Furkin, Howard v. Smikun, Leonid , 237 F. App'x 86 ( 2007 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted May 16, 2007*
Decided May 16, 2007
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. KENNETH F. RIPPLE, Circuit Judge
Hon. DIANE S. SYKES, Circuit Judge
No. 07-1067
HOWARD FURKIN, Appeal from the United States
Plaintiff-Appellant, District Court for the Northern
District of Illinois, Eastern Division
v.
No. 06 C 3342
LEONID SMIKUN and
INCREDIBLE TECHNOLOGIES, George W. Lindberg,
INC., Judge.
Defendants-Appellees.
ORDER
This appeal concerns the timeliness of Howard Furkin’s diversity suit against
Leonid Smikun and Incredible Technologies, Inc. (“IT”). Furkin, pro se, says that in
1985 he hired Smikun to write a computer software program called “Silent Partner”
and that the two agreed to split evenly the proceeds of its sales. Furkin says that
while he was imprisoned between 1994 and 2000 Smikun withheld from Furkin his
share of sales and that, in selling the rights to “Silent Partner” to IT in 2000,
*
After an examination of the briefs and the record, we have concluded that oral
argument is unnecessary. Thus, the appeal is submitted on the briefs and the record.
See Fed. R. App. P. 34(a)(2).
No. 07-1067 Page 2
Smikun and IT conspired to convert his property. The district court granted
summary judgment against Furkin because his claims, whether understood as
being brought under Illinois law or the Copyright Act, are barred by the statute of
limitations. We affirm.
Background
“Silent Partner” is a route management program that tracks the revenue of
coin-operated machines. Furkin says that after he hired Smikun to write the
software in 1985, he retained Smikun to provide technical support for their
customers. The operation was incorporated in 1989, with Furkin presiding over the
business. Unknown to Furkin, Smikun obtained copyrights for the program in 1985,
1987, 1989, and 1995, and on each copyright application he indicated that the
software was not a “work made for hire,” see 17 U.S.C. § 201(b).
The Silent Partner business took a big hit in 1994, when Furkin was
convicted of possessing an unregistered sawed-off shotgun, see 26 U.S.C. § 5861(d),
and then of conspiring to defraud the IRS, see 18 U.S.C. § 371, tampering with
witnesses, see 18 U.S.C. § 1512(b)(1), obstructing justice, see 18 U.S.C. § 1503, and
engaging in unregistered transactions in gambling devices, see 15
U.S.C. §§ 1173(a)(3) and 1176. See United States v. Furkin, 119 F.3d 1276, 1278-79
(7th Cir. 1997). In 1995 Furkin began serving a combined sentence of 144-months’
imprisonment for all counts. Id. The Silent Partner, Inc. involuntarily dissolved,
but Smikun continued to sell “Silent Partner” programs while Furkin was in prison.
Smikun wrote letters to Furkin and would periodically send him money orders in
amounts ranging from $100 to $500, which Furkin interprets as payment for sales
of “Silent Partner.”
In September 2000, Furkin discovered that Smikun had sold the rights to
“Silent Partner” to IT. He wrote a letter to Smikun expressing his “shock” about
the sale on October 1, 2000. Smikun wrote back to explain that the sale had
occurred in August and that he had not mentioned it because he had been waiting
for the official announcement of the sale. Furkin says he did not file suit then
because Smikun continued to send him partial payments and assured him that he
would receive his full share of the sale upon his release from prison in 2004. Furkin
also asserts that Smikun continued to make “similar promises” through 2005, and
that Furkin “had no reason to disbelieve him based upon [their] long relationship[.]”
Furkin filed this lawsuit in 2006, after Smikun stopped returning his phone calls.
Smikun responded to Furkin’s complaint with a motion for summary
judgment, arguing, among other things, that the suit is barred by the statute of
limitations. IT, meanwhile, moved to dismiss for failure to state a claim upon
which relief may be granted. See Fed. R. Civ. P. 12(b)(6). The company asserted
No. 07-1067 Page 3
that Furkin’s state-law claims are preempted by the Copyright Act, 17 U.S.C.
§§ 101-1332, which requires that a plaintiff register a copyright before initiating an
infringement suit. IT also argued that under either the Copyright Act or Illinois
law, the suit is barred by statutes of limitations.
In his responses to the motions, Furkin asserted that statutes of limitations
should not bar his suit because Smikun fraudulently concealed the existence of the
claims and “lulled” him into inaction. In support, Furkin stated by affidavit that
from 1994 to 2005 Smikun sent him small payments and promised to pay him his
full share of the sale of “Silent Partner.” Furkin also submitted three sets of FBI
agents’ notes from meetings with Smikun in 1991 and 1993; letters from Smikun
dated 1998, 1999, 2000, and 2003; a 1998 money-order stub in the amount of $100;
and a 1999 money-order stub in the amount of $300.
