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CUTTR Holdings LLC v. Patinkin

April 20, 2007

RE: CUTTR HOLDINGS LLC, ET AL.
v.
PATINKIN, ET AL.



The opinion of the court was delivered by: William J. Martini Judge

MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340

LETTER OPINION

Dear Litigants:

This matter comes before the Court on Counterclaim and Third-Party Defendants' Motion to Dismiss pursuant to Fed. R. Civ. P. R. 12(b)(6). There was no oral argument. Fed. R. Civ. P. R. 78. For the reasons stated below, Defendants' motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND

This case involves claims arising from a failed business venture among the parties. Although the facts set forth in the Complaint and Counterclaim are detailed and lengthy, the Court will recite only the pertinent facts and allegations for purposes of this motion. Seth Patinkin is a scientist and inventor of a spam e-mail filtering technology. (Countercl. 3-4.) Patinkin entered into a business venture with Mark Graham, Peter Getz, and Alexander Baytin to develop this technology. (Countercl. 4-5.) To this end, CUTTR//// Holdings LLC ("Cuttr Holdings") and CUTTR, INC. ("Cutter, Inc.") were formed by the parties, and Patinkin transferred his technology patent to Cuttr Holdings. (Countercl. 5-6.) Subsequently, Patinkin formed Bella Prosper LLC and Hao Fang LLC in order to pay international subcontractors on behalf of Cuttr, Inc. (Countercl. 9-12.) The business venture apparently struggled, and management conflicts arose. (Countercl. 14-15.) As a result, Patinkin resigned from Cuttr, Inc. (Countercl. 15-16.) Conflicts continued between Patinkin and the remaining members of the Cuttr entities. (Countercl. 16-20.) On September 12, 2005, Cuttr Holdings and Cuttr, Inc. brought this suit against Patinkin, Bella Prosper, and Hao Fang for conversion, fraud, and breach of fiduciary duty. In response, Patinkin brought a counterclaim and third-party complaint alleging, among others, fraud, conversion, slander, and breaches of fiduciary duty and contract against Cuttr Holdings, Cuttr, Inc., Mark Graham, Peter Getz, and Alexander Baytin. The Counterclaim and Third-Party Defendants bring the current motion to dismiss Seth Patinkin's Counterclaim and Third-Party Complaint under Rule 12(b)(6).*fn1

ANALYSIS

A. Standard of Review

The standard for deciding a motion for judgment on the pleadings under Fed. R. Civ. P. R. 12(c) is identical to that under Fed. R. Civ. P. R. 12(b)(6). All allegations in the complaint must be taken as true, and a court must draw all reasonable inferences in favor of the non-moving party. See Gomez v. Toledo, 446 U.S. 635, 636 n.3 (1980); Robb v. Philadelphia, 733 F.2d 274, 277 (3d Cir. 1984). If, after viewing the allegations in the complaint in the light most favorable to the plaintiff, it appears beyond doubt that no relief could be granted under any set of facts which could prove consistent with the allegations, a court may dismiss a complaint for failure to state a claim. Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984); Sunn v. O'Donnell, 688 F.2d 940, 941 (3d Cir. 1982).

B. Motion to Dismiss

Patinkin has voluntarily agreed to dismiss Counts Three, Six, Eleven, Thirteen, Fourteen, and Fifteen. Additionally, Patinkin has not opposed Baytin's motion to dismiss Count Sixteen. The remaining counts are addressed in turn.

Counts One, Two, Five, Eight, Nine, and Ten

These claims are based on Patinkin's continuing interest in Cuttr Holdings and Cuttr, Inc. Counterclaim and Third-Party Defendants argue that Patinkin has no remaining interest in either Cuttr entity since Patinkin clearly tendered his resignation from all positions within Cuttr and its affiliates by email on August 2, 2005. They further assert that Defendant Graham wrote a reply letter to Patinkin on August 4, 2005 stating: "We understand that you have resigned from all executive, managerial and membership positions at CUTTR and its affiliates . . . you relinquish all right, title and interest in and to all equity and other interests in these entities." (Countercl. 15.)

Patinkin argues that he only resigned as President and CEO of Cuttr, Inc. Patinkin acknowledges that his email appears ambiguous as he stated that he was resigning from Cuttr without specifying from which Cuttr entity. Additionally, he acknowledges that Graham wrote the reply letter cited above, but he denies ever receiving or seeing the letter before this litigation. Patinkin asserts that he is still a member, director, and officer of Cuttr ...


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