Slopeside Manager, LLC v. 12th & 5th Member, LLC

• Court: Superior Court of Delaware
• Decided: November 19, 2025
• Docket: N24C-09-096 EMD CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

SLOPESIDE MANAGER, LLC, et al., ) ) Plaintiffs/Counterclaim Defendants, ) ) v. ) ) 12TH & 5TH MEMBER, LLC, et al., ) ) C.A. No.: N24C-09-096 EMD CCLD Defendants/Counterclaim ) Plaintiffs/Third-Party Plaintiffs, ) ) v. ) ) CRAIG ZOGBY, ) ) Third-Party Defendant. )

Submitted: September 7, 2025 1 0F

Decided: October 30, 2025 Redacted: November 19, 2025 2 1F

Upon Motion for Judgment on the Pleadings and Motion to Stay DENIED

Thad J. Bracegirdle, Esquire, Sarah T. Andrade, Esquire, Bayard P.A., Wilmington, Delaware, John Baughman, Esquire, Allison Melton, Esquire, Baughman Kroup Bosse PLLC, Norfolk Virginia. Attorneys for Plaintiffs/Counterclaim Defendants Slopeside Manager, LLC, et al. Third-Party Defendant Craig Zogby.

Samuel L. Moultrie, Esquire, Greenberg Traurig, LLP. Attorneys for Defendants/Counterclaim Plaintiffs/Third-Party Plaintiffs 12th and 5th Member, LLC, et al.

DAVIS, J.

I. INTRODUCTION

This is a civil action assigned to the Complex Commercial Litigation Division of the

Court. Plaintiffs Slopeside Manager, LLC (“Slopeside Manager”); Gainesville Properties IV

1 The Court held a hearing on July 7, 2025 (D.I. No. 59). The transcript from that hearing was lodged on September 7, 2025. (D.I. No. 60). 2 Redacted per Order dated November 19, 2025 (D.I. No. 64). Mgr, LLC; Salt Lake City Properties Mgr, LLC; Rogers 28th Street Mgr, LLC; Salt Lake City

Properties II Mgr, LLC; and Michael Augustine (collectively “Alta,” sometimes referred to by

the parties as the “Alta Companies”) filed suit against Defendants 12th & 5th Member, LLC;

12th & 5th Manager, LLC; KAREP V OC, LLC; KAREP V OC REOC JV, LLC; 12th & 5th JV,

LLC; 12th & 5th, LLC; Salt Lake City Properties I Manager, LLC; KAREP REIT V REOC JV,

LLC; Salt Lake City Properties I JV, LLC; Salt Lake City Properties I, LLC; Rogers 28th Street

Properties Member KI, LLC; KA Multifamily Master Fund, LLC f/k/a KA Impact Master Fund,

LLC; Rogers 28th Street Properties JV KI, LLC; Rogers 28th Street Properties KI, LLC; Salt

Lake City Properties Member KP6, LLC; Salt Lake City Properties Manager KP6, LLC; KAREP

VI REOC, LLC; Salt Lake City Properties JV KP6, LLC; Salt Lake City Properties KP6, LLC;

and SLC Bueno Ave KP6, LLC (collectively “Kayne,” sometimes referred to by the parties as

the “Kayne Companies”). 3 2F

Alta filed its Complaint (the “Complaint”) against Kayne on September 13, 2024. 4 Alta 3F

asserts the following claims: (i) Count I: Breach of Contract; 5 and (ii) Count II: Declaratory 4F

Judgment. 6 Alta claims that its damages exceed $1,054,636.00. 7 5F 6F

On November 20, 2024, Kayne filed its Answer to Complaint, Affirmative Defenses, and

Counterclaim against Alta and Third-Party Defendant Craig Zogby (“Mr. Zogby”). 8 Kayne’s 7F

affirmative defenses assert lack of jurisdiction, improper venue, failure to state a claim,

fraudulent inducement, and several equitable defenses. 9 Kayne’s Counterclaims assert: (i) Count 8F

3 See Alta’s Complaint (hereinafter “Compl.”) (D.I. No. 1). 4 Id. 5 See id. ¶¶ 59-67. 6 See id. ¶¶ 68-73. 7 See id. ¶ 67. 8 See Kayne’s Answer to Complaint, Affirmative Defenses and Counterclaim (hereinafter “Kayne Answer,” “Kayne Affirmative Defense,” or “Kayne Countercl.,” as applicable) (D.I. 28). 9 See Kayne Answer at 22-23.

2 I: Fraud against Craig Zogby and Michael Augustine; 10 (ii) Count II: Intentional 9F

Misrepresentation against Craig Zogby and Michael Augustine; 11 (iii) Count III: Breach of 10F

Contract (the Sugar House DM Agreement) against Slopeside Manager; 12 (iv) Count IV: Breach 11F

of Contract (the Bueno DM Agreement) against Slopeside Manager; 13 (v) Count V: Breach of 12F

Contract (the Sugar House JV Agreement) against Slopeside Manager; 14 (vi) Count VI: Breach 13F

of Contract (the Bueno JV Agreement) against Slopeside Manager; 15 (vii) Count VII: Breach of 14F

the Sugar House Guaranty against Michael Augustine; 16 (viii) Count VIII: Breach of the Bueno 15F

Guaranty against Michael Augustine; 17 and (ix): Count IX: Declaratory Judgment against Alta 16F

and Mr. Zogby. 18 Kayne claims that its damages exceed $11,000,000.00. 19 17F 18F

On December 20, 2024, Mr. Zogby filed his Answer to Kayne’s Third-Party

Complaint. 20 In the same transaction, Alta filed its Reply to Kayne’s Counterclaim. 21 Alta and 9F 20F

Mr. Zogby’s defenses assert failure to state a claim and several equitable defenses. 22 21F

On January 17, 2025, Alta and Mr. Zogby moved for judgment on the pleadings (the

“Motion”) pursuant to Delaware Superior Court Civil Rule 12(c) against Kayne, noting:

Although Craig Zogby is named as a defendant to a third-party complaint filed by the Defendants, his interests are aligned with [Alta] and the arguments he asserts are the same, therefore he is grouped together with [Alta] for purposes of this Motion. 2322F

10 See Kayne Countercl. ¶¶ 161-173. 11 See id. ¶¶ 174-185. 12 See id. ¶¶ 186-194. 13 See id. ¶¶ 195-203. 14 See id. ¶¶ 204-210. 15 See id. ¶¶ 211-217. 16 See id. ¶¶ 218-221. 17 See id. ¶¶ 222-225. 18 See id. ¶¶ 226-232. 19 See id. at 69. 20 See Craig Zogby’s Answer to Kayne Countercl. (hereinafter “Zogby Answer”) (D.I. No. 35). 21 See Alta’s Reply to Kayne Countercl. (hereinafter “Alta Reply”) (D.I. No. 36). 22 See id. at 57-59. 23 See Alta and Craig Zogby’s Motion for Partial Judgment on the Pleadings at n. 1. (hereinafter “Mot.”) (D.I. No. 38).

3 Kayne filed its response in opposition to the Motion (the “Opposition”) on March 12, 2025. 24 23F

Alta and Mr. Zogby filed their reply brief in support of the Motion (the “Reply Brief”) on April

2, 2025. 25 24F

On May 1, 2025, Alta and Mr. Zogby moved to stay discovery (the “Motion to Stay”)

pending the Court’s ruling on the Motion. 26 On May 22, 2025, Kayne filed its response in 25F

opposition. 27 6F

The Court held a hearing on both motions on July 7, 2025. 28 The Court took the motions 27F

under advisement at the end of the hearing.

For the reasons set forth below, the Court DENIES the Motion for Partial Judgment on

the Pleadings and the Motion to Stay Discovery.

I. RELEVANT FACTS

A. THE PARTIES

1. Plaintiffs and Third-Party Defendant

Plaintiff Slopeside Manager, LLC is a Delaware limited liability company with its

principal place of business in Park City, Utah. 29 28F

Plaintiffs Gainesville Properties IV Mgr, LLC, Salt Lake City Properties Mgr, LLC,

Rogers 28th Street Mgr, LLC, and Salt Lake City Properties II Mgr, LLC, are Delaware limited

liability companies with their principal places of business located in Delaware. 30 29F

24 See Kayne’s Response to Alta and Craig Zogby’s Motion for Partial Judgment on the Pleadings (hereinafter “Opp’n”) (D.I. No. 42). 25 See Alta and Craig Zogby’s Reply Brief in Support of Their Motion for Partial Judgment on the Pleadings (hereinafter “Reply Br.”) (D.I. No. 43). 26 See Alta and Craig Zogby’s Motion to Stay Discovery (hereinafter “Mot. to Stay Disc.”) (D.I. No 45). 27 See Kayne’s Response to Alta and Craig Zogby’s Motion to Stay Discovery (hereinafter “Opp’n to Mot. to Stay Disc.”) (D.I. No. 48). 28 D.I. No. 59. 29 See Compl. ¶¶ 2-6. 30 See id. ¶ 3.

