Trelevate LLC v. Dumont Aviation Group Incorporated ( 2020 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Trelevate LLC, No. CV-19-05171-PHX-DWL 10 Plaintiff, ORDER 11 v. 12 Dumont Aviation Group Incorporated, 13 Defendant. 14 15 INTRODUCTION 16 In August 2019, Plaintiff Trelevate LLC (“Trelevate”) and Defendant Dumont 17 Aviation Group, Inc. (“Dumont”) executed a settlement agreement in an effort to terminate 18 their business relationship. The settlement agreement called for Dumont to make a one- 19 time payment of $170,500 to Trelevate. When Dumont failed to make that payment, 20 Trelevate brought this action. Afterward, the parties largely declined to engage in 21 discovery—no depositions were held and only a handful of interrogatories were 22 propounded. 23 Now pending before the Court is Trelevate’s motion for summary judgment. (Doc. 24 35.) The motion is fully briefed and nobody has requested oral argument. For the 25 following reasons, the motion will be granted. 26 … 27 … 28 … 1 BACKGROUND 2 I. Factual Background 3 A. The Underlying Agreements 4 Dumont is a Delaware-based aviation business that, among other things, sells 5 private charter flights. (Doc. 44 ¶ 2.) 6 On March 18, 2019, Trelevate and Dumont executed a mutual non-disclosure and 7 non-solicitation agreement (“the NDNS”). (Doc. 42 at 19-22; Doc. 44 ¶ 3.) The purpose 8 of the NDNS was “to maintain the confidentiality of [Dumont’s] proprietary customer and 9 prospective customer lists and related information.” (Doc. 44 ¶ 4.) Among other things, 10 the NDNS provided that Trelevate “could use the confidential information only for its work 11 and services on behalf of [Dumont]—and for no other purpose.” (Id. ¶ 7.) 12 On April 25, 2019, Trelevate and Dumont executed a business development and 13 marketing agreement (“the Marketing Agreement”). (Doc. 42 at 24-33; Doc. 44 ¶ 9.) 14 On July 16, 2019, Dumont informed Trelevate that it intended to terminate the 15 Marketing Agreement. (Doc. 35 at 19; Doc. 44 ¶ 13.) 16 B. The Settlement Agreement 17 On August 5, 2019, in an effort “to exit their relationship amicably,” the parties 18 executed a settlement agreement (“the Settlement Agreement”). (Doc. 35 at 19-21; Doc. 19 44 ¶ 14.) It provided that, within three days, (1) Dumont would pay $170,500 to Trelevate 20 via wire transfer and (2) Trelevate would “ship to Dumont . . . the computers, Dumont 21 branded materials, and all other Dumont property in the possession of Trelevate” and 22 “transition all leads of any kind generated by Trelevate or its representatives.” (Doc. 35 at 23 19.) The Settlement Agreement further provided that the NDNS “shall continue in full 24 force and effect” but the Marketing Agreement “is terminated and of no further force or 25 effect.” (Id.) 26 C. Compliance 27 It is undisputed that Trelevate complied with its obligation under the Settlement 28 Agreement to return Dumont’s leads and property. Trelevate has submitted evidence 1 establishing that, on August 6, 2019, it sent “[a]n Excel spreadsheet with all leads generated 2 by Trelevate . . . to [a] Dumont representative.” (Doc. 35 at 16-17 ¶ 10.) Additionally, 3 “Trelevate took possession of all computers used by Trelevate’s employees working on 4 behalf of Dumont and tendered the computers, along with all Dumont property[,] to 5 Dumont.” (Doc. 35 at 16 ¶ 7.) However, “Dumont failed and refused to provide an address 6 to which the computers and other Dumont property (a model of Dumont airplane, a model 7 car of the Dumont sponsored NASCAR and some pictures of Dumont airplanes) could be 8 sent. As a result, Trelevate still has the computers and other Dumont property stored in a 9 box at Trelevate’s office and ready for pick-up by Dumont.” (Id. ¶ 8.) 10 It is also undisputed that Dumont failed to make the $170,500 payment to Trelevate 11 that was contemplated by the Settlement Agreement. (Doc. 35 at 16 ¶ 6.) 12 As discussed infra, the parties’ only dispute concerns whether Trelevate complied 13 with its obligations under the NDNS. 14 II. Procedural Background 15 On August 14, 2019—less than a week after the deadline for making the $170,500 16 payment had elapsed—Trelevate filed a complaint against Dumont in Maricopa County 17 Superior Court. (Doc. 1-2 at 11-13.) 18 On September 13, 2019, Dumont removed the action to this Court. (Doc. 1.) 