14-1549-cv
RIDE, Inc. v. APS Technology, Inc.

                             UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT

                                        SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order filed on or
after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and
this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this court, a
party must cite either the Federal Appendix or an electronic database (with the notation “summary
order”). A party citing a summary order must serve a copy of it on any party not represented by
counsel.

    At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, at 40 Foley Square, in the City of New York, on
the 6th day of May, two thousand fifteen.

Present: ROBERT A. KATZMANN,
                     Chief Judge,
         ROSEMARY S. POOLER,
         SUSAN L. CARNEY,
                     Circuit Judges.
_____________________________________________

RIDE, INC., RUSSELL D. IDE,

                             Plaintiffs-Appellants,

                             v.                                 14-1549-cv

APS TECHNOLOGY, INC., WILLIAM E. TURNER,

                     Defendants-Appellees.*
_____________________________________________
For Plaintiffs-Appellants:          MATHEW P. JASINSKI (William H. Narwold, on the brief),
                                    Motley Rice LLC, Hartford, CT.
For Defendants-Appellees:           ROBERT A. BROOKS (Caleb H. Hogan, on the brief), Pepper
                                    Hamilton LLP, Boston, MA.




*
 The Clerk of Court is directed to amend the caption.
        Appeal from the United States District Court for the District of Connecticut (Hall, C.J.).

        ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,

and DECREED that the judgment of the district court be and hereby is AFFIRMED IN PART,

VACATED IN PART, and the case is REMANDED for further proceedings consistent with

this order.

        Plaintiffs-Appellants RIDE, Inc. and Russell D. Ide (collectively “RIDE”) appeal from an

April 1, 2014 judgment entered by the United States District Court for the District of

Connecticut (Hall, C.J.) granting summary judgment to Defendants-Appellees APS Technology,

Inc. and William E. Turner (collectively “APS”). RIDE’s Third Amended Complaint set forth

seven causes of action against APS: (1) breach of written contract, (2) breach of oral contract, (3)

violation of the implied covenant of good faith and fair dealing, (4) breach of fiduciary duty, (5)

accounting, (6) unjust enrichment, and (7) violation of the Connecticut Unfair Trade Practices

Act (“CUTPA”), Conn. Gen. Stat. § 42-110b(a). We assume the parties’ familiarity with the

other relevant facts, the procedural history, and the issues presented for review.

        We review the district court’s decision to grant summary judgment “de novo, construing

the evidence in the light most favorable to the non-moving party.” 10 Ellicott Square Court

Corp. v. Mountain Valley Indem. Co., 634 F.3d 112, 119 (2d Cir. 2011) (internal quotation marks

omitted). “Issues of contract interpretation are reviewed de novo,” Global Seafood Inc. v. Bantry

Bay Mussels Ltd., 659 F.3d 221, 224 (2d Cir. 2011), but we review for abuse of discretion the

district court’s decision not to exercise its equitable powers, see Nordwind v. Rowland, 584 F.3d

420, 429 (2d Cir. 2009).




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       On appeal, RIDE advances four primary arguments. First, RIDE argues that the district

court incorrectly concluded that RIDE and APS did not maintain a joint venture partnership as a

matter of law. We disagree. Under Connecticut law, “[a] joint venture is a special combination of

two or more persons who combine their property, money, effects, skill, and knowledge to seek a

profit jointly in a single business enterprise without any actual partnership or corporate

designation.” Elec. Assocs., Inc. v. Automatic Equip. Dev. Corp., 440 A.2d 249, 251 (Conn.

1981). While a joint venture need not be a separate legal entity, see Inv. Assocs. v. Summit

Assocs., Inc., 74 A.3d 1192, 1205 n.12 (Conn. 2013), it requires more than a mere agreement to

share profits, see Wicks v. Knorr, 155 A. 816, 817–18 (Conn. 1931). Specifically, in

Connecticut, a joint venture must meet five requirements:

       (1) [T]wo or more persons must enter into a specific agreement to carry on an enterprise
       for profit, (2) an agreement must evidence their intent to be joint venturers, (3) each must
       contribute property, financing, skill, knowledge or effort, (4) each must have some
       degree of joint control over the venture, and (5) there must be a provision for the sharing
       of both profits and losses.

