SyraInfotek, LLC v. Sakirrola

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

SYRAINFOTEK, LLC,

Plaintiff,

v. Case No.: 8:20-cv-797-T-33CPT

VENKATA P. SAKIRROLA,

Defendant.

____________________________/

ORDER

This cause comes before the Court pursuant to Defendant

Venkata P. Sakirrola’s Motion to Dismiss Plaintiff’s Amended

Complaint (Doc. # 14), filed on May 4, 2020. Plaintiff

SyraInfotek, LLC filed a response in opposition on May 25,

2020. (Doc. # 18). For the reasons explained below, the Motion

is granted in part and denied in part.

I. Background

According to the amended complaint, Yaser Hameed is the

Chief Executive Officer of SyraInfotek, a technology company.

(Doc. # 11 at ¶ 8). Sakirrola was the sole owner and Chief

Executive Officer of Techzio Solutions, LLC, a company that

specialized in the human resources placement of software

engineers. (Id. at ¶ 9). In late 2018, SyraInfotek and

Sakirrola began discussing the sale of Techzio. (Id. at ¶

10). On December 7, 2018,1 Hameed and Sakirrola exchanged

email correspondence detailing the final terms for the sale

of Techzio. (Id. at ¶ 11).

According to SyraInfotek, “[p]art and parcel to the sale

of [Techzio] stock, Sakirrola was to stay on board as a paid

employee to assure [Techzio] revenue stayed the same or

increased to assure ‘Gross Margin Guarantees’ were met

throughout 2019.” (Id. at ¶ 13). In addition, SyraInfotek

alleges that, before the parties signed the agreement

detailed below, Sakirrola “advised SyraInfotek that all taxes

[were] paid up to date and that there was a steady stream of

income that would be able to meet or exceed the ‘Gross Margin’

clause[.]” (Id. at ¶ 14).

On January 5, 2019, the parties entered into a Stock

Purchase Agreement (“Agreement”), whereby SyraInfotek

purchased 100% of Sakirrola’s interest and rights in Techzio

for $390,000.00. (Id. at ¶ 15). As part of the Agreement,

both parties agreed to a “Gross Margin Guarantee” clause.

(Id. at ¶ 18). Pursuant to this clause, if the gross margin

for 2019 was less than $432,640.00, Sakirrola would pay

1 The Court assumes that the date listed in the amended

complaint, December 7, 2019, was a scrivener’s error. See

(Doc. # 11-1 at 2).

SyraInfotek the difference between $432,640.00 and the actual

gross margin. (Id.). Conversely, if the gross margin exceeded

$432,640.00 for 2019, SyraInfotek would pay Sakirrola the

difference between $432,640.00 and the actual gross margin.

(Id.). The date for determining compliance with the Gross

Margin Guarantee clause was January 31, 2020. (Doc. # 11-1 at

10 (Agreement at 7)).

SyraInfotek alleges that Sakirrola made materially false

statements during negotiations regarding Techzio’s financial

and compliance situations. (Doc. # 11 at ¶ 17). Specifically,

SyraInfotek alleges that, in late 2019, it received notice of

several outstanding tax obligations for Techzio dating back

to 2017, despite Sakirrola’s previous guarantee within the

Agreement that such taxes had already been paid.2 (Id. at ¶

21). Moreover, on May 20, 2019, Hameed notified Sakirrola

that Techzio had not been reaching the monthly minimum

revenue, and “Sakirrola did nothing to help stem the [loss]

of revenue despite his pre-stock agreement assurances of

such.” (Id. at ¶¶ 19-20). On January 1, 2020, Techzio’s gross

2 As part of the Agreement, Sakirrola represented that all

tax returns “required to be filed by [Techzio] on or before

the Closing Date have been timely filed” and that “[a]ll Taxes

due and owing by [Techzio] . . . have been timely paid.” (Doc.

# 11-1 at 7 (Agreement at 4)).

margin profit for calendar year 2019 was $274,397.67, which

fell far short of the “Gross Margin Guarantee” of $432,640.00.

(Id. at ¶¶ 22-23). SyraInfotek alleges that it paid Sakirrola

“[t]hroughout the course of 2019” to help with the expansion

of the business, but that Sakirrola “did a halfhearted job,

then jet-setted away to India on a long vacation,” in

violation of the parties’ agreement. (Id. at ¶ 25).

On April 15, 2020, SyraInfotek filed its amended

complaint, in which it raises four claims – breach of verbal

contract (Count I), breach of stock purchase agreement (Count

II), unjust enrichment (Count III), and fraudulent

misrepresentation (Count IV). (Id. at ¶¶ 26-56).

Sakirrola now moves, pursuant to Federal Rule of Civil

Procedure 12(b)(6), to dismiss all counts of the amended

complaint. (Doc. # 14). In its response, SyraInfotek only

addressed Counts II and IV. See (Doc. # 18). As such, the

Court considers Sakirrola’s Motion unopposed as to Counts I

and III and will dismiss those counts accordingly. The Motion

is now ripe for review.

