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Hunting Solutions Limited Liability Co. v. Knight

Court of Appeals of Iowa

June 21, 2017

WILLIAM L. KNIGHT, Defendant-Appellee.

         Appeal from the Iowa District Court for Appanoose County, Daniel P. Wilson, Judge.

         A plaintiff appeals the district court's denial of its unjust enrichment claim.

          Bradley M. Grothe of Craver & Grothe, LLP, Centerville, for appellant.

          Timothy J. Zarley and Joshua J. Conley of Zarley Law Firm, P.L.C., Des Moines, for appellee.

          Considered by Danilson, C.J., and Vogel and Vaitheswaran, JJ.

          VOGEL, Judge.

         Hunting Solutions, L.L.C., d/b/a Extreme Hunting Solutions (EHS), filed suit against William Knight, asserting various causes of action arising from an unsuccessful business relationship. The district court rejected EHS's claims, along with Knight's counterclaims, following a bench trial. EHS asserts on appeal the district court was wrong to deny its unjust enrichment cause of action because it bestowed a benefit onto Knight by developing the prototype of his product and it should be compensated for that benefit. Knight asserts EHS conferred no benefit onto him because the product that EHS developed no longer complies with his patent. For the reasons stated below, we affirm the district court's decision.

         I. Background Facts and Proceedings.

         Knight invented and patented a product he called a "Rattle Stick for Attacking Animals, " which he envisioned would be used by hunters to attract deer by simulating the sound of the antlers of male deer engaged in a fight. The prototype also included a "grunt tube" with a reed in the handle of the unit, which could be used to vocalize a deer call. However, Knight lacked the resources to manufacture his product at an affordable price point to sell to consumers. In order to address this problem, Knight met with Randall Ferman, CEO of EHS, in April 2013.

         Ferman asserted that, at this initial meeting, he informed Knight that, if EHS were to invest in the Rattle Stick, EHS must have the exclusive right to sell the product. Knight denies any such discussion occurred. The two moved forwarded with developing a prototype of Knight's Rattle Stick through a company Ferman had used in the past. Knight provided Ferman with computer drawings of his patented product along with a video to demonstrate how it would be used. During the development of the prototype, Ferman wanted to change the grunt tube to a snort wheeze, a different vocalization call for attracting deer. Knight opposed the change but testified he "lost that argument, " and a snort wheeze replaced the grunt tube in the prototype.

         In August, Ferman contacted a mold company to create a mold so the product could be manufactured. Because EHS would be paying the $27, 000 cost of the mold, Ferman obtained Knight's final approval on the appearance and function of the Rattle Stick before ordering the mold. At this time, Knight informed Ferman that, before Ferman ordered the mold, the two should work out a written agreement, but Ferman went ahead and ordered the mold without a written agreement.

         In December, Ferman testified he had a meeting with Knight, and the two were on speaker phone with Ferman's attorney, giving him instructions to draft up the already agreed upon licensing agreement. Knight denied being present when Ferman contacted his attorney, and Ferman's attorney could not verify that anyone but Ferman was present during the phone call. Knight did remember a meeting in Ferman's office in December where Ferman provided him with a written licensing agreement that provided EHS with the exclusive right to sell the product. Knight testified this was the first time he had heard Ferman use the term "exclusive" with respect to selling the Rattle Stick. Knight took the agreement to his attorney to review.

         Both Ferman and Knight attended a hunter's trade show in January to develop interest in the product. Marketing and packaging materials were created and paid for by EHS, and a few products were available for demonstration purposes from the mold company. Knight testified that, when they were at the trade show, Ferman was notified by his U.S. manufacturer that the mold created in China would not work for production in the United States because it did not have "cooling jets."

         After returning from the trade show, Knight presented Ferman with a counteroffer agreement, prepared by Knight's attorney, that provided EHS's right to sell the product was nonexclusive. Ferman rejected this counteroffer, and the parties briefly discussed Ferman purchasing Knight's patent. But ultimately, the business relationship dissolved, and in May 2014, Ferman, on behalf of EHS, filed suit for the time and money invested in developing the Rattle Stick. Ferman estimated EHS spent nearly $35, 000 for the prototype, mold, ...

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