TIGER TEAM TECHNOLOGIES, INC. (formerly known as Blackwater Technologies, Inc.) v. SYNESI GROUP, INC. (formerly known as Portogo, Inc.)

NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2009-1508
TIGER TEAM TECHNOLOGIES, INC.
(formerly known as Blackwater Technologies, Inc.),
Plaintiff-Appellant,
v.
SYNESI GROUP, INC. (formerly known as Portogo, Inc.),
Defendant,
and
TIM OLISH and ROD MILEY,
Defendants-Appellees.
Boris Parker, Parker & Wenner, P.A., of Minneapolis, Minnesota, for plaintiff-
appellant.
Robert Zeglovitch, Law Offices of Robert Zeglovitch, of St. Paul, Minnesota, for
defendants-appellees.
Appealed from: United States District Court for the District of Minnesota
Judge Ann D. Montgomery

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NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2009-1508
TIGER TEAM TECHNOLOGIES, INC.
(formerly known as Blackwater Technologies, Inc.),
Plaintiff-Appellant,
v.
SYNESI GROUP, INC. (formerly known as Portogo, Inc.),
Defendant,
and
TIM OLISH and ROD MILEY,
Defendants-Appellees.
Appeal from the United States District Court for the District of Minnesota
in case no. 06-CV-01273, Judge Ann D. Montgomery.
__________________________
DECIDED: April 12, 2010
__________________________
Before MICHEL, Chief Judge, CLEVENGER and PROST, Circuit Judges.
PER CURIAM.
Tiger Team Technologies, Inc. ("TTT") sued Synesi Group, Inc. ("Synesi") and
two of its shareholder officers, Tim Olish and Rod Miley, in the United States District
Court for the District of Minnesota. The district court granted summary judgment to
defendants Olish and Miley and entered a default judgment against Synesi but awarded
no damages to TTT. Tiger Team Techs., Inc. v. Synesi Group, Inc., 2009 WL 749814
(D. Minn. 2009). TTT now appeals both orders. We affirm.

