Leitner-Wise v. Koniag, Inc. ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
)
PAUL ANDREW LEITNER-WISE, )
)
Plaintiff, )
)
v. ) Case No. 17-cv-01859 (APM)
)
KONIAG, INC., )
)
Defendant. )
_________________________________________ )
MEMORANDUM OPINION
I. INTRODUCTION
Plaintiff Paul Andrew Leitner-Wise is the inventor of a patented Self-Cleaning Gas
Operating System for Firearms. Over 14 years ago, Plaintiff sold a majority interest in his
company, Leitner-Wise Rifle Co. (“LWRC”), to subsidiaries of Defendant Koniag, Inc. and
thereafter signed an Employment Agreement with LWRC that promised to pay him royalties from
the sales of products incorporating his invention. Plaintiff now brings this case alleging, among
other things, that Defendant failed to pay him earned royalties and fraudulently induced him to sell
his ownership shares. He alleges common law claims of breach of contract, unjust enrichment,
fraudulent inducement, and conversion.
Defendant now seeks summary judgment as to all claims, and Plaintiff prays for partial
summary judgment. Defendant prevails for three independent reasons: (1) upon leaving LWRC,
Plaintiff agreed to a general release of all claims against Defendant; (2) all of Plaintiff’s claims are
time barred; and (3) Defendant is not a party to the Employment Agreement and thus is under no
obligation to pay Plaintiff royalties. In addition, the court denies Plaintiff’s request for additional
discovery because it comes too late and, in any event, no foreseeable discovery could cure the fatal
deficiencies inherent in Plaintiff’s case.
II. BACKGROUND
A. Factual Background 1
In October 1998, Plaintiff Paul Andrew Leitner-Wise founded the Leitner-Wise Rifle
Company, Inc (“LWRC”). See Pl.’s Mot. for Part. Summ. J., ECF No. 26 [hereinafter Pl.’s Mot.],
Pl.’s Stmt. of Facts Not Reasonably in Dispute, ECF No. 26-1 [hereinafter Pl.’s Facts], ¶ 1; Def.’s
Opp’n to Pl.’s Mot. for Summ. J., ECF No. 28 [hereinafter Def.’s Opp’n], Def.’s Stmt. of Facts in
Opp’n to Pl.’s Mot., ECF No. 28-1 [hereinafter Def.’s Opp’n Facts] (not contesting fact). In 2004,
Plaintiff invented a “Self-Cleaning Gas Operating System for a Firearm” (“the Invention”), and
secured a United States Patent on it in 2008. See Complaint, ECF No. 1 [hereinafter Compl.], ¶ 7;
Def.’s Am. Answer, ECF No. 14 [hereinafter Am. Answer], ¶ 7; see also Compl., U.S. Patent,
ECF No. 1-1.
In 2004, Plaintiff sold a majority interest in LWRC to two of Defendant Koniag, Inc.’s
subsidiaries, Koniag Development Corporation and Integrated Concepts and Research
Corporation. See Pl.’s Facts ¶¶ 5, 6; Def.’s Opp’n Facts (not contesting fact); see also Pl.’s Mot.,
Ex. F, ECF No. 26-2. The following year, on April 11, 2005, Plaintiff signed an Employment
Agreement with LWRC—at the time, controlled by Defendant’s subsidiaries—to serve as
LWRC’s Chief Technical Officer. See Pl.’s Facts ¶ 17; Def.’s Opp’n Facts (not contesting fact);
1
In opposing Defendant’s Motion for Summary Judgment, Plaintiff failed to controvert any fact asserted in
Defendant’s supporting statement of undisputed facts. See Def.’s Mot. for Summ. J., ECF No. 15, Def.’s Stmt. of
Material Facts in Support of Def.’s Mot. for Summ. J., ECF No. 15-2; Pl.’s Opp’n to Def.’s Mot., ECF No. 23
(containing no responsive statement of facts). The court therefore treats as true the facts asserted in Defendant’s
Statement. See Fed. R. Civ. P. 56(e); LCvR 7(h)(1). In addition, with his Motion for Partial Summary Judgment,
Plaintiff did submit a statement of undisputed facts, see Pl.’s Mot. for Part. Summ. J., ECF No. 26, Pl.’s Stmt. of Facts
Not Reasonably in Dispute, ECF No. 26-1, to which Defendant responded, see Def.’s Opp’n to Pl.’s Mot. for Summ.
