October 6, 2021, Southern District of New York – Plaintiff L&L Wings, Inc., by its attorneys, Davidoff Hutcher & Citron LLP, files a complaint against Beach Mart, Inc. (“BMI”), seeking reduction and disallowance of a claim filed by BMI or in alternative equitable subordination of the claim.

According to the complaint, Debtor operates 26 beachwear retail stores under the WINGS mark throughout North Carolina, South Carolina, Florida, Texas, and California.The Debtor “entered into a trademark license agreement with Defendant” that permitted beach wear stores’ operations under the trade name “Super Wings” or “Big Wings.” Sometime in or around 2011, a dispute arose between the Debtor and Defendant regarding Defendant’s use of the trade name “Super Wings.” The District Court rendered the judgment in favor of Defendant, awarding damages of $4,184,135.00 for each cause of action asserted by Defendant. The Debtor disputed the verdict. BMI requested the Court to enter judgment including treble damages of the ruling, according to the NC UDTPA. The Court issued a decision against the Debtor and awarded $15,868,068.49 towards damages to Defendant, which comprised actual damages for $4,184,135.00, trebling of actual damages for $8,368,270.00 under the jury’s finding of unfair and deceptive conduct, as prohibited under the NC UDTPA, NC. Gen. Stat. Section 75-1.1, prejudgment interest, attorney fees, and cost.

Plaintiff argues that the actual damages for $4,184,135 are “arbitrary, unsupported by the evidence, and do not represent a reasonable calculation of economic loss”. In addition, Plaintiff argues that the treble damages adjustment, the prejudgment interest, the previously paid fees, and the costs are in the nature of a “punitive award or penalty”. Further, Plaintiff contends that the judgment is disproportionate to the claims of the other creditors that “arise in the ordinary course of the Debtor’s business”. Accordingly, Plaintiff seeks to disallow or subordinate the actual damages claim, treble damages adjustment, prejudgment interest, previously paid fees, and costs for being “grossly and unconstitutionally disproportionate” to the alleged actual damages or purported economic injury suffered by Defendant. The Debtor also demands the avoidance of the obligation to pay the punitive damages claim as a “fraudulent conveyance” according to 11 USC. Section 548(a)(1).

In re: L&L Wings, Inc., Case No. 21-10795(DSJ)