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International Strategic Cancer Alliance, LLC v. Stichting Katholieke Universiteit

United States District Court, E.D. Pennsylvania

October 18, 2017



          BAYLSON, J.

         I. Introduction

         Defendant Stichting Katholieke Universiteit moves under Fed.R.Civ.P. 12(b)(6) to dismiss Plaintiff International Strategic Cancer Alliance, LLC's complaint for failure to state a claim. Defendant contends that Plaintiff's breach of contract, unjust enrichment, promissory estoppel, and fraud by concealment claims are barred by the statute of limitations and that Plaintiff has inadequately pled the existence of an agreement.

         II. Factual[1] and Procedural Background

         According to the Complaint, Plaintiff refers its clients to physicians for care and treatment. Plaintiff also provides assistance to other health care providers to obtain state-of-the-art cancer diagnosis and treatment procedures. (ECF 1, “Compl.” ¶ 5). In or about 2006, Dr. Orn Adalsteinsson, Chief Executive Officer of Plaintiff, became aware of a diagnostic procedure using a novel contrast agent, ferumoxtran-10 (brand name, “Combidex”) owned and developed by AMAG Pharma (“AMAG”). (Id. ¶ 6). In 2006, Plaintiff began directing patients to Defendant for MRI scans using Combidex. (Id. ¶ 9).

         Dr. Barentsz, Head of the Department of Radiology at Defendant, met in Pennsylvania with representatives of Plaintiff to develop a strategy to acquire and keep Combidex available for the treatment of referred cancer patients. (Id. ¶ 11). Defendant also expressed a desire to partner with Plaintiff so that both would have access to Combidex. (Id. ¶ 12). Thereafter, Plaintiff initiated meetings with AMAG to convince them to license Combidex to Defendant. (Id.)

         At a meeting between Plaintiff, Defendant, and AMAG on or about April 22, 2010, AMAG agreed to continue discussions with both Plaintiff and Defendant regarding licensing Combidex to Defendant. (Id. ¶ 13). Plaintiff and Defendant developed a Letter of Intent which after intensive negotiations conducted by Dr. Adalsteinsson, resulted in a Service Agreement between AMAG and Defendant dated May 19, 2011. (Id. ¶ 14). The Service Agreement allowed Defendant, for a period of one year, to produce Combidex for use in clinical trials and to determine if the product could be produced according to its specification. (Id. ¶ 14). Dr. Adalsteinsson undertook efforts to recruit Dr. Lewis, the inventor of Combidex, to participate in the Service Agreement. Plaintiff even drafted Dr. Lewis's consulting contract with Defendant at Plaintiff's own expense. (Id. ¶ 15). In late 2011 and 2012, Plaintiff, jointly with Defendant, conducted further negotiations with AMAG for a limited territorial license of Combidex. (Id. ¶ 16).

         Because AMAG had no further interest in producing or licensing Combidex to third parties (id. ¶ 17), Plaintiff convinced AMAG to sell all of its Combidex-related assets to Defendant on favorable terms (id. ¶ 18). As part of these discussions, Defendant assured Plaintiff that it would be allowed to: (1) take the lead in seeking FDA approval of Combidex, and (2) set up a patient treatment center in North America making use of Combidex. (Id. ¶ 19). Dr. Adalsteinsson had numerous meetings with Dr. Barentsz to discuss the best plan for obtaining FDA approval and Plaintiff's role in that process. (Id.) Specifically, Dr. Barentsz assured Dr. Adalsteinsson that Plaintiff would receive rights to acquire and use the Combidex nanoparticle in North America as well as the ability to use Combidex for clinical trials to obtain FDA approval. Id. Dr. Adalsteinsson pursued fundraising efforts to assist Defendant in funding its purchase of rights to Combidex. (Id.) The parties prepared term sheets in December 2012, followed by an Asset Purchase Agreement between AMAG and Defendant, which closed on or about February 19, 2013. (Id.)

         Plaintiff took physical possession of approximately half of AMAG's documents and records relating to Combidex, including those pertaining to FDA approval. (Id. ¶ 20). As agreed, Plaintiff maintains these materials to this day in a storage facility at its own expense. (Id.) In 2014, Defendant resumed manufacturing Combidex, after acquiring the rights to do so. (Id. ¶ 21). Later, in November 2014, at the request of Defendant, Dr. Adalsteinsson attended a meeting wherein he participated in mapping out a strategy for FDA approval of Combidex in the United States. (Id. ¶ 22).

         In 2015, Defendant informed Plaintiff that it was commercializing Combidex through its new for-profit holding company, SPL Medical B.V. ("SPL"), to which, “on information and belief, Defendant transferred the Combidex technology assets.” (Id. ¶ 24). Defendant further informed Plaintiff that it was collaborating with a different U.S. partner to bring Combidex to the U.S. market and that it would not involve Plaintiff at all. (Id.) Defendant provided Plaintiff no compensation or value for the benefits Plaintiff conferred on Defendant. (Id. ¶ 25).

         Plaintiff filed its Complaint on May 3, 2017. (ECF 1). Defendant filed its Motion to Dismiss on July 17, 2017. (ECF 8). Plaintiff filed its Response to the Motion on August 18, 2017. (ECF 13). Defendant filed its Reply in Support of its Motion on August 30, 2017. (ECF 14).

