COURT OF CHANCERY OF THE STATE OF DELAWARE NATHAN A. COOK LEONARD L. WILLIAMS JUSTICE CENTER VICE CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734
April 17, 2024
Ronald N. Brown, III Rudolf Koch Aaron S. Applebaum Robert L. Burns DLA Piper LLP Susan Hannigan Cohen 1201 North Market Street, Suite 2100 Nichole M. Henry Wilmington, DE 19801 Edmond S. Kim Richards, Layton & Finger, P.A. 920 North King Street, Suite 200 Wilmington, DE 19801
RE: Invictus Special Situations Master I, L.P. v. Invictus Global Mgmt., LLC C.A. No. 2023-1099-NAC
Dear Counsel:
This letter addresses my findings of fact and conclusions of law from the
March 28, 2024, trial on Counts I, IV, and VI of the plaintiff’s complaint. 1 For the
reasons below, I enter judgment for the plaintiff on all three counts.
1 Invictus Special Situations Master I, L.P. v. Invictus Global Mgmt., LLC,
C.A. No. 2023-1099-NAC, Docket (“Dkt.”) 1. I have carefully considered all the evidence and cite to specific documents where appropriate. Citations in the form of “JX __ ([Description])” refer to the trial exhibits. Citations in the form of “PTO ¶ __” refer to the parties’ pre-trial stipulations of fact. See Dkt. 106. Citations in the form of “Tr. __ ([Witness])” refer to testimony from the trial transcript. See Dkt. 125. And citations in the form of “Post-Tr. __” refer to the post-trial hearing transcript. See Dkt. 127. C.A. No. 2023-1099-NAC April 17, 2024 Page 2
I. FACTUAL BACKGROUND
Plaintiff Invictus Special Situations Master I, L.P. (“Plaintiff” or the
“Fund”) is a privately held investment fund and Cayman Islands exempted
limited partnership focused on litigation finance, distressed credit, and
reorganization investment opportunities. 2 In early 2019, Defendants Cindy Chen
Delano and Amit Patel founded Invictus Special Situations I GP, LLC (“Invictus
GP”) and Investment Global Management, LLC (“IGM,” together with Delano,
Patel, and Invictus GP, “Defendants”). 3 In 2019 and 2020, IGM served as a
subadvisor for Corbin Capital Partners, L.P. 4 Patel and Delano owned and
controlled both Invictus GP and IGM at all relevant times. 5
In 2020, the Fund was formed. 6 Invictus GP became the Fund’s general
partner on March 16, 2020. 7 On August 25, 2020, the Fund and Defendants Patel
and Delano entered into the First Amended and Restated Limited Partnership
Agreement (the “Partnership Agreement”); Delano did so in her individual
2 PTO ¶ 8. The Fund has several feeder funds. Whether the Fund is acting on its own behalf or in connection with the feeder funds, however, does not impact this analysis. Thus, for simplicity, I will only refer to the Fund. 3 JX 1 (IGM Slide Deck) at 4; JX 2 (Organization Chart).
4 Tr. 233:9-18 (Delano).
5 PTO ¶¶ 9-10.
6 JX 2 (Organization Chart).
7 JX 20 (Partnership Agreement); PTO ¶ 10. C.A. No. 2023-1099-NAC April 17, 2024 Page 3
capacity and Patel did so on behalf of various entities. 8 The Partnership
Agreement is governed by Cayman law. 9 Also on August 25, 2020, the Fund
entered into the Investment Management Agreement (the “Management
Agreement”), whereby the Fund appointed IGM as the Fund’s management
company. 10 The Management Agreement is governed by Delaware law. 11
Subject to limitations in the Partnership Agreement, Section 3.01 of the
Partnership Agreement provided Invictus GP “with absolute, exclusive and
complete right, power, and authority to operate, manage, and control the affairs
of the [Fund] and carry out the business of the [Fund].” 12 The Management
Agreement likewise gave IGM “full discretionary authority (until revoked in
writing) to do all acts and things on behalf of the Funds which do or may constitute
