Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-01519/USCOURTS-azd-2_05-cv-01519-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 In its motion for summary judgement, Océ requested oral

argument on this matter. Motion (doc. 19). Finding oral argument

unnecessary, the Court shall deny this request.

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

PageMasters, Inc., )

)

Plaintiff, ) No. CIV 05-1519-PHX RCB

)

vs. ) O R D E R

)

Océ-Technologies B.V., )

)

Defendant. ) )

On October 12, 2005, Defendant Océ-Technologies B.V. ("Océ")

filed a motion for summary judgment in this matter. Motion (doc.

19).1 Plaintiff PageMasters, Inc. ("PageMasters") entered their

response to Océ's summary judgment motion on December 7, 2005.

Resp. (doc. 27). In addition, PageMasters filed a cross-motion for

summary judgment. Cross-Motion (doc. 27). These motions were

fully briefed on February 7, 2006, and this Court, having reviewed

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 1 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 On February 22, 2006, Océ filed a motion requesting leave to

file a surreply in this matter. Mot. for Leave (doc. 32).

Specifically, Océ asserts that a surreply is necessary, because, in

its reply in support of its cross-motion for summary judgment,

PageMasters "misstates certain facts and introduces a new argument

for the first time[.]" Id. at 2. PageMasters opposes Océ's motion

and asks the Court to deny Océ's request for leave to file a

surreply. Resp. Surreply (doc. 33).

The Court sees no reason to extend briefing beyond that

contemplated in the federal rules and local rules governing civil

procedure. Any arguments initially raised in a reply shall not be

considered. Thus, no further briefing is necessary or permitted and

Océ's motion for leave to file a surreply shall be denied.

3 The Court notes that since the closing of the Asset Purchase

Agreement, Buzzsaw merged with Autodesk, Inc.

- 2 -

the record in this case, now rules. P. Reply (doc. 31).2

I. Undisputed Facts

On January 10, 1997, Océ and PageMasters entered into a

Software OEM Distribution Agreement ("Distribution Agreement").

PSOF (doc. 26) at ¶ 1. This agreement granted Océ the exclusive

right to reproduce, market and distribute the "Apprentice" software

product. Id. at ¶¶ 2, 3. In return, Océ agreed to pay PageMasters

royalties for each copy of "Apprentice" that it shipped and grant

PageMasters the right to inspect and audit Océ's shipping records.

Id. at ¶¶ 4, 5.

Three years after the Distribution Agreement, PageMasters

entered into an Asset Purchase Agreement with Buzzsaw.com, Inc.

("Buzzsaw").3 Id. at ¶ 9. In this agreement, PageMasters sold

substantially all of its assets to Buzzsaw, including the

Distribution Agreement. Id. at ¶¶ 9-11. Although Océ was not a

party to the Asset Purchase Agreement, it did grant its consent to

the assignment, as was required under the Distribution Agreement.

Id. at ¶ 9.

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 2 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

Sometime after the finalization of the Asset Purchase

Agreement, PageMasters requested an audit of Océ's records

believing that Océ owed them outstanding royalty payments. PSOF

(doc. 26) at ¶ 26. PageMasters claimed that they discovered a

discrepancy between the number of systems it supplied to Océ and

the number of systems for which they received payment. Id. at ¶

25. While Océ agreed to a limited audit by PageMasters, a dispute

arose concerning the scope of the review. Id. at ¶ 30. 

After extensive discussion between the parties concerning

Océ's licensing records and PageMasters' rights to such

information, PageMasters commenced an arbitration proceeding

against Océ. Id. at ¶ 44. In response, Océ filed in this court a

complaint and a motion for a preliminary injunction and stay of

arbitration. Océ-Technologies B.V. v. PageMasters, Inc., No. CIV

04-0557 PHX RCB, Complt. & Motion (docs. 1, 3). Thereafter, the

parties entered into a stipulation proposing that the Court decide

this matter on a motion for summary judgment. Océ-Technologies

B.V. v. PageMasters, Inc., No. CIV 04-0557 PHX RCB, Order (doc.

18). 

On October 25, 2004, the Court found in favor of Océ and

granted its motion for summary judgment. Order, No. CIV 04-0557

PHX RCB (doc. 35). Specifically, the Court determined that,

through the Asset Purchase Agreement, PageMasters assigned all of

its rights under the Distribution Agreement, including its right to

arbitration, to Buzzsaw. Id. However, the Court did not rule upon

whether PageMasters retained the right to audit Océ, because "[t]he

issue of PageMasters' right to audit [was] not currently before

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 3 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4 In its current motion for summary judgement, Océ focuses much

of its argument around language the Court used in its prior order

regarding PageMasters' asserted right to audit. Motion (doc. 19) at

6. However, as stated in that same order, the Court did not consider

the issue of PageMasters' right to audit and expressly noted that the

scope of the dispute at that time was limited to the question of

PageMasters' right to arbitration. Océ-Technologies B.V. v.

