IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ARI GREENBERG, ) ) Plaintiff, ) ) v. ) C.A. No. 2023-0388-BWD ) BCV SOCIAL, LLC, ) ) Defendant. )
FINAL REPORT
Final Report: November 20, 2023 Date Submitted: November 7, 2023
Jamie L. Brown, HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, Delaware; OF COUNSEL: Jordan A. Finfer, PATZIK, FRANK & SMOTNY LTD., Chicago, Illinois, Attorneys for Plaintiff Ari Greenberg.
Travis S. Hunter and Nathalie A. Freeman, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; OF COUNSEL: Jeffrey J. Mayer and Catherine A. Miller, AKERMAN LLP, Chicago, Illinois, Attorneys for Defendant BCV Social, LLC.
DAVID, M. The plaintiff in this action, Ari Greenberg (“Plaintiff”), seeks reformation of
an employment agreement negotiated in connection with non-party RateGain Travel
Technologies Pvt. Ltd.’s (“RateGain”) acquisition of defendant BCV Social, LLC
(“BCV”) in 2019. As part of that transaction, Plaintiff—a founder and former
executive of BCV—negotiated the terms of his continued employment with the
surviving entity. Plaintiff’s Verified Complaint (the “Complaint”) alleges that
during a May 10, 2019 dinner meeting, RateGain’s CFO agreed that following the
merger closing, as a condition of Plaintiff’s continued employment, Plaintiff would
receive stock options that “would vest within [a] mandatory employment period”—
in other words, by the earliest date on which BCV could terminate Plaintiff without
cause. Verified Compl. For Breach Of Contract [hereinafter, “Compl.”] ¶¶ 12-14,
Dkt. 1. At the merger closing, Plaintiff executed two agreements: (1) an employment
agreement with BCV, which permitted BCV to terminate Plaintiff for “non-
performance” no earlier than June 1, 2020; and (2) a stock option agreement with
RateGain, which provided that Plaintiff’s stock options would vest on the first
anniversary of the grant date, provided that Plaintiff remained employed by BCV
through that date.
According to the Complaint, the parties expected the merger to close on June
1, 2019. If it had, Plaintiff’s stock options would have vested one year later, on June
1, 2020—the earliest date BCV could terminate Plaintiff for non-performance.
1 Instead, the merger closed ten days later than anticipated, pushing the grant date to
June 11, 2019. The following March, BCV notified Plaintiff of its intent to
terminate him effective June 1, 2020—ten days before his options would have
vested. Through this action, Plaintiff seeks to reform the employment agreement to
reflect the parties’ alleged prior understanding that BCV could not terminate him for
non-performance until June 11, 2020, the date his options would have vested.
BCV has moved to dismiss the Complaint for failure to state a claim. For the
reasons discussed below, I recommend that the motion to dismiss be denied as to
Plaintiff’s request for reformation, but granted as to Plaintiff’s related claim for
breach of contract. This is a final report.
I. BACKGROUND
The following facts are drawn from the Complaint and the documents it
incorporates by reference, including a June 11, 2019 employment offer letter (the
“Employment Agreement”) and a June 11, 2019 Employee Stock Option Agreement
(the “Stock Option Agreement”).1
1 See Freedman v. Adams, 2012 WL 1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to and heavily relies upon documents in her complaint, these documents are considered to be incorporated by reference into the complaint[.]”) (citation omitted). The Employment Agreement is attached to the Complaint as Exhibit A. The Stock Option Agreement is attached to the Complaint as Exhibit B. 2 A. RateGain Agrees To Acquire BCV And Plaintiff Negotiates His Continued Employment With The Surviving Entity. In 2009, Plaintiff Ari Greenberg and non-party Benji Greenberg founded
BCV, a Delaware limited liability company engaged in social media marketing for
the hospitality industry. Compl. ¶¶ 5, 10. Benji Greenberg served as BCV’s CEO,
and Plaintiff served as President. Compl. ¶ 1.
