IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`Case No. 2025-0258 MTZ
`
`)))))))))))))
`
`MIR ANWAR, JEREMY KRELL,
`and ROBERT HOROWITZ,
`
`Plaintiffs,
`
`v.
`
`QUIP NYC INC., SIMON ENEVER,
`WILLIAM MAY, and GEORGE
`WELLS,
`
`Defendants.
`_______________________________
`
`DEFENDANTS’ REPLY BRIEF IN FURTHER SUPPORT OF THEIR
`MOTION TO DISMISS PLAINTIFFS’ COMPLAINT
`
`May 16, 2025
`
`KENNEDYS CMK LLP
`
`Marc S. Casarino, Esquire (#3613)
`Katie Barksdale (#6101)
`222 Delaware Avenue, Suite 710
`Wilmington, DE 19801
`302.308.6647
`
`Attorneys for Defendants Quip NYC Inc.,
`Simon Enever, William May, and George
`Wells
`
`Words: 7,064/8,000
`
`EFiled: May 16 2025 03:26PM EDT
`Transaction ID 76290328
`Case No. 2025-0258-MTZ
`
`

`

`TABLE OF CONTENTS
`Introduction ........................................................................................................1
`I.
`II. Argument............................................................................................................5
`A. Plaintiffs Misstate The Standard Of Review...................................................5
`B. Plaintiffs’ Breach Of Fiduciary Duty Claim Fails To Identify Any Breach Of
`Any Duty Owed .....................................................................................................7
`C. Plaintiffs Fail To Establish A Prima Facie Case For Intentional
`Misrepresentation/Fraudulent Concealment or Negligent Misrepresentation......11
`D. Anwar’s Breach of Express Contract Claim Is Premised On A Term Not
`Contained In the Promissory Note And Thus Fails As a Matter Of Law ............18
`E. Anwar’s Breach of Implied Contract Claim Lacks Consideration, Is Barred
`By The Statute Of Frauds, And Is Unenforceable Due To Lack Of Privity ........21
`F. Anwar’s Promissory Estoppel Claim Fails ...................................................27
`G. Delaware Courts Adhere to the American Rule, Barring Plaintiffs’ Demand
`For Attorneys’ Fees..............................................................................................29
`III. Conclusion........................................................................................................30
`
`i
`
`

`

`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`Ainscow v. Sanitary Co. of Am.,
`180 A. 614 (Del. Ch. 1935) ..................................................................................10
`Andor Pharms., LLC v. Lannett Co., Inc.,
`2024 WL 1855112 (Del. Super. Ct. Apr. 29, 2024) ...............................................6
`Anglo Am. Sec. Fund, L.P. v. S.R. Glob. Int'l Fund, L.P.,
`829 A.2d 143 (Del. Ch. 2003) ..........................................................................9, 15
`Apennine Acquisition Co., LLC v. Quill,
`2023 WL 3139934 (Del. Ch. Apr. 28, 2023)........................................................28
`Aspen Advisors LLC v. United Artists Theatre Co.,
`861 A.2d 1251 (Del. 2004)...................................................................................19
`Cincinnati SMSA Ltd. P'ship v. Cincinnati Bell Cellular Sys. Co.,
`708 A.2d 989 (Del.1998)......................................................................................19
`CM & M Group, Inc. v. Carroll,
`453 A.2d 788 (Del. 1982).....................................................................................20
`Corp. Prop. Assocs. 14 Inc. v. CHR Holding Corp.,
`2008 WL 963048 (Del Ch. Apr. 10, 2008)...........................................................13
`CSH Theatres, LLC v. Nederlander of San Francisco Assocs.,
`2015 WL 1839684 (Del. Ch. Apr. 21, 2015)........................................................22
`Dunlap v. State Farm Fire & Cas. Co.,
`878 A.2d 434 (Del.2005)......................................................................................20
`Dweck v. Nasser,
`2010 WL 972780 (Del. Ch. Mar. 10, 2010) .........................................................24
`Eagle Force Hldgs., LLC v. Campbell,
`187 A.3d 1209 (Del. 2018)...................................................................................25
`EEOC v. Waffle House, Inc.,
` 534 U.S. 279 (2002) ............................................................................................26
`Emerald P'rs v. Berlin,
`726 A.2d 1215 (Del. 1999).............................................................................12, 15
`Greenfield for Ford v. Budget of Delaware, Inc.,
`2017 WL 5075372 (Del. Super. Ct. Oct. 31, 2017)........................................12, 15
`Havef Corp. v. Guyer,
`211 A.2d 910 (Del. 1965).....................................................................................24
`In re Gen. Motors (Hughes) S'holder Litig.,
`897 A.2d 162 (Del. 2006).......................................................................................6
`
`i
`
`

