Justia.com Opinion Summary: Plaintiff brought his Second Amended Complaint asserting various claims against former business associates, including his former fellow members and Board of Managers members of Aeosphere and two companies with which Aeosphere purportedly had business dealings, Flakt Woods and SEMCO. All of plaintiff's claims related to the dissolution of Aeosphere, which he argued was wrongfully undertaken by the other Managers in order to remove him from a cutting-edge and potentially lucrative fragrance business. Plaintiff further asserted that Flakt Woods and SEMCO aided and abetted breaches of fiduciary duty and were otherwise complicit in these wrongful actions. Flakt Woods and SEMCO moved for dismissal. The court concluded that it did not have personal jurisdiction over Flakt Woods or SEMCO, and that, even if it had personal jurisdiction over SEMCO, the Complaint failed to state a claim upon which relief could be granted against SEMCO. Therefore, plaintiff's claims against Flakt Woods and SEMCO were dismissed. Counts II, IV, and V of the Counterclaims were also dismissed for failure to state a claim upon which relief could be granted.
Receive FREE Daily Opinion Summaries by Email Download as PDF
Loading PDF...
<![CDATA[
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
STEWART MATTHEW,
Plaintiff,
v.
CHRISTOPHE LAUDAMIEL,
ROBERTO CAPUA, ACTION 1 SRL,
FLÄKT WOODS GROUP SA and
SEMCO LLC,
Defendants.
:
:
:
:
:
:
:
:
:
:
:
:
C.A. No. 5957-VCN
MEMORANDUM OPINION
Date Submitted: November 1, 2011
Date Decided: February 21, 2012
Thad J. Bracegirdle, Esquire of Wilks, Lukoff & Bracegirdle, LLC, Wilmington,
Delaware, Attorney for Plaintiff.
Gregory V. Varallo, Esquire and Scott W. Perkins, Esquire of Richards, Layton &
Finger, P.A., Wilmington, Delaware, and Roger E. Barton, Esquire and Randall L.
Rasey, Esquire of Barton Barton & Plotkin LLP, New York, New York, Attorneys
for Defendants Christophe Laudamiel, Roberto Capua, and Action 1 srl.
Seth J. Reidenberg, Esquire of The Chartwell Law Offices, LLP, Wilmington,
Delaware, and Mark Thornhill, Esquire and Kersten Holzhueter, Esquire of
Spencer Fane Britt & Browne LLP, Kansas City, Missouri, Attorneys for
Defendants Fläkt Woods Group SA and SEMCO LLC.
NOBLE, Vice Chancellor
I. INTRODUCTION
Plaintiff/Counterclaim Defendant Stewart Matthew (
) brings his Second Amended
or the
ng
various claims against former business associates, including his former fellow
members and
anagers
of Aeosphere LLC
) and two companies with which Aeosphere purportedly had business
dealings, Fläkt Woods Group SA ( Fläkt Woods ) and SEMCO LLC ( SEMCO ).
All of Matthew
was wrongfully undertaken by the other Managers in order to remove him from a
cutting-edge and potentially lucrative fragrance business. He further asserts that
Fläkt Woods and SEMCO aided and abetted breaches of fiduciary duty and were
otherwise complicit in these wrongful actions.
Fläkt Woods and SEMCO move for full dismissal. Each company contends
that Matthew fails to demonstrate that it is subject to personal jurisdiction in
Delaware.
SEMCO also moves for dismissal under Court of Chancery
Rule 12(b)(6) for
failure to state a claim upon which relief may be
granted.
The former members and/or Managers of Aeosphere (besides Matthew)
Christophe Laudamiel
ie
srl
bring
1
five counterclaims against Matthew related to actions he took or did not take in his
capacity as a Manager or co-
-
Matthew moves for dismissal of Count II (breach of the implied covenant of good
faith and fair dealing), Count IV (breach of contract), and Count V (unjust
enrichment) under Court of Chancery Rule 12(b)(6) for failure to state a claim
upon which relief may be granted.
The Court concludes in this Memorandum Opinion that it does not have
personal jurisdiction over Fläkt Woods or SEMCO, and that, even if it had
personal jurisdiction over SEMCO, the Complaint fails to state a claim upon which
relief may be granted against SEMCO; therefore,
Fläkt
Woods and SEMCO are dismissed. Counts II, IV, and V of the Counterclaims are
also dismissed for failure to state a claim upon which relief may be granted.
II. PARTIES
Plaintiff/Counterclaim Defendant Matthew was a member, Manager, and coCEO of Aeosphere.1
Defendant/Counterclaim Plaintiff Laudamiel was also a member, Manager,
and co-CEO of Aeosphere.
Defendant/Counterclaim Plaintiff Action 1, an Italian business entity, was a
member of Aeosphere.
1
Aeosphere was a Delaware limited liability company.
2
Defendant/Counterclaim Plaintiff Capua was a Manager of Aeosphere and
the majority owner of Action 1.
Defendant Fläkt Woods, a Swiss business entity, provides management
services to the Fläkt Woods family of companies. The various Fläkt Woodsrelated companies are involved in the air climate and air movement industries.
According to Matthew, Fläkt Woods collaborated with Aeosphere on multiple
projects.
Defendant SEMCO, a Missouri limited liability company, is a member of
the Fläkt Woods family of companies. According to Matthew, SEMCO assisted
Fläkt Woods with some of the projects on which it collaborated with Aeosphere.
III. FLÄKT
A. Background2
For the purposes of deciding these motions, only a brief sketch of the
allegations comprising the core of the Complaint is necessary because Fläkt
jurisdictional factors and
2
Unless otherwise noted, the factual background is drawn from the Complaint, the well-pleaded
allegations of which, for present purposes, must be taken as true. Cent. Mortg. Co. v. Morgan
Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 535 (Del. 2011). In certain instances, the
Court will rely upon the Amended and Restated Limited Liability Company Agreement of
and emails sent between Neil Yule of Fläkt Woods and
the Complaint. Although, as a general rule, the Court is limited to considering only the facts
alleged in the complaint when deciding a motion to dismiss under Court of Chancery
Rule 12(b)(6), the Court may consider documents both integral to and incorporated into the
complaint, and documents not relied upon for the truth of their contents. Orman v. Cullman, 794
A.2d 5, 15-16 (Del. Ch. 2002). Consideration of the LLC Agreement and April Yule Emails is
appropriate in this case, as both are integral to and incorporated into the Complaint.
3
involvement in the rise and fall of Aeosphere, a tale in which it was, at most, a bit
ownership structure, and dissolution is presented to provide context for the
Counterclaims addressed later.
1.
Structure
Aeosphere was founded by Matthew and Laudamiel in June 2008 with a
commercial focus on the development and marketing of fragrance technologies and
systems. Before founding Aeosphere, Matthew had worked in corporate finance
and founded SenseLab LLC, a research and development company dedicated to
creating new forms of entertainment by combining neuroscience, artificial
intelligence and the creative arts.
3
For his part, Laudamiel was an accomplished
perfumer who had been Senior Perfumer of Fine Fragrances and Innovation at
International Flavors and Fragrances, Inc., a publicly traded manufacturer of flavor
and fragrance products.
In May 2009, Action 1 invested 1.55 million euros in Aeosphere and agreed
to provide further financing in the form of contingent loans. In return, Action 1
received
300 preferred
membership units;
3
Compl. ¶ 13.
4
voting equity in the form of 3
each.
, the members entered into the LLC
Agreement, which governed their rights and obligations as members of
Aeosphere.4 Under the LLC Agreement, Aeosphere was to be managed by a
Board o
appoint one Manager.
and each member was given the power to
At all times relevant to
claims, the Board
consisted of Matthew, Laudamiel, and Capua. The LLC Agreement also set forth
the notice requirements for regular Board meetings and emergency Board
meetings, which could be called on less notice (at least 24 hours) than a regular
Board meeting. A manager could waive notice under Article 5.2.3 of the LLC
Agreement
In addition, the LLC Agreement also set forth the processes for Board
approval. Generally, with some exceptions, both Matthew and Laudamiel had to
approve actions requiring Board approval.5
In the event that Matthew and
-
actions, including a winding up of Aeosphere,
4
See id., Ex. H (LLC Agreement) 1.
Id. at art. 5.2.6(a).
6
Id.
5
5
6
Some
unanimous approval of the
Board.
7
A similar process was used for the approval of certain types of contracts
by Matthew and Laudamiel in their capacity as co-CEOs. For these contracts, the
approval of both Matthew and Lauda
approval was to be submitted to the Board where Capua could cast a tiebreaking
vote in accordance with the Board-approval procedure noted above.8 Finally,
Article 9.1 of the LLC Agreement set forth a list of events that would trigger the
2.
s Dealings with Fläkt Woods
Upon its formation, Aeosphere started working with Fläkt Woods on the
2008, the two companies began a more formal process of collaboration on a new
project with the objective of developing and marketing a new scenting technology
to be incorporated into Fläkt
documenting this collaborative relationship was entered into between Aeosphere
and Fläkt Woods on July 2, 2008, and was amended twice in 2009 (the
Under the Collaboration Agreement, Aeosphere and Fläkt Woods partnered
to develop an air fragrancing component for use in Fläkt
7
8
Id. at art. 5.2.6(b).
Id. at art. 5.4.2.
6
Specifically, Aeosphere was to invest up to $253,000 (less the dollar equivalent of
25,000 euros) to develop commercial air fragrancing applications of a new
electrohydrodynamic
. Fläkt Woods had separately agreed with Battelle to
develop and license the Battelle technology in the commercial air fragrancing field
-Fläkt
he who first recognized this potential application of the Battelle technology and
brought it to the attention of the Defendants; he also claims to have been
instrumental in negotiating the Battelle-Fläkt Woods License Agreement.
