Court Opinion

ID: 4381406
Source: CourtListenerOpinion
Date Created: 2019-03-27 17:02:45.202827+00
Date Added: 2024-06-11T14:24:27.289023
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

CELESTIALRX INVESTMENTS,            )
LLC and KRITTIKA LIFE               )
SCIENCES, LLC,                      )
                                    )
                Plaintiffs,         )
                                    )
      v.                            ) C.A. No. 11733-VCG
                                    )
JOSEPH J. KRIVULKA; THE ESTATE OF   )
JOSEPH J. KRIVULKA; MICHAEL J.      )
LERNER, IN HIS CAPACITY AS PERSONAL )
REPRESENTATIVE FOR THE ESTATE OF    )
JOSEPH J. KRIVULKA; ANGELA L.       )
KRIVULKA, IN HER CAPACITY AS        )
PERSONAL REPRESENTATIVE FOR THE     )
ESTATE OF JOSEPH J. KRIVULKA;       )
LEONARD MAZUR; DONALD OLSEN; JJK )
PARTNERS, LLC; MIST ACQUISITION,    )
LLC; MIST PHARMACEUTICALS, LLC;     )
MIST PARTNERS, LLC; JAK INVESTMENT )
PARTNERS, LLC; CRANFORD             )
PHARMACEUTICALS, LLC; CRANFORD      )
THERAPEUTICS, LLC; HOLMDEL          )
PHARMACEUTICALS, LP; HOLMDEL        )
THERAPEUTICS, LLC; LMAZUR           )
ASSOCIATES, JV; AKRIMAX             )
PHARMACEUTICALS, LLC; JOHN DOES 1- )
10; and ABC ENTITIES 1-10,          )
                                    )
                Defendants,         )
                                    )
                and                 )
                                    )
AKRIMAX PHARMACEUTICALS, LLC,       )
                                    )
                Nominal Defendant.  )
                         MEMORANDUM OPINION

                       Date Submitted: December 5, 2018
                        Date Decided: March 27, 2019

Michael W. McDermott and David B. Anthony, of BERGER HARRIS LLP,
Wilmington, Delaware; OF COUNSEL: Benjamin C. Curcio, Paul F. Campano,
Jessica A. Tracy, Michael D. Zahler, and Jason S. Haller, of CURCIO MIRZAIAN
SIROT LLC, Roseland, New Jersey, Attorneys for Plaintiffs CelestialRX Investments,
LLC and Krittika Life Sciences, LLC.

Garrett B. Moritz and Benjamin Z. Grossberg, of ROSS ARONSTAM & MORITZ
LLP, Wilmington, Delaware; OF COUNSEL: Andrew E. Anselmi and Zachary D.
Wellbrock, of MCCUSKER, ANSELMI, ROSEN & CARVELLI, P.C., Florham
Park, New Jersey, Attorneys for Defendants Joseph J. Krivulka, JJK Partners, LLC,
JAK Investment Partners, LLC, Mist Acquisition, LLC, Mist Pharmaceuticals, LLC,
Mist Partners, LLC, Cranford Therapeutics, LLC, and Holmdel Therapeutics, LLC.

Samuel T. Hirzel, II and Aaron M. Nelson, of HEYMAN ENERIO GATTUSO &
HIRZEL LLP, Wilmington, Delaware, Attorneys for Defendants Leonard Mazur
and LMazur Associates, JV.

Andrew D. Cordo and F. Troupe Mickler IV, of ASHBY & GEDDES, Wilmington,
Delaware, Attorneys for Defendant Donald Olsen.

Jody C. Barillare, of MORGAN, LEWIS & BOCKIUS LLP, Wilmington, Delaware;
OF COUNSEL: Brian A. Herman, of MORGAN, LEWIS & BOCKIUS LLP, New
York, New York, Attorneys for Defendant Cranford Pharmaceuticals, LLC.

Ryan P. Newell and Lauren P. DeLuca, of CONNOLLY GALLAGHER LLP,
Wilmington, Delaware, Attorneys for Defendant Holmdel Pharmaceuticals, LP.

Phillip A. Rovner and Jonathan A. Choa, of POTTER ANDERSON & CORROON
LLP, Wilmington, Delaware, Attorneys for Defendant Akrimax Pharmaceuticals
LLC.

GLASSCOCK, Vice Chancellor
       This Memorandum Opinion represents incremental progress towards

resolution of a series of long-ago-filed, potentially case-dispositive motions. This

action involves the manner in which the primary Defendant, Joseph Krivulka, is

alleged to have used his control over nominal party Akrimax Pharmaceuticals, LLC

to benefit other entities (many also parties defendant) in which he was interested, at

the expense of Akrimax and its members. In 2016, the Defendants moved to dismiss,

and some moved for partial summary judgment as well. I addressed the Motions for

Partial Summary Judgment first, in the hope that resolution of issues involving the

scope of a release of claims, as well as Krivulka’s duties under the LLC agreement,

would narrow the issues and promote settlement. That decision (“Celestial I”) was

issued on January 31, 2017. Since that time, the pace of litigation has been

testudinal.

       The parties pursued mediation and settlement, unsuccessfully. Unfortunately,

Krivulka has died, which led to motion practice regarding what entity or individuals

should represent his estate going forward. Eventually, counsel resubmitted the

Motions to Dismiss for consideration, bolstered by the parties’ years-old briefing.

As the caption demonstrates, the case involves a blizzard of Defendant entities, each

associated with Krivulka.1 All have moved to dismiss for failure to state a claim,

1
 For cinephiles and those of a certain age, the description of these entities below may invoke the
“Hotel Central, Milwaukee” scene from Key Largo; nearly all are residents together at “the same
address” as Akrimax, in Cranford, New Jersey.
failure of process, failure of service of process, lack of subject matter jurisdiction,

or lack of personal jurisdiction. This Memorandum Opinion resolves the latter

issues. However, I had asked counsel to address what claims remained in the case

in light of my decision in Celestial I.2 That they have yet, effectively, to do.

Accordingly, rather than wade through the morass of 12(b)(6) motions for various

entities, some of which may be moot in light of my finding as to the applicable

contractual fiduciary duties explained in Celestial I, I find it appropriate to ask the

parties, again, to review that decision in light of the claims and inform me which

Motions to Dismiss remain. At that point, I will address the remaining Motions

under Rule 12(b)(6). 3

              My rationale for those decisions I can economically make follows a

statement of the facts, below.

                                  I. BACKGROUND

       The Defendants moved to dismiss all claims brought against them, in part

pursuant to Court of Chancery Rule 12(b)(6), failure to state a claim. In a Rule

12(b)(6) motion to dismiss, the Court does not consider documents extrinsic to the

complaint, except for documents that are integral to a plaintiff’s claim and are

2
 See Jan. 31, 2018 Status Teleconference Tr., at 18:24–19:22.
3
 As Richard Dreyfuss might say to Bill Murray, “Baby steps, Bob. Baby steps.” See What About
Bob? (Touchstone Pictures 1991).

                                             2
incorporated into the complaint. 4 The Court assumes as true all well-pleaded

allegations of fact in the complaint, and also draws all reasonable inferences from

those well-pleaded allegations in favor of the plaintiff.5               In this case, certain

Defendants, concurrent with their Motions to Dismiss, brought and argued Motions

for Partial Summary Judgment. I have already issued a Memorandum Opinion 6 that

addresses the Motions for Partial Summary Judgment, and I made findings of law

regarding certain contractual language that are incorporated below.

4
  Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 (Del. 2004). Here, the parties
conducted preliminary discovery in preparation for a preliminary injunction hearing. The
Plaintiffs amended their Complaint following that hearing, and explicitly noted that their Amended
Complaint “adds facts revealed during preliminary discovery conducted in advance of the
February 8, 2016 preliminary injunction hearing.” Am. Compl. ¶ 1. However, not all the
preliminary discovery conducted is considered in evaluating the Defendants’ Rule 12(b)(6)
Motions to Dismiss. There is no change to the standard that governs the record on which to
consider those Rule 12(b)(6) motions; documents integral to a plaintiff’s claim and incorporated
into the complaint can be considered, even if extrinsic to the complaint. See In re Morton’s Rest.
Grp., Inc. S’holders Litig., 74 A.3d 656, 658 n.3 (Del. Ch. July 23, 2013) (explaining why
depositions taken as part of discovery were considered fully incorporated into the complaint).
Here, that means that certain agreements, which were produced in preliminary discovery and/or
submitted by affidavit accompanying the Defendants’ Motions to Dismiss and Motions for Partial
Summary Judgment as well as affidavits accompanying the Plaintiffs’ responsive briefing to those
Motions, have been considered. These agreements, or the relationships they govern, are referenced
in the Amended Complaint. Information gleaned from these agreements has served to describe
certain relationships with greater specificity, but has otherwise had a nominal bearing on the
outcome.
5
  Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (citations omitted).
6
  See CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990 (Del. Ch. Jan. 31, 2017).

                                                3
       A. The Parties

       As this action involves a multitude of parties, it is beneficial (consistent with

my practice in Celestial I)7 to first delineate the various parties, especially because

many are interrelated.

              1. The Plaintiffs

       Plaintiff CelestialRX Investments, LLC (“CelestialRX”) is a Delaware limited

liability company with a principal place of business in Old Greenwich, Connecticut.8

CelestialRX is a member of Defendant Akrimax Pharmaceuticals, LLC

(“Akrimax”). 9 CelestialRX’s sole member and manager is Sandeep “Steve” Laumas

(“Laumas”). 10 From January 11, 2008 to July 1, 2013, Laumas served on Akrimax’s

Board of Directors.11

       Plaintiff Krittika Life Sciences, LLC (“Krittika”) is also a Delaware limited

liability company and shares its principal place of business with CelestialRX in Old

Greenwich, Connecticut.12         As with CelestialRX, Krittika’s sole member and

7
  Diligent readers may notice that I, at times, borrow the phrasing from my previous Memorandum
Opinion when describing the parties.
8
  Am. Compl. ¶ 4.
9
  Id.
10
   Id.
11
   Id. ¶¶ 32, 33, 77.
12
   Id. ¶ 5.

                                              4
manager is Laumas. 13 Krittika entered into a consulting agreement with Defendant

Akrimax dated February 1, 2008. 14

               2. The Defendants

                      a. Nominal Defendant/Defendant

       Defendant Akrimax is a Delaware limited liability company with a principal

place of business in Cranford, New Jersey. 15 Akrimax acquires, develops, sells, and

markets “pharmaceutical products in the areas of cardiovascular medicine,

endocrinology[,] and pain management.” 16 Akrimax was formed on October 24,

2007, and Defendants Joseph Krivulka and Leonard Mazur were its initial

members. 17 Plaintiff CelestialRX subsequently joined as the third member.18

Akrimax is a nominal defendant for the purposes of CelestialRX’s derivative claims,

but a defendant in Krittika’s claim for breach of contract. 19

                      b. Individual Defendants

       Joseph J. Krivulka (“Krivulka”) was 20 a resident of New Jersey and an

investor in numerous pharmaceutical businesses, which are defendants in this

13
   Id.
14
   Id. ¶ 45.
15
   Id. ¶ 6.
16
   Id. ¶ 28.
17
   Id.
18
   Id.
19
   Id. ¶ 6.
20
   Krivulka is now deceased. See Docket Item [hereinafter, “D.I.”] 278, Suggestion of Death Upon
the Record of Joseph J. Krivulka. Krivulka has been substituted in this action by the Estate of
Joseph J. Krivulka, and Michael J. Lerner and Angela L. Krivulka in their capacity as the personal

                                                5
action. 21 Krivulka was an original member of Defendant Akrimax. Prior to July 1,

2013, Krivulka served as one of three directors on Akrimax’s Board of Directors,

which acting collectively managed Akrimax. 22 Following a July 1, 2013 amendment

to Akrimax’s operating agreement, Krivulka, individually, became the sole manager

of Akrimax. 23 Pursuant to the same amendment, Krivulka became the beneficial

owner of all of Akrimax’s Common Voting Units and fifty-one percent of Akrimax’s

total units (or “Krivulka Units”). 24 Apart from Akrimax, Krivulka also held, directly

or beneficially, majority ownership interests in Defendants Mist Acquisition, LLC,

Mist Pharmaceuticals, LLC, Mist Partners, LLC, JJK Partners, LLC, JAK

Investment Partners, LLC, Holmdel Therapeutics, LLC, and Cranford Therapeutics,

LLC. 25 Krivulka passed away during the pendency of this litigation, and his Estate

and two individuals in their capacity as personal representatives of his Estate were

named Defendants in his stead, 26 references in this Memorandum Opinion to

“Krivulka” refer to Mr. Krivulka, or to his successors, as context dictates.

representatives of the Estate of Joseph J. Krivulka. See D.I. 304, Order Granting Plaintiffs’ Motion
to Substitute Pursuant to Court of Chancery Rule 25.
21
   Am. Compl. ¶ 7.
22
   Id. ¶¶ 33, 77.
23
   Id. ¶ 77.
24
   Id.
25
   Id. ¶¶ 7, 11–18. Through his ownership interest in Cranford Therapeutics, LLC, Krivulka is a
minority equity holder in Cranford Pharmaceuticals, LLC. See Am. Compl. ¶ 96; CelestialRX
Invs., LLC v. Krivulka, 2017 WL 416990, at *2 n.16 (Del. Ch. Jan. 31, 2017). Similarly, through
his equity interest in Holmdel Therapeutics, LLC, Krivulka is a minority equity holder in Holmdel
Pharmaceuticals, LP. See Am. Compl. ¶ 98; CelestialRX, 2017 WL 416990, at *2 n.16.
26
   D.I. 304.

