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The Long Form - July 27, 2022




Claims that the existence of one thing is dependent upon the presence of another thing, like the dependence of life on earth upon the presence of water, are easily rendered trite by the ultimate reduction of everything to the existence of matter, the universe, and/or god.

Accordingly The Chancery Daily places no undue emphasis on the observation that its own existence, and the ability of any subscriber to read its content, depends on the "existence" of -- in addition to the universe -- a seemingly trivial numeric sequence: an IP address.

TCD is admittedly (and perhaps excessively) excitable about conceptual constructs and such, so today we focus on the profound significance of seemingly trivial numeric sequences that facilitate all (i.e., not literally all, but yotta-lots) of the data transfer that happens in modern communications: the IP address.

TCD's interest in the "bundle of rights" nature of IP addresses was kindled by the Superior Court's decision in CoreTel America, Inc. v. Oak Point Partners, LLC, C.A. No. N21C-10-103-AML-CCLD, memo. op. (Del. Super. July 21, 2022), discussed in today's edition, which addresses a dispute over ownership of a block of IP addresses, including claims such as conversion that are easier to conceptualize when involving more traditional forms of property (e.g., tchotchkes that can be pocketed or personal items that could be surreptitiously removed from an open garage).

Certainly, IP addresses - these seemingly trivial numeric sequences - have value, not inherently, but upon functional deployment as an identifier in a specific engineering context. Having value, IP addresses can presumably be owned as property -- but the form is conceptually different from other customary types of intangible and intellectual property such as copyright, trademark, or even computer code.

The IP address sequence is not inherently meaningful. It is not a form of expression, doesn't really constitute "data" (at least in the sense that data collections may be afforded intellectual property protection), signals nothing regarding origin or quality (in the trademark / trade dress / "product of the Rhône valley" sense), is not an instruction to perform a computational function, and has no mathematical significance (other than potentially an order of mathematics beyond TCD's comprehension).

Like ASCII or Unicode assignments, IP addresses are not arbitrary per se, but they derive their value from agreement (at any given moment in time) about what they denote -- about where in the web world your packets will be routed.

In that sense, an IP address is perhaps analogous to a phone number, though others have suggested ostensive novelty -- see, e.g., Property Rights in IPv4 Numbers: Recognizing a New Form of Intellectual Property (Rubi); Determining Ownership and Control of IPv4 Addresses (Shantz).

When considering the indicia of ownership and possession discussed in the CoreTel decision, one might appreciate that other types of numerical, computational, or algorithmic assets having apparent value (though not for reasons that more customary forms of intangible and intellectual property have value) are now being generated at a brisk pace.

One might appreciate that application of traditional theories of property law to new or different types of intangible assets is inexorable, and while TCD hesitates to suggest that the CoreTel decision will be later recognized as foundational law on the matter, it is part of an inevitably-developing, if nascent, canon.

In contemplating the traditional brand of property-related legal concepts, such as conversion, one cannot help but think of the potential ramifications for application to various ineffable objects of value, see, e.g. "[A]n action for conversion of money will lie only where there is an 'obligation to return the identical money' delivered by the plaintiff to the defendant." Kenzo Kuroda v. SPJS Holdings, LLC, et al., C.A. No. 4030-CC, opinion (Del. Ch. Apr. 15, 2009).

Ever heard of a non-fungible token? It gets us thinkin'.

Email Evidencing Transfer of Assets Sufficient to Plead Conversion
  • The Superior Court finds vague emails purportedly transferring control of assets adequate to state a conversion claim, rejecting the argument that registration on a registry for administering such assets was necessary to demonstrate ownership.
  • GRANTED IN PART AND DENIED IN PART: Defendant's motion to dismiss
  • Plaintiff, the purported owner of intangible telecommunications assets, brought suit in Delaware Superior Court's Complex Commercial Litigation Division asserting conversion, unfair competition, tortious interference, and unjust enrichment claims challenging defendant's purported purchase, ownership, and sale of the assets plaintiff claimed to own.

    Plaintiff allegedly acquired ownership of the assets through an agreement with a prior owner more than twenty years earlier, represented only by vague emails purportedly transferring control of the assets, and did not register its ownership with a registry that administers such assets. Plaintiff alleged that it contacted a broker to potentially sell the assets, and that defendant's assertion of ownership interfered with a potential sale. Defendant moved to dismiss, arguing that plaintiff failed to plead evidence demonstrating its ownership of the assets, failed to allege the existence of a business opportunity with which defendant interfered, and failed to allege a relationship between defendant's enrichment and plaintiff's impoverishment.

