Unpublished Disposition, 919 F.2d 144 (9th Cir. 1990)

HUGLE ELECTRONICS, INC., a Japanese corporation,Plaintiff-Counterdefendant-Appellant,v.TIECO INC., a California corporation; Xynetics Inc., aCalifornia corporation; Rucker & Kolls, aCalifornia corporation; WentworthLaboratories Inc., aCaliforniacorporation,Defendants,andWentworth Laboratories, Inc., a California corporation,Defendant-Counterclaimant-Appellee.

No. 89-15901.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 20, 1990.Decided Nov. 19, 1990.

Before WIGGINS and LEAVY, Circuit Judges, and STEPHENS^* , District Judge.

MEMORANDUM^** 

OVERVIEW

Hugle Electronics ("Hugle") appeals from the district court's grant of summary judgment to Wentworth Laboratories ("Wentworth") on Hugle's Third Amended Complaint and Wentworth's Counterclaim. Hugle argues, inter alia, that the grant of summary judgment was in error because genuine issues of material fact remain. We reverse.

FACTS AND PROCEEDINGS

Hugle is a Japanese corporation that manufactures and sells epoxy fixed point probe cards. Wentworth is a Connecticut corporation that also manufactures and sells fixed point probe cards. In November 1979, Hugle entered into a contract with Wentworth ("the Agreement") by which, among other things, Wentworth gave Hugle rights to use Wentworth's technical expertise and know-how in the manufacture of fixed point probe cards. Included within the Agreement was the following provision:

3. The Representative (Hugle) is hereby authorized and encouraged to fabricate fixed point probe cards for sale and distribution to the semi-conductor and hybrid component manufacturers, sub-system and packing manufacturers and end-users in Japan.

In consideration for Wentworth's disclosure of its technical expertise and know-how, Hugle promised to pay Wentworth royalties on its sale of fixed point probe cards in Japan.

Prior to the Agreement, Wentworth had entered into a cross-licensing agreement with Xynetics, Inc. ("Xynetics") in March 1976 under which Xynetics agreed to grant to Wentworth a non-exclusive license to make, use, and sell fixed point probe cards in the United States and all foreign countries except Japan. The relevant language of the Wentworth-Xynetics cross-licensing agreement sets forth in pertinent part:

Article II (License and Release to Wentworth)

A. R & K, ELECTROGLAS, TIECO and XYNETICS hereby grant to WENTWORTH a fully paid-up, non-exclusive license, without rights to sub-license, under said XYNETICS PATENTS to make, have made, use sell and lease products of the type covered thereby for the full term of these patents throughout the United States and all its territories and possessions, and in all foreign countries except Japan.

The Xynetics-Wentworth cross-licensing agreement did not permit Wentworth to sub-license its patent rights in fixed point probe cards.

Hugle proceeded to manufacture and sell fixed point probe cards in Japan. In January 1984, Tieco, Inc., a wholly-owned subsidiary of Xynetics, filed suit against Hugle in Tokyo District Court charging Hugle with patent infringement. The parties entered into a settlement in September 1987, with Hugle agreeing to pay Xynetics 45,000,000 yen, or $321.000.00.

Hugle brought suit against Wentworth in April 1985. Hugle alleged four causes of action: a claim for a declaratory judgment as to the Agreement's validity; breach of contract; breach of the implied covenant of good faith and fair dealing; and misrepresentation. All causes of action arise from Hugle's allegation that Wentworth did not have the right to sub-license or to "authorize" Hugle to fabricate fixed point probe cards in Japan. Wentworth filed a counterclaim seeking past-due royalties from Hugle, and subsequently moved for summary judgment.

The district court granted Wentworth's motion for summary judgment and ordered an accounting. The district court found that Hugle had failed to raise a genuine issue of material fact in its claims against Wentworth and with respect to its liability for royalty payments on Wentworth's counterclaim. The court entered judgment accordingly. Hugle timely appeals.

