IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

CLEVELAND-CLIFFS BURNS 

HARBOR LLC, a Delaware limited 

liability company, and 

CLEVELAND-CLIFFS STEEL LLC, 

a Delaware limited liability company,

Plaintiffs,

v.

BOOMERANG TUBE, LLC, a Delaware

limited liability company, 

BLACK DIAMOND CAPITAL 

MANAGEMENT, L.L.C., a Delaware 

limited liability company, and 

PTC LIBERTY TUBULARS, LLC, a

Delaware limited liability company,

Defendants.

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C.A. No. 2022-0378-LWW

MEMORANDUM OPINION

Date Submitted: May 2, 2023

Date Decided: September 5, 2023

Kevin M. Capuzzi & Kate Harmon, BENESCH, FRIEDLANDER, COPLAN & 

ARONOFF LLP, Wilmington, Delaware; Andrew G. Fiorella & Nathan H. 

Boninger, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, 

Ohio; Counsel for Plaintiffs Cleveland-Cliffs Burns Harbor LLC and

Cleveland-Cliffs Steel LLC
Joseph B. Cicero & Thomas A. Youngman, CHIPMAN BROWN CICERO & 

COLE, LLP, Wilmington, Delaware; Jeffrey H. Zaiger & Judd Linden, ZAIGER 

LLC, New York, New York; Counsel for Defendant PTC Liberty Tubulars, LLC

David E. Ross, S. Michael Sirkin & Thomas C. Mandracchia, ROSS ARONSTAM 

& MORITZ LLP, Wilmington, Delaware; Counsel for Defendant Black Diamond 

Capital Management, L.L.C.

WILL, Vice Chancellor
Boomerang Tube, LLC was a producer of specialized tubing for oil and 

natural gas drilling rigs. Its business suffered alongside oil and gas prices during the 

height of the COVID-19 pandemic. It was unable to pay unsecured creditors, 

including the predecessor of Cleveland-Cliffs Burns Harbor LLC and ClevelandCliffs Steel LLC, which had sold Boomerang $7 million of goods.

In December 2020, an affiliate of Black Diamond Capital Management, 

L.L.C.—Boomerang’s purported controller—initiated an auction of Boomerang’s 

assets. According to Cleveland-Cliffs, the sale was a sham intended to place the

assets out of certain creditors’ reach. Notice of the auction was sent on Christmas 

Eve of 2020, with the sale occurring just ten days later. The purchaser, PTC Liberty 

Tubulars, LLC, is another Black Diamond affiliate. 

Cleveland-Cliffs maintains that PTC Liberty effectively became Boomerang

after the sale. PTC Liberty has the same ownership, officers, facilities, products, 

and customers that Boomerang once had. Conversely, Boomerang exists in name 

only.

Cleveland-Cliffs has now sued Boomerang, Black Diamond, and PTC Liberty

on varied (and novel) legal theories to recover the $7 million Boomerang owes it. 

Black Diamond and PTC Liberty insist that Cleveland-Cliffs is nothing more than 

an unsecured creditor trying to collect from the wrong entities. But, given the shady 

circumstances surrounding the asset sale, that may be an oversimplification.
2

As described below, Black Diamond’s motion to dismiss is granted in full. 

None of Cleveland-Cliffs’ claims against Black Diamond are viable, primarily 

because veil piercing is unavailable. As to PTC Liberty, however, Cleveland-Cliffs’

allegations support reasonably conceivable fraudulent transfer and successor 

liability claims. The remaining claims against PTC Liberty are dismissed.

I. FACTUAL BACKGROUND

Unless otherwise noted, the following facts are drawn from the plaintiffs’ 

Verified Amended Complaint (the “Complaint”) and the documents it incorporates 

by reference.1 

A. Boomerang’s Bankruptcy 

Boomerang Tube, LLC (“Boomerang”) is a Delaware limited liability 

company with its principal place of business in Texas or Missouri.2 Boomerang 

produced highly engineered oil country tubular goods for natural gas and crude oil 

drilling markets in the United States and Canada.3 On June 9, 2015, Boomerang and 

1 Verified Am. Compl. (Dkt. 18) (“Am. Compl.”); see In re Books-A-Million, Inc. 

S’holders Litig., 2016 WL 5874974, at *1 (Del. Ch. 2016) (explaining that the court may 

take judicial notice of “facts that are not subject to reasonable dispute” (citing In re Gen. 

Motors (Hughes) S’holder Litig., 897 A.2d 162, 170 (Del. 2006))).

2 Am. Compl. ¶ 12.

3

Id. ¶ 20.
3

its affiliated debtors filed for bankruptcy.4 Boomerang emerged from bankruptcy 

under a confirmed Chapter 11 plan in January 2016.5 

Under the Chapter 11 plan, Black Diamond Capital Management, L.L.C. 

(“Black Diamond”) became Boomerang’s majority owner.

6

 Black Diamond, a 

Delaware limited liability company with headquarters in Connecticut, is an 

alternative asset management firm specializing in high-yield credit, stressed and 

distressed credit, restructurings, and business turnarounds.7 The Chapter 11 plan 

also gave Black Diamond “exclusive control over the election of” a majority of the 

members of Boomerang’s board of directors.

8

 Black Diamond appointed four of its 

own employees to the board, with one of its Senior Managing Directors later serving 

as Chairman.9 Black Diamond was also a senior secured creditor of Boomerang.10

B. Boomerang’s Purchases from ArcelorMittal

Between June and November 2020, Boomerang conducted business with 

ArcelorMittal Burns Harbor LLC and ArcelorMittal USA LLC (together, 

4

Id. ¶ 21.

5

Id. ¶ 23.

6

Id. ¶¶ 24, 26.

7

Id. ¶¶ 15, 19.

8

Id. ¶ 24.

9

Id. ¶ 25.

10 Id. ¶ 5.
4

“ArcelorMittal”) pursuant to a Terms & Conditions of Sale agreement (the 

“Terms & Conditions Agreement”).11 In total, Boomerang purchased $7,355,585.91 

worth of goods from ArcelorMittal but failed to pay for certain orders and defaulted 

on the associated invoices (the “Unpaid Invoices”).12 

C. Cleveland-Cliffs’ Purchase of ArcelorMittal

On or around December 9, 2020, Cleveland-Cliffs Burns Harbor LLC and 

Cleveland-Cliffs Steel LLC (together, “Cleveland-Cliffs”) acquired ArcelorMittal.13 

ArcelorMittal’s rights and accounts associated with Boomerang were transferred to 

Cleveland-Cliffs.14 As such, Cleveland-Cliffs became ArcelorMittal’s successor-ininterest with respect to the Terms & Conditions Agreement.15

 

Boomerang remained delinquent on the Unpaid Invoices.16 Shortly after 

Cleveland-Cliffs acquired ArcelorMittal, Boomerang sought to purchase another 

$1.5 million of goods from Cleveland-Cliffs.17 Boomerang indicated that it had 

11 Id. ¶¶ 30-31, 33; Am. Compl. Ex. 2.

12 Am. Compl. ¶¶ 31, 38-40; Am. Compl. Ex. 1.

13 Am. Compl. ¶ 41. Cleveland-Cliffs Steel is the parent company of Cleveland-Cliffs 

Burns Harbor. Id. ¶ 11.

14 Id. ¶ 41.

15 Id.

16 Id. ¶ 43.

17 Id. ¶ 44.
5

“Black Diamond[’]s blessing” to do so.18 Cleveland-Cliffs declined to sell the goods 

to Boomerang.19

D. Boomerang’s Article 9 Sale 

On December 24, 2020 (Christmas Eve), Black Diamond Commercial 

Finance, L.L.C., as administrative agent for Boomerang’s secured creditors, gave 

notice of a foreclosure sale under Article 9 of New York’s Uniform Commercial 

Code (UCC).

20

 Black Diamond Commercial Finance is a subsidiary of Black 

Diamond.21 The notice stated that the assets of Boomerang and its affiliates would 

be sold in a public auction.22 Bids were due within ten days—by Sunday January 3, 

2021—and the auction would occur on January 4.23 The notice also explained that 

Boomerang owed approximately $110 million “to Black Diamond Commercial 

Finance and an unnamed group of lenders.”

24

 Boomerang did not provide notice of 

the sale to Cleveland-Cliffs.25

18 Id.

19 Id.

20 Id. ¶¶ 45-47; Am. Compl. Ex. 3 (“Notice”). 

21 Am. Compl. ¶ 46.

22 Id. ¶ 47; see id. ¶ 48 (stating that the sale included “all accounts, chattel paper, equipment, 

fixtures, general intangibles, inventory and other personal property, wheresoever located, 

together with the proceeds thereof” (quoting Notice at 2)).

23 Id. ¶¶ 50, 52.

24 Id. ¶ 47; see Notice at 3.

25 Am. Compl. ¶ 53.
6

The public auction occurred as scheduled on January 4.26 Two bidders 

appeared: 2021 Bidco I, LLC and Centric Pipe, LLC.27 Bidco—now renamed PTC 

Liberty Tubulars, LLC (“PTC Liberty”)—is a Delaware limited liability company 

with its principal place of business in Texas or Pennsylvania.28 PTC Liberty is “an 

affiliate of Black Diamond.”

29

Centric Pipe initially submitted a bid.30 But after learning that the competing 

bidder was affiliated with Black Diamond, Centric Pipe bowed out of the auction.31 

Bidco submitted the winning $16.5 million bid for all of Boomerang’s assets.32 The 

agreement between Black Diamond Commercial Finance as foreclosing seller, and 

Bidco as buyer, was memorialized in an Asset Purchase Agreement (the “APA”).33 

Black Diamond’s General Counsel executed the APA on behalf of Bidco.34

26 Id. ¶ 54.

27 Id. ¶ 55; Am. Compl. Ex. 4.

28 Am. Compl. ¶¶ 14, 56.

29 Id. ¶ 56.

30 Am. Compl. Ex. 4 at 12.

31 Am. Compl. ¶ 59.

32 Id. ¶ 60.

33 Id. ¶ 61; Am. Compl. Ex. 5.

34 Am. Compl. ¶¶ 62, 79; Am. Compl. Ex. 5 at 10.
7

E. PTC Liberty’s Post-Sale Operations

After the foreclosure sale, Boomerang allegedly ceased to exist as anything 

other than a shell entity.35 It “is no longer in good standing with the Delaware 

Department of State and has failed to timely pay its annual taxes.”

36

 It has yet to 

appear in this action.

PTC Liberty effectively replaced Boomerang.37 PTC Liberty operates the two 

manufacturing facilities once run by Boomerang.38 PTC Liberty has the same 

officers, manufactures and sells the same products to the same customers, uses the 

same equipment at the same facilities, and employs the same individuals as 

Boomerang.39 Boomerang’s former website and PTC Liberty’s current website give 

nearly identical descriptions of the companies.40 And, like Boomerang, PTC Liberty 

“remains under the ownership and control of Black Diamond and its affiliates.”

41

 

35 Am. Compl. ¶¶ 68, 93.

36 Id. ¶ 69.

37 Id. ¶¶ 73-81.

38 Id. ¶ 76.

39 Id. ¶¶ 75, 81.

40 Id. ¶ 77. For example, PTC Liberty’s website proclaims that it was established in 2008—

the date of Boomerang’s establishment. Id. ¶ 78.

41 Id. ¶ 79.
8

More specifically, PTC Liberty is “supervise[d] and operate[d]” by PTC Alliance, 

which is “owned by Black Diamond.”

42

F. The Demand Letter

On May 24, 2021, Cleveland-Cliffs sent a letter to Boomerang, Black 

Diamond, and PTC Liberty, demanding payment for the Unpaid Invoices.43 The 

parties attempted to resolve the matter.44 On June 9, they executed a tolling 

agreement that preserved all claims and defenses through August 6.45 The tolling 

period was extended until April 29, 2022, but no resolution was reached.46

G. This Litigation 

On April 29, 2022, Cleveland-Cliffs filed this action against Black Diamond, 

PTC Liberty, and Boomerang.47 Black Diamond and PTC Liberty separately moved 

for dismissal on May 25.48 Boomerang, which was served with the complaint on 

May 6, has yet to appear.49

42 Id. ¶ 80.

43 Id. ¶ 82; Am. Compl. Ex. 7.

44 Am. Compl. ¶ 83.

45 Id. ¶ 84.

46 Id. ¶¶ 84-87.

47 Dkt. 1. 

48 Dkts. 7-8.

49 See Dkt. 5.
9

On July 29, 2022, Cleveland-Cliffs filed a Verified Amended Complaint (the 

“Complaint”) advancing six counts.50 Count I is styled as a claim for successor 

liability against Black Diamond and PTC Liberty concerning Boomerang’s Unpaid 

Invoices.51 Count II is a fraudulent transfer claim under the Delaware Uniform 

Fraudulent Transfer Act (DUFTA) against all three defendants concerning 

Boomerang’s foreclosure sale.52 Count III seeks a declaratory judgment that 

Boomerang, PTC Liberty, and Black Diamond are each liable for Boomerang’s 

obligations to Cleveland-Cliffs based on veil piercing theories.

53

 Count IV is a claim 

against Boomerang for breach of the Terms & Conditions Agreement.54 Count V is 

an unjust enrichment claim against all three defendants.55 And Count VI seeks a 

declaratory judgment that Boomerang’s foreclosure sale was neither commercially 

reasonable nor compliant with Article 9 of the New York UCC.

56

 

50 Dkt. 18. 

51 Am. Compl. ¶¶ 89-96.

52 Id. ¶¶ 97-102.

53 Id. ¶¶ 106, 103-13.

54 Id. ¶¶ 114-21.

55 Id. ¶¶ 122-27.

56 Id. ¶¶ 128-32.
10

On September 23, Black Diamond and PTC Liberty each moved to dismiss 

the Complaint.57 Boomerang (again) did not respond. After briefing was complete, 

I heard oral argument on the motions to dismiss on May 2, 2023.58

II. LEGAL ANALYSIS 

The defendants’ motions to dismiss for failure to state a claim on which relief 

can be granted are governed by Court of Chancery Rule 12(b)(6). The standard that 

applies is as follows:

(i) all well-pleaded factual allegations are accepted as true; 

(ii) even vague allegations are “well-pleaded” if they give the 

opposing party notice of the claim; (iii) the Court must draw all 

reasonable inferences in favor of the non-moving party; and 

[(iv)] dismissal is inappropriate unless the “plaintiff would not 

be entitled to recover under any reasonably conceivable set of 

circumstances susceptible of proof.”59

The “pleading standards for purposes of a Rule 12(b)(6) motion ‘are 

minimal.’”60 The “reasonable conceivability” standard a plaintiff must meet to 

survive a Rule 12(b)(6) motion asks only “whether there is a ‘possibility’ of 

57 Dkts. 23-24.

58 Dkts. 42-43. 

59 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (citations omitted). 

60 In re China Agritech, Inc. S’holder Deriv. Litig., 2013 WL 2181514, at *23 (Del. Ch. 

May 21, 2013) (quoting Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 

A.3d 531, 536 (Del. 2011)). 
11

recovery.”61 I “must draw all reasonable inferences in favor” of the plaintiff but am 

“not required to accept every strained interpretation of the [plaintiff’s] allegations.”62

I begin by assessing Cleveland-Cliffs’ request for veil piercing, since it affects 

my analysis of other claims. After concluding that veil piercing is unavailable, I 

determine that Cleveland-Cliffs has stated viable claims for fraudulent transfer and 

successor liability against PTC Liberty. Its remaining claims are dismissed.

A. Veil Piercing

In Count III of the Complaint, Cleveland-Cliffs seeks a declaratory judgment 

that “Boomerang, PTC Liberty, and Black Diamond are legally indistinguishable 

and are each equally liable for Boomerang’s obligations to Cleveland-Cliffs.”63 

Read literally, this assertion would involve three distinct types of veil piercing based 

on an agency or “alter ego” theory: (1) traditional veil piercing from Boomerang and 

PTC Liberty up the chain to Black Diamond; (2) reverse veil piercing down the chain 

from Black Diamond to Boomerang and PTC Liberty; and (3) horizontal (also called 

sideways or sister) veil piercing between Boomerang and PTC Liberty. Only the 

first type—traditional veil piercing—is squarely addressed in Cleveland-Cliffs’

61 China Agritech, 2013 WL 2181514, at *24 (quoting Cent. Mortg., 27 A.3d at 537 n.13). 

62 Gen. Motors (Hughes), 897 A.2d at 168.

63 Am. Compl. ¶ 106.
12

brief.64 The Complaint also makes a vague reference to enterprise liability, which is

unbriefed.

65

 Each theory is either deficient or waived. 

1. Traditional Veil Piercing

“It is a general principle of corporate law deeply ‘ingrained in our economic 

and legal systems’ that a parent corporation (so-called because of control through 

ownership of another corporation’s stock) is not liable for the acts of its 

subsidiaries.”66 Delaware courts depart from this general rule only in exceptional 

circumstances.67

In the parent/subsidiary context, one exception is the alter ego doctrine—

where the subsidiary and the parent “operate[] as a single economic entity such that 

64 See Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are 

deemed waived.”).

65 Am. Compl. ¶ 9.

66 United States v. Bestfoods, 524 U.S. 51, 61 (1998) (citation omitted); see also Nieves v. 

Insight Bldg. Co., 2020 WL 4463425, at *8 (Del. Ch. Aug. 4, 2020) (“A subsidiary 

corporation is presumed to be a separate and distinct entity from its parent corporation.”)

(citation omitted).

67 Paul Elton, LLC v. Rommel Delaware, LLC, 2020 WL 2203708, at *14 (Del. Ch. May 

7, 2020) (“Delaware public policy disfavors disregarding the separate legal existence of 

business entities.”); see also Wallace v. Wood, 752 A.2d 1175, 1184 (Del. Ch. 1999) 

(“Persuading a Delaware court to disregard the corporate entity is a difficult task.”); 

Verdantus Advisors, LLC v. Parker Infrastructure P’rs, LLC, 2022 WL 611274, at *2 (Del. 

Ch. Mar. 2, 2022) (“Veil piercing is a tough thing to plead and a tougher thing to get, and 

for good reason.”).
13

it would be inequitable for th[e] Court to uphold a legal distinction between them.”68

Piercing the corporate veil under this doctrine “requires that the corporate structure 

cause fraud or similar injustice.”69 The subsidiary “must be a sham and exist for no 

other purpose than as a vehicle for fraud.”70 

Delaware courts consider various factors in assessing whether to disregard the 

corporate form, including: “(1) whether the company was adequately capitalized for 

the undertaking; (2) whether the company was solvent; (3) whether corporate 

formalities were observed; (4) whether the dominant shareholder siphoned company 

funds; and (5) whether, in general, the company simply functioned as a facade for 

the dominant shareholder.”71 No single factor is dispositive.72 Rather, “[a]n ultimate 

68 Manichaean Cap., LLC v. Exela Techs., Inc., 251 A.3d 694, 707 (Del. Ch. 2021) (quoting 

Mabon, Nugent & Co. v. Texas Am. Energy Corp., 1990 WL 44267, at *5 (Del. Ch. Apr. 

12, 1990)).

69 Wallace, 752 A.2d at 1184 (observing that veil piercing “requires that the corporate 

structure cause fraud or similar injustice” and that “[e]ffectively, the corporation must be 

a sham and exist for no other purpose than as a vehicle for fraud” (quoting Outokumpu 

Eng’g Enters., Inc. v. Kvaerner Enviropower, Inc., 685 A.2d 724, 729 (Del. Super. 1996))).

70 Wallace, 752 A.2d at 1184; see also In re Sunstates Corp. S’holder Litig., 788 A 2.d 530, 

534 (Del. Ch. 2001).

71 Manichaean, 251 A.3d at 706 (quoting Doberstein v. G-P Indus., Inc., 2015 WL 

6606484, at *4 (Del. Ch. Oct. 30, 2015)).

72 Id. at 707.
14

decision regarding veil-piercing is largely based on some combination of these 

factors, in addition to ‘an overall element of injustice or unfairness.’”73 

Only the second factor is satisfied as to Boomerang, which was left insolvent 

after the Article 9 sale.74 There are no allegations about PTC Liberty’s solvency.75 

The remaining factors are unmet.

Regarding the first and third factors, Cleveland-Cliffs has not alleged that

Boomerang or PTC Liberty was “[in]adequately capitalized for the undertaking” or 

failed to observe corporate formalities.76 And other than a conclusory assertion that 

73 Id.; see Crosse v. BCBSD, Inc., 836 A.2d 492, 497 (Del. 2003) (“To state a ‘veil-piercing 

claim,’ the plaintiff must plead facts supporting an inference that the corporation, through 

its alter-ego, has created a sham entity designed to defraud investors and creditors.”); 

Wenske v. Blue Bell Creameries, Inc., 2018 WL 3337531, at *15 (Del. Ch. July 6, 2018) 

(dismissing a veil piercing claim where there were no facts supporting an inference that the 

corporation “exists solely as a vehicle for fraud”); Gadsden v. Home Pres. Co., 2004 WL 

485468, at *4 (Del. Ch. Feb. 20, 2004, revised Mar. 12, 2004) (“A court of equity will 

disregard the separate legal existence of a corporation where it is shown that the corporate 

form has been used to perpetrate a fraud or similar injustice.”); see also United States v. 

Golden Acres, Inc., 702 F. Supp. 1097, 1104 (D. Del. 1988) (“[N]o single factor could 

justify a decision to disregard the corporate entity, but . . . some combination of them [is] 

required, and . . . an overall element of injustice or unfairness must always be present, as 

well.”), aff’d, 879 F.2d 860 (3d Cir. 1989) (TABLE).

74 Am. Compl. ¶ 67.

75 If anything, Cleveland-Cliffs asserts otherwise. See id. ¶ 76 (alleging that “PTC Liberty 

now operates . . . two manufacturing plants”).

76 Manichaean, 251 A.3d at 706. At oral argument, counsel for Cleveland-Cliffs conceded 

that corporate formalities were likely observed. Tr. of Oral Arg. on Defs.’ Mots. to Dismiss 

(Dkt. 43) (“Hr’g Tr.”) 73 (“I would suspect, given the counsel that’s here and the counsel 

that was representing the companies, that all corporate formalities were observed. I think 

there’s no question about that.”).
15

Black Diamond was “on both sides of the purported sale transaction,” there is no 

allegation that Black Diamond siphoned funds from Boomerang or PTC Liberty (the 

fourth factor).

77

Cleveland-Cliffs also falls short of satisfying the fifth factor. With respect to 

Boomerang, Cleveland-Cliffs avers that Black Diamond was Boomerang’s

“majority owner” and appointed four of its employees to Boomerang’s sevenmember board.

78 But “[a] parent corporation is not liable for the acts of its subsidiary 

merely because it owns (and votes) a majority of the subsidiary’s stock or shares 

common shareholders, directors or officers with the subsidiary.”79 As to PTC 

Liberty, the fact that Black Diamond’s General Counsel was PTC Liberty’s

representative and signatory on the APA is insufficient to support an inference that 

the two entities are alter egos.80 It is a “well established principle [of corporate law] 

77 Am. Compl. ¶ 5. This assertion yields a circular argument: Black Diamond was not on 

either side of the Article 9 sale unless the separate corporate existences of the entities are 

ignored. At argument, Cleveland-Cliffs averred that the siphoning factor is met because 

Black Diamond purportedly put its secured debt ahead of other creditors. Hr’g Tr. 73. 

Even if the allegations in the Complaint could be read to support this contention, the 

balance of factors would still weigh against veil piercing.

78 Am. Compl. ¶¶ 5, 24.

79 Wenske, 2018 WL 5994971, at *6 (“Nor will conclusory allegations that the parent’s 

management exclusively dominated and controlled the subsidiary’s management suffice to 

state a claim for veil-piercing.”).

80 See Am. Compl. ¶¶ 62, 79; APA § X.3. Cleveland-Cliffs’ allegation that “PTC Liberty

has the same ownership, the same officers, manufactures and sells the same products to the 

same customers, uses the same equipment at the same facilities, and uses the same 
16

that directors and officers holding positions with a parent and its subsidiary can and 

do ‘change hats’ to represent the two corporations separately, despite their common 

ownership.”

81 Black Diamond does not even directly oversee PTC Liberty’s 

business. Rather, PTC Alliance “supervise[s] and operate[s] PTC Liberty.”82 Black 

Diamond, in turn, “own[s]” PTC Alliance.83 

On balance, these factors weigh against viewing Black Diamond as a single 

economic entity with Boomerang or PTC Liberty. But even if it were reasonably 

conceivable that Cleveland-Cliffs could satisfy certain factors, its own allegations 

subvert the notion that Black Diamond is indistinguishable from PTC Liberty or

Boomerang. At the parent level, Cleveland-Cliffs describes Black Diamond as an 

alternative asset management firm based in Connecticut.84 At the subsidiary level, 

Boomerang and PTC Liberty purportedly operate tubular goods businesses from a

Texas location and have manufacturing facilities, employees, products, and 

customers.

85

 These facts not only belie any inference that Boomerang or PTC 

employees previously used by Boomerang” is irrelevant to veil piercing vis-à-vis these 

entities and Black Diamond. Am. Compl. ¶ 75 (emphasis added).

81 Bestfoods, 524 U.S. at 69 (citation omitted).

82 Am. Compl. ¶ 80.

83 Id.

84 Id. ¶¶ 15, 19.

85 Id. ¶¶ 7, 75-76. The allegation that Boomerang sought to purchase an additional $1.5 

million worth of goods from Cleveland-Cliffs with “Black Diamond[’]s blessing” is 

another acknowledgement of Black Diamond and Boomerang’s separateness. Id. ¶ 44.
17

Liberty functioned as a single economic entity with Black Diamond.86 They also 

make it unreasonable to infer that Boomerang or PTC Liberty are sham entities.87

In terms of the fraud or injustice inquiry, Cleveland-Cliffs’ contentions center 

on the Article 9 sale that it claims was a fraudulent transfer.

88

 The fraud or injustice 

must, however, “come from an inequitable use of the corporate form itself as a sham, 

and not from the underlying claim.”89 “To hold otherwise would render the fraud or 

injustice element meaningless, and would sanction bootstrapping.”90

86 See Altabef v. Neugarten, 2021 WL 5919459, at *12 (Del. Ch. Dec. 15, 2021) (rejecting 

a conclusory alter ego allegation where the plaintiff acknowledged that the company had 

actual business operations). 

87 See Crosse, 836 A.2d at 497 (“[T]he plaintiff must plead facts supporting an inference 

that the corporation, through its alter-ego, has created a sham entity designed to defraud 

investors and creditors.”) (citation omitted).

88 See Pls.’ Combined Answering Br. in Opp’n to Defs.’ Mots. to Dismiss (Dkt. 30) (“Pls.’ 

Answering Br.”) 54-55 (“Black Diamond abused the corporate form by transferring assets 

between two of its affiliate entities[.]”).

89 EBG Hldgs. LLC v. Vredezicht’s Gravenhage 109 B.V., 2008 WL 4057745, at *12 (Del. 

Ch. Sept. 2, 2008); see also Medi-Tec of Egypt Corp. v. Bausch & Lomb Surgical, 2004 

WL 415251, at *4 (Del. Ch. Mar. 4, 2004) (explaining that the plaintiff must allege facts 

showing “that the corporate form in and of itself operates to serve some fraud or injustice, 

distinct from the alleged wrongs”).

90 Mobil Oil Corp. v. Linear Films, Inc., 718 F. Supp. 260, 268 (D. Del. 1989); see also

Sears, Roebuck & Co. v. Sears plc, 744 F. Supp. 1297, 1305 (D. Del. 1990) (“[T]he alleged 

fraud or inequity must be distinct from the tort alleged in the complaint.”); Yu v. GSM

Nation, LLC, 2017 WL 2889515, at *4 (Del. Ch. July 7, 2017) (characterizing an alter ego 

veil piercing claim brought in parallel to a viable DUFTA claim as an “attempt to bootstrap 

a legal claim into the Court of Chancery’s jurisdiction through the ‘invocation of familiar 

chancery terms”’) (citation omitted).
18

Thus, Black Diamond cannot be held liable for the Unpaid Invoices through 

veil piercing. Cleveland-Cliffs has failed to demonstrate that Black Diamond 

functions a single economic entity with Boomerang or PTC Liberty. If anything, the 

Complaint suggests the opposite. It has also not shown that Boomerang or PTC 

Liberty exists solely to perpetrate fraud. 

2. Other Veil Piercing Theories

Cleveland-Cliffs does not explicitly seek to recover based on reverse or 

horizontal veil piercing or enterprise liability. These theories were unbriefed and 

therefore waived.91 Regardless, each would fail on the merits.

“The natural starting place when reviewing a claim for reverse veil-piercing 

are the [five] traditional factors Delaware courts consider when reviewing a 

traditional veil-piercing claim.”92 “The court should then ask whether the owner is 

utilizing the corporate form to perpetuate fraud or an injustice.”93 Horizontal veil 

piercing and enterprise liability—which have not been adopted in Delaware—would 

seemingly also require a prerequisite finding of traditional veil piercing.94 Because 

91 See Emerald P’rs, 726 A.2d at 1224.

92 Manichaean, 251 A.3d at 714.

93

 Id. at 714-15 (describing additional factors to consider in reverse veil piercing).

94 See 1 William Meade Fletcher et al., Fletcher Cyc. Corps. § 43 (perm. ed., rev. vol. 

2022), Westlaw (database updated Sept. 2022) (“If sister entities share common 

shareholders, owners, or parents, ‘horizontal veil piercing’ might be allowed if the veils 

separating each entity from the parent or common owners are first pierced to find that each 

sister entity is the alter ego of its owners.”); see also David J. Marchitelli, Disregard of 
19

Cleveland-Cliffs has not pleaded a viable basis for traditional veil piercing, these 

other theories are likewise defective. 

B. Fraudulent Transfer

In Count II of the Complaint, Cleveland-Cliffs asserts that Boomerang, Black 

Diamond, and PTC Liberty are liable for a fraudulent transfer under DUFTA.

Specifically, it advances constructive fraudulent transfer and actual fraudulent 

transfer theories against Boomerang (the transferor) and PTC Liberty (the 

transferee).

95

 Cleveland-Cliffs further alleges that Black Diamond is liable as a 

transfer beneficiary under Section 1308(b)(1).

96

 

Separate Existence of Corporations Under Single Business Enterprise Theory, 50 A.L.R.

7th art. 2 (2020), Westlaw (database updated weekly) (discussing case law); Sentry Supply 

Inc. v. NLMK N. Am. Plate LLC, 2019 WL 1388793, at *5 (W.D. La. Mar. 27, 2019) 

(“Delaware has not adopted the single business enterprise doctrine as a means of piercing 

the corporate veil.”); cf. Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1043 n. 

59 (Del. Ch. 2006) (“As I understand the tests for enterprise liability used in some states, 

they are not markedly more certain than the traditional veil piercing or alter ego inquiries.”)

(citation omitted).

95 Am. Compl. ¶¶ 99-101. Constructive fraudulent transfer is codified at 6 Del. C. 

§§ 1304(a)(2), 1305(a), and 1305(b). Actual fraudulent transfer is codified at 6 Del. C. 

§ 1304(a)(1). 

96 Id. ¶¶ 6-7. A careful read of the Complaint reveals hints of a constructive fraudulent 

transfer claim under Section 1305(b). Id. ¶ 101(e). This provision of the statute “renders 

a preferential transfer—i.e., a transfer by an insolvent debtor for or on account of an 

antecedent debt—to an insider vulnerable as a fraudulent transfer when the insider had 

reasonable cause to believe that the debtor was insolvent.” Wilm. Sav. Fund Soc., FSB v. 

Kaczmarczyk, 2007 WL 704937, at *7 (Del. Ch. Mar. 1, 2007) (citation omitted). 

Cleveland-Cliffs makes no mention of any such claim in its brief, thereby waiving it. See 

Emerald P’rs, 726 A.2d at 1224. Regardless, Boomerang is not alleged to owe any 

antecedent debt to PTC Liberty. See Kaczmarczyk, 2007 WL 704937, at *8 (“[T]he phrase 
20

As a threshold matter, it is reasonably conceivable that the Article 9 sale was 

a transfer under DUFTA. Cleveland-Cliffs has sufficiently pleaded constructive 

fraudulent transfer (under Sections 1304(a)(2) and 1305(a)) and actual fraudulent 

transfer (under Sections 1304(a)(1)) claims against PTC Liberty. Its transfer 

beneficiary claim against Black Diamond, however, is dismissed.

1. Qualifying “Transfers” of “Assets”

DUFTA applies to “transfers,” which are defined by the statute as “every 

mode . . . of disposing of or parting with an asset or an interest in an asset.”97 An 

“asset” is “property of a debtor,” but excludes “[p]roperty to the extent it is 

encumbered by a valid lien.”98 And a “valid lien” “means a lien that is effective 

against the holder of a judicial lien subsequently obtained by legal or equitable 

process or proceedings.”99 Thus, for a transaction to qualify as a “transfer” of 

“assets” under DUFTA, the value of the transferred property must exceed the value 

of any valid liens.100 

‘antecedent debt’ in section 1305(b) . . . refer[s] to a debt owed by the transferor to the 

insider transferee.”).

97 6 Del. C. § 1301(12). 

98 Id. § 1301(2)(a).

99 Id. § 1301(13).

100 See Rsrvs. Mgmt. Corp. v. 30 Lots, LLC, 2009 WL 4652991, at *5 (Del. Super. Nov. 

30, 2009) (concluding that because the “mortgage lien was valid and exceeded the value 

of the property, the lots [we]re not an ‘asset’” and the “mortgage foreclosure sale was not

. . . a ‘transfer’ by the debtor that the Act recognizes”); see also In re Valente, 360 F.3d 

256, 260 (1st Cir. 2004) (holding that because a “property was only worth $150,000 but 
21

PTC Liberty argues that Boomerang’s foreclosure sale is not a qualifying 

“transfer” of “assets.”101 It avers that Boomerang’s assets were encumbered by $126 

million in valid liens, including $110 million owed pursuant to a term credit 

agreement and $16 million owed to a bank.

102

 But to dismiss the claim on this basis

would require me to reject well-pleaded allegations in the Complaint and draw 

inferences against Cleveland-Cliffs. At present, I can do neither.103

Cleveland-Cliffs has sufficiently pleaded that the value of the transferred 

assets exceeds $126 million. The Complaint includes allegations that Boomerang’s 

inventory and raw goods were worth $27.5 million, that its Liberty, Texas plant 

housed $100 million worth of equipment, and that its Houston, Texas plant held

state-of-the art equipment of unspecified value.104 Cleveland-Cliffs also avers that 

was encumbered by a $168,000 first mortgage, as well as a number of state and federal tax 

liens, it did not qualify as an ‘asset’ under the UFTA at the time of the transfer”); Mussetter 

v. Lyke, 10 F. Supp. 2d 944, 958 (N.D. Ill. 1998) (“Uniform case law confirms the selfevident proposition that the unencumbered portion of a debtor’s property is an ‘asset’ for 

UFTA purposes.”), aff’d, 202 F.3d 274 (7th Cir. 1999). The “DUFTA is modeled on UFTA 

[Uniform Fraudulent Transfer Act], a uniform act, [so] the decisions of other jurisdictions 

interpreting the same (or substantially similar) model statutes [are appropriate] guidance.” 

Burkhart v. Genworth Fin., Inc., 275 A.3d 1259, 1270 (Del. Ch. 2022).

101 Def. PTC Liberty Tubular, LLC’s Opening Br. in Supp. of Mot. to Dismiss (Dkt. 24)

(“PTC Liberty’s Opening Br.”) 13-17.

102 Notice at 2-3; Am. Compl. ¶ 65.

103 See Savor, 812 A.2d at 896-97.

104 Am. Compl. ¶¶ 28-29, 64.
22

during the bankruptcy proceeding, Boomerang was valued at over $300 million.105 

Based on these facts, it is reasonably conceivable that the value of the assets sold 

during the Article 9 sale exceeded that of any valid liens.106

2. Constructive Fraudulent Transfer

Sections 1304(a)(2) and 1305(a) provide causes of action for constructive 

fraudulent transfer.107 To state a claim under either provision, a plaintiff must allege 

“(i) that the transferor failed to receive reasonably equivalent value for the asset 

transferred; and (ii) that the transferor was insolvent at the time of the transfer, or 

was rendered insolvent by the transfer.”108 Cleveland-Cliffs is not required to plead

105 Id. ¶ 64.

106 Further factual development is necessary to determine the value of the assets. Cf. Ryan 

Racing, LLC v. Gentilozzi, 2015 WL 728468, at *9 (W.D. Mich. Feb. 19, 2015) (denying 

summary judgment where “[t]here [we]re significant factual disputes concerning which 

loans to consider and what value should be ascribed to [the transferred] assets”). 

107 The difference between DUFTA Sections 1304(a)(2) and 1305(a) is that the latter 

“provides a cause of action only to present creditors.” Quadrant Structured Prod. Co. v. 

Vertin, 102 A.3d 155, 195 (Del. Ch. 2014); see also CIBC Bank USA v. JH Portfolio Debt 

Equities, LLC, 2021 WL 2230976, at *11 (Del. Super. June 2, 2021). Otherwise, the two 

sections are essentially identical. See In re Mobilactive Media, LLC, 2013 WL 297950, at 

*30 (Del. Ch. Jan. 25, 2013) (discussing 6 Del. C. § 1305(a)); Burkhart v. Genworth Fin., 

Inc., 250 A.3d 842, 854-55 & n.81 (Del. Ch. 2020) (discussing 6 Del. C. § 1304(a)(2)).

108 In re Samson Res. Corp., 2023 WL 4003815, at *24 (Bankr. D. Del. June 14, 2023) 

(citing 6 Del. C. §§ 1304(a)(2), 1305(a)).
23

these elements with particularity.

109

 Rather, the claim is subject to the more lenient 

Rule 8(a) notice pleading standard.110 

The defendants do not dispute that the second element—insolvency of the 

transferor at the time of or due to the transfer—is met. Nor could they. “A debtor 

who is generally not paying debts as they become due is presumed to be 

insolvent.”111 Before its foreclosure sale, Boomerang defaulted on the Unpaid 

Invoices and it remains in default.

112

 The foreclosure sale was prompted by 

Boomerang defaulting on its loans.113 After the sale, Boomerang allegedly “ceased 

to exist.”

114

Regarding the first element, Cleveland-Cliffs adequately pleads that the 

foreclosure failed to net Boomerang a “reasonably equivalent” value for “the assets 

109 Cf. Renco Grp., Inc. v. MacAndrews AMG Hldgs. LLC, 2015 WL 394011, at *10 (Del. 

Ch. Jan. 29, 2015) (“Although this is a notice pleading jurisdiction, Chancery Court Rule 

9(b) requires a plaintiff to ‘plead fraud with particularity’ [for an actual fraudulent transfer 

claim].”).

110 See Ki-Poong Lee v. So, 2016 WL 6806247, at *5 (Del. Super. Nov. 17, 2016)

(explaining that constructive fraud claims only require the plaintiff to plead “a short and 

plain statement of the claim” demonstrating its entitlement to relief); Renco Grp, 2015 WL 

394011, at *10 (“[A] plaintiff can focus on an inadequate exchange [i.e., a constructive 

fraudulent transfer claim], in which fraudulent intent is presumed.”).

111 6 Del. C. § 1302(b).

112 Am. Compl. ¶¶ 38, 82-88.

113 APA at Recitals. 

114 Am. Compl. ¶ 67; see id. ¶¶ 68-72.
24

transferred.”115 Cleveland-Cliffs alleges that the assets Bidco (i.e., PTC Liberty) 

bought in the foreclosure sale were worth over $100 million and that Boomerang’s 

“outstanding debt obligations” were not assumed through the purchase.116 In 

exchange, PTC Liberty paid $16.5 million.117 If true, this is obviously a significant 

disparity in value.

118

The assets purchased by PTC Liberty came encumbered with security 

interests.119 And a below market price is not unusual in a foreclosure sale.120 But 

115 Id. ¶ 101(c).

116 Id. ¶¶ 64(b), 74; see APA § I.2 (providing that Bidco/PTC Liberty did not “assume or 

become responsible for any liabilities or obligations”). 

117 Am. Compl. ¶ 60.

118 See In re Straight Path Commc’ns Inc. Consol. S’holder Litig., 2018 WL 3120804, at 

*20 (Del. Ch. June 25, 2018) (concluding that a lack of reasonably equivalent value was 

adequately pleaded where assets worth $50 million were sold for $6 million); see also 

Quadrant, 102 A.3d at 199-200 (concluding that the payment of service fees exceeding 

market rates by $5 to $7 million annually in return for a diminished scope of service 

supported a reasonable inference that the value exchanged was not reasonably equivalent); 

Mobilactive Media, 2013 WL 297950, at *31 (noting that the exchange of assets worth 

$72,920,00 for a deed of indemnity made it reasonably conceivable that the exchange was 

not reasonably equivalent). 

119 APA § IV.c (“The Foreclosing Seller has not waived any of its rights with respect to, 

or released any of the collateral currently in the possession or control of the Grantors 

securing, any obligations of the Borrower under the Loan Documents[.]”). 

120 See BFP v. Resol. Tr. Corp., 511 U.S. 531, 531 (1994) (holding that “reasonably 

equivalent value” under the federal fraudulent transfer statute was not “fair market value” 

because “fair market value presumes market conditions that, by definition, do not obtain in 

the forced-sale context, since property sold within the time and manner strictures of stateprescribed foreclosure is simply worth less than property sold without such restrictions”).
25

whether the encumbrances or the circumstances of a foreclosure sale affected the 

value of Boomerang’s assets is a factual question that I cannot presently resolve.

121

 

Accordingly, I decline to dismiss the constructive fraudulent transfer claim

against PTC Liberty under Sections 1304(a)(2) and 1305(a).

122

3. Actual Fraudulent Transfer 

Section 1304(a)(1) provides a cause of action for actual fraudulent transfer 

where “the debtor made the transfer . . . [w]ith actual intent to hinder, delay or 

defraud any creditor of the debtor.”123 To plead a claim under this provision, a 

plaintiff must meet the particularity standard of Rule 9(b) by pleading “specific 

supporting facts describing the circumstances of the transfer,” such as the who, what, 

121 See In re Image Worldwide, Ltd., 139 F.3d 574, 576 (7th Cir. 1998) (“Whether 

‘reasonably equivalent value’ was received in a transaction is a question of fact.”); see also 

Barber v. Golden Seed Co., 129 F.3d 382, 387 (7th Cir. 1997) (“We have held that the 

formula for determining reasonably equivalent value is not a fixed mathematical formula; 

rather, the standard for ‘[r]easonable equivalence should depend on all the facts of each 

case,’ an important element of which is fair market value. Another important factor in 

assessing reasonably equivalent value is whether the sale was ‘an arm’s length transaction 

between a willing buyer and a willing seller.’” (quoting In re Bundles, 856 F.2d 815, 824 

(7th Cir. 1988))).

122 This claim also survives against Boomerang, which is in default. 

123 6 Del. C. § 1304(a)(1). “The ‘intent’ that must be established under section 548(a) [the 

federal equivalent of DUFTA Section 1304(a)(1)] is the debtor’s actual fraudulent intent.” 

In re Park S. Sec., LLC., 326 B.R. 505, 517 (Bankr. S.D.N.Y. 2005) (citation omitted); see 

also Seiden v. Kaneko, 2015 WL 7289338, at *13 (Del. Ch. Nov. 3, 2015) (reciting 6 Del. 

C. § 1304(a)(1)). That is, Boomerang’s intent is at issue.
26

and when of the challenged transfer.124 Intent, though, “may be averred 

generally.”125

Cleveland-Cliffs describes the circumstances of the transfer with the requisite 

specificity. The Complaint details the parties to the transfer, the transferred assets, 

the nature of the notice and bidding process, and the date of the transfer.126

The Complaint also sets out multiple facts making it reasonably conceivable 

that Boomerang had a fraudulent intent. Section 1304(b) provides a 

“nonexhaustive” list of factors that may be considered in finding “actual intent” for 

purposes of Section 1304(a)(1).

127

 “The confluence of several of these factors, 

124 Ki-Poong Lee, 2016 WL 6806247, at *4; see also Trusa v. Nepo, 2017 WL 1379594, at 

*11 (Del. Ch. Apr. 13, 2017) (“A claim for fraudulent transfer also must comport with Rule 

9(b) and be pled with particularity.”); Winner Acceptance Corp. v. Return on Cap. Corp., 

2008 WL 5352063, at *7 (Del. Ch. Dec. 23, 2008) (“To satisfy Rule 9(b), a complaint must 

allege: (1) the time, place, and contents of the [transfer]; (2) the identity of the person 

making the [transfer]; and (3) what the person intended to gain by making the[transfer].”).

125 JPMorgan Chase Bank, N.A. v. Ballard, 213 A.3d 1211, 1245 (Del. Ch. 2019) ([T]o 

state a fraudulent transfer claim, [the plaintiff] must generally plead facts showing intent 

to defraud with specific supporting facts describing the circumstances of the transfer.”); 

see also Winner Acceptance, 2008 WL 5352063, at *7 (“State of mind . . . may be averred 

generally.”).

126 See Am. Compl. ¶¶ 45-66.

127 Kibler v. Wooters, 2007 WL 1756595, at *4 (Del. Ch. June 6, 2007). The factors include 

whether: “(1) The transfer or obligation was to an insider; (2) The debtor retained 

possession or control of the property transferred after the transfer; (3) The transfer or 

obligation was disclosed or concealed; (4) Before the transfer was made or obligation was 

incurred, the debtor had been sued or threatened with suit; (5) The transfer was of 

substantially all the debtor’s assets; (6) The debtor absconded; (7) The debtor removed or 

concealed assets; (8) The value of the consideration received by the debtor was reasonably 

equivalent to the value of the asset transferred or the amount of the obligation incurred; 

(9) The debtor was insolvent or became insolvent shortly after the transfer was made or the 
27

without the presence of all of them, is generally sufficient to support a conclusion 

that one acted with the actual intent to defraud.”

128

 The allegations serving as 

“badges of fraud”

129 that support several of the Section 1304(b) factors include:

• The transfer was made by one insider (Boomerang) to another insider

(PTC Liberty), insofar as both entities are ultimately owned and 

controlled by Black Diamond.130

• The transfer was concealed. Bids for the sale were accepted over a tenday period from Christmas Eve of 2020 to January 3, 2021—a 

suspiciously fast turnaround during the winter holidays.131

• The transfer was of substantially all Boomerang assets.132

obligation was incurred; (10) The transfer occurred shortly before or shortly after a

substantial debt was incurred; and (11) The debtor transferred the essential assets of the 

business to a lienor who transferred the assets to an insider of the debtor.” 6 Del. C. 

§ 1304(b).

128 Kibler, 2007 WL 1756595, at *4.

129 See Paul Elton, 2020 WL 2203708, at *10 (describing “badges of fraud” as “a phrase 

that generally refers to circumstances that would allow a court to find (or, at the pleading 

stage, infer) the intent required to support a claim of fraud”).

130 Am. Compl. ¶¶ 23-26, 56, 75, 79-80, 100, 110; see 6 Del. C. § 1304(b)(1).

131 Am. Compl. ¶¶ 50-53; see 6 Del. C. § 1304(b)(3). The defendants maintain that the 

notice was compliant with New York UCC Section 9-611(b) and that Boomerang was not 

entitled to notice. See Def. Black Diamond Capital Management, L.L.C.’s Mot. to Dismiss 

Br. (Dkt. 7). That argument may carry weight later in the case but is not determinative 

now when multiple badges of fraud are sufficiently pleaded. See SungChang Interfashion

Co., Ltd. v. Stone Mountain Accessories, Inc., 2013 WL 5366373, at *9 (S.D.N.Y. Sept. 

25, 2013) (denying a motion to dismiss an actual fraudulent transfer claim where “notice 

of the public auction was statutorily sufficient” because multiple badges of fraud were 

alleged, including “unusual timing” and “that creditors were not informed of a sale 

allegedly involving some of their assets”). 

132 Am. Compl. ¶ 73; see 6 Del. C. § 1304(b)(5). As noted below, the Complaint does not 

provide that “all” assets were transferred. See infra note 162 and accompanying text.
28

• The transfer occurred less than two months after ArcelorMittal issued 

its last invoice to Boomerang, which put Boomerang more than $7 

million in debt.133

• Boomerang was insolvent at the time of the sale or became insolvent 

shortly afterward.

134

• The assets sold were worth over $100 million but purchased by PTC 

Liberty for $16.5 million.135

PTC Liberty argues that these allegations of fraudulent intent are deficient 

because they are keyed to Black Diamond (or Black Diamond Commercial Finance)

rather than Boomerang.

136

 In PTC Liberty’s view, “unless alter ego [liability] 

applies . . . Black Diamond’s intent cannot be imputed to Boomerang.”137 No 

authority is cited for this proposition. This conclusory argument raises a thorny (and 

seemingly novel) question: can fraudulent intent be imputed from one entity to 

another absent alter ego liability?

Because I conclude that Cleveland-Cliffs has generally pleaded facts showing

Boomerang’s intent, I need not definitively resolve this question today. 

Nevertheless, I pause on it since PTC Liberty seems to think it is a slam dunk. I tend 

133 Am. Compl. ¶¶ 32, 54; see 6 Del. C. § 1304(b)(10). The last invoice was dated 

November 6, 2020, and the foreclosure sale was noticed on December 24, 2020. Am. 

Compl. ¶¶ 32, 46.

134 Am. Compl. ¶ 67; see 6 Del. C. § 1304(b)(9).

135 Am. Compl. ¶ 64; see 6 Del. C. § 1304(b)(8).

136 PTC Liberty’s Opening Br. 19; see Hr’g Tr. 61-63.

137 PTC Liberty’s Opening Br. 19.
29

to disagree. There are subtle—yet crucial—differences between the relevant 

doctrines that suggest the imputation of one entity’s fraudulent intent to another is 

not foreclosed solely because they are not alter egos.

Veil piercing on an alter ego theory requires entities to be functionally one in 

the same.

138 But several of the factors Delaware courts consider when assessing alter 

ego liability (such as solvency, adequate capitalization, or observation of corporate 

formalities) have little bearing on the issues of control central to the imputation 

inquiry. For a fraudulent conveyance claim, the actual fraudulent intent of an entity 

exercising control over a transferor may be imputed to the transferor.139 The 

imputation inquiry—at least in the bankruptcy context—can also look to the intent 

of the controller’s officers and directors who caused the transfer.

140

138 See Sunstates, 788 A.2d at 534; supra Section II.A.1.

139 U.S. Bank Nat. Ass’n v. Verizon Commc’ns Inc., 817 F. Supp. 2d 934, 941 (N.D. Tex. 

2011) (“Most courts recognize that when a transferee is in a position to dominate or control 

the debtor’s disposition of . . . property, the transferee’s intent to hinder, delay, or defraud 

will be imputed to the debtor/transferor.” (quoting ASARCO LLC v. Americas Mining 

Corporation, 396 B.R. 278, 369 (S.D. Tex. 2008))). In Verizon, the plaintiff alleged that 

the parent corporation “used its control” over three of its subsidiaries to effectuate

fraudulent transfers to two of its other subsidiaries. Verizon, 817 F. Supp. 2d at 940-41. 

Applying the imputed intent doctrine, the court held that the parent’s control over the 

transferor subsidiaries was sufficient to impute the parent’s actual fraudulent intent to the 

transferors and denied a motion to dismiss. Id. at 941-42.

140 See In re Syntax-Brillian Corp., 2016 WL 1165634, at *6 (Bankr. D. Del. Feb. 8, 2016) 

(“[F]or the purpose of recovering impermissibly transferred corporate assets and thereby 

facilitating creditor recovery, the intent of the officers and directors may be imputed to the 

corporation.” (quoting In re Nat’l Audit Def. Network, 367 B.R. 207, 220 (Bankr. D. Nev.

2007))); Verizon, 817 F. Supp. 2d at 942; In re Trib. Co. Fraudulent Conv. Litig., 2017 WL 

82391, at *5 (S.D.N.Y. Jan. 6, 2017) (“Because all corporations must act through agents, 
30

Here, Black Diamond allegedly controlled the transferor and the 

administrative agent that ran the foreclosure sale. Cleveland-Cliffs has alleged 

badges of fraud casting suspicion on the circumstances and timing of the sale—some 

of which pertain to Black Diamond’s involvement. To the extent that the imputation 

of intent from Black Diamond to Boomerang is necessary for Cleveland-Cliffs’ 

claim to survive (it is not), these facts arguably support a reasonable inference that 

Black Diamond controlled the sale to effectuate the transfer of Boomerang’s assets

to PTC Liberty.

141

The motion to dismiss is therefore denied as to the actual fraudulent transfer 

claim against PTC Liberty.142

4. Transfer Beneficiary

Finally, Cleveland-Cliffs seeks relief under DUFTA from Black Diamond, 

which was not a party to the sale.143 Section 1308(b)(1) allows a creditor to recover 

courts assessing the intent of a corporation in a fraudulent conveyance claim will look to 

the intent of the corporate actors who effectuated the transaction on behalf of the 

corporation.”), aff’d, 10 F.4th 147 (2d Cir. 2021).

141 See In re Adler, Coleman Clearing Corp., 263 B.R. 406, 447 (S.D.N.Y. 2001) (“[B]y 

virtue of the common relationship to both sides of the disposition, the wrongful intent 

embodied in the controlling transferee may be presumed to flow on to the debtor-transferor 

as the property passes, for all practical purposes, from one hand to the other of the same 

person, ending with the intended transferee.”).

142 The claim likewise survives against Boomerang.

143 See Am. Compl. ¶ 101 (“The transfer of assets by Boomerang to PTC Liberty constitutes 

a fraudulent transfer[.]”).
31

on a fraudulent transfer claim against “[t]he first transferee of the asset or the person 

for whose benefit the transfer was made.”144 Cleveland-Cliffs argues the latter—

that Black Diamond was a transfer beneficiary.145 

Delaware courts have applied a three-factor test used by bankruptcy courts to 

detect beneficiary status: “(1) whether the benefit was received by the beneficiary; 

(2) whether the benefit is quantifiable; and (3) whether the benefit is ‘accessible to 

the beneficiary.’”

146

 This case hinges on the first and third factors. Cleveland-Cliffs 

144 6 Del. C. § 1308(b)(1). Delaware courts have construed the remedial provisions of the 

statute narrowly and rejected attempts to create secondary liability. See Trenwick Am. 

Litig. Tr. v. Ernst & Young, L.L.P., 906 A.2d 168, 203 (Del. Ch. 2006) (“Despite the 

breadth of remedies available under state and federal fraudulent conveyance statutes, those 

laws have not been interpreted as creating a cause of action for ‘aiding and abetting.’

Rather, as [] both the defendants and the Litigation Trust agree, the only proper defendants 

in a fraudulent conveyance action under federal bankruptcy law or Delaware law are the 

transferor and any transferees.”), aff’d sub nom. Trenwick Am. Litig. Tr. v. Billett, 931 A.2d 

438 (Del. 2007) (TABLE); see also Edgewater Growth Cap. P’rs, L.P. v. H.I.G. Cap., Inc., 

2010 WL 720150, at *2 (Del. Ch. Mar. 3, 2010) (rejecting a claim for fraudulent transfer 

where the directors were alleged to have “conspired with [the transferees] to cause the 

transfer to occur”).

145 Cleveland-Cliffs does not argue that Black Diamond is the “first” or “initial” transferee. 

“[A] ‘transferee’ has ‘dominion over the money or other asset, the right to put the money 

to one’s own purposes.’ The ‘initial’ transferee is the first entity to have such a dominion

or right.” In re Hansen, 341 B.R. 638, 643 (Bankr. N.D. Ill. 2006) (quoting Bonded Fin.

Servs., Inc. v. Eur. Am. Bank, 838 F.2d 890 (7th Cir. 1988); citing In re Ausman Jewelers, 

Inc., 177 B.R. 282, 286 (Bankr. W.D. Wis. 1995)).

146 Humanigen, Inc. v. Savant Neglected Diseases, LLC, 2021 WL 4344172, at *16 (Del. 

Super. Sept. 23, 2021) (“To detect beneficiary status, this Court engages the same threefactor test bankruptcy courts use.”).
32

contends that Black Diamond’s alleged ownership and control of PTC Liberty is 

sufficient to satisfy them.147

In support of this argument, Cleveland-Cliffs relies on In re McCook Metals, 

L.L.C.—a decision by the United States District Court for the Northern District of 

Illinois.148 There, the court interpreted transfer beneficiary language in the 

Bankruptcy Code as permitting a fraudulent transfer claim against an individual 

controller of an LLC that received contract rights through a challenged 

transaction.149 The court reasoned that the defendant “received an actual benefit 

[through] his share of the value of the assets” and that the benefit was accessible to 

him “through [his] control of [the transferee].”150 

The approach taken in McCook has (rightly) been criticized. One year after 

McCook was issued, the Northern District of Illinois opined that: “The problem with 

McCook and the few other decisions authorizing this sort of status-based recovery is 

that they ignore the fundamental nature of corporations. . . . [A] corporation is a 

legal entity separate from its shareholders, officers, and directors.”

151

 In another 

decision, the court observed that because McCook “does not define ‘control,’” it 

147 Pls.’ Answering Br. 34.

148 319 B.R. 570 (N.D. Ill. 2005).

149 Id. at 590-92.

150 Id. at 592.

151 Hansen, 341 B.R. at 645.
33

“renders every majority shareholder of a closely-held corporation . . . liable for 

transfers to the corporation, although the corporation is entirely legitimate and all 

corporate formalities have been carefully observed.”152

To follow McCook and adopt Cleveland-Cliffs’ reasoning would be 

inconsistent with Delaware’s policy of safeguarding corporate separateness.

153

 

Courts have widely rejected attempts to pursue fraudulent transfer claims using 

similar logic.154 Having rejected Cleveland-Cliffs’ attempt to pierce the corporate 

152 In re Delta Phones, Inc., 2005 WL 3542667, at *10 n.4 (Bankr. N.D. Ill. Dec. 23, 2005).

153 See, e.g., All. Data Sys. Corp., 963 A.2d 746, 769 (Del. Ch. 2009) (“Delaware law 

respects corporate formalities, absent a basis for veil-piercing, recognizing that the wealthgenerating potential of corporate and other limited liability entities would be stymied if it 

did otherwise.”); see also Nieves, 2020 WL 4463425, at *8 (“Delaware law presumes 

respect for the corporate form: A subsidiary corporation is presumed to be a separate and 

distinct entity from its parent corporation.”) (cleaned up). As noted above, however, it is 

at least arguable that intent is imputable absent alter ego liability. See supra notes 138-41 

and accompanying text.

154 See Yu v. GSM Nation, LLC, 2018 WL 2272708, at *13 (Del. Super. Apr. 24, 2018) 

(dismissing a fraudulent transfer claim against a defendant who allegedly controlled the

transferor and transferee because the claim “read[] like an attempt to pierce the corporate 

veil”); see also In re Brown Publ’g Co., 2015 WL 1009177, at *7-8 (Bankr. E.D.N.Y. Mar. 

4, 2015) (collecting cases and observing that “[t]he majority of cases addressing this issue 

have held that a shareholder in a corporation which receives the benefit of a fraudulent 

transfer is not personally liable” under the transfer statute); In re Harris Agency, LLC, 477 

B.R. 590, 593 n.3 (Bankr. E.D. Pa. 2012) (“[T]he Trustee has merely stated that the Moving 

Defendants are in control and directed the actions of the Entity Defendants. This does not 

necessarily mean that the alleged transfers benefitted them and is, therefore, an insufficient 

factual allegation to survive a motion to dismiss.”); In re Green Field Energy Servs., Inc., 

2018 WL 1116374, at *3 (Bankr. D. Del. Feb. 27, 2018) (“Control of an entity is not 

enough to show access to the benefit. The party must show that there was actual access.”); 

In re Imageset, Inc., 299 B.R. 709, 718 (Bankr. D. Me. 2003) (“[T]he individuals’ rights 

as interest holders in the LLC is not alone sufficient to qualify them as persons ‘for whose 

benefit [the] transfer[s were] made’ within § 550(a)(1)’s meaning.”); Sher v. SAF Fin., Inc., 

2011 WL 4835700, at *2 (D. Md. Oct. 11, 2011) (“[A] shareholder may not be held liable 
34

veil, I decline to extend liability to Black Diamond—a stockholder that allegedly 

benefitted from a fraudulent transfer to the entity. To the extent that such liability is 

even legally possible under Delaware law, it fails here given the absence of wellpleaded allegations suggesting that Black Diamond was a transfer beneficiary. The 

fraudulent transfer claim against Black Diamond is dismissed.

C. Successor Liability 

In Count I of the Complaint, Cleveland-Cliffs claims that PTC Liberty bears 

successor liability for the Unpaid Invoices since it “acquired substantially all of 

Boomerang’s assets.”

155

 “In Delaware, when one company sells or otherwise 

transfers all of its assets to another company, the buyer generally is not responsible 

for the seller’s liabilities, including claims arising out of the seller’s tortious 

conduct.”

156

 “Exceptions include: (1) the buyer’s assumption of liability; (2) defacto 

without a showing that he had actually received distributions of the transferred property or 

unless ‘a showing can be made to pierce the corporate veil.’” (quoting Hansen, 341 B.R. 

at 646)).

155 Am. Compl. ¶¶ 90-91. This claim was initially also brought against Black Diamond 

but abandoned. See Hr’g Tr. 56-57. It would fail in any event because Black Diamond is 

not alleged to have bought any assets from Boomerang. See Spring Real Est., LLC v. 

Echo/RT Hldgs., LLC, 2013 WL 6916277, at *4 (Del. Ch. Dec. 31, 2013) (recognizing 

successor liability as to a “purchaser of assets”).

156 Ross v. Desa Hldgs. Corp., 2008 WL 4899226, at *4 (Del. Super. Sept. 30, 2008). 

Originally, the Cleveland-Cliffs argued that New York law should apply to the successor 

liability claim. At oral argument, it conceded that Delaware law applies, consistent with

the defendants’ position. Hr’g Tr. 57-58. This concession was apt. See Xperex Corp. v. 

Viasystems Techs. Corp., LLC, 2004 WL 3053649, at *2 (Del. Ch. July 22, 2004) 

(“Whether or not a Delaware corporation is liable for the conduct of another corporation is 

a question of Delaware law.”); see also Energy Intel. Grp., Inc. v. Cowen & Co., LLC, 2016 
35

merger or consolidation; (3) mere continuation of the predecessor under a different 

name; or (4) fraud.”157 Under the APA, PTC Liberty expressly disclaimed 

“responsib[ility] for any liabilities or obligations of [Boomerang].”158 That leaves 

three potential exceptions. Cleveland-Cliffs has invoked two, asserting that “PTC 

Liberty is merely a continuation of Boomerang and/or a de facto merger 

occurred.”159

1. De Facto Merger

“The elements necessary to create a de facto merger under Delaware law are 

the following: (1) one corporation transfers all of its assets to another corporation; 

(2) payment is made in stock, issued by the transferee directly to the shareholders of 

the transferring corporation; and (3) in exchange for their stock in that corporation, 

the transferee agreeing to assume all the debts and liabilities of the transferor.”160 

WL 3939747, at *11 (S.D.N.Y. July 15, 2016) (applying the law of the state of 

incorporation to a successor liability claim); Restatement (Second) of Conflict of Laws § 

302 (1971).

157 Ross, 2008 WL 4899226, at *4.

158 APA § I.2.

159 Am. Compl. ¶ 94. It is not apparent whether Cleveland-Cliffs seeks to invoke the fraud 

exception. Given my analysis of the fraudulent transfer claims, it arguably applies. To the 

extent that the mere continuation exception cannot support the claim, it could survive on 

this basis.

160 Magnolia’s at Bethany, LLC v. Artesian Consulting Engineers, Inc., 2011 WL 4826106, 

at *3 (Del. Super. Sept. 19, 2011).
36

None of these elements are met.161 The allegation that Boomerang transferred all of 

its assets is belied by APA’s terms, which provide for certain exclusions.

162

 Further, 

PTC Liberty paid for the assets in cash and expressly disclaimed the assumption of 

Boomerang’s liabilities.163

2. Mere Continuation 

The mere continuation exception requires that “the purchaser of the assets to 

be a continuation of ‘the same legal entity,’ not just a continuation of the same 

business in which the seller of the assets engaged.”164 “The ‘primary elements’ of 

being the same legal entity have been said to include ‘the common identity of the 

161 See Spring Real Est., 2013 WL 6916277, at *5 (dismissing successor liability claim 

arising out of asset purchase agreement); Magnolia’s at Bethany, 2011 WL 4826106, at 

*2-3 (same); Marnavi S.p.A. v. Keehan, 900 F. Supp. 2d 377, 397 (D. Del. 2012) (same); 

but see Xperex, 2004 WL 3053649, at *2.

162 Excluded assets included all real estate, certain equipment, and certain equity interests. 

APA § I.1(a); id. Ex. B. 

163 APA §§ I.2, I.3; id. Ex. C (“Buyer shall not assume or become responsible for any 

liabilities or obligations of the Grantors or any of its Affiliates . . . . The consideration 

payable at the Closing (the “Purchase Price”) shall be $16,500,000[.]”); see Energy Intel. 

Grp., 2016 WL 3939747, at *10 (S.D.N.Y. July 15, 2016) (observing a difference between 

New York and Delaware law in assessing a de facto merger because “the elements of a de 

facto merger in Delaware are clearly more rigorous: they require a transfer of all of the 

transferor’s assets and an assumption of all its liabilities, in exchange for a payment made 

in the stock of the transferee directly to the shareholders of the transferor”).

164 Spring Real Est., 2013 WL 6916277, at *5; see Mason v. Network of Wilm., Inc., 2005 

WL 1653954, at *5 (Del. Ch. July 1, 2005) (explaining that “the doctrine of successor 

liability . . . involves asset purchasers or, perhaps, the entity that picks up the business of 

the entity burdened (or likely to be burdened) by the creditor’s claim”).
37

officers, directors, or stockholders of the predecessor and successor corporations, 

and the existence of only one corporation at the completion of the transfer.’”

165

 

Although Delaware courts have construed this theory “very narrowly,”166 the 

Complaint supports its application here. Cleveland-Cliffs alleges that PTC 

Liberty—like Boomerang—“remains under the ownership and control of Black 

Diamond and its affiliates.”167 It asserts that Boomerang effectively ceased to exist 

after the Article 9 sale and was replaced by PTC Liberty—which operates the same 

business, employs the same facilities, employees, and equipment, has a similar

website, and sells to the same customers as Boomerang.168 Cleveland-Cliffs also 

states that the “same Vice President of Sales, Chief Technical Officer, Plant 

Manager, Operations Manager, and Product Technology and Field Services 

Manager” employed by PTC Liberty once worked for Boomerang, among other 

165 Id. (quoting Magnolia’s at Bethany, 2011 WL 4826106, at *3).

166 Spring Real Est., 2013 WL 6916277, at *5 (questioning whether the “continuation 

theory” finds support in our law given the absence of “explicit support in the precedent of 

the Supreme Court or this Court”); see also Fehl v. S. W. C. Corp., 433 F. Supp. 939, 946 

(D. Del. 1977) (“The continuation theory, which has rarely been raised, has been construed 

narrowly by the Delaware courts.”).

167 Am. Compl. ¶ 79.

168 Id. ¶¶ 75-78.
38

“officers and employees.”169 Taken together, these facts make it reasonably 

conceivable that PTC Liberty is a continuation of Boomerang. 

PTC Liberty’s arguments to the contrary would require me to draw inferences 

against Cleveland-Cliffs. Specifically, PTC Liberty argues that Boomerang existed 

after the Article 9 sale because PTC Liberty did not purchase certain real property, 

stock and membership interests in other companies, and equipment.

170

 Still, it is 

reasonable to infer from the Complaint that Boomerang no longer exists as a going 

concern, has effectively been dissolved, and was replaced by PTC Liberty.

171

 The 

motion to dismiss Count I is therefore denied as to PTC Liberty.

169 Id. ¶ 81 (alleging that PTC Liberty “continue[s] to employ many of the same officers 

and employees as Boomerang”).

