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The following 2009 case is about the microwave ceramics industry but cites to the “ninja” of Hasbro v Child’s Play – see NinjaLaw #7.


John Chabria, et al., Plaintiffs,
-v-
EDO Western Corporation, Defendant.

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Case No. 2:06-CV-00543

Filed – March 30, 2009

Opinion by Magistrate Judge Abel and signed by District Court Judge George C. Smith

OPINION AND ORDER

Plaintiffs John Chabria (“Chabria”), Zenix, Inc. (“Zenix”), and Zenix Ltd. (collectively “Plaintiffs”), have brought this action seeking payment of approximately $ 1,164,000 in unpaid royalties. On February 20, 2007, this Court granted in part and denied in part EDO Western Corporation’s (“EDO”) Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. 25). EDO now moves for summary judgment dismissing all remaining claims (Doc. 47). For the reasons that follow the Court GRANTS Defendant EDO’s Motion for Summary Judgment.

I. FACTUAL BACKGROUND

This litigation was commenced by Plaintiffs in 2006 to recover $ 1,164,000 of unpaid royalties Plaintiffs claim they are owed under the Asset Purchase Agreement (“APA”). On February 20, 2007, this Court granted in part and denied in part Defendant EDO’s Motion to Dismiss Plaintiffs’ Amended Complaint, holding, inter alia, that Plaintiffs had sufficiently alleged EDO’s failure to use its best efforts when performing under the APA, EDO’s breach of the implied covenant of good faith and fair dealing and EDO’s fraudulent inducement of Plaintiffs to enter into the APA (Doc. 25). EDO has now moved for summary judgment, contending that Plaintiffs’ claim for breach of an implied contractual obligation to reasonable efforts must fail because no such obligation should be implied in this case, and even if such an obligation is implied, EDO fulfilled the obligation by making extensive efforts to sell the Zenix line and by acting in good faith at all times in operation of the business. EDO further contends that it is entitled to summary judgment on Plaintiffs’ fraudulent inducement claim for the following reasons: (1) it is barred by the statute of limitations; (2) the alleged misrepresentations all relate to the performance of the APA and cannot give rise to a separate cause of action for fraud; (3) Plaintiffs’ reliance on the alleged misrepresentations were not reasonable; and (4) the alleged misrepresentations were all statements of future intent, which Plaintiffs cannot establish were false when made.

A. Plaintiff Chabria’s Background in the Microwave Ceramics Industry

In or around 1964, Plaintiff Chabria started Xtalonix, a microwave ceramics business, in Columbus, Ohio. He sold the business to Harshaw Chemical in 1966, but stayed on as manager. The business changed hands a number of times, and Chabria eventually repurchased it in the early 1980s. In April 1996, Xtalonix attempted to expand and moved its operations to Maryland, transferring most of the equipment previously located in Columbus. The attempted expansion failed because Xtalonix “racked up debt by spending money faster than it could bring it in . . . .” (Chabria Depo. at 200:3-19). To avoid bankruptcy, Xtalonix was forced to enter into receivership. Trak Ceramics purchased the assets of Xtalonix’s business in 1997 for $ 1,760,000.

and

The facts of Hasbro v. Child’s Play, supra, are analogous in that the defendant in Hasbro also failed to take all of the steps it had originally anticipated when it entered into the agreement at issue. Hasbro obtained an exclusive license to manufacture and sell Child’s Play’s line of ninja action figures. During negotiations, Hasbro represented that it anticipated spending $ 2-5 million on television advertising. 1991 U.S. Dist. LEXIS 10794, 1991 WL 156282 at *2. Notwithstanding Hasbro’s significant efforts, it was unable to sell the action figures at levels it had anticipated and ultimately determined that the number of action figures ordered by its customers did not warrant television advertising. Hasbro therefore abandoned its plan to launch a television advertising campaign. 1991 U.S. Dist. LEXIS 10794, [WL] at *3-4. Child’s Play sued and Hasbro moved for summary judgment. The Hasbro court, in its opinion granting summary judgment, took note of Hasbro’s description of its efforts to exploit the line, and observed that Child’s Play had failed to come forward in response with any evidence that such efforts were insufficient. 1991 U.S. Dist. LEXIS 10794, [WL] at *5. The Hasbro court also noted that if a best efforts duty were to be implied, “it, of course, would not have required Hasbro slavishly to devote its efforts to marketing the Line.” 1991 U.S. Dist. LEXIS 10794, [WL] at *6.