    The Superior Court grants in part and denied in part defendant's motion in this Opinion, finding that plaintiff's evidence of ownership, though vague and not "best evidence," is sufficient to plead a conversion claim, and that plaintiff adequately pled the existence of a business opportunity to sell the assets through the broker. The Court dismisses plaintiff's statutory unfair competition claim under Delaware's Deceptive Trade Practices Act, finding the Act applies to ongoing patterns of deceptive conduct, which plaintiff did not allege, and dismisses plaintiff's unjust enrichment claim, finding plaintiff alleged only a general relationship between enrichment and impoverishment but was required allege that defendant was enriched by an action plaintiff took on defendant's behalf.
Super. Ct. R. 12(b)(6); Motion to Dismiss; Legal Standard; Conversion; Property Ownership; Proof of Ownership; Contract; Best Evidence; Pleading Standard; Unfair Competition; Business Relationship; Prospective Relationship; Counterparty; Particularized Pleading; Expectancy Interest; Reasonable Expectation; Business Expectancy; Damages; Commercial Harm; Deceptive Trade Practices; DTPA; Future Harm; Ongoing Action; Injunctive Relief; Tortious Interference; Competition Privilege; Wrongful Act; Intentional Act; Reasonable Probability; Fraudulent Representation; Unjust Enrichment; Claim Elements; Causal Relationship; Impoverishment; Enrichment; Contractual Non-Party; Breach of Contract
Injunctions Entered in Place of Unavailable Contempt Finding
  • The Court explains that a declaratory judgment may not be enforced through a motion for contempt, but enters mandatory and prohibitive injunctive relief to enforce previously entered declarations regarding defendant's removal as a corporate director, and observes that the newly entered relief may be enforced with contempt findings if necessary.
  • DENIED: Plaintiff's motion for contempt
    ENTERED: Injunctive relief
Declaratory Judgment; Enforcement; Injunctive Relief; New Proceeding; Same Proceeding; Contempt; Prohibitive Relief; Mandatory Relief
. . . et al.
  • The Supreme Court affirms, for the reasons stated in the Superior Court's Opinion, a conclusion that a long-term supply contract term describing product types showed that the contract covered products the supplier did not make, and did not create latent ambiguity when the supplier and purchaser later disagreed on the term's meaning in view of market changes.
  • AFFIRMED: Superior Court judgment
Contract Ambiguity; Latent Ambiguity; Contract Interpretation; Supply Contract
  • GRANTED: Proposed stipulated order for class certification
  • Defendant LLC members-managers appeal the Court of Chancery's rulings on cross summary judgment confirming an arbitration award that defendants sought to vacate, which concluded plaintiff LLC member validly removed defendants as members for alleged self-dealing.
  • APPEALED: Court of Chancery judgment
NEW BUSINESS
[SEALED] Vincent Lacey v. Xometry, Inc., C.A. No. 2022-0647, compl. (Del. Ch. July 25, 2022)
  • Nature of Action: Breach of Contract
  • Plaintiff's Counsel: CHIPMAN BROWN CICERO & COLE
  • Entity Defendant(s): Xometry, Inc.
  • Nature of Action: Equitable Relief
  • Plaintiff's Counsel: MACAULEY
  • Entity Defendant(s): Slycedata Corp.
[SEALED] Malt Family Trust, et al. v. 777 Partners, LLC, et al., C.A. No. 2022-0652, compl. (Del. Ch. July 26, 2022)
  • Nature of Action: Breach of Contract
  • Additional Plaintiff(s): Timothy James O'Neil-Dunne
  • Plaintiff's Counsel: ASHBY & GEDDES
  • Individual Defendant(s): Steven W. Pasko; Joshua Wander; Adam Weiss
  • Entity Defendant(s): 777 Partners, LLC; Phoenicia, LLC
  • Nature of Action: Advancement
  • Plaintiff's Counsel: SMITH KATZENSTEIN & JENKINS
  • Entity Defendant(s): Fairwood Peninsula Energy Corp.
  • Nature of Action: Breach of Contract
  • Additional Plaintiff(s): Fleet Feet Sports, LLC
  • Plaintiff's Counsel: ASHBY & GEDDES; WYRICK ROBBINS YATES & PONTON
  • Entity Defendant(s): Running Specialty Group, LLC; Running Specialty Group Acquisitions 1, LLC; RSG Acquisitions, LLC
DAILY HEARING & TRIAL SCHEDULE
(W) = Wilmington; (D) = Dover; (G) = Georgetown; (T) = Telephone; (Z) = Zoom; (C) = CourtScribes

Wednesday, July 27, 2022
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
09:30 (W) - NetApp, Inc. v. Albert E. Cinelli, et al., C.A. No. 2020-1000-LWW [trial]
11:00 (T) - Gen BQ JV Holdings LLC v. New Generation Health LLC, C.A. No. 2022-0558-MTZ [MTE]
01:30 (W) - Patel v. Drahi, et al. [Altice USA, Inc.], C.A. No. 2020-0499-PAF [settlement]

Thursday, July 28, 2022
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
09:30 (W) - NetApp, Inc. v. Albert E. Cinelli, et al., C.A. No. 2020-1000-LWW [trial]
01:30 (W) - In re Mindbody, Inc. Stockholders Litigation, C.A. No. 2019-0442-KSJM [PT]
CASE ACTIVITY
Plaintiff CoreTel, the purported owner of telecommunications assets, brought suit in Delaware Superior Court's Complex Commercial Litigation Division against defendant Oak Point, asserting claims challenging Oak Point's purported purchase, ownership, and sale of assets that CoreTel claimed to own, and seeking a declaration that CoreTel was the proper owner of those assets.

According to CoreTel's complaint, its affiliate "Core" acquired IP addresses from non-party RCC by agreement purportedly commemorated through an email exchange in which an RCC engineer affirmed that he had given Core operational control, after which Core used the IP addresses in providing telecommunications services. Core later transferred ownership of the addresses to CoreTel's parent, which transferred ownership to CoreTel in 2003, and CoreTel used the IP addresses continuously thereafter to service customers.

In 2015, RCC entered Chapter 11 bankruptcy, but in its filings did not identify the IP addresses as assets it owned. The Bankruptcy Court approved the sale of substantially all of RCC's assets to non-party Black & Veatch, and the Asset Purchase Agreement did not identify the IP addresses as assets being sold. CoreTel learned of RCC's bankruptcy in 2017. At the time, RCC was listed as the point of contact for the IP addresses on the American Registry for Internet Numbers ("ARIN"), and CoreTel changed the contact information to identify CoreTel as the owner, purportedly providing notice that CoreTel exercised controlled over the addresses. Also in 2017, CoreTel approached non-party broker Hilco about potentially selling some of the addresses, but because RCC's bankruptcy remained pending, CoreTel decided to wait to sell the addresses in case another party asserted a claim on them.

