Carter v. Clements Walker PLLC
| Decision Date | 10 January 2014 |
| Docket Number | 08 CVS 4333 |
| Court | Superior Court of North Carolina |
| Parties | RONALD CARTER, Plaintiff, v. CLEMENTS WALKER PLLC, a North Carolina professional limited liability company; F. RHETT BROCKINGTON, an individual; and RALPH H. DOUGHERTY, an individual; Defendants. |
Harrington Law, P.C. by James M. Harrington for Plaintiff Ronald Carter.
Poyner & Spruill LLP by Cynthia L. Van Horne and E. Fitzgerald Parnell, III for Defendants Clements Walker PLLC and F. Rhett Brockington.
James, McElroy & Diehl, P.A. by John S. Arrowood and Edward T. Hinson, Jr. for Defendant Ralph H. Dougherty.
{1} THIS MATTER is before the court on Defendants' Motion for Summary Judgment, Defendants' Motion to Strike, and Plaintiff's Motion for Leave to Present Additional Evidence. For the reasons stated below, the Motion for Summary Judgment and Motion to Strike are GRANTED, and the Motion for Leave to Present Additional Evidence is DENIED.
{2} This action was filed in Mecklenburg County on February 29, 2008. The matter was designated a mandatory complex business case by order of the Chief Justice of the Supreme Court of North Carolina dated March 3, 2008 and then assigned to the Judge Ben F. Tennille, then Chief Special Superior Court Judge for Complex Business Cases.
{3} In March 2010, in ruling on Defendants' Motions to Dismiss, Judge Tennille held that the Complaint did not implicate a substantial issue of patent law sufficient to place the case within the exclusive jurisdiction of the federal courts under 38 U.S.C. § 1338(a) and that only Nevada corporation Revolutionary Concepts, Inc. ("RCI-NV"), a prior plaintiff in this case to whom Plaintiff Ronald Carter ("Carter") assigned the patent rights, had standing to assert the claims raised in the Complaint. See generally Revolutionary Concepts, Inc. v. Clements Walker, PLLC, 2010 NCBC LEXIS 8 (N.C. Super. Ct. Mar. 9, 2010). Defendants' appeal was dismissed as interlocutory. See generally Revolutionary Concepts, Inc. v. Clements Walker, PLLC, No. COA10-627, 2011 N.C.App. LEXIS 1391 (N.C. App. July 5, 2011).
{4} After Judge Tennille's retirement, this case was reassigned to the undersigned. The court granted summary judgment in Defendants' favor on all claims. See generally Revolutionary Concepts, Inc. v. Clements Walker PLLC, 2012 NCBC LEXIS 14 (N.C. Super. Ct. Mar. 8, 2012). Plaintiffs then appealed both Judge Tennille's prior order and the summary judgment on RCI-NV's claims. As to Judge Tennille's order on standing, the Court of Appeals held that, because legal malpractice claims in North Carolina are unassignable, Carter retained his malpractice claim, had standing to assert it, and his assignment of that claim to RCI-NV was invalid. Revolutionary Concepts, Inc. v. Clements Walker PLLC, __ N.C. App.__, 744 S.E.2d 130, 134 (N.C. App. 2013). The Court of Appeals affirmed both summary judgment in Defendants' favor on claims alleged by RCI-NV and the court's denial of RCI-NV's oral Rule 15 and Rule 17 motions seeking to join North Carolina corporation Revolutionary Concepts, Inc. ("RCI-NC") as a plaintiff in the case. Id. at 135–38. The Court of Appeals also affirmed summary judgment in favor of prior individual defendants Greg Clements and Christopher Bernard. Thus, only Carter's claim for legal malpractice against Clements Walker, PLLC ("CW"), F. Rhett Brockington, and Ralph H. Dougherty remains for disposition after remand.
{5} Defendants jointly filed a Motion for Summary Judgment under Rule 56 on June 21, 2013 based on the assertion that Carter has failed to produce or forecast any damages evidence in support of his legal malpractice claim. On July 19, 2013, Carter filed a Motion for Continuance and Discovery under Rule 56(f) requesting additional time to seek discovery from third parties to develop his damages evidence. Upon Defendants' consent, the court granted that motion on August 7, 2013, affording Carter until September 17, 2013 to conduct additional discovery and respond to Defendants' Motion for Summary Judgment. Carter responded to the Motion for Summary Judgment on that date. Defendants later filed a reply brief and a Motion to Strike the exhibits attached to Carter's response. After briefing on both the Motion for Summary Judgment and the Motion to Strike was complete, the court heard oral argument on both Motions on October 29, 2013 and took the matters under advisement.
