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Brakeplus LLC v. Kinetech, LLC

United States District Court, S.D. Indiana, Indianapolis Division

June 19, 2015

BRAKEPLUS LLC, KEVIN CANNON, MICHELLE HANBY, JILL CATES, RON CHRISTIAN, IT'S A DATE, LLC, D MAC ENTERPRISES, PAT CROZIER ENTERPRISES, INC., MAD AFTERMARKET SERVICES, LLC, and BRAKEPLUS NWA, INC., Plaintiffs,
v.
KINETECH, LLC, Defendant. KINETECH, LLC, Third Party Plaintiff,
v.
JEFF HAIL and DUSTIN SHEPHERD, Third Party Defendants.

ENTRY ON DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND MOTION FOR LEAVE TO FILE ADDITIONAL MOTION FOR SUMMARY JUDGMENT

TANYA WALTON PRATT, District Judge.

This matter is before the Court on Defendant Kinetech, LLC's ("Kinetech") Motion for Partial Summary Judgment (Filing No. 24) and Motion for Leave to File Additional Motion for Summary Judgment (Filing No. 27).[1] The parties in this lawsuit were parties in a separate lawsuit filed in July 2013. That litigation ended after mediation and the execution of a settlement agreement in August 2013 (the "Settlement Agreement"). About four months later, this action was initiated by BrakePlus LLC ("BrakePlus"). BrakePlus asserted claims for breach of the Settlement Agreement, defamation, and fraud. Kinetech moved for summary judgment on BrakePlus' fraud claim on the bases that no misrepresentation was made and BrakePlus cannot show reliance on Kinetech's alleged misrepresentation. Kinetech also moved for leave to file an additional dispositive motion because the Court's Case Management Order limits the parties to only one dispositive motion. The parties appeared for a hearing on the Motion for Partial Summary Judgment on December 11, 2014, and presented oral argument to the Court. For the following reasons, the Court DENIES Kinetech's Motion for Partial Summary Judgment and GRANTS its Motion for Leave to File Additional Motion for Summary Judgment.

I. BACKGROUND

Kinetech develops, manufactures, and distributes automotive safety products. In July 2013, Kinetech filed a lawsuit against BrakePlus, Ron Christian, Richard Battaglini, BrakeSafe Rear-End Collision Avoidance System, LLC, Michelle Hanby, It's a Date, LLC, BrakePlus NWA, Inc., Jill Cates, D Mac Enterprises, MAD Aftermarket Services, LLC, Dustin Shepherd, Kevin Cannon, Jeff Hail, and Pat Crozier Enterprises, Inc. (collectively "BrakePlus Defendants"). In that lawsuit, Kinetech alleged that the BrakePlus Defendants committed various unlawful acts in an effort to steal the business of Kinetech, including acts of conversion, fraud, tortious interference and breach of non-compete and non-solicitation agreements.

Kinetech asserted that Ron Christian, the president of BrakePlus-in concert with two former employees of Kinetech who had been terminated for their involvement in taking and selling Kinetech's product without Kinetech's knowledge and then keeping the proceeds-created BrakePlus to sell Kinetech's products to Kinetech's customers under a different brand name using Kinetech's ex-employees' knowledge of Kinetech's business model, suppliers, and customer lists.

Kinetech also alleged that BrakePlus approached Kinetech's salespeople in 2013 and convinced them to sell products on behalf of BrakePlus rather than Kinetech and to convert Kinetech customer accounts to BrakePlus accounts. These actions were in violation of noncompete and non-solicitation agreements executed by Kinetech's employees and contractors, of which BrakePlus was aware.

The Kinetech and BrakePlus Defendants participated in a mediation session, which resulted in resolution of the case and execution of the Settlement Agreement on August 27, 2013. As part of the Settlement Agreement, BrakePlus Defendants agreed to not do business with any of the entities on two lists that were attached as exhibits to the Settlement Agreement. Also, the parties agreed that they would not make disparaging or derogatory comments about each other.

About two and a half months after the Settlement Agreement was executed, Ron Christian (BrakePlus' president) informed Mark Olson (Kinetech's president) that one of BrakePlus' key distributors/investors had learned of the terms of the Settlement Agreement and was dissatisfied with the terms. This key distributor/investor directly competed with Kinetech. Mr. Christian informed Mr. Olson that the distributor/investor was threatening to withhold hundreds of thousands of dollars from BrakePlus if Mr. Christian did not renegotiate the terms of the Settlement Agreement with Kinetech. After considering BrakePlus' proposals for renegotiating the Settlement Agreement, Kinetech rejected the proposals and insisted that the parties continue under the terms of the Settlement Agreement that had been agreed upon during mediation and executed by the parties.

On December 18, 2013, BrakePlus filed this lawsuit against Kinetech and Mr. Olson in Marion Superior Court, alleging breach of the Settlement Agreement, defamation based on disparaging and derogatory comments made about BrakePlus, and fraud. For its fraud claim, BrakePlus alleged that Kinetech represented in the Settlement Agreement that the entities listed in the exhibits-with whom BrakePlus could not do business-were Kinetech's customers when in reality the entities were not Kinetech's customers. The state court entered a protective order for confidential documents, and on March 14, 2014, BrakePlus amended its complaint to include the Settlement Agreement as an exhibit to the complaint (Filing No. 1-2 at 42).

On May 12, 2014, Kinetech filed its Motion for Partial Summary Judgment on BrakePlus' fraud claim. Then on July 25, 2014, BrakePlus again amended its complaint to add a claim under the Sherman Antitrust Act, alleging an illegal horizontal market division (Filing No. 1-6 at 36). The following month, BrakePlus responded to Kinetech's Motion for Partial Summary Judgment, and Kinetech removed the case to federal court on August 27, 2014, based on the Sherman Antitrust Act claim. On September 26, 2014, the parties were ordered to file their state court dispositive motions papers in this Court (Filing No. 19), which they did on October 10, 2014. The Court then heard oral argument from the parties on the Motion for Partial Summary Judgment on December 11, 2014.

II. SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court reviews "the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor." Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (citation omitted). However, "[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial." Hemsworth, 476 F.3d at 490 (citation omitted).

"In much the same way that a court is not required to scour the record in search of evidence to defeat a motion for summary judgment, nor is it permitted to conduct a paper trial on the merits of [the] claim." Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001) (internal citations and quotation marks omitted). "[N]either the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary ...


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