Dhaliwal v. HYPR Corp.

Background

Amarpreet Dhaliwal sued George Avetisov and HYPR Corp. after the parties entered into an April 30, 2014 written agreement stating that they would be 50/50 partners in a project tentatively called Hypercard. The agreement described a platform for storing and transferring digital assets and stated that Avetisov would transfer 50% of Brillx Corp. to Dhaliwal for $1. Dhaliwal sought money and declarations that he was entitled to profits and ownership interests. The defendants filed a counterclaim seeking rescission, meaning cancellation of the agreement, based on alleged fraudulent inducement.

The court held a five-day bench trial from January 13 through January 17, 2020. This decision contains the court’s findings of fact and legal conclusions under Federal Rule of Civil Procedure 52. Before trial, the defendants also moved to exclude testimony from Dhaliwal’s expert witness, Bruce F. Webster.

Contract Claims

The court found that there was a valid and enforceable agreement between Dhaliwal and Avetisov, and that the parties’ understanding included more than the short written April 30 agreement. The court concluded that both parties were required to participate in the project and share responsibilities, rather than allowing Dhaliwal to receive benefits without contributing.

The court found that Dhaliwal failed to perform his obligations. According to the court, he did not create the required business materials, provide an expected nondisclosure agreement, pay certain expenses for which he was responsible, complete the transfer paperwork, or remain responsive to Avetisov’s communications. The court found that Dhaliwal effectively abandoned the agreement. Because Dhaliwal materially failed to perform, Avetisov was excused from further performance, including any obligation to pay Dhaliwal or transfer shares.

The court also stated that, even if the April 30 written agreement were treated as the entire agreement, Dhaliwal could not rely on it because he had not shown valid consideration. Consideration is something exchanged to support a contract. The court rejected Dhaliwal’s theories that his idea for Hypercard or his agreement not to pursue the project alone supplied consideration. It found that the evidence did not show that Dhaliwal originated the idea or could have pursued it independently.

Because the court found an enforceable contract covering the subject matter, it dismissed Dhaliwal’s unjust-enrichment claim. The court also ruled that HYPR could not be a defendant on the contract claims because HYPR did not exist when Dhaliwal and Avetisov made their agreement and there was no showing that Dhaliwal performed work for HYPR.

Fraudulent-Inducement Counterclaim

The defendants alleged that Dhaliwal made false statements about his resume and professional background to induce Avetisov to enter the arrangement. The court did not decide whether the statements were false or intentionally misleading. Instead, it found that the defendants did not show that the statements were material to the agreement or that they suffered damages because of them. The court therefore dismissed the fraudulent-inducement counterclaim.

Other Motion and Disposition

The court denied the defendants’ motion to exclude Webster’s testimony, stating that the testimony did not affect the outcome even when considered. The court entered judgment in favor of the defendants, dismissing Dhaliwal’s complaint, and in favor of Dhaliwal, dismissing the defendants’ counterclaim. It directed the Clerk of Court to close the motions at ECF Nos. 79 and 80.