Slep-Tone Entertainment Corp. v. Wired for Sound Karaoke & DJ Services, LLC

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
JAN 18 2017
SLEP-TONE ENTERTAINMENT No. 14-17229 MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
CORPORATION and PHOENIX
ENTERTAINMENT PARTNERS, LLC, D.C. No. 2:12-cv-02631-NVW

Plaintiffs-Appellants,
MEMORANDUM*
v.

WIRED FOR SOUND KARAOKE AND
DJ SERVICES, LLC; ERNEST Z.
MCCULLAR,

Defendants-Appellees.

Appeal from the United States District Court
for the District of Arizona
Neil V. Wake, District Judge, Presiding

Argued and Submitted December 12, 2016
San Francisco, California

Before: GRABER and HURWITZ, Circuit Judges, and BOULWARE,** District
Judge.

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Richard F. Boulware, United States District Judge for the
District of Nevada, sitting by designation.
 Plaintiff Slep-Tone Entertainment Corporation1 appeals the district court’s

dismissal with prejudice of Plaintiff’s claims for trademark infringement and unfair

competition under the Lanham Act, and the district court’s grant of summary

judgment to Defendants on Plaintiff’s claim for breach of contract under Arizona

law.2 Reviewing "de novo the district court’s grant of summary judgment," Am.

Tower Corp. v. City of San Diego, 763 F.3d 1035, 1043 (9th Cir. 2014), we

reverse and remand for further proceedings.

1. Plaintiff did not distinctly raise Arizona state law counterfeiting claims in

its opening brief. Those claims are therefore waived on appeal. Corbin v. Time

Warner Entm’t-Advance/Newhouse P’ship, 821 F.3d 1069, 1075 n.3 (9th Cir.

2016).

2. "We review the district court’s interpretation of the contract de novo."

Flores v. Lynch, 828 F.3d 898, 905 (9th Cir. 2016). "Our purpose in interpreting a

contract is to ascertain and enforce the parties’ intent. To determine the parties’

intent, we look to the plain meaning of the words as viewed in the context of the

1
On appeal, the court has added Phoenix Entertainment Partners, LLC, Slep-
Tone’s successor-in-interest, as an additional party. We refer to these entities
collectively as "Plaintiff."
2
We affirm the dismissal of the trademark-related claims in a concurrently
filed per curiam opinion.
2
contract as a whole." Elm Ret. Ctr., LP v. Callaway, 246 P.3d 938, 941–42 (Ariz.

Ct. App. 2010) (citation and internal quotation marks omitted).

The district court correctly held that paragraph 15 of the parties’ earlier

settlement agreement provides Plaintiff with a choice in the event of Defendants’

default. Plaintiff "may, at its option, (y) accelerate any debts owed to it, declaring

them immediately due and payable, and institute an action for breach of the

AGREEMENT, or (z) void the covenant provided in paragraph 13 above and

institute an action for trademark infringement, such action being based upon acts of

DEFENDANT undertaken both before and after the effective date of this

AGREEMENT."

Defendants argue, in effect, that by suing for trademark infringement,

Plaintiff waived its claim for breach of the earlier settlement agreement. See Am.

Cont’l Life Ins. Co. v. Ranier Constr. Co., 607 P.2d 372, 374 (Ariz. 1980)

("Waiver is either the express, voluntary, intentional relinquishment of a known

right or such conduct as warrants an inference of such an intentional

relinquishment."). Waiver constitutes an affirmative defense that must be raised in

responsive pleadings. See Fed. R. Civ. P. 8(c); see also Ariz. R. Civ. P. 8(c). "The

purpose of such pleading is to give the opposing party notice of the [affirmative

defense] and a chance to argue, if [it] can, why the imposition of an [affirmative

3
defense] would be inappropriate." Blonder-Tongue Labs., Inc. v. Univ. of Ill.

Found., 402 U.S. 313, 350 (1971). Here, Defendants raised no such affirmative

defense in their answer to the Second Amended Complaint, which asserted contract

claims for the first time. Instead, assertions of Plaintiff’s purported waiver did not

arise until the summary judgment stage. Although "[i]n the absence of a showing

of prejudice, . . . an affirmative defense may be raised for the first time at summary

judgment," Camarillo v. McCarthy, 998 F.2d 638, 639 (9th Cir. 1993), foreclosing

the contract claim only after the trademark claim had been dismissed prejudiced

Plaintiff, which had no opportunity to litigate this issue while both remedies

remained available.

Arguments that Plaintiff asserted only trademark infringement in its original

complaint are beside the point. The operative Second Amended Complaint asserts

side-by-side claims for trademark infringement and breach of contract. These

claims relate back to the original filing. See Fed. R. Civ. P. 15(c). As we have

explained, "the general rule is that an amended complaint super[s]edes the original

complaint and renders it without legal effect." Lacey v. Maricopa County, 693

F.3d 896, 927 (9th Cir. 2012) (en banc).

When the motion for summary judgment was decided, the operative

complaint alleged both contract and trademark claims, meaning that, at that stage,

4
Plaintiff had pursued both theories. It was impossible to determine whether, under

the contract, Plaintiff had "institute[d] an action" for one at the expense of the

other. And, because the trademark claims now have been dismissed, no possibility

of double recovery exists. We reverse the district court’s grant of summary

judgment to Defendants on Plaintiff’s claim for breach of contract and remand for

consideration of that claim on its merits.

AFFIRMED in part; REVERSED in part and REMANDED. The parties

shall bear their own costs on appeal.

5
Slep-Tone Entm’t Corp. v. Wired for Sound, No. 14-17229 FILED
HURWITZ, Circuit Judge, concurring in part and dissenting in part: JAN 18 2017
MOLLY C. DWYER, CLERK
Although Arizona law generally allows a plaintiff to elect remedies after OF
U.S. COURT trial,
APPEALS

see Tempe Corp. Office Bldg. v. Ariz. Funding Servs., 807 P.2d 1130, 1134 (Ariz.

App. 1991), filing a complaint is an election of remedies if a contract so provides,

see Wingate v. Gin, 714 P.2d 459, 462–63 (Ariz. App. 1985). In Wingate, the lease

provided that upon the tenant’s default, the landlord could either “wait for the end

of the lease term and recover any amounts found to be owing at that time,” or “elect

to terminate the lease and recover his damages upon termination.” 714 P.2d at 463.

The court found that by filing the “complaint, seeking judgment for all rents and

charges, past and future, Wingate elected to terminate the lease.” Id.

Paragraph 15 of the settlement agreement provides that in the event of breach

“SLEP-TONE may, at its option, (y) accelerate any debts owed to it, declaring them

immediately due and payable, and institute an action for breach of the

AGREEMENT, or (z) void the covenant provided in paragraph 13 above and

institute an action for trademark infringement, such action being based upon acts of

DEFENDANT undertaken both before and after the effective date of this

AGREEMENT.” I would hold, as did the district court, that by suing for trademark

infringement, Slep-Tone voided the settlement agreement. I would therefore affirm

the summary judgment to Wired for Sound on Slep-Tone’s breach of contract claim
and respectfully dissent from the memorandum disposition to the extent it holds to

the contrary.