Bad Ass Coffee Company of Hawaii v. Bad Ass Coffee Limited Partnership, et al.

Robert Alan Jones and Bad Ass Coffee Limited Partnership entered into numerous agreements with Appellee Bad Ass Coffee Company of Hawaii, Inc. These agreements governed, inter alia, BACLP's use of the Bad Ass Coffee Company trademark in the states of Hawaii and Nevada. BACH unilaterally terminated several of the agreements thereby affecting BACLP's continued right to use the Trademark. After the federal district court entered a judgment confirming an arbitration award relating to BACH's termination of one agreement, BACH sought and was granted preliminary injunctions enjoining BACLP from using the Trademark in Hawaii and Nevada. BACLP appeals from the judgment confirming the arbitration award(2) and from the two orders granting the preliminary injunctions. The three cases were consolidated in this appeal. Exercising jurisdiction pursuant to 28 U.S.C. §§ 1291 and 1291(a)(1), this court affirms.

FACTUAL BACKGROUND

Jones was formerly employed by Royal Aloha Coffee, Tea & Spice Company, Inc. ("Royal Aloha") d/b/a The Bad Ass Coffee Company. In November 1997, Royal Aloha assigned all of its right, title, and interest in and to the Trademark to BACH.

In February 1997, Jones and RAJ Limited, a Nevada corporation wholly owned by Jones, brought a lawsuit in Nevada state court naming BACH and several other entities and individuals as defendants. The parties resolved the litigation by entering into a series of cross-referenced agreements: (1) a Confidential Settlement Agreement and Mutual Release (the "Settlement Agreement"); (2) an Asset Purchase and Sale Agreement (the "APSA"); (3) a Master Distribution Agreement Hawaii (the "MDAH"); (4) a Master Distribution Agreement Nevada (the "MDAN"); (5) a Territory Development Agreement Hawaii (the "TDAH"); (6) a Territory Development Agreement Nevada (the "TDAN"); and (7) an Installment Promissory Note (the "Promissory Note"). These agreements governed, inter alia, the transfer and sale of certain assets from BACH to BACLP. BACLP is a Nevada limited partnership in which Jones is the principal. BACH and BACLP also entered into a Franchise Agreement dated January 1, 1999 (the "Franchise Agreement"). This agreement governed BACLP's operation of a Bad Ass Coffee Company retail store in Las Vegas, Nevada.

Almost before the ink was dry on the agreements, disputes arose between BACH and BACLP. In early 1999, BACH began sending default notices to BACLP and eventually gave BACLP notice of the immediate termination of the MDAH based on BACLP's failure to submit monthly sales reports and pay royalties. On March 9, 1999, BACH sent BACLP written notice that it was terminating both the MDAN and the TDAN based on BACLP's default under the Promissory Note and the APSA. BACH also filed a lawsuit in federal district court against BACLP and Jones.

An arbitration hearing to determine the propriety of BACH's termination of the MDAH commenced on August 4, 1999. On September 3, 1999, the arbitrator issued a written award in favor of BACH, concluding that BACH was entitled to terminate the MDAH. The arbitrator also awarded BACH administrative fees and expenses in the amount of $5,800. BACLP filed a motion to vacate the arbitration award in Third Judicial District Court, Salt Lake County, Utah. BACH filed a motion to confirm the arbitration award in federal district court and a notice to remove the Utah state action to federal court.

On September 23, 1999, BACH gave BACLP written notice of the termination of the Franchise Agreement. BACH then filed an amended complaint in its federal suit against BACLP and Jones. The amended complaint contained, inter alia, claims against BACLP alleging: (1) trademark infringement; (2) breach of the APSA, the Promissory Note, and the Security Agreement; (3) breach of the MDAH; (4) breach of the TDAH; (5) breach of the MDAN; (6) breach of the TDAH; and (7) breach of the Franchise Agreement. BACH moved to consolidate the federal suit and the application to confirm the arbitration award.

On November 4, 1999, the federal district court denied BACLP's motion to remand the matter to state court, granted BACH's motion to consolidate, and granted BACH's motion to confirm the arbitration award. BACLP's motion to vacate the arbitration award was denied. BACH then filed a Motion for Award of Attorney's Fees in Connection With Confirmation of the Arbitration Award. This motion was granted on April 13, 2000.

On February 24, 2000, the district court granted BACH's motion for a preliminary injunction prohibiting BACLP from (1) using or displaying the Trademark in Hawaii, (2) interfering with BACH's efforts to negotiate with suppliers of its licensed products, and (3) purporting to authorize others to use the Trademark in Hawaii. On October 11, 2000, the district court granted BACH a preliminary injunction enjoining BACLP from using the Trademark in Nevada or purporting to authorize others to use the Trademark in Nevada.

BACLP appeals the judgment confirming the arbitration award and awarding attorney's fees to BACH. BACLP also appeals the grant of the preliminary injunctions relating to the use of the Trademark in both Hawaii and Nevada. The appeals were consolidated and all are properly before this court.

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of the Court's opinion.

We affirm the confirmation of the arbitration award and the grant of attorney's fees to BACH, affirm the grant of the preliminary injunction enjoining BACLP from using the Trademark in Hawaii, and affirm the grant of the preliminary injunction enjoining BACLP from using the Trademark in Nevada.

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Reported by Kent Morlan