Rich Media Club et al v. Mentchoukov et al

Filing 115

MEMORANDUM DECISION granting in part and denying in part 24 Motion to Dismiss for Failure to State a Claim. Plaintiff shall have thirty days to file an amended complaint in conformity with this Order. Signed by Judge Ted Stewart on 04/03/2012. (asp)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

RICH MEDIA CLUB, LLC, a Delaware
limited liability company, and RICH MEDIA
WORLDWIDE, LLC, a Delaware limited
liability company,
Plaintiffs,

MEMORANDUM DECISION AND
ORDER ON DEFENDANTS’
MOTION TO DISMISS

vs.
NIKOLAI MENTCHOUKOV, JAMES W.
ROWAN, and LEFTSNRIGHTS, INC., a
Delaware corporation, dba LIQWID, and
JOHN DOES 1–25,

Case No. 2:11-CV-1202 TS

Defendants.

This matter is before the Court on Defendants’ Motion to Dismiss under Fed. R. Civ. P.
12(b)(6). 1 A number of other motions are also before the Court, including Plaintiffs’ Motion for
Preliminary Injunction. 2 The parties have requested that the Court rule on the instant Motion on
an expedited basis before considering the remaining motions.
I. BACKGROUND
Plaintiffs Rich Media Club, LLC and Rich Media Worldwide, LLC (collectively
“Plaintiffs” or “Rich Media”) have brought a number of claims against Nikolai Mentchoukov,
1

Docket No. 24.

2

Docket No. 5.
1

James Rowan, and LeftsnRights, Inc., dba LIQWID (collectively, “Defendants”). Plaintiffs
allege that Mentchoukov used information gained during his employment with Rich Media to
create a competing product, LIQWID, with Rowan. Plaintiffs allege that by doing so,
Mentchoukov breached his employment agreement contract, the implied covenant of good faith
and fair dealing, and fiduciary duties. Plaintiffs also argue that Defendants’ behavior violated a
number of statutes, that Defendants’ converted Rich Media’s intellectual property, and that
Defendants should be liable for tortious interference with economic relations, unjust enrichment,
civil conspiracy, fraudulent nondisclosure, and various other claims.
Defendants have moved the Court for dismissal of Defendant James Rowan and dismissal
of Plaintiffs’ 1st and 4th–15th claims for relief. Defendants argue that “the Complaint contains
no allegations that, if taken as true, state a claim for relief specifically against defendant Rowan”
and that claims 1 and 4-15 “fail to state a claim under the federal pleading requirements,” as each
is either “fatally flawed in its legal premise and/or is not sufficiently supported by well-pled
factual averments.” 3 In sum, Defendants argue that “Rich Media has turned a straightforward
contract dispute into a 15-claim house of cards, founded on allegations that state a claim for
nothing more than breach of contract.” 4
II. LEGAL STANDARD
A.

12(B)(6) MOTION TO DISMISS
In considering a motion to dismiss for failure to state a claim upon which relief can be

granted under Rule 12(b)(6), all well-pleaded factual allegations, as distinguished from
conclusory allegations, are accepted as true and viewed in the light most favorable to Plaintiffs as

3

Docket No. 24, at 1-2.

4

Docket No. 88, at 3.
2

the nonmoving party. 5 Plaintiffs must provide “enough facts to state a claim to relief that is
plausible on its face,” 6 which requires “more than an unadorned, the-defendant-unlawfully
harmed-me accusation.” 7 “A pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’ Nor does a complaint suffice if it
tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” 8 “The court’s function on
a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial,
but to assess whether the plaintiff’s complaint alone is legally sufficient to state a claim for
which relief may be granted.” 9 As the Court in Iqbal stated,
only a complaint that states a plausible claim for relief survives a motion to
dismiss. Determining whether a complaint states a plausible claim for relief will .
. . be a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense. But where the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged—but it has not show[n]—that the pleader is entitled to
relief. 10
When considering the adequacy of a plaintiff’s allegations in a complaint subject to a
motion to dismiss, a district court not only considers the complaint, but also “documents
incorporated into the complaint by reference, and matters of which a court may take judicial

5

GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.