CoreTel alleges that non-party Hazan, a Hilco affiliate, "got tired of waiting for [CoreTel] to sell" and informed Oak Point of the RCC bankruptcy proceedings and the IP addresses. In August 2019, Oak Point then purportedly entered into a "Remnant" Asset Purchase Agreement with RCC's bankruptcy estate, acquiring the "remnant assets" remaining in the estate -- including the IP addresses -- and proceeded to register itself as the owner of the addresses in the ARIN registry.

In 2020, CoreTel advised Oak Point that CoreTel owned the IP addresses. Oak Point disclosed the Remnant Asset Purchase Agreement, and Hazan contacted CoreTel offering to broker Oak Point's sale of the addresses to CoreTel. In May 2021, ARIN changed the registration for addresses from Oak Point to non-party FastTrack, and CoreTel alleges that FastTrack purchased the addresses from Oak Point.

CoreTel filed suit, asserting claims for conversion, unfair competition, tortious interference with CoreTel's relationship with Hilco, and unjust enrichment, and sought a declaration that CoreTel was the rightful owner of the IP addresses. Oak Point moved to dismiss, arguing: with respect to conversion, that CoreTel failed to demonstrate "superior title" to the IP addresses; with respect to tortious interference, that CoreTel failed to identify a business relationship with which Oak Point wrongfully interfered and that Oak Point was privileged to compete with CoreTel for Hilco's brokerage services; and, with respect to unjust enrichment, that CoreTel failed to adequately plead a relationship between Oak Point's enrichment and CoreTel's impoverishment.

The Superior Court grants Oak Point's motion in part and denies it in part in this Opinion, finding CoreTel's vague email evidence reflecting transfer of control of the IP addresses from RCC to Core, and its prospective brokerage relationship with Hilco, were sufficient to state claims for conversion, common law unfair competition, tortious interference with prospective economic advantage, and declaratory judgment. The Court dismisses CoreTel's statutory unfair competition claims under Delaware's Deceptive Trade Practices Act, finding the Act applies to ongoing patterns of deceptive conduct remediable with injunctive relief, and not to a single wrongful act as alleged by CoreTel; and dismisses CoreTel's unjust enrichment claims, finding CoreTel was required to allege that Oak Point was enriched by an action CoreTel took on Oak Point's behalf, but instead alleged only a simple relationship between enrichment and impoverishment.
*  *  *  *  *  *  *  *
The Superior Court discussed legal standards applicable when considering a motion to dismiss under Super. Ct. R. 12(b)(6).
"A party may move to dismiss under [Super. Ct. Civ. R. 12(b)(6)] for failure to state a claim upon which relief can be granted. In resolving a Rule 12(b)(6) motion, the Court (1) accepts as true all well-pleaded factual allegations in the complaint; (2) credits vague allegations if they give the opposing party notice of the claim; (3) draws all reasonable factual inferences in favor of the non-movant; and (4) denies dismissal if recovery on the claim is reasonably conceivable. The Court, however, need not 'accept conclusory allegations unsupported by specific facts or . . . draw unreasonable inferences in favor of the non-moving party.' Nor must the Court adopt 'every strained interpretation of the allegations the plaintiff proposes.' Still, even with those cautions in mind, Delaware's pleading standard is 'minimal.' Dismissal is inappropriate unless 'under no reasonable interpretation of the facts alleged could the complaint state a claim for which relief might be granted.'"
The Superior Court denied defendant's motion to dismiss plaintiff's conversion claim alleging that defendant wrongfully asserted ownership of intangible telecommunication assets that plaintiff allegedly owned, rejecting defendant's arguments that plaintiff's evidence of ownership -- a vague email exchange purportedly commemorating transfer of the assets from the prior owner -- failed to demonstrate plaintiff's ownership, and that ownership must be shown through registration with a registry that administers such assets, and finding that plaintiff was not required to plead "best evidence" of ownership and that its allegations were sufficient to state a conceivable claim.
"Conversion is 'any distinct act of dominion wrongfully exerted over the property of another, in denial of [the plaintiff's] right, or inconsistent with it.' To state a claim for conversion, a plaintiff must allege that: '(1) it had a property interest in equipment or other property; (2) it had a right to possession of the property; and (3) the property was converted.'

According to [defendant], [plaintiff] has 'no legitimate proof of any ownership rights in the' [assets] because [plaintiff] has not pleaded that it entered into [an agreement with the registry that administers such assets] -- which [defendant] claims to be 'an authoritative indicator of ownership rights . . . . [defendant] contends the complaint instead rests on '[a]llegations of operational control and use,' which 'are irrelevant to prove an ownership right in [such assets].'

. . . [Defendant] is correct that the emails [plaintiff] claims 'document' the agreement between [predecessor in interest] and [prior owner] are vague in their content and not particularly strong evidence that such an agreement existed. Nevertheless, the conduct of [prior owner], [predecessor in interest], and [plaintiff] following the alleged agreement permits a reasonable inference that [plaintiff] in fact acquired ownership of the [assets] from [prior owner]. In particular, [prior owner's] failure to identify the [assets] as one of its assets during the bankruptcy proceedings reasonably could be interpreted as evidence that [prior owner] did not believe it owned that asset anymore.

