Getzler v. River Run Foods

CourtSuperior Court of Delaware
DecidedJuly 1, 2024
DocketN23C-02-086 DJB
StatusPublished

This text of Getzler v. River Run Foods (Getzler v. River Run Foods) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Getzler v. River Run Foods, (Del. Ct. App. 2024).

Opinion

THE SUPERIOR COURT OF THE STATE OF DELAWARE

) JOEL GETZLER, DANIEL GETZLER, ) DANIEL GINDEA, NEIL MARKS & ) STEVEN SALES, TRUSTEE OF THE ) STEVEN SALES RETIREMENT PLAN, ) Plaintiffs, ) ) v. ) C.A. NO. N23C-02-086 DJB ) RIVER RUN FOODS (DE), LLC, a ) Delaware limited liability company, and ) FRED LANGER, ) Defendants, ) )

Argued: March 13, 2024 Decided: July 1, 2024

Upon Defendant’s Motion for Summary Judgment – GRANTED Upon Plaintiffs’ Cross-Motion for Summary Judgment and Defendant’s Motion to Strike Plaintiffs’ Cross-Motion – DENIED

MEMORANDUM OPINION

Andrew L. Cole, Esquire, Stacy L. Newman, Esquire, Michael E. Fitzpatrick, Esquire, and Nathaniel J. Klepser, Esquire of COLE SCHOTZ PC, Wilmington, Delaware, and J. Michael Pardoe, Esquire, admitted pro hac vice, of COLE SCHOTZ PC, Baltimore, Maryland, Attorneys for Plaintiffs.

Marc Casarino, Esquire, and Katie Barksdale, Esquire, of KENNEDYS CMK LLP, Wilmington, Delaware, Attorneys for Defendants.

BRENNAN, J.

1 I. INTRODUCTION

This civil action alleges one count of fraud by Plaintiffs following a four

hundred thousand dollar ($400,000.00) investment (“the investment”) in Defendant

River Run Foods, LLC (“River Run”) in October of 2021. This Complaint was filed

on February 10, 2023. Plaintiffs’ complaint is against both River Run and Defendant

Fred Langer (“Langer,” collectively “Defendants”), the Chief Operating Officer of

River Run.1 Defendant River Run is a company that provides food manufacturing

and packaging services.2 Langer worked for Plaintiff Joel Getzler (“Getzler”), who

owns a consulting firm which provides guidance to financially troubled businesses.

River Run was a former client of Getzler’s firm prior to the investment.

II. PROCEDURAL HISTORY

Following the close of discovery, Defendants moved for summary judgment

(“Defendants’ Motion”) on January 5, 2024, in accordance with the Trial Scheduling

Order set for this case.3 On February 5, 2024, Plaintiffs filed their opposition to

Defendants’ Motion and simultaneously filed a Cross-Motion for Summary

Judgment (“Cross-Motion”).4 Defendants moved to strike, as untimely, the Cross-

Motion on February 7, 2024.5 That same day, Plaintiffs filed their opposition to the

1 Complaint, D.I. 1. 2 D.I. 1, at ¶ 17. 3 Defendants’ Motion for Summary Judgment. D.I. 42. 4 D.I. 44-46. 5 D.I. 48. 2 Motion to Strike.6 On February 12, 2024, Defendants replied to the motions filed

by Plaintiffs.7 Oral argument was held March 13, 2024.8 Following review of the

filings, arguments of counsel, the entire record in the case, and the applicable legal

authority, for the reasons stated below, Defendants’ Motion to Strike and the

Plaintiffs’ Cross-Motion for Summary Judgment are DENIED; Defendants’ Motion

for Summary Judgment is GRANTED.

III. FACTUAL BACKGROUND

Getzler’s consulting firm, non-party Getzler Henrich & Associates, works

with financially troubled companies; Getzler is the co-chairman of his firm.9 River

Run was a client of Getzler Henrich until March 2018.10 In 2019, Langer, who

previously worked at Getzler Henrich, and a group of investors, purchased 80% of

River Run.11 Langer is currently the Chief Operating Officer of River Run. 12

Seeking investors, Langer, on behalf of River Run, sent Getzler a written

document offering Series A Preferred Stock in River Run (“Prospectus”) on August

31, 2021. Getzler forwarded the document to Plaintiffs Daniel Getzler, Daniel

6 D.I. 48, 49. 7 D.I. 52. 8 D.I. 53. 9 D.I. 42, at 3. 10 Id. at 4 11 Id. Langer and Getzler have known each other for forty years. 12 Id. 3 Ginger, Neil Marks and Steven Sales (collectively “Plaintiffs”).13 On September 3,

