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Digital Advertising Displays, Inc. v. Newforth Partners, LLC

United States District Court, D. Colorado

March 31, 2014

DIGITAL ADVERTISING DISPLAYS, INC., a Colorado corporation, Plaintiff,
NEWFORTH PARTNERS, LLC, a California limited liability company, DHANDO INVESTMENTS, INC., a Delaware corporation, and ROBERT HOFFER, Defendants.


WILLIAM J. MARTÍNEZ, District Judge.

Plaintiff Digital Advertising Displays, Inc., ("Plaintiff") brings this action against Defendants Dhando Investments, Inc., Newforth Partners, LLC, and Robert Hoffer (collectively "Defendants") based on the attempted purchase of intellectual property assets. (ECF No. 55.) This matter is before the Court on Defendants' Motion for Summary Judgment (ECF No. 157), and Defendants' Motion to Strike the exhibits attached to Plaintiff's response opposing summary judgment (ECF No. 200). For the reasons set forth below, both motions are denied.


The relevant facts, viewed in the light most favorable to Plaintiff, are as follows.

This case arises out of Plaintiff's attempt to purchase technology developed by Reactrix Systems, Inc. ("Reactrix"), that allows for human interaction with a projected image. Reactrix went into receivership in October 2008, and to avoid bankruptcy, assigned its property to Reactrix (Assignment for the Benefit of Creditors), LLC ("Reactrix ABC"), then owned by Sherwood Partners, LLC ("Sherwood"). (Am. Compl. (ECF No. 55) ¶ 12.) On October 31, 2008, Jessam Communications, Inc. ("Jessam"), Plaintiff's alleged business partner, entered into a Letter of Intent with Reactrix ABC to purchase its intellectual property assets (the "IP Assets"), equipment, and customer contracts. (ECF No. 191-1.) The Letter of Intent contained a confidentiality clause and gave Jessam the exclusive first right of refusal to purchase the IP Assets. ( Id. ) With financial support from Jessam, Plaintiff sought to bid $2 million for the IP Assets. (Deposition of John Jeffrey Storey ("Pl.'s Depo.") (ECF No. 156-1) pp. 182, 215-17.)

In the course of negotiating the purchase of the IP Assets, Reactrix ABC Vice President Timothy J. Cox introduced Plaintiff to Defendant Robert Hoffer, an investor and part owner of Defendant Newforth Partners, LLC ("Newforth"). (Pl.'s Depo. pp. 165-66.) Hoffer had an interest in purchasing the IP Assets, and Cox believed that Hoffer and Newforth could serve as additional investors to provide capital for Plaintiff's plan to restart the Reactrix company. ( Id. ) Plaintiff and Hoffer executed a Confidentiality and Non-Disclosure Agreement ("NDA") with respect to the purchase of the Reactrix assets. (ECF No. 157 at 3, 21; Am. Compl. ¶ 140.) The NDA required that any "proprietary information" received by one party from the other must be "maintained in the strictest confidence" and could not be used, disseminated, or disclosed to any third party for any purpose except solely to evaluate the prospect of the future investment relationship. ( Id. )

In December 2008, Plaintiff met with Hoffer, presented its and Jessam's business plan for the Reactrix assets, and provided Hoffer with a copy of the business plan. (Pl.'s Depo. pp. 218-21.) This business plan did not contain comprehensive financial data, but only a summary. ( Id. at pp. 218-21, 234-35.) Plaintiff also disclosed to Hoffer its plan for the use of the IP Assets in contracting with McDonald's Corporation and Microsoft Corporation, including licensing a Reactrix patent then pending for "Wavescape" technology allowing individuals to play games by moving in front of a screen. ( Id. pp. 209, 228-29, 241-43.) The Wavescape technology was to be licensed to Microsoft for a video game system that could compete with the Nintendo Wii without the use of a hand controlled device. ( Id. pp. 124-25, 228-29, 260.) Plaintiff valued the Microsoft license as a $270 million opportunity. ( Id. pp. 123-25.)

In January 2009, Cox informed Plaintiff that Reactrix ABC had sold its IP Assets to another purchaser. (ECF No. 191-6.) That purchaser was later revealed to be Hoffer, who then represented that he owned the rights to license the IP Assets, although the purchase had not yet been completed. (ECF No. 191-9.) In March 2009, Hoffer engaged in negotiations with Chris Beauchamp, the Chief Executive Officer of Monster Media, regarding licensing the IP Assets. ( Id.; ECF No. 191-8.) Hoffer formed a new corporation, Defendant Dhando Investments, LLC ("Dhando"), which was assigned the rights to license the IP Assets. (ECF No. 191-8.) Plaintiff alleges that Hoffer and Dhando did not actually purchase the IP Assets until April 10, 2009, in contrast to Hoffer's prior representations, and that Hoffer had previously hidden from Plaintiff and Jessam his intention to compete against them to purchase the IP Assets himself. (Am. Compl. ¶¶ 49-50, 61, 66, 122, 124.)

On April 11, 2009, Hoffer initiated negotiations with Plaintiff and Jessam to license the IP Assets to them for use in a contract with McDonald's. (ECF No. 191-10.) Hoffer promised several times to provide this license for Plaintiff's and Jessam's exclusive use with McDonald's. (Pl.'s Depo. p. 238.) The license was never provided. ( Id. p. 239.) Dhando subsequently sold the IP Assets to Intellectual Ventures. (ECF No. 192-2.)

On February 16, 2012, Plaintiff filed this action against Hoffer, Newforth, Dhando, and then-Defendants Sherwood and Cox, in Denver County District Court. (ECF No. 1-1.) Defendants subsequently removed the action to this Court on March 16, 2012. (ECF No. 1.) Plaintiff amended its Complaint on February 6, 2013. (ECF No. 55.)

After the parties stipulated to dismiss Defendants Sherwood and Cox, as well certain other claims, the remaining claims - numbered as in the Amended Complaint - are: (1) breach of the NDA, asserted against Hoffer and Newforth; (3) breach of the implied covenant of good faith and fair dealing, asserted against Hoffer and Newforth; (4) breach of an agreement to grant a license for the IP Assets, asserted against Dhando; (5) fraud based on false representation, asserted against all remaining Defendants; (6) fraud based on nondisclosure or concealment, asserted against all remaining Defendants; (9) constructive trust, asserted against Dhando; and (10) unjust enrichment, asserted against Hoffer and Dhando. (ECF Nos. 55, 150, 187.)

On August 23, 2013, Defendants filed their Motion for Summary Judgment as to all remaining claims. (ECF No. 157.) On November 20, 2013, Plaintiff filed its Response, along with twenty exhibits in support of its opposition to summary judgment. (ECF Nos. 191-193.) On November 29, 2013, Defendants filed a Motion to Strike Plaintiff's exhibits, arguing that they are unauthenticated and were not previously produced. (ECF No. 200.) Defendants then filed their Reply to Plaintiff's Response on December 2, 2013. (ECF No. 202.) Plaintiff opposed the Motion to Strike (ECF No. 211), and Defendants filed a Reply (ECF No. 218). Both motions are now ripe for disposition.


Defendants argue that Plaintiffs' exhibits should be stricken because: (1) all of the exhibits except Exhibit 14 are unauthenticated, and therefore are not admissible under Federal Rule of Evidence 901; (2) Exhibits 1, 2, 5-10, and 14 were not produced during discovery and therefore cannot be used to supply evidence on a motion under Federal Rule of Civil Procedure 37(c)(1); and (3) Exhibit 14, the Affidavit of Joseph Raymond Suarez, is an expert opinion that ...

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