[Defendant's] argument for dismissal rests on its assertion that 'the best evidence of any ownership rights in [telecommunication assets] is registration of [the assets] with [registry],' which [plaintiff] has not produced. But [plaintiff] does not need to produce at the pleading stage the 'best evidence' of its ownership of the [assets]. Instead, [plaintiff] only needs to plead facts showing recovery is reasonably conceivable -- a 'minimal' burden. As explained, [plaintiff] satisfies this burden by pleading facts supporting the existence of an alleged agreement between [prior owner] and [predecessor in interest] for the transfer of the [assets]. The reasons for [plaintiff's] failure to register the [assets] with [registry] are issues better resolved in discovery, after which either the Court or a jury can weigh the significance of [plaintiff's] failure to register. At this stage, the Court must credit [plaintiff's] allegation that registration with [registry] is immaterial because '[registry] does not have authority over the use, ownership, and transfer of [such assets]' . . . . [Plaintiff's] failure to register its ownership of the [assets] does not necessarily establish that [plaintiff] does not own [them] as a matter of law."
The Superior Court denied defendant's motion to dismiss plaintiff's unfair competition claim alleging that defendant's wrongful assertion of ownership of intangible telecommunication assets that plaintiff allegedly owned prevented plaintiff from concluding a brokered sale of the assets, rejecting defendant's argument that plaintiff failed to identify with particularity a counterparty to a prospective business relationship, and finding plaintiff's allegation that it expected to pursue a sale through an identified broker was sufficient to state a claim, even if plaintiff did not identify a specific buyer.
"To state a claim for unfair competition, a plaintiff must allege 'a reasonable expectancy of entering a valid business relationship, with which the defendant wrongfully interferes, and thereby defeats the plaintiff's legitimate expectancy and causes him harm.' This cause of action protects prospective business relations that offer potential pecuniary value to a plaintiff, including 'the prospect of obtaining employees . . . and any other relations leading to potentially profitable contracts.' A 'mere perception' of a prospective business relationship, however, does not amount to a 'bona fide expectancy.'

. . . [Defendant's] contention that a plaintiff must be able to identify 'with sufficient particularity the counterparties to the expected business relationship' overstates the pleading requirements of Delaware law. [Defendant's] sole support for this proposition is an open-ended citation to [Agilent Technologies, Inc. v. Joseph J. Kirkland, et al., C.A. No. 3512-VCS, memo. op. (Del. Ch. Jan. 20, 2009)]. But the Agilent court held: 'Agilent has cited cases indicating that the specific party is generally identified by name, but these cases do not suggest that the specific party must be identified. In fact, in one of the cases Agilent cites, [Kelly-Springfield Tire Co. v. Dominic D'Ambro, et al., opinion (Pa. Super. Sept. 6, 1991)], . . . the court accepted allegations of both named and unnamed prospective business relations.' In [IronRock Energy Corp. v. Pointe LNG, LLC, C.A. No. N20C-06-121-EMD, opinion (Del. Super. July 19, 2021)], citing Agilent, this Court held a plaintiff 'does not need to name the specific party but must be descriptive enough to support a claim that specific prospective business relations existed.' [Plaintiff's] averment that it expected to enter a business relationship with [broker] to sell the [assets] satisfies this element, even though [plaintiff] does not identify who, exactly, would have purchased the [assets]. In any case, [plaintiff] has pleaded that the scarcity of [such assets] has created an active market for their purchase and sale. It therefore reasonably can be assumed that [broker] would have been able to find a buyer for the [assets] on [plaintiff's] behalf. Additional support for this conclusion lies in [plaintiff's] allegation that [defendant] did in fact find a buyer for the [assets]. Accordingly, [plaintiff] has adequately pleaded facts 'descriptive enough to support a claim that specific prospective business relations existed.'"
The Superior Court denied defendant's motion to dismiss plaintiff's unfair competition claim alleging that defendant's wrongful assertion of ownership of assets that plaintiff allegedly owned prevented plaintiff from concluding a brokered sale of the assets, rejecting defendant's argument that plaintiff failed to plead that it was harmed by defendant's interference, and finding plaintiff's allegation that defendant's misrepresentation prevented plaintiff from earning revenue from a sale was sufficient to state a claim.
"To state a claim for unfair competition, a plaintiff must allege 'a reasonable expectancy of entering a valid business relationship, with which the defendant wrongfully interferes, and thereby defeats the plaintiff's legitimate expectancy and causes him harm.' This cause of action protects prospective business relations that offer potential pecuniary value to a plaintiff, including 'the prospect of obtaining employees . . . and any other relations leading to potentially profitable contracts.' A 'mere perception' of a prospective business relationship, however, does not amount to a 'bona fide expectancy.'