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I
The case arises from a contemplated joint business venture with TTT licensing
and marketing Synesi's technology. Relations between the parties withered, and,
among other things, TTT believed its business was harmed due to Synesi's public
allegations of patent infringement. Along with various state law claims, TTT's original
complaint filed in this action sought a declaratory judgment that TTT did not infringe
Synesi's patents. Upon filing of the original complaint, the suit was thus denominated in
the court system as a patent case.
By its second amended complaint, TTT dropped its declaratory judgment patent
count, but left in the complaint several counts: Count I for Breach of Contract, Count II
for Promissory Estoppel, Count III for Deceptive Trade Practices Under Minnesota
Statute § 325D.44, Count IV for Unfair Competition, Count V for Common Law Fraud by
Misrepresentation and/or Omission, Count VI for Negligent Misrepresentation and
Count VII for Individual Liability against Olish and Miley.
Although the primary patent claim of noninfringement was dropped from the
case, a remaining question of patent law lurked in Count III. A theory of liability under
the Minnesota Deceptive Trade Practices Act ("MDTPA") is that Synesi disparaged
TTT's products by asserting claims of patent infringement against TTT. For TTT to
prevail on Count III, it would need to prove that its products did not infringe Synesi's
patents. See McClure v. American Family Mut. Ins. Co., 223 F.3d 845, 854-55 (8th Cir.
2000) (MDTPA claimant must prove falsity of allegedly false deceptive statement).
TTT's right to relief on Count III of its amended complaint thus depends on the
resolution of a substantial question of patent law.
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Our jurisdiction depends on whether the plaintiff's complaint as amended
establishes that either federal patent law creates the cause of action or the plaintiff's
right to relief depends on the resolution of a substantial question of patent law, in that
patent law is a necessary element of one of the well-pleaded claims. Christianson v.
Colt Indus. Operating Corp., 486 U.S. 800, 806-08 (1988). Because Count III depends
on the resolution of a substantial question of patent law, we have jurisdiction over this
appeal. See Additive Controls & Measurement Sys. Inc. v. Flowdata, Inc., 986 F.2d
476, 478-79 (Fed. Cir. 1993) (applying similar analysis to a Texas state business
disparagement claim).
Because the well-pleaded complaint defines our appellate jurisdiction, it is of no
matter that TTT does not appeal the dismissal of Count III. In fact, while the district
court dismissed or granted summary judgment on all of the counts, TTT only appeals
the district court's grant of summary judgment on Counts I, II, IV and VII, and the
dismissal of its request for damages under a default judgment entered against Synesi.
II
Because the merits of the default judgment entered against Synesi are not
appealed, the live controversy on appeal is whether Olish and Miley are liable to TTT
under Counts I, II and V. Count VII represented TTT's attempt to pierce the corporate
veil and thereby assign individual liability to Olish and Miley for the breach of contract,
promissory estoppel, and common law fraud counts. The district court ruled against
TTT on the merits of Counts I, II and V, and, in addition, held that on the facts of this
case the corporate veil could not be pierced to establish liability for the individual
defendants.
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III
The district court refused to pierce Synesi's corporate veil with regard to the
Breach of Contract and Promissory Estoppel counts. Under Minnesota law, the
corporate veil may be pierced when the corporation is an alter ego or mere
instrumentality of an individual shareholder or shareholders. Victoria Elevator Co. of
Minneapolis v. Meriden Grain Co., 283 N.W.2d 509, 512 (Minn. 1979). The district court
carefully assessed the facts alleged by TTT to support its piercing theory and found
those allegations lacking in evidentiary support. Consequently, the district court ruled
against TTT on Count VII, thus releasing Olish and Miley from liability under Counts I
and II. We discern no clear error in any of the facts found by the district court in ruling
on the corporate veil issue, and therefore affirm its grant of summary judgment
regarding Counts I and II.
IV
Count V charged Olish and Miley with making misrepresentations to TTT
regarding the status of the Synesi's patents. Corporate officers can be found liable for
fraudulent acts if they directly engage in the fraudulent conduct. See State by
Humphrey v. Alpine Air Prods. Inc., 490 N.W. 2d 888, 897-98 (Minn. Ct. App. 1992).
The second amended complaint specified the alleged misrepresentations, namely that
"[d]espite the fact that they knew that no patent had yet been granted, [Olish and Miley]
repeatedly assured [TTT's representative] Mr. Hogan that the Synesi technology was
fully patented and that [TTT] would be granted a license to sell it." Second Am. Compl.
¶ 52. The district court found that TTT presented no evidence that Olish or Miley made
the alleged misrepresentations.
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TTT does not appeal the district court's factual finding regarding the
misrepresentations alleged in the second amended complaint. Instead, TTT asserts
reversible error by the district court in refusing to consider other alleged
misrepresentations by Olish and Miley. The other alleged misrepresentations were first
presented to the district court, and the defendants, by TTT in its opposition to the
Defendants' Motion for Summary Judgment on the fraud count.
Under Federal Rule of Civil Procedure 9(b), a party alleging fraud "must state
with particularity the circumstances constituting fraud or mistake." "This requirement is
designed to enable defendants to respond specifically, and at an early stage of the
case, to potentially damaging allegations of immoral and criminal conduct." BJC Health
Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007). The district court held,
with regard to TTT's new allegations, that "[t]heir late arrival to the lawsuit is prejudicial
to Defendants." The court granted summary judgment to Olish and Miley on Count V.
On appeal, TTT recognizes that freely amending a complaint to add new
allegations can be barred if the objecting party is prejudiced. Appellant's Brief at 33.
Here, the district court made a finding of fact that the defendants would be prejudiced by
allowing amendment to include TTT's new factual allegations to support Count V. We
see no error in the ruling of prejudice by the district court and therefore affirm its grant of
summary judgment of Count V.
V
The final item of business in this appeal is TTT's appeal of the district court's
order entering default judgment against Synesi, but without award of damages. The
district court initially declined to rule on TTT's motion for default judgment against
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2009-1508 6
Synesi, because "Plaintiff has failed to submit documentation fixing its damages at a
'sum certain' of $49,550,225, and, therefore, a default judgment will not be entered at
this time." The district court further instructed TTT that "[i]f Plaintiff has appropriate
documentation to support a judgment, such documentation should be submitted to the
Clerk."
In response, TTT submitted an affidavit by Bart J. Ward, stating his views as to
why the judgment should be set at $49,550,225. In response to this affidavit, the district
court repeated the admonition it had issued when denying the original request for
judgment:
A "sum certain" under the rule means an amount that can be fixed by
simple calculation or that can be set by documentation, such as an invoice
or contract. It does not refer to a mere claim by a party for a specific
amount, such as a multimillion dollar claim for damages.
Accordingly, the district court held that TTT's affidavit of an expert did not meet the
requirements of establishing a "sum certain."
We see no error in the district court's rejection of Mr. Ward's affidavit as
insufficient to establish a sum certain to accompany the default judgment, and we
therefore affirm the district court's entry of default judgment against Synesi without
damages.
VI
We affirm the judgment of the district court in all respects.
COSTS
No costs.

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