Aeosphere separately entered into a collaboration agreement with Battelle.
Under the Collaboration Agreement, Aeosphere was to be Fläkt Wood
exclusive supplier of scented media for use in Fläkt
fragrancing systems for as long as the Battelle technology was employed, and
would receive royalties from sales of the devices themselves and a specified
percentage of profits from sales of scented media. If Fläkt Woods decided not to
use the Battelle technology, Aeosphere would be Fläkt
of scented media for 10 years, but would not receive any royalties from sales of the
devices. Fläkt Woods accepted responsibility for, and the cost of, sales, marketing,
distribution, installation, and maintenance of the systems developed under the
Collaboration Agreement.
7
3.
Fläkt
Collaboration
According to the Plaintiff, throughout the discussions and negotiations
leading to the Collaboration Agreement, Fläkt Woods
representatives made
Fläkt
d to SEMCO, to market and sell products
9
Specifically, Neil Yule
the
European Sales Director for Fläkt Woods and the individual responsible for
negotiating the Collaboration Agreement on behalf of Fläkt Woods indicated that
ing of the Battelle
technology because there were concerns about licensing it to a foreign entity such
as Fläkt Woods. Notably, the license agreement between Battelle and Fläkt Woods
expressly authorized Fläkt Woods to sublicense the Battelle technology to its
affiliated companies.
Representatives of SEMCO were also involved in the collaborations among
Aeosphere, Fläkt Woods, and Battelle. For example, John Fischer
,
a July 2, 2008,
meeting between Fläkt Woods and Battelle to discuss the development and
9
Compl. ¶ 17.
8
10
potential licensing of the Battelle technology for use in Fläkt
Fischer also worked with Yule to evaluate the Battelle technology. Furthermore,
in communications with the Plaintiff, Yule identified
of Sales, as the individual at SEMCO who would lead the marketing effort in the
United States of systems developed under the Collaboration Agreement. Finally,
John Morrissette
Fläkt
, allegedly, took
direction concerning Fläkt
, in an August 6,
11
2009, email sent to Yule,
had
12
4.
Alleged
Misappro
According to the Plaintiff, beginning in October 2009, Laudamiel and Capua
repeatedly refused to set the 2010 operating budget in violation of the LLC
10
Apparently, Fischer was a consultant for SEMCO, but was described as its Director of Research
and Development by Yule at the Battelle meeting. See Reply Br. in Support of Def. SEMCO
Fläkt
title and employment status are not crucial to the motion under consideration, as it is clear that he
was acting as an agent of SEMCO in all of the activities discussed in this Memorandum Opinion.
11
entOpera was a performance
Fläkt
Dismiss 6. The ScentOpera was created, written, and directed by Matthew, and performances
were given at the Guggenheim Museums in New York and Bilbao, Spain. Compl. ¶ 39. The
scent organ technology jointly developed by Aeosphere and Fläkt Woods was utilized in the
ScentOpera. Id.
12
Compl. ¶ 18 (quoting id., Ex. G (Email from Morrissette to Yule)).
9
Agreement,13 fearing that doing so would uncover a working capital shortfall and
money to Aeosphere.14 Instead, allegedly,
trigg
misbegotten gains by enlisting the support Fläkt Woods. In January 2010, Capua
informed Yule of an internal dispute between Laudamiel and Matthew related to
. Capua
informed Matthew of this discussion, and told him that he had proposed
and Yule
agreed in principle to a plan whereby Aeosphere would be split up. Under this
controlled by Laudamiel and Capua; Matthew would be permitted to sell
fragrances to Fläkt Woods. In conversation, Yule allegedly confirmed to Matthew
that he agreed in principle
As tensions among the Managers remained high, Yule made it clear to them
that their internal problems were putting the Aeosphere-Fläkt Woods collaboration
at risk.15 In the April Yule Emails
13
Article 10.8 of the LLC Agreement required the Board to provide the members with an annual
budget within ninety (90) days prior to the beginning of each Fiscal Year.
14
Under Article 4.4.2(c) of the LLC Agreement, Action 1 was required to loan Aeosphere
would occur if any two Managers
determined that Aeosphere had insufficient funds to pay the salary or guaranteed bonus of either
co-CEO.
15
See Compl., Ex. I (Email from Yule to Capua, Matthew, and Laudamiel (Apr. 22, 2010)
10
Yule stated that he would be unable to pursue business opportunities
the new set-up for Aeosphere ha[d] been put
ed some re-assurance that Aeosphere [would] remain a
16
He further implored the Managers to
sible and allow us to get this
exciting
17
According to the Plaintiff, this last
statement shows that Yule was taking direction from senior management at Fläkt
Woods with respect to the Aeosphere-Fläkt
18
In the April
Yule Emails, Yule also revealed that Fläkt Woods viewed Laudamiel, and not
Matthew, as critical to the success of the scent project.19 The Plaintiff alleges that,
in subsequent correspondence,20
withdrawing from Aeosphere or permitting Fläkt Woods to proceed with Mr.
Fläkt Woods work
21
16
Id.
Id.
18
Compl. ¶ 28.
19
See id.
17
) (noting that
otal in the formation
-Fläkt Woods
20
It is not clear from the Complaint exactly when this communication occurred or whether it
occurred telephonically or by email.
21
Compl. ¶ 29.
11
Matthew refused to bow out of Aeosphere, and, he alleges, this led
Laudamiel and Capua to exclude him from the business by improperly dissolving
Aeosphere and misappropriating its assets. On May 3, 2010, Laudamiel and Capua
purported to call and deliver to Matthew notice of an emergency meeting of the
Board to be held the next day. According to the agenda for this meeting, the Board
would consider and vote on, among other things: (1) the dissolution and winding
up of Aeosphere; (2) the termination of all of
distribution of
mployees; and (3) the
remaining intellectual property rights.
Following
delivery of this notice,
Capua that certain agenda items, including dissolution, did not meet the
requirement that emergency meetings could only be called if a Manager
-faith that such meeting [was] necessary to preserve [an
Aeosphere] right or to avoid [an Aeosphere] liability or adverse consequence to
22
Before the meeting, counsel for Matthew notified counsel for
Laudamiel and Capua that Matthew would not participate in the meeting and did
not consent to the dissolution of Aeosphere. Matthew did not waive notice of the
meeting.
22
Id. at ¶ 21 (quoting LLC Agreement art. 5.2.3).
12
Laudamiel and Capua were the only Mangers present at the emergency
meeting, and they voted to wind up the affairs of Aeosphere and dissolve it as soon
as practical. They also voted to terminate Matthew as co-CEO, to terminate
to close its labs and offices. Laudamiel was
designated to oversee the winding up and liquidation of Aeosphere, and, on
May 12, 2010, a certificate of cancellation was filed with the Delaware Secretary
of State. The Plaintiff alleges that Laudamiel and Capua took several actions to
enrich themselves at his expense prior to and in connection with the liquidation of
Aeosphere, including: (a) accelerating capital improvements at Aeosphere
properties later transferred to entities controlled by Laudamiel and Capua;
(b) taking cash and company funds; and (c) causing Aeosphere to assign material
assets, including intellectual property and fragrance formulae, to themselves or
entities they controlled.
According to the Plaintiff, among the most valuable assets of Aeosphere that
Laudamiel and Capua misappropriated were
Fläkt
Woods.
control have, allegedly, continued working with Fläkt Woods to: (a) develop the
Battelle technology and integrate it or an alternative technology into Fläkt
commercial systems; and (b) market the systems and scented media used in them.
13
Additionally,
has worked with Laudamiel and Capua on
the marketing of a scenting system.
B. The Contentions
The Plaintiff contends that Laudamiel and Capua breached the LLC
Units through their actions described above aimed at dissolving Aeosphere and
transferring its assets to entities they control; Action 1 is also alleged to have
breached the LLC Agreement. The Plaintiff further alleges that Fläkt Woods and
SEMCO aided and abetted these breaches of fiduciary duties. Additionally, the
Plaintiff argues that Fläkt Woods tortiously interfere
under the LLC Agreement and his employment agreement
by conspiring with and inducing Laudamiel, Capua, and Action 1
to breach these agreements. Finally, the
Plaintiff asserts that all of the Defendants were unjustly enriched and committed
acts of civil conspiracy.
In support of their respective motions to dismiss, both Fläkt Woods and
SEMCO argue that they are not subject to personal jurisdiction in Delaware and,
therefore, that the claims asserted against each should be dismissed under Court of
Chancery Rule 12(b)(2).
Both note that they are non-Delaware entities with
minimal contacts with Delaware, either generally or with regard to
14
causes of action. As a result, Fläkt Woods and SEMCO contend, Delaware can
exercise neither general nor specific long-arm jurisdiction over them, and,
regardless, any assertion of personal jurisdiction would violate the Due Process
Clause of the Fourteenth Amendment.
Additionally, citing the dearth of
allegations linking SEMCO to the alleged wrongful conduct, SEMCO argues that
the Plaintiff has failed to state a claim against it upon which relief can be granted,
and that this provides a separate ground for dismissal under Court of Chancery
Rule 12(b)(6).
In opposition to these motions to dismiss, the Plaintiff asserts that both Fläkt
Woods and SEMCO are subject to personal jurisdiction in Delaware under the
. Moreover, the Plaintiff argues that SEMCO is
subject to general jurisdiction in Delaware due to its sale and marketing of
products in Delaware. Finally, with regard to the claims against SEMCO, the
Plaintiff contends that he has alleged facts that when considered with all
reasonable inferences in his favor
meet the liberal pleading standard governing
Court of Chancery Rule 12(b)(6) motions to dismiss.
