PITTSBURGH – A federal judge has denied a Connecticut research organization’s attempt to dismiss breach of contract claims brought against it by the University of Pittsburgh, which were made seeking the return of funds exceeding $84,000.
The University of Pittsburgh (of the Commonwealth System of Higher Education) first filed suit in the U.S. District Court for the Western District of Pennsylvania on April 26 versus PACS1 Syndrome Research Foundation, of Old Greenwich, Conn.
According to the suit, PACS1 Syndrome is “a condition caused by a genetic mutation in which all affected individuals have intellectual disability, speech and language problems, and a distinct facial appearance.”
The defendant foundation is focused on “finding therapeutic approaches to remove a toxic protein produced by the mutated PACS1 gene.”
“On or about Nov. 15, 2017, the University and PACS1 Foundation entered into a Research Grant Agreement, which provided for the investigation of ‘both the structure and biophysical properties of the wild type and R203W PACS-1 FBRs and identify the sites in the PACS-1FBR required for contacting client proteins and how the R203W mutation may alter these interactions.’ The Research Agreement identifies Gary Thomas, Ph.D as the principal investigator on behalf of the University. Dr. Thomas is a professor in the University’s School of Medicine. Department of Microbiology and Molecular Genetics and a member of the PACS1 Foundation scientific team, as identified on the PACS1 Foundation website,” the suit said.
“The Research Agreement was amended on Dec. 5, 2018 and July 15, 2020 which increased the budget for the PACS1 research. The Research Agreement, as amended, required Dr. Thomas to conduct certain research and, at the conclusion of the research, produce a report to the PACS1 Foundation outlining his findings. The Final Progress Report dated Nov. 10, 2021 was provided to counsel for the PACS1 Foundation by letter dated Nov. 30, 2021.”
The suit added that the production of the Final Progress Report was delayed principally because of the effects of the COVID-19 pandemic on the work of the plaintiff, generally and Dr. Thomas’s research team, specifically.
“During the course of the research, the University submitted invoices to the PACS1 Foundation pursuant to the terms of the Research Agreement for Dr. Thomas’s research, totaling $414,689.65. The PACS1 Foundation paid the University a total of $330,709.83. There remains an unpaid balance due and owing to the University by the PACS1 Foundation in the amount of $84,315.53 for the additional research performed by the plaintiff at the request of the defendant. The PACS1 Foundation has failed and refused to pay the outstanding balance of $84,315.53, in spite of numerous demands for payment,” the suit stated.
On June 27, the defendant filed a motion to dismiss the complaint for failure to state a claim for breach of contract.
“Plaintiff admits to entering into the research agreement and subsequent amendments, but fails to appreciate that the research agreement and its three amendments constitute a contract that was unambiguously and fully integrated. That the contract is fully integrated is supported by an integration/merger clause, a clause that is further strengthened by multiple other clauses in the research agreement and explicitly re-invoked in each of the three subsequent amendments,” according to the dismissal motion.
“The research agreement expressly defined the amount of funding to be provided in exchange for the specific research to be conducted. The research agreement was followed by three amendments, each of which was entered into according to the procedures set out in the research agreement, and each of which also expressly defined the amount of funding to be provided in exchange for the specific research to be conducted. This course of conduct in adherence to the terms of the contract further indicates that the contract was a complete and unambiguous expression of the parties’ intent, a fully integrated contract.”
The defendant added that where a party fails to allege fraud, accident or mistake, the parol evidence rule prohibits introduction of evidence extrinsic to an unambiguous and fully integrated contract.
“Plaintiff does not allege fraud, accident or mistake, and under Pennsylvania law, the inclusion of an integration/merger clause in a contract strengthens the parol evidence rule’s prohibitive effect,” the dismissal motion stated.
UPDATE
On Aug. 22, U.S. District Court for the Western District of Pennsylvania Judge Nora Barry Fischer denied the defense’s motion to dismiss the complaint, finding that the plaintiff “sufficiently pled plausible claims for relief under the prevailing standards” and ordering the defendant to answer the complaint by Sept. 6.
“In so holding, the Court observes that Defendant’s reliance on the parol evidence rule is misplaced at this stage of the proceeding. To that end, plaintiff’s lawsuit stems from an alleged side agreement between the parties, not the Research Agreement dated Nov. 15, 2017. As such, the parol evidence rule does not apply at this stage of the proceeding because the Court is not interpreting or applying the Research Agreement,” Fischer stated.
“Additionally, the scope of the Research Agreement’s integration clause is limited to ‘the subject matter hereof,’ but plaintiff is claiming that it had a side agreement regarding different ‘subject matter’ from the Research Agreement. Inferring that the work resulting from the side agreement falls within the scope of the integration clause is not warranted at the pleadings stage. Given, that the Court has determined that plaintiff states a breach of contract claim, it does not need to reach defendant’s alternative arguments regarding quantum meruit and unjust enrichment.”
For counts of breach of contract, quantum meruit and unjust enrichment, the plaintiff is seeking damages of $84,315.53, plus legal interest and costs of suit.
The plaintiff is represented by Thomas V. Gebler Jr. of Swartz Campbell and Shannon Huygens of the University of Pittsburgh’s Office of University Counsel, both in Pittsburgh.
The defendant is represented by Julian E. Neiser of Spilman Thomas & Battle, also in Pittsburgh.
U.S. District Court for the Western District of Pennsylvania case 2:22-cv-00630
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com