Dravo Bay d/b/a Blue Rock Financial Group v. James Whalen

• Court: Court of Chancery of Delaware
• Decided: March 10, 2026
• Docket: C.A. No. 2025-0355-SEM
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

DRAVO BAY LLC D/B/A BLUE ROCK ) FINANCIAL GROUP, ) ) Plaintiff-Counterclaim ) Defendant, ) ) v. ) C.A. No. 2025-0355-SEM ) JAMES WHALEN, ) ) Defendant-Counterclaim ) Plaintiff. )

Date Submitted: February 6, 2026 Date Decided: March 10, 2026

MEMORANDUM OPINION1

R. Eric Hacker, Melissa A. Lagoumis, MORRIS JAMES LLP, Wilmington, Delaware; Counsel for Plaintiff-Counterclaim Defendant Dravo Bay LLC d/b/a Blue Rock Financial Group

Judith M. Jones, GIORDANO & GAGNE, LLC, Wilmington, Delaware; David F. McComb, ZARWIN BAUM DEVITO KAPLAN SCHAER & TODDY, P.C., Philadelphia, Pennsylvania; Counsel for Defendant-Counterclaim Plaintiff James Whalen

MOLINA, Senior Magistrate 1 In their pretrial stipulation, the parties agreed to waive their right to seek further judicial review of my final decision under Court of Chancery Rule 144. See Docket Item 91 at ¶ 57. Thus, I am issuing my ruling as a memorandum opinion which shall have the same effect as a decision of the Chancellor or Vice Chancellors and is subject to the same procedural and substantive review of that of the Chancellor or Vice Chancellors. The employee in this employment-related dispute blatantly breached his

restrictive covenants and misused his former employer’s trade secrets. His attempts

to avoid liability and shift blame through a defamation counterclaim fail. In this post-

trial ruling, I conclude that the employee should be assessed damages and held to his

obligations through an extended restrictive term.

I. BACKGROUND 2

This employment-related dispute addresses the fallout after James Whalen

(the “Defendant”) left his employer “effective immediately,” informed the

employer’s clients of his move, and succeeded in bringing some of his employer’s

clients with him to his new firm. I began with a bit about the parties before diving

into the largely uncontested facts leading to our February 2026 trial.

A. The Parties

In or around 2014, Todd Roselle founded Marathon GRP Events LLC

(“Marathon”) as a financial advisory and predecessor entity to Dravo Bay, LLC d/b/a

Blue Rock Financial Group (the “Plaintiff”).3 Roselle, the sole owner of the Plaintiff,

2 The facts in this report reflect my findings based on the record developed at trial on February 6, 2026, as well as those agreed upon by the parties in the joint pretrial stipulation. See Docket Item (“D.I.”) 91 (“Pretrial Order”). Citations to the trial transcript are in the form “[Last name] Tr.” referring to the testimony of the identified person. Defined parties are identified with that designation. The parties’ jointly submitted exhibits are cited as “JX __.” I grant the evidence the weight and credibility I find it deserves. 3 Pretrial Order ¶ 9; Roselle Tr. 6:20–22. is an experienced financial advisor who has been in the financial advisory and

planning business industry for over twenty years. 4 His current business, the Plaintiff,

is a Delaware limited liability company with its principal place of business in

Delaware.5 It operates as an independent financial services firm that provides

comprehensive, customized financial advice and services to individuals and

businesses based upon the clients’ unique goals and objectives. 6

The Defendant also has experience as a financial advisor. Before joining

Marathon, the Plaintiff’s predecessor entity, the Defendant was a registered advisor

with Goldman Sachs. The Defendant was terminated from that position, however,

when he “used a photocopied signature” against company policy. 7 Goldman Sachs

reported that termination on a U5, FINRA reporting form (the “First U5”). “The

Form U5 is a requirement whenever a registered advisor separates from an advisory

firm for any reason: termination, voluntary. It’s sort of like an exit disclosure to just

speak from the departing employer's perspective what were some of the conditions

or circumstances surrounding that exit. So it certainly gives a future employer some

insight into the nature of that departure.”8

4 Roselle Tr. 5:20–23. JX20; Pretrial Order ¶ 6, 9. 5 Pretrial Order ¶ 6. 6 Pretrial Order ¶ 8; Roselle Tr. 6:5–7. 7 Roselle Tr. 70:15–17. 8 Jones Tr. 208:13–18.

2 In the First U5, Goldman Sachs disclosed the Defendant’s termination and

reasons therefor. Roselle was aware of the Defendant’s termination and the First U5. 9

But he wished to work with the Defendant, nonetheless. Roselle was not the final

decisionmaker, though, on whether Marathon could onboard the Defendant as an

advisor. That was Cambridge Investment Research, Inc. (“Cambridge”), Marathon’s

broker-dealer.10 Because Cambridge had other registered investment advisors with

U5 form disclosures, it determined that the Defendant would be one too many and it

refused to register the Defendant as an investment advisor. 11 Undeterred, Roselle

went to bat for the Defendant and negotiated a non-investment advisor hiring.12

Ultimately, Roselle decided that Director of Financial Planning was an appropriate

title for the Defendant. 13 The Defendant, thus, joined Marathon in 2017 as the

Director of Financial Planning, an administrative role. 14

9 Roselle Tr. 69:11-14. The Defendant brought this issue to Roselle’s attention. Defendant Tr. 254:23–255:1. 10 Roselle Tr. 70:21–22. The Cambridge relationship went away when Marathon transitioned into the Plaintiff. Roselle Tr. 8:1–4. 11 Roselle Tr. 71:8–15. 12 Roselle Tr. 15:1–3. 13 JX27; Roselle Tr. 15:14–16. 14 Roselle Tr. 10:1–4; see also Roselle Tr. 69: 8–10.

3 In May 2017, in connection with his hiring, the Defendant signed a

Confidentiality and Non-Solicitation Agreement (the “Agreement”), which will be

addressed in the analysis section below.15

B. The Business

With his non-advisory role, the Defendant did not bring a book of business

with him. But he worked closely with Roselle and his clients and assisted the

Plaintiff as it transitioned from Marathon into the Plaintiff. 16 In connection with that

transition, Marathon was closed on December 31, 2018, and effectively cancelled on

February 20, 2019.17 With the transition, the Plaintiff was no longer under the

Cambridge umbrella and the Defendant’s role could evolve. He began to partake in

Roselle’s client meetings and eventually conducted some of those meetings on his

own.18 And he eventually took over the advisory role he had initially been denied.19

Through the relevant period, the Plaintiff had about eight to ten employees

including Roselle and the Defendant.20 The small team was successful; their general

15 JX22; Pretrial Order ¶ 2; Roselle Tr. 23:17–19. The Defendant testified that “he remembered signing an employment agreement but did not know the contents of” it. Defendant Tr. 287:17–23. 16 Roselle Tr. 10:10–14. 17 JX31; Roselle Tr. 7:21–22. 18 Roselle Tr. 15:21–23. 19 Roselle Tr. 16:3–14. 20 Roselle Tr. 13:8–9.

4 retention rate was 98 to 99 percent, and the most common reason clients left was

their passing.21 Altogether, the small team serviced a total of 300 households,

catering towards high-net-worth clients and clients planning for retirement.22

As a financial advisory entity, the Plaintiff maintains clients’ confidential

information such as “[s]ocial security numbers, personal information, financial

information, home addresses, contact information, family information,” as well as

information related to their investments. 23 It also maintains clients’ investment

strategies including risk tolerance, the amount of funds that the clients have with the

Plaintiff, the fee that it charges, notes of prior meetings, and deliverables of

meetings. 24 It monitors that information closely to prevent it from being publicly

available.25 In addition to client confidential information, the Plaintiff also maintains

employee information. 26 To protect this confidential information, the Plaintiff uses

multiple two-factor authenticated portals.27

21 Roselle Tr. 54:16–20. 22 Roselle Tr. 17:6–11. 23 Roselle Tr. 17:16–22. 24 Roselle Tr. 18:1–5. 25 Roselle Tr. 18:9–11. 26 Roselle Tr. 18:14–16. 27 Roselle Tr. 18:17–19:1.

