Mizer v Nexstar

Filing 69

OPINION Entered by Judge Sue E. Myerscough on 10/18/2017. SEE WRITTEN OPINION. Plaintiff's Motion for Summary Judgment is DENIED. This case is set for a Final Pretrial Conference on January 2, 2018 at 2:00 PM and Jury Trial onJanuary 16, 2018 at 9:00 AM. (DM, ilcd)

E-FILED

Thursday, 19 October, 2017 11:32:50 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
DAVID MIZER ENTERPRISES,
INC.,

)
)
)
Plaintiff,
)
)
v.
)
)
NEXSTAR BROADCASTING, INC., )
)
Defendant.
)

No. 2:14-CV-02192

OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
This cause is before the Court on Plaintiff David Mizer
Enterprises, Inc.’s Motion for Summary Judgment (d/e 57).
Because genuine issues of material fact remain, the Motion is
DENIED.
I. FACTS
Plaintiff is a corporation that provides technology services
across the United States. David Mizer (Mizer) is the president of
Plaintiff. Plaintiff created a business model and supporting
technology for providing services to automobile dealers, which

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included a system to manage inventory and facilitate web-based
automobile shopping.
Defendant is a telecommunications company that operates
television stations throughout the country. Defendant wanted to
use Plaintiff’s product with its current and prospective automotive
dealership advertising customers.
On or about August 27, 2008, the parties entered into a
written Licensing Agreement with a term from January 1, 2008
through December 31, 2010. The Agreement did not specify an
automatic extension beyond the stated termination date. The
Agreement provided that either party could terminate the
Agreement without cause upon 60 days written notice and
immediately for any breach of the Agreement. In addition,
Defendant could have terminated its obligations under the
Agreement by simply not deploying Plaintiff’s software to any of
Defendant’s stations. Defendant never provided a notice of
termination to Plaintiff during the term of the Agreement. The
Agreement terminated on December 31, 2010.

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The Agreement allowed Defendant to host propriety and
copyrighted pages (code)1 owned by Plaintiff on Defendant’s servers.
Defendant had the ability to add and remove the software from its
television stations’ websites. Plaintiff’s software allowed
Defendant’s television websites to carry a webpage that visitors to
the website could use to search for new and used cars in their local
market.
Plaintiff was not responsible for the end revenue or profit
Defendant received from the advertising relationships Defendant
entered into with the automobile dealerships. Instead, Plaintiff
provided the infrastructure for managing the data related to the
automobile web sales and hosted the content of such data. Plaintiff
was also responsible for troubleshooting any problems that arose.
Under the Agreement, Defendant could use Plaintiff’s
proprietary software and business model for three years in
exchange for certain fees as outlined in Appendix A of the
Agreement. Plaintiff charged a monthly base fee per dealership. If

Plaintiff appears to use the terms “code,” “software,” “program,” “proprietary
software,” and “software code” interchangeably. The Court will attempt to use
the same terms Plaintiff uses in each section of Plaintiff’s Motion.
1

