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Utterkar v. Ebix, Inc.

United States District Court, N.D. California, San Jose Division

March 18, 2015

CHETAN UTTERKAR, Plaintiff,
v.
EBIX, INC., et al., Defendants.

ORDER GRANTING MOTIONS TO DISMISS Re: Dkt. Nos. 44, 53

LUCY H. KOH, District Judge.

Plaintiff Chetan Utterkar ("Plaintiff") brings this action for breach of contract and fraud against Defendants Ebix, Inc., Sudhir Bajaj, and Does 1 through 10 (collectively, "Defendants"). Before the Court are Defendant Ebix, Inc.'s motion to dismiss and Defendant Bajaj's motion to dismiss. ECF Nos. 44, 53. Having considered the parties' submissions, the record in this case, and the relevant law, the Court hereby GRANTS Defendant Ebix's motion to dismiss and GRANTS Defendant Bajaj's motion to dismiss.

I. BACKGROUND

A. Factual Background

On or around April 3, 1999, Plaintiff and Bajaj, then President of PlanetSoft, Inc. ("PlanetSoft"), signed a Memorandum of Understanding ("MOU") summarizing the terms and conditions of Plaintiff's partnership with PlanetSoft. First Am. Comp. ("FAC"), ECF No. 33, ¶¶ 8-9. 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 agreement would also "be finalized upon at [sic] the end of the 3 months." Id. 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. ¶ 13, 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. ¶ 14. 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. ¶ 21, 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. ¶ 22, Ex. 1.

The MOU was written on PlanetSoft letterhead. Id. Ex. 1. The MOU was signed by Defendant Bajaj and by Plaintiff. Id. 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. ¶ 27. Plaintiff paid the $25, 000.00 initial investment to PlanetSoft. Id. ¶ 16. Plaintiff's spouse, Marceline Utterkar, worked full-time at PlanetSoft from June 1999 until about February 2004. Id. ¶ 17. 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. ¶¶ 15, 18.

Plaintiff alleges that he "requested payment numerous times from 2004 until 2012, and intended to bring suit but refrained from doing so based on assertions" by Defendant Bajaj and "settlement discussions" that took place during that period. Id. ¶ 44. In 2008, Defendant Bajaj and the former attorney for PlanetSoft, Shivbir Grewal, "discussed a formal settlement/mutual release" with Plaintiff that "would have paid [Plaintiff] for his equity and reimbursed [Plaintiff and his spouse] for expenses." Id. ¶ 45. While the agreement was drafted, it was never executed because Defendant Bajaj "ceased communications" in "late 2008." Id. In July of 2012, Defendant Bajaj and Grewal allegedly contacted Plaintiff regarding the settlement and mutual release. Id. ¶ 46. According to Plaintiff, the agreement was fully drafted but not executed. Id. "The last communication [Plaintiff] received from [Defendant Bajaj] was an email stating that he would contact Mr. Grewal" regarding Plaintiff's proposed changes to the agreement. Id.

Plaintiff alleges that around June of 2012, Ebix purchased all of PlanetSoft's stock for approximately $40 million dollars. Id. ¶ 30, Ex. 2. Plaintiff alleges that Ebix "reportedly acquired all of the outstanding capital stock and assets of Planetsoft for cash and shares of the common stock of [Ebix]." Id. ¶ 31. The deal also "reportedly involved earn-out cash payments to PlanetSoft shareholders based on specific revenue numbers achieved" within two years. Id. ¶ 32. Following the sale, Plaintiff contacted Ebix and Bajaj multiple times through counsel requesting compensation for Plaintiff's 5 percent interest in PlanetSoft. Id. ¶¶ 35-36, Ex. 3. Plaintiff has not received any compensation for his 5 percent interest in PlanetSoft. Id. ¶ 34.

Plaintiff resides in Santa Clara County, California. Id. ¶ 1. Ebix is a Delaware corporation headquartered in Atlanta, Georgia, and does business in California. Id. ¶ 2. Bajaj has residences in India, Florida, and Georgia, and was formerly the President of PlanetSoft, Inc., a former Delaware corporation that was "licensed to do business in California." Id. ¶ 3.

B. Procedural Background

Plaintiff filed his original complaint on May 15, 2014. ECF No. 1. Defendant Ebix filed motions to dismiss and to transfer on July 31, 2014. ECF Nos. 15, 16. Plaintiff filed timely oppositions, ECF Nos. 18, 19, and Ebix filed timely replies, ECF Nos. 20, 21. On October 6, 2014, the Court granted Ebix's motion to dismiss Plaintiff's breach of contract claim without prejudice. ("October 6, 2014 Order"), ECF No. 26. In the October 6, 2014 Order, the Court also denied Ebix's motion to dismiss or transfer venue. Id.

While Plaintiff served Defendant Ebix on May 30, 2014, Plaintiff was unable to effectuate service on Defendant Bajaj as Plaintiff could not locate Bajaj. See ECF No. 52. On December 15, 2014, Plaintiff filed a "Status Report re: Service upon Defendant Sudhir Bajaj." Id. Plaintiff represented that on December 6, 2015, a Mr. Navipeta Mahest personally served a security guard at the gated entrance to Bajaj's residence in Secunderabad, India. Id. Plaintiff also mailed the documents to the residence and emailed the documents to Bajaj's two last known email addresses on December 15, 2014.

Defendant Ebix filed the instant motion to dismiss on November 18, 2014. ECF No. 44. Plaintiff filed a timely opposition, ECF No. 49, and Ebix filed a timely reply, ECF No. 50.

On December 29, 2014, Defendant Bajaj made a special appearance and filed the instant motion to dismiss for defective service, lack of personal jurisdiction, and failure to state a claim. ECF No. 53. Plaintiff filed his opposition on January 12, 2015, ECF No. 54, and Bajaj filed a timely reply, ECF No. 55.

II. LEGAL STANDARDS

A. 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 draw ...


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