Court Opinion

ID: 9398712
Source: CourtListenerOpinion
Date Created: 2023-05-31 21:04:52.016114+00
Date Added: 2024-06-11T17:19:35.856544
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

BRAGA INVESTMENT & ADVISORY,                  )
LLC,                                          )
                                              )
                  Plaintiff,                  )
                                              )
     v.                                       ) C.A. No. 2019-0408-PAF
                                              )
MUSA YENNI, YENNI INCOME                      )
OPPORTUNITIES FUND I, L.P., STEVEN            )
FELLER P.E., LLC,                             )
                                              )
                Defendants.                   )

                         MEMORANDUM OPINION

                       Date Submitted: February 8, 2023
                         Date Decided: May 31, 2023

Blake Rohrbacher, Andrew L. Milam, RICHARDS, LAYTON & FINGER, P.A.,
Wilmington, Delaware; David Lackowitz, Alexandra Kolod, MOSES & SINGER
LLP, New York, New York; Attorneys for Plaintiff Braga Investment & Advisory,
LLC.

Julia B. Klein, KLEIN LLC, Wilmington, Delaware; Justin S. Stern, FRIGON
MAHER & STERN LLP, New York, New York; Attorneys for Defendants Musa
Yenni, Yenni Income Opportunities Fund I, L.P.

Francis G.X. Pileggi, Cheneise V. Wright, LEWIS BRISBOIS BISGAARD &
SMITH LLP, Wilmington, Delaware; Attorneys for Steven Feller P.E., LLC.

FIORAVANTI, Vice Chancellor
       In 2016, Braga Investment & Advisory, LLC (“Braga Investment” or

Plaintiff”) invested $700,000 to acquire a 23.3% membership interest in Steven

Feller P.E., LLC (the “Company” or “Newco”), as part of a transaction in which the

Company acquired the business of Steven Feller P.E., PL.                      Yenni Income

Opportunities Fund, I, L.P. (the “Fund”) and its managing partner, Musa Yenni

(“Yenni”), engineered the deal. The Fund owned a majority of the Company’s

membership interests and became the Company’s managing member.

       Among the materials that Braga Investment received in due diligence was an

unsigned, proposed form of the Company’s limited liability company agreement,

which is referred to as the operating agreement. Braga Investment knew that the

proposed operating agreement would be revised before the closing of the transaction.

Braga Investment even received one of the invoices from the lawyers who prepared

those revisions, and it paid the bill. After that, Braga Investment executed and

returned a signature page to the operating agreement.                Before executing and

returning the signature page, Braga Investment never asked to see the final operating

agreement.1

1
  The trial testimony is cited as “Tr.”; deposition testimony is cited as “Dep.”; trial exhibits
are cited as “JX”; stipulated facts in the pre-trial order are cited as “PTO”; and references
to the docket are cited as “Dkt.,” with each followed by the relevant section, page,
paragraph, exhibit, or docket number. The trial record includes over 71 exhibits, live trial
testimony from 3 witnesses, and 9 deposition transcripts.
         As part of the terms of its investment in the Company, Braga Investment also

entered into a separate agreement with the Fund.           In that agreement, Braga

Investment acknowledged that it was a passive investor and gave the Fund an

irrevocable power of attorney, allowing it to “vote [Braga Investment’s] equity

interest in [the Company] . . . at all meetings of equity holders and for any other

purpose equity owners are called to vote or consent.” 2

         After disputes later arose between Braga Investment and the Fund, the Fund

sought to amend the operating agreement in connection with a potential debt

refinancing in May 2019. In that process, Braga Investment discerned that the

existing operating agreement materially differed in certain respects from the

proposed form of the operating agreement that it first received in 2016. On May 31,

2019, the Company and its members adopted an amended operating agreement, with

the Fund signing on behalf of Braga Investment under the irrevocable power of

attorney.

         In this action, Braga Investment alleges that the Fund and Yenni fraudulently

induced Braga Investment to invest in the Company in 2016 and that they breached

the operating agreement by purporting to amend it twice without Braga Investment’s

authorization.     Braga Investment seeks rescission and a return of its original

2
    JX 5 (“Co-Investment Agreement”) § 5.

                                            2
investment or, alternatively, damages and an order declaring that the form of

operating agreement that it first received in August 2016 is the Company’s “valid

and effective” operating agreement.

         In this post-trial decision, the court concludes that Braga Investment failed to

establish its claims. Accordingly, judgment is entered in favor of the defendants.

The defendants’ application for an award of its attorneys’ fees and expenses,

however, is denied.

I.       BACKGROUND
         The following recitation reflects the facts as the court finds them after trial.

         A.     The Players
         The Fund is a Delaware limited partnership and private equity fund.3 Musa

Yenni is the Fund’s managing partner. 4 The Fund created the Company in October

2015 to facilitate the acquisition of the assets that made up the business of Steven

Feller P.E., PL (“Oldco”),5 an engineering firm owned by Steven Feller and Louise

Feller (together, the “Sellers”). 6 On or about November 16, 2015, the Fund entered

3
    PTO ¶ 14; Tr. 292:3–5 (Yenni).
4
    PTO ¶ 15.
5
    See JX 18 YENNI0046682; Tr. 293:12–294:4 (Yenni).
6
    Tr. 73:13–15 (Ricardo); id. 16:8–16:l5 (Ricardo); PTO ¶ 17.

                                             3
into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with

the Sellers and Oldco. 7 The transaction did not close until ten months later.8

          Braga Investment is a Delaware limited liability company headquartered in

New York, New York. 9 Ricardo Braga has served as Braga Investment’s managing

member since 2011. Ricardo Braga’s son, Rodrigo Braga, has served as a director

and member of Braga Investment since 2015. 10

          In August 2016, the Fund presented Braga Investment with an opportunity to

invest in the Company. 11 At this point, the transaction contemplated by the Purchase

Agreement had not yet closed.           Braga Investment expressed interest in the

opportunity and began due diligence.12 On August 26, 2016, Yenni sent an email to

Braga Investment attaching a copy of the Purchase Agreement. The text of the email

stated in pertinent part:

          Here is the definitive purchase agreement we executed with the Seller
          in November both with and without all its exhibits. The purchase
          agreement without the exhibits has the signatures of the parties. Please
          note that Section 9 of the Operating Agreement (Exhibit D) addresses
          the issues of transfer of shares for all members. We could specify in

7
    PTO ¶ 17.
8
    Id.
9
    Id. ¶ 13.
10
   Tr. 5:13–22 (Ricardo); id. 8:1 (Ricardo); id. 250:19–21 (Rodrigo). For clarity, this
opinion refers to Ricardo Braga and Rodrigo Braga by their first names. No familiarity or
disrespect is intended.
11
     PTO ¶ 18.
12
     Tr. 297:24–298:6 (Yenni).

                                             4
           our operating agreement that we would abide by this Exhibit D. We
           look forward to our likely partnership.13

           The operating agreement attached as Exhibit D to the Purchase Agreement

(the “2015 OA” or “2015 Operating Agreement”) 14 was unsigned and undated.

Unsurprisingly, the 2015 OA did not refer to Braga Investment, which only arrived

on the scene in August 2016, ten months after the Fund, Sellers, and Oldco had

executed the Purchase Agreement. Thus, there was no signature block for Braga

Investment to sign on the 2015 OA’s signature page.15 Schedule A to 2015 OA

(“2015 Schedule A”), which set out the members and managers of the Company’s

capital accounts, had blanks where the dollar amount of the capital account should

have been and did not provide a line for Braga Investment.16 It did, however, provide

lines for the Fund and Oldco.17

           B.   The Co-Investment Agreement
           After receiving the August 26, 2016, email, Braga Investment began

conducting due diligence. On September 2, 2016, Braga Investment and the Fund

held a due diligence conference call. Ricardo created a seven-page list of talking

13
   JX 2 at BRAGA00011046. The parties understood that the lowercase “operating
agreement” refers to a separate agreement between the Fund and Braga Investment that
would come to be known as the Co-Investment Agreement. Tr. 13:5–20 (Ricardo).
14
     JX 2 at BRAGA00011047.
15
     Id. at BRAGA00011249–50.
16
     Id. at BRAGA00011256.
17
     Id.

                                          5
points for the conference call. One point stated, “Management fees schedule has to

be amended in operating agreement to match requirements by lenders.”18 Another

bullet point stated: “Outline of operating agreements, included in current one or just

between us and Yenni Fund[.] Might go against operating agreements.” 19 Ricardo

and Yenni also discussed Braga Investment’s desire for a seat on the Company’s

board of managers (the “Board”).20 The Fund declined that request but offered to

give Braga Investment board observer rights.

           Following the conference call, the Fund made various changes to a co-

investment agreement (the “Co-Investment Agreement”).21 In an email enclosing

the revised Co-Investment Agreement, Yenni stated, “Thank you for our call today.

Please find attached a redlined copy of our agreement reflecting the changes we

agreed to and a pdf copy with my signature. Ricardo: please sign and email back to

us today.”22 Ricardo signed and returned the executed Co-Investment Agreement

later that day.23

18
     JX 3 at BRAGA00000956; Tr. 102:14–103:5 (Ricardo).
19
     JX 3 at BRAGA00000957.
20
     Tr. 19:11–20:12 (Ricardo).
21
     JX 4 at BRAGA00034050.
22
     Id.
23
     Id.