C. Analysis
1. Fläkt
Jurisdictional Argument
Fläkt Woods moves to dismiss the claims brought against it for lack of
personal jurisdiction. In considering a motion to dismiss for lack of personal
15
jurisdiction under Court of Chancery Rule 12(b)(2), the Court is not limited to the
affidavits, briefs of the parties in order to determine whether the defendants are
23
Once a defendant moves to dismiss under
Rule 12(b)(2), the burden rests on the plaintiff to demonstrate the two bedrock
requirements for personal jurisdiction: (1) a statutory basis for service of process;
24
Here, the Plaintiff contends that the Court may exercise
jurisdiction over Fläkt Woods under the conspiracy theory of jurisdiction.25 The
Delaware long-arm statute26
jurisdiction over any nonresident, or a personal representative, who in person or
through an agent engages in any one of several categories of actions with a
Delaware nexus.27 Furthermore, a well-established principle of conspiracy posits
-conspirator with respect to the
23
Sample v. Morgan, 935 A.2d 1045, 1055-56 (Del. Ch. 2007) (quoting Crescent Mach I
Partners, L.P. v. Turner, 846 A.2d 963, 974 (Del. Ch. 2000)).
24
Fisk Ventures, LLC v. Segal, 2008 WL 1961156, at *6 (Del. Ch. May 7, 2008) (citations
omitted).
25
, it is
more aptly described as a shorthand reference to a
conduct that either occurred or had a substantial effect in Delaware is attributed to a defendant
Benihana of Tokyo Inc. v.
Benihana, Inc., 2005 WL 583828, at *6 n.16 (Del. Ch. Feb. 4, 2005) (citation and internal
quotation marks omitted). In this instance, Matthew is attempting to attribute the conduct of the
Aeosphere Defendants to Fläkt Woods.
26
10 Del. C. § 3104.
27
Id. at § 3104(c) (emphasis added).
16
aim of the conspiracy are attributable to the acts of the other co-conspirators under
28
Thus,
-conspirator are of
such nature and quality that the actor would be subject to personal jurisdiction in
Delaware, all of the conspirators may be deemed subject to jurisdiction in
29
In order to establish that personal jurisdiction under the conspiracy theory is
consistent with constitutional due process, Matthew must make a factual showing
that:
(1) a conspiracy to defraud existed; (2) the defendant was a member
of that conspiracy; (3) a substantial act or substantial effect in
furtherance of the conspiracy occurred in the forum state; (4) the
defendant knew or had reason to know of the act in the forum state or
that acts outside the forum state would have an effect in the forum
state; and (5) the act in, or effect on, the forum state was a direct and
foreseeable result of the conduct in furtherance of the conspiracy.30
This is a strict test with a narrow scope, and, as a result, factual proof of each
enumerated element is required.31 When assessing the first two Istituto Bancario
factors, the Court focuses on the substance instead of the form of the p
28
Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice in the
Delaware Court of Chancery § 3.05[b], at 3-82 (2011).
29
Id.
30
, 449 A.2d 210, 225 (Del. 1982) (the
Istituto Bancario
Istituto Bancario
31
Werner v. Miller Tech. Mgmt., L.P., 831 A.2d 318, 330 (Del. Ch. 2003). See also Newspan,
Inc. v. Hearthstone Funding Corp., 1994 WL 198721, at *8 (Del. Ch. May 10, 1994) (explaining
that satisfaction of the Istituto Bancario
17
allegations.32 Therefore, allegations supporting a conspiracy theory of jurisdiction
need not be framed as civil conspiracy in the Complaint.33 Also, although the test
the principle is not limited to
that particular tort.
34
The first and second Istituto Bancario factors may be
satisfied by sufficiently pleading a claim for aiding and abetting a breach of
fiduciary duty.35
While this Court has in the past applied the Istituto Bancario test in
connection with its analysis under the long-arm statute, the test was, apparently,
intended to only apply to the due process analysis.36 Nonetheless, because it is
clear that the Plaintiff cannot meet the Istituto Bancario test, the Court will apply
only this test, as even a positive showing under the statutory basis analysis would
be rendered moot by t
Fläkt Woods has
the minimum contacts necessary to meet constitutional due process standards.37
32
See Benihana, 2005 WL 583828, at *7.
See id. The allegations would, apparently, still need to satisfy the elements of civil conspiracy,
even if not pled in this fashion. See id.
34
Hamilton Partners, L.P. v. Englard, 11 A.3d 1180, 1197 (Del. Ch. 2010).
35
Id. at 1198.
36
Wolfe & Pittenger, supra note 28, § 3.05[b], at 3-85 (citing Abajian v. Kennedy, 1992 Del. Ch.
LEXIS 6, at *35 (Del. Ch. Jan. 17, 1992)). See also Istituto Bancario
conspirator who is absent from the forum state is subject to the jurisdiction of the court,
assuming he is properly served under state law, if the plaintiff can make the factual
showing . .
37
Although perhaps analytically distinct, the statutory basis and Istituto Bancario tests are
clearly closely related in the context of the conspiracy theory of jurisdiction. Indeed, it appears
that acts necessary to meet the statutory basis test under the conspiracy theory of jurisdiction
would also be required to meet the Istituto Bancario test. Thus, a successful or unsuccessful
showing under the Istituto Bancario test would, generally, seem to imply the same result under
33
18
The first and second Istituto Bancario factors require a showing that the
defendant was a member of a conspiracy to defraud. Matthew asserts claims of
civil conspiracy and aiding and abetting a breach of fiduciary duty against Fläkt
Woods, either of which, if properly pled, would satisfy the first two Istituto
Bancario factors. The precise parameters and goals of the alleged conspiracy38 are
somewhat obscure, though.
Matthew repeatedly alleges that Fläkt Woods
39
This
is a conclusory allegation; Matthew pleads no facts to support the notion that Fläkt
40
More to
the point, Matthew alleges that Fläkt Woods conspired with Laudamiel and Capua
41
the statutory basis test. It has been suggested that one distinction between the two tests is that
the Istituto Bancario test, as a test used to assess the requirements of due process, can consider a
wider range of Delaware contacts and is not limited to considering only those forum activities
upon which service of process may be based. See Wolfe & Pittenger, supra note 28, § 3.05[b], at
3-85 to -86. But, given the Istituto Bancario test
nexus likely the same subject matter underlying any argument in support of finding a statutory
basis for the service of process in practice this is likely to be a distinction which only rarely
amounts to a difference. Such a distinction is meaningless in the instant case, as Fläkt
only alleged connections to Delaware result from the acts of its alleged co-conspirators upon
which service of process might be based or are otherwise intimately intertwined with such acts
(e.g., entering into the Collaboration Agreement with a Delaware corporation). In short, the
the Istituto Bancario test, in this case, makes it highly unlikely that he would
meet the statutory basis test if it were separately applied.
38
The same allegations and conspiracy theory underlie both the aiding and abetting and civil
conspiracy claims.
39
Compl. ¶¶ 53, 67.
40
The Defendants seemingly have not questioned whether Matthew would have standing to
bring a direct claim related to a conspiracy to misappropriate
assets.
41
19
42
ownership stake
While his conspiracy allegations are
often phrased in terms of harm to Aeosphere
and not Matthew, personally43
based upon the totality of the allegations in the Complaint, it is fair to say that
Matthew alleges the existence of a conspiracy to force him out of Aeosphere and
deprive him of his equity stake in the company.
To plead a claim of civil conspiracy, Matthew must allege facts establishing
the following elements: (1) two or more persons; (2) an object to be accomplished;
(3) a meeting of the minds between or among such persons relating to the object or
a course of action; (4) one or more unlawful acts; and (5) damages as a proximate
result thereof.44 Matthew need not allege
agreement; a
45
conspiracy
At this stage, the Court must draw all reasonable inferences in his favor.46
that Fläkt Woods had a meeting of the minds with
Laudamiel and Capua to remove Matth
detriment); id. at ¶ 67 (alleging that the conspiracy involves Laudam
42
43
Id. at ¶ 67.
Id.
iness plan); id. at ¶ 67 (same and alleging that Matthew had rights to
by virtue of his
ownership in Aeosphere
44
Wolfe & Pittenger, supra note 28, § 3.05[b], at 3-83.
45
l Group, Inc., 965 A.2d 763, 806 (Del. Ch. 2009) (citing Empire Fin. Servs., Inc.
v. Bank of N.Y., 900 A.2d 92, 97 n.16 (Del.2006)),
Ret. Sys. of La. v.
PricewaterhouseCoopers LLP, 11 A.3d 228, 2011 WL 13545 (Del. Jan. 3, 2011) (TABLE).
46
Sample, 935 A.2d at 1056.
20
him his stake in the company satisfies these elements, and, based upon the alleged
facts, the Court may reasonably infer that such a conspiracy existed. The Court
specifically notes two statements allegedly made by Yule that are crucial to its
conclusion that a proper factual basis is pled to allow an inference to satisfy the
second and third elements of a civil conspiracy. First, Yule allegedly told Capua
hew from
Aeosphere.47
withdrawing from Aeosphere or permitting Fläkt Woods to proceed with Mr.
48
The Court concludes that Matthew has pled sufficient facts
to allow it to infer that this conspiracy existed, and that this conspiracy satisfies the
first and second Istituto Bancario factors.
The filing of the certificate of cancellation satisfies the third Istituto
Bancario factor. Cancelling Aeosphere was a critical step taken in furtherance of
the conspiracy to remove Matthew from Aeosphere, and the filing of a corporate
instrument, such as a certificate of cancellation, is considered an act occurring in
Delaware.49
Matthew, however, does not satisfy the fourth Istituto Bancario factor. A
defendant does not purposefully avail himself of a forum without knowledge that
47
Compl. ¶ 27.
