# CMI Roadbuilding Inc v. Specsys Inc

> District Court, W.D. Oklahoma · May 28, 2021

URL: https://www.frixlaw.com/law-library/cases/10388897

## Case

- **Court:** District Court, W.D. Oklahoma
- **Decided:** May 28, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10388897

## How later opinions describe it (automated extraction)

- explaining that § 98 embodies a procedural requirement for perfection of a lien— not a substantive element of entitlement to a claim of lien
- holding that computer-stored data “is not tangible property”; reasoning that “[a]lthough the medium that holds the information can be perceived, identified or valued, the information itself . . . cannot be touched, held, or sensed by the human mind”
- explaining that § 91A is “a catch-all provision intended to govern possessory liens on items of personal property which do not fall under either §§ 91 or 91.2”
- holding that “the use and disclosure of [plaintiff’s] confidential information . . . [was] likely” to happen where defendant had access to the information and was a direct competitor of plaintiff
- holding that summary judgment on defendant’s conversion claim was improper because there existed a genuine issue of material fact as to whether plaintiff had a valid possessory lien over engines in its possession

## Opinion text

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA

CMI ROADBUILDING, INC., and )
CMI ROADBUILDING, LTD. )
)
Plaintiffs, )
v. ) Case No. CIV-18-1245-G
)
SPECSYS, INC., )
)
Defendant. )

ORDER

Now before the Court are the following motions: (1) Defendant’s Motion for
Partial Summary Judgment No. 3 (Doc. No. 240) and related briefs (Doc. Nos. 241, 289,
and 297); (2) Defendant’s Motion for Partial Summary Judgment No. 4 (Doc. No. 242)
and related briefs (Doc. Nos. 243, 291, and 298); (3) Defendant’s Motion for Partial
Summary Judgment No. 5 (Doc. No. 244) and related briefs (Doc. Nos. 245, 286, and
299); (4) Plaintiffs’ Motion for Partial Summary Judgment on Count XVI (Doc. No. 221)
and related briefs (Doc. Nos. 222, 276, and 309); and (5) Plaintiffs’ Motion for Partial
Summary Judgment on Counts XI, XIV, and XV (Doc. No. 231) and related briefs (Doc.
Nos. 232, 281 and 314). The Court makes its decision based on the parties’ written
submissions.
BACKGROUND
This lawsuit stems from a series of purchase orders whereby Defendant SpecSys,
Inc. (“SpecSys”) agreed to manufacture mobile equipment and provide related design
and engineering services to Plaintiff CMI Roadbuilding, Inc. (“CMI”). The business
relationship soured, resulting in claims and counterclaims, including, as relevant to the
Motion under review, Plaintiffs’ claims for accounting, conversion, breach of the parties’
confidentiality and nondisclosure agreements, misappropriation of trade secrets, and

injunctive relief. See Am. Compl. (Doc. No. 78) ¶¶ 142-156, 171-193.
I. The Confidentiality Agreement and NDA
Each purchase order includes a “Confidentiality” provision (collectively, the
“Confidentiality Agreement”), which: (1) prohibits SpecSys from disclosing CMI’s
“confidential” information “to any other person” without CMI’s “express written

consent”; and (2) obligates SpecSys to exercise “reasonable care to prevent the
unauthorized disclosure or use of” such information. Doc. Nos. 78-16 at 7; 78-26 at 12;
78-26 at 12, 15, 19; 78-33 at 5; 78-36 at 9; 78-46 at 5, 9.
The parties likewise executed a Confidentiality and Non-Disclosure Agreement
(“NDA”) governing the exchange of “confidential and proprietary information and

material.” See Doc. No. 78-9 at 3-5. The term “Confidential Information” will be used
herein in collective reference to the information protected under the Confidentiality
Agreement and the NDA.
The NDA requires SpecSys “to use reasonable means . . . to safeguard” CMI’s
Confidential Information. Id. at 3. It further prohibits SpecSys from “us[ing] (for its own

benefit or the benefit of any third party), disclos[ing] . . . or otherwise mak[ing] available
to any third party” any Confidential Information “without [CMI’s] prior written consent.”
Id. This prohibition is subject to an exception, which permits SpecSys to disclose CMI’s
Confidential Information to “Representatives” of SpecSys who “have a need to know”
such information and who “have been provided with a copy of [the NDA] and have
agreed to be bound by the same or similar terms.” Id. The term “Representatives” is
defined to mean “directors, officers, employees, agents or advisors” of SpecSys. Id.

Paragraph 5 of the NDA includes an acknowledgement that the Confidential
Information is “proprietary to CMI” and that “[n]o right, license or ownership interest, of
any kind, express or implied, is granted by CMI [] to [SpecSys] in the [Confidential]
Information. Id. at 4. The NDA further states, in Paragraph 3:
In the event that [SpecSys] shall at any time create, discover, conceive, make,
invent or reduce to practice any invention, modification, discovery, design,
development, process or intellectual property right whatsoever or any interest
therein . . . result[ing] from exposure to the [Confidential] Information, then
all such [d]evelopments and the benefits thereof are and shall immediately
become the sole and absolute property of CMI.

Paragraph 9 of the NDA addresses disposition of CMI’s Confidential Information
acquired by SpecSys. It provides, in relevant part:
Upon expiration or earlier termination of this Agreement, or earlier if
requested by [CMI], [SpecSys] will promptly deliver to [CMI] all tangible
copies of the [Confidential] Information, including but not limited to
magnetic or electronic media containing the [Confidential] Information,
compact discs, spreadsheets, note(s) and parpers(s) in whatever form
containing the [Confidential] Information or parts thereof, and any other
copies of the [Confidential] Information in whatever form, which are in
possession of [SpecSys] and its Representatives. [CMI], at its sole option,
may request in writing that [SpecSys] destroy all such copies of the
Information.

Id.
Finally, Paragraph 4 specifies injunctive relief as an appropriate remedy in the
event SpecSys discloses CMI’s Confidential Information:
[SpecSys] and its Representatives recognize that its disclosure of
[Confidential] Information will give rise to irreparable injury to CMI [],
inadequately compensable in damages, and that, accordingly, CMI [] may
seek and obtain injunctive relief against the breach of the within
undertakings, in addition to any other legal remedies which may be available.

Id.

Following execution of the NDA, CMI sent SpecSys engineering documents
containing Confidential Information (the “Engineering Documents”). Am. Compl. ¶¶ 33,
41, 53, 56, 62, 66; Answer (Doc. No. 82) ¶¶ 33, 41, 53, 56, 62, 66; Pls.’ Br. (Doc. No.
232) at 3; Def.’s Resp. Br. (Doc. No. 281) at 9-10. It is undisputed that the Engineering
Documents were transmitted to, and maintained by, SpecSys in electronic format. Def.’s
Br. (Doc. No. 245) at 10; Pls.’ Resp. Br. (Doc. No. 286) at 3; Def.’s Br. (Doc. No. 243)
at 20-21. SpecSys used the Confidential Information to create new engineering
documents, software code, and other intellectual property (collectively, the “Intellectual
Property”), as described in greater detail below. Am. Compl. ¶¶ 41, 56, 63, 80; Answer
¶¶ 41, 56, 63, 80; Pls.’ Br. (Doc. No. 232) at 5.
II. Purchase Order 17580
The parties’ first transaction is memorialized by Purchase Order 17580 (“PO
17580”), dated January 11, 2018, pursuant to which SpecSys agreed to manufacture and
assemble four TR-4 machines1 for CMI. See Doc. No. 78-16 at 2-11. Pursuant to PO
17580, CMI was to supply SpecSys with certain Engineering Documents in addition to
various materials and component parts—i.e., “the cutter drum, track assemblies, wire

