Arthur Rutenberg Homes, Inc. v. Drew Homes, Inc., 92-548-Civ-T-21(A).

• Decision Date: 26 July 1993
• Docket Number: No. 92-548-Civ-T-21(A).,92-548-Civ-T-21(A).
• Citation: 829 F. Supp. 1314
• Parties: ARTHUR RUTENBERG HOMES, INC., a Florida corporation, Plaintiff, v. DREW HOMES, INC., a Florida corporation and Andrew J. Vecchio, Jr., an individual, Defendants.
• Court: U.S. District Court — Middle District of Florida

829 F. Supp. 1314

ARTHUR RUTENBERG HOMES, INC., a Florida corporation, Plaintiff, v. DREW HOMES, INC., a Florida corporation and Andrew J. Vecchio, Jr., an individual, Defendants.

No. 92-548-Civ-T-21(A).

United States District Court, M.D. Florida, Tampa Division.

July 26, 1993.

Frank R. Jakes, Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A., Tampa, FL, for Arthur Rutenberg Homes, Inc.

David L. Partlow, Gibbons & Partlow, P.A., Tampa, FL, for Drew Homes, Inc. and Andrew J. Vecchio, Jr.

MEMORANDUM OPINION

CHARLES R. WILSON, United States Magistrate Judge.

This action was tried before the Court upon a Complaint alleging infringement of copyrighted architectural drawings entitled the "Verandah II", allegedly owned by Arthur Rutenberg Corporation ("ARH") and licensed to David Allen Properties, Inc. ("DAP"). ARH claims that defendant, Drew Homes, Inc. and its President and sole officer and shareholder, Andrew J. Vecchio, Jr., infringed upon its copyrighted Verandah II architectural drawings when preparing drawings for a house constructed by defendant in the Bayport Village subdivision in Hillsborough County, Florida. Having considered the evidence and the record, the Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

In 1987, the Verandah II was designed by Stan Heise of the Heise Group, Inc. which was an architectural firm specializing in customer design work. Heise developed a portfolio of architectural plans for Chrysalis Homes Associates ("Chrysalis") who built single family homes in Pinellas and Hillsborough County, Florida. Edward Bellamy was then President of Chrysalis. Bellamy is now ARH's Vice-President of Marketing and testified at the trial. According to Bellamy, Heise and Chrysalis verbally agreed that the copyright and any resulting architectural drawings developed by Heise for Chrysalis would be owned by Chrysalis. In accordance with this arrangement, Heise prepared the Verandah II architectural drawing in addition to various other drawings.

In early 1988, Chrysalis filed a Certificate of Copyright Registration for the Verandah II with the United States Copyright Office, identifying Chrysalis as both the author and the copyright claimant. A copy of the blueprint for the Verandah II lists the copyright registration, which is customary in the industry.

Verandah II models appeared in locations in Pinellas and Hillsborough County, including in the Tampa Palms subdivision and was featured in the "Street of Dreams" competition in 1988 visited by prospective home purchasers.

In early 1990, Chrysalis ceased doing business. On February 19, 1990, Chrysalis sold the Verandah II copyrighted plans to ARH and assigned its copyrights to ARH. A written "Certificate of Release" from Heise was also entered which clarified that Heise had assigned all of its rights, interests and ownership in the copyrights for the Verandah II plan to Chrysalis. The written assignments were recorded in the United States Copyright Office.

Before the trial ARH applied for and received from the Copyright Office a Certificate of Supplementary Copyright Registration correcting the Verandah II copyright registration to reflect Heise as the author and Chrysalis as owner by assignment.

Andrew Vecchio, Jr., is the President, and sole officer and director of Drew Homes, Inc. which was in the business of constructing residential homes in Hillsborough County. In April of 1991, Drew Homes acquired an undeveloped lot in the Bayport Village subdivision in Hillsborough County for the purpose of constructing a home. In April of 1991, Vecchio engaged the services of Edgar Ellerbe, a draftsman, to draft plans for the purpose of constructing the home on this lot. It was Vecchio's intention to build a home for himself, although he sold the home for a profit prior to its construction. Vecchio had engaged in this practice significantly in the past.

Vecchio presented Ellerbe with a brochure for a home called "The Cashmere" which had previously been built by HomeCraft which was a company believed by Vecchio to be out of business at the time. The Heise Group, Inc. had developed the architectural plans for the Cashmere. Vecchio presented Ellerbe with the HomeCraft brochure and Ellerbe then proceeded to prepare preliminary drawings from those plans.

