Hoover Panel Systems, Inc. v. HAT Contract, Incorp

Case: 19-10650 Document: 00515456381 Page: 1 Date Filed: 06/17/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 19-10650 June 17, 2020
Lyle W. Cayce
HOOVER PANEL SYSTEMS, INCORPORATED, Clerk
Plaintiff – Appellant,
v.
HAT CONTRACT, INCORPORATED,
Defendant – Appellee.
************************************************************************
Consolidated with 19-10702
HOOVER PANEL SYSTEMS, INCORPORATED,
Plaintiff – Appellee,
v.
HAT CONTRACT, INCORPORATED,
Defendant – Appellant.
Appeals from the United States District Court
for the Northern District of Texas
USDC No. 3:17-CV-3283
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Before ELROD, SOUTHWICK, and HAYNES, Circuit Judges.
PER CURIAM:*
This appeal arises out of a dispute between Hoover Panel Systems, Inc.
and HAT Contract, Inc. involving the development of a power beam for desks.
Hoover claims that once the development of a prototype was complete, HAT
sold the prototype to other manufacturers. Hoover sued HAT, claiming breach
of contract, breach of oral contract, trade secret misappropriation, and a
variety of quasi-contract claims. HAT moved for summary judgment on
Hoover’s breach of contract claim and alternatively asserted the defenses of
waiver and ratification. HAT also moved for summary judgment on Hoover’s
oral contract, trade secret misappropriation, and quasi-contract claims. The
district court granted HAT’s motion for summary judgment on each of Hoover’s
claims and now Hoover appeals. We reverse the district court’s grant of
summary judgment on Hoover’s breach of contract claim, on HAT’s alternative
arguments of waiver and ratification, and on the trade secret misappropriation
claim. We affirm the district court’s grant of summary judgment on Hoover’s
breach of oral contract and quasi-contract claims.
HAT separately appeals the district court’s order denying its bad faith
counterclaim against Hoover. We affirm the district court’s judgment on HAT’s
untimely counterclaim.
I.
In 2014, HAT approached Hoover, a product developer, about
manufacturing and developing a power beam for desks “in an open-office
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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environment” for HAT to sell. Hoover was initially hesitant to design a product
with HAT because HAT had a history of using overseas manufacturers.
Nonetheless, after HAT guaranteed Hoover that it would not have someone
else copy and make the product, both parties signed and executed a
confidentiality agreement. The pertinent part of the agreement reads as
follows:
Both parties agree that all information disclosed to the other party,
such as inventions, improvements, know-how, patent applications,
specifications, drawings, sample products or
prototypes,[]engineering data, processes, flow diagrams, software
source code, business plans, product plans, customer lists, investor
lists, and any other proprietary information shall be considered
confidential and shall be retained in confidence by the other party.
1. Both parties agree to keep in confidence and not use for its or
others benefit all information disclosed by the other party, which
the disclosing party indicates is confidential or proprietary or
marked with words of similar import (hereinafter
INFORMATION). Such INFORMATION shall include
information disclosed orally, which is reduced to writing within
five (5) days of such oral disclosure and is marked as being
confidential or proprietary or marked with words of similar import.
After both parties executed and signed the confidentiality agreement,
Hoover then developed a prototype of the product. During the development
phase, Hoover suggested that HAT should use an existing “foot,” or base for
the prototype, and HAT suggested that a local metal shop could develop a foot
in accordance with the prototype’s needs. Later, “multiple dealers” provided
feedback to Hoover and HAT about the then-existing prototype of the product.
Hoover also supplied third parties with drawings and “showroom samples.” At
no point during the development of the prototype did Hoover mark any
information as confidential.
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After Hoover completed the development of the prototype and forwarded
it to HAT for approval, HAT approved the prototype and placed several orders
with Hoover. Later, after a much smaller number of orders than Hoover
expected, HAT stopped placing orders for the product. Hoover eventually
learned that HAT sent the prototype to an overseas manufacturer and started
using it to manufacture products that were similar to the products Hoover
manufactured. Hoover also discovered that several overseas companies used
the prototype to market to other consumers.
