Real Time Translation, Inc., d/b/a RTT Mobile Interpretation v. i.wi, LLC, Selle Management, Inc. ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-2132
Real Time Translation, Inc., d/b/a RTT Mobile Interpretation,
Respondent,
vs.
i.wi, LLC,
Defendant,
Selle Management, Inc., et al.,
Appellants.
Filed October 5, 2015
Affirmed; motion denied
Stauber, Judge
Hennepin County District Court
File No. 27CV1221287
Scott A. Johnson, Todd M. Johnson, Hellmuth & Johnson, PLLC, Edina, Minnesota (for
respondent)
Christoper P. Parrington, Christopher C. Grecian, Foley & Mansfield, PLLP,
Minneapolis, Minnesota (for appellants)
Considered and decided by Peterson, Presiding Judge; Stauber, Judge; and
Stoneburner, Judge.

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
UNPUBLISHED OPINION
STAUBER, Judge
Appellants, a former shareholder and the former president and shareholder of
respondent business, challenge an adverse judgment in an action for appellants’ breaches
of nondisclosure and confidentiality provisions of a settlement agreement. Appellants
also challenge a permanent injunction that prohibits them from further breaching the
settlement agreement and requires them to destroy confidential information belonging to
respondent business. We affirm the judgment and deny respondent’s motion to strike
materials that are outside the appellate record.
FACTS
Charles Howerton founded respondent Real Time Translation, Inc. (RTT) in 2006
to develop and market a translation device that permits a person wearing the device to
receive contemporaneous language translation. First- and second-generation models of
the device are hands-free, have “enhanced speaker phone and noise cancellation
features[,] and are designed to work through . . . an ‘end-to-end operating platform’” that
“includes agreements with telephone carriers and interpreting companies, a web-based
interface, and a call center through which incoming calls from individuals wearing the
devices are routed and instantly connected with the appropriate interpreters.”1 The first-
generation model of RTT’s device is called the Pro-1 Communicator (Pro-1), and the
second-generation model of the device is called the ELSA.
1
Unless otherwise noted, quotations in the facts section are taken from the district court’s
order granting a permanent injunction.
2
Appellant Paul Selle is a former shareholder and past president of RTT. Selle
provided business consulting services to help start up RTT and in 2007 was hired full
time as RTT’s president. Selle had no background in the translation business or in the
technical aspects of creating a translation device. His duties included “raising money;
setting up the new company; helping to obtain a patent for Howerton’s concept; getting
Howerton’s concept engineered, designed and manufactured; and overseeing those who
were developing RTT’s product, including design engineers, patent attorneys, investor
relations, and market researchers.”
Selle introduced Howerton to appellant Carlos Jimenez in 2007. Jimenez is
experienced in the translation industry, and he became an advisor to RTT, invested
$25,000 in the company, and eventually became a minority shareholder. Through his
dealings with RTT, Jimenez became familiar with its business plan and functions.
By late 2008, Selle’s relationship with Howerton had deteriorated. Selle was
discharged as president in late fall of 2008 and was asked to resign from the company in
early 2009. His last day of employment at RTT was January 31, 2009, but he remained
an RTT shareholder for over a year thereafter. In September 2009, while Selle was still a
shareholder, RTT sued him for breach of contract, unjust enrichment, and tortious
interference with business relations, alleging that Selle had breached a consulting contract
by failing to perform tasks that he had agreed to do to establish RTT’s business,
overcharged RTT for his services, and made defamatory statements to RTT shareholders.
Selle, Jimenez, and another minority shareholder, Anthony C. Muellenberg, asserted
counterclaims against RTT that derived from their status as minority shareholders.
3
At the time of Selle’s resignation from RTT, RTT “had design drawings, market
research, business plans, investor presentation materials, and marketing videos.” RTT
asked Selle for all RTT property and proprietary information in his possession at the time
of his resignation. Although Selle sent RTT a letter on March 12, 2009, stating that he
was returning all of RTT’s proprietary information and property, the district court found
that he actually “kept copies of almost everything he returned to RTT.” Selle kept
patented information and emails, as well as “business plans, PowerPoints, [and] investor
updates.” The district court found that Selle’s “secretive behavior” played a part in its
decision to find Selle not credible in Selle’s later testimony that he was unaware of
RTT’s work on the ELSA before April 2010.
