If you include the FileUploadSupport trait it will allow you to process multipart forms as your example shows a form boundary suggesting this is the issue.
An example inclusion:
import org.scalatra.ScalatraServlet
import org.scalatra.servlet.{FileUploadSupport, MultipartConfig, SizeConstraintExceededException}
class MyApp extends ScalatraServlet with FileUploadSupport {
configureMultipartHandling(MultipartConfig(maxFileSize = Some(3*1024*1024)))
// ...
}