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Plaintiff provided the data source—which the Agreement defined as
the means by which information about specific automobiles is
gathered and provided to Plaintiff—Plaintiff charged a one-time set
up fee and an additional charge per month per dealership. A cap of
$1,000 per month per market area applied to pre-owned vehicles.
Appendix A provided that Defendant would pay Plaintiff each
month the amount due pursuant to the fee schedule. The
Agreement did not indicate whether Plaintiff would submit invoices
or whether Defendant would calculate on its own the amounts due.
In April 2008, approximately four months after Defendant began
using Plaintiff’s program, Ambrose Rivera, Plaintiff’s contact person
with Defendant at that time, emailed Plaintiff asking for the total
amount Defendant owed to date for Plaintiff’s work. In response to
that request, Plaintiff set up an aggregated markets link, which
allowed Defendant to review the participating dealerships for each
of Defendant’s station websites. By doing so, Defendant had the
ability to track the program billing. While it appears that Defendant
paid Plaintiff in accordance with Rivera’s request, Defendant failed
to pay Plaintiff for the use of Plaintiff’s propriety software and
business model during the remaining term of the Agreement. See
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April 5, 2013 email (Mizer telling Rivera’s replacement, Todd
Hartsell, that Mizer believed Defendant paid the invoices submitted
per Rivera’s request; Hartsell no longer works for Defendant).
In December 2012, Plaintiff contacted Defendant to discuss
Defendant’s nonpayment. Plaintiff submitted a spreadsheet with
market and billing information for the entire term of the Agreement.
Defendant denies that Plaintiff is entitled to payment under the
Agreement because of Plaintiff’s poor performance and because the
late submission of invoices deprived Defendant of the information
needed to verify Plaintiff’s claims. Defendant did not, however,
raise the affirmative defense of waiver in its Answer.
The Agreement also prohibited Defendant from using, making
available, selling, disclosing, or otherwise communicating to any
third party Plaintiff’s confidential information, either during or after
the Defendant’s relationship with Plaintiff, without prior written
approval of Plaintiff’s president. In addition, the Agreement
required Defendant to immediately deliver to Plaintiff all copies of
all materials and writings belonging to Plaintiff when the
relationship ended. Plaintiff asserts that Defendant violated this
provision because Defendant continued to use Plaintiff’s product
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after the contract term expired, specifically from January 1, 2011
until early February 2013. Plaintiff also asserts that Defendant’s
station’s websites generated 126 leads2 after the Agreement expired.
Defendant disputes this, asserting that Defendant disabled the
program but that it was possible that cached3 pages of the inactive
web pages might be accessible under certain circumstances.
Plaintiff also brings claims relating to the development of a
potential website named Auto Buy Cell. The idea behind Auto Buy
Cell was to allow customers to use their cellphone to scan a code on
an automobile dealer’s vehicle and pull up information about that
vehicle. The parties agree that Helen Agnew, who worked for
Defendant at that time, was in charge of developing Auto Buy Cell.
The parties dispute whether Agnew acted for her own benefit or in
her capacity as an employee for Defendant.

At his deposition, David Mizer explained that a lead is a contact form
completed by a potential customer who is using the website. Mizer Dep. at
187-88.
2

Cache “stores recently used information so that it can be quickly accessed at
a later time. . . . Most web browsers cache webpage data by default. For
example when you visit a web page, the browser may cache the HTML, image,
and any CSS or JavaScript files reference by the page. When you browse
through other pages on the site that use the same images, CSS, or JavaScript,
your browser will not have to re-download the files. Instead, the browser can
simply load them from the cache, which is stored on your local hard drive.”
https://techterms.com/definition/cache (last visited October 18, 2017).
3

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Plaintiff’s involvement with Auto Buy Cell began in early 2011.
Agnew testified that she involved Plaintiff not to develop software
but to find a way of getting dealer inventory to the Auto Buy Cell
program.
In June 2012, Plaintiff disconnected from the Auto Buy Cell
project. At this time, the project had only advanced to the point
that it was a test site for developmental purposes. Plaintiff claims
that, despite disconnecting from Auto Buy Cell, Defendant copied
Plaintiff’s actual software code without Plaintiff’s authorization.
Agnew claims that the webpage and software that appeared on the
Auto Buy Cell website was her creation.
II. LEGAL STANDARD
Summary judgment is proper if the movant shows that no
genuine dispute exists as to any material fact and that the movant
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
The movant bears the initial responsibility of informing the court of
the basis for the motion and identifying the evidence the movant
believes demonstrates the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

