Court Opinion

ID: 3198157
Source: CourtListenerOpinion
Date Created: 2016-04-27 12:03:26.063323+00
Date Added: 2024-06-11T14:50:19.033952
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

COMVEST CAPITAL II, L.P., )
Plaintiff, §
v. § C.A. No. N15C-08-110 JRJ CCLD
GREGORY SELKOE, §
Defendant. §

AND NOW TO WIT, this 26th day of April, 2016, having heard and duly
considered Plaintiff`s Motion to Dismiss and for Judgment on the Pleadings;l

Defendant’s Response;z and Plaintiff’s Rep1y,3 IT APPEARS THAT:

Background

1. Comvest Capital II, L.P. ("Comvest"), CapX Partners, and
Karrnaloop, Inc. ("Karrnaloop") entered into an Amended and Restated Credit
Agreement dated June 27, 2014 ("Credit Agreement")." In connection with the
Credit Agreement, Gregory Selkoe ("Selkoe"), the founder and former CEO of

Karrnaloop, executed an Amended and Restated Limited Personal Guaranty

l Plaintiff’ s Opening Brief in Support of its Motion to Dismiss and for Judgrnent on the
Pleadings ("Comvest Mot. Dismiss") (Trans. ID. 58094883).

2 Answering Brief of Defendant Gregory Selkoe in Opposition to Plaintiff’ s Motion to Dismiss
and for Judgment on the Pleadings ("Selkoe Answer") (Trans. ID. 58229008).

3 Plaintiff’ s Reply Brief in Support of its Motion to Dismiss and for judgment on the Pleadings
(‘nifjf'°c;z_tn-*ir~“est Reply") ("'f"?_'.»‘;i_?l€>_?»~ ID. :'*§~$EZ`%'.?*`:5905).

4  111 (Trans. I-;:§, :¢§-'.'?,1».'713§":"1}'.

Agreement ("Guaranty").$ In March of 20l5, Selkoe, Karmaloop, and Comvest
executed three amendments to the Credit Agreement.G All three amendments
included a "Consent and Reaffirrnation," wherein Selkoe "reaffirrn[ed] that all
Loan Documents [including the Guaranty] shall continue to remain in full force
and effect."7

2. Comvest alleges that Selkoe’s obligation under the Guaranty to
personally guarantee five million dollars of Kar1naloop’s debt was triggered when
Comvest demanded payment, following Karmaloop’s defaults in its performance
obligations under the Credit Agreement. Selkoe alleges that his payment
obligation was never triggered because Comvest failed to exhaust all commercially
reasonable collection efforts against Karrnaloop before demanding payment from
Selkoe.

3. Selkoe also alleges various defenses and counterclaims against Comvest
based on Comvest’s wrongful conduct. In particular, Selkoe alleges that Comvest
breached the implied covenant of good faith and fair dealing when Comvest made

repeated misrepresentations to Selkoe as part of "an undisclosed plan to depress

5 Id.; Defenda.nt’s Counterclaim 11 l ("Countercl.") (Trans. ID. 57984046).

6 Compl. Exs. B, C, D.
7 Selkoe’s Consent and Reaffirmation is Exhibit C to each of the amendments.

2

14. Selkoe does not directly address the Consent and Reaffrrrnation in his
answering brief. Rather, Selkoe’s treatment of the Consent and Reafflrrnation falls
back to the issue of whether Section 2.4(b) precludes Selkoe’s implied covenant
claim. Selkoe argues that the Guaranty cannot bar his implied covenant defense
because it does not "clearly and unequivocally" waive the implied covenant as a
defense.zg In particular, Selkoe highlights Section 2.5 of the Guaranty, wherein
Selkoe "expressly waives" certain enumerated rights and defenses. The
enumerated waiver provision of the Guaranty does not make the language of
Section 2.4(b) ambiguous. Section 2.4(b) employs broad language: "The
Guarantor represents, warrants, and agrees that its obligations under this Guaranty
are not and shall not be subject to any counterclaims, offsets or defenses . . . of any
kind against ...[Comvest], whether now existing or which may arise in the
future."” This language is clear and unequivocal, and as of March 19, 2015, when
Selkoe signed the last of the amendments to the Credit Agreement, Selkoe affirmed
that the Guaranty was in "full force and effect." Thus, Selkoe’s argument that the
implied covenant defense alleged in this case could not be waived by Section
2.4(b) because Comvest’s misconduct had not yet occurred when the Guaranty was
signed fails-Selkoe affirmed the enforceability of the Guaranty in March of 20l5.

