427 F.Supp.3d 571
M.D. Pa.2019Background
- Plaintiff Mukeshkumar B. Patel and Defendant Vithal D. Dhaduk were 50/50 partners in two U.S. companies: Somahlution (Soma) and Global Pharma Analytics, LLC (GPA).
- On July 16, 2015 they signed a Memorandum of Understanding (MOU) to end their business relationship; ¶3 of the MOU states: “Dhaduk will pay [Patel] USD 9.45 Million as soon as he can for exiting Soma/GPA.”
- After execution Patel relinquished his ownership interests; Dhaduk has not paid the $9.45 million but later invested approximately $30 million personally into Soma.
- Patel sued for breach of contract; the case proceeded to summary judgment on Patel’s breach claim (and various counterclaims were dismissed earlier).
- The court found the MOU was a fully integrated, enforceable contract, construed “as soon as he can” under the majority rule (promise to pay when able), concluded Dhaduk had the ability to pay, and granted summary judgment to Patel for breach and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the MOU is a binding contract | MOU memorializes and binds parties to the separation terms | MOU was an informal outline, not a binding contract | MOU is a valid, enforceable contract (parties intended to be bound; definite terms; consideration) |
| Whether ¶3 is sufficiently definite | ¶3 clearly obligates Dhaduk to pay $9.45M “as soon as he can” for Patel’s exit | Phrase is indefinite and payment was intended to come only from future profits of Soma/GPA | ¶3 is sufficiently definite and unambiguous; extrinsic negotiations barred by integration clause |
| Proper construction of “as soon as he can” | Payment due within reasonable time / or when promisor is able; plaintiff argues reasonable time has passed and promisor had ability | Payment was contingent on Soma/GPA becoming profitable; not yet due | Court applied majority rule (pay when able); found Dhaduk acquired ability to pay (personal $30M investment) and thus breached |
| Damages — are they provable with reasonable certainty? | Damages equal the stated $9.45M in ¶3; thus reasonably certain | No meaningful dispute about amount | Damages are reasonably certain; summary judgment for $9.45M (breach established) |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (genuine issue for trial standard)
- American Eagle Outfitters v. Lyle & Scott Ltd., 584 F.3d 575 (3d Cir. 2009) (contract-formation intent and definiteness principles)
- Ware v. Rodale Press, Inc., 322 F.3d 218 (3d Cir. 2003) (damages must be proved to reasonable certainty)
- Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425 (Pa. 2004) (integration/parol evidence rule and when a writing is fully integrated)