Muthle v. SAP.IO

— 1 — — 2 — — 3 — — 4 — — 5 — 6 UNITED STATES DISTRICT COURT — 7 — NORTHERN DISTRICT OF CALIFORNIA — 8 — — 9 — 10 CHAMPION DANIEL MUTHLE, 11 Plaintiff, No. C 19-06124 WHA 12 v. 13 SAP.IO, et al., ORDER GRANTING DEFENDANTS' MOTION FOR 14 Defendants. SUMMARY JUDGMENT — 15 — 16 INTRODUCTION 17 Defendants move for summary judgment, asserting a settlement agreement from a prior 18 suit between the parties bars the current claims. For the foregoing reasons, the motion is 19 GRANTED. 20 STATEMENT 21 Prior orders detail the facts of the case (Dkt. No. 42). In brief, pro se plaintiff accuses 22 defendants of infringing his intellectual property. In April 2017, plaintiff disclosed a pitch deck 23 to solicit defendants’ investment in his business venture. Defendants released a product shortly 24 after which, plaintiff alleges, was “a virtually identical, mirror-image” of his technology (ibid.). 25 This suit is not the first dispute between the parties. In 2018, plaintiff or his counsel (at 26 the time), sent several letters alleging “there is strong evidence supporting claims for 27 infringement, misappropriation of trade secrets, breach of contract, and fraud by SAP.io and 1 threating legal action against defendants (Dkt. No. 61-4). Defendants then filed for declaratory 2 judgment in the Central District of California. SAP America, Inc. v. Adheat, Inc., No. C 183 05764-JFW (Dkt. No. 61-5). Ultimately, the parties settled (Dkt. No. 12-3). On October 4, 4 2018, plaintiff and defendants agreed to drop all their claims against each other and walk away 5 peaceably (ibid.). 6 Plaintiff then filed the current suit in June 2019. In a Rule 12(b)(6) motion, defendants 7 asserted the settlement agreement to bar plaintiff’s claims (Dkt. No. 12). The undersigned 8 converted the motion into one for summary judgment (Dkt. No. 42). This order follows several 9 rounds of briefing (Dkt. Nos. 16, 28, 44, 51, 52, 61), expedited discovery, and oral argument. 10 ANALYSIS 11 Summary judgment is appropriate if there is no genuine dispute of material fact. Rule 12 56(a). Material facts are those “that might affect the outcome of the suit” and “the substantive 13 law’s identification of which facts are critical and which facts are irrelevant . . . governs.” 14 Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). A genuine dispute is one where there is 15 “sufficient evidence” such that a “reasonable jury could return a verdict for the nonmoving 16 party.” Id. At 248–49. “In judging evidence at the summary judgment stage, the court does not 17 make credibility determinations or weigh conflicting evidence.” Soremekun v. Thrifty Payless, 18 Inc., 509 F.3d 978, 984 (9th Cir. 2007). “Rather, it draws all inferences in the light most 19 favorable to the nonmoving party.” Ibid. 20 The primary issue is the validity of the settlement agreement which defendants’ offer to 21 bar plaintiff’s claims. Generally, “when a person with the capacity of reading and 22 understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its 23 contents, and is estopped from saying that its provisions are contrary to his intentions or 24 understanding.” Palmquist v. Mercer, 272 P.2d 26, 30 (Cal. 1954). Our court of appeals has 25 recognized that duress, such as “[e]conomic duress[,] can excuse an innocent party’s contractual 26 obligations when the other contracting party does a wrongful act . . . .” Hicks v. PGA Tour, 27 Inc., 897 F.3d 1109, 1119 (9th Cir. 2018). But note, the “wrongful act” must be committed by 1 Defendants offer the settlement agreement, signed by both plaintiff and defendants (Dkt. 2 No. 12-3). Plaintiff contends the agreement is invalid as his assent was induced via duress (Dkt. 3 No. 44). He offers his declaration (Dkt. No. 52) as evidence to create a genuine dispute of fact 4 about the validity of the agreement. See Rule 56(a). Plaintiff fails to create such a dispute. 