In the instant case, Defendant EDO purchased and operated the Zenix product line for 3.5 years, investing in excess of $ 3 million after purchasing. The evidence shows that the Zenix product line continued to lose money and sales were not as expected. As the Hasbro court noted, implication of a best efforts duty does not require slavish devotion to the marketing of the line, especially in light of the continued and unanticipated monetary losses and low sales. Reasonable efforts does not require every possible effort, to the detriment of one’s own interests or finances. See e.g., Scott-Macon Securities, Inc. v. Zoltek Companies, 2005 U.S. Dist. LEXIS 9034, 2005 WL 1138476, *14 (S.D.N.Y. 2005) (under a reasonable efforts clause “a party is entitled to give ‘reasonable consideration to its own interests’ in determining an appropriate course of action to reach the desired result”), aff’d in relevant part, vacated in part, and reversed in part, 2007 U.S. App. LEXIS 23356, 2007 WL 2914873 (2d Cir. 2007). See also Johns v. Rexam , 2005 WL 1308319, at *10 (M.D. Ga. 2005) (“[T]he implied covenant of good faith does not require a party to a contract to exert the maximum possible effort. Indeed, a party can in good faith exert no effort at all, if it can show that a business decision to exert no effort was reasonable under the circumstances.”). Accordingly, this Court, like the Hasbro court, holds that Defendant EDO’s failure to implement Phase III of its pre-acquisition plan does not constitute evidence creating a material question of fact with respect to the issue of whether Defendant EDO took reasonable efforts to market the Zenix product line.

Therefore

In conclusion, the Court finds that Defendant EDO has presented evidence that they used reasonable efforts to market the Zenix Product. Plaintiffs unsupported allegations and hindsight complaints about EDO’s operation of the Zenix business fail to raise triable issues of fact in response to EDO’s showing. Thus, the undisputed facts establish that the question of whether Defendant EDO used reasonable efforts is appropriately resolved in Defendant EDO’s favor on summary judgment.

And also, as regards “Fraud in the Inducement Claim (Count Four)”:

Accordingly, this Court finds that Plaintiffs’ fraud in the inducement claim is time-barred, and Plaintiffs have failed to meet their burden of proving that the alleged fraud was not discovered and could not have been discovered until within two years of the commencement of the lawsuit. Therefore, the Court grants Defendant EDO’s motion for summary judgment with respect to Plaintiffs’ Count Four Fraud in the Inducement claim.

As an alternative basis for summary judgment on Plaintiffs’ fraud in the inducement claim, Defendant EDO argues that the claim should be dismissed because it is duplicative of Plaintiffs’ breach of contract claim and because Plaintiffs have adduced no evidence from which a jury could reasonably find that EDO fraudulently induced Plaintiffs to enter into the APA. Having determined that Plaintiffs’ claims are barred by the applicable statute of limitations, however, the Court finds it unnecessary to address Defendant’s alternative arguments.

V. CONCLUSION

For all of the foregoing reasons, the Court GRANTS Defendant EDO’s Motion for Summary Judgment (Doc. 47).

The Clerk shall remove Document 47 from the Court’s pending motions list.

The Clerk shall remove this case from the Court’s pending cases list.

IT IS SO ORDERED.

/s/ George C. Smith
GEORGE C. SMITH, JUDGE

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The 2006 opinion affirmed a grant of habeas corpus to a convicted murderer. Richard Joseph was convicted of the 1990 murder of 16-year-old son, Ryan Young. The case involved a “black ninja mask”, evidence found with the dead body and linked to the defendant.


RICHARD JOSEPH, Petitioner-Appellant/Cross-Appellee,
v.
RALPH COYLE, Warden, Respondent-Appellee/Cross-Appellant.

