IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
BIGLARI HOLDINGS, INC., ) ) Plaintiff, ) ) v. ) C.A. No.: N24C-06-187 EMD CCLD ) BRENT FUNSTON, as executor for the ) estate of LANCE FUNSTON, ) ) Defendant. ) )
Submitted: August 14, 2025 Decided: November 26, 2025
Upon Defendant’s Motion to Dismiss GRANTED in part and DENIED in part
John M. Seaman, Esquire, S. Michael Blochberger, Esquire, Abrams & Bayliss LLP, Wilmington, Delaware, Lori Marks-Esterman, Esquire, Daniel M. Stone, Esqure, Olshan Frome Wolosky LLP, New York, New York. Attorneys for Plaintiff Biglari Holdings, Inc.
Richard L. Renck, Esquire, Michael B. Gonen, Esquire, Duane Morris LLP, Wilmington, Delaware, Luke McLoughlin, Esquire, Duane Morris LLP, Philadelphia, Pennsylvania. Attorneys for Defendant Brent Funston as executor for the estate of Lance Funston.
DAVIS, P. J.
I. INTRODUCTION
This is a civil action assigned to the Complex Commercial Litigation Division of the
Court. Plaintiff Biglari Holdings Inc. (“Biglari”) commenced this action against Defendant
Brent Funston, as executor (“Defendant” or “Executor”) for the estate of Lance Funston
(“Decedent” or “Mr. Funston”).
Biglari filed its Complaint (the “Complaint”) against Defendant on June 21, 2024,
asserting a breach of contract claim (Count I) and a fraudulent inducement claim (Count II). 1 0F
1 See Complaint (hereinafter “Compl.”) (D.I. No. 1). Presently before the Court is Defendant’s Motion to Dismiss which was filed on August
27, 2024. 2 The parties modified the briefing schedule multiple times throughout 2024 and 1F
2025. 3 Defendant timely filed his Opening Brief in Support of his Motion to Dismiss (the 2F
“Motion”) on April 18, 2025. 4 Biglari filed its opposition on June 6, 2025 (the “Opposition”). 5 3F 4F
Defendant filed his reply brief on July 2, 2025 (the “Reply Brief”). 6 The Court held argument on 5F
the Motion on August 14, 2025. At the conclusion of the hearing, the Court took the Motion
under advisement.
For the reasons set forth below, the Court GRANTS the Motion as to Count II and
DENIES the Motion as to I.
II. RELEVANT FACTS
A. THE PARTIES
Biglari is a Delaware corporation with its principal place of business in San Antonio,
Texas. 7 6F
Mr. Funston was a Pennsylvania resident at the time of his death. 8 His last Will and 7F
Testament, dated May 25, 2023 (the “Will”), is currently being probated in Orphan’s Court in
Montgomery County, Pennsylvania. 9 The Will names Mr. Funston’s son, Brent Funston, as 8F
executor and trustee of the estate. 10 The Executor is a California resident who currently serves 9F
2 See Defendant’s Motion to Dismiss (D.I. No. 13) 3 See D.I. Nos. 16, 18, 20, 22, 24. 4 See Defendant’s Opening Brief in Support of His Motion to Dismiss (hereinafter “Mot.”) (D.I. No. 26). 5 See Plaintiff’s Answering Brief in Opposition to Defendant’s Motion to Dismiss (hereinafter “Opp’n”) (D.I. No. 28). 6 See Defendant’s Reply Brief in Further Support of his Motion to Dismiss (hereinafter “Reply Br.”) (D.I. No. 32). 7 Compl. ¶ 8. 8 Id. ¶ 9. 9 Id. 10 Id.
2 as the executor of the Estate of Lance Funston. 11 The Executor is named as Defendant in this 10F
action pursuant to 10 Del. C. § 3701. 12 11F
B. NATURE OF THE DISPUTE
1. Timeline of Events
In September 2014, Mr. Funston and his affiliated companies entered into a loan
agreement and warrant with CCA Industries, Inc. (“CCA” or the “Company”). 13 CCA is “a 12F
Delaware corporation formerly traded on the New York Stock Exchange but traded on the pink
sheets since April 2019.” 14 Throughout the transaction, Mr. Funston and his affiliated 13F
companies beneficially owned approximately 17% of the Company and were entitled to appoint
four of the seven directors of CCA. 15 As a result, Mr. Funston and his affiliated companies 14F
controlled CCA. 16 15F
The Lion Fund, L.P. (“Lion Fund”) is an affiliate of Biglari. 17 When Mr. Funston 16F
acquired control of CCA, Lion Fund was a CCA shareholder. 18 Specifically, Lion Fund owned 17F
776,259 shares of CCA’s common stock (the “CCA Shares”), representing approximately 12.9%
of the outstanding common stock. 19 18F
Sadar Biglari, Lion Fund’s Chairman and CEO, is an entrepreneur and investor with
decades of experience growing successful businesses. 20 Mr. Biglari also had a long history and 19F
11 Id. ¶ 10. 12 Id.; see also 10 Del. C. § 3701, stating in relevant part: "[a]ll causes of action, except actions for defamation, malicious prosecution, or upon penal statutes, shall survive to and against the executors or administrators of the person to, or against whom, the cause of action accrued....)." 13 See Compl. ¶¶ 1, 12. 14 See id. 15 See id. ¶ 12. 16 See id. 17 See id. ¶ 2. 18 See id. ¶ 13. 19 See id. 20 See id. ¶ 14.