1 The TR-4 is a machine used to trim the road base prior to the pouring of pavement. Am.
Compl. ¶ 35.
harnesses, [and] engine skid/power pack” (collectively, the “Purchased Items”).2 Doc.
No. 78-16 at 2; see also Doc. No. 78-14 at 3. SpecSys was responsible for buying the
remaining “raw material and hardware” required for assembly and for providing all

necessary labor, management, and quality control. Doc. No. 78-16 at 2, 8.
The total purchase price under PO 17580 was $800,000, comprised of $231,152
for the first TR-4 machine and $189,616 for each of the remaining TR-4 machines. Id.
at 5. With respect to each machine, CMI agreed to pay 30% of the purchase price as a
down payment, 20% each month for a three-month period, and the remaining 10% upon

delivery and inspection. Id. The parties further agreed:
The total price of $800,000 is contingent upon CMI releasing for
manufacture all four (4) units within twelve (12) months from the completion
and delivery of Unit 1. In the event units 2, 3, [and] 4 are not released within
this time period, CMI will reimburse SpecSys the amount of $67,500.00.
Unit prices are based on preliminary estimate for raw materials and hardware
of $30,000 cost with any increase considered and approved in advance of
purchase by CMI.

Id. at 3.

It is undisputed that CMI has paid SpecSys a total of $303,609.73 under PO 17580.
The parties disagree, however, as to the appropriate allocation of such payments. CMI
alleges it has paid $216,608.42 towards the first TR-4 machine and $87,001.31 towards
the second machine. Am. Compl. ¶ 43. SpecSys, on the other hand, contends that CMI
has paid $174,807.73 towards the first TR-4 machine, $65,467.74 for services on the

2 CMI asserts that it spent $608,270.15 to purchase and $16,558.14 to ship the Purchased
Items to SpecSys. Pls.’ Br. (Doc. No. 222) at 3, 6. SpecSys contends that several of the
items CMI was obligated to supply were “actually purchased by SpecSys . . . in order to
keep the project moving forward.” Def.’s Resp. Br. (Doc. No. 276) at 9.
second machine, $63,334.26 towards “raw materials and hardware,” and $2,025 towards
a subsequent “hydraulics plumbing change order.” Answer (Doc. No. 82) ¶ 43.
It is further undisputed that SpecSys has not delivered any TR-4 machines to CMI.

CMI alleges that “SpecSys has yet to complete a single TR-4” and that PO 17580 was
merely a pretense “to generate billings” for work that SpecSys never intended to perform.
Am. Compl. ¶¶ 43-44; see also Pls.’ Resp. Br. (Doc. No. 291) at 5. SpecSys, for its part,
asserts that it is currently “in possession of a completed TR-4 (Unit #1) and a partially
completed TR-4 (Unit #2) that it built pursuant to [PO] 17580.” Def.’s Br. (Doc. No.

243) at 12; see also Def.’s Resp. Br. (Doc. No. 276) at 10. SpecSys argues that it “is
justified in retaining” these machines as a lienholder in possession because “CMI still
owes SpecSys $262,540.97 for work and materials” provided under PO 17580.3 Answer
¶ 43; see also Def.’s Br. (Doc. No. 243) at 12.
III. The Authorization Letter

On March 14, 2018, SpecSys’ Dave Gelhar emailed CMI’s Les Bebchick
requesting “a blanket letter that allows SpecSys to buy CMI proprietary components”
from vendors. Doc. No. 281-11 at 1. In response, CMI supplied SpecSys with the
following (the “Authorization Letter”):

3 SpecSys elsewhere asserts that CMI’s outstanding balance under PO 17580 is
$202,540.97. Def.’s Resp. Br. (Doc. No. 276) at 8.
March 14, 2018

TO WHOM IT MAY CONCERN
Subject: Proprietary CMI Roadbuilding/T erex Parts and Components

_- Please be advised that CMI Roadbuildinf/ Terex authorizes you and provides
permission for your Company to release information, pricing, and availability on the
products we buy from you and that are covered by our NDA to SpecSys Engineering
and Manufacturing. ‘
If you have any questions in this regard, please dotitact the undersigned.
~ Very truly yours, ~ sea
| ‘
□□□□□□□□□□□□□□□□□□□□□□□□□□□
BREVIRVE HEV iu :
CMI Roadbuildine. Inc. /
Doc. No. 281-10 at 2. SpecSys thereafter transmitted certain Engineering Documents
containing Confidential Information to at least four different vendors supplying parts
needed to assemble TR-4 machines under PO 17580. Pls.’ Br. (Doc. No. 232) at 3-4;
Resp. Br. (Doc. No. 281) at 11-12. Before transmitting the documents, SpecSys redacted
CMI Ltd.’s name and logo. Pls.’ Br. (Doc. No. 232) at 4; Def.’s Resp. Br. (Doc. No. 281)
at 12.
IV. Purchase Orders 18643, 20501, 22015, and 22016
On March 2, 2018, CMI issued Purchase Order 18643 (“PO 18643”) pursuant to
which SpecSys agreed to perform engineering updates to the concept design for CMI’s

TP-4 machine.4 See Doc. No. 78-26 at 9-12. Pursuant to PO 18643, CMI was to supply
SpecSys with certain Engineering Documents, and SpecSys was to deliver to CMI
updated concept design documentation. Id. at 2, 4.

It is undisputed that the total amount of PO 18643 was $225,742, that CMI has
paid $119,512.37 towards that sum, and that SpecSys has yet to remit any deliverables
related to the TP-4. See Am. Compl. ¶ 54; Answer ¶ 54. It is further undisputed that,
with CMI’s consent, SpecSys purchased certain long-lead materials for a TP-4 prototype.
See Def.’s Br. (Doc. No. 241) at 10; Pls.’ Resp. Br. (Doc. No. 289) at 4. SpecSys contends

that CMI still owes it $106,229.63 on PO 18643 for engineering services and $111,539.93
for the long-lead materials. Answer ¶ 54. SpecSys asserts that, pending CMI’s payment
of outstanding invoices, it is justified in retaining the long-lead materials, as well as final
prints it created for the TP-4 design under PO 18643, under a claim of possessory lien.
Id.; Def.’s Br. (Doc. No. 243) at 12-13, 17.

On May 24, 2018, CMI issued Purchase Order 20501 (“PO 20501”) in the amount
of $182,400, pursuant to which SpecSys agreed to provide “engineering manpower” for
the support and design of various CMI mobile equipment over a three-month period. See
Doc. No. 78-33 at 2-5. It is undisputed that CMI has paid just under $41,000 towards PO
205015 and that SpecSys is withholding delivery of software code it created pursuant to

4 “The TP-4 is [a machine] used to place concrete on a road base to be formed by a slip-
form paver.” Am. Compl. ¶ 47.

5 CMI alleges that it has paid $40,945 towards PO 20501, Am. Compl. ¶ 63, while
SpecSys contends CMI has paid $40,925 towards PO 20501, Answer ¶ 63.
PO 20501 pending CMI’s payment of outstanding invoices.6 See Am. Compl. ¶ 63;
Answer ¶ 63; Def.’s Br. (Doc. No. 243) at 17.
On August 30, 2018, CMI issued Purchase Order 22015 (“PO 22015”) in the

amount of $121,481, pursuant to which SpecSys agreed to develop, test, and debug
software and controls on CMI’s SP-5 machine and provide related engineering services
and documentation. See Doc. No. 78-46 at 2-5. It is undisputed that CMI has not made
any payments towards PO 22015 and that SpecSys is withholding delivery of software
code it created pursuant to PO 22015 pending CMI’s payment of outstanding invoices.

