United States District Court, W.D. Washington, Seattle
ORDER ON MOTION FOR SUMMARY JUDGMENT AND ORDER TO
SHOW CAUSE REGARDING COUNTERCLAIMS
L. ROBART UNITED STATES DISTRICT JUDGE.
the court is Defendant Wow 1 Day Painting, LLC's
(“Wow”) motion for summary judgment. (MSJ (Dkt. #
35).) The court has reviewed the motion, Plaintiff Val
DiNardo's responsive memorandum (Resp. (Dkt. # 38)), all
other submissions filed in support of or in opposition to the
motion, the relevant portions of the record, and the
applicable law. Being fully advised,  the court GRANTS the motion.
The court also ORDERS the parties to show cause why Wow's
counterclaims should not be dismissed without prejudice, as
more fully described below.
to a licensing agreement between Wow and its parent
corporation, Wow 1 Day Painting, Inc. (“Wow
Corporate”), Wow has an exclusive right and license to
market, sublicense, franchise, and distribute certain
federally registered United States trademarks, including the
registered trademarks bearing Registration No. 4, 143, 638
(May 15, 2012), Registration No. 4, 168, 698 (July 3, 2012),
Registration No. 6, 644, 008 (November 25, 2014), and
Registration No. 4, 644, 097 (November 25, 2014). (Alisch
Decl. (Dkt. # 36) ¶ 2, 5, Exs 1, 4.) Wow attests that
it, in turn, sublicensed the federally registered trademarks
to certain franchisees, including Mr. DiNardo. (Id.
Mr. DiNardo executed a franchise agreement on May 21, 2014,
that was effective on May 17, 2014 (“the Franchise
Agreement”). (Graff Decl. (Dkt. # 37) ¶ 3, Ex. 2
(“Franchise Agreement”).) The Franchise Agreement
offers a system of providing interior and exterior painting
services in one day “using confidential methods,
procedures, and business techniques.” (Compl. (Dkt. #
1-1) ¶¶ 6-7.) Under the Franchise Agreement, Wow
granted to DiNardo the right to use the registered United
States trademarks-or “Marks” as defined in
Recital B of the Agreement-“and related logos, designs,
brands, and slogans as may be added or modified from time to
time.” (Franchise Agreement at Recitals A-C, §
Franchise Agreement expressly states that the term
“Mark” is defined in Recital B. (Id.
§ 2.1.) Recital B states:
The distinguishing characteristics of the System currently
include, but are not limited to, the registered U.S.
trademarks shown in Schedule A and related logos, designs,
brands and slogans as may be added or modified from time to
time (collectively the “Marks”) which are
licensed to [Wow] by [Wow Corporate], . . . which [Wow] in
turn licenses to [Mr. DiNardo] under the terms and conditions
set forth herein.
(Id., Recital B.) Schedule A of the Agreement lists
two Marks with registrations pending as of February 24, 2014,
and February 25, 2014, respectively. (Id., Schedule
A.) These two Marks were ultimately registered on November
25, 2014, bearing the Registration Nos. 4, 644, 088 and 4,
644, 097, respectively. (Alisch Decl. ¶ 5, Ex. 4 at
Agreement contains the following integration clause:
Entire Agreement. Unless
acknowledged and agreed in writing by both parties, this
Agreement, all Security Agreements, and all Guarantees set
forth the entire agreement between Franchisor and Franchisee
and contain all of the representations, warranties, terms,
conditions, provisos, covenants, undertakings and conditions
agreed upon by them with reference to the subject matter
hereof. All other representations, warranties, terms,
conditions, provisos, covenants, understandings and
agreements, whether oral or written (including without
limitation any letter of intent between the parties and other
pre-contractual representations), are waived and are
superseded by this Agreement. However, nothing in this
Agreement or related agreements is intended to disclaim any
representation made by Franchisor in the franchise disclosure
document furnished to Franchisee as required prior to
entering into this Agreement.
(Franchise Agreement § 21.8.)
Agreement also contains a choice of law provision:
Governing Law. This Agreement shall
be construed and interpreted according to the laws of the
state of Washington, except that no Washington statute or
regulation shall apply or shall give rise to any right or
claim unless the Territory is in the State of Washington and
such statute or regulation would apply to this Agreement by
its own terms in the absence of any choice of law provision.
The King County Superior Court in Seattle or the U.S.
District Court in Seattle, as appropriate, shall have
exclusive jurisdiction to entertain any proceeding relating
to or arising out of this Agreement, and Franchisee and
Franchisor each consent to the jurisdiction of such Courts in
all matters related to this Agreement; provided that
Franchisor may obtain relief in such other jurisdictions as
may be necessary or desirable to obtain declaratory,
injunctive or other relief to enforce the provisions of this
(Id. § 21.12.)
DiNardo admits that he executed the Agreement. (Id.
