Skydive Ariz., Inc. v. Hogue

• Decision Date: 22 October 2015
• Docket Number: No. 1 CA–CV 14–0084.,1 CA–CV 14–0084.
• Citation: 724 Ariz. Adv. Rep. 9,360 P.3d 153,238 Ariz. 357
• Parties: SKYDIVE ARIZONA, INC., an Arizona corporation, Plaintiff/Appellant, v. Marc HOGUE, an individual; Skydive Force, Inc., an Arizona corporation; Skydive Coolidge, Inc., an Arizona corporation, Defendants/Appellees.
• Court: Arizona Court of Appeals

238 Ariz. 357

360 P.3d 153

724 Ariz. Adv. Rep. 9

SKYDIVE ARIZONA, INC., an Arizona corporation, Plaintiff/Appellant,

v.Marc HOGUE, an individual; Skydive Force, Inc., an Arizona corporation; Skydive Coolidge, Inc., an Arizona corporation, Defendants/Appellees.

No. 1 CA–CV 14–0084.

Court of Appeals of Arizona, Division 1.

Oct. 22, 2015.

Snell & Wilmer, LLP, By Sid Leach, Andrew M. Jacobs, Michael J. Coccaro, Phoenix, for Counsel for Plaintiff/Appellant.

Jennings, Strouss & Salmon, PLC, By Paul G. Johnson, Eric D. Gere, Phoenix, Counsel for Defendants/Appellees.

OPINION

HOWE, Judge:

¶ 1 Skydive Arizona, Inc., appeals the trial court's order granting judgment in favor of Marc Hogue, Skydive Force, Inc., and Skydive Coolidge, Inc. (collectively, “Hogue”)¹on all of Skydive Arizona's claims. It argues that the court erred in (1) granting Hogue's motion to vacate and set aside judgment; (2) instructing the jurors that the limitations period for Lanham Act claims, 15 U.S.C. §§ 1051–1141n, was one year; (3) denying its claim for specific performance; and (4) awarding Hogue all his requested attorneys' fees, costs, and expenses. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2 After three years in the United States Army, Hogue returned to Arizona. Hogue joined the Marine Corps Reserve and also entered a joint venture with a friend to open a commercial skydiving facility. In March 2002, Hogue incorporated Skydive Force and bought derelict airplanes from Lawrence Hill, founder and then-president of Skydive Arizona.

¶ 3 Hogue's friend, Mike Mullins, who operated a skydiving drop zone 11 miles from Skydive Arizona in Coolidge, offered to sell Hogue his commercial skydiving business, Arizona Skydiving Coolidge. Hogue asked Hill for his advice, and Hill agreed to support Hogue's business by leasing it airplanes. But because Hogue knew that a federal trademark lawsuit was pending between Skydive Arizona and Mullins about Mullins' skydiving business name, Hogue asked Hill about the name. Hill said that he did not care what Hogue named his skydiving business.

¶ 4 As provided in the sale contract, Hogue purchased from Mullins “the business and assets of Arizona Skydiving Coolidge, located at 6300 North Airport Rd., South Hangar, Coolidge, Arizona.” As part of the sale, Hogue received the domain name, “www.arizonaskydiving.com.” Even though the City of Coolidge would not let Mullins assign his lease for the South Hangar of the Coolidge Airport to Hogue, Hogue began operating Mullins' former business in Coolidge, keeping its name as Arizona Skydiving Coolidge. The business included serving military contracts, operating a commercial drop zone, doing paragliding demonstrations, selling skydiving equipment, and leasing airplanes. After setting up the business, Hogue leased airplanes from Hill.

¶ 5 Some months later, Hill asked Hogue to sign an agreement to change his business name and give up the domain name. Because Hogue was a friend of both Hill and Mullins, he did not want to get involved in their dispute over the business name and agreed to enter into the contract.

¶ 6 Hill presented Hogue with a draft agreement, and Hogue agreed with most of the terms, but refused to give up the domain name. The parties to the “Settlement Agreement” were Hogue, Skydive Force, and Skydive Arizona. Both Hill and Hogue proposed changes to the agreement, but Hill made the edits to the draft. Hill signed the agreement as Skydive Arizona and Hogue in his individual capacity and as Skydive Force.