19 Thereafter, Dumont filed an amended removal notice with amended jurisdictional 20 allegations. (Doc. 12.) 21 On September 20, 2019, Dumont filed an answer and counterclaims. (Doc. 13.) 22 On October 28, 2019, the Court issued the Rule 16 scheduling order. (Doc. 26.) 23 Per the parties’ joint request (Doc. 24 at 9), it set a deadline of April 15, 2020 for the 24 completion of fact discovery. However, at Dumont’s unopposed request (Doc. 30), this 25 deadline was later extended to June 15, 2020. (Doc. 32.) 26 On June 29, 2020, after the discovery deadline had elapsed, Trelevate filed a motion 27 for summary judgment. (Doc. 35.) 28 On July 16, 2020, Dumont filed a motion to retroactively extend the expired 1 deadline for fact discovery. (Doc. 36.) After Trelevate filed an opposition (Doc. 39), this 2 request was denied (Doc. 41). 3 On August 28, 2020, Dumont filed a response to the summary judgment motion. 4 (Doc. 42.) 5 On September 11, 2020, Trelevate filed a reply. (Doc. 45.) 6 DISCUSSION 7 I. Legal Standard 8 A party moving for summary judgment “bears the initial responsibility of informing 9 the district court of the basis for its motion, and identifying those portions of ‘the pleadings, 10 depositions, answers to interrogatories, and admissions on file, together with the affidavits, 11 if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” 12 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “In order to carry its burden of 13 production, the moving party must either produce evidence negating an essential element 14 of the nonmoving party’s claim or defense or show that the nonmoving party does not have 15 enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” 16 Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). “If . . . 17 [the] moving party carries its burden of production, the nonmoving party must produce 18 evidence to support its claim or defense.” Id. at 1103. 19 “Summary judgment is appropriate when ‘there is no genuine dispute as to any 20 material fact and the movant is entitled to judgment as a matter of law.’” Rookaird v. BNSF 21 Ry. Co., 908 F.3d 451, 459 (9th Cir. 2018) (quoting Fed. R. Civ. P. 56(a)). “A genuine 22 dispute of material fact exists if ‘there is sufficient evidence favoring the nonmoving party 23 for a jury to return a verdict for that party.’” United States v. JP Morgan Chase Bank 24 Account No. Ending 8215 in Name of Ladislao V. Samaniego, VL: $ 446,377.36, 835 F.3d 25 1159, 1162 (9th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249- 26 50 (1986)). The court “must view the evidence in the light most favorable to the 27 nonmoving party and draw all reasonable inference in the nonmoving party’s favor.” 28 Rookaird, 908 F.3d at 459. Summary judgment is also appropriate against a party who 1 “fails to make a showing sufficient to establish the existence of an element essential to that 2 party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 3 U.S. at 322. 4 II. Analysis 5 A. Trelevate’s Claim 6 Trelevate moves for summary judgment on the sole claim in its complaint, which is 7 that Dumont breached the Settlement Agreement by failing to make the $170,500 payment. 8 (Doc. 35 at 10-11.) 9 Dumont responds that Trelevate’s motion is procedurally improper because it was 10 not accompanied by a separate statement of facts, as required by the local rules of the 11 District of Arizona. (Doc. 42 at 7-8.) This argument is unavailing. The Rule 16 scheduling 12 order in this case made clear that the local rules on this point were suspended and that a 13 separate statement was not required. (Doc. 26 at 5-6.) 14 Dumont also contends that summary judgment should be denied because Trelevate 15 “breached the Settlement Agreement first, which excused [Dumont] from any 16 performance.” (Doc. 42 at 8-12.) Dumont’s theory is that because the Settlement 17 Agreement provided that one of the parties’ earlier contracts, the NDNS, would remain in 18 full force and effect, “the terms of the NDNS were incorporated into the Settlement 19 Agreement.” (Id. at 9.) With this understanding in mind, Dumont argues that Trelevate 20 violated the NDNS in two different ways, thereby excusing its obligation under the 21 Settlement Agreement to make the $170,500 payment. (Id. at 9-12.) In reply, Trelevate 22 doesn’t seem to dispute Dumont’s theory that the terms of the NDNS were implicitly 23 incorporated into the Settlement Agreement but argues that the evidence proffered by 24 Dumont fails to establish a material breach of the NDNS. (Doc. 45 at 7-11.) 