Court Opinion

ID: 624206
Source: CourtListenerOpinion
Date Created: 2012-03-03 06:33:21+00
Date Added: 2024-06-11T17:51:06.912948
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                          FOR THE ELEVENTH CIRCUIT
                                                                    FILED
                            ________________________       U.S. COURT OF APPEALS
                                                             ELEVENTH CIRCUIT
                                                              FEBRUARY 15, 2012
                                  No. 10-12837
                                                                  JOHN LEY
                            ________________________
                                                                   CLERK

                         D. C. Docket No. 9:09-cv-81846-KLR

MAX ABECASSIS,
an individual,
NISSIM CORP.,
a Florida corporation,

                                                   Plaintiffs-Appellants,

                                       versus

EUGENE M. CUMMINGS, P.C.,
an Illinois corporation,
JOSEPH M. VANEK,
an individual,

                                                   Defendants-Appellees.

                            ________________________

                   Appeal from the United States District Court
                       for the Southern District of Florida
                         ________________________

                                 (February 15, 2012)

Before DUBINA, Chief Judge, MARCUS and FAY, Circuit Judges.
PER CURIAM:

      Plaintiffs-Appellants Nissim Corporation and Max Abecassis (collectively

“Nissim”) appeal the dismissal of their complaint for failure to state a claim

against Defendants-Appellees Joseph M. Vanek and Eugene M. Cummings, P.C.

(collectively “Vanek and Cummings”). After reading the parties’ briefs and

having the benefit of oral argument, we affirm the judgment of dismissal.

                                         I.

      In January 1998, Nissim retained Vanek and Cummings as counsel to

“enhance, defend, and enforce” certain U.S. patents owned by Nissim. [Retainer

Agreement, R.1 (Exh. A) at 1.] The parties entered into a Retainer Agreement in

which Vanek and Cummings agreed to, inter alia, “[v]igorously defend to the

extent meritorious and reasonable any challenges that may arise to the validity of

the Intellectual Properties” and to “[t]ake such actions and conduct such

negotiations and litigations as may be meritorious, reasonable, and necessary to

secure Licensing Agreements with entities infringing the Intellectual Properties.”

Id. at 3. The term “Intellectual Properties” is defined in the Retainer Agreement to

include, inter alia, U.S. Patent Nos. 5,434,678; 5,589,945; and 5,634,849.

      The Retainer Agreement expressly provided that “CustomPlay” was outside

its scope. CustomPlay was a product developed by Nissim, which “allows users to

                                          2
customize individual viewing preferences for motion pictures and enables the

skipping of objectionable content in response to such individualized content

preferences.” [Compl., R.1 (Exh. A) at 3.] The Retainer Agreement provided that

Vanek and Cummings “will not receive any portion of the revenues of CustomPlay

or otherwise participate in CustomPlay and shall have no obligation to participate

in any copyright or other litigation that may result as a consequence of the

commercialization of CustomPlay.” [Retainer Agreement, R.1 (Exh. A) at 3.]

       In January 2000, Matthew and Lee Jarman contacted Nissim about

obtaining licensing rights to CustomPlay. Nissim sent Matthew and Lee Jarman

information about CustomPlay, but the parties never entered into a licensing

agreement.1 About a year later, the Jarmans formed ClearPlay, Inc. and began

producing and distributing software that Nissim alleges infringed upon several of

Nissim’s patents. On May 14, 2004, Nissim filed a patent infringement action

against the Jarmans and ClearPlay, Inc. (collectively, “the Jarmans”). Specifically,

Nissim alleged that the Jarmans infringed U.S. Patent Nos. 6,607,401; 5,724,472;

5,434,678; and 5,589,945. The last two patents – U.S. Patent Nos. 5,434,678 and

       1
         Nissim sent the Jarmans a demonstration version of the CustomPlay software. The opening
screen referenced several of Plaintiffs’ patents, including U.S. Patent Nos. 5,434,678; 5,589,945; and
5,634,849.

                                                  3
5,589,945 – are “Intellectual Properties” as defined in Nissim’s Retainer

Agreement with Vanek and Cummings.

