Devex Corp. v. General Motors Corp., Civ. A. No. 3058 CMW

• Court: United States District Courts. 3th Circuit. United States District Court (Delaware)
• Writing for the Court: CALEB M. WRIGHT, Senior
• Citation: 579 F. Supp. 690
• Parties: DEVEX CORPORATION, et al., Plaintiffs, v. GENERAL MOTORS CORPORATION, Defendant. Frederick B. ZIESENHEIM, et al., Plaintiffs, v. TECHNOGRAPH, INC., Defendant.
• Docket Number: 83-567 CMW.,Civ. A. No. 3058 CMW
• Decision Date: 20 January 1984

579 F. Supp. 690

DEVEX CORPORATION, et al., Plaintiffs,
v.
GENERAL MOTORS CORPORATION, Defendant.
Frederick B. ZIESENHEIM, et al., Plaintiffs,
v.
TECHNOGRAPH, INC., Defendant.

Civ. A. Nos. 3058 CMW, 83-567 CMW.

United States District Court, D. Delaware.

January 20, 1984.

579 F. Supp. 691

COPYRIGHT MATERIAL OMITTED

579 F. Supp. 692

Robert K. Payson of Potter, Anderson & Corroon, Wilmington, Del., for plaintiffs in No. 3058 and defendant in No. 83-567; Sidney Bender and Aaron Lewittes of Leventritt, Lewittes & Bender, Garden City, N.Y., of counsel

Arthur G. Connolly and Arthur G. Connolly, Jr. of Connolly, Bove, Lodge & Hutz, Wilmington, Del., for defendant in No. 3058; George E. Frost of Barnes, Kisselle, Raisch, Choate, Whittemore & Hulbert, Detroit, Mich., of counsel.

William H. Sudell, Jr. and Denison H. Hatch, Jr. of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for plaintiffs in No. 83-567.

OPINION

CALEB M. WRIGHT, Senior District Judge.

A ruling from this Court is once again required in this long and difficult patent litigation because several plaintiffs remain unable to agree on how money received as a result of this litigation should be distributed and on whether a claim for attorney's fees should be honored. The TeGrotenhuis and Ziesenheim plaintiffs (hereinafter "T & Z") have filed a complaint alleging that they are entitled to interest on various amounts received by them as a result of this litigation and that TeGrotenhuis is entitled to certain attorney's fees. Technograph, Inc. (hereinafter "Technograph") has filed a motion for summary judgment.¹

There are five counts in the complaint. In Count One, T & Z seek to obtain interest that accrued on the balance of the purchase price due to them under the exclusive license they gave to Technograph while this fund was in the custody of the Court.² (Complaint ¶ 6). In Count Two, T

579 F. Supp. 693

& Z allege that they are "entitled to post-judgment interest on the Court's Final Judgment of October 6, 1980, pro rata in accordance with their interests in that judgment." (Complaint ¶ 13). Counts Three and Four present an alternative theory of recovery to Count Two under which T & Z demand interest for an alleged breach of contract and fiduciary duty on the ground that Technograph should have executed on the Final Judgment against General Motors Corporation (hereinafter "GM"). In Count Five, T & Z allege a claim by TeGrotenhuis for personal services as an attorney in the amount of $41,000. For the reasons discussed below, the Court grants summary judgment for Technograph on Counts One, Two, Three and Four and denies summary judgment on Count Five of the Complaint.³

FACTS

While the legal issues governing the disposition of the present motion are fairly straightforward, the factual background is sufficiently complex to warrant a brief explanation of how this litigation arrived at its present stage. Therefore, the Court will initially present a summary of the relevant undisputed facts in this lawsuit and then discuss each issue raised by T & Z's complaint in sequence.⁴

This case began twenty-seven years ago as a patent infringement suit in the Northern District of Illinois. As stated in an earlier opinion:

The patent involved in this case is Reissue Patent No. 24,017 (hereinafter "Henricks Patent") issued to John A. Henricks, President of Devex Corporation, on June 7, 1955, on Original Patent No. 2,588,234, dated March 4, 1952. Subsequently, the Henricks Patent was assigned by Devex Corporation (hereinafter "Devex") and Henricks to William M. McCoy, Theodore A. TeGrotenhuis, and Frederick B. Ziesenheim. These three individuals were attorneys, each involved in prosecuting infringement claims concerning the Henricks Patent.

In 1964, McCoy, TeGrotenhuis, and Ziesenheim (hereinafter referred to as "Licensors"), entered into an exclusive License Agreement with Technograph, Inc. (hereinafter "Technograph"), a North Carolina corporation, concerning the Henricks Patent. The License Agreement vested Technograph with all significant rights in the Henricks Patent, with the Licensors retaining only bare legal title. The 1964 License Agreement provided, inter alia, that Technograph would pay the Licensors $6,000,000 from monies received through sub-license

579 F. Supp. 694

agreements and infringement suit judgments or settlements relating to the Henricks Patent.