                                          6
          The Co-Investment Agreement provided that Braga Investment would

purchase 23.3% of the equity of Newco for $700,000.24                 It also contained a

representation that Braga Investment entered into the agreement on an informed

basis stating that:

          [Braga Investment] reviewed with its counsel, or has had the
          opportunity to do so, the diligence material made available to it by
          Newco and the Managing Investor and the [Membership Interest
          Purchase Agreement dated as of November 16, 2015 (the “PA”)] and
          has agreed to enter into a so-called Joinder Agreement pursuant to
          which it shall be deemed to be a Buyer under the PA and will be entitled
          to all of the rights and subject to all of the obligations described in the
          PA, including but not limited to the Operating Agreement of Newco
          and the other Exhibits referenced therein.25

The Co-Investment Agreement also recites that:

          [Braga Investment] intends to be a passive investor in Newco but shall
          be granted Board of Managers (“Board”) observer rights in which
          capacity it shall receive copies of all Board packages prepared for
          Board members concurrent with receipt thereof by all Board members
          and shall be reimbursed all travel and related expenses in accordance
          with Company policy. 26

          Reflecting the passive nature of Braga Investment’s investment, the Co-

Investment Agreement also granted the Fund “the right to vote [Braga Investment’s]

equity interest in Newco for so long as it own[ed] any equity interest in Newco” and

24
     Co-Investment Agreement § 1.
25
  Id. § 3. In the representations and warranties section of the Co-Investment Agreement,
Braga Investment further represented that “It has had the opportunity to consult with
advisors of its choice before making this investment.” Id § 7.
26
     Id. § 4.

                                              7
provided that the grant would “constitute an irrevocable power of attorney to do so

at all meetings of equity holders and for any other purpose equity owners [were]

called to vote or consent.”27 Braga Investment also represented in the Co-Investment

Agreement that “It has the financial wherewithal to make [the] investment, is a

sophisticated investor experienced in making such investments[,] and can afford the

total loss of its investment.” 28

          C.     Braga Executes Signature Pages to the Operating Agreement
          In addition to bringing Braga Investment into the deal, Yenni and the Fund

were also negotiating revisions to some of the transaction documents, including the

2015 OA, to reflect changed deal terms. 29 Ricardo chose not to participate in these

negotiations. 30

          To that end, on September 6, 2016, Yenni emailed lawyers at Dickinson

Wright PLLC (“Dickinson Wright”) regarding the Co-Investment Agreement and

the Company’s need for a revised operating agreement.                  Dickinson Wright

represented Fifth Third Bank, which served as one of the Company’s lenders.31 Clint

27
     Id. § 5.
28
   Id. § 7. Braga Investment also represented that it “is an accredited investor as that term
is defined under the Securities Act of 1933, as amended, and the rules promulgated by the
Securities and Exchange Commission.” Id.
29
     PTO ¶ 27.
30
     Tr. 126:1–127:24 (Ricardo).
31
     Id. 114:20–115:9 (Ricardo).

                                             8
Gage of Dickinson Wright emailed Yenni stating, “The Co-Investment Agreement,

subject to the revision re: the wire receipt, looks fine. 32 The email also indicated

that the Dickinson Wright lawyers would “review the revised Operating Agreement

upon receipt” from the Fund’s lawyers at Dentons US LLP (“Dentons”).”33 Yenni

forwarded this email chain to Ricardo and Rodrigo, giving them general wiring

instructions for their investment and updates on the possible need to further update

the Co-Investment Agreement.34 Ricardo understood from the email chain, and

“many other factors,” that the Company’s operating agreement would need to be

revised.35 That same day, Braga Investment signed an amendment to the Co-

Investment Agreement which clarified that Braga Investment would be wiring its

$700,000 investment to counsel for Fifth Third Bank, not Newco as originally

planned. 36 On September 8, 2016, Ricardo signed the joinder agreement (the

“Joinder Agreement”) contemplated by the Co-Investment Agreement.37              The

Joinder Agreement provided that Braga Investment would be made a party to the

Purchase Agreement and have all the rights and obligations of a “Buyer” as defined

32
     JX 6 at BRAGA00023949.
33
     Id.
34
     Id.
35
     Tr. 115:1–116:24 (Ricardo).
36
     JX 7 at BRAGA00034698.
37
     JX 8 at BRAGA00028963.

                                         9
by the Purchase Agreement. 38 Yenni countersigned the Joinder Agreement on behalf

of the Company at or around the September 19, 2016, closing date. 39

                 1.     The Dentons Invoice

           On September 12, 2016, Dentons sent an invoice to Yenni for its work in

revising documents to facilitate Braga Investment’s participation in the deal,

including the operating agreement.40 The invoice is dated September 9, 2016, and

contained two time entries for services performed on September 6 and 7, 2016.41

The first narrative explained:

           Prepare letter agreement on a rush basis for Co-Investor to wire
           $700,000 to Newco or Fifth Third Bank and describe rights and
           obligations thereunder; review e-mail correspondence with counsel for
           the bank, Dickinson Wright; amend Co-Investment Agreement to
           provide for wire into attorney trust account; series of e-mails with Musa
           regarding wire and timing.42

The second narrative stated:

           Prepare revisions for Newco Operating Agreement to provide for
           capital account for Co-Investor, Board Advisory seat, Membership
           interest and power of attorney regarding voting agreement; review
           same with Musa and make revisions; review provisions of Purchase
           Agreement permitting co-investment; prepare Joinder Agreement for
           Co-Investor to be deemed a Buyer under the Purchase agreement; make
           revisions after Musa comments; call with Sellers’ counsel regarding
           Co-Investor and non-dilution of Steve Feller indirect 20% ownership
38
     Id.
39
     PTO ¶ 25.
40
     JX 9 at BRAGA00016939.
41
     Id.
42
     Id.

                                              10
           and brief conference with tax department re: opening capital account
           amounts. 43

           Yenni forwarded the invoice to Ricardo and Rodrigo and asked them to pay

it.44 Rodrigo and Ricardo discussed the invoice. 45 As a result of these discussions,

Ricardo understood that the invoice reflected that the lawyers had made changes to

the 2015 Operating Agreement.46 Braga Investment unsuccessfully tried to convince

Yenni to pay half of the bill.47 Conceding its obligation to pay, Braga Investment

made payment in full to Dentons on September 14, 2016. 48

           The work described by the September 9, 2016, Dentons invoice reflected only

part of the total changes to the operating agreement. On September 12, 2016,

Dentons sent an email to Yenni about open issues and the desire to collect signature

pages in advance of closing. 49 The email attached signature pages for Yenni and the

Fund, which Yenni executed and returned within the next hour. 50 The email also

43
     Id.
44
     Id. at BRAGA00016939; Tr. 315:24–316:4 (Yenni).
45
     Tr. 124:1–16 (Ricardo).
46
     Id. 121:20–122:8 (Ricardo).
47
     Id. 262:15–51 (Rodrigo).
48
     PTO ¶ 28; JX 16 at BRAGA00011620.
49
     JX 13 at BRAGA00021648–49.
50
     Id. at BRAGA00021652.

                                            11
noted an open issue concerning the operating agreement.51 Minutes later, Dentons

sent Yenni another email attaching a signature page packet for Braga, which

included signature pages for the operating agreement and a written consent related

to Oldco’s profit sharing plan. 52 Recognizing that there were outstanding issues with

the operating agreement, the Dentons email stated: “We will need to receive Braga’s

signatures on these, though I note he should receive a final copy of the operating

agreement he is signing when it is finished.” 53

           The next morning, September 13, 2016, Yenni forwarded the September 12

Denton’s email containing the signature packet to Ricardo, copying Rodrigo and

several Dentons lawyers, asking Braga Investment to sign and return the signature

pages “by no later than tomorrow.”54 The attached signature page for the operating

agreement differed from the form attached as Exhibit D to the Purchase Agreement,

as it included a signature block for Braga Investment.55

           On the afternoon of September 13, Dentons sent an email to Yenni indicating

that its “negotiations with the lenders have led to a change to the signature page of

51
  Id. at BRAGA00021649 (“We will need additional signature(s) from you and any other
mangers to a couple documents once you settle the operating agreement issue with Steve
Feller.”).
52
     JX 12 at BRAGA00030296.
53
     Id.
54
     Id.
55
     Compare id. at BRAGA00030299, with JX 2 at BRAGA00011249.

                                            12
the operating agreement being necessary. Please see attached. You and Braga will

have to sign where applicable.” 56 Later that day, Yenni forwarded the email to

Ricardo, writing: “I believe this will be the last page you need to sign before our

close scheduled this Thursday.”57

           The new signature page contained additional signature blocks. Specifically,

it added a signature block manifesting the signatories’ consent to changes in Section

4.15 of the operating agreement, pertaining to Yenni Income Opportunities Fund

GP, LLC’s annual management fees.58 Yenni’s forwarding email also included a

string of his communications with Dentons over the last two days, including emails

that reflected the existence of the “manager issue” between Yenni and Steven Feller

in the operating agreement, the fact that the issue had since been resolved, and the

need to execute revised signature pages as a result of the negotiations with the

lender.59 Ricardo acknowledged receiving and likely reading this email chain, but

he did not ask questions about it. 60

           On the afternoon of September 13, 2016, Ricardo executed and returned to

Yenni the signature pages to the operating agreement, including the signature block

56
     JX 13 at BRAGA00021645.
57
     Id.
58
     Id. at BRAGA00021652.
59
     Id. at BRAGA00021645-49.
60
     Tr. 132:1–135:24 (Ricardo).

