Wilferd v. Digital Equity, LLC et al
OPINION AND ORDER: Defendants' 26 motion to dismiss is GRANTED IN PART and DENIED IN PART. Count VIII is DISMISSED in its entirety. Count III is DISMISSED only against Digital Equity. Wilferd may proceed on Counts I, II, III (solely against D hanani), IV, V, VI, and VII. Defendants shall file their Answers to the remaining claims in the Amended Complaint within 14 days after entry of this Order. The parties shall file their initial disclosures and a revised joint proposed preliminary report within 14 days after Defendants file their Answers. The discovery period shall commence 30 days after Defendants file their Answers. Signed by Judge Steven D. Grimberg on 11/20/2020. (jed) Modified on 11/20/2020 to edit text (jed).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 1 of 35
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
Civil Action No.
DIGITAL EQUITY, LLC and
OPINION AND ORDER
This matter is before the Court on a motion to dismiss filed by Defendants
Digital Equity, LLC (Digital Equity) and Khuram Dhanani [ECF 26]. For the
reasons stated below, and with the benefit of oral argument, Defendants’ motion
is GRANTED IN PART and DENIED IN PART.
The following facts are treated as true for purposes of this motion.1
On September 19, 1994, Plaintiff Jacklyn Wilferd (Wilferd) purchased the online
Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1274 (11th Cir. 1999) (“At the motion
to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable
inferences therefrom are construed in the light most favorable to the
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 2 of 35
domain wines.com.2 Beginning in 2012, Wilferd resumed active management of the
domain, seeking to develop it as a commercial product.3 Wilferd created a website
containing articles, videos, discussion boards, and other resources.4 Wilferd also
developed linking relationships with the website and an e-commerce wine store
to increase the value of the domain.5 In 2018, Wilferd was introduced to Dhanani
as a potential business partner.6 Dhanani claimed to have substantial capital he
would contribute to the business, as well as experience in developing domains as
commercial products.7 Specifically, Dhanani represented that he:
(1) would invest $200,000–$300,000 of his own money
into further developing wines.com, (2) had a “team” who
could help further develop the website to a $3–5 million
valuation “fast,” and (3) in the arrangement, they would
split all profits, including from the sale of the domain and
In furtherance of these discussions, Dhanani sent Wilferd two contracts
(both drafted by Dhanani) to be entered between Wilferd and Digital Equity, a
ECF 17, ¶2.
Id. ¶ 12.
Id. ¶ 12.
Id. ¶ 17.
Id. ¶ 18.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 3 of 35
Georgia limited liability company with Dhanani as the sole member:
(1) an agreement
(Domain Agreement), and (2) a profit-sharing agreement by which Wilferd would
receive 50% of the net profits generated by Digital Equity from various sales
(Profit Agreement or PS Agreement).9 Both the Domain and Profit Agreements
contained (1) limitations and warranties clauses and (2) merger clauses.10
Wilferd alleges that, to induce her to sign the Domain and Profit
Agreements, Dhanani promised that:
(1) prospective buyers would not work with him unless
the domain was transferred to Digital Equity, (2) he
already had an interested company willing to pay
$200,000 for advertising on the website, [ ] (3) Wilferd
would receive $100,000 within thirty days, in addition to
further payments for product sales, which would only
increase as the Christmas season approached. . . .
(4) Defendants would not sell the website and domain
for less than $3–4 million, (5) Wilferd would have the
right to approve any sale, and (6) prior to any sale,
Defendants would actively operate the website as a “cash
cow,” producing between $5,000 and $10,000 per month
Id. ¶ 19.
ECF 17-1, at 2, 4.
ECF 17, ¶ 23.
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Wilferd and Digital Equity executed the Domain and Profit Agreements on July
After executing these agreements, Wilferd realized that “virtually
everything about Dhanani was and is a fraud.”13 Wilferd contends Dhanani lied
about his business acumen, did not actually have advertising ready for the
website, had no personal money to invest, nor an intent to operate or develop the
website.14 Between July 2018 and April 2019, Dhanani allegedly made no effort to
fund, operate, or update the website.15 Wilferd repeatedly offered to return the
$50,000 she received from Digital Equity in exchange for the domain, but Dhanani
Beginning in April 2019, blog articles attributed to Wilferd (that she did not
author) began appearing on the website.17 Some of these blog articles concerned
salacious and pornographic topics.18 Wilferd contends that Dhanani and Digital
Id. ¶ 24.
Id. ¶ 25.
Id. ¶ 29.
Id. ¶ 31.
Id. ¶ 32.
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Equity were responsible for these articles, which continued to appear on the
website until July 2019.19 In October 2019, Wilferd learned that Dhanani had
covertly sold wines.com for $200,000 on August 27, 2019.20 Dhanani acknowledged
the sale, but refused to provide any details to Wilferd, asserting that he had no
obligation to pay any of the profits to Wilferd.21 Wilferd claims she has never
received any profits under the Profit Agreement.22 Additionally, neither Dhanani
nor Digital Equity have provided Wilferd with an accounting of Digital Equity,
which she has repeatedly requested.23
Wilferd initiated this action on May 6, 2020.24 On June 11, 2020, Wilferd filed
her Amended Complaint, asserting eight causes of action: accounting (Count I,
against both Defendants); breach of contract (Count II, against Digital Equity;
Count III, against both Defendants); breach of fiduciary duty (Count IV, against
both Defendants); fraud (Count V, against Dhanani); financial abuse of an elder
(Count VI, against both Defendants); defamation (Count VII, against both
Id. ¶¶ 33, 36.
Id. ¶ 37.