Id. at ¶ 29.
49
See, e.g., Istituto Bancario, 449 A.2d at 227 (filing of a certificate of amendment).
48
21
an act or effect will occur there.50 There is nothing in the record from which this
Court may infer that Fläkt Woods knew that the conspiracy would have a Delaware
nexus until after
was completed. In an email dated May 24, 2010, Yule told Matthew that he had
seen a copy of the certificate of cancellation filed in Delaware.51
This email was
sent nearly two weeks after the certificate of cancellation was filed. Furthermore,
it is clear from the wording of the email that Yule did not see a copy of the
certificate of cancellation until after it had been filed with the Delaware Secretary
of State.52
By that time,
employment by Aeosphere had been
terminated, as had his directorship and economic interest in the company, which
had come to an end by the time Fläkt Woods learned of its Delaware nexus.
Matthew pleads no other facts from which the Court could infer that Fläkt
Woods knew that the conspiracy had a Delaware nexus or even that Aeosphere was
a Delaware entity. In his Answering Brief, Matthew argues that the May 24 Email
and Fläkt Woods
50
See id. at 225
in a conspiracy with
knowledge of its acts or effects in the forum state can be said to have purposefully availed
himself of the privilege of conducting activities in the forum state, thereby fairly invoking the
s added)).
51
Decl. of Stewart Matthew, Ex. 2. (Email from Yule to Matthew (May 24, 2010)
).
52
See id.
LLC,
22
53
But, both of these acts
occurred after the conspiracy was completed; additionally, it is unclear how Fläkt
Woods
asserted that an email sent by Yule to Matthew on May 10,
2010,54 demonstrated that Fläkt Woods was aware that an act in furtherance of the
conspiracy would take place in Delaware.55
This argument fails because
inaccurate. In this email, Yule did not state that h
56
instead,
Yule merely stated that he had heard that Aeosphere had been dissolved
there
was no mention of Delaware (or even meeting minutes), whatsoever.57 Since
Matthew does not establish that Fläkt Woods
nexus before the completion of the conspiracy, he fails to satisfy the fourth Istituto
Bancario factor.
53
54
. 30-31.
Decl. of Stewart Matthew, Ex. 1. (Email from Yule to Matthew (May 10, 2010) (
55
56
57
Id.
May 10 Email.
23
10
In his brief, the Plaintiff does not sponsor any other arguments that Delaware
has personal jurisdiction over Fläkt Woods, and his allegations do not support any
other theory of jurisdiction. For instance, there are no allegations that Fläkt Woods
itself took any actions in Delaware related to the alleged wrongs, and given the
paucity of Fläkt Woods
Delaware-related activities, it is clear that any
effort to exercise general jurisdiction over Fläkt Woods would be inappropriate.
For the reasons discussed above, the Plaintiff s claims against Fläkt Woods are
dismissed for lack of personal jurisdiction.
2.
al Argument
SEMCO
dismiss
claims for
conclusion that it has personal jurisdiction is a condition precedent to judicial
action, including dismissal of a complaint for failure to state a claim. 58 Therefore,
merits of its Court of Chancery Rule 12(b)(6) argument.
The Plaintiff first argues that SEMCO is subject to personal jurisdiction
under the conspiracy theory of jurisdiction. This argument is unavailing. Based
58
Branson v. Exide Electronics Corp., 625 A.2d 267, 269 (Del. 1993).
24
upon the alleged facts,59 this Court cannot conclude that SEMCO was involved in a
conspiracy to defraud Matthew.
10 Del. C. § 3104(c)(4) is a closer call. Ultimately, Matthew shows neither a
statutory basis for the service of process on SEMCO, nor that exercising personal
jurisdiction over SEMCO would comport with constitutional due process.
following summary of the facts relevant to determining whether SEMCO is subject
to general jurisdiction in Delaware.
SEMCO is a Missouri limited liability
company with its principal place of business in Columbia, Missouri.60 SEMCO
has no employees, offices, bank accounts, or real estate in Delaware.61 SEMCO
made sales in Delaware in each of the four years before the filing of this suit
(2007-2010).62
These sales ranged in dollar-value from $32,711.07 to
$286,721.47, and represe
sales in the
United States.63 The number of sales in Delaware ranged from a low of six in 2010
59
See Part III.C.3 (summarizing the facts alleged to tie SEMCO to the wrongful actions alleged
in this suit).
60
Compl. ¶ 12.
61
State a Claim upon which Relief Can Be Granted and to Dismiss for Lack of Personal
-11.
62
63
Id.
25
to a high of eleven in 2009.64 On its website, SEMCO lists a sales representative
located in Delaware.65 Apparently, this sales representative is independent of
SEMCO.66
Section 3104(c)(4) provides that personal jurisdiction may be exercised over
or omission outside of [Delaware] if the person regularly does or solicits business,
engages in any other persistent course of conduct in [Delaware] or derives
subst
Based upon the relevant facts, the better inference is that SEMCO does not meet
this standard.
Even assuming that Matthew sufficiently pleads that SEMCO caused a
tortious injury,67 he does not offer facts that would support an inference that
of conduct in [Delaware] or derives substantial revenue from . . . [Delaware].
68
It
is clear that SEMCO does no
64
Decl. of Mark A. Thornhill, Ex. 4 (SEMCO sales report for the years 2007-2010).
webpage).
66
See id. (separate company, Trane-Seiberlich, listed as the Delaware sales representative)
its products in Delaware
Jan. Morissette Aff. ¶ 9 (stating that SEMCO has no
employees in Delaware).
67
In this context, t
definition of tort but
includes any act which involves breaching a duty to another and makes the one committing the
act liable for damages. See State ex rel. Brady v. Preferred Florist Network, Inc., 791 A.2d 8, 13
(Del. Ch. 2001) (citing Magid v. Marcal Paper Mills, Inc., 517 F. Supp. 1125, 1130 (D. Del.
1981)).
68
10 Del. C. § 3104(c)(4).
65
26
Delaware,69
relies primarily on two cases
United States v. Consolidated Rail Corp.70 and
Magid v. Marcal Paper Mills, Inc.71
to consumers in Delaware over a four-year period is, by itself, sufficient to confer
personal jurisdiction. In neither of these cases, though, was personal jurisdiction
found based upon a pattern of sales alone. In Consolidated Rail, the court found
72
No such concession was made in this case. In
Magid, the court found that Section 3104(c)(4) was met, not only due to the
73
No such supervisory activities are alleged in
this case.
69
See Bell Helicopter Textron, Inc. v. C & C Helicopter Sales, Inc., 295 F. Supp. 2d 400, 405 (D.
Del. 2002) (finding that Delaware revenue comprising less than 1% of total revenue was not
70
674 F. Supp. 138 (D. Del. 1987).
517 F. Supp. 1125 (D. Del. 1981).
72
Consol. Rail, 674 F. Supp. at 144.
73
Magid, 517 F. Supp. at 1130.
71
27
Instead, the relevant facts of this case more closely track those of Merck &
Co., Inc. v. Barr Laboratories, Inc.74 In Merck
-derived revenue comprised less than 1% of its annual revenue,
and it had no Delaware offices, telephone listings, bank accounts, or advertising
directed at Delaware.75 It also was not registered with the Secretary of State to do
business in Delaware and did not solicit new customers in Delaware.76 Barr did
maintain two licenses that allowed it to sell drugs in Delaware and to make direct,
weekly sales to a company located in Delaware, which resold the drugs as a
retailer.77 Barr also had one account manager for its existing Delaware customers
who traveled to Delaware up to three times per year.78 Based upon these facts, the
court in Merck concluded that Barr did not regularly do or solicit business in
Delaware.79
As with the defendant in Merck
-derived revenue
comprises less than 1% of its annual revenue, and it has no Delaware offices,
telephone listings, or bank accounts. Matthew has not alleged that SEMCO is
licensed with the Secretary of State to do business in Delaware, nor has he alleged
that SEMCO holds any licenses issued by the state of Delaware. Unlike Barr,
74
179 F. Supp. 2d 368 (D. Del. 2002).
Id. at 371.
76
Id. at 372.
77
Id.
78
Id. at 373.
79
Id.
75
28
SEMCO is not alleged to send an employee physically to Delaware to service
customers.
In fact, beyond the minimal amount of sales SEMCO makes in
Delaware, its only alleged contact is a listing on its website for a third-party sales
representative based in Delaware. There are no allegations that SEMCO advertises
its products in Delaware or does anything else to promote its products in Delaware,
besides listing this third-party on its website.80 This listing, in conjunction with a
small amount of Delaware sales and nothing e
In the alternative, SEMCO contends that even if jurisdiction is proper under
the Delaware long-arm statute, the exercise of jurisdiction would be improper
under the Due Process Clause. The Court agrees. To satisfy constitutional due
process concerns, a defendant must engage in sufficient minimum contacts with a
forum state to require it to defend itself in the courts of that state consistent with
81
82
80
show
Furthermore, M
81
LaNuova D & B, S.p.A v. Bowe Co., Inc., 513 A.2d 764, 769 (Del. 1986) (citing
v. Washington, 326 U.S. 310 (1945)).
82
Merck, 179 F. Supp. 2d at 375 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 416 (1984)).
29
83
contacts are unrelated to the causes of action, the Court concludes that they do not
84
satisf
3.
upon which Relief May be Granted
In the alternative, SEMCO moves to dismiss the claims brought against it
under Court of Chancery Rule 12(b)(6) for failure to state a claim upon which
relief may be granted.85 For the reasons explained below, this motion would be
granted if this Court had personal jurisdiction over SEMCO.
