Opinion

Smoot Construction of Washington, D.C. v. The Smoot Corporation

Court: District Court, S.D. Ohio
Filed: Jul 11, 2022
Cited by: 0 cases
Authority: More cited than 28.3%

“The law presumes that when a business is conveyed, its trade name and good will are also conveyed.”

How later courts described this case

“The law presumes that when a business is conveyed, its trade name and good will are also conveyed.”
explaining that the TRO and preliminary injunction standards are “logically the same”
“Unless there is evidence to the contrary, a trade name will be presumed to have passed, even in the absence of formal assignment, to one to whom the business has been transferred.”

Written by the judges who cited it.

The opinion

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Smoot Construction of

Washington, D.C..,

Case No. 2:22-cv-1707

Plaintiff,

Judge Michael H. Watson

Vv.

Magistrate Judge Vascura

The Smoot Corporation, ef al.,

Defendants.

OPINION AND ORDER

Smoot Construction of Washington, D.C. (“Plaintiff”) filed its Complaint in

March. ECF No. 1. Over a month later, The Smoot Corporation and Smoot

Construction Company of Ohio filed an Answer, Counterclaim, and a motion for a

temporary restraining order (“TRO”) and preliminary injunction. ECF Nos. 10, 12.

The Court held an informal preliminary conference and ordered the parties to

fully brief the motion. For the following reasons, the motion for a TRO is

DENIED.

I. BACKGROUND

Defendant’ alleges the following in its Verified Counterclaim:

1 The Smoot Corporation and the Smoot Construction Company of Ohio are both

named defendants in this case. However, for simplicity’s sake, the Court refers to The

Smoot Corporation as “Defendant.” The Smoot Construction Company of Ohio is a

wholly owned subsidiary of Defendant “and has a permissive license on the Smoot

trade name and the Registered Marks referenced herein.” Mot. 1n.1, ECF No. 12. The

Smoot Construction Company of Ohio joins in the motion for a TRO only “to the extent

that [it] is independently harmed by the uses and unfair practices described herein.” /d.

This case arises from a dispute between members of the Smoot family.

Because the family members are so intertwined with the issues, the following

lineage is important:

Sherman

| Smoot

Lewis R. | Nina Smoot

Smoot, Sr. Cain

| Lewis R. Mark

Smoot, Jr. 'Sherman Cain

Countercl. J] 7-9, ECF No. 10;2 Cain Decl. 75, ECF No. 16-2.

Sherman Smoot founded The Smoot Corporation (“Defendant”) in 1946.

Countercl. Jf 4, 6 ECF No. 10. Lewis R. Smoot, Sr. (“Lewis Sr.”) is Defendant's

past President and current Chairman. /d. {| 7, 89. Lewis R. Smoot, Jr. (“Lewis

Jr.”) is Defendant’s current President and CEO. /d. 8. Mark Sherman Cain

(“Cain”) is the current President and CEO of Plaintiff. /d. { 9.

Before the instant suit arose, Cain served as Defendant’s President from

2010-2020. /d. § 15. A breakdown occurred between the Smoot family

2 Defendant's statement of facts regularly cites to the Verified Counterclaim. See Mot.

4—11, ECF No. 12. However, the citations themselves are incorrect. Defendant should

check any future filings for accuracy; the Court will strike future filings with similar errors.

Case No. 2:22-cv-1707 Page 2 of 13

members, at which point Cain became Co-President alongside his cousin, Lewis

Jr. fd. Jf] 16, 101. Upon the creation of the Co-Presidency for the cousins, the

relationship between Cain and Defendant further deteriorated. /d. {f] 99-100,

102. Cain was then removed from the Co-Presidency, and Lewis Jr. became

Defendant’s Chairman of the Board, CEO, and President. /d. 103. Three days

after Lewis Jr.’s promotion, Cain was fired. /d. 106. But Cain’s firing did not

leave him without work, because Cain is Plaintiff's majority owner.

By way of background, Defendant originally ran D.C. operations from

1964-1984, until Plaintiff was founded as a wholly owned subsidiary of

Defendant in 1984. /d. J] 35-37. Plaintiff remained a wholly owned subsidiary

of Defendant until 2005, when Cain became the majority owner. /d. {] 41-45.

Even after the ownership change, Cain regularly reported to Defendant’s Board

of Directors about Plaintiffs operations, and the companies “shared common

bonding, insurance, and other programs which allowed Plaintiff to enjoy a lower

overhead cost and have access to largejr] projects than it otherwise would have.”

