Holiday Inns, Inc. v. Trump

• Decision Date: 23 September 1985
• Docket Number: Civ. A. No. 85-2884.
• Citation: 617 F. Supp. 1443
• Parties: HOLIDAY INNS, INC., A Tennessee corporation, and Harrah's Atlantic City, Inc., a New Jersey corporation, Plaintiffs, v. Donald J. TRUMP, Defendant, Third-Party Plaintiff, v. HARRAH'S INC., Third-Party Defendant.
• Court: U.S. District Court — District of New Jersey

617 F. Supp. 1443

HOLIDAY INNS, INC., A Tennessee corporation, and Harrah's Atlantic City, Inc., a New Jersey corporation, Plaintiffs, v. Donald J. TRUMP, Defendant, Third-Party Plaintiff, v. HARRAH'S INC., Third-Party Defendant.

Civ. A. No. 85-2884.

United States District Court, D. New Jersey.

September 23, 1985.

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Laurence B. Orloff, Orloff, Lowenbach, Stifelman & Siegel, P.A., Roseland, N.J., and Joseph R. Sahid, Douglas D. Broadwater, Gerald A. Ford, Kenneth A. O'Brien, Jr., Cravath, Swaine & Moore, New York City, for plaintiffs and third-party defendant.

John J. Barry, David Samson, Gage Andretta, Kenneth N. Laptook, David J. Reich, Wolff & Samson, Roseland, N.J., for defendant and third-party plaintiff.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

BROTMAN, District Judge.

This action arises out of conflicts between the principals in a three-year-old partnership venture to build and operate the tenth casino hotel in Atlantic City, New Jersey. On June 30, 1982, plaintiff Harrah's Atlantic City, Inc. ("HAC"), a subsidiary of plaintiff Holiday Inns, Inc. ("HI"), entered into a partnership with Trump Plaza Corporation, whose sole shareholder is defendant Donald J. Trump. The agreement created "Harrah's Associates" ("the Partnership").

Through Harrah's Associates, plaintiffs and Trump ("the Partners") own and operate the "Trump Casino Hotel" on the Boardwalk in Atlantic City. The Partners' casino hotel, built by Trump and now managed by HAC, opened in May, 1984. Each of the Partners is the sole owner of another casino hotel in Atlantic City. These two other facilities, "Harrah's Marina" and "Trump's Castle Casino Hotel," are situated across the street from one another in the section of the city known as the Marina. "Harrah's Marina" has been in operation for several years. Defendant began operations of his new casino hotel in June, 1985, shortly after he purchased the facility from Hilton Hotel Corporation, which failed to receive an operating license from the New Jersey Casino Control Commission.

The present litigation stems from two sets of events which have caused a serious deterioration in relations between the Partners. HAC and Trump originally planned to develop a multi-level parking complex ("the Parking Facility") on land adjacent to their Boardwalk casino hotel. While the Partners have obtained the necessary properties, they have failed to agree upon terms for construction and operation of a garage. Plaintiffs fear defendant wishes to obstruct development of new parking accommodations. Plaintiffs also object to defendant's use of his last name in the promotion of his new casino hotel. According to plaintiffs, defendant's actions have caused public confusion between the two facilities whose titles contain the name "Trump." Such confusion has allegedly resulted in irreparable harm to the Partnership's casino hotel.

Plaintiffs filed suit on June 17, 1985. The Complaint asserts that defendant's refusal to recognize plaintiffs' ownership interest in land designated for a new parking facility and his use of his name in connection with his new casino hotel both violate plaintiffs' rights under the Partnership Agreement. With respect to the issue of parking accommodations (Count 1), plaintiffs seek relief under New Jersey property and partnership law. As to defendant's use of his name, plaintiffs state claims based on the common law of service mark and trade name infringement, the common law of unfair competition and the Lanham Act, 15 U.S.C. § 1051 et seq., which imposes federal statutory sanctions against unfair competition. (Count 2). In addition, plaintiffs make various other allegations as to defendant's acts in violation of his fiduciary duties as a partner. (Counts 3-5). The court's jurisdiction is invoked pursuant to 28 U.S.C. §§ 1331, 1332, 1337, 2201, and principles of pendent jurisdiction.

Defendant has counterclaimed with numerous contentions as to plaintiffs' breaches of their reciprocal fiduciary duty to him. In doing so, defendant has added Harrah's Inc., HI's Nevada casino gaming subsidiary, as an additional counterclaim defendant.

This action is presently before the court on an application by plaintiffs for an order, inter alia, preliminarily enjoining defendant from

(a) using the word "Trump" in any form, alone or in combination with other words, whether on signs, slot machines or other fixtures or articles, or in advertisements, telephone directories, brochures, press releases or otherwise, in connection with his new Atlantic City casino hotel; or

(b) conveying, encumbering or otherwise taking steps adverse to plaintiffs' interests in connection with any real property acquired by him, as nominee for himself and one or both of them, without their consent.

