Court Opinion

ID: 9380261
Source: CourtListenerOpinion
Date Created: 2023-03-17 18:03:15.45063+00
Date Added: 2024-06-11T17:16:38.178512
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

     ALUMINUMSOURCE, LLC,                                  )
                                                           )
                              Plaintiff,                   )
                                                           )     C.A. No.: N18C-07-231 EMD CCLD
                      v.                                   )
                                                           )
     LLFLEX, LLC,                                          )
                                                           )
                              Defendant.                   )

                                           DECISION AFTER TRIAL

Thad J. Bracegirdle, Esquire, Bayard, P.A., Wilmington, Delaware, Elliot Richardson, Esquire,
Michele D. Dougherty, Esquire, Ryan D. Gibson, Esquire, Korey Richardson LLC, Chicago,
Illinois, Attorneys for Plaintiff AluminumSource, LLC

Benjamin A. Smyth, Esquire, McCarter & English, LLP, Wilmington, Delaware, Andrew Gold,
Esquire, Erica Gomer, Esquire, Akerman LLP, Fort Lauderdale, Florida, Attorneys for Defendant
LLFlex, LLC

DAVIS, J.

                I.         INTRODUCTION AND PROCEDURAL BACKGROUND

        This is a civil action assigned to the Complex Commercial Litigation Division of the

Court. The claims arise in connection with the Membership Unit Purchase Agreement

(“MUPA”). Plaintiff AluminumSource, LLC (“Aluminum”) alleges that Oracle Flexible

Packing, Inc. (“Oracle” or “LLFlex”)1 made several misrepresentations in the Estimated

Working Capital statement and that these misrepresentations damaged Aluminum. Aluminum

also claims that Oracle breached the contract by withholding annealing racks and the full-time

1
 The Court will generally refer to Defendant as Oracle when describing pre-sale conduct or when it is the party to a
particular agreement.
services of Jack White. Oracle is the predecessor by merger of Defendant LLFlex, LLC

(“LLFlex”).2 LLFlex asserts a counterclaim for breach of the MUPA.

        Aluminum filed its Complaint against Oracle on July 24, 2018. The Court granted a

motion to dismiss without prejudice on January 10, 2019. Aluminum then filed an Amended

Complaint on January 28, 2019. The Amended Complaint contained two claims for relief: (i)

Fraud in the Inducement (Count I); and (ii) Breach of Contract (Count II). On February 12,

2019, the Court denied Oracle’s second motion to dismiss on the record. The Court granted

Aluminum’s motion to substitute LLFlex for Oracle as the real party of interest on April 18,

2019. On February 27, 2019, LLFlex filed it answer to the Amended Complaint.3 LLFlex also

asserted a counterclaim for breach of the MUPA (the “Counterclaim”).4 Aluminum filed its

answer to the Counterclaim on March 19, 2019.5

        LLFlex moved for summary judgment on July 29, 2020.6 On August 28, 2020,

Aluminum submitted its opposition to the motion for summary judgment.7 After a hearing,8 the

Court granted, in part, and denied, in part, LLFlex’s motion for summary judgment on January

21, 2021.9

        Aluminum then moved to amend the Amended Complaint.10 Over LLFlex’s

opposition,11 the Court granted, in part, leave to amend.12 Aluminum filed the Second Amended

2
  The Court will use Oracle and LLFlex interchangeably.
3
  D.I. No. 29.
4
  Id.
5
  D.I. No. 35.
6
  D.I. No. 77.
7
  D.I. No. 82.
8
  D.I. No. 86.
9
  D.I. No. 92.
10
   D.I. No. 93.
11
   D.I. No. 94.
12
   D.I. No. 101.

                                                          2
Complaint on May 27, 2021.13 LLFlex filed it answer to the Second Amended Complaint on

June 11, 2021.14 The Second Amended Complaint contains two claims: (i) Breach of Contract

(Estimated Working Capital Dispute)(“Count I”); and (ii) Breach of Contract (Jack White and

Annealing Racks)(“Count II”).

                                                II.      THE TRIAL

         A. GENERAL

         The Court conducted a bench trial on Count I, Count II and the Counterclaim from May

16, 2022 through May 20, 2022 (the “Trial”).15 The Court then had both parties submit their

closing arguments in written form, receiving the final post-trial paper on or about August 29,

2022.16 These are the facts as the Court finds them after assessing the witnesses’ credibility and

weighing the evidence.17

         B. WITNESSES

         During the Trial, the Court heard from and considered testimony from the following

witnesses:

         Robert Gamba
         Joshua Hoyt
         Craig L. Green
         James Squatrito
         Kevin Hughes
         Jack White
         Jon Heard
         Stephen J. Scherf

13
   D.I. No. 102.
14
   D.I. No. 109.
15
   D.I. No. 128.
16
   D.I. No. 141.
17
   The factual background in this post-trial decision cites C.A. No.: N18C-07-231 EMD CCLD docket entries (by
“D.I. No. __”); joint trial exhibits (by “JX __”); plaintiff’s trial exhibits (by “PX__”); defendant’s trial exhibits (by
DX __”); the trial transcript (Trial Tr. __” by day “I-V”); Deposition transcripts lodged by the parties (by “witness
last name”); and stipulated facts set forth in the parties’ Joint Pre-Trial Order (by “PTO”).

                                                            3
           All the witnesses testified on direct and were available for cross-examination. The fact

witnesses in this civil action were Mr. Gamba, Mr. Hoyt, Mr. Squatrito, Mr. Hughes, Mr. White,

and Mr. Heard. The expert witnesses were Mr. Scherf and Mr. Green.

           Normally, the Court would list the witnesses in the order they testified and which party

called the witness; however, because the Trial was a bench trial, the Court took witnesses as

presented and used Rule 611 of the Delaware Rules of Evidence to allow for examination of the

witness for both parties cases-in-chief.

             Here, the Court is the sole judge of each witnesses' credibility, including the parties.18

The Court considers each witnesses' means of knowledge; strength of memory; opportunity to

observe; how reasonable or unreasonable the testimony is; whether it is consistent or

inconsistent; whether it has been contradicted; the witnesses' biases, prejudices, or interests; the

witnesses' manner or demeanor on the witness stand; and all circumstances that, according to the

evidence, could affect the credibility of the testimony.

           The Court finds that—based on their testimony at the Trial, their manner or demeanor on

the witness stand, and all circumstances that, according to the evidence, could affect the

credibility of the testimony—all witnesses were straightforward and credible. Moreover, all

witnesses provided testimony that was helpful to the Court on the issues to be decided in this

civil action.

           Both parties presented expert testimony during the Trial. In weighing expert testimony,

the Court may consider the expert's qualifications, the reasons for the expert's opinions, and the

reliability of the information supporting the expert's opinions, as well as the factors previously

18
     Taken from Superior Court Civil Pattern Jury Instruction 23.9.

                                                           4
mentioned for weighing the testimony of any other witness. Expert testimony should receive

whatever weight and credit the Court thinks appropriate, given all the other evidence in the case.

         C. FINDINGS OF FACT

         1. General Background

         Aluminum is a Delaware Limited Liability Company.19

         LLFlex is an Illinois Limited Liability Company with its principal place of business

located in Louisville, Kentucky.20

         Oracle and Aluminum entered into the MUPA on August 11, 2015.21

         LLFlex is the successor in interest to Oracle Flexible Packaging, Inc., having merged into

LLFlex on or before June 13, 2018.22

         The MUPA contains a forum selection clause that designates that the Court has

jurisdiction over disputes arising out of the MUPA.23 The parties otherwise agree that the Court

has valid jurisdiction over Count I and Count II, and the Counterclaim.24 In addition, the Court

is the proper venue for this dispute.25 The parties agree that the MUPA is a valid and

enforceable agreement between the parties.26 The parties also agree that Delaware law applies to

any dispute relating to the MUPA.27

         On August 11, 2015, Aluminum’s managing members were Mr. Gamba and Mr. Hoyt.

Mr. Gamba has since resigned his role as managing member.28 Mr. Gamba and Mr. Hoyt were

19
   PTO at 1.
20
   PTO at 2.
21
   JX 1.
22
   PTO at 3.
23
   JX 1, § 2.4.
24
   PTO at 4.
25
   PTO at 5; JX1, § 2.4.
26
   PTO at 21.
27
   PTO at 6.
28
   PTO at 8.

                                                 5
also the managing members of Alpha Aluminum, LLC (“Alpha”).29 Mr. Gamba acted as the

President and CEO of Alpha, until his resignation on or about July 1, 2016.30

         On August 11, 2015, Mr. Squatrito was LLFlex’s president.31 Mr. Squatrito left LLFlex

in the summer of 2018.32 Mr. Heard was LLFlex’s chief financial officer when the MUPA was

executed.33 Mr. Heard left LLFlex in late spring or early summer of 2015.34

         Prior to August 11, 2015, Oracle manufactured flexible packaging products, such as foil

lining for cigarette packages, foil tops for yogurt or coffee pods, pharmaceutical products such as

blister packs, and insulation for cable and wire.35 Oracle manufactured these products at its Polo

Road facility (the “Packaging Division”) in Winston-Salem, North Carolina.36 The Packaging

Division products are generally referred to as “light gauge products.”37

         LLFlex was a sister company to Oracle. LLFlex manufactured flexible packaging

products in a facility located in Louisville, Kentucky facility (the “LLFlex Facility”).38 On or

about June 13, 2018, Oracle merged into LLFlex.39 LLFlex was subsequently substituted as a

party defendant for Oracle, the original named defendant.40

         In addition to the Packaging Division, Oracle owned and operated an aluminum rolling

mill (the “Mill”) located on Cunningham Avenue in Winston-Salem, North Carolina. Oracle

refers to the Mill as the “Metals Division.” The Metals Division purchased aluminum ingots,

29
   PTO at 9.
30
   PTO at 10.
31
   PTO at 11.
32
   Id.
33
   PTO at 12.
34
   Id.
35
   Trial Tr. III at 78-9; Trial Tr. I at 90, 133; Trial Tr. IV at 69; PTO at 15.
36
   Id.
37
   Id.
38
   Trial Tr. I at 42; Trial Tr. III at 97; PTO at 15.
39
   PTO at 14.
40
   Id.

                                                              6
melted the ingots in furnaces, and then ran the melted ingots of aluminum through various rolling

mills until it reached a desired thickness or “gauge,” which were then sold in large aluminum

rolls weighing thousands of pounds.

        Oracle maintained separate accounting for the Packaging and Metals Divisions. Oracle

maintained the separate accounting so it could track performance and generate financial

statements for each division. The two divisions’ financial statements were “rolled up” and

consolidated for purpose of Oracle’s annual audit.