Id. Jf 54, 57. According to Defendant, the parties also had various (apparently

oral) “understandings’—“it was understood that Plaintiff would continue to

operate for the collective benefit of [Defendant]” and “that Plaintiff would never be

operated in a manner to compete with [Defendant].” /d. ff] 59-60. Plaintiff and

Defendant also, apparently, had an understanding regarding Plaintiff's use of

Defendant's “protected trade name and Registered Marks”: “the scope of the

Case No. 2:22-cv-1707 Page 3 of 13

permissible use was . . . only extended to non-competitive use while the

companies shared common interests.” /d. J] 67-81.

In addition to the alleged oral understandings, the parties executed a

written agreement regarding Administrative Services (the “ASA”) that Defendant

would provide Plaintiff. /d. { 83. But, according to Defendant, that agreement

“does not reflect all of the interrelated operations between Plaintiff and

[Defendant].” /d. J 84.

Defendant makes numerous further allegations about Plaintiff—or, more

specifically, about Cain. However, as many of those allegations are unrelated to

the legal arguments that Defendant makes, the Court will not repeat them here.

ll. © STANDARD OF REVIEW

The United States Court of Appeals for the Sixth Circuit has recognized

that the purpose of a TRO “is to preserve the status quo so that a reasoned

resolution of a dispute may be had.” Procter & Gamble Co. v. Bankers Tr. Co.,

78 F.3d 219, 226 (6th Cir. 1996). When considering whether to issue a TRO, a

Court considers four factors:

(1) whether the movant has a strong likelihood of success on the

merits, (2) whether the movant would suffer irreparable injury absent

a stay, (3) whether granting the stay would cause substantial harm to

others, and (4) whether the public interest would be served by

granting the stay.

Ohio Democratic Party v. Donald J. Trump for President, Inc., No. 16-4268, 2016

WL 6608962, at *1 (6th Cir. Nov. 6, 2016) (internal citations omitted). “These

factors are not prerequisites that must be met, but are interrelated considerations

Case No. 2:22-cv-1707 Page 4 of 13

that must be balanced together.” Stein v. Thomas, 672 F. App’x 565, 569 (6th

Cir. 2016) (quoting Mich. Coal. of Radioactive Material Users, Inc. v. Griepentrog,

945 F.2d 150, 153 (6th Cir. 1991)). “[P]reliminary injunctions are extraordinary

and drastic remed[ies] . . . never awarded as of right.” Platt v. Bd. of Comm'rs on

Grievances and Discipline of Ohio Supreme Court, 769 F.3d 447, 453 (6th Cir.

2014) (internal quotation marks and citation omitted); see also ABX Air, Inc. v.

Int'l Bhd. of Teamsters, Airline Div., 219 F. Supp. 3d 665, 669—70 (S.D. Ohio

2016) (explaining that the TRO and preliminary injunction standards are “logically

the same”).

When a party seeks a TRO that does not simply preserve the status quo,

but rather is “tantamount to a mandatory injunction,” there is a “higher—yet

undefined—burden” on the party seeking the TRO. Shelby Cnty. Advocs. for

Valid Elections v. Hargett, 348 F. Supp. 3d 764, 768-69 (W.D. Tenn. 2018)

(citing Hill v. Snyder, No. 16-2003, 2016 WL 4046827, at *2 (6th Cir. July 20,

2016); Ne. Ohio Coalition for Homeless & Serv. Emps. Int'l Union, Local 1199 v.

Blackwell, 467 F.3d 999, 1006 (6th Cir. 2006)).

lll. ANALYSIS

Defendant alleges that Plaintiff is violating the Lanham Act.? See generally

Mot., ECF No. 12. As a result of that violation, Defendant seeks a preliminary

injunction and TRO that requires Plaintiff to:

3 In its Reply, Defendant alleges, in the alternative to the Lanham Act claim, that Plaintiff

is in breach of the ASA. Reply 3, ECF No. 18. It also mentions for the first time in its

Case No. 2:22-cv-1707 Page 5 of 13

1. Cease using the “Smoot” name in connection with any business,

marketing, construction, building, or general contracting purposes.

2. Cease using the domain name smootcons[t]ructiondc.com and

remove all current content displayed on that website from public

access.

3. Return control of the domain name smootcons{[t]ructiondc.com to

The Smoot Corporation.

4. Cease using [Defendant]’s Registered Marks, trade name, or trade

dress in any fashion. (See Verified Complaint Ex. C; E).

5. Cease the circulation of photos, video and media containing any

depiction of or reference to: [Defendant], its founders, employees,

former employees, corporate history, and projects completed by

[Defendant].

6. Cease using [Defendant]'s proprietary bidding software.

7. Cease making false claims and misleading statements about

Plaintiffs own corporate history and make-up, experience in the

construction trades and related industries, and geographical regions

in which it operates.

Mot. 1-2, ECF No. 12.

