Patriot Homes, Inc. v. Forest River Housing, Inc.

• Decision Date: 06 June 2007
• Docket Number: No. 3:05-CV-471 AS.,3:05-CV-471 AS.
• Citation: 489 F.Supp.2d 865
• Parties: PATRIOT HOMES, INC. and Patriot Manufacturing, Inc., Plaintiffs, v. As FOREST RIVER HOUSING, INC. d/b/a Sterling Homes, Brent Raifsnider, Daniel Reed, William Milliken and Steven Ryker, Defendants.
• Court: U.S. District Court — Northern District of Indiana

489 F.Supp.2d 865

PATRIOT HOMES, INC. and Patriot Manufacturing, Inc., Plaintiffs, v. As FOREST RIVER HOUSING, INC. d/b/a Sterling Homes, Brent Raifsnider, Daniel Reed, William Milliken and Steven Ryker, Defendants.

No. 3:05-CV-471 AS.

United States District Court, N.D. Indiana, South Bend Division.

June 6, 2007.

Anthony Nimmo PHV, Ice Miller LLP, Chicago, IL, Dustin S. Dubois, Scott D. Matthews, Elizabeth T.L. Raymond, Wayne O. Adams, III, Scott D. Matthews, Ice Miller LLP, Indianapolis, IN, for Plaintiffs.

Ryan M. Fountain, Law Offices of Ryan M. Fountain, Mishawaka, IN, Timothy J. Abeska, D. Michael Anderson, Barnes & Thornburg LLP, South Bend, IN, James R. Byron, Thorne Grodnik LLP, Ian J. Forte, Michael A. Christofeno, Michael A. Cosentino, Cosentino and Christofeno, Elkhart, IN, for Defendants.

MEMORANDUM OPINION AND ORDER

ALLEN SHARP, District Judge.

This matter is before the Court on Defendant, Forest River Housing, Inc. d/b/a Sterling Homes' ("Sterling" or "Defendant"), Motion For Partial Judgment on the Pleadings (Docket No. 83) filed by Sterling on June 9, 2006, pursuant to Federal Rules of Civil Procedure, Rule 12(c), against Plaintiffs, Patriot Homes, Inc. and Patriot Manufacturing, Inc. ("Patriot" or "Plaintiffs"). The Plaintiffs have alleged claims of conversion and theft, tortious interference with contract, tortious interference with prospective business advantage, and unfair competition in Counts IV through VII of their Amended Complaint. Defendant Sterling alleges that the Indiana Uniform Trade Secrets Act and/or federal Copyright Act preempt these claims based solely upon Defendant's alleged misappropriation of trade secret/confidential information and alleged unauthorized reproduction and use of Plaintiffs' alleged copyrights. Further, Sterling alleges that Patriot's claim for treble damages relating to the alleged conversion and theft is also preempted by the Copyright Act to the extent that the claim is based upon infringement of Patriot's copyrights. In sum, Sterling asserts that it is entitled to judgment as a matter of law on Counts IV through VII of Patriot's Amended Complaint.

I. Procedural History

This Court has subject matter jurisdiction under 28 U.S.C. §§ 1338(a) and 1331. Specifically, federal claims are brought under 74 U.S.C. §§ 101, et. seq. ("The Copyright Act") and 15 U.S.C. § 1125(a) ("The Lanham Act"). The Court has supplemental jurisdiction under the state law claims pursuant to 28 U.S.C. § 1367. Venue is appropriate in this case due to the fact that Defendants either reside or do business in the Northern District of Indiana and because events or omissions giving rise to the claims occurred within this District.

On August 5, 2005, Patriot filed their Complaint [docket # 1] with this Court. Defendants Brent Raifsnider, Daniel Reed, William Milliken, and Steven Ryker filed their answer and counter-claim to that Complaint on September 20, 2005 [docket # 27], and Defendant Sterling filed its answer and counter-claim to that Complaint on January 5, 2006 [docket # 71]. Defendant Sterling moved for a partial judgment on the pleadings on June 9, 2006 [docket # 83], seeking partial judgment on Plaintiffs' original Complaint, Counts IV through VII. Then, on July 6, 2006, Plaintiffs filed their Amended Complaint [docket # 119]. The Amended Complaint adds claims for copyright infringement based upon three (3) additional copyright registrations allegedly issued by the Copyright Office after the filing of the original Complaint, and it adds a claim for passing off under the Lanham Act. However, Counts IV through VII in the Amended Complaint detail the same allegations as contained in Counts VI through VII in the original Complaint. Defendant Sterling filed its answer to the Amended Complaint on July 26, 2006 [docket # 120], and Defendants Brent Raifsnider, Daniel Reed, William Milliken, and Steven Ryker filed their answer to the Amended Complaint on the same day [docket # 121]. In light of the fact that Sterling has moved for Partial Judgment on the Pleadings, regarding only Counts IV through VII (and Patriot's claim for treble damages relating to the alleged conversion and theft), and because the original Complaint and Amended Complaint contain alike allegations in Counts IV through VII, this Court considers Sterling's Motion for Partial Judgment on the Pleadings. This Court has carefully analyzed the Amended Complaint ("Complaint"), the Answers filed thereto, and the parties' briefs¹ on the matter. Further, on January 11, 2007 the Court heard oral argument in South Bend on various pending motions, including this motion.