5 Additionally, for further protection of confidential information, employees are

advised on confidentiality in, for example, the Plaintiff’s employee handbook. 28 The

employee handbook generally states that “[c]onfidentiality is important to [the

Plaintiff] and [employee(s)] cannot breach that requirement.” 29 Often times, “there

is [also] an annual compliance training[] to reiterate the expectations.”30 The

Plaintiff also provided a compliance training in 2024 specifically discussing the

general approved communication methods maintaining a strict policy prohibiting

texting from personal cell devices.31

On a day-to-day basis, the Plaintiff uses four management systems that store

and protect its confidential information. The first system is a Customer Relationship

Management System (“CRM”) that allows the Plaintiff to track when employees

access, delete, or download files. 32 The second is its SEI system, which is its main

client portfolio or platform, which allows information to become immediately

available should a client choose to switch from one advisor to another.33 The third

system is e-money, a financial planning portal. 34 The fourth and final system is

28 Roselle Tr. 19:4–5; JX57. 29 Roselle Tr. 20:15–18. 30 JX46; Roselle Tr. 19:4–7; JX57. 31 Roselle Tr. 19:18–20, 19:24–20:7; JX46. 32 Roselle Tr. 22:15. 33 JX37; Roselle Tr. 22:1–17; see also Roselle Tr. 86:1–4. 34 Roselle Tr. 22:3.

6 Box.com (“Box”) which is a file drive that keeps all of the Plaintiff’s electronic

files.35 The Plaintiff is able to track when employees access, delete, or download

files in Box.36 Further, CRM, e-money, and Box are “[a]ll password protected and

two-factor authentication enabled.” 37

C. Promotion Denied

Beginning in or around 2021 to 2022, the Defendant began asking about a

promotion to partner; he believed five years of service was the base requirement and

he was reaching that level.38 But when he talked to Roselle in 2022, five years in,

nothing changed. 39 As the years went on, the Defendant grew frustrated that he still

had not made partner. 40 In 2024, he approached Roselle again.41 During that

conversation they discussed the Defendant having “a really productive first half of

the year with new business revenue generation and such. And it was [Roselle] that

35 Roselle Tr. 22:4–5. 36 Roselle Tr. 21:15, 86:1–4. 37 Roselle Tr. 22:8–9. 38 Defendant Tr. 260:1–5. 39 Defendant Tr. 260:6–14. (testifying that during his 2022 conversation with Roselle, the Defendant expressed his frustration that: “[Roselle] rolled out a program that was more or less accessible to every employee and the only requirement was five years of service. And that was really disappointing because in my mind partnership is exclusivity, and you really extend that to an individual that’s worthy to be a partner.”). 40 See Roselle Tr. 53:14–20. 41 Defendant Tr. 260:15–17.

7 brough the conversation of partnership back in play.”42 But, again, the conversation

did not lead to partnership or even a clear path in that direction.

The Defendant continued to inquire throughout 2024.43 But, to his dismay,

rather than being promoted, he was demoted. 44 And, in late 2024, Roselle informed

the Defendant that he would not be able to continue having partner conversations,

because he had signed a non-disclosure agreement in connection with a potential

sale of the Plaintiff. 45 To the Defendant, a potential or impending sale, when he had

no equity in the Plaintiff, was a big factor in his ultimate decision to leave (in

addition to family updates).46 He testified: “because I had no equity, no skin in the

game, you know, even if I’m well-compensated now, whoever acquires us could

decide that I make too much or whatever. And I didn’t have control.” 47 But for

Roselle the Defendant was not the right fit for a potential partner; he explained he

wanted “someone who was able to take on management responsibility, strategy

responsibility, client acquisition responsibility and advisory responsibility. While

42 Defendant Tr. 260:18–24. 43 Defendant Tr. 261:2–3. 44 Roselle Tr. 54:2–4. 45 Defendant Tr. 261:4–8. 46 Defendant Tr. 261 9–18; 261:20–24. (testifying that the time, the possible sale of the Plaintiff and these conversations with Roselle “all happened just as [he] found news that [he was] having twins. And so, the lack of certainty as what [the Plaintiff] was going to look like in the future was concerning”). 47 Defendant Tr. 262:1–4.

8 [the Defendant] was excelling in an advisory area, he was not in others.”48

Ultimately, Roselle decided not to promote the Defendant to partner.

D. The Potential Acquisition

The potential acquisition that caused the Defendant concern was with

AssuredPartners (“Assured”).49 Sometime in 2024, the Plaintiff was exploring a

transaction with Assured, which conducted a valuation of the Plaintiff in Q4 2024.50

Justin Callaham, a former president and broker dealer for Assured, played a

significant role in the valuation and testified as to that valuation as an expert witness

at trial. 51

Assured was looking at the Plaintiff as a potential target to join its firm; to

value it, Assured reviewed the Plaintiff’s investment advisory agreements and

conducted a broad analysis of its contractual obligations to determine expenses.52 It

then determined the Plaintiff’s EBITDA, and applied a market-level multiple to that

EBITDA to determine the Plaintiff’s value.53 To determine that market-based

multiple, Assured used its judgment to determine what the Plaintiff would be worth

48 Roselle Tr. 54:5–10. 49 Roselle Tr. 53:1–4. 50 Roselle Tr. 52:22–24; JX6; see also Roselle Tr. 53:6–7. 51 Callaham Tr. 156:10–13. Callaham’s expertise and involvement in the Assured valuation is not in dispute. 52 Callaham Tr. 157:3–11. 53 Callaham Tr. 157:3–11.

9 in an open-market and open-bidding process; looking to get to the fair market value

of the business. 54 Ultimately, Assured valued the Plaintiff at $10,655,511.55

Following, and relying upon, this valuation, Assured made an offer to Roselle, which

led to a letter of intent. 56 The offer was not accepted.

E. The Departure

Although the Assured transaction fizzled, the Defendant’s doubts about his

future with the Plaintiff remained. Seeking more security, the Defendant looked

elsewhere and, ultimately, found a new home with Cypress Financial Planning

(“Cypress”).

The Cypress move was in the works for some time. The Defendant initially

looked to his Cypress connection, Jeff Jones, as a “mentor” of sorts. Those

conservations morphed to include more direct talk of the Defendant’s desire to make

a move, after which Jones interviewed and vetted the Defendant.57 They discussed

his compensation and the possibility of him bringing clients to Cypress from the

Plaintiff. Jones considered this a common exercise when hiring a new advisor at

54 Callaham Tr. 162:3–11. 55 Callaham Tr. 161:10–15; JX6. 56 Callaham Tr. 161:6–9. 57 Jones Tr. 237:7–15 (explaining that “in the weeks leading up to March 29, 2024, [the Defendant], myself, and Mr. Ruoff had had conversations that shifted from just purely being mentor and a little more detached to ones that seriously contemplated the thought of [the Defendant] joining Cypress.”).

