United States District Court, N.D. Georgia, Atlanta Division
HAWAIIWEB, INC. and DAVID DIETERLE, Plaintiffs,
EXPERIENCE HAWAII, INC., d/b/a Experience Hawaii Group, Defendant.
OPINION AND ORDER
WILLIAM S. DUFFEY, JR. UNITED STATES DISTRICT JUDGE.
matter is before the Court following the February 7, 2017,
evidentiary hearing on Plaintiffs Hawaiiweb, Inc. and David
Dieterle's (collectively, “Plaintiffs”)
Motion for Default Judgment .
February 10, 2016, Plaintiffs filed a Complaint  alleging
that Defendant Experience Hawaii, Inc., d/b/a Experience
Hawaii Group (“Experience Hawaii”), breached a
contract (Count I) and willfully infringed Plaintiff
Dieterle's (“Dieterle”) copyrighted
photograph (Count II). (). On February 25, Plaintiffs
served the Complaint on Defendant. ().
April 5, 2016, Defendant and its counsel agreed that
Defendant's Counsel should withdraw from its
representation of Defendant. ( at 1). On April 18, 2016,
after Defendant failed to respond to the Complaint,
Plaintiffs filed their Motion for Clerk's Default ,
and the Clerk entered default against Defendant later that
2, 2016, Plaintiffs filed their Motion for Default Judgment
. On May 11, 2016, the Court granted Defendant's
Counsel's Motion to Withdrawal , and a copy of the
order was sent to Defendant. In entering the order to
withdrawal, Defendant was admonished that because it is a
corporation it had to be represented in this action by
counsel. Defendant was ordered to “provide the Court .
. . with the name, address, and telephone number of its new
counsel, ” and that counsel “shall file a notice
of appearance” by June 1, 2016. ( at 4). The Court
then extended Defendant's deadline for responding to
Plaintiff's Motion for Default Judgment to June 14, 2016.
(Id.). Defendant has failed to respond to the
motion, and counsel has not appeared on its behalf. On
January 27, 2017, the Court considered  Plaintiffs'
Motion for Default Judgment, entered judgment as to
Defendant's willful violation of Plaintiffs'
copyright, and awarded statutory damages and permanently
enjoined Defendant from further infringing use of
Plaintiffs' copyright. As to Plaintiffs'
breach-of-contract claim, the Court scheduled an evidentiary
hearing to determine whether Plaintiffs are entitled to
contractual damages and, if so, in what amount.
February 7, 2017, the Court held an evidentiary hearing on
Plaintiffs' Motion for Default Judgment. During the
hearing, Dieterle testified on the factual basis for the
damages alleged as well as the damages caused by Defendant to
the Hawaiiweb website and the Google Analytics account.
Plaintiffs further presented arguments as to why
Plaintiffs' contractual damages are not limited to the
domain name pledged for the nonrecourse Promissory Note.
defaulted defendant is deemed to admit the plaintiff's
well-pleaded allegations of fact.” Surtain v.
Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir.
2015) (quoting Cotton v. Mass. Mut. Life Ins. Co.,
402 F.3d 1267, 1278 (11th Cir. 2005) (internal quotation
marks omitted)). If these well-pleaded allegations state a
plausible claim for relief, a motion for default judgment is
permitted but not required. See id. at1244-46; cf.
id. at 1244-45 (“Because of our ‘strong
policy of determining cases on their merits, ' . . .
default judgments are generally disfavored.” (quoting
In re Worldwide Web Sys., Inc., 328 F.3d 1291, 1295
(11th Cir. 2003))). “The entry of a default judgment is
committed to the discretion of the district court, ”
Hamm v. DeKalb Cnty., 774 F.2d 1567, 1576 (11th Cir.
1985), cert. denied, 475 U.S. 1096 (1986)), and
“the court, in its discretion, may require some proof
of the facts that must be established in order to determine
liability, ” 10A Charles Alan Wright, et al.,
Federal Practice and Procedure § 2688 (3d ed.
