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Butler v. Balolia

United States District Court, D. Massachusetts

September 10, 2014

DAVID BUTLER, Plaintiff,
v.
SHIRAZ BALOLIA, Defendant.

MEMORANDUM AND ORDER

MARK L. WOLF, District Judge.

I. INTRODUCTION

In 2012, plaintiff David Butler filed this suit against defendant Shiraz Balolia in Massachusetts state court, alleging that Balolia had failed to comply with a letter of intent that the two had signed regarding the purchase of Butler's "Whirlwind" invention. After the case was removed to the United States District Court for the District of Massachusetts, Balolia filed a motion to dismiss for failure to state a claim, and Butler filed a motion for leave to amend the complaint. In February 2013, Judge Joseph Tauro allowed the motion to dismiss, based on his interpretation of Washington state contract law. See Butler v. Balolia, C.A. No. 12-11054-JLT, 2013 WL 752363 (D. Mass. Feb. 26, 2013). Judge Tauro also denied the motion for leave to amend, explaining that any such amendment would be futile because the proposed amended complaint did not alter the underlying legal theory of the original complaint. See id. The First Circuit subsequently vacated Judge Tauro's decision based on its reading of Washington law, and remanded the case. It has been randomly reassigned to this court.

On remand, the plaintiff filed his First Amended Complaint without leave from the court or the consent of the defendant to do so. The defendant then filed a Motion to Strike the First Amended Complaint.

Although the plaintiff should have renewed his motion for leave to amend the complaint following remand, his failure to do so is not fatal. For the reasons explained below, the defendant's Motion to Strike is being denied, and the First Amended Complaint is now the operative complaint in this case.

II. PROCEDURAL HISTORY

A. Proceedings Before Judge Tauro

On May 29, 2012, plaintiff David Butler filed suit in Suffolk County Superior Court against defendant Shiraz Balolia. In his complaint, Butler alleged that he and Balolia had both signed a letter of intent ("LOI") stating that the parties intended to enter into a separate agreement for Balolia to purchase the technology underlying Butler's patented "Whirlwind" invention, which relates to safety devices for power tools. When the purchase was not consummated, Butler sued Balolia for: (1) a declaration that the LOI was a binding and enforceable contract; (2) damages for breach of contract; (3) damages for breach of the implied covenant of good faith and fair dealing; and (4) damages for violation of Mass. Gen. Laws. ch. 93A. See Compl. ¶¶35-61.

On June 13, 2012, Balolia removed the case to the District of Massachusetts, invoking diversity jurisdiction pursuant to 28 U.S.C. §1332 and 28 U.S.C. §1446. On August 3, 2012, Balolia filed a motion to dismiss for failure to state a claim, which Butler opposed. On September 7, 2012, Butler filed a motion for leave to amend his complaint, seeking to add additional factual allegations about events that occurred after the original complaint was filed and to add a fifth count for specific performance. See Pl.'s Mot. for Leave to Amend Compl.

In a decision issued on February 26, 2013, Judge Tauro allowed the defendant's motion to dismiss. Judge Tauro applied the law of Washington state, as specified in the LOI's choice-of-law provision. See Butler v. Balolia, C.A. No. 12-11054-JLT, 2013 WL 752363, at *2 (D. Mass. Feb. 26, 2013). He "conclude[d] that the parties merely entered into an agreement to agree, " id., and that such agreements are unenforceable under Washington law, id. (citing Keystone Land & Dev. Co. v. Xerox Corp. , 94 P.3d 945, 948 (Wash. 2004)). In the same order, Judge Tauro also denied Butler's motion for leave to amend, solely on the grounds that the proposed amended complaint was "futile" because the "new allegations do not affect the court's construction of the [LOI] as an unenforceable agreement to agree." Id.

B. Appeal

The First Circuit vacated the judgment and remanded. See Butler v. Balolia , 736 F.3d 609, 618 (1st Cir. 2013). The First Circuit acknowledged that the Washington Supreme Court had not directly addressed whether to "recognize a cause of action for breach of a contract to negotiate." Id. at 612. However, the court concluded that "the district court erred in deeming the absence of an on-point opinion from the state's highest court dispositive, " id. at 612, and stated that "[t]he goal is to replicate, as well as possible, the decision that the state's highest court would be likely to reach, " id. at 613 (emphasis added). The court concluded that:

In this case, all roads lead to Rome. After surveying the relevant legal landscape in Washington and beyond and weighing the pertinent policy considerations, we conclude that the Washington Supreme Court will in all probability recognize the enforceability ...

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