Court Opinion

ID: 4659209
Source: CourtListenerOpinion
Date Created: 2021-02-10 18:02:51.738083+00
Date Added: 2024-06-11T08:01:58.020475
License: Public Domain

COURT OF CHANCERY
                                  OF THE
                            STATE OF DELAWARE

                                                                    417 S. State Street
JOSEPH R. SLIGHTS III                                             Dover, Delaware 19901
 VICE CHANCELLOR                                                Telephone: (302) 739-4397
                                                                Facsimile: (302) 739-6179

                         Date Submitted: January 6, 2021
                         Date Decided: February 10, 2021

 Bradley R. Aronstam, Esquire                      James G. McMillan, III, Esquire
 Roger S. Stronach, Esquire                        Theodore A. Kittila, Esquire
 Ross Aronstam & Moritz LLP                        Halloran Farkas + Kittila LLP
 100 S. West Street, Suite 400                     5801 Kennett Pike, Suite C/D
 Wilmington, DE 19801                              Wilmington, DE 19807

       Re:    AG Resource Holdings, LLC, et al. v. Thomas Bradford Terral
              C.A. No. 2020-0850-JRS

Dear Counsel:

       This is a breach of contract action where Plaintiff, AG Resource Holdings,

LLC, seeks specific performance and damages following Defendant, Thomas

Bradford Terral’s alleged breaches of limited liability operating agreements and an

employment agreement. Terral has moved to dismiss or stay this action under

Chancery Rule 12(b)(3) in favor of first-filed litigation in Louisiana. Alternatively,

he seeks dismissal for failure to state viable claims under Chancery Rule 12(b)(6).

For the reasons explained below, Counts II and III of the Complaint will be stayed
AG Resource Holdings, LLC, et al. v. Thomas Bradford Terral
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to allow the unfettered adjudication of the identical claims pending in Louisiana, but

otherwise the Motion to Dismiss or Stay is denied.

                          I. FACTUAL BACKGROUND

         Defendant,   Terral,   co-founded   AG     Resource    Management,       LLC

(“ARM LA”), an agricultural lending business, in 2009.1 In 2015, Terral initiated a

multi-step restructuring of his business. In the first step, he sold a majority of his

interest in ARM LA to a private equity firm, Virgo Tigers LLC (“Virgo”). 2 He then

caused ARM LA’s assets to be transferred to a Delaware operating company,

AG Resource Management, LLC (“AG Management”). Terral and Virgo then

formed Plaintiff AG Resource Holdings, LLC (“AG Holdings”)—also a Delaware

limited liability company—to own and manage AG Management. They also formed

Plaintiff, Agrifund, LLC, an affiliated Delaware entity (together with

1
  Compl. ¶ 14. For purposes of Terral’s motion to dismiss under Chancery Rule 12(b)(6),
the Court accepts as true all well-pled facts in the Complaint and draws all reasonable
inferences in favor of Plaintiffs. Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97
(Del. 2002).
2
    Compl. ¶ 16.
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AG Management and AG Holdings, the “Company”).3 Finally, in 2016, Terral and

Virgo solicited another investment, this time by Nutrien Ag Solutions, Inc.,

(“Nutrien”).

         The restructuring was ultimately memorialized in two operating agreements:

the AG Resource LLC Agreement and the Agrifund LLC Agreement

(the “LLC Agreements”).4 And Terral’s ongoing role at the Company was defined

in an Employment Agreement dated September 9, 2015 (the “Employment

Agreement”).5

         The LLC Agreements and the Employment Agreement contain several

provisions that govern Terral’s conduct within the Company. First, the LLC

Agreements contain a “good faith” clause at Section 6.4.2, requiring the Company’s

managers, including Terral, to act “in good faith and within the scope of

3
    Compl. ¶¶ 7, 17–18.
4
    Compl. ¶¶ 7, 18.
5
    Compl. ¶ 8.
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[the manager’s] authority.” 6 Second, at Section 7.4, the LLC Agreements set forth

non-competition covenants preventing members from competing with the Company

or engaging in business with competitors of the Company.7 Third, the Employment

Agreement, at Sections 7(a)–(e), lays out its own set of restrictive covenants,

including a non-competition provision, a non-solicitation provision, a non-

disparagement provision, a non-interference provision and an agreement not to share

confidential information, as defined in the agreement.8         Finally, the LLC

Agreements contain both a Delaware choice of law and a Delaware choice of forum

provision at Section 11.6, while the Employment Agreement likewise contains a

Delaware choice of law provision at Section 11, but no choice of forum provision.

