Ortega v. Forks RV

• Court: U.S. District Court — Northern District of Indiana
• Writing for the Court: Roger B. Cosbey
• Decision Date: 22 May 2012
• Docket Number: CAUSE NO. 1:10-CV-227
• Citation: Ortega v. Forks RV, CAUSE NO. 1:10-CV-227 (N.D. Ind. May 22, 2012)
• Parties: AMY AND JAMES ORTEGA, Plaintiffs, v. FORKS RV a/k/a Continental Coach a/k/a Forks International, et al., Defendants.

AMY AND JAMES ORTEGA, Plaintiffs, v. FORKS RV a/k/a Continental Coach a/k/a Forks International, et al., Defendants.

CAUSE NO. 1:10-CV-227

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA FORT WAYNE DIVISION

Dated: May 22, 2012

OPINION AND ORDER

Plaintiffs Amy and James Ortega assert that in the summer of 2009 they entered into an implied agreement or quasi-contract with Defendants Forks RV a/k/a Continental Coach a/k/a Forks International concerning the design, manufacturing, marketing, and sale of certain recreational vehicles customized for use in the equine industry (the "RVs").¹ The Ortegas filed this suit one year later, claiming that Forks and three of its owners or employees (collectively, "Forks") breached the purported agreement, were unjustly enriched, and violated the Copyright Act by using the Ortegas' designs for the RVs in an unauthorized manner.² (Docket # 1.)

Forks vehemently denies the existence of the type of sales distributorship agreement described by the Ortegas. Instead, it claims that the Ortegas breached two separate express contracts for the purchase of two RVs and, accordingly, advances counterclaims for breach of contract, suit on account, and conversion. (Docket # 31.) This dispute has become quitecontentious, and the parties have now filed a plethora of motions which are ripe for ruling, including a motion to dismiss Amy Ortega (Docket # 80), cross-motions for summary judgment (Docket # 55, 57, 62), and four motions to strike that allege a host of technical transgressions (Docket # 60, 64, 73, 77).³

Having reviewed these filings, the Court will GRANT Forks's motion to dismiss Amy Ortega and will GRANT IN PART Forks's motion for summary judgment in that Ortega's copyright infringement claim and request for damages predicated on emotional distress will be dismissed and Forks's request for attorney's fees in defending the copyright infringement claim will be granted. But because genuine disputes of material fact require a trial as to the parties' other claims, the pending motions will otherwise be DENIED.

I. THE MOTION TO DISMISS AMY ORTEGA

Plaintiff Amy Ortega died on October 19, 2011, and Forks filed a notice to that effect on December 16, 2011. (Docket # 41.) Forks now seeks to dismiss her from this action.

Federal Rule of Civil Procedure 25(a) states: "If a party dies and the claim is not extinguished, the court may order substitution of the proper party . . . . If the motion is not made within 90 days after service of a statement noting the death, the action by or against the decedent must be dismissed." See Russell v. City of Milwaukee, 338 F.3d 662, 665 (7th Cir. 2003) (denying plaintiff's request for an extension of time to file a motion for substitution of parties and dismissing suit under Rule 25(a)(1)); Magee v. Hous. Auth. of South Bend, No. 3:09-cv-337, 2010 WL 2950449, at *2 (N.D. Ind. July 21, 2010) (same). Here, the ninety-day period passedon March 15, 2012, and no motion for substitution has been filed.

James Ortega argues that, despite Rule 25(a), a motion for substitution was not necessary in this instance. He elaborates that pursuant to the general rules of descent articulated in Section 474.010 of the Missouri Probate Code, which he purports is the law applicable to this issue, he, as Amy's surviving spouse, inherits all of her property. As he sees it, he is, by operation of Missouri law, the successor to Amy's rights in this action and thus may proceed both in his individual capacity and on her behalf regardless of a motion for substitution. (Docket # 85.)

But whether James Ortega inherits his wife's claim in this suit is not the issue. Both Federal Rule of Civil Procedure 25(a) and Missouri Supreme Court Rule 52.13 procedurally provide that if a motion for substitution is not made within ninety days after receiving the notice of death, "the action by or against the decedent must be dismissed." See, e.g., Magee, 2010 WL 2950449, at *2 (denying individual plaintiff's request to simply "change her status from that of an individual plaintiff to that of a plaintiff on behalf of herself and her late daughter" and dismissing decedent's claims where no motion for substitution had been timely filed); Loven v. Davis, 783 S.W.2d 152, 154 (Mo. App. S.D. 1990) ("The death of Stanley, and failure to file suggestions of his death with the trial court, which resulted in no successor or personal representative being appointed to represent his interests, terminated the action against him. Therefore, any part of the trial court's ruling . . . referring to Stanley Davis is void, but does not affect the ruling which applies to [his wife,] Neva Davis.").