10 Cypress, aimed at getting an understating as to the “size of the clientele, the revenue

that could potentially be generated, and the probability that a client would end up

becoming a client of Cypress.”58

During this interview process, the Defendant shared a spreadsheet with

Cypress that had potential revenue data. 59 The spreadsheet disclosed client assets

under management, revenue, and fees assessed by the Plaintiff.60 In the spreadsheet,

the Defendant also estimated the likelihood that he would be able to bring over each

of the listed clients to Cypress. 61 Although the spreadsheet did not identify any of

the Plaintiff’s customers by name, the Defendant admitted that Cypress, through

him, could connect some of the figures on the chart to the Plaintiff’s client names.62

Relying upon the Defendant’s representations in the spreadsheet, on March

29, 2024, Cypress sent the Defendant an offer letter with a flexible start date.63 The

58 Jones Tr. 230:10–17. 59 Jones Tr. 229:15–18. See JX013; JX003; Jones Tr. 230:3–6 (testifying as to not recalling if he asked the Defendant to offer the excel sheet). See also Roselle Tr. 46:6–10 (testifying that the spreadsheet was used to determine the likelihood of the Plaintiff’s clients following the Defendant to a new employer, which was then used to determine his compensation at Cypress). 60 JX13. 61 Defendant Tr. 290:11–15. The Defendant was still an employee of the Plaintiff when he provided the spreadsheet and was not authorized to disclose any of the information to a third party. Roselle Tr. 49:22–24. 62 Defendant Tr. 293:19–22. 63 JX62; Defendant Tr. 314:12–15.

11 Defendant was offered a base draw of $140,000.00, subject to payback or increase

depending on the business the Defendant brought in.64

It would be nearly a year before the Defendant accepted that offer. Per the

Defendant and his wife, he struggled with deciding to accept the offer and leave the

Plaintiff. But he eventually did so on March 14, 2025.65 The same day, the Defendant

emailed Roselle resigning from his position at the Plaintiff, “effective

immediately.”66 At the time, the Defendant knew Roselle was in Europe for his

daughter’s senior trip. 67 But the Defendant testified that he had no ill intent and chose

the resignation date because it “coincided with when the meetings for that quarter

ended[.]” 68

Roselle was initially thankful that the Defendant had waited until after those

meetings. Upon receiving the resignation, Roselle called the Defendant and told him

that he was appreciated and thanked him for staying until the end of the annual

64 JX52. See also Jones Tr. 238:14–18 (explaining that the Defendant’s “base amount is $140,000. But that draw could be set higher if [the Defendant] was able to bring over clients from [the Plaintiff]. And that draw was also subject to being paid back to the extent that it exceeded what [the Plaintiff’s] normal compensation model was.”). See also JX63. 65 JX80. 66 Pretrial Order ¶ 10; See JX79. 67 Defendant Tr. 297:2–4; Roselle Tr. 28:22–29:12 (explaining that the trip was on his calendar and that “[a]ll company employees have access to each other’s calendars so if a client calls or needs anything, that we know who is going to pick it up.”) 68 Defendant Tr. 279:6–12.

12 review for that quarter. 69 That gratitude changed, though, when Roselle learned what

the Defendant did simultaneously with his resignation.

E. The Announcement Cards

Although the Defendant and his wife testified that he decided to leave the

Plaintiff just minutes before he sent his resignation email, they already had

announcement cards advertising his new employment created and ready for

mailing. 70 The front side of the announcement card stated, “We are pleased to

announce James Whalen has joined the team” and contained Cypress’ logo and

contact information.71 The back side of the announcement card was filled in with the

recipient client’s address and Cypress’ return address. 72

The template for the announcement card was one that Ruoff used when he left

his previous employer to join Cypress.73 Cypress provided the sample announcement

card to the Defendant and his wife, who used the template to model their own

announcement. 74 The Defendant’s wife used Canva to make it “a little bit prettier”

69 Defendant Tr. 265:24–266:13; Roselle Tr. 30:16–24. 70 See JX86. 71 Id. 72 Id.; Defendant Tr. 298:6–8; Roselle Tr. 33:13–18. Jones Tr. 232:9–12 (explaining that the announcement card he provided to the 73

Defendant’s family was used by Kurt Ruoff, a partner at Cypress, when he left his previous employer; Ruoff sent the announcement card and then followed up with a phone call.) 74 Alexa Testa Tr. 195:13–19.

13 and placed an order through FedEx the Sunday before the Defendant resigned from

the Plaintiff. 75 The Defendant’s family paid for the cards,76 and once they were ready,

the Defendant’s wife picked them up from FedEx, 77 and took them to her mother,

who addressed them and sent them out.78 The Defendant had already given his

mother-in-law the client information approximately one or two days before she sent

them out. 79 With this planning and coordination, the Defendant resigned from the

Plaintiff, mailed the cards, and signed on with Cypress all within one hour.

F. The Fallout

Roselle did not initially suspect any malintent or untoward conduct in the

Defendant’s resignation. But the Defendant’s departure was unique; besides the

Defendant, all past advisors of the Plaintiff had given notice before resigning,80 and

at no point prior to his resignation had the Defendant requested or negotiated to take

any clients with him.81 Unaware of the announcement cards, Roselle started to send

75 Alexa Testa Tr. 194:20–195:1, 196:18–22. 76 Alexa Testa Tr. 196:4–6. 77 Alexa Testa Tr. 195:23–196:3. 78 Maria Testa Tr. 199:8–11; JX112 Ex. B. 79 Maria Testa Tr. 200:12–18. See also Maria Testa Tr. 203:17–20 (testifying that she did not transmit the customers names to Cypress nor was never asked by anyone to send them to Cypress.) 80 Roselle Tr. 29:13–15. But see Defendant Tr. 267:11–21 (testifying that in his 15 years in the industry he never heard the phrase “customary notice” for when an advisor resigns.) 81 Roselle Tr. 27:10–13. This was different than, for example, the departure of Jeff Kaczmarczyk, a past advisor at the Plaintiff who negotiated which clients he would take

14 emails to clients one by one to ensure that they were aware of the Defendant’s

departure. 82

Roselle first learned about the cards when Robert Pedigo, a client of the

Plaintiff’s since 2008, 83 called him the Monday after the Defendant’s resignation.84

Pedigo had received the announcement card in the mail,85 and took issue with it

because, in his view, the Defendant “obviously sent the mailing and wanted to try to

solicit business.”86 After he received the card, Pedigo called the Defendant and when

he did not answer, he left a voice message and called Roselle. 87 He wanted Roselle

to be aware of the card and of the Defendant’s activities. 88 After the call, he also sent

Roselle a picture of the card. 89 Sometime thereafter, the Defendant returned Pedigo’s

call and told him that he “needed to do what was best for him and his family and he

with him before leaving. Roselle Tr. 27:18–21; Roselle Tr. 96:18–19. For about 6–7 weeks before Kaczmarczyk left the Plaintiff, he and Roselle worked on an agreement and discussed which clients he will be taking. Roselle Tr. 27:23–28:3. The Defendant was aware of these discussions. Roselle Tr. 28:7–11 (explaining that the Plaintiff “touched on [these discussions] in some of our company meetings and also [Mr. Kaczmarczyk] and [the Defendant] were pretty close.”) 82 Roselle Tr. 36:18–22; Roselle Tr. 90:3–9. See JX11. 83 Pedigo Tr. 144:5–10; Pedigo Tr. 144:13–16. 84 Roselle Tr. 31:8–17. 85 Pedigo Tr. 145:24–146:6 (stating that he learned about the Defendant’s departure for the first time when he received the announcement card in the mail.) 86 Pedigo Tr. 146:24–147:4. 87 Pedigo Tr. 147:13–20. 88 Pedigo Tr. 148:2–3. 89 Pedigo Tr. 146:7–21; JX86.