In June 2019, non-party RateGain acquired BCV in a merger through which
RateGain Merger LLC, a wholly owned subsidiary of RateGain, merged with BCV
(the “Merger”). Compl. ¶ 1. The Complaint alleges that in the months leading up
to the Merger, Plaintiff negotiated the terms of his post-merger employment with
RateGain’s CFO, Tanmaya Das. Compl. ¶ 11. Specifically, the Complaint alleges
that on May 10, 2019, Plaintiff, Benji Greenberg, and Das met for dinner, during
which Das agreed that, as a condition of Plaintiff’s continued employment, RateGain
would grant Plaintiff options to purchase 1,000 shares of RateGain common stock,
“which would vest within [a] mandatory employment period.” Compl. ¶¶ 12-13. In
other words, Plaintiff’s “options in RateGain would vest, at the earliest,
conterminously with the earliest termination date of his employment.” Compl. ¶ 14.
According to the Complaint, BCV and RateGain initially anticipated that the
Merger would close on June 1, 2019. Compl. ¶ 24. However, “due to last minute
changes” in the transaction documents, the Merger closed ten days later than
expected, on June 11, 2019. Compl. ¶ 24. 3 B. The Employment Agreement
Concurrently with the closing of the Merger, on June 11, 2019, Plaintiff and
BCV executed an Employment Agreement in the form of an “offer letter,” pursuant
to which Plaintiff would become BCV’s “Head of Global Growth.” Compl., Ex. 1
at 1. The Employment Agreement contemplates that, in addition to receiving a base
salary, Plaintiff would be eligible for an annual bonus based on BCV achieving
EBITDA targets, benefits made available to “C” level management, and vacation
time, and also would receive “options to purchase [1,000] shares of [RateGain] under
[a] grant agreement . . . .” Compl. Ex. 1 at 2.
The Employment Agreement states that:
[T]he Company can terminate [Plaintiff’s] employment on the grounds of Cause and Non Performance and [Plaintiff] shall be relieved of all of [his] obligations (other than as set forth on Exhibit C). In case of Non Performance, the company is obliged to provide two (2) months notice. . . . For the purpose of this Agreement “Non Performance” shall mean at any time following March 31, 2020 if the company’s EBIDTA is less than (i) 70% of the EBIDTA target set forth for the 3 month period ending March 31, 2020 or (ii) 80% of the EBIDTA target for any fiscal quarter set forth as part of a Plan for a period thereafter.
Compl., Ex. 1 at 1-2 (emphasis added).
Accordingly, the earliest date on which BCV could terminate Plaintiff for Non
Performance was June 1, 2020, i.e., two months after the first date following March
31, 2020. Plaintiff avers that the June 1 date was a function of the original
anticipated merger closing, and that the parties “mistakenly failed to modify
4 [Plaintiff’s] Employment Agreement to reflect the new closing date . . . .” Compl.
¶ 25.
C. The Stock Option Agreement Also concurrent with the Merger closing, on June 11, 2019, Plaintiff and
RateGain entered into a Stock Option Agreement. Compl., Ex. 2. The Stock Option
Agreement provides that Plaintiff’s “1,000 Employee Stock Options shall vest on the
first (1st) anniversary of the [June 11, 2019] Grant Date, provided that [Plaintiff]
remains continuously employed by or providing services to the Company or one of
its subsidiaries between the Grant Date and such first (1st) anniversary of the Grant
Date.” Compl., Ex. 2 ¶ 4.2.
Accordingly, the earliest date on which Plaintiff’s 1,000 stock options could
vest was June 11, 2020, i.e., the first anniversary of the June 11, 2019 Grant Date.
D. BCV Terminates Plaintiff’s Employment Before His Stock Options Vest. On March 27, 2020, Plaintiff received written notice from Das that,
“[p]ursuant to the [Employment Agreement], BCV w[ould] exercise its right to
terminate [Plaintiff’s] employment for Non-Performance, as defined therein, on
April 1, 2020.” Compl., Ex. 3. Because the Employment Agreement required that
BCV give Plaintiff two months’ notice prior to his termination, the effective date of
his termination was June 1, 2020. Compl., Ex. 1 at 1; see also Compl., Ex. 3.
