Opinion
13-P-1719
11-10-2014
NOVELOS THERAPEUTICS, INC. v. ZAO BAM & another.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
ZAO BAM and ZAO BAM Research Laboratories (collectively, BAM) appeal from a judgment, entered on the pleadings, in favor of Novelos Therapeutics, Inc. (Novelos). A Superior Court judge entered judgment in favor of Novelos, declaring that a 2005 Agreement between Novelos and BAM (the 2005 Agreement) superceded a 2000 Agreement between them (the 2000 Agreement), extinguished any duties or obligations arising out of the 2000 Agreement, and governed the parties' obligations. The judge also dismissed BAM's counterclaims for fraudulent inducement, rescission, breach of the 2000 and 2005 Agreements, and breach of the implied covenant of good faith and fair dealing.
On appeal, BAM contends that the judge (1) improperly discounted factual allegations in BAM's counterclaims and drew inferences in favor of Novelos, and (2) erred in denying BAM leave to substantively amend its counterclaims. We affirm for substantially the reasons set forth in the judge's well-reasoned memorandum of decision. See Kirschbaum v. Wennett, 60 Mass. App. Ct. 807, 809 (2004).
We need not consider BAM's argument that the judge erred in denying its motion to amend its counterclaims because BAM failed to reproduce a motion to amend or any proposed amended counterclaims in the record appendix. See Zedros v. Kenneth Hudson, Inc., 11 Mass. App. Ct. 1007, 1008 (1981); Hahn v. Planning Bd. of Stoughton, 24 Mass. App. Ct. 553, 557 (1987). Even were that not so, BAM's argument would fail as it never moved formally to amend its complaint or provided the judge with substantive factual allegations supporting a proposed amendment.
1. Novelos's claim for declaratory judgment. A judge interprets an unambiguous contract "according to its plain meaning." Southern Union Co. v. Department of Pub. Utils., 458 Mass. 812, 820 (2011). "[A]n ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other's." Suffolk Constr. Co. v. Lanco Scaffolding Co., 47 Mass. App. Ct. 726, 729 (1999) (quotation omitted). We agree with the judge that the plain language of the 2005 Agreement unambiguously indicates the parties' intention that the 2005 Agreement supersede the 2000 Agreement. The parties referred to the 2000 Agreement using past tense, and expressly stated that the intent of the 2005 Agreement "is to establish the relationship between NOVELOS and BAM going forward from the date hereof" (emphasis supplied). Indeed, the 2005 Agreement's integration clause expressly states that it "constitutes the entire agreement between the parties relating to the subject matter hereof."
2. BAM's counterclaims. "We review the allowance of a motion for judgment on the pleadings de novo, based on our review of the allegations in the complaint." Kraft Power Corp. v. Merrill, 464 Mass. 145, 147 (2013). See Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008) ("What is required at the pleading stage are factual allegations plausibly suggesting [not merely consistent with] an entitlement to relief") (quotation omitted). Construing all factual allegations and inferences therefrom in favor of BAM, we conclude that the judge properly dismissed BAM's counterclaims under Mass.R.Civ.P. 12(c), 365 Mass. 754 (1974).
A. Breach of contract. We discern no error in the dismissal of BAM's claims for breach of contract. BAM claimed that Novelos beached the 2000 Agreement by modifying or taking steps to modify the drug without obtaining BAM's permission. BAM failed, however, to present any concrete factually based assertion that Novelos actually modified the drug in preclinical or clinical studies while the 2000 Agreement was in effect and prior to the effective date of the 2005 Agreement. Rather, BAM relied on a letter sent by Novelos to the Food and Drug Administration in August, 2005, some four months after the 2005 Agreement was executed, to support its claim. BAM's allegations are speculative and conclusory, and accordingly, its claim was properly dismissed. See Iannacchino v. Ford Motor Co., supra ("[P]laintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions. . . . Factual allegations must be enough to raise a right to relief above the speculative level") (quotation omitted).
We agree with the judge that the 2000 Agreement only prohibits actual modification of the drug, not the intention to modify the drug at some point in the future.
Indeed, when pressed by the judge at the hearing on Novelos's rule 12(c) motion, BAM conceded that without discovery, it could not produce further information about the alleged modification.
Likewise, BAM failed to state a claim for breach of the 2005 Agreement because that agreement contains no requirement that Novelos continue developing the drug, or that it commercialize products using BAM technology. BAM's attempt to resurrect its breach of contract claim with the implied covenant of good faith and fair dealing is misguided. See Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 289 (2007) ("[T]he implied covenant of good faith and fair dealing cannot create rights and duties that are not already present in the contractual relationship").
B. Fraudulent inducement. Even passing over the three-year statute of limitations as a bar to BAM's claim for fraudulent inducement, the judge properly dismissed that claim because BAM's allegations fall far below the heightened requirements of Mass.R.Civ.P. 9(b), 365 Mass. 751 (1974). Aside from BAM's failure to adequately allege that Novelos modified the drug prior to April 4, 2005, the judge correctly determined that the language from the 2005 Agreement on which BAM relies "is in the nature of a release . . . , [and is] not a representation by either one as to its own performance, or its intentions for the future." See Commerce Bank & Trust Co. v. Hayeck, 46 Mass. App. Ct. 687, 693 (1999) ("[Defendant] could not have been induced to sign the note because of a misrepresentation made by [another], as none was made").
We agree with Novelos that BAM's claim is not saved by G. L. c. 260, § 36, or the discovery rule.
Other arguments advanced by BAM have not been overlooked. We have considered them, but conclude nothing therein requires more extended discussion. See Commonwealth v. Domanski, 332 Mass. 66, 78 (1954).
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Judgment affirmed.
By the Court (Grasso, Kantrowitz & Meade, JJ.), Clerk Entered: November 10, 2014.