United States District Court, E.D. North Carolina, Western Division
W. FLANAGAN United States District Judge
matter is before the court on defendant's motions to
compel (DE 85) and for leave to file a second amended
affirmative defenses and counterclaims (DE 101). Plaintiff
opposes the motions, both of which have been fully briefed.
In this posture the issues raised are ripe for ruling. For
the following reasons, defendant's motion to compel is
granted and its motion for leave to amend is denied as moot.
24, 2015, plaintiff commenced this action arising from an
exclusive supply agreement (“Agreement”) relating
to plaintiff's automotive diagnostic tool (the
“CPT”), and defendant's marketing of a
competing product (the “AutoEKG”). Plaintiff
asserts claims of breach of contract, trademark infringement,
inducement of trademark infringement, false advertisement,
and unfair and deceptive trade practices. On August 21, 2015,
plaintiff filed an amended complaint, adding a sixth claim
requesting the cancellation of U.S. Trademark Registration
No. 4, 771, 676, for AutoEKG. Plaintiff seeks compensatory
damages, injunctive relief, disgorgement of profits relating
to false advertising and trademark infringement, attorney
fees, pre- and post-judgment interest, statutory damages,
trebling of damages, and any other relief the court may deem
just and proper. (Id.).
September 4, 2015, defendant filed answer including 11
affirmative defenses and one counterclaim. (DE 25).
Affirmative defenses include failure to state a claim,
doctrines of payment, accord and satisfaction, laches,
estoppel, and waiver, laches, unclean hands, and statute of
limitations. (Id.). Defendant's counterclaim is
for breach of contract and alleges “multiple breaches
of the Agreement, ” specifically alleging a breach of
the workmanship warranty provision found in the Agreement.
(Id. at ¶¶ 17-22). Defendant seeks dismissal
with prejudice, judgment in favor of defendant, damages in an
amount to be determined, disgorgement, attorneys fees,
prejudgment and postjudgment interest, to tax the costs of
the action to plaintiff, and any other relief the court deems
just and appropriate. (Id.).
January 15, 2016, defendant filed a motion for leave to file
amended affirmative defenses and counterclaims, which the
court granted on March17, 2016. (DE 34, 42, 43). Defendant
added, among additional allegations, five new affirmative
defenses and six new counterclaims. (DE 43). The additional
affirmative defenses include mutual mistake, unilateral
mistake, fraudulent inducement due to misrepresentation,
fraudulent inducement due to concealment, and negligent
misrepresentation. (Id.). The counterclaims are, in
addition to a claim for unfair and deceptive trade practices,
claims for damages arising from mistake, fraudulent
inducement, and negligent misrepresentation. (Id. at
August 30, 2017, defendant filed the instant motion to
compel, seeking responses to interrogatories concerning a
software warranty provision found in the parties'
Agreement. (DE 85) .Additionally, on October 6, 2017, defendant
filed the instant motion for leave to file its second amended
affirmative defenses and counterclaims. (DE 101). Defendant
seeks to add a claim of breach of the same software warranty
provision as is the subject of defendant's motion to
compel. (DE 102 at 1; DE 101-1 at ¶¶ 38, 49).
contends that defendant's efforts to assert and seek
discovery on this new claim should be denied as irrelevant in
that it is outside the scope of claims previously asserted.
Defendant has been aware of this claim perhaps as early as
September 2015, when defendant filed its original
counterclaims, and fact discovery will close December 22,
2017. (DE 89 and 110).
OF THE FACTS
court repeats here with some modification as pertinent to the
instant motions the facts as stated in the court's March
16, 2016, order. On February 8, 2010, plaintiff entered into
an agreement with Jiffy Lube International (“Jiffy
Lube”) under which plaintiff was to develop and deliver
a prototype software tool, CPT, to analyze a vehicle's
relative combustion efficiency to demonstrate the need or
value of performing a fuel system cleaning on their vehicles.
(Am. Compl. (DE 21) at ¶ 9). During 2010, plaintiff
decided to identify and advertise the CPT using a design
meant to evoke a medical electrocardiogram (EKG) display.
This design was incorporated into promotional materials and a
test tool. (Id. at ¶¶ 14, 15).
2011, Jiffy Lube introduced plaintiff to defendant, an
automotive product company. (Id. at ¶ 18).
Representatives of plaintiff and defendant then met,
exchanged emails, and contacted one another regarding the CPT
on multiple occasions over the next few months. (Id.
at ¶¶ 19-28). This culminated in their Agreement,
executed November 7, 2011, which provided that plaintiff
would sell the CPT exclusively to defendant, and defendant in
turn would purchase a minimum of 100 CPTs per month from
plaintiff. (Id. at ¶ 29).
asserts that starting in 2011 and continuing into 2012,
defendant began marketing a competing tool (named the
“AutoEKG tool”) in violation of the Agreement.
(Id. at ¶ 75). Defendant marketed the AutoEKG
tool using logos and promotional materials that plaintiff
describes as similar to those used by plaintiff to promote
the CPT. (Id. at ¶¶ 75-87). Additionally,
plaintiff asserts that in 2012 defendant wrongfully
terminated the parties' Agreement. (Id. at
facts alleged in defendant's current counterclaims may be
summarized as follows. During negotiations, plaintiff
incorrectly and repeatedly represented that the CPT tool
“could accurately and reliably analyze the fuel system
of a gasoline-powered automotive engine to determine the
engine's need for a fuel system cleaning.” (DE 43
at ¶¶ 7, 10-17). Based on these representations,
defendant entered into the Agreement with plaintiff.
(Id. at ¶ 26). Plaintiff warranted that it
would provide CPT units to defendant that would be free from
defects in material and workmanship under normal use and
service. (Id. at ¶ 38). However, the CPT units
provided had substantial issues, and plaintiff failed to
correct the issues within the time frame required by the
agreement, breaching the agreement. (Id. at
¶¶ 41-43). Defendant then terminated the agreement,
and plaintiff acknowledged receipt of the termination.
(Id. at ¶ ¶ 45-46).