PARK v. INOVIO PHARMACEUTICALS, INC. et al
ORDER granting in part and denying in part 22 Motion to Dismiss Amended Complaint, etc.. Signed by Judge Stanley R. Chesler on 3/1/2016. (seb)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Civil Action No. 15-3517 (SRC)
OPINION & ORDER
INOVIO PHARMACEUTICALS, INC.
This matter comes before the Court on the motion to dismiss the Amended Complaint for
failure to state a valid claim, pursuant to FED. R. CIV. P. 12(b)(6), by Defendants Inovio
Pharmaceuticals, Inc. (“Inovio”) and J. Joseph Kim (collectively, “Defendants”). For the reasons
stated below, the motion to dismiss will be granted in part and denied in part.
This case arises from a dispute over the exercise of two grants of stock options to Plaintiff.
The Amended Complaint alleges that Plaintiff received two option grants from a corporate
predecessor of Defendant Inovio: 1) the 2005 option grant (the “2005 Grant”); and 2) the 2006
option grant (the “2006 grant”). The Amended Complaint alleges that Plaintiff had been employed
by the predecessor at the time he received the 2005 Grant as partial compensation, that his
employment terminated on June 1, 2006, and that he received the 2006 Grant after termination.
The Amended Complaint alleges, in short, that Defendants have breached their contract by
refusing to allow him to exercise these grants, and that he began attempting to exercise the grants
in 2013. (Am. Compl. ¶ 32.) The Amended Complaint asserts six claims: 1) breach of contract; 2)
breach of the implied covenant of good faith and fair dealing; 3) unjust enrichment; 4) intentional
and negligent misrepresentation; 5) intentional nondisclosure; and 6) declaratory judgment.
Defendants move to dismiss the Amended Complaint on several grounds. First,
Defendants argue that the breach of contract claims fail because, under the express terms of the
contract, Plaintiff had only 90 days after the termination of his employment to exercise the option,
and the Amended Complaint alleges that years passed before any attempt to exercise the option.
The Court first observes that Plaintiff’s opposition brief argues only that the claim for
breach of the 2006 Grant is valid; it does not assert that the claim for breach of the 2005 Grant is
valid. This Court interprets this as an abandonment of all claims pertaining to the 2005 Grant. To
the extent that the Amended Complaint asserts claims concerning the 2005 Grant, such claims will
be dismissed with prejudice.
As to the 2006 Grant, Defendants contend that the 2001 Equity Compensation Plan
requires that the options be exercised “within 90 days of the time he stopped performing services.”
(Pls.’ Br. 9.) Defendants contend that Plaintiff’s claims for breach must fail because he did not do
so. The first problem with this argument is that it relies on a fact contrary to that alleged in the
Amended Complaint, which alleges that Plaintiff has provided continuous services to VGX to the
present. “A motion to dismiss pursuant to Rule 12(b)(6) may be granted only if, accepting all well
pleaded allegations in the complaint as true, and viewing them in the light most favorable to
plaintiff, plaintiff is not entitled to relief.” In re Burlington Coat Factory Sec. Litig., 114 F.3d
1410, 1420 (3d Cir. 1997). Defendants have disregarded this basic rule.
This alone is sufficient to deny the motion to dismiss the claims for breach of the 2006
Grant. The Court additionally observes, however, that it appears plausible that the Amended
Complaint does not limit “services” to services as an employee.1 The 2006 Grant states: “The
Board . . . has decided to make a stock option grant to the Grantee as an inducement for the
Grantee to promote the best interests of the Company and its stockholders.” (Am. Compl. Ex. E at
1.) It is undisputed that the 2006 Grant was issued after the termination of Plaintiff’s employment.
It is thus plausible that Plaintiff continuously upheld his end of this bargain from 2006 forward,
and that his attempt to exercise the 2006 Grant in 2013 was timely. Moreover, even if Defendants
persuaded the Court to agree with their interpretation of the 2006 Grant, Plaintiff would still have a
plausible claim for breach of the implied covenant of good faith and fair dealing.2 As to the 2006
Grant, the motion to dismiss the breach of contract claims (both express in the First Count and
implied in the Second Count) will be denied.
