United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS, U.S. DISTRICT COURT JUDGE
action arises out of the Master Service Agreement
(“MSA”) entered into between VeliQ USA, Inc.
(“VeliQ USA”) and Mobillogix LLC
(“Mobillogix”) in February 2014. Under the MSA,
Mobillogix was to purchase licenses to VeliQ USA’s
mobile device management platform, incorporate that platform
into Mobillogix’s own product, and then sell that
product to Mobillogix’s end user customers. On December
18, 2014, VeliQ USA filed a Complaint in Massachusetts state
court against Mobillogix, alleging that Mobillogix breached
the MSA by refusing to pay for the licenses it had agreed to
purchase. [ECF No. 1-1]. Mobillogix removed the case to this
Court on January 23, 2015. [ECF No. 1].
moved to dismiss VeliQ USA’s complaint for lack of
personal jurisdiction and the Court denied the motion. [ECF
No. 14]. Thereafter, Mobillogix filed a Counterclaim against
VeliQ USA and a Third Party Complaint against VeliQ B.V.,
VeliQ USA’s parent company, in which Mobillogix
asserted counts for fraud (Count I) and unfair and deceptive
trade practices in violation of Mass. Gen. Laws 93A, §
11 (Count II) against both VeliQ USA and VeliQ B.V. and a
count for breach of the MSA against VeliQ USA (Count III).
[ECF No. 21]. Mobillogix filed an Amended Third Party
Complaint and Counterclaim on July 8, 2015, with the same
three counts. [ECF No. 38]. Mobillogix alleged that
VeliQ’s product, the “MobiDM, ” did not
work as promised and that during negotiations, both VeliQ USA
and VeliQ B.V. made knowingly false statements about the
MobiDM’s capabilities in order to induce Mobillogix to
enter into the MSA. On August 10, 2015, both VeliQ USA and
VeliQ B.V. moved to dismiss Counts I (fraud) and II (Chapter
93A) of the Amended Third Party Complaint and Counterclaim.
[ECF No. 43]. Mobillogix opposed the motion on August 24,
2015 [ECF No. 47], and the Court has yet to resolve it.
September 29, 2015, VeliQ’s counsel filed a Motion for
Leave to Withdraw, stating that it needed to withdraw because
of irreconcilable differences with VeliQ. [ECF No.
Court granted the motion. [ECF No. 50]. Since then, no
attorney has entered an appearance for VeliQ USA or VeliQ
B.V. On October 19, 2015, Mobillogix moved to compel
discovery from VeliQ. [ECF No. 51]. It requested, among other
things, that VeliQ produce documents responsive to
Mobillogix’s document requests and provide more
detailed responses to its interrogatories. Id. VeliQ
did not appear at the November 10, 2015 motion hearing and
the Court granted Mobillogix’s motion to compel. [ECF
after the Court’s order, VeliQ has continued to
disregard its discovery obligations. It has still not
produced any documents responsive to Mobillogix’s
document requests and appears to have abandoned the case. As
a result, on December 7, 2015, Mobillogix filed a motion
pursuant to Rules 37 and 41(b) of the Federal Rules of Civil
Procedure requesting that the Court (a) dismiss VeliQ
USA’s claims against it and (b) enter a default
judgment against VeliQ USA and VeliQ B.V. on its Counterclaim
and Third Party Complaint, as a sanction for VeliQ’s
inaction. [ECF No. 60]. The Court held a hearing on
Mobillogix’s motion on January 28, 2016. [ECF No. 65].
As with the previous motion to compel hearing, counsel for
VeliQ did not appear. The next day, in response to
Mobillogix’s motion, the Court entered an Order to Show
Cause requesting that VeliQ USA explain why its Complaint
should not be dismissed for failure to prosecute. [ECF No.
63]. VeliQ USA did not file a response.
