Amgine Technologies (US), Inc. v. Harold Roy Miller

• Court: Court of Chancery of Delaware
• Decided: November 29, 2021
• Docket: C.A. No. 2020-0537-JRS
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

AMGINE TECHNOLOGIES (US), INC., ) ) Plaintiff, ) ) v. ) C.A. No. 2020-0537-JRS ) HAROLD ROY MILLER, JONATHAN ) DAVID MEYER MILLER, SEVEN ) MEDICAL INC., AMGINE ) TECHNOLOGIES US HOLDING, LLC, ) and AMGINE HOLDINGS LTD., ) ) Defendants. )

MEMORANDUM OPINION

Date Submitted: August 17, 2021 Date Decided: November 29, 2021

Emily V. Burton, Esquire and Alberto E. Chávez, Esquire of Young Conaway Stargatt & Taylor, LLP, Wilmington, Delaware, Attorneys for Plaintiff.

Srinivas M. Raju, Esquire and Angela Lam, Esquire of Richards, Layton & Finger, P.A., Wilmington, Delaware; Michael C. Holmes, Esquire, Margaret Dunlay Terwey, Esquire and Meredith S. Jeanes, Esquire of Vinson & Elkins LLP, Dallas, Texas; and Christopher E. Duffy, Esquire, David A. Hoffman, Esquire and W. Logan Lewis, Esquire of Vinson & Elkins LLP, New York, New York, Attorneys for Defendants.

SLIGHTS, Vice Chancellor In this action, Plaintiff, Amgine Technologies (US), Inc. (“Amgine US” or

“Plaintiff”), challenges two purported instances of misconduct by Amgine US’s

former controlling stockholders—father and son Harold Roy Miller (“Roy”) and

Jonathan David Meyer Miller (“Jonathan”).1 First, Plaintiff alleges that the Millers

wrongfully caused the assignment of intellectual property developed and funded by

Amgine US to Seven Medical, Inc. (“Seven Medical”), an entity partially owned and

controlled by the Millers. Second, Plaintiff alleges that the Millers executed a self-

dealing scheme by orchestrating the 2017 reorganization of Plaintiff’s sister-

company, Amgine Technologies Limited (“Amgine Canada”), on terms favorable to

the Millers and detrimental to Plaintiff and its stockholders (the “Inversion”). As

part of the Inversion, Plaintiff, Amgine Canada, and Amgine Canada’s stockholders

entered into a unanimous stockholders agreement dated January 10, 2017

(the “CSA”), which facilitated Plaintiff’s now-challenged acquisition of Amgine

1 Roy and Jonathan are collectively referred to as the “Millers.” I refer to both by their first names for clarity and intend no familiarity or disrespect. Defendants, Seven Medical, Amgine Technologies US Holding, LLC (“US Holding”) and Amgine Holdings Ltd. (“Canada Holdings”), are collectively referred to as the “Miller Entities.”

1 Canada.2 The CSA is at the heart of this dispute.3 Notably, of the 47 signatories to

the CSA, only two are parties to this action: Plaintiff and Canada Holdings.4

Against this backdrop, the specific claims raised in the operative Amended

and Supplemental Verified Complaint (the “Amended Complaint”) comprise five

counts. Count I alleges the Millers breached their respective fiduciary duties in

connection with the Inversion by securing unfair preferential terms for themselves

at the expense of other stockholders, and “by taking [Amgine US and Amgine

Canada’s]5 intellectual property, resources and corporate opportunity, including [a

patent to protect the use of Amgine US’s technology for medical applications

(the “Medical Patent”)], and providing them to Seven Medical.”6 Count II is brought

against the Miller Entities and Jonathan, to the extent he did not directly owe

fiduciary duties to Amgine US, for aiding and abetting the Millers’ or Roy’s

breaches of fiduciary duties.7 Count III seeks a declaration that “Seven Medical’s

2 Amended and Supplemental Verified Compl. (“Am. Compl.”) (D.I. 30) Ex. 6. 3 Am. Compl. ¶¶ 18, 23. 4 Am. Compl. Ex. 6 at Schedule A. 5 Throughout the Amended Complaint, Plaintiff uses the defined term “Amgine” to refer to Amgine and Amgine Canada, collectively. As discussed below, this combination has created confusion. For clarity, anytime a quote from the Amended Complaint includes the term “Amgine,” I have replaced the defined term with “Amgine US and Amgine Canada.” 6 Am. Compl. ¶¶ 171, 173–74. 7 Am. Compl. ¶ 179.

2 patents and other intellectual property, including but not limited to the Medical

Patent, which (i) relate to work performed by, or at the direction of, the Millers while

engaged by [Amgine US and Amgine Canada], or (ii) were prepared using

[Amgine US and Amgine Canada] resources or funding, are owned by

Amgine US.”8 Count IV asserts claims against the Millers and their affiliated

entities for unjust enrichment following their receipt of “misappropriated funds and

other assets of [Amgine US and Amgine Canada] to the detriment of [Amgine US

and Amgine Canada] without justification.”9 And finally, Count V seeks a

declaration under 8 Del. C. § 205 (“Section 205”) that Amgine US’s entry into the

CSA was void, that the CSA itself is void and that no party to this action may seek

to enforce any of the terms of the CSA in any court.10

Defendants have moved to dismiss the Amended Complaint in its entirety

under Court of Chancery Rules 9(b), 12(b)(1), 12(b)(3), 12(b)(6), 12(b)(7) and the

forum non conveniens doctrine. According to Defendants, several of the claims are

time-barred. Defendants also argue that the “Patent Claims” (Count III and portions

of Counts I, II and IV) must be dismissed for forum non conveniens. As for the

“Inversion Claims” (Count V, and portions of Counts I, II and IV), Defendants

8 Am. Compl. ¶ 185. 9 Am. Compl. ¶ 187. 10 Am. Compl. ¶ 194.

3 contend they must be dismissed because they arise from the CSA and, under

Section 1.6(b) of the CSA (the “Forum Selection Clause”), any action or proceeding

arising out of or related to the CSA must be litigated in Ontario, Canada.11 Dismissal

of the Inversion Claims is also appropriate, say Defendants, both because Plaintiff

has failed to name necessary parties and because the Court may not exercise personal

jurisdiction over those absent parties. Alternatively, Defendants contend that the

Inversion Claims fail for want of specific allegations of fraud and well-pled

allegations that the Inversion-related transactions were defective. Finally,

Defendants argue that Count V must be dismissed for failure to state a claim.

For reasons explained below, I am satisfied that Defendants’ arguments

regarding time-barred claims cannot be decided on the pleadings. I am also satisfied

that Defendants have failed to demonstrate that litigating in Delaware would be an

overwhelming hardship. Accordingly, dismissal of the Patent Claims under the

doctrine of forum non conveniens is inappropriate. Likewise, the Inversion Claims

are not subject to the CSA’s Forum Selection Clause, so Plaintiff’s selection of

Delaware as the forum to litigate its claims must be respected. As for the breach of

fiduciary duty claims, contrary to Defendants’ argument, Plaintiff has well pled

breach of fiduciary duty with respect to the Inversion as the claim is subject to notice

pleading standards, not the heightened pleading standard required for claims of

11 Am. Compl. Ex. 6, § 1.6(b).

4 fraud. On the other hand, Plaintiff has failed to state a claim under Section 205.

Count V, therefore, must be dismissed.

