IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`FLAGLER HOLDINGS VI BETA, INC.
`and KENNETH SHANLEY
`
`
`Plaintiffs,
`
`
`v.
`
`AIRLINE ACCOMMODATIONS
`SOLUTIONS, LLC and FLEETCOR
`TECHNOLOGIES OPERATING
`COMPANY, LLC,
`Defendants.
`TA CONNECTIONS DE, LLC
`f/k/a AIRLINE ACCOMMODATIONS
`SOLUTIONS, LLC,
`Plaintiff,
`
`
`
`
`
`
`
` C.A. No. 2023-0050-SKR
`
`
`
`
`v.
`
`FLAGLER HOLDINGS VI BETA,
`INC.,
`
`
`Defendant.
`
`FLAGLER HOLDINGS VI BETA, INC.’S AMENDED ANSWER TO
`COMPLAINT FOR BREACH OF CONTRACT
`
`Flagler Holdings VI Beta, Inc. (“HCI”), by its undersigned attorneys, and
`
`without waiver of any rights under the Court of Chancery Rules, including the right
`
`to amend or supplement its answers, defenses, and allegations, hereby responds to
`
`the Complaint for Breach of Contract filed by TA Connections DE, LLC
`
`1
`
`EFiled: Jan 21 2025 11:27AM EST
`Transaction ID 75475108
`Case No. 2023-0050-SKR
`
`
`
`FLAGLER HOLDINGS VI BETA, INC.
`and KENNETH SHANLEY
`
`
`Plaintiffs,
`
`
`v.
`
`AIRLINE ACCOMMODATIONS
`SOLUTIONS, LLC and FLEETCOR
`TECHNOLOGIES OPERATING
`COMPANY, LLC,
`Defendants.
`TA CONNECTIONS DE, LLC
`f/k/a AIRLINE ACCOMMODATIONS
`SOLUTIONS, LLC,
`Plaintiff,
`
`
`
`
`
`
`
` C.A. No. 2023-0050-SKR
`
`
`
`
`v.
`
`FLAGLER HOLDINGS VI BETA,
`INC.,
`
`
`Defendant.
`
`FLAGLER HOLDINGS VI BETA, INC.’S AMENDED ANSWER TO
`COMPLAINT FOR BREACH OF CONTRACT
`
`Flagler Holdings VI Beta, Inc. (“HCI”), by its undersigned attorneys, and
`
`without waiver of any rights under the Court of Chancery Rules, including the right
`
`to amend or supplement its answers, defenses, and allegations, hereby responds to
`
`the Complaint for Breach of Contract filed by TA Connections DE, LLC
`
`1
`
`EFiled: Jan 21 2025 11:27AM EST
`Transaction ID 75475108
`Case No. 2023-0050-SKR
`
`
`
`(“US Purchaser”) on March 1, 2024 in the Superior Court of the State of Delaware
`
`(the “Superior Court Complaint”) as follows.*
`
`Unless expressly admitted, all allegations in the Superior Court Complaint are
`
`denied. Headings and footnotes contained in the Superior Court Complaint do not
`
`constitute allegations of fact, but to the extent they are considered allegations of fact,
`
`they are denied. HCI reserves the right to amend and/or supplement this Answer.
`
`All capitalized terms not defined herein shall have the meanings ascribed by
`
`the Superior Court Complaint; however, HCI, by using such defined terms, does not
`
`admit to any allegations made by US Purchaser in connection with such definitions
`
`or terms.
`
`PARTIES
`
`1.
`Plaintiff US Purchaser is a Delaware limited liability company and is a
`wholly-owned subsidiary of FleetCor Technologies Operating Company, LLC
`(“FleetCor”). FleetCor is a wholly-owned subsidiary of FleetCor Technologies, Inc.
`ANSWER: Admitted.
`
`2.
`Defendant HCI is a Florida corporation. Upon information and belief,
`Kenneth Shanley and his wife, Vivian Andrea Shanley, own a majority stake in HCI.
`ANSWER: Admitted.