3 familiarity with CCA, having served as CCA’s director from 2011 through 2014. 21 Mr. Funston 20F
sought to have Mr. Biglari remain as director of CCA and to maintain Lion Fund’s status as a
significant stockholder of the Company. 22 21F
On November 14, 2014, Mr. Funston and Lion Fund entered into a Lock Up and Put
Agreement (the “2014 Lock Up and Put Agreement”). 23 The 2014 Lock Up and Put Agreement 22F
provides that Lion Fund could not sell or otherwise transfer its 776,259 CCA Shares until the
earliest of (a) the sale of the Company; (b) the Company became insolvent; or (c) January 1,
2018. 24 Lion Fund also agreed that Mr. Biglari would continue to serve as a director for so long 23F
as the CCA board nominated him. 25 24F
In exchange, Lion Fund had the right to sell, and Mr. Funston agreed to purchase, Lion
Fund’s CCA Shares for $6 per share within thirty days after the end of the Lock Up Period (the
“Put Right”). 26 During this period, Lion Fund could exercise its Put Right by giving written 25F
notice to Mr. Funston. 27 Upon receipt, Mr. Funston had an obligation to pay, within seven days, 26F
Lion Fund $6 per share for each CCA Share noticed. 28 27F
Mr. Funston explained his rationale for entering the 2014 Lock Up and Put Agreement to
the CCA Board of Directors, stating:
[t]he additional personal risk of $4.2 million dollars [sic] seemed justified given [Mr. Biglari’s] demonstrated record of building shareholder value… [Mr. Biglari] wanted to protect his funds downside, with a three-year put at his investment basis which would give management the time to work to increase CCA’s market cap… The benefits to both sides were obvious.” 29 28F
21 See id. 22 See id. ¶ 15. 23 See id. ¶ 16. 24 See id. 25 Id. 26 See id. ¶ 17. 27 See id. ¶ 18. 28 See id. 29 See id. ¶ 19.
4 At the time of the 2014 Lock Up and Put Agreement, CCA shares traded at or around $3.40 per
share. 30 29F
In 2016, Lion Fund sought to transfer the CCA Shares to Biglari, a related entity also
controlled by Mr. Biglari; however, the transfer restrictions in the 2014 Lock Up and Put
Agreement precluded this. 31 On June 14, 2016, Mr. Funston, Lion Fund, and Biglari entered 30F
into a second agreement regarding the CCA Shares (the “2016 Lock Up and Put Agreement”). 32 31F
The 2016 Lock Up and Put Agreement amended and superseded the 2014 Lock Up and Put
Agreement. 33 32F
The 2016 Lock Up and Put Agreement authorizes Lion Fund to transfer the CCA Shares
to Biglari and contained the same Put Right as the 2014 Lock Up and Put Agreement. 34 33F
However, the Lock Up period was extended until at the latest January 1, 2019, which had the
corresponding effect of extending the Put Period to January 31, 2019. 35 34F
Mr. Funston represented in the 2016 Lock Up and Put Agreement that he had “the
financial ability to bear the economic risk of his investment,” and that “at all times during the
terms of this Agreement, [Mr.] Funston [would] have sufficient, liquid funds necessary to
purchase the [CCA Shares] for [$6 per share].” 36 At the time of the 2016 Lock Up and Put 35F
Agreement, CCA Shares traded at or around approximately $3.26 per share. 37 36F
As of January 1, 2019, CCA’s share price had fallen to approximately $2.24 per share. 38 37F
The Company had not been sold, nor had a bankruptcy event occurred. Therefore, per the terms
30 Id. ¶ 20. 31 See id. ¶ 21. 32 Id. ¶ 22. 33 See id. 34 See id. ¶ 23. 35 See id. 36 See id. ¶ 24. 37 Id. ¶ 28. 38 Id. ¶ 29.
5 of the 2016 Lock Up and Put Agreement, the Lock Up period expired January 1, 2019, and the
Put Period began. 39 Mr. Funston was unwilling or unable to purchase the CCA Shares and 38F
sought to extend the Put Period. 40 39F
On January 30, 2019, the parties executed an amendment to the 2016 Lock Up and Put
Agreement (the “2019 Amendment”). 41 The 2019 Amendment extended the Put Period to April 40F
30, 2020, in exchange for payment by Mr. Funston to Biglari of $200,000. 42 The 2019 41F
Amendment further provided that if Mr. Funston failed to make the required payment, the 2019
Amendment would instead constitute a Put Right Notice under the 2016 Lock Up and Put
Agreement. 43 42F
Mr. Funston made the payment of $200,000 to Biglari, and both Biglari and Mr. Funston
filed Schedule 13D’s disclosing the 2019 Amendment and the extension of the Put Period. 44 43F
On February 5, 2019, the Company announced that it was deregistering from the New
York Stock Exchange. 45 Biglari was prohibited from selling any of its CCA Shares for years 44F
leading up to the Company’s delisting, per the 2016 Lock Up and Put Agreement. 46 This was 45F
the precise risk that the Put Right was supposed to protect Biglari against. 47 46F
In April 2020, Mr. Funston was again unwilling or unable to purchase the CCA Shares
during the extended Put Period and sought a further extension. 48 Mr. Funston requested that the 47F
parties work on a new deal, but if it was “not in place in 90 days” Mr. Funston would pay
39 See id. 40 See id. ¶ 30. 41 See id. 42 See id. 43 See id. 44 See id. ¶ 31. 45 See id. ¶ 32. 46 See id. 47 See id. 48 See id. ¶ 33.
