COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER VICE CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734
November 20, 2024
Theodore A. Kittila, Esquire Jesse L. Noa, Esquire Halloran Farkas + Kittila LLP Potter Anderson & Corroon LLP 5722 Kennett Pike, Suite C/D 1313 North Market Street, 6th Floor Wilmington, DE 19807 Wilmington, DE 19801
RE: Kevin Robnett v. Lithos Industries Inc., Civil Action No. 2024-0232-MTZ Dear Counsel:
I write to address the motion for summary judgment filed by defendant Lithos
Industries, Inc. (“Lithos” or the “Company”). As the undisputed facts show Lithos
terminated plaintiff Kevin Robnett at will and repurchased his shares in accordance
with the express and implied terms of the contract between them, Lithos’s motion is
granted.
I. BACKGROUND
Lithos conducted a preferred stock financing round that initially closed on
February 14, 2023.1 The same day, Lithos and Robnett, one of Lithos’s co-CEOs,
1 Docket Item (“D.I.”) 1 [hereinafter “Compl.”] ¶¶ 10–11; D.I. 27 [hereinafter “Ans. Br. App.”] at A-27.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 2 of 21
entered into a Common Stock Repurchase Agreement (the “Agreement”).2 The
financing’s closing was conditioned on Robnett signing the Agreement.3
The Agreement created an at-will employment relationship, providing that
“[n]othing in this Agreement shall create an obligation on the Company or [Robnett]
to continue [Robnett’s] Service to the Company. [Robnett’s] Service shall remain
terminable at will.”4 The Agreement also authorized Lithos to terminate Robnett’s
employment for cause under specified circumstances, including if Robnett “willfully
fail[ed] to substantially perform his material duties” and did not cure such failure
within thirty days of written notice.5
Robnett beneficially owned 5,000,000 shares of Lithos common stock. The
Agreement deemed 3,250,000 of Robnett’s shares as unvested (the “Vesting
Shares”), and established they would vest in twenty-four equal monthly installments
beginning March 14, 2023. 6 The Agreement allowed Lithos to repurchase Vesting
Shares at $0.00001 per share upon Robnett’s termination, in different quantities
2 Compl. Ex. A [hereinafter “Agr.”].
3 Id. Recital B.
4 Id. ¶ 6(b).
5 Id. ¶¶ 1(b), 2(b).
6 Id. Recital A, ¶¶ 2(a), 2(c).
C.A. No. 2024-0232-MTZ November 20, 2024 Page 3 of 21
depending on if the termination was for cause or at will.7 If Lithos terminated
Robnett at will, it could repurchase only those Vesting Shares that had not vested
according to the schedule. If Lithos fired Robnett for cause before the final vesting
installment, all Vesting Shares would be deemed unvested, so Lithos could
repurchase all 3,250,000 of them. 8 The Agreement did not allow for the repurchase
of the remaining 1,750,000 shares under any circumstances (the “Guaranteed
Shares”). And if Robnett resigned for “Good Reason” as defined in the Agreement,9
all his Vesting Shares would vest, so Lithos could not repurchase any shares. 10
Robnett alleges that once Lithos secured the ability to cheaply eliminate his
equity stake, it moved swiftly to terminate his employment. 11 He alleges Lithos
embarked down a path of termination for cause, intending to repurchase all
3,250,000 Vesting Shares and leave him with only the Guaranteed Shares and
$32.50. But, Robnett presses, when Lithos realized it had no legal grounds to
7 Id. ¶ 2(b).
8 Id.
9 Id. ¶ 1(e) (defining “Good Reason” to include a nonconsensual “material reduction in [Robnett’s] overall compensation and benefits” or a nonconsensual “material diminution in [Robnett’s] overall responsibilities”). 10 Id. ¶ 2(e).
