Court Opinion

ID: 8406563
Source: CourtListenerOpinion
Date Created: 2022-10-28 19:02:40.421171+00
Date Added: 2024-06-11T16:47:15.900558
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

JAMES BOCOCK, VENTURI             )
ANDERSONI, LLC, JOHN N. KYLE      )
II, KRISTINA C. BRUNI, PAUL       )
DESTEFANIS, PAULA ABERLE,         )
MICHAEL DAGEN, ENTRUST            )
FREEDOM/YVONNE WOOD,              )
EQUITY TRUST/J.M. HUISINGA,       )
IRWIN PODHAJSER, JAMES            )
GALLAGHER, JONATHAN               )
HEISTEN, LINDA KLINK, MICHAEL     )
L. ROBERTS, PAVAN ANAND,          )
PHYLLIS COHEN, RONALD R.          )
TILLER, TYLER WOOD, STEPHEN       )
CLAASSEN, MICHAEL TANIELIAN,      )
FRANK NEVES, JOHN D. ROEHRS,      )
STAN V. SMITH ON BEHALF OF        )
THE STAN V. SMITH TRUST           )
DATED APRIL 30, 1993, ROBERT A.   )
BEAN, RICHARD CAREY, and          )
ALLEN WHITMORE,                   )
                                  )
            Plaintiffs,           )
                                  )
    v.                            ) C.A. No. 2021-0224-PAF
                                  )
INNOVATE CORP., HC2               )
BROADCASTING HOLDINGS INC.,       )
HC2 BROADCASTING INC.,            )
CONTINENTAL GENERAL               )
INSURANCE COMPANY, PHILLIP        )
A. FALCONE, MICHAEL J. SENA,      )
WAYNE BARR, JR., LES LEVI,        )
PAUL K. VOIGT, AND IVAN P.        )
MINKOV,                           )
                                  )
           Defendants.            )
                         MEMORANDUM OPINION

                         Date Submitted: July 20, 2022
                        Date Decided: October 28, 2022

John G. Harris, David B. Anthony, BERGER HARRIS LLP, Wilmington, Delaware;
Attorneys for Plaintiffs James Bocock, Venturi Andersoni, LLC, John N. Kyle II,
Kristina C. Bruni, Paul Destefanis, Paula Aberle, Michael Dagen, Entrust
Freedom/Yvonne Wood, Equity Trust/J.M. Huisinga, Irwin Podhajser, James
Gallagher, Jonathan Heisten, Linda Klink, Michael L. Roberts, Pavan Anand,
Phyllis Cohen, Ronald R. Tiller, Tyler Wood, Stephen Claassen, Michael Tanielian,
Frank Neves, John D. Roehrs, Stan V. Smith on behalf of The Stan V. Smith Trust,
Robert A. Bean, Richard Carey, and Allen Whitmore.

Kevin G. Abrams, J. Peter Shindel, Jr., April M. Ferraro, ABRAMS & BAYLISS
LLP, Wilmington, Delaware; Attorneys for Defendants INNOVATE Corp. (f/k/a
HC2 Holdings, Inc.), HC2 Broadcasting Holdings Inc., HC2 Broadcasting Inc.,
Michael J. Sena, Wayne Barr, Jr., Les Levi, and Ivan P. Minkov.

Martin S. Lessner, Daniel M. Kirshenbaum, M. Paige Valeski, Wilmington,
Delaware, YOUNG CONAWAY STARGATT & TAYLOR, LLP; Beth I. Z.
Boland, FOLEY & LARDNER LLP, Boston, Massachusetts; Chelsea L. Hilliard,
FOLEY & LARDNER LLP, Dallas, Texas; Attorneys for Defendant Continental
General Insurance Company.

Stephen C. Norman, Jaclyn C. Levy, POTTER ANDERSON & CORROON LLP,
Wilmington, Delaware; Eric Landau, Travis Biffar, ELLENOFF GROSSMAN &
SCHOLE LLP, Irvine, California; Attorneys for Defendant Philip A. Falcone.

Kurt M. Heyman, Aaron M. Nelson, HEYMAN ENERIO GATTUSO & HIRZEL
LLP, Wilmington, Delaware; Attorneys for Defendant Paul K. Voigt.

FIORAVANTI, Vice Chancellor
      In November 2017, HC2 Holdings, Inc. (now Innovate, Inc. or “Innovate”)

acquired a controlling stake in DTV America Corporation (“DTV America”). It

acquired that stake through a stock purchase agreement with several DTV America

stockholders, many of whom are plaintiffs in this action. Both Innovate and DTV

America were and are in the television broadcasting business.

      After the transaction closed, Innovate designated as DTV America officers

and directors certain of its or its affiliates’ officers and directors. The plaintiffs

allege that Innovate’s acquisition of control was part of a scheme by Innovate, its

affiliates, and the DTV America officers and directors to loot DTV America.

According to the alleged scheme, Innovate usurped for itself valuable corporate

opportunities that DTV America had identified, transferred DTV America broadcast

licenses to Innovate’s affiliates for little to no consideration to DTV America, and

forced DTV America to enter into agreements with Innovate that drained DTV

America of its value. Plaintiffs allege that this scheme culminated in Innovate

offering to buy the remaining shares of DTV America from the plaintiffs on the

cheap.

      The plaintiffs comprise stockholders and option holders of DTV America.

They have asserted a variety of claims, including fiduciary duty claims against

officers and directors of DTV America and Innovate and certain of its affiliates as

DTV America’s controlling stockholders. The complaint also seeks to hold these
same defendants liable under theories of aiding and abetting and civil conspiracy.

The last claim is by holders of DTV America stock options, who allege that the same

fiduciary duty breaches underlying the stockholder plaintiffs’ derivative claims give

rise to a direct tortious interference claim for devaluing the stock options.

      The defendants have moved to dismiss.            Before addressing the factual

background and the merits, a few words about the complaint and the plaintiffs’ legal

theories are in order. To put it charitably, the complaint is unfocused and short on

well-pleaded facts. It is the classic, unappetizing “pizza on the wall.” For example,

the complaint lumps all of the individual defendants together as “Conspirators.” The

complaint purports to allege claims as to dozens of events, but, as to most of them,

the complaint does not identify when they occurred, who the decision makers were,

or any of the transaction details. The complaint alleges that five of the six individual

defendants served as DTV America officers, directors, or both, at varying times, but

is vague as to the duration of their service. In other words, it is impossible to discern

who served on the board at the time of some of the challenged transactions. The

complaint alleges both direct and derivative claims covering identical conduct, but

the direct claims do not pass the straight-face test, and the plaintiffs conceded as

much by not briefing the issue.

      Delaware is a notice-pleading state. All reasonable inferences are to be drawn

in favor of the plaintiffs on a motion to dismiss. The court applies that standard here.

                                           2
None of the more than 20 plaintiffs utilized the tools at hand under 8 Del. C. § 220

to obtain basic facts about the transactions that they challenge. That failure is not

fatal, but the court is left with a complaint that for the most part lacks well-pleaded

facts from which reasonable inferences can be drawn. At the end of this opinion, a

few claims survive. Most do not. Consequently, this opinion is longer than it should

be because, “it is more time-consuming to clean up the pizza thrown at a wall than

it is to throw it.” In re TransPerfect Glob., Inc., 2021 WL 1711797, at *1 (Del. Ch.

Apr. 30, 2021), aff’d sub nom. TransPerfect Glob., Inc. v. Pincus, 2022 WL 1763204

(Del. June 1, 2022).

I.     BACKGROUND

       The facts recited in this Memorandum Opinion are drawn from the Amended

Verified Complaint (the “Complaint”)1 and documents integral thereto or otherwise

subject to judicial notice.

1
  Dkt. 30 (“Compl.”). Exhibits attached to the Complaint are cited as “Ex.” Both sides
have submitted documents that are outside the pleadings. Some of those documents are
integral to the Complaint or otherwise subject to judicial notice. Others are not. The
Defendants’ reliance on documents outside the pleadings raised the specter of converting
the motions to dismiss into motions for summary judgment and affording the Plaintffs
discovery. In re CBS Corp. S’holder Class Action & Deriv. Litig., 2021 WL 268779, at
*17 (Del. Ch. Jan. 27, 2021). The court declines to do so. Instead, the court considers only
those documents that are integral to the Complaint or otherwise subject to judicial notice.
See City Pension Fund for Firefighters & Police Officers in City of Miami v. The Trade
Desk, Inc., 2022 WL 3009959, at *9 (Del. Ch. July 29, 2022).

                                             3
          A.    The Parties

          The plaintiffs are 22 purported stockholders or option holders of DTV

America Corporation (“DTV America” or the “Company”). They are collectively

referred to as “Plaintiffs.”2 Counts I through VI are asserted on behalf of a group

defined as the “Stockholder Plaintiffs.”3 Plaintiffs James Bocock and Venturi

Andersoni, LLC (the “Derivative Plaintiffs”) represent that they have “continuously

held DTV America stock at all times pertinent to the derivative claims averred in

this action and remain stockholders of record.” 4 The “Option Holder Plaintiffs” are

John N. Kyle II, Kristina C. Bruni, Paul DeStefanis, Michael Dagen, Irwin

Podhajser, Paula Aberle, Robert A. Bean, and James Bocock.5 Many of the plaintiffs

are former officers, directors, or employees of DTV America.

          DTV America owns and operates low-power television (“LPTV”) broadcast

stations across the United States.6

2
    Compl. ¶¶ 1, 21–22.
3
  The Stockholder Plaintiffs are: James Bocock; Venturi Andersoni, LLC; Entrust
Freedom/Yvonne Wood; Equity Trust/JM Huisinga; Irwin Podhajser; James Gallagher;
Jonathan Heistein; Linda Klink; Michael L. Roberts; Pavan Anand; Phyllis Cohen; Ronald
R. Tiller; Tyler Wood; Stephen Claassen; Michael Tanielian; Frank Neves; John D.
Roehrs; Stan V. Smith on behalf of the Stan V. Smith Trust Dated April 30, 1993; Robert
A. Bean; Richard Carey; and Allen Whitmore. See Ex. 1.
4
 Compl. ¶ 91. The other Stockholder Plaintiffs do not appear to be holding themselves
out as stockholders asserting derivative claims on behalf of the Company.
5
    Id. ¶ 22.
6
    Dkt. 45 (“Pls.’ HC2 Ans. Br.”) 2; see also Compl. ¶ 29.

                                              4
           Innovate, 7 a Delaware corporation, is a publicly traded holding company with

a “diverse array of operating subsidiaries across multiple reportable segments.”8

Innovate is “the ultimate parent company of DTV America and a web of numerous

other intersecting companies.”9 Among Innovate’s wholly owned subsidiaries is

Defendant HC2 Broadcasting Holdings Inc. (“HC2 Broadcasting”), a Delaware

corporation that holds Innovate’s broadcasting assets.10 As of January 2021, HC2

Broadcasting operated over 220 broadcast television stations and owned

approximately 210 silent licenses and construction permits across 130 U.S.

markets. 11 HC2 Broadcasting, in turn, owns 100% of Defendant HC2 Broadcasting

Inc. (“HC2 Inc.”), a Delaware corporation. 12          Defendant Continental General

Insurance Company (“Continental”), a Texas corporation, was at all relevant times,

7
    See Dkt. 42 (Order Regarding Name Change of Defendant HC2 Holdings, Inc.).
8
    Compl. ¶ 6.
9
    Id.
10
     Id. ¶ 7.
11
     Id.
12
     Id. ¶ 8.

                                             5
a wholly owned subsidiary of Innovate. 13 At all relevant times, Continental owned

approximately 8% of DTV America’s common stock.14

       Innovate, HC2 Broadcasting, and HC2 Inc. are collectively referred to as the

“Innovate Defendants.” The Innovate Defendants and Continental are referred to

collectively as the “Entity Defendants.”

       The six remaining defendants (the “Individual Defendants”) are current and

former directors and officers of the Innovate Defendants. Five of them also served

at various time as directors and officers of DTV America. Outside of the time

periods described below, the specific tenure of each defendant in their alleged

fiduciary roles is not apparent from the Complaint.

       Defendant Phillip A. Falcone was the President and Chief Executive Officer

of Innovate from May 2014 to April 2020 and the President and a director of HC2

13
   Id. ¶ 9. Innovate sold Continental to Continental General Holdings LLC in a transaction
that closed on July 1, 2021. HC2 Holdings, Inc., Quarterly Report 21 (Form 10-Q) (June
30, 2021). The court may take judicial notice of this fact, which is not subject to reasonable
dispute. Omnicare, Inc. v. NCS Healthcare, Inc., 809 A.2d 1163, 1167 n.3 (Del. Ch. 2002)
(“The court may take judicial notice of facts publicly available in filings with the SEC.”).
It is not clear what happened to Continental’s equity interest in DTV America in the
transaction, but the result does not matter for this decision.
14
   Compl. ¶ 9. Continental, relying upon Innovate’s filings with the United States
Securities and Exchange Commission (“SEC”), argues that Continental owned 6.84% of
DTV’s outstanding common stock. Dkt. 39 (“Continental Mot. To Dismiss”) 5, 19. For
purposes of this decision, the court accepts the allegations of the Complaint. Whether
Continental owned 6.84% or 8% of DTV America’s outstanding stock is immaterial to the
outcome of this decision.

