Fun Spot of Florida v. Magical Midway of Cent. Fl

• Decision Date: 06 November 2002
• Docket Number: No. 6:01CV633-ORL-28JGG.,6:01CV633-ORL-28JGG.
• Parties: FUN SPOT OF FLORIDA, INC., John Arie, Plaintiffs, v. MAGICAL MIDWAY OF CENTRAL FLORIDA, LTD., Magical Midway, Inc., John B. Morgan, Robin Turner, Barry Frank, Defendants.
• Court: U.S. District Court — Middle District of Florida

242 F.Supp.2d 1183

FUN SPOT OF FLORIDA, INC., John Arie, Plaintiffs, v. MAGICAL MIDWAY OF CENTRAL FLORIDA, LTD., Magical Midway, Inc., John B. Morgan, Robin Turner, Barry Frank, Defendants.

No. 6:01CV633-ORL-28JGG.

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

November 6, 2002.

COPYRIGHT MATERIAL OMITTED

Stephen D. Milbrath, Herbert L. Allen, Allen, Dyer, Doppelt, Milbrath, & Gilchrist, P.A., Kieran F. O'Connor, Cooney, Mattson, Lance, Blackburn, Richards & O'Connor, P.A, Orlando, FL, for plaintiffs.

Keith R. Mitnik, Morgan, Colling & Gilbert, P.A, Tucker H. Byrd, Gregory W Byrd, Gregory W. Herbert, Greenberg Traurig, P.A., David C. Knapp, Rogers, Coleman, Pendas, Knapp, & Dill, P.A., Orlando, FL, for defendants.

ORDER

ANTOON, District Judge.

This cause is before the Court on Plaintiffs' Motion for Summary Judgment (Doc. 39, filed June 3, 2002) and Defendants' Motion for Partial Summary Judgment (Doc. 62, filed June 3, 2002). The United States Magistrate Judge has submitted a Report and Recommendation (Doc. 108, filed October 1, 2002) that Plaintiffs' motion be granted in part and denied in part; and that Defendants' motion be denied.

After an independent review of the record in this matter, including the Objection filed by Defendants (Doc. 117, filed October 15, 2002) and the response filed by Plaintiffs (Doc. 118, filed October 22, 2002), the Court agrees with the findings of fact and conclusions of law in the Report and Recommendation.

This ease involves a dispute over the design of go-kart tracks located at Magical Midway amusement park. Plaintiffs allege copyright infringement, conspiracy to misappropriate trade secrets, misappropriation of trade secrets, breach of confidence, unjust enrichment, fraud in the inducement, trade disparagement in violation of 15 U.S.C. § 1125(a), slander, libel, trademark infringement, and trade dress infringement. (Doc. 27). The Defendants assert several affirmative defenses including the economic loss rule, license, joint works, and work-for-hire. Defendants also filed a counterclaim seeking a declaratory judgment, a temporary injunction, and a permanent injunction; and seeking damages for common law unfair competition, trade libel/disparagement in violation of 15 U.S.C. § 1125(a) and unfair and deceptive trade practices in violation of § 501.201 et seq., Florida Statutes. (Doc. 28).

Plaintiffs' Dispositive Motion for Summary Judgment as to Certain Affirmative Defenses and the Counterclaim seeks summary judgment as to the following four affirmative defenses: the economic loss rule, license, joint works and work-forhire. In addition, the Plaintiffs' motion seeks summary judgment as to Defendants' counterclaim. (Doc. 39). Defendants' Motion for Partial Summary Judgment and Incorporated Memorandum of Law seeks summary judgment as to Plaintiffs allegations of copyright infringement, slander and libel. (Doc. 62).

A. Defendants' Motion for Summary Judgment

To establish a prima facie case of copyright infringement, a plaintiff must demonstrate two elements: (1) that he owns a valid copyright in the allegedly copyrighted materials; and (2) that the defendant copied original elements of those materials. See Calhoun v. Lillenas Publ'g, 298 F.3d 1228, 1232 (11th Cir.2002) (citing Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). The Plaintiffs in this case have a registered copyright, and are thus entitled to a presumption of validity and originality that accompanies that registration certificate. Therefore, the Defendants must rebut the presumption of validity. The Magistrate Judge explained that "[t]he defendants have failed to show that no reasonable juror could find that the copyright is valid, and that no reasonable jury could find that [the plaintiff] is the owner of a valid copyright in the go-kart track designs. Genuine issues of material fact remain with regard to the validity and ownership of the copyright. Genuine issues of fact also remain as to whether the defendants copied [the plaintiffs] designs when they designed and constructed Magical Midway." (Doc. 108 at 13). As a result, the Magistrate Judge recommended that summary judgment be denied as to Plaintiffs' allegation of copyright infringement.

