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Component Hardware Group, Inc. v. Trine Rolled Moulding Corp.

September 1, 2006


The opinion of the court was delivered by: Cooper, District Judge


This matter comes before the Court on motion of third-party defendants, Thomas E. Carr and Richard Bohacik, to enforce a settlement agreement and for an award of counsel fees and costs of the motion. The Court decides the motion on the pleadings, briefs and evidence submitted by the parties, without oral argument pursuant to Fed. R. Civ. P. 78.*fn1 The Court will grant the part of the motion seeking to enforce the settlement agreement, but deny the part seeking an award of counsel fees and costs.


A. Procedural History

This commercial litigation was commenced in state court by plaintiff, Component Hardware Group, Inc. ("Component") against defendant, Trine Rolled Moulding Corp. ("Trine"), and was removed to this Court by Trine on February 14, 2005. The procedural history in this Court, as relevant here, is as follows.

On February 25, 2005, Trine filed an answer, counterclaim and third-party complaint ("Answer"). The third-party defendants are named and described as Thomas E. Carr ("Carr"), the current President and Chief Operating Officer of plaintiff Component, and Richard Bohacik ("Bohacik"), a former principal of Component who is listed as the inventor of a specified patent assigned to Component.*fn2 Trine's Answer asserted, by way of counterclaim and third-party complaint, claims against the named parties as follows:

CountClaimParties Named IBreach of requirements contractComponent IITheft of trade secretsComponent IIIBreach of fiduciary dutyComponent IVBreach of covenant of good faithComponent VInterference with prospective economic advantageComponent VIInjurious falsehood and slanderComponent/Carr VIITrade libelComponent/Carr VIIIConversionComponent IXCommon law unfair competitionComponent XViolation of NJ Unfair Competition ActComponent XIViolation of Lanham ActComponent XIIUnjust enrichmentComponent XIIIConstructive trustComponent XIVBreach of implied covenant of confidentialityComponent XVDeclaration of inventorship or unenforceability of the '975 patent.Component/Bohacik

Component and Trine immediately cross-moved for preliminary injunctive relief against each other on all issues in dispute between them except the patent dispute, which they agreed to defer. The Court permitted limited expedited discovery, and conducted a ten-day evidentiary hearing over the period April to June, 2005. On June 27, 2005, the Court issued a lengthy opinion and an order on the cross-motions for injunctive relief, making certain preliminary findings and denying any injunction. (Dkt. entries 38, 39.)

Meanwhile, on April 18, 2005, Component (counterclaim defendant) and Carr and Bohacik (third-party defendants) filed an answer to Trine's counterclaim and third-party complaint. (Dkt. entry 21.) In that pleading the third-party defendants asserted denials and defenses, but no counterclaims or crossclaims. (Id.)

In August, 2005, the Magistrate Judge entered an order staying discovery in the case and referring it to mediation. (Dkt. entry 45.) Also in August, 2005, separate counsel for the third-party defendants entered an appearance, thus separating the representation of Component from that of the third-party defendants. (Dkt. entry 46.)

On October 25, 2005, while the stay of discovery was still in effect, Trine moved for summary judgment on (1) all claims in Component's complaint, and (2) liability against Component on Counts I, III, IV, V, VI and VII of Trine's counterclaim. (Dkt. entry 52.) Although third-party defendant Carr was named in Counts VI and VII of that pleading, Trine's motion for summary judgment was not directed to Carr. On October 31, 2005, the Magistrate Judge entered an Order of Designation for Mediation, continuing the stay of proceedings and specifically directing that Trine's motion for summary judgment be held in abeyance pending mediation. (Dkt. entry 55.)

On December 1, 2005, counsel for Trine advised the Magistrate Judge by letter that the mediation had concluded without settlement. In that letter, Trine requested that the Court set a schedule for responsive briefing on its motion for summary judgment, and a schedule for discovery. Component's counsel responded with a December 13, 2005 letter requesting, inter alia, a schedule of at least one year to conduct and complete discovery before any summary judgment motions would be appropriate. (Dkt. entry 58.)

Counsel for all parties participated with the Magistrate Judge in a lengthy teleconference on the record on December 16, 2005. (Dkt. entry 60.) The focus of that conference was the differing positions of all the parties concerning the scope and timetable for conducting discovery, and the discovery issues posed by the then-pending Trine motion for summary judgment against Component. Counsel for the third-party defendants stated that although Trine's pending summary judgment motion did not seek relief against them, the issues presented in that motion implicated them and would affect the course of the litigation as to them, so they would require discovery and an opportunity to respond to that motion as well as Component. Those statements are quoted in the margin.*fn3

At the close of the December 16, 2005 conference, the Magistrate Judge directed counsel for Component and counsel for the third-party defendants to submit letters by the following Wednesday, December 21, 2005, describing the discovery, and discovery schedule, they would each expect to need to respond to the issues raised by Trine's summary judgment motion. (Id. at 25-30.)

