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Ringdahl Architects, Inc. v. Swendsrud Construction, Inc.

United States District Court, D. Minnesota

November 6, 2017

Ringdahl Architects, Inc., a Minnesota corporation, Plaintiff,
v.
Swendsrud Construction, Inc., a Minnesota corporation, and Hilltop Lumber of Glenwood, Inc., a Minnesota Corporation, Defendants.

          Dwight G. Rabuse, Esq., and Holly J. Newman, Esq., DeWitt Mackall Counse & Moore, S.C., counsel for Plaintiff.

          Brock P. Alton, Esq., and Marissa K. Linden, Esq., Gislason & Hunter LLP, and Jordan B. Weir, Esq., and Robert G. Manly, Esq., Vogel Law Firm, counsel for Defendants.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         This matter is before the Court on cross-motions for summary judgment brought by Defendants Swendsrud Construction, Inc. (“Swendsrud”) and Hilltop Lumber of Glenwood, Inc. (“Hilltop”) (together, “Defendants”) (Doc. No. 30) and Plaintiff Ringdahl Architects, Inc. (“Ringdahl” or “Plaintiff”) (Doc. No. 36). For the reasons set forth below, the Court denies Plaintiff's motion and grants Defendants' motion in part.

         BACKGROUND

         On August 7, 2012, Ringdahl and Dr. Hamid R. Abbasi entered into a contract for the design and services related to the construction of a house and garage for Abbasi (the “Project”). (Doc. No. 1 (“Compl.”) ¶ 10; Doc. No. 33 (“Alton Decl.”) ¶ III, Ex. 2 (the “Ringdahl-Abbasi Contract”).) Pursuant to the Ringdahl-Abbasi Contract, Ringdahl was to perform work described as “Design, Construction Documents and Construction Administration Services” pursuant to the following relevant terms:

Fee The total fee, except stated lump sum, shall be understood to be an estimate, based upon Scope of Services[1], and shall not be exceeded by more than ten percent, without written approval of the Client. Where the fee arrangement is to be on an hourly basis. [sic] The rates shall be those that prevail at the time services are rendered. . . . . . .
Termination of Services This agreement may be terminated upon 10 days written notice by either party should the other fail to perform his obligations hereunder. In the event of termination, the Client shall pay the Design Professional for all services rendered to the date of termination, all reimbursable expenses, and reasonable termination expenses.
Ownership of Documents All documents produced by the Design Professional under this agreement shall remain the property of the Design Professional and may not be used by the Client for any other endeavor without the written consent of the Design Professional.

         (Ringdahl-Abbasi Contract at 1-2 (emphasis added).) The parties agreed that the budget for the project would not exceed $1, 000, 000. (Id. at Amendments.)

         The Project consisted of two phases: Phase I (construction of a three story garage with living quarters) and Phase II (construction of the main living quarters). After multiple drafts, and input from Abbasi, Ringdahl completed the construction documents. Ringdahl maintains that these plans are its copyrighted works and were marked as such. Abbasi approved Phase I of the project in October 2012, including an estimated total cost of $1, 224, 794 for both phases. (Alton Decl. ¶ XIV, Ex. 13.) Abbasi was invoiced for, and paid, the full amount for Phase I.

         In June 2013, the design process for Phase II began and Ringdahl solicited bids from contractors. Ringdahl and Richard Hardine of Infinity Development[2] proposed a budget of over $2, 000, 000 for Phase II. Abbasi rejected this bid, as well as additional subsequent bids. Eventually, Abbasi asked Swendsrud to bid on the Project, after which Abbasi and Swendsrud agreed to a total of $1, 072, 000 to construct Phase II. (Alton Decl. ¶ II, Ex. 1 (Findings of Fact, Conclusions of Law, Order for Judgment, and Judgment (“Order in Initial Litigation”) at Findings of Fact ¶ 52.) According to Defendants, shortly after submitting the bid, Mike Swendsrud, the principal of Swendsrud, received a phone call from the owner of Tradesman Construction, Inc., offering him $30, 000 to withdraw his bid.[3] (Id. ¶ 53.) After learning of the call, Abbasi terminated his relationship with Plaintiff. (Alton Decl. ¶ XIX, Ex. 18.) In his e-mail documenting the termination, Abbasi offered to pay Ringdahl $20, 000 for the rights to the plans and to separate on “friendly terms” without having to involve lawyers. (Id.) The offer was not accepted. In September 2013, Swendsrud began work on Phase II and hired Hilltop as a subcontractor, and both used the Plans to complete Phase II.

         After Abbasi terminated Ringdahl, Ringdahl demanded roughly $96, 000 from Abbasi. Abbasi refused the demand. Ringdahl sued Abbasi in Minnesota State Court for Breach of Contract, Account Stated, Mechanic's Lien Foreclosure, and Unjust Enrichment (the “Initial Litigation”). In the Initial Litigation, Ringdahl alleged, among other things, that after terminating the relationship with Ringdahl, Abbasi “proceeded with construction of the new home upon the Real Estate and utilized architectural plans prepared by [Ringdahl] in obtaining the building permit for construction of such home.” (Alton Decl. ¶ XXIII, Ex. 22 at ¶ XIII.)

         On May 19, 2014, Plaintiff registered its final copy of the Plans for the home with the United States Copyright Office. (Id. ¶ XXIV, Ex. 23.) On July 14, 2014, counsel for Plaintiff sent Swendsrud a cease and desist letter. (Id. ¶ XXV, Ex. 24.) Plaintiff did not add Swendsrud or Hilltop to the Initial Litigation or assert a copyright infringement claim.

         In July 2015, the state court held a bench trial in the Initial Litigation, after which the court found in Abbasi's favor. (Order in Initial Litigation at Findings of Fact ¶ 9 & Conclusions of Law ¶ 2.) Specifically, the state court made the following findings and conclusions:

• the Ringdahl-Abbasi Contract does not define “Scope of Services, ” contains incomplete sentences, does not define material terms and is ambiguous;
• the terms of the Ringdahl-Abbasi Contract are construed against Ringdahl as the drafter;
• Ringdahl breached the Ringdahl-Abbasi Contract by failing to administer construction or complete Phase I;
• Ringdahl did not complete any “Construction Administration Services” related to the design, construction documents, or bidding related to Phase II.

(Id. at Findings of Fact ¶ 9 & Conclusions of Law ¶¶ 2-7.) In an attached Memorandum, the judge in the Initial Litigation rejected Ringdahl's assertion that Abbasi was obligated to pay Ringdahl for Phase II under the contract, explaining that Ringdahl breached the Contract, and that its breach precludes Ringdahl's claim for any subsequent breach by Abbasi.

         On April 22, 2016, Plaintiff filed this action, asserting claims for copyright infringement, unfair competition under the Lanham Act, violations of the Minnesota Deceptive Trade Practices Act, Minn. Stat. § 325 D.44, et seq., (“MUDTPA”), and conversion. In an agreement dated July 28, 2016, Abbasi agreed to fully defend and indemnify Defendants against the claims in the lawsuit.

         The parties filed cross-motions for summary judgment, the merits of ...


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