Yangaroo Inc. v. Digital Media Services, Inc. ( 2024 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
YANGAROO INC., )
)
Plaintiff, )
)
v. )
)
DIGITAL MEDIA SERVICES, INC., et al., )
DUPLICATION SERVICES, INC., PELCO )
PRINTS, INC., DUPLICATION )
HOLDINGS CORPORATION, ) C.A. No. N23C-06-090 EMD CCLD
DUPLICATION SERVICES, LLC, )
CENTERFIELD CAPITAL PARTNERS, )
L.P., CENTERFIELD CAPITAL )
PARTNERS II, L.P., CENTERFIELD )
CAPITAL PARTNERS III, L.P., SR )
CAPITAL ADVISORS, LLC, and BDO )
USA, LLP, )
)
Defendants. )
Submitted: March 4, 2024
Decided: May 30, 2024
Upon Defendants Centerfield Capital Partners, L.P., Centerfield Capital Partners II, L.P., and
Centerfield Capital Partners III, L.P.’s Motion to Dismiss
GRANTED in part, DENIED in part
Upon Defendant BDO USA, LLP’s Motion to Dismiss
GRANTED in part, DENIED in part
Upon Defendant SR Capital Advisors, LLC’s Motion to Dismiss
GRANTED
David J. Soldo, Esquire, Morris James LLP, Wilmington, Delaware, Anne Mercado Clark,
Esquire, Jeffrey D. Coren, Esquire, Phillips Lytle LLP, Buffalo, New York. Attorneys for
Plaintiff Yangaroo Inc.
Catherine A. Gaul, Esquire, Randall J. Teti, Esquire, Ashby & Geddes, Wilmington, Delaware,
George A. Gasper, Esquire, Ice Miller LLP, Indianapolis, Indiana. Attorneys for Defendants
Centerfield Capital Partners, L.P., Centerfield Capital Partners II, L.P., Centerfield Capital
Partners III, L.P.
Ethan H. Townsend, Esquire, Daniel T. Menken, Esquire, McDermott Will & Emery LLP,
Wilmington, Delaware. Attorneys for Defendant BDO USA, LLP.
David A. Felice, Esquire, Bailey & Glasser, LLP, Wilmington Delaware. Attorneys for
Defendant SR Capital Advisors, LLC.
DAVIS, J.
I. INTRODUCTION
This is a contractual fraud action assigned to the Complex Commercial Litigation
Division of this Court. Plaintiff Yangaroo Inc. (“Yangaroo”), the buyer, alleges that certain
representations in the asset purchase agreement (the “APA”) were knowingly false when made.
Yangaroo further alleges that several of the sellers’ affiliates participated in that fraud.
Yangaroo additionally claims that the sellers breached post-closing obligations under the asset
purchase agreement.
Before the Court are three motions to dismiss filed by the sellers’ affiliates (the “Moving
Defendants”). The motions collectively seek dismissal of all of the claims not brought against
the sellers. Those claims are for aiding and abetting fraud (Count IV), tortious interference with
contract (Count V), and unjust enrichment (Count VI).
For the reasons stated below, the Court GRANTS the Moving Defendants’ motions as to
Count V (tortious interference) in its entirety, Count VI (unjust enrichment) against BDO USA,
LLP, all the claims against Centerfield Capital Partners, L.P., and all the claims against SR
Capital Advisors, LLC. The Court DENIES the motions in all other respects.
II. RELEVANT FACTS
A. THE PARTIES
Yangaroo is a Canadian corporation that operates in digital media distribution.1
Yangaroo was the buyer under the APA.2
1
D.I. No. 1, Complaint (hereinafter “Compl.”) ¶¶ 1, 19.
2
Id. ¶ 21.
2
Defendants Digital Media Services, Inc. (“Digital”), Duplication Services, Inc. (“DM-
DS”), and Pelco Prints Inc. (“Pelco” and, together with Digital and DM-DS, “DMS”) are New
York corporations headquartered in that state.3 Through the APA, Yangaroo purchased
substantially all of DMS’s assets.4
Defendant Duplication Holdings Corporation (“Holdings”) is an Indiana corporation
headquartered in that state, and it owns all of the outstanding stock of DMS.5
Defendant Duplication Services, LLC (“Duplication Services” and, together with DMS
and Holdings, the “Duplication Entities”) is a Delaware entity headquartered in Indiana, and it
owns all of the outstanding stock of Holdings.6 Duplication Services’ members are a group of
entities, including several of the other defendants in this case.7
Defendants Centerfield Capital Partners, L.P. (“Centerfield I”), Centerfield Capital
Partners II, L.P. (“Centerfield II”), and Centerfield Capital Partners III, L.P. (“Centerfield III
and, together with Centerfield I and Centerfield II, the “Centerfield Entities”) are three Delaware
entities headquartered in Indiana.8 Yangaroo alleges that Centerfield II and Centerfield III are
members of Duplication Services.9
SR Capital Advisors, LLC (“SR Capital”) is a New York entity headquartered in that
state.10 Yangaroo alleges that SR Capital is a member of Duplication Services.11
3
Id. ¶¶ 2-4.
4
Id. ¶ 21.
5
Id. ¶ 5.
6
Id. ¶ 6.
7
Id.
8
Id. ¶¶ 7, 8, 9.
9
Id. ¶ 6.
10
Id. ¶ 10.
11
Id. ¶ 6.
3
BDO USA, LLP (“BDO” and, together with SR Capital and the Centerfield Entities, the
“Moving Defendants”) is a Delaware entity headquartered in New York.12 Yangaroo contends
that BDO is the Duplication Entities’ accountant in connection with the APA.13
B. THE APA
The Duplication Entities and Yangaroo entered the APA on May 19, 2021.14 Under the
APA, DMS sold substantially all of its assets to Yangaroo, including substantially all of DMS’s
customer accounts and agreements.15 The APA designated DMS as “Sellers,” Yangaroo as
“Buyer,” Holdings as “Midco,” and Duplication Services as “Parent.”16
APA Article IV contains the Duplication Entities’ express representations and
warranties.17 Two of those representations are involved here: APA Section 4.16’s “Customers
and Suppliers” representation and APA Section 4.21’s “Contracts” representation.18 APA
Section 4.16 provides in pertinent part:
Schedule 4.16 of the Disclosure Schedule lists those top ten (10) consolidated
customers of Sellers (“Customers”) to which Sellers have made sales in either of
the two (2) most recent fiscal years or the two (2) month period ended February 28,
2021 . . . . Except as listed on Schedule 4.16 of the Disclosure Schedule, Sellers
have not had any material dispute with any Customer or Supplier within the last
two (2) years and no Customer or Supplier has given [the Duplication Entities] any
written notice terminating, canceling, reducing the volume under, or renegotiating
the pricing terms or any other material terms of any applicable Contract with any
Seller or threatening in writing to take any of such actions, and, to Sellers’
Knowledge, no customer or supplier intends to do so.19
APA Section 4.21(a) provides in pertinent part:
Schedule 4.21(a) of the Disclosure Schedule lists the following Contracts to which
any Seller is a party or by which it is bound (organized by each Contract that meets
12
Id. ¶ 11.
