Source: http://coldfusioncommunity.net/rvd-study-of-203ih-motion-for-summary-judgment-2/
Timestamp: 2019-06-25 11:52:48
Document Index: 172065471

Matched Legal Cases: ['§ 401', '§ 688', '§ 688', '§ 3', '§ 3', '§ 3', '§ 4', '§ 5', '§ 5', '§ 3', '§ 16', '§ 5', '§ 1', '§ 688', '§ 16', '§ 1', '§ 16', '§ 16', '§ 10', '§ 7', '§ 7', '§ 13', '§12', '§ 13', '§ 401', '§ 6', '§ 6', '§ 10', '§ 6']

Text on this page is from Rossi v. Darden, filed 03/22/2017 0203.0_IH_Motion_for_Summary_Judgment (MSJ)
The Support document, 207, as imported and linked to the Exhibits, has been appended to the Motion here in order to simplify internal links and create a single study.
DEFENDANTS’/COUNTERPLAINTIFFS’ STATEMENT OF MATERIAL FACTS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT (SOMF) with 75 exhibits. There are unsealed versions of some exhibits found with 04/06/2017 0247.0_IH_supp_207_MSJ previously filed under seal, see the Docket index for the lists of exhibits, annotated.
This document will reference citations in the MSJ so that claimed facts and evidence may be easily studied.
DEFENDANTS’/COUNTERPLAINTIFFS’ MOTION FOR
SUMMARY JUDGMENT AND MEMORANDUM OF LAW IN SUPPORT THEREOF
Pagination refers to the original document, but anchors are used here.
BACKGROUND … 1
LEGAL STANDARD … 2
== I. Industrial Heat and IPH Are Entitled to Summary Judgment on Complaint Count I and AACT Count I … 3
==== A. Plaintiffs Lack Standing to Bring a Breach of Contract Claim Based on the Alleged Failure to Pay $89 Million under the License Agreement … 5
==== B. Rossi Intentionally Deceived Industrial Heat into Agreeing to Test Fewer E-Cat Units for the Validation Test in Ferrara, Italy … 5
==== C. Plaintiffs Breached the License Agreement by Failing to Abide by the Terms of the Validation Protocol … 7
==== D. Plaintiffs Breached the License Agreement Prior to the Date Plaintiffs Claim They Were Entitled to an $89 Million Payment Because Plaintiffs Failed to Achieve “Guaranteed Performance” As Defined By the License Agreement … 7
==== E. Plaintiffs Breached the License Agreement by Failing to Measure the Flow of the Heated Fluid During the Purported Guaranteed Performance Test … 10
==== F. Plaintiffs’ Prior Breaches of the License Agreement Entitle Industrial Heat and IPH to Summary Judgment on Count I of the Complaint … 10
== II. Industrial Heat and IPH Are Due Summary Judgment on Complaint Count III … 11
== III. Defendants Are Entitled to Summary Judgment on Complaint Count IV … 12
== IV. Defendants Are Entitled to Summary Judgment on Complaint Count VI … 15
==== A. Defendants Are Entitled to Summary Judgment on Count VI Because Plaintiffs Fail to Adduce Evidence of Separate Damages for Fraud … 15
==== B. Plaintiffs’ Fraud Claim Cannot Be Proven Because Evidence of Defendants’ Alleged Misrepresentations Is Barred by the Parol Evidence Rule … 16
== V. IPH Is Entitled to Summary Judgment on the AACT Count II … 17
==== A. Breach of Confidentiality Provisions … 17
==== B. Failure to Assign Licensed Patents … 18
==== C. Failure to Inform and Consult on Patent Applications and Abandonment of Patent Applications … 19
==== D. Covenant Not to Compete … 19
==== E. Failure to Pay Taxes … 20
==== F. Failure to Enable Replication of the E-Cat Technology … 21
== VI. Industrial Heat Is Entitled to Summary Judgment on AACT Count III … 21
== VII. Industrial Heat and IPH Are Entitled to Summary Judgment on AACT Count IV … 23
==== A. Rossi, Leonardo, Johnson, J.M … 24
====== 1. The First Part of the Scheme … 24
====== 2. The Second Part of the Scheme … 24
====== 3. The Third Part of the Scheme. … 27
==== B. The FDUTPA Defendants’ Deceptive Acts or Unfair Practices Caused Industrial Heat and IPH to Suffer Actual Damages … 27
== VIII. Industrial Heat Is Entitled to Summary Judgment on the AACT Count V … 28
CONCLUSION … 30
Alhassid v. Bank of Am., N.A., 14-CIV-20484, 2015 WL 11216721 (S.D. Fla. Sept. 14, 2015) … 3
All Pro Sports Camp, Inc. v. Walt Disney Co., 727 So.2d 363 (Fla. 1999) … 12
Amer. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir. 1998) … 12, 13
Beverage Canners, Inc. v. Cott Corp., 372 So.2d 954 (Fla. 3rd DCA 1979) … 3
Burger King Corp. v. Huynh, No. 11-22602-CIV, 2011 WL 6190163 (S.D. Fla. Dec. 5, 2011) … 3
Butler v. Yusem, 44 So.3d 102 (Fla. 2010) … 22
Chatlos v. Morse Auto Rentals, Inc., 183 So.2d 854 (Fla. 3d DCA 1966) … 10
Cheezem Dev. Corp. v. Intracoastal Sales & Serv., Inc., 336 So.2d 1210, 1212 (Fla. 2d DCA 1976) … 10
D & M Jupiter, Inc. v. Friedopfer, 853 So.2d 485 (Fla. Dist. Ct. App. 2003) … 6
Deere Constr., LLC v. Cemex Constr. Materials Fla., LLC, 198 F.Supp.3d 1332, 1342 (S.D. Fla. July 2016) … 24
Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F. Supp. 2d 1271 (S.D. Fla. 2001) … 12, 13, 14
Destiny Const. Co. v. Martin K. Eby Const., 662 So.2d 388 (Fla. Dist. Ct. App. 1995) … 3
Diamond “S” Dev. Corp. v. Mercantile Bank, 989 So.2d 696 (Fla. Dist. Ct. App. 2008) … 11
Eclipse Med., Inc. v. Am. Hydro-Surgical Instruments, Inc., 262 F. Supp. 2d 1334 (S.D. Fla. 1999) … 16, 17
Energy Smart Indus., LLC v. Morning Views Hotels-Beverly Hills, LLC, 660 Fed. App’x. 859 (11th Cir. 2016) … 6
Fito v. Attorneys’ Title Ins. Fund, Inc., 83 So.3d 755 (Fla. Dist. Ct. App. 2011) … 11
Galstaldi v. Sunvest Cmtys. USA, LLC, 637 F.Supp.2d 1045 (S.D. Fla. 2009) … 24
GEICO Gen. Ins. Co. v. Hoy, 136 So.3d 647 (Fla. Dist. Ct. App. 2013) … 22
Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256 (11th Cir. 2004) … 2, 3
Jeld-Wen, Inc. v. Nebula Glass Intern., Inc., 05-60860-CIV, 2007 WL 5960207 (S.D. Fla. May 15, 2007) … 3
Kopel v. Kopel, No. SC13-992, 2017 WL 372074 (Fla. Jan. 26, 2017) … 11
Levenger Co. v. Feldman, 516 F. Supp. 2d 1272 (S.D. Fla. 2007) … 12
