Adams Arms, LLC v. Unified Weapon Sys., Inc.
| Decision Date | 27 September 2016 |
| Docket Number | Case No. 8:16-cv-1503-T-33AEP |
| Parties | ADAMS ARMS, LLC, Plaintiff, v. UNIFIED WEAPON SYSTEMS, INC. et al., Defendants. |
| Court | U.S. District Court — Middle District of Florida |
This cause is before the Court pursuant to the following Motions, which are ripe for the Court's review: Defendant Aguieus, LLC's Motion to Dismiss Count V of Plaintiff's Complaint (Doc. # 46), Defendant Michael C. Bingham's Motion to Dismiss Count V of Plaintiff's Complaint (Doc. # 47), Defendant Major General James W. Parker's Motion to Dismiss Count V of Plaintiff's Complaint (Doc. # 48), Defendant Unified Weapon Systems, Inc.'s Motion to Dismiss Counts I, II, and V of Plaintiff's Complaint (Doc. # 49), Defendant Christian Quintanilla Aurich's Motion to Dismiss Counts II and V of Plaintiff's Complaint (Doc. # 50), and Plaintiff Adams Arms' Motion to Dismiss Defendant Unified Weapon Systems' Counterclaim for Tortious Interference (Doc. # 81). For the reasons that follow, the Motions are denied.
Plaintiff Adams Arms, LLC is a Tampa, Florida, manufacturer specializing in "small arms, including high-powered military rifles." (Doc. # 1 at ¶ 1). Adams Arms' rifles are "used around the world by members of police and sheriff departments, SWAT teams, the Federal Bureau of Investigation, the United States Marine Corps, and the Mexican and Panamanian militaries." (Id. at ¶ 2).
Defendant Unified Weapon Systems, Inc. ("UWS") is a Delaware corporation with its principal place of business in Hillsborough County, Florida. (Id. at ¶ 11). UWS is a subsidiary of Defendant Aguieus, LLC. (Id.). Defendant Michael Bingham is the managing member of Aguieus, is the Vice President and Chief Operating Officer of UWS, and resides in Pasco County, Florida. (Id. at ¶ 13). Defendant Christian Quintanilla Aurich is the President and Chief Executive Officer of UWS. (Id. at ¶ 14). Defendant General James W. Parker is a retired Major General from the United States Army and serves as a Director and advisor for UWS. (Id. at ¶ 15).
In early 2014, Aguieus and UWS approached Adams Arms with a proposal for the companies to work together on a bid to supply high-powered military rifles to the Peruvian military. (Id. at ¶¶ 18, 20). The Ministry of Defense of the Republic of Peru ("Peruvian MOD") was funding the purchase through the Peruvian Factory of Weapons and Ammunition from the ArmyS.A.C. ("FAME"). The project would require Adams Arms to provide UWS with products, such as demonstration rifles, to disclose trade secrets, and allow a tour of Adams Arms' manufacturing facility. (Id. at ¶ 21).
On February 24, 2014, as an "inducement" for Adams Arms to join the project, Aurich executed a "Mutual Confidentiality and Nondisclosure Agreement" with Adams Arms "in which Aguieus agreed not to use [Adams Arms'] confidential information, including [Adams Arms'] technical data, trade secrets, and know-how, for its own use or for any purpose other than the commercial relationship between [Adams Arms] and Aguieus." (Id. at ¶ 22).
The Mutual Confidentiality and Nondisclosure Agreement, which is attached to the Complaint, explains that the parties contemplated disclosure of confidential information to "Representatives," including "directors, officers, employees, consultants and agents" to facilitate the joint venture's "permitted purpose" and "[e]ach party will require each of its Representatives who has access to Confidential Information of the other party to acknowledge and agree to be bound by" the Mutual Confidentiality and Nondisclosure Agreement. (Id. at 28).
Thereafter, on April 29, 2014, Bingham, on behalf of UWS and non-party Jim Granger, the Vice President of Adams Arms,executed a six-page Letter of Intent. On page one, the Letter of Intent states: "This document, in and of itself, does not represent a legal contract." (Id. at 31). The Letter of Intent also states in section nine:
9. No Binding Obligation. Except for Sections 1(b), (c), (d) and 2 through 7, THIS LETTER OF INTENT DOES NOT CONSTITUTE OR CREATE, AND SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE, ANY LEGALLY BINDING OR ENFORCEABLE OBLIGATION ON THE PART OF EITHER PARTY TO THIS LETTER OF INTENT. NO SUCH OBLIGATION SHALL BE CREATED, EXCEPT BY THE EXECUTION AND DELIVERY OF THE PURCHASE AGREEMENT CONTAINING SUCH TERMS AND CONDITIONS OF THE PROPOSED TRANSACTION AND SHALL BE AGREED UPON BY THE PARTIES, AND THEN ONLY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH PURCHASE AGREEMENT.