                                                 6
       Defendant Leonard Mazur (“Mazur”) is a resident of New Jersey and an initial

member of Akrimax. 27 Between January 11, 2008 and July 1, 2013, Mazur served

on Akrimax’s Board of Directors, along with Krivulka and Laumas. 28 Mazur, like

Krivulka, has various investments outside his interest in Akrimax. 29 Mazur’s

interests, direct and beneficial, include minority ownership interests in Defendants

Mist Acquisition, LLC, Mist Partners, LLC, Holmdel Therapeutics, LLC and

Cranford Therapeutics, LLC; 30 all entities in which Krivulka also has a majority

ownership interest. Mazur also holds ownership interests in Prenzamax, LLC, Citius

Pharmaceuticals, LLC, and Valencia Investment Partners, LLC. 31 Finally, Mazur

manages Defendant LMazur Associates JV (“LMazur Associates”).32

       Defendant Donald Olsen (“Olsen”) is a resident of California.33 Olsen is the

former President and CEO of Akrimax. 34 Olsen holds a minority ownership interest

in Defendants Cranford Therapeutics, LLC and Holmdel Therapeutics, LLC. 35

27
   Am. Compl. ¶¶ 8, 28.
28
   Id. ¶¶ 33, 77.
29
   Id. ¶ 8.
30
   Id. ¶¶ 8, 14–18. As with Krivulka, Mazur has an ownership interest in Cranford Pharmaceuticals
and Holmdel Pharmaceuticals through his interests in Cranford Therapeutics and Holmdel
Therapeutics, respectively.
31
   Id. ¶ 8. These entities have contractual relationships with Akrimax but are not defendants in this
action, and the Plaintiffs make no allegations linking these entities to the claims in the Amended
Complaint. See id. ¶ 59.
32
   Id. ¶ 21.
33
   Id. ¶ 9.
34
   Id.
35
    Id. As with Krivulka and Mazur, Olsen also has an ownership interest in Cranford
Pharmaceuticals and Holmdel Pharmaceuticals through his interests in Cranford Therapeutics and
Holmdel Therapeutics, respectively. Id. ¶¶ 17–20.

                                                 7
                      c. The Entity Defendants

       Defendant JJK Partners, LLC (“JJK Partners”) is a Delaware limited liability

company, with the same principal place of business as Akrimax in Cranford, New

Jersey. 36 JJK Partners was formed on March 3, 2008, Krivulka is its sole member. 37

JJK Partners entered into a consulting agreement with Akrimax dated February 1,

2008. 38 Following a July 1, 2013 amendment to Akrimax’s operating agreement,

JJK Partners holds all the voting rights in Akrimax and all the “Krivulka Units” in

Akrimax;39 prior to the amendment, Krivulka held his interests in Akrimax in his

own name. 40 Apart from Akrimax, JJK Partners holds majority ownership interests

in Defendants Cranford Therapeutics, LLC and Holmdel Therapeutics, LLC. 41

       Defendant JAK Investment Partners, LLC (“JAK Investment Partners”) is a

Delaware limited liability company, with the same principal place of business as

Akrimax in Cranford, New Jersey. 42 JAK Investment Partners was formed in

36
   Id. ¶ 11.
37
   Id.
38
    Id. ¶ 45. The inconsistency between formation date, March 1, 2008, and the date of the
consulting agreement, February 1, 2008, is reflective of the Amended Complaint and is not an
error of the Court.
39
   Id. ¶¶ 8, 77.
40
   See Transmittal Aff. of Michael D. Zahler In Support of Pls.’ Opp’n to the Krivulka and Mazur
Defs.’ Mots. for Partial Summ. J. and to All Defs.’ Mots. to Dismiss [hereinafter, “Zahler Aff.”]
Ex. 2 (Amended and Restated Limited Liability Company Agreement of Akrimax
Pharmaceuticals, LLC), at Subex. A; Ex. 3 (Second Amended and Restated Limited Liability
Company Agreement of Akrimax Pharmaceuticals, LLC), at Subex. A.
41
   Am. Compl. ¶ 46 n.1.; Zahler Aff. Ex. 19, at Subex. B; Transmittal Aff. of John A. Eakins, Esq.,
in Support of Krivulka Defs.’ Mots. for Summ. J. and to Dismiss [hereinafter, “Eakins Aff.”] Ex.
24, at Subex. B.
42
   Am. Compl. ¶ 12.

                                                8
September 2008, and Krivulka is its sole member. 43 JAK Investment Partners holds

a majority ownership interest in Defendant Mist Partners, LLC. 44

        Defendant Mist Partners, LLC (“Mist Partners”) is a Delaware limited liability

company, with the same principal place of business as Akrimax in Cranford, New

Jersey. 45 Mist Partners was formed in October 2009.46 As previously mentioned,

JAK Investment Partners holds a majority ownership interest in Mist Partners; prior

to July 30, 2015, JJK Partners held the same majority ownership interest in Mist

Partners. 47 Defendant LMazur Associates holds a minority ownership interest in

Mist Partners.48 Mist Partners is the sole owner and member of Defendant Mist

Acquisition, LLC. 49

        Defendant Mist Acquisition, LLC (“Mist Acquisition”) is a Delaware limited

liability company, with the same principal place of business as Akrimax in Cranford,

New Jersey. 50 Mist Acquisition was formed in October 2009. 51 As stated above,

Mist Acquisition is wholly owned by Mist Partners.

43
   Id.
44
   Id. ¶ 14.
45
   Id.
46
   Id.
47
   Id. ¶¶ 14, 46 n.1.
48
   Id. ¶ 14.
49
   Id.
50
   Id. ¶ 15.
51
   Id.

                                           9
       Defendant Mist Pharmaceuticals, LLC (“Mist Pharmaceuticals”) is a

Delaware limited liability company, with the same principal place of business as

Akrimax in Cranford, New Jersey. 52 Mist Pharmaceuticals was formed in October

2009. 53 Krivulka has an over ninety percent interest in Mist Pharmaceuticals and

was Chairman of its Board of Directors.54

       Defendant Cranford Therapeutics, LLC (“Cranford Therapeutics”) is a

Delaware limited liability company, with the same principal place of business as

Akrimax in Cranford, New Jersey. 55 Cranford Therapeutics was formed in October

2013. 56 JJK Partners holds a majority ownership interest in Cranford Therapeutics,

and Krivulka serves as Cranford Therapeutics’ Chairman of the Board of Directors.57

Defendants LMazur Associates and Olsen also hold minority ownership interests in

Cranford Therapeutics. 58 Cranford Therapeutics is a member of Defendant Cranford

Pharmaceuticals, LLC, in which it owns a minority interest of approximately twelve

percent. 59

       Defendant Cranford Pharmaceuticals, LLC (“Cranford Pharmaceuticals”) is a

Delaware limited liability company, with the same principal place of business as

52
   Id. ¶ 16.
53
   Id.
54
   Id.
55
   Id. ¶ 17.
56
   Id.
57
   Id. ¶¶ 17, 46 n.1.
58
   Id. ¶¶ 17, 46 n.2.
59
   Id. ¶ 17; see also Eakins Aff. Ex. 58, at Subex. A.

                                                10
Akrimax in Cranford, New Jersey. 60 Cranford Pharmaceuticals was formed in

October 2013, and Krivulka was its CEO. 61 As stated above, Cranford Therapeutics

holds a minority interest in Cranford Pharmaceuticals, majority ownership is held

by third-party investor JCP II CI AIV, L.P. (“JCP”). 62

       Defendant Holmdel Therapeutics, LLC (“Holmdel Therapeutics”) is a

Delaware limited liability company, with the same principal place of business as

Akrimax in Cranford, New Jersey. 63             Holmdel Therapeutics was formed in

December 2012, and Krivulka is the Chairman of its Board of Directors.64

Defendant JJK Partners holds a majority interest, approximately sixty-two percent,

in Holmdel Therapeutics; Defendant LMazur Associates holds a twenty-five percent

interest, and Defendant Olsen holds a one-half percent interest.65                  Holmdel

Therapeutics is a limited partner in Defendant Holmdel Pharmaceuticals, LP, and

holds an approximately thirteen percent interest in that entity. 66

       Defendant Holmdel Pharmaceuticals, LP (“Holmdel Pharmaceuticals”) is a

Delaware domestic limited partnership, with the same principal place of business as

60
   Id. ¶ 18.
61
   Id.
62
   See CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *4 (Del. Ch. Jan. 31, 2017); see
also Eakins Aff. Ex. 58.
63
   Am. Compl. ¶ 19.
64
   Id.
65
   Id. ¶¶ 19, 46 n.1, 46 n.2.
66
   Id. ¶ 19.

                                             11
Akrimax in Cranford, New Jersey. 67 Holmdel Pharmaceuticals was formed in

December 2012.68 As stated above, Holmdel Therapeutics is a limited partner and

minority owner of Holmdel Pharmaceuticals. The majority owner and holder of the

remaining interest is third-party SWK. 69

       Defendant       LMazur       Associates       JV   (“LMazur       Associates”)      is    an

unincorporated joint venture with a principal place of business in Mountain Lakes,

New Jersey. 70 LMazur Associates is managed by Defendant Mazur.71 LMazur

Associates entered into a consulting agreement with Akrimax on February 1, 2008.72

As stated above, LMazur Associates holds minority ownership interests in

Defendants Mist Partners, Cranford Therapeutics, and Holmdel Therapeutics.

                       d. Defendant Groups

       The Defendants in this action have helpfully formed six groups. The first

group is the “Krivulka Defendants,” which consists of the following Defendants:

Krivulka, JJK Partners, JAK Investment Partners, Mist Partners, Mist Acquisition,

Mist Pharmaceuticals, Cranford Therapeutics, and Holmdel Therapeutics.73 The

67
   Id. ¶ 20.
68
   See CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *4 (Del. Ch. Jan. 31, 2017); see
also Eakins Aff. Ex. 25 at Recitals.
69
   See CelestialRX, 2017 WL 416990, at *4; see also Eakins Aff. Ex. 25 at Partner Schedule.
70
   Am. Compl. ¶ 21.
71
   Id.
72
   Id. ¶ 45.
73
   The Krivulka Defendants therefore consist of Krivulka (and, currently, his estate), entities that
Krivulka wholly and directly owned, and entities in which Krivulka held beneficial majority
ownership.

                                                12
second group is the “Mazur Defendants,” which consists of Mazur and LMazur

Associates.     The other Defendants are grouped individually: Olsen, Cranford

Pharmaceuticals, Holmdel Pharmaceuticals, and Akrimax.

       B. Akrimax from Founding to July 1, 2013

               1. Akrimax is Founded

                      a. Akrimax’s Ownership Structure

       Akrimax was formed as a Delaware limited liability company by Defendants

Krivulka and Mazur on October 24, 2007.74 Neither individual made an initial

capital contribution. 75 Plaintiff CelestialRX became a member of Akrimax on

approximately December 1, 2007. 76 Laumas facilitated an investment of $35 million

into Akrimax, and in return CelestialRX (which Laumas controlled) was made a

member of Akrimax and given voting units.77 On January 11, 2008, Akrimax

amended its governing documents (the “Second Amended LLC Agreement”).78

According to the Second Amended LLC Agreement, CelestialRX owned 49.9% of

Common Voting Units; and Krivulka and Mazur each owned 25.5% of Common

Voting Units. 79

74
   Am. Compl. ¶ 28.
75
   Id. ¶¶ 28, 32.
76
   Id. ¶ 31.
77
   Id. ¶¶ 31, 32; see also CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *5 (Del. Ch. Jan.
31, 2017) (describing in more detail that Laumas facilitated an investment from a previous
employer, an investment fund, which received non-voting preferred units).
78
   Am. Compl. ¶ 32; id. Ex. A.
79
   Id. ¶ 32; id. Ex. A, at Subex. A.

