Chang v. Winklevoss

123 N.E.3d 204, 95 Mass. App. Ct. 202
CourtMassachusetts Appeals Court
DecidedApril 24, 2019
DocketAC 18-P-329
StatusPublished
Cited by15 cases

This text of 123 N.E.3d 204 (Chang v. Winklevoss) is published on Counsel Stack Legal Research, covering Massachusetts Appeals Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chang v. Winklevoss, 123 N.E.3d 204, 95 Mass. App. Ct. 202 (Mass. Ct. App. 2019).

Opinion

KINDER, J.

*203 *207 In this case we examine the dismissal of contract and tort-based claims brought by software developer Wayne Chang against brothers Cameron and Tyler Winklevoss, the creators of ConnectU, Inc. (ConnectU), a social networking website that was a competitor to The Facebook, Inc. (Facebook). This action was filed following the settlement of protracted multistate litigation between Mark Zuckerberg, the founder of Facebook, and the Winklevoss brothers, Zuckerberg's pre-Facebook collaborators. Chang's complaint alleged that he was entitled to a share of the proceeds of the settlement between the Winklevoss brothers and Zuckerberg -- $ 65 million in cash and stock tendered by Facebook in exchange for ConnectU.

Chang's suit arises from the failed business relationship between Chang and his company, The i2hub Organization, Inc. (i2hub), the Winklevoss brothers, Divya Narendra, and Howard Winklevoss (collectively, the Winklevoss defendants), 3 and ConnectU. Chang's complaint also included malpractice claims against Scott R. Mosko (Mosko), an attorney who previously represented *204 Chang, and Mosko's law firm 4 (collectively, the Mosko defendants).

Chang asserted contract and tort claims against the Winklevoss defendants, claiming that they had breached at least one of two agreements entitling him to a portion of the Facebook settlement proceeds. Alternatively, Chang claimed that, in the absence of an enforceable agreement, he was entitled to recover damages through equitable claims, including quantum meruit and unjust enrichment. Chang's equitable claims were dismissed for failure to state a claim, and his remaining contract and tort claims were subsequently dismissed on summary judgment. The professional negligence claims against the Mosko defendants were also dismissed on a motion pursuant to Mass. R. Civ. P. 12 (b), 365 Mass. 754 (1974), and final judgment entered for all defendants. 5 On appeal, Chang claims error in the orders of dismissal and the decision on the defendants' motion for summary judgment. We affirm, principally because we agree that the business relationship between Chang and the Winklevoss defendants ended long before the commencement of the settlement negotiations between the Winklevoss brothers and Facebook.

Background . 1. Formation of the business relationship . We summarize the facts alleged in Chang's complaint, accepting them as true for the purpose of our review of the rule 12 (b) dismissal of the quantum *208 meruit and unjust enrichment claims. Harrington v. Costello , 467 Mass. 720 , 724, 7 N.E.3d 449 (2014).

Chang launched i2hub, a peer-to-peer, file-sharing "platform," in March 2004. ConnectU, a social networking site in competition with Facebook, was founded by Cameron and Tyler Winklevoss. At some point, Divya Narendra and Howard Winklevoss (Cameron and Tyler's father) also became coowners of ConnectU. Seeking to increase ConnectU's user base, Cameron and Tyler contacted Chang in October of 2004, to explore forming a business relationship. The parties agreed to integrate i2hub software into ConnectU's social networking website, and discussed forming a jointly owned holding company, later referred to as the Winklevoss Chang Group (WCG), which would own both companies *205 as well as other Internet-based entities that they would jointly develop. The parties further agreed that, upon completion of the integration, Chang would be given the option to acquire a fifteen percent ownership interest in ConnectU. On November 23, 2004, Cameron sent Chang a memorandum of understanding (MOU) via e-mail, 6 and Chang accepted the terms the next day by e-mail.

Over the next several months, the parties worked collaboratively, holding themselves out as partners in the development of ConnectU, i2hub, and other Internet entities. Chang and the Winklevoss defendants opened an office in Amherst run by Chang, with a small staff paid for by Cameron and Tyler. Revenue generated by i2hub and other Internet entities Chang worked on was redirected to ConnectU. Chang also began working to integrate the i2hub software into ConnectU, and claimed he completed the integration in February, 2005. The complaint did not indicate what, if any, compensation Chang received. Beginning in April 2005, the business relationship quickly deteriorated as the parties became entangled in various financial and ownership disputes (further described infra ).

2. Termination of the business relationship . We summarize the undisputed facts which relate to the Winklevoss defendants' motion for summary judgment. The business collaboration between Chang and the Winklevoss defendants was short-lived. The parties do not dispute that they never executed a written agreement to form WCG; nor is there any evidence of any agreement on the specific terms of a working partnership or holding company. Several months after the relationship commenced in the fall of 2004, it became antagonistic due to intensifying financial and ownership disputes. In April of 2005, Cameron and Tyler informed Chang that they had ceased funding him and the Amherst office. They also claimed that Chang was in debt to them for expenses in the amount of approximately $ 18,000 and demanded repayment or equity in i2hub.

*206 The record contains substantial documentation in the form of e-mail messages and online discussions (instant messaging) exchanged during April and May of 2005 between Chang and the Winklevoss brothers, as well as between Chang and John Taves, a principal of a company hired to work on the integration of ConnectU and i2hub. These communications indicate that *209 both parties sought to end their business relationship. On April 23, 2005, Chang told Taves that he had "no desire to continue to work with them" and that he was "figur[ing] out how to get funding, wash myself of the Winklevosses, and move onto the next venture." The next day, Chang further stated to Taves, "[A]ll I want is i2hub ... [I'm] willing to take just i2hub, rather than keeping my hands in connectu." Chang reiterated this position in an e-mail to Taves on April 25, stating that his "end goal" was to retain ownership of i2hub and, on April 28, he again told Taves that he had "no wish to continue to work with them," adding that he had "already begun disintegration."

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Cite This Page — Counsel Stack

Bluebook (online)
123 N.E.3d 204, 95 Mass. App. Ct. 202, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chang-v-winklevoss-massappct-2019.