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Seattle Pacific Industries, Inc. v. S3 Holding LLC

United States District Court, W.D. Washington, Seattle

July 8, 2019

SEATTLE PACIFIC INDUSTRIES, INC., Plaintiff,
v.
S3 HOLDINGS LLC, et al., Defendants.

          ORDER REGARDING MOTION FOR ATTORNEY'S FEES AND COSTS

          Robert S. Lasnik United States District Judge

         This matter comes before the Court on plaintiffs “Motion for Attorneys' Fees and Costs.” Dkt. #50. In the Order Regarding Cross-Motions for Summary Judgment (“Summary Judgment Order”), this Court held that plaintiff Seattle Pacific Industries (“SPI”), as the prevailing party, was entitled to an award of reasonable attorney's fees and costs. Dkt. #49, at 7. Plaintiff filed its motion along with a declaration of Marc Levy in support of its petition for $122, 489.00 in attorney's fees and $5, 939.59 in costs. Having reviewed the party's memoranda and the declaration of Marc Levy, the Court finds that plaintiffs motion is GRANTED in part and DENIED in part.

         BACKGROUND

         SPI is the owner of the UNIONBAY and UB trademarks for apparel and footwear which it licensed to defendant S3 Holdings LLC (“S3”) in 2014 in connection with the manufacture and sale of footwear pursuant to a Trademark License Agreement. SPI filed this lawsuit to recover two required quarterly guaranteed minimum royalty payments and two quarterly advertising payments due under the contract and damages arising from post-termination sales of trademarked goods in violation of the Lanham Act.

         In May 2017, SPI provided written notice of default to S3 and, 10 days later, the License Agreement terminated. Upon termination of the License Agreement, the unpaid royalty balance for 2017 of $160, 000 was accelerated and became due. S3 continued to sell UNIONBAY products after receiving notice of termination.

         S3 failed to satisfy the conditions of paragraph 11(d) of the License Agreement that would have entitled it to a 180 day period during which it could continue to sell accumulated inventory. Thus, its sales of trademarked products after May 26, 2017, were not authorized by the contract and violated SPI's rights under the Lanham Act.

         On summary judgment, the Court awarded plaintiff $160, 000 in damages plus pre-judgment interest at the rate of 12% per annum on its breach of contract claim and an additional $31, 136 in actual damages on its trademark infringement claim. The Court found S3 and Olivia Miller jointly and severally liable for all amounts awarded on the breach of contract claim. The Court found that SPI was not entitled to $15, 012 in royalties based on the inventory S3 held at the end of 2018.

         DISCUSSION

         Washington law generally provides for an award of attorney's fees when authorized by contract, a statute, or a recognized ground of equity. Labriola v. Pollard Grp., Inc., 152 Wn.2d 828, 839 (2004). Whether a specific statute, contractual provision, or recognized ground in equity authorizes an award of fees is a question of law. Tradewell Grp., Inc. v. Mavis, 71 Wn.App. 120, 126 (1993).

         A. The Terms of the License Agreement Fee Provision Determine Its Scope.

         The attorney's fee provision in the License Agreement is bilateral by its plain terms and does not fall under RCW 4.84.330. Therefore, “it is the terms of the contract to which the trial court should look to determine if such an award is warranted.” Kaintz v. PLG, Inc., 147 Wn.App. 782, 790 (2008). As long as plaintiffs request for fees falls within the contractual provision, “mistaken additional reliance on RCW 4.84.330 . . . is no reason to deny its otherwise sufficient fee request.” Exelsior Mortg. Equity Fund II, LLC v. Schroeder, 171 Wn.App. 333, 346 (2012). The relevant provision of the License Agreement states

Should either party be required to bring legal action (including arbitration) to enforce its rights under this Agreement, the prevailing party in such an action shall be entitled to recover from the losing party reasonable attorneys' fees and costs in addition to any other relief to which he is entitled.

         “Standard Terms and Conditions” Section 17(q) (Dkt. #26-2, at 22).

         B. The License Agreement Limits the Fee Award to the ...


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