Court Opinion

ID: 5176089
Source: CourtListenerOpinion
Date Created: 2022-01-05 01:00:38.992142+00
Date Added: 2024-06-11T08:26:19.260254
License: Public Domain

Case: 21-20146     Document: 00516153605          Page: 1    Date Filed: 01/04/2022

              United States Court of Appeals
                   for the Fifth Circuit                            United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                                                     January 4, 2022
                                   No. 21-20146                       Lyle W. Cayce
                                                                           Clerk

   In the Matter of: TMT Procurement Corporation; F
   Elephant, Incorporated

                                                                          Debtors,

   Hsin Chi Su,

                                                            Plaintiff—Appellant,

                                       versus

   F Elephant, Incorporated,

                                                            Defendant—Appellee.

                  Appeal from the United States District Court
                       for the Southern District of Texas
                           USDC No. 4:14-CV-3342

   Before Stewart, Haynes, and Graves, Circuit Judges.
   Per Curiam:*

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-20146      Document: 00516153605            Page: 2    Date Filed: 01/04/2022

                                      No. 21-20146

          Appellant Hsin Chi Su (“Su”) is the former president of Appellee F
   Elephant, Inc. (“F Elephant Corp.”). F Elephant Corp. previously owned
   the M.V. Fortune Elephant (“F Elephant”), a large vessel capable of carrying
   both oil and ore, a technology Su allegedly patented. When the F Elephant
   failed to generate sufficient revenue, F Elephant Corp. filed for chapter 11
   bankruptcy, and the vessel was sold. Su then sued F Elephant Corp.
   requesting declaratory relief and alleging claims for unjust enrichment and
   money had and received related to the sale of the F Elephant.
          F Elephant Corp. filed a motion for judgment on the pleadings which
   the district court granted. It held that Su’s claim for declaratory relief was an
   impermissible request for an advisory opinion. It also held that because the
   alleged patents were separate and distinct from the F Elephant vessel, Su had
   no claim for money had and received or unjust enrichment. The district court
   entered judgment for F Elephant Corp.
          We agree with the district court and accordingly AFFIRM.
                                           I.
          The following facts are taken from Su’s complaint, which for purposes
   of this appeal, are accepted as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
   Around March 2010, Su made a financial presentation to a group of banks to
   secure funds to build and purchase multiple ships. Su received loans from
   these entities and subsequently financed and directed the construction of
   several vessels. One vessel, the F Elephant, incorporated an under-deck
   piping structure created by Su. The piping structure was protected by patents
   in Japan, Korea, and China. F Elephant Corp., founded and headed by Su,
   then purchased the F Elephant. Su never transferred any patent rights
   stemming from the under-deck piping to F Elephant Corp. Instead he
   “simply allowed [F Elephant Corp.] to use his design and technology . . . free
   of any royalty or license fees.”

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Case: 21-20146      Document: 00516153605          Page: 3   Date Filed: 01/04/2022

                                    No. 21-20146

          On June 20, 2013, F Elephant Corp. filed for Chapter 11 bankruptcy
   and moved to release the vessel from the automatic bankruptcy stay so it
   could be sold. On May 13, 2014, the bankruptcy court entered a Sale Order
   stating that the F Elephant could be sold. Ultimately, the bankruptcy court
   approved the sale of the F Elephant “free and clear of all Alleged Su IP
   Claims.” Su then filed the instant complaint “to determine the extent and
   priority of his ownership interest in the [F Elephant’s] sale proceeds” to the
   extent the sale proceeds pertain to his patent rights. The district court
   granted judgment on the pleadings for F Elephant Corp. and Su appealed.
                                         II.
   This court reviews a district court’s grant of judgment on the pleadings under
   Rule 12(c) de novo. See Brittan Commc’ns Int’l Corp. v. Sw. Bell Tel. Co., 313
   F.3d 899, 904 (5th Cir. 2002); Hughes v. The Tobacco Inst., Inc., 278 F.3d 417,
   420 (5th Cir. 2001). A motion for judgment on the pleadings under Rule 12(c)
   is subject to the same standard as a motion to dismiss under Rule 12(b)(6).
   Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004) (citing Great Plains
   Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 313 n. 8 (5th
   Cir. 2002)). “[T]he central issue is whether, in the light most favorable to
   the plaintiff, the complaint states a valid claim for relief.” Hughes, 278 F.3d
   at 420 (internal quotations omitted). Although we must accept the factual
   allegations in the pleadings as true, id., a plaintiff must plead “enough facts
   to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
   Twombly, 550 U.S. 544, 570 (2007).
                                        III.
          On appeal, Su argues that the district court erred in determining his
   patents were exhausted, that he has not authorized the sale of his patents
   such that exhaustion could have occurred, that his claims were not moot, and
   that the district court erred in granting judgment for F Elephant Corp. on his

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Case: 21-20146      Document: 00516153605           Page: 4    Date Filed: 01/04/2022

                                     No. 21-20146

   money had and received and unjust enrichment claims. F Elephant Corp. did
   not file an answering brief.
          As to Su’s arguments on patent exhaustion, there seems to be
   confusion as to the scope of the district court’s order. Simply put, the district
   court did not discuss patent exhaustion in its order. Appellee F Elephant
   Corp. raised this argument in its motion for judgment on the pleadings, but
   the district court granted judgment on alternative grounds. Because we
   cannot affirm or reverse a determination that the district court never made,
   Su’s patent exhaustion arguments are misplaced.
          Next, Su claims that the sale of the F Elephant presented a “live
   controversy” regarding the extent of his ownership interest in the proceeds
   from the sale of the vessel and that he was not seeking an advisory opinion.
   However, the complaint requests “a declaratory judgment that [Su] has a
   valid claim against bankruptcy estate of each defendant” and that the valid
   claim “is entitled to administrative claim status under 11 U.S.C. § 503 in the
   amount of the value of the loss of his intellectual property rights.” “[T]he
   federal courts established pursuant to Article III of the Constitution do not
   render advisory opinions,” and parties must articulate “concrete legal issues,
   presented in actual cases, not abstractions” Golden v. Zwickler, 394 U.S. 103,
   108 (1969) (quoting United Public Workers of America (C.I.O.) v. Mitchell, 330
   U.S. 75, 89 (1947)). Here, Su sought a declaration that he could sue potential
   future patent infringers for potential future acts. Such a request is neither
   concrete nor actual. The district court was correct in determining that this
   request was advisory. Aptly put, if Su “wishes to later sue the participants in
   the bankruptcy, those claims need to be presented to the bankruptcy court.”
          Lastly, regarding the money had and received and unjust enrichment
   claims, Su seemingly conflates two issues: the sale of his alleged patents and
   the sale of the F Elephant. Su argues that F Elephant Corp. profited from the

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Case: 21-20146      Document: 00516153605          Page: 5   Date Filed: 01/04/2022

                                    No. 21-20146

   sale of his patent rights, but no such sale occurred. The bankruptcy court
   specifically noted that the F Elephant was sold “free and clear” of all alleged
   patent claims and rights. Other evidence also indicates that the patents were
   not sold as part of the sale of the vessel: Neither the loan documents nor Su’s
   guarantee of the loan mention patents. And Su has consistently affirmed that
   the patents were never the property of the F Elephant Corp. such that F
   Elephant Corp. could have sold them. Importantly, Su’s patent rights are
   distinct from the patented technology in the ship. The sale of the ship did not
   encompass the sale of any patents. Because these two causes of action are
   wholly premised upon patent sales that did not occur, judgment on behalf of
   F Elephant Corp. was proper.
          The judgment of the district court is AFFIRMED.

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