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Enslein v. Di Mase

United States District Court, W.D. Missouri, Western Division

June 17, 2019

JERALD S. ENSLEIN, in his capacity as Trustee for Xurex, Inc., Plaintiff,
v.
GIACOMO E. DI MASE, et al., Defendants.

          ORDER AND OPINION ON THE PARTIES' DAUBERT MOTIONS AND THE PARTIES' DISPOSITIVE MOTIONS

          ORTRIE D. SMITH, SENIOR JUDGE.

         Pending are two motions to strike, exclude, or limit expert opinion testimony (Docs. #348 and 356) and eleven motions for summary judgment (Docs. #347, 350, 358, 359, 360, 361, 362, 363, 365, 366, and 367). As examined in section II, the parties' motions to strike, exclude, or limit expert opinion testimony are denied. As discussed in section III, the parties' motions for summary judgment are granted in part and denied in part.

         TABLE OF CONTENTS

         I. BACKGROUND

         …………………..…………………………………………………………1

         A. The Early Years of Xurex…………………………………..…………………………...1

         (1) Agreement with DuraSeal Pipe…………………………………………………...1

         (2) Initial Communications with the Di Mases and Jensvold……………………….1

         (3) Loven's Audit………………………………………………………………………..2

         B. The 1/13/10 Agreement…………………………………………………………………2

         C. Formation of DuraSeal Holdings……………………………………………………….3

         D. The 12/31/10 Agreement and Acquisition of DuraSeal Pipe………………………..4

         E. Events Occurring Between January 2011 and November 2011……………………6

         (1) Negotiations Between DuraSeal Holdings and Xurex…………………………..6

         (2) Reports from John Lowry…………………………………………………………..6

         (3) Proxy Contest and Subsequent Lawsuit………………………………………….7

         F. Events and Communications Immediately Preceding the 1/11/12 Amendment…..9

         G. The 1/11/12 Amendment………………………………………………………………11

         H. HDI, Xurex Stock Issuance, and Changes to the Xurex Board…………………….12

         I. Another Delaware Lawsuit…………………………………………………………….13

         J. DuraSeal Pipe's Uneconomic Condition Notice & Xurex's Bankruptcy Filing…….13

         K. This Lawsuit…………………………………………………………………………….15

         II. MOTIONS TO STRIKE, EXCLUDE, OR LIMIT EXPERT OPINION TESTIMONY....16

         A. Standard………………………………………………………………………..……… 16

         B. Michele Pavone, Ph.D…………………………………………………………………17

         (1) Relevance………………………………………………………………………….17

         (2) Reliability…………………………………………………………………...……...19

         C. Robert F. Reilly……………………………………………………………………...….20

         (1) Limits on Lost Profits…………………………………………………………...…21

         (2) Additional Minimum Purchase Obligations……………………………………..24

         (3) Purchases and Penalties…………………………………………………………26

         (4) Xurex's Business Reality…………………………………………………………27

         (5) Tort Claim Damages……………………………………………………………...28

         III. MOTIONS FOR SUMMARY JUDGMENT……………………………………………....29

         A. Standard………………………………………………………………………..……… 30

         B. Motions for Summary Judgment on Plaintiff's Claims……………………………...30

         (1) Breach of Contract (Counts II and III)……………………………………………30

         (2) Breach of Implied Covenant of Good Faith and Fair Dealing (Count IV)………31

         (3) Misappropriation of Trade Secrets (Count V)……………………………………35

         (4) Breach of Fiduciary Duty (Count VII)……………………………………………..35

         (a) Standard of Review…………………………………………………………….36

         (b) Substantive Claims…………………………………………………………….38

         (c) Immunity from Damages………………………………………………………38

         (5) Civil Conspiracy (Count VI)………………………………………………………..39

         (6) Aiding and Abetting Breach of Fiduciary Duty (Count VIII)…………………….41

         (a) Choice of Law…………………………………………………………………..41

         (b) Internal Affairs Doctrine………………………………………………………..42

         (c) Most Significant Relationship…………………………………………………45

         (7) Declaratory Judgments (Counts XIII and XIV)…………………………………..46

