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Leisure Pass North America, LLC v. Leisure Pass Group, Ltd.

United States District Court, Third Circuit

August 23, 2013



WILLIAM J. MARTINI, District Judge.

Plaintiff Leisure Pass North America, LLC ("LPNA") brings this breach of contract action against Defendant Leisure Pass Group, Ltd. ("LPG"). This matter comes before the Court on Defendant's motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, Defendant's motion to dismiss is GRANTED.


Defendant LPG is a company based in London, England. LPG developed a product called the "Leisure Pass, " a travel card that allows consumers to access various tourist attractions in a city at a discounted rate. Defendant also developed a separate Leisure Pass Operating System ("LPOS"), a software system that is used to manage the Leisure Pass businesses.

In 2002, LPG entered into an agreement with Plaintiff LPNA, which gave Plaintiff a license to sell Leisure Passes in North America. In a separate agreement, Defendant granted Plaintiff a license to use the LPOS software ("LPOS License Agreement"). In October 2008, the parties entered an additional agreement ("2008 Agreement"). Section 18 of the 2008 Agreement gave Plaintiff the option to purchase the rights to sell Leisure Passes in North America (the "Option"). Section 18 provided, in relevant part, that:

Leisure Group hereby grants North America the option, for the period beginning on October 1, 2011 and anytime thereafter so long as this Agreement remains in effect, to purchase the Product and Rights for utilization in the Expanded Territory....
Such option to purchase shall be deemed exercised immediately upon Leisure Group's receipt of North America's written notice of its intent to exercise the option (hereafter the "Option Notice"). Within a reasonable period of time from the date of Leisure Group's receipt of the Option Notice, but not later than 30 days subsequent thereto, the parties shall schedule a closing at a mutually convenient time, date and place within the United States to consummate North America's purchase of the Product and the Rights for the Expanded Territory....

2008 Agreement at 23-25, Mot. to Dismiss App'x A, ECF No. 24-2. The Option did not provide Plaintiff with the right to purchase the LPOS software. But the 2008 Agreement did provide that Plaintiff "shall... be permitted to continue to utilize the LPOS System for one year" after exercising the Option. Section 18 did not provide Plaintiff with a right to conduct due diligence before or after exercising the Option.

In July 2011, a company called Smart Destinations, Inc. ("Smart Destinations") filed a patent infringement suit against Plaintiff and Defendant over their use of the LPOS software. Defendant and Plaintiff discussed the possibility of entering a joint defense agreement ("JDA") for that action, but they never executed a JDA. Despite the absence of a JDA, Defendant took the lead on negotiating a potential settlement on behalf of itself and Plaintiff. Defendant requested that Plaintiff refrain from participating in those negotiations. Because settlement negotiations were still ongoing in October 2011, Plaintiff refrained from exercising its Option at that time. Plaintiff alleges that the parties entered a verbal tolling agreement providing that the purchase price of the Option would be calculated as of October 1, 2011, regardless of when Plaintiff exercised the Option. Defendants deny that they entered any verbal agreements.

In March 2012, Defendant reached a confidential settlement agreement with Smart Destinations (the "Settlement"). The Settlement disposed of all the claims pending against both Defendant and Plaintiff. Plaintiff did not sign the Settlement and never saw a copy of the Settlement. Shortly thereafter, Plaintiff exercised its Option to purchase the rights to sell Leisure Passes in North America. Defendant did not disclose the confidential Settlement to Plaintiff after it exercised the Option. However, in order to close the Option, Defendant agreed to indemnify Plaintiff for any claims made by Smart Destinations regarding Plaintiff's use of the LPOS software. Defendant also provided expansive representations and warranties assuring Plaintiff that it would have the ability to use the LPOS system for an additional year under the existing LPOS License Agreement, free and clear of any claim by Smart Destinations. The deal should have closed in April 2012, but the parties could not agree on three issues: (1) disclosure of the Settlement; (2) the tolling agreement; and (3) the closing date. Plaintiff filed this action to compel Defendant to "specifically perform its obligations" under the 2008 Agreement by closing the deal.


Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).

Although a complaint need not contain detailed factual allegations, "a plaintiff's obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, such that it is "plausible on its face." See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 ...

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