Court Opinion

ID: 4546366
Source: CourtListenerOpinion
Date Created: 2020-07-06 21:00:10.684442+00
Date Added: 2024-06-11T08:53:02.407081
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 19-1856

                          GREGORY KELLY,

                      Plaintiff, Appellant,

                                v.

      RIVERSIDE PARTNERS, LLC, a Massachusetts Corporation;
                 STEVEN F. KAPLAN, individually,

                      Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Douglas P. Woodlock, U.S. District Judge]

                              Before

                  Torruella, Lynch, and Kayatta,
                          Circuit Judges.

     Colin R. Hagan and Shlansky Law Group, LLP on brief for
appellant.
     Daniel C. Winston, John C. Calhoun, and Choate, Hall & Stewart
LLP on brief for appellees.

                           July 6, 2020
             LYNCH, Circuit Judge.         Plaintiff Gregory Kelly was the

President of TelJet Longhaul, LLC ("TelJet"), a company that

defendant     Riverside    Partners,       LLC   ("Riverside")     sought   and

successfully directed one of its portfolio companies to acquire.

Defendant Steven Kaplan was a General Partner at Riverside.                   A

General Partner at Riverside is an employee, not an equity owner

or managing member.       In the face of considerable documentation of

the acquisition, Kelly brought suit in federal court alleging that

he had an oral side agreement under which Kaplan and Riverside

("the defendants") would pay Kelly $1 million if the portfolio

company acquired TelJet. Then the defendants did not pay him after

the acquisition occurred.

             In response to Kelly’s breach-of-contract claim, the

defendants     denied     any    such    side    deal   existed.    They    also

counterclaimed     for     indemnification        for   breach     of   certain

representations and warranties Kelly had made.              After discovery,

the district court entered summary judgment for defendants, not

reaching the issue of whether such an oral side agreement existed,

and holding that regardless Kelly was in breach of his warranties

and representations and awarded the defendants attorneys' fees of

$250,000 and interest.          Kelly appealed.

             We take the case as presented to us, including the waiver

of arguments by Kelly.          On that basis, we affirm.

                                        - 2 -
                                       I.

A.   Facts

     1.      The Relevant Parties and Entities

             In fall 2010, Riverside, a Boston-headquartered private

equity firm, identified TelJet1 as a potential acquisition for its

portfolio    company   Tech   Valley    Holdings,   LLC    ("Tech   Valley").

Vermont Fiberlink, LLC and TelJet, Inc. owned and were the members

of TelJet.     Tech Valley wholly owned TVC Albany, Inc. ("TVC").

TVC was the sole member of and exclusively managed TJL Acquisition

Company, LLC (“TJL Acquisition”).            TVC created TJL Acquisition

specifically to acquire TelJet with it.

             Riverside employees controlled the Board of Managers of

Tech Valley and the Board of Directors of TVC.                 Kaplan was the

Chairman of both these Boards.         He also had the authority to sign

agreements     for   TJL   Acquisition      in   which    he   exercised   TJL

Acquisition's rights, powers, and privileges as to both the Asset

Purchase Agreement ("APA"), the contract which outlined the terms

of the purchase of TelJet, and the TelJet transaction ("the

Transaction") itself.

     2.      The TelJet Transaction and Execution of the APA

             In 2011, Ian Blasco, a Riverside General Partner, and

Kaplan met with Kelly, then the President of TelJet, and the owners

     1    TelJet provided a fiber optic communications network and
telecommunications services.

                                  - 3 -
of TelJet's parent companies to discuss investing in TelJet.

Blasco and Kaplan also met with Kelly to discuss the possible

acquisition of TelJet by Tech Valley and Kelly's post-acquisition

role. Kelly later testified that, during one of these discussions,

"Kaplan offered [him] a million dollars to guide the sale . . .

[payable] if [Tech Valley was] the successful winner to acquire

the company." Kelly alleges that Kaplan offered this sum on behalf

of Riverside, which would supply the payment.

