TFI Tutti LLC v. Sono America, Inc. ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
TFI TUTTI LLC, WOO YOUNG )
CHOI and FLORIS TUTTI )
INTERNATIONAL, INC., )
)
Plaintiffs, ) C.A. No. N23C-03-122
) PRW CCLD
v. )
)
SONO AMERICA, INC. (F/K/A )
DAEMYUNG AMERICA, INC.) and )
DAEMYUNG TUTTI, LLC, )
)
Defendants. )
Submitted: December 14, 2023
Decided: December 18, 2023
ORDER GRANTING DEFENDANT SONO AMERICA, INC.’S
MOTION TO DISMISS
HAVING FULLY CONSIDERED the Defendant Sono America Inc.’s
Motion to Dismiss (D.I. 18); the Plaintiffs’ Answer opposing dismissal (D.I. 19);
Defendant Sono America Inc.’s Reply supporting its own dismissal request (D.I. 22);
the parties’ cited authorities; and Plaintiffs’ Amended Complaint and exhibits
attached thereto (D.I. 14). This contest is a contractual one, and accordingly
Defendant Sono America Inc.’s Motion to Dismiss all implied and non-contractual
claims (Counts II – V) is GRANTED.
(1) Both sides are familiar with the factual background and operative
agreements mentioned herein; so, the Court need not spell all that out in detail.
(2) Both sides are equally familiar with the procedural background of this
matter and the pending motion; so, that is explained just briefly here. In sum,
Plaintiffs brought a six-count amended complaint against Defendants. Defendant
Sono America Inc. characterizes this action as an entirely contractual dispute, and
thereby moves to dismiss all claims, minus the breach-of-contract claims. Plaintiffs
have withdrawn the sixth count (quantum meruit, unjust enrichment, and
constructive trust), and opposed the motion as to the other claims. Unsurprisingly,
Plaintiffs argue that the parties’ contractual agreements do not resolve the conduct
giving rise to the fraud, tortious interference and implied covenant of good faith and
fair dealing claims.
(3) Under this Court’s Civil Rule 12(b)(6), a party can move to dismiss for
failure to state a claim upon which relief can be granted.1 When considering a
motion under Rule 12(b)(6), the Court (i) accepts as true all well-pled factual
allegations in the complaint, (ii) credits vague allegations if they give the opposing
party notice of the claim, and (iii) draws all reasonable inferences in favor of the
plaintiffs.2 “Dismissal is warranted [only] where the plaintiff has failed to plead
facts supporting an element of the claim, or [where] under no reasonable
interpretation of the facts alleged could the complaint [be read to] state a claim for
1
Del. Super. Ct. Civ. R. 12(b)(6).
2
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011).
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which relief might be granted.”3
(4) After a thorough review of the Motion to Dismiss, the response thereto,
and the record to date, the Court concludes that the terms of the parties’ joint venture
agreement dispose of the fraud, tortious interference and implied covenant of good
faith and fair dealing claims.
(5) First, Plaintiffs allege that Defendants misrepresented their intent to
compensate Mr. Choi and complete the development of the stores.4 But, the Joint
Venture Agreement directly addresses those matters.5 Too, these representations
allegedly occurred after the execution of the contract and relate to the performance
of Defendants’ obligations under the Joint Venture Agreement. Thus, the anti-
bootstrapping rule bars Plaintiffs’ fraud claims based on these allegations.6
(6) Relatedly, Plaintiffs allege that Mr. Hwang misrepresented Defendants’
commitment to participate in other business opportunities.7 Yet, Plaintiffs allege no
facts raising a reasonable inference that “Mr. Hwang knew” that the Defendants’
3
Kable Prod. Servs., Inc. v. TNG GP, 2017 WL 2558270, at *5 (Del. Super. Ct. June 13, 2017).
4
Amended Complaint (D.I. 14) ¶¶ 218(a)-(b).
5
See Am. Compl., Exhibit A (“Joint Venture Agreement”) Art.III.B and Art.IV J.
6
Midland Red Oak Realty, Inc. v. Friedman, Billings & Ramsey & Co., 2005 WL 445710, at *3
(Del. Super. Ct. 2005) (“A plaintiff must sue in contract and not in tort” where an action is based
entirely on a breach of the terms of a contract between the parties, and not on a violation of an
independent duty imposed by law.”); MicroStrategy Inc. v. Acacia Research Corp., 2010 WL
5550455, at *17 (Del. Ch. 2010) (a party “cannot ‘bootstrap’ a claim of breach of contract into a
claim of fraud merely by alleging that a contracting party never intended to perform its
obligations.”).
7
Am. Compl. ¶ 218(c).