6 “$100,000 for [a] one year extension, commencing July 30.” 49 On or about April 29, 2020, Mr. 48F
Funston and Biglari executed a written agreement extending the Put Period through July 31,
2020, with the option for Mr. Funston to extend it further to April 30, 2021, if he paid Biglari
$100,000 before July 30, 2020 (the “April 2020 Agreement”). 50 49F
The parties failed to agree to a “new deal” during the 90-day negotiation period and
instead entered into a new executed written agreement on or around July 27, 2020 (the “July
2020 Agreement”). 51 The July 2020 Agreement provided that if Mr. Funston paid $100,000 by 50F
July 30, 2020, the Put Period would be extended until December 31, 2021. 52 Furthermore, the 51F
July 2020 Agreement provided that if Mr. Funston failed to make the required payment, the July
2020 Agreement would instead constitute a Put Right Notice under the 2016 Lock Up and Put
Agreement. 53 52F
Mr. Funston made the $100,000 payment, thereby extending the Put Period to December
31, 2021. 54 53F
On December 14, 2021, Biglari sent Mr. Funston a notice exercising its right under the
2016 Lock Up and Put Agreement, triggering Mr. Funston’s obligation to purchase all 776,259
of the CCA Shares for $6 per share. 55 Mr. Funston failed to make the required payment of 54F
$4,657,554 to Biglari within seven business days 56 to acquire the CCA Shares. 57 55F 56F
49 See id. 50 See id. ¶ 34. 51 See id. ¶ 35. 52 See id. 53 See id. 54 See id. ¶ 36. 55 See id. ¶ 37. 56 The seventh business day was December 23, 2021. 57 See Compl. ¶ 37.
7 Biglari sent an additional notice on December 30, 2021, exercising the Put Right for all
the CCA Shares. 58 Mr. Funston did not make the required payment. 59 57F 58F
On December 31, 2021, Biglari offered to extend the Put Period to January 7, 2022, in a
signed offer (the “December 31 Offer”). 60 The December 31 Offer provided Mr. Funston with 59F
the option to further extend the Put Period to September 30, 2022, if he paid Biglari $100,000 by
January 7, 2022. 61 The December 31 Offer provides that if Mr. Funston did not make the 60F
required payment, the December 31 Offer constituted a third notice of Biglari’s exercise of the
Put Right under the 2016 Lock Up and Put Agreement. 62 61F
Mr. Funston did not make the required payment by January 7, 2022. 63 Accordingly, by 62F
way of its three December 2021 notices, Biglari exercised its Put Right in December 2021. 6463F
Mr. Funston did not purchase the CCA Shares as required, allegedly breaching his
contractual obligations under the 2016 Lock Up and Put Agreement. 65 64F
Throughout 2022, Biglari repeatedly engaged with Mr. Funston seeking to enforce the
2016 Lock Up and Put Agreement, which Mr. Funston ignored until October 2022 directing
Biglari to his attorneys at Duane Morris. 66 Mr. Funston indicated a desire to structure a payment 65F
but never provided a formal offer. 67 Throughout these discussions, Mr. Funston acknowledged 66F
that he owed Biglari the funds; however, Mr. Funston claimed not to have the funds necessary to
58 See id. ¶ 38. 59 See id. 60 See id. ¶ 39. 61 See id. 62 See id. 63 See id. ¶¶ 40-41. 64 See id. 65 See id. ¶ 42. 66 See id. ¶ 43. 67 See id.
8 purchase the CCA Shares. 68 The parties failed to reach a resolution before Mr. Funston died on 67F
July 5, 2023. 69 68F
2. The Alleged Breaches
Biglari asserts that the 2016 Lock Up and Put Agreement, as amended, is a valid contract
that required Mr. Funston to purchase the CCA Shares for $6 per share if Biglari provided notice
exercising its Put Right during the Put Period. 70 Biglari contends that it provided notice in 69F
December 2021, and at all times, fully performed its contractual obligations under the 2016 Lock
Up and Put Agreement. 71 70F
Biglari alleges that Mr. Funston breached the 2016 Lock Up and Put Agreement by
failing to purchase the CCA Shares within the time required by the 2016 Lock Up and Put
Agreement. 72 Biglari further contends Mr. Funston breached the 2016 Lock Up and Put 71F
Agreement by failing to maintain sufficient liquid funds necessary to purchase the CCA Shares,
per his financial representation and covenant. 73 72F
Biglari alleges it has been damaged in the sum of no less than $4,657,554, plus interest,
and that this claim for breach of contract survives Mr. Funston’s death and is assertable against
Defendant. 74 73F
3. The Alleged Fraud
Executor purportedly made repeated statements that there was insufficient liquid assets in
the Funston Estate to comply with Mr. Funston’s obligations under the 2016 Lock Up and Put
68 See id. ¶ 44. 69 See id. ¶ 48. 70 See id. ¶ 54 71 See id. ¶ 55. 72 See id. ¶ 56. 73 See id. ¶ 57. 74 See id. ¶¶ 58-59.
