Rule v. Brine, Inc.
| Decision Date | 05 June 1996 |
| Docket Number | D,No. 1289,1289 |
| Citation | 85 F.3d 1002 |
| Parties | Robert J. RULE, Plaintiff-Appellant, v. BRINE, INC., also known as W.H. Brine Company, and William H. Brine, Jr., Defendants-Appellees. ocket 95-7986. |
| Court | U.S. Court of Appeals — Second Circuit |
Rodney A. Brown, New York City (Eileen Fox, Brown & Fox, New York City, on the brief), for Plaintiff-Appellant.
Andrew M. Calamari, New York City (Elyse D. Echtman, Donovan Leisure Newton & Irvine, New York City, on the brief), for Defendants-Appellees.
Before NEWMAN, Chief Judge, KEARSE, Circuit Judge, and WEXLER, District Judge. *
Plaintiff Robert J. Rule appeals from a judgment of the United States District Court for the Eastern District of New York, Manuel L. Real, Judge **, dismissing his amended complaint seeking damages principally for breach of contract or unjust enrichment in connection with his designs of equipment for use in the sport of lacrosse. The district court granted summary judgment dismissing the amended complaint on the ground that Rule's claims depended on the existence of an agreement by defendant Brine, Inc. to pay Rule "reasonable royalties" and that Rule's testimony in deposition and at an evidentiary hearing was insufficient as a matter of law to support an inference that there was such an agreement. On appeal, Rule contends principally that summary judgment was inappropriate because there were genuine issues of material fact to be tried. For the reasons that follow, we vacate the judgment and remand for trial.
Rule began playing lacrosse in high school in 1964, was an All-American in college, and was the starting goaltender on a team that represented the United States and won the world championship in 1974. Since 1973, he has been a high-school lacrosse coach. In the mid-1970s, based on his experiences as a goaltender and his knowledge of the rules applicable to the specifications for lacrosse sticks, Rule began developing a novel design for a goaltender stick.
At all pertinent times, Brine, Inc. or its predecessor W.H. Brine Company (collectively "Brine" or the "Company") was engaged in the manufacture and sale of sporting goods, including lacrosse-related products. Defendant William H. ("Bill") Brine, Jr., and his brother Peter Brine (collectively "the Brines") were officers of Brine and ran the Company. In 1976, the Brines got one of Rule's former teammates to introduce them to Rule.
Rule discussed with the Brines his design for the new goaltender stick, showed them a small clay model, and explained the reasoning behind the new design. William Brine opined that Rule's design was patentable. Rule and the Company entered into a relationship lasting more than a decade, during which Rule developed goaltender sticks and other lacrosse-related products on which Brine obtained seven patents naming Rule as the inventor. Pursuant to negotiations described in greater detail in Part I.B. below, Rule assigned his rights in these inventions to Brine, which manufactured and sold the products and paid Rule various sums, to wit, $200/month from 1975 to 1977, $400/month from 1977 to 1979, and $675/month from 1979 to 1990.
Toward the end of this period the relationship deteriorated, and in 1990 Brine stopped making payments to Rule. Brine continued, however, to manufacture and sell the patented products that had been developed by Rule. In 1991, Rule commenced the present action. As amended, the complaint alleged principally that Rule had assigned his rights in the inventions covered by the seven patents to Brine in exchange for Brine's agreement to pay him reasonable royalty fees and that Brine had breached the agreements, and been unjustly enriched, by failing to pay Rule reasonable royalties. The amended complaint also alleged that defendants had committed patent fraud by obtaining a patent naming William Brine as the sole inventor of a product invented by Rule.
After several years of discovery, the case was scheduled to be tried in June 1995. In April 1995, Brine sought the court's permission to move for summary judgment dismissing all of Rule's claims. Judge John Gleeson, to whom the case was then assigned, noted that he had asked the parties in January 1995 whether anything remained to be done before trial, and that although Brine had mentioned the possibility of a motion for partial summary judgment, it made no such motion. Judge Gleeson denied Brine permission to make a summary judgment motion in April because it had unduly delayed and the trial date was too near.
