Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Advanced Comfort Technologies, Inc. v. London Luxury, LLC

United States District Court, D. Utah

December 6, 2017

ADVANCED COMFORT TECHNOLOGIES, INC., d/b/a INTELLIBED, a Utah corporation, Plaintiff,
v.
LONDON LUXURY, LLC, a New York limited liability company, Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

          JILL N. PARRISH UNITED STATES DISTRICT COURT JUDGE.

         Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint (ECF No. 14). For the reasons set forth below, the motion is GRANTED IN PART and DENIED IN PART.

         I. INTRODUCTION

         This is a contract case. Plaintiff Advanced Comfort Technologies, Inc. d/b/a/ intelliBED (“Intellibed”) entered into a Non-Circumvention Agreement (the “Agreement”) with Defendant London Luxury, LLC. Under the Agreement, London Luxury agreed to use “best efforts” to market Intellibed mattresses to Mattress Firm, Inc., a third-party retailer. In exchange, Intellibed agreed to pay London Luxury a finder's fee. About two months after signing, the deal soured. Intellibed claims that London Luxury misrepresented its relationship with Mattress Firm, among other things. Intellibed also claims that London Luxury did not use “best efforts” to market Intellibed mattresses to Mattress Firm. Intellibed now wants out of the Agreement. So it brought the following causes of action against London Luxury: (1) fraud/fraud in the inducement, (2) breach of contract, (3) breach of the implied covenant of good faith and fair dealing, and (4) breach of fiduciary duty. London Luxury has moved to dismiss Intellibed's complaint.

         II. FACTUAL ALLEGATIONS

         Intellibed is the inventor and manufacturer of a gel mattress called Gel Matrix. Compl. ¶ 6. London Luxury is a manufacturer and distributor of home products with a sourcing arm that markets third-party products, including mattresses, to retailers. Compl. ¶ 7.

         Prior to February 2017, Intellibed was searching for a marketing partner that could introduce the Gel Matrix mattress to Mattress Firm, a third-party retailer. Compl. ¶ 10. Intellibed was introduced to London Luxury. Compl. ¶ 10. During initial discussions, Intellibed told London Luxury about its desire to market the Gel Matrix mattress to Mattress Firm. Compl. ¶ 11. London Luxury's president, Steve Schwartz, expressed a desire to work with Intellibed in an exclusive relationship. Compl. ¶ 11. Mr. Schwartz told Intellibed that London Luxury had a longstanding relationship with Mattress Firm. Compl. ¶ 11. And he told Intellibed that he thought that London Luxury could get the Gel Matrix mattress into Mattress Firm showrooms. Compl. ¶ 11.

         Based on these discussions, the parties met on February 13, 2017. Compl. ¶ 12. Intellibed representatives traveled to London Luxury headquarters and spoke with representatives from London Luxury. Compl. ¶ 13. Intellibed stated that it needed a partner that (a) would have significant influence with Mattress Firm, particularly with its buyers and those who would control product distribution, (b) had a significant and longstanding business relationship with Mattress Firm such that it would have both the connections and the know-how to get Intellibed's products placed, and (c) would give Intellibed the best possible chance to successfully place its mattresses with Mattress Firm. Compl. ¶ 13.

         To vet London Luxury's qualifications, Intellibed asked detailed questions. Compl. ¶ 14. Intellibed asked about (a) the magnitude of London Luxury's annual revenues, (b) the magnitude of London Luxury's business with Mattress Firm, and (c) London Luxury's relationship with Mattress Firm and its influence and connection with Mattress Firm. Compl. ¶ 14.

         In response, London Luxury's CEO Marc Jason and its president Mr. Schwartz represented that:

a) London Luxury's annual revenues were in the high nine figures, not quite a billion;
b) Approximately one quarter of London Luxury's annual revenues stemmed from work with Mattress Firm;
c) London Luxury was the largest single accessory provider to Mattress Firm, shipping products to thousands of Mattress Firm locations every week; and
d) London Luxury was a major influencer with Mattress Firm, and it had the best relationships of any potential partner with the highest and most senior people and key decision-makers at Mattress Firm.

Compl. ¶ 15.

         Mr. Jason and Mr. Schwartz also told Intellibed that London Luxury had a longstanding relationship with Columbia Sportswear Company and that London Luxury had success in selling Columbia-branded pillows to Mattress Firm. Compl. ¶ 16. London Luxury suggested that it could use the Gel Matrix mattress to offer a Columbia-branded mattress. Compl. ¶ 16. London Luxury claimed that it could “immediately incorporate” the Gel Matrix mattress into a line of Columbia-branded products that would be marketed to Mattress Firm. Compl. ¶ 16.

