C-Tech Corporation v. Aversion Technologies et al

Filing 33

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 9/7/12. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
C-TECH CORPORATION
:
v.

:

Civil Action No. DKC 11-0983

:
AVERSION TECHNOLOGIES, et al.
:
MEMORANDUM OPINION
Presently pending and ready for review in this breach of
contract case are two motions:

a motion for voluntary dismissal

with prejudice filed by Plaintiff C-Tech Corporation (“C-Tech”)
(ECF

No.

28)

and

a

motion

filed

by

Defendant

Aversion

Technologies, Inc. (“Aversion”) seeking partial summary judgment
on

its

contractual

counterclaim

for

litigation

costs

and

attorneys’ fees (ECF No. 30).

Also pending is a request for

statutory

Aversion

Tutini.1

attorneys’

fees

by

and

Defendant

Peter

The issues have been fully briefed, and the court now

rules, no hearing being deemed necessary.

Local Rule 105.6.

For the following reasons, the motion for voluntary dismissal
with prejudice will be granted; the motion for partial summary
judgment

1

on

Aversion’s

counterclaim

for

litigation

costs

and

As set forth below, Aversion and Defendant Peter Tutini
filed a single brief addressing attorneys’ fees (ECF No. 30),
but it contains two distinct issues that will be addressed
separately.

attorneys’ fees will be granted in part and denied in part; and
the request for statutory attorneys’ fees will be denied.2
I.

Background
A.

Factual Background

The following facts are uncontroverted.
corporation

based

distributor

agreement

Maryland

in

corporation,

India,
(“the
on

entered

into

Agreement”)

November

1,

C-Tech, a foreign
an

with

2006.

Aversion,
Mr.

Aversion prepared the final draft of the Agreement.
the

Agreement,

Aversion

agreed

to

act

as

exclusive

Tutini

a
at

Pursuant to

the

exclusive

distributor of certain C-Tech products in North America, Central
America,

and

South

America,

as

well

distributor in other geographic areas.

as

a

non-exclusive

Aversion also agreed:

(1) to promote and sell C-Tech’s products, including Rodrepel, a
rodent

repellant

containing

denatonium

benzoate;

(2)

“not

to

sell any product competitive to C-Tech’s products”; (3) to keep
C-Tech’s

proprietary

information

“in

the

strictest

of

confidence”; and (4) not to “use” or “disclose” any confidential
information without the prior written consent of C-Tech, both
during the term of the Agreement “or at any time subsequent
thereto.”

(ECF No. 1-1 ¶¶ 1, 2.5, 2.6).

2

The parties mutually

Defendants also filed a motion to dismiss and for summary
judgment on Plaintiff’s claims. (ECF No. 26). That motion will
be denied as moot.
2

terminated
Aversion

the

Agreement

could

continue

January

30,

on
to

June
sell

20,

2007,

Rodrepel

on

but
a

agreed

that

non-exclusive

basis.
On

2008,

Aversion

submitted

a

trademark

application for Rodrepel, a product developed by C-Tech, to the
United States Patent and Trademark Office, which was granted on
November 18, 2008.

After negotiations between the parties, C-

Tech paid Aversion $3,500 on November 17, 2009 in exchange for
an

assignment

of

the

Rodrepel®

trademark.

At

some

point

thereafter, Aversion began marketing and selling a product known
as Repela, a rodent repellent that, like Rodrepel®, contains
denatonium benzoate.
B.

Procedural Background

On April 14, 2011, C-Tech filed a complaint in this court
against Aversion and Mr. Tutini, alleging counts for breach of
contract, common law trademark infringement, violations of the
Lanham Act, 15 U.S.C. § 1125(a)(1)(B), unfair competition under
Maryland

law,

and

violations

of

the

Maryland

Uniform

Trade

Secrets Act, Md. Code, Com. Law §§ 11-1201 et seq. (“MUTSA”).
(ECF No. 1).

On July 13, 2011, Defendants filed an answer to

the complaint, and Aversion asserted a counterclaim against CTech

seeking

its

“reasonable

costs

of

litigation,”

including

“its attorney’s fees, costs, expert witness fees, and expenses.”
(ECF No. 5).
3

Following

the

entry

of

a

scheduling

order,

the

parties

engaged in discovery and agreed to the entry of a stipulated
protective order on October 25, 2011.
close

of

discovery

on

January

18,

(ECF No. 20).
2012,

After the

Defendants

filed

a

motion to dismiss and for summary judgment on January 24, 2012.
(ECF No. 26).
On March 5, 2012 — the court-extended deadline for C-Tech’s
opposition to Defendants’ motion — C-Tech filed a motion for
voluntary dismissal of its complaint with prejudice, citing the
poor health of its principal, “among other things.”
28).

(ECF No.

On March 22, 2012, Defendants filed a response to the

motion for voluntary dismissal in which (1) Aversion moved for
partial

summary

judgment

on

its

counterclaim,

seeking

a

determination of C-Tech’s liability for its litigation costs and
attorneys’

fees

and

(2)

both

Defendants

requested

fees pursuant to the Lanham Act and the MUTSA.
C-Tech

filed

summary

an

judgment

opposition
and

to

to

Aversion’s

Defendants’

(ECF No. 30).3

motion

request

attorneys’

for

for

partial

statutory

attorneys’ fees (ECF No. 31), and Defendants filed a reply (ECF
No. 32).

3

Defendants note their intent to file documentation to
support
the
reasonableness
of
their
attorneys’
fees
in
accordance with Local Rule 109 if C-Tech is held liable for such
fees. (See ECF No. 30, at 5).
4

II.

Motion for Voluntary Dismissal
C-Tech moves for voluntary dismissal of its claims pursuant

to Rule 41(a)(2) of the Federal Rules of Civil Procedure, which
allows for dismissal by court order after the opposing party has
served

either

without

the

an

answer

consent

or

of

motion

all

for

summary

parties

who

judgment

and

appeared.4

have

Typically, the decision to grant or deny a voluntary dismissal
under Rule 41(a)(2) is a matter of discretion to be guided by
certain factors, including the potential prejudice to the nonmoving party.