                                            13
consenting to the changes in Section 4.15 of the operating agreement. 61 Ricardo did

not inquire about any of the revisions generally or to Section 4.15 specifically, even

after receiving notice of the change to Section 4.15.62 Braga Investment also did not

request a copy of the final version of the operating agreement before executing and

returning the signature pages.

           Shortly after Yenni sent the final, revised signature pages to Braga Investment

on September 13, a Dentons lawyer forwarded an email to Yenni attaching a revised

operating agreement and describing some of the changes.63 The email also included

a redline reflecting changes from a prior draft.64 Among the changes were revisions

to Yenni’s voting and appointment authority. The following reflects revisions to

two pertinent provisions in Section 3.1(b) (the “Contested Provisions”):

           (i) Yenni Income Opportunities Fund 1, L.P. (“"Yenni"”) (or other
           investors as Yenni may designate), shall have the right to appoint four
           (4) members of the Board; the initial membersmember of the Board
           appointed by Yenni shall be Musa Yenni and Gregory Floyd who, in
           lieu of Yenni appointing any of the three (3) vacancies on the Board,
           shall have a supermajority vote for the purpose of calling all
           meetings, being counted toward a quorum at all meetings,
           consenting to all actions, and voting on all measures brought before
           the Board. Yenni (or other investors as Yenni Fund may designate),

61
     JX 14 at BRAGA00031712–15.
62
  Tr. 137:1–138:14 (Ricardo). Ricardo testified that he did not check because “I trust my
partner at this time.” Id. 138:10–11 (Ricardo). Yenni and the Fund did not send a revised
operating agreement along with the signature page or at any point before the Closing, nor
did Braga Investment request one before Closing. PTO ¶ 30.
63
     JX 11 at YENNI0050204.
64
     Id.

                                             14
         may remove, recall and replace such members of the Board at will as it
         shall determine and shall always have the right to appoint four (4)
         members of the Board for so long as Yenni (or other investors as Yenni
         may designate) or their respective Affiliates is a controlling member of
         the Company. In addition, Yenni shall have the right to invite
         (and/or remove) up to four (4) Board observers to any and all
         meetings of the Board who shall be entitled to receive Board
         packages at the same time as Board members. The initial Board
         observers so appointed are Parul Dubey, Ben Godbout, Wayne
         Kalayjian and Ricardo Braga; and

         (ii) Steven Feller shall become and remain a member of the Board of
         Managers for so long as Steven Feller is employed by the Company;
         provided, that, if Steven Feller shall no longer be a member of the
         Board, Yenni (or other investors as Yenni may designate) shall have
         the right to appoint all of the members of the Board. 65

The Contested Provisions were not in the 2015 OA.66 On September 14, Dentons

sent another clean and redline version of the operating agreement to counsel for Fifth

Third Bank with additional changes to section 4.15 and asked for confirmation that

the changes were acceptable.67 Yenni was copied on this email; Braga Investment

was not.

         Braga Investment’s signature page was affixed to the final revised version of

the operating agreement that was later included in the closing binder. 68 The parties

refer to this version of the operating agreement as the 2016 Operating Agreement

65
   Id. at YENNI0050247–48. Bold formatting reflects additions while strike-through
formatting reflects deletions.
66
     Compare id. at YENNI0050247–48, with JX 2 at BRAGA00011228–29.
67
     JX 15 at YENNI0050848.
68
     PTO ¶ 32.

                                           15
(the “2016 Operating Agreement” or the “2016 OA”). Braga Investment did not see

the 2016 Operating Agreement before May 15, 2019.69

         D.     The Closing and Post-Closing Events

         On September 19, 2016, the transaction closed (the “Closing”). 70 Ricardo

participated in the closing call, which included a discussion of the material terms of

the transaction.71 On October 3, 2016, Rodrigo wrote to Parul Dubey of the Fund

requesting the Closing documents, including the “final signed version of the

Purchase Agreement by all parties.”72

         Dubey did not transmit to Braga Investment the final signed version of the

Purchase Agreement or its exhibits in response to Rodrigo’s email. Rather, on

October 21, 2016, Dubey sent Ricardo and Rodrigo a link to electronic data rooms

that purported to contain “important shared files,” the documents Rodrigo Braga had

requested, and a marketing folder to be used for consolidating marketing materials.73

At some point, Yenni discontinued the data room. 74

69
     Tr. 49:8–9 (Ricardo).
70
     Id. 314:1–3 (Yenni).
71
     Id. 146:11–15 (Ricardo).
72
  PTO ¶ 34. Specifically, Rodrigo noted that they were missing “Final signed versions of
both debt notes[;] Final signed version of the Purchase Agreement by all parties[;] Final
signed version of the Joinder Agreement by all parties[;] Board observer agreements[; and]
Any option pool contracts or warrants currently granted.” JX 20.
73
     JX 21 at YENNI0009846–47; Tr. 292:19–22 (Yenni).
74
     Tr. 245:7–12 (Rodrigo).

                                           16
           The only documentary evidence of the contents of the data room is a

screenshot of an automated email sent from the data room service provider to Yenni.

The screenshot reflects that Dubey uploaded documents to the data room on October

21, 2016. 75 The titles of these documents indicate that they were from November

2015, not September 2016. 76 For example, one document was titled “YENNI AND

FELLER PURCHASE AGREEMENT WITH ALL EXHIBITS 23NOV2015.pdf.”77

The two other documents visible from this screenshot also had November 2015 dates

in their titles.78

           The Company held its first Board meeting on October 24, 2016.79 Braga

Investment attended the meeting as a Board observer.80 At the meeting, the Board,

consisting of Yenni and Steven Feller, ratified all matters related to the transaction

for the Company without objection, including ratification of Steven Feller’s

selection as President and Board member and Yenni’s selection as “Chair” of the

75
     JX 22 at YENNI0010537.
76
  Id. (“YENNI AND FELLER SIGNATURE PAGE OF PURCHASE AGREEMENT
WITH FELLERS’ SIGNATURES 22NOV2015.pdf”); id. (“YENNI AND FELLER
SIGNATURE PAGE OF PURCHASE AGREEMENT WITH YENNI’S SIGNATURE
22NOV2015.pdf”).
77
     Id.
78
     Id.
79
     PTO ¶ 36.
80
     Id.

                                         17
Board. 81 The Company’s decision to retain Ricardo, Kalayjian, Dubey, and Godbout

as Board observers was also ratified.82 Braga Investment has since attended and

participated in every Company Board meeting, except for the January 2017 meeting,

from which it was disinvited by the Board. 83 From the Closing until April 2021,

there had been only two Company Board managers: Yenni and Steven Feller.84

           E.    The First Action
           On May 22, 2017, Braga Investment filed a complaint (the “Main Lawsuit”)

against the Fund. See Braga Inv. & Advisory, LLC v. Yenni Income Opportunities

Fund I, L.P., 2020 WL 3042236, at *1 (Del. Ch. June 8, 2020). In the Main Lawsuit,

Braga Investment alleged that the Fund breached the Purchase Agreement by

agreeing to amend its terms shortly before the Closing to exclude certain assets from

being transferred to Newco. Id. Braga Investment also alleged that the Fund

breached the Co-Investment Agreement by depriving Braga of its rights as a Board

observer to receive “board packages.” Id.

           In a post-trial opinion, the court entered judgment in favor of the Fund and

against Braga. Id. at *19. The court concluded that the “Joinder Agreement’s

purported modification to add Braga as a party to the Purchase Agreement [was]

81
     Id.
82
     Id.
83
     Id.
84
     Id.

                                            18
facially invalid” because the Joinder Agreement was not signed by any of the parties

that were required to effect an amendment to the Purchase Agreement. Id. at *9.

Because Braga was not properly joined as a signatory to the Purchase Agreement,

the Fund and the Sellers were permitted to amend the list of excluded assets to the

Purchase Agreement without Braga’s review or approval. Id. at *1. The court also

determined that the Fund did not breach Braga’s contractual right to receive “Board

packages” under the Co-Investment Agreement. Id. at *16–19.

         F.      The Second Action
         In September 2017, Yenni sought advancement for the Fund’s legal fees to

defend the Main Lawsuit.85 Yenni retained Delaware counsel on behalf of the

Company to render an opinion on the Fund’s entitlement to advancement under the

terms of the Company’s operating agreement. In the process of preparing its opinion

(the “Advancement Opinion”), counsel examined the unsigned 2015 OA, not the

2016 OA.86

         On February 9, 2018, Braga Investment filed an action seeking declaratory

judgment and injunctive relief to prevent the Fund from receiving indemnification

or advancement (the “Second Action” and together with the Main Lawsuit, the

 PTO ¶ 39; Braga Investment & Advisory, LLC v. Musa Yenni, C.A. No. 2018-0093-
85

LWW Dkt. 1 ¶ 28 (Del. Ch. Feb. 9, 2018).
86
     PTO ¶ 39.