Managed Care Sols., Inc. v. Cmty. Health Sys., Inc., 10-60170-CIV, 2012 WL 12861133 (S.D. Fla. May 14, 2012) … 10
Marshall Construction, Ltd. v. Coastal Sheet Metal & Roofing, Inc., 569 So.2d 845 (Fla. Dist. Ct. App. 1990) … 3, 7
Mazzoni Farms, Inc. v. E.I. DuPont De Nemours and Co., 761 So.2d 306 (Fla. 2000) … 6, 15, 22, 23
Moriber v. Dreiling, 194 So.3d 369 (Fla. Dist. Ct. App. 2016) … 22
MSM Golf, L.L.C. v. Newgent, 853 So.2d 1086, 1087 (Fla. Dist. Ct. App. 2003) … 3
Nature’s Prods., Inc. v. Natrol, Inc., 990 F.Supp.2d 1307 (S.D. Fla. 2013) … 24
Network Tallahassee, Inc. v. Embarq Corp., No. 4:10cv38-RH/WCS, 2010 WL 4569897 (N.D. Fla. Sept. 20, 2010) … 14
Ocean Commc’ns, Inc. v. Bubeck, 956 So.2d 1222 (Fla. Dist. Ct. App. 2007) … 11
Okeechobee Resorts, L.L.C. v. E Z Cash Pawn, Inc., 145 So.3d 989 (Fla. Dist. Ct. App. 2014) … 6
Porsche Cars N. Am., Inc. v. Diamond, 140 So.3d 1090 (Fla. Dist. Ct. App. 2014) … 11
Rollins, Inc. v. Butland, 951 So.2d 860 (Fla. Dist. Ct. App. 2006) … 24
Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) … 13
Skinner v. Haugseth, 426 So.2d 1127 (Fla. Dist. Ct. App. 1983) … 8, 9
Stowell v. Ted S. Finkel Inv. Servs., Inc., 641 F.2d 323 (5th Cir. 1981) … 15
Sundance Apartments I, Inc. v. Gen. Elec. Capital Corp., 581 F.Supp.2d 1215 (S.D. Fla. 2008) … 24
Swiss Watch Int’l v. Movado Grp., No. 00-7703-CIV, 2001 WL 36270979 (S.D. Fla. Sept. 5, 2001) … 11
Treiber v. StorCOMM, Inc., No. 303CV1040J32MMH, 2005 WL 2012275 (M.D. Fla. Aug. 16, 2005) … 12, 13
Typographical Serv., Inc. v. Itek Corp., 721 F.2d 1317 (11th Cir. 1983) … 17
United States v. Four Parcels of Real Prop., 941 F.2d 1428 (11th Cir. 1991) … 2
Ussc Holdings Corp. v. TK Prods., LLC, No. 3:16-cv-00398-RJC-WGC, 2016 WL 7116009 (D. Nev. Dec. 6, 2016) … 13
Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009) … 3
Vital Pharm., Inc. v. Balboa Capital Corp., No. 14-62469-CIV, 2016 WL 4479370, at *4 (S.D. Fla. Aug. 25, 2016) … 3, 30
Williams v. Peak Resorts Int’l Inc., 676 So.2d 513 (Fla. 1996) … 15
Fla. Stat. § 401.204(1) … 24
Fla. Stat. § 688.002 … 12
Fla. Stat. § 688.008(1) … 12
Florida Deceptive and Unfair Trade Practices Act … passim
Florida’s Uniform Trade Secrets Act … 12
Italian Law … 4
2d Amendment … 9
Fed. R. Civ. P. 56(a) … 2
Federal Rule of Civil Procedure 56 … 1
To prevail on a breach of contract claim, a party must prove the existence of a contract and a material breach of the contract. Vital Pharm., Inc. v. Balboa Capital Corp., No. 14-62469-CIV, 2016 WL 4479370, at *4 (S.D. Fla. Aug. 25, 2016); Burger King Corp. v. Huynh, No. 11- 22602-CIV, 2011 WL 6190163, at *5 (S.D. Fla. Dec. 5, 2011) (quoting Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009)). The party must also have performed (or been excused from performing) its obligations imposed by the contract prior to the other party’s breach. See Marshall Const., Ltd. v. Coastal Sheet Metal & Roofing, Inc., 569 So.2d 845, 848 (Fla. Dist. Ct. App. 1990). A party often also seeks to prove some damages to compensate it for another party’s breach (either on summary judgment or at a trial), but Florida law is clear that proof of actual damages is not necessary to prevail on a breach of contract claim. See, e.g., See MSM Golf, L.L.C. v. Newgent, 853 So.2d 1086, 1087 (Fla. Dist. Ct. App. 2003); Destiny Const. Co. v. Martin K. Eby Const., 662 So.2d 388, 390 (Fla. Dist. Ct. App. 1995); Beverage Canners, Inc. v. Cott Corp., 372 So.2d 954, 956 (Fla. 3rd DCA 1979). Thus, this Court has granted summary judgment on liability for breach of contract and for nominal damages, even where actual damages and proximate cause have not been proven. Jeld-Wen, Inc. v. Nebula Glass Intern., Inc., 05-60860-CIV, 2007 WL 5960207, at *13 (S.D. Fla. May 15, 2007); Alhassid v. Bank of Am., N.A., 14-CIV-20484, 2015 WL 11216721, at *5 (S.D. Fla. Sept. 14, 2015).
This morning I had a meeting with the Health Office of the Province of Ferrara, which has to authorize the 24 hours test (it is unthinkable to make it without authorization, we could be stopped by the police upon a phone call due to the noise of the air escape of the condensers, because we must dissipate the energy not having any possible utilization for it.) We found an acceptable solution. He explained to me that the Italian Law “DPR (Decreto del Presidente della Repubblica) # 551- Dec. 21 1999 requests an authorization for any plant that makes more than 35 kWh/h and this authorization takes at least 6 months. But we are advantaged, because LENR do not exist in the known technology, therefore when we say 35 kWh we say kWh consumed, because plants that produce more than the energy they consume “do not exist.” Now, 35 x 6=210 kW[.] Therefore if we can consume up to 35 kWh/h without authorization, this implies that in out LENR case I can produce up to 210 kWh/h, which is a consistent amount of energy. …
SOMF ¶ 6.
The sole breach identified in Complaint Count I is the alleged failure to make the contingent $89 million payment under the License Agreement. As is clear from the Agreement (Section 3.2(c)), that payment – if in fact it were due – would only have to be made to Leonardo Corp., a New Hampshire corporation (“Leonardo-N.H.”). See License Agreement (SOMF Ex. 1) § 3.2(c). Moreover, Rossi has testified that he is no longer the owner of Leonardo or Leonardo-N.H. SOMF ¶ 10. Rossi thus has no standing to assert a breach of the License Agreement for the alleged failure to pay money to Leonardo-N.H. In addition, Leonardo claims it is the successor to Leonardo-N.H. because Leonardo-N.H. was merged into it. But Leonardo-N.H. still exists, so Plaintiff Leonardo appears not to be a proper party either. SOMF ¶ 106.