5 Because Plaintiff was no longer employed by BCV on June 11, 2020,
Plaintiff’s 1,000 stock options did not vest under the Stock Option Agreement.
E. Plaintiff Files Suit. More than three years after receiving notice of BCV’s intent to terminate him,
on March 31, 2023, Plaintiff initiated this action through the filing of the Complaint,
which alleges two counts: Count I, seeking reformation of the Employment
Agreement, and Count II, asserting a claim for breach of the Employment
Agreement. Compl. ¶¶ 22-35.
On May 15, 2023, BCV moved to dismiss the Complaint (the “Motion”). Dkt.
4. On June 20, 2023, BCV filed its Opening Brief in Support of its Motion to
Dismiss. Def. BCV Social, LLC’s Op. Br. In Supp. Of Its Mot. To Dismiss
[hereinafter, “OB”], Dkt. 7. On August 1, 2023, Plaintiff filed his Answering Brief
in Opposition to BCV Social LLC’s Motion To Dismiss. Ari Greenberg’s Ans. Br.
In Opp’n To BCV Social LLC’s Mot. To Dismiss [hereinafter, “AB”], Dkt. 11. On
September 1, 2023, BCV filed a Reply Brief in Support of its Motion to Dismiss.
Def. BCV Social, LLC’s Reply Br. In Supp. Of Its Mot. To Dismiss [hereinafter,
“RB”], Dkt. 13.
I heard oral argument on the Motion on November 7, 2023.
6 II. ANALYSIS
BCV has moved to dismiss the Complaint under Court of Chancery Rule
12(b)(6) for failure to state a claim upon which relief may be granted. When
reviewing a motion to dismiss under Rule 12(b)(6), Delaware courts “(1) accept all
well pleaded factual allegations as true, (2) accept even vague allegations as ‘well
pleaded’ if they give the opposing party notice of the claim, [and] (3) draw all
reasonable inferences in favor of the non-moving party . . . .” Cent. Mortg. Co. v.
Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011). “[T]he
governing pleading standard in Delaware to survive a motion to dismiss is
reasonable ‘conceivability.’” Id. at 537.
A. The Complaint Pleads A Viable Request For Reformation In Count I.
In Count I, Plaintiff seeks to reform the Employment Agreement to conform
to the parties’ alleged prior understanding that BCV could not terminate Plaintiff for
Non Performance before June 11, 2020, the day his stock options would have vested.
“Reformation is an equitable remedy which emanates from the maxim that
equity treats that as done which ought to have been done.” Obsidian Fin. Gp., LLC
v. Identity Theft Guard Sols., Inc., 2021 WL 1578201, at *10 (Del. Ch. Apr. 22,
2021) (citation and internal quotation marks omitted). “Reformation does not . . .
provide the Court ‘equitable license . . . to write a new contract at the invitation of a
party who is unsatisfied with his or her side of the bargain; rather, it permits the 7 Court to reform a written contract that was intended to memorialize, but fails to
comport with, the parties’ prior agreement.’” Id. (ellipses in original) (citation
omitted).
A party seeking reformation must plead the following:
(i) that the parties reached a definite agreement before executing the final contract; (ii) that the final contract failed to incorporate the terms of the agreement; (iii) that the parties were similarly mistaken or that [one] knew of [another’s] mistake and remained silent; and (iv) the precise mistake the parties made.
AECOM v. SCCI Nat’l Hldgs., Inc., 2023 WL 6294985, at *6 (Del. Ch. Sept. 27,
2023) (alterations in original) (footnotes and internal quotation marks omitted).
These elements must be pled with particularity in accordance with Court of
Chancery Rule 9(b). See Joyce v. RCN Corp., 2003 WL 21517864, at *3 (Del. Ch.