On September 18 Furkin filed a Federal Rule of Civil Procedure 56(f)
affidavit in which he requested an indefinite amount of time to obtain affidavits
from additional unnamed out-of-state witnesses. On October 23—before the district
court had ruled on his 56(f) motion—Furkin filed additional affidavits from three
former employees and a former customer. The affiants testified to Furkin’s
ownership of “Silent Partner” as well as his arrangement with Smikun to split the
proceeds of sales. Furkin also filed stubs from checks written on the Silent Partner,
Inc. account.
On December 12, the district court granted summary judgment for Smikun
and then sua sponte granted summary judgment for IT on their statute of
limitations defenses. The court determined that all of Furkin’s claims accrued on
September 20, 2000, when he discovered Smikun’s sale of “Silent Partner” to IT.
Consequently, the court deemed Furkin’s 2006 suit untimely under the Copyright
Act’s three-year statute of limitations, see 17 U.S.C. § 507, and Illinois’s five-year
statute of limitations for a claim of conversion, see 720 ILCS § 5/13-205.
The court then analyzed whether Furkin could invoke either the doctrine of
equitable estoppel with respect to his copyright claims, or Illinois’s fraudulent
concealment statute, see 720 ILCS § 5/13-215, with respect to his state-law cause of
action. The court found that, even if Smikun’s payments and promises “lulled”
Furkin into thinking he retained a property interest in the proceeds of sales of
“Silent Partner,” the latest he received such money was in 2000, and none of his
evidence, other than his own affidavit, established later payments or promises.
Accordingly, the district court determined that Furkin could not invoke either
equitable estoppel or fraudulent concealment to excuse his untimely case, as he had
not proven that Smikun or IT took active steps to prevent him from suing.
No. 07-1067 Page 4
In so ruling, the district court did not consider the FBI agents’ notes from
their meetings with Smikun in 1991 and 1993, which the district court deemed
inadmissible hearsay. The district court did, however, admit as evidence the
additional affidavits and check stubs that Furkin submitted on October 23. The
court found, however, that Furkin’s evidence did not support his equitable estoppel
or fraudulent concealment arguments.
Analysis
On appeal, Furkin contests (1) the district court’s application of statutes of
limitations to bar his suit; (2) its grant of summary judgment without allowing
Furkin additional time for discovery; (3) its sua sponte grant of summary judgment
for IT; and (4) its adverse evidentiary ruling on the notes from the FBI agents’
meetings with Smikun.
Furkin first argues that the district court erred by not applying the doctrines
of equitable estoppel and fraudulent concealment to bar Smikun’s and IT’s statute
of limitations defense. He says that the district court failed to consider his
affidavit, in which he asserted that Smikun made promises and payments to him
between 2000 and 2005. He says that his sworn statements, which were not
contested by Smikun or IT, created a genuine issue of material fact about whether
Smikun’s conduct “lulled” him into inaction.
We review a district court’s grant of summary judgment de novo, viewing the
facts in the light most favorable to the non-moving party. Repa v. Roadway
Express, Inc., 477 F.3d 938, 940 (7th Cir. 2007). Because Furkin bears the burden
of proof on his equitable estoppel argument, he must present facts that, if true,
“would justify equitable modification of the statute of limitations.” See Hamilton v.
Komatsu Dresser Indus., Inc., 964 F.2d 600, 606 (7th Cir. 1992). The common law
doctrine of equitable estoppel applies to claims under the Copyright Act, see Taylor
v. Meirick, 712 F.2d 1112, 1118 (7th Cir. 1983), and “comes into play if the
defendant takes active steps to prevent the plaintiff from suing in time.” Smith v.
Potter, 445 F.3d 1000, 1010 (7th Cir. 2006) (citation and quotation marks omitted).
Furkin must also show that he actually and reasonably relied upon Smikun’s or IT’s
conduct or representations. Smith, 445 F.3d at 1010.
We reject Furkin’s equitable estoppel argument because, as a matter of law,
Smikun’s promises and payments did not prevent Furkin from filing suit. Smikun
candidly acknowledged his sale of “Silent Partner” in an October 2000 letter to
Furkin. That unambiguous expression of an adverse claim of ownership of the
rights to “Silent Partner” clearly alerted Furkin to the existence of his copyright
claim, and Furkin then knew, or should have known, that Smikun and IT had
violated his ownership rights. See Gaiman v. McFarlane, 360 F.3d 644, 652-53 (7th
No. 07-1067 Page 5
Cir. 2004). Even if we accept as true Furkin’s statement that Smikun continued to
make promises and payments to him until 2005, such acts were not active steps to
prevent Furkin from timely filing his copyright claims. See Smith, 445 F.3d at
1010. And since Furkin has not set forth specific facts that would lead a factfinder
to conclude that IT took any action to prevent him from suing in time, the district
court properly rejected Furkin’s equitable estoppel argument against IT as well.1
Furthermore, while at this stage we may accept as true Furkin’s actual
reliance on Smikun’s many promises to pay him, his reliance was unreasonable.