STANDARD OF REVIEW

We review a grant of summary judgment de novo. Harris v. Alumax Mill Products, Inc., 897 F.2d 400, 402 (9th Cir. 1990). We must determine, viewing the evidence in the light most favorable to Hugle, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1083 (9th Cir. 1989). If the contractual language is ambiguous and subject to conflicting inferences of intent, summary judgment is inappropriate. International Bhd. of Electrical Workers, Local 47 v. Southern Cal. Edison Co., 880 F.2d 104, 107 (9th Cir. 1989).

DISCUSSION

I. The District Court's Grant of Summary Judgment

The district court granted summary judgment to Wentworth on the grounds that the Agreement was not intended to confer patent rights upon Hugle. The district court found that the preamble to the Agreement clearly demonstrated that the intent of the Agreement was the transfer of Wentworth's production know-how and technical expertise to Hugle, and not a transfer of patent license from Wentworth to Hugle. Therefore, the district court determined that no genuine issues of material fact remained to be determined.

Hugle contends that genuine issues of material fact do exist. Hugle maintains that Wentworth made affirmative representations to Hugle in letters and communications from 1979-1986 that it had the power and right to "authorize" Hugle to sell fixed point probe cards in Japan pursuant to the Wentworth-Xynetics Cross-Licensing Agreement. In support of this contention, Hugle points to paragraph 3 of the Agreement in which Wentworth "authorized" Hugle to manufacture and sell fixed point probe cards in Japan. Hugle argues that the inclusion of this term in the Agreement on its face indicates that Wentworth was making this representation.

We agree. The Agreement states that " [t]he Representative (Hugle) is hereby authorized and encouraged to fabricate fixed point probe cards for sale and distribution ... in Japan." The standard definition of the word "authorized" is to be "endowed ... [or] sanctioned with authority," Webster's Third New Int'l Dictionary (1971), or " [l]egally or duly sanctioned ... with authority," Oxford English Dictionary (1971). As such, the plain language of the Agreement itself indicates that Hugle's contention that Wentworth represented that it had the authority to grant to Hugle manufacture and sale rights of fixed point probe cards in Japan pursuant to its cross-licensing agreement with Xynetics may have merit. Therefore, we find that this genuine issue of material fact remains to be considered.

Furthermore, we note that the district court misapplied the relevant substantive law in granting summary judgment to Wentworth. The district court found that the construction of contracts is a matter of law to be determined by the court under Connecticut law. This was error. "The interpretation ... of contracts [in Connecticut] is principally a question of the intention of the contracting parties, a question of fact to be determined by the trier of fact." Rodziewicz v. Giguere, 5 Conn.App. 293, 295-96, 497 A.2d 1025, 1027 (1985) (quoting Monroe Ready Mix Concrete, Inc. v. Westcor Dev. Corp., 183 Conn. 348, 351, 439 A.2d 362, 363 (1981)).¹  Hence, the determination of the Agreement's intent is an issue for the trier of fact, not for the district court. Accordingly, we reverse the district court's grant of summary judgment to Wentworth.

II. Conduct of Hugle's Counsel

The opening brief filed in this case by Dean Francis Pace, counsel for Hugle, violated several provisions of Fed. R. App. P. 28 and was otherwise seriously flawed. Specifically, the brief failed to support with argument several of the contentions listed in the statement of issues and failed to provide citation to the record in several instances in violation of Rule 28. Perhaps most egregiously though, the brief presented an argument based upon an order that had been vacated by the district court. Finally, in general, we found the brief to be thoroughly confusing and redundant. Because Hugle is the prevailing party in this appeal, we cannot impose sanctions against Mr. Pace pursuant to Fed. R. App. P. 38. We do have the authority, however, to strike Hugle's brief in our discretion pursuant to Ninth Circuit Rule 28-1. As such, Mr. Pace has put the interests of his client in serious jeopardy. We will decline to strike Hugle's brief in this case. However, Mr. Pace is on notice that we will not be so generous in the future.

REVERSED and REMANDED.