Howard v. Inova Health Care Servs., 302 F. App’x

166, 178-79 (4th Cir. 2008).
Where,

as

here,

a

plaintiff’s

Rule

41(a)(2)

motion

“specifically request[s] dismissal with prejudice, it has been
held

that

Charles

A.

the

district

Wright

(emphases added).

&

court

Arthur

must

R.

grant

Miller

§

that
2367

request.”
(3d

ed.

9

2008)

Indeed, that C-Tech seeks “dismissal with

prejudice is of paramount importance,” F.D.I.C. v. Becker, 166
F.R.D. 14, 15 (D.Md. 1996), because a voluntary dismissal with
prejudice

under

Rule

41(a)(2)

operates

as

adjudication on the merits of the dismissed claim,”

4

“a

complete

Harrison v.

By contrast, Rule 41(a)(1) allows a plaintiff to dismiss
an action voluntarily without a court order by filing either
(1) a notice of dismissal, so long as the opposing party has not
filed an answer or motion for summary judgment, or (2) a
stipulation of dismissal signed by all parties who have appeared
in the case.
5

Edison Bros. Apparel Stores Inc., 924 F.2d 530, 534 (4th Cir.
1991).

Absent a specific order by the court, dismissal with

prejudice “is subject to the usual rules of res judicata.”

9

Wright & Miller § 2367; see also McLean v. United States, 566
F.3d 391, 407 (4th Cir. 2009) (“A dismissal with prejudice is a
complete adjudication of the issues presented by the pleadings
and

is

a

bar

to

a

further

action

(internal quotation marks omitted).
plaintiff

may

not

appeal

the

between

the

parties.”)

Moreover, “[n]ormally, a

dismissal

of

his

prejudice, which is granted on his own motion.”

suit

with

Distaff, Inc.

v. Springfield Contracting Corp., 984 F.2d 108, 110 (4th Cir.
1993) (citing United States v. Proctor & Gamble Co., 356 U.S.
677, 680 (1958)).
Given that dismissal with prejudice of C-Tech’s complaint
insulates Defendants from further litigation arising out of the
dismissed claims, any injustice that Defendants might otherwise
suffer “is significantly lessened.”

Becker, 166 F.R.D. at 15.

Indeed, although they question the “eleventh hour” timing of CTech’s voluntary dismissal and refused to sign a stipulation of
voluntary dismissal at C-Tech’s request, Defendants agree that
dismissal

with

prejudice

is

“probably

the

most

appropriate

course of action here,” notwithstanding the pendency of their
motion to dismiss and for summary judgment on C-Tech’s claims.
(ECF No. 30, at 4).
6

Because

district

courts

ordinarily

“must”

grant

a

plaintiff’s request for voluntary dismissal with prejudice and
because Defendants here have not offered any argument that such
a dismissal would prejudice their rights, C-Tech’s Rule 41(a)(2)
motion will be granted.
The question remains, however, as to whether any conditions
should be attached to the dismissal of the complaint.

Rule

41(a)(2) affords discretion to order dismissal “upon such terms
and

conditions

41(a)(2).

as

the

court

Defendants

condition:

deems

proper.”

explicitly

request

Fed.R.Civ.P.
only

one

such

that C-Tech, a foreign corporation without any known

presence in the United States, be ordered to furnish a bond or
some

other

assurance

that

Plaintiff

entered in Defendants’ favor.

will

pay

any

judgment

(ECF No. 30, at 4 n.3).

Because

C-Tech will not be held liable for any of Defendants’ attorneys’
fees and because C-Tech does not dispute its obligation to pay
Aversion’s

reasonable

litigation

costs

(excluding

attorneys’

fees), Defendants’ request for a bond will be denied.
As

explained

attorneys’
Although

fees
not

Defendants’

below

in

pursuant
framed

statutory

as

Section

to
a

the

IV,

Lanham

request

entitlement

Defendants

to

Act

under

and

also
the

Rule

attorneys’

fees

seek

MUTSA.

41(a)(2),
will

be

analyzed under Rule 41(a)(2) because that is the only means by
which such fees could be awarded at this stage.
7

For the reasons

set forth in Section IV, Defendants’ request will be denied and
the dismissal of C-Tech’s complaint will not be conditioned on
an award of attorneys’ fees.
III. Aversion’s Motion for Partial Summary Judgment on Its
Contractual Counterclaim for Attorneys’ Fees
In

its

motion

contractual

for

counterclaim

determination

of

partial
(ECF

C-Tech’s

summary

No.

judgment

30),

liability

Aversion

for

its

on

its

seeks

a

reasonable

litigation costs, including attorneys’ fees.5
As

the

parties

acknowledge,

Maryland

law

governs

the

resolution of this dispute pursuant to Paragraph 4.16 of the
Agreement.
common

law

(See ECF No. 1-1, at 6).
“American

Rule,”

which

Maryland follows the

states

that,

generally,

a

prevailing party is not awarded attorneys’ fees “unless (1) the
parties

to

a

contract

have

an

agreement

to

that

effect,

(2) there is a statute that allows the imposition of such fees,
(3) the wrongful conduct of a defendant forces a plaintiff into

5

Although Defendants’ opening and reply briefs refer to the
counterclaim as being “theirs” (e.g., ECF No. 30, at 1; ECF No.
32, at 1), Aversion alone asserts the contractual counterclaim
(ECF No. 5, at 10), likely because Mr. Tutini was not a party to
the Agreement.
Accordingly, the motion for partial summary
judgment on the counterclaim likewise will be construed as being
brought
by
Aversion
alone.
Additionally,
because
the
counterclaim is titled “Breach of Contract,” Defendants’
statutory arguments will not be considered in ruling on
Aversion’s motion for partial summary judgment but instead will
be construed as constituting a separate request for attorneys’
fees by both Defendants that will be addressed in Section IV.
8

litigation with a third party, or (4) a plaintiff is forced to
defend against a malicious prosecution.”