See Def.’s Br. (Doc. No. 243) at 12, 17; Pls.’ Resp. Br. (Doc. No. 291) at 6.
On August 30, 2018, CMI issued Purchase Order 22016 (“PO 22016”) in the
amount of $121,481, pursuant to which SpecSys agreed to develop, test, and debug
software and controls on CMI’s TM-11 machine and provide related engineering services
and documentation. See Doc. No. 78-46 at 6-9. It is undisputed that CMI has not made

any payments towards PO 22016 and that SpecSys is withholding delivery of software
code it created pursuant to PO 22016 pending CMI’s payment of outstanding invoices.
See Def.’s Br. (Doc. No. 243) at 12, 17; Pls.’ Resp. Br. (Doc. No. 291) at 6.
V. Termination of the Parties’ Relationship and Ensuing Litigation
By September 19, 2018, the parties’ relationship had deteriorated to the point that

CMI directed SpecSys to stop work on nearly all active purchase orders. Am. Compl.
¶ 79; Answer ¶ 79; Doc. No. 78-51. On September 23, 2018, CMI’s Les Bebchick

6 According to SpecSys, CMI still owes $142,194.97 on PO 20501: “$141,455.00 in
engineering services and $739.97 for RM-6 valves.” Answer ¶ 63.
emailed SpecSys’ Chief Executive Officer Kevin Wald stating, in relevant part: “[P]lease
advise us when you will have all engineering documents, analysis, software, drawings
new and old including all marked up and corrected drawings, data, etc. to evidence and

document the efforts to date that we have already paid for and that you are ready to
transfer them to CMI.” Doc. No. 232-14 at 1.
The parties soon became embroiled in a dispute about: (1) what amounts, if any,
are due and owing under outstanding invoices; and (2) what items, if any, SpecSys is
obligated to turn over to CMI. The dispute blossomed into the current lawsuit, which

was filed on December 20, 2018, by CMI and its parent company CMI Roadbuilding,
Ltd.7 (collectively, “Plaintiffs”).
It is undisputed, for purposes of the Motions under review, that SpecSys has in its
possession: (1) two partially complete TR-4 machines; (2) electronic copies of
Engineering Documents containing CMI’s Confidential Information; and (3) Intellectual

Property that SpecSys created using CMI’s Confidential Information.
SUMMARY JUDGMENT STANDARD
Summary judgment is a means of testing in advance of trial whether the available
evidence would permit a reasonable jury to find in favor of the party asserting a claim.
The Court must grant summary judgment when “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a).

7 CMI Roadbuilding, Ltd. allegedly owns the Confidential Information on which the
lawsuit is based. Am. Compl. ¶ 9.
A party that moves for summary judgment has the burden of showing that the
undisputed material facts require judgment as a matter of law in its favor. Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986). To defeat summary judgment, the nonmovant need

not convince the Court that it will prevail at trial, but it must cite sufficient evidence
admissible at trial to allow a reasonable jury to find in the nonmovant’s favor—i.e., to
show that there is a question of material fact that must be resolved by the jury. See
Garrison v. Gambro, Inc., 428 F.3d 933, 935 (10th Cir. 2005). The Court must then
determine “whether the evidence presents a sufficient disagreement to require submission

to a jury or whether it is so one-sided that one party must prevail as a matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 243, 251-52 (1986).
Parties may establish the existence or nonexistence of a material disputed fact by:
• citing to “depositions, documents, electronically stored information,
affidavits or declarations, stipulations . . . , admissions, interrogatory
answers, or other materials” in the record; or
• demonstrating “that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.”

Fed. R. Civ. P. 56(c)(1)(A), (B). While the Court views the evidence and the inferences
drawn from the record in the light most favorable to the nonmoving party, see Pepsi-Cola
Bottling Co. of Pittsburg, Inc. v. PepsiCo, Inc., 431 F.3d 1241, 1255 (10th Cir. 2005),
“[t]he mere existence of a scintilla of evidence in support of the [nonmovant’s] position
will be insufficient; there must be evidence on which the [trier of fact] could reasonably
find for the [nonmovant].” Liberty Lobby, 477 U.S. at 252.
With respect to cross-motions for summary judgment, the Tenth Circuit has
explained:
The filing of cross-motions for summary judgment does not necessarily
concede the absence of a material issue of fact. This must be so because by
the filing of a motion a party concedes that no issue of fact exists under the
theory he is advancing, but he does not thereby so concede that no issues
remain in the event his adversary’s theory is adopted. Accordingly, cross
motions for summary judgment are to be treated separately; the denial of one
does not require the grant of another.

Brown v. Perez, 835 F.3d 1223, 1230 n.3 (10th Cir. 2016) (citations and internal quotation
marks omitted).
ACCOUNTING
Defendants move for summary judgment on Plaintiffs’ claim for equitable
accounting.8 See Def.’s Mot. (Doc. No. 242). Plaintiffs seek an accounting with respect
to: (1) “all goods and materials” CMI provided to SpecSys or for which SpecSys invoiced
CMI pursuant to the purchase orders (e.g., whether and to what extent such goods and
materials “were incorporated into the equipment SpecSys was to manufacture for CMI”);
and (2) all “monies paid [by CMI to SpecSys] on each Purchase Order” (i.e., “where
[such] monies . . . were expended”). Am. Compl. ¶¶ 142-151.
Under Oklahoma law, a claim for equitable accounting is comprised of four

8 Under Oklahoma law, a claim for accounting may be legal or equitable. Margaret Blair
Trust v. Blair, 378 P.3d 65, 72-74 (Okla. Civ. App. 2016). A claim for legal accounting
seeks to enforce a duty created by contract or fiduciary status. Id. at 72. Equitable
accounting, by contrast, is available “where the plaintiff lacks a legal right to an
accounting, but an accounting is the only available means to an adequate remedy.” Id. at
73. Plaintiffs’ intent to pursue a claim for equitable accounting is evident from their
response brief. See Pls.’ Resp. Br. (Doc. No. 291) at 10 (listing the elements of a claim
for equitable accounting); id. at 13 (arguing that SpecSys has not shown why its claims
for possessory liens preclude “the equitable remedy of an accounting”) (emphasis added).
elements: (1) the existence of a “confidential relationship” between the plaintiff and
defendant; (2) the defendant’s control over the plaintiff’s property and related records;
(3) the defendant’s failure to “account [for] or return the property” after a demand by the

plaintiff; and (4) the absence of an “adequate remedy at law.” Howell Petrol. Corp. v.
Leben Oil Corp., 976 F.2d 614, 620 (10th Cir. 1992). To succeed on the claim, the
plaintiff “must produce evidence that a balance is due.” Id. SpecSys argues—and the
Court agrees—that Plaintiffs have not shown they lack an adequate remedy at law.9
Def.’s Br. (Doc. No. 243) at 18-19.

