Opinion ID: 199239
Heading Depth: 4
Heading Rank: 3

Heading: Failure to Find AccuSoft in Contempt Because it

Text: did Not Maintain Records of IFL Sales Using Sequential Serial Numbers As a third ground for contempt, Snowbound alleges that AccuSoft failed to maintain its records of IFL sales as required -41- by the last section of Paragraph 5 of the settlement agreement, which states: Each AccuSoft sale or license pursuant to this Paragraph will be identified by a serial number, issued sequentially beginning with the number 276745. AccuSoft will keep a list of each sale by serial number, which list will be made available to Palo's independent accountant . . . . This argument was raised below by Snowbound, but, like Snowbound's contention that the allocated licenses constituted contempt, was not directly addressed by the master in his memorandum disposing of the contempt allegations. On appeal, Snowbound asks us to rectify the omission, pointing to language in one of the master's memoranda on audit costs which, it argues, constitutes a factual finding that no such records were kept. Because it considers the settlement agreement unambiguous as to this requirement, Snowbound contends that this finding obligates us to conclude, as a matter of law, that AccuSoft was in contempt. Given the heavy burden of proof our precedent places on a party alleging contempt, we do not agree that the current record provides an adequate basis for resolving the issue in Snowbound's favor. The language to which Snowbound refers, although it does state that AccuSoft “failed to maintain” the sequential list of IFL sales required by the settlement -42- agreement, appears in a discussion of the allocation of audit costs, contained in a memorandum issued after the master had ruled on the parties' contempt allegations. It is not clear that the master intended the statement to stand as a formal finding of fact, and there is certainly no suggestion in the record that it was meant to carry the weight Snowbound would have it bear. Nor can we consider the matter free from dispute, as AccuSoft points to several exhibits appearing to show that sequential serial numbers, meeting the requirements of the settlement agreement, were used for at least some IFL sales. Under the circumstances, the master's brief statement does not constitute proof, by clear and convincing evidence, of contempt. At the same time, however, we conclude that we cannot resolve this matter in AccuSoft's favor either. The master's statement at a minimum indicates that he harbored some doubt about AccuSoft's compliance with this requirement. On the basis of the current record, we cannot foreclose the possibility that the master, once he squarely confronts the issue, might find that AccuSoft's failure to comply fully constitutes contempt. While we see comparatively little chance that such contempt, if proven, could be linked to any significant damages -- or attorneys' fees, given our interpretation of the fee-shifting -43- provision contained in the agreement -- we leave those determinations to the district court on remand.