Opinion
X06UWYCV156026684S
10-27-2017
G Therm, Inc. et al. v. Jerrold Metcoff et al
UNPUBLISHED OPINION
ORDER RE DEFENDANTS' MOTION TO DISMISS, #105
Terence A. Zemetis, J.
ISSUE: Whether to grant the defendants' motion to dismiss for lack of subject matter jurisdiction?
HOLDING: The motion to dismiss is granted.
DOCUMENTS CONSIDERED: Docket entries: 102, 105, 105.10, 106, 107, 108, 110, 111, 112, 113, 120, 122, 123, 124, 120, 131, and full Exhibits marked.
FACTS:
The plaintiffs are GTherm, Inc. and Pardev, LLC, business entities created, owned, and managed by Michael Parella, MP. MP has been a judgment debtor to David Wilson, DW, and Jerrold Metcoff, JM, since February 17, 2011. The judgment is unpaid. This action arises out of the judgment creditors' efforts to satisfy the judgment against MP by filing judgment liens against MP's interest in personal property.
Although alleged Amended Complaint, entry number 102, ¶ 1, to be a Connecticut corporation, Ex 2 asserts that GTherm, Inc. is a stock corporation formed in Nevada.
A limited liability company formed in CT, entry 102, ¶ 2.
Jerrold Metcoff et al. v. NCT Group, Inc. et al., 137 Conn.App. 578, 49 A.3d 282 (2012), cert. denied, 307 Conn. 924, 55 A.3d 566 (2012). Plaintiffs JM and DW obtained judgments totaling $2, 127, 967.00, and additional postjudgment interest, against MP for negligent and intentional misrepresentation and violation of Conn. Unfair Trade Practices Act.
DW and JM obtained judgment against MP on February 17, 2011 after a jury trial in the Connecticut Superior Court, Metcoff v. NCT Group, Inc., Superior Court of Connecticut, Barry Stevens, J., 52 Conn.Supp. 363, 50 A.3d 1004 A.3d 1004, February 17, 2011, affirmed 137 Conn.App. 578, 49 A.3d 282 (2012), cert. denied, 307 Conn. 924, 55 A.3d 566 (2012). The unsatisfied judgment now exceeds $2, 400, 000.00 (two million four hundred thousand dollars).
On February 25, 2011 DW and JM filed Judgment Liens against MP's interests in personal property, including intellectual property existing or thereafter arising, with the Connecticut Secretary of State, Judgment Lien Certificate and later a UCC-3 Financing Statement Amendment--Ex. B & C. On April 28, 2011 and May 2, 2011 JM filed Judgment Liens on MP's interests in patents and pending patent applications in the United States Patent and Trademark Office, USPTO, Judgment Lien Certificate and later a UCC-3 Financing Statement Amendment--Ex. D.
MP owned interests in patents and applications for patents prior to February 25, 2011. DW and JM sought to satisfy their judgment against those assets.
On April 18, 2011 JM amended his lien filing at the CT Secretary of State to include patent application numbers and patent numbers assigned to MP's submissions to the USPTO.
On April 28, 2011 and May 2, 2011 JM amended his lien filings at the USPTO to include and specify particular patent application numbers and patent numbers assigned by USPTO to MP's submissions.
On May 6, 2011 JM acting on behalf of DW amended his lien filings at the CT Secretary of State to include and specify particular patent application numbers and patent numbers assigned to MP's submissions to the USPTO.
On October 6, 2011 MP first recorded in the USPTO a revocable Assignment of his rights in patents issued by and patent applications pending before the USPTO. The Assignment, dated August 15, 2009, was to Pardev, LLC.
Page 2, paragraph 2 provides for an " immediate reversion of all rights granted hereunder back to the Inventor" if Pardev fails to fulfill enumerated obligations.
On October 6, 2011 MP first recorded in the USPTO a Licensing Agreement between Pardev, LLC and GTherm, Inc. authorizing use of the patents MP had assigned to Pardev in the Assignment. The Licensing Agreement, dated August 15, 2009, was to GTherm, Inc.