Id. ¶ 38.
Id. ¶ 39.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 6 of 35
Defendants); and declaratory judgment (Count VIII, against both Defendants).25
On June 25, 2020, Defendants filed the instant motion to dismiss.26 Wilferd filed
her response in opposition to Defendants’ motion on July 9, 2020.27 Defendants
filed their reply on July 23.28
Federal Rule of Civil Procedure 8(a)(2) requires a pleading to contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). Rule 12(b)(6) provides for the dismissal of a
complaint that fails to state a claim upon which relief can be granted. Fed. R. Civ.
P 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007)). A claim is facially plausible if “the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).
See generally ECF 17.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 7 of 35
This pleading standard “does not require detailed factual allegations.” Id.
(citing Twombly, 550 U.S. at 555). However, it requires “more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Id. (citing Twombly, 550 U.S. at
555). A complaint providing “label and conclusions,” “a formulaic recitation of the
elements of a cause of action,” or “naked assertions devoid of further factual
enhancement” will not do. Id. (internal quotation marks omitted) (quoting
Twombly, 550 U.S. at 555). Although the “plausibility standard is not akin to a
probability requirement at the pleading stage,” it demands “enough fact to raise a
reasonable expectation that discovery will reveal evidence of the claim.”
Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010)
(citing Twombly, 550 U.S. at 556).
Choice of Law
“In diversity cases, the choice-of-law rules of the forum state determine
what law governs.” Interface Kanner, LLC v. JPMorgan Chase Bank, N.A., 704 F.3d
927, 932 (11th Cir. 2013). Under Georgia law, for claims arising under contract,
“contractual choice-of-law provisions will be enforced unless application of the
chosen law would be contrary to the public policy or prejudicial to the interests of
this state.” Nat’l Freight, Inc. v. Consol. Container Co., LP, 166 F. Supp. 3d 1320, 1326
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 8 of 35
(N.D. Ga. 2015) (quoting CS–Lakeview at Gwinnett, Inc. v. Simon Prop. Grp., Inc.,
283 Ga. 426, 428 (2008)). Paragraph 6 of the Domain Agreement and Paragraph 10
of the Profit Agreement contain choice of law provisions selecting Georgia law.
Neither party has suggested the application of Georgia law to the contract claims
violates public policy or is prejudicial to the state’s interests. Accordingly, the
choice of law provisions are valid and Georgia law applies to Wilferd’s contract
Wilferd’s tort claims present a separate issue. Contractual choice-of-law
clauses generally do not apply to tort claims. Ins. House, Inc. v. Ins. Data Processing,
Inc., No. 1:07-cv-0286-BBM, 2008 WL 11333547, at *6 (N.D. Ga. Nov. 19, 2008)
(citing Manuel v. Convergys Corp., 430 F.3d 1132, 1139–40 (11th Cir. 2005);
Rayle Tech, Inc. v. DEKALB Swine Breeders, Inc., 133 F.3d 1405, 1409 (11th Cir. 1998)).
See also EarthCam, Inc. v. OxBlue Corp., 49 F. Supp. 3d 1210, 1234 (N.D. Ga. 2014)
(“A choice of law provision that relates only to the agreement will not encompass
related claims.”). The Court instead must apply Georgia’s traditional choice of law
rules for tort claims. Georgia follows the doctrine of lex loci delicti, pursuant to
which “a tort action is governed by the substantive law of the state where the tort
was committed.” Dowis v. Mud Slingers, Inc., 279 Ga. 808, 809 (2005). “The place
where the tort was committed . . . is the place where the injury sustained was
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 9 of 35
suffered rather than the place where the act was committed.” Bullard v. MRA
Holding, LLC, 292 Ga. 748, 750–51 (2013) (citing Risdon Enter., Inc. v. Colemill Enter.,
Inc., 172 Ga. App. 902, 903 (1984)). But an exception exists when the law of the
foreign state is the common law; “application of another jurisdiction’s laws is
limited to statutes and decisions construing those statutes. When no statute is
involved, Georgia courts apply the common law as developed in Georgia rather
than foreign case law.” In re Tri-State Crematory Litig., 215 F.R.D. 660, 678 (N.D. Ga.
2003) (citing Frank Briscoe Co. v. Ga. Sprinkler Co., 713 F.2d 1500, 1503 (11th Cir.
According to the Amended Complaint, Wilferd is a California resident.
As such, Wilferd likely suffered her alleged injuries in that state. This points to the
application of California law. However, with the exception of Count VI, all of
Wilferd’s tort claims are premised on the common law. Count VI is asserted under
the California statute prohibiting the financial abuse of an elder; Cal. Welf. & Inst.
Code § 15610.30. Therefore, pursuant to Georgia’s choice of law rules, the Court
applies Georgia law to each Count in the Amended Complaint except Count IV,
which is governed by California law.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 10 of 35
Defendants contend each Count in the Amended Complaint must be
dismissed as a matter of law. The Court addresses each claim in turn.
Breach of Contract and Covenant of Good Faith and Fair
Dealing (Counts II and III)
Wilferd asserts two separate breach of contract claims: one against Digital
Equity for breach of the Profit Agreement (Count II), and the other against both
Defendants for breach of an alleged oral agreement (Count III). In Georgia, the
elements of a breach of contract claim are “(1) breach and the (2) resultant damages
(3) to the party who has the right to complain about the contract being broken.”
