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Dreamstone Entertainment Ltd v. Maysalward Inc.

United States District Court, C.D. California

August 18, 2014


Nathaniel Kelly Attorneys Present for Plaintiffs

David Nemecek, Jr. Attorneys Present for Defendants


CHRISTINA A. SNYDER, District Judge.

Proceedings: MOTION TO DISMISS DEFENDANTS' COUNTERCLAIMS (Dkt. #19, filed July 17, 2014)


Plaintiffs Dreamstone Entertainment Ltd. ("Dreamstone") and Tigris Entertainment LLC ("Tigris") filed this action on March 18, 2014, against defendants Nour Khrais ("Khrais"), Maysalward Inc. ("Maysalward"), and Does 1 through 10.[1] Dkt. #1. The dispute arisesfrom an agreement between the parties to develop and distribute a video game for mobile devices. Id . The complaint asserts claims for: (1) breach of contract; (2) fraud; (3) breach of fiduciary duty; (4) intentional interference with prospective economic relations; (5) negligent interference with prospective economic relations; (6) money had and received; (7) trademark infringement; (8) copyright infringement; (9) trade secret misappropriation; (10) conversion; (11) unfair competition; (12) accounting; and (13) piercing the corporate veil. Id.

On June 25, 2014, the defendants (hereinafter "defendants and counterclaimants") filed an answer and asserted counterclaims for (1) fraud; (2) libel per se; and (3) breach of contract. Dkt. #17. Defendants and counterclaimants also named as third-party defendants Lewis Sarmed Alsamari ("Alsamari") as to all three counterclaims, and The Siegel Law Group PLLC ("SLG") and Jack Siegel ("Siegel") as to the libel per se counterclaim. Id . Plaintiffs (hereinafter "plaintiffs and counterdefendants") filed a motion to dismiss all counterclaims on July 27, 2014. Dkt. #19. Defendants and counterclaimants filed an opposition on August 4, 2014, dkt. #21, and plaintiffs and counterdefendants replied on August 5, 2014, dkt. #22.[2] After considering the parties' arguments, the Court finds and concludes as follows.


The complaint alleges that Maysalward breached a contract and committed various torts by withholding accounting information, profits, and intellectual property relating to a mobile video game called "GHUL: 1001 Arabian Nights" (the "Game"). Compl. ¶¶ 10, 26. Tigris and Dreamstone entered into essentially identical contracts with Maysalward on May 3, 2013 and August 15, 2013, respectively, under which Maysalward was to develop and distribute the Game. Countercl. Exs. A, B; see Compl. ¶¶ 17, 20. The complaint further alleges that Khrais is personally liable in contract and tort because Maysalward "was the mere alter ego" of Khrais. Compl. ¶¶ 140-46.

Defendants and counterclaimants allege that Alsamari induced them to develop the Game through false representations. Countercl. ¶ 38. Specifically, defendants and counterclaimants aver that Alsamari "represented to Khrais in April 2013" that a film based on the same concept as the proposed game "was in preproduction and that the shooting... was scheduled to begin in September 2013." Id . ¶ 12. Defendants and counterclaimants further allege that Alsamari (1) "assured Khrais that the GHUL film would be a big production' with well-known actors, " (2) represented in an April 22, 2013 e-mail that the parties could "use the film to leverage the game and vice versa, " and (3) stated in an April 23, 2013 e-mail that Tigris could not pay Maysalward to develop the Game because "all of [Tigris's] resources are going into making the movie." Id.

Defendants and counterclaimants contend that these representations were false and made with the intent to induce them to "design and develop [the Game] and... waive the initial fee" that they usually charge for mobile game development. Id . ¶¶ 35-36. They aver that no filming had begun by the time of filing in March 2013, and that Alsamari "has stated in interviews that production... is not slated to begin until at least 2015." Id . ¶ 22. Defendants and counterclaimants allege that they would not have agreed to develop the Game had they known of the alleged falsity of these representations. Id . ¶ 38.

Defendants and counterclaimants also allege a claim against plaintiffs and counterdefendants, SLG, and Siegel based on an allegedly defamatory press release issued on March 25, 2014 and posted on SLG's website. Id . ¶ 30. The press release describes the lawsuit and includes a link to the filed complaint. See id. Ex. C. Defendants and counterclaimants base their defamation claim on a sentence that quotes Siegel as follows: "Maysalward and Nour Khrais have maliciously absconded with my clients' valuable intellectual property and hard earned money." Id . ¶ 30. Siegel's quotation concluded, "We will fight tooth and nail to ensure the [G]ame is restored on gaming platforms and [d]efendants pay every dime needed to rectify the damage done to my clients' reputations and the GHUL franchise." Id . Ex. C.

Finally, defendants and counterclaimants allege that plaintiffs and counterdefendants breached contracts entered into by the parties on May 3 and August 15, 2013, by filing a lawsuit and "refusing to participate in at least four hours of mediation" despite a clause requiring mediation of any dispute between the parties and a demand by defendants and counterclaimants that plaintiffs and counterdefendants mediate. Id . ¶¶ 14-15, 48-49.


A. Fed.R.Civ.P. 12(b)(6)

A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint or counterclaim. "While a [pleading] attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a [claimant's] obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007). "[F]actual allegations must be enough to raise a right to relief above the speculative level." Id.

In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all material allegations in the pleading, as well as all reasonable inferences to be drawn from them. Pareto v. F.D.I.C. , 139 F.3d 696, 699 (9th Cir. 1998). The pleading must be read in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001); Parks Sch. of Bus., Inc. v. Symington , 51 F.3d 1480, 1484 (9th Cir. 1995). However, "[i]n keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a [pleading], they must be supported by factual allegations." Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 1950 (2009); Moss v. United States Secret Service , 572 F.3d 962, 969 (9th Cir. 2009) ("[F]or a [pleading] to survive a motion to dismiss, the non-conclusory factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.") (citing Twombly and Iqbal); Sprewell , 266 F.3d ...

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