Matilock, Inc. v. Pouladdej

Background

Matilock, Inc. described itself as a start-up focused on user-verification solutions. Pouladdej purchased a $150,000 convertible promissory note in February 2017, which could provide him an automatic equity interest after a qualifying financing event. From October 2018 through July 2019, he also made stipend payments totaling $800,000.

In June 2019, Matilock agreed with Accomplice Management, LLC, to receive seed funding. Matilock alleged that Pouladdej introduced it to Jon Ezrine, who received confidential and proprietary information during discussions about joining Matilock. Matilock further alleged that Pouladdej later made multiple negative and harmful statements about Matilock and its founder, Filip Victor, to an Accomplice principal, causing Accomplice to abandon the seed-funding agreement. Matilock also alleged that Pouladdej used confidential information without authorization to support business ventures involving Matilock’s competitors and later requested repayment of the $800,000 in stipend payments.

Matilock asserted claims for intentional interference with contractual relations, violations of California’s Unfair Competition Law, and a declaratory judgment that no enforceable repayment contract existed for the stipend payments. It also sought punitive damages.

Pleading standard

The court evaluated the claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally recognized claim supported by enough facts. Under the ordinary pleading rule, a complaint must provide enough factual content to make liability plausible. If fraud is an essential part of a claim, Rule 9(b) requires the circumstances of the alleged fraud to be stated in detail.

Intentional-interference claim

The court granted the motion in part as to Matilock’s intentional-interference claim. The claim required allegations of a valid contract with a third party, Pouladdej’s knowledge of that contract, intentional acts designed to disrupt it, an actual breach or disruption, and resulting damage.

The court held that Matilock’s allegations about Pouladdej’s conduct were too vague. Matilock described the statements only as “negative and harmful” and did not explain what Pouladdej said or how the statements were designed to cause a breach or disruption. Without those details, the court could not determine whether the allegations sounded in fraud and therefore required the heightened Rule 9(b) standard. The court also rejected Matilock’s argument that the details could be supplied later through discovery. It did not decide that Matilock had to plead falsity as an element of the claim at this stage.

Unfair Competition Law claim

The court found that the portion of Matilock’s Unfair Competition Law claim based on intentional interference failed for the same reasons. The court also found that Matilock’s allegations that Pouladdej received and used confidential information were conclusory and did not explain the specific facts supporting Matilock’s belief. Statements exchanged during the parties’ meet-and-confer process were not included in the operative complaint and were not before the court.

Declaratory-judgment claim

The court denied Pouladdej’s request to dismiss Matilock’s claim seeking a declaration that no enforceable contract required repayment of the $800,000 in stipend payments. Declaratory relief is discretionary, and the court declined at this early stage to dismiss the claim as a related claim accompanying the other causes of action. The court stated that it could reconsider that assessment if Matilock again failed to plead a valid substantive cause of action.

Punitive damages and disposition

The court granted the motion in part as to Matilock’s request for punitive damages because that request was based on the deficient intentional-interference claim. Overall, the court GRANTED IN PART and DENIED IN PART the motion to dismiss. Because the court could not say that amendment would be futile, it required Matilock to file any amended complaint within 28 days. The court also denied as moot the parties’ requests for judicial notice of additional documents or background information and continued the initial case-management conference to July 21, 2020.