SUN-TEK INDUSTRIES v. Kennedy Sky-Lites, Inc.

• Decision Date: 21 November 1991
• Docket Number: No. 82-469-ORL-CIV-11.,82-469-ORL-CIV-11.
• Parties: SUN-TEK INDUSTRIES, INC., a Florida Corporation, Plaintiff, v. KENNEDY SKY-LITES, INC., a Florida Corporation and Kennergy Corporation, a Florida Corporation, Defendants.
• Court: U.S. District Court — Middle District of Florida

779 F. Supp. 589

SUN-TEK INDUSTRIES, INC., a Florida Corporation, Plaintiff, v. KENNEDY SKY-LITES, INC., a Florida Corporation and Kennergy Corporation, a Florida Corporation, Defendants.

No. 82-469-ORL-CIV-11.

United States District Court, M.D. Florida, Orlando Division.

November 21, 1991.

William H. Shawn, Shawn, Berger & Mann, Washington, D.C., Robert B. Nadeau, Jr., Akerman, Senterfitt & Eidson, Orlando, Fla., for plaintiff.

Joel H. Sharp, Jr., Frederick J. Ward, Beth Ball, Baker & Hostetler, Orlando, Fla., David G. Hanlon, Shackleford, Farrior, Stallings, & Evans, P.A., Tampa, Fla., for defendants.

ORDER ON MOTION FOR CONSOLIDATED JUDGMENT ON THE MANDATE AND PROFFER

KOVACHEVICH, District Judge.

This cause of action is before the Court on Plaintiff, Sun-Tek Industries, Inc.'s (hereafter "Sun-Tek") motion for entry of consolidated judgment on the mandate and proffer, filed on August 3, 1991, and opposition thereto, filed on September 12, 1991.

FACTS

This case was initiated approximately 9 years ago when Sun-Tek sued Defendants, Kennedy Sky-Lites, Inc. and Kenergy Corporation (hereafter "Defendants"), for patent fraud, antitrust violations, and rescission of a license agreement allegedly forced upon Sun-Tek in earlier litigation. The case went to trial in July 1986, and the jury returned a unanimous verdict in favor of Sun-Tek. This Court entered judgment on the verdict in October 1986, and rescinded Defendants' patent license agreement for fraud.

Subsequent to the entry of judgment, this Court found this case to be exceptional under the provisions of 35 U.S.C. § 285. Additional proceedings were held, after which this Court awarded Sun-Tek $447,716.37 in attorneys' fees. Defendants appealed the final judgment and judgment on attorneys' fees to the Court of Appeals for the Federal Circuit.

Defendants also requested from this Court an ex parte supersedeas bond reduction. In exchange for the bond reduction order, Defendants made several commitments to Sun-Tek. In September 1987, this Court held hearings based on allegations that Defendants had violated the bond reduction order. This Court determined that Defendants had failed to provide documentation they undertook to furnish under the bond reduction order. Defendants were required to post additional security by this Court's order entered September 29, 1987.

Meanwhile, the Court of Appeals for the Federal Circuit reversed and remanded, inter alia this Court's finding of exceptional case under 35 U.S.C. § 285. Sun-Tek Industries, Inc. v. Kennedy Sky-Lites, Inc., 848 F.2d 179 (Fed.Cir.1988). The Court of Appeals held that this Court lacked jurisdiction to enter the exceptional case finding more than 10 days after entry of the final judgment, without reservation of jurisdiction under Fed.R.Civ.P. 59(e).

On remand, this Court held further proceedings concerning Defendants' alleged misconduct and fraud under Fed.R.Civ.P. 60(b). By Order entered September 30, 1988, this Court entered the mandate of the Court of Appeals; found the mandate did not require restitution of the judgment Sun-Tek obtained in its action for fraud against Defendants; found that Defendants had failed to seek any modification or correction of such mandate; took judicial notice of the sanctions imposed by the Court of Appeals on Defendants' counsel in their appeal of this Court's order entered September 29, 1987; found it had jurisdiction to entertain ancillary proceedings against Defendants' president, Kent Weisner, for the purpose of ordering him to show cause why he should not be held personally liable to Sun-Tek for damages and related misconduct; and initiated evidentiary proceedings on the issue of damages and attorneys' fees and costs.