their respective business . . . .” 13
8 JX 20 (Partnership Agreement).
9 Id. § 14.02.
10 JX 21 (Management Agreement).
11 Id. § 12.
12 JX 20 (Partnership Agreement) § 3.01(a).
13 JX 21 (Management Agreement) § 1. C.A. No. 2023-1099-NAC April 17, 2024 Page 4
Most relevant to this post-trial decision, Section 7 of the Management
Agreement provides:
The Funds shall have direct and unrestricted access to the books and records of [IGM] as such books and records relate to the Funds, and any and all other information pertaining to the business and affairs of the Funds and its Investments. [IGM] shall promptly provide the Funds with copies of any such information upon the Funds’ request. 14
IGM retained several law firms to advise it in its capacity as the Fund’s
management company. 15 On March 19, 2021, IGM engaged U.S. Bank Global
Fund Services (Cayman) Limited (“U.S. Bank”) to serve as the Fund’s
administrator. 16 U.S. Bank was responsible for the Fund’s portfolio accounting,
investor accounting, investor reporting, tax reporting, anti-money laundering
services, and tax compliance. 17
Under Section 3.08(b)(i) of the Partnership Agreement, Fund investors
could remove Invictus GP “at any time, for any reason and without cause, by the
14 Id. § 7.
15 Tr. 240:21-241:3 (Delano).
16 JX 27 (Fund Administration Agreement). Prior to U.S. Bank, NAV was the Fund’s third-party administrator. PTO ¶ 85. The parties amended the administration agreement on February 23, 2022, adding U.S. Bancorp Fund Services, LLC (d/b/a U.S. Bank Global Fund Services) as a Fund administrator, in addition to the previously designated Cayman U.S. Bank entity. JX 34 (First Amended Fund Administration Agreement). The parties later amended the administration agreement on April 5, 2022. JX 39 (Second Amended Fund Administration Agreement). 17 JX 27 (Fund Administration Agreement) Schedule A. As properly described by Mr. Woodmansee at trial, U.S. Bank’s function is “more accounting and related in nature.” Tr. 54:9 (Woodmansee). C.A. No. 2023-1099-NAC April 17, 2024 Page 5
affirmative vote of” at least two thirds of the Fund’s investor interests.18
Accordingly, on September 29, 2023, fund investors Corbin ERISA Opportunity
Fund, Ltd., Corbin Opportunity Fund, L.P., Corbin Private Creditor Manager
Fund, L.P., and New York State Nurses Association Pension Plan (collectively,
the “Corbin Entities”), with Gatewood Capital Opportunity Fund, L.P. and
Gatewood Opportunity Fund (Cayman), L.P. (collectively, the “Gatewood
Entities”), removed Invictus GP as the Fund’s general partner and IGM as the
Fund’s management company. 19 The investors replaced Invictus GP and IGM
with TREO Vitus GP, LLC (“TREO GP”) and TREO Asset Management, LLC
(“TREO AM” and collectively with TREO GP, “TREO”), respectively. 20
Upon appointment, TREO sent books and records requests to IGM. 21 U.S.
