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Orbit One Communs. v. Numerex Corp.

United States District Court for the Southern District of New York

March 10, 2010, Decided; March 12, 2010, Filed

08 Civ. 0905 (LAK); 08 Civ. 6233 (LAK); 08 Civ. 11195 (LAK)

Opinion

 [*375]  MEMORANDUM OPINION

LEWIS A. KAPLAN, District Judge.

This case is an acrimonious dispute between David Ronsen, Scott Rosenzweig, and Gary Naden, shareholders and former executives of Orbit One Communications, Inc. ("Orbit"), on the one hand, and Numerex Corporation ("Numerex"), to which they sold their business, on the other. The parties have asserted an array of claims sounding in contract and tort in three consolidated actions. The matter is now before the Court on cross motions for summary judgment.

Facts

A. Background

David Ronsen created Orbit in 2000. 1 The company, located in Bozeman, Montana,  [*376]  manufactured satellite-based tracking devices and provided satellite communications services primarily to government agencies and contractors. 2 

In 2005, Ronsen hired Rosenzweig, a former corporate  [**2] executive, to serve as Orbit's vice president of development. 3 During the following year, he hired Naden, an engineer at Axonn, a Louisiana-based communications company and Orbit's principal supplier of satellite transmitters, to serve as chief technology officer. 4 Rosenzweig and Naden became ten and six percent equity owners of Orbit, respectively, while Ronsen retained an eighty-four percent interest in the company. 5 

B. The Acquisition and Asset Purchase Agreement

In late 2006, Numerex, an Atlanta-based corporation that provides cellular and satellite-based communications services, expressed interest in acquiring Orbit. 6 Ronsen and Stratton Nicolaides, Numerex's chief executive officer, thereafter entered into negotiations that culminated in the execution by Orbit and Numerex of an asset purchase agreement (the "APA") on July 31, 2007. 7 

The APA provided in substance that Numerex would acquire all of Orbit's  [**3] assets. In exchange, Numerex agreed to pay $ 5.5 million into an escrow account at closing, with an additional $ 500,000 due sixty days later. 8 The APA contained also an earn out provision under which Numerex agreed to pay Orbit additional compensation if Orbit met certain earnings and other targets. 9 

C. The Employment Agreements

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692 F. Supp. 2d 373 *; 2010 U.S. Dist. LEXIS 36609 **

ORBIT ONE COMMUNICATIONS, INC., et ano., Plaintiffs/Counterclaim Defendants, -against - NUMEREX CORP., Defendant/Counterclaim Plaintiff. NUMEREX CORP., Plaintiff/Counterclaim Defendant, -against- SCOTT ROSENZWEIG, et al., Defendants/Counterclaim Plaintiffs. GARY NADEN, et al. Plaintiffs/Counterclaim Defendants, -against- NUMEREX CORP., Defendant/Counterclaim Plaintiff.

Subsequent History: Sanctions disallowed by Orbit One Communs. v. Numerex Corp., 2010 U.S. Dist. LEXIS 123633 (S.D.N.Y., Oct. 26, 2010)

Prior History: Naden v. Numerex Corp., 593 F. Supp. 2d 675, 2009 U.S. Dist. LEXIS 3863 (S.D.N.Y., 2009)

CORE TERMS

summary judgment, non-competition, resigned, counterclaims, employment agreement, good reason, terminated, breached, earn, misappropriation, authorization, obligations, covenants, declaration, genuine issue, material fact, fair dealing, good faith, departure, accessed, adduced, parties, moves, tortious interference, one year, contractual, satellite, breach of the implied covenant, proprietary information, breach of contract

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Evidentiary Considerations, Absence of Essential Element, Burdens of Proof, Nonmovant Persuasion & Proof, Business & Corporate Compliance, Contracts Law, Types of Contracts, Quasi Contracts, Contracts Law, Remedies, Equitable Relief, Quantum Meruit, Breach, Breach of Contract Actions, General Overview, Contract Interpretation, Good Faith & Fair Dealing, Discovery & Disclosure, Disclosure, Sanctions, Third Parties, Beneficiaries, Claims & Enforcement, Evidence, Allocation, Torts, Prospective Advantage, Intentional Interference, Elements, Computer & Internet Law, Criminal Offenses, Data Crimes & Fraud, Computer & Internet Law, Computer Fraud & Abuse Act, Criminal Law & Procedure, Fraud, Computer Fraud, Governments, Legislation, Interpretation, Rule of Lenity