         On September 9, 2020, the Company terminated Terral from all positions

within the Company after discovering he was secretly planning either to compete

6
    Compl. Ex. 1–2 (“LLC Agreements”) at § 6.4.2.
7
    LLC Agreements at § 7.4.
8
    Compl. Ex. 3 (“Employment Agreement”) at §§ 7(a)–(e).
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directly    with    the Company     or otherwise     “steal   Plaintiffs’ business.”9

The termination was “for cause,” meaning, inter alia, Plaintiffs have rights to

repurchase from Terral certain incentive units under various equity agreements

between Terral and the Company.10

                            II. PROCEDURAL HISTORY

         On August 26, 2020, Terral filed a complaint against the Company in the

5th Judicial     District   Court   for   the   Parish   of   Richland,    Louisiana

(the “Louisiana court”) seeking declarations that the non-competition covenant in

his Employment Agreement is unenforceable, the Delaware choice of law provision

in the Employment Agreement is null and void under Louisiana law and the

Company did not have cause to terminate him (the “Louisiana Action”).11

The complaint in the Louisiana Action was served on the Company on

September 28, 2020. Four days later, on October 2, 2020, Plaintiffs, AG Holdings

9
    Compl. ¶¶ 2–4, 64.
10
     Compl. ¶¶ 65–66.
11
  Def.’s Opening Br. in Supp. of Mot. to Dismiss or Stay Pls.’ Verified Compl. (“OB”)
D.I. 36, Ex. B (“Louisiana Complaint”).
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and Agrifund, filed this action seeking three remedies: (a) specific performance of

the LLC Agreements and Employment Agreement, including the choice of law and

non-competition provisions in the Employment Agreement; (b) an injunction to

prevent Terral from further breaching those agreements; and (c) damages for

Terral’s breach of contract.12

         On November 5, 2020, the Court granted Plaintiffs’ Motion to Expedite.13

Two weeks later, the Court entered a status quo order governing Terral’s actions

during the pendency of this litigation.14 Meanwhile, on November 13, the Louisiana

court heard oral argument on Terral’s motion for a preliminary injunction to prevent

the Company from enforcing the Employment Agreement’s non-compete covenant

and, on November 20, the parties completed briefing on the Company’s motion to

12
  Specifically, Count I of the Delaware Complaint alleges Breach of the LLC Agreement;
Count II alleges Breach of the Employment Agreement; and Count III seeks a Declaration
that Terral’s conduct justified his termination “for cause” under the Employment
Agreement.
13
     D.I. 39.
14
     D.I. 37.
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stay the Louisiana Action in favor of this action. 15 On December 21, the Louisiana

court issued its ruling, denying the Company’s motion to stay and granting Terral’s

motion for preliminary injunction.16 In its ruling, the Louisiana court determined

that the Employment Agreement’s Delaware choice of law provision was null and

void and its non-competition covenant was unenforceable for failure to comport with

Louisiana’s statutory restrictions on such covenants.17

                                  III. ANALYSIS

           Terral seeks a stay or dismissal of the Complaint under Chancery

Rule 12(b)(3) for improper venue and dismissal under Chancery Rule 12(b)(6) for

failure to state a viable claim. I address the arguments in turn.

15
     OB at 6.
16
     D.I. 48.
17
     Id.
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      A. Forum Non Conveniens

         Under Chancery Rule 12(b)(3), this court may dismiss or stay an action upon

concluding that Delaware is an inappropriate forum to adjudicate the action.18

The standard by which the court will address a forum challenge depends upon

whether the Delaware action is first-filed or later filed in relation to actions regarding

the same or similar dispute(s) filed elsewhere. If the Delaware action is first-filed,

the court applies a standard, the so-called Cryo-Maid standard, that gives due

deference to the plaintiff’s choice of forum. 19 If the Delaware action follows the

filing of a similar action elsewhere, the court applies the discretionary McWane

standard that allows the court to defer more readily to the court in which related

litigation was first filed.20     If actions in and outside of Delaware are filed