On December 8, 2011 MP, through counsel, filed UCC-3 Financing Statement Amendments with the CT Secretary of State terminating the Judgment Liens filed by JM and DW solely against the personal property of MP. MP had no permission or authority from JM or DW to file the statement of termination of the Judgment Lien nor had the Judgment Lien been satisfied.
EX. 1 in both EN 107 (JM's affidavit) & 108 (DW's affidavit).
On December 9, 2011 MP, through counsel, filed a termination of the judgment liens filed by JM in the USPTO. MP had no permission or authority from JM to file the statement of termination of the Judgment Lien nor had the Judgment Lien been satisfied.
In June 2012, upon learning of the " termination of lien" filings, of which MP had NOT given DW or JM notice, DW and JM re-filed their filed judgment liens with the CT Secretary of State and the USPTO.
All such filings on behalf of and at the request of JM and DW were performed by their counsel, Berman and Sable, LLC.
GTherm and Pardev allege MP, " over 18 months prior to" the February 17, 2011 judgment against MP " filed and registered" certain patents with the USPO. Allegedly on August 15, 2009 MP assigned his rights in certain patents to Pardev and immediately thereafter Pardev licensed those rights to GTherm. The assignment and license agreement are dated August 15, 2009 but are not recorded in the USPTO until October 6, 2011. MP claimed the Assignment and Licensing Agreement were disclosed to DW and JM before February 17, 2011 while defendants claim that the Assignment and Licensing Agreement first disclosed to DW and JM, through their counsel, on December 7, 2011 during an examination of a judgment debtor proceeding of MP in the Connecticut Superior Court.
Amended Complaint, docket entry number 102, April 10, 2015, ¶ 19-21.
See fn.1.
Evidence received during the hearing on the motion to dismiss established that Pardev licensed rights in patents to GTherm, but there was no evidence of an assignment by Pardev to GTherm. Ex 3 and 4.
Ex. 3 " Assignment of Patents" recites that MP solely owns five (5) provisional patent applications concerning Single Well Engineered Geothermal System, SWEGS, and assigns rights to Pardev. Ex. 4 " License Agreement" recites that Pardev owns intellectual property rights described in Patents pending or issued to MP concerning SWEGS.
MP's June 17, 2015 Affidavit, ¶ 8, captioned case docket entry #111, pp 14-17.
MP's " Assignment of Patents, " Ex. 3, Pardev's " License Agreement, " Ex. 4, and an " Intellectual Property Agreement, " Ex. 5, are dated August 15, 2009 but were not recorded in the USPTO until October 6, 2011. The documents are signed by MP on behalf of all parties--assignor/assignee, licensor/licensee, and MP individually--because MP then owned and controlled both Pardev and GTherm. There are no witnesses and no notarization of MP's signatures on Ex. 3, 4 or 5. The accuracy and reliability of execution of those documents rests solely on the documents themselves, created by MP, and MP's testimony. USPTO, 35 U.S.C. 261, addresses ownership and assignment of patents. This statute addresses the validity of the assignments vis a vis " any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage ."
35 U.S.C. 261 Ownership; assignment. Subject to the provisions of this title, patents shall have the attributes of personal property. The Patent and Trademark Office shall maintain a register of interests in patents and applications for patents and shall record any document related thereto upon request, and may require a fee therefore.
28 U.S.C. § 1338 states that " [t]he district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents . . . Such jurisdiction shall be exclusive of the courts of the states . . ." 28 U.S.C. § 1338(a) (1994). Whether the case originally could have been heard under § 1338 depends on whether the plaintiffs, in a well-pleaded complaint, state a claim which arises under the patent law. A claim arises under the patent law if patent law creates the cause of action or is a necessary element of one of the well-pleaded claims. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09, 108 S.Ct. 2166, 2173-74, 100 L.Ed.2d 811 (1988). Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1571 (Fed.Cir. 1997).