I. BACKGROUND

I have drawn the facts from well-pled allegations in the Amended Complaint,

documents incorporated by reference or integral to that pleading and documents

properly subject to judicial notice.12

A. Parties and Relevant Non-Parties

Roy resides in Toronto, Ontario.13 In 2012, he founded Amgine US and non-

party, Amgine Canada, to develop and operate a software application as a cloud

service to automate the processing of travel requests.14 Although Roy formed

Amgine US and Amgine Canada as separate companies, he, and the employees

reporting to him, frequently failed to respect their corporate separateness.15 As a

result, the operations and finances of the entities were not clearly delineated.16

12 DRE 201, 202 (setting forth Delaware’s “judicial notice” standards); Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 (Del. 2004) (noting that on a motion to dismiss, the Court may consider documents that are “incorporated by reference” or “integral” to the complaint). 13 Am. Compl. Ex. A. 14 Am. Compl. ¶ 45. Plaintiff is a Delaware corporation and Amgine Canada is a “Canadian corporation.” Am. Compl. ¶¶ 34, 40. 15 Am. Compl. ¶ 47. 16 Id.

5 Roy served as director and CEO of Amgine US and Amgine Canada until he was

removed from those positions by the stockholders of both companies in May 2019.17

Jonathan resides in Austin, Texas.18 In 2012, Roy unilaterally appointed

Jonathan as Chief Innovation Officer of Amgine Canada. Three years later, in 2015,

Roy again unilaterally appointed Jonathan as an officer, this time as Chief

Technology Officer of Amgine US and some of its affiliates, including Amgine

Canada. Jonathan remained in that position until August 15, 2019.19

Defendant, Seven Medical, is a Delaware corporation founded by Roy in

October 2014.20 It is owned or controlled by the Millers and Roy’s longtime

business partner, non-party, James Valverde, Jr.21 Substantially all of Seven

Medical’s assets are, or were, built from resources taken from Amgine US or

Amgine Canada.22

17 Am. Compl. ¶¶ 1, 35. 18 Am. Compl. ¶ 36. 19 Id. 20 Am. Compl. ¶ 37. 21 Am. Compl. ¶¶ 11, 37. 22 Am. Compl. ¶ 37.

6 Defendant, US Holding LLC, is a Wyoming limited liability company

controlled by the Millers through a family trust.23 US Holding is the record owner

of the Millers’ equity interests in Plaintiff, consisting of common stock and a

convertible debenture.24

Defendant, Canada Holdings, is a Canadian corporation controlled by the

Millers through a family trust.25 Canada Holdings is the record owner of the Millers’

preferred equity in Amgine Canada.26 Relevant here, the Millers own 67.8% of the

new class of preferred stock in Amgine Canada that was created to facilitate the

Inversion (the “CA Preferred”).27

Non-party, James Valverde, Jr., served on Plaintiff’s board and as its Chief

Analytics Officer from August 2014 to April 2017.28 From December 2014 through

April 2017, he was Plaintiff’s sole director.29 Valverde is a close friend of the

23 Am. Compl. ¶ 38. 24 Id. 25 Am. Compl. ¶ 39. 26 Id. 27 Am. Compl. ¶¶ 39, 137; Am. Compl. Ex. 6, at Schedule A. Canada Holdings, as holder of CA Preferred shares, is a party to the CSA. 28 Am. Compl. ¶ 41. 29 Id.

7 Millers and has worked with Roy at various businesses.30 Undisclosed to the

stockholders of Amgine US or Amgine Canada during the relevant period, Valverde

was also a trustee for the Millers’ family trust, which directly owns US Holding and

Canada Holdings.31

B. The Inversion Claims

According to Plaintiff, in the spring of 2016, Roy devised a plan to collapse

Amgine Canada into Amgine US—i.e., the “Inversion.”32 Three interrelated steps

occurred to effect the Inversion: “(1) Amgine Canada exchanged newly issued

[CA Preferred] for its then-outstanding common stock; (2) Amgine Canada []

transferred substantially all of its assets, including its own common stock and its

common stock in Amgine US, to Amgine US pursuant to a subscription agreement;

and (3) Amgine US [] entered into the [CSA] with Amgine Canada and all of the

CA Preferred holders.”33

Plaintiff alleges the Millers breached their fiduciary duties as controlling

stockholders and officers when they caused Amgine US to enter into the CSA

because the CSA is structured unfairly to favor the holders of the CA Preferred in

30 Id. 31 Am. Compl. ¶ 42. 32 Am. Compl. ¶ 91 33 Am. Compl. ¶ 17.

8 several respects at the expense of Amgine US.34 Specifically, upon the liquidation

of either Amgine US or Amgine Canada, the holders of the CA Preferred are to

receive a $10 million liquidation preference.35 This preference, when exercised, will

result in a $6.78 million payment to the Millers because they are the beneficial

owners of 67.8% of the CA Preferred.36 The liquidation provision also includes a

drag-along right that is triggered if Amgine US or Amgine Canada receives an

acquisition offer that is approved by 66.67% of the CA Preferreds.37 In other words,

if the holders of 66.67% of the CA Preferred deem a Liquidation Offer acceptable,

then the remaining CA Preferreds must sell on those terms. Because the Millers

control more than 66.67% of the CA Preferred, they can unilaterally cause the sale

of Amgine Canada—provided, of course, there is a willing buyer.

Amgine US alleges that, in an effort to “justify the Inversion to [Amgine US

and Amgine Canada’s] outside stockholders, the Millers hired Deloitte LLP to

provide a calculation of the fair market value of Amgine Canada (the ‘Deloitte

34 Am. Compl. ¶¶ 167–170, 173–74. 35 Am. Compl. ¶ 96. I refer to the holders of CA Preferred as the “CA Preferreds.” 36 Am. Compl. ¶¶ 96, 137. 37 Am. Compl. ¶ 137. The Millers’ control over Amgine Canada’s future is further cemented by the fact that any amendment or modification to the CSA must be approved by at least 50% of the CA Preferred. Am. Compl. ¶ 138.

9 Valuation’).”38 According to Amgine US, the Millers knowingly provided false and

misleading information to Deloitte, and then “took their fraudulent valuation and

fraudulently induced [Amgine US] and Amgine Canada into purporting to enter into

the Inversion and the [CSA].”39 As a result, Amgine US alleges that the subsequent

stockholder approval was invalid because the stockholders were uninformed and

their consent was fraudulently induced.40

Amgine US maintains that its acquisition of Amgine Canada, at this point,

cannot be unwound.41 Accordingly, Amgine US has started the process of ratifying

its acquisition under 8 Del. C. § 204.42 Related to this process, Amgine US seeks a

determination under Section 205 that its entry into the CSA was void ab initio,

presumably so the CSA and related agreements can be restructured on fair terms.43

38 Am. Compl. ¶ 21. 39 Am. Compl. ¶ 23. Specifically, Amgine US alleges that, in an attempt to inflate the value of Amgine Canada, the Millers provided Deloitte false information about the commercial readiness of Amgine US’s and Amgine Canada’s technology and concealed the fact that Amgine US had already contributed $12.9 million USD towards development of the technology. Am. Compl. ¶¶ 22, 107. 40 Am. Compl. ¶¶ 99–114. 41 Am. Compl. ¶ 5; Pl.’s Answering Br. in Opp’n to Defs.’ Mot. to Dismiss (“AB”) (D.I. 43) at 10. 42 AB at 10; Am. Compl. ¶ 32. 43 Am. Compl. 54, ¶¶ 33, 192, 194.

