Bryan Corp. v. Chemwerth, Inc.

952 F. Supp. 2d 358, 2013 WL 3389033, 2013 U.S. Dist. LEXIS 94667
CourtDistrict Court, D. Massachusetts
DecidedJuly 8, 2013
DocketCivil Action No. 12-10446-MLW
StatusPublished
Cited by1 cases

This text of 952 F. Supp. 2d 358 (Bryan Corp. v. Chemwerth, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bryan Corp. v. Chemwerth, Inc., 952 F. Supp. 2d 358, 2013 WL 3389033, 2013 U.S. Dist. LEXIS 94667 (D. Mass. 2013).

Opinion

MEMORANDUM OF DECISION AND ORDER ON THIRD-PARTY DEFENDANT’S MOTION TO DISMISS AND DEFENDANT’S MOTION FOR LEAVE TO FILE AMENDED THIRD-PARTY COMPLAINT

JUDITH GAIL DEIN, United States Magistrate Judge.

I. INTRODUCTION

This action arises out of an agreement pursuant to which the plaintiff, Bryan Corporation (“Bryan”), agreed to purchase the pharmaceutical ingredient Tobramycin Sulfate (“TS”) from the defendant, ChemWerth, Inc. (“ChemWerth”). Bryan claims that in order to induce it to purchase TS from ChemWerth and to develop products that could expand ChemWerth’s TS market in the United States, ChemWerth falsely-represented to Bryan that it would provide certain documents required by the United States Food and Drug Administration (“FDA”) so that Bryan could obtain FDA approval of its TS products. Bryan has asserted claims against the defendant for breach of contract (Count I), breach of implied covenant of good faith and fair dealing (Count II), promissory estoppel (Count III), negligent misrepresentation (Count IV), fraud (Count V), and violation of Mass. Gen. Laws ch. 93A (Count VI).

The defendant ChemWerth filed a third-party complaint against Waldman Biomedical Consultancy, Inc. and-its principal, Dr. Alan A. Waldman (unless otherwise indicated, collectively, “Waldman”), who had served as Bryan’s consultant in the transaction with ChemWerth, alleging that Waldman was liable in whole or in part for any damages Bryan may have suffered. The original third-party complaint (Docket No. 28) contained claims for contribution and/or indemnity for all or any portion of the amounts for which ChemWerth may be adjudged liable to Bryan. (Docket No. 28 at p. 23, ¶ 72). Waldman responded with a motion to dismiss the third-party complaint in its entirety pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. (Docket No. 41). That motion is a subject of this decision.

In response to the motion to dismiss, ChemWerth filed a motion for leave to file an amended third-party complaint (Docket No. 51), which motion is also the subject of this decision.1 In the proposed amended third-party complaint,2 ChemWerth purports to state claims of negligent represen[361]*361tation (Count I), fraud (Count II), violation of Mass. Gen. Laws ch. 93A (Count III), and contribution as a result of Waldman’s negligent representation (Count IV) and fraudulent representation (Count V). ChemWerth has dropped its claim for indemnification. Waldman has opposed the motion to amend on the grounds that the proposed amendment is futile, as the proposed amended third-party complaint still fails to state a claim. See Waldman Opp. (Docket No. 58).

As detailed herein, Waldman’s opposition to ChemWerth’s motion for leave to amend is based on too restrictive a reading of the proposed third-party complaint. ChemWerth is entitled to explore more fully its allegations through discovery. Therefore, ChemWerth’s “Motion for Leave to File Amended Third-Party Complaint” (Docket No. 51) is ALLOWED. The “Third-Party Defendant’s Motion to Dismiss” ChemWerth’s original third-party complaint (Docket No. 41) is DENIED AS MOOT.

II. STATEMENT OF FACTS

Bryan’s Claims Against ChemWerth

The following summary of Bryan’s claims is helpful to put ChemWerth’s claims against Waldman in context. According to Bryan, it “provides high quality medical devices and innovative pharmaceuticals to the global medical community.” Bryan Compl. (Docket No. 1) ¶ 8. In 2006, Bryan was interested in developing new products or uses of TS that could receive FDA approval. Id. ¶ 13. ChemWerth held itself out as an agent for Chinese pharmaceutical ingredient manufacturers, and described itself “as having substantial expertise in ensuring that the manufacturers it represents in China produce pharmaceutical ingredients and documentation that meet FDA requirements.” Id. ¶ 11. Bryan contacted ChemWerth in connection with its plan to develop products with TS. Id. ¶ 14. ChemWerth allegedly represented that it would obtain and file with the FDA the documentation necessary to show that the TS manufactured in China by Chongqing Daxin Company Limited, Inc. (“Daxin”) met FDA standards. Id. ¶¶ 15-16. ChemWerth’s failure to obtain such documentation forms the basis of Bryan’s complaint. See id. ¶ 1. Bryan summarizes its claim as follows:

1. This action arises from Defendant ChemWerth’s fraud, misrepresentation and other misconduct in connection with the sale of a pharmaceutical ingredient (Tobramycin Sulfate) to Plaintiff Bryan Corp. To induce Plaintiff to buy Tobramycin Sulfate from ChemWerth and to develop products that could expand ChemWerth’s Tobramycin Sulfate market in the United States, ChemWerth represented and promised to Plaintiff that ChemWerth would provide certain documents regarding the Tobramycin Sulfate that Plaintiff required to obtain FDA approval of Plaintiffs Tobramycin Sulfate products.
2. ChemWerth’s representations and promises were false, and ChemWerth knew or should have known that it would not and could not provide the necessary documents. Ultimately, ChemWérth did not provide the documents, and suggested that Bryan Corp. could cure the problem through misleading filings with FDA. Bryan Corp. refused to participate in such a scheme, and has lost millions of dollars that it spent seeking FDA approval of Tobramycin Sulfate products in reliance on ChemWerth’s promises and representations.

Id. ¶¶ 1-2. Waldman has asserted in connection with the instant motions that “Waldman was Bryan Corp.’s consultant, and was just as mislead and deceived by [362]*362ChemWerth and Daxin’s misrepresentations.” Waldman Opp. at 2.

ChemWerth’s Claims Against Waldman3

ChemWerth denies .liability to Bryan, and contends that Waldman is liable for any and all damages Bryan allegedly suffered. According to ChemWerth, Wald-man Biomedical is a New York company, and Dr. Waldman is its president. Proposed Third-Party Complaint (“TPCompl.”) ¶¶ 2-4. Waldman served as consultants to Bryan in its development of TS products during the period at issue in this litigation, December 2005 through March 2012, as well as Bryan’s agent in regulatory matters. Id. ¶¶ 12-13. Waldman’s expertise is detailed in its website, which provides that Waldman Biomedical “offers every aspect of bringing a product from strategic definition through production, processing and testing, to regulatory approval, licensure and distribution.” Id. at ¶ 10. The company provides “consulting and support” in connection with “compliance with QSR, GMP and ISO standards,” “qualification and validation of facilities and operations,” “creation of regulatory strategies,” “all aspects of product and plant registration, including, creation and conduct of clinical trials, creation and filings of all necessary documents, preparation for FDA inspections.” Id. ¶ 11. Bryan paid Waldman Biomedical approximately $1.35 million dollars out of the alleged approximately $2.1 million dollars, spent developing Bryan’s TS products, and Waldman was very involved in every aspect of Bryan’s transaction with ChemWerth. Id. ¶¶ 14-16.

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Bluebook (online)
952 F. Supp. 2d 358, 2013 WL 3389033, 2013 U.S. Dist. LEXIS 94667, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bryan-corp-v-chemwerth-inc-mad-2013.