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

March 29, 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NOT FOR PUBLICATION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 :

Plaintiffs Aequus Technologies L.L.C., Aequus Technologies Corp., Richard Schatzberg and Lemuel Tarshis have brought suit against Defendants gh, L.L.C. ("gh"), David Schleppenbach and Joseph Said.Defendants move for summary judgment. Pursuant to Rule 78.1 of the Local Rules, the motion is decided without oral argument. The motion is granted in part and denied in part.

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., ("Aequus") 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 The development agreement superseded the contract and contained an integration clause and a clause that permitted only written modifications.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 ever purchased Technology Sellers‟ interest in gh. Aequus and gh did not enter into an agreement concerning this payment.

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. Defendants now move for summary judgment on all remaining claims.

STANDARD OF REVIEW

Summary judgment is appropriate where the moving party establishes that "there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). A factual dispute between the parties will not defeat a motion for summary judgment unless it is both genuine and material. See Scott v. Harris, 550 U.S. 372, 380 (2007); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant and it is material if, under the substantive law, it would affect the outcome of the suit. See Anderson, 477 U.S. at 248. The moving party must show that the non-moving party has failed to "set forth," by affidavits or otherwise, "specific facts showing that there is a genuine issue for trial." See Beard v. Banks, 548 U.S. 521, 529 (2006) (citing Fed. R. Civ. P. 56(e)).

Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts" in question.

Scott, 550 U.S. at 380 (citing Matsushita Elec. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). At the summary judgment stage, the court‟s function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue of fact for trial. See Anderson, 477 U.S. at 249. In so doing, the court must construe the facts and inferences in the light most favorable to the non-moving party. Curley v. Klem, 298 F.3d 271, 277 (3d Cir. 2002). To survive a motion for summary judgment, a non-movant must present more than a mere "scintilla of evidence" in his favor. Woloszyn v. Cnty. of Lawrence, 396 F.3d 314, 319 (3d Cir. 2005). The opposing party must set forth specific facts showing a genuine issue for trial. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001).

DISCUSSION

I.Contract and Good Faith and Fair Dealing Claims

To properly make out a breach of contract claim Aequus must allege: (1) a valid contract, (2) breach of that contract, and (3) damages resulting from that breach. AT&T Credit Corp. v. Zurich Data Corp., 37 F. Supp. 2d 367, 370 (D.N.J. 1990). Every contract in New Jersey has an implied covenant of good faith and fair dealing and "[g]ood faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified ...


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