Nova Research, Inc. v.

Penske Truck Leasing Co., 405 Md. 435, 445 (2008) (internal
quotation marks and citation omitted).
Aversion
superseded

contends

in

this

that

case

the

based

American
on

Rule

Paragraph

has

4.17

of

been
the

Agreement, which provides that “[i]n the event that litigation
is instituted to enforce any provision of this Agreement, the
prevailing party in such action shall be entitled to recover its
reasonable costs of such litigation.”
Aversion

argues

that

the

phrase

(ECF No. 1-1, at 6).

“reasonable

costs

of

litigation” encompasses its reasonable attorneys’ fees.
No. 30, at 4-6; ECF No. 32, at 3-5).

such
(ECF

Although C-Tech concedes

that Paragraph 4.17 justifies an order awarding Aversion its
“reasonable costs of [] litigation,” Plaintiff maintains that
such costs do not include attorneys’ fees.
23).6

(ECF No. 31, at 21-

As set forth below, C-Tech has the better argument.
In order to award attorneys’ fees based on a contractual

provision, the contract between the parties must “specifically

6

C-Tech does not dispute that Aversion is a “prevailing
party” within the meaning of Paragraph 4.17.
In fact, C-Tech
affirmatively concedes that point at numerous points in its
brief.
(See, e.g., ECF No. 31, at 19, 20).
In light of this
concession, it is not necessary to decide whether granting a CTech’s unopposed Rule 41(a)(2) motion for voluntary dismissal
with prejudice renders Aversion a “prevailing party” under
Maryland law.
9

authorize” recovery of such fees.

Thomas v. Capital Med. Mgt.

Assocs., LLC, 189 Md.App. 439, 468 (2009) (citing Maxima Corp.
v.

6933

Arlington

(1994)).

Dev.

Ltd.

P’ship,

100

Md.App.

441,

452

Under the objective theory of contract interpretation,

which applies in Maryland, a court must “give effect to the
plain

meaning

specific

provision

contract.”
(2011).

of

an
in

unambiguous
light

of

term,
the

and

will

language

of

evaluate
the

a

entire

Weichert Co. of Md., Inc. v. Faust, 419 Md. 306, 324
Contract terms must be construed according to their

“customary, ordinary and accepted meaning,” regardless of the
parties’ intentions at the time the contract was formed.
Research,

405

Md.

at

448.

Therefore,

when

Nova

interpreting

a

contract, the court’s task is to “determine from the language of
the agreement itself what a reasonable person in the position of
the parties would have meant at the time it was effectuated.”
Calomiris v. Woods, 353 Md. 425, 436 (1999) (internal quotation
marks omitted); see also Capital Select Realtors, LLC v. NRT
Mid-Atl.,
theory

LLC,

of

197

contract

Md.App.

698,

711

interpretation]

(2011)

encourages

(“The

[objective

parties

to

use

language as precisely as possible, so as to forestall costly
inquiries into their subjective intentions.”).
Absent

a

finding

of

ambiguity,

parol

evidence

parties’ intent or meaning should not be considered.

of

the

Beale v.

Am. Nat’l Lawyers Ins. Reciprocal, 379 Md. 643, 660 (2004); see
10

also Higgins v. Barnes, 310 Md. 532, 537 (1987) (“[E]vidence is
inadmissible to vary, alter, or contradict a contract that is
complete

and

unambiguous.”).

“Ambiguity

arises

if,

to

a

reasonable person, the language used is susceptible of more than
one meaning or is of doubtful meaning.”

Anderson Adventures,

LLC v. Sam & Murphy, Inc., 176 Md.App. 164, 178 (2007) (internal
quotation marks and citation omitted).

“[I]t is well-settled

that a contract is not ambiguous merely because of a controversy
concerning

the

proper

interpretation

of

its

terms.”

B

&

P

Enters. v. Overland Equip. Co., 133 Md.App. 583, 605 (2000)
(citing Lerner Corp. v. Three Winthrop Props., Inc., 124 Md.App.
679, 685 (1999)).
In this case, the term that must be construed — “reasonable
costs

of

Dictionary

such

litigation”

defines

—

is

“litigation

not
costs”

ambiguous.
as

“[t]he

Black’s

Law

expenses

of

litigation, prosecution, or other legal transaction, esp. those
allowed in favor of one party against the other” and further
notes that “[s]ome but not all states allow parties to claim
attorney’s fees as a litigation cost.”
(9th ed. 2009).

Black’s Law Dictionary

Maryland decidedly is not one of those states.

For more than a century, “[i]t [has been] well settled in this
state that the costs of a suit do not, apart from statutory
direction, include the counsel fees of the successful party,”
and that attorneys’ fees are “not part of the costs of the suit,
11

in the ordinary sense.”
A.

63,

63

(Md.

Singer v. Fid. & Deposit Co. of Md., 54

1903).

Thus,

in

Maryland,

the

customary,

ordinary and accepted meaning of the term “reasonable costs of
such

litigation”

does

not

include

attorneys’

fees.

Because

Paragraph 4.17 is unambiguous, there is no need to consider
parol evidence of the parties’ intent.7
The

Maryland

cases

cited

by

Aversion

to

support

its

argument that the term “reasonable costs of such litigation”
unambiguously includes attorneys’ fees are not apposite.

In

Brady v. Dilley, the court held that attorneys’ fees incurred by
a trustee in connection with the sale of a trust property were
allowable under a term in the deed of trust permitting recovery
of

“just

and

reasonable

expenses,

costs,

charges

commissions” attendant to the trust’s administration.
570, 582 (1867).

and

27 Md.

Brady is irrelevant to the construction of the

Agreement here for two reasons.

First, the deed of trust in

Brady mentioned “costs” without any reference to “litigation,”
distinguishing it from the use of “costs” in Paragraph 4.17.