6

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007).

7

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

8

Id. (quoting Twombly, 550 U.S. at 557) (alteration in original).

9

Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991).

1997).

10

Iqbal, 129 S. Ct. at 1949-50 (alteration in original) (internal quotation marks and
citations omitted).
3

notice.” 11 Thus, “notwithstanding the usual rule that a court should consider no evidence beyond
the pleadings on a Rule 12(b)(6) motion to dismiss, ‘[a] district court may consider documents
referred to in the complaint if the documents are central to the plaintiff’s claim and the parties do
not dispute the documents’ authenticity.’” 12 If documents outside the pleadings are presented by
the parties, they must either be excluded from consideration by the Court or “the motion must be
treated as one for summary judgment under Rule 56” and “all parties must be given a reasonable
opportunity to present all the material that is pertinent to the motion.” 13
B.

PLEADING SPECIAL MATTERS
Rule 9(b) sets forth specific requirements for pleading fraud, mistake, and conditions of

the mind. “In alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s
mind may be alleged generally.” However, this Rule “do[es] not require courts to credit a
complaint’s conclusory statements without reference to its factual context.” 14 The requirements
of Rule 8 still apply “[a]nd Rule 8 does not empower respondent to plead the bare elements of
his cause of action, affix the label ‘general allegation,’ and expect his complaint to survive a
motion to dismiss.” 15

11

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (citing 5B
WRIGHT & MILLER § 1357 (3d ed. 2004 and Supp. 2007)).
12

Alvarado v. KOB-TV, LLC, 493 F.3d 1210, 1215 (10th Cir. 2007) (quoting Jacobsen v.
Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002)).
13

Fed. R. Civ. P. 12(d); see also Teton Millwork Sales v. Schlossberg, 311 F. App’x 145,
149 (10th Cir. 2009).
14

Iqbal, 129 S. Ct. at 1954.

15

Id.
4

Under Utah law, to bring a claim sounding in fraud, a party must allege (1) that a
representation was made (2) concerning a presently existing material fact (3) which was false
and (4) which the representor either (a) knew to be false or (b) made recklessly, knowing that
there was insufficient knowledge upon which to base such a representation, (5) for the purpose of
inducing the other party to act upon it and (6) that the other party, acting reasonably and in
ignorance of its falsity, (7) did in fact rely upon it (8) and was thereby induced to act (9) to that
party’s injury and damage. 16
III. ANALYSIS
Defendants have moved the Court for dismissal of Defendant James Rowan and dismissal
of Plaintiffs’ 1st and 4th–15th claims for relief. Each issue is addressed in turn.
A.

ALLEGATIONS SOUNDING IN FRAUD
Defendants argue that “Plaintiffs’ allegations broadly and without specificity invoke

‘fraud’ nine times, ‘intentional’ twelve times, ‘willful’ six times, and ‘malicious’ four times.
However, Plaintiffs state that they “assert[] only one claim sounding in fraud, against
Mentchoukov for fraudulent nondisclosure. [The] remaining claims are decidedly not fraud
claims.” 17 The Court will therefore only address the heightened Rule 9(b) fraud standard with
respect to Plaintiffs’ claim for fraudulent nondisclosure, discussed below.
B.

CLAIM 1 – PATENT INFRINGEMENT OF THE ‘590 PATENT
Plaintiffs’ first claim is for patent infringement of United States Patent No. 7,313,590

(“the ‘590 patent”). 18 Defendants argue that this claim should be dismissed as the allegations are
16

Gold Standard, Inc. v. Getty Oil Co., 915 F.2d 1060, 1066-67 (Utah 1996) (citing
Crookston v. Fire Ins. Exch., 817 P.2d 789, 800 (Utah 1991)).
17

Docket No. 74, at 5.

