600 F. App'x 502
9th Cir.2015Background
- Wrights appeal district court judgment in favor of Century 21 Real Estate LLC; jurisdiction under 28 U.S.C. § 1291, Court affirms.
- New Jersey choice-of-law provisions in the franchise agreements are enforced; Century 21 is NJ-based with substantial relation to the transaction.
- California policy is not given controlling effect; California good cause provision is incorporated, and Medimatch cited for comparison.
- Summary judgment granted on breach-of-contract claims; elements require a contract, breach, damages, and performance by Century 21.
- Wrights’ companies allegedly breached by unpaid fees, note principal, and abandonment of the Folsom office; Century 21 alleged other non-breaching actions.
- Multiple issues addressed: action in misappropriation of marks, confidential information, enforcement discretion on marks, and other contract-related matters including tools, systems, and advertising.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the NJ choice-of-law provision | Wrights argue California law should apply. | Century 21 relies on enforceability of NJ choice-of-law. | NJ law applied; choice-of-law provision enforceable. |
| Breach of contract—existence and material breaches | Breach by Century 21 on multiple counts. | Century 21 performed under contract and disputes lack material breach. | Summary judgment for Century 21 on breach-related claims. |
| Guaranty liability | Wrights seeking limitation or avoiding guaranty. | Guaranties bind Wrights to their companies’ obligations. | Wrights liable personally as guarantors. |
| Unfair competition and related claims | California unfair competition claim; misuses of marks. | New Jersey law applies; CA claims would fail under NJ choice-of-law. | NJ law applies; CA claim dismissed; even if viable, claims fail on merits. |
| Liquidated damages clause enforceability | Damages should reflect actual loss; clause contested. | Clause reasonable and presumptively enforceable under NJ law. | Liquidated damages upheld; reasonable forecast of harm. |
Key Cases Cited
- ABF Capital Corp. v. Osley, 414 F.3d 1061 (9th Cir. 2005) (choice-of-law and related enforceability considerations)
- Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148 (Cal. 1992) (fundamental policy and enforcement of choice-of-law provisions)
- Medimatch, Inc. v. Lucent Tech. Inc., 120 F. Supp. 2d 842 (N.D. Cal. 2000) (comparison of protections under differing laws)
- Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007) (elements of New Jersey breach of contract claim)
- Gennari v. Weichert Co. Realtors, 691 A.2d 350 (N.J. 1997) (New Jersey fraud standard and reliance requirements)
- Printing Mart-Morristown v. Sharp Elecs. Corp., 563 A.2d 31 (N.J. 1989) (malice standard in tortious interference)
- Lamorte Burns & Co., Inc. v. Walters, 770 A.2d 1158 (N.J. 2001) (intent and motive considerations in contract termination)
- Wasserman’s Inc v. Township of Middletown, 645 A.2d 100 (N.J. 1994) (reasonableness of liquidated damages under NJ law)
- Century 21 Real Estate Corp v. Sandlin, 846 F.2d 1175 (9th Cir. 1988) (likelihood of confusion factors in trademark disputes)
- AMF Inc. v. Sleekcraft Boats, 599 F.2d 343 (9th Cir. 1979) (eight-factor test for likelihood of confusion)
- Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003) (update of Sleekcraft framework)