Censor v. ASC Tech. of Conn., LLC, 900 F. Supp. 2d 181, 201 (D. Conn. 2012); accord 46 Am.

Jur. 2d Joint Ventures § 8 (2014).

       Although RIDE conceded below that it did not expressly create a joint venture company

with APS, it maintains that a joint venture relationship was nevertheless formed. Yet, even

accepting all of the evidence in the light most favorable to RIDE as we must, we conclude that

the district court correctly held that RIDE had failed to establish a genuine issue of material fact

that would preclude a finding in APS’s favor on three of the five required elements of a joint

venture: (1) intent to be joint venturers, (2) some degree of joint control over the venture, and (3)

the sharing of both profits and losses. The absence of a genuine issue of material fact on any one


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of these three elements would be a sufficient basis on which to affirm; the lack of all three makes

clear that district court did not err in reaching this conclusion. Because RIDE’s causes of action

for accounting and breach of a fiduciary duty are based solely on the presence of a joint venture,

we affirm the district court’s grant of summary judgment to APS on these claims. In addition,

insofar as RIDE’s causes of action for breach of oral and written contract are based on the

presence of a joint venture, we affirm the grant of summary judgment.

       RIDE’s second argument is that, even if the district court correctly concluded that no

joint venture existed as a matter of law, there was no basis to grant summary judgment to APS

on its causes of action for breach of written and oral contracts based on the alternative theory

that another agreement—a 1994 contract between RIDE and APS, some oral modification to that

contract, or another oral contract altogether—entitled RIDE to certain compensation. On this

point, we agree with RIDE. Although the district court noted in its decision that RIDE argued

that “the plain language of the 1994 Agreement . . . cover[s] the APS Product,” Special App. at

10, the district court’s analysis of whether to grant APS’s motion for summary judgment on the

causes of action for breach of contract focused on whether the 1994 contract and the subsequent

course of dealings between RIDE and APS constituted the creation of a joint venture. APS did

not dispute that some contract (whether the 1994 contract or a modified oral contract) governed

the parties’ practice of splitting equally the gross profits from the RIDE Product. The question

that the district court therefore failed to consider is: “Irrespective of whether it flows from the

1994 Agreement or a separate oral contract (or modification of the 1994 Agreement), does the

parties[’] undisputed agreement to share profits on sales of the RIDE Product also apply to the

APS Product?” Appellants’ Br. 33–34. Accordingly, we vacate the grant of summary judgment


                                                  4
on the breach of written and oral contract causes of action so that the district court may answer

this question in the first instance.

        RIDE’s third argument is that the statute of limitations does not bar its causes of action

for breach of contract, violation of the implied covenant of good faith and fair dealing claim, and

violation of the CUTPA. We consider the statute of limitations for each of these claims in turn.

First, the parties agree that under Connecticut law, there is a six-year statute of limitations period

for breaches of contract. Conn. Gen. Stat. § 52-576(a). The district court therefore correctly

concluded that “[u]nder the six-year statute of limitations for contracts, a breach of contract

claim seeking to recover for APS Products sales prior to November 7, 2005, would be untimely,

as the plaintiffs filed this case on November 7, 2011.” Special App. 24. If, however, on remand

the district court concludes that a contract governed the sale of the APS Product, then the district

court would also need to consider when, if ever, that contract was breached and, if necessary,

whether under Connecticut law the statute of limitations had run on any such breach that

occurred after November 7, 2005.

        Second, it is unclear under Connecticut law whether the statute of limitations for a claim

that the implied covenant of good faith and fair dealing was violated is three or six years.

