IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

(Richmond Division)

In re: 

LECLAIRRYAN PLLC, 

Debtor. 

______________________________________ 

Lynn L. Tavenner, as Chapter 7 Trustee, 

Plaintiff, 

vs. 

ULX Partners, LLC, UnitedLex 

Corporation, and ULX Manager, LLC 

Defendants. 

Chapter 7 

Case No. 19-34574 (KRH) 

 Adv. Proc. No. 20-03142-KRH 

ULX PARTNERS, LLC’S, UNITEDLEX CORPORATION’S, AND ULX MANAGER, 

LLC’S OPPOSITION TO THE TRUSTEE’S MOTION FOR LEAVE TO AMEND THE 

FIRST AMENDED COMPLAINT 

Defendants ULX Partners, LLC (“ULXP”), UnitedLex Corporation (“UnitedLex”), and 

ULX Manager, LLC (“ULXM”) (collectively, the “ULX Entities” or “Defendants”), by counsel, 

respectfully submit this Opposition to the Trustee’s Motion for Leave to Amend the First Amended 

Complaint (the “Motion”), and state as follows: 

I. INTRODUCTION

Lynn A. Tavenner, in her capacity as Chapter 7 Trustee (the “Trustee”) should not be given

leave to file the proposed Second Amended Complaint (the “SAC”) at this late stage. The Trustee’s 

Motion is, quite simply, untimely and prejudicial. If granted, Defendants will need to reopen 

discovery to defend these new, broad claims adequately. Depriving Defendants of additional 

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discovery if the Motion is granted will substantially prejudice Defendants. Accordingly, this litigation 

will require a continuance of the trial date. Further, the Trustee’s proposed amendment is futile. 

Despite simultaneously claiming that the theory supporting her proposed new cause of 

action for fraudulent inducement was contained in the First Amended Complaint (filed over six 

months ago) and that she promptly moved to amend, the Trustee’s Motion comes after the close 

of discovery, after the January 27, 2022 omnibus hearing during which she made no mention of 

any possible amendment, and after Defendants moved for Summary Judgment.1

 Although the 

Trustee alleges that evidence regarding this new allegation arose as a result of testimony received 

in depositions, as described in greater detail below, the straightforward testimony that came during 

the course of 13 depositions was that there was no fraudulent inducement and that the entire deal 

was set forth in the joint venture agreements.2 Assuming that the Trustee’s amended claim is made 

in good faith – a generous assumption – the Defendants are entitled to ask who is making these 

assertions, and on what basis. That is why in the unlikely event of an amendment, discovery must 

be reopened in the form of additional depositions and very likely additional written discovery, 

especially if it is determined that responsive documents are needed from custodians which were 

not included on the parties’ previously agreed-upon email custodian list. With discovery currently 

closed, however, and the parties working diligently to prepare for the fast-approaching trial, and 

because the Court has indicated that continuing the trial date is not an option, the Court should 

1

 The Trustee’s counsel first informed Defendants’ counsel of the Trustee’s intent to file the Motion afterhours on January 31, 2022. She did not provide a draft copy of the proposed SAC until after-hours on 

February 2, 2022. Although the Defendants reserve all rights and do object to the proposed amended as 

untimely, the parties agreed on February 3, 2022 that Defendants would not object to the additional delay 

between February 3, 2022 and the hearing on this Motion (March 8, 2022) as being prejudicial as the parties 

agreed to table the Motion pending the result of their mediation. 

2 See reference to Exhibits E-I on page 8, infra.

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deny the Motion. To fail to reopen discovery and continue the trial will otherwise severely, and 

unnecessarily, prejudice Defendants. 

The proposed amendment is also futile, as the alleged “misrepresentations” within the SAC 

do not relate to present or pre-existing facts. Rather, the alleged “misrepresentations” amount to 

statements of opinion and speculation concerning the future business opportunities which the 

Debtor would receive following the creation of the joint venture. Further, the SAC attempts to 

allege that Defendants made certain promises which they did not intend to perform. However, 

despite having approximately a year and a half to review her documents and engage in discovery, 

the Trustee does not identify where any of these alleged promises resulted in contractual provisions 

as the law requires to state a claim for fraudulent inducement. Especially in light of the 

sophistication of the parties and the various merger clauses in the JV Agreements, the SAC does 

not state a plausible cause of action for fraudulent inducement. 

