Court Opinion

ID: 4394497
Source: CourtListenerOpinion
Date Created: 2019-05-07 14:03:15.696761+00
Date Added: 2024-06-11T14:52:03.700617
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
B&B FINANCIAL SERVICES, LLC, :
C.A. No. K18C-11-040 WLW
Plaintiff,
v.
RFGV FESTIVALS, LLC, RED
FROG EVENTS LLC and
ANSCHUTZ ENTERTAINMENT
GROUP, INC.,
Defendants.
Submitted: April 12, 2019
Decided: May 2, 2019
ORI)ER
Upon Defendants’ Motion to Dismiss.
Stayed.
Kara A. Hager, Esquire of Woloshin Lynch & Associates, P.A., Wilrnington,

Delaware; attorney for Plaintiff.

Christopher P. Simon, Esquire and David G. Holmes, Esquire of Cross & Sirnon,
LLC, Wilmington, Delaware; attorneys for Defendants.

WITHAM, R.J.

B&B Financial Servz`ces LLC v. RFGVFestivals LLC, et al.
C.A. No. KlSC-l l-040 WLW
May 2, 2019

INTRODUCTION

Presently before the Court is Defendants RFGV Festivals, LLC, Red Frog
Events LLC, and Anschutz Entertainment Group, Inc.’s Motion to Dismiss B&B
Financial Services’ complaint pursuant to Rule l2(b)(l) and Rule 12(b)(6) of the
Delaware Superior Court Rules of Civil Procedure. After considering the Defendants’
motion, the Plaintiff’ s response in opposition, and the record, the Defendants’ Motion
to Dismiss is hereby STAYED for a period not to exceed thirty (30) days.

FACTUAL AND PROCEDURAL HISTORY

l. The Plaintiff in this case, B&B Financial Services, LLC, (hereinafter
“Plaintiff”) is a Maryland limited liability company.‘

2. Defendant RFGV Festivals, LLC (hereinafter “RFGV”) is a foreign business
entity With its principle place of business in Illinois.

3. Defendant Red Frog Events, LLC (hereinafter “Red Frog”) is a Delaware
business entity With its principle place of business in Illinois.

4. Defendant Anschutz Entertainment Group, Inc. (hereinafter “Anschutz”) is
a foreign corporation With its principle place of business in Colorado.2

5. On April 27, 2015, the Plaintiff and RFGV entered into a contract Whereby
RFGV retained the Plaintiff to provide ATM services for the 2015 and 2016 Firefly

 

l Pl. Reply at 11 l. In its initial complaint, the Plaintiff is represented as a “Delaware business
entity With its principal place of business in Maryland. See Pl. Complaint at 11 l. As stated below, the
Plaintiff informed the Court of its intentions to cure its standing defect in the near future, as it had
already started the process for regaining good standing in Delaware.

2 Defendant Anschutz appears to have joined this motion With movants RFGV and Red Frog.

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B&B Financial Ser'vices LLC v. RFGVFestivals LLC, et al.
C.A. No. K18C-l 1-040 WLW
May 2, 2019

Music Festivals (hereinafter “Firefly”). The contract also provided that the Plaintiff
would provide additional ATM services for the 2015 and 2016 Big Barrel Country
Music Festivals (hereinafter “Big Barrel”).

6. The contract was drafted by RFGV and provided a provision that stated that
RFGV could terminate the contract prior to Firefly 2016 with or without cause, by
providing the Plaintiff thirty days written notice.3

7. The Plaintiff, per its contractual obligations, provided ATM services for
Firefly and Big Barrel in 2015.

8. On December 30, 2015 , the Plaintiff sent RFGV “and/or” Red Frog a
proposal for ATM services for events to take place in 2016 including Firefly. Neither
RFGV, nor Red Frog, responded to the Plaintiff’ s proposal.4