18
   Lefkowitz v. HWF Hldgs., LLC, 2009 WL 3806299, at *3 (Del. Ch. Nov. 13, 2009)
(“Courts traditionally dismiss a matter under Rule 12(b)(3) when the contract underlying
the dispute contains an explicit forum selection clause or when, applying the doctrine
of forum non conveniens, Delaware is clearly not the appropriate forum for litigation.”).
19
     Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681 (Del. 1964).
20
  McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281
(Del. 1970).
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simultaneously, the court will engage in a traditional forum non conveniens analysis

by applying the factors set forth in Cryo-Maid. 21 In other words, in the case of

simultaneous filings, “the court may place less emphasis on filing priority and

determine by a preponderance of the evidence whether litigating in one forum or the

other would be easier, more expeditious, and less expensive.”22

         When determining whether an action filed first in time but in close temporal

proximity to another action should be given first-filed deference, or instead be

treated as simultaneously filed, the court “takes into account the circumstances

surrounding the filing of the actions.”23 “Ultimately, the exercise of the court’s

discretion will depend upon review of the relevant practical considerations keeping

in mind the broader policies of comity between the states and their courts and the

21
     HFTP Invs., L.L.C. v. ARIAD Pharms., Inc., 752 A.2d 115, 121–23 (Del. Ch. 1999).
22
  Focus Fin. P’rs, LLC v. Holsopple, 2020 WL 6390038, at *7 (Del. Ch. Nov. 2, 2020)
(“Holsopple II”); HFTP Invs., 752 A.2d at 122 (clarifying that the forum non
conveniens standard when two actions are simultaneously filed asks: “towards which of
the two competing fora do the forum non conveniens factors preponderate?”).
23
  Lima Delta Co. v. Glob. Aerospace, Inc., 2016 WL 691965, at *4 (Del. Super. Ct.
Feb. 19, 2016) (quoting Nat’l Union Fire Ins. Co. of Pittsburgh v. Turner Constr. Co.,
2014 WL 703808, at *2 (Del. Super. Ct. Feb. 17, 2014)).
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orderly and efficient administration of justice.”24 Here, the Louisiana Action was

filed earlier in the same week the Delaware action was filed, merely four days apart.

The temporal proximity of the filings and the mirror-image nature of the requests for

relief suggest the parties were in a race to file in the courthouses of their choice.

Under these circumstances, it is appropriate to afford neither party first-filer status.25

       Having determined that the Louisiana and Delaware actions should be deemed

simultaneously filed, I turn to the Cryo-Maid factors to address Terral’s forum

challenge. They are:

24
  Adirondack GP, Inc. v. Am. Power Corp., 1996 WL 684376, at *6 (Del. Ch. Nov. 13,
1996).
25
   See Nat’l Union Fire Ins., 2014 WL 703808, at *3 (“The Court may consider if the suit
was filed in anticipation of litigation when determining if deference is applicable. The
anticipatory use of a declaratory judgment action ‘for the purpose of gaining an affirmative
judgment in a favorable forum requires a closer look at the deference historically accorded
a prior filed action.’” (quoting Playtex, Inc. v. Columbia Cas. Co., 1989 WL 40913, at *4
(Del. Super. Ct. Apr. 25, 1989)); Williams Gas Supply Co. v. Apache Corp., 1991
WL 18091, at *2 (Del. Super. Ct. Feb. 12, 1991) (“Delaware courts have recognized that
the use of a declaratory judgment action to anticipate and soften the impact of an imminent
suit elsewhere for the purpose of gaining an affirmative judgment in a favorable forum
requires a closer look at the deference historically accorded a prior filed action.”
(citing Playtex, 1989 WL 40913, at *4)); Air Prods. & Chems., Inc. v. Lummus Co.,
252 A.2d 545, 547–48 (Del. Ch. 1968), rev’d on other grounds, 252 A.2d 543 (Del. 1969)).
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         (1) the existence of other litigation involving substantially similar parties or
         subject matter;

         (2) whether the controversy depends upon a question of Delaware law which
         the courts of this State more properly should decide than those of another
         jurisdiction;

         (3) the relative ease of access to proof;

         (4) the availability of compulsory process for witnesses; and

         (5) any other matters that would affect the conduct of the litigation and the
         expeditious and economic administration of justice. 26