`

`In re Molycorp, Inc. Shareholder Derivative Litig.,
`2015 WL 3454925 (Del. Ch. May 27, 2015) .................................................17, 26
`In re Wayport, Inc. Litig.,
`76 A.3d 296 (Del. Ch. 2013) ................................................................................13
`Lank v. Steiner,
` 224 A.2d 242 (Del.1966).....................................................................................13
`Malpiede v. Townson,
`780 A.2d 1075 (Del. 2001).....................................................................................6
`Montgomery Cellular Holding Co. v. Dobler,
`880 A.2d 206 (Del. 2005).....................................................................................29
`Mooney v. Boeing Co.,
`2021 WL 1852310 (Del. Super. Ct. May 4, 2021)...............................................12
`New Castle Cnty. v. Hersha Hosp. Mgmt., L.P.,
`2025 WL 1203501 (Del. Super. Ct. Apr. 25, 2025) .......................................12, 15
`North Shore Bottling Co. v. C. Schmidt & Sons, Inc.,
` 239 N.E.2d 189 (N.Y.1968) ................................................................................24
`Olson v. Halvorsen,
`982 A.2d 286 (Del. Ch. 2008) ..............................................................................24
`P.J. Bale, Inc. v. Rapuano,
` 888 A.2d 232 (Del. 2005)....................................................................................29
`PR Acquisitions, LLC v. Midland Funding LLC,
`2018 WL 2041521 (Del. Ch. Apr. 30, 2018)........................................................17
`Pulieri v. Boardwalk Props., LLC,
`2015 WL 691449 (Del. Ch. Feb. 18, 2015)..........................................................22
`Ramunno v. Crawley,
`705 A.2d 1029 (Del. 1998).....................................................................................6
`Solak v. Sarowitz,
`153 A.3d 729 (Del. Ch. 2016) ..........................................................................7, 22
`Stephen G. Perlman, Rearden LLC v. Vox Media, Inc.,
`2015 WL 5724838 (Del. Ch. Sept. 30, 2015)...................................................7, 22
`Territory of U.S. Virgin Islands v. Goldman, Sachs & Co.,
`937 A.2d 760 (Del. Ch. 2007) ..............................................................................28
`Thomas & Betts Corp. v. Leviton Mfg. Co.,
`685 A.2d 702 (Del. Ch. 1995) ..............................................................................20
`Tooley v. Donaldson, Lufkin & Jennette, Inc.,
` 845 A.2d 1030, 1033 (Del. 2004)..........................................................................8
`United Food & Com. Workers Union v. Zuckerberg,
`250 A.3d 862 (Del. Ch. 2020) ........................................................................10, 11
`Windsor I, LLC v. CWCapital Assets Mgmt. LLC,
`238 A.3d 863 (Del. 2020).......................................................................................7
`
`ii
`
`

`

`Winshall v. Viacom Int'l, Inc.,
`55 A.3d 629 (Del. Ch. 2011) ................................................................................20
`
`Statutes
`
`8 Del. C. § 220 ..................................................................................................20, 21
`
`iii
`
`

