RGIS International Transition Holdco, LLC v. Retail Services WIS Corporation

• Court: Superior Court of Delaware
• Decided: September 29, 2025
• Docket: N21C-12-077 PRW CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

RGIS INTERNATIONAL TRANSITION ) HOLDCO, LLC, RGIS INTERNATIONAL ) TRANSITION HOLDCO MEXICO, LLC, ) and RGIS MEXICO, LLC, ) Plaintiffs,) v. ) C.A. No. N21C-12-077 ) PRW CCLD RETAIL SERVICES WIS CORPORATION, ) RETAIL SERVICES WIS HOLDINGS ) CORPORATION, JAMES ROSE, and ) RICHARD BAXTER, ) Defendants. )

Submitted: June 26, 2025 Decided: September 29, 2025

Upon Defendants’ Motion for Dismissal of Plaintiffs’ Count II and III, GRANTED.

MEMORANDUM OPINION AND ORDER

Michael A. Barlow, Esquire, and Shannon M. Doughty, Esquire, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Wilmington, Delaware; Michael B. Carlinsky, Esquire (argued), Jianjian Ye, Esquire, and Caroline M. Vermillion, Esquire, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; Christopher P. Simon, Esquire, and David G. Holmes, Esquire, CROSS & SIMON, LLC, Wilmington, Delaware, Jed M. Schwartz, Esquire, MILBANK LLP, New York, New York, Attorneys for Plaintiffs.

Samuel L. Moultrie, Esquire, and Bryan T. Reed, Esquire, GREENBERG TRAURIG, LLP, Wilmington, Delaware; Ian S. Marx, Esquire (argued), and Todd L. Schleifstein, Esquire, GREENBERG TRAURIG, LLP, Florham Park, New Jersey; Karl G. Dial, Esquire, and Morgan E. Jones, Esquire, GREENBERG TRAURIG, LLP, Dallas, Texas, Attorneys for Defendants.

WALLACE, J. This is a fraud and securities action between Plaintiffs RGIS International

Transition Holdco, LLC, RGIS International Transaction Holdco Mexico, LLC, and

RGIS Mexico, LLC (collectively “RGIS”), and Defendants Retail Services WIS

Corporation (“WIS”), Retail Services WIS Holdings Corporation (“WIS Holdings”,

together with WIS, “Selling Defendants”), James Rose, and Richard Baxter

(together with Mr. Rose, “Individuals”).1 The dispute arises from RGIS’s purchase

of the outstanding share capital of non-parties Washington Inventory Service

Limited (“WIS UK”), Washington Inventory Service Mexico, S. de R.L. de C.V.

(“WIS Mexico”), and Proveedora de Servicios Internacional, S. de R.L. de C.V.

(“PSI”, collectively with WIS UK and WIS Mexico, the “Transferred Companies”),

from Selling Defendants (the “Transaction”).2 The parties memorialized the

Transaction in a Share Purchase Agreement (the “Agreement”).3 RGIS alleges the

Agreement contains several false representations and warranties related to the

Transferred Companies, which induced them to enter the Transaction.4

1 See generally D.I. 55 (Pltfs. Second Amended Complaint [hereafter “SAC”]). Plaintiffs initially filed claims for fraud and civil conspiracy. See generally D.I. 1 (Complaint [hereafter “Compl.”]); D.I. 22 (Pltfs. First Amended Complaint [hereafter “FAC”] (D.I. 22)). After the Court granted Defendants’ previous motion to dismiss the FAC’s civil conspiracy and aiding and abetting fraud claims against Messrs. Rose and Baxter, Plaintiffs filed the operative SAC. See RGIS International Transition Holdco, LLC v. Retail Services Wis Corporation, 2024 WL 568515, at *1, *6 (Del. Super. Feb. 13, 2024) (dismissing the FAC’s civil conspiracy and aiding and abetting fraud claims) (“RGIS Int’l I”). 2 See SAC ¶ 1. 3 See id. ¶ 2 4 See id. ¶¶ 2-6, 19-60.

-1- RGIS initiated this action seeking damages for Defendants’ allegedly

fraudulent representations in the Agreement.5 RGIS’s operative SAC asserts three

causes of action: (1) Count I—Fraud against Selling Defendants;6 (2) Count II—

Violation of the Texas Securities Act (the “TSA”) against Selling Defendants;7 and

Count III—Violation of the TSA against the Individuals.8

Defendants responded to the SAC by filing the current motion to dismiss

Counts II and III (the “Motion”).9 The Motion advances four main arguments:

(1) the Court lacks personal jurisdiction over the Individuals; (2) the Agreement’s

Delaware choice-of-law provision bars Counts II and III; (3) Counts II and III are

time-barred; and (4) Count III fails to state a claim against the Individuals.10 RGIS

counters each of these arguments, maintaining the Court has personal jurisdiction

over the Individuals and its TSA claims are proper.11 For the reasons now explained,

the Motion is granted and Counts II and III dismissed as time-barred.

5 See generally id. 6 See id. ¶¶ 61-73. 7 See id. ¶¶ 74-91 (asserting a claim for violation of the TSA, TEX. GOV’T CODE ANN. § 4008.052 (2021)). 8 See id. ¶¶ 92-104 (asserting a claim for violation of the TSA, TEX. GOV’T CODE ANN. § 4008.055 (2021)). 9 See generally Defs. Mot. to Dismiss (D.I. 58). 10 See id. 11 See generally Pltfs.’ Answering Brief in Opposition to Defendants’ Motion to Dismiss Counts II and III of the Second Amended Complaint (hereafter “MTD Opp’n”) (D.I. 60).