                                                13
                        b. Akrimax’s Initial Board of Directors

        According to the Second Amended LLC Agreement, “the business affairs of

[Akrimax] shall be managed by or under the direction of the Manager.” 80 The

“Manager” of Akrimax was further defined as the “Board of Directors acting

collectively.” 81 The Agreement specifically named Krivulka, Mazur, and Laumas

as the initial directors of Akrimax. 82 According to the Agreement, each director had

one vote, 83 and all actions taken by the Board of Directors required approval of a

majority of directors.84 Furthermore, a director acting individually did not have the

authority to act for Akrimax. 85

        In terms of fiduciary duties, the Second Amended LLC Agreement provided

in Section 4.01(h) that:

        The members of the Board of Directors shall have no fiduciary duties
        to the Company or the Members and shall not be personally liable to
        the Company or to its Members for breach of any duty that does not
        involve (i) an act or omission not in good faith or which involves
        intentional misconduct or a knowing violation of law; or (ii) a
        transaction from which such member of the Board of Directors derived
        an improper personal benefit.86

80
   Id. Ex. A § 4.01(a).
81
   Id. ¶ 33; id. Ex. A § 4.01(b).
82
   Id. ¶ 33; id. Ex. A § 4.01(b).
83
   Id. ¶ 33; id. Ex. A § 4.01(c).
84
   Id. ¶ 42; id. Ex. A § 4.01(c).
85
   Id. ¶ 42; id. Ex. A § 4.01(c).
86
   Id. ¶ 43; id. Ex. A § 4.01(h).

                                             14
Sections 8.01 and 8.02 of the Second Amended LLC Agreement further provided

provisions which governed transactions with interested parties, conflicts of interest,

and the ability of members and directors of Akrimax to engage in business

opportunities in competition with Akrimax. 87

       The Second Amended LLC Agreement also named Krivulka and Mazur as

officers of Akrimax. 88 Specifically, Krivulka was Chairman and Mazur was Vice

Chairman. 89 According to the Agreement, officers “are not ‘managers’ (within the

meaning of the Act) of [Akrimax], but the Manager may delegate to such Officers

such power and authority as the Manager deems advisable.” 90

                      c. Akrimax Enters into Consulting Agreements with Krittika,
                      LMazur Associates, and JJK Partners

       In the spring of 2008, Akrimax entered into consulting agreements with JJK

Partners, LMazur Associates and Krittika.91 These agreements were dated February

1, 2008.92 The agreements provided that Akrimax would pay each entity two percent

of Akrimax’s gross revenues.93 The agreements also included covenants not to

87
   Id. Ex. A §§ 8.01, 8.02.
88
   Id. ¶ 44.
89
   Id. Ex. A § 4.03(a).
90
   Id. The “Act” is defined as the Delaware Limited Liability Company Act. See id. Ex. A, at
Recitals.
91
   Id. ¶ 45.
92
   Id. The inconsistency between the time of contracting and the dates of the consulting agreements
is not an error of the Court.
93
   See Eakins Aff. Ex. 6 (Consulting agreement with JJK Partners); Zahler Aff. Exs. 23 (Consulting
Agreement with Krittika), 24 (Consulting Agreement with LMazur Associates).

                                                15
compete. As a result, JJK Partners and LMazur Associates were prohibited from

competing with Akrimax and from directly or indirectly owning an interest in any

entity that competes with Akrimax. 94

              2. Rouses Point Manufacturing Facility and the Inderal License95

       On January 11, 2008, Akrimax purchased a manufacturing facility in Rouses

Point, New York from Wyeth Pharmaceuticals (“Wyeth”) for $20 million.96 In

another agreement executed on the same day, Akrimax purchased the rights to the

pharmaceutical Inderal, and certain other drugs, from Wyeth for $12 million. 97

              3. The Tirosint Sublicense

       On January 27, 2010, Akrimax and Alpharma Pharmaceuticals, LLC

(“Alpharma”) entered into an exclusive sublicense agreement (the “Alpharma

Agreement”) for Akrimax to acquire the sublicense to the pharmaceutical Tirosint.98

Alpharma had previously acquired the exclusive license to distribute and sell

Tirosint from Institut Biochimique SA (“IBSA”), the Swiss patent holder of

Tirosint. 99 Under the Alpharma Agreement, Alpharma assigned all of its rights

94
   Am. Compl. ¶ 47; see also Zahler Aff. Exs. 23, 24.
95
   This subsection does not appear in the Amended Complaint but provides helpful background for
the reader and was included in my Memorandum Opinion of January 31, 2017 [hereinafter,
“Celestial I”].
96
   CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *5 (Del. Ch. Jan. 31, 2017).
97
   Id.
98
   Am. Compl. ¶ 35.
99
   Id.

                                              16
under its exclusive license from IBSA to Akrimax. 100 In return, Akrimax agreed to

expend certain efforts to distribute Tirosint in the United States; including a

minimum amount of expenditures, the purchase of a minimum quantity of Tirosint

from IBSA, and the maintenance of a certain level of sales force. 101

        On the same day the Alpharma Agreement was executed, Krivulka,

individually and without board approval, caused Akrimax to enter into the

“Assignment and Assumption Agreement” with Mist Acquisition. 102 Under the

Assignment and Assumption Agreement, Akrimax assigned its Tirosint sublicense

to Mist Acquisition.103

        Almost two years later, on December 1, 2011, Krivulka, individually and

again without board approval, caused Akrimax to enter into the “Promotion,

Distribution and Support Services Agreement” with Mist Acquisition. 104        The

Agreement was purported to be retroactive to January 27, 2010, the original date of

the Alpharma Agreement and the subsequent assignment of the Tirosint sublicense

from Akrimax to Mist Acquisition. 105 Under the Promotion, Distribution and

Support Services Agreement, Mist Acquisition transferred the Tirosint sublicense

back to Akrimax; in return, Akrimax assumed all the obligations of the sublicense

100
    Id.
101
    Id.
102
    Id. ¶ 54.
103
    Id.
104
    Id. ¶ 55.
105
    Id.

                                         17
and agreed to pay a “distribution fee” of ten percent of gross sales of Tirosint to Mist

Acquisition and Mazur. 106 Furthermore, under the Promotion, Distribution and

Support Services Agreement, Mist Acquisition could take back the sublicense to

Tirosint “for convenience” after thirty days’ notice.107

       Mist Acquisition and Mazur (but not Laumas or CelestialRX) separately

entered into a side agreement to split the proceeds of any sale by Mist Acquisition

of the Tirosint sublicense. 108

              4. The Rights to NitroMist, Suprenza, and Primlev

       Prior to 2013, Krivulka also caused Akrimax to enter into contractual

relationships with Mist Acquisition and Mist Pharmaceuticals after those two entities

obtained the distribution rights to the pharmaceuticals NitroMist, Suprenza,109 and

Primlev. 110 As with Tirosint, Krivulka purported to enter Akrimax into distribution

agreements with Mist Acquisition or Mist Pharmaceuticals for NitroMist and

Primlev without the knowledge or approval of the Akrimax Board of Directors.111

Under the distribution agreements for NitroMist and Primlev, Akrimax agreed to

make royalty payments to Mist Acquisition and Mist Pharmaceuticals, in addition to

106
    Id.
107
    Id.
108
    Id. ¶ 57.
109
    Suprenza is briefly mentioned in the Amended Complaint, but no actions or agreements related
to Suprenza appear to be at issue in this litigation.
110
    Id. ¶ 59.
111
    Id.

                                              18
taking on the obligations that Mist Acquisition and Mist Pharmaceuticals had agreed

to when they first obtained the distribution rights from third parties. 112 Furthermore,

Akrimax’s agreements for the distribution rights to NitroMist and Primlev included

provisions for termination at will by Mist Acquisitions and Mist Pharmaceuticals.113

              5. The Pfizer Settlement 114

       After Akrimax purchased the Rouses Point manufacturing facility and

distribution rights to Inderal from Wyeth, Pfizer acquired Wyeth. 115 Pfizer alleged

that Akrimax had failed to comply with its obligations under the original agreements

with Wyeth. 116 Akrimax entered into a settlement with Pfizer to resolve this dispute

in 2011. 117 Under the settlement, Akrimax returned the manufacturing facility, and

also the rights to Inderal and certain other drugs.118 However, on the same day,

Pfizer and Akrimax entered into a “License and Option Agreement,” under which

Akrimax could continue selling Inderal into 2013, and would thereafter have the

option to extend the license in exchange for a lump sum payment. 119

112
    Id.; see also CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *6–7 (Del. Ch. Jan. 31,
2017).
113
    Am. Compl. ¶ 59, 60; see also CelestialRX, 2017 WL 416990, at *7–8.
114
     This subsection also does not appear in the Amended Complaint but provides helpful
background for the reader and was included in Celestial I.
115
    CelestialRX, 2017 WL 416990, at *7.
116
    Id.
117
    Id.
118
    Id. In return, Akrimax was released from certain obligations to Pfizer. Id.
119
    Id.

                                              19
              6. Termination of the Distribution Rights to Tirosint, NitroMist and
              Primlev

       On April 12, 2013, Mist Acquisition sent a letter to Akrimax purporting to

terminate the sublicense agreement for Tirosint; this letter was signed by

Krivulka.120 Mist Acquisition and Mist Pharmaceuticals also purported to terminate

their agreements with Akrimax for the distribution rights to NitroMist and Primlev

on the same day. 121

       Laumas received a copy of the Mist Acquisition letter regarding Tirosint, and

learned for the first time of the assignment of the Tirosint sublicense from Akrimax

to Mist Acquisition, and the subsequent re-assignment of the same sublicense back

to Akrimax. 122 Krivulka represented to Laumas that Akrimax’s financial condition

was tenuous, 123 the implication being that Akrimax could not have first acquired the

distribution rights to Tirosint and the other drugs on its own, thereby justifying the

inclusion of the intermediary entities. As a result, Laumas was shown financial and

other information from Akrimax. 124 The financial information provided to Laumas

(and CelestialRX) was false and incomplete. 125 Olsen, who was Akrimax’s CEO at

the time, participated in withholding and concealing correct financial information.126

120
    Am. Compl. ¶ 60.
121
    Id.
122
    Id. ¶ 61.
123
    Id. ¶ 65.
124
    Id.
125
    Id. ¶¶ 65, 66.
126
    Id. ¶ 65.

                                         20
        Akrimax    threatened   suit   against   Mist   Pharmaceuticals     and    Mist

Acquisitions.127    Krivulka requested a standstill, and the parties negotiated a

settlement for the return of the rights to Tirosint, NitroMist, and Primlev to

Akrimax. 128

        C. The 2013“Settlement” and Related Agreements

        In broad strokes, under the settlement between the parties, Krivulka agreed to

return—or rather have Mist Acquisition and Mist Pharmaceuticals return—the

licensing rights to Tirosint and the other drugs to Akrimax. 129 Krivulka further gave

assurances that he would make “good faith efforts for Akrimax to sell Tirosint and

other product rights at the best possible price,” 130 and that in the meantime, he would

maximize the drug assets and avoid default on Akrimax’s licensing agreements.131

In return, Krivulka asked that the royalty rate paid by Akrimax to Mist Acquisition

and Mist Pharmaceuticals for Tirosint and the other pharmaceuticals be increased,

and that, in the event of a default on the royalty payments, the rights to those

pharmaceuticals be returned to Mist Acquisition and Mist Pharmaceuticals.132

127
    Id. ¶ 62.
128
    Id. ¶ 63.
129
    Id. ¶ 67.
130
    Id. ¶ 68.
131
    Id.
132
    Id. ¶ 67.

                                          21
       Krivulka also wanted Laumas, Mazur, and himself to execute a release of

claims. 133 Furthermore, Krivulka wanted changes to Akrimax’s ownership and

management structure. 134 Laumas assented to these terms, and on July 1, 2013, the

settlement was finalized through at least fourteen different agreements. 135

               1. The Return of the Rights to Tirosint and the Other Drugs

       One of the agreements executed on July 1, 2013 was the Tirosint Termination

and Royalty Agreement. 136             Under this Agreement, Akrimax regained the

distribution rights to Tirosint and, in return, Akrimax agreed to pay to Mist

Acquisition a royalty of thirty-five percent of gross sales of Tirosint;137 this was an

increase from their previous agreement. Additionally, according to the Tirosint

Termination and Royalty Agreement, if Akrimax defaulted on the royalty payments

and failed to cure the default within forty-five days of notice of default, Mist

Acquisition could retake the Tirosint sublicense.138 Akrimax entered into similar

agreements for the return of the rights to NitroMist and Primlev; that is, Akrimax’s

133
    Id.
134
    Id. ¶ 72.
135
    Id. ¶ 73.
136
    Id. ¶ 75.
137
    Id. The return of the Tirosint rights was accomplished by the termination of the initial January
27, 2010 assignment of the rights to Tirosint from Akrimax to Mist Acquisition. See CelestialRX
Invs., LLC v. Krivulka, 2017 WL 416990, at *10 (Del. Ch. Jan. 31, 2017).
138
    Am. Compl. ¶ 75.