The district court found that, “[a]t some point in 2009,” RTT shifted its product
focus to its second-generation device, the ELSA. The ELSA “functions much the same
as the Pro-1” but includes an integrated cell phone so that the user can connect directly to
a network operating center, identify a translation language, and locate an appropriate
interpreter. The ELSA also includes “enhanced speaker phone and noise cancellation
technologies.”
The parties settled their claims effective April 2, 2010. Under the terms of a
settlement agreement, Selle and Jimenez were to be paid $15,000 in exchange for
conveyance of their RTT stock shares to the company. The settlement agreement
includes the following paragraph, which prohibits appellants from disclosing RTT’s
proprietary property:
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a. Selle, Muellenberg and Jimenez agree to keep
confidential and protect, and agree not to divulge, allow
access to or use in any way:
i. any Intellectual Property Rights, as said term is
defined below, of the Company specifically related to
proprietary information of certain products and
services of the Company (the “proprietary Products”),
as defined below;
ii. processes, designs, drawings, samples and
inventions, past, current and planned research and
development, current and planned manufacturing and
distribution methods and processes, customer lists,
current and anticipated customer requirements, price
lists, market studies, business plans, improvements,
devices, know-how, discoveries, concepts and methods
related to the Proprietary Products;
iii. any and all information concerning the business
and affairs of RTT . . . , however documented; and
iv. any and all notes, analyses, compilations,
studies, summaries and other material containing or
based, in whole or in part, on any information included
in the foregoing of RTT (collectively, the
“Confidential Information”).
Selle, Muellenberg and Jimenez acknowledge that
such Confidential Information constitutes a unique and
valuable asset of RTT and represents a substantial
investment of time and expense by RTT, and that any
disclosure or other use of such Confidential
Information other than for the sole benefit of RTT
would be wrongful and would cause irreparable harm
to RTT. Selle, Muellenberg and Jimenez agree to
return all tangible and intangible embodiments (and all
copies) of such Confidential Information that are in
their possession and to destroy all intangible
embodiments (and all copies) of such Confidential
Information that are in their possession.
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b. For purposes of this Agreement, “Intellectual Property
Rights” means RTT’s:
i. rights in patents, patent applications and
patentable subject matter, whether or not the subject of
an application, of the Proprietary Products;
ii. rights in trademarks, service marks, trade
names, trade dress and other designators of origin,
registered or unregistered of the Proprietary Products;
iii. rights in copyrightable subject matter or
protectable designs, registered or unregistered of the
Proprietary Products;
iv. trade secrets related to the Proprietary Products;
v. rights in internet domain names, uniform
resource locators and e-mail addresses;
vi. know-how related to the Proprietary Products;
and
vii. all other intellectual and industrial property
rights of every kind and nature and however
designated, whether arising by operation of law,
contract, license or otherwise, involving the
Proprietary Products.
c. For purposes of this Settlement Agreement,
“Proprietary Products” shall mean RTT’s mobile
interpretation device, services and end-to-end operating
platform.
d. Selle, Muellenberg and Jimenez acknowledge that
RTT has required that Selle, Muellenberg and Jimenez make
the agreements in this [P]aragraph . . . as a condition of
RTT’s entry into this Agreement. Selle, Muellenberg and
Jimenez agree that the agreements contained in this
[p]aragraph . . . are reasonable and necessary to protect the
legitimate interests of RTT and that any violation or breach of
this [p]aragraph . . . will result in irreparable injury to RTT
for which no adequate remedy would exist at law.
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Accordingly, in addition to any relief at law that may be
available to RTT for such violation or breach and regardless
of any other provision contained in this Agreement, RTT will
be entitled to injunctive and other equitable relief restraining
such violation or breach.
....
f. Jimenez, Muellenberg and Selle represent, warrant and
covenant that to the best of their knowledge they, collectively
and in their individual capacity, have not knowingly or
intentionally, as of the date of the full execution of this
Settlement Agreement, disclosed any of RTT’s Confidential
Information as said term is defined herein except to legal
counsel and accounting professionals. . . .
(Emphases added.) The settlement agreement also includes a provision that requires the
parties to “refrain from publishing, disseminating or communicating to any third parties
disparaging comments about the other, or about any director, officer, employee or agent
of the parties.” The settlement agreement further provides for an award of attorney fees
to the prevailing party for breach of the agreement.