Hoover sued HAT in state court, and HAT removed the case to the
federal district court on diversity grounds. Hoover then filed its second
amended complaint, declaring breach of contract, trade secret
misappropriation, promissory estoppel, quantum meruit, and unjust
enrichment. HAT filed a motion for summary judgment on all of Hoover’s
claims. The district court granted HAT’s motion for summary judgment,
thereby dismissing all of Hoover’s claims against HAT.
II.
We turn first to Hoover’s appeal. Hoover contests the district court’s
grant of summary judgment on its breach of contract claim and HAT’s waiver
and ratification claim. Hoover also appeals the grant of summary judgment on
its breach of oral contract, trade secret misappropriation, promissory estoppel,
quantum meruit, and unjust enrichment claims. We address each issue in
turn.
We review a grant of summary judgment de novo. Apache Corp. v. W & T
Offshore, Inc., 626 F.3d 789, 793 (5th Cir. 2010). A grant of summary judgment
is proper “if the pleadings, the discovery and disclosure materials on file, and
any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” Id.
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A.
We first determine whether the district court erred in granting HAT’s
motion for summary judgment on Hoover’s breach of contract claim. Hoover
and HAT do not dispute that a valid written contract exists. However, both
parties dispute its meaning. The dispute surrounds whether Hoover was
required to label the information it wanted to keep confidential or whether
shared information, specifically the prototype, was to be kept confidential
under the agreement, even without a confidentiality marking. Essentially,
Hoover and HAT dispute the correct meaning of the following portion of the
written confidentiality agreement:
Both parties agree that all information disclosed to the other party,
such as inventions, improvements, know-how, patent applications,
specifications, drawings, sample products or
prototypes,[]engineering data, processes, flow diagrams, software
source code, business plans, product plans, customer lists, investor
lists, and any other proprietary information shall be considered
confidential and shall be retained in confidence by the other party.
1. Both parties agree to keep in confidence and not use for its or
others benefit all information disclosed by the other party, which
the disclosing party indicates is confidential or proprietary or
marked with words of similar import (hereinafter
INFORMATION). Such INFORMATION shall include
information disclosed orally, which is reduced to writing within
five (5) days of such oral disclosure and is marked as being
confidential or proprietary or marked with words of similar import.
The district court did not address the agreement’s opening paragraph,
but it concluded that the contract required Hoover to mark any confidential
information as such for it to be considered confidential under the agreement.
And, as “[i]t is undisputed that [Hoover] failed to [designate any items or
information as confidential] and as a result, failed to perform its condition
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precedent to [HAT’s] performance,” the district court granted HAT’s motion for
summary judgment on Hoover’s breach of contract claim.
On appeal, Hoover argues that the contract required the parties to
maintain the confidentiality of Hoover’s prototype regardless of whether it was
marked. Hoover contends that the district court’s interpretation did not
consider the entire agreement and rendered the opening paragraph
meaningless. Conversely, HAT claims that the district court’s interpretation
was correct. HAT argues that Hoover’s interpretation renders the first
numbered paragraph meaningless because there would be no need for the
explicit instructions for labeling in the first numbered paragraph if the opening
paragraph automatically considered certain items confidential.
Here, we conclude that summary judgment was improper for two
reasons. First, the effect of the summary judgment is to render the opening
paragraph of the contract meaningless, contrary to contract interpretation
tools. And second, summary judgment is not appropriate where, as here,
multiple permissible interpretations exist. Gonzalez v. Denning, 394 F.3d 388,
392 (5th Cir. 2004).
Both parties agree that the substantive law of Texas applies to this
dispute. See Preston Expl. Co., v. GSF, L.L.C., 669 F.3d 518, 522 (5th Cir. 2012)
(citing Erie R.R. v. Tompkins, 304 U.S. 64, 78–79 (1938)). Under Texas law,
our primary concern in interpreting a contract “is to ascertain the true
intentions of the parties as expressed in the instrument.” Coker v. Coker, 650
S.W.2d 391, 393 (Tex. 1983). Courts, in accomplishing this objective, “should
examine and consider the entire writing in an effort to harmonize and give
effect to all the provisions of the contract so that none will be rendered
meaningless.” Id. “[A]ll the provisions must be considered with reference to the
whole instrument,” and earlier terms must be favored over subsequent terms.