-2- I. BACKGROUND A. THE PARTIES

Each Plaintiff is a Delaware LLC affiliated with non-party RGIS, LLC, “a

global leader in retail merchandising and inventory services[.]”12

The Selling Defendants are each a Delaware corporation headquartered in

Dallas, Texas.13 The Individuals are Texas residents.14 Before the Transaction,

Mr. Rose served as CEO of WIS and WIS Holdings, as well as a member of PSI and

WIS Mexico’s board.15 At the same time, Mr. Baxter also served on PSI and WIS

Mexico’s board as well as WIS and WIS Holding’s CFO.16

B. THE TRANSACTION AND THE AGREEMENT

In September 2021, RGIS agreed to purchase all issued shares of the

Transferred Companies from Selling Defendants for $7.5 million.17 The Agreement

effectuated that Transaction.18 While Mr. Rose signed on behalf of the Selling

Defendants, neither of the Individuals are a party to the Agreement.19 The

12 SAC ¶ 9. 13 Id. ¶¶ 10-12. 14 Id. ¶¶ 13-15. 15 Id. ¶ 13. 16 Id. ¶ 14. 17 Id. ¶ 1. 18 Id. ¶ 2; see generally SAC, Ex. 1 (the “Agreement”). 19 See Agreement at Preamble, Signature Pages.

-3- Agreement is governed by Delaware law20 and contains a Delaware forum-selection

clause.21

Several of the Agreement’s representations and warranties are central to the

parties’ dispute.22 Specifically, RGIS’s claims implicate the representations and

warranties in Sections 5.1.4.1, 5.1.4.2, 5.1.5, 5.1.8.2, 5.1.9.1, and 5.1.9.3.23

Section 5.1.4.1 states Selling Defendants provided “true and accurate . . .

financial statements” covering the Transferred Companies’ “unaudited balance sheet

and statements of operating income and expenses” for 2021.24

Section 5.1.4.2 warrants “[t]here are no material liabilities or obligations of

the Transered Companies of any nature, whether or not accrued, contingent or

otherwise, other than those” on the provided financial statements, incurred in the

ordinary course, or contemplated by the Agreement.25

Section 5.1.5 represents in relevant part, “[s]ince March 31, 2021, each of the

20 See id. § 15.1. 21 See id. § 15.2. 22 See SAC ¶¶ 2-6, 19-60. 23 See id. ¶¶ 21-26. While the exact contours of these representations and warranties are critical to RGIS’s claims, the specifics aren’t relevant to resolving the Motion. So, the Court only briefly discusses RGIS’s allegations concerning each at-issue representation and warranty. 24 Agreement § 5.1.4.1. Additionally, Selling Defendants represented those financial statements were prepared “in accordance with GAAP” and “present[ed] fairly, in all material respects, the financial position . . . of the Transferred Companies.” Id. Moreover, Section 5.1.4.1 states “the Transferred Companies have no indebtedness other than (i) as reflected on the Financial Statements or (ii) as incurred in the Ordinary Course of Business.” Id. 25 Id. § 5.1.4.2.

-4- Transferred Companies has conducted the Business in the Ordinary Course of

Business.”26

Section 5.1.8.2 provides “[t]o the knowledge of Seller . . . there are no unfair

labor practice charges, grievances or complaints anticipated, pending, or threatened

. . . involving or affecting the Transferred Companies[.]”27 The Agreement defines

“knowledge of the Seller” as “the actual knowledge after reasonable inquiry of

James Rose and Richard Baxter.”28

Section 5.1.9.1 warrants in relevant part, “all material Taxes due and payable

[on behalf of the Transferred Companies] have been paid or will be paid by the due

date thereof” and “each of the Transferred Companies has complied with all

applicable Laws relating to the payment and withholding of Taxes[.]”29

Section 5.1.9.3 states “[t]o the knowledge of Seller, the Transferred

Companies have properly collected and remitted all material amounts of sales and

similar Taxes with respect to sales or leases made or services provided[.]”30

C. THE ALLEGED FRAUD AND SECURITIES VIOLATIONS

According to RGIS, after the Transaction closed, it discovered the

26 Id. § 5.1.5. 27 Id. § 5.1.8.2. 28 Id. § 1.1 (knowledge of the Seller). 29 Id. § 5.1.9.1. 30 See id. § 5.1.9.3.

-5- representations and warranties discussed above were false.31 First, RGIS alleges PSI

and WIS Mexico had numerous outstanding tax liabilities in Mexico.32 Second,

RGIS asserts “Defendants failed to disclose at least 75 currently pending claims and

labor-related lawsuits against the Transferred Companies.”33 Third, the SAC alleges

the Selling Defendants improperly transferred funds from WIS UK to themselves

outside the ordinary course of business.34 Fourth, RGIS claims WIS UK paid

bonuses outside the ordinary course of business.35

In addition to rendering the at-issue representations and warranties fraudulent,

RGIS alleges Defendants’ actions violated the TSA.36 Specifically, the SAC asserts

the Selling Defendants violated TSA § 4008.052 by selling “securities to Plaintiffs

by means of numerous false statements and omissions of material fact[.]”37

Regarding the Individuals, RGIS alleges they are liable under TSA § 4008.055(a) as

