### COURT OF CHANCERY OF THE STATE OF DELAWARE L ORI W. W ILL V ICE C HANCELLOR L EONARD L. W ILLIAMS J USTICE C ENTER 500 N. K ING S TREET , S UITE 11400 W ILMINGTON , D ELAWARE 19801

- 3734 

### Date Submitted: July 20, 2023 Date Decided: October 3 1 , 202 3

Peter B. Ladi g , E squ i re Sarah T. Andrade , Esquire Bayard, P. A. 6 00 N . King Street, Suite 400 Wilmington, Delaware 198 01 Barry M. Klaym an , Esquire Kaan Ekiner , Esquire Cozen O ’ Connor P.C. 1201 N. Market St reet , S uite 1001 Wilmington
, Del aw are 198 01

RE: Avgiris Brothers
, LLC v. Th eodoros Bouikidis, et al. C. A. No. 2 02 1

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- L WW

Dear Counsel:

I write regarding plaintiff Avgiris Brothers, LLC’s Motion for Attorneys’
Fees and Expenses. 1 

### For the reasons explained below, the m otion is denied
without prejudice

.
I. BACKGRO UND

This case involves two se ts of bro th ers who ran a fast casual Greek

restaurant in Philadelphia

. The brothers formed nominal defendant A

- B Brothers,
LLC to own and operate the restaurant and adopted the A

- B Bro thers L imited
Liability Company Agreement (the “LLC Agreement”) to g ov er n the entity

. The
LLC Agreement initially provided that Avgiris Brothers held a 65% membership

1 Pl.’s Mot. for Att ’ ys’ Fees and Expenses (Dkt. 11 4 ) (“Pl. ’s Mo t.” ).C .A . No. 202 1

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- L WW

October 3 1 , 2023 P age 2 of 8


### interest, with defendants Theodoros and Savvas Bouikidis jointly holding the
remaining 3 5% inte rest. 2



### Because the defendants ’ financial contribution fell short of equating to a

35% int e rest in the entity
, Avgiris Brothers loaned the defendants the difference. 3


### The loan was secured by a promissory note and a Pledge Agreement. 4 

### In the
Pledge Agreement, th e Bouikidis b rothers ple dged their interest in A

- B Brothers to

se cure th eir obl igation s under the n ote

. 5


### The parties’ relationship deteriorated. In June 2020, Avgiris Brothers acted
pursuant to the Pledge Agreement to seize most of the d efendants’ membership

inter ests in A

- B Br others after t he d efe n dants default ed on the n ote. 6 

### I n response,

the d efendants filed suit in Penn sylvania state court for , among other things, a

declaration of no d ef

ault on the n ot e and replevin of their member ship interests

. 7

2 Avg ir is Bros., LL C v. Bouiki dis , 2022 W L 4672075, at *2 (Del. Ch. S ept. 30, 2022) (“Mem. Op.”). Undefined capitalized terms have the meanings given in the Memorandum Opinion.

3 Id

. at *3.

4 Id.

5 Id.

6 Id. at * 5

. 7 Id.C .A . No. 202 1

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October 3 1 , 2023 P age 3 of 8


### On March 22, 2021, Avg iris Brothers

— as the holder of a majority of the
outstanding interes ts in A

- B Bro ther s

— remove d the d efendants as managers of

A

- B Brothers. 8 

### Avgiris Brothers then filed counterclaims in t he Pennsylvania

a ction , including a request for declaratory relief confirming the defendants ’

removals

. 9 

### In July 2021, Avg iris Brothe rs moved t o wi t hdr aw the coun ter claim s
and in November, the P ennsylvania court dismissed the m

. 10


### Avgiris Brothers commenced litigation in this court on August 21, 2021. It

filed a complaint advancing one count under 6 D el. C. § 18

- 110

. Av giris B rothers
averred that because it owned a majority of the outstanding membership interests

of A

- B Broth ers, it had the right under the LLC Agreement to remove the

def endants as managers. 11 

### It sought a corresponding de clarati on

. 12 

### A tw o

- day trial

was held i n January 2022.

On September 30, 2022, I issued a post

- tr ial memorandum opinion. 13



### I found t hat the def

endants were properly remov ed as m anagers of A

- B Brothe r s
by written consent

. I explained that “pur suant to the terms of the LLC Agreement,

8 I d.

9 Id.

10 Id. at *5

- 6.

11 Verifie d Com pl . ( Dkt. 1) ( “ Compl. ” ) ¶¶ 25

- 28.

12 Id. ; Mem. Op. at *6. The pla int iff also sought ancillary relief that was denied

. See infra note 1 5 and accompanying text.

