Hutchins v. Cardiac Science, Inc.

456 F.Supp.2d 173

Donald C. HUTCHINS, Plaintiff v. CARDIAC SCIENCE, INC., et al., Defendants.

C.A. No. 04-30126-MAP.

United States District Court, D. Massachusetts.

September 27, 2006.

COPYRIGHT MATERIAL OMITTED

Donald C. Hutchins, Longmeadow, MA, pro se.

Colleen Moran O'Neil, Jeffrey J. Lauderdale, William E. Coughlin, Calfee, Halter & Griswold LLP, Cleveland, OH, John J. Egan, Egan, Flanagan & Cohen, PC, Springfield, MA, for Defendants.

MEMORANDUM AND ORDER RGARDING CROSS MOTIONS FOR SUMMARY JUDGMENT AND OTHER MISCELLANEOUS RELIEF (Dkt. Nos. 66, 67, 87, 105, 120, 127, 129, 134, 139, 141, 149, 151, 154, 163, 165, 170, 175, 187, and 198)

PONSOR, District Judge.

I. INTRODUCTION

This is a suit brought by pro se Plaintiff Donald C. Hutchins against Cardiac Science, Inc. ("Cardiac Science") and Complient Corporation ("Complient"). Plaintiff alleges that Cardiac Science is liable for copyright and patent infringement, abuse of process, and tortious interference with contract, and that Complient is liable for fraud, fraudulent misappropriation and sale of patent, and breach of contract. Defendants deny Plaintiff's allegations and have asserted counterclaims seeking damages for breach of contract, abuse of process, tortious interference with contract, and interference with prospective advantage.

On January 4, 2006, the court heard argument on nine motions, including Cornplient's and Plaintiffs respective motions for summary judgment.¹ Since oral argument, Plaintiff has filed a number of additional motions, as well as an amended notice of removal of Complient Corp. v. Donald C. Hutchins, et al., Hampden County Superior Court Civil Action No. 05-1115 ("the Hampden County collection action") and a second amended complaint. Complient, the plaintiff in the Hampden County collection action, opposes removal and has filed a motion to remand. Cornplient has also moved to strike Plaintiff's second amended complaint.

For the reasons set forth below, the court will: allow Complient's Motion for Summary Judgment (Dkt. No. 66); deny Complient's Motion for Default Judgment (Did. No. 67); deny Plaintiffs Motion for Summary Judgment (Dkt. No. 87); deny Plaintiffs Motion for Declaratory Judgment (Dkt. No. 105); deny, as moot, Plaintiffs Motion to Enjoin Cardiac Science to Disclose the Identity of the Current Licensee (Dkt. No. 120); deny, as moot, Plaintiffs Motion to Join Stradling, Yocca, Carlson & Rauth (Dkt. No. 127); deny Plaintiffs Motion to Join Steven Lindseth (Dkt. No. 129); deny, as moot, Plaintiffs Motion for Removal (Dkt. No. 134); deny Plaintiffs Motion to Schedule a Jury Trial (Dkt. No. 139); deny Plaintiffs Motion to Strike (Dkt. No. 141); allow Complient's Motion to Remand (Dkt. No. 149); deny Plaintiffs Second Motion for Declaratory Judgment (Dkt. No. 151); deny Plaintiffs Motion to Join CPR Limited Partnership ("CPR L.P.") (Dkt. No. 154); allow Plaintiffs Motion to Withdraw his Motion to Join Stradling, Yocca, Carlson & Rauth (Dkt. No. 163); deny Plaintiffs Motion for Sanctions against Counsel for Complient (Dkt. No. 165); deny Plaintiffs Motion for Partial Summary Judgment (Dkt. No. 170); deny Plaintiffs Motion to join Axentis LLC ("Axentis") (Dkt. No. 175); deny Plaintiffs Motion to Define Complient (Dkt. No. 187); and allow Complient's Motion to Strike Plaintiffs Second Amended Complaint (Dkt. No. 198).

II. FACTUAL AND PROCEDURAL BACKGROUND

The court will begin by addressing Cornplient's Motion for Summary Judgment; the facts below therefore appear in the light most favorable to Plaintiff, the nonmoving party. See Teragram Corp. v. Marketwatch.com, Inc., 444 F.3d 1, 8 (1st Cir.2006) (citation omitted)² On June 1, 1994, Plaintiff and his closely-held company, CPR Prompt Corporation ("CPR Prompt"), entered into a license agreement (the "License Agreement") with County Line Limited Partnership ("County Line"), a venture company under the direction of Jon and Steven Lindseth. (See Dkt. No. 91, Martinelli Aff.) Under the terms of this agreement, Plaintiff and his company provided County Line with an exclusive license to various intellectual properties, including CPR Prompt®—a device designed to instruct individuals in the performance of cardiopulmonary resuscitation.³ (See Dkt. No. 91, Ex. E, License Agreement.)