      On June 23, 2004, the Jarmans answered Nissim’s complaint in the

ClearPlay litigation, denying any infringement and challenging the validity of

Nissim’s patents. After Vanek and Cummings declined to participate in this

litigation with the Jarmans, Nissim hired John Carey as counsel.

      On December 8, 2005, Nissim terminated its Retainer Agreement with

Vanek and Cummings, citing grounds referred to in the agreement as “without

cause” and also “for cause.” Nissim identified the “for cause” reason for

termination as being “based on Counsel’s actions and inactions relating to the

defense of the validity of the Intellectual Properties in the ClearPlay . . .

litigation.” [R. 1-2 (Exh. D) at 1.] Over three years later, on June 22, 2009, Nissim

filed this suit against Vanek and Cummings, claiming breach of contract and fraud

in the inducement and seeking a declaratory judgment. In response, Vanek and

Cummings moved to dismiss the complaint under Federal Rule of Civil Procedure

12(b)(6) for failure to state a claim. The district court dismissed Nissim’s breach

of contract and fraud in the inducement claims with prejudice. The district court

also dismissed Nissim’s declaratory judgment action with prejudice “insofar as it

attempts to reargue” the breach of contract claim. The district court, however,

                                            4
went on to dismiss that claim without prejudice “insofar as it seeks a declaration

regarding entitlement to contingency fees on royalties from certain license

agreements.” Abecassis v. Cummings, P.C., No. 09-81846 at *15–16 (S.D. Fla.

June 2, 2010). The district court gave Nissim leave to amend the complaint within

fifteen days of the date of the dismissal order to specify the relevant license

agreements. Nissim did not file an amended complaint and now appeals the

district court’s order.

                                          II.

      “We review the grant of a motion to dismiss for failure to state a claim

under Fed. R. Civ. P. 12(b)(6) de novo.” Thompson v. RelationServe Media, Inc.,

610 F.3d 628, 633 (11th Cir. 2010). In ruling on a 12(b)(6) motion, “[a] court may

consider only the complaint itself and any documents referred to in the complaint

which are central to the [plaintiff’s] claims.” Wilchombe v. TeeVee Toons, Inc.,

555 F.3d 949, 959 (11th Cir. 2009) (citation omitted). “[T]he [c]ourt accepts the

factual allegations in the complaint as true and construes them in the light most

favorable to the plaintiff.” Speaker v. U.S. Dep’t of Health & Human Servs. Ctrs.

for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010).

“Dismissal for failure to state a claim is proper if the factual allegations are not

‘enough to raise a right to relief above the speculative level.’” Edwards v. Prime,

                                           5
Inc., 602 F.3d 1276, 1291 (11th Cir. 2010) (quoting Rivell v. Private Health Care

Sys., Inc., 520 F.3d 1308, 1309 (11th Cir. 2008)); see also Sinaltrainal v. Coca-

Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009) (“A complaint may be dismissed

if the facts as pled do not state a claim for relief that is plausible on its face.”).

                                           III.

       Nissim contends that the district court erred in dismissing its breach of

contract claim on statute of limitations grounds. Florida law provides a five-year

statute of limitations on a claim for breach of contract. Fla. Stat. § 95.11(2)(b);

see also Collections, USA, Inc. v. City of Homestead, 816 So. 2d 1225, 1227 n.2

(Fla. Dist. Ct. App. 2002). The limitations period begins to run at the time of the

breach. See Fla. Stat. § 95.031(1) (“A cause of action accrues when the last

element constituting the cause of action occurs.”); Technical Packaging, Inc. v.

Hanchett, 992 So. 2d 309, 313 (Fla. Dist. Ct. App. 2008) (“Florida case law

consistently holds that a cause of action for breach of contract accrues and the

limitations period commences at the time of the breach.”). The plaintiff’s

knowledge of the breach is immaterial. See Abbott Labs., Inc. v. Gen. Elec.

Capital, 765 So. 2d 737, 740 (Fla. Dist. Ct. App. 2000) (“[T]he limitation period

in [Fla. Stat. §] 95.11(2)(b) is not tolled by the lack of discovery of a breach within

the limitation period [,] . . . actions for breach of contract are barred five years

                                             6
after the cause of action accrued regardless of whether the plaintiff knew that it

had a claim.”).

