IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

JAMES A. ZACHMAN,

Plaintiff,

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)

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v. )

)

C.A. No. 9729-VCG

REAL TIME CLOUD SERVICES, LLC, 

SANGEETA CHHABRA, and CBS 

ACCOUNTING PRIVATE, LIMITED,

)

)

)

)

Defendants,

and

REAL TIME DATA SERVICES, LLC,

Intervenor-Defendant.

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)

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)

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)

MEMORANDUM OPINION

Date Submitted: December 20, 2019

Date Decided: March 31, 2020

James A. Zachman, Pro Se.

Edward McNally and Kathleen Murphy, of MORRIS JAMES LLP, Wilmington, 

Delaware, Attorneys for Defendants and Intervenor-Defendant.

GLASSCOCK, Vice Chancellor
This elderly action results from the inability of the principals of a Delaware 

LLC to work together. Eventually, the Plaintiff here, James Zachman, was forced 

out of the LLC at an unfair price following an unfair process. Claims and counterclaims resulted; the LLC is run from India, which made discovery difficult and slow;

the Plaintiff proceeded pro se, further complicating the litigation; in sum, progress 

has been testudinal.1 I will not recount here the several prior rulings of this Court, 

which interested readers, if any, may themselves peruse.2 The remaining issues are 

the fair value of the Plaintiff’s interest, as well as any set-off appropriate under the 

Intervenor-Defendant’s counterclaims. The Defendants and Intervenor-Defendant 

bear the burden on both these issues. This post-trial Memorandum Opinion resolves 

these issues.

Using standard valuation techniques, I find that the fair value of the Plaintiff’s 

interest is $173,000, and that the Intervenor-Defendant has not proved its 

counterclaims for damages. My analysis is below.

1

I have sworn off the adjective “glacial,” which once aptly invoked progress so slow as to be 

imperceptible; in light of the current climate, it better implies rapid retreat.

2 Transcript Ruling of the Court on Defs.’ Mot. for Summ. J. - July 28, 2016, Docket Item (“D.I.”)

128 (“July 28, 2016 Ruling”); Transcript of the 2-26-18 Oral Argument and Ruling of the Court, 

D.I. 202 (“February 26, 2018 Ruling”); 3-5-2019 Oral Argument, D.I. 240 (“March 5, 2019 

Ruling”).
2

I. BACKGROUND3

A. The Parties

Plaintiff James A. Zachman co-founded Intervenor-Defendant Real Time 

Data Services, LLC (“Real Time Data” or the “Company”) in 2006.4

Intervenor-Defendant Real Time Data is a Delaware limited liability company 

that provides QuickBooks hosting services.5

Defendant CBS Accounting Private, Limited (“CBS Accounting”) is an 

Indian company that provides bookkeeping services.6 CBS Accounting co-founded 

Real Time Data with Zachman.7

Defendant Sangeeta Chhabra founded CBS Accounting.

8

 She also comanaged Real Time Data with Zachman.9

 Later, she founded non-party Real Time 

Data Services Private Limited (“Real Time Data SPL”) to provide support for Real 

3 The parties submitted separate trial exhibits. Citations to the Plaintiff’s Trial Exhibits are 

expressed as PX __, at __. Citations to the Defendants’ Trial Exhibits are expressed as DX __, at 

__. Citations in the form “Trial Tr.” refer to the trial transcript. Pagination in some trial exhibits 

is non-existent or handwritten, and I note this where appropriate.

4 DX 3, Real Time Data Services, LLC Operating Agreement (“Operating Agreement”); Trial Tr. 

9:7–12 (Chhabra).

5 Operating Agreement; Trial Tr. 9:1–12 (Chhabra).

6 Trial Tr. 7:17–24 (Chhabra).

7 Operating Agreement, Ex. A, “Members.”

8 Trial Tr. 9:7–12 (Chhabra); see also Operating Agreement, Ex. A, “Members” (Identifying 

Zachman and Chhabra on behalf of CBS Accounting as LLC signatories).

9 Operating Agreement, Ex. C, “Officers.”
3

Time Data.10 In 2012, Chhabra, through Real Time Data SPL, founded Defendant 

Real Time Cloud Services, LLC (“Real Time Cloud”).

11

Zachman founded non-party Cloudvara.com (“Cloudvara”) after his departure 

from Real Time Data.12

B. Factual Background

1. Zachman and CBS Accounting Co-Found Real Time Data

Originally, starting in 2004, CBS Accounting, owned by Chhabra and based 

in India, provided bookkeeping services to customers in the United States.13 Over 

the next few years, it evolved its business toward providing “QuickBooks hosting.”

14

 

Under this business model, CBS Accounting provided computer servers used to 

facilitate the operation of QuickBooks software on customers’ computers.15 CBS 

Accounting did not actually supply the software; it supplied the remote servers to 

run the software.16

10 Trial Tr. 67:5–17 (Chhabra).

11 DX 17, at -556 (Zachman email from November 2012 discussing Chhabra’s creation of Real 

Time Cloud); Trial Tr. 54:17–55:4 (Chhabra) (testifying she founded Real Time Cloud in June 

2012); PX Q, Declaration in Superior Court of California, County of Riverside, ¶ 17 (Chhabra 

declaring that Real Time Data SPL founded Real Time Cloud).

12 DX 15 (emails from Zachman describing founding of Cloudvara).

13 Trial Tr. 7:12–24 (Chhabra).

14 Id.

15 Id.

16 Id. at 8:2–16 (Chhabra).
4

Toward the end of 2004, Chhabra met the Plaintiff, Zachman, who operated 

an accounting firm in the United States.17 On March 12, 2006, Chhabra and 

Zachman joined forces and formed a limited liability company, Real Time Data.18 

Like CBS Accounting, Real Time Data focused on QuickBooks hosting.19 Real 

Time Data had two members: Zachman and CBS Accounting.20 Zachman and 

Chhabra served as Real Time Data’s managers.21 Zachman, who was based in the 

United States and had marketing experience, ran the marketing arm of the business, 

first through direct marketing, then through digital campaigns.22 The digital 

campaigns, particularly search engine optimization through Google, proved 

effective, and after a slow start, the company began to grow.

23

Meanwhile, in India, CBS Accounting provided hosting, tech, and billing 

support to Real Time Data.

24

 As Real Time Data grew, it hired more employees in 

addition to Zachman.25 Chhabra started another company, Real Time Data SPL, to 

17 Id. at 8:17–9:6 (Chhabra).

18 Operating Agreement; Trial Tr. 9:7–12 (Chhabra).

19 Trial Tr. 8:21–9:12 (Chhabra).

20 Operating Agreement, Ex. A, “Members.”

21 Operating Agreement, Ex. C, “Officers.”

22 Trial Tr. 10:9–21 (Chhabra).

23 Id. at 11:2–13 (Chhabra). After three years of business, in 2009, Real Time Data’s net income 

was around $45,000. See DX 23, Ex. 1 (calculating 2009 adjusted net income of $43,864); Trial 

Tr. 40:18–41:2 (Chhabra) (testifying that 2009 unadjusted net income was $47,816).

24 Trial Tr. 25:1–12 (Chhabra).

25 Id. at 25:13–26:1 (Chhabra).
5

allow the Real Time Data business to add employees while circumventing regulatory 

strictures in India on companies with more than twenty employees.26 Zachman 

testified he was unaware Chhabra had started an additional company to provide

services to Real Time Data, but contemporaneous emails show that Zachman 

corresponded with employees from Real Time Data SPL.27 Because Real Time Data 

was a startup and initial revenue was small, neither Zachman nor Chhabra drew a 

salary; instead, they agreed to equally split Real Time Data’s net income.28

2. Real Time Data’s Accounting Practices and Management Disputes

Zachman received accounting reports and reviewed the Company’s finances 

on annual trips to India.29 In addition, he communicated with Real Time Data’s 

accountants, who answered his inquiries and provided him with viewing access to 

the company’s accounting records.

30 Some sensitive accounting information, 

26 Id. at 25:20–26:12 (Chhabra).

27 Id. at 196:24–198:17 (Zachman) (testifying that despite corresponding with Real Time Data SPL 

employees regarding Real Time Data business and numerous payments to Real Time Data SPL 

from Real Time Data’s PayPal, Zachman was unaware whether the business was providing 

services to Real Time Data); DX 31 (emails showing Zachman corresponded with Real Time Data 

SPL employees regarding Real Time Data business).

28 Trial Tr. 39:5–8 (Chhabra).

29 Id. at 27:5–21 (Chhabra).

30 DX 7 (emails documenting Zachman’s correspondence with Real Time Data employees 

regarding accounting and accounting records from 2007 to 2012); Trial Tr. 28:13–32:3 (Chhabra).
6

however, remained inaccessible to Zachman, although it was accessible to his wife, 

who helped with Real Time Data’s accounting.31

To facilitate customer payments, Real Time Data used several banking 

services during its early years, including Bank of America until 2008, then Wachovia 

Bank (which was taken over by Wells Fargo) and PayPal (a non-bank merchant 

service) in 2009.

32

 Because the vast majority of Real Time Data’s customers were 

in the United States, most paid for the Company’s services with checks and credit 

card payments deposited in Real Time Data’s United States bank accounts.

33

 

Zachman, as the United States liaison for the business, had access to these accounts 

and was able to make withdrawals to pay the Company’s bills and draw his 

membership share.

34

31 See PX O, at 1 (screenshot indicating Zachman’s lack of access to “Sensitive Accounting 

Activities”); Trial Tr. 65:3–67:2 (Chhabra) (testifying that Zachman’s wife had access to 

“Sensitive Accounting Activities” on the Company’s QuickBooks); DX 7, at 31 (email from 

accountant Shikha Bajaj responding to Zachman’s request for “Admin” access to QuickBooks that 

he “can have the access to that file using [Zachman’s Wife’s] User id.”). 

32 Trial Tr. 12:17–13:1 (Chhabra). Contemporaneous emails between Zachman and Chhabra show 

that Zachman was aware of the PayPal account opened in 2009. DX 6 (emails dated October 23–

24, 2009, December 2, 2009, and January 26, 2010 discussing usernames and setting up and 

accessing PayPal account); see also Trial Tr. 22:22–24:24 (Chhabra) (testifying she communicated 

with Zachman regarding the PayPal account). Despite this evidence, Zachman contends he did 

not know of the PayPal account. I do not credit his testimony in this regard. For further discussion, 

see footnote 176, infra.