           On December 14, 2012, Kelly, other TelJet officers, and

TelJet shareholders executed a Letter of Intent ("the Letter")

with Kaplan and Riverside.      The Letter outlined non-binding terms

of Tech Valley's acquisition of TelJet.         TVC was designated as the

bidding entity for the acquisition.             The Letter was signed by

Kaplan and addressed as being from Riverside (on behalf of Tech

Valley).

           On   March    27,    2013,     Kelly,    Kaplan,   and    TelJet

shareholders signed the APA, which sold TelJet's assets to Tech

Valley and TVC.    The Transaction closed on June 28, 2013.              After

the closing, Kelly began work for TVC pursuant to the APA.

           On   August   22,   2014,    Kelly   resigned   from   TVC.     On

September 12, 2014, he rejected a separation agreement from TVC

and did not release any claims.

                                  - 4 -
       3.    The APA Parties and Affiliates

             The parties to the APA were defined as the "Selling

Entities," the "Sellers," the "Purchaser," and the "Parent."                   The

Selling Entities were TelJet; Vermont Fiberlink, LLC; and TelJet,

Inc.    The Sellers were Kelly and three individuals, Scott Pidgeon,

Kenneth Pidgeon, and Alan Pidgeon, who were TelJet shareholders

and owners of Vermont Fiberlink, LLC.

             The     APA     originally    defined     "Purchaser"      as     TJL

Acquisition, a wholly owned subsidiary of TVC.              TVC, TelJet, and

TelJet Inc. executed an Amendment to the APA, which assigned the

rights and obligations of TJL Acquisition to TVC and defined the

"Purchaser" as TVC alone.             Kelly, Kaplan, and Kenneth Pidgeon

signed this agreement.           The APA defined the "Parent" as Tech

Valley.

             The APA defined "Affiliates" using the definition in

Rule 405 of the Securities Act of 1933, as amended: that is, "a

person      that    directly,    or   indirectly      through   one    or    more

intermediaries, controls or is controlled by, or is under common

control with [a party to the APA]."             17 C.F.R. § 230.405.         Rule

405    further     defines   "control"    as   "the   possession,     direct   or

indirect, of the power to direct or cause the direction of the

management and policies of a person, whether through the ownership

of voting securities, by contract, or otherwise."               Id.

                                      - 5 -
       4.   The APA Representations and Warranties

            Article 2 of the APA contains certain representations

and warranties of the Sellers.     It states in the relevant part:

            The execution, delivery and performance of
            this Agreement and the other agreements . . .
            will not result in any violation of, be in
            conflict with, constitute a default under, or
            cause the acceleration of any obligation or
            loss   of   any   rights   under   any  Legal
            Requirement,    agreement,   contract,   [or]
            instrument . . . to which the Seller is a
            party or by which the Seller is bound.

            Article 3 contains additional warranties of the Sellers

and Selling Entities. This includes Section 3.23(f), which states:

"The   consummation   of   the   Transactions    contemplated     by   this

Agreement will not . . . increase the amount of compensation or

benefits due to any individual."

       5.   The APA Indemnification,        Choice   of   Law,   and   Forum
            Selection Provisions

            Article 9 contains the APA's indemnification provisions.

Section 9.1 provides for an eighteen-month survival period for

"action[s] for a breach of the representations and warranties

contained [in the APA]," except for claims arising out of Article

2 (and several other irrelevant provisions), "which shall survive

indefinitely after the Closing."          Section 9.4 provides that the

Sellers will severally indemnify the Purchaser and its Affiliates

"against all Losses arising out of or relating to . . . any breach

or violation of the representations or warranties of such Seller

                                  - 6 -
in ARTICLE 2" and provides that the Selling Entities and Sellers

will       jointly   and   severally   indemnify   the   Purchaser   and   its

Affiliates against all losses arising out of or relating to the

breach or violation of other representations or warranties.                The

APA defines "Losses" as "claims, liabilities, obligations, costs,

damages, losses and expenses (including reasonable attorneys' fees

and costs of investigation) of any nature."

