Southern Audio Services, Inc. v. Carbon Audio, LLC

141 F. Supp. 3d 653, 2015 U.S. Dist. LEXIS 146548, 2015 WL 6551820
CourtDistrict Court, M.D. Louisiana
DecidedOctober 29, 2015
DocketCIVIL ACTION NO.: 15-00050-BAJ-SCR
StatusPublished
Cited by1 cases

This text of 141 F. Supp. 3d 653 (Southern Audio Services, Inc. v. Carbon Audio, LLC) is published on Counsel Stack Legal Research, covering District Court, M.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Audio Services, Inc. v. Carbon Audio, LLC, 141 F. Supp. 3d 653, 2015 U.S. Dist. LEXIS 146548, 2015 WL 6551820 (M.D. La. 2015).

Opinion

RULING AND ORDER

BRIAN A. JACKSON, CHIEF JUDGE,

UNITED STATES DISTRICT COURT, MIDDLE DISTRICT OF LOUISIANA

Before the Court is Defendants Head-box, LLC’s and Licon Ventures, Inc.’s Motion to Dismiss Plaintiffs Second Amended Complaint (Doc. 34), seeking an order dismissing Plaintiff’s Second [655]*655Amended Complaint with prejudice pursuant to Federal Rule of Ciyil Procedure (“Rule”) 12(b)(2) and 12(b)(6). Plaintiff filed an Opposition to Defendants’ Motion. (Doc. 35). Defendants were then granted leave to file a Reply. (Doc. 38). Plaintiff has been denied leave to file a surreply. (Doc. 40). Oral argument is not necessary. The Court has jurisdiction pursuant to 28 U.S.C. § 1332.

I. BACKGROUND

A. Plaintiffs initial Complaint

On January 1,-2015, Plaintiff Southern Audio Services, Inc. (“Plaintiff’) filed a Complaint for Breach of Contract against Defendant Carbon Audio, LLC (“Carbon”). (Doc. 1). Plaintiffs claim for breach of contract arises from a licensing agreement (“the Agreement”) it entered into with Carbon on August 17, 2012. (Doc. 1-3 at pp. 1 — 7). Under the terms of the Agreement, Plaintiff, owner of the “BAZOOKA” trademark for high-end audio equipment, permitted Carbon to register the “ZOO-KA” trademark in connection with speakers it produced for computers and other small portable electronic devices. (Id. at pp. 1 — 2). Pursuant to the Agreement, Plaintiff asserted that Carbon was obligated to, inter alia, pay it royalties from the sale of ZOOKA products and not to “offer for sale or sell” any products without the ZOOKA trademark until certain royalty payments were made. (Doc. 1 at ¶¶ 19— 25).

Plaintiff claimed in its Complaint that Carbon breached the Agreement in three ways: 1) by failing to make certain royalty payments; 2) by selling a new product— the “Pocket Speaker” — without the ZOO-KA trademark before it made certain royalty payments; and 3) by licensing-its intellectual property rights in the Pocket Speaker and other products to a third party in exchange for royalties before it made certain royalty payments. (Id. at ¶¶ 32 — 36). Plaintiff requested a monetary award of at least $450,000 to compensate it for unpaid royalties or to satisfy a minimum royalty payment it asserts was contemplated under the Agreement. (Id. at p. 6).

In addition to monetary damages — and central to the ultimate inclusion of Headbox, LLC (“Headbox”) and Lieon Ventures, Inc. (“Lieon”) (collectively, “Defendants”) in this lawsuit — Plaintiff also requested an injunction preventing Carbon from selling the Pocket Speaker to third parties or licensing its intellectual property rights in the Pocket Speaker to third parties. (Id.). Carbon did not respond to Plaintiffs lawsuit. Plaintiff then filed a Motion for Default Judgment, which included a proposed judgment that provided in pertinent part:

Carbon Audio is enjoined from selling, or licensing any other party to sell, the Pocket Speaker product, or any other product covered by [the Agreement], until Carbon Audio ... has satisfied all the monetary payment requirements of this Judgment. This injunction expressly covers any sales made under license, permission, or other authority granted by Carbon Audio, or in the name of Carbon Audio, to any third party selling the Pocket Speaker of an equivalent product. This injunction covers products currently sold by Monster, Inc. or by Headbox, Inc., to the extent such products are sold under license or other grant of rights from Carbon Audio or in the name of Carbon Audio.