`
`
`* On December 4, 2024, the Court granted a Stipulation and Proposed Consolidation Order
`(the “Consolidation Order”) consolidating the action in the Court of Chancery with the
`civil action number 2023-0050-SKR (the “Chancery Court Action”) and the action in the
`Superior Court with the civil action number N24C-03-012-SKR (the “Superior Court
`Action”), and providing that future filings in the consolidated action shall be made in the
`Chancery Court Action.
`
`2
`
`
`
`JURISDICTION AND VENUE
`
`3.
`This Court has subject matter jurisdiction over this dispute pursuant to
`Article IV, Section 7, of the Delaware Constitution and Section 541 of Title 10 of
`the Delaware Code.
`ANSWER: The allegations in paragraph 3 set forth a legal conclusion to
`
`which no response is required.
`
`4.
`This action arises from the Settlement and Mutual Release Agreement
`(“Settlement Agreement”),3 dated as of February 17, 2021, entered into by and
`among US Purchaser, HCI, and solely for the purposes of Sections 3.1, 4.1, and
`5.8(a) of the Settlement Agreement, FleetCor.
`ANSWER: HCI admits that a copy of the Settlement Agreement is attached
`
`as Exhibit A to the Superior Court Complaint. The allegations in paragraph 4 and
`
`footnote 3 otherwise purport to characterize the nature and content of the Settlement
`
`Agreement, the terms of which speak for themselves. HCI respectfully refers the
`
`Court to that document for a complete and accurate recitation of its terms and denies
`
`any interpretations or characterizations inconsistent with those terms.
`
`5.
`Pursuant to Section 5.4(a) of the Settlement Agreement, the parties
`agreed that “the provisions of Section 8.5 of the [Asset] Purchase Agreement
`[(“APA”)] shall, including with respect to service of process and waiver of jury trial,
`shall apply, mutatis mutandis, to this Agreement.”
`ANSWER: The allegations in paragraph 5 purport to characterize the nature
`
`and content of the Settlement Agreement, the terms of which speak for themselves.
`
`
`3 A true and correct copy of the Settlement Agreement is attached hereto as Exhibit A.
`Capitalized terms used herein but not defined shall have the definitions ascribed to them in
`the Settlement Agreement described in paragraph 4 of this Complaint.
`3
`
`
`
`HCI respectfully refers the Court to that document for a complete and accurate
`
`recitation of its terms and denies any interpretations or characterizations inconsistent
`
`with those terms.
`
`6.
`Accordingly, this Court also has subject matter jurisdiction over this
`dispute and venue is proper in this Court because Section 8.5(b) of the APA provides
`as follows:
`
`[A]ny and all disputes, claims or proceedings arising out of, relating to or in
`connection with this Agreement or its subject matter and the rights and
`obligations arising hereunder, or for recognition and enforcement of any
`settlement or judgment in respect of this Agreement and the rights and
`obligations arising hereunder brought by any other Party hereto or its
`successors or assigns, shall be brought and determined exclusively in a state
`or federal court sitting in the State of Delaware.
`ANSWER: The allegations in paragraph 6 purport to characterize the nature
`
`and content of the APA, the terms of which speak for themselves. HCI respectfully
`
`refers the Court to that document for a complete and accurate recitation of its terms
`
`and denies any interpretations or characterizations inconsistent with those terms.
`
`Further responding, HCI also denies the allegations in paragraph 6 to the extent
`
`inconsistent with the Consolidation Order. The allegations in paragraph 6 also set
`
`forth a legal conclusion to which no response is required.
`
`7.
`This Court has personal jurisdiction over HCI because, pursuant to
`Section 8.5(b) of the APA, the parties agreed as follows:
`
`Each of the Parties hereto hereby irrevocably submits with regard to any
`such action or proceeding for itself and in respect of its property, generally
`and unconditionally, to the personal jurisdiction of [a state or federal court
`sitting in the State of Delaware] and agrees that it will not bring any action
`relating to this Agreement or any of the transactions contemplated by this
`
`4
`
`
`
`Agreement in any court or tribunal other than [a state or federal court sitting
`in the State of Delaware].