Respectfully, it seems to be no accident that the proposed amendment comes after the 

summary judgment deadline where the Trustee has now had to concede that a number of her damages 

theories, which Defendants have contested from the outset, have failed, and that a number of others 

will fail and are hanging by a thread. Thus, the Trustee needs new alleged damages theories to elevate 

her position and to try to leverage and disparage Defendants. The Court should reject this effort and 

for the reasons stated herein and at argument, leave to file the SAC should be denied. 

II. RELEVANT PROCEDURAL BACKGROUND 

This matter has been pending for approximately a year and a half as the Trustee filed her 

initial complaint against ULXP and UnitedLex on October 26, 2020. Dkt. No. 4. On August 25, 

2021, after being given leave by the Court to do so, the Trustee filed the First Amended Complaint, 

(the “FAC”) adding ULX Manager and Gary LeClair as defendants and containing 34 causes of 

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action. Dkt. No. 86. The ULX Entities moved to dismiss the FAC, and in her opposition (filed on 

October 12, 2021) to their arguments that the Trustee’s claim for misappropriation of trade secrets 

should be dismissed, the Trustee vaguely argued that such claim was partially based on a theory 

that the Contribution Agreement was fraudulently induced. See Dkt. No. 106. The Trustee did not, 

however, include a fraudulent inducement count regarding the JV transaction in her FAC. Yet now 

in her Motion the Trustee asserts that “[o]ne alleged unlawful basis for the conspiracy counts was 

the ULX Entities’ fraudulent inducement to enter into the joint venture agreement.” Mot. ¶ 9. But 

at most, she only alleged in the FAC that one of the “unlawful, illegal, and/or oppressive acts” 

underlying the alleged conspiracy between Mr. LeClair and the ULX Entities was 

“misrepresenting to one or more of the LCR Officer and Directors the potential benefits of the 

ULXP joint venture.” FAC ¶ 529. The Trustee did not, however, allege that such 

misrepresentations fraudulently induced the complete JV transaction. Id. In short, the Trustee now 

seeks to introduce a significant and very broad new theory into the case. 

Following extensive written and deposition discovery into the causes of action alleged in 

the FAC, discovery closed on January 21, 2022. Days later, on January 27, 2022, the parties 

attended an omnibus status conference to discuss various outstanding issues. At such conference, 

the Trustee did not alert the Court or the Defendants of any issues whatsoever concerning the 

Trustee’s intention or need to seek leave to amend the FAC, and indicated instead that the parties 

were proceeding with summary judgment briefing and that they were working towards the April 

18th trial date. See Ex. A, Jan. 27, 2022 Transcript at 9:23-10:19. The next day, on January 28th, 

the Defendants moved for summary judgment. Dkt. No. 133 (the “MSJ”). Three days after the 

MSJ was filed, and presumably after reviewing the same, the Trustee’s counsel first reached out 

to Defendants’ counsel to raise the possibility of seeking leave to amend the FAC. A copy of the 

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Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)). Further, “amendments of 

pleadings are particularly inappropriate, absent exceptional circumstances, once discovery has 

closed.” Id. (quoting Remington Arms Co. v. Modern Muzzleloading, Inc., 1998 U.S. Dist. LEXIS 

21526, at *7-8 (M.D.N.C. Dec. 17, 1998)) (emphasis added). “When considering whether a 

movant has shown good cause for an untimely amendment, a court should primarily consider the 

movant’s diligence.” Chrisley v. Dan Ryan Builders Mid-Atlantic, LLC, Civil Action No. 

5:18cv00056, 2020 U.S. Dist. LEXIS 38374, at *5 (W.D. Va. Mar. 5, 2020) (quoting Thorpe, 2011 

U.S. Dist. LEXIS 96755, 2011 WL 3820809, at *2)) (additional citations omitted). The Trustee 

has not demonstrated the requisite exceptional circumstances – or diligence – to amend her 

complaint after discovery closed and after the Defendants filed their MSJ. 

IV. ANALYSIS 

A. Leave to Amend Should be Denied because Trustee’s Undue Delay in Seeking 

Leave Will Prejudice Defendants and Require Additional Discovery. 

