Court Opinion

ID: 4187182
Source: CourtListenerOpinion
Date Created: 2017-07-18 21:01:35.212631+00
Date Added: 2024-06-11T14:40:01.967273
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SEED COMPANY LTD., et al., )
Plaintiffs, §
v. § Civil Case N0. 08-0355 (RJL)
WESTERMAN, et al., §
Defendants. § F I L E D

/1_¢,.. JUL 1 8 2017

MEMORANDUM OPINION amer :I.S. D|str|ct & Bankruptcy
our orth D| trlt f I
(July f g 2017) [Dkts. ##161, 1621 ° S ° ° C°""'b'a

Seed Company Limited and its leader, Shigeru Tamai (collectively “Seed” or
“plaintiffs”), brought this suit against their former attorneys, Westerman, Hattori, Daniels,
and Adrian, LLP (the “Westerman defendants”) and Kratz, Quintos, and Hanson, LLP (the
“Kratz defendants”), alleging legal malpractice arising out of an unsuccessful patent
application. Before the Court is the Westerman defendants’ Motion for Judgment on the
Pleadings as to C0unt ll [Dkt. #161], and the Kratz defendants’ Motion for Summary
Judgment on C0unts III and IV of the Amended Complaint [Dkt. #162]. Upon
consideration of the pleadings, relevant law, and the entire record herein, the Court Will
GRANT the motions.

BACKGROUND

The issue in this case is Whether Tamai, an` inventor of a dispenser of White
correctional tape, can recover for malpractice against his company’s former attorneys

following the mishandling of a U.S. patent application and the award of the patent to

another inventor, Christopher J. Stevens. The background has been set forth in detail by
our Court of Appeals and by this Court. See Seed Co. Lta’. v. Westerman, 832 F.3d 325,
329-31 (D.C. Cir. 2016) (“Seea’ II”); Seed Co. Lta’. v. Westerman, 62 F. Supp. 3d 56, 59-
62 (D.D.C. 2014) (“Seea’ 1”). The Court will thus limit its present statement of the facts to
that necessary for the present disposition.

Plaintiffs allege that defendants committed legal malpractice by failing to tile an
English-language translation of their international Patent Cooperation Treaty (“PCT”)
application and by giving erroneous advice about the implications of a patent suit in the
Federal Circuit. The first and second counts of the amended complaint assert that both the
Westerman and Kratz defendants are responsible for these errors. Am. Compl. 111 42-52
(l\/Iay 29, 2008) [Dkt. #29].l The third and fourth counts, which are contingent on the
dismissal of the first two counts on statute-of-limitations grounds, name only the Kratz
defendants and allege that these defendants committed malpractice by giving erroneous
advice concerning the statute of limitations for plaintiffs’ primary claims. Am. Compl.
W 53-66. Following the close of discovery, defendants moved for summary judgment. l
found that plaintiffs’ claims were not barred by the statute of limitations, granted judgment
for defendants on count one and two, and dismissed counts three and four as moot. Seed

I, 62 F. Supp. 3d at 67.

 

l As has previously been explained, see Seed 11, 832 F.3d at 330-32, the law firm representing
plaintiffs in filing their patent application split in October 2003. The lawyers who left formed the
Westerman firm and took the patent matter with them. The lawyers who remained founded the Kratz firm.

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The Court of Appeals reversed Although the court agreed that the first and second
counts were timely as to the Westerman defendants, it held that they were untimely as to
the Kratz defendants Seed II, 832 F.3d at 335. On the merits, the court held that the
Westerman defendants were not entitled to summary judgment on count one because
plaintiffs had raised “a genuine dispute of material fact about whether the defendants’
decision [not to file a translation of the PCT application] could have been characterized as
an exercise of professional judgment in 1997,” id. at 336-37, and because the Westerman
defendants had “introduced no evidence of their deliberative process in reaching the
decision not to file the translation,” id. at 338. The court remanded count one for trial. As
to count two, the court declined to review my determination that plaintiffs had withdrawn
this count. lnstead, responding to arguments plaintiffs raised for the first time on appeal,
the court reasoned that “[b]ecause the district court found that the claims were brought
within the statute of limitations, it had no occasion to consider whether the second count
alleges damages stemming from appellants’ failure to pursue their malpractice claims
sooner due to the defendants’ erroneous advice about the significance of the Federal Circuit
appeal (and, if it does, whether Seed waived those damages as well)” and “remand[ed] to
the district court to interpret the complaint in the first instance.” Id. at 339. Finally,
consistent with its determination that counts one and two were untimely as to the Kratz
defendants, the Court of Appeals reinstated contingent counts three and four against the
Kratz defendants and remanded them “for the district court to adjudicate . . . in the first