¶ 7 The agreement stated that the parties “desire[d] to put an end to customer confusion” between the locations of Skydive Arizona and Hogue's business and that the agreement was intended to settle potential claims Skydive Arizona might have against Hogue in connection with the federal trademark lawsuit against Mullins. The agreement required in paragraph 4 that Hogue “immediately” change his business name to “Coolidge Skydiving” and that he stop using “Arizona Skydiving” or “any name including the word ‘Arizona’ in combination with any form of the word ‘Skydive’ or ‘Skydiving.’ ”

¶ 8 For the domain name, the agreement provided in paragraph 8 that “[t]he parties have reached a compromise concerning the domain name ... that is being used in connection with the business involving the skydiving operations now being conducted by Marc Hogue at 6300 North Airport Road, South Hang[ar], Coolidge, Arizona 85228.” Paragraph 8(a) stated that Skydive Force could continue to use the domain name as long as Hogue owned “at least 34% equity ownership of such business” and that he was “responsible for and actively involved in the management of such business”:

As long as Marc Hogue has at least a 34% equity ownership of such business, and is responsible for and actively involved in the management of such business, Marc Hogue may continue to use the domain name or website address of “www.arizonaskydiving.com” in connection with such business involving the skydiving operations being conducted by Marc Hogue in Coolidge, Arizona. If either of those conditions cease to exists, (i.e., Marc Hogue no longer has at least a 34% equity ownership of such business, or is no longer responsible for and actively involved in the management of such business), then Marc Hogue agrees that the domain name or [website] address of “www.arizonaskydiving.com” will be promptly assigned to Skydive Arizona.

The agreement did not define “such business” as used therein. After signing the agreement, Hogue continued leasing airplanes from Hill.

¶ 9 A few months later, Hogue was deposed for the trademark lawsuit between Skydive Arizona and Mullins. At the deposition, Hogue reviewed the “Settlement Agreement.” He explained that this agreement said “Arizona Skydiving” instead of “Arizona Skydiving Coolidge” and “Coolidge Skydiving” instead of “Skydive Coolidge,” but otherwise correctly reflected the parties' agreement.

¶ 10 In April 2005, Hogue incorporated Skydive Coolidge and that entity joined Skydive Force in operating his business. Skydive Coolidge's primary purpose was to own and lease airplanes. Also in April, Hogue received a letter from Skydive Arizona's attorney stating that he was not complying with the agreement. The letter referred to a newspaper article that called Hogue's business “Arizona Skydiving.” Hogue responded that Skydive Coolidge was making “every effort to set [itself] apart from [Skydive Arizona]” and that it would “continue to make every effort to be referred to by [its] proper name and not be confused with [Skydive Arizona].” Several months later, Hogue moved his business from Coolidge to Gila Bend, Arizona.

¶ 11 In 2006, Skydive Arizona's attorney notified Hogue that he was in breach of the agreement because he no longer had a “34% equity ownership of the business involving skydiving operations being conducted at 6300 North Airport Road, South [Hangar], Coolidge, Arizona” and that he was “no longer responsible for and actively involved in the management of that business.” Pursuant to the agreement, Hogue had 30 days to cure the breach or assign the domain name to Skydive Arizona. If not, Skydive Arizona would take legal action. By this point, Skydive Force and Skydive Coolidge had expanded beyond renting equipment and airplanes; they had contracted with the United States Navy to provide parachute safety officers.

¶ 12 Because Hogue kept using the domain name, Skydive Arizona filed suit against him for specific performance, i.e., transferring the domain name to Skydive Arizona, and for breach of contract. Hogue's attorney then withdrew, and several months later Skydive Arizona moved for summary judgment. The trial court did not rule on the motion because it received a voice mail from Hogue that he was on active duty in the Marine Corps and was in Tennessee for training. After a change of judge and at a status conference, where neither Hogue nor a representative was present, the court ordered him to file a response to Skydive Arizona's motion. With no response filed from Hogue, Skydive Arizona asked the court to rule on the motion. The court granted the motion and awarded attorneys' fees and costs.

¶ 13 Less than a year later in 2009, Hogue obtained new counsel and moved to vacate and set aside the judgment pursuant to Arizona Rule of Civil Procedure 60(c)(6). Hogue explained that during critical times in this suit, he was either on active military duty away from Arizona preparing for deployment or actually deployed to Iraq. He stated that he had never received the court's minute entry ordering him to respond and explained that he spoke with court personnel who told him that the case “was on the inactive calendar and that [he] did not have to do anything about [it] until [he] was released from active duty.” Hogue also explained that although he was away, he maintained an active role in and was responsible for Skydive Force and Skydive Coolidge through friends and relatives. The court granted Hogue's motion and recognized that his military service delayed the suit.

¶ 14 Skydive Arizona then again moved for summary judgment, and Hogue cross-moved for summary judgment. The trial court found that the central issue was whether Hogue complied with paragraph 8(a) of the agreement, but the parties had proposed competing interpretations. Skydive Arizona argued that Hogue was no longer actively involved in the management of the skydiving business at the Coolidge location. But Hogue countered that he had been responsible for and was actively managing that skydiving business and that he was not required to operate it in Coolidge. The court held that a reasonable person could follow either party's proposed interpretation and therefore denied both motions.

¶ 15 During the litigation, Hogue incorporated Skydive Phoenix, Inc., which ran a skydiving business in Maricopa, Arizona, and used some of the same equipment that Hogue had purchased from Mullins. Skydive Force and Skydive Coolidge directly...