In May 1995, noting Rule's estimate that 30 days would be needed to try the entire case, Brine moved to bifurcate the trial, arguing that trying only liability issues first would serve the interests of judicial economy and would prevent potential prejudice to Brine. In an Order and Trial Notice dated June 21, 1995 ("June 21 Order"), Judge Friedman ***, to whom the case had been reassigned, granted the motion. He ordered that
[i]n the first phase of the trial, the jury will determine whether defendants "breached a contract with plaintiff to pay royalties for defendants' use of plaintiff's patented devices.".... If the jury decides this issue in plaintiff's favor, the same jury will determine in the second phase of the trial the amount of damages, if any, to which plaintiff is entitled.
June 21 Order at 1. No provision was made for the trial of any other issue or claim. Judge Friedman scheduled trial of the above contract liability issue to commence on or before August 7, 1995, before Judge Real. On July 25, 1995, the parties were informed that the liability trial would commence on Thursday, August 3.
On August 3, the parties arrived in court ready to proceed with the limited trial but learned that two other cases were scheduled for trial before Judge Real that day. Judge Real stated that, instead of trying Rule's case, he would entertain a motion by defendants for summary judgment, returnable on Monday, August 7. Over Rule's objection to, inter alia, the lack of time to prepare to oppose such a motion, the court stated that, since Rule was ready for trial, the court would conduct an evidentiary hearing on the summary judgment motion, at which Rule could present live testimony. On Friday, Brine served on Rule extensive motion papers requesting summary judgment dismissing the amended complaint in its entirety.
The summary judgment hearing, which Brine's attorney described at the oral argument of this appeal as "in effect ... the trial of the contract claim in the case," began on August 7, with Rule as the principal witness. Rule described, inter alia, his lacrosse background and his meetings with the Brines. In the first meeting in 1976, after examining Rule's model for the new goaltender stick and stating that it was patentable and that Brine would like to market it, William Brine stated that
to pay you a royalty it's very hard to track the sticks on a month-to-month basis, very hard to do that, we'll pay a royalty for the month.
I [Rule] said, you are the businessman, you be fair with me.
He [William Brine] said, we'll pay you a fair royalty, we'll keep track of it and you'll get a fair royalty amount or reasonable or equitable, whatever word was used then to describe the royalty amount that I would receive.
(Summary Judgment Hearing Transcript ("Tr.") 15 (emphases added).)
In the fall of 1976, after Rule had devised lacrosse-oriented protective body pads, he again met with the Brines, who asked him to sign agreements assigning to Brine all his right, title, and interest in his inventions. Noting that those agreements provided that, in exchange, he was to be paid "One Dollar ($1.00) and other good and valuable consideration, the receipt of which is hereby acknowledged," Rule balked, saying,
it looks like I could sign this over for one dollar and you would make a lot of money, I would get nothing.
Bill Brine said, we promised you a fair royalty, you will get a fair royalty amount on this.
(Tr. 20 (emphasis added).) Rule testified, "I would not have signed the document unless I was absolutely sure that I was going to get a fair royalty amount." (Id.)
Rule also testified that the Brines assured him thereafter that the monthly sums Brine was sending him were the fair royalties he had been promised. For example, in connection with the $675/month paid from 1979 to 1990, he testified:
Since we agreed to reasonable and just royalty, I assumed that was the royalties that I was supposed to get for the stuff that I patented and assigned to the Brines to use.
....
... I came back a year or two later, I said, how are sales on the items. And I believe Peter said the sales are okay, you are getting what you deserve, you are getting what is fair. I assumed he was talking about the fair and--royalties that we agreed upon.
(Tr. 48 (emphasis added).)
Brine's attorney pointed out to the court that defendants' summary judgment motion relied on Rule's testimony at his deposition. He argued that Rule's "deposition testimony clearly is to the effect there was no agreement other than the agreement to pay Mr. Rule[ ] specified fixed sums of money offered for 15 years," and that Rule's hearing testimony could not create a triable issue of fact merely by conflicting with his deposition testimony. (Tr. 70.) He cross-examined Rule, in part, as follows:
Q. In your words, [Brine said] we will pay you $200 a month as a fair royalty?
A. They would pay me a fair royalty amount and that would start out at $200 a month.
Q. And you said all right?
A. Yes.
Q. They never asked--offered you any sum of money, dollar amount beyond $200 a month at that initial meeting, is that correct?
A. They said they would pay me a fair royalty.
....
Q. I would like to read from your deposition, if I may.
....
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