                                                22
rights to both drugs were restored, but at increased royalty rates and with royalty

default and right reversion provisions.139

               2. The Release Agreement140

       On July 1, 2013, Krivulka, Mazur, and Laumas also entered into a release

agreement (the “Release Agreement”),141 under which the “Releasing Parties”

agreed to release the “Released Parties” from “any and all claims relating to, arising

from, or in any way connected to any actions taken by the parties in connection with

the company.” 142       The Release Agreement is governed by New York law.143

CelestialRX was not included as a “Party” to the Release Agreement; 144 instead,

“Parties” is a defined contractual term that encompasses only Mazur, Laumas, and

Krivulka.145 The Release Agreement defined “Releasing Parties” and “Released

Parties” differently; in particular, affiliates of Mazur, Laumas, and Krivulka were

defined to be Released Parties but were not Releasing Parties. 146 As a result,

CelestialRX, an affiliate of Laumas, is a Released Party but not a Releasing Party,

139
    Id. ¶ 76.
140
    This was a subject of Celestial I; accordingly, I cite to that Opinion below.
141
    CelestialRX, 2017 WL 416990, at *14.
142
    Id. (internal quotations omitted).
143
    Id. at *13.
144
    Id. at *14.
145
    Id. at *15.
146
    Id.

                                                 23
and therefore, under the Release Agreement as written, CelestialRX did not release

its claims existing as of July 1, 2013.147

               3. Amendment No. 7 to the Second Amended LLC Agreement

                      a. Ownership and Control

       On July 1, 2013, Akrimax amended its operating agreement through

Amendment No. 7 to the Second Amended LLC Agreement (“Amendment No. 7”),

under this Amendment JJK Partners was given one hundred percent of the voting

rights in Akrimax, and Krivulka, indirectly, became the owner of fifty-one percent

of total units,148 also known as “Krivulka Units.” Amendment No. 7 stated that these

“Krivulka Units” would never decrease below fifty-one percent of total units.149

Under Amendment No. 7, Mazur lost his voting units; however, his ownership

interest increased from 25.5% of common voting units to approximately thirty

percent of common non-voting units.150                 On the other hand, according to

Amendment No. 7, CelestialRX’s ownership interest decreased from forty-nine

percent of common voting units to nineteen percent of common non-voting units.151

147
     Id. To be precise, I denied the Defendants’ Motions for Partial Summary Judgment that
CelestialRX had released claims existing as of July 1, 2013. Id. I note that the Defendants argued
mutual mistake, an element of an (unpled) reformation claim.
148
    Am. Compl. ¶¶ 73, 77.
149
    Id. ¶ 77.
150
    Id. ¶ 78.
151
    Id. ¶ 79.

                                               24
       Amendment No. 7 also changed the management structure of Akrimax. The

Amendment now defined “Manager” as Krivulka alone; 152 previously, “Manager”

had been defined as the Board, acting collectively. Furthermore, Krivulka was

named in Amendment No. 7 as the sole director of Akrimax. 153 The Amendment

did require Krivulka to submit Akrimax’s budget to Mazur and Laumas for

approval. 154

                       b. Fiduciary Duties 155

       As described above, Amendment No. 7 changed the ownership and

management structure in the Second Amended LLC Agreement. Amendment No. 7

also amended Section 4.01(h) of the Second Amended LLC Agreement. That

provision now provides that:

       Notwithstanding anything to the contrary in this Agreement, neither the
       Manager nor any of the members of the Board of Directors nor any
       Member shall have any fiduciary duties to the Company or the
       Members or shall be personally liable to the Company or its Members
       for a breach of any duty that does not involve (i) an act or omission not
       in good faith or which involves intentional misconduct or a knowing
       violation of law; or (ii) a transaction from which such Manager, a
       member of the Board of Directors, or Member derived an improper
       personal benefit. 156

152
    Id. ¶ 77.
153
    Id.
154
    Id. ¶ 80; id. Ex. B § 7.
155
    This was also the subject of Celestial I; accordingly, I cite to that Opinion below.
156
    Id. Ex. B § 6.

                                                 25
This language in Amendment No. 7 “generally eliminates common-law fiduciary

duties except that it retains liability for intentional or illegal misconduct and other

bad faith actions, as well as for improper self-dealing.”157 “[T]hose duties are

contractual in nature,” although “common law fiduciary duties are instructive in

supplying the definition” to undefined terms such as “bad faith.” 158

       In turn, Sections 8.01 and 8.02 of the Second Amended LLC Agreement,

which were unchanged by Amendment No. 7, 159 “provide specific contractual

standards which govern conflict transactions and corporate opportunities.”160

Section 8.02 “eschews the corporate opportunity doctrine, and permits conflicted

interests to be held by Directors and Members.”161 Section 8.01 contains two

provisions, which provide alternative safe harbors for conflicted transactions.162

Under Section 8.01(a) a conflicted party bears no liability where a conflicted

transaction was entered in the absence of bad faith and the “Manager” determines in

good faith that the transaction is fair and reasonable to the Company.163

Alternatively, under Section 8.01(b), the conflicted party can avoid liability by

acting in good faith and resolving its conflict by a good-faith balancing of the relative

157
    CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *16 (Del. Ch. Jan. 31, 2017).
158
    Id. at *16.
159
    See Am. Compl. Ex. B.
160
    CelestialRX, 2017 WL 416990, at *17.
161
    Id. at *18.
162
    Id.
163
    Id. (internal quotations omitted).

                                              26
interests of each party (including its own interest) and the benefits and burdens

relating to such interests.164 Conflicted transactions that do not achieve either safe

harbor are therefore transactions from which the conflicted “party may be shown to

have derived an improper personal benefit under Section 4.01(h)(ii), in breach of his

[contractual] duty under that section.”165

               4. Other Relevant Agreements on July 1, 2013

       The consulting agreement between Akrimax and Krittika was also amended

on July 1, 2013. 166 According to the amendment, Krittika would still be paid a

consulting fee equal to two percent of Akrimax’s gross sales, but this fee would now

be payable quarterly instead of monthly. 167 Relatedly, Amendment No. 7 provided

that Krittika’s fees would be the first paid from Akrimax’s funds available for

distribution.168 Furthermore, Akrimax agreed to pay Krittika arrears on consulting

fees that had accrued to approximately $4.7 million. 169 Krittika and Mazur also

entered into a related agreement, pursuant to which Mazur agreed to pay Krittika the

difference between the actual amount Akrimax paid to Krittika on a quarterly basis

and the amount payable to Krittika by Akrimax. 170            Akrimax’s consulting

164
    Id. (internal quotations omitted).
165
    Id.
166
    Am. Compl. ¶ 144.
167
    Id. ¶¶ 143, 144.
168
    Id. Ex. B § 10(i).
169
    Id. ¶ 144.
170
    Id. ¶ 145.

                                             27
agreements with JJK Partners and LMazur Associates were also amended on July 1,

2013, 171 but these amendments did not change the prohibition on competing with

Akrimax and diverting opportunities from Akrimax. 172

       On July 1, 2013, Krivulka and Mazur also entered into a new side letter

agreement.173 Pursuant to the side letter, Mist Acquisition agreed to pay Mazur

twenty-five percent of the Tirosint royalties it received from Akrimax.174

Additionally, under the side letter, if Mist Acquisition reacquired the Tirosint asset

from Akrimax and then sold it, Krivulka and Mazur agreed to split Krivulka’s share

of the proceeds. 175 On June 28, 2013, prior to the side letter agreement between

Krivulka and Mazur, Mazur had agreed to pay Krittika 14.3% of the Tirosint

royalties that Mazur received from Mist Acquisition. 176

       D. Akrimax After the 2013 “Settlement”

              1. Cranford Pharmaceuticals Acquires the Rights to Inderal

       In late 2013, Akrimax’s license with Pfizer to sell Inderal expired, and

Akrimax chose not to exercise its option to repurchase the licensing rights.177

171
    The amendments to the consulting agreements with JJK Partners and LMazur Associates,
similar to the changes to the Krittika consulting agreement, changed the consulting fee payment
period from monthly to quarterly and set an amount for arrears on consulting fees owed by
Akrimax to JJK Partners and LMazur. See Zahler Aff. Exs. 25, 26.
172
    Am. Compl. ¶ 85; see also Zahler Aff. Exs. 25, 26.
173
    Am. Compl. ¶ 74.
174
    Id. ¶¶ 74 n.3, 150.
175
    Id. ¶ 74.
176
    Id. ¶ 151.
177
    Id. ¶ 95.

                                              28
Cranford Pharmaceuticals, which was formed in October 2013, then acquired the

rights to Inderal from Pfizer. 178 Cranford Pharmaceuticals planned to derive a

royalty stream from owning the licensing rights to Inderal and to leverage the

extended release technology used by Holmdel Pharmaceuticals to create a new

Inderal product.179

       On February 4, 2014, Akrimax entered into agreements with Cranford

Pharmaceuticals and Holmdel Pharmaceuticals in furtherance of the plan to create

an extended release product based on Inderal. 180 Cranford Therapeutics and JCP had

together contributed $25 million in capital to Cranford Pharmaceuticals to fund the

purchase of the Inderal rights from Pfizer. 181     Akrimax guaranteed Cranford

Therapeutics and JCP’s capital contributions to Cranford Pharmaceuticals.182

Akrimax also assigned to Cranford Pharmaceuticals more than $5.5 million in cash

and other assets and agreed to assume Cranford Pharmaceuticals’ royalty payments

to non-party AstraZeneca.183 Furthermore, Akrimax agreed to distribute Inderal for

Cranford Pharmaceuticals.184 In return, Cranford Pharmaceuticals agreed to pay

Akrimax an “administrative fee” of ten percent of the net sales of Inderal. 185 Under

178
    Id.
179
    Id. ¶¶ 97, 99.
180
    Id. ¶¶ 100–105.
181
    Id. ¶ 100.
182
    Id.
183
    Id.
184
    Id.
185
    Id. ¶ 102.

                                         29
the agreement between Cranford Pharmaceuticals and Akrimax, Cranford

Pharmaceuticals can terminate the agreement for any reason after the first year and

after 180 days’ notice. 186

        Holmdel Pharmaceuticals licensed its extended release technology to

Cranford Pharmaceuticals.187 As part of the license agreement, Akrimax guaranteed

$28.2 million in royalty payments from Cranford Pharmaceuticals to Holmdel

Pharmaceuticals.188

        To date, the “administrative fee” paid to Akrimax based on net sales of Inderal

has not exceeded the $5.5 million of assignments to Cranford Pharmaceuticals.189

Furthermore, since February 4, 2014, Akrimax has paid over $14 million to Holmdel

Pharmaceuticals to fulfill its obligation to guarantee royalties owed by Cranford

Pharmaceuticals.190

                 2. Akrimax Defaults on the Tirosint Royalties to Mist Acquisition

        As previously mentioned, under one of the July 1, 2013 agreements, Akrimax

regained the sublicense to Tirosint. Akrimax had agreed to pay a higher royalty rate

to Mist Acquisition and to return the Tirosint sublicense to Mist Acquisition if it

defaulted on those royalty payments. Notwithstanding its contractual obligation to

186
    Id. ¶ 104.
187
    Id. ¶ 100.
188
    Id.
189
    Id. ¶ 103.
190
    Id.

                                            30
do so, Akrimax did not make a royalty payment for Tirosint to Mist Acquisition after

October 1, 2013. 191 However, around the same time, Akrimax did decide to assign

millions of dollars in assets to Cranford Pharmaceuticals and to guarantee tens of

millions of dollars in capital contributions and royalty payments to Cranford

Pharmaceuticals and Holmdel Pharmaceuticals.