9. The Plaintiff contacted RFGV “and/or” Red Frog again on February 3, 2016
regarding the December 30, 2015 proposal.5 One of the Defendants responded and
informed the Plaintiff that another company was doing a test event and following that
test, one of the Defendants, RFGV or Red Frog, would provide more information to
the Plaintiff moving forward with 2016 ATM needs.6

10. RFGV did not utilize the Plaintiff’s services for the 2016 Firefly and did

 

3 Pl. Complaint at 11 16.
4 Id. at 11 7.
5 ld. at 11 9.

6 See Pl. Complaint at 11 9 (It is unclear to the Court, however, which Defendant actually
responded.).

B&B Financial Services LLC v. RFGVFestivals LLC, et al.
C.A. No. K18C-11-040 WLW
May 2, 2019

not satisfy the thirty day notice requirement provided for in the April 27, 2015
contract.

ll. The Plaintiff initiated this current action naming RFGV, Red Frog, and
Anschutz as co-defendants on November 19, 2018.

12. On February 5, 2019, RFGV and Red Frog, through counsel, sent a letter
to the Plaintiff informing it that the Plaintiff was not a company in good standing in
Delaware7 and could not, under those circumstances, maintain the current litigation.8

13. The Defendants filed their present motion to dismiss on February 15, 2019.
The Plaintiff filed its response, in opposition, on March 1, 2015. A hearing was held
on April 12, 2019 and based on the parties’ arguments, the Court reserved judgment

14. As of the date of this order, the Plaintiff has not informed the Court of any
further progress it had in rectifying its good standing with the State of Delaware.

PARTIES’ CONTENTIONS

15. RFGV and Red Frog, as the movants, argue that dismissal should be
granted on two grounds. First, they argue that the Plaintiff’ s action should be
dismissed pursuant to Superior Court Rule of Civil Procedure Rule 12(b)(1)
(hereinafter “Rule 12(b)( l )”) due to the Court’s lack of jurisdiction over the Plaintiff

because they are presently not a company in good standing with the State of

 

7 See D. Mot. Ex. l.

8 See Pl. Reply at 11 5 (Plaintiff objects to any mention of the letter that was allegedly written
under the heading “F or Settlement Purposes, lnadmissible Under DRE 408" and requests that any
reference to the letter be disregarded and stricken from the record.).

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B&B Financial Services LLC v. RFGVFestivals LLC, et al.
C.A. No. KlSC-l l-040 WLW
May 2, 2019

Delaware. This, RFGV and Red Frog contend, results in the Plaintiff’ s lack of
standing to bring a cause of action against them in Delaware.9 Second, they assert the
Plaintiff' s action is also subject to dismissal pursuant to Superior Court Rule of Civil
Procedure Rule 12(b)(6) (hereinafter “Rule l2(b)(6)”) for failure to state a claim
against Red Fro g or Anschutz.10 Specifically, the Defendants claim that the basis for
the suit against Red Frog and Anschutz, vicarious liability, is inapplicable to them
because they were not Signatories to the contract between the Plaintiff and RFGV.ll
They also argue that the Plaintiff has not made any alter ego or piercing the corporate
veil claims regarding Red Frog or Anschutz that would be required in this action.12

l 6. The Plaintiff, in opposition, concedes that it incorrectly characterized itself
in its complaint as a Delaware business entity,13 but argues that the Court is not

required to dismiss the claim, but rather, the Court is required to permit the Plaintiff

 

9 D. Mot. at 11 4.

10 Defendants note for the Court that the Delaware Supreme Court has previously addressed
whether a lack of standing requires dismissal under Rule 12(b)(l) or 12(b)(6) and has found support
for dismissal under either Rule. See Appriva S ’holder Litig. C0., LLC v. EV3, Inc., 937 A.2d 1275,
1285-86 (Del. 2007). The Supreme Court stated that “where, as here, the issue of standing is so
closely related to the merits, a motion to dismiss based on a lack of standing is properly considered
under Rule 12(b)(6) rather than Rule 12(b)( l ).” ld. The Defendants claim that in this case, the merits
of the case are not related to the standing issue and accounts for their motion pursuant to either Rule
12(b)(l) or Rule 12(b)(6).

