Defense Verdicts & Settlements from 2011

Listen to this article

Mixed in with Lawyers Weekly’s list of the top verdicts and settlements for 2011 were a pair of notable defense wins: A restaurant owner who successfully defended his right to use the word “firehouse” in his business name, and a developer who fought off a foreclosure action and forced a bank to settle the case.

Little guy beats big chain over “Firehouse” trademark

Firehouse Restaurant Group demanded in 2008 that Calli Baker’s Firehouse Bar & Grill, a Myrtle Beach area restaurant owned by firefighter Heath Scurfield, stop using the word “Firehouse.” When he refused to comply, the restaurant group sued, alleging Scurfield, his limited liability company and Calli Baker’s were in violation of some 34 trademarks owned by Firehouse.

Three years later, Scurfield was vindicated by a federal jury in Florence. The jury decided that Scurfield and Calli Baker’s had not infringed on any of Firehouse’s trademarks. The jury also agreed with Scurfield that Firehouse Subs had obtained one of its 34 trademarks fraudulently. When Firehouse obtained its trademark of the word “firehouse” used in connection with restaurant services, it knew that at least one other restaurant, Firehouse Bar and Grill in Tampa, Fla., was already using the word. Thus, Firehouse didn’t have a right to claim ownership of it.

Scurfield’s lawyer was able to prove that Firehouse knew about the Tampa restaurant by obtaining internal company correspondence and emails that referred to the restaurant before Firehouse applied for the trademark. Firehouse co-founder Robin Sorensen admitted in a deposition that Firehouse knew the Tampa restaurant had a superior right to the trademark.

Because the jury found that Firehouse had obtained its registration for the trademark “through fraud on the U.S. Patent & Trademark Office,” U.S. District Court Judge R. Bryan Harwell cancelled the trademark and assessed the costs of the action against Firehouse.

Those costs, including attorney’s fees, totaled $490,217.

Type of action: Trademark infringement

Injuries alleged: Infringement on trademark of the word “Firehouse” used in connection with restaurant services

Case name: Firehouse Restaurant Group, Inc. v. Scurmont, LLC et al.

Court: U.S. District Court for the District of South Carolina, Florence Division

Case No.: 4:09-cv-00618

Judge: R. Bryan Harwell

Verdict or settlement: Verdict

Date: Aug. 22, 2011

Defendant’s attorney: Sarah Day Hurley of Turner Padget (Greenville)

Plaintiff’s attorney: Marcus A. Manos of Nexsen Pruet (Columbia)

Bank, developer settle loan dispute

A foreclosure action in which the parties traded claims and counterclaims over alleged improprieties in the disbursement of a $2.4 million loan for a construction project in Clemson concluded with a settlement.

Regions Bank agreed to reduce the balance owed on the loan to about $1,136,000, down from the almost $2 million the bank originally claimed as due on the loan.

The settlement came after U.S. District Judge R. Bryan Harwell declined to grant the bank summary judgment on defense counterclaims of breach of contract and breach of contract accompanied by a fraudulent act. That gave the defense lawyers confidence that their client’s case was strong enough to take before a jury. The threat of a trial, they believed, would help them reach a settlement.

Type of action: Lender liability/fraudulent breach of loan agreement involving financing of mixed-use commercial project in Clemson.

Injuries alleged: Monetary damages in excess of $1 million

Name of case: Regions Bank v. College Avenue Development, LLC, et al.

Court: U.S. District Court of South Carolina

Case number: 8:09-cv-01095-RBH

Verdict or settlement? Plaintiff/counter-defendant Regions filed for summary judgment. After defendant/counter-plaintiff College Avenue Development, LLC, successfully defended against the summary judgment motion, the case was settled.

Name of judge, arbitrator or mediator: U.S. Magistrate Judge Bruce H. Hendricks issued a report and recommendation, and U.S. District Judge R. Bryan Harwell adopted that report as modified in his order.

Amount: The original loan amount was more than $2.4 million. After failing to have the case dismissed by summary judgment, plaintiff/counter-defendant Regions agreed to reduce the balance owed on the loan to $1,136,000.

Date of settlement: Aug. 27, 2010

Attorneys for plaintiff: Attorney for plaintiff/counter-defendant Regions Bank was Hamilton Osborne Jr. of Haynsworth Sinkler Boyd of Charleston.

Attorneys for defendant: Attorneys for defendant/counter-plaintiff College Avenue Development, LLC, were T.S. Stern Jr. of Covington, Patrick, Hagins, Stern & Lewis and E. Benton Leinster, III, of Leinster Law Firm, both of Greenville.