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ShoMe Technologies v. Nobska Group, LLC, 05-2425 (2006)

Court: Court of Appeals for the Fourth Circuit Number: 05-2425 Visitors: 36
Filed: Jul. 18, 2006
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 05-2425 SHOME TECHNOLOGIES, INCORPORATED, Plaintiff - Appellant, versus NOBSKA GROUP, LLC, Defendant - Appellee. Appeal from the United States District Court for the District of Maryland, at Baltimore. Andre M. Davis, District Judge. (CA-05- 2316-AMD) Submitted: July 6, 2006 Decided: July 18, 2006 Before MOTZ, TRAXLER, and SHEDD, Circuit Judges. Affirmed by unpublished per curiam opinion. Thomas P. Silis, Alexandria, Virginia,
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                            UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                            No. 05-2425



SHOME TECHNOLOGIES, INCORPORATED,

                                              Plaintiff - Appellant,

          versus


NOBSKA GROUP, LLC,

                                              Defendant - Appellee.


Appeal from the United States District Court for the District of
Maryland, at Baltimore. Andre M. Davis, District Judge. (CA-05-
2316-AMD)


Submitted:   July 6, 2006                  Decided:   July 18, 2006


Before MOTZ, TRAXLER, and SHEDD, Circuit Judges.


Affirmed by unpublished per curiam opinion.


Thomas P. Silis, Alexandria, Virginia, for Appellant. David J.
Heubeck, VENABLE, L.L.P., Baltimore, Maryland, for Appellee.


Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

     On August 23, 2005, ShoMe Technologies, Inc. (“ShoMe”) filed

suit against Nobska Group, LLC, (“Nobska”) alleging breach of

contract, breach of duty of negotiation in good faith, intentional

interference with prospective economic advantage, and negligent

misrepresentation. Nobska moved to dismiss the suit on all counts.

The district court granted Nobska’s motion, finding that the

“plaintiff    has   not    and    simply     cannot    plausibly   allege    the

rudimentary     elements     of    its       ostensible   claims.”          ShoMe

Technologies, Inc. v. Nobska Group, LLC, No. AMD 05-2316 (D. Md.

Nov. 23, 2005).     ShoMe has appealed the district court’s dismissal

with regard to its negligent misrepresentation claim.                Finding no

error, we affirm.

     In February 2004, ShoMe and Nobska entered into a Letter of

Intent regarding Nobska’s acquisition of “exclusive licensing,

commercial exploitation, and development rights” for certain ShoMe

technologies    and    software,     “subject     to    the   execution    of    a

definitive License Agreement.”           J.A. 11.*      The Letter of Intent

provided Nobska with a 60-day due diligence period, ending in April

2004, to investigate ShoMe’s business and assets.               J.A. 12.        The

Letter   of   Intent   contained    a    non-solicitation      provision    that


     *
      In reviewing a dismissal under Federal Rule of Civil
Procedure 12(b)(6), we view the complaint in the light most
favorable to the plaintiff and accept all of the plaintiff’s well
pleaded assertions as true. Venkatraman v. REI Systems, Inc., 
417 F.3d 418
, 420 (4th Cir. 2005).

                                         2
precluded    ShoMe   from    entering     into    or   considering    any    other

licensing or acquisition proposal until April 1, 2004, or until

Nobska    informed   ShoMe    it    was       terminating   any   negotiations,

whichever occurred earlier.          J.A. 5.       With the exception of the

non-solicitation provision, a provision regarding governmental

approvals, and a provision requiring the representation of no

materially adverse changes in ShoMe’s business or assets, which

were enforceable solely against ShoMe, the Letter of Intent, by its

express terms, did not “create any legal obligations on the part

of, or any rights in favor of, [Nobska], [ShoMe], or any other

party.”    J.A. 13-14.

     On April 26, 2004, after the due diligence period had ended,

Nobska sent a letter to ShoMe, stating that Nobska had instructed

its attorneys to begin drafting a licensing agreement consistent

with the Letter of Intent for ShoMe to review.                    J.A. 15.    Two

months later, Nobska notified ShoMe that, after completing its due

diligence investigation, Nobska would not proceed with a licensing

agreement.    J.A. 16.