`

`Defendants Quip NYC Inc., Simon Enever, William May, and George Wells
`
`respectfully submit this reply brief in further support of their motion to dismiss
`
`Plaintiffs’ Complaint (the “Motion”) and in response to Plaintiffs’ opposition (the
`
`“Opposition”).
`
`I.
`
`Introduction
`
`Plaintiffs’ Opposition continually touts that Plaintiffs’ Complaint should
`
`survive dismissal because the claims asserted therein are “reasonably conceivable.”
`
`While Plaintiffs are entitled to certain deference at the pleadings stage, such
`
`deference does not require the Court to ignore properly incorporated facts and
`
`documentation or permit legally unsound claims to proceed, as would be necessary
`
`for Plaintiffs’ claims to survive this Motion.
`
`Fundamentally, Defendants contend that they had no legal duty to provide
`
`Plaintiffs notice of and had no power to induce the buyers in such transactions to
`
`afford Plaintiffs the opportunity to participate in third-party private transactions of
`
`Quip stock. Plaintiffs cite no authority to the contrary. Dismissal of the Complaint
`
`does not require the Court to weigh facts or draw inferences in Defendants’ favor,
`
`as Plaintiffs incorrectly contend. Rather, Defendants merely point to the documents
`
`integral to Plaintiffs’ claims that established the parties’ rights and obligations (or,
`
`with respect to notice and participation rights of Plaintiffs, lack thereof), none of
`
`which support Plaintiffs’ case theory. Plaintiffs cannot base claims upon certain
`
`1
`
`

`

`transactions and agreements and then attempt to keep the terms of those transactions
`
`and agreements—and the actual documentation containing the same—from the
`
`Court. It is telling that Plaintiffs failed to attach any of the many documents they
`
`received in response to their § 220 demand to their Complaint. Plaintiffs instead
`
`rely upon generalizations and mischaracterizations, failing to even directly quote any
`
`language from any of the documents so heavily referenced in the Complaint. But
`
`the Court is not so limited in its assessment of the claims.
`
` When the well-pled allegations of the Complaint and the documents
`
`referenced and incorporated therein are considered, each claim asserted by Plaintiffs
`
`fails. First, lacking authority demonstrating a fiduciary duty to be informed of or
`
`permitted to “participate in the secondary stock purchases” of CSI Crown and PeT,
`
`(Compl. ¶ 134) Plaintiffs now recast their breach of fiduciary duty claim not as a
`
`direct claim resulting from the failure to inform and offer them the right to participate
`
`in the private stock transactions at issue, but as a breach of the duty of loyalty of the
`
`former director defendants by obtaining personal benefits based on their ability to
`
`“sell a greater amount of their personal shares” than other shareholders. Such a
`
`claim, as now characterized by Plaintiffs, is plainly derivative in nature under the
`
`Tooley test. Because no demand on the Quip board was made by Plaintiffs prior to
`
`filing their Complaint and Plaintiffs do not allege demand futility, Plaintiffs’ breach
`
`of fiduciary duty claim must be dismissed.
`
`2
`
`

`

`Second, Plaintiff’s fraudulent misrepresentation claims, which rely on a
`
`failure to speak rather than any affirmative particularized misstatement of fact, fails
`
`because Plaintiffs have not identified a duty to speak, nor is there one. A fiduciary
`
`relationship does not impose a blanket duty to speak. Plaintiffs cite no authority
`
`requiring that Defendants inform them of secondary stock purchases or to somehow
`
`cause third parties to purchase their stock. A duty to speak arises only in special
`
`circumstances, none of which are alleged by Plaintiffs. The claim as pled also does
`
`not meet Rule 9(b) standards.
`
`Third, the alleged loss underlying Plaintiffs’ negligent misrepresentation
`
`claim is purely speculative and Plaintiffs do not allege that Defendants were
`
`negligent in communicating information about stock purchase opportunities.
`
`Plaintiffs improperly ask the Court to accept hypothetical and speculative assertions
`
`as true.
`
`Fourth, Anwar’s implied contract claim fails under any one of the four
`
`arguments asserted in the Motion and inadequately addressed in the Opposition:
`
`Anwar fails to plead consideration for the alleged promise; the claim based on an
`
`oral promise unsupported by any documentation at all is barred by the statute of
`
`frauds because its performance could not take place within a year; there is no breach
`
`of the purported terms of the contract because Plaintiffs allege an obligation to
`
`participate in Quip stock “purchases” but complain of a failure to participate in a
`
`3
`
`

