Linkepic Inc. v. Vyasil, LLC

• Decision Date: 27 March 2019
• Docket Number: No. 12 C 09058,12 C 09058
• Citation: 370 F.Supp.3d 906
• Parties: LINKEPIC INC., et al., Plaintiffs, v. VYASIL, LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

370 F.Supp.3d 906

LINKEPIC INC., et al., Plaintiffs,

v.VYASIL, LLC, et al., Defendants.

No. 12 C 09058

United States District Court, N.D. Illinois, Eastern Division.

Signed March 27, 2019

Justin J. London, Law Offices of Justin London, Chicago, IL, Theodore Roosevelt Jamison, III, Law Offices of Theodore Roosevelt Jamison III, PC, Matteson, IL, for Plaintiff.

Greg Shinall, Sperling & Slater, John Michael Touhy, David Michael Friebus, Michael Thomas Werner, Baker & Hostetler LLP, Suzanne Marie Alton de Eraso, Benesch Friedlander Coplan & Aronoff, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Honorable Edmond E. Chang, United States District Judge

Plaintiffs Linkepic Inc., GMAX Inc., Veoxo Inc., and Justin London (collectively referred to as "London") brought this lawsuit against Defendants Vyasil, LLC d/b/a eWittas, Mehul Vyas, Karl Wittstrom, and Ryan Tannehill d/b/a RMT Enterprises, alleging various state-law claims related to an ill-fated relationship between London's companies and Vyasil, a company with which Tannehill and Wittstrom are allegedly associated.¹ London asserts that he hired Vyasil, a software development company that also does business as eWittas, to perform software development on his internet companies (Veoxo and Linkepic) as well as his mobile voice-recognition technology company (GMAX). According to London, Vyasil charged him for work it never performed and engaged in various acts of fraud. Entries of default have already been issued against Mehul Vyas and Vyasil. R. 17, Entry of Default against Vyas; R. 89, Entry of Default against Vyasil. London now seeks summary judgment on all claims against Tannehill and Wittstrom (the Defendants). The Defendants have cross-moved for summary judgment, requesting that the Court dismiss all of London's claims. For the reasons stated below, the Defendants' motion is granted as to the agency theory of liability and the promissory estoppel claim. It is also granted insofar as London seeks to hold Wittstrom directly liable for sending Brian Swanson's business card to Vyas. But the Defendants' motion is otherwise denied. London's motion is denied in its entirety.

I. Background

A. Vyas's alleged scheme

In deciding cross motions for summary judgment, the Court views the facts in the light most favorable to the respective non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). So, when the Court evaluates London's summary judgment motion, the Defendants get the benefit of reasonable inferences; conversely, when evaluating the Defendants' filing (which the Court interprets as a cross-motion), the Court gives London the benefit of the doubt.

The primary alleged culprit in this saga is Mehul Vyas, who operated Vyasil LLC, a software development company based in India; the company also did business as eWittas. R. 172, Answer ¶¶ 12, 14, 17. Justin London is an Illinois business person who founded two internet companies called Veoxo and Linkepic, as well as GMAX, a mobile voice-recognition technology company. R. 374.1, Pls.' Resp. to DSOF ¶¶ 2-4. In February 2010, London began communicating with Vyas, primarily via Skype, to discuss the possibility of Vyasil performing development and marketing work for London's companies. R. 373.1, London Dep. II at 11:7-13:21. Based on his Skype conversations with Vyas, London believed that Vyasil could handle all his development needs at a below-market rate.² R. 373.2, 2010 London IM at 2-3, 5-6.

London eventually entered into contracts with Vyasil for five development projects: an e-commerce platform development for both Veoxo and Linkepic; a search engine optimization (SEO) for both Veoxo and Linkepic; and a mobile technology development for GMAX. R. 159.8, Linkepic SEO Proposal; R. 159.9, Linkepic SEO Proposal Signature Page; R. 159.10, Veoxo SEO Proposal; R. 159.13 Linkepic Platform Development Project Plan; R. 159.16, Veoxo Platform Development Project Plan; R. 359, London Dep. I at 11:6-10. Vyasil began invoicing London for work in March 2010. R. 372.1, London Invoices at 1.

London asserts that, despite Vyas's guarantees that the company could handle the projects, Vyasil did not complete the work. London Dep. I at 3:21-4:2; 8:16-22; 12:6-8. The Defendants counter that some of Vyasil's proposed work was completed. R. 373.10, 2010 London IM at 34; R. 373.11, 2010 London IM at 30, 55; R. 373.26, 2011 London IM at 16, 31, 48, 70; London Dep. II at 113:16-117:8. In any event, Vyasil continued to send invoices to London, who continued to send payments believing that the work was in progress. London Invoices at 15-17; London Dep. I at 8:8-22. Vyas repeatedly assured London that the work would be completed, asking that London trust him. R. 373.4, 2010 London IM at 50, 52, 63; R. 373.8, 2010 London IM at 80; R. 373.9, 2010 London IM at 3; R. 373.10, London IM at 78; R. 373.12, London IM at 4-5.

