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Gravelle v. Hudson Lock LLC

United States District Court, D. Massachusetts

January 30, 2018



          Leo T. Sorokin United States District Judge

         Pro se Plaintiff Gordon Gravelle filed a complaint against above-captioned Defendants in December 2016 and first amended his complaint in February 2017. Defendants filed a Motion to Dismiss (Doc. No. 25) on June 5, 2017. On June 26, 2017, Gravelle opposed Defendants' Motion and moved for leave to file a Second Amended Complaint (the “SAC”) prior to disposition of Defendants' Motion. Doc. No. 34. He attached the SAC to that motion. Doc. No. 34-1. Defendants opposed Gravelle's motion for leave to file the SAC. Doc. No. 36.[1]Subsequently, Gravelle filed an emergency motion for leave to file a reply and further amendments to his complaint. Doc. No. 37. The Court ALLOWS Gravelle's motion for leave to file the SAC (Doc. No. 34) and deems the SAC to be the filed, operative complaint in this case.[2]However, Gravelle's motion to amend the complaint a third time (Doc. No. 37) is DENIED, though his request to file a reply is ALLOWED.

         For the reasons that follow, the Court DISMISSES all of Gravelle's claims except for Count XII (breach of Release). Accordingly, Defendants' Motion to Dismiss (Doc. No. 25) is ALLOWED in part and DENIED in part.

         I. BACKGROUND

         Gravelle is a resident of Ontario, Canada and a designer and manufacturer of electronic key cutting machines. Hudson Lock, LLC (“Hudson”) makes and sells custom and specialty locks and locking systems. HPC Acquisitions, LLC (“HPC”) is a wholly-owned subsidiary of Hudson. Waveland Investments, LLC (“Waveland”) is a private equity firm with controlling ownership of Hudson. Phil Calian, an Operating Partner at Waveland, oversaw the management and operations of Hudson and HPC. Doc. No. 34-1 ¶ 35.4.

         On October 1, 2014, Hudson entered into a Purchase Order with Gravelle for the production and assembly of 100 of Gravelle's Rapidkey 7000 machines over the following six months. Hudson began marketing and accepting pre-orders for the Rapidkey 7000 machines in November 2014. Id. ¶¶ 21-24. In December 2014, Robert Sylvia, Hudson's President and General Manager, informed Gravelle by email that Hudson expected to sell 1, 000 Rapidkey 7000 machines in each subsequent year. Id. ¶¶ 11 and 25. Marty Jalove, Hudson's manager of research development, also discussed Hudson's sales projections with Gravelle. Id. ¶¶ 12, 26.

         For reasons disputed by the parties, production of the machines needed to fill the pre-orders was delayed. Gravelle claims that Hudson failed to order and timely deliver machine parts required to complete production of those machines. Id. ¶ 31; Doc. No. 36-3. On February 27, 2015, Gravelle emailed a cease and desist letter to Hudson and certain of its clients warning against infringement of his claimed intellectual property rights. Sylvia emailed a reply the next day that copied those clients, sought to clarify Hudson's rights under the Purchase Order, and urged that Gordon “take a deep breath, assume responsibility for [his] breaches of [the Purchase Order], and spend [his] time trying to resolve the issues[.]” Id.

         On April 23, 2015, HPC and Gravelle entered into an Asset Purchase Agreement (the “APA”), pursuant to which HPC acquired intellectual property rights for certain key making technology owned by Gravelle. Doc. No. 26-1. Also at that time, Hudson engaged Gravelle to serve as a consultant pursuant to a Consulting Agreement. Doc. No. 26-2. Calian signed these agreements on behalf of HPC and Hudson Lock as “Manager of Manager LLC.” Over the next year, Gravelle's consulting relationship with Hudson ended. On April 26, 2016, Gravelle and Hudson signed a Release Agreement (the “Release”) under which Gravelle received $24, 000 and certain rights to become a Hudson distributor and servicer in exchange for releasing all claims against Hudson and its subsidiaries related to events predating the Release. Doc. No. 26-3. Around this time, Gravelle began work on a new key cutting machine and approached Gale Johnson, a computer programmer who at times has worked as an independent contractor with Gravelle and Hudson, to supply custom software. Doc. 34-1 ¶ 62.1. Johnson walked away from this project in July 2016.