“The long-standing rule in Oklahoma is that a plaintiff may not pursue an equitable
remedy when the plaintiff has an adequate remedy at law.” Krug v. Helmerich & Payne,
Inc., 320 P.3d 1012, 1022 (Okla. 2013); see also Robertson v. Maney, 166 P.2d 106, 108
(Okla. 1946) (“[W]here the plaintiff has a plain, speedy and adequate remedy at law,
equity will not intervene in his behalf.”). As relevant here, “[a] claim for breach of

contract provides such a remedy.” Krug, 320 P.3d at 1022; see also Reirdon v. Cimarex
Energy Co., No. CIV-16-445, 2019 WL 2610115, at *3 (E.D. Okla. June 25, 2019)
(holding that plaintiff’s claim for breach of contract was an adequate remedy at law
precluding plaintiff’s claim for equitable accounting); Hill v. Kaiser-Francis Oil Co., No.
CIV-09-07-R, 2011 WL 13113453, at *1 (W.D. Okla. Aug. 12, 2011) (same).

In this lawsuit, Plaintiffs have asserted nine separate contract claims against
SpecSys: one for breach of the Confidentiality Agreement and NDA and one for breach

9 Finding this argument to be dispositive, the Court does not reach the alternative grounds
advanced by SpecSys.
of each of eight purchase orders.10 See Am. Compl. ¶¶ 93-141, 152-56. Plaintiffs have
neither explained nor identified any evidence suggesting that these claims, alone or in
combination, provide an inadequate remedy for their alleged injuries. Plaintiffs’ sole

argument in this regard is based on a misconstruction of the following provision in the
NDA:
[SpecSys] and its Representatives recognize that its disclosure of
[Confidential] Information will give rise to irreparable injury to CMI [],
inadequately compensable in damages and that, accordingly, CMI
Roadbuilding may seek and obtain injunctive relief against the breach of
the within undertakings, in addition to any other legal remedies which
may be available.

Pls.’ Resp. Br. (Doc. No. 291) at 7 (citing Doc. No. 243-19).
Contrary to Plaintiffs’ assertion, the foregoing language does not constitute a
concession by SpecSys that a breach-of-contract claim is an inadequate remedy for
violation of the NDA or any of the purchase orders. It is instead an acknowledgement by
SpecSys that the disclosure of CMI’s Confidential Information will cause irreparable
injury for purposes of obtaining injunctive relief. At any rate, the provision is, by its
terms, irrelevant to Plaintiffs’ accounting claim, which is not predicated on any alleged
“disclosure” of Confidential Information.

10 Apart from the five purchase orders detailed above, the parties executed three
additional purchase orders, which, while relevant in the broader context of this lawsuit,
are not relevant to the claims at issue in this order: (1) Purchase Order 18644, dated March
2, 2018, whereby SpecSys agreed to create a manual for the TR-4 machine (Doc. No. 78-
26 at 13-15); (2) Purchase Order 18645, dated March 2, 2018, whereby SpecSys agreed
to provide control support services related to the TR-4 and TP-4 projects (Doc. No. 78-
26 at 16-19); and (3) Purchase Order 21234, dated July 10, 2018, whereby SpecSys
agreed to manufacture various wiring harnesses for CMI (Doc. No. 78-36 at 3-9).
The Court therefore concludes that SpecSys is entitled to summary judgment on
Plaintiffs’ claim for equitable accounting.
CONVERSION

The parties each seek summary judgment on Plaintiffs’ claim for conversion. See
Def.’s Mot. (Doc. No. 242); Pls.’ Mot. (Doc. No. 221). “Conversion is defined by
Oklahoma law as ‘any act of dominion wrongfully exerted over another’s personal
property in denial of or inconsistent with his rights therein.’” Am. Biomedical Grp., Inc.
v. Techtrol, Inc., 374 P.3d 820, 825 (Okla. 2016).

Plaintiffs allege conversion of: (1) the two partially complete TR-4 machines and
the Purchased Items to the extent they are not incorporated into the TR-4 machines; and
(2) the Engineering Documents CMI provided to SpecSys. Am. Compl. ¶¶ 182-90.
A. The TR-4 Machines and Purchased Items
Conversion requires “some form of wrongful possession or act of control over the

property” in question. Am. Biomedical Grp., 374 P.3d at 825 (internal quotation marks
omitted) (emphasis added). Thus, “[a]n individual with authority to possess property is
not liable in tort for the property’s conversion.” Eaton v. Okla. Cnty. Sheriff's Dep’t, No.
CIV-06-566-M, 2007 WL 2703153, at *5 (W.D. Okla. Sept. 13, 2007) (holding that
sheriff’s statutory authority to tow and impound plaintiff’s vehicle “negate[d] an essential

element of [p]laintiff’s claim for conversion”—namely, the “authorized assumption of
control” over the vehicle), aff’d sub nom. Eaton v. Whetsel, 283 F. App’x 599 (10th Cir.
2008).
SpecSys contends it is authorized to retain the TR-4 machines, inclusive of the
Purchased Items, pursuant to Okla. Stat. tit. 42, § 91A and Okla. Stat. tit. 12A, § 2-703.11
Def.’s Br. (Doc. No. 243) at 15. Okla. Stat. tit. 42, § 91A provides that one who, “while
lawfully in possession” of another’s personal property, supplies “material, labor or skill”

for the improvement of such property “has a special lien thereon, dependent on
possession, for the compensation, if any, which is due to such person.” Okla. Stat. tit.
42, § 91A(A)(2). Okla. Stat. tit. 12A, § 2-703 permits a seller of goods to “withhold
delivery of such goods” if, among other things, the buyer “fails to make a payment due
on or before delivery or repudiates with respect to a part or the whole.” Okla. Stat. tit.

12A, § 2-703(a).
SpecSys has evinced a plausibly lawful basis for retaining the TR-4 machines and
Purchased Items under Okla. Stat. tit. 42, § 91A12 and/or Okla. Stat. tit. 12A, § 2-703. It

11 Alternatively, SpecSys claims to hold a lien pursuant to Okla. Stat. tit. 42, § 91. Def.’s
Br. (Doc. No. 243) at 15. Section 91 applies only where the property at issue has “a
certificate of title issued by the Oklahoma Tax Commission or by a federally recognized
Indian tribe in the State of Oklahoma.” Okla. Stat. tit. 42, § 91. Because neither party
contends that the T-4 machine has a certificate of title, § 91A—not § 91—is the
applicable statute. See Blue Sky Telluride, L.L.C. v. Intercontinental Jet Serv. Corp., 328
P.3d 1223, 1228 (Okla. Civ. App. 2014) (explaining that § 91A is “a catch-all provision
intended to govern possessory liens on items of personal property which do not fall under
either §§ 91 or 91.2”).

12 The Court rejects Plaintiffs’ argument that § 91A is inapplicable because SpecSys did
not comply with the recording requirement of Okla. Stat. tit. 42, § 98. Pls.’ Resp. (Doc.
No. 291) at 13-14. Section 98’s recording requirement is not a substantive element of a
claim of possessory lien. See McCormack v. Air Ctr., Inc., 571 P.2d 835, 838 (Okla.
1977) (explaining that § 98 embodies a procedural requirement for perfection of a lien—
not a substantive element of entitlement to a claim of lien); Williamson v. Winningham,
186 P.2d 644, 651 (Okla. 1947) (“Where possession is actually, or in the eyes of the law,
retained . . . a lien of the common law exists and endures without the necessity of filing
a lien statement . . . . The filing of [a lien] statement is necessary to preserve the lien only
is undisputed that SpecSys purchased materials and provided labor in furtherance of PO
17580 and that CMI has paid some—but not all—of the purchase amount contemplated
thereunder. However, there remain several disputed factual issues bearing on SpecSys’

right to retain the property in question, including, but not limited to, the validity and scope
of the claimed liens, whether and to what extent the Purchased Items were incorporated
into the TR-4 machines, whether and to what extent work performed under PO 17580
remains unpaid, and whether and to what extent CMI must reimburse SpecSys for
materials SpecSys purchased on CMI’s behalf.

