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Innotec LLC v. Visiontech Sales, Inc.

United States District Court, W.D. Virginia, Charlottesville Division

May 18, 2018

INNOTEC LLC, Plaintiff,
v.
VISIONTECH SALES, INC., et al., Defendants. VISIONTECH SALES, INC., Counterclaim Plaintiff,
v.
INNOTEC, et al., Counterclaim Defendants.

          MEMORANDUM OPINION

          Hon. Glen E. Conrad Senior United States District Judge

         This case is presently before the court on the defendants' motion to enforce settlement agreement and stay proceedings, and the plaintiffs motion for sanctions. For the reasons set forth below, the defendants' motion will be denied and the plaintiffs motion will be denied without prejudice to renewal.

         Background

         I. The Parties

         Plaintiff Innotec LLC ("Innotec") is a Colorado limited liability company based in Lafayette, Colorado that manufactures and supplies electrical and mechanical components. Allen Ting, a Colorado resident, is the managing member of Innotec.

         Visiontech Sales, Inc. ("Visiontech") is a Virginia corporation based in Troy, Virginia that purchases electrical and mechanical components. The founder, chief executive officer, and owner of Visiontech is Richard Perrault, a Florida resident. Perrault is also the owner of Visiontech Sales Group Hong Kong, Ltd. ("VSG HK"), a related entity based in Hong Kong.

         II. Procedural History

         On February 1, 2017, Innotec filed the instant action against Visiontech, VSG HK, and Perrault, seeking to obtain payment for products ordered from Innotec. The complaint contains five counts: (1) "Breach of Contract" by Visiontech - "For the sale of goods pursuant to the Exclusivity Agreement"; (2) "Breach of Contract" by Visiontech - "Unpaid invoices for the sale of goods and open purchase orders"; (3) "Unjust Enrichment" against Visiontech; (4) "Breach of Contract by VSG HK"; and (4) "Personal Liability against Owners of [Visiontech] and VSG HK." Compl.fflf 30-44, Docket No. 1.

         On March 16, 2017, the defendants answered Innotec's complaint, and Visiontech filed a counterclaim against Innotec and Ting. The counterclaim includes four counts: (1) "Breach of Contract"; (2) "Actual Fraud"; (3) "Tortious Conversion of Molds and Tooling"; and (4) "Tortious Interference with Contracts, Business Relationships, and Prospective Economic Advantage." Counterclaim fflf 24-45, Docket No. 10. The counterclaim is the subject of a motion to dismiss that remains pending.

         On January 16, 2018, Innotec moved to compel proper and complete discovery responses. That motion and other non-dispositive pretrial matters were referred to United States Magistrate Judge Joel C. Hoppe. By order entered February 12, 2018, Judge Hoppe granted the motion to compel and directed the defendants to respond to the discovery requests at issue no later than February 22, 2018. See Feb. 12, 2018 Order, Docket No. 91.

         The defendants did not comply with Judge Hoppe's order. They maintain that compliance is no longer necessary because the parties reached an oral settlement agreement on February 21, 2018, the day before their discovery responses were due. The plaintiff, however, disagrees and contends that no enforceable settlement agreement has been reached in the case. On March 2, 2018, the defendants moved to enforce the alleged oral settlement agreement and stay further proceedings, including discovery, until the court rules on the defendants' motion. That same day, the plaintiff moved for sanctions, including involuntary dismissal of the defendants' counterclaim, based on the defendants' failure to comply with the discovery order. In response, the defendants argue that sanctions are unwarranted because the case has settled.

         III. Facts Relevant to the Purported Settlement Agreement

         Throughout this litigation, Innotec and Ting have been represented by James Cosby and other attorneys with the law firm of Vandeventer Black, LLP (collectively, "plaintiffs counsel"). Visiontech, VSG HK; and Richard Perrault have been represented by Michael Whitticar of NOVA IP Law, PLLC ("defense counsel").

         On September 15, 2017, plaintiffs counsel filed a proposed joint discovery plan after receiving input from defense counsel. The plan included a provision in which the parties "agree[d] to request a settlement conference to be administered by the Court upon a date mutually agreeable." Discovery Plan¶13, Docket No. 33-2. Judge Hoppe adopted the proposed discovery plan on October 25, 2017.

         Initial settlement discussions were conducted through counsel. In the fall of 2017, plaintiffs counsel submitted a settlement demand to defense counsel. The record indicates that defense counsel did not respond to the demand. See Ex. 1 to PL's Resp. to Defs.' Mot. to Enforce Settlement Agreement, Docket No. 108-1.

         Approximately four months later, oh January 25, 2018, defense counsel forwarded a settlement proposal to plaintiffs counsel. In response, plaintiffs counsel noted that defense counsel's clients had not responded to the plaintiffs previous demand. Plaintiffs counsel emphasized that "[w]hen we receive an offer or demand, we respond to it, with whatever view we have at that time." Id. In reply, defense counsel suggested that the attorneys "focus on resolving the case rather than pointing fingers." Id.

         There is no evidence that counsel engaged in further settlement discussions, requested a court-administered settlement conference, or sought referral to an alternative dispute, resolution resource outside the court as permitted by the local rules. See W.D. Va. Civ. R. 83. Instead, Andrew Flint, a non-attorney "debt negotiator" who was "hired" by the defendants to "assist in the negotiation and settlement of this litigation, " attempted to negotiate directly with Ting. Flint Decl.t 2, Docket No. 97-7.

         On February 21, 2018, Flint contacted Ting by telephone on multiple occasions. The defendants now maintain that, during those telephone conversions, the parties reached an oral settlement agreement. According ...


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