Mattatall v. Transdermal Corp.

Filing 29

OPINION AND ORDER granting 5 Motion for Summary Judgment. Signed by District Judge John Corbett O'Meara. (WBar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DEBOURAH MATTATALL,
Plaintiff,
Case No. 13-14344
v.
Hon. John Corbett O’Meara
TRANSDERMAL CORP.,
Defendant.
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OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
Before the court is Defendant’s motion for summary judgment, filed
November 27, 2013, which has been fully briefed. The court heard oral argument
on April 17, 2014, and took the matter under advisement. For the reasons stated
below, Defendant’s motion is granted.
Plaintiff Debourah Mattatall brought this action on October 15, 2013,
alleging that Defendant Transdermal Corporation breached two agreements
between the parties: a share purchase agreement and an employment agreement.
Defendant seeks summary judgment or dismissal, contending that Plaintiff’s claims
are barred by a settlement agreement and release, Plaintiff has failed to sufficiently
plead her claims, and Plaintiff’s claims related to the share purchase agreement are

subject to a mandatory forum selection clause and must be brought in New York.
The court finds that Plaintiff’s claims are barred by release, as discussed below.
BACKGROUND FACTS
Mattatall was a defendant in a lawsuit brought by minority shareholders in
DPM Theraputics Corporation, a company that Mattatall founded with Dr. Pankaj
Modi. The suit (“the Fia application”) was brought in Ontario, Canada; the
applicants were the minority shareholders of DPM, the respondents were DPM, Dr.
Pankaj Modi and Mattatall. Pl.’s Ex. H. The applicants sought an injunction to
prevent Mattatall and Modi, DPM’s majority shareholders, from selling DPM’s
assets to Transdermal.
In October 2009, before the Fia application was acted upon by the court,
Mattatall and Modi sold their shares in DPM to Transdermal. Mattatall, Modi, and
Transdermal signed a Stock Purchase Agreement on October 21, 2009. Pl.’s Ex. I.
Shortly thereafter, Mattatall and Transdermal entered into an Employment
Agreement, whereby Mattatall became Executive Vice President of Transdermal.
Pl.’s Ex. J.
On October 22, 2009, the Ontario Superior Court of Justice issued an order
enjoining DPM from selling its assets to Transdermal. However, this order was
effectively moot because Mattatall and Modi had sold their shares to Transdermal
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the day before. This legal proceeding apparently remained dormant for the next
two years, while Transdermal took control of DPM and Mattatall commenced her
employment with Transdermal. In 2010, Transdermal brought an application
against the DPM minority shareholders in Ontario, although it is not clear from the
record on what basis the suit was brought. See Pl.’s Ex. O at 1.
Plaintiff contends that Transdermal did not fulfill its obligations under either
the Stock Purchase Agreement or the Employment Agreement, citing a lack of
funds.
In September 2012, the parties to the Ontario lawsuit and Transdermal
negotiated a settlement regarding the Fia application and the Transdermal
application. See Pl.’s Ex. O at 1-2. The parties agreed to dismiss the Fia
application and the Transdermal application without costs. Transdermal and DPM
agreed to provide cash payments and Transdermal stock to the applicants. Id. at 3.
The Settlement Agreement also contained the following release:
4. General Releases and Waivers by Applicants: Upon the execution
and delivery of this Settlement Agreement, Transdermal, DPM, Modi
and Mattatall and each Applicant, on his, her or its, as the case may
be, own behalf and behalf of his heirs, assigns, attorneys, agents and
legal representatives, officers, directors and shareholders does hereby
release, waive and forever discharge each other, including each of
their current and former officers, directors, employee, shareholders,
attorneys and accountants, agents, and successors and assigns, of and
from any and all claims, causes of action, obligations, demands and
liabilities whatsoever, of every name and nature, both in law and
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equity, known and unknown, anticipated and unanticipated, which a
Party had, has or hereafter may have, or which any person or entity
may have on any Party’s behalf, against each other, including their
current and former officers, directors, employees, shareholders,
attorneys and accountants, agents and successors and assigns, because
of or arising from any matter, event or thing which has happened,
developed or occurred before the execution of this Settlement
Agreement.
Pl.’s Ex. O at 3-4 (emphasis added). “Applicants” are defined in Attachment A to
the agreement, and do not include Mattatall or Modi. The term “Party” refers to all
parties to the agreement, including Mattatall. Id. at 1.
The Settlement Agreement also contains a merger clause: “All
understandings heretofore had between and among the Parties are merged in this
Settlement Agreement and the Attachments and Exhibits annexed hereto and to be
executed and delivered hereunder, which along fully and completely express the
agreement of the Parties and supersede all prior or contemporaneous agreements,
contracts, discussions or representations, whether oral or written, with respect to
the subject matter hereof.” Pl.’s Ex. O at ¶ 10.
Before Mattatall agreed to the settlement, she raised the issue of money
Transdermal owed her pursuant to the Stock Purchase Agreement and Employment
