Court Opinion

ID: 9928366
Source: CourtListenerOpinion
Date Created: 2024-01-31 17:03:26.72429+00
Date Added: 2024-06-11T09:46:04.546003
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

 ISAAC LARIAN, as Trustee of The Larian           )
 Living Trust,                                    )
                                                  )
                Plaintiff,                        )
        v.                                        )
                                                       C.A. No.: N22C-07-133 EMD CCLD
                                                  )
 MOMENTUS INC.,                                   )
                                                  )
                Defendant.                        )

                                  Submitted: November 8, 2023
                                   Decided: January 31, 2024

                    Upon Defendant’s Motion for Partial Summary Judgment
                                         DENIED

Dominick T. Gattuso, Esquire, Elizabeth A. DeFelice, Esquire, Gillian L. Andrews, Esquire,
Heyman Enerio Gattuso & Hirzel LLP, Wilmington, Delaware, Jonathan K. Cooperman,
Esquire, Kelly Drye & Warren LLP, New York, New York. Attorneys for Plaintiff Isaac Larian,
as Trustee for The Larian Living Trust.

Joseph L. Christensen, Esquire, Christensen & Dougherty LLP, Wilmington, Delaware, Perrie
M. Weiner, Esquire, Baker & McKenzie LLP, Los Angeles, California, Peter P. Tomczak,
Esquire, Michael D. Lehrman, Esquire, Baker & McKenzie LLP, Chicago, Illinois. Attorneys for
Defendant Momentus, Inc.

DAVIS, J.

                                    I.      INTRODUCTION

       This is a breach of contract and fraudulent inducement action assigned to the Complex

Commercial Litigation Division of the Court. In February and August 2020, respectively, The

Larian Living Trust (the “Trust”) through Plaintiff Isaac Larian, the Trust’s trustee (“Plaintiff”),

entered into two “Simple Agreements for Future Equity” (“SAFE”) with Defendant Momentus
Inc. (“Momentus,” and, together with Larian, the “Parties”).1 Essentially, these SAFE

agreements were investment contracts.2 The Trust ultimately invested $4 million in Momentus.3

        Plaintiff now asserts that the Trust was entitled to shares of Momentus stock, and that

Momentus failed to timely issue those shares to the Trust.4 Plaintiff also maintains that the Trust

was fraudulently induced into investing in Momentus.5 Accordingly, the Trust and Isaac Larian

brought this action and alleged two causes of action against Momentus: (1) breach of contract

with respect to both SAFE agreements; and (2) fraudulent inducement for allegedly making

material misrepresentations about Momentus and its technology, and omissions about its then-

CEO, Mikhail Kokorich.6

        The Trust and Plaintiff filed the original Complaint on July 20, 2022.7 Momentus filed

its first motion to dismiss in September 2022.8 Instead of responding to the motion to dismiss,

the Trust and Plaintiff filed an Amended Complaint on November 16, 2022.9 The Amended

Complaint had the effect of mooting Momentus’ first motion to dismiss.

        On December 2, 2022, Momentus filed a second motion to dismiss (the “Motion to

Dismiss”). In the Motion to Dismiss, Momentus moved to dismiss Plaintiff’s claims.10

Momentus also argued that the Trust lacked standing to bring the suit.11 The Trust and Isaac

Larian opposed the Motion to Dismiss.12 The Court entertained oral argument on March 16,

1
  Amended Complaint (hereinafter “Am. Compl.”) ¶ 12, Nov. 16, 2022 (D.I. No. 19).
2
  Id. ¶ 1.
3
  Id. ¶ 65.
4
  Id. ¶ 60.
5
  Id. ¶ 64.
6
  See Id. ¶¶ 58-66.
7
  See D.I. No. 1.
8
  See D.I. No. 14.
9
  See Am. Compl.
10
   See Mem. of Law in Supp. of Def. Momentus Inc’s Mot. to Dismiss the Larian Living Trust and Isaac Larian,
Trustee’s Am. Compl. (hereinafter “MTD”) (D.I. No. 20).
11
   See id.
12
   See Pls. the Larian Living Trust’s and Isaac Larian, Trustee’s Answering Br. in Opp’n to Momentus’s Mot. to
Dismiss (hereinafter “Opp’n to MTD”), (D.I. No. 25).

                                                      2
2023. At the conclusion of the hearing, the Court denied the Motion to Dismiss except as to

standing which the Court granted.13 Accordingly, Plaintiff (as trustee of the Trust) substituted

himself for the Trustee as the named plaintiff.14

         Presently before the Court is Defendant’s Motion for Partial Summary Judgment (the “SJ

Motion”). Through the SJ Motion, Momentus seeks judgment on the Amended Complaint’s

breach of contract claim. Plaintiff opposed the SJ Motion.15 The Court held a hearing on the SJ

Motion on November 8, 2023. At the conclusion of the hearing the Court took the SJ Motion

under advisement.

         For the reasons stated below, the SJ Motion is DENIED.