In return, Plaintiff received an up-front payment of $100,000 and royalty payments on CPR Prompt® sales. (Id. at §§ 3.1-3.4.) Pursuant to § 3.10 of the License Agreement, County Line also agreed to assign its interest to an "Affiliate"⁴ athat would

cause each partner of such Affiliate who purchases or otherwise acquires a partnership interest of such Affiliate directly from such Affiliate to agree to pay CPR-PROMPT seven and one-half percent (7.5%) of the net proceeds of any sale of any or all of such partnership interest to any person or entity which is not an Affiliate to such partner.

(License Agreement § 3.10 (noting that "Rif such Affiliate conducts a public offering . . . , no person or entity purchasing stock in such offering or from such Affiliate thereafter shall be required to agree to make such payments").)

On September 19, 1994, County Line assigned all of its rights and obligations under the License Agreement to CPR L.P.,⁵ an Ohio entity that initially had two partners: Catalog Products, Inc. ("Catalog Products"), a 1% limited partner, and County Line itself, the 99% general partner.⁶

In December, 1997, County Line's corporate successor⁷ transferred its general partnership interest in CPR L.P. to CPR Prompt LLC, which subsequently converted to Complient, a Delaware corporation. Like the previous general partners, Complient retained a 99% partnership interest in CPR L.P. and performed various services related to the License Agreement. Specifically, Complient "supplied Hutchins with sales reports, royalty payments, patent license fee payments and all other transactions covered by the License Agreement" (Dkt. No. 89, Pl.'s Statement of Undisputed Facts in Supp. Pl.'s Mot. Summ. J. ¶ 3.)

On November 23, 1999, Plaintiff attempted to terminate the License Agreement by issuing a "Notice of Termination," alleging a breach of § 3.10.⁸ Five days later, on November 28, 1999, Plaintiff issued a "Final Notice of Termination" in which he claimed the same misconduct.

On December 15, 1999, Complient responded on behalf of CPR L.P. and County Line and asserted that no breach of § 3.10 had occurred.⁹ Complient further advised Plaintiff that if he did not reply by December 31, 1999, Complient would consider his termination notices null. Plaintiff did not respond and later acknowledged that his efforts to terminate the License Agreement were unsuccessful.

The next significant action occurred in January of 2001, when Plaintiff, represented by counsel at the time, informed Complient of his belief that the License Agreement entitled CPR Prompt to "7.5% of the proceeds of any sale by any partner/member/shareholder of Complient . . . and not simply on Complient's interest in CPR [L.P.]." (Dkt. No. 40, Ex. N, Letter from Gary E. Martinelli, counsel for Plaintiff, to Steven W. Lindseth, President, Complient at 3 (Jan. 15, 2001).) In a letter to Steven Lindseth, Plaintiff's counsel provided the following rationale for Plaintiff's position:

In the course of the drafting of the License Agreement, you informed Don Hutchins that, inasmuch as County Line had separate lines of business including Christmas tree stands and birdhouses, you intended to form a new entity to be controlled by County Line for the purposes of conducting the business to be built around the invention covered by the License Agreement. You indicated that the new entity would raise venture capital from outside investors.

Accordingly, Section 3.10 was incorporated into the License Agreement providing for the creation of an "Affiliate" and for the payment of 7.5% of the proceeds of any sale by a "partner" (intended to include County Line and any outside investors) of the Affiliate to CPR Prompt. Consistent with this, Section 4.9(d) of the License Agreement provided that the Affiliate would provide and update the names and addresses of the investor partners to CPR Prompt . . . . [Instead,] County Line [seems to have] proceeded with two affiliated companies, one to hold the rights under the License Agreement (CPR [L.P.] ) and another (now Complient Corporation) to actually raise venture funding, to conduct the business and to own CPR [L.P.]. It appears that [Complient's] thinking is that while CPR Prompt may be entitled to 7.5% of the proceeds to be derived from the sale of CPR [L.P.], CPR Prompt is not entitled to 7.5% of the proceeds to be derived from the sale of Complient

This interpretation of the License Agreement is completely at odds with the understanding of the parties at the time the License Agreement was executed. The intent was that one "Affiliate" be the holder of the License Agreement, the repository of the venture funding and the operating company.

The discussion in Section 3.10 of the consequences of a public offering or a merger would be irrelevant absent this conclusion as would be the undertaking in Section 4.9(d) to provide and update the names of other investors in the Affiliate.[¹⁰] It is also totally inconsistent with the discussions held with you leading up to the execution of the License Agreement. . .

Finally, it is inconsistent with the early drafts of the License Agreement in which County Line itself was to be not only the licensee but also the investment vehicle. The notion of assigning the license to an affiliate was developed late in our discussions when you sought to separate bird feeder / Christmas tree stand operations from the CPR Prompt business.

(Id. at 1-3 (emphasis in original).)

In conclusion, Plaintiffs counsel requested an explanation

as to how and why CPR [L.P] was relegated to a dark corner of Complient's corporate structure when the premise under which the License Agreement we entered...