse of process counterclaim survived. The court granted summary judgment to Muylle on most of Plaintiffs' claims, including trademark dilution, sale of counterfeit items, unfair competition, bad faith, tortious conduct, abuse of process, breach of contract, fraud, and a claim for compensation under the Indiana Crime Victims Act. The court also granted partial summary judgment to Muylle on Plaintiffs' trademark infringement claim, finding that for any use through November 18, 2011, Plaintiffs had impliedly consented to Muylle's using the marks.

         Only three claims proceeded to trial: Plaintiffs' claims of trademark infringement and false designation of origin (for any use of the marks after November 18, 2011), and Muylle's abuse of process counterclaim. The jury returned a verdict for Muylle on all counts, rejecting Plaintiffs' claims and awarding Muylle $ 270, 000 on his counterclaim. After Plaintiffs filed their ...


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