For Selkoe to sustain a defense for breach of the implied covenant of good faith

28 Selkoe Answer at lS.
29 Emphasis added.

ll

and fair dealing, the alleged wrongful conduct must posta'ate the signing of the
third amendment to the Credit Agreement.”

Collateral Estoppel

l5. The principle events that postdate the third amendment to the Guaranty
are Karrnaloop filing for bankruptcy and Comvest allegedly misrepresenting to

Selkoe that he would continue to work for Karrnaloop and that the Guaranty would

»31

be "resolved as part of [his] employment. Comvest argues that Selkoe is

collaterally estopped from arguing that Comvest acted in bad faith because such a

theory is "directly contrary to the findings and final order of the bankruptcy

court "32

16. The Bankruptcy Court found, inter alz`a, that Comvest "in no way

induced or caused [Karmaloop’s] chapter ll filing."” Under Delaware law, the

30 Comvest cites First Fedeml Savings Bank v. CPM Energy Systems Corp. as evidence that a
prospective waiver of the type presented here would be enforceable. 1991 WL 35689 (Del.
Super. Mar. 12, 1991). CPM is a bare-bones decision. Although the Court found that the
defendants had waived their right to assert the counterclaims alleged in that case, the Court does
not specify what the actual allegations of "bad faith" and misrepresentation were, nor is it clear
when the alleged bad faith conduct occurred. Id. at *2-3.

31 Countercl. \H[ 56-69.

32 Comvest Mot. Dismiss at 16.
33 Comvest Mot. Dismiss, Ex. 2 at 5 . Selkoe also asserts that Comvest "intentionally structured

the sale process to insure that it was the only bidder at the action" and "effectively foreclosed a
true auction" for Karrnal0op. Countercl. 1[1] 50, 56. Comvest argues that these allegations
conflict with the Bankruptcy Court’s finding that the "bid procedures . . . were non-collusive and
substantially and procedurally fair to all parties," that the "negotiation and execution" of
Comvest’s purchase of Karrnaloop’s assets "was in good faith and constituted an arms-length
transaction between" Comvest and Karrnaloop "without collusion and in good faith," and that the
consideration paid by Comvest for Karmaloop’s assets was "fair and reasonable." Comvest Mot.

Dismiss at 17-18.
12

"preclusive effect of a foreign judgment is measured by standards of the rendering

forum."34 Because the Bankruptcy Court issued the relevant opinion, the law of

the United States Court of Appeals for the Third Circuit applies.35

l7. In the Third Circuit, a party is collaterally estopped when "(l) the issue
sought to be precluded is the same as that involved in the prior action; (2) that
issue was actually litigated; (3) it was determined by a final and valid judgment;
and (4) the determination was essential to the prior judgment."% The Third Circuit
also requires that "the party against whom the doctrine is asserted must have been

a party or in privity with a party to the prior adjudication and have had a full and

fair opportunity to litigate the issue in question in the prior action."37

l8. The record before the Court at this preliminary stage is insufficient for
the Court to determine if Selkoe is collaterally estopped by the findings of the
Bankruptcy Court. For example, Comvest states that Selkoe was a "creditor party"
to the bankruptcy proceeding.38 However, it is unclear at this stage whether Selkoe

had a full and fair opportunity to litigate any of the factual findings issued by the

34 Aczerno v_ New castle czy., 679 A.zd 455, 459 (Del. 1996).
35 Yucm'pa Am. All. Fund 1, LP v. SBDRE LLC, 2014 wL 5509787, ar *11 (Dei. ch. oct 31,

2014) (citing Acierno, 679 A.2d at 459).

36 Ia'. (quoting In re Graham, 973 F.Zd 1089, 1097 (3d Cir. 1992)) (alterations omitted); see also
Leyse v. Bank ofAm., Nat’l Ass ’n, 538 Fed. App'x l56, 158-59 (3d Cir. 2013).

37 Seborowski v. Pittsburgh Press Co., 188 F.3d l63, 169 (3d Cir. 1999) (citing Dici v.

Commonwealth of Pennsylvania, 91 F.3d 542, 548 (3d Cir. 1996)).
38 Additionally, in its opening brief Comvest cites Delaware law on collateral estoppel, rather

than the law of the Third Circuit.

