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Mai Larsen Designs v. Want2Scrap, LLC

United States District Court, W.D. Texas, San Antonio Division

December 10, 2019

MAI LARSEN DESIGNS, Plaintiff,
v.
WANT2SCRAP, LLC and MICHELLE PARRISH, Defendants. WANT2SCRAP, LLC, Counter-Plaintiffs,
v.
CREATIVE SCRAP DESIGNS, LLC, MAI LARSEN DESIGNS, and MABEL LARSEN, Counter-Defendants.

          ORDER ON MOTION FOR ATTORNEY'S FEES

          ELIZABETH S. ("BETSY'") CHESTNEY UNITED STATES MAGISTRATE JUDGE

         Before the Court in the above-styled and numbered cause of action are Defendants' Motion for Attorney Fees [#107] and Plaintiff's Response to Motion [#108]. The undersigned has authority to enter this Order as all parties have consented to the jurisdiction of a United States Magistrate Judge [#17, #18]. See 28 U.S.C. § 636(c)(1). In reviewing these motions and for the reasons set forth below, the Court will deny Defendants' Motion for Attorney Fees but award Defendants costs.

         I. Background

         This case originated in the Northern District of Indiana, where Defendant Want2Scrap, LLC filed suit seeking a declaration of non-infringement of copyright and asserting claims of breach of contract, copyright infringement, and other torts against Mabel Larsen and the two unincorporated entities through which she conducts business-Mai Larsen Designs and Creative Scrap Designs. The following day, Mai Larsen Designs (hereinafter “Plaintiff”) filed this action against Want2Scrap and its owner Michele Parrish (hereinafter “Defendants”), asserting claims of copyright infringement, fraud, and theft by conversion in this district. (Orig. Compl. [#1].) The Indiana court transferred the Indiana case to this division, where it was assigned the cause No. 5:18-CV-321-OLG. Following the transfer, the Court consolidated the Texas and Indiana cases and designated cause No. 5:17-CV-1084-OLG as the lead case. (Consolidation Order [#14].)

         Plaintiff subsequently filed its First Amended Complaint [#15] in the lead case; the parties consented to the jurisdiction of a United States Magistrate Judge; and the consolidated action was transferred to the undersigned's docket on May 22, 2018 [#19]. Plaintiff filed a Second Amended Complaint on December 12, 2018 [#41], again asserting claims of copyright infringement (Count I), fraud (Count II), fraud in the inducement (Count III), theft by deception and conversion (Count IV), and conspiracy and unfair competition in violation of the Texas Free Enterprise and Antitrust Act of 1983 (Counts V and VI). In Defendants' answer to this amended pleading [#42], they asserted counterclaims against Plaintiff, Mabel Larsen, and Creative Scrap Designs, including counterclaims for declaratory judgment of non-infringement, breach of contract (against Larsen only), copyright infringement, tortious interference with business contract, unfair competition, inducing copyright infringement, and defamation.

         On June 3, 2019 the Court issued an Order on various dispositive motions [#100]. The Court granted in part Defendants' Motion for Judgment on the Pleadings [#58], dismissing Plaintiff's claim of conversion (Count IV) with prejudice as preempted by the Copyright Act. Defendants' Motion for Summary Judgment [#61] was granted in part, and Defendants were awarded summary judgment on Plaintiff's claims for fraud and fraudulent inducement (Count II and III). The Court also granted Defendants' summary judgment on Plaintiff's antitrust claims (Count V and VI) because Plaintiff lacked standing to assert her antitrust claims. Lastly, the Court granted Defendants' Supplemental Motion for Summary Judgment [#96], holding Plaintiff's claim of copyright infringement (Count I) should be dismissed without prejudice for failure to obtain a copyright registration prior to filing suit in accordance with the Supreme Court's recent decision in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 139 S.Ct. 881 (2019).

         The Court held Plaintiff and Counter-Defendants' Motion for Partial Summary Judgment [#62] in abeyance and ordered Defendants to show cause why their counterclaims for a declaratory judgment of non-infringement and claims of copyright infringement, inducing copyright infringement, and breach of contract should not be dismissed without prejudice along with Plaintiff's copyright infringement claim for failure to satisfy the registration requirement in the Copyright Act. In response to the show cause order, Defendants filed their Opposed Motion to Dismiss [#101], requesting that the Court dismiss their claims without prejudice because they “lack the resources to proceed to trial.” On June 20, 2019, the Court granted Defendants' motion to dismiss and ordered Defendants' Counterclaims [#42] be dismissed without prejudice and that Plaintiff's Motion for Partial Summary Judgment [#62] be dismissed as moot [#103]. On the same day, Final Judgment was entered ordering that the parties recover nothing on their claims and counterclaims and that the action be dismissed [#104].

         Defendants Want2Scrap, LLC and Michele Parish have filed a motion pursuant to Rule 54(d) for attorney's fees and costs [#107] as well as a Bill of Costs [#106]. Plaintiff did not file objections to the Bill of Costs, but they did file a response to the motion [#108], and thus Defendants' request for costs and fees is ripe for consideration.

         II. Analysis

         Defendants' Motion for Attorney Fees is denied but they are entitled to their costs. Defendants have not demonstrated they are contractually or statutorily entitled to attorney's fees, but as they prevailed at summary judgment on several claims, they are presumptively entitled to costs.

         A. Attorney's Fees

         Defendants move for their attorney's fees. Under federal law, the general rule is that a prevailing party is entitled to costs-but not attorney's fees. See Fed. R. Civ. P. 54(d)(1). A party moving for attorney's fees must file a motion that specifies “the statute, rule, or other grounds entitling the movant to the award.” Fed.R.Civ.P. 54(d)(2). “State law controls both the award of and the reasonableness of fees awarded where state law supplies the rule of decision.” Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Defendants contend that under Texas law, they are entitled to attorney's fees pursuant to their Copyright License Agreement with Plaintiff and pursuant to Section 15.21(a)(3) of the Texas Free Enterprise and Antitrust Act of 1983 (“Texas Antitrust Act”). The Court disagrees on both counts.

         1. The Copyright License Agreement

         Defendants are not entitled to their fees under the Copyright License Agreement. Under Texas law, a prevailing party on a breach of contract claim can recover damages under Section 38.001(8) of the Texas Civil Practice and Remedies Code but only when it recovers damages. See Intercontinental Group P'ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009). But the Texas Supreme Court has made clear that parties are “free to contract for a fee recovery standard either looser or ...


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