. . . [Defendant] argues [plaintiff] does not adequately plead it suffered damage as a result of the alleged wrongful interference. To properly plead damages, however, a plaintiff need only plead facts that conceivably support an inference of commercial harm. 'There is no requirement that a business relationship be definitively terminated for there to be inference. Rather, wrongful conduct is unfair action on the part of defendant by which he prevents plaintiff from legitimately earning revenue.' Here, [plaintiff] alleges (i) it had a reasonable expectancy of entering a business relationship with [broker] under which [broker] would broker a sale of the [assets] on [plaintiff's] behalf, and (ii) [defendant] 'falsely represented that it had an ownership interest in the [assets].' [Plaintiff] avers [defendant's] misrepresentation caused [broker] to switch its focus to attempting to broker a deal under which [plaintiff] would buy what it already owned. These allegations permit a reasonable inference that [defendant's] alleged interference 'prevented [plaintiff] from legitimately earning revenue.' [Plaintiff] therefore has adequately pleaded an injury, and the Motion is DENIED as to the common law unfair competition claim."
The Superior Court granted defendant's motion to dismiss plaintiff's statutory claim for unfair competition under Delaware's Deceptive Trade Practices Act -- in which plaintiff alleged that defendant's wrongful assertion of ownership of assets that plaintiff allegedly owned prevented plaintiff from concluding a brokered sale of the assets -- concluding that claims under the Act depend on availability of injunctive relief to preclude patterns of deceptive conduct, and that plaintiff's allegation of a defendant's single misrepresentation did not support imposition of injunctive relief to prevent ongoing conduct or future harm.
". . . [Delaware's Deceptive Trade Practices Act] prohibits engaging in a 'deceptive trade practice . . . in the course of a business, vocation, or occupation.' Because the [Act] is intended to prevent patterns of deceptive conduct, rather than isolated incidents, relief under the [Act] depends on the availability of injunctive relief. 'A claim for injunctive relief must be supported by the allegation of facts that create a reasonable apprehension of a future wrong.'

. . . The essential defect with [plaintiff's] [deceptive trade practices] claim is that 'the alleged wrongdoing' -- i.e., [defendant's] conduct in asserting an ownership interest in the [assets] and then selling it to a third party -- 'is in the past.' The claim is concerned with an isolated incident of misconduct and not any ongoing practices of [defendant]. Furthermore, relief under the [Act] is dependent on a plaintiff's entitlement to injunctive relief. But [plaintiff] pleads no facts supporting a reasonable apprehension of a future wrong against it, and this Court does not have jurisdiction to grant this relief. Simply put, the [Act] was not intended to cover disputes regarding isolated instances of conduct. The Motion therefore is GRANTED as to the [deceptive trade practices] claim."
The Superior Court discussed claim elements, applicable legal standards, and showings required to prevail on a claim for tortious interference with business relations, including the need to overcome a defendant's privilege to compete for business opportunities.
". . . To survive dismissal, a claim for tortious interference with business relations must allege: '(a) the reasonable probability of a business opportunity, (b) the intentional interference by defendant with that opportunity, (c) proximate causation, and (d) damages.' The Court must consider these elements 'in light of a defendant's privilege to compete or protect his business interests in a fair and lawful manner.' To defeat the defendant's competition privilege, the plaintiff must plead that the defendant's conduct was wrongful independent of the interference.

. . . The existence of a reasonably probable business expectancy is a 'question of fact not suitable for resolution [on a motion to dismiss].' Similarly, justification defenses 'present fact-intensive inquiries that are typically not appropriate for disposition on a motion to dismiss.' . . .

Prospective business relationships are 'by definition, not as susceptible of definite, exacting identification as is the case with an existing contract.' Recognizing this distinction, Delaware courts 'permit[] a broad range of legitimate business expectancies, including the prospect of . . . [any] relations leading to potentially profitable contracts.' It is required, however, that the factual allegations establish some basis of 'a bona fide expectancy.' The 'mere perception' of a prospective relationship or contract will not suffice. 'To be reasonably probable, a business opportunity must be something more than a mere hope or the innate optimism of the salesman.'

. . . 'To meet the intentional interference prong, a plaintiff must prove that the defendant's interference with the plaintiff's business opportunity was intentional and wrongful or improper.' 'An alleged interference in a prospective business relationship is only actionable if it is wrongful.' To defeat the defendant's privilege to compete, the defendant's conduct must be 'wrongful independent of the interference.' Wrongful conduct defeating the privilege to compete includes '[f]raudulent misrepresentations' -- that is, a statement that 'to the knowledge or belief of its utterer . . . is false in the sense in which it is intended to be understood by its recipient.' A fraudulent representation may subject a defendant to liability even when it 'is not of such a character as to subject him to liability for . . . other torts.' 'To prove fraudulent intent, a misrepresentation must be made either knowingly, intentionally, or with reckless indifference to the truth.'"
The Superior Court granted defendant's motion to dismiss plaintiff's unjust enrichment claim challenging defendant's wrongful assertion of ownership and sale to a third party of assets that plaintiff allegedly owned, finding plaintiff failed to allege defendant was unjustly enriched by plaintiff's action on defendant's behalf, and that plaintiff's allegation that defendant exercised dominion over the assets inconsistent with plaintiff's right supported a claim for conversion rather than unjust enrichment. The Court rejected plaintiff's argument that only a simple relationship between enrichment and impoverishment must be alleged, concluding that the argument misapplied a standard applicable when a contractual non-party is alleged to have facilitated and benefitted from breach of a contract.
"Unjust enrichment is 'the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity or good conscience.' To state a claim for unjust enrichment, a plaintiff must allege: (1) an enrichment, (2) an impoverishment, (3) a relation between the enrichment and impoverishment, (4) the absence of justification, and (5) the absence of a remedy provided by law.

. . . The general rule is that the plaintiff must show that there is 'some direct relationship . . . between a defendant's enrichment and a plaintiff's impoverishment.' In other words, there must be '[a] showing that the defendant was enriched unjustly by the plaintiff who acted for the defendant's benefit.' . . .