There is no dispute that the License Agreement exists, that Industrial Heat complied with its obligations under that Agreement prior to the validation test (it had paid Leonardo the initial $1.5 million). See SOMF ¶¶ 1, [and SOMF] 4. There also can be no dispute that Leonardo and Rossi breached the License Agreement because they only used 18 E-Cat reactors for the Validation Test, and that Industrial Heat and IPH were damaged as a result of the breach both for having made the subsequent payment of $10 million under License Agreement §§ 3.2(b) and 4, and for not having the initial $1.5 million payment to Leonardo returned (among other damages). See SOMF ¶¶ 4, [and SOMF] 15; License Agreement (SOMF Ex. 1) § 3.2(b).
The First Amendment does not change this conclusion. First, it was procured by Rossi’s fraud on behalf of Leonardo. Rossi falsely represented that Italian law prohibited the Validation Test as set forth in the License Agreement but allowed the testing of fewer E-Cat reactors (30, to be specific). See SOMF ¶¶ 6, [and SOMF] 7. Industrial Heat relied on this false representation in entering into the First Amendment. SOMF ¶ 17; see also Darden Dep. (SOMF Ex. 9) 200:5-15 (“How about . . . running the fraction of the units in the Ferrara test. You know, what’s that about. I mean, we thought it was all legitimate like, okay, well, I guess there’s some law that says…you can’t run an energy device larger than whatever the size was.”). Rossi and Leonardo cannot avoid their breach of the License Agreement by fraudulently inducing an amendment to the Agreement. See Mazzoni Farms, Inc. v. E.I. DuPont De Nemours and Co., 761 So.2d 306, 313 (Fla. 2000). Second, Rossi and Leonardo did not even comply with the First Amendment. That amendment required the testing of 30 E-Cat reactors, but Rossi and Leonardo only tested 18 ECat reactors. See SOMF ¶¶ 7, [and SOMF] 8, [and SOMF] 18; 1st Amendment (SOMF Ex. 5) Ex. A.
For the foregoing reasons, Industrial Heat and IPH are entitled to summary judgment on Count I of the AACT for breach of contract. [1]
They are also entitled to summary judgment on Count I of Plaintiffs’ Complaint for breach of contract because there can be no subsequent breach, as alleged by Plaintiffs, for Industrial Heat and/or IPH not making an additional $89 million payment under the License Agreement after Rossi and Leonardo previously breached the Agreement by not correctly performing the validation test. This not only constituted a prior breach of the License Agreement barring Plaintiffs’ claim of a subsequent breach, see Marshall Construction, 569 So.2d at 848, but also allowed for the termination of the Agreement. See
License Agreement (SOMF Ex. 1) § 4.
The License Agreement is crystal clear as to when Rossi and Leonardo were to conduct any “guaranteed performance” test:
Payment of the amount set forth in Section 3(c) above is contingent upon the Plant operating at the same level (or better) at which Validation was achieved for a period of 350 days (even if not consecutive) within a 400 day period commencing on the date immediately following delivery of the Plant to the Company [i.e., Industrial Heat] (‘Guaranteed Performance’).”
License Agreement (SOMF Ex. 1) § 5.
There is no dispute that Rossi and Leonardo did not complete any “guaranteed performance” test within the time period set by the License Agreement. As they admit in their Complaint, the 1 MW Plant was delivered to Industrial Heat in August 2013. SOMF ¶ 23. As they also admit in their Complaint, they did not commence a “guaranteed performance” test either in 2013 or even in 2014. Instead, they did not allegedly commence such a test until 2015. SOMF ¶ 24. By no later than October 2013, however, Rossi and Leonardo could no longer comply with the License Agreement requirement to operate the 1 MW Plant for “a period of 350 days (even if not consecutive) within a 400 day period commencing on the date immediately following delivery of the 1 MW Plant to the Company.” License Agreement (SOMF Ex. 1) § 5. [2]
In an effort to avoid this obvious and correct outcome, Plaintiffs contend that a Proposed Second Amendment to the License Agreement (“Proposed Second Amendment”) provided them with additional time to commence a “guaranteed performance” test. This contention fails for at least two independent reasons.
First, the Proposed Second Amendment was not effective because it was not signed and executed by all parties. See SOMF ¶¶ 26-30. The general rule on enforceability of contracts where all parties are not signatories is that “a contract not signed by all of the parties, but otherwise valid, may be upheld against a signing party, unless the nature or the wording of the contract indicates that his signature was conditioned upon all other parties signing the contract.” Skinner v. Haugseth, 426 So.2d 1127, 1131 (Fla. Dist. Ct. App. 1983). The Proposed Second Amendment is little more than a page long, but Section 3 makes the parties’ intentions expressly clear: “This Amendment may be executed in counterparts . . . provided that one or more counterparts collectively shall contain the signatures of all Parties to this Amendment.” (emphasis added). Proposed 2d Amendment (SOMF Ex. 15) § 3. [3]
[3] This is distinguishable from the contract at issue in Skinner, where there was “nothing in the contract specifying [Defendant’s] intent not to go through with the sale if [Plaintiff] did not sign.” Skinner, 426 So.2d at 1131. The Proposed Second Amendment dictated that it was ineffective unless all parties signed at least one counterpart.
The Proposed Second Amendment was not effective because it was not signed by either AEG or IPH (or, for that matter, by Rossi in his individual capacity). SOMF ¶¶ 27, 30; Proposed 2d Amendment (SOMF Ex. 15). Both were essential to any Agreement modification. Most of Industrial Heat’s rights under the Agreement had previously been assigned to IPH (with Rossi and Leonardo’s consent) under an Assignment and Assumption of the License Agreement (“Assignment Agreement”). See 1st Amendment (SOMF Ex. 5) § 16.7; Assignment Agreement (SOMF Ex. 7); SOMF ¶¶ 12, 13. Altering what would constitute “guaranteed performance” under the Agreement would directly impact those rights. In addition, AEG could have received an additional payment if Rossi and Leonardo satisfied the Agreement’s “guaranteed performance” requirement. SOMF ¶ 27. AEG thus had a direct interest in any change to the Agreement that would alter what had to be done to satisfy guaranteed performance. See id.
Not surprisingly, the parties recognized that the Proposed Second Amendment was not effective absent the signatures of all the relevant parties. SOMF ¶¶ 27, 32. Indeed, even Rossi admitted that the Proposed Second Amendment was not effective because AEG did not execute it. See SOMF ¶ 31.
Second, even if the Proposed Second Amendment was effective, it is crystal clear that the “guaranteed performance” test thereunder could not be conducted using the 1 MW Plant; rather, a different “Six Cylinder Unit” needed to be used for any such test:
Payment of the amount set forth in Section 3(c) above is contingent upon a six cylinder Hot Cat unit reasonably acceptable to the Company (the “Six Cylinder Unit”) operating at the same level (or better) at which Validation was achieved for a period of 350 days (even if not consecutive) within a 400 day period commencing on the date agreed to in writing between the Parties (“Guaranteed
Proposed 2d Amendment (SOMF Ex. 15) § 5.
Because Plaintiffs’ breaches of the License Agreement were prior to any alleged breach of the Agreement by Industrial Heat or IPH, Plaintiffs cannot prevail on Count I. It is well established that a “[p]rior material breach of a contract excuses further performance by the other party.” See Managed Care Sols., Inc. v. Cmty. Health Sys., Inc., 10-60170-CIV, 2012 WL 12861133, at *6 (S.D. Fla. May 14, 2012), report and recommendation adopted, 10-60170-CIV, 2012 WL 12861134 (S.D. Fla. June 4, 2012) (citing Cheezem Dev. Corp. v. Intracoastal Sales & Serv., Inc., 336 So.2d 1210, 1212 (Fla. 2d DCA 1976) (“As the party who initially committed a substantial breach of the contract, Intracoastal was not entitled to avail itself of a claimed subsequent breach by Cheezem.”) (citing Chatlos v. Morse Auto Rentals, Inc., 183 So.2d 854,
855 (Fla. 3d DCA 1966)). Summary judgment in favor of Industrial Heat an IPH on Count I of the Complaint is thus warranted.