7

Even if the term “reasonable costs of such litigation”
were ambiguous, Maryland law would require Paragraph 4.17 to be
construed against Aversion because Mr. Tutini, as the undisputed
drafter of the Agreement, could have made the language of the
provision clearer by explicitly referencing “attorneys’ fees.”
See King v. Bankerd, 303 Md. 98, 106 (1985) (“[A]mbiguities in
an instrument are resolved against the party who made it or
caused it to be made, because that party had the better
opportunity to understand and explain his meaning.”).
12

See id.

Second, the deed of trust included broader language by

also referring to the availability of “expenses,” “charges,” and
“commissions,” and the court’s holding did not make clear which
particular term or combination of terms it relied on to uphold
the award of attorneys’ fees.
Also
Maryland

unavailing
Court

of

Id.

is

Aversion’s

Appeals

cases

reliance

addressing

on
the

the

trio

of

recovery

of

attorneys’ fees in the context of indemnity agreements:

Jones

v. Calvin B. Taylor Banking Co., 253 Md. 430 (1969), Atlantic
Contracting & Material Co., Inc. v. Ulico Casualty Co., 380 Md.
285 (2004), and Nova Research, Inc. v. Penske Truck Leasing Co.,
405 Md. 435 (2008).
In

Jones,

a

mobile-home

manufacturer

entered

into

a

financing agreement with a bank, pursuant to which the bank
accepted assignment of the manufacturer’s accounts receivables
and the responsibility for paying its suppliers.
431-32.

253 Md. at

In exchange, the manufacturer’s officers executed a

note guaranteeing the bank against any loss resulting from the
arrangement.

Id.

After the manufacturer was adjudged bankrupt,

the bankruptcy trustee obtained a judgment against the bank to
recover amounts it received pursuant to the agreement.
436.
its

Id. at

The bank then sued the manufacturer’s officers to recover
losses,

including

bankruptcy proceedings.

the

attorneys’

Id. at 437.
13

fees

incurred

in

the

The Maryland Court of

Appeals upheld the lower court’s award of attorneys’ fees based
on

the

“general

rule

[that],

unless

the

indemnity

contract

provides otherwise, an indemnitee is entitled to recover, as
part of the damages, reasonable attorneys’ fees.”

Id. at 411.

Importantly, the Jones court did not construe any contractual
language to reach its holding; instead, the court created a new
exception

to

the

provision

based

on

American

Rule

principles

by

of

implying

a

fee-shifting

indemnification.

See

Nova

Research, 405 Md. at 446 (explaining that the “implied indemnity
exception” to the American Rule originated in Jones).

Because

neither party contends that the Agreement between C-Tech and
Aversion is one for indemnity, Jones is irrelevant to Aversion’s
contractual counterclaim for attorneys’ fees.
Nor

can

Contracting.
involve

the

subcontractor

Aversion’s

position

be

supported

by

Atlantic

In contrast to Jones, Atlantic Contracting did
construction
promised

to

of

contractual

indemnify

its

language.
surety

There,
against

a

all

“loss,” defined as:
Any and all damages, costs, charges, and
expenses of any kind, sustained or incurred
by [the surety] in connection with or as a
result of: (1) the furnishing of any Bonds;
and
(2)
the
enforcement
of
this
[indemnification] Agreement.
Atlantic

Contracting,

380

Md.

at

302.

Pursuant

to

this

definition, the surety sued the subcontractor to recover amounts

14

paid pursuant to the bond, as well as attorneys’ fees incurred
in suing to enforce the agreement.

Id. at 296.

The Court of

Appeals held that “under the terms of the indemnity agreement,”
the subcontractor was “obligated by contract” to pay the surety
for

“the

sums

it

incurred

to

enforce

the

agreement,

included its attorneys’ fees, costs, and expenses.”

which

Id. at 316.

This holding has no relevance here because the definition of
“loss” at issue in Atlantic Contracting is distinguishable from
the language of Paragraph 4.17 in two critical ways.
although

the

included

a

“charges,”
Agreement.

definition
number

and

of

of

“loss”

“expenses”

–

that

“costs,”

terms

additional

included

e.g.,

are

–

not

First,
it

also

“damages,”

mentioned

in

the

Second, each of the aforementioned terms was also

modified by the phrase “any and all,” id. at 302, making the
definition of “loss” much broader than the language used by the
parties in Paragraph 4.17.
Finally,
misplaced.

Aversion’s

reliance

on

Nova

Research

also

is

Nova Research addressed whether an indemnitee can

recover first-party attorneys’ fees (i.e., those fees incurred
to

enforce

the

terms
not

of

the

include

indemnity

agreement

does

an

recovery.

See 405 Md. at 444-58.

express

agreement)
provision

where

the

for

such

The Court of Appeals first

noted that the implied indemnity exception to the American Rule
established in Jones applies only to the recovery of attorneys’
15

fees incurred in defending against third-party actions and “does
not

accurately

settle

the

matter”

for

first-party

attorneys’

fees, which is “a question to be answered by interpretation of
the

contract.”

omitted).

Id.

at

447,

449

(internal

quotation

marks

The agreement at issue in Nova Research required the

customer

of

a

harmless

[the

rental

truck

company]

.

.

company
.

to

from

“indemnify,

and

against

and
all

hold
loss,

liability and expense caused or arising out of [the customer’s]
failure to comply with the terms of this Agreement.”
450.

Id. at

The court held that this did not constitute the type of

“express fee shifting provision” that is required in the firstparty context.

Id. at 451.

Significantly
Aversion

notes,

here,

observe

the
that

Nova
the

Research

implied

court

indemnity

did,

as

exception

established by Jones “aligns us with those states that do not
strictly require the phrase ‘attorneys’ fees’ in a contract to
override the American Rule,” but then declined to extend this
principle beyond the implied-indemnity exception for third-party
attorneys’ fees because, otherwise, “the exception would swallow
the rule.”

Id. at 452.

The court explained that its holding

“comports with the generally accepted rule, requiring that a
contract

provision

[enforcing

the

must

terms

of

call
the

for

fee

agreement

recovery
itself]

overcome the application of the American rule.”
16

expressly
in

order

for
to

Id. at 453.