9 Agreement. 75 Biglari contends that this demonstrates that Mr. Funston’s financial 74F
representations were false when made and remain false. 76 Further, Biglari alleges that Mr. 75F
Funston made these representations knowingly, or at least with reckless indifference to the truth.
Specifically, Biglari maintains that Mr. Funston had no intention of performing the financial
covenant to maintain the sufficient liquid funds necessary. 77 76F
Biglari claims that Mr. Funston’s purported inability to pay the Put Purchase Price was a
breach of the Representation and Warranty made in the 2016 Lock Up and Put Agreement to
“have sufficient, liquid funds necessary to purchase the Aggregate Shares for the aggregate Put
Purchase Price.” 78 Biglari alleges that Mr. Funston intended to induce Biglari to enter into the 77F
2016 Lock Up and Put Agreement through false financial representations. 79 Biglari states it 78F
reasonably relied upon Mr. Funston’s financial representations and would not have entered into
the 2016 Lock Up and Put Agreement without a reasonable expectation that he would be able to
exercise the Put Right. 80 79F
Biglari asserts that Mr. Funston’s fraud caused Biglari to be damaged, in an amount to be
proven at trial, because, inter alia, it was not able to access public markets while it could have. 81 80F
Biglari asserts that the claim for fraudulent inducement survives Mr. Funston’s death and is
assertable against Executor. 82 81F
75 See id. ¶ 62. 76 See id. 77 See id. ¶ 63. 78 See id. ¶ 45. 79 See id. ¶ 64. 80 See id. ¶¶ 25, 65. 81 See id. ¶ 66. 82 See id. ¶ 67.
10 III. PARTIES’ CONTENTIONS
A. THE MOTION
Executor contends that, under the facts Biglari has alleged, the “Put Right” obligation
expired unexercised, or the limitations period for claiming breach of contract has long since
elapsed. 83 Further, Executor contends that Biglari cannot succeed because the letters did not 82F
form contracts as they lacked necessary legal consideration. 84 Executor maintains that, in either 8 F
case, and based solely on the Complaint and the documents integral thereto, there is no
reasonably conceivable set of circumstances susceptible of proof under the Complaint upon
which Biglari can recover, and dismissal is appropriate under Superior Court Civil Rule (“Rule”)
12(b)(6). 85 84F
Executor further contends that Biglari’s alternative fraud theory is not sustainable as it is
simply a re-characterization of a contract theory and as such is precluded by Delaware’s anti-
bootstrapping doctrine. 86 Executor further asserts that Mr. Funston’s statements about future 85F
financials cannot be fraudulent as they are not statements of present facts. 87 86F
B. THE OPPOSITION
Biglari contends that this action is not time barred as its contract claim accrued after July
21, 2021. 88 Biglari notes that Executor’s argument that Biglari’s Put Right was exercised on 87F
January 31, 2019, ignores specific allegations regarding the valid extension of the 2019
Amendment. 89 Biglari contends that each extension of the Put Period was supported by valid 88F
83 See generally Mot. 84 See id. at 14. 85 See id. 86 See id. at 1. 87 See Reply Br. at 1. 88 See Opp’n. at 13. 89 See id. at 16.
11 consideration, and the parties conduct further supports this assertion. 90 Furthermore, Biglari 89F
asserts that its Put Right did not expire before it was exercised, as supported by the December
Offer. 91 90F
Biglari also argues that its fraud claim is timely and distinct from its breach of contract
claim. 92 91F
IV. STANDARD OF REVIEW
When reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court
must “view the complaint in the light most favorable to the non-moving party, accepting as true
all well pleaded allegations and drawing reasonable inferences that logically flow from them,”
but “decline … to accept conclusory allegations unsupported by specific facts or to draw
unreasonable inferences in favor of the non-moving party.” 93 “Even vague allegations are 92F
considered well-pleaded if they give the opposing party notice of a claim.” 94 93F
“Dismissal is warranted where the plaintiff has failed to plead facts supporting an
element of the claim, or that under no reasonable interpretation of the facts alleged could the
complaint state a claim for which relief might be granted.” 95 But, if the Court engages the 94F
standards described and finds the claimant may recover, the Court must deny the motion to
dismiss. 96 95F
90 See id. at 16-17. 91 See id. at 20. 92 See id. at 22. 93 Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162, 166 (Del. 2011). 94 Veney v. United Bank, 2017 WL 3822657, at *2 (Del. Super. Aug. 31, 2017). 95 Hedenberg v. Raber, 2004 WL 2191164, at *1 (Del. Super. Aug. 20, 2004). 96 Riverside Fund V, L.P. v. Shyamsundar, 2015 WL 5004924, at *3 (Del. Super. Aug. 17, 2015); Spence v. Funk & Commc’n Consultants, Inc., 396 A.2d 967, 968 (Del. 1978).