Bank cooperated with TREO to produce the records it held as the Fund’s
administrator. 22 U.S. Bank, however, could only produce the items it created,
monitored, or received from IGM. 23
On October 18, 2023, several minority investors in the Fund, including
18 JX 20 (Partnership Agreement).
19 JX 69 (Resolution of the Fund Investors); see also JX 68 (Notice of Resolution). 20 PTO ¶ 22.
21 Id. ¶ 84.
22 Id. ¶ 85.
23 Id. ¶ 86. C.A. No. 2023-1099-NAC April 17, 2024 Page 6
Patel and Delano, requested that TREO provide information regarding its
“background, capabilities, and strategy to successfully manage the Fund’s
assets.” 24 On October 20, 2023, TREO responded that “such demands are
nonsensical given that IGM has not turned over books and records with respect
to these investments.” 25 Many of these transactions involve investments related
to The Tuesday Morning Corporation, DeCurtis Holdings LLC, and associated
legal expenses. 26 TREO attached a books and records request to its response
letter. 27
Plaintiff’s asserted books and records deficiencies fall into three general
categories: (1) information related to the various investment positions and assets
of the Fund, (2) information related to potential liabilities that may be asserted
against the Fund, and (3) information related to potential causes of action and
other assets the Fund may pursue. 28
On October 30, 2023, Plaintiff filed its Verified Complaint. 29 The Verified
24 JX 90 (October 18, 2023, Minority Investor Letter).
25 JX 91 (October 20, 2023, TREO Response Letter).
26Many of the disputed information deficiencies relate to complex investment transactions that would require pages of details to give a cohesive background. In the interest of resolving Plaintiff’s books and records claims expeditiously, I will therefore omit a detailed recitation of the underlying transactions. 27 JX 91 (October 20, 2023, TREO Response Letter).
28 See Tr. 24:15-25:11 (Woodmansee).
29 Dkt. 1. C.A. No. 2023-1099-NAC April 17, 2024 Page 7
Complaint outlined eight causes of action against Defendants. Only three of
Plaintiff’s claims are relevant to this decision: Count I for breach of contract for
failure to comply with the information rights provision provided under Section 7
of the Management Agreement; Count IV for declaratory judgment that IGM is
breaching Section 7 of the Management Agreement; and Count VI for injunctive
relief asking that all books and record related to the Fund be turned over to the
Fund. 30 Plaintiff also filed a motion to expedite and for a temporary restraining
order on the same day it filed its Verified Complaint. 31
During a November 6, 2024, hearing on Plaintiff’s motions to expedite and
for a temporary restraining order, Defendants represented that they were “not
disagreeing that [Plaintiff is] entitled to additional documents” and “that there
may not even be a need for a trial” regarding the books and records disputes.32
Indeed, Defendants asserted that they had given Plaintiff “access to what we
believe is almost everything. The remaining items are subject, we believe, to
confidentiality agreements that were executed in [Invictus GP’s] own name.” 33
Two days later, on November 8, 2023, I held a follow-up hearing. 34 The next
30 Id.
31 Id.
32 Dkt. 47. at 14:20-23.
33 Id. at 8:1-4.
34 Dkt. 41. C.A. No. 2023-1099-NAC April 17, 2024 Page 8
day, on November 9, 2023, I entered a status quo order relating to the disputed
funds, resolving the temporary restraining order motion. 35 On November 14,
2023, I granted the parties stipulated schedule for an expedited trial on Counts I,
IV, and VI. 36
Plaintiff filed a motion to compel on December 19, 2023, asserting that
Defendants were failing to comply with their discovery obligations. 37 On January
4, 2024, I heard argument on the motion to compel before granting Plaintiff’s
motion. 38 On January 6, 2024, Defendants filed a notice of removal in the United
States District Court for the District of Delaware. 39 On January 8, 2024, I held a
teleconference, and confirmed that the trial, scheduled for January 11, 2024, was
cancelled, given Defendants’ notice of removal. 40 Less than a week later, on
January 12, 2024, the federal court remanded the case back to this Court. 41 Trial
was rescheduled for February 6, 2024.
On February 5, 2024, the day before the trial, Defendants filed a letter on
35 Dkt. 32.
36 Dkt. 39. The original schedule also contemplated Count V, but the parties
amended the schedule to limit the trial to only Counts I, IV, and VI. Dkt. 88. 37 Dkt. 64.