(Doc. 11-7 at pp. 8 — 9).

Prior to a ruling on' the Motion for Default Judgment against- Carbon, Defendants filed a Motion to Intervene for the limited purpose of challenging the injunction. (Doc. 12). In the Motion to Intervene, Headbox- asserted that it entered into a [656]*656license agreement with Carbon in September 2013, which granted Headbox an exclusive, royalty-bearing license in the Pocket Speaker intellectual property. (Id. at p. 6). Licon asserted that it is Carbon’s senior secured lender and that it foreclosed on all of Carbon’s assets in April, 2014, (Id. at p. 7). Defendants asserted that Plaintiffs proposed injunction would impair their lawful interests. (Id. at p. 2).

Plaintiff did not oppose the Motion to Intervene, (Doc. 16), and the Motion was subsequently granted by the Magistrate Judge for the limited purpose of allowing Defendants the opportunity to file an opposition to Plaintiffs Motion for Default Judgment, (Doc, 17). After Defendants filed their limited opposition, (Doc. 18),’ Plaintiff filed a Second Amended Complaint naming them both as defendants in the underlying lawsuit, (Doc. 22). In its Second Amended Complaint, Plaintiff added a breach of contract claim against Li-con, (Id. at ¶¶ 123 — 131), a business enterprise or joint venture liability claim against Headbox,- (Id. at ¶¶ 132 — 137), and a revo-catory action -claim against Licon, (Id. at ¶¶ 138 — 146).

B. Plaintiffs Second Amended Complaint

Relative to these new claims, Plaintiff now asserts that. sometime in April, 2013, Licon purchased an existing loan that was made to Carbon. (Id. at, ¶¶ 94 — 96). In conjunction with this purchase, Plaintiff claims that Licon took security interests in Carbon’s intellectual property, some of which were not perfected. (Id. at ¶¶’ 96, 114,117). On April 1, 2014, Plaintiff asserts that Licon obtained á transfer from Carbon of certain intellectual property. (Id. at ¶ 97). Plaintiff further claims that Licon accepted a transfer of all rights in the ZOOKA trademark on November 7, 2014. (Id. at ¶ 103). Plaintiff asserts that Carbon “made transfers of money or other property of value to [Licon] that either left [Carbon] insolvent or worsened [Carbon’s] existing insolvency.” (Id. at 11110).

In the midst of these transactions, Plaintiff asserts that on September 17, 2013, Carbon and Headbox “entered into an agreement that effectively transferred all of [Carbon’s] active business operations to Headbox.” (Id. at ¶ 71).' Following this agreement, Plaintiff asserts that Headbox and Carbon “essentially became a single business enterprise or a, joint venture for the purpose of developing and selling all active products that [Carbon] had previously developed.” (Id. at ¶ 81). Plaintiff further asserts that Licon was a named third-party beneficiary of the agreement between Headbox and Carbon, and that Licon received at least a portion of the $260,000 Headbox paid to Carbon under the September 17, 2013 agreement. (Id. at ¶¶ 90, 92).

II. STANDARD OF REVIEW

When a nonresident defendant moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure (“Rule”) 12(b)(2), the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.l985j. In deciding a motion to dismiss for lack of personal jurisdiction, courts within the.

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141 F. Supp. 3d 653, 2015 U.S. Dist. LEXIS 146548, 2015 WL 6551820, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-audio-services-inc-v-carbon-audio-llc-lamd-2015.