Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ASTOR HOLDINGS, INC. v. ROSKI & BATTLEBOTS

August 11, 2003

ASTOR HOLDINGS, INC. F/K/A PROFILE RECORDS, INC., PLAINTIFF, -V- EDWARD "TREY" ROSKI, III, AND BATTLEBOTS, INC., DEFENDANTS


The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Robot Wars LLC, and Battlebots, Inc., along with their founders, have entertained, in addition to the millions who enjoy the robotic combat events they produce, no less than five federal judges in this District*fn1 and in California*fn2 (exclusive of appeals) with six different actions, all concerning the disastrous business relationship that once existed between the creative guru and spiritual leader of the robotic combat community, Marc Thorpe, and the sport's first corporate sponsor, Astor Holdings, Inc., formerly known as Profile Records, Inc. ("Astor"). In [ Page 2]

the instant campaign, Astor alleges that defendant Edward Roski, III, a robot builder and founder of defendant Battlebots, Inc., (1) tortiously interfered with two contractual agreements Astor had executed with Thorpe, and (2) aided and abetted Thorpe in breaching fiduciary duties he owed Astor as a joint venturer.*fn3 Astor seeks recovery of revenues it has lost as a result of Thorpe's and Roski's conduct, which allegedly injured its reputation among the robot builders its business depends upon.

Astor, having largely survived defendants' motion to dismiss, and having engaged with Roski in extensive and predictably contentious discovery, must now face its ultimate challenge — the facts — for Roski and Battlebots (hereinafter simply "Roski") have moved for summary judgment. Roski's motion will be granted in part and denied in part.

BACKGROUND

I. The Venture Agreement

The following facts are drawn from the voluminous summary judgment record; where material facts are disputed, the dispute is noted and described. In 1992, Marc Thorpe "conceived the idea of competitions involving radio-controlled robots designed to do mayhem to each other." (D. Mem. 2.) In order to fund the realization of his concept, Thorpe entered an agreement with Astor on July 22, 1994, forming the "Robot Wars" joint venture. According to that agreement, Thorpe and Astor each acquired a half interest in the Venture; Thorpe contributed his interest in [ Page 3]

the "Robot Wars" trademark, and Astor promised to contribute $50,000 and "the benefit of its expertise and contacts in the entertainment industry." (DX 1 ¶¶ 1(b), 3(a)-(c).) The agreement bound Thorpe to "devote the majority of his professional time to the Venture" and prohibited him from "enter[ing] into an agreement (other than through the Venture) with respect to matters . . . within the scope of the Venture," but made no provision for a salary. (Id. ¶ 2(a) (emphasis in original).) The Venture was not to make contracts or expenditures in excess of $500 without the consent of both parties. (Id. ¶ 2(a)-(b).) The agreement also contemplated the incorporation of the Venture in New York "as soon as practicable," with Thorpe and Astor having equal shares. (Id. ¶ 12.) A corporate shareholders' agreement, to be negotiated "in good faith" by the parties, would then replace the Venture Agreement. (Id.)

Astor's $50,000 contribution enabled the Venture to hold the first Robot Wars event in San Francisco in 1994. Events were also held there in 1995 and 1996. Since none of these earned a profit, Astor loaned additional cash to the Venture in those years, including, for a time, a salary it chose to pay to Thorpe. (DX 94 at 11; Plotnicki Aff. ¶ 3.) In early 1996, Astor decided not to make any more advances or loans to the Venture unless it received some consideration (such as a larger stake in the Venture), or unless the Venture obtained some outside investment. (DX 6; Plotnicki Tr. 10-13; Thorpe 7/21/98 Tr., DX 108 at 250.) The 1996 event ultimately went forward with Astor's consent, financed, in part, by a $25,000 loan Thorpe arranged from venture capitalist Robert Leppo, along with funds from Astor and its president, Steven Plotnicki. (Plotnicki Tr. 51-52.) Astor contributed or loaned a total of $368,000 to the Venture through January 1997. (DX 94 at 11.) [ Page 4]

As early as late 1995, Astor had proposed, and Thorpe appeared to be close to accepting, an "operating agreement" for a limited liability corporation that would succeed the joint venture. (DX 3; Friedman Tr., DX 122 at 26.) But Thorpe thereafter repeatedly raised objections and no agreement was executed. (Id. at 27.) Open disagreement surfaced between Astor and Thorpe when, in January or February of 1997, Astor took the position that no further live events would go forward until Thorpe executed an operating agreement. (DX 33 at 2; DX 94 at 10.) By April 1997, Thorpe had nevertheless decided not to sign the proposed agreement "as it stands," and to proceed with planning the 1997 event anyway. (PX 10.) In July 1997, a month before the usual time for the event, he publicized it, made arrangements with agents to sell tickets to it, and contracted for insurance. (PX 11, 14; DX 30-32.) Astor maintains, but Roski disputes, that it did not consent to these arrangements and was ignorant of them until it fortuitously discovered a published advertisement for the event. (PX 15; Pini Tr. 42-44.)

