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Atmosphere Hospitality Management, LLC v. Shiba Investments, Inc.

United States District Court, D. South Dakota, Western Division

July 30, 2018

ATMOSPHERE HOSPITALITY MANAGEMENT, LLC, Plaintiff,
v.
SHIBA INVESTMENTS, INC., KARIM MERALI, ZELJKA CURTULLO, Defendants.

          ORDER GRANTING MOTION FOR ATTORNEY FEES IN PART AND DENYING IN PART

          KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE

         Plaintiff, Atmosphere Hospitality Management, LLC, moves the court to award it attorney fees and costs incurred to enforce the parties' settlement agreement. Docket 368. Atmosphere asks for $27, 158 in attorney fees and $6, 750.54 in costs. Docket 381-1. Defendants Shiba Investments, Inc., Karim Merali, and Zeljka Curtollo oppose Atmosphere's motion. Docket 379. Defendants also move the court for a hearing on Atmosphere's motion for attorney fees. Docket 374. For the reasons stated below, the court grants Atmosphere's motion for attorney fees in part and denies defendants' motion for a hearing.

         FACTUAL BACKGROUND

         On May 20, 2013, Atmosphere filed its complaint against defendants alleging several violations of law. Docket 1. After several years of discovery and dispositive motions, the trial was set to begin on September 26, 2016. Docket 294. On September 9, 2016, the parties informed the court that they had reached a mediated settlement agreement. Docket 346-1. On September 27, 2016, the court entered an order and judgment of dismissal without prejudice. Docket 329. The order stated that “[t]he court will retain jurisdiction over this matter until the settlement is completed and a joint motion for dismissal with prejudice is filed.” Id. On October 14, 2016, the parties entered into a settlement agreement and mutual release. Docket 346. On August 30, 2017, defendants filed a motion to reopen the case and enforce the settlement agreement and a motion to dismiss with prejudice. Docket 333; Docket 334. Defendants' brief in support of their motion to dismiss argued that they had substantially complied with the settlement agreement and asked the court to enforce the settlement agreement and dismiss the case with prejudice. Docket 336 at 7-8. Atmosphere did not oppose reopening the case and enforcing the agreement, but it did oppose dismissing the case with prejudice. Docket 344. Atmosphere argued in its brief that defendants had not complied with the terms set out in paragraph four of the settlement agreement, so Atmosphere refused to agree to a dismissal. Id.

         On February 8, 2018, and March 8, 2018, the court held an evidentiary hearing on defendants' motions. Docket 354; Docket 360. As a result of the evidentiary hearing, the court denied defendants' motion to dismiss and motion to enforce the settlement agreement. Docket 367. After reviewing the motions, briefs, exhibits, and testimony, the court found:

Plaintiff Atmosphere and the Defendants entered into a written settlement agreement dated October 14, 2016. In paragraph four of the settlement agreement, Defendants agreed to remove from the Internet, including their web site and social media, all references and links within their control to their association, past or present, with Adoba hotels. Paragraph four further required Defendants to do so within 30 days from the date of the settlement agreement.
The Court relies in part upon the testimony of Stacie Hull, who testified that Merali met with her and instructed her to remove references to Adoba on Shiba's hotel website. Stacie Hull lacked the skill and training to remove references to Adoba that were embedded in the HTML code. While some or a majority of the public references to Adoba on the website have been removed, Defendants did not take sufficient action to ensure that all references to the Adoba Hotel were removed from the website's HTML code. Such requirement is clearly covered within paragraph four of the settlement agreement. Even on the day of March 8, 2018 hearing, the website still contained Adoba references embedded in its HTML code. Having Adoba references embedded within the website's code drives up search responses for Defendant's hotel when the public searches online for Adoba.
Atmosphere gave notice in April of 2017 that Defendants had not met the provisions of the settlement agreement. Such notice was sufficient and adequately put Defendants on notice that they needed to take further action to fully comply with the settlement agreement. Defendants did not take such actions.
Atmosphere was not required to hire an expert and inform Defendants what they needed to do to fully comply with removing all Adoba references from the internet. Such was Defendants' responsibility and they were capable of doing so and should have on their own.
Merali is experienced in the hotel industry and has rebranded the hotel in the past a number of times. Rebranding is [] not a new concept for Merali.
With regard to third-party booking sites, the Court finds that the third-party booking vendors were contacted in March 2016 with instructions to change the name of the hotel from Adoba Eco-Hotel or Adoba Hotel to the The Rushmore Hotel and Suites. There were, however, no instructions given that all references to Adoba Eco-Hotel or Adoba Hotel should be removed. Defendants only made such requests of some third-party booking sites shortly before the February and March 2018 hearings on this matter. Contacting third-party vendors to instruct them to change the name of the hotel is not sufficient to meet the requirements of paragraph four of the settlement agreement.

Docket 367.

         Atmosphere now moves for an award of attorney fees and costs under paragraph six of ...


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