        The vast majority of the rolled aluminum made in the Mill was sold to Oracle’s

Packaging Division or LLFlex. On an annualized basis in 2013, 2014 and 2015, Oracle

purchased 64%, and LLFlex purchased 15% of the Mill’s total output, for a combined total of

79%.41 Oracle sold the remainder of the Mill’s output to external third-party purchasers.42

        The evidence indicated that the Mill was losing money from its operations. The

unaudited income statements of the Metals Division showed that the Metals Division had a

negative EBIT of almost $2.7 million and a negative EBITDA of $1.4 million for the year ending

December 31, 2014, and a negative EBIT and EBITDA of $2.2 million for the first four months

of 2015.43    Testimony at the Trial provided that the Mill’s equipment was functional but also

old and there were output quality issues.44 Oracle was not prepared to invest the necessary

capital expenditures to modernize the Mill to improve the quality and make it competitive.45

41
   JX 14 at Alum012662-64.
42
   Trial Tr. III at 82; Trial Tr. I at 51.
43
   JX 1 at MUPA000215-19; Trial Tr. II at 33-36; Trial Tr. IV at 220-22.
44
   Trial Tr. II at 41-61; Trial Tr. IV at 114.
45
   Id.

                                                         7
         2. The Sale, the MUPA and Related Agreements

         Oracle decided to sell the Mill.46 Oracle engaged a broker, Stout Risius Ross, to assist in

the sale.47 Oracle then transferred a substantial portion of the Metal Division’s assets and agreed

liabilities to a limited liability company called Phoenix Aluminum, LLC, which later changed its

name to Alpha.48

         Mr. Gamba and Mr. Hoyt became interested in acquiring the Metals Division.49 Mr.

Gamba and Mr. Hoyt formed Aluminum to be the buyer.50

         Oracle and Oracle’s then owner, Centre Lane Partners, agreed before the transaction that

if the Mill was not sold to Aluminum, they would likely liquidate the Mill.51 Oracle understood

that it would take six to nine months to find, and qualify, alternative suppliers for aluminum foil,

the primary raw material used by Oracle in its other business divisions.52

         On December 29, 2014, Oracle and Aluminum entered into a letter of intent for the

purchase and sale of the membership units in Alpha.53 On June 9, 2015, Oracle and Aluminum

entered into an amended letter of intent for the purchase and sale of the membership units in

Alpha.54

         Oracle and Aluminum executed the MUPA on August 11, 2015. Through the MUPA,

Oracle sold to Aluminum all the issued and outstanding membership units in Alpha.55

46
   PTO at 16.
47
   Id.
48
   PTO at 17.
49
   Trial Tr. I at 27-29.
50
   Id.
51
   PX 105; Trial Tr. IV at 49.
52
   Id.
53
   PTO at 18.
54
   PTO at 20.
55
   JX 1; PTO at 21.

                                                  8
         In addition to the MUPA, the parties signed a series of agreements including: (i) a

Secured Subordinated Promissory Note (the “Seller Note”); (ii) a Transition Services Agreement

(“TSA”); (iii) a Product Supply Agreement (“PSA”); and (iv) a Sublease. The Seller Note, the

TSA, the PSA and the Sublease are exhibits to the MUPA.56

         The TSA provides that Oracle will provide services to Alpha during a transition period of

up to nine months.57 These services included financial, accounting, human resources,

information technology and other services. The TSA obligated “[Oracle] to provide [Alpha]

with the full-time services of Jack White, Director of Sales – Metals, in a manner consistent with

the normal duties, responsibilities and authority implied by such position.”58 Aluminum and

Oracle understood that if Mr. White was not reassigned to lead the Mill’s sales for a transitional

period after close, the transaction would not move forward.59

         Under the PSA, Oracle was obligated to purchase, and Alpha was obligated to supply, a

minimum of 12.2 million pounds of product, during the nine-month period covered by the

PSA.60

         The Sublease provides that Alpha was to pay rent to Oracle for the Cunningham Road

property housing the Mill consistent with the terms of Master Lease under which Oracle was

tenant.61 In addition, Alpha was to post a letter of credit in favor of Oracle supporting its rent

obligations, and otherwise comply with the terms of the Master Lease.62

         After execution of the MUPA, Mr. Gamba became the president and CEO of Alpha.63

56
   JX 1 at MUPA00054, MUPA000063 and MUPA000086.
57
   JX 1 at MUPA00063-84.
58
   Id. at MUPA000084.
59
   Trial Tr. I at 56 and 104; Trial Tr. II at 89.
60
   JX 1 at MUPA000086-88.
61
   Id. at MUPA000110-205.
62
   Id.
63
   PTO at 14, Trial Tr. I at 28-29.

                                                  9
        MUPA Article IV contains Oracle’s representations to Aluminum.64 Relevant to this

case are Sections 4.10 (Real Property; Personal Property), 4.12 (Sufficiency of Assets) and 4.26

(Limitations on Warranties). The relevant portions of those sections are set out below.

Section 4.10(c) provides:

        4.10 Real Property; Personal Property.

        ...
                (c) Except (i) as set forth on Schedule 4.10(c), (ii) as set forth on the Latest
                    Balance Sheet, (iii) for assets disposed of in the ordinary course of
                    business since the date of the Latest Balance Sheet, or (iv) for Permitted
                    Liens, the Company65 owns, free and clear of all Liens, or has a
                    Contract, license or lease to use, all of the personal property and assets
                    shown on the Latest Balance Sheet, acquired thereafter or located at the
                    Leased Real Property, in each case which is material to the Business or
                    its operations (the “Personal Property”). The Personal Property includes
                    all of the material tangible assets used in the conduct of the Business as
                    currently conducted.66

Section 4.12 provides:

        4.12 Sufficiency of Assets. Except as set forth in Schedule 4.12, the Company has
        good, valid and marketable title to, or a valid leasehold interest in or valid license
        to use, each of its assets, Personal Property and properties reflected in the Financial
        Reports or that are used or held for use in connection with and necessary for the
        conduct of the Business as heretofore conducted by the Company (the “Assets”),
        except for inventory sold following the date of the Latest Balance Sheet in the
        ordinary course of business consistent with past practice, in each case, free and
        clear of any Liens, except for Permitted Liens. The Assets, together with the
        services provided under the Transition Services Agreement, (a) constitute all of the
        properties and assets used or held for use in the conduct of the Business as
        heretofore conducted by the Company, and (b) are sufficient in all material respects
        for the conduct of the Business as currently conducted.67

Section 4.26 provides:

        4.26 LIMITATIONS ON WARRANTIES. Except as expressly set forth in this
        Agreement (including, without limitation, this Article IV), Seller disclaims all
        liability and responsibility for any representation, warranty, or statement made or

64
   JX 1, Art. IV.
65
   Throughout the MUPA, “the Company” refers to the Mill.
66
   JX 1, § 4.10.
67
   JX 1, § 4.12.

                                                     10
         information communicated (orally or in writing) to Buyer (including an opinion,
         information, projection or advice which may have been provided to Buyer or any
         of its Affiliates or any of its or their respective Representatives by the Company,
         Seller or any Representative of Seller or the Company). ALL IMPLIED
         WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A
         PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. ANY AND ALL
         PRIOR REPRESENTATIONS AND WARRANTIES MADE BY SELLER OR
         ITS AFFILIATES OR ANY OF ITS OR THEIR RESPECTIVE
         REPRESENTATIVES, WHETHER VERBALLY OR IN WRITING, ARE
         DEEMED TO HAVE BEEN MERGED INTO THIS AGREEMENT, IT BEING
         INTENDED THAT NO SUCH PRIOR REPRESENTATIONS OR
         WARRANTIES SHALL SURVIVE THE EXECUTION AND DELIVERY OF
         THIS AGREEMENT.68

         Article VII deals with indemnification between the parties.69

         Section 7.10 provides that the indemnification terms under Article VII are “the sole and

exclusive remedy of the Buyer Indemnified Parties for any and all Losses or other claims relating

to or arising from this agreement or in connection with the transactions contemplated hereby.”70

Section 7.1 creates a survival period of one year from closing for any claims.71

         Section 7.6(a) sets out the procedure that must be followed for making a claim:

         7.6 Procedures Relating to Indemnification

                     (a) . . . [T]he Indemnified Party shall deliver . . . to the party from which
                         indemnification is sought (the “Indemnifying Party”), a certificate (a
                         “Claim Certificate”), which shall

                            (i)     state that the Indemnified Party has incurred or anticipates it
                                    will incur Losses for which such Indemnified Party is
                                    entitled to indemnification pursuant to this Agreement; and
                            (ii)    specify in reasonable detail based upon the information then
                                    available . . . each individual item of Losses included in the
                                    amount so stated, the date such item was paid, the basis for
                                    any anticipated liability and the nature of the
                                    misrepresentation, breach of warranty, breach of covenant or
                                    claim to which each such item is related and the computation

68
   JX 1, § 4.26.
69
   JX 1, Art. VII.
70
   JX 1, § 7.10.
71
   JX 1, § 7.1.

                                                      11
                                     of the amount to which such Indemnified Party claims to be
                                     entitled hereunder.72

The MUPA does not create any additional formalities as to the form of the Claim Certificate or

its delivery.

           Claims brought outside the Survival Period will not be limited if they fall under Section

7.4(i):

           (i)        notwithstanding anything to the contrary herein, none of the restrictions,
                      limitations, caveats or qualifications in this Agreement shall limit any
                      Person’s rights, whether substantively or procedurally, with respect to
                      recovery or other remedial relief in respect of intentional misrepresentation
                      or fraud.73

           Count II asserts claim under Article VII. In addition, the Counterclaim states claims

under Article VII. As discussed below, Aluminum and LLFlex failed to comply with MUPA

Section 7.6.

           3. The Annealing Racks Dispute

           Both parties agree that the Personal Property in MUPA Sections 4.10(c) and 4.12 include

the Mill’s annealing racks.

           As set out during the Trial, annealing is a process where metal is heated and allowed to

cool slowly, which removes internal stresses and makes it stronger. The Mill annealed

aluminum on annealing racks and then delivered the aluminum on the racks to the Polo Road

Facility where they remained in inventory until used by the Polo Road Facility, at which point

they were returned.