`ANSWER: The allegations in paragraph 7 purport to characterize the nature
`
`and content of the APA, the terms of which speak for themselves. HCI respectfully
`
`refers the Court to that document for a complete and accurate recitation of its terms
`
`and denies any interpretations or characterizations inconsistent with those terms.
`
`The allegations in paragraph 7 also set forth a legal conclusion to which no response
`
`is required.
`
`FACTUAL BACKGROUND
`
`8.
`On August 10, 2020, HCI and US Purchaser entered into the APA,
`through which HCI sold substantially all of its assets to US Purchaser (the
`“Acquisition”). Pursuant to the APA, the parties negotiated for US Purchaser to
`make a one-time, lump sum payment of $75 million to HCI upon closing of the
`transactions contemplated by the APA (“Closing”).
`ANSWER: HCI admits the allegations of the first sentence of paragraph 8.
`
`HCI also admits that among the consideration to be paid under the APA, the parties
`
`negotiated for US Purchaser to make an initial $75 million payment to HCI upon
`
`Closing. HCI otherwise denies the allegations in paragraph 8.
`
`9.
`Following the Acquisition, questions arose as to how HCI would be
`compensated for certain accounts receivable (“AR”) representing money owed to
`HCI by its customers for services delivered prior to the Acquisition.
`ANSWER: Admitted.
`
`10. After engaging in a series of back-and-forth communications, on
`February 17, 2021, the parties entered into the Settlement Agreement.
`ANSWER: Admitted.
`
`5
`
`
`
`11. The Settlement Agreement provided a mechanism for HCI or its
`designee to receive additional consideration from US Purchaser based on the amount
`of cash US Purchaser collected and received on pre-Acquisition AR as of the Closing
`against which a reserve had been recorded (“Reserved AR”). This payment is
`referred to in the Settlement Agreement as the Payment Amount.
`ANSWER: The allegations in paragraph 11 purport to characterize the
`
`nature and content of the Settlement Agreement, the terms of which speak for
`
`themselves. HCI respectfully refers the Court to that document for a complete and
`
`accurate recitation of its terms and denies any interpretations or characterizations
`
`inconsistent with those terms.
`
`12. The definition of Payment Amount is set forth in Section 2.1(a)(iii) of
`the Settlement Agreement:
`
`“Payment Amount” means, (1) as of the first Payment Date, the Paid
`Reserved AR Amount defined in clause (1) of such term and (2) as of each
`subsequent Payment Date after the first Payment Date, the excess of the Paid
`Reserved AR Amount for such Payment Date over the Paid Reserved AR
`Amount for the immediately preceding Payment Date.
`The formula to determine the Payment Amount is driven by the definition of Paid
`Reserved AR Amount.
`ANSWER: HCI admits that paragraph 12 accurately quotes Section
`
`2.1(a)(iii) of the Settlement Agreement. The further allegations in paragraph 12
`
`purport to characterize the nature and content of the Settlement Agreement, the terms
`
`of which speak for themselves. HCI respectfully refers the Court to that document
`
`for a complete and accurate recitation of its terms and denies any interpretations or
`
`characterizations inconsistent with those terms.
`
`6
`
`
`
`13. The definition of Paid Reserved AR Amount is set forth in Section
`2.1(a)(ii) of the Settlement Agreement:
`
`“Paid Reserved AR Amount” means,
`(1) as of the first Payment Date, the aggregate amount of Reserved AR that
`has been actually received in cash by the US Purchaser or any Assignee
`from [August 10, 2020 (the “Closing Date”)]4 through and including
`December 31, 2020;
`(2) as of the Payment Date on April 30, 2021, the aggregate amount of
`Reserved AR that has been actually received in cash by the US Purchaser or
`any Assignee from the Closing Date through and including March 31, 2021;
`(3) as of the Payment Date on July 30, 2021, the aggregate amount of
`Reserved AR that has been actually received in cash by the US Purchaser or
`any Assignee from the Closing Date through and including June 30, 2021;
`(4) as of the Payment Date on September 30, 2021, the aggregate amount of
`Reserved AR that has been actually received in cash by the US Purchaser or
`any Assignee from the Closing Date through and including August 31, 2021;
`less, in all cases to the extent applicable, any amounts of such Paid Reserved
`AR Amount previously received by US Purchaser that has been refunded or
`returned by operation of law or otherwise.