         C. Plaintiff's Motion for Summary Judgment on Affirmative Defenses………………46

         (1) Prior Material Breach by Xurex……………………………………………………47

         (2) Commercial Frustration or Impossibility of Performance………………………47

         (3) Ratification…………………………………….……………………………………47

         (4) Lack of Consideration and/or Failure of Consideration…………………………48

         (5) Failure to Mitigate Damages………………………………………………………48

         (6) Fraud in the Inducement…………………………………………………………..48

         D. Plaintiff's Request for Ruling as a Matter of Law……………………………………49

         E. Plaintiff's Summary Judgment Statement of Uncontroverted Facts………………49

         (1) Failure to Cite Materials in the Record……………………………………………49

         (2) Reliance on Inadmissible Evidence………………………………………………50

         (3) References to Exhibits…………………………………………………………….50

         (4) Rose's Responses to Plaintiff's Statement of Uncontroverted Facts…………51

         F. McKeon's Motion for Summary Judgment…………………………………………..52

         (1) Attempts to Incorporate Facts and Arguments………………………………….52

         (2) Plaintiff's Counter-Statement of Uncontroverted Material Facts………………53

         (3) Responses to Counter-Statement of Uncontroverted Material Facts…………53

         G. Rose's Motion for Summary Judgment………………………………………………54

         (1) Failure to Abide by Federal and Local Rules…………………………………….54

         (2) Exhibit 96…………………………………………………………………………...54

         (3) Arguments Related to Plaintiff's Claims…………………………………………55

         (4) Rose's Affirmative Defenses..…………………………………………………….56

         (5) Failure to State a Claim Argument………………………………………………..57

         (6) Plaintiff's Responses to Rose's Motion for Summary Judgment………………57

         H. Olson's Motion for Summary Judgment……………………………………………..58

         (1) Attempts to Incorporate Facts and Arguments……………………………….…58

         (2) Plaintiff's Responses to Olson's Statement of Facts……………………………59

         (3) Plaintiff's Counter-Statement of Additional Uncontroverted Material Facts….59

         I. Johnston's Motion for Summary Judgment…………...……………………………..60

         (1) Plaintiff's Responses to Johnston's Statement of Facts...……………………..60

         (2) Plaintiff's Counter-Statement of Additional Uncontroverted Material Facts….60

         J. HDI's Motion for Summary Judgment…..……………………………………………61

         (1) Parties' Facts and Counter-Facts……………………………………...…………61

         (2) Personal Jurisdiction…………………………………………………………..…..61

         (3) Liability for Alleged Tortious Conduct of Subsidiary…………………………….65

         IV. PARTIES' SEALED EXHIBITS…………………………………………………..………65

         V. CONCLUSION……………………………………………………………………………..66

         A. Summary of the Court's Rulings………………………………………………………66

         B. Claims to Be Tried……………………………………………………………………...67

         I. BACKGROUND

         The Court will provide information about the entities and individuals in this lawsuit as well as supply some context for the events leading up to the filing of this lawsuit, the parties' pending motions, and the Court's consideration of those motions. This background section is not meant to be comprehensive. Moreover, nothing in this section should be construed as a finding of fact by the Court. Unless otherwise noted, the information contained in this section is either undisputed by the parties or extracted from exhibits accompanying the parties' summary judgment filings.

         A. The Early Years of Xurex

         Founded in 2005, Xurex, Inc. (“Xurex”) is a Delaware corporation with its principal place of business in Jackson County, Missouri. At inception, Xurex engaged in the development and sale of protective coatings derived from nano-technology invented by Bo Gimvang. Since its founding, Xurex struggled to commercialize Gimvang's technology, and to date, has not developed a commercial product of its own.