Hence, Nova Research does not, as Aversion contends, support
that

the

term

“reasonable

costs

of

unambiguously includes attorneys’ fees.
confirms

that

“majority

Maryland
courts”

of

follows
that

the

such

litigation”

Rather, Nova Research
approach

“contractual

adopted

by

attorney’s

a

fees

provisions must be strictly construed to avoid inferring duties
that the parties did not intend to create.”

Id. at 455, 458

(internal quotation marks and citation omitted); cf. Talley v.
Talley,

317

Md.

428,

438-39

(1989)

(“The

power

to

award

attorney’s fees, being contrary to the established practice in
this

country,

may

be

expressly

conferred

but

will

not

be

presumed from general language.”).
Aversion also mistakenly contends that, if Paragraph 4.17
is not interpreted to encompass attorneys’ fees, the provision
would be rendered meaningless because a “prevailing party” is
already entitled to its costs in both federal court, pursuant to
Federal Rule of Civil Procedure 54(d) and 28 U.S.C. § 1920, and
state court, pursuant to Maryland Rules 2-603(a) and 3-603(a).
(ECF No. 30, at 5).

Maryland does subscribe to the “general

rule” that courts must “avoid interpreting contracts in a way
that renders its provisions superfluous.”
442.

Contrary

to

Aversion’s

argument,

Calomiris, 353 Md. at
however,

construing

Paragraph 4.17 to exclude attorneys’ fees does not render the
provision

merely

duplicative

of
17

existing

law.

Indeed,

the

contractual

clause

is

distinguishable

from

the

statutes

and

regulations cited by Aversion in two respects.
First, the taxable costs available to a prevailing civil
litigant pursuant to statute and rule typically are limited.
See, e.g., Taniguchi v. Kan Pac. Saipan, Ltd., --- U.S. ---, 132
S.Ct.

1997,

2006

(2012)

(reaffirming

the

“narrow

scope

of

taxable costs” available under 28 U.S.C. § 1920, the text of
which is limited to “relatively minor, incidental expenses”).
For example, in Taniguchi, the United States Supreme Court held
that

the

reference

in

28

U.S.C.

§

1920

to

“compensation

of

interpreters” does not permit a prevailing party to recover the
costs associated with document translation because “the ordinary
meaning of ‘interpreter’ is someone who translates orally from
one language to another.”
restrictions

on

the

Id. at 2007.

“reasonable

costs

There are no comparable
of

.

.

.

litigation”

available pursuant to the Agreement, such that Aversion may be
entitled to an award of certain litigation costs that would not
be taxable under Rule 54(d).

Indeed, if Paragraph 4.17 were

interpreted to be limited to those costs available pursuant to
statute or rule, the provision would be rendered superfluous.
See,

e.g.,

Best

Buy

Stores

v.

Developers

Diversified

Realty

Corp., No. 05–2310, 2011 WL 1321391, at *10-11 (D.Minn. Feb. 1,
2011)

(agreeing

that

a

contract

clause

providing

for

the

recovery of “legal costs” does not include attorneys’ fees but
18

also

holding

that

the

clause

is

not

limited

to

those

costs

available under 28 U.S.C. § 1920 because a contrary construction
would render the provision surplusage).
Second, because Paragraph 4.17 mandates that the prevailing
party “shall be entitled to recover its reasonable costs of such
litigation,” the provision also eliminates the discretion that a
court typically has to deny an award of costs to a prevailing
litigant.

For example, in Maryland, “allowance of . . . costs

[pursuant to Md. Rule 2-603] is within the discretion of the
Court.”

Bahena

v.

Foster,

164

Md.App.

275,

286

(2005).

Likewise, “the federal courts are free to pursue a case-by-case
approach [to award costs pursuant to Rule 54(d)] and to make
their decisions on the basis of the circumstances and equities
of each case.”

9 Wright & Miller § 2367.

By contrast, the use

of “shall” makes an award of costs to a prevailing party under
the Agreement non-discretionary.

Therefore, it cannot be said

that

to

construing

renders

the

Paragraph

provision

4.17

duplicative

exclude

of

the

attorneys’

statutes

and

fees
rules

cited by Aversion.
In sum, although Paragraph 4.17 entitles Aversion to its
“reasonable

costs

include

its

partial

summary

of

attorneys’

[this]

litigation,”

fees.

judgment

on

To

that

Aversion’s

granted in part and denied in part.
19

such
end,

costs
the

do

not

motion

for

counterclaim

will

be

Because the costs to which

Aversion is entitled to recover from C-Tech may extend beyond
those

normally

recoverable

and

taxable

by

the

clerk,

the

petition shall be submitted to the undersigned, and not to the
clerk.

Nevertheless, as set forth in the accompanying order,

Aversion will be directed to submit documentation as required by
Local Rule 109 within fourteen (14) days.
IV.

Defendants’ Request for Attorneys’ Fees
Aversion and Mr. Tutini also request their attorneys’ fees

pursuant to two statutes:

(1) the fee-shifting provision of the

MUTSA; and (2) Section 35(a) of the Lanham Act.
6-9).8

Defendants

did

not

specifically

(ECF No. 30, at

plead

a

claim

for

attorneys’ fees under either of these statutes in their answer,
and – as previously noted – the counterclaim filed by Aversion
asserted only a contractual right to attorneys’ fees.

(See ECF

No. 5).

Accordingly, such claims are barred pursuant to Fourth

Circuit

precedent

holding

that

8

attorneys’

fees

constitute

In their reply brief, Defendants also argue that C-Tech
has admitted to asserting “doomed claims” knowingly, such that
an award of attorneys’ fees is warranted as a sanction pursuant
to either Rule 11 of the Federal Rules of Civil Procedure or 28
U.S.C. § 1927. (ECF No. 32, at 3).
Defendants failed to raise
this argument in their opening brief, and it will not be
addressed here pursuant to the general rule in federal courts
that an argument raised for the first time in a reply brief will
not be considered.
Clawson v. FedEx Ground Package Sys., 451
F.Supp.2d 731, 734 (D.Md. 2006); see also United States v.
Williams, 445 F.3d 724, 736 n.6 (4th Cir. 2006).
Furthermore,
Rule 11 has its own procedural requirements, none of which have
been met here.
20

“special damages” that must be specifically pled pursuant to
Rule

9(g)

of

the

Federal

Rules

of

Civil

Procedure.