                                        II.      RELEVANT FACTS

     A. THE PARTIES

         Mr. Larian, as Trustee of the Trust, resides in California.16 The Trust is a California trust

with its beneficiaries located in California.17 Non-party Jason Larian is the son of Isaac Larian

and a Beneficiary of the Trust.18 Jason Larian resides in California.19

         Momentus is incorporated in Delaware and has its principal place of business in

California.20 Momentus marketed itself as a “space infrastructure company” that produced a

“disruptive water-based propulsion technology” to enable commercial satellites to be placed into

13
   See Mot. to Dismiss Hearing Transcript of March 16, 2023 (filed March 22, 2023) (hereinafter “Tr.”) (D.I. No. 36).
14
   Tr. at 69. For consistency with older filings, this memo will primarily refer to Plaintiff “the Trust.”
15
   Plaintiff Isaac Larian, as Trustee of The Larian Living Trust’s Answering Br. in Opp’n to Momentus, Inc.’s Mot.
for Partial Summ. J. (hereinafter “Opp’n to MSJ) (D.I. No. 46.
16
   Am. Compl.¶ 9.
17
   Id. ¶ 8.
18
   See Opp’n to MSJ at 5.
19
   Id.
20
   Am. Compl. ¶ 9.

                                                         3
specific orbits around Earth.21 Momentus’ former CEO is non-party Mikhail Kokorich, a

Russian national with experience in the industry.22

     B. THE SAFE AGREEMENTS

         The Trust invested $4 million in Momentus through two SAFE agreements.23 On

February 24, 2020, the Trust, through trustee Isaac Larian, and Momentus entered into the first

SAFE agreement (the “February SAFE”).24 The Trust invested $1 million in exchange for “the

right to certain shares of [Momentus’] capital stock” in the event of an “Equity Financing” or

“Liquidity Event.”25 On August 6, 2020, the Trust, through Plaintiff, as trustee, and Momentus

entered into the second SAFE agreement (the “August SAFE”).26 Under the August SAFE, the

Trust invested $3 million in Momentus.27 Both Parties agree that the terms of the February

SAFE and the August SAFE are materially the same.28 Both SAFE agreements are governed by

Delaware law.29

         Section 1(a) of the SAFE agreements, titled “Equity Financing,” states:

         If there is an Equity Financing before the expiration or termination of this Safe,
         [Momentus] will automatically issue to the [Trust] a number of shares of Safe
         Preferred Stock equal to the Purchase Amount divided by the Conversion Price on
         the on the initial closing of the Equity Financing. In connection with the issuance
         of Safe Preferred Stock by [Momentus] to the [Trust] pursuant to this Section 1(a):
         (i) The [Trust] will execute and deliver to [Momentus] all transaction documents
         related to the Equity Financing, provided, that such documents are the same
         documents to be entered into with the purchasers of Standard Preferred Stock, with
         appropriate variations for the Safe Preferred Stock if applicable, and provided
         further, that such documents have customary exceptions to any drag-along
         applicable to the [Trust], including, without limitation, limited representations and

21
   See Id. ¶¶ 2, 11.
22
   See Id. ¶ 42.
23
   See Id. ¶¶ 12, 17.
24
   See Id. ¶ 12.
25
   Am. Compl., February SAFE § 1 (Ex. B to D.I. No. 19).
26
   Am. Compl. ¶ 17.
27
   Am. Compl. (the August SAFE is Ex. C. to D.I. No. 19).
28
   See Am. Compl. ¶ 17; MTD at 8.
29
   Am. Compl., February SAFE § 5(f), August SAFE § 5(f).

                                                      4
        warranties and limited liability and indemnification obligations on part of the
        [Trust].30

        The SAFE agreements define “Equity Financing” as “a bona fide transaction or series of

transactions with the principal purpose of raising capital, pursuant to which [Momentus] issues

and sells Preferred Stock at a fixed pre-money valuation.”31 “Standard Preferred Stock” is “the

shares of a series of Preferred Stock issued to the investors investing new money in [Momentus]

in connection with the initial closing of the Equity Financing.”32 “Safe Preferred Stock” is

essentially the same as Standard Preferred Stock, but Safe Preferred Stock has (i) liquidation

preference with anti-dilution protection; and (ii) different dividend rights.33

        Section 1(b) of the SAFE agreements, titled “Liquidity Event,” states in pertinent part:

        If there is a Liquidity Event before the termination of this Safe, this Safe will
        automatically be entitled to receive a portion of the Proceeds, due and payable to
        the [Trust] immediately prior to, or concurrent with, the consummation of such
        Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out
        Amount”) or (ii) the amount payable on the number of shares of Common Stock
        equal to the Purchase Amount divided by the Liquidity Price (the “Conversion
        Amount”). If any of [Momentus]’s securityholders are given a choice as to the
        form and amount of Proceeds to be received in a Liquidity Event, the [Trust] will
        be given the same choice, provided that the [Trust] may not choose to receive a
        form of consideration that the [Trust] would be ineligible to receive as a result of
        the [Trust]’s failure to satisfy any requirement or limitation generally applicable to
        [Momentus]’s securityholders, or under any applicable laws.34

        The SAFE agreements define a “Liquidity Event” as a “Change of Control or an Initial

Public Offering.”35 “Proceeds” are “cash and other assets (including without limitation stock

30
   Id. § 1(a) (emphasis in original).
31
   Id. § 2.
32
   Id.
33
   Id.
34
   August SAFE § 1(a) (emphasis in original).
35
   February SAFE § 2.