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When ruling on a motion for summary judgment, the court
must consider the facts in the light most favorable to the
nonmoving party, drawing all reasonable inferences in the
nonmoving party's favor. Blasius v. Angel Auto., Inc., 839 F.3d
639, 644 (7th Cir. 2016). No genuine issue of material fact exists if
a reasonable jury could not find in favor of the nonmoving party.
Brewer v. Bd. of Trs. of the Univ. of Ill., 479 F.3d 908, 915 (7th Cir.
2007).
III. ANALYSIS
Plaintiff brings claims for breach of contract related to
Defendant’s use of Plaintiff’s program during the three-year term of
the Agreement. Plaintiff brings claims for breach of contract,
conversion, quantum meruit, and copyright infringement for
Defendant’s alleged use of Plaintiff’s program after the expiration of
the Agreement. Finally, Plaintiff brings claims for conversion and
copyright infringement for Defendant’s alleged use of Plaintiff’s
proprietary software related to Plaintiff’s work for Auto Buy Cell.

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A.

Plaintiff is Not Entitled to Summary Judgment on the
Breach of Contract Claims (Count I)
The parties agree that Illinois law governs the Agreement.4 To

establish a breach of contract, Plaintiff must prove (1) the existence
of a valid and enforceable contract; (2) performance by Plaintiff; (3)
breach of contract by Defendant; and (4) resultant injury to
Plaintiff. Burkhart v. Wolf Motors of Naperville, Inc. ex rel. Toyota
of Naperville, 2016 IL App (2d) 151053, ¶ 14 (2016).
Plaintiff claims that the undisputed facts demonstrate that
Defendant breached the Agreement by (1) failing to pay Plaintiff for
the use of Plaintiff’s program during the term of the Agreement, (2)
using Plaintiff’s program after the Agreement terminated, and (3)
providing Plaintiff’s proprietary software to third parties related to
the Auto Buy Cell platform. Plaintiff seeks damages in the amount
of $299,175 for Defendant’s use of Plaintiff’s program during the

In the Complaint, Plaintiff alleges that this Court has diversity jurisdiction
over all of the claims pursuant to 28 U.S.C. § 1332. See Compl. ¶ 1. The
Court notes, however, that Plaintiff brings a federal claim under the Copyright
Act, which vests the Court will original jurisdiction pursuant to 28 U.S.C.
§ 1331. Where a court has original jurisdiction pursuant to § 1331, the court
has supplemental jurisdiction over state law claims that form part of the same
case or controversy.
4

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term of the Agreement. Plaintiff seeks an additional $33,750 for
Defendant’s use of the program following the end of the Agreement.
In response to the Motion for Summary Judgment, Defendant
argues that Plaintiff breached the covenant of good faith and fair
dealing and performing poorly under the Agreement.5 Defendant’s
good faith and fair dealing argument presumes that Plaintiff was
required to submit invoices to Plaintiff.
Under Illinois law, “every contract contains an implied
covenant of good faith and fair dealing.” Suburban Ins. Servs., Inc.
v. Va. Sur. Co. Inc., 322 Ill.App.3d 688, 693 (2001). To establish a
breach of the duty of good faith and fair dealing, Defendant must
show that (1) the contract vested Plaintiff with discretion in
performing an obligation under the contract; and (2) that Plaintiff
exercised that discretion in bad faith, unreasonably, or in a manner
inconsistent with the reasonable expectations of the parties. See
LaSalle Bank Nat’l Ass’n v. Paramont Props., 588 F. Supp. 2d 840,

Even if the breach of the duty of good faith and fair dealing were an
affirmative defense that Defendant failed to plead, the affirmative defense is
forfeited only if Plaintiff is harmed by Defendant’s delay in raising the defense.
See Carter v. United States, 333 F.3d 791, 796 (7th Cir. 2003). Plaintiff has
responded to the defense without objection. Therefore, the Court finds that
Plaintiff was not harmed, and the defense was not forfeited by Defendant.
5