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alleged promises were false.8 Such conclusory allegations are insufficient to state a
claim for promissory fraud.9
(7) Next, Plaintiffs allege that Defendants tortiously interfered with
Plaintiffs’ contracts and prospective business opportunities.10 As to tortious
interference with contract, Plaintiffs argue that, because Defendants failed to cover
the operating expenses of the joint venture stores, third parties subsequently enforced
cross-default provisions on leases of other, non-joint-venture stores.11 But Plaintiffs
do not identify any contractual obligation on the part of Defendants to continue
funding the joint venture stores once they opened and became fully operational.12
8
See id. ¶¶ 218(c)(i)-(ii); see also id. ¶ 218(c)(iii) (failing to provide any specific facts indicating
that “Mr. Hwang knew at the time that Defendants never had the intention to follow through” on
the representation that “Mr. Hwang told Mr. Choi that Defendants had decided to support the
[Kiosk Project]”); id. ¶¶ 218(c)(iv), 219 (“Mr. Hwang committed to [the Kiosk Project] …
defendants knew their misrepresentations were false at the time they were made or failed to correct
them before Plaintiffs took in action in reliance on the material misrepresentations.”).
9
CRE Niagara Holdings, LLC v. Resorts Grp., Inc., 2022 WL 1749181, at *15 (Del. Super. Ct.
May 31, 2022) (citation omitted) (When a plaintiff pleads a claim of promissory fraud, the plaintiff
“must plead specific facts that lead to a reasonable inference that the promisor had no intention of
performing at the time the promise was made.”)
10
Am. Compl. ¶¶ 223-238.
11
Am. Compl. ¶¶ 106-107.
12
Plaintiffs allege that the “[Joint Venture Agreement] called for Mr. Choi to invest ‘sweat equity’
in…paying half of initial capital and half of their net operating costs once they opened. [Sono
America Inc.] and [Sono International, Co. Ltd.] were to ‘front’ the build-out costs and pay the
other half of the net operating costs.” Id. ¶ 18 (emphasis added); see also id. ¶¶ 50-51, 59. The
Court could not identify any provisions in the Joint Venture Agreement requiring Defendants to
pay “net operating costs.” See Chapter 7 Tr. Constantino Flores v. Strauss Water Ltd., 2016 WL
5243950, at *11 (Del. Ch. Sept. 22, 2016) (“As discussed below, whether the claim is brought
under Section 766 or Section 766A, a plaintiff cannot prevail on a tortious interference with
contract claim if the essence of his complaint is that the defendant refused to deal when he had no
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(8) As to prospective business opportunities, Plaintiffs have not shown that
it was wrongful for Defendants to back out of any of the proposed projects. The Joint
Venture Agreement required, in part, that Mr. Choi present Defendants with
potentially competing business opportunities.13 Whether Defendants decided to
exercise their contractual rights to pursue those opportunities alone or in partnership
with the Plaintiffs cannot be the basis for a tortious interference claim.14
(9) Lastly, no “unanticipated gap” exists for the implied covenant of good
faith and fair dealing to fill as to the amount and timing of executive compensation,
or the opening of Phase 2 stores.15 The Joint Venture Agreement expressly governs
these topics.16 The implied covenant is not a means to re-write and insert what the
parties could have provided for at the time of contracting.17
obligation to deal, or that the defendant's alleged tortious conduct amounted to nothing more than
the defendant acting within its contractual rights.”).
13
See Joint Venture Agreement, Art. V.I.
14
See Agilent Techs., Inc. v. Kirkland, 2009 WL 119865, at *8 (Del. Ch. Jan. 20, 2009) (“An
alleged interference in a prospective business relationship is only actionable if it is wrongful.”).
15
Am. Comp. ¶ 243.
16
Dave Greytak Enters., Inc. v. Mazda Motors of Am., Inc., 622 A.2d 14, 23 (Del. Ch. 1992),
aff’d, 609 A.2d 668 (Del. 1992) (The implied covenant does not apply when “the subject at issue
is expressly covered by the contract.”); see Joint Venture Agreement, Art.III.B, and Art.V.J.
17
Allied Capital Corp. v. GC–Sun Holdings, L.P., 910 A.2d 1020, 1035 (Del. Ch. 2006) (Courts
should not imply “a contractual protection when the contract easily could have been drafted to
expressly provide for it.”). In their Answering Brief, Plaintiffs raise for the first time that the
absence of a provision to terminate the license or revert ownership of the trademark constitutes a
“gap” for the implied covenant to fill. Ans. Br. at 22-23. The Joint Venture Agreement, however,
contemplates that the Licensing Agreement can be “amend[ed], modif[ied] and/or otherwise
ma[de] changes to…”. See Joint Venture Agreement, Art.V.F.3. and 11; See Joint Venture
Agreement, Ex. A (“Licensing Agreement”) § 7. The Licensing Agreement also contains
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(10) Given all this, the Court GRANTS Defendant Sono America Inc.’s
Motion to Dismiss all implied and non-contractual claims (Counts II – V).
SO ORDERED this 18th day of December, 2023.
Paul R. Wallace, Judge
Original to Prothonotary
cc: All counsel via File & Serve
termination provisions that allows for modification through the Joint Venture Agreement. See
Licensing Agreement § 7.
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