38 Dkt. 111.
39 Dkt. 82.
40 Dkt. 113.
41 Dkt. 86. C.A. No. 2023-1099-NAC April 17, 2024 Page 9
the docket (the “February Letter”). 42 In the February Letter, Defendants agreed
to produce documents to Plaintiff, with two exceptions. First, Defendants carved
out eight specific categories of documents and records they believed fell outside of
Plaintiff’s information rights, including documents unrelated to the Fund or its
investments. 43 And second, Defendants asserted that they would have “no
objection to producing privileged communications with counsel,” subject to a
condition precedent that Plaintiff pay the legal fees associated with the requested
documents. 44 Defendants closed their letter by noting that their “decision to
produce the documents outlined above significantly narrows the disputes
concerning the remaining categories of documents. Accordingly, Defendants
believe that the trial should focus on any categories of documents in the eight
categories above.” 45
The Court held trial with three live witnesses and over 800 joint trial
exhibits on February 6, 2024, to address Counts I, IV, and VI of Plaintiff’s Verified
Complaint. 46 The parties completed post-trial briefing on March 25, 2024, and
the Court heard post-trial oral argument on March 28, 2024. 47 In the post-trial
42 JX 230 (February Letter).
43 Id. at 3.
44 Id. at 2.
45 Id. at 4.
46 Dkt. 114.
47 Dkt. 127. C.A. No. 2023-1099-NAC April 17, 2024 Page 10
briefing and post-trial argument, Defendants largely did not contest the facts of
the case and instead asserted legal arguments for dismissal, arguments
Defendants waived with the February Letter.
II. LEGAL ANALYSIS
Plaintiff’s claims before me concern the books and records related to the
Fund. Plaintiff seeks specific performance of Section 7 of the Management
Agreement, in addition to both declaratory and injunctive relief arising from its
right to the books and records related to the Fund.
A. Scope of the Fund’s Information Rights
“When interpreting a contract, the role of a court is to effectuate the parties’
intent.” 48 “Unless there is ambiguity, Delaware courts interpret contract terms
according to their plain, ordinary meaning.” 49 “Contract language is not
ambiguous merely because the parties dispute what it means. To be ambiguous,
a disputed contract term must be fairly or reasonably susceptible to more than
one meaning.” 50 “If a writing is plain and clear on its face, i.e., its language
conveys an unmistakable meaning, the writing itself is the sole source for gaining
48 Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006). 49 Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012).
50 Id. (footnote omitted). C.A. No. 2023-1099-NAC April 17, 2024 Page 11
an understanding of intent.” 51
Plaintiff points to its information rights under Section 7 of the Management
Agreement. 52 Section 7 of the Management Agreement gives the Fund “direct and
unrestricted access to the books and records of the Management Company as such
books and records relate to the Funds, and any and all other information
pertaining to the business and affairs of the Funds and its Investments.” 53 This
information rights provision is broad—all books, records, and information that
relate to the Fund. Indeed, at trial, Mr. Woodmansee understandably described
it as “probably the broadest information, books and records provision I’ve seen.” 54
But Section 7 only gives the Fund access to IGM’s books and records that
relate to the Fund. In light of IGM having operated almost exclusively as the
Fund’s management company, however, that information right gives the Fund
51 City Inv. Co. Liquid. Tr. v. Cont’l Cas. Co., 624 A.2d 1191, 1198 (Del.
1993). 52 Plaintiff also briefly asserts that under Cayman law the Fund’s books and
records are owned by the general partner of the Fund. See JX 97 (Mourant Letter). In other words, once the Corbin Entities and the Gatewood Entities removed Invictus GP as the Fund’s general partner the rights to the documents and records automatically passed to the replacement general partner—TREO GP. But rather than engage on the Cayman entity arguments, the parties instead focused their briefing and arguments on Section 7 of the Management Agreement. I therefore do the same. 53 JX 21 (Management Agreement) § 7.