instance.” Id. at 335.

On remand, the Westerman defendants moved for judgment on the pleadings as to
count two. The Kratz defendants moved for summary judgment on counts three and four.
Plaintiffs opposed both motions, Pls.’ Mem. in Opp’n to Westerman Defs.’ Mot for J. on
the Pleadings (“Opp’n to Westerman”) [Dkt. #169]; Pls.’ l\/lem. of P. & A. in Opp’n to
Kratz Defs.’ Mot. for Summ. J. on Counts lll and lV of the Am. Compl. (“Opp’n to Kratz”)
[Dkt. #170], and defendants replied in support of their motions, Reply in Supp. of
Westerman Defs.’ Mot. for J. on the Pleadings as to Count ll [Dkt. #172]; KratZ Defs.’
Reply Mem. in Supp. of their Mot. for Summ. J. on Counts III and lV of the Am. Compl.
[Dkt #173]. l took the motions under advisement shortly thereafter.

STANDARD OF REVIEW

The Westerman defendants move for judgment on the pleadings. “[A] party may
move for judgment on the pleadings” “[a] fter the pleadings are closed . . . but early enough
not to delay trial,” Fed. R. Civ. P. l2(c). The motion shall be granted “if the moving party
demonstrates that no material fact is in dispute and that it is entitled to judgment as a matter
oflaw.” Schuler v. Prz`cewaterhouseCoopers, LLP, 514 F.3d 1365, 1370 (D.C. Cir. 2008)
(quoting Peters v. Nat’l R.R. Passenger Corp., 966 F.2d 1483, 1485 (D.C. Cir. 1992)). ln
ruling on the motion, the court must “tak[e] the complaint’s factual allegations as true.”
Mpoy v. Rhee, 758 F.3d 285, 287 (D.C. Cir. 2014) (citing Ashcroft v. Iqbal, 556 U.S. 662,
678-79 (20()9)). “[A]ny ambiguities or doubts concerning the sufficiency of the claim
must be resolved in favor of the pleader,” Schuler, 514 F.3d at 1370 (quoting Doe v. DOJ,
753 F.2d 1092, 1102 (D.C. Cir. 1985)) (emphasis deleted), and the court should “accord
the benefit of all reasonable inferences to the non-moving party,” Jones v. Law Office of

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Davia’ Sean Dufek, 77 F. Supp. 3d 134, 137 (D.D.C. 2015), aff’d, 830 F.3d 523 (D.C. Cir.
2016), cert denied, 137 S. Ct. 1336 (2017).

The Kratz defendants move for summary judgment. Summary judgment is
appropriate “if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A fact
is material if it ‘might affect the outcome of the suit under the governing law,’ and a dispute
about a material fact is genuine ‘if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.”’ Steele v. Schafer, 535 F.3d 689, 692 (D.C. Cir. 2008)
(quoting Anderson v, Liberly Lobby, lnc., 477 U.S. 242, 248 (1986)). “ln making that
determination, the court ‘must view the evidence in the light most favorable to [the
nonmoving party], draw all reasonable inferences in [their] favor, and eschew making
credibility determinations or weighing the evidence.”’ Calhoun v. Johnson, 632 F.3d 1259,
1261 (D.C. Cir. 2011) (quoting Lathram v. Snow, 336 F.3d 1085, 1088 (D.C. Cir. 2003)).