UWork.com, Inc. v. Paragon Techs., Inc., 321 Ga. App. 584, 590 (2013) (citing Norton
v. Budget Rent A Car System, 307 Ga. App. 501, 502 (2010)). Defendants argue both
counts must be dismissed as a matter of law.29
Breach of the Profit Agreement (Count II)
Wilferd alleges Digital Equity breached the Profit Agreement by covertly
selling the domain and website for wines.com and failing to pay her fifty percent of
Wilferd also alleges Defendants’ actions raise an inference of bad faith.
Although “every contract implies a covenant of good faith and fair dealing in
the contract’s performance and enforcement,” the covenant cannot provide an
independent basis for liability. Layer v. Clipper Petrol., Inc., 319 Ga. App. 410,
419 (2012). Therefore, Wilferd’s bad faith arguments are part and parcel of her
breach of contract claims.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 11 of 35
the profits. Defendants contend this claim is not supported by the plain language
of the Profit Agreement. In relevant part, the Profit Agreement states:
Starting on the Date that this PS Agreement is signed,
Company agrees to share with Individual 50%
(fifty percent) of net profits after expenses that are
generated by Company directly from product sales,
advertising sales, accessory sales, affiliate sales, ticket
sales, tour sales and commission sales.30
Defendants argue the resale of the Domain Name is not expressly listed in this
Specifically, Defendants contend that a domain name and website—such as
wines.com—is not a “product.”
In Georgia, the construction of a contract “is a matter of law for the court,
unless an ambiguity remains in the contract after applying the rules of
construction.” Dep’t of Transp. v. Meadow Trace, Inc., 274 Ga. App. 267, 269 (2005)
(citing Golden Pantry Food Stores v. Lay Bros., 266 Ga. App. 645, 650 (2004)).
Contract construction requires three steps:
First, the trial court must decide whether the language is
clear and unambiguous. If it is, the court simply enforces
the contract according to its clear terms; the contract
alone is looked to for its meaning. Next, if the contract is
ambiguous in some respect, the court must apply the
rules of contract construction to resolve the ambiguity.
ECF 17-1, at 4.
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Finally, if the ambiguity remains after applying the rules
of construction, the issue of what the ambiguous
language means and what the parties intended must be
resolved by a jury.
City of Baldwin v. Woodard & Curran, Inc., 293 Ga. 19, 30 (2013). A contract term is
ambiguous when it is capable of “more than one reasonable construction.” Estate of
Pitts v. City of Atlanta, 323 Ga. App. 70, 76 (2013). See also Caswell v. Anderson,
241 Ga. App. 703, 705 (2000) (“Ambiguity exists when the language may be fairly
understood in more than one way; language is unambiguous if it is capable of only
one reasonable interpretation.”). “The cardinal rule of contractual construction is
to ascertain the intent of the parties.” Knott v. Knott, 277 Ga. 380, 381 (2003) (citing
O.C.G.A. § 13-2-3).
Beginning with its plain language, the Profit Agreement does not expressly
provide that Wilferd is entitled to profits from the sale of the domain name and
website for wines.com. But it does state that Wilferd is entitled to profits from
“product sales.” This term is not defined in the agreement. Under Georgia law, an
undefined contract term “must be afforded its literal meaning,” as “plain[,]
ordinary words [are] given their usual significance.” Unified Gov’t of Athens-Clarke
Cnty. v. McCrary, 280 Ga. 901, 903 (2006). To aid in this inquiry, Georgia courts
look to the term’s dictionary definition. Capital Color Printing, Inc. v. Ahern, 291 Ga.
App. 101, 107 (2008). Here, the dictionary definition does not elicit a clear answer;
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“product” is defined in relevant part as “[s]omething that is distributed
commercially for use or consumption.” Product, Black’s Law Dictionary (11th ed.
2019). Wilferd and Digital Equity each urge the Court to adopt different
interpretations as to what “product sales” means in the agreement, both of which
are reasonable under the circumstances.31 Thus, the Court finds the Profit
Agreement is facially ambiguous on this issue.
The Court must proceed to step two and apply Georgia’s canons of contract
construction to resolve the ambiguity. See Matthew Focht Enters., Inc. v. Lepore, No.
1:12-CV-4479-WSD, 2014 WL 3557698, at *3 (N.D. Ga. July 18, 2014) (“The rules of
contract construction in Georgia are dictated by statute.”). O.C.G.A. § 13-2-2
identifies nine specific canons of construction. No one canon is absolute or
determinative; “[e]ach may be overcome by the strength of differing principles
that point in other directions.” In re Estate of McKitrick, 326 Ga. App. 702, 706 (2014).
The Court finds that application of the statutory canons of construction do
not resolve the ambiguity at this preliminary stage. For example, one canon is that
The parties also point to conflicting authorities as to whether a domain name
and website are considered “products.” Compare Kremen v. Cohen, 337 F.3d
1024, 1030 (9th Cir. 2003) (finding that plaintiff “had an intangible property
right in his domain name”), with Gridiron.com, Inc. v. Nat’l Football League
Player’s Ass’n, Inc., 106 F. Supp. 2d 1309, 1314 (S.D. Fla. 2000) (“[W]ebsites, in
and of themselves, are products.”).
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“[w]ords generally bear their usual and common signification.” O.C.G.A. § 13-22(2). As stated above, the dictionary definition of “product” does not clarify the
disputed term. Another canon is that “words are given meaning by their context.”
Estate of Pitts, 323 Ga. App. 82. This is buttressed by a canon stating that a
“construction which will uphold a contract in whole and in every part is to be
preferred, and the whole contract should be looked to in arriving at the
construction of any part.” O.C.G.A. § 13-2-2(4). Ultimately, “[i]f the construction is
doubtful, that which goes most strongly against the party executing the
instrument . . . is generally to be preferred.” O.C.G.A. § 13-2-2(5). See also Stern’s
Gallery of Gifts, Inc. v. Corp. Prop. Inv’rs, Inc., 176 Ga. App. 586, 593 (1985) (“As a
general rule the provisions of a contract will be construed against the draftsman.”).