The pleading standards governing a motion to dismiss are minimal.86 When
considering a motion to dismiss under Court of Chancery Rule 12(b)(6), the Court
should accept all well-pleaded factual allegations in the Complaint as
if they provide the defendant notice of the claim, draw all reasonable
83
Id. (citing P
n, 819 F.2d 434, 437 (3d Cir.
1987)).
84
Id. at 374. The Court also notes that, in all three of the cases primarily relied upon by the
parties in making their Section 3104(c)(4) arguments Merck, Consolidated Rail, and Magid
including two in which the requirements of Section 3104(c)(4) were found to be met, it was
determined that the requirements of constitutional due process were not met. Merck, 179 F.
Supp. 2d at 375; Consol. Rail, 674 F. Supp. at 145 (regular and continuous business activities in
Delaware were insufficient for the assertion of jurisdiction where the activities were minimal
(small amount of sales)); Magid, 517 F. Supp. at 1131.
85
Although the Court has determined that it does not have personal jurisdiction over SEMCO,
Matthew presented strong arguments supporting a finding of jurisdiction, and this determination
was not clearRule 12(b)(6) argument to inform the parties of how it would rule on this issue in the event it
were found to have personal jurisdiction over Matthew.
86
Cent. Mortg. Co., 27 A.3d at 536.
30
inferences in favor of the plaintiff, and deny the motion unless the
plaintiff could not recover under any reasonably conceivable set of
circumstances susceptible of proof.87
Matthew makes the following claims against SEMCO: aiding and abetting
breaches of fiduciary duties,88 unjust enrichment,89 and civil conspiracy.90 His
theory of these claims is not readily apparent from review of the Complaint. At
s questioning, counsel for Matthew
revealed his theory of the claims against SEMCO, explaining:
But what we have alleged, and what we believe is appropriate, given
the totality of the record, is an inference that SEMCO is an integral
part of the business
Fläkt Woods, Mr.
Laudamiel and Mr. Capua, their entity, just as it was throughout. So,
current participation, that they have been involved the whole time.91
In sum, based upon allegations that SEMCO had some involvement with
Aeosphere before its dissolution and some involvement with Laudamiel and Capua
[it has] been involved
87
Id.
Compl. ¶ 52. A claim for aiding and abetting a breach of fiduciary duty requires three
elements: (1) the existence of a fiduciary relationship; (2) a breach of the fiduciary's duty; and
(3) a knowing participation in that breach by the defendant.
holder
Litig., 669 A.2d 59, 72 (Del. 1995).
89
Compl. ¶ 63. The elements of unjust enrichment are: (1) an enrichment; (2) an
impoverishment; (3) a relation between the enrichment and impoverishment; (4) the absence of
justification; and (5) the absence of a remedy provided by law. Nemec v. Shrader, 991 A.2d
1120, 1130 (Del. 2010).
90
Compl. ¶ 67. The elements of a civil conspiracy are: (1) two or more persons; (2) an object to
be accomplished; (3) a meeting of the minds between or among such persons relating to the
object or a course of action; (4) one or more unlawful acts; and (5) damages as a proximate result
thereof. Wolfe & Pittenger, supra note 28, § 3.05[b], at 3-83.
91
at 60 (emphasis added).
88
31
92
Involved in exactly what and exactly how is not clear.
Matthew does not ask for an inference of any particular act that might support the
claims asserted; essentially, he asks the Court to imagine what wrongful acts
SEMCO might have committed that would support these claims, and then to infer
that these acts were indeed committed. Such a theory likely fails as a matter of
law, but, nevertheless, the Court will assess the factual allegations involving
SEMCO to determine whether or not they can support a reasonable inference that
SEMCO was involved in actions that could support the claims asserted against it.
There are sparse factual allegations related to SEMCO to support these
claims.93 The following is a summary of the factual allegations tying SEMCO to
Aeosphere and Matthew; few, if any, of these allegations connect SEMCO to the
alleged wrongs, let alone constitute the well-pleaded facts that, together with their
reasonable inferences, are necessary to support any of the claims brought against
SEMCO. According to the Plaintiff, representatives of Fläkt Woods stated that
SEMCO would assist with the marketing and sales of products developed under
the Collaboration Agreement and with licensing the Battelle technology. Fischer, a
SEMCO employee, allegedly participated in a meeting between Aeosphere, Fläkt
Woods, and Battelle on July 2, 2008, and helped Yule evaluate the Battelle
92
Id.
93
question asking what involvement SEMCO was alleged to have had in any efforts to separate
Id. at 59.
32
technology.
alerting him to an HVAC industry newsletter that highlighted the ScentOpera.
worked with Laudamiel and Capua on the sale and marketing of a scenting system
that the Plaintiff alleges should have been undertaken by Aeosphere.
Each of the claims brought against SEMCO requires some connection
between SEMCO and the alleged wrong.
Aiding and abetting breaches of
fiduciary duty requires a knowing participation in the breach by the defendant;94
unjust
enrichment
requires
a
relation
between
the
enrichment
and
impoverishment;95 and civil conspiracy requires a meeting of the minds between or
among the conspirators relating to the object of the conspiracy or a course of action
to be taken.96
At most, the Plaintiff has alleged that, before
dissolution, SEMCO had a tangential relationship to Aeosphere and the
Aeosphere-Fläkt Woods collaboration; there was a disputed dissolution of
Aeosphere, and unlawful acts were committed in connection with this dissolution;
and, following the dissolution, SEMCO worked with Laudamiel and Capua, who
are alleged to have harmed the Plaintiff. Based upon the well-pleaded facts, the
Court cannot make a reasonable inference that SEMCO conspired to commit or
94
In re Santa Fe Pac. Corp. S'holder Litig., 669 A.2d at 72.
Nemec, 991 A.2d at 1130.
96
Wolfe & Pittenger, supra note 28, § 3.05[b], at 3-83.
95
33
actively participated in any of the alleged wrongful actions, and, as a result, none
of the elements noted above requiring a connection between SEMCO and the
alleged wrong has been met.
dismiss for failure to state a claim would be granted, if this Court had personal
jurisdiction over SEMCO.
IV.
A. Background97
1.
Governance
p
founding by
Matthew and Laudamiel is, in all material respects, consistent with that described
in Part III.A. Additionally, they claim that
business plan was to develop the Battelle technology into a commercially viable
project by the end of 2009, and that Matthew brought the ScentOpera to
Aeosphere. While considered an interesting project by Laudamiel, neither he nor
Matthew expected the ScentOpera to be a significant source of revenue for
Aeosphere, and it was not referenced in the written business plan. The Aeosphere
97
Unless otherwise noted, the factual background is taken from the Counterclaims, the wellpleaded allegations of which, for present purposes, must be taken as true. Cent. Mortg. Co., 27
A.3d at 535. In certain instances, the Court will rely upon the LLC Agreement. While, as a
general rule, the Court is limited to considering only the facts alleged in the Counterclaims when
deciding a motion to dismiss under Court of Chancery Rule 12(b)(6), the Court may consider
documents both integral to and incorporated into the Counterclaims, and documents not relied
upon for the truth of their contents. Orman, 794 A.2d at 15-16. Consideration of the LLC
Agreement is appropriate in this case, as it is both integral to and incorporated into the
Counterclaims.
34
Defendants also aver that Matthew, who had little background in the fragrance
industry, was eager to have Laudamiel associated with the ScentOpera and hoped
to use it as a vehicle to establish his own reputation in the fragrance and film
industries.
in Aeosphere
resulting ownership structure is, in all material respects,
consistent with that described in Part III.A. They further claim that Action 1 made
this investment in reliance up
tations to Capua that he was
experienced and competent in the areas of corporate finance, business
administration, and project management.
governance structures are also, in all material respects, consistent with that
described in Part III.A, unless otherwise noted. As set forth in more detail in
Part IV.C, the Aeosphere Defendants and Matthew interpret differently the
portions of the LLC Agreement that required Capua to serve as a tie-breaker when
Matthew and Laudamiel
in their capacities as either Managers or co-CEOs
were deadlocked on a decision that required both of their votes. Additionally, the
Aeosphere Defendants allege that Laudamiel and Matthew agreed that Matthew
would be prim
management, while Laudamiel
35
responsibility for creative and technical matters.
Furthermore, the Aeosphere
Defendants point out that, under Article 7.1 of the LLC Agreement, Matthew,
Laudamiel, and Capua each assumed, as a co-CEO and/or Manager, explicit duties
of care and good faith.98 Finally, under Article 5.1.2 of the LLC Agreement, each
d all properly called Board
meetings.
2.
The Aeosphere Defendants allege that by the spring of 2010 Aeosphere had
, and its business activities had ground
to a hal
s of
company funds, and unwillingness to cooperate with Laudamiel and Capua. By
unfeasible, but Matthew failed to pursue other business opportunities, except the
ScentOpera.
Matthew, allegedly, repeatedly delayed significant contracts and
other actions for months, refusing either to accept or to reject them, thereby
effectively preventing Aeosphere from conducti
dwindling cash reserves, he refused to approve expenditures for core business
activities
98
Article 7.1 of th
their managerial duties in good faith, in a manner they reasonably believe to be in the best
interests of the Company and its Members, and with such care, including reasonable inquiry, as
36
the ScentOpera. Moreover, Matthew entered into several agreements on behalf of
Agreement.
to accept or to reject contracts and actions
put to him by Laudamiel is a basis for
counterclaims. Perhaps the most contentious of these scenarios involved the hiring
of
Hornetz was qualified as a junior perfumer and
had worked with Laudamiel in that capacity in the past.
