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Setai Hotel Acquisition, LLC v. Miami Beach Luxury Rentals, Inc.

United States District Court, S.D. Florida

August 15, 2017

Setai Hotel Acquisition, LLC, Plaintiff
Miami Beach Luxury Rentals, Inc. and Allen Tuller, Defendants.


          Robert N. Scola, Jr., United States District Judge

         This matter is before the Court on the Plaintiff Setai Hotel Acquisition's (“SHA”) motion for partial summary judgment (ECF No. 164). The Defendants Miami Beach Luxury Rentals, Inc. (“MBLR”), and Allen Tuller responded (ECF No. 169), and SHA replied (ECF No. 181). Also before the Court is the Defendants' motion for summary judgment (ECF No. 158). SHA responded (ECF No. 166), and the Defendants replied (ECF No. 183). Finally, SHA requests that the Court take judicial notice of certain evidence in support of its motion for summary judgment (ECF No. 142).

         The Court has reviewed the record, the parties' briefs, and the relevant legal authorities. For the reasons more fully explained below, the Court grants in part and denies in part SHA's motion for judicial notice (ECF No. 142), denies the Plaintiff's Motions for Summary Judgment (ECF No. 164), and denies the Defendants' Motion for Summary Judgment (ECF No. 158).

         1. Background

         SHA brought this action against the Defendants, raising six statutory and common-law trademark claims: counterfeiting pursuant to 15 U.S.C. § 1116 (Count 1); infringement pursuant to 15 U.S.C. § 1114 and common law (Counts 2 and 4, respectively); unfair competition pursuant to the Lanham Act, 15 U.S.C. § 1125, and common law (Counts 3 and 5, respectively); and dilution (Count 6). (Am. Compl., ECF No. 110.) SHA also alleges a state-law claim of tortious interference in Count 7. (Id.) The Defendants raised thirty-one affirmative defenses[1] and brought three counterclaims: (1) false advertisement under the Lanham Act; (2) unfair competition; and (3) violation of Florida's Deceptive and Unfair Trade Practices Act. (Answer and Countercls. at 35-41, ECF No. 138.) SHA answered the counterclaims and raised four affirmative defenses. (Answer, ECF No. 177.)

         The United States Patent and Trademark Office (“USPTO”) issued a trademark registration Number 2, 506, 974 for “The Setai” on November 13, 2001 (“the Setai Mark” or the ‘974 Mark). (USPTO File at 1, [2] ECF No. 142-1.) The Setai Mark includes real estate management, real estate development and construction, and hotel and resort services. (Id.) The previous owners of the mark renewed it on June 5, 2007, and May 21, 2012. (Id. at 1-2.) In fact, the previous owners filed, and the USPTO accepted and acknowledged, and affidavit of incontestability. (Id. at 3, 37, 41.)

         On February 27, 2015, Lehman Brothers Holding, Inc., assigned and transferred “all right, title[, ] and interest in and to the [Setai] Mark[]” to BPI Lux S.à.r.l. (“BPI”) and the Alexandre von Furstenberg Living Trust (“Trust”). (Lehman Assignment, Mot. Extension of Time Ex. 1 at 3, ECF No. 96-1.) Under the Lehman Assignment, BPI owns 85% of the ‘974 Mark, and the Trust owns 15% of the ‘974 Mark. (Id.) The Lehman Assignment provided that the “Assignors and Assignees have caused this Assignment to be executed by their duly authorized representatives as of the date first written above.” (Id. at 4.) All of the relevant representatives signed the Lehman Assignment on April 1, 2015. (Id. at 4-5.)

         Also on February 27, 2015, BPI and the Trust assigned to SHA “the exclusive right and license to use the [‘974 Mark] . . . throughout the [United States].” (SHA License §§ 1.1 & 3.1, Aff. of Mounayyer Ex. 1 at 2-3, ECF No. 143-2.) The SHA License provides that SHA “shall not . . . permit others to use the . . . ‘SETAI' formative trademark, . . . [or] domain name . . . in any way inconsistent with [BPI and the Trust's] rights therein and all uses of the [‘974 Mark] shall inure to the benefit of [BPI and the Trust].” (Id. § 4.1(a) at 3.) The SHA License further provides, “[BPI and the Trust] shall have the exclusive right to take action or institute proceedings with respect to such infringement, and shall proceed as it may, in its sole discretion. If [BPI and the Trust] elect not to take action or fail[] to diligently prosecute such action, [SHA] may take such action at [SHA's] expense.” (Id. § 4.2 at 3-4.)