               Section 9.3 requires that claims for indemnification

exceed $50,000 and caps the maximum recovery.               But the section

also provides that "claims based upon fraud or for breach of the

Uncapped Representations [i.e., the representations and warranties

contained in Article 2] shall not be subject to [these] limits."2

               Article 10 states that the APA "shall be governed by and

construed in accordance with the internal laws of the State of

Delaware" and "[a]ny judicial proceeding arising out of or relating

to [the APA] shall be brought in the courts of the State of

Delaware."

       2   On October 8, 2013, Tech Valley and TVC gave Notice of
Claims for Indemnification against TelJet; Vermont FiberLink, LLC;
and the Pidgeons (the "TelJet Parties"). These parties settled
this claim on July 31, 2014. Tech Valley and TVC, "on behalf of
themselves    and   each   of   their   respective   subsidiaries,
predecessors, successors and assigns," released any additional
claims against the TelJet Parties and their "shareholders, equity
holders, . . . managers, [and] officers," among others.

                                       - 7 -
B.   Procedural History

          On August 19, 2016, Kelly brought suit in Massachusetts

federal court against Kaplan and Riverside for (1) breach of

contract against Riverside; (2) fraud against both defendants; (3)

quantum meruit against Riverside; (4) promissory estoppel against

Riverside; (5) unfair or deceptive acts or practices against

Riverside; (6) aiding and abetting fraud against Kaplan; and (7)

civil conspiracy by concerted action against Kaplan.

          On January 27, 2017, Riverside and Kaplan brought a

counterclaim for indemnification under Article 9 of the APA against

Kelly.   In   response,   on   February   17,   2017,   Kelly   brought   a

counterclaim for breach of the July 31, 2014 settlement agreement.

          On August 24, 2017, the defendants moved for summary

judgment on all claims and counterclaims, and Kelly moved for

summary judgment on the defendants' counterclaim.

          On December 19, 2017, the district court granted summary

judgment in favor of Riverside and Kaplan on all claims and on the

counterclaims.3   It also requested further briefing on damages.

On February 28, 2018, the district court held a hearing on damages

and requested further briefing on attorneys' fees.

          On July 25, 2019, the district court issued a Memorandum

and Order, in which the court outlined its reasoning and awarded

     3    The court also denied a motion to strike that Kelly had
brought earlier, but Kelly does not challenge this on appeal.

                                 - 8 -
damages of $250,000 (as well as pre- and post-judgment interest)

to Riverside.

           First, the court held that Kelly had waived enforcement

of   the   APA's    forum     selection    clause     by    bringing    suit    in

Massachusetts,      and     dismissing      the     counterclaim       would    be

"unreasonable and unjust . . . since the full course of discovery

and several rounds of motion practice ha[d] proceeded in [the

district] court."

           Next,    the     district    court   concluded    that   Kaplan     and

Riverside were Affiliates of the Purchaser, and so could bring

indemnification claims under the APA.               The court concluded that

(1) Kaplan and Riverside controlled TVC and TJL Acquisition, and

(2) Kaplan, Riverside, TVC, and TJL Acquisition were under the

common control of David Belluck, Riverside's sole equity owner and

managing member.

           The     district    court    concluded    that   the   existence     of

Kelly's "undisclosed, oral side-deal with Riverside to be paid a

$1 million signing bonus" would breach Article 2 (Section 2.1) and

Article 3 (Section 3.23(f)).           The court stated that the side-deal

"conflicted with" the warranty in Section 2.1 against the APA

"caus[ing] the acceleration" of any obligation and the warranty in

Section 3.23(f) that the APA would not "increase the amount of

compensation or benefits due to any individual."

                                       - 9 -
                 The district court then held that the counterclaim for

indemnification was based on breaches of Articles 2 and 3, and

that each breach was based on fraud.                   Because a claim based on a

breach of Article 2 or based on fraud is excepted from the

indemnification and survival limits, the district court rejected

Kelly's arguments that the indemnification counterclaim should be

dismissed for not reaching the $50,000 indemnification threshold

and for being time-barred.