`ANSWER: HCI
`admits
`that
`paragraph
`
`quotes
`
`13
`
`accurately
`
`Section 2.1(a)(ii) of the Settlement Agreement. The further allegations in paragraph
`
`13 and footnote 4 purport to characterize the nature and content of the Settlement
`
`Agreement and the APA, respectively, the terms of which speak for themselves. HCI
`
`respectfully refers the Court to those documents for a complete and accurate
`
`recitation of their terms and denies any interpretations or characterizations
`
`inconsistent with those terms.
`
`
`4 Pursuant to the APA, the “Closing Date” is defined as August 10, 2020.
`7
`
`
`
`14. As a result, under the Settlement Agreement, the applicable Payment
`Amount owed to HCI or its designee on each Payment Date is based on “the
`aggregate amount of Reserved AR that has been actually received in cash by the US
`Purchaser” or “any Person to which the right to receive the Reserved AR is assigned
`or transferred, including by operation of law and including any successor or assign
`of US Purchaser” (“Assignee”).
`ANSWER: The allegations in paragraph 14 purport to characterize the
`
`nature and content of the Settlement Agreement, the terms of which speak for
`
`themselves. HCI respectfully refers the Court to that document for a complete and
`
`accurate recitation of its terms and denies any interpretations or characterizations
`
`inconsistent with those terms.
`
`15. Pursuant to Section 2.2(b) of the Settlement Agreement, the parties
`agreed that all Reserved AR payments would be made by wire transfer of
`immediately available funds to an account specified by HCI under the Settlement
`Agreement.
`ANSWER: The allegations in paragraph 15 purport to characterize the
`
`nature and content of the Settlement Agreement, the terms of which speak for
`
`themselves. HCI respectfully refers the Court to that document for a complete and
`
`accurate recitation of its terms and denies any interpretations or characterizations
`
`inconsistent with those terms.
`
`16. Following the Acquisition, several HCI employees continued to be
`employed by US Purchaser. One of those employees who continued to be employed
`by US Purchaser post-Acquisition, Michelle Alava, served as HCI’s Controller and
`Vice President of Finance at the time of the Acquisition. Upon information and
`belief, Ms. Alava had worked closely with Mr. Shanley, the former Chairman and
`Chief Executive officer of HCI, during her fourteen (14) years at HCI before the
`Acquisition.
`
`8
`
`
`
`ANSWER: HCI admits, upon information and belief, that US Purchaser
`
`employed certain HCI employees post-Acquisition, and that one of those employees
`
`was Ms. Alava. HCI further admits that HCI employed Ms. Alava for 14 years pre-
`
`Acquisition and that paragraph 16 accurately describes Ms. Alava’s role at HCI at
`
`the time of the Acquisition. HCI denies the allegations in paragraph 16 to the extent
`
`they purport to characterize the nature of Ms. Alava and Mr. Shanley’s working
`
`relationship.
`
`17. Prior to and following Closing, Ms. Alava, along with her team of other
`legacy HCI employees, was responsible for managing any collections for the
`accounts in the Reserved AR.
`ANSWER: HCI admits that, prior to the Closing, Ms. Alava, along with
`
`other HCI employees, managed collections for accounts in the Reserved AR. HCI
`
`further admits, on information and belief, that for a period following the Closing,
`
`FleetCor tasked Ms. Alava and other legacy HCI employees with managing
`
`collections for accounts in the Reserved AR. HCI otherwise denies the allegations
`
`in paragraph 17.
`
`18. FleetCor gave Ms. Alava strict instruction on how to process
`collections for the Reserved AR so that US Purchaser would only pay HCI for
`Reserved AR actually received in cash by US Purchaser or any Assignee from the
`Closing Date through and including August 31, 2021.
`ANSWER: HCI denies the allegations in paragraph 18.