Defendants next argue that the unjust enrichment claim must be dismissed because an
unjust enrichment claim must fail where the plain terms of a written contract address the disputed
issue. As Plaintiff argues in opposition, the use of breach of contract and unjust enrichment as
alternative theories of recovery is well-established. Federal Rule of Civil Procedure 8(d)(2, 3)
expressly allows this. The motion to dismiss the Third Count will be denied.
Defendants ask this Court, in effect, to interpret “services” in the relevant documents in
the narrow way most favorable to them. It is well-established that this Court must view the
factual allegations in the light most favorable to Plaintiff. Given the timing of the 2006 Grant –
after termination of Plaintiff’s employment – it is certainly plausible that the parties intended
“services” to have a much broader scope than “employment.” The interpretation of the relevant
contractual provisions in this case has some complexity and the Court goes no further than to
say, for the purpose of this motion, that Plaintiff’s interpretation is plausible.
Defendants contend that this Court should apply Pennsylvania law to the breach claim,
but the 2001 Equity Compensation Plan expressly provides for the application of Delaware law,
which, like New Jersey law, implies the covenant of good faith and fair dealing in every
contract. Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del. 2005).
Defendants next contend that the Fourth and Fifth Counts, for intentional and negligent
misrepresentation and intentional nondisclosure, are barred by the economic loss doctrine. “The
Economic Loss Doctrine provides that no cause of action exists for negligence that results solely in
economic damages unaccompanied by physical or property damage.” Sovereign Bank v. BJ's
Wholesale Club, Inc., 533 F.3d 162, 175 (3d Cir. 2008). See also King v. Hilton-Davis, 855 F.2d
1047, 1051 (3d Cir. 1988) (“When loss of the benefit of a bargain is the plaintiff’s sole loss, the
judgment of the Supreme Court was that the undesirable consequences of affording a tort remedy
in addition to a contract-based recovery were sufficient to outweigh the limited interest of the
plaintiff in having relief beyond that provided by warranty claims.”) The Fourth and Fifth Counts
allege tortious conduct which resulted solely in economic damages. In opposition, Plaintiff
contends that the Fourth and Fifth Counts fall within the exception to the economic loss doctrine
for claims of fraud in the inducement. The Fourth and Fifth Counts are not, however, claims for
fraud in the inducement of the contract: they do not allege a misrepresentation which is
“extraneous to the contract.” Werwinski v. Ford Motor Co., 286 F.3d 661, 676 (3d Cir. 2002).
Rather, they recast the claim for breach of contract as tort claims. The Fourth and Fifth Counts are
barred by the economic loss doctrine. As to the Fourth and Fifth Counts, the motion to dismiss
will be granted, and the Fourth and Fifth Counts will be dismissed with prejudice.
Defendants move to dismiss the Sixth Count, for declaratory judgment, as duplicative of
other claims. Plaintiff’s opposition brief states no opposition to this point, and the Court finds that
Plaintiff has abandoned this claim, which will be dismissed with prejudice.
Lastly, Defendants argue that all claims are barred by the applicable statutes of limitation.
Again, this argument relies on contradicting factual allegations in the Amended Complaint, which
alleges that Plaintiff has provided continuous services to the present day. (Am. Compl. ¶ 44.) The
motion to dismiss all claims as barred by applicable statutes of limitation will be denied.
For these reasons,
IT IS on this 1st day of March, 2016,
ORDERED that Defendants’ motion to dismiss the Amended Complaint (Docket Entry
No. 22) is GRANTED in part and DENIED in part; and it is further
ORDERED that, to the extent that the Amended Complaint asserts claims concerning the
2005 Grant, Defendants’ motion to dismiss such claims is GRANTED, and any such claims are
hereby DISMISSED with prejudice; and it is further
ORDERED that, as to the First, Second and Third Counts, relating to the 2006 Grant,
Defendants’ motion to dismiss is DENIED; and it is further
ORDERED that, as to the Fourth, Fifth and Sixth Counts, Defendants’ motion to dismiss
is GRANTED, and the Fourth, Fifth and Sixth Counts are hereby DISMISSED with prejudice.
s/ Stanley R. Chesler
Stanley R. Chesler, U.S.D.J.
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