4 Plaintiff Michael Augustine is an individual who resides in Park City, Utah. 31 Mr. 30F

Augustine founded Utah-based Alta Terra Real Estate (“ATRE”) in 2019. 32 Mr. Augustine is 31F

the “100% member and manager of Slopeside Manager, LLC.” 33 32F

Third-Party Defendant Craig Zogby is an individual who resides in Park City, Utah. 34 33F

Mr. Zogby is Mr. Augustine’s business partner, “and participates materially in the management

of [ATRE] and its affiliates, including Counter-Defendants[.]” 35 Prior to becoming co-managing 34F

partner of ATRE, Mr. Zogby was “Managing Director at Kayne [], from 2010 through 2022.” 36 35F

2. Defendants

All Defendants, listed above, are Delaware limited liability companies with their

principal places of business located in Delaware. 37 36F

B. NATURE OF THE DISPUTE

1. The Joint Venture Real Estate Development Projects

This case concerns a series of joint venture real estate development projects between Alta

and Kayne (collectively, the “Projects”). 38 The at issue Projects are: (i) the “Ufora Project” 37F

located in Gainesville, Florida; (ii) the “Rogers Project” located in Rogers, Arkansas; (iii) the

“Sugar House Project” located in Salt Lake City, Utah; (iv) the “Bueno Project” located in Salt

Lake City, Utah; and (v) the “Trolley Project” located in Salt Lake City, Utah. 39 38F

31 See id. ¶ 7. 32 Kayne Countercl. ¶ 38. 33 Id. 34 See id. ¶ 29. 35 Id. 36 Id. ¶ 42. 37 See Compl. ¶¶ 8-27; see also Kayne Countercl. ¶¶ 2-22. 38 See Compl. ¶¶ 30-31; see also Mot. at 4 (“Although the agreements associated with these projects were made between various Delaware business entities, based on who controlled the various entities they can be and have been readily grouped into two opposing sides in this action: the Plaintiffs (the Alta Companies) and the Defendants (the Kayne Companies).”). 39 See Compl. ¶ 30; see also Mot. at 5.

5 For each Project, the parties created a Delaware LLC “with certain Alta Companies and

certain Kayne Companies becoming the members of those LLCs.” 40 “That entity would then 39F

acquire land, which the parties would improve according to a development plan. Once

developed, the improved real estate would be operated on an ongoing basis or sold onward to a

third party for a profit.” 41 40F

Alta and Kayne also entered into two contracts for each Project: (i) an LLC operating

agreement (a “JV Agreement”); and (ii) a development manager’s agreement (a “Development

Agreement”). 42 “Alta, through [Slopeside Manager], would act as ‘manager’ of each Project 41F

under the JV Agreements and ‘development manager’ under each Development Agreement.” 43 42F

Kayne claims that Slopeside Manager and Mr. Zogby selected Makers Line, LLC

(“Makers Line”) as the general contractor for the Sugar House Project. 44 Kayne asserts that 43F

Slopeside Manager was responsible for ensuring that: (i) Makers Line completed the Sugar

House Project on time (within 27-30 months); 45 and (ii) Makers Line completed the Sugar 44F

House Project for no more than the guaranteed maximum price ($89,903,519.00). 46 Alta and 45F

Mr. Zogby deny these claims. 47 46F

Kayne contends that by September 2023, “the Sugar House Project was approximately

one year behind schedule. Nevertheless, Slopeside Manager claimed that the Project had not

exceeded its budget.” 48 Alta and Mr. Zogby deny these contentions. 49 47F 48F

40 See Compl. ¶ 32; see also Mot. at 4-5. 41 Compl. ¶ 32. 42 See Compl. ¶ 31; see also Mot. at 5. 43 Compl. ¶ 33. 44 Kayne Countercl. ¶ 61. 45 See id. ¶¶ 68-70. 46 Id. ¶¶ 71-72. 47 See Zogby Answer ¶¶ 61, 68-70, 71-72; see also Alta Reply ¶¶ 61, 68-70, 71-72. 48 Kane Countercl. ¶¶ 74, 80-81. 49 See Zogby Answer ¶¶ 74, 80-81; see also Alta Reply ¶¶ 74, 80-81.

6 On October 18, 2023, Mr. Zogby informed Kayne that Makers Line was insolvent and

was ceasing all business operations, including the Sugar House Project. 50 Makers Line agreed to 49F

assign the remaining work to other subcontractors. 51 Kayne asserts that Slopeside Manager and 50F

Mr. Zogby represented to Kayne that the Sugar House Project “would get back on track” and

hired Built Contractors, LLC as its construction adviser. 52 Alta and Mr. Zogby deny these 51F

assertions. 53 52F

Kayne contends that by February 2024, “work on the Sugar House Project was suspended

by the fire marshal, yet Slopeside Manager did not inform [Kayne] of this[.]” 54 Kayne also 53F

claims that throughout the end of 2023 and into 2024, the subcontractors “complained about non-

payment and threatened to file, and did file, mechanic’s liens against the Sugar House Project,

yet Mr. Zogby and Mr. Augustine continued to represent to [Kayne] that the project was on

track.” 55 Alta and Mr. Zogby deny these contentions. 56 54F 55F

Kayne alleges that during this time, the Rogers Project was at its earliest phase of

development, the Bueno and Trolley Projects “were suffering from the similar construction delay

and cost overrun problems as the Sugar House Project,” and the Ufora Project “was completed

but had been delivered significantly late.” 57 Alta and Mr. Zogby deny these allegations. 58 56F 57F

50 See Kayne Countercl. ¶ 87. 51 Id. ¶ 88. 52 Id. ¶¶ 90-91. 53 See Zogby Answer ¶¶ 90-91; see also Alta Reply ¶¶ 90-91. 54 See Kayne Countercl. ¶ 99. 55 Id. ¶ 100. 56 See Zogby Answer ¶¶ 99-100; see also Alta Reply ¶¶ 99-100. 57 Kayne Countercl. ¶¶ 107-109. 58 See Zogby Answer ¶¶ 107-109; see also Alta Reply ¶¶ 107-109.

7 2. Kayne’s Notices of Default and Alta’s Response

On May 29, 2024, Kayne sent Alta correspondence asserting alleged contractual defaults

with respect to all the Projects (the “Notices of Default”). 59 The Notices of Default demanded 58F

that Alta be removed as manager of the Projects. 60 Kayne also claimed that Alta failed to: (i) 59F

meet Project deadlines; (ii) provide Kayne with written notice of delays with proposed resolution

plans; and (iii) make payments on the loan associated with the Rogers Project. 61 60F

On June 6, 2024, Alta sent Kayne its response titled “Dispute Notices,” in which Alta

disputed the above allegations and further asserted claims against Kayne. 62 On June 11, 2024, 61F

Kayne delivered to Alta its responses to the Dispute Notices. 63 62F

3. Settlement Agreement Negotiations

After exchanging the Notices of Default and Dispute Notices, the parties engaged in

settlement negotiations to resolve their disputes. 64 “The negotiations lasted over a month. They 63F

included multiple exchanges of red line drafts emailed back and forth between the parties, and

multiple phone calls between the parties and their counsel.” 65 Alta claims, and Kayne denies, 66 64F 65F

that on June 13, 2024, “a senior Kayne executive emailed a third party referring to the global

settlement agreement between Kayne and Alta.” 67 66F

On June 25, 2024, Kayne’s counsel sent Alta’s counsel the first drafts of settlement

agreements, stating that “these drafts remain subject to change until executed.” 68 On July 19, 67F

59 See Compl. ¶ 36. 60 See id. 61 See id. 62 See id. ¶ 38. 63 Id. ¶ 39. 64 See id. ¶ 40; see also Mot. at 6. 65 Id.; see also Mot. at 6 (referencing Ex. 1 to Mot.). 66 See Zogby Answer at 12-13; see also Opp’n at 10. 67 Compl. ¶ 41. 68 See Kayne Countercl. ¶ 112 (referencing Ex. G to Kayne Countercl.).