         Since February 27, 2015, SHA holds a Special Warranty Deed delineating their ownership in a real property known as The Setai Resort & Residences, a Condominium (“the Condominium”).[3] It appears that SHA owns seventy-nine “Condominium Parcels, ” a retail/commercial unit, a hotel unit, and a utility unit. (Deed at 4, ECF No. 142-3.) The “Hotel Unit” is not the same physical space as the “Hotel Building.” (Declaration at 32, ECF No. 142-2.) Though not clearly stated, it appears that the “Condominium Parcels” are actually located in the Hotel Building, and not in the condominium Tower Building. (Depo. Alex Furrer at 35-36, 38, ECF No. 140) (“[SHA] doesn't own any condominium apartments. . . . [SHA] owns about 70 hotel rooms in the Act Deco Building.”). However, SHA “operat[es] multiple private condos as hotel suites . . . . Legally speaking [guests] are staying in a private unit . . . . But they are staying in a private unit which is completely . . . 100 percent managed by [SHA] . . . . under a multiple-year contract for full hotel management.” (Id. at 35, 38, 39.) SHA does not officially share this information with the public, and the private units are considered collectively part of “the Setai Hotel.” (Id. at 39; Aff. Mounayyer ¶ 6, ECF No. 143-1.)

         The Condominium, which SHA continues to refer to as “The Setai®, ” is governed by the Declaration of Setai Resort and Residences, a Condominium (“the Declaration”), a publicly recorded document. (Mot. Ex. B, ECF No. 142-2.) Pursuant to the Declaration, SHA's “Hotel Unit” consists “of all of the [property], . . . less and except only the following: (i) the Residential Units, the Utility Unit and the Retail/Commercial Unit and (ii) the portion of the Condominium Property below minus seventy feet . . . .” (Id. ¶ 3.2(b).) SHA appears to interpret this provision to mean that it owns the entire “Tower Building, ” which contains the privately owned condominium units. The Condominium's “Common Elements” form part of the “Hotel Unit, ” and thus fall under SHA's ownership. (Id. ¶ 2.16.) The Declaration also provides, “The Owner from time to time of the Hotel Unit shall have the exclusive right (but not the obligation) to provide hotel and/or transient rental services, including, but not limited to, solicitation and/or provision of housekeeping, personal services (i.e., massage, personal training, dry cleaning, etc.) and/or food and beverage services to the Condominium and the Unit Owners.” (Id. ¶ 16.3.)

         Signage on the real property does not distinguish the entryway to the “Setai Hotel” versus the entryway to the Condominium. (Depo. Alex Furrer at 41.) In fact, Furrer notes that “Setai” refers to the “entire hotel and residences, ” and that private owners say ‘I live at the Setai.'” (Id. at 52.) Tuller also notes that as an owner of a unit in the Condominium and a previous resident of the Condominium, he knows that the Condominium Tower is referred to as “The Setai.” (Decl. Allen Tuller ¶ 7), ECF No. 168.) Owners of individual condominium units, as well as their “guests, ” possibly have access to “hotel” amenities. (Id. ¶ 12(c).)

         After SHA acquired the real property and the license, it began making changes to the way in which the owners of individual condominium units could conduct short-term rentals. One such change was a requirement that each owner or third-party rental agency “register each tenant with the attached form at the front desk of the Tower Building.” (Decl. Allen Tuller # 2 Ex. 2 at 20, ECF No. 168.) The required transient rental unit registration form included the double-palm logo and “The Setai” at the top of the page. (Id. Ex. 3. at 25.) The hotel will no longer provide keys to guests of individually owned condo units, instead requiring that the owner or third-party agency provide the keys to short-term tenants. (Decl. Allen Tuller # 1 ¶ 21, ECF No. 154.) Also, at one point, SHA refused access to certain privileges, such as “signing privileges” to guests who had rented from third-party agencies. (Answer and Countercls. Exs. 10 & 11, ECF Nos. 138-10, 138-11.)

