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Leitner-Wise v. Koniag, Inc.

United States District Court, District of Columbia

December 13, 2018

KONIAG, INC., Defendant.


          Amit P. Mehta United States District Judge.


         Plaintiff Paul Andrew Leitner-Wise is the inventor of a patented Self-Cleaning Gas Operating System for Firearms. Over 14 years ago, Plaintiff sold a majority interest in his company, Leitner-Wise Rifle Co. (“LWRC”), to subsidiaries of Defendant Koniag, Inc. and thereafter signed an Employment Agreement with LWRC that promised to pay him royalties from the sales of products incorporating his invention. Plaintiff now brings this case alleging, among other things, that Defendant failed to pay him earned royalties and fraudulently induced him to sell his ownership shares. He alleges common law claims of breach of contract, unjust enrichment, fraudulent inducement, and conversion.

         Defendant now seeks summary judgment as to all claims, and Plaintiff prays for partial summary judgment. Defendant prevails for three independent reasons: (1) upon leaving LWRC, Plaintiff agreed to a general release of all claims against Defendant; (2) all of Plaintiff's claims are time barred; and (3) Defendant is not a party to the Employment Agreement and thus is under no obligation to pay Plaintiff royalties. In addition, the court denies Plaintiff's request for additional discovery because it comes too late and, in any event, no foreseeable discovery could cure the fatal deficiencies inherent in Plaintiff's case.


         A. Factual Background[1]

         In October 1998, Plaintiff Paul Andrew Leitner-Wise founded the Leitner-Wise Rifle Company, Inc (“LWRC”). See Pl.'s Mot. for Part. Summ. J., ECF No. 26 [hereinafter Pl.'s Mot.], Pl.'s Stmt. of Facts Not Reasonably in Dispute, ECF No. 26-1 [hereinafter Pl.'s Facts], ¶ 1; Def.'s Opp'n to Pl.'s Mot. for Summ. J., ECF No. 28 [hereinafter Def.'s Opp'n], Def.'s Stmt. of Facts in Opp'n to Pl.'s Mot., ECF No. 28-1 [hereinafter Def.'s Opp'n Facts] (not contesting fact). In 2004, Plaintiff invented a “Self-Cleaning Gas Operating System for a Firearm” (“the Invention”), and secured a United States Patent on it in 2008. See Complaint, ECF No. 1 [hereinafter Compl.], ¶ 7; Def.'s Am. Answer, ECF No. 14 [hereinafter Am. Answer], ¶ 7; see also Compl., U.S. Patent, ECF No. 1-1.

         In 2004, Plaintiff sold a majority interest in LWRC to two of Defendant Koniag, Inc.'s subsidiaries, Koniag Development Corporation and Integrated Concepts and Research Corporation. See Pl.'s Facts ¶¶ 5, 6; Def.'s Opp'n Facts (not contesting fact); see also Pl.'s Mot., Ex. F, ECF No. 26-2. The following year, on April 11, 2005, Plaintiff signed an Employment Agreement with LWRC-at the time, controlled by Defendant's subsidiaries-to serve as LWRC's Chief Technical Officer. See Pl.'s Facts ¶ 17; Def.'s Opp'n Facts (not contesting fact); see also Compl., Ex. B, ECF No. 1-2 [hereinafter Employment Agreement]. Plaintiff acknowledged in the Employment Agreement that “[a]ll right, title and interest in and to the [Invention] shall be and remain the sole and exclusive property of [LWRC].” Employment Agreement ¶ 11(a). The agreement also contained a royalty provision with respect to the Invention:

Employer hereby acknowledges that [Plaintiff] has developed certain Intellectual Property prior to the execution of this Agreement which Employer desires to exercise ownership rights including patents developed while [Plaintiff] was employed by [LWRC]. Employer will separately pay a royalty of one half of one percent (.05%) on the net sale price of each product containing a previously patented or patentable or otherwise protected device developed by [Plaintiff] . . . The royalties[] payable under this subsection shall not be due and payable until Employer's books of accounts show the existence of pre-tax profits . . . Payment of royalties under this section shall not be withheld or terminated regardless of any Termination of the [Plaintiff] for any reason.

Employment Agreement ¶ 11(f); see also Pl.'s Facts ¶ 18. The Employment Agreement also stated that “[t]his Agreement is personal to [LWRC] and to [Plaintiff] and may not be assigned by either party without the written consent of the other.” Employment Agreement ¶ 13. And it provided that “[t]his Agreement shall be interpreted and construed in accordance with the laws in Virginia.” Id. ¶ 22.