                                              6
Broadcasting from October 2017 to May 2020. 15 He served as a director of DTV

America from October 2017 to May 2020. 16 He also served as CEO, President, and

Chairman of the Board of DTV America starting in November 2017.17

          Defendant Michael J. Sena is currently the Chief Financial Officer of

Innovate, an executive officer and director of HC2 Broadcasting, and a director and

former Chief Financial Officer of DTV America. 18 He has served at Innovate since

June 2015 and at HC2 Broadcasting since October 2017. 19 He served as a member

of the DTV America board of directors on March 15, 2021, but the Complaint does

not allege when he first joined the board. 20

          Defendant Les Levi was the Chief Operating Officer of DTV America from

December 2017 to April 2018.21 He has served on the DTV America board of

directors since November 2017 and became the managing director of business

15
     Compl. ¶¶ 10, 99.
16
     Id. ¶ 10.
17
     Id. ¶ 17.
18
     Id. ¶ 11.
19
     Id. ¶ 12,
20
     Id. ¶¶ 12, 95.
21
     Id. ¶ 12

                                           7
strategy of DTV America in May 2020.22 Levi has been an officer of HC2 Holdings

since 2017. 23

           Defendant Ivan P. Minkov has been the Chief Financial Officer of DTV

America since April 2018 and is a current member of the board. 24 He became an

officer of HC2 Broadcasting in 2018 and a director of the same in October 2017.25

           Defendant Wayne Barr, Jr. has served as a director of Innovate since 2014 and

as its Chief Executive Officer since June 2020.26 He has served as the Chief

Executive Officer and as a director of HC2 Broadcasting since February 2021.27

Barr has also served as President of two non-party Innovate entities since 2018.28

The Complaint alleges that “[s]ince November 2017” Barr “at one time, served as

either a director, officer, or both of DTV America,” and that he was a director as of

March 15, 2021.29

           Defendant Paul K. Voigt served as senior managing director of investments

at Innovate from late 2014 to early 2018 and as a “director and/or officer of several

22
     Id.
23
     Id. ¶ 100.
24
     Id. ¶¶ 13, 17.
25
     Id. ¶ 98.
26
     Id. ¶ 15.
27
     Id.
28
     Id.
29
     Id. ¶¶ 17, 93

                                             8
[Innovate] entities” at undisclosed times.30 He is not alleged to have held any

position at DTV America at any time.

           The Complaint alleges that Barr, Minkov, Sena, and Levi were DTV America

directors at the time of the filing of the original complaint in this action on March

15, 2021. 31

           The named defendants are collectively referred to as the “Defendants.”

           B.    The Entity Defendants’ Acquisition of DTV America Stock
           In late 2015, Innovate indirectly owed a minority equity stake in DTV

America through Continental. 32        In early 2016, Falcone and Voigt, acting as

representatives of the Innovate Defendants, engaged in discussions with and

obtained confidential business information about DTV America in contemplation of

an additional equity investment in the Company.33 That information included details

of valuable business opportunities available to DTV America—specifically

“immediate, near term LPTV broadcast station purchase opportunities around the

country.” 34 The Complaint alleges that these acquisition targets were reflected in a

30
     Id.
31
     Id. ¶ 93.
32
     Id. ¶ 26.
33
     Id. ¶ 32.
34
     Id.

                                             9
“Business Plan,” but the Complaint does not identify any of the targets.35 Plaintiffs

acknowledge that Plaintiff John N. Kyle, II, DTV America’s former Chief Executive

Officer, created the Business Plan.36     The Complaint does not specify when the

Business Plan was provided to any of the Innovate Defendants. It is apparent,

however, that it was provided sometime between May 2016 and June 2017.37

           In June 2017, Innovate, through a wholly owned subsidiary, entered into

private agreements with certain DTV America stockholders, including some of the

Plaintiffs, to purchase their shares of DTV America common stock, representing

approximately 43% of all outstanding shares (the “Purchase Agreement”).38 The

transaction closed in November 2017.39 As a result of these transactions, Innovate

and its subsidiaries owned over 50% of DTV America’s common stock by the end

of 2017.

35
     Id.
36
     Dkt. 43 (“Pls.’ HC2 Ans. Br.”) 3.
37
  Compl. ¶ 32 (alleging that Falcone and others had continuous access to DTV America’s
LPTV station purchase opportunities from June 2017 to November 2017); see Pls.’ HC2
Ans. Br. Ex. A (attaching what is alleged to be the Business Plan, dated May 2016).
38
  Compl. ¶ 27; see Dkt. 38 (“HC2 Defs.’ Opening Br.”) Ex. D. The court can take judicial
notice of this document, which was filed with the SEC and is not subject to reasonable
dispute. See Del. R. Evid. 201(b); In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d
162, 169 (Del. 2006).
39
     Compl. ¶ 30.

                                          10
          At some unalleged time thereafter, Innovate entered into proxy agreements

with other stockholders allowing Innovate “at all times to maintain a controlling

majority.” 40 The Complaint contains no facts as to these agreements or the number

of shares that are subject to these agreements.

          C.      Defendants’ Alleged Misconduct

          Plaintiffs allege that once Innovate signed the Purchase Agreement in June

2017, Innovate, its affiliates, and several of the Individual Defendants began

siphoning off assets from the Company. The Plaintiffs allege that these events were

part of a scheme, led by Falcone, to acquire a majority stake in DTV America and

then loot DTV America of its assets and corporate opportunities, leading to

Innovate’s attempt to buyout the remaining minority DTV America stockholders at

a deep discount.41 In addition to Falcone, the other alleged participants in this

alleged scheme were Levi, Sena, Minkov, Barr, and Voigt, to whom the Complaint

refers as the “Conspirators.”42 Plaintiffs allege that beginning in November 2020,

the Conspirators began to “make offers to Minority Shareholders to purchases their

shares at a deep discount.”43 The allegations as to much, but not all, of the alleged

40
     Id. ¶ 116.
41
     Id. ¶ 1.
42
     Id. ¶ 31.
43
  Id. ¶ 78. There are no other allegations about this alleged “third and final step of the
Scheme.” Id. There are no allegations as to any offers, any representations about the
offers, or whether any offers were accepted.

                                           11
misconduct are sparse to nearly nonexistent. What follows is the court’s attempt to

categorize and describe the claims.

                 1.   Usurpation of Corporate Opportunities Identified in the
                      Business Plan

          Plaintiffs allege that in the period between June 2017 and December 2020,

Innovate, through subsidiaries other than DTV America, acquired over 100 LPTV

stations that had been identified as DTV America acquisition targets prior to

November 2017.44 Very few of those alleged corporate opportunities are identified

in the Complaint. For the most part, Plaintiffs do not identify which specific stations

were purchased, when they were purchased, or which Innovate subsidiaries (party

or non-party) were the purchasers. The few that are described in the Complaint are

as follows:

             • WFWC-CD Station Group. DTV America signed a letter of intent with

          Trans Star, LLC (“Trans Star”) on October 19, 2017 to acquire the WFWC-

          CD Station Group for $225,000 45. On February 8, 2018, HC2 Station Group,

          Inc., 46 an Innovate affiliate, filed an assignment for the WFWC-CD Station

44
     Id. ¶¶ 33–34.
45
     Id. ¶ 35.
46
    HC2 Station Group, Inc. (“HC2 Station Group”) is not a defendant in this action. See
id. ¶¶ 13, 15, 95, 96, 98, 100.

                                           12
           Group with the FCC, and on April 6, 2018, the FCC approved the sale of

           WFWC-CD Station Group to HC2 Station Group.47

              • Frank Digital Broadcasting.          In October 2017, DTV America

           “negotiated a deal to purchase Frank Digital Broadcasting’s LPTV stations

           for $65,000.”48 On April 15, 2018, HC2 Station Group filed an application

           with the Federal Communications Commission (the “FCC”) to purchase these

           stations for itself for the same $65,000 purchase price. 49

              • Azteca America. In November 2017, the Innovate Defendants acquired

           Azteca America, a Spanish-language television programming network (the

           “Azteca America Acquisition”).50 The Complaint alleges that the Business

           Plan identified Azteca America as a potential target.51 But the document that

           Plaintiffs attached to their answering brief and asserted to be the Business Plan

           does not mention Azteca America as a potential acquisition target. 52 Plaintiffs

           do not specify which of the Innovate Defendants purchased Azteca America.

           According to the Complaint, since the Azteca America Acquisition, DTV

47
     Id. ¶¶ 36–37.
48
     Id. ¶ 39.
49
     Id.
50
     Id. ¶ 40.
51
     Id.
52
  Pls. HC2 Ans. Br. Ex. A. Azteca America is mentioned one time in the Business Plan
as among 27 networks carried on DTV America. Id. at 13.

                                              13
          America’s stations have been “forced” to run Azteca America programming

          at “a reduced profit.” 53 Plaintiffs imply that, but for an unidentified Innovate

          affiliate’s acquisition of this company, DTV America could have and would

          have acquired Azteca America itself, which would have resulted in greater

          value to the Company. 54

                 2.   Broadcasting Licenses and Construction Permits

          Plaintiffs allege that “[s]ince 2017, over 70 licenses or construction permits

were transferred from DTV America and placed in the name of HC2 Station Group,

Inc. . . . or another [Innovate] Entity”55 for “little or no consideration to DTV

America.”56 Plaintiffs provide no details or dates for any of these license transfers.

The Complaint merely lists the station call letters, city, and state of 48 licenses.57

According to the Complaint, the Entity Defendants have begun transferring some of

these licenses back to DTV America following the commencement of this action.58

53
     Compl. ¶¶ 40, 42.
54
     Id. ¶¶ 41–42.
55
     Id. ¶ 44.
56
     Id. ¶ 43.
57
     Id. ¶ 44.
58
     Id. ¶ 45.

                                             14
                 3.   The Lowcountry Sale

          On November 11, 2019, DTV America sold two LPTV stations, W26DT-D

and WCGZ-LD, to Lowcountry 24 Media, LLC (“Lowcountry”) for two dollars (the

“Lowcountry Sales”). 59 According to an application filed with the FCC, “additional

consideration for the [Lowcountry] transaction is the extension of time granted by

[Lowcountry] to DTV America . . . in a related transaction between the parties.”60

The “related transaction,” however, did not directly involve DTV America. Instead,

it involved Lowcountry’s sale of a full power TV station to Innovate for $2.6

million.61 Seven months later, Lowcountry sold W26DT-D to a third party for

$200,000 and sold WCGZ-LD, along with two other licenses, to another third party

for over $350,000.62

                 4.   The Gray Media Sale

          On March 12, 2021, DTV America and HC2 Broadcasting entered into an

asset purchase agreement with Gray Media Group, Inc. (“Gray Media”) to sell ten

broadcasting station licenses to Gray Media for $475,000 (the “Gray Media Sale”).63

Six were DTV America licenses, and the other four had previously been transferred

59
     Id. ¶ 47.
60
     Id. ¶ 48 (modified from all capital letters in original).
61
     Id. ¶ 49.
62
     Id. ¶¶ 50–51.
63
     Id. ¶ 53.

                                                 15
from DTV America to the Entity Defendants for “no consideration.”64                     The

Complaint alleges on information and belief that the proceeds from the Gray Media

Sale “went directly to the [Entity Defendants], and DTV America received no

consideration for its licenses.”65 The Complaint alleges no facts as to whether any

of the Individual Defendants had any involvement in the transaction.

                 5.    TV-49

           On March 17, 2021, HC2 Broadcasting sold six licenses to TV-49, Inc. (“the

TV-49 Sale”). 66 DTV America originally owned and has been named as licensee of

four of those six licenses. DTV America was not a party to the asset purchase

agreement.67          Plaintiffs allege that the Entity Defendants and the so-called

Conspirators “improperly transferred control of these licenses to HC2

Broadcasting.”68 Again, the Complaint alleges no facts as to who was involved in

negotiating, approving, or effectuating the transaction.

64
  Id. The Complaint identifies these four licenses by city, state, and call letters. Id. ¶ 54
n.1.
65
   Id. ¶ 55. After the initiation of this action, HC2 Broadcasting informed the FCC that the
four stations listed as being HC2, Inc. licenses should have been listed as DTV America
licenses. Id. ¶ 56.
66
     Id. ¶ 59.
67
     Id.
68
     Id. ¶ 60.

                                             16
                 6.   Expired and Written-Off Licenses and Permits

          Plaintiffs allege that, since 2017, over 115 of DTV America’s licenses and

construction permits have expired and are worthless. 69 In addition, as of the date of

the Complaint, an additional 62 construction permits were set to expire in July

2021. 70 As a result, the alleged Conspirators “engage[d] in the large-scale selling of

DTV America assets at severely depressed prices to various other broadcasters.”71

DTV America also wrote off nearly $2 million for the impairment of FCC licenses

in 2019. By contrast, DTV America wrote off $319,557 in impaired licenses in 2017

and $176,119 in 2018. 72 The Complaint alleges no further facts about any of these

licenses and permits. The Complaint does not identify them, and there are no

allegations that any of the licenses or permits had value at the time they were written

off or were allowed to expire.

          D.     DTV America’s Technology and Intellectual Property
          Long before Innovate began discussing a transaction to acquire a controlling

interest in DTV America, the Company had developed a proprietary program

69
     Id. ¶ 81.
70
  Id. ¶ 82. The parties have not informed the court whether such expiration actually
occurred.
71
  Id. The court infers that the assets being sold were the soon-to-expire construction
permits.
72
     Id. ¶ 80.

                                           17
distribution platform named “DTV Cast.”73 DTV Cast “enabled TV programming

from a central ‘hub’ to any connected TV station in the US,” without the need for

satellite dishes.74 The DTV Cast platform “provides for a low cost of operation,

flexibility in maintenance, remote monitoring, remote operations, and the ability to

scale to hundreds of TV stations.”75 Plaintiffs allege that the Entity Defendants

appropriated and rebranded this valuable technology as “Central Cast,” an asset of

HC2 Broadcasting, without paying any consideration to DTV America. 76 Like most

of the other activities and transactions alleged to be wrongful, the Complaint does

not allege when the appropriation and rebranding occurred or offer any other facts

about the purported malfeasance. What they do allege, however, is that Innovate’s

misappropriation of the DTV Cast technology “made it possible for the [Entity

Defendants] to go on a $150,000,000 acquisition spree to purchase stations, starting

in November 2017.”77 The only reasonable inference to draw from this allegation is

that the wrongful misappropriation of DTV Cast occurred at or before the beginning

of the “acquisition spree.”