Summary judgment must be entered in favor of Industrial Heat and IPH on Plaintiffs’ claim for unjust enrichment in Count III of the Complaint. That Count alleges that Industrial Heat and IPH would be unjustly enriched if allowed to retain the license granted under the License Agreement without paying Plaintiffs $89 million. Compl. ¶ 91.
A party cannot pursue a quasi-contract claim for unjust enrichment if an express contract exists concerning the same subject matter as the party’s claim for unjust enrichment. See Diamond “S” Dev. Corp. v. Mercantile Bank, 989 So.2d 696, 697 (Fla. Dist. Ct. App. 2008) (citing Ocean Commc’ns, Inc. v. Bubeck, 956 So.2d 1222, 1225 (Fla. Dist. Ct. App. 2007)). Hence, Count III fails as a matter of law because the License Agreement is an express contract (a fact which neither side disputes) that concerns the same subject matter as Plaintiffs’ claim for unjust enrichment claim – namely, a license of the E-Cat IP to Industrial Heat. Compl. ¶ 89. Furthermore, Plaintiffs’ unjust enrichment claim is fatally flawed because it ignores the reality that the alleged benefit conferred – the “license to use the E-Cat IP,” id. – was only conferred per the terms of the License Agreement. If the Agreement is valid, then Industrial Heat and/or IPH have all the benefits created by the Agreement, including a license of the E-Cat IP and the right to sub-license the E-Cat IP to whomever they choose. If the Agreement is not valid, then Industrial Heat and IPH do not have the supposed benefit that is the basis of Court III – they would not have a “license to use the E-Cat IP.” Compl. ¶ 89.
An unjust enrichment claim also requires proof that Plaintiffs “directly conferred a benefit on [Industrial Heat and IPH]; an indirect benefit is insufficient.” Swiss Watch Int’l v. Movado Grp., No. 00-7703-CIV, 2001 WL 36270979, at *4 (S.D. Fla. Sept. 5, 2001); see also Kopel v. Kopel, No. SC13-992, 2017 WL 372074, at *5 (Fla. Jan. 26, 2017) (“[t]o prevail on an unjust enrichment claim, [a] plaintiff must directly confer a benefit to the defendant”). No such direct benefit was conferred here because the license was without value – the undisputed evidence is that neither Industrial Heat nor IPH ever sub-licensed the E-Cat IP for profit, never created a product or service that could be sold based on the E-Cat IP, and indeed never were able to generate the results Rossi and Leonardo claimed using the E-Cat IP. See SOMF ¶¶ 38-40. [38 . 39 . 40] For the foregoing reasons, Industrial Heat and IPH are entitled to summary judgment on the unjust enrichment claim in Plaintiffs’ Complaint (Count III).
Because Plaintiffs licensed the E-Cat IP to Industrial Heat and later, through an assignment, to IPH – and because each entity was allowed to grant sublicenses to the E-Cat IP to anyone it selected (License Agreement (SOMF Ex. 1) § 1) – there is no question of material fact as to whether Plaintiffs protected the E-Cat IP from disclosure as required for Count IV’s misappropriation claim. To prove a claim for misappropriation of trade secrets, a plaintiff must prove that “(1) the plaintiff possessed secret information and took reasonable steps to protect its secrecy and (2) the secret it possessed was misappropriated, either by one who knew or had reason to know that the secret was improperly obtained or by one who used improper means to obtain it.” Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F. Supp. 2d 1271, 1291 (S.D. Fla. 2001) (citing Fla. Stat. § 688.002) (emphasis added). [4] Thus, under the first step, “[f]or there to be actionable misappropriation, the party asserting trade secret protection bears the dual burden of describing the alleged trade secret information and also showing that it has taken reasonable steps to protect this secrecy.” [5] Levenger Co. v. Feldman, 516 F. Supp. 2d 1272, 1287 (S.D. Fla. 2007) (emphasis added) (citing Amer. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407, 1410 (11th Cir. 1998)); see also Del Monte Fresh Produce Co., 136 F. Supp. 2d at 1291 (“To qualify as a trade secret, the information that the plaintiff seeks to protect must derive economic value from not being readily ascertainable by others and must be the subject of reasonable efforts to protect its secrecy.”) (citing Amer. Red Cross, 143 F.3d at 1410).
In this case, Plaintiffs cannot show that they “took reasonable steps to protect [the] secrecy” of the E-Cat technology because they willingly—and virtually without limitation, including as to confidentiality—transferred the E-Cat technology to Industrial Heat and later to IPH under the License Agreement and the Assignment Agreement, respectively. See License Agreement (SOMF Ex. 1); SOMF ¶ 3; Del Monte Fresh Produce Co., 136 F. Supp. 2d at 1291.
As the United Supreme Court has explained, “[i]f an individual discloses his trade secret to others who are under no obligation to protect the confidentiality of the information . . . his property right is extinguished.” Thus, by definition, there was no misappropriation here.
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984).
Indeed, neither Industrial Heat nor IPH were under any obligation under the License Agreement to keep the E-Cat technology confidential; both were authorized to grant sublicenses to anyone they selected. SOMF ¶ 3. Instead, the non-disclosure obligation extended only to
Plaintiffs under the License Agreement, the terms of which thus dictate entry of summary judgment in Defendants’ favor on Count IV. See License Agreement (SOMF Ex. 1) § 16.4; Ussc Holdings Corp. v. TK Prods., LLC, No. 3:16-cv-00398-RJC-WGC, 2016 WL 7116009, at *4-5
(D. Nev. Dec. 6, 2016) (in determining whether plaintiffs “employed reasonable measures to maintain the secrecy of its trade secrets,” the court must conduct a “review and interpretation of the Agreement” by asking, “[f]or example, does the Agreement contain non-disclosure or confidentiality provisions relative to trade secrets?”) (citation omitted). Indeed, Plaintiffs do not even allege that either Industrial Heat or IPH had an obligation to maintain the confidentiality of the E-Cat technology under the License Agreement. Cf. id. at *4 (“[Plaintiff] has not asserted that the terms of the License Agreement prohibited Plaintiffs from divulging trade secrets.”). They do not because they cannot.
By signing the License Agreement authorizing the use or disclosure (including sublicensing) of the E-Cat IP by Industrial Heat and IPH, Plaintiffs did the opposite of protecting the secrecy of their intellectual property; they surrendered to Industrial Heat and IPH the right to hold confidential, or disseminate, the E-Cat IP. See SOMF ¶ 3; Treiber, 2005 WL 2012275, at *4 (concluding that, by asserting “that defendant breached the confidentiality clause of the license agreement by misusing confidential information to which it was entrusted,” “plaintiff has not plead” a claim for misappropriation of trade secrets).
