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Ahadams & Company, P.C. v. Spectrum Health Services, Inc.

United States District Court, E.D. Pennsylvania

August 18, 2014

AHADAMS & COMPANY, P.C., Plaintiff,
v.
SPECTRUM HEALTH SERVICES, INC., et al., Defendants.

MEMORANDUM

GENE E.K. PRATTER, District Judge.

I. INTRODUCTION

In this case of alleged copyright infringement, the Defendants, moving for summary judgment, have asked the Court to determine that as a matter of law, Defendant Spectrum Health Services, Inc. ("Spectrum"), had an implied license to use, for its construction the New Haddington Health Center, the architectural work and technical drawings (the "Drawings") that Plaintiff AHAdams & Company, P.C. ("AHAdams"), created for Spectrum before the two parties parted ways. Claiming copyright infringement (Count I), AHAdams, in addition to suing Spectrum, the owner of the New Haddington Health Center project, has also named Paul E. Jones and Paul E. Jones Associates, Inc. (with Spectrum, collectively, the "Spectrum Health Defendants"), and T.N. Ward Company, Charles Matsinger, and Charles Matsinger Associates, Inc. (collectively, the "Matsinger Defendants"). AHAdams also asserts supplemental state law claims for breach of contract (Count II) and unjust enrichment (Count III) against Spectrum.[1] As explained in detail hereafter, the Court will grant the motions for summary judgment.

II. FACTUAL BACKGROUND[2]

In 2005 or 2006, Spectrum hired Arthur H. Adams and his architectural firm, AHAdams, to assist in the selection of a location for the construction of the New Haddington Health Center (the "HHC"). After Spectrum selected the location for the HHC, AHAdams performed various services for the development of the HHC. On June 1, 2009, AHAdams prepared and submitted a memorandum (the "Proposal"), that outlined the remaining phases of design and construction and the services that AHAdams proposed to perform with regard to each phase. The Proposal did not require the use of AHAdams's services through completion of the HHC project, nor did it impose any restrictions on Spectrum's use of any drawings or other work product prepared for Spectrum by AHAdams.

In addition to the Proposal, AHAdams, per Mr. Adams, also drafted, unilaterally signed, and submitted to Spectrum an iteration of the standard project agreement recommended by the American Institute of Architects ("AHAdams AIA Agreement").[3] Section 7.3 of the AHAdams AIA Agreement provided:

Upon execution of this Agreement, the Architect [AHAdams] grants to the Owner [Spectrum] a nonexclusive license to use the Architect's Instruments of Service solely and exclusively for purposes of constructing, using, maintaining, altering and adding to the Project, provided that the Owner substantially performs its obligations, including prompt payment of all sums when due, under this Agreement. The Architect shall obtain similar nonexclusive licenses from the Architect's consultants consistent with this Agreement. The license granted under this section permits the Owner to authorize the Contractor, Subcontractors, Sub-subcontractors, and material or equipment suppliers, as well as the Owner's consultants and separate contractors, to reproduce applicable portions of the Instruments of Service solely and exclusively for use in performing services or construction for the Project. If the Architect rightfully terminates this Agreement for cause as provided in Section 9.4, the license granted in this Section 7.3 shall terminate.

Spectrum's Mot. Summ. J. ("MSJ, " Docket No. 41), Ex. F. Thus, based upon the facts of the parties' conduct vis à vis each other and on the AHAdams AIA Agreement, Spectrum argues that it retained the license to use the Instruments of Service after the termination of the Agreement.

From June 2009 through the end of March 2010, AHAdams performed architectural and design services for the HHC project and submitted invoices, which were paid in full-a total of approximately $558, 000. After March 2010, Spectrum refused to pay AHAdams's subsequent invoices out of concern with AHAdams's billing, and by April 2010, Spectrum had hired an outside consultant, Paul Jones, who recommended that Spectrum consider moving to a design-build delivery method for the project.[4] In May 2010, Mr. Adams and Mr. Jones discussed Spectrum Health's refusal to pay AHAdams. Mr. Adams testified that he wrote a memo to Spectrum Health on July 10, 2010, because he was unsure of his role in the future design and construction of the HHC.[5] Spectrum's Mot. Summ. J., Ex. G, Dep. of Mr. Adams (July 17, 2012) ("Adams 2012 Dep.") at 173:14-19, 174:10-17.

Also in July 2010, Mr. Jones requested that AHAdams provide six copies of the Drawings on CDs. Mr. Adams complied. On the July 29th transmittal cover sheet for the transmittal, Mr. Adams wrote:

Paul: Enclosed please find six (6) copies of the drawings and specifications for the New Haddington Health Center.... I would suggest that anyone looking at the documentation for pricing be made aware of the nature of the VE items and that the project will be going for LEED Certification.

Spectrum's Mot. Summ. J., Ex. E. The six CDs were addressed as follows: four to the contractors T.N. Ward, Domas, Intech and EP Guidi; one to Mr. Jones; and one to Spectrum. Although neither Spectrum nor AHAdams alleges that there was any further discussion about the transmission of the Drawings, AHAdams notes that each drawing contained the notice

© AHAdams & Company 2008. This drawing or parts thereof may not be altered or reproduced in any form without the written ...

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