July 1, 2003) (“Rule 9(b) requires that ‘in all averments of . . . mistake, the
circumstances constituting . . . [the] mistake shall be stated with particularity.’”)
(alteration and ellipses in original) (citation omitted). “The Rule 9(b) heightened
pleading standard is intended to serve the purpose of giving notice of the claimed
ground or mistake to the defendant, as well as to preserve the integrity of written
agreements by making it difficult to re-open completed transactions.” Id.
The Complaint here sufficiently alleges facts that, if true, meet the elements
for entitlement to reformation. First, the Complaint adequately alleges that the
parties came to a mutual understanding prior to executing the Employment
8 Agreement. The Complaint alleges that, “[p]rior to entering into the Employment
Agreement, [Plaintiff] and BCV and RateGain agreed and guaranteed that
[Plaintiff]’s options would vest and both parties intended to draft the Employment
Agreement with this intent.” Compl. ¶ 23. More specifically, Plaintiff avers that on
May 10, 2019, at a dinner meeting between Plaintiff, Benji Greenberg, and Das, the
parties agreed that RateGain would grant Plaintiff options to purchase 1,000 shares
of RateGain common stock “which would vest within [a] mandatory employment
period.” Compl. ¶¶ 12-13. BCV points out that “mandatory employment period” is
not defined in the Employment Agreement. See OB at 6. In my view, though,
Plaintiff’s pleading makes his position sufficiently clear—he alleges the parties
reached a prior understanding that BCV could not terminate Plaintiff without cause
prior to the date on which his stock options would vest.2
2 BCV asserts that even if Plaintiff and RateGain (through Das) reached a prior understanding before the Merger closed, BCV did not have that same “understanding” because Das could not speak for BCV until after the Merger closed. OB at 10; RB at 5-6. This argument is too cute by half. The Complaint alleges that Das negotiated for RateGain in a transaction through which RateGain acquired BCV. Compl. ¶ 13. At closing, Das signed the Employment Agreement on behalf of BCV. Compl., Ex. 1 at 3. The corporation had no “understanding” other than through its principals—if Das had an understanding with Plaintiff, it can, at the pleadings stage, be fairly attributed to BCV. See N. Assur. Co. v. Rachlin Clothes Shop, 125 A. 184, 188 (Del. 1924) (“A corporation being a purely metaphysical creature, having no mind with which to think, no will with which to determine and no voice with which to speak, must depend upon the faculties of natural persons to determine for it its policies and direct the agencies through which they are to be effectuated.”). 9 Second, the Complaint adequately alleges that the Employment Agreement
failed to incorporate the terms of the parties’ prior mutual understanding. The
Complaint alleges that “the Employment Agreement between BCV and [Plaintiff]
was intended to guarant[ee] twelve months of employment”; “RateGain and
[Plaintiff] intended to structure [Plaintiff’s] employment agreement such that his
options in RateGain would vest, at the earliest, conterminously with the earliest
termination date of his employment”; but, “[d]ue to an oversight by the parties, they
mistakenly failed to modify [Plaintiff]’s Employment Agreement to reflect the new
closing date [after the Merger closing was postponed] such that [Plaintiff’s] options
would be guaranteed to vest.” Compl. ¶¶ 2, 14, 25. As a result, the Employment
Agreement, as written, permits BCV to terminate Plaintiff for Non Performance
effective June 1, 2020—on the one-year anniversary of the planned Merger closing,
but ten days before the one-year anniversary of the actual Merger closing and stock
option Grant Date. See Compl., Ex. 1.
Third, the Complaint adequately alleges that the parties were mutually
mistaken about the terms of the Employment Agreement. The Complaint alleges
that “[b]oth RateGain (inclusive of its wholly-owned subsidiary, BCV) and
[Plaintiff] intended that the Non-Performance definition should have been written in
such a manner that [Plaintiff]’s termination could not be effective until June 11,
[2020], such that his options in RateGain would have vested prior to his termination
10 of employment with BCV.” Compl. ¶ 18. Despite the parties’ mutual belief that
this had been accomplished, due to a drafting oversight, it had not. Compl. ¶¶ 25-
26.