18

Docket No. 2, at 6, 15.
5

supported “by nothing more than information and belief” and because “they are fatally
conclusory.” 19 Plaintiffs’ first claim states: “Upon information and belief, Defendants . . . have
operated their LIQWID business and offered its associated products in a manner which directly
infringes one or more claims of the ‘590 Patent.” 20 Plaintiffs argue, again upon information and
belief, that Defendants “incorporate methods and systems described in, at a minimum, claims 8
and 9, and others, of the ‘590 Patent, including but not limited to the FSDC Technology.” 21
“Specifically . . . Defendants offer, through their LIQWID business, a product that passes
viewable impression data over the internet in real time to a server through a one-way
communication that goes unnoticed to the viewer.” 22
Taking these assertions together, Plaintiffs claim that Defendants offer a product that
passes viewable impression data over the internet in real time to a server through a one-way
communication that goes unnoticed to the viewer, thereby violating at least claims 8 and 9 of the
‘590 Patent. This claim does generally identify the alleged method of infringement. However,
the statement is also based merely on “information and belief” and does not go into detail about
how this process occurs or what basis Plaintiffs have for their belief that this infringement
occurs. Therefore, the Court will dismiss this claim without prejudice to Plaintiffs’ filing an
amended complaint setting forth the claim with greater specificity.

19

Docket No. 25, at 16.

20

Id. at 15.

21

Id.

22

Id.
6

C.

CLAIM 4 – BREACH OF FIDUCIARY DUTY
Plaintiffs’ fourth claim is for breach of fiduciary duty against Mentchoukov. This claim

alleges that “[a]t all material times, regardless of his job title, Mentchoukov served in the role of
chief technology officer at Rich Media,” and that therefore he owed Rich Media fiduciary
duties. 23 Plaintiffs then argue that Mentchoukov breached those duties by using company
information to create a competing product, soliciting customers on behalf of his competing
business, and failing to perform his duties as Chief Technology Officer. 24 However, Plaintiffs’
own allegations do not support this claim. Plaintiffs’ first allege that RMC employed
Mentchoukov as its chief technology officer in August 2002. 25 Earlier in their Complaint,
Plaintiffs state that the employment agreement was terminated and a consultant arrangement was
entered into through an October 23, 2010, agreement (“October Agreement”). 26
The October Agreement states that “Mentchoukov’s at-will employment with Rich Media
Club, LLC terminated on October 15, 2010, and . . . Mentchoukov has no further obligation to
the Companies, except pursuant to (i) Delaware limited liability company law and (ii) the
“Consulting Engagement” described below.” 27 The Consulting Engagement does not state that
Mentchoukov is Rich Media’s Chief Technology Officer, nor does it impose any fiduciary duties

23

Docket No. 2, at 18.

24

Id. at 18-19.

25

Id. at 2.

26

Id. at 8-9. This Agreement is referred to in Plaintiffs’ Complaint and the parties have
not disputed its authenticity, with both parties providing identical copies of the October
Agreement as part of the briefing on the instant Motion. Docket No. 25 Ex. 4; Docket No. 74
Ex. 1. The Court will therefore include the October Agreement in its consideration of
Defendants’ Motion to Dismiss.
27

Docket No. 25 Ex. 4, at 4.
7

on him. Plaintiffs have not pled any non-conclusory allegations supporting a claim against
Mentchoukov for breach of fiduciary duty for events occurring prior to execution of the October
Agreement and have not cited to Delaware law imposing a fiduciary duty on a minority
shareholder, such as Mentchoukov. Defendant Mentchoukov is bound by contractual duties, not
fiduciary duties. The Court will therefore dismiss Plaintiffs’ fourth claim for breach of fiduciary
duty with prejudice. 28
D.

CLAIM 5 – VIOLATION OF UTAH UNFAIR COMPETITION ACT
Plaintiffs claim that Defendants violated the Utah Unfair Competition Act. Unfair

competition is defined by statute as “an intentional business act or practice that . . . is unlawful,
unfair, or fraudulent; and . . . leads to a material diminution in value of intellectual property.” 29
In support of the material diminution element, Plaintiffs simply state that “Defendants’ conduct
as alleged herein has, upon information and belief, led to a material diminution in the value of
Rich Media’s intellectual property.” 30 This is no more than “a naked assertion” without “further
factual enhancement,” which, under Iqbal and Twombly, is insufficient to maintain a claim. 31
The Court will therefore dismiss this claim without prejudice.

