DiFrancesco v. Particle Interconnect Corp., No. 00CA0601.

• Decision Date: 06 December 2001
• Docket Number: No. 00CA0601.
• Citation: 39 P.3d 1243
• Parties: Louis DIFRANCESCO, d/b/a Particle Interconnect Research & Development, Inc., Defendant and Third-Party Plaintiff-Appellant, v. PARTICLE INTERCONNECT CORPORATION and Nanopierce Technologies, Inc., Plaintiffs-Appellees, and Intercell Corporation and Paul H. Metzinger, Third-Party Defendants-Appellees.
• Court: Colorado Court of Appeals

39 P.3d 1243

Louis DIFRANCESCO, d/b/a Particle Interconnect Research & Development, Inc., Defendant and Third-Party Plaintiff-Appellant, v. PARTICLE INTERCONNECT CORPORATION and Nanopierce Technologies, Inc., Plaintiffs-Appellees, and Intercell Corporation and Paul H. Metzinger, Third-Party Defendants-Appellees.

No. 00CA0601.

Colorado Court of Appeals, Div. IV.

December 6, 2001.

Hale Hackstaff Tymkovich & ErkenBrack, L.L.P, Richard W. Daily, Allan L. Hale, Scott A. Hyman, Denver, CO, for Defendant and Third-Party Plaintiff-Appellant.

Caplan and Earnest, L.L.C., Peter M. Hamilton, Colleen A. O'Laughlin, Denver, CO, for Plaintiffs-Appellees and Third-Party Defendant-Appellee Intercell Corporation.

Kirk Holleyman, P.C., Kirk B. Holleyman, Denver, CO, for Third-Party Defendant-Appellee Paul H. Metzinger.

Opinion by Judge DAVIDSON.

Defendant, Louis DiFrancesco, d/b/a Particle Interconnect Research and Development, Inc., appeals from the judgment enforcing a settlement of his patent dispute with Particle Interconnect Corporation (PIC), Nanopierce Technologies, Inc. (NTI), Intercell Corporation, and Paul Metzinger (collectively, plaintiffs). We reverse and remand.

This lawsuit concerns technology patented by defendant. In 1996, defendant merged his wholly-owned company with PIC, assigned his patents to the latter entity, and entered into a one-year consulting agreement. NTI is the successor in interest to PIC.

After defendant's consulting position was terminated, PIC and NTI filed this lawsuit, alleging that defendant continued to represent that he owned the patents and to improperly use the name Particle Interconnect. Defendant filed counterclaims against PIC and NTI and third-party claims against Intercell Corporation, the parent corporation of PIC and NTI, and Paul Metzinger, defendant's former attorney who had facilitated the merger and who is an officer of one or more of the other entities in this lawsuit. Defendant alleged, inter alia, breach of the merger agreement and legal malpractice.

According to a deposition transcript submitted by plaintiffs, during a break in defendant's pretrial deposition, the parties discussed settlement and then placed the substance of their discussions on the record. The transcript indicates that written documents would subsequently be prepared. However, later, when drafts were exchanged, the parties could not agree on terms.

Plaintiffs then filed a motion with the trial court, alleging that the deposition transcript reflected a completed settlement agreement. Plaintiffs asked the court to enforce the settlement agreement and to dismiss all claims and counterclaims. Plaintiffs also submitted a lengthy proposed order, which, according to plaintiffs, reflected the terms of the settlement reached during defendant's deposition. One of the terms in the proposed order granted defendant a license to use certain patented technology. The trial court, presumably finding that a settlement had been reached, entered plaintiffs' proposed order as a judgment.

Defendant appeals, arguing that the trial court erred in its determination that a settlement agreement was reached and, alternatively, that the judgment entered by the trial court omitted or inaccurately reflected terms set forth in the deposition transcript. We agree and therefore reverse.

I.

As a threshold matter, we address and reject plaintiffs' contention that defendant waived his right to appeal the judgment enforcing the settlement agreement.

While defendant's appeal was pending, plaintiffs filed a motion to dismiss with this court, arguing that defendant waived or mooted his right to appeal because he had accepted the benefits of the trial court's judgment. On plaintiffs' motion for leave to file supplemental factual materials regarding events since the filing of the appeal, the case was remanded to the trial court to determine whether, based on these factual allegations, defendant had waived his right to appeal.

On remand, the record before the trial court consisted of the parties' briefs and attached exhibits, which contained two messages posted by defendant. These messages were posted on the NTI bulletin board on a stock market watch website hosted by a well-known search engine portal. The first message, which was posted after the initial appeal was filed, stated:

Hello, I am Louis DiFrancesco. I have a license to produce product. I am trying to get my company to be listed on the Penny Stock over the counter StockMarket. I would appreciate any suggestions that would accomplish that end. You fellow shareholders of Intercell, may want to invest in this new company. [sic]

The second message was posted after the remand order and appears to be an excerpt from a draft of defendant's remand brief. It referenced the earlier posting and stated, in part: "Since the judgment appealed from has not been stayed, Appellant does have the license awarded him under its provisions."