13
Id. ¶ 101.
14
Id. ¶ 21; Compl., Ex. A (hereinafter “APA”).
15
Compl. ¶ 21.
16
Id. ¶ 22.
17
APA § 4.
18
Compl. ¶¶ 23-30.
19
APA § 4.16 (emphases omitted).
4
any of clauses (i) through (xxii) below) (each Contract set forth, or required to be
set forth, on Schedule 4.21(a) of the Disclosure Schedule, a “Material Contract”):
(i) any Contract (or group of related Contracts) involving the performance
of services or the delivery of goods or materials by or to Sellers, the
performance of which will involve aggregate consideration in excess of
Twenty Thousand Dollars ($20,000);
....
(ix) any Contract under which the consequences of a default or termination
could have a Material Adverse Effect; [and]
....
(xxi) all other Contracts that are material to the Purchased Assets or the
operation of the Business and not previously disclosed pursuant to this
Section 4.21;20
APA Section 4.21(b) provides in pertinent part:
Sellers have delivered to Buyer a correct and complete copy of each written
Material Contract listed in Schedule 4.21(a) of the Disclosure Schedule as amended
to date and a written summary setting forth the terms and conditions of each oral
Material Contract referred to in Schedule 4.21(a) of the Disclosure Schedule. With
respect to each such Material Contract: (i) the Material Contract is legal, valid,
binding, enforceable, and in full force and effect; [and] (ii) the Material Contract is
assignable to Buyer without any Consent of any Person except as set forth in
Schedules 4.5, 4.6 and 4.21 of the Disclosure Schedule; . . . .21
APA Section 3.5 obliged the Duplication Entities to “use their commercially reasonable
efforts to obtain the consent of the other party to any Assumed Contract to the sale, transfer,
sublease or assignment thereof to Buyer in all cases in which such consent is required (subject
and in addition to any other condition or covenant set out in [the APA]).”22 APA Section 3.5
required the Duplication Entities to “use their commercially reasonable efforts to cooperate with
Buyer in reasonable arrangements designed to provide for Buyer the benefits of such Assumed
Contract.…” if such counter party’s consent was not obtained.23
APA Section 6.5 provides for exclusive remedies, saying in pertinent part:
20
Id. § 4.21(a) (emphases omitted).
21
Id. § 4.21(b) (emphases omitted).
22
Id. § 3.5.
23
Id.
5
After the Closing, the foregoing indemnification provisions shall be the sole and
exclusive remedy for monetary damages for the matters set forth in this Agreement,
or any of the transactions contemplated hereby, and no party hereto shall have any
cause of action or remedy at law or in equity for breach of contract, rescission, tort
or otherwise against any other party arising under or in connection with this
Agreement, except for claims for intentional breach or fraud, . . . in each of which
case each of the parties shall have and retain all other rights and remedies existing
in their favor at law or in equity, including any actions for specific performance or
injunctive or other equitable relief.
C. THE ALLEGED FRAUD
Yangaroo contends that the representations in APA Sections 4.16 and 4.21 were false
when made and that the Duplication Entities breached their obligations under APA Section 3.5.24
Yangaroo’s allegations stem from the October 2021 termination of a Material Contract—the
“Verizon Agreement.”25
Verizon Sourcing LLC (“Verizon”) had been one of DMS’s top customers.26 Pelco and
Verizon entered into the Verizon Agreement in November 2012.27 In February 2021, Verizon
reached out to DMS regarding a “vendor review,” and Verizon issued a “request for proposal”
(“RFP”).28 The RFP provided notice that Verizon was reevaluating its “ad distribution partners”
and wanted a pitch from DMS.29 Yangaroo maintains that the RFP indicated that DMS’s years-
long relationship with Verizon was in jeopardy.30 Indeed, Verizon ultimately terminated the
Verizon Agreement in October 2021.31
Yangaroo alleges that the Duplication Entities, along with the Moving Defendants, hid
the at-risk Verizon Agreement from Yangaroo.32 Yangaroo claims the Duplication Entities
24
Compl. ¶¶ 76-85.
25
See id. ¶ 72.
26
Id. ¶ 48.
27
Id. ¶ 49.
28
Id. ¶ 55.
29
Id.
30
Id. ¶ 57.
31
Id. ¶ 72.
32
Id. ¶¶ 61-62.
6
never even disclosed the Verizon Agreement’s existence, let alone that contract’s anti-
assignment clause or the shadow cast upon it by the RFP.33 Yangaroo further asserts that even
after the APA closed, the Duplication Entities continued to hide the RFP from Yangaroo.34
The Complaint mostly targets the Duplication Entities; however, Yangaroo’s claims also
implicate the Moving Defendants. In particular, Yangaroo alleges the Moving Defendants were
integral to the due diligence process and directed or encouraged the Duplication Entities’
concealment of the Verizon issues.35 For example, the Complaint states:
Upon information and belief, Centerfield [Entities], SR Capital, and BDO
coordinated with [the Duplication Entities] and/or provided [the Duplication
Entities] with advice related to disclosures required under the APA, and were
involved in [the Duplication Entities’] decision to conceal information concerning
Verizon and the Verizon Agreement from Yangaroo both during the APA due
diligence period and after the execution of the APA.36
D. THIS LITIGATION
Yangaroo filed its Complaint on June 21, 2023, after unsuccessfully pursuing relief in
federal court.37 The Centerfield Entities, SR Capital, and BDO each separately moved to dismiss
the Complaint.38 Yangaroo opposed each motion.39 The Centerfield Entities, BDO, and SR
Capital each replied to Yangaroo’s opposition.40 The Court heard argument on the motions on
March 4, 2024.41
33
Id. ¶ 62
34
Id. ¶¶ 70-71.
35
Id. ¶¶ 63-70.
36
Id. ¶ 65.
37
Compl.
38
D.I. No. 19, The Centerfield Entities Motion to Dismiss (hereinafter “Centerfield’s Mot.”); D.I. No. 20, BDO’s
Motion to Dismiss (hereinafter “BDO’s Mot.”); D.I. No. 24, SR Capital’s Motion to Dismiss (hereinafter “SR
Capital’s Mot.”).
39
D.I. No. 29, Yangaroo’s Opposition to the Centerfield Entities’ Motion to Dismiss (hereinafter “Pl.’s Opp’n to
Centerfield”); D.I. No. 30, Yangaroo’s Opposition to BDO’s Motion to Dismiss (hereinafter “Pl.’s Opp’n to BDO”);
D.I. No. 39, Yangaroo’s Opposition to SR Capital’s Motion to Dismiss (hereinafter “Pl.’s Opp’n to SR Capital”).
