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Boyle v. Systema USA, Inc.

United States District Court, D. Oregon

August 28, 2017

EDWARD BOYLE and SCI-TEK PRODUCTS, LLC, Plaintiffs,
v.
SYSTEMA USA, INC. and SYSTEMA GMBH, Defendants.

          Daniel L. Duyck, WHIPPLE & DUYCK, P.C., Andrew L. Paris, ANDREW PARIS LAW, Of Attorneys for Plaintiffs.

          Katherine C. Tank, TANK LAW, PC, Of Attorneys for Defendants.

          OPINION AND ORDER

          MICHAEL H. SIMON, DISTRICT JUDGE.

         Edward Boyle and Sci-Tek Products, LLC (collectively, “Sci-Tek”) bring this lawsuit against Systema USA, Inc. and Systema GMBH (collectively, “Systema”). Sci-Tek alleges that Systema failed to pay Sci-Tek commissions for sales that Sci-Tek made on Systema's behalf. In its Amended Complaint (“Am. Comp.”) (ECF 8), Sci-Tek asserts claims of breach of express contract, breach of implied-in-fact contract, quantum meruit, and financial abuse of a vulnerable person. Sci-Tek also seeks declaratory relief. Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, Systema moves to dismiss Sci-Tek's claims of breach of implied-in-fact contract, quantum meruit, and financial abuse of a vulnerable person. ECF 11. Sci-Tek concedes that its claim for financial abuse may be dismissed. ECF 15. For the reasons that follow, the Court grants Systema's motion to dismiss with leave to replead.

         STANDARDS

         A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “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.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

         BACKGROUND

         Systema sells licensed software and provides implementation services to semiconductor manufacturers and others in high-tech industries. Boyle and his wife formed Sci-Tek to make sales on Systema's behalf. Sci-Tek sells both “Projects, ” which are the implementation, analysis, integration, and teaching of the use of Systema's software product systems, and “Licenses, ” which are agreements that allow use of Systema's software during a specified period of time. Sci-Tek and Systema entered into a Sales Representative Agreement (the “Agreement”), “effective as of the date of the last signature below.” ECF 1 at 10. Sci-Tek signed the Agreement on August 1, 2010. Under the signature for Systema, the typewritten date “29.01.2010” appears. Sci-Tek alleges that Systema signed the Agreement on August 29, 2010. Am. Comp. ¶ 11.

         After Systema terminated the Agreement on February 24, 2014, Sci-Tek demanded from Systema payment for sales commissions that Sci-Tek alleges it is owed. Systema, however, refused to pay Sci-Tek commissions on sales of Projects to customers that had already purchased services from Systema. Exhibit 2 of the Agreement provides that Systema will pay for implementation services performed by Systema as follows: “Fees due for any Customer who was not already a customer of SYSTEMA's and for existing SYSTEMA customers where new SYSTEMA Licensed Products are sold.” ECF 1 at 26. The parties dispute the meaning and legal effect of this provision and, relatedly, whether Systema owes additional commissions to Sci-Tek.

         DISCUSSION

         A. Sci-Tek's Claim of Breach of Contract Implied-in-Fact

         As its third claim, Sci-Tek alleges that it entered into an implied-in-fact contract with Systema under which Systema agreed to pay Sci-Tek commissions for sales “outside the scope of the [Agreement].” Am. Compl. ¶ 39. Systema argues that Sci-Tek has insufficiently alleged the elements of that claim and that Plaintiffs cannot maintain ...


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