15 was moving to another financial place.”90 This did not assuage Pedigo’s concerns

and Roselle testified that other clients were confused, frustrated, and uncertain as to

who their advisor was after receiving the card in the mail. 91

The Defendant, on the other hand, testified that he sent the cards to alleviate

any such confusion; contending it was industry standard of giving notice to clients

when a fiduciary changes employment. 92 He further explained he wanted to be the

first one to communicate to the clients that he had left the Plaintiff and he did not

want Roselle or anyone at the Plaintiff to create a narrative of why he left.93 Thus,

after sending the cards, the Defendant also called between 30–40 of the Plaintiff’s

clients.94 Those calls were to confirm that they received the card and to let them

know that he had joined Cypress. 95

90 Pedigo Tr. 148:11–20. 91 Roselle Tr. 34:23–35:8. See JX92 (email from a client to the Defendant asking is he is still with the Plaintiff); JX94 (email dated March 17 from the Plaintiff’s client asking if the Defendant was leaving the firm). 92 Defendant Tr. 281:5–16. 93 Defendant Tr. 297:5–15. 94 Defendant Tr. 282:19–22,294:4–16. 95 Pretrial Order ¶ 15. The Defendant got this contact information from his personal cellphone; he explained that, despite the Plaintiff’s prohibition on keeping client contact information on personal devices, Roselle Tr. 32:3–6, he stored client contact information on his personal cellphone. Defendant Tr. 310:15–17.

16 On March 18, 2025, the Plaintiff’s counsel sent a cease and desist letter to the

Defendant and Cypress.96 Cypress retained counsel and responded to the letter. 97 The

Defendant then deleted all of the Plaintiff’s files from his Google Drive other than

his performance reviews, 98 and responded to the letter through counsel.99 After he

received the letter, the Defendant did not initiate contact with any of the Plaintiff’s

clients; he would only respond when they contacted him.100

Once Roselle learned of the cards and file downloads, the Defendant began

an internal investigation. 101 The investigation uncovered, in the Plaintiff’s eyes,

concerning activity in the Box. Up until the day the Defendant left the Plaintiff, he

maintained personal files the Box.102 This was after the September 2024 notification

to the Defendant that he was a “managed user” which meant that his activity would

be “monitored or tracked[.]”103 But, just before resigning, the Defendant copied

96 Pretrial Order ¶ 16; JX112 Ex. C–D. 97 Jones Tr. 218:7–12; Roselle Tr. 139:11–14. 98 Defendant Tr. 271:16–20. 99 Roselle Tr. 139:15–17. 100 Defendant Tr. 295:4–7. But the Defendant did send more announcement cards to his family, friends, and neighbors. Defendant Tr. 270:9–18. See also Roselle Tr. 123:24–124:9 (stating that he was not aware that the Defendant had sent out announcement cards to family, friends, and neighbors prior to trial); Defendant Tr. 30:13–21 (confirming the Defendant did not provide a list or receipts for the mailings to these people in discovery). 101 Roselle Tr. 37:5–8, 38:18–22. Roselle contacted Tom Spence and Kelly Wilson to help conduct the investigation. Roselle Tr. 37:11–21. 102 Defendant Tr. 305:23–306:2. See JX126. 103 Defendant Tr. 272:7–16.

17 client files from the Box system to his Google Drive. 104 And, fifteen minutes prior

to his resignation, the Defendant downloaded the Plaintiff’s password file which

contained the passwords for all the Plaintiff’s technology for all its employees.105

The investigation ultimately led to this lawsuit and awaits its results.

While this case was pending, on April 14, 2025, the Plaintiff filed a U5 form

addressing the Defendant’s departure (the “Second U5”).106 In the Second U5, the

Plaintiff disclosed that “[a]n internal review is ongoing. Certified letters were sent

to existing clients indicating the employee’s new employer and were postmarked on

the same day the resignation was received. This timing suggests that confidential

client information may have been sent to another firm during the employee’s

tenure.” 107 Although notified of its filing, Cypress did not take any negative

employment action against the Defendant based on the Second U5. 108

104 Defendant Tr. 308:10–12; JX144 Resp. 33. 105 Roselle Tr. 45:20–46:12; See JX126; See also Roselle Tr. 137:11–16 (explaining that nothing regarding the meeting with clients on March 11, 2025, would have led the Defendant to download the Plaintiff’s passwords). Reacting to the fallout, Roselle let his frustration show in an email to Spence. Roselle Tr. 38:10–15 (testifying that he was emotional when he wrote the email, but he did not allow the email to affect the internal investigation). See also Roselle Tr. 95:13–16 (admitting to telling Spence that he wanted to “bury the Mfer in as many ways as possible.”). See JX109. Roselle vented to his friend, frustrated that the Defendant appeared to be stealing from him. Roselle Tr. 97:18–21 (testifying that he was referring to the Defendant’s violation of the non-solicitation agreement when he said “The theft is unreal”). See also JX100. 106 JX121; Roselle Tr. 98:24–99:1. 107 JX121 at 5 ¶ 3. 108 Jones Tr. 247:20–22.

18 I learned at trial that the Defendant is still settling in at Cypress and did not

yet, as of trial, have a full load. 109 But some of the Plaintiff’s clients have moved

with him. After the Defendant’s resignation, there was a sudden increase in client

departures from the Plaintiff; more than it had ever encountered from years of

operation.110 Altogether, since joining Cypress, the Defendant has secured about

fifteen clients with past associations with the Plaintiff. 111 All of these clients had

been with the Plaintiff for at least three years prior to leaving, and they all left to join

Cypress after receiving the Defendant’s announcement card. 112

109 A “full load” of clients for an advisor at Cypress is between 75 and 100 clients. Jones Tr. 245:4–9. 110 Roselle Tr. 54:21–24. 111 Jones Tr. 244:6–12; Pretrial Order ¶ 17; JX144 at Resp. 28 (“Since March 14, 2025, the following clients have moved their accounts from [the Plaintiff] to Cypress: Desiree Anderson, Holly Melzer & Charles Green, Margaret Hinton, John Krawczyck, Robb & Silvia Lanham, Joseph & Lana Lark, Jennifer Linton, Christopher Long & Danielle Capece, William & Pam Morris, Lindsay Olson & Audrey Mason, Michael Schauber, Carl & Pam Stroud, and James & Linda Whalen.”). 112 Roselle Tr. 58:11–20. See JX7. Several times during trial, the Defendant raised the issue of the “Broker Protocol.” The Broker Protocol is “an agreement that investment firms can choose to join or not that sets some guidelines where a departing employee is allowed to take a very limited amount of client information to a new firm and not be subjected to litigation, even if that is in conflict with any type of agreement that they have signed with that firm.” Jones Tr. 66:7– 13. For the Broker Protocol to apply both firms need to be a member of the protocol. Jones Tr. 252:14–19. That protocol does not to apply here as neither Cypress nor the Plaintiff were members of the protocol at the time of trial or alleged breach. See Jones Tr. 219:20– 24; Roselle Tr. 134:11–16. Nor does the protocol supersede valid restrictive covenants.

19 II. PROCEDURAL POSTURE

The Plaintiff initiated this action on April 3, 2025.113 In its complaint, the

Plaintiff pled three counts for: (1) breach of contract; (II) breach of fiduciary duty;

and (III) violation of the Delaware Uniform Trade Secret Act (“DUTSA”). 114

With its complaint, the Plaintiff also filed a motion for a temporary restraining

order and a motion to expedite.115 Vice Chancellor Laster heard the motions, which

the Defendant contested, on April 15, 2025.116 The Vice Chancellor denied the

temporary restraining order, but granted the motion to expedite with

modifications.117 Specifically, the Vice Chancellor directed the parties to work on a

schedule for a preliminary injunction hearing within 45 days. Shortly thereafter,

however, the Plaintiff withdrew its request for preliminary injunctive relief.118

Completing the pleadings, the Defendant filed his answer and counterclaim for

defamation on April 21, 2025, 119 and the Plaintiff responded on May 12, 2025.120

113 D.I.1. 114 Id. 115 Id. 116 D.I. 17. 117 D.I. 15, 16. 118 D.I. 20. 119 D.I. 18, 91; JX123. 120 D.I. 21.

20 On May 30, 2025, this action was reassigned to me.121 I originally scheduled

trial for November 12, 2025, but I moved that date to January 9, 2026.122 Then came

the Plaintiff’s discovery motions, which I heard and granted on December 30, 2025,

requiring more from the Defendant, extending discovery deadlines appropriately,

and cancelling the January 2026 trial.123 I promptly rescheduled trial for February 6,