         (1) Agreement with DuraSeal Pipe

         In 2008, Defendant Joseph Johnston discovered a unique method of applying Xurex coatings to prevent corrosion, reduce abrasion, and extend the life of “down-hole” pumps and pipes in the oil and gas industry. To pursue this business, Johnston and co-investors formed Defendant DuraSeal Pipe Coatings Company LLC (“DuraSeal Pipe”), [1]a Missouri limited liability company with its principal place of business in Missouri. DuraSeal Pipe was able to develop a functional product from Xurex's technology. In October 2008, Xurex authorized DuraSeal Pipe to distribute two Xurex products, HabraCoat-SA and PenetrAct-SA.

         (2) Initial Communications with the Di Mases and Jensvold

         In 2008 and 2009, Defendants Jose Di Mase and Tristram Jensvold communicated with Xurex about potential investment in the company and received marketing materials from Xurex explaining how HabraCoat worked. Jose Di Mase[2] visited the Xurex facility in Albuquerque and attended meetings with Johnston at the facility. At the time, Jensvold was Jose Di Mase's son-in law.

         In August 2009, Xurex provided an Offering Memorandum and Subscription Agreement to Jose Di Mase. Doc. #364-21. Therein, Xurex represented the following:

HabraCoat® is different than a traditional coating product because it has “nano-penetrating” reactive chemistry, as opposed to most coatings, which merely bond with the substrate surface without any such reaction. PenetrAct® is Xurex's surface preparation aid for use with its nano coatings. PenetrAct® penetrates and activates the surface and subsurface matrix of metals and alloys, which allows penetration into the substrate.

Id. at 4. The agreement was forwarded to Defendant Giacomo Di Mase, Jose Di Mase's son. Although the agreement was not executed, Jose Di Mase and Jensvold continued to communicate with Johnston in 2009 and 2010.

         (3) Loven's Audit

         In 2009, Bill Loven became Xurex's CEO. As CEO, Loven audited the entire Xurex business, and investigated allegations that Gimvang and Bob Bishop, an early CEO of Xurex, defrauded investors and misused company funds. Loven purportedly found evidence supporting the allegations. Shortly thereafter, Loven was removed as Xurex's CEO, and the remainder of the Xurex board was also removed. Subsequently, Robert Clifford and Ken Pedersen became directors on the Xurex board.

         B. The 1/13/10 Agreement

         On January 13, 2010, Xurex and DuraSeal Pipe entered into an Exclusive License, Marketing and Distribution Agreement (the “1/13/10 Agreement”). Doc. #364-29. Johnston negotiated the 1/13/10 Agreement on behalf of DuraSeal Pipe, and Rex Powers, then a Xurex board member, negotiated on Xurex's behalf. The 1/13/10 Agreement granted DuraSeal Pipe an exclusive license to market and sell Xurex Authorized Products - including but not limited to HabraCoat, PenetrAct, Oxilane, and ProGlide - to the North American oil and gas industry.

         Per the 1/13/10 Agreement, DuraSeal Pipe was to pay $50, 000 to Xurex for four fifty-gallon barrels of HabraCoat 200. Id. at 2.[3] Upon the later of January 1, 2010, or Xurex's completion of an IP escrow, DuraSeal Pipe was to pay an additional $50, 000 to Xurex for four more fifty-gallon barrels. Id. “The Parties agree that the Initial Product Purchase shall apply and be counted towards [DuraSeal's] Product Purchase Minimums.” Id. The Agreement required DuraSeal Pipe to make minimum purchases of Xurex products and pay royalties. Beginning in January 2010, DuraSeal was required to make minimum monthly purchases. Id. at 4, 17. If DuraSeal failed to purchase the monthly minimum product for two consecutive months, it would be deemed to be in default. Id. at 4.