Apr. 2016 Update); see Wooten v. McDonald Transit
Associates, Inc., 788 F.3d 490, 496-98 (5th Cir. 2015)
(stating that, although plaintiff's allegations were
sufficient under the pleading requirements, the district
court was permitted to hold a “prove-up hearing”
to establish the truth of the allegations by evidence and
thus to determine whether default judgment should be
threshold issue remaining for Plaintiffs'
breach-of-contract claim is whether Plaintiffs'
contractual damages are limited to the collateral pledged for
the nonrecourse Promissory Note. The Promissory Note was
“secured by the Domain Name being purchased pursuant to
the Domain Name Purchase and Transfer Agreement”
(“Purchase Agreement”), “which shall be
held in escrow by Escrow Agent until this Note is paid in
full.” (Promissory Note § 14 [1.2]). Because the
Promissory Note itself does not supply the meaning of the
language “Domain Name being purchased . . . [and] held
in escrow, ” the Court looks to the Purchase Agreement
and the Escrow Agreement for possible definitions.
(See Purchase Agreement § 3.a.iv. [1.2] (The
Purchase Agreement, Promissory Note, and Escrow Agreement
were entered contemporaneously, and “the terms of the
[Promissory Note] are incorporated [in the Purchase
Agreement] for all intents and purposes.”)). The
Purchase Agreement defines the term “Domain Name”
in two ways: (1) the Internet domain name hawaiiweb.com
(Purchase Agreement, Background) and (2) the collection of
the domain name, the look and feel of the website, the
trademarks and trade names, and any goodwill associated
(Purchase Agreement § 1). And the Escrow Agreement
defines the “Domain Names” as “the domain
name(s) HawaiiWeb.com.” (Escrow Agreement § A
adheres to the ‘objective' theory of contracts,
i.e. a contract's construction should be that which would
be understood by an objective, reasonable third party.”
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159
(Del. 2010) (quoting Twin City Fire Ins. Co. v. Delaware
Racing Ass'n, 840 A.2d 624, 628 (Del. 2003); see
also Rhone-Poulenc Basic Chem. Co., 616 A.2d at 1195
(“[A] contract is ambiguous only when the provisions in
controversy are reasonably or fairly susceptible of different
interpretations or may have two or more different
meanings.”). If a contract is ambiguous, courts will
apply the doctrine of contra proferentem against the
drafting party and interpret the contract in favor of the
non-drafting party. Id. The determination of
ambiguity lies within the sole province of the court.
clear from the Purchase Agreement that Defendant received
more than just the domain name hawaiiweb.com. Defendant's
purchase, stated in the Purchase Agreement, includes, in
addition to the domain name, the look and feel of the website
associated with the domain name as well as any goodwill. The
website's look and feel is how the site looks to a user
and how it feels when the user is interacting with it, and is
defined by “the computer code on which Dieterle built
the website.” (See id. ¶ 34). The
business goodwill represents an intangible asset that is
associated with Hawaiiweb's tourism business, and the
value of which was tracked by Hawaiiweb's Google
Analytics account based on “the number of unique
sessions by visitors to www.hawaiiweb.com.”
(See id. ¶ 23). Both the computer code and the
Google Analytics account were transferred to Defendant.
most reasonable interpretation of the term “Domain
Name” as used in the Promissory Note, therefore, should
include all assets listed in the Purchase Agreement,
notwithstanding that the domain name hawaiiweb.com was the
sole asset held in escrow until the sale price is paid in
full. This interpretation comports with the common
conditional sales agreement where a buyer takes possession of
an item, but the title and right of repossession remains with
the seller until the buyer pays the full purchase price.
Here, instead of the legal title being held in escrow, it was
the domain name hawaiiweb.com that was held in escrow.
Although Plaintiffs have regained possession of the domain
name, Defendant has failed to return the computer code of the
website and the Google Analytics account associated with the
domain name. ( ¶¶ 34-35). Because Plaintiffs
only had a partial recovery, the Court concludes that
Plaintiffs are entitled to damages in order to place
Plaintiffs in the same position as they expected to be in.
minimum sale price under the Purchase Agreement is $90,
000.Plaintiffs have received $40, 000 as
earnest money. The domain name, which is now in
Plaintiffs' possession, without the computer code amounts
to nominal value. The Court determines that the ...