31 See SAC ¶¶ 27-60. Here too, the details of the alleged falsity of the at-issue representations and warranties aren’t of particular moment in resolving the present motion. So again, the Court only briefly outlines RGIS’s allegations concerning Defendants’ allegedly fraudulent conduct. 32 Specifically, RGIS alleges: (1) PSI has outstanding VAT tax liability of approximately $2 million; (2) PSI owes income taxes from 2007 and 2015-2020 in the amount of approximately $400,000; (3) PSI has not filed a monthly tax return since 2013 or an annual return for 2016, 2019, and 2020; and (4) WIS Mexio is subject to an audit with potential liability of approximately $4.2 million. SAC ¶¶ 29-24. 33 Id. ¶¶ 48-51. 34 Id. ¶¶ 52-55. 35 Id. ¶¶ 56-60. 36 Id. ¶¶ 74-104. 37 Id. ¶¶ 74-91.

-6- both “control persons” of the Selling Defendants and “aiders” of the allegedly

fraudulent sale.38

II. STANDARD OF REVIEW Superior Court Civil Rule 12(b)(2) governs motions to dismiss for lack of

personal jurisdiction.39 While a complaint need not “contain facts establishing a

court’s personal jurisdiction over a non-resident defendant,” upon a Rule 12(b)(2)

motion “the plaintiff does shoulder such a burden.”40 In determining whether

personal jurisdiction exists, courts consider “the pleadings, affidavits, and discovery

of record.”41 Yet, “unless contradicted by affidavit, the Court must (1) accept as true

all well-pleaded allegations in the complaint; and (2) construe the record in the light

most favorable to the plaintiff.”42

A motion to dismiss for failure to state a claim implicates Superior Court Civil

Rule 12(b)(6).43 Such a motion requires the Court determine “whether there are any

38 Id. ¶¶ 92-104. 39 Del. Super. Ct. Civ. R. 12(b)(2); see Curam, LLC v. Gray, 2025 WL 733256, at *4 (Del. Super. Ct. Mar. 6, 2025). 40 Green America Recycling, LLC v. Clean Earth, Inc., 2021 WL 2211696, at *3 (Del. Super. Ct. June 1, 2021) (cleaned up). When “no meaningful discovery has been conducted, that burden is a prima facie one.” Id. (citing Endowment Rsch. Grp., LLC v. Wildcat Venture Partners, LLC, 2021 WL 841049, at *4 (Del. Ch. Mar. 5, 2021)). 41 Economical Steel Building Technologies, LLC v. E. West Construction, Inc., 2020 WL 1866869, at *1 (Del. Super. Ct. Apr. 14, 2020) (quoting Ryan v. Gifford, 935 A.2d 258, 265 (Del. Ch. 2007)). 42 Green America, 2021 WL 2211696, at *3 (internal quotes omitted). 43 Del. Super. Ct. Civ. R. 12(b)(6).

-7- reasonably conceivable set of circumstances susceptible [to] proof under the

complaint under which a Plaintiff may be entitled to recovery.”44 Under the well-

settled Rule 12(b)(6) standard, the Court will:

(1) accept all well pleaded factual allegations as true, (2) accept even vague allegations as “well pleaded” if they give the opposing party notice of the claim, (3) draw all reasonable inferences in favor of the non-moving party, and (4) [not dismiss the claims] unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances.45 The Court does not, however, “accept as true conclusory allegations without any

specific supporting factual allegations.”46

III. DISCUSSION

In seeking dismissal of SAC Counts II and III, Defendants advance four

primary arguments.47 First, Defendants say the Court lacks personal jurisdiction

over the Individuals.48 Second, they contend the Agreement’s Delaware choice-of-

law clause bars Counts II and III—which invoke Texas statutory securities law.49

Third, Defendants insist that if the TSA claims are cognizable, then Counts II and III

44 Langford v. Irgau, 2025 WL 1013491, at *2 (Del. Super. Ct. Apr. 1, 2025) (citing Vinton v. Grayson, 189 A.3d 695, 700 (Del. Super. Ct. 2018)). 45 Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011). 46 In re General Motors (Hughes) Shareholder Litigation, 897 A.2d 162, 168 (Del. 2006) (internal quotes omitted). 47 See generally MTD. 48 See id. at 10-18. 49 See id. at 18-23.

-8- are time-barred by its three-year statute of limitations.50 Fourth, they assert Count III

fails to state a claim against the Individuals for control-person or aider liability under

the TSA.51

A. THE AGREEMENT’S FORUM-SELECTION CLAUSE PROVIDES PERSONAL JURISDICTION OVER THE INDIVIDUALS.

1. The Parties’ Contentions

Defendants say the Court lacks personal jurisdiction over the Individuals and

that the SAC’s allegation that the Individuals are “necessary and proper” parties52

does nothing to establish such.53 Defendants also contend the SAC does not allege

facts that show exercising jurisdiction over the Individuals comports with due

process.54 Defendants point out that: (1) “the Individuals are not Delaware

residents”;55 (2) the Transferred Companies are not Delaware entities;56 (3) RGIS

does not allege “the Agreement was negotiated in Delaware”;57 and (4) “the

50 See id. at 23-27. 51 See id. at 27-30. 52 SAC ¶ 18. 53 MTD at 10-18. Specifically, Defendants contend this conclusory allegation that “simply parrots-back the legal standard” rather than alleging fact demonstrating personal jurisdiction. Id. at 10-13. 54 Id. at 13-18; see Hazout v. Tsang Mun Ting, 134 A.3d 274, 278 (Del. 2016) (“[A]ny exercise of personal jurisdiction under [a] statute [must be] consistent with due process, by applying the established minimum contacts test[.]”). 55 See SAC ¶¶ 13-14. 56 See SAC ¶ 1. 57 MTD at 16; see generally SAC.

