Vogel v. Takeone Network Corp.

Background

Michael Scott Vogel alleged that he worked with Naysawn Naji and Hesham El-Nahhas to develop Tradekraft, an electronic production or “wrap” book intended to manage entertainment and media production. Vogel alleged that the collaborators created software code, planning materials, task lists, and other confidential documents. He further alleged that Naji and El-Nahhas ended their relationship with him, cut off his access to the work product, and later co-founded Wrapbook with Cameron Woodward. Vogel claimed that Wrapbook included features similar to those planned for Tradekraft.

Vogel sued TakeOne Network Corp., doing business as Wrapbook, and Patrick Ali Javid, Naji, El-Nahhas, and Woodward. His amended complaint asserted ten counts: misappropriation of trade secrets, breach of actual or implied contract, breach of fiduciary duty, misappropriation of a business idea, breach of the implied covenant of good faith and fair dealing, unjust enrichment, unfair competition, promissory estoppel, aiding and abetting breach of fiduciary duty, and usurpation of a joint venture opportunity.

Documents Considered on the Motion

On a motion to dismiss under Rule 12(b)(6), the court generally considers the complaint and certain documents incorporated into or integral to it. The court declined to consider the Kitchen Sink Document, Proposed Terms Document, and transcript of a January 16, 2018 call. It did consider the Dissolution Email because Vogel quoted it in the complaint and alleged that it had legal significance concerning the alleged dissolution of the partnership.

Dismissed Claims

The court dismissed Vogel’s breach-of-contract and implied-covenant claims because the complaint did not adequately plead an enforceable partnership agreement. Under the court’s analysis, an agreement to share losses is an indispensable element of a partnership. Vogel’s allegations were contradictory: they referred to a possible one-third split of equity and expenses, stated that the proposed ratio could change, and alleged that the parties had not agreed on El-Nahhas’s equity. The complaint also alleged that the parties never actually split expenses and did not establish an agreement to share losses. The court concluded that Vogel likewise had not pleaded a joint venture, which also requires an agreement to share profits and losses.

Because Vogel did not adequately plead a partnership or joint venture, the court dismissed the breach-of-fiduciary-duty, aiding-and-abetting, and usurpation-of-a-joint-venture-opportunity claims. The court also dismissed the implied-covenant claim because there was no adequately pleaded contract from which that duty could arise.

The court dismissed the promissory-estoppel claim for two independent reasons. First, the alleged promise—that Naji and El-Nahhas would commit to the Tradekraft joint venture—was too vague and indefinite. Second, the damages Vogel alleged involved an interest in Wrapbook, lost business opportunities, and profits, whereas promissory-estoppel damages generally compensate actual expenditures made in reliance on a promise.

The court dismissed the trade-secret, business-idea, and unfair-competition claims because Vogel had not adequately pleaded the required fiduciary, contractual, quasi-contractual, or confidential relationship. The court rejected Vogel’s alternative reliance on an independent confidentiality agreement because the complaint did not allege that one had been signed or specify the terms of an oral or implied agreement. The court did not reach the defendants’ separate arguments that Vogel’s ideas were insufficiently specific or original.

Unjust Enrichment

The court denied the motion to dismiss Vogel’s unjust-enrichment claim. The defendants argued only that the claim duplicated the trade-secret claim. The court held that unjust enrichment may be pleaded in the alternative and that, because the other claims had been dismissed, unjust enrichment was Vogel’s only remaining potential mechanism for relief. The court did not determine that Vogel would ultimately prevail on that claim.

Leave to Amend and Disposition

The court granted Vogel leave to amend the complaint because this was the first opportunity for the court to identify the pleading’s specific defects and it was not yet apparent that another amendment would be futile. The court’s conclusion was stated as follows: the defendants’ motion to dismiss was GRANTED in part and DENIED in part. The request for oral argument was DENIED as moot. The court permitted Vogel to file an amended complaint by August 30, 2023, and directed the parties to appear for a telephone conference on August 31, 2023. The opinion does not state that the dismissed claims were dismissed with or without prejudice.