Court Opinion

ID: 1018690
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:24:09.813631+00
Date Added: 2024-06-11T15:07:47.151786
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 05-1090

P.R. CHUNK, INCORPORATED; PAUL WESTMEYER,

                                            Plaintiffs - Appellants,

           versus

MARTIN MARIETTA MATERIALS, INCORPORATED,

                                              Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh.   Terrence W. Boyle,
District Judge. (CA-02-210-5-BO)

Argued:   February 2, 2006                  Decided:   March 8, 2006

Before MOTZ and TRAXLER, Circuit Judges, and Henry E. HUDSON,
United States District Judge for the Eastern District of Virginia,
sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Joseph W. Westmeyer, III, WESTMEYER LAW OFFICES, Toledo,
Ohio, for Appellants.   Donald Earl Knebel, BARNES & THORNBURG,
Indianapolis, Indiana, for Appellee.       ON BRIEF: Joseph W.
Westmeyer, Jr., WESTMEYER LAW OFFICES, Toledo, Ohio; Peter J.
Sarda, WALLACE, CREECH & SARDA, L.L.P., Raleigh, North Carolina,
for Appellants.   Daniel G. Cahill, Julie W. Hampton, POYNER &
SPRUILL, L.L.P., Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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PER CURIAM:

      P.R.    Chunk,   Inc.       and     Paul    Westmeyer     (collectively,

“Plaintiffs”) entered into a Technology Transfer Agreement (the

“Agreement”)    with   Martin      Marietta       Materials,    Inc.    (“Martin

Marietta”) to develop and market patented microwave technology used

in the removal of hardened concrete.                    After a dispute arose

concerning the payment of royalties, the parties sued each other

for breach of contract and fraud.            Plaintiffs recovered nothing at

trial and now appeal.       We affirm.

                                        I.

      In the Agreement, Plaintiffs transferred ownership of domestic

patent rights in their technology to Martin Marietta.1                     Martin

Marietta agreed to pay Plaintiffs minimum royalties for the first

five years of the Agreement.            In turn, Plaintiffs warranted that

the   technology    would     “remove        hardened    concrete   from   metal

containers, including concrete trucks, at an average rate of one

(1) cubic yard per hour using reasonably optimized microwave

generator wattage and ancillary equipment.”                  J.A. 39.      Martin

Marietta     also   paid    for    an    option    to     acquire   Plaintiffs’

international patent rights. The Agreement granted Martin Marietta

      1
      For simplicity, we refer to “Plaintiffs’” rights and
obligations in the Agreement, even though the Agreement
distinguishes between the two plaintiffs in this case, P.R. Chunk,
Inc. and Paul Westmeyer.    For purposes of our discussion, this
distinction is not relevant.

                                         3
the right and discretion to file patent applications in foreign

countries prior to exercising the option.     After paying the first

year of minimum royalties, Martin Marietta claimed the technology

would not work as Plaintiffs warranted and ceased any further

payment of royalties, prompting this litigation.

     The parties litigated several issues in the district court,

but only a few are germane to this appeal.    First, Plaintiffs argue

that the district court should have granted them judgment as a

matter of law on their claim for minimum royalties.     Second, they

contend that the district court improperly ruled that Martin

Marietta had not exercised the option for international patent

rights.   Finally, Plaintiffs submit that the district court should

not have awarded costs to Martin Marietta.

                                II.

     We first address Plaintiffs’ argument that the district court

should have granted their motion for judgment as a matter of law on

the issue of minimum royalties.       We review de novo the district

court’s decision, viewing the evidence in the light most favorable

to the nonmoving party.   See Babcock v. BellSouth Adver. & Publ’g

Corp., 348 F.3d 73, 76 (4th Cir. 2003).

     Martin Marietta agreed to two alternative royalty structures.

Under the first scenario, found in section 3.1 of the Agreement,

Martin Marietta would pay Plaintiffs a percentage of gross revenue

                                  4
generated from the sale of units employing the technology after

attaining    a    certain      sales    volume.        The   alternative      royalty

structure    provided       for     “minimum”     royalties     in   the   event   of

insufficient sales.         These minimum royalties, covered in section

3.2 of the Agreement, were due annually for the first five years of

the Agreement.         The parties agree that Martin Marietta never sold

any units employing the technology.               As a result, Plaintiffs only

sought minimum royalties under section 3.2.

     In    section      12.5   of    the      Agreement,     Plaintiffs    expressly

represented      and    warranted      that    their   technology     “will   remove

hardened concrete . . . at an average rate of one (1) cubic yard

per hour.”       J.A. 39.      Furthermore, section 3.3 of the Agreement

explained that, if the rate of removal Plaintiffs warranted in

section 12.5 could not be “maintained,” the previous royalty

structures would no longer apply and the parties would be required

to meet and renegotiate in good faith a new royalty structure.

J.A. 26.

     Plaintiffs argue on appeal that the district court should have

granted judgment as a matter of law in their favor and awarded

minimum royalties.        They explain that, as long as Martin Marietta

owned the domestic patent rights, it owed minimum royalty payments

under section 3.2.

     We disagree. As an initial matter, Plaintiffs never moved for

judgment as a matter of law on this issue prior to sending the case

                                           5
to the jury.   Their failure precludes our review.                    See Fed. R. Civ.