`

`sale of their stock; and the alleged implied contract is unenforceable due to lack of
`
`privity. Plaintiffs fail to demonstrate well-pled allegations that rebut these
`
`arguments.
`
`Fifth, Anwar’s express contract fails as Anwar has not identified a specific
`
`term of the Promissory Note requiring that Quip inform him of changes in Quip’s
`
`stock value that was breached. Further, the implied covenant of good faith and fair
`
`dealing does not apply because Quip did not prevent Anwar from “receiving the
`
`fruits of the bargain,” nor did it frustrate the purpose of the contract. And there is
`
`no gap in the contract needing to be filled; there are clear mechanisms under
`
`Delaware law for Anwar to obtain the stock value he alleges he was prevented from
`
`obtaining.
`
`Sixth, the promissory estoppel claim fails because it is not reasonably
`
`conceivable that Anwar will ever be able to establish clear and convincing evidence
`
`of either a definite promise or reasonable reliance. It is unreasonable to expect that
`
`Quip could have agreed to control the conduct of unaffiliated third parties.
`
`Additionally, a promissory estoppel claim cannot survive when there are parallel
`
`contracts—the Promissory Note and the Pledge Agreement—addressing the subject
`
`matter. Nor is there any injustice, as a promise to notify Anwar of a secondary stock
`
`purchase would not have permitted Anwar a right to participate in it.
`
`4
`
`

`

`Finally, Plaintiffs respond to Defendant attorneys’ fee argument with a
`
`misinterpretation of Delaware law. Defendants have not engaged in bad faith
`
`litigation conduct such that shifting attorneys’ fees is warranted.
`
`Additionally, certain claims brought on behalf of and asserted against certain
`
`parties must be dismissed. The Complaint fails to state any claim on behalf of
`
`Plaintiffs Krell and Horowitz because Plaintiff does not allege that any Defendant
`
`made any statements at all to them, negating any misrepresentation claim for those
`
`Plaintiffs.
`
`Plaintiffs’ Opposition asks the Court to ignore the facts rightfully before it and
`
`impermissibly bend the law in Plaintiffs’ favor. The Court must not do so and,
`
`respectfully, Plaintiffs’ Complaint should be dismissed with prejudice.
`
`II. Argument
`
`A.
`
`Plaintiffs Misstate The Standard Of Review.
`
`Plaintiffs’ Opposition relies on the Court finding that all of the claims asserted
`
`in the Complaint are “reasonably conceivable.” Plaintiffs assert that the “facts plead
`
`in the Complaint are accepted as true, and all inferences therefrom are drawn in
`
`Plaintiffs favor.”1 Critically, however, the Court need only accept well-pleaded
`
`facts and “must ‘ignore conclusory allegations that lack specific supporting factual
`
`1 Opp. p. 1.
`
`5
`
`

`

`allegations.’”2 And, under Delaware Rule 9(b), Plaintiffs’ claims for fraud and
`
`negligence must be stated with particularity.
`
`The Court need not “accept every strained interpretation of the allegations
`
`proposed by the plaintiff” and a plaintiff is entitled only to “reasonable inferences
`
`that logically flow from the face of the complaint.”3 Much like their failure to
`
`acknowledge that the Court only need to accept well-pleaded facts, Plaintiffs
`
`incorrectly assert that the all inferences are drawn in Plaintiffs’ favor at the motion
`
`to dismiss stage.4 However, Plaintiffs are only entitled to reasonable inferences—
`
`an important distinction given many of Plaintiffs’ allegations require that the Court
`
`accept unreasonable inferences unsupported by applicable documents.
`
`Also importantly here, “[i]t is well established that ‘a claim may be dismissed
`
`if allegations in the complaint or in the exhibits incorporated into the complaint
`
`effectively negate the claim as a matter of law.’”5 The Court may even consider
`
`affirmative defenses raised in a motion to dismiss if “it is clear from the face of the
`
`complaint that an affirmative defense exists and that the plaintiff can prove no set of
`
`2 Andor Pharms., LLC v. Lannett Co., Inc., 2024 WL 1855112, at *8 (Del. Super.
`Ct. Apr. 29, 2024) (citing Ramunno v. Crawley, 705 A.2d 1029, 1034 (Del. 1998).
`3 Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001) (emphasis added).
`4 Opp. p. 1.
`5 In re Gen. Motors (Hughes) S'holder Litig., 897 A.2d 162, 169 (Del. 2006) (citing
`Malpiede, 780 A.2d at 1083.
`
`6
`
`