In late 2011, RTT learned that another company, i.wi, LLC (i.wi),2 was in the
process of developing a product nearly identical to RTT’s and that i.wi’s business plan
copied a large portion of RTT’s business plan. Selle, Jimenez, and Muellenberg are the
founders of i.wi, and Selle is the majority shareholder. Upon learning this, RTT brought
a breach-of-contract action against Jimenez, Muellenberg, Selle, and Selle’s management
2
In a posttrial order, the district court denied RTT’s motion to amend the complaint to
add Instant Wireless Interpretation, LLC (IWI) as a defendant. The district court denied
the motion, but the district court and the parties commonly refer to i.wi as IWI
throughout these proceedings.
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company.3 The only remedy RTT sought for breach of the settlement agreement was the
issuance of a permanent injunction against appellants, and attorney fees. The parties
stipulated before trial that the settlement agreement is unambiguous and fully integrated.
Muellenberg settled with RTT in 2013.
Following a bench trial at which the district court received lengthy testimonial and
a significant amount of documentary evidence concerning the parties’ roles and conduct
with regard to RTT’s and i.wi’s businesses, the district court ruled that appellants had
violated the settlement agreement. The district court concluded that Selle and Jimenez
breached both their obligations of confidentiality and nondisclosure, stating:
They breached the Agreement when they retained
confidential RTT documents on their computers after such
documents were supposed to have been returned or destroyed.
They breached the Agreement when they made use of some
of those documents in their efforts to set up a competing
business after April 2, 2010. They breached the Agreement
when they used confidential and proprietary information
learned through their association with RTT to create a
functionally identical device to market and sell through IWI,
including virtually identical marketing videos.
The district court permanently enjoined Selle and Jimenez from committing any further
breaches of the settlement agreement, ordered them to return or destroy all confidential
information held by them, prohibited them from further use of proprietary information,
and ruled that RTT was the prevailing party for purposes of an attorney fees award.
3
The complaint also included a deceptive trade practices claim that was later dismissed
by stipulation.
8
The district court denied appellants’ motion for a new trial and awarded RTT
attorney fees of $280,000, reduced from its claimed amount in excess of $425,000. This
appeal followed.
DECISION
The primary issue in this appeal is whether the district court erred in its
interpretation of the parties’ settlement agreement. “[T]he goal of contract interpretation
is to ascertain and enforce the intent of the parties.” RAM Mut. Ins. Co. v. Rohde, 820
N.W.2d 1, 14 (Minn. 2012) (quotation omitted).
This court reviews the district court’s interpretation of a
contract as a question of law subject to de novo review. A
clear and unambiguous contract is enforced in accordance
with the plain language of the contract; a reviewing court
considers parol evidence or matters outside of the contract
only when the contract terms are ambiguous.
Terminal Transp., Inc. v. Minnesota Ins. Guar. Ass’n, 862 N.W.2d 487, 489 (Minn. App.
2015) (citation omitted). The principles of contract law dictate that, if contract language
is subject to only one reasonable interpretation, that interpretation must apply. Seagate
Tech., LLC v. W. Dig. Corp., 854 N.W.2d 750, 761 (Minn. 2014). Further, a reviewing
court must read the terms of a contract in the context of the whole agreement, giving
effect to all of its terms. Kalenburg v. Klein, 847 N.W.2d 34, 40 (Minn. App. 2014).
The parties claim that the settlement agreement is unambiguous, and yet they each
urge a different reading of the agreement to determine whether the agreement applies to
the second-generation ELSA product. Respondent asserts that particular nondisclosure
provisions, as well as the broad language of the agreement overall, dictate that the ELSA
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should be included in the definition of proprietary property protected by the settlement
agreement. Appellants assert that the singular form of the word “device” in the definition
of “proprietary products” references only the Pro-1 product, and that the ELSA should
not be included in the agreement.