Agreement and initially refused to consent to the dismissal of the Fia application.
Pl.’s Ex. M at 1. In attempting persuade Mattatall to settle, Transdermal’s counsel
stated that “any claim that Ms. Mattatall has against DPM or Transdermal is
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wholly extraneous to the matter of the settlement of the Fia Application. If Ms.
Mattatall has a claim against Transdermal or DPM, whether it be for
indemnification or legal fees or otherwise, she is free to pursue it. In our respectful
view if would be a breach of Ms. Mattatall’s fiduciary duty as an officer and
director of DPM to stand in the way of the settlement of the Fia Application on the
basis of a separate dispute she has [with] Transdermal.” Id. at 2. See also id. at 5
(“Ms. Mattatall’s claims of payment are mutually exclusive of getting the Fia
application dismissed. . . . Further, I believe that indications have been made to Ms.
Mattatall that her contract will be honored.”).
According to Mattatall, she relied upon these assurances when she executed
the Settlement Agreement on September 28, 2012. On the same date, Mattatall
contends that the Transdermal board of directors passed a consent resolution
acknowledging Transdermal’s obligations to Mattatall and Modi under the Stock
Purchase Agreement and the Employment Agreement. Pl.’s Ex. N (stating that
Transdermal “shall endeavor to honor the Corporation’s Share Purchase
Obligations and the Employment Obligations as and when funds become
available”). Transdermal contends that this resolution was invalid because it was
not signed by all of the board members. Additionally, Transdermal states that
evidence of these pre-contractual assurances are barred by the merger clause. See
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Pl.’s Ex. O at ¶ 10.
Mattatall also alleges that, after the Settlement Agreement was signed,
Transdermal did not treat its obligations under the Stock Purchase Agreement or
the Employment Agreement as extinguished. On November 30, 2012,
Transdermal paid Mattatall and Modi $25,000; the memo section of the check
states “SPA – Payment,” suggesting a reference to the Stock Purchase Agreement.
Pl.’s Ex. Q. On April 9, 2013, Mattatall and Modi were again each paid $25,000
and the memo section of the check states “DPM Purchase Agreement.” Pl.’s Ex. R.
Also on April 9, 2013, Transdermal reimbursed Mattatall $2,614.12 with a check
with the notation “expenses.” Mattatall contends that this reimbursement was paid
for expenses she incurred pursuant to the Employment Agreement. Mattatall also
points out that Transdermal apparently entered into an amended Stock Purchase
Agreement with Modi, only, after the execution of the Settlement Agreement.
LAW AND ANALYSIS
Transdermal argues that the Settlement Agreement signed by Mattatall
clearly releases it from liability for all potential claims that Mattatall had against it
prior to October 1, 2012, including the breach of contract claims she raises here.
Mattatall argues that the release only applies to any claims that she,
Transdermal/DPM, and Modi had against the “Applicants” and vice versa.
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Unfortunately for Mattatall, the release is much more broadly worded than that. It
states that “Transdermal, DPM, Modi and Mattatall and each Applicant, . . . does
hereby release, waive and forever discharge each other . . . from any and all
claims . . . which a Party had, has or hereafter may have . . . because of or arising
from any matter, event or thing which has happened, developed or occurred before
the execution of this Settlement Agreement.” Pl.’s Ex. O.
Under the choice of law provision in the Settlement Agreement, Nevada law
applies. Pursuant to Nevada law, “[s]ummary judgment is appropriate when a
contract is clear and unambiguous, meaning that the contract is not reasonably
susceptible to more than one interpretation.” University of Nevada, Reno v. Stacey,
116 Nev. 428, 431 (2000). Whether a contract is ambiguous is a question of law
for the court. Margrave v. Dermondy Properties, Inc., 110 Nev. 824, 827 (1994).
The Settlement Agreement cannot be fairly read to apply only to the claims
Mattatall/DPM/Transdermal/Modi had against the Applicants and vice versa.
Rather, each party to the agreement released “each other” from “all claims”
“arising from any matter” occurring before the execution of the agreement. Pl.’s
Ex. O. In this regard, the agreement is unambiguous. Under the circumstances, the
court agrees with Mattatall that it is not logical that she would intend to release her
claims under the Stock Purchase and Employment Agreements. Nonetheless, that
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is what the broadly worded release does, and the court must ascertain the intent of
the parties as manifested by their unambiguous agreement. It is not for the court to
rewrite the parties’ agreement, nor is the court able to consider extrinsic evidence
when the contract is unambiguous. See Sheehan & Sheehan v. Nelson Malley &
Co., 121 Nev. 481, 488 (2005).
ORDER
IT IS HEREBY ORDERED that Defendant’s motion for summary judgment
is GRANTED. Plaintiff’s complaint is DISMISSED WITH PREJUDICE.

s/John Corbett O’Meara
United States District Judge
Date: April 18, 2014

I hereby certify that a copy of the foregoing document was served upon
counsel of record on this date, April 18, 2014, using the ECF system.

s/William Barkholz
Case Manager

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