To establish a likelihood of success on the merits for their claim, Defendant

must “show more than a mere possibility of success.” Six Clinics Holding Corp.

v. Cafcomp Sys., Inc., 119 F.3d 393, 402 (6th Cir.1997) (internal citations

omitted). Defendant asserts that it has a likelihood of success on the merits as to

its Lanham Act claim and as to several of its requested forms of relief. Mot., ECF

No. 12. As an initial matter, Defendant did not clearly link each type of relief

Reply a deceptive trade practices claim. /d. A party normally waives an argument by

bringing it for the first time in a reply brief. Cole v. JP Morgan Chase Bank, N.A., No.

2:15-CV-2634, 2018 WL 7107927, at *13 (S.D. Ohio Jan. 8, 2018). And even if the

Court wanted to consider these arguments, Defendant has failed to brief them, even in

the Reply.

Case No. 2:22-cv-1707 Page 6 of 13

requested to a specific claim. In any event, it seems that most of the relief

sought relates to alleged trademark infringement. Accordingly, the Court will first

examine Defendant's likelihood of success on its Lanham Act Claim and will then

briefly discuss the appropriateness of the other remedies sought.

A. Lanham Act

The Lanham Act provides that:

(1) Any person who shall, without the consent of the registrant--

(a) use in commerce any reproduction, counterfeit, copy, or

colorable imitation of a registered mark in connection with the

sale, offering for sale, distribution, or advertising of any goods

or services on or in connection with which such use is likely to

cause confusion, or to cause mistake, or to deceive; or

(b) reproduce, counterfeit, copy, or colorably imitate a

registered mark and apply such reproduction, counterfeit, copy,

or colorable imitation to labels, signs, prints, packages,

wrappers, receptacles or advertisements intended to be used

in commerce upon or in connection with the sale, offering for

sale, distribution, or advertising of goods or services on or in

connection with which such use is likely to cause confusion, or

to cause mistake, or to deceive,

shall be liable in a civil action by the registrant for the remedies

hereinafter provided.

15 U.S.C.A. § 1114.4 In accordance with this provision, to prevail on a claim, the

moving party “must prove that: (1) the [movant] owns the registered trademark;

(2) the [infringer] used the mark in commerce without the [movant’s] consent; and

4 Defendant also has a claim under Ohio law, but neither party addresses the same.

Nonetheless, “trademark claims under Ohio law follow the same analysis’ that courts

employ when considering analogous federal claims.” Allard Enterprises, Inc. v.

Advanced Programming Res., Inc., 146 F.3d 350, 354-55 (6th Cir. 1998) (citing Rock &

Roll Hall of Fame & Museum, Inc. v. Gentile Prods., 134 F.3d 749, 754 (6th Cir.1998)).

Case No. 2:22-cv-1707 Page 7 of 13

(3) the use was likely to cause confusion.” Nagler v. Garcia, 370 F. App’x 678,

680 (6th Cir. 2010) (citing Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th

Cir. 2009)).

Defendant cannot show that it has a likelihood of success on the merits

because it is not clear who owns the “Smoot” mark. Defendant registered the

character mark “Smoot” for “commercial building general contractor; commercial

building construction.” Countercl. Ex. C., ECF No. 10-3.° Federal registration

serves as “prima facie evidence of the validity of the registered mark and of the

registration of the mark, of the owner’s ownership of the mark, and of the owner's

exclusive right to use the registered mark in commerce on or in connection with

the goods or services specified in the certificate, subject to any conditions or

limitations stated in the certificate.” 15 U.S.C. § 1057(b). This certainly weighs in

Defendant's favor.

But Plaintiff disputes Defendant’s ownership and argues instead that

“[elach company jointly owns the mark.” Resp. 8, ECF No. 16 (citing Cain Decl.

q 38, ECF No. 16-2). Cain’s understanding is that when Plaintiff became

individually held, and a majority of its shares were sold to him, that included “all

5 Defendant also has a design mark registered under trademark 4,829,888 (“888 Mark’).

Mot. 10-11, ECF No. 12; see a/so Counterclaim JJ 21-27, ECF No. 10. The same

issues arise for both. But Plaintiff has attempted to cease use of the ‘888 Mark. Resp.

32-33, ECF No. 16. Despite this attempt, Defendant notes that Plaintiff still uses the

‘888 mark in a few places: some company trucks, public posters, and apparently, one

LinkedIn post. Reply 18-19, ECF No. 18. Because of Plaintiff's willingness to cease

use of the ‘888 mark, the Court is confident that the parties can reach a standstill

agreement relating to the same.