      Nissim’s complaint alleges that Vanek and Cummings committed breach of

contract by failing to defend the validity of the Nissim patents and to advance

litigation costs in the ClearPlay litigation. The district court concluded that the

statute of limitations on Nissim’s breach of contract claim began running on May

13, 2004, when Nissim initiated the ClearPlay litigation and hired Carey as

counsel. The district court reasoned that filing suit against ClearPlay put at issue

the patents’ validity and triggered Vanek and Cummings’ obligation to defend.

Because Nissim did not file suit in this case until June 22, 2009, more than five

years later, the district court determined that Nissim’s breach of contract claim is

time barred. Nissim contends that was error. It argues that the limitations period

began running, at the earliest, on June 23, 2004, the date that the Jarmans

answered Nissim’s complaint and asserted an affirmative defense and

counterclaim that alleged that Nissim’s patents were invalid. By Nissim’s

calculation, its breach of contract claim was filed just inside the five-year

limitations period.

      We do not need to decide whether Nissim’s breach of contract claim is

barred by the statute of limitations. Even if the claim is timely, Nissim may not

                                           7
recover as a matter of law because it did not comply with the Retainer

Agreement’s default clause. See Morris v. Knox Corp., 13 So. 2d 914, 915 (Fla.

1943) (explaining that a plaintiff must comply with a contractual obligation to

provide written notice of breach and opportunity to cure before defendant’s breach

becomes actionable); Saunders Leasing Sys., Inc. v. Gulf Cent. Distrib. Ctr., Inc.,

513 So. 2d 1303, 1307 (Fla. Dist. Ct. App. 1987) (reversing judgment on breach of

contract claim where plaintiff failed to give defendant notice and an opportunity to

cure as required by contract). Section 9.2 of the Retainer Agreement provides:

       In the event that Counsel fails to provide Services as stipulated
       herein; breaches any material term of this Agreement, or otherwise
       fails to perform under this Agreement, Client shall deliver notice
       thereof to Counsel and Counsel shall have thirty (30) days from
       receiving such notice to sure such failure. If the failure continues
       after such 30-day period, this Agreement shall be automatically
       terminated.

[Retainer Agreement, R.1 (Exh. A) at 6.] Nissim provided Vanek and Cummings

with written notice of their alleged breach in a letter dated December 8, 2005.2

The letter informed Vanek and Cummings that they were being terminated “for

cause under Section 9.2 . . . based on Counsel’s actions and inactions relating to

the defense of the validity of the Intellectual Properties” in the ClearPlay litigation

       2
        The December 8, 2005, letter was referenced in Nissim’s complaint and attached as an
exhibit. The district court, therefore, properly considered the letter in ruling on Vanek and
Cummings’ 12(b)(6) motion to dismiss. See Wilchombe, 555 F.3d at 959.

                                             8
and specifically alleged that Vanek and Cummings violated Section 2.4 of the

Retainer Agreement, which required them to: “[v]igorously defend to the extent

meritorious and reasonable any challenges that may arise to the validity of the

Intellectual Properties.” [R.1-2 (Exh. D) at 1.] Nissim’s notice of breach was

inadequate because it was given roughly two weeks after Nissim settled the

ClearPlay litigation. The thirty-day notice requirement in Section 9.2 was

expressly intended to give Vanek and Cummings an opportunity to cure any

default. Here, Vanek and Cummings were deprived of any opportunity to cure

because they were not informed of their purported breach until cure became

impossible.3 Thus, Nissim’s claim for breach of contract fails as a matter of law.

See Morris, 13 So.2d at 915; Saunders Leasing Sys., Inc., 513 So.2d at 1307.

                                                   IV.

       Nissim also challenges the district court’s finding that its fraud in the

inducement claim was time barred.4               The statute of limitations for a fraud in the

       3
         Nissim sent Vanek and Cummings a letter dated January 9, 2006, stating that they could cure
by reimbursing Nissim for their defense costs in the ClearPlay litigation within 30 days. But under
the terms of the contract, Vanek and Cummings’ opportunity to cure had already expired on January
7, 2006, thirty-days after notification of breach. Nissim lacked authority to unilaterally extend the
time for cure because the Retainer Agreement included a clause providing that: “This Agreement
may not be modified, amended, rescinded, canceled or waived, in whole or in part, except by a
written instrument signed by the Parties.” [Retainer Agreement, R.1 (Exh. A) at 8-9.]