At first glance, the context surrounding “product sales” seems to weigh in
Digital Equity’s favor. The term is included amongst a list of specific items and
services for which Wilferd would be entitled to receive remuneration: “advertising
sales, accessory sales, affiliate sales, ticket sales, tour sales and commission
sales.”32 The nature of these terms seems to indicate that the parties intended
Wilferd to receive revenue from items and services sold on the website, not the
ECF 17-1, at 4 ¶ 1.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 15 of 35
sale of the entire website itself. But at oral argument, Digital Equity could not
identify what “products” were sold, or intended to be sold, on the website. Digital
Equity instead defined “product sales” to mean “tour sales,” “ticket sales,” and
“advertising sales.” This interpretation cannot be accepted, as it would ostensibly
render the term “product sales” superfluous to the remainder of the sentence.
VATACS Grp., Inc. v. HomeSide Lending, Inc., 276 Ga. App. 386, 389 (2005)
(“[A] contract must be interpreted to give the greatest effect possible to all
provisions rather than to leave any part of the contract unreasonable or having no
effect. And, one of the most fundamental principles of construction is that a court
should, if possible, construe a contract so as not to render any of its provisions
In sum, the Court is unable to resolve this ambiguity at the motion to
dismiss stage because it must resort to extrinsic evidence to ascertain the intent of
the parties. O.C.G.A. § 13-2-2(1). See also Thomas v. Am. Glob. Ins. Co., 229 Ga. App.
107, 109 (1997) (“[A]fter the application of pertinent rules of contract construction
to the contract, extrinsic evidence becomes admissible to explain any remaining
ambiguity.”); Martin v. S. Atl. Inv. Corp., 160 Ga. App. 852, 854 (1982) (“It is only
after applying the rules of construction and an ambiguity remains is extrinsic
evidence admissible to explain the ambiguity.”). The parties will be permitted an
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 16 of 35
opportunity to take discovery and present evidence on this issue, which the Court
may resolve as a matter of law on a motion for summary judgment, if appropriate.
Breach of Oral Agreement (Count III)
Wilferd alleges that she entered into an oral agreement with Defendants to
jointly develop wines.com for a subsequent commercial sale. Defendants,
conversely, contend that any alleged oral agreement is barred by merger clauses
in the Domain and Purchase Agreements.
Oral contracts are enforceable under Georgia law. O.C.G.A. § 13-1-5(b)
(“Simple contracts may either be in writing or rest only in words as remembered
by witnesses.”). This is true even if the parties contemplated the execution of a
subsequent written agreement. Turner Broad. Sys., Inc. v. McDavid, 303 Ga. App.
593, 601 (2010). However, when the parties execute a “written contract[ ]
containing a merger clause . . . all prior negotiations, understandings, and
agreements on the same subject are merged into the final contract, and are
accordingly extinguished.” First Data POS, Inc. v. Willis, 273 Ga. 792, 795 (2001).
See also Atlanta Integrity Mortg., Inc. v. Ben Hill United Methodist Church, 286 Ga.
App. 795, 797 (2007) (“Under the merger rule, an existing contract is superseded
and discharged whenever the parties subsequently enter upon a valid and
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 17 of 35
inconsistent agreement completely covering the subject-matter embraced by the
Wilferd alleges Dhanani and Digital Equity made certain promises to her
regarding their future intent to jointly develop wines.com for commercial sale.
Wilferd points to specific statements from Dhanani and Digital Equity she
contends encompass the oral joint venture agreement. Wilferd and Digital Equity
subsequently executed the Domain and Profit Agreements; neither contained the
alleged oral promises pointed to by Wilferd. Wilferd has subsequently sought the
rescission of the Domain Agreement, but affirmed and sought damages for the
alleged breach of the Profit Agreement. The Profit Agreement’s merger clause
This [Profit] Agreement constitutes and contains the
entire agreement and understanding between the Parties
hereto with respect to the subject matter herein and
supersedes any prior or contemporaneous oral or written
agreements, representations, discussions, proposals,
understandings, and the like respecting the subject
matter hereof. This [Profit] Agreement cannot be
changed, modified, amended, or supplemented in any
way, shape or form whatsoever, without exception,
including in writing or orally.33
ECF 17-1, at 4 ¶ 9.
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The Profit Agreement listed Digital Equity as a party, but not Dhanani
Wilferd contends the merger clause is inapplicable at this stage because
there is a question of fact as to whether it covers the same subject matter as the
alleged oral agreement. Under Georgia law, “for the merger rule to apply [ ] the
parties of the merging contracts must be the same and the terms of those contracts
must completely cover the same subject matter and be inconsistent.”
Atlanta Integrity Mortg., 286 Ga. App. at 797. See also Nat’l ID Recovery, Inc. v.
LifeLock, Inc., No. 1:09-cv-0489-TCB, 2009 WL 10699688, at *3 (N.D. Ga. Oct. 7, 2009)
(citing First Data, 273 Ga. at 792) (“[M]erger clauses only extinguish prior
agreements that relate to the same subject matter.”). In granting a motion to
dismiss, a court in this district has found that, as a matter of law, “[i]t is improper
to be overly restrictive in determining whether a previous agreement relates to the
same subject matter as a subsequent agreement containing a merger clause.”