Case No. 2:22-cv-1707 Page 8 of 13

the assets, including the company’s goodwill and the right to use the ‘Smoot’

name.” Resp. 20, ECF No. 16 (citing Cain Decl. 34, ECF No. 16-2). This is not

an unreasonable assumption. See First Fashion USA, Inc. v. Best Hair

Replacement Mirs., Inc., 645 F.Supp.2d 1158, 1164 (S.D. Fla. 2009) (“The law

presumes that when a business is conveyed, its trade name and good will are

also conveyed.”); see also Brinkman v. Beaulieu of Am., Inc., No. CIV.A. SA-02-

CA-268-, 2002 WL 32097534, at *5 (W.D. Tex. Oct. 29, 2002), aff'd sub nom. 67

F. App’x 243 (5th Cir. 2003); Am. Sleek Craft, Inc. v. Nescher, 131 B.R. 991, 998

(D. Ariz. 1991); Dovenmuehle v. Gilldorn Mortgage Midwest Corp., 670 F.Supp.

795, 798 (N.D.III.1987), affd,871 F.2d 697 (7th Cir. 1989) (“Unless there is

evidence to the contrary, a trade name will be presumed to have passed, even in

the absence of formal assignment, to one to whom the business has been

transferred.” ).

Moreover, regardless of ownership, Defendant may have consented to

Plaintiff's use of its mark, and consent is an affirmative defense. See 15 U.S.C.

§ 1114. It is undisputed that the parties had, at least at one time, a written

contract: the ASA. Further, the ASA contains at least some language that

suggests Plaintiff had consent to use the mark:

Marketing. Both parties agree that construction services shall be

jointly marketed under the name “Smoot Construction” or equivalent

so as to present a common and comprehensive list of qualified

services and capabilities to the construction industry.

Case No. 2:22-cv-1707 Page 9 of 13

Countercl. Ex. A, ECF No. 10-1. What is disputed, is whether the ASA has

expired, compare Complaint J 11, ECF No. 1 with Answer J 11, ECF No. 10, and

whether the ASA encompassed the entire agreement between the parties,

Countercl. 7 84, ECF No. 10.

If the parties’ various oral “understandings” are part of the ASA, Plaintiff

could have been an implied licensee and, by extension, could be unlawfully using

Defendant's mark, which seems to be Defendant’s theory. See generally Mot.,

ECF No. 12. On the other hand, if the oral understandings are not part of the

ASA, then their relationship is governed by only the ASA, which has some

language that seems to suggest Plaintiff has the right to use the “Smoot” mark.

Either option is a problem for Defendants. Start with option one:

incorporating the oral “understandings” into the parties’ agreement. To

incorporate those understandings, the Court would have to consider evidence

outside the four corners of the ASA. That will be difficult here, because the parol

evidence rule provides that “extrinsic or parol evidence which tends to contradict,

vary, add to, or subtract from the terms of a written contract must be excluded.”

Segal Wholesale, Inc. v. United Drug Serv., 933 A.2d 780, 783 (D.C. 2007).®

Even assuming the parties had properly briefed such an issue (which they did

not), and the Court were to make such a finding (which it does not at this stage),

6 The Court assumes for the purposes of this Order that the ASA is governed by the

law of the District of Columbia, pursuant to the parties’ agreement of the same.

Countercl. Ex. A, ECF No. 10-1.

Case No. 2:22-cv-1707 Page 10 of 13

in order to actually determine what the ASA encompassed, the Court would need

to make factual findings. /d. Such inquiries are inappropriate, if not impossible,

without an evidentiary hearing. Therefore, they are better left until after a

preliminary injunction hearing.

Next, consider option two: Plaintiffs use of the mark is governed solely by

the ASA. That option is also problematic, because certain language in the ASA

could be read as consenting to Plaintiffs use of the marks. At this stage, the

Court is ill-equipped to fully analyze what the ASA did or did not require parties to

do. At bottom, Defendant has not established a likelihood of success on the

merits for a breach of contract claim or a Lanham Act claim.

B. Domain Name Content and Control

Defendant does not provide support for its website-related requests for

injunctive relief. For example, Defendant provides no legal justification for

Plaintiff to return control of the “smootcons[t]ructiondc.com” website to

Defendant. Defendant also requests that Plaintiff be ordered to cease using the

domain name and remove all current content on the page. If the issue is with the

“Smoot” character mark being part of the web address, or the prior use of the

registered marks on the webpage, for the reasons discussed in detail above, the

Defendant has not established a likelihood of success on the merits for these

claims. If the issue relates to Defendant’s Counterclaim for a violation of the

Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d) or a trade

dress argument Defendant failed to brief the same and so the Court is not in a

Case No. 2:22-cv-1707 Page 11 of 13

position to evaluate the merits at this stage. See Countercl. | 214, ECF No. 10;