`

`facts to avoid it.”6 Plaintiffs asserted claims based on documents that they attempted
`
`to shield from the Court. In determining the adequacy of the Complaint, this Court
`
`may consider documents referred to or incorporated by reference in the Complaint.7
`
`Upon review of the documents properly incorporated into the Complaint that
`
`negate Plaintiffs’ claims, assessing the insufficiency of the pled facts and allegations,
`
`and evaluating Plaintiffs’ legally unsound claims, the Court, respectfully, should
`
`dismiss this matter with prejudice.
`
`B.
`
`Plaintiffs’ Breach Of Fiduciary Duty Claim Fails To Identify Any
`Breach Of Any Duty Owed
`
`In the Motion, Defendants, focusing on Plaintiffs’ allegation that they were
`
`asserting a breach of fiduciary duty based upon a purported “lost opportunity to
`
`participate the secondary stock purchases,”8 demonstrated that they owed no
`
`fiduciary duty to Plaintiffs to inform them of secondary stock purchases or to assure
`
`their participation in the transactions between third parties. Lacking any response
`
`to Defendants’ sound arguments, Plaintiffs now recast their breach of fiduciary duty
`
`claim as a breach of the duty of loyalty resulting from the Individual Defendants
`
`“failing to inform Quip’s shareholders” of the transactions and the Individual
`
`6 Solak v. Sarowitz, 153 A.3d 729, 746 (Del. Ch. 2016) (citing Stephen G. Perlman,
`Rearden LLC v. Vox Media, Inc., 2015 WL 5724838, at *12 (Del. Ch. Sept. 30,
`2015)).
`7 Windsor I, LLC v. CWCapital Assets Mgmt. LLC, 238 A.3d 863, 873 (Del. 2020).
`8 Compl. ¶ 134.
`
`7
`
`

`

`Defendants receiving unfair benefits from their purported ability to “sell a greater
`
`amount of their personal shares.”9 As now framed, it is clear that Plaintiffs’ breach
`
`of fiduciary duty claim is derivative rather than direct under the Tooley test.
`
`Under Tooley, in determining whether a claim is direct or derivative, the court
`
`looks at (1) who suffered the alleged harm and (2) who would receive the benefit of
`
`any recovery or other remedy.10 Here, Plaintiffs focus on alleged harms to all
`
`shareholders. Plaintiffs claim that the Individual Defendants “acted in their personal
`
`pecuniary interest, and not in the interest of Quip or its shareholders.”11 If the
`
`Individual Defendants allegedly “furthered their own interests” by failing to inform
`
`Quip stockholders of the third-party stock sales so that they could sell more of their
`
`own shares, the resulting harm (Individual Defendants’ financial benefit to the
`
`detriment of stockholders) would be to all of Quip’s stockholders.12 Therefore, any
`
`recovery or disgorgement based on a breach of the duty of loyalty would inure to the
`
`benefit of the corporation, not to plaintiffs personally—a derivative claim.
`
`Additionally, Plaintiffs’ recasting of their breach of fiduciary duty claim with
`
`a new allegation that Individual Defendants purportedly did not inform Plaintiffs
`
`(and apparently other stockholders) of the various third-party transactions so that
`
`9 Opp. p. 12.
`10 Tooley v. Donaldson, Lufkin & Jennette, Inc., 845 A.2d 1030, 1033 (Del. 2004).
`11 Opp. p. 12.
`12 Opp. p. 13.
`
`8
`
`

