Matthew v. Laudamiel

Opinion

EFiled: Nov 12 2014 02:34PM EST Transaction ID 56328175 Case No. 5957-VCN COURT OF CHANCERY OF THE STATE OF DELAWARE

JOHN W. NOBLE 417 SOUTH STATE STREET VICE CHANCELLOR DOVER, DELAWARE 19901 TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179

November 12, 2014

Thad J. Bracegirdle, Esquire Seth J. Reidenberg, Esquire Wilks, Lukoff & Bracegirdle, LLC Tybout, Redfearn & Pell 1300 North Grant Avenue, Suite 100 750 Shipyard Drive, Suite 400 Wilmington, DE 19806 Wilmington, DE 19801

Re: Matthew v. Laudamiel C.A. No. 5957-VCN Date Submitted: August 7, 2014

Dear Counsel:

Defendant Fläkt Woods Group SA’s (“Fläkt Woods”) potential liability is

premised upon its role in the efforts of Defendant Christophe Laudamiel

(“Laudamiel”) and, to a lesser extent, Defendant Roberto Capua (“Capua”) to rid

Aeosphere LLC (“Aeosphere”) of Plaintiff Stewart Matthew (“Matthew”).1

1 Fläkt Woods has moved for summary judgment on Counts III (aiding and abetting breach of fiduciary duties), IV (tortious interference with contractual relations, VI (unjust enrichment), and VII (civil conspiracy) of Matthew’s complaint. The motion was directed at the Third Amended Verified Complaint which has been superseded by the Fourth Amended Verified Complaint, which added Fläkt Woods Limited (“FWL”) as a defendant. The claims against Fläkt Woods do not vary materially between the two complaints. For purposes of this Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 2

There is no question that Fläkt Woods wanted Aeosphere to resolve its

internal problems and that it wanted to do business with Laudamiel because he had

the knowledge which would be useful to it. Neil Yule (“Yule”) represented Fläkt

Woods in its dealings with Aeosphere. Evidence of any wrongful conduct by him

is sparse. That he (and therefore Fläkt Woods) wanted the entity’s internal

disputes resolved and wanted to do business with Laudamiel is not objectionable.

Nor is there any basis for criticism if he expressed those views. The problem—in a

summary judgment setting where the facts must be viewed in Matthew’s favor and

the reasonable inferences also must be drawn in his favor—is that the record

suggests that Yule may have gone beyond merely expressing his (and Fläkt

Woods’) goals and desires.

motion, reference to Fläkt Woods also reaches FWL. They are entitled to summary judgment if they can show “that there is no genuine issue as to any material fact and that [they are] entitled to judgment as a matter of law.” Ct. Ch. R. 56(c). Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 3

Although it is easy to be skeptical, the inference can be reasonably drawn

that Yule was involved in developing and implementing the strategy to drive

Matthew out of Aeosphere. For example, scheduling conflicts were created to

keep Matthew from attending potentially important meetings.2 Meetings, joined by

Yule, between Laudamiel and Capua, were held without Matthew allegedly to

discuss how to exclude Matthew from Aeosphere.3 Yule committed not to share

details of the meetings with Matthew.4 Yule told Capua and Laudamiel that “[a]ny

contact I have with [Matthew] during this time will purely be on the basis that it

may help you guys.”5 Yule offered to threaten—with a potentially desired effect

on Matthew—that Fläkt Woods was about to end its relationship with Aeosphere.6

After Aeosphere was dissolved, Yule took the position that DreamAir

(Laudamiel’s new entity) “will simply inherit the terms of the agreement

2 Yule referred to one such effort as “a slightly devious mechanism.” App. of Dep. Trs. Cited in Pl.’s Answering Br. in Opp’n to Def. Fläkt Woods Gp. SA’s Mot. for Summ. J. (“Dep. Trs.”) Ex. 3 (“Yule Dep II”), at 371. 3 See, e.g., id. at 383-85. 4 See, e.g., Decl. of Thad J. Bracegirdle in Supp. of Pl.’s Answering Br. in Opp’n to Def. Fläkt Woods Gp. SA’s Mot. for Summ. J. (“Pl.’s Answering Br.”) Ex. 4, at LCA 24939; Yule Dep. II 416-19. 5 Pl.’s Answering Br. Ex. 7, at FWGSA008960. 6 See, id., Ex. 15. Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 4

previously in place with Aeosphere.”7 This recital does not include all examples of

Yule’s conduct that Matthew cites. It does develop a sense, however, for how

Yule went about seeking his objectives. These occasions and others like them

perhaps can be explained away. Sequencing may affect the emphasis which they

should be given. These considerations, especially when assessed against the

balance of the record, do not make Yule’s involvement necessarily improper and

do not make the corresponding inferences in Matthew’s favor the only ones or

even the more reasonable ones, but they are considerable obstacles to granting

Fläkt Woods’ motion for summary judgment generally.