8 2024, the parties and their counsel participated in a Zoom call to discuss the settlement

agreements. 69 68F

Alta claims, and Kayne denies, 70 that the parties agreed to several material terms during 69F

this call. 71 Alta also contends that at the end of the call, “Kayne’s counsel stated in sum and 70F

substance, ‘why don’t we just drop everything into some escrow, and we can run everything that

way, we are settling everything at once so all the properties, agreements, money, same day.’ All

parties agreed to this process.” 72 Kayne denies this contention. 73 71F 72F

On July 23, 2024, Kayne’s counsel sent an email to Alta’s counsel titled “ATRE / Kayne

- Settlement Agreements.” 74 The email states, “See attached for further revised drafts of the 73F

Settlement Agreements, clean and redline against the prior drafts of each. Please let us know of

any questions or comments.” 75 The email included eight attachments—two sets of drafts (the 74F

prior drafts and Kayne’s updated drafts) for the following four Projects: (i) the Rogers Project;

(ii) the Ufora Project; (iii) the Sugar House Project; and (iv) the Bueno and Trolley Project. 76 75F

Later the same day, Alta’s counsel responded to Kayne’s email, stating, “Kayne Team –

these drafts are approved as final.” 77 Alta attached W-9s and wiring instructions to facilitate 76F

payment. 78 The email also states: 77F

[Alta’s Counsel] will coordinate signature with [Alta] and I assume [Kayne’s Counsel] will coordinate with Kayne. We can exchange signature pages among the

69 See Compl. ¶ 42; see also Mot. at 7, 17. 70 See Kayne Answer at 13. 71 See Compl. ¶ 42(a)-(i). 72 Id. ¶ 43. 73 See Kayne Answer at 14. 74 See Compl. ¶ 44; see also Mot. at 3, 17 (referencing Exs. 2-6 to Mot.). 75 See Ex. 2 to Mot. 76 Id. Mot. at 5 n.2 (“The Bueno Project and the Trolley Project have been treated as a single project called ‘Bueno Trolley’ at times … and at other times have been treated as two separate projects … but this distinction is immaterial to the outcome of this Motion.”); Mot. at 7 n.4 (“[T]he projects called Bueno and Trolley, to the extent they might be considered different projects, were addressed within the same settlement agreement.”). 77 See Compl. ¶ 45; see also Mot. at 8 (referencing Ex. 7 to Mot.). 78 Id.

9 attorneys in escrow. Once everything is signed, we can release signatures and Kayne can initiate wires. Does that process work for everyone? Can we get this signed and funded tomorrow? 7978F

Kayne did not respond to Alta’s email of July 23, 2024. 80 79F

On July 24, 2024, Alta’s counsel sent Kayne’s counsel executed signature pages, signed

by Mr. Augustine, for each of the four Settlement Agreements. 81 The email states: 80F

[A]ttached hereto are [Alta’s] signature pages to the four settlements agreements, delivered to you in escrow. Please coordinate signature with Kayne, compile fully executed settlement agreements and deliver them to me in escrow. The attached signatures are not to be released from escrow and effective until I have received fully executed and compiled settlement agreements and confirmation that Kayne is prepared to initiate the required wire transfers. Hopefully we can accomplish this today. We reserve the right to recall and withdraw these signatures at any time prior to completion of the transaction. Please confirm receipt and acceptance of the escrow instructions. 82 81F

Kayne did not respond to Alta’s email of July 24, 2024. 83 82F

The next day, on July 25, 2024, Alta’s counsel sent Kayne’s counsel an email stating, “I

have not heard back from you. Please confirm receipt of the documents and acceptance of

escrow. Also, please provide a status update.” 84 Kayne’s counsel responded later the same day, 83F

stating, “Yes, we are holding in escrow. I’ve been tied up on other matters, but am following

up.” 85 84F

Alta’s counsel sent Kayne’s counsel another email on July 30, 2024, stating:

All – as we indicated last week, the settlement agreements are all final as Kayne last presented them. We have provided wire instructions and W-9s. We have provided [Kayne’s counsel] with all signatures in escrow and are ready to close on

79 Mot. at 9 (referencing Ex. 7 to Mot.). 80 See id. at 9. 81 See Compl. ¶ 46 (referencing Exs. 1-4 to Compl., copies of the Settlement Agreements); see also Mot. at 9 (referencing Ex. 9 to Mot.). 82 Id. 83 Id. 84 See Compl. ¶ 47; see also Mot. at 9-10 (referencing Ex. 14 to Mot.). 85 Id.

10 this transaction. Please advise on status of Kayne’s signatures and the wires. We would like to close this transaction today or tomorrow. 86 85F

Kayne contends that during this time, Kayne “discovered major discrepancies between

[Project] records and actual costs incurred, especially on the Sugar House Project. … [F]or

example, Slopeside Manager’s change order log dated May 8, 2024, showed at credit of

$1,064,101.19 for deleted work. In actuality, there was $3,485,466.14 in unpaid change orders

pending, a discrepancy of over $4.5 million.” 87 Kayne continues: 86F

Just as [Kayne] was beginning to understand the true status of the Alta Projects, [Alta] executed the draft settlement agreements. … Kayne determined that it needed to further investigate whether the parties’ settlement terms were reasonable given the new information it was learning about the Alta Projects and, therefore, elected not to sign the draft settlement agreements. … [Kayne] ultimately discovered that the financial and other records provided by [Alta] during settlement negotiations concealed material information. With respect to the Sugar House Project, [Alta] concealed actual construction costs, the true status of subcontractor buyout, improper use of the Makers Line construction line of credit, and other evidence of mismanagement of the Sugar House Project. In addition, Mr. Zogby and Mr. Augustine misrepresented the actual status of the Alta Projects during settlement negotiations. 88 87F

Alta and Mr. Zogby deny all allegations of wrongdoing. 89 88F

On August 14, 2024, Kayne sent Alta an “Excess Projects Costs Notice” on the Sugar

House Project. 90 Kayne claimed that Alta is “100% responsible” for $2,269,686.40 in excess 89F

project costs, and that failure to pay would result in a default under the Sugar House JV

Agreement. 91 90F

86 See Compl. ¶ 48; see also Mot. at 10 (referencing Ex. 15 to Mot.). 87 See Kayne Countercl. ¶¶ 118-120. 88 See id. ¶¶ 121-125. 89 See Zogby Answer ¶¶ 118-125; see also Alta Reply ¶¶ 118-125. 90 See Compl. ¶ 49. 91 See id.

11 On August 19, 2024, Alta’s counsel sent an email to Kayne’s counsel stating that the

Excess Projects Costs Notice is ineffective because the claim releases set forth in the settlement

agreements are material terms and binding. 92 91F

On September 6, 2024, Kayne’s counsel responded to Alta’s counsel. 93 Kayne’s counsel 92F

stated that the settlement agreements are not enforceable because they are unexecuted drafts. 94 93F

Kayne contends that after analyzing the documents provided by Alta during these

negotiations, Kayne determined Alta mismanaged all the Projects. 95 Kayne also alleges that Mr. 94F

Zogby and Mr. Augustine: (i) intentionally concealed evidence of their mismanagement of the

Projects; 96 and (ii) fraudulently induced Kayne to enter into settlement negotiations. 97 Alta and 95F 6F

Mr. Zogby deny these allegations. 98 97F

II. PARTIES’ CONTENTIONS

A. MOTION

1. Alta and Mr. Zogby

Alta and Mr. Zogby assert that the parties entered into binding and enforceable settlement

agreements on July 23, 2024. 99 Alta and Mr. Zogby argue that Kayne made an offer on July 23, 98F

2024, when it emailed the settlement agreements to Alta. 100 Alta and Mr. Zogby maintain that 99F

Alta accepted Kayne’s offer by replying, “these drafts are approved as final.” 101 Alta and Mr. 100F

Zogby also contend that granting the Motion will resolve all liability issues in this case. 102 Alta 101F

92 See id. ¶ 51; see Kayne Countercl. ¶ 129 (referencing Ex. I to Kayne Countercl.). 93 See Kayne Countercl. ¶ 130 (referencing Ex. J to Kayne Countercl.). 94 See id. 95 See id. ¶ 153. 96 See id. ¶¶ 162-168. 97 See id. ¶ 169. 98 See Zogby Answer ¶ 153; see also Alta Reply ¶ 153. 99 See Mot. at 3. 100 See id. 101 See id. 102 See id. at 1, 3.

12 and Mr. Zogby request that the Court allow this matter to proceed only on the issue of Alta’s

damages. 103 Further, Alta and Mr. Zogby maintain that Kayne fails to properly assert its 102F

affirmative defense of fraudulent inducement. 104 Alta and Mr. Zogby also contend that Kayne’s 103F

Counterclaims of fraud and intentional misrepresentation fail because: (i) the settlement

agreements bar such claims; (ii) the claims are not pled with the particularity required by Rule

9(b); and (iii) the economic loss doctrine bars the claims. 105 104F

2. Kayne

Kayne argues that the Motion is improper under Civil Rule 12(c) because it relies on

matters outside the pleadings, such as “multiple emails, including with third parties[.]” 106 Thus,105F

Kayne asserts that the Court must consider the Motion as a motion for summary judgment. 107 106F

Kayne next contends that if the Court does not consider matters outside the pleadings,

there exist material issues of fact as to whether the settlement agreements are enforceable. 108 107F

Kayne claims that it did not provide an offer to Alta, and even if it did, Alta did not accept;

instead, Alta made a counteroffer that was never accepted by Kayne. 109 108F

Kayne maintains that even if the Court finds that the settlement agreements are

enforceable, its well-pleaded fraudulent misrepresentation affirmative defense precludes an entry

of judgment in Alta’s favor. 110 Further, Kayne disputes Alta’s argument that the settlement 109F

agreements bar Kayne’s fraudulent inducement affirmative defense. 111 While the clauses state 110F

103 See id. 104 See id. at 27-30. 105 See id. at 13, 30-32. 106 See Opp’n at 9. 107 See id. 108 See id. at 11. 109 Id. at 24. To further support its argument, Kayne references text messages between Kayne and Alta executives from August 2024. However, the Court will not consider these text messages at this stage because they are not included or referenced in either Alta’s Complaint or Kayne’s Counterclaim. 110 See id. at 24-25. 111 See id. at 27.

