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Wintrode Enterprises Incorporated v. Pstl LLC

United States District Court, D. Arizona

August 25, 2014

Wintrode Enterprises Incorporated, Plaintiff,
v.
PSTL LLC, et al., Defendants.

ORDER

DAVID G. CAMPBELL, District Judge.

Defendants GunVault, Inc. ("GunVault"), Thomas and Sharon Loeff, and Aaron and Jalyn Baker have filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. 11. The Court will deny the motion as moot.[1]

Defendant PSTL, LLC ("PSTL") has filed a motion to join the motion to dismiss filed by Defendants GunVault, Inc., Thomas and Sharon Loeff, and Aaron and Jalyn Baker. Doc. 22. The Court will grant the motion.

Plaintiff Wintrode Enterprises, Inc. ("Wintrode") has filed a motion to remand pursuant to 28 U.S.C. § 1447(c). Doc. 23. The motion is fully briefed. The Court will grant the motion and remand the case to Maricopa County Superior Court.

Defendants GunVault, PSTL, Thomas and Sharon Loeff, and Aaron and Jalyn Baker have filed a motion to transfer. Doc. 24. The Court will deny the motion as moot.

Wintrode has filed a motion to stay briefing on and consideration of Defendants' motion to dismiss (Doc. 11) and motion to transfer (Doc. 24). Doc. 25. The Court will grant the motion in part and deny it in part.

I. Background.

Defendant Thomas Loeff owns two entities that are also defendants in this action, PSTL and ASP. Doc. 1-1, ¶ 20. On March 12, 1997, PSTL and ASP entered into an agreement (the "Assignment Agreement") to assign PSTL's interest in U.S. Patent No. 5, 161, 396 to ASP. Id., ¶ 24. The Assignment Agreement did not include any reference to U.S. Patent No. 5, 549, 337 ("the 337 Patent"). Id. No other agreement between PSTL and ASP assigned any interest in the 337 Patent. On November 23, 2004, GunVault agreed to purchase the 337 Patent from Lazy Red Dog, LLC, which is another entity owned by Loeff. Id., ¶ 30. Lazy Red Dog, LLC obtained its interest in the 337 Patent from ASP. Id., ¶ 32. Wintrode alleges, however, that Lazy Dog, LLC never owned the 337 Patent due to a chain of title error. Id., ¶¶ 31-32, 34.

Believing that it owned the 337 Patent, GunVault filed a patent infringement action against Wintrode on August 29, 2012 in the United States District Court for the Central District of California. Id., ¶ 35. During the course of discovery, GunVault was unable to produce a complete chain of title for the 337 Patent ( Id., ¶ 36) and Wintrode filed a motion to dismiss the patent infringement action on the basis that GunVault did not own the 337 Patent ( id., ¶ 38). GunVault opposed Wintrode's motion, contending that the defect in the chain of title was due to a scrivener's error or, in the alternative, that the defective link in the chain of title could be reformed under Arizona law. Id., ¶ 39. In connection with the motion to dismiss, Loeff provided a declaration in which he stated: "If the Court deems it necessary, it should feel free to reform [the Assignment Agreement] to include explicit reference to the assignment of all interest in Patent no. 5, 549, 337. I have no objection to this." Id., ¶ 40. Wintrode replied that GunVault could not meet the standard for reformation of the Assignment Agreement and that any attempt to reform the Assignment Agreement would be an end run around the nunc pro tunc doctrine, which provides that acquiring retroactive ownership of a patent is insufficient to confer standing to sue for patent infringement. Id., ¶ 41.

The district court denied Wintrode's motion to dismiss and entered an order staying the patent infringement action for thirty days to permit GunVault to file a separate action in state court to reform the Assignment Agreement. Id., ¶ 42. The district court's order stated that if reformation was granted, the district court would then rule on Wintrode's argument that reformation was an end run around the nunc pro tunc doctrine. Id. On April 3, 2014, GunVault filed a complaint in Orange County Superior Court against PSTL and Loeff for declaratory judgment seeking reformation of the Assignment Agreement between PSTL and ASP. Id., ¶ 43.

Wintrode instituted this action in Maricopa County Superior Court on April 14, 2014, to "protect its interests as Arizona, not California, is the proper venue for any determination as to the reformation question." Id. Wintrode named PSTL, GunVault, Thomas and Sharon Loeff, and Aaron and Jalyn Baker as defendants. Wintrode's complaint seeks a declaration that reformation of the Assignment Agreement is improper as the statute of limitations bars reformation, the Assignment Agreement did not create a valid assignment, GunVault is not a legitimate successor in interest to the 337 Patent, and GunVault cannot meet its burden of showing that reformation as an available remedy under Arizona law. Wintrode's complaint also asserts state law claims for unfair competition, consumer fraud, and conspiracy. Defendants removed the case to federal court on June 2, 2014.

II. Plaintiff's Motion to Stay Briefing and Consideration of Defendants' Motions.

Wintrode urges the Court to stay briefing and consideration of Defendants' motion to dismiss (Doc. 11) and motion to transfer (Doc. 24) in order to consider jurisdictional arguments raised in Wintrode's motion to remand (Doc. 23). Doc. 25 at 2 (citing Orient v. Linus Pauling Inst. of Sci. & Med., 936 F.Supp. 704, 706 (D. Ariz. 1996) ("Federal subject matter jurisdiction is a threshold issue that goes to the power of the court to hear the case.... Therefore, a 12(b)(1) motion must be decided before other motions, as they will become moot if dismissal is granted.")). Defendants argue that there is no good cause to suspend the briefing schedule for its motions. Doc. 26 at 3.

The Court will deny Wintrode's motion in part because Wintrode's request to stay the briefing schedule of Defendants' motions is moot. Defendants' motions have been fully briefed. The Court will grant Wintrode's motion in part, ...


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