See Smith, 445 F.3d at 1010. If, as Furkin says, Smikun reiterated unfulfilled
promises for nearly six years, Furkin could not have reasonably believed that
Smikun would pay him in full after such a long wait. See id. at 1011; Bridgeport
Music, Inc. v. Diamond Time, Ltd., 371 F.3d 883, 891 (6th Cir. 2004). Accordingly,
the district court properly rejected Furkin’s equitable estoppel argument.
For similar reasons, we reject Furkin’s fraudulent concealment argument
with respect to his state-law causes of action. Under Illinois law, if Smikun or IT
fraudulently concealed a cause of action from Furkin, Furkin is entitled to bring his
action for conversion five years after he discovered it. See 735 ILCS § 5/13-215
(2007); Shropshear v. Corp. Counsel of Chi., 275 F.3d 593, 597 (7th Cir. 2001). But
even if we assume, for the purpose of summary judgment, that Smikun concealed
his ownership interest in “Silent Partner” from 1985 to 2000, Furkin admits that he
learned about Smikun’s sale of all rights to “Silent Partner” in 2000. At that time,
Furkin had all the information he needed to file suit. Consequently, his 2006
lawsuit is too late.
Furkin next argues that the district court prematurely granted summary
judgment without ruling on his Rule 56(f) motion. He argues that if he had more
time, he would have deposed Smikun, IT, and the FBI agents who interviewed
Smikun in 1991 and 1993.
1
Our statute of limitations analysis assumes that Furkin’s only claim under the
Copyright Act accrued when he discovered the sale of “Silent Partner” in September
2000. See Gaiman, 360 F.3d at 652-53. We note, however, that had Furkin sued IT for
a single or multiple instances of copying “Silent Partner” within the three years prior
to the filing of his lawsuit, his claim(s) of copyright infringement would be timely.
Although we could liberally construe Furkin’s papers to make such a claim, it would
not save Furkin’s lawsuit. As IT notes, Furkin has not attempted to register a
copyright, a prerequisite for a suit for copyright infringement. See 17 U.S.C. § 411(a);
Automation by Design, Inc. v. Raybestos Prods. Co., 463 F.3d 749, 753 n.1 (7th Cir.
2006); Pickett v. Prince, 207 F.3d 402, 404 (7th Cir. 2000).
No. 07-1067 Page 6
If a party would like additional time for discovery, he must submit an
affidavit stating the reasons why. Fed R. Civ. P. 56(f). A district court may, in its
discretion, grant or deny the request. See Grayson v. O’Neill, 308 F.3d 808, 815-16
(7th Cir. 2002).
Here, the district court clearly considered, and effectively granted, Furkin’s
request for additional discovery. Furkin had asked for additional time to “enlarge
[his] responses by affidavits from other witnesses.” Before the district court had
ruled on the motion, Furkin submitted four affidavits from out-of-state witnesses.
The court later permitted the filing of the affidavits. Furkin never requested, as he
now asserts, to obtain depositions of Smikun, IT, and various FBI agents, and so he
has forfeited the argument by not raising it before the district court. See Omega
Healthcare Investors, Inc. v. Res-Care, Inc., 475 F.3d 853, 858-59 (7th Cir. 2007).
Furkin next argues that the district court should not have sua sponte granted
summary judgment in IT’s favor because he was not given a fair opportunity to
present evidence against IT. We disagree. “[W]here one defendant succeeds in
winning summary judgment on a ground common to several defendants, the district
court may also grant summary judgment to the non-moving defendants, if the
plaintiff had an adequate opportunity to argue in opposition.” Acequia, Inc. v.
Prudential Ins. Co. of Am., 226 F.3d 798, 807 (7th Cir. 2000); see also Simpson v.
Merchants Recovery Bureau, Inc., 171 F.3d 546, 549 (7th Cir. 1999). Here, the
district court’s sua sponte grant of summary judgment for IT was proper because it
was on the same ground—the statute of limitations—as its grant of summary
judgment for Smikun, and Furkin had a full opportunity to present evidence on that
ground in his responses to both of their motions.
Finally, we decline to address Furkin’s argument that the district court
improperly ruled that FBI agents’ notes from 1991 and 1993 meetings with Smikun
were hearsay. Even if they had been admitted, they would not affect Smikun’s and
IT’s statute of limitations defense.
AFFIRMED.