MARY L. COOPER, District Judge.
The plaintiff, Fresh Prepared Foods, Inc. ("Fresh Prepared Foods"), d/b/a Blue Ridge Farms, brought this action alleging, inter alia, trademark infringement by defendants, Farm Ridge Foods LLC ("Farm Ridge Foods"), Jeffrey Siegel, Ronald Loeb, and Luis Gonzalez (collectively, "the Defendants"). (See dkt. entry no. 6, Am. Compl.) The parties cross-move for summary judgment on the issues of liability and trademark infringement. (See dkt. entry no. 44, Pl. Mot. for Summ. J. ("Pl. Mot."); dkt. entry no. 50, Defs. Mot. for Summ. J. ("Defs. Mot.").) Fresh Prepared Foods moves for summary judgment in its favor as to liability on Counts 1-6 of the Amended Complaint, the Defendants' counterclaims, attorneys' fees and costs, and an injunction prohibiting the Defendants from use of the specified logo, name, and references on their website. (See Pl. Mot.) Counts 1-6 of the Amended Complaint concern trademark infringement, false designation of origin, unfair competition, and dilution of trademarks under the Lanham Act, 15 U.S.C. §§ 1114(1), 1125(a), 1125(c); unfair competition under New Jersey state law; and common law trademark infringement and unfair competition. (See Am. Compl. at ¶¶ 17-38.) The Defendants seek a declaration that Fresh Prepared Foods has no right to the registered trade name or registered logo, summary judgment in their favor as to all claims, and an award of attorneys' fees and costs. (See Defs. Mot.)
For the reasons that follow, the Court will deny the Defendants' cross motion for summary judgment, and grant the motion by Fresh Prepared Foods for summary judgment in part and deny it in part.
The members of the Siegel family began selling chicken parts in 1938, and incorporated their store in New York as Blue Ridge Farms, Inc., in 1961. (See dkt. entry no. 48, Defs. Statement of Undisputed Facts at ¶¶ 1, 2 ("Defs. Statement").)
Blue Ridge Farms, Inc., and its owners entered into an agreement to sell the company to Thomas Kontogiannis in 2004. (See dkt. entry no. 8, Ans. & Countercl. at ¶ 48.) Kontogiannis turned out to be a "career criminal" engaged in various criminal enterprises, including but not limited to immigration fraud, bid rigging, and bribing former United States Representative Randall "Duke" Cunningham. (Id. at ¶¶ 50-53.) The Defendants assert that Kontogiannis and his daughter wrongfully usurped control over Blue Ridge Farms, Inc.'s day-to-day operations, using entities under their exclusive control (including 3301 Atlantic Avenue LLC, BRF Acquisition LLC, and Chloe Foods), and divested Blue Ridge Farms, Inc.'s assets, including its intellectual property, by fraudulently transferring these assets to other controlled entities. (See id. at ¶ 55-56.) The members of the Siegel family commenced a long saga of multi-forum litigation seeking the return of their trademark property, while all along asserting that they were the rightful owners and that Kontogiannis and the subsequent companies could not purport to have any legal interest or title to that property. (See id. at ¶¶ 61-63, 64, 73.)
i. The Bankruptcy Proceedings
The issue of ownership of that trademark property was raised during the Chloe Foods bankruptcy proceedings: In re Chloe Foods Corp., No. 08-48650 (Bankr. E.D.N.Y., Chap. 11 petition filed Dec. 19, 2008). (See dkt. entry no. 44-1, Pl. Statement of Facts at ¶¶ 4-16 ("Pl. Statement").) In those bankruptcy proceedings, Chloe Foods moved to sell certain assets, and proposed a sale of certain intellectual properties to EM-ESS Acquisition LLC ("EM-ESS"). (See id. at ¶ 4.) Jeffrey Siegel, Blue Ridge Farms, Inc., June Siegel, and the estate of Seymour Siegel ("the Objectors") objected to the asset sale motion, arguing that Chloe Foods did not own the intellectual property it proposed to sell. (See id. at ¶¶ 5-14; see dkt. entry no. 44-4, Declaration of Donna Thompson ("Thompson Decl."), Ex. A, In re Chloe Foods Corp.)
Chloe Foods sought the Bankruptcy Court's approval of a proposed sale of assets, which specifically referenced trademarks:
THE PROPOSED SALE
(A) THE SALE OF ASSETS
7. EM-ESS Acquisition LLC has; contracted to purchase the Debtor's assets (the "Property"), consisting of its trade marks and trade names, customer list, recipes, goodwill, accounts receivable, machinery and equipment, office furniture and equipment and its leases (a)
(Dkt. entry no. 44-4, Thompson Decl., Ex. B, In re Chloe Foods Corp., Mot. for Approval of Proposed Sale of Assets at ¶ 7.) Enumerated in Section 2.2 of the proposed purchase agreement, the assets to be purchased included:
(g) all of Seller's recipes, formulas, know-how, trade secrets, customer lists, books of account, written contracts with customers, trademarks, trade names, service marks, and service names and all rights associated therewith and appurtenant thereto, all as set forth on Schedule 2.2(g) attached hereto and made a part hereof (collectively "Intellectual Property");
(Dkt. entry no. 44-4, Thompson Decl., Ex. C, Asset Purchase Agreement at 7.) As was noted by the Defendants, this agreement did not include the schedule enumerating all of the specific "trademarks" and "trade names" that were being sold; that schedule, Schedule 2.2 G, was instead to be provided at closing. (See id. at 30.) Schedule 2.2 G, concerning the intellectual property of the debtor, was provided at closing. (See dkt. entry no. 56-5, Supp. Decl. of Donna L. Thompson ("Thompson Supp. Decl."), Ex. E, Schedule 2.2 G (listing recipes only, despite label designating it to be "Recipes, Customer Lists, Trademarks, Trade Names & Written Contracts to be provided at closing").)
