Nordetek Environmental, Inc. v. RDP Technologies, Inc.

862 F. Supp. 2d 406, 2012 U.S. Dist. LEXIS 162278, 88 Fed. R. Serv. 545, 2012 WL 1719660
CourtDistrict Court, E.D. Pennsylvania
DecidedMay 16, 2012
DocketCivil Action No. 09-4714
StatusPublished

This text of 862 F. Supp. 2d 406 (Nordetek Environmental, Inc. v. RDP Technologies, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nordetek Environmental, Inc. v. RDP Technologies, Inc., 862 F. Supp. 2d 406, 2012 U.S. Dist. LEXIS 162278, 88 Fed. R. Serv. 545, 2012 WL 1719660 (E.D. Pa. 2012).

Opinion

MEMORANDUM

DALZELL, District Judge.

As we noted in an earlier memorandum, see Nordetek Envtl., Inc. v. RDP Tech., Inc., 677 F.Supp.2d 825 (E.D.Pa.2010), this case arises from the venom between two brothers, Paul G. (“Paul”) and Richard (“Dick”) Christy. Together for decades they ran a successful company, RDP Technologies, Inc. (“RDP”), before enmity between them led Paul to leave the company, start his own firm, Nordetek Environmental, Inc. (“Nordetek”), and attempt to compete against RDP — all in alleged violation of his fiduciary duties to his family’s company and a non-competition provision in a shareholder agreement.

Thus it was that plaintiffs and counterclaim defendants Nordetek and Paul on October 14, 2009 filed suit against defendant and counterclaim plaintiff RDP, asserting claims for patent infringement, false designation of origin, false advertising, and trade infringement. They shortly thereafter filed a motion for preliminary injunction, to which RDP responded with its own preliminary injunction motion. After a hearing, we denied Nordetek and Paul’s motion for preliminary injunction and granted RDP’s motion for one. Id. After further briefing, we granted RDP’s motion for summary judgment with respect to all of Nordetek and Paul’s claims against it. Aug. 9, 2010 Order (docket entry # 110). But by this time RDP had filed counterclaims against Nordetek and Paul — including claims for breach of fiduciary duty and breach of contract — which the counterclaim defendants unsuccessfully moved to dismiss. Moreover, several months after the entry of our preliminary injunction against Paul, RDP moved to hold Paul in contempt for violating the injunction — a motion that we granted. June 11, 2010 Order (docket entry # 100).

After those battles this case settled into relative quiet for a time, as the parties first attempted (unsuccessfully) to mediate their claims before Judge Jacob P. Hart, and then participated in arbitration proceedings before our former colleague, the Hon. Edward N. Cahn, aimed at fixing a value of RDP to determine how much Paul’s shares in RDP were worth at the time he resigned. Judge Cahn issued a decision in that arbitration about a year [410]*410ago and offered to help the parties mediate the rest of their claims. While the parties accepted this gracious offer, Judge Cahn’s efforts at mediation were unavailing, leading us to set a schedule for discovery and motion practice regarding the remaining counterclaims in this case.

RDP has now filed a motion for summary judgment with respect to its counterclaims for breach of fiduciary duty and breach of contract, a motion to hold Lisa Christy (“Lisa”), Paul’s wife, in contempt and a motion to enjoin a second arbitration that Paul has initiated. Paul and Nordetek have filed a motion for summary judgment regarding seven of RDP’s ten counterclaims, as well as a motion to preclude the expert testimony of J. Mark Penny that RDP has proffered.

