United States District Court, E.D. Michigan, Southern Division
OPINION & ORDER DENYING PLAINTIFF'S MOTION FOR
TEMPORARY RESTRAINING ORDER/PRELIMINARY INJUNCTION
F. Cox United States District Court Judge
SKG International, Inc. (“International”) filed
this action against Defendants SKG Italia, S.p.A.
(“Italia”) and Michele Bernini (collectively
“Defendants”) on December 30, 2016. On that same
date, International filed a Motion for Temporary Retraining
Order/Preliminary Injunction and a motion asking the Court to
expedite the motion. This Court held an evidentiary hearing
and heard oral argument on January 19, 2017, and January 20,
reasons set forth below, the Court DENIES Plaintiff's
International filed this action against Defendants Italia and
Michele Bernini on December 30, 2016. On that same date,
International filed a Motion for Temporary Retraining
Order/Preliminary Injunction and a motion asking the Court to
expedite the motion.
Verified Complaint contains the following four counts,
asserted against Defendants:
• “Count I - Injunctive Relief” -
wherein International asks the Court to issue a TRO and/or
preliminary injunction that: 1) requires Italia to supply
components/products to International; and 2) prohibits Italia
from communicating or contacting International's
customers regarding the supply of components.
• “Count II - Breach of the Licensing
Agreement” - asserted against Italia, wherein
International asserts that Italia breached the parties'
License Agreement by: 1) refusing to provide supplier and
cost information; 2) by contacting, communicating, and
soliciting its customers; and 3) committing other breaches
concerning payments. This Count seeks monetary damages and an
award of attorney fees.
• “Count III - Intentional Interference with
Contractual Relationships and Business
Expectancies” - asserted against Italia, wherein
International asserts that Italia has wrongfully and
maliciously interfered with its contractual relationships and
business expectancies with its customers. This Count seeks
monetary damages and attorney fees.
• “Count IV - Breach of Fiduciary
Duty” - asserted against Michele Bernini, wherein
International asserts that he has breached his fiduciary
duties to it in a number of different ways. This Count seeks
monetary damages and an award of attorney fees.
Court held a conference with the parties on January 9, 2017.
During that conference, the Court explored settlement of the
preliminary injunction motion with the parties. Although the
Court was preparing for a criminal Medicare fraud trial that
was to commence the following day, the Court devoted the
better part of a full day to that conference. During that
conference, International's counsel stated that
International was in the process of obtaining a letter of
credit. The parties were unable to come to any kind of
resolution as to the requested preliminary injunction.
Court then scheduled the pending Motion for TRO/Preliminary
Injunction for January 18, 2017. The Court also ordered the
parties to submit the following materials to the Court prior
to the hearing: 1) witness lists; 2) exhibit lists; and 3)
proposed findings of fact and conclusions of law.
Specifically, the Court ordered:
IT IS FURTHER ORDERED that Defendants shall
file their response to Plaintiff's Motion for Temporary
Restraining Order and Preliminary Injunction no later than
Thursday, January 12, 2017, at 5:00 p.m.
IT IS FURTHER ORDERED that, no later than
January 13, 2017, at 1:00 p.m., each party
shall file: 1) a Witness List, that lists each
witness that may be called at the January 18, 2017 hearing,
along with a short summary of the expected testimony, and an
estimate of the length of the expected testimony, of each
witness; 2) an Exhibit List, listing each exhibit
that may be presented at the January 18, 2017 hearing; and 3)
Proposed Findings of Fact and Conclusions of Law,
set forth in separately-numbered paragraphs.
IT IS FURTHER ORDERED that two (2) courtesy
copies of each of the above filings shall be delivered to the
Court on the dates that the filings are due.
IT IS SO ORDERED.
(D.E. No. 13) (emphasis in original).
filed all of their required materials as ordered by the
Court. That included Defendants' response to the motion
and an Affidavit of Olivia Bernini. (D.E. No. 15-1).
Plaintiff had not filed anything by late afternoon on January
13, 2017, this Court issued a Show Cause Order, requiring
Plaintiff to show cause by 5:00 p.m. why the Court should not
deny the motion and cancel the hearing. (D.E. No. 20).