See Devex Corp. v. General Motors Corp., 569 F.Supp. 1354, 1356 (D.Del.1983) (footnotes omitted). The 1964 License Agreement was subsequently modified on January 31, 1977 to provide the Licensors with a total purchase price of $5,803,040,⁵ payable only out of the General Motors Fund (hereinafter "GM Fund") created by Technograph.⁶

The 1977 Agreement provides Technograph with a license which includes, "without limitation, the right to sue for, obtain, and keep full equitable and legal relief for past and future infringement in pending and any future litigation."⁷ Technograph is required to "deposit to the GM Fund all amounts received as a result of any settlement or judgment from the GM litigation."⁸ Article 3 of the Agreement sets out a distribution scheme from the GM Fund. After the payment of certain priority claims, Article 3 provides for distribution "of the balance to the Licensors and to Technograph in the following proportions: 80% or $5,803,040, whichever is less, to the licensors, and ... the amount of the balance remaining ... will be paid to Technograph."⁹ Because the $5,803,040.00 purchase price was payable only out of the GM Fund, and because no amounts could be deposited in the GM Fund until judgment had been entered in this litigation, distributions to the Licensors in accordance with the 1977 Agreement were contingent on a number of judicial decisions.

The first judicial decision of any consequence in relation to the 1977 Agreement was this Court's entry of Final Judgment in this action on October 6, 1980, awarding plaintiffs a reasonable royalty, prejudgment interest, postjudgment interest, and costs. (Dkt. No. 636). GM then appealed and the Third Circuit affirmed the judgment.¹⁰ GM then petitioned the United States Supreme Court for certiorari. On May 24, 1982, the Supreme Court denied GM's petition for certiorari except on the issue of prejudgment interest.¹¹ After the Supreme Court's May 24, 1982 Order, Technograph filed a motion in this Court on June 1, 1982 to require GM to pay a reasonable royalty award plus postjudgment interest. (Dkt. No. 649). This Court recognized that it lacked jurisdiction to entertain such a motion, and on June 8, 1982, Technograph filed a motion in the Third Circuit seeking issuance of a mandate affirming the $8,813,945.50 reasonable royalty award plus postjudgment interest thereon. On June 30, 1982, the Third Circuit granted the motion, and on July 7, 1972, GM paid $8,813,945.50 into this Court. This Court distributed the above amount to the GM Fund. Technograph then paid priority claims in accordance with the 1977 Agreement. After these priority claims were satisfied, Technograph distributed $3,801,794.27 out of the GM Fund to the Licensors, and the remainder was paid out to Technograph. Under the terms of the 1977 Agreement, this left a balance of $2,001,245.73 due to the Licensors collectively (or $667,081.91 each) if and when additional money was received as a result of this litigation.

579 F. Supp. 695

Additional money from GM was soon forthcoming. On May 24, 1983, the Supreme Court affirmed the award of prejudgment interest in the amount of $11,022,854.97. See General Motors Corp. v. Devex Corp., ___ U.S. ___, 103 S.Ct. 2058, 76 L.Ed.2d 211 (1983). On June 6, 1983, GM paid the $11,022,854.97 into Court. Because of the dispute among the plaintiffs concerning the distribution of this money, the award of prejudgment interest was not paid into the GM Fund until August 8, 1983, in accordance with this Court's Opinion and Order. See Devex Corp. v. General Motors Corp., 569 F.Supp. 1354 (D.Del. 1983). On August 18, 1983, Technograph paid TeGrotenhuis and Ziesenheim $667,081.91 each out of the GM Fund, which represented the balance of the purchase price due to them under the 1977 Agreement.¹²

Since the purchase price due to the Licensors under the 1977 Agreement has already been fully paid by Technograph, the present dispute involves claims for interest on the amounts already received by T & Z. In addition to these claims for interest, the present motion also involves TeGrotenhuis' claim for attorney's fees. The Court will initially address the claim for interest presented in Count One, then consider the claims presented in Counts Two, Three, and Four for a share of the postjudgment interest, and finally, discuss the claim for attorney's fees raised in Count Five.

COUNT ONE

In Count One, T & Z claim that they are entitled to interest that accrued on the balance of the purchase price due to them under the 1977 Agreement from June 6, 1983, the date the award of prejudgment interest was paid into Court, until August 18, 1983, the date payment from the GM Fund to T & Z was made. This issue has already been ruled upon by this Court. This Court's Opinion and Order of August 8, 1983 awarded T & Z the balance of the purchase price due to them under the 1977 Agreement. See Devex Corp. v. General Motors Corp., 569 F.Supp. 1354 (D.Del. 1983). On August 9, 1983, T & Z moved to amend the Order to require Technograph to pay interest that accrued on the funds ordered to be paid while they were in the custody of the Court. The Court denied the motion to amend at an August 23, 1983 oral argument on the ground that such interest belonged to Technograph and not to T & Z,¹³ and entered an Order to that effect on August 29, 1983. (Dkt. No. 713). Count One is thus an attempt by T & Z to have the Court reconsider and alter its previous ruling.

Technograph claims that the matter is settled because of the doctrines of res judicata, law of the case, and estoppel...