J., ECF No. 28, Def.’s Stmt. of Facts in Opp’n to Pl.’s Mot., ECF No. 28-1. The court treats as true any fact admitted
by Defendant in this response.
2
see also Compl., Ex. B, ECF No. 1-2 [hereinafter Employment Agreement]. Plaintiff
acknowledged in the Employment Agreement that “[a]ll right, title and interest in and to the
[Invention] shall be and remain the sole and exclusive property of [LWRC].” Employment
Agreement ¶ 11(a). The agreement also contained a royalty provision with respect to the
Invention:
Employer hereby acknowledges that [Plaintiff] has developed
certain Intellectual Property prior to the execution of this Agreement
which Employer desires to exercise ownership rights including
patents developed while [Plaintiff] was employed by [LWRC].
Employer will separately pay a royalty of one half of one percent
(.05%) on the net sale price of each product containing a previously
patented or patentable or otherwise protected device developed by
[Plaintiff] . . . The royalties[] payable under this subsection shall not
be due and payable until Employer’s books of accounts show the
existence of pre-tax profits . . . Payment of royalties under this
section shall not be withheld or terminated regardless of any
Termination of the [Plaintiff] for any reason.
Employment Agreement ¶ 11(f); see also Pl.’s Facts ¶ 18. The Employment Agreement also stated
that “[t]his Agreement is personal to [LWRC] and to [Plaintiff] and may not be assigned by either
party without the written consent of the other.” Employment Agreement ¶ 13. And it provided
that “[t]his Agreement shall be interpreted and construed in accordance with the laws in Virginia.”
Id. ¶ 22.
On January 20, 2006, Defendant’s subsidiaries sold their interests in LWRC to the Leitner-
Wise Acquisition Group, LLC. See Def.’s Mot. for Summ. J., ECF No. 15 [hereinafter Def.’s
Mot.], Def.’s Stmt. of Material Facts in Support of Def.’s Mot. for Summ. J., ECF No. 15-2
[hereinafter Def.’s Facts], ¶ 1; see also Def.’s Mot., LWAG Certificate of Incorporation, ECF No.
15-9 [hereinafter LWAG Incorporation], at KON 000276–279; see also Pl.’s Facts ¶ 27
(acknowledging “Defendant claims to have sold all of its interest to the Leitner-Wise Acquisition
Group, LLC on January 20, 2006” without contesting the fact). Plaintiff, a member and manager
3
of the Leitner-Wise Acquisition Group, signed the acquisition documents. Def.’s Facts ¶¶ 2–3;
see also LWAG Incorporation at KON 000233, KON 000278; Pl.’s Opp’n to Def.’s Mot., ECF
No. 23 [hereinafter Pl.’s Opp’n] (not contesting fact).
Ten months later, Plaintiff left his employment with LWRC. Compl. ¶ 22; Def.’s Facts ¶ 7
(citing to Termination Letter); Pl.’s Opp’n (not contesting fact). On October 31, 2006,
contemporaneous with his departure, Plaintiff signed a Termination Agreement “by and between
[LWRC] and [Plaintiff].” See Def.’s Mot., Termination of Employment, ECF No. 15-11
[hereinafter Termination Agreement]; Pl.’s Opp’n (not contesting fact). The Termination
Agreement contained a broadly worded general release provision:
In exchange for the execution of this letter agreement by [LWRC],
the execution of the Equities Purchase Agreement by Ryan and other
good and valuable consideration, you hereby, among other things,
fully, forever, irrevocably and unconditionally release and discharge
[LWRC], and any subsidiary or affiliated organization of the
Company and their current or former officers, directors,
stockholders, corporate affiliates, members, managers, attorneys or
employees (the “Released Parties”) from any and all claims,
charges, complaints, demands, actions, causes of action, suits,
rights, debts, sums of money, costs, accounts, covenants, contracts,
agreements, promises, omissions, damages, obligations, liabilities
and expenses (including attorney’s fees and costs), of every kind and
nature, known or unknown, which you ever had or now have against
the Released Parties, including, but not limited to, all claims arising
out of your employment, all claims arising out of the Employment
Agreement, all claims arising out of your separation from
employment, all claims arising from any failure to re-employ
you . . . all wrongful discharge claims, common law tort,
defamation, breach of contract and other common law claims . . . .