The Court thus concludes that neither party is entitled to summary judgment on
Plaintiffs’ claim for conversion of the TR-4 machines and Purchased Items. See
Vaseleniuck Engine Dev., LLC v. Sabertooth Motorcycles, LLC, 727 S.E.2d 308, 311
(N.C. Ct. App. 2012) (holding that summary judgment on defendant’s conversion claim
was improper because there existed a genuine issue of material fact as to whether plaintiff

had a valid possessory lien over engines in its possession).
B. The Engineering Documents
“The general rule in Oklahoma is that only tangible personal property may be
converted.” Shebester v. Triple Crown Insurers, 826 P.2d 603, 608 (Okla. 1992)
(emphasis in original); see also Am. Biomedical Grp., 374 P.3d at 825. SpecSys argues,

among other things, that the Engineering Documents are intangible intellectual property
and are not, therefore, the proper subject of a conversion claim. Def.’s Br. (Doc. No.

as against the priority of other liens in the absence of lienor’s rightful possession.”).
243) at 20-21. The Court agrees.13
Tangible property “is ‘[p]roperty that has physical form and substance’”; it “may
be felt or touched, and is necessarily corporeal.” U.S. ex rel. MMS Constr. & Paving,

L.L.C. v. Head, Inc., No. CIV-10-1340-M, 2011 WL 4954021, at *3 (W.D. Okla. Oct.
18, 2011) (citing Black’s Law Dictionary (6th ed. 1990)). Intangible property, by
contrast, “has no intrinsic or marketable value, but is merely the representative or
evidence of value.” Id. (internal quotation marks omitted); see also Intellectual Property,
Black’s Law Dictionary (11th ed. 2019) (defining intellectual property as “[a] category

of intangible rights protecting commercially valuable products of the human intellect”).
The undisputed facts reflect that the Engineering Documents, consisting entirely
of electronically stored files and data, are, as a matter of law, intangible property not
subject to conversion. See State Auto Prop. & Cas. Ins. Co. v. Midwest Computs. &
More, 147 F. Supp. 2d 1113, 1116 (W.D. Okla. 2001) (holding that computer-stored data

“is not tangible property”; reasoning that “[a]lthough the medium that holds the
information can be perceived, identified or valued, the information itself . . . cannot be
touched, held, or sensed by the human mind”); MMS Constr. & Paving, 2011 WL
4954021 at *3 (holding that plaintiff’s asphalt mix design formula was intangible
property not capable of conversion); Architects Collective v. Gardner Tanenbaum Grp.,

L.L.C., No. CIV-08-1354-D, 2009 WL 3919514, at *3 (W.D. Okla. Nov. 18, 2009)
(rejecting plaintiff’s argument that written documents containing alleged intellectual

13 Finding this argument to be dispositive, the Court does not reach the alternative
grounds advanced by SpecSys.
property constituted “tangible property” for purposes of plaintiff’s conversion claim;
reasoning that plaintiff’s allegations were “logically construed as alleging conversion of
intangible copyrighted intellectual property”).

Accordingly, the Court concludes that SpecSys is entitled to summary judgment
on Plaintiffs’ claim for conversion of the Engineering Documents.
BREACH OF THE CONFIDENTIALITY AGREEMENT AND NDA
The parties each move for summary judgment on Plaintiffs’ claim for breach of
the Confidentiality Agreement and NDA. See Def.’s Mot. (Doc. No. 244); Pls.’ Mot.

(Doc. No. 231). Plaintiffs assert that SpecSys breached these agreements in four ways:
(1) by disclosing Confidential Information to third-party vendors without prior written
authorization from CMI; (2) by “claiming ownership” of CMI’s Confidential
Information; (3) by refusing to return to CMI the Engineering Documents containing
Confidential Information; and (4) by refusing to deliver to CMI the Intellectual Property

created using Confidential Information. Am. Compl. ¶ 155; see also Pls.’ Br. (Doc. No.
232) at 6-8.
A. Disclosure of Confidential Information
It is undisputed that SpecSys disclosed Confidential Information to vendors
supplying parts in furtherance of PO 17580. Pls.’ Br. (Doc. No. 232) at 3-4; Def.’s Resp.

Br. (Doc. No. 281) at 11-12. Plaintiffs contend that such disclosures violated the
Confidentiality Agreement and NDA because they were not authorized in writing by
CMI. Pl.’s Br. (Doc. No. 232) at 6-8. SpecSys offers two arguments in response.
SpecSys first argues that the vendors are “Representatives” as that term is used in
the NDA and, therefore, the disclosures did not require preauthorization by CMI. Def.’s
Resp. Br. (Doc. No. 281) at 16-17. According to SpecSys, the parties contemplated that
SpecSys would need to disclose Confidential Information to vendors and accounted for

that need by permitting the disclosure of such information to “Representatives” with a
“need to know [it],” subject to certain conditions. Def.’s Resp. Br. (Doc. No. 281) at 16-
17 (citing Doc. No. 78-9 at 3); see also Def.’s Br. (Doc. No. 245) at 21. Plaintiffs resist
the conclusion that the vendors qualify as “Representatives” under the NDA, but neither
party offers any meaningful argument or evidence to support its respective position. See

Pls.’ Resp. Br. (286) at 13-14; Pls.’ Reply Br. (Doc. No. 314) at 6-7.
As noted, the NDA defines “Representatives” as “directors, officers, employees,
agents or advisors” of SpecSys. Doc. No. 78-9 at 3. Arguably, the vendors qualify as
“agents” or “advisors” of SpecSys with respect to PO 17580. Whether they in fact so
qualify presents a question of contract construction, which, in the absence of meaningful

advocacy, the Court will not endeavor to resolve on summary judgment. See Voda v.
Medtronic Inc., 899 F. Supp. 2d 1188, 1199 n.20 (W.D. Okla. 2012) (“Arguments that
are not developed are deemed waived”), aff’d, 541 F. App’x 1003 (Fed. Cir. 2013);
Beckham Cnty. Rural Water Dist. No. 3 v. City of Elk City, No. CIV-05-1485-F, 2014
WL 12818160, at *13 (W.D. Okla. Mar. 28, 2014) (declining “to undertake the research,

to say nothing of the advocacy, necessary to support” the parties’ “contentions [that]
[were] not supported by developed argument”).
SpecSys’ second argument is that CMI authorized and/or ratified the disclosures
of Confidential Information to the vendors. Def.’s Resp. Br. (Doc. No. 281) at 16-17.
To support this argument, SpecSys points to the Authorization Letter, as well as
deposition testimony and a number of written communications indicating that CMI knew
about and acquiesced in SpecSys’ disclosure of Confidential Information to vendors.14

See Doc. Nos. 245-4, at 5-6, 245-5, at 5, 281-9, 281-10, 281-11, 281-12, 281-13; 313-3
(filed under seal).
Plaintiffs, for their part, urge a narrow reading of the Authorization Letter. They
admit that CMI consented to SpecSys’ disclosure of Confidential Information—but only
with respect to some of the vendors in question. See Pls.’ Reply (Doc. No. 314) at 7