12 V. DISCUSSION
A. THE MOTION IS DENIED AS TO THE BREACH OF CONTRACT CLAIM (COUNT I).
The Court finds that Biglari provides sufficient evidence in its Complaint to survive a
Rule 12(b)(6) challenge. Biglari sufficiently alleges that Mr. Funston breached the 2016 Lock
Up and Put Agreement by: (i) failing to purchase the CCA Shares within the time required; and
(ii) failing to maintain sufficient liquid funds necessary to purchase the CCA Shares per his
financial representation and covenant.
1. The Extension Letters Contained Valid Consideration
A contract must be supported by mutual assent and consideration. 97 “Delaware courts 96F
define consideration as a benefit to a promise or a detriment to a promise pursuant to the
promisor’s request.” 98 97F
Executor contends the letters following the Amendments lack the necessary legal
consideration. 99 Executor argues that each letter contemplated: (i) a wire payment from Mr. 98F
Funston to Biglari, and (ii) an expansion of the Put Period, not a refraining of any action by
Biglari. 100 Executor argues that the letters provide that the Put Period shall be “extended,” rather 99F
than replaced, highlighting that Biglari’s existing obligations were the basis of the “new”
contract. 101 100F
Executor relies on James J. Gory Mech. Contracting, Inc. v. BPG Residential Partners V,
LLC. 102 BPG states that “[p]ast consideration, as opposed to true consideration, however, cannot 101F
97 Continental Ins. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1232 (Del. Ch. 2000). 98 Id. 99 See Mot. at 14. 100 See id. at 15. 101 See id. 102 2011 WL 6935279 (Del. Ch. Dec. 20, 2011)
13 form the basis for a binding contract.” 103 However, as Biglari points out, BPG applies to the 102F
“Pre-Existing Duty Rule,” under which a “commitment to honor a pre-existing obligation works
neither benefit nor detriment that it cannot serve as valid consideration.” 104 103F
Across all the letters, Mr. Funston paid to extend the Put Period, which is sufficient
consideration because a promise to extend the period by which money must be paid is valid
consideration. 105 The Court discounts Executor’s attempt to analyze the adequacy of this 10 F
consideration because Delaware courts limit inquiry to the consideration’s existence. 106 Mr. 105F
Funston repeatedly bargained for, paid for, and received numerous extensions of the Put Period
(impending $4.7 million liability) on the understanding that Biglari would forbear from
exercising its Put Right for the duration of the Put Period. 107 Executor argues that an 106F
“understanding” is insufficient to find consideration. 108 107F
Biglari’s implied forbearance should be deemed consideration at this stage of the
proceedings. “[A]ctual forbearance is generally evidence of an agreement to forbear, and when
viewed in connection with other facts and circumstances relating to the promise, an implied
promise to forbear may be established which will be deemed to supply the necessary
consideration.” 109 108F
As the Complaint makes clear, Mr. Funston requested and paid for each extension, which
Mr. Funston would not have asked nor acted on if he did not reasonably believe it was a benefit
to him. 110 Mr. Funston’s $300,000 payment to Biglari provides sufficient evidence to show that 109F
103 Id., at *2 (citing Roam-Tel Partners v. AT & T Mobility Wireless Operations Holdings Inc., 2010 WL 5276991, at 6* (Del. Ch. Dec. 17, 2010)). 104 See Opp’n at 20 (quoting James J. Gory Mech. Contracting, Inc., *2). 105 See id. at 17 (referencing Hensel v. U.S. Electronics Corp., 262 A.2d 648, 650 (Del. 1970)). 106 See id. at 19 (referencing Schell Bros., LLC v. Pickard, 2023 WL 2581711, at 4* (Del. Ch. Mar. 21, 2023)). 107 See id. 108 See Reply Br. at 4. 109 See id. (paraphrasing from Szymanska v. Equitable Life Ins. Co., 183 A. 309, 314 (Del. Super, 1936). 110 See Opp’n at 16; see also Compl. ¶¶ 30, 33, 35
14 each extension was supported by valid consideration. Otherwise, Mr. Funston’s payments would
be pointless had he not believed he was benefitting in any way.
2. Biglari’s Breach of Contract Claim is Not Time-Barred
Delaware applies a three-year limitation period to contract claims and fraudulent
inducement claims. 111 In Delaware, a breach of contract claim accrues at the time of the alleged 110F
wrongful act, which is the breach itself. 112 111F
Executor asserts that the letters do not grant any forbearance which could furnish
consideration. The Executor then contends the latest the Put Right could have been exercised
was January 31, 2019. Therefore, Executor maintains that the breach of contract claim accrued
on January 31, 2019 and is time barred. 113 Executor states that only if the later letters constitute 112F
contracts would Biglari possibly obtain a later accrual date that is not time-barred. 114 Executor 113F
argues that, even assuming, arguendo, the contracts are found to have valid consideration, the
claims are time barred. 115 114F
As the Complaint alleges, Biglari and Mr. Funston extended the Put Period in the 2019
Amendment as Mr. Funston made the required payment, despite Executor’s attempt to state
otherwise. 116 The parties filed Scheduled 13D’s disclosing the 2019 Amendment and the 11 F
extension. 117 Executor does not address or otherwise explain why Mr. Funston would file this 116F
Schedule 13D and pay $100,000 to Biglari had it not been a valid extension. 118 The parties’ 117F
111 10 Del. C. § 8106. 112 See Isaacson, Stolper & Co. v. Artisan’s Sav. Bank, 330 A.2d 130, 132 (Del. 1974); see also Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 62 A.3 62, 77 (Del. Ch. 2013). 113 See Mot. at 16. 114 See id. at 12-13. 115 See id. at 10. 116 See Opp’n at 14; see also Compl. ¶¶ 30-31. 117 See id. at 14. 118 See Opp’n at 15.