. . . [Plaintiff] pleads no facts suggesting [defendant] was enriched unjustly by [plaintiff] or [plaintiff] ever acted for [defendant's] benefit. Instead, [plaintiff] alleges only that '[defendant's] unjust enrichment is related to the impoverishment that [plaintiff] has suffered because [defendant's] misconduct has robbed [plaintiff] of its right to use the [assets] to service customers and/or to sell, license, transfer or otherwise dispose of the [assets] for a profit.' These factual allegations do not sound in unjust enrichment, but rather in conversion: 'any distinct act of dominion wrongfully exerted over the property of another, in denial of [the plaintiff's] right, or inconsistent with it.'

[Plaintiff] argues the relationship element of unjust enrichment is not so demanding; citing [Lyons Insurance Agency, Inc. v. Roger Kirtley, et al., C.A. No. N18C-09-040-CLS, opinion (Del. Super. Mar. 18, 2019)], [plaintiff] claims all that is necessary is a 'simple relationship between the plaintiff's impoverishment and defendants' enrichment.' But Lyons explained that standard applies in situations where 'a nonparty to a contract knowingly facilitates prohibited activities.' In Lyons, for example, an insurance agency entered into an employment contract with one of its sales agents. Under the contract, the agent agreed to pay his agency in the event he began working for a different employer and took his clients with him. The agent later began for working for a new agency and brought his pre-existing clients with him, but failed to pay the previous agency. The previous agency claimed the new agency was liable for unjust enrichment because the new agency allegedly used the agent's confidential information for its own benefit despite knowing the agent was prohibited from using that information. Under those circumstances, the court held the initial agency adequately pleaded a relationship between its impoverishment and the new agency's enrichment. In short, Lyons sets out a circumstance in which an unjust enrichment claim may be brought against nonparties to a contract who knowingly facilitate and benefit from the breach of a party to the contract.

The facts of the current case are distinguishable from Lyons. [Plaintiff] does not allege [defendant] knowingly facilitated prohibited activities under any contract. Instead, [plaintiff] simply alleges [defendant] should not be allowed to keep the proceeds from the sale of property it did not own. [Plaintiff's] allegations support its conversion claim, as previously discussed, but [plaintiff] has not pleaded the sort of relationship necessary to sustain an unjust enrichment claim. The Motion therefore is GRANTED as to that claim."
Plaintiff Zhou, a stockholder of nominal defendant iFresh, brought suit against defendants Deng and Fang, purported directors of iFresh, seeking a declaration under 8 Del. C. § 225 that defendants were validly removed as iFresh directors and replaced with two new directors (Ou and Xu) by written consent.

The Court ruled for plaintiff in a post-trial Opinion, declaring that the consent was valid and effective, defendants were validly removed, and Ou and Xu were validly elected to the board. Dengrong Zhou v. Long Deng, et al. and iFresh, Inc., C.A. No. 2021-0026-JRS, memo. op. (Del. Ch. Apr. 6, 2022).

Deng nevertheless continued to hold himself out as Chairman and CEO of iFresh, ignored instructions issued by the new board, exercised dominion over iFresh property, and refused to cooperate in transition to new management. Plaintiff filed a motion to hold Deng in contempt.

The Court denies the motion in this Order but enjoins Deng from further representing himself as an iFresh director and CEO and requires him to return all iFresh property, explaining that a declaratory judgment may not be enforced with a contempt motion, but the newly entered injunctive relief may be so enforced if Deng fails to comply.
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The Court explained that a party previously awarded declaratory relief may not use a contempt motion to enforce that award against a party that has refused to abide by the declaration, but may seek additional, coercive relief to enforce the declaration in either the court that awarded the declaration or another - and either in the original action or another, as appropriate under the circumstances - which later relief may be enforced through additional judicial measures if needed.
"When seeking to enforce a declaration, a party may either seek additional relief in the proceeding that resulted in the declaration, or a party may commence a new proceeding. If a party needs to resort to a court in a different jurisdiction, then obviously a new action is required. If significant time has passed or if the declaration must be applied in a different factual context, then proceeding by way of a new action may be more prudent. But a party also can seek additional implementing relief from the court that issued the declaration and in the proceeding in which the declaration was issued.

In [Arbitrium (Cayman Islands) Handels, AG, et al. v. H. Frederick Johnston, et al., C.A. No. *13506-VCJ, memo. op. (Del. Ch. Sept. 17, 1997)], this court provided an example of when such follow-on relief might be warranted:

By way of example, if the defendants in [an 8 Del. C. § 225] proceeding suffered an adverse determination on the ultimate issue of their entitlement to corporate office, but retained their officer, director, or employee status, the defendants, in their representative capacities, could properly be enjoined from challenging the voting rights issue in a new action. Similarly, if the defendants, in their representative (as opposed to personal) capacities, were ordered to turn over operational control of the corporation (including custody of its books, records, and physical premises) to the plaintiffs, and if the defendants refused to do so, they could properly be held in contempt of that injunctive order.


