Systems Unlimited, Inc. v. Cisco Systems, Inc. , 228 F. App'x 854 ( 2007 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 06-12357 APR 6, 2007
Non-Argument Calendar THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 04-61127-CV-JEM
SYSTEMS UNLIMITED, INC.,
a Florida corporation,
Plaintiff-Appellant,
versus
CISCO SYSTEMS, INC.,
a California corporation,
CISCO SYSTEMS CAPITAL CORPORATION,
a Nevada corporation,
CAPITAL ACQUISITION CORPORATION,
a Delaware corporation,
ASSET ACQUISITION CORPORATION,
a Delaware corporation,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(April 6, 2007)
Before BLACK, CARNES and MARCUS, Circuit Judges.
PER CURIAM:
Following the settlement of a dispute between Systems Unlimited, Inc. and
Cisco Systems, Inc. over the ownership of certain intellectual property, Cisco
agreed to covey the property to Systems. In the resulting bill of sale, Cisco:
granted, bargained, sold, transferred and delivered, and by these
presents does grant, bargain, sell, transfer and deliver unto [Systems],
its successor and assigns, the following:
Any and all of [Cisco]’s right, title and interest in any copyrights,
patents, trademarks, trade secrets and other intellectual property of
any kind associated with any software, code or data, including without
limitation host controller software and billing software, whether
embedded or in any other form (including without limitations, disks,
CDs and magnetic tapes), and including any and all available copies
thereof and any and all books and records related thereto by
[Cisco] . . . .
(R1:2:Compl., Ex.A.)
Cisco never delivered any of the software to Systems. Alleging that it had
been damaged by the non-delivery, Systems sued Cisco for breaching the bill of
sale contract and for violating the attendant obligations to deliver the software
under the Uniform Commercial Code.
On November 29, 2005, the parties filed cross-motions for summary
judgment. That same day, Systems moved for leave to amend its complaint to add
claims for fraud, conversion and negligence.
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The district court denied Systems’ motion for leave to amend. The court
also denied Systems’ motion for summary judgment, but granted Cisco’s summary
judgment motion. In this appeal Systems contests both the denial of its motion for
leave to amend and the judgment entered for Cisco.
I.
Systems contends that the district court abused its discretion in denying its
motion for leave to amend the complaint. It argues that leave should be freely
granted because it did not seek leave in bad faith or for the purpose of undue delay,
and Cisco would not be prejudiced. We will reverse a district court’s denial of a
motion to amend only where it has clearly abused its discretion. Henson v.
Columbus Bank & Trust Co., 770 F.2d 1566, 1574 (11th Cir. 1985).
Federal Rule of Civil Procedure 15(a) provides that, after a responsive
pleading has been served, a party may amend its complaint only by leave of court.
Fed. R. Civ. P. 15(a). The rule also provides that “leave shall be freely given when
justice so requires.” Id. The Supreme Court said that the “freely given” standard
means:
If the underlying facts or circumstances relied upon by a plaintiff may
be a proper subject of relief, he ought to be afforded an opportunity to
test his claim on the merits. In the absence of any apparent or
declared reason—such as undue delay, bad faith or dilatory motive on
the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing
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party by virtue of allowance of the amendment, futility of amendment,
etc.—the leave sought should, as the rules require, be “freely given.”
Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230 (1962).
Here, the district court found that Systems had unduly delayed amending its
complaint after deficiencies had been pointed out by the court. In an April 7, 2005
hearing before the district court on Systems’ motion to compel, the district court
said to Systems’ counsel:
It seems to me that if you want to somehow or other expand
your claim to include the AMC items, that you have got to amend
your pleading. You have got to, and I don’t know what kind of claim
you want to make; whether or not you want a claim of fraud, mutual
mistake, or whatever . . . .
[I]t may get you by a motion to dismiss, but if they never got
anything, then I don’t know where you are going with this, based on
your pleadings and the agreements as they are right now.
That is why I said you may have to amend, but I guess you can
wait until the district court rules on the motion as to whether or not
you have stated a claim.
(R4:32:34, 46.) The district court denied Cisco’s motion to dismiss on August 25,
2005.
Systems’ waited more than seven months after the court pointed out that its
complaint was missing several causes of action, and more than three months after
the motion to dismiss was denied, to amend its complaint. The motion for leave to
amend was filed the day the summary judgment motions were due and two days
before the discovery deadline was to lapse. Under similar circumstances, we have
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held that the district court did not abuse its discretion in denying the motion for
leave to amend. See Maynard v. Bd. of Regents ex rel. Univ. of S. Fla., 342 F.3d
1281, 1287 (11th Cir. 2003) (“Because we conclude that Maynard has failed to
show good cause for the eleventh hour amendment, we find that the district court
did not abuse its discretion by enforcing its timetable for disposition of the case.”).
Systems argues that it had good cause for the late amendment since Cisco
withheld a crucial piece of discovery related to the fraud until only a few weeks
before the summary judgment motions were due in November. This suggestion is
problematic given the district court’s comments in April that Systems had a
potential fraud claim. The district court found that the facts underlying the alleged
fraud were “not newly discovered but rather were known to [Systems] and have
been referenced by [Systems] in previous pleadings” (R3:133:1), and Systems has
not shown that this finding is clearly erroneous.
The district court also found that Cisco would be unduly prejudiced if
Systems were given leave to amend its complaint because discovery was set to
close and summary judgment motions had already been filed. Adding three more
causes of action to the complaint would require additional time and expense for
discovery and an additional round of summary judgment motions.
