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Ride, Inc. v. APS Technology, Inc.

United States District Court, D. Connecticut

December 30, 2015

RIDE, INC., and RUSSELL D. IDE, Plaintiffs,
v.
APS TECHNOLOGY, INC. and WILLIAM E. TURNER, Defendants.

RULING RE: DEFENDANTS’ SECOND MOTION FOR SUMMARY JUDGMENT (DOC. NOS. 160 AND 161)

Janet C. Hall United States District Judge

I. INTRODUCTION

This is a diversity action filed by plaintiffs Russell D. Ide (“Ide”) and RIDE, Inc. (“RIDE”) against defendants William E. Turner (“Turner”) and APS Technology, Inc. (“APS”), which was returned to this court following the Second Circuit’s decision affirming in part, vacating in part, and remanding the court’s original grant of summary judgment for the defendants. See RIDE, Inc. v. APS Technology, Inc., 612 Fed.Appx. 31 (2d Cir. 2015). The Circuit affirmed the court’s decision that the parties never had a joint venture relationship, as well as this court’s grant of summary judgment for the defendants on the plaintiffs’ causes of action for unjust enrichment, accounting, breach of fiduciary duty, and violation of the Connecticut Unfair Trade Practices Act (“CUPTA”), section 42-110b(a) of the Connecticut General Statutes (“C.G.S.A.”). See id. at 35. However, the Circuit Court vacated the court’s grant of summary judgment for defendants on plaintiffs’ claims of breach of contract, breach of oral contract, and breach of the implied covenant of good faith and fair dealing, and remanded the case for further proceedings. See id.

Immediately after the case was remanded, defendants filed a renewed motion for summary judgment on plaintiffs’ remaining claims. See Second Mot. for Summ. J. (Doc. No. 160).[1] For the reasons set forth below, the court DENIES the defendants’ Second Motion for Summary Judgment (Doc. No. 160).

II. FACTUAL BACKGROUND

A. The 1994 Agreement[2]

Ide is the president of RIDE, a Rhode Island corporation. See Rule 26(f) Report of Planning Meeting (“Rule 26(f) Report”) at 3-4 (Doc. No. 29). Turner is the president of APS, a Connecticut corporation. See id. In mid-1994, Turner and Ide, acting on behalf of APS and RIDE, executed a two-page letter agreement (“the 1994 Agreement”) that “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.” 1994 Agreement at 1 (Doc. No. 160-3). The 1994 Agreement 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, 007, 491; and other patents such as the threaded, rubber injected flex coupling and the spiral groove flow restrictor.

Id. The 1994 Agreement further specifies that the parties’ agreement “will be in two phases.” Id. In Phase One, RIDE granted APS Technology “exclusive rights to market and distribute the above products, ” and in return APS would receive 10% of the receipts for any sales made, with the remaining 90% going to RIDE. Id. The parties agree that Phase One of the 1994 Agreement ended no later than June 3, 1995. See Plaintiffs’ Local Rule 56(a)2 Statement (“Pls.’ L.R. 56(a)2 Stmt.”) at 5 ¶ 6 (Doc. No. 162-1).[3]Phase Two was to be the formation of a joint venture to “design, manufacture, market, and distribute the above products, ” with ownership of the joint venture divided equally between APS and RIDE. 1994 Agreement at 1 (Doc. No. 160-3). However, neither a formal joint venture company nor an informal joint venture relationship was ever established by the parties. See RIDE, 612 Fed.Appx. at 32-33.

B. The RIDE Product and the APS Product

Beginning in 1996, APS and RIDE sold a suspension (“the RIDE Product”) to Baker Hughes INTEQ (“Baker Hughes”) and shared certain, but not all, costs and proceeds from that sale on a 50/50 basis. See Rule 26(f) Report at 4 (Doc. No. 29). APS sold the RIDE Product to Baker Hughes, while RIDE provided the manufacturing, testing, inspection, and shipping of the RIDE Product. See id. Sales of the RIDE Product, and the related costs/proceeds sharing arrangement between the parties, continued until approximately 2009. See id.

Beginning in 2003, APS-acting without RIDE-began selling a suspension (“the APS Product”)[4] to other parties. At some point after sales of the APS Product commenced, RIDE became aware that APS was marketing and selling the APS Product. Believing that sales of the APS Product violated the agreements between the parties, the plaintiffs filed the present lawsuit on November 7, 2011.

III. STANDARD OF REVIEW

On a motion for summary judgment, the burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); White v. ABCO Engineering Corp., 221 F.3d 293, 300 (2d Cir. 2000). Once the moving party has met its burden, in order to defeat the motion, the nonmoving party must “set forth specific facts showing that there is a genuine issue for trial, ” Anderson, 477 U.S. at 255, and present such evidence as would allow a jury to find in his favor, Graham v. Long Island R.R., 230 F.3d 34, 38 (2d Cir. 2000).

In assessing the record to determine whether there are disputed issues of material fact, the trial court must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. See Anderson, 477 U.S. at 255; Graham, 230 F.3d at 38. Summary judgment “is properly granted only when no rational finder of fact could find in favor of the non-moving party.” Carlton v. Mystic Transp., Inc., 202 F.3d 129, 134 (2d Cir. 2000). “When reasonable persons, applying the proper legal standards, could differ in their responses to the question” raised, on the basis of the evidence presented, the question must be left to the finder of fact. Sologub v. City of New York, 202 F.3d 175, 178 (2d Cir. 2000).

IV. DISCUSSION

The claims pled by plaintiffs that survived the court’s Ruling on defendants’ first Motion for Summary Judgment and the Second Circuit’s review of that Ruling, see RIDE, 612 Fed.Appx. at 35, are breach of contract and breach of the implied covenant of good faith and fair dealing. Defendants have moved for summary judgment on these claims. See Second Mot. for Summ. J. (Doc. No. 160).

A. Breach of Contract

Although the Second Circuit directed the court to consider whether plaintiffs have a viable claim related to either breach of written contract or breach of a separate oral contract, at oral argument plaintiffs conceded that they have abandoned their claim that a separate oral agreement existed between the parties. Instead, plaintiffs contend that the 1994 Agreement[5] was orally modified by the parties such that it covered sales of both the RIDE Product and the APS Product. Thus, plaintiffs’ sole breach of contract claim is that defendants breached the modified 1994 Agreement when they sold the APS Product and did not share profits from those sales with plaintiffs.

In response, defendants argue: (1) that neither the RIDE Product nor the APS Product were covered by the 1994 Agreement, and (2) that the 1994 Agreement was not modified by the parties and therefore expired on its own terms decades ago. Either of these arguments, if proven under the Rule 56 standard, would warrant the granting of summary judgment for the defendants. Therefore, the court will consider these arguments separately and in turn.

1. The 1994 Agreement

The dispute between the parties about whether the RIDE Product and APS Product are covered by the 1994 Agreement is primarily a dispute about how the first full paragraph of that agreement ...


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