           Oracle represented in the MUPA that:

           [T]he Company owns, free and clear of all Liens . . . all of the personal property
           and assets shown on the Latest Balance Sheet, acquired thereafter or located at the
           [Mill], in each case which is material to the Business or its operations (the “Personal

72
     JX1, § 7.6(a).
73
     JX1, § 7.4(i).

                                                       12
          Property”). The Personal Property includes all the material tangible assets used in
          the conduct of the Business as currently conducted.74

          Oracle further represented that:

          [T]he Company has good, valid and marketable title to . . . each of its assets,
          Personal Property and properties reflected in the Financial Reports or that are used
          or held for use in connection with and necessary for the conduct of the Business as
          heretofore conducted by the Company (the “Assets”) . . . consistent with past
          practice. . . . The Assets, together with the services provided under the Transition
          Services Agreement, (a) constitute all of the properties and assets used or held for
          use in the conduct of the Business as heretofore conducted by the Company, and
          (b) are sufficient in all material respects for the conduct of the Business as currently
          conducted.”75

          The annealing racks were supposed to be a component part of the annealing furnaces at

the Mill.76 The annealing racks were necessary to conduct the Mill’s business.77 Aluminum

anticipated, based on the representations in MUPA Sections 4.10 and 4.12, that the Mill would

have more than 600 annealing racks to use at the Mill.78

          Most of the racks, on the date of close, and thereafter, were located at Oracle’s packaging

facility across town from the Mill.79 The evidence indicated that, after August 11, 2015, the Mill

did not at any one time have access to the entirety of the annealing racks.80

          Mr. Gamba testified that the lack of racks was one of the reasons that the Mill had to shut

down frequently.81

          LLFlex attempted to help the Mill find alternatives to the annealing racks.82 Despite this,

LLFlex never returned all the racks before the Mill ceased operations.83

74
   JX 1 § 4.10(c).
75
   JX 1 § 4.12.
76
   Trial Tr. I at 64.
77
   Id. at 71.
78
   Id. at 69; Trial Tr. II at 93-94.
79
   Trial Tr. I at 71-72.
80
   Id.; JX11.
81
   Trial Tr. I at 71.
82
   Trial Tr. IV at 100
83
   Id.

                                                    13
         Mr. Gamba testified that an annealing rack has a replacement cost of $1,500.84

         No evidence adduced at the Trial supports the contention that Oracle or any other party

claimed ownership of the annealing racks. The actual dispute was over location of and/or access

to the annealing racks at any one time

         4. The Jack White Services Dispute

         Oracle provided financial documentation to Aluminum prior to the execution of the

MUPA that showed the Mill had lost external sales volume throughout 2014 and through May of

2015.85 The Court heard testimony that external sales declined, in part, during this time because

Mr. White, the primary salesperson for the Mill, had been reassigned to tasks that did not relate

to the Mill in approximately the final quarter of 2014.86

         Aluminum provided information to LLFlex’s agent, Vince Pappalardodo, that sales could

be affected if Mr. White’s attention was not redirected to the Mill.87 Aluminum sent this

information to Mr. Pappalardo in a slide deck.88 Mr. Pappalardo forwarded the slide deck to Mr.

Heard, who received it.89 Aluminum told Oracle that if Mr. White was not reassigned to lead the

Mill’s sales for a transitional period after close, the transaction would not move forward.90

         Oracle agreed to provide certain services post-Closing to the Mill as part of a Transitions

Services Agreement (TSA).91 The parties to this agreement were Oracle and Alpha.92 The TSA

services were, however, part of the MUPA § 4.12 representations.93

84
   Trial Tr. I at 64-65.
85
   PTO at 19.
86
   Trial Tr. I at 39; Trial Tr. IV at 106-07.
87
   Trial Tr. IV at 103-04.
88
   PX 169A; Trial Tr. I at 103-04.
89
   PX 169B; Trial Tr. I. at 103-04.
90
   Trial Tr. I at 56-57; Trial Tr. II at 89.
91
   JX 1, TSA at MUPA000062.
92
   JX 1, TSA at MUPA000069-000070.
93
   JX 1, § 4.12.

                                                 14
        Under Service Schedule VII, Oracle was to provide the Mill with Mr. White’s services.

The TSA provides that Oracle was to provide the Mill “with the full-time services of Jack White,

Director of Sales – Metals, in a manner consistent with the normal duties, responsibilities and

authority implied by such position” for “so long as Mr. White is employed by” Defendant or nine

months after closing, whichever was shorter.94

        Mr. White was the Director of Sales for Oracle’s Metals Division.95 Mr. White also

performed some sales functions for LLFlex.96 Mr. Gamba and Mr. Hoyt wanted Mr. White to

become a full time employee of Alpha.97 Although Mr. White seemed interested in joining

Alpha, Mr. White decided to stay with Oracle.98 As such, the parties agreed to include the

services of Mr. White as part of the TSA.99

        Mr. White had a limited sales function at the Mill for approximately eight weeks.100 Mr.

White testified that he spent this time attempting to reestablish relationships with customers that

had lost faith in the Mill under Oracle’s ownership due to quality and service issues.101

        Mr. Payne did use Mr. White to perform sales functions that benefited LLFlex.102 In

addition, Mr. White carried out sales functions for LLFlex within the nine-month TSA period

when Mr. White was supposed to be providing full-time sales duties to the Mill. During a period

covered by the TSA, Mr. White headed the customer service department for LLFlex’s Louisville

operation, a role that did not relate to the Mill’s sales.103 Mr. Heard also asked Mr. White to

94
   JX 1, TSA Service Sch. VII.
95
   Trial Tr. IV at 123-24.
96
   Id.
97
   Trial Tr. III at 238-40.
98
   Trial Tr. IV at 126-27.
99
   JX 1, TSA.
100
    Trial Tr. I at 101, 109.
101
    Trial Tr. IV at 112-14.
102
    PX 177; PX 180; PX 181; PX 183; PX 185; PX 186; and PX 187.
103
    PX 187; Trial Tr. IV at 208-10.

                                                    15
provide information in support of LLFlex’s response letter regarding the net working capital

dispute between LLFlex and Aluminum during this same period.104

         Mr. Gamba’s complained that Mr. White was spending almost all his time working for

Oracle or LLFlex, and not for Alpha. Mr. Gamba’s first written complaint about Mr. White’s

alleged lack of services was on October 21, 2015.105 Mr. Gamba notified LLFlex of the damages

that Aluminum was sustaining as a result because of Mr. White’s lack of sales support.106 Mr.

Gamba informed LLFlex of this verbally and in writing.107 Aluminum contended that it was

sustaining losses because of LLFlex’s failure to provide Mr. White’s services on a full-time basis

on two occasions: December 14, 2015108 and January 27, 2016.109

         Mr. Squatrito testified at trial that he instructed Mr. Payne and Mr. White to continue to

support the Mill with Mr. White’s sales efforts, and that this instruction was being carried out.110

         Mr. White conceded that he did not spend his full time working for Alpha because it was

“not a full time job.”111 Mr. White did testify that he gave the job all of the time that it required,

and he did not “deprioritize” Alpha.112

         According to Mr. White, the plan was for Alpha to make the capital improvements

necessary to modernize the equipment and to fix the quality issues that plagued the Mill.113 Mr.

White testified that the market for the Mill’s product was small, and many customers already had

bad experiences.114 Mr. White said he could not successfully go to market without being able to

104
    PX 185.
105
    PX 178.
106
    Trial Tr. I at 85-86, 94-95, 97-100, 105, 127-30, 147-49; and Trial Tr. II at 6-7.
107
    PX 118; PX 125.
108
    PX 118
109
    PX 125.
110
    Trial Tr. III at 244-46.
111
    Trial Tr. IV at 165.
112
    Id.
113
    Trial Tr. IV at 165.
114
    Trial Tr. IV at 191-92.

                                                           16
demonstrate to the customers and the market that the quality issues had been addressed.115 Mr.

White said he told this to Mr. Gamba.116

         Mr. White provided that the Mill could not fill the orders it already had due to Alpha’s

cash flow issues and inability to purchase raw materials.117 Mr. White felt the Mill had

production and service issues.118 Mr. White was therefore concerned about generating new

orders.119 Mr. White testified that he did not want to sell to customers with the knowledge that

Alpha could not timely fill the orders.120

         Mr. White testified that no one at Oracle ever told him not to perform services for Alpha

or to prioritize Oracle or LLFlex’s work over his responsibilities with Alpha.121

         The record demonstrates that Mr. White did not provide full-time services to Alpha. The

Court also finds that this seems to be more Mr. White’s allocation of his resources than any

action on the part of Oracle.

         5. The Estimated Working Capital Statement

              a. Preparation and Delivery of the Estimated Working Capital Statement

         Article II of the MUPA provides for the calculation of the purchase price. The purchase

price was:

         (a) An amount paid at Closing (the “Closing Cash Payment[”]) equal to:

              (i)      $4,500,000;
              (ii)     Plus the amount by which the Estimated Working Capital exceeds the
                       Target Net Working Capital, if any; and
              (iii)    minus the amount by which the Target Net Working Capital exceeds
                       the Estimated Working Capital, if any;

115
    Id.
116
    DX 520.
117
    Trial Tr. IV at 129, 203-04.
118
    Id.
119
    Id.
120
    Trial Tr. IV at 113-14.
121
    Trial Tr. IV at 214.

                                                  17
            (iv)    minus the aggregate amount of Company Debt outstanding
                    immediately prior to the Closing as set forth in the Pay-Off Statements
                    (as defined below);
            (v)     minus the unpaid portion of the Selling Expenses; and
            (vi)    minus $1,250,000;

        (b) plus the Promissory Note.122

The Estimated Working Capital was to be calculated according to the Section 2.4(a):

        (a) Estimated Statement. At least three (3) days prior to the Closing Date, Seller
            shall prepare and deliver, or cause to be prepared and delivered, to Buyer a
            statement setting for the Company’s good faith calculations of (i) the Net
            Working Capital as of the close of business on the day immediately preceding
            the Closing Date prepared in accordance with the principles set forth on
            Schedule 2.4(a) (such estimate, the “Estimated Working Capital”); and (ii) the
            Closing Cash Payment calculated in accordance with Section 2.2(a) and this
            Section 2.4(a) and based on the Estimated Working Capital.123

        Schedule 2.4(a) defines, “under GAAP,” the current assets as the Mill’s cash in its bank

account, its inventory, trade receivables and prepaid expenses while its liabilities are the Mill’s

net accounts payable and accrued liabilities.124 The MUPA defines GAAP as “United States

generally accepted accounting principles, consistently applied.”125

        Under its Section 2.4(a) obligations, Oracle provided the Estimated Working Capital

statement.126 The statement estimated the Mill’s net working capital to be $5.25 million, or

$1.25 million more than the Target Net Working Capital ($4 million).