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857 (N.D. Ill. 2008). The implied covenant of good faith and fair
dealing guides the construction of a contract and aids the court in
determining the intent of the parties where a provision is
susceptible of two conflicting constructions. See LaSalle Bank Nat’l
Ass’n v. Moran Foods, Inc., 477 F. Supp. 2d 932, 937 (N.D. Ill.
2007); Fox v. Heimann, 375 Ill. App. 3d 35, 42 (2007).
When construing a contract, the court’s primary objective is to
give effect to the parties’ intent. Gallagher v. Lenart, 226 Ill. 2d
208, 232 (2007). The court gives the language in the contract its
plain and ordinary meaning. Id. at 233. If the contract’s language
is susceptible to more than one meaning, the contract is
ambiguous. Id. When a contract is ambiguous, the court may
consider extrinsic evidence to determine the parties’ intent. Id.6
A court construes a clear and unambiguous contract as a
matter of law. Storino, Ramello & Durkin v. Rackow, 2015 IL App
(1st) 142961 ¶ 18. When a contract is ambiguous, however, the
interpretation of the contract is a question of fact for the jury unless

The Agreement contains a provision providing that the normal rule of
construction that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of the Agreement. Agreement ¶ 11(vv).
6

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the extrinsic evidence is undisputed. Lakeview Collection Inc. v.
Bank of Am., N.A., 942 F. Supp. 2d 830, 849 (N.D. Ill. 2013).
The Court finds the Agreement ambiguous. While the
Agreement provides for payment by Defendant to Plaintiff each
month, the Agreement is ambiguous whether Plaintiff was required
to submit invoices or whether Defendant was required to determine
what it owed and submit payment to Plaintiff. And, if Plaintiff was
required to bill Defendant and failed to do so, Plaintiff may have
breached the implied covenant of good faith and fair dealing. Kipnis
v. Mandel Metals, Inc., 318 Ill. App. 3d 498, 505 (2000) (“Whenever
the cooperation of one party is necessary for the other party’s
performance, there is an implied condition that such cooperation
will be given.”).
Because extrinsic evidence is required to determine the
parties’ intent, a question of fact remains. Plaintiff is not entitled to
summary judgment on its claim for breach of contract for
Defendant’s failure to pay under the Agreement. In light of this
holding, the Court need not address Defendant’s additional
argument that Plaintiff’s alleged poor performance constituted a

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material breach of the Agreement and excused Defendant’s
obligation to pay.
Plaintiff also claims that Defendant breached the Agreement
by using Plaintiff’s program after the Agreement’s termination date.
Defendant disputes this fact. Defendant points to Hartsell’s
testimony that, after Defendant stopped using Plaintiff’s product,
Defendant disabled it. Hartsell also testified that it was possible
that cached pages of the inactive website might be accessible under
certain circumstances. Although Plaintiff asserts that Defendant’s
use of its code after termination of the Agreement resulted in 126
leads, this fact is not contained in Mizer’s affidavit and the exhibit
Plaintiff cites in support of that fact does not appear to support that
claim. Therefore, the Court finds a genuine issue of material fact
remains whether Defendant breached the Agreement by using
Plaintiff’s program after the Agreement’s termination date.
Finally, Plaintiff argues that Defendant breached the
Agreement by providing Plaintiff’s code to third parties. Plaintiff
claims that, despite terminating his involvement with Auto Buy Cell
and removing the demo website, Plaintiff’s code was copied to a new
demo without his permission. However, questions of fact remain
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whether the code in question was Plaintiff’s code or Agnew’s code,
as both claim ownership. Therefore, genuine issues of material fact
remain. Plaintiff is not entitled to summary judgment on Count I.
B.

Plaintiff is Not Entitled To Summary Judgment on the
Conversion Claim (Count II)
Plaintiff seeks summary judgment on its conversion claim.