54 Tr. 23:12-13 (Woodmansee). C.A. No. 2023-1099-NAC April 17, 2024 Page 12
access to almost everything in IGM’s custody. 55
Although Defendants have suggested that U.S. Bank has everything
Plaintiff needs, U.S. Bank is not the custodian of all the Fund’s books and records,
despite acting as the Fund’s administrator. During post-trial argument, Plaintiff,
further demonstrating its point, listed several examples of key documents not
maintained at U.S. Bank. 56
Rather than dispute the definition of “related” and its application to IGM’s
books and records, Defendants articulated the following eight categories of
documents they perceive to be outside of the scope of Section 7 in the February
55 As mentioned, Plaintiff often categorized the information it seeks in this
action into three categories: (1) information related to the Fund’s investments, (2) information related to the Fund’s potential liabilities, and (3) information related to causes of action that the Fund may pursue. In addition to general information deficiencies related to the first category, Plaintiff has identified several Fund liabilities and potential claims where the Fund has little to no visibility due to IGM’s failure to produce the relevant books and records. Post-Tr. 14:22-17:6. 56 Post-Tr. 12:21-13:17 (“All of the email correspondence related to the Fund;
copies of underlying invoices that were purportedly paid by IGM for which IGM sought reimbursement from the Fund; IGM’s receipts or other proof of payment with respect to reimbursed expenses, documentation of the $6.9 million that IGM received on account of Fund investments from Tuesday Morning; documentation regarding the allocation of the $25 million administrative expense claim in Tuesday Morning and how that claim was to be addressed among the three loan positions and between the Fund and Mr. Redleaf; agreements between IGM and the Groombridge law firm regarding IGM’s agreement to convey a share of UnumX from the Fund to Groombridge; the post-foreclosure direction and contribution agreement to which the Fund is a party; the post-foreclosure expense reimbursement agreement to which the Fund is a party; documents related to the Fund’s claims against the Polsinelli firm; and documents relating to the claims against Corbin that Ms. Chen Delano says the Fund has.”). C.A. No. 2023-1099-NAC April 17, 2024 Page 13
Letter:
1. All personal documents and communications involving Ms. Delano and Mr. Patel. 2. All non-Fund related documents and/communications involving either Ms. Chen Delano and Mr. Patel, such as documents related to investments outside of the Fund. 3. All financial documents and communications of IGM and not the Fund (financial statements, tax returns, business and marketing plans, bank statements, etc.). 4. All administrative documents and communications concerning IGM, and not the Fund (e.g., employment matters, leases, software licenses, etc.). 5. All privileged documents and communications with IGM’s counsel that provided legal advice to IGM about its duties and responsibilities as a fund manager that were not involved in or related to the business and affairs of the Fund or its Investments (i.e., Kirkland and Orrick). 6. All documents and communications (including, but not limited to privileged communications) concerning any IGM dispute or litigation not related to the Fund or its Investments. 7. All documents and communications concerning separately managed accounts (‘SMAs’) and sub-advisory relationships, which are separate arrangements from the Fund and its Investments. 8. All documents and communications that were created or occurred after IGM was removed as manager of the Fund, which, for the avoidance of doubt, includes any privileged communications about any litigation between the Fund and Defendant. 57
At post-trial argument, Plaintiff walked through each of the eight categories
and articulated what I find to be the proper application of Section 7 to Defendants’
eight asserted exceptions.
The first exception excludes “[a]ll personal documents and communications”
related to Delano and Patel’s personal lives outside of IGM. These emails are
properly excluded, as they do not relate to the Fund.
57 JX 230 (February Letter) at 3. C.A. No. 2023-1099-NAC April 17, 2024 Page 14
The second exemption excludes “non-Fund related documents
and/communications,” including “documents relating to investments outside the
Fund.” Such exclusion is appropriate to the extent that the documents and
communications are truly unrelated to the Fund. For the avoidance of doubt, this
exception does not include any research, communications, or any other documents
created on behalf of the Fund; those documents fall within the Fund’s information
rights under Section 7.
