Filed: Feb. 15, 2012
Latest Update: Feb. 22, 2020
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED _ U.S. COURT OF APPEALS ELEVENTH CIRCUIT FEBRUARY 15, 2012 No. 10-12837 JOHN LEY _ CLERK D. C. Docket No. 9:09-cv-81846-KLR MAX ABECASSIS, an individual, NISSIM CORP., a Florida corporation, Plaintiffs-Appellants, versus EUGENE M. CUMMINGS, P.C., an Illinois corporation, JOSEPH M. VANEK, an individual, Defendants-Appellees. _ Appeal from the United States District Court for the Southern District of Florida _ (F
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED _ U.S. COURT OF APPEALS ELEVENTH CIRCUIT FEBRUARY 15, 2012 No. 10-12837 JOHN LEY _ CLERK D. C. Docket No. 9:09-cv-81846-KLR MAX ABECASSIS, an individual, NISSIM CORP., a Florida corporation, Plaintiffs-Appellants, versus EUGENE M. CUMMINGS, P.C., an Illinois corporation, JOSEPH M. VANEK, an individual, Defendants-Appellees. _ Appeal from the United States District Court for the Southern District of Florida _ (Fe..
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
FEBRUARY 15, 2012
No. 10-12837
JOHN LEY
________________________
CLERK
D. C. Docket No. 9:09-cv-81846-KLR
MAX ABECASSIS,
an individual,
NISSIM CORP.,
a Florida corporation,
Plaintiffs-Appellants,
versus
EUGENE M. CUMMINGS, P.C.,
an Illinois corporation,
JOSEPH M. VANEK,
an individual,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(February 15, 2012)
Before DUBINA, Chief Judge, MARCUS and FAY, Circuit Judges.
PER CURIAM:
Plaintiffs-Appellants Nissim Corporation and Max Abecassis (collectively
“Nissim”) appeal the dismissal of their complaint for failure to state a claim
against Defendants-Appellees Joseph M. Vanek and Eugene M. Cummings, P.C.
(collectively “Vanek and Cummings”). After reading the parties’ briefs and
having the benefit of oral argument, we affirm the judgment of dismissal.
I.
In January 1998, Nissim retained Vanek and Cummings as counsel to
“enhance, defend, and enforce” certain U.S. patents owned by Nissim. [Retainer
Agreement, R.1 (Exh. A) at 1.] The parties entered into a Retainer Agreement in
which Vanek and Cummings agreed to, inter alia, “[v]igorously defend to the
extent meritorious and reasonable any challenges that may arise to the validity of
the Intellectual Properties” and to “[t]ake such actions and conduct such
negotiations and litigations as may be meritorious, reasonable, and necessary to
secure Licensing Agreements with entities infringing the Intellectual Properties.”
Id. at 3. The term “Intellectual Properties” is defined in the Retainer Agreement to
include, inter alia, U.S. Patent Nos. 5,434,678; 5,589,945; and 5,634,849.
The Retainer Agreement expressly provided that “CustomPlay” was outside
its scope. CustomPlay was a product developed by Nissim, which “allows users to
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customize individual viewing preferences for motion pictures and enables the
skipping of objectionable content in response to such individualized content
preferences.” [Compl., R.1 (Exh. A) at 3.] The Retainer Agreement provided that
Vanek and Cummings “will not receive any portion of the revenues of CustomPlay
or otherwise participate in CustomPlay and shall have no obligation to participate
in any copyright or other litigation that may result as a consequence of the
commercialization of CustomPlay.” [Retainer Agreement, R.1 (Exh. A) at 3.]
In January 2000, Matthew and Lee Jarman contacted Nissim about
obtaining licensing rights to CustomPlay. Nissim sent Matthew and Lee Jarman
information about CustomPlay, but the parties never entered into a licensing
agreement.1 About a year later, the Jarmans formed ClearPlay, Inc. and began
producing and distributing software that Nissim alleges infringed upon several of
Nissim’s patents. On May 14, 2004, Nissim filed a patent infringement action
against the Jarmans and ClearPlay, Inc. (collectively, “the Jarmans”). Specifically,
Nissim alleged that the Jarmans infringed U.S. Patent Nos. 6,607,401; 5,724,472;
5,434,678; and 5,589,945. The last two patents – U.S. Patent Nos. 5,434,678 and
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Nissim sent the Jarmans a demonstration version of the CustomPlay software. The opening
screen referenced several of Plaintiffs’ patents, including U.S. Patent Nos. 5,434,678; 5,589,945; and
5,634,849.