73
     Id. ¶ 73.
74
     Id.
75
     Id.
76
     Id. ¶ 74.
77
     Id. ¶ 75.

                                        18
           E.    FCC Repacking

           The FCC periodically “repacks” television stations in order to efficiently

utilize the spectrum of airwaves. 78 This practice reshuffles stations via an incentive

auction process, in which some stations voluntarily relinquish spectrum usage rights

in exchange for payment from the FCC, those rights are resold to mobile broadband

providers, and the remaining television stations are reorganized to occupy a smaller

portion of the spectrum. 79 Stations are reshuffled regardless of whether they chose

to participate in the reverse auction.80

           Plaintiffs allege that, after the Entity Defendants acquired a controlling

ownership interest in DTV America in November 2017, they “took the best open

and available channels that were repacked by the FCC from DTV America and

diverted those stations to other wholly owned subsidiaries of [Innovate].”81

Plaintiffs do not identify the channels diverted or the entities to which they were

transferred, nor do they offer facts to support their assertion that these channels were

“the best open and available channels.”

78
   Id. ¶ 76. See Comment Sought on Competitive Bidding Procedures for Broadcast
Incentive Auction 1000, Including Auctions 1001 and 1002, 20 FCC Rcd. 15750 (Feb 27,
2015) ¶ 2.
79
     Id.
80
     Id. ¶ 3.
81
     Compl. ¶ 77.

                                           19
           F.    Expense Sharing and Equity Compensation

           Plaintiffs allege that the Entity Defendants, as DTV America’s controllers,

used their control to “prop up [Innovate’s] financial position while also diluting the

[minority shareholders of DTV America].”82 According to the Complaint, the Entity

Defendants caused DTV America to enter into a “Right to Use” agreement (the

“Right to Use Agreement”).83 The Complaint offers no details as to when this

agreement was entered or its terms. The Complaint alleges that this agreement “adds

over $12 million in long-term debt payable to [Entity Defendants].” 84

           In addition to the Right to Use agreement, DTV America entered into an

“Expense Sharing Agreement” with the Entity Defendants.85 The Complaint does

not describe the terms of this agreement. Plaintiffs allege this agreement was

mentioned in the 2019 DTV America financial statements.86 The Complaint alleges

that between 2017 and 2019, DTV America’s operating expenses increased from

$7.5 million to $12.3 million, and that its total liabilities increased from $12.8

82
     Id. ¶¶ 62–63.
83
     Id. ¶ 65.
84
     Id.
85
     Id. ¶ 66.
86
     Id.

                                            20
million to $30.2 million. 87 However, DTV America only recorded an increase of

about $100,000 in gross revenues during that time. 88

           Plaintiffs allege that the Conspirators have caused DTV America to “pay[] out

large sums of share-based compensation disproportionate to DTV America’s profits

or revenue.”89          Plaintiffs allege the Company paid $1,602,879 in share-based

compensation in 2019 and $628,000 in 2018, while revenues have remained between

$4.7 million and $4.8 million between 2017 and 2019. There are no other allegations

beyond these top-line numbers. The Complaint does not identify of any recipient of

this share-based compensation or allege who approved it. Nor does the Complaint

describe the form of the share-based compensation.

           The Complaint alleges that these agreements and compensation arrangements

enabled the Entity Defendants to push expenses down to DTV America, damaging

DTV America’s financial status, and diluting Company’s minority stockholders.90

           G.    Procedural History
           Plaintiffs filed their Verified Complaint on March 15, 2021, and an Amended

Verified Complaint (the “Complaint”) on June 23, 2021.91

87
     Id. ¶ 67.
88
     Id.
89
     Id. ¶ 70.
90
     Id. ¶¶ 62–72.
91
     Dkt. 1; Dkt. 30.

                                             21
           The Complaint contains seven counts. Count I alleges that Falcone, Sena,

Levi, Barr, and Minkov (together, the “Director and Officer Defendants”) breached

their fiduciary duty of loyalty by expropriating DTV America’s assets, value, and

opportunities for the benefit of Innovate and its affiliates. Count II alleges that the

Entity Defendants, as the controlling stockholders of DTV America, breached their

fiduciary duties of loyalty to DTV America’s minority stockholders by “steal[ing]

numerous business opportunities that rightfully belonged to DTV America.”92

Count III is a direct fiduciary duty claim against the Director and Officer Defendants

for their involvement in the “Scheme.”93 Count IV is a derivative breach of fiduciary

duty claim and corporate waste claim against the Director and Officer Defendants

for permitting the sale of DTV America licenses for inadequate consideration and

allowing other DTV America licenses to expire. Count V is a civil conspiracy claim

against all Defendants for “engag[ing] in overt acts in furtherance of the

conspiratorial Scheme” to loot DTV America.94 The Complaint alleges all of the

Defendants engaged in acts in support of the alleged scheme, “all of which were

willful violations of their fiduciary duties.” 95 Count VI alleges the Entity Defendants

92
     Compl. ¶ 118.
93
     Id. ¶ 124.
94
     Id. ¶ 133.
95
     Id.

                                          22
aided and abetted the Director and Officer Defendants’ breaches of fiduciary duties.

Finally, Count VII is asserted solely by the Option Holder Plaintiffs. It alleges that

all Defendants tortiously interfered with the Option Holder Plaintiffs’ “prospective

contractual interests relating to the Options” and “intentionally and improperly

interfered with the Option Holders’ interests and expectations relating to the

Options.” 96

         All Defendants have moved to dismiss the Complaint. All Defendants seek

dismissal under Court of Chancery Rule 12(b)(6) for failure to state a claim.

Continental additionally argues that the Complaint must be dismissed as to it for lack

of personal jurisdiction and failure to plead demand futility.97 Following argument

on the motions, the parties filed supplemental submissions in response to questions

from the court at and after oral argument.98 The last submission was filed on July

20, 2022. The court took the matter under submission as of that date.

96
     Id. ¶¶ 147–48.
97
   Dkt. 35–39. The Innovate Defendants, Sena, Barr, Levi, and Minkov filed one motion
to dismiss, which Voigt and Falcone joined. Continental filed its own motion to dismiss
and supporting briefs.
98
    Dkt. 55. Despite asserting several derivative claims on behalf of DTV America,
Plaintiffs have not named the Company as a nominal defendant in this case. See 1 Donald
J. Wolfe & Michael A. Pittenger, Corporate and Commercial Practice in the Delaware
Court of Chancery § 11.06[e], at 11-176 (2d. ed. 2021) (“The general rule in derivative
litigation is that the entity on whose behalf Plaintiff asserts a claim is an indispensable
party.”). Both parties agree that the Company can later be added as an indispensable party
pursuant to Court of Chancery Rule 19(a). See Dkt. 60–61. For purposes of deciding the
pending motions to dismiss, the court need not join the Company at this time.

                                            23
II.      ANALYSIS

         A.     Plaintiffs Have Not Established Personal Jurisdiction over
                Continental.

         Continental has moved to dismiss the Complaint for lack of personal

jurisdiction under Court of Chancery Rule 12(b)(2).99 Personal jurisdiction is a

threshold issue that must be resolved before considering the merits of the claims.

Reid v. Siniscalchi, 2018 WL 620475, at *12 (Del. Ch. Jan. 30, 2018). The court

begins its analysis here.

         Once a defendant moves to dismiss pursuant to Rule 12(b)(2), the plaintiff

bears “the burden to show a basis for the Court’s jurisdiction over the nonresident

defendant.” Sprint Nextel Corp. v. iPCS, Inc., 2008 WL 2737409, at *5 (Del. Ch.

July 14, 2008). In deciding a Rule 12(b)(2) motion, “the court may consider the

pleadings, affidavits, and any discovery of record.” Ryan v. Gifford, 935 A.2d 258,

265 (Del. Ch. 2007). Plaintiffs submitted no affidavits to establish jurisdiction over

Continental, served no discovery in aid of establishing personal jurisdiction over

Continental, and did not argue in their answering brief that discovery was necessary

to establish jurisdiction. Where, as here, “no evidentiary hearing has been held,

plaintiffs need only make a prima facie showing of personal jurisdiction, and the

99
     Dkt. 39.

                                         24
record is construed in the light most favorable to the plaintiff.” Id. (internal

quotations omitted).

         Continental is a nonresident defendant incorporated in the state of Texas.100

It is not alleged to have conducted business in or otherwise have a connection with

this forum. In response to the motion to dismiss, Plaintiffs assert that jurisdiction

over Continental is proper under the conspiracy theory of jurisdiction. 101

         Conspiracy is not an independent basis for personal jurisdiction; it merely

provides a rubric whereby the actions of a co-conspirator may “create sufficient

minimum contacts with Delaware to satisfy the long-arm statute and due process.”

Lacey v. Mota-Velasco, 2020 WL 5902590, at *6 (Del. Ch. Oct. 6, 2020). To obtain

personal jurisdiction over an alleged conspirator who is absent from the forum state,

a plaintiff must make a factual showing that:

         (1) a conspiracy to defraud existed; (2) the defendant was a member of
         that conspiracy; (3) a substantial act or substantial effect in furtherance
         of the conspiracy occurred in the forum state; (4) the defendant knew
         or had reason to know of the act in the forum state or that acts outside
         the forum state would have an effect in the forum state; and (5) the act
         in, or effect on, the forum was a direct and foreseeable result of the
         conduct in furtherance of the conspiracy.

Istituto Bancario Italiano SpA v. Hunter Eng’g Co., Inc., 449 A.2d 210, 225 (Del.

1982). “Delaware courts construe this test narrowly and require a plaintiff to assert

100
      Compl. ¶ 9.
101
      Id. ¶ 24; Dkt. 44 (“Pls.’ Continental Ans. Br.”) at 2.

                                                25
specific facts, not conclusory allegations, as to each element.” Hartsel v. Vanguard

Gp., Inc., 2011 WL 2421003, at *10 (Del. Ch. June 15, 2011), aff’d, 38 A.3d 1254

(Del. 2012).

         Continental argues that Plaintiffs fail to allege facts to support any of the five

elements of the Istituto Bancario test,102 but focuses its argument on elements two

and three. The court agrees that Plaintiffs have failed to make a prima facie showing

to support the second and third elements. 103 The Complaint contains no well-

pleaded factual allegations that Continental was a member of any conspiracy.

Continental, a wholly owned subsidiary of Innovate, owned approximately 8% of

DTV America’s voting stock. Continental’s ownership of DTV America stock is

the only specific allegation in the Complaint as to Continental.

         There are no allegations that anyone at Continental communicated with

anyone at Innovate, its other affiliates, or any of the Individual Defendants

concerning any of the acts alleged in the Complaint. The Complaint specifically

defines the “Conspirators” as Falcone, Levi, Sena, Minkov, Barr, and Voigt.

102
      Dkt. 39 (“Continental’s Opening Br.”) 8
103
    Additionally, Continental asserts that it should be dismissed from this case because: (i)
the claims asserted against it are derivative in nature and Plaintiffs did not plead demand
futility; (ii) Plaintiffs failed to state a cognizable claim under Court of Chancery Rule
12(b)(6) by failing to allege any wrongful act by Continental; and (iii) Plaintiffs failed to
allege that Continental was part of the Innovate “control group.” Id. 9–25. Because this
court finds that it lacks personal jurisdiction over Continental, this opinion does not address
Continental’s additional grounds for dismissal.

                                                26
Continental is not among them. There are no allegations that any of the alleged

Conspirators served as an officer or director of Continental or that Continental ever

voted its shares of DTV America. In sum, the Complaint is bereft of any well-

pleaded facts to establish that Continental participated in any conspiracy.

      The Complaint also lacks allegations to support a prima facie showing as to

the third element of the conspiracy theory test, i.e., a “substantial act or substantial

effect in furtherance of the conspiracy” that occurred in this state. See Altabef v.

Neugarten, 2021 WL 5919459, at *8 (Del. Ch. Dec. 15, 2021) (“A conspiracy is not

an independent jurisdictional hook; there must still be an anchoring Delaware act.”);

Lacey, 2020 WL 5902590, at *7 (“Even assuming that [the defendant] was a part of

a conspiracy, in order to establish jurisdiction the Plaintiff would have to allege that

a substantial act in furtherance of that conspiracy was taken in Delaware.”). Under

the Istituto Bancario framework, any act by a member of the conspiracy is attributed

to all of the members of the conspiracy. Istituto Bancario, 449 A.2d at 225; accord

O’Gara v. Coleman, 2020 WL 752070, at *13 (Del. Ch. Feb. 14, 2020). The

Complaint fails to make a prima facie showing that any act or substantial effect of

the alleged conspiracy occurred in Delaware.

      The conspiracy theory of jurisdiction applies to a “defendant who has so

voluntarily participated in a conspiracy with knowledge of its acts in or effects in the

forum state.” Istituto Bancario, 449 A.2d at 225. There are no allegations that any

                                          27
act or substantial effect of the alleged conspiracy occurred in Delaware, and there is

certainly no allegation that Continental knew of any acts or effects having occurred

in Delaware. Cf. Matthew v. Fläkt Woods Gp. SA, 56 A.3d 1023, 1028–29 (Del.

2012) (holding that the complaint supported an inference that a non-resident

defendant knew that the corporation was a Delaware entity, that a certificate of

dissolution had been filed in Delaware, and that co-conspirators intended to continue

the business after dissolution).

      The Plaintiffs’ decision to lump Continental together with the other Innovate

Defendants cannot satisfy their pleading obligation to make a prima facie showing

of personal jurisdiction over Continental.       Delaware respects the corporate

separateness of individual entities. Pauley Petrol. Inc. v. Cont’l Oil Co., 239 A.2d

629, 633 (Del. 1968). As Vice Chancellor Glasscock recently decided in Lacey,

merely invoking a conspiracy theory of jurisdiction among entities in the capital

structure of a controlling stockholder is not enough to establish jurisdiction over a

non-resident defendant. Lacey, 2020 WL 5902590, at *7–8; see also Goodyear

Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 930 (2011) (“[M]erging parent and

subsidiary for jurisdictional purposes requires an inquiry ‘comparable to the

corporate law question of piercing the corporate veil.’”) (quoting Brilmayer &

Paisley, Personal Jurisdiction and Substantive Legal Relations: Corporations,

Conspiracies, and Agency, 74 Cal. L. Rev. 1, 14, 29–30 (1986)). Plaintiffs have not

                                         28
argued that the court should disregard Continental’s status as a separate entity and,

instead, treat all of the entity defendants as a unitary business subject to personal

jurisdiction in Delaware. They have forfeited any right to do so by not briefing the

issue, and the court does not consider it here.