10 C. The Patent Claims

In separate claims, Amgine US alleges the Millers and Valverde

misappropriated a corporate opportunity from Amgine US by abandoning the

Medical Patent, a contested provisional patent filed to protect medical applications

of Amgine US’s core technology, and refiling it in July 2015 under their own

names.44 Subsequently, in June 2019, the Millers and Valverde were awarded the

Medical Patent, which they assigned to Seven Medical on August 29, 2017.45

Amgine US seeks a declaration that it is the rightful owner of the Medical Patent

(Count III).46 It also asserts that Defendants’ conduct with respect to the Medical

Patent is the product of fiduciary duty breaches (Count I),47 and the aiding and

abetting of such breaches (Count II),48 and that the result of this wrongdoing has

unjustly enriched the Millers and the Miller Entities (Count IV).49

44 Am. Compl. ¶ 85. 45 Am. Compl. ¶¶ 11, 88. 46 Am. Compl. ¶¶ 183–85. 47 Am. Compl. ¶¶ 171–72. 48 Am. Compl. ¶ 181. 49 Am. Compl. ¶ 187.

11 Amgine US also vaguely asserts that Roy presently holds patents belonging

to Amgine US, which he refuses to assign to Amgine US.50 The Amended

Complaint, however, provides no details concerning these patents, the dates on

which Amgine US’s claims arose or any basis for Amgine US’s entitlement to them.

D. Procedural History

This action marks the third lawsuit involving most of the parties involved

here. On November 6, 2019, Jonathan and his sister, non-party Naomi Miller, sued

Amgine US and a related entity in Texas for wages that allegedly went unpaid while

Roy controlled the payroll (the “Texas Action”).51 On April 30, 2020, Amgine US

filed counterclaims against Jonathan, in which it asserted claims for breach of

fiduciary duties and unjust enrichment.52

Just over a month after Jonathan filed the Texas Action, on December 9, 2019,

Roy sued Amgine US and certain related entities in Ontario, Canada for wages and

benefits that Amgine US allegedly failed to pay Roy while Roy worked for

Amgine US (the “Ontario Action”).53 Then, on July 8, 2020, Amgine US filed

50 Am. Compl. ¶¶ 162–65. 51 AB at 2; Defs.’ Corrected Opening Br. in Supp. of Mot. to Dismiss Am. Compl. (“OB”) (D.I. 40) Ex. C. 52 OB Ex. C. 53 AB at 2.

12 counterclaims against Roy, US Holding and Canada Holdings, alleging that Roy

could not recover supposedly unpaid wages because he had already extracted more

than what was owed him through self-dealing.54 The alleged self-dealing related to

the misappropriation of intellectual property referred to as “the Parser.”55

Amgine US filed its initial complaint in this Court on June 30, 2020.56

Defendants moved to dismiss that complaint on September 15, 2020, and Amgine

US responded by filing the Amended Complaint on December 11, 2020.57

Defendants moved to dismiss the now-operative Amended Complaint on

December 28, 2020.58

II. ANALYSIS

As noted, Defendants have moved to dismiss on several grounds. I first

address the arguments related to the Patent Claims. I then turn to the Inversion

Claims, and as a threshold matter, I address Defendants’ argument that the Forum

Selection Clause requires Plaintiff to bring the Inversion Claims in Ontario. Upon

concluding that the Forum Selection Clause does not cover the claims asserted here,

54 OB Ex. B. 55 Id. 56 D.I. 1. 57 D.I. 14, 30. 58 D.I. 35.

13 I address the remaining arguments and conclude, save Count V, that all other counts

in the Amended Complaint survive dismissal.

A. The Patent Claims Survive Dismissal

Defendants seek dismissal of the Patent Claims on two grounds. First, they

argue that, under the doctrine of forum non conveniens, the Court must dismiss the

Patent Claims because similar intellectual property disputes are pending in Texas

and Canada.59 And, second, they maintain the Patent Claims must be dismissed

because they are time-barred under Ontario’s two-year statute of limitations.60

Neither ground is persuasive.

Forum Non Conveniens

For reasons explained below, in the absence of a qualifying “first-filed”

action, Defendants’ forum non conveniens argument rises or falls under its theory

that application of the Cryo-Maid factors makes clear the Patent Claims should be

litigated in Canada, not Delaware.61 Under Chancery Rule 12(b)(3), this court may

dismiss or stay an action upon concluding that Delaware is an inconvenient forum

in which to litigate.62 Specifically, “[t]he doctrine of forum non conveniens

59 Defs.’ Reply Br. in Supp. of Mot. to Dismiss Am. Compl. (“RB”) (D.I. 46) at 3. 60 RB at 2–3. 61 OB at 23; RB at 32. See generally, Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681 (Del. 1964). 62 Lefkowitz v. HWF Hldgs., LLC, 2009 WL 3806299, at *3 (Del. Ch. Nov. 13, 2009)

14 empowers a court to decline to hear a case, despite having jurisdiction, where the

plaintiff’s choice of forum would vex, oppress, or harass the defendant through

undue inconvenience, expense, or other hardship.”63

In considering a motion to dismiss for forum non conveniens where the

Delaware action is the only action filed,64 or where the Delaware action is first-filed,

this court applies Cryo-Maid.65 If litigation is commenced prior to the Delaware

action “involving the same parties and the same issues” in a court “capable of doing

prompt and complete justice,” then this court applies the discretionary McWane

standard which allows the court to defer more readily to the court in which related

litigation was first filed.66 Thus, as a threshold matter, I must determine if the Patent

Claims are pending elsewhere in a first-filed action. They are not.

(“Courts traditionally dismiss a matter under Rule 12(b)(3) when the contract underlying the dispute contains an explicit forum selection clause or when, applying the doctrine of forum non conveniens, Delaware is clearly not the appropriate forum for litigation.”). 63 Vichi v. Koninklijke Philips Elecs. N.V., 2009 WL 4345724, at *12 (Del. Ch. Dec. 1, 2009) (citing to Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd. P’ship, 669 A.2d 104, 106 (Del. 1995)). 64 Id. at *12. 65 AG Res. Hldgs., LLC v. Terral, 2021 WL 486831, at *2 (Del. Ch. Feb. 10, 2021). 66 McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281 (Del. 1970).

15 Neither of the Millers’ lawsuits pending elsewhere will address the

wrongdoing alleged in connection with the Patent Claims.67 Seven Medical, a

necessary party with respect to the majority of Patent Claims, is not a party in either

the Texas or the Ontario Actions.68 Moreover, the intellectual property disputes in

Texas and Ontario involve different assets and different causes of action.69 Both the

Texas and Ontario Actions involve claims relating to the Parser, which have since

been dropped from this action.70 The Texas Action will address claims that Jonathan

breached his employment agreement when he shared confidential information

pertaining to Plaintiff’s intellectual property.71 The Ontario Action will address

claims that Roy engaged in self-dealing related to the Parser and is therefore

precluded from recovering unpaid wages.72 On the other hand, Roy’s alleged refusal

to execute the assignments implicated in the Patent Claims did not occur until after

the Texas and Ontario Actions were filed and are not, therefore, at issue in those

67 AB at 55. 68 OB Ex. A ¶¶ 2–6; OB Ex. C, at 1; AB at 55. 69 OB Ex. B. Plaintiff “eliminated claims related to the Parser from this action in order to prevent any collision of rulings between this Court and the Ontario Action.” AB at 56. 70 RB at 33. 71 AB at 55; OB Ex. C. 72 AB at 55–56.

16 cases.73 Given that neither of the two cases pending elsewhere will address the

claims pending before this Court, no first-filed action triggers McWane deference.