        On February 21, 2014, Mist Acquisition notified Akrimax by letter that

Akrimax had breached the July 1, 2013 agreement by defaulting on royalty payments

that were due on February 15, 2014. 192 According to the letter, Akrimax had until

April 7, 2014 to cure the default or the agreement would be terminated and the rights

to Tirosint transferred to Mist Acquisition.193 Laumas was not aware of this letter at

the time it was received by Akrimax. 194 Additionally, despite the requirement in

Amendment No. 7 that Laumas receive and approve Akrimax’s budget, Laumas was

not provided with a copy of Akrimax’s 2014 budget. 195

        On November 1, 2014, Akrimax and Mist Acquisition entered into a

Termination and Assignment Agreement, under which, based on Akrimax’s default,

the sublicense to Tirosint and the license to NitroMist reverted back to Mist

191
    Id. ¶ 87.
192
    Id. ¶ 90.
193
    Id.
194
    Id. ¶ 91.
195
    Id. ¶ 89.

                                         31
Acquisition. 196 Despite the termination of the agreement and loss of distribution

rights, Akrimax continued to market and distribute Tirosint and NitroMist. 197

        As previously mentioned, the sublicense for Tirosint came from Alpharma,

which in turn held an exclusive license from IBSA.          On January 14, 2015,

Alpharma’s exclusive license from IBSA was terminated.198 On the same day, Mist

Acquisition and Akrimax entered into an Exclusive License, Supply and Distribution

Agreement with IBSA. 199 Under the Agreement, Mist Acquisition was granted the

exclusive license to distribute Tirosint in the United States.200 Akrimax guaranteed

Mist Acquisition’s financial and performance obligations to IBSA under this

Agreement. 201 Akrimax continued to market and distribute Tirosint without an

agreement with Mist Acquisition. 202

        On July 31, 2015, Akrimax entered into the Promotion, Distribution and

Support Agreement with Mist Acquisition, under which Mist Acquisition granted

Akrimax a sublicense to Tirosint.203 According to this agreement, Akrimax agreed

to make all royalty and other payments that Mist Acquisition was obligated to make

196
    Id. ¶ 93.
197
    Id. ¶ 94.
198
    Id. ¶ 111.
199
    Id. ¶ 114.
200
    Id.
201
    Id. ¶ 115.
202
    Id. ¶ 117.
203
    Id. ¶ 118.

                                        32
to IBSA. 204 Additionally, Akrimax agreed to pay Mist Acquisition a “distribution

fee” equal to ten percent of the gross sales of Tirosint.205 Mist Acquisition can

terminate the Agreement “for convenience” after thirty days’ notice. 206           The

Agreement was purported to be retroactive to November 1, 2014, the date that

Akrimax’s previous sublicense for Tirosint was terminated.207

        Additionally, under the July 31, 2015 agreement for the Tirosint sublicense,

Akrimax was obligated to issue over $11 million in promissory notes, the majority

of which were payable to JAK Investments and LMazur Associates.208 These notes

supposedly represented the unpaid “distribution fees” from the agreement with Mist

Acquisition that Akrimax had defaulted on, and which had thereby been terminated

in November 2014.209 The Agreement also imposed on Akrimax the obligation to

pay for and provide operating services for Mist Acquisition.210

        On September 2, 2015, Laumas met with Krivulka and several Akrimax

officers to discuss the status of efforts to sell Akrimax’s rights to Tirosint.211 While

Krivulka and Akrimax officers told Laumas that Akrimax would be accepting bids

from prospective purchasers, they did not tell Laumas that Mist Acquisition had

204
    Id. ¶ 119.
205
    Id.
206
    Id.
207
    Id. ¶ 118.
208
    Id. ¶ 120.
209
    Id.
210
    Id. ¶ 121.
211
    Id. ¶ 124.

                                          33
obtained the exclusive license to Tirosint. 212 Krivulka did, however, reveal to

Laumas that Akrimax had defaulted on its royalty obligation to Mist Acquisition and

that the Tirosint sublicense had reverted to Mist Acquisition. 213 As a result, per

Krivulka, Mist Acquisition (and not Akrimax) would therefore be selling the rights

to Tirosint.214 Laumas asked why Akrimax had defaulted on royalty payments to

Mist Acquisition and lost the sublicense. 215 In response Krivulka cited excess

overhead; in particular, Krivulka cited a Tirosint price increase by IBSA and

Akrimax’s debt.216 However, in truth both the price increase and the majority of

Akrimax’s debt—that is, the promissory notes—occurred after Akrimax defaulted

on the Tirosint royalty payments.217

        During this meeting, Laumas also asked why he had not been provided with

Akrimax’s budget for 2014, and why Akrimax’s default and loss of the Tirosint

sublicense were not reflected in the financials that were provided to him. 218 Laumas

was not given a response to the former; and regarding the latter, he was told that the

sublicense was not considered an asset. 219 Plaintiff CelestialRX filed a Complaint

shortly thereafter on November 20, 2015, and also filed a Motion for a Temporary

212
    Id.
213
    Id. ¶ 125.
214
    Id.
215
    Id. ¶ 126.
216
    Id. ¶¶ 126, 127.
217
    Id. ¶¶ 126, 127.
218
    Id. ¶¶ 129, 130.
219
    Id. ¶¶ 129, 130.

                                         34
Restraining Order (“TRO”) in an attempt to prevent the sale of assets, including

Tirosint. 220

                3. Krittika Is Not Paid Its Consulting Fees

       Despite the July 1, 2013 amendment to the consulting agreement between

Akrimax and Krittika, Akrimax has withheld over $6 million due to Krittika.221

During the time Akrimax has withheld payment to Krittika, Akrimax has continued

to make payments to JJK Partners and LMazur Associates, pursuant to Akrimax’s

consulting agreements with those entities. 222 Additionally, despite the side letter

agreement between Krittika and Mazur, Mazur has not paid to Krittika the difference

between the quarterly amounts actually paid to Krittika by Akrimax, and the

amounts payable. 223 Furthermore, despite the June 28, 2013 agreement between

Mazur and Krittika, Mazur has never paid Krittika any portion of the Tirosint

royalties that Mazur has received from Mist Acquisition. 224

       E. Procedural History

       Plaintiff CelestialRX filed its verified Complaint on November 20, 2015. I

held a hearing on Celestial RX’s petition for a Temporary Restraining Order

(“TRO”) on November 24, 2015, and I subsequently granted the TRO request on

220
    See D.I. 1.
221
    Am. Compl. ¶ 146.
222
    Id. ¶ 148.
223
    Id. ¶ 147.
224
    Id. ¶ 151.

                                            35
December 3, 2015. The parties then engaged in expedited discovery, followed by

Oral Argument on CelestialRX’s request for a preliminary injunction on February 8,

2016. I denied CelestialRX’s request for a preliminary injunction from the Bench,

and CelestialRX filed an Amended Complaint on March 8, 2016. The Amended

Complaint added Krittika as a plaintiff, additional Defendants, and additional

counts.

       At the February 8, 2016 argument for a preliminary injunction, I indicated

that, moving forward, two legal issues needed to be decided: first, the effect, if any

of the July 1, 2013 Release Agreement, and second, the nature of the duties owed

under Akrimax’s LLC Agreement. Pursuant to an April 14, 2016 Scheduling Order,

the parties were permitted discovery on these two preliminary issues. The Mazur

Defendants filed a Motion to Dismiss the Amended Complaint on March 22,

2016. 225    On July 19, 2016, the Krivulka Defendants and Mazur Defendants

separately filed Motions for Partial Summary Judgment, and the Krivulka

Defendants filed a Motion to Dismiss the Amended Complaint.226 The Motions for

Partial Summary Judgment were based on the two preliminary issues I had

identified. On July 5, 2016, Defendant Cranford Pharmaceuticals and Defendant

Holmdel Pharmaceuticals also separately filed Motions to Dismiss the Amended

225
    Mazur had also filed a Motion to Dismiss the original Complaint on November 24, 2015.
226
    The Krivulka Defendants had also filed a Motion to Dismiss the original Complaint on January
6, 2016.

                                              36
Complaint. Finally, on July 7, 2016, Defendant Olsen filed a Motion to Dismiss the

Amended Complaint.

       I heard Oral Argument on all the Defendants’ Motions for Partial Summary

Judgment and Motions to Dismiss on October 17, 2016, which focused on the two

preliminary issues identified. On January 31, 2017, I issued a Memorandum

Opinion that addressed only the Defendants’ Motions for Partial Summary

Judgement, which I granted in part and denied in part. I directed the parties to

“confer regarding the most efficient way to move forward in light of [the]

Memorandum Opinion.”227 The parties then indicated that they would pursue

mediation; however, toward the end of 2017, they reported that the mediation had

failed. A scheduling conference was held on January 31, 2018, following which the

parties submitted letters on February 7, February 14, and February 22, 2018,

indicating that they considered the previously filed Motions to Dismiss to remain

pending. 228

       Defendant Krivulka died on February 17, 2018. On April 4, 2018, in light of

his passing and given indication from the parties that they were engaging in

settlement discussions, I suspended consideration of the then-pending Motions to

Dismiss. I later learned that the settlement discussions were not successful. Given

227
   CelestialRX Investments, LLC v. Krivulka, 2017 WL 416990, at *19 (Del. Ch. Jan. 31, 2017).
228
  The Parties also submitted supplemental letter briefs on the Motions to Dismiss on October 20,
2016.

                                              37
the death of Krivulka, On May 29, 2018, the Plaintiffs filed a Motion to Substitute,

which was promptly opposed. On October 23, 2018, the Plaintiffs represented that

the Motions to Dismiss and the Motion to Substitute were once again ripe for

adjudication. On November 5, 2018, the parties indicated via letter that no party to

the action, despite the more than two years since Oral Argument, sought to file

further supplemental briefing on the Motions to Dismiss. I heard Oral Argument on

the Motion to Substitute on December 5, 2018, and granted the Motion to Substitute

on the same day. 229 Having resolved the Motion to Substitute, I considered the

Motions to Dismiss again submitted for decision on December 5, 2018.

                                       II. ANALYSIS

       The Plaintiffs bring sixteen counts against fifteen Defendants (not including

ten John Does and ten ABC entities) in their Amended Complaint. In the Amended

Complaint, CelestialRX brings against all the Defendants: a direct and derivative

claim for Accounting;230 a direct and derivative claim for Bad Faith Breach of

Fiduciary Duty; 231 a derivative claim for Waste;232 a derivative claim for

Conversion; 233 a direct claim for Civil Conspiracy; 234 and a direct and derivative

229
    The Motion to Substitute is reflected in the caption of this Opinion and was granted following
a short telephonic Oral Argument on the same date, December 5, 2018.
230
    Count I of the Amended Complaint. See Am. Compl. ¶¶ 155–160.
231
    Count II of the Amended Complaint. See id. ¶¶ 161–171.
232
    Count V of the Amended Complaint. See id. ¶¶ 188–192.
233
    Count VII of the Amended Complaint. See id. ¶¶ 198–201.
234
    Count IX of the Amended Complaint. See id. ¶¶ 214–218.

                                               38
claim for Unjust Enrichment. 235 CelestialRX also brings counts against only certain

of the Defendants: a direct and derivative claim for Akrimax Officers Breach of

Fiduciary Duties against Krivulka, Mazur, and Olsen; 236 a derivative claim for

Breach of Restrictive Covenants against Krivulka, JJK Partners, and LMazur

Associates; 237 a direct and derivative claim for Aiding and Abetting Breach of

Fiduciary Duty against all Defendants, except Krivulka; 238 a direct claim for

Fraud/Fraudulent Inducement against Krivulka; 239 a direct claim for Breach of

Operating Agreement against Krivulka and Mazur; 240 a direct claim for Breach of

Implied Covenant of Good Faith and Fair Dealing against Krivulka and Mazur;241

seeking Declaratory Judgment against Krivulka, Mazur, and JJK Partners; 242 and a

direct claim for “Majority Oppression” against Krivulka, Mazur, and JJK

Partners. 243 Krittika brings a direct claim for Breach of Contract against Akrimax

and Mazur 244 and a direct claim for Tortious Interference with Contract against

Krivulka.245

235
    Count XIII of the Amended Complaint. See id. ¶¶ 234–237.
236
    Count III of the Amended Complaint. See id. ¶¶ 172–176.
237
    Count IV of the Amended Complaint. See id. ¶¶ 177–187.
238
    Count VI of the Amended Complaint. See id. ¶¶ 193–197.
239
    Count VII of the Amended Complaint. See id. ¶¶ 202–213.
240
    Count X of the Amended Complaint. See id. ¶¶ 219–222.
241
    Count XI of the Amended Complaint. See id. ¶¶ 223–228.
242
    Count XII of the Amended Complaint. See id. ¶¶ 229–233.
243
    Count XIV of the Amended Complaint. See id. ¶¶ 238–242.
244
    Count XV of the Amended Complaint. See id. ¶¶ 243–246.
245
    Count XVI of the Amended Complaint. See id. ¶¶ 247–253.

