COURT OF CHANCERY OF THE STATE OF DELAWARE KATHALEEN ST. JUDE MCCORMICK LEONARD L. WILLIAMS JUSTICE CENTER CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734
April 24, 2026
J. Clayton Athey, Esq. Itshak On Prickett, Jones & Elliott, P.A. Keren-Or On 1310 N. King Street 24 Haavoda St. Wilmington, Delaware 19801 Tel-Aviv, Israel 6382132
Re: Kevin Kulak v. Itshak (“Itzik”) On, et al., C.A. No. 2023-0011-KSJM
Dear Counsel, Mr. On, and Ms. On,
This decision addresses eight pending motions: Plaintiff’s Request to Strike
Defendants’ Answering Brief for Exceeding Word Count;1 Plaintiff’s Motion for
Partial Summary Judgment;2 Plaintiff’s First Motion for Sanctions;3 Plaintiff’s
Second Motion for Sanctions;4 Defendants’ Motion to Intervene filed on behalf of
Movado Stockholders;5 Defendants’ Submission Regarding Discovery in Aid of
1 C.A. No. 2023-0011-KSJM Docket (“Dkt.”) 143.
2 Dkt. 130.
3 Dkt. 55 (Pl.’s Motion for Sanctions).The court took this matter under advisement as the parties submitted additional evidence. See Dkts. 88, 89. 4 Dkt. 111.
5 Dkt. 140. C.A. No. 2023-0011-KSJM April 24, 2026 Page 2 of 35
Execution;6 Defendants’ Motion to Stay Summary Judgment;7 and Defendants’
Request for Leave to File Summary Judgment.8
I. FACTUAL BACKGROUND
Unless otherwise noted, the background is drawn from undisputed facts in the
pleadings and exhibits the parties submitted.9
A. Defendants Form Movado.
Siblings Itshak (“Itzik”) On and Keren-Or On founded Movado PT Technologies
Inc. (“Movado” or the “Company”) in July 2020. Movado is a Delaware corporation.10
Movado’s sole product was a mobile phone application that aimed to analyze a user’s
musculoskeletal conditions and provide an automated, tailored rehabilitation plan
using artificial intelligence and two- and three-dimensional analysis.11
Movado wholly owns two foreign subsidiaries: Movado PT Technologies Ltd.
(“Movado Israel”), which operated in Israel; and Sironaphysio Sociedad de
6 Dkt. 152.
7 Dkt. 147.
8 Dkt. 159.
9 This decision cites to the exhibits submitted with the briefing for summary judgment by “Ex.” number. Plaintiff submitted 80 exhibits; Defendants submitted 16 exhibits. Defendants’ deposition transcripts are cited using their first name and “Dep. Tr.” The decision also notes in citation form where a witness testified pursuant to the motions for sanctions. This decision refers to Itzik and Keren-Or by their first names to distinguish them. The court intends no familiarity or disrespect. 10 See Ex. 1 (Movado 2021 Annual Franchise Tax Report).
11 See Ex. 2 (“June 2020 Investor Presentation”). C.A. No. 2023-0011-KSJM April 24, 2026 Page 3 of 35
responsabilidad limitada de capital variable (“Movado Mexico”), which operated in
Mexico.12
Movado Israel handled all research and development, recruitment, and
salaries, and paid for all of Movado’s non-U.S. expenses.13 Movado and Movado Israel
held separate bank accounts at Bank Leumi.14 Movado Mexico was formed for the
sole purpose of signing an agreement with the Mexican Social Security Institute
(“IMSS”) due to restrictions imposed by the Mexican government concerning the
domicile of contracting counterparties.15
During the relevant period, Defendant Itzik16 served as Movado President and
board chairman.17 Itzik was mainly responsible for Movado’s fundraising efforts,
including outreach to potential and existing investors.18 Defendant Keren-Or On
(with Itzik, “Defendants”) served as Movado’s co-CEO.19 In that role, Keren-Or
engaged in investor outreach alongside her brother and was also responsible for
establishing Movado in the Mexican market.20 Non-parties Shachar Fleishman
12 Ex. 3 at 7; Ex. 4 (“Itzik On Dep. Tr.”) at 35:14–36:10.
13 See Itzik Dep. Tr. at 35:14–36:10; Ex. 5 (“Keren-Or Dep. Tr.”) at 30:4–32:5.
14 See Keren-Or Dep. Tr. at 19:18–20:7.
15 See id. at 241:25–242:13.
16 Itshak goes by Itzik, according to the caption.
17 See Ex. 1; Keren-Or Dep. Tr. at 75:16–20.
18 Keren-Or Dep. Tr. at 75:16–76:10.
19 Id. at 251:4–6.
20 See Ex. 6 (“Keren-Or Sanctions Tr.”) at 10:9–12:17. C.A. No. 2023-0011-KSJM April 24, 2026 Page 4 of 35
(CTO) and Doron Houminer (co-CEO), along with Defendant Keren-Or (co-CEO)
managed the Company.21
B. Defendants Solicit Plaintiff’s Investment.
Defendants first began speaking with Plaintiff Kevin Kulak about a potential
investment in Movado in mid-2020.22 Through the rest of 2020, Defendants sent
Plaintiff materials concerning Movado’s purported product, clientele, and fundraising
to induce him to invest and assist them with capital formation efforts.23
Plaintiff entered into two convertible loan agreements with Movado: (i) an
agreement dated September 20, 2020, in the amount of $100,000 (the “September
CLA”), and (ii) an agreement dated November 18, 2020, in the amount of $150,000
(the “November CLA” and, together with the September CLA, the “CLAs”).24
The September CLA provided that Kulak’s $100,000 loan would automatically
convert to shares of the Company upon the earlier of (i) the consummation of the
Company’s next financing round in an aggregate amount of $1.5 million or an
acquisition of the Company, or (ii) December 31, 2023.25 The November CLA provided
that Kulak’s $150,000 loan would automatically convert to shares of the Company
upon the earlier of (i) the consummation of the Company’s next financing round in an
21 Itzik Dep. Tr. at 22:10–22.
22 See Keren-Or Dep. Tr. at 82:11–15.
23 See, e.g., June 2020 Investor Presentation.
24 See Ex. 7 (“September CLA”); Ex. 8 (“November CLA”).
25 See September CLA at KULAK_0000118–19. C.A. No. 2023-0011-KSJM April 24, 2026 Page 5 of 35
aggregate amount of $2 million, or (ii) December 31, 2021.26 Although these events
occurred, Defendants never converted Kulak’s loans and never paid him back.27
In addition to the CLAs, on November 30, 2020, Movado issued 26,338 shares
to Kulak pursuant to a Joinder to the Founders Agreement.28 As of November 30,
2020, therefore, Kulak was a shareholder of Movado.