13 that the written agreement replaces all prior discussions or promises, the clauses fail to state that

Kayne did not rely on any of Alta’s earlier statements, especially concerning the financial

condition of the Projects. 112 Kayne argues that under Delaware law, this type of standard 111F

contract language does not preclude Kayne from claiming that Alta fraudulently induced Kayne

into entering settlement negotiations. 113 112F

Kayne asserts that it has adequately pled its fraud claims under Civil Rule 9(b). 114 113F

Kayne asserts that it sufficiently alleges that Mr. Zogby and Mr. Augustine made false

representations and material omissions concerning the Projects. 115 In addition, Kayne argues 114F

that the economic loss doctrine does not apply to its fraud claims. 116 Kayne also contends that 115F

the doctrine often does not apply when the parties are not in privity. 117 116F

B. THE MOTION TO STAY

Alta and Mr. Zogby ask the Court for a “brief stay of discovery … until the Court decides

the dispositive Motion.” 118 Alta and Mr. Zogby maintain that the Motion disposes of every issue 117F

in the case except for damages, “and will correspondingly narrow the scope of discovery.” 119 118F

Alta and Mr. Zogby argue that “it would be wasteful to force Alta and Mr. Zogby to engage in

discovery on issues that may not survive the pleading stage. Requiring Alta and Mr. Zogby to

respond to Kayne’s discovery requests before the Court has ruled on the Motion will result in an

112 See id. at 28. 113 See id. 114 See id. at 30. 115 Id. (citing Kayne Countercl. ¶¶ 162-164). 116 See id. at 32. 117 See id. 118 Mot. to Stay Disc. at 3. 119 Id. at 4.

14 uneconomical waste of resources and impose a significant and potentially unnecessary burden

upon Alta and Mr. Zogby.” 120 119F

Alta and Mr. Zogby also contend that Kayne’s discovery requests “are not narrowly

tailored” and that the “number of discovery requests would be overly burdensome,

disproportionate to the needs of the case, and objectionable.” 121 120F

Kayne contends that Alta and Mr. Zogby are seeking to deprive Kayne of access to the

discovery process to continue covering up their wrongdoings. 122 “Alta is not trying to save 121F

Kayne money in discovery. It is trying to have the Court shield its bad acts from exposure.” 123 122F

Kayne also argues that this is not an instance in which the Court should use its “sparing

discretion” to grant a discovery stay because: (i) the Motion would only partially resolve the

case, so discovery would take place anyway; 124 (ii) a protective order would provide the relief 123F

Alta and Mr. Zogby are seeking; 125 and (iii) Kayne would face a risk of prejudice because “[i]f 124F

the Court were to deny Alta’s Motion for Partial Judgment on the Pleadings on July 7, 2025, this

would leave only a year for the parties to begin and complete discovery.” 126 125F

III. STANDARD OF REVIEW

A. MOTION FOR JUDGMENT ON THE PLEADINGS

A party may move for judgment on the pleadings pursuant to Civil Rule 12(c). In

determining a motion under Civil Rule 12(c) for judgment on the pleadings, the Court is required

120 Id. 121 Id. 122 See Opp’n to Mot. to Stay Disc. at 1. 123 Id. at 2. 124 See id. at 3-4. 125 See id. at 6. 126 Id. at 7.

15 to view the facts pled and the inferences to be drawn from such facts in a light most favorable to

the non-moving party. 127 The Court must take the well-pled facts alleged in the complaint as 126F

admitted. 128 When considering a motion under Civil Rule 12(c), the Court also assumes the 127F

truthfulness of all well-pled allegations of fact in the complaint. 129 The Court must, therefore, 128F

accord parties opposing a Civil Rule 12(c) motion the same benefits as a party defending a

motion under Civil Rule 12(b)(6). 130 129F

However, a court will “not rely upon conclusory allegations . . . [and] neither inferences

nor conclusions of fact unsupported by allegations of specific facts . . . are accepted as true.” 131 130F

Further, “[a] trial court need not blindly accept as true all allegations, nor must it draw all

inferences from them in plaintiffs' favor unless they are reasonable inferences.’” 132 Yet, if the 131F

non-moving party “presents any reasonably conceivable set of facts susceptible of proof to

support its claim, the motion against it must be denied. A complaint will not be dismissed unless

it is clearly without merit. ‘Vagueness or lack of detail’ is not enough for dismissal.” 133 13 F

With these considerations in mind, the Court may grant a motion for judgment on the

pleadings only when no material issue of fact exists, and the movant is entitled to judgment as a

matter of law. 134133F

127 See Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1205 (Del. 1993); see also Warner Commc’ns, Inc. v. Chris–Craft Indus., Inc., 583 A.2d 962, 965 (Del. Super.), aff’d without opinion, 567 A.2d 419 (Del. 1989). 128 See Desert Equities, Inc., 624 A.2d at 1205; Warner Commc’ns, Inc., 583 A.2d at 965. 129 See McMillan v. Intercargo Corp., 768 A.2d 492, 500 (Del. Ch. 2000). 130 See id. 131 Id. (internal citations omitted). 132 Id. (internal citations omitted). 133 Velocity Exp., Inc. v. Office Depot, Inc., 2009 WL 406801, at *4 (Del. Super. 2009) (internal citations omitted). 134 See Desert Equities, Inc., 624 A.2d at 1205; Warner Commc’ns, Inc., 583 A.2d at 965.

16 B. THE “PLEADINGS” CONSIDERED.

On a Civil 12(c) motion, the Court considers all pleadings, including the complaints,

answers, “documents integral to the pleadings,” such as those attached as exhibits or

incorporated by reference, and facts subject to judicial notice. 135 134F

IV. DISCUSSION

A. THE COURT FINDS THAT ALTA’S MOTION SHOULD BE CONSIDERED AS A MOTION FOR JUDGMENT ON THE PLEADINGS, NOT SUMMARY JUDGMENT.

Civil Rule 12(c) states in relevant part:

If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56. 136 13 F

Here, Kayne argues that the Court should consider the Motion as a motion for summary

judgment because it relies on matters outside the pleadings, including “multiple emails, including

with third parties, and other documents upon which there has been no opportunity for deposition

or other examination in discovery.” 137 136F

Alta asserts that in deciding a motion for judgment on the pleadings, the Court can

“consider documents integral to the pleadings, including documents incorporated by reference

and exhibits attached to the pleadings.” 138 Alta contends that the exhibits attached to its Motion 137F

“were referenced and relied upon in the Complaint or attached to it. Throughout, the Motion

135 Jiménez v. Palacios, 250 A. 3d 814, 827 (Del. Ch. 2019); accord Patheon Biologics LLC v. Humanigen Inc., 2023 WL 5041233, at *1 (Del. Super. July 31, 2023); see also Intermec IP Corp. v. TransCore, LP, 2021 WL 3620435, at *8 (Del. Super. Aug. 16, 2021) (“[T]he Court can consider, limitedly, documents outside the pleadings but integral to and incorporated referentially into them.”). 136 Del. Super. Ct. Civ. R. 12(c). 137 See Kayne Opp’n at 9. 138 See Reply Br. at 12 (quoting Jimenez v. Palacios, 250 A.3d 814, 827 (Del. Ch. 2019), as revised (Aug. 12, 2019), aff’d, 237 A.3d 68 (Del. 2020)).

17 generally cites to the paragraph of the pleading in which a document was referenced when

introducing the exhibit.” 139 138F

The Court finds that Alta does not rely on matters outside of the pleadings in the Motion.

Alta specifically references each of the Motion’s exhibits in its Complaint. Alta references the

July 23, 2024, email thread in Complaint Paragraphs 44 and 45 and includes the email thread as

Exhibits 7 and 15 of the Motion. Alta references the July 24, 2024, email thread in Complaint

Paragraph 46 and includes the email thread as Exhibit 14 of the Motion. Alta references the July

25, 2024, email thread in Complaint Paragraph 47 and includes the thread in Exhibit 14 of the

Motion. Further, Alta references the July 30, 2024, email thread in Paragraph 48 of its

Complaint and includes that thread in Exhibit 15 of the Motion.