The federal courts have recognized these principles and acknowledged that a party which has obtained a declaratory judgment may seek the issuance of additional, coercive relief in the event that another party to the litigation fails to acknowledge the court's determinations. In a passage that foreshadowed that type of escalation, the United States Court of Appeals for the Seventh Circuit explained [in Badger Catholic, Inc., et al. v. David G. Walsh, et al., Nos. 09-1102, 09-1112, opinion (7th Cir. Sept. 1, 2010)] why a district court might initially issue declaratory relief, then follow that up with further relief to implement its ruling:

As for the choice between declaratory judgment and an injunction: that's a matter left to the district judge's discretion . . . . A declaratory judgment cannot be enforced by contempt proceedings, but it has the same effect as an injunction in fixing the parties' legal entitlements . . . . A litigant who tries to evade a federal court's judgment--and a declaratory judgment is a real judgment, not just a bit of friendly advice--will come to regret it. . . . If the entry of [an] injunction can be avoided by a simpler declaratory judgment, everyone comes out ahead . . . . If [the ruling is disregarded], then more relief lies in store."
The Court, having previously declared that plaintiff stockholder validly removed and replaced defendant as a director of nominal defendant corporation, denied plaintiff's motion to hold defendant in contempt for having continued to hold himself out as a director and officer and having retained corporate property - explaining that a declaratory judgment may not be enforced with a contempt order - but granted injunctive relief requiring defendant to abide by the previous declarations, and noted that the new relief may be enforced with a contempt motion if necessary.
"An order of contempt is not the next step in the remedial process. The [Court's previous post-trial Opinion, Dengrong Zhou v. Long Deng, et al. and iFresh, Inc., C.A. No. 2021-0026-JRS, memo. op. (Del. Ch. Apr. 6, 2022)] made declarations regarding the business and affairs of [nominal defendant]. As such, it did not--in and of itself--mandate or prohibit any party from taking action. Nevertheless, a party that fails to act in conformance with a declaration exposes themselves to the possibility of coercive relief.

. . . . This court made declarations. [Defendant] has failed to respect them. At this stage, the proper course is to issue more relief--in the form of this order--that clearly contains both mandatory and prohibitive dimensions. If [defendant] fails to comply, then still more relief lies in store.

[Defendant] shall cease to hold himself out as a director or CEO of [nominal defendant]. This provision is prohibitive relief, enforceable by contempt.

[Defendant] shall return all of [nominal defendant's] property and information to [nominal defendant] within two (2) business days. This provision is mandatory relief, enforceable by contempt."
". . . [T]his Action shall be certified as a class action on behalf of a non-opt-out stockholder class as follows:

All record holders and/or beneficial owners of Pandora Media, Inc. ('Pandora') common stock as of February 1, 2019 (the date of the consummation of the Merger), and their heirs, assigns, transferees, and successors-in-interest, in each case solely in their capacity as holders or owners of Pandora common stock. . . .


. . . Plaintiff is hereby certified as the Class Representative.

