Am. Biomedical Grp., Inc. v. Techtrol, Inc.

• Decision Date: 17 May 2016
• Docket Number: No. 113,978.,113,978.
• Citation: 2016 OK 55,374 P.3d 820
• Parties: AMERICAN BIOMEDICAL GROUP, INC.; ABG Cattletraq, LLC; and James Burgess, Plaintiffs/Appellants, v. TECHTROL, INC. and William Ardrey, Defendants/Appellees.
• Court: Oklahoma Supreme Court

374 P.3d 820

2016 OK 55

AMERICAN BIOMEDICAL GROUP, INC.; ABG Cattletraq, LLC; and James Burgess, Plaintiffs/Appellants,

v.TECHTROL, INC. and William Ardrey, Defendants/Appellees.

No. 113,978.

Supreme Court of Oklahoma.

May 17, 2016.

Murray E. Abowitz, Abowitz, Timberlake & Dahnke, P.C., Oklahoma City, Oklahoma, for Appellants.

James W. Tilly, The Tilly Law Firm, Tulsa, Oklahoma, for the Appellees.

TAYLOR

, J.,

¶ 1 The question before this Court is whether Defendants supported their motion for summary judgment with undisputed, material facts sufficient to warrant the district court granting partial summary adjudication in their favor. We answer in the negative.

I. STANDARD OF REVIEW

¶ 2 Partial summary adjudication, like summary judgment, settles only questions of law. See Pickens v. Tulsa Metropolitan Ministry, 1997 OK 152, ¶ 7, 951 P.2d 1079, 1082

. The standard of review of questions of law is de novo. Id. Summary judgment or a partial summary adjudication will be affirmed only if the appellate court determines that there is no dispute as to any material fact and that one party is entitled to judgment as a matter of law. See id. A partial summary adjudication will be reversed if the appellate court determines that reasonable people might reach different conclusions from the undisputed material facts. See Runyon v. Reid, 1973 OK 25, ¶ 15, 510 P.2d 943, 946

.

¶ 3 Under this standard, we confine our review to the limited, undisputed, material facts. Frey v. Independence Fire and Cas. Co., 1985 OK 25, ¶ 6, 698 P.2d 17, 20

(“The ruling on a motion for summary judgment must be rested on the record which is then before the court rather than on one that could have been assembled.”). We do not consider Defendants' factual allegations included in their appellate paperwork which they failed to include as undisputed, material facts or support with evidentiary materials in the district court. See

id.

II. RELEVANT PROCEDURAL HISTORY

¶ 4 This legal battle began in 2006 when American Biomedical Group, Inc. (ABGI) and ABG Cattletraq, LLC (Cattletraq) filed a petition in the district court against Techtrol, Inc. and William Ardrey (Defendants); Defendants then filed a counterclaim. ABGI and Cattletraq dismissed their claims and causes of action against Defendants (without prejudice), leaving Defendants' counterclaim pending. Two years later, Defendants filed a petition in the same court against ABGI, Cattletraq, and James Burgess, their sole shareholder and CEO (Plaintiffs).

¶ 5 On March 16, 2009, Plaintiffs filed another petition in the district court, alleging that Defendants “wrongfully exercised dominion and control over plaintiffs' personal and intellectual property” and “willfully, deliberately and maliciously converted plaintiffs' personal and intellectual property” for their own benefit. Plaintiffs sought damages based on Defendants' unjust enrichment from the conversion. The district court consolidated the three cases. When the cases were consolidated, Defendants' counterclaim, Defendants' petition alleging abuse of process, and Plaintiffs' petition alleging causes of action for conversion and unjust enrichment remained pending before the district court.

¶ 6 On October 29, 2014, Defendants moved for summary judgment on Plaintiffs' claim for conversion, asserting that Oklahoma does not recognize a tort for conversion of intangible property, and for unjust enrichment, asserting Plaintiffs' claim was precluded because they had an adequate remedy at law for breach of contract. The statement of undisputed, material facts in Defendants' motion for summary judgment listed the pleadings filed and an excerpt from a deposition.¹ The only undisputed, material facts alleged by Defendants were (1) Plaintiffs filed a claim for the willful, deliberate, and malicious conversion of their personal and intellectual property and a claim for unjust enrichment caused by the conversion, and (2) part of Plaintiffs' claims are based on a nondisclosure agreement (NDA). Plaintiffs' response admits the excerpt is from a deposition and alleges twenty-one additional facts, with supporting evidentiary materials, that they contend may or may not be disputed and preclude summary judgment in Defendants' favor. Plaintiffs urged that (1) Oklahoma does recognize a cause of action for conversion of both personal and intellectual property which, in this case, is not preempted by the Oklahoma Uniform Trade Secrets Act (OUTSA), 78 O.S.2011, §§ 85

–94, (2) they had pled facts sufficient to make a prima facie claim of misappropriation under the OUTSA, and (3) they do not have an adequate remedy at law which would bar their claim for unjust enrichment.