C. Defendants Make Allegedly False Representations.
According to Plaintiff, Defendants made several misrepresentations in
investor solicitation materials. The misrepresentations include descriptions of
Movado’s technical capabilities (for example, that it could perform 3D
musculoskeletal analysis), the scope of its contracts with major customers, and the
success of its fundraising efforts for the company.29
In June 2020, Keren-Or prepared an investor presentation, which Itzik
reviewed and sent to Plaintiff (the “June 2020 Investor Presentation”).30 The file
name contained “investor deck” and the cover page stated “Series A.”31 The June
26 See Ex. 8 at KULAK_0000301–02.
27 See Itzik Dep. Tr. at 152:24–153:11, 155:4–17.
28 See Ex. 9 (Joinder Agreement).
29 Dkt. 131 (“Pl.’s Opening Br.”) at 6–29.
30 Keren-Or Dep. Tr. at 89:15–18; Itzik Dep. Tr. at 183:6–184:3. At the time, the Ons used the name Sirona on marketing materials. See Keren-Or Dep. Tr. at 87:16–89:10. Later, they changed the name of their product to “Movado.” Id. at 89:3–6. 31 June 2020 Investor Presentation at KULAK_0000044–45. C.A. No. 2023-0011-KSJM April 24, 2026 Page 6 of 35
2020 Investor Presentation did not caveat any of the representations it made.32 But
it did contain several alleged misrepresentations:
• “[Movado] provides employers with an autonomous therapeutic platform.”33
• “Autonomous care via mobile-phone[:] Measures and analyzes key physical attributes of users and delivers personalized action plans.”34
• “Motion tracking technology[:] Visual sessions are analyzed in real-time to guide users through safe and effective training.”35
• “Using deep learning, human posture and motion video analysis.”36
• “[Movado] automatically maps an organization’s workforce and identifies the risk for musculoskeletal injuries, while providing tailored training plans for each type of worker, pathology, and potential risk factor”37
• “Computer vision and deep learning tech provides fully autonomous exercise coach.”38
• “The only 2D and 3D real-time, mobile solution for [musculoskeletal] conditions.”39
32 See generally June 2020 Investor Presentation; see also Keren-Or Dep. Tr. at 96:6–
20 (acknowledging that the presentation did not state the technology was a work in progress). 33 Id. at KULAK_0000048.
34 Id.
35 Id.
36 Id. at KULAK_0000049.
37 Id. at KULAK_0000050.
38 Id. at KULAK_0000058.
39 Id. C.A. No. 2023-0011-KSJM April 24, 2026 Page 7 of 35
• “The app is visually monitoring the user to keep track of repetitions, correct posture and motion.”40
• Movado “has signed its first [] customer to reinvent physical therapy and pain management for 18M Mexican employees.”41
Keren-Or admitted the inaccuracy of many of these statements during her
deposition. She described Movado’s autonomous therapeutic platform as only a
“vision.”42 And she admitted Movado did not have a working product at the time.43
She said, “not actually,” “very partially,” and “work in progress” when asked if
Movado could analyze key physical attributes and deliver personalized action plans.44
Similarly, she said, “the technology that we worked [] wasn’t a product, . . . we couldn’t
do it in a mobile phone”45 when asked about the slide presenting Movado as
“autonomous care via mobile-phone.”46
When Itzik was asked about the June 2020 Investor Presentation’s accuracy,
he explained that management provided all the information, and he was “not a
40 Id.
41 Id. at KULAK_0000053.
42 Keren-Or Dep. Tr. at 92:11–14.
43 Id. at 94:4–95:13, 99:7–9, 102:15–20, 111:4–18.
44 Id. at 95:3–10 (cleaned up).
45 Id. at 99:7–25.
46 June 2020 Investor Presentation at KULAK_0000048. C.A. No. 2023-0011-KSJM April 24, 2026 Page 8 of 35
technical person.”47 He then invoked the Fifth Amendment 18 times when asked
about whether the technology worked when he sent the presentation.48
In 2021 and 2022, investors started requesting information about the Company
from Defendants. Defendants refused to provide any of the requested information
and then shut down Movado in March 2022.
Plaintiff began investigating the representations that Defendants made to him
prior to his investments. Plaintiff came to believe that Movado’s application had none
of the technical capabilities Defendants represented to him. Plaintiff demanded
repayment on his loans.49 Plaintiff also demanded inspection under 8 Del. C. § 220.50
Defendants did not respond.
D. Plaintiff Files This Litigation.
Plaintiff filed his complaint asserting individual and derivative claims on
January 6, 2023:
• In Count I for fraudulent inducement, Plaintiff claims that Itzik and Keren-Or fraudulently misrepresented Movado’s technology, customers, and fundraising to induce him to loan Movado $250,000.
• In Count II, Plaintiff claims on behalf of Movado that Itzik and Keren- Or breached their fiduciary duties by misinforming Movado’s stockholders, engaging in self-dealing, and acting with a purpose other than the best interest of the Company.51
47 Itzik Dep. Tr. at 187:3–11.
48 Id. at 187:18–194:25.
49 Ex. 74 at 2.
50 Id.
51 Dkt. 1 ¶¶ 65–75. C.A. No. 2023-0011-KSJM April 24, 2026 Page 9 of 35
Under the initial scheduling order, the deadline for completion of fact discovery
was December 1, 2023, the deadline to seek leave to file summary judgment was
December 15, 2024, and trial was initially scheduled for June 2024.52 Defendants’
counsel withdrew on March 11, 2024.53
Plaintiff learned during discovery that Defendants had spoliated key evidence
and were withholding relevant documents. Examples of Defendants’ discovery
abuses include:
• The deletion of email accounts for all Movado employees except for Keren-Or;54
• Failure to preserve relevant communications on various devices despite the pending threat of litigation, including from Itzik’s Specta.ai email account,55 and Defendants’ numerous cellphones which were all described as either “lost” or “broken”;56
• Failure to preserve communications on Defendants’ WhatsApp accounts;57
• Unsupervised self-collection of documents in response to Plaintiff’s discovery requests;58