`

`“Individual Defendants [could] sell a greater amount of their personal shares” is
`
`nonsensical.13 Putting aside the fact that Plaintiffs did not include this allegation in
`
`the Complaint, and it cannot be added in response to a motion to dismiss,14 the
`
`allegation is unfounded. Plaintiffs admit that the aggregate purchases under the CSI
`
`Crown transactions and Tender Offer were “$8 million below the $50 million limit”
`
`as agreed to by CSI Crown.15 Additionally, the Individual Defendants participated
`
`only in the first third-party sale, after which approximately $20 million remained
`
`under CSI Crown’s agreed limit.16 It is unclear how the Individual Defendants
`
`“were able to sell a greater amount of their personal shares” when the $50 million
`
`limit was never even reached.17 As such, there is no actual harm to the stockholders
`
`pled.
`
`Regardless, the corporate claims and recoveries, if any, belong to Quip rather
`
`than Plaintiffs. Thus, the claims are derivative. Indeed, Plaintiffs expressly assert
`
`that their claim is derivative, referring to their “derivative claims” in seeking
`
`13 Opp. p. 12.
`14 See Anglo Am. Sec. Fund, L.P. v. S.R. Glob. Int'l Fund, L.P., 829 A.2d 143, 155
`(Del. Ch. 2003) (“Parties may not amend the pleadings through briefing on a motion
`to dismiss.”).
`15 Compl. ¶ 99.
`16 See Compl. ¶¶ 69, 74 (confirming a total aggregate purchase price of
`$30,653,457.80 under the first transaction, with a $50 million cap agreed to by CSI
`Crown.).
`17 Compl. ¶ 99.
`
`9
`
`

`

`attorneys’ fees in section H of their Opposition.18 As a derivative claim, Plaintiffs’
`
`breach of fiduciary duty claim must be dismissed for failure to meet critical threshold
`
`requirements under Delaware law.
`
`Under Section 141(a) of the Delaware General Corporation Law, a company’s
`
`board of directors is vested with the authority to determine if and when the company
`
`should initiate or refrain from initiating litigation. “When a corporation suffers
`
`harm, the board of directors is the institutional actor legally empowered under
`
`Delaware law to determine what, if any, remedial action the corporation should take,
`
`including pursuing litigation against the individuals involved.”19 This authority
`
`requires a stockholder who wishes to bring a claim belonging to the corporation first
`
`take certain steps, including first making a demand on the company’s board to pursue
`
`the claim.20 If the board wrongfully refuses, or if the plaintiff can establish that the
`
`company’s directors “are incapable of making an impartial decision regarding the
`
`litigation,” only then can a plaintiff properly bring a derivative claim.21
`
`Under Chancery Court Rule 23.1, “when a stockholder seeks to assert a
`
`derivative claim, the complaint must ‘allege with particularity the efforts, if any,
`
`18 See Opp. p. 26 (“If successful on their underlying claims, Plaintiffs may recover
`their attorneys’ fees on their derivative claims.”).
`19 United Food & Com. Workers Union v. Zuckerberg, 250 A.3d 862, 875 (Del. Ch.
`2020), aff'd sub nom. United Food & Com. Workers Union & Participating Food
`Indus. Emps. Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034 (Del. 2021).
`20 Id.
`21 Id. (citing Ainscow v. Sanitary Co. of Am., 180 A. 614, 615 (Del. Ch. 1935).
`
`10
`
`

`

`made by the plaintiff to obtain the action the plaintiff desires from the directors or
`
`comparable authority and the reasons for the plaintiff's failure to obtain the action or
`
`for not making the effort.’”22 Plaintiffs have neither described any actions they took
`
`to request the current Quip board pursue this litigation, nor have they detailed why
`
`such efforts were futile. Indeed, none of the Individual Defendants currently serve
`
`on the Quip board and there is no reason to question the Board’s disinterestedness.
`
`Given that Plaintiffs did not make a demand on the Quip board and did not allege
`
`demand futility in any manner in their Complaint, the breach of fiduciary duty claim
`
`must be dismissed.
`
`C.
`
`Plaintiffs Fail To Establish A Prima Facie Case For Intentional
`Misrepresentation/Fraudulent
`Concealment
`or
`Negligent
`Misrepresentation
`
`i.
`
`No fraudulent conceal as to all Plaintiffs
`As an initial matter, although styled as a claim “Asserted by All Plaintiffs
`
`against All Defendants,” Plaintiffs’ Opposition appears to concede that Plaintiffs
`
`Krell and Horowitz do not have a viable fraudulent concealment claim against any
`
`Defendants.23 In attempting to rebut Defendants’ assertion that Plaintiffs’ fraud
`
`22 Id. (citing Ct. Ch. R. 23.1(a)).
`23 Opp. p. 15, fn. 4 (In an attempt to argue Plaintiffs met particularity requirements
`under Rule 9(b) the Opposition states: “Plaintiffs have alleged that Anwar’s
`conversations were: (1) with Enever and May . . .” (emphasis added). Note that this
`response also shows that no particularized allegations of fraud were made with
`respect to Defendant Wells. In fact, the Oppositions’ sole reference to Defendant
`Wells merely states the amount of shares that he sold (See Opp. p. 6)).
`
`11
`
`