ANALYSIS

A. Motion for Judgment on the Pleadings as to C0unt Two

The Court of Appeals remanded the second count so that this Court could “interpret
the complaint in the first instance and decide whether Seed waived any remaining claims.”
Seed II, 832 F.3d at 339. “[l]f the allegations in the complaint cover such a claim and Seed
did not concede it, Seed could seek damages based on the Westerman defendants’ faulty
advice about the timing of its (now dismissed) claims against the Kratz defendants.” Id.

The first question 1 must answer is “whether the second count [of thelamended
complaint] alleges damages stemming from [plaintiffs’] failure to pursue their malpractice

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claims sooner due to the defendants’ erroneous advice about the significance of the Federal
Circuit appeal.” Id. The Westerman defendants contend that our Circuit’ opinion answers
this question in the negative. See Mem. in Supp. of Westerman Defs.’ Mot for J. on the
Pleadings as to C0unt 11 10_12 [Dkt. #161-1]. But that is plainly wrong; if our Circuit had
answered this question, there would be no need for it to ask me to do so “in the
first instance.”2

Turning to the amended complaint, 1 find that it contains allegations that are
consistent with a claim that defendants’ advice caused plaintiffs to underestimate the
importance of the Federal Circuit appeal (and therefore delayed the discovery of their
malpractice claims). To begin with, the amended complaint states that defendants
counseled plaintiffs that “even if Seed lost the pending Federal Circuit appeal, the patent
application would thereafter ‘be returned to the EXaminer’ and Seed would be permitted to
‘add or amend claims’ and otherwise protect its rights to its invention.” Am. Compl. 11 49
(internal citations omitted). lt also states that the behavior of defendants “had the effect of
lulling [p]laintiffs into believing that their rights would be protected.” Am. Compl. 1111 34,
47. Although these statements may have only been intended as support for the claim that
defendants’ “incorrect advice was the proximate cause of [p]laintiffs’ loss of royalties that

would have been earned had [p]laintiffs agreed to settle with the owner of the Stevens

 

2 The Westerman defendants’ argument is based on our Circuit’s holding “that Seed had inquiry
notice of an injury upon receiving the Federal Circuit decision.” Seed II, 832 F.3d at 334-35. Although
that holding might prevent plaintiffs from relying on damages stemming from advice given after the Federal
Circuit’s decision Was announced, the amended complaint also contains allegations concerning advice
given before the Federal Circuit’s decision was announced

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patent,” Am. Compl. 11 50, they arguably admit of some ambiguity Thus, on the face of
the complaint 1 cannot rule out the possibility that plaintiffs intended also to assert a
separate claim for damages resulting from the delayed discovery of their malpractice
claims. See Schuler, 514 F.3d at 1370 (“[A]ny ambiguities or doubts concerning the
sufficiency of the claim must be resolved in favor of the pleader.” (emphasis deleted)).
Having resolved any ambiguity in favor of plaintiffs and thereby concluded that the
amended complaint plausibly alleges damages stemming from defendants’ erroneous
advice, 1 must next determine “whether Seed waived those damages.” Seed II, 832 F.3d at
339. When this case was last before me, plaintiffs purported to withdraw the second count
of their amended complaint, stating they would “not be pursuing that cause of action.” Pls.’
Mem. ofP. & A. in Opp’n to Kratz Defs.’ Mot. for Summ. J. 6 (“Opp’n to First Kratz Mot.
for Summ. J.”) [Dkt. #137]. Plaintiffs now argue, however, as they did for the first time
on appeal, that their withdrawal of the second count was only a partial withdrawal
Specifically, they assert that the second count of their amended complaint asserted two
types of damages, and that although they withdrew the claim for damages from not
accepting a settlement, they did not withdraw the claim for damages resulting from their
reliance on defendants’ advice concerning the importance and finality of the Federal
Circuit appeal. According to plaintiffs, the limited nature of their previous concession is
shown by the fact that their prior “stipulation never mentions a waiver of any claims under
Count ll, and never mentions a waiver of any damages other than those arising from a
failure to enter into a settlement agreement with Stevens.” Opp’n to Westerman 10

(emphasis deleted).