Nat’l ID Recovery, 2009 WL 10699688, at *3 (citing Int’l Telecomms. Exch. Corp. v. MCI
Telecomms. Corp., 892 F. Supp. 1520, 1538 (N.D. Ga. 1995)). According to that court:
[T]he scope of an agreement’s subject matter, at least
with regard to the application of a merger clause, is
typically interpreted to be broad enough to encompass
any prior arrangement between the parties involving the
provision of the same type of goods or services.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 19 of 35
Nat’l ID Recovery, 2009 WL 10699688, at *3 (finding two contracts covered the same
subjects as a matter of law).
Comparing Wilferd’s allegations regarding the oral contract with the terms
of the Profit Agreement, the Court finds the two cover the same subject matter.
Both concern Wilferd’s and Digital Equity’s relationship and representations to
each other to develop wines.com for commercial use and monetary gain.
Merely because the Profit Agreement does not contain the list of prior promises
allegedly made to Wilferd does not create a sufficient factual distinction. Conway v.
Romarion, 252 Ga. App. 528, 532 (2001) (“A merger clause such as the one in the
present case prevents a party from claiming reliance upon a representation not
contained in the contract.”) (emphasis in original). Since there is a substantial
overlap in subject matter, the merger clause in the Profit Agreement bars any
alleged oral contract between Wilferd and Digital Equity.
Dhanani, on the other hand, was not a party to the Profit Agreement. The
merger clause in the Profit Agreement expressly states that it “constitutes and
contains the entire agreement and understanding between the Parties hereto.”34
It also states that it is “not binding upon [Digital Equity’s] respective
ECF 17-1, at 4 ¶ 9 (emphasis added).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 20 of 35
representatives.”35 According to Wilferd, the plain language of the Profit
Agreement thus prevents Dhanani from availing himself of the merger clause.
Defendants disagree and contend Dhanani can invoke the merger clause because
he acted as Digital Equity’s agent. They point to case law providing that “an agent
of a contracting party can rely upon a merger clause contained in the contract to
preclude claims against the agent for his or her alleged representations made
before formation of the contract.” Greenwald v. Odom, 314 Ga. App. 46, 57 n.5 (2012)
(citing Tampa Bay Fin. v. Nordeen, 272 Ga. App. 529, 534 (2005)). See also Curtis Inv.
Co., LLC v. Bayerische Hypo-und Vereinsbank, AG, 341 F. App’x 487, 493 (11th Cir.
2009) (holding a “merger clause does not apply just to the parties to the contract”);
Eco Sols., LLC v. Verde Biofuels, Inc., No. 4:09-cv-0125-HLM, 2011 WL 13135279, at
*17 (N.D. Ga. Feb. 1, 2011) (holding non-parties may invoke a merger clause as
agents of the party to contract and noting “that the merger clause, by its plain
terms, does not preclude statements of non-parties to the Agreements”).
Defendants’ authorities are, however, inapplicable here. The plain language
of the Profit Agreement explicitly states that it only covers Wilferd and Digital
Equity and does not cover Digital Equity’s representatives or agents. Put another
Id. at 4 ¶ 8 (emphasis added).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 21 of 35
way, Dhanani is expressly excluded from availing himself of any provisions in the
Profit Agreement, including the merger clause. As previously stated, the Court
must enforce the unambiguous terms of the agreement as written. E.g., Office
Depot, Inc. v. Dist. at Howell Mill, LLC, 309 Ga. App. 525, 529 (2011) (“When the
language of the contract is clear and unambiguous, we enforce those terms as
written, and we will not look to matters outside of the contract.”). Therefore, Count
III is dismissed against Digital Equity, but may proceed against Dhanani
Fraudulent Inducement (Count V)
Wilferd alleges Dhanani made fraudulent promises and statements to
induce her to sign the Domain Agreement. In Georgia, a party asserting a
fraudulent inducement claim has two choices: “(1) affirm the contract and sue for
damages from the fraud or breach; or (2) promptly rescind the contract and sue in
tort for fraud.” Legacy Acad., Inc. v. Mamilove, LLC, 297 Ga. 15, 17 (2015). Wilferd
seeks to rescind the Domain Agreement. Defendants argue Wilferd cannot do so
as a matter of law based on the type of fraud alleged. Defendants point to the
Georgia Supreme Court’s decision in Novare Group, Inc. v. Sarif, which held:
It is well-settled law in Georgia that a party who has the
capacity and opportunity to read a written contract
cannot afterwards set up fraud in the procurement of his
signature to the instrument based on oral representations
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 22 of 35
that differ from the terms of the contract. Statements that
directly contradict the terms of the agreement or offer
future promises simply cannot form the basis of a fraud
claim for the purpose of cancelling or rescinding a
contract. In fact, the only type of fraud that can relieve a
party of his obligation to read a written contract and be
bound by its terms is a fraud that prevents the party from
reading the contract.
290 Ga. 186, 188–89 (2011) (citations omitted). See also Legacy Acad., 297 Ga. at 18
(affirming Novare and holding that “[b]ecause the pre-contractual earnings claim
upon which the [plaintiffs] allege they relied expressly contradicts the disclaimer
and acknowledgment provisions of the Agreement, their reliance on such
representations was unreasonable as a matter of law”).
