Instead, Inc. v. Reprotect, Inc.
Docket: No. 09-0976-cv
Court: Court of Appeals for the Second Circuit; October 21, 2009; Federal Appellate Court
Instead, Inc. appeals a judgment from the U.S. District Court for the Southern District of New York, which dismissed its complaint against ReProtect, Inc. and individual defendants for failure to state a claim under Fed. R. Civ. P. 12(b)(6). The court determined that the 1998 Asset Purchase Agreement between Ultrafem, Inc. and Akcess Pacific Group unambiguously excluded rights from Ultrafem’s 1996 License, Research and Product Development Agreement with ReProtect, which Instead claims as an assignee. Consequently, Instead's request for a declaration of rights and damages for anticipatory breach was dismissed. The appellate court reviews the dismissal de novo, assuming all well-pleaded facts in the complaint are true and interpreting the contract as a question of law. Under New York law, a contractual term is not ambiguous merely because parties have differing interpretations. The language of the Purchase Agreement clearly excludes the rights from the 1996 Agreement from the assets sold to Akcess, as it does not specifically reference the 1996 Agreement and lists it as excluded in the accompanying schedule. Instead’s argument that the exclusion pertains only to the research and development portion of the 1996 Agreement is deemed highly implausible, since the Purchase Agreement treats the 1996 Agreement as a single entity and does not suggest separable parts. The court concludes that Instead's claims are unpersuasive, affirming the district court's interpretation of the Purchase Agreement. Schedule 3.6 references the 1996 Agreement using the same language as Schedule 1.4, suggesting that it refers to the entire agreement. Instead asserts that the 1996 Agreement was excluded from the Purchase Agreement, but that Ultrafem’s rights under it vested separately and passed to Akcess, then to Instead. Instead contends that the exclusion of these rights as "material" assets in Schedule 1.1(a) is irrelevant since it is not an exhaustive list. The court disagrees, stating that the Purchase Agreement treats the 1996 Agreement as a whole and excludes it as an "Asset." While Schedule 1.1(a) is not exhaustive, Schedule 3.6 comprehensively lists Ultrafem’s intellectual property, including only the items in Section 1.1(a) and the rights from the 1996 Agreement, which is excluded in its entirety under Schedule 1.4. The court affirms that the district court did not improperly rely on materials outside the complaint and that the referenced opinion merely summarizes the 1996 Agreement without resolving factual disputes. The court declines to remand for consideration of Instead’s claims since Instead did not own rights under the 1996 Agreement, resulting in no "actual controversy" over those rights. Thus, the district court's judgment is affirmed.