United States District Court, D. Massachusetts
ORDER ADOPTING REPORT AND RECOMMENDATION
A. O'Toole, Jr. United States District Judge.
magistrate judge to whom this matter was referred has filed a
report and recommendation (dkt. no. 27)
(“R&R”) with respect to the defendants'
motion to dismiss Count II (as to defendants Naveena Lakshmi
Paladugu and Akshita Properties, LLC), III, IV, V (as to
defendants Naveena Lakshmi Paladugu and Akshita Properties,
LLC), IX, and X of the plaintiff's Complaint. No
objections to the R&R have been filed.
carefully reviewing the pleadings, the parties' motion
papers, and the R&R, I ADOPT the recommendation of the
magistrate judge. The defendants' Partial Motion to
Dismiss (dkt. no. 22) is GRANTED to the extent that Count III
is dismissed as to Naveena Lakshmi Paladugu, Count IV is
dismissed in its entirety, and Count V is dismissed as to
Naveena Lakshmi Paladugu and Akshita Properties, LLC. The
motion is otherwise DENIED.
AND RECOMMENDATION ON DEFENDANTS' MOTION TO DISMISS
31, 2016, plaintiff Ravi Mukthineni filed an eleven count
complaint (#1) against defendants Murahari Rao Paladugu,
Naveena Lakshmi Paladugu,  and Akshita Properties,
LLC(Akshita). This action, which consists of
claims for breach of contract (Counts I and VII), breach of
implied contract (Counts II and VIII), unjust enrichment
(Counts III and IX), conversion (Counts IV and X), equitable
estoppel (Counts V and XI), and breach of fiduciary duty
(Count VI), stems from a business venture and loan agreement
gone awry. Defendants moved to dismiss Counts II (as to Ms.
Paladugu and Akshita), III (in its entirety), IV (in its
entirety), V (as to Ms. Paladugu and Akshita), IX (in its
entirety), and X (in its entirety); and plaintiff responded in
facts as set forth in the complaint are as follows. Around
May 3, 2013, plaintiff and Mr. Paladugu entered into a
partnership agreement (the Agreement) (#1-3 at 2-4) with the
intention to open a cigar lounge and café called
“The Royale, ” to be located at 297 Georgesville
Road in Columbus, Ohio. (#1 ¶¶ 8, 9; #1-3 at 2-4.)
The record owner of 297 Georgesville Road is Akshita.
Id. ¶ 10.
May 9, 2013, plaintiff transferred via bank wire $150, 000.00
to Akshita in connection with the business venture.
Id. ¶ 13. Pursuant to the Agreement, plaintiff
and Mr. Paladugu were each to have a 50% ownership interest
in The Royale, and the business was to be managed by Mr.
Paladugu. Id. ¶¶ 12, 14; (#1-3 at 2-3.) On
June 24, 2013 and again on August 16, 2013, plaintiff
received from Mr. Paladugu emails regarding interior and
exterior renovation and design of The Royale. (#1 ¶¶
the next twelve months, plaintiff repeatedly called and sent
messages to Mr. Paladugu inquiring as to the status of the
business venture. Id. ¶ 17. Mr. Paladugu orally
promised to repay, with 18% interest, all funds tendered by
plaintiff in connection with the Agreement. Id.
¶ 18. Around January 2014, defendants made a payment of
$4, 500.00 in an effort to reimburse plaintiff for his
contribution to the business venture under the Agreement.
Id. ¶ 19. Around February 2014, defendants made
an additional payment of $4, 500.00 for the same
purpose. Id. ¶ 20.
time this suit was filed, plaintiff had not been paid the
$150, 000.00 debt owed by Mr. Paladugu as a result of the
Agreement, and plaintiff was unaware of the status of The
Royale's existence. Id. ¶¶ 21, 22.
June 29, 2013, plaintiff and Mr. Paladugu entered into a loan
agreement (the Loan) (#1-3 at 10-11), separate from the
above-described partnership agreement. Id. ¶
24; (#1-3 at 10-11.) Pursuant to the Loan, plaintiff agreed
to lend Mr. Paladugu $150, 000.00 at an interest rate of 18%
per year that was to be repaid in full, via monthly
installments, by July 2014. (#1 ¶¶ 25, 28; #1-3 at
July 2013, Mr. Paladugu paid $2, 250.00 toward the interest
on the Loan. (#1 ¶ 29.) Around January 2014 and again
around February 2014, defendants made two payments of $4,
500.00 towards the balance of the Loan. Id.
¶¶ 30, 31. “Thereafter, a check for the sum
of $4, 500.00 was returned for insufficient
funds.” Id. ¶ 32.
time this action was initiated, plaintiff had not been repaid
the debt owed under the Loan or his investment made pursuant
to the Agreement. Id. ¶ 33. Plaintiff has
demanded repayment of all funds. Id. ¶ 36.