According to the
Aeosphere Defendants, when Action 1 became a member of Aeosphere, the
assistant. The LLC Agreement reflected the possibility that Aeosphere might hire
Hornetz and provided in Article 5.2.6(f)(iii) that, if Hornetz was hired by
terms of employment of [Hornetz] or any employment agreement between
As a result, a unanimous vote of Matthew and
Capua was required to hire Hornetz or set the terms of his employment.99
Allegedly, Matthew first approved Aeo
, but he
later refused to execute an employment agreement between Aeosphere and
Hornetz. In July 2009, Matthew sent an unsigned employment agreement to
99
See LLC Agreement art. 5.2.6(f).
37
Hornetz, who promptly signed and returned it. From July 2009 until Aeosphere
was dissolved, Matthew failed to execute the agreement or to
inquiries about it. Hornetz began working for Aeosphere without an employment
agreement, but Matthew largely prevented him from working with Laudamiel,
claiming that he could not have access to confidential or sensitive information until
an employment agreement was in place. Instead, Matthew allegedly diverted
Hornetz
Matthew also refused to pay Hornetz due to
the absence of a fully executed employment agreement. As a result, Action 1 paid
Hornetz more than 40,000 euros, expecting, but never receiving, repayment from
Aeosphere.
The Aeosphere Defendants also float a raft of other complaints about
-CEO. For instance, allegedly, he
prevented Laudamiel from receiving the assistance, supplies, and infrastructure
Laudamiel needed to perform his responsibilities as the chief perfumer, while also
financial responsibilities. Matthew also, allegedly, charged Aeosphere for personal
and other non-business expenses. Furthermore, business partners and Aeosphere
employees complained to Laudamiel about the way Matthew conducted himself.
Additional alleged improprieties include: (1)
clients and business partners regarding Aeosphere
38
statements to potential
intellectual
property
disclose that the outside accountant whom
he recommended hiring had been his personal accountant for fifteen years.
3. The Dissolution of Aeosphere
In the months preceding the dissolution of Aeosphere in May 2010,
Laudamiel and Capua engaged in negotiations with Matthew, first seeking to
resolve their internal conflicts, and, when that failed, seeking a mutually acceptable
way to end their collaboration and distribute any remaining business opportunities.
In April 2010, after several months of negotiations and when the parties were on
the verge of finalizing a settlement agreement, Matthew terminated the
negotiations and informed Laudamiel and Capua that he wanted Aeosphere to
continue, despite the fact that it was on the verge of insolvency and had essentially
ceased to function.
On May 3, 2010, Capua caused notice of an emergency Board meeting to be
delivered to Matthew and Laudamiel. The notice stated that the meeting would be
held on May 4, 2010,
conflict situation between the two co-CEOs of Aeosphere, and most importantly
100
A meeting agenda
was attached to the notice; it noted that items for discussion included the
dissolution and winding up of Aeosphere, termination of its employees, closing of
100
Countercls. ¶ 47.
39
its facilities, the rights to the ScentOpera, and the distribution of remaining
intellectual property rights. Matthew acknowledged receipt of this meeting notice,
but refused to attend the meeting. The emergency meeting was held at the noticed
time on May 4, 2010, and attended by Laudamiel and Capua. They both voted to
dissolve Aeosphere, and, on May 12, 2010, Laudamiel and/or Capua caused a
Certificate of Cancellation to be filed with the Delaware Secretary of State.
Allegedly, during and following the winding up, Laudamiel personally paid
significant outstanding accounts payable of Aeosphere for which the company no
longer had sufficient funds; Matthew did not contribute.
B. The Contentions
The Aeosphere Defendants bring a number of counterclaims against
Matthew. In Count I, they assert that Matthew breached the LLC Agreement by
unilaterally approving actions and entering into cont
refusing to take action on various contracts, and refusing to attend the emergency
Board meeting. Count II alleges that Matthew breached his implied obligations of
good faith and fair dealing in the LLC Agreement by refusing to accept or reject
various contracts and actions for which his approval was required under the LLC
Agreement, otherwise refusing to cooperate with the other Managers in the
management of Aeosphere, diverting
resources to the ScentOpera for
his own benefit, and refusing to attend the emergency Board meeting. In Count III,
40
the Aeosphere Defendants claim that Matthew breached his fiduciary duties of
care, loyalty, and good faith; these alleged breaches of fiduciary duty stem from
many of the same alleged actions that form the bases of Counts I and II, as well as
from allegedly charging personal expenses to Aeosphere. This alleged improper
charging of personal expenses to Aeosphere also forms the basis of the
s for breach of the Employment Agreement (Count IV)
and unjust enrichment (Count V).
Matthew seeks dismissal of Counts II, IV, and V under Court of Chancery
Rule 12(b)(6). In support of his motion to dismiss Count II, Matthew argues that
the Aeosphere Defendants fail to establish an independent counterclaim for breach
of the implied covenant of good faith and fair dealing because the alleged wrongful
acts were either addressed by the LLC Agreement or form the basis of other
counterclaims.
In response, the Aeosphere Defendants aver that the LLC
Agreement did not contemplate a situation where Matthew refuses expressly to
accept or to reject an agreement. They also argue that they may plead alternative
theories for relief, and, as such, the fact that the same allegations form the basis of
multiple counterclaims does not provide grounds for dismissal. In seeking to
dismiss Counts IV and V, Matthew argues that these counterclaims are derivative,
and Laudamiel and Action 1 lack standing to assert them. In response, Laudamiel
and Action 1 argue that these counterclaims were property of Aeosphere that
41
passed proportionately to its members by operation of law upon its dissolution and
winding up, and, as such, may now be brought as direct claims.
C. Analysis
1. Court of Chancery Rule 12(b)(6) Standard
Matthew has moved to dismiss Counts II, IV, and V under Court of
Chancery Rule 12(b)(6) for failure to state a claim upon which relief may be
granted.
As previously noted, the pleading standards governing a motion to
dismiss are minimal.101 When considering a motion to dismiss under Court of
Chancery Rule 12(b)(6), the Court,
should accept all well-pleaded factual allegations in the Complaint as
if they provide the defendant notice of the claim, draw all reasonable
inferences in favor of the plaintiff, and deny the motion unless the
plaintiff could not recover under any reasonably conceivable set of
circumstances susceptible of proof.102
2.
to Dismiss Count II
The Aeosphere Defendants allege that numerous wrongful acts committed
by Matthew support the counterclaim brought in Count II.
Each of these
allegations will be assessed below under the Rule 12(b)(6) standard to determine
whether the Aeosphere Defendants have properly pled a counterclaim for breach of
the implied covenant of good faith and fair dealing in the LLC Agreement.
101
102
Cent. Mortg. Co., 27 A.3d at 536.
Id.
42
In Delaware, the implied covenant attaches to every contract by operation of
law.103 It requires contracting par
conduct which has the effect of preventing the other party to the contract from
104
105
undermine and frustrate every legal obligation e
The implied
covenant acts as a way to import terms into the agreement to analyze unanticipated
106
developments or to
To state a claim for
breach of the implied covenant, a litigant must allege a specific obligation implied
in the contract, a breach of that obligation, and resulting damages.107
108
109
reformation . . . should be a rare and facto
-
and should operate
where the contract as a whole speaks
sufficiently to suggest an obligation and point to a result, but does not speak
directly enough to provide an explicit answer.
110
Where the contract does speak
directly regarding the issue in dispute,
103
Gloucester Holding Corp. v. U.S. Tape & Sticky Prods., LLC, 832 A.2d 116, 128 (Del. Ch.
2003).
104
Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del. 2005) (citation and internal
quotation marks omitted).
105
Gloucester Holding Corp., 832 A.2d at 128 (citation and internal quotation marks omitted).
106
Dunlap, 878 A.2d at 442.
107
Fitzgerald v. Cantor, 1998 WL 842316, at *1 (Del. Ch. Nov. 10, 1998).
108
Lonergan v. EPE Holdings LLC, 5 A.3d 1008, 1018 (Del. Ch. 2010) (quoting Nemec, 991
A.2d at 1125).
109
Dunlap, 878 A.2d at 442.
110
Lonergan, 5 A.3d at 1018 (citation and internal quotation marks omitted).
43
that implied good faith cannot be used to circumvent the parties' bargain, or to
create a free-floating duty unattached to the underlying legal documents
111
As a
result, generally, a claim for breach of the implied covenant may not be based on
conduct authorized by the terms of the agreement.112 Parties have a right to enter
into and the law enforces
both good and bad contracts.113
to Reject Contracts
a.
that Required his Approval
Matthew served Aeosphere in two separate and distinct roles
Manager and
co-CEO in which his approval was required in order for the company to take
certain actions. Under the LLC Agreement, in their capacity as Managers, both
Matth
,
-
114
Similarly, in their roles as co-CEOs, except for contracts
requiring the authorization of and previously authorized by the Board, both coCEO
-
and approved (or disapproved) pursuant to Article 5.2.6(a) of the LLC Agreement
whereby Capua could cast a tie-breaking vote.115
111
Dunlap, 878 A.2d at 441 (citation and internal quotation marks omitted).
Id.
113
Lonergan, 5 A.3d at 1018.
114
LLC Agreement art. 5.2.6(a).
115
Id. at art. 5.4.2.
112
44
The Aeosphere Defendants contend that in order for Aeosphere to employ
-breaking power, Matthew and Laudamiel needed to expressly disagree,
not simply fail to reach an agreement.116 The Aeosphere Defendants further argue
that the implied covenant in the LLC Agreement required Matthew and Laudamiel
117
Therefore, by
refusing either expressly to agree or to disagree with Laudamiel regarding the
approval of various contracts and actions, Matthew, according to the Aeosphere
Defendants, breached the implied covenant in the LLC Agreement.