        The Estimated Working Capital statement was prepared by or under the control of its

then CFO, Mr. Heard.127 Prior to the sale, there were no independently audited financial

statements for the Mill alone.128 The only statements were for the “consolidated company,” that

122
    JX 1, § 2.2.
123
    JX 1, § 2.4(a).
124
    JX 1 at MUPA 000204, Sch. 2.4(a).
125
    JX 1 at MUPA 00009 (“GAAP” definition).
126
    JX 2.
127
    Trial Tr. IV at 233-34..
128
    Trial Tr. IV at 222-24.

                                                 18
is the Polo Road facility and the Mill together and audited annually by RSM McGladrey.129 The

consolidated statements were, however, compliant with GAAP according to external auditors.130

              b. Aluminum disputes the Estimated Working Capital Statement

         Aluminum had a contractual obligation to provide a “Closing Statement” within ninety

(90) days after closing. Section 2.4(b) of the MUPA provides:

         (b) Closing Statement. Within ninety (90) days after the Closing Date, Buyer shall
             cause to be prepared and delivered to Seller a statement (the “Closing
             Statement”) setting forth Buyer’s good faith calculations of (i) the Net Working
             Capital as of the Closing, prepared in accordance with the principles set forth
             on Schedule 2.4(a), and (ii) the Closing Cash Payment calculated in accordance
             with Section 2.2 and based on the Final Net Working Capital.131

         On November 8, 2015, Aluminum provided the Closing Statement.132 Aluminum noted

several factors relevant to this adjustment. The “biggest single factor” was Oracle’s valuation of

the aluminum at $1.00 per pound while Aluminum valued it “in accordance with GAAP” to the

PLATTS Metals Week Daily Midwest Transaction Price for the day of closing, around $.78 per

pound.133 The Purchase Price Adjustment also alleged overstated weights for various inventory,

obsolete inventory, outstanding product quality claims, overstated value for inventory

(particularly for finished goods that would have supplied the Polo Road facility), oil valuation,

other accruals and natural gas contracts in place. Aluminum ultimately estimated that this added

up to an adjustment of $5,027,973.36 in its favor.134

129
    Trial Tr. IV at 242.
130
    Trial Tr. IV at 222-24.
131
    JX 1, § 2.4(b).
132
    JX 3.
133
    Id.
134
    Id.

                                                 19
         Oracle responded on December 18, 2015 (the “Dispute Notice”).135 Oracle did not

dispute all of Aluminum’s contentions but did dispute the valuation methodology.136 Oracle

offered to adjust the purchase price by $362,912 to satisfy those concerns.137

              c. The Failed Arbitration

         On January 27, 2016, Aluminum emailed Oracle outlining their issues with Oracle’s

performance under the MUPA.138 Aluminum alleged that the inventory valuation was not

GAAP-compliant.139

         Section 2.4(c) contains an arbitration clause for closing statement disputes:

              d. Purchase Price Adjustment.

              ...

         (c) Closing Statement Dispute. Within forty-five (45) days following receipt by
             Seller of the Closing Statement, Seller shall deliver written notice to Buyer of
             any dispute it has with respect to the preparation or content of the Closing
             Statement. If Seller does not notify Buyer of a dispute with respect to the
             Closing Statement within such forty-five (45)-day period, such Closing
             Statement will be final, conclusive and binding on the parties. In the event Seller
             disagrees with any items contained in the Closing Statement . . . Buyer and
             Seller shall negotiate in good faith to resolve the Disputed Amount. If Buyer
             and Seller, notwithstanding such good faith effort, fail to resolve the Disputed
             Amounts within thirty (30) days after Seller advises Buyer of its objections,
             then Buyer and Seller jointly shall engage Grant Thornton LLP (the
             “Arbitration Firm”) for final determination of the Disputed Amounts.140

         Under MUPA Section 2.4(c), the parties agreed to engage Grant Thornton as the

Arbitration Firm in February 2015.141 Grant Thornton, however, declined to arbitrate the matter.

Grant Thornton contend that SEC independence rules precluded it from providing arbiter

135
    JX 14.
136
    Id.
137
    Id.
138
    PX 125.
139
    Id.
140
    JX 1, § 2.4(c).
141
    Id.

                                                   20
services while they had an audit relationship with Oracle’s brother-sister company.142

Subsequent attempts to arbitrate failed with the parties disagreeing about who is the at-fault

party.

         6. Post-MUPA

         Oracle continued to operate the Packaging Division and the Louisville, Kentucky

facility.143 On or about June 18, 2018, Oracle transferred substantially all its assets relating to

the Packaging Division operations located at Polo Road, Winston-Salem, North Carolina

business operation, to Tekni-Plex, Inc.144

         Aluminum intended to make capital expenditures necessary to modernize the Mill. Mr.

Gamba testified that modernization was necessary to improve the long-standing quality issues at

the Mill and to move away from light gauge products.145 Mr. Gamba testified that the plan was

to expand the Mill’s product miss to heavier gauge products and away from the light gauge

products that were considered inefficient and unprofitable.146

         At Trial, the Court was presented with a series of business plans prepared by Mr. Gamba

and Mr. Hoyt. These plans are dated October 2014,147 November 2014148 and February 2015.149

According to the evidence, these business plans identify a “Stage 1 CAPEX PLAN” in the first

year of $8.6 million to buy new equipment and repair existing equipment.150 Mr. Gamba testified

that these plans were used to seek investors and lenders.151

142
    Id.
143
    PTO at 14.
144
    Id.
145
    Trial Tr. II at 37.
146
    DX 500 at Alum023761; Trial Tr. II at 37.
147
    DX 500.
148
    PX 101.
149
    PX 13.
150
    DX 500 at Alum 023766-67; PX 101 at Alum025150; and PX 103 at Alum025440.
151
    Trial Tr. II at 40-41.

                                                  21
        The business plans sought to: (i) “to raise between US$3 to US$6 million in seed capital”

and “an additional US$6+ million for CAPEX financing purposes;”152 (ii) to raise $ 6 million to

purchase the rolling mill assets and “finance, the first (of two) strategic capital

improvements/investments[,] [t]he first is an $8+ million capital expenditure plan (CAPEX)

which will 1) bring the plant up to current standards and 2) make the necessary equipment

improvements and additions to achieve the mill’s planned repurposing (PX 101 at Alum.

025152); and (iii) “to raise $ 6 million . . . or alternatively $15 million Mezzanine Unitraunch”153

        Aluminum was unable to raise the funds called for in the business plans.154 Aluminum

had to capitalize the business with only (i) $900,000 in equity, (ii) a $1,500,000 equipment loan

from Big Shoulders Capital at 18% interest,155 (iii) an inventory and receivable line from BBT,

which had availability at the time of closing of no more than $4,500,000,156 and (iv) a

$1,000,000 Seller Note.157

        Alpha suffered cash flow issues. The Sublease required Alpha to post a letter of credit as

security for its rent obligations in the amount of $196,000 within ninety (90) days of closing,

which amount increased quarterly up to a maximum of $980,000.158 Alpha failed to post any

letter of credit.159

        After acquiring the Mill, Alpha sought to transfer the electric utility into its name.160

Because Alpha did not have credit, the utility required a $250,000 deposit. Alpha failed to post

152
    DX 500 at 023765.
153
    PX 103 at Alum025442.
154
    Trial Tr. II at 61-63, 67-68.
155
    DX 514.
156
    DX 512; DX 513.
157
    Trial Tr. II at 61-63, 67-68; JX 1 at MUPA000054.
158
    JX 1 at MUPA000119.
159
    Trial Tr. IV at 6.
160
    Trial Tr. IV at 7-8.

                                                        22
the deposit.161 Accordingly, the utility remained in Oracle’s name, and Oracle had to pay the

electric bill, and then seek reimbursement from Alpha.162

        Alpha’s primary lender was Branch Bank and Trust Company (“BBT”).163 BBT loaned

against eligible receivables and inventory pursuant to a formula detailed in the loan

documents.164

        Alpha was in covenant default of its BBT loan by October 4, 2015, less than two months

after the August 11, 2015 closing.165 BBT contended that Alpha was over-advanced on its loan

by $1,137,000 as of October 31, 2015.166

        BBT transferred the loan to BBT’s troubled loan/workout division by October or

November 2015.167 BBT seems to have wanted to exit the facility soon thereafter.168

        In late 2015, BBT reduced availability on the line of credit, by (i) changing the definition

of Net Orderly Liquidation Value of Alpha’s inventory against which it would loan from 72% to

53.3%,169 and (ii) lowering the concentration limit from 75% to 50%, representing the percentage

of receivables from one customer that BBT would loan against.170 At the time, the Mill sold as

much as 79% of its product to Oracle and LLFlex.

        Alpha was having trouble purchasing raw materials. As of January 7, 2016, Alpha owed

its primary metal supplier, Metallic Conversion (which was owned by Mr. Hoyt), approximately

$3.3 million, and had not made a payment since November 12, 2015, almost 2 months earlier.171

161
    Id.
162
    Id.
163
    DX 512; DX 513.
164
    Id.; Trial Tr. II a96-97.
165
    DX 532; Trial Tr. II at 98.
166
    DX 540 at Alum001568; Trial Tr. II at 98.
167
    Trial Tr. II at 98-99.
168
    Id.
169
    DX 504; DX 554.
170
    Trial Tr. II at 113; DX 573; DX 504; and DX 554.
171
    DX 544 at Alum019005.

                                                       23
        On January 6, 2016, Mr. Gamba wrote to BBT:

        The problem right now . . . is that my shipping/order fulfillment is down 25%
        (500,000 Lbs. worth approximately $760,000) in December because of restricted
        access to raw materials due to vendor non-payment [referring to Alpha’s failure to
        pay Metallic Conversion]. I have another 2.2 million lbs. of orders to ship in
        January. Right now based on a continuation of the above mentioned vendor non-
        payment, our access to raw materials continues to be restricted and these numbers
        are in jeopardy.172

        On January 7, 2016, Mr. Gamba advised BBT that “I am now having to turn off one of

my [two] furnaces and we have only been on one caster for over about a month now due to the

supply situation.”173 On January 26, 2016, Mr. Gamba wrote to BBT:

            Of the order commitments we had in January to ship of ~ 2.3 million lbs., we
            received ~ 800K lbs., leaving a hole of ~ 1.5 million lbs. . . . In January, we had
            sales commitments to manufacture for February delivery again of ~ 2.3 million
            lbs. and by the close of the month it looks like we will have had delivered
            against that just ~ 1.1 million lbs. This means a shortfall of metal units coming
            in around 1.2 million lbs. Given a sales book of 4.6 million lbs. for January and
            February, and receipts of metal for 1.9 million lbs. [i]t’s not hard to guess how
            that ends when we are in effects short by 2.7 million lbs. of material.174

        The Mill’s lack of raw material led to numerous customer order delays.175 Alpha’s

inability to improve and modernize the equipment led to continuing and additional quality issues.