                                         19
“Related Actions”).87 Plaintiff attached the unsigned 2015 OA to its complaint.88

The case proceeded for months without the Fund or the Company raising any issue

concerning the validity of the 2015 OA.89

         It appears that the Company and Yenni were not focused on the issue in the

context of the Second Action because the substantive language in the

indemnification and advancement provisions were the same in both the 2015 OA

and 2016 OA. 90 Yenni realized the discrepancy in October 2018 and asked Dentons

to send him an electronic version of the 2016 OA. In his email to counsel, Yenni

wrote that the discrepancy “created a problem in our lawsuits against Braga; the

older version was filed in DE courts by the plaintiffs and we did not realize that until

recently! We are trying to rectify that.” 91

         Most troubling is the fact that neither Yenni nor his counsel sought to correct

the record at that time. It was only months later, when the dispute arose over the

proposed amendment to the operating agreement in May 2019 that Plaintiff learned

87
     Id. ¶ 40; Braga Investment, C.A. No. 2018-0093-LWW Dkt. 1.
88
     Braga Investment, C.A. No. 2018-0093-LWW Dkt. 1 Ex. A.
89
   PTO ¶ 41. On September 28, 2018, the court denied Braga Investment’s motion for
judgment on the pleadings. Braga Investment, C.A. No. 2018-0093-LWW Dkt. 84. The
Second Action is currently stayed but is subject to potential dismissal for prolonged
inactivity. Id. Dkts. 88 & 94.
90
     JX 2 at BRAGA00011230–31; JX 11 at YENNI0050211.
91
     JX 47.

                                           20
of the issue—and only then by conducting its own redline comparison of the

proposed amendment against the 2015 OA. Defendants conduct was irresponsible,

and perhaps worse. But, as will be explained, this post-closing conduct does not

establish that the 2015 OA was the Company’s operating agreement, or that

Defendants fraudulently induced Plaintiff to enter into the Co-Investment

Agreement.

         G.     Braga Investment Seeks a Larger Role
         On January 25, 2018, Braga Investment, through its counsel, circulated to the

Company, its Board, its Board observers, and its lenders, a proposed term sheet for

Braga Investment to make a capital injection in the Company in return for, among

other things, Braga Investment’s right to appoint a Board member and that its

consent be required for any change to the Company’s corporate and organizational

documents.92 Yenni rejected Braga’s proposal. 93

         H.     The Fund Engineers the Adoption of a Further Amended
                Operating Agreement in 2019

         On May 12, 2019, Yenni emailed both Ricardo and Steven Feller about a

potential refinancing of the Company’s debt. Yenni indicated that the refinancing

“requires an amendment to [the Company’s] operating agreement and your

92
     Id. at BRAGA00026102.
93
     Tr. 215:16–216:4 (Ricardo).

                                           21
signatures.”94     The next day, Yenni sent Ricardo a draft amended operating

agreement along with a redline.95 The redline highlighted changes between the

proposed amended agreement and the 2016 Operating Agreement.96

         When Ricardo reviewed the redline, he realized that it did not reflect all the

differences between the newly proposed operating agreement and the 2015 OA,

which was the only version that he possessed. On May 14, 2019, Ricardo sent an

email to Yenni, copying Steven Feller, accusing Yenni of bad faith and complaining

that the redline did not capture what Ricardo perceived to be changes to Article 3 of

the operating agreement.97 Yenni replied that “Article 3 was not amended at all”

and accused Ricardo of making “false accusations.”98

         Ricardo responded to Yenni, copying Steven Feller, the other Board

observers, and others, insisting that “the redline version [Yenni] sent out does not

reflect the full changes made to the operating agreement.” 99 Ricardo attached a

redline comparison of the proposed amended operating agreement against the 2015

94
     PTO ¶ 42; JX 48 at YENNIOA0001103.
95
     PTO ¶ 44; JX 49 at YENNIOA0003719.
96
     PTO ¶ 45.
97
     Id. ¶ 46; JX 50 at YENNIOA0000904–05.
98
     JX 51 at YENNIOA0001090.
99
     PTO ¶ 48; JX 52 at YENNIOA0002426.

                                           22
Operating Agreement. 100 He also noted that Braga Investment had not approved the

proposed amended operating agreement.101

         On May 15, 2019, Yenni sent an email stating that he had confirmed with

counsel that Yenni’s original redline used the final executed version of the

Company’s operating agreement.102 He attached a final execution version of the

2016 OA, which included Braga Investment’s signature page. 103

         The Company proceeded to effect the amendments in a “First Amended and

Restated Operating Agreement of Steven Feller P.E., LLC” signed by all of the

managers and members of the Company (the “2019 OA”). 104 Steven Feller signed

in his capacity as a manager of the Company and as president of member Steven

Feller P.E., PL. 105 Yenni signed in his capacity as a manager of the Company and

on behalf of the Company as its executive chairman.106 Midwest Mezzanine Fund

V, LP, and Midwest Mezzanine Fund V SBIC, LP signed as preferred unit

holders. 107 Yenni also signed as the authorized signatory for Braga Investment,

100
      Id. at YENNIOA0002430.
101
      Id. at YENNIOA0002426.
102
      PTO ¶ 49; JX 53 at YENNIOA0003154.
103
      PTO ¶ 49; JX 53 at YENNIOA0003185–87.
104
      JX 55 at YENNIOA0001184–6.
105
      Id. at YENNIOA00011185.
106
      Id. at YENNIOA00011184.
107
      Id. at YENNIOA00011186.

                                        23
relying on the power of attorney in the Co-Investment Agreement.108 The Company

has been operating under the 2019 Operating Agreement since May 31, 2019.109

            In April 2021, Steven Feller was terminated as a Company employee, thereby

disqualifying him as a manager. 110 Since that time, Yenni has been the sole manager

on the Company’s Board. 111 Under the 2019 OA, Section 3.1 of that agreement

provides Yenni the right to appoint members to the Board, but Yenni has thus far

declined to exercise that right.112

            I.    This Action
            On May 31, 2019, Braga Investment filed this action against Yenni and the

Fund, seeking an order declaring that the 2015 OA was the “valid and effective

operating agreement for the Company” and that the 2016 OA was not. Plaintiff also

asserted a claim for breach of contract, alleging that the 2015 OA had been

purportedly amended by attaching Braga Investment’s signature page to the 2016

OA without having obtained Braga Investment’s approval under Section 11.1 of the

2015 OA.

108
      Id. at YENNIOA00011184.
109
      Tr. 220:13–22 (Ricardo).
110
      PTO ¶ 52.
111
      Id.
112
      JX 55 at YENNIOA0001157.

                                            24
         On February 25, 2020, this court denied Defendants’ motion to dismiss this

action. 113 Defendants later moved for summary judgment, and Plaintiff moved to

amend and supplement the complaint to add parties and claims relating to the

adoption of the 2019 OA.114 On May 28, 2021, the court denied Defendants’ motion

for summary judgment and granted Plaintiff’s motion to file a supplemental

amended complaint (the “Amended Complaint”). 115 The Amended Complaint

asserts three counts. Count I seeks an order declaring that the 2015 OA is the valid

and effective operating agreement for the Company and that the 2016 OA and 2019

OA are not.116 Count II is a breach of contract claim alleging that Yenni and the

Fund breached Section 11.1 of the 2015 Operating Agreement by affixing Braga

Investment’s signature page to the 2016 Operating Agreement. 117 Count III alleges

the Defendants fraudulently induced Braga Investment into becoming a member of

the Company by representing that the 2015 OA was the Company’s operative

operating agreement while concealing the differences between the 2015 OA and the

2016 OA.118

113
      Dkt. 23.
114
      Dkts. 31, 65, 122.
115
      Dkt. 95.
116
      Dkt. 96 ¶ 39.
117
      Id. ¶ 44–45.
  Id. ¶ 57. The Amended Complaint added the other members of the Company (Oldco,
118

Midwest Mezzanine Fund V, LP, and Midwest Mezzanine Fund V SBIC, LP) as

                                         25
            On November 15, 2021, Plaintiff and Defendants cross-moved for summary

judgment.119 The court denied both motions on April 12, 2022. 120 The court held a

two-day trial on October 12 and 14, 2022.121

            Plaintiff seeks an order rescinding the Co-Investment Agreement, compelling

the Defendants to return to Braga Investment its $700,000 investment, plus

management payments made under the Co-Investment Agreement.122                       In the

alternative, Plaintiff seeks damages and an order declaring the 2015 OA as the

Company’s operating agreement. 123 Defendants seek judgment in their favor and an

award of their attorneys’ fees and expenses under the terms of the Co-Investment

Agreement. 124

II.         ANALYSIS
            To succeed at trial, Plaintiff must prove each element of its breach of contract

claims against each Defendant by a preponderance of the evidence. OptimisCorp.

defendants in response to Defendants’ argument that they were necessary parties. Plaintiff
later agreed to dismiss them from the action after determining that they no longer owned
membership interests in the Company. Dkt. 155.
119
      Dkts. 122–23.
120
      Dkts. 149–51.
121
      Dkt. 163.
122
      PTO ¶ 61.
123
      Id.
124
   Id. ¶ 58; Tr. 404:7–15 (Ricardo); see Co-Investment Agreement § 6 (“Co-Investor
agrees to pay the expenses related to this Co-Investment Agreement.”).