Plaintiff claims that Defendant converted Plaintiff’s (1) proprietary
software, business model, web services, and other related
intellectual property provided to Defendant pursuant to the
Agreement; and (2) software code and technology for the Auto Buy
Cell platform.
To prove conversion under Illinois law, Plaintiff must establish
(1) a right to certain property; (2) an absolute and unconditional
right to the immediate possession of the property; (3) that Plaintiff
made a demand for possession; and (4) Defendant wrongfully and
without authorization assumed control, dominion, or ownership
over the property. Cirrincione v. Johnson, 184 Ill. 2d 109, 114
(1998). Ordinarily, “‘an action for conversion lies only for personal
property which is tangible, or at least represented by or connected

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with something tangible.’” In re Thebus, 108 Ill.2d 255, 260 (1985)
(quoting 18 Am.Jur.2d Conversion sec. 9, at 164 (1965)).
In September 2014, Defendant filed a motion to dismiss
asserting that Illinois courts do not recognize an action for
conversion of intangible rights. This Court found no need to decide
the issue because the Complaint alleged, in part, the conversion of
property that was tangible or represented by or connected with
something tangible. Opinion at 14 (d/e 15) (referring to the
provisions in the Agreement that contemplated the return of
confidential information, including materials and writings, upon
termination of the Agreement). Defendant does not re-raise the
issue here. Therefore, the Court will assume, for purposes of this
Motion, that Plaintiff can bring an action for conversion of its
propriety software, business model, web services, and other related
intellectual property at issue in the Agreement and the software
code and technology for the Auto Buy Cell platform.
Defendant asserts that genuine issues of material fact remain
because Plaintiff failed to prove that Plaintiff made a timely demand
for return of its software code related to the Agreement. Defendant
also asserts that genuine issues of material fact remain whether
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Plaintiff or Agnew lawfully owned the software code related to the
Auto Buy Cell platform.
The Court agrees that genuine issues of material fact remain.
Plaintiff points to an email of April 5, 2013 from Mizer to
Defendant’s employee, Hartsell, as evidence that Plaintiff demanded
that Defendant remove the software code from the website.
However, that email does not demand that Defendant remove the
software code. See Caterpillar Inc. v. Sturman Indus., Inc., No. 99CV-1201, 2005 WL 3132196, at *2 (C.D. Ill. 2005) (providing that
the demand must request the present delivery of property and be in
absolute, unequivocal terms) (citing 90 C.J.S. Trover and
Conversion § 43). At most, the email alerts Defendant of Plaintiff’s
claim that Defendant was representing Plaintiff’s property as its
own.
In addition, a genuine issue of material fact remains whether
Plaintiff or Agnew lawfully owned the code appearing on the Auto
Buy Cell Website. Therefore, Plaintiff is not entitled to summary
judgment on Count II.
The Court also notes that state law claims are preempted by
the Copyright Act where the state law claims arise exclusively from
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conduct governed by the Copyright Act. Cassetica Software, Inc. v.
Computer Scis. Corp., No. 09 C 0003, 2009 WL 1703015, at *4–5
(N.D. Ill. June 18, 2009). The parties will need to address this issue
at the Final Pretrial Conference.
C.

Plaintiff is Not Entitled to Summary Judgment on the
Quantum Meruit Claim (Count III)
Plaintiff seeks damages for Defendant’s alleged use of its

software code after expiration of the Agreement, January 1, 2011
until early February 2013. Plaintiff is entitled to damages under a
quantum meruit theory if Plaintiff proves that: (1) Plaintiff
performed a service to benefit the defendant; (2) Plaintiff did not
perform the service gratuitously; (3) Defendant accepted this
service; and (4) no contract existed to provide for payment for the
service. Instalico Inc. v. Whiting Corp., 336 Ill. App. 3d 776, 781
(2002).
Plaintiff asserts that the undisputed facts show that (1)
Plaintiff provided Defendant with software code for more than two
years after expiration of the Agreement; (2) Plaintiff did not intend
that the services would be done for free; (3) Defendant accepted the
services, which generated additional automotive leads and activities
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for the television stations’ clients; and (4) there was no contract in
place for this time period.
Defendant argues that a genuine issue of material fact
remains. The Court agrees. A question of fact remains whether
Defendant accepted the services of Plaintiff. Hartsell, who was an
employee of Defendant at the relevant time, testified that he
believed the forward facing pages of Plaintiff’s software were
removed when the contract expired but he could not eliminate the
possibility that some cached pages might still have existed on
Defendant’s servers. Defendant argues that the fact that some of
Plaintiff’s software may have persisted on Defendant’s server as a
result of a computer glitch is not consistent with a finding that
Defendant knowingly continued to accept Plaintiff’s service at the
expiration of the contract. Because genuine issues of material fact
remain, Plaintiff is not entitled to summary judgment on Count III.
D.