In denying Defendants’ Motion to Dismiss ([D.E. 24]), the Court identified as a question of fact for discovery whether Plaintiffs took steps to protect their trade secrets by signing individual confidentiality agreements with Defendants. [D.E. 24] at 12 (construing allegations in Plaintiffs’ favor “at the motion-to-dismiss phase”). There are, however, no such separate confidentiality agreements. Moreover, while any confidentiality agreements Plaintiffs had with third parties would have no bearing on whether Defendants misappropriated the E-Cat IP, the Court need not even reach that issue. When asked in an interrogatory about third-party confidentiality agreements, Plaintiffs identified none. [6] See SOMF ¶ 41.
By the same token, Defendants did not obtain the E-Cat IP (including any potential trade secret therein) by improper means or disclose it without Plaintiffs’ consent. Del Monte Fresh Produce Co., 136 F. Supp. 2d at 1291 (setting forth remaining elements of misappropriation). As explained infra, summary judgment is warranted on Plaintiffs’ fraud and deceit claim, so it cannot form the basis for the argument that Defendants obtained trade secrets by improper means. Moreover, the alleged fraudulent inducement does not go to the right of Industrial Heat and IPH to have, and to license others to have, the E-Cat IP under the License Agreement. Plaintiffs do not and cannot dispute that Industrial Heat and IPH made the payments to Plaintiffs under the Agreement (to the tune of $11.5 million) to trigger and warrant the E-Cat IP transfer pursuant to the Agreement. License Agreement (SOMF Ex. 1) § 1.1, 3.2(b). Moreover, there has been no disclosure of whatever might be claimed to constitute a trade secret within the E-Cat IP. Defendants maintained the confidentiality of the undisclosed E-Cat IP (even assuming arguendo that it constituted a trade secret). For example, Darden did not share the recipe for the “secret sauce” even with Vaughn, much less with any third party. Defendants did so not because such was required by the License Agreement, but to protect Industrial Heat’s and IPH’s rights in the E-Cat IP. Nevertheless, Defendants’ protection of the E-Cat IP for their own interests means that Plaintiffs can show no improper disclosure of that IP.
IPH is entitled to summary judgment as to Count II of the 4th Amended AACT, for various breaches of the License Agreement by Rossi and Leonardo, including Leonardo and Rossi’s failure to (i) comply with the confidentiality provision, (ii) assign licensed patents, (iii) inform and consult on patents, (iv) comply with the covenant not to compete, (v) pay taxes, and (vi) enable replication of the E-Cat technology.
No publicity release or public announcement concerning this Agreement or the transaction contemplated hereby shall be made by Leonardo, Rossi, AEG or the Company without written advance approval thereof by each of Leonardo and the Company. While this Agreement is in effect and after this Agreement terminates, each party hereto and its Affiliates shall keep confidential and shall not disclose, the terms of this Agreement to any other person without the prior consent of each other Party hereto…
License Agreement (SOMF Ex. 1) § 16.4. Rossi and Leonardo have repeatedly made public disclosures of specific terms of the License Agreement without Industrial Heat or IPH’s “written advance approval.” These public disclosures by Rossi and Leonardo include statements on Rossi’s website, Journal of Nuclear Physics (“JONP”), www.journal-of-nuclear-physics.com, which reveal that the License Agreement required a test of the 1 MW Plant, a test to be conducted over 400 days, a test involving 350 days of operation of the 1 MW Plant, and a guaranteed performance or “guarantees of performance” test. See SOMF ¶ 43.
My uninterrupted presence in the plant installed in the factory of the Customer of IH [Industrial Heat] is due to the fact that it is our first plant installed in the factory of a Customer, operating for unlimited time. We have to be always presnt for at least 1 year due to our contractual agreement[.]
Rossi and Leonardo breached the License Agreement by failing to assign to IPH the Licensed Patents as defined in § 16.1 and Exhibit A of the License Agreement. Section 10 of the License Agreement provides: “Upon the request of the Company, Leonardo and Rossi shall assign to the Company the Licensed Patents with respect to the Territory.” License Agreement (SOMF Ex. 1) § 10. On February 17, 2016, counsel for Counter-Plaintiffs sent a letter to counsel for Rossi and Leonardo requesting assignment of the Licensed Patents to IPH. SOMF ¶ 46.
Rossi and Leonardo failed to execute the requested assignment in contravention of the License Agreement. See SOMF ¶ 47.
Leonardo breached the License Agreement by failing to inform and consult with IPH regarding patent applications. Section 7.1 contains clear directives relating to informing and consulting with IPH regarding patent prosecution and maintenance of the E-Cat IP: For each patent application and patent under the Licensed Patents, Leonardo shall:
(f) notify the Company in writing of any additions, deletions or changes in the status of such patent or patent application.
License Agreement (SOMF Ex. 1) § 7.1. Similarly, Section 7.2 of the License Agreement states:
“If Leonardo wishes to abandon any patent application or patent that is a Licensed Patent, it shall give the Company ninety (90) days prior written notice of the desired abandonment. Leonardo shall not abandon any such Licensed Patent except upon the prior written consent of the Company.” Id. § 7.2. There are over one hundred (100) patent applications relating to the Licensed Patents that Leonardo filed without informing IPH and that Leonardo abandoned without prior written notice to IPH, in contravention of the License Agreement. SOMF ¶¶ 48, 49. Leonardo also failed to keep Industrial Heat and IPH informed as to the status of those patent applications, and charged them for “fees and expenses associated with [Leonardo’s patent] activities” that Leonardo was obligated to bear. [7]
7 As a result of this breach by Rossi and Leonardo, IPH has suffered damages in the form of fees and expenses charged by Leonardo and/or Rossi to IPH for preparing, filing or prosecuting patent applications that should have been borne by Leonardo. See, e.g., SOMF ¶ 50.
This conduct – collectively and separately – was a breach of sections 7.1 and 7.2 of the License Agreement.
Rossi and Leonardo breached the License Agreement’s covenant not to compete. The Agreement contains a clear and defined non-compete provision prohibiting Plaintiffs, while performing services for Industrial Heat and for two years thereafter, from being “connected in any manner with any business or enterprise . . . engaged in the design, development, manufacture, distribution, lease, rental or sale of any E-Cat Products, or the provision of any services related thereto” absent Industrial Heat’s prior written consent. License Agreement (SOMF Ex. 1) § 13.3 (emphasis added). Notwithstanding this covenant not to compete, Rossi and Leonardo have been open in broadcasting that they are engaged in designing and developing what are classified as “E-Cat Products” under the License Agreement. SOMF ¶ 51 & Exs. 24-25. For example, Rossi has publicly stated that in June 2016 he conducted a “very important test” with a “very important customer” that was not Industrial Heat or IPH. See SOMF Ex. 29 at Resp. No. 3; SOMF Ex. 25 at April 27 & June 26, 2016. This constitutes a clear violation of the non-compete provision.
In light of the foregoing, it is clear that at least Leonardo, in breach of the License
Agreement, failed properly to report and pay taxes on all of its 2012 and 2013 revenue.
Finally, Counter-Defendants breached the License Agreement by failing to provide the intellectual property and services necessary for Counter-Plaintiffs to replicate the results claimed from the E-Cat technology. Leonardo and Rossi represented and warranted in the License Agreement that the E-Cat IP delivered under the License Agreement is “all the…intellectual property that [is] necessary or useful for the Company to develop, manufacture, make…and sell…all the products deriving from the E-Cat IP.” License Agreement (SOMF Ex. 1) §12 (b). Additionally, the License Agreement requires Rossi to “provide ongoing training and support to the Company in the use of the [1 MW] Plant and the production of the E-Cat Products…to enable it to utilize the E-Cat IP, operate the [1 MW] Plant and produce E-Cat Products.” Id. § 13.3. Indeed, a core aspect of the License Agreement was for Industrial Heat or IPH to be able to replicate and commercialize the E-Cat technology.
