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Kawasaki Heavy Industries, Ltd. A/K/A Kawasaki Jukogyo v. Bombardier Recreational Products

May 9, 2011

KAWASAKI HEAVY INDUSTRIES, LTD. A/K/A KAWASAKI JUKOGYO KABUSHIKI KAISHA AND KAWASAKI MOTORS MANUFACTURING CORP., U.S.A., PLAINTIFFS,
v.
BOMBARDIER RECREATIONAL PRODUCTS, INC., BRP U.S., INC., BANK OF MONTREAL (IN THE CAPACITY AS ADMINISTRATIVE AGENT), HARRY MARCUS, AND ROBERT GOETHALS DEFENDANTS.



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

MEMORANDUM and ORDER

I. Introduction

Pending before the Court is defendant Bank of Montreal's ("the Bank"), in its capacity as administrative agent for certain secured lenders, motion to dismiss plaintiffs' complaint and supporting memorandum (Doc. 35). Plaintiffs Kawasaki Heavy Industries, Ltd.'s ("KHI") and Kawasaki Motors Manufacturing Corp., U.S.A. ("KMM") (collectively referred to as "plaintiffs" or "Kawasaki") filed their opposition to defendant Bank of Montreal's motion to dismiss for improper venue and under Federal Rule 12(b)(6) (Doc. 49). For the reasons stated below, the Court denies defendant's motion to dismiss plaintiffs' complaint.

II. Background

The Court begins with the facts as alleged by Kawasaki in the complaint. KHI is a Japanese corporation with its principal place of business in Japan. KMM is a Nebraska corporation with its principal place of business in Nebraska. Bombardier Recreational Products, Inc. ("BRP-CA") is a Canadian corporation with its principal place of business in Canada. BRP U.S., Inc. ("BRP-US," and together with BRP-CA, "the BRP parties") is a Delaware corporation with its principal place of business in Wisconsin. The Bank is a Canadian corporation with its principal place of business in Canada. Robert Goethals and Harry Marcus are lawyers and residents of New York (Doc. 2, ¶¶ 5-11).

A. The BRP/Kawasaki Litigation

The case at bar arises out of several cases filed in both Florida and Texas from February 2006 and April 2007 between Kawasaki and the BRP parties, involving numerous allegations of patent infringement (Doc. 2, ¶ 1). In relation to one of these lawsuits, Kawasaki also requested reexamination of three BRP patents from the United States Patent and Trademark Office, concerning Patent Nos. 6,336,833 (Control No. 90/008222), 6,405,669 (Control No. 95/000179), and 6,428,371 (Control No. 95/000163) (Id. at ¶ 13).

B. The BRP/Kawasaki Settlement Agreement and Alleged Subordination Agreement

In September 2007, Kawasaki and the BRP parties reached an agreement in principle to settle the disputes alleged in the various lawsuits (Id. at ¶ 16; Doc. 28, Ex. A). Pursuant to the settlement agreement, the BRP parties were to obtain an agreement from the Bank to subordinate certain security interests the Bank possessed in the BRP parties' patent portfolio (Id. at ¶¶ 17-18). The Bank holds these security interests as administrative agent on behalf of several secured lenders to the BRP parties (Doc. 35, p. 3). The complaint further alleges that obtaining a subordination agreement would allow Kawasaki to use the BRP parties' patents without fear of future patent infringement should the Bank foreclose on the security interests. (Doc. 49, p. 9).

Prior to executing the settlement agreement, Kawasaki requested confirmation from the BRP parties that the Bank was willing to subordinate its security interest (Doc. 2, ¶ 18). In response to this request, counsel for the BRP parties, defendants Robert Goethals and Harry Marcus, sent an email stating that "BRP has just received word that the Bank of Montreal will agree to subordinate the security interests." (Id. at ¶ 19). In reliance on this representation, Kawasaki and the BRP parties finalized the settlement agreement, which became effective on March 31, 2008 (Id. at ¶ 20; see also Doc. 28, Ex. A, pp. 13, 18). Pursuant to the settlement agreement, the parties timely dismissed their respective patent lawsuits (Doc. 2, ¶ 22). Shortly thereafter, counsel to the BRP parties informed Kawasaki "that it is taking longer than expected to work with the Bank to prepare and execute the subordination documents" and that "it will take an additional 15 days beyond the 10 day period provided in the Settlement Agreement." (Id. at ¶ 23). Kawasaki expressed concern that the BRP parties would not fulfill their obligations under the settlement agreement, to which counsel for the BRP parties replied:

"[t]he unexpected delay we are encountering with the subordination agreement results from having to work with the bank's attorneys. We discussed the need for the subordination agreement with the bank before finalizing the settlement agreement and we don't expect any problems with obtaining the subordination agreement. However, we cannot dictate the timeframe for finalizing it since we are dealing with another party." (Id. at ¶ 24). Shortly after this statement, Kawasaki fully performed its obligations under the settlement agreement (Id.). On May 14, 2008, the BRP parties informed Kawasaki that they were not going to provide the required subordination agreement from the Bank (Id. at ¶ 25).

Kawasaki subsequently filed suit in this Court on August 23, 2010, against the BRP parties, as well as the Bank, Goethals, and Marcus, requesting specific performance of the BRP parties' obligations under the settlement agreement, or in the alternative, asserting against varying defendants claims for breach of contract, fraud, fraud in the inducement, negligent misrepresentation, negligence, breach of a third party beneficiary contract, and tortious interference, and seeking damages accordingly (See generally Doc. 2). Against the Bank specifically, Kawasaki alleged breach of a third-party beneficiary contract and tortious interference with the settlement greement (Doc. 2, pp. 13-15).

In response, the Bank filed the motion dismiss. The Bank contends that this Court should dismiss Counts VII and VIII, and Count I to the extent it applies to the Bank, for improper venue. In the alternative, the Bank asks the Court to dismiss counts VII and VIII, and Count I to the extent it applies to the Bank, for ...


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