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Things aren’t looking so good for Grandma Heidi Powell

Cybersquatting claim is dead, but battle continues in bankruptcy court.

Grandma Heidi Powell just wants to keep her domain name.
The saga of Grandma Heidi Powell and the domain name HeidiPowell.com seems like it will be settled in bankruptcy court after a federal district judge said a settlement agreement in its court must be honored.

A bit of background…

A somewhat-famous fitness instructor named Heidi Powell filed a cybersquatting lawsuit against Grandma Heidi Powell to try to get the domain name HeidiPowell.com. Never mind that Grandma Heidi Powell owned the domain name well before Fitness Heidi Powell adopted the last name Powell, and never mind that the domain name exactly matches Grandma’s name.

Grandma Heidi Powell responded with counterclaims asserting reverse domain name hijacking.

The two parties went at it in court. They also entered into settlement negotiations in which both parties agreed to drops the claims with prejudice and both parties would pay their own legal fees.

Before submitting the settlement to the court, Grandma Heidi Powell’s lawyers figured out why Fitness Heidi Powell was suddenly willing to settle the matter — she had found another avenue to procure the domain name.

It turns out that Grandma Heidi Powell had filed for bankruptcy in Washington in 2012. So Fitness Heidi Powell went to the trustee in the bankruptcy case and offered to pay $10,000 for the domain name if the trustee reopened the case. (Grandma Heidi Powell, not surprisingly, hadn’t thought to declare ownership of the domain name as an asset during bankruptcy.)

Once Grandma’s lawyer David Weslow understood what was happening, he informed Fitness Heidi Powell’s lawyer that the proposed stipulation needed to include a line “making clear that Defendants will retain ownership of the HeidiPowell.com domain name.”

Fitness Heidi Powell’s lawyers said no dice, you already agreed (apparently via email) to the dismissal without that clause.

This week, U.S. District Judge Susan Bolton sided with Fitness Heidi Powell, ruling (pdf) that the settlement was enforceable. She also said that, even if the settlement stated that Grandma Powell would retain the domain name, that wouldn’t preclude Fitness Heidi Powell from trying to get the domain name through the bankruptcy court.

(Bolton also ruled that Grandma Heidi Powell didn’t need to pay Fitness Heidi Powell’s legal costs for enforcing the settlement, primarily because it would cause hardship.)

So, this brings the case to bankruptcy court in Washington.

At first, the trustee determined “It is unclear whether the domain name is an asset of the bankruptcy estate. It is unclear whether Debtors properly claimed the exemption in the domain name.”

Grandma Powell had some exemption amount and agreed to pay the difference between it and the $10,000. So the trustee moved to essentially sell the domain name back to Grandma.

Then Fitness Heidi Powell upped her offer to the bankruptcy trustee to $20,000. Now the trustee is saying that the domain name is property and should have been scheduled in the bankruptcy proceedings, even though it really seemed to have nominal value at the time.

This drags up the long-running question of “are domain names property?”. Fitness Heidi Powell’s lawyers provided some examples (pdf) of courts seemingly finding this. It brings up some old cases, including the Sex.com theft and the lawsuit between Jay Westerdal and Name Intelligence.

The circumstances in this battle should serve as a warning to lawyers entering into settlement agreements in cybersquatting/reverse domain name hijacking cases. They need to word the settlement such that it’s clear the other party won’t try to get the domain name through any other legal means, not just a cybersquatting claim.

Although David Weslow defended Grandma Powell pro bono in the cybersquatting case, Powell has now had to hire a bankruptcy lawyer. She has a GoFundMe page to raise funds to pay the bankruptcy lawyer.

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  1. J.R.

    So, the questions remain: Is a domain name ‘property’ in the State of Washington, as declared by the California courts? Or is it a contract for service, as it is in the Virginia Courts? This Fitness Heidi is a tyrant and creep, but understand that as domainers; many of you have assets that are worth more than cars, homes, and sometimes commercial businesses. Protect yourself, know your rights, and build a lawyer fund.

    This will be a precedent setting case for the status of domains for the State of Washington…

  2. Shane Cultra

    If I am reading this correctly. If she gives up the name she takes $20,000 off her bankruptcy debt. I understand the principle of keeping your name and not having it stolen from you, but given her hardship and debt owed, this seems like a fair exchange. And again, we must fight for our ownership rights at all times to insure we keep our names fair and square but without her personal bankruptcy this probably would all be over. Unfortunately part of bankruptcy is forfeiting things that can be sold to pay back the people you owe. It’s never pretty

    Great article Andrew. Well written

    • Andrew Allemann

      Shane,

      There would be a benefit to her creditor if this happens. In this case, I believe it’s the U.S. government because it was student loan debt (not sure if someone else was actually owed the money).

      I assume she doesn’t have “bankruptcy debt” because it would have discharge in the Chap 7 bankruptcy.

      I’m not a bankruptcy expert, though.