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Id. If a contract has conflicting provisions, “the specific trumps the general.”
Transitional Learning Cmty. v. U.S. Office of Personnel Mgmt., 220 F.3d 427,
432 (5th Cir. 2000) (quoting Millgard Corp. v. McKee/Mays, 49 F.3d 1070, 1073
(5th Cir. 1995)).
Applying these and other relevant contract interpretation rules
demonstrates that summary judgment is improper as multiple plausible
interpretations exist. See e.g., Coker, 650 S.W.2d at 393 (“[T]erms stated
earlier in an agreement must be favored over subsequent terms.”);
Transitional Learning Cmty., 220 F.3d at 432 (“[W]hen two provisions of a
contract conflict, the specific trumps the general.” (quoting Millgard, 49 F.3d
at 1073)).
Moreover, the district court erred in granting summary judgment on the
breach of contract claim because multiple plausible interpretations exist.
When a contract interpretation question is raised on summary judgment, a
material fact issue concerning the parties’ intent precludes summary judgment
“when there is a choice of reasonable interpretations of the contract.” Gonzalez,
394 F.3d at 392 (quoting Amoco Prod. Co. v. Texas Meridian Resources Explor.
Inc., 180 F.3d 664, 669 (5th Cir. 1999)); see S. Nat. Gas Co. v. Pursue Energy,
781 F.2d 1079, 1081 (5th Cir. 1986). “[A] contract is ambiguous . . . when the
application of the applicable rules of interpretation . . . leave it genuinely
uncertain which one of the two meanings is the proper meaning.” Instone
Travel Tech Marine & Offshore v. Int’l Shipping Partners, Inc., 334 F.3d 423,
431 (5th Cir. 2003) (quoting R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc,
596 S.W.2d 517, 519 (Tex. 1980)).
Here, the tension between the opening and first numbered paragraph
“leave[s] it genuinely uncertain” what the contract means. Id. (quoting R & P
Enters., 596 S.W.2d at 519)). Several plausible interpretations exist. For
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instance, Hoover reads the opening paragraph to apply to the prototype, the
primary property the confidentiality agreement was entered into to protect.
Hoover argues that the first numbered paragraph applied to other information
and communications that were not obviously confidential under the opening
paragraph.
In contrast, HAT reads the opening paragraph to speak generally about
the content of the agreement, and the first numbered paragraph to provide the
specific instructions needed to put the confidentiality agreement into effect.
There are additional possible interpretations. One such interpretation is
that under the agreement, proprietary information is automatically
confidential while all other information must be marked. The opening
paragraph states that “proprietary material shall be considered confidential,”
and in the first numbered paragraph, “all information . . . which the disclosing
party indicates is confidential or proprietary or marked with words of similar
import” is considered confidential. Another plausible reading is that the
opening paragraph provides the scope for all information that is confidential
while the first numbered paragraph functions as a housekeeping paragraph,
providing instruction on how to mark information as confidential, but not
requiring labeling as a condition precedent.
Here, “there is a choice of reasonable interpretations of the contract.”
Gonzalez, 394 F.3d at 392. This ambiguity precludes summary judgment. See
Instone Travel Tech, 334 F.3d at 431. Accordingly, we reverse the district
court’s grant of summary judgment on Hoover’s breach of contract claim and
remand for further proceedings.
B.
The district court also granted summary judgment to HAT on the
alternative ground that Hoover waived and ratified any alleged breach. We
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conclude that this was in error and reverse because disputed material facts
remain.
HAT argues that Hoover waived its right to enforce the agreement and
ratified HAT’s conduct because Hoover suggested that HAT send the sample
to a third party, that Hoover was contemporaneously aware that third parties
saw versions of the sample throughout the development phase, and that
Hoover supplied third parties with drawings and “showroom samples.”