B. THE COURT WILL DENY THE MOTION BECAUSE MATERIAL ISSUES OF FACT EXIST AS TO THE ELEMENTS OF OFFER, ACCEPTANCE, AND AN INTENT TO BE BOUND.

“A valid contract requires an offer, acceptance, and consideration, and the parties must

have intended that the contract would bind them.” 140 139F

“Delaware courts favor the negotiated settlement of contested legal disputes and enforces

them as contracts.” 141 “Settlement agreements are binding where the parties agree to all the 140F

material terms and intend to be bound by that contract, whether or not the contract is in

writing.” 142 “A party seeking to enforce a purported agreement has the burden of proving the 141F

existence of a contract by a preponderance of the evidence.” 143 In determining if the movant has 142F

139 Id. 140 Shilling v. Shilling, 332 A.3d 453, 462 (Del. 2024) (quoting Trexler v. Billingsley, 166 A.3d 101, 2017 WL 2665059, at *3 (Del. 2017) (TABLE)). 141 Alatus Aerosystems v. Triumph Aerostructures, LLC, 2021 WL 6122106, at *5 (Del. Super. Dec. 27, 2021) (citing Delphi Petroleum, Inc. v. Magellan Terminal Holdings, L.P., 2020 WL 1972857 at *5 (Del. Super. Apr. 23, 2020)); Clark v. Ryan, 1992 WL 163443, at *5 (Del. Ch. June 12, 1992)). 142 Id. (citing Schwartz v. Chase, 2010 WL 2601608, at *4 (Del. Ch. June 29, 2010)). 143 Id.

18 met its burden, the Court must ask “whether a reasonable negotiator in the position of one

asserting the existence of a contract would have concluded, in that setting, that the agreement

reached constituted agreement on all of the terms that the parties themselves regarded as

essential and thus that that agreement concluded the negotiations and formed a contract.” 144 143F

1. The Court finds that an issue of material fact exists as to whether Kayne made Alta an offer on July 23, 2024.

To form a contract in Delaware, an offer must be made by one person or entity to

another. 145 “An offer means the signification by one person to another of his willingness to 144F

enter into a contract with him on the terms specified in the offer.” 146 “But a ‘mere statement of a 145F

person’s willingness to enter negotiations with another person is in no sense an offer, and cannot

be accepted so as to form a binding contract.’” 147 14 F

“Delaware courts have often looked to the Restatement (Second) of Contracts as

persuasive authority for interpreting basic contract principles[.]” 148 Restatement (Second) of 147F

Contracts § 27 states: “Manifestations of assent that are in themselves sufficient to conclude a

contract will not be prevented from so operating by the fact that the parties also manifest an

intention to prepare and adopt a written memorial thereof; but the circumstances may show that

the agreements are preliminary negotiations.” 149 148F

144 Id. 145 See Loveman v. Nusmile, Inc., 2009 WL 847655, at *3 (Del. Super. Mar. 31, 2009). 146 Id. (quoting Salisbury v. Credit Servs., 199 A. 681 (Del. Super. 1937). 147 Hyetts Corner, LLC v. New Castle Cnty., 2021 WL 4166703, at *7 (Del. Ch. Sept. 14, 2021) (quoting Salisbury, 199 A. at 681). 148 Thompson St. Cap. Partners IV, L.P. v. Sonova United States Hearing Instruments, LLC, 340 A.3d 1151, 1169 (Del. 2025). 149 Restatement (Second) of Contracts § 27 (1981) (emphasis added).

19 Alta and Mr. Zogby argue that Kayne’s email of July 23, 2024, was an offer. 150 The 149F

email states, “See attached for further revised drafts of the Settlement Agreements, clean and

redline against the prior drafts of each. Please let us know of any questions or comments.” 151 150F

The Court finds that there is an issue of material fact as to whether Kayne made an offer

to Alta on July 23, 2024. To the Court, this communication does not clearly indicate a

willingness to enter a binding contract with Alta. First, Kayne’s use of the word “further” may

indicate that Kayne intended this communication to be a part of the parties’ continuing

negotiations. Second, Kayne attaching its “revised drafts” along with the parties’ “prior drafts”

may indicate that Kayne assumed that the negotiations were ongoing. Third, Kayne stating

“[p]lease let us know of any questions or comments” appears to show that its drafts were

tentative while awaiting feedback from Alta. These all may be considered examples of “direct

language indicating an intent to defer the formation of a contract.”

At this stage in the proceedings, the Court finds that the record is unclear on whether

Kayne manifested a willingness to be bound by the terms contained in the revised drafts, or

whether Kayne was merely negotiating with Alta. Accordingly, the Court DENIES the Motion

with respect to Alta’s request that the Court enforce the settlement agreements because an issue

of material fact exists as to whether Kayne’s communication of July 23, 2024, constitutes a valid

offer.

2. The Court also finds that an issue of material fact exists as to whether Alta accepted Kayne’s offer on July 23, 2024.

Acceptance of an offer occurs when a party “expresses his or her intent to accept the

offer, by word, sign, writing or act, communicated or delivered to the person making the

150 See Compl. ¶ 44; see also Mot. at 3, 17 (referencing Exs. 2-6 to Mot.). 151 See Ex. 2 to Mot. (emphasis added).

20 offer.” 152 The offeree must unconditionally accept the offer on identical terms. 153 “It is basic 15 F 152F

that overt manifestation of assent ... controls the formation of a contract.” 154 “Once an offer is 153F

accepted, there is a binding contract.” 155 However, “if a reply to an offer purports to accept that 154F

offer but attaches conditions or qualifications that require additional performance by the offeror,

such a reply is not an acceptance but is, instead, a counteroffer.” 156 155F

Alta and Mr. Zogby argue that Alta’s response to Kayne’s July 23, 2024, email

constituted acceptance. 157 Kayne argues that even if its email constituted an offer, Alta did 156F

provide acceptance; rather, Alta made a counteroffer that Kayne never accepted. 158 157F

As stated above, an issue of material fact exists as to whether Kayne made Alta an offer.

Thus, Alta’s purported acceptance cannot bind Kayne unless Kayne initially made the offer to

Alta. In other words, there cannot be a valid acceptance without a valid offer. Still, even if the

Court found that Kayne made an offer, an independent issue of material fact exists as to whether

Alta’s response constitutes a valid acceptance.

The July 23, 2024, email first states: “Kayne Team – these drafts are approved as

final.” 159 Taken alone, this language likely establishes that Alta manifested a willingness to be 158F

bound by the identical terms of Kayne’s purported offer. However, Alta continues by stating,

“[Alta’s counsel] will coordinate signature with [Alta] and I assume [Kayne’s counsel] will

coordinate with Kayne. We can exchange signature pages among the attorneys in escrow.

Once everything is signed, we can release signatures and Kayne can initiate wires. Does that

152 In re AMC Invr’s. LLC, 637 B.R. 43, 62 (Bankr. D. Del. 2022), aff’d, 656 B.R. 95 (D. Del. 2024). 153 See Hyetts Corner, LLC, 2021 WL 4166703, at *7. 154 In re AMC Inv’rs, LLC (quoting Leeds v. First Allied Connecticut Corp., 521 A.2d 1095, 1101 (Del. Ch. 1986)). 155 Id. 156 Schwartz, 2010 WL 2601608, at *7. 157 See Mot. at 3. 158 See Opp’n at 24. 159 See Compl. ¶ 45; see also Mot. at 8 (referencing Ex. 7 to Mot.).

21 process work for everyone? Can we get this signed and funded tomorrow?” 160 This language 159F

could be construed as Alta adding an additional term not found in Kayne’s purported offer—

specifically, that the signatures of both parties are required to make the settlement agreements

binding. As such, a factual issue exists as to whether Alta’s response should be considered an

unconditional acceptance or a counteroffer.

Again, on this record, the Court DENIES the Motion with respect to Alta’s request that

the Court enforce the settlement agreements because an issue of material fact exists as to whether

Alta’s response of July 23, 2024, constitutes a valid acceptance.

3. In addition, the Court finds that an issue of material fact exists as to whether Alta and Kayne intended to be bound to the settlement agreements.