13

__,§_;

Bankruptcy Court.” If Selkoe was not a party, whether Selkoe was in privity with
Karrnaloop is question of fact that cannot be determined at this stage.‘m

l9. The collateral estoppel issue cannot be resolved on the record before the
Court, and, because material issues of fact remain in dispute, judgment on the

pleadings is inappropriate. Therefore, Comvest’s Motion for Judgment on the

Pleadings is DENIED.

Bankruptcy Court Sale Order

20. In its Reply brief, Comvest argues for the first time that Selkoe’s

defenses are barred by the Bankruptcy Court Sale Order because the "the rights

that were transferred to Comvest by the Sale Order are ‘ good against the w0rld."’41

In support of its two-sentence argument, Comvest cites In re Farmland Industries,

39 See In re Mariner Post-Acute Network, Inc., 267 B.R. 46, 53 (Bankr. D. Del. 200l) ("In
considering the application of res judicata to bankruptcy proceedings, it is important to recognize
the difference between bankruptcy cases and typical civil litigation. In the latter, identifying the
parties and the cause of action is relatively easy to do: the parties are those named in the
complaint who have been duly served and the issues are those articulated by the pleadings In
contrast, in bankruptcy cases the parties in interest may include the debtor, all its creditors and all
its shareholders. Additionally, a particular matter in a bankruptcy case may affect the debtor's
employees, its vendors, its landlords, parties to contracts with the debtor, and numerous other
parties. These parties are not typically named in the Motion or Application. Further the issues
that may be litigated in the bankruptcy court are far reaching and include determinations of title
to and liens on property, the sale of property, claims against the debtor and others related to the
debtor, claims which the debtor may have against others, as well as numerous issues involving
the debtor’s operations and eventual business and financial restructuring. However, all of these
issues (though the bankruptcy court may ultimately hear and decide them) are not expected to be
litigated at one time. That is, the fact that a particular party may have an interest in a motion
does not require that party to raise all interests or claims that it has in the bankruptcy case
generally at the time that the motion is heard. However, this on its face is what res judicata
appears to r';:§._'{l_€ir\:‘_. To a;g_;f_;°f¢lj:': 1‘£¢1;:-; j°zxat§i.iz.“le`ia so broadly j:».f.z:;~ét:l`c§_l_i bring `ii¥a§zlof_z'=if;:»_tcy-'€.z€,?»‘§i?rs to a halt.").
,I¢_‘»hnson °¢Si'¢fj:§‘a'¢"z;v_;son '-z: :;'§§__ ___°,fz§z_e;'_”z'é_i'.:f';z_';z'z;zrz, Inc., 720 F.  '_`.i, l 16, l.`._l_$§';:i_¢~~-§'?,-i. (D. `Bel. l989).

41 Comvest Mot. Dismiss at 14 (citing In re Farmland Indus., Inc., 376 B.R. 7l8, 727 (Bankr.
W.D. Mo. 2007), ajj"d, 408 B.R. 497 (B.A.P. 8th Cir. 2009)).

14

  

Inc., a case in which the Bankruptcy Court for Westem District of Missouri found
that the unsuccessful bidder at an auction sale was collaterally estopped from
bringing a claim of tortious interference against the successful bidder because the
unsuccessful bidder was, in essence, "seeking to undo the economics of the sale."42
In this case, Comvest’s right to Karrnaloop’s assets is not at issue, and Selkoe’s
personal guarantee of a portion of Karmaloop’s debt does not implicate the
"economics of the sale" as contemplated by Farmland. Selkoe is not seeking to
functionally oust Comvest as the purchaser of Karmaloop assets, but rather to be
relieved of his obligations under the Guaranty.

NOW THEREFORE, for the foregoing reasons, Plaintiff’s Motion to

Dismiss is GRANTED, and Plaintiff’ s Motion for Judgment on the Pleadings is

DENIED.

 

42 376 B.R. ar 726.

