DeVona v. Zeitels

• Decision Date: 12 March 2014
• Docket Number: CIVIL NO. 13-10952-RWZ
• Citation: DeVona v. Zeitels, CIVIL NO. 13-10952-RWZ (D. Mass. Mar 12, 2014)
• Parties: DENNIS R. DeVONA v. STEVEN M. ZEITELS, M.D.
• Court: U.S. District Court — District of Massachusetts

DENNIS R. DeVONA v. STEVEN M. ZEITELS, M.D.

CIVIL NO. 13-10952-RWZ

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

DATE: March 12, 2014

MEMORANDUM OF DECISION

ZOBEL, D.J.

Plaintiff Dennis R. DeVona has sued defendant Steven M. Zeitels, M.D., for correction of inventorship of U.S. Patent No. 6,955,645 ("the '645 Patent"). See 35 U.S.C. § 256. He also brings four claims under Rhode Island law regarding the wrongful dissolution of his alleged partnership with defendant. Defendant has filed seven counterclaims.¹ Plaintiff now moves to dismiss those counterclaims on multiple grounds (Docket # 20). Defendant moves for summary judgment on plaintiff's correction of inventorship claim, alleging it is barred by the equitable doctrine of laches (Docket # 28).

I. Background

Plaintiff is an experienced mechanical designer who also ran an antiquesbusiness in Rhode Island. Compl. ¶ 11. Defendant is an innovative laryngeal surgeon and developer of surgical instruments. Id. ¶ 10. Plaintiff and defendant collaborated to design a glottiscope, an instrument used to examine the larynx and vocal folds. The parties dispute how their collaboration began. Plaintiff states defendant approached him about partnering to design and sell the glottiscope. Id. ¶¶ 17-20. Defendant claims plaintiff asked for permission to market two products defendant had previously invented. Def.'s Mem. in Opp. to Pl.'s Mot. to Dismiss Counterclaims, Docket # 22, at 3. What is undisputed, however, is that the two became good friends, so much so that in 2003, plaintiff served as marriage officiant at defendant's wedding. Compl. ¶ 12.

Plaintiff claims that in Fall 1997, he and defendant launched their business, which they agreed to operate as co-owners and split all profits on a 60%-40% basis, with 60% going to defendant. Id. ¶ 21. Plaintiff also claims he created several design features that made the glottiscope innovative. Id. ¶¶ 28-37.

On April 21, 1999, defendant filed a Certificate of Organization with the Rhode Island Secretary of State forming Endocraft, L.L.C., whose stated purpose was to sell surgical instruments. Id. ¶ 43. Defendant listed himself as Endocraft's sole member. Id. That same year, defendant prepared, and plaintiff signed, an "Independent Sales Representative Agreement" ("the Agreement") with Endocraft. Docket # 17-3. The Agreement provided plaintiff with forty percent of the "net sales" he made, "after appropriate and reasonable deductions for research and development costs have been made by [Endocraft]." Id. § 6(a). Defendant presented the Agreement to plaintiff as a means to provide him an income until their partnership, as governed by the 60%-40%split, became profitable. Compl. ¶ 48.

On February 4, 2002, defendant filed U.S. patent application No. 10/061,256 ("the '256 application"). Id. ¶ 52. He listed himself as the sole inventor Plaintiff claims he conceived of one or more of the inventions claimed in the application, including a "detachable baseplate design incorporating channels for removable light and suction cannulae." Id. ¶ 55. The '645 Patent issued on October 18, 2005. Id. Ex. 1.

Meanwhile, Endocraft's sales began to increase, and in 2006, the company became "cash flow positive." Id. ¶ 62. On December 11, 2007, Endocraft amended its Articles of Organization to name plaintiff its manager. Id. ¶ 67. Plaintiff states that during this time, defendant distributed to himself large amounts of Endocraft's revenue in order to recover the capital contributions he had made to the business. Id. ¶ 61. Defendant claims plaintiff never contributed his share of the start-up costs. Def.'s Mem. in Opp. at 4.

The parties' personal and professional relationships deteriorated in 2010. According to defendant, in July 2010, he learned plaintiff was not keeping proper records and maintaining appropriate storage spaces for Endocraft products, potentially in violation of Food and Drug Administration ("FDA") regulations. Id. He also claims plaintiff began demanding more money, and doing so frequently, to cover the cost of an over-budget home renovation project in Florida. Id. Finally, he accuses plaintiff of using Endocraft's FedEx shipping account for personal purposes and stealing Endocraft's products. Id. On October 22, 2011, defendant terminated plaintiff asEndocraft's manager. Compl. ¶ 72. Defendant alleges that following the termination, plaintiff began to act erratically. He refused to relinquish control of Endocraft's email address and phone number and has not returned defendant's property, including a prized laryngoscope holder defendant received as a gift from a friend and mentor. Def.'s Mem. in Opp. at 5.

