United States District Court, S.D. New York
OPINION AND ORDER
KATHERINE POLK FAILLA UNITED STATES DISTRICT JUDGE.
March 2010, Plaintiff LiveIntent, Inc.
(“LiveIntent”) contracted with Defendants Mark
Naples and his company, WIT Strategy (collectively,
“Defendants”), for Defendants to provide services
to LiveIntent over a six-month period. According to
Defendants, after six weeks of performance, LiveIntent
determined that it could no longer afford Defendants'
services, resulting in a modification to the parties'
agreement by which LiveIntent agreed to pay Defendants cash
for the first month of services and to provide equity shares
in LiveIntent as compensation for “ongoing”
services from Defendants. Defendants allege that they
continued to provide services to LiveIntent, but discovered,
more than six years after the contract modification, that
LiveIntent had never issued them any stock.
advising Naples of its belief that it owed no equity shares,
LiveIntent brought this action, seeking a declaratory
judgment to the same effect. Defendants then brought
counterclaims against LiveIntent for breach of contract,
fraud, and declaratory judgment. Before the Court are
LiveIntent's motions to dismiss Defendants'
counterclaims and for judgment on the pleadings. For the
reasons that follow, the Court grants the motions.
The Initial Contract
his company, WIT Strategy, Naples provides “strategic
public relations services [to] startup companies, ”
including avenues for publicity “that would otherwise
not be available to a startup company.” (Countercl.
¶ 1). LiveIntent is in the business of providing
“[email-]based marketing solutions” and was a
startup company in March 2010. (Id. at ¶¶
2-3). In or around that time, Naples began discussions with
LiveIntent's Chief Executive Officer, Matt Keiser, and
its Chief Operating Officer, Dave Hendricks, regarding WIT
Strategy contracting to provide services for LiveIntent.
(Id. at ¶ 3).
discussions resulted in the parties executing a contract on
March 10, 2010, under which WIT Strategy would coordinate
“an initial public relations campaign” to
“launch” LiveIntent over the course of a
six-month period from March 15, 2010, through September 15,
2010; WIT Strategy would then provide “ongoing”
public relations services “after the anticipated
expiration date of the [c]ontract.” (Countercl.
¶¶ 3-6; see Letter of Agreement). In
exchange, LiveIntent would pay WIT Strategy $2, 500 per month
over the six-month period, in addition to conveying to Naples
equity shares in LiveIntent equivalent to $5, 000 (in
present-day value) each month during the six-month period.
(Id. at ¶ 5). LiveIntent had the option to
terminate the contract after three months' service,
provided that LiveIntent gave WIT Strategy one month's
notice of termination. (Id. at ¶ 7).
Alleged Modification of the Contract
Defendants recall, for the first six weeks of the six-month
period, WIT Strategy performed under the contract, but
LiveIntent then “determined that it was not prepared to
sustain a six-month launch” because it could not afford
WIT Strategy's services. (Countercl. ¶ 8). Due to
LiveIntent's low cash flow, in April 2010, the parties
modified the contract to provide that LiveIntent would pay
WIT Strategy $2, 500 in cash and the remaining two
months' fees ($5, 000) in equity shares in the company,
in addition to the equity interests to which Naples was
previously entitled. (See Id. at ¶¶ 8,
11). Hendricks and Naples agreed further “that
Hendricks would contact Naples in the future … to
provide the services that [WIT Strategy] would typically
provide … following [an] initial launch, i.e., the
‘ongoing basis' services specified in the
[c]ontract.” (Id. at ¶ 9).
thereafter paid WIT Strategy $2, 500 in cash and provided
Naples an Internal Revenue Service Form 1099 in relation to
that payment. (Countercl. ¶ 12). LiveIntent did not,
however, provide any corresponding documentation regarding a
transfer of stock to WIT Strategy or Naples.
Defendants Continue to Provide Services to
receiving no record of any stock transfer, Naples remained in
contact with Keiser and Hendricks, and, indeed, continued to
provide services for LiveIntent. (See Countercl.
¶ 13). Naples contends that he did so, without
additional compensation, because he “believed that he
was a [LiveIntent] shareholder, ” and “that by
performing these services[, ] he would increase the
[company's] value.” (Id. at ¶ 18).