PageMasters, Inc., No. CIV 04-0557 PHX RCB, Order (doc. 35) at 5,

n.4. 

- 4 -

this Court." Id. at 5, n.4.4

Thus, on November 1, 2004, PageMasters filed the present

action in the Superior Court of Arizona, seeking a declaratory

judgment holding that PageMasters is entitled to audit Océ's books

and records, and that Océ is required to cooperate with the audit. 

Resp. & Cross-Motion (doc. 27) at 2. PageMasters also requests a

judgment for the amount of accounts receivable due and owed by Océ

to PageMasters, any accrued interest on such amount, and its

attorneys' fees and costs. Id. On May 23, 2005, Océ removed the

action to the United States District Court in the District of

Arizona. Notice (doc. 1). This action is based on the same

contracts that were at issue in the prior case that was before this

court. Motion (doc. 19) at 1.

II. Summary Judgment Standard

To grant summary judgment, the Court must determine that the

record before it contains "no genuine issue as to any material

fact" and, thus, "that the moving party is entitled to judgment as

a matter of law." Fed.R.Civ.P. 56(c). In determining whether to

grant summary judgment, the Court will view the facts and

inferences from these facts in the light most favorable to the

nonmoving party. See Matsushita Elec. Co. v. Zenith Radio Corp.,

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 4 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

475 U.S. 574, 587 (1986).

The mere existence of some alleged factual dispute between the

parties will not defeat an otherwise properly supported motion for

summary judgment; the requirement is that there be no genuine issue

of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 247-48 (1986). A material fact is any factual dispute that

might affect the outcome of the case under the governing

substantive law. Id. at 248. A factual dispute is genuine if the

evidence is such that a reasonable jury could resolve the dispute

in favor of the nonmoving party. Id. 

A party opposing a motion for summary judgment cannot rest

upon mere allegations or denials in the pleadings or papers, but

instead must set forth specific facts demonstrating a genuine issue

for trial. See id. at 250. Finally, if the nonmoving party's

evidence is merely colorable or is not significantly probative, a

court may grant summary judgment. See, e.g., California

Architectural Build. Prods., Inc. v. Franciscan Ceramics, 818 F.2d

1466, 1468 (9th Cir. 1987).

III. Analysis

In determining whether summary judgment is appropriate in this

case, the main issue that must be analyzed is whether there exists

a contractual agreement between Océ and PageMasters that grants

PageMasters the right to audit and collect royalties from Océ. The

parties do not dispute the fact that they entered into the

Distribution Agreement according to the previously described terms. 

In addition, the parties both concede that PageMasters entered into

the Asset Purchase Agreement that assigned essentially all of

PageMasters' assets, including the Distribution Agreement, to

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 5 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

Buzzsaw. The issue the parties dispute is whether PageMasters, in

the Asset Purchase Agreement, reserved a right to audit Océ or

assigned such a right away to Buzzsaw. Océ asserts that summary

judgment should be granted in its favor because, under the Asset

Purchase Agreement, PageMasters lacks standing to bring its claims

and, in any event, its claims are time barred. Motion (doc. 19) at

4-11.

a. Contract Language of the Asset Purchase Agreement

Océ asserts that summary judgment should be granted in its

favor, because PageMasters lacks standing to pursue this action. 

Motion (doc. 19) at 4. Noting this Court's orders from the prior

case and the contract language included in the Asset Purchase

Agreement, Océ argues that "PageMasters transferred all of its

rights under the Distribution Agreement to Buzzsaw,...[and, thus,]

lacks standing to proceed with an action against Océ under the

Distribution Agreement to conduct an audit and to recover

damages[.]" Id. at 5. 

In the case at bar, the Asset Purchase Agreement is governed

by California law. Exbt. 2 (doc. 20) at § 8.16. Consequently, it

must be analyzed under California law to determine how PageMasters'

transfer of the Distribution Agreement affected their right to

audit or collect royalties from Océ.

Under California law, a court must use the language of a

contract to govern its interpretation as long as the language is

"clear and explicit." CAL. CIV. CODE, § 1638 (2006). When

interpreting the meaning of contract language, a court must enforce

"the outward expression of the agreement, rather than a party's

unexpressed intention[.]" Winet v. Price, 6 Cal.Rptr.2d 554, 558

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 6 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

(4th Dist.1992). 