4
Termination Agreement ¶ 1. The Termination Agreement defined the “Employment Agreement”
to be the agreement containing the royalty provision. Id. ¶ (i) (defining Employment Agreement
as agreement signed on April 11, 2005). 2
According to Plaintiff, on April 18, 2008, LWRC sold its interest in the Invention to LWRC
International, LLC for five million dollars. See Compl. ¶¶ 28, 36; see also Compl., Ex. D, ECF
No. 1-4. Defendant never paid Plaintiff royalties for the Invention. See Pl.’s Facts ¶ 28; Def.’s
Opp’n Facts (not contesting fact).
According to Plaintiff, at some point a copy of the 2005 Employment Agreement was taken
from him, and in 2014, an immigration attorney for Plaintiff discovered the Employment
Agreement and provided it to Plaintiff. See Compl. ¶¶ 24, 39.
B. Procedural Background
Plaintiff filed this action on September 11, 2017, pleading four causes of action against
Defendant: (1) breach of contract, (2) unjust enrichment, (3) fraudulent inducement, and
(4) conversion. See Compl. ¶¶ 40–67. The breach of contract and unjust enrichment claims are
premised on Defendant’s alleged failure to pay him royalties under the Employment Agreement.
See id. ¶¶ 40–52. The fraudulent inducement and conversion claims contend that Defendant
caused Plaintiff to enter into unspecified contracts under false pretenses, namely, Defendant
promised to fund LWRC through a private offering, when it never intended to do so. See id. ¶¶ 53–
67.
Defendant filed an initial Answer on November 15, 2017, see Answer, ECF No. 7, after
which the court entered a scheduling order, which permitted discovery to commence as of
2
Plaintiff disputes the significance of an IP assignment signed contemporaneously with the Termination Agreement
in light of a prior IP assignment. See Pl.’s Opp’n at 1–2. But neither IP assignment is material to the court’s decision,
so the court does not address them in its recitation of uncontested, material facts.
5
December 18, 2017, see Order, ECF No. 11, at 1. The court set September 18, 2018, as the
discovery deadline. See id. Defendant filed an Amended Answer on February 6, 2018. See Am.
Answer.
Shortly thereafter, on March 2, 2018—six months before the close of discovery—
Defendant moved for summary judgment as to all claims. See Def.’s Mot. Plaintiff did not,
however, file a timely opposition to Defendant’s motion. Instead, over three months later, on June
18, 2018, Plaintiff filed a motion seeking to “expand discovery deadlines” and “hold responses to
Defendant’s Motion for Summary Judgment in abeyance.” Mot. to Expand Disc., ECF No. 19
[hereinafter Mot. to Expand Disc.], at 1. Before briefing on his motion became ripe, however,
Plaintiff filed his opposition to Defendant’s Motion for Summary Judgment on June 27, 2018. See
Pl.’s Opp’n. Then, two months later, Plaintiff moved for partial summary judgment, asking the
court to find that Defendant had breached the Employment Agreement by assigning the Invention
without his consent and without compensation. See generally Pl.’s Mot.
The court now addresses all three motions: (1) Defendant’s Motion for Summary
Judgment, (2) Plaintiff’s Motion to Expand Discovery and to Hold Defendant’s Motion in
Abeyance, and (3) Plaintiff’s Motion for Partial Summary Judgment. The court begins by
analyzing the parties’ motions for summary judgment, then turns to Plaintiff’s motion to extend
the time for discovery and to hold in abeyance a decision on summary judgment.
III. LEGAL STANDARD
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A “genuine dispute” of a “material fact” exists when the fact is “capable of affecting the
substantive outcome of the litigation” and “the evidence is such that a reasonable jury could
6
return a verdict for the nonmoving party.” Elzeneiny v. District of Columbia, 125 F. Supp. 3d 18,
28 (D.D.C. 2015).
In assessing a motion for summary judgment, the court considers all relevant evidence
presented by the parties. See Brady v. Office of Sergeant at Arms, 520 F.3d 490, 495 (D.C. Cir.
2008). The court looks at the facts in the light most favorable to the nonmoving party and draws
all justifiable inferences in that party’s favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986). If the court determines “no reasonable jury could reach a verdict in [his] favor,” then
summary judgment is appropriate. Wheeler v. Georgetown University Hosp., 812 F.3d 1109, 1113
(D.C. Cir. 2016). Courts are “not to make credibility determinations or weigh the
evidence.” Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006).