52 Dkt. 27.
53 Dkt. 54.
54 See Keren-Or Sanctions Tr. at 53:4–55:18.
55 See Ex. 78 (Defs.’ Supp. Discovery Disclosures) at 2–3.
56 Id. at 4–5.
57 See, e.g., Keren-Or Sanctions Tr. at 80:11–81:23, Ex. 79 (“Itzik Sanctions Tr.”) at
21:16–22:23, 26:3–6, 58:25–59:2, 65:2–13. 58 See Defs.’ Supp. Discovery Disclosures at 2–4. C.A. No. 2023-0011-KSJM April 24, 2026 Page 10 of 35
• Improper invocation of the Fifth Amendment over one hundred times during deposition testimony;59 and
• The wholesale refusal to turn over documents in their possession, custody, or control, that are relevant to the action, including Movado Israel’s bank account statements,60 documents reflecting fees paid to Movado Israel,61 Itzik’s credit card statements,62 Itzik’s reimbursement requests to Movado,63 and Itzik’s Google calendar, which details meetings with investors and potential investors in Movado.64
For over a year, Defendants resisted Plaintiff’s efforts to obtain basic discovery
materials, including: bank statements for both Movado and Movado Israel; emails
and other electronic communications relating to Movado; communications with
investors and potential investors; and documents relating to expenses incurred and
paid for by Movado.65
Defendants’ discovery misconduct forced Plaintiff to file two motions to
compel66 and two motions for sanctions,67 and to conduct court-ordered discovery-
59 See, e.g., Itzik Dep. Tr. at 77:13–15, 80:9–81:7, 81:16–82:6, 119:19–21, 173:8–14.
60 See, e.g., Keren-Or Dep. Tr. at 33:17–34:3, 34:24–35:15.
61 See, e.g., id. at 44:19–45:25.
62 See Itzik Dep. Tr. at 58:4–12, 66:16–24.
63 See, e.g., id. at 59:11–60:11, 107:19–108:20, 109:12–110:9.
64 See, e.g., id. at 139:13–19, 269:17–270:25; Keren-Or Dep. Tr. at 162:2–163:19.
65 See Dkt. 33, Exs. A–G; Dkt. 111, Exs. A–D.
66 Dkts. 33, 111.
67 Dkts. 55, 111. C.A. No. 2023-0011-KSJM April 24, 2026 Page 11 of 35
related depositions of Defendants (in addition to their respective merits
depositions).68
The court granted the first motion to compel in part, compelling Defendants to
cooperate in the production of redacted versions of their personal bank statements.69
Defendants have bogged down these proceedings with extensive motion
practice, filing two motions for sanctions,70 a motion to compel,71 a motion to limit
deposition,72 a motion for recusal,73 two motions for reargument,74 and two motions
for certification of interlocutory appeal.75 The court denied all these motions and
shifted fees in connection with Plaintiff’s opposition to Defendants’ second motion for
certification of interlocutory appeal (the “Sanctions Order”).76
In discovery, however, Plaintiff learned that Defendants reimbursed
themselves for thousands of what seem to be personal transactions (Uber, Amazon,
68 See Keren-Or Sanctions Tr., Itzik Sanctions Tr.
69 Dkt. 53 at 25–26.
70 Dkts. 59, 61.
71 Dkt. 65.
72 Dkt. 79.
73 Dkt. 105.
74 Dkt. 95, Ex. 1; Dkt. 117.
75 Dkts. 98, 126.
76 Dkts. 89, 103, 109, 122, 128, 139. C.A. No. 2023-0011-KSJM April 24, 2026 Page 12 of 35
etc.).77 He also uncovered about $740,000 worth of reimbursements paid to Movado
Israel, which he views as suspicious.78
Plaintiff moved for partial summary judgment on March 5, 2025.79 The other
pending motions are: Plaintiff’s Request to Strike Defendants’ Answering Brief for
Exceeding Word Count;80 Plaintiff’s First Motion for Sanctions;81 Plaintiff’s Second
Motion for Sanctions;82 Defendants’ Motion to Intervene filed on behalf of Movado
Stockholders;83 Defendants’ Submission Regarding Discovery in Aid of Execution;84
Defendants’ Motion to Stay Summary Judgment;85 and Defendants’ Request for
Leave to File Summary Judgment.86 The court held an omnibus hearing on January
5, 2026.87
77 See Keren-Or Dep. Tr. at 50:19–54:20; see also Itzik Dep. Tr. at 67:6–7 (“I didn’t
take a salary. I took reimbursement.”). 78 Ex. 76 at DFDTS027444, 49, 50; Ex. 77 at 2, 9, 14, 21, 28, 42, 43, 54, 58, 70, 71, 95,
98, 106. 79 Dkt. 130.
80 Dkt. 143.
81 Dkt. 55.
82 Dkt. 111.
83 Dkt. 140.
84 Dkt. 152.
85 Dkt. 147.
86 Dkt. 159.
87 Dkt. 158. C.A. No. 2023-0011-KSJM April 24, 2026 Page 13 of 35
II. PLAINTIFF’S MOTIONS
A. Plaintiff’s Motion To Strike
On April 3, 2025, Defendants filed an “Opposition to Plaintiff’s Motion
Governing Briefing on Plaintiff’s Motion for Partial Summary Judgment” (the
“Opposition Brief”),88 which contained an accurate certification under Court of
Chancery Rule 10(d).
Under Rule 7(c)(3), Defendants’ opposition brief may not exceed 14,000
words.89 On page 101 of the Opposition Brief, following the signatures of both
Defendants, the brief states, “Words: 13,895 of 14,000.”90 The Microsoft Word version
of the Opposition Brief, however, reveals that Defendants’ brief contains 18,268
words, or 4,373 words more than the total set forth in Defendants’ certification.
In response, on April 7, 2025, Defendants told the court that they had omitted
footnotes from the Word count.91 Defendants resubmitted an edited version of their
brief, representing that it contained 13,905 words.92 By the court’s count, however,
the revised brief contains 14,255 (omitting tables, cover page, and signature block).
88 Dkt. 141 (“Defs.’ Opposition Br.”).
89 Ct. Ch. R. 7(c)(3).
90 Defs.’ Opposition Br. at 94.
91 See Dkt. 145.
92 Dkt. 144 at 82. C.A. No. 2023-0011-KSJM April 24, 2026 Page 14 of 35
Despite the multiple misrepresentations, the court has considered Defendants’
Opposition Brief when resolving the motion. For that reason, the motion to strike is
denied.
B. Plaintiff’s Motion For Summary Judgment
Plaintiff has moved for summary judgment on Plaintiff’s claims for fraudulent
inducement and breach of fiduciary duty.
“Summary judgment serves to ‘avoid a useless trial’ and ‘should, when possible,
be encouraged for it should result in a prompt, expeditious and economical ending of
lawsuits.’”93 Under Court of Chancery Rule 56, summary judgment is appropriate
when “there is no genuine issue as to any material fact and . . . the moving party is
entitled to a judgment as a matter of law.”94 “A party is entitled to judgment as a
matter of law ‘where there are no material factual disputes.’”95
“If, however, there are material factual disputes, that is, if the parties are in
disagreement concerning the factual predicate for the legal principles they advance,
summary judgment is not warranted.”96 “[T]he court must view the evidence in the
93 In re Coral Gables Luxury Hldgs., 2025 WL 1356027, at *4 (Del. Ch. May 9, 2025)
(first quoting McKesson Corp. v. Derdiger, 793 A.2d 385, 388–89 (Del. Ch. 2002) and then quoting Davis v. Univ. of Del., 240 A.2d 583, 584 (Del. 1968)). 94 Ct. Ch. R. 56(c).