Hoover argues that a fact question exists precluding HAT from
conclusively establishing either waiver or ratification. Specifically, Hoover
contends that HAT never told Hoover that it was sending the prototype to any
third-party manufacturers and that Hoover never authorized HAT to do so.
Hoover argues that its suggestion to HAT to use an existing base for the
prototype does not mean that Hoover knew that HAT would send the prototype
to an overseas competitor. Hoover claims that HAT did not seek advance
permission to send the prototype to other companies and that HAT never told
Hoover the full extent to which it had shared the prototype.
Under Texas law, waiver is the “intentional relinquishment of a known
right or intentional conduct inconsistent with claiming that right.” Addicks
Servs., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286, 298 (5th Cir. 2010) (quoting
Sun Expl. & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987)). “[A]n obligee
may waive the obligor’s requirement for strict compliance with the terms of a
contract if the obligee expressly or impliedly assents to the obligor’s
nonconforming conduct.” Id. (quoting Fairfield Fin. Grp., Inc. v. Gawerc, 814
S.W.2d 204, 209 (Tex. App.—Houston [1st Dist.] 1991, no writ)). If a litigant
wants to demonstrate implied waiver, the litigant must “clear a high threshold
by clearly demonstrating the other party’s intent to relinquish a right.” Id. at
299. The facts are in dispute as to whether HAT told Hoover it was sending the
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prototype to overseas competitors and whether Hoover authorized HAT to do
so.
Likewise, a material fact issue exists with the ratification claim.
Ratification, under Texas law, “is the adoption or confirmation by a person with
knowledge of all material facts of a prior act which did not then legally bind
him and which he had the right to repudiate.” R & L Inv. Prop., L.L.C. v.
Hamm, 715 F.3d 145, 149 (5th Cir. 2013) (quoting Fortune Prod. Co. v. Conoco
Inc., 52 S.W.3d 671, 678 (Tex. 2000)). As the movant, HAT bears the burden of
proof and “must establish beyond peradventure all of the essential elements of
the . . . defense to warrant judgment in his favor.” Chaplin v. NationsCredit
Corp., 307 F.3d 368, 372 (5th Cir. 2002) (quoting Fontenot v. Upjohn Co., 780
F.2d 1190, 1194 (5th Cir. 1986)). Here, a factual dispute exists as to whether
Hoover was told about the full extent of HAT’s actions. It is therefore unclear
whether Hoover was made aware of all material facts when it allegedly ratified
HAT’s conduct.
Viewing the facts and evidence in the light most favorable to the non-
movant, HAT did not establish beyond peradventure all of the essential
elements of waiver or ratification. See Chaplin, 307 F.3d at 372. Accordingly,
we reverse the district court’s grant of summary judgment on HAT’s
alternative arguments of waiver and ratification.
C.
We next address the issue of whether the district court erred in granting
summary judgment on Hoover’s oral contract claim. Hoover’s oral contract
claim arises from HAT’s alleged oral guarantee that it would not have an
overseas competitor copy and manufacture the product. On appeal, Hoover
argues that the district court improperly granted summary judgment to HAT
on this claim. HAT argues that Hoover’s oral contract claim fails because
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Hoover did not plead the requisite elements of contract formation and because
the written agreement addresses the same subject matter as the alleged oral
agreement.
Under Texas law, a party must establish contract formation by proving
“an offer and acceptance and a meeting of the minds on all essential terms.”
Ibe v. Jones, 836 F.3d 516, 524 (5th Cir. 2016) (quoting Principal Life Ins. v.
Revalen Dev., LLC, 358 S.W.3d 451, 454–55 (Tex. App.—Dallas 2012, pet.
denied)). In this case, the alleged oral contract is based on HAT’s promise not
to take Hoover’s product and have it copied and manufactured overseas.
Hoover never responded to HAT’s offer and never followed through on that
proposal. Hoover also rejected HAT’s offer related to exclusivity. Hoover has
not sufficiently established that acceptance of the oral contract occurred.