Specifically, around May 20, 2015, plaintiff sent an email to
Mr. and Ms. Paladugu (#1-3 at 17-18), in which he itemized
the amounts owed and sought to recoup his money. Id.
Standard of Review.
12(b)(6) motion to dismiss challenges a party's complaint
for failing to state a claim. In deciding such a motion, a
court must “‘accept as true all well-pleaded
facts set forth in the complaint and draw all reasonable
inferences therefrom in the pleader's favor.'”
Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir.
2011) (quoting Artuso v. Vertex Pharm., Inc., 637
F.3d 1, 5 (1st Cir. 2011)). When considering a motion to
dismiss, a court “may augment these facts and
inferences with data points gleaned from documents
incorporated by reference into the complaint, matters of
public record, and facts susceptible to judicial
notice.” Haley, 657 F.3d at 46 (citing In
re Colonial Mortg. Bankers Corp., 324 F.3d 12, 15 (1st
order to survive a motion to dismiss under Rule 12(b)(6), the
plaintiff must provide “enough facts to state a claim
to relief that is plausible on its face.” See Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The
“obligation to provide the grounds of [the
plaintiff's] entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.”
Id. at 555 (internal quotation marks and alteration
omitted). The “[f]actual allegations must be enough to
raise a right to relief above the speculative level, ”
and to cross the “line from conceivable to
plausible.” Id. at 555, 570.
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Twombly, 550 U.S. at 556). However,
the court is “‘not bound to accept as true a
legal conclusion couched as a factual allegation.'”
Id. at 678 (quoting Twombly, 550 U.S. at
555). Simply put, the court should assume that well-pleaded
facts are genuine and then determine whether such facts state
a plausible claim for relief. Id. at 679.
respect to the claims brought in connection with the
Agreement, defendants move to dismiss Count II, breach of
implied contract, as to Ms. Paladugu and Akshita; Count III,
unjust enrichment, as to all defendants; Count IV,
conversion, as to all defendants; and Count V, equitable
estoppel, as to Ms. Paladugu and Akshita.
Agreement contains a choice of law provision that mandates
application of Ohio law, (see #1-3 at 3 ¶ 14),
and the parties do not contest that Ohio law applies to
claims pertaining to the Agreement. (See ##7, 16
(applying Ohio law).)
Breach of Implied Contract - Count II.
alleges that Ms. Paladugu and Akshita are bound by an implied
contract to repay the funds he tendered under the Agreement.
Under Ohio law, mutual assent in the context of an
implied-in-fact contract is shown not by an express offer and
acceptance, “but by ‘the surrounding
circumstances, including the conduct and declarations of the
parties.' Those circumstances must ‘make it
inferable that the contract exists as a matter of tacit
understanding.'” GEM Indus., Inc. v. Sun Trust
Bank, 700 F.Supp.2d 915, 922 (N.D. Ohio 2010) (quoting
Stepp v. Freeman, 119 Ohio App.3d 68, 74, 694 N.E.2d
510 (1997)); see also Legros v. Tarr, 44 Ohio St.3d
1, 6-7 (1989).
matter is an extremely close call and turns on the allegation
that “the defendants” made certain payments to
plaintiff in an effort to repay him. (See #1
¶¶ 19, 20.) Taking the facts alleged in a light
most favorable to Mr. Mukthineni, which must be done at this
stage, if Ms. Paladugu and Akshita made these payments with
the intention of repaying the debt owed, then plaintiff's
breach of implied contract claim has merit. That said, an
email attached to the complaint, (#1-3 at 17-18), in which
plaintiff itemizes the debts he is allegedly owed, cuts
against the inference that there was a meeting of the minds
between Mr. Mukthineni and the moving defendants.
Specifically, the email, entitled “Spreadsheet with the
details of money owed by Murali to me, ” seems to show that
plaintiff was under the impression, as of May 20, 2015, that
Mr. Paladugu would remunerate the funds owed. (See
#1-3 at 17 (“I loaned my daughter's college savings
. . . with the expectation that Murali will be paying back
the amount”); 18 (labeling the debt owed as
“Total Money Owed to me by Murali”).) In Gem
Indus., Inc., the court found such conduct - demanding
payment from other individuals - to be of substantial import
in deciding whether the relevant circumstances illustrated
the existence of an implied contract. See Gem Indus.,
Inc., 700 F.Supp.2d at 922-923. While the Gem
Indus., Inc. court was confronted with this question at
the summary judgment stage and found a complete absence of
evidence to support an implied-in-fact contract, the May 20,
2015 email is enough to give the court pause. However, the
court will not speculate as to the potential existence of
evidence in support of or against this claim and leaves it to
the parties to ferret out these issues through the discovery
plaintiff has, by the thinnest of margins, pled adequately
his claim for breach of implied contract such that Count II
should survive the motion to dismiss. For these reasons,
defendants' motion should be denied as to Count II.