Limelight Productions, Inc. v. Limelite Studios, Inc.

United States Court of Appeals,

Eleventh Circuit.

No. 94-4467.

LIMELIGHT PRODUCTIONS, INC., Plaintiff-Appellee,

v.

LIMELITE STUDIOS, INC., Limelite Equipmental Rental, Inc.,
Defendants-Appellees,

Limelite Entertainment, Inc., et al., Defendants,

Gulf Insurance Company, Select Insurance Company, Garnishees-
Appellant.

Aug. 8, 1995.

Appeal from the United States District Court for the Southern
District of Florida. (No. 89-965-CIV-DLG), Donald L. Graham, Judge.

Before TJOFLAT, Chief Judge, ANDERSON, Circuit Judge, and FAY,
Senior Circuit Judge.

FAY, Senior Circuit Judge:

This appeal arises from writs of garnishment issued against

Gulf Insurance Company ("Gulf") and Select Insurance Company

("Select"). Plaintiff Limelight Productions, Inc. ("Limelight

Productions"), sued for permanent injunctive relief and damages

against Limelite Studios, Inc. ("Limelite Studios"), Limelite

Equipmental Rental, Inc. ("Limelite Rentals"), and Limelite

Entertainment, Inc. ("Limelite Entertainment"), for trademark

infringement in violation of the Lanham Act. The district judge

permanently enjoined the Defendants from using the Limelite name

and a jury awarded damages. To collect the damages, the Plaintiff

sought to garnish the Defendants's policies with Gulf and Select.

The district court entered summary judgment against each garnishee

insurance company.
 Appellants Gulf and Select allege the district court erred in

determining the verdict award based on Defendants's ill-gotten

profits was covered under the policies, and in precluding the

insurance companies from raising issues decided at trial. We

disagree and AFFIRM the district court judgment.

I. FACTUAL BACKGROUND & PROCEDURAL HISTORY

Limelite Studios and Limelite Rentals were related entities

operating from the same offices. Limelite Studios rented film and

videotape stages. Limelite Rentals rented film and videotape

production equipment. Neither Defendant produced films or

videotapes.

Limelite Studios was formed and began using the Limelite name

in 1982. In October 1986, "Hi-Lite Motion Picture & Television

Rentals" amended its Articles of Incorporation, changed its name to

Limelite Equipment Rentals, Inc., and began using the name

Limelite. Neither Defendant conducted business immediately upon

being formed although they conducted business on a limited basis in

one small room in late 1987 or early 1988. They actually began

doing business as Limelite in March 1988 after they advertised

nationally and held a grand opening. Limelite Rentals later merged

into Limelite Studios.

In May 1989 Limelight Productions began this action alleging

federal service mark infringement, false designation of origin and

description of goods under the Lanham Act, common law unfair

competition, trademark dilution under Fla.Stat. § 495.151, and

common law trademark infringement. The jury found Defendants

liable on each theory and awarded compensatory and punitive damages
against Limelite Rentals and Limelite Studios.

The Plaintiff moved to garnish defendants' insurance policies

with Gulf and Select to recover the nonpunitive damages. Gulf and

Select opposed the garnishment, arguing the policies did not cover

the wrongs complained of and did not include Limelite Studios as a

named insured. The Plaintiff moved for summary judgment alleging

Gulf and Select were responsible to pay the damages awarded against

Defendants at trial. Gulf and Select each counter-moved for

summary judgment. Limelite Rentals and Limelite Studios supported

the Plaintiff's bid for summary judgment, opposed that of the

insurance companies, and moved for summary judgment that Gulf and

Select must pay the damages. The district judge granted summary

judgment for Plaintiff Limelight Productions and Defendants

Limelite Studios and Limelite Rentals. He denied the insurance

companies's motions for summary judgment. Gulf and Select

appealed.

Garnishees Gulf and Select raise the following issues: First,

whether the insurance policies cover ill-gotten profits as damages

even though strictly speaking they are not losses, and second,

whether the district court denied Gulf and Select due process by

precluding them from relitigating the issues decided in the

infringement case.

After careful review of the record, we find no error.

II. STANDARD OF REVIEW

We review summary judgment decisions de novo and may resolve

questions not addressed by the district court. Clark v. Coats &

Clark, Inc., 929 F.2d 604, 609 (11th Cir.1991).
 III. ANALYSIS

A. Damages

We find no merit to the argument that ill-gotten profits are

not damages covered by the insurance policies. Congress recognized

that in this kind of lawsuit a plaintiff's resulting lost profits

often will be difficult or impossible to establish. As an

alternative, Congress allows a presumption that any profits the

defendant gained because of its violation would have accrued to the

plaintiff but for that violation. 15 U.S.C. § 1117(a)(1).

Congress authorizes plaintiffs to recover these ill-gotten profits

as the presumed equivalent of plaintiff's own lost profits.

Moreover, Courts in this Circuit have interpreted Lanham's

damages provision to embody both actual damages under 15 U.S.C.

1117(a)(2) and presumed damages (or ill-gotten profits) under 15

U.S.C. 1117(a)(1). See, e.g., Ramada Inns, Inc. v. Gadsden Motel

Co., 804 F.2d 1562 (11th Cir.1986). That is, while Lanham

specifies the plaintiff may recover its actual damages in addition

to the defendant's ill-gotten profits, this Circuit recognizes

ill-gotten profits as merely another form of damages that the

statute permits to be presumed because of the proof unavailability

in these actions.

When Gulf and Select issued these policies they knew of the

Lanham Act, were on notice plaintiffs could recover ill-gotten

profits, and must be held to have intended to cover these damages

because they did not exclude them. Applying Florida law to

construe the policy, we interpret "damages" broadly in favor of the

insureds because Gulf and Select wrote the policies, selected that
term, and chose not to define or restrict it. Ideal Mut. Ins. Co.

v. C.D.I. Constr., Inc., 640 F.2d 654, 657 (5th Cir. Unit B 1981)

(applying Florida law to construe an ambiguous term liberally in

favor of the insured);1 see also Blue Cross & Blue Shield of Fla.,

Inc. v. Cassady, 496 So.2d 875, 877 (Fla. 4th Dist.Ct.App.1986)

(collecting cases). We refuse to allow Gulf and Select to deny

coverage for the very injury they took payment to insure against.

Such amounts clearly are covered by the policies issued.

B. Issue Preclusion

Gulf and Select argue the district court reversibly erred

when it precluded them from relitigating issues decided in the

trial against Limelite Studios and Limelite Rentals. We disagree.

First, we note Gulf and Select have failed to edify this Court as

to which facts they wish to relitigate. This failure makes it

impossible to discern whether the error, if any, was harmless.

Second, Gulf and Select cannot move for summary judgment arguing no

genuine issues of material fact exist while simultaneously arguing

they will be denied due process if they are not permitted to

relitigate factual issues. We reject the insurance companies's

argument that this stance accords with Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and

agree with the magistrate and district court that it is a feeble

attempt to create a fact question where none exists. Finding no

merit to the argument, we affirm the district court.

1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th
Cir.1981) (en banc), this Court adopted as binding precedent all
cases decided by the former Fifth Circuit, including both Units A
and B, before October 1, 1981.
 IV. CONCLUSION

We hold that the district court correctly concluded that

defendant's ill-gotten profits were damages covered by the

policies, and correctly precluded the insurance companies from

relitigating issues decided at trial. We AFFIRM.

AFFIRMED.