II. Standard of Review

Under Federal Rules of Civil Procedure 12(c), a party may move for judgment on the pleadings "[a]fter the pleadings are closed but within such time as not to delay the trial." A Rule 12(c) motion for judgment on the pleadings is reviewed "under the same standards as a motion to dismiss under 12(b): the motion is not granted unless it appears beyond doubt that the plaintiff can prove no facts sufficient to support the moving party." Flenner v. Sheahan, 107 F.3d 459, 461 (7th Cir.1997). And a motion for judgment on the pleadings is properly granted where, accepting all "well-pleaded allegations in the complaint as true" and drawing all "reasonable inferences in favor of the plaintiff," the moving party is entitled to judgment as a matter of law. Forseth v. Vill. of Sussex, 199 F.3d 363, 368 (7th Cir.2000); Milne v. Stephen Slesinger, Inc., 430 F.3d 1036, 1042 (9th Cir.2005), cert. denied. This Court is permitted only to consider the pleadings, which include the complaint, the answer, and any written instruments attached to those documents and exhibits. Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir.1998) (citing Fed.R.Civ.P. 10(c)). Whether a claim is preempted is a pure question of law for the court to decide. See Raskin v. Moran, 684 F.2d 472, 475 (7th Cir.1982); Short v. Haywood Printing Co., Inc., 667 N.E.2d 209, 212 (Ind.Ct.App.1996), trans. denied.

III. The Pleadings²

Patriot is in the business of designing and selling several models of modular homes. Complaint at ¶¶ 1, 2. Patriot has a copyright interest in the technical drawings and in the architectural works for each model of modular home created by Patriot's employees as works for hire.³ Complaint at ¶¶ 14, 15. Sterling is a recent competitor in the modular home industry, with employees, Raifsnider, Reed, Milliken, and Ryker, whom were previously employed by Patriot and had access to Patriot's alleged trade secret and confidential information. Complaint at ¶¶ 21, 24-30. This information was found on confidential state submissions, technical and construction drawings for modular homes, three-dimensional computer models for modular homes, confidential sales and cost information, and computer files containing more detailed information than just copyrighted material. Complaint at ¶¶ 30-32, 40-41. Within a short time after the Defendant's former employees started their employment with Sterling, Sterling circulated to the general public advertising materials describing 22 separate models of modular homes which are virtually identical to a separate and preexisting Patriot model. Complaint at ¶¶ 35, 37, 45-47, Exbs. 10-13. Patriot has registered copyrights in several of its technical drawings, a registered copyright in one of the architectural works for one of its modular homes, and has applied for additional copyright registrations for original and derivative technical drawings for its modular homes. Complaint at ¶¶ 38-39, Exbs. 1-9.

Patriot contends that the Defendant misappropriated its trade secret computer files, manufacturing and production drawings, and other information to create Defendant's modular home line, as well as misappropriated Patriot's confidential state submissions and confidential sales and cost information. Complaint at ¶¶ 43-45. Patriot further contends that, by way of Defendant's advertising, Patriot has improperly adopted Patriot's technical drawings and architectural works, and improperly promoted the drawings as being the work of Sterling, in an effort to deprive Patriot of customers. Complaint at ¶ 48. Patriot has suffered lost revenues and profits as a result of Sterling's misrepresentations and unlawful actions. Complaint at ¶ 49. Therefore, Patriot asserts the following claims in their Amended Complaint: theft and conversion, pursuant to Ind.Code 35-43-4-2 and 35-43-4-3 respectively, where Defendants "are knowingly and/or intentionally exercising unauthorized control over Patriot's property" (Complaint at ¶¶ 68-72), tortious interference with contract (Complaint at ¶¶ 73-77), tortious interference with prospective business advantage (Complaint at ¶¶ 78-82), and unfair competition (Complaint at ¶¶ 83-89). Further, Patriot asserts that it is entitled to recover treble damages as a direct and proximate result of Defendants' theft and conversion of Patriot's property, pursuant to Ind.Code. 34-24-3-1 (Complaint at ¶ 72).

IV. Analysis

A. Motion as premature/Pleading in the Alternative

Before addressing the preemption issues, the Court first considers Patriot's argument that Sterling's motion must be denied as premature. Plfs' Opp. at 8-12. Essentially, Patriot asserts that because plaintiffs are permitted to plead claims in the alternative, Sterling cannot force Patriot to prematurely elect its remedies and prioritize its theories of relief. Id. at 8-9. Further, Patriot argues, without citation to any supporting law or other authority, "[u]nless Defendant, by way of its Motion, is both admitting the Trade Secret and Copyright violations set forth in the Complaint and seeking a Judgement from this Court to that effect, then it is simply too early to address and render judgement on Patriot's common law theories of relief." Id. at 11.

While this Court agrees that clearly a plaintiff has the right to plead...