The opinion of the court was delivered by: Dennis L. Beck United States Magistrate Judge
ORDER REGARDING DEFENDANTS' MOTION TO ENFORCE THE PARTIES' SETTLEMENT AGREEMENTS AND JUDGMENT (Doc. 116)
Defendants William Pardini, an individual, and B.T.B., Inc., a California corporation dba Data Consultants, filed the instant motion to enforce the settlement against Plaintiff Credit Bureau Connection, Inc. and Darin Larsen. The matter was heard on September 6, 2012, before the Honorable Dennis L. Beck, United States Magistrate Judge. David Alan Makman appeared on behalf of Defendants William Pardini and Data Consultants ("Defendants"). John Tamborelli appeared on behalf of Plaintiff Credit Bureau Connection, Inc.
Plaintiff Credit Bureau Connection, Inc. ("CBC") initiated this copyright infringement action on July 1, 2010, against Defendants William Pardini and Data Consultants. CBC claimed that its shareholder, William Pardini, breached his duty of loyalty to CBC by wrongfully appropriating assets to his own company, Data Consultants, and by blocking CBC from accessing its copyrighted software program known as eF&I Complete.
CBC sought a temporary restraining order ("TRO") and preliminary injunction enjoining Defendants from, among other things, preventing CBC from utilizing its eF&I Complete software. On July 12, 2010, the Court granted the TRO, finding that CBC established a likelihood of success on some of its claims. Following Defendants' request for reconsideration, the Court issued a modified preliminary injunction.
On August 31, 2010, Defendants filed an answer, along with a counterclaim against CBC and Darin Larsen, a part owner of CBC. Defendants' counterclaim included causes of action for declaratory judgment of copyright ownership, trade secret misappropriation and unfair business practices. CBC and Darin Larsen filed an answer to the counterclaim on October 5, 2010.
Following multiple settlement conferences, the parties settled their dispute. To that end, they executed a Memorandum of Understanding ("MOU") dated May 18, 2011, and they amended the MOU by addendum dated October 3, 2011 (collectively "settlement agreements").
On January 24, 2012, pursuant to the parties' stipulation, the Court entered judgment stating that Data Consultants is the author and sole owner of the copyright to the eF&I portion of the software, which was the subject of the complaint and counterclaim.
On July 17, 2012, Defendants filed a motion to enforce the settlement agreements and judgment. Defendants claim that CBC has kept copies of Data Consultants' copyrighted and trade secret eF&I software source code, which Defendants argue is an intentional breach of warranty and a violation of the judgment and settlement agreements between the parties. As a remedy, Defendants believe that termination of the licensing agreement between the parties is appropriate.
On August 6, 2012, CBC filed an opposition to the motion, along with a declaration from Darin Larsen. CBC asserts that it did not materially breach the agreement by Mr. Larsen reportedly forgetting about a copy of the eF&I source code as part of multiple files in a compressed zip file on a lap top computer, and by not providing a June 2010 memory stick containing a backup copy of the eF&I source code.
On August 22, 2012, Defendants filed their reply, asserting that CBC made undisclosed copies of the code and concealed its copying until it was caught. Defendants also filed objections to the Declaration of Mr. Larsen.*fn1
On September 4, 2012, CBC submitted objections and two supplemental declarations in support of their opposition.