         MBLR and Tuller, MBLR's sole officer, director employee, and shareholder, manage luxury private residential condominium suites, including units at the Condominium. (Depo. Allen Tuller at 5, ECF No. 147-1.) To this end, the Defendants operate a website at[4] (Depo. Allen Tuller at 6, 32.) On this website, the Defendants advertised “‘5-star private accommodations at the Setai Resort and Spa . . . for up to 70%* off the published hotel rates.” (Pl.'s SMF ¶ 29, ECF No. 152-1; Defs.' SMF ¶ 29, ECF No. 170.) The website also included the following information:

1. “Bearing the unmistakable imprint of legendary hotelier Adrian Zecha, The Setai is an intimate oceanfront resort in the heart of South Beach;”
2. “The Setai Miami was recently chosen as the ‘#1 hotel in Miami Beach' by U.S. World & News Report and The Spa being voted the ‘Best for Romance by SpaFinder Readers' Choice Awards' were just a few among the other recent awards. Conde Nast Traveler recently acknowledged The Setai on ‘The Gold List 2012' in both U.S. and UK, ‘Readers' Choice Awards Best in the World, ' as well as the ‘Top 50 Hotel Spas in the US.' Travel & Leisure The World's Best List #9 Large City Hotel in US/Canada”, along with the Conde Nast Johansens Awards for the ‘Most Excellent Hotel in the USA & Canada;'”
3. advertising “Holiday Events at The Setai” and stating “[t]o celebrate, we will present a series of special activities and events this Christmas . . .;”
4. stating “Miami Beach Luxury Rentals provides luxurious suites and villas from luxury hotels Miami in The Setai Miami Beach and the Setai South Beach, all available for your pleasure and enjoyment;”
5. stating “[w]e look forward to helping you find the best luxury rentals in Miami Beach from South Beach Miami hotels. For immediate assistance in booking your stay with Miami Beach Luxury Rentals today, please complete the online booking inquiry form below;”
6. stating “[t]he restaurant at the Setai is one of the many luxurious amenities that you will enjoy during your stay . . . . You are sure to enjoy your stay at the Setai Miami with a visit to the Setai restaurant to explore one of Chef Mathias exquisite creations;”
7. stating “[y]our stay at the Setai Miami is full of amenities such as the Pool & Beach Bar . . . . If you're relaxing by one of the three pools, or on our beach, service includes a select menu of snacks and light meals, as well as full beverage service;” and
8. quoting an alleged client as stating “[s]taying at the Setai resort was an experience that met all of my expectations, from the friendly staff, to the beach and nightlife just next door, I will definitely be back for another great stay.”

(Pl.'s SMF ¶ 30; Defs.' SMF ¶ 30; Decl. Allen Tuller ¶ 9, ECF No. 168.)

         The website continued to make the following representations:

1. “Starting with a perfect oceanfront setting in the heart of South Beach, The Setai Group and hotelier Adrian Zecha have created a private, luxurious world that is more than a condominium, hotel, and resort . . . it is a way of life.;”
2. “The Setai is a new, 40-story oceanfront glass tower as well as an 8-story art deco landmark building. Setai is also a member of the distinguished “Leading Hotels of the World.;”
3. “Set amid tropical gardens and sparkling pools at the edge of the Atlantic Ocean, Setai introduces the Asian traditions of simplicity and elegance to South Beach. A lavish spa, health club, and an extraordinary restaurant and bar add to this 5-Star experience. Setai as the ‘#1 hotel in Miami Beach' by U.S. World & News Report and The Spa being voted the ‘Best for Romance by SpaFinder Readers' Choice Awards' were just a few among the other awards received throughout the year of 2012.;”
4. “Conde Nast Traveler acknowledged The Setai on ‘The Gold List 2012' in both U.S. and UK, ‘Readers' Choice Awards Best in the World, ' [sic] as well as the ‘Top 50 Hotel Spas in the US' [sic]. Travel & Leisure The World's Best List #9 Large City Hotel in US/Canada', [sic] along with the Conde Nast Johansens Awards for the ‘Most Excellent Hotel in the USA & Canada.;'” 5. “For more information please visit”
6. “At the Setai, everything is available and all things are possible. The Setai staff is there to serve you, with passion, intelligence, and respect. At the Setai, you will be treated as if you are the most important person in the world;” and
7. “[The Hotel Spa is a] haven of serenity and natural beauty, The Spa at The Setai opens the door to an intimate private world dedicated to the restoration of the body, mind and soul. The philosophy behind this very special spa is derived from an ancient Sanskrit legend of the gods, who embarked on a quest for a natural elixir of immortality and eternal youth. Today, the unique and exotic treatments of The Spa at Setai reflect this legend, bringing the healing spirit and traditions of the east to South Beach.”

(Pl.'s SMF ¶ 31, 33; Defs.' SMF ¶ 31, 33; Decl. Allen Tuller #2 ¶¶ 9, 11, ECF No. 168.)