25 Trelevate has the better side of this argument. Dumont sought to establish the 26 alleged breaches of the NDNS via a declaration from its CEO, Daniel Piraino. (Doc. 44.) 27 First, Mr. Piraino asserts that Trelevate breached the NDNS on August 2, 2019, when one 28 of its employees sent an email to a Dumont client. (Id. ¶¶ 17-18.) According to Mr. 1 Piraino, this email violated the NDNS because it constituted the “use of [Dumont’s] 2 confidential customer information in soliciting a [Dumont] customer . . . not done on 3 [Dumont’s] behalf but on [Trelevate’s] . . . behalf.” (Doc. 44 ¶ 24.) An initial problem 4 with this argument is that Dumont does not explain how an email sent on August 2, 2019 5 could violate the Settlement Agreement, which was not executed until August 5, 2019. A 6 more fundamental problem is that Mr. Piraino’s characterization of the email is inaccurate. 7 In the actual email, the Trelevate employee simply wrote: “Just wanted to wish you a very 8 happy Friday!! Have a great weekend!” (Doc. 42 at 39.) Dumont makes no effort to 9 explain how this innocuous email somehow constituted an impermissible attempt to solicit 10 Dumont’s customers. 11 The only other evidence in the summary judgment record on the issue of solicitation 12 is a declaration from two of Trelevate’s representatives, Paul Briski and Ryan Knauss, who 13 avow that, since the execution of the Settlement Agreement, Trelevate “has not contracted 14 to conduct business with and has not conducted business with any . . . Dumont customer 15 or prospective customer” and “has not contacted any Dumont customer or lead other than 16 to provide notification that Trelevate was no longer affiliated with Dumont and to direct 17 any further inquiries to . . . Dumont.” (Doc. 35 at 17 ¶¶ 13-14.) On this record, no 18 reasonable factfinder could conclude that Trelevate violated the Settlement Agreement by 19 impermissibly soliciting Dumont’s customers. 20 The other theory of breach outlined in Mr. Piraino’s declaration is that, on some 21 unspecified date after July 16, 2019, Trelevate entered into an agreement with one of 22 Dumont’s “direct competitors,” an aviation company called Alliance Aviation 23 (“Alliance”), “to provide the very same services that [Trelevate] was providing to 24 [Dumont].” (Doc. 44 ¶¶ 19-22.) Additionally, Mr. Piraino asserts that several former 25 Trelevate employees, who had access to Dumont’s confidential information, have now 26 been hired by Alliance. (Id. ¶ 23.) According to Dumont, these interactions between 27 Trelevate and Alliance constitute further proof that the NDNS was violated. (Doc. 42 at 28 10-12.) 1 This argument fails because it presumes that the NDNS included a non-compete 2 clause. But as the contract’s acronym and text make clear, the contract only included 3 prohibitions against the disclosure of Dumont’s confidential information and against 4 certain solicitation efforts. (Doc. 42 at 19-22.) There wasn’t a non-compete provision (or 5 else the contract would have been the “NDNSNC”). Thus, even accepting as true that 6 Trelevate began working with one of Dumont’s competitors after the parties’ relationship 7 fizzled and that some Trelevate employees were eventually hired by that competitor, such 8 conduct would not violate the NDNS and thus would not excuse Dumont from its 9 performance obligations under the Settlement Agreement. 10 In the final paragraph of its brief, Dumont makes a passing argument that the real 11 problem with Trelevate’s dealings with Alliance is “the fact that [Trelevate] entered into 12 an agreement with [Dumont’s] direct competitor, and that this direct competitor then hired 13 several of [Trelevate’s] employees, provides a strong inference that [Dumont’s] 14 confidential information was inevitably disclosed to a competitor.” (Doc. 42 at 12.) The 15 difficulty with this argument is that Dumont has no evidence that its confidential or 16 proprietary information was ever transmitted to Alliance. The only evidence proffered by 17 Dumont concerning the relationship between Trelevate and Alliance is Trelevate’s 18 response to Dumont’s first set of interrogatories. (Doc. 42 at 41-54.) In that document, 19 Trelevate explained that it merely entered into a non-disclosure agreement with Alliance 20 “to facilitate discussions regarding a prospective business relationship” and ultimately 21 “elected not elected not to continue its preliminary discussions with Alliance and did not 22 enter into any Statement of Work agreements with Alliance”; that it “undertook . . . 