`
`19. Specifically, FleetCor instructed Ms. Alava via email that she and her
`team should not write off any customer accounts in the Reserved AR until September
`30, 2021, after US Purchaser finally settled with HCI under the Settlement
`
`9
`
`
`
`Agreement. Ms. Alava acknowledged via email that she understood and agreed to
`follow US Purchaser’s instruction not to write off any Reserved AR until US
`Purchaser finally settled with HCI under the Settlement Agreement.
`ANSWER: HCI admits that in July or August 2021, shortly before Ms.
`
`Alava’s departure from FleetCor, a FleetCor employee instructed Ms. Alava not to
`
`write off any pre-acquisition AR until all settlements with HCI were finalized. To
`
`the extent the allegations in paragraph 19 purport to characterize the nature and
`
`content of certain emails, which speak for themselves, HCI respectfully refers the
`
`Court to those emails for a complete and accurate recitation of their content and
`
`denies any interpretations or characterizations inconsistent therewith.
`
`20. On March 3, 2021, two weeks after finalizing the Settlement
`Agreement, US Purchaser wired $731,537.97 to HCI (the “First AR Payment”).
`ANSWER: Admitted.
`
`21. Pursuant to Section 2.1(a)(ii)(1) of the Agreement, the First AR
`Payment was supposed to represent the aggregate amount of Reserved AR that had
`been actually received in cash by US Purchaser or any Assignee from the Closing
`Date through and including December 31, 2020.
`ANSWER: The allegations in paragraph 21 purport to characterize the
`
`nature and content of the Settlement Agreement, the terms of which speak for
`
`thmselves. HCI respectfully refers the Court to that document for a complete and
`
`accurate recitation of its terms and denies any interpretations or characterizations
`
`inconsistent with those terms.
`
`22. US Purchaser calculated the First AR Payment based on reports
`prepared by Ms. Alava showing the Reserved AR had been reduced by $731,537.97
`
`10
`
`
`
`as of December 31, 2020 through cash actually received by US Purchaser from the
`Closing Date through and including December 31, 2020.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 22 and denies them on that basis.
`
`23.
`In reality, US Purchaser only received $619,337.97 of Reserved AR in
`cash from the Closing Date through and including December 31, 2020. Thus, the
`reports prepared by Ms. Alava, had they been accurate, should have shown only a
`$619,337.97 reduction to the Reserved AR amount from the receipt of cash.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 23 and denies them on that basis.
`
`24. However, because Ms. Alava improperly directed HCI’s legacy
`accounts receivable team to make “credit memo” (non-cash) adjustments to write
`off certain HCI customer accounts included in the Reserved AR, the first AR
`Payment included $112,200 that was never received in cash by US Purchaser from
`the Closing Date through and including December 31, 2020 and thus did not qualify
`as payment owed to HCI under the Settlement Agreement. This resulted in an
`overpayment of $112,200 to HCI for the First AR Payment.
`ANSWER: HCI denies the allegations in the first sentence of paragraph 24.
`
`HCI otherwise denies knowledge or information sufficient to form a belief as to the
`
`truth of the allegations in paragraph 24 and denies them on that basis.
`
`25. After the First AR payment, Ms. Alava and her team continued to
`manage and process collections for the Reserved AR.
`ANSWER: On information and belief, for a period following the Closing,
`
`FleetCor tasked Ms. Alava and other legacy HCI employees with managing
`
`collections for accounts in the reserved AR. HCI otherwise denies knowledge or
`
`11
`
`
`
`information sufficient to form a belief as to the truth of the allegations in paragraph
`
`25 and denies them on that basis.
`
`26. As the parties approached April 30, 2021 (the second Payment Date
`under the Settlement Agreement), Ms. Alava went so far as to direct her team to
`identify pre-Acquisition AR to write off, including customer accounts included in
`the Reserved AR.
`ANSWER: HCI admits, on information and belief, that with FleetCor’s
`
`knowledge, Ms. Alava provided direction to her team to identify pre-Acquisition AR
`
`that should be written off pursuant to FleetCor’s policies. To the extent a further
`
`response is required, HCI otherwise denies knowledge or information sufficient to
`
`form a belief as to the truth of the allegations in paragraph 26 and denies them on
`
`that basis.