¶ 2, Ex. 1 (“DiNardo Dep.”) at 56:7-57:1,
57:11-15; see also Compl. ¶ 14 (“[O]n May
21, 2014, [Mr. DiNardo] entered into a Franchise Agreement
with [Wow] effective May 17, 2014.”).) Mr. DiNardo
testified in his November 9, 2017, deposition that he did not
read the Agreement before signing it. (Id. at
58:5-7.) When asked why he did not read the Agreement, he
stated he “was probably too busy, at the time, to read
it over, ” and he “didn't really want to be
bothered with it at the time.” (Id. at
DiNardo alleges that Wow made certain misrepresentations to
him. (See Compl. ¶ 22.) During the discovery
phase of the litigation, Wow asked Mr. DiNardo to identify
“each and every false statement, omission, or
representation” that underpinned his misrepresentation
claim. (Graff Decl. ¶ 4, Ex. 3 (DiNardo's Responses
to Wow's Interrogatories and Requests for Production) at
2-3 (Answer to Interrogatory No. 3).) In response to
Wow's interrogatory, Mr. DiNardo stated:
DiNardo should expect to make $300, 000 in sales the first
year and $400, 000 in sales the second year. The margins
include 10% for materials, 50% for labor, 11% for the
franchise, with a goal of 30% as net profit. 2% would go to
the National Ad Fund, which was supposed to fund national
advertising. Lee Adler admitted that the money was used for
the back office expense and not for advertising.
[Wow] represented that it was offering a revolutionary system
with trade secrets about how to paint a project in one day
and would provide support services to generate significant
business for DiNardo, to as much as $3 million per year.
[Wow] represented that the new franchise would be
significantly marketed by Wow 1 Day Painting, LLC in the
State of Connecticut, and such marketing efforts would
include use of their call center operations and internet
operations, resulting in new business opportunities based on
its innovative business concept.
[Wow] represented that it would be dramatically expanding its
presence in the Northeastern United of States, to include the
(Id.) Mr. DiNardo did not list any other alleged
misrepresentations. (See id.) During his November 9,
2017, deposition, Mr. DiNardo admitted that Wow made each of
the foregoing alleged misrepresentations after Mr. DiNardo
had entered into the Agreement. (DiNardo Dep. at
response to Wow's motion for summary judgment, Mr.
DiNardo filed an affidavit in which he testifies that he
relied on misrepresentations in the Agreement itself
“when deciding to enter into the . . .
Agreement.” (DiNardo Aff. (Dkt. # 39) ¶ 18.) Mr.
DiNardo also testifies in his affidavit that Wow's
representatives made alleged misrepresentations prior to his
execution of the Agreement and that he relied on those
misrepresentations. (See Id. ¶¶ 11-17.) He
also states that “Wow . . . never discussed with [him]
any Marks beyond those listed in Schedule A [of the
Agreement], ” and “never granted the right to use
any of the registered trademarks claimed held or licensed to
[Wow] . . . at or after the signing of the . . .
Agreement.” (Id. ¶¶ 43-44.)
DiNardo stopped operating his franchise in October or
November 2015. (DiNardo Aff. ¶ 45.) In May 2016, Mr.
DiNardo filed suit against Wow. (See generally
Compl.) Wow removed Mr. DiNardo's suit to federal court
(Not. of Removal (Dkt. # 1)), and the federal district court
in Connecticut subsequently transferred the suit to this
district (see Dkt. # 18).
DiNardo asserts claims against Wow in state court in
Connecticut for (1) intentional misrepresentation
(see Compl. ¶ 22), (2) violation of
Connecticut's Unfair Trade Practices Act
(“UTPA”), Conn. Gen. Stat. §§
42-110b(a) (see Compl. ¶ 20), and (3)
violations of Connecticut's Business Opportunity
Investment Act (“BOIA”), Conn. Gen. Stat.
§§ 36b-60, 36b-74(a) (see Compl. ¶
Wow countersued bringing claims against Mr. DiNardo for
breach of contract and payment of accounts receivable. (Ans.
& Counterclaims (Dkt. # 21) at 5-9.) Wow seeks both
damages and an injunction prohibiting Mr. DiNardo from
further alleged violations of the non-competition provisions
of the Agreement. (See id.)
moves for summary judgment on all of Mr. DiNardo's
claims. (See MSJ; Reply (Dkt. # 41).) The court now
considers Wow's motion.
Standard for Summary Judgment
judgment is appropriate if the evidence shows “that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986); Galen v. Cty. of L.A., 477
F.3d 652, 658 (9th Cir. 2007). A fact is
“material” if it might affect the outcome of the
case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). A factual dispute is “‘genuine'
only if there is sufficient evidence for a reasonable fact
finder to find for the non-moving party.” Far Out
Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001)
(citing Anderson, 477 U.S. at 248-49).
moving party bears the initial burden of showing there is no
genuine dispute of material fact and that it is entitled to
prevail as a matter of law. Celotex, 477 U.S. at
323. If, like Wow, the moving party does not bear the
ultimate burden of persuasion at trial, it can show the
absence of such a dispute in two ways: (1) by producing
evidence negating an essential element of the nonmoving
party's case, or (2) by showing that the nonmoving party
lacks evidence of an essential element of its claim or
defense. See Nissan Fire & Marine Ins. Co. v. Fritz
Cos., 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving
party meets its burden of production, the burden then shifts
to the nonmoving party to identify specific facts from which
a fact finder could reasonably find in the nonmoving
party's favor. Celotex, 477 U.S. at 324;
Anderson, 477 U.S. at 252.
court is “required to view the facts and draw
reasonable inferences in the light most favorable to the
[nonmoving] party.” Scott v. Harris, 550 U.S.
372, 378 (2007). The court may not weigh evidence or make
credibility determinations in analyzing a motion for summary
judgment because those are “jury functions, not those
of a judge.” Anderson, 477 U.S. at 249-50.
Nevertheless, the nonmoving party “must do more than
simply show that there is some metaphysical doubt as to the
material facts . . . . Where the record taken as a whole
could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for trial.”
Scott, 550 U.S. at 380 (internal quotation marks
omitted) (quoting Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586-87 (1986)).