40
D.I. No. 33, The Centerfield Entities’ Reply in Support of their Motion to Dismiss (hereinafter “Centerfield’s
Reply”); D.I. No. 34, BDO’s Reply in Support of its Motion to Dismiss (hereinafter “BDO’s Reply”); D.I. No. 40,
SR Capital’s Reply in Support of its Motion to Dismiss (hereinafter “SR Capital’s Reply”).
41
D.I. No. 44.
7
Aside from Duplication Services joining a stipulated order regarding scheduling in July
2023,42 the Duplication Entities have not responded to Yangaroo’s Complaint.
III. PARTIES’ CONTENTIONS
A. CENTERFIELD ENTITIES’ MOTION
1. Motion
The Centerfield Entities challenge the Complaint on several bases. First, the Centerfield
Entities rely on the APA’s exclusive remedies provision, claiming that clause forbids Yangaroo’s
current claims.43 The Centerfield Entities also argue that the aiding and abetting fraud claim
must be dismissed because there was no underlying fraud to abet and, in any event, the
Centerfield Entities never owed Yangaroo a duty to disclose.44 The Centerfield Entities maintain
that the tortious interference claim fails because: (i) Yangaroo is improperly trying to bind the
Centerfield Entities to their subsidiary’s contract; (ii) the Centerfield Entities could not have
tortiously interfered with their affiliate’s contract, and (iii) the alleged interference occurred
before the APA existed.45 The Centerfield Entities assert that the unjust enrichment claim cannot
stand because the at-issue conduct is exclusively governed by the APA.46 Separately, the
Centerfield Entities argue that Centerfield I cannot be liable under any theory because it
dissolved years before the APA was entered.47
2. Opposition
Yangaroo offers three reasons as to why its claims are not barred by the APA’s exclusive
remedies provision: (i) the Centerfield Entities cannot avail themselves of the APA’s protection
42
D.I. No. 10.
43
Centerfield’s Mot. at 7-8.
44
Id. at 12-14.
45
Id. at 9-11.
46
Id. at 15.
47
Id. at 6-7.
8
while disclaiming its obligations; (ii) the exclusive remedies provision does not apply to claims
against non-parties to the APA; and (iii) claims based on intentional breach and fraud are carved
out of the exclusive remedies provision.48 Yangaroo contends that its pleading of the underlying
fraud is sufficient to support an aiding and abetting fraud claim and that a duty to disclose is not
an element of this tort.49 Yangaroo continues that not all of the alleged tortious interference
occurred pre-closing and that a breaching party’s affiliate can be liable for tortious interference
despite the affiliation.50 Next, Yangaroo claims the unjust enrichment claim is viable because
the APA was procured by fraud so the APA does not necessarily govern.51 Last, Yangaroo
contends that there are outstanding factual issues pertaining to whether Centerfield I was still
winding up at the relevant times, and thus potentially involved in the alleged misconduct, which
precludes dismissal.52
B. BDO’S MOTION
1. Motion
BDO, too, seeks dismissal of all the claims against it. BDO claims it could not have
aided and abetted the Duplication Entities’ alleged fraud, in part, because there was no such
fraud, and because neither BDO nor its predecessor—which was the relevant entity for much of
the due diligence process—knew about or substantially assisted fraud.53 As for tortious
interference, BDO claims there are no allegations that BDO engaged in any improper, interfering
conduct after the APA was signed.54 BDO makes arguments similar to those made by the
48
Pl.’s Opp’n to Centerfield at 12-15.
49
Id. at 15-21.
50
Id. at 21-24.
51
Id. at 24-25.
52
Id. at 26-27.
53
BDO’s Mot. at 7-10.
54
Id. at 10-12.
9
Centerfield Entities as to the unjust enrichment claim—i.e., the APA exclusively governs—but
adds that BDO received no enrichment at Yangaroo’s expense.55
2. Opposition
Yangaroo disagrees with each of BDO’s arguments. First, Yangaroo claims that it has
adequately pled underlying fraud and BDO’s knowing assistance of that fraud.56 Yangaroo also
argues that, for present purposes, any successor liability issues pertaining to BDO are premature
factual disputes that rely on facts outside the Complaint.57 With regard to tortious interference,
Yangaroo maintains that it alleged that BDO improperly interfered with DMS’s performance,
which it says is all that is required at this stage.58 Yangaroo concludes by saying that BDO’s fee
was an unjust enrichment and that the APA does not exclusively govern because it was procured
by fraud.59
C. SR CAPITAL’S MOTION
1. Motion
SR Capital’s motion is the narrowest, with the caveat that it incorporates the other
Moving Defendants’ arguments by reference.60 SR Capital contests this Court’s personal
jurisdiction.61 SR Capital argues that the APA’s forum selection provision is the only plausible
basis for jurisdiction over it.62 SR Capital continues that because it did not sign the APA, it is
55
Id. at 13-14.
56
Pl’s Opp’n to BDO at 4-8.
57
Id. at 9-10.
58
Id. at 12-13.
59
Id. at 11-12.
60
SR Capital’s Mot. at 11.
61
Id. at 5-10.
62
Id. at 6.
10
not bound to the forum selection provision.63 SR Capital adds that it was not “closely related” to
the APA and that this case does not arise from SR Capital’s standing with regard to the APA.64
2. Opposition
Yangaroo asserts that SR Capital is closely related to the APA because SR Capital
directly benefitted from it and could have foreseen being bound to it, either of which is
supposedly sufficient to make SR Capital closely related.65 Yangaroo concludes that because SR
Capital is closely related to the APA and Yangaroo’s claims against SR Capital emanate from
the APA, the APA’s forum selection provision enables Yangaroo to pursue its claims against SR
Capital in Delaware.66
IV. STANDARD OF REVIEW
A. FAILURE TO STATE A CLAIM
When reviewing a motion to dismiss under Superior Court Civil Rule 12(b)(6), the Court
(i) accepts all well-pled factual allegations as true, (ii) accepts even vague allegations as well-
pled if they give the opposing party notice of the claim, (iii) draws all reasonable inferences in
favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be
entitled to recover under any reasonably conceivable set of circumstances.67 The Court will not,
however, accept “conclusory allegations that lack specific supporting factual allegations.”68
63
Id. at 6-7.
64
Id. at 7-10.
65
Pl.’s Opp’n to SR Capital at 5-10.
66
Id. at 10-11.
67
See ET Aggregator, LLC v. PFJE AssetCo Hldgs. LLC, 2023 WL 8535181, at *6 (Del. Super. Dec. 8, 2023).
68
Id. (quoting Ramunno v. Crawley, 705 A.2d 1029, 1034 (Del. 1998)).