2026. 124

Trial went forward as scheduled and the parties waived post-trial briefing,

choosing to rely on their pretrial briefs, pretrial stipulation, and trial record.125 The

parties further stipulated, in their pretrial stipulation, to present this action to me for

a final decision, waiving the right to further judicial review at the Chancery level

and stipulating to a direct appeal to the Delaware Supreme Court.126

III. ANALYSIS

The primary issue pending before me is whether the Defendant breached the

Agreement, particularly his confidentiality and non-solicitation restrictions. 127 He

did. He also misappropriated the Plaintiff’s confidential information in violation of

121 D.I. 22. 122 See D.I. 26-35. 123 See D.I. 70. 124 D.I. 71. 125 D.I. 94. 126 Pretrial Order at ¶ 57. 127 D.I. 82, 84.

21 DUTSA. But the Plaintiff fell short of demonstrating that the Defendant owed and

breached additional fiduciary duties. And I conclude that the Defendant’s

counterclaim for defamation fails, because the statements at issue were true. The

Plaintiff is entitled to consequential damages, costs as the prevailing party, attorneys’

fees under the Agreement, and injunctive relief. I address these matters in turn.

A. The Plaintiff proved its breach of contract claim.

The Plaintiff’s primary claim is that the Defendant breached the Agreement.

To prove a breach of contract under Delaware law, the Plaintiff must show: (1) the

existence of a contract; (2) breach of an obligation imposed by that contract; and (3)

resulting damages.128 The Plaintiff must prove those elements by a preponderance

of the evidence.129

The Defendant initially challenges the Plaintiff’s ability to invoke the

Agreement, arguing that it was not properly assigned to the Plaintiff from Marathon,

the predecessor entity. I disagree.

The Agreement was executed by the Defendant and Marathon “collectively

with its affiliates, parents, successors and subsidiaries,” which were collectively

defined as the “Employer.”130 In Section 4, the parties further agreed that “Employer

128 VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003). 129 Desktop Metal, Inc. v. Nano Dimension Ltd., 2020 WL 904521, at *22 (Del. Ch. Mar. 24, 2025). 130 JX22.

22 and any affiliate or successor of Employer (including, without limitation, [the

Plaintiff]) shall have standing to enforce this Agreement.”131 These provisions track

Delaware law recognizing the assignability of restrictive covenants “so long as the

assignee engages in the same business as the assignor.”132 “While personal service

contracts usually may not be assigned, noncompete agreements and other restrictive

covenants exist for the benefit of the business and not the individual parties. Thus,

the business, whether as assignee or assignor, should enjoy that benefit by having

the power to enforce such restrictive covenants.” 133 Such assignment is generally

effective when the owner of that right “manifest[s] his intention to make a present

transfer of the right without any further action by him or by the obligor.” 134

Here, the Agreement expressly included Marathon’s successors as part of the

collective contracting party and future enforcer. The parties manifested their

agreement that the rights and interests would transfer thereto, without further

confirmatory action. Thus, when Marathon reorganized without changing its

business, the Agreement went with it and was not invalidated by Marathon’s

131 Id. 132 Great Am. Opportunities, Inc. v. Cherrydale Fundraising, LLC, 2010 WL 338219, at *12 (Del. Ch. Jan. 29, 2010). 133 Id. at *11 (emphasis in original) (citations omitted). Baxter Pharm. Prods., Inc. v. ESI Lederle Inc., 1999 WL 160148 at *5 n.16 (Del. Ch. 134

Mar. 11, 1999) (citing RESTATEMENT (SECOND) OF CONTRACTS § 317(1)).

23 cancellation. The Agreement was properly assigned to the Plaintiff as a successor

entity when Marathon reorganized.135

Having determined that the Agreement was properly assigned, I turn now to

the Agreement itself and the Defendant’s subsequent breach. The Plaintiff argues

that the Defendant breached Sections 3(a), (c), and (e), which in turn bar the

Defendant from using the Plaintiff’s client information, soliciting the Plaintiff’s

clients, and managing or training any other person in doing either. The Defendant

argues that he did not use any client information and the non-solicit is unenforceable

under Delaware law; without either, he argues that he could not violate Section 3(e).

I address these in turn.

1. The Defendant used the Plaintiff’s “Client Information,” and managed his wife and mother-in-law in doing the same.

Under Section 3(a) of the Agreement, the Defendant could not “copy,

disseminate, download, upload, forward, transmit, use or modify Client Information,

Employer Information, lists or contact information.” 136 Additionally, when the

Defendant concluded his employment with the Plaintiff, he was required to “return

forthwith to the Employer any and all such records (originals and copies) he may

135 In so holding, I give no weight to the outside authority on which the Defendant relies. This Court has spoken on and decided the issue of assignability for restrictive covenants, and that precedent applies here. 136 JX22 § 3(a).

24 have in his possession and . . . not retain copies thereof except as he may be required

to do so by law . . . or otherwise with the express written consent of the Employer.”137

And he could not, under Section 3(e), manage or train anyone else to use or maintain

such information. The Agreement defines “Client information” as “all the files and

records . . . regarding Clients, including but not limited to financial, banking,

investment, debt, personal, business, tax, audit and corporate information, and the

like.”138

This restriction is unambiguous; it bars the Defendant from maintaining and

using information about the Plaintiff’s clients, or working through others to do so.

The Defendant did just that; admitting to retaining customer contact information,

including home addresses, on his cell phone. 139 The Defendant also downloaded

information from the Plaintiff’s shared drives. He attempted to defend this conduct

by arguing that the information was downloaded to assist with his annual

employment review and client meetings. 140 But his last annual review was conducted

on December 23, 2024, and the Defendant last met with clients on March 11, 2025.141

Yet well after these dates, the Defendant continued to download the Plaintiff’s

137 Id. 138 JX22 § 2. 139 JX144 at 15; Defendant Tr. 310:1–18. 140 See JX 144 at Resp. 33. 141 Roselle Tr. 42:5–12; Defendant Tr. 313:6–8.

25 confidential files. In fact, just 15 minutes before the Defendant sent his resignation

email, he downloaded the Plaintiff’s password files.142

The Defendant also used the client information to help him get the Cypress

job and to solicit the Plaintiff’s clients to join him at that new firm. First, he compiled

a list of the clients he serviced at the Plaintiff, the revenue those clients brought into

the Plaintiff, and the client’s assets under management.143 He then shared that

information with Cypress during the interview process.144 Then, after he announced

his departure, he used client information in his possession, with the held of his wife

and mother-in-law, to send an announcement about his change in firm. The

Defendant violated Sections 3(a) and (e).

2. The non-solicit is enforceable and the Defendant violated it.

The Defendant also violated the non-solicit in Section 3(c), which I find

enforceable. Section 3(c), reads in relevant part:

Employee agrees that during employment and for a period of three years following Separation, he shall not directly or indirectly, for his benefit or the benefit of any other person, entity, or organization, solicit, sell or service business from, to or for any Client who was a Client at the time of Separation. Employee acknowledges that the restriction against solicitation “directly or indirectly” as provided herein means that he may not assist, authorize, or otherwise empower any other

142 JX126. That file contains passwords for every employee of the Plaintiff, including Roselle. Roselle Tr. 46:6–10. 143 JX13. Unsurprisingly, client revenue and assets under management is considered highly confidential by the Plaintiff. Roselle Tr. 49:10–21. 144 Jones Tr. 229:15–18.