Atl.

Purchasers, Inc. v. Aircraft Sales, Inc., 705 F.2d 712, 716 n.4
(4th

Cir.

1983)

(noting

that

“attorneys’

fees

are

items

of

special damage for Rule 9(g) purposes”); see also Belk, Inc. v.
Meyer

Corp.,

U.S.,

No.

07-cv-168,

2010

WL

3474918,

at

*7

(W.D.N.C. Aug. 31, 2010) (adhering to Atlantic Purchasers as
“binding precedent” that barred a prevailing defendant’s claim
for attorneys’ fees under the Lanham Act where the defendant
filed a motion for attorneys’ fees under Rule 54(d) but had not
specifically

plead

its

statutory

right

to

such

do

fees

not

in

its

responsive pleadings).
Nonetheless,
request

although

attorneys’

fees

as

Defendants
a

condition

of

specifically

dismissal,

Rule

41(a)(2) allows for dismissal of C-Tech’s claims “on terms that
the court considers proper.”
where

a

prejudice,

motion
an

for

award

F.R.C.P. 41(a)(2).

voluntary
of

dismissal

attorneys’

fees

is
is

Ordinarily,
granted

not

with

appropriate

because there is no risk that the defendant can “be called upon
again

to

expense.”

defend”

and

thus

no

risk

of

“any

duplication

of

Lawrence v. Fuld, 32 F.R.D. 329, 331 (D.Md. 1963).

Courts have recognized two exceptions to this general principle:
(1) where the case involves “exceptional circumstances” and (2)
where

“there

is

independent

statutory
21

authority

for

such

an

award.”

9 Wright & Miller § 2366 (internal quotation marks and

citations omitted).

Because the fee-shifting provisions cited

by Defendants fall into this latter category, the merits of
Defendants’

statutory

requests

for

attorneys’

fees

will

be

addressed.

Cf. Belk, 2010 WL 3474918, at *7 (considering the

merits of a prevailing defendant’s claim for attorneys’ fees
under the Lanham Act based on Rule 54(c), which requires final
judgments – other than default judgments – to “grant the relief
to which each party is entitled, even if the party has not
demanded that relief in its pleadings”).

For the reasons set

forth below, an award of attorneys’ fees is not warranted under
either statute.
A.

Maryland Trade Secrets Act

First, Defendants insist that, as the prevailing parties in
this litigation, they are entitled to an award of attorneys’
fees under the MUTSA because C-Tech brought its trade secrets
claim in bad faith.9

Because Defendants have not met their

burden to offer clear evidence of bad faith, there is no basis
for such an award.

9

Here again, C-Tech does not question that Defendants are
“prevailing part[ies]” within the meaning of the MUTSA’s
attorneys’ fees provision. (See ECF No. 30, at 24-25). Because
Defendants
have
not
shown
that
C-Tech
brought
its
misappropriation claim in “bad faith” as required by the MUTSA,
the issue of whether Defendants are “prevailing” within the
meaning of the statute need not be reached.
22

The

MUTSA

bestows

courts

with

discretion

to

award

attorneys’ fees to a prevailing defendant where “[a] claim of
misappropriation is made in bad faith.”
§ 11-1204.

Md. Code, Com. Law

A prevailing defendant must offer “clear evidence

that the action [was] entirely without color and taken for other
improper

purposes

amounting

to

bad

faith,”

meaning

that

the

plaintiff prosecuted the action “vexatiously, wantonly, or for
oppressive reasons.”

Optic Graphics, Inc. v. Agee, 87 Md.App.

770, 789 (1991), cert. denied, 324 Md. 658 (1991).
Materials

Processing,

Inc.

v.

Kateleuna

GMBH

In Contract

Catalysts,

the

court predicted that the Maryland Court of Appeals would join
other jurisdictions in holding that “bad faith” exists where the
plaintiff (1)

brings an “objective[ly] specious[]” claim; and

(2)

in

engages

“subjective

maintaining” the claim.
(adopting

the

misconduct

in

bringing

or

222 F.Supp.2d 733, 744-45 (D.Md. 2002)

two-pronged

test

used

by

courts

interpreting

statutes that, like the MUTSA, are based on the Uniform Trade
Secrets Act).
Defendants posit that this action is factually similar to
Contract Materials, where a prevailing MUTSA defendant received
an award of attorneys’ fees.

Specifically, Defendants contend

that, as in Contract Materials, the evidence offered by C-Tech
“fall[s]

short

of

misappropriation

of

making
trade

even

secrets,”
23

a

prima

facie

indicating

the

case

of

objective

speciousness

of

its

MUTSA

claim.

(ECF

No.

32,

at

8).

Defendants also contend that C-Tech has engaged in subjective
misconduct by:

(1) continuing to pursue this action despite its

knowledge of Defendants’ judgment-proof status in an effort to
“put

[Defendants]

(2) demanding
exchange

out

that

for

of

business”

Defendants

dismissing

exit

the

(ECF

the

action

No.

chemical

(ECF

No.

30,

at

business
32,

at

7);
in
9);

(3) continuing to repeat allegations that it “knows it cannot
prove”

(id.);

and

(4) violating

the

protective

order

by

attaching a document marked “Highly Confidential” as an exhibit
to its opposition (id. at 9-10).
Despite

Defendants’

efforts

to

analogize

to

Contract

Materials, this case is factually distinguishable in a number of
critical

respects.

First,

unlike

the

plaintiff

in

Contract

Materials whose claim was deemed to be “utter[ly] lack[ing] [in]
substantive legal merit” from the outset, 222 F.Supp.2d at 746,
C-Tech offers some evidence in support of a prima facie claim of
misappropriation of trade secrets.