IV. DISCUSSION
A. Motions for Summary Judgment
Defendant’s Motion for Summary Judgment is granted—and Plaintiff’s Partial Motion for
Summary Judgment is denied—for the following three reasons. First, Plaintiff expressly released
Defendant as to all claims he now asserts. Second, all of Plaintiff’s claims are barred by applicable
statutes of limitations. And, third, Koniag is an improper defendant as to the breach of contract
claim.
1. Express Release of Claims
Under Virginia law, 3 a contract must be interpreted as written. See, e.g.,
Bridgestone/Firestone v. Prince William Square Assocs., 250 Va. 402, 407 (Va. 1995) (“When
3
In interpreting substantive contract issues, the court looks to Virginia law. The two main contracts at issue in this
case—the Employment Agreement and the Termination Agreement—expressly state that Virginia law governs any
contractual dispute. See Employment Agreement ¶ 22 and Termination Agreement ¶ 9. The court must honor such
explicit choice-of-law agreements by contracting parties. See Southern California Edison Co. v. F.E.R.C., 502 F.3d
176, 181 (D.C. Cir. 2007); see also RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 (1971); cf. Milanovich
v. Costa Crociere, S.p.A., 954 F.2d 763, 767–68 (D.C. Cir. 1992) (applying a choice-of-law provision in passage
tickets).
7
contract terms are clear and unambiguous, a court must construe them according to their plain
meaning.”). Further, “[l]ike the terms of any contract, the scope and meaning of a release
agreement ordinarily is governed by the intention of the parties as expressed in the document they
have executed.” Berczek v. Erie Ins. Group, 259 Va. 795, 799 (Va. 2000). “When the contract is
lawful and the language is free from ambiguity, the agreement furnishes the law that governs the
parties.” Id. In this case, the Termination Agreement’s release provision is “free from ambiguity.”
It is clear, expansive in scope, and enforceable under Virginia law. See Ferguson v. Stokes, 287
Va. 446, 450–51 (Va. 2014) (enforcing provision in which the parties mutually released each other
“from any and all claims . . . past or present, known or unknown, fixed or contingent, which have
arisen or might arise in the future, for or because of any matter or thing done, omitted, or suffered
to be done from the beginning of time to the date of th[e] [r]elease”). The Termination Agreement
therefore “furnishes the law that governs the parties.” Berczek, 259 Va. at 799.
The release’s broad terms easily reach both Defendant and the claims asserted against it.
As part of the Termination Agreement, Plaintiff agreed to generally release all entities and persons
affiliated with LWRC, both past and present. The Termination Agreement defines the “Released
Parties” to include “the Company, and any subsidiary or affiliated organization of the Company
and their current or former officers, directors, stockholders, corporate affiliates, members,
managers, attorneys, or employees . . . ” Termination Agreement ¶ 1 (emphasis added). This
definition plainly includes Defendant. At the time of the Termination Agreement, Defendant
qualified as a “former” “corporate affiliate” of LWRC, as Defendant was the parent company of
LWRC’s “former” majority owners, Koniag Development Corporation and Integrated Concepts
and Research Corporation. See Def.’s Facts ¶ 1; LWAG Incorporation at KON 000276–279; Pl.’s
8
Facts ¶ 27 (noting that Defendant’s subsidiaries divested from LWRC prior to Termination
Agreement). The clear terms of the release therefore include Defendant.
Moreover, the release easily covers the claims Plaintiff asserts against Defendant. As
relevant here, Plaintiff agreed to
fully, forever, irrevocably and unconditionally release and discharge
[the Released Parties] from any and all claims, charges, complaints,
demands, actions, causes of action, suits, rights, debts, sums of
money, costs, accounts, covenants, contracts, agreements, promises,
omissions, damages, obligations, liabilities and expenses (including
attorney’s fees and costs), of every kind and nature, known or
unknown, which you ever had or now have against the Released
Parties, including but not limited to, . . . all claims arising out of the
Employment Agreement . . . all common law tort, . . . breach of
contract and other common law claims . . .