Plaintiffs are mistaken. To begin with, their prior stipulation does expressly
mention the waiver of “claims” under count two. lt both refers to the “withdrawn claim
for damages relating to the Stevens settlement proposals,” Pls.’ Mem. of P. & A. in Opp’n
to Westerman Defs.’ Consolidated Mot. for Summ. J. 9 [Dkt. # 138] (emphasis added), and
states that the “factual allegations contained in C0unt 11” concerning “defendants’ ‘lulling’
activity”'i.e., the delaying of the discovery of plaintiffs’ malpractice claims by
misapprehending the significance of the Federal Circuit appeal_are “not [relevant] to any
specific claim for damages.” Ia’. (emphasis added). Equally plain is the breadth of that
stipulation. ln addition to the phrase just quoted, which on its face encompasses “any
specific claim for damages” brought under count two, plaintiffs represented to the Court
that they had “informed defendants that they were not aware of damages arising from
C0unt 11 that would be different or greater than the damages under C0unt 1,” Opp’n to First
Kratz Mot. for Summ. J. 41. This broad language clearly waives any claim for damages
outside of count one, and thus cannot be squared with plaintiffs’ current contention that
they only partially withdrew count two. l therefore conclude based on plaintiffs’ prior
statements that they have waived any claim for damages under the second count of the
amended complaint. Cf. El Paso Naz. Gas Co. v. Um'tea’ States, 750 F.3d 863, 876 (D.C.
Cir. 2014) (holding parties to prior admissions in briefs and other filings).

Plaintiffs raise one final issue. They argue that even if the scope of their prior waiver
was “ambiguous,” that cannot be held against them because “[j]udical admissions ‘must be
deliberate, express and unequivocal.”’ Opp’n to Westerman 10. This argument misses the

mark. Plaintiffs’ prior statements were clear. They used broad, general language to delimit

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the scope of their waiver, and it is presumed, absent some indication to the contrary, that
general terms should be accorded “their full and fair scope” and not “be arbitrarily limited.”
Antonin Scalia & Bryan A. Garner, Reaa’l`ng Law.' T he Interprelation ofLegal Texts 101
(2012) (general-terms canon). To be sure, plaintiffs did not say in so many words that they
were withdrawing a claim for the delayed discovery of their malpractice claims. But that
omission “does not demonstrate ambiguity”; “[i]t demonstrates breadth.” Um'lea’ States v.
Monsanto, 491 U.S. 600, 609 (1989) (construing general terms in statute). lndeed,
although 1 gave plaintiffs the benefit of the doubt in deciding whether their amended
complaint plausibly pleads a claim for the delayed discovery of their malpractice claims, it
is quite possible that the reason plaintiffs’ waiver of count two does not specifically identify
that claim is because plaintiffs never intended to bring it in the first place (and thus could
not identify a claim they had not considered). ln any event, plaintiffs’ decision not to spell
out every possible application of the comprehensive waiver language they used “does not
lessen the force of the [waiver’s] plain language.” Ia’. As such, the Court will grant
judgment on pleadings for the Westerman defendants as to count two.
B. Motion for Summary Judgment on C0unts Three and Four

The Court of Appeals also reinstated the third and fourth counts and “remand[ed]
for the district court to adjudicate them in the first instance.” Seea’ 11, 832 F.3d at 335.
When this case was last before me, 1 found counts three and four moot because they were
contingent on the dismissal of at least one of the first two counts on statute-of-limitations

grounds, an event that had not occurred under my ruling. However, because our Circuit

“concluded that the claims against the Kratz defendants are barred by the statute of
limitations,” it also determined that “the contingent counts must be adjudicated” Ia'.

Despite this clear instruction from the Court of Appeals, the Kratz defendants
contend that the third and fourth counts are moot. They contend this is so because the court
found, applying the continuous-representation rule, that the statute of limitations does not
bar any claims against the Westerman defendants Kratz Defs.’ Mem. of P. & A. in Supp.
of Their Mot for Summ. J. on Counts 111 and IV 4 (“Kratz Mem.”) [Dkt. #162-1]. But that
finding does not render the remaining counts moot. Our Circuit expressly held that
dismissal of counts one and two as to the Kratz defendants was sufficient to reinstate counts
three and four and to require adjudication of those counts on the merits. Seed II, 832 F.3d
at 335. The Kratz defendants’ argument would require me to disregard the Circuit’s
determination, something 1 am not free to do.

