Court Opinion

ID: 9414714
Source: CourtListenerOpinion
Date Created: 2023-08-02 16:06:29.633628+00
Date Added: 2024-06-11T17:17:57.733297
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

NEW WOOD RESOURCES LLC,                     )
                                            )
             Plaintiff/                     )
             Counterclaim Defendant,        )
                                            )
                 v.                         ) C.A. No. N20C-10-231 SKR CCLD
                                            )
RICHARD BALDWIN                             )
                                            )
             Defendant/                     )
             Counterclaim Plaintiff.        )

                             Submitted: June 14, 2023
                              Decided: July 31, 2023

                          MEMORANDUM OPINION

Richard P. Rollo, Esquire, Travis S. Hunter, Esquire, Jordan L. Cramer, Esquire,
Richards, Layton & Finger, P.A., Wilmington, Delaware, Attorneys for
Plaintiff/Counterclaim Defendant New Wood Resources LLC.

Sean J. Bellew, Esquire, Bellew LLC, Wilmington, Delaware; Chris L. Gilbert,
Esquire, Gilbert PC, Dallas, Texas, Attorneys for Defendant/Counterclaim Plaintiff
Richard Baldwin.

Rennie, J.
                               I. INTRODUCTION

      Plaintiff and defendant have been embroiled in lawsuits against each other

over the past several years. Defendant’s exit from a plaintiff-owned company was

the catalyst for multiple lawsuits spanning state and federal courts. This iteration of

the conflict stems from plaintiff’s agreement to indemnify defendant for costs

incurred in defending certain lawsuits. This commitment was conditioned upon

defendant’s agreement to repay plaintiff, if it was later determined that defendant

was not entitled to indemnification under the standard set forth in their agreement.

Defendant requested indemnification, and plaintiff complied after being ordered by

a court. Plaintiff then determined that defendant did not meet the contractual

standard for indemnification and sought to claw back the funds advanced to

defendant. That is what this action is about—the claw back.

      Plaintiff asserted a breach of contract claim as a result of defendant’s refusal

to return the advanced indemnification funds. In response, defendant asserted a

counterclaim that alleges, among other things, that the agreement contained an

implied term requiring any determination on indemnification to be made in good

faith. This Court previously granted judgment on the pleadings in plaintiff’s favor

on both the breach claim and the counterclaim. As to the breach claim, the Court

determined that defendant breached the agreement and, as to the counterclaim, the

Court determined that that the agreement contained no implied term. The ruling on
the counterclaim was appealed to the Delaware Supreme Court. The Supreme Court

held that the agreement contained an implied term that any indemnification

determination must be made in good faith. Thus, the case was remanded to this

Court.

         Following remand, the parties conducted discovery. Plaintiff now moves for

summary judgment on the counterclaim. The issue before the Court is whether

defendant can demonstrate that plaintiff breached the implied covenant of good faith

and fair dealing when plaintiff determined that defendant was not entitled to

indemnification. Stated differently, can defendant establish that plaintiff acted in

bad faith? The answer is no, because the record does not support a plausible finding

of bad faith. Accordingly, for the reasons set forth more fully below, plaintiff is

entitled to summary judgment on defendant’s counterclaim. Plaintiff is also entitled

to judgment in its favor on its breach claim because defendant has no valid basis to

excuse his breach.

              II. FACTUAL AND PROCEDURAL BACKGROUND

   A. The Parties

         Plaintiff/Counterclaim Defendant, New Wood Resources LLC (“New

Wood”), is a Delaware limited liability company with its principal place of business

                                          2
in Boise, Idaho.1 New Wood has multiple members.2 Defendant/Counterclaim

Plaintiff, Dr. Richard Baldwin, served as a member of New Wood’s Board of

Managers from September 13, 2013 to August 24, 2016.3 Dr. Baldwin is a citizen

of Texas.4

       Several non-parties are relevant to this action. Oak Creek Investments, LLC

(“OCI”) is a member of New Wood. Dr. Baldwin served as OCI’s manager.5 New

Wood operates a plywood and veneer manufacturing facility in Mississippi known

as Winston Plywood & Veneer LLC (“WPV”).6 New Wood controls WPV through

its wholly owned subsidiary WPV Holdco LLC (“Holdco”).7                         ACR Winston