11 Compl. ¶¶ 19, 31.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 4 of 21
effectuate a termination for cause, it decided to terminate him at will, repurchasing
2,708,333 Vesting Shares for $27.08. 12
Lithos’s board, which included Robnett, met on June 2, 2023. 13 Robnett had
circulated an agenda ahead of the meeting. But when the meeting started, another
director took the floor to address “additional agenda items” not provided to Robnett
in advance.14 The director moved for the board to deliver Robnett a memo detailing
the Company’s grounds for termination for cause. Another director explained the
thirty-day cure period. 15 The same day, Lithos emailed Robnett a letter repeating
the information in the memo. The letter reminded Robnett he was “an at-will
employee” and could be terminated “at any time with or without cause or prior
notice.”16
Robnett offered to resign three days later under certain terms, but noted he
believed his termination was “wrongful and not for any cause.” 17 The board rejected
Id. ¶ 56; see also D.I. 26 [hereinafter “Ans. Br.”] at 30. Four vesting periods had passed 12
when Lithos terminated Robnett. So 541,667 Vesting Shares had vested, while 2,708,333 were unvested and thus subject to repurchase upon a termination at will. 13 Compl. ¶¶ 14–15.
14 Id. ¶ 16.
15 D.I. 6 Answer ¶ 18.
16 D.I. 22 Ex. B.
17 Ans. Br. App. at A-152.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 5 of 21
Robnett’s offer via letter on June 19, restating its grounds for termination for cause
and reiterating that Robnett was an at-will employee.18 The June 19 letter also stated
Lithos was willing to agree Robnett could retain 1,750,000 shares if Lithos could
exercise its “repurchase rights . . . as to the balance of [his] shares.” 19
On June 23, 2023—nine days before the for-cause cure period was set to
expire20—the board removed Robnett by unanimous written consent. 21 At 10:08
a.m. that day, Lithos emailed Robnett a letter notifying him of his termination.22
More than an hour later, Robnett emailed Lithos his own letter claiming he had
“Good Reason” to resign. 23 The board issued a release to stockholders noting
Robnett had been an at-will employee. 24
18 D.I. 22 Ex. C.
19 Id.
20 Because Lithos gave Robnett notice that it had cause to terminate his employment on June 2, the thirty-day cure period would have expired on July 2. 21 D.I. 22 Ex. H.
22 D.I. 22 Ex. F.
23 D.I. 22 Ex. G (email timestamped 11:29 a.m.); Ans. Br. App. at 174–80. Robnett’s letter stated that the board required him to use a company laptop that was “being surveilled without [his] consent,” monitored his email and internet usage, and shielded him from large portions of Lithos’s business despite his ongoing role as co-CEO. D.I. 22 Ex. G; see also Ans. Br. at 9, 12, 29. 24 D.I. 22 Ex. I.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 6 of 21
On July 12, Lithos informed Robnett it was repurchasing “all 2,708,333 shares
of [his] Unvested” shares, consistent with an at-will termination. 25 Lithos paid him
$27.08.26
Robnett filed his complaint on March 10, 2024, claiming Lithos purported to
terminate him for cause, and repurchased all available shares, when there was no
cause to terminate him. His complaint presents Count I for breach of the Agreement;
Count II for breach of the implied covenant of good faith and fair dealing; and Count
III for an injunction returning the repurchased shares. 27 Lithos filed a counterclaim,
asserting a cause of action for declaratory judgment. 28 On July 8, Lithos moved for
summary judgment on all counts.29 The parties briefed Lithos’s motion, and I took
it under advisement on the papers on November 4. 30
II. ANALYSIS
This Court will grant a motion for summary judgment where there are no
genuine issues of material fact, and the moving party is entitled to judgment as a
25 D.I. 22 Ex J.
26 D.I. 22 Ex. K.
27 Compl. ¶¶ 35–66.
28 D.I. 6.
29 D.I. 22. at Mot.
30 D.I. 22; Ans. Br.; D.I. 31; D.I. 35.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 7 of 21
matter of law.31 The movant has the burden of showing entitlement to judgment as
a matter of law; then the nonmovant has the burden of demonstrating a genuine issue
of material fact precludes judgment for the movant. 32 “Summary judgment must be
granted when the nonmovant fails to respond to facts which the movant has placed
in the record which entitle him to summary judgment.”33 The Court views the facts
in the light most favorable to the nonmoving party.34
To succeed on a breach of contract claim, the plaintiff must show the existence
of a contract, a breach of the contract’s obligations, and resulting damages. 35 The
parties do not dispute that the Agreement is a valid contract. They disagree on the
nature of Robnett’s termination, and whether Lithos complied with the Agreement
in terminating him.