                                                  5
consideration) that are proceeds from the Liquidity Event or the Dissolution Event, as applicable,

and legally available for distribution.”36

     C. THE MERGER AGREEMENT37

         On October 7, 2020, Momentus announced that it agreed to a merger with Stable Roads

Acquisition Corp. (“Stable Roads”), which is a special purpose acquisition vehicle or “SPAC.”38

The merger was “completed in or around August 2021” pursuant to a Merger Agreement (the

“Merger Agreement”).39 The merger’s purpose was to take Momentus public.40

         Regarding the SAFE Agreements, Merger Agreement section 2.6(f) states:

         Immediately prior to the Effective Time, each outstanding Company SAFE shall
         be automatically converted into the right to receive the aggregate Per Share
         Company Stock Consideration payable in accordance with the terms of such
         applicable Company SAFE in connection with the Transactions (for the avoidance
         of doubt, with respect to each Company SAFE, such aggregate Per Share Company
         Stock Consideration shall be equal to (i) the number of shares of Company Stock
         equal to the (A) Purchase Amount (as defined in each such Company SAFE),
         divided by (B) Liquidity Price (as defined in each such Company SAFE) applicable
         to such Company SAFE, multiplied by (ii) the Per Share Company Stock
         Consideration). Each Company SAFE so converted shall immediately thereafter
         terminate in accordance with its terms.41

         The Merger Agreement defines the “Effective Time” as the date the “first Certificate of

Merger with the Secretary of State of the State of Delaware” is filed, or a “later time as may be

agreed in writing” by the parties to the Merger.42 The First Certificate of Merger was filed on

August 12, 2021 and neither Party claims another date was specified.43

36
   Am. Compl. Additionally, the SAFE agreements define “Liquidity Price” as “the price per share equal to the
Valuation Cap divided by the Liquidity Capitalization.” See February SAFE § 2; August SAFE § 2.
37
   Ex. D to D.I. No. 20, and Ex. D to D.I. No. 42 (hereinafter “Merger Agreement”).
38
   Am. Compl. ¶ 47.
39
   Id. ¶ 51.
40
   See id. ¶ 47.
41
   Merger Agreement § 2.6(f) (italics in original).
42
   Id. § 2.1.
43
   Opp’n to MSJ at 9-10; see generally Mem. of Law in Supp. of Def. Momentus Inc.’s Mot. for Partial Summ. J.
(hereinafter “MSJ) at 8 (D.I. No. 42) (dating the merger consummation to August 12, 2021).

                                                     6
         The Merger Agreement further provides:

         Each share of Company Stock . . . issued and outstanding immediately prior to the
         Effective Time will be cancelled and automatically deemed for all purposes to
         represent the right to receive, and the holder of such share of Company Stock shall
         be entitled to receive, the Per Share Company Stock Consideration pursuant to this
         Section 2.6(a), issuable in Parent Class A Common Stock, in each case, without
         interest, upon surrender of stock certificates representing all of such Company
         Stockholder’s Company Stock (each, a “Certificate”) and delivery of the other
         documents requires pursuant to Section 2.8.44

         Merger Agreement section 2.8, titled “Disbursement of Aggregate Stock Consideration,”

then specifies:

         Promptly after the Effective Time (and in any event within five (5) Business Days
         thereafter), the Exchange Agent shall mail to each holder of Company Interests
         (other than holders of Excluded Shares and holders of Company Options, Company
         Warrants and Company Restricted Stock): (i) a letter of transmittal (the “Letter of
         Transmittal”) in such form and having such other provisions as Parent and the
         Company may reasonably agree; and (ii) instructions for surrendering Certificates
         representing Company Stock (or affidavits of loss in lieu of the Certificates as
         provided in Section 2.8(g)), if applicable, to the Exchange Agent (the “Surrender
         Documentation”) . . . . Upon receipt by the Exchange Agent of the completed Letter
         of Transmittal and the Surrender Documentation, the Exchange Agent will deliver
         to the holder of such Company Interests the portion of the Aggregate Stock
         Consideration payable to such holder in respect of the Company Interests held by
         such holder in accordance with the terms of Section 2.6 . . . .45

     D. THE LETTER OF TRANSMITTAL AND POST-MERGER COMMUNICATIONS46

         Following the Merger’s consummation, Momentus’ in-house counsel sent an email to the

Trust’s counsel on September 15, 2021 stating the Trust “should receive about 724,995 shares”

of Momentus stock.47 The email also specified, “Attached, please find the Letter of Transmittal

44
   Merger Agreement § 2.6(a).
45
   Id. § 2.8(d).
46
   See “First Email Chain” (Ex. F to D.I. No. 42), containing messages from Sept. 9, 2021 through Sept. 27, 2021;
“Second Email Chain” (Ex. G to D.I. No. 42), containing messages from Sept. 29, 2021 through April 6, 2022; and
“Third Email Chain” (Ex. H to D.I. No. 42), containing a message from April 8, 2022.
47
   Am. Compl. ¶ 52, Ex. D.

                                                       7
and a link to the IRS Form you will need to use for exchanging your shares and/or SAFEs of

Momentus, Inc. for the merger consideration.”48 The Letter of Transmittal stated in part:

         In order to effect the exchange and receive the Per Share Company Stock
         Consideration, the [Trust] must correctly complete and sign this Letter of
         Transmittal and submit either (a) the executed Letter of Transmittal to the address
         above or (b) an electronic copy of the executed Letter of Transmittal to the secure
         URL address provided in the Accompanying Instructions hereto.49

Within an hour, Jason Larian emailed principals at Momentus and responded that “[w]e have a

few questions regarding the two SAFE notes we have with you and what the contemplated

conversion is to shares.”50

         The Parties differ fundamentally in their characterization of the series of communications

that follow.51 Momentus claims that the Trust simply failed to ever return the Letter of

Transmittal despite Momentus having provided the information the Trust required.52 Plaintiff

contends that Momentus provided only “cursory responses” to its questions, including

“insufficient information to determine the validity of the share calculations . . . ”, supplied an

inadequate capitalization table, and did not “follow up” with the Trust on questions the Trust had

posed regarding “large stock option grants to Momentus insiders” including Mr. Kokorich.53

     E. THE SEC ORDER54

         On July 13, 2021, the SEC issued an order instituting a cease-and-desist proceeding

against Momentus (the “SEC Order”).55 The SEC Order asserts that Momentus and Mr.