28

Defendants also argue that, even if Mentchoukov were Rich Media’s Chief Technology
Officer, this would not impose any fiduciary duties on him under Delaware law. Docket No. 25,
at 10-12. However, as Plaintiffs’ own allegations do not support their claim, the Court will not
engage in an analysis of Delaware law.
29

Utah Code Ann. § 13-5a-102(4)(a).

30

Docket No. 2, at 19.

31

Iqbal, 129 S. Ct. at 1949; Twombly, 550 U.S. at 557.
8

E.

CLAIM 6 – CONVERSION AND THEFT
Plaintiffs’ sixth claim is for conversion and theft. Plaintiffs have stipulated to the

dismissal of their civil theft claim. 32 The parties agree that, under Utah law, “conversion is an
act of wilful interference with a chattel, done without lawful justification by which the person
entitled thereto is deprived of its use and possession.” 33 Plaintiffs claim that “Defendants
knowingly and intentionally converted Rich Media’s patented and patent-pending technology, as
well as the RealVu Technology and Rich Media’s software, source, and access codes, for their
use and benefit with the intention of depriving Rich Media of the same.” Plaintiffs do not claim
that Rich Media has been deprived of the use of any of its source code, software, or access codes,
and further stated at the hearing that this claim is premised solely on the contractual duty to turn
over improvements that Mentchoukov made on the software. Therefore, as there is no
deprivation of possession or use of a chattel, the Court finds that Plaintiffs have not stated an
adequate claim for conversion. The Court will therefore dismiss claim six of Plaintiffs’
complaint with prejudice.
F.

CLAIM 7 – TORTIOUS INTERFERENCE WITH ECONOMIC RELATIONS
Defendants assert that Plaintiffs fail to state a claim for tortious interference with

economic relations. To recover on such a claim under Utah law, a plaintiff must prove “(1) that
the defendant intentionally interfered with the plaintiff’s existing or potential economic relations,
(2) for an improper purpose or by improper means, (3) causing injury to the plaintiff.” 34

32

Docket No. 74, at 13.

33

Fibro Trust, Inc. v. Brahman Fin., Inc., 974 P.2d 288, 295-96 (Utah 1999) (quotation

omitted).
34

Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982).
9

1. Improper means
Plaintiffs have failed to properly allege an improper means. In their Opposition to the
instant Motion, Plaintiffs argue that they alleged “deceit or misrepresentation” by claiming that
Mentchoukov “falsely represented to an important potential customer and investor, in emails
beginning October 7, 2011, that he owned Rich Media product and that Rich Media possessed a
lower value than it did.” 35 However, examining Plaintiffs’ Complaint, Plaintiffs’ allegations are
that “Mentchoukov sent an email to the Potential Client stating ‘Would [the Potential Client] be
interested in buying 20% of RealVu from me personally for $10 million (I own 25%)?’” 36
Plaintiffs previously state in their Complaint that “Mentchoukov owns a 25% ownership interest
in” both Rich Media Worldwide and Rich Media Club. Therefore, Plaintiffs’ own allegations
show that there is no basis for their claim that Mentchoukov “falsely represented” that he owned
25% of Rich Media. Furthermore, the fact that Mentchoukov was willing to sell his 25% share
in Rich Media for less than Rich Media itself would have valued those shares does not constitute
a false representation “that Rich Media possessed a lower value than it did.”
To the extent that Plaintiffs could be suggesting that Mentchoukov’s offering of his
competing services to a Rich Media client constitutes tortious interference, there is no allegation
of improper means, which include “violence, threats or other intimidation, deceit or
misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood.” 37
Furthermore, to the extent that Plaintiffs allege that failure to perform contractual duties
constitutes tortious interference, under Utah law “[a] deliberate breach of contract, even where

35

Docket No. 74, at 15.

36

Docket No. 2, at 11 (alteration in original).