Lithos prevails because the undisputed facts show it terminated Robnett at
will and repurchased only those unvested shares it was entitled to repurchase for an
31 Ct. Ch. R. 56(c).
32 Deloitte LLP v. Flanagan, 2009 WL 5200657, at *3 (Del. Ch. Dec. 29, 2009).
33 Gabelli & Co., Inc. v. Liggett Gp., Inc., 1983 WL 18015, at *4 (Del. Ch. Mar. 2, 1983), aff’d, 479 A.2d 276 (Del. 1984). 34 Weil v. VEREIT Operating P’ship, L.P., 2018 WL 834428, at *3 (Del. Ch. Feb. 13, 2018).
35 E.g., Wenske v. Blue Bell Creameries, Inc., 2018 WL 3337531, at *9 (Del. Ch. July 6, 2018).
C.A. No. 2024-0232-MTZ November 20, 2024 Page 8 of 21
at-will termination. Lithos did not terminate Robnett for cause. Lithos’s at-will
termination did not breach any express or implied terms in the Agreement.
A. There Is No Genuine Dispute That Robnett Was Fired At Will.
Lithos moved for summary judgment on the premise that because it
terminated Robnett at will, it cannot have breached the Agreement’s provisions for
termination for cause. Over the course of briefing, Robnett conceded Lithos
repurchased only 2,708,333 Vesting Shares, consistent with an at-will termination.36
Lithos did not repurchase 3,250,000 Vesting Shares, as it could upon a termination
for cause.
It is also undisputed that Lithos never stated that it terminated Robnett for
cause. And Lithos regularly reiterated that Robnett was an at-will employee in its
communications beginning June 2. 37 Lithos has established it terminated Robnett at
will.
36 See Ans. Br. at 30 (“Robnett concedes that Lithos did not repurchase all 3,250,000 shares of his stock subject to the Repurchase Agreement as alleged in the Complaint. The allegations in paragraph 46 and 48 of the Complaint referencing that number of shares repurchased are withdrawn.”). 37 D.I. 22 Ex. B (“Setting aside the concept of ‘Cause’ . . . your employment as co-CEO for the Company is at-will, meaning . . . the Company may terminate your employment at any time with or without cause or prior notice.”); D.I. 22 Ex. C (“[Y]ou are an at-will employee and can be terminated at any time with or without notice under applicable law.”); D.I. 22 Ex. I (“Robnett was employed on an at-will basis, meaning . . . the Company . . .
C.A. No. 2024-0232-MTZ November 20, 2024 Page 9 of 21
Robnett maintains Lithos purported to terminate him for cause, and did so
before the cure period ended.38 But Robnett has identified no supporting evidence,
as he must.39 He points to evidence Lithos believed it could fire him for cause, and
evidence Lithos may have intended to fire him for cause for a time before they fired
him at will. 40 While Lithos did not state Robnett was terminated at will until the
July 12 letter, it never said before July 12 that he was terminated for cause. Lithos’s
June 19 letter indicated Lithos’s intent to exercise its repurchase rights as to the
Vesting Shares. Its June 23 letter did not explicitly state he was fired at will or how
could terminate the employment relationship for any reason and at any time, with or without notice.”). 38 Ans. Br. at 29–31.
39 Cirba Inc. v. Turbonomic, Inc., 2022 WL 985417, at *3 (Del. Ch. Apr. 1, 2022) (“If the movant puts in the record facts which, if undenied, entitle him to summary judgment, the burden shifts to the defending party to dispute the facts by affidavit or proof of similar weight.” (quoting Comet Sys., Inc. S’holders’ Agent v. MIVA, Inc., 980 A.2d 1024, 1029 (Del. Ch. 2008))). 40 See D.I. 22 Ex. B (“Based on the above referenced performance and misconduct issues, the Company hereby places you on notice that it has ‘Cause,’ as defined in the Repurchase Agreement, to terminate your performance. While the Repurchase Agreement extends you a 30-day notice-and-cure period, your prior misrepresentations . . . and your inability to successfully perform your key duties . . . are uncurable.”); D.I. 6, Answer ¶ 18 (“Lithos admits that Gregg took the floor and identified that there is a 30-day cure period.”); D.I. 22 Ex. C (reaffirming cause and stating the Company “desire[s] to reach an amicable resolution” in which “the Company will agree to allow you to retain 1,750,000 of your shares of common stock of the Company, but will be exercising its repurchase rights under the Repurchase Agreement as to the balance of your shares.”).