26 individual, entity or organization, be that party an employer, employee, partner, associate, consultant or unrelated person, in the solicitation, sale or service of business form a Client or provide any information of assistance that would help such party in soliciting business from a Client. Employee specifically acknowledges and agrees that after three years following Separation, the prohibitions in this paragraph will remain in effect unless contrary action is in the best interest of a Client. 145

A restrictive covenant like the non-solicit in Section 3(c) is enforceable if: “(1)

it meets general contract law requirements, (2) is reasonable in scope and duration,

(3) advances a legitimate economic interest of the party enforcing the covenant, and

(4) survives a balance of the equities.” 146 Here, the Defendant argues the non-solicit

is not reasonable in scope and duration because of the final sentence allowing for an

extension of the temporal limitation. I disagree that this renders the restriction

unenforceable.

The Defendant takes issue with the sentence that states: “[e]mployee

specifically acknowledges and agrees that after three years following Separation, the

prohibitions in this paragraph will remain in effect unless contrary action is in the

best interest of a Client.” 147 But “Delaware courts evaluate restrictive covenants

holistically and in context.” 148 Looking at the meat of Section 3(c), I conclude it is

145 JX22 § 3(c). 146 Kan-Di-Ki, LLC v. Suer, 2015 WL 4503210, at *19 (Del. Ch. July 22, 2015). 147 JX22 § 3(c). 148 Cleveland Integrity Services, LLC v. Byers, 2025 WL 658369, at *8 (Del. Ch. Feb. 28, 2025).

27 reasonable. The initial three-year restriction on client solicitation falls well within

the inner bounds of what Delaware courts have determined as enforceable.149 It

seems even more reasonable when considering that both Section 3(c) and the

Agreement as a whole do not inhibit the Defendant’s ability to work in his field.150

Nor is it ambiguous. A three-year bar on soliciting the Plaintiff’s hard earned

customer base is clear and reasonable. I reject the Defendant’s argument that the last

sentence of Section 3(c) renders the larger non-solicit indefinite. At worst, it is an

add-on that may be segregated from the enforceable scope.

Not only is Section 3(c) reasonable, but the Defendant breached it. The factual

record developed at trial supports the conclusion that the Defendant directly or

indirectly solicited the Plaintiff’s clients. The same day he resigned from the

Plaintiff, the Defendant mailed out announcement cards to the Plaintiff’s clients.151

One prominent client felt it was obvious that the Defendant was trying to solicit his

business. 152 And with good reason. The mailing stated “Welcome to our team” next

to the client’s name and address.153 The Defendant further testified to calling “as

149 See, e.g., Kan-Di-Ki, LLC, 2015 WL 4503210, at *19 n.233 (compiling cases); Gener8, LLC v. Castanon, 2023 WL 6381635 (Del. Ch. Sept. 29, 2023) (enforcing a non-solicitation clause with a period of five years). 150 See Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674, 691 (Del. 2024). 151 JX83; JX86; Pretrial Order ¶ 11. 152 Pedigo Tr. 147:3–4. 153 JX86.

28 many [of the Plaintiff’s] clients as [he] could before [he] received the cease and

desist.”154 The Defendant had the opportunity to identify any clients to be exempt

from the Agreement’s restrictions under Section 3(e).155 But he failed to do so, and

instead reached out on his own behalf.

The trial record confirmed that the Defendant contacted over forty of the

Plaintiff’s clients through mailing and phone calls and attempted to bring them to

Cypress. That was the expectation when he joined Cypress, and he followed through.

His actions amount to solicitation in clear violation of Section 3(c) in the Agreement.

B. The Defendant misappropriated trade secrets under DUTSA.

The Plaintiff next asserts that the Defendant misappropriated its client

information in violation of DUTSA. Trade secrets, under Delaware law, are a

protectable interest. 156 The Plaintiff must prove the following by a preponderance of

the evidence: (1) the existence of a trade secret as defined in the statute; (2)

communication of the secret by plaintiff to the defendant; (3) such communication

was pursuant to an express or implied understanding that the secrecy of the matter

would be respected; and (4) the secret information has been improperly (e.g., in

154 Defendant Tr. 282:12–13. 155 JX22 § 3(e). 156 Great Am. Opportunities, Inc., 2010 WL 338219, at *16.

29 breach of that understanding) used or disclosed by the defendant to the injury of the

plaintiff.157

The Defendant contests that the client information at issue was a trade secret.

To prove that it is a trade secret exists, the Plaintiff needed to demonstrate “(1) that

it possessed information sufficiently secret and valuable to give it a competitive

advantage and (2) that it took reasonable efforts to maintain the secrecy of that

information.”158 That information must “[derive] independent economic value,

actual or potential, from not being generally known to, and not being readily

ascertainable by proper means[.]”159 A potential trade secret “derives actual or

potential independent economic value if a competitor cannot produce a comparable

product without a similar expenditure of time and money.” 160

Under this framework, the customer contact information is certainly a trade

secret. The lists and customer contact information included names, contact numbers,

home addresses, and assets under management. 161 The Defendant argued that this

information cannot constitute a trade secret because telephone numbers and

157 Nucar Consulting, Inc. v. Doyle, 2005 WL 820706, at *5 (Del. Ch. Apr. 5, 2005) (quoting Total Care Physicians, P.A., v. O’Hara, 2002 WL 31667901, at *4 (Del. Super. Oct. 29, 2002)). See also 6 Del. C. § 2001 et seq. 158 Great Am. Opportunities, Inc., 2010 WL 338219, at *16. 159 6 Del. C. § 2001(4). 160 Del. Express Shuttle, Inc., 2002 WL 31458243, at *18. 161 JX13; JX3; JX126.

30 addresses are public information. But the client lists, including the ones that the

Defendant admitted to downloading to his personal drive, include social security

numbers, financial information, family information, and information related to their

investment strategies.162 That bespoke information is not publicly available. 163

And the Plaintiff took steps to protect the confidentiality of its client lists and

information. Most notably, that information was specifically referenced in the

Agreement and similar employee restrictive covenants,164 as well as its employee

handbook and compliance trainings.165 It was also password protected and required

two-factor authentication to access.166 Based on that evidence, the Plaintiff made

reasonable efforts to maintain the secrecy of its customer information.

The client list and the information within also derive independent economic

value. The Plaintiff spent considerable time and effort in cultivating its client base,

assessing and planning their finances, and determining the fees to charge them. The

client information at issue qualifies as trade secrets under 6 Del. C. § 2001.

162 Roselle Tr. 17:16–22. The investment information included risk tolerance assessments, the fees the Plaintiff charges the clients, notes of prior meetings, and similar planning information. Roselle Tr. 18:1–5. 163 I also reject the Defendant’s argument that client contact information like phone number and home address is publicly available through Google searches. The contact information for its clients, as compiled by the Plaintiff during the course of its business, is not publicly available. 164 JX22. 165 JX57 at 32; JX46. 166 Roselle Tr. 18:17–19:7.

31 The Defendant misappropriated those trade secrets. The Defendant received

confidential client information through his employment, and receipt of that

information was expressly conditioned on it being kept confidential. 167 Despite that

condition, the Defendant used the information to prepare and send his announcement

cards. 168 He also shared confidential client information like assets under

management and fees with Cypress while he negotiated his next employment. 169 And

he downloaded significant confidential client information leading up to his

resignation, including client files and templates that were property of the Plaintiff.170

Through this activity, the Defendant misappropriated trade secrets under DUTSA.

C. The Plaintiff failed to articulate any fiduciary duty breached by the Defendant.

The Plaintiff’s final claim is that the Defendant breached his fiduciary duty to

the Plaintiff. For a breach of fiduciary duty claim, the Plaintiff needed to prove that

the Defendant owed and breached duties.171 The Plaintiff argues that the Defendant

167 JX22. 168 JX2; JX86. 169 JX3; JX62; JX63. 170 JX126; JX127. 171 See Beard Research, Inc. v. Kates, 8 A.3d 573, 601 (Del. Ch. 2010), aff’d sub nom. ASDI, Inc. v. Beard Research, Inc., 11 A.3d 749 (Del. 2010) (“A claim for breach of fiduciary duty requires proof of two elements: (1) that a fiduciary duty existed and (2) that the defendant breached that duty.”).