And fourth, the Complaint makes plain the effect of the error—if the
Employment Agreement had included a termination date ten days later, Plaintiff
would have remained employed with BCV on the one-year anniversary of the
Merger closing, and his stock options would have vested under the Stock Option
Agreement. Compl. ¶ 3.
BCV raises several arguments that it contends defeat Plaintiff’s request for
reformation “as a matter of law.” OB at 11. These arguments do not require
dismissal of Plaintiff’s reformation count at this stage.
First, BCV cites Obsidian Financial Group, LLC v. Identity Theft Guard
Solutions, Inc., to argue that “Delaware law . . . does not support simply rewriting
deadlines on the grounds of alleged mistake when precise deadlines are at issue.”
OB at 10. BCV’s reliance on Obsidian here is misplaced. In that case, a plaintiff
seeking to reform a merger agreement “fix[ed] its theory of reformation on the
parties’ mistaken belief” that a government contract would be extended for six years.
Obsidian Fin. Gp., LLC, 2021 WL 1578201, at *10. It later turned out that the
contract was terminated after five years and six months. Id. The plaintiff argued
that, had the parties known and understood the effect of a particular regulation on
11 the duration of that contract, they would have drafted an earnout provision
differently. Id. As the Court explained, the plaintiff did not allege “particularized
facts detailing a ‘specific prior understanding’” between the parties, and the
complaint therefore failed to adequately allege entitlement to reformation. Id. By
contrast, here, the Complaint alleges that Plaintiff and BCV actually agreed to an
arrangement that differs from what ultimately was reflected in the Employment
Agreement.3
Next, BCV argues that the Complaint fails to allege the precise “contract
language to which [Plaintiff] and BCV supposedly agreed, or identify the language
in the Employment Agreement . . . that needs to be changed to match the language
that the parties allegedly agreed should be included in the [Employment
Agreement].” RB at 2. In Joyce v. RCN Corporation, Justice Jacobs, sitting by
designation as Vice Chancellor, rejected a similar argument. There, the Court
declined to dismiss a complaint seeking reformation of a merger agreement where
“[t]he plaintiff claim[ed] that as a result of a mutual mistake, the Agreement
3 Compare AECOM, 2023 WL 6294985, at *7 (dismissing reformation count where plaintiff’s theory was not premised on “any actual agreement between the parties”), and In re TIBCO Software Inc. S’holders Litig., 2015 WL 6155894, at *2 (Del. Ch. Oct. 20, 2015) (dismissing reformation count where “plaintiff . . . failed to allege facts demonstrating the existence of an antecedent agreement between [the parties] inconsistent with the price term of the merger agreement”), with Joyce, 2003 WL 21517864, at *6 (sustaining reformation count where “the complaint clearly state[d] the terms of the parties’ alleged oral agreement”). 12 incorrectly stated the consideration that was to be paid to the shareholders of the
acquired company.” Joyce, 2003 WL 21517864, at *1. Specifically, the merger
parties agreed that the buyer would place stock in escrow for one year to secure
certain indemnity rights. According to the complaint, the merger parties “bargained
for th[os]e escrowed funds to be converted into [the buyer’s] common shares, in a
quantity that would be determined under a formula based upon [the buyer]’s average
stock price for the fifteen days preceding the expiration of the indemnity claims
period . . . .” Id. However, the escrow provision in the merger agreement omitted
that fifteen-day formula. The seller’s stockholder representative sued, seeking
reformation of the merger agreement, and the buyer moved to dismiss, arguing,
among other things, that the complaint failed to “identify each section of the
Agreement that [wa]s affected by the mistake, and . . . inform the Court of the correct
terms that must be inserted in each affected provision.” Id. at *6. Rejecting that
argument, the Court explained:
The complaint does not enumerate each and every section of the Agreement that is implicated by the alleged error, but that omission likewise is not fatal, because the complaint alleges the specific transaction—and the mistake—in sufficient detail to enable the defendant to investigate and make that determination itself. Although the plaintiff may have been sloppy in not identifying the Agreement’s escrow provision by section number, the omission is immaterial because the Agreement identifies that provision as “Section 2.1(l) Escrow of Shares.” Although common sense dictates the inference that certain other sections or documents that track or are inconsistent with the mistaken language may have to be reformed if the plaintiffs can prove their claim, [defendant] cites no authority that requires the 13 plaintiff, at this stage of the proceedings, to provide a laundry list of all sections that may be implicated by the reformation claim, or to propose precise language that should be substituted for those sections.
