HATTERAS PRESS, INC. v. AVANTI COMPUTER SYSTEMS LIMITED
MEMORANDUM OPINION. Signed by Judge Mary L. Cooper on 10/18/2016. (km)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HATTERAS PRESS, INC.,
AVANTI COMPUTER SYSTEMS
CIVIL ACTION NO. 16-5420 (MLC)
COOPER, District Judge
Plaintiff Hatteras Press, Inc. (“Hatteras”) is a commercial printing company that
entered into a License Agreement with Defendant Avanti Computer Systems Limited
(“Avanti”) to use Avanti’s proprietary “Slingshot” software platform. Hatteras alleges that
the Slingshot software platform has not functioned properly and has sued Avanti for damages
under several theories of liability. Avanti has moved to dismiss the Complaint under Rule
12(b)(6) of the Federal Rules of Civil Procedure (FRCP) for failing to state a claim. (Dkt. 5.)1
Avanti argues Hatteras’ claims should be dismissed for various reasons, including that some
are insufficiently pleaded under the FRCP. (Dkt. 5-3.) In responding to Avanti’s motion,
The Court will cite to documents filed on the Electronic Case Filing System (“ECF”) by referring to
the docket entry numbers as “dkt.” Pincites reference ECF pagination.
Hatteras included new factual allegations and evidence in its opposition papers. (Dkt. 7)
Such allegations and evidence, however, are not properly considered when evaluating a
motion to dismiss. Instead, and as Hatteras requests in its opposition brief, Hatteras will be
allowed the opportunity to move for leave to file an amended complaint. Should Hatteras
successfully move to amend its Complaint, Avanti may move to dismiss the Amended
Complaint. Should Hatteras decline to move for leave to amend its Complaint, or have
its motion for leave to amend denied, Avanti may move again to dismiss the Complaint
as filed. For now, Avanti’s motion to dismiss (dkt. 5) will be denied without prejudice.
The Court resolves this motion without oral argument. See L.Civ.R. 78.1(b).
Factual and Procedural Background
Hatteras is a commercial printing company that entered into a License Agreement with
Avanti in August 2014 to use Avanti’s proprietary “Slingshot” software platform. (Dkt. 5-3
at 10.) The Slingshot software platform is designed to assist commercial printers with various
aspects of their business. (Id.) Hatteras alleges that Avanti made numerous false
representations about the capabilities of the platform and further alleges that the Slingshot
software platform has proven to be “worthless and useless.” (Dkt. 5-2 at 3–5.) Consequently,
Hatteras sued Avanti for damages under a number of legal theories, and specifically: (1)
common law fraud and fraud in the inducement; (2) violations of the New Jersey and
Delaware Consumer Fraud Acts; (3) breach of contract; (4) breach of the implied covenant of
good faith and fair dealing; (5) breach of warranty; and (6) unjust enrichment. (Id. at 6–11.)
Avanti has moved to dismiss all of Hatteras’ claims. First, Avanti argues that Hatteras
has improperly tried to “bootstrap” a breach of contract claim into a fraud claim and that the
alleged fraud claims have not been pleaded with the particularity required under FRCP Rule
9(b). (Dkt. 5-3 at 16–19.) Second, Avanti argues that New Jersey and Delaware consumer
fraud statutes are inapplicable given the nature of the parties’ transaction and that the
consumer fraud claims are inadequately pleaded under FRCP Rule 9(b). (Id. at 19–24.)
Third, Avanti argues that it did not breach the terms of the License Agreement. (Id. at 24–
26.) Fourth, Avanti argues that Hatteras has insufficiently pleaded details of any allegedlybreached warranties and, further, that Hatteras failed to provide adequate notice regarding any
alleged breaches of warranty. (Id. at 27–29.) Fifth, Avanti argues that Hatteras has
insufficiently pleaded its claim for breach of the implied covenant of good faith and fair
dealing, and further that such a claim should fail regardless because the dispute is covered by
the express terms of the License Agreement. (Id. at 29–31.) Sixth, Avanti argues that
Hatteras’ unjust enrichment claim is barred because the License Agreement governs the rights
and obligations of the parties. (Id. at 31–32.) Finally, Avanti argues that all claims for
consequential damages, attorneys’ fees, and costs of suit must be dismissed because they are
expressly disclaimed in the License Agreement. (Id. at 32.)