5 Plaintiff’s declaration details a rough set of circumstances. Plaintiff suffered severe injury 6 in an Amtrak train crash. Following another injury during a trip to Spain, “it became clear that 7 [his] life was in danger and someone was likely trying to kill [him] before [he] could launch 8 [his] company completely.” So he fled to “South Africa on an emergency passport to receive 9 medical attention and find safety.” Yet even there plaintiff “was attacked with electricity, 10 radiofrequency, and vibratory weapons on a daily and nightly basis.” Plaintiff’s appeals to 11 “friends and family at the State Department, the White House, and Human Rights 12 Organizations” appear to have been ignored (Dkt. No. 52 at 3–4). 13 For the purposes of summary judgment, plaintiff’s story is true. See Anderson, 242 U.S. 14 at 255 . But plaintiff does not allege facts indicating defendants or their law firm had anything 15 to do with plaintiff’s difficulties. As our court of appeals indicated, it is the “other contracting 16 party[‘s]” conduct in causing duress that undermines the contract — not unrelated parties’ 17 conduct. See Hicks, 897 F.3d at 1119 . Indeed, plaintiff admits any allegation of defendants’ or 18 defense counsel’s misconduct is speculative: “In hindsight, it seems as though someone planned 19 the incident[s] . . . When I think of who might have benefited, especially considering their 20 launch of ATLAS.IO, SAP.IO comes immediately to mind” (ibid.). Federal Rule of Evidence 21 602 bars such speculation. Thus, plaintiff does not present sufficient evidence to create a 22 genuine dispute as to the validity of the settlement agreement based on defendants’ 23 misbehavior. Anderson, 242 U.S. at 248–49. 24 The remaining issue is, then, whether the settlement agreement encompasses and bars 25 plaintiff’s current claims. It does. Both plaintiff and defendants “irrevocably and forever 26 settle[d], release[d], and absolutely discharge[d] [each other] from any and all claims that could 27 have been brought, whether known or unknown” (Dkt. No. 12-3). Plaintiff’s current claims are 1 that caused defendants to file for declaratory judgment asserted “there is strong evidence 2 supporting claims for infringement, misappropriation of trade secrets, breach of contract, and 3 fraud by SAP.io and Atlas.io” (Dkt. 61-4). Earlier, plaintiff had explained the dispute arose out 4 of his April 2017 submission of a “pitch deck describing the scope and framework of the 5 Adheat Technology to SAP.io Fund .. .” (Dkt. No. 61-1 at 21). This suit similarly arises from 6 plaintiff's April 2017 submission of “a copy of its pitch deck describing the scope and 7 framework of the Adheat Technology to SAP.io Fund...” (Dkt. No. 23). Thus, plaintiff's 8 patent infringement, trade secret misappropriation, contract, and tort claims “could have been 9 brought” in the prior suit. Under the terms of the settlement, these claims are barred (Dkt. No. 10 12-3). 11 The settlement involved a walk-away, meaning both parties walked away from the earlier 12 lawsuit. No money exchanged hands. At first blush, the absence of money might seem unfair 5 13 to plaintiff. But, on reflection, plaintiff did receive consideration. He himself provoked the 14 earlier lawsuit by sending cease and desist letters. He should have expected a declaratory relief 3 15 suit. When it came, he should have litigated it, if his claims had any merit. Instead, he accepted a 16 a walk-away deal to avoid the risk of having to pay the accused’s costs of suit. That was 3 17 enough to make the deal fair. 18 CONCLUSION 19 Finding plaintiff has provided insufficient evidence to create a genuine dispute as to the 20 validity of the settlement agreement, and finding the settlement agreement encompasses and 21 bars plaintiff's current claims, defendants’ motion for summary judgment is GRANTED. 22 IT IS SO ORDERED. — 23 — 24 Dated: January 23, 2020. — 25 — 26 Al = | | . □ LLIAM ALSUP 27 UNITED STATES DISTRICT JUDGE — 28 —