23 measures . . . to ensure that no confidential information of [Dumont] or proprietary 24 information of [Dumont] was shared with Alliance”; and that it “verified in writing, signed 25 by each Trelevate former employee, that no confidential or proprietary information of 26 [Dumont] was taken when they left Trelevate’s employment.” (Id. at 48, 50, emphasis 27 added.) In other words, the evidence proffered by Dumont undermines, rather than 28 supports, its allegation that Trelevate violated the NDNS by disclosing confidential 1 information to Alliance.1 2 On this record, Dumont has not established that Trelevate committed a material 3 breach of the NDNS that would excuse Dumont’s obligation under the Settlement 4 Agreement to make the $170,500 payment. Because Dumont does not offer any other 5 reasons for avoiding summary judgment on Trelevate’s breach-of-contract claim, 6 Trelevate’s motion for summary judgment on that claim will be granted. 7 B. Dumont’s Counterclaims 8 Dumont has asserted four counterclaims against Trelevate. (Doc. 13.) Count One 9 is for breach of contract, Count Two is for unjust enrichment, Count Three is for tortious 10 interference, and Count Four is for breach of the implied covenant of good faith and fair 11 dealing. (Id. at 4-9.) The theory underlying all of these counterclaims is that Trelevate 12 violated the NDNS and Settlement Agreement by “surreptitiously utiliz[ing] [Dumont’s] 13 proprietary and confidential business information and trade secrets for [Trelevate’s] own 14 use and to assist a competitor of [Dumont]” and by “improperly and unlawfully 15 contact[ing] [Dumont’s] customers and leads in order to generate business for [Dumont’s] 16 competitor.” (Id. at 5-6 ¶¶ 9-10.) 17 Trelevate moves for summary judgment on all four counterclaims. (Doc. 35 at 11- 18 14.) It argues that Dumont cannot establish the essential elements of any counterclaim and 19 also identifies additional reasons why the unjust enrichment and implied covenant claims 20 are not cognizable. (Id.) 21 In its response, Dumont barely mentions its counterclaims. The only counterclaim 22 that is specifically discussed is Count Three (tortious interference) and Dumont’s only 23 argument is that the evidence it proffered to defeat summary judgment on Trelevate’s 24 breach-of-contract claim (i.e., the August 2, 2019 email and Trelevate’s dealings with 25 Alliance) is also sufficient to “demonstrate that [Dumont] has established its tortious 26 27 1 The evidence proffered by Trelevate is no different. (Doc. 35 at 17 [declaration avowing that, since the execution of the Settlement Agreement, Trelevate “has not 28 disclosed any trade secrets of Dumont” and has not “used . . . or disclosed any confidential information of Dumont”].) interference claim.” (Doc. 42 at 10-11.) 2 Trelevate is entitled to summary judgment on all of Dumont’s counterclaims. Those 3 || claims are predicated on the notion that Trelevate improperly solicited Dumont’s customers 4|| and improperly disclosed Dumont’s confidential and proprietary information, but as 5 || discussed in Part II.A above, there is simply no evidence of such misconduct. Additionally, 6 || Dumont has made no effort to establish its alleged damages. Chartone, Inc. v. Bernini, 83 7\| P.3d 1103, 1111 (Ariz. Ct. App. 2004) (“damages [are] an essential element of their breach- 8 || of-contract claim”); Wallace v. Casa Grande Union High Sch. Dist. No. 82 Bd. of 9|| Governors, 909 P.2d 486, 494 (Ariz. Ct. App. 1995) (“To establish a prima facie case of || intentional interference with contractual relations, a plaintiff must prove . . . resultant 11 || damage to the party whose relationship or expectancy has been disrupted.”). 12 Accordingly, 13 IT IS ORDERED that: 14 (1) Trelevate’s motion for summary judgment (Doc. 35) is granted. 15 (2) The Clerk of Court shall enter judgment accordingly and terminate this action. 17 Dated this 10th day of December, 2020. 18 19 Lom ee” 20 f CC —— Dominic W. Lanza 2] United States District Judge 22 23 24 25 26 27 28 -9-