       The Complaint does not allege that any substantial act or substantial effect in

furtherance of the conspiracy occurred in Delaware—not by Continental or any other

defendant. Nor did the Plaintiffs’ answering brief identify any acts or effects having

occurred in Delaware. 104 Having failed to make a prima facie showing on this

element of the conspiracy theory test, Plaintiffs are not entitled to pursue their claims

104
     At oral argument, Plaintiffs asserted for the first time a possible “act” subjecting
Continental to jurisdiction in this court: “[T]he act here that’s alleged is the act of
controlling a Delaware corporation, which is DTV [America].” Dkt. 56 (“Hrg. Tr.”) 37.
This new argument, which was not briefed, is waived. See Emerald P’rs v. Berlin, 726
A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”); see also Winshall
v. Viacom Int’l, Inc., 55 A.3d 629, 642 (Del. Ch. 2011) (ruling that an argument raised for
the first time at a hearing was “not fairly or timely presented and was waived”), aff’d, 76
A.3d 808 (Del. 2013). Nor did Plaintiffs support this argument with any legal authority.
At argument, Plaintiffs cited Hart Holding Co. Inc. v. Drexel Burnham Lambert Inc., 593
A.2d 535 (Del. Ch. 1991), in support of their newly spun basis for jurisdiction. Even if the
court were to consider this untimely argument, Hart Holding is inapposite. There, the court
permitted discovery into the question of jurisdiction over a non-Delaware conspirator
where it appeared that the “operative events critical to the success of the alleged conspiracy
. . . did involve actions in this state.” Id. at 542. Those acts were the effectuation of a
merger involving a Delaware corporation and perhaps the issuance of shares upon exercise
of warrants. Id. The Plaintiffs do not allege any such acts here. See Lacey, 2020 WL
5902590, at *7–8 (granting a motion to dismiss filed by the non-resident parent of the
controlling stockholder where the plaintiff’s conspiracy theory of jurisdiction failed to
allege any acts in furtherance of the conspiracy having occurred in Delaware).

                                             29
against Continental. Accordingly, Continental’s motion to dismiss for lack of

personal jurisdiction is granted.

      B.     Claims Accruing Before March 15, 2018 Are Time-Barred.
      Defendants have moved to dismiss several of Plaintiffs’ claims as untimely

under the doctrine of laches. “Laches is an affirmative defense that the plaintiff

unreasonably delayed in bringing suit after the plaintiff knew of an infringement of

his rights, thereby resulting in material prejudice to the defendant.” U.S. Cellular

Inv. Co. of Allentown v. Bell Atl. Mobile Sys., Inc., 677 A.2d 497, 502 (Del. 1996).

The party asserting laches has the burden of establishing every element of the

defense. See Hudak v. Procek, 806 A.2d 140, 154 (Del. 2002) (“[T]he burden to

prove the elements of laches—both delay and prejudice to defendants—rests upon

the defendants.”); see also Ct. Ch. R. 8(c) (stating that affirmative defenses such as

laches shall be “set forth affirmatively”).

      Although laches is “not ordinarily well-suited for treatment” at the motion to

dismiss stage, the court may dismiss a complaint on grounds of laches if “it is clear

from the face of the complaint that an affirmative defense exists and that the plaintiff

can prove no set of facts to avoid it.” Reid v. Spazio, 970 A.2d 176, 183 (Del. 2009);

see Buerger v. Apfel, 2012 WL 893163, at *4 (Del. Ch. Mar. 15, 2012) (recognizing

that laches can be applied at the pleadings stage if “the complaint itself alleges facts

                                          30
that show that the complaint is filed too late”) (quoting Kahn v. Seaboard Corp., 625

A.2d 269, 277 (Del. Ch. 1993).

         “Absent some unusual circumstances, a court of equity will deny a plaintiff

relief when suit is brought after the analogous statutory period.” U.S. Cellular, 677

A.2d at 502; see also Kraft v. WisdomTree Inv., Inc., 145 A.3d 969, 973–83 (Del.

Ch. 2016) (providing the applicable framework in this court for determining whether

legal and equitable claims are time-barred). The parties do not dispute that the

presumptive limitations period for all of the Plaintiffs’ claims is three years. See 10

Del. C. § 8106.105 The three-year limitations period under Section 8106 begins to

run at the time of the wrongful act giving rise to the claim, “even if the plaintiff is

ignorant of the cause of action.” S’holder Representative Servs. LLC v. Alexion

Pharm., Inc., 2021 WL 3925937, at *5 (Del. Ch. Sept. 1, 2021).

         Plaintiffs’ initial complaint was filed on March 15, 2021.106 Thus, any claims

accruing before March 15, 2018 are time-barred unless the Plaintiffs can establish a

105
    See Pls.’ HC2 Ans. Br. 15 (conceding that “[e]ach of Plaintiffs’ claims is subject to an
analogous three-year statutory limitations period”); see also In re Sirius XM S’holder
Litig., 2013 WL 5411268, at *4 (Del. Ch. Sept. 27, 2013) (applying the statute of
limitations by analogy to a breach of fiduciary duty claim); Dubroff v. Wren Hldgs., LLC,
2011 WL 5137175, at *12 (Del. Ch. Oct. 28, 2011) (applying the statute of limitations by
analogy to breach of fiduciary duty and aiding and abetting claims); BTIG, LLC v. Palantir
Techs., Inc., 2020 WL 95660, at *3 (Del. Super. Ct. Jan. 3, 2020) (applying the three-year
statute of limitations to tortious interference and civil conspiracy claims).
106
      Dkt. 1.

                                            31
recognized exception that would toll the running of the statute of limitations. In re

Primedia, Inc. S’holders Litig., 2013 WL 6797114, at *11 (Del. Ch. Dec. 20, 2013).

      Plaintiffs invoke the doctrine of equitable tolling to avoid the presumptive

limitations period. “Under the theory of equitable tolling, the statute of limitations

is tolled for claims of wrongful self-dealing . . . where a plaintiff reasonably relies

on the competence and good faith of a fiduciary.” Weiss v. Swanson, 948 A.2d 433,

451 (Del. Ch. 2008). Under the equitable tolling doctrine, the limitations period

ceases to run only until “the plaintiff is objectively aware of the facts giving rise to

the wrong, i.e. on inquiry notice.” Id.

      When a plaintiff invokes equitable tolling, it does not enjoy the plaintiff-

friendly standard under Court of Chancery Rule 12(b)(6), and the court is not

required to draw plaintiff-friendly inferences when determining whether the

pleadings support tolling. Eni Hldgs., LLC v. KBR Gp. Hldgs., LLC, 2013 WL

6186326, at *11 (Del. Ch. Nov. 27, 2013). Plaintiffs bear the burden of “plead[ing]

facts supporting the applicability of that exception.” State ex rel. Brady v. Pettinaro

Enters., 870 A.2d 513, 524 (Del. Ch. 2005).

      The reason for this [heightened pleading] requirement is plain: having
      discovered the facts sufficient to bring an action, a [plaintiff] is
      uniquely aware of the circumstances which caused it to fail to do so in
      a timely manner; consequently, it bears the burden of pleading with
      specificity the reasons that the defendant should not enjoy the
      protections of the statutorily-imposed (or bargained-for) limitations
      period.

                                          32
Eni Holdings, 2013 WL 6186326, at *11. Therefore, Plaintiffs must offer facts to

show when they “learned of the [challenged transaction] . . . ; when [Plaintiffs] had

notice of facts concerning possible unfairness of the terms; and the reasonable steps

[Plaintiffs] took to oversee [their] investment.” Buerger, 2012 WL 893163, at *4

(quoting Kahn v. Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. 1993)).

       Plaintiffs have not pleaded when they learned of any of the Defendants’

wrongful conduct. In their briefing, the Stockholder Plaintiffs merely assert that

they “rel[ied] on the supposed good faith and competency of the [Director and

Officer Defendants] and . . . therefore justifiably assumed Defendants were not

engaging in wrongful self-dealing to the ongoing detriment of DTV America and its

minority stockholders.” 107 This is not enough to satisfy the Plaintiffs’ burden.

“Even where a defendant is a fiduciary, a plaintiff is on inquiry notice when the

information underlying plaintiff’s claim is readily available.” In re Dean Witter

P’rship Litig., 1998 WL 442456, at *8 (Del. Ch. July 17, 1998); accord Erisman,

2021 WL 6134034, at *14. The Plaintiffs do not allege or indicate in their answering

107
    Pls.’ HC2 Ans. Br. 16. At oral argument, Plaintiffs pointed to two paragraphs
referencing financial statements as possible markers for inquiry notice: “So the complaint
alleges that the plaintiffs learned of the alleged misconduct or wrongful conduct concerning
the expense sharing agreement by reviewing financial statements that pertain to that year
and they did so. And the statements were for 2018, so they were for calendar year 2018
looking back. So that suggests to me, and I think a reasonable inference can be drawn that
those statements were reviewed after 2018, or after at least March 15, 2018, which the
defendants say is the witching date.” Hrg. Tr. 54:03–14.

                                            33
brief when they were on notice of any of their claims that accrued outside the three-

year limitations period. Based on the Complaint, it is apparent that Plaintiffs learned

of their claims by reviewing publicly available FCC filings.                The Plaintiffs

confirmed at oral argument that they obtained information supporting their claims

from FCC filings,108 but they never alleged or otherwise disclosed when the

Plaintiffs learned of that information. Nor have the Plaintiffs alleged any reasonable

steps that they took to monitor their investment in the Company. 109

         The unfocused, disjointed allegations of the Complaint lack sufficient

information to determine when many claims accrued. For example:

         • The Complaint alleges that over 70 broadcasting station licenses or

            construction permits were wrongfully transferred from DTV America to

            unidentified Innovate entities (the “License and Permit Transfers”). 110 The

            Complaint merely asserts, without elaboration, that the Licenses and

108
      Hrg. Tr. 50:15–20.
109
   In this case, many of the Plaintiffs are former DTV America executives. For example,
Kyle, Bocock, Dagen, and DeStefanis were all directors of DTV America as of October
14, 2016. DTV America Corp., Notice of Exempt Offering of Securities (Form D) (Oct.
14, 2016) (signed by Kyle as “Chief Executive Officer” of DTV America). The court can
take judicial notice of these facts which are not subject to reasonable dispute. See Hughes,
897 A.2d at 170 (“This Court has recognized that, in acting on a Rule 12(b)(6) motion to
dismiss, trial courts may consider hearsay in SEC filings to ascertain facts appropriate for
judicial notice under [Delaware Rule of Evidence] 201.” (internal quotations omitted)).
110
      Compl. ¶¶ 43–44.

                                            34
             Permit Transfers have occurred “since 2017.”111 The Complaint merely

             lists approximately 28 of these licenses by call letters and city and state of

             location. Otherwise, there are no facts as to when the transfers occurred.

          • The Complaint alleges that Innovate subsidiaries acquired “more than 100

             LPTV stations” that were previously identified for acquisition by DTV

             America.”112 The Complaint states that these acquisitions took place

             “between June 2017 and December 2020.” 113

          • The Complaint alleges that “[s]ince 2017, over 115 of DTV America’s

             licenses and construction permits have expired and [become]

             worthless.”114 That is the entire sum and substance of this allegation.

          • The Complaint’s Repacking allegations assert that Innovate entities

             arrogated DTV America’s “best open and available channels” at some time

             “[a]fter . . . November 2017.” 115 There are no other allegations as to when

             this occurred.

          • Plaintiffs assert that the Innovate Defendants are exploiting DTV America

             financially through a Right to Use Agreement, Expense Sharing

111
      Id. ¶ 44 (emphasis added).
112
      Id. ¶ 34.
113
      Id. (emphasis added).
114
      Id. ¶ 81 (emphasis added).
115
      Id. ¶ 77 (emphasis added).

                                             35
             Agreement, and Innovate’s position as a large minority investor. 116 No

             specific dates are provided for this alleged exploitation. Plaintiffs rely,

             however, upon the financial statements for the years 2018 and 2019.117

             There are no allegations as to when the Right to Use agreement was

             entered. The Complaint alleges that the Expense Sharing Agreement was

             entered in 2018.118

          The court is not able to determine, at this stage, when each of the claims

accrued, but many are alleged to have accrued more than three years before the filing

of the Complaint. As to any claims concerning pre-March 15, 2018 conduct, the

Plaintiffs’ claims are time-barred and dismissed, except as discussed below.

          As to certain claims, the Complaint provides sufficient facts to establish the

accrual date. For example, Plaintiffs allege that Innovate “acquired Azteca America

for themselves” in “November 2017.”119 Plaintiffs allege that the “HC2 Entities

usurped the opportunity” and “DTV America was in the best position to take

advantage of the Azteca America opportunity.” 120 The crucial event within this

allegation is the wrongful acquisition of Azteca America, which occurred in

116
      Id. ¶¶ 62–72.
117
      Id. ¶¶ 66, 67, 70, 71.
118
      Id. ¶ 71.
119
      Id. ¶ 40.
120
      Id. ¶ 42.

                                            36
November 2017.          This date is four months outside the analogous statute of

limitations for Plaintiffs’ claims.

          Dismissal of this claim is appropriate because “it is clear from the face of the

complaint that the claims are time-barred.” Akrout v. Jarkoy, 2018 WL 3361401, at

*11 (Del. Ch. July 10, 2018) (citation omitted). Plaintiffs have not pleaded any fact

supporting equitable tolling as to this claim. Dismissal is therefore appropriate. See,

e.g., Chertok v. Zillow, Inc., 2021 WL 4851816, at *7 (Del. Ch. Oct. 18, 2021)

(granting motion to dismiss complaint as time-barred), aff’d, 2022 WL 1789337

(Del. June 1, 2022); Pettinaro, 870 A.2d at 533–34 (same).

