Mikkilineni v. PayPal, Inc.
N19C-05-123 PRW CCLD
| Del. Super. Ct. | Jul 1, 2021Background:
- Plaintiff Maheswar Mikkilineni (pro se) operates Maheswar.org and contracted with an India-based developer (Spark) for website development; he paid two $4,000 advance fees via PayPal.
- Spark missed deadlines; Mikkilineni filed and revived a PayPal payment dispute; PayPal refunded one of the two payments, leading to dispute over PayPal’s handling.
- GoDaddy hosted the site; plaintiff alleges server glitches, submission-form errors, and data leakage tied to GoDaddy hosting.
- Upwork connected plaintiff to a freelancer who allegedly took payment and the original animation file; plaintiff seeks relief from Upwork for failing to resolve the problem.
- Plaintiff previously litigated related claims in the Justice of the Peace Court (lost on a directed verdict re: PayPal; separate Upwork claim dismissed for arbitration); he did not appeal.
- Superior Court granted defendants’ motions: GoDaddy and PayPal claims dismissed under Rule 12(b)(6); Upwork dismissed under Rule 12(b)(1) for arbitration; all dismissals with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GoDaddy is liable in negligence for website/server failures | GoDaddy’s servers caused glitches and data theft, producing economic loss | Economic loss doctrine bars tort recovery for purely economic damages arising from contractual services | Dismissed; economic loss doctrine applies; alternative breach claim fails for lack of factual support |
| Whether PayPal’s dispute decision can be relitigated here | PayPal acted in bad faith, committed fraud, and mishandled IP/dispute resolution | Prior Justice of the Peace judgment bars relitigation (res judicata and collateral estoppel); claims lack merit | Dismissed; precluded by res judicata/collateral estoppel; fraud and bad-faith/inferred implied covenant claims fail on merits/pleading rules |
| Whether fraud/bad-faith claims against PayPal are viable | PayPal made false representations and intended to deprive plaintiff of remedies | Fraud not pleaded with Rule 9(b) particularity; alleged conduct mirrors contract dispute; implied covenant duplicative of contract | Dismissed; fraud lacks particularity and is essentially a repackaged contract claim; implied covenant cannot override express terms |
| Whether Upwork must arbitrate plaintiff’s claims | Upwork’s refusal to meaningfully intervene created compensable torts and interference | Plaintiff accepted Upwork’s user agreement containing a broad arbitration clause; claims fall within arbitration scope | Dismissed for lack of jurisdiction; arbitration clause covers disputes and is enforceable; alternatively the claims fail on the merits |
| Whether plaintiff states tortious interference against Upwork | Upwork’s inaction after notification amounts to wrongful interference | Tort requires intentional, unjustified act that caused the breach; Upwork did not cause freelancer’s breach | Dismissed; not reasonably conceivable that Upwork caused breach and a party to a contract cannot be liable for inducing its own contract’s breach |
Key Cases Cited
- Danforth v. Acorn Structures, Inc., 608 A.2d 1194 (Del. 1992) (economic loss doctrine bars tort recovery for pure economic loss)
- LaPoint v. AmerisourceBergen Corp., 970 A.2d 185 (Del. 2009) (transactional approach for res judicata; pragmatic factors for same-transaction analysis)
- RBC Capital Mkts., LLC v. Educ. Loan Tr. IV, 87 A.3d 632 (Del. 2014) (elements and purpose of res judicata)
- Parfi Holding AB v. Mirror Image Internet, Inc., 817 A.2d 149 (Del. 2002) (principles favoring arbitration and contract interpretation govern arbitrability)
- Viacom Int’l, Inc. v. Winshall, 72 A.3d 78 (Del. 2013) (court’s role in deciding whether parties should arbitrate)
- Dieckman v. Regency GP LP, 155 A.3d 358 (Del. 2017) (nature and limits of implied covenant of good faith and fair dealing)