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Butler v. Balolia

United States District Court, D. Massachusetts

April 21, 2016

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

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT’S MOTION TO DISMISS COUNT IV

JUDITH GAIL DEIN, UNITED STATES MAGISTRATE JUDGE.

I. INTRODUCTION

This matter is before the court on the defendant’s Motion to Dismiss Count IV of the plaintiff’s Second Amended Complaint. In that Count, the plaintiff has asserted a claim for violation of the Washington Consumer Protection Act (“CPA”), Wash. Rev. Code § 19.86, et seq. The parties have consented to having this motion finally decided by this Magistrate Judge pursuant to 28 U.S.C. § 636(c). See Docket Nos. 84 & 87. For the reasons detailed herein, this court finds that the plaintiff has failed to allege facts which could support a finding that the alleged wrongful conduct was injurious to the public interest, a requirement of the Washington CPA. Therefore, the Motion to Dismiss Count IV (Docket No. 72) is ALLOWED.

II. STATEMENT OF FACTS[1]

When ruling on a motion to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(6), the court must accept as true all well-pleaded facts, and give the plaintiff the benefit of all reasonable inferences. See Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir. 1999). Applying these principles, the relevant facts as derived from the plaintiff’s Second Amended Complaint (Docket No. 67) (“Compl.”) are as follows.

As described by the plaintiff:

This action arises from Defendant’s breach of a contract for the sale of Butler’s patents and technology related to safety devices for cutting tools and saws. After signing a binding Letter of Intent that contains all material terms to the transaction, Defendant has taken the fantastical position that he is entitled to rescind the contract based on mutual mistake. Indeed, there was never a mutual mistake relating to any material facts, but the Defendant is alleging such in an attempt to renegotiate the deal he struck with Butler. Defendant’s pretextual basis for claiming rescission amounts to unfair and deceptive business practices in violation of Wash. Rev. Code § 19.86 et seq. Butler seeks damages from Defendant’s breach of its contractual obligations as well as treble damages, attorneys’ fees and costs.

Compl. ¶ 1. Specifically, according to the Complaint, the parties signed a Letter of Intent (“LOI”)[2] on or about April 23, 2012 pursuant to which the plaintiff was to sell “Whirlwind” technology he had developed to the defendant. Id. at Facts, ¶¶ 2, 12. The Whirlwind technology relates to safety devices for cutting tools such as table saws. Id. at Facts, ¶ 1. The LOI contained, inter alia, a confidentiality provision and an exclusivity provision which lasted until June 20, 2012. Id. at Facts, ¶ 15; LOI at ¶ 5. Plaintiff alleges that “[i]n reliance on the LOI and in compliance with the exclusivity provision, Butler has declined inquiries from other potential purchasers of the Whirlwind technology.” Id. at Facts, ¶ 16.

The plaintiff contends that the defendant, in an attempt to renegotiate the deal, falsely “identified several putative ‘deficiencies’ and ‘design around risks’ in the Whirlwind patents[, ]” and proposed an entirely different deal for the Whirlwind technology on May 21, 2012. Id. at Facts, ¶¶ 19, 22. The plaintiff further alleges that the defendant sought to rescind the contract set forth in the LOI due to a non-existent mutual mistake regarding the enforceability of the patents. Id. at Facts, ¶¶ 23-29. Despite contending that the LOI was unenforceable, according to the plaintiff, “the Defendant refused to waive the exclusivity provision of the LOI.” Id. at 30. Thus, after May 21, 2012, the plaintiff worked to execute a Purchase Agreement that he believed reflected the terms of the agreement as set forth in the LOI, while the defendant insisted on a response to his May 21, 2012 proposal. Id. at Facts, ¶¶ 31-41. The deadline for entering into a Purchase Agreement as set forth in the LOI, June 20, 2012, expired without an agreement. Id. at Facts, ¶¶ 38, 41.

In Count I of his Complaint, Butler is seeking a declaration that the LOI is a binding and enforceable contract. In Count II, Butler alleges that the defendant breached the contract by refusing to complete its obligations, failing to negotiate a Purchase Agreement and attempting to rescind the contract due to an alleged mutual mistake. In Count III, he alleges that the “Defendant’s actions and conduct of creating pretextual reasons for attempting to rescind the LOI, refusal to negotiate a Purchase Agreement as required by the LOI and attempting to renegotiate the terms set forth in the LOI constitutes a breach of the implied covenant of good faith and fair dealing.” Id. at ¶ 61. Finally, in Count IV, Butler alleges that the defendant has violated the Washington CPA, Wash. Rev. Code § 19.86, et seq. In particular, he alleges as follows:

65. Defendant simply had “buyer’s remorse” and did not want to go through with the purchase of the Whirlwind technology under the terms, and price, set forth in the LOI.
66. Defendant, by alleging problems with the Whirlwind intellectual property in bad faith, falsely claiming mutual mistake, and otherwise refusing to comply with the terms of the LOI, engaged in unfair and deceptive acts or practices.
67. Defendant’s actions constitute more than a breach of the LOI, but are unjustified excuses fabricated by the Defendant to put himself in a position to negotiate a better deal than the one in the LOI.
68. Defendant’s unfair or deceptive acts or practices affect the public interest and have the capacity to deceive a ...

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