13 Dkt . 109.C .A . No. 202 1

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October 3 1 , 2023 P age 4 of 8


### Avgiris Brothers ow ns a majority of the membership interests of A

- B Brothers and
validly remo ved t he defe ndants a s [m]anagers .” 14 

### I rejected the plai n tiff’s request
for an order requiring the defendants to return A

- B Brothers’ propert y as outside
the scope of th is Se ction 18

- 110 procee ding

. 15



### The plaintiff ’ s m otion for an award of attorneys ’ fees followed. 16 

### After the
defendants submitted an opposition to the m otion and the plaintif f repl ied, I held
oral argument

. 17 

### During th e h earing, I questioned whether I had jurisdic tion over

the defendants to order t hem to pay the plaintiff ’ s fees

. As discussed below, I

conclude that I do not.

II. ANALYSIS
“Under the American Rule, litigants are expecte d to bear their own c osts of
litigation absent some special circumstanc es that warran t a s hifting of attorneys ’

fees.” 18 

### There are exceptions. For one, “[a] fee

- shifting provision i n an

enforceable contract p rovides a clear exception to the default Americ an Rule.” 19

14 Mem. Op . at * 6

. 15 I d. a t *16

. 16 See Dkt . 114

17 See Dkts. 119, 121, 126.

18 Beck v. Atlantic Coast PLC , 868 A.2d 840, 85 0 ( D el. Ch. 2005).

19 Manti H

ld gs, LLC v. Authentix Acq

. Co., Inc. , 2020 WL 4596838, at *4 (Del. Ch. Aug. 11, 2020)

.C .A . No. 202 1

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October 3 1 , 2023 P age 5 of 8


### An applicable provision allows “a trial judge [t o] award the prevailin g p arty all the

cos ts it incurred during litig ation.” 20


### The plaintiff invokes th is exception to th e American Rule

. It seeks fees and

expenses pur suant to S ec tio n XII.16 of the LLC Agreement , whi c h states :
In the event that any party hereto institutes any le gal suit, action o r proceeding, including arbitration, against anothe r party in respect of a matter arising out of or r elating to th [e] [LLC] Agreement, the prev ai lin g party in the suit, action or proceeding sha ll be entitled to receive, in addition to all other damages to which i t may be entitled, the costs incurred by such party in conducting the suit, action or proceeding , inc luding reasonable attorneys’ fees a nd ex penses and court costs. 21


### In the plaintiff ’ s view, the provision applies because it prevailed in l itigation

“ arising out of

” or “ relating to ” the LLC Agreement. 22


### In opposing the m oti on, the defendants do not m eaningfully dispute t hat t his

action relates to the LLC Agreement. 23 

### Rather, t hey argue that this court lacks

20 Sternbe rg v. Nanticoke Mem ’ l Hosp., Inc ., 62 A.3d 1212, 1218 (Del. 2013) (quoting Mahani v. EDI

X Media Grp. , I

nc. , 935 A.2d 242, 245 (Del. 20 0 7) )

. 21 Pl.’s Mot. Ex. A.

22 Pl. ’ s Mot. 7

- 8

. T he plainti ff does not seek fees under the bad faith exception to the Americ an Rule or because it conferred a benefit on A

- B Brothers

. See generally CCSB Fin. Corp. v. Totta
, 2023 WL 4628822, at * 14 ( Del. July 19, 2023) (observing the

“ general rule that, in a Section 225 action, the benefit is typically to the individ uals seeking to conf

i rm their board seats and fees and expense s should ordinarily not be awarded ” (citing Keyser v. Curtis
, 2012 WL 3115453, at *19 ( Del. Ch. July 31, 2012), aff ’ d sub nom. Poliak v. Keyser , 65 A.3d 617 (Del. 2013) ) )

. 23 The de fendants contend that “ [w]hi le seeki ng an award of att orney s ’ fees and costs, Plaintiff did not claim a contract ual right to or an y othe r b asis ” to do so

. Defs.’ ResponseC .A . No. 202 1

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October 3 1 , 2023 P age 6 of 8


### jurisdiction to require them to pay fees
, that the plaintiff waived its ability to s eek

fees , that neither party prevailed
, a nd that the fees sought are unreasonable. 24



### Be cau se the jurisdictional argument has merit, my analysis is limited to that

threshold issue.
The p resent litigation is brought solely under 6 Del. C. § 18

- 110 . The statute
grants the cou rt in rem jurisdiction to determine “who validly holds office as a

ma nag er of a Delawar e limited liability compa ny

. ” 25 

### T he only party before the

court individuall y in a Sectio n 18

- 110 proceeding is the nominal defendant entity
,

“ which embodies the ‘ res

. ’ ” 26


### The plaintiff ’s application for contractual fee shifting is an in per sonam

matter anc illary to its Section 18

- 110 claim

. 27 

### The request, if successful, would

in Opp ’ n to Pl .’s Mot. for Att ’ y s ’ Fees (Dkt. 119) (“ D efs .’ Opp ’ n ” ) 3 ; s ee also Mem . Op. at * 9

- 1 6 (describing and i nterpreting obligations arising out of t he LLC Agreement ) ; Compl. ¶ 26 ( s eeking declaration s as to ri ghts ari sing from Section 7.3(a ) and 4.7 of t he L LC Agreement) ; Corrected Def s