On July 18, 1997, Astor informed Thorpe through its litigation counsel that it believed he had breached the Venture Agreement by making these arrangements (PX 15), and on July 25, filed suit against Thorpe in this District, alleging breach of contract, breach of fiduciary duty, unjust enrichment, trademark infringement, and unfair competition. (PX 19.) It sought damages as well as preliminary and permanent injunctive relief. (Id. at 17-19.)

Robot Wars '97 ultimately took place with Astor's blessing, thanks to a settlement reached before Judge Batts on August 6, 1997, that gave Thorpe a license to proceed with the event and required him to sign a new operating agreement whose terms were set forth at the hearing. (PX 21.) But Thorpe never signed the agreement as subsequently proposed by Astor, or another version Astor says it drafted after a court-ordered mediation in December 1997, claiming [ Page 5]

that the drafts did not accurately reflect the agreements reached in those proceedings. (DX 67, 69, 72.) Correspondence indicates that starting in August 1997, Astor perceived that Thorpe was refusing to negotiate with them at all. (DX 63; PX 29; PX 38 at 2.)

In an apparent effort to pressure Thorpe to execute the promised operating agreement, Astor informed Thorpe on October 14, 1997, that "for financial and strategic reasons" it would not grant him a license to hold Robot Wars in 1998. (DX 56.) In February 1998, Thorpe sought to compel Astor to grant him a license to produce the event, but Judge Batts denied his motion and ordered the parties to mediate again. A mediation held on March 6, 1998, appears to have been fruitless. (PX 29.) Meanwhile, Thorpe appealed Judge Batts's denial of his motion and sought an injunction from the Second Circuit permitting Robot Wars '98 to go forward. That relief was denied on April 29, and Thorpe subsequently withdrew the appeal entirely.

Judicially barred from holding a live event, Thorpe became openly hostile to Astor and even to the Venture itself. On March 20, 1998, he sent a mass e-mail to Robot Wars participants and enthusiasts publicly airing his complaints about Astor and the agreement it was trying to get Thorpe to sign. (PX 30.) He blamed his inability to make arrangements for the 1998 event on Astor, stating that he had "worked far too hard and too long and at far to [sic] much personal sacrifice to be bullied into submission by a wealthy businessman and his clever attorneys" and that "I am not one to succumb to tactics of coercion and intimidation." (Id.)

Thorpe wrote to Plotnicki on June 5 proposing that they work out an "interim accommodation to enable the [1998] event to go forward" notwithstanding the persistent inability of Astor and Thorpe to arrive at a "`global' resolution" of their larger problems. (PX 58 at BB03682.) But on June 10, he again publicly berated Astor for withholding its approval for the [ Page 6]

annual live event (PX 56), and subsequently appeared to have given up on producing a live event or otherwise promoting Robot Wars with Astor.

In early June 1998, the British TV producer Mentorn Films, which had filmed and broadcast earlier Robot Wars events, presented the Venture with the opportunity to introduce Robot Wars to the U.K. on a large scale, promising deals with the BBC and Polygram Video for filming Robot Wars events and licensing of the trademark to computer game manufacturers. (PX 52 at BB10766-67.) Thorpe immediately circulated the correspondence to one of his attorneys with the comment that it needed "urgent attention." (PX 52, 53.) On July 4, apparently taking a page out of Astor's 1997 game plan, Thorpe informed Plotnicki that "There is no approval by the . . . Joint Venture for [Robot Wars '98]" (PX 60), and, on July 13, Thorpe's attorney issued a cease-and-desist letter to Mentorn with respect to its use of the Robot Wars trademark, citing Mentorn's contractual arrangements with "Robot Wars Limited" or "Robot Wars UK," entities which the letter stated were "wrongfully creat[ed]." (PX 61.)