-9- Agreement did not involve the change in control of a Delaware corporation.”58

According to the Plaintiffs, the Individuals consented to Delaware jurisdiction

in two ways.59 First, Plaintiffs contend the Agreement’s forum-selection clause

binds the Individuals, notwithstanding their non-signatory status.60 Plaintiffs assert

the Individuals are “closely related” to the Agreement, because they received a direct

benefit therefrom61 and it was “foreseeable” they would be bound thereby.62 Second,

Plaintiffs argue 10 Del. C. § 3114 establishes personal jurisdiction over the

Individuals as “officers of Delaware corporations” who are “necessary or proper”

parties to this action.63 Plaintiffs also propose that exercising personal jurisdiction

58 Id. at 17 n.6. 59 MTD Opp’n at 8-15. 60 Id. at 9-12 (citing Aviation W. Charters, LLC v. Freer, 2015 WL 5138285, at *4 (Del. Super. Ct. July 2, 2015)). Plaintiffs also argue Agreement Section 11.5 shows that the parties contemplated that a signatory’s officers could be held independently liable for fraud. Id. at 12. 61 MTD Opp’n at 10-11. The direct benefit the Individuals alleged received was being “relieved of their personal liability exposure for the Mexican Entities’ outstanding VAT liability. Id. (citing SAC ¶ 47). 62 Id. at 11-12 (“[I]t is foreseeable for a non-signatory who received a direct benefit to be subject to forum-selection clauses where, as here, they are closely related to the contract or were involved in its planning and negotiation.” (citing Weygandt v. Weco, LLC, 2009 WL 1351808, at *5-6 (Del. Ch. May 14, 2009)). Plaintiffs maintain the Individuals “were not mere bystanders to the [Agreement] but active participants in the Selling Defendants’ violation.” Id. (citing SAC ¶¶ 100, 102-03). Plaintiffs note the Individuals were “the sole contacts for Plaintiffs throughout negotiations, including for diligence.” Id. (citing SAC ¶ 20). 63 Id. at 13-15 (citing Hazout, 134 A.3d at 290 (“by accepting a position as a directors [or] officer of a Delaware corporation” an individual “consent[s] to appear in this state to defend claims that full under either the Necessary or Proper Party provision.”)). Plaintiffs point out the SAC alleged the Individuals are “jointly and severally liable [] [] to the same extent as, Selling Defendants.” SAC ¶¶ 97, 104. Moreover, Plaintiffs maintain the SAC “asserts well-pled claims against the Individual[s] [] for control person and/or aider liability under the TSA, which necessarily arise out of the same facts and occurrences as the claims against the Selling Defendants.” MTD Opp’n at -10- over the Individuals satisfies due process.64

Defendants reject the notion that the forum-selection clause binds the

Individuals.65 Defendants contend the SAC does not allege the Individuals directly

benefited from the Agreement.66 And because the Individuals did not receive a direct

benefit, say Defendants, the “active-involvement theory” does not provide a

“standalone basis . . . to exercise personal jurisdiction[.]”67

2. The Agreement’s Forum-Selection Clause establishes personal jurisdiction over the Individual Defendants.

In the norm, Delaware courts apply a two-prong test to determine whether

personal jurisdiction over nonresident defendants exist: “First, the Court must

consider whether there is a statutory basis for jurisdiction under Delaware’s long arm

statute. . . . Second, the Court must evaluate whether the exercise of jurisdiction

14-15 (citing SAC ¶ 96). 64 Id. at 15-20. According to Plaintiffs, the Individuals’ (1) position as officers in Delaware corporations, (2) control over the Selling Defendants, and (3) role in negotiating the Transaction, establish the required minimum contacts. Id. at 16-19 (citing SAC ¶¶ 15, 20, 95-96, 100, 102-03). 65 Defendants’ Reply Brief in Further Support of Motion to Dismiss Counts II and III of Plaintiffs’ Second Amended Complaint (hereafter “MTD Reply”) at 3-7 (D.I. 61). 66 Id. at 5-6. Defendants note the Court already rejected Plaintiffs’ argument that the Transaction extinguished any personal tax liability for the Individuals. Id. at 2; see RGIS Int’l I, 2024 WL 586515, at *6. According to Defendants, the “SAC did nothing to supplement the FAC’s insufficient allegations that–at most–the Individuals’ alleged ‘exposure’ is ‘potentially reduced’ because of the Agreement.” MTD Reply at 5 (quoting SAC ¶ 47). Moreover, Defendants reject Plaintiffs’ argument regarding VAT liability to the Mexican government, as untethered from the SAC’s allegations. Id. at 6. 67 Neurvana Medical, LLC v. Balt USA, LLC, 2019 WL 4464268, at *8 (Del. Ch. Sept. 18, 2019); MTD Reply at 6-7.