95Coral Gables, 2025 WL 1356027, at *4 (quoting Merrill v. Crothall-American, Inc., 606 A.2d 96, 99 (Del. 1992)). 96 Merrill, 606 A.2d at 99. C.A. No. 2023-0011-KSJM April 24, 2026 Page 15 of 35
light most favorable to the non-moving party.”97 “But once the moving party puts
facts into the record, which, if undenied, entitle it to summary judgment, the burden
shifts to the opposing party to present some evidence to show the existence of a
material factual dispute.”98
“[T]he court must accept as true the uncontested facts set forth in the record”
if the nonmovant fails to do so.99 “So long as the uncontested facts ‘provide a legal
basis for summary judgment,’ the court will grant the movant’s motion.”100
1. Fraudulent Inducement
Plaintiff argues that Defendants made false representations regarding
Movado’s technology, customer relationships, and fundraising to induce Plaintiff to
invest. Plaintiff then loaned $250,000 to Defendants in reliance on those
representations. According to Plaintiff, these actions amount to fraudulent
inducement.
“Under Delaware law, the elements of fraudulent inducement and fraud are
the same.”101 The five elements are:
97 Id.
98 Jernigan Cap. Operating Co. v. Storage P’rs of KOP, LLC, 2020 WL 7861334, at *5
(Del. Ch. Dec. 31, 2020) (quoting Union Oil Co. of Cal. v. Mobil Pipeline Co., 2006 WL 3770834, at *9 (Del. Ch. Dec. 15, 2006)). 99 Id. (citing Cooke v. Oolie, 1997 WL 367034, at *7 (Del. Ch. June 23, 1997)).
100 Id. (quoting Cooke, 1997 WL 367034, at *7).
101 In re SwervePay Acq., LLC, 2022 WL 3701723, at *6 (Del. Ch. Aug. 26, 2022)
(quoting Great Hill Equity P’rs, LP v. SIG Growth Equity Fund I, LLLP, 2018 WL 6311829, at *31 (Del. Ch. Dec. 3, 2018)). C.A. No. 2023-0011-KSJM April 24, 2026 Page 16 of 35
1) a false representation, usually one of fact, made by the defendant;
2) the defendant’s knowledge or belief that the representation was false, or was made with reckless indifference to the truth;
3) an intent to induce the plaintiff to act or to refrain from acting;
4) the plaintiff’s action or inaction taken in justifiable reliance upon the representation; and
5) damage to the plaintiff as a result of such reliance.102
The June 2020 Investor Presentation misrepresented Movado’s technology as
of June 2020. It stated, “[Movado] provides employers with an autonomous
therapeutic platform.”103 Movado’s “[c]omputer vision and deep learning tech
provides fully autonomous exercise coach.”104 And “[t]he app is visually monitoring
the user to keep track of repetitions, correct posture and motion.”105 In reality,
Movado did not have any of those capabilities because it did not even have a working
product at the time.106 It was only a “vision.”107 Itzik did not dispute any of this
evidence.108 The first element is met.
102 Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del. 1983).
103 June 2020 Investor Presentation at KULAK_0000048.
104 Id. at KULAK_0000058.
105 Id.
106 Keren-Or Dep. Tr. at 94:4–95:13, 99:7–9, 102:15–20, 111:4–18.
107 Id. at 92:11–14.
108 Itzik Dep. Tr. 187:18–194:25 (invoking the Fifth Amendment 18 times when asked
about the contents of the June 2020 Investor Presentation). C.A. No. 2023-0011-KSJM April 24, 2026 Page 17 of 35
Keren-Or knew the June 2020 Investor Presentation contained false
representations at the time. In her deposition, she admitted that the product did not
work as of June 2020.109 The second element is met for Keren-Or.
At a minimum, Itzik displayed a reckless disregard for truth.110 “By statute,
Delaware has defined recklessness as a situation where ‘the person is aware of and
consciously disregards a substantial and unjustifiable risk that the element exists or
will result from the conduct.’”111 The risk “must be of such a nature and degree that
disregard thereof constitutes a gross deviation from the standard of conduct that a
reasonable person would observe in the situation.”112 Itzik exhibited a gross
deviation. Itzik reviewed the June 2020 Investor Presentation.113 And he served as
Movado’s President and board chairman.114 Under the circumstances, a reasonable
person would at least know whether the technology worked before soliciting investors
for millions of dollars. Itzik’s excuse that he was “not a technical person” 115 does not
excuse his reckless disregard of Movado’s actual technological capabilities at the time.
The second element is met for Itzik.
109 Keren-Or Dep. Tr. at 94:4–95:13, 99:7–9, 102:15–20, 111:4–18.
110 See Stephenson, 462 A.2d at 1074.
111 PJT Hldgs., LLC v. Costanzo, 339 A.3d 1231, 1249 (Del. Ch. 2025), aff’d, 2026 WL
958201 (Del. Apr. 9, 2026) (quoting 11 Del. C. § 231(e)). 112 Id.
113 Itzik Dep. Tr. at 186:18–21.
114 See Ex. 1; Keren-Or Dep. Tr. at 75:16–20.
115 Itzik Dep. Tr. at 187:3–11. C.A. No. 2023-0011-KSJM April 24, 2026 Page 18 of 35
The third element is also met. The file name of the June 2020 Investor
Presentation contained “investor deck” and the cover page stated “Series A.”116
Keren-Or created the investor deck to solicit Plaintiff and Itzik sent the presentation
hoping it would convince Plaintiff to invest in Movado.
As for the fourth element, a plaintiff must present facts showing that he acted
based on a material misrepresentation.117 Plaintiff has met this burden. Plaintiff
proved that he justifiably relied on the false representations in the June 2020
Investor Presentation. Plaintiff submitted an affidavit attesting to his reliance on
the technology representations made in the June 2020 Investor Presentation when
making his $250,000 investment.118 The misrepresentations were material because
they addressed the fundamental capabilities of Movado’s only product, an
autonomous therapeutic platform on users’ mobile devices.
Further, the June 2020 Investor Presentation’s other statements justify
Plaintiff’s reliance. The presentation claimed Movado signed a customer that services
18 million potential users.119 And it stated, Movado is “the only 2D and 3D real-time,
mobile solution for musculoskeletal conditions.”120 Together, those statements
bolster the June 2020 Investor Presentation’s claims about Movado’s technology.