170 PTC Liberty’s Opening Br. 16, 25-26.

171 See AJZN, Inc. v. Yu, 2015 WL 331937, at *15-16 (D. Del. Jan. 26, 2015) (denying a 

motion to dismiss a successor liability claim based on the mere continuation exception 

where the plaintiff alleged the successor “continued to conduct the same business as [the 

prior company], using the same assets, domain name and websites, and retaining most 

employees . . . [and] held itself out to the public as a continuation of the business”); see 

also Simple Glob., Inc. v. Brathwait Watches, Inc., 2022 WL 100363, at *3 (Del. Super. 

Jan. 10, 2022) (denying a motion for summary judgment where the successor “fill[ed] the 

same role” in selling products “once filled by” the prior company, the two used the same 

website, and it seemed that “a relationship of some degree exists, or existed”); see generally

SungChang Interfashion, 2013 WL 5366373, at *15-16 (applying New York law, which 

the court observed was substantively identical to Delaware law, and denying a motion to 

dismiss a successor liability claim where the plaintiff alleged the prior company engaged 

in a fraudulent conveyance and was functionally insolvent, that the successor company was 

in the same line of business and operated in the same location as the prior company, and 

that the same individual served as president of both companies).
39

D. Unjust Enrichment

Count V is a claim for unjust enrichment brought in the alternative against 

Boomerang, PTC Liberty, and Black Diamond.172 To prevail on an unjust 

enrichment claim, a plaintiff “must show an enrichment, an impoverishment, a 

relation between the enrichment and impoverishment, and the absence of 

justification.”173 “Of cardinal significance is whether a contract already governs the 

parties’ relationship.”

174 If so, the contract is “the measure of [the] plaintiff’s 

right.”175

Here, Cleveland-Cliffs alleges that its relationship with Boomerang was 

governed by the Terms & Conditions Agreement and brings a claim against 

Boomerang for breaching that contract.176 The Complaint makes clear that the issues 

underlying the unjust enrichment claim against PTC Liberty and Black Diamond are 

172 Am. Compl. ¶¶ 122-27.

173 Laidlaw v. GigAcquisitions2, LLC, 2023 WL 2292488, at *14 (Del. Ch. Mar. 1, 2023); 

see also Garfield ex rel. ODP Corp. v. Allen, 277 A.3d 296, 351 (Del. Ch. 2022).

174 MetCap Secs. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *5 (Del. Ch. May 

16, 2007).

175 Wood v. Coastal States Gas Corp., 401 A.2d 932, 942 (Del. 1979); see also Choupak 

v. Rivkin, 2015 WL 1589610, at *20 (Del. Ch. Apr. 6, 2015) (dismissing an unjust 

enrichment claim because the parties’ agreements “established the measure of [the 

plaintiff’s] rights”), aff’d, 129 A.3d 232 (Del. 2015) (TABLE). 

176 Am. Compl. ¶ 33 (“Boomerang’s purchases pursuant to the Invoices were governed by 

a certain Terms & Conditions of Sale[.]”).
40

the same raised in the breach of contract claim against Boomerang.177 For example, 

Cleveland-Cliffs alleges that “it would be inequitable for [the defendants] to retain 

the benefits conferred by ArcelorMittal without full payment to ArcelorMittal’s 

successor-in-interest, Cleveland-Cliffs, for the value of those benefits.”178 The 

unjust enrichment complained of is the defendants’ purported receipt of “the benefit 

of the products provided without reimbursing Cleveland-Cliffs.”179 ClevelandCliffs cannot circumvent the terms of the Terms & Conditions Agreement by 

claiming that non-parties to the contract (Black Diamond and PTC Liberty) were 

unjustly enriched.180

Cleveland-Cliffs argues that the unjust enrichment claim should survive 

because “it is unknown whether Boomerang, which has not appeared yet, will 

challenge the [Terms & Conditions Agreement’s] validity.”181 That argument is 

177 Id. ¶ 31; see Albert v. Alex. Brown Mgmt. Servs., 2005 WL 2130607, at *8 (Del. Ch. 

Aug. 26, 2005) (dismissing an unjust enrichment claim where it was “undisputed that a 

written contract existed between” the parties and “the plaintiffs specifically brought claims 

based on these contracts”).

178 Am. Compl. ¶ 125. 

179 Id. ¶ 126.

180 Tygon Peak Cap. Mgmt., LLC v. Mobil Invs. Investco, LLC, 2022 WL 34688, at *15 

(Del. Ch. Jan. 4, 2022) (“It is well settled that [a plaintiff] may not use a claim for unjust 

enrichment ‘to circumvent basic contract principles recognizing that a person not a party 

to a contract cannot be held liable to it.’” (quoting MetCap Secs., 2007 WL 1498989, at 

*6), reargument granted in part, 2022 WL 414399 (Del. Ch. Feb. 10, 2022).

181 Pls.’ Answering Br. 50 (citing Lyons Ins. Agency, Inc. v. Kirtley, 2019 WL 1244605, at 

*2 (Del. Super. Mar. 18, 2019) and non-Delaware precedent applying other states’ laws). 
41

entirely hypothetical. Unlike the precedent Cleveland-Cliffs relies on, there is no 

live dispute about “the validity and enforceability” of the contract.

182

 ClevelandCliffs acknowledges that the Terms & Conditions Agreement is enforceable.183

In any event, Cleveland-Cliffs has failed to support the elements of an unjust 

enrichment claim. For example, there are no well-pleaded allegations that Black 

Diamond was “enriched” by the Article 9 sale. Nor can “some direct relationship”184

between the defendants’ purported enrichment (acquiring assets for less than fair 

value) and Cleveland-Cliffs’ impoverishment (the inability, as an unsecured creditor 

of Boomerang, to collect on debts) be reasonably inferred.

Thus, Count V is dismissed against PTC Liberty and Black Diamond.185

E. Declaratory Judgment

Finally, in Count VI, Cleveland Cliffs requests a declaration that the Article 9 

sale was not commercially reasonable and therefore noncompliant with the New 

182 Lyons, 2019 WL 1244605, at *2.

183 Pls.’ Answering Br. 50 (“Cliffs has alleged an enforceable agreement with 

Boomerang.”). Moreover, Boomerang has defaulted, waiving its right to assert affirmative 

defenses. Am. Compl. ¶¶ 13, 70, 88; cf. Chewning v. JPMorgan Chase Bank, 133 A.3d 

971 (Del. 2016) (“To the extent that the [appellants] are now attempting to offer a defense 

to the foreclosure action, they waived any such defenses by failing to appear and file an 

answer to the complaint.”).

184 MetCap Secs., 2007 WL 1498989, at *5.

185 I cannot dismiss the claim against Boomerang since it has not moved for dismissal and 

is in default.
42

York UCC.

186

 But Cleveland-Cliffs lacks standing to challenge the Article 9 sale 

under the New York statute. Article 9 Section 625 of the New York UCC provides 

a cause of action only to a debtor, an obligor, or a secured creditor.187 ClevelandCliffs concedes that it is none of these; it was a contract creditor of Boomerang that 

does not claim any security interest.188

Cleveland-Cliffs insists that it can nonetheless ask this court to decide whether 

it would prevail on a statutory claim under Article 9 if it theoretically had standing. 

This is proper, it argues, because the defendants raised the sale’s compliance with 

Article 9 when moving to dismiss the original complaint.189 But if Cleveland-Cliffs 

wants to show that the Article 9 sale was noncompliant to defeat a defense, it can

litigate the issue as such. It is neither necessary nor appropriate to bring an 

186 Am. Compl. ¶ 131.

187 N.Y. U.C.C. Law § 9-625 (McKinney) (“Persons entitled to recover damages; statutory 

damages if collateral is consumer goods. Except as otherwise provided in Section 9-628:

(1) a person that, at the time of the failure, was a debtor, was an obligor, or held a security 

interest in or other lien on the collateral may recover damages under subsection (b) for its 

loss.”).

188 Pls.’ Answering Br. 15; see also Opacmare USA, LLC v. Lazzara Custom Yachts, LLC, 

314 F. Supp. 3d 1276, 1282 (M.D. Fla. 2018) (“Article 9 does not afford . . . an unsecured 

creditor . . . a statutory basis to challenge the sale or set aside the sale.”) (citation omitted); 

iFlex Inc. v. Electroply, Inc., 2004 WL 502179, at *3 (D. Minn. Mar. 4, 2004) (concluding 

that an unsecured creditor lacked standing to challenge the fair market value or commercial 

reasonableness of an Article 9 sale); Burton v. Hardwood Pallets, Inc., 2001 WL 1589162, 

at *5 (Tenn. Ct. App. Dec. 13, 2001) (“As unsecured creditors, [plaintiffs] have no interest 

in the collateral. As such, they were not entitled to notice of the sale, and they have no 

standing to challenge the manner in which it was sold.”) (citation omitted).

189 Pls.’ Answering Br. 14-15.
43

affirmative claim to rebut a defense—much less one that neither defendant is 

presently asserting. I decline to issue an advisory opinion on a New York statute 

that does not give Cleveland-Cliffs a key to the courthouse door.190 

III. CONCLUSION 

For the foregoing reasons, Black Diamond’s motion to dismiss is granted and 

PTC Liberty’s motion to dismiss is granted in part and denied in part. Counts I, II, 

III, V, and VI are dismissed with prejudice as to Black Diamond. Counts III, V, and 

VI are dismissed with prejudice as to PTC Liberty. Counts I and II as brought against 

PTC Liberty survive.

Within ten days, the parties shall submit a proposed order to implement this 

decision. Additionally, within thirty days, Cleveland-Cliffs shall inform the court 

by letter how it intends to proceed as to Boomerang.

190 See generally In re Merrill Lynch & Co., Inc. Secs., Deriv. & ERISA Litig., 597 F. Supp. 

2d 427, 431 (S.D.N.Y. 2009) (“Standing is the key to the courthouse door; those who 

possess the key, possess power.”).