Nos. 05-3111 / 05-3113
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
469 F.3d 441

Decided November 9, 2006, before Circuit Judges Moore, Cole and Clay. The opinion by Judge Karen Moore begins:

An Ohio jury convicted Richard Joseph of aggravated murder. The jury also convicted Joseph of a single capital specification, which made him eligible for the death penalty, and, after a mitigation hearing, recommended a sentence of death. The trial court accepted this recommendation and imposed the death penalty, which was upheld on direct and state post-conviction review. Asserting twenty grounds for relief, Joseph petitioned the district court for a writ of habeas corpus. The district court granted the writ on four grounds relating to a fundamental error in the capital specification: although the specification required Joseph to be the principal offender in the commission of the aggravated murder, everyone at trial proceeded under the mistaken view that the specification required Joseph to be the principal offender in the commission of the kidnapping. The district court denied Joseph’s remaining claims. Joseph appeals the denial of six of his sixteen unsuccessful claims, while the state cross-appeals the grant of the writ.

For the reasons discussed below, we AFFIRM the grant of a writ of habeas corpus.

Then quoting facts from from the Ohio Supreme Court’s decision:

Ryan’s body was discovered in a shallow grave. The body was wrapped in Visqueen, the jagged edge of which was matched positively with Visqueen recovered from the job site at Indian Lake where [Joseph] had been working. Under the body, a black ninja mask was recovered. An autopsy revealed that Ryan had superficial lacerations in the area of the throat. Further, Ryan had been stabbed two times in the back – one to the right flank and one at the base of the skull.

And about the materiality and prejudice of suppressed evidence:

All five items of suppressed evidence that were favorable to Joseph were favorable in the sense that they would have impeached Forest. And viewed collectively, these items would have strongly impeached Forest, who was clearly a crucial trial witness for the prosecution. FN22

–FOOTNOTE—
FN22 Forest testified that Joseph and Bulerin had access to Visqueen (the material in which Young’s body was found) at the sand and gravel lot, that Joseph’s and Bulerin’s demeanors were unusual the morning after the kidnapping, that Bulerin changed the tires on Forest’s car the morning after the murder, that a knife was kept in Forest’s car and was in the car on the day of the murder, that Joseph and Bulerin kept a shovel in Forest’s car, and that Joseph owned a black ninja mask like the one discovered near Young’s body

By affirming the grant of habeas petition, the defendant’s death sentence was set aside. Subsequently, writ of certiorari was denied (549 U.S. 1280), and on subsequent state court appeals the remaining life sentence (parole after 20) was affirmed (2008 Ohio 1138), but later remanded in 2010 only for the limited purposes of allowing motion to waive some court costs (125 Ohio St. 3d 76).

Two articles in the Lima Press are noteworthy – the parents of the victim and friends filled the courtroom and the parent were outraged at what they thought was an injustice to not execute their son’s killer:

“You were indicted, convicted by a jury of your peers and sent to death row where you should have died many years ago,” Sharon Young said Wednesday during the resentencing of Richard Joseph for the 1990 murder of their 16-year-old son, Ryan Young. She then criticized the law and justice system for his second chance. “The justice system has failed us and given you, a convicted murderer, another chance in life. Where does the system give Ryan another chance? You did not and neither did the justice system,” she said as she held her husband’s arm while both of them choked back tears. Joseph stared downward at the table in front of him …

In this case, the court’s majority denied a writ of habeas corpus to a convicted cult leader, Jeffrey Lundgren, who claimed ineffective assistance of counsel. The word “ninja” appears in the dissent, in which Judge Merritt argues that the defense counsel’s failure to claim the insanity defense was ineffective assistance. But the majority saw it as a reasonable decision and would not let the defendant get the opportunity to first test the case at trial and then allege insanity. The particular facts are about insanity by “deific degree”, meaning the defendant acted under belief he was ordered by god to kill.

JEFFREY D. LUNDGREN, Petitioner-Appellant,
v.
BETTY MITCHELL, Warden, Respondent-Appellee.

