Cranbrook Custom Homes, LLC v. Fandakly
2:17-cv-11060
E.D. Mich.Jan 12, 2018Background
- Cranbrook Custom Homes sued homeowners Waeil and Abigail Fandakly and architect Blake Elderkin for copyright infringement, alleging their Rochester Hills house copied Cranbrook’s copyrighted Esperance plans, blueprints, and brochure.
- Cranbrook filed a Notice of Lis Pendens on the property asserting a copyright-based claim that could lead to destruction/impoundment of the house.
- Defendants learned of the lis pendens in August 2017 and moved to cancel it and seek sanctions; they also moved for leave to file a counterclaim for slander of title.
- Cranbrook’s counsel defended the lis pendens as grounded in 17 U.S.C. § 503 and threatened substantial damages; defendants argued lis pendens is improper in copyright cases.
- The Court found precedent and statutory interpretation did not support using § 503 to affect real property, concluded the lis pendens was improper, granted cancellation, awarded sanctions (fees/costs) to defendants, and granted leave to add a slander-of-title counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of lis pendens in copyright case | § 503 remedies (destruction/impoundment) justify lis pendens on the house | § 503 does not authorize relief that affects title/possession of real property; lis pendens therefore improper | Lis pendens canceled; § 503 does not support affecting completed real property |
| Sanctions for filing lis pendens | Counsel acted in good faith and not subject to sanctions | Filing was vexatious/bad-faith litigation tactic given controlling precedent | Court imposed sanctions (fees/costs) on plaintiff and directed submission of billing for recovery |
| Leave to file counterclaim (slander of title) | Premature, untimely, prejudicial to plaintiff | Defendants timely sought leave after discovering lis pendens; claim plausibly alleges falsity, malice, and special damages | Leave to amend granted; slander-of-title counterclaim permitted |
| Futility and prejudice of amendment | Amendment prejudicial and unnecessary | Amendment is timely (discovered later) and not futile; discovery remains open | Amendment allowed; no undue prejudice found |
Key Cases Cited
- Zitz, Inc. v. Pereira, 965 F. Supp. 350 (E.D. Pa. 1997) (§503 remedies for movable infringing copies do not extend to real property)
- Christopher Phelps & Assocs., LLC v. Galloway, 492 F.3d 532 (4th Cir. 2007) (courts should be reluctant to order injunctions affecting completed, inhabited houses based on architectural copyrights)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (court authority to impose sanctions for bad-faith litigation conduct)
- Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509 (6th Cir. 2001) (standards for denying leave to amend: undue delay, bad faith, prejudice, futility)
- Iron Workers Local No. 25 Pension Fund v. Klassic Services, Inc., 913 F. Supp. 541 (E.D. Mich. 1996) (Rule 15(a) promotes amendment to assert overlooked or newly discovered claims)