116 June 2020 Investor Presentation at KULAK_0000044, KULAK_0000045.
117 See Stephenson, 462 A.2d at 1074.
118 Dkt. 131 (Aff. of Kevin Kulak) ¶¶ 3–13.
119 June 2020 Investor Presentation at KULAK_0000053.
120 Id. at KULAK_0000058. C.A. No. 2023-0011-KSJM April 24, 2026 Page 19 of 35
Plaintiff justifiably believed Movado had genuine technology because it signed a large
customer. Similarly, from Plaintiff’s perspective, Movado must have had genuine
technology if it was the “only” company with a real-time mobile solution for
musculoskeletal conditions.
Defendants have not introduced any evidence disputing Plaintiff’s reliance.
Instead, Defendants argue that Plaintiff identifies only “speculation, hindsight, and
forward-looking statements” and concludes that there is no “misstatement of fact.”121
But the 2020 Investor Presentation did not make forward-looking statements. It used
the present tense when describing Movado’s capabilities.122 Nor did the 2020 Investor
Presentation disclaim any of the representations.123 It did not classify statements as
forward-looking or hedge the technology as a work-in-progress. Ultimately,
Defendants’ arguments do not qualify as facts sufficient to avoid summary
judgment.124
121 Dkt. 144 (“Defs.’ Answering Br.”) at 71–72.
122See, e.g., June 2020 Investor Presentation at KULAK_0000050 (stating that Movado “automatically maps an organization’s workforce and identifies the risk for musculoskeletal injuries, while providing tailored training plans for each type of worker, pathology and potential risk factor”); KULAK_0000058 (“The app is visually monitoring the user to keep track of repetitions, correct posture and motion.”). 123See June 2020 Investor Presentation; see also Keren-Or Dep. Tr. at 96:6–20 (acknowledging that the presentation did not state the technology was a work in progress). 124 See Comet Sys., Inc. S’holders’ Agent v. MIVA, Inc., 980 A.2d 1024, 1032 (Del. Ch.
2008) (explaining that “[m]ere allegations or denials are not sufficient to avoid summary judgment”). C.A. No. 2023-0011-KSJM April 24, 2026 Page 20 of 35
Defendants also argue that Plaintiff’s claims “collapse under Plaintiff’s own
conduct” because he “conducted a six-month diligence process in 2022[.]”125 But this
argument fails for timing reasons. Plaintiff executed the CLAs in reliance on the
2020 Investor Presentation in the fall of 2020, before the diligence process.126
Plaintiff did not have notice that Movado’s technology was only a “vision” without a
product.
Finally, the fifth element of fraudulent inducement is met. Plaintiff incurred
damages from his reliance. To date, he has not recouped the $250,000 he lent to
Defendants.127 Plaintiff’s motion for summary judgment is thus granted as to the
fraudulent inducement claim.
2. Breach Of Fiduciary Duties
Plaintiff claims that Defendants breached their fiduciary duties by lying to
stockholders and failing to account for certain expenses. Defendants dispute the
merits of Plaintiff’s claim. Defendants also argue under Rule 23.1 that Plaintiff failed
to adequately allege demand futility and is inadequate to serve as a representative
plaintiff. Defendants further contend that Movado’s stockholders ratified the
challenged conduct.
125 Defs.’ Answering Br. at 25.
126 See September CLA; November CLA.
127 See Itzik Dep. Tr. at 152:24–153:11, 155:4–17. C.A. No. 2023-0011-KSJM April 24, 2026 Page 21 of 35
a. Demand Futility
Defendants’ demand futility argument is untimely. Rule 23.1 arguments must
be preserved at the pleading stage.128 Defendants were represented by counsel at the
pleading stage. And Defendants chose not to raise Rule 23.1 as a basis for dismissal.
Defendants’ demand futility argument also fails on the merits. Rule 23.1
requires that a stockholder either make a pre-suit demand on the board or show that
demand is futile because the directors could not impartially consider it. 129 Directors
are partial if they receive a material personal benefit, face a substantial likelihood of
liability, or lack independence from someone who received a benefit or faces
liability.130 Defendants do not dispute that demand on Movado’s board would have
been futile because Itzik is the sole director and faces a substantial likelihood of
liability from this suit.
Defendants seem to argue that a plaintiff cannot plead demand futility as to
an inactive company. But Defendants cite no law for that proposition. Although
Movado is not actively operating, it has not been dissolved and still exists. Delaware
law requires that even dissolved corporations continue for a term of at least three
years for, among other things, “prosecuting and defending suits.”131
128 United Food & Commercial Workers Union & Participating Food Indus. Employers
Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034, 1048 (Del. 2021). 129 Id. at 1047.
130 Id. at 1058.
131 8 Del. C. § 278. C.A. No. 2023-0011-KSJM April 24, 2026 Page 22 of 35
b. Adequacy
Defendants have not shown that Plaintiff is inadequate. Rule 23.1 requires
that a derivative plaintiff “fairly and adequately” represent the company’s
interests.132 To show inadequacy, a defendant must demonstrate “a substantial
likelihood that the derivative action is not being maintained for the benefit of the
shareholders.”133
Defendants argue that Plaintiff is not maintaining this action for the benefit
of Movado stockholders due to a conflict of interest. Plaintiff is “a co-founder and
equity holder of Fizio, a direct competitor to Movado.”134 But Movado is no longer
operational; it does not have competitors. And Defendants themselves claim that
Fizio was not incorporated until July 2022, over four months after Itzik announced
that Movado was ceasing operations.135
The two cases cited by Defendants do not support their argument. In Davis v.
Comed, Inc.,136 a derivative plaintiff brought a suit to unwind a sale of real estate by
the company to a third party; it was later revealed, however, that “[plaintiff] and his
cohorts were interested in acquiring the hospital property for themselves if possible
132 Ct. Ch. R. 23.1 (c)(1)(A)(ii); Griffith v. Stein ex rel. Goldman Sachs Gp., Inc., 283
A.3d 1124, 1138 (Del. 2022). 133 South v. Baker, 62 A.3d 1, 22 (Del. Ch. 2012) (collecting cases).
134 See Defs.’ Answering Br. at 16–17, 53–54.
135See Ex. 70 (March 7, 2022 e-mail from Itzik to Plaintiff and others); Defs.’ Answering Br., Ex. 12. 136 619 F.2d 588 (6th Cir. 1980). C.A. No. 2023-0011-KSJM April 24, 2026 Page 23 of 35
at a foreclosure sale or by other means and they had plans for developing the property
for their own benefit.”137 That was a clear conflict of interest. Defendants cite no
similar fact here. And in Youngman v. Tahmoush,138 the court denied a motion to
dismiss although the plaintiff owned equity in a corporation that had engaged in a
pre-suit takeover attempt of the nominal defendant.139 That did not happen here.