Because Matthew sponsors several theories for imposing liability upon Fläkt

Woods and the various theories have some distinct aspects, a brief review of the

claims, in light of the more general preceding observations, is necessary.

Fläkt Woods argues that no claims tied to breach of fiduciary duty should

continue because such claims are also based on contract and therefore are

duplicative and without independent basis. The question is whether Matthew has

identified any harm that is not the consequence of the dissolution or the unwinding

7 Id. Ex. 29, at FWGSA010617. Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 5

of Aeosphere which are the grounds for his contract claims.8 If his facts are

accurate, there were breaches of fiduciary duty. However, fiduciary duty breaches

do not proceed in parallel with contract claims,9 unless there is some harm to be

remedied through the lens of fiduciary duty which cannot be adequately

compensated through enforcement of the contract. “To allow a fiduciary duty

claim to coexist in parallel with a[] . . . contractual claim, would undermine the

primacy of contract law over fiduciary law in matters involving . . . contractual

rights and obligations . . . .”10 Thus, assessing the aiding and abetting of a breach

of fiduciary duty claim against Fläkt Woods first requires consideration of whether

the claim against Laudamiel would be foreclosed by the parallel contract claims.11

8 Cf. PT China LLC v. PT Korea LLC, 2010 WL 761145 (Del. Ch. Feb. 26, 2010) (alleging fiduciary duty breaches that were not adequately addressed by specific provisions of the contract). 9 See Nemic v. Schrader, 991 A.2d 1120, 1129 (Del. 2010) (“It is a well-settled principle that where a dispute arises from obligations that are expressly addressed by contract, that dispute will be treated as a breach of contract claim. In that specific context, any fiduciary duty claims arising out of the same facts that underlie the contract obligations would be foreclosed as superfluous.”). 10 Gale v. Bershad, 1998 WL 118022, at *5 (Del. Ch. Mar. 4, 1998). 11 Matthew’s rights against Fläkt Woods do not depend upon Laudamiel’s litigation strategy. Laudamiel has not sought the dismissal of the fiduciary duty claims against him on these grounds. Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 6

Matthew asserts both aiding and abetting breach of fiduciary duty claims and

tortious interference with contractual relations claims against Fläkt Woods. As a

general matter, establishing an aiding and abetting claim would likely be less

difficult than demonstrating tortious interference with contractual relations.12

Avoiding duplication of companion fiduciary duty and contact claims serves to

conserve resources. The purpose is not to make a plaintiff’s tasks even more

challenging. Nevertheless, Matthew’s claim against Fläkt Woods “for aiding and

abetting [Laudamiel’s] breaches of fiduciary duty must also be dismissed [if] there

is no legally sufficient underlying claim for breach of fiduciary duty against

[Laudamiel].”13 Thus, Matthew’s claim that Fläkt Woods aided and abetted

breaches of fiduciary duties owed to him would be dismissed if the underlying

breach of fiduciary duty did not cause harm separate from that caused by the

breach of contract.

12 Matthew properly does not argue that Fläkt Woods aided and abetted a breach of contract. 13 Madison Realty P’rs 7, LLC v. AG ISA, LLC, 2001 WL 406268, at *6 n.19 (Del. Ch. Apr. 17, 2001) (citing Moore Bus. Forms, Inc. v. Cordant Hldgs. Corp., 1995 WL 662685, at *6 (Del. Ch. Nov. 2, 1995)). Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 7

The harm suffered by Laudamiel arose primarily from the dissolution and

winding up of Aeosphere, and Aeosphere’s operating agreement expressly

addressed those topics. However, Matthew has presented facts in support of

broader allegations. For example, Matthew contends that Fläkt Woods is

carrying on Aeosphere’s business with DreamAir. While dissolving and winding

up Aeosphere may have been the primary means by which the alleged

wrongdoing occurred, the breadth of the allegations and the post-dissolution

relationship between Fläkt Woods and DreamAir raise material issues of fact

about the scope of the violations and the resulting harm. 14 Thus, whether there

was harm caused by a breach of fiduciary duties that may be distinguished from

the harm resulting from the breach of contract is a question of fact that cannot be

resolved on this summary judgment record.

Similarly, Fläkt Woods’ efforts to obtain summary judgment on Matthew’s

civil conspiracy claim fail largely for the same reason as its unavailing efforts to

secure dismissal of the aiding and abetting of fiduciary duty claims.