(“CMI did not object to SpecSys sending drawings to companies that already had non-
disclosure agreements in place with CMI as part of their ongoing business”).
On the current record, the Court is unable to grant summary judgment to either
party on Plaintiffs’ claim that SpecSys breached the Confidentiality Agreement and NDA
by disclosing Confidential Information to vendors. Specifically, there exist genuine

disputes of material fact as to: (1) whether the vendors qualify as “Representatives” under
the NDA; and (2) whether and to what extent SpecSys’ disclosures were authorized by
CMI.
B. Claiming Ownership to Confidential Information
Plaintiffs allege that SpecSys “claim[ed] ownership” of CMI’s Confidential

Information by “‘cover[ing] up’ CMI Ltd.’s name and confidentiality stamp” on

14 In one such email, a CMI employee told a vendor that SpecSys was CMI’s “sister
Company,” and, in another, a CMI engineer instructed a vendor to “treat [SpecSys] as
CMI.” Doc. Nos. 281-12, 281-13.
Engineering Documents sent to third-party vendors. Am. Compl. ¶ 155; Pls.’ Br. (Doc.
No. 232) at 7-8. SpecSys responds that, when transmitting sensitive documents to third
parties, it routinely “obscur[es] the owner’s name in a title block . . . to make it more

difficult for unauthorized use of the document.” Def.’s Resp. Br. (Doc. No. 281) at 12.
SpecSys contends that this practice complied with its obligation in Paragraph 3 of the
NDA, which required SpecSys to “use reasonable means, not less than those used to
protect its own proprietary information, to safeguard [CMI’s] [Confidential]
Information.” Id. at 16 (citing Doc. No. 78-9).

Plaintiffs fail to identify any provision in the Confidentiality Agreement or NDA
that would prohibit SpecSys from redacting CMI Ltd.’s name and logo. Nor do Plaintiffs
offer argument or evidence in response to SpecSys’ contention that this practice complies
with Paragraph 3 of the NDA. Consequently, SpecSys is entitled to summary judgment
on this aspect of Plaintiffs contract claim. See Porter v. Farmers Ins. Co., 505 F. App’x

787, 791 (10th Cir. 2012) (affirming award of summary judgment to defendant on
plaintiff’s breach-of-contract claim where plaintiff failed to point to any contract
provision allegedly violated by defendant’s conduct); Chapman v. Chase Manhattan
Mortg. Corp., No. 04-CV-0859, 2007 WL 2815246, at *10 (N.D. Okla. Sept. 24, 2007)
(granting summary judgment to defendant on plaintiff’s breach-of-contract claim on the

ground that plaintiff failed to identify “any specific contractual provision that [defendant]
violated); Phillips Univ. Legacy Found., Inc. v. Charles H Bentz Assocs., Inc., No. CIV-
09-408-R, 2012 WL 12861099, at *2 (W.D. Okla. Mar. 1, 2012) (declining to grant
summary judgment to plaintiff on its breach-of-contract claim because plaintiff “[did] not
point to any specific provision in the contract the [d]efendants breached”).
C. Refusal to Return Engineering Documents
It is undisputed that SpecSys remains in possession of Engineering Documents

containing CMI’s Confidential Information. Am. Compl. ¶¶ 80, 82; Answer ¶¶ 80, 82;
Def.’s Br. (Doc. No. 243) at 12, 17; Pls.’ Br. (Doc. No. 232) at 5. Plaintiffs contend that
SpecSys breached Paragraph 9 of the NDA by failing to return the Engineering
Documents upon termination of the parties’ relationship. Pls.’ Br. (Doc. No. 232) at 7-
8. Paragraph 9 of the NDA requires SpecSys to “promptly deliver” to CMI “all tangible

copies” of documents containing Confidential Information “[u]pon expiration or earlier
termination of this Agreement.” Doc. No. 78-9 at 4.
SpecSys offers no viable justification for its failure to return the Engineering
Documents to CMI as required by Paragraph 9 of the NDA. SpecSys’ sole argument in
this regard is that CMI cannot establish damages for the alleged breach because, having

“admit[tedly] . . . retained copies” of the Engineering Documents, CMI has not been
“deprived of” their use. Def.’ Resp. Br. (Doc. No. 281) at 18. But even assuming, as
SpecSys asserts, that Plaintiffs have suffered no “appreciable detriment” resulting from
the breach, they are, at a minimum, entitled to recover nominal damages for acts and
omissions of SpecSys that violate the NDA. See Okla. Stat. tit. 23, § 98 (stating that a

plaintiff who prevails on a contract claim is entitled to recover nominal damages even if
he suffered “no appreciable detriment” resulting from the breach). Thus, failure to prove
actual damages is not an appropriate ground on which to grant summary judgment. See
Miller v. Hosp. Care Consultants, Inc., No. CIV-10-471, 2011 WL 5025141, at *3 (E.D.
Okla. Oct. 21, 2011) (rejecting defendants’ argument that summary judgment on
plaintiff’s contract claim should be awarded in their favor due to lack of evidence that
plaintiff suffered actual damages).

Accordingly, Plaintiffs are entitled to summary judgment on their claim that
SpecSys breached Paragraph 9 of the NDA by refusing to return the Engineering
Documents.
D. Refusal to Deliver Intellectual Property
It is undisputed that SpecSys is withholding certain Intellectual Property it created

using CMI’s Confidential Information. Am. Compl. ¶¶ 41, 56, 62, 80; Answer ¶¶ 41, 56,
62, 80; Pls.’ Br. (Doc. No. 232) at 5. Plaintiffs assert that CMI has made partial payments
under the purchase orders, but SpecSys has not delivered any work product to CMI. Am.
Compl. ¶¶ 54, 55, 56, 63. Plaintiffs further suggest that CMI is entitled to recover
whatever Intellectual Property remains in SpecSys’ possession pursuant to Paragraph 3

of the NDA, which states that CMI will be the owner of “any invention, modification,
discovery, design, development, process or intellectual property right . . . result[ing] from
exposure” to CMI’s Confidential Information. Pls.’ Br. (Doc. No. 232) at 7 (citing Doc.
No. 78-9 at 4). SpecSys argues that CMI has not paid for the work it performed under
the relevant purchase orders, and, thus, SpecSys is entitled to retain the Intellectual

Property pending payment. Am. Countercl. (Doc. No. 23) ¶¶ 5-10; Def.’s Br. (Doc. No.
241) at 17-19.
Neither party supplies any argument or evidence addressing the core issue at
play—namely, whether and to what extent the purchase orders and NDA allow CMI to
recover Intellectual Property for which it has only partially paid. This issue presents a
question of contract construction, which, in the absence of meaningful advocacy, the
Court declines to resolve on summary judgment. See Voda, 899 F. Supp. 2d at 1199 n.20;

Beckham Cnty. Rural Water Dist. No. 3, 2014 WL 12818160 at *13.
For the reasons stated, the Court determines that neither party is entitled to
summary judgment on Plaintiffs’ claim that SpecSys breached the NDA by refusing to
deliver to CMI the Intellectual Property it created using CMI’s Confidential Information.
MISAPPROPRIATION OF TRADE SECRETS

The parties each seek summary judgment on Plaintiffs’ claims for violation of the
Defend Trade Secrets Act, 18 U.S.C. § 1832 et seq. (“DTSA”) and Oklahoma’s Uniform
Trade Secrets Act, Okla. Stat. tit. 78, § 85 et seq. (“OUTSA”). See Def.’s Mot. (Doc.
No. 244); Pls.’ Mot. (Doc. No. 231). Plaintiffs allege SpecSys violated these statutes by
“retaining” Engineering Documents, which, Plaintiffs assert, contain legally cognizable

trade secrets.15 Am. Compl. ¶¶ 173, 179, 180; see also Pls.’ Br. (Doc. No. 232) at 11.
SpecSys argues, and the Court agrees, that SpecSys’ retention of Engineering
Documents does not, without more, amount to a violation of the DTSA or the OUTSA.16
Def.’s Br. (Doc. No. 245) at 22-23. Each of these statutes requires proof of

15 The Court need not determine, for purposes of this order, whether the Confidential
Information contained in the Engineering Documents constitutes a “trade secret” under
the DTSA and OUTSA.