Furthermore, even assuming that an oral contract between Hoover and
HAT had been formed, the oral contract would fail because of the doctrine of
merger. “[A] written contract is presumed to embody the entire agreement
between the parties,” N.K. Parrish, Inc. v. S.W. Beef Indus. Corp., 638 F.2d
1366, 1368–69 (5th Cir. Mar. 1981), and under the doctrine of merger, the prior
negotiations and alleged oral promises between the parties will, therefore, be
“merged into [the] written contract,” Harville Rose Serv. v. Kellogg Co., 448
F.2d 1346, 1349 (5th Cir. 1971). In this case, both the written agreement and
the alleged oral promise cover the confidentiality concerns of the parties.
Specifically, both the written and oral contracts limit HAT’s ability to use other
manufacturers. Given that the alleged oral promise was made before or
contemporaneous with entering into the written agreement, the doctrine of
merger presumes that the parties reduced the alleged oral contract into the
written agreement. See Harville, 448 F.2d at 1349. Therefore, Hoover’s oral
contract claim must fail.
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Accordingly, we affirm the district court’s grant of summary judgment
on the breach of oral contract claim.
D.
Next, we address whether the district court erred in granting summary
judgment on Hoover’s misappropriation of trade secrets claim. Hoover alleges
that HAT misappropriated its trade secret by providing the prototype to a third
party.
Under Texas law, a claimant must establish the following to prove trade
secret misappropriation: “(a) a trade secret existed; (b) the trade secret was
acquired through a breach of a confidential relationship or discovered by
improper means; and (c) use of the trade secret without authorization from the
plaintiff.” Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 600 (5th Cir.
2015) (quoting Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 874 (5th Cir.
2013)). Discovery by “improper means” includes “theft, fraud, unauthorized
interception of communications, inducement of or knowing participation in a
breach of confidence, and other means either wrongful in themselves or
wrongful under the circumstances of the case.” Wellogix, 716 F.3d at 876
(quoting Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 636 (Tex.
App.—Fort Worth 2007, pet. denied)).
The district court granted HAT’s motion for summary judgment on this
claim. Because Hoover volitionally sent HAT the alleged trade secret without
HAT engaging in improper or unlawful activity, the district court reasoned
that Hoover could not establish the second prong of trade secret
misappropriation. But Hoover argues that its misappropriation of trade secrets
claim is not negated by the fact that it voluntarily shipped the prototype to
HAT because the written agreement required HAT to maintain its
confidentiality.
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We reverse the district court’s grant of summary judgment and remand
for further findings on this question. We disagree with the conclusion that
simply because Hoover willingly shipped the prototype to HAT, it would be
impossible for Hoover to establish that HAT acquired the trade secret through
improper means. As a “breach of a duty to maintain secrecy” is a way of
establishing improper means, Hoover’s allegation that HAT breached the
confidentiality agreement creates a factual issue as to whether HAT
misappropriated Hoover’s alleged trade secret. See Graduate Med. Educ. Dev.,
LLC v. St. George’s Univ., Ltd., No. H-15-2641, 2016 WL 5844707 (S.D. Tex.
Oct. 6, 2016) (explaining that a “breach of a duty to maintain secrecy is
sufficient to show trade secret misappropriation”); see also Wellogix, 716 F.3d
at 876 (holding sufficient evidence of improper acquisition existed when parties
entered into confidential agreements that gave the offending party access to
the alleged trade secret materials).
Accordingly, we reverse the grant of summary judgment on Hoover’s
misappropriation of trade secrets claim and remand to the district court.
E.
Next, we determine whether the district court erred in granting
summary judgment on Hoover’s quasi-contract claims, including promissory
estoppel, quantum meruit, and unjust enrichment. 1 In this case, Hoover bases
1 Promissory estoppel requires the following elements: “(1) a promise, (2) foreseeability
of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his
detriment.” English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983).
Under quantum meruit, a claimant must prove the following elements: (1) “valuable
services were rendered or materials furnished;” (2) “for the person sought to be charged;”
(3) “which services and materials were accepted by the person sought to be charged, used and
enjoyed by him;” (4) “under such circumstances as reasonably notified the person sought to
be charged that the plaintiff in performing such services was expecting to be paid by the
person sought to be charged.” Vortt Expl. Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944
(Tex. 1990)
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its quasi-contract claims on HAT’s alleged oral promise not to take Hoover’s
systems, prototypes, or designs and manufacture them abroad. On appeal,
HAT contends that Hoover’s quasi-contract claims fail because they cover the
same subject matter as the written confidentiality agreement. Hoover
disagrees and claims that it can plead its quasi-contract claims in the
alternative. We affirm the district court’s grant of summary judgment on
Hoover’s quasi-contract claims because a valid contract covers the subject
matter of Hoover and HAT’s dispute.