         The 1/13/10 Agreement indicated DuraSeal Pipe had the option to purchase intellectual property rights upon the occurrence of certain events. Id. at 6-7. Eleven publicly available patent applications were identified in an exhibit to the 1/13/10 Agreement. Id. at 18. That exhibit specified “all product knowhow and formulas” must be included “to enable [DuraSeal Pipe] to reproduce and manufacture all Xurex products upon a purchase of the IP…in accordance with the terms” of the 1/13/10 Agreement. Id. The 1/13/10 Agreement was to be “governed by and construed and enforced in accordance with the internal laws of the State of Delaware.” Id. at 8.

         C. Formation of DuraSeal Holdings

         In mid-2010, Johnston met with Jensvold and his then-wife (Jose Di Mase's daughter, Daniela Di Mise) and delivered a presentation on Xurex products. After the presentation, Jensvold became interested in investing in Xurex. Johnston later contacted Jose Di Mase about a proposal to acquire and combine DuraSeal Pipe and Xurex into a new company. Sometime thereafter, Defendant DuraSeal Holdings, S.r.L., [4] an Italian company, was formed for the purpose of acquiring 100% of DuraSeal Pipe. At that time, Jose Di Mase was the president of DuraSeal Holdings. According to Jose Di Mase, the initial DuraSeal Holdings board consisted of him, Ugo Anatra, [5] and Defendant Lee Kraus, who has decades of experience in the oil and gas industry. Before closing on its purchase of DuraSeal Pipe, DuraSeal Holdings executed an agreement with Xurex.

         D. The 12/31/10 Agreement and Acquisition of DuraSeal Pipe

         On December 31, 2010, DuraSeal Holdings entered into an Exclusive License, Marketing and Distribution Agreement with Xurex (the “12/31/10 Agreement”).[6] Doc. #375-1. The 12/31/10 Agreement granted DuraSeal Holdings a worldwide license to market and sell Xurex “Products” in the oil and gas, aerospace industry, automobile industry, and ceramic tile applications in the construction industry. Id. at 1. The North American oil and gas market subject to the 1/13/10 Agreement between Xurex and DuraSeal Pipe was excluded. Id.

         Effective December 31, 2010, the 12/31/10 Agreement concluded on December 31, 2022. Id. It would “be automatically extended and renewed for one-year periods after December 31, 2022, unless either party notifies the other at least 180 days prior to December 31, 2022 or any anniversary thereafter of its intent to allow the term of this Agreement to expire.” Id. The 12/31/10 Agreement permitted termination before December 31, 2022, in limited instances: (1) default in performance; (2) bankruptcy or insolvency; or (3) “[i]n the unlikely event that [DuraSeal Holdings] determines that the marketing and distribution of the Products is not commercially viable, it may terminate this agreement with at least 180 days written notice to Xurex.” Id. at 11. The parties agreed the 12/31/10 Agreement would be governed by and interpreted in accordance with the laws of the United States and the State of New York. Id. at 13.

         Subject to completion of an IP escrow and upon execution of the 12/31/10 Agreement, DuraSeal Holdings was to pay Xurex a $200, 000 fee. Id. at 4. During the “R&D Period, ”[7] DuraSeal Holdings was obligated to purchase a target quarterly amount of Xurex product and pay “a penalty of $10, 000 per drum short of target payable.” Id. at 5-6. Purchases during the R&D Period “will be credited against the minimum purchase requirements” after the expiration of the R&D Period. Id. at 5.

         The 12/31/10 Agreement granted DuraSeal Holdings and its “Affiliates”[8] the “right to practice the Xurex Intellectual Property as needed in the application, use, marketing and sale of the Products, which specifically excludes the right to manufacture the Products.” Id. at 4. Xurex Intellectual Property included, inter alia, “formulas of the Xurex Products…all technical and non-technical know-how used in the mixing and preparation of the Products…all Know-How; and…all trademarks, trade secrets, and other intellectual property owned or used by Xurex.” Id. at 3. Know-How was defined as “all knowledge, enhancements, technology practices, processes, methods of manufacture, application protocols, materials, discoveries, improvements, developments, trade secrets, inventions, data or similar other information relating to the Products.” Id. Four publicly available patent applications were identified as Xurex Intellectual Property. Id. at 3, 22.