`
`27. Specifically, on April 12, 2021, Ms. Alava emailed her team “regarding
`potential write-off revenue” and attached a spreadsheet of HCI’s pre-Acquisition
`AR. Ms. Alava asked her team to “review [any] outstanding commission for 2019”
`and let her know “which revenue is 100% non-collectible.”
`ANSWER: The allegations in paragraph 27 purport to characterize the
`
`nature and content of an email, which speaks for itself. HCI respectfully refers the
`
`Court to the email for a complete and accurate recitation of its content and denies
`
`any interpretations or characterizations inconsistent therewith.
`
`28. The next day, on April 13, 2021, Ms. Alava followed up on her earlier
`email and again asked her team to send her “[their] 2019 write offs.”
`ANSWER: The allegations in paragraph 28 purport to characterize the
`
`nature and content of an email, which speaks for itself. HCI respectfully refers the
`
`12
`
`
`
`Court to that email for a complete and accurate recitation of its content and denies
`
`any interpretations or characterizations inconsistent therewith.
`
`29. Ms. Alava’s team responded to her email by identifying pre-
`Acquisition AR that should be written off.
`ANSWER: The allegations in paragraph 29 purport to characterize the
`
`nature and content of certain emails, which speak for themselves. HCI respectfully
`
`refers the Court to those emails for a complete and accurate recitation of their content
`
`and denies any interpretations or characterizations inconsistent therewith.
`
`30. On April 20, 2021, Ms. Alava emailed a member of her team to follow
`up on that team member’s “report with [] notes and confirmation of what should be
`written off for [the team member’s] accounts.”
`ANSWER: The allegations in paragraph 30 purport to characterize the
`
`nature and content of certain emails, which speak for themselves. HCI respectfully
`
`refers the Court to those emails for a complete and accurate recitation of their content
`
`and denies any interpretations or characterizations inconsistent therewith.
`
`31. The next day, on April 21, 2021, Ms. Alava’s team member sent her a
`report that identified pre-Acquisition AR to write off for certain HCI accounts. Ms.
`Alava proceeded to make non-cash write-offs to the Reserved AR.
`ANSWER: The allegations in the first sentence of paragraph 31 purport to
`
`characterize the nature and content of a certain report and associated email, which
`
`speaks for themselves. HCI respectfully refers the Court to those documents for a
`
`complete and accurate recitation of their content and denies any interpretations or
`
`characterizations inconsistent therewith. HCI denies knowledge or information
`
`13
`
`
`
`sufficient to form a belief as to the truth of the allegations in the second sentence of
`
`paragraph 31, including because the phrase “non-cash write-offs” is vague and
`
`undefined, and denies them on that basis.
`
`32. On April 27, 2021, US Purchaser wired $466,313.01 to HCI (the
`“Second AR Payment”).
`ANSWER: Admitted.
`
`33. US Purchaser calculated the Second AR Payment based on reports
`prepared by Ms. Alava showing the Reserved AR had been reduced by $466,313.01
`as of March 31, 2021 through additional cash actually received by US Purchaser
`after the First AR Payment.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 33 and denies them on that basis.
`
`34.
`In reality, US Purchaser only collected and received an additional
`$281,688.01 of Reserved AR in cash from the Closing Date through and including
`March 31, 2021. Accordingly, the reports prepared by Ms. Alava, had they been
`accurate, should have shown only a $281,688.01 deduction to the Reserved AR.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 34 and denies them on that basis.
`
`35. However, because Ms. Alava again improperly directed HCI’s legacy
`accounts receivable team to make “credit memo” (non-cash) adjustments to write
`off certain HCI customer accounts included in the Reserved AR, the Second AR
`Payment included $184,625 that was never received in cash by US Purchaser from
`the Closing Date through and including March 31, 2021 and thus did not qualify as
`payment owed to HCI under the Settlement Agreement. This resulted in an
`overpayment of $184,625 to HCI for the Second AR Payment.
`
`14
`
`
`
`ANSWER: HCI denies the allegations in the first sentence of paragraph 35.