II. Legal Standard

On a motion to dismiss pursuant to Rule 12(b)(6), the

Court accepts as true all the allegations in the complaint

and construes them in the light most favorable to the

plaintiff. Jackson v. Bellsouth Telecomms., 372 F.3d 1250,

1262 (11th Cir. 2004). Further, the Court favors the plaintiff

with all reasonable inferences from the allegations in the

complaint. Stephens v. Dep’t of Health & Human Servs., 901

F.2d 1571, 1573 (11th Cir. 1990). But,

[w]hile a complaint attacked by a Rule 12(b)(6)

motion to dismiss does not need detailed factual

allegations, a plaintiff’s obligation to provide

the grounds of his entitlement to relief requires

more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action

will not do. Factual allegations must be enough to

raise a right to relief above the speculative

level.

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)

(citations omitted); see also Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (“Threadbare recitals of the elements of a

cause of action, supported by mere conclusory statements, do

not suffice.”). Courts are not “bound to accept as true a

legal conclusion couched as a factual allegation.” Papasan v.

Allain, 478 U.S. 265, 286 (1986). Generally, the Court must

limit its consideration to well-pled factual allegations,

documents central to or referenced in the complaint, and

matters judicially noticed. La Grasta v. First Union Sec.,

Inc., 358 F.3d 840, 845 (11th Cir. 2004).

III. Analysis

As a preliminary matter, the parties do not dispute that

the Agreement is central to SyraInfotek’s claim and is

authentic. Sakirrola concedes that the Agreement is an

enforceable contract and “does not dispute the validity of

the [Agreement] attached to the Amended Complaint.” (Doc. #

14 at ¶ 1). Accordingly, the Court will consider the Agreement

in ruling upon Sakirrola’s Motion. See SFM Holdings, Ltd. v.

Banc of Am. Sec., LLC, 600 F.3d 1334, 1337 (11th Cir. 2010).

A. Count II: Breach of Stock Purchase Agreement

SyraInfotek alleges that, under the Agreement, Sakirrola

is obligated to pay SyraInfotek the “Gross Margin” difference

of $208,536.17 because Techzio failed to meet the minimum

“Gross Margin Guarantee” of $432,640.00 in 2019. (Doc. # 11

at ¶¶ 37-39). Sakirrola argues that SyraInfotek breached the

Agreement first, by terminating Sakirrola’s employment on

April 22, 2019, and failing to pay Sakirrola for the work he

performed between February 15, 2019, and April 22, 2019. (Doc.

# 14 at 2). Sakirrola points to his Employment Agreement,

which he attached to his Motion,3 which he claims was

3 The Court need not consider the Employment Agreement at this

juncture because, regardless of the terms of the Employment

incorporated into the Stock Purchase Agreement by reference

and provides that Sakirrola was to stay “on board as a paid

employee . . . throughout 2019.” (Id. at 9). Therefore,

Sakirrola argues that SyraInfotek’s prior breach excused any

further performance by Sakirrola. (Id. at 8-9).

“For a breach of contract claim, Florida law requires

the plaintiff to plead and establish: (1) the existence of

a contract; (2) a material breach of that contract; and (3)

damages resulting from the breach.” Vega v. T-Mobile USA,

Inc., 564 F.3d 1256, 1272 (11th Cir. 2009) (citations

omitted).

Here, SyraInfotek has asserted a plausible claim for

breach of contract. While the parties dispute the reasons and

circumstances underlying Sakirrola’s leaving the company

prior to the end of 2019, the relevant breach-of-contract

allegations center around the failure of Techzio to meet the

Gross Margin Guarantee and Sakirrola’s related failure to pay

the difference, pursuant to the terms of the Agreement.

SyraInfotek has met its burden of pleading the existence of

a valid contract and a material breach by Sakirrola that

Agreement, SyraInfotek has plausibly alleged a claim for

breach of contract.

caused it damages. It would be premature at this juncture for

the Court to determine whether Sakirrola’s performance under

the Agreement was excused based on a prior material breach by

SyraInfotek. The Motion is denied with respect to Count II.

B. Count IV: Fraudulent Misrepresentation

SyraInfotek alleges that “[t]hroughout the month of

December [2018], Hameed and members of SyraInfotek spoke with

Sakirrola, who informed them that [Techzio] was fully up to

date on all tax payments and in governmental compliance.”

(Doc. # 11 at ¶ 50). SyraInfotek alleges that Sakirrola knew

that Techzio was overdue on several tax bills but made these

alleged misrepresentations in order to induce SyraInfotek to

execute the Agreement, and that SyraInfotek relied on these

statements to its detriment. (Doc. # 11 at ¶¶ 50-56).

