Armstrong Pump, Inc. v. Hartman et al
DECISION and ORDER SETTING ASIDE, the 324 Report and Recommendation; RECOMMITTING this matter to the Magistrate Judge; GRANTING in part and DENYING in part the parties' 333 334 335 Objections. Signed by William M. Skretny, United States District Judge on 11/26/2017. (MEAL)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ARMSTRONG PUMP, INC.,
DECISION AND ORDER
THOMAS HARTMAN d/b/a THE HARTMAN
COMPANY and OPTIMUM ENERGY LLC
Presently before this Court are the parties’ objections to Magistrate Judge
Scott’s Report and Recommendation. When a party objects to a magistrate judge’s report
and recommendation, the district court makes a “de novo determination of those portions
of the report or specified proposed findings or recommendations to which objection is
made.” See 28 U.S.C. § 636(b)(1)(C). After reviewing the report and recommendation,
the district court may “accept, reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge. The judge may also receive further
evidence or recommit the matter to the magistrate judge with instructions.” Id.
In the Report and Recommendation, Judge Scott found that Section 2.1 of
the license agreement (the “ALA”), between Plaintiff Armstrong Pump, Inc. (“Armstrong”)
and Defendant Thomas Hartman, is ambiguous because it is susceptible to “two equally
possible interpretations that [the Court] cannot reconcile:
1) Armstrong can make
complete, ready-to-use HVAC solutions; or 2) Armstrong can take any action—
manufacturing, restoration, or retrofits of new, used, or hybrid HVAC equipment—that
‘practices’ the LOOP Technology.” (Docket No. 324 at 37.) He further found “the two
categories in Section 2.1 [to be] in irreconcilable conflict with each other,” and sua sponte
questioned whether Armstrong and Hartman had reached a meeting of the minds on the
terms of Section 2.1 because, if not, the ALA is not a valid and enforceable contract. (Id.
at 42.) Accordingly, he recommended that an immediate trial be held regarding the
validity and enforceability of the ALA, and that the parties’ motions for summary judgment
be dismissed without prejudice or held in abeyance until the trial is complete.
As Hartman noted in one of his submissions, this recommendation had an
“extraordinary” impact on the litigants, because—for the first time in this matter—they all
agreed on an issue. (Docket No. 340 at 1.) Plaintiff and both defendants argue that the
ALA is a valid and enforceable contract, and object to the Judge Scott’s sua sponte
challenge to its validity and recommendation for an immediate trial on an issue as to which
no party has sought summary judgment. (Docket Nos. 333, 334, 335.) Critically, both
Armstrong and Hartman—the parties to the ALA—believe that they reached a meeting of
the minds, and neither argues for the alternative construction advanced by Judge Scott,
in which he found it possible that the ALA essentially put no bounds on Armstrong’s use
of the licensed technology. 1
As Judge Scott notes in the Report and Recommendation:
“[A]t some point virtually every agreement can be said to have a degree of
indefiniteness, and if the doctrine is applied with a heavy hand it may defeat
the reasonable expectations of the parties in entering into the contract.
While there must be a manifestation of mutual assent to essential terms,
parties also should be held to their promises and courts should not be
pedantic or meticulous in interpreting contract expressions. Before
rejecting an agreement as indefinite, a court must be satisfied that the
agreement cannot be rendered reasonably certain by reference to an
extrinsic standard that makes its meaning clear. The conclusion that a
party’s promise should be ignored as meaningless is at best a last resort.”
However, Armstrong and Hartman are still unable agree on the meaning of Section 2.1, and Armstrong
simply rejected Judge Scott’s interpretation without supplying its own proposed construction.
(Docket No. 324 at 35, quoting Cobble Hill Nursing Home, Inc. v. Henry & Warren Corp.,
4 N.Y.2d 475, 483, 548 N.E.2d 203, 206 (N.Y. 1989) (internal quotation marks and
citations omitted)). Such a last resort is not necessary here.
Assuming that ALA is ambiguous, “ambiguously worded contracts should
not be interpreted to render them illegal and unenforceable where the wording lends itself
to a logically acceptable construction that renders them legal and enforceable.” N.L.R.B.
v. Local 32B-32J Serv. Emps. Int'l Union, 353 F.3d 197, 202 (2d Cir. 2003) (quoting Walsh
v. Schlecht, 429 U.S. 401, 408, 97 S. Ct. 679 (1977)). See also Venizelos S.A. v. Chase
Manhattan Bank, 425 F.2d 461, 465 (2d Cir. 1970) (“[I]f an agreement is fairly capable of
a construction that will make it valid and enforceable, that construction will be given it.”);
Eli Lilly Do Brasil, Ltda. v. Fed. Express Corp., 502 F.3d 78, 82 (2d Cir. 2007) (“[A]n
interpretation which gives a reasonable, lawful, and effective meaning to all the terms is
preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect.”)
(quoting Restatement (Second) of Contracts § 203(a)). The interpretation offered by
Judge Scott, that the ALA does not limit Armstrong’s use of the licensed technology in
any way, is inconsistent with the remainder of the agreement.
recommendation is not “consistent with the general rule of contract construction that
‘presumes the legality and enforceability of contracts.’” Eli Lilly Do Brasil, Ltda., 502 F.3d
at 82 (quoting Walsh, 429 U.S. at 408). This Court therefore finds that, even if Section
2.1 is ambiguous, the enforceability of the ALA is not at issue.
Having reviewed the Report and Recommendation de novo after
considering the objections and the parties’ submissions, see 28 U.S.C. § 636(b)(1), this
Court does not concur with the recommendation contained in the Report and
Recommendation. Accordingly, the Objections are granted to the extent that they object
to the interpretation of Section 2.1 as calling into question the parties’ mutual assent to
contract, and this finding of the Report and Recommendation is set aside. As noted in
Optimum’s Objection (Docket No. 335), there are several motions pending that are not
dependent on an interpretation of Section 2.1 of the ALA, including motions for dismissal
of claims that Armstrong has not opposed. Briefing on these matters has been extensive,
including oral argument before the Magistrate Court, and the Magistrate Judge has
greater knowledge and familiarity with the parties and issues of this matter. In the interest
of efficiency and judicial economy, this Court therefore recommits this matter to Judge
Scott to address the motions consistent with this Order. This Court also requests that
Judge Scott, if appropriate, address the factual inconsistencies and errors described in
the parties’ objections and consider whether a less restrictive protective order could be
put into place.
IT HEREBY IS ORDERED, that the Report and Recommendation (Docket No.
324) is set aside, and that this matter is recommitted to the Magistrate Judge;
FURTHER, that the parties’ objections (Docket Nos. 333, 334, 335) are GRANTED
in part and DENIED in part, consistent with this Order.
Dated: November 26, 2017
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?