`
`HCI otherwise denies knowledge or information sufficient to form a belief as to the
`
`truth of the allegations in paragraph 35 and denies them on that basis.
`
`36. On May 17, 2021, Ms. Alava informed US Purchaser that she was
`resigning from her position but would stay at the company until August 13, 2021 to
`provide transitional support for her role.
`ANSWER: Admitted.
`
`37. On July 14, 2021, one month before her departure, Ms. Alava emailed
`her team a spreadsheet of HCI’s pre-Acquisition AR. Ms. Alava told her team that
`she “would like to write off any commission due which we will NOT be collecting
`(revenue pre-acquisition)” before her departure from FleetCor. Ms. Alava instructed
`her team to review the report and “let [her] know what [outstanding invoices] [are]
`100% uncollectible.”
`ANSWER: The allegations in paragraph 37 purport to characterize the
`
`nature and content of certain emails, which speak for themselves. HCI respectfully
`
`refers the Court to those emails for a complete and accurate recitation of their content
`
`and denies any interpretations or characterizations inconsistent therewith. HCI
`
`denies that Ms. Alava acted outside FleetCor’s knowledge or the scope of direction
`
`from US Purchaser to her.
`
`38. Between July 20 and July 21, 2021, Ms. Alava’s team responded to her
`email by sending her a list of pre-Acquisition AR that should be written off.
`ANSWER: The allegations in paragraph 38 purport to characterize the
`
`nature and content of certain emails, which speak for themselves. HCI respectfully
`
`15
`
`
`
`refers the Court to those emails for a complete and accurate recitation of their content
`
`and denies any interpretations or characterizations inconsistent therewith.
`
`39. On July 27, 2021, approximately two weeks before Ms. Alava’s last
`day at FleetCor, US Purchaser wired $353,922.27 to HCI (the “Third AR Payment”).
`ANSWER: Admitted.
`
`40. US Purchaser calculated the Third AR Payment based on reports
`prepared by Ms. Alava showing the Reserved AR had been reduced by $353,922.27
`as of June 30, 2021 through additional cash actually received by US Purchaser since
`the Second AR Payment.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 40 and denies them on that basis.
`
`41.
`In reality, US Purchaser only received an additional $125,422.27 of
`Reserved AR in cash from the Closing Date through and including June 30, 2021.
`Accordingly, the reports prepared by Ms. Alava, had they been accurate, should have
`shown a $125,422.27 reduction to the Reserved AR from the receipt of cash.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 41 and denies them on that basis.
`
`42. However, because Ms. Alava again improperly directed HCI’s legacy
`accounts receivable team to make “credit memo” (non-cash) adjustments to write
`off certain HCI customer accounts included in the Reserved AR, the Third AR
`Payment included $228,500 that was never received in cash by US Purchaser from
`the Closing Date through and including June 30, 2021 and thus did not qualify as
`payment owed to HCI under the Settlement Agreement. This resulted in an
`overpayment of $228,500 to HCI for the Third AR Payment.
`ANSWER: HCI denies the allegations in the first sentence of paragraph 42.
`
`HCI otherwise denies knowledge or information sufficient to form a belief as to the
`
`truth of the allegations in paragraph 42 and denies them on that basis.
`
`16
`
`
`
`43. On August 13, 2021, Ms. Alava left US Purchaser’s employment.
`Shortly after her departure, Ms. Alava became Vice President, Finance and
`Administration at Vindow, Inc., a company founded by Mr. Shanley.
`ANSWER: Admitted.
`
`44. Following Ms. Alava’s departure, US Purchaser’s accounting team was
`tasked with determining additional amounts of Reserved AR that had been actually
`received in cash by US Purchaser or any Assignee from the Closing Date through
`and including August 31, 2021. This review necessarily included further
`investigation with respect to the First AR Payment, the Second AR Payment, and
`the Third AR Payment.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 44 and denies them on that basis.
`
`45. During this review, US Purchaser’s team discovered that US Purchaser
`paid HCI $525,325 that was not actually received in cash by US Purchaser or any
`Assignee, as required under Section 2.1(a)(ii) of the Agreement.