{6} Carter filed a Motion for Leave to Present Additional Evidence on November 25, 2013. Defendants responded in opposition on December 4, 2013. All three Motions have been fully briefed, a hearing was held on the Motion for Summary Judgment and Motion to Strike, [1] and all three Motions are ripe for disposition.
{7} Past opinions of this court and the Court of Appeals provide a detailed summary of the allegations in this case. Revolutionary Concepts, Inc., ___ N.C. App. at ___, 744 S.E.2d at 131–32; Revolutionary Concepts, Inc., 2012 NCBC LEXIS, at *1–*11. In sum, Carter and RCI retained CW to seek both domestic and foreign patent protection for Carter's invention. CW filed a domestic patent application but allowed that application to be published before filing an application for international patent rights (the "PCT application"). As a result, RCI and Carter could not obtain patents in countries requiring absolute public novelty before granting a patent. Carter and RCI's domestic patent application was eventually approved.
{8} The court does not make findings of fact when ruling on a motion for summary judgment. See Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C.App. 138, 142, 215 S.E.2d 162, 164–65 (1975). It is, however, appropriate for the court to describe the undisputed facts or lack of facts the record discloses in order to provide context for the court's ruling on the motion. The court believes the following facts are either uncontested or, if contested, have been construed in favor of the party opposing the Motion.
{9} Carter claims that he suffered injury because of the loss of patent protection in foreign jurisdictions. (Compl. ¶¶ 30, 36, 43, 50; Pl.'s Resp. Opp'n Defs.' Mot. Summ. J. 7–8.)[2] The Complaint also alleges that RCI paid CW $3, 600 in fees to prepare and file the PCT application, but CW applied those fees towards other matters. (Complaint ¶¶ 55–58.)[3]
{10} Carter was deposed in 2007 and 2010 and examined on his damages contentions. In the current record, neither Carter nor RCI has quantified the sales potential of the invention, (Carter Dep. 30:11–30:15, Apr. 11, 2007, ) nor has he or anyone else researched the sales potential of the invention, (Carter Dep. 35:12– 35:22, Apr. 11, 2007.)[4] Neither Carter nor RCI has sought to manufacture the invention, but only hoped to license it. (Carter Dep. 45:5–45:11, Apr. 11, 2007.) Carter has expressed no knowledge of the foreign marketing or licensing potential of the invention. (Carter Dep. 72:11–72:15, Apr. 11, 2007.) In 2007, Carter did not know of anyone who placed any monetary value on the invention or patent, nor could he name any company or product in the target markets for the invention that was infringing or exploiting the invention. (Carter Dep. 84:13–85:13, Apr. 11, 2007.)
{11} As of 2007, Carter had not made any profit on the invention, nor had anyone advised him when the patent would attain commercial value. (Carter Dep. 99:2–99:12, Apr. 11, 2007). Although Carter thought the patent would develop commercial value in the near future, he did not then have any documentation or research substantiating that opinion. (Carter Dep. 99:13–100:18, Apr. 11, 2007.) No one had yet approached him about buying RCI or the patent rights to the invention. (Carter Dep. 100:24–101:4, Apr. 11, 2007.) In 2010, Carter again acknowledged that he had never licensed the invention. (Carter Dep. 109:23–110:3, May 25, 2010.)
{12} RCI's most recent annual report, dated April 15, 2013 and signed by Carter, states that RCI cannot guarantee that the invention or patent will generate revenue or that it will even be developed. (Defs.' Mot. Summ. J. Ex. 3, 8–9.) RCI acknowledges that successful commercialization of the invention is likely contingent upon third-party manufacturing or licensing agreements that may never materialize. (Defs.' Mot. Summ. J. Ex. 3, 8–9.) The report does not contain any evidence supporting a conclusion that there will ultimately be successful commercialization.
{13} The record also contains excerpts from an expert report by Paul Gariboldi asserting, with a confidence level of over 90%, the bare conclusion that "RCI lost total gross profits of approximately $33 million between the years of 2010 and 2020" by losing foreign patent rights. (Defs.' Mot. Summ. J. Ex. 6, 5.)
{14} As noted, the court granted Carter's Rule 56(f) motion to allow additional discovery of damages evidence. During the extended period, Carter admitted in response to written discovery that "no person or entity has ever purchased or licensed" the invention from him or RCI. When asked to produce all documents showing any damages claimed from lost patent rights, Carter responded that all such documents had already been produced.
{15} Carter objected to producing any documents reflecting any person's or entity's alleged or possible infringement of rights in the invention on the basis that such documents are "not relevant to any issue before the Court and not reasonably calculated to lead to the discovery of admissible evidence." Carter objected on the same grounds when asked to produce any agreements, communications, meeting records, letters of intent, or term sheets between Carter or...
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