Industrial Heat is entitled to summary judgment in its favor on Count III of the AACT for fraudulent inducement to enter into the Term Sheet. Under Florida law, the elements of fraudulent inducement are: (1) a false statement concerning a material fact; (2) the representor’s knowledge that the representation is false; (3) an intention that the representation induce another to act on it; and (4) consequent injury by the party acting in reliance on the representation. Moriber v. Dreiling, 194 So.3d 369, 373 (Fla. Dist. Ct. App. 2016) (citing Butler v. Yusem, 44 So.3d 102, 105 (Fla. 2010); GEICO Gen. Ins. Co. v. Hoy, 136 So.3d 647, 651 (Fla. Dist. Ct. App. 2013)). A party that proves fraudulent inducement may elect rescission as the remedy, which involves both voiding the contract and returning the parties to the status quo that existed before the contract was executed. See Mazzoni Farms, Inc. v. E.I. DuPont De Nemours & Co., 761 So.2d 306, 313 (Fla. Dist. Ct. App. 2000).
Rossi, on behalf of Leonardo, and Johnson, on behalf of J.M. Products, made numerous false statements of material fact or omissions of material fact to Industrial Heat prior to execution of the Term Sheet (August 13, 2014) to induce Industrial Heat to enter the Term Sheet. Notably, and without a factual basis to be disputed, they represented (among other things) that: (a) J.M. Products [8] was affiliated with a well known United Kingdom specialty chemicals and precious metals company called Johnson Matthey, see SOMF ¶¶ 57, 60-64 [60 . 61 . 62 . 63 . 64], and (b) J.M. Products had a need for, and was going to use, the steam Leonardo could produce from the 1 MW Plant in a chemical manufacturing process, see SOMF ¶¶ 56, 59, & 62.
As to the first false representation, Johnson further backed up the representation by signing a compliance certificate stating that J.M. Products was “owned by an entity formed in the United Kingdom.” SOMF ¶ 65. (Johnson would also later send letters representing J.M. Products to be an “Advanced Derivatives of Johnson Matthew Platinum Sponges.” See SOMF ¶ 74b ). As to the second false representation, Rossi and Leonardo pointed to this as an independent check on how the 1 MW Plant would operate – in other words, that a “real Customer” would be purchasing the steam produced by Leonardo to use in a real manufacturing process would confirm that such steam was in fact being produced and the 1 MW Plant was operating as promised by Rossi and Leonardo, because if it was not, this “real Customer” would certainly complain. See SOMF ¶ 59.
The foregoing false statements were made to induce Industrial Heat to enter into the Term Sheet and allow the 1 MW Plant to be moved from its facilities in North Carolina (where it obviously could closely monitor any operation of, and any output from, the 1 MW Plant) to an alleged J.M. Products location in Florida, removed from Industrial Heat’s immediate oversight. See SOMF ¶ 69. (Discovery has revealed that the Florida location was rented after the Term Sheet was signed, and that it was rented by Rossi for Leonardo, which in turn walled off a portion of the location for J.M. Products to “operate.” See SOMF ¶ 72). As expected, Industrial Heat did in fact rely on these representations and allowed the 1 MW Plant to be moved to Florida. It would not have done so had it known that J.M. Products had no affiliation with Johnson Matthey and no real manufacturing process to operate in Florida. See SOMF ¶¶ 70, 71.
As a result of Industrial Heat being fraudulently induced to enter into the Term Sheet, it is entitled to rescission of the Term Sheet. See Mazzoni Farms, Inc. 761 So.2d at 313. It is also entitled to recoup the moneys it paid subsequent to entering the Term Sheet for the operation and maintenance of the 1 MW Plant while in Florida, including the expenses associated with paying for the services of Fulvio Fabiani and Barry West to assist Rossi in the operation and maintenance of the Plant. Industrial Heat would not have incurred these costs if the Term Sheet had not been entered and the 1 MW Plant had not been moved to Florida. Accordingly, these costs must be reimbursed to return to the status quo before the Term Sheet was entered. See id. [9]
VII. Industrial Heat and IPH Are Entitled to Summary Judgment on AACT Count IV. Counter-Plaintiffs are entitled to at least partial summary judgment on Count IV of the AACT for Counter-Defendants’ and Third Party Defendants’ violations of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).
The elements of a FDUTPA violation are: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. Rollins, Inc. v. Butland, 951 So.2d 860, 869 (Fla. Dist. Ct. App. 2006). FDUTPA claims can encompass a broad variety of conduct, and are not limited to parties’ contractual relationships or conduct involving fraud. See Fla. Stat. § 401.204(1); Nature’s Prods., Inc. v. Natrol, Inc., 990 F.Supp.2d 1307, 1322 (S.D. Fla. 2013); Deere Constr., LLC v. Cemex Constr. Materials Fla., LLC, 198 F.Supp.3d 1332, 1342 (S.D. Fla. July 2016) (quoting Galstaldi v. Sunvest Cmtys. USA, LLC, 637 F.Supp.2d 1045, 1058 (S.D. Fla. 2009). A FDUTPA claim does not require “show[ing] [that] [a] defendant was the principal actor involved in the violative acts, or that [a] defendant initiated those acts.” Galstaldi, 637 F.Supp.2d at 1056. “[I]t is sufficient to allege that a party directly participated in a violation of the FDUTPA, even if that violation was initiated by another.” Sundance Apartments I, Inc. v. Gen. Elec. Capital Corp., 581 F.Supp.2d 1215, 1222 (S.D. Fla. 2008).
First, Rossi, Leonardo, Johnson, and J.M. Products defrauded Industrial Heat and IPH into agreeing to relocate the 1 MW Plant to Florida. The undisputed facts proving this step in the scheme are described in more detail in Section VI supra.
Rossi, Leonardo, Johnson, J.M. Products, and Bass created the intentionally false illusion that J.M. Products was a “real customer” of Leonardo using the steam produced by the 1 MW Plant. They did so to falsely substantiate the reliability and independence of the 1 MW Plant’s operations and performance. Specifically, Rossi and Bass: (a) represented J.M. Products as an entity separate from Rossi and Leonardo by, for example, distinguishing it from Rossi and Leonardo in discussions with Industrial Heat and others, see SOMF ¶ 73a; (b) held out Bass as J.M. Products’ “Director of Engineering,” see SOMF ¶¶ 73b, 75a; (c) represented J.M. Products as having its own operations and using the 1 MW Plant’s steam to manufacture and process its own products, see SOMF ¶¶ 73c, 75b; and (d) represented J.M. Products as satisfied with the power it was purportedly receiving from the 1 MW Plant, see SOMF ¶¶ 73d, 75c. Johnson and J.M. Products also portrayed J.M. Products as receiving, measuring and being satisfied with the power it was purportedly receiving from the 1 MW Plant by sending monthly letters to Industrial Heat stating the amount of power it was receiving and offering to pay for such power. See SOMF ¶ 74a. Separately, Rossi, Leonardo, Johnson, and J.M. Products continued to portray J.M. Products as a credible company by representing that it was affiliated with Johnson Matthey. See SOMF ¶¶ 73e, 74b.