¶ 7 Defendants and Plaintiffs each filed an additional brief, somewhat altering their arguments. Defendants submitted that the OUTSA preempts Plaintiffs' conversion and unjust enrichment claims, that Plaintiffs admitted that they had no contractual remedy under the NDA, and that Plaintiffs' admitted failure to identify its intellectual and personal property as confidential under the NDA barred relief under the OUTSA. Plaintiffs again contended that their claim for conversion of confidential, proprietary information is not displaced by the OUTSA. After the district court held a hearing, it granted Defendants' motion for summary judgment.²

¶ 8 Plaintiffs filed a petition in error, and the appeal was assigned to the Court of Civil Appeals. The Court of Civil Appeals affirmed the district court. This Court granted Plaintiffs' petition for certiorari review. This Court ordered the parties to file briefs addressing only the issues before this Court.

III. ALLEGED FACTS

¶ 9 These alleged facts are informational to help clarify the dispute before this Court. Because the record does not show that these facts are undisputed, we do not rely on them in rendering our decision.³ Plaintiffs contend that they developed a protocol to monitor and track cattle and a bolus containing technology to accomplish this task. In October of 2004, the parties entered into an oral agreement for Defendants to manufacture the bolus to Plaintiffs' specifications. About a month later, the parties entered into the written NDA. The NDA is part of the record and contains the following provision.

Subject to the limitations set forth in Section 2, all information disclosed by one party (the “Discloser”) to the other party (the “Recipient”), which is labeled or marked “Confidential” or with some other similar proprietary legend shall be deemed to be “Confidential Information.” If Confidential Information is disclosed in oral form, the Discloser shall identify it as confidential at the time of disclosure and thereafter summarize it in writing and transmit such summary to the Recipient within thirty (30) days of the oral disclosure.

The NDA restricts the disclosure and use of confidential information, as defined above, including the restriction that the recipient shall “use such Confidential Information only to the extent required to accomplish the Purpose.” The purpose was defined as “the purpose and evaluation and possible joint operations.” After the parties entered into the NDA, Plaintiffs supplied Defendants with what they contend is confidential, proprietary information, including software, circuitry for biometric data, specifications, documents, drawings, chips, and thermistors, as well as tangible property.

¶ 10 After they entered into the NDA, the parties ended their business relationship. Since then, Defendants have manufactured and sold about 1,500 of the boluses. Plaintiffs alleged that at least some of the information Defendants used to manufacture and sell the boluses was Plaintiffs' confidential, proprietary information and tangible property not subject to the NDA.

IV. ANALYSIS

¶ 11 Based on the parties' briefs on the issues before this Court, we determine the legal issues to be (1) whether Oklahoma recognizes a common-law action for misappropriation of intangible, proprietary property, (2) if so, whether the OUTSA displaces Plaintiffs' common-law claims, (3) whether information disclosed to Defendants by Plaintiffs without the “confidential” marking required by the NDA is subject to a common-law claim for conversion, (4) whether Plaintiffs have an adequate remedy at law which bars their claim for unjust enrichment, and (5) if this Court finds the OUTSA displaces Plaintiffs' common-law claims, whether the decision should be applied prospectively only.⁴

A. Common-law Claims

¶ 12 Conversion is defined by Oklahoma law as “any act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein.” Steenbergen v. First Fed. Sav. & Loan of Chickasha, 1987 OK 122, ¶ 9, 753 P.2d 1330, 1332

. This definition does not include intangible property. It does require that “some form of wrongful possession or act of control over the property must occur.” Installment Fin. Corp. v. Hudiburg Chevrolet, Inc., 1990 OK 55, ¶ 10, 794 P.2d 751, 753. It is not necessary that the property wrongfully came into a party's possession, but only that the property was taken or appropriated without the owner's consent. Fed. Nat'l Bank of Shawnee v. Lindsey, 1935 OK 455, ¶ 12, 172 Okla. 30, 43 P.2d 1036, 1037 ; Steenbergen, 1987 OK 122, ¶ 9, 753 P.2d at 1332. Conversion of personal property does not require the property be obtained by wrongful means, but it must be either obtained or appropriated without the owner's consent. Id. Here, Defendants have failed to provide evidentiary support or even aver that they appropriated Plaintiffs' personal property without the Plaintiffs' permission, and Plaintiffs have not admitted this fact. Thus, partial summary adjudication in Defendants' favor was improper on this issue.

¶ 13 Oklahoma does not recognize the tort of conversion of intangible property in the same manner as it does for personal property. Shebester v. Triple Crown Insurers, 1992 OK 20, ¶ 14, 826 P.2d 603, 608

(“The general rule in...