11
B. LACK OF PERSONAL JURISDICTION
Upon a motion to dismiss under Rule 12(b)(2), the plaintiff bears the burden of
establishing this Court’s jurisdiction over the defendant.69 A prima facie showing of personal
jurisdiction suffices at the pleading stage.70 The plaintiff’s well-pled allegations are taken as true
and all reasonable inferences are drawn in the plaintiff’s favor; but, unlike a motion under Rule
12(b)(6), the Court may look outside the pleadings, and the complaint’s factual allegations can
be contradicted by affidavit.71
V. DISCUSSION
A. DEFENDANT-SPECIFIC ARGUMENTS
The Court begins its analysis with the reasons the claims against Centerfield I and SR
Capital must be dismissed. As such, the Court will not address any other issues unique to
Centerfield I or SR Capital with respect to other portions of this opinion.
1. Centerfield I’s Cannot be Liable.
Centerfield I’s position is uncomplex. It filed its Certificate of Cancellation with the
Delaware Secretary of State on June 11, 2019.72 That filing caused Centerfield I’s existence as a
juridical entity to end.73 As the Court of Chancery has explained:
After a certificate of cancellation has been filed, a defunct entity may speak only
through a receiver to manage litigation or any other outstanding business: the
receiver is appointed because there are no other fiduciaries to make decisions for
the entity. A defunct entity cannot otherwise make any decisions or take any
action.74
69
ADGS, LLC v. Emery Silfurtun, Inc., 2022 WL 1498433, at *3 (Del. Super. May 11, 2022) (citing Wiggins v.
Physiologic Assessment Servs., LLC, 138 A.3d 1160, 1164 (Del. Super. 2016)).
70
Id.71
Id. (citations omitted).
72
See Centerfield’s Mot., Ex. 1. “The court may take judicial notice of filings with the Delaware Secretary of
State.” Swift v. Hous. Wire & Cable Co., 2021 WL 5763903, at *2 n.14 (Del. Ch. Dec. 3, 2021).
73
See In re Reinz Wis. Gasket, LLC, 2023 WL 3300042, at *2 (Del. Ch. May 8, 2023).
74
Id. (footnote omitted).
12
Thus, the question is whether Yangaroo has raised a reasonable inference that an entity that
became defunct in 2019 is liable for misconduct committed in 2021.
Despite the deference given to the plaintiff on Rule 12(b)(6) motion, “the court need not
‘accept every strained interpretation of the allegations proposed by the plaintiff.’”75 Here, the
Complaint’s only factual allegations against Centerfield I come in the form of group pleading
against each of the Centerfield Entities.76 Unlike Centerfield I, however, Centerfield II and
Centerfield III were still operating during the relevant time period. The Court will not undertake
a reading of the Complaint which infers that a defunct entity shares the blame for allegations that
are coextensively levied against active entities. Because the Complaint sets forth no specific
facts from which the Court can reasonably infer Centerfield I took part in the alleged
misconduct, the Complaint fails as to Centerfield I.
2. The Court Lacks Personal Jurisdiction over SR Capital.
SR Capital is also entitled to dismissal. SR Capital is a New York entity with its
principal place of business in New York.77 Accordingly, Yangaroo must demonstrate a basis for
specific jurisdiction over SR Capital.78 To do so, Yangaroo points only to the APA’s forum
selection provision.79 A forum selection clause can establish a party’s consent to the selected
forum’s jurisdiction.80 But more analysis is required when a litigant seeks to enforce a forum
selection clause against an entity that did not sign the relevant agreement.
75
Barnes v. Hooper, 2024 WL 165987, at *2 (Del. Super. Jan. 12, 2024) (quoting Murray v. Mason, 244 A.3d 187,
192 (Del. Super. Dec. 16, 2020)).
76
See Compl. ¶ 9 n.2.
77
Id. ¶ 10.
78
See Owens v. Lead Stories, LLC, 2021 WL 3076686, at *7 (Del. Super. July 20, 2021).
79
Pl.’s Opp’n to SR Capital at 4-10.
80
See Labyrinth, Inc. v. Urich, 2024 WL 295996, at *25 (Del. Ch. Jan. 26, 2024) (quoting Partners & Simons, Inc.
v. Sandbox Acqs., 2021 WL 3161651, at *3 (Del. Ch. July 26, 2021)).
13
A litigant must satisfy the Capital Group81 test to enforce a forum selection clause
against a non-signatory.82 The three elements of that test are:
(i) the agreement contains a valid forum selection provision; (ii) the non-signatory
has a sufficiently close relationship to the agreement, either as an intended third-
party beneficiary under the agreement or under principles of estoppel; and (iii) the
claim potentially subject to the forum selection provision arises from the non-
signatory's standing relating to the agreement.83
Here, the Court focuses its analysis on the second element and SR Capital.
Yangaroo acknowledges that the APA has a clause disclaiming third-party
beneficiaries.84 As such, Yangaroo must demonstrate that the principles of estoppel apply to SR
Capital. Two circumstances suffice to establish estoppel in this context: “(i) the non-signatory
accepted a direct benefit from the agreement or (ii) the non-signatory had a close relationship to
the agreement, a signatory to the agreement controlled the non-signatory, and the circumstances
establish that the signatory agreed to the forum selection provision on behalf of its controlled
affiliate.”85 Yangaroo must establish one of those circumstances to bind SR Capital to the
APA’s forum selection clause.
The Complaint makes no allegations that SR Capital was controlled by a signatory to the
APA. So, Yangaroo must show SR Capital directly benefitted from the APA. A qualifying
benefit can be pecuniary or non-pecuniary, but it must be direct and actually received.86 As for
the direct benefit SR Capital supposedly received, Yangaroo contends:
81
Cap. Grp. Cos., Inc. v. Armour, 2004 WL 2521295 (Del. Ch. Oct. 29, 2004).
82
See Fla. Chem. Co., LLC v. Flotek Indus., Inc., 262 A.3d 1066, 1089-90 (Del. Ch. 2021).
83
Id. at 1090 (citing Cap. Grp., 2004 WL 2521295, at *5).
84
Pl.’s Opp’n to SR Capital at 6 (citing APA § 8.3).
85
Fla. Chem., 262 A.3d at 1090. The second circumstance has been referred to as the “foreseeability” prong. See
Sustainability Partners LLC v. Jacobs, 2020 WL 3119034, at *7 (Del. Ch. June 11, 2020). The foreseeability prong
can also apply where a non-signatory defendant seeks to enforce the forum selection clause against a signatory
plaintiff. Id. (citations omitted).
86
See Fla. Chem., 262 A.3d at 1091 (citing Neurvana Med., LLC v. Balt USA, LLC, 2019 WL 4464268, at *4 (Del.
Ch. Sept. 18, 2019)).
14
SR Capital directly benefitted from the APA because it received a portion of the
$3.16 million purchase price paid by Yangaroo to DMS pursuant to the APA.