Rossi, Leonardo, Johnson, J.M. Products, and Bass’s representations and actions were meant to present J.M. Products as a check on, and confirmation of, claims by Rossi, Leonardo, and Penon that the 1 MW Plant was operating effectively and producing an extraordinarily high volume of steam. SOMF ¶ 76. The reality, however, was far different. J.M. Products had no manufacturing process to use the steam allegedly produced by the 1 MW Plant, made no products, and had no customers other than Leonardo itself. See SOMF ¶ 77. Rossi and Leonardo entirely controlled and funded J.M. Products and Bass. SOMF ¶ 78. Bass was hired as J.M. Products’ independent contractor (not employee) by Rossi and Leonardo, and worked under the direction of Rossi and Leonardo. SOMF ¶ 78a. Johnson and Bass had little to no knowledge of J.M. Products’ supposed business and operations. SOMF ¶ 78b. The Johnson/J.M. Products monthly letters on the power J.M. Products was allegedly receiving from the 1 MW Plant were drafted and the information contained therein provided by Rossi. SOMF ¶ 78c. J.M. Products was not an affiliate of Johnson Matthey, but rather owned by a U.S. trust over which Johnson had control as trustee. SOMF ¶ 79.
Rossi, Leonardo, Fabiani, and USQL also deceived Industrial Heat and IPH as to the accuracy and success of the 1 MW Plant’s operations and the accuracy of measurements of the 1 MW Plant’s performance. Rossi and Leonardo (through Penon) and Fabiani and USQL (themselves and through Penon) provided measurement data to Industrial Heat and IPH (see SOMF ¶ 80) that was fabricated, obtained as the result of manipulating the 1 MW Plant’s operations, or incomplete such as to render it misleading. For one, the power absorption data that Fabiani and Penon provided Industrial Heat and IPH (which were nearly identical to each other, see SOMF ¶ 81) materially conflicted with the data provided by Florida Power and Light (“FPL”). Indeed, during certain time periods, the false data from Fabiani and Penon reflecting that the 1 MW Plant used more power than FPL was providing to the entire warehouse facility where the 1 MW Plant was located – an impossible feat even if every single light, fan and computer at the warehouse was turned off during these time periods. See SOMF ¶ 82. Rossi and Leonardo admitted to Industrial Heat and IPH that FPL’s electrical usage data “[would] be a confirmation of the [1 MW Plant’s] COP.” See SOMF ¶ 59 & Ex. 34 at 4th Am. AACT Ex. 16. Fabiani and Penon provided fabricated electrical usage data instead of the real data from FPL in order to avoid Industrial Heat and IPH being able to use the real data as a check or confirmation of Rossi and Leonardo’s claims about the 1 MW Plant’s performance. Furthermore, Rossi and Leonardo withheld material information when providing data to Penon, particularly (a) discrepancies between measurements taken from Leonardo’s side of the Doral facility and measurements taken from J.M. Products’ side of the Doral facility; and (b) instances when the 1 MW Plant had operational problems or had to be shut down. SOMF ¶ 83. This information is material to understanding the implications and significance of Penon’s data, and thus withholding it renders such data incomplete and misleading.
Rossi, Leonardo, Johnson, J.M. Products, Fabiani, and USQL prevented or blocked Industrial Heat or IPH from verifying the 1 MW Plant’s operations and performance. To begin, Rossi and Leonardo altered the 1 MW Plant’s setup in Florida from the design created by Industrial Heat personnel in North Carolina in order to make evaluating the 1 MW Plant’s performance more difficult. SOMF ¶ 84. For example, the 1 MW Plant was designed to produce steam, yet Rossi and Leonardo removed the steam trap and condensate line placed on the pipe intended to carry the steam out of the 1 MW Plant. See id. These devices would have helped measure whether the 1 MW Plant was producing pure steam as claimed or just water or a combination of water and steam. In addition, Rossi and Leonardo refused to grant Industrial Heat personnel access to the Doral facility in both July and December 2015 (which refusal Johnson and J.M. Products complied with and enforced). See SOMF ¶¶ 86, 87. Rossi and Leonardo (again with J.M. Products’ concurrence) also prohibited Industrial Heat personnel from entering or knowing anything about J.M. Products’ side of the Doral facility entirely. SOMF ¶ 85. Once an Industrial Heat engineer finally gained access to the Doral facility in February 2016, he was promptly able to determine that Rossi and Leonardo’s claims about the performance of the 1 MW Plant – claims that had been backed up by the other FDUTPA Defendants – were simply impossible. See SOMF ¶ 88.
For their part, following the completion of the purported Guaranteed Performance test, Fabiani and USQL refused to provide Industrial Heat with data that they had collected during the purported test, despite Industrial Heat’s request for and despite initially committing to produce such data. SOMF ¶¶ 96-99. [96 . 97 . 98 . 99] Fabiani (on behalf of USQL), along with Rossi (on behalf of Leonardo and J.M. Products), also removed, modified, or destroyed data and equipment from the Doral facility following the completion of the purported “guaranteed performance test” without notifying or obtaining the consent of Industrial Heat or IPH. SOMF ¶¶ 37, 104, 105. All of this, of course, was on top of Fabiani and USQL providing fabricated data to Industrial Heat and IPH during the purported test, as noted already above.
Here, a contract existed between Industrial Heat and the USQL Defendants, and the contract remained in existence at the time of the breach by the USQL Defendants. On or about September 1, 2013, Industrial Heat and USQL entered into the original USQL Agreement pursuant to which Fabiani and USQL were to provide services to Industrial Heat related to the manufacture and development of products relating to the E-Cat IP. SOMF ¶ 90. Fabiani executed a joinder to the USQL Agreement, agreeing to be bound by certain provisions contained therein, including Section 6 relating to “Rights to Materials.” SOMF ¶ 91. The USQL Agreement was renewed and extended in August of 2014, and again in July of 2015. See SOMF ¶¶ 92, 94. Fabiani executed joinders in connection with both of those renewals. See SOMF ¶¶ 93, 95. The USQL Defendants do not dispute that the termination date of the USQL Agreement was March 31, 2016. See SOMF ¶ 100.
USQL Agreement (SOMF Ex. 67) § 6. Thus, upon termination of the contract or upon earlier demand by Industrial Heat, the contract required the USQL Defendants to provide Industrial Heat with all data and other documents they “use[d] or prepare[d] or c[a]me into contact with” in connection with the services they provided during the testing of the 1 MW Plant. Id. Such documents are the “sole property of Industrial Heat” or are specifically deemed contracted for as a part of the services provided. Id.
It is not disputed that the USQL Defendants refused to provide Industrial Heat with data and documents to which it was contractually entitled, despite repeated requests to do so. On February 23, 2016, Fabiani acknowledged that the USQL Defendants would provide Industrial Heat with “all electrical and thermal data of the system throughout the period of the test” and an “official report to bring to light all the flaws and functional deficiencies of the system,” which would also mention all “plant stop periods (total or partial)” and the reasons therefor. SOMF ¶ 96 & Ex. 70. Fabiani delivered no such data and documents to Industrial Heat. Industrial Heat repeatedly requested from the USQL Defendants copies of the promised raw thermal and electrical data as well as the final report relating to the testing in Doral. See SOMF ¶¶ 97-98. Industrial Heat also requested flow meter records the USQL Defendants represented they had. Id. Notwithstanding Industrial Heat’s repeated demands for the USQL Defendants to provide it with what the USQL Agreement made Industrial Heat’s sole property, the USQL Defendants refused. See SOMF ¶ 99. Their actions breached Section 6 of the USQL Agreement.