Employment Agreement ¶ 1 (emphasis added). This sweeping text easily encompasses the causes
of action Plaintiff presses here. Count I for breach of contract arises out of the commitment to pay
royalties contained in the Employment Agreement. See Compl. ¶¶ 40–52. The release expressly
reaches “all claims arising out of the Employment Agreement.” Termination Agreement ¶ 1.
Counts II, III, and IV for unjust enrichment, fraudulent inducement, and conversion, respectively,
are likewise covered by the release. Plaintiff agreed not to bring against the Released Parties,
including Defendant, any “common law tort[s]” or “other common law claims,” whether he knew
about them at the time or not. Id. In short, the unambiguous text of the Termination Agreement’s
release provision is controlling and thus, by itself, ends Plaintiff’s case.
Plaintiff makes three unavailing arguments to dispute the release’s power. First, he
erroneously contends that the release “does not address . . . his entitlement to compensation for his
intellectual property.” Pl.’s Opp’n at 8. This argument has no legs. The release applies to “all
claims . . . arising out of the Employment Agreement,” Termination Agreement ¶ 1, and defines
the Employment Agreement as the contract signed on April 11, 2005, see id. ¶ (i). It is the
9
Employment Agreement that contains the compensation provision for Plaintiff’s intellectual
property, upon which he now tries to sue. See Employment Agreement ¶ 11(f). But the release
expressly precludes him from doing so.
Second, in the same breath as his first argument, Plaintiff insists that he “reasonably did
not contemplate” that the release addressed his right to royalty payments. Pl.’s Opp’n at 8. But
Plaintiff’s post-hoc characterization of his then-understanding is not controlling; the clear and
unambiguous terms of the release are what bind him. See Ott v. L & J Holdings, LLC, 275 Va.
182, 187 (Va. 2008) (stating that “a court [shall] construe a document according to its plain terms
if it is clear and unambiguous on its face”). Any construction of the release that would exclude
the claims against Defendant seeking unpaid royalties would be flatly inconsistent with its terms.
Lastly, Plaintiff wrongly asserts that the release does not forbid claims arising from the
royalty provision because the Employment Agreement provided that “[p]ayment of royalties under
this section shall not be withheld or terminated regardless of any Termination of [Plaintiff] for any
reason.” See Pl.’s Mot. at 8; Employment Agreement ¶ 11(f). This section means that royalty
payments would continue after Plaintiff’s termination, regardless of the reason. But that provision
does not foreclose what happened later. In 2006, Plaintiff ended his employment with LWRC and
he agreed to release all claims under the Employment Agreement. Thus, even if Plaintiff’s right
to royalties technically survived his termination, 4 he gave up the ability to enforce that right.
For these reasons, the court finds that the Termination Agreement’s release bars Plaintiff’s
claims against Defendant. Plaintiff’s case fails for two other reasons, to which the court now turns.
4
Plaintiff arguably assigned away his royalty rights as part of the Assignment Agreement in 2006, which he entered
into at the same time as the Termination Letter. In the Assignment Agreement, Plaintiff transferred and assigned all
“right, title and interest” in the Invention to LWRC. See Def.’s Mot., Ex. I, ECF No. 15-13, ¶ 2.1. He also agreed
that the Assignment Agreement “supersede[s] all prior agreements and understandings, oral and written, between the
Parties with respect to the subject matter hereof.” Id. ¶ 8.4.
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2. Statutes of Limitations
Before discussing the merits of Defendant’s limitations defense, the court must
acknowledge a nuance in its choice of law. To determine which law to apply, the court looks to
the forum’s choice-of-law rules. See A.I. Trade Fin., Inc., v. Petra Int’l Banking Corp., 62 F.3d
1454, 1458 (D.C. Cir. 1995). 5 In the District of Columbia, statutes of limitations are procedural
and therefore “almost always mandate application of the District’s own statute of limitations.” Id.The court, therefore, applies D.C. law on this issue.
Under D.C. law, a three-year statute of limitations applies to all four of Plaintiff’s claims. 6
See D.C. Code § 12-301(7) (contract claim); see id. § 12-301(8) (applying three-year limitation
period to claims “for which a limitation is not otherwise specially prescribed”). At the latest,
Plaintiff’s claims accrued in 2008, nine years before he brought this case. A claim for breach of
contract accrues when a party fails to perform as required by the contract. See Eastbanc, Inc. v.