Defendants offer no other reason why this suit is not in the best interests of
Movado’s other shareholders. Plaintiff alleges that Defendants breached their
fiduciary duties in ways that harmed the company writ large. Likely, Plaintiff has
spent hundreds of thousands of dollars on attorneys’ fees pursuing these claims for
the company. And Defendants have provided no proof that Plaintiff will receive any
benefit from his derivative claim that is different from what the other stockholders
will receive.140
137 Id. at 592.
138 457 A.2d 376 (Del. Ch. 1983).
139 Id. at 381–92.
140 See Emerald P’rs v. Berlin, 564 A.2d 670, 676 (Del. Ch. 1989) (denying motion to
dismiss where defendants failed to show “no meaningful evidence indicating that [plaintiff’s] business interests would be harmed if it properly carries on this litigation on behalf of the class or that [plaintiff] could receive any benefit at the expense of the class.”); see also Tahmoush, 457 A.2d at 380 (“purely hypothetical, potential or remote conflicts of interests never disable the individual plaintiff”). C.A. No. 2023-0011-KSJM April 24, 2026 Page 24 of 35
c. Ratification
Defendants argue that Movado’s stockholders, in August 2024, ratified all their
actions from July 6, 2020 to January 6, 2023,141 thereby cleansing any misconduct.
Defendants rely on Corwin for this argument.142 This argument has several
problems. For one, the alleged stockholder action on which Defendants rely was
taken by Movado’s “Convertible Loan Holders,” not Movado stockholders. Equally
problematic, ratification is only effective where it identifies the specific decisions by
the corporate fiduciaries that are being ratified.143 Defendants have produced no
evidence showing what the conduct or decisions the ratification approved.
Defendants have failed to demonstrate that the purported ratification precludes
Plaintiff from asserting its claims.144
d. Merits
Under Delaware law, a claim for breach of fiduciary duty “has only two formal
elements: (i) the existence of a fiduciary duty and (ii) a breach of that duty.”145
141 Defs.’ Answering Br. at 60–62.
142 Corwin v. KKR Financial Hldgs. LLC, 125 A.3d 304 (Del. 2015).
143 Calma ex rel. Citrix Sys., Inc. v. Templeton, 114 A.3d 563, 586 (Del. Ch. 2015); see
also Gantler v. Stephens, 965 A.2d 695, 713 (Del. 2009) (explaining that “the only director action or conduct that can be ratified is that which the shareholders are specifically asked to approve.”). 144 Even if the ratification was effective, it would only bar Plaintiff’s derivative fiduciary duty claim. It would have no effect on Plaintiff’s ability to bring his direct fraud claim. 145 HOMF II Inv. Corp. v. Altenberg, 2020 WL 2529806, at *43 (Del. Ch. May 19,
2020), aff’d, 263 A.3d 1013 (Del. 2021). C.A. No. 2023-0011-KSJM April 24, 2026 Page 25 of 35
Fiduciaries breach their duty of loyalty when they deliberately spread
misinformation about the nature of the business146 and misappropriate assets
entrusted to management and their supervision.147 To bring a derivative suit based
on breach of fiduciary duty, a plaintiff must own stock (1) when the alleged wrong
occurred, (2) when the complaint is filed, and (3) throughout the litigation.148
On November 30, 2020, Movado issued 26,338 shares to Plaintiff. 149
Defendants thus owed Plaintiff fiduciary duties as of that date. The issue then is
whether Defendants breached those duties after November 30, 2020.
Unlike the fraudulent inducement claim, the facts here do not lend themselves
to summary judgment. The record is murkier after Plaintiff became a stockholder.
Plaintiff argues that Defendants breached their duty of loyalty by failing to keep
financial records and improperly diverting funds to themselves.150 The evidence on
which Plaintiff relies, however, is quite thin—financial records reflecting aggregate
amounts.151 The record is factually rife with respect to Plaintiff’s other fiduciary duty
146 See Malone v. Brincat, 722 A.2d 5, 10, 14 (Del. 1998); see also In re Nine Sys. Corp.
S’holders Litig., 2013 WL 771897, at *9 (Del. Ch. Feb. 28, 2013) (“When directors are not seeking shareholder action, a breach of their fiduciary duty may occur if they ‘knowingly disseminate false information’ or deliberately misinform shareholders.” (quoting Malone, 722 A.2d at 9)). 147 Dweck v. Nasser, 2012 WL 161590, at *12 (Del. Ch. Jan. 18, 2012).
148 See Lewis v. Anderson, 477 A.2d 1040, 1046 (Del. 1984).
149 See Joinder Agreement.
150 Pl.’s Opening Br. at 53.
151 See, e.g., Exs. 76, 77. C.A. No. 2023-0011-KSJM April 24, 2026 Page 26 of 35
theory, which argues that Defendants breached their duty of loyalty when they
misrepresented Movado’s technology, customers, and fundraising.152
Plaintiff’s motion for summary judgment on the claim for breach of fiduciary
duty is denied.
C. Plaintiff’s First And Second Motions For Sanctions
On March 25, 2024, Plaintiff moved to compel production and for sanctions (the
“First Motion for Sanctions”).153 Plaintiff argued that Defendants spoliated evidence
and sought an adverse inference on that basis.154 On May 17, I heard argument and
took the matter under advisement to allow the trial record and arguments to inform
a resolution.155
On October 3, 2024, Plaintiff moved again to compel and for sanctions (the
“Second Motion for Sanctions”) on two grounds.156 First, Itzik invoked the Fifth
Amendment during his deposition to obstruct questioning. Itzik invoked the Fifth
Amendment during his deposition over one hundred times.157 He invoked the Fifth
152 Pl.’s Opening Br. at 51–53. Plaintiff makes several other misrepresentation arguments. But they occurred prior to him becoming a Movado stockholder. For instance, he argues that Defendants falsely described Movado’s technology as “patent pending.” See, e.g., Ex. 16 at DFDTS003265. That representation, however, occurred on September 24, 2020, prior to Plaintiff’s investment in November. Id. 153 Dkt. 55.
154 Id. ¶ 5.
155 Dkt. 88 at 20–21.
156 Dkt. 111.
157 See, e.g., Itzik Dep. Tr. at 77:13–15, 80:9–81:7, 81:16–82:6, 119:19–21, 173:8–14. C.A. No. 2023-0011-KSJM April 24, 2026 Page 27 of 35
Amendment in response to innocuous questions like: “What was Movado’s business,”
“when was Movado established,” and “did you receive a salary from Movado”?158 He
did so although there is no evidence that Itzik faces any criminal liability based on
the facts alleged. Itzik’s Fifth Amendment invocations were undoubtedly improper.
Second, Itzik admitted at his deposition that he was purposefully withholding
evidence.159 He testified that he was withholding evidence until a time when he sees
fit to disclose it.160 It is unclear whether he has produced the documents or not.