      • cam

        In Bankrupcty in Canada, I think you can be discharged after a year. Wouldnt she have a complete discharge by now in the U.S. Maybe the file was allowed to reopen because grandma failed to disclose domain as asset at the time ( even though it had no money value at the time) If she was discharged, it seems wrong to open up her case again unless she knowingly hid information from her trustee during her bankruptcy.

    • Joseph Peterson

      @Shane Cultra,

      None of this looks like a “fair exchange” to me.

      Some minor celebrity bullies a woman, dragging her through the court system, piling on legal expenses, until she can yank away that woman’s name. You’d agree that part isn’t fair.

      As far as the bankruptcy goes, isn’t that process meant to give someone a chance to make a clean break and start over? When someone goes bankrupt, presumably some bills will go unpaid. Life ought to be allowed to continue without perpetual debt. If the bankruptcy filing happened in 2012, then shouldn’t the matter have been laid to rest by now, five years later?

      Grandma Powell survived the bankruptcy years ago, keeping her name as a .COM – an anniversary gift given her by her husband – just as she kept the socks in her sock drawer or her family photos. All personal items with negligible market value and of no legitimate interest for the bankruptcy court at the time.

      Should the trustee compel her to give up whatever personal item someone else now covets? In that case, if I decide to offer money for Grandma’s wedding dress, then the trustee must seize it and give it to me.

  3. Josh

    Someone should step in and offer more than Heidi to the bankruptcy court and hand it back to Grandma, screw that fitness woman real good.

    • Logan

      Someone with $30,000 to spare on a domain name that would immediately have a UDRP filed on it by Fitness Heidi Powell due to the new registration targeting her supposedly “famous” trademark? No dice.

      • Josh

        True, or the Grandma may suddenly receive a gift allowing her to buy back IF creditors were not owed. There is a way around things just like in this case. I agee though if Grandma had creditors owing and the name would pay that or a portion back, fine but if not…

    • Richie Riches

      Yeah right!
      Step up Legendary one
      Your always yapping about your sales n stuff
      Do grandma the favour yourself o benevolent one

  4. David

    I don’t think we can overlook that:

    GoDaddy’s registration agreement requires customers to “acknowledge and agree that by registering a domain name, you are not acquiring any property rights in that domain name.”

  5. Acro

    Not to mention that Heidi-Powell .com is now for sale on Afternic (registered and listed after the news broke out) and HeidiPowell.xyz looks like sports supplement spam galore. The .Blog variant is new too.

  6. Bryan G

    Would this have been a whole different story had the domain been declared at $10 or whatever in the bankruptcy?

    At the time of the bankruptcy wouldn’t the value have been pretty much reg fee? Or basically no value just the option to keep paying yearly renewals.

    • Joseph Peterson

      @Bryan G,

      That’s what it boils down to, as far as I can see. There would have been no legitimate reason to see market value in the domain name beyond $10, if even that.

      No reasonable person would have listed their own first-name-last-name domain name as an asset. At best, it was a personal expense – and a tiny one at that. Like lipstick or a framed photo. And if the domain HAD been included, the court would presumably have certified it as being of negligible value.

  7. Rose

    I would just like to say I’ve lost all respect for Fitness Heidi Powell. I hope she loses thousands of followers because of this. It doesn’t matter if you have a .com or .net after your name if everyone is disgusted by your behavior.

  8. 168

    “Grandma Powell had some exemption amount and agreed to pay the difference between it and the $10,000. So the trustee moved to essentially sell the domain name back to Grandma.

    Then Fitness Heidi Powell upped her offer to the bankruptcy trustee to $20,000. Now the trustee is saying that the domain name is property and should have been scheduled in the bankruptcy proceedings, even though it really seemed to have nominal value at the time”

    Who ever advised Grandma to offer “pay the difference” should be fired.
    Why the Trustee wasn’t made aware that no registration “acquires property rights” is beyond me.
    The trustee, regardless of circumstance is WRONG without ANY evidence of value or rights “At the time”
    Justice is definitely for sale in this case

  9. clasione

    You know what they say about Karma. Someone commented on one of my articles about this topic and raised the idea of something like this: Available for hand reg. http://www.heidipowellsucks.com – Wouldn’t that be just what someone deserves. Or what happened to those .sucks domains. HeidiPowell.sucks

  10. steve

    I agree with Joseph Peterson. If the bankruptcy happened in 2012, I’d assume the court and the attorneys listed and placed valuation on the various assets. IP (domains, trademarks, patents, copyrights) are intangible assets, and no doubt valuations can be placed on IP assets when there are comps, or parties wishing to acquire or license these. But you can certainly see why Grandma Heidi or her attorneys didn’t list her own name as a URL as an asset, unless this name already had “brand value” and had received solicitation for selling — a name like “JenniferLopez.com”, “TaylorSwift”, etc

    I’m not a bankruptcy expert either, and I hope I never will be.

    Let’s hope things turn out OK for Grandma Heidi. Sounds like she’s had to deal with enough hardship.

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