Negotiatus Corp. v. Viola, Inc.

Background

Negotiatus Corp., doing business as Order.co, sued Viola Inc., VB Brands California LLC, Viola Portland LLC, and D Savage LLC. Negotiatus alleged that the defendants created an Order.co account, agreed to the platform’s terms and conditions on or about February 25, 2022, requested services, and accepted those services. The alleged agreement required the defendants to pay invoices within 30 days, subject to an exception for amounts disputed in good faith, and allowed interest on overdue payments.

Negotiatus alleged that the defendants accepted and paid 24 invoices totaling $418,070.49 between March 14 and November 11, 2022. It further alleged that the defendants continued requesting and accepting services but did not pay invoices due between December 16, 2022, and March 3, 2023. According to the complaint, the unpaid balance was $352,496.08 as of September 27, 2023, including interest. The complaint asserted breach of contract and, alternatively, account stated, quantum meruit, and unjust enrichment.

Motion and legal standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. At this stage, the court assumed that well-pleaded factual allegations were true, drew reasonable inferences for Negotiatus, and considered the complaint and documents attached to it, including the alleged contract.

Breach of contract

The court held that Negotiatus sufficiently pleaded a breach-of-contract claim under New York law. The complaint identified the alleged contract, its date, and its major terms. The court concluded that the allegations that customers had to agree to the online terms to use the platform plausibly described an online agreement. It also concluded that the defendants’ alleged conduct—requesting services and accepting and paying 24 earlier invoices—could show assent to the agreement.

The court rejected the defendants’ arguments that the complaint failed to identify the contracting parties, the breaching defendant, or the date of the agreement. The complaint alleged that all four named defendants, collectively defined as “Viola,” entered into the contract and breached it, and it identified February 25, 2022, as the date of agreement. The court also found that Negotiatus adequately alleged its own performance, the defendants’ nonpayment, and resulting damages. It therefore denied the motion to dismiss the breach-of-contract claim.

Account stated

An account stated is an agreement, express or implied, about the correctness of an account and the balance due. The court held that Negotiatus adequately alleged this claim because it alleged that the defendants accepted the invoices without objection, including the unpaid invoices.

Although the account-stated claim and the contract claim arose from the same facts and sought the same damages, the court allowed both claims to remain at this stage. The defendants disputed whether a valid contract existed, and the court stated that alternative claims may proceed while the contract’s validity and scope remain unresolved. The court denied the motion to dismiss the account-stated claim.

Quantum meruit

Quantum meruit allows recovery for the reasonable value of services when the required elements are pleaded, including good-faith performance, acceptance of the services, an expectation of payment, and the reasonable value of the services. The court found that Negotiatus adequately alleged each of those elements.

The court also held that Negotiatus could plead quantum meruit as an alternative to breach of contract because the defendants disputed the existence of an enforceable contract. The court denied the motion to dismiss the quantum-meruit claim.

Unjust enrichment

Unjust enrichment requires allegations that the defendant was enriched at the plaintiff’s expense and that it would be unfair to allow the defendant to retain the benefit. The court found that Negotiatus adequately alleged that it provided services, the defendants accepted them without paying, and the defendants were thereby enriched at Negotiatus’s expense.

Because the scope and validity of the parties’ alleged contract had not yet been determined, the court found it premature to dismiss the alternative unjust-enrichment claim. It denied the motion to dismiss that claim.

Disposition

The court denied the defendants’ motion to dismiss in full and directed the clerk to terminate the motion. The parties were ordered to meet and confer and submit a revised case-management plan by March 6, 2025. The opinion addressed only whether the complaint could proceed past the dismissal stage; it did not determine the defendants’ ultimate liability or the amount recoverable.

Judge-name note

The supplied case information identifies Stewart Aaron as the judge, but the opinion text identifies and is signed by Katherine Polk Failla. This summary uses the judge named in the opinion itself.