Georgetown Park Assocs. II, L.P., 940 A.2d 996, 1004 (D.C. 2008) (citations omitted). The breach
of the Employment Agreement occurred no later than April 18, 2008, when LWRC sold the rights
in the Invention to LWRC International, Inc. without Plaintiff’s consent. See Compl. ¶¶ 28, 43;
Employment Agreement ¶ 13 (stating that the Agreement could “not be assigned by either party
without the written consent of the other”). Similarly, an unjust enrichment claim accrues at the
time of the wrongful act that gives rise to a duty of restitution. See News World Commc’ns, Inc.
v. Thompsen, 878 A.2d 1218, 1223 (D.C. 2005) (internal quotation and citation omitted). That
claim, too, accrued on April 18, 2008, when LWRC breached the Employment Agreement and
5
The choice-of-law provisions in the contracts at issue do not bear on the statute of limitations inquiry—as they do
on the other issues in this opinion—because they supply only the substantive law applicable to the dispute. See Dalal
v. Goldman Sachs & Co., Inc., 575 F.3d 725, 726 (D.C. Cir. 2009).
6
Even if the court followed Virginia law, Plaintiff could rely on five years at most. Virginia law allows for five years
for claims pertaining to contracts in writing and five years for conversion claims. See Va. Code § 8.01-246(2); Va.
Code § 8.01-243(B). It provides three years for unjust enrichment, see Va. Code § 8.01-246(4), and two years for
fraudulent inducement, see Va. Code § 8.01-248 (covering personal actions not otherwise specified).
11
earned five million dollars without providing restitution to Plaintiff. See ¶¶ 28, 36, 47. Plaintiff’s
contract and quasi-contract claims needed to be filed by April 18, 2011, and are thus time-barred.
Claims of fraudulent inducement and conversion accrue when a plaintiff has actual or
inquiry notice of the wrong committed by a defendant. See Diamond v. Davis, 680 A.2d 364, 372
(D.C. 1996). Plaintiff’s fraudulent inducement claim is based on Defendant’s representations
during contract negotiations that LWRC “would continue as a going concern” and it would be
funded by a private offering. Compl. ¶ 54. That claim accrued on January 20, 2006, when
Defendant sold its interest in LWRC, see Def.’s Facts ¶ 1, clearly demonstrating that the promises
to treat LWRC as a “going concern” or to fund it through a private offering were untrue. Plaintiff
obviously knew about that sale because Defendant sold its interest in LWRC to a group in which
Plaintiff was a member. See id. ¶¶ 1–3.
Plaintiff’s conversion claim is based on the sale of his “intellectual property . . . unlawfully
. . . for five million dollars.” Compl. ¶ 66. It, therefore, accrued on or near April 18, 2008, when
Plaintiff should have been on notice of the alleged unlawful sale. At the latest, it accrued on
December 9, 2008, when Plaintiff finally received his patent for the Invention, which listed LWRC
International, and not Defendant or its subsidiaries, as the assignee. See Compl., U.S. Patent, ECF
No. 1-1, at 1. For these reasons, Plaintiff had to have filed at the latest by December 9, 2011, three
years after his conversion claim accrued. He filed nearly six years later.
Plaintiff invokes equitable tolling to advocate for a later accrual date. He relies solely on
the assertion that “[i]mmediately following cessation of his unemployment with [LWRC],
unknown persons removed all copies of [Plaintiff’s] contracts from his possessions at the
company’s offices and all copies of [the Employment Agreement] were believed to be lost.”
12
Compl. ¶ 24; see also Pl.’s Opp’n at 10–12; Pl.’s Mot. at 13–15. This allegation, even if taken to
be true, cannot trigger equitable tolling.
In the District of Columbia, equitable tolling may be found if the defendant “ha[s] done
something that amounted to an affirmative inducement to plaintiffs to delay bringing action.”
Beach TV Props., Inc., v. Solomon, 306 F. Supp. 3d 70, 89 (D.D.C. 2018) (internal quotation marks
and citations omitted). Put another way, equitable tolling may be found if the defendant “has done
anything that would tend to lull the plaintiff into inaction.” P’ship Placements, Inc. v. Landmark
Ins. Co., 722 A.2d 837, 842 (D.C. 1998) (citations omitted). To prevail with equitable tolling, a
plaintiff must also show he has “pursu[ed] his rights diligently.” Mizell v. Suntrust Bank, 26 F.
