No. 04-1744
Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. Joseph Robert Goodwin,
District Judge. (CA-03-2467-3)
Argued:
February 2, 2005
Decided:
June 8, 2005
PER CURIAM:
AttorneyFirst LLC (AttorneyFirst) appeals from a judgment
against it on the merits of seven of its nine claims1 after the
district court, under Fed. R. Civ. P. 65(a)(2), consolidated a
hearing on an application for preliminary injunction with a trial
on the merits.
I.
AttorneyFirst filed its original Complaint against Ascension
Entertainment, Inc., Steven Lopez, JurisFirst LLC, and Academy
Mortgage Corp. alleging claims for: (1) breach of a Confidentiality
and Non-Disclosure Agreement (the Confidentiality Agreement); (2)
breach of a Development Agreement (the Development Agreement);
(3) breach of a declaratory judgment of the rights and obligations
of the parties under those agreements; and (4) willful, malicious,
intentional and independent torts against AttorneyFirsts property
interests.
The
original
Complaint
sought
compensatory
and
The action,
Affirmative Defenses.
On
January
16,
2004,
the
parties
filed
their
Report
Of
court
to
enjoin
all
defendants
from
improper
use
of
confidentiality.
AttorneyFirst
also
requested
an
In the Amended
injunctive relief
conversion
(Count
V);
tortious
interference
with
business
constructive
trust
(Count
VIII);
and
violations
of
West
Virginias Uniform Trade Secrets Act (Count IX). Like the original
Complaint, the Amended Complaint made a demand for trial by jury.
After the defendants had responded to the motion for preliminary
injunction, the district court set the motion for an evidentiary
hearing.
II.
At the beginning of the two day hearing, the district court
observed that the proposed Amended Complaint included a claim, and
sought injunctive relief,
Secrets Act.
Then,
the
JA 250.
The
Were prepared to
address the contractual issues set forth in the first and second
agreements, as well as the trade secrets issue.
JA 251.
Breakthrough Med. Corp., 952 F.2d 802 (4th Cir. 1991); Rum Creek
Coal Sales, Inc. v. Caperton, 926 F.2d 353 (4th Cir. 1991);
Blackwelder Furniture Co. v. Seilig Mfg. Co., 550 F.2d 189 (4th
Cir. 1977).
5
* * *
And, the claim for preliminary injunction is based not
only on the contractual provisions [and] . . . by
agreement ore tenus on the West Virginia Trade Secrets
Act.
JA 251 (emphasis added).
JA 252.
Thereupon,
for most of that day and the better part of the next day the
district
court
heard
testimony
directed
to
the
claims
for
injunctive relief.
At the conclusion of the evidentiary session, the district
court set a schedule for filing proposed findings of fact and
conclusions of law.
JurisFirst
expressed
JA 696.
concern
incurring
the
expense
of
The
district
court
addressed
that
issue
by
on
under
whether
the
preliminary
Blackwelder
injunctive
standard.3
relief
was
AttorneyFirsts
JA at 833.
II, III, VII, VIII and IX; (b) declined to enter the declaratory
relief requested in Count IV; and (c) held in favor, in small part,
of AttorneyFirst on Counts I and V.
JA 845-65.
A judgment order
JA 866.
This appeal
ensued.
III.
Assessment of the notice issue raised by AttorneyFirst begins
with the terms of Fed. R. Civ. P. 65(a)(2), which, in pertinent
part, provides:
(2) Consolidation of Hearing With Trial on Merits.
Before or after the commencement of the hearing of an
application for a preliminary injunction, the court may
order the trial of the action on the merits to be
advanced and consolidated with the hearing of the
application.
* * *
This subdivision (a)(2) shall be so construed and applied
as to save to the parties any rights they may have to
trial by jury.
We have held that Fed. R. Civ. P. 65(a)(2) wisely permits the
district
court
in
an
appropriate
case
to
hear
motion
for
(quoting Singleton v. Anson County Bd. of Educ., 387 F.2d 349, 351
(4th Cir. 1967)).
We also have accepted the now-settled principle announced in
Pughsley v. 3750 Lake Shore Drive Coop. Bldg., 463 F.2d 1055 (7th
8
hearing
appropriate,
unambiguous
on
the
notice
motion
parties
to
that
for
should
effect
preliminary
normally
either
injunction
receive
before
clear
the
is
and
hearing
to
present
their
respective
cases.
Gellman
v.
(emphasis
added).
Noting,
however,
that,
on
occasion,
10
In Gellman, we cited
And,
IV.
A.
At the beginning of the preliminary injunction hearing, and
based on its perception of an exchange with, and between, counsel
11
JA 846.
The exchange
Clearly, the
Having
reviewed
that
exchange
in
its
entirety,
we
both the
Uniform
Trade
Secrets
Act
as
presented
in
the
Amended
Complaint.
That conclusion is supported by a review of the hearing
transcript which discloses that the evidence was focused on the
question of preliminary injunctive relief, not on the entirety of
the contractual claims or the Uniform Trade Secret Act claims that
formed the springboard for preliminary injunctive relief. Nor does
the record disclose the sort of proofs usually associated with
claims for fraud, conversion, tortious interference with a business
(JA 249-257).
12
support
conclusion
that
there
no
agreement
to
both
the
contractual
and
the
statutory
claims
for
injunctive relief, and not that the merits of all claims were to be
decided.
13
JA 814.
JA 847.
B.
The district court also held that the notice requirement was
satisfied by a comment that it made after the evidence had been
presented.
exchange.
JurisFirst moved that the Court decide from the bench now that the
standards for issuing a preliminary injunction have not been met
and that such an injunction will not be issued.
added).
JA 616 (emphasis
stated:
This fight among all of you has been going on a while.
And I just as soon the preliminary injunction stage, if
I do it right, will be the end of the fight, or at least
I think it will. Since thats an appealable order too
and we wont be going into discovery, it doesnt seem to
me like this is a case that will need to go on much
beyond this.
JA 847 (quoting the hearing transcript at JA 621).
In its
15
V.
AttorneyFirst
also
asserts
that
the
district
courts
(emphasis added).
We agree.
for
trial
by
jury.
Yet,
to
accept
the
view
that
lightly implied.
16
Bowles v. Bennett,
decision
to
enter
judgment
on
the
merits
all
of
Here, as there,
waive the right to trial by jury, but the record here discloses no
such agreement.
VI.
Of course, there are instances when the lack of notice under
Rule 65(a)(2) does not foreclose a decision on the merits of a
legal issue by the district court.
Thompson, 296 F.3d at 235.
Id.
The special
the
plaintiff
at
argument
on
appeal
that
all
the
legal
Id.
Also, in aaiPharma, we
noted that the case turned wholly on the resolution of one specific
legal question; and, therefore, if the case were remanded, we
would likely find ourselves reviewing the district courts ruling
on this issue next year in light of the same record and the same
arguments we have before us now.
Id.
Unlike
Nor,
Indeed,
on
Virginias
the
facts
Uniform
presented,
Trade
Secret
the
Act
contracts
warranted
or
the
West
preliminary
18
merits.
19