                 The district court then concluded the counterclaim was

ripe.        The       court    found    the   harm     to     Kaplan   and    Riverside

"sufficiently probable to allow a declaratory judgment on the duty

to   indemnify         before    the     question      of     [their]   liability    was

resolved."

                 The    district     court     held    that     the     indemnification

counterclaim served as a complete defense to all of Kelly's claims

and that he would owe attorneys' fees to the defendants.4

                 Finally,      the      district      court     calculated      damages.

Although Riverside incurred over $900,000 in attorneys' fees and

costs,      it    paid    $250,000      (the   deductible       under    its   insurance

policy).5        The district court concluded that the APA limited Losses

        4 The district court also concluded that the previous
settlement agreement and release of claims did not apply to the
defendants and the indemnification counterclaim. Kelly does not
challenge this on appeal.
        5        Riverside paid for Kaplan's attorneys' fees.

                                           - 10 -
(as the term is defined in the APA) by the amount recovered under

insurance    policies      and   that    Riverside's      attorneys'     fees   were

reasonable.       The court awarded $250,000 to the defendants as well

as pre- and post-judgment interest.

            On August 23, 2019, Kelly timely appealed.

                                         II.

A.   Standard of Review

            We review the district court's grant of summary judgment

de novo.    Hightower v. City of Boston, 693 F.3d 61, 70 (1st Cir.

2012).      Because      the   parties    filed    cross-motions       for   summary

judgment, we "'view each motion, separately,' in the light most

favorable    to    the    non-moving     party,     and   draw   all    reasonable

inferences in that party's favor."                 OneBeacon Am. Ins. Co. v.

Commercial Union Assurance Co. of Can., 684 F.3d 237, 241 (1st

Cir. 2012) (quoting Estate of Hevia v. Portrio Corp., 602 F.3d 34,

40 (1st Cir. 2010)).

B.   Kelly Waived Enforcement of the Forum Selection Clause by
     Bringing Suit in Massachusetts

            Kelly     argues     that     the     defendants'    indemnification

counterclaim should be dismissed under the APA's forum selection

clause.    Kelly contends that he did not waive the clause by filing

in Massachusetts.        We disagree.

            Delaware law applies to interpreting the APA's forum

selection clause.        See FPE Found. v. Cohen, 801 F.3d 25, 32 (1st

                                        - 11 -
Cir. 2015) (applying the governing state contract law to interpret

a forum selection clause).         Delaware law requires that a court

interpret broadly the phrase "arising under or relating to."           ASDC

Holdings, LLC v. Richard J. Malouf 2008 All Smiles Grantor Retained

Annuity Tr., C.A. No. 6562-VCP, 2011 WL 4552508, at *5 (Del. Ch.

Sept. 14, 2011) (unpublished).            "[A]ny issues that 'touch on

contract rights or contract performance' should be subject to the

exclusive jurisdiction agreed to under that clause."           Id. (quoting

Parfi Holdings AB v. Mirror Image Internet, Inc., 817 A.2d 149,

155 (Del. 2002)).

               Kelly's breach-of-contract claim clearly relates to the

APA.       It touches on both rights to indemnification in the APA and

the performance of the APA.             The defendants' indemnification,

estoppel, and waiver defenses all relate to contractual rights in

the APA.       Kelly's entire claim relies on the performance of the

APA: he could not bring a claim for breach of contract without

performing the side agreement, i.e., completing the Transaction

and performing the APA.          See Huffington v. T.C. Grp., LLC, 637

F.3d 18, 22 (1st Cir. 2011) (holding that a forum selection clause

in     a    subscription    agreement    covered   claims   arising    from

misrepresentations about a "purchase [that] could not have been

made without the agreement").

               Kelly   brought   suit    in   Massachusetts,     and   that

constituted waiver.        See FPE Found., 801 F.3d at 29 (stating that

                                    - 12 -
a party may waive "through its conduct" a right to arbitrate); see

also Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974) ("An

agreement to arbitrate before a specified tribunal is, in effect,

a specialized kind of forum-selection clause . . . .").                      His

argument to us that he would be excused from that waiver under

Delaware law was not presented to the district court and so cannot

be raised for the first time on appeal.                  Arrieta-Gimenez v.