“ D. Mot. at 1111 6-7.
12 Id. at 11 9.

13 See Supra n.l.

B&B Financial Ser'vices LLC v. RFGVFestivals LLC, et al.
C.A. No. K18C-11-040 WLW
May 2, 2019

with an opportunity to cure the defect.14 The Plaintiff also asserts that it has met its
obligation to state a claim pursuant to Rule 12(b)(6) because Red Frog and Anschutz
can be held vicariously liable because there is an agency relationship between the
parent and subsidiary corporations for which all co-defendants are members.15
Finally, the Plaintiff requests that if the Court finds that piercing the corporate veil
is necessary, that it be granted a stay so that it may amend its complaint.16
STANDARDS OF REVIEW

17. On a motion to dismiss pursuant to Rule 12(b)(l), the Court is mandated
to dismiss an action for lack of subj ect matter jurisdiction if it appears from the record
that the Court does not have jurisdiction over the claim.17 Notably, “[t]he burden of
establishing the Court's subject matter jurisdiction rests with the party seeking the

Court's intervention.”18 To prevail on a motion to dismiss pursuant to Rule 12(b)(l),

 

14 ThinkArchitecture, LLC v. Cheer, Inc., et al., 2019 WL 245195, at *3 (Del. Super. Jan.
16, 2019) (citing Hua'son Farms, Inc. v. McGrellis, 620 A.2d 215, 216 (Del. 1993)).

15 Pl. Reply at 11 8.
16 Id. at 11 9.

17 Airbase Carpet Mart, Inc. v. AYA Associates, Inc., 2015 WL 9302894, at *2 (Del. Super.
Dec. 15, 2015) (citing Super. Ct. Civ. R. 12(b)(l)).

18 Id. (citing Ropp v. King, 2007 WL 2198771, at *2 (Del. Ch. July 25, 2007) (citing
Scattered Corp. v. Chicago Stock Exch., 671 A.2d 874, 877 (Del. Ch.l994), ajj"d, 633 A.2d 372
(1993)); See also Appriva Sharehola'er Litigation Co., LLC v. EV3, Inc., 937 A.2d 1275 (Del.2007)
(stating that, “[u]nlike the standards employed in Rule 12(b)(6) analysis, the guidelines for the
Court's review of [a] 12(b)(l) motion are far more demanding on the non-movant. The burden is on
the Plaintiffs to prove jurisdiction exists. Further, the Court need not accept Plaintiffs factual
allegations as true and is free to consider facts not alleged in the complaint.” (quoting Phillips v.

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B&B Financial Services LLC v. RFGVFestivals LLC, et al.
C.A. No. KlSC-l l-040 WLW
May 2, 2019

a movant need only show that the Court lacks jurisdiction.19

18. On a motion to dismiss pursuant to Rule 12(b)(6), the moving party bears
the burden of demonstrating that “under no set of facts which could be proven in
support of its [complaint] would the [plaintiff] be entitled to relief.”20 Upon this
Court's review of a motion to dismiss, “(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.”21

DISCUSSION

19. First, the Court addresses whether the Plaintiff` s cause of action should be
dismissed pursuant to Rule 12(b)(l ), simply because they are not currently a business
entity in Delaware in good standing. As previously stated, the Defendants argue that

the Plaintiff has no standing to bring a cause of action in Delaware due to a lack of

 

County ofBucks, C.A. No. 98-6415, 1999 WL 600541, at *l (E.D.Pa. Aug. 9, 1999) (citations
omitted)).

19 AYA Associa¢es, Inc., 2015 wL 9302894, at *2 (citing super. Ct. Civ. R. 12(b)(1)).

20Alpha Contracting Services, Inc., 2019 WL 151482, at *1 (Del. Super. Jan. 9, 2019) (citing
Daisy Constr. Co. v. W.B. Venables & Sons, Inc., 2000 WL 145818, at *l (Del. Super. Jan. 14,
2000)).