48
   MSJ at 8-9 (emphasis removed to reflect original) (referencing Letter of Transmittal, Ex. A to Decl. of Matthew
Wolf (Ex. A-G to D.I. No. 46)).
49
   Id. at 9.
50
   MSJ at 10 (referencing the First Email Chain).
51
   See id. at 10-14 for Momentus’s summary of the emails; and see Opp’n to MSJ at 10-17 for the Trust’s summary.
52
   MSJ at 14.
53
   Opp’n to MSJ at 11, 14-15.
54
   This information is relevant to the instant Motion only insofar as the Trust references the SEC Order in its prevention
doctrine argument (see below).
55
   See Am. Compl., Ex. D.

                                                            8
Kokorich engaged in conduct constituting “materially false statements, omissions, and other

deceptive conduct.”56 The SEC Order further states Momentus and Mr. Kokorich “misled”

investors “in two key respects.”57

         First, the SEC Order notes that Momentus “claimed that in 2019, Momentus had

‘successfully tested’ in space its key technology.58 However, the SEC found the “2019 test

failed to meet Momentus’ own public and internal pre-launch criteria for success, and was

conducted on a prototype that was not designed to generate commercially significant amounts of

thrust.”59 Second, the SEC Order provides that Mr. Kokorich and Momentus “concealed and

made false statements about U.S. government concerns with national security and foreign

ownership risks posed by [Mr.] Kokorich, including concerns related to his affiliation with

Momentus.”60 The SEC Order found “investors lacked material information about the extent to

which [Mr.] Kokorich’s affiliation with Momentus jeopardized . . . the company’s launch

schedule and the revenue projections that were based in part on assumptions about the timing of

its first commercial launch.”61

                                   III.     PARTIES’ CONTENTIONS

     A. MOMENTUS

         Momentus moves for partial summary judgment on the breach of contract claim.

Momentus contends that the Trust “failed to satisfy an unambiguous condition to receiving the

merger consideration that [it] seeks under the merger agreement.”62 Momentus maintains that, as

56
   Id., Ex. D ¶ 1.
57
   Id. ¶ 4.
58
   Id.
59
   Id.
60
   Id., Ex. D ¶ 5.
61
   Id.
62
   Reply Br. in Supp. of Def. Momentus Inc.’s Mot. for Partial Summ. J. (hereinafter “Reply MSJ”) at 1 (D.I. No. 48).

                                                         9
such, Plaintiff cannot establish an essential element of the breach of contract claim.63 Momentus

contends that “Parties cannot maintain claims for breach of contract unless all relevant

conditions precedent have been satisfied or excused.”64

         Momentus disputes Plaintiff’s claim that relying on the Merger Agreement (to which the

Trust is not a party) to supply a binding condition on the Trust’s right to receive merger

consideration would effectively “have the Trust forfeit the value of its . . . $4 million

investment.”65 Rather, Momentus states that the Trust’s “only entitlement to shares . . . is

through execution of the Letter of Transmittal. Thus, Plaintiff cannot be said to have forfeited

rights that he did not have in the initial instance.”66

         Finally, Momentus argues that the prevention doctrine should not apply here because

Momentus did not: (i) withhold the letter of transmittal; (ii) delay informing the Trust of the

number of shares to which it was entitled; or (iii) “materially contribute” to the Trust’s failure to

satisfy the condition precedent.67

     B. PLAINTIFF

         Plaintiff contends that Momentus is not entitled to partial summary judgment on its

breach of contract claim because material factual disputes exist with respect to: (i) whether the

Merger constituted an “Equity Financing” or “Liquidity Event” under the SAFE Agreements; (ii)

whether the SAFEs required the Trust to execute a Letter of Transmittal as a condition precedent

63
   MSJ at 28 (quoting Finclusive Capital v. Q2 Software, 2021 WL 5225860, at *8 (Del. Super. Oct. 28, 2021) (“In a
contract with a condition precedent, performance of that condition precedent is an essential element of a plaintiff’s
breach of contract case.”).
64
   Id. at 17.
65
   Opp’n to MTD at 18.
66
   Reply MSJ at 18 (quoting Realty Growth Invs. v. Council of Unit Owners, 453 A.2d 450, 456) (Waiver of a
contractual right presupposes the existence of a “known right.”) (citing 28 AM. JUR. 2D, Estoppel and Waiver, § 158
(1966); George v. Frank A. Robino, Inc., 334 A.2d 223, 224 (Del. 1975)).
67
   Id. at 25-28.