33 Trial Tr. 11:23–15:4 (Chhabra); DX 4 (Defendants’ graphic representation of bank accounts and 

access).

34 E.g. DX 25, at 60 (Wells Fargo bank statement showing Zachman’s draws on account); Trial 

Tr. 16:19–18:2 (Chhabra) (testifying regarding Zachman’s access). The page numbers in DX 25

are handwritten.
7

For the first several years of operations, Real Time Data’s accounting 

practices were inconsistent.35 They began to improve once the Company’s revenues 

grew and it hired an accountant, Shikha Bajaj, in 2010.36 However, both Zachman 

and Chhabra had grievances related to the other’s behavior regarding accounting and 

taxes. In 2010, it came to light that Zachman, although named “Tax Matters 

Member” under the Real Time Data Services, LLC Operating Agreement (the 

“Operating Agreement”), had never filed taxes for Real Time Data.37 For his part, 

Zachman was concerned over the accounting practices and the unorganized system 

of drawing on Company funds, and he suggested hiring a certified public accountant 

to reconcile the past several years of accounting.38 In 2010, Zachman filed for 

personal bankruptcy, but, as I found in a previous ruling, Chhabra was unaware of 

his bankruptcy when it occurred.

39

35 Trial Tr. 32:4–23, 71:7–18 (Chhabra).

36 Id.

37 Operating Agreement, § 5.4 (naming Zachman “Tax Matters Member”); DX 10 (emails dated 

December 24–25, 2011 discussing tax returns); Trial Tr. 42:7–43:2 (Chhabra). After Zachman left

the Company, Real Time Data failed to file taxes in 2012 because, as Chhabra testified, she was 

afraid the failure to file in the past would come to light. Trial Tr. 90:13–24 (Chhabra).

38 Trial Tr. 98:2–22 (Chhabra).

39 See id. at 59:10–13, 94:20–24, 101:12–21 (Chhabra) (testifying that Zachman’s bankruptcy 

occurred in 2010 and that she did not know about it). Zachman testified that Chhabra was aware 

of his personal bankruptcy. Id. at 179:15–22 (Zachman). I ruled on this issue in a summary 

judgment bench ruling, finding the record did not support knowledge on Chhabra’s part. July 28, 

2016 Ruling, at 6:15–18 (“The record does not support the plaintiff’s allegation that the defendants 

knew of the plaintiff’s bankruptcy in 2010, although they were well aware of his financial 

difficulties.”).
8

By the time the Company reached its sixth year of operations in 2012, 

Zachman and Chhabra each believed the other was manipulating the Company’s 

accounts for personal benefit. Chhabra suspected Zachman was making illegitimate 

draws from the Company’s United States bank accounts, using his control of those 

accounts to draw more than his fifty-percent share of net income.

40

 Further 

investigation led her to conclude that he had overdrawn the accounts in the amount 

of $48,720 during his time with the Company.

41

 Zachman, in turn, suspected that 

Chhabra was inappropriately transferring money to the companies in India, where 

she could exercise control over the funds.

42

In March 2012, Zachman visited India, and the disputes between the business 

partners came to a head.

43

 In late March, shortly after his return, Zachman 

unilaterally opened a new bank account for Real Time Data at U.S. Bank and began 

to deposit revenues in this account.44 Zachman’s practice was to deposit revenues 

in the U.S. Bank account, then transfer a portion of those revenues to the Company’s 

40 Trial Tr. 39:20–42:5, 88:16–89:1 (Chhabra), 217:21–218:7 (Zachman).

41 DX 9, at 1 (Defendants’ summary of alleged excess draws by Zachman).

42 E.g. Trial Tr. 164:22–165:3 (Zachman testifying he was angry with Chhabra in late 2009 because 

she would “take money to India” when the Company needed it to pay vendors in the United States), 

165:22–166:5 (Zachman testifying that money would be in the PayPal account, then he would find 

“they had already withdrawn the funds and they were off to India.”).

43 Id. at 83:1–84:2 (Chhabra); DX 16 (Defendants’ timeline of events noting March 23, 2012 

meeting leading to disputes).

44 Trial Tr. 44:5–22 (Chhabra); DX 12 (transaction records for U.S. Bank account).
9

Wells Fargo bank account.

45

 He acknowledged he kept money back in the U.S. Bank 

account and spent it on personal expenses (including a lawsuit against Chhabra in 

California), but he testified that he counted these funds as part of his membership 

draw or that he intended to pay them back.46 Although Zachman had indicated to 

Chhabra in emails that he wanted to streamline the Company’s revenue deposits to 

eliminate the use of multiple accounts, he did not inform Chhabra when he opened 

the U.S. Bank account.47 He testified that while he did not tell Chhabra about his 

numerous personal draws on the account, it did not matter because she learned about 

them through the bank statements.48 There is no evidence, however, that Zachman 

provided the bank statements for the U.S. Bank account to Real Time Data.49 

Chhabra discovered the new bank account in May 2012.50 Chhabra calculated the 

total funds she believed he wrongfully retained in the U.S. Bank account to be 

$63,213.20.51

45 Trial Tr. 44:23–46:17 (Chhabra).

46 Id. at 218:2–219:15 (Zachman); DX 13 (Zachman’s interrogatory response summarizing U.S. 

Bank draws).

47 Trial Tr. 44:5–22 (Chhabra), 167:19–168:18 (Zachman) (testifying he informed Chhabra he was 

contemplating streamlining revenue deposits by starting a new bank account).

48 Id. at 223:18–224:15 (Zachman).

49 Id. at 224:16–20, 227:6–19 (Zachman).

50 Id. 44:15–18 (Chhabra).

51 DX 9, at 2; Trial Tr. at 44:23–47:9 (Chhabra).
10

Around this time, Zachman began to take steps to form a competing company, 

Cloudvara, including, on May 9, 2012, purchasing a website for his new company.52

3. Chhabra Terminates Zachman’s Employment with Real Time Data

In May 2012, Zachman traveled to India again, in part to attempt to amicably 

resolve differences with Chhabra over the business, but the two did not end up 

meeting.

53

 On May 16, 2012, after Zachman’s return to the United States, Chhabra 

removed Zachman as manager of Real Time Data due to his 2010 personal 

bankruptcy.

54

 Chhabra sent a Company-wide email regarding the termination that 

stated it was due to mismanagement of Company funds, failure to file the Company’s 

taxes, as well as Zachman’s personal bankruptcy filing in 2010.

55

 In addition, 

Chhabra wrote to several Real Time Data clients, stating that Zachman had been 

terminated due to “financial misappropriation of funds.”56 Though he was 

52 See DX 16 (Defendants’ timeline of events noting purchase of website); DX 15 (Zachman’s 

solicitation email date May 19, 2012 describing Cloudvara as “an improved application hosting 

experience.”).

53 Trial Tr. 84:3–85:4 (Chhabra). Chhabra testified she waited for Zachman at a hotel in New 

Delhi, and he failed to show. Trial Tr. 92:22–93:7 (Chhabra). Zachman testified that he invited 

her to discuss the partition of the Company in Delaware, but she declined the invitation. Trial Tr. 

179:8–13 (Zachman).

54 Id. at 179:16–17 (Zachman testifying “I’ve been removed as a manager because of my 

bankruptcy filing. . .”); see also DX 15 (Zachman emailing Real Time Data customers noting his 

date of departure as May 16, 2012); Trial Tr. 48:4–10 (Chhabra) (testifying Zachman was 

terminated in May 2012).

55 Trial Tr. 87:9–89:1 (Chhabra).

56 PX D (email dated May 23, 2012); Trial Tr. 99:8–100:8 (Chhabra).
11

terminated as a managing member, under Delaware law Zachman retained his 

economic interest in Real Time Data.

57

In June 2012, following Zachman’s departure, Chhabra, through Real Time 

Data SPL, started a new business, Real Time Cloud.58

4. Zachman Competes through Cloudvara, and Chhabra Eliminates 

His Interest in Real Time Data

Following his termination, Zachman took actions aimed at prohibiting Real 

Time Data’s ability to operate in the United States. He ceased making payments to 

Real Time Data vendors, and he contacted Real Time Data’s service provider 

seeking to restrict access for the Company.59 Through his son, Zachman contacted 

a Chicago attorney who was helping Real Time Data open a bank account and 

threatened to get him disbarred.60 He filed a complaint with PayPal, alleging that 

Chhabra stole his identity.

61 In that complaint, Zachman claimed he was the “sole 

57 See Trial Tr. 93:8–24 (Chhabra). I ruled previously on this issue. July 28, 2016 Ruling, at 7:5–

8 (“Therefore, while Mr. Zachman did not retain, post-bankruptcy, the same managerial rights that 

flowed from his membership, he retained certain economic rights.”).

58 Trial Tr. 54:17–55:4, 67:5–17 (Chhabra); PX Q, Declaration in Superior Court of California, 

County of Riverside, ¶ 17.

59 DX 16-A (Zachman informing Chhabra on May 18, 2012 that he will not make vendor payments 

until he is given access to Real Time Data platforms); DX 16-B (Zachman emailing service 

provider requesting emergency administrative privileges and suspension of access by others at 

Real Time Data); see also Trial Tr. 48:24–50:12 (Chhabra).

60 DX 16-D (Zachman’s son writing about attorney who assisted Real Time Data that he “will lose 

his ability to practice law for the rest of his life”); Trial Tr. 51:1–52:3 (Chhabra). Zachman filed 

a lawsuit in Illinois against this Chicago lawyer. Trial Tr. 52:2–3 (Chhabra).

61 See DX 16-C.
12

manager” of Real Time Data.62 He sent letters to a company, USA2Me, to prevent 

Real Time Data from acquiring a United States address.63 He filed complaints with 

the police and the United States Postal Service regarding another individual 

attempting to assist Real Time Data to open a new bank account in the United 

States.64 Finally, having closed Real Time Data’s bank account at Wells Fargo—

thus making PayPal the Company’s sole means to receive payments—Zachman 

attempted several times after his termination to block Real Time Data’s access to its 

PayPal account.65

Also following his removal as manager, Zachman began to contact Real Time 

Data’s customers to recruit them to join his new company, Cloudvara.66 At least one 

of Zachman’s solicitationsincluded a warning against continuing to do business with 

Real Time Data: “My primary concern with my former clients is that [Real Time 

Data] is now controlled by an India operation which provides you no recourse should 

62 DX 16-C; Trial Tr. 50:13–24 (Chhabra).

63 DX 16-H; Trial Tr. 54:5–16 (Chhabra).

64 DX 16-E; Trial Tr. 52:4–22 (Chhabra).

65 See DX 16-G (response from PayPal regarding Zachman’s complaints); Trial Tr. 52:23–54:4 

(Chhabra).