Appellants’ argument depends on the meaning given to the definition of RTT’s
proprietary products. The relevant provision states that “[f]or purposes of this Settlement
Agreement, ‘Proprietary Products’ shall mean RTT’s mobile interpretation device,
services and end-to-end operating platform.” Appellants assert that the district court
erred by finding that “RTT’s mobile interpretation device” includes both the Pro-1 and
the ELSA because this interpretation does not give effect to the singular form of the word
“device.” They also argue that, consistent with the testimony of Selle, Howerton, and
David Ladner (RTT’s CEO after Selle left the company), the use of “device” in the
settlement agreement could refer only to the Pro-1 because the ELSA was not officially
released until 15 months after Selle’s departure from RTT.
While appellants ’urged interpretation of “device” seems reasonable in a
grammatical sense and when read in isolation, it does not comport with many other
specific provisions of the settlement agreement and contradicts the overall broad
language and spirit of the settlement agreement. Further, other provisions of the
settlement agreement refer to “devices” rather than “device,” and the agreement is replete
with references to “proprietary products,” which is contrary to appellants’ argument that
RTT made only one “product” at the time that Selle and RTT entered into the settlement
agreement. The word “device” can only be reasonably interpreted to represent both the
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Pro-1 and the ELSA models—the ELSA “device” is an enhanced version of the Pro-1
“device.”
This interpretation is consistent with other provisions that provide very broad
protection for RTT’s property, including, for example, nondisclosure provisions that
apply to “past, current and planned research and development,” and “concepts and
methods related to the Proprietary Products.” Numerous other provisions such as these
would have no effect if the ELSA was not included within the definition of proprietary
products. When read as a whole, the settlement agreement unambiguously supports the
district court’s interpretation of “device” to include the ELSA as well as the Pro-1. See
Seagate Tech., LLC, 854 N.W.2d at 761 (requiring contract to be given a particular
interpretation, if only that interpretation is reasonable); Kalenburg, 847 N.W.2d at 40
(requiring contract to be interpreted in the context of the whole agreement, giving effect
to all of its terms).
The district court’s numerous and detailed factual findings, which are not
challenged by appellants, also clearly establish that Selle was aware of the development
of the ELSA long before he left RTT. Selle’s final break from the company did not occur
until 2010, but RTT’s production focus shifted to the ELSA in 2009. Appellants also
downloaded and retained hundreds of pages of RTT documents and other information
pertaining to every facet of RTT’s business; forwarded some of those documents to
others who joined Selle in establishing i.wi; used ideas, frameworks, concepts, and
sometimes identical language or video recordings in contacts with other entities,
including vendors and investors; and even claimed to potential investors that i.wi
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“acquired the value of RTT’s intellectual property” by “capitaliz[ing] on their knowledge
of RTT’s proprietary information as an asset of IWI.” These actions demonstrate clear
violations of the settlement agreement.
Because the settlement is not ambiguous, the district court did not err by denying
appellants’ new-trial motion to permit the parties to offer evidence of their intent
regarding the settlement agreement. The only procedural ground for granting the motion
would be for “[e]rrors of law occurring at trial.” Minn. R. Civ. P. 59.01(f). The district
court did not err by upholding appellants’ stipulation that the contract was the sole
evidence to be used by the court to interpret the contract. See Lichterman v. Laundry &
Dry Cleaning Drivers Union, Local No. 131, 204 Minn. 75, 79, 283 N.W. 752, 752
(1939) (rejecting petition for rehearing in labor dispute and enforcing stipulation that case
did not present a constitutional issue, stating that the “stipulation is controlling, and so
narrows the issue that no constitutional question was presented”); Warren v. Great N.
Ry., 64 Minn. 239, 241, 66 N.W. 984, 986 (1896) (stating that when railway stipulated to
damages from accident and evidence at trial did not support stipulated amount,
“[d]efendant is not in a position to assail its own stipulation, and the order appealed from
must be affirmed”).
Finally, respondent moved to strike portions of appellants’ principal brief as
pertaining to matters outside the record on appeal. See Minn. R. Civ. App. P. 110.01
(“The documents filed in the trial court, the exhibits, and the transcript of the
proceedings, if any, shall constitute the record on appeal in all cases.”). Because we did
not consider or rely on the challenged materials in reaching our decision, we deny the
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motion as moot. See Drewitz v. Motorwerks, Inc., 728 N.W.2d 231, 233 n.2 (Minn.
2007) (denying motion to strike as moot when court did not rely on challenged
materials).
Affirmed; motion denied.
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