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Igambit Inc. v. Digi-Data Corporation

United States District Court, Fourth Circuit

December 13, 2013

IGAMBIT INC., Plaintiff,
v.
DIGI-DATA CORPORATION, Defendant.

MEMORANDUM OPINION

GEORGE L. RUSSELL, District Judge.

THIS MATTER is before the Court on Plaintiff's, iGambit Inc. ("iGambit"), Motion for Summary Judgment. (ECF No. 23). The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D.Md. 2011). For the reasons that follow, iGambit's Motion for Summary Judgment will be granted.

I. BACKGROUND[1]

On February 23, 2006, iGambit and the Defendant, Digi-Data Corporation ("Digi-Data"), entered into an Asset Purchase Agreement governing the sale of iGambit's business assets to Digi-Data (the "Agreement"). Pursuant to the Agreement, Digi-Data agreed to pay certain ongoing commissions to iGambit in connection with the purchase of iGambit's assets. iGambit agreed to jointly and severally indemnify and hold harmless Digi-Data in respect of "any damage or loss resulting from any misrepresentation, breach of warranty or breach of non-fulfillment of any agreement or covenant...." (Compl. Ex. 1 ["Asset Purchase Agreement"], at 35, ECF No. 1-2). iGambit represented and warranted that the intellectual property sold to Digi-Data "consists solely of items and rights that are: (1)owned by the Seller; (2) in the public domain; or (3) rightfully used by the Seller pursuant to a valid license, sublicense, consent or other similar written agreement...." (Asset Purchase Agreement at 23). iGambit further warranted that it "has not infringed upon or misappropriated any Intellectual Property Rights or personal right of any person anywhere in the world." (Id.). iGambit agreed that Digi-Data

shall have the right to set off against any payment otherwise due to [it] the amount of loss, liability or damages (including reasonable attorneys' fees and expert fees) sustained by Purchaser due to the breach... of any representation or warranty or other provision contained in [the] Agreement....

(Id. at 10-11).

On February 22, 2012, iGambit issued a statement to Digi-Data identifying commissions payable to iGambit in the amount of $820, 590. The account statement was signed by a representative of Digi-Data and returned to iGambit. In a letter dated April 24, 2012, Digi-Data acknowledged unpaid commissions payable to iGambit in the amount of $645, 590. Thereafter, Digi-Data submitted partial payments to iGambit in the amounts of $50, 000 and $25, 000, but subsequently failed to pay the remaining balance of $570, 590.

On April 30, 2012, a third party, Titanide Ventures, LLC ("Titanide"), filed suit against Verizon Online, LLC ("Verizon") alleging patent infringement (the "Verizon Litigation").[2] In its complaint, Titanide asserted that Verizon Online Backup and Storage, a product sold by Digi-Data to Verizon, infringed Titanide's patents. The allegedly infringing product is subject to iGambit's indemnity obligations under the Agreement. By letter dated July 20, 2012, Digi-Data provided notice to iGambit of its indemnity obligations under the Agreement and of Digi-Data's intent to set off monies due from iGambit against any sums due under the Agreement.

On October 1, 2012, iGambit filed this action against Digi-Data. (ECF No. 1). In its three-count Complaint, iGambit alleges Breach of Contract (Count I), Account Stated (Count II), and Unjust Enrichment (Count III) concerning Digi-Data's failure to pay monies due to it pursuant to the Agreement. On December 3, 2012, Digi-Data filed an Answer and Counterclaim alleging Breach of Contract and seeking to invoke its right to set-off payment to iGambit in an amount equal to iGambit's indemnity obligation. (ECF No. 9). On May 24, 2013, iGambit moved for summary judgment as to each count of its Complaint. Digi-Data filed a Response in opposition (ECF No. 26), and iGambit filed a Reply (ECF No. 30).

II. DISCUSSION

A. Summary Judgment

Under Federal Rule of Civil Procedure 56, the Court must grant summary judgment if the moving party demonstrates that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255 (1986) (citing Adickes v. S. H. Kress & Co. , 398 U.S. 144, 157 (1970)). Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586-87 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson , 477 U.S. at 247-48.

A "material fact" is a fact that might affect the outcome of a party's case. Id . at 248; see also JKC Holding Co. v. Wash. Sports Ventures, Inc. , 264 F.3d 459, 465 (4th Cir. 2001) (citing Hooven-Lewis v. Caldera , 249 F.3d 259, 265 (4th Cir. 2001)). Whether a fact is considered to be "material" is determined by the substantive law, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law ...


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