P. 50(a)(2) (“Motions for judgment as a matter of law may be made

at any time before submission of the case to the jury.”) (emphasis

added); Pittman v. Grayson, 149 F.3d 111, 120 (2d Cir. 1998) (“Rule

50(a) requires that, to be timely, the motion for judgment as a

matter of law must be made ‘before submission of the case to the

jury.’”) (quoting rule).

      Additionally,     Plaintiffs         did    not        object     to    the    jury

instructions or the jury verdict form, which clearly prohibited

Plaintiffs from recovering any minimum royalties under section 3.2

of   the   Agreement   if   the    jury       found    a   breach     of     Plaintiffs’

warranty.      We   therefore      agree      with     the    district       court   that

Plaintiffs cannot raise this argument.

      Even if we consider this issue on its merits, the jury found

that Plaintiffs breached their warranty under sections 3.3 and 12.5

of the Agreement.       There was ample evidence to support such a

finding.     Plaintiffs’ breach was material and excused Martin

Marietta from further performance under the Agreement. See Coleman

v. Shirlen, 281 S.E.2d 431, 434 (N.C. Ct. App. 1981) (“The general

rule governing bilateral contracts requires that if either party to

the contract commits a material breach of the contract, the other

party should be excused from the obligation to perform further.”).2

      2
      The parties      agree      that    North       Carolina    law      governs    the
Agreement.

                                          6
Moreover,   as   Plaintiff    Westmeyer    admitted   at   trial,   if   the

warranted rate of removal could not be “maintained” as stated in

section 3.3, the previous royalty structures under sections 3.1

(sales-based royalties) and 3.2 (minimum royalties) would no longer

apply.   J.A. 26, 335.       In other words, the jury’s finding of a

breach of the warranty precludes any claim to minimum royalties

under section 3.2.

     Thus, we find no error in the district court’s denial of

Plaintiffs’ motion for judgment as a matter of law.

                                    III.

     We now turn to Plaintiffs’ argument that the district court

should not have granted judgment as a matter of law to Martin

Marietta on Plaintiffs’ claim concerning the international patent

rights option.

     In section 4.1 of the Agreement, Plaintiffs granted Martin

Marietta an option to acquire any rights to the patented technology

in foreign countries, which the parties generally refer to as

“international patent rights.”           Martin Marietta agreed to pay

additional royalties to Plaintiffs if it exercised the option. The

Agreement allowed Martin Marietta to file patent applications in

foreign countries before exercising the option.

     Plaintiffs   contend    that   Martin   Marietta’s    “ownership”   of

certain foreign patents indicated its intention to exercise the

                                     7
option.        This     argument   fails.        The   Agreement    allowed      Martin

Marietta “sole control and discretion” to file foreign patent

applications, and such foreign filings would not be an exercise of

the option. For example, the Agreement required Martin Marietta to

give       Plaintiffs    notice    of    the    countries   where    it    had    filed

applications.         The deadline for this notice fell well before the

deadline for exercising the option, meaning that Martin Marietta’s

pursuit      of   foreign    patent     applications     would     not    necessarily

trigger an exercise of the option.                In fact, the parties extended

the deadline for exercising the option even after Martin Marietta

had    begun      foreign   patent      prosecution,    confirming       that    Martin

Marietta’s conduct could not be considered an exercise of the

option.      Furthermore, Martin Marietta’s prosecution of the foreign

patents in its own name did not manifest an intention to exercise

the option, especially where the foreign patent offices required

such a practice for Martin Marietta to have standing.

       Under the circumstances, Martin Marietta’s conduct did not

amount to an exercise of the option.                    As such, there was “no

legally sufficient evidentiary basis” for a reasonable jury to find

for Plaintiffs on this issue, and the district court properly

granted judgment as a matter of law to Martin Marietta.                         Fed. R.

Civ. P. 50(a).3

       3
      This conclusion renders moot Plaintiffs’ argument that the
district court improperly limited their potential damages on this
claim prior to trial.

                                            8
                                       IV.

     Finally, Plaintiffs argue that the district court should not

have awarded costs to Martin Marietta.                  Rule 54(d)(1) of the

Federal   Rules    of   Civil     Procedure    grants   district   courts   the

authority to allow “costs other than attorneys’ fees . . . as of

course to the prevailing party unless the court otherwise directs.”

Fed. R. Civ. P. 54(d)(1).         We have explained that, “in the ordinary

course, a prevailing party is entitled to an award of costs.”

Teague v. Bakker, 35 F.3d 978, 996 (4th Cir. 1994); see also Oak

Hall Cap & Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d

291, 296 (4th Cir. 1990) (“[T]he award of costs to the prevailing

party is a matter firmly in the discretion of the trial court.

However, we have previously declared that district courts may not

depart    from    the   ‘normal    practice’    of   awarding   fees   to   the

prevailing party without first articulating some good reason for

doing so.”).

     Plaintiffs contend that Martin Marietta was not a prevailing

party because it did not prevail on its counterclaims.             However, a

party need not prevail on every issue to be considered a prevailing

party.    See Bly v. McLeod, 605 F.2d 134, 137 (4th Cir. 1979).

Martin Marietta prevailed in its defense of Plaintiffs’ claims, and

we find no abuse of discretion in the district court’s award of

costs to Martin Marietta.

                                        9
                            V.

    For the foregoing reasons, we affirm the decision of the

district court.

                                                    AFFIRMED

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