Fortunately for the Kratz defendants, their analysis is on firmer footing when
applied to the merits of the third and fourth counts. On the merits, the Kratz defendants
argue they are entitled to summary judgment because, in light of our Circuit’s finding that
the claims against the Westerman defendants were timely, “there is no set of facts by which
a reasonable jury could find causation or damages as alleged in Counts 111 and 1V, i.e.,
[that] the purportedly incorrect accrual date ‘caused’ the claims against the Westerman
defendants to be dismissed, which ‘damaged’ Seed such that it cannot pursue a malpractice
claim.” Kratz Mem. 7-8. 1 agree. 1 ames Armstrong, a member of the Kratz firm,
suggested to plaintiffs in an email sent on May 20, 2005, that plaintiffs’ malpractice claims

against the Westerman defendants had ripened on June 10, 2004. Kratz Defs.’ Exs. 12 and

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14 [Dkts. ##162-14, 162-16].3 Plaintiffs allege that this error_their claims in fact ripened
no later than May 4, 2004, Seed II, 832 F.3d at 334_“caused Seed to believe that it had
until at least June 10, 2007, to assert timely malpractice claims against [d]efendants.” Am.
Compl. 11 37. But, even if that is so, the error caused plaintiffs no harm because the
continuous-representation rule tolled the statute of limitations until at least May 3, 2007,
the date at which plaintiffs entered a tolling agreement with the Westerman defendants that
preserved their claims as to those defendants 1n other words, as 1 found and the Court of
Appeals affirmed, plaintiffs’ claims against the Westerman defendants were timely. See
Seea’ II, 832 F.3d at 332-33. Because these claims were timely, plaintiffs cannot show
damages stemming from Armstrong’s advice about when those claims accrued

Plaintiffs concede that they cannot show causation or damages in regard to the
Westerman defendants. But, they contend, that should not result in summary judgment
because “causation and damages are direct with respect to Count 1 claims against the Kratz
[d]efendants, which the D.C. Circuit held to be time-barred” C)pp’n to Kratz 11 (emphasis
deleted). Plaintiffs are mistaken. Our Circuit’S determination entitled plaintiffs to
adjudication on the merits of the contingent counts contained in their amended complaint,
nothing more. The contingent counts assert claims against the Kratz defendants based on
the advice given by Armstrong in the spring of 2005, i.e., the May 20 email concerning the
statute of limitations. But that email, and the rest of the email exchange between the

parties, is perfectly clear that Armstrong was advising plaintiffs about the accrual of their

 

3 Plaintiffs refer to this email by the date they received it, which, due to the time difference between
the United States and Japan, was May 21, 2005,

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claims against the Westerman defendants, not about the accrual of any claims against
himself or the Kratz firm (which had stopped representing Seed in connection with the
patent matter in the fall of 2003). For example, in the May 20 email, Armstrong wrote in
response to a comment from Seed’s agent about the company’s efforts to negotiate a
“settlement with the Westerman office” that the time was “ripe for immediately demanding
a substantial monetary settlement.” Kratz Defs.’ Ex. 12, at 3_4. Earlier in the same
exchange, Armstrong expressed his opinion that Seed “should demand return of all the
money paid to Westerman plus ten or twenty times that amount for loss of [the] patent
right.” Kratz Defs.’ Ex. 12, at 2. Nowhere is a claim against Armstrong or the Kratz firm
suggested or discussed Plaintiffs’ argument thus does nothing to alter my conclusion that
the Kratz defendants are entitled to summary judgment on contingent counts three and four.
CONCLUSION

For all of the above reasons', the Court will grant judgment on the pleadings for the
Westerman defendants as to count two, and summary judgment for the Kratz defendants
on counts three and four. C0unt one will proceed to trial. An Order consistent with this

decision accompanies this Memorandum Opinion.

,YM raw

RICHARD }.~{:’EON
United States District Judge

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