There are no exceptional circumstances present in this case to allow amendment at this 

stage in the proceedings, and Defendants will be significantly prejudiced if the Trustee is permitted 

to file the proposed SAC. Prejudice may be found “[i]f an amendment requires the opponent ‘to 

engage in significant new preparation,’ or results in ‘added expense and the burden of a more 

complicated and lengthy trial,’ prejudice may be found.” Smithfield Foods, 254 F.R.D. 274, 278 

(E.D. Va. 2008) (quoting Smith v. Angelone, 111 F.3d 1126, 1134 (4th Cir. 1997)). Further, “where 

an amendment is offered shortly before trial, ‘prejudice can result where a proposed amendment 

raises a new legal theory that would require the gathering and analysis of facts not already 

considered by the opposing party.’” Id. (quoting Johnson, 785 F.2d at 510). In determining 

whether an amendment would be prejudicial, courts consider the good faith of the moving party 

and the extent to which there has been undue delay in seeking amendment. Id. Particularly when 

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a motion is made after the close of discovery and is based on information known during the 

discovery phase of the case, it is within the sound discretion of the Court to deny leave. Id. (citing 

First Nat’l Bank v. Master Auto Service Corp., 693 F.2d 308, 314 (4th Cir. 1982)). Here, the 

relevant considerations weigh strongly in favor of denying the Trustee’s Motion. 

First, the Trustee’s request for leave to file the SAC was unduly delayed. The parties have 

engaged in extensive written discovery consisting of hundreds of thousands of exchanged 

documents, dozens of interrogatories, and dozens of hours of depositions. Discovery closed on 

January 21, 2022. After the close of discovery, on January 27, 2022, the Parties appeared before 

the Court for an omnibus status conference, and the Trustee did not mention any desire to file a 

SAC to add a new cause of action against Defendants. See Ex. A, Jan. 27, 2022 Transcript. It was 

not until after Defendants filed their Motion for Summary Judgment, and likely as a response to 

the MSJ, that the Trustee determined that the SAC would be her next tactical move. See Norris v. 

PNC Bank, N.A., No. ELH-20-3315, 2022 U.S. Dist. LEXIS 10527, at *16 n.5 (D. Md. Jan. 19, 

2022) (noting that “District judges are sometimes skeptical of motions to amend offered after the 

filing of summary judgment motions, in part because of the possibility that a plaintiff may be 

attempting to refashion its case to stave off an adverse summary judgment ruling.”) (citing Parish 

v. Frazier, 195 F.3d 761, 764 (5th Cir. 1999) (explaining that once a Rule 56 motion has been filed 

the court will “more carefully scrutinize a party’s attempt to raise new theories of recovery by 

amendment”) (additional citations omitted). 

The Trustee seeks to excuse her delay by asserting, in part, that “recent deposition 

testimony has made clear that the proposed new claim is well-founded,” and that her Motion is 

being made “at the earliest possible time given that depositions by key members of UnitedLex 

management and others were conducted within the final two weeks of fact discovery . . . .” (Mot. 

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at ¶¶ 2, 19). Yet nowhere in the Motion does the Trustee identify any of the deposition testimony 

or other purported evidence that apparently came to light recently and provide support for a new 

claim. Nor does the Trustee provide any explanation as to what information she learned after 

August 2021 when she last amended her complaint that would justify further amendment. During 

December 2021 and January 2022, the Parties participated in 13 depositions, yet she does not 

identify what testimony supposedly gave rise to her new cause of action against the Defendants.

The fact that such purported testimony is conspicuously absent from her Motion is not surprising

given the fact that the LeClairRyan leadership all testified that UnitedLex personnel did not make 

misrepresentations to LCR, and that the JV Agreements contained all promises between 

the Parties. See Exs. E - I (LeClair Depo. 206:22-207:1-4; 213:7-11; 299:14-300:1); (Zappia 

Depo. 56:13-57:15); (Thompson Depo. 57:2-15; 116:14-117:2); (Gustafson Depo. 52:8-53:6; 

70:11-16; 211:12-212:12); (Lange Depo. 66:7-22, 544:21-545:6) 

 In light of such overwhelming evidence demonstrating that no such misrepresentations 

were made, the Trustee should have to specifically identify the allegedly recent and new evidence 

she relies upon to bring her motion at such an untimely hour. 