-11- violates [] Due Process.”68 Courts may exercise personal jurisdiction over a

nonresident defendant “by consent through conduct, statutory means, or by ‘dint of

a contractual arrangement.’”69 Where consent is the basis for personal jurisdiction,

a minimum- contacts analysis is unnecessary.70

A valid Delaware forum-selection clause can establish consent to personal

jurisdiction.71 Now, it is undisputed that the Individuals did not sign the Agreement

in their personal capacities.72 But in certain circumstances, Delaware courts interpret

forum-selection clauses to bind non-signatories.73

A forum-selection clause provides personal jurisdiction over a non-signatory

where: (1) the forum-selection clause is valid; (2) the non-signatories are third-party

beneficiaries or closely related to the agreement; and (3) the claim arises from the

non-signatory’s standing related to the contract.74 Here, the parties only dispute

68 Tell v. Roman Catholic Bishops of Diocese of Allentown, 2010 WL 1691199, at *8 (Del. Super. Ct. Apr. 26, 2010) (citing LaNuova D & B, S.p.A. v. Bowe, Inc., 513 A.2d 764, 768 (Del. 1986)); AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 437 (Del. 2005). 69 Golden v. ShootProof Holding, LP, 2023 WL 2255953, at *4 (Del. Ch. Feb. 28, 2023) (quoting BAM Int’l, LLC v. MSBA Gp. Inc., 2021 WL 5905878, at *6 (Del. Ch. Dec. 14, 2021)). 70 See Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1145 (Del. 2010). 71 Cap. Gp. Cos., Inc. v. Armour, 2004 WL 2521295, at *3 (Del. Ch. Oct. 29, 2004). Such clauses are “‘presumptively valid’ and should be ‘specifically’ enforced unless the resisting party ‘could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud and overreaching.’” Id. (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). 72 See Agreement at Preamble; Signature Pages. 73 See Cap. Gp., 2004 WL 2521295, at *5-7. 74 Baker v. Impact Holding, Inc., 2010 WL 1931032, at *3 (Del. Ch. May 13, 2010).

-12- whether the Individuals are closely related to the Agreement.

A non-signatory is “closely related” to a contract when: (1) “the party receives

a direct benefit from the agreement” or (2) “it was foreseeable that the party would

be bound by the agreement.”75

The Court can quickly reject foreseeability as a basis for personal jurisdiction.

Foreseeability is only a standalone basis to satisfy the closely-related prong when:

(1) a non-signatory defendant seeks to enforce a forum-selection clause against a

signatory plaintiff; or (2) a non-signatory entity is sued under a contract signed by

its controller.76 Neither situation applies. Thus, a direct benefit is the only possible

way the Individuals are closely related to the Agreement.

A direct benefit satisfying the closely-related requirement, “may arise at the

time of contracting, or a party may accept the benefits of an agreement after it was

executed.”77 Both pecuniary and non-pecuniary benefits are sufficient.78 The benefit

must be direct79 and actually received; ‘the mere contemplation of a benefit does not

75 Id. at *4. 76 Neurvana, 2019 WL 4464268, at *5-6. The Neurvana court rejected the argument that “active involvement in negotiating the Purchase Agreement standing alone should satisfy the foreseeability inquiry.” Id. at *7. Rather, the “active involvement” theory requires the non- signatory receive a direct benefit. See id. at *7-8. 77 Florida Chemical Company, LLC v. Flotek Industries, Inc., 262 A.3d 1066, 1091 (Del. Ch. Aug. 17, 2021) (citations omitted). 78 Neurvana, 2019 WL 4464268, at *4 (collecting cases). 79 Id. (“[I]ndirect benefits have been deemed insufficient.”).

-13- directly confer one.’”80

While perhaps a close call, the SAC does allege sufficient facts demonstrating

it reasonably conceivable that the Individuals directly benefited under the

Agreement.81 The SAC repeatedly alleges the Transaction “reduc[ed] Rose and

Baxter’s personal exposure to both civil and potential criminal liability in Mexico”

based on the Mexican entities’ unpaid tax liabilities.82 These allegations identify the

specific years at issue, type of tax, and amount of potential liability.83 Thus, the SAC

contains more than conclusory allegations that the Individuals received a direct

benefit.84 And the Defendants may criticize the SAC for not citing any specific

statute, yet they provide no contrary authority nor affidavit showing RGIS misstates

80 Florida Chemical, 262 A.3d at 1091 (quoting Neurvana, 2019 WL 4464268, at *4). 81 The Court’s previously Motion to Dismiss opinion does not compel a different result. First, that opinion addressed the FAC, not the operative SAC which contains different allegations. See see RGIS Int’l I, 2024 WL 568515, at *3. Second, the Court didn’t hold that Messrs. Rose and Baxter received no direct benefit under the Agreement. See id. at *5-6. Indeed, the Court opined Messrs. “Rose and Baxter may in fact personally benefit from selling those companies with outstanding tax liabilities.” Id. *6. Rather, the Court held “RGIS’s claims of civil conspiracy and aiding and abetting fail[ed],” because the FAC did not allege Messrs. Rose and Baxter “stepped outside of their corporate role and acted out of personal motivation[.]” Id. 82 SAC ¶ 47 (“[u]nder Mexican law, directors such as Rose and Baxter are subject for non- compliance with VAT requirements, but that exposure is potentially reduced once they no longer serve as directors[.]”); see id. ¶¶ 29 (“the VAT liability for PSI amounts to approximately . . . $2 million[] in unpaid VAT from 2013 to 2020, which involves exposure to personal liability both for the Mexican Entities and their managers.”); 43 (“Rose assisted . . . to avoid detection by the Mexican taxing authorities and to reduce his personal exposure to liability.”). 83 See id. ¶¶ 29, 43, 47. 84 See Aviation W. Charters, 2015 WL 5138285, at *4 (“[C]onclusory allegation[s] [are] not enough to support the assertion that [non-signatory defendant] received a direct benefit from the [agreement].”).