The question of whether the parties intended to be bound by the contract is a question of

fact that “looks to the parties’ intent as to the contract as a whole, rather than analyzing whether

the parties possess the requisite intent to be bound by each particular term.” 161 “Under Delaware 160F

law, ‘overt manifestation of assent—not subjective intent—controls the formation of a

contract.’” 162 “When applying this objective test to determine ‘whether the parties intended to 161F

be bound, the Court reviews the evidence that the parties communicated to each other up until

the time that the contract was signed[.]’” 163162F

Kayne asks the Court to rely on Schwartz v. Chase, 164 where “the Court concluded that 163F

the draft settlement agreement was not enforceable because, at the onset of negotiations, the

160 Mot. at 8-9 (referencing Ex. 7 to Mot.). 161 Alatus Aerosystems, 2021 WL 6122106, at *8 (quoting Eagle Force Holdings, LLC v. Stanley V. Campbell, 187 A.3d 1209, 1230 (Del. 2018)). 162 Id. (quoting Black Horse Capital, LP v. Xstelos Holdings, Inc., 2014 WL 5025926, at *12 (Del. Ch. Sept. 30, 2014)); Indus. Am., Inc. v. Fulton Indus., Inc., 285 A.2d 412, 415 (Del. 1971)). 163 Id. (citing Eagle Force, 187 A.3d at 1229). 164 2010 WL 2601608, at *8 (Del. Ch. June 29, 2010)).

22 plaintiff had indicated that it ‘would not even consider whether to accept the terms of the

Settlement Agreement until after Chase had signed that document.’” 165 Kayne continues: 164F

Here, Kayne’s reservation was even more clear than the reservation made in Schwartz. [On June 25, 2024,] Kayne expressly indicated that the agreements were not final “until executed.” … Moreover, Alta made a similar reservation [on July 24, 2024], explaining that the agreements were not “effective until [its counsel had] received fully executed and compiled settlement agreements and confirmation that Kayne is prepared to initiate the required wire transfers.” … Accordingly, a reasonable person would not believe that Kayne intended to be bound by the unexecuted, draft settlement agreements, until (and unless) Kayne actually executed the documents. 166 165F

Alta and Mr. Zogby argue that Kayne’s signature was not a condition precedent to

contract formation. 167 “‘[S]ettlements may be enforced even in the absence of a signed writing.’ 166F

Similarly, the fact that the parties intended to memorialize the settlement later does not render

the settlement unenforceable.” 168 Alta and Mr. Zogby contend that the lack of a signed contract 167F

can only prevent a settlement from becoming effective if the ‘[p]arties positively agreed that

there will be no binding contract until execution.’” 169 Alta and Mr. Zogby assert that Kayne 168F

“cannot demonstrate the existence of any ‘positive agreement’ that the Settlement Agreements

had to be executed by Kayne, because no such agreement ever existed.” 170 Alta and Mr. Zogby 169F

further contend that Loppert v. WindsorTech, Inc., not Schwartz, is the controlling precedent

because like Loppert, Kayne is attempting to “renege by claiming, after the fact, that its signature

was required before the settlement became effective.” 171 170F

165 Opp’n at 15. 166 Id. at 15-16 (emphasis supplied). 167 See Reply Br. at 2. 168 Id. (citing Schwartz, 2010 WL 2601608, at *4); Stone Creek Custom Kitchens & Design v. Vincent, 2016 WL 7048784, at *3 (Del. Super. Dec. 2, 2016); Sarissa Capital Dom. Fund LP v. Innoviva, Inc., 2017 WL 6209597, at *21 (Del. Ch. Dec. 8, 2017)). 169 Id. at 2-3 (quoting Loppert v. WindsorTech, Inc., 865 A.2d 1282, 1287 (Del. Ch. 2004), aff’d, 867 A.2d 903 (Del. 2005); accord Shilling, 2024 WL 4960326, at *8). 170 Id. at 3. 171 Id. at 9.

23 The Court finds that, even if there is a valid offer and acceptance, an independent issue of

material fact exists regarding whether both parties intended to be bound by the settlement

agreements. The evidence, as described in detail above, shows that “up until the time that the

contracts were signed” by Alta on July 23, 2024, Alta may have intended to be bound by the

settlement agreements, but Kayne may not have intended to be bound. Discovery should resolve

this factual issue.

Moreover, the Court’s analysis does not end with consideration of only the parties’

communications of July 23, 2024. “Delaware courts have also said that … the court may

consider evidence of the parties’ prior or contemporaneous agreements and negotiations in

evaluating whether the parties intended to be bound by the agreement.” 172 Because material 171F

issues of fact exist as to whether the parties’ July 23, 2024, communications resulted in a valid

contract or were mere negotiations, the Court may also look to the parties’ communications after

July 23, 2024, to evaluate whether they both intended to be bound by the settlement agreements.

On July 24, 2024, Alta’s counsel sent an email enclosing Kayne’s counsel executed

signature pages, stating:

[A]ttached hereto are [Alta’s] signature pages to the four settlements agreements, delivered to you in escrow. Please coordinate signature with Kayne, compile fully executed settlement agreements and deliver them to me in escrow. The attached signatures are not to be released from escrow and effective until I have received fully executed and compiled settlement agreements and confirmation that Kayne is prepared to initiate the required wire transfers. Hopefully we can accomplish this today. We reserve the right to recall and withdraw these signatures at any time prior to completion of the transaction. Please confirm receipt and acceptance of the escrow instructions. 173 172F

This communication seems to show that although Alta signed the settlement agreements,

Alta may not have intended to be bound to these agreements until Kayne signed and delivered

172 Eagle Force, 187 A.3d at 1230. 173 See Mot. Ex. 9 (emphasis added).

24 them to Alta. Kayne did not respond to Alta’s email, which may indicate that Kayne did not

intend to be bound by the settlement agreements on this date. This communication creates a

material issue of fact as to whether either party intended to be bound.

On July 25, 2024, Alta’s counsel sent Kayne’s counsel another email stating, “I have not

heard back from you. Please confirm receipt of the documents and acceptance of escrow. Also,

please provide a status update.” 174 Kayne’s counsel responded the same day, stating, “Yes, we 17 F

are holding in escrow. I’ve been tied up on other matters, but am following up.” 175 Unlike the 174F

prior communication, this email indicates that Kayne may have intended to be bound because it

affirmatively states that it was holding in escrow. Taken together with prior communications,

this email creates a material issue of fact as to whether Kayne intended to be bound.

On July 30, 2024, Alta’s counsel sent Kayne’s counsel another email stating, in relevant

part, “We have provided [Kayne’s counsel] with all signatures in escrow and are ready to close

on this transaction. Please advise on status of Kayne’s signatures and the wires. We would

like to close this transaction today or tomorrow.” 176 Again, this communication shows that Alta 175F

may not have intended to be bound by the settlement agreements until Kayne provided its

executed signature pages. Taken together with prior communications, this email creates a

material issue of fact as to whether Alta intended to be bound.

The Court finds that issues of material fact remain on Alta’s request that the Court

enforce the settlement agreements because an issue of material fact exists as to whether both

parties intended to be bound. In conclusion, because material issues of fact exist as to the

elements of offer, acceptance, and an intent to be bound, the Court must DENY the Motion.

174 See Compl. ¶ 47; see also Mot. at 9-10 (referencing Ex. 14 to Mot.). 175 Id. (emphasis added). 176 See Compl. ¶ 48; see also Mot. at 10 (referencing Ex. 15 to Mot.) (emphasis added).

25 C. THE COURT WILL DENY THE MOTION AS TO KAYNE’S FRAUDULENT INDUCEMENT AFFIRMATIVE DEFENSE AND FRAUD COUNTERCLAIMS.

In its Answer, Kayne asserts a fraudulent inducement affirmative defense. 177 In its 176F

Counterclaim, Kayne’s asserts a claim for fraud against Mr. Zogby and Mr. Augustine (Count I)

and a claim for intentional misrepresentation against Mr. Zogby and Mr. Augustine (Count

II). 178 In the Motion, Alta and Mr. Zogby argue that Kayne fails to properly assert its 177F

affirmative defense of fraudulent inducement. 179 Alta and Mr. Zogby also contend that Kayne’s 178F

Counterclaims of fraud and intentional misrepresentation fail because: (i) the settlement

agreements bar such claims; (ii) they are not pled with the particularity required by Rule 9(b);

and (iii) they are barred by the economic loss doctrine. 180 179F

1. The Court finds that Kayne properly asserts its fraudulent inducement affirmative defense.

Under Civil Rule 9(b), a party must plead fraud and negligence with particularity. 181 To180F

plead fraud or negligence with the particularity required by Rule 9(b), a party must include the

“time, place, contents of the alleged fraud or negligence, as well as the individual accused of

committing the fraud” or negligence. 182 181F

“If a party’s manifestation of assent is induced by either a fraudulent or a material

misrepresentation by the other party upon which the recipient is justified in relying, the contract

is voidable by the recipient.” 183 To prevail on a fraudulent inducement defense, the asserting 182F

177 Kayne Answer at ¶ 23. 178 Kayne Countercl. At ¶¶ 57-61. 179 See Mot. at 27-30. 180 See id. at 13, 30-32. 181 Del. Super. Ct. Civ. R. 9(b); see Flowshare, LLC v. GeoResults, Inc., 2018 WL 3599810, at *3 (Del. Super. July 25, 2018). 182 Flowshare, LLC, 2018 WL 3599810, at *3 (quoting TrueBlue, Inc., v. Leeds Equity Partners IV, LP, 2015 WL 5968726, at *6 (Del. Super. Sept. 25, 2015)). 183 Lynch v. Gonzalez, 2020 WL 4381604, at *35 (Del. Ch. July 31, 2020), aff’d, 253 A.3d 556 (Del. 2021) (quoting Restatement (Second) of Contracts § 164 (1981)).