II. The Bankruptcy and the Bankruptcy Settlement Agreement

By May 1998, Thorpe, who had received no Robot Wars salary for two years, had accumulated $80,000 in credit card debt along with his debts to Leppo and others. (Thorpe Tr. 193; Thorpe Decl. ¶ 18.) He engaged bankruptcy attorney William Weintraub and, on May 28, filed for bankruptcy in the Central District of California. (DX 98.) In July, Weintraub moved for rejection of the Venture Agreement. (PX 64 at 37-38.) The first reorganization plan submitted by Weintraub, discussed below, was not well received by the bankruptcy court, which urged Weintraub to settle Thorpe's dispute with Astor. (Weintraub Tr. 33.) [ Page 7]

Thorpe engaged Frederick Fierst, a licensing attorney, to attempt to negotiate the settlement. On February 2, 1999, Astor and Thorpe signed a settlement agreement that conveyed full title to the Robot Wars trademark and entity to Astor, in return for a payment of $250,000 and certain royalties to Thorpe. Thorpe was obligated, while he received royalties and at least through September 1, 1999, to "use his reasonable best efforts to . . . promote the property [and] help the Robot Wars Entity secure likeness and image rights from the community of robot makers." (DX 75 ¶ 7.) The bankruptcy court approved the settlement on March 5, 1999.

III. Roski's Involvement

Roski had entered the picture at the 1995 event, in which his robot successfully competed. (Roski Aff. 2.) Excited about the event, Roski had approached Gary Pini, an Astor employee, to see how he could "get[] involved" financially. He was rebuffed. (Roski 7/16/98 Tr. 28-30.) He nevertheless took it upon himself to seek advertising sponsors for subsequent Robot Wars events, and sent a list of potential sponsors to Pini in February 1996, although nothing came of those leads. (PX 7; Pini Tr. 35.) When Astor sued Thorpe in July 1997, Thorpe's counsel, William M. Scherer, approached Roski's father, Edward Roski, Jr., a wealthy businessman, for assistance with the imminent legal battles. (PX 17.) Astor provides hearsay evidence that Roski's father offered to provide assistance at this time. (PX 18.)

In any case, there is evidence, albeit only in the form of one-way communications from Thorpe and his attorneys, that the Roskis' law firm, Latham & Watkins ("Latham"), had become involved with Thorpe's dispute with Astor by early March 1998, and remained so until early 1999. Prior to the March 6, 1998, mediation session, Thorpe told Roski he thought he needed a transactional attorney. (Thorpe Tr. 104-05.) Roski's father engaged David Rogers of Latham to [ Page 8]

get "a better understanding of what this dispute was all about." (Rogers Tr. 27.) Rogers sent another Latham attorney, Andrew Richman, to the mediation for the purpose of reporting back to him. (Richman Tr. 41-42.) Caspar Ewig, Thorpe's litigation attorney, told Astor's counsel that Richman was representing Thorpe. (PX 26.) According to Rogers, Latham subsequently declined to assist Thorpe, and decided instead to advise Roski, who "was interested in having this Robot Wars event occur in San Francisco." (Rogers Tr. 46.) In early April 1998, Thorpe thanked Rogers for "taking this on" (PX 37), and thereafter appears to have transmitted to Rogers and/or Roski's father copies of all correspondence regarding Robot Wars. (E.g., PX 32, 34-35, 37-39, 42-43, 52-54.) He provided Rogers with a copy of Thorpe's "Robot Wars" trademark registration (PX 39), a list of Robot Wars' assets (PX 40), and a draft of a letter to Plotnicki (PX 41).

Roski's motivations and intentions are disputed, but it is clear that he wanted to ensure that the live events were held and that he was not averse to helping Thorpe free himself from the relationship with Astor. Thorpe sent Rogers deal documents, dated April 2 and April 8, 1998, outlining proposed arrangements by which, in return for half of Thorpe's interest in Robot Wars, Roski would continue his legal support and fund future Robot Wars events "up to $100 ? per event." (DX 70.) These also contemplated possible dissolution of the relationship between Thorpe and Astor. Id. On April 29, following the Second Circuit's rejection of Thorpe's request for an injunction, Thorpe's litigation counsel Ewig wrote to Rogers, noting that Thorpe would be meeting with Rogers "this afternoon," and indicating that Rogers should discuss litigation strategy with Thorpe in light of a recent letter from Plotnicki urging a continuation of negotiations. (PX 44.) Ewig also assured Rogers that he did not "want to interfere with any [ Page 9]

future course of action you may contemplate." (Id.)

