Architects v. Highway Inn, Inc.
| Decision Date | 26 August 2014 |
| Docket Number | CIVIL NO. 13-00496 SOM/BMK |
| Parties | FROST-TSUJI ARCHITECTS, Plaintiff, v. HIGHWAY INN, INC.; HO`OLA MAU, LLC; BRYCE UYEHARA, A.I.A., INCORPORATED; J. KADOWAKI, INC.; FESTIVAL MANAGEMENT CORPORATION; et al, Defendants. |
| Court | U.S. District Court — District of Hawaii |
This case involves an architectural firm's claims that a restaurant is using the architectural firm's designs without having paid for them. The restaurant's position is that it ended its agreement with the architectural firm when the firm refused to work within budget, and that it is acting within its rights.
Before the court are competing motions filed by Plaintiff Frost-Tsuji Architects, on the one hand, and DefendantsHighway Inn, Inc., and Ho`ola Mau LLC (collectively, "Highway Inn"), on the other. Both sides seek summary judgment on the copyright claim asserted in Count IV of the Second Amended Complaint. In a related motion, Defendant J. Kadowaki, Inc., seeks a determination that Frost-Tsuji is not entitled to statutory damages or attorneys' fees in connection with Count IV. Also before the court is a motion to continue the Kadowaki motion. The court also has before it Highway Inn's motion for partial summary judgment on Count V, which alleges that Frost-Tsuji's copyright management information was wrongfully removed from its architectural plans.
Frost-Tsuji, the architectural firm, originally sought partial summary judgment with respect to several portions of Count IV of the Second Amended Complaint, see ECF No. 55, but has since clarified that its motion is limited to "the issue[] of whether any of the named defendants had a license to use and/or copy [its] copyrighted work after [its] termination." See ECF No. 99. A decision that Defendants have a license would moot out other issues raised by Count IV. Highway Inn, the restaurant owner, argues that, because its use of any of Frost-Tsuji's work was "fully licensed," Frost-Tsuji cannot maintain any copyright claim. See ECF No. 176.
The court agrees that Highway Inn had a nonexclusive implied license to use the plans created by Frost-Tsuji in theconstruction of and permitting for the contemplated restaurant. Accordingly, Highway Inn and the other Defendants did not violate any of the rights Frost-Tsuji claims in Count IV to have had as a copyright owner. Summary judgment is therefore granted in favor of Defendants with respect to Count IV of the Second Amended Complaint. This ruling renders moot Kadowaki's motion seeking a determination that Frost-Tsuji is not entitled to statutory damages or attorneys' fees in connection with Count IV. Accordingly, that motion and the motion seeking to continue that motion are denied without a hearing pursuant to Local Rule 7.2(d).
The court denies partial summary judgment in favor of Highway Inn with respect to Count V of the Second Amended Complaint, as Highway Inn fails to meet its initial burden as to whether Highway Inn or any Highway Inn agent removed the copyright management information at issue in that count.
On or about December 1, 2012, Highway Inn hired Frost-Tsuji to design and oversee the development of a full-service restaurant in the Kakaako area of Honolulu. Frost-Tsuji was not the first firm to tackle this project, having been preceded by DKKY Architecture Studio, Inc., whose plans, drawings, schematics, and layouts Frost-Tsuji received copies of. SeeDeclaration of Monica Toguchi ¶ 4, ECF No. 141-2, PageID # 1514; Declaration of Monica Toguchi, ¶ 7, ECF No. 177-1, PageID # 1777.
Highway Inn and Frost-Tsuji entered into a letter agreement dated December 1, 2012. See ECF No. 56-4, PageID #s 472-73. Pursuant to that agreement, Frost-Tsuji was to "coordinate and manage [Highway Inn's] consultant team and provide for Concept, Schematic, Design Development and Construction Document Phases." Id., PageID # 472.
The letter agreement stated, "Any termination of this Agreement shall be per AIA Standard Contract language which is either party may terminate this agreement at any time with 7 day written notice." Id., PageID # 473.
The letter agreement further stated that, "per AIA standard contract, Architect's drawings, specifications, and all design work are 'instruments of service', and all copyrights to all items designed are for the specific jobsite address only, and design copyrights, formulas, custom furniture, fixtures or fabrics remain under the ownership of the Architect." Id.