15

Karmaloop’s value and interfere with its ability to repay its debt, so that Comvest
could acquire [Karmaloop] for a fraction of its true worth."g
Standard of Review

4. A motion for judgment on the pleadings made pursuant to Superior Court
Civil Rule 12(0) will be granted only when no material issues of fact exist and the
movant is entitled to judgment as a matter of law.9 On a motion to dismiss for
failure to state a claim under Rule l2(b)(6), "all well-pleaded allegations must be
accepted as true," and if the plaintiff can recover "under any reasonably
conceivable set of circumstances susceptible of proof under the complaint," the
motion to dismiss win bo doiiioo.‘° Uiiooi both Ruio iz(b)(o) and Ruio iz(o), if
matters outside the pleadings are presented to and considered by the Court, the
motion must be treated as one for summary judgment under Rule 56. In this case,
the Guaranty is an Exhibit to the Complaint and is incorporated by reference in the
Complaint; therefore the Guaranty is not outside the pleadings and may be
considered in connection with Comvest’s Motion.“ Also, the findings of fact
issued by the Bankruptcy Court in the Sale Order for Karrnaloop’s assets are

appropriate to consider on a Rule 12 motion because they are part of an official

8 cottiitoiol. 1111 1-70.
9 Artisans ' Bank v. Seaford IR, LLC, 2010 WL 2501471, at *l (Del. Super. June 21, 2010) (citing
Gonzales v. Apartmem‘ Communities Corp., 2006 WL 2905724, at *l (Del. Super. Oct. 4, 2006)).

‘° spence v_ Fttnk, 396 A.zd 967, 968 (Del. 1978).
ll Lagrone v. Am. Mortell Corp., 2008 WL 4152677, at *4 (Del. Super. Sept. 4, 2008) ("Matters
attached to a complaint, and incorporated by reference, are not ‘extraneous’ for purposes of

Rule l2.").
3

court record and subject to judicial notice.lz Therefore, Comvest’s Motion need
not be converted into a Rule 56 motion.

Guaranty Trigger Provision
5. Section 2.l(b) of the Guaranty states:

[I]n no event shall [Selkoe] be required to make payment to
[Comvest] under Section 2(a) of this Guaranty until the earliest of

(a) the date that [Comvest] has reasonably determined in good
faith that [it] has exhausted, in all material respects, all
commercially reasonably collection efforts available to
[Comvest] against the Borrower [Karmaloop] and all material
portions of the collateral,

(b) 90 days after the occurrence of any Event of Default which
was used as a basis for [Comvest] making a demand for
payment under Section 2.l(a) or Section 2.7 of this Guaranty,

(c) 90 days after the occurrence of an Event of Default under
Section 7.0l(f) of Section 7.0l(g) of the Credit Agreement, and

(d) 90 days after [Comvest] notifies [Selkoe] that [Comvest]
has initiated its collection efforts against the Borrower and
or/the Collateral.”

6. Comvest argues that this provision clearly and unambiguously allows for

Comvest to demand payment once "the earliest of" subparts (a), (b), (c), or (d) is
fulfilled. Conversely, Selkoe argues that Section 2.l(b) subpart (a) is a

freestanding requirement that Comvest exhaust commercially reasonably collection

12

Ia'.
13 Compl., Ex. E Amended and Restated Limited Personal Guaranty Agreement ("Guaranty").
Section 2.l(b) appears as a single continuous paragraph in the Guaranty, Line breaks have been

used here solely for clarity.
4

efforts against Karmaloop before Selkoe’s obligation to pay can be triggered under
subparts (b), (c), or (d). In particular, Selkoe highlights to the use of "and"
between subparts (c) and (d). According to Selkoe, the use of "and" indicates that
the subparts (a)-(d) are not four, equally sufficient, altematives. Rather, Selkoe
argues, the proper reading of Section 2.l(b) requires Comvest to exhaust
commercially reasonable collections efforts against Kar1naloop under subpart (a)
and "the earliest of’ subparts (c)-(d) must also be fulfilled before Selkoe’s
obligation to pay is triggered At the least, Selkoe argues, the use of "and"
between subparts (c) and (d) renders the provision ambiguous, such that dismissal
of his counterclaim for breach of contract is not warranted.

7. Selkoe’s interpretation does not comport with the plain meaning of
Section 2.l(b).l4 Section 2.l(b) provides that Selkoe shall not have to pay "until
the earliest of," with the phrase "until the earliest of’ immediately followed by
subparts (a)-(d). Although Selkoe’s argument purports to make sense of the use of
"and" rather than the disjunctive "or" between subparts (c) and (d), Selkoe’s
interpretation rearranges the text in a way unsupportable by the plain meaning of

the provision. For Selkoe’s interpretation to follow, Section 2.l(b) would read:

14 GMG Capital Investments, LLC v. Athem`an Venture Partners I, L.P., 36 A.3d 776, 780
(Del. 20l2) (quoting Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d l228, 1232
(Del. 1997)) ("The Court will interpret clear and unambiguous terms according to their ordinary
meaning. ‘Contract terms themselves will be controlling when they establish the parties’
common meaning so that a reasonable person in the position of either party would have no
expectations inconsistent with the contract language."’).