RDP restricts its motion for summary judgment to a subset of its counterclaims explaining that it “is willing to liquidate the entirety of its damages to $5,165,000, ie., those resulting from Paul Christy’s breaches of his fiduciary duty and contractual obligations.”1 RDP’s Mot. Summ. J. (“RDP’s MSJ”) at 3 n. 2. With respect to liability for Paul’s alleged breach of fiduciary duty, RDP argues that “collateral estoppel applies to findings made in arbitration proceedings, as well as in litigation,” id. at 5, and suggests that since Judge Cahn found that Paul “ ‘devised a plan that was intended to harm RDP,’ ” id. at 8 (quoting Ex. 604 to RDP’s MSJ (“Cahn Opinion”) at 4), RDP is entitled to summary judgment on that claim. Id. at 10. RDP also points to evidence presented in the arbitration proceedings that it says demonstrates Paul’s alleged breach. Id. at 9-10. With respect to liability for Paul’s alleged breach of his noncompetition obligation, RDP notes that this Court has found that Paul competed with RDP, so that it is entitled to summary judgment on this claim as well. Id. at 11, Finally, with respect to damages, RDP argues that because (1) “Judge Cahn found that the value of RDP prior to a deduction for Paul Christy’s bad acts was $6,490,000,” id. at 14, (2) RDP’s expert Edward Wilusz set “the value of RDP following Paul Christy’s bad acts” at $1,325,000, id. at 15, and (3) “[ajfter hearing all of the evidence, Judge Cahn credited Wilusz’s report, and rejected Paul Christy’s challenges to it,” id., RDP is therefore “entitled to $5,165,000— the difference in RDP’s value.” Id.

As for Paul and Nordetek, they contend in their motion for summary judgment that “Judge Cahn found, and RDP is collaterally estopped from challenging, [that] RDP has not — and cannot — show any damages were caused to it by Paul Christy’s conduct.” Nordetek’s Mot. Summ. J. (“Nordetek’s MSJ”) at 1. Since causation and damages “are both elements of [RDP’s] Counts I-IV and VI-VIII,” Paul and Nordetek argue that “RDP cannot establish the existence of the elements of its claims and summary judgment is appropriate.” Id. Paul and Nordetek further assert that “the only evidence of economic damages RDP has provided for any of its counterclaims rests entirely on Penny’s unreliable and irrelevant expert opinion.” Id. at 9. Since as counterclaim defendants they move for the preclusion of this testimony pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 [411]*411U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), Paul and Nordetek suggest that they are entitled to summary judgment.

As this canvass of these motions makes clear, the two pending motions for summary judgment and motion to preclude expert testimony involve related issues. We will thus examine these motions together, considering each pertinent issue in turn, before pivoting to resolve RDP’s motions to hold Lisa in contempt and enjoin Paul’s second arbitration.

I. The Parties’ Arguments Respecting Collateral Estoppel

We first consider the parties’ respective efforts to use Judge Cahn’s Opinion and Award to collaterally estop their opponents and secure summary judgment. We begin by reviewing the outlines of collateral estoppel doctrine in Pennsylvania.

As the Supreme Court of Pennsylvania explained in Safeguard Mut. Ins. Co. v. Williams, 463 Pa. 567, 345 A.2d 664, 668 (1975),

[A] plea of collateral estoppel is valid if, 1) the issue decided in the prior adjudication was identical with the one presented in the later action, 2) there was a final judgment on the merits, 3) the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication, and 4) the party against whom it is asserted has had a full and fair opportunity to litigate the issue in question in a prior action.

While this language suggests that only four requirements need be met in order for the doctrine to apply, an array of case law makes clear that in addition “[t]he identical issue must have been necessary to final judgment on the merits.” Balent v. City of Wilkes-Barre, 542 Pa. 555, 669 A.2d 309, 313 (1995). See also, e.g., City of Pittsburgh v. Zoning Board of Adjustment of Pittsburgh, 522 Pa. 44, 559 A.2d 896, 901 (1989) (“Collateral estoppel applies if ... the determination in the prior proceeding was essential to the judgment.”); Parklane Hosiery Co., Inc. v. Shore,

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Bluebook (online)
862 F. Supp. 2d 406, 2012 U.S. Dist. LEXIS 162278, 88 Fed. R. Serv. 545, 2012 WL 1719660, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nordetek-environmental-inc-v-rdp-technologies-inc-paed-2012.