         III. Parties' Contentions

         The Complaint raises four claims:

• Count I: Breach of Oral Contract;
• Count II: Unjust Enrichment (Quantum Meruit);
• Count III: Promissory Estoppel; and
• Count IV: Fraud by Concealment.

         A. Breach of Contract and Promissory Estoppel (Counts I and III)

         The Complaint alleges that Defendant refused to provide the promised consideration in exchange for all the services Plaintiff performed. Defendant contends in its Motion to Dismiss that Plaintiff has failed to adequately plead: 1) a manifestation of an intent to be bound by the terms of the agreement; and (2) sufficiently definite terms of the alleged contract. As a result, Defendant asserts, the complaint fails to set forth “sufficient factual matter” establishing the existence of an oral contract. (See ECF 8). Plaintiff responds that the intent to be bound is implicit in the parties' conduct, that Plaintiff's services constitute consideration, and that the surrounding circumstances further bolster its claims. (See ECF 13). In its Reply, Defendant highlights that, because the basic terms of a contract-- compensation, consideration, duration, and the like--are essential to pleading and missing here, the Complaint must be dismissed. (See ECF 14).

         B. Unjust Enrichment (Count II)

         The Complaint alleges Plaintiff conferred benefits upon Defendant and Defendant's retention of those benefits without compensating Plaintiff would amount to unjust enrichment. Defendant argues that Plaintiff has not pleaded sufficient facts to demonstrate that it would be inequitable for Defendant to retain the alleged value of the benefits (if any) contributed by Plaintiff. Plaintiff responds that it has sufficiently pled the elements for unjust enrichment found in Kontonotas, [2] which is sufficient on Rule 12(b)(6) review. Defendant replies that the district court opinion giving rise to Kontonotas based its holding on specific allegations of compensation set forth in that complaint and that, as a result, Kontonatas is inapplicable to this case.

         C. Fraud by Concealment (Count IV)

         The Complaint also includes a claim for fraud by concealment, alleging that Defendant Plaintiff intentionally concealed its intentions to form a for-profit company, commercialize Combidex, and cut Plaintiff out of its dealings involving Combidex. Plaintiff claims Defendant had a duty to speak because the parties were engaged in a joint effort, there was a relationship of trust and confidence, and Defendant was a larger and more sophisticated entity that exhibited domination and influence over Plaintiff. In the Motion to Dismiss, Defendant contends this claim is inadequately pled in the Complaint because: (1) Plaintiff does not allege any particular facts about the purported misleading statements made by Defendant (when, where and by whom); and (2) there is no duty to speak in an “arms-length” business relationship. Plaintiff responds that the heightened pleading standard for fraud claims is applied more flexibly to claims of fraudulent concealment, where, by definition, “key factual information remains within the defendant's control as in this case and therefore the complaint is properly pled.” In its Reply, Defendant argues that Plaintiff's position--i.e., that information disparities in business negotiations create confidential relationships--is contrary to law.

         Defendant also contends that Plaintiff's fraudulent concealment claim is barred by the “gist of the action” doctrine. Plaintiff responds that Defendant's actions give rise to Plaintiff's separate action for fraud apart from its other claims.

         D. Statute of Limitations

         Additionally, Defendant argues that the claims are barred by the statute of limitations. Plaintiff responds that its claims are timely because the statute of limitations began to run when Plaintiff knew or should have known that Defendant breached the contract/promises, in 2015. Defendant replies that the Complaint lacks “precision or some measure of substantiation” to survive the limitations bar.

         IV. Legal Standard for Motion to Dismiss for Failure to State a Claim

         In considering a motion to dismiss under Rule 12(b)(6), “we accept all factual allegations as true [and] construe the complaint in the light most favorable to the plaintiff.” Warren Gen. Hosp. v. Amgen, Inc., 643 F.3d 77, 84 (3d Cir. 2011) (internal quotation marks and citations omitted). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its fact.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007)).

         V. Discussion

         A. Statute of Limitations

         In Pennsylvania, [3] the statute of limitations for breach of contract claims is four years. Steiner v. Markel, 968 A.2d 1253, 1255, n.5 (Pa. 2009) (citing 42 Pa.C.S. § 5525). The equitable claims also have a four year limitations period while fraud has a two year limitations period. See Crouse v. Cyclops Indus., A.2d 606, 610 (Pa. 2000); 42 Pa.C.S. § 5524.

         The statute of limitations begins to run when the cause of action accrues, which, under Pennsylvania law, occurs when the contract is breached. Colonial Assurance Co. v. The Mercantile & General Reinsurance Co., 297 F.Supp.2d 764, 769-70 (E.D. Pa. 2003). However, “[u]nder Pennsylvania's discovery rule, the statute of limitations will not begin to run until the plaintiff reasonably knows or reasonably should know: (1) that he has been injured, and (2) that his injury has been caused by another party's conduct.” In re Mushroom Transp. Co. Inc., 382 F.3d 325, 338 (3d Cir. 2004)

         Plaintiff alleges that its agreement with Defendant was that Defendant would perform its part of the contract once Plaintiff had assisted it in acquiring Combidex. Thus, the alleged injury or breach of contract occurred at the time that Defendant acquired Combidex and acted in a manner contrary to Plaintiff's expectations; which Plaintiff alleges is in 2015. Having filed the Complaint on May 3, 2017, Plaintiff alleged sufficient facts to warrant the Court denying any Motion to Dismiss as to the statute of limitations issue on all counts, except for the fraud count. Because the statute of limitations for fraud is two years, and the Court ...

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