15 conduct supports Biglari’s allegations that the 2019 Amendment was validly executed and the
Put Period was extended. 119 118F
The parties extended the Put Period twice more, in each case providing Mr. Funston with
valuable forbearance of Biglari’s exercise of the Put Right. 120 As Biglari alleged in its 119F
Complaint, Biglari exercised the Put Right in December 2021 by way of three Put Notices,
which Mr. Funston failed to act upon as required by the 2016 Lock Up and Put Agreement. 121 120F
Therefore, the wrongful act could not have occurred until after July 21, 2021, providing Biglari’s
allegations on a timely claim with sufficient evidence.
3. As alleged, Biglari’s Put Right Was Exercised Timely
Executor argues, in the alternative, that Biglari’s Put Right expired unexercised on
December 31, 2021. 122 Executor provides that the letter dated June 27, 2020, describes an 121F
extension of the Put Right Period to December 31, 2021. 123 Executor contends the letter in July 122F
does not state that the Put Right shall be deemed exercised on December, 31, 2021, in the
absence of other extensions. 124 Executor contends that Biglari’s acknowledgement in the 123F
December 31, 2021, letter that the Put Right was expiring on the same day nullifies the previous
letters from December 14 and 30 purporting to invoke the Put Right. 125 124F
Further, Executor asserts that, within the letter, Biglari was holding off on the decision of
whether to exercise the option until a week after the expiration. 126 Executor correctly states that 125F
time requirements on options are strictly enforced, and when “an option lapses, the option
119 See id. 120 See id. at 14; see also Compl. ¶¶ 34-36. 121 See id. at 14; see also Compl. ¶¶ 37-42. 122 See Mot. at 16. 123 See id. at 17; see also Ex. E to Mot., ¶ 3. 124 See Mot. at 17. 125 See id. 126 See id.
16 becomes void, and all rights under the contract, along with any consideration given, are
forfeit.” 127 Executor contends that Biglari operated under the misapprehension that it could 126F
contrive a retroactive notice, after the Put Period lapses. 128 Biglari did not “un-exercise” the Put 127F
Right in the December Offer, allowing the Put Period to lapse. Rather, Biglari provided Mr.
Funston with an option to further extend, consistent with the parties’ previous conduct. 129 128F
However, the plain language of the December Offer states that “if the Amendment
Payment is not made by January 7, 2022, this letter will constitute as a Put Right Notice under
the Agreement….” 130 Here, the December Offer constituted notice while providing Mr. Funston 129F
an option to convert the offer to an extension. 131 Mr. Funston did not make the payment of 130F
$100,000 to satisfy the extension. 132 Therefore, the December Offer included a timely notice. 131F
For these reasons, the Court finds that Biglari alleges sufficient facts to support the breach of
contract claim. Accordingly, the Court DENIES the Motion as to Count I.
127 See id. (referencing Morris v. Delmarva Real Estate Holdings, LLC, 2024 WL 413512, at *7 (Del. Ch. Feb. 5, 2024) (quoting 77 Paul M. Coltoff, Am. Jur. Vendor § 44 (2d ed. 2024))). 128 See Reply Br. at 11. 129 See id. at 10; see also Opp’n at 21 n.1. 130 See Opp’n at 21; see also Ex. F to Mot. 131 See Opp’n at 21. 132 See id.; see also Compl. ¶ 40.
17 B. THE COURT GRANTS THE MOTION ON THE FRAUD CLAIM (COUNT II).
Biglari contends Mr. Funston knowingly made false representations, or at a minimum,
with reckless indifferent to the truth to induce Biglari to enter into the 2016 Lock Up and Put
Agreement. 133 As set forth below, the Court finds that this claim is time barred based on the 132F
Complaint’s own allegations.