16 Finding this argument to be dispositive, the Court does not reach the alternative
grounds advanced by SpecSys.
“misappropriation,” which is defined as: (1) acquisition by “improper means”; (2) use
without consent; or (3) disclosure without consent. 18 U.S.C. § 1839(5); Okla. Stat. tit.
78, § 86(2).

It is undisputed that CMI willingly furnished SpecSys with the Engineering
Documents in question. Pls.’ Br. (Doc. No. 232) at 3; Def.’s Resp. Br. (Doc. No. 281) at
9-10. SpecSys’ retention of these Engineering Documents—irrespective of CMI’s
subsequent withdrawal of permission—does not make the acquisition unlawful. See
Restatement (Third) of Unfair Competition § 40 cmt. b (1995) (explaining that, where

trade secrets “ha[ve] been acquired . . . through a confidential disclosure from the trade
secret owner . . . acquisition of the secret is not improper; only a subsequent use or
disclosure in breach of the defendant’s duty of confidence is wrongful”).
Likewise, SpecSys’ retention of the Engineering Documents does not support a
finding of unlawful use. Plaintiffs have offered no evidence or argument suggesting that

SpecSys actually used the Engineering Documents for its own benefit or the benefit of a
third party, and mere possession is not sufficient to show misappropriation where, as here,
the documents were lawfully acquired. See, e.g., JustMed, Inc. v. Byce, 600 F.3d 1118,
1131 (9th Cir. 2010) (holding that defendant’s mere “possession” of trade secret against
the will of its owner did not constitute “use” of the trade secret under the Uniform Trade

Secrets Act); Iofina, Inc. v. Khalev, No. CIV-14-1328-M, 2016 WL 5794793, at *4 (W.D.
Okla. Oct. 4, 2016) (granting summary judgment on OUTSA claim on the ground that
plaintiff “failed to submit any evidence of defendants’ use of [the] alleged trade secret,
let alone use of the alleged trade secret to [plaintiff’s] detriment”).
Finally, although there exists a material fact dispute as to whether SpecSys
disclosed certain Engineering Documents to vendors without CMI’s consent, see
discussion supra, Plaintiffs’ misappropriation claims are predicated solely on SpecSys’

retention of the Engineering Documents.17 Am. Compl. ¶¶ 173, 179, 180; see also Pls.’
Br. (Doc. No. 232) at 11.
Because Plaintiffs have offered no argument or evidence indicative of
“misappropriation,” SpecSys is entitled to summary judgment on Plaintiffs’ claims for
violation of the DTSA and OUTSA.

INJUNCTIVE RELIEF
In their Amended Complaint, Plaintiffs assert a claim for injunctive relief in the
form of an order directing SpecSys to return to CMI: (1) the Purchased Items that CMI
supplied to SpecSys under PO 17580; (2) the Engineering Documents containing CMI’s
Confidential Information; and (3) the Intellectual Property that SpecSys developed using

CMI’s Confidential Information. See Am. Compl. ¶¶ 192-93. SpecSys moves for
summary judgment on Plaintiffs’ claim for injunctive relief. See Def.’s Mot. (Doc. No.
240).

17 In the pertinent briefing, SpecSys raises the question of whether its disclosure of
documents to vendors constituted a violation of the DTSA or the OUTSA. Def.’s Resp.
Br. (Doc. No. 281) at 20. In reply, Plaintiffs contend that the disclosure was
unauthorized. Pls.’ Reply Br. (Doc. No. 314) at 9. The Court declines to address
Plaintiffs’ unlawful-disclosure theory, as it was not advanced by Plaintiffs in the
Amended Complaint. See Woods v. Grant & Weber, Inc., No. CIV-18-939-R, 2018 WL
6517455, at *2 (W.D. Okla. Dec. 11, 2018) (explaining that “[m]otions for summary
judgment should be decided on the claims as pled, not as alleged in motion papers”)
(citation and internal quotation marks omitted)).
To obtain injunctive relief, Plaintiffs must establish: (1) success on the merits of
an underlying claim; (2) irreparable harm unless the injunction is issued; (3) the
threatened injury outweighs the harm that the injunction may cause the opposing party;

and (4) the injunction, if issued, will not adversely affect the public interest. Prairie Band
Potawatomi Nation v. Wagnon, 476 F.3d 818, 822 (10th Cir. 2007); see Att’y Gen. of
Okla. v. Tyson Foods, Inc., 565 F.3d 769, 776 (10th Cir. 2009).18 Plaintiffs concede that
the injunction they seek would require SpecSys “to take affirmative action” and, thus,
Plaintiffs must make a “heightened showing” on each of the four injunction factors. Little

v. Jones, 607 F.3d 1245, 1251 (10th Cir. 2010) (internal quotation marks omitted); see
Pls.’ Resp. Br. (Doc. No. 289) at 7.
SpecSys urges the Court to grant summary judgment in its favor for two reasons.
SpecSys first challenges Plaintiffs’ ability to succeed on the merits of their underlying
claims, arguing that SpecSys has a right to retain the items in question pending payment

of outstanding invoices by CMI. Def.’s Mot. (Doc. No. 241) at 12-21. But, as detailed
elsewhere in this order, there are questions of material fact bearing on SpecSys’ claimed
lien rights, including whether and to what extent SpecSys performed work on CMI’s
behalf that remains unpaid, and whether and to what extent CMI must reimburse SpecSys

18 Because Plaintiffs have not moved for a preliminary injunction, the Court limits its
consideration to whether a permanent injunction may be issued as part of the judgment
in this case. “The only measurable difference” between the standard required for entry
of a preliminary injunction and that for permanent injunctive relief “is that a permanent
injunction requires showing actual success on the merits, whereas a preliminary
injunction requires showing a substantial likelihood of success on the merits.” Prairie
Band Potawatomi Nation, 476 F.3d at 822.
for materials it purchased on CMI’s behalf. The Court likewise found there are material
issues of fact precluding summary judgment on Plaintiffs’ claim that SpecSys breached
Paragraph 9 of the NDA by refusing to deliver the Intellectual Property it created using

CMI’s Confidential Information. Finally, the Court concluded that summary judgment
should be awarded in Plaintiffs’ favor on their claim that SpecSys breached the NDA by
refusing to return the Engineering Documents. Thus, SpecSys cannot show the absence
of a material fact with respect to the “success” prong of Plaintiffs’ injunction claims.
SpecSys’ second argument is that Plaintiffs’ alleged injuries can be addressed

through an award of monetary damages, and, therefore, irreparable harm is lacking as a
matter of law. See Def.’s Br. (Doc. No. 241) at 21. To establish irreparable harm,
Plaintiffs must demonstrate a “significant risk that [they] will experience harm that
cannot be compensated after the fact by monetary damages.” Greater Yellowstone Coal.
v. Flowers, 321 F.3d 1250, 1258 (10th Cir. 2003) (internal quotation marks omitted)

(emphasis removed). The Court agrees with SpecSys that the undisputed facts establish
a lack of irreparable harm insofar as Plaintiffs seek return of the Purchased Items but
disagrees that the same is true insofar as Plaintiffs seek return of the Engineering
Documents or the Intellectual Property.
As to the Purchased Items, Plaintiffs have presented no argument or evidence

suggesting that an award of monetary damages will not compensate them for their alleged
injury. In fact, Plaintiffs suggest just the opposite:
SpecSys spends much effort trying to show why it would be unfair or
impractical to return the materials CMI provided for the TR-4s . . . . SpecSys
fails to present any evidence or legal authority to support its assertion that
Plaintiffs’ conversion claim requires return of the materials; it does not. As
provided under Oklahoma law, Plaintiffs seek to recover a jury award of
damages in the amount of at least what it cost CMI to buy and ship materials
to SpecSys, with the ultimate award to be proved at trial.

