United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
LUCY H. KOH, District Judge.
Plaintiff Chetan Utterkar ("Plaintiff") brings this action for breach of contract against Defendants Ebix, Inc., Sudhir Bajaj, and Does 1 through 10 ("Defendants"). ECF No. 1 ("Compl.") Plaintiff further alleges fraud against Sudhir Bajaj and Does 1 through 10. Before the Court is Defendant Ebix, Inc.'s motion to dismiss for improper venue or to transfer venue, ECF No. 15 ("Mot. 1"), and motion to dismiss for failure to state a claim, ECF No. 16 ("Mot. 2"). Plaintiff opposes the motions. ECF No. 18 ("Opp. 1"), ECF No. 19 ("Opp. 2"). Defendant Ebix, Inc. ("Ebix") replied to the oppositions. ECF No. 20 ("Reply 1"), ECF No. 21 ("Reply 2"). Ebix also requested judicial notice of a record from the Delaware Division of Corporations in support of its motions. ECF No. 23 ("RJN"). Having considered the parties' submissions and the relevant law, the Court hereby GRANTS Defendant Ebix's motion to dismiss the breach of contract claim without prejudice, and DENIES Defendant Ebix's motion to dismiss or transfer for improper venue.
On or around April 3, 1999, Plaintiff and Bajaj, the President of PlanetSoft, Inc. ("PlanetSoft"), signed a Memorandum of Understanding ("MOU") summarizing the terms and conditions of Plaintiff's partnership with PlanetSoft. Compl. ¶¶ 7-9. The MOU required that Plaintiff would work half-time for PlanetSoft for three months and then either Plaintiff or his spouse, Marceline Utterkar, would work full-time thereafter on "mutual consent of both parties". Id. ¶ 10, Ex. 1. The MOU detailed that Plaintiff would be working half-time "to develop new business in PlanetSoft's area of specialty in the New York and New Jersey areas" at a salary of $40, 000.00/yr. prorated monthly. Id. Ex. 1. That salary would increase to $80, 000.00/yr. for full-time work upon "mutual agreement" and "satisfactory full time focus." Id. In addition, the MOU required that Plaintiff would "invest $25, 000.00 towards the equity of PlanetSoft." Id. The MOU provided that Plaintiff would receive 5 percent of the equity in PlanetSoft in exchange for one person's full-time work and the $25, 000.00 investment. Id. ¶ 11, Ex. 1. Plaintiff was further given the option to invest $50, 000.00 more for an additional 2.5 percent interest in PlanetSoft, but Plaintiff did not do so. Id. ¶ 12. Finally, the MOU noted that all equity would be vested as long as Plaintiff was "operationally participating in the growth and development of PlanetSoft business on a full time basis." Id. ¶ 19, Ex. 1. According to the MOU, if participation by Plaintiff was no longer full time, "equity will be bought back prorated on the basis of valuing the company at twice the current revenue." Id. ¶ 20, Ex. 1.
The MOU was written on PlanetSoft letterhead. Id. Ex. 1. The MOU was signed by Defendant Bajaj and by Plaintiff. Id. However, the signed MOU was faxed to Plaintiff from PlanetSoft's office and lists Bajaj's PlanetSoft email address. Id. Plaintiff and Bajaj never signed a final written contract incorporating the terms of the MOU, despite promises by Bajaj that it would be done. Id. ¶ 23. Ebix was not a party to the MOU. Mot. 1 at 3.
Plaintiff paid the $25, 000.00 initial investment to PlanetSoft. Id. ¶ 14. Plaintiff's spouse, Marceline Utterkar, worked full-time at PlanetSoft from June 1999 until about February 2004. Id. ¶ 15. Plaintiff worked full-time at PlanetSoft from September 2000 until about July 2001, at which point he ceased working at PlanetSoft due to 66 percent wage cuts. Id. ¶¶ 13, 16. In the "several years" after Marceline Uttekar ceased working full time at PlanetSoft, Defendant Bajaj promised the equity would be bought back by PlanetSoft. Id. ¶ 21. Neither Defendant Bajaj or PlanetSoft fulfilled those promises. Id. Plaintiff alleges that around June of 2012, Ebix purchased all of PlanetSoft's stock for approximately $35 million in cash and $5 million in Ebix shares. Compl. ¶ 25, Ex. 2; Mot. 1 at 3. On Yahoo! Finance, this transaction was reported as an "acquisition" of PlanetSoft by Ebix. Compl. ¶25, Ex. 2. Following the sale, Plaintiff contacted Ebix and Bajaj multiple times through counsel requesting $2 million for his 5 percent interest in PlanetSoft. Compl. ¶¶ 30-31, Ex. 3. Following these requests, Plaintiff did not receive any compensation for his 5 percent interest in PlanetSoft. Id. ¶ 32.
Plaintiff resides in Santa Clara County, California. Id. ¶ 1. Ebix is a corporation incorporated in Delaware, headquartered in Atlanta, Georgia, and does significant business in California. Id. ¶ 2. Bajaj resides in India, and was formerly the President of PlanetSoft, Inc., a California based corporation. Id. ¶ 3, Ex. 2. PlanetSoft Holdings, Inc. was incorporated in Delaware on September 28, 2004. RJN Ex. 2.
Plaintiff alleges that Defendants Ebix, Bajaj, and Does 1 through 10 breached the MOU with Plaintiff. Id. ¶¶ 33-52. Plaintiff alleges that the MOU is a valid contract between Plaintiff and PlanetSoft, with clear and concise material terms and conditions, and without any contrary intention to not be bound by its terms. Id . ¶ ¶ 34-35, 49. Plaintiff alleges he fulfilled his obligations under the MOU, and received a 5 percent interest in PlanetSoft, but that this interest was never bought back, despite promises by Bajaj to buy back the interest. Id. ¶¶ 36-39, 40, 44, 48. Plaintiff contends that around June of 2012, Ebix bought not only the shares of PlanetSoft, but also PlanetSoft itself, and that Ebix therefore is the successor-in-interest to PlanetSoft and liable for any breach of the MOU. Id. ¶¶ 25, 28, 30, 50. Plaintiff pleads that Ebix has breached the MOU by refusing "to compensate him for his 5% ownership of PlanetSoft." Id. ¶ 47. Plaintiff further alleges fraud against Defendants Bajaj and Does 1 through 10. Id. ¶¶ 53-66.
II. LEGAL STANDARDS
A. Rule 12(b)(3)
Where a defendant moves to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), the plaintiff bears the burden of showing that venue is proper. Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979). When considering a motion to dismiss pursuant to Rule 12(b)(3), a court need not accept the pleadings as true and may consider facts outside of the pleadings. Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). However, the trial court must draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non-moving party. Id. at 1138. Pursuant to 28 U.S.C. § 1406(a), if the Court determines that venue is improper, the Court must either dismiss the action or, if it is in the interests of justice, transfer the case to a district or division in which it could have been brought. Whether to dismiss for improper venue, or alternatively to transfer venue to a proper court, is within the discretion of the district court. See King v. Russell, 963 F.2d 1301, 1304 (9th Cir. 1992).
B. Rule 12(b)(6)
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Such a motion tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In considering whether the complaint is sufficient, the Court must accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). However, the Court need not accept as true "allegations that contradict matters properly subject to judicial notice or by exhibit" or "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). While a complaint need not allege detailed factual allegations, it "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to ...