All of this diminished the Mill’s ability to sell product and to bring in revenue to support the

business.176

        Alpha eventually factored or borrowed against its receivables from Accord Financial

Inc.177 The maximum amount that could be sold or borrowed was $1.25 million, and the balance

owed bore interest at prime plus 10%.178

172
    DX 542 at Alum002096.
173
    DX 544 at Alum019004.
174
    DX 550.
175
    Trial Tr. IV at 118-19, 193-94 and 1026-1027.
176
    Id.; see, e.g., DX 529; DX 535; DX 538; DX 549; DX 551; DX 553; DX 555; and DX 585.
177
    DX 578-82.
178
    Id.

                                                    24
        On July 1, 2016, Mr. Gamba resigned his position.179 Soon thereafter, Alpha abandoned

the Mill shortly thereafter.180

        7. Lack of Bad Faith, Intentional Misrepresentations and/or Fraud

        The Court finds no evidence that Aluminum or LLFlex acted in bad faith, made

intentional misrepresentations or committed fraud. The Court understands that is a broad

finding; however, the Court heard the witnesses testify and reviewed the exhibits. As presented

during the Trial, the parties acted, at time, cooperative but also in their respective business

interests.

        While the parties may have not met obligations perfectly or engaged in disputes, the

record does not support a finding that either party acted in bad faith, purposely misrepresented

material facts or engaged in “sham” transactions. The margin of error on this transaction was

narrow. Events did not transpire in a way that the Mill could succeed. The Court finds no

evidence that LLFlex purposely blocked or prevented the Mill from succeeding, or otherwise

acted in bad faith with respect to the obligations of Oracle (or LLFlex) under the MUPA.

       III.     THE HOLDING ON COUNT I, COUNT II AND THE COUNTERCLAIM

        In Delaware, a party must allege and prove three things to prevail on a breach of contract

claim: (i) a contract exists, (ii) a breach of the terms of that contract and (iii) resultant

damages.181 The breach of contract claim must be proved by a preponderance of the evidence.182

The claims of Aluminum and LLFlex are all breach of contract claims—i.e., Count I, Count II

and the Counterclaim.

179
     PTO at 10; Trial Tr. II at 7.
180
     Id.; Trial Tr. III at 68.
181
    Braga Inv. & Advisory, LLC v. Yenni Income Opportunities Fund I, L.P., 2020 WL 3042236, at *8 (Del. Ch. June
8, 2020) (breach of contract claim under Delaware law requires a contract, breach, and damages because of the
breach).
182
    Id.

                                                      25
            After considering the evidence, the Court is entering judgment in favor of LLFlex on

Count I and Count II. Except, that as to Count I, the Court holds that LLFlex needs to

compensate Aluminum for a purchase price adjustment of $362,912—an amount previously

agreed to by Oracle. The Court is entering judgment in favor of Aluminum on Counterclaim I.

The Court finds that the parties have failed to adequately prove their claims by a preponderance

of the evidence. In addition, the Court finds that Aluminum and LLFlex failed to satisfy the

contractual requirements under the MUPA to proceed on contract claims. The evidence and

testimony at trial demonstrate that Aluminum failed to establish the elements of its claims.

            The problem lies with causation. The Court agrees that there are problems related to the

availability of the annealing racks and the focus of Mr. White’s services; however, the evidence

also supports the conclusion that Aluminum’s inability to sufficiently capitalize the Mill is a

significant cause for the Mill’s failure. Despite not paying rent or utility bills (significant

numbers), Aluminum needed to shutter the Mill within a year of execution of the MUPA. The

evidence adduced during the Trial showed that the Mill was a business losing more than two

million dollars annually. Financial statements attached to the MUPA show that the Metals

Division had a negative EBIT in excess of $2.5 million and a negative EBITDA of almost $1.5

million for the year ending December 31, 2014. The number for the first four months of 2015

were a negative EBIT and EBITDA of $2,172,931.183

            Oracle decided to sell the Mill because it was losing money. Aluminum knew this but

planned to change the focus of the Mill from manufacturing light-gauge aluminum to primarily

heavy-gauge aluminum.184 Aluminum intended to increase sales activities and expend new

capital. Aluminum’s business plans estimated that the capital expenditure necessary to convert

183
      See JX 1 at MUPA000215, 000219, Trial Tr. II at 33-36; Trial Tr. IV at 220-22.
184
      DX 500 at Alum023761, 023778; Trial Tr. II at 37.

                                                           26
the Mill and address existing quality issues was $8.6 million.185 The additional capital

expenditures were in addition to the cash needed to close the MUPA, the funds to cover

anticipated operating losses and to acquire raw materials to fulfill customer orders.

        The business plans anticipated an equity raise of between $3 million and $6 million, and

debt financing to fund $8.6 million in capital expenditures.186 The evidence at the Trial showed

that Aluminum was unable to raise these funds. Aluminum executed the MUPA with a budget

of only (i) $900,000 in equity, (ii) a $1.5 million equipment loan from Big Shoulders Capital at

18% interest, (iii) an inventory and receivable line from BBT, which had availability at the time

of closing of no more than $4.5 million and (iv) a $1 million Seller Note.187 In the end, these

amounts were inadequate to bear the financial obligations and sustain the Mill. This was true

even though the Mill did not pay rent or utilities.

        Aluminum argues that LLFlex wanted the Mill to fail and/or did not care if the Mill

closed. The Court finds that the evidence does not support that conclusion. LLFlex seemingly

wanted the Mill to succeed at least for a time post-closing. LLFlex used the Mill as Oracle’s

domestic supplier, a “qualified supplier” for Oracle’s pharmaceutical customers, and Oracle’s

largest supplier, supplying Oracle with two-thirds of its volume.188

        The Trial demonstrated a situation where Aluminum (as Alpha) tried its best with the

Mill but under difficult financial and operational conditions. In addition, the evidenced showed

that Oracle worked with Aluminum to try and address issues as the issues arose. The Court finds

no evidence that Oracle (or LLFlex) intentionally or recklessly misrepresented facts to

Aluminum or otherwise acted fraudulently as to Aluminum or the Mill’s operations. The

185
    DX 500 at Alum023766-67; PX 101 at Alum025150; and PX 103 at Alum025440.
186
    Id.
187
    JX 1 at MUPA000054; Trial Tr. II at 61-63, 67-68.
188
    Trial Tr. III at 87-92; Trial Tr. IV at 69.

                                                  27
business situation—antiquated equipment, thin capitalization and deteriorating sales—was not

ideal. The Mill and its operations would not have been saved by more accessible annealing racks

or the increase services of Mr. White. In Count I, Aluminum claims that LLFlex breached

MUPA Section 2.4, the purchase price adjustment procedures, by allegedly overstating its net

working capital, and seeks damages of “at least $1,761,137.”189 In Count II, Aluminum contends

that LLFlex breached MUPA Sections 4.10(c) and 4.12 by purportedly “withholding annealing

racks” needed to operate the Mill, and by allegedly preventing Mr. White from providing his

full-time services to Alpha in violation of the TSA.

        As detailed below, in each case, Aluminum failed to meet its evidentiary burden.

Accordingly, the evidence and testimony adduced at trial, together with applicable law, require

judgment in favor of LLFlex, and against Aluminum.

        A. COUNT I—BREACH OF CONTRACT

        The MUPA contains a standard purchase price adjustment procedure tied to Net Working

Capital. The MUPA set target Net Working Capital at $4 million.190 According to MUPA

Section 2.4 and Schedule 2.4, Oracle must deliver to Alpha its “good faith calculations” of the

anticipated Net Working Capital on the day of closing, referred to in the MUPA as the Estimated

Working Capital.191 Alpha then had ninety days to deliver its Closing Statement to Oracle,

setting forth Alpha’s good faith calculations of Net Working Capital on the day of closing.192

Oracle then had forty-five (45) days to notify Alpha if Oracle disputed Alpha’s proposed Closing

Statement.193 If there were a dispute, Oracle and Alpha were to engage in good faith

189
    Second Amended Compl. ¶¶ 78, 88.
190
    JX 1 at MUPA 000208.
191
    Id.
192
    Id.
193
    Id.

                                                28
negotiations, after which, the dispute is to be submitted to Grant Thornton for arbitration of the

Disputed Amounts.194

        The evidence demonstrated Oracle delivered it’s Estimated Working Capital statement on

the day of closing. Oracle’s Estimated Working Capital statement estimated that Net Working

Capital on the day of closing would be $5.25 million.195 Approximately ninety days later, Alpha

provided its Closing Statement.196 Alpha’s Closing Statement estimated Net Working Capital at

$3.3 million.197 Alpha then demanded a purchase price adjustment in its favor of $5 million.198

Oracle responded with its Dispute Notice, agreeing to $362,912 in adjustments, but rejecting the

remaining requested adjustments.199

        Aluminum contends that the Estimated Working Capital delivered by Oracle was in bad

faith, intentionally overstated the value of inventory and other assets, was not GAAP-compliant,

and therefore breached Section 2.4 of the MUPA. Aluminum claims it “was deprived of its

contractually agreed-to opportunity to recoup the sum of money from Defendant which Plaintiff

overpaid for the Company, which is at least $1,761,137.”200 To prevail, Aluminum must prove

that (i) that the Estimated Working Capital was not prepared in accordance with the MUPA and

GAAP, and (ii) Oracle’s calculations of the Estimated Working Capital were not “good faith

calculations.”201

        The Court finds that Aluminum failed to prove, by a preponderance of the evidence, that

Oracle breached Section 2.4.

194
    Id.
195
    JX 2.
196
     JX 3.
197
     Id.
198
    Id.
199
    JX 14.
200
    SAC at ¶ 64, 88.
201
    JX 1 at MUPA0014, 0208.

                                                 29
        The Court finds that Aluminum failed to demonstrate at Trial that Oracle’s Estimated Net

Working Capital statement was inconsistent with the MUPA and GAAP. Schedule 2.4 governs

the determination of Net Working Capital.202 Schedule 2.4 requires that Net Working Capital be

prepared in accordance with GAAP.203 The MUPA defines “GAAP” as “United States

generally accepted accounting principles, consistently applied.”204 Schedule 2.4 additionally

provides:

        Inventory — Manufacturing inventories of the Company (materials, labor, direct
        manufacturing costs and overhead used in the manufacture of products produced by
        the rolling mill which become a constituent part of the finished product, calculated
        in a manner consistent with past practice, including, metals, alloys, metal scrap,
        work-in process and finished goods inventories.205

“GAAP is not a set of prescriptive rules.”206 “Instead, GAAP ‘tolerate[s] a range of “reasonable”

treatments, leaving the choice among alternatives to management.’”207

         The Court reads the MUPA to require inventory be valued using the same methodology

employed by Oracle pre-sale if that method is GAAP compliant. Indeed, the experts, Mr.