No. 02-3001; 440 F.3d 754
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Decided, March 13, 2006, Judge Merritt’s dissent begins:

Lundgren testified that he killed a family of five cult members as a religious sacrifice. He did so, he said, because he received a command from God that this sacrifice was necessary to prepare for “Zion” and the “Second Coming.” I disagree with our Court’s decision and reasoning in section II.D.3. above rejecting Lundgren’s ineffective assistance of counsel claim based on trial counsel’s inexplicable failure to raise the defense of insanity. Other than insanity Lundgren had no defense. In many similar “deific decree” cases in which a “delusional” person like Lundgren professed to be following God’s command to kill, defense lawyers have almost uniformly entered an insanity plea — and the jury has accepted the defense in some of the cases. As we shall see, even the prosecutors in the case could not understand why Lundgren’s lawyers did not enter such a defense. I will also apply Ohio’s definition of insanity in light of a mental illness theory counsel overlooked in bypassing his only available defense. I will then show why, in light of these considerations, the conduct of Lundgren’s counsel was manifestly ineffective. The writ of habeas corpus should have issued in this case to require a new trial in which Lundgren would be allowed to present the insanity defense before the jury.

The dissent then continues by listing a variety of deific decree insanity defenses over the past 200 years:

State v. Lafferty, 2001 UT 19, 20 P.3d 342, 363 (Utah 2001) (Mormon fundamentalist, who killed his sister-in-law and her infant child pursuant to God’s “removal revelation,” presented insanity defense to jury);

People v. Coddington, 23 Cal. 4th 529, 97 Cal. Rptr. 2d 528, 2 P.3d 1081, 1103, 1110-14 (Cal. 2000), overruled on different grounds by Price v. Superior Court, 25 Cal. 4th 1046, 108 Cal. Rptr. 2d 409, 25 P.3d 618, 633 n.13 (Cal. 2001) (defendant presented insanity defense to jury after strangling chaperones of two girls he sexually abused professedly because God commanded the actions);

State v. Blair, 143 N.H. 669, 732 A.2d 448, 449-50 (N.H. 1999) (counsel presented insanity defense to jury in case in which husband bludgeoned his wife and son with a hammer after experiencing a “trance” in which God revealed that he would be cast into the lake of fire if he refused to do so);

People v. Serravo, 823 P.2d 128, 130 (Colo. 1992) (en banc) (jury found defendant not guilty by reason of insanity for stabbing his wife “in order to sever the marriage bond” in accordance with God’s purported instructions);

State v. Ryan, 233 Neb. 74, 444 N.W.2d 610, 632 (Neb. 1989) (cult leader entered plea of not guilty by reason of insanity after following Yahweh’s “command” to torture and kill an “unfaithful” cult member);

Laney v. State, 486 So. 2d 1242, 1245-46 (Miss. 1986) (defendant shot police officers because God purportedly commanded the act and presented insanity defense to jury);

State v. Cameron, 100 Wn.2d 520, 674 P.2d 650, 654 (Wash. 1983) (en banc) (jury question regarding insanity defense existed when defendant implemented God’s “command” to stab repeatedly his stepmother to stop the “evil spirit” within her);

State v. Malumphy, 105 Ariz. 200, 461 P.2d 677, 678 (Ariz. 1969) (defendant, who shot and killed two co-employees due to his belief that God sanctioned the deeds, presented insanity defense to jury);

State v. Di Paolo, 34 N.J. 279, 168 A.2d 401, 407-08 (N.J. 1961) (defendant repeatedly stabbed ex-girlfriend because God professedly commanded the actions and presented insanity defense to jury);

People v. Schmidt, 216 N.Y. 324, 110 N.E. 945, 945, 34 N.Y. Cr. 51 (N.Y. 1915) (defendant, who claimed God commanded him to kill a woman as a sacrifice, presented insanity defense to jury);

State v. Hudson, 1999 Tenn. Crim. App. LEXIS 144, No. 01C01-9508-CC-00270, 1999 WL 77844, at **1, 8 (Tenn. Crim. App. Feb. 19, 1999) (appellate court remanded for entry of a judgment of not guilty by reason of insanity in case in which defendant shot her one-month-old nephew, believing that God had instructed her to kill “the son of Satan”);