The third and fourth exemptions relate to financial and administrative
documents and communications. To the extent that these do not pertain in any
way to the Fund, Defendants do not need to produce these documents. 58 Yet
Defendants’ purported exemptions in the February Letter include items that are
almost certainly related to the Fund, such as IGM’s bank statements. Despite
Defendants’ attempt to portray IGM as a stand-alone company with little overlap
with the Fund, trial has shown that to be far from the truth. The vast majority of
IGM’s actions are related to the Fund, including IGM routinely receiving
payments on behalf of the Fund. 59
The fifth exemption relates to any legal advice IGM received while acting
as the Fund’s management company, including but not limited to advice received
58 For the avoidance of doubt, documents and communications that concern
actual or potential charges to the Fund must be produced. 59 See, e.g., Tr. 64:23-65:3 (Woodmansee). C.A. No. 2023-1099-NAC April 17, 2024 Page 15
from Kirkland & Ellis and Orrick, Herrington & Sutcliffe. Section 14.10 of the
Partnership Agreement provides that Invictus GP, “acting on behalf of the [Fund],
has initially selected Orrick, Herrington & Sutcliffe LLC (‘Partnership Counsel’)
as legal counsel to [Invictus GP] when acting on behalf of the [Fund].”60
Additionally, “Counsel to the Partnership may also be counsel to the General
Partner and its Affiliates.” 61
At trial, Delano asserted that under Section 14.10, the firms Kirkland &
Ellis and Orrick, Herrington & Sutcliffe were providing services to Invictus GP,
not the Fund. Even if I were to adopt Delano’s interpretation of the Partnership
Agreement, to the extent that IGM has the documents, such legal services are still
entirely within the scope of Section 7 of the Management Agreement since they
are all in the context of Invictus GP and IGM’s services to the Fund.
Defendants contend that Plaintiff must pay Defendants’ legal fees as a
condition precedent to receiving the documents related to the legal advice and
disputes. Defendants assert that, under the Partnership Agreement, the Fund is
responsible for paying “all Operational Expenses,” which include “all legal,
accounting, tax, consulting and professional services fees and expenses (including
tax preparation) relating to the Partnership and its activities . . . .” 62 Yet
60 JX 20 (Partnership Agreement) § 14.10.
61 Id.
62 Id. § 2.05 and Appendix A. C.A. No. 2023-1099-NAC April 17, 2024 Page 16
Defendants do not identify any legal or contractual basis for their assertion that
Plaintiff’s broad information right is conditioned on the prior payment of such
expenses. “[C]ourts may not by construction add or excise terms, nor distort the
meaning of those used and thereby make a new contract for the parties under the
guise of interpreting the writing.” 63 When pressed at post-trial, Defendants could
not point to anything in the Management Agreement that conditioned Plaintiff’s
Section 7 information rights on the payment of legal fees. 64 If anything,
Defendants may have an independent claim under Section 2.05 of the Partnership
Agreement or Section 5 of the Management Agreement for reimbursement. But
in no way does that allow Defendants to shirk their obligations under Section 7 of
the Management Agreement. 65
The sixth exception relates to IGM’s disputes “not related to the Fund or its
Investments.” Again, so long as the dispute is unrelated to the Fund or IGM’s
services to the Fund, IGM does not need to produce the documents related those
disputes. During post-trial argument, Plaintiff highlighted that it has no interest
in receiving, for example, documents relating to the litigation with the Corbin
63 Union Fire Ins. Co. of Pittsburgh, P.A. v. Pan Am. Energy, LLC, 2003 WL
1432419 at *4 (Del. Ch. Mar. 19, 2003). 64 Post-Tr. 37:1-3 (“Well, Your Honor, we concede that there is no express
condition in Section 7 of the management agreement.”). 65To the extent that Invictus GP or IGM believes it has a right to reimbursement under the Partnership Agreement or the Management Agreement, it may assert its claim in a separate action. C.A. No. 2023-1099-NAC April 17, 2024 Page 17
Entities and the Gatewood Entities.
