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Colocation America Corp. v. Mitel Networks Corp.

United States District Court, D. Arizona

June 15, 2018

Colocation America Corporation, Plaintiff,
v.
Mitel Networks Corporation, Defendant. Mitel Networks Corporation, Counterclaimant,
v.
Colocation America Corporation; and Corey Allen Kotler and Mojgan Tabibnia, husband and wife, Counter-defendants.

          ORDER

          Neil V. Wake Senior United States District Judge

         Before the Court are Mitel Networks Corporation's Motion Under Fed.R.Civ.P. 56 for Summary Judgment on Contract Interpretation (Doc. 81), Plaintiff's Cross Motion for Summary Judgment on Contract Interpretation (Doc. 84), and the replies.

         The cross-motions for summary judgment ask the Court to determine whether the parties' Domain Name Assignment Agreement includes the sale of a block of Internet addresses (referred to as IPv4 134.22.0.0/16). Both parties agree that summary judgment should be granted for the party that prevails on this motion, subject to litigation of Mitel Networks Corporations' pleaded defenses if Colocation America Corporation prevails on contract interpretation. On its face, the executed agreement does not include the sale of IPv4 addresses, which number about 65, 536. Further, the parties' course of negotiations demonstrates that Mitel Networks had no reason to know that Colocation interpreted their agreement as including the sale of IPv4 addresses, and Colocation not only had reason to know Mitel Networks interpreted the agreement differently, it intentionally led Mitel Networks into thinking the agreement involved only the assignment of a domain name. If there is any ambiguity, under Restatement (Second) of Contracts § 201(2), the agreement is interpreted in accordance with the meaning attached by Mitel Networks.

         I. LEGAL STANDARD

         A motion for summary judgment tests whether the opposing party has sufficient evidence to merit a trial. Summary judgment should be granted if the evidence reveals no genuine dispute about any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A material fact is one that might affect the outcome of the suit under the governing law, and a factual dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         II. MATERIAL FACTS

         A. The Parties

         Plaintiff/Counter-defendant Colocation America Corporation is a Nevada corporation with offices in Nevada and California. Albert A. Ahdoot is the President of Colocation. Ahdoot signed the Domain Name Assignment Agreement on behalf of Colocation.

         Defendant/Counterclaimant Mitel Networks Corporation is incorporated in Canada and maintains its principal place of business in Canada. Mitel Networks indirectly acquired assets from the Gandalf Technologies Inc. bankruptcy that include the Canadian domain name gandalf.ca. Its intellectual property counsel, Michelle R. Whittington, has an office in Arizona and negotiated the Domain Name Assignment Agreement on behalf of Mitel Networks. Mitel Networks' General Counsel signed the Domain Name Assignment Agreement on behalf of Mitel Networks.

         B. The Broker

         Ahdoot hired Corey Allen Kotler to locate the owners of certain IPv4 addresses and to negotiate contracts to buy the IPv4 addresses. Ahdoot met Kotler through a friend of Ahdoot's lawyer, Paul Seligman. Before working for Ahdoot, Kotler did not know anything about IP addresses and had not previously acted as a broker for Colocation.

         Ahdoot located a block of IPv4 addresses on the American Registry for Internet Numbers that were registered to Gandalf Technologies. By researching Gandalf's bankruptcy records, Ahdoot concluded that “Mitel” had acquired Gandalf's assets, but he did not determine whether “Mitel” was “Mitel Networks Corporation” and whether the bankruptcy assets acquired by “Mitel” included the block of IPv4 addresses registered to Gandalf Technologies. Ahdoot directed Kotler to negotiate a deal to acquire from Mitel Networks the block of IPv4 addresses that might have been acquired from Gandalf Technologies by “Mitel.” Kotler's email communications were signed under the name “Corey Allen” as “Principal Advisor” of “Dividend Advisors, LLC.” It was Ahdoot's understanding that Kotler was the owner/member of Dividend Advisors and Dividend Advisors had the same business address as Ahdoot's attorney Seligman.

         C. The Communications

         On February 18, 2016, Kotler emailed Mitel Networks, stating that “we would like to purchase the domain Gandalf.ca.” Kotler further stated that “we would like to issue you and/or your company immediate payment for a letter of authorization of sale for the purchase of this domain.”