1. Bootstrapping
“A contracting party may not ‘bootstrap’ a breach of contract claim into a fraud claim
‘merely by adding the words “fraudulently induced” or alleging that the contracting parties never
intended to perform.’” 134 “A bootstrapped fraud claim thus takes the simple fact of 133F
nonperformance, adds a dollop of the counterparty’s subjective intent not to perform, and claims
fraud.” 135 134F
Executor argues that Biglari puts forth the fraud claim by alleging that Mr. Funston, and
later the Estate, breached the 2016 Lock Up and Put Agreement and that Mr. Funston “clearly
had no intention of performing.” 136 Executor contends this type of claim is prohibited 135F
“bootstrapping.” 137 13 F
Biglari correctly states that Delaware courts will not dismiss a fraud claim pled alongside
a breach of contract claim “so long as the claim is based on conduct that is separate and distinct
from the conduct constituting breach.” 138 “Allegations that are focused on inducement to 137F
contract are ‘separate and distinct’ conduct.” 139 138F
133 See Compl. ¶¶ 63-64. 134 See Iotex Commc’ns, Inc. v. Defries, 1998 WL 914265, at *5 (Del. Ch. Dec. 21, 1998). 135 Smash Franchise P’rs, LLC v. Kanda Hldgs., Inc., 2020 WL 4692287, at *16 (Del. Ch. Aug. 13, 2020)). 136 See id. at 20; see also Compl. ¶ 63. 137 See Mot. at 20. 138 Furnari v. Wallpang, Inc., 2014 WL 1678419, at *8 (Del. Super. Apr. 16, 2014). 139 ITW Glob. Inv. Inc. v. Am. Indus. P’rs Cap. Fund IV, L.P., 2015 WL 3970908, at *6 (Del. Super. June 24, 2015).
18 Biglari relies on three cases that allowed a fraud claim to coexist with a contract claim
when the fraud that was alleged involved separate wrongful conduct and damages. 140 The Court139F
notes that the duplicative allegations in those cases involve extracontractual injuries which could
not be remedied by performance of the contractual duties. 141 “Failure to plead separate damages 140F
is an independent ground for dismissal.” 142 141F
For example, the Court in Medlink Health Solutions, LLC v. JL Kaya, Inc. 143 dismissed 142F
the fraudulent inducement claims except as to one defendant who was alleged (with detail) to
have induced a settlement agreement based on extracontractual actions. 144 In Medlink, a 143F
supplier contracted with a shipping company in order to assist with a government contract. 145 144F
The supplier later sued alleging the shipping company breached the settlement agreement, and
that it had fraudulently induced the settlement by inflating its reported costs under the original
government contract. 146 The two claims were allowed to stand because they depended on 145F
different facts, pled with specificity, related to different obligations, and work different injuries
compensable by different damages. 147 146F
Here, Biglari’s allegations all relate to Mr. Funston’s contractual promise to maintain the
ability to perform under the Put Option. 148 The “fraud” and injury is Biglari not obtaining the 147F
benefit of its bargain under the same contract for which Biglari claims has been breached. 149 148F
The Court notes that Biglari pleads no extracontractual representation, duty, or damages. 150 149F
140 See Mot. at 20. 141 See Reply Br. at 15. 142 See id. at 14. 143 2023 WL 1859785 (Del. Super. Feb 9, 2023). 144 See id. at *9. 145 See id. at *1. 146 Id. 147 See id. at *7. 148 See id; see also Opp’n at 22. 149 See Reply Br. at 16. 150 See id.
19 However, Biglari agreed to lock up its CCA Shares for three years, unable to sell the shares
while CCA traded on the public market. 151 This alleged injury or damage differs from Biglari’s 150F
damages in its breach of contract claim. 152 151F
A plaintiff is allowed to plead claims in the alternative, which are distinct at this stage of
litigation. 153 Therefore, even if Executor is correct that Biglari improperly bootstrapped its 152F
fraudulent inducement claim, the Court finds the fraudulent inducement claim would still be
permitted as an alternative to its breach of contract claim.
2. Future Fraud
“Predications about the future cannot give rise to actionable common law fraud,” and to
be fraudulent, the challenged representation must be “a statement of present fact.” 154 Executor 153F
contends Biglari’s fraud claim fails this requirement. 155 Executor argues that because the Put 154F
Period had not begun, the Put Right was not yet ripe. 156 Therefore, Mr. Funston’s statements 155F
regarding his financial capacity and liquidity to cover the price of the CCA Shares were
statements about Mr. Funston’s future financial capacity and liquidity. 157 Executor contends 156F
that failure to adhere to this ‘financial covenant,” is a claim for breach not fraud and such an
allegation is directed to events before the three-year statute of limitation. 158 157F
When Mr. Funston’s representations are read as a whole, Mr. Funston represented that (i)
at the time of execution he had approximately $4.7 million in liquid assets; and (ii) that he would
151 See Opp’n at 25; see also Compl. ¶ 32. 152 See Opp’n at 25. 153 See Ashland LLC v. Samuel J. Heyman 1981 Continuing Tr. ex rel. Heyman, 2018 WL 3084975, at *15 (Del. Super. June 21, 2018). 154 See Mot. at 20; see also Great Lakes Chem. Corp. v. Pharmacia Corp., 788 A.2d 544, 554 (Del. Ch. 2001). 155 See Mot. at 20. 156 See id. 157 See id. 158 See id.; see also 10 Del. C. § 8106.
