Summary
granting summary judgment on defendant's laches defense because "Moore's sole cause of action is breach of contract, a legal remedy. . ."
Summary of this case from In re RFC & Rescap Liquidating Trust Litig.Opinion
Civil No. 99-2066 ADM/AJB
July 30, 2001
Joseph R. Delmaster, Esq., and Susan F. Evans, Esq., Seidel, Gonda, Lavorgna, Monaco, Philadelphia, PA, and Kevin J. Kennedy, Esq., Hanson, Lulic, Krall, Minneapolis, MN, appeared for and on behalf of the Plaintiff.
Jeffrey J. Keyes, Esq., Michael A. Mitchell, Esq., and Robin Caneff Gipson, Esq., Briggs Morgan, Minneapolis, MN, and Wayne E. Willenberg, Esq., Stephen R. Schaefer, Esq., and Michael J. Kane, Esq., Fish Richardson, Minneapolis, MN, appeared for and on behalf of the Defendant.
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
On May 11, 2001, this matter came on for hearing before the undersigned United States District Court Judge pursuant to Defendant's Motion for Summary Judgment [Doc. No. 64] and Plaintiff's Motion for Partial Summary Judgment [Doc. No. 61]. For the reasons set forth below, Defendant's Motion is denied and Plaintiff's motion is granted.
II. BACKGROUND
Plaintiff E. Neil Moore ("Moore") alleges a claim of breach of contract seeking royalties against Defendant Medtronic, Inc. ("Medtronic"). As required on summary judgment, the following facts are reviewed in a light most favorable to the non-movant. Cooper v. Olin Corp., 246 F.3d 1083, 1087 (8th Cir. 2001). In the mid-70's, Medtronic, a medical device manufacturer, and Moore, a veterinarian, entered into a contractual relationship in which Moore would develop patentable cardiac medical technology for Medtronic. Moore Summ. J. Decl. ("Moore Decl. I") Attach. A at 1. Pursuant to the parties' agreement ("Agreement"), Moore agreed to develop inventions and surrender all rights to such intellectual property to Medtronic. Id. Attach. A § 6(a) (b). In return, Moore received a salary and certain royalties. Id. Attach. A §§ 4, 6(c). The royalty provision states that "[i]n the event any aforesaid item or procedure becomes the subject of the patent application or patent, Medtronic shall pay to Dr. Moore, as a co-inventor, a royalty fee of 1% of the net selling price of each such item or procedure during the full life of each such patent." Id. Attach. A § 6(c). Moore's work helped Medtronic develop two patents on "implantable cardioverters", which were issued on September 13, 1983 and March 8, 1983, respectively. Compl. ¶¶ 11-12. Moore is named as a co-inventor on both patents. Id. ¶ 13. Medtronic alleges that in 1984 it began selling some of the implantable cardioverters that Moore asserts require royalty payment. Kane Decl. Ex. A. Medtronic has not paid Moore any royalties under the Agreement. Compl. ¶ 15.
III. DISCUSSION
There are two motions now before the Court. First, Medtronic seeks summary judgment of Moore's claim, either in its entirety or in part, based upon the statute of limitations. Moore's partial summary judgment seeks the dismissal of Medtronic's laches defense. "Summary judgment is proper if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law." Cooper v. Olin Corp., 246 F.3d 1083, 1087 (8th Cir. 2001).
A. Statute of Limitations
Medtronic's Summary Judgment Motion seeks dismissal of Moore's claim based upon the statute of limitations. Moore has responds that: (1) the period of limitations is tolled by Medtronic's fraudulent concealment of the breach of contract; and
(2) the Agreement is an installment contract, meaning that each failure to pay royalties constitutes a new breach with its own limitations period. Not in dispute is that the six-year breach of contract statute of limitations applies to the claims in the present lawsuit. Minn. Stat. § 541.05(1). Minnesota's general rule is that the statute of limitations accrues when an action can first be commenced. Leisure Dynamics, Inc. v. Falstaff Brewing Corp., 298 N.W.2d 33, 37 (Minn. 1980).
1. Fraudulent Concealment
Moore asserts that the statute of limitations is tolled by Medtronic's fraudulent concealment of the missed royalty payments. First, such allegations must be plead with particularity under Rule 9(b) of the Federal Rules of Civil Procedure. Stangel v. Johnson Madigan, P.L.L.P., No. 00-1670, 2001 WL 530549, at *2 (D.Minn. May 17, 2001); Evans v. Rudy-Luther Toyota, Inc., 39 F. Supp.2d 1177, 1185 (D.Minn. 1999); Larson v. Northrop Corp., 21 F.3d 1164, 1173 (D.D.C. 1994). Because Moore's Amended Complaint does not make any such allegations, fraudulent concealment does not toll the limitations period. Furthermore, Moore has failed to set forth any affirmative acts of concealment on the part of Medtronic, which is required where, like here, there is no fiduciary relationship between the parties. See Wild v. Rarig, 234 N.W.2d 775, 795 (Minn. 1975); In re Trust Created by Hill, 499 N.W.2d 475, 489 (Minn.Ct.App. 1993).