 Nor does the Trustee explain why she waited until the final two seeks of discovery to 

depose UnitedLex’s management rather than at any other time during the approximately 13 months 

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of discovery.5

 In other words, the untimeliness of the Trustee’s Motion is solely the result of the 

Trustee’s own decisions and strategy.6

Second, Defendants will be prejudiced if the Trustee is permitted to file a Second Amended 

Complaint at this stage because the Trustee will have deprived Defendants of critical discovery. 

Defendants are entitled to discover the specific alleged misrepresentations, who made them, who 

they were made to, when they were made, and who relied upon them. The proposed SAC lacks 

such specificity (despite discovery now being complete) and instead alleges generalities such 

 SAC 

¶ 185. None of these, or the other “examples” in the SAC constitute actionable misrepresentations, 

and Defendants should be permitted to conduct discovery with respect to the precise 

misrepresentations at issue. By way of example, early in this case the Parties agreed to a list of 

5

 The Trustee’s counsel emailed Defendants’ counsel on December 22, 2021 indicating the Trustee’s 

intention to depose Daniel Reed (CEO), Nick Hinton (CFO), and Gary Quinn (Treasurer). Against the 

backdrop of a January 21, 2022 discovery deadline, the Trustee proposed at that time to depose those three 

witnesses on January 18, January 20, and January 11, respectively. A copy of counsel’s December 22, 2021 

email is attached as Exhibit J. Similarly, on December 23, 2021, the Trustee’s counsel emailed 30(b)(6) 

deposition notices for UnitedLex, ULXP, and ULXM to take place on January 12, 13, and 14, respectively. 

A copy of the Trustee’s email and deposition notices are attached collectively as Exhibit K. (The ultimate 

dates of the actual depositions varied somewhat after discussions among counsel). Moreover, it is also 

worth noting that the Trustee informally interviewed Mr. Reed, Mr. Hinton, and Mr. Quinn in September 

2020, and then deposes Mr. Reed and Mr. Hinton pursuant to Rule 2004 in September 2020 as well. In 

short, the depositions of Mr. Reed and Mr. Hinton in January 2022 were not the first times the Trustee had 

the opportunity to depose UnitedLex leadership under oath. 

6

 The Trustee’s statement that she sought amendment at the “earliest possible time” is also contradicted by 

her own arguments within the Motion that the theories of fraudulent inducement were already present in 

the First Amended Complaint. Mot. at ¶ 19. If the Trustee knew enough facts for to allege a theory of 

fraudulent inducement in the First Amended Complaint, she should have been able to allege a cause of 

action on the same. 

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email custodians at LCR whose emails would be searched for potentially relevant documents as 

part of discovery. If the Trustee now asserts that particular persons at LCR were recipients of, or 

reasonably relied upon, alleged misrepresentations by Mr. Reed or others at UnitedLex, and such 

persons at LCR were not among the original group of agreed-upon email custodians, then 

Defendants risk severe prejudice and ambush at trial as they would not have had the opportunity 

to review potentially relevant correspondences. 

 Indeed, even during the pendency of the First Amended Complaint, Defendants attempted 

to discover information underlying the Trustee’s prior statements of alleged misrepresentations 

but the Trustee stonewalled such information. For example, the Trustee had alleged in Paragraph 

179 of the FAC as follows: “To get shareholders in LeClairRyan on board, Mr. Reed had promised 

them business deals and opportunities, but never delivered.” Accordingly, on October 7, 2021 the 

Defendants served the Trustee with an interrogatory asking her to “[i]dentify and describe ‘all 

business deals and opportunities’ that were promised to LeClairRyan by Mr. Reed and/or the ULX 

Entities but were never delivered, as alleged in Paragraph 179 of the Amended Complaint.” On 

October 25, 2021, the Trustee served her objections to this Interrogatory Number 12, stating: 

The Trustee objects to this Interrogatory to the extent that it calls for information 

protected by the attorney-client privilege, attorney work product doctrine, or any 

other privileges, immunities, or other protections recognized by the Rules. The 

Trustee further objects to this Interrogatory to the extent it purports to require the 

Trustee to “describe” the requested information. The Trustee also objects to this 

Interrogatory on the ground that it is a premature contention interrogatory since 

discover is still ongoing, and the Trustee’s ability to respond to this Interrogatory 

depends in part upon the records in the possession of the ULX Entities, which they 

still have to produce, as well as depositions, and the Trustee’s continuing review 

and investigation of the Debtor’s records. Subject to the foregoing objections, the 

Trustee will confer with the ULX Entities about this Interrogatory and subsequently 

provide her Response, if any, to this Interrogatory. 