Whether SR Capital received its share of the APA proceeds in a distribution from
Duplication Services is of no moment, because any receipt of this benefit resulted
from the APA.87
Yangaroo’s argument is mistaken. A “benefit result[ing] from the APA” is not enough—
it must result directly from the APA.88 The Court recently addressed whether distributions of
sale proceeds to the seller’s members are direct benefits of the sale.89 In Chumash, the Court
held that such distributions are not direct benefits.90 The distributions are not direct benefits
because the distributions are contingent upon the selling entity’s managers choosing to distribute
the proceeds and, in that way, are removed from the contract.91 Were it otherwise, passive
members who receive contract-based distributions could end up unwittingly consenting to
personal jurisdiction without taking any affirmative act to do so.92
The Court will follow the holding in Chumash. The distributions SR Capital purportedly
received—which are not mentioned in the Complaint and would have needed to be distributed
twice before reaching SR Capital—are even further from a direct benefit than the pre-planned
distributions at issue in Chumash.93 That means Yangaroo’s only plausible basis for establishing
jurisdiction over SR Capital is insufficient. Accordingly, the Court grants SR Capital’s motion.
87
Pl.’s Opp’n to SR Capital at 7 (citations omitted).
88
Fla. Chem., 262 A.3d at 1091 (citing Neurvana Med., 2019 WL 4464268, at *4).
89
See Chumash Cap. Invs., LLC v. Grand Mesa Partners, LLC, 2024 WL 1554184, at *8-9 (Del. Super. Apr. 10,
2024).
90
Id.91
Id. at *8 (citing CLP Toxicology, Inc. v. Casla Bio Hldgs. LLC, 2020 WL 3564622, at *13 n.100 (Del. Ch. June
29, 2020)).
92
Id. at *9 (noting the due process concerns associated with personal jurisdiction (citing Genuine Parts Co. v.
Cepec, 137 A.3d 123, 127 n.2 (Del. 2016)).
93
See id. at *8 (explaining the purchase-related distributions were approved as part of the approval of the purchase
itself).
15
B. THE APA’S EXCLUSIVE REMEDY PROVISION DOES NOT COMMAND DISMISSAL.
The Centerfield Entities94 maintain that Yangaroo’s claims are preempted by the
exclusive remedy provision in APA Section 6.5. There are at least two problems with the
Centerfield Entities’ reliance on Section 6.5. First, the Court is unclear on how the Centerfield
Entities have standing to enforce provisions of the APA. Second, the Court finds that the scope
of the exclusive remedy provision is ambiguous. That makes a pleading-stage dismissal
inappropriate.
The Court is guided by the result in LVI Group Investments, LLC v. NCM Group
Holdings, LLC.95 There, the Court of Chancery declined to dismiss claims based on an exclusive
remedy provision because “it is unclear whether [certain defendants], as non-parties to the
[contract], have standing to enforce its provisions” and “even if [those defendants] could enforce
the exclusive remedies clause, there is another ambiguity that requires further factual
development.”96
As for the standing issue, Yangaroo invokes the general rule that a party cannot “have it
both ways” by seeking protection under the terms of a contract while simultaneously disclaiming
the contract’s obligations.97 The Centerfield Entities respond that third-party beneficiaries—
which are facially precluded by APA Section 8.3—can enforce contracts.98 The Centerfield
Entities add that releases can be drafted to apply to non-signatories.99 The Court will not address
94
The Court will continue to refer to “the Centerfield Entities” for the remainder of this opinion, even though the
claims against Centerfield I are dismissed regardless of the other arguments.
95
2018 WL 1559936 (Del. Ch. Mar. 28, 2018).
96
Id. at *14.
97
Pl.’s Opp’n to Centerfield at 12 (quoting Kuroda v. SPJS Hldgs., L.L.C., 2010 WL 4880659, at *4 (Del. Ch. Nov.
30, 2010)); see also Wash. House Condo Assoc. of Unit Owners v. Daystar Sills, Inc., 2015 WL 6750046, at *4
(Del. Super. Oct. 28, 2015) (“As a general rule, parties who are strangers to the contract have no legal right to
enforce it.” (citing RHA Constr., Inc. v. Scott Eng’g Inc., 2011 WL 3908765, at *5 (Del. Super. Sept. 1, 2011))).
98
Centerfield’s Reply at 4.
99
Id.16
those arguments because, as in LVI Group,100 even if the Centerfield Entities could enforce APA
Section 6.5, ambiguity precludes dismissal.
The ambiguity in APA Section 6.5 is whether it provides the exclusive remedy for APA-
related claims against anyone, or only those against other parties to the APA. The key language
is “no party hereto shall have any cause of action . . . against any other party arising under or in
connection with this Agreement.”101 According to the Centerfield Entities, “any other party”
cannot be limited to parties to the APA because the drafters omitted “hereto” from that phrase.102
Put differently, if “any other party” meant “any other party to the APA,” the “hereto” in the first
part of the sentence would be superfluous. The Court attempts to avoid finding that contractual
language is superfluous verbiage,103 but the analysis is less simple in this instance.
Despite the contrary presumption, the APA’s drafter used “hereto” unnecessarily in
places. That is because “Parties”—note the capital “P”—is defined in the APA to mean “Buyer,
Parent, Midco, and Sellers,” and “Party” is defined as any one of those entities.104 And yet,
another clause within APA Section 6.5 states, “no legal action . . . may be maintained by any
Party hereto.”105 Because “Party” is defined to mean one of the parties to the APA, the “hereto”
in that clause appears to be superfluous. Moreover, APA Section 6.5 uses “Party” without
“hereto” in some places,106 which militates against finding that the drafters would include
“hereto” any time they meant a “Party” to the APA.
100
This question was ultimately left unanswered in LVI Group because the claim it pertained to failed on other
grounds. See LVI Grp. Invs., LLC v. NCM Grp. Hldgs., 2019 WL 7369198, at *32 (Del. Ch. Dec. 31, 2019).
101
APA § 6.5 (emphasis added).
102
Centerfield’s Reply at 5.
103
See NAMA Hldgs., LLC v. World Mkt. Ctr. Venture, LLC, 948 A.2d 411, 419 (Del. Ch. 2007) (“Contractual
interpretation operates under the assumption that the parties never include superfluous verbiage in their agreement,
and that each word should be given meaning and effect by the court.” (citing Majkowski v. Am. Imaging Mgmt.
Serv., 913 A.2d 572, 588 (Del. Ch. 2006))).
104
APA at 1.
105
Id. § 6.5.
106
Id. (specifically, “other Parties” and “each Party”).
17
The Court need not settle this interpretive question at this juncture. Instead, it is enough
to conclude that a reasonable interpretation of the contract would permit Yangaroo’s claims.107
Here, it is reasonable to read the at-issue portion of APA Section 6.5 consistently with the latter
portions of APA Section 6.5 that are expressly limited to claims between parties to the APA.