                                            39
       The Krivulka Defendants moved to dismiss all counts brought against them

under Rule 12(b)(6), failure to state a claim, except for the breach of restrictive

covenant claim, which they moved to dismiss under Rule 12(b)(1), lack of

jurisdiction over subject matter.246 The Mazur Defendants moved to dismiss all

counts brought against them under Rule 12(b)(2), lack of jurisdiction over the

person, Rule 12(b)(4), insufficiency of process, Rule 12(b)(5), insufficiency of

service of process, and Rule 12(b)(6), failure to state a claim. 247        Cranford

Pharmaceuticals moved to dismiss all claims brought against it under Rule 12(b)(6),

failure to state a claim. 248 Holmdel Pharmaceuticals also moved to dismiss all claims

brought against it under Rule 12(b)(6), failure to state a claim. 249 Finally, Olsen

moved to dismiss all claims brought against him under Rule 12(b)(2), lack of

jurisdiction over the person, Rule 12(b)(5), insufficiency of service of process, and

Rule 12(b)(6), failure to state a claim. 250

       I will first address the subject matter jurisdiction defense to the claim for

breach of restrictive covenants. I then turn to the Mazur Defendants’ and Defendant

Olsen’s Motions to Dismiss on personal jurisdiction, process, and service of process

grounds. In light of my decision here and my previous Memorandum Opinion of

246
    D.I. 135, 208.
247
    D.I. 137.
248
    D.I. 192.
249
    D.I. 193.
250
    D.I. 195.

                                               40
January 31, 2017, the remaining parties shall confer on which Motions to Dismiss

still need to be addressed.

       A. Subject Matter Jurisdiction Over the Consulting Agreements

       Defendants JJK Partners and LMazur Associates251 argue that Count IV of the

Amended Complaint, breach of restrictive covenants, brought derivatively by

CelestialRX against them, should be dismissed under Rule 12(b)(1) for lack of

subject matter jurisdiction because the claim is subject to arbitration. On a motion

to dismiss under Rule 12(b)(1), the plaintiff “bear[s] the burden of establishing

subject matter jurisdiction,” and “a court may consider documents outside the

complaint.”252 Furthermore, “Delaware courts lack subject matter jurisdiction to

resolve disputes that litigants have contractually agreed to arbitrate.”253 This Court

respects, and will enforce, parties’ contractual arbitration commitments.

       The restrictive covenants—non-compete clauses—at issue here are contained

in consulting agreements that JJK Partners and LMazur Associates entered into

separately with Akrimax on February 1, 2008; each consulting agreement was

subsequently amended on July 1, 2013. JJK Partners and LMazur Associates argue

that the February 1, 2008 consulting agreements contain governing arbitration

251
    LMazur Associates joined JJK Partners’ argument. See Opening Br. in Support of the Mazur
Defs.’ Mot. to Dismiss Pls.’ First Am. Verified Compl. and Mot. for Partial Summ. J., at 14.
252
    HBMA Hldgs., LLC v. LSF9 Stardust Hldgs. LLC, 2017 WL 6209594, at *3 (Del. Ch. Dec. 8,
2017).
253
    NAMA Hldgs., LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 429 (Del. Ch. 2007).

                                            41
clauses. CelestialRX, in turn, contends that the arbitration clauses are superseded

by the July 1, 2013 amendments to the consulting agreements. 254 That is to say,

CelestialRX does not contest that the parties agreed to binding arbitration clauses in

the February 1, 2008 agreements.                The Plaintiff’s only contention is that the

arbitration obligations were terminated via the July 1, 2013 amendments.

          In the alternative, CelestialRX proposes that the Court decline to enforce the

arbitration clauses here as a matter of judicial policy against dividing disputes.255 To

the extent that CelestialRX argues that judicial efficiency would be better served by

declining to honor the arbitration clauses, such an argument is misplaced; again, this

Court will respect these parties’ contractual obligations. 256 I turn to the language of

the consulting agreements and the July 1, 2013 amendments.

          JJK Partners’ and LMazur Associates’ consulting agreements with Akrimax

contain identical provisions on governing law and arbitration. According to the

initial February 1, 2008 consulting agreements, each agreement “shall be governed

by and construed in accordance with the laws of the State of New Jersey . . . except

254
      Pls.’ Br. in Opp’n to the Krivulka Defs.’ Mot. for Partial Summ. J. and Mot. to Dismiss, at 12–
13.
255
    Id. at 142. While the Plaintiffs address arbitration as it pertains to Plaintiff Krittika’s direct
claim against Akrimax for breach of the Krittika consulting agreement (Count XV), the Defendants
have not moved to dismiss that count on the basis of subject matter jurisdiction, and the Plaintiffs’
argument is therefore misplaced.
256
    See, e.g., Parfi Hldgs. AB v. Mirror Image Internet, Inc., 817 A.2d 149, 156 (Del. 2002) (“When
parties to an agreement decide that they will submit their claims to arbitration, Delaware courts
strive to honor the reasonable expectations of the parties . . . .”).

                                                  42
with respect to matters of law concerning the internal corporate affairs . . . .”257

Additionally:

       Notwithstanding anything herein to the contrary, in the event that there
       shall be a dispute among the parties arising out of or relating to this
       Agreement, or the breach thereof, the parties agree that such dispute
       shall be resolved by final and binding arbitration in the State of New
       York, Borough of Manhattan administered by the American Arbitration
       Association (the “AAA”), in accordance with AAA’s Commercial
       Arbitration Rules . . . . 258

       The consulting agreements were amended on July 1, 2013; the amendments

provided that:

       The Agreement, amended hereby, shall be construed, governed,
       interpreted and applied in accordance with the laws in effect in the State
       of Delaware exclusive of its conflict of laws provisions. Any claim or
       controversy arising out of or related to this Amendment shall be
       submitted to a court of applicable jurisdiction in the State of Delaware,
       and each Party hereby consents to the jurisdiction and venues of such
       court.259

The July 1, 2013 amendments did not alter or amend the non-compete provisions

found in the initial February 1, 2008 consulting agreements. Thus, facially at least,

it preserved the provision that “[n]otwithstanding anything herein to the contrary,”

disputes are subject to arbitration.260 Nonetheless, the Plaintiffs argue that the

amendments abrogated the arbitration obligations.

257
    Zahler Aff. Ex. 24 ¶ 10(c); Eakins Aff. Ex. 6 ¶ 10(c).
258
    Zahler Aff. Ex. 24 ¶ 10(j); Eakins Aff. Ex. 6 ¶ 10(j).
259
    Zahler Aff. Exs. 25, 26.
260
    Zahler Aff. Ex. 24 ¶ 10(j); Eakins Aff. Ex. 6 ¶ 10(j).

                                                43
       JJK Partners and LMazur Associates argue that the parties consented to the

jurisdiction of Delaware only for claims and controversies “arising out of or related

to” the July 1, 2013 amendments. Per the Defendants, CelestialRX’s derivative

claim is for breach of restrictive covenants that were not changed by the

amendments, and are therefore subject to arbitration and not to the jurisdiction of

Delaware. In the Defendants’ view, claims arising from “[t]he Agreement, amended

hereby”—that is, claims arising from the amendments—are subject to the

jurisdiction of Delaware. 261 The restrictive covenants at issue were unchanged by—

and in fact, are not referred to in—the amendments, and therefore a claim based on

those restrictive covenants arises from the original consulting agreements and not

the amendments. As a result, per the Defendants, a claim for breach of those

restrictive covenants is subject to the arbitration clause in the original consulting

agreements. I find the Defendants’ argument colorable in this regard.

       As the Plaintiffs point out, judges normally decide questions of

arbitrability. 262 Indeed, Delaware law “follows the general rule that ‘courts should

decide questions of substantive arbitrability.’” 263 An exception exists, however,

261
    Zahler Aff. Exs. 25, 26.
262
    Pls.’ Br. in Opp’n to the Krivulka Defs.’ Mot. for Partial Summ. J. and Mot. to Dismiss, at 142
(“The question of arbitrability is one for a Judge to decide.”).
263
    UPM-Kymmene Corp. v. Renmatix, Inc., 2017 WL 4461130, at *4 (Del. Ch. Oct. 6, 2017)
(quoting James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76, 78 (Del. 2006)).

                                                44
where “the parties clearly and unmistakably provide otherwise.” 264 As here, clear

and unmistakable evidence is present when an arbitration clause “generally provides

for arbitration of all disputes and also incorporates a set of arbitration rules that

empower arbitrators to decide arbitrability.” 265 The arbitration clauses in the original

consulting agreements, quoted above, generally provide for arbitration of all disputes

and incorporate AAA rules.266 As a result, questions of substantive arbitrability here

should be decided by the arbitrator. Count IV, the claim for breach of restrictive

covenants, is therefore stayed pending the decision of the arbitrator as to

arbitrability.

       B. Personal Jurisdiction Over Mazur and LMazur Associates

       Defendants Mazur and LMazur Associates moved to dismiss the claims

brought against them under Rule 12(b)(2), lack of personal jurisdiction. In a Rule

12(b)(2) motion to dismiss, “the plaintiff bears the burden of showing a basis for the

court’s exercise of jurisdiction over the defendant.”267 This Court uses a two-step

analysis when considering the exercise of personal jurisdiction over a nonresident

defendant: first, the Court must determine if a statutory basis for personal

264
    Willie Gary, 906 A.2d at 79 (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83
(2002)).
265
    Id. at 80 (internal citations omitted).
266
    I need not consider the “additional step” in the Willie Gary analysis, as the arbitration clause in
question contains no carve-outs or ambiguity as to the disputes covered. See UPM-Kymmene
Corp., 2017 WL 4461130, at *4 (discussing McLaughlin v. McCann, 942 A.2d 616 (Del. Ch.
2008)).
267
    Ryan v. Gifford, 935 A.2d 258, 265 (Del. Ch. 2007).

                                                 45
jurisdiction exists, and second, it must determine whether application of jurisdiction

over the nonresident would violate “traditional due process notions of fair play and

substantial justice.”268 Where, as here, there has been no evidentiary hearing, the

plaintiff need only make a prima facie showing.269 The Court “can consider

affidavits, briefs of the parties, and the available results of discovery.                  Still,

allegations regarding personal jurisdiction in a complaint are presumed true, unless

contradicted by affidavit, and, as with a motion to dismiss under Rule 12(b)(6), the

court must construe the record in the light most favorable to the plaintiff.” 270

       The Plaintiffs argue that Mazur was a “manager” of Akrimax from January

11, 2008 to July 1, 2013, such that he is subject to the personal jurisdiction of this

Court under 6 Del. C. § 18-109(a)(i).271 The Plaintiffs further argue that after July

1, 2013, he participated materially in the management of Akrimax, such that he is

subject to the personal jurisdiction of this Court under 6 Del. C. § 18-109(a)(ii).272

The Plaintiffs argue that Mazur does business as LMazur Associates, and that

jurisdiction over Mazur should extend to LMazur Associates, an unincorporated

joint venture. 273    Additionally, the Plaintiffs contend that LMazur Associates

268
    Id.; see also Hartsel v. Vanguard Grp., Inc., 2011 WL 2421003, at *6 (Del. Ch. June 15, 2011).
269
    Hartsel, 2011 WL 2421003, at *7.
270
    Id.
271
    Pls.’ Br. in Opp’n to Defs. Olsen’s, Mazur’s, and LMazur’s Mots. to Dismiss and in Opp’n to
the Mazur Defs.’ Mot. for Partial Summ. J., at 25.
272
    Id. at 26.
273
    Id. at 27.

                                               46
consented to the jurisdiction of Delaware Courts in the July 1, 2013 amendment to

its consulting agreement with Akrimax. 274 Finally, the Plaintiffs propose that both

Mazur and LMazur Associates have waived the defense of lack of personal

jurisdiction because they have not shown continuous intent to object to such

jurisdiction. 275 I turn first to the issue of waiver, before addressing the personal

jurisdiction defenses of Mazur and LMazur Associates.

              1. Waiver

       The Plaintiffs argue that Defendants Mazur and LMazur Associates have

waived their right to raise a personal jurisdiction defense. According to Court of

Chancery Rule 12(h), a defense of lack of personal jurisdiction is waived if not made

in a timely Rule 12 motion or in the first responsive pleading. 276 “The purpose for

this rule is to expedite litigation and encourage disputes to be resolved on their

merits.”277 Accordingly, a defendant’s challenge to personal jurisdiction should be

brought at the time he makes his first defensive move. 278 A defendant may waive or

abandon its defense of personal jurisdiction when the defendant becomes an “active

274
    Id.
275
    Id. at 28.
276
    See Ct. of Ch. R. § 12(h).
277
    Tuckman v. Aerosonic Corp., 394 A.2d 226, 232 (Del. Ch. Sept. 11, 1978) (citations omitted).
278
    Ross Hldg. & Mgmt. Co. v. Advance Realty Grp., LLC, 2010 WL 1838608, at *11 (Del. Ch.
Apr. 28, 2010) (citing Hornberger Mgmt. Co. v. Haws & Tingle Gen. Contractors, Inc., 768 A.2d
983, 987–88 (Del. Super. 2000)).

                                              47
actor” in the case. 279 In other words, the inquiry of waiver is “whether the defendant

has abandoned a solely defensive posture and become an actor in the cause.”280

However, “[t]he entry of a limited appearance by a defendant does not constitute a

waiver . . . .” 281 For example, seeking advancement before raising a defense of

personal jurisdiction in a timely motion to dismiss is not a waiver of the defense. 282

       The original Complaint named Mazur as a defendant—but not LMazur

Associates—and was filed on November 20, 2015. Mazur first filed a Motion to

Dismiss, in part under Rule 12(b)(2), four days later, on November 24, 2015.283

Mazur subsequently participated in the proceedings on the Plaintiffs’ Motion for a

Temporary Restraining Order and the Plaintiff’s Application for Preliminary

Injunctive Relief. Mazur submitted himself to a deposition and responded to

preliminary discovery.        The Plaintiffs contend that Mazur’s deposition and

participation in discovery constitute a waiver of his personal jurisdiction defense.

LMazur Associates was not added as a party until the Plaintiffs filed their Amended

Complaint on March 8, 2016. While the Plaintiffs do not directly assert as much,

they appear to suggest that LMazur Associates is effectively the same as Mazur and

279
    Id.; see also Conn. Gen. Life Ins. Co. v. Pinkas, 2011 WL 5222796, at *3 (Del. Ch. Oct. 28,
2011).
280
    Bigelow/Diversified Secondary P'ship Fund 1990 v. Damson/Birtcher Partners, 2001 WL
1641239, at *6 (Del. Ch. Dec. 4, 2001) (internal citations omitted).
281
    Gans v. MDR Liquidating Corp., 1990 WL 2851, at *4 (Del. Ch. Jan. 10, 1990).
282
    See Conn. Gen. Life Ins. Co., 2011 WL 5222796, at *3.
283
    D.I. 18.

                                              48
has therefore also waived its personal jurisdiction defense prior to being added as a

party. 284

       Mazur and LMazur Associates have not waived their right to raise a personal

jurisdiction defense. Mazur asserted such a defense in his first Motion to Dismiss

the original complaint, only days after the Complaint was filed. This Court has

found that participation in preliminary discovery does not by itself constitute

waiver—or, here, abandonment—of a defense of personal jurisdiction.285 To find

otherwise in this case would controvert the purpose of the doctrine recognizing

waiver by active participants, and in fact would serve to slow litigation. LMazur

Associates was not added as party until the Amended Complaint was filed on March

8, 2016. The Plaintiffs do not argue that LMazur was involved in this litigation

previously. Mazur and LMazur Associates promptly asserted a personal jurisdiction

defense in their Motion to Dismiss the Amended Complaint on March 22, 2016.286

Nothing in the behavior of either Defendant comes close, in my mind, to a waiver of

the defense of lack of personal jurisdiction.

284
    In its waiver section, the Plaintiffs’ Opposition Brief only mentions Mazur and does not
mention LMazur, although the title to the section refers to “Mazur/LMazur.” See Pls.’ Br. in Opp’n
to Defs. Olsen’s, Mazur’s, and LMazur’s Mots. to Dismiss and in Opp’n to the Mazur Defs.’ Mot.
for Partial Summ. J., at 28.
285
    See Ross Hldg. & Mgmt. Co. v. Advance Realty Grp., LLC, 2010 WL 1838608, at *11 (Del.
Ch. Apr. 28, 2010)
286
    D.I. 137.

                                               49
                 2. Personal Jurisdiction over Defendant Mazur Under 6 Del. C. § 18-
                 109

        Under 6 Del. C. § 18-109, Delaware Limited Liability Company Act’s implied

consent statute:

        A manager . . . of a limited liability company may be served with
        process . . . in all civil actions or proceedings brought in the State of
        Delaware involving or relating to the business of the limited liability
        company . . . , whether or not a manager . . . is a manager . . . at the time
        suit is commenced. A manager’s . . . serving as such constitutes such
        person’s consent to the appointment of the registered agent of the
        limited liability company . . . as such person’s agent upon whom service
        of process may be made . . . . Such service as a manager . . . shall signify
        the consent of such manager . . . that any process when so served shall
        be of the same legal force and validity as if served upon such manager
        . . . within the State of Delaware and such appointment of the registered
        agent . . . shall be irrevocable.287

        A “manager” refers “(i) to a person who is a manager as defined in § 18-

101(10) of this title and (ii) to a person, whether or not a member of a limited liability

company, who, although not a manager as defined in § 18-101(10) of this title,

participates materially in the management of the limited liability company . . . .”288

A “manager,” as defined by § 18-101(10), is “a person who is named as a manager

of a limited liability company in . . . a limited liability company agreement . . . .”289

Therefore, if Mazur was included in the definition of “manager” in Akrimax’s

operating agreement or if he participated materially in the management of Akrimax,

287
    6 Del. C. § 18-109(a).
288
    Id. § 18-109(a)(i), (ii).
289
    Id. § 18-101(10).

                                             50
then a statutory basis for jurisdiction over Mazur would exist, satisfying the first

prong of the two-step analysis.

       In terms of the second prong of the analysis, this Court has previously dealt

with personal jurisdiction under 6 Del. C. § 18-109, and found that:

       Due process would not be offended if Plaintiffs can show that (1) the
       allegations against the defendant-manager focus centrally on his rights,
       duties and obligations as a manager of a Delaware LLC; (2) the
       resolution of the matter is inextricably bound up in Delaware law; and
       (3) Delaware has a strong interest in providing a forum for the
       resolution of the dispute relating to the manager's ability to discharge
       his managerial functions. 290

I now apply this two-prong test to Mazur.

                      a. Mazur Was A “Manager” of Akrimax Before July 1, 2013,
                      But Not After

       According to Akrimax’s Second Amended Operating Agreement, Akrimax’s

“manager” was the “board of directors acting collectively.” Mazur was specifically

named as an initial member of the Board in the Second Operating Agreement and

served as a director until July 1, 2013. As a result, from January 11, 2008 to July 1,

2013, Mazur was a “manager,” as defined by 6 Del. C. § 18-101(10), and thereby

impliedly consented to Delaware jurisdiction under § 18-109(a)(i) for actions

“involving or relating to the business” of Akrimax. 291

290
   Hartsel v. Vanguard Grp., Inc., 2011 WL 2421003, at *9 (Del. Ch. June 15, 2011).
291
   Cf. Fla. R & D Fund Inv’rs, LLC v. Fla. BOCA/Deerfield R & D Inv’rs, LLC, 2013 WL
4734834, at *7 (Del. Ch. Aug. 30, 2013) (“Therefore, under Section 18–109(a)(i), the [LLC]’s
manager is the Board of Directors. Because [the defendant] is not listed in the LLC Agreement as

                                              51
       Following Amendment No. 7 to the Second Amended Operating Agreement

on July 1, 2013, Mazur was removed from Akrimax’s Board of Directors. The

Plaintiffs allege that Mazur retained the title of Vice Chairman, spoke often with

Krivulka about Akrimax, and engaged Jeffries to advise regarding sale of Akrimax’s

assets in 2015. 292 Mazur challenges that this level of involvement rises to the

material participation in management required to exert jurisdiction in § 18-

109(a)(ii).

       Mazur’s communication with Krivulka does not by itself rise to material

participation. For example, “[t]here is a difference between material participation in

managing a company and offering comments via email to one’s appointed Board

representatives.”293 However, performing actions within the exclusive purview of a

manager, such as making an application for dissolution, which by statute “must be

made by or for a member or manager,” can qualify as material participation.294 In

Phillips v. Hove, the defendant, by his own admission, took over day-to-day

operations of the LLC, “effectively ran the business [,] . . . [and] later filed a

a member of the [LLC]’s Board of Directors, [the defendant] may not be considered a manager of
the [LLC] for the purposes of either Section 18–109(a)(i) or Section 18–101(10).”).
292
    Pls.’ Br. in Opp’n to Defs. Olsen’s, Mazur’s, and LMazur’s Mots. to Dismiss and in Opp’n to
the Mazur Defs.’ Mot. for Partial Summ. J., at 26.
293
    Fisk Ventures, LLC v. Segal, 2008 WL 1961156, at *7 (Del. Ch. May 7, 2008).
294
    In re Mobilactive Media, LLC, 2013 WL 297950, at *30 (Del. Ch. Jan. 25, 2013).

                                              52
bankruptcy petition on [the LLC’s] behalf.” 295 The Court found that “through these

acts, [the defendant] participated materially in the management of [the LLC].” 296

       Performing the tasks of a manager, however, does not equate with “material

participation” if that work is done “simply at the direction of and as a representative”

of another.297 Material participation in the management of an LLC requires “control

or [a] decision-making role.” 298 For example, the fact that a defendant negotiates

agreements on behalf of an LLC and arranges financing for the LLC is not sufficient

to show material participation, when the defendant’s power is subject to the control

of another.299 Here, Amendment No. 7, in explicit terms, put Krivulka solely at the

helm of Akrimax on July 1, 2013. As Mazur points out, the Plaintiffs themselves

make the same argument in briefing, where they write that Amendment No. 7

“install[ed] Krivulka as emperor, supreme leader, and dictator for life” and that

Krivulka “has absolute control and discretion without expressed limits.” 300 The

295
    2011 WL 4404034, at *22 (Del. Ch. Sept. 22, 2011).
296
    Id.
297
    Vichi v. Koninklijke Philips Elecs. N.V., 2009 WL 4345724, at *7 (Del. Ch. Dec. 1, 2009)
(finding assertions that an individual defendant helped form the LLC and issue notes on its behalf
did not qualify as material participation because those actions were taken as an employee of a
defendant entity, which was the sole member and manager of the LLC).
298
    In Matter of Dissolution of Arctic Ease, LLC, 2016 WL 7174668, at *4 (Del. Ch. Dec. 9, 2016)
(quoting Wakely Ltd. v. Ensotran, LLC, 2014 WL 1116968, at *5 (D. Del. Mar. 18, 2014)); see
also Fla. R & D Fund Inv’rs, LLC v. Fla. BOCA/Deerfield R & D Inv’rs, LLC, 2013 WL 4734834,
at *8 (Del. Ch. Aug. 30, 2013).
299
    In Matter of Dissolution of Arctic Ease, LLC, 2016 WL 7174668, at *5.
300
    Reply Br. in Support of the Mazur Defs.’ Mot. to Dismiss Pls.’ First Am. Verified Compl. and
Mot. for Partial Summ. J., at 6 (quoting Pls.’ Br. in Opp’n to the Krivulka Defs.’ Mot. for Partial
Summ. J. and Mot. to Dismiss, at 27, 123).

                                                53
Plaintiffs’ allegations that Mazur retained his title as vice chairman and engaged a

banker on behalf of Akrimax are not sufficient to suggest that Mazur materially

participated in the management of Akrimax, when Krivulka alone had the authority

to manage Akrimax and the Plaintiffs allege that Krivulka asserted this authority.301

Nothing in those allegations suggests that Mazur acted outside of or usurped

Krivulka’s control. As a result, Mazur was not a “manager,” as defined by 6 Del. C.

§ 18-109(a)(ii), after July 1, 2013, and statutory implied consent is absent following

that date.

                       b. Due Process

       Mazur agreed to act as a manager of Akrimax from January 11, 2008 to July

1, 2013, with at least constructive notice of Section 18-109(a). The Plaintiffs’ claims

against Mazur during that time period deal with his duties and obligations as a

director and manager of Akrimax. Accordingly, Mazur’s due process rights are not

offended by this Court’s assertion of jurisdiction over him; 302 Mazur does not argue

otherwise.

301
    Here, I paraphrase Vice Chancellor Montgomery-Reeves in In Matter of Dissolution of Arctic
Ease, LLC. 2016 WL 7174668, at *5 (“Even taking all reasonable inferences in the Heck Parties’
favor, these allegations are not sufficient to suggest that Cohen materially participated in
management when Forden alone had the authority to manage Summetria.”).
302
    The Plaintiffs’ claims against Mazur, at least in part, relate to the internal business of Akrimax,
such as whether Mazur violated his fiduciary or contractual duties as a manager or otherwise
breached the operating agreement.

                                                 54
             3. Personal Jurisdiction over LMazur Associates

      Defendant LMazur Associates also moved to dismiss all claims against it for

lack of personal jurisdiction under Rule 12(b)(2). The Plaintiffs, in response, argue

that personal jurisdiction exists over LMazur Associates as an extension of Mazur,

and through LMazur Associates’ consulting agreement with Akrimax. I have

discussed the applicable legal standard for Rule 12(b)(2) above, and I therefore

proceed directly to its application.

      The Plaintiffs contend that personal jurisdiction exists over LMazur

Associates as a result of its consulting agreement with Akrimax. I have discussed

that agreement above and determined that the parties consented to jurisdiction in

Delaware for claims arising from the amendment. However, other claims, such as

breach of the non-compete covenants, are potentially subject to arbitration in New

York. The Plaintiffs’ claims against LMazur Associates, as they relate to the

consulting agreement, arise from breaches of the restrictive covenants; these claims

have been stayed pending a determination of arbitrability (and, indirectly, my

jurisdiction) by the arbitrator.       Therefore, the question of whether LMazur

Associates consented to personal jurisdiction in Delaware through the consulting

agreement with Akrimax must likewise be stayed.