Assuming arguendo that it was the longer six-year statute of limitations period, the district court

concluded that this cause of action was time-barred. In reaching this conclusion, the district court

reasoned that there was no “continuing course of conduct based on the alleged joint venture

relationship between the parties,” and that the claim therefore accrued in 1997 at the latest based

on statements in a 1997 letter. Special App. 26–27.




                                                  5
       Under Connecticut law a violation of the implied covenant of good faith and fair dealing

occurs where the “defendant . . . impedes the plaintiff’s right to receive benefits that he or she

reasonably expected to receive under the contract . . . in bad faith.” Capstone Bldg. Corp. v. Am.

Motorists Ins. Co., 67 A.3d 961, 986 (Conn. 2013) (internal quotation marks omitted). Bad faith

in this context “implies both actual or constructive fraud, or a design to mislead or deceive

another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted

by an honest mistake as to one’s rights or duties, but by some interested or sinister motive. Bad

faith means more than mere negligence; it involves a dishonest purpose.” Id. (internal quotation

marks and ellipsis omitted).

       Yet, this conclusion might suffer from the same flaw as the conclusion concerning the

causes of action for breach of contract. That is, as far as we can tell, the Connecticut Supreme

Court has not yet addressed whether an implied covenant of good faith and fair dealing accrues

for statute of limitations purposes at the date of the agreement or, in the alternative, if it accrues

anew each time the underlying contract that provides the covenant is breached. Accordingly, we

vacate the district court’s decision granting summary judgment to APS on the implied covenant

claim and leave it to the district court to decide in the first instance: (1) when an implied

covenant claim accrues under Connecticut law, and (2) if necessary, whether the statute of

limitations is three years, six years, or some other period.

       Third, the district court dismissed RIDE’s claims under CUTPA as time-barred. We find

no error in this decision. RIDE has consistently argued that its CUTPA claim is not barred by the

relevant three-year statute of limitations because the parties engaged in a continuing course of

conduct by virtue of their joint venture. Because the district court correctly concluded that no


                                                   6
joint venture existed for the reasons discussed above, there was no special relationship that gave

rise to a continuing course of conduct. The district court therefore correctly concluded that any

CUTPA claim was time-barred by the three-year statute of limitations.

       RIDE’s fourth argument is that the district court abused its discretion by refusing to

consider its equitable claim for unjust enrichment as a result of the length of time that elapsed

between RIDE’s acceptance of a fifty-fifty profit sharing agreement and its filing the complaint.

Specifically, RIDE argues that even if no joint venture exists and RIDE is not entitled to any

profits from the APS Product, RIDE still may be entitled to 50% of gross profits from the sale of

the RIDE Product from 1996–2009. The district court granted summary judgment to APS on

unjust enrichment reasoning that “the claim is essentially based in contract, and seeks relief

which has not changed since 1997.” Id. at 30. Although the district court recognized that “the

court cannot be sure that plaintiffs’ claim would have been successful if brought [in 1997] under

a breach of the 1994 Agreement,” it concluded that because “[Ide] chose to continue splitting the

gross profits on a 50/50 basis with Turner [] for another 12 years until 2009,” there was no basis

for bringing an unjust enrichment claim. Id. at 30 & n.25. We agree and therefore conclude that

the district court did not abuse its discretion in refusing to exercise its equitable powers to

consider RIDE’s unjust enrichment claim.

       For the foregoing reasons, we AFFIRM in part, VACATE in part, and REMAND for

further proceedings. Specifically, we AFFIRM the district court’s holding that RIDE and APS

never had a joint venture relationship. We also AFFIRM the district court’s decision to grant

summary judgment to APS on RIDE’s causes of action for unjust enrichment, breach of

fiduciary duty, and violation of the CUTPA. We VACATE the district court’s grant of summary


                                                  7
judgment to APS on RIDE’s causes of action for breach of written and oral contracts and the

violation of the implied covenant of good faith insofar as those claims rest on legal theories other

than that RIDE and APS maintained a joint venture.


                                              FOR THE COURT:
                                              CATHERINE O’HAGAN WOLFE, CLERK




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