                                                        10
to receiving merger consideration; and (iii) whether Momentus fairly and properly calculated the

number of shares it proposed to distribute to the Trust.68

        Plaintiff also argues that a forfeiture would result if its breach of contract claim was

dismissed and it was held to a condition precedent supplied by the Merger Agreement, an

instrument to which the Trust is not a party.69

        Finally, Plaintiff asserts that, even if the Court were to construe the delivery of the Letter

of Transmittal as a condition precedent, Momentus’ “obstructive conduct” prevented the Trust

from fulfilling that condition, thereby excusing the Trust’s inaction under the prevention

doctrine.70

                                    IV.      STANDARD OF REVIEW

        “The Court will grant summary judgment if, after viewing the record in a light most

favorable to the non-moving party, no genuine issues of material fact exist and the movant is

entitled to judgment as a matter of law.”71 On a motion for summary judgment, the Court “(i)

construes the record in the light most favorable to the non-moving party; (ii) detects, but does not

decide, genuine issues of material fact; and (iii) denies the motion if a material fact is in

dispute.”72 The moving party bears the initial burden of showing the motion is supported by the

undisputed facts.73 If the moving party carries its burden, then the burden shifts to the non-

moving party to show a genuine issue of material fact exists, and that a trial is necessary.74

68
   Opp’n to MSJ at 3-4.
69
   Opp’n to MTD at 18.
70
   Opp’n to MSJ at 3.
71
   CVR Refin., LP v. XL Specialty Ins. Co., 2021 WL 5492671, at *8 (Del. Super. Nov. 23, 2021) (citing Merrill v.
Crothall-Am., Inc., 606 A.2d 96, 99-100 (Del. 1992)); Del. Super. Ct. Civ. R. 56.
72
   CVR Refin., LP, 2021 WL 5492671, at *8 (citing Judah v. Del. Tr. Co., 378 A.2d 624, 632 (Del. 1977); Merrill, 606
A.2d at 99; Ebersole v. Lowengrub, 180 A.2d 467, 468-69 (Del. 1962)).
73
   Id. (citing Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979)).
74
   Id. (citing Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995)).

                                                        11
        Although summary judgment is “encouraged when possible,”75 there is no “right” to

summary judgment.76 “The Court may deny summary judgment if the Court is not reasonably

certain” whether there is a triable fact issue.77 The Court may also deny summary judgment if

“the Court concludes a more thorough inquiry into, or development of, the facts[] would clarify

the law or its application.”78

                                         V.       DISCUSSION

        To state a claim for breach of contract, the plaintiff must show: “(1) a contractual

obligation; (2) breach of that obligation; and (3) damages caused by the defendant’s breach.”79

        “When a contract is clear and unambiguous, the court will give effect to the plain-

meaning of the contract’s terms and provisions.”80 Although “[a] contract is not rendered

ambiguous simply because the parties do not agree upon its proper construction”,81 an ambiguity

does exist “when the provisions in controversy are reasonably or fairly susceptible to different

reasonable interpretations.”82 The Supreme Court has held that summary judgment is

inappropriate where contractual language is ambiguous.83

        Fundamentally, the Parties here disagree about the contractual obligation at issue and the

source of that obligation. Consequently, the Parties also dispute whether that obligation has been

breached. That disagreement is only sufficient to preclude summary judgment if (i) Momentus’

interpretation is supported by undisputed facts; and (ii) if so, that Plaintiff has failed to argue a

75
   AeroGlobal Cap. Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 443 (Del. 2005).
76
   Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002) (internal citation omitted).
77
   CVR Refin., LP, 2021 WL 5492671, at *8 (citing Cross v. Hair, 258 A.2d 277, 278 (Del. 1969)).
78
   Id. (citing Alexander Indus., Inc. v. Hill, 211 A.2d 917, 918-19 (Del. 1965)).
79
   1 Oak Priv. Equity Venture Cap. Ltd. v. Twitter, Inc., 2015 WL 7776758, at *4 (Del. Super. Nov. 20, 2015).
80
   Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159-60 (Del. 2010).
81
   GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 780 (Del. 2012) (internal citations
omitted).
82
   Axis Reinsurance Co. v. HLTH Corp., 993 A.2d 1057, 1062 (Del. 2010), as corrected (May 10, 2010) (internal
citation omitted).
83
   See GMG Cap. Invs., LLC, 36 A.3d at 784.

                                                     12
different, reasonable interpretation. Here, Momentus has not presented undisputed facts in

support of its interpretation. This is enough to defeat the SJ Motion. Yet even if Momentus

could present undisputed facts, Plaintiff has—at this stage of the proceedings—nevertheless

argued reasonable alternative interpretations of the contracts, obligations, and breaches at issue.

     A. THERE ARE MATERIAL DISPUTES ABOUT THE EFFECT OF THE MERGER ON THE SAFE
        AGREEMENTS, AND WHETHER THE TRUST IS SUBJECT TO THE MERGER AGREEMENT.

         Momentus argues that the Merger was neither an Equity Financing nor a Liquidity Event

as defined in the SAFE Agreements, and so Momentus is therefore not required to

“automatically issue” shares (in the event of the SAFEs Section 1(a)’s Equity Financing) nor

acknowledge that the Trust is “automatically . . . entitled to receive” compensation (under the

SAFEs Section 1(b)’s Liquidity Event).