      The Plaintiffs, however, seek to impose jurisdiction on an alternative ground.

Defendant LMazur Associates is an unincorporated joint venture, managed by

                                           55
Mazur, who is a resident of New Jersey. 303 The Plaintiffs (citing, I note, no

authority) contend that if the Court has jurisdiction over Mazur, it has jurisdiction

over LMazur Associates.          The Plaintiffs have not plead sufficient facts to

demonstrate that LMazur Associates is the alter ego of Mazur. Simply pleading that

an entity has an association with an individual (Mazur) who is subject to jurisdiction

is insufficient to show that the entity is also subject to jurisdiction. Therefore, I find

that this Court lacks personal jurisdiction over LMazur Associates on the grounds of

association with Mazur. As such, I need not reach LMazur Associate’s arguments

on service of process.

              4. Process and Service of Process

       Mazur also moved to dismiss the claims brought against him under Rule

12(b)(4), insufficiency of process, and Rule 12(b)(5), insufficiency of service of

process. These motions rest on the premise that Mazur was not a manager of

Akrimax; as I have found that the Plaintiffs adequately pled that he was a manager

until July 1, 2013, these motions are denied.

       C. Personal Jurisdiction over Olsen and Related Service of Process

       Defendant Olsen moved to dismiss the claims brought against him under Rule

12(b)(2), lack of personal jurisdiction, and Rule 12(b)(5), insufficiency of service of

303
   I note that it is not clear who owns LMazur Associates, or where it is resident. At Oral
Argument, LMazur’s own counsel could only say “I don't believe it was formed under any state’s
law officially.” Tr. of Oral Argument at 62:1–2.

                                             56
process. As with Defendant Mazur, the Plaintiffs allege that Olsen meets the

definition of “manager” in 6 Del. C. § 18-109, the implied consent statute of the

Delaware Limited Liability Company Act, and is therefore subject to this Court’s

personal jurisdiction. As with the Mazur Defendants, the Plaintiffs argue that, in

any case, a personal jurisdiction defense has been waived. I turn first to the issue of

waiver.

              1. Waiver

       Olsen was added as a defendant in this action when the Plaintiffs filed their

Amended Complaint on March 8, 2016. Olsen filed a Motion to Dismiss on July 7,

2016, where he asserted a personal jurisdiction defense. Prior to being added as a

party on March 8, 2016, Olsen was deposed by the Plaintiffs in this action. The

Plaintiffs contend that Olsen has therefore “been an interested party for quite some

time,” and that by not opposing his deposition, Olsen has waived his right to assert

a personal jurisdiction defense.304 This contention is contrary to our case law,305 and

inimical to its rationale; accordingly, I reject the Plaintiffs’ argument that Olsen has

waived his personal jurisdiction defense.

304
    Pls.’ Br. in Opp’n to Defs. Olsen’s, Mazur’s, and LMazur’s Mots. to Dismiss and in Opp’n to
the Mazur Defs.’ Mot. for Partial Summ. J., at 23–24.
305
    See, e.g., Ross Hldg. & Mgmt. Co. v. Advance Realty Grp., LLC, 2010 WL 1838608, at *11
(Del. Ch. Apr. 28, 2010) (finding that participating in motion practice to disqualify plaintiff’s
counsel and engaging in discovery are not enough to constitute active involvement such that a
personal jurisdiction defense is waived).

                                               57
              2. Personal Jurisdiction Over Olsen Under 6 Del. C. §18-109

       Having found that Olsen did not waive his personal jurisdiction defense, I turn

to his Motion to Dismiss pursuant to Rule 12(b)(2). As I have covered the legal

standard for Rule 12(b)(2) and its interaction with 6 Del. C. § 18-109 above, I will

not repeat it and will instead proceed to apply the legal analysis to Olsen.

       Olsen served as President and CEO of Akrimax from July 2011 until October

2015. 306 According to the Plaintiffs, Olsen was hired to manage Akrimax’s sales

and marketing, and as President and CEO of Akrimax, Olsen was further involved

in product acquisition and the development of an annual business plan, and he “had

the authority to write checks, approve wire transfers, execute promissory notes, and

bind Akrimax to contracts.”307 The Plaintiffs also claim that Olsen was responsible

for “repairing” Akrimax’s relationship with Pfizer. 308 As such, per the Plaintiffs,

Olsen had a role in day-to-day operations.309 Olsen contends that, even if true, all

the cited activity does not support “material participation in the management” of

Akrimax, such that Olsen would be a “manager” under 6 Del. C. § 18-109. In

addition, the Plaintiffs allege that in 2013 Olsen was involved first in denying

306
    Am. Compl. ¶ 9; Opening Br. in Support of Def. Olsen’s Mot. to Dismiss the First Am. Verified
Compl., at 2.
307
    Pls.’ Br. in Opp’n to Defs. Olsen’s, Mazur’s, and LMazur’s Mots. to Dismiss and in Opp’n to
the Mazur Defs.’ Mot. for Partial Summ. J., at 19.
308
    Id. As previously described, Akrimax’s Second Amended LLC Agreement specifically stated
that officers of Akrimax are not managers.
309
    Id. at 21.

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Laumas any financial information and then providing Laumas with misleading

information,310 and that Olsen later executed the agreements between Cranford

Pharmaceutical, Holmdel Pharmaceuticals, and Akrimax. 311 Nonetheless (setting

aside the waiver theory) the Plaintiffs assert no grounds for this Court’s jurisdiction

over Olsen, except for Section 18-109, accordingly, I limit my analysis to that

statute.

       The Plaintiffs’ argument that Olsen materially participated in managing

Akrimax suffers from the same fatal flaw as the Plaintiffs’ argument that Mazur

materially participated in managing Akrimax after July 1, 2013. In short, the

Plaintiffs fail to allege that Olsen had control of, or had a decision making role, in

Akrimax. Viewing the record in the light most favorable to the Plaintiff, as I must,

I assume Olsen helped to run day-to-day operations, including managing the sales

force, responding to information requests from directors, and executing agreements

that Akrimax had entered into with other entities.              Olsen was an employee.

However, the Plaintiffs do not allege that Olsen performed his duties as President

and CEO independently of the manager of Akrimax; 312 instead, the facts pled

310
    Id. at 6.
311
    Id. at 7–8. The Amended Complaint barely mentions Olsen’s role at Akrimax, aside from
providing misleading financial information to Laumas. However, the Plaintiffs have supplemented
this account with information from preliminary discovery and affidavits.
312
    Akrimax’s manager was the entire board before July 1, 2013, and solely Krivulka after that
date.

                                              59
indicate that Olsen performed his duties subject to the control of the “emperor,”

Akrimax’s manager, Krivulka.

       As previously mentioned in relation to Mazur’s Motion to Dismiss under Rule

12(b)(2), the Plaintiffs have repeatedly emphasized the complete control of Krivulka

over Akrimax. The Plaintiffs allege that Olsen implemented the terms of agreements

that Krivulka caused Akrimax to enter into, such as Akrimax’s agreements with

Cranford Pharmaceuticals and Holmdel Pharmaceuticals. The fact that Olsen, the

president and CEO of Akrimax, implemented agreements that Akrimax had entered

into is not remarkable, nor is it a sign of control over those agreements. The

Plaintiffs also allege that Olsen at first refused to provide any financial information

to Laumas and then gave him information that the Plaintiffs contend was misleading.

However, the Plaintiffs themselves acknowledge that Olsen asked Krivulka how

Krivulka wanted Olsen to respond to Laumas’s requests,313 and then acted

accordingly.

       Olsen was certainly an officer of Akrimax, and as an officer his

responsibilities were broad and included day-to-day operations. Such participation

can be material; for example, in Phillips v. Hove, this Court found that a defendant

who took over all day-to-day operations and effectively ran the LLC at issue,

313
   Pls.’ Br. in Opp’n to Defs. Olsen’s, Mazur’s, and LMazur’s Mots. to Dismiss and in Opp’n to
the Mazur Defs.’ Mot. for Partial Summ. J., at 5-6.

                                             60
including filing legal petitions on its behalf, had materially participated in the LLC’s

management. 314 Contrary to Phillips, however, here the Plaintiffs have specifically

pled the complete control of Akrimax by Krivulka. In Phillips, by contrast, there

was no manager in place when the defendant took and exercised control, and

effectively became the manager.315 The Plaintiffs have failed to plead facts that, if

true, show that Olsen had the requisite control or a decision making role required to

show material participation, or that Olsen ever attempted to take any action outside

of the control of the manager. As a result, Olsen is not a manager as defined in 6
Del. C. § 18-109. The Plaintiffs have cited no other basis for exercising personal

jurisdiction over Olsen. Olsen’s Motion to Dismiss pursuant to Rule 12(b)(2) is

granted.316

       D. The Remaining Rule 12(b)(6) Motions

       As described above, LMazur Associates and Olsen are dismissed from this

action for lack of personal jurisdiction. I have also stayed the claim for breach of

restrictive covenants pending the decision of the arbitrator. The remaining parties

also seek dismissal of all claims brought against them under Rule 12(b)(6). I issued

Celestial I on January 31, 2017, in which I interpreted Akrimax’s LLC operating

agreement as of July 1, 2013; I note that the language eliminating fiduciary duties as

314
    2011 WL 4404034 (Del. Ch. Sept. 22, 2011).
315
    Id. at *22.
316
    Accordingly, I need not reach Olsen’s argument on insufficiency of service of process.

                                               61
of July 1, 2013 appears materially unchanged from the Second Amended LLC

Agreement the parties entered into on January 11, 2008. The parties subsequently

entered into mediation; after mediation failed, in a January 31, 2018 scheduling

conference I asked the parties to submit letters detailing what Motions to Dismiss

remained pending and how Celestial I bears on the Motions to Dismiss. The

responses I received lacked the specificity to be useful to me. Following these

efforts, Krivulka passed away, and the parties tried, but again failed, to resolve this

action outside of litigation. The remaining parties shall, again in light of Celestial I

and in light of this Memorandum Opinion, inform me what remains of the Motions

to Dismiss, specifically as to counts and parties.317

317
    For instance, and as just noted, I found in Celestial I that, at least as of July 1, 2013, Akrimax’s
LLC operating agreement “generally eliminates common-law fiduciary duties except that it retains
liability for intentional or illegal misconduct and other bad faith actions, as well as for improper
self-dealing. Those duties are contractual in nature . . . .” CelestialRX Invs., LLC v. Krivulka, 2017
WL 416990, at *16 (Del. Ch. Jan. 31, 2017). The Plaintiffs allege in the Amended Complaint that
Cranford Pharmaceuticals and Holmdel Pharmaceuticals aided and abetted a breach of fiduciary
duty. Am. Compl. ¶ 193. The Amended Complaint also contained a claim for bad faith breach of
fiduciary duty brought “against Krivulka and All Defendants;” however, the Plaintiffs now contend
that they “do not assert a direct breach of fiduciary claim against Cranford Pharmaceuticals, LLC
and Holmdel Pharmaceuticals, LP . . . .” See Am. Compl., at 54 (emphasis added); Pls.’ Br. in
Opp’n to Cranford and Holmdel’s Mots. to Dismiss, at 11. Akrimax’s operating agreement, at
least as of July 1, 2013, eliminated common law fiduciary duties and left only contractual fiduciary
duties. And “Delaware law . . . ‘does not recognize a claim for aiding and abetting a breach of
contract.’” Wenske v. Blue Bell Creameries, Inc., 2018 WL 3337531, at *17 (Del. Ch. July 6, 2018)
(quoting Gerber v. EPE Holdings, LLC, 2013 WL 209658, at *11 (Del. Ch. Jan. 18, 2013)). In
Wenske, for example, this Court, in the LPA context, found that the plaintiff failed to state a claim
for aiding and abetting a breach of “contractual fiduciary duties” because the claim advanced “is,
in substance, a claim for aiding and abetting a breach of contract,” which is not recognized by
Delaware law. 2013 WL 209658, at *2, 17. It would be helpful to know if, and on what grounds,
the Plaintiffs maintain that the aiding and abetting claims survive. Ditto, with respect to the other
equitable claims asserted against entities other than Krivulka or his estate.

                                                  62
                              III. CONCLUSION

      The Plaintiffs’ claims for breach of restrictive covenants are stayed pending

the arbitrator’s decision on arbitrability. Furthermore, this Court lacks personal

jurisdiction over LMazur Associates (pending the arbitrator’s decision) and Olsen.

I reserve judgment on the balance of the Motions to Dismiss, as explained above.

                                        63