MedInformatix Wins Breach of Contract and Copyright Infringement Case

In the case of MedInformatix v. Acermed, Timothy McGonigle's client prevailed in a breach of contract/copyright infringement lawsuit. Timothy McGonigle's client was awarded the sum of $785,704. Timothy McGonigle's client also prevailed on the cross-complaint seeking in excess of four million dollars in damages.

MedInformatix's predecessor and C.A.R.E.I.S. #1 were parties to a 1996 Reseller Agreement. In 2001, C.A.R.E.I.S. #1 and another company, Systems West, joined forces to form a new company, Acermed, which continued doing business with MedInformatix as it has been doing before.

Acermed carried on the business of C.A.R.E.I.S. #1 by continuing to sell MedInformatix's software, holding itself out to be an authorized reseller of the product, benefiting by MedInformatix's success and goodwill, and making a profit from the sales; basically, Acermed accepted all the benefits of the Reseller Agreement.

However, the relationship deteriorated as Acermed refused to cure its large overdue account, refused to acknowledge the Reseller Agreement, and began developing a competing product. As a result, in July of 2005, MedInformatix terminated Acermed's reseller authority.

Despite the fact that Acermed was no longer authorized to demonstrate, distribute or sell MedInformatix software, MedInformatix received complaints from third parties that Acermed was still demonstrating the MedInformatix product. Then MedInformatix discovered that Acermed copied the MedInformatix software in an effort to create its own competing software.

Accordingly, in September of 2005, Timothy McGonigle filed a complaint on behalf of MedInformatix against Acermed in the United States District Court for copyright infringement, trade secret misappropriation, breaches of contracts, unfair business practices, account stated and goods sold and delivered. Michael McCarthy of the law firm of Nemecek & Cole joined the case as co-counsel for MedInformatix.

Acermed retained the Newport Beach firm of Stradling, Yocca, Carlson & Roth to represent it in the litigation. Acermed filed a counter-claim against MedInformatix seeking in excess of four million dollars in damages.

Acermed compelled the matter to Arbitration with the Honorable Gary Taylor, a retired judge of the United States District Court. After a two week arbitration, Judge Taylor concluded that MedInformatix owned a valid copyright to its software program and product.
Judge Taylor found that Acermed copied MedInformatix's copyrighted materials.

Judge Taylor also found that MedInformatix's software was the subject of considerable creative effort.

Judge Taylor concluded that Acermed treated MedInformatix's materials as if they were an industry standard, in the public domain, for use by others. Judge Taylor found that there was ample evidence of intent to copy MedInformatix's software. Acermed's plan was to develop a competing product by standardized and more efficient design, through incorporation of existing materials from other sources. Acermed treated MedInformatix's materials as non-protected, and disclaimed the agreement between the parties with its protective provisions.

Judge Taylor found that Acermed had improperly intended to copy MedInformatix's copyrighted software. Judge Taylor awarded MedInformatix statutory damages in the amount of $150,000 for Acermed's willful infringement.

Judge Taylor also awarded breach of contract damages against Acermed in the amount of $279,397, as a result of Acermed's failure to pay MedInformatix the amounts due under their contract. Judge Taylor found in favor of MedInformatix against Acermed on its multi-million dollar counterclaim. A copy of Judge Taylor's decision can be found on the firm's website.

Finally, Judge Taylor also found that MedInformatix's counsel, Timothy McGonigle and Michael McCarthy, did an excellent job in presenting their case. Judge Taylor awarded attorney's fees to MedInformatix's counsel under the Copyright Law in the amount of $356,307.


Non-Judicial Foreclosures

Because of the trying economic times, there has been a lot of buzz in the news about different kinds of foreclosures and the serious consequences of a foreclosure. However, within the legal system there are different types of foreclosure with different proceedings, which makes the entire process of foreclosure complicated.

The two most important aspects of this process to know are what the differences between non-judicial and judicial foreclosures and the specific requirements for foreclosures.

A judicial foreclosure goes entirely through the courts and ends with a sheriff's sale where the highest bidder becomes the newest owner of the property. On the other hand, non-judicial foreclosures are not handled by the court, but instead rely upon the state's already established laws pertaining to foreclosure. When the loan stops being paid, the homeowner is mailed a default letter and given the opportunity to make the appropriate payments on the loan. However, if the homeowner still does not rectify the loan payments, then the homeowner will receive a letter of intent to sell and other public postings will be displayed throughout the area informing neighbors of the foreclosure. Then at the auction, the home goes to the highest bidder.

Consequently, within the non-judicial realm there are some legal loopholes within California that have judges disagreeing with each other.

Recently in California, in Kachlon v. Markowitz it came to light that Civil Code Section 2924 asserts publication of these notices as privilege under Civil Code 47.

But that section claims to have both a litigation privilege which is absolute and also a common interest privilege, which is qualified by lack of malice. The non-judicial foreclosure section does not state which section of Civil Code 47 privilege applies to, which opens the door to differing opinions from within the California courts.

In another case, the 4th district court held that privilege was absolute, making the non-judicial foreclosure case fall under litigation privilege.

Then in the Court of Appeals, the 2nd district court directly disagreed with the 4th district court's decision and determined that holding privilege is the common interest privilege. Therefore, under common interest, privilege applies only when the defendant lacks malice.

In this particular case, Kachlon v. Markowitz, the privilege does apply because they did not find malice. With these conflicting Court of Appeal perspectives, any judge within California is free to choose the view that suits them best. Markowitz's attorney Timothy D. McGonigle, a Los Angeles litigation lawyer, asserts that in these types of situations it's a case of first impressions and that the judge expanded the potential of trustees when involved on foreclosure properties.

Obviously, in California there are a lot of differing judicial perspectives about non-judicial foreclosures and ultimately depends on both your lawyer and judge

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