         With these factors in mind, I am satisfied the Company’s claims against Terral

under the Employment Agreement must be stayed pending resolution of the identical

claims in the Louisiana Action. The Louisiana court has already determined that the

non-compete covenant in the Employment Agreement likely violates Louisiana

statutory law, and has further determined that the Employment Agreement’s

Delaware choice of law provision is null and void to the extent the Company would

enforce the provision to deny Terral his rights under the applicable Louisiana

statutes. This weighs strongly in favor of staying the similar claims in Delaware to

26
     Holsopple II, 2020 WL 6390038, at *6.
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allow the Louisiana court to complete its adjudication of the claims under the

Employment Agreement without the risk of competing or confounding rulings from

Delaware.27 The claims arising under the LLC Agreements, on the other hand,

present issues of internal governance and fiduciary conduct within Delaware entities.

They are not subject to Louisiana statutory law and the Company has every right to

litigate those claims in its choice of forum.

       1. The Claims under the Employment Agreement

       The parties dispute whether Delaware or Louisiana law should apply to the

Company’s claim that Terral breached his Employment Agreement. Before turning

to the merits of the choice of law dispute, it is appropriate first to consider whether

27
   Id. at *8 (noting that an “important consideration [under Cryo-Maid] is the degree to
which one jurisdiction or the other has engaged with the case and expended judicial
resources”); see also id. (“If a judge in one forum has invested actual, substantive effort in
a case, a competing forum should consider carefully whether one of its judges should make
a similar case-specific investment.”) (quoting Hamilton P’rs, L.P. v. Englard, 11 A.3d
1180, 1217 (Del. Ch. 2010)); Brookstone P’rs Acq. XVI, LLC v. Tanus, 2012 WL 5868902,
at *7 (Del. Ch. Nov. 20, 2012) (observing that if the Texas and Delaware actions proceeded
simultaneously, then the parties would be forced to engage in “piecemeal litigation” and
“duplicative efforts,” which would risk “inconsistent judgments” from the courts); Sprint
Nextel Corp. v. iPCS, Inc., 2008 WL 2737409, at *17 (Del. Ch. July 14, 2008) (taking into
account the duplication of effort and the risk of inconsistent judgments in the forum non
conveniens analysis).
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an actual conflict exists as between the two states’ laws.28 In the case of a “false

conflict,” where the laws of the competing jurisdictions are in accord, the court need

not conduct a choice of law analysis and may, instead, apply Delaware law.29

As discussed below, no such “false conflict” exists here; Louisiana and Delaware

law are miles apart on the subject of covenants not to compete.

          When employers and employees within Louisiana designate a choice of law

other than Louisiana law in their employment contract, Louisiana will enforce the

choice only in instances where the breaching party ratifies the provision after the

alleged wrongful conduct.30 No such restriction exists in Delaware, where our courts

presume that parties to a contract specifying a choice of law meant what they said

when they said it.31 Similarly, Louisiana law permits non-compete covenants only

28
  Focus Fin. P’rs, LLC v. Holsopple, 241 A.3d 784, 814 (Del. Ch. 2020) (“Holsopple I”)
(“The next step in the choice-of-law analysis is to determine if there is an actual conflict
between the laws of the different states that each party urges should apply.” (internal
quotations omitted)).
29
     Id. at 815.
30
     LA. STAT. ANN. § 23:921(A)(2) (2020).
31
     Swipe Acq. Corp. v. Krauss, 2021 WL 282642, at *2 (Del. Ch. Jan. 28, 2021).
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to the extent they are geographically limited to a single parish and temporally limited

to two years. 32 Again, Delaware law recognizes no such rigid restrictions.33

         Having determined that an actual conflict of law exists, the court next

considers the impact of any contractual choice of law. As noted, the parties to the

Employment Agreement expressly chose Delaware law. Accordingly,

         the choice of law analysis . . . involves three questions: (1) whether
         “absent the contractual agreement of the parties to import Delaware
         law, [Louisiana] law would apply[,]” (2) “whether the enforcement of
         the covenant would conflict with a ‘fundamental policy’ of
         [Louisiana’s] law” and (3) “whether [Louisiana] has a materially
         greater interest in the issues—enforcement (or not) of the contract at
         hand—than Delaware.” 34