         At the February 13 meeting, Mr. Jason told Intellibed that it needed to quickly sign a contract because London Luxury was meeting with Mattress Firm's CEO on February 20. Compl. ¶ 17. He told Intellibed that it needed to sign a contract before the meeting if London Luxury was going to present the Gel Matrix mattress to Mattress Firm. Compl. ¶ 17. According to Intellibed, there was never any meeting scheduled. Compl. ¶ 19. London Luxury allegedly lied about the meeting to get Intellibed to sign a contract. Compl. ¶ 19.

         On February 21, the day after the purported meeting, London Luxury and Intellibed executed a Non-Circumvention Agreement (the “Agreement”).[1] Compl. ¶ 20. The parties had allegedly agreed to the terms of the Agreement before the “meeting.” Compl. ¶ 20. Under the Agreement, London Luxury agreed to use its “best efforts” to market Intellibed gel mattresses to Mattress Firm. ECF No. 14-2 at 2. London Luxury also agreed not to “market any other ‘gel matrix' mattress product to [Mattress Firm].” ECF No. 14-2 at 2. The Agreement does not prohibit London Luxury from marketing any other class of goods. See ECF No. 14-2 at 2.

         Under the Agreement, Intellibed agreed “not to directly or indirectly contact or initiate contact with [Mattress Firm] or any officers, directors, shareholders, consultants, attorneys, employees, agents or other affiliates of [Mattress Firm] at any time or for any purpose, unless such approval is specifically granted in writing by [London Luxury].” ECF No. 14-2 at 1. Intellibed also agreed that it would notify London Luxury “within 24 hours” in the event that it was contacted by Mattress Firm. ECF No. 14-2 at 1. If Intellibed entered into a business relationship with Mattress Firm within a set amount of time, Intellibed agreed to pay London Luxury a finder's fee. ECF No. 14-2 at 2. The Agreement contains a merger clause: “This Agreement constitutes the entire agreement between the parties hereto regarding the transactions contemplated herein.” ECF No. 14-2 at 2.

         On March 13, less than a month after the parties signed the Agreement, Intellibed and London Luxury representatives met with Mattress Firm in Houston, Texas (the “Houston meeting”). Compl. ¶ 25. At the Houston meeting, London Luxury presented mattresses and accessories to Mattress Firm. Compl. ¶ 26. London Luxury presented the Gel Matrix mattress, but it also showed a competing foam mattress in one of the main presentation rooms. Compl. ¶ 26. The Gel Matrix mattress was not featured in the main presentation room. Compl. ¶ 26. London Luxury also used the competing foam mattress as its proposed Columbia-mattress product. Compl. ¶ 26.

         Mattress Firm representatives asked London Luxury representatives whether London Luxury had licensing rights from Columbia to market a Columbia-branded mattress. Compl. ¶ 27. London Luxury admitted that it did not have those rights. Compl. ¶ 27. London Luxury had not told Intellibed that it did not have the rights to license a Columbia-branded mattress, and London Luxury did not tell Intellibed that it discussed this issue with Mattress Firm. Compl. ¶ 28.

         Intellibed alleges that at the Houston meeting a London Luxury representative told a Mattress Firm executive that if Mattress Firm did not like the Gel Matrix mattress, Mattress Firm would “never have to talk to Intellibed again.” Compl. ¶ 29. Intellibed also alleges that London Luxury invited Mattress Firm to visit the manufacturing facilities of the company that produced the competing foam mattress days after the Houston meeting. Compl. ¶ 30. London Luxury never invited Mattress Firm to tour the Intellibed facilities, according to Intellibed. Compl. ¶ 31.

         Intellibed alleges that London Luxury made a number of false representations about its business. Specifically, Intellibed has learned or on information and belief maintains:

a) London Luxury's annual revenues are significantly lower than the high hundreds of millions;
b) London Luxury is not only not the largest single accessory provider to London Luxury, it is not even one of the top three accessory providers;
c) London Luxury does not have a strong relationship with the key decision-makers and buyers at Mattress Firm and was not uniquely or specifically situated to affect Mattress Firm's purchasing decisions;
d) London Luxury does not have licensing rights to market Columbia-branded mattresses; and
e) London Luxury did not have a meeting set with Mattress Firm's CEO for February 20.

Compl. ¶ 32. Intellibed alleges that its affiliation with London Luxury was detrimental to its ability to market the Gel Matrix mattress to Mattress Firm. Compl. ¶ 33.

