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Hawg Tools, LLC v. Newsco International Energy Service, Inc.

United States District Court, D. Colorado

December 13, 2017

HAWG TOOLS, LLC, a Colorado limited liability company, Plaintiff,


          Robert E. Blackburn United States District Judge

         The matter before me is Plaintiff Hawg Tools, LLC's Motion To Lift Stay Entered on March 9, 2015 [Doc. #61] and To Administratively Reopen Case [#62], [1]filed July 28, 2017. I deny the motion.


         This court has jurisdiction over this matter pursuant to 28 U.S.C. §1332 (diversity of citizenship).


         A case that is administratively closed pursuant to D.C.COLO.LCivR 41.2 may be reopened for good cause. Generally, there is good cause to reopen when parties seek to litigate remaining issues that are ripe for review. American Family Mutual Insurance Co. v. Teamcorp, Inc., 835 F.Supp.2d 1083, 1086 (D. Colo. 2011). Nevertheless, courts may exercise discretion by denying a motion to reopen where the relief sought would be futile. Id.

         III. ANALYSIS

         In March 2014, a jury found in favor of plaintiff against defendants on claims for misappropriation of trade secrets, conversion, and breach of contract related to the design of two types of “bearing packs” used in oil field operations. In post-trial proceedings, plaintiff moved under the Colorado Uniform Trade Secrets Act, §7-74-103, C.R.S., to permanently enjoin defendants from using its trade secrets in one of the two designs. The trial court, however, noted the general verdict form used in the case made it impossible to determine whether the jury had found the entire design to be a trade secret or only some part thereof. (Plf. Reply Br., Exh. 2 ¶ 5 at 2-3.) It therefore denied plaintiff's motion for permanent injunctive relief. (Id., Exh. 2 ¶ ¶ 6-7 at 3-4.)

         Undeterred, plaintiff thereafter filed this lawsuit to seek ongoing and future damages for defendants' alleged continuing use of the bearing pack design after December 31, 2013.[2] At the time this suit was filed, however, defendants' appeal was still pending before the Colorado Court of Appeals. I therefore granted defendants' motion to stay these proceedings and administratively closed this matter pending the outcome of that appeal. (See Order Sustaining Objection to Order of the United States Magistrate Judge and Administratively Closing Case [#61], filed March 9, 2015.) On January 12, 2017, the Colorado Court of Appeals vacated the jury's verdict on plaintiff's misappropriation of trade secrets claim, but upheld the verdicts on the claims of conversion and breach of contract. (See Plf. Reply Br., Exh. 2.) The Colorado Supreme Court subsequently denied the parties' cross-petitions for writ of certiorari. 2017 WL 2772254 (Colo. June 26, 2017). Plaintiff now moves to reopen this case to seek ongoing and future damages for conversion claim against all defendants (or in the alternative, for unjust enrichment), as well as for breach of contract against defendant Joe Ficken.

         Although defendants suggest plaintiff is attempting to engage in improper claim-splitting now that plaintiff's state court claims have been reduced to judgment, the proper rubric is claim preclusion.[3] See Katz v. Gerardi, 655 F.3d 1212, 1218 (10th Cir. 2011); Hernandez v. Asset Acceptance, LLC, 970 F.Supp.2d 1194, 1200-01 (D. Colo. 2013). Claim preclusion “secures the peace and repose of society by the settlement of matters capable of judicial determination, ” Nevada v. United States, 463 U.S. 110, 129, 103 S.Ct. 2906, 2917-18, 77 L.Ed.2d 509 (1983) (citation and internal quotation marks omitted), by “protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation, ” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552 (1979).

         “Claim preclusion requires (1) a judgment on the merits in the earlier action; (2) identity of the parties or privies in the two suits; and (3) identity of the cause of action in both suits.” Yapp v. Excel Corp., 186 F.3d 1222, 1226 (10th Cir. 1999). As the first two elements of this test are not in dispute, the only question is whether the claims plaintiff seeks to bring in this lawsuit arise out of the same transaction, or series of connected transactions, as the previous suit. Id. at 1227. Plaintiff maintains its claims for ongoing or future damages relate not to continuing wrongs and therefore are not precluded.

         With respect to plaintiff's claim of conversion, the law is plainly to the contrary. Under Colorado law, “[c]onversion is not a continuing tort.” Farm Credit of Southern Colorado, ACA v. Mason, - P.3d. -, 2017 WL 1279716 at *10 (Colo.App. April 6, 2017), cert. granted, 2017 WL 4391812 (Colo. Oct. 2, 2017) (No. 17SC346) (citing Employers' Fire Insurance Co. v. Western. Guaranty Fund Services, 924 P.2d 1107, 1111 (Colo.App. 1996)). See also Kelley v. New York Life Insurance & Annuity Corp., 2008 WL 1782647 at *6 (D. Colo. April 17, 2008). Instead, property is considered converted when a demand for its return is refused, and damages are based on the fair market value of property converted at the time and the place of the conversion. Kelley, 2008 WL 1782647 at *6. By contrast, the continuing violation doctrine applies only to “continuing unlawful acts and conduct, not [to] continual ill effects from an initial violation.” Salas v. United States, 2012 WL 4097303 at *3 (D. Colo. Sept. 18, 2012), affirmed in relevant part, 527 Fed.Appx. 813 (10th Cir. May 21, 2013). See also Anderson Living Trust v. WPX Energy Production, LLC, 27 F.Supp.3d 1188, 1214 (D.N.M. 2014). Thus, as the magistrate judge previously found, “the fact that Defendants continue to possess the property does not mean that Plaintiff accrues a new claim daily.” Hawg Tools, LLC v. Newso International Energy Services, Inc., 2015 WL 1064519 at *7 (D. Colo. Feb. 23, 2015).

         Nor can plaintiff pursue a claim for unjust enrichment as an alternative to conversion. “Under res judicata, or claim preclusion, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in the prior action.” Wilkes v. Wyoming Department of Employment, 314 F.3d 501, 504-05 (10th Cir. 2002), cert. denied, 124 S.Ct. 181 (2003) (emphasis in original). This rule precludes plaintiff from presenting new theories of the case or seeking “remedies or forms of relief not demanded in the first action:”

Typically, even when the injury caused by an actionable wrong extends into the future and will be felt beyond the date of judgment, the damages awarded by the judgment are nevertheless supposed to embody the money equivalent of the entire injury. Accordingly, if a plaintiff who has recovered a judgment against a defendant in a certain amount becomes dissatisfied with his recovery and commences a second action to obtain increased ...

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