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5,589,945 – are “Intellectual Properties” as defined in Nissim’s Retainer
Agreement with Vanek and Cummings.
On June 23, 2004, the Jarmans answered Nissim’s complaint in the
ClearPlay litigation, denying any infringement and challenging the validity of
Nissim’s patents. After Vanek and Cummings declined to participate in this
litigation with the Jarmans, Nissim hired John Carey as counsel.
On December 8, 2005, Nissim terminated its Retainer Agreement with
Vanek and Cummings, citing grounds referred to in the agreement as “without
cause” and also “for cause.” Nissim identified the “for cause” reason for
termination as being “based on Counsel’s actions and inactions relating to the
defense of the validity of the Intellectual Properties in the ClearPlay . . .
litigation.” [R. 1-2 (Exh. D) at 1.] Over three years later, on June 22, 2009, Nissim
filed this suit against Vanek and Cummings, claiming breach of contract and fraud
in the inducement and seeking a declaratory judgment. In response, Vanek and
Cummings moved to dismiss the complaint under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim. The district court dismissed Nissim’s breach
of contract and fraud in the inducement claims with prejudice. The district court
also dismissed Nissim’s declaratory judgment action with prejudice “insofar as it
attempts to reargue” the breach of contract claim. The district court, however,
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went on to dismiss that claim without prejudice “insofar as it seeks a declaration
regarding entitlement to contingency fees on royalties from certain license
agreements.” Abecassis v. Cummings, P.C., No. 09-81846 at *15–16 (S.D. Fla.
June 2, 2010). The district court gave Nissim leave to amend the complaint within
fifteen days of the date of the dismissal order to specify the relevant license
agreements. Nissim did not file an amended complaint and now appeals the
district court’s order.
II.
“We review the grant of a motion to dismiss for failure to state a claim
under Fed. R. Civ. P. 12(b)(6) de novo.” Thompson v. RelationServe Media, Inc.,
610 F.3d 628, 633 (11th Cir. 2010). In ruling on a 12(b)(6) motion, “[a] court may
consider only the complaint itself and any documents referred to in the complaint
which are central to the [plaintiff’s] claims.” Wilchombe v. TeeVee Toons, Inc.,
555 F.3d 949, 959 (11th Cir. 2009) (citation omitted). “[T]he [c]ourt accepts the
factual allegations in the complaint as true and construes them in the light most
favorable to the plaintiff.” Speaker v. U.S. Dep’t of Health & Human Servs. Ctrs.
for Disease Control & Prevention,
623 F.3d 1371, 1379 (11th Cir. 2010).
“Dismissal for failure to state a claim is proper if the factual allegations are not
‘enough to raise a right to relief above the speculative level.’” Edwards v. Prime,
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Inc., 602 F.3d 1276, 1291 (11th Cir. 2010) (quoting Rivell v. Private Health Care
Sys., Inc.,
520 F.3d 1308, 1309 (11th Cir. 2008)); see also Sinaltrainal v. Coca-
Cola Co.,
578 F.3d 1252, 1260 (11th Cir. 2009) (“A complaint may be dismissed
if the facts as pled do not state a claim for relief that is plausible on its face.”).
III.
Nissim contends that the district court erred in dismissing its breach of
contract claim on statute of limitations grounds. Florida law provides a five-year
statute of limitations on a claim for breach of contract. Fla. Stat. § 95.11(2)(b);
see also Collections, USA, Inc. v. City of Homestead, 816 So. 2d 1225, 1227 n.2
(Fla. Dist. Ct. App. 2002). The limitations period begins to run at the time of the
breach. See Fla. Stat. § 95.031(1) (“A cause of action accrues when the last
element constituting the cause of action occurs.”); Technical Packaging, Inc. v.
Hanchett,
992 So. 2d 309, 313 (Fla. Dist. Ct. App. 2008) (“Florida case law
consistently holds that a cause of action for breach of contract accrues and the
limitations period commences at the time of the breach.”). The plaintiff’s
knowledge of the breach is immaterial. See Abbott Labs., Inc. v. Gen. Elec.
