Vehicle Market Research, Inc. v. Mitchell International, Inc.

839 F.3d 1251, 95 Fed. R. Serv. 3d 2009, 2016 U.S. App. LEXIS 19242, 63 Bankr. Ct. Dec. (CRR) 75, 2016 WL 6211806
CourtCourt of Appeals for the Tenth Circuit
DecidedOctober 25, 2016
Docket15-3243
StatusPublished
Cited by35 cases

This text of 839 F.3d 1251 (Vehicle Market Research, Inc. v. Mitchell International, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Vehicle Market Research, Inc. v. Mitchell International, Inc., 839 F.3d 1251, 95 Fed. R. Serv. 3d 2009, 2016 U.S. App. LEXIS 19242, 63 Bankr. Ct. Dec. (CRR) 75, 2016 WL 6211806 (10th Cir. 2016).

Opinion

McHUGH, Circuit Judge.

I. INTRODUCTION

Vehicle Market Research, Inc. (VMR) sued Mitchell International, Inc. (Mitchell) to recover royalties Mitchell allegedly owed pursuant to a software licensing agreement. The jury returned a verdict for Mitchell, and VMR appeals. VMR first argues the district court erred by allowing Mitchell, contrary to the law of the case doctrine, to cross-examine VMR’s sole shareholder on the value of VMR as he stated in his personal bankruptcy. Second, VMR contends the district court erred in omitting part of VMR’s proposed jury instruction on Rule 30(b)(6) witnesses. We affirm.

II. BACKGROUND I

John Tagliapiétra is the sole shareholder ofiVMR. In 1997, he developed the TLSS Product, designed to “assistf] automobile insurers in providing a fair market value for a vehicle that has been declared a total loss.” Vehicle Mkt. Research, Inc. v. Mitchell Int’l, Inc., 767 F.3d 987, 989 (10th Cir. 2014) [hereinafter VMR /] (citation omitted). VMR licensed this product exclusively te Mitehell, á company that provides products and solutions for insurance companies and collision repair facilities. In return, Mitchell agreed to pay a $1.00 royalty each time it used VMR’s product, up to a maximum of $4.5 million. 2 Mitchell paid VMR royalties of between $200 and $3,300 monthly until September 2005.

Although Mitchell never terminated the agreement-with VMR, in November 2005, it released its own product for assessing vehicle fair market value (the Mitchell Product) and used it exclusively thereafter. Accordingly/ Mitchell discontinued paying royalties to VMR.

Mr. Tagliapiétra filed Chapter 7 bankruptcy in October 2005. Id. at 991. On his bankruptcy schedules, he listed the value of VMR’s stock as “0.00.” He did so because he “was no longer receiving royalties from Mitchell; had no expectation of receiving additional royalties from Mitchell; did not have possession or right to possess the software developed for Mitchell because the Agreement was never terminated; and had no other assets.” Id.

. Approximately a year and half later, in mid-2007, Mr. Tagliapiétra began to sus *1254 pect that Mitchell had used VMR’s intellectual property to develop the Mitchell Product. After examining the Mitchell Product in 2009, Mr. Tagliapietra became convinced it infringed .on VMR’s proprietary rights.

On October 5, 2009, VMR filed a complaint against Mitchell claiming over. $4 million in damages for breach of contract and other causes of action. Fifteen days later, on October 20, 2009, the bankruptcy court approved the discharge of Mr. Ta-gliapietra’s debts based on his insolvency. The Trustee valued Mr. Tagliapietra’s interest in VMR as “unknown.” VMR /, 767 F.3d at 989.

Mitchell then moved for summary judgment under a theory of judicial estoppel based on the inconsistency between Mr. Tagliapietra’s valuation of VMR; at zero in his personal bankruptcy proceedings and the allegation in the pending litigation that Mitchell owed VMR over $4 million in royalties. Id. at 992. The district court granted Mitchell’s motion for summary judgment, and VMR appealed.

This court reversed and remanded, acknowledging that

the near-simultaneous timing between Mr. Tagliapietra’s bankruptcy discharge and the filing of this lawsuit is, suspicious, ¡and there is some facial incongruity between Mr. Tagliapietra’s approving a valuation of “unknown” for his VMR stock given his testimony that he believed at the time he filed the lawsuit that VMR was entitled to “up to $4 million in royalties” because of the legal claim.

Id. at 996-97. Nevertheless, we reasoned that judicial estoppel “would have to be based on a duty by Mr. Tagliapietra to amend his bankruptcy pleadings to report a possible increased value for his VMR stock.” Id, at 989. Because our precedent was unclear “on whether a debtor has a continuing duty to amend his bankruptcy schedules when the estate’s assets change in value,” we expressed “our reluctance to invoke judicial estoppel.” Ultimately, we concluded Mitchell had “not met its burden of showing any clearly inconsistent statements that would warrant that relief.” Id.

On remand and in anticipation of trial, both VMR and Mitchell filed motions in limine relating to the bankruptcy valuation. Mitchell sought an order allowing use of Mr. Tagliapietra’s “inconsistent sworn statements,” made during his bankruptcy, “in order to examine Mr. Tagliapietra’s veracity and credibility as a witness, and for purposes of impeachment.” Conversely, VMR moved to prohibit Mitchell from making any reference to the bankruptcy or Mr. Tagliapietra’s statements in the bankruptcy. VMR argued that VMR I “foreclose^] even a suggestion that the statements made by [Mr. Tagliapietra] ... during his bankruptcy and the statements that he’s made to this court in his deposition or during his live testimony’ were inconsistent.

The district court denied VMR’s motion and granted, in part, Mitchell’s request to use the bankruptcy valuation evidence at trial. It read our decision in VMR I as being limited to the issue of judicial estop-pel, which is “a very egregious and harsh remedy ... requiring] clearly inconsistent statements.” Concluding nothing in VMR I precluded it from doing so, the court ruled Mitchell could impeach Mr. Tagliapietra on cross-examination with prior inconsistent statements, including from the bankruptcy proceeding. The court further instructed, however, that it would not allow “an affirmative reveal ... by [Mitchell’s counsel], whether that’s in opening statement or otherwise through the testimony of another witness or whatever, any suggestion that Mr. Tagliapietra filed bankruptcy and *1255 that he did what he did in the bankruptcy.” 3

During discovery, VMR had noticed the deposition of Mitchell under Rule 30(b)(6), thereby compelling Mitchell to designate one or more persons to testify on behalf of the company as to the subject matters identified. See Fed. R. Civ. P. 30(b)(6). Mitchell designated' Jim Lindner, its former CEO. At his 30(b)(6) deposition, Mr. Lindner testified that he would not have allowed his employees to “use” the VMR work product in developing the Mitchell Product because that would be a breach of his “ethics of business conduct.”

The case proceeded to trial. During the direct examination of Mr. Tagliapietra, VMR’s counsel approached the bench and outlined her plan to raise preemptively his bankruptcy valuation statements, while preserving her argument that this court’s mandate precluded the introduction of any evidence on that subject:

[I]n light of the Court’s ruling about ...

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839 F.3d 1251, 95 Fed. R. Serv. 3d 2009, 2016 U.S. App. LEXIS 19242, 63 Bankr. Ct. Dec. (CRR) 75, 2016 WL 6211806, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vehicle-market-research-inc-v-mitchell-international-inc-ca10-2016.