United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM & ORDER
G. FLEISSIG, UNITED STATES DISTRICT JUDGE
matter comes before the Court on the motion of Defendants
Agilis Systems, LLC (“Agilis LLC”) and Gilead
Group, LLC (“Gilead”) for leave to file a third
party complaint. ECF No. 27. Plaintiff LADS Network
Solutions, Inc. (“LADS”) opposes the motion. ECF
No. 28, 37. For the reasons set forth below, Defendants'
motion will be denied.
pleadings filed in this copyright infringement lawsuit allege
the following facts. LADS is a provider of dispatching
software, wireless data communications, and mobile GPS-based
software solutions, and it is the owner of a registered
copyright concerning logistic software (“Copyrighted
Software”). LADS alleges in its complaint that in 2004,
it entered into a bilateral intellectual property transfer
and license agreement with Siliga Systems, Inc.
(“Siliga”) for use of the Copyrighted Software. LADS
alleges that it entered into subsequent licensing agreements
with Siliga for Siliga's use of the Copyrighted Software
in 2006 and 2007.
alleges that in October 2007, without the permission or
consent of LADS, Siliga assigned its rights under the license
agreement to Agilis LLC. Thereafter, Agilis LLC used the
Logistic Software without license or authorization. Then,
LADS alleges that in July 2017, Gilead created Defendant
Archlogix, LLC (“Archlogix”), which began using
the Logistic Software without license or authorization.
Plaintiff asserts copyright infringement (Count I) against
Agilis and Archlogix and seeks to pierce the corporate veil
of all Defendants (Count II).
February 5, 2019, Defendants filed a counterclaim for breach
of contract, asserting that LADS is barred from asserting
copyright infringement claims against them under the terms of
a July 9, 2014 Settlement Agreement, which Defendants allege
was signed by Daniel Huber (“Huber”), the
“President, Chief Executive Officer, and majority owner
of LADS.” ECF No. 16 at ¶ 6. That Settlement
Agreement was signed in the context of a state court action
filed by Huber for his wrongful termination for cause from
Agilis, Inc., where he had been serving as Chief Executive
Officer. The terms of the Settlement Agreement
include a provision waiving, on behalf of LADS, all claims
against Agilis LLC and Gilead, including intellectual
property claims. Defendants argue that LADS is violating the
terms of that Settlement Agreement by filing this copyright
infringement lawsuit. Specifically, Defendants allege that
“The Settlement Agreement is a valid and enforceable
contract” and that pursuant to the terms of that
agreement, LADS “waived, released, and renounced any
and all claims, including any purported Intellectual Property
claims and/or royalty claims.” Id. at
¶¶ 31-32. Defendants also assert a breach of
contract claim related to the November 1, 2007 license
agreement entered into by the parties, as well as an abuse of
February 21, 2019, LADS filed its answer and affirmative
defenses to Defendants' counterclaim. ECF No. 21.
Relevant to this motion for leave to file a third amended
complaint, LADS maintains that it was not a party to the
Settlement Agreement, and thus cannot be held to its terms.
See, e.g., ECF No. 21 at ¶ 18.
Defendants seek leave to file a third party complaint against
Huber for breach of contract, breach of implied covenant of
good faith and fair dealing, and detrimental reliance, based
on his execution of the Settlement Agreement and affirmative
representations that he was the agent of LADS and that the
Settlement Agreement would be binding on LADS. ECF No. 27-1.
Defendants contend that if the Court determines that LADS is
not bound by the Settlement Agreement, Huber should be held
liable for his contractual promises.
opposes Defendants' request to file a third party
complaint, arguing that Defendants' state law claims
concerning the Settlement Agreement are not part of the same
case or controversy as LADS's infringement claims and
assert issues of state law.
LADS maintains that a Missouri state court has already
determined that LADS is not bound by the Settlement
Agreement. Specifically, in another unrelated state court
lawsuit filed by LADS against Siliga and Agilis Systems,
Inc., the state court held:
This Court finds that LADS was not a Party in the Settlement
Agreement, LADS did not execute the release, nor was LADS
given any consideration under the release. Therefore, LADS
did not release any claims and has a right to execute on the
Warrant issues to LADS.
ECF No. 33-6.
also argues that the third party complaint raises a novel and
complex issue of state law: whether an individual can be sued
for executing a settlement agreement that binds a corporation
that is not a party to the agreement or the underlying
lawsuit. Lastly, LADS argues that principles of res judicata
based on the state court's decision may preclude the
claims asserted by Defendants, and thus requests the Court to
decline to exercise supplemental jurisdiction under 28 U.S.C.
reply that this copyright infringement litigation falls
squarely within the terms of the Settlement Agreement
executed by Huber. Thus, if Huber executed the Settlement
Agreement without authorization by LADS, then “he
should be held accountable for those promises and
representations as part of this lawsuit.” ECF No. 34 at
¶ 12. Defendants contend that, as a result, the terms of