Exhibit L (emphasis added). 

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On November 11, 2021, the Parties engaged in a meet and confer discussion regarding the 

Trustee’s objections, during which the Trustee’s counsel continued to assert that this information 

did not have to be disclosed until closer to the end of discovery because the Trustee considered it 

to be a “contention interrogatory.” While the Parties ultimately agreed to disagree and reserve all 

rights on such call, the Trustee agreed to promptly provide substantive responses to other 

interrogatories (but not this Interrogatory No. 12). Accordingly, the Trustee provided a 

supplemental response to interrogatories on November 24, 2021, but did not supplement the aboveresponse to Interrogatory No. 12. Indeed, it was not until January 25, 2022, four days after the 

close of discovery, after all depositions were completed – including the Defendants’ deposition of 

the Trustee – that the Trustee finally supplemented her response to Interrogatory No. 12. Exhibit 

M. Rather than respond to the interrogatory and specify the alleged misrepresentations at issue, 

however, the Trustee instead identified previously-produced emails that she contends are 

“documents reflecting information that support allegations contained in Paragraph 179 of the 

Amended Complaint.” Id. In other words, the Trustee has consistently refused to identify the 

specific promises at issue and their relevant details. 

And even with respect to the documents she untimely identified in her supplemental 

response, which consist of LCR documents (that she has possessed since her appointment) and 

ULXP-produced documents (that she has possessed since April 2021), none of them contain 

actionable promises and many of them are dated after the JV Agreements were already signed. 

Nevertheless, the Trustee waited to identify such documents and answer Interrogatory Number 12 

until after the Trustee was deposed and after discovery was closed. Yet the Trustee now seeks to 

amend her complaint again and introduce a new count, purportedly based in part upon these 

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documents, while depriving Defendants the opportunity to question the parties to such emails or 

the Trustee herself about such emails.7

If permitted to file a SAC adding a separate cause of action, at minimum, the Defendants 

would need to take the depositions of various email recipients 

, and potentially the Trustee, and possibly others, depending on who the 

Trustee identifies as persons she relies upon to attempt to prove that these alleged representations 

were material and detrimentally relied upon, despite no mention in any of the contractual 

documents), as well as to conduct email searches of certain LCR email custodians who may be 

alleged recipients of misrepresentations or who reasonably relied upon any alleged statements. 

Defendants should be permitted to question these, and potentially others, regarding what specific 

representations were made to Debtor, their perception of any such representations, whether they 

were materially relied on when entering the JV Agreements, whether such reliance was reasonable 

(especially in light of the various merger clauses in the JV Agreements), whether they insisted on 

specific contractual promises to reflect any such representations, etc. In addition, Defendants 

would need to expend significant additional time and resources to examine documents from 

potential new document custodians. Put simply, the Trustee’s statements that no additional 

discovery would be needed is wrong. In order for Defendants to adequately prepare its defenses 

against a new cause of action for fraudulent inducement, discovery would need to be reopened, 

multiple depositions would need to be taken (or retaken), additional written discovery may be 

needed, and the trial potentially continued. Equal Rights Ctr. v. Niles Bolton Assocs., 602 F.3d 

597, 603 (4th Cir. 2010) (affirming denial of motion to amend to add a new claim after the close 

of discovery and on the eve of the deadline to file dispositive motions which would have required 

7

 Such emails identified by the Trustee can be provided to the Court should the Court request to see them. 

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2:18cv320, 2021 U.S. Dist. LEXIS 39082, at *11 (E.D. Va. Feb. 16, 2021) (“A proposed 

amendment is deemed futile if it fails to state a claim upon which relief can be granted.”) (citing 

U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)). Here, 

the proposed fraudulent inducement claim is insufficient under Virginia law and fails to state a 

cause of action against Defendants, and thus, permitting the Trustee to file the SAC to assert such 

claim is futile. 

i. Amendment is Futile Because the Only “Misrepresentations” Within the 

SAC Constitute Statements or Opinion as to Future Events.

