McPike v. Zero-Gravity Holdings, Inc.
Decision Date | 21 November 2017 |
Docket Number | Case No. 1:17–cv–562 |
Citation | 280 F.Supp.3d 800 |
Court | U.S. District Court — Eastern District of Virginia |
Parties | Harald MCPIKE, Plaintiff, v. ZERO–GRAVITY HOLDINGS, INC. f/k/a Space Adventures, Ltd., et al., Defendants. |
Megan Lambart Meier, Thomas Arthur Clare, Clare Locke LLP, Alexandria, VA, for Plaintiff.
Kevin James Quilty, William Clarke Miller, Pillsbury Winthrop Shaw Pittman LLP, John Marcus McNichols, Williams & Connolly LLP, Washington, DC, for Defendants.
Space tourism, once only the stuff of science fiction, is now, as this diversity case demonstrates, just another part of the current scene. In March 2013, plaintiff Harald McPike, a wealthy Austrian adventurer seeking to be a space tourist, entered into a contract with Space Adventures, Ltd. ("SA"),1 a Virginia company specializing in space tourism, for a spaceflight around the moon and to the International Space Station. SA was to accomplish plaintiff's trip to space and around the moon with the aid of the Russian national space agency, Roscosmos. Understandably, this trip was expensive; plaintiff contracted to pay a non-refundable $30,000,000 deposit over the course of three installments and thereafter to make additional payments of $120,000,000, for a grand total of $150,000,000.2 On March 28, 2013, plaintiff made his first $7,000,000 installment payment of the required $30,000,000 deposit. Then during the summer of 2014, plaintiff effectively terminated the agreement by not making the second installment payment of the $30,000,000 deposit; instead, plaintiff sought a refund of his initial $7,000,000 deposit based on his belief that SA, contrary to its representations in the parties' Agreement, did not have the capacity to complete the spaceflight. SA refused to refund plaintiff's $7,000,000 deposit and plaintiff brought this action raising five claims: (i) breach of contract, (ii) fraud in the inducement, (iii) violations of the Virginia Consumer Protection Act, (iv) conversion, and (v) unjust enrichment. Defendants seek threshold dismissal of plaintiff's claims and, as the matter has been fully briefed and argued, it is now ripe for disposition.
Plaintiff Harold McPike is a private investor and adventurer who hails from Austria, but currently resides in the Bahamas. In the past, plaintiff has undertaken expeditions to the North and South Poles and has scaled many notable mountain peaks including Mt. Kilimanjaro. He now wishes to add space travel to his long list of adventures.
Defendant SA is a Nevada corporation with its principal place of business in Virginia. It specializes in providing space travel to private individuals and over the past several years has arranged eight flights to the International Space Station for seven different clients. SA's primary corporate officers are defendants Thomas Shelley ("Shelley"), SA's President, and Eric Anderson ("Anderson"), SA's CEO and Chairman of the Board. Both Shelly and Anderson are Virginia citizens.
In pursuit of his goal of spaceflight, plaintiff contacted SA in 2012 to express interest in a circumlunar mission. One of SA's employees responded to plaintiff's inquiry and informed him (i) that the cost of a circumlunar mission was approximately $150,000,000; and (ii) that he would have to enter into a mutual non-disclosure agreement before discussions and negotiations could continue. Plaintiff signed the nondisclosure agreement, completed and submitted a medical questionnaire and engaged in multiple conversations with Shelley and Anderson. On November 13, 2012, Shelley emailed a draft of the Circumlunar Space Flight Purchase Agreement (the "Agreement") to plaintiff; and on November 19, 2012, Anderson and Shelley orally represented that SA had an exclusive arrangement Roscosmos to complete a circumlunar mission and that the mission would be accomplished within eight years.
After engaging in several months of discussions and negotiations, the parties executed the Agreement on March 20, 2013. The following Agreement provisions are pertinent to the parties' dispute:
On March 28, 2013, plaintiff paid the initial deposit of $7,000,000 as set forth in the Agreement and throughout 2013 and 2014 took various steps to prepare for the circumlunar space mission, including undergoing medical examinations, reviewing technical materials, continuing discussions with SA, and attending a meeting in Moscow in mid-January 2014.
In spring 2014, shortly before plaintiff's second installment payment of $8,000,000 was due, plaintiff expressed concern to SA about the method and schedule of payments under the Agreement given the inherent risks associated with the project. Specifically, plaintiff sought to modify the Agreement to permit him to make future payments into an escrow account. SA declined this proposal, but in an attempt to alleviate plaintiff's concerns, SA modified the Agreement to give plaintiff another three (3) months to make his second installment payment towards the deposit. Yet by July 2014, plaintiff still had not made this $8,000,000 installment payment toward the $30,000,000 deposit that was then due; instead, he continued to propose modifications to the Agreement to allow him to deposit future payments into an escrow account, a request that SA repeatedly declined. In any event, plaintiff thereafter made no further payments of any kind under the Agreement.
In July 2014, plaintiff discovered an English-language Russian publication of the Moscow Times that reported that Space Adventures had not consulted with Roscosmos about the circumlunar mission and had no contractual relationship with the Russian space agency.4 Plaintiff, understandably concerned by this news report, emailed Shelley and Anderson and asked them to comment on the article. In response, Anderson told plaintiff that the article was incorrect and that Roscosmos had a new leader who was unaware of SA's existing arrangements with Roscosmos. Following this, plaintiff made no further inquiries into this issue, but also made no further payments pursuant to the Agreement. Citing plaintiff's failure to make any additional installment payments on the $30,000,000 deposit, SA terminated the Agreement by written notice on March 24, 2015, and retained plaintiff's initial $7,000,000 deposit payment.
In May 2016, sixteen months after SA terminated the Agreement, plaintiff contacted Roscosmos to arrange an alternative space mission and to inquire into Roscosmos' relationship with SA. By letter dated July 25, 2016, Roscosmos responded to plaintiff's communication, in relevant part, as follows:
With regard to our relationship with Space Adventure, Ltd., we would like to note that Roscosmos has successfully conducted 7 commercial space flights on the Russian "Soyuz" manned transport vehicle with the involvement of SA. At present, however, there are no valid documents containing any legal obligations of Roscosmos to SA. (Pl.'s Compl. at ¶¶ 63 and 64.)
In response to further inquiries by plaintiff regarding its relationship with SA, Roscosmos sent another letter on December 26, 2016, stating that:
Unfortunately, we are unable to provide you with information on relationships with ‘Space Adventures’ as such information is confidential and may not be disclosed to third parties. In addition, neither the current nor previous Federal Space Programs of the Russian Federation envisaged implementation of projects associated with manned missions to the Moon.
Armed with this information, plaintiff filed a five-count complaint against SA on May 17, 2017, alleging: (i) that he was fradulently induced to enter into the Agreement by SA's misrepresentations regarding its relationship with Roscosmos; (ii) that SA violated Virginia's Consumer Protection Act, Va. Code § 59.1–196, et seq., by engaging in fraud; (iii) that SA breached the Agreement by failing to have a contractual relationship with Roscosmos, contrary to SA's representation in the Agreement; (iv) that SA tortiously converted plaintiff's $7,000,000 deposit; and (v) that SA was unjustly enriched by its...
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