-14- Mexican tax law. Absent such, the Court accepts the SAC’s allegations as true.85

And as such, the SAC contains sufficient allegations showing it is reasonably

conceivable the Individuals directly benefited from the Agreement. Hence, the

Individuals are closely related to the Agreement and bound by the forum-selection

clause.

B. THE AGREEMENT’S DELAWARE CHOICE-OF-LAW CLAUSE DOES NOT BAR COUNTS II AND III.

While Defendants insist the Agreement’s choice-of-law clause bars RGIS’s

TSA claims,86 they acknowledge the split authority regarding whether a Delaware

choice-of-law provision compels dismissal of the TSA claims in their motion.87 And

they suggest Anschutz Corp. v. Brown Robin Capital should control here88 arguing

that Wind Point Pr’s v. Insight Equity is inapplicable because the SCA does not plead

85 See Green America, 2021 WL 2211696, at *3 (internal quotes omitted). 86 MTD at 18-23 (citing Anschutz Corp. v. Brown Robin Capital, LLC, 2020 WL 3096744, at *7 (Del. Ch. 2020) (“Delaware respects and generally enforced contracting parties’ selection of a particular state’s law to govern their disputes.”)); see Agreement § 15.1. 87 See MTD at 19-23. Compare Anschutz, 2020 WL 3096744, at *7-8 (holding a Delaware choice- of-law provision compelled dismissal of claims under other states’ fraud and securities statutes based on alleged contractual misrepresentations), with Wind Point P’rs. VII-A, L.P. v. Insight Equity A.P. X Co., 2020 WL 5054791, at *19-20 (Del. Super. Ct. Aug. 17, 2020) (holding a Delaware choice-of-law provision does not compel dismissal of a TSA claim when: (1) Texas is the “default state”; (2) enforcing the choice-of-law provision would contradict Texas public policy; and (3) Texas has a greater interest than Delaware in the case). 88 MTD at 21 (“[T]he Supreme Court [] [] cited the Anschutz holding favorably and has not done so with Wind Point.”) (citing Stillwater Mining Co. v. Nat’l Union Fire Ins. Co., 289 A.3d 1274, 1287 n.77 (Del. 2023)).

-15- facts showing Texas is the “default state”89 or “has a materially greater interest in

this case than Delaware.”90

RGIS counters that Delaware courts recognize an exception to the general

enforceability of choice-of-law provisions91 that can indeed apply to TSA claims.92

In RGIS’s view, the SAC alleges facts that establish: (1) Texas is the default state;93

(2) Texas has a greater interest in the dispute;94 and (3) “enforcing the [Agreement’s]

Delaware choice-of-law provision would be contrary to Texas’ fundamental

policy.”95

2. Counts II and III survive the challenge based on the Agreement’s choice-of-law clause.

The Court must first determine whether Anschutz or Wind Point provides the

proper framework to evaluate the choice-of-law provision’s effect on Counts II and

III. In this instance, the Court finds Wind Point more persuasive.96

89 MTD at 21-23. 90 Id. at 21. MTD Reply at 14-15. 91 MTD Opp’n at 20-26 (citing Swipe Acquisition Corp. v. Krauss, 2021 WL 282642, at *2 (Del. Ch. Jan. 28, 2021)). 92 See Wind Point, 2020 WL 5054791, at *19-20. 93 MTD Opp’n at 23-24 (“the SAC alleges that a substantial part of the fraudulent conduct giving rise to the violation occurred in Texas . . . the Selling Defendants are headquartered in Texas and the Individual[s] . . . are Texas residents.” (citing SAC ¶¶ 10-11, 13-14)). 94 Id. at 24-25 (citing Wind Point, 2020 WL 5054791, at *19; Swipe Acquisition, 2021 WL 282642, at *4). 95 MTD Opp’n at 25-26. 96 Our Supreme Court’s brief citation to and explanatory note regarding Anschutz doesn’t counsel otherwise. See Stillwater, 289 A.3d at 1287 n.77. The Wind Point analysis considers the threshold -16- Under Wind Point, a TSA claim survives notwithstanding a Delaware choice-

of-law clause when: (1) Texas is the default state; (2) enforcing the contract would

violate a fundamental Texas public policy; and (3) Texas has a materially greater

interest in the dispute.97 Defendants only dispute the first and third elements.

Element three is met for the same reasons articulated in Wind Point—namely,

because the Delaware Securities Act “is not meant to regulate interstate securities

transactions,” adopting Defendants’ proffered interpretation “would lead to absurd

results and leave investors without protection.”98 Given the TSA is “intended not