32 owed a duty not to maintain and use the Plaintiff’s confidential information and

breached that duty.

This fiduciary duty claim reflects the type of bootstrapping this Court

eschews. “Delaware law does not permit a plaintiff to ‘bootstrap’ a contract claim

into a fiduciary duty claim by alleging that the contractual breach was disloyal.

“[W]here a dispute arises from obligations that are expressly addressed by contract,”

the contract claim is typically the only one that can proceed.”172 Here, the fiduciary

claim is parallel to the contract claim, lacking any additional or broader scope of

facts upon which it would be appropriate to consider an independent fiduciary claim

or different potential remedies. 173

Mckenzie v. Bdo USA, P.C., 2026 WL 191010, at *7 (Del. Ch. Jan. 26, 2026) (citations 172

omitted). 173 Id.

33 D. The Defendant’s defamation counterclaim fails.174

The Defendant argues that the Second U5 is defamatory. 175 To be successful

on a defamation claim, the Defendant was required to prove “(i) [the Plaintiff] made

a defamatory statement, (ii) concerning [the Defendant], (iii) the statement was

published, and (iv) a third party would understand the character of the

communication as defamatory.”176

“A statement is defamatory when it tends so to harm the reputation of another

as to lower him in the estimation of the community or to deter third persons from

associating or dealing with him.”177 But “truth is an absolute defense to a defamation

174 This Court’s jurisdiction over defamation claims is murky. As Judge Winston addressed in Cytotheryx, Inc. v. Castle Creek Biosciences, Inc., 2025 WL 3142373, at *2 (Del. Ch. Nov. 10, 2025), this Court declared in Perlman v. Vox Media, Inc. that it “in all instances, lacks subject matter jurisdiction to adjudicate” certain elements of defamation. 2019 WL 2647520, at *1 (Del. Ch. June 27, 2019) (citing Organovo Hldgs., Inc. v. Dimitrov, 162 A.3d 102 (Del. Ch. 2017)). Yet after Perlman, this Court invoked the clean-up doctrine to adjudicate a defamation claim in Laser Tone Bus. Sys., LLC v. Del. Micro-Computer LLC, 2019 WL 6726305, at *13-15 & n.177 (Del. Ch. Nov. 27, 2019). See also Invictus Glob. Mgmt., LLC v. Corbin Capital P'rs, L.P., 2025 WL 2419577, at *20 (Del. Super. Aug. 21, 2025) (explaining that the Court of Chancery has “in its discretion” exercised the clean-up doctrine “to hear defamation claims,” and citing Laser Tone). Because the defamation claim here found its way to this Court through a compulsory counterclaim, I follow the lead of the Court in Laser Tone and retain jurisdiction through the clean-up doctrine. Kraft v. Wisdom Trees Invs., Inc., 145 A.3d 969, 974 (Del. Ch. 2016). Compare Preston Hollow Cap. LLC v. Nuveen LLC, 216 A.3d 1, 4 (Del. Ch. 2019) (declining to exercise jurisdiction over a defamation claim brought by the plaintiff) with Laser Tone Bus. Sys., LLC, 2019 WL 6726305, at *1 (exercising jurisdiction for compulsory counterclaims that included defamation). 175 D.I. 18. 176 Agar v. Judy, 151 A.3d 456, 470 (Del. Ch. 2017). 177 Cousins 8 v. Goodier, 283 A.3d 1140, 1148 (Del. 2022).

34 action.”178 As long as the statements in the Section U5 are “substantially true,” the

defamation claim must fail. 179

Likewise, opinions are also protected. 180 The distinction between opinion and

fact is significant, because “[w]hile allegations of specific criminal conduct

generally cannot be protected as opinion, broad brush-stroked references to unethical

conduct, even using terms normally understood to impute criminal acts, may be

understood by the reasonable viewer as opinion.”181

Here, both truth and opinion operate as an absolute defense to the Defendant’s

claim. In the Second U5, the Plaintiff was obligated to answer question 7B which

asks: “[c]urrently is, or at termination was, the individual under internal review for

fraud or wrongful taking of property, or violating investment-related statutes,

regulations, rules or industry standards of conduct?”182 The Plaintiff answered in the

affirmative, and provided the following description:

The employee resigned effective immediately on 3/14. An internal review is ongoing. Certified letters were sent to existing clients indicating the employee’s new employer and were postmarked on the same day that the resignation was received. This timing suggests that

178 Barker v. Huang, 610 A.2d 1341, 1350 (Del. 1992). 179 Ramunno v. Cawley, 705 A.2d 1029, 1035 (Del. 1998). 180 Agar v. Judy, 151 A.3d at 481 (“The First Amendment of the United States Constitution generally protects expressions of opinion.”). 181 Id. 182 JX121 at 2.

35 confidential client information may have been sent to another firm during the employee’s tenure.

The Defendant argues that the affirmative answer and explanation was

defamatory and done maliciously with the specific intent to injure.183 But by

answering yes to question 7B, the Plaintiff truthfully represented that at the time of

filing, the Defendant was under internal review for wrongful taking of property—

client information. And the explanation provided is similarly truthful. The employee

did resign effective immediately on March 14.184 And when the Section U5 was filed

on April 14, 2025, the Plaintiff was conducting an internal review. 185 By the

Defendant’s own admission, priority letters were sent to existing clients indicating

his new employer, and those were postmarked on the same day the resignation was

received. 186 Those are all completely truthful statements and the difference between

priority and certified is immaterial.

Finally, the last sentence reflects the Plaintiff’s opinion that confidential client

information may have been sent to another firm during the Defendant’s tenure. That

opinion was based on information gained through the internal review. The Plaintiff

opined that the timing of events suggests client information was sent. There is not a

183 D.I. 18 ¶¶ 12–13. 184 JX121; JX79. 185 Roselle Tr. 62:23–63:4, 64:12–22. 186 See JX 86; Defendant Tr. 293:23–294:3.

36 definitive or definite claim that it had. Regardless, the statement was ultimately

true. 187

Because the statement at issue was truthful, the first element of defamation

has not been met. The analysis ends there. The statements in the Second U5 were

truthful and opinion based, and as such, the Defendant’s counterclaim fails. 188

E. The Plaintiff is entitled to damages.

Having found the Defendant liable for breach of contract and violating

DUTSA, I turn lastly to damages. For its claims, the Plaintiff must, by a

preponderance of the evidence, prove the level of damages that resulted from the

Defendant’s wrongful behavior.189

187 See JX144; Defendant Dep. 46:12–48:5, 83:14–85:5. 188 In so holding, I decline to address the outside authority relied on by the Defendant. See D.I. 87 at 17–19. The Defendant points me to eleven unreported FINRA arbitration cases which speak to actual damages available for defamatory form U-5 disclosures. Because the statements in the Second U5 were truthful, there is no need to address this precedent that is persuasive authority at best. 189 See Triton Const. Co. v. E. Shore Elec. Servs., Inc., 2009 WL 1387115, at *6 (Del. Ch. May 18, 2009) (“To succeed on its various claims against Defendants [including a claim of breach of fiduciary duty], Triton must prove liability by a preponderance of the evidence.”); Nucar Consulting, Inc., 2005 WL 820706, at *5 (“A plaintiff alleging misappropriation of a trade secret must prove its case by a preponderance of the evidence.”); Desktop Metal, Inc., 2020 WL 904521, at *22 (“The party asserting breach [of contract] bears the burden of proof and must meet that burden by a preponderance of the evidence.”).