To prevail on such a claim,

Plaintiff

would

to

technology

in

ultimately
question

need

qualifies

as

show
a

that:
trade

(2) Defendants misappropriated the technology.

(1)

the

secret

and

See Diamond v.

T. Rowe Price Assocs., Inc., 852 F.Supp. 372, 412 (D.Md. 1994).
Information qualifies as a trade secret where it “(1) hold[s]
independent economic value because it is not generally known to
24

or

readily

ascertainable

by

others

who

stand

if

or

disclose

it,

and

economically

they

use

to

(2)

benefit
[is]

subject of reasonable efforts to maintain its secrecy.”
Graphics,

87

Md.App.

at

787.

“In

order

to

the

Optic

qualify

as

misappropriation under MUTSA, one must either acquire the trade
secret by improper means or disclose the trade secret without
express or implied consent.”
With

respect

to

Diamond, 852 F.Supp. at 412.

the

first

element,

C-Tech’s

principal

averred in a declaration that C-Tech shared certain proprietary
information

with

composition

of

Aversion,

Rodrepel®

including

that

the

allegedly

distinguishes

it

unique

from

denatonium benzoate-based rodent repellants on the market.
No. 31-1, Joshi Decl. ¶ 10).

other
(ECF

Such information might qualify as

a trade secret under Maryland law given that C-Tech appears to
have taken steps to maintain its secrecy via the confidentiality
provisions

of

the

parties’

Agreement.10

See,

e.g.,

Bond

v.

PolyCycle, Inc., 127 Md.App. 365, 375-76 (1999) (although other
companies used similar approaches to breaking down plastic, the
subject technology could be deemed a “trade secret” where the

10

Read together, Paragraphs 2.5 and 2.6 of the Agreement
prohibit Aversion from “us[ing] . . . any . . . information
[identified as proprietary or which, from the circumstances, in
good faith and good conscience, ought to be treated as
confidential]” during the term of the Agreement or “at any time
subsequent thereto.” (ECF No. 1-1 ¶¶ 2.5 & 2.6).
25

defendant’s knowledge of its formula stemmed from his experience
at the company rather than a general study of the marketplace).
In support of the second element of a MUTSA claim, C-Tech
offers evidence showing that Aversion sold a product that is
highly similar to Rodrepel®, including pages from the web site
of Aversion containing language that is obviously similar to CTech’s marketing materials for Rodrepel®.
12 with ECF No. 31-13).

(Compare ECF No. 31-

Such evidence gives rise to an arguably

plausible inference that Aversion, without the consent of CTech,

used

confidential

information

about

the

composition

of

Rodrepel® to sell a competing product, which could constitute a
violation of the MUTSA.

See, e.g., PolyCycle, 127 Md.App. at

379

former

(explaining

confidential

that

a

information

agent’s

acquired

during

unauthorized
the

use
of

course

of
the

agency relationship can constitute “misappropriation”).
The rebuttal evidence offered by Defendants in their motion
to dismiss or for summary judgment indicates that C-Tech likely
would not have been able to prevail on its MUTSA claim had it
filed an opposition to that motion. (See ECF No. 26).
the

current

record,

however,

it

cannot

be

said

Based on

that

“alleged” an MUTSA claim “in objective speciousness.”

C-Tech

Contract

Materials, 222 F.Supp.2d at 747.
Nor

does

the

record

support

a

conclusion

that

C-Tech

engaged in “subjective misconduct” by “maintaining” its MUTSA
26

claim

until

this

point.

In

Contract

Materials,

the

losing

plaintiff “continued to pursue” its meritless MUTSA claim after
losing on summary judgment and “in reckless disregard of [its]
speciousness,” as established by the prior ruling of the court.
Id.

at

745.

Here,

to

dismiss

decision”

by

contrast,

its

claims

C-Tech

made

voluntarily

a

“business

before

opposing

Defendants’ motion and before the issuance of any evidentiary
findings.

Because

determination
procedural

there

that

the

posture

has

been

MUTSA

of

claim

Contract

inapposite to the facts here.

no

comparable
lacks

evidentiary
merit,

the

renders

Materials

any

that

case

See also JLM Formation, Inc. v.

Form%8FPac, No. 04–1774, 2004 WL 1858132, at *2 (N.D.Cal. Aug.
19,

2004)

(explaining

that

where

a

plaintiff

voluntarily

dismisses its case prior to summary judgment or trial, it is
difficult to contend that it “maintained” or “prosecuted” its
trade secret claim so as to sustain a finding of “bad faith”).
What is more, the type of litigation misconduct held to
warrant an award of attorneys’ fees in Contract Materials is not
present

here.

established
discovery

There,

that

the

abuses,

the

plaintiff

including

requests

and

filing

Contract

Materials,

concrete

action

numerous
222

that

clear

by

and

had

convincing

committed

serving

F.Supp.2d

Defendants
27

at

motions

748.

point

“promiscuous”

overbroad

unsuccessful

to

discovery
to

Here,
as

evidence

compel.

the

evidence

only
of

“subjective

misconduct”

protective

order

by

is

C-Tech’s

attaching

a

Confidential” to its opposition.
document

in

question

is

an

alleged

violation

document

marked

of

the

“Highly

(ECF No. 32, at 9-10).

email

inquiry

from

an

The

Aversion

customer to Mr. Tutini asking for advice about how to combine
denatonium
birds.

benzoate

and

capsaicin

(See ECF No. 31-16).

oil

to

deter

mammals

and

The customer also inquired whether

Mr. Tutini “knew anything about” C-Tech or Rodrepel® based on
the similarities between an article authored by Aversion and a
white paper drafted by C-Tech.
Tutini:
products;

(See id.).

In response, Mr.

(1) offered “guesses” about the proper ratios for the
(2) confirmed

that

the

resulting

mixture

would

stable; and (3) indicated his familiarity with Rodrepel®.
id.)

be

(See

Although the inclusion of this document without filing a

motion to seal does violate the protective order and therefore
can serve as a basis for sanctions or other appropriate relief
(see ECF No. 18 ¶ 27), Defendants’ designation of this email
exchange as “Highly Confidential” is suspect.