Blue Ridge Farms, Inc., and Jeffrey Siegel claimed in that bankruptcy proceeding that the filing was fraudulent because the properties being sold did not belong to Chloe Foods, that the Kontogiannis family had engaged in extensive fraud and looting of the family business, and that a state court proceeding had original jurisdiction over the dispute that Chloe Foods was now attempting to evade by making the bankruptcy filing. (See dkt. entry no. 44-5, Thompson Decl., Ex. D, Objections of Jeffrey Siegel and Blue Ridge Farms, Inc.) The objections mirror many of the Defendants' arguments before this Court, including that the Objectors are the true owners of the registered trade name and registered logo, and that the "frauds" perpetrated by the Kontogiannis family nullify any subsequent sales of assets procured through such fraud:
57. With respect to Blue Ridge, the "assets" which debtor proposes to sell include and consist of: its accounts receivables; cash; assets; machinery; equipment; trademarks; trade names; logo; trucks; office furniture and computer equipment; intellectual property; and, contract rights and leasehold interests of which it was wrongfully divested. The debtor has no valid title to any such assets, and cannot prove any title thereto.
58. It is well-settled that a "bankruptcy court may not allow the sale of property as property of the estate' without first determining whether the debtor in fact owned the property". Warnick v. Yassian (In re Rodeo Canon Development Corp.) , 362 F.32d 603, 608-609 609 (9th Cir. 2004); also In re Kurt Claywell , 341 B.R. 396 (Bankr. Conn. 2006). Moreover, as most recently held, a Section 363(1) sale cannot be had when there exists an unresolved issue of whether the subject property is "property of the estate". In re Interiors of Yesterday, LLC, 2007 Bankr. LEXIS 449 (Bankr. D. Conn. 2007); In re Whitehall Jewelers Holdings, Inc. , 2008 Bankr. LEXIS 2120 (Bankr. D. Del. July 28, 2008). As demonstrated herein.
(Id. at 25.) June Siegel and the estate of Seymour Siegel also filed an objection, making the same arguments as described above. (See Pl. Statement at ¶ 7; see also dkt. entry no. 44-4, Thompson Decl., Ex. E, Objections of June Siegel & Estate of Seymour Siegel.)
The Bankruptcy Court held two hearings on the proposed sale, and at the second of those hearings, the Objectors, represented by counsel, objected vociferously to the proposed sale, but were ultimately overruled. (See dkt. entry no. 44-6, Thompson Decl., Ex. F, 5-21-09 Hr'ing on Mot. to Sell Property Free & Clear of Liens Transcript at 2, 63-76 ("5-21-09 Hr'ing"); see also dkt. entry no. 44-2, Pl. Br. in Supp. of Mot. for Summ. J. at 7-10, 14-18 ("Pl. Br.").)
The Objectors argued to the Bankruptcy Court that the assets did not belong to Chloe Foods, or at the very least, there was a question regarding who properly owned the assets such that the sale of those assets could not be approved by the court; the Bankruptcy Court ultimately disagreed with that position:
We just believe that there's a fundamental question that should be answered before any sale proceeds and that's whether the debtor even has a right to sell the property that it seeks to sell here today. It's our position that it's not and that the property belongs to Blue Ridge, that it was acquired by the debtor pursuant to a fraudulent foreclosure proceeding that was orchestrated by Chloe Foods' principals and other companies acting with it. The rights to the ownership of these assets are being litigated in a state court action pending off the street and we just believe that a determination on ownership should be made before any sale can proceed forward.
THE COURT: All right. Chloe Foods is a corporation. It owns these assets, has title to these assets at the present time. Your clients' actions a fraudulent conveyance action.
(5-21-09 Hr'ing at 63.)
The Objectors disputed the Bankruptcy Court's understanding that Chloe Foods had the right to transfer that title through an approved sale, explaining the history of the transactions between Kontogiannis and the Siegel family and how they were seeking a judgment against Kontogiannis regarding his fraudulent conveyances. (See id. at 63-64, 70-75.) When the Objectors argued that there were ongoing, concurrent state and arbitration actions that could determine that Kontogiannis had defrauded the Siegel family and stolen the property at issue, the Bankruptcy Court asked:
THE COURT: By your - but the point is how are you - is Chloe Foods a defendant in that?
MR. MAIZES: No, Your Honor.
THE COURT: Well, then how do you think you would ever get a judgment that would be enforceable against Chloe Foods?
MR. MAIZES: Chloe Foods doesn't own the asset it's trying to sell today.
THE COURT: But you - this arbitration, you're saying is going ...