On December 21, 2005, counsel for third-party defendants telephoned the chambers of the Magistrate Judge to report that Trine and the third-party defendants had reached a settlement. At the request of the law clerk who received that call, counsel for the third-party defendants sent a confirming e-mail on the same date, addressed to the chambers of the Magistrate Judge, with e-mail copies to counsel for both Trine and Component, stating as follows:

[A]s you requested, this will confirm my telephone call to you that Trine and Third-Party defendants Messrs Carr and Bohacik have agreed to exchange mutual releases of all claims and Trine has agreed to dismiss its claims asserted against Messrs Carr and Bohacik in this action with prejudice. Consequently, Messrs Carr and Bohacik will not be submitting a letter today regarding Trine's motion for partial summary judgment. It is expected that the stipulation of dismissal can be executed over the next few days and will be filed as soon as possible. If we run into any problems in this regard, I will be back in touch.

(Dkt. entry 64-5.)*fn4

On that same date, December 21, 2005, counsel for Component submitted a six-page letter to the Magistrate Judge, as it had been directed to do during the teleconference on December 16, 2005. That letter provided a detailed listing of areas of discovery, described as discovery "Component must have before it can properly respond to Trine's summary judgment motion, and/or before Component can make its own cross-motion for summary judgment in an efficient and effective manner." (Dkt. entry 64-19.) Attached to that letter was a 17-page "First Request for Production of Documents" from Component, described in the letter as "an inchoate document demand totally without prejudice and with a full reservation of rights to add or subtract, so that Your Honor can further see what documents and information Component requires to response [sic] to Trine's summary judgment motion." The letter concluded, "It is quite clear to us that this motion is premature, and that discovery should be advanced at least for a period of time constituting several months before any summary judgment motions are warranted." (Id.)

On December 27, 2005, a substitution of counsel was filed on behalf of Component. (Dkt. entry 59.) By that substitution, Component introduced into the litigation a different law firm and attorney of record, previously not involved in the case.

Component's new counsel, on January 16, 2006, sent a six-page letter to the Magistrate Judge. (Dkt. entry 64-20.) A copy of that letter was directed to counsel for Trine but not to counsel for third-party defendants who, on December 21, 2005 had advised the Court of their settlement with Trine. That letter again provided a detailed listing of areas of discovery, described as "on behalf of plaintiff Component ... in response to Your Honor's request that we identify for the Court what discovery is needed to respond to the motion for partial summary judgment of ... Trine. That motion not only seeks the dismissal of all of Component's affirmative claims, but also seeks judgment on six of Trine's fifteen counterclaims...." (Id.) That letter concluded, "We estimate that fact discovery will likely take approximately six months to complete; we will require another two months for expert discovery." (Id.)

On January 26, 2006, the Magistrate Judge conducted another teleconference pertaining to setting up a discovery schedule. (Dkt. entries 61, 63.) As of that date, no discovery scheduling order had as yet been entered in the case since its inception because (1) the case was originally before the District Judge for months of injunctive proceedings; (2) it had then been stayed for several more months for mediation; and (3) the filing of the summary judgment motion by Trine had occasioned the unresolved discussions on discovery with the Magistrate Judge described above. As a result of the January 26, 2006 conference, the Magistrate Judge entered the first of a series of discovery scheduling orders on January 31, 2006. (Dkt. entry 62.)

Counsel for third-party defendants entered their appearance in the January 26, 2006 teleconference, and advised the Magistrate Judge that a dispute had arisen with Trine as to the settlement of the third-party claims. (Dkt. entry 63 at 5-18.) The Magistrate Judge, in issuing the Scheduling Order of January 31, 2006, included a direction that if the parties could not resolve that dispute, third-party defendants should file a formal motion to enforce the settlement. (Dkt. entry 62, ¶¶ 2,3.)

On February 10, 2006, counsel for the third-party defendants filed the present motion against Trine, seeking enforcement of the settlement agreement and an award of fees and costs of the motion. (Dkt. entry 64.) After the motion was filed, this District Judge conferred with the parties by teleconference on March 6, 2006. (Dkt. entry 70.) Neither party requested oral argument or an evidentiary hearing on this motion. The motion has been fully briefed, with submission of certifications by both parties, which the Court has carefully reviewed in rendering its decision.*fn5

B. Communications Between the Parties to the Alleged Settlement

Here we summarize the record before the Court describing all communications between counsel for defendant/third-party plaintiff (Trine) and counsel for the third-party defendants (Messrs. Carr and Bohacik), pertaining to a settlement between those parties. Those communications took place between December 16, 2005 and the date of the filing of this motion, February 10, 2006. The attorneys who conducted those communications were Messrs. Brendan Judge and Mitchell W. Taraschi for Trine, and Ms. Celeste M. Butera for third-party defendants. The documented record of those communications is not in dispute.

On Friday, December 16, 2005, after the teleconference of that date with the Magistrate Judge, Mr. Judge contacted Ms. Butera by telephone and proposed that Trine and the third-party defendants enter into a settlement in which those parties would release and dismiss, with prejudice, any claims each had or could assert against the other. (Dkt. entry 64-2, ΒΆ 1.) On Tuesday, ...

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