          Plaintiffs’ claims as to DTV Cast are also time-barred. The Complaint alleges

that the Entity Defendants, “under the direction of the Conspirators, rebranded DTV

Cast as ‘Central Cast’ and appropriated it for HC2 Broadcasting.”121 The Complaint

does not specify when this appropriation occurred. Nevertheless, the Complaint

acknowledges that it happened more than three years before Plaintiffs filed their

original Complaint. This conclusion is drawn from the Complaint’s allegation that

the misappropriation of DTV Cast “made it possible for the [Innovate Defendants]

to go on a $150,000,000 acquisition spree to purchase stations, starting in November

2017.” 122 Therefore, the misappropriation of DTV Cast must have occurred prior to

121
      Id. ¶ 74.
122
      Id. ¶ 75 (emphasis added).

                                             37
that date, which is outside the analogous three-year limitations period. Accordingly,

all of Plaintiffs’ claims arising from the DTV Cast misappropriation are time-barred

and must be dismissed. 123

         The motion to dismiss the claim alleging usurpation of a corporate opportunity

to acquire stations from Frank Digital Broadcasting is denied. The Complaint

alleges that DTV America negotiated a deal to acquire those stations in October 2017

and that on April 15, 2018, the HC2 Station Group filed an application with the FCC

to purchase those licenses. Although the April 15, 2018 application is within the

three-year limitations period, the Innovate Defendants argue that this claim is,

nevertheless, time-barred. The Innovate Defendants contend this claim accrued on

March 12, 2018. To support that argument, the Innovate Defendants have submitted

a copy of the asset purchase agreement between HC2 Station Group and Frank

Digital Broadcasting, which indicates that it is “entered into as of” March 12,

2018. 124 The agreement is dated “as of” three years and three days prior to the filing

of the original Complaint.

         Under the doctrine of equitable tolling, the statute of limitations is tolled only

until the plaintiff discovers or, exercising reasonable diligence, should have

123
   Plaintiffs’ claims based on the following events are not time-barred: (i) the November
11, 2019 Lowcountry Sales; (ii) the March 12, 2021 Gray Media Sale; and (iii) the March
17, 2021 TV-49 Sale.
124
      HC2 Defs.’ Opening Br. Ex. E.

                                             38
discovered her injury. Dean Witter, 1998 WL 442456, at *6. Even considering the

asset purchase agreement as integral to the Complaint, the document does not show

when it was actually executed. There is also no indication or explanation that it was

available to the Plaintiffs before March 15, 2018 so as to put them on inquiry notice

of their claim. Id.125 Given the close proximity of the date of the contract to the

outside date of the statute of limitations period, the court cannot conclude at this

stage that the Plaintiffs were on inquiry notice of this claim before March 15, 2018.

Accordingly, the motion to dismiss the corporate opportunity claim concerning the

Frank Digital Broadcasting transaction on grounds of laches is denied.

         The usurpation of DTV America’s opportunity to acquire the WFWC-CD

Station Group stands on a different footing. DTV America signed a letter of intent

to acquire the WFWC-CD Station Group on October 19, 2017. The Plaintiffs allege

that on February 8, 2018, Innovate affiliate HC2 Station Group filed an assignment

with the FCC for the WFWC-CD Station Group, and on April 6, 2018, the FCC

approved the sale of WFWC-CD Station Group to HC2 Station Group.126 Plaintiffs

do not allege, as they must when asserting equitable tolling, when they were on

inquiry notice of this claim. Dean Witter, 1998 WL 442456, at *6. The basis of this

125
   The HC2 Defendants argue that this agreement was disclosed in public filings with the
FCC, but they do not state when it was filed and they have not attached the FCC filing with
their brief. HC2 Defs.’ Opening Br. 11.
126
      Compl. ¶¶ 35–37.

                                            39
claim—the February 8, 2018 assignment to HC2 Station Group—was publicly filed

with the FCC. Plaintiffs also acknowledged that they “were able to inform ourselves

of a possible claim . . . by virtue of searching the FCC filings.” Hr’g Tr. 50.

      The February 8, 2018 publicly filed notice of assignment was a red flag that

WFWC-CD Station Group was not being acquired by DTV America, but rather HC2

Station Group, an Innovate affiliate. Even if Plaintiffs did not know that HC2 Station

Group was not controlled by Innovate (then HC2 Holdings, Inc.), the FCC filing put

them on reasonable notice that DTV America’s letter of intent to acquire the WFWC-

CD Station Group was not heading toward closing.               A reasonably prudent

stockholder of DTV America in Plaintiffs’ position would have known enough at

that point to put them on notice of the need to undertake further inquiry. See U.S.

Cellular, 677 A.2d at 504 (holding plaintiff had notice of claims based on public

filings with the FCC). The information necessary to put the Plaintiffs on inquiry

notice was contained in one document. This is not a situation like Weiss, where the

stockholder would have needed to cull through several public filings “then conduct

a statistical analysis in order to uncover the alleged malfeasance.” 948 A.2d at 452;

see also Carsonaro v. Bloodhound Techs., Inc., 65 A.3d 618, 646 (Del. Ch. 2013)

(rejecting argument that documents filed with the Delaware Secretary of State,

which the plaintiffs would have been required to purchase, established inquiry notice

and, even then, the content of the filings was insufficient to put plaintiffs on inquiry

                                          40
notice). Accordingly, Plaintiffs’ corporate opportunity claim regarding the WFWC-

CD Station Group is time barred.

      C.     Failure to State a Claim

      All Defendants have moved to dismiss under Court of Chancery Rule

12(b)(6). In addressing a motion to dismiss on this basis:

             (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.

Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (internal citations and

quotations omitted). Although these pleading standards are minimal, Central Mortg.

Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011), they

have reasonable limits. “[A] trial court is required to accept only those reasonable

inferences that logically flow from the face of the complaint and is not required to

accept every strained interpretation of the allegations proposed by the plaintiff.” In

re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006) (citation

omitted). Indeed, “a claim may be dismissed if allegations in the complaint or in the

exhibits incorporated into the complaint effectively negate the claim as a matter of

law.” Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001); accord H-M Wexford

LLC v. Encorp, Inc., 832 A.2d 129, 139 n.9 (Del. Ch. 2003).

                                         41
      When it comes to fiduciary duty claims: “A plaintiff must adequately plead a

breach of fiduciary duty claim against each individual director or officer; so-called

‘group pleading’ will not suffice.” In re USG Corp. S’holder Litig., 2020 WL

5126671, at *23 (Del. Ch. Aug. 31, 2020) (internal quotations omitted); accord Raj

& Sonal Abhyanker Fam. Tr. ex rel. UpCounsel, Inc. v. Blake, 2021 WL 2477025,

at *4 (Del. Ch. June 17, 2021); see In re Cornerstone Therapeutics Inc, S’holder

Litig., 115 A.3d 1173, 1182 (Del. 2015) (“[E]ach director has a right to be considered

individually when the directors face claims for damages in a suit challenging board

action.”).

      D.     The Fiduciary Duty Claims
      The Stockholder Plaintiffs have packaged their fiduciary duty claims in

multiple counts of the Complaint. Many of the counts overlap. Counts I, III and IV

are asserted against the Director and Officer Defendants. Count I is a framed as a

derivative claim for transferring DTV America assets to the Innovate Defendants

and their affiliates, failing to pursue business opportunities that were then passed on

to the Innovate Defendants, and selling assets for inadequate consideration to the

detriment of the Company and for the benefit of the Innovate Defendants. Count III

is asserted as a direct claim on behalf of the minority stockholders against the

Director and Officer Defendants, and simply incorporates earlier paragraphs of the

Complaint. Count IV is a claim against the Director and Officer Defendants for

                                          42
waste of corporate assets 127—specifically for selling licenses for “next to nothing”

and allowing over 70 broadcast licenses and construction permits to expire or “be

sold at fire sale prices.” 128

          Count II alleges the Entity Defendants breached their fiduciary duties as DTV

America’s controlling stockholder. This Count is fashioned as a direct claim by the

minority stockholders seeking “direct relief in the form of a damages award,” for the

Innovate Defendants’ breaches of the fiduciary duty of loyalty and usurpation of

corporate opportunities. 129

                   1.   All of the Fiduciary Duty Claims are Derivative

          The Stockholder Plaintiffs have styled many of their fiduciary duty claims as

both direct and derivative. In reviewing claims alleging breach of fiduciary duty,

the court is not obliged to accept the Plaintiffs’ characterization of the claims. “The

manner in which a plaintiff labels its claim and the form of words used in the

127
    “The waste test is just another way to examine whether a fiduciary breach has been
committed.” Hampshire Gp., Ltd. v. Kuttner, 2010 WL 2739995, at *35 (Del. Ch. July 12,
2010); Sample v. Morgan, 914 A.2d 647, 699-70 (Del. Ch. 2007) (“Claims of waste are
sometimes misunderstood as being founded on something other than a breach of fiduciary
duty. Conceived more realistically, the doctrine of waste is a residual protection for
stockholders that polices the outer boundaries of the broad field of discretion afforded
directors by the business judgment rule.”) (citations omitted); see also In re Barnes &
Noble S’holders Deriv. Litig., C.A. No. 4813-VCS, at 131 (Del. Ch. Oct. 21, 2010)
(TRANSCRIPT) (“Waste is a form of breach of fiduciary duty.”).
128
      Compl. ¶¶ 127, 129.
129
      Id. ¶ 121.

                                             43
complaint are not dispositive; rather, the court must look to the nature of the wrong

alleged, taking into account all of the facts alleged in the complaint, and determine

for itself whether a direct claim exists.” Hartsel v. Vanguard Gp., Inc., 2011 WL

2421003, at *16 (Del. Ch. June 15, 2011), aff’d, 38 A.3d 1254 (Del. 2012). That

determination, as our Supreme Court recently reaffirmed, is to be derived from a

“simple test of straightforward application to distinguish direct claims from

derivative claims.” Brookfield Asset Mgmt., Inc. v. Rosson, 261 A.3d 1251, 1263

(Del. 2021). This test “‘turn[s] solely on the following questions: (1) who suffered

the alleged harm (the corporation or the suing stockholders, individually); and (2)

who would receive the benefit of any recovery or other remedy (the corporation or

the stockholders, individually)?’” Id. (quoting Tooley v. Donaldson, Lufkin &

Jenrette, Inc., 845 A.2d 1031, 1033 (Del. 2004)).

      A claim is considered “derivative in nature,” under the first element of the

Tooley test, “[w]here all of a corporation’s stockholders are harmed and would

recover pro rata in proportion with their ownership of the corporation’s stock solely

because they are stockholders.” Feldman v. Cutaia, 951 A.2d 727, 733 (Del. 2008).

Plaintiffs’ “Scheme” allegations, which have not been consistently pleaded, focus

primarily on the alleged “looting [of] DTV America’s assets” and “forc[ing] DTV

                                         44
America into unfavorable agreements that negatively impact DTV America’s

financial position.” 130 This harm is derivative.

          Mismanagement which depresses the value of stock is a wrong to the
          corporation, i.e., the stockholders collectively, to be enforced by a
          derivative action. . . . A claim that excessive fees, options and bonuses
          operated to depress the value of the stock of the corporation resulting
          in a loss in value of the stockholders is merely a claim for the waste of
          corporate assets—a purely stockholder derivative claim.

In re First Interstate Bancorp Consol. S’holder Litig., 729 A.2d 851, 862 (Del. Ch.

1998) (internal citations and quotations omitted), aff’d, 546 A.2d 348 (Del. 1988);

see also Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1188 n.10 (Del. 1988)

(“Generally speaking, a wrong to the incorporated group as a whole that depletes or

destroys corporate assets and reduces the value of the corporation’s stock gives rise

to a derivative action.”). Here, the “alleged harm is one to the corporation (a

diminution of the pool of available assets), and any recovery would flow to the

corporation.” N. Am. Catholic Educ. Programming Found., Inc. v. Gheewalla, 2006

WL 4782349, at *14 (Del. Ch. Sept. 1, 2006).

          As alleged here, a claim that “a controller transferred to himself assets of the

corporation for less than fair value is a claim belonging to the corporation.” In re

Straight Path Commc’ns Inc. Consol. S’holder Litig., 2017 WL 5565264, at *3 (Del.

Ch. Nov. 20, 2017). Similarly, claims alleging usurpation of corporate opportunities

130
      Id. ¶ 1.

                                             45
and waste are derivative. In re Digex Inc. S’holders Litig., 789 A.2d 1176, 1189

(Del. Ch. 2000) (“A claim that a director or officer improperly usurped a corporate

opportunity belonging to the corporation is a derivative claim.”); In re J.P. Morgan

Chase & Co. S’holder Litig., 906 A.2d 766, 771 (“[C]laims of waste are classically

derivative”). Accordingly, all of the claims asserted in Counts I–IV are exclusively

derivative. Plaintiffs offered no argument to the contrary in their answering brief.

             2.   Sorting Out the Claims

      Plaintiffs’ disjointed and unwieldy Complaint presented challenges for the

Defendants, and even more so for the court. The court will address the claims as the

court understands them to be.

      To establish a claim for breach of fiduciary duty, a plaintiff must allege: “(1)

that a fiduciary duty existed and (2) that the defendant breached that duty.” Bamford

v. Penfold, L.P., 2020 WL 967942, at *8 (Del. Ch. Feb. 28, 2020). Directors and

officers of a Delaware corporation owe “identical” fiduciary duties of loyalty and

care to the corporation and its stockholders. Gantler v. Stephens, 965 A.2d 695,

708–09 (Del. 2009).

      Similarly, controlling stockholders owe fiduciary duties to the corporation and

its stockholders. Brookfield, 261 A.3d at 1274; see also Carr v. New Enter. Assocs.,

Inc., 2018 WL 1472336, at *22 (Del. Ch. Mar. 26, 2018) (“A controlling stockholder

owes fiduciary duties to the corporation and its minority stockholders, and it is

                                         46
‘prohibited from exercising corporate power (either formally as directors or officers

or informally through control over officers and directors) so as to advantage [itself]

while disadvantaging the corporation.’”) (citation and emphasis omitted).

