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Aequus Technologies, L.L.C., Aequus Technologies Corp v. Gh

January 28, 2011

AEQUUS TECHNOLOGIES, L.L.C., AEQUUS TECHNOLOGIES CORP., RICHARD SCHATZBERG AND LEMUEL TARSHIS, FICTITIOUS ENTITY, PLAINTIFFS,
v.
GH, L.L.C., DAVID SCHLEPPENBACH, JOSEPH P. SAID, AND ABC CORP., A DEFENDANTS.



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

NOT FOR PUBLICATION

OPINION

Defendants gh, L.L.C., David Schleppenbach and Joseph Said ("gh") move to strike the experts‟ report submitted by plaintiffs Aequus Technologies, L.L.C., Aequus Technologies Corp., Richard Schatzberg and Lemuel Tarshis (collectively "Aequus"). Defendants contend that the experts‟ report disregards this Court‟s prior summary judgment ruling and that its conclusions lack factual support. Pursuant to Rule 78.1 of the Local Rules, the motion is decided without oral argument.

FACTUAL AND PROCEDURAL BACKGROUND

David Schleppenbach and Joseph Said started gh to provide technological solutions to visually disabled individuals. Richard Schatzberg and Lemuel Tarshis are officers of Aequus Technologies, L.L.C., another company that provides services to the disabled. Aequus and gh began talks concerning a potential collaboration in 2001. Over the course of this relationship, the parties entered into a management contract (the "contract"), a Letter of Intent for Aequus to acquire all of gh‟s assets, and a Joint Marketing, Sales and Business Development Agreement (the "development agreement"). The development agreement superseded the contract and contained an integration clause and a clause that permitted only written modifications. Aequus contends that it created new product concepts and new intellectual property that were utilized by gh and introduced gh to its customers.

During their association, gh was in the process of repurchasing Technology Sellers‟ 49% interest in gh but had fallen behind in its payments. Aequus entered into a deposit agreement with Technology Sellers and paid Technology Sellers $250,000 on gh‟s behalf. While the deposit agreement did not provide for any possible return of this payment to Aequus, it did state that the payment would be credited to Aequus if Aequus purchased Technology Sellers‟ interest in gh. Aequus and gh did not enter into an agreement concerning this payment. Aequus also made three $5,000 payments to Schleppenbach. There are no written agreements memorializing these payments.

Aequus believed that the two entities had entered into a partnership agreement and had merged; gh did not. After the relationship soured, Aequus brought suit claiming breach of contract, breach of the duty of good faith and fair dealing, misrepresentation, negligent misrepresentation, breach of fiduciary duty, breach of the duty of loyalty, tortious interference with agreements, tortious interference with prospective economic advantage, conversion, unjust enrichment, quantum meruit, violation of the Uniform Fraudulent Transfer Act, violation of the New Jersey Oppressed Shareholder statute and violation of the Uniform Partnership Act. gh brought counterclaims for breach of contract, breach of the duty of good faith and fair dealing, fraudulent inducement, negligent misrepresentation, tortious interference with prospective economic advantage and disgorgement.

In 2007, gh moved for partial summary judgment, primarily contending that a partnership had never been legally created and that the two entities had not merged. The Court granted gh‟s motion. Specifically, the Court found no valid partnership or merger and dismissed Aequus‟ breach of contract claims concerning the partnership and merger agreements, Aequus‟ claims for a breach of the duty of good faith and fair dealing under the partnership and merger agreements, Aequus‟ claims for breach of fiduciary duty and the duty of loyalty under the partnership and merger agreements, Aequus‟ claim under the New Jersey Oppressed Shareholders‟ Statute, Aequus‟ claim under the Uniform Partnership Act, and Aequus‟ claim for $250,000 in damages under the partnership agreement.

Before the Court‟s ruling on gh‟s initial summary judgment motion, Aequus submitted an experts‟ report from Scott A. Maier, CPA, ABV, JD, ASA and Kyle S. Garcia, CFA, ASA, CBA that calculated Aequus‟ damages for gh‟s alleged wrongdoing. In calculating damages, the report assumed that the business relationship between gh and Aequus constituted a partnership under New Jersey law. After the Court determined that a partnership had not been established, Aequus submitted a second experts‟ report. The second experts‟ report purports to calculate the total damages owed to the plaintiffs for the surviving claims. The total amount of damages under the remaining claims is $5,870,000. gh contends that the second experts‟ report disregards the Court‟s earlier rulings. gh claims that this Court‟s dismissal of Aequus‟ claim for $250,000 under the partnership agreement, and the ruling that no partnership existed and no merger occurred means the only possible damages Aequus could be due would come under the development agreement. As Aequus‟ expert has not estimated damages under the development agreement, gh demands that the report be stricken.

STANDARD OF REVIEW

Federal Rule of Evidence 702 governs the admission of expert testimony in federal courts. In evaluating expert testimony the court must consider "(1) qualifications-whether the expert is qualified to speak with authority on a particular subject or issue; (2) reliability-whether the expert‟s methodology is sound and whether his or her opinion is supported by "good grounds;‟ and (3) fit-whether there is a relevant "connection between the scientific research or test result to be presented and particular disputed factual issues in the case.‟" Yarchark v. Trek Bicycle Corp., 208 F.Supp.2d 470, 494 (D.N.J. 2002) (quoting In re Paoli R.R. Yard PCG Litig., 35 F.3d 717, 741-43 (3d Cir. 1994)).

The fit requirement relates to the relationship between the expert‟s testimony and the facts that will be presented to the jury. Federal District Judges are to act as gatekeepers and must determine whether the proposed expert testimony will assist the trier of fact. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 598 (1993). In evaluating fit, the court must determine "whether [the] expert testimony proffered . is sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute." United States v. Schiff, 602 F.3d 152, 173 (3d Cir. 2010) (quotation omitted).

DISCUSSION

References to the $250,000 Payment and Other Expenses gh avers that this Court‟s August 17, 2009, opinion dismissed Aequus‟ claim for $250,000. Aequus correctly counters that their claim for $250,000 was only dismissed under the partnership agreement. gh‟s own citation to the record shows as much. ("Plaintiffs‟ claim for $250,000 in damages under the partnership agreement is also dismissed with prejudice." (gh ...


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