At the trial, Vecchio admitted that at the time that he presented the Cashmere plan to Ellerbe, he had in his possession, in a box at his residence where he keeps clippings and home brochures, the Chrysalis Verandah II plan, but he was not aware of its existence at the time. He testified that he had never seen a Verandah II model although he was at the Street of Dreams competition when the model was presented for customer view, in 1988. Although he didn't go inside the model home, he did pick up a brochure which he kept.

The HomeCraft Cashmere plan does not bear a copyright notice, and was not, in fact, copyrighted. Vecchio did not seek permission from HomeCraft to use its Cashmere floor plan, and did not need to.

Ellerbe testified at the trial that he prepared a preliminary floor plan solely from a marked-up HomeCraft floor plan presented to him by Vecchio. Various modifications were made including:

A. A different design for the pool.

B. The sitting room at the end of the master bedroom and the master bedroom were moved to the front of the house.

C. A raised foyer was implemented with steps up to the foyer area.

D. The office was placed next to the foyer.

E. Columns were taken out.

F. The ceilings were made higher.

G. The seat at the breakfast nook was eliminated.

H. The large walk-in closet was changed to a small broom closet.

I. There was an offset on the garage.

J. There was an outside entry for the pool bath.

K. Closets in the gameroom were eliminated where a fourth bedroom would be.

L. The house was changed so that there would be 3,200-3,300 square feet of living area.

Ellerbe completed the drawing and incorporated the changes. Additional changes were later made including reverting the gameroom back to a bedroom with a closet and other minor changes in the square footage.

Before completion of the final drawing, Vecchio testified that he came across the Chrysalis Verandah II brochure, realized that there was a copyright claimed in the drawing and also learned that it was substantially similar to the HomeCraft Cashmere. He testified that he found certain items in the Verandah II that he wished to incorporate into the Cashmere plan including a new arrangement for the family room fireplace, the kitchen island, and the divider between the living and dining areas. The result of these changes was that the architectural plan ultimately finalized by Ellerbe was substantially similar to the Verandah II plan.

Vecchio had heard that Chrysalis had been out of business for two years, but he was unaware that the rights to those plans had been transferred to ARH. Ellerbe testified that had he known that Chrysalis had sold the Verandah II plan to Rutenberg, he would not have used the Verandah II house sheet, and that it was not his practice to draft from copyrighted plans.

The similarity between the Drew Homes final architectural and the Verandah II plan is strikingly similar. The Drew Homes plan is far more similar to the Verandah II floor plan than the HomeCraft Cashmere floor plan.

Before construction of Vecchio's home was complete, he sold the home to a customer for $330,000.00, realizing a profit of $12,502.00. Vecchio testified that his business overhead for 1991 was $15,000.00. His overhead expense for the Bayport Village was $33,000.00 based upon his building of five homes in 1991.

When Vecchio learned that ARH was considering legal action for violation of its copyright, he had a telephone conversation with Frank Henderson who is the President of an ARH franchisee and a social acquaintance. At the trial, Henderson related the following discussion:

"I called Andrew to discuss the possibility of using an Arthur Rutenberg plan, and I asked him if he had used the plan. He said that he had used the plan, that basically he felt that — well, he knew that Chrysalis Homes had gone out of business, and he was not aware of anyone having the rights to the plan so he didn't see anything wrong in using the plan." (T. 202)

Henderson's testimony was corroborated by Bellamy who also had a conversation with Vecchio when Vecchio learned that legal action was contemplated:

"He told me that he had seen the Verandah plan; that he saw it in the Tampa Palms Street of Dreams; that he believed that since Chrysalis was no longer in business, that there wouldn't have been a copyright problem; that he and his wife intended to reside in the house; that prior to — and that his wife had really liked the Verandah; that prior to his — they were moving into the house, it had been sold; that he felt that there wasn't a legal problem because he, in fact, was just building it for he and his wife to live in." (T. 196)

Vecchio failed to mention that he had used the HomeCraft Cashmere plan during this conversation nor did he mention it during his conversation with Henderson. Vecchio was very equivocal and unsure in responding to the validity of these conversations at the trial.

DAP maintained a model center at Bayport Village subdivision as a franchisee of ARH. Under its franchise agreement with ARH, DAP was the only builder licensed and authorized to use the Rutenberg copyrighted plans to build homes in that subdivision. The average profit after construction expenses and franchise fees realized by Rutenberg franchisees when constructing homes based on the Verandah plan is 13.6 percent of the sales price.¹ Additionally, Rutenberg receives a franchise fee of 3.5 percent of the sales price.

Thomas Kruempelstaedter, an architect, reviewed the HomeCraft Cashmere plan, the Verandah II plan and the Drew Homes plan which is the subject of this action. In his opinion, it is "highly unlikely" that the...