Id. (emphasis added).
Here, the Complaint sufficiently alleges a prior understanding between the
parties—BCV could not terminate Plaintiff without cause prior to the date on which
his stock options would vest. Although the Complaint does not allege the precise
contract language to which the parties agreed,4 “the complaint alleges the specific
transaction—and the mistake—in sufficient detail to enable the defendant to
investigate” and determine for itself what language must reformed to reflect the
parties’ intentions.5 Id.
4 The Court is not really “left to guess as to what contractual terms should fill the void,” as BCV asserts. RB at 4. One obvious possibility for reconciling the difference between the alleged prior understanding and the express terms of the Employment Agreement would be to reform the definition of Non Performance as follows: “For the purpose of this Agreement ‘Non Performance’ shall mean at any time following March 31, 2020 April 10, 2020 . . . .” 5 BCV urges that the facts in Richard B. Gamberg 2007 Family Trust v. United Restaurant Group, L.P., are more analogous to those pled here. 2018 WL 566417 (Del. Ch. Jan. 26, 2018). In that case, the plaintiff, a limited partner of a limited liability company, sought reformation of a partnership agreement requiring that any excess distributions in a given year be treated as prepayment in later years. The plaintiff argued that those prepayment terms were the result of a scrivener’s error because the general partner who signed the agreement “did not know or realize the offending provision . . . was included in the . . . Agreement.” Id. at *5. In rejecting this argument, the Court noted that the “Plaintiff only allege[d] what [the general partner] believed the underlying agreement was not, as opposed to what positive agreement [the general partner] intended to govern distributions.” Id. at *6. By contrast, here, Plaintiff alleges a specific prior understanding between the parties that was not accurately reflected in the Employment Agreement. 14 Additionally, BCV contends that two provisions in the Stock Option
Agreement bar Plaintiff’s request for reformation: (1) the Stock Option Agreement
contains an integration clause;6 and (2) the Stock Option Agreement requires that
BCV’s “Compensation and Benefits Committee shall determine all questions of
interpretation concerning this Agreement.” Compl., Ex. 2 ¶ 3. These arguments
miss the mark. Plaintiff does not seek to reform or interpret the Stock Option
Agreement—that agreement is clear that Plaintiff’s stock options would vest on the
first anniversary of the Grant Date, provided Plaintiff remained employed by BCV
on that date. Id. ¶ 4.2. The question raised by Plaintiff’s request for reformation is
not when the stock options would vest, but whether the parties intended to permit
BCV to terminate Plaintiff for Non Performance before that date.7
6 The integration clause in the Stock Option Agreement provides that “[t]his Agreement and the [RateGain Employee Stock Option Scheme (2018) (the ‘Plan’)] constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Option Grantee with respect to the subject matter hereof . . . .” Compl., Ex. 2 ¶ 2. The Employment Agreement does not contain similar language. See Compl., Ex. 1. 7 Similarly, BCV suggests that “[t]he overall content of the Employment Agreement and the Plan (which is incorporated into the Stock Agreement) . . . refute the idea that the parties intended to reward poor performance or move any dates.” OB at 13. That argument does not address whether the parties intended to permit BCV to terminate Plaintiff for Non Performance as of June 1, 2020, or as of June 11, 2020. If BCV means to argue that BCV would not have agreed to guarantee that Plaintiff’s stock options would vest because doing so would be inconsistent with the Plan’s purpose, this raises a fact dispute contrary to Plaintiff’s well-pled allegations that cannot be resolved on the Motion. 15 Finally, BCV argues that Plaintiff’s failure to seek reformation sooner “is a
dispositive fact here.” RB at 13. The Employment Agreement was signed on June
11, 2019. Compl., Ex. 1. On March 27, 2020, Plaintiff received notice of BCV’s
intent to terminate him. Compl., Ex. 3. The termination became effective on June
1, 2020. Id. Plaintiff then waited nearly three years, until March 31, 2023, to file
the Complaint. According to BCV, based on that timing, “it is simply not reasonably
conceivable that [Plaintiff] would be able to establish each of the elements of
reformation by clear and convincing evidence, and the Court can rule as a matter of
law that he can never meet that burden.” RB at 14. While the timing is odd, at this
stage, Plaintiff is entitled to the benefit of all reasonable inferences based on the
well-pled facts in his Complaint. As such, it is reasonably conceivable that
reformation is appropriate, for all the reasons explained above.