In response, Matthew argues that even if the allegations are true that he
refused to make an express decision on contracts and actions that required his
approval, the LLC Agreement provided a remedy for such conduct, and, therefore,
interpretation of Articles 5.2.6(a) and 5.4.2 of the LLC Agreement. Specifically,
he contends that the conduct described, if true,
Board under Article 5.2.6(a)
ed
-CEOs under
Article 5.4.2. If this interpretation is correct, the LLC Agreement would have
116
See Br. of Defs. Christophe Laudamiel, Roberto Capua, & Action 1 srl
to Dismiss Counts II, IV, & V of Their Amended Verified Countercls.
8.
117
Id. at 8.
45
7-
alleged impasses.118
As presented by the Aeosphere Defendants and Matthew, the key issue is
alleged actions (or inaction) could be deemed to have created a
Laudamiel. If so, then the LLC Agreement provided a way to resolve the impasse,
and there is no gap for the implied co
appear to be the very type of unreasonable conduct that the implied covenant is
meant to protect against. The Court concludes that the actions alleged by the
Aeosphere Defendants, whether taken by Matthew in his role as a Manager or coCEO, do not constitute a breach of the implied covenant because such actions were
addressed by the LLC Agreement and should be assessed under the standards
agreed to in the contract. This conclusion is not based upon the issue focused on
Agreement, namely Articles 5.1.2 and 7.1.
While in their Counterclaims and briefs the Aeosphere Defendants do not
distinguish between actions Matthew took in his capacities as Manager and coCEO, the Court will analyze these actions separately.
At least one of the
counterclaim
118
See LLC Agreement art. 5.2.6(a).
46
disapprove the hiring of Hornetz.119 But, as noted above, the implied covenant
does not speak directly enough to provide an
;120 otherwise,
121
The LLC
Agreement squarely addressed the timeliness
requires a Manager to vote in order to approve or disapprove any action, such
Manager shall act with diligence and shall not unreasonably delay approving or
122
Clearly, that a Manager might delay approving
or disapproving an action was not an unanticipated development, and there is no
related contractual gap to be filled by implying contract terms through the implied
covenant.
As such, it would be inappropriate for this Court to supplant or
supplement the contractually agreed upon standard for the timeliness of a
ng by implying additional terms.
119
Under Article 5.2.6(f)(iii) of the LLC Agreement, the unanimous vote of Matthew and Capua
was required to approve
and any employment agreement
between Aeosphere and Hornetz.
[hiring Hornetz], but then refused to execute an employment agreement between Aeosphere and
dilatory conduct with regard to approving Horne
related to his role as co-CEO, the ultimate result dismissal of the counterclaim
same under the analysis presented below.
120
Lonergan, 5 A.3d at 1018 (citation and internal quotation marks omitted).
121
Dunlap, 878 A.2d at 441 (citation and internal quotation marks omitted).
122
LLC Agreement art. 5.1.2.
47
would be the
violated the standard set forth in the LLC Agreement, the appropriate counterclaim
is one for breach of contract, and, indeed, the Aeosphere Defendants assert such a
counterclaim.123
Some of the agreements and actions that Matthew allegedly wrongfully
delayed expressly approving or disapproving appear to have implicated his role as
co-CEO.124 There were no provisions in the LLC Agreement that specifically
governed a co-
diligence in discharging his duties to approve or to
disapprove contracts. But, Article 7.1 of the LLC Agreement did create a general
Article
perform their managerial duties in good faith, in a manner they reasonably believe
to be in the best interests of the Company and its Members, and with such care,
including reasonable inquiry, as an ordinarily prudent person in a like position
would use under simi
-CEO
f
Aeosphere under Articles 5.4 and 5.4.2 of the LLC Agreement. Furthermore, there
123
Countercls. ¶ 54 (asserting a counterclaim for breach of the LLC Agreement based in part on
124
receiving the assistance, supplies, and infrastructure he needed to perform his responsibilities as
d/or
Id. at ¶ 31. At least some of these agreements would presumably require approval
of both co-CEOs under Article 5.4.2 of the LLC Agreement, which requires such approval for
48
125
Therefore,
similar to Article 5.1.2, although more broadly applicable, Article 7.1 sets a
contractua
timeliness in approving and disapproving
contracts should be judged.126 As such, the LLC Agreement directly speaks to the
issue at hand; there is no contractual gap to be filled; and the
terms control
127
A
contractual standard, the appropriate counterclaim is one for breach of contract, a
counterclaim the Aeosphere Defendants do, in fact, bring.128
125
Article 5.4.2 of the LLC Agreement grants the co-CEO
explain the way in which each co-CEO, in his individual capacity, is limited in carrying out the
specific managerial duty of approving contracts, namely that the approval of his co-CEO is also
required.
126
or disapproving contracts in his role as a Manager. In that case, though, to the extent the
Article 7.1 standard conflicted with the Article 5.1.2 standard, the more specific Article 5.1.2
standard
would govern. See DCV Holdings, Inc. v. ConAgra,
Inc., 889 A.2d 954, 961 (
Specific language in a contract controls
over general language, and where specific and general provisions conflict, the specific provision
ordinarily qualifies the meaning of the general
127
Dunlap, 878 A.2d at 441 (citation and internal quotation marks omitted).
128
Countercls. ¶ 54 (asserting a counterclaim for breach of the LLC Agreement based in part on
tions on behalf of
oted that the standard Laudamiel and Action 1 assert should be used
is very similar to the standards articulated in Articles 5.1.2 and
7.1 of the LLC Agreement that would be applied in assessing a breach of contract counterclaim.
49
ment
b.
of Aeosphere
unreasonably refus[ed] to cooperate with Laudamiel and/or Capua in the
intransigent behavior as another basis for their breach of the implied covenant
counterclaim.129 Even assuming that this not-well-defined category of wrongdoing
is truly separate from others alleged by the Aeosphere Defendants, this allegation
is so vague that it teeters on the verge of failing to provide Matthew with notice of
the counterclaim, as it relates to this particular allegation.
In general, this
allegation speaks to how Matthew discharged his managerial duties, beyond the
more specific allegations made by the Aeosphere Defendants. Review of the
Counterclaims reveals, possibly, one particular allegation that would fall most
squarely into this
unwillingness to pursue business opportunities aside from the ScentOpera.130
Any contractual counterclaim based upon allegations that Matthew failed to
properly perform his managerial duties, whether it relates to his role as a Manager
or a co-CEO, must be pled as a breach of contract counterclaim, not a breach of the
129
Countercls. ¶ 59.
See id. at ¶ 27. This description of the cited allegation is perhaps charitable, as the
Counterclaims actually do not allege, strictly speaking, that Matthew was unwilling to pursue
130
50
implied covenant counterclaim.
As explained above, Article 7.1 of the LLC
Agreement sets a contractual standard by which the Managers and officers of
Aeosphere were to perform their managerial duties, and, thus, there is no gap to be
filled by implying terms through the implied covenant.
c.
counter
the ScentOpera for his own benefit and against the best interests of the
131
According to the Aeosphere Defendants, the ScentOpera served the
132
establish his own reputation i
Thus, the
alleged personal benefit was an incidental benefit. The Aeosphere Defendants also
admit that the ScentOpera was a valid Aeosphere company project, albeit not one
of the most important.133
This allegation essentially boils down to a disagreement over how Matthew
allocated
company
resources
among
various
internal
projects,
perhaps
overallocating resources to a project that provided him with incidental personal
131
Id. at ¶ 59.
Id. at ¶ 12.
133
See id.
132
other business activities, neither he nor Matthew expected it to be a significant source of
51
benefits and less tangible benefits to Aeosphere itself.
Such actions might
implicate a breach of fiduciary duties, and the Aeosphere Defendants have used
this allegation as one basis for such a counterclaim.134
Here the Aeosphere
Defendants assert that these actions also constitute a breach of the implied
covenant. These allegations speak to how Matthew carried out his managerial
duties in this case, allocation of company resources
and, to the extent that these
allegations support a contractual counterclaim, it would be one for breach of
contract, not breach of the implied covenant, as Article 7.1 of the LLC Agreement
sets a contractual standard by which the Managers and officers of Aeosphere were
to perform their managerial duties. Therefore, there is no gap to be filled by
implying terms through the implied covenant.
d.
Refusal to Attend the Emergency Board Meeting
The final allegation the Aeosphere Defendants rely upon as a basis for their
implied covenant counterclaim is that Matthew refused to attend or otherwise
participate in the emergency Board meeting held on May 4, 2010, during which the
other Managers voted to dissolve Aeosphere. As with the other bases of the
134
See id. at ¶ 63. Matthew argues that in doing so the Aeosphe
general principle that Defendants cannot simultaneously seek relief for the same alleged conduct
dismissal of the implied covenant counterclaim. See
Dismiss Counts II, IV, & V of the Am. Verified Countercls. of Defs. Christophe Laudamiel,
because it
set forth above.
52
counterclaim, this one, too, must be
dismissed, since it relates to an issue that was explicitly addressed by the LLC
Agreement. Article
y Board meeting must
be pled as a breach of contract counterclaim applying the contractually agreedupon best efforts standard, and, in fact, the Aeosphere Defendants assert such a
counterclaim.135
Since this issue was addressed by the LLC Agreement, the
existing contract terms control, and there is no justification for implying additional
terms through the implied covenant.
breach of the implied covenant is dismissed.
3.
n to Dismiss Counts IV and V
In Counts IV and V, Laudamiel and Action 1 assert counterclaims against
Matthew for damages resulting from his alleged breach of the Employment
Agreement and for unjust enrichment. Both of these counterclaims are based upon
allegations that Matthew improperly charged personal expenses to Aeosphere for
reimbursement. Matthew moves for dismissal of these counterclaims arguing that
Laudamiel and Action 1 do not have standing to bring them in their individual
135
See Countercls. ¶ 54.