It appears that it was Rogers who suggested that Thorpe file for bankruptcy. He believed that the Venture Agreement was "onerous," "obscene," and "unconscionable," and had suggested to Thorpe sometime before April 21, 1998, that bankruptcy could serve the dual goal of "reconfigur[ing]" Thorpe's debt and freeing him of his obligations under the Venture Agreement. (Rogers Tr. 91-92, 185; see also PX 45 at BB16641.) A Latham & Watkins bankruptcy attorney, Peter Gilhuly, subsequently discussed bankruptcy issues with Thorpe. (Rogers Tr. 96.) It was Latham that referred Thorpe to bankruptcy attorney Weintraub, and Thorpe paid Weintraub with $150,000 borrowed from Roski, who in turn had borrowed the money from his father. (PX 46, 47.) Thorpe's half interest in the Venture served as security for this loan. (PX46.)

Roski initially hoped to obtain a stake in the Robot Wars Venture through Thorpe's bankruptcy reorganization. Weintraub's first draft of a reorganization plan, which was never actually filed with the court, contemplated auctioning off the Robot Wars trademark with "stalking horse" protection for any bid by Roski, and Thorpe's employment by a new entity that would acquire his interest in the Venture. (PX 65 at 9, 13, 21-22.) Gilhuly and Weintraub were in frequent, sometimes daily, contact through February 1999; Latham's billing records indicate that Gilhuly discussed the plan with Weintraub (PX 45 at BB16557-79), and specifically the possible sale of the Robot Wars trademark (id. at BB16558). In an August 15 letter to Gilhuly, Weintraub stated that in drafting the plan, he "tried to be sensitive to the structure that you and Dave Rogers have envisioned for the Plan and for Trey." (PX 65 at BB10959.) Thorpe testified that he assumed he would "play some role in the business" if Roski acquired the Robot Wars trademark. (Thorpe Tr. 209-10.) When the bankruptcy court rejected the first reorganization [ Page 10]

plan, Roski, at Weintraub's suggestion, hired Fierst to assist Thorpe in December 1998 as "a critical part of [Roski's] own overall strategy" (according to Weintraub), for the limited purpose of "consult[ing] on those aspects of the proposed global settlement that relate to [Thorpe's] buy-out"; that buy-out was "a smaller part of the larger puzzle representing Mr. Roski's future involvement." (PX 67.) But under circumstances disputed by the parties, Roski ceased to be involved or represented in the bankruptcy negotiations in early 1999 (D. Rule 56.1 Counter-Statement ¶ 94 (citing Fierst Tr. 29-32)), and Roski had no stake in the final settlement between Thorpe and Astor.*fn4

On February 3, 1999, a day after execution of the settlement agreement, Gary Cline, a robot maker who may have heard about the settlement terms from Roski (Cline 8/26/99 Tr. 106-09), publicly attacked it in an e-mail broadcast referring to Plomicki and Astor as "evil" and suggesting that any robot maker who participated in Robot Wars '99 would be a "whore." (PX 74.) On February 22, 1999, Roski held the organizational meeting for Battlebots, Inc., and on March 10, 1999, announced its formation as "a new and unique entry into the expanding field of extreme robotic sports." (PX 75.) Its first event was to take place in Long Beach, California, in August. (Id.) The first Battlebots event took place exactly one week before Robot Wars '99 had been scheduled (P. Mem. 16), and, according to Astor, Robot Wars'99 had to be cancelled due to lack of interest from robot builders. (Compl. ¶ 94.)

IV. Thorpe's Breach of the Bankruptcy Settlement

Astor claims that sometime before March 11, 1999, it "called upon Thorpe to fulfill his [ Page 11]

obligations under the settlement agreement," but that Thorpe refused to do so. (Compl. ¶ 84.) Furthermore, on March 13, Thorpe posted a message on the Robot Wars Forum that, with obvious sarcasm, purported to praise Robot Wars and to urge robot builders to participate in Robot Wars '99:

[A]ccording to [Astor], I am not living up to my obligations within the settlement agreement. Specifically, they say that I am not doing enough to get robot builders to participate in Steve's event and to rehabilitate his reputation. So . . . imagine me opening my front door, standing with hands cupped on either side of my mouth, shouting at the top of my lungs for all to hear, "STEVE PLOTNICKI IS A NICE GUY AND I WANT EVERYONE FROM BELL CLINTON TO C3PO TO COME TO RW99 BECAUSE IT WELL BE THE BEST EVENT EVER!" Hopefully this will satisfy all concerned and I can go back rebuilding my life.
(PX 78.) The message also asserted that he was not involved ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.