The Trustee’s proposed fraudulent misrepresentation claim fails as a matter of law because 

the SAC does not allege any misrepresentations of a “present or pre-existing fact.” As Defendants 

have set forth in detail on summary judgment, to be legally actionable an alleged misrepresentation 

“must relate to a present or pre-existing fact, and cannot ordinarily be predicated on unfulfilled 

promises or statements as to future events.” Enomoto v. Space Adventures, Ltd., 624 F.Supp.2d 

443, 454 (E.D. Va. 2009) (quoting McMillion v. Dryvit Sys., Inc., 262 Va. 463, 552 S.E.2d 364 

(2001)); Patrick v. Summers, 235 Va. 452, 454, 369 S.E.2d 162, 4 Va. Law Rep. 2949 (1988) 

(quoting Soble v. Herman, 175 Va. 489, 500, 9 S.E.2d 459 (1940)). “[T]he mere expression of an 

opinion, however strong and positive the language may be, is not a statement of present 

fact.” Enomoto, 624 F.Supp.2d at 454 (quoting Mortarino v. Consultant Eng’g Servs., Inc., 251 

Va. 289, 467 S.E.2d 778 (1996) (additional citation omitted); see also Glaser v. Enzo Biochem, 

Inc., 126 F. App’x 593, 600 (4th Cir. 2005) (“[C]ommendatory statements, trade talk, or puffing, 

do not constitute fraud because statements of this nature are generally regarded as mere expressions 

of opinion.”). 

The only allegations of “misrepresentations” within the SAC all relate to speculative 

promises of or statements as to future events or positive opinions regarding the future business 

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opportunities that would come to Debtor following the implementation of the joint venture. See 

e.g., 

 These are 

plainly not “misrepresentations” of present or pre-existing fact, and are clearly statements and 

opinions as to the forecasted (and hopeful) success of the joint venture transaction and the future 

business Debtor would hopefully be able to generate. Even after the benefit of analyzing 

Defendants’ MSJ, the Trustee can still not allege that Defendants made any misrepresentation of 

pre-existing fact. 

The Trustee’s proposed fraudulent inducement claim apparently hangs on the narrow 

exception to the requirement that to state a claim a plaintiff must allege a present or pre-existing 

fact: that when the Defendants made contractual promises, they did so with the present intent not 

to perform such promise. See Orbit Corp v. FedEx Ground Package Sys., No. 2:14cv607, 2016 

U.S. Dist. LEXIS 155212, at *9 (E.D. Va. Nov. 8, 2016) (explaining the narrow exception to the 

general rule that while fraudulent misrepresentation be predicated on statements of present or preexisting facts, “fraud may sometimes be predicated on promises which are made with a present 

intention not to perform them; that is, the false representation of an existing intention to perform . 

. . is the misrepresentation of a fact.”) (quoting Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 

362, 699 S.E.2d 483 (2010) (additional citations omitted). 

However, such theory also fails, as to be actionable the Trustee must identify a specific 

contractual promise she alleges the Defendants made which it never intended to perform. Compare 

James C. Justice Cos. v. Xcoal Energy & Res., Civil Action No. 7:14cv00170, 2015 U.S. Dist. 

LEXIS 199129, at *9 (W.D. Va. Feb. 9, 2015) (denying leave to amend to add claim based on 

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fraudulent inducement where the alleged promises were not contained in the allegedly induced 

agreement); Richmond Metro. Auth. v. McDevitt St. Bovis, 256 Va. 553, 560, 507 S.E.2d 344, 348 

(1998) (rejecting a fraudulent inducement claim where “[n]othing in the record suggests that [the 

defendant] did not intend to fulfill its contractual duties at the time it entered into the [subject 

agreement.]”) (emphasis added); with Zuberi v. Hirezi, Civil Action No. 1:16-cv-1077 (AJT/TCB), 

2017 U.S. Dist. LEXIS 14150, at *14 (E.D. Va. Jan. 30, 2017) (explaining that an allegation that 

the defendants did not intend to perform the work as specifically set forth in the subject agreement 

could support a fraudulent inducement claim). 