Arrieta-Negron, 859 F.2d 1033, 1037 (1st Cir. 1988).

C.     Riverside and Kaplan Were Affiliates of the Purchaser(s)

              Kelly argues that Riverside and Kaplan lack standing to

bring an indemnification claim because they are not Affiliates of

the Purchaser, TJL Acquisition.6           Although there is some dispute

about      whether   the   Purchaser    subject   to   the   analysis   is   TJL

Acquisition, or its parent company TVC, this is immaterial: TVC

wholly owns and controls TJL Acquisition, so the Affiliates of TVC

are also the Affiliates of TJL Acquisition.              In consequence, we

need not decide whether TJL Acquisition or TVC was the Purchaser.

              The defendants directly controlled TJL Acquisition and

TVC.       Kaplan was the Chairman of the Board of both TVC and Tech

Valley and "at all times orchestrated and controlled the decisions

of those companies as to whether and on what terms to sign the

APA, purchase the TelJet assets, and enter into employment terms

       6  Kelly and the defendants agree that Riverside and Kaplan
were not parties to the APA.

                                       - 13 -
with Mr. Kelly."            "Kaplan . . . was specifically authorized to

sign       agreements      for   TJL   Acquisition   exercising    all   of   TJL

Acquisition’s rights, powers, and privileges with respect to the

APA and the TelJet transaction."            Indeed, Kaplan signed the APA on

behalf of both Tech Valley and TJL Acquisition.               This degree of

control      over    TJL     Acquisition   and   TVC,   especially     over   the

Transaction at issue, clearly shows Kaplan was an Affiliate.                  See

SEC v. Platforms Wireless Int'l Corp., 617 F.3d 1072, 1088 (9th

Cir. 2010) ("[T]he explicit power to direct the specific share

transfers at issue establishes control . . . .").              Kaplan averred

under       oath    that    "Riverside     through   its   employees     thereby

controlled the Board and company decisions of both Tech Valley and

TVC" and "controlled and orchestrated the negotiation of the terms

of the APA and TelJet transaction on behalf of Tech Valley, TVC

and TJL Acquisition."

               Further, Tech Valley's LLC Agreement states that Tech

Valley is "exclusively" managed by its Board.                     Its Board is

comprised of Managers, and any Manager who is also an employee of

Riverside is defined as a "Riverside Manager."              The LLC Agreement

states that, even if the Riverside Managers comprise less than a

majority of Tech Valley's Board, they "shall be deemed to have a

sufficient number of votes to constitute a majority of the Board."7

       7  Kelly's argument that the LLC Agreement limits these
Managers to take only certain actions relies on a misreading of

                                        - 14 -
            Kelly argues that this evidence is insufficient to show

control.8    But he offers conclusory assertions, misstatements of

the   record,   and   irrelevant    arguments   that   fail   to   challenge

Kaplan's testimony or the control shown by the LLC Agreement.             An

entity need not have complete and exclusive control over another

entity to control it under Rule 405; "multiple persons can exercise

control simultaneously."     Id.9

D.    The Defendants' Indemnification Claim is Ripe

            Kelly argues that the defendants' indemnification claim

is not ripe because the underlying dispute has not been resolved.

Not so.

            The ripeness of indemnification claims is a question of

federal law.    See Valentin v. Hosp. Bella Vista, 254 F.3d 358, 363

the Agreement and so is meritless.
      8   Kelly also makes a meritless argument that, because
there was an unsigned signature block on the Assignment Agreement
for TJL Acquisition, TJL Acquisition never assigned its rights and
obligations in the APA to TVC. So, Kelly contends, because TJL
Acquisition dissolved before Kelly filed the complaint and TVC
never acquired any rights, the defendants were not Affiliates of
TJL Acquisition at the appropriate time. But this would mean that
TVC never purchased TelJet, which no party has ever asserted and
would preclude Kelly's alleged entitlement to the $1 million
payment. Kelly has not sufficiently developed this argument to
address this contradiction, and so he has waived it. See United
States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
      9   Because the defendants have shown that they directly
controlled TJL Acquisition and TVC, we need not address whether
these parties and entities were under the common control of
Belluck.