21 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002).

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B&B Financial Services LLC v. RFGVFestivals LLC, et al.
C.A. No. K18C-11-040 WLW
May 2, 2019

good standing as a Delaware company.22 The Court disagrees
20. The Defendants are correct in stating that as a business entity not in good
standing in Delaware, the Plaintiff has no standing to bring a cause of action in a
Delaware Court. Pursuant to 6 Del. C. § 18-907:
A foreign limited liability company doing business in the State of Delaware
may not maintain any action, suit or proceeding in the State of Delaware until
it has registered in the State of Delaware, and has paid to the State of Delaware
all fees and penalties for the years or parts thereof, during which it did business
in the State of Delaware without having registered
Section 18-1107 further provides:
A foreign limited liability company doing business in the State of Delaware
may not maintain any action, suit or proceeding in the State of Delaware until
it has registered in the State of Delaware, and has paid to the State of Delaware
all fees and penalties for the years or parts thereof, during which it did business
in the State of Delaware without having registered.
21. In this case, the Plaintiff has not been in good standing in Delaware since
June 2003.23 Thus, the Plaintiff cannot technically pursue a cause of action in a
Delaware court until the good standing defect is cured pursuit to 6 Del. C. §§ 18-907
and section 18-1107.

 

22 See Supra n.9.

23 D. Mot. Ex. A.

B&B Financial Services LLC v. RFGVFestivals LLC, et al.
C.A. No. K18C-11-040 WLW
May 2, 2019

22. However, the Plaintiff correctly notes the Court is not required to dismiss
the action under section 18-907 and pursuant to Hudson Farms, it should be granted
an opportunity to cure the good standing defect.

23. At the hearing, the Court inquired as to the Plaintiff’ s status as a business
entity in Delaware, The Plaintiff disclosed to the Court that while it was still not in
good standing, it was taking the necessary steps to retain good standing as soon as
possible, including ascertaining how much in back franchise taxes, interest, and other
penalties, are owed. The Plaintiff also disclosed to the Court that it would be
registering under another name, since B&B Financial Services, LLC, has already been
taken.24

24. lf so, the Court finds that the Plaintiff’s actions are satisfactory and that a
temporary stay of the Defendant’s motion is warranted. Therefore, the Court will stay
the Defendant’s Motion to Dismiss for a period of 30 days from the date of this
Order. The Plaintiff is required to establish its good standing in Delaware, or
otherwise demonstrate it is qualified to further maintain this action. Furthermore, the
Plaintiff is ordered to provide the Court with any update in its status, as soon as
possible, preferably before the 30 day stay has expired. lf its good standing defect is
cured within the 30 day stay, the Plaintiff will be granted leave to amend its
complaint, if it feels any such amendment is necessary. However, if the Plaintiff has

not regained good standing in that time period, it will be required to Show cause why

 

24 At the hearing, Plaintiff disclosed its new name in Delaware will be B&B ATM Services.

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B&B Financial Services LLC v. RFGVFestivals LLC, et al.
C.A. No. K18C-l 1-040 WLW
May 2, 2019

the Court should not dismiss the Defendants motion pursuant to Rule 12(b)(l).

25. Ordinarily, the Court would next address the Defendants’ 12(b)(6) motion.
However, because the Court has stayed the Defendant’s potentially dispositive
12(b)(1) motion, the Court will also temporarily stay the Defendant’ s 12(b)(6) motion
for 30 days.

CONCLUSION

26. F or the reasons stated above, the Defendants’ Motion to Dismiss pursuant
to Rule l2(b)(1) and 12(b)(6) are hereby STAYED for a period not to exceed 30
days.

IT IS SO ORDERED.

/s/ William L. Witham Jr.
Resident Judge

WLW/dmh

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