In addition, the Magistrate Judge concluded that summary judgment should be denied as to plaintiffs' slander and libel claims. To sustain a cause of action for slander under Florida law, a plaintiff must demonstrate that: (1) the defendant published a false statement; (2) about the plaintiff; (3) to a third party; and (4) the party suffered damages as a result of the publication. See Valencia v. Citibank Int'l, 728 So.2d 330 (Fla.3d D.C.A.1999). Libel is defined as the unprivileged written publication of false statements. See Dunn v. Air Line Pilots Ass'n, 193 F.3d 1185, 1191 (11th Cir.1999).

The Plaintiffs allege that Defendant John B. Morgan ("Mr.Morgan") told John Arie's ("Mr.Arie") attorney, Ladd Fassett ("Mr.Fassett"), that Mr. Arie had his wife murdered. Defendants argue that Mr. Morgan's communication to Mr. Fassett was privileged because Mr. Arie's attorney is not a "third party" for purposes of publication of a defamatory statement. The Magistrate Judge explained that "[a]lthough a conditional privilege exists for [Mr.] Morgan's communications to [Mr.] Fassett for the purposes of negotiating a business transaction, any defamatory statement that Morgan may have made to [Mr.] Fassett with the purpose of destroying the attorney-client relationship and harming [Mr.] Arie's business falls outside of the conditional privilege." (Doc. 108 at 16). The Report and Recommendation further explains that a material issue of fact remains as to the purpose of the statements made by Mr. Morgan to Mr. Fassett.

Additionally, the Magistrate Judge concluded that issues of material fact remain as to whether statements made in an August 24, 2000 letter from Mr. Morgan to Mr. Arie regarding the safety of the gokart tracks at Fun Spot were defamatory and published to a third party. The letter states that Fun Spot's go-kart tracks are likely to cause death or serious injury. The Report and Recommendation notes that "[t]he defendants have not shown that no reasonable juror could find that defamatory statements were published to a third party." (Doc. 108 at 16). As a result the Magistrate Judge concluded that summary judgment should not be granted with regard to Plaintiffs' slander and libel claims.

B. Plaintiffs' Motion for Summary Judgment

In the Report and Recommendation, the United States Magistrate Judge also concluded that Plaintiffs' motion for summary judgment should be granted in part and denied in part. According to the Magistrate Judge, summary judgment should be granted to Plaintiffs as to Defendants' affirmative defenses relying on the economic loss rule, license and work for hire. However, the Magistrate Judge recommended the denial of summary judgment with regard to the affirmative defense of joint work. The Magistrate Judge explained that the economic loss rule is not an appropriate affirmative defense in this case because the defendants have taken the position that they did not enter into contracts with the Plaintiffs. In addition, the Report and Recommendation notes that "[defendants have cited no legal authority extending the economic loss rule to a case that does not involve a contract." (Doc. 108 at 17-18). With regard to the affirmative defense of license, the Magistrate Judge concluded that "[a]s a matter of law, even if [Plaintiff] had granted a license to the defendants, no license continued after revocation on April 12, 2000." (Doc. 108 at 18). Regarding the defendants' affirmative defense of work for hire, the Magistrate Judge noted that "there is no evidence that the defendants ever employed [the Plaintiff], or that [the Plaintiff] produced the designs within the scope of such employment ... [defendants never paid anything to [Plaintiff] for his drawings [and t]he defendants never hired or employed [Plaintiff]." (Doc. 108 at 19). The Magistrate Judge concluded that "no reasonable juror could find that [Plaintiff] created the drawings for defendants in the scope of such employment." (Doc. 108 at 19). Therefore, the Report and Recommendation recommends that summary judgment be granted with regard to Defendants' affirmative defenses of economic loss rule, license and work for hire.

However, with regard to the affirmative defense of joint work, the Report and Recommendation explains that "genuine issues of material fact remain as to whether the drawings for which [Plaintiff] holds a copyright certificate are joint works authored by [Plaintiff] and by the architects employed by defendants." (Doc. 108 at 19). A joint work requires two separate authors who create two separate works with the intention of combining them together into a single work. See 17 U.S.C. § 101. "Taken in the light most favorable to the defendants, it is conceivable that a reasonable juror could find that [ ] cooperation with defendants' architects constitutes creation of a joint work." (Doc. 108 at 20). Thus, the Report recommends that the Court deny summary judgment as to Defendants' affirmative defense of joint work.

The Magistrate Judge also recommended that summary judgment be granted as to Counts II-V of Defendants' counterclaim, but found summary judgment inappropriate as to Count I. Count I of Defendants' counterclaim seeks a declaratory judgment that Plaintiff and Fun Spot have no ownership interest in Magical Midway, or alternatively, that the gokart track designs are jointly owned by Plaintiffs and Defendants. (Doc. 28 at 20). According to the Magistrate Judge, summary judgment should be denied with regard to this count because there are material issues of fact that remain as to whether or not Plaintiffs and Defendants jointly own the work or whether Defendants' infringed upon Plaintiffs go-kart...