Supp. 3d 80, 87 (D.D.C. 2014) (quoting Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005)).
Plaintiff fails the equitable tolling standard for a host of reasons. First, he does not contend
that Defendant took the affirmative act of stealing the contract. Instead, he alleges “unknown
persons” stole them. Compl. ¶ 24. For that reason alone, equitable tolling does not apply. Second,
Plaintiff comes nowhere close to showing that, even if Defendant or its agents took the contracts,
such action would “tend to lull plaintiff into inaction.” P’ship Placements, 722 A.2d at 842. The
alleged theft of the contracts did nothing to prevent his causes of action, all of which could have
been brought without the stolen material. For his breach of contract and unjust enrichment claims,
Plaintiff had to have known the Employment Agreement contained a royalty agreement—he was
a party to the contract, after all. See Fitzgerald v. Seamans, 553 F.2d 220, 228–29 (D.C. Cir. 1977)
(finding no equitable tolling because appellant knew of the material facts). Similarly, for his
fraudulent inducement and conversion claims, Plaintiff knew about Defendant’s supposed false
representations made to him in the negotiated sale of LWRC. See Compl. ¶ 55. Thus, Plaintiff
could have timely pleaded these claims even without the contracts. Furthermore, these reasons
13
demonstrate that Plaintiff did not act diligently in bringing his claim. Equitable tolling therefore
does not apply.
In addition to equitable tolling, Plaintiff avers that 35 U.S.C. § 286 provides a six-year
limitation for patent infringement damages. Pl.’s Opp’n at 12–13; Pl.’s Mot. at 15–16. This is a
frivolous argument because Plaintiff did not plead patent infringement. See Compl. ¶¶ 40–67.
Accordingly, none of Plaintiffs’ causes of action overcome the limitations bar. The court
turns now to its final reason to grant Defendant’s Motion.
3. Koniag is an Improper Defendant for the Breach of Contract Claim
For his breach of contract claim, Plaintiff has not put forth adequate evidence that
Defendant owed him any legal obligation under the Employment Agreement. As discussed,
Plaintiff’s first claim arises from the 2005 Employment Agreement entitling him to royalties on
the Invention. That agreement was signed by LWRC and Plaintiff. See Employment Agreement
¶ 27. Koniag was not a party to that contract, so it cannot be held liable under it.
Plaintiff rebuts this straightforward logic by arguing that Koniag had “absolute dominion
and control” over LWRC when the contract was made. Pl.’s Mot. at 10–13. Plaintiff bolsters this
argument with an affidavit testifying that Koniag and its subsidiaries owned 53% of LWRC,
Koniag’s Chief Operating Officer was LWRC’s Corporate Secretary, and that person was paid by
Koniag. See Pl.’s Opp’n, Pl.’s Aff., ECF No. 23-1, ¶¶ 2–6. He also states that Koniag and LWRC
“were [] enmeshed with shared officers, board members and compensation of the employees”;
“Koniag was the majority shareholder of [LWRC]”; “a majority voting block of the Board of
Directors of [LWRC] were held by two current board members of Koniag”; and three individuals
“simultaneously controll[ed] [LWRC] while directly controlling the three hundred thousand dollar
14
line of credit from Koniag.” Pl.’s Mot. at 10–11. These facts, even if true, are insufficient to have
Koniag bear responsibility for LWRC’s legal obligations.
Under Virginia law, 7 “[b]efore [a] corporate entity may be properly disregarded and the
parent corporation held liable for the acts of its subsidiary . . . it must be shown not only that undue
domination and control was exercised by the parent corporation over the subsidiary, but also that
this control was exercised in such a manner as to defraud and wrong the complainant.” Beale v.
Kappa Alpha Order, 192 Va. 382, 396 (Va. 1951). Here, the facts Plaintiff provides, even if read
in the light most favorable to him, do not come close to proving that Defendant exercised control
over LWRC “in such a manner as to defraud and wrong the complainant.” Id. Not one of the
above facts even touches on how Plaintiff was defrauded by Defendant’s alleged exercise of
“undue domination and control” over LWRC. Therefore, no reasonable jury could find that
LWRC’s corporate form should be disregarded, such that Defendant should be held liable for
breach of the Employment Agreement.
* * *
For the foregoing reasons, Defendant’s Motion for Summary Judgment is granted and
Plaintiff’s Motion for Partial Summary Judgment is denied. The court now turns to Plaintiff’s
Motion to Expand Discovery and Hold Summary Judgment in Abeyance.