Therefore, the APA’s exclusive remedy provision does not provide a basis to dismiss Yangaroo’s
claims.108
C. COUNT IV (AIDING AND ABETTING FRAUD) IS WELL-PLED.
There are three elements to an aiding and abetting claim: (1) an underlying tort; (2) the
alleged abettor’s knowledge of that tort; and (3) the alleged abettor’s substantial assistance of the
tort.109 The Moving Defendants make arguments as to each of those elements.
1. Underlying Fraud
On the first element, the Moving Defendants essentially come to the Duplication Entities’
defense and say Yangaroo’s fraud claim is not well-pled. The Moving Defendants say that
Yangaroo’s fraud allegations are not particularized enough to satisfy Rule 9(b), and that the
fraud claim is an impermissibly bootstrapped duplication of the breach of contract claim.
Neither contention justifies dismissal.
Rule 9(b) requires the following circumstance of fraud to be pled with particularity:
“(1) the time, place, and contents of the false representation; (2) the identity of the person
making the representation; and (3) what the person intended to gain by making the
representation.”110 This requirement is “relatively easy” to satisfy when the fraud is “based on a
107
See LVI Grp., 2018 WL 1559936, at *14.
108
This conclusion obviates the need to address which, if any, of Yangaroo’s claims fall under Section 6.5’s carve-
out for fraud and intentional breach.
109
AmeriMark Interactive, LLC v. AmeriMark Hldgs., LLC, 2022 WL 16642020, at *11 (Del. Super. Nov. 3, 2022).
110
ABRY Partners, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1050 (Del. Ch. 2006).
18
representation in a contract.”111 Here, APA Sections 4.16 and 4.21 provide the contents of the
false representation, and those representations were made at the time and place of the APA’s
execution.112 The Duplication Entities made those representations for the alleged purpose of
inducing Yangaroo to enter the APA.113 That is enough particularity to satisfy Rule 9(b).
Another requirement for pleading fraud is that “[a] contracting party may not bootstrap a
breach of contract claim into a fraud claim merely by adding the words ‘fraudulently induced’ or
alleging that the contracting parties never intended to perform.”114 Relatedly, “[u]nder
Delaware’s pleading standard, a plaintiff’s fraud claim may not simply rehash the damages
allegedly caused by the breach of contract.”115 But, “[t]he anti-bootstrapping rule does not apply
where a plaintiff has made particularized allegations that a seller knew contractual
representations were false or lied regarding the contractual representation, or where damages for
plaintiff's fraud claim may be different from plaintiff's breach of contract claim.”116
Yangaroo has adequately pled that the Duplication Entities knew the representations in
Section 4.16 and 4.21 were false at the time they were made.117 At this stage, the Court finds
these allegations are sufficient to avoid application of the anti-bootstrapping rule.118 Likewise,
the fact that Yangaroo requests the same minimum amount of damages for each of its six causes
111
Swipe Acq. Corp. v. Krauss, 2020 WL 5015863, at *9 (Del. Ch. Aug. 25, 2020) (quoting Prairie Cap. III, L.P. v.
Double E Hldg. Corp., 132 A.3d 35, 62 (Del. Ch. 2015)).
112
See Compl. ¶¶ 77, 79, 81, 94-95.
113
Id. ¶¶ 95-96.
114
Swipe Acq., 2020 WL 5015863, at *11 (internal quotation marks omitted) (quoting Iotex Commc’ns, Inc. v.
Defries, 1998 WL 914265, at *5 (Del. Ch. Dec. 21, 1998)).
115
AmeriMark, 2022 WL 16642020, at *11 (internal quotation marks omitted) (quoting Khushaim v. Tullow Inc.,
2016 WL 3594752, at *6 (Del. Super. June 27, 2016)).
116
Swipe Acq., 2020 WL 5015863, at *11. The Court notes that the second “or” in this sentence reflects that
different damages are not essential where the plaintiff adequately pleads the defendant knew a representation was
false at the time of contracting.
117
See Compl. ¶¶ 52-57.
118
See Trust Robin, Inc. v. Tissue Analytics, Inc., 2022 WL 17423728, at *5 (Del. Ch. Dec. 2, 2022) (“Here, the
Plaintiff is not merely taking ‘the simple fact of nonperformance, add[ing] a dollop of the counterparty’s subjective
intent not to perform, and claim[ing] fraud.’” (alterations in original) (citation omitted)).
19
of action119 does not make the fraud claim a “rehash” of the contractual claim.120 The minimum
award listed in each prayer for relief is uncoincidentally the purchase price under the APA.121
Yangaroo may not recover the same damages multiple times but, at the pleading stage, it need
not pick just one theory to pursue when the allegations support several.122
2. Knowing Assistance
The Moving Defendants contend that their conduct fails to show that they knowingly
assisted any fraud. To adequately plead the knowledge element, the plaintiff must “plead facts
from which it reasonably can be inferred that the defendants knew or were in a position to know
of the underlying tortious conduct.”123 For substantial assistance, the plaintiff must show the
abettor’s “encouragement or assistance [wa]s a substantial factor in causing the resulting tort.”124
Analyzing these elements is “necessarily fact intensive.”125
The Complaint alleges that the Centerfield Entities and BDO126 were involved in the due
diligence surrounding the APA.127 They are also alleged to have regularly communicated with
119
See Compl. at Prayer for Relief. The Complaint does not fix the exact amount sought, instead saying: “in an
amount to be determined at trial, but not less than $3.16 million.” Id.120
In fact, the breach of contract claim includes the alleged nonperformance of a covenant, which is wholly
detached from the fraud allegations. See id. ¶¶ 82-87.
121
Id. ¶ 47.
122
See, e.g., Trust Robin, 2022 WL 17423728, at *5 (“[T]o the extent the abundance of fraud claims pled is
redundant, obviously, the Plaintiff can recover for resulting damages (if any) but once. But at this pleading stage, it
would be inappropriate to dismiss for redundancy.”); Principal Growth Strategies, LLC v. AGH Parent LLC, 2024
WL 274246, at *13 n.12 (Del. Ch. Jan. 25, 2024) (“If plaintiff has pleaded and then prevails in demonstrating that
the same conduct results in both liability for breach of defendant’s fiduciary duties and disgorgement via unjust
enrichment, plaintiff then will have to elect his remedies. But, at this time, defendants have wholly failed to justify
dismissal of this count.” (cleaned up) (quoting McPadden v. Sidhu, 964 A.2d 1262, 1276 (Del. Ch. 2008))).
123
AmeriMark, 2022 WL 16642020, at *11 (citing Agspring Holdco, LLC v. NGP X US Hldgs., L.P., 2020 WL
4355555, at *20 (Del. Ch. July 30, 2020)).