Specifically pertaining to assignments, California law holds

that an assignor "may not maintain an action upon a claim after

making an absolute assignment of it to another." McCown v.

Spencer, 8 Cal.App.3d 216, 225 (2nd Dist.1970). What constitutes

an "absolute assignment" was further defined in Botsford v. Haskins

& Sells, 146 Cal.Rptr. 752 (1st Dist.1978). In Botsford, the court

reviewed an agreement where a trustor assigned "all of its right,

title and interest" in certain assets to a trustee. Id. at 783.

The court held that such contractual language, without a listed

remainder or reservation, indicates an absolute assignment. Id.

Therefore, all of the assignor's rights and interests, including

causes of actions and rights to sue, were relinquished to the

assignee. Id. at 783-84.

Here, the text of the Asset Purchase Agreement states at least

three times that PageMasters intended to assign "all" agreements,

rights and obligations created under the Distribution Agreement to

Buzzsaw. Exbt. 2 (doc. 20) at §§ 1.1 and 5.16. PageMasters argues

that despite their use of such all-inclusive language, they

retained their right to audit and collect royalties from Océ.

After a thorough reading of the contract language, this Court does not

agree that PageMasters reserved such rights in the Asset Purchase

Agreement. 

As stated in the Court's October 25, 2004 Order in the prior

related case, the language of the Asset Purchase Agreement "clearly

and unequivocally assign[ed] to Buzzsaw all rights and

responsibilities created by the Distribution Agreement." OcéTechnologies B.V. v. PageMasters, Inc., No. CIV 04-0557 PHX RCB, Order

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 7 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5 The "Closing" is defined in the agreement as "no later than

10:00am Pacific Standard Time on March 31, 2000...or date as may be

agreed upon by the parties." Exbt. 2 (doc. 20) at § 6.1.

- 8 -

(doc. 35) at 7. The parties do not dispute that this included Section

5.6 of the Distribution Agreement, which originally granted

PageMasters the right to inspect and audit Océ's records. See Exbt.

1 (doc. 20) at 6. However, PageMasters asserts that the critical

language relating to its reserved ability to audit Océ and collect

royalties due to it prior to the "Closing"5 is contained within

Section 5.16 of the Asset Purchase Agreement. Exbt. 2 (doc. 20) at

§ 5.16.

Buyer [Buzzsaw] will provide reasonable assistance

to [PageMasters] to assist [PageMasters] in

conducting a single audit of Océ's financial

records (as permitted under the [Distribution]

Agreement) to verify amounts due and paid by Océ to

[PageMasters] prior to the Closing, and will pay

[PageMasters] the Net Revenues actually recovered

pursuant to such audit.

Id. As the Court found in its prior order,

...the Asset Purchase Agreement bestows upon

Buzzsaw "all right, title, and interest" and "all

responsibilities" pertaining to the Distribution

Agreement. Such all-inclusive language, without

any indication to the contrary, would logically

include the arbitration rights established in the

Distribution Agreement's arbitration clause.

Océ-Technologies B.V. v. PageMasters, Inc., No. CIV 04-0557 PHX RCB,

Order (doc. 35) at 7-8. The same analysis applies here in relation

to PageMasters' alleged right to audit and collect royalties from Océ.

Section 5.16 of the Asset Purchase Agreement bestows upon Buzzsaw

"all responsibilities" pertaining to the Distribution Agreement.

Although Section 5.16 allows for a "single" audit of Océ's financial

records to verify amounts due and paid by Océ to PageMasters prior to

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 8 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

 "'Net Revenues' shall mean gross amounts actually received,

less commissions, trade discounts, costs of goods sold...services

provided, taxes, and costs of conducting audits." Exbt. 2 (doc. 20)

at § 5.16.

- 9 -

the Closing, the contract does not state that PageMasters retained the

right to independently pursue such an audit. Instead, the contract

language specifically declares that Buzzsaw will provide reasonable

assistance to PageMasters to assist PageMasters in conducting the

audit, and that Buzzsaw will pay PageMasters the "Net Revenues"6

actually recovered pursuant to the audit. Thus, the plain language

of the contract indicates that the parties intended to transfer to

Buzzsaw all rights and responsibilities pertaining to the Distribution

Agreement, including the right to conduct the "single" audit to

collect any remaining royalty payments due to PageMasters. The

"single" audit clause contained within Section 5.16 is merely an

agreement between PageMasters and Buzzsaw that requires Buzzsaw to

allow and assist such an audit, and deliver to PageMasters any

royalties it discovers through such an audit. Even PageMasters admits

that "[t]hese same obligations were reinforced in Schedule G to the

Asset Purchase Agreement, and required Buzzsaw to bill and collect

said accounts receivable from Océ and remit payment to PageMasters."