                                               26
v. Waite, 2015 WL 5147038, at *55 (Del. Ch. Aug. 26, 2015), aff’d, 137 A.3d 970

(Del. 2016).        This standard also applies to Plaintiff’s claim for fraudulent

inducement. See In re IBP, Inc. S’holders Litig., 789 A.2d 14, 54 (Del. Ch. 2001);

Stone & Paper Invs., LLC v. Blanch, 2021 WL 3240373, at *26 n.320 (Del. Ch. July

30, 2021). ‘“Proof by a preponderance of the evidence means proof that something

is more likely than not. It means that certain evidence, when compared to the

evidence opposed to it, has the more convincing force and makes you believe that

something is more likely true than not.”’ Agilent Techs., Inc. v. Kirkland, 2010 WL

610725, at *13 (Del. Ch. Feb. 18, 2010) (quoting Del. Express Shuttle, Inc. v. Older,

2002 WL 31458243, at *17 (Del. Ch. Oct. 23, 2002)).

         A.     Fraudulent Inducement
         In Count III, Plaintiff alleges Defendants fraudulently induced it into

becoming a member of the Company by representing that the 2015 OA was the

Company’s operating agreement.125 Plaintiff claims Defendants’ conduct entitles

Plaintiff to recission. “‘If a party’s manifestation of assent is induced by either a

fraudulent or a material misrepresentation by the other party upon which the

recipient is justified in relying, the contract is voidable by the recipient.’” Lynch v.

Gonzalez, 2020 WL 4381604, at *35 (Del. Ch. July 31, 2020) (quoting Restatement

(Second) of Contracts § 164 (1981)), aff’d, 253 A.3d 556 (Del. 2021)).

125
      Pl.’s Opening Br. 23 (Dkt. 168).

                                          27
      To prevail on a claim of fraudulent inducement, the plaintiff must prove:

      1) a false representation, usually one of fact, made by the defendant; 2)
      the defendant’s knowledge or belief that the representation was false,
      or was made with reckless indifference to the truth; 3) an intent to
      induce the plaintiff to act or to refrain from acting; [and] 4) the
      plaintiff’s action or inaction taken in justifiable reliance upon the
      representation . . . .

Lord v. Souder, 748 A.2d 393, 402 (Del. 2000); accord Standard Gen. L.P. v.

Charney, 2017 WL 6498063, at *12 (Del. Ch. Dec. 19, 2017), aff’d, 195 A.3d 16

(Del. 2018). Plaintiff frames its fraud claim as one of misrepresentation and

omission. “[F]raud does not consist merely of overt misrepresentations, but may

also occur through deliberate concealment of material facts, or by silence in the face

of a duty to speak.” Martin v. Med-Dev Corp., 2015 WL 6472597, at *10 (Del. Ch.

Oct. 27, 2015).

             1.    Did Defendants Make False Representations of Fact?

      Plaintiff presents its fraud claim as being grounded in two misrepresentations

and one omission. As to each alleged misrepresentation and omission, Plaintiff

claims that Defendants represented that the 2015 OA was or would be the final

operating agreement.

      First, Plaintiff points to an August 26, 2016, email from Yenni to Braga

Investments attaching the Purchase Agreement. That email stated, in its entirety:

      Here is the definitive purchase agreement we executed with the Seller
      in November both with and without all exhibits. The purchase
      agreement without the exhibits has the signatures of the parties. Please

                                         28
         note that Section 9 of the Operating Agreement (Exhibit D) addresses
         the issues of transfer of shares for all members. We could specify in
         our operating agreement that we would abide by this Exhibit D. We
         look forward to our likely partnership.126

         At the time Yenni made this statement, the 2015 Operating Agreement had

yet to be executed.127 Yenni stated that they could specify that they would abide by

the attached Exhibit D in the Co-Investment Agreement, but Yenni did not say that

the attached Exhibit D would be the final operating agreement at closing. Plaintiff’s

assertion that Yenni’s email represented that Exhibit D to the Purchase Agreement

would be the final operating agreement is belied by the terms of Exhibit D itself.

         The operating agreement attached as Exhibit D to the Purchase Agreement

was not final. The Purchase Agreement referred to Exhibit D as the “proposed

operating agreement.” 128 Exhibit D was unsigned, and there is no evidence that it

had been signed in that form.129 It also made no reference to Braga Investment; yet

there is no dispute that changes were necessary to reflect Plaintiff’s investment.130

The August 26 email from Yenni to Braga Investment was not a false statement of

fact.

126
      JX 2 at BRAGA00011046.
127
      Tr. 83:20–84:1 (Ricardo).
128
      JX 2 at BRAGA00011177.
129
      Id. at BRAGA00011249–50.
130
      Id. at BRAGA00011177; Tr. 83:20–84:1 (Ricardo).

                                          29
            Next, Plaintiff points to the Co-Investment Agreement, which Braga

Investment executed on September 2, 2016. Plaintiff asserts that Section 3 of that

agreement represented that Exhibit D to the Purchase Agreement would be the final

version of the Company’s operating agreement at closing. Section 3 is titled

“JOINDER,” and states, in its entirety:

            Co-Investor has reviewed with its counsel, or has had the opportunity
            to do so, the diligence material made available to it by Newco and the
            Managing Investor and the [Purchase Agreement] and has agreed to
            enter into a so-called Joinder Agreement pursuant to which it shall be
            deemed to be a Buyer under the [Purchase Agreement] and will be
            entitled to all of the rights and subject to all of the obligations described
            in the [Purchase Agreement], including but not limited to the Operating
            Agreement of [the Company] and the other Exhibits referenced
            therein.131

This sentence contemplates that Braga Investment will enter into a Joinder

Agreement, and under that agreement Braga Investment will be subject to the rights

and obligations in the Purchase Agreement, including the “Operating Agreement . . .

referenced therein.”132 The joinder paragraph of the Co-Investment Agreement

refers to the form of operating agreement attached as Exhibit D to the Purchase

Agreement. Exhibit D was, as explained above, a proposed operating agreement.133

Neither the joinder paragraph of the Co-Investment Agreement, nor the Purchase

131
      Co-Investment Agreement § 3.
132
      Id.
133
      JX 2 at BRAGA00011177.

                                                 30
Agreement indicated that Exhibit D to the Purchase Agreement would be the final

operating agreement. Read in context, the joinder paragraph of the Co-Investment

Agreement represented that Plaintiff and the Company would enter into a Joinder

Agreement, which in turn would give Plaintiff all of the rights associated with being

a buyer under the Purchase Agreement. The final link in this chain of agreements is

the Purchase Agreement. As previously explained, Exhibit D to the Purchase

Agreement was only an unsigned, proposed operating agreement. 134 Thus, the Co-

Investment Agreement did not represent that the final operating agreement would be

the 2015 OA.135

            Plaintiff frames the last misrepresentation as a form of omission, claiming that

Defendants did not provide Plaintiff with a copy of the 2016 OA before seeking

Braga Investment’s signature. This argument reflects a slight pivot from Plaintiff’s

other arguments, as it focuses on Defendants’ conduct leading up to Plaintiff’s

134
      Id.
135
   Braga Investment and the Company entered into the Joinder Agreement six days later,
on September 8, 2016. JX 8. That agreement did not explicitly mention the operating
agreement that was attached as Exhibit D to the Purchase Agreement. Instead, it states, in
pertinent part, that Braga Investment “shall have all of the rights and obligations of a
‘Buyer’ [under the Purchase Agreement] as if it had executed the Purchase Agreement.”
Id. In the Main Action, the court determined that the Joinder Agreement was invalid
because it had not been executed by all the parties to the Purchase Agreement. Braga Inv.,
2020 WL 3042236, at *9. Again, Exhibit D was identified only as a proposed operating
agreement that was negotiated in November 2015, long before Braga Investment emerged
on the scene. It did not govern the Company before the closing of the transaction in
September 2016. Tr. 300:3–6 (Yenni).

                                               31
delivery of the executed signature pages to the operating agreement on September

12, 2016.136 This argument fails, as it is merely a reformulation of the first two

alleged misrepresentations as an omission.

         In an arm’s length setting like the negotiation of the Co-Investment

Agreement and the execution of the operating agreement between Plaintiff and

Defendants, the Defendants had no affirmative duty to speak. Airborne Health, Inc.

v. Squid Soap, LP, 2010 WL 2836391, at *9 (Del. Ch. July 20, 2010). An affirmative

duty to speak arises where there is a “fiduciary or other similar relation of trust and

confidence between the parties.” Prairie Cap. III, L.P. v. Double E Hldg., Corp.,

132 A.3d 35, 52 (Del. Ch. 2015). Plaintiff does not argue that Defendants owed a

fiduciary duty or had some other similar relationship with Braga Investment giving

rise to an affirmative duty to speak.

         It is true, however, that “if a party in an arms’ length negotiation chooses to

speak, then it cannot lie. . . . And once the party speaks, it also cannot do so partially

or obliquely such that what the party conveys becomes misleading.” Prairie Cap.,

132 A.3d at 52. Plaintiff invokes this principle to argue that once Defendants spoke

on the issue of the operating agreement generally, they had a “duty to disclose the

2016 OA and all differences between it and the 2015 OA.”137 Plaintiff’s omission

136
      See Pl.’s Opening Br. 28.
137
      Pl.’s Reply Br. 8–9 (Dkt. 171).

                                           32
argument essentially recasts the first two arguments of misrepresentation into one of

omission. See Prairie Cap., 132 A.3d at 52 (“[A]ny misrepresentation can be re-

framed for pleading purposes as an omission.”).

         Defendants did not represent that the 2015 OA was going to be the final

operating agreement for the Company at or before closing. Exhibit D was a proposed

form of the operating agreement.138 To the extent Defendants owed any duty to

Plaintiff concerning the terms of the final operating agreement, they owed a duty not

to misrepresent, conceal, or lie about what would be in the final version. In the days

leading up to Plaintiff’s execution of the signature page of the operating agreement,

Defendants informed Plaintiff that the operating agreement was being revised.139

Indeed, before Braga Investment signed the agreement, it saw an invoice from

Dentons reflecting that the operating agreement had been revised.140 Defendants

represented that there were revisions to the operating agreement. At no time did the

Defendants represent that the operating agreement contained the same terms as the

2015 OA. Nor did they represent that only certain provisions would be changed.

Thus, Defendants did not lie to Braga Investment about the changes to the operating

138
      JX 2 at BRAGA00011177.
139
      JX 12 at BRAGA00030296.
140
      JX 9 at BRAGA00016939.

                                         33
agreement or make representations that would mislead Plaintiff into believing that

the final terms would be the same as in the 2015 OA. 141

              2.     Plaintiff’s Reliance on Any Representations Indicating that
                     the 2015 OA Was the Final, Effective Operating Agreement
                     Was Not Reasonable.
       Even if Defendants had represented that the 2015 OA would be the final

operating agreement for the Company, any reliance on those representations was not

reasonable. Braga Investment knew that the 2015 OA would be revised before

closing and would not be the final operating agreement, yet it never asked to see the

final version before executing and returning the signature pages to the agreement.

“Fraudulent inducement is not available as a defense when one had the opportunity

to read the contract and by doing so could have discovered the misrepresentation.”

Carrow v. Arnold, 2006 WL 3289582, at *11 (Del. Ch. Oct. 31, 2006) (citing 17A

Am. Jur. 2d Contracts § 214 (2006)), aff’d, 933 A.2d 1249 (Del. 2007).

141
    For these reasons, Plaintiff’s reliance on Narrowstep, Inc. v. Onstream Media Corp.,
2010 WL 5422405 (Del. Ch. Dec. 22, 2010), is misplaced. In that case, the court held, on
a motion to dismiss, that the plaintiff successfully pleaded the false statement element of
its fraud claims. Id. at *12 (“Narrowstep alleges that Onstream made several false
representations with respect to its communicated desire to close a merger with Narrowstep
in an expeditious manner.”). In so holding, the court observed that the complaint
“sufficiently describe[d] the details” of an alleged misappropriation scheme, which in turn
indicated that the false representations were made intentionally. Id. Here, the Plaintiff has
not met its evidentiary burden to show that Defendants made a false representation that the
2015 OA would be the final version of the operating agreement.

                                             34
      All concerned parties knew on August 26, 2016, that the 2015 OA was not the

final operating agreement. Braga Investment knew from the outset and up to the

date that it executed and returned its signature page that changes to the operating

agreement were necessary and had been made.

      Braga Investment’s notes, prepared in anticipation of its September 2, 2016,

pre-investment call with Yenni, indicated that changes to the operating agreement

would be discussed on the call. 142 Ricardo Braga knew when he executed the Co-

Investment Agreement on September 2, 2016, that the 2015 OA was not the final

version. 143 Thus, Braga Investment could not have reasonably relied on any

representation on or before that date that the proposed operating agreement attached

as Exhibit D to the Purchase Agreement would be the final version.

      Plaintiff’s return of the executed signature pages to the operating agreement

on September 13, 2016, without having reviewed the agreement, further

142
   See JX 3 at BRAGA00000957 (“Outline of operating agreements, included in current
one or just between Fund. Might go against operating agreements.”). Braga Investment’s
notes also reflected that governance would be discussed, including Plaintiff’s desire “to
have a board seat.” Id.
143
   Tr. 33:9–13 (Ricardo) (Q: “And you were aware that certain other changes needed to
be made to the 2015 OA to reflect the terms of the deal; correct? A: Yes, I was expecting
changes to reflect the co-investment.”); id. 94:23–94:6 (Ricardo) (recognizing that the
operating agreement needed to be revised to provide for board observers); id. 100:18–
101:16 (Ricardo) (acknowledging based on his notes of September 2, 2016 that the
management fee schedule in the 2015 OA needed to be revised to satisfy the lenders); id.
108:11–109:2 (Ricardo) (acknowledging that the 2015 OA did not yet accurately reflect
the capitalization of the Company so as to include Braga Investment’s ownership).

                                           35
demonstrates unreasonable reliance. Ricardo knew that Dentons had made changes

to the operating agreement before Plaintiff signed and returned the signature page.144

Indeed, on September 14, 2016, Plaintiff saw the Dentons invoice reflecting that

Dentons had made changes to the operating agreement. 145 Not only did Plaintiff see

that invoice, but it also discussed the invoice with Yenni and then paid the invoice

in full.146 Plaintiff also knew, before executing and returning the signature pages to

the operating agreement, that the agreement had been revised due to the resolution

of the “manager issue” between Yenni and Steven Feller and the issues with Fifth

Third Bank.147

         Plaintiff’s fraudulent inducement argument boils down to an assertion that

Defendants’ failure to provide Braga Investment with a copy of the 2016 OA when

seeking Braga Investment’s signature page constituted a misrepresentation or

omission sufficient to give rise to fraudulent inducement. The court finds that

Defendants did not conceal or misrepresent the terms or revisions of the operating

144
      Tr. 116:2–7 (Ricardo).
145
    Id. 124:20–126:5 (Ricardo). Braga Investment also knew from other emails on
September 6, 2016, and “based on many other factors” that the operating agreement was
being revised. Id. 115:1–116:24 (Ricardo).
146
      Id.; JX 16; PTO ¶ 28.
147
   JX 13; Tr. 132:12–134:7 (Ricardo); see also JX 12 at BRAGA00030296 (reproducing
a September 12, 2016, email forwarded to Plaintiff on September 13, indicating the
operating agreement had not been finalized).

                                         36
agreement.148 Rather, Braga Investment knew that the agreement would be, and

was, revised up until it executed and returned its signature pages. 149 Under these

circumstances, Braga Investment, a sophisticated investor, cannot rely on its own

failure to request and read the final version of the operating agreement as grounds to

rescind the Co-Investment Agreement or to invalidate the 2016 Operating

Agreement. See Scion Breckenridge Managing Member, LLC v. ASB Allegiance

Real Estate Fund, 68 A.3d 665, 676–77 (Del. 2013) (“[A] failure to read bars a party

from seeking to avoid or rescind a contract.”). 150

148
   As noted above, the Defendants behaved less than admirably when they learned that the
wrong version of the operating agreement had been relied upon in the Second Action.
Nevertheless, the court does not find that the Defendants sought to conceal the 2016 OA
from the Plaintiff.
149
      JX 16; PTO ¶ 28.
150
    See also Parke Bancorp Inc. v. 659 Chestnut LLC, 217 A.3d 701, 711 (Del. 2019)
(“When an experienced party does not bother to read what he knows will be the binding
agreement, a court must be exceedingly careful before allowing him to escape the
consequences of that agreement, lest the court undercut the reliability of all written
contracts, a reliability critical to their important role in facilitating useful commercial
relations.”); Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908, 913 (Del. 1989)
(“[A] party’s failure to read a contract [cannot] justify its avoidance.”); W. Willow–Bay Ct.,
LLC v. Robino–Bay Ct. Plaza, LLC, 2009 WL 3247992, at *4 n.19 (Del. Ch. Oct. 6,
2009) (“‘[F]ailure to read a contract provides no defense against enforcement of its
provisions where the mistake sought to be avoided is unilateral and could have been
deterred by the simple, prudent act of reading the contract.’” (quoting 27 Williston on
Contracts § 70.113 (4th ed. 2009))), aff’d, 985 A.2d 391 (Del. 2009) (TABLE); Patel v.
Dimple, Inc., 2007 WL 2353155, at *11 n.22 (Del. Ch. Aug. 16, 2007) (“A party’s failure
to read a contract does not justify its avoidance.”); Moore v. O’Connor, 2006 WL 2442027,
at *4 (Del. Super. Aug. 23, 2006) (“Even if [defendant] was, in fact, unaware of the effect
his initials on the June 30, 2006 agreement would have regarding the good will payment,
he is still responsible for the contents of the writing to which he assented. One of the basic
tenets of contract law is that a party is responsible for the terms of a contract they sign,
even if unaware of the terms.”); UBEO Hldgs., LLC v. Drakulic, 2021 WL 1716966, at *10

                                             37
       Braga Investment could have protected its interest by refusing to execute and

return the signature page, or alternatively, demanding that the signature pages be

held in escrow until Plaintiff had an opportunity to review the final version. It chose

neither path. Ultimately, Braga Investment’s predicament is one of its own making

and could easily have been avoided. The court will not unwind a transaction due to

a sophisticated party’s decision to sign an agreement without having read it.

(Del. Ch. Apr. 30, 2021) (“[I]f a party to a contract could use her failure to read a contract
as a way to circumvent her obligations, contracts would not be worth the paper on which
they are written.” (quotations omitted)); Harrington Raceway, Inc. v. Vautrin, 2001 WL
1456873, at *3 (Del. Super. Aug. 31, 2001) (“[T]he Court cannot protect business people
who decide to sign contracts . . . without reading them.”); TP Gp.–CI, Inc. v. Vetecnik,
2016 WL 5864030, at *1 (D. Del. Oct. 6, 2016) (“The law is well settled . . . that failure to
read a contract does not excuse performance.”); Hollinger Int’l v. Black, 844 A.2d 1022,
1065–66 n.95 (Del. Ch. 2004) (“Succinctly put, a party will not be heard to complain that
he has been defrauded when it is his own evident lack of due care which is responsible for
his predicament.”). Other jurisdictions are in accord. See, e.g., Dasz, Inc. v. Meritocracy
Ventures, Ltd., 969 N.Y.S.2d 653, 655 (N.Y. App. Div. 2013) (“[A] signer’s duty to read
and understand that which it signed is not diminished merely because [the signer] was
provided with only a signature page.” (second alteration in original) (quoting Vulcan Power
Co. v. Munson, 932 N.Y.S.2d 68, 69 (N.Y. App. Div. 2011))); McBroom v. Child, 392 P.3d
835, 842 (Utah 2016) (holding that the plaintiff’s duty to inquire into the terms of her
agreement was not diminished because she only received the signature page as that page
was clearly not a self-contained document); Parks v. Parks, 2013 WL 4478189, at *4 (Ohio
Ct. App. Aug. 14, 2013) (“[I]f appellants had questions of what they were signing they
could have refused to sign it; or alternatively, they could have asked to see the entire
document before they signed it.”); Allied Office Supplies Inc. v. Lewandowski, 261 F. Supp.
2d 107, 112–13 (D. Conn. 2003) (explaining the general rule that a person who signs a
written contract has a duty to read it and that the general rule “presupposes either that the
alleged breaching party was provided with the entirety of the allegedly breached agreement
. . . or that because the signature pages made explicit reference to an agreement, defendants
were put under a derivative duty of inquiry into the contents of the referenced writing”
(applying Connecticut law)); Friedman v. Fife, 262 A.D.2d 167, 168 (N.Y. App. Div.
1999) (“Plaintiff will not be heard to claim that he received only a signature page for the
stock restriction agreement, since he was bound to know and read what he signed.”).

                                             38
      Because Plaintiff did not prove the first two elements of its fraud claim, the

court need not address the other elements, including whether Plaintiff has established

a right to rescind the Co-Investment Agreement.

      B.     Breach of Contract
      Plaintiff sought to prove two claims for breach of contract relating to the

adoption and amendment of the Company’s operating agreement. First, Braga

Investment contends that Defendants breached Section 11.1 of the 2015 OA by

failing to obtain Plaintiff’s approval to adopt the 2016 OA.          Second Braga

Investment maintains that Defendants breached the 2015 OA when it signed Braga

Investment’s signature to the 2019 OA using the power of attorney in the Co-

Investment Agreement.

      Under Delaware law, Plaintiff must establish the following to succeed on a

breach of contract claim: “(1) the existence of a contract, whether express or

implied; (2) breach of one or more of the contract’s obligations; and (3) damages

resulting from the breach.” GEICO Gen. Ins. Co. v. Green, 276 A.3d 462, at *5

(Del. 2022) (TABLE).

                                         39
                  1.    Plaintiff Did Not Prove a Breach of the Amendment
                        Provision of the 2015 OA.

          Section 11.1 of the 2015 OA provides that it “may be amended only upon

unanimous approval of all Members.”151 Under Delaware law, only parties to a

contract and intended third-party beneficiaries have standing to sue for breach of the

contract. Arkansas Tchr. Ret. Sys. v. Alon USA Energy, Inc., 2019 WL 2714331, at

*10 (Del. Ch. June 28, 2019). The 2015 OA was never signed or implemented by

the members of the Company.152 But even if it had been, the Plaintiff was never a

party or third-party beneficiary of the 2015 Operating Agreement. Plaintiff became

a member of the Company “post-closing.” 153 Closing occurred on September 19,

2016, the date of the 2016 OA.154 Thus, Plaintiff lacks standing to assert any claims

under the 2015 OA.

          Recognizing its lack of standing to assert a direct breach of contract claim

under the 2015 OA, Plaintiff argues that “based on Defendants’ intentional

concealment of the 2016 OA, they are estopped from asserting its existence.”155

Plaintiff did not satisfy the high burden necessary to support this theory.

151
      JX 2 at BRAGA00011246.
152
      Tr. 300:3–6 (Yenni).
153
      PTO ¶ 26.
154
      JX 18 at YENNI0046682.
155
      Pl.’s Opening Br. 30.

                                           40
      “[E]stoppel may arise when a party by his conduct intentionally or

unintentionally leads another, in reliance upon that conduct, to change position to

his detriment.” Wilson v. Am. Ins. Co., 209 A.2d 902, 903–04 (Del. 1965). The

party claiming estoppel must demonstrate that: “(i) they lacked knowledge or the

means of obtaining knowledge of the truth of the facts in question; (ii) they

reasonably relied on the conduct of the party against whom estoppel is claimed; and

(iii) they suffered a prejudicial change of position as a result of their reliance.”

Nevins v. Bryan, 885 A.2d 233, 249 (Del. Ch. 2005), aff’d, 884 A.2d 512 (Del. 2005).

“Regardless of the form of the action, the burden of proof of estoppel rests upon the

party asserting it. Furthermore, equitable estoppel must be proven by clear and

convincing evidence . . . .” Id.

      As discussed above, Braga Investment did not lack the means of obtaining the

terms of the 2016 OA before it became a member of the Company. Defendants did

not conceal the terms of the 2016 OA. Rather, Plaintiff did not ask to see it before

executing and delivering its signature page. Plaintiff also cannot argue that it could

reasonably rely on Defendants’ conduct as a representation that there would be no

material changes to the 2015 Operating Agreement.156 Braga Investment knew when

it signed the Co-Investment Agreement that there were going to be changes to the

156
   Yenni testified that he kept Braga Investment informed of negotiations over the
Operating Agreement in numerous phone calls. Tr. 310:4–312:24 (Yenni).

                                         41
operating agreement, and it knew changes had been made up to the time it returned

its executed signature page. Thus, Plaintiff has fallen far short of presenting clear

and convincing evidence that it lacked the means of learning that the 2015 OA would

not be the final operating agreement or that it could reasonably rely on Defendants’

conduct as indicating otherwise. 157 Accordingly, Defendants are not estopped to

assert the existence of the 2016 Operating Agreement. Plaintiff’s claim for breach

of the 2015 Operating Agreement fails for a lack of standing.158 Accordingly, as of

the Closing, the 2016 OA was the Company’s duly approved operating agreement.

              2.     Plaintiff Did Not Establish that the Adoption of the 2019 OA
                     Breached the Operating Agreement.
       Plaintiff contends that the adoption of the 2019 OA breached Section 11.1 of

the operating agreement, which requires “unanimous approval of all Members” for

157
   Plaintiff’s reliance on Nevins is misplaced. In Nevins, the court found, after trial, that
the plaintiff was estopped to contest the appointment of directors that he held out as board
members after having executed a written consent appointing them. Nevins, 885 A.2d at
249. Although the consent was determined to be defective, the appointed directors had no
reason to question its validity and it was reasonable for the new directors to rely on the
plaintiff’s assertions that they were valid directors. Id. at 249–50. Here, by contrast,
Defendants did not affirmatively represent to Plaintiff that the unexecuted 2015 OA was
or would be the final version of the Company’s operating agreement. The confusion over
the valid operating agreement that arose in the Second Action does not make it reasonable
for Plaintiff to assume that the 2015 OA was the operative agreement, particularly when
Plaintiff knew that it had been under revision before closing and declined to request a copy
before executing the signature pages to the 2016 OA.
158
   Braga Investment’s requested alternative relief for an order declaring the 2015 OA as
the Company’s “valid and effective” operating agreement fails for same reason. PTO ¶ 61.
The 2015 Operating Agreement was an unsigned, undated, proposed operating agreement
that was never implemented. Tr. 300:3–6 (Yenni).

                                             42
any amendment.159 Plaintiff maintains that it did not approve the amendment, and

the Fund’s signing the amendment on behalf of Braga Investment under the

purported authority of the power of attorney in the Co-Investment Agreement was

invalid.

         The 2019 OA is dated May 31, 2019. 160 Steven Feller signed in his capacity

as a manager of the Company and as president of member Steven Feller P.E., PL.

Yenni signed in his capacity as a manager of the Company and on behalf of the

Company as its executive chairman. Midwest Mezzanine Fund V, LP, and Midwest

Mezzanine Fund V SBIC, LP signed as preferred unit holders. 161 Yenni also signed

the 2019 OA on Braga Investment’s behalf, as its “authorized signatory.” 162

         The power of attorney gives the Fund:         “The right to vote [Braga

Investment’s] equity interest in [the Company] at all meetings of equity holders and

for any other purpose equity owners are called to vote or consent.” 163 This broad,

open-ended language reflects the parties’ agreement that the Fund has an irrevocable

proxy to vote Braga Investment’s equity interest in the Company. See Eliason v.

  This provision is the same in the 2015 OA and 2016 OA. See 2015 OA § 11.1; 2016
159

OA § 11.1.
160
      JX 55 at YENNIOA0001155.
161
      PTO ¶ 50.
162
      Id. ¶ 51; JX 55 at YENNIOA0001184.
163
      JX 55 at YENNIOA0001184.