Having concluded that the Patent Claims are not pending elsewhere, I analyze

the forum non conveniens defense in accordance with Cryo-Maid. “Under our Cryo-

Maid jurisprudence, a defendant seeking dismissal on forum non conveniens grounds

must establish with particularity that it will be subject to overwhelming hardship and

inconvenience if required to litigate in Delaware.”74 To assess the degree of hardship

a defendant will face if required to litigate in Delaware, our courts apply the factors

identified in Cryo-Maid.75 As currently framed, those six factors are:

(1) the relative ease of access to proof; (2) the availability of compulsory process for witnesses; (3) the possibility of the view of the premises; (4) whether the controversy is dependent upon the application of Delaware law which Delaware courts more properly should decide than those of another jurisdiction; (5) the pendency or nonpendency of a similar action or actions in another jurisdiction; and (6) all other practical problems that would make the trial of the case easy, expeditious and inexpensive. 76

To succeed on a motion to stay or dismiss because of forum non conveniens,

“[a] defendant must establish that one or more of the Cryo-Maid factors actually

73 See Am. Compl. ¶ 172; AB at 55. 74 Vichi, 2009 WL 4345724, at *12. 75 See Cryo-Maid, 198 A.2d at 684 (identifying four factors). 76 Candlewood Timber Gp., LLC v. Pan Am. Energy, LLC, 859 A.2d 989, 998 (Del. 2004) (expanding the Cryo-Maid factors); Chase, 2019 WL 6833958, at *3 (applying six factors).

17 causes [] significant hardship and inconvenience.”77 It does not matter whether, on

balance, a majority of the factors favor defendant—“[t]he issue is whether any or all

of the Cryo-Maid factors establish that defendant will suffer overwhelming hardship

and inconvenience if forced to litigate in Delaware. Absent such a showing,

[Amgine US’s] choice of forum must be respected.”78

Relative Ease of Access to Proof Based on the allegations in the Amended

Complaint, it is clear that the Millers will be a focal point of discovery and trial

proofs.79 Roy is in Ontario.80 Jonathan is in Texas.81 Other sources of proof are US

Holding (a Wyoming LLC), Canada Holdings (a Canadian corporation), Seven

Medical (a Delaware corporation) and the present CEO of Amgine US, who is

located in Ontario.82 In other words, much if not all of the evidence resides outside

of Delaware.

With that said, Roy and Jonathan have been served in this litigation and have

not sought dismissal for want of personal jurisdiction over them. And the fact that

77 Chrysler, 669 A.2d at 108. 78 Id. 79 AB at 57 (explaining the central role of Roy and Jonathan). 80 Am. Compl. Ex. A. 81 Am. Compl. ¶ 36. 82 Am. Compl. ¶¶ 38–39; AB at 57.

18 documentary evidence may reside outside of Delaware, alone, is not a basis to find

overwhelming hardship, particularly “in an age where air travel, express mail,

electronic data transmissions and videotaped depositions are part of the normal

course of business” for complex litigation in the United States.83 On balance, this

factor is, at best, neutral.

The Availability of Compulsory Process for Witnesses Defendants have

made no meaningful effort to demonstrate that necessary witnesses are beyond the

reach of Delaware’s compulsory process. And they certainly have not attempted to

argue that the application of this factor reveals that litigating in Delaware will cause

overwhelming hardship.

The Possibility of a View of the Premises Neither party addressed this factor,

and for good reason. None of Plaintiff’s claims suggest that a view of any premises

will be necessary to present claims or defenses.

Whether the Controversy Is Dependent upon the Application of

Delaware Law The parties are centered in Delaware: Plaintiff is incorporated in

Delaware,84 and the Millers allegedly are fiduciaries of Plaintiff, a Delaware

corporation.85 The harm is centered in Delaware: The Millers are alleged to have

83 In re Asbestos Litig., 929 A.2d 373, 384 (Del. Super. 2006) (citations omitted). 84 Am. Compl. ¶ 34. 85 Am. Compl. ¶¶ 35, 67–69.

19 intentionally misappropriated intellectual property from Plaintiff and assigned it to

Seven Medical, an entity they control, which is also incorporated in Delaware.86 In

so doing, the Millers allegedly usurped a corporate opportunity from Plaintiff. While

the Court need not declare definitively at this stage that Delaware law will apply to

this claim, it does appear that Delaware law is the frontrunner among the possible

contestants. There is no overwhelming hardship to be found here.

The Pendency or Nonpendency of a Similar Action or Actions in

Another Jurisdiction As previously discussed, this action is not pending in another

jurisdiction; the Texas and Ontario Actions involve different intellectual property

and different claims among variously different parties. While the actions may be

similar, in the sense that all three of the pending actions involve allegations of

misappropriation of intellectual property, it cannot be said on this record that forcing

Defendants to defend the Patent Claims in Delaware will result in overwhelming

hardship of a nature that would justify denying Plaintiff its choice of forum.

All Other Practical Problems That Would Make the Trial of the Case

Easy, Expeditious and Inexpensive While Defendants argue this factor weighs in

favor of not litigating in Delaware, Plaintiff persuasively observes that Defendants’

86 Am. Compl. ¶¶ 37, 78–85.

20 argument in this regard is light on specifics.87 While it is true that these parties have

chosen to litigate on multiple fronts and that a consolidation of claims and

counterclaims in one forum would undoubtedly be more efficient, multi-forum

litigation is not uncommon. And, the fact that the parties have opted to engage on

multiple fronts does not, on its own, justify dismissal of the Delaware piece of the

multi-forum puzzle, at least not on grounds of forum non conveniens.88

Statute of Limitations/Laches

Defendants argue that the Patent Claims are time-barred under the applicable

Ontario statute of limitations.89 According to Defendants, Ontario law clearly

applies to the Patent Claims given the Amended Complaint’s acknowledgement that

the Medical Patent and related corporate opportunities belonged to Amgine

Canada.90 Thus, say Defendants, under the “internal affairs doctrine,” Ontario law—

not Delaware law—governs the Patent Claims. And, because the wrongful act

underlying the Patent Claims (the misappropriation) occurred on August 29, 2017,

and the initial complaint was not filed until June 30, 2020, the Patent Claims are

87 AB at 57–58. 88 See Ryan v. Gifford, 918 A.2d 341, 349–50 (Del. Ch. 2007) (observing, even in the context of McWane, that Delaware courts do not reflexively dismiss or stay actions in Delaware simply because the parties are engaged in litigation elsewhere). 89 OB at 27, 40. 90 OB at 39 and RB at 29; Am. Compl. ¶¶ 46–49.

21 time-barred by Ontario’s two-year statute of limitations.91

Plaintiff counters that Defendants have misread the Amended Complaint;

specifically, Plaintiff disputes that it has pled the Medical Patent and the related

claims belong to Amgine Canada.92 Separately, Plaintiff argues that even if Ontario

law did govern the Patent Claims, the United States Patent Office did not disclose

the assignment of the Medical Patent until June 2019, which means the Patent

Claims were brought within Ontario’s two-year statute.93

“Because [Plaintiff’s’] claims sound in equity, the limitations doctrine that

applies is laches, which focuses on whether an unreasonable delay in asserting the

claim has unfairly prejudiced the defendant. This court frequently uses the

analogous statutory limitations period as the presumptive limitations period for

91 RB at 2. 92 AB at 59–60. Plaintiff points to its allegation that the Medical Patent, among other assets, was “Amgine’s intellectual property, resource[], and corporate opportunity.” Am. Compl. ¶ 171. Plaintiff’s definition of “Amgine,” which includes both Amgine US and Amgine Canada, muddies the water here and in other aspects of the Amended Complaint. Am. Compl. ¶ 1. See also Am. Compl. ¶ 10 (“In 2015, after Amgine had funded the expensive task of developing, drafting, and defending the Medical Patent, [the Miller’s and Valverde] caused Amgine’s counsel to abandon the draft Medical Patent filing.”). Even so, giving all reasonable inferences to Plaintiff, as I must at this stage, I accept Plaintiff’s characterization of its pleading for now. See Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005) (“Finally, in ruling on a motion to dismiss under Rule 12(b)(6), a trial court must draw all reasonable factual inferences in favor of the party opposing the motion.”). 93 AB at 60.