20 maintain that level of liquidity for the duration of the contract. 159 As Biglari contends, Mr. 158F
Funston’s representation at closing that he had the liquidity to bear the risk of the Put Right was
linked to his future ability to bear Biglari’s eventual exercise. 160 As alleged, Mr. Funston’s 159F
representations about his financial liquidity were purportedly false when made and, therefore,
sufficient to state a claim for fraud. 161 160F
3. Time-Barred
Executor seeks to dismiss the fraudulent inducement claim, alleging that the statute of
limitations for Biglari’s fraud claim is three years. 162 Biglari contends this claim is timely 161F
because the fraud claim was tolled until Biglari’s discovery of the fraud in October 2022. 163 162F
As discussed, Mr. Funston made financial representations in the 2016 Lock Up and Put
Agreement, which Biglari relied on when entering into this agreement. 164 Biglari did not learn 163F
that Mr. Funston had misrepresented his liquidity until October 2022, after Biglari submitted its
Put Notice and sought payment from Mr. Funston and/or the Estate. 165 164F
Delaware is an occurrence-rule jurisdiction where the cause of action for fraud accrues at
the at the time the fraud is perpetrated. 166 Tolling doctrines can delay the running of a 165F
limitations period, and Biglari states that under the discovery rule, “the statute of limitations does
not begin to run until the discovery of facts ‘constituting the basis of the cause of action or the
existence of facts sufficient to put a person of ordinary intelligence and prudence on inquiry
159 See Opp’n at 26; see also Compl. ¶¶ 61-63. 160 See Opp’n at 26. 161 See id.; see also Compl. ¶¶ 26-27, 43-47. 162 See Opp’n at 22. 163 See id. 164 See id. 165 See id.; see also Compl. ¶¶ 24-26, 43-47. 166 See ISN Software Corp. v. Richards Layton & Finger, P.A., 226 A.3d 727 (Del. 2020); see also Reading Int’l, Inc. v. St. Francis, 2005 WL 1654343, at *1 (Del. Super. June 17, 2005).
21 which, if pursued, would lead to discovery’ of such facts.” 167 Thus, Biglari contends the 166F
discovery rule is particularly appropriate here, where the fraud was “inherently unknowable” and
Biglari’s ignorance of the fraud was “caused by ‘concealment or fraud.’” 168 1 7F
The Court looks to the Complaint to determine whether to dismiss on timeliness
grounds. 169 When evaluating whether the Complaint’s factual allegations, the Court “must draw 168F
the same plaintiff-friendly inferences required in a 12(b)(6) analysis. 170 While the 12(b)(6) 169F
analysis is “plaintiff friendly,” Biglari must meet its burden of pleading that a tolling exception
applies. 171 170F
The Complaint alleges that Mr. Funston did not reveal his financial inability until 2022
and Biglari had no way to discover such other than from Mr. Funston himself. 172 Thus, the 171F
statute of limitations would have been tolled until October 2022, when Mr. Funston finally
revealed he did not have the liquidity to purchase the CCA Shares, rendering the claim timely. 173 172F
However, Executor asserts that Biglari made no claim of tolling in the Complaint and
Biglari’s failure to properly join the issue of tolling concedes the issue. 174 Executor contends 173F
that even if the Court were to consider tolling doctrines, the fraud claim would still be time-
barred because inquiry notice universally limits tolling. 175 174F
167 See Opp’n at 22; see also Estate of Buonamici v. Morici, 2010 WL 2185966, at *3 (Del. Super. June 1, 2010). 168 See Opp’n at 23 (citing Lehman Brothers Hldgs., Inc. v. Kee, 268 A.3d 178, 186 (Del. 2021)). 169 Lebanon Cnty. Employees’ Ret. Fund v. Collis, 287 A.3d 1160, 1193 (Del. Ch. Dec. 15, 2022) (citing Kahn v. Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. Jan. 14, 1993)). 170 Id. (citing State ex rel. Brady v. Pettinaro Enterprises, 870 A.2d 513, 524-25 (Del. Ch. 2005)). 171 Id. 172 See id. 173 See id. 174 See Reply Br. at 17-18 (referencing Jung v. El Tinieblo Int’l Inc., 2022 WL 16557663, at *12 (Del. Ch. Oct. 31, 2022)). 175 See id. at 18 (referencing Ontario Provincial Council of Carpenters’ Pension Tr. Fund v. Walton, 294 A.3d 65, 96 (Del. Ch. 2023)).
22 “Inquiry notice does not require a plaintiff to have actual knowledge of a wrong… a
plaintiff is put on inquiry notice when he gains possession of facts sufficient to make him
suspicious, or that ought to make him suspicious.” 176 Here, Biglari specifically alleges that it 17 F
was aware that Mr. Funston was seeking to avoid the Put Right obligation “almost immediately”
after the contract’s inception. 177 Biglari also pleads that “[i]n January 2019, Funston was 176F
unwilling or unable to purchase the CCA Shares.” 178 177F
Under Biglari’s own alleged facts, Biglari was on inquiry notice that Mr. Funston might
lack the financial capacity to purchase the CCA Sharese no later than January 2019. 179 Thus, the 178F
statute of limitations ended in January 2022, and this claim is time-barred.
Therefore, the Court GRANTS the Motion with respect to Count II.
VI. CONCLUSION
For the reasons stated above, the Court GRANTS in part and DENIES in part the
Motion.
IT IS SO ORDERED.
November 26, 2025 Wilmington, Delaware
/s/ Eric M. Davis Eric M. Davis, President Judge
cc: File&ServeXpress
176 See id. at 18; see also Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 363845, at *7 (Del. Ch. Jan. 27, 2010). 177 See Reply Br. at 18; see also Compl. ¶¶ 27, 63 178 See Reply Br. at 18; see also Compl. ¶ 30. 179 See Reply Br. at 19.