Humphreys & Partners Architects, L.P. v. Lessard Design, Inc.

• Decision Date: 02 September 2014
• Docket Number: Case No. 1:13–cv–433.
• Citation: 43 F.Supp.3d 644
• Court: U.S. District Court — Eastern District of Virginia
• Parties: HUMPHREYS & PARTNERS ARCHITECTS, L.P., Plaintiff, v. LESSARD DESIGN, INC., et al., Defendants.

43 F.Supp.3d 644

HUMPHREYS & PARTNERS ARCHITECTS, L.P., Plaintiff

v.LESSARD DESIGN, INC., et al., Defendants.

Case No. 1:13–cv–433.

United States District Court, E.D. Virginia, Alexandria Division.

Signed Sept. 2, 2014.

Walter Dekalb Kelley, Jr., Tara Lynn Renee Zurawski, Jones Day, Washington, DC, for Plaintiff.

Christopher P. Foley, Finnegan Henderson Farabow Garrett & Dunner LLP, Reston, VA, Antigone Gabriella Peyton, Cloudigy Law PLLC, Paul Anthony Varela, Watt Tieder Hoffar & Fitzgerald LLP, McLean, VA, Jennifer Allen Sands Atkins, Kirkland & Ellis LLP, Washington, DC, Craig Crandall Reilly, Law Office of Craig C. Reilly, Alexandria, VA, Christopher Bowmar Mead, London & Mead, Washington, DC, for Defendants.

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

This is an architectural works copyright infringement action. Plaintiff claims that defendants' design and construction of the high-rise apartment building known as “Two Park Crest” in McLean, Virginia, infringes plaintiff's architectural works copyright embodied in a high-rise condominium building in Minneapolis, Minnesota, known as Grant Park. Defendants deny infringement, contending that they did not copy the Grant Park design and that the Two Park Crest design is not substantially similar to, and hence does not infringe the Grant Park design. Defendants also assert various counterclaims and defenses, including a challenge to the validity of the copyright and to its enforceability. Following full discovery, the parties filed numerous motions, cross-motions, and partial motions for summary judgment, all of which have been fully briefed and are now ripe for disposition.

I.

A. Parties

Plaintiff Humphreys & Partners Architects, L.P. (“Humphreys”) is a limited partnership organized under the laws of Texas with its principal place of business in Dallas, Texas. Humphreys claims to be the author and sole owner of the copyright in the Grant Park design, which is registered as an architectural work with the United States Copyright Office as Number VAu 579–008, with an effective date of February 19, 2003. Mark Humphreys (“Mr. Humphreys”) is the founder, president, and CEO of Humphreys.

The nine defendants currently in this case fall into four groups: (1) the Lessard defendants, (2) the Penrose defendants, (3) the Northwestern defendants, and (4) Clark Builders Group.

1. The Lessard Defendants

Defendant Lessard Design, Inc. (“Lessard Design”) is a corporation organized under the laws of Virginia with its principal place of business in Vienna, Virginia. After the dissolution of Lessard Urban Inc. (“Lessard Urban”)—the entity originally hired to design the Two Park Crest project—the dissolved company's revenues flowed into Lessard Design. Thus, Lessard Design is the successor to Lessard Urban as the designer of Two Park Crest. Lessard Design is a subsidiary of co-defendant Lessard Group Inc. (“Lessard Group”), a corporation organized under the laws of Virginia with its principal place of business in Vienna, Virginia. Lessard Group is the parent corporation of co-defendant Lessard Design.

Defendant Christian J. Lessard (“Mr. Lessard”), an architect who resides in Virginia, is the sole shareholder of Lessard Design and was a majority shareholder (90%) of Lessard Urban. Mr. Lessard was an employee of Lessard Urban and Lessard Group until December 2010, at which time he became an employee of Lessard Design. During the time that he was an employee of each of these companies, Mr. Lessard drew a salary from the company he was working for at the time. Mr. Lessard worked on the Two Park Crest project as a consultant and he personally guaranteed Lessard Design's performance on the Two Park Crest project. Lessard Design, Lessard Group, and Mr. Lessard are collectively referred to as the “Lessard defendants.”

2. The Penrose Defendants

Defendant The Penrose Group, which has its principal place of business in Vienna, Virginia, is an ongoing enterprise of individuals who have joined together by mutual consent for the purpose of creating and promoting various real estate and other development projects. Once development activities for a particular project have proceeded to a certain point, The Penrose Group forms one or more project-specific companies to manage the development project. Individuals who are members of The Penrose Group include Mark Gregg, Olav Kollevoll, Tim McDonald, and Ron Testa. The Penrose Group was involved in the development of Two Park Crest as early as 2008. In 2010, The Penrose Group was responsible for soliciting design services proposals for Two Park Crest and for eventually hiring Lessard Urban as the architect for the project.