Preferred Holdings LLC (“ACR”) was the majority holder of New Wood Units at

the relevant time, holding approximately 85.52% of New Wood’s then-outstanding

Units.8 Andrew Bursky was President of ACR.9 Kurt Liebich is the former CEO of

WPV.10

1
  Amended Complaint (“Am. Compl.”) ¶ 2 (D.I. 6).
2
  Id.
3
  Id. ¶ 3; Answer & Counterclaim (“Counterclaim”) ¶ 3 (D.I. 7).
4
  Am. Compl. ¶ 3.
5
  See id. ¶ 12; Plaintiff/Counterclaim Defendant’s Opening Brief (“Opening Br.”) at 5 (D.I. 61).
6
  Baldwin v. New Wood Res. LLC, 283 A.3d 1099, 1102 (Del. 2022).
7
  Id.
8
  Id.
9
  Id.
10
   Id.
                                                3
     B. Dr. Baldwin’s Employment by New Wood

       New Wood leased the WPV manufacturing facility in Mississippi.11 The

facility was dormant and in need of repairs.12 New Wood started repairs with the

intent to operate a plywood mill there.13 New Wood selected Dr. Baldwin to oversee

the facility’s repairs because he was an industry expert.14 Before repairs were

completed, a tornado destroyed the facility.15 As a result of the damage to the

facility, WPV received funding from the Federal Emergency Management Agency,

and Dr. Baldwin led the facility’s restoration effort on behalf of New Wood.16 On

August 24, 2016, Dr. Baldwin’s employment as President and General Manager of

WPV ended.17

     C. The LLC Agreement

       The verbiage of New Wood’s Second Amended and Restated Limited

Liability Company Agreement (the “LLC Agreement”) is central to this dispute.

The LLC Agreement provides specific indemnification and advancement rights to

11
   Baldwin, 283 A.3d at 1104.
12
   Id.
13
   Id.
14
   Id.
15
   Id.
16
   Id. at 1104-05.
17
   It is unclear from the record whether Dr. Baldwin resigned or whether he was terminated.
Compare Baldwin, 283 A.3d at 1105 (stating that Dr. Baldwin was “terminated”), with Answering
Br., Ex. A at 1 (stating in the New Wood Written Consent document that Dr. Baldwin resigned).
                                             4
its Managers.18 Hence, as a Manager, Section 8.2 of the LLC Agreement establishes

Dr. Baldwin’s indemnification rights:

       Subject to the limitations and conditions as provided in this Article 8,
       each Person who was or is made a party or is threatened to be made a
       party to or is involved in any threatened, pending or completed action,
       suit or proceeding, whether civil, criminal, administrative, arbitrative
       or investigative (hereinafter, a “Proceeding”), or any appeal in such a
       Proceeding or any inquiry or investigation that could lead to such a
       Proceeding, by reason of the fact that it, or a Person of whom it is the
       legal representative, is or was a Member, Manager, Member of a
       Committee of the Board or an Officer, or while a Member, Manager or
       an Officer is or was serving at the request of the Company as a member,
       manager, director, officer, partner, venturer, proprietor, trustee,
       employee, agent or similar functionary of another foreign or domestic
       limited liability company, corporation, partnership, joint venture, sole
       proprietorship, trust, employee benefit plan or other Person (each, an
       “Indemnitee”) shall be indemnified by the Company to the fullest
       extent permitted by the [Delaware Limited Liability Company] Act, as
       the same exists or may hereafter be amended (but, in the case of any
       such amendment, only to the extent that such amendment permits the
       Company to provide broader indemnification rights than said Act
       permitted the Company to provide prior to such amendment) against
       judgments, penalties (including excise and similar taxes and punitive
       damages), fines, settlements and reasonable expenses (including
       attorneys’ fees) actually incurred by such Person in connection with
       such Proceeding, and indemnification under this Article 8 shall
       continue as to a Person who has ceased to serve in the capacity which
       initially entitled such Person to indemnity hereunder. Notwithstanding
       anything to the contrary in this Section 8.2, no Person shall be entitled
       to indemnification hereunder unless it is found (in the manner
       described below in this Section 8.2) that, with respect to the matter for
       which such Person seeks indemnification, such Person acted in good
       faith and in a manner that he or she reasonably believed to be in or not
       opposed to the best interests of the Company and, with respect to any

18
   “Managers” is defined in the LLC Agreement. See Defendant/Counterclaim Plaintiff’s
Answering Brief (“Answering Br.”), Ex. B § 7.2(a) (D.I. 70); see also id., Ex. B at Exhibit A to
the LLC Agreement at 4 (defining “Manager”).
                                               5
          criminal action or proceeding, had no reasonable cause to believe his or
          her conduct was unlawful. . . . The finding of the standard of conduct
          required above shall be made (a) by a majority vote of all the Managers
          who are not parties to such Proceeding even though less than a quorum
          or (b) if there are no such Managers, or if such Managers so direct, by
          independent legal counsel in a written opinion or (c) by holders of a
          Majority of the then-outstanding Units (determined without regard to
          any Members that are parties to such Proceeding). Notwithstanding
          anything to the contrary herein, “internal disputes” shall be excluded
          from the types of claims indemnified hereunder. For purposes of the
          preceding sentence, an “internal dispute” is defined exclusively as any
          proceeding commenced by any Atlas Member or one or more officers,
          directors, managers, partners, members or employees of any Atlas
          Member against any other Atlas Member or one or more other officers,
          directors, managers, partners, members or employees of any Atlas
          Member against any other Atlas Member or one or more other officers,
          directors, managers, partners, members or employees of such Atlas
          Member.19