(Id. at 35). Section 1(e), titled "Definitive Purchase Agreement," states that "all of the terms and conditions of the proposed transaction would be stated in the Purchase Agreement, to be negotiated, agreed and executed by you and us." (Id. at 33). Further, that section states that "[n]either party intends to be bound by any oral or written statements or correspondence concerning the Purchase Agreement arising during the course of negotiations, notwithstanding that the same may be expressed in terms signifying a partial, preliminary or interim agreement between the parties." (Id.). "After signing the [Letter of Intent], on or about June 25, 2014, Mr. Bingham represented to [Adams Arms] that there would be an immediate order for 3,000 units for use by the Peruvian MOD." (Id. at ¶ 31).
During that time, General Parker met with Adams Arms' President and CEO, Michael Froning, "and represented to Mr. Froning that General Parker possessed significant expertise and knowledge regarding foreign and domestic military matters, which would be helpful to [Adams Arms] in negotiating the rifle contract with UWS." (Id. at ¶ 32). According to Adams Arms, General Parker failed to disclose that he was a director and advisor for UWS and "when Mr. Froning asked General Parker whether he had any conflicts of interest or ties with UWS that would prevent him from being loyal to [Adams Arms], General Parker misrepresented to Mr. Froning that he had no ties to UWS." (Id. at ¶ 33).
In furtherance of General Parker's efforts to gain access to Adams Arms' trade secrets, on June 24, 2016, General Parker executed a separate "Confidential/Nondisclosure Agreement" vowing to hold Adams Arms' confidential information and trade secrets "in the strictest confidence" and agreeing "not to use any Confidential Information for any purpose other than the Business Purpose." (Id. at 39). General Parker also executed a Consulting Services Agreement on July 7, 2014, further agreeing to keep Adams Arms' proprietary information confidential and to only use such information in connection with providing services on behalf of Adams Arms. (Id. at ¶ 35).
Adams Arms "has spent a number of years and endless resources" developing "numerous trade secrets that are crucial and extremely valuable to its business." (Id. at ¶¶ 28-29). Adams Arms explains that it "exerts great efforts to ensure that its trade secrets remain confidential," such as requiring employees and third parties to sign nondisclosure agreements, maintaining security cameras at its facilities, and requiring badges for entry into its facilities. (Id. at ¶ 29).
However, in reliance on the non-disclosure agreements, the Letter of Intent, and other assurances, Adams Arms disclosed trade secrets to all Defendants. (Id. at ¶¶ 27, 36). In particular, between August of 2014, and February of 2015, Adams Arms manufactured demonstration rifles for examination and testing by UWS and the Peruvian MOD. (Id. at ¶¶ 37-43). Between April of 2015, and September of 2015, Defendant Bingham, who is a managing member of Aguieus and an executive of UWS, requested supplier pricing information for the separate components of Adams Arms' rifles, which Adams Arms provided. (Id. at ¶¶ 13, 45). Bingham also requested information about Adams Arms' manufacturing facility and equipment, and Adams Arms allowed tours of its facility in Florida during which Adams Arms revealed step-by-step details of its manufacturing processes, machinery, and tooling. (Id.at ¶¶ 46-47).
Following the meetings in Florida, Bingham requested additional confidential and proprietary information, which he represented was necessary to secure the contract with FAME. (Id. at ¶¶ 49-50). This information included photographs of Adams Arms' facility and tool boxes; a complete list of parts, parts configurations, parts suppliers, and prices; and proprietary details of Adams Arms' technician training program. (Id. at ¶ 49).
On September 25, 2015, Bingham represented to Adams Arms that all submissions to FAME were completed on time thanks to Adams Arms. (Id. at ¶ 51). On November 19, 2015, FAME issued its bid solicitation for the rifles. (Id. at ¶ 52). On December 10, 2015, UWS submitted a qualified offer in response to the bid solicitation using Adams Arms' designs, procedures, and specifications. (Id. at ¶ 54). On December 18, 2015, FAME announced UWS as the winning bidder. (Id. at ¶ 57).
After UWS obtained the winning bid, UWS "began taking steps to squeeze [Adams Arms] out of the final purchase contract[.]" (Id. at ¶ 60). UWS and Bingham refused Adams Arms' requests for documents and meetings, although Defendants "continued to seek guidance and input" about the design of the rifles. (Id. at ¶¶ 61-63). On December 30, 2015, DefendantAurich, the CEO of UWS, advised Adams Arms that UWS would take the entire project over now that UWS had all of Adams Arms' technical and pricing data. (Id. at ¶¶ 14, 64). In the months that followed, Adams Arms was excluded from multiple meetings with FAME, including another meeting in Peru to test Adams Arms' rifles before final contract execution. (Id. at ¶ 65).
Adams Arms voiced its concerns to FAME officials in an email dated May 6, 2016, asserting that the rifles subject to the bid employed technology belonging to Adams Arms and threatening litigation. (Doc. #...
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