The seventh and eighth exceptions concern documents and communications
related to IGM’s advisement roles outside of the Fund and after IGM was removed
as the Fund’s management company. But IGM’s advisement roles outside of the
Fund are limited. In fact, outside of the limited sub-advisory services it offered to
Corbin Entities, such sub-advisement roles are essentially nonexistent. 66 But to
the extent IGM provided services to identifiable clients outside of the Fund, IGM
may exclude such documents. And finally, Plaintiff does not contest IGM’s
position that it does not need to produce documents and communications that
IGM created after its removal.
This is not rocket science. If the information relates to the Fund, and almost
everything IGM did during its time as the Fund’s management company related
to the Fund, then IGM is obligated under Section 7 of the Management Agreement
to produce the records to the Fund. Defendants have taken aggressive stances in
this litigation as to what “relates” to the Fund. If it is not already clear, I find
Section 7 to be extremely broad, and I order production accordingly.
B. Late Arguments
Rather than engage with the scope of Plaintiff’s information right or raise
arguments as to the eight categories that Defendants identified in the February
66 Tr. 216:14-21 (Patel). C.A. No. 2023-1099-NAC April 17, 2024 Page 18
Letter, Defendants used their post-trial brief to assert that Counts I, IV, and VI
fail. But Defendants cannot now assert arguments they waived with the February
Letter.
In the February Letter, filed the day before trial, Defendants represented
that they “believe that the trial should focus on any categories of documents in
the eight categories above.” 67 Then, in a complete reversal of position, Defendants
assert after trial that specific performance, declaratory judgment, and injunctive
relief in general are not warranted and that this Court must dismiss all three of
Plaintiff’s claims in their entirety. 68 This is in stark contrast to Defendants’
representation that “Defendants’ decision to produce the documents outlined [in
the February Letter] significantly narrows the disputes concerning the remaining
categories of documents.” 69
Parties are encouraged to work together to narrow issues and allow for
courts to efficiently adjudicate only the matters that remain in dispute. But a
party may not narrow issues for trial, participate in a trial tailored to those
67 JX 230 (February Letter) at 4.
68 In addition to their volte-face, Defendants confusingly argue for dismissal
of Plaintiff’s declaratory judgment claim in their post-trial briefing, but propose that I grant judgment in Plaintiff’s favor on the claim in their proposed order. Compare Dkt. 119 at 32, 34, with Dkt. 119 at Exhibit A [hereinafter “Defendants’ Proposed Order”] ¶ 2 (“Judgment is entered in favor of the Fund only with respect to Count IV (declaratory judgment) of the Complaint.”). 69 JX 230 (February Letter) at 4. C.A. No. 2023-1099-NAC April 17, 2024 Page 19
narrowed issues, and then, in its post-trial brief, revert back to arguments that it
waived in its pre-trial concession.
Under Section 7, Defendants agreed to “promptly provide” information to
Plaintiff. Defendants’ attempt to assert their previously waived defenses
reinforces my concern that Defendants are taking positions to delay compliance
with their bargained-for contractual obligations.
In the early stages of litigation, Defendants represented to me that they
would promptly produce the bulk of the disputed documents. 70 But Defendants
failed to follow through. Then, just days before the originally scheduled trial,
Defendants removed this action to federal court, which the federal court in turn
quickly sent back. And then, on the eve of the rescheduled trial, Defendants filed
the February Letter, asserting that it “significantly narrows the disputes
concerning the remaining categories of documents.” Yet, following the February
Letter, Defendants have basically done nothing to prepare the uncontested
documents for production. 71 And now, in post-trial briefing and argument,
Defendants attempt to assert dismissal arguments they had already waived.
