AlSayer v. omniX Labs, Inc.
1:22-cv-02628
S.D.N.Y.Jan 15, 2025Background
- Plaintiff, Muthla AlSayer, and Anoop Kanthan formed TagXLabs (later renamed OmniX, the defendant), initially funded in part by a $1.3M loan from the Kuwait National Fund (KNF) obtained via a Kuwaiti sole proprietorship (Tags Lab) set up by AlSayer solely to access the funding.
- The KNF loan, available only to Kuwaiti entities, was represented in investor communications as funding for OmniX, and the proceeds were used to pay OmniX’s startup expenses.
- Tags Lab had no independent business operations; it existed only to channel the KNF loan to TagXLabs/OmniX.
- AlSayer, personally liable as both manager of Tags Lab and as surety for the loan, later resigned from OmniX's management amid disputes regarding repayment responsibility for the KNF loan.
- Upon OmniX’s acquisition by EverWash, AlSayer was left with personal liability on the KNF loan, and OmniX denied any obligation to repay the loan on her behalf.
- AlSayer sued OmniX for breach of oral/implied agreement, unjust enrichment, indemnity, and declaratory relief regarding responsibility for the KNF loan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of contract (oral) | Oral agreement made; OmniX responsible. | No binding oral contract; discussions were too indefinite. | No enforceable oral contract; too vague. |
| Existence of contract (implied-in-fact) | Conduct showed mutual intent for OmniX to repay KNF loan. | Loan never intended as OmniX obligation; funds weren't for OmniX. | Implied contract: OmniX responsible for repayment. |
| Statute of Frauds defense | Agreement could be performed in under a year; was not a promise to third-party creditor. | Barred by statute: not performable within a year; promise to pay debt of another. | Not barred: could be performed within a year; promise made to obligor, not creditor. |
| Declaratory relief | Immediate controversy; liable as surety for KNF loan; wants court declaration. | No damages yet; declaratory relief not appropriate. | Declaratory judgment granted: OmniX liable for AlSayer’s KNF obligations. |
| Unjust enrichment/Indemnity | Alternative equitable claims for repayment/compensation. | Contract bars unjust enrichment; no indemnification basis. | Both claims dismissed; implied contract governs, and indemnity inapplicable. |
Key Cases Cited
- Jemzura v. Jemzura, 330 N.E.2d 414 (N.Y. 1975) (distinguishing contracts implied-in-fact from written or oral contracts)
- Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) (acceptance of contract terms by conduct constitutes binding agreement)
- Sackin v. TransPerfect Glob., Inc., 278 F. Supp. 3d 739 (S.D.N.Y. 2017) (elements of breach of contract under New York law)
- Cobble Hill Nursing Home, Inc. v. Henry & Warren Corp., 548 N.E.2d 203 (N.Y. 1989) (agreement must be reasonably definite to be enforceable)
- Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573 (2d Cir. 2006) (unjust enrichment unavailable when contract governs subject matter)
- Caro Cap., LLC v. Koch, 2021 WL 1595843 (S.D.N.Y. 2021) (not official reporter citation, so omitted)