Mindspirit, LLC v. Evalueserve Ltd.

Decision Date30 September 2018
Docket Number15 Civ. 6065 (PGG)
Citation346 F.Supp.3d 552
Parties MINDSPIRIT, LLC; Malvika Kumar; and Rosewood Partners, Plaintiffs, v. EVALUESERVE LTD., Defendant.
CourtU.S. District Court — Southern District of New York

Donald David Conklin, III, Evan Mandel, Rishi Bhandari, Robert Allen Glunt, Evan Mandel, Mandel Bhandari, L.L.P., New York, NY, for Plaintiffs.

Gregory Francis Hauser, Wuersch & Gering LLP, New York, NY, for Defendant.

MEMORANDUM OPINION & ORDER

Paul G. Gardephe, United States District Judge

In this action, Mindspirit, LLC, and its two members – Malvika Kumar and Rosewood Partners – allege that Defendant Evalueserve Ltd. breached an agreement to issue 480,000 Evalueserve stock options to Mindspirit. According to Plaintiffs, although Evalueserve issued these options to Mindspirit in April 2001, it later breached the parties' agreement by wrongfully re-issuing these stock options in the names of Rajat Gupta and Anil Kumar, non-parties to this action. (See Am. Cmplt. (Dkt. No. 19) ¶¶ 20, 49, 61, 64-70, 109-113)

As a result of this Court's ruling on Evalueserve's motion to dismiss, Mindspirit is the sole remaining plaintiff, and only Mindspirit's breach of contract and unjust enrichment claims remain, (See id.; Sept. 26, 2016 Order (Dkt. No. 45) )

Evalueserve has moved for summary judgment on Mindspirit's remaining claims, arguing that (1) they are barred by the applicable statute of limitations; (2) the parties' contract bars the unjust enrichment claim; (3) there was no breach of contract; (4) the doctrine of illegality bars the breach of contract claim; (5) the parties' mutual mistake either (a) excuses any further performance by Evalueserve or (b) is grounds for reformation of the contract; and (6) there has been no unjust enrichment to Evalueserve, because (a) Evalueserve provided the value at issue to third-parties and did not retain that value, and (b) equity and good conscience do not require restitution. (Def. Mot. (Dkt. No. 78) ) Mindspirit has cross-moved for summary judgment on Evalueserve's statute of limitations and illegality defenses, (Pltf. Mot. (Dkt. No. 73) )

For the reasons stated below, Evalueserve's motion for summary judgment will be granted as to the unjust enrichment claim, but will otherwise be denied. Mind spirit's cross-motion for partial summary judgment will be granted as to Evalueserve's illegality defense, but will otherwise be denied.

BACKGROUND
I. FACTS 1
A. The Parties

Plaintiff Mindspirit is a Nevada limited liability company, formed on January 26, 2001, with two members: Malvika Kumar – the wife of Anil Kumar ("Kumar") – and Rosewood Partners. (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶¶ 1-5) Since Mindspirit's formation, Rosewood has held 75% of the membership interest in Mindspirit, and Malvika Kumar has held the remaining 25%. (Id. ¶¶ 3-4)

Rosewood is an Illinois partnership. (Deuser Aff. (Dkt. No. 40) ¶ 6) Between 2001 and 2013, Rajat Gupta ("Gupta") was one of Rosewood's general partners. (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 7) According to Rajat Gupta, Rosewood is "a family partnership for [his] kids." (Gupta Dep. (Dkt. No. 88-92) at 99;2 see also id. at 16 (Gupta referring to Rosewood as "my family investment company") ) Rosewood presently has five partners: the Anita Gupta 2013 Irrevocable Trust, Geetanjali Gupta, Deepali Gupta, Megha Gupta, and Aditi Gupta. (Deuser Aff. (Dkt. No. 40) ¶ 8)