Plaintiff's suit contains five claims: (1) addition as a co-inventor of the '645 patent, see 35 U.S.C. § 256; (2) declaratory, equitable, and monetary relief for wrongful ouster from the alleged partnership and wrongful dominion over partnership property and business, see Rhode Island Uniform Partnership Act, R.I. Gen. L. § 7-12-1 et seq.²; (3) breach of fiduciary duty; (4) breach of the parties' partnership agreement; and (5) unjust enrichment.

Defendant, on behalf of himself and Endocraft, filed seven counterclaims along with his answer: (1) declaratory relief that plaintiff is not a co-inventor of the '645 Patent; (2) intentional interference with business and/or contractual relations; (3) breach of the Agreement; (4) breach of the covenant of good faith and fair dealing in the Agreement; (5) unjust enrichment; (6) conversion; and (7) unfair business practices in violation of Mass. G. L. ch. 93A, §§ 2 and 11.

Plaintiff claims defendant's counterclaims violate three procedural pleading rules. See Fed. R. Civ. P. 8(a); 10(b); 12(f). Alternatively, he moves to dismiss Counterclaims III-VII against defendant for lack of standing and failure to state a claim.He further moves to dismiss Counterclaim VII against defendant and Endocraft on choice of law grounds, as well as the ground that defendant's 93A claim fails as it pertains to an "intra-enterprise dispute" that involves no trade or commerce. Defendant asserts he is entitled to summary judgment on Count I of the complaint because plaintiff's inventorship claim is barred by laches.

II. Analysis

A. Plaintiff's Motion to Dismiss All Counterclaims

Federal Rule of Civil Procedure 8(a)(2) requires a pleading to contain "a short and plain statement . . . showing that the pleader is entitled to relief." Rule 10(b) requires a pleading to "state its claims or defenses in numbered paragraphs, each limited as far as practicable to a single set of circumstances." Finally, Rule 12(f) allows a court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Plaintiff contends defendants' counterclaims are verbose, meandering, and contain superfluous and prejudicial information, in violation of these three rules.

This contention is without merit. First, as a general matter, the "federal rules promote the disposition of claims on the merits rather than on the basis of technicalities." Kuehl v. F.D.I.C., 8 F.3d 905, 908 (1st Cir. 1993) (citing Foman v. Davis, 371 U.S. 178, 181-82 (1962)). Second, and more specifically, defendants' counterclaim pleading is simply nowhere near egregious enough to warrant the extraordinary remedy plaintiff seeks. See Bose Corp. v. Lightspeed Aviation, Inc., 691 F. Supp. 2d 275, 278 (D. Mass. 2010) (noting 12(f) motions are disfavored); Dennisonv. LaPointe, No. 06-40100-FDS, 2006 WL 3827516, at *2 (D. Mass. Dec. 21, 2006) (denying as an "extraordinary remedy" a motion to strike a complaint on Rule 8 grounds); 5A Charles Alan Wright et al., Federal Practice and Procedure § 1322 (3d ed. West 2013) (stating Rule 10(b) motions often "employed only as a dilatory tactic"). Plaintiff is not entitled to dismissal on these grounds.

B. Plaintiff's Motion to Dismiss Counterclaims III-VII against Defendant

Plaintiff moves to dismiss Counterclaims III-VII on two grounds. He alleges, first, that defendant lacks standing to bring these counterclaims, and second, that the counterclaims do not state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).

1. Standing

a. Independent Sales Representative Agreement

The Agreement was executed between plaintiff and Endocraft. Defendant was not a party to the Agreement, and he concedes as much. Instead, he argues that he is an intended beneficiary of the Agreement and therefore has standing to bring suit to enforce it. See Restatement (Second) of Contracts §§ 304, 315 (1981) (intended beneficiary of promise has standing to enforce a duty of performance, but incidental beneficiary does not). Rhode Island law applies Restatement § 302 to determine whether a beneficiary is intended or incidental. See Cathay Cathay, Inc. v. Vindalu, L.L.C., 962 A.2d 740, 745 (R.I. 2009). A beneficiary is intended

if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or

(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.

Restatement § 302(1). Accordingly, as the Restatement directs, I must examine the Agreement to determine whether recognizing defendant as an intended beneficiary effectuates the parties' intentions.

I conclude it does not. Rhode Island law looks to the words of the contract to determine intent. Cathay Cathay, 962 A.2d at 746. Where the words are unambiguous, the parties are bound by their ordinary meaning. Id. (quoting Singer v. Singer, 692 A.2d 691, 692 (R.I. 1997) (mem.)). "[T]he parties [must] directly and unequivocally intend to benefit a third party in order for that third party to be considered an intended beneficiary." Forcier v. Cardello, 173 B.R. 973, 985 (D.R.I. 1994). No unequivocal intention is present here. There is...