         While Tuller ultimately concedes that the information excerpted above appeared on previous versions of the Defendants' website, Tuller also notes that all the content on the website received approval from the previous owner of the Setai Hotel in approximately 2011. (Decl. Allen Tuller # 1 ¶ 7, ECF No. 154; Decl. Allen Tuller # 2 ¶¶ 9, 18, ECF No. 168.) In fact, in an email sent April 27, 2011, legal counsel to the previous owner of the Setai Hotel appears to approve of MBLR's webste, and requests that certain language found in the “About Us” section be moved to the Home Page.[5] (Decl. Allen Tuller # 1 Ex. 1 at 10.)

         The Defendants also purchased Google AdWords containing the term “Setai.” (Pl.'s SMF ¶ 28(b); Defs.' SMF ¶ 28.) Finally, the Defendants stipulated to owning the domain name and to redirecting internet traffic from that page to MBLR's website. (Resp. to Mot. to Compel at 2, ECF No. 224.)

         In addition to MBLR's website, the Defendants used the Setai Mark in their correspondence with customers and potential customers:

1. Offered “suite that boa[s]ts the Setai Hotel Finishings and Furnishings package.” (Sealed Depo. Allen Tuller Ex. 8 at 16, ECF No. 149-2);
2. Instructed customer to “check in as any guest” and that “[h]ousekeeping is available for an additional fee directly from the hotel.” (Id. Ex. 11 at 26, 28);
3. Referred to the “5 star Setai” (Id. Ex. 18 at 119);
4. Referred to the “oceanfront 5 star leading Hotels of the world property” (Id. Ex. 19 at 121);
5. Told a client that “you can't get an oceanfront suite in Miami Beach at ¶ 4 or 5 star hotel at that price level” (Id. Ex. 20 at 122);
6. Referred to The Setai as “the hotel” and stated that it is “the best hotel in all of south Florida” (Id. Ex. 21 at 125);
7. Told a client, “I'll try and get you in to Setai . . . standard rooms can only be book[ed] directly from the hotel . . . I only offer suites in the hotel tower . . . .” (Id. Ex. 22 at 127);
8. Told a client about “the Setai five star Hotel in the tower” (Id. Ex. 23 at 129);
9. Told a client that “[t]he hotel has made arrangements with []the Raleigh hotel close by where all Setai guests will have access to their pools complimentary” (Id. Ex. 24 at 131);
10. Referred to “the Hotel TOWER” to distinguish from the “art deco building” (Id. Ex. 26 at 142);
11. Referred to The Setai as “a high quality hotel” (Id. Ex. 27 at 147);
12. In response to an accusation that the Defendants were “not the hotel, ” wrote “Not the hotel? You have The Setai concierge services, room services, pool and beach services and gym/spa privileges amenities available to you” (Id. Ex. 28 at 148, 150); and
13. Called The Setai “the most expensive hotel in South Florida” (Id. Ex. 29 at 152).

         Tuller regularly closed his initial-contact emails with the tagline, “You have all the Setai amenities available to you including room service, concierge, services, pool and beach services and gym/spa privileges. . . . I am also a Florida Realtor and I have been offering huge discounts at The Setai since the Resort and Spa first opened.” (Id. Exs. 12-13, 15-21, 24, 26, 29-30 at 28, 31, 110, 115, 117, 119, 121, 123, 125, 131, 144, 152, 158-159.) Also, at time the Defendants arranged for housekeeping services for customers. (Id. Ex. 13 at 30; Sealed Depo. Allen Tuller at 32-34, ECF No. 149-1.) The Defendants, on one recorded occasion, attempted to obtain tickets to a Miami Heat basketball game. (Aff. Daniel Barsky Ex. B at 1-2, ECF No. 146-2.)

         Tuller does not dispute the statements in the emails, but notes that “the phrases [are taken] out of context to misrepresent the actual contents.” (Decl. Allen Tuller # 2 ¶ 12, ECF No. 168; Defs.' SMF ¶ 34.) Tuller further notes that the previous owner of the Setai Hotel provided third-party housekeepers with key fobs to gain access to multiple units and that SHA only prohibited the provision of housekeeping services as of November 1, 2016. (Id. ¶ 13; (Decl. Allen Tuller # 1 ¶ 11, ECF No. 154; Defs.' SMF ¶ 34; Answer and Countercls. Ex. 12 at 1, ECF No. 138-12.) According to Tuller, the Defendants have acted in good ...

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