C.A. No. 2024-0232-MTZ November 20, 2024 Page 10 of 21
much stock Lithos considered unvested. The June 23 board consent only expressed
Lithos’s belief that it had cause to remove him. Robnett points to no evidence
creating any issue of fact as to whether Lithos fired him at will. 41
B. Lithos Did Not Breach The Agreement.
Robnett argues that even if Lithos terminated him at will, Lithos breached the
Agreement by doing so before the cure period for termination for cause expired.42
As any thirty-day cure period began on June 2 when Lithos notified Robnett of his
termination, Robnett’s June 23 firing was within the cure period. Lithos contends it
is still entitled to judgment because the Agreement does not condition termination at
will on the cure period for termination for cause.43 This issue is one of contract
interpretation, a legal issue well-suited for summary judgment as it can be performed
even in the context of disputed facts.
The Agreement is plain: “Nothing in this Agreement shall create an obligation
on the Company . . . to continue [Robnett’s] Service to the Company. [Robnett’s]
Service shall remain terminable at will.”44 This language makes clear that nothing—
41 I therefore need not address Robnett’s argument that Lithos cannot establish cause.
42 Ans. Br. at 30–32.
43 D.I. 22 at 14; see also D.I. 31 at 4, 16.
44 Agr. ¶ 6(b).
C.A. No. 2024-0232-MTZ November 20, 2024 Page 11 of 21
not even the cure period for termination for cause—interrupts or conditions Lithos’s
ability to terminate Robnett at will. 45 Lithos contracted for the right to terminate
Robnett’s at-will employment at any time.
Robnett argues this interpretation cannot be correct because it would render
the cure period “a nullity.” 46 Not so: the cure period conditions termination for
cause, and therefore the repurchase of all Robnett’s Vesting Shares.
Lithos had the contractual freedom to terminate Robnett at will at any time,
including after initiating but before completing the cure period for termination for
cause. Lithos is entitled to summary judgment on Count I.
C. Lithos Did Not Breach The Implied Covenant Of Good Faith And Fair Dealing.
So beaten back, Robnett makes a final stand, claiming Lithos’s termination at
will breached the implied covenant of good faith and fair dealing that applies in
45 This language differentiates termination at will from the contractual dispute mechanism in MSCM Holdings, which Robnett relies on in arguing “[t]he notice and cure period is analogous to a contractual dispute resolution mechanism under which a party must exhaust the agreed-upon process before filing suit.” Ans. Br. at 31 (citing MSCM Hldgs., Inc. v. PCS-Mosaic Hldgs., LLC, 2024 WL 3595934, at *5–7 (Del. Ch. Jul. 31, 2024). The MSCM Holdings provision explicitly requires parties to exhaust a particular procedure before bringing suit. Here, the Agreement made clear Lithos could terminate Robnett at will without any precursory procedure. 46 Ans. Br. at 30.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 12 of 21
particular ways in at-will employment contracts like the Agreement. Robnett alleges
his termination was in bad faith because Lithos terminated him “only after he
notified the Company that he had ‘Good Reason’ to resign”47 and the Company
“realized that its pretextual reasons to terminate him for ‘Cause’ were factually
baseless and legally insufficient under the [] Agreement.”48
“Under Delaware law, the implied covenant inheres in all contracts and exists
to fill contractual gaps that neither party anticipated.” 49 But invoking the doctrine is
a “cautious enterprise.” 50 The implied covenant “cannot be invoked where the
contract itself expressly covers the subject at issue.”51 “[O]ne generally cannot base
a claim for breach of the implied covenant on conduct authorized by the terms of the
agreement.”52
In the at-will employment context, courts are reluctant to apply the implied
covenant “out of a concern that [it] could thereby swallow the [employment-at-will]
