United States District Court, D. Maryland, Southern Division
Heravi, Plaintiff, represented by Melvin White, Berliner
Corcoran & Rowe, LLP.
Network Solutions, LLC, Defendant, represented by Alain
Jeffrey Ifrah, Ifrah PLLC & Rachel Hirsch, Ifrah PLLC.
MEMORANDUM OPINION AND ORDER
W. GRIMM, District Judge.
Babak Heravi co-founded Defendant Gaming Network Solutions,
LLC, ("GNS") and has brought a ten-claim complaint
against GNS in a dispute relating to certain equity that he
previously held in GNS and alleged fraud on the part of GNS
for its use of his social security number to receive
payments. Heravi claims that this equity stake, which he
initially paid for with debt, was subsequently part of his
compensation under an employment agreement. Separately, he
also claims that GNS violated an operating agreement with
respect to certain financial disclosures that it was
obligated to make. GNS disputes the existence of the
employment agreement, denies any fraudulent misconduct,
challenges the sufficiency of his pleadings with respect to
the breach of the operating agreement claim, and has filed a
motion to dismiss. Def.'s Mot., ECF No. 17.
grant in part and deny in part GNS's motion to dismiss.
Because I find that Heravi has pleaded sufficient facts to
establish the existence of an employment agreement between
him and GNS, I will deny GNS's motion to dismiss with
respect to his breach of contract and implied contract
claims. Based on this finding, I also will deny GNS's
motion to dismiss with respect to Heravi's promissory
estoppel and equitable estoppel claims. I will also deny
GNS's motion to dismiss with respect to the breach of
contract claim relating to GNS's operating agreement
because he has pleaded sufficient facts to support this
claim. Because Maryland law does not recognize independent
claims in these circumstances for breach of the covenant of
good faith and fair dealing, accounting, and fiduciary duty,
I will grant GNS's motion to dismiss with respect to
these claims. Further, given that Heravi has not demonstrated
that monetary damages are an insufficient remedy, I will
dismiss Heravi's claim for specific performance. Finally,
due to Heravi's failure to allege with sufficient
particularity that GNS made its statement about the use of
his social security number in conjunction with the PayPal and
Facebook accounts with the intent to defraud him, I will
grant GNS's motion to dismiss with respect to his fraud
count but will permit Heravi to amend his complaint again to
include a negligent misrepresentation claim based on
GNS's use of these accounts.
co-founded GNS in 2012. Am. Compl. Â¶ 8, ECF No. 13. GNS is
"a developer, provider and operator of online and mobile
interactive multi-layer game applications and turnkey
solutions participating in the worldwide market."
Id. Â¶ 5. During the course of his employment
relationship with GNS, Heravi received certain equity (the
"Equity Stake") in GNS by exercising an option
under a February 1, 2012, Professional Services Agreement.
Id. Â¶Â¶ 17-19. Heravi paid for this option through a
loan from GNS pursuant to a four-year note. Id.
2012, Heravi's professional relationship with GNS
appeared to have soured, which led to the termination of his
Professional Services Agreement in February 2013. Following
the termination of the Professional Services Agreement,
Heravi received an email from GNS's other co-founder,
William Wade, about Heravi continuing his work for GNS.
Id. at Â¶Â¶ 8, 25. On June 13, 2013, Wade emailed
Heravi as follows:
I discussed our conversation from mid May with John and
further got some input from Patrick. As you may be aware,
Michael D'Arrigo, a very experience engineer and product
manager was brought on late last year. Michael has been
driving the fixes to our system, the audit with GLI, and
readying the company for real money launch.
He has done an excellent job under John and Patricks counsel,
and has brought together a real sense of teamwork and
productivity that did not exist prior to his joining the
company. Real money play and the add of a call center in
Manila have gone into production and the product was launched
live last weekend for real money play.
I exposed your interest to remain involved with GNS with John
and Patrick. I think under the current team culture, an
"on call" availability is agreeable, so long as we
do not have disruption to the new culture and smooth
operations enjoyed by the team executing the business plan
As we discussed, the board supports the decisions and actions
of John and I do not want to undermine his authority and
executive control of the company. I was able to get John and
the board to agree upon a compromise to avail an availability
in the future of your past knowledge and experience, if it is
needed and as a informal collaborative engagement. In
exchange, we are willing to waive any further payment
requirements for the purchased equity for you to be available
as needed as a special consultant. The shares would remain in
escrow during this informal time horizon and we would have no
termination right to the engagement other than the right to
not collaborate if the energy did not prove to be a value for
the company. In effect, you will be connected to the company
as a special advisor and the note payments would be booked as
compensation whether you provided any services or not.
If we find that the engagement becomes more than periodic
sound boarding, we can re-evaluate the engagement and move to
a more formal process
I think this enables us to put behind the past and move
forward as engaged shareholders all seeking success and
shareholder distributions when we reach profitability.
Certainly that's why I've supported this financially
with no payments to date for any energy I've invested
dating back to 2005, and I'd assume as a significant
shareholder, your in it for the same.
Glad to discuss this further when we have our monthly call
All the best.
Rec. 3, ECF No. 19-1. That same day, Heravi responded by
First of all I am glad that I am still part of the family and
I am happy that now we have someone who can get things done
the way its desired. I gladly accept this proposal regarding
my relationship with the company and thank you for making
this happen. I know, going forward, I will show myself more
and more useful and will be on the side that I love and enjoy
also you, John and Patrick and of course the rest of the
team's side. As I am writing these lines, I assure you,
with my honor, that I do not have any problem what so ever
with anybody in the company and my only intention is to be at
Regarding the compensation, I can only say thank you, as I
did not have any intention to be paid and my old offer also a
$1 per month would have subside too. I am not saying this,
because I do not need money, but because, I feel that helping
at this time is more important than money. I have friends
there that are worth more than any money in the world to me
and they have already put a lot to make this happen.
Please lets talk tomorrow to work out the details so we all
are on the same page and know what are the requirements and
time frames. Again thanks for your, as always positive and
supportive, efforts and I am so happy that I have you in my
life as my close friend.
Id. at 2. On June 14, 2013, Wade replied with the
Still sick as a dog with Officemax breathing down my neck. ...