          In this case, the Plaintiffs allege that the Innovate Defendants became

controlling stockholders in November 2017, after they acquired more than a majority

of the voting power of the Company’s outstanding stock. 131

          Whether and when fiduciary duties attached as to each of the Individual

Defendants is difficult to determine, because the Complaint lacks well-pleaded

allegations as to when many of the Individual Defendants became officers and

directors, when they departed those positions, and when most of the conduct that is

alleged to constitute fiduciary duty breaches occurred.           It is clear from the

Complaint, however, that none of the Individual Defendants served as directors or

officers of DTV America until October 2017.

                  3.   Usurpation of Corporate Opportunities.

          A corporate opportunity claim is a claim for breach of fiduciary duty. Broz v.

Cellular Info. Sys., Inc., 673 A.2d 148, 154 (Del. 1996) (“The doctrine of corporate

opportunity represents but one species of the broad fiduciary duties assumed by a

corporate director or officer.”). The corporate opportunity doctrine holds that a

131
      Id. ¶ 16.

                                            47
fiduciary “may not take a business opportunity for his own if: (1) the corporation is

financially able to exploit the opportunity; (2) the opportunity is within the

corporation's line of business; (3) the corporation has an interest or expectancy in

the opportunity; and (4) by taking the opportunity for his own, the corporate

fiduciary will thereby be placed in a position inimicable to his duties to the

corporation.” Id. at 155. No one factor is dispositive, and all of them must be taken

into account insofar as they are applicable. Id.

      Nearly all of the corporate opportunity claims fail. First, as explained above,

claims as to any corporate opportunities usurped before March 15, 2018 are time-

barred. Second, the Complaint’s vague and generalized allegations of unspecified

opportunities having been usurped at unspecified times must be dismissed. The

court is not required to accept vague and conclusory allegations that are not

supported by well-pleaded facts. Norton v. K-Sea Transp. P’rs L.P., 67 A.3d 354,

360 (Del. 2013) (“We do not, however, credit conclusory allegations that are not

supported by specific facts, or draw unreasonable inferences in the plaintiff’s

favor.”). Thus, the general allegation that “[b]etween June 2017 and December

2020, more than 100 LPTV stations that were identified by DTV America (prior to

November 2017) as its acquisition candidates were purchased by HC2 Holdings

                                         48
through subsidiaries other than DTV America” 132 is insufficient to state a claim.

Plaintiffs fare no better with their allegation that the Director and Officer Defendants

“prompted [Innovate] (through its wholly owned subsidiaries) to purchase a number

of LPTV broadcast stations that were identified in DTV America’s business plan.”133

The Complaint does not name any of the stations purportedly identified in the

Business Plan. After the Defendants exposed that shortcoming, the Plaintiffs

attached the so-called Business Plan to their answering brief. The Business Plan,

which is actually titled “Investor Update,” lists a two-column table of 13 acquisition

opportunities, identified only as “Target” A through M and an approximate cash cost

to acquire each target.134 But the Business Plan does not identify a single acquisition

target by name, and neither the Complaint nor Plaintiffs’ brief connects any specific

opportunity to any of the unnamed targets listed in the Business Plan.135 These

generalized allegations lack sufficient factual support to establish a prima facie claim

for usurpation of corporate opportunities. In short, the Complaint does not identify

any opportunity in the Business Plan that the Innovate Defendants took for their

132
      Compl. ¶ 34.
133
      Id. ¶ 33.
134
      Pls.’ HC2 Ans. Br. Ex. A at 29.
135
    The Plaintiffs easily could have done so, as they acknowledge that Plaintiff Kyle
prepared the Business Plan. Pls.’ HC2 Ans. Br. 3. In addition, the Business Plan itself
identifies Plaintiffs Kyle, Bruni, and Podhajser as members of DTV America’s
management team. Id. Ex. A at 19.

                                          49
own. Therefore, it is not possible to apply the other Broz factors. Accordingly, the

Plaintiffs have failed to state a claim for usurpation of unknown and unidentified

targets in the Business Plan.

      Except for one claim discussed below, there are no well-pleaded allegations

that any of the Director and Officer Defendants took any act to usurp any alleged

corporate opportunity from DTV America. To be sure, the Complaint does not

contain any allegations of any board meetings, written consents, communications by

or to any of these defendants about any of the events or transactions underlying the

Plaintiffs’ claims.

      Instead, the Complaint lumps each Individual Defendant into the categories

of Director and Officer Defendants and Conspirators, and then in conclusory fashion

attributes all of the events about which Plaintiffs complain to all of the Individual

Defendants. See, e.g., Compl. ¶ 34 (“All the members of the board of directors of

DTV America were also members of the Conspirators.”); id. ¶ 105 (“While directors

and officers, the D&O Defendants used their authority to transfer valuable assets

from DTV America to the HC2 Entities and their affiliates, including but not limited

to state of the art intellectual property, the lucratively ‘repackaged’ broadcasting

channels, the LPTV licenses, and the network programming relationships.”); id. ¶

106 (“[T]he D&O Defendants and HC2 Entities sold DTV America licenses for the

                                         50
direct and indirect financial benefit of HC2 Entities which HC2 Entities are currently

in the process of covering up.”).

          “The blunt nature of the pleading” and Plaintiffs’ failure to identify any act by

a specific Individual Defendant constituting a fiduciary breach requires dismissal of

the claims against them. See Genworth Fin., Inc. Consol. Deriv. Litig., 2021 WL

4452338, at *22 (Del. Ch. Sept. 29, 2021) (dismissing claims asserted against

officers where they merely lumped together as “Executive Defendants” and no

specific allegations were directed against them).

          The Complaint does, however, contain well-pleaded allegations as to one

corporate opportunity alleged to have been usurped. In October 2018, DTV America

negotiated a deal to purchase Frank Digital Broadcasting’s LPTV stations for

$65,000. On April 15, 2018, HC2 Station Group filed an application to purchase

these stations for itself for the same $65,000 purchase price. 136

          The Defendants do not meaningfully challenge the substance of this corporate

opportunity claim.137 The Complaint alleges well-pleaded facts that DTV America

had reached a deal to acquire Frank Digital Broadcasting’s LPTV stations. Months

after reaching this agreement, Innovate, through its affiliates, acquired those same

136
      Id. ¶ 39.
137
   The Defendants argued that the claims as to these two transactions are time-barred. As
discussed above, the court has denied the motion to dismiss on grounds of laches.

                                             51
assets. From these well-pleaded allegations, it is reasonably conceivable that this

opportunity was within DTV America’s line of business, and that the Company had

an expectancy in and was financially capable of exploiting the opportunity. It is also

reasonably conceivable that the Innovate Defendants took this opportunity for

themselves, placing them in a position inimicable to their duties to DTV America.

      Analyzing this claim as to the Director and Officer Defendants is much more

challenging. The Complaint does not identify the composition of the DTV America

board at the time of the transaction. Nor does it allege that any board action

occurred. Based on the Complaint, Falcone, Minkov, and Levi served as officers

and/or directors of DTV America at the time of this transaction. Falcone was the

Chief Executive Officer, President, and Chairman of the Board of both Innovate and

DTV America when Innovate’s affiliate executed the asset purchase agreement for

the Frank Digital Broadcasting properties. Levi was also a conflicted officer, having

served at that time both as Chief Operating Officer of HC2 Station Group, the

Innovate affiliate that acquired the properties, while also serving as director and

Chief Operating Officer of DTV America. Levi also signed the Frank Digital

Broadcasting asset purchase agreement in his capacity as COO of HC2 Station

Group. Minkov began as DTV America’s CFO at some time in April 2018, but it is

not apparent when he became a director.         At the time of the Frank Digital

Broadcasting transaction, he was an officer and director of HC2 Broadcasting. None

                                         52
of the other Individual Defendants are alleged to have served as officers or directors

of DTV America at the time of the transaction.

      The court is left with the tension between the plaintiff-friendly standard of

Rule 12(b)(6) and the requirement that a “plaintiff must adequately plead a breach

of fiduciary duty claim against each individual director or officer; so-called ‘group

pleading’ will not suffice.” In re USG Corp. S’holder Litig., 2020 WL 5126671, at

*23; In re Dell Techs. Inc. Class V S’holders Litig., 2020 WL 3096748, at *43 (Del.

Ch. June 11, 2020) (dismissing director defendant where the complaint did not

identify specific, non-conclusory facts to support an inference that she acted

disloyally); United Food & Com. Workers Union v. Zuckerberg, 250 A.3d 862, 896

(Del. Ch. 2020) (finding that the court must identify individual conduct on the part

of each director in which they furthered the self-interest of an interested party to

support a claim for breach of loyalty), aff’d, 262 A.3d 1034 (Del. 2021).

      Here, the Complaint does not allege any board action whatsoever. Giving the

Plaintiffs the benefit of all reasonable inferences, it is reasonably conceivable that

Levi breached his fiduciary duties to DTV America as a conflicted fiduciary who

executed the Frank Digital Broadcasting asset purchase agreement. The allegations

are not so strong as to Falcone, but given his dual-fiduciary capacities as CEO,

President, and Chairman at both Innovate and DTV America at the time, it is

reasonably conceivable that he approved and authorized this transaction.

                                         53
Defendants’ briefs hardly address these transactions in their motions to dismiss. In

light of Falcone and Levi’s roles at the time of Frank Digital Broadcasting sale, it is

reasonably conceivable that each approved and authorized the transaction.

         Therefore, the Complaint adequately alleges that Falcone and Levi breached

their fiduciary duties in connection with the Innovate Entities’ usurpation of DTV

America’s opportunity to acquire LPTV stations from Frank Digital Broadcasting.

                4.    Duty of Loyalty.

                       a.   Gray Media Sale.

         In March 2021, DTV America and HC2 Broadcasting entered into an asset

purchase agreement with Gray Media, transferring ten licenses to Gray Media.138

As controlling stockholders of DTV America at the time of the transaction, the

Innovate Entities owed DTV America fiduciary duties of loyalty and care. “To plead

a claim for breach of the duty of loyalty that will overcome a motion to dismiss, a

plaintiff must plead sufficient facts to support a rational inference that the corporate

fiduciary acted out of material self-interest that diverged from the interests of the

shareholders.” In re Saba Software, Inc. S’holder Litig., 2017 WL 1201108, at *21

(Del. Ch. Mar. 31, 2017).

138
      Id. ¶¶ 53–58.

                                          54
            The Complaint alleges that six of the licenses in the Gray Media Sale belonged

to DTV America139 and the other four “were previously improperly transferred from

DTV America to [the Entity Defendants’] control for no consideration.”140 The

Complaint alleges that the $475,000 purchase price for the ten licenses was not

allocated among the licenses. 141 Plaintiffs allege that all proceeds from the Gray

Media Sale went to the Entity Defendants and that DTV America received no

consideration for its licenses.142 After this litigation was filed, HC2 Broadcasting

sent a letter to the FCC citing a “technical issue” and claiming that four of the

transferred licenses had been incorrectly listed as belonging to HC2 Broadcasting

instead of DTV America.143 In other words, HC2 Broadcasting owned none of the

licenses listed in the Gray Media Sale agreement.

            It is reasonably conceivable the Innovate Defendants breached their duty of

loyalty by causing DTV America to transfer its licenses to a third-party and taking

the full purchase price for themselves. Defendant contests the Complaint’s assertion

that “the proceeds of the sale went directly to the [Innovate] Entities, and DTV

139
   Id. ¶ 53. The Complaint identifies these licenses by city, state, and call letters. Id. ¶ 53
n.1.
140
      Id.
141
      Id. ¶ 54
142
      Id. ¶ 55.
143
      Id. ¶ 56.

                                              55
America received no consideration for its licenses,” arguing the statement is

conclusory and unsupported.144 The Complaint alleges that both DTV America and

HC2 Broadcasting were listed as “Seller” under the agreement and the purchase

price was to be transferred in accordance with wire instructions “sent by the

Seller.”145     The well-pleaded facts support a reasonable inference that HC2

Broadcasting received consideration for the sale of the ten broadcast licenses held

by DTV America to the exclusion of DTV America. As such, the court declines to

dismiss the Gray Media Sale claims against the Innovate Defendants.

         This claim is not well-pleaded as to the Director and Officer Defendants and

must be dismissed. The Complaint identifies no individual or board-level action

involving the Gray Media Sale. The Complaint does not mention the Conspirators

or alleged Conspiracy at all in connection with the Gray Media Sale. Because the

Complaint does not identify any individual’s involvement in the Gray Media Sale,

this claim must be dismissed as to the Director and Officer Defendants.

                       b.   TV-49 Sale.

         HC2 Broadcasting Holdings sold six licenses to TV-49 for $145,333 on

March 17, 2021. Plaintiffs allege that DTV America owned and was named licensee

144
      Id. ¶ 55; see HC2 Defs.’ Opening Br. 39.
145
      Compl. ¶¶ 53–54.

                                             56
of four licenses sold in the transaction. 146 The Complaint identifies each by location,

call sign, and FCC facility number.147 The Complaint further alleges that “[t]he

Conspirators and HC2 Entities improperly transferred control of these licenses to

HC2 Broadcasting.” 148 Levi signed this asset purchase agreement in his capacity as

Chief Operating Officer of HC2 Broadcasting.149 DTV America is not mentioned

in the purchase agreement. 150

            Taking these allegations as true, it is reasonably conceivable that the Innovate

Entities breached their duty of loyalty by causing DTV America to transfer its

licenses to an Innovate Entity, which then sold the licenses to TV-49 without

compensating DTV America. Further, the Plaintiffs have adequately alleged a

breach of fiduciary duties by Levi, who signed the purchase agreement. The

Complaint does not contain any allegations pertaining to the other Individual

Defendants as to the transaction. Therefore, the TV-49 Sale claim is sustained as to

Levi and the Innovate Entities but is dismissed as to the other Defendants.

146
      Id. ¶ 59.
147
      Id. ¶ 59 n.2.
148
      Id. ¶ 60.
149
      Id. ¶ 61.
150
      Id.

                                               57
                   c.   Expense Sharing Agreement, Right to Use Agreement,
                        and Stock-Based Compensation Claims.
      Plaintiffs’ claims concerning the Expense Sharing Agreement, Right to Use

Agreement, and unidentified agreements regarding stock-based compensation are

dismissed for two independent reasons. First, the Complaint’s allegations of as to

these agreements fail to state a claim upon which relief can be granted. The

Complaint does not describe any of the terms of the agreements and does not attach

them to the Complaint or their brief. The Plaintiffs’ failure to provide the terms of

these agreements renders the parties and the Court unable to assess whether the terms

of those agreements were fair to DTV America, when they were entered, or which

of the defendants were involved in proposing or approving any of those agreements.

      For example, Plaintiffs merely allege that DTV America’s expenses and

liabilities increased after DTV America purportedly entered into those agreements.

But the mere fact that the Company’s expenses increased after it entered into the

agreements without an understanding of their terms is insufficient to demonstrate

any type of causal relationship.

      In short, the allegations as to these three agreements lack sufficient well-

pleaded facts to support claims for breach of fiduciary duty. See Criden v. Steinberg,

2000 WL 354390, at *3 (Del. Ch. Mar. 23, 2000) (dismissing claims where the

complaint failed to specifically allege why an agreement breached the duty of

loyalty); In re General Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del.

                                         58
2006) (“A trial court is not . . . required to accept as true conclusory allegations

‘without specific supporting factual allegations.’”) (quoting In re Santa Fe Pac.

Corp. S’holder Litig., 669 A.2d 59, 65–66 (Del. 1995)).

         These claims also fail because the Plaintiffs’ Answering Brief did not respond

to arguments the Innovate Defendants raised in their opening brief regarding these

agreements. Instead, the fact section of the Plaintiffs’ answering brief repeats some

of the allegations contained in the Complaint, 151 but contains no argument in support

of these claims. Nor did Plaintiffs address these claims at oral argument. Therefore,

the Plaintiffs have waived any argument to support their claims as to these

agreements. “A party’s failure to raise an argument in its answering brief constitutes

a waiver of that argument.” King v. VeriFone Hldgs., Inc., 994 A.2d 354, 360 (Del.

Ch. 2010), rev’d on other grounds, 12 A.3d 1140 (Del. 2011); see Emerald P’rs v.

Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”

(citing Murphy v. State, 632 A.2d 1150, 1152 (Del. 1993) and Loudon v. Archer–

Daniels–Midland Co., 700 A.2d 135, 140 n.3 (Del. 1997))); T.A.H. First, Inc. v.

Wescott, 2004 WL 2827879, at *2 (Del. Super. Ct. Nov. 23, 2004) (“Employer

mentions the accident in the ‘Statement of Facts’ section of the opening brief but

does not argue the import of the accident in the ‘Argument’ section. This Court

151
      See Pls.’ HC2 Ans. Br. 65–67, 71–72.

                                             59
therefore finds that this argument has been waived.”); In re Mobilactive Media, LLC,

2013 WL 297950, at *12 n.152 (Del. Ch. Jan. 25, 2013) (“[I]ssues adverted to in a

perfunctory manner, unaccompanied by some effort at developed argumentation, are

deemed waived . . . . It is not enough merely to mention a possible argument in the

most skeletal way, leaving the court to do counsel's work . . . . Judges are not

expected to be mindreaders. Consequently, a litigant has an obligation to spell out

its arguments squarely and distinctly, or else forever hold its peace.”) (omissions in

original) (quoting Roca v. E.I. duPont de Nemours & Co., Inc., 842 A.2d 1238, 1243

n.12 (Del. 2004))); accord AB Stable VIII LLC v. Maps Hotels & Resorts One LLC,

2020 WL 7024929, at *78 (Del. Ch. Nov. 30, 2020) (“A court need not address

arguments that are presented in such a cursory and elliptical manner.”), aff’d, 268

A.3d 198 (Del. 2021). Plaintiffs have failed to satisfy that obligation in regard to

these agreements. Accordingly, Plaintiffs’ claims challenging the Expense Sharing

Agreement, Right to Use Agreement, and stock-based compensation are

dismissed. 152

152
  Plaintiffs also did not respond to the Innovate Defendants’ arguments in support of the
motion to dismiss claims concerning FCC Repacking. See HC2 Defs.’ Opening Br. 41.
Those claims are dismissed, as well.

                                           60
              5.    Count IV States a Claim for Corporate Waste

       Count IV asserts a claim of corporate waste against the Director and Officer

Defendants. Although the Complaint included several acts of corporate waste, the

Plaintiffs focused on only one: the Lowcountry Sales.153

       For a claim of waste to survive a motion to dismiss, a plaintiff must show

“economic terms so one-sided as to create an inference that no person acting in a

good faith pursuit of the corporation’s interests could have approved the terms.”

Sample v. Morgan, 914 A.2d 647, 670 (Del. Ch. 2007). A “claim of waste will arise

only in the rare, ‘unconscionable cases where directors irrationally squander or give

away corporate assets.’” In re Walt Disney Co. Deriv. Litig., 906 A.2d 27, 74 (Del.

2006) (quoting Brehm v. Eisner, 746 A.2d 244, 263 (Del. 2000)). This high pleading

standard is crucial, as “[a]ny other rule would deter corporate boards from the

optimal rational acceptance of risk . . . . Courts are ill-fitted to attempt to weigh the

153
    Compl. ¶¶ 47–48. The Complaint asserts three primary bases for the waste claim: (i)
the sale of DTV America licenses for inadequate value; (ii) the transfer of DTV America’s
licenses to Innovate Entities for inadequate value; and (iii) the expiration of DTV America
licenses and construction permits. Defendants argue that “[m]erely alleging that the
defendants elected not to renew unidentified licenses at unidentified times is insufficient
to state a waste claim.” Plaintiffs did not respond to this argument, as their briefing on the
waste claim was limited to the Lowcountry Sales. Therefore, Plaintiffs waived their
argument as to any other basis for their waste claim by failing to address it in their briefing
and oral argument. See Emerald P’rs, 726 A.2d at 1224 (“Issues not briefed are deemed
waived.”); Richard B. Gamberg 2007 Family Tr. v. United Rest. Gp., L.P., 2018 WL
566417, at *4 (Del. Ch. Jan. 26, 2018) (“Plaintiff chose very specific arguments on which
to stand. I address only these arguments . . . .”).

                                              61
‘adequacy’ of consideration under the waste standard or, ex post, to judge

appropriate degrees of business risk.” Lewis v. Vogelstein, 699 A.2d 327, 336 (Del.

Ch. 1997).

         In November 2019 two DTV America Stations were sold to Lowcountry for

nominal consideration paid to DTV America and “additional consideration”

provided to Innovate. The Complaint alleges that this “additional consideration” was

the extension of time to finalize a sale of Lowcountry assets to an HC2 Entity.154

Within a year of these sales, Lowcountry sold one of the licenses for $200,000 and

sold the other, along with two additional licenses, for over $350,000. 155

         Plaintiffs analogize this claim with the waste claim that was sustained in

Orloff v. Shulman, 2005 WL 3272355, at *3–6 (Del. Ch. Nov. 23, 2005). In Orloff,

the plaintiffs alleged the defendants wasted corporate assets by approving rents for

the company’s properties for less than 20% of their market value, as measured

154
   Compl. ¶¶ 47–48. The Innovate Defendants argue that the additional consideration was
provided to DTV America, basing their argument solely on the terms of the contract itself,
which reads:
         ADDITIONAL CONSIDERATION FOR THE TRANSACTION IS THE
         EXTENSION OF TIME GRA[N]TED BY LOW COUNTRY 34 MEDIA,
         LCC TO DTV AMERICA CORPORATION IN A RELATED
         TRANSACTION BETWEEN THE PARTIES (SEE FCC FILE NO. BALCT –
         20190520AAU).
Id. ¶ 48. The FCC file describes an asset assignment between Lowcountry and HC2 Station
Group. Pls.’ HC2 Ans. Br. Ex. C. DTV America is not mentioned in the filing. Id.
155
      Compl. ¶¶ 50–51.

                                           62
against rents charged for properties on the same street. Id. at *13. Plaintiffs argue

the same dramatic disparity is alleged here, warranting discovery.

         Defendants argue that Orloff is inapposite and that the Complaint obscures

important context. Defendants point out that: (i) Lowcountry had over six months

to develop W26DT-D and increase its market value; and (ii) WCFZ-LD was sold as

a package with two other licenses, whose values are not identified in the

Complaint.156 Therefore, Defendants assert, the particularized allegations fail to

meet the high standard required to plead a claim for waste of corporate assets

         Defendant’s explanation may ultimately pan out, but the allegations of the

Complaint also support a reasonable inference that these licenses were sold without

any benefit to DTV America. Any “additional consideration” outside of the $2

payment for this transfer flowed to non-party HC2 Holding Group. A payment of a

single dollar for a station license that was later turned around and sold six months

later for $200,000 is striking. “[T]he size of the gap between the two numbers means

that the court cannot say that a claim of waste . . . could not be proven at trial.”

Orloff, 2005 WL 3272355, at *13.

         Like the corporate opportunity claim relating to Frank Digital Broadcasting,

the Complaint alleges only that Falcone and Levi served on the DTV America board

156
      HC2 Defs.’ Opening Br. 47.

                                          63
at the time of the Lowcountry sale. Levi signed the Lowcountry Asset Purchase

Agreement as “Managing Director” of DTV America.157                There are no other

allegations that any other of the Individual Defendants served as a director of DTV

America at the time of this sale or had any specific involvement in approving or

effectuating the transaction. Accordingly, the Complaint states a claim for waste of

corporate assets against Levi and Falcone. This claim is dismissed as to the

remaining Individual Defendants.

                6.   Aiding and Abetting Breaches of Fiduciary Duty

         In Count VI, the Stockholder Plaintiffs allege the Innovate Defendants aided

and abetted the Director and Officer Defendants’ breaches of fiduciary duty. The

Stockholder Plaintiffs allege the Innovate Defendants participated in the “Scheme”

of diverting business opportunities that belonged to DTV America and inundating

DTV America with debt and expenses through agreements such as the Expense

Sharing Agreement 158

         To plead a claim for aiding and abetting a breach of fiduciary duty, a plaintiff

must plead: “‘(1) the existence of a fiduciary relationship, (2) the fiduciary breached

its duty, (3) a defendant, who is not a fiduciary, knowingly participated in a breach,

157
      Pls.’ HC2 Ans. Br. Ex. B.
158
      Compl. ¶¶ 138–41.

                                            64
and (4) damages to the plaintiff resulted from the concerted action of the fiduciary

and the non-fiduciary duty.’” Gotham P’rs, L.P. v. Hallwood Realty P’rs, L.P., 817

A.2d 160, 172 (Del. 2002) (quoting Fitzgerald v. Cantor, 1999 WL 182573, at *1

(Del. Ch. Mar. 25, 1999)). A claim of aiding and abetting will fail if the court fails

to find an underlying breach of fiduciary duty. See, e.g., Weil v. Morgan Stanley

DW Inc., 877 A.2d 1024, 1039 (Del. Ch. 2004) (“[H]aving failed to state an

underlying claim for breach of fiduciary duty against Morgan Stanley itself, Weil’s

aiding and abetting claim against HarrisDirect necessarily fails.”), aff’d, 894 A.2d

407 (Del. 2005); accord Stone & Paper Invs., LLC v. Blanch, 2020 WL 3496694, at

*14 (Del. Ch. June 29, 2020).

         The Innovate Defendants argue that this claim must be dismissed as to them

because “a fiduciary cannot aid and abet the fiduciary breach of another

fiduciary.”159 The Innovate Defendants rely on several cases, including In re Pattern

Energy Group, Inc. Stockholders Litigation, 2021 WL 1812674 (Del. Ch. May 6,

2021), which observed that claims of aiding and abetting breaches of fiduciary duty

against persons and entities alleged to be a control group would be subject to

dismissal if the plaintiffs were to establish that they constituted a control group

owing fiduciary duties. Id. at *77; see OptimisCorp v. Waite, 2015 WL 5147038, at

159
      HC2 Defs.’ Opening Br. 48.

                                         65
*57 (Del. Ch. Aug. 26, 2015) (“In those instances where a fiduciary takes actions

that would amount to aiding and abetting by a non-fiduciary, that conduct amounts

to a direct breach of fiduciary duties.”), aff’d, 137 A.3d 970 (Del. 2016); Higher

Educ. Mgmt. Gp., Inc. v. Mathews, 2014 WL 5573325, at *13 (Del. Ch. Nov. 3,

2014) (“As a separate and independent reason for dismissing the aiding and abetting

claim against [the defendant], I note that, as an executive officer . . [the defendant]

himself owes fiduciary duties to the corporation, and therefore any conduct of his

rising to the level of aiding and abetting would be a breach of his own fiduciary

duties.”).

         Plaintiffs generally do not seem to contest this statement of the law. Instead

they argue that the aiding and abetting claim should not be dismissed as to

Continental, which denies that it owes fiduciary duties to the Company or its

stockholders.160      But with Continental being dismissed for lack of personal

jurisdiction, and the Innovate Entities conceding that they owe fiduciary duties,

Plaintiffs’ argument is untenable. See Pattern Energy, 2021 WL 1812674, at *77

(denying motion to dismiss aiding and abetting claim against members of an alleged

control group alleged to owe fiduciary duties where further evidence was necessary

to determine whether those defendants constituted a control group); HC2 Defs.’

160
      Pls.’ HC2 Ans. Br. 28.

                                           66
Reply Br. 29–30 (“[T]he viability of [the aiding and abetting claim against

Continental] has no bearing on the viability of Plaintiffs’ aiding and abetting claim

against the [Innovate] Entities, all of which are fiduciaries.”); Hrg Tr. at 28 (counsel

for the Innovate Defendants acknowledging that the Innovate Entities “are alleged

and concede that they owe fiduciary duties in their capacity as DTV's controlling

stockholder”); see also Firefighters’ Pension Sys. of City of Kansas City, Missouri

Tr. v. Presidio, Inc., 251 A.3d 212, 281 (Del. Ch. 2021) (“The defendants do not

dispute that Apollo was a fiduciary for purposes of the motion to dismiss, and this

decision therefore analyzes Apollo's liability as a fiduciary, rather than an alleged

aider and abettor.”).