47 D.I. 8 ¶ 5.
48 Compl. ¶ 56.
49 Sheehan v. AssuredPartners, Inc., 2020 WL 2838575, at *11 (Del. Ch. May 29, 2020) (citing Dieckman v. Regency GP LP, 155 A.3d 358, 367 (Del. 2017)). 50 Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010) (citing Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del. 2005)). 51 Fisk Ventures, LLC v. Segal, 2008 WL 1961156, at *10 (Del. Ch. May 7, 2008).
52 Dunlap, 878 A.2d at 441.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 13 of 21
[d]octrine and effectively end at-will employment.” 53 To breach the implied
covenant in that setting, an employer’s conduct “must constitute ‘an aspect of fraud,
deceit or misrepresentation.’”54 Delaware courts recognize four narrowly defined
and exclusive categories of actionable implied covenant claims in the at-will
employment context:
(i) where the termination violated public policy; (ii) where the employer misrepresented an important fact and the employee relied “thereon either to accept a new position or remain in a present one”; (iii) where the employer used its superior bargaining power to deprive an employee of clearly identifiable compensation related to the employee’s past service; and (iv) where the employer falsified or manipulated employment records to create fictitious grounds for termination.55
In those contexts, “[a]n employer may not in good faith knowingly allow an
employee to assume that the duration of an employment contract is indefinite, when
it is, in secret contemplation of the employer, of limited duration.” 56 And an
53 E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, 442 (Del. 1996); see also Sheehan, 2020 WL 2838575, at *11. 54 Merrill v. Crothall-Am., Inc., 606 A.2d 96, 101 (Del. 1992) (quoting Magnan v. Anaconda Indus., Inc., 429 A.2d 492, 494 (Conn. Super. Ct. 1980)). 55 Lord v. Souder, 748 A.2d 393, 400–01 (Del. 2000) (quoting Pressman, 679 A.2d at 442– 44); Lidya Hldgs. Inc. v. Eksin, 2022 WL 854688, at *2–3, *2 n.20 (Del. Ch. Mar. 23, 2022) (recognizing the four categories’ exclusivity). 56 Merrill, 606 A.2d at 102.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 14 of 21
employer may not terminate an at-will employee with cause for pretextual reasons
in order to deny them the benefits of termination without cause. 57 Lithos seeks a
summary judgment on the basis that its straightforward at-will termination did not
breach the implied covenant.
Robnett attempts to show a genuine issue of material fact as to three
applications of the implied covenant. He first contends Lithos misrepresented an
important fact he relied on in agreeing to the Agreement’s employment terms 58: that
Lithos induced him to execute the Agreement while misrepresenting its intention “to
oust [him] and divest him of his Stock at the earliest opportunity.” 59 To support his
theory, Robnett cites the timing of his firing (four months after the parties executed
the Agreement) and the board’s “ambush” at the June 2 meeting. 60 He points to no
evidence of any misrepresentation predating the Agreement’s execution.61 He
57 See Sheehan, 2020 WL 2838575, at *10.
58 See Lord, 748 A.2d at 400–01.
59 Ans. Br. at 10, 26 n.2.
60 Id. at 26, 26 n.2.
61 Robnett points to the board’s conduct surrounding the ambush, namely that the board declined to follow his agenda, “in particular making no effort to identify an additional director candidate—whose presence on the Board could have protected [him] from the ambush.” Id. at 9. This does not suggest any pre-Agreement misrepresentation. And while Robnett cites documents showing that there was a vacant board seat, he offers no evidence
C.A. No. 2024-0232-MTZ November 20, 2024 Page 15 of 21
asserts “[d]iscovery is likely to show that the Company’s decision to oust [him] was
made by the Series Seed Preferred Stock investors in connection with the conversion
of Lithos to a Delaware entity.”62 Yet he responded to Lithos’s motion for summary
judgment without filing an affidavit seeking discovery under Rule 56(f).63 Robnett
cannot support his conclusory allegations of fraudulent misrepresentations by
appealing to discovery he failed to seek.