Capital,
765 So. 2d 737, 740 (Fla. Dist. Ct. App. 2000) (“[T]he limitation period
in [Fla. Stat. §] 95.11(2)(b) is not tolled by the lack of discovery of a breach within
the limitation period [,] . . . actions for breach of contract are barred five years
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after the cause of action accrued regardless of whether the plaintiff knew that it
had a claim.”).
Nissim’s complaint alleges that Vanek and Cummings committed breach of
contract by failing to defend the validity of the Nissim patents and to advance
litigation costs in the ClearPlay litigation. The district court concluded that the
statute of limitations on Nissim’s breach of contract claim began running on May
13, 2004, when Nissim initiated the ClearPlay litigation and hired Carey as
counsel. The district court reasoned that filing suit against ClearPlay put at issue
the patents’ validity and triggered Vanek and Cummings’ obligation to defend.
Because Nissim did not file suit in this case until June 22, 2009, more than five
years later, the district court determined that Nissim’s breach of contract claim is
time barred. Nissim contends that was error. It argues that the limitations period
began running, at the earliest, on June 23, 2004, the date that the Jarmans
answered Nissim’s complaint and asserted an affirmative defense and
counterclaim that alleged that Nissim’s patents were invalid. By Nissim’s
calculation, its breach of contract claim was filed just inside the five-year
limitations period.
We do not need to decide whether Nissim’s breach of contract claim is
barred by the statute of limitations. Even if the claim is timely, Nissim may not
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recover as a matter of law because it did not comply with the Retainer
Agreement’s default clause. See Morris v. Knox Corp., 13 So. 2d 914, 915 (Fla.
1943) (explaining that a plaintiff must comply with a contractual obligation to
provide written notice of breach and opportunity to cure before defendant’s breach
becomes actionable); Saunders Leasing Sys., Inc. v. Gulf Cent. Distrib. Ctr., Inc.,
513 So. 2d 1303, 1307 (Fla. Dist. Ct. App. 1987) (reversing judgment on breach of
contract claim where plaintiff failed to give defendant notice and an opportunity to
cure as required by contract). Section 9.2 of the Retainer Agreement provides:
In the event that Counsel fails to provide Services as stipulated
herein; breaches any material term of this Agreement, or otherwise
fails to perform under this Agreement, Client shall deliver notice
thereof to Counsel and Counsel shall have thirty (30) days from
receiving such notice to sure such failure. If the failure continues
after such 30-day period, this Agreement shall be automatically
terminated.
[Retainer Agreement, R.1 (Exh. A) at 6.] Nissim provided Vanek and Cummings
with written notice of their alleged breach in a letter dated December 8, 2005.2
The letter informed Vanek and Cummings that they were being terminated “for
cause under Section 9.2 . . . based on Counsel’s actions and inactions relating to
the defense of the validity of the Intellectual Properties” in the ClearPlay litigation
2
The December 8, 2005, letter was referenced in Nissim’s complaint and attached as an
exhibit. The district court, therefore, properly considered the letter in ruling on Vanek and
Cummings’ 12(b)(6) motion to dismiss. See Wilchombe, 555 F.3d at 959.
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and specifically alleged that Vanek and Cummings violated Section 2.4 of the
Retainer Agreement, which required them to: “[v]igorously defend to the extent
meritorious and reasonable any challenges that may arise to the validity of the
Intellectual Properties.” [R.1-2 (Exh. D) at 1.] Nissim’s notice of breach was
inadequate because it was given roughly two weeks after Nissim settled the
ClearPlay litigation. The thirty-day notice requirement in Section 9.2 was
expressly intended to give Vanek and Cummings an opportunity to cure any
default. Here, Vanek and Cummings were deprived of any opportunity to cure
because they were not informed of their purported breach until cure became
impossible.3 Thus, Nissim’s claim for breach of contract fails as a matter of law.
See Morris, 13 So. 2d at 915; Saunders Leasing Sys.,
Inc., 513 So. 2d at 1307.
IV.
