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Maxim Defense Industries, LLC v. Kunsky

United States District Court, D. Minnesota

October 10, 2019

Maxim Defense Industries, LLC, Plaintiff,
Jake Kunsky, and Unconventional Equipment Solutions, LLC, Defendants.


          Paul A. Magnuson United States District Court Judge

         This matter is before the Court on Defendants' Motion to Dismiss. For the following reasons, that Motion is granted in part and denied in part.


         The complete factual background is set forth in the Court's Order (Docket No. 19) denying a preliminary injunction and need not be repeated here. In brief, Maxim Defense Industries, LLC (“Maxim”) brought this case following the termination of its employment relationship with Jake Kunsky (“Kunsky”) and Kunsky's company, Unconventional Equipment Solutions, LLC (“UES”). Maxim alleges that Kunsky misused and destroyed Maxim's data, made unauthorized purchases with Maxim's credit card, and has not returned Maxim's devices and equipment.

         Maxim unsuccessfully sought injunctive relief requiring Kunsky to comply with the restrictive covenants in the parties' Consulting Agreement (“Agreement”), as well as to return an Apple Time Capsule and provide thumb drives that were connected to Maxim's devices. (Docket No. 19.) Maxim subsequently filed an Amended Complaint, pleading alternate theories of relief for the allegedly unreturned property, misused information and data, and unauthorized credit-card purchases. (Docket No. 21.) Kunsky and UES now move to dismiss Counts II through VIII of the Amended Complaint for failure to state a claim.


         To survive a motion to dismiss under Rule 12(b)(6), a complaint need only “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fed.R.Civ.P. 12(b)(6). A claim bears facial plausibility when it allows the Court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. When evaluating a motion to dismiss under Rule 12(b)(6), the Court must accept plausible factual allegations as true. Gomez v. Wells Fargo Bank, N.A., 676 F.3d 655, 660 (8th Cir. 2012). But “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are insufficient to support a claim. Iqbal, 556 U.S. at 678.

         Kunsky and UES ask the Court to dismiss Maxim's claims for a declaratory judgment, breach of contract, conversion, breach of loyalty, violation of the Computer Fraud and Abuse Act, civil theft, and unjust enrichment. At this stage, the Court assumes the allegations in the Amended Complaint are true and views them in the light most favorable to Maxim. See Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 933 n.4 (8th Cir. 2012).

         A. Declaratory Judgment

         In Count II, Maxim asks for a declaratory judgment under 28 U.S.C. §§ 2201-02, regarding three patent application agreements. Maxim claims that because Kunsky already executed the agreements, they are valid and enforceable under contract law. Kunsky and UES, on the other hand, contend that Maxim is asking for a declaratory judgment regarding patent ownership. Under this theory, Defendants assert that because no patents have yet issued, the dispute is not ripe and therefore the claim should be dismissed.

         Taking all the facts in the Amended Complaint as true, this claim seeks resolution of the validity of the agreements assigning patent application ownership, not patent ownership itself. Although Defendants are right that any underlying patent ownership claim is not ripe, the contract claim is ripe. Maxim has stated a claim on which relief can be granted on its declaratory judgment claim.

         B. Breach of Contract

         Count III pleads that Kunsky and UES breached the Agreement's confidentiality restrictions in three ways. First, Maxim alleges that Kunsky and UES did not return property and confidential information when asked. To establish a breach-of-contract claim, Maxim must prove three elements: (1) contract formation, (2) that Maxim performed any conditions precedent to demand Kunsky and UES's performance, and (3) that Kunsky and UES breached the contract. Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833 (Minn. 2011) (citing Briggs Transp. Co. v. Ranzenberger, 217 N.W.2d 198, 200 (Minn. 1974)). The Amended Complaint alleges that the Agreement required Defendants to return Maxim's property and confidential information, but that Defendants did not comply. (Am. Compl. ¶¶ 46-47). Maxim accordingly meets the breach-of-contract pleading standards for unreturned property.

         Second, Maxim claims that Kunsky and UES destroyed confidential information, again violating the Agreement. Maxim sufficiently pleads that the data wiped from the laptop and cellphone is lost, and the amount of information lost cannot be fully comprehended at this time. Assuming that the Agreement prohibited Defendants from destroying confidential information, as Maxim alleges, ...

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