         In the 12/31/10 Agreement, DuraSeal Holdings agreed “to retain [Defendant] Lee Kraus[9] as a non-executive director under a five-year agreement.” Id. at 12. The Agreement was signed by Pedersen, who identified himself as CEO of Xurex, and Jose Di Mase, who identified himself as president of DuraSeal Holdings. Id. at 16.

         In January 2011, DuraSeal Holdings closed on its purchase of DuraSeal Pipe and acquired DuraSeal Pipe's members' shares of Xurex stock.

         E. Events Occurring Between January 2011 and November 2011 (1) Negotiations Between DuraSeal Holdings and Xurex

         From January 2011 to September 2011, Pedersen, then-director of Xurex, negotiated with Jensvold, [10] on behalf of DuraSeal Holdings, to combine and renegotiate the 1/13/10 and 12/31/10 Agreements. In April 2011, Xurex and DuraSeal Holdings agreed to negotiate a combined license agreement. On August 20, 2011, Xurex communicated it was prepared to negotiate a “complete new agreement.” The parties dispute what offers or agreements, if any, Xurex made about minimum purchase obligations and/or licensing fees during this timeframe. On September 23, 2011, Xurex sent a draft counter-proposal to Johnston and Jensvold.[11] The draft counter-proposal was not executed.

         (2) Reports from John Lowry

         In January 2011, John Lowry, who was Xurex's Director of Operations from August 2009 through January 2010 and worked as a consultant for Xurex from August 2010 through January 2012, [12] sent a memorandum to Pedersen, then-CEO of Xurex. Lowry's memorandum indicated that, during a three-day visit to DuraSeal Pipe, there were extensive discussions about DuraSeal Pipe's successes and failures with HabraCoat. Lowry wrote, “[i]t is clear from this review that there are certain environments in which Habracoat will not work.” Doc. #364-54, at 15-18. Later that same month, Lowry stated, “[o]il and gas well success and failure data provided by DuraSeal was analyzed, ” and results “point[] to a very narrow window in which current silane formulations[13] can successfully operate.” Id. at 19. In July 2011, Lowry wrote another memorandum to Pedersen stating, “[i]nitial test results from New Mexico tech show corrosion rates consistent with Albuquerque laboratory weight loss tests and confirm the weaknesses of the habracoat technology related to existing technology in the oil and gas market to prevent tubing corrosion.” Id. at 71. According to Lowry's memorandum, “[t]he ‘degree' of corrosion protection for [a version of HabraCoat] is ‘minimal' according to these results and therefore confirms why there are some failures in the field.” Id. at 72.

         (3) Proxy Contest and Subsequent Delaware Lawsuit

         According to Johnston, as of January 2011, DuraSeal Pipe was considering a proxy contest to unseat the Xurex board. In March 2011, Jensvold emailed Johnston, Jose Di Mase, and others regarding an “update” about an objective to “[c]omplete the take over of Xurex.” Doc. #353-20. In April 2011, DuraSeal began soliciting proxies from Xurex shareholders to remove the incumbent Xurex directors and elect a new board. Once the Xurex board learned of the solicitations, it began counter-solicitations.

         On May 23, 2011, Jensvold emailed an individual named Mackeno Lee, [14] stating, among other things, he was “engineering a coup on June 25th, [which was] the next Xurex Shareholders meeting.” Doc. #354-3, at 2. He reported he had “secured over 50% support through proxy solicitation and now I need to win the hearts and minds of the rest of the Xurex shareholders to keep my costs low once I am in control. I am successfully eliminating all opposition.” Id.

         In the meantime, in June 2011, the Xurex board sent a letter to Gimvang, and forwarded a copy of the letter to its shareholders. The letter represented field tests of Xurex's products “were pretty much all failures” and Gimvang's inventions did not work. Doc. #364-17.