B. Plaintiff’s Motion to Expand Discovery and Hold Summary Judgment in
Abeyance Under Federal Rule 56(d)
The court denies Plaintiff’s Motion to Expand Discovery and Hold Summary Judgment for
three reasons. First, the motion is untimely. Second, Plaintiff has not complied with the
7
The court reverts to using Virginia law for this substantive issue. See supra note 3.
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established procedural requirements of a Rule 56(d) motion. And, third, no foreseeable additional
discovery could help Plaintiff defeat Defendant’s Motion for Summary Judgment.
1. Untimeliness
To begin, Plaintiff filed his Motion to Expand Discovery and to Hold Defendant’s Motion
in Abeyance long after it came due. Plaintiff did not file a timely opposition to Defendant’s motion
and instead filed his Rule 56(d) motion three months late. The court nevertheless could consider
Plaintiff’s motion if he demonstrates “excusable neglect” for his tardiness. Fed. R. Civ. P.
6(b)(1)(B). But this he fails to do. Missing a deadline because of other case responsibilities does
not constitute excusable neglect. See D.A. v. District of Columbia, 2007 WL 4365452, at * 4
(D.D.C. Dec. 6, 2007) (citing Citizens’ Protective League v. Clark, 178 F.2d 703, 704 (D.C. Cir.
1949) and Maghan v. Young, 154 F.2d 13, 13 (D.C. Cir. 1946)). Yet, that is Plaintiff’s counsel’s
only justification for missing the deadline in this case. See Mot. to Expand Disc. ¶¶ 9–19.
Plaintiff’s motion is thus denied as untimely.
2. Non-compliance with Procedural Requirements
Even if Plaintiff’s motion was timely, the court would not grant it. To prevail on a Rule
56(d) motion, a party must submit a declaration that satisfies three criteria. With “sufficient
particularity,” the declaration “must outline the particular facts he intends to discover and describe
why those facts are necessary to the litigation”; “explain why he could not produce the facts in
opposition to the motion”; and “show the information is in fact discoverable.” Convertino v. U.S.
Dep’t of Justice, 684 F.3d 93, 99–100 (D.C. Cir. 2012) (cleaned up); see also Ames v. Nielsen, 286
F. Supp. 3d 70, 95 (D.D.C. 2017) (cleaned up). Plaintiff fails to satisfy any of these requirements.
Plaintiff acknowledges as much, writing that “he has not had sufficient time to examine what
discovery has been produced, to discern what exactly is deficient and to enumerate the elements
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of a Rule 56(d) affidavit.” Mot. to Expand Disc. at 6. Plaintiff’s Rule 56(d) motion therefore fails
under Convertino’s requirements.
3. Discovery Would Make No Material Difference
Even if Plaintiff could overcome these threshold deficiencies, the court finds a much deeper
flaw with Plaintiff’s request—there is no plausible discovery that could overcome the court’s
reasons for granting Defendant’s Motion for Summary Judgment. The court cannot conceive of
evidence Plaintiff could muster to overcome the Termination Agreement’s release, to prevail on
equitable tolling, and to prove Koniag is the proper defendant as to his breach of contract claim.
For this additional reason, his Rule 56(d) request is denied.
4. Expanding Discovery Request
Finally, the court denies Plaintiff’s request to “expand” discovery, which the court
interprets as a motion to extend the discovery period. That motion, too, is denied. Plaintiff
concedes his lack of diligence in reviewing and pursuing timely discovery. See Mot. to Expand
Disc. at 6; see also Lopez v. Timeco Inc., 291 F. Supp. 3d 1, 3 (D.D.C. 2017) (noting that the
primary consideration in deciding whether to amend a scheduling order is the party’s diligence in
seeking discovery before the deadline). Additionally, as discussed, additional time for discovery
will not alter the outcome. Extending discovery is therefore not warranted.
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V. CONCLUSION
For the reasons set forth above, Defendant’s Motion for Summary Judgment is granted.
Plaintiff’s Motion for Partial Summary Judgment and Motion to Expand Discovery and Hold
Summary Judgment in Abeyance are denied.
A separate, final order accompanies this Memorandum Opinion.
Dated: December 13, 2018 Amit P. Mehta
United States District Judge
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