Deman Data Systems, LLC et al v. Schessel et al

Filing 868

ORDER granting in part and denying in part 862 Motion for clarification; denying 862 Motion to extend time. Signed by Judge Susan C Bucklew on 3/29/2017. (JD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
DEMAN DATA SYSTEMS, LLC,
ET AL.,
Plaintiffs,
v.

Case No. 8:12-cv-2580-T-24 EAJ

MARC S. SCHESSEL, ET AL.,
Defendants.
______________________________/
ORDER
This cause comes before the Court on Plaintiffs’ Emergency Motion (Doc. No. 862),
which Defendants oppose (Doc. No. 866). The Court, however, does not view the motion as an
“emergency.” As explained below, the motion is granted in part and denied in part.
I. Background
On April 13, 2015, after several days of trial, the parties entered into a settlement
agreement wherein the Court agreed to retain jurisdiction for two years.1 The settlement
agreement provided for a specific dispute resolution process/protocol relating to disputes that
might arise during those two years relating to the settlement agreement. On July 15, 2015,
pursuant to the dispute resolution protocol, Plaintiffs sent Defendants a letter notifying them of
alleged breaches of the settlement agreement. Unable to resolve the disputes, the parties
requested a mediation of their disputes with Magistrate Judge Porcelli. When the mediation
impassed, this Court held an evidentiary hearing on November 21, December 6, and December
15, 2016. Following the hearings, the Court entered an order adjudicating the parties’ disputes.

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The Court retained jurisdiction over disputes related to the settlement agreement through
April 13, 2017. (Doc. No. 804).

In the Order, the Court found, among other things, that Plaintiffs’ act of hiring the parties’
escrow agent (John Jorgensen) as their expert following the settlement of the case created a
conflict such that John Jorgensen could not be forced to continue as the escrow agent, and
Defendants were unable to comply with their obligations under Section 7(b)(1) of the settlement
agreement to turn over certain data to the escrow agent because there was no escrow agent. The
Court gave the parties three options regarding the escrow provision of the settlement agreement,
and the parties have now chosen Option 3, even though the Court stated in its order that Option 3
did not seem practical because the two-year term of escrow provided in the settlement agreement
would expire in three months. Option 3 provides the following:
Defendants can identify and select a new escrow agent that meets
with Plaintiffs’ approval. The reasonable costs of identification and
selection of the escrow agent to be borne by Plaintiffs, the party that
created the problem. Thereafter, the parties will both equally share
the escrow costs.
(Doc. No. S-853). The Court also stated the following: “no later than 7 days after an escrow
agent has been selected and an escrow agreement has been executed, Defendants must turn over
all materials that must be escrowed under the settlement agreement.” (Doc. No. S-853). The
parties agreed on a new escrow agent but are not able to agree on the terms of an escrow
agreement, and the instant motion followed.
II. Plaintiffs’ Emergency Motion
In their emergency motion, Plaintiffs seek clarification of the Court’s January 10, 2017
order, as well as a 30-day enlargement of the Court’s retention of jurisdiction. Accordingly, the
Court will address both requests.

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A. Clarification
After the evidentiary hearing, the parties originally selected Matthew Decker as their
escrow agent, but they could not agree on the terms of the escrow agreement. As a result, the
parties selected a replacement escrow agent, but again, they disagree as to the material terms of
the escrow agreement as it relates to the scope of what Defendants are obligated to turn over and
Plaintiffs’ right to inspect the escrowed materials. Specifically, the parties dispute whether all of
the materials required to be escrowed are necessarily contained on the external hard drive and
whether Plaintiffs have the right to inspect the escrowed materials to ensure that all of the
required materials have been turned over.
It appears that the major dispute revolves around whether Plaintiffs have the right to
inspect the escrowed materials. Plaintiffs base this perceived right of inspection on the original
escrow agreement entered into by the parties and Jorgensen during the course of the litigation, to
which the settlement agreement refers. Specifically, Section 7(b)(1) of the settlement agreement
states that the materials deposited with the escrow agent are “subject to the terms, conditions and
provisions of the Escrow Agreement established under the Action.” (Doc No. S-770).
The parties agree that the “Escrow Agreement” referred to in the settlement agreement is
the parties’ Escrow Agreement with Jorgensen. (Doc. No. 862-1). However, Defendants point
out that Plaintiffs urged the Court during the evidentiary hearing to conclude that the Jorgensen
Escrow Agreement had terminated. Therefore, Defendants contend that they cannot be bound by
the terms of the Jorgensen Escrow Agreement. Defendants further argue that the Court implied
that the terms of the Jorgensen Escrow Agreement did not survive when the Court directed the
parties to agree to and execute a new escrow agreement.

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The Court agrees with Defendants that with the exit of Jorgensen as the escrow agent, the
Jorgensen Escrow Agreement cannot be enforced and that is why the Court contemplated that a
new escrow agreement would need to be executed. This Court will not create an escrow
agreement for the parties, although the Court anticipated, apparently wrongly, the parties would
enter into an escrow agreement substantially similar to the Jorgensen Escrow Agreement. The
Jorgensen Escrow Agreement did provide a protocol for the review of materials deposited with
the escrow agent. (Doc. 862-1, ¶ 4). Until an escrow agreement is in place, Defendants will be
relieved of the obligation to escrow the required materials. Accordingly, Plaintiffs’ motion to
clarify the Court’s January 10, 2017 order is granted in part and denied in part.
B. Enlargement of Time
Next, Plaintiffs seek a 30-day enlargement of the Court’s retention of jurisdiction in order
to provide the parties with more time to agree to and execute an escrow agreement, to allow
Plaintiffs sufficient time to review the escrowed materials, and to allow Plaintiffs time to seek
Court intervention if necessary. Defendants object to any extension. The ADR period agreed to
by the parties in the settlement agreement was from April 14, 2015 to April 13, 2017. Without an
agreement by both parties, the Court is unwilling to enlarge the ADR time frame or its retention
of jurisdiction, which will expire on April 13, 2017.
III. Conclusion
Accordingly, it is ORDERED AND ADJUDGED that Plaintiffs’ Emergency Motion
(Doc. No. 862) is Granted in Part and Denied in part.
DONE AND ORDERED at Tampa, Florida, this 29th day of March, 2017.

Copies to: Counsel of Record

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