5

In no event shall Selkoe be required to make payment to Comvest
under Section 2(a) of this Guaranty until

(a) Comvest has reasonably determined in good faith that it has
exhausted, in all material respects, all commercially reasonably
collection efforts available to Comvest against Karrnaloop and
all material portions of the collateral,

and, until the earliest of

(b)...

(c)... or

(d)....

The provision is not fairly susceptible to this formulation.l$ Moreover, in this case,
the use of "and" where an "or" might have been more appropriate does not render
the provision ambiguous.lé The plain meaning of Section Z.l(b) provides four
alternative triggers, and Karmaloop filing for bankruptcy satisfies subpart (c).
Therefore, Selkoe’s counterclaim for breach of contract against Comvest for failing
to fulfill subpart (a) before demanding payment is DISMISSED.

Implied Covenant of G00d Faith and Fair Dealing

8. Under Delaware law, "a guarantor on a loan can assert the violation of

the covenant of good faith that was implied in his personal guarantee as a defense

 

15 Id. (quoting Eagle Indus., 702 A.2d at 1232) ("[A]n ambiguity exists ‘[w]hen the provisions in

controversy are fairly susceptible of different interpretations or may have two or more different

meanings. ’ ").
16 1d. (quoting Rhone-Poulenc Basic Chemicals Co. v. American Motorists Ins. C0., 616 A.2d
ll92, 1195 (Del. 1992)) ("A contract is not rendered ambiguous simply because the parties do

not agree upon its proper construction.").

6

to a breach of contract claim."" Whether the implied covenant of good faith and
fair dealing has been breached is a fact intensive inquiry, one not typically suitable
for judgment on the pleadings.lg That said, in Daystar Construction Management,
Inc. v. Mz'tchell, the Court explained that it is exceptionally rare for the covenant to

apply to a guarantee contract because "the ability to demand is an agreed upon
term explicit in the contract," and the Court cannot dilute explicit terms of a
contract by imposing implied obligations. 19

9. In this case, it is not the demand of payment itself that Selkoe attacks, but
Comvest’s alleged intentional undermining of Karrnaloop’s operations such that
Karrnaloop could not fulfill its obligations under the Credit Agreement.z° In
Daystar, the Court laid out the inquiry that the Court must make in order to

determine if a violation of the covenant of good faith and fair dealing can relieve a

guarantor of their obligation to guarantee a debt:

17 Artisans’ Bank, 2010 WL 250l47l, at *2 n.4 (citing Daystar Construction Mgrnt., Inc. v.

Mitchell, 2006 WL 2053649, at *7 (Del. Super. July l2, 2006)).

18 Days¢ar, 2006 WL 2053649, ar *8.

19 1a ar *9 (citing Firs¢ Fed. sav. Bank v. CPM Energy sys., 1993 WL 138986, ar *2 (Del. Super.

 22, 

'="~" _Ié:`-i’.‘, at *7 §""_["-.I"]o the extent the fact finder is to consider the plaintiffs non-compliance with the
covenant as a basis to defeat the plaintiffs breach of contract claim, it is up to the defendant to
raise the issue and then affirmatively prove the plaintiffs material breach, either in the context of
a cross claim or, at least, an affirmative defense."); see also Chamison v. HealthTrust-Hosp. Co.,
735 A.2d 912, 920 (Del. Ch. 1999) ("This implied covenant is a judicial convention designed to
protect the spirit of an agreement when, without violating an express tenn of the agreement, one
side uses oppressive or underhanded tactics to deny the other side the fi'uits of the parties’

bargain.").