`

`claim was not pled with sufficient particularity in accordance with Rule 9(b),
`
`Plaintiffs assert that Defendants’ contention is “unfounded” because Anwar had
`
`conversations with Enever and May.24 Anwar’s alleged conversations with Enever
`
`and May do not support a claim against Wells, nor a claim on behalf of Krell or
`
`Horowitz, as none of these individuals are alleged to have been part of the
`
`conversations supporting the fraud claim.25 By failing to address the lack of
`
`particularity with respect to these parties, Plaintiffs concede that no claim is stated
`
`and any argument thereto is waived.26
`
`The Complaint also fails to establish a fraudulent concealment claim against
`
`Enever and May on behalf of Anwar (or at all), as shown in Defendants’ Opening
`
`Brief. Plaintiffs contend that because a duty to speak “may” arise in fiduciary
`
`relationships, Defendants affirmatively had an unbounded duty to speak that the
`
`Court must recognize.27 Not so. In fact, in the very case cited by Plaintiffs for the
`
`proposition that a fiduciary relationship may establish a duty to speak, the court did
`
`24 Opp. p. 15, fn. 4.
`25 See, e.g., Mooney v. Boeing Co., 2021 WL 1852310, at *4 (Del. Super. Ct. May
`4, 2021), aff'd, 267 A.3d 996 (Del. 2021) (“[T]he fraudulent behavior must be
`personal to the plaintiff . . .”).
`26 See New Castle Cnty. v. Hersha Hosp. Mgmt., L.P., 2025 WL 1203501, at *3 (Del.
`Super. Ct. Apr. 25, 2025) (“Failure to respond to an argument raised in a motion
`constitutes waiver.”) (citing Emerald P'rs v. Berlin, 726 A.2d 1215, 1224 (Del.
`1999) (“Issues not briefed are deemed waived.”); Greenfield for Ford v. Budget of
`Delaware, Inc., 2017 WL 5075372, at *4 (Del. Super. Ct. Oct. 31, 2017), aff'd, 211
`A.3d 1087 (Del. 2019)).
`27 Opp. pp. 14-15.
`
`12
`
`