* * *
As explained above, the Complaint adequately pleads entitlement to
reformation. Accordingly, I recommend that the Motion be denied as to Count I.
B. The Complaint Fails To State A Claim For Breach Of Contract In Count II.
In Count II, Plaintiff alleges that BCV breached the Employment Agreement.
According to Plaintiff, “BCV attempted to prematurely terminate” Plaintiff by
sending a notice of termination on March 27, 2020, even though, under the
Employment Agreement, “BCV could only give notice of its intent to terminate his 16 employment for non-performance after March 31, 2020, given that performance was
tied to financial results and the fiscal quarter needed to close.” AB at 11-12.
“The statute of limitations at 10 Del. C. § 8106 requires a plaintiff to bring a
breach of contract claim within three years of the accrual of the cause of action.”
AM Gen. Hldgs. LLC v. The Renco Gp., Inc., 2016 WL 4440476, at *7 (Del. Ch.
Aug. 22, 2016). “A cause of action for breach of contract accrues ‘at the time the
contract is broken, not at the time when actual damage results or is ascertained.’”
Brown v. Ct. Square Cap. Mgmt., L.P., 2022 WL 841138, at *2 (Del. Ch. Mar. 22,
2022) (citation omitted).
Plaintiff alleges that BCV breached the Employment Agreement when it sent
the notice of termination on March 27, 2020. The Complaint was filed more than
three years later, on March 31, 2023. Plaintiff’s breach of contract claim is time-
barred.
Plaintiff asserts that BCV waived its statute of limitations defense by raising
the argument for the first time in its reply brief. I disagree. The orderly
administration of justice requires parties to brief their positions so that their
opponents, and the Court, have a fair opportunity to respond; if issues are not fairly
presented, they are waived.8 Here, however, the Complaint did not clearly allege
8 See Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”); Kroll v. City of Wilm., 2023 WL 6012795, at *15 (Del. Ch. Sept. 15, 17 when the purported breach occurred.9 Plaintiff’s answering brief clarified his
theory.10 BCV’s reply brief appropriately responded to a theory that was not fully
articulated until Plaintiff’s answering brief explained it.
I therefore recommend that Count II be dismissed as time-barred.
III. CONCLUSION
For the reasons explained above, I recommend that the Motion be denied as
to Count I and granted as to Count II. This is a final report pursuant to Court of
Chancery Rule 144. Pursuant to the Chancellor’s August 8, 2023 reassignment
letter, exceptions to this final report are stayed pending final resolution of this matter.
2023) (“Arguments are . . . waived when they are not ‘fairly or timely presented’” (citation omitted)). 9 See Compl. ¶ 30. 10 AB at 11-12 (explaining that “BCV gave [Plaintiff] notice of termination for Non- Performance on March 27, 2020,” when “BCV could only give notice of its intent to terminate his employment for non-performance after March 31, 2020, given that performance was tied to financial results and the fiscal quarter needed to close”). 18