Perhaps recognizing the futility of his argument, James Ortega alternatively asks for an extension of time within which to open an estate and file a motion to substitute a proper party for Amy. But while "[a] motion filed before the deadline may be granted 'for good cause,' a motionmade after the time has expired may be granted only if 'the party failed to act because of excusable neglect.'" Murphy v. Eddie Murphy Prods., Inc., 611 F.3d 322, 324 (7th Cir. 2010) (quoting Fed. R. Civ. P. 6(b)(1)). Here, Ortega does not satisfy either standard, as he makes no attempt to explain why, despite his diligence, the time table could not reasonably have been met. See Smith v. Howe Military Sch., No. 3:96-cv-790RM, 1997 WL 662506, at *1 (N.D. Ind. Oct. 20, 1997).

In that regard, Forks did not file the notice of Amy Ortega's death until fifty-eight days after she died, and then James Ortega had ninety days after that to file a motion for substitution. Thus, James Ortega has already had ample time—more than five months—to seek to substitute a proper party for Amy; yet, he offers no reason for his delay. Nor is Ortega's failure to file a motion for substitution due to a "plausible misinterpretation[] of ambiguous rules" that could constitute excusable neglect. Lewis v. Sch. Dist. #70, 523 F.3d 730, 740 (7th Cir. 2008). Consequently, his request to file a belated motion for substitution of a party will be DENIED, and Plaintiff Amy Ortega will be DISMISSED from this action, leaving James Ortega as the sole Plaintiff in this action. Similarly, any counterclaim by Defendants against Amy Ortega is likewise DISMISSED.

II. THE CROSS-MOTIONS FOR SUMMARY JUDGMENT

In their motions for summary judgment, the parties attempt to describe a rather convoluted business relationship and leave significant factual gaps in the record; as a result, the Court's task in deciphering their filings was quite difficult. A summation of the parties' respective, albeit confusing, positions follows.

A. James Ortega's Position

Boiling this case down from James Ortega's perspective, in the summer of 2009 the parties entered into an implied agreement or quasi-contract whereby Forks would manufacture and customize the RVs according to Ortega's designs, and then Ortega would market and sell the RVs in the equine industry. Ortega and Forks would then equally split the expenses and profits associated with the venture.

In furtherance of this "agreement," in August 2009 Ortega took possession of RV # 7039—the first recreational vehicle customized by Forks according to Ortega's design—as a "demo" unit and traveled in it to equine shows to promote the sale of the customized RVs. Forks, however, retained the certificate of origin and title, and also insured and plated RV #7039.

In September 2009, Ortega, through "Money Tree Associates, Inc.," purportedly "loaned" Forks $59,509, with the understanding that RV #7039 served as collateral for the loan.⁴ Two months later, Ortega submitted purchase orders for two more RVs—the "Purdin" and the "Ortega I" units. The Purdin unit was ultimately sold to the customer who ordered it. Forks, however, purportedly usurped Ortega's interest in the Ortega I RV by directly marketing and selling it to a third party for approximately $20,000 less than its original asking price.

In filing suit, Ortega contends that Forks violated what was essentially a sales distributorship agreement in numerous ways, including manufacturing delays; producing flawed and defective units; delaying responses for requests concerning pricing, floor plans, and other information; unilaterally raising the price of the RVs; failing to reimburse expenses; failing topay back the so-called "loan"; using designs without authorization; and utilizing his customer base for direct marketing. Ortega claims that Forks's purported breach and copyright infringement caused him to experience, among other things, lost profits, increased expenses, harm to his customer relationships, and difficulty with future sales.

B. Forks's Position

Not surprisingly, Forks views its contractual relationship with Ortega quite differently. It argues that the purported agreement described by Ortega never existed and that Ortega instead simply entered into two express contracts to purchase RV #7039 and the Ortega I.

As to RV #7039, Forks contends that it sent Ortega an invoice in the amount of $124,840 for this unit and that Ortega's check of $59,509 was not a loan but instead a down payment toward the RV's purchase price. Similarly, with respect to the Ortega I, Forks asserts that Ortega submitted a purchase order for that RV and Forks later invoiced him for the purchase price, but Ortega failed to pay the invoice and pick up the RV. As Forks sees it, these invoices and purchase order constitute two express contracts for the sale of goods—RV #7039 and Ortega I—between "merchants" under Indiana's version of the Uniform Commercial Code, which Ortega breached. See IND. CODE §§ 26-1-2-104, 204.

Forks further clarifies that although the parties did exchange a draft sales distributorship agreement, that agreement was never finalized and executed and thus there was never a "meeting of the minds" concerning the contractual arrangement that Ortega describes. Forks emphasizes that the two express contracts bar Ortega's...