37

St. Benedict’s Dev. Co. v. St. Benedict’s Hosp., 811 P.2d 194, 201 (Utah 1991).
10

employed to secure economic advantage, is not, by itself, an ‘improper means.’ Because the law
remedies breaches of contract with damages calculated to give the aggrieved party the benefit of
the bargain, there is no need for an additional remedy in tort.” 38 Therefore, as Plaintiffs have not
alleged improper means tied to interference with Rich Media’s economic relations anywhere in
Complaint, the Court will dismiss a claim for tortious interference with economic relations
through improper means with prejudice.
2.

Improper purpose

Plaintiffs may also establish a tortious interference claim by properly alleging improper
purpose. 39 “Improper purpose is established by a showing that the actor’s predominant purpose
was to injure the plaintiff.” 40 Plaintiffs have alleged that “Defendants have interfered with Rich
Media’s current and prospective economic relations for an improper purpose, namely, with a
specific intent to harm Rich Media.” These are no more than conclusory allegations. Therefore,
the Court will dismiss this claim without prejudice.
G.

CLAIM 8 – UNJUST ENRICHMENT
The elements of a claim for unjust enrichment under Utah law are: “1) a benefit conferred

on one person by another; (2) an appreciation or knowledge by the conferee of the benefit; and
(3) the acceptance or retention by the conferee of the benefit under such circumstances as to
make it inequitable for the conferee to retain the benefit without payment of its value.” 41
Defendants argue that Plaintiffs’ Complaint fails, as “Plaintiffs make no allegations that they

38

Leigh Furniture, 657 P.2d at 309.

39

See id. at 304.

40

St. Benedict’s, 811 P.2d at 201.

41

Berrett v. Stevens, 690 P.2d 553, 557 (Utah 1984).
11

conferred a benefit on Defendants. In fact, their allegations are that Defendants converted
Plaintiffs’ intellectual property.” 42 Plaintiffs argue that this is “hairsplitting” with “no basis in
law.”
Plaintiffs claim in their Complaint that “Defendants’ conversion of Rich Media’s
intellectual property, including the RealVu Technology, has conferred a substantial benefit upon
Defendants.” 43 As the Court has found that Plaintiffs have failed to state a claim for conversion,
Plaintiffs’ claim for unjust enrichment has no basis. The Court will therefore dismiss this claim
with prejudice.
H.

CLAIMS 9 & 10 – VIOLATIONS OF UTAH CODE ANN. § 48-2C-807
Plaintiffs’ ninth and tenth claims for relief stem from alleged violations of Utah Code

Ann. § 48-2C-807. Defendants move for dismissal of these claims, arguing that the Utah statute
is inapplicable, as Rich Media Club and Rich Media Worldwide are both companies formed in
Delaware under Delaware law.
Plaintiffs’ complaint states that Rich Media Worldwide and Rich Media Club are both
“Delaware limited liability compan[ies].” 44 Plaintiffs have provided no basis to apply the Utah
Revised Limited Liability Company Act to a Delaware LLC, and have also not opposed
Defendants’ Motion with respect to these claims. The Court will therefore dismiss Plaintiffs’
eighth and ninth claims with prejudice.

42

Docket No. 25, at 20.

43

Docket No. 2, at 22.

44

Id. at 2. Defendants have provided exhibits with documents relating to the Delaware
formation of Rich Media, LLC and Rich Media Worldwide, LLC. Docket No. 25, Exs. A, B.
However, as these documents are not referred to in Plaintiffs’ Complaint, they are not properly
before the Court on a Motion to Dismiss. The Court has therefore excluded these exhibits from
its consideration.
12

I.