26 party must prove the following elements: (i) a false representation, usually one of fact, made by

the other party; (ii) the other party’s knowledge or belief that the representation was false, or was

made with reckless indifference to the truth; (iii) an intent to induce the asserting party to act or

to refrain from acting; [and] (iv) the asserting party’s action or inaction taken in justifiable

reliance upon the representation. 184183F

Kayne asserts in its Answer that “Alta’s claims are barred because [Kayne was]

fraudulently induced into negotiating the settlement agreements as far as they did by [Alta’s]

misrepresentations and omissions about the financial condition and development of the

Projects.” 185 Kayne claims that it did not learn of Alta’s wrongdoings until after taking over the 184F

Projects and entering the settlement negotiations. 186 185F

In their Answer and Reply to Kayne’s Counterclaims, Alta and Mr. Zogby deny all

allegations of wrongdoing. 187 In the Motion, Alta and Mr. Zogby contend that Kayne’s 186F

fraudulent misrepresentation affirmative defense fails on the justifiable reliance element. 188 187F

“Delaware courts have consistently held that ‘sophisticated parties to negotiated commercial

contracts may not reasonably rely on information that they contractually agreed did not form a

part of the basis for their decision to contract.’” 189 188F

Alta and Mr. Zogby assert that the settlement agreements contain such language, thus

barring Kayne from claiming that it was fraudulently induced into entering the settlement

184 Id. (citing Standard Gen. L.P. v. Charney, 2017 WL 6498063, at *12 (Del. Ch. Dec. 19, 2017) (quoting Lord v. Souder, 748 A.2d 393, 402 (Del. 2000), aff’d, 195 A.3d 16 (Del. 2018)). 185 Kayne Answer at 23. 186 See id. ¶ 153. 187 See Zogby Answer ¶¶ 118-125. 188 Mot. at 28. 189 Id. (quoting H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 142, n.18 (Del. Ch. 2003)).

27 negotiations. 190 Specifically, the settlement agreements include a [REDACTED------------------- 18 F

-------------------------------------------------------------] stating:

[REDACTED--------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------]. 191 190F

In its Opposition, Kayne argues that under Delaware law, integration clauses included in

unexecuted, draft settlement agreements are not the type of clauses that bar a fraudulent

inducement claim. 192 Even if the settlement agreements are binding, Kayne argues that the 19 F

instant integration clauses do not contain [REDACTED-------------------------------------------------

----------------------------------------------------]. 193 Kayne maintains that the clauses fail to state 192F

that [REDACTED----------------------------------------------------------------------------------------------

---------------------------]. 194 Kayne asserts that under Delaware law, this type of standard contract 193F

language does not bar Kayne from claiming that Alta fraudulently induced Kayne into entering

settlement negotiations. 195 Kayne contends that the clauses “simply operate[] to police the 194F

variance of the agreement by parol evidence.” 196 195F

190 See id. at 28-29. 191 [REDACTED] 192 See Opp’n at 27. 193 [REDACTED] 194 [REDACTED] 195 See id.: To be effective, a contract must contain language that, when read together, can be said to add up to a clear anti-reliance clause by which the [relevant party] has contractually promised that it did not rely upon statements outside the contract’s four corners in deciding to sign the contract. … The presence of a standard integration clause alone, which does not contain explicit anti-reliance representations and which is not accompanied by other contractual provisions demonstrating with clarity that the [party] had agreed that it was not relying on facts outside the contract, will not suffice to bar fraud claims. (quoting Adviser Invs, LLC v. Powell, 2023 WL 6383242, at *5 (Del. Ch. Sept. 29, 2023)). 196 Id. at 29.

28 The Court finds that, at the pleading stage, Kayne properly asserts its fraudulent

inducement affirmative defense. To satisfy the first element of fraudulent misrepresentation,

Kayne alleges that Mr. Zogby and Mr. Augustine: (i) falsely represented “construction costs, the

progress of the work, subcontractor buyouts, and the status of payments to subcontractors during

construction and settlement negotiations related to the Projects;” 197 (ii) fraudulently concealed 196F

documents which “would have accurately described construction costs, the progress of the work,

subcontractor buyout, and the status of payments to subcontractors during construction, and

settlement negotiations related to the projects;” 198 and (iii) submitted false applications for 197F

payment and reallocated the Projects’ schedule of values to deceive Kayne. 199 198F

For the second element, Kayne alleges that Mr. Augustine and Mr. Zogby “knew that

these affirmative misrepresentations and omissions were false when made” because of their roles

at Kayne and their involvement with the Projects. 200 For the third element, Kayne contends that 199F

Mr. Augustine and Mr. Zogby made these misrepresentations and omissions to induce Kayne to

enter into the settlement agreements. 201 For the fourth element, Kayne alleges that it justifiably 200F

relied upon Alta’s representations “when Kayne was making critical business decisions about the

Projects, including negotiating settlement.” 202 201F

Because Kayne raises a well-pleaded challenge to the formation of the settlement

agreements, the Court notes that it follows that a material fact issue exists to preclude granting a

judgment on the pleadings. 203 In other words, because there are material issues of fact 202F

197 Kayne Countercl. ¶ 162. 198 Id. ¶ 164. 199 See id. ¶¶ 166-67. 200 See id. ¶¶ 38, 41, 168. 201 See id. ¶ 169. 202 Id. ¶¶ 163, 165. 203 See Wonnum v. State, 942 A.2d 569, 574 (Del. 2007) (“When the defendant presents some evidence capable of being believed, on each of the elements of an affirmative defense, whether the defendant has proved the affirmative defense by a preponderance of the evidence is a jury question.”)

29 surrounding whether a valid contract exists at this stage of litigation, the Court cannot currently

enforce a term—like an anti-reliance clause or integration clause—from the potentially non-

binding contract.

Therefore, the Court DENIES the Motion with respect to Alta’s request to dismiss

Kayne’s affirmative defense of fraudulent inducement.

2. The Court finds that Kayne pleads its fraud Counterclaim (Count I) with enough particularity.

In its Counterclaims, Kayne asserts a fraud claim against Mr. Augustine and Mr.

Zogby. 204 Kayne alleges that Mr. Augustine and Mr. Zogby “falsely represented construction 203F

costs, the progress of the work, subcontractor buyout, and the status of payments to

subcontractors during construction and settlement negotiations” related to the Projects. 205 204F

In the Motion, Alta and Mr. Zogby argue that “at best, [Kayne’s Counterclaims] just

suggest[] vague topics of communications—not the actual words used—and cannot even identify

which of the two accused parties made the statements or the date(s) they were made.” 206 205F

The Court finds that Kayne pleads its fraud Counterclaim with sufficient particularity.

Kayne includes relevant dates, contents, and parties. Kayne asserts that “Slopeside Manager’s

applications for payment for February, March, and April of 2024 showed ordinary progress of

the work. In May of 2024, however, Slopeside [Manager] submitted an application for payment

which included a mass reallocation of its schedule of values. Slopeside Manager’s proposed

reallocation demonstrated an intentional attempt by Slopeside Manager to conceal cost

overruns.” 207 Kayne also contends that “in May of 2024, six Assigned Subcontractors refused to 206F

204 See Kayne Countercl. ¶¶ 161-173. 205 Id. ¶ 162. 206 Mot. at 31. 207 Kayne Countercl. ¶¶ 101-103.

30 continue performing work for the Sugar House Project due to non-payment.” 208 Kayne further 207F

claims that for the Sugar House Project, Alta’s “change order log dated May 8, 2024, showed at

credit of $1,064,101.19 for deleted work. In actuality, there was $3,485,466.14 in unpaid change

orders pending, a discrepancy of over $4.5 million.” 209 208F

Therefore, the Court DENIES the Motion with respect to Alta’s request to dismiss

Kayne’s fraud Counterclaim for failure to state a claim under Civil Rules 9 and 12.

3. In addition, the Court finds that Kayne properly asserts its intentional misrepresentation Counterclaim (Count II).

To prevail on an intentional misrepresentation claim, the asserting party must prove: (i)

deliberate concealment by the other party of a material past or present fact, or silence in the face

of a duty to speak; (ii) the other party acted with scienter; (iii) an intent to induce the asserting

party’s reliance upon the concealment; (iv) causation; and (v) damages resulting from the

concealment. 210 209F

In its Counterclaims, Kayne asserts an intentional misrepresentation claim against Mr.