53
capacities. Both of these counterclaims belonged to Aeosphere, he contends, and
could only have been brought directly by Aeosphere or derivatively on its behalf
before the certificate of cancellation was filed; additionally, he argues that neither
Laudamiel nor Action 1 qualifies as a third-party beneficiary of the Employment
Agreement.
Regarding the counterclaim for breach of the Employment
Agreement, Matthew notes that the Agreement was between himself and
Aeosphere, not Laudamiel or Action 1.
Similarly, Matthew avers that the
allegations related to the unjust enrichment counterclaim make clear that it seeks
relief for harm purportedly done to Aeosphere, not Laudamiel or Action 1
directly.136
Laudamiel and Action 1 do not contest that these counterclaims originally
belonged to Aeosphere, and they offer no argument that they were third-party
beneficiaries of the Employment Agreement.
In fact, they admit that these
137
counter
In
their brief, Laudamiel and Action 1 defend these counterclaims, largely, by
contending that Matthew contradicts his argument for their dismissal by asserting
claims in his Complaint that are allegedly based upon harm caused to
136
See id. at
).
Similarly, the Court agrees that, but for the fact that Aeosphere has
filed a certificate of cancellation, there would be no question that the counterclaims would
belong to Aeosphere and would need to be pursued by it directly or by its members derivatively.
137
54
Aeosphere.138 The Court is now addressing the counterclaims of the Aeosphere
not at issue; thus, there is no need for the Court to consider a question that has not
been squarely put before it.
is a
brief argument almost devoid of citations to authority.139 They assert that, since
the counterclaims were property of Aeosphere and under Articles 9.4 and 6.1 of the
LLC Agreement and 6 Del. C. § 18-804 any assets of Aeosphere remaining after
liquidation were to be distributed to the members pro rata (with certain preferences
for Action 1), the undistributed counterclaims devolved by operation of law
proportionately to Laudamiel, Action 1, and Matthew, each of whom could then
bring the counterclaims directly in their individual capacities. Laudamiel and
Action 1 argue that this must be so because, otherwise, there would be no way for
s
for the harm he allegedly inflicted upon Aeosphere.
While there appears to be no Delaware statutory or case law that directly
addresses this argument, the Court concludes that the dissolution and cancellation
of a limited liability company (an LLC
into direct claims held propo
138
139
does not transform derivative claims
as asserted by
See id. at 11-13.
See id. at 12.
55
Laudamiel and Action 1; instead, after the filing of the certificate of cancellation,
such claims must be brought in the name of the LLC by a trustee or receiver
appointed under 6 Del. C. § 18-805, or directly by the LLC or derivatively by its
members after reviving the LLC by obtaining revocation of its certificate of
cancellation.140
The dissolution process for an LLC is outlined in 6 Del. C. §§ 18-801 18806. After an act of dissolution occurs, an LLC is to be wound up and its assets
distributed as provided by 6 Del. C. § 18-804. T
certificate of cancellation.141 After the certificate of cancellation has been filed,
suits generally may not be brought by or against an LLC.142 But, under 6 Del. C.
§ 18-
140
The Court notes that the LLC Agreement did not provide for how
be pursued after the filing of its certificate of c
does not
speak to the validity of a provision in a limited liability company agreement that purports to
establish an alternative process for pursuing the claims of a cancelled entity. This Memorandum
Opinion merely recites the background rule governing the disposition of such claims in the
absence of some other contractually agreed-upon process that might possibly be capable of
d
Fisk Ventures, LLC v. Segal, 2008 WL 1961156, at *8 (Del. Ch. May 7, 2008),
,
984 A.2d 124 (Del. 2009). As such, the parties to an limited liability company agreement have
In re Seneca Invs. LLC, 970
A.2d 259, 261 (Del. Ch. 2008). Thus, it might be possible to include a provision in an limited
liability company agreement that prescribes an alternate method for pursuing the claims of a
cancelled LLC.
141
6 Del. C. § 18-803(b).
142
I v. Advanced Mobilecomm Techs., Inc., 854 A.2d 121, 138 (Del.
Ch. 2004).
56
Chancery may, on application, appoint one or more managers or other persons to
the debts and property due and belonging to the [LLC], with the power to
prosecute and defend, in the name of the LLC, suits as may be necessary or proper
The trustee or receiver may also be given the broad
143
be necessary for the final settlemen
This provision is almost identical to 8 Del. C. § 279, which allows the Court
of Chancery to appoint a receiver or trustee, with the same powers described in
§ 18-805, to conclude the unfinished business of a dissolved corporation. Since the
wording and context of these two statutory provisions are essentially identical,
authorities interpreting § 279 are persuasive when interpreting § 18-805.144 This
Court has found that
rd the collection
145
143
Along with 8 Del. C.
6 Del. C. § 18-805.
Due to the paucity of reported decisions in the LLC context, this Court often looks to
corporate law authorities when interpreting similar statutory provisions. See, e.g., Re:
Travelcenters of Am., LLC v. Brog, 2008 WL 868107, at *2 n.2 (Del. Ch. Mar. 26, 2008).
145
In re Citadel Indus., Inc., 423 A.2d 500, 506 (Del. Ch. 1980).
144
57
§ 278,146 §
147
As described above, § 18-805 provides members an avenue to pursue an
in the name of the LLC after the filing of a certificate of
cancellation;148 thus, one who harmed an LLC would not be
related liability by the filing of a certificate of cancellation, even if the cancelled
could not pursue its claims directly. The process set forth in § 18805 also addresses concerns regarding a multiplicity of suits.
This statutory
analysis indicates that the undistributed claims of a cancelled LLC may not, on the
authority of the statute alone, be asserted directly by some of the
former
members.149 Such claims may be brought in the name of the LLC using the
146
Under § 278, the legal existence of a dissolved corporation is automatically extended as a
which time the corporation can sue and be sued and otherwise wind up its business. While there
is no statutorily-defined period of time during which an LL
dissolution, the period of time between the dissolution of an LLC and the filing of the certificate
of cancellation is somewhat analogous. During this time, an LLC may be wound up and suits
brought on its behalf and against it. See 6 Del. C. § 18suits prosecuted and defended in its name);
, 854 A.2d at 138 (stating that suits
may be brought by or against an LLC until the certificate of cancellation is filed).
147
In re Tex. E. Overseas, Inc., 2009 WL 4270799, at *3 (Del. Ch. Nov. 30, 2009) (citing
Citadel, 423 A.2d at 504),
, 998 A.2d 852 (Del. 2010).
148
This is not the only way in which former members may pursue an LLC
after a
certificate of cancellation has been filed.
were not wound up in compliance with the Delaware Limited Liability Company Act, it may
nullify the certificate of cancellation, which effectively revives the LLC and allows claims to be
brought by and against it. See
, 854 A.2d at 138.
149
This is consistent with general principles of corporate law expressed in the case law of other
st
against erring directors does not create an individual right of action in shareholders where the
58
process set forth in § 18-805, or as direct claims of the LLC or derivative claims of
its members after or in conjunction with150 a successful action seeking the
One case applying Delaware law with an argument similar to that of
Laudamiel and Action 1 supports this determination, although it did not
definitively rule on the issue. That case, Deerfield Specialty Papers, Inc. v. Black
Clawson Co., Inc.,151 involved a counterclaim by Black Clawson Company, Inc.
152
The contract at issue was entered into between
Black
Clawson was the sole shareholder of Enterprises
action is representative or derivative in character and cognizable only in equity at suit of the
causes of action, namely, the avoidance of multiplicity of actions and the protection of creditors,
are equally applicable wh
WILLIAM MEADE FLETCHER,
FLETCHER CYCLOPEDIA OF THE LAW OF CORPORATIONS § 5909 (Perm. Ed. 2011). This logic can
those levied against former directors.
150
In Metro, the Court found that a litigant need not bring a separate action seeking nullification
of a certificate of cancellation before filing a derivative suit on the
behalf. Metro
, 854 A.2d at 140.
151
751 F. Supp. 1578 (S.D.N.Y. 1990). A related argument was offered by the plaintiffs in
Abelow v. Symonds, 156 A.2d 416, 418allow the plaintiffs to amend their complaint was based upon its determination that the plaintiffs
denied the right to couch their complaint in terms which seek a
remedy for alleged personal injury to a class of stockholders as opposed to the theoretical injury
han a finding that the dissolution of a corporation
transformed derivative claims of a corporation into direct claims of its shareholders.
152
Deerfield Specialty Papers, 751 F. Supp. at 1579.
59
153
of
Deerfield Specialty contended that,
since Black Clawson was not a party to the contract, it did not have standing to
bring a direct suit.154
The Magistrate, who first heard the matter, initially
recommended that summary judgment should be granted for Deerfield Specialty
passed to Black Clawson, by operation of law, merely by virtue of the
155
The District Court ruled that the counterclaim survived a motion to
dismiss based upon the possibility that genuine issues of material facts existed as to
a purported related oral contract between Deerfield Specialty and Black Clawson
and the alleged assignment to Black Clawson of Enterpri
156
that a shareholder of a dissolved corporation can bring a contract action in its own
name, and not derivatively, either during or after the winding-
a corporation after dissolution should be brought in the name of the
157
153
Id. at 1580.
See id.
155
Id.
156
Id. at 1582.
157
Id.
154
60
For the foregoing reasons, Counts IV and V are dismissed because
Laudamiel and Action 1 lack standing to assert these counterclaims directly.
V. CONCLUSION
For the foregoing reasons, the claims against Fläkt Woods and SEMCO are
dismissed in their entirety, and Counts II, IV, and V of the Counterclaims are
dismissed.
An implementing order will be entered.
61
]]>