         Momentus primarily focuses on the terms of the Merger Agreement, not the SAFE

Agreements, though Momentus does acknowledge that the SAFE Agreements provide for certain

“triggering events,” including an Equity Financing.84 Momentus highlights that the SAFEs also

state that “[t]he [Trust] will execute and deliver to [Momentus] all transaction documents related

to the ‘Equity Financing’ . . . .”85

         However, Momentus simultaneously denies that the Merger constituted an Equity

Financing.86 Instead, Momentus contends that the Merger Agreement treated the SAFEs

“similarly to the other holders of Company Interests” in that “all outstanding shares of ‘Company

84
   MSJ at 3 (citing § 1 of both the February SAFE and the August SAFE).
85
   Id. at 4 (citing § 1 of both the February SAFE and the August SAFE).
86
   See id. at 18, n.5 (citing § 2 of each SAFE) (“Though Plaintiff implicitly contends the SAFEs were triggered, here
the Merger was not an ‘Equity Financing’ because Momentus did not ‘issue[] and sell[] Preferred Stock’ in the Merger.
Instead, in the Merger, Momentus cancelled all of its preferred stock;” see also MSJ at 23, n. 6 (“[T]he Merger was
not a triggering ‘Equity Financing’ under the SAFEs that entitled the Trust to receive shares of Momentus common
stock.”).

                                                        13
Stock’ were cancelled and converted into the ‘right to receive’ the ‘Per Share Company Stock

Consideration’” upon closing.”87

         Conversely, Plaintiff concentrates his breach of contract claim on the SAFE

Agreements’ terms, and argues that the Merger was either an Equity Financing or a Liquidity

Event as defined in those Agreements.88 Plaintiff maintains that Momentus was therefore

obligated to deliver shares to the Trust under either scenario.89 Plaintiff claims that Momentus

breached the SAFE Agreements by not doing so, and the Trust was damaged when the value of

those shares then “dropped precipitously”.90

         Plaintiff contends that summary judgment is inappropriate because a factual dispute

exists as to whether the Merger constituted an Equity Financing or a Liquidity Event, or neither,

and what effect that has on Momentus’ obligation to pay merger consideration to the Trust.91

Plaintiff argues that “[d]iscovery into a number of issues solely within Momentus’ control is

necessary, including information concerning (i) the nature of the merger transaction, and (ii)

whether the shares Momentus proposed to provide to the Trust were properly and fairly

calculated.”92

87
   Id. at 5-6 (citing Merger Agreement §§ 2.6(a), (f)) (describing the “Per Share Company Stock Consideration” as a
certain number of shares of common stock in the surviving company.”).
88
   Am. Compl. ¶ 51. See also Opp’n to MSJ at 6-7:
           [U]pon the occurrence of an Equity Financing, as defined, the Trust would become automatically
           entitled to “a number of shares of Safe Preferred Stock,” determined by a formula set forth in the
           SAFE. Upon the occurrence of a Liquidity Event, defined as a Change in Control or an Initial Public
           Offering, the Trust would “automatically be entitled to receive” its pro rata share of merger
           consideration, whether in the form of cash (the “Cash-Out Amount”) or as-converted Momentus
           shares (the “Conversion Amount”).
89
   Id.
90
   Opp’n to MSJ at 1. The Trust claims that Momentus’ delay in informing the Trust of the number of shares to which
it was entitled “significantly damaged” the Trust as the per-share price fell from $10.56 to $2.91, resulting in the value
of the Trust’s 724,995 shares declining from $7,655,947 “when the shares should have been distributed” to
$2,109,735, “well below the $4 million investment amount.” Am. Compl. ¶¶ 5, 59.
91
   Id. at 3.
92
   Id. at 4.

                                                           14
         The Court does not believe summary judgment, currently, is appropriate. “[S]ummary

judgment cannot be granted where a material factual dispute arises regarding contracting parties’

intentions”93 and, to the Court, there appears to be the existence of valid disputes about intention

regarding both the terms of the Merger and the effect of the Merger on the parties’ rights and

obligations under the SAFEs. Given the pre-discovery stage of the case, the Court does not

believe the issues are yet ripe for resolution on summary judgment.

     B. THERE IS A MATERIAL DISPUTE ABOUT THE EXISTENCE OF A CONDITION PRECEDENT,
        AND, IF SO, WHETHER IMPOSING THAT CONDITION WOULD RESULT IN A FORFEITURE.

          Momentus asserts that Merger Agreement section 2.8(d) dictates that Momentus is not

obligated to deliver on the Trust’s “right to receive” merger consideration until a Letter of

Transmittal has been received by its Exchange Agent.94 In support, Momentus relies upon the

following language: (i) “Upon receipt by the Exchange Agent of the completed Letter of

Transmittal and Surrender Documentation, the Exchange Agent will deliver to the holder of such

Company Interests the portion of the Aggregate Stock Consideration payable to such holder. . .

.;” and (ii) “…Until a Letter of Transmittal has been received by the Exchange Agent, each

Company Interest shall represent . . . only the right to receive” merger consideration.95

         Momentus contends that “[u]nder Delaware law, ‘[t]here are no particular words that

must be used in order to create a condition precedent . . . any phrase that conditions performance’

suffices.’” 96 Momentus argues the language it cites from the Merger Agreement “‘conditions

93
   McAnulla Electrical Construction, Inc. v. Radius Techs., LLC, 2010 WL 3792129, at *5 (Del. Super. Sept. 24, 2010)
(citing Modern Telecomms., Inc. v. Modern Talking Picture Serv., 1987 WL 11286, at *3 (Del. Ch. May 27, 1987)).
94
   Id. at 8.
95
   Id. (emphasis supplied). Momentus further argues that other provisions in the Merger Agreement “reiterated and
implemented” the return of the Letter of Transmittal as a condition precedent, e.g., Section 1.2(c) (““[T]he Letter of
Transmittal that shall be required to be delivered by the applicable holders of Company Interests as a condition to
receipt of any portion of the Aggregate Stock Consideration shall include . . . .”) (Opp’n to MSJ at 7) (emphasis
supplied).
96
   Id. at 19, quoting Thomas v. Headlands Tech Principal Holdings, L.P., 2020 WL 5946962, at *5 (Del Super. Sept.
22, 2022).