Kumar and Gupta formed Mindspirit, using Shivbir Grewal, an attorney selected by Kumar, to perform the necessary legal work. (See Kumar Dep. (Dkt. No. 88-90) at 28-29 ("[I]n late 2000-early 2001, Gupta and I had discussed the fact that we were making so many investments that it was actually for the benefit of our families that we set up an organization where those investments would be held, from an estate planning perspective, and we thought we would set one up called Mindspirit from which the investments would be made.... We retained a law firm in L.A. to ... do the paperwork, and that's what they did.") ) When Mindspirit was formed, Kumar told Grewal that Gupta would be the manager of and signatory for Mindspirit. (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 59)

Mindspirit's principal place of business is 59 Beachside Avenue in Stamford, Connecticut (id. ¶ 1), which is one of Gupta's residences. (Gupta Dep. (Dkt. No. 88-92) at 4) Until 2007, Mindspirit's mailing address was Gupta's business office in Stamford, where Mindspirit's business records were maintained. (Id. at 12, 23) Mindspirit's accounting and tax returns were handled by Gupta's "family's tax accountant." (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 11; Gupta Dep. (Dkt. No. 88-92) at 24-25)

Gupta does not recall whether he was the manager of Mindspirit (Gupta Dep. (Dkt. No. 88-92) at 16 ("I don't know [if I was a manager.] It was just an investment vehicle.") ), but assumes as much. (Id. at 27 ("Q. Is Mr. Kumar correct when he states, at least as of January 25th, 2001, that you would be the signatory on behalf of Mindspirit, LLC and the manager? A. Based on what I saw, I signed those documents so [I] must have been.") )

According to Kumar, his wife Malvika was responsible for "[being] aware of" Mindspirit's investments, and "ensur[ing] that Mindspirit complie[d] with all laws and filings." (Kumar Dep. (Dkt. No. 88-90) at 34-35) Mindspirit's only investment was in Evalueserve, however. (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 58)

Evalueserve is a Bermuda company that was incorporated on October 25, 2000. (Id. ¶ 13) Its main office is in Gurgaon, India. (Id. ¶ 14) Evalueserve was founded by Alok Aggarwal ("Aggarwal") and Marc Vollenweider to provide consulting services. (Id. ¶¶ 16-17; Vollenweider Dep. (Dkt. No. 88-62) at 58-60) From Evalueserve's formation until 2013, Aggarwal and Vollenweider were its only directors. (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 18) Aggarwal also served as executive chairman, while Vollenweider served as chief executive officer through December 2016. (Id. ) Vollenweider is still a member of Evalueserve's board. (Id. ¶ 19)

B. The Agreement

In late December 2000 or early January 2001, Aggarwal, Vollenweider, Gupta, and Kumar began discussions about Gupta and Kumar becoming "angel investors" in Evalueserve. (Id. ¶ 40) At some point in January or February 2001, Aggarwal, Vollenweider, and Gupta met at Gupta's office to discuss the potential investment. (Id. ¶ 51) According to Aggarwal, about "a week or so later, [Gupta] [ ] said that he would like to invest with Anil Kumar through ... Mindspirit ...." (Aggarwal Dep. (Dkt. No. 88-54) at 28)

On April 20, 2001, Evalueserve sent Gupta several transaction documents drafted by Evalueserve reflecting the arrangement between Evalueserve and Mindspirit, including a Stock Option Grant Notice ("Grant Notice"), a Stock Option Agreement, the Evalueserve, Ltd, 2001 Equity Incentive Plan ("Equity Incentive Plan"), and a Securities Purchase Agreement ("Purchase Agreement"). (See Def. Resp. to Pltf. R. 56.1 Stmt. (Dkt. No. 82) ¶ 3; Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 87) Vollenweider had signed these documents and dated them April 17, 2001. (Pltf. Resp. to Def. R. 56.1 Stmt. (Dkt. No. 86) ¶ 87) A cover letter included with these documents asks Gupta to sign and return all of the documents to Aggarwal (id. ¶ 88), but no party to this suit has produced a countersigned copy of any of these documents. (Id. ¶ 89) Gupta received the documents and retained them in Mindspirit's files, however, and Kumar received and retained at least the Grant Notice, the Stock Option Agreement, and the Equity Incentive Plan. (Id. )3