The trial court issued an order stating, in its entirety, "The court rules that DiFrancesco has waived his right to appeal."

In their motion to dismiss filed here, plaintiffs argue that, by advertising that he had a license, seeking financial support, and acknowledging that the license in question was that awarded in the judgment, defendant voluntarily accepted the benefits of the trial court judgment granting him a license and, thereby, waived his right to appeal. Defendant argues, as he did in the trial court, that even if benefits of a patent license can be accepted before the licensed technology is used in production, his claim was not inconsistent with the appeal because he also held another license, cancelled by the trial court's judgment, that would be valid if the settlement were set aside.

It is not clear from the trial court's order on remand if, or how, it resolved the factual disputes presented to it. However, even if it determined all factual questions against defendant, i.e., that defendant was referring to the license awarded him in the judgment, was using the license to solicit investors, and did not have any other valid licenses, we disagree that defendant has accepted the benefits of the judgment being appealed.

Accepting an award or legal advantage under a judgment generally waives a party's right to appeal that judgment when the appeal may result in a determination that the party is not entitled to what has been accepted. Potter v. State Farm Mut. Auto. Ins. Co., 21 P.3d 874 (Colo.App.2001). See also Farmers Elevator Co. v. First Nat'l Bank, 181 Colo. 231, 508 P.2d 1261 (1973)(acceptance of attorney fees under the judgment rendered the appeal moot); Wilson v. Auto. Owners Ass'n Ins. Co., 152 Colo. 431, 382 P.2d 815 (1963)(by voluntarily accepting money awarded in the judgment, the plaintiff is estopped from claiming any right to appeal). Cf. Main Elec., Ltd. v. Printz Servs. Corp., 980 P.2d 522 (Colo.1999)(to render an appeal moot, acceptance of benefits under a judgment must be attended by circumstances indicating an intention by both parties to settle and compromise the disputed claim). The party asserting waiver under this rule must demonstrate that the appealing party has actually received a benefit under the judgment and that resolution of the appeal may result in removing the appealing party's entitlement to the benefit received. First Nat'l Bank v. Theos, 794 P.2d 1055 (Colo.App. 1990).

The question to be answered here is whether defendant has actually received any benefit under the judgment. In the majority of cases that discuss this issue, the party had received cash or tangible property in satisfaction of the judgment, and there was no question that a benefit had been received. See, e.g., Wilson v. Auto. Owners Ass'n Ins. Co., supra. The only Colorado case determining that no benefit had been received is First National Bank v. Theos, supra. There, a division of this court held that no benefit had been received where the appellant's motion to appoint a receiver had been granted, but no money or property had been conveyed, no execution on the judgment issued, and both sides had obtained stays of execution.

The courts of some states have adopted a rule that prevents an appeal if the party takes any action inconsistent with the right of review. These jurisdictions treat such inconsistent behavior as a tacit acceptance of the benefits of the judgment. See, e.g., J & F Car Care Serv., Inc. v. Russell Corp., 166 Ga.App. 888, 305 S.E.2d 504 (1983)("As a general rule, any voluntary act by a party, with knowledge of the facts, by which he expressly or impliedly recognizes the validity and correctness of a judgment against him, will operate as a waiver of his right to bring error to reverse it, as where he receives affirmative relief under the judgment or takes a position inconsistent with his right of review."); Allen v. Allen, 198 Ga. 267, 31 S.E.2d 481 (1944)(appointment of receiver waived right of appeal).

Most courts that have considered the issue, however, deny an appeal only when the party has received some benefit of tangible value under the judgment; actions that are merely inconsistent with the appeal are not sufficient to support a finding of waiver. See, e.g., Robert L. Wheeler, Inc. v. Scott, 818 P.2d 475 (Okla.1991). See also Menges v. Robinson, 132 Cal.App. 647, 23 P.2d 526 (1933)(recordation of judgment lien resulted in only speculative benefit depending on opposing party's future acquisition of property in the county and did not constitute acceptance of benefits). The latter view is more consistent with the language in Theos, "reversal of the judgment on appeal will not affect the Bank's entitlement to a benefit that it actually received under the judgment," First National Bank v. Theos, supra, 794 P.2d at 1058 (emphasis added), and we find it persuasive.

Here, we conclude that defendant's statements did not result in his receipt of a tangible benefit under the judgment. It is undisputed that defendant...