                                                         15
performance’ on the return of Letter of Transmittal” and therefore creates the condition

precedent.97

         Plaintiff, again, focuses his argument on the terms of the SAFE Agreements, contending

that that “[n]owhere do the SAFE Agreements contain the language required for a condition

precedent,”98 and that “[t]his is enough to defeat Momentus’ condition precedent argument.”99

Further, Plaintiff claims that contracting parties are required to “use unambiguous, express

language to create a condition precedent capable of producing a forfeiture”100 because Delaware

law disfavors conditions precedent “because of their tendency to work a forfeiture.”101

         Like Momentus, Plaintiff relies on the Court’s opinion in Thomas v. Headlands Tech

Principal Holdings102 to support his argument. Thomas, in relevant part, reads as follows:

         The existence of conditions precedent “are ultimately a question of contract
         interpretation.”103 “[I]f the language of a contract is plain and unambiguous, a court
         should construe the contract according to its terms.”104 “There are no particular
         words that must be used in order to create a condition precedent. . . any phrase that
         conditions performance” suffices.105 A condition precedent is an “act or event,
         other than a lapse of time, that must exist or occur before a duty to perform
         something promised arises.”106 Under Delaware law, “[c]onditions precedent are

97
    Id. at 19. Momentus also argues that “treatment of the Letter of Transmittal as a condition is unsurprising as
Momentus could not issue shares as merger consideration without first receiving the Letter of Transmittal and Form
W-9.” (Reply MSJ at 5 (referencing Posco Energy Co. v. FuelCell Energy, Inc., 560 F. Supp. 3d 747, 753 (S.D.N.Y.
2021)) (“explaining that courts have construed triggering events as conditions if the trigger is necessary to a party’s
ability to perform the obligation at issue . . . .” (internal citations omitted)).
98
   Opp’n to MTD at 18.
99
   Opp’n to MSJ at 19 (citing Aveanna Healthcare, LLC v. Epic/Freedom, LLC, 2021 WL 3235739, at *28 (Del. Super.
July 29, 2021) (denying judgment on the pleadings where the Court found no conditions precedent in the applicable
contract provision); (and Grottenthaler v. SVN Med, LLC, 2022 WL 17249642, at *4 (Del. Super. Nov. 28, 2022) (“If
a completed I-9 is a condition precedent to receiving wages as a matter of law, no party has pointed the Court to that
condition in the contract or in federal law;” denying motion to dismiss).
100
     Id. (citing Thomas at *5).
101
     Id. (quoting Stoltz Realty Co. v. Paul, 1995 WL 654152, at *7 (Del. Super. Sept. 20, 1995)).
102
     2020 WL 5946962 (Del. Super. 2020).
103
     Quoting Casey Emp't Servs., Inc. v. Dali, 1993 WL 478088, at *4 (Del. Nov. 18, 1993).
104
     Quoting AES Puerto Rico, L.P. v. Alstom Power, Inc., 429 F. Supp. 2d 713, 717 (D. Del. 2006) (citing 17A Am.
Jur. 2d Contracts § 471 (1991)).
105
     Quoting Cato Cap. LLC v. Hemispherx Biopharma, Inc., 70 F. Supp. 3d 607, 619 (D. Del. 2014) (interpreting
Delaware law).
106
      Quoting Condition Precedent, BLACK'S LAW DICTIONARY (10th ed. 2014); see also RESTATEMENT
(SECOND) OF CONTRACTS § 224 (“A condition is an event, not certain to occur, which must occur, unless its non-
occurrence is excused, before performance under a contract becomes due.”).

                                                         16
         not favored in contract interpretation because of their tendency to work a
         forfeiture.”107 Parties to a contract must use unambiguous, express language to
         create a condition precedent capable of producing a forfeiture.108

         Momentus emphasizes that “no particular words” are necessary if a “phrase that

conditions performance” is included. Plaintiff accentuates the need for “unambiguous, express

language” when the condition precedent is “capable of producing a forfeiture.” Taken together,

the degree of precision required therefore turns on whether the “condition” at issue can produce a

forfeiture. If not, only a phrase conditioning performance is necessary. If so, Delaware law

requires it to be made unambiguously and expressly.

         The condition precedent proposed by Momentus seems capable of working a forfeiture.

As the Court noted during the hearing on Momentus’ Motion to Dismiss:

         I'm concerned of a forfeiture, you invest $4 million, that's a pretty big investment
         in this entity, and it shouldn't be a forfeiture, the parties should be working together
         to make sure that both parties benefit from this. It's not any game, it's not a, you
         know, gotcha thing, it's supposed to be people are working together, they invested
         $4 million and you take care of them when there's a time for it.109

Because of the threat of forfeiture, the “unambiguous, express language” standard should apply

to the evaluation of whether there is a condition precedent under these circumstances.