`

`not find a fiduciary relationship establishing a duty to speak, and did not further
`
`address the parameters of a duty to speak that may arise under a fiduciary
`
`relationship.28
`
`There are, of course, certain instances when the Court recognizes that a
`
`fiduciary has a duty to speak—for example, when stockholder action is required and
`
`stockholders are entitled to be informed so that they can exercise their rights, such
`
`as when stockholders are asked to ratify certain interested transactions, or when
`
`directors require stockholder approval for actions such as mergers, sales of assets,
`
`or charter amendments.29 The duty can even arise when a fiduciary is selling shares
`
`to an existing outside stockholder.30 Notably, that duty runs to the purchasing
`
`stockholder, and “only when a director is possessed of special knowledge of future
`
`plans or secret resources and deliberately misleads a stockholder who is ignorant of
`
`them.”31 In fact, in that context, a fiduciary “does not have a duty to speak” unless
`
`he has the requisite “special knowledge.”32 Plaintiffs’ unsupported supposition that
`
`Defendants’ role as fiduciaries unilaterally imposes upon them a blanket “duty to
`
`speak” about a transaction that was not available to them and did not require their
`
`28 See Opp. p. 14, citing Corp. Prop. Assocs. 14 Inc. v. CHR Holding Corp., 2008
`WL 963048, at *6 (Del Ch. Apr. 10, 2008).
`29 See In re Wayport, Inc. Litig., 76 A.3d 296, 314-16 (Del. Ch. 2013).
`30 Id.
`31 Id. at 315 (citing Lank v. Steiner, 224 A.2d 242 (Del.1966)).
`32 Id. (emphasis added).
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`ratification is simply incorrect. A fiduciary-based duty to speak is not boundless; it
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`arises only under certain circumstances, particularly when stockholders are to be
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`making decisions requiring access to full and accurate information. A private third-
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`party stock sale between a private stock purchaser and select stockholders is not one
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`of those situations, and Plaintiffs have cited no authority showing otherwise.
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`Plaintiffs have failed to identify any duty to speak here.
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`The Opposition additionally fails to address that the Complaint’s main basis
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`for a fraudulent concealment claim was based on deliberate concealment (rather than
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`a duty to speak). The Complaint based the deliberate concealment claim on the
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`execution of ROFR waivers.33 The Complaint describes the ROFR waivers as
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`Defendants’ alleged “deliberate steps to conceal,” and mentions the ROFR waivers
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`in detail (notably without attaching the actual documents, or even citing to their
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`contents). The Complaint does not allege any other affirmative steps Defendants
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`took to allegedly actively conceal the third-party stock transactions from Plaintiffs.34
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`33 Compl. ¶¶ 141-145. Filed in conjunction with this Reply is an amended Exhibit
`F, the more current ROFR Agreement. Defendants inadvertently attached a prior
`version to their Motion. However, Plaintiffs are not included in Schedule A to either
`the prior or more recent ROFR Agreement. Plaintiffs’ assertion that the ROFR
`Agreement is not incorporated by reference is unfounded. Plaintiffs base arguments
`on the ROFR waivers but attempt to shield the Court from the actual ROFR being
`waived. It is not “unclear” whether Plaintiffs are entitled to notice under the ROFR.
`They are not. (See Opp. pp. 5-6, fn. 2).
`34 Plaintiffs’ footnote argument that they alleged a “pattern of concealment” (Opp.
`p. 15, fn. 5) is insufficient and does not hold. That Anwar alleges separate
`
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`As Plaintiffs did not address in the Opposition Defendants’ arguments establishing
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`that the ROFR waivers were not, in any way, a mechanism of deliberate
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`concealment, any arguments Plaintiffs may attempt to make that the ROFR waivers
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`constitute deliberate concealment is waived.35
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`Finally, Plaintiffs again raise, new to the Opposition, that Defendants “limited
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`the number of participants” in the third-party sales so that they could “sell more of
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`their personal shares.”36 While not entirely clear, it appears Plaintiffs present this
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`new allegation in response to Defendants’ argument in their Motion that Plaintiffs
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`failed to allege what Defendants may have gained by allegedly misrepresenting the
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`existence of third-party stock sale opportunities—or more particularly, that Plaintiff
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`did not allege “intent” required to establish a fraudulent inducement claim.37 As
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`noted previously, Plaintiffs’ attempts to amend their Complaint through briefing
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`must not be considered.38 The Complaint did not allege that Defendants limited
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`participation in the third-party sales so that they could sell more of their shares
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`misrepresentation allegations against Enever and May does not establish a “pattern
`of concealment” as to Plaintiffs.
`35 See Hersha Hosp. Mgmt., 2025 WL 1203501, at * 3 (“Failure to respond to an
`argument raised in a motion constitutes waiver.”) (citing Emerald P'rs, 726 A.2d at
`1224 (Del. 1999) (“Issues not briefed are deemed waived.”); Greenfield for Ford,
`2017 WL 5075372, at *4.
`36 Opp. p. 16.
`37 See Opening Brief to Motion p. 21; Opp. p. 16.
`38 Anglo Am. Sec. Fund, 829 A.2d at 155.
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`15
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`(which, again, is an illogical assertion to begin with). This may not be considered
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`as evidence of Defendants’ intent.
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`That Defendants simply did not tell Plaintiffs about third-party stock sale
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`transactions (when they had no duty to do so and in which Plaintiffs had not been
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`offered the opportunity to participate by the buyers) does not support a fraudulent
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`concealment claim, which requires either a duty to speak or a deliberate
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`concealment. Here, Plaintiffs have not adequately alleged either, and the claim must
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`be dismissed.
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`ii.
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`No negligent representation as to Anwar
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`As w