Courtelis v. Rosenberg
| Decision Date | 19 September 2022 |
| Docket Number | 22-CV-00779 (KMM\BRT) |
| Parties | Kiki Courtelis, Plaintiff, v. Kailen Rosenberg, and Global Love Mergers, Inc. d/b/a Kailen's Love and Life Architects, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Before the Court is Kailen Rosenberg's and Global Love Mergers Inc., d/b/a Kailen Love and Life Architects (“KLLA”)'s motion to dismiss for failure to state a claim under Rule 12(b)(6). [ECF No. 16]. For the reasons set forth below, Defendants' motion is GRANTED.
This case arises out of Plaintiff Kiki Courtelis's dealings with Defendant Kailen Rosenberg, an “elite matchmaker” and owner of Kailen Love and Life Architects (“KLLA”). Throughout their acquaintance, Ms. Rosenberg served as a matchmaker and business partner for Ms. Courtelis, who in turn provided significant funding and direction to Ms. Rosenberg's enterprises.
In January 2018, Ms. Courtelis contacted Ms. Rosenberg to engage her matchmaking services. [Am. Compl. ¶¶ 14, 36, ECF No. 5]. Ms. Rosenberg provides these services through her firm “The Love Architects,” a division of KLLA. On February 3, 2018, Ms. Courtelis signed a contract for the Elite Love Search Program with Ms. Rosenberg (“the Matchmaking Contract”). [Id. ¶ 39]. Ms. Courtelis paid $250,000 in consideration for the contract. [Id.].
The Matchmaking Contract disclaimed all warranties, express or implied, about “the suitability, success, or outcome” of the matchmaking. [Rosenberg Decl., Ex. 3, “Matchmaking Contract,” at § 2.10, ECF No. 21]. It contained an arbitration clause, stating that all disputes “arising directly, indirectly, or derivatively out of or relating to [the Matchmaking Contract] or the breach, termination, or validity of [the Matchmaking Contract]” are to be resolved exclusively “through binding arbitration conducted before and according to the American Arbitration Association Commercial Arbitration Rules.” [Id. at § 3.2]. It specified that the arbitration would be conducted under the law of Minnesota and conducted in Minneapolis. [Id.].
While engaging Ms. Rosenberg's matchmaking services, Ms. Courtelis alleged that she paid the following additional expenses:
Ms. Courtelis paid a total of $327,030.54 for these additional services. [Id. ¶ 98]. Ms. Courtelis also alleges that on several occasions, Ms. Rosenberg asked Ms. Courtelis to buy her luxury items “such as purses, clothing, and shoes from designer stores” and then deduct those expenses from the invoices “so it would appear that she earned less income.” [Id. ¶ 42].
On top of these additional fees, after terminating the matchmaking contract, Ms. Courtelis received two invoices for $140,000 for services allegedly performed on her behalf. [Id. ¶ 99].
In September 2018, Ms. Courtelis asked Ms. Rosenberg to cease the matchmaking service, but requested that she resume those services in January 2019. [Id. ¶¶ 58-59]. Ms. Rosenberg refused, stating that Love Architects was not financially sound, that she could not afford to keep her remaining employee working on Ms. Courtelis's profile, and that she was too busy working on a separate project, a dating app called “the Lodge.” [Id.]. To remedy this issue, Ms. Courtelis began paying the employee who had worked on her search directly through Love Shopping to continue the search. [Id.]. Ms. Rosenberg “interviewed around three men” and performed little additional work on the matchmaking service. [Id. ¶ 63].
Ms. Rosenberg then persuaded Ms. Courtelis to invest in the Lodge App. [Id. ¶ 47]. Ms. Courtelis alleges that Ms. Rosenberg made false representations regarding the dating app, including that Ms. Rosenberg had invested millions of dollars of her own money into the development of the dating app. [Id. ¶ 53]. Ms. Courtelis alleges that she relied on those misrepresentations to make an investment in the Lodge App on June 22, 2018. Ms. Courtelis handled her investment through Love Shopping, LLC, of which she was the sole owner. [Id. ¶ 54].
A few months later, Ms. Courtelis and Ms. Rosenberg traveled to meet Rainmakers, the developer of the Lodge App, in Florida, and discussed a deadline for app development. [Id. ¶¶ 63-64]. Despite their assurances, the app faced consistent delays and missed its February 2019 launch date. [Id. ¶¶ 65-68]. Ms. Courtelis alleges that Ms. Rosenberg made constant, unilateral changes to the app, and attempted to thwart Ms. Courtelis from communicating directly with the developers. [Id. ¶ 65].