14 See Matthew v. Fläkt Woods Gp. SA, 56 A.3d 1023, 1029 (Del. 2012) (“[These allegations] identify specific assets that Laudamiel and Capua allegedly misappropriated as part of a scheme to exploit those assets with Fläkt Woods. The dissolution of Aeosphere was not the end point of the conspiracy; it was one of the means by which the conspiracy was effectuated.”). Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 8

Matthew brings tortious interference with contractual relations claims

against Fläkt Woods based on two contracts: Aeosphere’s limited liability

company agreement and Matthew’s employment agreement with Aeosphere.15

Although Fläkt Woods knew of Aeosphere’s limited liability company agreement,

there is a question as to whether it knew of Matthew’s employment agreement. It

may be that Yule never saw an employment agreement, but he is charged with

knowledge that Matthew served as an employee or officer of Aeosphere and

therefore there was a contractual relationship. It is possible that Yule (and, thus,

Fläkt Woods) believed that Matthew was simply a co-owner and all of the

economic benefits arose from that relationship. Yule, however, acknowledged that

he had had conversations with Matthew about his “employment in the

organization.” 16 Again, this is not especially persuasive evidence of knowledge of

the employment contract, but it supports the notion that Yule would have inferred

15 Matthew, in order to be successful with his tortious interference with contractual relations claims, must demonstrate that there was a contract about which Fläkt Woods knew, that an intentional act was a significant factor in causing a breach of the contract, that the act was without justification and that it caused injury. See, e.g., WaveDivision Hldgs. LLC v. Highland Capital Mgmt. L.P., 49 A.3d 1168, 1174 (Del. 2012). 16 Dep. Trs. Ex. 2 (Yule Dep. I), at 207. Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 9

from the facts and circumstances of Matthew’s relationship with Aeosphere that

there was an employment contract.17 Thus, Fläkt Woods cannot prevail on its

argument that it was not aware of the employment agreement.

Fläkt Woods also argues that it was not a substantial factor in causing the

breach of either of the contracts. Although Yule may not have directed Capua and

Laudamiel to pursue the dissolution of Aeosphere, the record supports an inference

that Yule wanted to go forward without Matthew and that he encouraged

Laudamiel and Capua to figure out how to achieve that objective and to implement

the strategy. It may be that Yule had very little, if anything, to do with the decision

by Laudamiel and Capua to force Matthew out, but Yule’s actions may be inferred

to have been a substantial cause in the process that resulted in the dissolution.

17 Fläkt Woods points out that most of Yule’s actions were either while Matthew and Laudamiel were trying to work out their disagreements or after the dissolution, thus leaving only a very few actions upon which to premise tortious interference. Matthew’s proof for summary judgment purposes cannot be so strictly limited. There was a process, one in which Yule participated, that resulted in Aeosphere’s dissolution. Preliminary actions may be part of conduct that turns out to be tortious interference even though no breach was directly caused at that very moment. Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 10

Fläkt Woods also argues that its conduct was legally justified.18 Fläkt

Woods is correct that this consideration is of critical importance in Matthew’s

tortious interference claim. From Fläkt Woods’ perspective, Aeosphere, because

of the internal dissention, was not likely to be an effective joint venturer.

Preservation of a business relationship with Aeosphere in which Matthew played a

role was difficult to envision. Yet, this case is not at the stage where the Court

may make factual findings or overlook reasonable inferences in Matthew’s favor.

How far Yule inserted himself into the tempestuous relationship among Laudamiel,

Matthew, and, to a lesser extent, Capua is a topic that cannot be resolved on the

paper record before the Court. Fact finding and an assessment of the credibility

and perceptions of the various witnesses cannot be avoided.

In sum, Matthew’s tortious interference with contractual relations claim

presents triable issues, and, accordingly, Fläkt Woods’ motion for summary

judgment as to this claim must be denied.

18 See Restatement (Second) of Torts § 767 (1979). Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 11

Finally, Fläkt Woods seeks summary judgment on Matthew’s unjust

enrichment claim. Matthew has not demonstrated a basis for concluding that Fläkt

Woods has been enriched. Enrichment is a necessary predicate for unjust

enrichment.19 This is not merely a matter of accounting within various Fläkt

Woods entities; Fläkt Woods did not gain any economic advantage from its

conduct. This case is about whether Matthew has been damaged and, in this

context, whether Fläkt Woods was responsible for that damage. Matthew has not

set forth a basis for invoking the unjust enrichment doctrine. He may be able to

show that he suffered an “impoverishment,” but it does not inevitably follow that

there was an enrichment for Fläkt Woods or that he lacks an adequate remedy at

law for any harm that he suffered. In sum, Fläkt Woods has demonstrated, through

the undisputed facts, that it is entitled to summary judgment on Matthew’s unjust

enrichment claim.

19 See, e.g., Pharmathene, Inc. v. Siga Techs., Inc., 2011 WL 4390726, at *27 (Del. Ch. Sept. 22, 2011). Matthew v. Laudamiel C.A. No. 5957-VCN November 12, 2014 Page 12

Accordingly, Fläkt Woods’ motion for summary judgment is granted as to

Count VI, but denied as to Counts III, IV, and VII.

IT IS SO ORDERED.

Very truly yours,

/s/ John W. Noble

JWN/cap cc: Stephanie S. Habelow, Esquire Mr. Christophe Laudamiel DreamAir LLC Register in Chancery-K