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Muhler Company, Inc. v. Window World of N. Charleston LLC

United States District Court, D. South Carolina, Charleston Division

August 28, 2014

THE MUHLER COMPANY, INC., Plaintiff,
v.
WINDOW WORLD OF N. CHARLESTON LLC, Defendant.

ORDER

DAVID C. NORTON, District Judge.

This matter is before the court on plaintiff The Muhler Company, Inc.'s ("Muhler") motion for entry of judgment and for damages against defendant Window World of N. Charleston, LLC ("WWNC"). Based on the pleadings filed in this matter, as well as the uncontroverted evidence presented at the hearing, the court grants Muhler's motion for judgment and awards damages against WWNC as set forth herein.

I. BACKGROUND

The following facts are drawn from the proposed order emailed to chambers by Muhler and Muhler's motion for default judgment.

Muhler and WWNC are direct competitors in the business of supplying and installing replacement windows in Charleston County, South Carolina, and in neighboring coastal counties ("the market"). WWNC advertised through its website and other media that it adhered to the "strictest industry standards" in the conduct of its replacement window installation services. It advertised that it provided the "best for less" and that it was "lead certified." These representations were aimed at and reached consumers in the market. Similarly, Muhler advertised in the market that it "strives to exceed customer expectations by offering the highest level of service and value, " that it "complies with industry standards, " and that it is a "certified lead renovator." Muhler expends great time, money, and effort to ensure that it meets the standards of its advertising and complies with industry standards when supplying and installing replacement windows.

WWNC's advertisements were false or misleading because, contrary to the literal meaning of its statements that it adhered "to the strictest industry standards, " WWNC installed windows in Charleston County and neighboring areas without permits as required by law. WWNC also advertised that it was "lead certified." However, WWNC frequently neglected to notify homeowners of lead-based paint concerns, neglected to check or perform testing to determine if lead-based paint was present, or failed to perform lead remediation when installing replacement windows. These actions were done to secure a competitive advantage and were against public policy.

WWNC's failure to comply with the laws related to obtaining permits for replacement windows and failure to meet requirements with regard to lead-based paint allowed WWNC to gain an unfair competitive advantage in the market. WWNC was able to save significant money, time, and effort by failing to meet these requirements which allowed it to offer their products and services at a substantially lower price. This advantage then allowed WWNC to earn substantial revenues. It also had the effect of adversely impacting Muhler's business and its ability to compete in the market.

Muhler filed a complaint against WWNC in state court on March 11, 2011. WWNC removed the case to federal court on April 11, 2011. Muhler filed an amended complaint asserting three causes of action against WWNC: (1) false and misleading advertising violation of the Lanham Act; (2) common law unfair competition; and (3) violation of the South Carolina Unfair Trade Practices Act ("SCUPTA"). WWNC initially appeared in the case through counsel and defended the allegations in this case.

On July 6, 2012, counsel for WWNC filed a motion to withdraw as counsel. The court granted the request to be relieved and gave WWNC time to secure new counsel. On August 6, 2012, new counsel briefly made an appearance on behalf of WWNC. Shortly thereafter, the attorney filed a motion to withdraw as counsel, which the court granted on September 5, 2013. The court's order allowed another thirty days for counsel to appear on behalf of WWNC. No counsel made an appearance within that time. As a result of the failure of WWNC to secure counsel, WWNC's answer was stricken and WWNC placed in default on January 15, 2013.

On October 10, 2013, Muhler filed the instant motion for judgment and damages. The court held a damages hearing on November 12, 2013. WWNC was notified of both Muhler's motion and the damages hearing. Despite this notice, WWNC failed to appear at the hearing. The motion is now ripe for the court's review.

II. STANDARDS

In determining whether to award a default judgment, the court will take as true the well-pleaded factual allegations in the complaint. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) ("Defendant, by his default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established." (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975))). The court must, therefore, determine whether the well-pleaded allegations in the plaintiff's complaint support the relief sought in this action. Id. "A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed.R.Civ.P. 54(c).

III. DISCUSSION

The court will first consider Muhler's claims to determine whether they support the relief sought in this action. The court will then determine the appropriate amount of monetary relief to which Muhler is entitled.

A. Findings of Fact and Conclusions of Law

The Lanham Act prohibits the "false or misleading description of fact, or false or misleading representation of fact, which... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities." 15 U.S.C. § 1125(a)(1)(B). To bring a false advertising claim under § 1125(a)(1)(B), a plaintiff must establish that:

(1) the defendant made a false or misleading description of fact or representation of fact in commercial advertisement about his own or another's product; (2) the misrepresentation is material, in that it is likely to influence the purchasing decision; (3) the misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience; (4) defendant placed the false or misleading statement in interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the misrepresentation, either by direct diversion of sales or by a lessening of goodwill associated with its product.

Scotts Co. v. United Indus. Corp., 315 F.3d 264, 272 (4th Cir. 2002).

SCUTPA prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." S.C. Code Ann. § 39-5-20(a); see also Wright v. Craft, 640 S.E.2d 486 (S.C. Ct. App. 2006). To recover in an action brought pursuant to the SCUTPA, a plaintiff must establish the following three elements: (1) the defendant engaged in an unfair or deceptive act in the conduct of trade or commerce; (2) the unfair or deceptive act affected public interest; and (3) a monetary or property loss as a result of the unfair or deceptive act(s). Id. "A trade practice is unfair' when it is offensive to public policy or when it is immoral, unethical, or oppressive; a practice is deceptive' when it has a tendency to deceive." Young v. Century Lincoln-Mercury, Inc., 396 S.E.2d 105, 108 (S.C. Ct. App. 1989) aff'd in part, rev'd in part on other grounds, 396 S.E.2d 105 (S.C. 1989). "Whether an act or practice is unfair or deceptive within the meaning of the UTPA depends on the surrounding facts and the impact of the transaction on the marketplace." Wright, 640 S.E.2d at 500. "An impact on the public interest may be shown if the acts or practices have the potential for repetition." Id. at 501 (internal citations omitted).

Muhler has established that WWNC was a licensee of Window World, Inc. Window World, Inc. is a national replacement window distributor. WWNC's website is linked to and accessed through the Window World, Inc. website. By following the instructions on the Window World, Inc. website, the customer is directed to use the "store locator to locate a Window World dealer near you." WWNC's website included its contact information as Window World, Inc.'s representative in the Southeast region of South Carolina, including Berkeley, Charleston, Colleton, and Dorchester Counties. Muhler conducts its business in these same areas. Thus, according to the evidence ...


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