22 laches.” 94 If a party files a claim after the analogous statute of limitations has run,

the claim is likely time-barred “except in the ‘rare’ and ‘unusual’ circumstance that

a recognized tolling doctrine excuses the late filing.”95

The factual record is not developed enough at this nascent stage of the

litigation to make a dispositive determination regarding the timeliness of the Patent

Claims. This should come as no surprise given that “the standard of review under

Rule 12(b)(6) is only of reasonable conceivability based on the complaint, [and]

affirmative defenses, such as laches, are not ordinarily well-suited for treatment on

such a motion, even though the Court may reach a different answer with a more

developed factual record.”96

After the record is developed further, if the evidence reveals that Amgine US

possessed the intellectual property that is the object of the Patent Claims, then

Defendants’ theory that the Patent Claims are subject to Ontario’s statute of

limitations would likely fail, and Delaware’s three-year statute of limitations would

94 de Adler v. Upper New York Inv. Co. LLC, 2013 WL 5874645, at *12 (Del. Ch. Oct. 31, 2013). 95 In re Sirius XM S’holder Litig., 2013 WL 5411268, at *4 (Del. Ch. Sept. 27, 2013) (citations omitted). 96 de Adler, 2013 WL 5874645, at *12 (cleaned up) (quoting Reid v. Spazio, 970 A.2d 176, 182–83 (Del. 2009)); see also Khanna v. McMinn, 2006 WL 1388744, at *30 (Del. Ch. May 9, 2006) (same).

23 apply.97 Even if Ontario law governs, there may be factual or equitable grounds to

toll the limitations period. On the other hand, the evidence may dispositively reveal

that a two-year statute of limitations applies and that Plaintiff failed to bring its

claims in Delaware within the statutory window. If so, Defendants may pursue

judgment as a matter of law on that ground under Chancery Rule 56. The point, for

now, is that further development of the factual record is required before the Court

can adjudicate the laches defense.

* * * * *

The motion to dismiss the Patent Claims under Chancery Rule 12(b)(3) is

denied; those claims will be litigated in Delaware. The motion to dismiss the Patent

Claims under Chancery Rule 12(b)(6) as untimely is also denied; Defendants may

renew their laches defense, if appropriate, on summary judgment.

B. The Inversion Claims Survive Dismissal

Defendants move to dismiss the Inversion Claims on four grounds:

(1) dismissal is required under the CSA’s Forum Selection Clause; (2) dismissal is

required under Chancery Rule 19(b) because Plaintiff has failed to join necessary

parties––the CA Preferreds not named in this action; (3) the Inversion Claims are

97 10 Del. C. § 8106(a) (codifying a three-year limitations period for an “action to recover damages for the detention of personal chattels” or for an “action to recover damages caused by an injury unaccompanied by force.”).

24 time-barred under both Delaware and Ontario law; and (4) Plaintiff has failed to

plead fraud regarding the Inversion with the requisite specificity under Rule 9(b).

I address each ground in turn.

The Forum Selection Clause

“The courts of Delaware defer to forum selection clauses and routinely give

effect to the terms of private agreements to resolve disputes in a designated judicial

forum out of respect for the parties’ contractual designation.”98 Accordingly, “when

the contract underlying the dispute contains an explicit forum selection clause,” this

court will dismiss a Delaware complaint under Chancery Rule 12(b)(3) if the clause

requires the action to be brought elsewhere.99 Here, the contract underlying this

dispute, the CSA, contains an explicit forum selection clause that requires actions

“arising out of or relating to” the CSA to be brought in Ontario, Canada.100 Amgine

US argues the clause is unenforceable as a matter of Delaware law and, even if it is

98 Ashall Homes, Ltd. v. ROK Entm’t Gp. Inc., 992 A.2d 1239, 1245 (Del. Ch. 2010) (internal quotations omitted). 99 Baker v. Impact Hldg., Inc., 2010 WL 1931032, at *2 (Del. Ch. May 13, 2010). 100 Am. Compl. Ex. 6, §1.6(b) (“Subject to the dispute resolution provisions of this Agreement, each of the Parties irrevocably attorns and submits to the exclusive jurisdiction of the courts of Ontario in any action or proceeding arising out of or relating to this Agreement. Each of the Parties waives objection to the venue of any action or proceeding in such court or any argument that such court provides an inconvenient forum.”).

25 enforceable, the clause does not apply to the claims it has asserted here.101 I address

both arguments in turn.

a. The Forum Selection Clause Is Valid and Enforceable When a contract contains a forum selection clause, this court will interpret the

forum selection clause in accordance with the law chosen to govern the contract.102

“Here, the agreement clearly chose [Canadian] law to govern the parties’

relationship” under the CSA.103 In their opening brief, Defendants cite one Canadian

case to confirm that Canadian courts, like Delaware courts, generally enforce forum

selection and choice-of-law clauses.104 Amgine US does not cite any contrary

authority. Given that there appears to be no conflict of law, “the analysis will

proceed exclusively under Delaware law.”105

101 I note that Amgine US does not argue the Forum Selection Clause is not actually an exclusive forum selection clause. See In re Bay Hills Emerging P’rs I LP, 2018 WL 3217650, at *8 (Del. Ch. July 23, 2018) (explaining the distinction between a “permissive consent to jurisdiction clause” and a “mandatory forum selection clause”). Accordingly, I do not take up that issue here. 102 See Germaninvestments AG v. Allomet Corp., 225 A.3d 316, 331 (Del. 2020) (“When a contract contains a forum selection clause, this court will interpret the forum selection clause in accordance with the law chosen to govern the contract.”) (internal quotations omitted). 103 Ashall, 992 A.2d at 1245–46. 104 OB at 20–21 (citing Aldo Gp. Inc. v. Moneris Sols. Corp., [2013] 118 O.R. (3d) 81, ¶ 44, 2013 ONCA 725 (Can. Ont. C.A.)). 105 Ashall, 992 A.2d at 1246.

26 According to Amgine US, because the transactions memorialized in the CSA

are void for failure of proper authorization, the Forum Selection Clause within the

CSA is also void and, therefore, unenforceable.106 That is not a correct statement of

Delaware law. Instead, our law is clear that a party cannot escape a valid forum

selection clause “by arguing that the underlying contract was fraudulently induced

or invalid for some reason unrelated to the forum selection . . . clause itself. Instead,

the party must show that the forum selection clause itself is invalid.”107 Amgine US

has not advanced any argument that the Forum Selection Clause itself is invalid, and

so I proceed under the presumption that the clause is valid as a matter of law.

b. The Forum Selection Clause Does Not Govern the Inversion Claims Amgine US argues its claims do not “aris[e] out of or relat[e] to” the CSA

because the claims sound in breach of fiduciary duty, not breach of contract.108 For

support, Amgine US cites OTK Assocs., LLC v. Friedman, where the court observed,

“[i]t has not traditionally been thought that a contractual forum selection provision

in the transaction agreement governed the stockholder plaintiffs’ claims for breach

of fiduciary duty and aiding and abetting.”109 In their papers, Defendants make no

106 Am. Compl. ¶ 4. 107 Mack v. Rev Worldwide, Inc., 2020 WL 7774604, at *12 (Del. Ch. Dec. 30, 2020). 108 AB at 36–37. 109 OTK Assocs., LLC v. Friedman, 85 A.3d 696, 721 (Del. Ch. 2014) (emphasis added).