As stated above, Dhanani is precluded from utilizing the merger or
disclaimer clauses in the agreements. Defendants’ reliance on Novare and its
progeny is therefore misplaced. Wilferd need not rescind or otherwise untangle
the contractual relationship between herself and Digital Equity to pursue a fraud
claim against Dhanani individually because Dhanani is expressly not a party to
Defendants’ next argument—that Wilferd’s fraud claim cannot be premised
on “mere puffery or promises of anticipated future performance”—is likewise
unpersuasive. As a general rule, “actionable fraud cannot be predicated upon
promises to perform some act in the future” or “a mere failure to perform promises
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 23 of 35
made.” Buckley v. Turner Heritage Homes, Inc., 248 Ga. App. 793, 795 (2001). But an
exception exists when “a promise as to future events is made with a present intent
not to perform or where the promisor knows that the future event will not take
place.” Gibson Tech. Servs, Inc. v. JPay, Inc., 327 Ga. App. 82, 84 (2014)
(citing BTL COM, Co. v. Vachon, 278 Ga. App. 256, 258 (2006)). What is more, if the
statement “was not a future promise but a present misrepresentation of fact, it is
sufficient to support a claim for fraud.” BTL COM, 278 Ga. App. at 258
(citing Baker v. Campbell, 255 Ga. App. 523, 527 (2002)).
Here, Wilferd points to a litany of allegedly false statements made by
Dhanani that concern both (1) present misrepresentations of fact36 and
(2) promises to perform certain acts in the future.37 Wilferd alleges Dhanani’s
representations “were intentionally and knowingly false at the time they were
E.g., ECF 17, ¶ 23 (“Dhanani personally claimed that (1) prospective buyers
would not work with him unless the domain was transferred to Digital Equity,
[and] (2) he already had an interested company willing to pay $200,000 for
advertising on the website.”).
Id. (“Dhanani personally claimed that . . . (4) Defendants would not sell the
website and domain for less than $3–4 million, (5) Wilferd would have the
right to approve any sale, and (6) prior to any sale, Defendants would actively
operate the website as a ‘cash cow,’ producing between $5,000 and $10,000 per
month in profits.”).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 24 of 35
made . . . with the intent that Wilferd would rely upon them.”38 At this stage,
Wilferd’s allegations state a facially plausible claim that Dhanani lied about
existing facts or knowingly made false statements of fact with no present intent to
perform. This is enough to survive a motion to dismiss.
Breach of Fiduciary Duty (Count IV)
Wilferd alleges Defendants breached various fiduciary duties owed to her.
To state a claim for the breach of a fiduciary duty, Wilferd must allege “(1) the
existence of a fiduciary duty; (2) breach of that duty; and (3) damage[s]
proximately caused by the breach.” Griffin v. Fowler, 260 Ga. App. 443, 445 (2003)
(citing Conner v. Hart, 252 Ga. App. 92, 94 (2001)). A fiduciary duty exists “where
one party is so situated as to exercise a controlling influence over the will, conduct,
and interest of another or where, from a similar relationship of mutual confidence,
the law requires the utmost good faith, such as the relationship between partners,
principal and agent, etc.” Mail & Media, Inc. v. Rotenberry, 213 Ga. App. 826, 828
(1994) (citing O.C.G.A. § 23-2-58). A fiduciary duty “may be created by law,
contract, or the facts of a particular case.” Douglas v. Bigley, 278 Ga. App. 117, 120
(2006) (citing Bienert v. Dickerson, 276 Ga. App. 621, 624 (2005)). But the “party
Id. ¶ 70.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 25 of 35
asserting the existence of a confidential relationship has the burden of establishing
its existence.” Canales v. Wilson Southland Ins. Agency, 261 Ga. App. 529, 531 (2003).
Defendants argue Wilferd’s breach of fiduciary duty claim fails because she
cannot show a duty or subsequent breach. Defendants characterize their
relationship with Wilferd as an “ordinary arms-length transaction” that should
not be converted into a confidential relationship. In the Amended Complaint,
Wilferd alleges Defendants owed her a fiduciary duty because she (1) was a profitsharing partner in Digital Equity under the Profit Agreement, and (2) a joint
venture partner with both Defendants based on the alleged oral agreement.39
Wilferd points to the representations allegedly made to her and posits she engaged
with Defendants to further joint business objectives, not individual gains. For
example, Wilferd alleges she “contributed the domain and website . . . as well as
new articles, new content, shared knowledge, and overall expertise” to
Defendants, who contributed their time and expertise in exchange for the profitsharing relationship.40 Wilferd alleges she “placed a near-critical level trust, faith
ECF 17, at 27.
Id. ¶ 63 (punctuation omitted).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 26 of 35
and confidence in [Dhanani’s] judgment, business acumen and advice in
performing the principal executive office of Digital Equity.”41
Treating Wilferd’s allegations as true, the Court finds she has stated a
facially plausible claim. Defendants are correct that an ordinary business
transaction generally does not give rise to a fiduciary duty. Mail & Media, 213 Ga.
App. at 828 (“In the majority of business dealings, opposite parties have trust and
confidence in each other’s integrity, but there is no confidential relationship by this
alone.”). See also Optimum Techs., Inc. v. Henkel Consumer Adhesives, Inc., 496 F.3d
1231, 1249 (11th Cir. 2007) (“A confidential relationship does not arise, however,
where the business transaction is merely an arrangement in which each party is
attempting to further its own separate business objectives, rather than entering
into some sort of joint venture.”). But this does not entirely foreclose the potential
existence of such a duty. Gilmore v. Bell, 223 Ga. App. 513, 514 (1996) (“[A]ll the
law requires is a showing of a relationship which justifies the reposing of
confidence by one party in another.”). See also Bienert, 276 Ga. App. at 624
(“When a fiduciary or confidential relationship is not created by law or contract,
we must examine the facts of a particular case to determine if such a relationship
Id. ¶ 62.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 27 of 35
exists.”). It is also not determinative at this stage that the parties referred to
themselves as “independent contractors” in the Profit Agreement.42 See New York
Life Ins. Co. v. Grant, No. 5:14-cv-101 (MTT), 2016 WL 1241186, at *10 (M.D. Ga.