1. The Grant Notice

The April 17, 2001 Grant Notice provides that "Evalueserve, Ltd. (the ‘Company’), pursuant to its Evalueserve, Ltd. 2001 Equity Incentive Plan (the ‘Plan’) hereby grants to you (the ‘Optionholder’) an option to purchase the number of shares of the Company's Common Stock set forth below." (Grant Notice (Dkt. No. 86-3) at 2)

The Grant Notice identifies Mindspirit as the "Optionholder"; the date of the grant as April 17, 2001; the number of shares subject to option as 480,000; the exercise price as $0.56; and the nature of the options as "nonstatutory stock options." (Id. ) The Grant Notice includes a vesting schedule, with options for 160,000 shares vesting on April 17, 2002; options on an additional 160,000 shares vesting on April 17, 2003; and options on the remaining 160,000 shares vesting on April 17, 2004. (Id. ) The Grant Notice provides that all options will expire on April 16, 2006. (Id. )

Under a section entitled "Additional Terms/ Acknowledgements," the Grant Notice states:

The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Grant Notice, the Stock Option Agreement and the [Equity Incentive] Plan. Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option Agreement and the [Equity Incentive] Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company under the [Equity Incentive] Plan and supersede all prior oral and written agreements on the subject with the exception of (i) options previously granted and delivered to Optionholder under the [Equity Incentive] Plan, and (ii) the following agreements only: ________.

(Id. )4

The Grant Notice further provides that, "[t]his option is subject to all of the terms and conditions as set forth herein and in the Stock Option Agreement between the Company and the Optionholder, the [Equity Incentive] Plan and the Notice of Exercise, all of which are ... incorporated [ ] in their entirety." (Id. )

2. The Stock Option Agreement

The Stock Option Agreement provides that,

[p]ursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, and in consideration of the help and guidance to be provided by you to it, Evalueserve Ltd, (the "Company") has granted yon (the "Optionholder"
...

To continue reading

Request your trial
27 cases
  • Nuance Commc'ns, Inc. v. Int'l Bus. Machs. Corp.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • June 21, 2021
    ...continues to cause harm or increases the damages by the passage of time without performance. See Mindspirit, LLC v. Evalueserve Ltd., 346 F. Supp. 3d 552, 593 (S.D.N.Y. 2018) (quoting Henry v. Bank of Am., 147 A.D.3d 599, 48 N.Y.S.3d 67, 70 (2017) ). In other words, it is insufficient that ......
  • Alessi Equip., Inc. v. Am. Piledriving Equip., Inc.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • January 6, 2022
    ...See Blum v. Spaha Capital Mgmt., LLC , 44 F. Supp. 3d 482, 496 (S.D.N.Y. 2014) ; see also Mindspirit, LLC v. Evalueserve Ltd. , 346 F. Supp. 3d 552, 594–95 (S.D.N.Y. 2018). This is so even if the court finds a dispute of material fact regarding "which documents or provisions are incorporate......
  • Fed. Deposit Ins. Corp. v. Murex LLC
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • November 12, 2020
    ...then ‘defendants are entitled to summary judgment on the unjust enrichment claim.’ " Mindspirit, LLC v. Evalueserve Ltd. , 346 F. Supp. 3d 552, 595 (S.D.N.Y. 2018) (quoting Blum v. Spaha Cap. Mgmt., LLC , 44 F. Supp. 3d 482, 496 (S.D.N.Y. 2014) and collecting cases); see Beth Isr. , 448 F.3......
  • Willis Re Inc. v. Herriott
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 22, 2021
    ...of both common-law conflict-of-laws principles and statutory choice-of-law directives ....’ " Mindspirit, LLC v. Evalueserve Ltd. , 346 F. Supp. 3d 552, 583 (S.D.N.Y. 2018) ; see, e.g. , Cotiviti, Inc. v. McDonald , No. 19-CV-6559 (VSB), 2021 WL 2784529, at *4 (S.D.N.Y. July 2, 2021) ; Caps......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT