IN THE SUPERIOR COURT FOR THE STATE OF DELAWARE

PVP ASTON, LLC, RX 

FREDERICKSBURG INVESTORS L.L.C., 

AUSBP OWNERCO 15, LLC, AUSBP 

OWNERCO 3, LLC, AUSBP OWNERCO 

10, LLC, AUSBP OWNERCO 13, LLC 

AUSBP OWNERCO 7, LLC, AUSBP 

OWNERCO 8, LLC, AUSBP OWNERCO 

9, LLC, AUSBP OWNERCO 4 LLC, 

AUSBP OWNERCO 5, LLC, RA2 FLINT 

L.L.C., AUSBP OWNERCO 1, LLC, 

AUSBP OWNERCO 1I, LLC, AUSBP 

OWNERCO 2, LLC, RA2 MARLINTON 

L.L.C., RA2 MARYSVILLE L.L.C. RA2 

OREM L.L.C., PVP CASTOR LLC, PVP 

KREWSTOWN, LLC, RA2 STUARTS 

DRAFT L.L.C., RA2 TOLEDO L.L.C., 

AUSBP OWNERCO 12 LLC, AUSBP 

OWNERCO 14, LLC, AUSBP OWNERCO 

6, LLC, WEC 98D-26 LLC, WEC 98D-23 

LLC, WEC 98D-6 LLC, GCC-RA BEREA 

LLC, GCC-RA HODGENVILLE, LLC, 

GCC-RA BARDSTOWN, LLC, GCC-RA 

CANE RUN, LLC, GCC-RA 

ORANGEVALE LLC and GCC-RA 

PARADISE, LLC, each a Delaware or 

Texas limited liability company,

 

Plaintiffs,

v.

FINANCIAL STRUCTURES LIMITED, a

company organized under the laws of 

Bermuda, and AMHERST RA-357 LLC, 

ASTON RA-357 LLC, BALTIMORE RA357 LLC, BATTLE CREEK RA-357 LLC, 

BISHOP RA-357 LLC, WEST FAIRVIEW 

C.A. No. N21C-09-095 AML CCLD

 JURY TRIAL DEMANDED
2

BOISE RA-357 LLC, WEST OVERLAND 

BOISE RA-357 LLC, BROADVIEW 

HEIGHTS RA-357 LLC, BROOKPARK 

RA-357 LLC, CASTOR PHILADELPHIA 

RA-357 LLC, FLINT RA-357 LLC,

GOUVERNEUR RA-357 LLC, HINES 

RA-357 LLC, KREWSTOWN 

PHILADELPHIA RA-357 LLC, LORAIN 

RA-357 LLC, MARLINTON RA-357 LLC, 

MARYSVILLE RA-357 LLC, 

MUSKEGON RA-357 LLC, OREM RA357 LLC, STUARTS DRAFT RA-357 

LLC, TOLEDO RA-357 LLC, TROY RA357 LLC, WAYNESBORO RA-357 LLC, 

WILLARD RA-357 LLC, BLYTHE RA320 LLC, CLAREMONT RA-320 LLC, 

IRONTON RA-320 LLC, 

FREDERICKSBURG RA-100 LLC, 

BEREA RA-379 LLC, HODGENVILLE 

RA-379 LLC, LOUISVILLEBARDSTOWN RA-379 LLC, 

LOUISVILLE-CANE RUN RA-379 LLC,

ORANGEVALE RA-379 LLC, and 

PARADISE RA-379 LLC, each a Delaware 

limited liability company,

Defendants.

Submitted: December 29, 2022

Decided: March 31, 2023

MEMORANDUM OPINION

Upon Defendants’ Motion to Dismiss: GRANTED.

Upon Plaintiffs’ Motion for Partial Summary Judgment: DENIED AS 

MOOT.
3

Christopher P. Simon, Esq. and Michael L. Vild, Esq. of CROSS & SIMON, LLC, 

Wilmington, Delaware, Attorneys for Plaintiffs.

Michael W. Teichman, Esq., Kashif I. Chowdhry, Esq., and Kyle F. Dunkle, Esq. of 

PARKOWSKI, GUERKE & SWAYZE, P.A., Wilmington, Delaware; Jeffrey D. 

Brooks, Esq. and Tanisha L. Massie, Esq. of MORRISON COHEN LLP, New York, 

New York, Attorneys for Defendants.

LEGROW, J.
The plaintiffs in this action are a group of special-purpose entities that 

acquired various commercial properties and funded those acquisitions with loans. 

The loans required the plaintiffs, as borrowers, to obtain residual value insurance 

policies guaranteeing payment of the outstanding loan to the lenders if the borrowers 

did not satisfy the loan at maturity. The defendants are the insurers under those 

policies and related entities.

At the end of the loans’ terms, the plaintiffs did not pay the balloon payment, 

and the defendants therefore paid the lenders the insured value. In exchange for those 

payments, the lenders assigned the loans and related documents to the defendants. 

The insurance policies likewise required the borrowers to transfer all title and

ownership interest in the properties to the defendants, but the plaintiffs refused to do 

so. Instead, they took the position that the insurers and lenders breached the parties’ 

agreement or the parties’ agreement was otherwise unenforceable. 

Litigation ensued between the parties in various jurisdictions. While this case 

was pending, courts in Michigan and Idaho issued decisions expressly contrary to 

the claims the plaintiffs seek to maintain in this case. The insurers therefore moved 

to dismiss this action. Plaintiffs, on the other hand, maintain they are entitled to 

partial summary judgment as to their declaratory judgment claim. The question that 

ultimately is dispositive for purposes of the pending motions is whether the collateral 

estoppel doctrine bars the plaintiffs from relitigating the issues already decided in 
2

Michigan and Idaho. Because the collateral estoppel doctrine applies, and the 

plaintiffs are bound by the adverse decisions in the other jurisdictions, the plaintiffs’ 

amended complaint must be dismissed with prejudice. 

FACTUAL AND PROCEDURAL BACKGROUND

The following facts are drawn from the amended complaint and the 

documents it incorporates by reference. This dispute arises out of sale and lease back 

transactions between an insurance company, its designees, and limited liability 

companies that own properties operated as Rite-Aid pharmacies.

A. The Parties and the Loan Purchases

Plaintiffs (collectively, “Plaintiffs” or each, a “Borrower”) are thirty-four 

special-purpose entities that obtained commercial loans (each, a “Loan”) from 

several lenders or agents of lenders (each, a “Lender”) to finance the sale and 

leaseback of properties formerly owned by Rite-Aid drugstores (each, a 

“Property”).1 The Loans were evidenced and secured by a mortgage, note, and 

related instruments for each Property (the “Loan Documents”).2 Each Loan required 

a considerable “balloon” payment when the Loan matured in 2020 or 2021.3

1 Amended Complaint (hereinafter “Am. Compl.”) ¶ 44.

2

Id. ¶ 2. 

3

Id. ¶ 66.
3

Defendants are Financial Structures Limited (“FSL”) and its special-purpose 

subsidiaries.4

B. FSL’s RVI Policies 

The Loan Documents required Plaintiffs to obtain Residual Value Insurance 

(“RVI”) from FSL to insure the balloon payment for each Loan.

5 Each RVI policy 

included an Insured Covenants Agreement (“ICA”) that contained terms establishing 

the parties’ rights and obligations if FSL made a payment under the policy.6 Under 

the ICA, if FSL made a payment to the Lender, the Borrower was required to deed 

the Property to FSL, thereby forfeiting any equity in the Property.7 Each RVI policy

stated that if a Borrower defaulted on its Loan, FSL would pay the lender the 

“Insured Value” set out in the policy declarations, which was an amount equal to the 

4 Each Defendant other than FSL is a Delaware limited liability company that received an 

assignment of the Loan Documents relating to a particular Property from a Lender after the Lender 

was paid in full by FSL for all amounts of the Loan. Defendants are Amherst RA-357 LLC, Aston 

RA-357 LLC, Baltimore RA-357 LLC, Battle Creek RA-357 LLC, Bishop RA-357 LLC, West 

Fairview Boise RA357 LLC, West Overland Boise RA-357 LLC, Broadview Heights RA-357 

LLC, Brookpark RA-357 LLC, Castor Philadelphia RA-357 LLC, Flint RA-357 LLC, Hines RA357 LLC, Krewstown Philadelphia RA-357 LLC, Muskegon RA-357 LLC, Troy RA-357 LLC, 

Waynesboro RA-357 LLC, Willard RA-357 LLC, Blythe RA-320 LLC, Claremont RA-320 LLC, 

Fredericksburg RA-100 LLC, Berea RA379 LLC, Hodgenville RA-379 LLC, LouisvilleBardstown RA-379 LLC, Louisville-Cane Run RA-379 LLC, Orangevale RA-379 LLC, and 

Paradise RA-379 LLC. Eight of the named defendants have been dissolved and no longer exist as 

legal entities. Those eight entities were Gouverneur RA-357 LLC, Lorain RA-357 LLC, Marlinton 

RA-357 LLC, Marysville RA-357 LLC, Orem RA-357 LLC, Stuarts Draft RA-357 LLC, Toledo 

RA-357 LLC, and Ironton RA-320 LLC. Id. ¶ ¶ 45-46.

5

Id. ¶¶ 3-5, 78-79.

6

Id. ¶ 7.

7

Id. ¶ 98.
4

“balloon” payment owed on that particular Loan.

8 Upon making that payment, FSL 

would be subrogated to the Lender’s rights against the Borrower, and the Lender 

would assign the Loan Documents to FSL or its designee.9

C. Conflict at Loan Maturation

All the Loans matured during the Covid-19 pandemic at a time when turmoil 

in the financial markets made refinancing the Loans a challenge. Plaintiffs ultimately 

were unable to make the necessary balloon payments at maturity.10 After each 

Borrower defaulted on their Loan, the Lender made claims to FSL under the 

applicable RVI policy associated with that Loan.11 FSL or an FSL nominee was 

required to pay each Lender all outstanding amounts due on the Loans.12 The RVI 

policy obligated FSL to make those payments within a matter of days;13 FSL and the 

Lenders ultimately entered into agreements (each, an “Extension Agreement”) under 

which FSL paid an amount greater than the Insured Value to each Lender in 

exchange for an extension of the payment deadline.

14 Eventually, FSL made the 

payments to each Lender,

15 and, upon receipt of each payment, the applicable Lender 

8

Id. ¶¶ 78-79; Brooks-Decl. Exhibit 2, RVI Policy Art. V.

9

See id. ¶ 21.

10 Id. ¶¶ 19-20, 67.

11 Id. ¶ 20.

12 Id. ¶ 21.

13 Id. ¶ 22.

14 Id. ¶ 23.

15 Id. ¶ 27.
5

assigned the Loan Documents for each Loan to FSL or one of the Assignee 

Defendants.16

Each Policy contained an option that allowed FSL to purchase a Loan instead 

of paying it off in the event FSL paid a claim to a Lender (the “Loan Purchase 

Option”).17 In Plaintiffs’ view, this “option” was in fact FSL’s only choice if it 

wanted to be assigned the Loan Documents. In other words, Plaintiffs maintain FSL 

only could obtain an assignment of the Loan Documents if it exercised the Loan 

Purchase Option.18 FSL did not exercise the Loan Purchase Option and from 

Plaintiffs’ perspective, under the applicable Policy, when FSL makes a claim 

payment without exercising the Loan Purchase Option, the Loan is satisfied.19

Plaintiffs allege FSL’s receipt and attempted enforcement of the Loan Document 

therefore was improper.20

Plaintiffs are of the view that FSL also sought to retain all premiums and any 

amount it funded for claims under the Policies and all the equity it accrued in the 

Properties for the twenty-two years Borrowers had owned them.21 Although each 

ICA also required each Borrower to deliver a deed to its Property to FSL or its 

16 See id. ¶ 28. 

17 Id. ¶ 29.

18 Id. ¶ 30.

19 Id. ¶¶ 31-32, 119-123.

20 Id. ¶¶ 34-36.

21 Id. ¶ 97.
6

successors if FSL made a payment to the Lender,22 Borrowers refused to deed their 

Properties to FSL because they did not believe the ICAs were enforceable in 

accordance with their terms and Borrowers received no consideration from FSL for 

the ICAs’ execution and delivery.

23

D. Relevant Contractual Language

The Loan Documents were assigned to FSL under the provisions of Article 

V(a) of each Policy and Section 8 of the Additional Named Insured Endorsement 

(“ANIE”), which was incorporated into the policy. Article V(a), titled “Payment of 

Insured Value,” defined FSL’s obligation to pay the Insured Value. That article 

required FSL to pay the “Additional Named Insured,” that is, the Lender,24 the 

Insured Value if: (i) FSL received a valid claim notice; (ii) the Lender had not 

received the full payment on the Loan; and (iii) the RVI Policy’s terms and 

conditions were satisfied.25 That same section confirmed that the Borrower had no 

22 Id. ¶ 98.

23 Id. ¶¶ 100-101.

24 The Lenders are the “Additional Named Insured” under the RVI Policy. See id. ¶ 10; Defendants 

U.S. Bank National Association, Wells Fargo Trust Company, N.A., and WF RR3-CMFUN’s 

Motion to Dismiss (“U.S. Bank Motion”) at 1 (D.I. 34); see also id., Ex. C RVI Policy art. II(1). 

25 Id., Ex. A RVI Policy art. V(a). Article V(a) states in relevant part:

(a) [FSL] will pay to the [Lender] an amount equal to the Insured Value, if: (i) a 

valid Notice of Claim has been given; (ii) the [Lender] shall not have received 

payment in full of all amounts owing under the Loan; and (iii) all of the terms and 

conditions of this [RVI] Policy have been satisfied. [FSL]’s obligations hereunder 

are limited to making payment to the [Lender] in accordance with the terms hereof 

and the Additional Named Insured Endorsement, or, at [FSL]’s option, in 

accordance with [Article] (V)(d) below, and [FSL] shall have no liability to the 
7

“ownership or other rights” to the RVI Policy’s proceeds.26 Article V provided that 

the Policy’s coverage terminated upon payment of the Insured Value or exercise of 

FSL’s Purchase option contained in Article V(d).27

Subsection (d) established an alternative to payment of the Insured Value 

under subsection (a). Specifically, if FSL was obligated to pay the Insured Value, 

FSL had the option “in its sole discretion, in lieu of complying with Article I and 

Article V,” to purchase the Loan from the Lender for the total amounts payable under 

the Loan (the “Loan Purchase Option”). Article V(d) described the Loan Purchase 

Option as follows:

(d) In the event that [FSL] is obligated in accordance with the terms and 

conditions of this [RVI] Policy to make payment to the [Lender], on the 

Termination Date (and at any time thereafter) [FSL] shall have the 

option in its sole discretion, in lieu of complying with Article I and 

Article V of this [RVI] Policy, to purchase the Loan from the [Lender] 

for a purchase price equal to all amounts payable under the Loan, but 

in no event greater than the Insured Value. [FSL] may exercise such 

option by giving written notice to the Insured and the [Lender] within 

the time period provided in Article V(c) hereof. If [FSL] exercises such 

option, the [Lender] will assign the Loan and all documents evidencing 

or securing the Loan to [FSL], without recourse, in accordance with the 

provisions of Section 8 of the Additional Named Insured Endorsement. 

Upon completion of such transfer and payment by [FSL] as provided 

herein, any and all liability of [FSL] under the [RVI] Policy shall 

Insured except to make payment to the [Lender] in accordance with this [RVI] 

Policy. 

See id., Ex. A RVI Policy art. V(a). 

26 See id. (“In no event will the Insured have any ownership interest or other rights with respect to 

the proceeds of this Policy.”).

27 See Am. Compl., Ex. A RVI Policy art. V(b). Article V(b) states: “Upon payment of the Insured 

Value under paragraph (a) above or paragraph (d) below, all coverage provided by this [RVI] 

Policy shall be terminated.” See id., Ex. A RVI Policy art. V(b). 
8

terminate. In any event, if the Loan is not outstanding on the 

Termination Date, any and all liability of [FSL] under the [RVI] Policy 

shall terminate.

28

Each RVI Policy is subject to the ANIE. Plaintiffs ascribe case-dispositive 

significance to the fact that the Loan Purchase Option expressly references Section 

8 of the ANIE, which is titled “Assignment of Loan Documents in Accordance with 

Requirements of [RVI] Policy.”29 Plaintiffs point out that Article V(a), which was 

the provision under which FSL made payments in this case, does not reference 

Section 8 of the ANIE. Section 8 is the assignment provision, and it establishes the 

Lenders’ obligation to assign the Loan Documents under the RVI Policy. The first 

sentence of Section 8, however, expressly refers to the Lenders’ obligation to assign 

the Loan Documents upon payment of the “Insured Value,” which is what Article 

V(a) requires:

Upon the payment by [FSL] of the Insured Value pursuant hereto, the 

[Lender] agrees to promptly assign to [FSL] (or its designee), without 

recourse, the Note, the Mortgage and all other documents relating to the 

Loan (“Loan Documents”, including without limitation the rights of the 

[Lender] under any mortgage title insurance policies, to the extent 

assignable) or, in the event the [Lender] (or its Affiliate) has acquired 

title to the Property prior to the Termination Date, the [Lender], at the 

option of [FSL] shall also transfer good and marketable title to the 

Property to [FSL], subject to no mortgages, deeds of trust, liens, 

easements, covenants, conditions, restrictions, leases or other 

encumbrances other than the permitted title matters identified on 

Schedule B attached hereto and made a part hereof or which do not have 

a material, adverse effect on the value of the Property as of the 

28 Id., Ex. A RVI Policy art. V(d).

29 Id., Ex. A ANIE § 8 (underlining in original).
9

Termination Date. Notwithstanding the foregoing, the [Lender] shall 

not be required to assign any claim it has to rent payable during the 

terms of the Lease.30

Each RVI Policy also included an Insured Covenants Agreement (“ICA”). 

Section 4 of the ICA, titled “Transfer of Title,” further confirms the Borrowers are 

obligated to deliver the Property’s Deed to FSL under Article V of the RVI Policy:

(a) In the event that FSL makes payment for a Claim under Articles I 

and V of the [RVI] Policy, the Owner shall cause the deed to the 

Property to be immediately delivered to FSL, without payment of 

additional consideration by FSL. Owner hereby acknowledges that 

payment by FSL under the [RVI] Policy is the equivalent of a purchase 

of the Property by FSL for an amount equal to the amount paid under 

the [RVI] Policy and used in satisfying all or part of Owner’s 

obligations under the Note, and that such payment constitutes full and 

fair consideration for the transfer of title to the Property to FSL. 

(b) At the time of such transfer of title to the Property, Owner agrees to 

comply with all of the terms and conditions of, and to execute all 

documents referred to in, the Contract Provisions Exhibit, attached 

hereto as Exhibit B.31

Each RVI Policy also had an inspection and appraisal clause. Section 

IV, titled “Inspection and Appraisal,” stated FSL was required to perform an 

appraisal and notify the Borrower:

During the period beginning twelve months and ending five months 

prior to the Termination Date, [FSL] will perform an Inspection and an 

Appraisal of the Property and will promptly notify the [Borrower] and 

the Additional Named Insured of the results thereof, including without 

limitation and any determination by the Inspector and the Appraiser that 

30 Id. (underlining in original).

31 Id., Ex. A ICA § 4.
10

the Property is not in compliance with the Property Return 

Conditions.32

E. Procedural History

Plaintiffs filed their original Complaint in this action on September 13, 2021.33

At the time, one of the named plaintiffs, ACA FSL Holdingco, LLC, purported to be 

the assignee of several of the Borrowers, notwithstanding a clause in the Policies 

stating any attempted assignment of rights under the Policy would be void ab initio.

34

On November 3, 2021, Defendants moved to dismiss Plaintiff ACA FSL Holdingco, 

LLC’s claims, and filed an Answer to the other plaintiffs’ claims, along with a

Counterclaim against all Plaintiffs.35 On May 31, 2022, the Court dismissed ACA 

FSL Holdingco, LLC from the case for lack of standing.

36

 Plaintiffs then filed the 

Amended Complaint on July 25, 2022, naming an additional 31 original Borrower 

entities as new plaintiffs alongside the three original Plaintiff Borrower entities.37

Plaintiffs also filed a separate lawsuit in this Court against the Lenders (the 

“Lenders Action”). The plaintiffs in the Lenders Action filed claims for declaratory 

32 Id., Ex. A RVI Policy art. IV.

33 Defs.’ Opening Br. in Support of Defendants’ Motion to Dismiss the Amended Complaint 

(hereinafter “Defs.’ Op. Br.”) at 3. 

34 Id. at 3.

35 Id.

36 PVP Aston, LLC, et al. v. Fin. Structures Ltd, et al., 2022 WL 1772247, at *16 (Del. Super. May 

31, 2022).

37 Defs.’ Op. Br. at 3.
11

relief, breach of contract, and violation of state mortgage statutes.

38 The defendants 

moved to dismiss the amended complaint, and the Court granted that motion.39

1. Filings in other Courts

This litigation is not the only dispute between various Borrowers and FSL, the 

Lenders, and their affiliates. In addition to the two actions pending in Delaware, 

litigation has arisen in several states where the subject properties are located, as FSL, 

its nominees, or third-party purchasers have asserted ownership and possession 

rights in the properties. Importantly for purposes of Defendants’ motion to dismiss, 

decisions in two of those states address the same claims and legal theories Plaintiffs 

seek to advance in this case. Specifically, during the period between the filing of 

Plaintiffs’ initial Complaint and their Amended Complaint, courts in Michigan and 

Idaho issued decisions that rejected the theories and contractual constructions 

Plaintiffs advance here.40 Defendants have moved to dismiss the Amended 

Complaint on the basis of those decisions.

i. Michigan Action

In August 2021, one of the Borrowers, RA2 Troy LLC (the “Michigan 

Borrower”), filed a claim in the Michigan Circuit Court for Oakland County relating

38 PVP Aston LLC, et al. v. U.S. Bank Nat’l Assoc., et al., 2023 WL 525059 (Del. Super. Jan. 24, 

2023).

39 Id.

40Additionally, in the time since the parties argued the pending motions, this Court issued its 

decision in Plaintiffs’ case against the Lenders. That decision also interprets the Loan Documents 

and RVI Policy in a way fundamentally at odds with Plaintiffs’ claims in this case. See id.
12

to a Troy, Michigan Property. The Michigan Borrower named as defendants the 

entities to which FSL and its affiliates had assigned the Loan and the ICA.

41 Neither 

FSL nor any of its other affiliates was a party to the Michigan litigation.42 On April 

28, 2022, the Michigan Court granted summary judgment to the defendants on all 

claims.43 That court rejected the Michigan Borrower’s argument that the parties 

intended FSL’s claim payment to the Lender to pay off the loan balance, holding 

that “contrary to Plaintiff’s argument, Article V(a) [of the RVI Policy] does not state 

that if a claim is made, the Insurer’s payment to the Lender will be used to pay off 

the loan.”44 The Michigan Court also rejected the Borrower’s arguments that it was 

not bound by the ANIE45 or that Section 8 of the ANIE only applied when FSL 

exercised the Loan Purchase Option under Article V(d) of the Policies.

46 Similarly, 

that court was not persuaded by the Michigan Borrower’s arguments that the ICA is 

unenforceable because “it clogs the equity of redemption” and that the parties 

intended the Insurer’s right to the Loan’s assignment to be conditioned on the 

41 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB (Mich. Cir. Ct. Oakland Cnty. 

2022), Defs.’ Op. Br. Ex. 4.

42 Id.

43 Id., Ex. 5.

44 Id.

45 Id.

46Id. at *16-17.
13

appraisal’s performance.

47 The Michigan Borrower moved for reconsideration of the 

April 28, 2022 decision, but the court denied that motion.48

ii. The Idaho Action

In May 2021, an assignee under the ICA, TJV Associates LLC, brought a 

claim against RA2 BoiseOverland LLC and RA2 Boise-Fairview LLC (the ‘Idaho

Borrowers”) in the District Court of the Fourth Judicial District of the State of 

Idaho.

49 TJV Associates LLC sought specific performance against the two borrower 

defendants after they failed to transfer title to the properties to the plaintiff as 

required by the ICAs.50 In August 2021, the Idaho Borrowers filed counterclaims 

against TJV Associates LLC and third-party claims against several entities to which 

FSL’s affiliates assigned the Loan Documents.51 Neither FSL nor any of its affiliates 

was a party to the Idaho litigation.52 On July 12, 2022, the Idaho Court granted

summary judgment to TJV Associates LLC and 487 Morris Associates, LLC on all 

claims and counterclaims. The Idaho Court held the ICA was enforceable and 

rejected the Idaho Borrowers’ argument that the ICA impermissibly clogged the 

47 Id. at *18-21, 23-25.

48 Id. at *16-17, Ex. 6.

49 Brooks-Decl. ¶ 11.

50 Id.

51 The parties are 487 Morris Associates, LLC, West Fairview Boise RA 357 LLC, and West 

Overland Boise RA 357 LLC. See id. ¶ 12.

52

 TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-07907 (D. Idaho. Ada 

Cnty. 2021). 
14

equity of redemption.

53 The Idaho Court also rejected the Idaho Borrowers’ 

arguments that the RVI Policies provided illusory coverage and that the parties 

intended the Insurer’s right to the Loan’s assignment to be conditioned on

performance of an appraisal on the property.

54

2. Claims in Amended Complaint

Plaintiffs assert four claims in the Amended Complaint. In the first claim, 

Plaintiffs seek a declaratory judgment.55 Plaintiffs ask the Court to declare that, “[a]ll 

the Loan Documents were paid in full and satisfied at the time FSL paid the claim 

amounts to the Lenders, and neither FSL nor any Assignee Defendant acquired any 

valid indebtedness or lien or other rights against any Plaintiff or any Property by 

reason of its purported acquisition of any Loan Document . . . .”

56 Among other 

requests, Plaintiffs also seek a declaratory judgment that each Policy, excluding the 

ICA, was a valid contract between FSL and the applicable Plaintiff, enforceable as 

written.

57

In Count II of the Amended Complaint, Plaintiffs assert a claim for breach of 

contract based on FSL’s alleged “‘sale’ of agreements that FSL knows are

53 TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-07907 at *27-29 (D. 

Idaho. Ada Cnty. 2021), Defs.’ Op. Br. Ex. 9.

54 Id. at *31-33.

55 Am. Compl. ¶ 140. The full list of declaratory judgments Plaintiffs seek can be found in the 

Amended Complaint ¶140(a-n).

56 Id. ¶ 140(f).

57 Id. ¶ 140(a).
15

unenforceable to parties hostile to Plaintiffs.”58 In Count III of the Amended 

Complaint, Plaintiffs allege FSL’s “actions and omissions constitute multiple 

violations of the anti-subrogation rule, the reasonable expectations doctrine, the 

illusory coverage doctrine and other [insurance-related] laws and duties.”59 The 

Amended Complaint also contains a fourth claim for Unjust Enrichment. Plaintiffs 

plead this claim in the alternative, stating the Court only should find unjust 

enrichment “[i]n the event that this Court determines there are no enforceable 

agreements between the parties.”60

On December 22, 2021, Plaintiffs moved for partial summary judgment. The 

Court stayed consideration of that motion while it resolved Defendants’ motion to 

dismiss the Original Complaint. After the Court partially dismissed that complaint 

and Plaintiffs filed their Amended Complaint, Defendants again moved to dismiss.

The Court heard oral arguments on both motions on December 9, 2022 before taking 

them under advisement.

PARTIES’ CONTENTIONS

In Plaintiffs’ motion for partial summary judgment, they contend FSL’s 

payments under Article V(a) satisfied the “insured” Loans such that any assignment 

of the Loan Documents transferred only the Borrowers’ obligations that survived the 

58 Id. ¶ 142.

59 Id. ¶ 146.

60 Id. ¶ 150.
16

Loans’ full payment.

61 In their motion to dismiss, Defendants contend Plaintiffs’ 

amended complaint should be dismissed because their claims are barred by collateral 

estoppel on the basis of the Michigan and Idaho courts’ decisions.62

Defendants’ collateral estoppel argument carries the day. The Motion to 

Dismiss must be granted because all Plaintiffs’ claims are barred by the collateral 

estoppel doctrine. Plaintiffs’ motion for partial summary judgment therefore is moot.

ANALYSIS

Under Superior Court Civil Rule 12(b)(6), this Court may grant a motion to 

dismiss for failure to state a claim if the complaint does not allege sufficient facts 

that, if proven, would entitle the plaintiff to relief. The governing pleading standard 

in Delaware to survive a motion to dismiss is reasonable conceivability.63

A court only will grant a motion to dismiss under Rule 12(b)(6) when “it 

appears with reasonable certainty that the plaintiff cannot prevail on any set of facts 

that can be inferred from the pleadings.”64 Although the court will accord a plaintiff

all reasonable inferences that may be drawn from their complaint, it “is not required 

to accept every strained interpretation of the allegations proposed by the plaintiff.”65 

61 Pls.’ Mot. Summ. J. at 7, 32-33.

62 Defs.’ Op. Br. at 17.

63 Wild Meadows MHC, LLC v. Weidman, 250 A.3d 751, 756 (Del. 2021).

64 Lefkowitz v. HWF Holdings, LLC, 2009 WL 3806299, at *4 (Del. Ch. Nov. 13, 2009).

65 Malpiede v. Towson, 780 A.2d, 1075, 1083, (Del. 2001).
17

Mere conclusory allegations unsupported by facts in the complaint will not be 

accepted as true.66 

I. Plaintiffs’ Amended Complaint must be dismissed in its entirety 

because all Plaintiffs’ claims are barred under the collateral estoppel 

doctrine.

“Collateral estoppel, also known as issue preclusion, refers to the preclusive 

effect of a judgment on the merits of an issue that was previously litigated or that 

could have been litigated.”67 Under the collateral estoppel doctrine, “once an issue 

is actually and necessarily determined by a court of competent jurisdiction, that 

determination is conclusive in subsequent suits based on a different cause of action 

involving a party to the prior litigation.” 68

A. A collateral estoppel defense may rest on legal rulings and can be raised 

and resolved at the pleadings stage.

Plaintiffs first resist Defendants’ motion on procedural grounds. Plaintiffs 

argue the judgments in Michigan and Idaho are outside the pleadings and a court 

only may consider collateral estoppel at the pleadings stage when the reviewing 

court also decided the prior action. Numerous cases contradict Plaintiffs’ theory,

69

66 In re General Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006).

67 Shahin v. Darling, 606 F. Supp. 2d 525, 545 (D. Del. 2009); see also Tyndall v. Tyndall, 238 

A.2d 343, 346 (Del. 1968) (collateral estoppel provides repose by preventing re-litigation of an 

issue previously decided).

68 Hercules Inc. v. AIU Ins. Co., 783 A.2d 1275, 1278 (Del. 2000) (citing Montana v. United States, 

440 U.S. 147, 153 (1979)).

69 Jones v. Reliant Energy Res. Corp., 2001 WL 111988, at *8 (Del. Ch. Feb. 2, 2001); see also In 

re Career Educ. Corp, Derivative Litig., 2007 WL 2875203, at *10-11 (Del. Ch. Sept.28, 2007); 
18

and it is virtually axiomatic that courts may take judicial notice of other courts’ 

decisions at any stage of the proceedings.

70 Delaware courts routinely consider 

collateral estoppel arguments on motions to dismiss and grant those motions where 

it is plain from the pleadings and the matters of which the court may take judicial 

notice that the pending claims are barred by collateral estoppel.71

Plaintiffs next contend dismissal based on the Michigan and Idaho decisions 

is not permitted because collateral estoppel “only applies to findings of fact made by 

the other tribunal,” and neither the Michigan nor Idaho court made factual findings.

72

That argument is baseless; collateral estoppel applies to issues of law in addition to 

factual findings. Under Delaware law, the collateral estoppel doctrine applies 

broadly to a court’s determinations of “rights, questions, or facts.”

73 The Delaware 

Yucaipa Am. All. Fund I, LP v. SBDRE LLC, 2014 WL 5509787, at *11-15 (Del. Ch. Oct. 31, 

2014). 

70 See Aequitas Sols., Inc. v. Anderson, 2012 WL 2903324, at *3 (Del. Ch. July 10, 2012) (holding 

that court may take judicial notice of a declaration because it was a pleading filed in a California 

bankruptcy proceeding); In re Wheelabrator Tech. Inc. S’holders Litig., 1992 WL 212595, at *12 

(Del. Ch. Sept. 1, 1992) (holding that “publicly filed documents [including certificate of 

incorporation] are judicially noticeable on a motion to dismiss.”).

71 See, e.g., Pyott v. La. Mun. Police Emples.' Ret. Sys.,74 A.3d 612, 618 (Del. 2013) (reversing 

Court of Chancery decision that wrongly declined to grant motion to dismiss based on collateral 

estoppel); Asbestos Workers Local 42 Pension Fund v. Bammann, 2015 WL 2455469, at *15 (Del. 

Ch. May 21,2015) (granting motion to dismiss because collateral estoppel barred plaintiffs’ 

claims); Adjile, Inc. v. City of Wilmington, 2010 WL 1379921, at *2 (Del. Super. Mar. 31, 2010) 

(granting motion to dismiss based on collateral estoppel); Nelson v. Emerson, 2008 WL 1961150, 

at *10 (Del. Ch. May 6, 2008) (granting motion to dismiss based on collateral estoppel where 

issues were addressed in prior bankruptcy proceedings); Preffered Fin. Servs. v. A&R Bail Bonds, 

LLC, 2020 WL 2952443, at *2 (Del. Super. June 3, 2020) (motion to dismiss granted based on 

collateral estoppel).

72

 Pls.’ Answ. Br. at 15.

73 Hercules Inc., 783 A.2d at 1276 (emphasis added); see also In re Columbia Pipeline Grp., Inc.,

2021 WL 772562, at *59 n.5 (Del. Ch. Mar. 1, 2021).
19

rule also extends to legal rulings.74 Moreover, even if Delaware law limited

application of the collateral estoppel doctrine to “questions of fact,” the restriction 

would not apply here because “a Delaware court will give the judgments of another 

state court the same preclusive effect as would a court in that state.”75 The Court 

must defer to Michigan and Idaho law, and those states also extend collateral 

estoppel to legal rulings.76

B. Each of the elements of collateral estoppel are met with respect to the 

claims raised in the Amended Complaint.

Plaintiffs also resist dismissal on substantive grounds, arguing the Michigan 

and Idaho decisions do not satisfy the elements of collateral estoppel. When 

determining whether the collateral estoppel doctrine applies, this Court must 

determine whether: 1) the issue previously decided is identical to the one presented 

in the action in question; 2) the prior action has been finally adjudicated on the 

merits; 3) the party against whom the doctrine is invoked was a party or in privity 

74Hercules Inc., 783 A.2d at 1276; Columbia Pipeline, 2021 WL 772562, at *59, n. 5; 606 F. Supp. 

525; Restatement (Second) of Judgments § 27.

75 See Branson v. Branson, 2019 WL 193991 at *5 (Del. Jan. 14, 2019) (quotation and citation 

omitted).

76 See Ford Motor Co., v. Centra, Inc. et. al 2018 WL 9944322, at *4 (holding that collateral 

estoppel applies to “a right, question or fact distinctly put in issue and directly determined by a 

court of competent jurisdiction”) (emphasis added) (citing Hackley v. Hackley, 395 N.W.2d 906, 

910 (Mich. 1986)); Richardson v. Four Thousand Five Hundred Forty-Three Dollars, U.S. 

Currency, 814 P.2d 952, 954 (Ct. App. Idaho 1991) (“Under the judicially-developed doctrine of 

collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that 

decision is conclusive in a subsequent suit based on a different cause of action involving a party 

to the prior litigation.”) (emphasis added) (citation omitted); Bach v. Bagley, 229 P.3d 1146, 1149 

(Idaho 2010) (holding that collateral estoppel barred re-litigation of a question of law concerning 

whether a land transfer was void).
20

with a party to the prior adjudication; and 4) the party against whom the doctrine is 

raised had a full and fair opportunity to litigate the issue in the prior action.77

1. The issues previously decided are identical to the issues presented in this

action.

The first question for collateral estoppel purposes is whether the issues are 

identical. Identicality depends on whether the contentions raised in the second 

proceeding are necessarily inconsistent with the previously adjudicated issues.78

Plaintiffs vaguely contend FSL and its nominees were not parties to the Michigan 

and Idaho decisions, this case concerns FSL’s “duties” under the policies, and the 

pending claims are “unique” to this proceeding. These arguments misunderstand 

collateral estoppel at both a macro and a micro level. 

First, as a preliminary matter, Plaintiffs acknowledge that all the transactions 

and related documents are the same. Plaintiffs expressly allege each loan transaction 

that each Borrower entered into with FSL was substantively the same, and was

governed by substantially identical agreements.79 Each Borrower was a specialpurpose entity created with reference to a number of sale and lease back transactions 

by Rite Aid in 1998 and 1999.80 The operative terms and conditions of all the 

77 Klauder v. Echo/RT Holdings, LLC (In re RayTrans Holdings, Inc.), 573 B.R. 121, 130 (Bankr. 

D. Del. 2017) (citing Betts v. Townsends, Inc., 765 A.2d 531, 535 (Del. 2000)). 

78 Neoplan USA Corp. v. Taylor, 604 F. Supp. 1540 (D. Del. 1985).

79 Am. Compl. ¶ 9.

80 Id. ¶¶ 48-54.
21

Policies, including all ICAs, also were substantially identical.81 The transactions and 

agreements at issue here are the same transactions and agreements addressed in the 

Michigan and Idaho actions. In addition, Plaintiffs’ current position that the actions 

are distinct and involve different claims contradicts Plaintiffs’ earlier 

representations. Plaintiffs previously argued that this Court should consider 

Plaintiffs’ motion for partial summary judgment on an expedited basis because a 

ruling on that motion would affect the Michigan and Idaho proceedings. The fact 

that Plaintiffs’ claims are raised against different defendants than the defendants 

named in Michigan does not change the identicality analysis.

Second, an analysis of each claim brought by Plaintiffs in the Amended 

Complaint establishes that the material issues in this action already have been 

decided in Michigan and Idaho. In Plaintiffs’ claim seeking a declaratory judgment, 

Plaintiffs request several declarations based on their argument that FSL’s payments 

to the Lenders retired and extinguished Plaintiffs’ Loans.

82 Plaintiffs argue FSL’s 

payments under Article V(a) of the Policy, rather than under Article V(d)’s Loan 

Purchase Option, precluded assignment by the Lenders and resulted instead in 

satisfaction of the Loans.83 According to Plaintiffs, therefore, “[a]ny assignment of 

81 Id. ¶ 9.

82 See id. ¶¶140(b), 140(e), 140(f), 140(i), 140(k), and 140(n).

83 Id. ¶¶ 123-25.
22

the Loan Documents was an effective transfer of no more than those rights that 

survive payment in full of the applicable Loan.”84

The Michigan Borrower raised this same legal theory in the Michigan Action, 

and that court expressly rejected that contractual construction. The Michigan Court 

held that “Article V(a) merely states that upon valid notice of a claim, the Insurer 

will pay the Insured Value to the Additional Named Insured (the Lender). Further, 

Section 8 of the ANIE unambiguously provides for Assignment of the Mortgage 

Instruments upon payment of a claim by the Insurer.”

85 The Michigan Court found 

that to the extent Article V(d) of the Policy and Section 8 of the ANIE conflict, the 

ANIE expressly controls.

86

The Michigan Court similarly rejected the argument that the borrower there 

was not bound by the ANIE. The Michigan Court held “the [ANIE] is considered 

part of the Policy under which the Plaintiff is the named Insured. The Policy 

specifically defines the ‘Policy’ as ‘this Residual Value Insurance Policy, the 

Application and the Declarations, the ANIE and any and all other endorsements 

hereto or thereto.’ Moreover, the fact that Plaintiff is not named in the [ANIE] has 

84 Id. ¶ 33.

85 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *13-14 (Mich. Cir. Ct. 

Oakland Cnty. 2022), Defs.’ Op. Br. Ex. 5.

86 Id. at *14-15. This Court recently reached the same conclusion in Plaintiffs’ action against the 

Lenders, holding “[t]he plain language of Article V of the RVI Policy and Section 8 of the ANIE 

permits only one reasonable interpretation: FSL is entitled to assignment of the Loans upon 

tendering payments under either Article V(a) or V(d).” PVP Aston LLC, et al. v. U.S. Bank Nat’l 

Assoc., et al., 2023 WL 525059 at *19 (Del. Super. Jan. 24, 2023).
23

no effect on its application. The RVI Policy (including the [ANIE]) is for the benefit 

of the Lender (the Additional Named Insured), which is the only party that can make 

a claim under the Policy.”

87

Plaintiffs also have argued in this action that “[i]n the case of Section 8 of the 

ANIE, ... there can be no conflict with the ‘Policy’ because the bold and underlined 

language at the head of Section 8 makes clear that any assignment to be delivered 

under that Section must be ‘in Accordance with the Requirements of Policy.’”88 The

Michigan Court again rejected that argument, finding Plaintiff’s construction was

not supported by the language of the Policy and the ANIE.

89

Plaintiffs further seek a declaration that “Each [ICA] is unenforceable and 

void.”90 Plaintiffs assert the ICA is unenforceable because it can require forfeiture 

of “all of the equity that has accrued in the Properties for the 22 years” with “no 

equity of redemption.”91 Again, the Michigan and Idaho courts rejected those 

arguments. The Michigan Court held the ICA was fully enforceable, finding “the 

prohibition against clogging the equitable right to redemption is not implicated in 

this case” because the ICA “is an agreement between the Insurer and the Plaintiff 

87 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *15 (Mich. Cir. Ct. Oakland 

Cnty. 2022).

88 Pls.’ Op. Br. Mot. Part Summ. J. Ex. 14 at 25.

89 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *16-17 (Mich. Cir. Ct. 

Oakland Cnty. 2022). This Court agreed in its January 24, 2023, Memorandum Opinion. See PVP 

Aston LLC, et al., 2023 WL 525059, at *9.

90 Am. Compl. ¶ 140(j).

91 Id. ¶¶ 97, 104.
24

and is not an agreement between the Lender (mortgagee) and the Plaintiff 

(mortgagor).”92 The Idaho Court similarly held the ICA was enforceable and did not 

effect a forfeiture.93 The Idaho Court noted “[t]he ICAs . . . were far from a penalty” 

but instead were “a crucial part of carefully structured investment strategy . . . under

which [the Borrowers] were able to acquire the properties entirely though loans 

without contributing any equity or capital.”94 In Count IV of the Amended 

Complaint, Plaintiffs assert a claim for unjust enrichment on the basis that “there are 

no enforceable agreements between the parties.”95 The Michigan Court already 

found that the RVI Policy enforceable, and both the Michigan and Idaho courts 

found the ICA enforceable.96

Plaintiffs also seek a declaration that “FSL breached Article IV of each Policy 

by failing timely or ever to appraise the applicable Property and notify the applicable 

Plaintiff of the results thereof,” and in Count II Plaintiffs assert a breach of contract 

claim on the basis that FSL’s “actions and omissions,” including its “‘sale’ of 

agreements known by FSL to be unenforceable to parties hostile to Plaintiffs,” 

92 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *21 (Mich. Cir. Ct. Oakland 

Cnty. 2022).

93 TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-07907 at *25-26 (D. 

Idaho. Ada Cnty. 2021), Ex. 9.

94 Id.

95 Am. Compl. ¶ 150.

96 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *18-21 (Mich. Cir. Ct. 

Oakland Cnty. 2022); TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-

07907 at *27-29 (D. Idaho. Ada Cnty. 2021).
25

constitute breaches of each Policy.97 But the Michigan and Idaho courts already 

rejected these arguments. 

The Michigan and Idaho courts both disagreed with the Borrowers’ position 

that the parties intended the Insurer’s right to a Loan assignment to be conditioned 

on the performance of an appraisal.98 The Michigan Court also rejected Plaintiff’s 

effort to recover breach of contract damages because the Policy provides that “the 

[Insurer] shall have no liability to [the Plaintiff] except to make payment to the 

Additional Insured in accordance with this Policy.”99 The Idaho Court similarly

found that the breach of contract claim was futile.

100 In addition, having concluded

the ICA was enforceable, the Idaho Court rejected the claim that FSL allegedly sold 

unenforceable agreements.101

In their declaratory judgment claim, Plaintiffs in Count I here also seek a 

declaration that “the Policies violate the illusory coverage doctrine, the antisubrogation rule, and the doctrine of reasonable expectations.”102 Plaintiffs raise 

97 Am. Compl. ¶¶ 140(l), 142.

98 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *23-25 (Mich. Cir. Ct. 

Oakland Cnty. 2022); TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-

07907 at *33 (D. Idaho. Ada Cnty. 2021). 

99 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *24-25 (Mich. Cir. Ct. 

Oakland Cnty. 2022).

100 TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-07907 at *33 (D. 

Idaho. Ada Cnty. 2021). 

101 Id.

102 Am. Compl. ¶ 140(m).
26

these issues again in Count III.103 But the Idaho District Court rejected the argument 

that the RVI Policies provide illusory coverage, holding “[t]he extent of coverage 

under the RVI Policies [was] clearly and unambiguously stated. It was not intended 

to directly benefit [the Borrowers].”104 Because the Borrower was not an intended 

beneficiary of the RVI Policy, the RVI Policy could not violate the anti-subrogation 

rule or the reasonable expectations doctrine.

In sum, the material issues decided by the Michigan and Idaho courts are 

identical to the issues raised in the Amended Complaint, and the Michigan and Idaho 

courts’ holdings preclude all Plaintiffs’ claims here. Plaintiffs did not attempt to 

identify any claims raised in the Amended Complaint that were not precluded by the 

contractual construction and legal rulings adopted in Michigan and Idaho.

2. The prior actions have been finally adjudicated on the merits.

Plaintiffs next argue collateral estoppel does not bar the claims in the 

Amended Complaint because the judgments in Michigan and Idaho have been 

appealed.105 That argument is not consistent with settled law. A final judgment in 

Delaware for purposes of collateral estoppel is the trial court’s final act in the case.106

103 Id. ¶¶ 145-47.

104 TJV Associates LLC v. RA2 Boise-Overland, LLC, et ano., No. CV0l-21-07907 at *30-31 (D. 

Idaho. Ada Cnty. 2021). 

105 Plaintiff RA2 Troy L.L.C filed a claim of appeal in the Michigan action on July 7, 2022. The 

judgment in the Idaho case was entered on July 19, 2022, and the notice of appeal was filed on 

August 8, 2022.

106 Tyson Foods, Inc. v. Aetos Corp. et. al., 809, A.2D 575, 579 (Del. 2002).
27

Moreover, under Delaware law, “a Delaware court will give the judgments of 

another state court the same preclusive effect as would a court in that state.”107

Collateral estoppel law in Idaho and Michigan is substantially the same as the law 

in Delaware.

108

 Delaware follows the majority rule that an appeal does not render a 

judgment non-final for purposes of res judicata or collateral estoppel. Michigan and 

Idaho law control the question of finality for purposes of this Court’s collateral 

estoppel analysis,

109 and Michigan and Idaho also follow the majority rule.110

Plaintiffs acknowledge this case law but nevertheless contend the Court 

should be “cautious” about applying collateral estoppel because the Michigan and 

107 Branson v. Branson, 2019 WL 193991, at *5 (citation and internal quotation omitted).

108 See Picatti v. Miner, 449 P.3d 403, 409 (Idaho 2019) (the doctrine of collateral estoppel under 

Idaho law bars re-litigation of an issue previously decided if “(1) the party against whom the earlier 

decision was asserted had a full and fair opportunity to litigate the issue decided in the earlier case; 

(2) the issue decided in the prior litigation was identical to the issue presented in the present action; 

(3) the issue sought to be precluded was actually decided in the prior litigation; (4) there was a 

final judgment on the merits in the prior litigation; and (5) the party against whom the issue is 

asserted was a party or in privity with a party to the litigation.”); Monat v. State Farm Ins. Co., 

677 N.W.2d 843, 844-47 (Mich. 2004) (holding that collateral estoppel applies under Michigan 

law where an issue essential to the judgment has been actually litigated and determined by a valid 

and final judgment and the party being bound or its privy had a full and fair opportunity to litigate 

the issue and also holding that mutuality of estoppel is not required where collateral estoppel is 

being asserted defensively).

109 See Defs.’ Op. Br. at 16; Branson v. Branson, 2019 WL 193991, at *5; Yucaipa, 2014 WL 

5509787 at *11.

110 See Wilson v. Brown, 2011 WL 55953, at *2 (Del. Super. Jan. 3, 2011) (“Delaware courts have 

rejected Plaintiffs’ argument that the appeal of a judgment renders it non-final for res judicata; 

Playtex Family Prods., Inc. v. St. Paul Surplus Lines Ins. Co., 564 A.2d 681, 684 n.2 (Del. Super. 

1989) (“the Courts of this state have indicated that the better view is that judgments on appeal are 

final for res judicata purposes.”); see also Maldonado v. Flynn, 417 A.2d 378, 384 (Del. Ch. 1980) 

(the “better view is that a judgment being appealed will support the application of the doctrine of 

res judicata”). See also Campbell v. Lake Hallowell Homeowners Ass'n, 852 A.2d 1029, 1039 (Ct. 

Spec. App. Md. 2004) (noting that the rule “that a pending appeal does not affect the finality of a 

judgment” is now “followed by a majority of the states,” including Delaware).
28

Idaho courts “glossed over” the contractual issues and their decisions may have been 

grounded in a concern that the rights of bona fide purchasers could be affected.

Plaintiffs do not specify how the Michigan and Idaho courts failed to adequately 

consider the contractual issues, and those decisions demonstrate the opposite is true. 

The Michigan Court specifically considered the relevant provisions of the RVI 

Policy, Articles V(a) and (d), and Section 8 of the ANIE, and ruled that “to the extent 

that Article V(d) of the Policy and Section 8 of the ANIE conflict, the Endorsement 

controls.”111

The Michigan Court also found “there is nothing stating the payment of a 

claim by the Insurer to the Lender discharges the Loan . . . because such a reading 

would render the assignment provisions meaningless, and it is well-settled that 

Courts must ‘give effect to every word, phrase, and clause in a contract and avoid 

an interpretation that would render any part of the contract surplusage or 

nugatory.’”

112 Plaintiffs point to nothing in the record indicating the parties in 

Michigan or Idaho were bona fide purchasers or that that fact, if true was dispositive 

or even essential to those courts’ decisions.

111 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *13-20 (Mich. Cir. Ct. 

Oakland Cnty. 2022).

112 Id. at 16-17.
29

3. Plaintiffs in this action are in privity with the Borrowers in the Michigan 

and Idaho actions.

Plaintiffs also resist application of the collateral estoppel doctrine under the 

theory that “only a small subset of the Plaintiffs in the Amended Complaint were 

parties in the Michigan and Idaho actions.”113 The analysis is not nearly so simple,

and the doctrine is not nearly so limited. Collateral estoppel bars parties to a previous 

action and anyone in privity with that party. “The concept of privity pertains to the 

relationship between a party to a suit and a person who was not a party but whose 

interest in the action was such that he will be bound by the final judgment as if he 

were a party.”

114

The relationship between Plaintiffs and the Borrower parties in Michigan and 

Idaho permits—and in fact requires—application of the collateral estoppel doctrine. 

Each Plaintiff in this action is in privity with the Michigan and Idaho Borrowers 

because Richard Sabella controls each of the Plaintiff entities, including those who 

were parties in Michigan and Idaho. 115 Courts routinely hold that entities under 

common control are in privity with each other for collateral estoppel purposes.116

113 Pls.’ Answ. Br. at 16.

114 Michell v. Cook, 2001 WL 1729136, *2 (Del. Super. Dec. 10, 2021).

115 See Brooks-Decl. ¶¶ 14-22.

116 Restatement (Second) Judgments §39; See, e.g., Household Int'l, Inc. v. Westchester Fire Ins 

Co., 286 F. Supp. 2d 369 (D. Del. 2003) (“In a parent-subsidiary context, a parent can be found to 

have controlled its subsidiary’s earlier lawsuit if the subsidiary represented the parent's interests 

and the parent directed the litigation.”); see also Gulf Power v. FCC, 669 F.3d 320, 323 (D.C. Cir. 

2012) (finding privity between sister entities); In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 

19 (1st Cir. 2003) (finding privity regardless of whether the entities were parent and subsidiary or 
30

The record in this case allows this Court to conclude at the motion to dismiss 

stage that Sabella controls each of the Plaintiff entities.117 First, in their reply to 

Defendants’ counterclaims, Plaintiffs admitted that each of the Plaintiff entities is 

controlled, directly or indirectly, by Richard Sabella.118 Second, in their Original 

Complaint, Plaintiffs attached a series of assignments in which various Borrower 

entities purported to assign their claims against FSL. Those assignments also 

confirm Mr. Sabella’s common control. 

For example, an assignment dated March 15, 2021, provides that the Michigan 

and Idaho Borrowers—RA2 Troy LLC, RA2 Boise-Fairview LLC, and RA2 BoiseOverland LLC—are each “a wholly or partially owned, direct or indirect, 

subsidiary” of RA2 Holdings LLC and are “controlled directly or indirectly by” RA2 

Holdings LLC. That assignment also provides RA2 Amherst LLC, RA2 BaltimoreHarford LLC, RA2 Battle Creek LLC, RA2 Bishop LLC, RA2 Broadview Heights 

LLC, RA2 Brook Park LLC, PVP Castor LLC, RA2 Gouverneur LLC, RA2 Hines 

LLC, PVP Krewston LLC, RA2 Lorain LLC, and RA2 Muskegon LLC are also each 

“a wholly or partially owned, direct or indirect, subsidiary” of RA2 Holdings LLC 

and are each “controlled directly or indirectly by” RA2 Holdings LLC. Mr. Sabella 

sister corporations); Cent. Transp., Inc. v. Four Phase Sys., Inc., 936 F.2d 256, 260, n. 2 (6th Cir. 

1991) (finding privity between three sister corporations owned by a common parent).

117 Am. Compl. ¶ 44; Ex. B.

118 Pls.’ Reply to Counterclaim ¶ 22. 
31

executed the Assignment on behalf of each entity.119 Each of those entities is a 

Plaintiff in this action. 120

Likewise, an assignment dated February 1, 2021, provides that GCC-RA 

Barea, LLC, GCC-RA Hodgenville, LLC, GCC-RA Bardstown, LLC, GCC-RA 

Cane Run, LLC, GCC-RA Orangeville LLC, and GCC-RA Paradise, LLC are each 

“a wholly or partially owned, direct or indirect, subsidiary of” Allerand Realty 

Holdings, LLC and are each “controlled directly or indirectly by” Allerand Realty 

Holdings, LLC. Mr. Sabella executed the Assignment on behalf of each entity.121

Again, each of those entities is a Plaintiff in this action.122

An assignment dated September 28, 2020, provides that PVP Aston, LLC, 

RA2 Flint, LLC, RA2 Marlinton LLC, RA2 Marysville, LLC, RA2 Orem, LLC, 

RA2 Stuarts Draft LLC, and RA2 Toledo, LLC are each “a wholly or partially 

owned, direct or indirect, subsidiary of” Allerand Realty Holdings, LLC and are each 

“controlled directly or indirectly by” Allerand Realty Holdings, LLC. Mr. Sabella 

executed the Assignment on behalf of each entity,

123 and each of those entities is a 

Plaintiff in this action.124

119 Brooks-Decl. ¶17; Ex. 11.

120 Compl. Ex. B.

121 Brooks-Decl. ¶17; Ex. 11.

122 Compl. ¶ 44; Ex. B.

123 Brooks-Decl. ¶17; Ex. 11.

124 Am. Compl. ¶ 44; Ex. B.
32

An assignment dated July 31, 2020, likewise provides that WEC 98D-26 LLC, 

WEC 98D-23 LLC, and WEC 98D-6 LLC are each “a wholly or partially owned, 

direct or indirect, subsidiary of” Allerand Realty Holdings, LLC and are each 

“controlled directly or indirectly by” Allerand Realty Holdings, LLC. Mr. Sabella 

executed the Assignment on behalf of each entity, and each of those entities is a 

Plaintiff in this action.125

In other words, each of the 34 plaintiffs in this action is directly or indirectly 

controlled by either RA2 Holdings LLC or Allerand Realty Holdings, LLC. Mr. 

Sabella manages Allerand Realty Holdings LLC,126 and he is “the controlling natural 

person and majority beneficial owner” of RA2 Holdings, LLC.127 Through his 

control of Allerand Realty Holdings LLC and RA2 Holdings LLC, Mr. Sabella 

therefore controls each of the 34 Plaintiffs in this proceeding, including the three 

Plaintiffs128 that were parties in the Michigan and Idaho Actions. 

This privity question is one the Court may consider at the pleadings stage 

because all the documents necessary to resolve the inquiry are attached to the 

pleadings or otherwise subject to judicial notice. The Court may consider the various 

assignments because those documents were attached to Plaintiffs’ original 

125 Brooks-Decl. ¶ 21.

126 Id., Ex. 13. 2022 Foreign Limited Liability Company Annual Report, No. 3927664315CC, filed 

by the Florida Secretary of State with the Florida Division of Corporations.

127 See Sabella Aff. ¶ 2.

128 RA2 Troy LLC, RA2 Boise-Fairview LLC, and RA2 Boise-Overland LLC.
33

complaint.129 Even after an amended complaint has been filed, the Court may take 

judicial notice of the exhibits attached to the original complaint.130 And the Court is 

permitted to take judicial notice of any “matters that are not subject to reasonable 

dispute.”131 Delaware Rule of Evidence 201(b)(2) provides that “[t]he court may 

judicially notice a fact that is not subject to reasonable dispute because it . . . can be 

accurately and readily determined from sources whose accuracy cannot reasonably 

be questioned.”132 Moreover, the court may take such judicial notice “at any stage 

of the proceeding.”133

Delaware courts consider publicly filed documents to constitute 

“sources whose accuracy cannot reasonably be questioned,” and they therefore 

routinely take judicial notice of such documents.134 “[T]he court also may take 

129 See Kim v. Coupang, LLC, 2021 WL 3671136, at *4 (Del. Ch. Aug. 19, 2021) (“In adjudicating 

a motion to dismiss, the Court may look to documents attached to the complaint”); In re Gardner 

Denver, Inc. S'holders Litig., 2014 WL 715705, at *2 (Del. Ch. Feb. 21, 2014) (On a motion to 

dismiss, the “universe of facts” that the court may consider include “any documents attached” to 

the complaint). Under Delaware law, the Court may also consider any facts subject to judicial 

notice. See Schuss v. Penfield Partners, L.P., 2008 WL 2433842, at *4 (Del. Ch. June 13, 2008) 

(“... when assessing a motion to dismiss for failure to state a claim, the court may consider ... 

facts subject to judicial notice.")

130 See Barnett v. York Cnty., 2011 WL 2790467, at *6 (M.D. Pa. June 24, 2011), report & 

recommendation adopted, 2011 WL 2791320 (M.D. Pa. July 14, 2011) (considering exhibits 

attached to original, superseded complaint); Ernst v. Child & Youth Servs. of Chester Cnty, 108 

F.3d 486, 498-99 (3d Cir. 1997) (holding that “the court may take judicial notice of its own records, 

especially in the same case”); In re Career Educ. Corp. Deriv. Litig., 2007 WL 2875203, at *9 

(Del. Ch. Sept. 28, 2007).

131 In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 169 (Del. 2006).

132 Del. R. Evid. 201(b)(2).

133 Id. 201(d).

134 See In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d at 169 (affirming trial court’s decision 

granting motion to dismiss in which the trial court took judicial notice of documents publicly filed 

with the SEC).
34

judicial notice of publicly filed documents, such as documents publicly filed in 

litigation pending in other jurisdictions.” The Court therefore takes judicial notice 

of the corporate filing regarding Allerand Realty Holdings LLC that the Florida 

Secretary of State filed with the Florida Division of Corporations and the Affidavit 

Mr. Sabella filed in court in Florida. 135

4. The Michigan Plaintiff and Idaho Borrowers had a full and fair 

opportunity to litigate the issues in those actions.

Finally, it is apparent that the parties had a full and fair opportunity to litigate 

the issues addressed in the Michigan and Idaho actions.

136 The decisions issued by 

those courts describe the cases’ procedural history and reflect that the parties had the 

opportunity to fairly present their positions. Those courts fully analyzed and

considered the parties’ multifaceted arguments.137 The Michigan Borrower moved 

for reconsideration of the April 22, 2022 decision but did not argue that it had lacked 

an opportunity to fully litigate the issues. Rather, it argued the Court erred in its 

analysis of the law regarding clogging the equity of redemption. The Michigan Court 

135 See Aequitas Sols., Inc., 2012 WL 2903324, at *3 (holding that court may take judicial notice 

of a declaration because it was a pleading filed in a California bankruptcy proceeding); In re 

Wheelabrator Tech. Inc. S’holders Litig., 1992 WL 212595 at *12 (Del. Ch. Sept. 1, 1992) 

(holding that “publicly filed documents [including certificate of incorporation] are judicially 

noticeable on a motion to dismiss.”).

136 First Nat'l Bank v. A.E. Simone & Co., 1998 WL 437147, *3 (Del. Super. May 18, 1998)

(holding that a “party has not had a full and fair opportunity if he or she was unable to present 

critical evidence in the initial proceeding”).

137 See Brooks-Decl. Exs. 5, 9.
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considered carefully that motion but determined its initial decision was correct.

138

The Michigan and Idaho actions were finally adjudicated on the merits, and RA2 

Troy LLC, RA2 Boise-Fairview LLC, and RA2 Boise-Overland LLC participated, 

through counsel, in the entire case. Accordingly, the final collateral estoppel element 

is met. 

CONCLUSION

For the foregoing reasons, Defendants’ Motion to Dismiss is GRANTED. 

Accordingly, Plaintiffs’ Motion for Partial Summary Judgment is DENIED AS 

MOOT. 

IT IS SO ORDERED. 

138 RA2 Troy LLC v. FI 135 Troy, LLC, et ano., No. 2021-189427-CB at *16-17 (Mich. Cir. Ct.

Oakland Cnty. 2022), Defs.’ Op. Br. Ex.6.