Free Reply to Response to Motion - District Court of Colorado - Colorado

Case 1:01-cv-00413-JLK-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-00413-JLK-BNB M.D. MARK, INC., Plaintiff, v. KERR-McGEE CORPORATION and ORYX ENERGY COMPANY, Defendants. ______________________________________________________________________________ REPLY TO PLAINTIFF'S RE-NEWED MOTION FOR ATTORNEYS' FEES ______________________________________________________________________________ COMES NOW, the Plaintiff, M.D. Mark, Inc., by and through its attorneys, Pelz, Bonifazi & Inderwish, P.C., and respectfully submits the following Reply to Kerr-McGee's Response to Re-newed Motion for Award of Attorneys Fees. As grounds therefore, Plaintiff states as follows: 1. Mark's Motion For Attorneys Fees Under CUTSA Is Based Upon "Willful And Malicious" Conduct Which Defendant Kerr-McGee Has Failed To Explain Much Less Respond To. Not surprisingly, Defendant Kerr-McGee claims that Plaintiff has omitted the "Malicious" element from the CUTSA attorneys' fees provision. In doing so, Defendant KerrMcGee refused to reconcile Mr. Salazar's letter to the Plaintiff where he intentionally misstates the facts of the TXO and Nuevo cases in order to keep Plaintiff's trade secrets without paying for them and in defiance of good judgment. Clearly, this was done with malice aforethought because as head counsel for Defendant Kerr-McGee, Mr. Salazar knew the facts of the cases

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were not the same. It is not likely that an experienced corporate attorney, educated at one the best law schools in this country would make such an error. Regardless, Kerr-McGee nor Mr. Salazar ever said that he erred in making this false statement. No explanation is given as to how Mr. Salazar's statement could be anything other than a malicious and intentional attempt to mislead the Plaintiff. Indeed, Defendant Kerr-McGee has not addressed this issue at all. Defendant Kerr-McGee claims that Plaintiff did not present evidence of willful and malicious conduct. This statement is equally untrue. It is undisputed that the correspondence between Mr. Salazar and Plaintiff was presented and accepted into evidence at trial. Additional evidence exists where it is further undisputed that following Plaintiff's demand that all the PGI seismic data be returned, Defendant Kerr-McGee engaged in various mergers and corporate reorganizations. The express terms of the 1994 license agreement, (Trial Exhibit 60) which applied to all the PGI Data previously licensed by Kerr-McGee, unambiguously provided that the license terminates upon merger or reorganization and the data is to be returned. Thus, KerrMcGee knew the rules, admitting as much through the testimony of its attorney Marilyn Young. At trial, Ms. Young admitted that Kerr-McGee engaged in various corporate reorganizations and mergers beginning in 1997 with the formation of Kerr-McGee Oil & Gas Corporation, each of which was cause for termination of Kerr-McGee's license to use the PGI Data and required its return. Incredibly, despite admitting to knowing the rules, Kerr-McGee Corporation maliciously refused to return the PGI Data anyway after a demand was again made for its return in April, 2004. (Trial Exhibit 142.) Kerr-McGee has no good faith basis to keep possession of any of the PGI Data after demand for its return in 2004. (Trial Exhibit 142). This included the 3,100 miles of the 2

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Bootlegged data, which assuming arguendo had been lawfully acquired, would have been subject to the same 1994 license agreement (Exhibit 60) and had to be returned as well. KerrMcGee argued "ad nauseum" they just couldn't find the license for the 3,100 miles of PGI Data Any license that Kerr-McGee might have had, was unequivocally replaced by the 1994 license agreement requiring its return. Again, Defendant Kerr-McGee's Response provides no explanation as to how this conduct is anything other than willful and malicious. Knowingly breaking rules to ones benefits is the essence of maliciousness. These failures to return the PGI Data following corporate reorganizations did not occur accidentally or without much thought. Such refusals following the reorganizations require very precise scrutiny of the legal affect the merger will have generally, so clearly Kerr-McGee knew that these reorganizations and mergers would be a breach of the 1994 license agreement and require return of the PGI Data. As more specifically addressed below, because Kerr-McGee admitted that this 1994 license agreement did expressly address merger, Kerr-McGee could not have relied on the TXO or Nuevo cases. The truth is that Defendant Kerr-McGee knew these mergers and reorganizations caused a breach and a termination of the 1994 license, but willfully and maliciously kept the PGI Data anyway. In addition to being completely willful and malicious conduct, such conduct reeks of arrogance and contempt for Plaintiff's legal rights as well as contempt for the well established law prohibiting this type of conduct. It can be described as nothing but incredible that KerrMcGee would have the audacity to keep possession of the PGI Data as this case progressed.

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2.

The Court's Has Not Already Ruled That Kerr-McGee's Actions Were Not Willful And Malicious With Respect To Awarding Attorneys' Fees Pursuant To CUTSA As explained in Plaintiff's Motion, the mere fact that the Court did not find willful or

malicious conduct in the context of Exemplary Damages does not function as the complete bar to a request for an award of attorneys' fees pursuant to CUTSA as Kerr-McGee would hope. The fact remains that this Court may consider Plaintiff's Motion regardless of the Court's ruling dismissing Plaintiff's claim for Exemplary Damages. At the time the Court made its finding dismissing the Exemplary damages claim, other evidence presented later in the trial proves that Defendant Kerr-McGee engaged in willful and malicious conduct. This evidence was presented during Defendant's case. Specifically, Ms. Young did not testify until after the Court ruled on Defendants Rule 50 Motion raised at the conclusion of Plaintiff's case. As stated above, her testimony regarding the express prohibition against mergers and reorganization contained in the 1994 license agreement, coupled with her admissions that KerrMcGee engaged in mergers and reorganizations is evidence of willful and malicious conduct. Additionally, there was no reliance on the Texas cases because Kerr-McGee's argument that the PGI licenses agreement are silent as to merger cannot apply to the 1994 license agreement which Ms. Young admitted does expressly address merger. Consequently, this additional evidence, not presented at the close of Plaintiff's case, may now be considered by this Court for purposes of the instant Motion. 3. Mark Was Not Required To Secure A Jury Finding That Kerr-McGee's Conduct Was Willful And Malicious As Required By CUTSA Defendant Kerr-McGee relies upon Cartel Asset Management. v. Ocwen Financial Corporation, 2007 WL 2733725, stating that "[t]he court was clear: `"Willful and malicious"' is 4