CLAIM 11 – CIVIL CONSPIRACY
Plaintiffs’ eleventh claim is for civil conspiracy. The parties agree that the elements of a

claim for civil conspiracy under Utah law are “(1) a combination of two or more persons, (2) an
object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one
or more unlawful, overt acts, and (5) damages as a proximate result thereof.” 45
The entirety of Defendants’ claim for Civil Conspiracy, except those elements realleged
and incorporated from other sections of the Complaint, is as follows:
128. Upon information and belief, Defendants agreed upon a scheme to
misappropriate Rich Media’s intellectual property, including the RealVu
Technology, as well as to infringe upon the claims of the ‘590 Patent, to
undermine Rich Media’s business opportunities, and to interfere with Rich
Media’s economic relations.
129. In furtherance of the conspiracy, Defendants committed one or more
unlawful, overt acts—including, but not limited to, patent infringement.
130. As a result of their civil conspiracy, Defendants are jointly and severally
liable for Rich Media’s damages and judgment should be entered against them
jointly and severally. 46
These allegations amount to no more than “a formulaic recitation of the elements of a cause of
action” 47 that is not “plausible on its face.” 48 The Court will therefore dismiss this claim without
prejudice.
J.

CLAIM 12 – FRAUDULENT NONDISCLOSURE
Defendants have moved for the dismissal of Plaintiffs’ claim for fraudulent

nondisclosure. To prevail on a claim for fraudulent nondisclosure under Utah law, “the plaintiff

45

Israel Pagan Estate v. Cannon, 746 P.2d 785, 790 (Utah Ct. App. 1987).

46

Docket No. 2, at 24.

47

Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 557)

48

Twombly, 550 U.S. at 547.
13

must show (1) that the nondisclosed information is material, (2) that the nondisclosed
information is known to the party failing to disclose, and (3) that there is a legal duty to
communicate.” 49 “Whether a duty exists is strictly a question of law; it grows out of the
relationship between the parties, and the duties created by that relationship.” 50 Defendants argue
that, as a matter of law, Mentchoukov did not have a legal duty to communicate anything to
Plaintiffs, 51 while Plaintiffs argue that Mentchoukov did owe Plaintiffs a fiduciary duty as their
chief technology officer. 52
Rule 9(b) governs Plaintiffs’ claim for fraudulent nondisclosure. Rule 9(b) states: “In
alleging fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake.” The relevant portion of Plaintiffs’ claim states: “Upon information and belief,
at the time of that demand, Mentchoukov had already formulated a plan to undermine Rich
Media and to appropriate Rich Media’s intellectual property for his own use in a competitive
business.” 53 It continues, “[u]pon information and belief, Mentchoukov intentionally withheld
the reasons for his demand in order to procure a release from his noncompetition agreement and
other obligations contained in his Employment Agreement.” 54 As these statements do not “state
with particularity the circumstances constituting fraud,” the Court will dismiss this claim without
prejudice.

49

Mitchell v. Christensen, 31 P.3d 572, 574 (Utah 2001).

50

Moore v. Smith, 158 P.3d 562, 572 (Utah 2007).

51

Docket No. 25, at 22.

52

Docket No. 74, at 17.

53

Docket No. 2, at 25.

54

Id.
14

K.

CLAIM 13 – REPLEVIN
Plaintiffs’ thirteenth claim is for replevin. Plaintiffs allege: “Rich Media is entitled to

complete ownership and control over its intellectual property, including the claims of the ‘781
Application, the ‘321 Application, and the ‘590 Patent, the RealVu Technology, and all access
codes and information. . . . Defendants have wrongfully converted, appropriated, and retained
possession and control over Rich Media’s intellectual property.” 55 A separate Motion for
Prejudgment Writ of Replevin is pending before the Court, 56 which the parties have requested
the Court not consider until the instant Motion is decided.
Federal Rule of Civil Procedure 64 makes any remedy for repossession available in the
state in which the court sits applicable in any action. Utah Rule of Civil Procedure 64B provides
that “[a] writ of replevin is available to compel delivery to the plaintiff of specific personal
property held by the defendant.” “[T]he grounds for a writ of replevin require . . . that the
plaintiff is entitled to possession[] and [] that the defendant wrongfully detains the property.” 57
As set forth above, Rich Media has not alleged that they have been deprived of
possession of any information or tangible property, apart from any alleged improvements that
were not taken by Mentchoukov, but arise under a contractual duty. Therefore, the Court would
have no means of granting Plaintiffs’ request for a writ of replevin and will dismiss this claim
with prejudice.