         In March 2017, sometime after the Houston meeting, a Mattress Firm representative advised Intellibed not to attend a second meeting that was scheduled between London Luxury and Mattress Firm. Compl. ¶ 34. When Intellibed asked why, the Mattress Firm representative told Intellibed that London Luxury had a negative impact on Intellibed's ability to negotiate with Mattress Firm. Compl. ¶ 34.

         Intellibed alleges that London Luxury has done little if anything to market the Gel Matrix mattress since the Houston meeting. Compl. ¶ 35. Intellibed also learned that Mattress Firm entered into a pilot agreement with Purple, a direct competitor of Intellibed, to sell Purple's competing gel mattress. Compl. ¶ 36. The deal “could be worth millions of dollars.” Compl. ¶ 36. Intellibed believes that it lost the ability to secure a comparable deal because of London Luxury's poor relationship with Mattress Firm. Compl. ¶ 36.

         Intellibed alleges that London Luxury knowingly made certain false representations during its initial meeting with Intellibed. Compl. ¶ 37. London Luxury allegedly made these representations to get Intellibed to sign the Agreement. Compl. ¶ 37. If London Luxury had not made those representations, Intellibed would not have signed the Agreement and it would be in a better position to market the Gel Matrix mattress. Compl. ¶ 38. Intellibed also alleges that it “performed its obligations under the Agreement.” Compl. ¶ 51.

         On June 1, 2017, Intellibed filed a complaint against London Luxury. The complaint states four causes of action: (1) fraud/fraud in the inducement, (2) breach of contract (in the alternative), (3) breach of the covenant of good faith and fair dealing (in the alternative), and (4) breach of fiduciary duty. Compl. ¶¶ 40-62. Intellibed asks the Court to rescind the Agreement based on the alleged misrepresentations or, in the alternative, to award damages in excess of $75, 000. Compl. at 15-16. London Luxury has moved to dismiss the complaint.

         III. DISCUSSION

         A. Whether Subject Matter Jurisdiction Exists

         London Luxury contends that the Court lacks subject matter jurisdiction over this case because the $75, 000 amount-in-controversy requirement is not satisfied. See 28 U.S.C. § 1332(a). Specifically, London Luxury argues that Intellibed's damages are too speculative to satisfy the amount-in-controversy requirement and that Intellibed's rescission claim is essentially worthless in determining whether the amount-in-controversy requirement has been satisfied. London Luxury misunderstands the amount-in-controversy requirement.

         When federal subject matter jurisdiction is challenged based on the amount in controversy, the plaintiff must show “that is does not appear to a legal certainty” that he or she cannot recover the jurisdictional amount. Woodmen of World Life Ins. Soc'y v. Manganaro, 342 F.3d 1213, 1216 (10th Cir. 2003) (quoting Watson v. Blankinship, 20 F.3d 383, 386 (10th Cir. 1994)). Put simply, unless it is legally certain that less than $75, 000 is at issue, the jurisdictional challenge fails. See id.

         “The legal certainty standard is very strict.” Id. As such, “it is difficult for a dismissal to be premised on the basis that the requisite jurisdictional amount is not satisfied.” Id. “There is a strong presumption favoring the amount alleged by the plaintiff.” Id. “Generally, dismissal under the legal certainty standard will be warranted only when a contract limits the possible recovery, when the law limits the amount recoverable, or when there is an obvious abuse of federal court jurisdiction.” Id. at 1217.

         In actions seeking declaratory or injunctive relief, “the amount in controversy is measured by the value of the object of the litigation.” Hunt v. Wash. St. Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). Accordingly, “in cases where a plaintiff seeks to rescind a contract, the contract's entire value, without offset, is the amount in controversy.” Rosen v. Chrysler Corp., 205 F.3d 918, 921 (6th Cir. 2000) (emphasis added); see also Pyskaty v. Wide World of Cars, LLC, 856 F.3d 216, 224 (2d Cir. 2017) (holding that plaintiff's “rescission claim supplies a sufficient basis for subject-matter jurisdiction, ” despite the fact that her claimed damages “fell well below” the amount-in-controversy requirement).

         Here, the amount-in-controversy requirement is satisfied. The Court need only look to the fraud claim to reach this conclusion. Intellibed seeks to rescind the Agreement, so the Court looks to the value of Agreement to determine the amount in controversy. The exact value of the Agreement is uncertain because the finder's fee turns on prospective sales. The parties could make millions, or nothing. Regardless, the Court cannot conclude that it is a “legal certainty” that the value of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.