Plaintiff renewed his requests from the First Motion for Sanctions. He also
requested adverse inferences based on his improper invocation of the Fifth
Amendment.
The Fifth Amendment states that no person “shall be compelled in any
criminal case to be a witness against himself.”161 The Fifth Amendment protects
against self-incrimination,162 and it can be raised in civil actions for that purpose.163
158 Itzik Dep. Tr. at 36:24–27:2, 48:22–24, 51:14–16.
159 See Itzik Dep. Tr. at 107:19–108:3 (“[O]nce we need to go to court to prove the costs
that I spen[t] on Movado . . . we will be there.”). 160 See id. at 108:4–109:6 (“Q. But at some point, you will provide me with the costs?
A. Yes. Q. Okay. When will that be? A. It depends on your court. Q. Do you understand that you have an obligation to turn relevant documents over? A. Yes.”). 161 U.S. Const. amend. V.
Ohio Adult Parole Auth. v. Woodard, 523 U.S. 272, 286 (1998) (“The Fifth 162
Amendment protects against compelled self-incrimination.”). 163McCarthy v. Arndstein, 266 U.S. 34, 40 (1924) (explaining that the privilege against self-incrimination “applies alike to civil and criminal proceedings”). C.A. No. 2023-0011-KSJM April 24, 2026 Page 28 of 35
Delaware Rule of Evidence 512(a) prohibits drawing an adverse inference against a
party that invokes the Fifth Amendment in a civil action.164
But neither the rule nor case law interpreting it prohibit a court from drawing
an adverse inference where the invocation was improper. Courts in Delaware can
sanction deponents who improperly invoke the Fifth Amendment at deposition,
including through burden-shifting.165 And Delaware courts have suggested that
“reliance on the Fifth Amendment in civil cases may give rise to an adverse inference
against the party claiming its benefits.”166
Still, the relief of adverse inferences is a “serious discovery sanction.” 167
Generally, this court will not issue adverse inferences absent some culpable state of
164 See A. Schulman, Inc. v. Citadel Plastics Hldgs., LLC, 2018 WL 1812575, at *3–4
(Del. Ch. Apr. 15, 2018); W.L. Gore & Assocs. v. Long, 2011 WL 6935278, at *4 & n.31 (Del. Ch. Dec. 28, 2011). 165 See Mellado v. ACPDO Parent Inc., 2023 WL 8086840, at *10 n.81 (Del. Ch. Nov.
21, 2023) (“The Court has broad discretion to fashion an appropriate remedy, whether it looks to authorities addressing discovery abuse or, by analogy, a witness’s refusal to answer questions based on the Constitutional Fifth Amendment right against self- incrimination.”). 166 State v. Da Zhong Wang, 2018 WL 2202274, at *4 (Del. Super. Ct. May 11, 2018)
(quoting SEC v. Graystone Nash, Inc., 25 F.3d 187, 190 (3d Cir. 1994)); see also Hecksher v. Fairwinds Baptist Church, Inc., 115 A.3d 1187, 1194 n.8 (Del. 2015) (citing the “prevailing rule that the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them: the Amendment does not preclude the inference where the privilege is claimed by a party to a Civil cause” (quoting Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)); cf. Del. R. Evid. 512(a). 167 Terramar Retail Centers, LLC v. Marion #2-Seaport Tr. U/A/D June 21, 2002,
2018 WL 6331622, at *11 (Del. Ch. Dec. 4, 2018) (quoting James v. Nat’l Fin. LLC, 2014 WL 6845560, at *9 (Del. Ch. Dec. 5, 2014)). C.A. No. 2023-0011-KSJM April 24, 2026 Page 29 of 35
mind.168 And this court will limit inferences to no more than what is necessary to
cure the prejudice to the moving party.169 Although Itzik’s conduct might warrant
adverse inferences, it is difficult at this stage to discern the degree to which Plaintiff
was prejudiced. It is thus difficult to fashion a sanction tailored to the harm. I will
therefore hold the motion for adverse inference in abeyance pending development of
a fuller record.
III. DEFENDANTS’ MOTIONS
A. Defendants’ Motion To Intervene
Defendants moved to intervene on behalf of Movado investors who seek to
pursue the stockholder ratification argument. The motion is denied for many
reasons. First, it is unclear whether any of the proposed intervenors are stockholders
with standing to pursue a derivative claim.170 Second, Plaintiff has proven an
adequate representative capable of prosecuting the claims at issue.171 Third, Plaintiff
168 See Ct. Ch. R. 37(e) (noting that if a party fails to take reasonable measures to
preserve ESI, the court “may order measures no greater than necessary to cure the prejudice” unless first entering a “finding that the party acted recklessly or with the intent to deprive another party of the information’s use in the litigation”); see also Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 550 (Del. 2006) (adverse inferences “require a preliminary finding of intentional or reckless destruction of evidence”). 169 Ct. Ch. R. 37(e).
170 See Ct. Ch. R. 24(a)(2) (“On timely motion, the Court must permit anyone to
intervene who . . . claims an interest relating to the property or transaction that is the subject of the action[.]”). 171 South St. Corp. Recovery Fund I v. Salovaara, 1999 WL 504778, at *4 (Del. Ch.
July 9, 1999) (denying a motion to intervene where intervenors’ claims were already properly pursued by another party). C.A. No. 2023-0011-KSJM April 24, 2026 Page 30 of 35
would be severely prejudiced by allowing intervenors to hijack a case he has been
prosecuting at his own expense for many years.172
B. Defendants’ Motion For Relief From Discovery In Aid Of Execution
Plaintiff served discovery in aid of him executing the court’s Sanctions
Order.173 Plaintiff served discovery because Defendants have not satisfied the fee
award granted in the Sanctions Order. In response, Defendants served an
“Opposition” to the discovery, which I will treat as a motion for a protective order. 174
Under Delaware law, discovery in aid of execution of a judgment is appropriate where
a judgment remains unsatisfied.175 It is unclear whether Defendants have now paid
the fee award. If they have, then Plaintiff agreed to withdraw the discovery.176 If
not, then Defendants must respond within ten business days of this decision.
172 See Great Am. Leasing Corp. v. Republic Bank, 2003 WL 22389464, at *1 (Del. Ch.
Oct. 3, 2003) (explaining that a trial court may deny a motion to intervene depending on “the inexcusableness of the delay and the prejudice to the existing parties”). 173 See Dkt. 151.
174 Dkt. 152.
175 See Ct. Ch. R. 69(b) (authorizing proceedings in aid of execution which includes
discovery); see also Glick v. KF Pecksland LLC, C.A. No. 12624-CB, at 3 (Del. Ch. June 6, 2018) (ORDER) (ordering defendant to respond to interrogatories and document requests in aid of execution). 176 Dkt. 153 at 4. C.A. No. 2023-0011-KSJM April 24, 2026 Page 31 of 35
C. Defendants’ Motion To Stay
Defendants moved to stay discovery based on their Rule 23.1 argument, the
ratification argument, and the motion to intervene, all of which this decision
rejected.177 The motion to stay is denied.