. . . The law firms Prickett, Jones & Elliott, P.A., Andrews & Springer LLC, and Friedman Oster & Tejtel PLLC are hereby certified as Class Counsel."
"PLEASE TAKE NOTICE that DTR MHP Management, LLC, Colonial Kitchen, LLC, and WaterTree Capital, Inc., Defendants Below-Appellants, do hereby appeal to the Supreme Court of the State of Delaware from [MHP Management, LLC v. DTR MHP Management, LLC, et al., C.A. No. 2020-0365-LWW, letter op. (Del. Ch. June 21, 2022),] Letter Decision on Cross-Motions for Summary Judgment . . . and [MHP Management, LLC v. DTR MHP Management, LLC, et al., C.A. No. 2020-0365-LWW, order (Del. Ch. June 21, 2022),] the Order Granting Plaintiff/Counterclaim Defendant's Motion for Summary Judgment and Denying Defendant/Counterclaim Plaintiffs' Cross-Motion For Summary Judgment . . . of the Court of Chancery of the State of Delaware by Vice Chancellor Lori W. Will . . . "
SUMMARIES OF NEW COMPLAINTS
[SEALED] Vincent Lacey v. Xometry, Inc., C.A. No. 2022-0647, compl. (Del. Ch. July 25, 2022)
  • Plaintiff(s): Vincent Lacey
  • Plaintiff's Counsel: CHIPMAN BROWN CICERO & COLE - Joseph B. Cicero (#4388); Elliott Covert (#6540)
  • Entity Defendant(s): Xometry, Inc.
  • Nature of Claim(s): Plaintiff brought suit against defendant for breach of a separation agreement.
  • Field of Law: Commercial Law
  • Basis for Jurisdiction: 10 Del. C. § 341 - jurisdiction over matters and causes in equity
  • Plaintiff(s): Justin L. White
  • Plaintiff's Counsel: MACAULEY - Thomas G. Macauley (#3411)
  • Entity Defendant(s): Slycedata Corp.
  • Nature of Claim(s): Plaintiff brings this action against defendant Slycedata as the successor to non-party entity to collect on a promissory note to plaintiff that was made by non-party.
    Count 1 & 2: Successor Liability
  • Related Actions: In re Elsen, Inc., C.A. No. 2021-0325-PAF
  • Field of Law: Commercial Law
  • Basis for Jurisdiction: 10 Del. C. § 341 - jurisdiction over matters and causes in equity
[SEALED] Malt Family Trust, et al. v. 777 Partners, LLC, et al., C.A. No. 2022-0652, compl. (Del. Ch. July 26, 2022)
  • Plaintiff(s): Malt Family Trust; Timothy James O'Neil-Dunne
  • Plaintiff's Counsel: ASHBY & GEDDES - Catherine A. Gaul (#4310); Michael J. Vail (#6994)
  • Individual Defendant(s): Steven W. Pasko; Joshua Wander; Adam Weiss
  • Entity Defendant(s): 777 Partners, LLC; Phoenicia, LLC
  • Nature of Claim(s): Plaintiffs brought suit seeking declaratory relief and asserting breach of contract and related claims in connection with plaintiffs' investment in defendant Phoenicia.
  • Field of Law: Commercial Law
  • Basis for Jurisdiction: 6 Del. C. § 18-111 - interpretation / enforcement of LLC agreement ; 10 Del. C. § 341 - jurisdiction over matters and causes in equity
  • Plaintiff(s): Matthew Weil
  • Plaintiff's Counsel: SMITH KATZENSTEIN & JENKINS - Robert K. Beste, III (#3931)
  • Entity Defendant(s): Fairwood Peninsula Energy Corp.
  • Nature of Claim(s): Plaintiff, a former officer and director of defendant Fairwood Peninsula Energy, brought this action pursuant to 8 Del. C. § 145 to enforce his right to advancement of attorneys' fees and expenses in connection with claims defendant has asserted against plaintiff concerning a dispute over a web domain.
    Count 1: Advancement
    Count 2: Fees on Fees
  • Related Actions: Matthew Weil v. Fairwood Peninsula Energy Corp., et al., C.A. No. 2021-0235-KSJM; CC Strategies Fund, LP v. Fairwood Peninsula Energy Corp., et al., C.A. No. 2021-0329-KSJM; Matthew Weil v. Fairwood Peninsula Energy Corp., C.A. No. 2021-0872-KSJM
  • Field of Law: Corporation Law
  • Basis for Jurisdiction: 8 Del. C. § 145(k) - jurisdiction over actions for indemnification and advancement
  • Preliminary Motions: Motion for expedited proceedings
  • Plaintiff(s): J Street 1976, LLC; Fleet Feet Sports, LLC
  • Plaintiff's Counsel: ASHBY & GEDDES - Catherine A. Gaul (#4310); WYRICK ROBBINS YATES & PONTON - Benjamin N. Thompson; Lee M. Whitman; Samuel A. Slater
  • Entity Defendant(s): Running Specialty Group, LLC; Running Specialty Group Acquisitions 1, LLC; RSG Acquisitions, LLC
  • Nature of Claim(s): Plaintiff buyers bring this action for an order of specific performance compelling defendant sellers to comply with their post-closing financial obligations under the parties' asset purchase agreement.
    Count 1: Declaratory Judgment
    Count 2: Specific Performance
    Count 3: Breach of Contract
    Count 4: Preliminary and Permanent Injunction
  • Field of Law: Commercial Law
  • Basis for Jurisdiction: 10 Del. C. § 341 - jurisdiction over matters and causes in equity
  • Preliminary Motions: Motion for expedited proceedings, Motion for preliminary injunction
CASE ASSIGNMENTS
SG - C.A. No. 2022-0640, LHIM Productions, LLC, et al. v. Starvox Exhibits, Inc., et al.
PAF - C.A. No. 2022-0643, Gregory W. Malcolm v. Alset EHome International, Inc.
MTZ - C.A. No. 2022-0646, Driver Opportunity Partners II, LP v. National Security Group, Inc.
LWW - C.A. No. 2022-0647, Vincent Lacey v. Xometry, Inc.
PAF - C.A. No. 2022-0651, Justin L. White v. Slycedata Corp.
MTZ - C.A. No. 2022-0652, Malt Family Trust, et al. v. 777 Partners, LLC, et al.
WEEKLY HEARING & TRIAL SCHEDULE - July 25 - July 29, 2022
(W) = Wilmington; (D) = Dover; (G) = Georgetown; (T) = Telephone; (Z) = Zoom; (C) = CourtScribes

Monday, July 25, 2022
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
01:30 (T) - OptimisCorp v. William Atkins et al., C.A. No. 2021-0624-MTZ [PTC]

Tuesday, July 26, 2022
09:15 (W) - Buzzfeed, Inc., et al. v. Hannah Anderson, et al., C.A. No. 2022-0357-MTZ [MSJ/MTD]
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
09:30 (W) - NetApp, Inc. v. Albert E. Cinelli, et al., C.A. No. 2020-1000-LWW [trial]
01:15 (T) - Steven Hellman v. Wall Street Sys. Del., Inc. [Oilspace], C.A. No. 2020-0190-LWW [conf.]
03:15 (Z) - Strategic Ventures LLC v. Vivek Garipalli, C.A. No. 2021-1040-KSJM [MSQO/MTS]
03:15 (T) - Apotex, Inc. v. Otsuka Pharmaceutical Co., Ltd., C.A. No. 2022-0291-MTZ [PO]

Wednesday, July 27, 2022
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
09:30 (W) - NetApp, Inc. v. Albert E. Cinelli, et al., C.A. No. 2020-1000-LWW [trial]
11:00 (T) - Gen BQ JV Holdings LLC v. New Generation Health LLC, C.A. No. 2022-0558-MTZ [MTE]
01:30 (W) - Patel v. Drahi, et al. [Altice USA, Inc.], C.A. No. 2020-0499-PAF [settlement]

Thursday, July 28, 2022
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
09:30 (W) - NetApp, Inc. v. Albert E. Cinelli, et al., C.A. No. 2020-1000-LWW [trial]
01:30 (W) - In re Mindbody, Inc. Stockholders Litigation, C.A. No. 2019-0442-KSJM [PT]

Friday, July 29, 2022
09:30 (G) - In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.) [trial]
09:30 (W) - NetApp, Inc. v. Albert E. Cinelli, et al., C.A. No. 2020-1000-LWW [trial]
09:30 (T) - Biote Corporation v. Dr. Gary S. Donovitz, C.A. No. 2022-0611-KSJM [INJ]
11:00 (Z) - Richard J. Tornetta v. Gregory B. Maffei, et al., C.A. No. 2019-0649-KSJM [MTC]