. ’ Ans wer ing Pre

- t rial Br. (Dkt. 74) 29

- 30 ( arguing about the effect of the LLC Agreement o n al leged reallocations of membership interests )

. 24 D efs .’ Opp ’ n 1, 5

- 6

. 25 Feeley v. NHAO CG, LLC
, 2012 WL 966944, at *5 (Del. Ch . Mar. 2 0, 2012)

. The plaintiff asserts that this is a “ quasi in rem action

. ” Pl

. Avgi ris Brothers, LLC ’ s Reply in Further S upp

. of Mot

. for Att ’ y s ’ Fees and Expenses (Dkt. 121) 2. It cites no authority

su pporting this characterizati o n

. 26 Genger v. TR Inv s. , 26 A.3d 180 , 200 (Del. 2011)

. 27 See Mem. Op. at *13

- 14 (explaining that the court should not consi der matters collateral to th e identity of the LLC ’ s manager) ; see also In re Dissolution of Doehler Dry Ingredients So l ’ ns , LLC , 2022 WL 4281841, at * 4 (Del. Ch. Sept. 15, 2022)C .A . No. 202 1

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October 3 1 , 2023 P age 7 of 8



### involve an order requir ing the defen dants to make a payment to the plaintiff. But

t he defendants are not before the court individually . They are only “ invi ted to

lit igate their claims to the res (here, the di sputed corporate office) .” 28 

### Without in

persona m jurisd iction
, I cannot bind the “ individuals or entities beyond the res

. ” 29


### Accordingly, I cannot resolv e the plaintiff ’ s fee request

. 30 

### T he plaintiff

invo kes a contract right outside the jurisdictional l imitations of this matter

. T he

(describi ng a breach of contractual claim as classically in personam )
, aff ’ d
, 294 A.3d 64 (Del. 2023)

. 28 Genger
, 26 A.3d at 200 ; see also Feely , 20 12 WL 966944, at *5 ( “The defendants in such a proceeding appear before th e Court ‘ not individually, but rather, as respondents being invited to litigate their claims to the res (here, the disputed corp orate office) or forever be barred from doing so. ’ ” (citation omitted) )

. 29 Lynch v. Gonzalez Gonzalez , 2020 WL 3422399 , at * 5 (Del. C h. June 22, 2 020)

. 30 See id. at * 7

- 9 (declin ing to amend a status quo order in a Section 18

- 110 action to address a property s ale where the property was outside the res before the court and th e court lacked in personam jurisdiction ov er the party to be bound)

. My research indicates that t he C ourt of Chancery has previo usly awarded fe es in Section 18

- 110 action s under prevailing party provision s in LLC agreement s

. See 2009 Caiola Fam. Tr. v. PWA, LL C
, 2015 WL 6007596, at *12, *33 (Del. Ch. Oct. 14, 2015) ( concludi ng in an acti o n unde r Sections 18

- 110 and 18

- 111 that an LLC a g r eement “ provide [d] for fee

- shifting in favor of the prevailing pa rty in any action over its pro visions ” and awarding fees to the plaintiff) ; see also Roccia v. Mugica , 2020 WL 77653 40, at * 8 (De l. Ch. Dec. 29 , 2020 ) ( awarding fees in a Section 18

- 1 10 actio n based o n a contr actual fee shif ting provision in

an LLC a gre e ment ) ; Pullman Sugar, LLC v. Ken neth Valdivia
, C.A. No. 2018

- 0431

- SG
, at 27

- 31 ( Del. Ch. Mar. 7, 2019) (TRANSCRIPT) ( award ing fees in a Section 1 8

- 110 act ion to “ determine who were the managers o f the LLC ” bas ed on a pre vailing party provision in an LLC a g reement )

. N one of the defendant s in these matters challenge d the

c ourt ’ s jurisdiction over them. See Macklowe v. Plane t Hollywood, Inc.
, 1994 WL 560804, at *3 (Del. Ch. Oct. 13, 199 4) ( “ Personal jurisdiction is a waivable right

. ” ) ( citation omitted )

.C .A . No. 202 1

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October 3 1 , 2023 P age 8 of 8


### plaintiff ’ s application “ must be raised in a [separate] plenary action ” where the

court has in persona m jurisdiction over the defendants. 31



### III. CONCL USI O N

T he m otion is denied without prejudice . The plaint iff may pursu e relief

fr om the defendants under Section XII.16 of the LLC Agreemen t in a n appropriate
proceeding

. Sincerely yours,

/s/ Lori W. Will

Lori W. Will Vice Chancellor

31 Genger , 2 6 A.3d at 199 (q uoting Agranoff v. Miller , 1999 WL 219650, at *17 (Del. Ch. Apr. 12, 1999)
, aff ’ d , 737 A.2d 530 (Del. 1999) (T ABLE ) )

.