Law Offices of Peter H. Priest, PLLC v. Coch
| Decision Date | 05 November 2014 |
| Docket Number | 12 CVS 3532 |
| Citation | 2014 NCBC 54 |
| Court | Superior Court of North Carolina |
| Parties | LAW OFFICES OF PETER H. PRIEST, PLLC, Plaintiff, v. GABRIEL COCH and INFORMATION PATTERNS, LLC, Defendants. |
J.W. Bryant Law Firm, PLLC by John Walter Bryant and Amber J. Ivie for Plaintiff Law Offices of Peter H. Priest, PLLC.
Glenn, Mills, Fisher & Mahoney, P.A. by Carlos E. Mahoney for Defendants Gabriel Coch and Information Patterns, LLC.
{1} THIS MATTER is before the Court on Defendants' Motion for Summary Judgment ("Defendants' Motion") and Plaintiffs' Motion for Summary Judgment ("Plaintiff's Motion"), both made pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. For the reasons expressed below, Defendants' Motion is GRANTED, and Plaintiff's Motion is DENIED.
{2} Plaintiff Law Offices of Peter H. Priest, PLLC ("Law Offices"), of which attorney Peter H. Priest ("Priest") is the principal, seeks damages related to an alleged breach of a contract ("the Agreement") entered into with Defendants Gabriel Coch ("Coch") and Information Patterns, LLC ("IP").[1]
{3} Plaintiff alleges that the parties are bound to the Agreement, which entitled Plaintiff to a percentage of the sale of a patent for a technological device developed by Defendants. Defendants contend that the Agreement cannot be enforced because it was not entered into in compliance with the procedural requirements for a business transaction between an attorney and client. Defendants further argue that, in any event, the contract allows for payment to Plaintiff of a share of licensing proceeds for the patent, but not for sales proceeds.
{4} This action was filed in Durham County on June 19, 2012. The matter was designated a mandatory complex business case by order of the Chief Justice of the Supreme Court of North Carolina dated July 24, 2012, and subsequently assigned to the undersigned Special Superior Court Judge for Complex Business Cases by order of the Chief Special Superior Court Judge for Complex Business Cases.
{5} Defendants filed a Motion to Dismiss on August 24, 2012, which was granted in part and denied in part on January 25, 2013, by the Order that dismissed Priest in his individual capacity as well as Plaintiff's claims for breach of fiduciary duty, constructive fraud, and unfair and deceptive trade practices. Plaintiff's claims for breach of contract and fraud remain for disposition and are the subject of Plaintiff's and Defendants' motions.
{6} Defendants filed a Motion for Summary Judgment on Plaintiff's breach of contract and fraud claims on January 21, 2014. Plaintiff sought summary judgment in its own favor in Plaintiff's Brief in Opposition to Defendants' Motion for Summary Judgment and in Support of Summary Judgment for Plaintiff ("Response"), filed on March 25, 2014. Both motions have been fully briefed, the Court has heard oral argument, and the motions are ripe for disposition.
{7} The Court does not make findings of fact when ruling on a motion for summary judgment. Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C.App. 138, 142, 215 S.E.2d 162, 164–65 (1975). However, it is appropriate for the Court to outline the undisputed facts or lack of facts in order to provide context for the Court's ruling. The Court believes the following facts to be uncontested.
{8} Plaintiff Law Offices, formerly known as Priest & Goldstein, PLLC, is a North Carolina professional limited liability company, with its principal place of business in Chapel Hill, Orange County, North Carolina.
{9} Priest is a citizen and resident of Durham County, North Carolina, and is the sole owner of the Plaintiff.
{10} Defendant Coch is a citizen and resident of Chapel Hill, Orange County, North Carolina, and is a member-manager of Defendant Information Patterns, LLC ("IP").
{11} Defendant IP is a North Carolina limited liability company with its principal place of business in Chapel Hill, Orange County, North Carolina. IP is a small information technology company, formed in 2003. Graham Knight ("Knight") and Mark Smith ("Smith") are both citizens and residents of the United Kingdom, and, at the time relevant to this action, were both members of IP.
{12} Coch, Knight, and Smith had developed a computer program for geo-collaboration titled "Methods and Apparatus for Geo-Collaboration" ("the Program"). In either 2004 or 2005, Coch began discussions with Mr. Joe Agusta, an associate attorney working for Plaintiff and Coch's neighbor, regarding Agusta's assistance filing a patent for the Program.
