Ride, Inc. v. Aps Tech., Inc.

11 F.Supp.3d 169

RIDE, INC. and Russell D. Ide, Plaintiffs,

v.APS TECHNOLOGY, INC. and William E. Turner, Defendants.

Civil Action No. 3:11–CV–1721 (JCH).

United States District Court, D. Connecticut.

Signed March 31, 2014

Motion granted. Ingrid L. Moll, Mathew P. Jasinski, William H. Narwold, Motley Rice LLC, Hartford, CT, for Plaintiffs.

Caleb H. Hogan, David M. Magee, Robert A. Brooks, Pepper Hamilton LLP, Boston, MA, for Defendants.

RULING RE: PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT (Doc. No. 85) AND DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Doc. No. 87)

JANET C. HALL, District Judge.

I. INTRODUCTION

In this diversity action, plaintiffs Russell D. Ide (“Ide”) and RIDE, Inc. (“RIDE”), in their Third Amended Complaint (“TAC”) (Doc. No. 35), allege seven claims arising out of a 1994 agreement and an alleged joint venture with the defendants, APS Technology, Inc. (“APS”) and William E. Turner (“Turner”). The plaintiffs set forth claims of breach of written contract, breach of oral contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, accounting, unjust enrichment, and CUTPA. TAC at 10–18. Defendants filed the same seven claims as counterclaims against plaintiffs in their answer to the plaintiffs' Third Amended Complaint. Answer (Doc. No. 38) at 13–19.

The plaintiffs have moved for summary judgment on all of the defendants' cross-claims. Plaintiffs' Motion for Partial Summary Judgment (“Pls.' Mot. Summ. J.”) (Doc. No. 85). Defendants do not object to the plaintiffs' Motion, thus abandoning all of their counterclaims.¹ Defendants' Response Memorandum to Plaintiffs['] Motion for Partial Summary Judgment (Doc. No. 110) at 2. Therefore, the plaintiffs' Motion for Partial Summary Judgment is GRANTED. The defendants move for summary judgment on all of plaintiffs' claims. For reasons set forth below, the court GRANTS the defendants' Motion for Summary Judgment on All Counts (“Defs.' Mot. Summ. J.”) (Doc. No. 87).

II. STANDARD OF REVIEW

A motion for summary judgment may be granted only when there are no issues of material fact in dispute and the moving party is therefore entitled to judgment as a matter of law. See Fed.R.Civ.P. Rule 56(a); In re Dana Corp., 574 F.3d 129, 151 (2d Cir.2009). The moving party may satisfy his burden “by showing—that is pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case.” PepsiCo, Inc. v. Coca–Cola Co., 315 F.3d 101, 105 (2d Cir.2002) (per curiam) (quotation marks and citations omitted). Once the moving party meets this burden, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial. Wright v. Goord, 554 F.3d 255, 266 (2d Cir.2009). The non-moving party must present evidence that would allow a reasonable jury to find in its favor in order to defeat the motion for summary judgment. Graham v. Long Island R.R., 230 F.3d 34, 38 (2d Cir.2000).

When reviewing the record, the court resolves all ambiguities and draws all permissible factual inferences in favor of the party against whom summary judgment is sought. Loeffler v. Staten Island Univ. Hosp., 582 F.3d 268, 274 (2d Cir.2009). If there is any evidence in the record on a material issue from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is inappropriate. Security Ins. Co. of Hartford v. Old Dominion Freight Line Inc., 391 F.3d 77, 83 (2d Cir.2004). However, the existence of a mere “scintilla” of evidence supporting the plaintiff's position is insufficient to defeat a motion for summary judgment. Havey v. Homebound Mortgage, Inc., 547 F.3d 158, 163 (2d Cir.2008).

III. STATEMENT OF FACTS²A. The 1994 Agreement

A two-page letter agreement (the “1994 Agreement”) was executed on May 27, 1994, by Turner, on behalf of APS, and on June 3, 1994, by Ide, on behalf of RIDE. Defendants' Local Rule 56(a)1 Statement (“Defs.' L.R. 56(a)1 Stmt.”) (Doc. No. 93–1 ³) at ¶ 1; Plaintiffs' Local Rule 56(a)2 Statement (“Pls.' L.R. 56(a)2 Stmt.”) (Doc. No. 97–1 ⁴) at ¶ 1. The 1994 Agreement purports to “set forth [the parties'] understanding and agreement as to the development of [their] mutual business interest in developing technical products for the oilfield and other industries.” Defs.' Ex. A at 1. The 1994 Agreement further specifies that: “[t]he products agreed upon are flexible couplings, sealed bearings, flow restrictors, and deflection pad silicon carbide bearings including any product covered by patents 5,048,981; 5,135,060; 5,007,490; 5,048,622; 5,077,491; and other patents such as the threaded, rubber injected flex coupling and the spiral groove flow restrictor.” ⁵ Defs.' Ex. A at ¶ 1.

