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Amerex Environmental Technologies, Inc., et al v. John Foster

February 21, 2012

AMEREX ENVIRONMENTAL TECHNOLOGIES, INC., ET AL., PLAINTIFFS,
v.
JOHN FOSTER,
DEFENDANT.



The opinion of the court was delivered by: Judge Cathy Bissoon

MEMORANDUM AND ORDER

I.MEMORANDUM

Pending before the Court is Plaintiffs Amerex Environmental Technologies, Inc. ("Amerex"), Brian McMahon, and Joe Pircon's Motion to Amend Complaint (Doc. 34). For the reasons stated herein, the Court will deny Plaintiffs' motion.

BACKGROUND

Plaintiffs allege in their Complaint (Doc. 1) that Defendant John Foster, a shareholder and former employee of Plaintiff Amerex, accepted employment with Plaintiff Amerex's competitor, Amerair Industries LLC. See Compl. (Doc. 1). Plaintiffs allege that Defendant's acceptance of such employment breached an employment agreement with Plaintiff Amerex, breached fiduciary duties owed to Plaintiffs, and will lead to inevitable use and disclosure of trade secrets owned by Plaintiff Amerex. See id.

Plaintiffs seek leave to amend their complaint to add a count for "Fraud, Deceit, and Misrepresentation." According to Plaintiffs, this proposed claim is based on testimony from Defendant John Foster's December 2011 deposition. See Mot. to Amend (Doc. 34). Plaintiffs further assert that they learned for the first time at Defendant's deposition that Defendant claims he owns certain technology. See id. at 2.

Plaintiffs allege that prior to and during Defendant's employment by Plaintiff Amerex, Defendant failed to disclose that he claims to own the technology at issue. Specifically, Plaintiffs seek to add the following allegations to their complaint:

19. During Foster's employment with Amerex he was instructed to prepare a document containing all the software -- programs -- and intellectual property he used in performance of his duties for Amerex, and he prepared a document entitled "John Foster Technology" and provided same to Amerex and its Board, Officers, Directors, and other shareholders.

20. One purpose of the document was for use in a presentation in a potential acquisition (Austrian Energy) in which Foster participated by presenting to the other party the types of intellectual property - software -- and programs that Amerex could provide for use in the new business if the acquisition proceeded.

21. Foster never made any disclosures, representations or caveats to either Amerex, its Board, Officers, Directors, and other shareholders, or to Austrian Energy to the effect that the software -- programs -- and intellectual property he used in performance of his duties for Amerex were not the property of Amerex but were owned separately by Foster (as he now claims).

22. Foster also participated in the presentation and representations made to Amerex, Pircon, and McMahon, at the time that Amerex purchased Foster's previous employer SP Environmental from its owner Stevens Painton, and signed the Agreement for Sale of Business Assets which included transfer to Amerex of:

The name SP Environmental, customer lists, records, project files, proposal files, all related CDMG drawings, estimates, vendor quotes, licenses and permits., trademarks, trade names, the web domain name., and goodwill.

23. In the same transaction as the Amerex purchase of SP Environmental's assets, Foster received monies for arranging the sale, received ownership interest in Amerex, and entered an Employment Agreement with Amerex.

24. Yet Foster again failed to make any disclosures, representations or caveats to either Amerex, its Board, Officers, Directors, and other shareholders to the effect that the software -- programs -- and intellectual property he used in performance of his duties for SP Environmental including his work on its "project files, proposal files, all related CDMG drawings, estimates, vendor quotes" for SP Environmental were not the property of SP Environmental, or were not being purchased by Amerex, but were owned separately by Foster (as he now claims).

25. After this litigation began, Foster changed the name on his copy of the document "John Foster Technology" and added the word "owned" so that the document he produced in discovery was at that time (after this litigation began) now entitled "John Foster Owned Technology."

26. Foster admitted during his deposition: 8 Q So except for the numbers at the bottom of 9 the page, because we produced one and you produced 10 one, the only difference I see is in the title. 11 Do you see the difference? 12 A Yeah. Uh-huh. 13 Q When did you -- well, and the difference is 14 that the word "Owned" is inserted on JF 4, not present 15 on 155? 16 A Sure. I see that. Uh-huh. 17 Q When did you prepare JF 4? 18 A You know, I think it was prepared in 19 response to request for documents. I think -- and I 20 may even have a copy of this on -- on a disk or 21 something. I'd have to look to see where I might have 22 a copy of it. It's been ...


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