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Con-Way Transportation, Services, Inc. v. Regscan

March 9, 2006


The opinion of the court was delivered by: Judge Jones



Pending before the Court is Defendant's Renewed Motion for Judgment as a Matter of Law ("the Motion")(doc. 127) filed on December 22, 2005. At the close of the Plaintiff's case-in-chief the Defendant RegScan ("Defendant" or 'RegScan") made an oral motion under Fed. R. Civ. P. 50(a)(1) for judgment as a matter of law. Thereafter, RegScan orally renewed its Rule 50(a)(1) motion at the close of all evidence and before the action was submitted to the jury. At both times the oral motions were denied.

The instant Motion (doc. 127) has been fully briefed by the parties and is therefore ripe for our review. For the following reasons, the Motion (doc. 127) will be denied.


On December 6 and 7, 2005, this case was tried to a jury. On December 8, 2005, the jury returned a partial verdict in favor of the Plaintiff Conway ("Plaintiff" or "Conway"). The answers to interrogatories submitted to the jury reflect that the jury's verdict in favor of Conway was based on finding a breach of contract by RegScan for royalties due Conway on sales of the HazMat Manager/Loader program. On December 8, 2005, this Court entered judgment on the jury verdict in the amount of $36,100.64. This figure was based on 32% of the gross sales of the Hazmat Manager/Loader, less a credit for fees already paid to Conway by RegScan.

At trial, Conway claimed that RegScan breached the Licensing Agreement (the "Agreement") between them by failing to pay Conway licensing fees due it under Paragraph 7(a) of the Agreement. Pursuant to the Agreement, RegScan was to pay Conway, "[a]n amount equal to 32% of the gross revenue received by RegScan from the sale or use of the Product from any source . . ." "Product" is defined in the Agreement as a commercial implementation of the "Program." The Agreement defines "Program" as a software program that, in response to stored regulatory information and user input, generates data corresponding to required placarding, labeling, and load segregation for the shipment of hazardous materials.

Robert Petrancosta ("Petrancosta"), an employee of Conway, designed a concept that Conway referred to as the "HazCalc" program. In 1999, after Conway decided not to use HazCalc internally for its own business purposes, Conway representatives met with RegScan officials to discuss RegScan's development of HazCalc into a commercial implementation. Prior to the signing of the Agreement, RegScan officials were in possession of the program, and after running the program, were aware that HazCalc was "pretty unworkable as a useful program," and that "the design objectives were fairly loosely structured." Thereafter, on May 3, 2000, the Agreement was entered into between the Plaintiff and Defendant.

At trial, Petrancosta gave detailed testimony about his interaction with RegScan employees indicating the existence of a combined effort between Plaintiff and Defendant to develop HazCalc into a commercially viable computer software program. RegScan ultimately developed HazCalc into what became known first as "HazMat Manager," and later as "HazMat Loader." RegScan acknowledged that it had not contemplated creating a computer software program like HazMat Manager/Loader until it viewed HazCalc and entered into the Agreement with Conway. Moreover, RegScan did not begin developing HazMat Manager/Loader until after it entered into the Agreement on May 3, 2000.

In 2001, RegScan began selling HazMat Loader*fn1 to law enforcement agencies and private entities. To date, RegScan continues to sell and market HazMat Loader. Pursuant to the Agreement, RegScan made the first two required royalty payments to Conway, in the total amount of $3,420.00. RegScan then stopped making payments to Conway, alleging that the Agreement was no longer binding. RegScan's failure to pay Conway royalty payments ultimately resulted in Conway's filing the instant action before this Court.


In deciding a renewed motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b), the trial court must "view the evidence in the light most favorable to the non-moving party . . . and determine whether 'the record contains the minimum quantum of evidence from which a jury might reasonably afford relief.'" Keith v. Truck Stops Corp., 909 F.2d 743, 745 (3d Cir. 1990)(citations omitted). In accomplishing this task, the trial court is "not free to weigh the evidence, pass on the credibility of [witnesses], or substitute [its] judgment of the facts for that of the jury." Blair v. Manhattan Life Ins. Co., 692 F.2d 296, 300 (3d Cir. 1982). Essentially, our task is to determine whether "the record is critically deficient of the minimum quantum of evidence" upon which a reasonable jury could grant relief. Id.


In this case, Plaintiff bore the burden of proving that Defendant breached the Agreement. Abreach of contract occurs when a party to the contract fails to perform his duty under the contract or violates an obligation or duty, and where that breach is material. See Connolly, Epstein, Chicco, Foxman, Engelmyer & Ewing v. Fanslow, 1995 U.S. Dist. LEXIS 17231, *10-11 (E.D. Pa. 1995). A breach does not have to be defined in a contract; and in making its determination as to whether the ...

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