The parties contemplated that the letter agreement would be followed by a formal contract. Thus, the letter agreement required Frost-Tsuji to "convert" the letter agreement "into a Standard AIA Short Form Contract between Architect and Owner, not later than December 31, 2012." Id. Frost-Tsuji did not meet that deadline. Instead, it waited until February 1,2013, to propose a contract, which Frost-Tsuji labeled "DRAFT." See Declaration of Monica Toguchi ¶ 11, ECF No. 177-1, PageID # 1779. Highway Inn marked up the proposed contract and returned it to Frost-Tsuji on or about March 1, 2013. Frost-Tsuji did not make any of the changes Highway Inn sought. See Toguchi Decl. ¶ 12-13, PageID #s 1779-80.
The contract proposed by Frost-Tsuji did not entirely track the letter agreement. For example, the letter agreement noted that the project was to end "not later than June 15, 2012," and that Frost-Tsuji would provide its services "for a NOT TO EXCEED SUM of $97,500." ECF No. 56-4, PageID # 473. The draft contract, on the other hand, had a "Substantial Completion date" of July 15, 2013, and provided for Highway Inn to pay Frost-Tsuji $97,500. See ECF No. 56-7, PageID #s 504, 513; ECF No. 177-7, PageID #s 1892, 1901; ECF No. 177-8, PageID #s 1912, 1921. The draft contract also had a different scope of work from that described in the letter agreement, and added a list of additional services for additional pay. Compare ECF No. 56-4, PageID # 472, with ECF No. 177-7, PageID #s 1893-1900.
The draft contract proposed by Frost-Tsuji appears to have been based on AIA Document B101-2007, Standard Form of Agreement Between Owner and Architect. See ECF No. 56-5. Had the parties signed the draft contract as proposed by Frost-Tsuji, they would have agreed to the following:
. . . .
§ 9.4. Either party may terminate this Agreement upon not less than seven days' written notice should the other party fail substantially to perform in accordance with the terms of this Agreement through no fault of the party initiating the termination.
§ 9.5. The Owner may terminate this Agreement upon not less than seven days' written notice to the Architect for the Owner's convenience and without cause.
§ 9.6. In the event of termination not the fault of the Architect, the Architect shall be compensated for services performed prior to termination, together with Reimbursable Expenses then due and all Termination Expenses as defined in Section 9.7.
. . . .
§ 9.8. The Owner's right to use the Architect's Instruments of Service in the event of a termination of this Agreement are set forth in Article 7 and Section 11.9.
ECF No. 56-7, PageID #s 511-12; ECF No. 177-7, PageID #s 1904-05; ECF No. 177-8, PageID #s 1924-25.
Section 7.3 of the draft contract states:
Upon execution of this Agreement, the Architect grants to the Owner a nonexclusive license to use the Architect's Instruments of Service solely and exclusively for purposesof constructing, using, maintaining, altering and adding to the Project, provided that the Owner substantially performs its obligations, including prompt payment of all sums when due, under this Agreement. . . . The license granted under this section permits the Owner to authorize the Contractor, Subcontractors, Sub-subcontractors, and material or equipment suppliers, as well as the Owner's consultants and separate contractors, to reproduce applicable portions of the Instruments of Service solely and exclusively for use in performing services or construction for the Project. If the Architect terminates this Agreement for cause as provided in Section 9.4, the license granted in this Section 7.3 shall terminate.
ECF No. 56-7, PageID # 509; ECF No. 177-7, PageID # 1907; ECF No. 177-8, PageID # 1927.
Section 11.9 of the draft contract states, "If the Owner terminates the Architect for its convenience under Section 9.5, . . . the Owner shall pay a licensing fee as compensation for the Owner's continued use of the Architect's Instruments of Service solely for purposes of completing, using and maintaining the project as follows:" ECF No. 56-7, PageID # 514; ECF No. 177-7, PageID # 1902; ECF No. 177-8, PageID # 1922. In the standard AIA form that the draft contract was based on, there is then a blank for the parties to fill in with the licensing fee. See ECF No. 56-5, PageID # 491. In the draft contract, Frost-Tsuji filled in that blank with the following: "Compensation for Basic Service + Additional Services earned to Date of Termination + Reimbursable Expenses to Date + 15% x Article 11.1 [] or $14,625, or the remaining amount due on the Contract, whichever is less." ECF No. 56-7, PageID # 514; ECF No. 177-7, PageID # 1907; ECF No....
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