     On August 23, 2005, ShoMe filed suit against Nobska.                   Nobska

moved to dismiss the suit, claiming that the Letter of Intent, by

its express language, was not binding on Nobska and did not cause

Nobska to owe ShoMe any legal duty unless and until a Licensing

Agreement was executed.            The district court granted Nobska’s

motion, and ShoMe timely appealed.


                                          3
       The grant of a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6) is reviewed de novo.            
Venkatraman, 417 F.3d at 420
.      To state a claim for negligent misrepresentation under

Maryland law, a plaintiff must allege:

       (1) the defendant, owing a duty of care to the plaintiff,
       negligently asserts a false statement;
       (2) the defendant intends that his statement will be
       acted upon by the plaintiff;
       (3) the defendant has knowledge that the plaintiff will
       probably rely on the statement, which, if erroneous, will
       cause loss or injury;
       (4) the plaintiff, justifiably, takes action in reliance
       on the statement; and
       (5) the plaintiff suffers damage proximately caused by
       the defendant's negligence.

Gross v. Sussex Inc., 
630 A.2d 1156
, 1162 (Md. 1993).

       In dismissing ShoMe’s negligent misrepresentation claim, the

district court found that Nobska did not owe ShoMe a duty of care

“insofar as it chose to communicate with [ShoMe] pursuant to the

letter of intent.” J.A. 48.         We agree.         Under Maryland law, a

plaintiff asserting a claim of economic loss due to negligent

misrepresentation may show that the defendant owed him a duty of

care if an “intimate nexus” exists between the parties.                 Griesi v.

Atlantic Gen. Hosp. Corp., 
756 A.2d 548
, 554 (Md. 2000).                    This

“intimate nexus” can be demonstrated by showing contractual privity

between    the   parties,   or   its       equivalent,      such   as   “special

relationships    consummated     during      the   course     of   pre-contract

negotiations.”      
Id. ShoMe claims that
  the    lengthy    contract


                                       4
negotiations between it and Nobska, which were documented in the

Letter of Intent, established a special relationship and intimate

nexus that caused Nobska to owe ShoMe a duty of care.                    This

assertion, however, is contradicted by the express language in the

Letter of Intent, which states that the Letter is an “expression of

intent only . . . and the parties do not intend to be legally bound

or otherwise to incur any obligations with respect to the proposed

transactions” until the execution of a License Agreement. J.A. 14.

ShoMe relies heavily on cases where Maryland courts have allowed

negligent misrepresentation cases to proceed when, in the course of

pre-contract    employment     negotiations,   the    defendant     maintains

“exclusive     control   of”    and   withholds      “vital   and   material

information” that is necessary for the plaintiff to completely

understand the situation.       See Odyssey Travel Center, Inc. v. RO

Cruises, Inc., 
262 F. Supp. 2d 618
, 628 (D. Md. 2003).                 In the

present case, ShoMe was fully aware that Nobska’s failure to act

within the deadlines set out in the Letter of Intent allowed ShoMe

to seek other licensing and acquisition proposals.            By not seeking

other investors after the deadline, ShoMe acted “at its peril.”

J.A. 48.

     Furthermore, the district court held that ShoMe could not

show, as a matter of law, that it acted in:

     reasonable reliance on the April 26, 2004, letter in
     failing to seek “alternative channels of distribution . .
     . .” [T]he very fact that [Nobska] had not communicated
     the outcome of its due diligence to [ShoMe] by the

                                      5
     deadline established in the letter of intent (60 days
     from February 6, 2004) affirmatively undermines, rather
     than supports, any claim of reasonable reliance on
     [ShoMe’s] part.

J.A. 48.   We agree that, as a matter of law, ShoMe has failed to

show that it reasonably relied on Nobska’s April 26, 2004, letter

in failing to seek alternative investors, as it was permitted to do

under the Letter of Intent following the April 1 deadline.

     Since ShoMe has not alleged any set of facts that could state

a claim of negligent misrepresentation, we affirm the district

court’s decision. We dispense with oral argument because the facts

and legal contentions are adequately presented in the materials

before the court and argument would not aid the decisional process.



                                                          AFFIRMED




                                6

Source:  CourtListener

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