Second, Robnett invokes the implied covenant’s restraint on an employer
falsifying or manipulating employment records to create fictitious grounds for
termination.64 Robnett contends it is inferable that Lithos created fictitious grounds
for terminating him, as the grounds identified for cause are, according to Robnett,
that the board was required to attempt to fill the vacancy at his request. See id. at 3–4 (citing Ans. Br. App. at A-7, -29, -70). 62 Ans. Br. at 26–27.
63 In Robnett’s letter opposing Lithos’s request for leave to move for summary judgment, he stated, “Discovery is necessary to demonstrate whether Lithos’s fellow board members had planned to fire Mr. Robnett when the parties negotiated the seed round and the conversion of Lithos to a Delaware corporation, of which the Repurchase Agreement was an integral part.” D.I. 18 at 5. Robnett’s opposition brief did not follow through under Rule 56(f), as it must. “This court has repeatedly denied requests for discovery made in opposition to a motion for summary judgment in the absence of a Rule 56(f) affidavit, instead ordering summary judgment in such cases.” Comet, 980 A.2d at 1033. 64 See Lord, 748 A.2d at 400–01.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 16 of 21
unsound. But as explained, Lithos ended up terminating Robnett at will. It did not
terminate him for those identified grounds.65
Third, Robnett asserts the covenant implies three specific terms in the
Agreement: “(1) that [his] employment would continue indefinitely; (2) that
termination decisions would [be] made in good faith; and (3) that once the for
‘Cause’ notice and cure period has commenced, the Company could not terminate
[him] ‘at-will’ until the 30-day notice and cure period was complete.” 66 Delaware’s
narrow application of the implied covenant in the at-will employment context only
supports a claim based on an implied promise of indefinite appointment when the
employer allows the employee to assume indefinite employment but “it is, in secret
contemplation of the employer, of limited duration.”67 As explained, Robnett has
offered no evidence of any such misrepresentation or secret plan.68
65 Robnett’s arguments that Lithos’s grounds for cause were inaccurate do not create a genuine issue of material fact as to whether Lithos fabricated them. See Ans. Br. at 15–21. 66 Id. at 27–28.
67 Merrill, 606 A.2d at 102.
68 Robnett’s argument that as a “Founder,” “Management Key Holder,” “Co-CEO,” and “Common Director,” he was “led to believe that he would play an important role in the Company’s future” does not change the analysis. Ans. Br. at 24. Robnett has not offered evidence of fraud, deceit, or misrepresentation.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 17 of 21
In arguing Lithos terminated him in bad faith, Robnett invokes authority
addressing bad faith termination designed to deny an employee benefits the
employee would have received in a different separation arrangement.69 Robnett has
asserted Lithos purported to terminate him at will only after it realized its grounds
for cause were lacking, and only after he notified Lithos that he had “Good Reason”
to resign, which would have accelerated his stock vesting. Robnett has not come
forward with any evidence supporting those theories. And the undisputed facts show
Lithos sent Robnett’s termination letter before receiving Robnett’s letter claiming
he had “Good Reason” to resign.70
Robnett also argues Lithos terminated him in bad faith as evidenced by the
board’s ambush at the June 2 board meeting, withholding an agenda item addressing
cause for his own termination.71 He cites case law speaking to directorial
information rights. 72 Even if a violation of a director’s information rights could
69 Id. at 28 (citing Sheehan, 2020 WL 2838575, at *11).
70 D.I. 22 Ex. F; D.I. 22 Ex. G.
71 Ans. Br. at 33.
72 Id. at 33–34 (first citing OptimisCorp v. Waite, 2016 WL 2585871, at *3 (Del. Apr. 25, 2016) (TABLE) (holding directors are entitled to advance notice of the agenda for a special meeting); then citing Hall v. Search Cap. Gp., Inc., 1996 WL 696921, at *2 (Del. Ch. Nov. 15, 1996) (holding that “[w]hen management communicates with the directors on matters
C.A. No. 2024-0232-MTZ November 20, 2024 Page 18 of 21
demonstrate an employee was terminated in bad faith termination, Lithos did not
violate Robnett’s directorial information rights by not including termination of his
employment on the board meeting agenda. Delaware law does not require as a
general matter that directors be given advance notice of agenda items for regular
board meetings. 73 While a director cannot be affirmatively deceived into attending
a regular board meeting,74 Robnett was not so deceived: he attended voluntarily
and circulated his own agenda in advance.75 Robnett has failed to produce evidence
that Lithos terminated him in bad faith.