Nissim also challenges the district court’s finding that its fraud in the
inducement claim was time barred.4 The statute of limitations for a fraud in the
3
Nissim sent Vanek and Cummings a letter dated January 9, 2006, stating that they could cure
by reimbursing Nissim for their defense costs in the ClearPlay litigation within 30 days. But under
the terms of the contract, Vanek and Cummings’ opportunity to cure had already expired on January
7, 2006, thirty-days after notification of breach. Nissim lacked authority to unilaterally extend the
time for cure because the Retainer Agreement included a clause providing that: “This Agreement
may not be modified, amended, rescinded, canceled or waived, in whole or in part, except by a
written instrument signed by the Parties.” [Retainer Agreement, R.1 (Exh. A) at 8-9.]
4
To state a claim for fraud in the inducement under Florida law, a plaintiff must allege that:
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inducement claim is four years. Tyson v. Viacom, Inc., 890 So. 2d 1205, 1213
(Fla. Dist. Ct. App. 2005) (citing Fla. Stat. § 95.11(3)(j)). The claim accrues when
“the facts giving rise to the cause of action were discovered or should have been
discovered with the exercise of due diligence.” Fla. Stat. § 95.031(2)(a); see also
Hanna v. Beverly Enterprises-Florida,
738 So. 2d 424, 425 (Fla. Dist. Ct. App.
1999) (reversing dismissal of fraud in the inducement claim as barred by the
statute of limitations where trial court assumed that the cause of action accrued at
the time the contract was signed).
The district court concluded that the statute of limitations on Nissim’s fraud
in the inducement claim commenced, at the latest, on June 23, 2004, and expired
on June 23, 2008. Because Nissim did not file this action until June 22, 2009, the
district court determined that Nissim’s claim was time barred. The district court
based its statute of limitations ruling on the allegations in the complaint that
Vanek and Cummings refused to defend Nissim’s patents when challenged by the
ClearPlay defendants in their answer.
(a) the representor made a misrepresentation of a material fact; (b) the representor
knew or should have known of the falsity of the statement; (c) the representor
intended that the representation would induce another to rely and act on it; and (d)
the plaintiff suffered injury in justifiable reliance on the representation.
Joseph v. Liberty Nat’l Bank, 873 So. 2d 384, 388 (Fla. Dist. Ct. App. 2004) (emphasis omitted).
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We agree with the district court that Nissim’s fraud in the inducement claim
is barred by the statute of limitations. Nissim’s fraud claim is based on Vanek and
Cummings’ representations concerning their willingness to defend challenges to
the validity of Nissim’s patents. The complaint alleges that Nissim hired John
Carey to represent them in the ClearPlay litigation as a result of Vanek and
Cummings’ refusal to fulfill their defense obligation. The ClearPlay complaint,
filed on May 13, 2004 and referenced in Nissim’s complaint and attached as an
exhibit, makes clear that Nissim retained Carey in 2004. Thus, based on the
allegations in the complaint, Nissim was aware of Vanek and Cummings’
purported fraud in 2004. Because Nissim did not file its complaint until June
2009, a period beyond the four year statute of limitations, its fraud in the
inducement claim is time barred.
V.
Finally, as to the claim for a declaratory judgment in Count III, we conclude
from the record that the district court did not abuse its discretion in dismissing the
count with leave to amend. The existence or nonexistence of some right, status,
immunity, power or privilege must be shown to entitle the moving party to
declaratory relief. Fla. Hotel & Rest. Comm’n v. Marseilles Hotel Co., 84 So. 2d
567, 568 (Fla. 1956). Count III is an attempt to reargue the breach of contract
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issue in Count I that was dismissed by the district court and affirmed supra.
Accordingly, Count III must be dismissed. See Colby v. Colby,
120 So. 2d 797,
800 (Fla. Dist. Ct. App. 1960) (holding that “questions which have already been
adjudicated by a court having jurisdiction of the subject matter and the parties
cannot subsequently, between such parties and their privies, constitute a justiciable
controversy within the meaning of declaratory judgment acts”).
Count III also requests a declaration regarding Cumming’s and Vanek’s
entitlement to contingency fees on certain royalties. Yet Nissim failed to plead
sufficient facts to identify which of the scores of possible license agreements its
claims addressed, details necessary to ascertain how the royalty stream is to be
divided under the Agreement. Nissim decided not to cure this defect in its
complaint but to appeal instead. That leaves us with little choice but to affirm the
dismissal of this count as well.
For the aforementioned reasons, we affirm the judgment of dismissal.
AFFIRMED.
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