{13} Under an early agreement between Plaintiff and Coch, Knight, and Smith, the fees due to Plaintiff for representation regarding filing a patent for the Program on behalf of Defendants would be limited to a maximum of $10, 000. That amount was exhausted during the early stages of patent filing, and Defendants paid that amount in 2006.
{14} In December 2005, at around the same time as the first patent application was filed, Coch, Knight, and Smith transferred their interests in the Program to IP.
{15} The first filing with the U.S. Patent and Trademark Office for the Program was made in December of 2005 and remained pending until 2009. Agusta resigned from Plaintiff's employ in 2006.
{16} In late 2009, Plaintiff received a "Non-Final Rejection" of the patent application it had made on behalf of IP. Dr. Jerry Pechanek, an engineer employee of Plaintiff, began to draft a response to the Non-Final Rejection prior to contacting Coch, Knight, and Smith to discuss their options regarding pursuing patent approval. Plaintiff learned that Coch, Knight and Smith may have been financially unable to proceed with the patent registration. Plaintiff then offered to file the response to the Non-Final Rejection at Plaintiff's cost.
{17} On or about February 18, 2010, Plaintiff received a "Notice of Allowance, " which indicated that a patent would be issued upon the filing of certain paperwork and payment of required fees. Plaintiff emailed Coch regarding this development. Coch, Smith, and Knight agreed to split the fees evenly.
{18} Around the same time that Coch, Smith, and Knight were discussing a fee-splitting arrangement, Plaintiff and Coch began discussing methods with which to monetize the patent, because Coch, Knight, and Smith were financially unable to continue forward with efforts to solicit a license. Plaintiff offered to form a partnership with Defendants, in which Plaintiff would attempt to market the patent on Defendants' behalf.
{19} Plaintiff alleges that Coch, on behalf of his fellow IP members, decided to enter into the Agreement with Plaintiff to handle the patent-related business, and notified Knight and Smith to this effect on March 23, 2010. Prior to the Agreement's drafting, in emails to Knight and Smith, Coch referred to Priest as a partner and indicated that he intended for Priest to have an equity portion of the patent.[2] Priest began drafting the Agreement and was largely responsible for the content of the contract, although Coch had some input.
{20} Plaintiff claims that Priest orally notified Defendants that Defendants should have an attorney review the Agreement prior to their signature. Plaintiff has produced no evidence that this advice was given in writing. The parties agree that Knight was not advised, in writing or otherwise, of the desirability of seeking outside counsel, nor did he give written informed consent to Plaintiff's role in the transaction.
{21} The Agreement provides that out-of-pocket, actual costs of patent filing, prosecution, and maintenance of the patent will be split equally among the four participants, as would be certain proceeds. Although the parties agree that Plaintiff was entitled to a percentage of licensing proceeds, they do not agree that Plaintiff is entitled to a twenty-five percent interest in proceeds from the sale of the patent.
{22} The Agreement was never fully executed in writing by Coch, Smith, or Knight.
{23} After the Agreement was drafted, Plaintiff paid the full amount of the costs related to the continuing registration of the patent, subsequently billing Coch, Smith, and Knight for their cumulative seventy-five percent share of the expenses due. Coch, Smith, and Knight paid the invoices.
{24} After the Agreement was drafted, Plaintiff began to send letters to business firms that it and Defendants thought may be interested in licensing the patent. No licenses were ever successfully negotiated, and no proceeds were received from licensing.
{25} In September 2011, Coch began to explore the possibility of selling the patent. To do so, he began conversations with William J. Plut ("Plut"), a patent broker experienced in the sale of patents who worked for Patent Pending International ("PPI").
{26} After his initial conversations with Plut, Coch contacted Smith and Knight by e-mail to provide an update on his efforts to sell the patent. Coch, Smith, and Knight agreed that Coch should have an additional ten percent of any potential sale as a finder's fee. Coch then wrote Smith and Knight an e-mail indicating that the split after costs would be four ways, because Priest, as the "attorney who has filed for continuations and has kept this alive from a patent / legal perspective has 1/4 of it, as we agreed some time ago." (Pl.'s Br. in Opp'n to Defs.' Mot. Summ. J. ("Opp'n Br.") Ex. 20.) Coch also indicated that he wanted Priest's approval prior to signing a contract with Plut and PPI.
{27} Plaintiff was hesitant to enter into the contract with Plut and PPI to broker the sale of the patent. Coch arranged an in-person meeting between Priest and Plut, after which Priest approved having Plut broker the patent.
{28} After the meeting, Priest acknowledged that he could not find a copy of the Agreement...
To continue reading
Request your trial