32
     LA. STAT. ANN. § 23.921(C) (2020).
33
   FP UC Hldgs., LLC v. Hamilton, 2020 WL 1492783, at *6 (Del. Ch. Mar. 27, 2020)
(observing that Delaware courts, as a matter of common law, will generally consider the
following when determining whether a non-compete covenant is enforceable: “(1) [is the
covenant] reasonable in geographic scope and temporal duration, (2) [does it] advance a
legitimate economic interest of the party seeking its enforcement, and (3) [does it] survive
a balancing of the equities”).
34
  FP UC Hldgs., 2020 WL 1492783, at *8 (quoting Ascension Ins. Hldgs., LLC v.
Underwood, 2015 WL 356002, at *6–8 (Del. Ch. Jan. 28, 2015)).
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These well-established principles are drawn from two sections of the Restatement

(Second) of Conflict of Laws—Sections 187 and 188.35 If these narrow “questions

are answered in the affirmative, [Louisiana] law will apply notwithstanding the

choice of law provision.”36

         Here, it is clear that absent the Employment Agreement’s choice of law

provision selecting Delaware law, Louisiana law would control claims related to

Terral’s status as employee. At the outset, I note the Company concedes this point

by acknowledging in its brief, “[s]olely for the sake of argument, Plaintiffs accept

the premise, implicit in Terral’s Motion, that Louisiana law would govern but for

the agreements’ Delaware choice of law provisions.” 37 The concession is well

placed, as there is little doubt Louisiana has the most significant relationship to the

35
     RESTATEMENT (SECOND) OF CONFLICT OF LAWS (“Restatement”) §§ 187–88 (2019).
36
   FP UC Hldgs., 2020 WL 1492783, at *8; see also Ascension, 2015 WL 356002, at *2
(“[W]here the parties enter a contract which, absent a choice-of-law provision, would be
governed by the law of a particular state (which I will call the “default state”), and the
default state has a public policy under which a contractual provision would be limited or
void, the Restatement recognizes that allowing the parties to contract around that public
policy would be unwholesome exercise of freedom of contract.”).
37
     Pls.’ Answering Br. in Opp. to Def.’s Mot. to Dismiss or Stay (“AB”) D.I. 44 at 35 n.10.
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transaction and the parties as relates to claims under the Employment Agreement.38

In this regard, the court considers several factors, including: “(1) the place of

contracting, (2) the place of negotiation of the contract, (3) the place of performance,

(4) the location of the subject matter of the contract and (5) the domicile, residence,

nationality, place of incorporation and place of business of the parties.” 39 Terral is

a resident of Louisiana; the Employment Agreement was executed in Louisiana; and

Terral performed his work for the Company primarily from his office in Louisiana.40

Louisiana, therefore, has the most significant relationship to claims arising under the

Employment Agreement.

38
     See FP UC Hldgs., 2020 WL 1492783, at *9.
39
  Id. The court typically considers other factors in this analysis, but given the concession
made by the Company, I need not fully address them at this juncture. See id. (“In addition,
when engaging in the most significant relationship analysis, our courts also consider the
factors laid out in Section 6 of the Restatement, which are: (1) the needs of the interstate
and international systems, (2) the relevant policies of the forum, (3) the relevant policies
of other interested states and the relative interest of those states in the determination of the
particular issue, (4) the protection of justified expectations, (5) the basic policies
underlying the particular field of law, (6) certainty, predictability and uniformity of result
and (7) ease in the determination and application of the law to be applied.”).
40
     OB, Ex. B ¶ 20.
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      Louisiana also maintains a more compelling public policy interest in ensuring

its laws are enforced with respect to the employment rights of its citizens working

within the state. In this regard, Louisiana statutes apply to both the choice of law

provision and the non-compete covenant within the Employment Agreement.

Indeed, as noted, the Louisiana court has already determined that both provisions

violate Louisiana law. 41 LA. STAT. ANN. § 23:921(A)(2) provides that choice of law

and forum selection clauses in employment agreements are unenforceable except

where the employee ratifies the provision “after the occurrence of the incident which

is the subject of the civil or administrative action.” Additionally, LA. STAT. ANN.

§ 23.921(C) governs the enforcement of non-competition provisions, prohibiting

them in employment contracts unless they specify a particular parish within

Louisiana to which the restriction(s) apply and are cabined to two years.

