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

Filing 73

ORDER Denying Plaintiff's Motion to Re-Open Case. Plaintiff Hawg Tools, LLC's Motion To Lift Stay Entered on March 9, 2015 [Doc. # 61 ] and To Administratively Reopen Case [# 62 ], filed July 28, 2017, is denied. The Order of Reference [# 64 ], filed August 2, 2017, is withdrawn, and Plaintiff Hawg Tools, LLC's Motion for Leave To File Second Amended Complaint [# 63 ], filed August 2, 2017, is denied as moot. By Judge Robert E. Blackburn on 12/13/2017. (athom, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Action No. 14-cv-03011-REB-MJW
HAWG TOOLS, LLC, a Colorado limited liability company,
Plaintiff,
v.
NEWSCO INTERNATIONAL ENERGY SERVICES, INC.,
NEWSCO INTERNATIONAL ENERGY SERVICES USA, INC., a/k/a NEWSCO USA,
INC.,
NEWSCO DIRECTIONAL & HORIZONTAL SERVICES, INC., and
JOE FICKEN, an individual,
Defendants.

ORDER DENYING PLAINTIFFS MOTION TO RE-OPEN CASE
Blackburn, J.
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.
I. JURISDICTION
This court has jurisdiction over this matter pursuant to 28 U.S.C. §1332 (diversity
of citizenship).
II. STANDARD OF REVIEW
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
1

“[#62]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.

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

2

Although the verdict was returned in March 2014, plaintiff claimed defendants failed to produce
sufficient evidence to allow it to submit the issue of damages after December 31, 2013, to the jury. (See
Verified Complaint and Jury Demand ¶ 36 at 7 [#3], filed November 6, 2014 .)

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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 claimsplitting 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).

3

Claim preclusion describes the rules formerly known as “merger” and “bar.” See In re Crespin,
551 B.R. 886, 895 (Bankr. D.N.M. 2016)

3

“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,

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“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 damages, the court will
hold him precluded; his claim has been merged in the
judgment and may not be split.
RESTATEMENT (SECOND) OF JUDGMENTS § 25 & cmt. c. If plaintiff believed there was a
danger defendants would continue to use its designs past the date of the jury’s verdict,
there is simply no reason why it could not have sought future damages under a primary
or alternative theory of unjust enrichment in the original suit. Nevertheless, it did not,
and such a claim is now precluded.

These same principles are likewise fatal to plaintiff’s breach of contract claim
5

against Mr. Ficken. As part of his assignment of the design, Mr. Ficken agreed “not at
any time [to] use for [his] own benefit or disclose to any person or entity any of the
Protected Materials or any information related thereto[.]” (Plf. Reply, Exh. 3 ¶ 7.) With
respect to the confidentiality piece of that agreement, it simply defies logic to suggest
the breach thereof is ongoing. Once Mr. Ficken revealed the design to Newsco,
confidentiality between them was lost, permanently. The breach of Mr. Ficken’s duty of
confidentiality was complete at that moment. Although plaintiff may continue to suffer
damages as a result, the breach itself is not continuing in nature.4 See Salas v. United
States, 2012 WL 4097303 at *3. Any claim based on breach of that promise, therefore,
is precluded.
As for the agreement that Mr. Ficken would not use the design for his own
benefit, plaintiff fails to address why a claim for future damages related to this alleged
breach of contract could not have been brought in its prior lawsuit.5 See Wilkes, 314
F.3d at 504-05. Although plaintiff suggests it could not have requested damages for
any period after December 2013 because defendants did not provide damages

4

To be sure, there are certain types of contracts which are capable of being repeatedly or
sequentially breached. See, e.g., Paul Holt Drilling, Inc. v. Liberty Mutual Insurance Co., 664 F.2d
252, 255-56 (10th Cir. 1981) (insurer’s ongoing refusal to defend insured constitutes a series of breaches
of the contract of insurance); Anderson Living Trust, 27 F.Supp.3d at 1215 (continuing wrong doctrine
has been applied where contract involves periodic payments). Nevertheless, plaintiff has cited no case,
and the court has found none, in which a confidentiality or non-disclosure agreement has been found to
constitute such an agreement.
5

Moreover, nothing in the proposed Second Amended Complaint alleges facts suggesting how
Mr. Ficken himself (as distinguished from the company for which he now works) personally benefits, on an
ongoing basis, from his disclosure of the design.

6

information for any period thereafter,6 “[i]t is immaterial that in trying the first action
[plaintiff] was not in possession of enough information about the damages, past or
prospective, or that the damages turned out in fact to be unexpectedly large and in
excess of the judgment.” RESTATEMENT (SECOND) OF JUDGMENTS § 25, cmt. c.
Indeed, it is inconceivable that plaintiff was prevented from permissibly extrapolating
future damages from evidence of defendants’ revenues which was current as of just
three months prior to the jury’s verdict. See Southwest Stainless, LP v. Sappington,
582 F.3d 1176, 1187 (10th Cir. 2009); Technics, LLC v. Acoustic Marketing Research
Inc., 179 P.3d 123, 127 (Colo. App. 2007), aff’d, 198 P.3d 96 (Colo. 2008). While
damages may not be speculative, neither is absolute mathematical certainty required.
See Tull v. Gundersons, Inc., 709 P.2d 940, 945 (Colo. 1985) (“In proving the amount
of damages it is sufficient for a plaintiff to provide ‘[a] reasonable basis for computation
and the best evidence obtainable under the circumstances of the case which will enable
the trier of the facts to arrive at a fairly approximate estimate of the loss.’”) (citation
omitted). Plaintiff’s failure to make its case for such damages in its prior lawsuit
precludes any request for those damages in a subsequent lawsuit.
For these reasons, it would be futile to reopen this case to allow plaintiff to
pursue the claims sought to be asserted in its proposed amended complaint. The
motion to reopen therefore will be denied, and the motion to file a second amended
complaint denied as moot.

6

To the extent plaintiff had complaints about defendants’ production of discovery relating to
damages after December 2013, the appropriate forum in which to address those issues was the state trial
court.

7

THEREFORE, IT IS ORDERED as follows:
1. That Plaintiff Hawg Tools, LLC’s Motion To Lift Stay Entered on March 9,
2015 [Doc. #61] and To Administratively Reopen Case [#62], filed July 28, 2017, is
denied; and
2. That the Order of Reference [#64], filed August 2, 2017, is withdrawn, and
Plaintiff Hawg Tools, LLC’s Motion for Leave To File Second Amended
Complaint [#63], filed August 2, 2017, is denied as moot.
Dated December 13, 2017, at Denver, Colorado.
BY THE COURT:

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