Finally, Robnett looks to the implied covenant to prevent Lithos from
effecting an at-will termination during the for-cause cure period. But, as explained,
the Agreement explicitly precludes any term in the Agreement from impairing
of concern to the [b]oard collectively, it cannot pick and choose which directors will receive that information”)). 73 Klaassen v. Allegro Dev. Corp., 106 A.3d 1035, 1043–44 (Del. 2014) (“[T]here is no default requirement that directors be given advance notice of the specific agenda items to be addressed at a regular board meeting.”). 74 Bäcker v. Palisades Growth Cap. II, L.P., 246 A.3d 81, 105–06 (Del. 2021) (explaining that while “Delaware law does not require that board members receive notice of the agenda related to regular board meetings,” this does not mean “equity provides no remedy where a director has the misfortune of being tricked into attending a regular, as opposed to special, board meeting”); see also id. at 107 (“Regardless of the type of meeting or form of communications, Delaware law does not countenance deception designed to manufacture a quorum or otherwise induce director action.”). 75 D.I. 6, Answer ¶ 14; Ans. Br. App. at A-130–33.
C.A. No. 2024-0232-MTZ November 20, 2024 Page 19 of 21
Lithos’s ability to terminate Robnett at will. Robnett cannot base an implied
covenant claim on Lithos’s contractually authorized conduct.
Lithos is entitled to a summary judgment on Count II.
D. Count III Of The Complaint And Count I Of Lithos’s Counterclaim
Count III for injunctive relief is a remedy, not a claim. There can be no
injunction without a claim, so Count III fails for lack of a breach of the Agreement.
Lithos is entitled to summary judgment on this count.
As to Count I of Lithos’s counterclaim, there is no dispute that the Agreement
is valid and enforceable or that Lithos purchased 2,708,333 shares given a valid at-
will termination. The only controversy is whether Lithos terminated Robnett’s
employment for cause. 76 As explained, it terminated him at will. Lithos is entitled
to summary judgment on its counterclaim.
76 D.I. 6, Countercl. ¶ 42(b).
C.A. No. 2024-0232-MTZ November 20, 2024 Page 20 of 21
E. Attorneys’ Fees
Finally, Lithos seeks attorneys’ fees under Paragraph 6(k) of the Agreement,
which provides that, “[i]f any action at law or in equity (including arbitration) is
necessary to enforce or interpret the terms of any of this Agreement, the prevailing
Party shall be entitled to reasonable attorney’s fees, costs and necessary
disbursements in addition to any other relief to which such Party may be entitled.”77
Robnett does not dispute that this action was necessary to enforce or interpret the
terms of the Agreement.78 As the prevailing party, Lithos is entitled to its reasonable
attorneys’ fees and costs incurred in this action, including contesting Robnett’s
allegation that Lithos repurchased 3,250,000 shares—an allegation Robnett did not
retract with any clarity until filing its answering brief opposing Lithos’s motion for
summary judgment.
The parties shall confer regarding the amount of Lithos’s award of reasonable
attorneys’ fees and costs. If the parties cannot agree on the amount, Lithos shall file
a motion supported by a Court of Chancery Rule 88 affidavit.
77 Agr. ¶ 6(k).
78 See Ans. Br. at 39 (opposing attorneys’ fees only on the basis that “Lithos cannot prevail on summary judgment”).
C.A. No. 2024-0232-MTZ November 20, 2024 Page 21 of 21
III. CONCLUSION
Lithos’s motion for summary judgment is granted as to Counts I–III of the
complaint and as to Count I of Lithos’s counterclaim.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record, via File & ServeXpress