27 attempt to distinguish OTK. In their reply brief, Defendants appear all but to concede

that the Forum Selection Clause does not govern Counts I and II of the Inversion

Claims and only halfheartedly attempt to explain why it governs the unjust

enrichment claim pled in Count IV.110

In OTK, the court held that a forum selection clause within an exchange

agreement would not extend to claims that the defendants breached fiduciary duties

in connection with the exchange.111 In doing so, the court made clear that the

fiduciary duties at issue did not arise from the exchange agreement.112 The same is

true here. The fiduciary duties the Millers allegedly breached were not created by

the CSA and would exist in the absence of the CSA. Accordingly, the Forum

Selection Clause does not extend to Counts I and II, as both allege breaches of

fiduciary duty related to the Inversion.113

As for Count IV, I am satisfied the Forum Selection Clause does not reach

that claim either. Count IV asserts a claim for unjust enrichment against the Millers

110 RB at 11–12 (“Third, even if the breach of fiduciary duty (Count I) and aiding and abetting claims (Count II) are ‘internal affairs’ claims subject to Delaware’s statute of limitations, the unjust enrichment claim (Count IV) is not. Unjust enrichment is a quasi- contract claim subject to the Choice of Law and Forum Selection Clauses of the [CSA].”). 111 OTK Assocs., LLC, 85 A.3d at 721. 112 Id. 113 Id.

28 and the Miller Entities based on their alleged receipt of misappropriated funds and

assets.114 According to Defendants, unlike Counts I and II, which are internal affairs

claims, the unjust enrichment claim is a quasi-contract claim and is therefore subject

to the Forum Selection Clause.115 Here again, Defendants seek to extend the

contractually selected forum beyond the reach of its terms.

Defendants are correct that “[a]n unjust enrichment claim is a quasi-

contractual claim, but it is a claim that proceeds under the theory that no contract

exists.”116 A claim that rests on the premise “that no contract exists,” by definition,

does not “aris[e] out of or relat[e] to” a contract.117 Because the unjust enrichment

claim is derived from common law118 and does not arise out of or relate to the CSA,

it does not fall within the scope of the Forum Selection Clause.119

114 Am. Compl. ¶¶ 187–89. 115 RB at 11–12. 116 JCM Innovation Corp. v. FL Acq. Hldgs., Inc., 2016 WL 5793192, at *7 (Del. Super. Sept. 30, 2016). 117 Am. Compl. Ex. 6, §1.6(b). 118 In re Verizon Ins. Coverage Appeals, 222 A.3d 566, 577 (Del. 2019), reh’g denied (Nov. 18, 2019) (stating “unjust enrichment and alter ego claims are common law claims”). 119 EnVen Energy Corp. v. Dunwoody, 2020 WL 2770609, at *3 (Del. Ch. May 28, 2020) (“Because the claims asserted [] in this action derive from common law and do not directly pertain to the rights set forth in the Employment Agreement, they do not fall within the scope of the forum selection provision.”).

29 The Absent CA Preferreds Are Not Indispensable Parties

Rule 19 dictates that an absent party should be joined if, without that party,

(1) “complete relief cannot be accorded among those already parties”; (2) the absent

party’s ability to protect its interest in the action will be impaired or impeded; or

(3) “any of the persons already parties [will remain] subject to a substantial risk of

incurring double, multiple, or otherwise inconsistent obligations . . . .”120 If Plaintiff

had pled a basis to rescind or reform the CSA, then I would agree that the absent

CA Preferreds likely would be indispensable.121 But the Amended Complaint pleads

no basis for either of those equitable remedies here.

The gravamen of Plaintiff’s Inversion Claims is that the Millers’ breached the

fiduciary duties they owed to Amgine US by causing it to agree to the CSA.122

If Plaintiff is successful on that claim, the Court can tailor remedies to address the

harm Plaintiff suffered without affecting the rights of the innocent absent

120 Perry v. Neupert, 2017 WL 6033498, at *11 (Del. Ch. Dec. 6, 2017). 121 See Perry, 2017 WL 6033498, at *12; Germaninvestments AG v. Allomet Corp., 2020 WL 6870459, at *8 (Del. Ch. Nov. 20, 2020) (“Delaware decisions recognize that when litigation places at issue the validity or enforceability of property rights, such as a party’s rights under an agreement, then the holders of the property rights have an interest in the subject matter of the action such that they should be joined as parties. Unless it is obvious that one not joined has no interest whatever in the subject matter of the suit, all parties to a contract under dispute are necessary.”) (internal quotations omitted). 122 Am. Compl. ¶¶ 173–74.

30 CA Preferreds.123 Indeed, Plaintiff has asked for remedies that, if awarded, would

not implicate, let alone impair, the validity or enforceability of the rights of the

absent CA Preferreds. These remedies, all directed to the named Defendants,

include, but are not limited to, the imposition of a constructive trust, monetary

damages and disgorgement.124 To be clear, for reasons discussed with respect to

Plaintiff’s Section 205 claim (below), as to the Inversion Claims, Plaintiff’s

remedies may not include an injunction against the absent CA Preferreds from

seeking to enforce the CSA, a declaration that the CSA is void, rescission,125 or

reformation of the CSA.126 If Amgine US fiduciaries caused Amgine US to enter

123 Arnold v. Soc’y for Sav. Bancorp, Inc., 1995 WL 376919, at *4 (Del. Ch. June 15, 1995) (holding that a “court of equity should protect the rights of an innocent acquiror, just as commercial law protects the rights of a good faith purchaser.”). Am. Compl. ¶¶ 5, Prayer for Relief J, K, M. 124 Am. Compl. at 37. 125 An injunction preventing the absent CA Preferreds from enforcing the CSA would have the same effect as a declaration that the CSA is void or is rescinded. Rescission “is extreme relief, which cannot be accomplished absent all parties to the agreement.” S’holder Rep. Servs. LLC v. RSI Holdco, LLC, 2019 WL 2207452, at *4 (Del. Ch. May 22, 2019). Further, it is well settled law in this state “that if a plaintiff chooses the remedy of rescission, there must be a restoration of the status quo ante, not only of the plaintiff but of the defendant as well, and if under the facts of the particular case ‘a just and equitable restoration of the substantial status quo ante’ cannot be accomplished, rescission will be denied.” Craft v. Bariglio, 1984 WL 8207, at *12 (Del. Ch. Mar. 1, 1984) (quoting Hegarty v. Am. Commonwealths Power Corp., 163 A. 616, 619 (Del. Ch. 1932)). Plaintiff concedes that “Amgine US’s acquisition of Amgine Canada cannot be unwound as a practical matter,” and if the Inversion cannot be unwound, recission must be denied. See AB at 10. 126 “The remedy of reformation typically is used to conform a document to the parties’ intent in cases of mutual mistake or fraud. It also can be used to remedy a breach of fiduciary duty; in which case the court has broad authority to fashion an appropriate