70 Dkt. 41 at 31:1-7 (“But I think it’s also important to consider that defendants have represented to me on multiple occasions, both during this hearing and during our prior hearing, that defendants are taking very active steps and will take very active steps to provide and facilitate access to nearly all of the information that the plaintiffs are requesting.”). 71 Id. at 41:12-43:21. C.A. No. 2023-1099-NAC April 17, 2024 Page 20
Defendants’ post-trial arguments are improper and consequently are
waived.
C. Production Procedure
In its proposed order, Plaintiff requests that Defendants turn over all books
and records within five business days. 72 Defendants, on the other hand, request
twenty-one business days to produce electronic documents and non-electronic
records and ninety days to produce emails. 73 I agree with Plaintiff—five business
days is an appropriate window for IGM to produce all books, records, and
information related to the Fund.
Defendants’ continued delay in producing the books and records is
concerning. Despite Defendants conceding Plaintiff’s right to additional books
and records in the February Letter, Defendants had not, as of post-trial argument,
produced a single document to Plaintiff since the February Letter. 74 And at post-
trial argument it became apparent that Defendants had done exceedingly little in
the over seven weeks since Defendants filed the February Letter to prepare to
72 See Dkt. 118 Exhibit A ¶ 2.
73 Defendants’ Proposed Order ¶ 3. I also note that Defendants’ proposed order uses “emails” instead of the term “communications” used in the February Letter. To the extent Defendants were attempting to avoid producing other electronic communications related to the Fund, such as Microsoft Teams chats and Bloomberg messages used at IGM to communicate information related to the Fund, I expressly order production of these communications. 74 Post-Tr. 8:1-5. C.A. No. 2023-1099-NAC April 17, 2024 Page 21
produce even the multitude of documents to which Defendants agreed Plaintiff
was entitled. 75 Consistent with my guidance at the conclusion of post-trial
argument, 76 I trust that Defendants have already done most of the heavy lifting
and indeed produced many of the subject books and records. But if Defendants
have instead continued to deny Plaintiff its information rights, much of the
burden is self-inflicted. 77
Moreover, the broad nature of Section 7 of the Management Agreement
alleviates much of the perceived burden Defendants assert they will incur if
expected to comply with their contractual obligation, an obligation they have
neglected for about six months.
Defendants argued they will need time to undertake a time-intensive
document-by-document review process, similar to what occurs in document
production in complex litigation. But the trial record demonstrates that nearly
all of IGM’s work was for the Fund and almost all of its documents are covered by
the Section 7 information access right. Rather than sifting through each of IGM’s
records one by one to decide what information Defendants should turn over to
Plaintiff, Defendants should start with the assumption that all of IGM’s records
75 Id. at 41:12-43:21.
76 Id. at 55:13-19.
77 Id. at 55:6-9 (“[D]efendants should not be surprised if my ruling sets a
very short window along the lines of what plaintiffs have asked for in terms of production . . . .”). C.A. No. 2023-1099-NAC April 17, 2024 Page 22
created or maintained from its appointment as the Fund’s management company
on August 25, 2020, until its removal on September 29, 2023, relate to the Fund.
Defendants should then target documents that fall into one of the permitted
exceptions. This process is especially appropriate, given that the parties expressly
bargained for Defendants to “promptly provide” the information to Plaintiff.
Plaintiff has requested that Defendants provide a log for withheld or
redacted documents. The parties bargained for a very broad contractual
information right. And Defendants have not argued why Plaintiff’s log request
would be inappropriate given the circumstances of this case, where Defendants
have repeatedly interfered with the bargained-for information right. Plaintiff’s
logging request in this instance is therefore appropriate and will be granted.
III. CONCLUSION
Having carefully considered all the evidence presented at trial, and for the
reasons set forth above, I am entering judgment for the Fund on Counts I, IV, and
VI by granting Plaintiff’s proposed form of order with modifications.
/s/ Nathan A. Cook Vice Chancellor Nathan A. Cook