Greene and Mr. Scherf, agree on this point.208

        Mr. Heard testified that Oracle valued its inventory in its books using a standard cost

methodology, which is common in the manufacturing industry.209 Mr. Scherf testified that

standard cost methodology is GAAP compliant if periodic adjustments are made to reflect

202
    Id. at MUPA0020.
203
    Id.
204
    Id. at MUPA0009. “GAAP is not a set of prescriptive rules.” Alliant Techsystems, Inc. v. MidOcean Bushnell
Holdings, L.P., 2015 WL 1897659, at *8 (Del. Ch. Apr. 24, 2015). “Instead, GAAP ‘tolerate[s] a range of
“reasonable” treatments, leaving the choice among alternatives to management.’” Id. (quoting Thor Power Tool Co.
v. C. I. R., 439 U.S. 522, 544 (1979)).
205
     JX 1 at MUPA0208.
206
     Alliant Techsystems, Inc. v. MidOcean Bushnell Holdings, L.P., 2015 WL 1897659, at *8 (Del. Ch. Apr. 24,
2015).
207
     Id. (quoting Thor Power Tool Co. v. C. I. R., 439 U.S. 522, 544 (1979)).
208
     Trial Tr. III at 176; Trial Tr. V at 38.
209
     Trial Tr. IV at 233.

                                                       30
variances in material pricing and costs of manufacture as compared to the standard cost.210 Mr.

Scherf explained that Oracle maintained its books on a standard cost system and that when there

is a difference between the standard cost and the actual cost there is a variance that is maintained

and gets recorded on the profit and loss statement.211 In that situation, GAAP requires periodic

recording of the variances to adjust the standard costs to actual costs.212 Mr. Greene testified on

the same point. Mr. Greene noted that standard costs are acceptable if adjusted at reasonable

intervals to reflect current conditions so the balance sheet date standard costs reasonably

approximate costs213

         Oracle made the necessary purchase price and manufacturing variance adjustments to its

standard cost of $1.00 so that its books and records, and the amount contained on the Estimated

Working Capital statement, represented Oracle’s actual cost of inventory.214 Mr. Heard testified

that, if the actual purchase price of a material differed from the standard cost, Oracle would

adjust the inventory when it closed its books on a monthly basis.215

         The evidence showed that Oracle made the necessary adjustments to its standard costs.216

The Dispute Letter contained a month-by-month detail of the adjustments and explained that

         [t]he above numbers represent both purchase price variances (the actual amount
         paid for raw materials vs the standard cost of the inventory in the ERP system) and
         manufacturing variances (the actual cost to produce inventory products vs the
         standard cost of the inventory products in the ERP system).217

210
     Trial Tr. V at 35.
211
     Id.
212
     Id.
213
    Trial Tr. III at 179.
214
     Trial Tr. IV at 235.
215
     Id.
216
    JX 4 at LLFlex3954 (emphasis in original).
217
     Id.

                                                 31
Mr. Scherf testified that he reviewed Oracle’s books and other financial records and was able to

test and confirm the variances.218 Moreover, Mr. Greene acknowledged that “Oracle Flexible

Packaging did, in fact, periodically adjust its books and records to reflect a purchase price

variance and manufacturing variances.”219

         RSM McGladrey audited Oracle’s consolidated financial statements.220 The evidence

shows that Oracle’s consolidated financial statements specifically included the financial

statements of the Metals Division, which were rolled up into the consolidated financial

statements and were audited annually by RSM McGladrey.221 RSM McGladrey issued

unqualified audit opinions which means that RSM McGladrey accepted Oracle’s valuation

methodology and conclusion.222 These facts further support the conclusion that Oracle’s

inventory valuation methodology was accurate and GAAP compliant.

         GAAP requires an additional test to ensure that market forces have not driven the value

of the inventory below its historical cost.223 Mr. Scherf conducted a detailed analysis to

determine the relevant market price of the inventory and determined that the market price was in

excess of the historical cost.224 Based upon his analysis, Mr. Scherf concluded that Oracle’s

calculation of the Net Working Capital set forth in Oracle’s Estimated Working Capital

statement and Dispute Notice was correct and accurately represented the Net Working Capital on

the day of closing, August 11, 2015.225

218
    Trial Tr. V at 37.
219
    Trial Tr. III at 180.
220
    Trial Tr. IV at 222-24, 242.
221
    Id.
222
    Id. at 222-24.
223
    Trial Tr. V at 36-38.
224
    Id.
225
    Id. at 52.

                                                 32
         The focus on Mr. Scherf and not Mr. Greene is not to imply that Mr. Greene’s testimony

was unreliable or inconsistent. Aluminum bears the initial burden of proof in showing a breach.

Mr. Scherf is a credible witness. Mr. Scherf’s opinions are supported by the evidence and his

methodologies are sound.

         MUPA Section 2.4(a) required Oracle to prepare the Estimated Working Capital

Statement in “good faith.” The Court cannot find, on this record, that Oracle did not prepare the

Estimated Working Capital Statement in good faith. The evidence shows that Oracle calculated

the Estimated Working Capital in accordance with the MUPA and GAAP as consistently

applied, and in the manner repeatedly accepted by its third-party auditor.

         Mr. Heard testified about how Oracle prepared the Estimated Working Capital statement

and the Dispute Notice.226 Specifically, Mr. Heard testified that, in calculating the Estimated

Working Capital, Oracle “would have been trying to look into the future on – to the closing date

and estimate as best we could, [ ] what the net working capital would be on the closing date.”227

Mr. Heard also testified that the Estimated Net Working Capital was prepared “consistent with

how [Oracle] kept the books and records of the company for each one of those line items [on the

Estimated Net Working Capital].”228

         The Court finds that the evidence at Trial does not support a finding that Oracle acted in

bad faith when preparing the Estimated Net Working Capital. For this additional reason,

Aluminum has failed to meet the evidentiary burden to demonstrate a breach of MUPA Section

2.4.

226
     Trial Tr. IV at 224-42.
227
     Trial Tr. IV at 225-26.
228
    Id. at 227.

                                                 33
         “Under Delaware law, a breach of contract claim ... requires a showing of compensable

injury.”229 To be compensable, the plaintiff must prove “damages that the plaintiff suffered as a

result of the breach.”230 “To satisfy this element, a plaintiff must show both the existence of

damages provable to a reasonable certainty, and that the damages flowed from the defendant’s

violation of the contract.”231

         Causation is a problem. The Court finds that Aluminum cannot prove causation. The

evidence demonstrates that Aluminum was aware, prior to closing, that: (i) a purchase price

adjustment would need to occur; and (ii) the adjustment procedure, under the MUPA, would not

be complete prior to April 7, 2016.232 The evidence also demonstrates that Aluminum suffered

financially months (no later than December 2015) before the purchase price adjustment

procedures in MUPA Section 2.4 could have been completed. As mentioned above, the evidence

shows:

         •   Alpha could not post a $196,000 letter of credit to secure the rent obligations
             under the Lease;233

         •   Alpha could not post a $250,000 security deposit with the electric company to
             transfer the account into Alpha’s name;234

         •   Alpha was in covenant default with BBT, its senior lender, by October 4, 2015;235

         •   Alpha was over-advanced on the loan with BBT by $1,137,000 less than three
             months after closing;236

         •   By November 2015, BBT transferred the loan to the troubled loan – workout
             division;237

229
    Braga Inv. & Advisory, LLC, 2020 WL 3042236, at *12.
230
    Id.
231
    Id.
232
    Trial Tr. I at 88-92.
233
    JX 1 at MUPA000119; Trial Tr. IV at 6.
234
    Trial Tr. IV at 7-8.
235
    DX 532; DX 512, 513; Trial Tr. II at 96.
236
    DX 540 at Alum001568; Trial Tr. II at 98.
237
    Trial Tr. II at 98-99.

                                                     34
        •    In November and December 2015, BBT reduced availability on the line of credit,
             by (i) changing the definition of Net Orderly Liquidation Value of Alpha’s
             inventory against which it would loan from 72% to 53.3%238 and (ii) lowering
             the concentration limit (the percentage of receivables from one customer that
             BBT would loan against) from 75% to 50%;239 and

        •    Alpha fell behind in payments to Metallic Conversion, the primary material
             supplier, and by January 2016 owed Metallic Conversion approximately $3.3
             million with no payments made since November 2015.240

        The record demonstrates that Aluminum’s lack of funds caused supply and raw material

constraints that resulted in the inability to fulfill orders. These facts demonstrate that thin

capitalization was the more likely cause of the Mill’s failure. The record does not demonstrate,

by a preponderance of the evidence, that cash from a purchase price adjustment in April 2016

would have caused the Mill to be viable.

        One point, Oracle did make an admission against interest on the purchase price

adjustment. Oracle agreed to $362,912 in adjustments in Aluminum’s favor while rejecting

other requested adjustments.241 While there was no arbitration under MUPA Section 2.4(c),

Oracle, here LLFlex, needs to compensate Aluminum for that amount. Therefore, the Court will

award Aluminum a purchase price adjustment of $362,912.

        B. COUNT II—BREACH OF CONTRACT

        Count II is a two-part breach of contract claim entitled “Jack White and Annealing

Racks.”242 Aluminum asserts two separate breaches of representations and warranties contained

238
    DX 504; DX554.
239
    DX 573; DX 504; DX554; Trial Tr. II at 113.
240
    DX 544 at Alum019005.
241
    JX 14.
242
    SAC at pp. 25.

                                                  35
in MUPA Sections 4.10(c) and 4.12. Aluminum then seeks indemnification for these

breaches.243

        Aluminum contends that Oracle “withheld approximately $900,000 worth of annealing

racks necessary for the Company’s operation.”244 Next, Aluminum claims that LLFlex

prevented Mr. White from providing his sales expertise to Alpha and that this was contrary to the

terms of the TSA (under which Mr. White was to provide full-time services to Alpha).

Aluminum contends this situation “led to a loss of external sales that had a profit/loss impact of

$3.2 million in the first year and continued thereafter.”245 During the Trial, Aluminum increased

the purported impact to approximately $4.3 million.246

        The Court finds that Aluminum has failed to prove breach of the MUPA as to the

annealing racks and Mr. White. First, the evidence demonstrates that Aluminum failed to

comply with MUPA Article VII. MUPA Article VII provides how and when indemnification

claims need to be made.247 To recover for “Losses or other claims relating to or arising from [the

MUPA] in connection with the transactions contemplated [t]hereby[,]” Aluminum was required

– but failed – to deliver a claim certificate that comported with the MUPA’s notice provisions.248

Second, even if Aluminum could be found to have complied with MUPA Article VII, Aluminum

failed to prove the elements of a breach of contract claim: (i) a breach, (ii) that the alleged breach

was the cause of the damages sought, and (iii) damages that are not speculative.

243
    In its Trial Brief, Aluminum references a claimed breach of MUPA Sections 4.11 and 9.4. Aluminum did not
assert these breaches in the Second Amended Complaint.
244
    SAC ¶ 100.
245
    Id. ¶¶ 94-95.
246
    Trial Tr. I at 104.
247
    JX 1 Article VII.
248
    JX 1 §7.10.

                                                      36
        1. Count II is Barred Because Aluminum Failed to Comply with MUPA Section 7.

        The MUPA provides that the indemnification procedures contained in MUPA Section

7.10 “constitute the sole and exclusive remedy . . . for any and all Losses or other claims relating

to or arising from [the MUPA] or in connection with the transactions contemplated [t]hereby.”

Pursuant to the MUPA, a party was obligated to deliver a “Claim Certificate” to the party from

which it seeks indemnification within the “Survival Period” of twelve months from August 11,

2015 in order to invoke any possible indemnification rights or claims.249

        The Claim Certificate, which must be brought within the “Survival Period,” must:

        (i)     state that the Indemnified Party . . . is entitled to indemnification pursuant
                to this Agreement; and

        (ii)    specify in reasonable detail . . . Losses . . ., the basis for any anticipated
                liability and the nature of the misrepresentation, breach of warranty, breach
                of covenant or claim to which each item is related and the computation of
                the amount to which such Indemnified Party claims to be entitled
                hereunder.250

        Only after a Claim Certificate is timely delivered within the Survival Period may the

party seeking indemnification file a claim for damages for breach of a representation and

warranty.251 The MUPA requires any notice provided thereunder, which includes a Claim

Certificate, comply with MUPA Section 9.5. MUPA Section 9.5 requires any notice be sent to

Oracle, with a copy delivered to its private equity sponsor, Centre Lane Partners, LLC, attention

Nathan Richey, and to its counsel, Katten Muchin, Rosenman LLP, attention Stephen Antion.252

        In denying in part LLFlex’s Motion for Summary Judgment, the Court found that PX 125

put LLFlex on notice as to the estimated working capital misrepresentations, racks, and Mr.

249
     JX 1 § 7.1.
250
     JX 1 §7.6(a).
251
    See JX 1 at MUPA0042-43, §7.6.
252
    JX 1 at MUPA0048-49.

                                                 37
White’s employment. PX 125 however, was only sent to Mr. Heard and Mr. Squatrito, and was

not copied to Centre Lane Partners, or Katten Muchin. Aluminum did not satisfy the

requirements for formal notice of a Claim Certificate. The Court finds that, after completion of

the factual record at Trial, Aluminum failed to comply with the MUPA’s notice requirements, a

condition precedent to its Count II for indemnification.

           Aluminum relies on a series of e-mails, claiming that these comply with the Claim

Certificate requirements.253 Of these e-mails, one dated November 8, 2015, one does copy

Oracle’s private equity sponsor and counsel; however, this e-mail does not otherwise comply

with MUPA Section 7.6(a).254

           The e-mail does not reference indemnification or Article VII. Moreover, the e-mail does

not mention Jack White or his services. The e-mail does mention a “possible” purchase price

adjustment as to the annealing racks. However, the e-mail does not put Oracle (or others) on

notice of a claimed breach of a representation or warranty, the representation or warranty

allegedly breached, or that Aluminum was making a claim for indemnification. The subject line

of the e-mail reads: “Purchase Price Adjustment request pursuant to our 8-11-2015 Membership

Unit Purchase Agreement,” and requests that Oracle “kindly add this $900,000.00 to our attached

purchase price adjustment request as an additional accrual to cover potential non return of the

racks.”

           The Court finds that requesting an additional line-item in the calculation of Net Working

Capital does not comply with making a claim under Article VII for an alleged breach of a

representation and warranty. The MUPA requires a more formal notice. Otherwise, each e-mail

would constitute a Claim Certificate, and that would give rise to a very haphazard and confusing

253
      JX 11; JX 12; JX 13; PX 143; JX 3; PX 118; PX 125.
254
      JX 3.

                                                           38
process. Indeed, Mr. Squatrito testified that neither Mr. Gamba, Mr. Hoyt, nor their counsel,

Nixon Peabody, ever suggested that Buyer had made a demand for indemnification pursuant to

the terms of the MUPA.255

        Such exclusive remedy provisions are fully enforceable in Delaware.256 Refusing to

enforce an exclusive remedy provision would “defeat the reasonable commercial expectations of

the [ ]parties.”257 As a matter of law, where the contract specifies what constitutes notice

thereunder and dictates how to communicate that notice, strict compliance with the notice

provision is necessary.258 Accordingly, Aluminum’s indemnification claim is contractually

barred, and LLFlex is entitled to judgment on Count II.

        2. Aluminum Failed to Prove by a Preponderance of the Evidence the Elements
           Necessary for a Breach of Contract Claim.

        Alternatively, the Court finds that, even if Aluminum had delivered a timely a Claim

Certificate, Aluminum failed to prove the elements of its Count II Breach of Contract Claim—

i.e., a breach, causation and damages.

        a. The Annealing Racks.

        Aluminum failed to establish that Oracle breached MUPA Sections 4.10 or 4.12 with

respect to the annealing rack claim. The Court does not find that the record supports the

conclusion that Oracle withheld annealing racks in a manner that constituted a breach of

255
    Trial Tr. IV at 16.
256
     JCM Innovation Corp. v. FL Acquisition Holdings, Inc., 2016 WL 5793192, *7 (Del. Super. Sept. 30, 2016); see
also Eni Holdings, LLC v. KBR Group Holdings, LLC, 2013 WL 6186326, *7 (Del. Ch. Nov. 27, 2013).
257
     Transched Sys. Ltd. v. Versyss Transit Sols., LLC, 2008 WL 948307, *2 (Del. Super. Apr. 2, 2008).
258
    See PR Acquisitions, LLC v. Midland Funding LLC, 2018 WL 2041521, at *8 (Del. Ch. 2018) (seller was entitled
to release of escrow funds and buyer was not entitled to escrow funds because buyer’s claim under escrow
agreement was barred as untimely and failed to comply with notice provisions); HBMA Holdings, LLC v. LSF9
Stardust Holdings LLC, 2017 WL 6209594, at *7 (Del. Ch. Dec. 8, 2017), order clarified, (Del. Ch. 2018)
(dismissing complaint as time barred where the notice did not comport with contract’s requirements for proper
notice of indemnification); i/mx Info. Mgmt. Sols., Inc. v. Multiplan, Inc, 2014 WL 1255944, at *13 (Del. Ch. 27,
2014) (claimed notice did not constitute sufficient notice within the survival period under the parties’ agreement).

                                                        39
contract. The evidence at Trial showed that the Mill’s production shutdowns were not due to

running out of racks. Alpha was delivering approximately 1.2 million pounds of product each

month to Oracle.259 Alpha needed enough annealing racks to run the business. Testimony

showed that the Mill delivered product to Oracle on between 200 and 300 annealing racks each

month.260 This means that racks were being used and returned in a type of circulation between

Alpha and Oracle and not that Oracle somehow converted property of Alpha into property of

Oracle. If that were true, then Alpha would not have been able to deliver this product to Oracle

month after month. Could Alpha and Oracle have been more efficient with the annealing racks

or substitutes. Probably. The representation relates to ownership of personal property (here, the

annealing racks) and not to misuse.

        Aluminum’s type of conversion claim is belied by the evidence adduced at the Trial.

While Alpha complained about running low on racks or potentially running out of racks, there

appears to be only one instance where Alpha contended that the Mill had to stop production due

to lack of racks.261 Moreover, Alpha told BBT that funding restrictions – not an annealing rack

shortage – caused the Mill to shut down production.262

        Even if Alpha was low on racks at certain times, the Court does not find that is

constitutes a breach of the MUPA. The MUPA controls. Oracle represents in MUPA Section

4.10(c) that Oracle owned

        all of the personal property and assets shown on the Latest Balance Sheet . . . in
        each case which is material to the Business or its operations (the ‘Personal
        Property’) [and that] the Personal Property includes all of the material tangible
        assets used in the conduct of the Business as currently conducted.263

259
    Trial Tr. II at 134; DX 564; Trial Tr. III at 219.
260
    Trial Tr. at 219.
261
    PX 148.
262
    DX 544 (“[We are] now having to turn off one of my furnaces and we have only been on one caster for over
about a month now due to the supply situation.”).
263
    JX 1, § 4.10.

                                                       40
Oracle also represents in MUPA Section 4.12 that Oracle has title to the assets “that are used or

held for use in connection with and necessary for the conduct of the Business as heretofore

conducted by the Company” and that the “Assets” as defined in the MUPA, “(a) constitute all of

the properties and assets used or held for use in the conduct of the Business as heretofore

conducted by the Company, and (b) are sufficient in all material respects for the conduct of the

Business as currently conducted.”264

         The Trial record supports that Oracle’s representations were true and correct when made.

Aluminum acknowledges that when it acquired the Mill, Aluminum bought an ongoing

business.265 As testimony indicated, the ongoing business operated as follows: pre-closing,

annealing racks were used to anneal aluminum at the Mill, the annealed aluminum (the final

product) was shipped on the annealing racks to the Packaging Division approximately 10 miles

away from the Mill, and, as the Packaging Division used the foil and emptied the racks, the

empty racks were shipped back to the Mill.266

         This situation was known and necessary.267 Alpha needed to continue to ship product to

Oracle and LLFlex. Oracle’s representations in MUPA Section 4.10 and 4.12 reflect that

understanding, and that the parties intended and contemplated for this process to continue post-

closing as the business was then “currently” and “heretofore conducted.” No evidence at Trial

showed that the annealing racks were owned, prior to the MUPA, by anyone other than Oracle.

         At the time of the transaction, Oracle and the Mill continued to be reliant upon each

other. Mr. Hughes testified that if “[the Mill] got problems and we [Oracle] don’t get a supply,

264
    JX 1, § 12.
265
    Plaintiff’s Trial Brief at 9.
266
    Trial Tr. III at 219-20; Trial Tr. IV at 71-72.
267
    Pappalardo Depo. Trans. at 52-53.