41
   This is similar to FP UC Hldgs. in that, there, the Alabama court had already held the
non-compete was unenforceable under Alabama law. FP UC Hldgs., 2020 WL 1492783,
at *10 (“That the Alabama Court has already stated it would void the Grant Agreement’s
non-compete is powerful evidence to that effect.”).
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          When compared to Louisiana’s interests, Delaware’s contractarian policy

interests clearly must yield. In Holsopple II, this court noted “a sister state’s policy

interest in adopting specific legislation to govern a particular substantive area, such

as employment, must necessarily trump a generalized interest in freedom of

contract.”42 The Louisiana laws cited above are clear pronouncements by the

Louisiana legislature regarding its public policy on matters of employment and

competition. Under the circumstances, Louisiana’s interests must be respected and

enforced. 43

          Given the force of the preference for Louisiana as dictated by Cryo-Maid’s

first two factors, I need not dwell on the others. Suffice it to say, the ease of access

to proof, the availability of compulsory process, and the broad “other matters”

factors do not push the needle toward either Louisiana or Delaware. 44

42
     Holsopple II, 2020 WL 6390038, at *12.
43
     Id. at *17.
44
     Id. at *26–27.
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      Based on the foregoing, I am satisfied the Louisiana court is best suited to

address the claims under the Employment Agreement and that a stay of these claims

in Delaware is appropriate. I say stay rather than dismissal because, to the extent

the issues are not fully resolved by the Louisiana court, the parties may return to

Delaware for complete resolution.

      2. The Claims under the LLC Agreements

      The claims arising under the LLC Agreements present a different story. Those

claims are not before the Louisiana court. Specifically, the Louisiana court is not

considering whether Terral breached his contractual duty of good faith under the

LLC Agreements when disclosing information to competitors, disparaging

Company representatives or attempting to compete.

      Contrary to the claims arising under the Employment Agreement, there is no

reason under either Louisiana or Delaware law to deny the Company its right to

enforce the LLC Agreement’s Delaware choice of law and choice of forum

provisions. Even without those provisions, absent an expression to the contrary in

the documents themselves, Delaware law most certainly would apply to claims
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arising under the constitutive documents of a Delaware entity.45 Moreover, while

Louisiana may possess a public policy interest in regulating the actions of employers

toward employees within that state, Louisiana has no interest in regulating the

governance or internal affairs of a Delaware entity. And, while LA. STAT. ANN.

§ 23:921(L) provides that, under Louisiana law, non-competes within LLC

agreements will be subject to nearly identical restrictions as those within

employment contracts, 46 there is no indication that Louisiana purports to extend

those restriction to fiduciaries acting within Delaware LLCs. 47

45
     Aveta Inc. v. Cavallieri, 23 A.3d 157, 168 (Del. Ch. 2010).
46
     LA. STAT. ANN. § 23:921(L) (2020).
47
   To state the distinction most directly, the claims under the Employment Agreement rest
on Terral’s conduct as employee (regardless of whether he occupied a fiduciary status),
while the claims under the LLC Agreement rest on Terral’s status as a member of the
Company’s Board of Managers. Compl. ¶ 26. In drawing this distinction, I acknowledge
there may be some overlap in the litigation and adjudication of claims arising under the
Employment Agreement on the one hand, and the LLC Agreements on the other, and
further acknowledge there is at least some risk of inconsistent outcomes. Nevertheless, as
discussed here, Terral is alleged to have engaged in wrongful conduct as a “manager” and
“officer” of a Delaware entity. Compl. ¶ 72. The Company is entitled to litigate that claim
in this Court.
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         On the other hand, Delaware maintains a “significant and substantial interest

in overseeing the conduct of [Delaware] corporate fiduciaries.” 48 In this regard,

determining whether Terral acted in good faith, in line with his contractual fiduciary

duties, is quintessentially an internal affairs question, creating an “obligation [for

this court] to provide . . . a forum.”49

      B. The Rule 12(b)(6) Analysis

         The standard for deciding a motion to dismiss under Court of Chancery

Rule 12(b)(6) is well-settled:

         (i) all well-pleaded factual allegations are accepted as true; (ii) even
         vague allegations are “well-pleaded” if they give the opposing party
         notice of the claim; (iii) the Court must draw all reasonable inferences
         in favor of the non-moving party; and (iv) dismissal is inappropriate
         unless the plaintiff would not be entitled to recover under any
         reasonably conceivable set of circumstances susceptible of proof. 50

48
  Hamilton P’rs, 11 A.3d at 1213; Holsopple II, 2020 WL 6390038, at *9 (“[I]f the
question of Delaware law involves the internal affairs of a Delaware entity, then this Cryo-
Maid factor will weigh heavily in favor of the plaintiff’s choice of forum.”).
49
  Sternberg v. O’Neil, 550 A.2d 1105, 1125 (Del. 1988), abrogated on other grounds
by Genuine Parts Co. v. Cepec, 137 A.3d 123 (Del. 2016).
50
     Savor, Inc., 812 A.2d at 896–97 (footnotes and internal quotations omitted).
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           Section 6.4.2 of the LLC Agreements dictates that the Company’s managers,

including Terral, act “in good faith and within the scope of [the manager’s]

authority.”51 This contractual good faith standard includes an obligation on Terral’s

part to refrain from taking actions involving “bad faith, gross negligence, willful

misconduct, or actual fraud.”52 With this standard as the backdrop, the Complaint

more than adequately states a claim that Terral’s consistent distribution of Company

confidential information to competitors and disparagement of management, among

other things, constituted bad faith for which the members can hold him liable.

Indeed, the issue of Terral’s alleged bad faith presents a “factual question that is

inappropriate for resolution on a Rule 12(b)(6) motion to dismiss.” 53

           The Complaint alleges that Terral, without authorization, provided

confidential information regarding the state of the Company’s business to a number

51
     LLC Agreements at § 6.4.2.
52
     Id.
53
  Work Cap., LLC v. AlphaOne Cap. P’rs, LLC, 2020 WL 3475887, at *4 (Del. Super. Ct.
June 25, 2020); Nicholas v. Nat’l Union Fire Ins. Co. of Pittsburgh, 83 A.3d 731, 732
(Del. 2013) (same).
AG Resource Holdings, LLC, et al. v. Thomas Bradford Terral
C.A. No. 2020-0850-JRS
February 10, 2021
Page 23

of entities, primarily competitors, including CGB Enterprises, Inc. and International

Farming Corporation, in a manner that “intentionally subvert[ed] [the Company’s]

business.” 54       The Complaint also well pleads that Terral recruited Company

employees to engage in unauthorized acts and intentionally interfered with the

Company’s customer relationships.55        And, through presentations of distorted

confidential information to and other communications with Nutrien designees to the

Company Board, Terral disparaged certain Board members, suggesting these

members had engaged in conduct that was “highly destructive” to the Company.56

         The repetitive nature of these unauthorized actions, as alleged, makes it

reasonably conceivable that Terral’s conduct was intentional and willful, in violation

of the standard of conduct embodied within the LLC Agreements. 57 In other words,

54
     Compl. ¶¶ 3, 43, 46, 47, 55, 56.
55
     Compl. ¶¶ 2, 39, 41, 85.
56
     Compl. ¶ 54.
57
  Armwood v. Penco Corp., 1997 WL 720461, at *3 (Del. Super. Ct. Sept. 29, 1997)
(“Courts have found wilful or wanton conduct in many contexts; important to this case,
however, is that context in which courts have found wilful or wanton conduct in
AG Resource Holdings, LLC, et al. v. Thomas Bradford Terral
C.A. No. 2020-0850-JRS
February 10, 2021
Page 24

taking all of the factual allegations in the Complaint as true, Terral’s actions in the

course of his time as Chief Operating Officer of the Company allow a reasonable

inference that he acted in bad faith amounting to willful misconduct, in breach of

Section 6.4.2 of the LLC Agreements.

                                IV. CONCLUSION

      For the foregoing reasons, the Motion to Dismiss is DENIED as to all Counts,

but the Motion to Stay is GRANTED as to Counts II and III, as both assert claims

arising under the Employment Agreement that are properly before the court in

Louisiana.

      IT IS SO ORDERED.

                                        Very truly yours,

                                        /s/ Joseph R. Slights III

employee’s repeated violations of company policy, despite receiving warnings regarding
his misconduct.”).