The Counterclaim describes several instances of such services
and provides email correspondences between Naples and
Hendricks suggesting that the parties had an ongoing business
example, on November 22, 2011, Hendricks emailed Naples
requesting “assistance in gaining entrance to an
industry media summit.” (Countercl. ¶ 14; see
also Hendricks Nov. 22, 2011 Email). Nearly four months
later, on March 16, 2012, Hendricks emailed Naples, thanking
him for an introduction to another individual that resulted
in the release of an article in a trade publication that
featured an interview with Hendricks. (Countercl. ¶ 15;
see also Hendricks Mar. 16, 2012 Email; Naples Mar.
20, 2012 Email). And on March 19, 2012, Hendricks emailed
Naples commending WIT Strategy's efforts in organizing a
panel presentation for LiveIntent. (Countercl. ¶ 16;
see also Hendricks Mar. 19, 2012 Email). The
Counterclaim also alleges that Keiser made at least one
statement suggesting that Naples held shares in LiveIntent:
In 2011, after Keiser hired Naples's nephew as an intern,
Keiser complimented the intern's work, telling Naples,
“as a shareholder, [Naples] should be proud.”
(Countercl. ¶ 19).
Naples Discovers That He Holds No Equity Interest in
not until September 21, 2016, that Naples requested a copy of
a stock certificate from LiveIntent's CEO Keiser.
(Countercl. ¶ 21). Naples explained that he was required
to disclose certain corporate interests in light of his
then-current work for a client that also did business with
the United States government. (See id.; Naples Sept.
21, 2016 Email). Rather than responding to Naples, Keiser
forwarded the email to Hendricks, who responded a day later,
stating, “[a]ccording to [LiveIntent's] records,
[Naples was] not ‘granted' any options outright,
and none were ever exercised or purchased.” (Hendricks
Sept. 22, 2016 Email; see Countercl. ¶¶
Hendricks stated that any equity interest Naples had would
have been subject to “a Company Advisor plan with a
1-year cliff and 2-year vesting (if [Naples was] still
offering services to the company), ” but that
LiveIntent and WIT Strategy had “terminated [their]
advisor relationship before the options hit their 1-year
vesting cliff, so they were automatically canceled.”
(Hendricks Sept. 22, 2016 Email). Naples contends that he had
no knowledge of any such Company Advisor plan and was not
provided a copy of it even after requesting one. (Countercl.
¶ 24). In October 2016, Naples retrieved a copy of the
purported contract between WIT Strategy and LiveIntent from
his files and forwarded the scanned document to Hendricks and
Gary Deutsch, LiveIntent's Chief Financial Officer.
(See Id. at ¶¶ 23, 25; Letter of
Agreement). But Deutsch repeated what Hendricks had
conveyed, “insist[ing] that the terms of [Naples's]
service were governed by an employee compensation agreement
that Naples, an independent contractor, had never
seen.” (Countercl. ¶ 26).
filed its Complaint on December 16, 2016. (Dkt. #1). It
contained a single cause of action, requesting declaratory
judgment that (i) “[t]he statute of limitations has
expired on any claim that WIT Strategy or [Naples] could
assert for compensation for services provided to
LiveIntent”; (ii) “[t]he purported ‘letter
agreement' recently supplied by Mr. Naples to support his
claim is not an authentic, genuine, and enforceable
contract”; and (iii) “LiveIntent owes no equity
or other compensation to WIT Strategy or [Naples].”
(Compl. ¶ 25).
receiving an extension of time to answer or otherwise respond
to the complaint, Defendants answered the Complaint on
January 27, 2017, generally denying LiveIntent's
allegations. (See Dkt. #9, 11). On February 16,
2017, Defendants amended their Answer to include
counterclaims against LiveIntent for breach of contract,
fraud, and declaratory judgment. (Dkt. #14). On April 28,
2017, Defendants amended their Answer once more, maintaining
their counterclaims against LiveIntent. (See Dkt.
26, 2017, LiveIntent filed the instant motion to dismiss
Defendants' counterclaims under Federal Rule of Civil
Procedure 12(b)(6) and for judgment on the pleadings under
Federal Rule of Civil Procedure 12(c). (Dkt. #27-28). On June
28, 2017, Defendants opposed the motion (Dkt. ...