Pardev, LLC and GTherm, Inc. assert a cause of action against the defendants for filing judgment liens in the USPTO and/or the CT Secretary of State against MP's interests in patents/patent applications which MP asserts had been assigned, and licensed, though neither the assignment or license were recorded in the USPTO nor, the defendants' claim, disclosed to the defendants prior to the defendants' filing of the judgment liens. The plaintiffs allege they are the owners/assignee and licensee of the patents and the liens filed by the defendants " cloud the title" or as plaintiffs' counsel asserts in his Objection to the Motion to Dismiss are akin to a " slander of title" and claim resulting damages.
Counsel briefed what this court felt was a necessary determination:
EN 130 & 131.
EN 105.10.
Whether the USPTO/federal courts have exclusive jurisdiction, to the exclusion of state courts, determining the ownership interests and priority of ownership interest in patents and pending patent applications among the parties?
The plaintiffs reject the need for USPTO/federal court determination of plaintiffs' patent/license ownership interests, EN 130, to determine whether plaintiffs have standing to prosecute this action. The defendants, EN 131, urge the need.
The court, as explained in EN 105.10, holds that the USPTO/federal courts have exclusive jurisdiction determining the ownership interests and priority of ownership interests in the patents and pending patent applications among the parties. Until the USPTO/federal courts determine whether plaintiffs have an interest in the patents or pending patent applications once owned by MP, this court would stay the case pending that determination, but, rather than stay these proceedings, the court dismisses the case on more narrow, and different, grounds than determining plaintiff's ownership and priority interests, to patents/pending patent applications once owned by MP, among the parties.
Standard of Review
" The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." St. George v. Gordon, 264 Conn. 538, 544, 825 A.2d 90 (2003). " The proper procedural vehicle for disputing a party's standing is a motion to dismiss." (Internal quotation marks omitted.) D'Eramo v. Smith, 273 Conn. 610, 615 n.6, 872 A.2d 408 (2005). " If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 282 Conn. 791, 802, 925 A.2d 292 (2007); In re Christina M., 280 Conn. 474, 480, 908 A.2d 1073 (2006); Missionary Society of Connecticut v. Board of Pardons & Paroles, 278 Conn. 197, 201, 896 A.2d 809 (2006).
" When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007); Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006); Filippi v. Sullivan, 273 Conn. 1, 8, 866 A.2d 599 (2005).
" The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue . . ." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007). " When issues of fact are necessary to the determination of a court's jurisdiction due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross examine adverse witnesses." Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 56, 459 A.2d 503 (1983); Golodner v. Women's Center of Southeastern Connecticut, Inc., 281 Conn. 819, 826, 917 A.2d 959 (2007); Gordon v. H.N.S. Management Co., 272 Conn. 81, 92, 861 A.2d 1160 (2004). " A motion to dismiss may . . . raise issues of fact and would, therefore, require a . . . hearing [to determine the facts] . . . [A]ffidavits are insufficient to determine the facts unless, like the summary judgment, they disclose that no genuine issue as to a material fact exists . . . When issues of fact are disputed, due process requires that an evidentiary hearing be held with the opportunity to present evidence and to cross examine adverse witnesses . . . Moreover, a court cannot make a critical factual finding based on memoranda and documents submitted by the parties . . ." (Citations omitted; internal quotation marks omitted.) Coughlin v. Waterbury, 61 Conn.App. 310, 315-16, 763 A.2d 1058 (2001). " The Plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." Fink v. Golenbock, 238 Conn. 183, 199 n.13, 680 A.2d 1243 (1996) (internal citation omitted).
Standing
" It is axiomatic that a party must have standing to assert a claim in order for the court to have subject matter jurisdiction over the claim. [The Connecticut Supreme Court's] standing jurisprudence consistently has embodied the notion that there must be a colorable claim of a direct injury to the plaintiff, in an individual or representative capacity . . . Standing focuses on whether a party is the proper party to request adjudication of the issues, rather than on the substantive rights of the aggrieved parties . . . One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy." Ganim v. Smith and Wesson Corp., 258 Conn. 313, 346-47, 780 A.2d 98 (2001).