       4
           To state a claim for fraud in the inducement under Florida law, a plaintiff must allege that:

                                                    9
inducement claim is four years. Tyson v. Viacom, Inc., 890 So. 2d 1205, 1213

(Fla. Dist. Ct. App. 2005) (citing Fla. Stat. § 95.11(3)(j)). The claim accrues when

“the facts giving rise to the cause of action were discovered or should have been

discovered with the exercise of due diligence.” Fla. Stat. § 95.031(2)(a); see also

Hanna v. Beverly Enterprises-Florida, 738 So. 2d 424, 425 (Fla. Dist. Ct. App.

1999) (reversing dismissal of fraud in the inducement claim as barred by the

statute of limitations where trial court assumed that the cause of action accrued at

the time the contract was signed).

       The district court concluded that the statute of limitations on Nissim’s fraud

in the inducement claim commenced, at the latest, on June 23, 2004, and expired

on June 23, 2008. Because Nissim did not file this action until June 22, 2009, the

district court determined that Nissim’s claim was time barred. The district court

based its statute of limitations ruling on the allegations in the complaint that

Vanek and Cummings refused to defend Nissim’s patents when challenged by the

ClearPlay defendants in their answer.

       (a) the representor made a misrepresentation of a material fact; (b) the representor
       knew or should have known of the falsity of the statement; (c) the representor
       intended that the representation would induce another to rely and act on it; and (d)
       the plaintiff suffered injury in justifiable reliance on the representation.

Joseph v. Liberty Nat’l Bank, 873 So. 2d 384, 388 (Fla. Dist. Ct. App. 2004) (emphasis omitted).

                                               10
      We agree with the district court that Nissim’s fraud in the inducement claim

is barred by the statute of limitations. Nissim’s fraud claim is based on Vanek and

Cummings’ representations concerning their willingness to defend challenges to

the validity of Nissim’s patents. The complaint alleges that Nissim hired John

Carey to represent them in the ClearPlay litigation as a result of Vanek and

Cummings’ refusal to fulfill their defense obligation. The ClearPlay complaint,

filed on May 13, 2004 and referenced in Nissim’s complaint and attached as an

exhibit, makes clear that Nissim retained Carey in 2004. Thus, based on the

allegations in the complaint, Nissim was aware of Vanek and Cummings’

purported fraud in 2004. Because Nissim did not file its complaint until June

2009, a period beyond the four year statute of limitations, its fraud in the

inducement claim is time barred.

                                          V.

      Finally, as to the claim for a declaratory judgment in Count III, we conclude

from the record that the district court did not abuse its discretion in dismissing the

count with leave to amend. The existence or nonexistence of some right, status,

immunity, power or privilege must be shown to entitle the moving party to

declaratory relief. Fla. Hotel & Rest. Comm’n v. Marseilles Hotel Co., 84 So. 2d

567, 568 (Fla. 1956). Count III is an attempt to reargue the breach of contract

                                          11
issue in Count I that was dismissed by the district court and affirmed supra.

Accordingly, Count III must be dismissed. See Colby v. Colby, 120 So. 2d 797,

800 (Fla. Dist. Ct. App. 1960) (holding that “questions which have already been

adjudicated by a court having jurisdiction of the subject matter and the parties

cannot subsequently, between such parties and their privies, constitute a justiciable

controversy within the meaning of declaratory judgment acts”).

      Count III also requests a declaration regarding Cumming’s and Vanek’s

entitlement to contingency fees on certain royalties. Yet Nissim failed to plead

sufficient facts to identify which of the scores of possible license agreements its

claims addressed, details necessary to ascertain how the royalty stream is to be

divided under the Agreement. Nissim decided not to cure this defect in its

complaint but to appeal instead. That leaves us with little choice but to affirm the

dismissal of this count as well.

      For the aforementioned reasons, we affirm the judgment of dismissal.

AFFIRMED.

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