The stipulated

protective order allows for a “Highly Confidential” designation
where the party believes, in good faith, that the information is
“highly confidential, proprietary or trade secret information”
that requires heightened protection.

(ECF No. 18 ¶ 5).

substance

—

of

this

email

exchange

i.e.,

how

Yet the

denatonimum

benzoate can be combined with other products sold by both C-Tech
28

and Aversion effectively to deter animals — is precisely the
type of information that Defendants argue is not a trade secret
because of its availability in the public domain.
26, at 12-16).
faith

As it is not clear that Defendants had a good

basis

Confidential”

(See ECF No.

for
in

designating

the

first

the

instance,

document
C-Tech’s

as

“Highly

violation

is

readily distinguishable from the egregious discovery abuses at
issue in Contract Materials and does not warrant an award of
attorneys’ fees under the MUTSA.
Because

Defendants

have

not

met

their

burden

to

offer

“clear evidence” that C-Tech brought a trade secretes claim that
was “entirely without color,” Optic Graphics, 87 Md.App. at 789,
Defendants’ motion for an award of attorneys’ fees under the
MUTSA will be denied.
B.

Section 35(a) of the Lanham Act

Defendants’ argument that they are entitled to attorneys’
fees pursuant to the Lanham Act also fails.

Section 35(a) of

that statute provides that a court may award attorneys’ fees to
the

prevailing

§ 117(a).11

party

in

“exceptional

cases.”

15

U.S.C.

Such an award is available equally to prevailing

11

Based on C-Tech’s characterization of the Defendants as
“prevailing” and because this is not an “exceptional case,” the
issue of whether Defendants are “prevailing part[ies]” for
purposes of Section 35(a) of the Lanham Act will not be reached.
29

plaintiffs and defendants.

The Scotch Whisky Ass’n v. Majestic

Distilling Co., Inc., 958 F.2d 594, 599 (4th Cir. 1992), cert.
denied,

506

U.S.

862

(1992)

(establishing

that,

unlike

a

prevailing plaintiff, a prevailing defendant is required to show
“[s]omething less than ‘bad faith’” to prove an “exceptional
case”).12

Relevant factors

to be considered in determining

“exceptional[ism]” include whether the losing party engaged in
economic coercion, advanced groundless arguments, or failed to
cite controlling law.

Ale House Mgmt., Inc. v. Raleigh Ale

House, Inc., 205 F.3d 137, 144 (4th Cir. 2000).

In sum, the

court must “determine, in light of the entire case, whether [the
losing party’s] claims and assertions were so lacking in merit
that the action as a whole was ‘exceptional.’”

Retail Servs.,

Inc. v. Freebies Publishing, 364 F.3d 535, 551 (4th Cir. 2004).
Hence, an award of attorneys’ fees pursuant to Section 35(a)
“[is] not to be made as a matter of course, but rather as a
matter of the court’s considered discretion.”

Ale House, 205

F.3d at 144.

12

In Retail Services, Inc. v. Freebies Publishing, the
Fourth Circuit recognized that “[t]his double standard of proof
may ultimately prove infirm under Fogerty v. Fantasy, Inc., 510
U.S. 517, 522–26 (1994), which rejected a standard that
differentiated between plaintiffs and defendants for the
recovery of attorney fees in the copyright context.”
364 F.3d
th
535, 551 (4
Cir. 2004).
The court declined, however, to
“decide whether Fogerty requires us to apply a uniform standard
under 15 U.S.C.A. § 1117(a).” Id.
30

Defendants assert that the Lanham Act claim asserted by CTech is “bereft of factual and legal support” because Plaintiff
has done no more than establish that Aversion sells a product
that is similar to Rodrepel®, and the Lanham Act does not exist
to “prevent the marketing of similar products.”
10-11).

(ECF No. 32, at

C-Tech rejoins that it filed the Lanham Act claim in

good faith based on Defendants’ promotion of a product similar
to Rodrepel® that uses a “slightly revised version of C-Tech’s
website.”
suffered

(ECF No. 31, at 25).
damage

as

a

result

C-Tech also alleges that it
of

Defendants’

marketing

of

competing products, including a one-year delay in finalizing a
contract with a major distributor that had discovered Aversion’s
activities.

(Id.).

In light of C-Tech’s seemingly scant evidence and vague
arguments, it may well be that Defendants’ motion to dismiss or
for summary judgment on C-Tech’s Lanham Act claim would have
been granted had Plaintiff not opted voluntarily to dismiss its
claims with prejudice.

Yet, in the absence of such a ruling and

without C-Tech having responded in full to the substance of
Defendants’ motion, there is no basis for concluding, based on
the

present

record,

that

C-Tech’s

Lanham

Act

claim

is

lacking in merit” as to render this action “exceptional.”

“so
A

comparison of the web sites of C-Tech and Aversion reveals very
similar language, providing some support for C-Tech’s allegation
31

that Defendants’ actions “have resulted in the misappropriation
of and intrusion upon C-Tech’s goodwill and business reputation”
as

alleged

in

C-Tech’s

complaint.

(ECF

No.

1,

at

14).

Similarly, although Defendants contend that C-Tech pursued this
action to force Aversion out of business, Defendants have not
offered

any

evidence

communications

—

between

other
the

than

parties

what
in

appear

be

context

the

to

of

confidential settlement negotiations (see ECF No. 30-1) — that
clearly establishes “economic coercion” by C-Tech.
Mgmt., 305 F.3d at 144.

Ale House

Accordingly, a discretionary award of

attorneys’ fees pursuant to Section 35(a) of the Lanham Act is
not warranted.
V.

Conclusion
For

dismissal
granted;

the
with
the

foregoing

reasons,

prejudice
motion

for

filed

by

partial

the

motion

Plaintiff
summary

for

voluntary

C-Tech

judgment

will

be

filed

by

Aversion on its counterclaim will be granted in part and denied
in

part;

and

the

request

Defendants will be denied.

for

statutory

attorneys’

fees

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

32

by