Anson Chhouy Chao v. Chhour
| Decision Date | 18 August 2021 |
| Docket Number | E073189 |
| Court | California Court of Appeals Court of Appeals |
| Parties | ANSON CHHOUY CHAO, Plaintiff and Appellant, v. CHHOEUTH CHHOUR et al., Defendants and Appellants. |
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County. No. RIC1718857 Daniel A. Ottolia, Judge. Affirmed.
Chandler Law Firm, Robert C. Chandler and Carla R. Kralovic for Defendants and Appellants.
Lo & Lo, Kelvin J. Lo, Jonathan J. Lo and Mikhail Liberzon for Plaintiff and Appellant.
FIELDS J.
In 2000, defendants and appellants Chhoeuth Chhour and Chanly Ke (defendants) opened a business on Pierce Street, in the City of Riverside (Pierce store), selling donuts under the name “Linda's Donuts.” In 2015, they sold the Pierce store to plaintiff and appellant Anson Chao (plaintiff) and signed a written sale of business agreement (agreement) as part of that transaction. The agreement contained a covenant not to compete and further provided that defendants would give up the fictitious business name “Linda's Donuts.”
In May 2017, defendants opened a new business selling donuts on Arlington Avenue in the City of Riverside (Arlington store) and used the name “Linda's Donuts” in the operation of that business. As a result, plaintiff filed a civil complaint against defendants, asserting causes of action for injunctive relief, breach of contract, unfair competition in violation of Business and Professions Code section 17200 et seq. (UCL), intentional interference with prospective economic relations, trademark infringement, and trade dress infringement.
Following trial, a jury returned a verdict for plaintiff on the causes of action for breach of contract and intentional interference with prospective economic relations and awarded him a total of $187, 035 in damages. Thereafter, the trial court also granted plaintiff equitable relief and enjoined defendants from using the name “Linda's Donuts” or any similar name in the operation of the Arlington store.
Both defendants and plaintiff have appealed from the judgment. On appeal, defendants claim: (1) the judgment should be reversed because the trial court erred in ruling on evidentiary issues; (2) the trial court erred in refusing to give a requested jury instruction; (3) opposing counsel engaged in prejudicial misconduct; (4) multiple aspects of the jury's verdict are not supported by substantial evidence (5) the trial court's award of equitable relief is against the law; and (6) the trial court erred in denying a request for a settled statement. For his part, plaintiff has filed a cross-appeal, arguing the trial court erred in directing a verdict on his cause of action for trademark infringement. Additionally, plaintiff has moved to dismiss defendants' appeal and has requested sanctions against defendants, and defendants have also requested sanctions against plaintiff. We find no merit in any of the claims of error, deny the motion to dismiss, deny the requests for sanctions, and affirm the judgment.
In 2000, defendants opened the Pierce store. The business sold donuts and operated under the name “Linda's Donuts.” In November 2015, defendants sold the Pierce store to plaintiff. The parties executed a written sale of business agreement (agreement), which included a covenant not to compete and a provision requiring defendants to surrender the fictitious business name “Linda's Donuts” to plaintiff.
In May 2017, defendants opened the Arlington store and sold donuts using the name “Linda's Donuts” in the operation of that business. As a result, plaintiff filed a civil complaint against defendants asserting causes of action for injunctive relief, breach of contract, a UCL claim, intentional interference with prospective economic relations, trademark infringement, and trade dress infringement.
The parties stipulated that plaintiff purchased the Pierce store from defendants and that plaintiff currently operates the Pierce store. They further stipulated that plaintiff and defendants executed the agreement in relation to the sale of the Pierce store. The agreement included a covenant not to compete precluding defendants from operating a competing business within a five mile “radius” of the Pierce store for a period of 10 years, as well as a provision that defendants will abandon the fictitious business name “Linda's Donuts.” Finally, the parties stipulated that defendants currently operate the Arlington store.