Augustine and Mr. Zogby. 211 The facts supporting Kayne’s intentional misrepresentation claim 21 F

overlap with the facts detailed above for Kayne’s fraudulent inducement affirmative defense and

fraud Counterclaim.

In the Motion, Alta and Mr. Zogby maintain that Kayne’s intentional misrepresentation

claim fails because Kayne fails to meet its burden to plead the claim with particularity. 212 211F

208 Id. ¶ 104. 209 Id. ¶ 120. 210 See Strong v. Wells Fargo Bank, 2012 WL 3549730, at *2 (Del. Super. July 20, 2012) (citing Nicolet, Inc. v. Nutt, 525 A.2d 146, 149 (Del. 1987)). 211 See Kayne Countercl. ¶¶ 174-185. 212 See Mot. at 30-31.

31 The Court finds that, for the same reasons Counterclaim (Count I) survives, the Motion is

DENIED as to the intentional misrepresentation Counterclaim.

4. The economic loss doctrine does not bar Kayne’s fraud claims.

The economic loss doctrine is a judicially created doctrine that prohibits certain tort

claims when overlapping contract-based claims adequately address the alleged injury. 213 The 212F

economic loss doctrine does not always prohibit fraud claims. 214 Yet the doctrine generally 213F

“does not extend to claims of fraud where the alleged misrepresentation is independent of the

contract, such as claims for fraud in the inducement.” 215 Nevertheless, “[a]llegations of fraud 214F

that go directly to the inducement of the contract, rather than its performance, would present a

viable claim.” 216 215F

In Brasby v. Morris, the Court applied the economic loss doctrine and dismissed the

plaintiff’s fraud claim because the allegations did not arise independently of the contract, but

were “relate[d] directly to the performance of the contract and are better addressed by applicable

contract law.” 217 In Abbott Laboratories v. Owens, the Court similarly found that the plaintiffs’ 216F

fraudulent inducement allegations arose “solely from the performance of contractual duties under

the Merger Agreement and, therefore, are insufficient to support a fraudulent inducement

claim.” 218 The Court in Abbott Laboratories also found that “[t]he fact that Plaintiffs have sued 217F

213 Abbott Labs. v. Owens, 2014 WL 8407613, at *7 (Del. Super. Sept. 15, 2014); Brasby v. Morris, 2007 WL 949485, at *7 (Del. Super. Mar. 29, 2007); Danforth v. Acorn Structures, Inc., 608 A.2d 1194, 1195 (Del. 1992). 214 Abbott Labs., 2014 WL 8407613, at *7. 215 Gea Sys. N. Am. LLC v. Golden State Foods Corp., 2020 WL 3047207, at *8 (Del. Super. June 8, 2020) (quoting American Aerial Services, Inc. v. Terex USA, LLC, 39 F. Supp. 3d 95, at 111 (D. Me. 2014) (citing Marvin Lumber and Cedar Co. v. PPG Indus., Inc., 223 F.3d 873, 885 (8th Cir. 2000))). 216 Brasby, 2007 WL 949485, at *7 (emphasis added). 217 Id. at *8. 218 See Abbott Labs., 2014 WL 8407613, at *9.

32 Defendants in their individual capacity does not alter the indisputable fact that the alleged

fraudulent conduct did not precede the Merger Agreement.” 219 218F

Kayne argues that the economic loss rule does not apply to its fraud claims. 220 Kayne219F

asserts that Delaware’s economic loss doctrine generally only prohibits recovery in tort cases

where a product has damaged only itself, and Alta does not provide caselaw to show that the

doctrine should apply in a fraud case. 221 Also, Kayne contends that the doctrine often does not 220F

apply when the parties are not in privity. 222 Kayne argues that because fraud claims are against 221F

individuals with whom it had no contract—Mr. Zogby and Mr. Augustine—the doctrine does not

apply. 223 222F

Alta and Mr. Zogby disagree on whether the economic loss rule applies to fraud

claims. 224 “To the contrary, a fraud claim alleged alongside a breach of contract claim—as in 223F

Kayne’s Counterclaim—is barred by the economic loss rule unless the fraud claim is based on a

duty independent of duties imposed by a contract.” 225 Alta and Mr. Zogby contend that the 224F

parties “already had a pre-existing contractual relationship and all of the alleged fraud relates to

and arises from performance of that pre-existing contractual relationship.” 226 Alta and Mr.2 5F

Zogby also oppose Kayne’s privity argument. 227 “A corporation necessarily acts through human 226F

219 Id. (emphasis supplied). 220 See Opp’n at 30-31. 221 See id. at 32 (“Alta cites two cases, neither of which suggest the economic loss doctrine is applicable in this case. Brasby, 2007 WL 949485, at *6 (applying economic loss doctrine to negligence claims); Data Mgmt. Internationale, Inc. v. Saraga, 2007 WL 2142848, at *3 (Del. Super. July 25, 2007) (applying economic loss doctrine to conversion claim).”) 222 See id. at 32, quoting Commonwealth Const. Co. v. Endecon, Inc., 2009 WL 609426, at *4 (Del. Super. Mar. 9, 2009) ([E]xceptions to the economic loss doctrine are legion, and have been judicially recognized in disputes involving multiple parties not in privity with each other.”) (quoting Commonwealth Const. Co. v. Endecon, Inc., 2009 WL 609426, at *4 (Del. Super. Mar. 9, 2009): 223 See id. at 32-33. 224 See Reply Br. at 18-19. 225 Id. (citing Brasby, 2007 WL 949485, at *7). 226 Id. at 20. 227 See id.

33 beings. The privity of some of those persons must be the privity of the corporation, else it could

always limit its liability.” 228227F

The Court finds that, because there are material issues of fact surrounding whether valid

contracts exist, the Court cannot decide whether the economic loss doctrine bars Kayne’s fraud

claims relating to those potentially non-binding contracts. At this stage of proceedings, the Court

may not determine whether Kayne’s allegations of fraud “go directly to the inducement” of the

purported settlement agreements rather than their performance.

D. THE MOTION TO STAY

“There is no right to stay of discovery, even where a case dispositive motion has been

filed.” 229 Rather, whether to grant a stay of discovery is within the discretion of the Court. 230 228F 229F

The moving party bears the burden of proving that a stay of discovery is appropriate. 231 “[I]n 230F

each instance, the court must make a particularized judgment evaluating the weight that

efficiency should be afforded (including the extent of the costs that might be avoided) and the

significance of any risk of injury to plaintiff that might eventuate from a stay.” 232 231F

In In re McCrory Parent Corp., the Court of Chancery discussed three “special

circumstances” that may justify denying a stay of discovery despite the pendency of a dispositive

motion: 233 (i) where the motion does not offer a “reasonable expectation” of avoiding further 232F

litigation; (ii) where the plaintiff has requested interim relief; and (iii) where the plaintiff will be

prejudiced because “information may be unavailable later.” 234 233F

228 Id. (citing E.I. du Pont de Nemours & Co. v. Admiral Ins. Co., 1996 WL 111133, at *3 (Del. Super. Feb. 22, 1996)). 229 Orloff v. Shulman, 2005 WL 333240, at *1 (Del. Ch. Feb. 2, 2005) (citing Pensionskasse Der ASCOOP v. Random Intern. Holding, Ltd., 1993 WL 35977, at *1 (Del. Ch. Jan. 26, 1993); Kahn v. Tremont Corp., 1992 WL 205637, at *2 (Del. Ch. Aug. 21, 1992)). 230 Id. 231 Id. (citing Pensionskasse, 1993 WL 35977, at *1). 232 In re McCrory Parent Corp., 1991 WL 137145, at *1 (Del. Ch. July 3, 1991). 233 Orloff, 2005 WL 333240, at *1 (citing McCrory, 1991 WL 137145, at *1). 234 Id.

34 The Court finds that none of the special circumstances are present here. First, granting

the Motion would not avoid further litigation. The Motion only asks the Court to resolve the

liability issues, not damages. Thus, a stay would not avoid costs as litigation would continue

regardless of the Court’s decision on Alta’s Motion. Second, Alta and Mr. Zogby have not

requested interim relief, even though a protective order would provide the relief that they are

seeking regarding their discovery concerns. Third, neither party has asserted facts to indicate

that information may be unavailable later. Thus, there is no concern of prejudice to either party.

The Court, therefore, DENIES the Motion to Stay.

V. CONCLUSION

For the reasons set forth above, the Court DENIES the Motion and the Motion to Stay.

IT IS SO ORDERED.

October 30, 2025 Wilmington, Delaware

/s/ Eric M. Davis Eric M. Davis, President Judge

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