         On February 19, 2016, Whittington sent an email to Kotler with the subject “Domain.” The email stated, “As Intellectual Property Counsel for Mitel, I have been asked to respond to your email request regarding the <<gandalf.ca>> domain name.” Whittington asked Kotler, “Can we set a time to discuss your offer?”

         Shortly thereafter, Kotler forwarded Whittington's email to Ahdoot and Seligman with the following message: “I would write it up for the domain and somehow slip in the IPV4.” The same day, Kotler added the following to his message to Ahdoot and Seligman:

Is there a way to slip it in nebulously? i.e “…and should any potential intellectually properties or scenarios that may be associated at a future point in time”

(Doc. 81-3 at 28, emphasis and errors in original.) On February 24, 2016, Kotler emailed a response to Whittington, apologizing for his delay and stating:

As a follow up to my request, our company would like to purchase the domain Gandalf.ca as well as any potential intellectually properties or scenarios that may be associated at a future point in time with the name Gandalf.ca. My company is in position to offer Mitel the sum of ten thousand American dollars ($10, 000) for all rights.

(Doc. 81-3 at 16, errors in original.)

         Whittington responded the same day, February 24, 2016, stating, “Mitel accepts the offer and provides a draft Domain Name Assignment Agreement for your review.”[1] Whittington asked Kotler to insert the purchaser's information and to indicate any edits by redline on the returned document. Paragraph A of Whittington's February 24, 2016 draft Domain Name Assignment Agreement stated:

A. Assignment of Domain Name. For good and valuable consideration, payable as more particularly described herein, Mitel hereby agrees to transfer and assign to INTELLECTUAL PROPERTY PURCHASER all of Mitel's right, title and interest in and to the Domain Name <gandalf.ca> and the registration thereof, together with the goodwill of the business connected with and symbolized by such Domain Name, and any intellectual property rights relating thereto, to the extent any such rights exist. The transfer and the assignment shall take effect as set forth herein upon INTELLECTUAL PROPERTY PURCHASER'S making the payment provided for herein.

(Doc. 81-3 at 17.)

         On February 26, 2016, Kotler sent an email to Whittington with the subject “Revised domain assignment” and an attachment named “DOMAIN NAME ASSIGNMENT AGREEMENT.pdf.” The email stated: “Here is the revised domain assignment . . . . The company recognizes that you may or may not have rights as a result of the old bankruptcy proceedings but is willing to go forward on quit claim basis.” Kottler's revised Domain Name Assignment Agreement did not indicate the revisions made to Whittington's February 24, 2016 draft. Kotler's revisions included adding the following paragraph to the preamble:

WHEREAS, Dividend Advisors LLC has introduced the INTELLECTUAL PROPERTY PURCHASER to intangible rights which may be claimed as a result of a prior bankruptcy proceeding, including domain name and related intellectual property.

(Doc. 81-2 at 55.) Kotler changed the original preamble paragraph from saying Mitel agrees to “sell, transfer and assign” the domain name to saying Mitel agrees to “quit claim, transfer and assign” the domain name “and related rights . . . .” (Id.) Kotler also inserted the phrase “the associated IPv4 134.22.0.0/16 and any associated trade dress, or other intellectual property” into Paragraph A.[2] Thus, Paragraph A of Kotler's February 26, 2016 draft Domain Name Assignment Agreement stated:

A. Assignment of Domain Name. For good and valuable consideration, payable as more particularly described herein, Mitel hereby agrees to quit claim to INTELLECTUAL PROPERTY PURCHASER any of Mitel's right, title and interest in and to the Domain Name <gandalf.ca> and the registration thereof, together with the goodwill of the business connected with and symbolized by such Domain Name, and the associated IPv4 134.22.0.0/16 and any associated trade dress, or other intellectual property intellectual property rights relating thereto, to the extent any such rights exist. The quit claim transfer and assignment shall take effect as set forth herein upon INTELLECTUAL PROPERTY PURCHASER'S making the payment as provided for herein.

(Id. (repetition of “intellectual property” in original)). Kotler's revision also modified Paragraph D of Whittington's draft to include ...


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