Hatteras filed an opposition brief (dkt. 7, 7-1, and 7-2), a supplemental declaration
from Hatteras’ Vice President of Special Projects and Technology (dkt. 7-3), a supplemental
declaration from Hatteras’ President (dkt. 7-4), and a supplemental attorney declaration with
12 exhibits including an expert report (dkt. 7-5 to dkt. 7-10). In its opposition brief, Hatteras
raises numerous responses to Avanti’s arguments, many citing the various supplemental
declarations and exhibits filed with its opposition papers. Hatteras also contends that Avanti’s
motion to dismiss should have been filed as a motion for a more definite statement under
FRCP Rule 12(e) and at the very least Hatteras should be given the opportunity to amend its
Complaint. (Dkt. 7-1 at 1–3.)2
FRCP Rule 8(a) requires pleadings to include “a short and plain statement of the claim
showing that the pleader is entitled to relief.” In order to survive a motion to dismiss, a
plaintiff must state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). Facial plausibility exists when the factual content related to the claim
permits the Court to draw a reasonable inference that a defendant is liable for the alleged
misconduct. Id. Judicial experience and common sense guide that determination. Id. at 679.
Although the Court must accept all factual allegations as true, the Court need not do the same
for legal conclusions. Id. at 678. Accordingly, “[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements” cannot survive a motion to
FRCP Rule 9(b) states, “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “The
purpose of Rule 9(b) is to provide notice of the precise misconduct with which the defendants
are charged and to prevent false or unsubstantiated charges.” Rolo v. City Inv. Co.
Because this Court will allow Hatteras the opportunity to move for leave to amend its Complaint, we
do not address Hatteras’ contention that Avanti’s motion to dismiss under Rule 12(b)(6) should be
converted into a Rule 12(e) motion for a more definite statement. (Dkt. 7-1 at 2–3.)
Liquidating Trust, 155 F.3d 644, 658 (3d Cir. 1998) (internal quotation and citation omitted).
“To satisfy this standard, the plaintiff must plead or allege the date, time, and place of the
alleged fraud or otherwise inject precision or some measure of substantiation into a fraud
allegation.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007). The allegations
also must include “who made a misrepresentation to whom and the general content of the
misrepresentation.” Lum v. Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004).
The Court, when considering a motion to dismiss filed pursuant to Rule 12(b)(6),
generally may not “consider matters extraneous to the pleadings.” In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). There a few exceptions to this rule,
including exhibits that are attached to the pleadings, and documents integral to or explicitly
relied upon in the pleadings. Angstadt v. Midd-West Sch. Dist., 377 F.3d 338, 342 (3d Cir.
2004). It is axiomatic, however, that the complaint may not be amended by the briefs in
opposition to a motion to dismiss. See Commonwealth of Pa. ex. rel. Zimmerman v.
PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988). Likewise, inadequate factual allegations in
a complaint cannot be remedied by statements in the plaintiff’s brief. See Clements v.
Sanofi-Aventis, U.S., Inc., 111 F. Supp. 3d 586, 601 (D.N.J. 2015).
Avanti has moved to dismiss four of Hatteras’ six claims on the grounds that they are
not well-pleaded. Rather than move for leave to file an amended complaint, Hatteras has
attempted to supplement its Complaint with additional factual allegations and evidentiary
submissions. (See, e.g., dkt. 7 at 12–18; dkt. 7-3 to dkt. 7-10.) Many of these documents—
including declarations from senior Hatteras officers and an entire expert report—are plainly
outside the scope of what the Court may consider when evaluating a motion to dismiss. See
Burlington Coat, 114 F.3d at 1426.
In its opposition brief3, Hatteras submits that it should have the opportunity to amend
its Complaint. (See, e.g., dkt. 7-1 at 11.) Instead of considering the parties’ arguments
piecemeal and without reference to Hatteras’ procedurally-improper additional allegations,
the Court will allow Hatteras the opportunity to move for leave to file an amended complaint.
Accordingly, Hatteras may move for leave to file an amended complaint on or before
November 17, 2016 in accordance with the FRCP and Local Civil Rules.4 Should Hatteras’s
motion to amend its Complaint be successful, Avanti may move to dismiss the Amended
Complaint in accordance with the FRCP and Local Civil Rules. Should Hatteras decline
to move for leave to amend its Complaint, or have its motion for leave to amend denied,
Avanti may move again to dismiss the Complaint as filed in accordance with the FRCP
and Local Civil Rules. For now, Avanti’s motion to dismiss will be denied without
Absent special permission from the Magistrate Judge or District Judge prior to submitting a brief,
Local Civil Rule 7.2 sets a 40 page limit for opposition briefs (30 pages if the brief uses a 12-point
proportional font such as Times New Roman). The Court reserves the right strike any further briefing
that does not conform to the Local Civil Rules.
Among other requirements, Local Civil Rule 7.1(f) requires that a party moving for leave to amend
its complaint must attach a copy of the proposed pleading or amendments.
For the reasons discussed above, the Court will deny the Defendant’s Motion to
Dismiss (dkt. 5) without prejudice. The Court will issue an appropriate order.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated: October 18, 2016
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