State v. McDaniel, 1998 Ohio App. LEXIS 6122, No. 18805, 1998 WL 887184, at **2-3 (Ohio Ct. App. Dec. 16, 1998) (defendant, after experiencing religious delusion that God commanded him to kill his wife with a baseball bat, presented insanity defense to jury);

Ivery v. State, 686 So. 2d 495, 499-503 (Ala. Crim. App. 1996) (defendant, who claimed to be the “ninja of God” and to have followed God’s command “to kill people at will and to take their money as the spoils of victory,” presented insanity defense to jury);

People v. Wilhoite, 228 Ill. App. 3d 12, 592 N.E.2d 48, 55-58, 169 Ill. Dec. 561 (Ill. App. Ct. 1991) (court found defendant not guilty by reason of insanity after she followed God’s “command” to shove her nine-year-old daughter out of apartment window to pass “a test to see if the defendant could get into heaven” prior to the imminent end of the world);

Perkey v. Cardwell, 369 F. Supp. 770, 770-74 (S.D. Ohio 1973), aff’d, 492 F.2d 1244 (6th Cir. 1974) (defendant claimed he was carrying out God’s orders by shooting victim and entered plea of not guilty by reason of insanity);

United States v. Guiteau, 10 F. 161, 186 (D.D.C. 1882) (defendant alleged he was following God’s command to kill the president and presented insanity defense to jury);

Elizabeth Mehren, Fellow Inmate Guilty of Murdering Ex-Priest, Los Angeles Times, Jan. 26, 2006, at A15 (Massachusetts inmate, who claimed God commanded him to kill defrocked priest, presented insanity defense to jury);

Mom Who Killed Kids with Rocks Committed to Mental Hospital, Chi. Trib., Apr. 7, 2004, at 8 (Texas jury found mother innocent by reason of insanity after she stoned two of her young sons to death with heavy rocks professedly in accordance with God’s instructions); Richard Moran, The Origin of Insanity as a Special Verdict: The Trial for Treason of James Hadfield (1800), 19 Law & Soc’y Rev. 487, 508 (1985) (jury acquitted defendant who pled insanity defense following attempted shooting of the king of England purportedly at God’s direction);

cf. State v. Wilson, 242 Conn. 605, 700 A.2d 633, 641 (Conn. 1997) (“An individual laboring under a delusion that causes him to believe in the divine approbation of his conduct is an individual who, in all practicality, is unlikely to be able fully to appreciate the wrongfulness of that conduct.”).

With footnote #1

I am aware of only a few deific decree cases in which the insanity defense was not presented. In one of them, the failure to do so was held to constitute ineffective assistance of counsel. Galloway v. State, 1985 OK CR 42, 698 P.2d 940, 942 (Okla. Crim. App. 1985) (defendant, at the professed direction of God, “drove demons out” of his neighbor by killing him). In another, the defendant represented himself. Jon Krakauer, Under the Banner of Heaven xxii-xxiii (large print ed. 2003) (Mormon fundamentalist killed his sister-in-law and her infant child pursuant to God’s “removal revelation”). The brother of the aforementioned defendant declined to raise the insanity defense in his first trial because he believed the jury would interpret that defense as an admission of guilt, but, in his retrial, allowed counsel to present the insanity defense. State v. Lafferty, 2001 UT 19, 20 P.3d 342, 363 (Utah 2001); State v. Lafferty, 749 P.2d 1239, 1250 (Utah 1988). In addition, prosecutors wondered why some of Lundgren’s followers did not raise the insanity defense. See Cynthia Stalter Sasse & Peggy Murphy Widder, The Kirtland Massacre 273 (1991).

And so here, the word “ninja” is actually a reference to another case entirely. That case was in an Alabama criminal court. Again, in that case, and in this citing case, we see “ninja” in a case related to murder and religion.

Ultimately, the higher courts did not agree with Judge Merritt’s dissenting analysis (though a stay of execution was at one point temporarily ordered) and Jeffrey Lundgren was executed by the State of Ohio on October 24, 2006. The final clemency report can be read, with eight signatures recommending denial of clemency and explaining further details about his case. May the ninja gods have mercy on their souls.