D. Defendants’ Request For Leave To Move For Summary Judgment
Defendants moved for leave to seek summary judgment on February 5, 2026.178
They argue that multiple issues are appropriate for summary judgment—that
Plaintiff lacks standing and is not a suitable representative of Movado’s stockholders;
that Movado’s stockholders have ratified Defendants’ alleged conduct; and that
Plaintiff lacks evidence supporting his fraud claim. Defendants are denied leave for
three reasons.
First, the motion is untimely. Defendants filed their motion more than a year
after the December 15, 2024 deadline. The court entered a stipulated scheduling
order on July 24, 2023.179 Under the scheduling order, the parties’ deadline to seek
leave to move for summary judgment was December 15, 2024.180 According to
Plaintiff, the parties subsequently agreed to move that deadline to August 6, 2024.181
177 Dkt. 147.
178 Dkt. 159.
179 Dkt. 27.
180 Id. ¶ 6.
181 Dkt. 160 at 2. C.A. No. 2023-0011-KSJM April 24, 2026 Page 32 of 35
Only Plaintiff moved for leave to seek summary judgment before either deadline.
Defendants opposed Plaintiff’s motion, which the court granted.182
It is true that the parties originally scheduled a four-day trial for June 4
through 6, 2024.183 The docket got bogged down with motions for discovery and
sanctions,184 and most of the motions went in Plaintiff’s favor.185 As a result, the
schedule slipped, but no one moved to change the court-ordered deadlines of the
plenary schedule. Scheduling orders are court orders; parties are bound by them
absent leave of the court.186 And under Rule 6(b)(1)(B), parties must demonstrate
excusable neglect to enlarge a deadline after it has passed.187 Defendants provide no
excuse for their late filing.188
Second, the Rule 23.1 and ratification arguments lack legal merit.
Third, granting Defendants’ motion would waste judicial resources. “There is
no ‘right’ to a summary judgment.”189 “Even where the facts are not in dispute, a
182 Dkts. 110, 115.
183 Dkt. 27 ¶ 1.
184 See, e.g., Dkts. 33, 55, 59, 61, 65.
185 Dkts. 53, 89, 103, 139. The court determined to resolve one of Plaintiff’s motion for sanctions after further development of the record. Dkt. 89. 186 See Americas Mining Corp. v. Theriault, 51 A.3d 1213, 1238 (Del. 2012).
187 See Ct. Ch. R. 6(b)(1)(B).
188 Bernstein v. MyJoVE Corp., 2021 WL 4999104, at *1–2 (Del. Ch. Oct. 15, 2021)
(refusing to enlarge deadline for a self-represented litigant who failed to demonstrate excusable neglect). 189 Stone & Paper Invs., LLC v. Blanch, 2020 WL 6373167, at *1 (Del. Ch. Oct. 30,
2020) (quoting Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002)). C.A. No. 2023-0011-KSJM April 24, 2026 Page 33 of 35
court may decline to grant summary judgment where a more thorough exploration of
the facts is needed to properly apply the law to the circumstances.”190 “When an
ultimate fact to be determined is one of motive, intention or other subjective matter,
summary judgment is ordinarily inappropriate.”191 The court may “decline to decide
the merits of the case in a summary adjudication where it is not reasonably certain
that there is no triable issue.”192 Motions for summary judgment require a court to
dive deeply into a paper record without the benefit of live witnesses explaining the
significance of that record. They require a tremendous investment of judicial
resources.
There are no good reasons to permit a motion for summary judgment here.
Many issues on which Defendants seek leave to file for summary judgment were
either raised in response to Plaintiff’s motion for summary judgment or present
factually rife issues. Allowing summary judgment in these circumstances would
190 In re Tri-Star Pictures, Inc., Litig., 1995 WL 106520, at *5 (Del. Ch. Mar. 9, 1995);
see also In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2014 WL 2768782, at *9 (Del. Ch. June 12, 2014) (“[T]he court may, in its discretion, deny summary judgment if it decides upon a preliminary examination of the facts presented that it is desirable to inquire into and develop the facts more thoroughly at trial in order to clarify the law or its application.”). 191 Cont’l Oil Co. v. Pauley Petroleum, Inc., 251 A.2d 824, 826 (Del. 1969); see also
Amirsaleh v. Bd. of Trade of City of N.Y., Inc., 2009 WL 3756700, at *4 (Del. Ch. Nov. 9, 2009). 192 Unbound P’rs Ltd. P’ship v. Invoy Hldgs. Inc., 251 A.3d 1016, 1024 (Del. Super.
2021) (internal quotation marks omitted) (quoting Parexel Int’l (IRL) Ltd. v. Xynomic Pharms., Inc., 2020 WL 5202083, at *4 (Del. Super. Sep. 1, 2020)) (interpreting a parallel rule of the Delaware Superior Court). C.A. No. 2023-0011-KSJM April 24, 2026 Page 34 of 35
waste judicial resources. The request for leave to move for summary judgment is
IV. CONCLUSION
Plaintiff’s motion to strike is denied. Plaintiff’s motion for summary judgment
on his fraudulent inducement claim is granted; it is denied as to the fiduciary duty
claim. Plaintiff’s two motions for sanctions will remain under advisement until the
record more fully develops. Defendants have ten business days from this decision to
respond to Plaintiff’s discovery in aid of execution if they have not paid the fee award
already. Defendants’ motions to intervene and to stay are denied. So too is their
request for leave to move for summary judgment.
I’ll end with a word of caution. Rule 11 reflects a common-sense expectation:
when lawyers or parties file something with the court, they are certifying that they
have done their homework, that their arguments are grounded in law or a good-faith
extension of it, that their factual assertions have or are likely to have evidentiary
support, and that the filing is not being made to harass, delay, or drive up costs
unnecessarily.193 Rule 11 gives me discretion to act where parties fall short of the
standard described above.194 Since Plaintiff filed this action in 2023, Defendants have
filed several unnecessary motions that do not advance the efficient resolution of the
case. I do not wish to impose sanctions and would prefer that Defendants proceed in
193 Ct. Ch. R. 11.
194 Id. C.A. No. 2023-0011-KSJM April 24, 2026 Page 35 of 35
a more focused and disciplined manner. But I will not hesitate to act under Rule 11
if Defendants’ troubling litigation conduct continues.
Sincerely,
/s/ Kathaleen St. J. McCormick
Chancellor
cc: All counsel of record (by File & ServeXpress)