31 into a contract with disinterested third-parties that is unfavorable to the company and

its stockholders but favorable to the fiduciaries, or caused the company to contract

with arms-length third-parties without obtaining proper approvals, then Amgine US

may seek remedies that directly affect the fiduciary wrongdoers to address the harm

caused. Amgine US cannot, however, seek to undo or reform the contract without

naming all parties to the contract as party defendants.127

remedy.” Zimmerman v. Crothall, 62 A.3d 676, 713 (Del. Ch. 2013). There are only a handful of cases that apply reformation when mutual mistake, unilateral mistake or fraud is not present. In In re Loral Space, for instance, this court reformed an agreement despite the absence of the typical reformation requirements. In doing so, the court relied on the fact that “[o]ur Supreme Court has emphasized the broad remedial power of this court to address breaches of the duty of loyalty.” In re Loral Space & Commc’ns Inc., 2008 WL 4293781, at *33 (Del. Ch. Sep. 19, 2008). Given the circumstances of this case, however, reformation of the CSA clearly is not an appropriate equitable remedy. In In re Loral, the court concluded that a financing entered into by a company and its largest stockholder (“MHR”), a party to the action, was unfair to the company and its other stockholders. As a remedy, the court reformed the transaction by converting MHR’s preferred stock into non- voting common stock at a price set by the court. Reformation is not implicated in this case, however, because the Inversion did not change the Millers’ overall equity ownership, unlike MHR in Loral. See Interactive Corp. v. Vivendi Universal, S.A., 2004 WL 1572932, at *15 (Del. Ch. July 6, 2004) (explaining that reformation “must be applied narrowly so as to ensure contracting to parties that in only limited circumstances will the court look beyond the four corners of a negotiated contract ... especially where the [contract] is an integrated document”). And, importantly, the reformation in Loral affected only the rights of parties who had appeared in the litigation. 127 See generally Strassburger v. Earley, 752 A.2d 557, 578 (Del. Ch. 2000) (holding that a transaction could not be rescinded because a party to the transaction was not a party the lawsuit); 12A C.J.S. Cancellation of Inst. § 115 (“All parties to a contract or agreement are necessary parties to an action to rescind it.”); Perry, 2017 WL 6033498, at *12 (holding that “when litigation places at issue the validity or enforceability of property rights, such as a party’s rights under an agreement, then the holders of the property rights have an interest in the subject matter of the action such that they should be joined as parties.”).

32 I recognize that now is not the time to decide the appropriate remedy for any

proven breach of fiduciary duty, and I am not foreclosing the possibility that if

Plaintiff is successful, the proper remedy might include an injunction that would

prevent the Defendants before the Court from exercising some or all of their rights

under the CSA.128 Rather, I am clarifying that Plaintiff’s potential remedies are

limited to remedies that will not harm the innocent absent CA Preferreds or their

rights under the CSA.129 Because complete relief can be afforded to Plaintiff, even

in the absence of most of the CA Preferreds, and the rights of the absent

128 See Brinckerhoff v. Enbridge Energy Co., Inc., 159 A.3d 242, 262 (Del. 2017) (holding that, at the motion to dismiss stage, a plaintiff “will not be limited to a specific equitable remedy. Whether an equitable remedy should be ordered will depend on the [this Court’s] assessment of the equities, which include the practicality of an equitable remedy given the passage of time, and the ability to order equitable relief tailored to the harm caused by [the breach.]”); FrontFour Cap. Gp. LLC v. Taube, 2019 WL 1313408, at *2 (Del. Ch. Mar. 11, 2019) (stating that “an injunction may not issue if it would ‘strip an innocent third party of its contractual rights’ under a merger agreement, unless the party seeking the injunction proves that the third party aided and abetted a breach of fiduciary duty by the target directors.”). 129 See, id.; In re RJR Nabisco, Inc. S’holders Litig., 1989 WL 7036, at *12 (Del. Ch. Jan. 31, 1989) (stating that the court “must be alert to the legitimate interests of the public or innocent third parties whose . . . legitimate interests might be affected by the issuance of the remedy.”); Andresen v. Bucalo, 1984 WL 8205, at *5 (Del. Ch. Mar.14, 1984) (“The most difficult part of this case is for me to find a remedy which will protect the innocent in this fiasco . . . This Court, fortunately, has broad discretion to tailor remedies to suit the situation as it exists . . . The true situation here is that unless I intervene, the corporation will be manipulated for the sole benefit of [Defendants] with little concern for the rights of the other stockholders. I will, therefore, insist that the final remedy include provisions which will protect the other stockholders.) (citing to Guarantee Bank v. Magness Constr. Co., 462 A.2d 405 (Del. 1983)).

33 CA Preferreds will not be impaired or impeded by any judgment of this Court, I am

satisfied there is no basis to dismiss for failure to join indispensable parties.130

The Court Cannot Declare the Inversion Claims Are Time-Barred On the Pleadings

For reasons explained above, the Inversion Claims likely arise under

Delaware law, and therefore are likely subject to Delaware’s three-year statute of

130 In Germaninvestments AG, the court granted a motion to dismiss under Chancery Rule 19 upon concluding that it would be improper to move forward without the absent parties for four reasons, none of which are present here. Germaninvestments AG, 2020 WL 6870459, at *13–14. First, the court determined that proceeding without the absent parties would be prejudicial to parties both absent and present because “any judgment determining that the transfers were effective or ineffective … would represent a judicial determination that [the losing parties] do not have property rights.” Id. at 13 (quoting Kennett v. Carlyle Johnson Mach. Co., 2002 WL 1358755, at *3 (Del. Ch. June 17, 2002)). There is no risk that a declaration issued in this case might be binding upon the absent CA Preferreds as the Court will not be declaring that the CSA is void or voidable. Second, the court found that the “prejudice to the necessary nonparties cannot be lessened or avoided.” Id. at 13. Again, not so here as the Court can tailor remedies, as appropriate, to affect only the Defendants before the Court. Third, the court determined that “judgment rendered without joinder of [the absent parties] would be inadequate because it would encourage [subsequent] litigation to proceed in piecemeal fashion.” Id. Here again, there is no risk of piecemeal litigation because there are no claims of wrongdoing (asserted or unasserted) to be brought against the absent CA Preferreds. Fourth, the court concluded that the Germaninvestments plaintiffs had “an adequate and available forum in Austria [in which to bring claims against all affected parties], which this Court and the Supreme Court have recognized has a material interest in this dispute. Indeed, Plaintiffs are presently pursuing a related action in Austria.” Id. at 14. While there may or may not be an adequate and available forum elsewhere to assert the Inversion Claims, as just stated, there are no such claims to bring against the absent CA Preferreds and no need, therefore, for a forum where such claims could be brought.

34 limitations for breach of fiduciary duty claims.131 Even if a shorter limitations period

applied, as with the Patent Claims, I have determined, at this stage in the litigation,

that the factual record is not developed enough to determine if the Inversion Claims

are time-barred.

Dismissal would be appropriate only if it appears “with reasonable certainty

that, under any set of facts that could be proven to support the claims asserted, the

plaintiff would not be entitled to relief.”132 At this stage, I am satisfied there is a

reasonably conceivable basis for tolling the statute of limitations with respect to the

Inversion Claims. To be sure, “[e]ven the most persuasive allegations of tolling can

only delay the limitations period until the party asserting the claim was on inquiry

notice.”133 But, in this case, multiple factual disputes need to be settled before the

point of inquiry notice can be established—including determining whether Roy was

controlling the flow of information such that Plaintiff’s agents could not have been

aware of Defendants’ allegedly wrongful acts,134 and whether the disclosures made

131 10 Del. C. § 8106(a); Halpern v. Barran, 313 A.2d 139, 141 (Del. Ch. 1973) (noting that “[i]t is by now firmly established that the three-year statute of limitations” applies to claims of breach of fiduciary duty in Delaware). 132 Feldman v. Cutaia, 951 A.2d 727, 731 (Del. 2008) (quoting VLIW Tech., LLC v. Hewlett–Packard Co., 840 A.2d 606, 610 (Del. 2003)). 133 de Adler, 2013 WL 5874645, at *15. 134 AB at 50.

35 regarding the Inversion were sufficient to give rise to inquiry notice.135 Those

determinations may well be susceptible to summary adjudication under Chancery

Rule 56, but they are not suitable for judgment on the pleadings under Chancery

Rule 12.