                                   - 15 -
(1st Cir. 2001).        To determine ripeness, we look to "both the

fitness of the issues for judicial decision and the hardship to

the parties of withholding court consideration."                  Mangual v.

Rotger-Sabat, 317 F.3d 45, 59 (1st Cir. 2003) (quoting Abbott Labs.

v. Gardner, 387 U.S. 136, 149 (1967)).            Under the Bankers Trust

test, we determine whether these prongs are met by looking to the

likelihood indemnification liability would exist, whether the

damages would be high, the liable party's ability to pay, and the

likelihood    another   insurance    policy     would   cover   the   damages.

Bankers Tr. Co. v. Old Republic Ins. Co., 959 F.2d 677, 680-82

(7th Cir. 1992); see also Molex Inc. v. Wyler, 334 F. Supp. 2d

1083, 1087 (N.D. Ill. 2004).

             Kelly does not challenge the Bankers Trust analysis on

the merits, and instead erroneously argues that Delaware law

governs this issue.10      He has waived any argument as to ripeness

under the applicable federal law.            See Pignons S.A. de Mecanique

v. Polaroid Corp., 701 F.2d 1, 3 (1st Cir. 1983).

     10   Further, the Delaware law to which he cites does not
necessarily bar indemnification suits before the underlying action
is decided. See, e.g., Ladenburg Thalmann Fin. Servs., Inc. v.
Ameriprise Fin., Inc., C.A. No. N16C–05–086 WCC CCLD, 2017 WL
685577, at *8 (Del. Super. Ct. Jan. 30, 2017) (unpublished) ("In
the context of indemnification, claims will 'not typically ripen
until after the merits of an action have been decided . . . .'"
(emphasis added) (quoting Yellow Pages Grp., LLC v. Ziplocal, LP,
C.A. No. N13C–10–225 JRJ CCLD, 2015 WL 358279, at *4 (Del. Super.
Ct. Jan. 27, 2015) (unpublished))).

                                    - 16 -
E.   Kelly Waived the Argument that the APA Does Not Allow for
     Indemnification of Attorneys' Fees Between Parties and
     Affiliates

             Kelly   next   argues    that    Delaware   law   requires   an

agreement to "unequivocally provide" that the indemnification of

attorneys' fees applies to "first-party litigation" and the APA

does not expressly provide for attorneys' fees in "first-party

litigation."     So, Kelly argues, he is not liable for attorneys'

fees to the defendants, whom he contends are "first-parties."             We

need not address the merits of this argument, because Kelly has

waived it.

             Despite multiple hearings and rounds of briefing on the

merits and on damages, Kelly did not raise this argument in the

district court.      He merely argued that Riverside had failed to

show it had actually paid any legal fees and later that the fees

alleged were unreasonable.           In consequence, this argument is

waived.   See United States v. Nygren, 933 F.3d 76, 88 n.3 (1st

Cir. 2019).

F.   Based on Kelly's Waivers, the Indemnification Claim Provides
     a Complete Defense to Kelly's Claims and Indemnification of
     Attorneys' Fees

             Kelly argues that the district court erred in granting

summary judgment and awarding attorneys' fees because it did not

determine whether he breached his warranties before addressing the

merits of the indemnification claim. We reject the argument, again

for waiver reasons.

                                     - 17 -
            There were several, at least two, clauses on which the

defendants argued Kelly was liable for indemnification.             Kelly's

initial brief to this court only argues about one of the possible

sources of the violation and not the other.          This is insufficient

argument for us to conclude the district court erred in finding

breach.11

            Kelly waived any argument that the side agreement did

not breach Article 2 by "be[ing] in conflict with" Section 3.23(f),

because     the   side   agreement    would    "increase   the   amount   of

compensation . . . due to [Kelly]."           Kelly represented in Article

2 that the APA would not "be in conflict with" any other agreement

and represented in Section 3.23(f) that the Transaction would not

"increase the amount of compensation or benefits due to any

individual."      Kelly does not argue in his initial brief that the

side agreement would not conflict with Section 3.23(f) and so does

not accordingly breach Article 2.              Kelly has waived any such

argument.    Pignons S.A. de Mecanique, 701 F.2d at 3.

