Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Telefonix, Inc v. Response Engineering

November 13, 2012

TELEFONIX, INC., PLAINTIFF/COUNTERCLAIM DEFENDANT,
v.
RESPONSE ENGINEERING, INC. AND RICHARD E. SKOWRONSKI, DEFENDANTS/COUNTERCLAIM PLAINTIFFS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

MEMORANDUM OPINION AND ORDER

On June 5, 2012, Plaintiff Telefonix, Inc. ("Telefonix") filed a one-count complaint alleging breach of contract against Defendants Response Engineering, Inc. ("Response") and Richard E. Skowronski ("Skowronski") (collectively, the "Defendants"). (R. 1, Compl.) On June 7, 2012, Telefonix filed an amended complaint. (R. 8.) Defendants filed an answer to the amended complaint and eleven counterclaims on July 16, 2012. (R. 14, Counter.) On August 6, 2012, Telefonix filed a motion to dismiss certain of Defendants' counterclaims pursuant to Federal Rules of Civil Procedure ("Rule") 12(b)(6). (R. 21, Mot. to Dis.) For the following reasons, the Court dismisses Counterclaims V-XI, without prejudice.

FACTUAL BACKGROUND

Defendants allege the following facts in support of their claims, which the Court accepts as true for the purpose of this motion.Richard Skowronski, a mechanical engineer and inventor, founded and incorporated Response Engineering, Inc. in 1989. (Counter. ¶ 6.) In 1994, Response entered into a written agreement to design a 2.5" cord reel*fn1 for Telefonix at a discounted rate of $35 per hour in exchange for a per unit royalty payment for each 2.5" cord reel sold by Telefonix ("the 1994 Agreement"). (Id. ¶¶ 9-10.) In 2000, Telefonix and Response signed another written agreement to supplement the 1994 Agreement ("the 2000 Agreement"). (Id. ¶ 13.) According to the 2000 Agreement, Telefonix agreed to pay Response the discounted $35 per hour rate plus royalty payments of $0.25/each and also to pay Response a higher, non-discounted rate without a royalty on other projects. (Id.) Under the 2000 Agreement, if Telefonix and Response wished to proceed with the non-discounted rate, the parties would agree to that modification at the start of the new project. (Id. ¶¶ 14, 17.)

Between 2000 and 2008, Telefonix unilaterally reduced the royalty rate from $0.25/each to $0.10 each, without disclosing to Response that it had made such a reduction. (Id. ¶ 17.) Response discovered this reduction on or about May 17, 2011 when Telefonix provided Response with a partial accounting of royalties for 2008-2010. (Id.) Response also learned, in early 2010, that Telefonix had omitted payments for some 2.5" cord reels sold. (Id. ¶ 18.)

Independent of any Telefonix product, Skowronski conceived of and invented the "rotating ferrule," which extends the life of a cord reel. (Id. ¶ 20.) Skowronski claimed this invention by U.S. Patent Application 12/951,354. (Id. ¶ 22.) Telefonix agreed to pay Response the discounted $35 rate plus a royalty fee for any reel cord using the rotating ferrule based on a new royalty agreement that they would formalize in the future. (Id. ¶ 21.)

Skowronski also invented a new, unique cord reel technology, the "conductive ratchet," described in U.S. Patent Application No. 12/573,854 which resulted in U.S. Patent No. 8,123,010 (the "'010 patent"). (Id. ¶¶ 23, 25.) Telefonix agreed to pay the $35 discounted rate plus a royalty based on a new royalty agreement that they would formalize in the future, for each product sold using the new technology. (Id. ¶ 24.) In exchange for the promise of a fair royalty on products using the rotating ferrule or conductive ratchet technology, Skowronski assigned to Telefonix the rights to the patent application that resulted in the '010 patent. (Id. ¶ 26.)

Michael Kuehn ("Kuehn") of Telefonix and Telefonix demanded that Skowronski also assign to Telefonix the priority right in China for the patent application that resulted in the '010 patent. (Id. ¶ 27.) To induce Response and Skowronski to assign these rights, Kuehn represented to Skowronski that, if Skowronski immediately executed the assignment, Telefonix would execute a new royalty agreement with Response for the rotating ferrule and conductive ratchet technologies. (Id. ¶ 28.) Based upon these representations, Skowronski executed the assignment on December 23, 2010. (Id. ¶ 29.)

Neither Kuehn nor Telefonix has entered into a new written royalty agreement with Response or paid any royalties on the rotating ferrule or conductive ratchet technology. (Id. ¶¶ 26, 30.)

LEGAL STANDARD

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Under Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)). Under the federal notice pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Put differently, a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Twombly, 550 U.S. at 570). "In evaluating the sufficiency of the complaint, [courts] view it in the light most favorable to the plaintiff, taking as true all well-pleaded factual allegations and making all possible inferences from the allegations in the plaintiff's favor." AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). A plaintiff may plead himself out of court by alleging facts showing that he has no legal claim. See Peterson v. McGladrey & Pullen, LLP, 676 F.3d 594, 600 (7th Cir. 2012); Atkins v. City of Chi., 631 F.3d 823, 832 (7th Cir. 2011).

ANALYSIS

Telefonix moves to dismiss Defendants' counterclaims for promissory estoppel (Counterclaims V-VI) and unjust enrichment (Counterclaims VII-VIII) for failure to state a claim. (Mot. to Dis. at 1-2.) Telefonix specifically argues that Defendants' unjust enrichment claims must meet the heightened pleading standards of Rule 9. (Id. at 5-8.) Telefonix also seeks to dismiss all of Defendants' quasi-contractual claims (Counterclaims V-XI) because each count, while purporting to be pled in the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.