Sakirrola argues that SyraInfotek has failed to plead

fraudulent misrepresentation for the following reasons: the

temporal relationship between the alleged statements and the

execution of the Agreement makes it impossible for the

statements to have induced SyraInfotek to enter the

Agreement, the alleged verbal statements are barred by the

merger clause in the Agreement, the parties’ obligations

regarding “Tax Matters” are located in the Agreement, the

alleged misrepresentations are immaterial to the Agreement,

and SyraInfotek’s allegations fail to meet the pleading

requirements of Federal Rule of Civil Procedure 9(b). (Doc.

# 14 at 12-13). Only Sakirrola’s Rule 9(b) argument merits

consideration.

Under Florida law, fraudulent misrepresentation

requires: “(1) a false statement concerning a material fact;

(2) the representor’s knowledge that the representation is

false; (3) an intention that the representation induce

another to act on it; and (4) consequent injury by the party

acting in reliance on the representation.” Hearn v. Int’l

Bus. Machines, 588 F. App’x 954, 956–57 (11th Cir. 2014)

(citing Butler v. Yusem, 44 So.3d 102, 105 (Fla. 2010)

(quotation marks omitted)).

Rule 9(b) requires a party alleging fraud to “state with

particularity the circumstances constituting the fraud,”

although “[m]alice, intent, knowledge, and other conditions

of a person’s mind may be alleged generally.” Fed. R. Civ. P.

9(b). Furthermore, Rule 9(b) requires that “a complaint

identify (1) the precise statements, documents

or misrepresentations made; (2) the time and place of and

persons responsible for the statement; (3) the content and

manner in which the statements misled the plaintiff; and (4)

what the Defendants gain[] by the alleged fraud.” W. Coast

Roofing & Waterproofing, Inc. v. Johns Manville, Inc., 287 F.

App’x 81, 86 (11th Cir. 2008) (citing Ambrosia Coal & Const.

Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th Cir.

2007)).

Plaintiffs need not “specify the exact time and the

particular place of each factual omission or

misrepresentation, but they must provide a sufficiently

narrow time from which defendants could derive notice as to

when the misrepresentations were made.” World Fuel Servs.,

Inc. v. Thrifty Propane, Inc., No. 16-20847-civ-

Moreno/O’Sullivan, 2016 WL 11547771, at *9 (S.D. Fla. July

15, 2016) (quoting Flamenbaum v. Orient Lines, Inc., No. 03-

22549-civ, 2004 WL 1773207, at *6 (S.D. Fla. July 20, 2004)).

In other words, to satisfy Rule 9(b), a plaintiff must

establish the who, what, when, where, and how of the fraud.

Mizarro v. Home Depot, Inc., 544 F.3d 1230, 1237 (11th Cir.

2008).

The allegations in the amended complaint meet the

requirements of Rule 9(b). For one, SyraInfotek has alleged

who made the statements – Sakirrola. (Doc. # 11 at ¶ 50).

SyraInfotek has also alleged that the representations were

made “[t]hroughout the month of December [2018].” (Id.). See

Potje v. Bluegreen Vacation Corp., No. 17-81055-cv-

Middlebrooks/Brannon, 2018 WL 5020135, at *7 (S.D. Fla. Mar.

6, 2018) (holding that an allegation of fraud containing the

month and year of the alleged representation meets the Rule

9(b) standard). Moreover, SyraInfotek has alleged that

Sakirrola informed Hameed and other members of SyraInfotek

that Techzio was “fully up to date on all tax payments and in

governmental compliance.” (Doc. # 11 at ¶ 50). SyraInfotek

has alleged that Sakirrola intended “to mislead SyraInfotek

. . . in order to complete the sale of stock” and that

SyraInfotek “relied upon Sakirrola’s false statements and

were damaged as a result . . . for payments of taxes and other

governmental expenses.” (Id. at ¶¶ 53-56). SyraInfotek has

clearly conveyed the substance of its fraudulent

misrepresentation claim and has satisfied the requirements of

Rule 9(b). The Motion is denied with respect to Count IV.

Accordingly, it is now

ORDERED, ADJUDGED, and DECREED:

(1) Defendant Venkata P. Sakirrola’s Motion to Dismiss

Plaintiff’s Amended Complaint (Doc. # 14) is GRANTED in

part and DENIED in part. Counts I and III are dismissed

as unopposed. The Motion is denied as to Counts II and

IV.

(2) Defendant Venkata P. Sakirrola is directed to file an

answer to the remaining counts of the amended complaint

within 14 days of the date of this Order.

DONE and ORDERED in Chambers, in Tampa, Florida, this

3rd day of June, 2020.

fans fp _ Mumerby Crip

VIRGINIA M. HERNANDEZ’COVINGTON

UNITED STATES DISTRICT JUDGE

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