" . . . (t)o state these basic propositions another way, if the injuries claimed by the plaintiff are remote, indirect, or derivative with respect to the defendant's conduct, the plaintiff is not the proper party to assert them and lacks standing to do so. Where, f`mple, the harms asserted to have been suffered directly by a plaintiff are in reality derivative of injuries to a third party, the injuries are not direct but are indirect, and the plaintiff has no standing to assert them." Id. at 347-48 (internal citations omitted.)
The plaintiffs, Pardev and GTherm, do not have standing because the harm claimed by them is remote, indirect, or derivative regarding the defendants' conduct. The defendants' liens, both in the USPTO and the CT Secretary of State's Office, are solely against the property interests of their judgment debtor, MP, and NOT against the plaintiffs' interests in patents--as may be determined in the USPTO, the federal court, or this court. The plaintiffs do not dispute the defendants' right to lien MP's property, not otherwise statutorily exempt, attempting to satisfy the judgment lien. Careful examination of the defendants' liens reveals the scope limited to the interests of MP.
The plaintiffs failed to offer evidence of their standing, " a colorable claim of direct injury, " to prosecute this case against these defendants. The liens filed by the defendants JM and DW through their counsel, Berman & Sable, in both the USPTO and the CT Secretary of State's Office address only the property interests of Michael J. Parrella, Sr. Interests of Pardev, LLC or GTherm, Inc., are not included in the liens filed by the defendants.
EN 102, " AMENDED COMPLAINT, " paragraph 11 incorporated into all counts, " . . . Defendants Metcoff and Wilson, acting through and with their Counsel (the Co-Defendant Berman and Sable, LLC) caused a Judgment lien, to be lodged and filed at the United States Patent Office, against the patents (italics added) described in Schedule A, which, at the time of said filing were, and had been held in the name of the Co-Plaintiff GTherm."
The court leaves a determination of whether and/or what priority the parties may have in patents/pending patent applications once owned by MP to the USPTO and/or the federal courts, see EN 105.10.
Pardev, LLC and GTherm lack standing to secure the relief requested by the Amended Complaint.
" 1. Money Damages; 2. Punitive Damages; 3. costs of collection and reasonable attorneys fees; 4. An Order Directing the Release of any and all liens held or claimed by any of the Defendants herein against the Patents of the Plaintiff GTherm, Inc. (italics added), as described in Schedule A; 5. Entry of an Order of Injunction Precluding any of the Defendants herein from taking any future action which could constitute a lien, a claim, or any impairment to the marketability and/or merchantability of the patents owned by the Plaintiff, Pardev, LLC being described in Schedule A; 6. Such other and further relief as the Court shall deem to be just, proper and appropriate in this action."
As plaintiffs have not sustained their burden of proof to establish this court's subject matter jurisdiction of the dispute described in the Amended Complaint, the motion to dismiss is granted.
Having decided the issue, the court declines to address the balance of the defendants' motion to dismiss.
Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States. A certificate of acknowledgment under the hand and official seal of a person authorized to administer oaths within the United States, or, in a foreign country, of a diplomatic or consular officer of the United States or an officer authorized to administer oaths whose authority is proved by a certificate of a diplomatic or consular officer of the United States, or apostille of an official designated by a foreign country which, by treaty or convention, accords like effect to apostilles of designated officials in the United States, shall be prima facie evidence of the execution of an assignment, grant, or conveyance of a patent or application for patent. An interest that constitutes an assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage .(Amended Jan. 2, 1975, Public Law 93-596, sec. 1, 88 Stat. 1949; Aug. 27, 1982, Public Law 97-247, sec. 14(b), 96 Stat. 321; Dec. 18, 2012, Public Law 112-211, sec. 201(d), 126 Stat. 1535.)