The 1994 Agreement set forth two phases: Phase One, which was to continue for one year or until $250,000 annualized sales was reached; and Phase Two, which would commence after Phase One was complete. Defs.' L.R. 56(a)1 Stmt. at ¶ 3; Pls.' L.R. 56(a)2 Stmt. at § I, ¶ 3; Defs.' Ex. A at ¶ 3. The 1994 Agreement provided that:

During Phase One RIDE will grant to APS Technology exclusive rights to market and distribute the above products. APS Technology will deal exclusively with RIDE for engineering and manufacturing the above products. APS Technology will pay 90% of the sales receipts to RIDE and APS Technology will retain 10% of the sales receipts. RIDE will absorb all of the manufacturing and engineering costs. APS Technology will absorb all of the marketing and sales cost. Defs.' Ex. A at ¶ 5. The 1994 Agreement noted that, “[d]uring Phase Two a joint venture will be established to design, manufacture, market, and distribute the above products. The joint venture will be owned 50% by RIDE and 50% by APS Technology.” Id. at ¶ 6. The Agreement's termination clause stated that, “[e]ither party may terminate this agreement if, after 12 months no prototypes are developed, or if after 2 years no sales are generated.” Id. at ¶ 7.

From 1996 through 2009, RIDE and APS shared certain, but not all, costs and proceeds from the sales of the Baker Hughes INTEQ suspension/isolator (heretofore referred to by the court as the “RIDE Product”) on a 50/50 basis. See Rule 26(f) Statement of Undisputed Facts (“R. 26(f) Stmt. Undisp. Facts”) (Doc. No. 29) at § IV, ¶ 8. In or about 2009, sales of the RIDE Product ended. R. 26(f) Stmt. Undisp. Facts at § IV. ¶ 11.

B. The 1997 Letter

On August 16, 1997, Ide wrote Turner a two-page letter that stated, in part:

Ride, Inc. has over 12 patents that relate to oil well drilling.... Our [1994] agreement states that we would pay APS Technology a 10% commission on the sale of products relating to this technology and that when sales reached $250,000 we would form a 50/50 joint venture that would focus and grow from the earlier successes. As a sign of “good faith” we began evenly splitting the gross profits prior to the $250,000 sales target in the expectation a joint venture would be formed.... Despite these good faith efforts, the joint venture has not been formed. To the contrary your APS Technology has assumed the role of the joint venture company and is capitalizing on our good faith efforts.... We believe you have breached our written and verbal agreements.... Specific areas of concern that require immediate remedy include:

• APS Technology has copied our designs without authorization and are misrepresenting them to customers as being APS property. These drawings should be destroyed and any third party notified that they belong to Ride, Inc....

• APS is required to refund the 50% gross profits paid to APS in “good faith” towards formation of the joint venture. We believe our obligation should be limited to a 10% sales commission. Extension of sales that are the direct result of our earlier efforts should be terminated. Specifically, these include the sale of retrofit kits that mate with Ride, Inc. products. APS used our designs to develop these products, have failed to compensate Ride in any way while we continued to share profits. Gross profits from these products should be refunded to Ride less a 10% commission paid to APS

We intend to pursue all legal and injunctive means available to resolve these issues. Any further contact or activity with Ride, Inc. vendors, customers and proprietary/patented information should be terminated immediately.

Defs.' Ex. I at 1–2; see also Defs.' L.R. 56(a)1 Stmt. at ¶¶ 12–13; Pls.' L.R. 56(a)2 Stmt. at § I, ¶¶ 12–13.

C. The '541 Patent

In 1996, Turner and Ide agreed to apply for a patent disclosing a tapered isolator for drill strings (the “'541 patent”). R. 26(f) Stmt. Undisp. Facts at § IV, ¶ 12; Pls.' L.R. 56(a)2 Stmt. at § I, ¶ 22. On December 28, 1996, Ide signed a statement for the '541 application which stated: “I have reviewed and understand the contents of the above identified specification, including the claims, as amended by any amendment referred to above.” Defs.' Ex. DD at 3; Defs.' L.R. 56(a)1 Stmt. at ¶ 30; Pls.' L.R. 56(a)2 Stmt. at § I, ¶ 30. Ide appointed Michael D. Bednarek to prosecute this application. Pls.' L.R. 56(a)2 Stmt. at § I, ¶ 32; see also Defs.' Ex. DD at 3.

The '541 patent issued on November 10, 1998. Defs.' Ex. EE at 1. Mr. Bednarek, Ide's patent lawyer of many years, received notice that the patent had issued, as evidenced by a letter sent from Mr. Bednarek to Turner on December 3, 1998. Defs.' L.R. 56(a)1 Stmt. at ¶ 33; Pls.' L.R. 56(a)2 Stmt. at § I, ¶ 33; Defs.' Ex. EE at 1. On June 26, 2006, Bednarek emailed Ide and attached a report listing the status of patents in Ide's name and that the attached report included a list of 70 patents, one of which was the '541 patent. Pls.' L.R. 56(a)2 Stmt. at § I, ¶ 34; see also Defs.' Ex. FF. at 3–4. The same report sent to Ide also contained information on reassignment of the '541 patent, which indicated that William Turner assigned the '541 patent (1) to Liberty Bank in Middletown, Connecticut on June 1, 1998...