`ANSWER: HCI denies knowledge or information sufficient to form a belief
`
`as to the truth of the allegations in paragraph 45 and denies them on that basis.
`
`46. On September 24, 2021, FleetCor emailed Mr. Shanley explaining that
`FleetCor discovered US Purchaser paid HCI for Reserved AR that was not actually
`received in cash by US Purchaser. That same day, US Purchaser sent Mr. Shanley a
`list of the credit memo (non-cash) adjustments wrongly issued by Ms. Alava for
`certain Reserved AR accounts.
`ANSWER: HCI admits FleetCor emailed Mr. Shanley on September 24,
`
`2021. The allegations in paragraph 46 otherwise purport to characterize the nature
`
`and content of certain emails, which speak for themselves. HCI respectfully refers
`
`the Court to those emails for a complete and accurate recitation of their content and
`
`denies any interpretations or characterizations inconsistent therewith.
`
`17
`
`
`
`47. On September 28, 2021, FleetCor met with Mr. Shanley and Ms. Alava
`over zoom. During that meeting, FleetCor again explained that US Purchaser had
`paid HCI amounts not due and owing under the Settlement Agreement.
`ANSWER: HCI admits the first sentence of paragraph 47. HCI also admits
`
`that during the virtual meeting, FleetCor explained its position that US Purchaser
`
`had paid HCI amounts not due and owing under the Settlement Agreement. HCI
`
`otherwise denies the allegations in paragraph 47.
`
`48. Mr. Shanley assured FleetCor he wanted to “do the right thing” and
`“was not going anywhere.”
`ANSWER: Admitted.
`
`49. Despite these assurances, HCI has not paid US Purchaser any of the
`amounts that HCI was not, and is not, entitled to under the Settlement Agreement.
`ANSWER: HCI admits that it has not remitted any payment to US Purchaser
`
`but otherwise denies the allegations in paragraph 49.
`
`COUNT I
`(Breach of Contract)
`
`50. US Purchaser repeats and realleges its allegations in the preceding
`paragraphs of the Complaint as if fully set forth herein.
`ANSWER: HCI repeats its answers and responses to the prior allegations in
`
`the Complaint as if asserted in full herein.
`
`51. The Settlement Agreement constitutes a valid and enforceable contract
`between US Purchaser and HCI.
`ANSWER: The allegations in Paragraph 51 set forth a legal conclusion to
`
`which no response is required.
`
`18
`
`
`
`52. Under the terms of the Settlement Agreement, HCI was to accept
`payment for Reserved AR actually received in cash by US Purchaser or any
`Assignee. Thus, any amount of Reserved AR that was not actually received in cash
`by US Purchaser or any Assignee was not due and owing to HCI under the
`Settlement Agreement.
`ANSWER: The allegations in paragraph 52 purport to characterize the
`
`nature and content of the Settlement Agreement, the terms of which speak for
`
`themselves. HCI respectfully refers the Court to that document for a complete and
`
`accurate recitation of its terms and denies any interpretations or characterizations
`
`inconsistent with those terms. The allegations in the second sentence of paragraph
`
`52 also set forth a legal conclusion to which no response is required. To the extent
`
`a response is required, HCI denies the allegations in paragraph 52.
`
`53. HCI has breached the Settlement Agreement by accepting and retaining
`payments from US Purchaser for Reserved AR that were not actually received in
`cash by US Purchaser or any Assignee.
`ANSWER: The allegations in paragraph 53 set forth a legal conclusion to
`
`which no response is required. To the extent a response is required, HCI denies the
`
`allegations in paragraph 53.
`
`54. HCI has breached the Settlement Agreement by failing and refusing to
`promptly refund US Purchaser for the amounts that have been paid but to which HCI
`was not, and is not, entitled to under the plain terms of the Settlement Agreement.
`ANSWER: The allegations in paragraph 54 set forth a legal conclusion to
`
`which no response is required. To the extent a response is required, HCI denies the
`
`allegations in paragraph 54.
`
`19
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`
`
`55. As a result of HCI’s breach of the Sett
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