2021, Langer provided Getzler with projected River Run financials (“Projections”)

forecasting 2021 sales of $23,620,601.00 and Earnings Before Interest, Taxes, and

Amortization (“EBITA”) of -$590,747.00.14 River Run’s actual 2021 sales were

$10,751,749.00,15 and EBITA was -$5,360,633.00.16 The Projections forecasted

sales for September 2021 as $4,289,165.00, however, actual sales were

$947,208.00.17

In October 2021, Plaintiffs invested $400,000.00, at $200.00 per unit, in River

Run.18 Per Plaintiffs, Defendants’ assertions that River Run had exclusive rights to

the Tetra Pak Recart packaging system,19 and River Run’s proposed new facility with

eight (8) Tetra Pak lines were the impetus to the investment.20 However, during an

13 D.I. 1, at ¶ 20. 14 D.I. 42, Ex. B, at 24:11-25:12, see also Ex. E; Plaintiff’s Complaint erroneously alleges the EBITA figures in the positive and makes arguments of fraud on its face based upon the positive EBITA. However, it is clarified in the depositions taken, specifically of Langer, that the EBITA figures are to be negative. See D.I. 42, p. 19, fn. 73. 15 D.I. 1, at ¶ 28; D.I. 7, at ¶ 28. 16 Id. at ¶ 29. 17 Id. at ¶ 30. 18 Joel Getzler invested $250,000.00; Daniel Getzler invested $10,000.00; Daniel Ginda invested $25,000.00; Neil Marks invested $15,000.00; Steven Sales, for Sales Retirement Plan invested $100,000.00. D.I. 1, at ¶¶ 36-40. 19 D.I. 1, at ¶ 22. 20 Id. at ¶ 32. Tetra Pak is a “food packaging company that has developed a proprietary carton packaging technology for food products that is touted as superior in many ways to traditional food packaging using cans, bottles and the like.” Id. at ¶ 18. 4 investor call on December 19, 2022, it was revealed that River Run and Tetra Pak

did not have a formal exclusivity agreement, but rather River Run was attempting to

obtain a two-year exclusivity agreement.21 Additionally, Plaintiffs state that River

Run’s “most recent capital raise” has a price of just $5.00 per unit, a vast difference

from the $200.00 per unit price paid by Plaintiffs. 22

IV. ARGUMENT

Defendants moved for summary judgment arguing the record does not support

Plaintiffs’ allegations that false statements were made.23 Alternatively, Defendants

claim any alleged misrepresentations cannot form the basis for a fraud claim, as

Plaintiffs failed to do their due diligence before investing in River Run, barring

recovery.24 Defendants argue the Tetra Pak exclusivity representation included on

the Prospectus was true, as River Run was the only co-packer in the Northeast.25

Defendants argue the onus is upon Plaintiff for having failed to inquire as to the

duration of “ongoing” and the scope of “Northeast” as stated in the Prospectus.26

21 Id. at ¶ 24. 22 D.I. 1 at ¶ 43, D.I. 7 at ¶ 43. 23 D.I. 42, at 7. 24 Id. 25 Id. at 11-12. 26 Id. at 13. Plaintiffs did not ask to see a contract or ask for details regarding the River Run and Tetra Pak relationship. Id. at 14. 5 Defendants argue that River Run had every intention of meeting the numbers

in the Projections when it was drafted and presented to Plaintiffs.27 According to

Defendants, the Projections “[p]repared on June 8, 2021” were “based on reasonable

assumptions regarding River Run’s future performance and anticipated new

customers and contracts.” 28 However, two unforeseen and unexpected obstacles

prevented River Run from reaching the anticipated sales figures: 1) a projected

million dollar sales contract with B&G Foods fell through in September 2021, when

union negotiations disrupted the B&G’s facility and; 2) mechanical issues with the

Tetra Pak line in August and September 2021 prevented River Run from having met

its expected sales for a “Mizkan Double Cheddar” deal, as it could not produce the

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Bluebook (online)
Getzler v. River Run Foods, Counsel Stack Legal Research, https://law.counselstack.com/opinion/getzler-v-river-run-foods-delsuperct-2024.