only to protect Texas residents but also non-Texas residents from fraudulent

question of whether the choice-of-law provision is enforceable. Anschutz did not consider the TSA’s anti-waiver provision. TEX. GOV’T CODE ANN. § 4008.002 (2021); see Swipe, 2021 WL 282642, at *6 (applying Wind Point over Anschutz, because “[u]nlike in Wind Point, the parties in Anschutz did not raise, and the court did not have reason to address, whether the Texas Securities Act's anti-waiver provision barred dismissal of the Texas Securities Act claim.”). Moreover, Anschutz didn’t address the doctrine permitting departure from a choice-of-law clause to prevent contracting around a default state’s public policy. See Anschutz, 2020 WL 3096744, at *7-8; Ascension Ins. Hldgs, LLC v. Underwood, 2015 WL 356002, at *2 (Del. Ch. Jan. 28, 2015) (“[W]here the parties enter a contract which, absent a choice-of-law provision, would be governed by the law of a particular state (which I will call the ‘default state’), and the default state has a public policy under which a contractual provision would be limited or void, the Restatement recognizes that allowing the parties to contract around that public policy would be an unwholesome exercise of freedom of contract.”). 97 Wind Point, 2020 WL 5054791, at *19. 98 Id. at *20 (citing FdG Logistics LLC v. A&R Logistics Holdings, Inc., 131 A.3d 842, 855-856 (Del. Ch. 2016), aff ’d sub nom. A & R Logistics Hldgs, Inc. v. FdG Logistics LLC, 148 A.3d 1171 (Del. 2016)). See also Swipe Acquisition, 2021 WL 282642, at *5 (“[E]nforcing a general choice- of-law provision to prohibit the assertion of a foreign state’s securities law [is] contrary to the purpose of Section 2708 and would lead to absurd results, including by causing the Delaware Securities Act to regulate interstate securities transactions.” (internal quotes omitted)).

-17- securities practices emanating from Texas,”99 Texas has a stronger interest in the

dispute. As such, the Agreement’s choice-of-law clause does not bar Counts II and

III if Texas is the default state.

When determining the “default state,” courts consider: “(a) the place of

contracting; (b) the place of negotiation of the contract; (c) the place of performance;

(d) the location of the subject matter of the contract; and (e) the domicile, residence,

nationality, place of incorporation and place of business of the parties.”100

Considering these factors, Texas is the default state.

The SAC is silent on the first three factors, but it can be reasonably inferred

that the parties negotiated, entered, and performed the Agreement in Texas. 101 The

subject matter of the Agreement—equity in the Transferred Entities—was held by

the Selling Defendants in Texas and relates to international entities.102 Finally, while

the entity-parties are Delaware corporations, both the Individuals and Selling

Defendants are located in Texas.103 As it at this point, at very least, reasonably

99 In re Enron Corp. Secs., 235 F.Supp.2d 549 691-92 (S.D. Tex. 2002). 100 Restatement (Second) Conflict of Laws § 188 (1971); See Sycamore Partners Management, L.P. v. Endurance American Insurance Company, 2021 WL 761639, at *8-9 (Del. Super. Ct. Feb. 26, 2021). 101 All Defendants are based in Texas and the Transferred Companies are international entities. SAC ¶¶ 1, 10-11, 13-14. Conversely, the SAC has no allegations that any portion of the Transaction took place in Delaware. See generally id. 102 See id. ¶¶ 1, 10-11. 103 SAC ¶¶ 9-11, 13-14. The SAC is silent regarding where RGIS is located. See generally id.

-18- conceivable that Texas is the default state, the Court cannot find the Agreement’s

choice-of-law clause bars Counts II and III.

C. THE TSA’S THREE-YEAR STATUTE OF LIMITATIONS BARS COUNTS II AND III.

1. The Parties Contentions

Defendants contend the TSA’s three-year statute of limitations104 bars Counts

II and III.105 They assert RGIS’s TSA claims accrued in September106 or November

of 2021.107 They then note Plaintiffs filed the SAC on February 17, 2025—raising

TSA claims for the first time more than three years after they accrued.108

RGIS insists Counts II and III aren’t time-barred, because they relate back to

the original complaint.109 RGIS recognizes Delaware’s relation-back doctrine does

not apply where a foreign jurisdiction’s procedural limitations are “inseparably

104 The TSA’s three-year statute of limitations begins to run from: (1) the date the claimant discovers the lie or omission; or (2) the date the claimant should have discovered the untruthfulness by exercising reasonable diligence. TEX. GOV’T CODE ANN. § 4008.062 (2021). 105 MTD at 23-27. The date the stock sale closed. MTD at 23 (citing Stone v. Enstam, 541 S.W.2d 473, 478 (Tex. 106

App. 1976)); see SAC ¶ 85. 107 MTD at 23-24; see SAC ¶ 8 (referencing a November 10, 2021, demand letter sent from Plaintiffs to Defendants). Defendants contend the November 2021 letter “makes clear that Plaintiffs had discover the purported facts they now rely upon to claim the alleged untruths and omissions at issue in the SAC, including: the purported VAT to Mexican tax administration service, pending labor claims, transfers the day before closing, and employee bonuses.” MTD at 24 (citing SAC ¶¶ 8, 28-60). 108 Id. at 24-26; see generally SAC. 109 MTD Opp’n at 26-29 (citing Del. Super. Ct. Civ. R. 15(c)(2)). RGIS asserts the Delaware relation-back doctrine is a procedural rule that applies to the parties’ dispute. Id. at 26 (citing Chaplake Hldgs., LTD v. Chrysler Corp., 766 A.2d 1,3 (Del. 2001)).