124
In re Oracle Corp. Deriv. Litig., 2020 WL 3410745, at *11 (Del. Ch. June 22, 2020) (quoting Restatement
(Second) of Torts § 876 cmt. d (1979)).
125
Id. (quoting In re Dole Food Co., Inc. S’holder Litig., 2015 WL 5052214, at *42 (Del. Ch. Aug. 27, 2015)).
126
BDO protests that its predecessor was the entity that advised Yangaroo at the beginning of the due diligence
process and that BDO did not become implicated in these events until January 2021. See BDO’s Mot. at 1. These
facts are outside the Complaint and BDO has not set forth a basis for the Court to consider them at this stage. In any
event, BDO’s late arrival to due diligence does not necessarily preclude all liability for BDO. How this
circumstance affects Yangaroo’s claims is a question for later proceedings.
127
Compl. ¶¶ 63-64.
20
representatives from the Duplication Entities regarding the Duplication Entities’ disclosure
obligations.128 The Complaint specifically alleges that the Moving Defendants “were involved in
[the Duplication Entities’] decision to conceal information concerning Verizon and the Verizon
Agreement from Yangaroo both during the APA due diligence period and after the execution of
the APA.”129 As an example, the Complaint cites a December 2020 meeting between BDO
employees and representatives of the Duplication Entities at which the BDO employees allegedly
advised against disclosing information relating to Verizon and the Verizon Agreement.130 The
Complaint adds that the Centerfield Entities encouraged a DMS executive to hide the Verizon
Agreement from Yangaroo.131
The Court finds that there is a fair inference that the Moving Defendants knowingly
assisted the Duplication Entities’ purported fraud based on the Moving Defendants’ alleged
involvement in the due diligence process and their purported advice to the Duplication Entities.
The Court finds it is reasonable to infer that as participants in the due diligence process, the
Moving Defendants were in a position to know what the Duplication Entities were obligated to
disclose. It is likewise reasonable to infer that the Moving Defendants’ purported advice to not
disclose the Verizon Agreement was a substantial factor in the Duplication Entities’ decision to
do just that. The Court is not opining on whether Yangaroo’s allegations are necessarily
compelling or destined to succeed; but all Yangaroo must do at this stage is provide notice of a
conceivable claim.132
128
Id.129
Id. ¶ 65.
130
Id. ¶ 66.
131
Id. ¶ 70.
132
Indep. Realty Tr., Inc. v. USA Carrington Park 20, LLC, 2022 WL 625293, at *4 (Del. Super. Mar. 1, 2022)
(“Delaware is a notice-pleading jurisdiction. In order to pass muster, a complaint need only ‘give general notice as
to the nature of the claim asserted against the defendant in order to avoid dismissal for failure to state a claim.’”
(quoting Nye v. Univ. of Del., 2003 WL 22176412, at *3 (Del. Super. Sept. 17, 2003))).
21
The Moving Defendants also argue that they cannot be liable for aiding and abetting
fraud because they had no duty to disclose the truth. They rely primarily on Oracle for that
assertion. There, certain defendants were alleged to have abetted fraud by failing to publicly
disclose facts that, if known, would have likely prevented the consummation of a fraudulent
transaction.133 In other words, “the alleged substantial aid was silence.”134 But, as the Moving
Defendants emphasize, “[a]bsent a fiduciary or contractual relationship, ‘Delaware law generally
does not impose a duty to speak.’”135 Thus, in Oracle, the Court of Chancery concluded that the
plaintiff first had to establish the alleged abettors’ duty to speak and then show an intentional
breach of that duty substantially assisted the fraud.136 The Moving Defendants seek to impose
that burden on Yangaroo.
The allegations here are not like those in Oracle. The Centerfield Entities and BDO are
not alleged to have merely silently countenanced the Duplication Entities’ fraud. Rather, as
explained above, the Centerfield Entities and BDO are alleged to have advised the Duplication
Entities to commit the fraudulent acts. Delaware law does not require entities to take on the role
of a good Samaritan, but neither does it allow entities to actively promote tortious conduct with
impunity. Eventually, Yangaroo will have to prove that BDO and the Centerfield Entities
actually encouraged the fraud. Yangaroo will also have to show that that encouragement rose to
the level of substantial assistance. In this situation, however, the lack of a duty to disclose is not
a legal impediment to aiding and abetting liability.
133
In re Oracle, 2020 WL 3410745, at *11.
134
Id. at *12.
135
Id. (quoting MetCap Sec. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *15 (Del. Ch. May 16, 2007)).
136
Id. at *12-13.
22
D. COUNT V (TORTIOUS INTERFERENCE WITH CONTRACT) IS NOT WELL-PLED.
Yangaroo’s tortious interference claim cannot be maintained. Yangaroo’s core
allegations against the Moving Defendants pertain to actions taken before the APA existed, so
they are irrelevant to tortious interference. The lone post-closing allegation does not aver an act
that was a factor in causing a breach. Thus, Count V fails.
A tortious interference with contract claim must satisfy five elements: “(1) a contract,
(2) about which defendant knew, and (3) an intentional act that is a significant factor in causing
the breach of such contract, (4) without justification, (5) which causes injury.”137 The scope of
this tort is “narrowly circumscribe[d]” in Delaware to avoid deterring legitimate competition.138
“A contract cannot be tortiously interfered with until it exists.”139 So conduct during the
due diligence process cannot support this claim. Yangaroo does not argue otherwise. That
leaves Yangaroo with the one allegation that deals with post-closing conduct—specifically, that
the Centerfield Entities and SR Capital encouraged a DMS executive to continue hiding the
Verizon-related issues from Yangaroo.140 Even if true, that was not tortious interference.
For an act to amount to tortious interference, it must be “a significant factor in causing [a]
breach.”141 Concealing the Verizon problems only pertains to the alleged breaches of the
representations in APA Sections 4.16 and 4.21. Those breaches occurred, if at all, when the
APA was executed and the false representations were made.142 For that reason, post-closing
conduct could not have been a factor in causing the breach. As a matter of simple logic, the
137
Surf’s Up Legacy Partners, LLC v. Virgin Fest, LLC, 2021 WL 117036, at *6 (Del. Super. Jan. 13, 2021)
(quoting Bhole, Inc. v. Shore Invs., Inc., 67 A.3d 444, 453 (Del. 2013)).
138
Id. (quoting Shearin v. E.F. Hutton Grp., Inc., 652 A.2d 578, 589(Del. Ch. 1994)).
139
WaveDivision Hldgs., LLC v. Highland Cap. Mgmt. L.P., 2010 WL 1267126, at *5 (Del. Super. Mar. 31, 2010).
140
Compl. ¶ 70.
141
Surf’s Up, 2021 WL 117036, at *6.
142
Lima USA, Inc. v. Mahfouz, 2021 WL 5774394, at *9 (Del. Super. Aug. 31, 2021) (noting “a breach of
representations occurs at the time of contracting”).