Here, the SAC fails to identify a single specific contractual promise contained in any of the 

JV Agreements which the Trustee now alleges the Defendants never intended to perform at the 

time the parties entered into such agreement. Notably, in the dozens of claims she has asserted, the 

Trustee has never asserted a claim against Defendants for breach of contract. It does not follow 

that the Defendants somehow made misrepresentations regarding their intention to perform under 

contracts which the Trustee does not even contend that the Defendants breached. Rather, the 

Trustee would like to add a new cause of action based on forward-looking, extra contractual, 

speculative “promises” regarding the level of prosperity Debtor would receive by entering into the 

joint venture. This is simply not a fraudulent inducement case, and the Trustee’s proposed 

amendment is futile. 

ii. The Merger Clauses in the JV Agreements Precludes the Trustee’s 

Proposed Fraudulent Inducement Claim. 

Highlighting further the notion that extra-contractual promises cannot serve the basis for a 

fraudulent inducement claim based on an intention not to perform, the heavily negotiated JV 

Agreements all contain similar non-reliance clauses reflecting that the Debtor did not rely on any 

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iii. The Trustee Does Not Plausibly Allege a Fraudulent Inducement Claim 

Because the SAC Reflects Such Claim Was Waived. 

The SAC does not plausibly state a claim for fraudulent inducement because there are no 

allegations that the Debtor ever attempted to repudiate the JV Agreements. When seeking to 

repudiate a contract based on fraudulent inducement, a party “should do so as soon as he discovers 

the fraud. If after the discovery of the fraud he treats the contract as a subsisting obligation, he will 

be deemed to have waived his right of repudiation.” White v. Bott, 158 Va. 442, 448, 158 S.E. 880, 

881 (1931). Here, even if the alleged promises of future performance could support a fraudulent 

misrepresentation claim, the Debtor was required to have promptly repudiated the JV Agreements 

once it discovered any such fraud. There are no allegations that the Debtor ever attempted to 

repudiate the contract, and to the contrary the SAC reflects that the parties operated under the joint 

venture through the date of the petition. 

CONCLUSION 

For the reasons set forth herein, the Defendants respectfully request that the Court deny the 

Trustee’s Motion for Leave to Amend the First Amended Complaint, and for such other relief as 

this Court may deem to be just and proper. 

Dated: March 1, 2022 Respectfully submitted, 

/s/ Thomas J. McKee, Jr. 

Thomas J. McKee, Jr. (VSB No. 68427) 

David G. Barger (VSB No. 21652) 

Greenberg Traurig, LLP 

1750 Tysons Boulevard, Suite 1000 

McLean, Virginia 22102 

Telephone: (703) 749-1300 

Facsimile: (703) 749-1301 

Email: mckeet@gtlaw.com 

bargerd@gtlaw.com 

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and 

J. Gregory Milmoe (admitted pro hac vice) 

Greenberg Traurig, LLP 

One International Place, Suite 2000 

Boston, MA 02110 

Telephone: (617) 310-6064 

Email: milmoeg@gtlaw.com 

Counsel to the ULX Entities

Case 20-03142-KRH Doc 168 Filed 03/01/22 Entered 03/01/22 19:09:23 Desc Main

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CERTIFICATE OF SERVICE

I hereby certify that on this 1st day of March, 2022, I served a true and correct copy of the 

foregoing document via the Court’s ECF system upon: 

Erika L. Morabito, Esq. 

 Brittany J. Nelson, Esq. 

 QUINN EMANUEL 

URQUHART & SULLIVAN LLP 

1300 I Street, N.W., Suite 900 

Washington, DC 20005 

(202) 538-8334 (telephone) 

erikamorabito@quinnemanuel.com 

brittanynelson@quinnemanuel.com 

Special Counsel to Lynn L. Tavenner, Chapter 7 Trustee 

 

/s/ Thomas J. McKee, Jr. 

Thomas J. McKee, Jr. (VSB No. 68427) 

Greenberg Traurig, LLP 

1750 Tysons Boulevard, Suite 1000 

McLean, Virginia 22102 

Telephone: (703) 749-1300 

Facsimile: (703) 749-1301 

Email: mckeet@gtlaw.com 

Counsel to Defendants

Case 20-03142-KRH Doc 168 Filed 03/01/22 Entered 03/01/22 19:09:23 Desc Main

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