Mar. 28, 2016) (citing Automated Sols. Enters., Inc. v. Clearview Software, Inc., 255 Ga.
App. 884, 888 (2002)); Gilmore, 223 Ga. App. at 514 (“While an independent
contractor relationship does not necessarily give rise to a fiduciary relationship, it
does not preclude a fiduciary relationship either.”). Georgia courts are clear that
the existence of a duty is “a factual matter for the jury to resolve.” Bienert, 276 Ga.
App. at 624. See also Gilmore, 223 Ga. App. at 514 (“The existence of a confidential
relationship depends heavily upon the circumstances of each case.”); Mail & Media,
213 Ga. App. at 828 (“The law recognizes that a confidential relationship may exist
between businessmen, depending on the facts.”). As such, Defendants’ arguments
regarding Wilferd’s failure to establish a duty—as well as a breach of that duty—
is better suited for resolution at a later stage in this proceeding.
Defamation (Count VII)
Wilferd alleges Defendants defamed her by falsely attributing offensive
blog articles posted on wines.com to her without consent. Wilferd alleges these
ECF 17-1, at 4 ¶ 6.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 28 of 35
posts were “sexually salacious, pornographic, and in some instances, degrading,
and grammatically incorrect.”43 The elements for defamation under Georgia law
are: “(1) a false and defamatory statement concerning the plaintiff; (2) an
unprivileged communication to a third party; (3) fault by the defendant
amounting at least to negligence; and (4) special harm or the actionability of the
statement irrespective of special harm.” Eason v. Marine Terminals Corp., 309 Ga.
App. 669, 672 (2011) (citing Bollea v. World Championship Wrestling, 271 Ga. App.
555, 557 (2005)).
Defendants argue Wilferd’s defamation claim is barred by the
Communications Decency Act (CDA). Under the CDA, “[n]o provider or user of
an interactive computer service shall be treated as the publisher or speaker of any
information provided by another information content provider.” Whitney Info.
Network, Inc. v. Xcentric Venture, LLC, 199 F. App’x 738, 742 (11th Cir. 2006)
(citing 47 U.S.C. § 230(c)(1)) (emphasis in original)). An “information content
provider is any person or entity that is responsible, in whole or in part, for the
creation or development of information provided through the Internet or any
other interactive computer service.” Whitney, 199 F. App’x at 742. Defendants here
ECF 17, ¶ 82.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 29 of 35
contend Wilferd has not plausibly alleged that either Dhanani or Digital Equity
authored the at-issue blog articles. Specifically, Defendants posit that Wilferd’s
allegations premised “upon information and belief” are insufficient.
The Court does not agree. In the Amended Complaint, Wilferd alleges:
Defendants authored, participated in the creation of or
otherwise caused and approved these abhorrent, sexist
and degrading statements to be published without
justification, privilege or other defense. Upon
information and belief, these statements were not
independently made by third parties.44
Wilferd additionally alleges that Defendants:
[W]ere directly responsible for either authoring and/or
hiring foreign contractors to author these posts, as well
as directly participating in and approving their
publication. Upon information and belief, the posts were
not independently created by any third party. Indeed, at
the time, and still today, the website www.wines.com did
not and does not allow independent user content to be
posted on the website. The only content posted to the
blog is by users authorized and approved by the website
owners, in this case, Digital Equity.45
These allegations contain enough specific facts to plead that either Dhanani or
Digital Equity authored or created the at-issue blog articles and posted them to the
website. This is enough to raise Wilferd’s claim above the speculative level. Nor is
ECF 17, ¶ 84.
Id. ¶ 33.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 30 of 35
there anything impermissible with Wilferd alleging facts “upon information and
belief” at this stage. Boateng v. Ret. Corp. of Am. Partners, L.P., No. 1:12-cv-01959JOF, 2013 WL 12061901, at *4 (N.D. Ga. Mar. 5, 2013) (citing Arista Records, LLC v.
Doe 3, 604 F.3d 110 (2d Cir. 2010) (“Twombly’s plausibility standard did not prevent
a plaintiff from pleading facts based upon information and belief, where the facts
are peculiarly within the possession and control of the defendant or where the
belief is based on factual information that makes the inference of culpability
Accounting (Count I)
Wilferd seeks an accounting of Digital Equity’s books and records. The
Profit Agreement provides Wilferd with a right to demand an accounting.46
Further, Georgia law provides the Court with jurisdiction to hear a claim for
equitable accounting when an account involves:
(1) Mutual accounts growing out of privity of contract;
(2) Cases where accounts are complicated and intricate;
(3) Cases where a discovery or writ of ne exeat is prayed
and granted; (4) Cases where the account is of a trust
fund; (5) Accounts between partners or tenants in
common; and (6) Cases where a multiplicity of actions
ECF 17-1, at 4 ¶ 4 (“Information. Company will provide individual access to
financial information upon request, including revenue, sales, expenses,
screenshots, and profits.”).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 31 of 35
would render a trial
unsatisfactory at law.
O.C.G.A. § 23-2-70.
As stated above, the Court finds that Wilferd’s breach of contract claim
against Digital Equity as to the Profit Agreement survives dismissal.