23
cause of an event must predate the event. Therefore, none of Yangaroo’s allegations support
tortious interference, and Count V must be dismissed.
E. COUNT VI (UNJUST ENRICHMENT) IS NOT WELL-PLED AS TO BDO BUT WELL-PLED AS
TO THE CENTERFIELD ENTITIES.
The Moving Defendants each oppose Yangaroo’s unjust enrichment claim. They each
argue that the APA comprehensively governs this action, which precludes a quasi-contractual
claim. BDO separately argues that it was not enriched by Yangaroo’s impoverishment. The
Court finds that only the BDO-specific argument is availing.
“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
and good conscience.”143 To plead unjust enrichment a plaintiff must show: “(1) an enrichment,
(2) an impoverishment, (3) a relation between the enrichment and the impoverishment, [and]
(4) the absence of justification.”144 Generally, if the parties’ relationship is “comprehensively
governed by contract” an unjust enrichment claim will be dismissed.145
1. The Centerfield Entities
The Centerfield Entities argue Yangaroo’s unjust enrichment claim must be dismissed
because this action is governed by the APA. That is the general rule, but an exception applies
here. Delaware courts hold that “[t]he contract itself is not necessarily the measure of [the]
plaintiff’s right where the claim is premised on an allegation that the contract arose from
143
CFGI, LLC v. Common C Hldgs. LP, 2024 WL 325567, at *6 (Del. Super. Ct. Jan. 29, 2024) (internal quotation
marks omitted) (quoting Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010)).
144
Id. (quoting Windsor I, LLC v. CWCapital Asset Mgmt. LLC, 238 A.3d 875 (Del. 2020)). The Delaware
Supreme Court has clarified that the absence of a remedy at law is not an element of an unjust enrichment claim in
Superior Court. State ex. rel. Jennings v. Monsanto Co., 299 A.3d 372, 390-91 (Del. 2023). That traditionally
enumerated element is only necessary to obtain the Court of Chancery’s equitable jurisdiction. Id. at 391 (citing
Garfield ex rel. ODP Corp. v. Allen, 277 A.3d 296, 351 (Del. Ch. 2022)). Hence, the Moving Defendants arguments
as to that element are anachronous.
145
CFGI, 2024 WL 325567, at *6 (citations omitted).
24
wrongdoing (such as . . . fraud) or mistake and the [defendant] has been unjustly enriched by the
benefits flowing from the contract.”146 Put another way, “when a plaintiff alleges that ‘it is the
[contract], itself, that is the unjust enrichment,’ the existence of the contract does not bar the
unjust enrichment claim.”147
That exception was demonstrated in LVI Group.148 There, a defendant allegedly
obtained a contract through fraud, but the contract’s existence did not preclude an unjust
enrichment claim.149 Instead, the Court of Chancery allowed the unjust enrichment claim to
persist because “the Complaint adequately alleges that the [contract] itself arose from
Defendants’ fraud.”150 Delaware courts have routinely applied that exception.151 Since it applies
here too, Yangaroo’s unjust enrichment claim against Centerfield II and III survives dismissal.
2. BDO
BDO has a different argument. Specifically, BDO claims that it did not receive any
enrichment from the APA itself or from Yangaroo.152 BDO instead received a $60,000 fee from
the Duplication Entities for its advisory services.153 That circumstance does not support
Yangaroo’s claim for unjust enrichment.
To maintain an unjust enrichment claim, there must be a relationship between the
defendant’s enrichment and the plaintiff’s impoverishment.154 A “simple relationship” is enough
146
LVI Grp., 2018 WL 1559936, at *16 (alterations in original) (citation omitted).
147
Id. (alteration in original) (quoting McPadden v. Sidhu, 964 A.2d 1262, 1276 (Del. Ch. 2008)).
148
Id. at *17.
149
Id.
150
Id.
151
See, e.g., Andor Pharms., LLC v. Lannett Co., Inc., 2024 WL 1855112, at *18-19 (Del. Super. Apr. 15, 2024);
Chumash, 2024 WL 1554184, at *16; Urvan v AMMO, Inc., 2024 WL 863688, at *14 (Del. Ch. Feb. 27, 2024);
Adviser Invs., LLC v. Powell, 2023 WL 6383242, at *8 (Del. Ch. Sept. 29, 2023).
152
BDO’s Mot. at 13-14.
153
See APA, Ex. A.
154
See CFGI, 2024 WL 325567, at *6.
25
where the defendant facilitated prohibited activities, but there still must be a relationship.155
Merely arguing that an entity should not be allowed to keep money derived from a misbegotten
transaction is not enough to establish unjust enrichment.156
Here, there is not a relationship between what BDO received and what Yangaroo lost. As
a result, even if the Court ordered the disgorgement of BDO’s fee, it is unclear where the money
would go. Giving it to Yangaroo would amount to a windfall because the money did not come
from Yangaroo. And it would make little sense to give the fee back to the Duplication Entities
considering they are alleged to be the primary tortfeasors. That conundrum demonstrates the
flaw in Yangaroo’s position.
Yangaroo relies on Lyons Insurance Agency, Inc. v. Kirtley157 and CLP Toxicology, Inc.
v. Casla Bio Holdings LLC;158however, these cases do not support Yangaroo’s argument. In
CLP Toxicology, the plaintiff “allege[d] all Defendants ‘received substantial direct benefits from
the Purchase Agreement.’”159 In Lyons, the plaintiff was impoverished by having its clients
follow a former employee to a new firm, and the defendants were enriched by the new clients’
business and their retention of a specified “buy-out fee” that was allegedly owed to the
plaintiff.160 Neither case supports the conclusion that a plaintiff can use unjust enrichment to
recover a fee that a third party paid to the defendant. Since there is no connection between
BDO’s gain and Yangaroo’s loss, Count VI is dismissed as to BDO.
155
See CoreTel Am., Inc. v. Oak Point Partners, LLC, 2022 WL 2903104, at *11 (Del. Super. July 21, 2022)
(citation omitted).
156
Id. at *12.
157
2019 WL 1244605 (Del. Super. Mar. 18, 2019).
158
2020 WL 3564622 (Del. Ch. June 29, 2020).
159
Id. at *13 (emphasis added).
160
Lyons Ins., 2019 WL 1244605, at *2-3.
26
VI. CONCLUSION
For the reasons stated above, the Centerfield Entities Motion is GRANTED as to Count
V (tortious interference) and all the claims against Centerfield I but DENIED in all other
respects; BDO’s Motion is GRANTED as to Counts V (tortious interference) and VI (unjust
enrichment) but DENIED in all other respects; and SR Capital’s Motion is GRANTED in full.
IT IS SO ORDERED.
May 30, 2024
Wilmington, Delaware
/s/ Eric M. Davis
Eric M. Davis, Judge
cc: File&ServeXpress
27