In December 2018, Ms. Courtelis's financial interest in the Lodge App was formalized legally, in the “Operating Agreement.” She acquired a 37.5% ownership interest in the dating app in exchange for “the significant financial contributions she had made to the continued development of the App.” [Id. ¶ 57]. Ms. Rosenberg and another matchmaking client, “WL,” held the other 62.5% ownership interest. [Id.].
That winter, Ms. Courtelis decided to rebrand the Lodge App as the Love Shopping App. [Id. ¶ 68]. She and Ms. Rosenberg terminated their contract with the Rainmakers. [Id. ¶ 73]. They began to work with Twin Vision Studios (“TVS”), another application development company, on the rebranded app. [Id. ¶ 77]. TVS suggested that they make a website and a “mini app” as well. [Id.]. On March 22, 2019, Ms. Courtelis incorporated “The Dating App, LLC,” and that company entered into the work agreement with TVS. [Id. ¶ 75].
The Love Shopping mini app was the first product released under the Love Shopping name on July 11, 2019. [Id. ¶ 77]. As for the website and the full app, Ms. Courtelis alleges that Ms. Rosenberg made false representations about their progress, made unilateral changes that delayed production, and managed the relationship with TVS until she was the sole individual communicating with them. [Id. ¶¶ 79-80, 83]. Ms. Courtelis was excluded from meetings and emails. [Id.].
Throughout this relationship, Ms. Rosenberg received a salary from Love Shopping, LLC and an American Express credit card linked to the business to pay for business expenses. [Id. ¶ 85]. The employees of the Love Shopping Dating App were also paid by the Love Shopping, LLC. Ms. Courtelis alleges that Ms. Rosenberg had her employees “perform services for The Love Architects and AH Love Design, her son Andrew Hanson's business.” [Id. ¶ 86]. She also alleges that Ms. Rosenberg used Love Shopping, LLC's funds to pay for personal expenses. [Id. ¶ 87].
On July 22, 2019, Ms. Courtelis informed Ms. Rosenberg that she no longer wanted to invest in the Love Shopping Dating App. [Id. ¶ 90]. That same day, Ms. Rosenberg terminated the Matchmaking Contract by “removing all of Ms. Courtelis' Facebook ads.” [Id. ¶ 91]. She did not provide notice to Ms. Courtelis of this termination.
On April 15, 2020, Ms. Courtelis filed this lawsuit in the Scott County Circuit Court in Kentucky, alleging (1) fraudulent inducement, (2) negligent misrepresentation, (3) civil conspiracy, and (4) unjust enrichment. [ECF No. 1]. On April 17, she initiated an arbitration proceeding in Minneapolis for her claims regarding the Matchmaking Contract. The arbitration proceeding was fully litigated and issued an award on January 18, 2022. [Rosenberg Decl., Ex. 7].
On June 20, 2020, Ms. Courtelis filed an Amended Complaint in Kentucky, adding causes of action against Ms. Rosenberg in her individual capacity. Ms. Rosenberg brought a motion to dismiss in the District of Kentucky, but the court denied the motion without prejudice due to improper venue. [ECF No. 11]. This case was transferred to the District of Minnesota pursuant to the “Operating Agreement” on April 1, 2022. [ECF No. 12]. On April 14th, Ms. Rosenberg filed her motion to dismiss, and the Court held a hearing on July 7, 2022.
To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This standard does not require the inclusion of “detailed factual allegations” in a pleading, but the complaint must contain facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not sufficient. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In applying this standard, the Court must assume the facts in the complaint to be true and take all reasonable inferences from those facts in the light most favorable to the plaintiff. Waters v. Madson, 921 F.3d 725, 734 (8th Cir. 2019); Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). But the Court need not accept as true any wholly conclusory allegations or legal conclusions that the plaintiff draws from the facts. Glick v. W. Power Sports, Inc., 944 F.3d 714, 717 (8th Cir. 2019).[1]
In bringing her motion to dismiss, Ms. Rosenberg divides Ms Courtelis' claims into two categories: (1) the Dating App Claims, Counts I-IV, include Ms. Courtelis' claims regarding the dating app investments for fraudulent inducement, negligent misrepresentation, civil conspiracy, and unjust enrichment; and (2) the Matchmaking Claims, Counts V-VI, encompass Ms. Courtelis'...
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