66 DX 15; Trial Tr. 57:2–58:8 (Chhabra).
13

there be any issues. I would suggest that you consider an alternative.”67 Real Time

Data began to experience high rates of customer attrition.68

In October 2012, Chhabra decided to eliminate Zachman’s interest in Real 

Time Data through a merger (the “Merger”).69 In determining a value, Chhabra 

chose the number that Zachman assigned to his interest in his 2010 bankruptcy 

petition: $3,487.50.70 Contending that Zachman’s post-termination actions had 

“caused financial harm” to Real Time Data, Chhabra applied the value of Zachman’s 

interest against what she alleged he owed the Company and paid him nothing.71 At 

trial, Chhabra acknowledged that these choices did not comport with the fair value 

owed to Zachman under Delaware law for his interest in the company.72

Although Chhabra’s other business, Real Time Cloud, existed from June 

2012, it conducted no substantial business until October 2012.73 With Real Time 

67 DX 15 (June 27, 2012 email); Trial Tr. 57:23–58:8 (Chhabra). DX 15 does not include page 

numbers.

68 Trial Tr. 58:9–20 (Chhabra).

69 Id. at 58:21–59:3 (Chhabra). The Amended Complaint states the date of the Merger was October 

29, 2012. First Am. Compl., D.I. 77 (“Am. Compl.”), ¶ 4. The Defendants’ valuation expert 

identified the Merger date as October 28, 2012. Trial Tr. 118:6–10 (Seitz).

70 Am. Compl., Ex. G (“November 25, 2012 Letter”). Zachman included the November 25, 2012 

Letter as an exhibit with his Amended Complaint, but he did not include it in his trial exhibits. 

The Defendants have not disputed the amount they originally assigned to his interest.

71 See id.

72 Trial Tr. 59:14–17 (Chhabra) (testifying that “on flashback, I very deeply apologize, we should 

have gone by the Delaware rules. I was actually not so much aware of it. And we should have 

determined the fair value.”).

73 Id. at 55:2–56:6 (Chhabra).
14

Data beginning to lose money, and in coordination with the Merger, Chhabra 

migrated Real Time Data’s customers to Real Time Cloud.74 Chhabra testified that 

the customers switched voluntarily, but there were no written communications 

asking customers for consent to move their business.

75

 Instead, it appears that 

Chhabra notified the customers that they would receive invoices from Real Time 

Cloud rather than Real Time Data, and she considered the business voluntarily 

moved when the customers paid the invoices.

76

5. The Experts’ Valuations of Zachman’s Economic Interest in Real 

Time Data

At trial, each side offered a valuation expert to opine on the fair value of 

Zachman’s fifty-percent economic interest in Real Time Data.

a. The Defendants’ Expert, Paul Seitz

The Defendants’ valuation expert, Paul Seitz, offered his report (the “Seitz 

Report”) based on financial information from the QuickBooks provided by Real 

Time Data.77 He selected October 31, 2012 as the relevant valuation date because it 

74 Id. at 59:18–60:17 (Chhabra); PX Q, Declaration in Superior Court of California, County of 

Riverside, ¶ 17.

75 Trial Tr. 67:18–68:18 (Chhabra); PX Q, Declaration in Superior Court of California, County of 

Riverside, ¶ 17.

76 Trial Tr. 67:18–68:18 (Chhabra); PX Q, Declaration in Superior Court of California, County of 

Riverside, ¶ 17.

77 DX 23 (“Seitz Report”), at 1–2; Trial Tr. 136:23–139:1 (Seitz).
15

was the closest month-end to the date of the Merger.78 He considered three potential 

approaches to valuation: the asset based approach, the market approach, and the 

income approach (which includes the discounted cash flow (DCF) approach and the

income capitalization approach).

79

 Ultimately, he selected the income capitalization 

approach.80

Seitz applied two key adjustments to Real Time Data’s income prior to 

applying his discount rate. First, he excluded lost revenues for the clients who left 

between Zachman’s termination as manager and the elimination of his economic 

interest through the Merger.81 In other words, Seitz assumed that the Company’s

loss of customers was permanent, and that it would grow at a steady rate from its 

reduced client base as of October 2012.82 Next, Seitz adjusted the income as he 

deemed appropriate to account for taxes, litigation expenses, and the fact that neither 

78 Seitz Report, at 1; Trial Tr. 118:6–10 (Seitz). Because this date did not match up with the 

Company’s fiscal year, Seitz employed a trailing 12-month period to create annualized numbers. 

Trial Tr. 120:3–8 (Seitz).

79 Seitz Report, at 9; Trial Tr. 118:11–119:14 (Seitz).

80 Seitz Report, at 10; Trial Tr. 118:11–119:14 (Seitz). As a service business, the assets on Real 

Time Data’s balance sheet would not reflect its true value; similarly, insufficient market data made 

using a market approach undesirable. Seitz Report, at 9. The Company’s fluctuating income and 

lack of financial forecasts made a DCF model difficult in Seitz’ opinion, thus making the income 

capitalization the optimal approach in his view. Seitz Report, at 9–10.

81 Seitz Report, at 12; Trial Tr. 120:9–121:3 (Seitz).

82 Seitz testified that he did not take the cause of these departures into account; only the financial 

results for Real Time Data’s income. Trial Tr. 141:11–142:5 (Seitz).
16

Zachman nor Chhabra took a salary.

83

 Excluding the lost revenue from the departed 

customers, Seitz concluded that Real Time Data showed an annualized income of 

$41,165.

84

To arrive at his discount rate, Seitz added equity risk, industry risk, size risk, 

and specific company risk premiums to the risk free rate.85 He based his companyspecific risk premium on the volatility caused by Real Time Data’s management 

disputes and Zachman’s competition at Cloudvara.

86

 Seitz also concluded that Real 

Time Data essentially had no growth potential, and thus its growth rate should match 

the inflation rate at 2%.87 Seitz’ final capitalization rate was 14.25%, which, applied 

to his annualized income created a value for Real Time Data of $265,000.88 

Therefore, under Seitz’ analysis, Zachman’s fifty-percent interest was worth 

$132,500.

83 Seitz Report, at 12–13; Trial Tr. 121:4–122:17 (Seitz).

84 Seitz Report, Ex. 3, at 1; Trial Tr. 122:18–123:10 (Seitz). With the lost revenue added back, 

Seitz calculated annual income at $97,273. Seitz Report, Ex. 3, at 1.

85 Seitz Report, Ex. 2, at 1; Trial Tr. 123:21–128:7 (Seitz).

86 Seitz Report, Ex. 2, at 1; Trial Tr. 123:21–128:7 (Seitz).

87 Seitz Report, Ex. 2, at 1; Trial Tr. 123:21–128:7 (Seitz).

88 Seitz Report, Ex. 3, at 1; Trial Tr. 128:24–129:8 (Seitz).
17

b. The Plaintiff’s Expert, Derek Thomas

Zachman’s expert, Thomas, did not base his valuation report (the “Thomas 

Report”) on the QuickBooks provided by Real Time Data.89 Instead, Zachman 

recreated the Company’s financials from scratch “based on source documents,” gave 

these numbers to an accounting firm to create new QuickBooks files, and the 

accounting firm provided this information to Thomas for his valuation.90 In 

conducting his valuation, Thomas did not review the QuickBooks files provided by 

Real Time Data or attempt to reconcile the numbers.91 He communicated with the 

accounting firm and confirmed with them that they based the numbers on bank and 

PayPal statements provided by Zachman.92 Thomas testified he did not use the 

numbers the Company provided due to Zachman’s doubts about their accuracy.93 

Also differing from Seitz, Thomas used the date of Zachman’s termination as 

manager in May 2012 for his valuation, rather than the date of the Merger in October 

2012.94

89 PX R (“Thomas Report”), at 2; Trial Tr. 238:6–239:8 (Thomas).

90 Thomas Report, at 2; Trial Tr. 238:6–239:8, 255:24–257:12 (Thomas).

91 Trial Tr. 254:17–255:2, 255:24–257:12 (Thomas).

92 Id. at 256:24–257:12 (Thomas).

93 Id. at 249:8–250:4 (Thomas).

94 Thomas Report, at 1.
18

Like Seitz, Thomas employed an income-based approach, but he used a DCF 

model for his valuation.95 He decided on this model because he believed it was the 

best fit for an early stage growth company.96 Because the company did not make 

financial projections, Thomas created his own projections, forecasting a 30% growth 

rate for five years, followed by a terminal growth rate of 5%.97 He made this 

determination based on Real Time Data’s 50% year-to-year growth leading up to the 

Merger.98

In determining Real Time Data’s income, Thomas added back in the loss of 

business the Company experienced due to management disputes and Zachman’s 

solicitations from Cloudvara, contending that the Company would heal from this 

temporary disruption and return to normal levels of growth.99 In determining 

expenses, Thomas used Zachman’s estimates of operational expenses in India.100 

Thomas then adjusted for expenses he imagined the Company might require in the 

future as it grew, such as the addition of another United States employee, rent, 

telephone service, and salaries for Zachman and his wife.101

95 Id. at 12; Trial Tr. 240:17–19, 243:19–244:14 (Thomas).

96 Trial Tr. 240:17–19, 243:19–244:14 (Thomas).

97 Id.

98 Thomas Report, at 3.

99 Trial Tr. 242:16–243:10 (Thomas).

100 Id. at 245:3–18 (Thomas).

101 Thomas Report, at 4; Trial Tr. 245:19–248:8 (Thomas).
19

Having made these adjustments to income, Thomas’ DCF model produced an 

equity value for Real Time Data at the time of Zachman’s termination of $3,364,554, 

of which Zachman’s half was worth (rounded) $1,682,000.102

C. Procedural History

Each phase of this litigation was lengthened by discovery disputes, which I 

refrain from recounting in full except where pertinent. Motion practice was also 

complicated by the Plaintiff filing “Notices,” which were essentially supplements to 

his operative complaint with ongoing allegations of wrongdoing as he uncovered 

facts during discovery, as well as arguments regarding what he felt the evidence 

proved.

103

The Plaintiff filed his original complaint on June 3, 2014 (the “Original 

Complaint”).

104

 The Original Complaint brought four counts against the 

Defendants: (I) breach of contract, (II) fraud, (III) breach of fiduciary duty, and (IV) 

a demand for access to accounting records.105 Motion practice followed. The 

102 Thomas Report, at 11–12; Trial Tr. 255:24–257:12 (Thomas).

103 See Notice to Court, D.I. 120; Notice to Court, D.I. 103; Notice to Court, D.I. 101; Notice to 

Court, D.I. 100; Notice to Court, D.I. 96; Notice to Court, D.I. 92; Notice to Court, D.I. 86.

104 Compl. for Damages, Debt or Breach of Contract, D.I. 1 (“Original Compl.”).

105 Id. at 3–13. The Original Complaint also contained claims for libel and identity theft, but the 

text of these claims was in strikethrough script, with a notation that they had been “Dismissed in 

Superior Court.” Id. at 10–12.
20

Defendants moved to dismiss.106 The Plaintiff attempted to freeze the Defendants’ 

assets through emergency injunctive relief.

107

 Both parties filed discovery

motions.

108

 In November 2014, the Defendants renewed their motion to dismiss.109 

In March 2015, the Plaintiff renewed his request for emergency injunctive relief.110

The Defendants answered the Plaintiff’s Original Complaint on May 13, 

2015.111 At the same time, Real Time Data moved to intervene as Defendant to file 

counterclaims.

112

 On June 12, 2015, the Plaintiff moved to amend his Original 

Complaint.113 I granted the Motion to Intervene from Real Time Data as well as the 

Plaintiff’s Motion to Amend on August 5, 2015.

114

 The Plaintiff’s amended 

complaint (the “Amended Complaint”) contained five counts: (I) breach of contract, 

106 Defs. Real Time Cloud Services, LLC, Sangeeta Chhabra and CBS Accounting Pvt. Ltd.’s Mot. 

to Dismiss the Compl., D.I. 12.

107 Motion for Expedited Proceedings, D.I. 14; Mots. Request Escrow and Custodianship by Court 

of All Funds or Assets of Def. Real Time Cloud Services Including Prelim. Inj., Asset Freeze & 

Other Emergency Relief, D.I. 13.

108 Defs. Mot. to Stay Disc., D.I. 17; Mot. to Compel Disc., D.I. 28.

109 Defs.’ Renewed Mot. to Dismiss, D.I. 48.

110 Mot. for Immediate Prelim. Inj., D.I. 57.

111 Def. Real Time Cloud Services, LLC’s Answer, D.I. 68; Defs. Sangeeta Chhabra and CBS 

Accounting Services Pvt. Ltd.’s Answer, D.I. 70.

112 Non-Party Real Time Data Services, LLC’s Mot. to Intervene, D.I. 71.

113 Mot. to Amend Compl., D.I. 76.

114 See D.I. 87.
21

(II) unjust enrichment, (III) breach of fiduciary duty, (IV) civil conspiracy, and (V) 

a request for books and records.115

On December 15, 2015, the Defendants moved for partial summary 

judgment.116 Resolution of this motion was complicated by ongoing discovery 

disputes and various motions from the Plaintiff.

117

 In a July 28, 2016 bench ruling

(the “July 28, 2016 Ruling”), I granted the Defendants’ Motion for Partial Summary 

Judgment on Counts I, II, IV, and V of the Amended Complaint.118 At that bench 

ruling, I determined that the Plaintiff had been terminated by operation of law under 

6 Del. C. § 18-304 due to his personal bankruptcy in 2010.119 This ruling left Count 

III, the breach of fiduciary duty, as the sole remaining claim.120 I specified at that 

115 Am. Compl.

116 Defs. Real Time Cloud Services LLC, Sangeeta Chhabra, and CBS Accounting Pvt. LTD’s 

Mot. for Partial Summ. J., D.I. 104.

117 See Tr. of 2.9.16 Telephonic Scheduling Conference, D.I. 114. The Plaintiff filed a request to 

defer the Motion for Partial Summary Judgment (D.I. 107), a Motion in Support of Evidence (D.I. 

111), and a Motion for Books and Records (D.I. 113). At my direction, the Plaintiff synthesized 

these filings into an answer to the Motion for Partial Summary Judgment. Pl.’s Opp’n to Mot. of 

Partial Summ. J. and Reply, D.I. 117. However, after briefing completed, the Plaintiff then 

supplemented his response with a “Notice to Court” regarding evidence from discovery. Notice 

to Court, D.I. 120. I rejected the Notice to Court as an inappropriate sur-reply and considered the 

matter submitted for decision. Ltr. to Litigants, D.I. 121. The Defendants then filed a Motion for 

Injunctive Relief seeking to enjoin the Plaintiff from litigating identical claims in federal court in 

the Western District of Pennsylvania. Defs.’ Mot. for Inj. Relief, D.I. 122. I denied this motion 

as moot on July 28, 2016. See July 28, 2016 Ruling.

118 July 28, 2016 Ruling, at 7:11–9:13.

119 Id. at 5:18–7:10.

120 Id. at 9:12–13.
22

time that I viewed the remedy for the breach of fiduciary duty as essentially a 

valuation exercise of the fair value of the Plaintiff’s interest in Real Time Data.

121

The Plaintiff proceeded with his claim for breach of fiduciary duty. This 

commenced a contentious and motion-heavy year-and-a-half-long discovery 

practice.

122

 During this time, the Plaintiff also requested leave to file a counterclaim 

against Intervenor-Defendant Real Time Data and moved to amend his complaint a 

second time.123 On February 26, 2018, I held a hearing on all outstanding motions.124 

I noted at the hearing that the Plaintiff’s requested second amended complaint was 

“a completely new complaint.”125 The Plaintiff agreed, but felt that “so many things 

have materially changed that [he] kind of thought a redo was in order.”

126 I denied 

the Plaintiff’s motion to amend the complaint.

127 At that same hearing, I directed the 

121 Id. at 11:15–16 (“[W]hat remains in this case is the value of [Plaintiff’s] interest at the time of 

the merger.”).

122 I will not recount the discovery motions in full, which are legion. See generally D.I. 127–97.

123 Pl.’s Request for Mot. for Leave to File a Sec. Am. Compl., D.I. 147; Countercl. Against 

Intervenor Def. Real Time Data Services, LLC, D.I. 156 (“Pl.’s Counterclaim”). The counterclaim 

against Real Time Data contained seven counts: (1) Breach of Contract; (2) Breach of Implied 

Covenant of Good Faith and Fair Dealing; (3) Defamation; (4) Fraud; (5) Constructive Trust; (6) 

Promissory Estoppel; and (7) Accounting from Data Services. Pl.’s Counterclaim. The Plaintiff 

also filed a “Petition for Post-Merger Appraisal” requesting the Court order a third-party fairness 

opinion. Petition for Post-Merger Appraisal, D.I. 167.

124 Feb. 26, 2018 Ruling.

125 Id. at 5:8–13.

126 Id. at 5:14–16.

127 Id. at 26:5–27:7.
23

parties to engage valuation experts so that the remaining claim could proceed to 

trial.128

By the fall of 2018, the parties were proceeding toward trial. The filing of 

expert reports led to further contentious and motion-heavy discovery disputes.129 

Eventually, the Defendants filed a Motion for Summary Judgment on May 15, 

2019.130 I informed the parties that I would resolve the Defendants’ Motion for 

Summary Judgment post-trial, after establishing an evidentiary record.131 I held a 

one-day trial on June 26, 2019. After post-trial briefing completed—with some 

delays due to the Plaintiff’s request to reopen the discovery phase of the litigation—

I considered this matter submitted on December 20, 2019.132

My decision follows.

II. ANALYSIS

This case concerns the Plaintiff’s claim for a breach of fiduciary duty against 

the Defendants for the loss of his economic interest in Real Time Data, a claim for 

which the Defendants concede wrongdoing.

133

 Therefore, this case entails two 

128 Id. at 23:16–25:18.

129 See generally D.I. 206–37.

130 Defs.’ Mot. for Summ. J. and to Strike Pl.’s Proposed Expert Report, D.I. 244.

131 Ltr. to Litigants, D.I. 252.

132 Ltr. to Counsel and Mr. Zachman, D.I. 273.

133 See Trial Tr. 59:14–17 (Chhabra) (testifying that “on flashback, I very deeply apologize, we 

should have gone by the Delaware rules. I was actually not so much aware of it. And we should 

have determined the fair value.”); see also Defs. Real Time Cloud Services, LLC, Sangeeta 
24

questions. The first is how much Real Time Data was worth when Chhabra merged 

Zachman out, without fair compensation, in 2012.

134

 The second is whether that 

value must be offset by Real Time Data’s counterclaims.

Before reaching these claims, however, I address two predicate matters. The 

Defendants filed motions that I preserved ruling on until after trial: (1) a motion in 

limine to exclude the Plaintiff’s valuation report, and (2) a motion for sanctions 

related to the Plaintiff’s discovery practice.135 In the course of addressing these 

issues, I also address concerns the Plaintiff raised post-trial, including arguments

about wrongful termination and his purported need for further discovery.

A. The Defendants’ Daubert Motion to Exclude the Plaintiff’s Expert

Valuation Report

The Defendants seek to exclude the Thomas Report.

136

 They argue that the 

Thomas Report is inadmissible under Delaware Rule of Evidence 703.137 Under 

Rule 703, an expert’s report must be based on “facts or data in the case that the expert 

Chhabra, CBS Accounting Pvt. Ltd. & Real Time Data Services, LLC’s Opening Post-Trial Br., 

D.I. 259 (“Defs.’ Opening Post-Trial Br.”), at 19 (“[T]he Seitz Report . . . should be accepted as 

stating fair value of [Real Time Data] on the merger date was $265,000.”).

134 See July 28, 2016 Ruling, at 11:15–16 (“[W]hat remains in this case is the value of [Zachman’s] 

interest at the time of the merger.”).

135 The Defendants also moved for Summary Judgment on all claims and counterclaims. Defs.’ 

Mot. for Summ. J. and to Strike Pl.’s Proposed Expert Report, D.I. 244. Given the existence of a 

full trial record, that motion is moot, except as it regards the Defendant’s evidentiary motion, 

addressed below.

136 See Defs.’ Opening Br. in Support of Their Mot. for Summ. J. and Their Daubert Mot., D.I. 

244, (“Defs.’ Opening Summ. J. Br.”), at 11–15.

137 D.R.E. 703.
25

has been made aware of.”

138

 Where “the expert’s opinion is not based upon an 

understanding of the fundamental facts of the case,” it should be excluded.139 

Excluding such evidence avoids a “two-layered reliability analysis” of both the 

underlying facts and the results based on those facts.140

The Defendants argue that the Thomas Report is based on financial

information that is, in turn, based on Zachman’s subjective conclusions regarding 

the Company’s expenses and income.

141

 In addition, the Thomas Report values the 

Company as of May 2012, six months prior to the Merger.142 Therefore, the 

Defendants conclude, its factual basis is speculative. However, I find that these 

factual issues go to the credibility of the experts and should be evaluated in light of 

their testimony and the evidence put forward at trial. In other words, rather than a 

misunderstanding of the fundamental facts, the Thomas Report illustrates a 

disagreement about the fundamental facts, one that requires resolution. As such, 

excluding the evidence is improper in this context; instead, I evaluate each experts’ 

credibility considering the factual record developed at trial. Therefore, I deny the 

Defendants’ Motion to Strike Plaintiff’s Expert Report.

138 Id.

139 Perry v. Berkley, 996 A.2d 1262, 1271 (Del. 2010).

140 Tumlinson v. Advanced Micro Devices, Inc., 81 A.3d 1264, 1270 (Del. 2013).

141 Defs.’ Opening Summ. J. Br., at 13–15.

142 Id. at 14.
26

B. Discovery Issues

As noted in the procedural history, a contentious discovery process lengthened 

every segment of this nearly six-year-old case.143 On two separate occasions, 

discussed below, I ordered Zachman to produce discovery, and he either refused or 

his responses were inadequate. One of these occasions warranted a presumption that 

the concealed evidence (his full tax returns) supported the Defendants’ position. For 

his part, Zachman contends that he requires an extensive review of the bank records 

of Real Time Data’s third-party service providers so that he can verify Real Time 

Data’s financial records, a contention he takes up even after trial. I address both 

issues below.

1. The Plaintiff’s Discovery Abuse

The Defendants filed a motion for sanctions against Zachman for his 

discovery abuses.144 As relief, they request that I bar Zachman’s expert from 

testifying.145

Part of the Defendants’ discovery requests included Zachman’s full income 

tax returns, which would show how much income Zachman reported from Real Time 

143 The case has seen eight motions to compel, four from each side. See D.I. 28, D.I. 127, D.I. 145, 

D.I. 153 (Plaintiff’s motions to compel); D.I. 144, D.I. 162, D.I. 182, D.I. 209 (Defendants’ 

motions to compel).

144 Defs.’ Mot. in Limine to Bar Testimony Because of Pl.’s Disc. Abuse, D.I. 254 (“Defs.’ Mot. 

in Limine”).

145 Id.
27

Data. Because Zachman had the right to half the Company’s net income, this 

number would indicate the Company’s total net income. Zachman refused to 

produce those in full because he did not believe they were “relevant.”146 On March 

5, 2019, I ruled that Zachman’s failure to produce his full tax returns warranted a 

presumption that they would support the Defendants’ position.

147

 In other words, 

Zachman’s refusal to produce this discovery estops him from establishing that Real 

Time Data’s income is higher than its financial statements show. As of trial, 

Zachman had still not produced the portion of his tax returns showing the amount of 

income he reported as coming from Real Time Data.148

The Defendants also requested that Zachman produce his communications 

with Real Time Data customers from his new company, Cloudvara. Zachman 

testified that Real Time Data customers in fact left the Company to come to 

Cloudvara.

149

 But he refused to produce communications from Cloudvara other than 

sixteen emails dated before June 1, 2012, explaining in his response that he was 

146 March 5, 2019 Ruling, at 24:15–25:12.

147 Id. at 35:19–36:3; Lucas v. Chistiana Skating Center, Ltd., 722 A.2d 1247, 1248 (Del. Super. 

1998) (“Courts in Delaware recognize the general rule that ‘where a litigant intentionally 

suppresses or destroys pertinent evidence, an inference arises that such evidence would be 

unfavorable to his case.’” (quoting Collins v. Throckmorton, 425 A.2d 146, 150 (Del. Super. 

1980))).

148 Trial Tr. 202:3–205:3 (Zachman).

149 Id. at 228:4–9 (Zachman).
28

attaching “all contacts for Cloudvara that could possibly be relevant.”150 I found this 

production inadequate.151 On March 5, 2019, I ordered Zachman to produce—

within ten days—all documents showing his communications with Real Time Data 

customers on behalf of Cloudvara.152 He did not do so. At trial, never having sought 

a protective order, he continued to maintain that communications after June 1, 2012 

were irrelevant to Real Time Data’s counterclaims.153

Similar to my ruling on Zachman’s refusal to produce his full tax returns, his 

refusal to produce communications after June 1, 2012 warrants a presumption in 

favor of the Defendants and Intervenor-Defendant that these communications would 

show that from June 1, 2012 through the Merger, Zachman continued to successfully 

solicit Real Time Data customers to join him at his competing company, 

Cloudvara.154

150 Id. at 229:24–230:7 (Zachman).

151 March 5, 2019 Ruling, at 35:15–18.

152 Id. (“It’s clear to me that you control the Cloudvara documents. You need to respond to those 

[discovery requests].”).

153 Trial Tr. 228:10–231:6 (Zachman).

154 See Lucas v. Chistiana Skating Center, Ltd., 722 A.2d 1247, 1248 (Del. Super. 1998) (“Courts 

in Delaware recognize the general rule that ‘where a litigant intentionally suppresses or destroys 

pertinent evidence, an inference arises that such evidence would be unfavorable to his case.’” 

(quoting Collins v. Throckmorton, 425 A.2d 146, 150 (Del. Super. 1980))).
29

I find these factual presumptions sufficiently resolve the issues of the 

Plaintiff’s failure to produce discovery, and I therefore deny the Defendants’ Motion 

in Limine to Bar Testimony Because of Plaintiff’s Discovery Abuse.

2. The Plaintiff’s Discovery Demands

In contrast to Zachman’s obstinacy in refusing to produce discovery, his 

demands for it are far-ranging. Even after trial, rather than filing his answering posttrial brief, he filed a “Motion to Reconsider,” purportedly under Chancery Court 

Rule 60, requesting that the Court reopen discovery and grant his motions to 

compel.155 I denied this motion and ordered the Plaintiff to complete post-trial 

briefing.156 Because the Plaintiff continues to address the issue in his post-trial 

briefing, and because it is relevant to the experts’ credibility, I address it here.

To facilitate a valuation, Real Time Data produced its financial records to 

Zachman in the form of QuickBooks files. Zachman, however, believes Real Time 

Data is inflating its expenses, and he therefore sought to compel the bank records of 

the Indian companies that provide services to Real Time Data so that he can conduct 

his own reconciliation of the Company’s expenses. In other words, he wishes to 

conduct a detailed financial audit of Real Time Data as a part of the litigation. At a 

hearing on February 26, 2018, I recognized that satisfaction of Zachman’s discovery 

155 Mot. to Reconsider and to Postpone Final Post-Trial Replies by Pl. until the Matter is Resolved, 

D.I. 261.

156 Order dated October 10, 2019, D.I. 266.
30

requests—full review of six years of third-party bank records—would be “incredibly 

burdensome.”

157

 Nonetheless, I ordered Zachman to secure an expert and have the 

expert inform me whether the records were necessary to conduct a valuation.158 

Three months later, Brian Mendez, CPA, submitted an affidavit stating that the 

discrepancies between the numbers that Zachman provided to him and the numbers 

the Company provided required third-party bank records to reconcile.159 In other 

words, Mendez certified that he would need the third-party records to verify whether 

Zachman’s suspicions were correct, or whether it was Zachman himself who was 

providing inaccurate financials.

In an attempt to compromise, the Defendants produced a sample month—

December 2011—of all third-party bank records, reconciling in detail Real Time 

Data’s expenses against these bank records.

160

 At argument on March 5, 2019, I 

addressed this discovery dispute.161 I informed Zachman that I considered the 

Defendants’ production sufficient for his purposes but that I would order further 

records if his expert filed a rebuttal report explaining why the absence of such 

157 February 26, 2018 Ruling, at 27:17–28:6.

158 Id. at 27:17–28:6.

159 Aff. Valuation Request of Brian Mendez, CPA, D.I. 206.

160 See Unsworn Foreign Declaration of Sangeeta Chhabra Supplementing Defs.’ Answer to Pl.’s 

Mot. to Compel Disc., D.I. 227–28.

161 March 5, 2019 Ruling.
31

records supported a presumption of unreliability.162 Zachman’s expert, Thomas,

filed his rebuttal report on March 27, 2019.163 In his rebuttal, Thomas stated

essentially the same thing as Mendez: to determine if Zachman’s numbers were 

correct, he needed third-party bank records.

164

 Neither Mendez nor Thomas, 

however, offered any reason to support the contention that the Company’s financial 

statements were inaccurate.

Zachman has continued to argue post-trial, however, that he needs the thirdparty records. In reviewing the sample month of third-party bank records, he claims 

to have found “several fraudulent entries.”

165

 However, he only offers “one such 

example.”166 He notes that Real Time Data entered “Rent paid for Office” as a 

30,000 rupee ($595.71) expense, and lists a single check number.167 The third-party, 

Real Time Data SPL, deposited a check bearing the same number for 15,000 rupees 

($297.86).168 From this entry, Zachman infers that Chhabra was orchestrating a 

162 Id. at 40:5–13.

163 Letter from Pl., Ex. A, Expert Evaluation Rebuttal Reply of Derek Thomas, D.I. 242 (“Thomas 

Rebuttal”).

164 Id. at 2.

165 Pl.’s Argument in Opp’n to Defs.’ Summ. J. and Daubert Mot., D.I. 255 (“Pl.’s Opp’n to Summ.

J.”), at 8.

166 Id. at 8.

167 Id. at 8, Ex. M.

168 Id.
32

100% markup to hide income.

169

 However, the expenses Real Time Data provided 

list “Rent paid for Office” as comprising two deposits on the associated bank 

statement from Real Time Data SPL.170 Correspondingly, Real Time Data SPL’s

bank statement shows two 15,000 rupee checks deposited.

171

 In other words, 

Zachman claimed to have found a single inaccurate entry of less than $300, but when 

bringing it to the Court, he failed to include the pages of the record that show the 

entry is not, in fact, inaccurate.

In short, while Zachman is convinced Chhabra is falsifying the financial 

records to hide income, he has not offered a credible basis to support this belief. A

detailed six-year audit of the Company’s financial records is not warranted by his 

suspicions. I found Chhabra’s testimony regarding Real Time Data’s expenses to 

be credible. By contrast, Zachman’s testimony was largely conclusory.172 The 

evidence shows that he had access to Real Time Data’s financial records during the 

169 Id. at 8.

170 DX 8, Ex. C, at 1.

171 DX 8, Ex. C, Annexure 1, at 4, 6. The first check has a different check number than the number 

listed on the expense sheet. The expense sheet, however, identifies total rent paid for the month 

and also identifies the two deposits that make up this total amount. See DX 8, Ex. C, at 1.

172 E.g. Trial Tr. 154:1–4 (Zachman) (testifying “I don’t know specifically what the answer is 

[regarding “sensitive accounting activities” in the Company’s QuickBooks], but it must be 

something that they want to hide; that they want other people not to see. Thus, it becomes 

sensitive.”); 180:7–182:8 (Zachman) (comparing Chhabra’s business practices to Hitler’s decision 

to engage the Eastern Front in World War II).
33

relevant years.

173

 He corresponded with the accounting personnel at the Company

regarding his inquiries.174 He corresponded with Real Time Data SPL employees 

and knew about that company’s existence.

175

 Despite Zachman’s testimony, it 

appears that he was aware of all of Real Time Data’s PayPal accounts and he was 

aware of the funds moving between those accounts.

176

 Again, I note that Thomas, 

173 See DX 7 (emails from 2007 through 2012 between Zachman and accounting personnel at Real 

Time Data); Trial Tr. 27:5–21 (Chhabra).

174 DX 7, at 23, 31, 64; Trial Tr. 28:13–32:3 (Chhabra). The page numbers for DX 7 are 

handwritten.

175 Trial Tr. 196:24–198:17 (Zachman); DX 31 (emails between Zachman and Real Time Data 

SPL employees).

176 Zachman remains fixated on the Company’s PayPal accounts and appears to consider this issue 

part of his breach of fiduciary duty claim. In his post-trial briefing, he writes, “[a]t the heart of 

this dispute, is Chhabra’s PayPal merchant account.” Post-Trial Br., D.I. 271 (“Pl.’s Post-Trial 

Br.”), at 24. Zachman mentioned PayPal in the factual allegations in his Amended Complaint. 

Am. Compl., ¶¶ 16–18. However, he did not include issues with PayPal in his Breach of Fiduciary 

Duty Count, which only addresses the Merger. See Am. Compl., ¶¶ 48–55. Even had he included 

PayPal issues in his breach of fiduciary duty claim, Zachman’s evidence and testimony on this 

subject is inscrutable and often contradictory. It is clear that at least two PayPal accounts existed, 

and that one was in Zachman’s name, while the other was in Chhabra’s name. See DX 6, at 1 

(PayPal account in Zachman’s name); PX F, at 1 (PayPal account in Chhabra’s name). Chhabra’s 

account appears to have been used to move funds to India so that she could pay business expenses 

and take her draws. See Trial Tr. 89:5–10 (Chhabra). Zachman testified that he did not know that 

Chhabra’s PayPal account existed until February 2012, and that this was the first time he knew 

any money was going to India. Trial Tr. 150:18–151:1 (Zachman). He also testified that he was 

involved in disputes with Chhabra over PayPal funds going to India as early at 2009, when she 

testified her PayPal account was created. Trial Tr. 161:8–167:5 (Zachman). Zachman testified 

that as of late 2009, he was angry with Chhabra because she would “take money to India” when 

the Company needed it to pay vendors. Trial Tr. 164:22–165:3 (Zachman). Similarly, he stated 

that money would be in his PayPal account, then he would find “they had already withdrawn the 

funds and they were off to India.” Trial Tr. 165:22–166:5 (Zachman). In his post-trial briefing, 

Zachman continued to provide contradictory dates. He wrote that a PayPal 1099 form—which he 

testified alerted him to Chhabra’s PayPal account—“came in in February 2012 . . . and the full 

PayPal records were not discovered until [I] received them in January 2014 from PayPal. Prior to 

January 2014, the only PayPal records [I] had access to were provided to [me] by Defendants in 

May 201[1].” Pl.’s Post-Trial Br., at 35. The exhibit referenced—Zachman submitted further 

exhibits with his post-trial brief—shows these PayPal records are from May 2011. Pl.’s Post-Trial 
34

Zachman’s expert, has failed to substantiate Zachman’s allegations of false Real 

Time Data financials.

Considering the above, my pre-and-post-trial rulings stand denying 

Zachman’s motions to compel additional discovery from the third-party Indian 

companies that would allow him to conduct a financial audit of Real Time Data. 

Zachman has not put forward evidence that creates doubt about the Company’s 

financial records sufficient to warrant reopening the record. Moreover, as discussed 

above, Zachman’s failure to produce his tax returns in full warranted an evidentiary 

presumption in favor of the accuracy of Real Time Data’s QuickBooks.

177

C. The Plaintiff’s Claim for Breach of Fiduciary Duty

Delaware’s common law fiduciary duties apply to mangers and managing 

members of Delaware LLCs.178 An LLC may eliminate those common law duties 

Br., Ex. D. The Defendants’ counsel examined Zachman at trial regarding emails showing that he 

helped Chhabra set up a PayPal account in 2009, and that he in fact received security cards for this

account. Trial Tr. 208:2–210:22 (Zachman). First, Zachman testified that the “PayPal virtual 

terminal” he helped set up was not a bank account and so these emails did not relate to Chhabra’s 

account, though he did not produce evidence to support this. Trial Tr. 209:10–210:9 (Zachman). 

He then testified regarding the account, “I knew it was a PayPal account, but they weren’t using it 

to pay expenses . . . they were taking all the money out on the first of the month to PayPal, there 

was no money left to pay [vendors].” Trial Tr. 210:15–22 (Zachman). Given this collection of 

contradictory testimony and lack of evidence, it is impossible for me to credit Zachman’s 

allegation that Chhabra stole his identity to create a secret PayPal account that she used to siphon 

off money from the Company. See Am. Compl., ¶¶ 16–18; Pl.’s Post-Trial Br., at 24–25.

177 March 5, 2019 Argument, at 35:19–36:3 (“With respect to the tax records, they should have 

been produced . . . I think the easiest thing to do with those is just to assume that they would 

support [the Defendants’] proposition, which is that Mr. Zachman certified the Real Time 

accounting through his verification to the federal government as to the sums he’s received.”).

178 Feeley v. NHAOCG, LLC, 62 A.3d 649, 661 (Del. Ch. 2012) (citing 6 Del. C. § 18-1104; 6 Del. 

C. § 18-1101(c)). I note that Defendant Real Time Cloud was a separate entity unrelated to Real
35

in its operating agreement, provided that it does so clearly.

179 By contrast, LLCs 

“may not eliminate the contractual covenant of good faith and fair dealing.”

180

 Real 

Time Data’s Operating Agreement does not eliminate fiduciary duties, and so by 

default, the Defendants owed fiduciary duties and obligations of good faith and fair 

dealing to Zachman.181 Zachman, although he continues to argue a wide array of 

wrongs, essentially claims the Defendants breached that fiduciary duty when they 

eliminated his economic interest through the Merger in 2012.

182

Time Data, and the Plaintiff has not raised any convincing argument that Real Time Cloud would 

owe fiduciary duties. The Defendants, however, do not attempt to distinguish Real Time Cloud 

regarding liability for the breach of fiduciary duty claim.

179 6 Del. C. § 18–1101(e); Bay Ctr. Apartments Owner, LLC v. Emery Bay PKI, LLC, 2009 WL 

1124451, at *9 (Del. Ch. Apr. 20, 2009) (requiring elimination of common law fiduciary duties by 

an LLC to be “plain and unambiguous”).

180 6 Del. C. § 18-1101.

181 See Operating Agreement.

182 This Court may exercise discretionary leniency toward pro se litigants to ensure their claims 

do not fail on technicalities. See Aziz v. Tsappas, 2019 WL 6724426, at *1 (Del. Ch. Nov. 1, 

2019); Durham v. Grapetree LLC, 2014 WL 1980335, at *5 (Del. Ch. May 16, 2014). Zachman 

spends the majority of his post-trial briefing arguing that 10 Del. C. § 18-304 is void under the 

Takings clause of the U.S. Constitution and that Chhabra’s attempt to use his personal bankruptcy 

as grounds to terminate his employment at Real Time Data was anathema to our nation’s founding 

document. Pl.’s Post-Trial Br., at 1–24. Zachman also argues his termination was illegal under 

federal statute. Pl.’s Post-Trial Br., at 30–31. I ruled on the issue of Zachman’s termination at 

summary judgment several years ago, holding that it occurred as a valid operation of law and that 

the Defendants did not consent to maintaining Zachman as an LLC member. See July 28, 2016 

Ruling, at 5:18–7:10. Despite the leniency granted to pro se litigants, this issue has been ruled on; 

it is the law of this case. Having ruled on the validity of his termination, I will not reconsider that 

issue here.
36

1. Liability

Under 6 Del. C. § 18-304, “[a] person ceases to be a member of a limited 

liability company,” if that person “[f]iles a voluntary petition in bankruptcy.”

183

 

Accordingly, in May 2012, Chhabra expressed that Zachman’s membership in Real 

Time Data, and his manager status, had ended by operation of Delaware law due to 

his personal bankruptcy in 2010.184 At that point, under Milford Power Co., LLC v. 

PDC Milford Power, LLC,

185 Zachman became an “assignee” with economic rights 

but no membership rights.186 Acting on the managerial control this termination gave 

her, on October 29, 2012, Chhabra merged Real Time Data with RTDS LLC, 

converting Zachman’s interests as an assignee into cash value.187 To assign a value, 

she chose the number Zachman assigned to his interest in his 2010 bankruptcy 

petition: $3,487.50.188 Alleging that Zachman’s post-termination actions had 

“caused financial harm” to Real Time Data, Chhabra applied the value of Zachman’s 

interest against what she alleged he owed the Company and paid him $0.

189

183 6 Del. C. § 18-304.

184 See November 25, 2012 Letter.

185 866 A.2d 738 (Del. Ch. 2004).

186 Id. at 762 (“[6 Del. C.] § 18-304 means that a member who files for bankruptcy still ceases to 

be a member, but becomes an assignee with the economic rights specified in [6 Del. C.] § 18–

702(b).”).

187 See November 25, 2012 Letter.

188 Id.

189 Id.
37

The Defendants do not dispute this narrative. At trial, Chhabra testified that

“during that time period [i.e. the Merger] . . . we had used the value which [Zachman] 

had put for the company in Bankruptcy filed in 2010. But today, of course, we have 

requested Mr. Paul Seitz to do the fair value of the company.”190 Chhabra also 

expressly conceded wrongdoing, testifying, “we should have gone by the Delaware 

rules . . . we should have determined the fair value.”191

I agree with Chhabra’s concession. As a manager of the LLC and controller 

of the LLC’s other member, CBS Accounting, Chhabra owed fiduciary duties as 

well as the obligation of good faith and fair dealing to Zachman. Her selection of 

the Merger value was a pretextual opportunity to avoid paying Zachman anything 

for his interest in the Company he had co-founded. The proper way to remedy this

breach, I find, is to determine the fair value of Zachman’s interest, and award him 

damages.

2. Damages

The parties submitted expert reports, and both experts testified at trial as to 

the fair value of Zachman’s interest. To reach their numbers, the experts valued

Zachman’s interest at different dates, based the Company’s income on different 

190 Trial Tr. 94:20–24 (Chhabra).

191 Id. at 59:14–17 (Chhabra).
38

financial records, and employed different valuation approaches.

192

 The Defendants’

expert, Paul Seitz, valued Zachman’s interest in Real Time Data at $132,500, while

the Plaintiff’s expert, Thomas, valued Zachman’s interest at over twelve times this 

amount, $1,682,000.193

a. The Relevant Date for the Valuation of Zachman’s Interest is 

the Merger in October 2012

Real Time Data terminated Zachman as manager in May 2012.194 Chhabra 

eliminated his economic interest in the Company through the Merger in October 

2012.195 Zachman argues that the valuation date ought to be his termination date in 

May, and his expert, Thomas, uses this earlier date in calculating the value of the 

Company.196 I find the proper date of the valuation is October 2012 for two reasons.

First, October 2012 is when Chhabra eliminated Zachman’s interest without 

proper compensation, and thus Zachman’s claim arose at that time. Zachman’s 

argument that his interest should be valued as of May 2012 is based on the contention 

that his termination was wrongful.197 I have already found, however, that Zachman’s 

192 See Seitz Report; Thomas Report.

193 Seitz Report, at 15; Thomas Report, at 1.

194 DX 15 (Zachman emailing Real Time Data customers noting his date of departure as May 16, 

2012); Trial Tr. 48:8–11 (Chhabra).

195 As noted, the Amended Complaint states the date of the Merger was October 29, 2012. Am. 

Compl., ¶ 4. Seitz identified the Merger date as October 28, 2012. Trial Tr. 118:6–10 (Seitz).

196 Pl.’s Post-Trial Br., at 36–37; Thomas Report, at 1.

197 See Pl. Post-Trial Br., at 30–31 (arguing that his termination as manager was unlawful under 

11 U.S.C. § 525).
39

termination was merely the Defendants’ acknowledgement of his removal by 

operation of law under 6 Del. C. § 18-304 at the time of his 2010 bankruptcy.198 The 

interest held by Zachman thereafter was eliminated in October of 2012; its value at 

that time is the measure of his damages.

199

b. The Value of Zachman’s Interest in Real Time Data as of 

October 2012 is $173,000

When evaluating parties’ expert opinions, “[t]he Court may evaluate the 

valuation opinions submitted by the parties, select the most representative analysis, 

and then make appropriate adjustments to the resulting valuation.”200 I find the Seitz 

Report, along with Seitz’ trial testimony, more reliable, and so I utilize it, with 

adjustments, to determine the value of Zachman’s interest. Two factors lead me to 

this conclusion.

198 July 28, 2016 Ruling, at 6:9–14.

199 I note that it would be inequitable to value Zachman’s shares at the earlier date. After his 

termination in May 2012, Zachman engaged in a campaign to prevent Real Time Data from 

operating in the United States. See DX 16-A through H. He also started a competing company 

and, by his own admission, successfully solicited Real Time Data’s customers. Trial Tr. 228:4–9 

(Zachman). Having eroded the value of Real Time Data for six months leading up to the Merger, 

he cannot argue that this Court of equity should ignore the downturn in its financial performance.

200 In re Appraisal of Dell Inc., 2016 WL 3186538, at *20 (Del. Ch. May 31, 2016), aff’d in part, 

rev’d in part sub nom. Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd., 177 A.3d 1 

(Del. 2017).
40

First, the Plaintiff’s expert, Thomas, valued Zachman’s interest as of May 

2012.

201 Seitz, by contrast, used the Merger date in October 2012, which I have 

found above to be the appropriate date.

202

Second, the experts based their valuations on different financial records. Seitz 

used financial information from the QuickBooks supplied by Real Time Data.203 

Thomas used financial information from the QuickBooks he received from an 

accounting firm that Zachman engaged to “recreate” Real Time Data’s financial 

statements “from scratch” based on “source documents” that were provided by 

Zachman.204 Thomas testified that he discussed the source documents with the 

accounting firm, but that he did not reconcile the numbers to the Company’s 

financial information.205

Zachman simply had no credible basis for the financial figures he supplied to 

Thomas, and Thomas’ use of those figures led to two problems highlighted in Seitz’ 

rebuttal and at trial. Zachman, due to his unwillingness to use the Company’s

QuickBooks, simply guessed at the expenses related to Real Time Data’s operations

201 Thomas Report, at 1.

202 Seitz Report, at 1.

203 Id. at 4–5.

204 Thomas Report, at 2.

205 Trial Tr. 256:24–257:12 (Thomas).
41

in India.

206 Based on Chhabra’s and Seitz’ credible trial testimony and Real Time 

Data’s financials, Zachman severely underestimated these expenses. For example, 

Zachman would not agree how many people Real Time Data employed. To “prove” 

his estimates of personnel expenses in India, he offered a photograph he had 

apparently taken on a trip to the Company showing a room with six people in it and 

two empty chairs.207 Given that the Company operated in two shifts, he argued this 

photo demonstrated the Company employed at most fifteen to eighteen people.

208

 

Seitz testified that based on the Company’s records—which trial testimony and a 

review of the evidence gave no reason to suspect—Thomas underestimated expenses 

from 2007 to 2011 by approximately $682,000.209

The second problem with Thomas’ reliance on Zachman’s numbers is that 

Zachman inflated Real Time Data’s income figures. On cross-examination, 

Zachman could not explain the fact that the income he alleged Real Time Data 

206 Id. at 238:6–239:4 (Thomas). I have already discussed at length why I found Zachman’s 

suspicions unfounded and denied him the opportunity to conduct what amounted to a financial 

audit through discovery.

207 Zachman included this photograph with his trial exhibits; it appears from a hand-written 

annotation in the corner to be PX Z.

208 Trial Tr. 184:9–185:7 (Zachman) (testifying “[t]he reason I know [the number of employees is] 

a fictitious number is because I’ve been to India. And that’s a picture of the office. That office is 

approximately 12 feet wide by about 20 feet, 25 feet deep. Holds about six to seven engineers . . 

. [s]o at any given time, there was maybe six people or seven people in that room and rotating 

through there was at most 15 to 18 at any -- on the payroll at any given time. So [Defendants’]

number is false.”).

209 Id. at 112:16–115:19 (Seitz).
42

generated was significantly higher than the income he reported on his personal tax 

returns.210 For example, based on the numbers that Zachman provided to the 

accounting firm, Thomas found that Real Time Data had a net income of 

$312,436.13 in 2010 and $422,171.98 in 2011.

211 In 2010, Zachman reported a joint 

income, together with his wife, of $53,000.212 He stated the discrepancy was due to 

income he had earned but had not yet moved to his personal bank accounts, though 

he offered no evidence to support this statement.

213

 Moreover, I found that 

Zachman’s refusal of this Court’s order to produce his complete personal tax returns

during discovery created a presumption in favor of Real Time Data’s income

figures.

214

 He cannot now establish that the Company’s income was three to four 

times what he reported to the federal government.

I found both Chhabra’s and Seitz’ testimony regarding Real Time Data’s 

finances credible, and I therefore find the numbers in the Seitz Report to be the most 

reliable indication of the Company’s value. However, I found Seitz’ estimates 

210 Id. at 206:6–207:7 (Zachman). As I noted above, although Zachman produced portions of his 

tax returns, he refused to produce the exhibits that showed how much income he reported from 

Real Time Data. See supra, Section II.B.1; see also March 5, 2019 Ruling, at 24:15–25:12.

211 Thomas Report, at Schedule 7.

212 Trial Tr. 202:3–204:12 (Zachman). As noted earlier, Zachman never produced his full tax 

returns, and so the Defendants were unable to identify the amount he reported to the government 

as income from Real Time Data.

213 Id. at 206:20–207:7 (Zachman).

214 March 5, 2019 Ruling, at 35:19–36:3.
43

regarding Real Time Data’s growth, given its early year-over-year expansion, 

unduly conservative. Therefore, to find fair value, I utilize the numbers and income 

capitalization model provided in the Seitz Report, but I adjust the long-term 

company growth rate from Seitz’ prediction of 2% to Thomas’ higher prediction of 

5%, to account for the Company’s early-years hyper-growth. Applying a 5% longterm growth rate to Seitz’ model produces an equity value for Real Time Data at the 

date of the Merger of $346,000. Zachman’s fifty-percent economic interest is worth 

$173,000.

D. Real Time Data’s Counterclaims215

Real Time Data, as Intervenor-Defendant, filed counterclaims against 

Zachman for conversion, violation of the Deceptive Trade Secret Act, and tortious 

interference with contract.

216

 The Defendants seek to have any award from Real 

Time Data’s counterclaims offset their liability owed for the fair value of Zachman’s 

interest resulting from the breach of fiduciary duty claim.217 I find, however, that 

215 Real Time Data filed its counterclaims on September 8, 2015. Countercl. by Intervenor-Def. 

Real Time Data Services, LLC, D.I. 93. On October 19, 2016, Zachman requested leave to file a 

“Supplemental Answer & Counterclaim Against Intervener Defendant Real Time Data Services, 

Inc.” D.I. 142. Zachman sought to bring seven counts against Real Time Data: (1) Breach of 

Contract, (2) Breach of Implied Covenant of Good Faith and Fair Dealing, (3) Defamation; (4) 

Fraud; (5) Constructive Trust, (6) Promissory Estoppel, and (7) Accounting from Data Services. 

Id. I consider Zachman’s request for leave to file this counterclaim denied under my ruling of 

February 26, 2018, where I denied his request for leave to file a second amended complaint, for 

the same reasons stated in that ruling. See February 26, 2018 Ruling, at 25:19–27:7.

216 Countercl. by Intervenor-Def. Real Time Data Services, LLC, D.I. 93.

217 The Defendants, in their briefing, often fail to distinguish between the Defendants and the 

Intervenor-Defendant, Real Time Data. E.g. Def. Real Time Cloud Services, LLC, Sangeeta 
44

the Intervenor-Defendant has failed to establish an entitlement to damages or an 

offset.

1. Conversion

Conversion is “any distinct act of dominion wrongfully exerted over the 

property of another, in denial of [the plaintiff’s] right, or inconsistent with it.”218 

Real Time Data argues that Zachman is liable for conversion because he overdrew 

on the Company’s bank accounts over several years and because he withheld 

revenue deposits in his secret U.S. Bank account, using the funds to pay for personal 

items.

For this counterclaim, the burden is on the Intervenor-Defendant to prove that 

Zachman’s draws and withholding of funds amounted to conversion. As proof of 

the overdraws, the Intervenor-Defendant submitted a one-page chart into evidence

showing a summary of how much it calculates Zachman overdrew the Company’s 

bank accounts from fiscal years 2005 through 2013.

219

 Chhabra testified she created 

this chart from bank statements with the help of an accountant.

220

 The number is 

Chhabra, CBS Accounting Pvt. Ltd. and Real Time Data Services, LLC’s Reply Post-Trial Br., 

D.I. 272, at 1 (naming Real Time Data simply as a “Defendant”), 5 (stating that “Zachman has 

failed to rebut the prima facie showing that supports Defendants’ claim against him.”). I have

attempted to distinguish the Defendants from the Intervenor-Defendant throughout this Opinion 

for the sake of clarity, although in some situations the distinction is immaterial.

218 Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872, 889 (Del. Ch. 2009) (citing Drug, Inc. v. Hunt, 

168 A. 87, 93 (Del. 1933)).

219 DX 9, at 1.

220 Trial Tr. 39:17–41:20 (Chhabra).
45

$48,720.221 Regarding the U.S. Bank account Zachman opened, Chhabra followed

the same approach, compiling expenditures and withdrawals into a one-page chart 

with the aid of bank statements and an accountant and reaching a final number 

labeled “Unexplained Withdrawal” of $63,213.20.222

These summary charts do not cite to or provide the bank statements or 

financial records from which the data is compiled.

223 The charts add together the 

categories “Summary of Money excessively withdrawn” and “Unexplained 

Withdrawal” to create “Total Money recoverable from Mr. Zachman.”224 This falls 

short of Real Time Data’s burden of proof on this claim. The evidence offered does 

not permit the Court to weigh whether these withdrawals and withholdings were 

tortious; instead, Real Time Data essentially asks me to assume wrongdoing and rely 

on its calculations, for which it provides only cumulative summaries. Zachman, too, 

has explanations regarding the amounts of his withdrawals and withholdings.

225

 

221 DX 9, at 1.

222 DX 9, at 2; Trial Tr. 44:23–46:1 (Chhabra).

223 The Defendants provided some of the bank statements for the U.S. Bank account in DX 12,

sample bank statements from Wells Fargo and Wachovia in DX 2, and a sample month of account 

activity in the Wells Fargo account in DX 25. These sample bank statements were included to 

demonstrate Zachman’s access to the accounts and to show the flow of money within the 

Company. Trial Tr. 15:5–19:4 (Chhabra). The Defendants argue these sample bank statements 

support Chhabra’s testimony at trial that she was able to trace funds and make calculations as to 

the amount tortuously converted, as summarized in DX 9. Defs.’ Opening Post-Trial Br., at 8–9. 

The summary charts in DX 9, as noted, do not reference any underlying bank statements or 

financial records.

224 DX 9, at 1–2.

225 Trial Tr. 218:2–219:15 (Zachman).
46

Given the summary nature of Real Time Data’s evidence, I have no way to evaluate 

credibility or compare the validity of the competing allegations, and so I cannot find 

that it is more likely than not that Zachman’s withdrawals or retention of funds 

constituted conversion.

2. Tortious Interference with Contract226

Tortious interference with contract requires showing “(1) a valid contract, (2) 

about which the defendants have knowledge, (3) an intentional act by defendants 

that is a significant factor in causing the breach of the [contract], (4) done without 

justification, and (5) which causes injury,” that is, cognizable damages.227 The 

Intervenor-Defendant argues that I should award damages because Zachman 

tortuously interfered with its contracts following his termination from the Company.

The Intervenor-Defendant argues as follows, based on the evidence at trial:

Real Time Data had valid contractual relationships with its customers; Zachman 

knew about those contracts because he helped obtain them through his marketing 

role at the Company; after his termination, he intentionally emailed Real Time Data 

customers and asked them to end their contractual relationship with Real Time Data 

226 As noted, Real Time Data also filed a counterclaim for violation of the Deceptive Trade Secret 

Act. Because the Intervenor-Defendant did not address this counterclaim in post-trial briefing, I 

consider it waived.

227 Great Am. Opportunities, Inc. v. Cherrydale Fundraising, LLC, 2010 WL 338219, at *9 (Del. 

Ch. Jan. 29, 2010).
47

and move to Cloudvara.228 Further, Real Time Data argues Zachman’s interference 

was without justification: he used its customer list—which it claims is a trade secret; 

he attempted to win the customers, at least in part, by disparaging the Company, 

insinuating that conducting business with an India-based company was unduly risky;

and he otherwise engaged in wrongful behavior to stymie its business.

229

 Finally, 

Real Time Data argues it was damaged, witnessing a spike in customer loss that, due 

to Zachman’s discovery abuse, I should presume resulted from Zachman’s efforts at 

Cloudvara.

230

I note that the Intervenor-Defendant failed to allege that Zachman caused a 

breach of any particular Real Time Data contract. The counterclaim appears to be a 

mispled claim for tortious interference with business relationships.231 In any event, 

I find that the Intervenor-Defendant’s claim founders on the shoal of justification. 

Real Time Data argues that it was damaged because Zachman poached its customers. 

Once Zachman was terminated, he was free to compete; the parties could have, but 

did not, have a non-compete contract. Telling consumers that Real Time Data no 

228 Defs.’ Opening Post-Trial Br., at 22–25.

229 Id. at 26–27; DX 15 (June 27, 2012 email suggesting Real Time Data had unsafe business 

risks); Trial Tr. 57:23–58:8 (Chhabra). DX 15 does not include page numbers.

230 Defs.’ Opening Post-Trial Br., at 27–29.

231 For tortious interference with contract, Delaware law requires “an intentional act by defendants 

that is a significant factor in causing the breach of the [contract].” Great Am. Opportunities, 2010 

WL 338219, at *9. In their post-trial brief, the Defendants re-style this element as “Mr. Zachman’s 

Intentional Act Caused The Contracts To Be Terminated”; interference with contract requires the 

defendant contribute to a breach, not merely a termination. Defs.’ Opening Post-Trial Br., at 22.
48

longer had an American presence, a true fact, and insinuating that dealing with such 

an entity is riskier than dealing with an American entity, is not, per se, unjustified 

competition.232 Zachman, at the time he took the acts complained of, was not a 

fiduciary for Real Time Data, nor has the Intervenor-Defendant pled a cause of 

action sounding in breach of fiduciary duty. Some of Zachman’s behavior, posttermination, such as directing his son to interfere with the relationship between the 

Company and its outside counsel, is not admirable, but again, the IntervenorDefendant has not pled unfair competition, only interference with its contractual 

relationship with customers.

The Intervenor-Defendant, in post-trial briefing, makes a half-hearted effort 

to suggest that Zachman’s use of Real Time Data’s customer list to contact and 

poach clients is the unjustified act leading to liability for intentional interference 

with contract.233 The counterclaim, I note, stated a cause of action for improper use 

of trade secrets concerning the customer list, but the Defendants did not brief the 

issue post-trial, and I deem the claim waived. Can the same claim support the 

interference tort? I make no determination whether the Delaware Trade Secret Act234

232 DX 15 (June 27, 2012 email) (“My primary concern with my former clients is that [Real Time 

Data] is now controlled by an India operation which provides you no recourse should there be any 

issues. I would suggest that you consider an alternative.”). DX 15 does not include page numbers.

233 Defs.’ Opening Post-Trial Br., at 26.

234 6 Del. C. §§ 2001–2009.
49

has preempted this common law tort where premised on misuse of trade secrets, 

because the trial record is bereft of evidence that Real Time Data’s customer lists 

were maintained as trade secrets.235 The Intervenor-Defendant has failed to 

demonstrate that Zachman’s efforts to poach customers were unjustified, rather than 

permitted, competition; therefore, I find that this counterclaim cannot support an 

offset against the amounts owed Zachman.

III. CONCLUSION

The Defendants’ Daubert Motion and Motion in Limine to Bar Testimony 

Because of Plaintiff’s Discovery Abuse are denied. The Defendants’ Summary 

Judgement motion is moot. I deny the Intervenor-Defendant’s counterclaims for 

conversion and tortious interference with contract. The Defendants are liable for 

breach of fiduciary duty and must pay the Plaintiff the value of his interest in Real 

Time Data as of the date of the Merger in October 2012. I find the value of 

Zachman’s interest is $173,000, plus interest at the legal rate.

236 The parties should 

confer and submit an appropriate form of order.

235 In their mooted Motion for Summary Judgement, the Defendants attached a statement from 

Chhabra asserting, in conclusory fashion, that customer lists were treated as trade secrets, but that 

statement was not made a part of the trial record. See Defs.’ Opening Summ. J. Br., App’x, at

115–16 (unsworn foreign declaration from Chhabra stating, “[t]he list of [Real Time Data] clients 

contained information that was not available as a compilation from public records and was kept 

confidential by [Real Time Data] before it was used by James Zachman to contact [Real Time 

Data] clients.”).

236 Citrin v. Int’l Airport Centers LLC, 922 A.2d 1164, 1167 (Del. Ch. 2006) (“A central purpose 

of pre-judgment interest is to ensure that a plaintiff to whom payment was owed does not suffer 

injury by the defendant’s unjustified delay. By requiring the defendant to pay a fair rate of interest 
during the period of unjustifiable delay, pre-judgment interest helps make the plaintiff more whole, 

while depriving the defendant of a windfall.”).