The Inversion Claims Are Adequately Plead

Defendants argue the Inversion Claims as pled in Counts I, II and IV fail to

state a claim because the allegations are fraud-based and fail to satisfy Chancery

Rule 9(b)’s heightened pleading requirements. I disagree.

In Count I, Plaintiff alleges the Millers were controlling stockholders and thus

fiduciaries of Amgine US.136 Defendants do not contest the sufficiency of these

135 OB at 37–38; AB at 50; see Bush v. Hillman Land Co., 2 A.2d 133, 137 (Del. Ch. 1938) (“[W]hat constitutes laches is . . . so dependent for its demonstration on the facts . . . that the court should be quite clearly of the opinion that it exists before saying so . . . and it is in the discretion of the court to defer its decision upon that question until the stage of the case has been reached when it can be passed upon in the light of fuller and more illuminating information than is now available.”); Wal-Mart Stores, Inc., 860 A.2d at 320 (holding that whether plaintiff was on inquiry notice at a given date, to establish the tolling of the statute of limitations, was an intensely factual question not appropriate for disposition at the motion to dismiss stage); Stoppel v. State, Dep’t of Health & Soc. Servs., 2011 WL 3558120, at *4 n.13 (Del. Super. Ct. Aug. 9, 2011) (“Because the Amended Complaint does not on its face exclude the possibility that Stoppel’s claims are timely under the Whistleblowers’ Act, dismissal on statute of limitations grounds would not be appropriate. From the limited account of events currently provided to the Court, it appears that the determination of when the limitations period commenced could be a fact-intensive inquiry.”). 136 Am. Compl. ¶¶ 1, 24, 26, 35, 36, 69, 89, 141, 169.

36 allegations.137 And, while Defendants are correct that Plaintiff alleges the Millers

breached their fiduciary duties by misleading stockholders, the essence of the

Inversion Claims is a fiduciary duty breach, not fraud.138 As such, Plaintiff need

only plead sufficient facts to put Defendants on notice of the claim.139

The rationale for the lower pleading bar is pellucid. It is right to require a

plaintiff to provide an arms-length third-party a particularized basis upon which to

defend a claim that he has committed fraud; a fiduciary, on the other hand, occupies

a special relationship with the beneficiary of his heightened duties and is held to a

“tougher” standard in defending his conduct than the third-party acting at arms-

137 OB at 51. 138 AB at 17 (explaining how the allegations of deceit animate the claim for breach of fiduciary duties). 139 See, e.g., Seiden v. Kaneko, 2015 WL 7289338, at *2, 10–11 (Del. Ch. Nov. 3, 2015) (noting that a breach of fiduciary duty claim, predicated on allegedly fraudulent activity, “need only meet Delaware’s rather forgiving notice pleading standard”); In re Am. Int’l Gp., 965 A.2d at 776 (applying the “plaintiff-friendly” Rule 12(b)(6) standard to deny dismissal of breach of fiduciary duty claims alleging defendants committed “pervasive, diverse, and substantial financial fraud”); In re Fruehauf Trailer Corp., 250 B.R. 168, 197 (D. Del. 2000) (“Although there is a dearth of case law, the Rule 9(b) heightened pleading requirement generally does not apply to the state law claims of breach of fiduciary duty, negligent misrepresentation, gross negligence, mismanagement, unjust enrichment, aiding and abetting breach of fiduciary duty, and breach of contract.”); Buckley v. O’Hanlon, 2007 WL 956947, at *5 (D. Del. Mar. 28, 2007) (“Neither was particularized pleading required when the plaintiff’s complaint included such statements as ‘knew or should have known the financial statements . . . misrepresented to System One the Division’s financial condition.’”) (internal citation omitted).

37 length.140 As the Amended Complaint asserts breaches of fiduciary duty, not fraud,

the pleading is measured by Chancery Rule 8, not Chancery Rule 9(b).

The two authorities Defendants cite in urging the Court to apply Rule 9(b) are

readily distinguishable. In York Lingings v. Roach, the court concluded that one of

the plaintiff’s breach of fiduciary duty claims was actually “an insufficiently pleaded

claim of fraud.”141 For reasons explained above, Plaintiff has stated breach of

fiduciary duty claims that, in part, rest on allegations of misrepresentations. These

claims are properly measured under Chancery Rule 8.142 And, in Lewis v. Ward, the

court addressed the unique circumstance where a stockholder plaintiff alleged “that

an arm’s-length merger of two public companies was not in fact consummated for

the reasons contained in the merger proxy materials, but instead merely as a device

to get rid of the plaintiff’s derivative claims.”143 The burden to plead particularized

facts the court required plaintiffs to meet in that circumstance was imposed because

plaintiff was seeking to invoke the fraud exception to Lewis v. Anderson, which

140 Metro Commc’n Corp. BVI v. Advanced Mobilecomm Techs. Inc., 854 A.2d 121, 156 (Del. Ch. 2004). 141 York Lingings v. Roach, 1999 WL 608850, at *2 (Del. Ch. July 28, 1999). 142 Seiden, 2015 WL 7289338, at *2, 10–11.

Lewis v. Ward, 2003 WL 22461894, at *4 (Del. Ch. Oct. 29, 2003), aff’d 852 A.2d 896, 143

905 (Del. 2004).

38 implicates both Chancery Rules 9(b) and 23.1.144 No derivative claim has been pled

here. Accordingly, Chancery Rules 8 and 12(b)(6) set the correct standard.

C. Plaintiff Has Failed to State a Claim Under Section 205

In Count V, Plaintiff seeks declarations that Amgine US’s entry into the CSA

was void, that the CSA is void and that no party to this action may seek to enforce

any of the terms of the CSA in any court of law.145 In pursuing these declarations,

Plaintiff breezily strolls past the actual terms of Section 205, which reveal the statute

is not intended to act as an eraser in the hands of the judge to extirpate allegedly void

or voidable corporate acts.146

Section 205 “fundamentally concerns a company having taken an act with the

intent and belief that it is valid and later petitioning the Court to correct a technical

defect and thereby remedy incidental harm.”147 With this in mind, this court has

emphasized that “Section 205 was intended to be a remedial statute designed, in

144 When our Supreme Court affirmed the trial court’s decision in Lewis v. Ward, it explained that “the particularized pleading requirement of Rule 9(b) must be satisfied by a derivative complaint that seeks to invoke the fraud exception in Lewis v. Anderson. Accordingly, the Court of Chancery correctly concluded that the plaintiff was required to plead ‘particularized facts invoking the fraud exception to Lewis v. Anderson in order to avoid dismissal.’” Lewis v. Ward, 852 A.2d 896, 905 (Del. 2004). 145 Am. Compl. ¶ 194. 146 See In re Genelux Corp., 126 A.3d 644, 668–69 (Del. Ch. 2015). 147 Id at 669.

39 conjunction with Section 204, to cure otherwise incurable defective corporate acts,

not a statute to be used to launch . . . plenary-type claims based on alleged breaches

of fiduciary duty or common law fraud.”148 But that is precisely how Plaintiff would

have the Court put Section 205 to work here. As stated, under the guise of

Section 205, Plaintiff asks the Court to declare that the CSA is invalid because of a

void corporate act, not to declare what “would have resulted if the defective

corporate act had been valid when approved or effectuated.”149 That is not a proper

invocation of the statute and Plaintiff’s claim to the contrary must be dismissed.150

III. CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss must be DENIED

as to Counts I, II, III and IV and GRANTED as to Count V.

IT IS SO ORDERED.

148 Id. at 668. 149 8 Del. C. § 205(b)(3). 150 Genelux, 126 A.3d at 668 (“Section 205 was intended to be a remedial statute designed, in conjunction with Section 204, to cure otherwise incurable defective corporate acts.”) (emphasis added).