         On June 14, 2011, written consents were delivered to Xurex. The written consents purportedly removed the directors of the Xurex board, fixed the number of directors on the Xurex board to five directors, and elected new board members. That same day, Johnston and others filed an action in the Delaware Court of Chancery against the then-current members of the Xurex board and sought a determination that the written consents validly removed the directors and replaced them with a new slate of directors. On September 23, 2011, the Delaware Court of Chancery found Johnston, Defendant Dietmer Rose, [15] Bill O'Brien, [16] and Nate Hutchings[17] were validly elected by written consents, and therefore, constituted the new Xurex board. Doc #364-1; Johnston v. Pedersen, 28 A.3d 1079, 1089-93 (Del. Ch. 2011).

         At the September 29, 2011 Xurex board meeting, the board decided the Xurex board directors would “not receive compensation other than stock.” Doc. #386-7. According to Rose, Johnston proposed the board award 800, 000 to 1.5 million shares of Xurex stock to each director. The directors appointed Johnston as president and CEO of Xurex and Chairman of the Xurex board. At that time, Johnston was president of DuraSeal Pipe, which was Xurex's only customer and was responsible for 99% of Xurex's sales.

         On October 12, 2011, Defendant Robert Olson, [18] a Kansas state senator since 2011, was appointed as a director to the Xurex board.

         On November 8, 2011, Johnston sent an email to O'Brien, Hutchings, Rose, Olson, Jack Angel, and Amy Tarwater (Johnston's assistant) stating he was resigning as president and CEO of Xurex effective that same day. But, as he has admitted, Johnston continued to serve as Xurex's president and CEO through January 10, 2012. Effective January 10, 2012, Angel became CEO and president of DuraSeal Pipe, and Jim Collins, a DuraSeal Pipe employee, became CEO of Xurex.

         F. Events and Communications Immediately Preceding the 1/11/12 Amendment

         According to Jensvold, DuraSeal Holdings gave him permission to negotiate an amendment to the 2010 agreements. Rose testified he was appointed by the Xurex board to negotiate the amendment to the 2010 agreements. To describe the events and communications leading up to the execution of the 1/11/12 Amendment, the Court sets forth a non-exhaustive timeline. Much of what is contained in this timeline is taken directly from written communications. While the contents of the communications are not necessarily in dispute, the parties dispute the context, completeness, accuracy, and/or admissibility of the communications.