         On January 20, 2006, Defendant's subsidiaries sold their interests in LWRC to the Leitner-Wise Acquisition Group, LLC. See Def.'s Mot. for Summ. J., ECF No. 15 [hereinafter Def.'s Mot.], Def.'s Stmt. of Material Facts in Support of Def.'s Mot. for Summ. J., ECF No. 15-2 [hereinafter Def.'s Facts], ¶ 1; see also Def.'s Mot., LWAG Certificate of Incorporation, ECF No. 15-9 [hereinafter LWAG Incorporation], at KON 000276-279; see also Pl.'s Facts ¶ 27 (acknowledging “Defendant claims to have sold all of its interest to the Leitner-Wise Acquisition Group, LLC on January 20, 2006” without contesting the fact). Plaintiff, a member and manager of the Leitner-Wise Acquisition Group, signed the acquisition documents. Def.'s Facts ¶¶ 2-3; see also LWAG Incorporation at KON 000233, KON 000278; Pl.'s Opp'n to Def.'s Mot., ECF No. 23 [hereinafter Pl.'s Opp'n] (not contesting fact).

         Ten months later, Plaintiff left his employment with LWRC. Compl. ¶ 22; Def.'s Facts ¶ 7 (citing to Termination Letter); Pl.'s Opp'n (not contesting fact). On October 31, 2006, contemporaneous with his departure, Plaintiff signed a Termination Agreement “by and between [LWRC] and [Plaintiff].” See Def.'s Mot., Termination of Employment, ECF No. 15-11 [hereinafter Termination Agreement]; Pl.'s Opp'n (not contesting fact). The Termination Agreement contained a broadly worded general release provision:

In exchange for the execution of this letter agreement by [LWRC], the execution of the Equities Purchase Agreement by Ryan and other good and valuable consideration, you hereby, among other things, fully, forever, irrevocably and unconditionally release and discharge [LWRC], and any subsidiary or affiliated organization of the Company and their current or former officers, directors, stockholders, corporate affiliates, members, managers, attorneys or employees (the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, covenants, contracts, agreements, promises, omissions, damages, obligations, liabilities and expenses (including attorney's fees and costs), of every kind and nature, known or unknown, which you ever had or now have against the Released Parties, including, but not limited to, all claims arising out of your employment, all claims arising out of the Employment Agreement, all claims arising out of your separation from employment, all claims arising from any failure to re-employ you . . . all wrongful discharge claims, common law tort, defamation, breach of contract and other common law claims . . . .

Termination Agreement ¶ 1. The Termination Agreement defined the “Employment Agreement” to be the agreement containing the royalty provision. Id. ¶ (i) (defining Employment Agreement as agreement signed on April 11, 2005).[2]

         According to Plaintiff, on April 18, 2008, LWRC sold its interest in the Invention to LWRC International, LLC for five million dollars. See Compl. ¶¶ 28, 36; see also Compl., Ex. D, ECF No. 1-4. Defendant never paid Plaintiff royalties for the Invention. See Pl.'s Facts ¶ 28; Def.'s Opp'n Facts (not contesting fact).

         According to Plaintiff, at some point a copy of the 2005 Employment Agreement was taken from him, and in 2014, an immigration attorney for Plaintiff discovered the Employment Agreement and provided it to Plaintiff. See Compl. ¶¶ 24, 39.

         B. Procedural Background

         Plaintiff filed this action on September 11, 2017, pleading four causes of action against Defendant: (1) breach of contract, (2) unjust enrichment, (3) fraudulent inducement, and (4) conversion. See Compl. ¶¶ 40-67. The breach of contract and unjust enrichment claims are premised on Defendant's alleged failure to pay him royalties under the Employment Agreement. See Id. ¶¶ 40-52. The fraudulent inducement and conversion claims contend that Defendant caused Plaintiff to enter into unspecified contracts under false pretenses, namely, Defendant promised to fund LWRC through a private offering, when it never intended to do so. See Id. ¶¶ 53- 67.

         Defendant filed an initial Answer on November 15, 2017, see Answer, ECF No. 7, after which the court entered a scheduling order, which permitted discovery to commence as of December 18, 2017, see Order, ECF No. 11, at 1. The court set September 18, 2018, as the discovery deadline. See Id. Defendant filed an Amended Answer on February 6, 2018. See Am. Answer.

         Shortly thereafter, on March 2, 2018-six months before the close of discovery- Defendant moved for summary judgment as to all claims. See Def.'s Mot. Plaintiff did not, however, file a timely opposition to Defendant's motion. Instead, over three months later, on June 18, 2018, Plaintiff filed a motion seeking to “expand discovery deadlines” and “hold responses to Defendant's Motion for Summary Judgment in abeyance.” Mot. to Expand Disc., ECF No. 19 [hereinafter Mot. to Expand Disc.], at 1. Before briefing on his motion became ripe, however, Plaintiff filed his opposition to Defendant's Motion for Summary Judgment on June 27, 2018. See Pl.'s Opp'n. Then, two months later, Plaintiff moved for partial summary judgment, asking the court to find that Defendant had breached the Employment Agreement by assigning the Invention without his consent and without compensation. See generally Pl.'s Mot.

         The court now addresses all three motions: (1) Defendant's Motion for Summary Judgment, (2) Plaintiff's Motion to Expand Discovery and to Hold Defendant's Motion in Abeyance, and (3) Plaintiff's Motion for Partial Summary Judgment. The court begins by analyzing the parties' motions for summary judgment, then turns to Plaintiff's motion to extend the time for discovery and to hold in abeyance a decision on summary judgment.

         III. ...

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