In their reply papers, plaintiffs requested that the court consolidate the preliminary injunction hearing on the land issue with a final hearing on their application for

(a) a declaratory judgment that defendant acquired and holds title to the parcels of real property forming the site for the Partnership's adjacent parking accommodations as nominee for plaintiffs and/or the Partnership, and

(b) an order directing defendant to convey title to the parcels to the Partnership, or, alternatively, to some other partnership composed 50% of plaintiffs and 50% of defendant.

On June 28, 1985, the court conducted a hearing on plaintiffs' application based on pleadings, affidavits, exhibits, written briefs and oral arguments of the counsel.

The court subsequently determined that discovery and live testimony would not materially improve the state of the record as to the merits of plaintiffs' claims for injunctive relief with respect to ownership of the parking facility properties as well as use of the name "Trump." Consequently, on July 11, 1985, the court advanced and consolidated a trial on the merits with the hearing on plaintiffs' application for a preliminary injunction, pursuant to Fed.R. Civ.P. 65(a)(2).

Based on all the submissions of the parties and the remainder of the record in this matter, the court makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

I. INTRODUCTION

A. Parties and Witnesses

1. Plaintiff HI is a corporation organized under the laws of the State of Tennessee and has its principal place of business in Memphis, Tennessee. Complaint ¶ 3; Answer ¶ 3.

2. Plaintiff HAC is a corporation organized under the laws of the State of New Jersey and has its principal place of business in Atlantic City, New Jersey. HAC is a wholly owned subsidiary of HI. Complaint ¶ 4; Answer ¶ 4.

3. Defendant Donald J. Trump is a citizen of the State of New York, residing in and having a principal place of business in New York City. Complaint ¶ 5; Answer ¶ 5 4. Philip G. Satre is President and Chief Executive Officer of Harrah's, a subsidiary of HI, President of HAC, and President of the Gaming Group of HI. Affidavit of Philip G. Satre, June 13, 1985 ("Satre Aff."). Satre's supplemental affidavit of June 25, 1985 is referred to herein as "Satre Supp. Aff."

5. Richard J. Goeglein is President and Chief Operating Officer of Holiday Corporation, the parent corporation of HI, a position he has held since September, 1984. Prior to assuming that position, he was President and Chief Executive Officer of Harrah's and Chairman of HAC. Goeglein was succeeded as President and Chief Executive Officer of Harrah's by Satre in October, 1984. Affidavit of Richard J. Goeglein, June 25, 1985 ("Goeglein Aff.") ¶ 1. Goeglein's supplemental affidavit of June 27, 1985 is referred to herein as "Goeglein Supp.Aff."

6. James L. Schorr is Executive Vice President and a member of the Board of Directors of Holiday Corporation, with primary responsibility for corporate strategy and new business development. Schorr is also a director of Harrah's and has been involved in marketing decisions relating to the Partnership's casino hotel.

7. Gary Selesner is Manager of Advertising for the Partnership's casino hotel. Selesner has been employed in advertising and related fields since 1976. Affidavit of Gary Selesner, June 13, 1985 ("Selesner Aff.") ¶ 1.

8. Arturo Camacho is Manager of Bus Operations for the Partnership's casino hotel. Affidavit of Arturo Camacho, June 13, 1985 ("Camacho Aff.") ¶ 1.

9. Jack Trout is a partner in Trout & Ries Advertising, Inc., in New York City, an agency specializing in strategic marketing and promotions. From late 1983 until late 1984, Trout and the firm of Trout & Ries were actively engaged in promoting the Partnership's casino hotel. Affidavit of Jack Trout, June 13, 1985 ("Trout Aff.") ¶¶ 1-2. Trout's supplemental affidavit of June 25, 1985 is referred to herein as "Trout Supp.Aff."

10. The defendant, Donald J. Trump, testified on his behalf. Affidavit of Donald J. Trump, June 25, 1985 ("Trump Aff.").

11. For a number of years, HI, including its wholly owned subsidiary Harrah's, has had the largest gaming operations of any company in the world. Harrah's has been involved in the gaming industry for over forty years. HI now owns casino hotels in Las Vegas, Reno and Lake Tahoe, Nevada. Since 1980, HI has also operated "Harrah's Marina Hotel Casino" in the Marina section of Atlantic City.¹ The Harrah's name and service mark have been well known among casino hotel patrons and the general public for many years in the Western United States, and since at least the early 1980s in the Eastern markets served by Atlantic City. As a result of Harrah's large expenditures on advertising and its successful operations, the Harrah's name and service mark constituted a valuable asset in connection with gaming at the time of the formation of the Partnership, and continues to do so. Satre Aff. ¶ 6; Trump Aff., Exhibit C at 105, 114, 145, 159, 163, 164.

12. Defendant Donald J. Trump has acquired a national reputation as a leading real estate developer and entrepreneur....