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LZT/FILLIUNG PARTNERSHIP v. CODY/BRAUN & ASSOC.

October 12, 2000

LZT/FILLIUNG PARTNERSHIP, LLP, PLAINTIFF-COUNTERDEFENDANT,
V.
CODY/BRAUN & ASSOCIATES, INC., DEFENDANT-COUNTERPLAINTIFF.



The opinion of the court was delivered by: Magistrate Judge Morton Denlow

MEMORANDUM OPINION AND ORDER

The Court conducted a three-day bench trial on September 12, 13, and 14, 2000, to consider LZT/Filliung Partnership, LLP's complaint that Cody/Braun & Associates, Inc., infringed its copyright in construction drawings and Cody/Braun's counterclaim that LZT's copyright is invalid. The Court has carefully considered the testimony of the three witnesses who appeared at trial, the numerous exhibits introduced into evidence, the written submissions and the closing arguments of counsel. The following constitute the Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. To the extent certain findings may be deemed conclusions of law, they shall also be considered conclusions. Similarly, to the extent matters contained in the conclusions of law may be deemed findings of fact, they shall also be considered findings. Miller v. Fenton, 474 U.S. 104, 113-14, 106 S.C. 445, 451-52 (1985).

I. FINDINGS OF FACT

A. THE PARTIES

1. Plaintiff-Counterdefendant LZT/Filliung Partnership, LLP ("Plaintiff" or "LZT") is an Illinois limited liability partnership engaged in the practice of architecture. The partners in LZT are LZT Associates, Inc., a Delaware corporation, James J. Filliung ("Filliung"), Michael Mistele and Terrence Russell. Filliung, LZT's managing partner, testified at trial. Filliung did not prepare any of the construction drawings. He oversaw the general production of the project.

2. Defendant-Counterplaintiff Cody/Braun & Associates, Inc., ("Defendant" or "Cody/Braun") is an Illinois corporation engaged in the practice of architecture. Jeffrey Braun ("Braun"), an officer of Cody/Braun and architect for over 25 years, testified at trial.

3. Alden North Shore Associates, LP and its in-house architectural firm, Alden Design Group, Inc. (collectively "Alden") are in the business of building and designing nursing homes and assisted living facilities. Alden is not a party to the litigation, but is at the center of the dispute which gives rise to the litigation. Raymond A. Schultz ("Schultz"), an architect and President of Alden Design Group, Inc., testified at trial.

B. ALDEN-LZT CONTRACT AND ARBITRATION

4. In September, 1996, LZT was retained by Alden to provide architectural services for the development of a two-story assisted living facility in Skokie, Illinois (the "North Shore project"). (PX 4). Prior to bidding on this job, LZT was provided with design drawings from Schultz. (DX 105). These drawings set forth the overall concept and the general shape and arrangement of spaces. Cody/Braun was an unsuccessful bidder on the North Shore project. Schultz characterized LZT as a drafting service to prepare construction drawings of the architectural, mechanical, electrical and plumbing plans. (PX 4, ¶ 2.1.1, 2.3). Alden separately contracted for the civil, structural, landscaping and kitchen plans. (PX 4, ¶ 12.1). LZT was to prepare construction drawings and coordinate the on-site parking, landscaping and civil engineering plans which were being designed by others. (PX 4., p. 1).

5. The Alden/LZT contract required LZT to follow Schultz's concept drawings. (PX 4, p. 1). LZT had no responsibility for the design phase of the project. (PX 4, ¶ 2.2).

6. The Alden/LZT contract specifically dealt with the issue of copyright and use of the plans to be prepared by LZT as follows:

The Drawings, Specifications and other documents prepared by the Architect for this Project are instruments of the Architect's service for use solely with respect to this Project, and the Architect shall be deemed the author of these documents and shall retain all common law, statutory and other reserved rights, including the copyright. The Owner shall be permitted to retain copies, including reproducible copies, of the Architect's Drawings, Specifications and other documents for information and reference in connection with the Owner's use and occupancy of the Project. The Architect's Drawings, Specifications or other documents shall not be used by the Owner or others on other projects, for additions to this Project or for completion of this Project by others, unless the Architect is adjudged to be in default under this Agreement, except by agreement in writing and with appropriate compensation to the Architect.

(PX 4, ¶ 6.1) (emphasis added).

7. In the course of LZT's work, Schultz provided LZT with a complete set of plans previously used at Alden's Orland Park project to be used as a guideline for the North Shore project. (DX 14). The Orland Park plans contained details and standards which Alden expected LZT to include in the North Shore project in order to expedite approval of the project with governmental bodies. (PX 104). Because Filliung had not personally worked on the construction plans, there was no reliable testimony to explain how LZT prepared the plans and what sources it relied upon.

8. David Selinger ("Selinger") was LZT's project manager for the North Shore project. He and Schultz would communicate and meet regularly to discuss the progress of the plans. Schultz was actively involved in the preparation of the plans and he would periodically send memos, drawings and details to LZT regarding the plans. (See e.g., DX 56, 80, 83, and 90). Schultz provided a number of finish details and specifications used in the project. (DX 5).

9. A dispute arose between Alden and LZT regarding the plans. LZT believed that it was not being paid in accordance with the contract and that its plans were complete. LZT claimed that Alden was more than $70,000 in arrears. Alden believed that the plans were not complete and that LZT had been overpaid, based on the plan's stage of completion.

10. In an effort to resolve this dispute, an LZT architect brought a set of plans to review with Schultz. Schultz examined these plans and determined they were incomplete. (DX 106). These plans were not left with Schultz and were taken back the same day, April 7. 1997, to LZT's offices.

11. The dispute between LZT and Alden escalated. In mid-April, 1997, LZT ceased all work on the project because it had not been paid. Alden terminated LZT several weeks later.

12. Pursuant to the Alden/LZT contract, Alden commenced arbitration proceedings to recover its architectural fees. On July 19, 1999, the arbitrator awarded LZT $52,070, finding that it was entitled to unpaid fees based on 85% completion of the construction documents. The arbitrator awarded Alden $5,250 for structural engineering fees, which it had advanced, resulting in a net award in LZT's favor in the amount of $46,820. (PX 14).

C. ALDEN-CODY/BRAUN CONTRACT

13. Following termination of LZT, Alden contacted Cody/Braun to discuss whether it would draft construction documents for the North Shore project.

14. Alden and Cody/Braun entered into a contract dated May 14, 1997 and amended May 23, 1997. (PX 5). Cody/Braun's role was to produce a complete set of construction documents starting from Schultz's design drawings. Upon the advice of counsel, and because of the ongoing dispute between Alden and LZT, Cody/Braun requested that the agreement be amended to include a hold harmless agreement as follows:

The ALDEN DESIGN GROUP, INC. agrees to defend, indemnify and hold harmless CODY/BRAUN & ASSOCIATES, INC. its officers, directors and employees, and any and all consultants of CODY/BRAUN & ASSOCIATES, INC. from all claims, damages, losses and suits, including attorneys fees and expenses, arising out of or in any way connected with alleged patent, trademark or copyright infringement related to any work of ...

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