Plaintiff's Counsel filed its materials, along with a
“Motion for Acceptance of Late-Filed Witness List,
Exhibit List, and Proposed Findings of Fact and Conclusions
of Law.” (D.E. No. 24). Contrary to the Court's
order, however, Plaintiff did not provide any estimate for
the length of time that Plaintiff would need to examine its
two witnesses. The Court had requested that information from
the parties because the Court was attempting to schedule the
evidentiary hearing around the criminal jury trial and
matters relating to that case.
Court held an evidentiary hearing, and heard oral argument
from counsel, on January 19, 2017, and January 20, 2017.
evidentiary hearing, International presented two witnesses,
who were cross-examined by Defense Counsel: 1) Steve Tarino,
the Chief Financial Officer and a Director of International;
and 2) Fariborz Kayyod, International's Chief Executive
Officer. Defendants presented two witnesses, who were
cross-examined by International's Counsel: 1) Olivia
Bernini, who serves a member of the Board of Directors of
Italia and has senior management responsibility of its
operations; and 2) Michele Bernini who works in research and
development for Italia and is a chairmen of International.
The Court also received a number of exhibits.
OF FACT AND CONCLUSIONS OF LAW
heard and observed the witnesses who testified at the
evidentiary hearing, allowing for this Court to assess
credibility, having considered the exhibits submitted by the
parties, having reviewed all matters of record for this case,
having considered the arguments presented by counsel, and
having applied the governing legal principles, the Court
makes the following findings of fact and conclusions of law,
for purposes of the pending motion.
manufactures and sells component and finished parts that are
used in automotive heating, ventilation, and air-conditioning
systems (“HVAC”) world-wide. Italia's
automotive products use Italia's confidential
intellectual property, which includes specifications and
designs, which were developed through many years of design,
engineering, coordination with suppliers, and quality
to the formation of International and execution of the
License Agreement, Italia's customer base included Valeo
Group (“Valeo”), Keihin Thermal Technology of
America, Inc. (“Keihin”), and Modine
Manufacturing Company (“Modine”).
2013, Italia had the necessary intellectual property and
expertise in the manufacturing process to expand its business
into North America. But it needed a financial partner and
local management. Italia was introduced to Kayyod and Tarino
as potential partners.
about November 1, 2013, Italia, along with Bell the Cat (an
entity owned by Kayyod) and MCP SKGI, LLC (an entity owned by
Tarino), formed International and entered into a
Shareholders' Agreement. (Def.'s Ex. 1). The intent
of the shareholders was to form a company (International)
that would source its own components and manufacture,
assemble, and sell automotive parts, based on Italia's
intellectual property, in North America, South America, and
same date, Italia and International entered into a written
“License and Technology Transfer Agreement”
(“the License Agreement”) (Def.'s Ex. 2).
the term of the License Agreement, International had the
right to use Italia's intellectual property to source its
own materials and manufacture products. Specifically, the
Licensing Agreement provided:
(a) Licensed Technology Transfer. Immediately, upon
commencement of this Agreement and for a period of fifteen
(15) years thereafter, the Licensor will use its reasonable
commercial efforts to effectuate the transfer of the Licensed
Technology by meeting with, discussing with and assisting the
(i) to ensure the proper communication of requirements on
Product design, Product features, performance, price and/or
other requirements to Product sales process;
(ii) to ensure the timely development and assistance in
certification (if applicable) of new Products to
Licensee's or customers' specifications and the
procurement and delivery of samples, as required;
(iii) to ensure the timely development of the manufacturing
process necessary for the manufacture of the Products by
Licensee which may incorporate all relevant information
pertaining to the relevant Product, which may include,
without limitation: development schedules, product
specifications and tooling specifications, purchase terms,
long-lead time components, qualified suppliers and quality
(iv) to assist Licensee in developing the quality standards
and test specifications for the Products.
the Licensing Agreement does not require Italia to
sell or supply any parts, components, or products to
Licensing Agreement required International to pay Italia a
“royalty of three percent (3%) of any and all Gross
Revenues derived from any and all sources in connection with
the Products in consideration for the obligations of Licensor
under Section 2A.” (Ex. A of Licensing Agreement). In
sum, as Fayyod testified at the evidentiary hearing,
International was required to pay a 3% royalty to Italia for
all of the products that International sold. The Licensing
Agreement provided that ...