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Randhawa v. Skylux Inc.

March 4, 2010

MOHIT RANDHAWA AKA HARPAL SINGH AND SHANNON CALLNET PVT LTD, PLAINTIFFS,
v.
SKYLUX INC., INTERACTIVE INTELLIGENCE, INC., MUJEEB PUZHAKKARAILLATH, SKYLUX TELELINK PVT LTD, AND DOES 1 THROUGH 20, INCLUSIVE, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTIONS TO DISMISS, TO COMPEL ARBITRATION, AND TO TRANSFER VENUE

Plaintiffs Mohit Randhawa aka Harpal Singh ("Randhawa") and Shannon Callnet PVT LTD ("Shannon Callnet") filed this action against defendants Skylux Inc. ("Skylux"), Skulux Telelink Pvt Ltd. ("STPL"), Interactive Intelligence, Inc. ("Interactive"), and Mujeeb Puzhakkaraillath alleging various state claims relating to a contract for calling center software. Defendant Interactive moves to dismiss Randhawa's claims against it pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, and moves the court for an order compelling arbitration of the remaining claims against them. In the alternative, Interactive moves for a transfer of venue to the Southern District of Indiana pursuant to 28 U.S.C. § 1404(a). Defendants Skylux, STPL, and Puzhakkaraillath move to dismiss plaintiffs' third cause of action for misrepresentation pursuant to Rule 12(b)(6) and for a transfer of venue to the Southern District of Indiana pursuant to 28 U.S.C. § 1404(a).

A. Interactive's Motion To Dismiss Claims by Randhawa

The court previously granted Interactive's motion to dismiss Randhawa's claims against Interactive for lack of standing in the court's November 3, 2009 Order. (Docket No. 26.) Plaintiffs' Second Amended Complaint ("SAC") remedied the standing problem by adding Shannon Callnet as plaintiff, and now both Randhawa and Shannon Callnet complain against Interactive. Interactive moves again to dismiss Randhawa's claims against it for lack of standing, leaving Shannon Callnet as the sole plaintiff complaining against it. (Interactive's Mot. to Dismiss, Docket No. 50.) Plaintiffs' Opposition to Interactive's motion does not address this argument. (See Opp'n to Interactive's Mot. to Dismiss, Docket No. 56.) For the same reasons expressed in the court's November 3, 2009 Order, Randhawa's claims against Interactive will be dismissed.

B. Interactive's Motion To Compel Arbitration

Interactive also moves for an order compelling arbitration of Shannon Callnet's claims against it, or, in the alternative, to transfer the action to the Southern District of Indiana. Both parties agree that the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, applies to the instant motion if the arbitration clause is found to be valid. (See Interactive's Mot. to Dismiss at 5; Opp'n to Interactive's Mot. to Dismiss at 2.) Because the License Agreement stipulates that Indiana law governs all disputes, Interactive asserts that Indiana's Uniform Arbitration Act also applies. See Uniform Arbitration Act, Ind. Code §§ 34-57-2-1 to 34-57-2-22. The FAA provides that contracts to arbitrate disputes "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2; see also Ind. Code § 34-37-2-1(a) (stating that written agreements to arbitrate are valid and enforceable "except upon such grounds as exist at law or in equity for the revocation of any contract"). A district court must issue an order compelling arbitration if 1) a valid agreement to arbitrate exists; and 2) that agreement encompasses the dispute at issue. See United Computer Sys., Inc. v. AT&T Corp., 298 F.3d 756, 766 (9th Cir. 2002). Interactive has submitted a copy of a 2005 License

Agreement with Shannon Callnet for the use of Interactive call center software which designates Indiana law as governing disputes under the License Agreement and mandates arbitration in cases where the licensee's principal offices are outside the United States. (Supp. Decl. Stephen R. Head Ex. A ¶¶ 8.9-.10.) STPL obtained Interactive licenses on behalf of Shannon Callnet on August 1, 2005, and Interactive mailed Shannon Callnet a copy of the License Agreement on October 6, 2005, which was signed for on October 10, 2005. (Id. Ex. A p.4, B-C.) These exhibits' validity are unchallenged by Shannon Callnet.