      The Innovate Entities concede that they owe fiduciary duties to DTV America

and the minority stockholders. Therefore, there is no basis to maintain the claims

that they aided and abetted the alleged breaches of fiduciary duty of the Director and

Officer Defendants. Accordingly, the claims against the Innovate Entities for aiding

and abetting the Director and Officer Defendants’ alleged breaches of fiduciary duty

are dismissed.

             7. Civil Conspiracy

      Count V is asserted by “All Plaintiffs against All Defendants” for civil

conspiracy. But the specific allegations of Count V show otherwise. The word

“conspiracy” appears in the Complaint exactly four times. First, in paragraph 1,

                                          67
which lists civil conspiracy as one of several claims. Second, paragraph 24 mentions

the “conspiracy theory of personal jurisdiction” as to Continental. The word

conspiracy next appears twice in the body of Count V. After incorporating the

preceding 131 paragraphs of the Complaint by reference, the civil conspiracy claim

is articulated as follows:

             133. To the extent any members of the Conspirators were not part
      of that group from its inception, each one of them at a point in time that
      they became a member engaged in overt acts in furtherance of the
      conspiratorial Scheme all of which were willful violations of their
      fiduciary duties.
             134. As a result of the conspiracy, the Minority Shareholders
      have suffered economic injury in terms of substantial devaluation of
      their stock holdings.
             135. As a result of the foregoing, Plaintiffs are entitled to direct
      relief in the form of a damages award against Defendants, including
      Voigt, in an amount to be determined at trial.

Compl. ¶¶ 133–35.            The Complaint alleges the conspiracy against the

“Conspirators.” The Conspirators are defined as: Falcone, Levi, Sena, Minkov,

Barr, and Voigt. The Complaint limits the civil conspiracy claim to the Conspirators.

In addition, only minority stockholders are alleged to have suffered any injury from

the acts of the Conspirators. Thus, the civil conspiracy claim is not asserted by all

Plaintiffs, but rather the Stockholder Plaintiffs, to whom the Complaint refers as the

Minority Shareholders.       There are no allegations alleging the Option Holder

                                          68
Plaintiffs suffered any injury in their capacities as option holders as a result of the

alleged civil conspiracy.

          Of the six alleged Conspirators, five are alleged to have served as a director,

officer, or both of DTV America, and served in those roles “[a]t the inception of the

Scheme.” 161 Voigt did not serve as an officer or director of DTV America. Rather,

he served as a Senior Managing Director at Innovate from October 2014 to May

2018 and as a “director and/or officer of several of [Innovate’s] subsidiaries,” none

of which the Complaint identifies. 162 Nevertheless, Count V alleges that he and the

other alleged Conspirators breached their fiduciary duties.163

          The elements for civil conspiracy under Delaware law are: (i) a confederation

or combination of two or more persons; (ii) an unlawful act done in furtherance of

the conspiracy; and (iii) damages resulting from the action of the conspiracy parties.

AeroGlobal Cap. Mgmt., LLC v. Cirrus Indus., 871 A.2d 428, 437 n. 8 (Del. 2005).

“Delaware law requires an independent tort underlying a civil conspiracy.”

OptimisCorp, 2015 WL 5147038, at *56; see also Ramunno v. Cawley, 705 A.2d

1029, 1039 (Del. 1998) (“We agree that civil conspiracy is not an independent cause

of action in Delaware, and that it must arise from some underlying wrong.”). A

161
      Compl. ¶ 18.
162
      Id. ¶ 14.
163
      Id. ¶ 133.

                                            69
plaintiff may not plead conspiracy to avoid the statute of limitations for the

underlying tort. See Connolly v. Labowitz, 519 A.2d 138, 144 (Del. Super. Ct. 1986)

(“Where there is a succession of wrongful acts done in pursuance of a conspiracy,

the statute of limitations commences as to each wrongful act at the time that act

occurred.”).

      As to Falcone, Levi, Sena, Minkov, Barr, the civil conspiracy claim must be

dismissed for the same reason as the aiding and abetting claim against the Innovate

Entities. Each of these five alleged Conspirators is alleged to have been a DTV

America director, officer, or both during the alleged conspiracy. In those capacities

they owed, and are alleged to have owed, fiduciary duties to DTV America and the

Stockholder Plaintiffs. See Gantler, 965 A.2d at 708–09 (recognizing that directors

and officers owe the identical fiduciary duties of care and loyalty). Thus, the

independent civil conspiracy count against these fiduciaries cannot stand. “However

captioned, civil conspiracy is vicarious liability. It holds a third party, not a

fiduciary, responsible for a violation of fiduciary duty. Therefore, it does not apply

to the defendants which owe the [stock]holders a direct fiduciary duty.” Albert, 2005

WL 2130607, at *11 (footnotes omitted); OptimisCorp, 2015 WL 5147038, at *57

(“In the fiduciary duty context, conspiracy is treated essentially as coterminous with

aiding and abetting.”);Presidio, , 251 A.3d 212 at (“This court largely has equated

claims for aiding and abetting and civil conspiracy, noting that the two theories often

                                          70
cover the same ground and that the distinctions usually are not material.”). Like the

aiding and abetting claim asserted against the Innovate Defendants, the civil

conspiracy claim is premised upon conduct by the alleged Conspirators that

constituted breaches of their fiduciary duties. Therefore, it must be dismissed.

          Although Voigt did not owe fiduciary duties to DTV America or the Plaintiffs,

the civil conspiracy claim as to him must be dismissed, as well. The sole factual

allegations against Voigt individually relate to his meeting with DTV America

officials and shareholders starting in 2016 until June 2017.164 The Complaint alleges

that Voigt “was” Innovate’s Senior Managing Director, Investments until May 2018.

Compl. ¶ 14. It also alleges that Voigt was a “director and/or officer” of other

Innovate subsidiaries (it does not clarify which entities). Id. Finally, the Complaint

alleges that Voigt is or was a director of another Innovate subsidiary not party to this

case. Id.

          The elements of a conspiracy require a “confederation.” OptimisCorp, 2015

WL 5147038, at *57.           “[T]he confederation requirement includes “knowing

participation” in the conspiracy. Although there need not be an explicit agreement,

plaintiffs still must prove knowing participation in a conspiracy.” Id.          At the

pleadings stage, “the Plaintiff must allege that the parties knowingly participated in

164
      Id. ¶ 32.

                                            71
the conspiracy and that there was coordination of action among the parties.”

Lechliter v. Del. Dep’t of Nat. Res. Div. of Parks & Rec., 2015 WL 7720277, at *11

(Del. Ch. Nov. 30, 2015). This can be accomplished by demonstrating a “meeting

of the minds on the object or course of action.” In re Swervepay Acq., LLC, 2022

WL 3701723 (Del. Ch. Aug. 26, 2022) (quoting Binks v. DSL.net, Inc., 2010 WL

1713629, at *11 (Del. Ch. Apr. 29, 2010)).

            There are no well-pleaded facts supporting a reasonable inference that Voigt

knowingly participated in a conspiracy. The only conduct alleged as to Voigt is that

he and Falcone met with DTV America and certain of its stockholders at times from

2016 until June 2017, when the SPA was executed.165 This was five months before

the transaction closed and Innovate became DTV America’s controlling stockholder.

There are no other allegations as to Voigt. Although it is reasonable to infer that

Voigt received the so-called Business Plan in the period before the parties executed

the SPA, but there is no well-pleaded allegation that Voigt agreed to anything or

coordinated his actions with anyone. See Allied Cap. Corp. v. GC-Sun Hldgs., L.P.,

910 A.2d 1020, 1037 (Del. Ch. 2006) (dismissing claims against defendants where

“the complaint is entirely devoid of facts regarding the role of particular individuals,

165
      Id.

                                             72
even by title.”). As with all claims, “[f]acts, not legal conclusions, must be pled.”

Atlantis Plastics Corp. v. Sammons, 558 A.2d 1062, 1066 (Del. Ch. 1989).

         Voigt joined the other Defendants’ briefs in support of dismissal and

independently moved to dismiss for lack of notice as to what he is alleged to have

done wrong. 166 Plaintiffs did not address Voigt’s argument in their answering brief.

Spring Real Estate, LLC v. Echo/RT Hldgs., 2013 WL 6916277, at *7 (Del. Ch. Dec.

13, 2013) (“In this Court, a plaintiff may waive a claim if it does not brief the

sufficiency of its allegations in response to a defendant’s motion to dismiss.”);

Forsythe v. ESC Fund Mgmt. Co. (U.S.), Inc., 2007 WL 2982247, at *11 (Del. Ch.

Oct. 9, 2007) (granting motion to dismiss claims after finding that the plaintiffs

waived them “by failing to brief them in their opposition to the motion to dismiss”).

         Plaintiffs fail to state a claim for civil conspiracy against Voigt because they

fail to allege that Voigt knowingly participated in any conspiracy. In addition, there

is no tort to underly a claim for conspiracy as to him. As such, Plantiffs’ claims for

civil conspiracy must be dismissed.

                 8.   Count VII Fails to State a Claim for Tortious Interference

         Finally, the Option Holder Plaintiffs allege that all defendants tortiously

interfered with their interests and expectations, including prospective contractual

166
      Dkt. 35.

                                            73
interests, relating to their options.167 The Option Holder Plaintiffs assert that

defendants wrongfully and intentionally interfered with their ability to financially

benefit from the option agreements.168

          To state a claim for tortious interference with a contract, a plaintiff must

allege: (1) a contract, (2) about which the defendant knew, and (3) an intentional act

by that defendant that is (4) without justification and is (5) a significant factor

causing a breach of the contract and resulting injury. Agranoff v. Miller, 1999 WL

219650, at *21 (Del. Ch. Apr. 12, 1999), aff’d, 737 A.2d 530 (Del. 1999). The

Option Holder Plaintiffs allege that a contract existed, defendants were aware of it,

defendants acted intentionally, and injury occurred as a result.169 The Option Holder

Plaintiffs do not, however, allege that any breach of the agreement occurred, whether

as a result of defendants’ conduct or that of others. On a motion to dismiss, “[t]he

well-pleaded allegations of the complaint are accepted as true . . . [but] such a motion

does not concede pleaded conclusions of law or fact where there are no allegations

of specific facts which would support such conclusions.            This is of critical

significance here.” Weinberger v. UOP, Inc., 409 A.2d 1262, 1264 (Del. Ch. 1979).

167
      Compl. ¶¶ 147–48.
168
      Id. ¶ 146.
169
      Id. ¶¶ 145–47.

                                           74
The Option Holder Plaintiffs’ allegations fail to fulfill a foundational element of the

claim for tortious interference with a contract.

          To state a claim for tortious interference with a prospective business

opportunity, a plaintiff must allege: “1) the reasonable probability of a business

opportunity; 2) the intentional interference by defendant with that opportunity; 3)

proximate causation; and 4) damages.” Agilent Techs., Inc. v. Kirkland, 2009 WL

119865, at *5 (Del. Ch. Jan. 20, 2009). The elements of this claim must be

considered “in light of a defendant’s privilege to compete or protect his business

interests in a fair and lawful manner.” DeBonaventura v. Nationwide Mut. Ins. Co.,

419 A.2d 942, 947 (Del. Ch. 1980), aff’d, 428 A.2d 1151 (Del. 1981).

          The Option Holder Plaintiffs allegations fail the first element. They allege

that “Defendants knew of the . . . [Option Holder Plaintiffs’] ability to become

stockholders and/or financially benefit from the Option Agreement.” 170 The law

requires more than a showing of an ability to benefit for such a claim to survive.

          This court recently rejected a similar claim on this basis in Blue v. Fireman,

2022 WL 593899 (Del. Ch. Feb. 28, 2022). There, Vice Chancellor Zurn succinctly

explained that the mere ownership of stock options is insufficient to show a bona

170
      Id. ¶ 146.

                                            75
fide expectancy to support a claim for tortious interference with prospective business

relationships:

       Plaintiffs rely exclusively on the conclusory allegation that they had a
       “reasonable probability of receiving positive value for their options
       from the Company.” This bare statement is insufficient to establish a
       bona fide expectancy. Plaintiffs plead no facts to quantify that
       expectancy, to support its existence, or to explain why it was reasonable
       to hold it. Rather, it appears their expectancy is based on a “mere hope”
       that their options would be in the money. Options, like other derivative
       securities, inherently involve risk. Plaintiffs’ speculation or hope that
       they picked the right side of their bet is not, standing alone, sufficient
       to establish a reasonable probability of a business relationship.

Id. at *18. 171 That reasoning equally applies here. Accordingly, Count VII is

dismissed.

171
    In essence, Count VII is an attempt by option holders to turn derivative claims, for which
they lack standing to assert, into direct fiduciary duty claims. Plaintiffs concede as much:
“the [Option Holder Plaintiffs’] tortious interference claim is . . . predicated on the gross
breaches of fiduciary duties, including the purposeful devaluation of DTV America.” Pls.’
HC2 Ans. Br. 27. “A claim for breach of fiduciary duty must be based on an actual, existing
fiduciary relationship between the plaintiff and defendants at the time of the alleged
breach.” In re Nine Sys. Corp. S’holders Litig., 2013 WL 771897, at *7 (Del. Ch. Feb 28,
2013) (citation omitted). The Option Holder Plaintiffs cannot assert fiduciary duty claims
in this case because they are not owed fiduciary duties. A “holder of an option to purchase
stock is not an equitable stockholder of the corporation.” Harff v. Kerkorian, 324 A.2d
215, 219 (Del. Ch. 1974), rev’d on other grounds, 347 A.2d 133 (Del. 1975). Therefore,
“the option feature of these instruments does not qualify for the protections that flow from
a fiduciary duty.” Glinert v. Wickes, 1990 WL 34703, at *9 (Del. Ch. Mar. 27, 1990), aff’d,
586 A.2d 1201 (Del. 1990).

                                             76
III.   CONCLUSION

       For the foregoing reasons, Continental’s motion to dismiss for lack of

personal jurisdiction is granted.    The Innovate Defendants and the Individual

Defendants’ motions to dismiss Counts I through IV are granted in part and denied

in part, and as to Counts V through VII are granted in their entirety.

       IT IS SO ORDERED.

                                         77