55

Docket No. 2.

56

Docket No. 5.

57

Utah R. Civ. P. 64B.
15

L.

CLAIM 14 – TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION,
AND PERMANENT INJUNCTION
Plaintiffs’ fourteenth claim is for a temporary restraining order, preliminary injunction,

and permanent injunction. A separate Motion for Preliminary Injunction is pending before the
Court, 58 which the parties have requested the Court not consider until the instant Motion is
decided. The Court will therefore defer ruling on this issue until considering the briefing
submitted by the parties on the Motion for Preliminary Injunction.
M.

CLAIM 15 – DECLARATORY JUDGMENT
Plaintiffs’ fifteenth claim is for declaratory judgment. Defendants argue that this claim

should be dismissed as “the Complaint fails to set forth allegations sufficient to establish the
requisite elements.” 59 Under Utah law, four threshold elements must be met before a declaratory
judgment action may proceed. These are: “(1) a justiciable controversy, (2) parties whose
interests are adverse, (3) a legally protectible interest residing with the party seeking relief, and
(4) issues ripe for judicial determination.” 60 Plaintiffs claim that “[a] justiciable controversy
exists between Rich Media and Defendants regarding, without limitation, Mentchoukov’s
obligation to return the intellectual property and related property specified in the October 2010
Agreement.” 61 This statement in itself lacks specificity as to what property Plaintiffs allege
should be returned. However, Plaintiffs do state that the property is “specified in the October

58

Docket No. 5.

59

Docket No. 25, at 26.

60

Miller v. Weaver, 66 P.3d 592, 597 (Utah 2003).

61

Docket No. 2, at 27.
16

2010 Agreement.” 62 As that agreement discusses a wide range of intellectual property, the Court
will dismiss Plaintiffs’ claim without prejudice so that Plaintiffs may file an Amended Complaint
with more specific allegations regarding the property they allege should be returned.
N.

CLAIMS AGAINST DEFENDANT ROWAN
Plaintiffs have moved for the dismissal of Defendant Rowan from the suit, arguing that

the Complaint speaks about Defendants collectively, makes very few factual allegations specific
to Rowan, and provides no basis for holding Rowan liable for allegedly wrongful conduct by
Defendant LIQWID. 63
Plaintiffs Complaint mentions Defendant Rowan by name in paragraphs 6, 40, 49, 50,
and 61. 64 The only claim that expressly names Defendant Rowan is the first claim for patent
infringement, which the Court has dismissed without prejudice. 65 Plaintiffs argue that Rowan
can be held liable for LIQWID’s acts, as “[i]t is well established in Utah that an officer of an
entity ‘cannot hide his or her own fraudulent acts behind the corporate veil.’” 66 However,
although Plaintiffs mention fraud many times in their Complaint, the only claim that is
specifically for fraud is Plaintiffs twelfth claim for fraudulent nondisclosure—a claim that is
specifically brought against Mentchoukov alone. Furthermore, Plaintiffs themselves have stated
that this is their only claim sounding in fraud and the “remaining claims are decidedly not fraud

62

Id.

63

Docket No. 25, at 17-29.

64

Docket No. 2.

65

Id. at 15.

66

Docket No. 74, at 19 (quoting Armed Forces Ins. Exch. v. Harrison, 70 P.3d 35, 41
(Utah 2003)).
17

claims.” 67 Therefore, there is no basis to hold Rowan liable for LIQWID’s acts and, as no other
claims are alleged against Rowan with any specificity, the Court will dismiss him from this case
with prejudice.
IV. CONCLUSION
Based on the foregoing, it is hereby
ORDERED that Defendants’ Motion to Dismiss under Fed. R. Civ. P. 12(b)(6) (Docket
No. 24) is GRANTED IN PART AND DENIED IN PART. Plaintiff shall have thirty days to
file an amended complaint in conformity with this Order.
DATED April 3, 2012.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

67

Id. at 5.
18