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Colony Insurance Co. v. Frison Flea Market Inc.

United States District Court, E.D. Missouri, Eastern Division

September 18, 2014

COLONY INSURANCE COMPANY, Plaintiff,
v.
FRISON FLEA MARKET INC., et al., Defendants.

MEMORANDUM AND ORDER

JEAN C. HAMILTON, District Judge.

This matter is before the Court on Plaintiff Colony Insurance Company's ("Colony") Motion for Summary Judgment ("Motion"), (ECF No. 25); Motion for Default Judgment against Defendants Jack Frison ("Frison") and Frison Flea Market ("Flea Market"), id.; and Request for Judicial Notice in Support of its Motion for Summary Judgment. (ECF No. 26). The motions are ready for disposition.

REQUEST FOR JUDICIAL NOTICE

The Court first addresses the Request for Judicial Notice because several of the materials listed in the Request are pertinent to the disposition of the Motion for Summary Judgment. Colony requests the Court to take judicial notice of the following materials, copies of all of which were filed as attachments to its Motion for Summary Judgment: (1) Defendant Coach's complaint in the Underlying Action;[1] (2) Coach's statement of uncontroverted material facts related to its summary judgment motion the Underlying Action; (3) the memorandum order granting Coach summary judgment in the Underlying Action; (4) Coach's motion for summary judgment and memorandum in support from the Underlying Action; (5) a criminal indictment against Defendant Jack Frison; and (6) an order from the court in the Underlying Action making clear that the damages issue had not been settled in Coach's motion for summary judgment. (ECF No. 26).

Under Fed. R. Ev. 201, a court may take judicial notice of an adjudicative fact as long as such a fact "is not subject to reasonable dispute...." Fed. R. Ev. 201(b). A court is obligated to "take judicial notice if a party requests it and the court is supplied with the necessary information." Fed. R. Ev. 201(c)(2). Judicial notice may be taken at any stage of litigation. Fed. R. Ev. 201(d). Here, the facts are not subject to reasonable dispute, nor does either Defendant contest Colony's Request. Because Colony has provided the necessary information, the Court takes judicial notice of the materials supplied.

BACKGROUND

Colony initiated this action on October 31, 2013 against Defendants Coach, Frison, and the Flea Market. (Complaint, ECF No. 1). Prior to Colony's filing of the Complaint, Frison and the Flea Market were found in an Underlying Action to be liable to Coach for trademark and copyright infringement. (Colony's Statement of Uncontroverted Facts, ("Colony SUF"), ECF No. 28, ¶¶ 24, 25). Colony, the insurer of the Flea Market, now seeks a declaration that it does not owe a duty to indemnify the Flea Market for the liability to Coach that has arisen out of Flea Market's actions.

In its complaint in the Underlying Action, Coach alleged that "Defendants [including Frison and the Flea Market] have been engaging in... illegal counterfeiting and infringing activities knowingly and intentionally, with reckless disregard or willful blindness to Coach's rights, or with bad faith, for the purpose of trading on the goodwill and reputation of the Coach marks and Coach products.'" (Colony SUF ¶ 2 (quoting Coach Underlying Complaint ¶ 30)). The Complaint contained several counts, among which were claims of trademark infringement, trademark counterfeiting, and copyright infringement. Id. ¶ 3. Colony, under a reservation of rights, defended Frison and the Flea Market in the Underlying Action, the liability portion of which has been determined by summary judgment in favor of Coach. Id. ¶¶ 4, 23.

Colony sets out in its Statement of Facts filed in support of this Motion several of the facts that Coach sought to establish on summary judgment in the Underlying Action. The Flea Market was a place where "counterfeit goods were sold every day by many vendors and were displayed in plain view." (Colony SUF ¶ 14 (citing Coach Underlying Statement of Facts, ECF No. 28-3, ¶ 22). "Frison had complete control over the Flea Market and provided the venue for the illegal conduct." Id. ¶ 12. In addition to making determinations about "who was allowed to sell goods and reserv[ing] the right to refuse rental of space[, ]" id. ¶ 9, Frison and his employees patrolled the Flea Market daily. Id. ¶ 19. At no point during these patrols, however, did Frison or an employee tell "any vendor not to sell counterfeit goods, even after viewing the counterfeit goods out on display for sale." Id. The sale of counterfeit goods continued at the Flea Market after Coach sent a letter to Frison and the Flea Market "advising them of the counterfeit activities." Id. ¶ 16. And the sales did not stop even after Coach filed the Underlying Action. Id. ¶ 19.

Based on Coach's statement of facts, the court in the underlying action made the following findings:

Coach has presented undisputed evidence from its investigators which establishes that counterfeit Coach merchandise was being sold openly at the Frison Flea Market by venders [ sic ], including Samb, in the second half of 2010 and in the Spring of 2011. The undisputed evidence also shows that after this lawsuit was brought, on one occasion only, Frison told the vendors to remove the Coach merchandise. However, sales of the counterfeit Coach merchandise continued and were had for the asking, the difference is that by July 2011, the items were no longer openly displayed.
...
Frison asserts that Couch [ sic ] is not entitled to summary judgment against him and the Flea Market because he did not facilitate the sale of counterfeit Coach goods by his vendors. The undisputed evidence is that Frison controlled the operations of the Flea Market and had the power to evict vendors who sold counterfeit goods at the market. The sale of counterfeit Coach goods was open and notorious. Despite being informed by Coach of this illegal activity in June 2010, the illegal sale of counterfeit Coach merchandise continued openly, then slightly less openly, at the Flea Market. Frison took no action to stop the sale of counterfeit Coach products until after this lawsuit was filed. After that date, instead of evicting vendors caught selling counterfeit Coach ...

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