Resp. & Cross-Motion (doc. 27) at 18. The fact that the contractual

definition of "Net Revenues" allows Buzzsaw to deliver to PageMasters

the gross amounts actually received from the audit, minus the costs

incurred from conducting the audits, further indicates that the

parties contemplated that only Buzzsaw would have the right to conduct

the audit of Océ. An independent right to audit Océ was not expressly

retained for PageMasters within the contract. 

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 9 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 10 -

Moreover, as the Court noted in the prior related action,

additional language in the Asset Purchase Agreement indicates that

PageMasters and Buzzsaw actively excluded certain assets from their

agreement. However, the parties failed to explicitly reserve a right

for PageMasters to audit or collect royalties under the Distribution

Agreement. Schedule 1.2 of the Asset Purchase Agreement lists assets

the parties intended to exclude from the contract, but makes no

mention of a right to audit or collect royalties under the

Distribution Agreement. Exbt. 2 (doc. 20). The face of the contract

indicates that the parties contemplated limitations to their agreement

and chose not to designate a retention of PageMasters' audit rights.

Accordingly, this Court finds that under the language of the Asset

Purchase Agreement, PageMasters did not retain a right to

independently audit or collect royalties from Océ. Having reached

such a conclusion, a further analysis of whether PageMasters' claims

are time barred is unnecessary. 

b. PageMasters as a Third-Party Beneficiary to the Distribution

Agreement

Just as it did in the prior related action, PageMasters

encourages the Court to consider it a third-party beneficiary to

the Distribution Agreement held between Buzzsaw and Océ. However,

the Court, in its prior order, already determined that PageMasters

is not an intended third-party beneficiary to the Distribution

Agreement. See Océ-Technologies B.V. v. PageMasters, Inc., No. CIV

04-0557 PHX RCB, Order (doc. 35) at 10-12. In the instant case,

the facts and analysis of this argument have not changed. Thus,

the Court shall repeat its prior conclusion that PageMasters is not

an intended third-party beneficiary to the Distribution Agreement

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 10 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7 "A person who is subject to service of process and whose

joinder will not deprive the court of jurisdiction over the subject

matter of the action shall be joined as a party in the action if (1)

in the person's absence complete relief cannot be accorded among

those already parties, or (2) the person claims an interest relating

to the subject of the action and is so situated that the disposition

of the action in the person's absence may (i) as a practical matter

impair or impede the person's ability to protect that interest or

(ii) leave any of the persons already parties subject to substantial

risk of incurring double, multiple, or otherwise inconsistent

obligations by reason of the claimed interest." Fed.R.Civ.P. 19.

- 11 -

and receives no rights accorded under such a designation.

c. PageMasters Request to Join Buzzsaw to the Arbitration

In its Response and Cross-Motion, PageMasters states that if

the Court finds that the provisions of the Asset Purchase Agreement

required Buzzsaw to affirmatively pursue PageMasters' claims, it

requests leave of the Court to join Buzzsaw, now Autodesk, as an

indispensable party. Resp. & Cross-motion (doc. 27) at 20. 

Standing, however, is a constitutional requirement that is to be

assessed under the facts existing when the complaint is filed. See

Lujan v. Defenders of Wildlife, 504 U.S. 555, 569 n.4 (1992). Rule

197 of the Federal Rules of Civil Procedure is intended to protect

the interests of absent parties. See Carroll v. Nakatani, 342 F.3d

934, 945 (9th Cir. 2003). "If an action is no longer pendent due

to plaintiff's deficient standing, the absent party's interest is

not at stake." Id. Accordingly, the Court shall deny PageMasters'

request for leave to join Buzzsaw in this action in order to cure

PageMasters' lack of standing. 

Therefore,

IT IS ORDERED that Océ's motion for leave to file a surreply

(doc. 32) is DENIED.

IT IS FURTHER ORDERED that PageMasters' motion for summary

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 11 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 12 -

judgment (doc. 27) is DENIED.

IT IS FINALLY ORDERED that Océ's motion for summary judgment

(doc. 19) is GRANTED. The court clerk is directed to enter

JUDGMENT for Defendant and terminate this case.

DATED this 23rd day of March, 2006.

Copies to counsel of record

Case 2:05-cv-01519-RCB Document 34 Filed 03/23/06 Page 12 of 12