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an underlying factual finding[] to be given to the jury". Upon review of Cartel, this case does not state that the trial court is precluded from making such a finding. In Cartel, it just so happened that the jury was asked to make such a finding. Nowhere in the holding of Cartel, is it required that the jury make the finding of willful and malicious conduct. Indeed, the

requirement that the jury make the underlying factual finding does not appear anywhere in CUTSA. The express language of the statute implies that it the Court that will award attorneys fees and costs. This is consistent with other Colorado law, which establishes that the trial court, not the jury, shall have discretion to make such a finding. See Ferrell v. Glenwood Brokers, Ltd., 848 P.2d 936 (Colo. 1993). 4. There Is Evidence That Kerr-McGee Engaged In Willful And Malicious Conduct. a. The Court Has Not Already Specifically Held That Kerr-McGee's Reliance On The TXO And Nuevo Was Not Willful And Malicious.

Defendant Kerr-McGee is well aware that the Court's ruling dealt only with Exemplary Damages. As addressed above, this argument ignores other evidence presented after the Court's ruling which establishes willful and malicious conduct on the part of Kerr-McGee. Kerr-McGee did not rely on the TXO and Nuevo cases when it continued to keep possession of the PGI Data after engaging in various corporate reorganizations prohibited by the 1994 license agreement. All of the Kerr-McGee attorneys testified that the 1994 license agreement clearly address corporate reorganizations and mergers. Carlos Salazar's letter and testimony confirmed that Kerr-McGee's reliance on the TXO and Nuevo cases applied only to the PGI license agreements entered into by Oryx which Kerr-McGee continues to argue did not address corporate reorganizations and mergers. The fact remains that Kerr-McGee never relied on the TXO and 5

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Nuevo cases each of which interpreted the PGI/Oryx licenses agreements, finding that they did not expressly address merger. Furthermore, such reliance contradicts the testimony of the KerrMcGee's attorneys each of whom testified that the 1994 license agreement, as opposed to the PGI/Oryx licenses agreements, expressly addressed and caused the termination of the license agreement upon corporate reorganizations and mergers. b. Kerr-McGee's Retention of Seismic Data Can Not Succeed.

Kerr-McGee's argument states that when an entity is found to be in possession of another entities property claimed to have been stolen, there is no requirement that the property be returned. This argument contradicts undisputed evidence that this property was never licensed, purchased, or acquired with the owner's authority and consent. Plaintiff proved that this data was wrongfully gotten. It was not that Kerr-McGee just couldn't find a license agreement. They had not one shred of evidence to support their possession of over 3,100 miles of the Plaintiff's geophysical survey. Not surprisingly, Kerr-McGee again ignores to address this undisputed evidence in its Response. What Kerr-McGee also fails to reconcile is that such conduct can be construed as being willful and malicious. Obviously, Kerr-McGee has made the conscious and intentional decision not to return the Bootlegged data. Malice is established by Kerr-McGee's possession of and refusal to return Plaintiff's best seismic data when the clear language of the license agreement requires that the data be returned. Put another way, Kerr-McGee knows that the rules of the seismic data licensing industry require that anyone using non-proprietary seismic data must do so with the legal permission of the owner to use that seismic data. Kerr-McGee licenses its own seismic data under those same rules. Despite knowing what the rules are and breaking those 6

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rules, Kerr-McGee hopes to convince this Court that there was no malice involved whatsoever. Knowingly breaking rules to ones benefit can only occur willfully and maliciously. They had no good faith legal basis the keep the PGI Data.

DATED:

March 13, 2008. Respectfully submitted, PELZ BONIFAZI & INDERWISH, P.C. s/ Daniele Bonifazi* Harlan P. Pelz Daniele W. Bonifazi 1873 South Bellaire Street, Suite 1401 Denver, CO 80222 Telephone: 303-691-5600 Facsimile: 303-691-5606 ATTORNEYS FOR PLAINTIFF

*In accordance with C.R.C.P. 121 § 1-26(7) a printed copy of this document with original signatures is being maintained by the filing party and will be made available for inspection by other parties or the court upon request.

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CERTIFICATE OF SERVICE I hereby certify that on the March 13, 2008, a true and correct copy of the foregoing REPLY TO PLAINTIFF'S RE-NEWED MOTION FOR ATTORNEYS' FEES was faxed and placed in the United States Mail, postage prepaid, addressed as follows: Marie R. Yeates VINSON & ELKINS LLP 1001 Fannin Street, Suite 2500 Houston, Texas 77002-6760 [email protected] Scott S. Barker Gregory E. Goldberg HOLLAND & HART LLP 555 Seventeenth Street, Suite 3200 Post Office Box 8749 Denver, Colorado 80201-8749 [email protected] [email protected]

___s/ Alyssa M Sylvester*______________ Alyssa M. Sylvester, Paralegal

*In accordance with C.R.C.P. 121 § 1-26(7) a printed copy of this document with original signatures is being maintained by the filing party and will be made available for inspection by other parties or the court upon request.

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