Legislator loses his first battle in court

Other disputes not yet decided; civil trial date set

Sen. Ray Scott

A fireplace maker has won a judgment against state Sen. Ray Scott for his failure to pay it thousands of dollars but lost in its efforts to toss out other claims the Grand Junction Republican has made against the manufacturer whose products he once sold.

In a ruling issued last week, U.S. District Judge Michael E. Hegarty said Scott’s company, Gas Products Corp., was in breach of contract with fireplace manufacturer Montigo Del Ray Corp. and owes Montigo $9,583.

Hegarty also dismissed Scott’s claim that Montigo interfered with prospective customers by telling GPC clients that GPC was having problems paying its bills, saying that in 2009, Scott’s past-due balances were as high as $110,000.

The judge, however, deferred execution of the monetary judgment against Scott until a final judgment is rendered on other claims against Montigo that Hegarty ruled should go to trial, which include misappropriation of trade secrets, civil conspiracy and interference with existing contractual relationships.

“The court holds that GPC’s remaining three claims are not time barred (and) disputed issues of material fact exist on each of the claims,” the judge wrote. “However, because GPC does not provide admissible evidence supporting its theory that defendants interfered with its prospective contractual relationships by disclosing GPC’s credit issues to its customers, the court grants summary judgment on this theory.”

A four-day trial on those allegations has been set for Dec. 11, but Scott said he and Montigo are close to reaching a settlement agreement. The court’s pre-trial order, however, said there is “little possibility” of a settlement.

“We are in the heat of negotiations,” Scott said. “I can’t disclose it, but it’s probably going to be wrapped up in a few days.”

Scott filed suit last fall against Montigo, the Washington-based company that makes high-end fireplaces, which Scott’s company sold in Colorado, Wyoming, Montana and Utah.

In the lawsuit, Scott claimed after Montigo fired his company as its manufacturer’s representative in 2012, granting that title to another company named in the suit, BTU Marketing, Montigo then proceeded to use his customer list, which Scott maintains was a trade secret, to lure away prospective clients.

Scott’s suit alleges that by doing so, Montigo is guilty of civil conspiracy and caused him to lose about $556,000 in profits.

Hegarty said it should be up to a jury to determine if Scott’s customer list was a trade secret and whether Montigo gave that list to BTU.

“The court has already held that GPC has demonstrated disputed issues of material fact over whether defendants misappropriated its trade secrets and tortuously interfered with its prospective business relationships,” Hegarty wrote. “If a jury were to find that defendants committed either of these acts, GPC would establish the unlawful act element of its conspiracy claim.”

Montigo, however, maintains in its court filings that the list wasn’t a secret and that Scott’s company didn’t hold it out as such, and questions whether Scott’s company even owned it. The manufacturer said 70 percent of the clients on the list were referrals from Montigo to GPC, and others were openly revealed to the manufacturer from Scott’s purchase orders. The manufacturer also said that any of the clients on that list could have been located through other sources, such as the telephone book or the internet.

Despite that, “given the evidence GPC has submitted supporting a contrary holding, the court cannot hold that the customer list is not a trade secret as a matter of law,” Hegarty said in his ruling.

“The court found it important that the plaintiff claimed it ‘spent anywhere from weeks to years developing the customer relationships,’” Hegarty wrote. “Although an internet search could reveal potential purchasers of Montigo’s products, it would not contain a condensed list of companies that bought products from GPC.”


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