7

First, the Court must look to the operative agreement to determine if

there is room to imply the covenant in the midst of the parties’ express

agreements and understandings. Second, the Court must take note of

the nature of the contract at issue to determine how (or even if) the

covenant fits under the circumstances. Third, the Court must look

specifically at [the plaintiff s] conduct to determine if it rises to the

level of a material breach of the covenant such that [the guarantor]

may be relieved of his personal guarantee of the . . . debt.zl
Considering step one of this analysis, Selkoe points to Section Z.l(b) of the
Guaranty. Section 2.l(b) prohibits Comvest from demanding payment from
Selkoe until Karmaloop proves unable to fulfill its obligations under the Credit
Agreement. Thus, Selkoe argues, the implied covenant prohibits Comvest from
intentionally interfering with Karmaloop’s ability to repay the debt.

lO. In opposition, Comvest highlights Sections 2.4(a) and 2.4(b) of the
Guaranty. Section 2.4(a) provides that Selkoe’s obligations are "primary, absolute
and unconditional, irrespective of, and unaffected by. . . any other action or
circumstances which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarant0r." Section 2.4(b) provides that Selkoe’s payment
obligations "are not and shall not be subject to any counterclaims, offsets or
defenses . . . whether now existing or which may arise in the future."zz Comvest

concludes that these provisions prohibit the application of the implied covenant in

this case because Section 2.4(b) explicitly provides that the Guaranty is not subject

21 Ia'. at *9.
22 Emphasis added.

to counterclaims or defenses and because Sections 2.4(a) and 2.4(b) are contract
terms that "address" the implied covenant, such that there is no room to imply any
term in the Guaranty.

ll. Selkoe counters that the Section 2.4(b) does not preclude a defense or
counterclaim for breach of the implied covenant of good faith and fair dealing
because Comvest’s alleged misconduct occurred, for the most part, after the
signing of the Guaranty. Thus, Selkoe argues that Section 2.4(b) does not bar the
covenant’s application in this case because an alleged waiver cannot be effective
when the alleged wrongful conduct_intentional interference with another party’s
perfor1nance-occurred alier the "waiver" was executed.”

l2. Most of Comvest’s alleged intentional interference with Karrnaloop’s
ability to repay its debt occurred after the Guaranty was signed in June 2014, but
before the amendments to the Credit Agreement were signed in March 2015. In
the amendments to the Credit Agreement, Selkoe "absolutely, unconditionally and

irrevocably" released "all actual or potential claims, demands or causes of action

23 See Bantum v. New Castle Cly. Vo-Tech Ea'uc. Ass’n, 21 A.3d 44, 50-51 (Del. 201 l) (quoting
AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 444 (Del. 2005) ("It is well
settled in Delaware that a party may waive her rights. But, the standards for proving waiver
under Delaware law are ‘quite exacting.’ ‘Waiver is the voluntary and intentional relinquishment
of a known right.’ ‘It implies knowledge of all material facts and an intent to waive, together
with a willingness to refrain from enforcing those [ ] rights’ . . . ‘[t]he facts relied upon to prove
waiver must be unequivocal.’ Applying those principles, we have required a party claiming
waiver to show three elements: (l) that ‘there is a requirement or condition to be waived,’ (2)
that ‘the waiving party must know of the requirement or condition,’ and (3) that ‘the waiving
party must intend to waive that requirement or condition."’) (footnotes omitted).

9

[against Comvest] . . . whether such Claims are matured or unmatured or known
or unknown."24 Selkoe does not dispute the validity of this release,z$ but maintains
that his bad faith arguments, although articulated under the label "counterclaim,"
are purely defensive, and therefore, cannot be barred by a provision that says
nothing about releasing defenses.

13. The release provision of the amendments to the Credit Agreement does
not bar Selkoe from raising the implied covenant as a defense because the release
provisions say nothing about releasing defenses, and a release must be
unambiguous.zé However, that does not end the inquiry. In connection with the
amendments to the Credit Agreement, Selkoe also signed a "Consent and
Reaffirrnation" for each amendment. The Consent and Reaffirmations state that
Selkoe "reajj‘irms that all Loan Documents [including the Guaranty] shall continue
to remain in full force and effect." Thus, Comvest argues, Selkoe affirmed the
enforceability of the Guaranty, including the waiver language in Section 2.4(b), as

of March l9, 20l5, when the last amendment to the Credit Agreement was

signed.”

24 Cempi., Exe. B 11 5, c 11 4, D 11 4.
25 rucker v. Albun, Ine., 1999 wL 1241073, ar *2 (Del. super. sept 27, 1999) (“A release is
valid if it meets three requirements. First, the release must not be arnbiguous. Second, the release

must not be unconscionable. Finally, the release must not be against public policy.").
26 Daystar, 2006 WL 2053649, at *6 ("[T]he covenant can be raised as a defense to a breach of

contract claim in the civil context.").
27 Compl. Ex. D.

10