                                           43
Englehart, 733 A.2d 944, 946 (Del. 1999) (“A proxy is evidence of an agent’s

authority to vote shares owned by another.” (citations omitted)). Plaintiff does not

contest the validity of the power of attorney or the irrevocable authority that it gives

to the Fund to vote Braga Investment’s membership interest in the Company.164

Rather, Plaintiff argues that it does not extend to amending the operating agreement,

which requires unanimous member approval. 165

         Powers of attorney are construed following the standard rules for the

interpretation of written instruments. Realty Growth Inv. v. Council of Unit Owners,

453 A.2d 450, 454 (Del. 1982); see also Daniel v. Hawkins, 289 A.3d 631, 645 (Del.

2022) (interpreting an irrevocable proxy). “When interpreting a contract, the role of

a court is to effectuate the parties’ intent.” Lorillard Tobacco Co. v. Am. Legacy

Found., 903 A.2d 728, 739 (Del. 2006). “If a writing is plain and clear on its face,

i.e., its language conveys an unmistakable meaning, the writing itself is the sole

source for gaining an understanding of intent.” City Investing Co. Liquidating Tr. v.

Cont’l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993). When the language of a “contract

is clear and unequivocal, a party will be bound by its plain meaning because creating

164
    Tr. 23:6–14 (Ricardo) (“[W]e gave power of attorney for the Fund to vote our equity
interest. . . . We agreed with that at this time because if you look [at the ownership interests
of the members], we are going to be minority, so meaning that any vote we are going to
end up, regardless, we want to approve, approve getting our -- our approval being lost.”).
165
      Pl.’s Opening Br. 29, 34–35.

                                              44
an ambiguity where none exists could, in effect, create a new contract with rights,

liabilities and duties to which the parties had not assented.” Hallowell v. State Farm

Mut. Auto. Ins. Co., 443 A.2d 925, 926 (Del. 1982). “The presumption that the

parties are bound by the language of the agreement they negotiated applies with even

greater force when the parties are sophisticated entities that have engaged in arms-

length negotiations.” W. Willow-Bay Ct., LLC, 2007 WL 3317551, at *9.

      Powers of attorney and irrevocable proxies are “strictly construed.” Daniel,

289 A.3d at 645; see Dorman v. Plummer, 2001 WL 32645, at *6 (Del. Ch. Jan. 9,

2001) (“Powers of attorney[, however,] are construed narrowly in favor of the

principal.”). Therefore, any ambiguity will be construed against the Fund. Daniel,

289 A.3d at 645 (“Where the irrevocable proxy is ambiguous, the ambiguity will be

construed against the rights of the proxy holder.”).

      Plaintiff argues the Fund’s authority under the power of attorney “only applies

to votes taken at member meetings and consents obtained in lieu of member

meetings. It does not allow [the Fund] to sign agreements delineating Braga

Investment’s rights and entitlements on Braga Investment’s behalf.”166               The

distinction that Plaintiff draws is not found in the Co-Investment Agreement. The

Fund’s authority under the power of attorney is not limited to votes taken at a

166
   Post-Trial Arg. Tr. 25:5–13; id. 24:14–28 (Dkt. 174); see also see also Pl.’s Reply Br.
22 (“[T]he power of attorney applies only to votes taken at member meetings and consents
obtained in lieu of member meetings.”).

                                           45
meeting of the members or written consents in lieu of a meeting. It extends to “any

other purpose equity owners are called to vote or consent.” 167 Consent means

“agreement, approval, or permission regarding some act or purpose.” Black’s Law

Dictionary 11th ed. 2019); see also Merriam-Webster Dictionary (defining consent

as “to give assent or approval”).168 Plaintiff’s interpretation of the power of attorney

as applying only to member meetings or formal written consents in lieu of a meeting

is an overly cramped construction that asks the court to supply words that do not

appear in the contract. See Murfey v. WHC Ventures, LLC, 236 A.3d 337, 356 (Del.

2020) (“[I]t is axiomatic that courts cannot rewrite contracts or supply omitted

provisions.”).169

         The operating agreement may be amended “upon unanimous approval of the

Members.”170 The 2019 Amendment was a matter upon which the members were

asked to approve. The Fund’s signature on the 2019 OA on behalf of Braga

167
      Co-Investment Agreement § 5.
168
     Consent, Merriam-Webster, https://www.merriam-webster.com/dictionary/consent
(last visited May 27, 2023).
169
   Plaintiff does not take issue with any of the amended terms added in 2019 that were not
already in the 2016 OA. Rather, it objects to Section 3.1, which is unchanged from the
2016 OA. Plaintiff argues that allowing the power of attorney to extend to amendments to
the operating agreement would theoretically allow the Fund to eliminate Plaintiff’s
ownership interest. Pl.’s Opening Br. 35. But that issue is not before the court, and
Defendants admit that any exercise of the power of attorney would be subject to “the
fiduciary duties imposed on LLC managers as well as agents exercising a power of
attorney, to which Yenni attested.” Defs.’ Ans. Br. 58 (Dkt. 170).
170
      Co-Investment Agreement § 5.

                                           46
Investment was a manifestation of the consent authority granted under the Co-

Investment Agreement to approve the amendment.

         Finally, Braga Investment argues that Yenni knew it could not use the power

of attorney to effect an amendment to the operating agreement because he stated that

Plaintiff’s approval was required. 171 Yenni’s request for member signatures to

amend the operating agreement does not change the unambiguous language of the

contract, which is an issue of law for the court to decide. As Chancellor Bouchard

noted in the Main Action when presented with a similar argument concerning the

interpretation of the Joinder Agreement: “The legal effect of the Joinder Agreement,

however, is an issue for the court to decide irrespective of whatever subjective belief

the Fund or Braga may have had about its meaning.” Braga Inv., 2020 WL 3042236,

at *10. Yenni’s request for member signatures to amend the operating agreement

does not alter the plain meaning of the power of attorney. Accordingly, Plaintiff has

failed to meet its burden to invalidate the 2019 OA.

         C.     Defendants’ Request for Attorney’s Fees

         Defendants seek an order compelling Plaintiff to pay Defendants’ attorneys’

fees.     Under the American Rule and Delaware law, litigants are ordinarily

responsible for their own litigation expenses. Mahani v. Edix Media Grp., Inc., 925

A.2d 242, 245 (Del. 2007). There is an exception to the general rule when a contract

171
      Pl.’s Opening Br. 34; JX 48 at YENNIOA0001101.

                                          47
contains an express fee-shifting provision. Id. Defendants claim entitlement to their

fees and expenses under one sentence in Section 6 of the Co-Investment Agreement,

which states: “Co-Investor agrees to pay the expenses related to this Co-Investment

Agreement.” 172 In the Main Action between these parties, the court denied the

Fund’s application for attorneys’ fees under this provision. Chancellor Bouchard

denied the request because the Fund had not been raised before entry of the final

judgment. Nevertheless, the Chancellor observed that this provision:

         does not even mention attorneys’ fees and, on its face, does not appear
         to be a fee-shifting provision. Rather, the provision appears in a section
         of the agreement describing the “economics” of the investment Braga
         made through the Fund (i.e., that Braga would pay the Fund annual fees
         and a success fee) and provides simply that: “Co-Investor agrees to pay
         the expenses related to this co-investment. 173

         Defendants are not entitled to an award of attorneys’ fees and expenses under

the quoted language from Section 6 of the Co-Investment Agreement. “A fee-

shifting provision must be a clear and unequivocal agreement triggered by a dispute

over a party’s failure to fulfill obligations under the contract. It must include specific

language, such as any reference to prevailing parties, a hallmark term of fee-shifting

provisions.” Murfey v. WHC Ventures, LLC, 2022 WL 214741, at *2 (Del. Ch. Jan.

172
      Co-Investment Agreement § 6.
173
   Braga Inv. & Advisory, LLC v. Yenni Income Opportunities Fund I, L.P., 2020 WL
5416516, at *3 (Del. Ch. Sept. 8, 2020).

                                            48
25, 2022) (cleaned up). Section 6 of the Co-Investment Agreement contains none

of the aforementioned language.

      Defendants’ reliance on SIGA Technologies, Inc. v. PharmAhtene, Inc., 67

A.3d 330 (Del. 2013), is misplaced. In that case, the Delaware Supreme Court

affirmed the trial court’s awarding of attorneys’ fees based on the construction of

two separate provisions of the contract. One provision required SIGA to pay all

costs and other expenses incurred by PharmAthene in connection with its

performance of the agreement. The second required SIGA to “defend, indemnify,

and hold harmless PharmAthene from expenses of whatever kind or nature,

(including, without limitation, counsel and consultant fees and expenses) that in any

way relate to SIGA’s breach of any covenants.” Id. at 352 n.108 (cleaned up).

      Unlike in PharmAthene, the Co-Investment Agreement does not make any

reference to Braga Investment having to indemnify, defend, or hold the Fund

harmless, nor does it mention litigation or fee-shifting. And unlike in PharmAthene,

the Co-Investment Agreement does not mention any right to attorneys’ fees in the

event of a breach of the agreement. Nor is there any claim in this case that Braga

Investment has breached the Co-Investment Agreement.

      Section 6 of the Co-Investment Agreement is not a clear and unequivocal fee-

shifting provision. Accordingly, Defendants’ application for attorneys’ fees is

denied.

                                         49
III.   CONCLUSION
       For the foregoing reasons, Plaintiff has failed to prove its claims. Judgment

is entered in favor of Defendants. Defendants’ claim for attorneys’ fees is denied.

                                         50