Pattern Design LLC v. We are Sechey Inc.

Background

Pattern Design LLC, a website-design company, alleged that We are Sechey Inc., Sechey, Inc., and Emily Heintz failed to make payments under a web-design contract and never intended to fulfill certain promises to pay. In August 2022, Pattern and “We are Sechey” entered into a Master Services Agreement and Statement of Work for a website redesign costing $125,000. The contract listed “We are Sechey” as the contracting party, while the Statement of Work referred to “Sechey.” Heintz signed for “We are Sechey” as its founder.

Pattern alleged that Sechey paid only part of the required amounts and that more than $95,000, including late fees, remained unpaid. Pattern also alleged that, in September 2023, Heintz said Sechey would receive a significant customer payment in December 2023 and would then pay Pattern. Pattern allowed Sechey to use its designs after agreeing to a reduced payment of $60,000, but Sechey paid only $2,000 of that amount and later made another $3,000 payment.

Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim, and Rule 9(b), which requires fraud allegations to be stated with particular detail.

Alter Ego Claim

Pattern pleaded alter ego as an independent claim against Sechey and Heintz. The court explained that alter ego is not a separate claim for damages; it is a legal theory that can sometimes allow a party to hold an individual responsible for a company’s obligations. The court dismissed Pattern’s independent alter ego claim as to all defendants without leave to amend.

Breach of Contract

Pattern claimed that all three defendants breached the contract. The court assumed that Pattern adequately alleged a contract breach by “We are Sechey,” the only defendant named in the contract.

As to Sechey, Pattern argued that the contract should be corrected because the parties mutually intended Sechey—not “We are Sechey”—to be the contracting party. The court found that the allegations plausibly supported correcting the written contract. The contract identified “We are Sechey Inc.” in one place, Heintz signed as Sechey’s founder, and the Statement of Work named “Sechey.” The court therefore denied the motion to dismiss Pattern’s breach-of-contract claim as to Sechey.

As to Heintz, Pattern relied on the alter ego theory to hold her personally responsible for Sechey’s contractual obligations. The court found that most of Pattern’s allegations were conclusory. Although Pattern adequately alleged that Sechey was undercapitalized, it did not adequately allege the required unity of interests between Sechey and Heintz. The court granted the motion to dismiss the contract claim as to Heintz, with leave to amend.

The court also granted the motion to dismiss the breach-of-contract claim as to “We are Sechey,” with leave to amend, as stated in the conclusion.

Promissory Fraud

Pattern alleged that Sechey and Heintz made promises to induce Pattern to enter the contract and later to let Sechey use Pattern’s designs. The court dismissed both theories as to all defendants, with leave to amend.

For the alleged promises made when the contract was formed, the court held that Pattern alleged nonperformance but did not provide particular facts showing that Sechey intended not to perform when the parties entered the contract. Nonperformance alone was insufficient to plead promissory fraud.

For the December 2023 customer-payment promise, Pattern alleged that Heintz falsely said Sechey would receive a customer payment and then pay Pattern. The court held that the economic-loss rule barred this fraud theory. That rule generally prevents recovery in tort for purely economic losses when the alleged duty is only a contractual one. The court found that Heintz’s statements concerned payment of amounts already owed under the existing contractual relationship, rather than conduct that independently induced a new or modified contract.

Disposition

Judge Charles R. Breyer’s order reached these dispositions:

- The motion to dismiss Pattern’s alter ego claim as to all defendants was granted without leave to amend. - The motion to dismiss Pattern’s breach-of-contract claim as to Sechey was denied. - The motion to dismiss Pattern’s breach-of-contract claim as to We are Sechey and Heintz was granted with leave to amend. - The motion to dismiss Pattern’s promissory-fraud claim as to all defendants was granted with leave to amend.