Northeast Coating Technologies, Inc. v. Vacuum Metallurgical Co., Ltd., 7820

• Citation: 684 A.2d 1322
• Decision Date: 04 November 1996
• Docket Number: No. 7820,7820
• Parties: NORTHEAST COATING TECHNOLOGIES, INC. v. VACUUM METALLURGICAL CO., LTD., et al. DecisionLaw Docket No. or 96-168.
• Court: Supreme Judicial Court of Maine (US)

Page 1322

684 A.2d 1322

41 U.S.P.Q.2d 1862

NORTHEAST COATING TECHNOLOGIES, INC. v. VACUUM METALLURGICAL CO., LTD., et al.

Decision No. 7820.

Law Docket No. or 96-168.

Supreme Judicial Court of Maine.

Argued Oct. 7, 1996.

Decided Nov. 4, 1996.

Paul W. Cadigan (orally), Reagan, Adams & Cadigan, Kennebunk, for Plaintiff.

Melissa A. Hewey (orally), Christopher G. Jernigan, Drummond, Woodsum, & MacMahon, Portland, for Defendants.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and LIPEZ, JJ.

WATHEN, Chief Justice.

Plaintiff, Northeast Coating Technologies, Inc. (NCT), appeals from the summary judgment entered against it in the Superior Court (York County, McKinley, A.R.J.) on all three counts of its complaint against defendants, Vacuum Metallurgical Co., Ltd. (VMC), ULVAC Corporation, IHT Corporation, ULVAC North America Corporation, ULVAC Technologies, Inc., and Darrell Lewis. ¹ NCT argues on appeal that it made a sufficient showing before the trial court of misappropriation of trade secrets, conversion, and intentional interference with advantageous relationships to survive defendants' motion for a summary judgment. We find no error and affirm the judgment.

The facts, as developed for purposes of the motion for a summary judgment, may be summarized as follows: NCT is a corporation formed by Shawn Spencer and others to create a metal vacuum coating business in Kennebunk. Spencer is a former employee of IHT Corporation, a division of which is currently engaged in metal vacuum coating in Kennebunk. NCT's incorporators prepared a stock prospectus to be distributed among potential investors. According to the verified complaint, it took approximately one year and $100,000 to develop this prospectus. It contains pricing information, five-year capital and operating budget projections, market development plans, and research and development planning information. The prospectus was approved by the relevant governmental agencies for circulation in connection with a proposed stock offering.

Of particular importance to the present controversy is the fact that the prospectus includes the terms of an option contract between NCT and an Arkansas company, National Swage, for the purchase of a used coating machine. This contract gave NCT the right to purchase the machine for $75,000. A comparable new machine sells for $800,000 to $1,200,000. Spencer learned of the machine's existence from an employee of ULVAC.

NCT circulated its prospectus to thirty to fifty potential investors. Approximately twenty-five of these individuals had not previously been contacted by anyone from NCT. The prospectus contains the following notice:

This information is being provided to you on a confidential basis for the purpose of soliciting your purchase of stock in the corporation and for no other purpose. You agree, by accepting this material for review, that you will not reproduce or distribute any part of its contents without the prior written consent of the corporation.

Spencer testified in his deposition that Darrell Lewis, manager of IHT's Kennebunk division, phoned him shortly after the copies of the prospectus were sent out. Lewis informed Spencer that he had learned of NCT's business plan. According to Spencer, Lewis said that he would contact other metal coating businesses and urge them to persuade National Swage to breach its contract. He also allegedly told Spencer that he would distribute the contents of the prospectus throughout the industry and "do anything else necessary to prevent plaintiff from entering the vacuum coating business." One of NCT's potential investors was an acquaintance of Lewis who had provided him with a copy of the prospectus.

Shortly thereafter, Spencer learned that several individuals in the vacuum coating industry had been provided with information contained in NCT's prospectus. He was also told by an officer of a Texas company that, because of the information being distributed by Lewis, many in the vacuum coating industry were "frightened" of competition by NCT. Spencer also discovered that National Swage had received several calls from companies seeking to purchase the coating machine at prices much higher than the contract price.

NCT contacted defendant VMC and demanded that it order Lewis to cease his activities, return all copies of the prospectus to NCT, and furnish the names of all persons to whom Lewis had divulged the contents of the prospectus. The individual contacted at VMC stated that he would investigate the matter.

NCT commenced the present action in the Superior Court alleging interference with beneficial business relationships, conversion, and misappropriation of trade secrets. According to NCT, because of Lewis's actions and the present litigation, it has become necessary for NCT to withdraw its prospectus and it has become impossible for NCT to...