Plaintiff testified that, in 2015, he met with defendant Chhour at the Pierce store after learning that defendants were interested in selling the business. During this meeting, Chhour confirmed his desire to sell the Pierce store and stated he wanted to take a break from the donut business. When plaintiff asked Chhour what Chhour planned to do following a break, Chhour represented that defendants had previously sold a similar business in Los Angeles for a similar reason and, after taking a break, opened a new store several cities away.
At defendants' request, plaintiff contacted an escrow company to facilitate the sale of the Pierce store. In November 2015, plaintiff, plaintiff's girlfriend, and defendants met with an escrow agent to provide information regarding the terms of the sale and to request preparation of a contract for sale of the Pierce store. The terms they discussed included a covenant not to compete precluding defendants from opening a competing business within a five mile radius of the Pierce store for a period of 10 years. According to plaintiff, the parties also agreed to include a provision stating that defendants would give up the fictitious business name “Linda's Donuts.” Plaintiff stated the purchase price included $32, 890 for the goodwill and trade name of the Pierce store, and $30, 000 as consideration for the covenant not to compete.
Plaintiff testified that he wanted to continue to operate the Pierce store using the name “Linda's Donuts” because the business had been operating under that name for a lengthy period of time; he believed customers who hear the name “Linda's Donuts” associate it with the Pierce store; and the Pierce store was promoted as the “ ‘Best Donut in Town.' ” At the time, plaintiff also believed the Pierce store had longtime customers who knew the business by the name “Linda's Donuts.”
According to plaintiff, the escrow company prepared the agreement pursuant to the parties' instructions following their first meeting, and the parties returned to the escrow company's office several days later for a second meeting. During this second meeting, the escrow agent explained the terms in the agreement; plaintiff and defendants were given time to review the agreement; and plaintiff and defendants executed the agreement. Plaintiff testified that he witnessed all parties execute the agreement at this time.
After the agreement was executed, plaintiff spent three weeks with defendants in the Pierce store to observe how the store was operated and to learn how to make donuts. During this time, Chhour indicated to plaintiff that he knew the purpose of a covenant not to compete and further indicated that he understood the term “radius” by drawing a circle on his hands. Chhour also disclosed that his average monthly profit operating the Pierce store was $18, 000.
Two or three months after plaintiff purchased the Pierce store, defendants visited the store and told plaintiff they had found a new location to operate a new donut business. When plaintiff asked where this new business would be located, Chhour responded that it was “far away.”
In early 2017, Chhour visited the Pierce store with some contractors. Chhour told plaintiff that the contractors needed to see a hose connector to a coffee machine, but plaintiff observed the contractors measuring everything in the store including the tables, the counter, and the showcase. In April 2017, another contractor visited the Pierce store without Chhour. This contractor disclosed the intended address of defendants' new business, indicated the new location appeared less than five miles away from the Pierce store, and disclosed that defendants intended to use the name “ ‘Linda's Donuts' ” in the operation of their new store. The contractor told plaintiff that defendants had disclosed they were seeking out and informing prior customers of their new business. Following this disclosure, plaintiff observed Chhour come to the Pierce store and speak with customers outside the store.
In May 2017, defendants opened the Arlington store. Plaintiff entered the address of the new store into an application on his phone and determined that defendants new store was only 4.12 miles from the Pierce store. Plaintiff also visited the Arlington store and observed that defendants were using the name “Linda's Donuts” to operate the business. Plaintiff testified to the accuracy of multiple pictures that appeared to show similarities in the designs of the Pierce store and the Arlington store.
Following the opening of the Arlington store, plaintiff experienced “a lot” of situations in which customers would place orders by telephone but would never arrive to pick up the orders. Customers began asking plaintiff if he opened a second location, and the Pierce store began receiving many calls asking if it had a second location. Plaintiff testified that he established two social media accounts for the Pierce store, and many customers began posting reviews that appeared to confuse his store with the Arlington store. Thirty-eight customer reviews were published to the jury, and plaintiff claimed nine of these reviews expressed some level of...
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