                                                      41
then we’ve [Oracle] got problems.”268 Oracle and LLFlex were the Mill’s biggest customer,

together purchasing 79% of the Mill’s output, and the Mill was Oracle’s largest supplier,

supplying Oracle with two-thirds of its volume. Oracle was “very dependent on that supply.”269

Additionally, Oracle continued to provide Alpha with essential financial and other services

pursuant to the Transition Services Agreement.270 The parties were to continue doing business

together in this fashion for at least nine months post-closing. To that end, the delivery of product

post-closing was directly addressed in the PSA:

         13. PACKAGING. The Seller shall properly pack, mark and ship the Products as
         instructed by the Buyer and in accordance with existing practices . . ..271

The agreements reflect the intent to continue operating the business in the same manner pre- and

post-closing, and that the business, including the transfer of racks. Moreover, this would

continue over the nine-month transition period post-closing when LLFlex would go to new

sources and Alpha would produce new products.272 Mr. Squatrito testified that Oracle would not

have entered into a transaction that would have required it to completely change the manner in

which business was previously conducted.273

         In addition, Oracle encouraged Alpha to stop shipping product on annealing racks and to

implement alternatives, even shipping free crates to the Mill to use for shipping product to

Oracle.274 Alpha could have expedited the return of the annealing racks, and had all annealing

racks back at the Mill within a matter of one to two months; however, Alpha chose to continue

shipping to Oracle on racks.275

268
    Trial Tr. IV at 74.
269
    JX 14 at Alum012664; Trial Tr. III at 84; Trial Tr. IV at 111.
270
    TSA, JX 1 at MUPA0064-84.
271
    JX 1 at MUPA0090.
272
    Trial Tr. III at 237; Trial Tr. IV at 9-10.
273
    Trial Tr. III at 231-33.
274
    JX 15, 16, PX 149, 150, DX 537; Trial Tr. III at 226; Trial Tr. IV at 76-77, pdf. 909-10.
275
    Trial Tr. at 29; Trial Tr. IV at 84; JX 15.

                                                          42
           b. The Jack White Services Claim

           The Court finds that Aluminum failed to prove by a preponderance of the evidence, that

LLFlex breached MUPA Section 4.12 as to Jack White’s services. Aluminum contends that

Oracle breached Section 4.12 by failing to provide Mr. White’s services as required under the

TSA. The MUPA does not contain such an obligation. The MUPA obligates Oracle to deliver a

signed Transition Services Agreement, the TSA, in favor of Alpha.276 The evidence

demonstrates that Oracle delivered the TSA to Alpha.

           The obligation to provide “the full-time services of Jack White, Director of Sales –

Metals, in a manner consistent with the normal duties, responsibilities and authority implied by

such position” for a period of nine months, arises solely from the TSA. The parties to the TSA

are Oracle and Alpha. Aluminum is not a party to the TSA. The MUPA does not obligate

Oracle to provide, or guaranty that Oracle will provide to Aluminum, Mr. White’s services.

Aluminum did not sue for breach of the TSA because Aluminum is not a party to that agreement.

           The Trial evidence demonstrates that Oracle’s representations and warranties under

MUPA Section 4.12 were true and accurate. “The Assets, together with the services provided

under the Transition Services Agreement, (a) constitute[d] all of the properties and assets used or

held for use in the conduct of the Business as heretofore conducted by the Company, and (b) are

sufficient in all material respects for the conduct of the Business as currently conducted.” That

representation was true and correct. Oracle provided all it was required to provide. It was

Plaintiff that was not equipped to run the Mill.

           c. Causation Issues

276
      JX 1, § 3.2(e).

                                                   43
        Aluminum also has a problem with causation. The Court finds that Aluminum failed to

carry its evidentiary burden that a breach, if any, by Oracle of MUPA Sections 4.10 and 4.12

caused Aluminum’s alleged damages.

        The Trial evidence demonstrates that, even with 600 annealing racks and Mr. White’s

“full time” services, Aluminum (Alpha) most likely lacked sufficient capital, raw material, and

quality product to succeed. Under Alpha’s ownership, the Mill experienced service and quality

issues. As such, the Mill’s failure cannot be solely attributed to lack of sales efforts by Mr.

White or availability of annealing racks.277

        As previously discussed, Aluminum was also undercapitalized.              Without sufficient

capital, Alpha’s business plan for the Mill was not attainable. Alpha had difficulty obtaining raw

materials and that affected the Mill’s ability to produce product.278

        Alpha needed to address quality and supply issues that had harmed customer

relationships, the Mill could not generate new business or repair damaged customer

relationships.279 The Trial evidence demonstrated that these same problems persisted throughout

the post-MUPA period.280 With this, the Court finds that Aluminum cannot prove by a

preponderance of the evidence that any breach relating to the annealing racks and/or Mr. White’s

services was the cause of Aluminum’s damages.

        d.      Aluminum Failed to Prove Intentional Misrepresentation or Fraud.

        Aluminum contends that the LLFlex acted fraudulently or made material

misrepresentations and MUPA Section 7.4(i) applies. The Court has heard the evidence at Trial

277
    Trial Tr. IV at 203.
278
    DX 544; DX 542; DX 550; DX 555; DX 549; DX 571.
279
    Trial Tr. IV at 183-84; Trial Tr. IV at 193; Trial Tr. III at 242-43.
280
    DX 529; DX 535; DX 538; DX 549; DX 551; DX 553; DX 556; Trial Tr. IV at 166-76; Trial Tr. IV at 200.

                                                     44
and finds that Aluminum failed to prove Oracle, or LLFlex, committed fraud or made intentional

misrepresentations.

         MUPA Section 7.2 provides, in certain circumstances, for the indemnification of

Aluminum by Oracle.281 MUPA Section 7.4 limits the parties’ indemnification claims.282

MUPA Section 7.4(i) provides that:

                  (i) Notwithstanding anything to the contrary herein, none of the restrictions,
                      limitations, caveats or qualifications in [the MUPA] shall limit any
                      Person’s rights, whether substantively or procedurally, with respect to
                      recovery or other remedial relief in respect of intentional
                      misrepresentation or fraud.283

         The Court finds that the record does not support the conclusion that Oracle (or LLFlex)

made any intentional misrepresentation or committed fraud. The MUPA was negotiated by

experienced parties that were represented by experienced counsel. The allegations about

annealing racks, Mr. White’s services and Grant Thornton are contractual disputes and not

instances of fraud or alike.

         The Court did not find support for Aluminum’s contention that Oracle intentionally

“withheld” annealing racks and never took “corrective action.”284 Oracle had a business interest

in maintaining a relationship with Alpha and the Mill. Purposefully withholding the racks just

does not serve the interests of Oracle. This has been discussed in depth above. The same is true

as to Mr. White’s services. The reality is Mr. White difficulty is selling the Mill’s products due

to supply and quality. While everything did not go as planned with the racks and Mr. White, the

record does not support that LLFlex committed fraud or intentionally misrepresented anything.

281
     JX 1, § 7.2.
282
     JX 1, § 7.4.
283
     JX 1, § 7.4(i).
284
    See SAC ¶¶ 45, 100; Alum. Trial Br. at 22, 43.

                                                     45
         Aluminum therefore failed to demonstrate, by a preponderance of the evidence, that

Oracle breached Section 4.10 and 4.12 of the MUPA, much less with an illicit state of mind or

with fraudulent intent.

         C. ALUMINUM’S CLAIMS REGARDING ARBITRATION DO NOT SUPPORT A CLAIM.

         The Court finds that Aluminum’s contention that it is entitled to damages because Oracle

made it “impossible” to arbitrate and engaged in “faux” settlement negations285 is not supported

by the evidence. Aluminum claims that Oracle should have known Grant Thornton, the agreed-

upon arbitrator in the MUPA, would have a conflict of interest on the seller side. The Court

finds that the evidence does not support a finding that Oracle acted in bad faith in selecting Grant

Thornton, forced the parties to select Grant Thornton as the arbitrator, or even knew that Grant

Thornton would not act due to a conflict.

         Grant Thornton declined to act as arbitrator based upon an audit relationship with another

portfolio company of Centre Lane Partners,286 which was remote and unknown to Oracle.287

After interviewing and discussing alternatives, the parties searched for an alternative arbitrator, a

process in which Oracle was very active.288 The parties ultimately agreed to use Anchin as an

arbitrator for the Net Working Capital dispute.289 Although Oracle was ready to proceed to

arbitration with Anchin, Aluminum failed to sign Anchin’s engagement letter or pay the retainer,

and failed to respond to inquiries relating thereto, ultimately abandoning the process.290

         As for settlement of the purchase price adjustment dispute, Mr. Squatrito credibly

testified that Oracle wanted to resolve the dispute with Aluminum, and that Oracle participated

285
    See Alum. Trial Br. at 4-41.
286
    Id. Oracle was owned in part by an investment fund affiliated with Centre Lane Partners, a private equity firm
based in New York.
287
     Trial Tr. IV at 57.
288
     PX 196, 197.
289
     PX 200.
290
     DX 590.

                                                         46
in settlement negotiations in good faith.291 The evidence shows that the parties actively engaged

in settlement discussions for several months.

         Oracle balked after Accord, an entity to whom Alpha had factored its receivables, made a

demand that Oracle pay the outstanding receivables to Accord.292 The terms of the proposed

settlement, however, required Oracle to pay those same receivables to Alpha.293 These

competing demands caused a stalemate.294 The failure to settle the purchase price adjustment

was not due to bad faith but rather timing issues and the circumstances.

         D. THE COUNTERCLAIM—BREACH OF CONTRACT

         LLFlex asserts a claim for indemnification, the Counterclaim. Oracle did not send a

formal Claim Certificate as defined by the MUPA within the Survival Period. Consistent with

the Court’s decision above, the Court will enforce the strict requirements of the indemnification

procedures and find in favor of Aluminum on the Counterclaim. Constructive or actual notice

does not control over the clear terms of the MUPA.

291
    Trial Tr. IV at 17.
292
    Trial Tr. IV at 21.
293
    Trial Tr. IV at 21-22.
294
    See id.

                                                47
                                   IV.     CONCLUSION

       For the reasons set out above, the Court enters judgment in favor of LLFlex on Count I

and Count II. Except, as set forth above, that the Court will award Aluminum a purchase price

adjustment of $362,912.

       In addition, the Court enters judgment in favor of Aluminum on the Counterclaim.

Dated: March 16, 2023
Wilmington, Delaware

                                                   /s/ Eric M. Davis
                                                   Eric M. Davis, Judge
cc: File&ServeXpress

                                              48