         Gravelle now asserts fourteen claims against the Defendants in the SAC. Count I alleges breach of implied covenant of good faith and fair dealing against Hudson and HPC. In Count II, Gravelle seeks a declaration that the Release is void and/or unconscionable and therefore unenforceable. In Count III, he requests a declaration that the Release does not shield Hudson's officers, directors, employees, agents, and managers from liability. Count IV alleges that Sylvia's reply to Gravelle's cease and desist notice was defamatory. Count V claims that Hudson, Sylvia, and Jalove fraudulently induced Gravelle to enter into the APA. Count VI asserts that Johnson breached an implied-in-fact or oral contract to provide custom software for use with a new key cutting machine. Count VII charges Sylvia and Jalove with intentional infliction of emotional distress for unspecified conduct. Counts VIII, IX, and X seek punitive damages against Hudson and HPC, Sylvia, and Jalove, respectively, for generalized wrongs. In Count XI, Gravelle claims that Hudson, HPC, and Waveland violated Mass. Gen. Laws. ch. 93A (“Chapter 93A”). Count XII alleges breach of the Release by Hudson and Waveland. Finally, Gravelle sues Hudson and Waveland for breaches of the APA and the Purchase Order in Counts XIII and XIV. Doc. No. 34-1 at 16-51.


         In resolving whether the SAC survives Defendants' motion to dismiss, the Court begins “by identifying and disregarding statements in the complaint that merely offer ‘legal conclusions couched as fact' or ‘threadbare recitals of the elements of a cause of action.'” Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 12 (1st Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The Court then accepts “[n]on-conclusory factual allegations in the complaint […] as true, even if seemingly incredible, ” and decides whether the legal claim “has facial plausibility, ” i.e., whether those allegations, accepted as true, “allow[] the court to draw the reasonable inference that the [Defendants are] liable for the misconduct alleged.” Id. at 12 (citations and internal quotation marks omitted). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (citation omitted).

         In addition, for any legal claims for which the “core allegations effectively charge fraud, ” the SAC must, under Rule 9(b), “state with particularity the circumstances constituting fraud.” N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 15 (1st Cir. 2009) (footnote omitted); Fed.R.Civ.P. 9(b). This particularity requirement requires the SAC to “set[] forth specific facts that make it reasonable to believe that [Defendants] knew that a statement was materially false or misleading.” Cardinale, 567 F.3d at 13 (citations and internal quotation marks omitted).

         Because the SAC sufficiently refers to the APA and the Release, the Court treats these documents as forming part of the Rule 12(b)(6) record. See Butler v. Balolia, 736 F.3d 609, 611 (1st Cir. 2013) (supplementing facts in complaint with “documents incorporated by reference into the complaint, matters of public record, and facts susceptible to judicial notice”).

         A. Claims Related to the Release

         As an initial matter, Defendants invoke the Release to argue that all claims in the SAC should be dismissed as against all named Defendants. Gravelle responds (i) that the Release is void and/or unenforceable and (ii) that the Release does not extend to claims against Hudson's officers, directors, employees, agents, or managers. The Court applies Massachusetts law in evaluating the validity of the Release. See In re Mi-Lor Corp., 348 F.3d 294, 301-02 (1st Cir. 2003) (looking to Massachusetts case law in diversity action to determine release's enforceability).[3]

         Gravelle claims that Hudson “maliciously exploited” a “substantial inequality of bargaining power” and Gravelle's “severe economic duress” to secure an unconscionable bargain. The only evidence of coercion that Gravelle offers is that “his only other remedy [to entering into the Release] would have been to close his business of 20 years, and file for bankruptcy.” Doc. No. 34-1 ¶ 44.2. However, a plaintiff asserting economic duress “must go beyond the mere showing of a reluctance to accept [and] financial embarrassment and show that acts of the other party produced these factors.” Cabot Corp. v. AVX Corp., 448 Mass. 629, 638 (2007). “The assertion of duress must be proved by evidence that the duress resulted from defendant's wrongful and oppressive conduct and not by plaintiff's necessities.” Id. (internal citations omitted). Gravelle claims that Defendants' “ongoing deceptive and unlawful trade practices” put him in ...

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