-19- interwoven with substantive rights,”110 but insists that exception does not apply.111

Substantively, RGIS argues the relation-back doctrine applies because “Counts II

and III arise out of the same conduct alleged in the original complaint—[] Selling

Defendants’ sale of the Transferred Companies to Plaintiffs by means of untrue

statements of material fact.”112

2. The TSA’s three-year statute of limitations is substantive and is a bar to Counts II and III’s untimely claims.

RGIS does not dispute it first asserted TSA claims outside of Texas’s three-

year statute of limitations. Thus, the timeliness of Counts II and III depends on the

applicability of Delaware’s relation-back doctrine. Generally, “the law of the forum

governs procedural matters”113 and “the relation back of statutes of limitations are []

110 US Dominion, Inc. v. Fox News Network, LLC, 2021 WL 5984265, at *18 (Del. Super. Ct. Dec. 16, 2021). 111 MTD Opp’n at 26-27. 112 Id. at 28. In resistance, Defendants posit: “The TSA’s built-in three-year limitation to assert a claim . . . is a substantive–not procedural–right.” MTD Reply at 16; see Weisz v. Spindletop Oil and Gas Co., 664 S.W.2d 423, 426 (Tex. App. 1983) (“Texas follows the rule that ‘where the statute creates a right and also incorporates a limitation upon the time within which the suit is to be brought, the limitation qualifies the right so that it becomes a part of the substantive law rather than procedural.’”) (quoting State of California v. Copus, 309 S.W.2d 227, 231 (Tex. 1958)). Defendants argue too that even were the Court to apply Delaware law, the three-year limitation is substantive because it is built-into the statute. MTD Reply at 16-17 (citing CHC Invs., LLC v. FirstSun Cap. Bancorp, 2020 WL 1480857, at *4 n.26 (Del. Ch. 2020) (holding a “foreign limitations period is a substantive ‘built-in’ aspect of the statutory right rather than a procedural issue . . . where a statute give a new right or creates a new liability and the same section or act limits the time within which it can be enforced.” (internal quotes omitted)). So, they say, because the TSA’s limitation period is substantive, the relation-back doctrine does not save Counts II and III. Id. at 17-18. 113 Chaplake Hldgs., 766 A.2d at 5.

-20- considered to be procedural rather than substantive.”114

A foreign state’s statute of limitations is “a matter of substance, rather than

procedure, when the statute of limitations is ‘inseparably interwoven’ with the

substantive laws of the foreign state.”115 In that situation, Delaware courts apply the

foreign jurisdiction’s statute of limitations without addressing the relation-back

doctrine.116 This comports with the notion that courts should not allow litigants to

“get[] the benefit of a statute of limitations that really ought not to apply given the

fact that the substantive law is interwoven with the procedural right.”117

So, is the TSA’s three-year statute of limitations “inseparably interwoven”

with is substantive provisions? A statute of limitations is “inseparably interwoven”

when it is a “built-in” aspect of the substantive law.118 A limitations period is “built-

in” “where a statute gives a new right or creates a new liability and the same section

114 In re Asbestos Litigation, 2018 WL 1468096, at *1 (Del. Super. Ct. Mar. 26, 2018); see US Dominion, 2022 WL 2229781, *6 n.67 (“Under Delaware’s conflict of law rules, a statute of limitations is procedural, not substantive[.]” (internal quotes omitted)). 115 Crawford v. Syngenta Crop Protection, LLC, 2024 WL 2831554, at *5 (Del. Super. Ct. May 31, 2024) (quoting US Dominion, 2021 WL 5984265, at *6 n.68). 116 See Chaplake Hldgs., 766 A.2d at 5 (“The procedural law of a foreign state will, however, be applied when the law of a foreign state is applied to substantive issues and the procedural law of the foreign state is so inseparably interwoven with substantive rights as to render a modification of the foregoing rule necessary, lest a party be thereby deprived of his legal rights.” (internal quotes omitted)). 117 Saudi Basic Industries Corp. v. Mobil Yanbu Petrochemical co., Inc., 866 A.2d 1, 15, 17-18 (Del. 2005) (applying Saudi statute of limitations, or lack thereof, because it was built-into the statute that there was no time limit for asserting a claim). 118 See Natale v. Upjohn Co., 236 F. Supp. 37, 40 (D. Del. 1964) (interpreting Delaware law) (citing Pack v. Beech Aircraft, 132 A.2d 54, 67 (Del. 1957)).

-21- or act limits the time within which it can be enforced.”119

Under that standard, the TSA’s statute of limitations is inseparably interwoven

with the substantive provisions. The same statute that created the causes of action

on which Counts II and III rely,120 establishes the three-year limitations period.121

Restated, the statute that creates the substantive right RGIS seeks to enforce, also

limits the time in which the right can be asserted. Accordingly, the Texas statute of

limitations applies, the Court need not address the relation-back doctrine; even if

otherwise properly and adequately pled, the TSA claims are time-barred and cannot

survive.

IV. CONCLUSION

For the foregoing reasons, the Court must GRANT the Defendants’ motion.

The SAC’s Counts II and III are time-barred and DISMISSED.

IT IS SO ORDERED. /s/ Paul R. Wallace _______________________ Paul R. Wallace, Judge

119 CHC Invs., 2020 WL 1480857, at *4 n.26 (citations omitted). Texas law applies the same standard. See Shields v. State, 27 S.W.3d 267, 275 (Tex. App. 2000) (holding where a statute “creates a private right of action and incorporates a time limit within which the investor must initiate the action, the limitation qualifies the right and becomes an element of the statutory cause of action itself.” (citing California v. Copus, 309 S.W.2d 227, 231 (Tex. 1958)). And therefore, under Texas law, where that is the case, the temporal “qualification on filing suit is not considered to be a statute of limitations.” Id. 120 See SAC ¶¶ 97-98 (noting Counts II and III advance claims against the Selling Defendants under TSA § 4008.052 and the Individuals under TSA § 4008.055). 121 TEX. GOV’T CODE ANN. § 4008.062 (2021).

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