At the same time, in April 2011, London and Vyas entered into a Secured Promissory Note agreement where London agreed to loan Vyas $ 60,000. R. 373.33, 4/14/11 Secured Promissory Note; London Dep. II at 202:2-10. Under the terms of the Note, the money was due to be repaid in two installments: on May 25, 2011 and on June 25, 2011. Secured Promissory Note at 1. The parties dispute the exact dollar amount that was loaned to Vyas under the note but agree that he did not make his first repayment to London until June 6, 2011. Pls.' Resp. to DSOF ¶¶ 72-74. According to London, he made an additional and separate loan to Vyas in June 2011 for $ 25,000, which was never repaid. London Dep. at 16:4-11; Pls.' Resp. to DSOF ¶ 73. The Defendants assert, however, that the June 2011 payment was part of the initial loan, which was paid back in its entirety by June 16, 2011. Pls.' Resp. to DSOF ¶¶ 72-74.

As previously mentioned, after service of process, entries of default were entered against Vyas and Vyasil on all claims. Entry of Default against Vyas; Entry of Default against Vyasil.³

B. Tannehill and Wittstrom

The current motions involve the remaining defendants—Karl Wittstrom and Ryan Tannehill. Neither of the Defendants has experience in software development or technology. R. 359.2, 2016 Wittstrom Dep. at 30:13-19; R. 359.1, 2016 Tannheill Dep. at 70:11-71:5. But Wittstrom does not dispute that he is an experienced business person who owns multiple companies. R. 372, Defs.' Resp. to PSOF ¶ 10; 2016 Wittstrom Dep. at 9:10-12:16. It is likewise undisputed that Tannehill and Wittstrom are friends and both signed the initial Vyasil operating agreement in March 2009, after Wittstrom introduced Tannehill to Vyas. Defs.' Resp. to PSOF ¶¶ 3, 4; 2016 Wittstrom Dep. at 113:1-3, 141:23-142:1; R. 372.2, 2015 Tannehill Dep. at 18:6-19:10. Wittstrom owned a 40% stake in Vyasil, while Tannehill owned a 20% stake through his company, RMT Enterprises, LLC. R. 357.3, Vyasil Operating Agreement at 118. Along with their ownership stakes, both men were member-managers of Vyasil. 2016 Wittstrom Dep. at 56:15-17, 91:19-24; 2015 Tannehill Dep. at 158:1-3; R. 357.4, Ltr from Cal. Sec. of State at 6.⁴

In March 2010—a few days after London received his first invoice from Vyasil for the Linkepic work—Vyas, Wittstrom, London, and other individuals interested in GMAX all participated in a video conference via Skype. London Dep. II at 61:8-63:5. Wittstrom attended the conference because he believed that the GMAX project was going to be a "big deal" and he wanted to support Vyas and help him win the business. Defs.' Resp. to PSOF ¶ 13; 2016 Wittstrom Dep. at 94:10-14, 101:17-21. During the conference, Vyas introduced Wittstrom as his "partner," which was a misrepresentation of Wittstrom's role in the company. R. 372.9, 2015 Wittstrom Dep. at 214:3-215:15. Wittstrom admits that he never corrected Vyas nor explained to London that he was not, in fact, Vyas's "partner." Defs.' Resp. to PSOF ¶ 12; 2015 Wittstrom Dep. at 215:13-25. London asserts that Wittstrom failed to correct Vyas in order to legitimize Vyasil and its ability to perform London's desired software development. London Dep. at 61:16-24.

Later on, in December 2010, an individual using Wittstrom's email address forwarded to Vyas the business card of Bill Swanson—the former CEO of the large defense and technology company, Raytheon. R. 159.4, 12/23/2010 Email re Bill Swanson. Vyas then forwarded this email onto London and wrote, "I have sent you the business card of william CEO of Raytheon. For your records to make you aware that I have far higher contacts than eric and jim." Id. Wittstrom denies that he sent this business card to Vyas. 2015 Wittstrom Dep. at 66:6-69:6. He concedes, however, that although Vyas himself did not know Swanson, at some point Wittstrom did tell Vyas that he (Wittstrom) knew Swanson. Def. Resp. to PSOF ¶ 29: 2015 Wittstrom Dep. at 65:19-23; 69:8-14. In any event, London was impressed with the connection, as he believed Raytheon to be one of the largest defense contractors in the United States at the time. London Dep. II at 64:2-13. London argues that, from this email exchange, it was reasonable for him to infer that Vyasil was a capable company with an experienced management team and, further, that it is now reasonable to infer that Wittstrom forwarded the business card with the intention to make London believe those things. London Dep. II at 279:23-280:22, 281:10-13, 313:4-314:4.

For his part, Tannehill was the signatory on Vyasil's bank account, meaning, among other things, that he signed and certified Vyasil's bank-account application with Wells Fargo. 2015 Tannehill Dep. at 176:1-2, 339:18-341:21; 2016 Tannehill Dep. at 300:20-301:7. The application represented that Vyasil had $ 10,000,000 in sales, which Tannehill admitted was untrue. 2016 Tannehill Dep. at 301:8-302:5. Four of the invoices from Vyasil to London include Tannehill's name, while one lists him as CFO of Vyasil. London Invoices at 1-4. Tannehill testified...