Sun-Tek submitted its evidence of additional attorneys' fees and costs incurred by Defendants' misconduct. Sun-Tek further alleged additional damages incurred as a result of Defendants' fraud and other misconduct before this and other Courts. On January 3, 1989, additional evidentiary hearings were held before this Court. Sun-Tek presented testimonial and documentary evidence of the attorneys' fees and costs it incurred before this Court following this Court's order of March 23, 1987. That order found that Defendants and their counsel had violated the order entered by this Court on September 29, 1987. Sun-Tek also submitted a proffer on testimonial and documentary evidence of the compensatory damages it suffered through Defendants' fraud committed in the Patent and Trademark Office (PTO), in procurement of the license agreement to which Sun-Tek was formally bound to the Defendants, and in numerous instances of misconduct during litigation. Such damages included legal fees and costs incurred by Sun-Tek in a state court action initiated by Defendants some 11 years ago and legal fees and costs Sun-Tek incurred in resisting Defendants' attempt to obtain specific performance of the license agreement this Court subsequently found fraudulent. Sun-Tek also introduced evidence of attorneys' fees and costs incurred in bringing its two antitrust counts against Defendants in this case.

Sun-Tek also proffered expert testimony establishing the financial damages it sustained through Defendants' fraudulent conduct. These damages included lost profits, lost investment opportunities, and the like.

On January 31, 1989, this Court granted Sun-Tek's application for $189,464.77 in attorneys' fees and costs. This amount represented the legal fees and costs incurred by Sun-Tek before this Court following this Court's order of March 23, 1987. However, this Court denied Sun-Tek's proffer on damages. This Court reviewed Sun-Tek's damages in the following analysis:

In this action, the damages Plaintiff suffered largely include the substantial attorneys' fees and costs it incurred in defending the two state court actions Defendants brought in their attempt to enforce the license agreement subsequently stricken for fraud. Plaintiff, through its president, established it incurred attorneys' fees and costs of $24,745.93 in the first action initiated by Defendants in 1980 and $33,124.50 in the second such action initiated by Defendants in 1982.

Plaintiff also introduced evidence of the fees and costs it incurred in prosecuting the antitrust counts before this Court. Such fees and costs were $192,000.00 and were not part of an earlier award of attorneys' fees and costs under the first exceptional case finding this Court made in the Amended Final Judgment entered March 3, 1987. Plaintiff's antitrust counts were the subject of a directed verdict for Defendants at trial. The directed verdict was based upon Plaintiff's failure to introduce at trial evidence supporting the antitrust violations. Defendants prevented Plaintiff from presenting such evidence because they employed their license and settlement agreement to obtain from this Court a ruling in limine preventing the introduction of such evidence. It was only at the conclusion of trial that the full scope of Defendants' fraud became apparent to this Court, too late to allow any resurrection of Plaintiff's antitrust action.

Plaintiff also adduced testimony from its expert witness on damages. Plaintiff's witness presented a series of calculations based upon Plaintiff's tax returns. The calculations demonstrated the damages Plaintiff suffered through a diversion of its profits to pay the legal fees necessary to defend the various actions threatened or initiated by Defendants. The average return on net worth calculations presented by Plaintiff's expert witness, Edward Mizerek, of the accounting firm, Coopers & Lybrand yielded total damages of $545,464.00 suffered by Plaintiff.

Memorandum Opinion and Order, at 10 and 11.

In addition, this Court determined that Mr. Mizerek's testimony was credible and persuasive in establishing that Sun-Tek had suffered financial damages for lost profits in the amount of $545,464.00. This Court also addressed punitive damages by considering the nature, extent, and enormity of the wrong committed by the Defendants; the intent of the Defendants in committing it; and the circumstances surrounding the transaction or transactions. This Court held that the conduct of the Defendants had disgracefully manipulated the legal system in this country during the course of this case. However, this Court was unable to do total justice at that time because it lacked the power and jurisdiction to do so. Therefore, this Court regrettably denied Sun-Tek's proffer.

On March 28, 1991, the Court of Appeals ruled on Defendants latest appeal. In Sun-Tek Industries, Inc. v. Kennedy Sky-Lites, Inc., 929 F.2d 676 (Fed.Cir.1991), the Court of Appeals first held that Defendants were entitled to restitution of the original attorneys' fees award to Sun-Tek in the amount of $447,716.37. Second, the Court of Appeals affirmed this Court's award of attorney fees against the Defendants in the amount of $189,464.77 for post-judgment vexatious conduct finding that this Court did not abuse its discretion in its second finding of an exceptional case under 35 U.S.C. § 285.

DISCUSSION

Sun-Tek now moves this Court for entry of consolidated judgment on the mandate and proffer. In deciding this motion, it must first be determined whether the doctrine of res judicata prohibits entry of such judgment.

The doctrine of res judicata establishes as a general rule that if an issue is decided by an appellate court, expressly or by necessary implication, those determinations of law will be binding on remand and on any subsequent appeal. Lehrman v. Gulf Oil Corp., 500 F.2d 659 (5th Cir.1974). In the present case, the Court of Appeals for the Federal Circuit did not decide whether this Court had jurisdiction for determination on damages. Neither Sun-Tek nor the Defendants appealed this Court's ruling that it did not have proper jurisdiction. Res judicata does not prevent this Court from reconsidering its previous jurisdictional ruling in...