Systems argues that the district court could have limited any additional
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discovery to reduce expense. However, a district court has wide latitude in
refereeing discovery, and we will not question the limits set by the court unless
they are clearly erroneous or not rationally supported by the evidence. Moore v.
Armour Pharm. Co., 927 F.2d 1194, 1197 (11th Cir. 1991) (“The trial court . . . has
wide discretion in setting the limits of discovery, and its decisions will not be
reversed unless a clearly erroneous principle of law is applied, or no evidence
rationally supports the decision.”). Systems has not made that showing.
Because Systems unduly delayed adding counts to its complaint and Cisco
would be prejudiced by the late amendment, the district court did not clearly abuse
its discretion in denying Systems’ motion to amend.
II.
Systems also contends that the district court erred in granting summary
judgment in favor of Cisco because: (1) the plain language of the bill of sale
required Cisco to deliver the software; (2) the bill of sale, when read in conjunction
with other contemporaneous agreements, required delivery; and (3) the UCC,
which governs the bill of sale, requires that all goods be delivered at a reasonable
time. Systems is wrong on each point.
The bill of sale is interpreted in accord with its plain language absent some
ambiguity. See Cal. Civ. Code § 1638 (“The language of a contract is to govern its
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interpretation, if the language is clear and explicit, and does not involve an
absurdity.”); Whitley v. Royal Trails Prop. Owners’ Ass’n, Inc., 910 So. 2d 381,
383 (Fla. 5th DCA 2005) (“The parties’ intention governs contract construction
and interpretation; the best evidence of intent is the contract’s plain language.”).1
Here, the parties agree that the bill of sale is clear and unambiguous.
The bill of sale provides that Cisco will “grant, bargain, sell, transfer and
deliver unto [Systems] . . . [a]ny and all of [Cisco]’s right, title and interest in any
copyrights, patents, trademarks, trade secrets and other intellectual property of a
kind associated with any software, code or data.” (R1:2:Compl., Ex.A.) As the
district court explained, this language unambiguously means that Cisco was
required by the bill of sale to transfer to Systems all of its rights in intellectual
property associated with certain software and data. There is no mention in the
plain language of the contract itself of Cisco being obligated to transfer the actual
software, and we will not imply any such obligation absent some good reason
under law.
Systems says there are two good reasons to imply an obligation by Cisco to
transfer the software. First, Systems argues that the bill of sale must be interpreted
in conjunction with the settlement agreement between Systems and Cisco and other
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The district court did not decide whether the bill of sale was governed by Florida or
California law, and we won’t either since it doesn’t matter to the outcome of the case.
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documents relating to the intellectual property. These other agreements, Systems
claims, include an obligation by Cisco to deliver the software with any conveyance
of intellectual property.
Assuming without deciding that the other agreements include language
requiring Cisco to deliver the software, they are not relevant here because Systems
has never alleged Cisco violated these other agreements. Systems’ complaint
alleges only a violation of the bill of sale contract, and there is no obligation in that
contract to deliver the software. The bill of sale does not reference or incorporate
any other agreement. Cf. Williams Constr. Co. v. Standard-Pac. Corp., 61 Cal.
Rptr. 912, 920 (Ct. App. 1967) (“For the terms of another document to be
incorporated into the document executed by the parties the reference must be clear
and unequivocal, the reference must be called to the attention of the other party and
he must consent thereto, and the terms of the incorporated document must be
known or easily available to the contracting parties.” (quotation omitted)); Collins
ex rel. Dixie Plywood Co. of Tampa v. Nat’l Fire Ins. Co. of Hartford, 105 So. 2d
190, 194 (Fla. 2d DCA 1958) (“Where a written contract refers to and sufficiently
describes another document, that other document or so much of it as is referred to,
may be regarded as a part of the contract and therefore is properly considered in its
interpretation.”).
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To get around this point, Systems argues that “when instruments relate to the
same matters, are between the same parties, and made part of substantially one
transaction, they are to be taken together.” (Blue Br. 22.) It is true that this is one
of the canons for construing a contract under California law. See Cal. Civ. Code §
1642 (“Several contracts relating to the same matters, between the same parties,
and made as parts of substantially one transaction, are to be taken together.”). But
it is also true that this canon, as with most others, is inapplicable where the contract
that is alleged to have been breached is unambiguous. Sonoma Falls Developers,
LLC v. Nev. Gold & Casinos, Inc., 272 F. Supp. 2d 919, 924 (N.D. Cal. 2003)
(section 1642 “is applicable only if there is ambiguity concerning the interpretation
of a contract”). Here, the language of the bill of sale is unambiguous. Thus, there
is no need to apply any canons of construction, including particularly section 1642.
Systems also argues that the UCC imposes a duty on Cisco to deliver the
software. We will assume without deciding that Systems’ reading of the UCC is
correct. Even so, the provisions of the UCC only apply to contracts that deal
predominately with “transactions in goods.” Cal. Com. Code § 2102; Fla. Stat. §
672.102. The sale of intellectual property, which is what is involved here, is not a
transaction in goods. See Lamle v. Mattel, Inc., 394 F.3d 1355, 1359 n.2 (Fed. Cir.
2005) (applying California law) (“a license for intellectual property . . . is not a sale
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of goods”); see generally Daniel R. Cahoy, Oasis or Mirage?: Efficient Breach as
a Relief to the Burden of Contractual Recapture of Patent and Copyright
Limitations, 17 Harv. J.L. & Tech. 135, 163 (Fall 2003) (“intellectual property or
other information cannot be a ‘good’ as defined by the UCC”). Thus, the UCC
does not apply. Accordingly, the plain language of the bill of sale governs and, as
the district court held, it does not include a provision requiring Cisco to deliver any
software.
AFFIRMED.
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