Plaintiff is Not Entitled to Summary Judgment on the
Copyright Claim (Count IV)
Plaintiff argues it is entitled to summary judgment on the

copyright infringement claim. Plaintiff states that Plaintiff had
ownership of a valid copyright and that Defendant copied elements
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of Plaintiff’s original work. Specifically, Plaintiff claims that
Defendant used Plaintiff’s copyrighted proprietary software business
model for car locating. Plaintiff appears to only seek summary
judgment regarding the software that Plaintiff alleges was not
removed from Defendant’s website after termination of the
Agreement and not the software related to Auto Buy Cell.
To establish copyright infringement, Plaintiff must prove: “(1)
ownership of a valid copyright, and (2) copying of constituent
elements of the work that are original.” Feist Publ’ns, Inc. v. Rural
Tel. Serv. Co., Inc., 499 U.S. 340, 360 (1991). “Copying” in this
context means infringing any of the exclusive rights of the copyright
owner. Marobie-FL, Inc. v. Nat’l Ass’n of Fire Equip. Distribs., 983
F. Supp. 1167, 1172 n.1 (N.D. Ill. 1997). The exclusive rights
include the rights to reproduce the copyrighted work, prepare
derivative works based on the copyrighted work, and distribute
copies of the copyrighted work to the public. 17 U.S.C. § 1061)-(3).
A plaintiff can prove copying by pointing to direct evidence of
copying or by showing that the alleged infringer had access to the
copyrighted work and that the alleged infringer’s works are
substantially similar to the copyrighted work. See Susan Wakeen
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Doll Co., Inc. v. Ashton Drake Galleries, 272 F.3d 441, 450 (7th Cir.
2001). If a plaintiff shows access and substantial similarity, the
defendant can rebut the inference of copying by showing that the
allegedly infringing work was independently created. JCW Invs.,
Inc. v. Novelty, Inc., 482 F.3d 910, 915 (7th Cir. 2007).
Defendant does not argue that Plaintiff did not hold a valid
copyright. Moreover, Defendant did not respond to Plaintiff’s claim
that Defendant infringed Plaintiff’s copyright by retaining Plaintiff’s
software after the expiration of the Agreement. Defendant only
addresses the copyright claim related to the Auto Buy Cell software.
However, the Court nonetheless finds that Plaintiff has not
demonstrated that Plaintiff is entitled to judgment as a matter of
law. Questions of fact remain whether Defendant infringed
Plaintiff’s copyright if, as Defendant claims, the software
inadvertently remained on inactive web pages. See, e.g., See Frasier
v. Adams-Sandler, Inc., 94 F.3d 129, 130 (4th Cir. 1996) (finding
that the defendant’s failure to return copyrighted material upon
request did not violate copyright law where the defendant did not in
any way use or copy the photographs); Design Data Corp. v. Enter.,
Inc., 847 F.3d 1169, 1172 (9th Cir. 2017) (finding genuine issue of
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material fact remained whether the defendant’s download of the
plaintiff’s program was more than an insignificant violation).
If Plaintiff does, in fact, seek summary judgment on its
copyright claim pertaining to the Auto Buy Cell software, that
request is denied. Genuine issues of material fact remain whether
the software belonged to Plaintiff or Agnew.
IV. CONCLUSION
For the reasons stated, Plaintiff’s Motion for Summary
Judgment is DENIED. This case is set for a Final Pretrial
Conference on January 2, 2018 at 2:00 PM and Jury Trial on
January 16, 2018 at 9:00 AM.
ENTER: October 18, 2017
FOR THE COURT:
s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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