Therefore, Wilferd has a corollary right under that agreement for an accounting
against Digital Equity. Although Defendants argue that they “have already agreed
to provide [Wilferd] this information,” that does not change the result, as Wilferd
alleges Defendants have not yet fulfilled that obligation.47 As to Dhanani, Wilferd
contends the claim is directed to him “as the custodian of Digital Equity’s records
(as the only member)” and “as a fellow joint venture partner, from whom an
equitable accounting may be ordered.”48 Wilferd also alleges Dhanani is
commingling the assets of Digital Equity—as well as the profits from the sale of
wines.com—with his own accounts.49 These allegations provide a sufficient basis
for Wilferd to proceed with her claim against Dhanani as to those intertangled
financial accounts. O.C.G.A. § 23-2-70.
ECF 17, ¶ 46.
ECF 28, at 27 n.10 (citing O.C.G.A. § 23-2-70)). See also ECF 17, ¶ 44.
ECF 17, ¶ 40.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 32 of 35
Financial Abuse of an Elder (Count VI)
Wilferd alleges that Dhanani and Digital Equity violated California
statutory law by defrauding an elder.50 In relevant part, California Welfare and
Institutions Code § 15610.30(a)(1) provides:
(a) “Financial abuse” of an elder or dependent adult
occurs when a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real
or personal property of an elder or dependent adult for a
wrongful use or with intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining,
or retaining real or personal property of an elder or
dependent adult for a wrongful use or with intent to
defraud, or both.
The California state legislature intended this statute to be broad in scope. Mahan v.
Charles W. Chan Ins. Agency, Inc., 14 Cal. App. 5th 841, 858 (Cal. Ct. App. 2017).
Defendants argue Wilferd’s claim must be dismissed because she cannot
maintain a predicate claim for a violation of this statute.51 Defendants’ argument
An “elder” is statutorily defined as “any person residing in [California],
65 years of age or older.” Cal. Welf. & Inst. Code § 15610.27. According to
Wilferd, she was over the age of 65 during the relevant time period [ECF 17,
ECF 26-1, at 26 (“An accounting, fiduciary duty, declaratory judgment, or even
defamation claim is not enough. Because all of [Wilferd’s] breach of contract
and fraud claims must fail, she cannot maintain a claim for elder financial
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 33 of 35
is moot. As stated above, the Court finds that aspects of Wilferd’s claims for breach
of contract, fraud, and breach of fiduciary duty survive dismissal. Wilferd may
base her elder financial abuse claim on these underlying counts. E.g., Crawford v.
Cont’l Cas. Ins. Co., No. SACV1400968CJCJCGX, 2014 WL 10988334, at *2 (C.D. Cal.
July 24, 2014) (holding plaintiff could maintain elder financial abuse claim
premised on allegations of bad faith breach of contract).
Declaratory Judgment (Count VIII)
Wilferd seeks a declaration from the Court that she is entitled to:
(a) [ ] access and conduct an inspection of the books and
records of Digital Equity, (b) an accounting, and
(c) payment of profits arising out of the sale of wines.com,
a product sale under the Profit Agreement between the
parties, among other and future profits to which she
claims she is entitled under the Profit Agreement.52
The Declaratory Judgment Act provides that “[i]n a case of actual controversy
within its jurisdiction . . . any court of the United States . . . may declare the rights
and other legal relations of any interested party seeking such declaration, whether
or not further relief is or could be sought.” 28 U.S.C. § 2201. Pursuant to Article
III’s “case or controversy” requirement, the Court may only entertain a declaratory
judgment claim “in the case of an actual controversy.” Walden v. Ctrs. for Disease
ECF 17, ¶ 87.
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 34 of 35
Control & Prevention, 669 F.3d 1277, 1284 (11th Cir. 2012) (citing Emory v. Peeler,
756 F.2d 1547, 1551–52 (11th Cir. 1985)). But there is no “actual controversy” when
a plaintiff’s request for a declaratory judgment is duplicative of her other claims
asserted in the same action. E.g., Daniels v. Wells Fargo Bank N.A., No. 1:14-cv-2640TCB-WEJ, 2014 WL 12492006, at *9 (Oct. 31, 2014) (“[I]n the context of Federal Rule
12(b)(6), courts will dismiss declaratory judgment claims that seek resolution of
matters that will be resolved as part of other claims in the lawsuit.”), report and
recommendation adopted, No. 1:14-cv-2640-LMM, 2014 WL 12493322 (N.D. Ga. Dec.
Wilferd’s requests for declaratory relief here are entirely duplicative of her
claims for accounting and breach of the Profit Agreement. Both claims are
plausibly alleged and survive dismissal. The Court’s resolution of those two claims
will afford Wilferd the same relief sought through her declaratory judgment claim.
As such, Count VIII is redundant and must be dismissed. See Eisenberg v. Standard
Ins. Co., No. 09-80199-CIV, 2009 WL 3667086, at *2 (S.D. Fla. Oct. 26, 2009)
(“[A] decision on the merits of the breach of contract claim would render the
defendant’s request for declaratory judgment moot or redundant.”).
Case 1:20-cv-01955-SDG Document 36 Filed 11/20/20 Page 35 of 35
For the foregoing reasons, Defendants’ motion to dismiss [ECF 26] is
GRANTED IN PART and DENIED IN PART. Count VIII is DISMISSED in its
entirety. Count III is DISMISSED only against Digital Equity. Wilferd may
proceed on Counts I, II, III (solely against Dhanani), IV, V, VI, and VII. Defendants
shall file their Answers to the remaining claims in the Amended Complaint within
14 days after entry of this Order. The parties shall file their initial disclosures and
a revised joint proposed preliminary report within 14 days after Defendants file
their Answers. The discovery period shall commence 30 days after Defendants file
SO ORDERED this the 20th day of November 2020.
Steven D. Grimberg
United States District Court Judge
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