         Plaintiff has presented a reasonable argument that the SAFE Agreements do not contain

the requisite express, unambiguous language. Plaintiff has also presented a reasonable argument

that the Trust is not bound by the terms of the Merger Agreement, in which Momentus claims to

locate the condition precedent. Therefore, material issues of fact exist with respect to the

107
    Quoting Stoltz Realty Co., 1995 WL 654152, at *9 (quoting 17A AM. JUR. 2D Contracts § 471).
108
    Referencing QC Holdings, Inc. v. Allconnect, Inc., 2018 WL 4091721, at *7 (Del. Ch. Aug. 28, 2018) (“For a
condition to effect a forfeiture, it must be unambiguous. If the language does not clearly provide for a forfeiture, then
a court will construe the agreement to avoid causing one.”); also referencing Martin v. Hopkins, 2006 WL 1915555,
at *6 (Del. Super. June 27, 2006) (same); Volair Contractors, Inc. v. Coastal Mech., Inc., 1986 WL 13982, at *1 (Del.
Super. Dec. 1, 1986) (requiring “an unambiguous expression of intent to make receipt of payment” from a third party
a condition precedent).
109
    Tr. at 27.

                                                          17
existence of a condition precedent, and the potential for forfeiture implied by that condition

precedent.

  C. THERE IS A MATERIAL DISPUTE ABOUT THE APPLICATION OF THE PREVENTION
     DOCTRINE.

         The Court, finally, finds that a genuine dispute remains about whether Plaintiff (for the

Trust) could invoke the prevention doctrine to excuse his nonperformance. This would be true

even if the Court were to find that Momentus had presented undisputed facts establishing that the

Trust was subject to an unfulfilled condition precedent under the Merger Agreement. This is

largely because the application of the doctrine is dependent on whether the conduct in question

materially contributed to nonperformance.110

         Whether Momentus’ conduct contributed materially to the Trust’s decision not to return

the Letter of Transmittal is a fact-intensive inquiry not appropriate for summary judgment at this

stage. As this Court has stated, “Delaware courts routinely recognize that materiality is a

question of fact that is ordinarily not suited for judgment as a matter of law.”111

         Momentus notes that the record before the Court now includes evidence that the Trust

received the Letter of Transmittal in September 2021 and not August 2022 (as the Trust had

previously contended), and that this aligns with the Court’s “recogni[tion] at the motion to

dismiss hearing that Momentus’s arguments would be stronger if it could show that it sent a

letter in September 2021 rather than in April 2022. Momentus has now made that showing[.]”112

110
    MSJ at 26-27. (“[A] breach is generally considered to have ‘“contributed materially” to the non-occurrence of a
condition if the conduct made satisfaction of the condition less likely,’ a failure of performance did not contribute
materially ‘if it can be shown that the condition would not have occurred regardless . . . .’”) (quoting In re Anthem-
Cigna Merger Litig., 2020 WL 5106556, at *90 (Del. Ch. Aug. 31, 2020)).
111
    IP Network Solutions, Inc. v. Nutanix, Inc., 2022 WL 369951, at *11 (Del. Super. Feb. 8, 2022).
112
    MSJ at 25-26. (At the hearing, the Court stated: “The Court is very concerned about the timing of this transaction.
And I’m very concerned that if I dismissed it on a motion to dismiss for a condition precedent, there would be a
forfeiture. . . . As pled, Plaintiff has pled a breach of contract. Whether discovery demonstrates a material conditions
precedent have occurred that would prevent the issuance of the stock to the Larian Trust, that would be grounds for
summary judgment and not on a motion to dismiss.”) (Tr. at 67, 68-69).

                                                          18
        Plaintiff concedes that the Trust no longer claims it did not received the initial Letter of

Transmittal, but counters that ending a prevention doctrine inquiry on this fact alone “ignores the

parties’ subsequent communications” during which the Trust’s counsel “unsuccessfully sought to

obtain information” from Momentus.113 Plaintiff claims that the Trust’s counsel “did not want to

have his client sign the Letter of Transmittal, containing a broad release of Momentus, without

understanding the answers to his questions.”114

        Momentus argues any deficiency in its provision of information to the Trust was

immaterial to the Trust’s failure to return the Letter of Transmittal.115 Momentus notes that

“there is no indication the Trust would have returned the Letter of Transmittal and Form W-9 if

Momentus had done anything differently—as shown by Plaintiff’s continuing failure” to do so

even after the Trust’s questions were answered.116

        Plaintiff counters by arguing that the Merger “came on the heels of the SEC’s Cease and

Desist Order against Momentus and Mr. Korkorich, finding that they had materially misled

investors. The SEC Order understandably led the Trust . . . to proceed cautiously and seek

information” about how the Merger would affect its investment.117 Moreover, Plaintiff asserts

that “Momentus’ post-merger conduct only heightened the Trust’s concerns” and “raised more

questions than [it] answered.”118

        Whether Momentus’ conduct materially contributed to the Trust’s failure to return the

Letter of Transmittal is a fact-intensive inquiry that cannot be resolved on the present record.

113
    Opp’n to MSJ at 25-26.
114
    Id.
115
    MSJ at 27.
116
    Id.
117
    Opp’n to MSJ at 26.
118
    Id.

                                                  19
Therefore, whether the prevention doctrine might excuse the Trust from performance presents

material issues of fact that are not appropriately decided at this stage of the proceeding.

                                      VI.    CONCLUSION

       For the reasons stated above, the Court DENIES the Motion for Partial Summary

Judgment.

IT IS SO ORDERED.

January 31, 2024
Wilmington, Delaware

                                                      /s/ Eric M. Davis
                                                      Eric M. Davis, Judge

cc:    File&ServeXpress

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