• On December 16, 2011, Jensvold emailed Rose and Johnston proposing a conference call to discuss the licensing agreement. Doc. #372-63, at 3. Rose responded: “Joe needs to confirm and tell you and me what he can decide right now. Don't we need the BOD on this?” Id. Jensvold replied to the email, copying Johnston, telling Rose final BOD approval will be needed. Id. at 2.
• On December 21, 2011, Jensvold emailed Johnston and Rose asking them to look at “the latest version of the agreement per our discussions.” Id. at 4. Rose forwarded the email to Johnston, noting “the royalty section is still in the latest version” and asking Johnston if that was “an oversight.” Id.
• On December 22, 2011, Jensvold emailed Giacomo Di Mase, Johnston, and Rose, asking them “to communicate with each other as needed to move the licensing agreement execution process forward.” Id. at 5. Rose responded to Jensvold's email, stating he tried to communicate with Johnston but had not reached him yet. Id.
• On December 28, 2011, Rose emailed Johnston saying he would call him later. Doc. #386-26. Johnston replied: “No problem we can talk in the morning, I will continue to work on the agreement.” Id.
• In a letter dated December 30, 2011, O'Brien and Hutchings resigned from the Xurex board. Doc. #386-50. O'Brien and Hutchings asserted their “participation on the Xurex board was strictly contingent on the members' mutual, good faith effort to facilitate and advance the business affairs of Xurex through independent, objective and reasonable management practices…” Id. They claimed that they cannot fulfill their duties as directors. Id. With their departures, the Xurex board was comprised of Johnston, Rose, and Olson.
• On January 3, 2012, Rose emailed Johnston about comparisons among the different versions of the Xurex/DuraSeal Pipe contracts. Doc. #386-53. About the minimum purchase reduction, Rose stated, “[i]f any member of the old BOD gets wind of this we would be in potential trouble.” Id. That same day, Rose told Jensvold he believed “Joe should be in on” a “[c]onference call re Duraseal.” Doc. #372-63, at 13.
• On January 4, 2012, Rose contacted an attorney for the first time about the proposed amendment, sending the proposed amendment to a New Mexico attorney, Paul Fish. Doc. #386-20.
• On January 5, 2012, Fish emailed Rose saying, he is “absolutely not an expert in distribution contracts, and I trust you have had advice on those type of details from someone who is.” Doc. #386-20. But he raised some “points” and “questions” he had. Id. Johnston was copied on Fish's email. Id. Rose did not speak with Fish about his points or questions nor did he talk with another attorney.
• On January 6, 2012, Jensvold sent another draft of the amendment to Rose. Rose forwarded it to Johnston telling him to “study this before we discuss this contract.” Doc. #386-27.
• On January 7, 2012, Rose emailed Johnston asking for the name of “our legal counsel” who will be reviewing “the revised contract before we sign the contract.” Doc. #386-19. Rose also asked for a copy of the director's insurance policy. Id. Johnston responded, telling Rose that Fish was the attorney, and he already provided his comments. Id. Rose responded, saying he does “not understand [his] reply.” Id. Rose indicated that if Fish is “Xurex counsel, then based on his comments we would not sign this contract. This is very confusing.” Id.
• On January 7, 2012, Johnston met with Olson and told him Rose would contact him about the amendment. Doc. #386-56. That same day, Rose emailed Olson the proposed amendment. Doc. #386-55. Rose wrote, “Johnston wanted me to share with you documents relating to the contract negotiations between Duraseal and Xurex, Inc.” Id. Johnston is copied on the email. Id. According to Olson, this email was the first time he saw the proposed amendment.
• On January 9, 2012, Johnston emailed Rose asking if he got a hold of Olson. Doc. #386-56. Rose stated he did not have Olson's phone number and said he would like “to discuss a few items with” Johnston before calling Olson. Id.
• On January 10, 2012, Jensvold sent Rose another draft of the amendment. Doc. #372-62. Rose responded, saying he forwarded the amendment to Olson and Johnston and “asked for their input.” Id. Jensvold responded: “I am confused. I have not spoken with Joe [Johnston] about this agreement and you had told me that you were not speaking with Joe about this either. As I have stated and as we have agreed, Joe is not part of this negotiation. Please do not communicate with Joe about this deal.” Id. Rose stated he included Johnston “for advice and legal interpretation” because Johnston “has considerably more experience in these contract and legal matters.” Id.
• On January 11, 2012, Rose, Olson, and Johnston signed a “written consent in lieu of a meeting of the board of directors of Xurex, Inc.” Doc. #386-117. They adopted several resolutions, including: Johnston “may be deemed to have an interest in the Amended and Restated Agreement”; in light of the potential interest, “Johnson has abstained from all discussions and decisions relating to the negotiation”; and “the executive officers of [Xurex] are…authorized and directed, in the name and on behalf of [Xurex], to execute the Amended and Restated Agreement….” Id. At this time, neither Rose nor Olson was an executive officer of Xurex.

         G. The 1/11/12 Amendment

         On January 11, 2012, Rose signed the Amended and Restated Exclusive License, Marketing and Distribution Agreement (the “1/11/12 Amendment”) on behalf of Xurex, and Jensvold signed the 1/11/12 Amendment on behalf of DuraSeal Holdings, writing “Vice President” below his name. Doc. #375-2, at 19. The 1/11/12 Amendment indicated the parties “intend to amend and restate the [1/13/10 Agreement] by entering into this Agreement.” Id. at 2. Angel signed the 1/11/12 Amendment as DuraSeal Pipe's CEO, indicating “this Agreement amends and restates the Exclusive License, Marketing and Distribution agreement” between DuraSeal Pipe and Xurex ...


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