            This breach of Article 2 entitles the defendants to

uncapped indemnification, which would cover all damages Kelly

     11   Further, Kelly's argument in his reply brief that
Article 2's "in conflict with" clause cannot apply to Article 3
representations is insufficiently developed. Zannino, 895 F.2d at
17.

                                     - 18 -
could be awarded and attorneys' fees.                Kelly's only arguments to

the contrary are meritless12 or waived.13

            Kelly    argues    that    the      indemnification    claim       cannot

accrue without a determination of breach, which is absent here

because   the   existence      of     the    side    agreement    has    not    been

established.        He contends that the district court improperly

granted summary judgment against him "for believing that he had an

extrinsic    agreement       with   [the        defendants]."      Although       the

indemnification      claim    provides      a    complete   defense     to   Kelly's

claims, his argument also implies that the district court could

not award attorneys' fees without determining whether the side

deal existed.

            Kelly did not adequately present this argument to the

district court, and so he has waived it.                    Arrieta-Gimenez, 859

F.2d at 1037.        The defendants' counterclaim asserts that Kelly

     12   Kelly contends that the APA caps his indemnification
liability at $1,804,585 and that his damages could exceed this
cap. But a breach of Article 2 is not subject to this cap, and so
his argument lacks merit.
     13    Kelly has doubly waived his argument that he has an
"unclean hands" defense against indemnification, as it is not in
Kelly's initial brief or sufficiently developed. Pignons S.A. de
Mecanique, 701 F.2d at 3; Zannino, 895 F.2d at 17. He has also
waived his argument indemnification here would be "repugnant to
the public policy of Delaware," J.S. Alberici Constr. Co. v. Mid-
West Conveyor Co., 750 A.2d 518, 520 (Del. 2000), because he did
not argue it in his initial brief, Pignons S.A. de Mecanique, 701
F.2d at 3.

                                      - 19 -
breached his warranties "[b]y failing to disclose his belief or

intention to later assert [the existence of the side agreement]."

The   defendants      argued   to   the        district   court     that   their

indemnification counterclaim was a complete defense to Kelly's

claims and that the APA required Kelly to pay their "attorneys'

fees in defense of this case, under any outcome."                   They stated

that if Kelly proved his claims, he would have to show the

existence of the side agreement, which breaches his warranties.

Even if Kelly lost on his claims, the defendants argued, he would

"still     owe[]   indemnity   because    he    nevertheless      admit[ted]   he

breached the warranties in the APA by signing the APA while

believing he had an alleged . . . side-deal with Riverside."

             Kelly did not address this argument in his memorandum in

opposition to the defendants' motion for summary judgment.                     Nor

did Kelly clearly address this argument in other summary judgment

briefings or at the summary judgment hearing.14

      14  The defendants argue that Kelly waived the argument that
the district court improperly concluded Kelly breached the
agreement by holding a "belief that he had a side-deal." Kelly
argues that he did raise this point before the district court.
But the pages he cites perfunctorily argue that the defendants
could not "circumvent the survival clause by phrasing their breach
of warranty claim as fraud," and do not clearly address the
"belief" argument.     Although Kelly baldly asserts that this
"belief" argument is "without merit" in his Memorandum of Law in
Support of His Motion for Summary Judgment, he does not clearly or
adequately address the issue.

                                    - 20 -
G.   The Indemnification Claim was Timely

           Under the plain language of the APA, claims based on

breaches of Article 2 survive indefinitely. Kelly's only arguments

that the indemnification claim was time-barred rely on his earlier

arguments that he did not breach Article 2 (or breach Section

3.23(f)   fraudulently).   We   have     already   determined   that   the

indemnification claim arises out of Kelly's breach of Article 2,

and so it was timely.

                                 III.

           On the bases stated, we affirm.

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