Additionally, Fabiani testified that he had other relevant documents and data that he did not provide to Industrial Heat, including data from thermocouples that were installed on individual E-Cat reactors in the 1 MW Plant, and e-mails to Penon that contained data about the operation of the 1 MW Plant. See SOMF ¶ 104. By contract, these documents and data were the “sole property” of Industrial Heat and needed to be turned over to Industrial Heat no later than “[u]pon termination of th[e USQL] Agreement.” See USQL Agreement (SOMF Ex. 67) § 6. [missing text?] documents and data. See SOMF ¶ 104. This conduct constitutes a further breach of Section 6 of
the USQL Agreement. [10]
10 The USQL Defendants contend that their duty to provide data and documents to Industrial Heat pursuant to the USQL Agreement was excused based on Industrial Heat’s “precedent breach” of failing to pay the final invoice under the Agreement. [D.E. 149] at 20. This argument fails. First, the USQL Defendants’ breach occurred before any obligation of Industrial Heat to pay the final invoice. The USQL Defendants’ final invoice dated March 30, 2016 was received by Industrial Heat on April 6, 2016. See SOMF ¶ 101. Industrial Heat had fifteen days from then to pay the invoice, so payment was due by April 21, 2016. USQL Agreement (SOMF Ex. 68) § 10. The USQL Defendants breached the USQL Agreement well before that by failing to comply with Industrial Heat’s information request on March 22, 2016 (and multiple times thereafter). See SOMF ¶¶ 97-99. Second, notwithstanding the USQL Defendants’ breach, Industrial Heat repeatedly offered to pay the USQL final invoice if the USQL Defendants would provide the documents and data they were required to provide under the Agreement, but the USQL Defendants refused to comply with their obligations under the Agreement. See SOMF ¶¶ 98, 99.
There can be no dispute that Industrial Heat has demonstrated damages resulting from the USQL Defendants’ breach. Industrial Heat paid the USQL Defendants $10,500 per month from February 2015 through February 2016 and also paid Fabiani’s monthly rent of $1,370 during that time period. See SOMF ¶¶ 102, 103. Industrial Heat, however, did not get the benefit of its bargan [sic] because the USQL Defendants refused to provide Industrial Heat with the documents and data that were “the sole property of Industrial Heat” or “contracted for as a part of the services provided”. USQL Agreement (SOMF Ex. 67) § 6. Partial summary judgment in favor of Industrial Heat as to Count V of the AACT is warranted. See Vital Pharm., Inc., 2016 WL 4479370, at *9.
For these reasons, the Court should grant summary judgment in Defendants’/CounterPlaintiffs’ favor on Counts I, III, IV, and VI of the Complaint, and on all Counts of the 4th Amended AACT.
(exists also as a separate page.)
20. The purported Validation Test that commenced on April 30, 2013 did not “measure the flow of the heated fluid and the Delta T between the temperature of the fluid before and after the E-Cat reaction,” as specified in the First Amendment. See id. [Abd note: see Exhibit 11, Delta T was not reported, fluid before was assumed to be at boiling point, “in order to be conservative.”)
24. Rossi and Leonardo did not commence a “Guaranteed Performance Test” in 2013 or 2014. In fact, they did allegedly commence such a test until 2015. See Compl. ¶ 66; Pls.’ Resp. & Objections to Industrial Heat’s 1st Req. for Admissions (attached hereto as Ex. 14) at Resp. Nos. 36 & 37.
[Abd note: I do not find the License agreement clear on the definition of “Licensed Patents.” The list of patents in the Agreement, styled Exhibit A, is vague. However, the Agreement preamble strongly implies that all related technology is included, and not just “E-Cat.” How this affects this IH claim, I am not yet sure.]
49. Leonardo abandoned over one hundred patent applications relating to the Licensed Patents (as defined in the License Agreement) without prior written notice to IPH. See id.
51. Rossi and Leonardo are engaged in designing and developing what are classified as “E-Cat Products” under the License Agreement with persons or entities other than Industrial Heat and IPH. See Ex. 25 at Feb. 9, 11, 13, 18, 20, 21, & 22, March 25 & 30, April 27, June 26, & July 23, 2016; Ex. 29 at Resp No. 2.
53. The IRS Form 1120 for the year 2012 filed by Leonardo FL, as produced by Plaintiffs in this action, is attached as Exhibit 31 ([Rossi_00011665-00011684]).
54. The IRS Form 1120X for the year 2013 filed by Leonardo FL, as produced by Plaintiffs in this action, is attached as Composite Exhibit 32 [filed under seal] ([Rossi_00011685-00011704]; [Rossi_00011715-00011734]; [Rossi_00011736-00011751]).
55. The IRS Form 1040NR for the year 2013 filed by Rossi, as produced by Plaintiffs in this action, is attached as Exhibit 33 [filed under seal] ([AE000358]).
57. Rossi also represented, on behalf of Leonardo, that this “customer” was affiliated with Johnson Matthey, plc (“Johnson Matthey”), a British multinational specialty chemical company with over £10 billion in revenue. See Ex. 9 at 172:6-173:12, 185:18-186:2, 186:9-18; Ex. 19 at 213:25-214:9, 215:3-10, 229:21-230:5; 231:22-232:23; Ex. 21 at 180:13-181:25, 194:9-16; Composite Ex. 35 ([IH-00090895-00090896]). [Besides the initial correspondence, see particularly this page.]
c. The monthly letters to Industrial Heat prepared on J.M. Products letterhead and signed by Johnson, which reported levels of power allegedly received from the 1 MW Plant, were drafted and the information contained therein provided by Rossi. See Ex. 2 at 271:11-272:2, 276:6-23; Ex. 37 at 121:2-12, 167:15-169:8, 170:9-171:3, 173:6-174:3, 179:23-179:25; Ex. 47 at Johnson Dep. Ex. 17; Ex. 50 at
Johnson Dep. Exs. 34, 35, 36, 37, & 38; Ex. 54 (Johnson Dep. Exs. 18 & 33).
89. The scheme orchestrated by Rossi, Leonardo, Johnson, J.M. Products, Bass, Fabiani, and USQL, including Rossi, Leonardo, Johnson, and J.M. Products’ inducement of Industrial Heat to enter the Term Sheet, caused Industrial Heat and IPH to pay for (1) the Plant’s transportation to Florida; (2) the procurement and delivery of equipment for the Plant’s reassembly in Florida; (3) the procurement and transportation of personnel to assemble the Plant in Florida; (4) repairs and maintenance of the 1 MW Plant; (5) new equipment for the Doral Facility; and (6) personnel to work at the Doral Facility, including Barry West (an independent contractor), T. Barker Dameron (an Industrial Heat employee), Murray, and Fabiani. See Ex. 9 at 249:14-20, 305:21-306:5 [no 305-306 in doc]; Ex. 10 at 119:10-15; Ex. 17 at 134:24-135:4, 137:16-138:18, 141:16-142:17, 143:14-144:16, 145:11-148:24, 295:11-18; Ex. 19 at 241:19-242:8, 292:7-20;
Ex. 21 at 247:1-6; Ex. 30 [originally filed under seal]; Ex. 57 at 82:21-83:8; Ex. 66 ([IH-00131928])