37 To show damages, the Plaintiff relied on the report prepared by Justin

Callaham, LLM, its damages expert (the “Damages Report”). 190 In the Damages

Report, Callaham employed an identical methodology to that he used in his

December 2024 business valuation of the Plaintiff. Specifically, he used an

enterprise value impairment metric to measure the actual economic harm that

resulted from eleven client households that followed the Defendant to Cypress.191

When comparing the Damages Report to the 2024 valuation, Callaham noted that

the departing households generated $179,265 in annual revenue during 2024.192 He

applied the Plaintiff’s historical EBITDA margin of 38.8% to that lost revenue,

which showed an annual lost EBITDA of $69,555.193 Finally, he multiplied that

figure by 11.00x, the same multiple used in the 2024 valuation, to produce damages

of $765,103.00.194 Essentially, the expert opined, if the Plaintiff sought to sell the

firm now, the buyer would pay $765,103.00 less than it would have in December

2024, before the Defendant solicited clients.195

190 JX146. 191 Id. at 4. 192 Id. 193 Id. 194 Id. That multiple “reflects market conditions, industry norms, and an all-cash acquisition structure, as well as the specific characteristics of [the Plaintiff’s] client relationships as of December 2024.” Id. 195 Callaham’s calculation excluded two clients: The Defendant’s parents and a client who left the Plaintiff for independent reasons.

38 DUTSA allows a party to recover damages, including “both the actual loss

caused by misappropriation and the unjust enrichment caused by misappropriation

that is not taken into account in computing actual loss.”196 Neither the Plaintiff nor

the Damages Report made any attempt to prove damages for unjust enrichment.

Thus, for compensatory damages, I can only consider the direct damages from the

Defendant’s solicitation; the actual loss caused by the misappropriation.

With that said, I find the Damages Report a helpful guide. The report

reasonably calculated the lost revenue from those eleven clients that the Defendant

solicited. That lost revenue could also be seen as the actual damage that resulted

from the misappropriation of client information. The Defendant took that

information, gave it to a competitor, and the clients eventually moved to that

competitor. Those damage figures are not speculative, they are concrete and

attainable. Therefore, I adopt the report and award the Plaintiff the full lost enterprise

value of $765,103.00. That figure is a principled, nonspeculative estimate of

damages due to the Plaintiff. 197

D. The Plaintiff is entitled to attorneys’ fees and costs.

The Plaintiff also seeks costs, attorneys’ fees, and both pre- and post-judgment

interest. The Agreement has a fee-shifting provision, which provides that “if

196 6 Del. C. § 2003(a). 197 See Great Am. Opportunities, Inc., 2010 WL 338219, at *27.

39 Employer successfully enforces this Agreement, Employer shall be awarded its

reasonable costs and attorneys’ fees.”198 “When a contract contains a fee shifting

provision, Delaware courts will enforce that provision.”199 The Plaintiff has

successfully enforced the Agreement and is entitled to attorneys’ fees. If the parties

cannot agree, the Plaintiff shall submit an affidavit under Court of Chancery Rule

88.

The Plaintiff is also entitled to costs under Court of Chancery Rule 54(d),

where “costs shall be allowed as of course to the prevailing party unless the Court

otherwise directs.” This Court has defined a prevailing party as “the party who

successfully prevails on the merits of the main use or on most of her claims.”200 Here,

the Plaintiff is the prevailing party, and fees should be shifted as such.

The Plaintiff is also entitled to prejudgment and post-judgment interest. “In

Delaware, prejudgment interest is awarded as a matter of right. Such interest is to be

computed from the date payment is due.” 201 “Where damages do not accrue

immediately upon breach, prejudgment interest is measured from the date on which

198 JX22 § 4. 199 Bako Pathology LP v. Bakotic, 288 A.3d 252, 280 (Del. 2022). 200 Adams v. Calvarese Farms Maint. Corp., 2011 WL 383862, at *3 (Del. Ch. Jan. 13, 2011) (emphasis in original). 201 Citadel Hldg. Corp. v. Roven, 603 A.2d 818, 826 (Del. 1992).

40 the damages began to accrue.” 202 I see no reason to depart from that routine practice,

and I grant the Plaintiff prejudgment interest on its damages at the legal rate.203

Post-judgment interest is also awarded as a matter of right. 204 “Prejudgment

interest is part of the ‘judgment’ and, as such, should be included in the amount on

which post-judgment interest accrues.” 205 The Plaintiff is awarded post-judgment

interest at the legal rate on the combined amount of the damages award and the pre-

judgment interest. Post-judgment interest, like prejudgment interest, will compound

quarterly.

E. Injunctive relief is also warranted.

Finally, the Plaintiff seeks injunctive relief, enjoining the Defendant from

using or disclosing any of the Plaintiff’s trade secrets or confidential information,

disclosing the identities of its clients, and compelling the Defendant to return all such

information that may still be in his possession. To be entitled to such relief, the

Plaintiff must demonstrate: (1) actual success on the merits, (2) irreparable harm,

and (3) that the balance of equities weighs in favor of issuing the injunction. 206

202 Vivint Solar, Inc. v. Lundberg, 2024 WL 2755380, at *37 (Del. Ch. May 30, 2024). 203 See 6 Del. C. § 2301(a). 204 See Noranda Aluminum Hldg. Corp. v. XL Ins. Am., Inc., 269 A.3d 974, 978 (Del. 2021). 205 NGL Energy P’rs LP v. LCT Cap., LLC, 319 A.3d 335, 338 (Del. 2024). 206 Concord Steel, Inc. v. Wilm. Steel processing Co., 2009 WL 3161643, at *14 (Del. Ch. Sept. 30, 2009).

41 That first element, actual success on the merits, is demonstrated by the

analysis above. The Plaintiff has proven that the Defendant breached his non-

solicitation and confidentiality restrictions and misappropriated trade secrets. In

connection with the contractual disputes, the parties agreed that “any breach by [the

Defendant] of this Agreement would cause [the Plaintiff] irreparable damage, and

that no remedy available at law would be adequate for such a violation.207 Further,

“our law has consistently found a threat of irreparable injury in circumstances when

a [restrictive covenant] is breached.”208 Based on the clear agreement between the

parties that breaches of the Agreement would cause irreparable harm, and the factual

record developed at trial as to the nature and extent of these breaches, I find that this

requirement is also met.

Finally, I must consider whether the harm that a potential injunction would

cause outweighs the benefits of granting the Plaintiff the injunction it seeks. The

Agreement does not contain a non-compete clause. There is nothing preventing the

Defendant from working in his field or providing for his family. He just may not do

so by poaching the Plaintiff’s clients. Meanwhile, the Plaintiff has a strong interest

in protecting its book of business and maintaining client relationships. The balancing

of the equities supports injunctive relief.

207 JX22 at § 4. 208 Hough Assocs., Inc. v. Hill, 2007 WL 148751, at *18 (Del. Ch. Jan. 17, 2007).

42 For those reasons, I will grant the injunctive relief sought by the Plaintiff. The

Defendant shall be enjoined from using or disclosing any of the Plaintiff’s trade

secrets or confidential information, and he must return all such information that may

still be in his possession. The Defendant shall be required to submit an affidavit

representing that those actions have been complete. I will also reinstate the

Defendant’s non-solicit for the full three-year period.

IV. CONCLUSION

For the reasons stated within, I conclude that the Plaintiff has proved its breach

of contract and misappropriation of trade secrets claims. The Plaintiff’s fiduciary

duty claim, and the Defendant’s counterclaim for defamation both fail. The Plaintiff

is entitled to the damages and injunctive relief addressed herein, including shifted

fees and costs. This ruling is a memorandum opinion subject to the same appellate

process and review as the constitutional officers of this Court.