Court affirms verdict for American Equity Mortgage over ‘ninety-nine, ninety-nine’ fight

A Missouri appeals court upheld a $300,000 unfair competition verdict a St. Louis County jury issued last year in the long-running lawsuit between American Equity Mortgage and Vinson Mortgage.

American Equity Mortgage was owned by Ray Vinson and his then-wife, Deanna Daughhetee, and it was Vinson’s familiar twang that was heard over the airwaves urging would-be borrowers to call AEM at 878-9999 — the last four digits pronounced “ninety-nine, ninety-nine.”

The couple’s business relationship soured along with their personal relationship, and when the two divorced in 2006 the St. Louis County Family Court awarded Daughhetee ownership of AEM. The court also ordered her to pay Vinson $16 million; part of that was for his share of AEM.

Then Ray Vinson started Vinson Mortgage and began advertising on the radio, on television and in print. Appealing to folks with “less than perfect credit,” Vinson urged them to call 839-9999 — still using the “ninety-nine, ninety-nine” wording.

Radio ads

That phone number was at the center of an unfair competition lawsuit AEM filed in St. Louis County in October 2006 as well as the center of a trademark lawsuit the same plaintiff filed in the U.S. District Court in St. Louis. The federal suit was dismissed without prejudice in July 2007.

On March 11, 2011, a St. Louis County jury concluded the radio ads using the familiar “ninety-nine, ninety-nine” refrain were misleading and damaged AEM, which had used the same refrain for more than a decade.

After deliberating for about six hours, the jury unanimously found for AEM and awarded $300,000 in damages. The award, however, was significantly less than the $3.4 million AEM’s trial attorney, David P. Stoeberl, of Carmody MacDonald in Clayton, asked for in closing arguments.

“I challenged it because I don’t know of anyone out there who hears Ray’s voice and thinks of American Equity,” his lawyer, Steven M. Hamburg, of Steven M. Hamburg P.C., said in a telephone interview. “I don’t think Ray was attempting to hijack the brand as they challenged and as they charged.”

On appeal, Vinson Mortgage argued an instruction was faulty because it didn’t require AEM to prove secondary meanings to words or phrases VM used — allegedly unfairly — in its advertising.

‘Distinctive marketing’

But the Missouri Court of Appeals Eastern District said the presence of a secondary meaning isn’t a required element for the type of unfair competition claim AEM alleged: that VM used AEM’s “distinctive marketing” to pass off AEM’s services as its own.

Secondary meaning comes into play in trademark cases.

“This case was about reaffirming that in our community free competition means you need fair competition, and in fair competition you can’t pass off your goods and services as those of your competitor,” Stoeberl said in a telephone interview.

“The evidence showed that rather than simply incorporating the use of particular phrases, slogans, or Vinson’s voice itself for its advertisements, VM used virtually identical advertisements to those of AEM,” Judge Robert M. Clayton III wrote for the unanimous panel. “While VM’s advertisements did include certain phrases used by AEM, as well as used Vinson’s voice, they also incorporated the content, syntax, and message used by AEM in its advertising. In addition, Vinson himself testified he adopted and used the same marketing strategies used at AEM because he believed they would work for VM.”

Chief Judge Kurt S. Odenwald and Judge Patricia L. Cohen concurred with Clayton’s opinion.

The case is American Equity Mortgage Inc. v. Vinson et al., ED97103.