United States District Court, W.D. Missouri, Western Division
ORDER GRANTING IN PART MOTION TO DISMISS
lawsuit arises from Plaintiffs' purchase of an e-Commerce
business, Essential Hardware, from Defendant Dukat, LLC
(“Dukat”). Now before the Court is
Defendants' Joint Motion to Dismiss Plaintiffs'
Complaint and/or for a More Definite Statement (Doc. 7). For
the following reasons, the motion is GRANTED IN PART and
DENIED IN PART.
may be dismissed if it fails “to state a claim upon
which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In
ruling on a motion to dismiss, the Court “must accept
as true all of the complaint's factual allegations and
view them in the light most favorable to the Plaintiff [
].” Stodghill v. Wellston School Dist., 512
F.3d 472, 476 (8th Cir. 2008). To avoid dismissal, a
complaint must include “enough facts to state a claim
to relief that is plausible on its face.” Bell
Atlantic 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 the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). The plaintiff need not demonstrate the
claim is probable, only that it is more than just possible.
reviewing the complaint, the court construes it liberally and
draws all reasonable inferences from the facts in the
plaintiff's favor. Monson v. Drug Enforcement
Admin., 589 F.3d 952, 961 (8th Cir. 2009). The court
generally ignores materials outside the pleadings but may
consider materials that are part of the public record or
materials that are necessarily embraced by the pleadings.
Miller v. Toxicology Lab. Inc., 688 F.3d 928, 931
(8th Cir. 2012).
Complaint alleges Plaintiff Tarvisium Holdings, LLC
(“Tarvisium”) purchased Essential Hardware, a
reportedly very profitable e-Commerce business, from Dukat
for $5 million: $1 million cash at closing and a $4 million
promissory note. The purchase was consummated via a variety
of integrated agreements, including an asset purchase
agreement, a software services agreement, a security
agreement, a non-compete agreement, and a promissory note.
The promissory note was backed by a security agreement in
Dukat's favor covering critical assets of the business
which would revert to Dukat in the event Tarvisium did not
make the required payments. Tarvisium also contracted with
Dukat and Defendant 36Lower, Inc. (“36Lower”) to
operate and run the business after the closing to ensure its
continued profitability. The sale closed on September 21,
allege that Dukat and 36Lower breached their agreement to
continue running the business, causing Essential Hardware to
sustain extensive losses. Plaintiffs also allege that
Dukat's founder, Defendant Elliott Kattan
(“Kattan”), along with key employee Defendant Ben
Schwartz (“Schwartz”) (collectively “the
Individual Defendants”), misrepresented Essential
Hardware's financial health during the purchase
negotiations by inflating the business's historical sales
and profitability. Plaintiffs claim that before closing,
Kattan and Schwartz shut down Essential Hardware's
operations to inflict a fatal wound on the business. They
contend Defendants were either indifferent to the
business's continued success, or Defendants intentionally
caused the business to fail in order to recover it through
the security agreement.
Complaint contains six counts: a request for a declaratory
judgment that Dukat and 36Lower materially breached the
various agreements such that Tarvisium may elect to excuse
its own performance under the agreements (Count One); breach
of contract (Count Two); breach of the covenant of good faith
and fair dealing (Count Three); fraudulent
inducement/misrepresentation (Count Four); a negligent
inducement/misrepresentation claim (Count Five); and a
tortious interference with a business expectancy (Count Six)
brought against Kattan only.
Counts One and Two state a claim against Dukat and
argue Counts One and Two, which are based on alleged breach
of contract, should be dismissed against the individual
Defendants because these counts fail to state any claims
against them as individuals as opposed to corporate
officials. Defendants also argue Counts One and Two should be
dismissed against all Defendants because the contracts fail
for lack of consideration, an essential element of a
contract. Joint Mot. at ¶ 8.
Court agrees that Counts One and Two fail to state claims
against the Individual Defendants. In fact, Plaintiffs do not
contest this point. Accordingly, Counts One and Two are
dismissed without prejudice against Kattan and Schwartz.
assertion that the integrated agreements fail for lack of
consideration is meritless. For example, the Complaint
alleges the parties entered into a series of agreements to
purchase Essential Hardware for “$5 million, comprised
of $1 million in cash at closing and a $4 million Promissory
Note with monthly payments extending through July ...