2. Continuing Obligation Contract/Installment
A more difficult question is whether or not each violation of the Agreement has its own statute of limitations period or whether one breach of the Agreement begins the statute of limitations for any and all breaches. The language in the Agreement critical to this inquiry is the royalty provision. "In the event any aforesaid item or procedure becomes the subject of the patent application or patent, Medtronic shall pay to Dr. Moore, as a co-inventor, a royalty fee of 1% of the net selling price of each such item or procedure during the full life of each such patent." Moore Decl. I Attach. A § 6(c). No particular date is specified for the royalty payments.
Although the parties argue whether or not the Agreement was an installment contract for statute of limitation purposes, a different, albeit related doctrine is more germane to the present situation. Where a "contract provides for continuing performance over a period of time, each breach may begin the running of the statute anew such that accrual occurs continuously." 54 C.J.S. Limitations of Actions § 154 (1990); accord Airco Inc. v. Niagra Mohawk Power Corp., 76 A.D.2d 68, 80 (N Y A.D. 1980). In other words, where an agreement places a continuing duty on a party for a duration of time, the right to maintain an action for its breach continues as long as the plaintiff is damaged thereby. Indian Territory Illuminating Oil Co. v. Rosamond, 120 P.2d 349, 352 (Okla. 1941); see Nat'l R.R. Passenger Corp. v. Notter, 677 F. Supp. 1, 5 (D.D.C. 1987). Similarly, Minnesota courts hold that a contractual wage violation accrues "each time a payment is due, but is not paid." See McGoldrick v. DataTrak Int'l, Inc., 42 F. Supp.2d 893, 898 (D.Minn. 1999) (citing Levin v. C.O.M.B. Co., 441 N.W.2d 801, 803 (Minn. 1989); accord Cuadra v. Millan, 952 P.2d 704, 707 (Cal. 1998). This holding is applicable even where there is no specific due date for payment. See Levin, 441 N.W.2d at 804.
The Agreement is silent as to the date and time of the royalty payments. Because the Agreement is ambiguous as to when the payments are due, the determination of when the payments become due is a factual inquiry for the jury. See id; Henry v. Hutchins, 178 N.W. 807, 809 (Minn. 1920); but see Brown v. Cosby, 433 F. Supp. 1331, 1338 (E.D. Penn. 1977). Depending on the factual determination of the royalty due date by the fact finder, royalties that accrued prior to six years before Moore filed his Complaint will be barred. Summary Judgment is denied at this time.
This will likely require a special interrogatory to the jury.
B. Laches Defense
Moore seeks summary judgment of Medtronic's laches defense. The doctrine of laches is "defined as neglect to assert a right or claim which, taken together with lapse of time and other circumstances causing prejudice to [the] adverse party, operates as bar in court of equity." Black's Law Dictionary 875 (6th ed. 1990); accord A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028, (Fed. Cir. 1992) (en banc). "When a limitation on the period for bringing suit has been set by statute, laches will generally not be invoked to shorten the statutory period." Scimed Life Sys., Inc. v. Hess, 988 F.2d 1157, 1161 (Fed. Cir. 1993); accord Clark v. Amoco Prod. Co., 794 F.2d 967, 971 (5th Cir. 1986); Peterson v. DeKalb Phizer Genetics, 354 N.W.2d 887, 890 (Minn.Ct.App. 1984). Moore's sole cause of action is breach of contract, Compl. at 5, a legal remedy with a statute of limitations Minn. Stat. § 541.05(1). Therefore, as an equitable defense, laches is inapplicable to a breach of contract action. See Scimed Life, 998 F.2d at 1161; Clark, 794 F.2d at 971; Peterson, 354 N.W.2d at 890.
As discussed supra, the action was arguably filed within the statute of limitations period.
Medtronic asserts that Moore has alleged an accounting claim in the present lawsuit. The word accounting appears in the final paragraph of the Complaint.
Wherefore, Plaintiff E. Neil Moore prays for judgment in his favor and requests that the court order Medtronic to promptly provide Moore with an accounting of all sales made of covered products and with all royalties due pursuant to the 1975 Agreement between the parties, together with interest, and further, to order such relief as the Court may deem just and proper.
Compl. at 5. The "accounting" is not a separate cause of action, but a word used to describe the process for determining the amount of damages in the breach of contract action. "[E]quitable relief cannot be granted where the rights of the parties are governed by a valid contract." U.S. Fire Ins. Co. v. Minn. St. Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981). Therefore, Moore's Partial Summary Judgment Motion is granted.
IV. CONCLUSION
Based upon the foregoing, and all of the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Defendant's Summary Judgment Motion [Doc. No. 64] is DENIED.
2. Plaintiff's Partial Summary Judgment Motion [Doc. No. 61] is GRANTED. The laches defense is DISMISSED.