Defendant Sixth Penrose Investing Company LLC (“Sixth Penrose”) is a limited liability investment company organized under the laws of Virginia with its principal place of business in Vienna, Virginia. The Penrose Group created Sixth Penrose in early 2011 as a single-purpose entity to enter into a joint venture with an unrelated company—The Donohoe Companies, Inc. (“Donohoe”)—to create PDT Builders LLC (“PDT”), a limited liability company organized under the laws of Virginia with its principal place of business in Vienna, Virginia, for the purpose of managing the development of the Two Park Crest project.

In the parlance of the real estate development industry, PDT was the “fee developer” for the Two Park Crest project. As a majority investing member, Sixth Penrose has a 70% stake in PDT and Donohoe has a 30% stake in PDT. The Penrose Group, Sixth Penrose, and PDT are collectively referred to as the “Penrose defendants.”

3. The Northwestern Defendants

Defendant The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) is a corporation organized under the laws of Wisconsin with its principal place of business in Milwaukee, Wisconsin. In January 2011, Northwestern Mutual purchased the Two Park Crest property from The Penrose Group and hired PDT to facilitate the development of the Two Park Crest project and to coordinate the efforts of the contractor, the architect, and other entities hired to perform work for the development project on Northwestern Mutual's behalf.

Defendant Northwestern Investment Management Company, LLC (“Northwestern Investment”) is a limited liability company organized under the laws of Wisconsin with its principal place of business in Milwaukee, Wisconsin. Northwestern Investment is a subsidiary of Northwestern Mutual and is responsible for Northwestern Mutual's real estate management functions. Northwestern Mutual and Northwestern Investment are collectively referred to as the “Northwestern defendants.”

4. Clark Builders Group

Defendant Clark Builders Group, LLC (“Clark”) is a limited liability company organized under the laws of Maryland with its principal place of business in Bethesda, Maryland. Northwestern Mutual contracted with Clark to construct the Two Park Crest project. Clark obtained the building permit for the project on March 22, 2012.

The following table summarizes the nine co-defendants and their relationship to Two Park Crest:¹

B. Facts

The allegedly protected Grant Park design originally appeared in architectural plans and drawings, and thereafter was embodied in a building constructed in 2004 in Minneapolis, Minnesota known as the Grant Park Condominium building. Grant Park is a 27–story condominium building with an average of 11 condominium units per floor. The Grant Park design features two elevator shafts that offer direct access from residential units to elevator lobbies.²

The allegedly infringing Two Park Crest building, which is currently being developed in McLean, Virginia, is a 19–story apartment building with an average of 17 rental units per floor. Two Park Crest also features two elevator shafts that offer direct access from residential units to elevator lobbies.³ Two Park Crest is part of a multi-building development that was created and approved by Fairfax County in 2004. As originally planned and approved, Two Park Crest included a condominium building. However, as a result of the 2008–09 economic crisis, the condominium building originally planned for the Two Park Crest site was never built. In the summer of 2010, the owners of the land began discussing plans for an apartment building at the Two Park Crest site.

1. Lessard Urban/Design's Selection as Architect for Two Park Crest

In developing the Two Park Crest apartment project, The Penrose Group considered three architects: (i) Lessard Urban/Design,⁴ (ii) Humphreys, and (iii) Washington Design Group. The Penrose Group met with representatives of both Humphreys and Lessard Urban/Design in late October 2010. Specifically, on September 30, 2010, The Penrose Group requested a proposal from Humphreys. Humphreys responded by submitting to The Penrose Group representatives a written proposal and illustrations of the Grant Park design. During the proposal and bidding process, Humphreys' representatives met with Mark Gregg and Tim McDonald of The Penrose Group on October 6, 2010, and Humphreys' representatives again met with Penrose Group representatives—this time Tim McDonald and Olav Kollevoll—on October 27, 2010.

Subsequently, on November 2, 2010, The Penrose Group selected Lessard Urban/Design to design the Two Park Crest project. According to The Penrose Group, Lessard Urban/Design was selected for three reasons:

i. Lessard Urban/Design submitted a lower bid,ii. Lessard Urban/Design was local and had already designed the building next door to Two Park Crest, and

iii. Lessard Urban/Design presented a design with a high percentage of rentable apartment space.

Tim McDonald of The Penrose Group informed Humphreys of the decision to hire Lessard Urban/Design on November 17, 2010. Following Northwestern Mutual's purchase of Two Park Crest from the Penrose Group in January 2011, the Northwestern defendants entered into a contract with Lessard Urban/Design, which gave Northwestern Mutual control over the design throughout the design process....