VeliQ’s Motion to Dismiss
evaluating Mobillogix’s motion, the Court must first
assess VeliQ’s outstanding motion to dismiss
Mobillogix’s Amended Third Party Complaint and
Counterclaim. [ECF No. 43]. Mobillogix contends that because
corporations cannot act pro se, this motion is moot
now that VeliQ’s counsel has withdrawn. [ECF No. 67].
The motion to dismiss, however, was fully briefed before
VeliQ’s counsel withdrew, and Mobillogix has not
provided any authority that supports mooting a ripe motion
because of counsel’s subsequent withdrawal.
alleged in Mobillogix’s Amended Third Party Complaint
and Counterclaim, which the Court accepts as true for
purposes of VeliQ’s motion to dismiss, Mobillogix and
VeliQ USA entered into the MSA on or about February 26, 2014.
[ECF No. 38 ¶ 13]. Under the MSA, VeliQ USA was to
provide Mobillogix with MobiDM-a software application that
VeliQ represented was a scalable and configurable security
solution for mobile devices-such that Mobillogix could sell
MobiDM to third parties as part of its comprehensive
enablement solution. Id. ¶ 1. Although the MSA
was signed by VeliQ USA, no one employed by VeliQ USA had any
involvement with the development or maintenance of MobiDM, or
efforts to license MobiDM to Mobillogix. Id. ¶
11. These efforts were led by VeliQ B.V. Id.
contends that to induce it into entering into the MSA, VeliQ
USA and VeliQ B.V. made representations regarding
MobiDM’s then available functionalities and
capabilities that they knew were false. For example,
Mobillogix alleges that during the period of time from late
2013 until execution of the MSA in February 2014, VeliQ B.V.
employees made representations that MobiDM was designed to
easily support hundreds of thousands of devices within a
single corporation, which they knew was not true.
Id. ¶ 37. They allegedly made further false
representations regarding MobiDM’s configurability and
monitoring capabilities. Id. ¶ 38.
the Court finds that the fraud and Chapter 93A claims against
VeliQ USA should be dismissed. Although the Amended Third
Party Complaint and Counterclaim asserts identical Chapter
93A and fraud claims against VeliQ USA and VeliQ B.V., it
does not identify a single representation made by a VeliQ USA
employee during the course of the negotiations. The Amended
Third Party Complaint and Counterclaim states that “all
representations regarding MobiDM’s technical
capabilities and specifications made by them during the
efforts to induce Mobillogix to enter into a licensing
agreement came from VeliQ B.V. . . .”
Id. ¶ 12 (emphasis added).It only identifies one
VeliQ USA employee, Edwin Vargas, and states that he
“was not involved in the development and maintenance of
MobiDM, nor was he involved in the efforts to license MobiDM
to Mobillogix.” Id Though Mobillogix has a
viable breach of contract claim against VeliQ USA, which
VeliQ USA has not moved to dismiss, Mobillogix has not pled
plausible fraud and Chapter 93A claims against VeliQ USA. An
essential element of a fraud claim is a false representation
of a material fact. See Slaney v. Westwood Auto,
Inc., 366 Mass. 688, 703 (1975). Because the Amended
Third Party Complaint and Counterclaim does not identify any
representations made by VeliQ USA, let alone false ones, the
fraud claim against VeliQ USA must be dismissed. Furthermore,
because the Chapter 93A claim against VeliQ USA is premised
on the same allegations as the fraud claim, it also must be
fraud and Chapter 93A claims against VeliQ B.V., however, may
proceed. The Amended Third Party Complaint and Counterclaim
identifies numerous representations made by VeliQ B.V.
employees to Mobillogix during the MSA negotiations. These
include the following:
• “[D]uring the period of time from late 2013
until execution of the MSA in late February 2014, Messrs. de
Sterke and van Bijsterveld (VeliQ B.V. CTO), made
representations to Scott Jonasz and others at Mobillogix
regarding the multi-tenancy, configurability and ...