Generally, a party may not recover under a quasi-contract theory “when
a valid, express contract covers the subject matter of the parties’ dispute.”
Fortune Prod. Co., 52 S.W.3d at 684. Similarly, recovery under an equitable
theory is generally inconsistent when a valid agreement already addresses the
matter. Id.
Here, the parties do not dispute that a valid written contract exists and
that Hoover’s equitable theories of recovery concern the same subject matter
as the written confidentiality agreement. Accordingly, we affirm.
III.
Finally, we address HAT’s appeal. HAT appeals the district court’s order
declining consideration of HAT’s bad faith counterclaim because it was
untimely. Because the district court did not abuse its discretion in denying
consideration of HAT’s bad faith counterclaim, we affirm.
Under unjust enrichment, a party may recover “when one person has obtained a
benefit from another by fraud, duress, or the taking of an undue advantage.” Heldenfels Bros.
v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992)).
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During the discovery period, HAT took the deposition of a corporate
representative, Alex Hoover, on February 7, 2019. On March 28, 2019, HAT
received a finalized and signed transcript from Alex Hoover’s deposition.
On April 18, 2019, HAT then requested leave to file a second amended
answer after the amendment deadline had passed on April 16, 2019, seeking
to assert the affirmative defenses of waiver and ratification and a counterclaim
of bad faith. The district court originally denied HAT’s motion for leave to file
a second amended answer in all aspects because it was too close to the trial
date. However, on May 8, 2019, the district court sua sponte reconsidered
HAT’s motion for leave to file a second amended answer and granted HAT’s
motion for leave.
On May 10, 2019, when the only live claim was HAT’s bad faith
counterclaim, the district court issued an order that amended its May 8 order
and clarified that it would not consider HAT’s bad faith counterclaim because
it was untimely.
We review a district court’s denial of a motion to amend for abuse of
discretion. Crostley v. Lamar County, 717 F.3d 410, 420 (5th Cir. 2013). A
district court may grant leave to amend after the deadline has passed only
“upon a showing of good cause.” S&W Enters., L.L.C. v. SouthTrust Bank of
Ala., NA, 315 F.3d 533, 535 (5th Cir. 2003) (quoting Fed. R. Civ. P. 16(b)).
Under the good cause standard, the party seeking relief must show “that the
deadlines cannot reasonably be met despite the diligence of the party needing
the extension.” Id. (quoting 6A Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1522.1 (2d ed. 1990)). District courts have
broad discretion in granting or denying leave to amend. See id.
HAT claims, among other things, that it could not reasonably meet the
April 16, 2019 pleadings deadline because its bad faith counterclaim came to
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light only after it took the deposition of Alex Hoover on February 7, 2019. HAT
argues that because it filed its motion for leave to amend only two months
thereafter, it was not untimely. But, HAT did not take Alex Hoover’s deposition
until almost a year after the pleadings deadline had passed, and it waited for
two months after the deposition to file its motion to amend.
The district court was well within its discretion in determining that
HAT’s bad faith counterclaim would disrupt “the integrity and purpose of the
pretrial order” by being untimely. S&W Enters., 315 F.3d at 535. We affirm the
district court’s judgment as to HAT’s bad faith counterclaim.
IV.
For the foregoing reasons, we REVERSE the district court’s grant of
summary judgment on Hoover’s breach of contract claim, HAT’s waiver and
ratification defense, and Hoover’s trade secret misappropriation claim. We
REMAND those issues to the district court. We AFFIRM the district court’s
judgment on Hoover’s oral contract and quasi-contract claims. And we
AFFIRM the district court’s judgment on HAT’s bad faith counterclaim.
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