Pls.’ Reply Br. (Doc. No. 309) at 4 (emphasis added). Thus, insofar as Plaintiffs seek an
injunction mandating the return of the Purchased Items, SpecSys is entitled to summary
judgment.
As to the Engineering Documents, the Court has found that Plaintiffs are entitled
to immediate return of those items. The Court further finds that SpecSys’ failure to return
the Engineering Documents threatens an irreparable harm not reducible to monetary
damages. A competitor’s access to a plaintiff’s proprietary information poses a
significant risk of harm that is difficult, if not impossible, to quantify. See Restatement
(Third) of Unfair Competition § 44 cmt. b (1995) (“[T]he harm caused by the
appropriation of a trade secret may not be fully reparable through an award of monetary
relief due to the difficulty of proving the amount of loss and the causal connection with
the defendant's misconduct.”). A threat of imminent irreparable harm exists where the
defendant “is in possession of [the plaintiff’s] confidential information and is poised to

use or disclose [it], either personally or through an agent such as a parent or close
associate.” Jackson Hewitt, Inc. v. Barnes, No. 10-cv-05108 (DMC) (JAD), 2011 WL
181431, at *4 (D.N.J. Jan. 18, 2011); see also Inflight Newspapers, Inc. v. Mags. In-
Flight, LLC, 990 F. Supp. 119, 125 (E.D.N.Y. 1997) (holding that “the use and disclosure
of [plaintiff’s] confidential information . . . [was] likely” to happen where defendant had

access to the information and was a direct competitor of plaintiff); Caring Senior Serv.
Franchise P’ship L.P. v. Batson, No. 1:06-CV-82, 2006 WL 8442197, at *5 (E.D. Tenn.
May 15, 2006) (holding that “[i]rreparable harm may be established by evidence that
disclosure of confidential information could enable competitors to mimic the marketing

plans and strategies of the [plaintiff] and avoid the less successful strategies, resulting in
a substantial competitive injury”) (internal quotation marks omitted); Hahn v. OnBoard,
LLC, No. 09-3639 (MAS), 2011 WL 703836, at *9 (D.N.J. Feb. 18, 2011) (holding that
injuries occasioned by defendant’s retention of plaintiff’s confidential materials “may be
difficult to quantify,” and may not, therefore, be adequately compensated for by an award

of damages). Indeed, SpecSys agreed in advance of the parties’ transactions that its
disclosure of CMI’s Confidential Information would cause “irreparable injury” to CMI:
[SpecSys] and its Representatives recognize that its disclosure of
[Confidential] Information will give rise to irreparable injury to CMI [],
inadequately compensable in damages and that, accordingly, CMI
Roadbuilding may seek and obtain injunctive relief against the breach of
the within undertakings, in addition to any other legal remedies which
may be available.

Doc. No. 78-9 at 4. While not determinative of the inquiry, this stipulation provides
additional support for the conclusion that SpecSys’ failure to return the Engineering
Documents, and the Confidential Information included therein, threatens imminent
irreparable harm. See Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356
F.3d 1256, 1266 (10th Cir. 2004).
Similar considerations are present regarding the potential use or disclosure of the
Intellectual Property, i.e., the engineering documents, software code, and other
intellectual property created by SpecSys using CMI’s Confidential Information. While
the Court rejects Plaintiffs’ ability to obtain an injunction mandating the return of the
Intellectual Property—as set forth above, Plaintiffs have never possessed that property in
the first place—it remains possible under the rulings of the Court that Plaintiffs may

establish at trial their right to sole possession of this property. If Plaintiffs prevail on
such a claim, the authorities cited above suggest that any continued possession of the
Intellectual Property by SpecSys would at that time represent an irreparable harm not
reducible to monetary damages. On the present record, the Court denies SpecSys’ request
for summary judgment as to this aspect of Plaintiffs’ injunction claim.

PLAINTIFFS’ RULE 56(G) REQUEST
Rule 56(g) of the Federal Rules of Civil Procedure states that “[i]f the court does
not grant all the relief requested by the motion, it may enter an order stating any material
fact . . . that is not genuinely in dispute.” Fed. R. Civ. P. 56(g). Invoking this rule,
Plaintiffs broadly request an order “identifying each material fact relevant to” their claims

“that is not genuinely in dispute.” Pls.’ Br. (Doc. No. 222) at 7; Pls.’ Br. (Doc. No. 232)
at 8, 11, 13, 15. The Court declines to do so in the exercise of its discretion, as there
remain significant factual disputes pertaining to the claims. See Fed. R. Civ. P. 56(g)
advisory committee's note to 2010 amendment (“Even if the court believes that a fact is
not genuinely in dispute it may refrain from ordering that the fact be treated as

established.”); 10B Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 2737 (4th ed.) (“The question whether to exercise [the] authority [to
establish undisputed facts under Rule 56(g)] is within the court’s discretion.”).
CONCLUSION
For the reasons stated above, the Court rules as follows:
1. Defendant’s Motion for Partial Summary Judgment No. 4 (Doc. No. 242)

is GRANTED IN PART:
a. The Motion is GRANTED with respect to Plaintiffs’ claims for
accounting and conversion of the engineering documents and Plaintiffs’
claim that SpecSys breached the NDA by covering up CMI Ltd.’s name
and logo on Engineering Documents sent to third-party vendors. The

parties are ADVISED that entry of judgment with respect to these
claims will await resolution of Plaintiffs’ remaining claims.
b. The Motion is DENIED in all other respects.
2. Plaintiffs’ Motion for Partial Summary Judgment on Count XVI (Doc. No.
221) is DENIED.

3. Defendant’s Motion for Partial Summary Judgment No. 5 (Doc. No. 244)
is GRANTED IN PART:
a. The Motion is GRANTED with respect to Plaintiffs’ claim for violation
of the Defend Trade Secrets Act and Uniform Trade Secrets Act. The
parties are ADVISED that entry of judgment with respect to these

claims will await resolution of Plaintiffs’ remaining claims.
b. The Motion is DENIED in all other respects.
4. Plaintiffs’ Motion for Partial Summary Judgment on Counts XI, XIV, and
XV (Doc. No. 231) is GRANTED IN PART:
a. The Motion is GRANTED with respect to Plaintiffs’ claim that SpecSys
breached Paragraph 9 of the NDA by refusing to return the Engineering
Documents.
b. The Motion is DENIED in all other respects.
5. Defendant’s Motion for Partial Summary Judgment No. 3 (Doc. No. 240)
is GRANTED IN PART:
a. The Motion is GRANTED insofar as Plaintiffs seek an injunction
mandating the return of the Purchased Items. The parties are ADVISED
that entry of judgment with respect to these claims will await resolution
of Plaintiffs’ remaining claims.
b. The Motion is DENIED in all other respects.
IT IS SO ORDERED this 28th day of May, 2021.

(Barba B. Kadota
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10388897. Public record. Not legal advice.