At oral argument counsel for plaintiffs argued for the first time that they believe the entire License Agreement is invalid because they allege Skylux and STPL were engaged in a fraud against them. Yet Shannon Callnet is suing Interactive for, inter alia, breach of that very agreement. The SAC makes it clear that Shannon Callnet is suing Interactive for failing to provide the correct licenses that were purchased on its behalf by STPL. Those licenses were purchased under the terms of the License Agreement and not, as the court has previously noted, under the Memorandum of Understanding ("MOU") signed by Randhawa. (November 3, 2009 Order, (Docket No. 26), at 5.) Simply put, Shannon Callnet wants to enforce those parts of the contract it likes and ignore those parts it dislikes. Shannon Callnet cannot have it both ways.

Indeed, it is clear from the terms of the MOU between Randhawa and STPL and from the allegations contained in plaintiffs' SAC that STPL had the authority and was contractually obliged to obtain all of the required licenses for operating Shannon Callnet's call center. (SAC Ex. A; SAC ¶ 10); see Heritage Dev. of Ind., Inc. v. Opportunity Options, Inc., 773 N.E. 2d 881, 888 (Ind. App. 2002) ("Actual authority exists when the principal has, by words or conduct, authorized the agent to enter into a contract for the principal.").

Shannon Callnet also argues that it should not be bound by the arbitration clause because it did not know that STPL entered into the License Agreement on its behalf in order to obtain the Interactive software for its calling center. (Opp'n to Interactive's Mot. to Dismiss at 2 (arguing that Randhawa was never aware of the License Agreement or its terms, and that Shannon Callnet never signed the License Agreement).) The relevant inquiry, however, is whether the terms of STPL's agency authorized it to assent to the License Agreement on Shannon Callnet's behalf. See Heritage Development of Indiana, 773 N.E. 2d at 888 ("In general, a principal will be bound by a contract entered into by the principal's agent on his behalf only if the agent had authority to bind him."). As explained supra, the answer to this inquiry is clearly "yes."

Even if STPL lacked the authority to assent to the arbitration clause on Shannon Callnet's behalf, Shannon Callnet subsequently ratified the License Agreement when it continued to use Interactive's software after it had actual notice of the terms of the License Agreement. See id. at 889 ("Ratification means the adoption of that which was done for and in the name of another without authority.... Corporations act only by and through their officers and agents, and ratification may be inferred from... passive acquiescence or from the receipt of benefits with knowledge.") (quoting State ex rel. Guaranty Bldg. & Loan Co. v. Wiley, 100 Ind. App. 438 (1935)) (internal quotation marks omitted). Interactive mailed a copy of the License Agreement to Shannon Callnet---specifically to Rana Ravinder, Randhawa's brother-in-law and one of Shannon Callnet's directors--at their listed company headquarters in India two months after STPL obtained the licenses on Shannon Callnet's behalf. (Interactive Mot. to Dismiss at 6; Supp. Decl. Stephen R. Head Ex. B-C.) Shannon Callnet continued to use the Interactive software governed by the License Agreement through May of 2009. (SAC ¶ 18.) Shannon Callnet therefore ratified the terms of the License Agreement including the arbitration clause.

The License Agreement states that where the "Customer's principal office is outside the United States.... any controversy or claim arising out of or relating to this Agreement or the existence, validity, breach or termination thereof... will be finally settled by compulsory arbitration...." (Supp. Decl. Stephen R. Head Ex. A ¶ 8.10.1.) It is uncontested that Shannon Callnet's principal office is in Ludhiana, India (SAC ¶ 2) and that Shannon Callnet's claims against Interactive stem from its purchase and use of Interactive software. (See SAC ¶¶ 9-23.) Shannon Callnet's claims against Interactive, therefore, are subject to the arbitration clause of the License Agreement. The court will accordingly grant Interactive's motion to compel arbitration of Shannon Callnet's claims against it.

C. Skylux, STPL, and Puzhakkaraillath's Motion To Dismiss

Skylux, STPL, and Puzhakkaraillath move to dismiss plaintiffs' third cause of action for misrepresentation against them pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. In addition to arguing that the third cause of action fails to meet the heightened pleading standard of Rule 9(b), defendants also argue that none of the alleged misrepresentations are actionable in fraud as a matter of law. Plaintiffs' one-page Opposition to defendants' motion to dismiss does not address this latter argument.

On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a ...


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