          Section 8.3 of the LLC Agreement covers “Advance Payment” and states:

          The right to indemnification conferred in this Article 8 shall include the
          right to be paid or reimbursed by the Company the reasonable expenses
          incurred by a Person of the type entitled to be indemnified under
          Section 8.2 who was, is or is threated to be made a named defendant or
          respondent in a Proceeding in advance of the final disposition of the
          Proceeding and without any determination as to the Person’s ultimate
          entitlement to indemnification; provided, however, that the[] payment
          of such expenses incurred by any such Person in advance of the final
          disposition of a Proceeding shall be made only upon delivery to the
          Company of a written affirmation by such Person of its good faith belief
          that it has met the standard of conduct necessary for indemnification
          under this Article 8 and a written undertaking, by or on behalf of such
          Person, to repay all amounts so advanced if it shall ultimately be
          determined that such indemnified Person is not entitled to be
          indemnified under this Article 8 or otherwise.20

19
     Id., Ex. B § 8.2 (underlining and bold in original) (italics added).
20
     Id., Ex. B § 8.3 (underlining in original) (italics added).
                                                    6
     D. Lawsuits and Advancement

       1. Underlying Actions

       Four lawsuits that are relevant to this action will be discussed—two in

Mississippi, and two in the Delaware Court of Chancery.

       On February 9, 2018, Dr. Baldwin, as the manager of OCI, filed a complaint

in the United States District Court for the Northern District of Mississippi against

New Wood, WPV, Holdco, Mr. Bursky, Mr. Liebich, and Atlas FRM LLC d/b/a

Atlas Holdings, LLC (“Atlas”). Dr. Baldwin alleged breach of contract, fraud,

breach of the implied covenant of good faith and fair dealing, and breach of fiduciary

duties, among other counts (the “Mississippi Federal Action”).21 In the Mississippi

Federal Action, OCI also sought declaratory relief for an alleged improper dilution

of OCI’s equity interests and veil piercing arising from a Management Services

Agreement by and between Dr. Baldwin and WPV and investments by Dr. Baldwin

in New Wood and Holdco.22 Dr. Baldwin alleged, and the Delaware Supreme Court

noted, that Dr. Baldwin’s basis for the Mississippi Federal Action arose from the end

of his employment as President and General Manager of WPV.23

21
   See Opening Br. at 5-6, Ex. 1.
22
   See id. at 5-6; see also Baldwin, 283 A.3d at 1105.
23
   See Baldwin, 283 A.3d at 1105-06.
                                                 7
       On May 17, 2018, the defendants in the Mississippi Federal Action moved to

dismiss for lack of subject matter jurisdiction.24 On the very same day, those same

defendants filed a suit against OCI and Dr. Baldwin in the Delaware Court of

Chancery, asserting claims for breach of contract, breach of fiduciary duty, and

negligence (the “Delaware Plenary Action”).25 Those defendants also asserted a

declaratory judgment claim in the Delaware Plenary Action and requested a

declaration that OCI’s allegations in the Mississippi Federal Action were false.26

       On May 25, 2018, OCI filed a notice of dismissal without prejudice in the

Mississippi Federal Action and refiled the same claims against the same defendants

in the Circuit Court of Winston County, Mississippi (the “Mississippi State

Action”).27 The Mississippi State Action was dismissed in February 2019 under the

doctrine of forum non conveniens.28

       2. Advancement Action

       Before dismissal of the Mississippi State Action, Dr. Baldwin and OCI sought

advancement of their litigation expenses under Section 8.3 of the LLC Agreement.29

Section 8.3 required Dr. Baldwin and OCI to provide an “affirmation” and an

24
   Answering Br. at 12.
25
   Id.; Opening Br. at 6.
26
   Baldwin, 283 A.3d at 1106.
27
   Answering Br. at 12.
28
   Id.
29
   See Baldwin, 283 A.3d at 1106.
                                         8
“undertaking.”30 On August 10, 2018, Dr. Baldwin sent one letter on behalf of

himself and one on behalf of OCI stating that they agreed “to repay all amounts so

advanced if it shall ultimately be determined that [Dr. Baldwin and OCI are] not

entitled to be indemnified in [the Delaware Plenary Action].”31 New Wood denied

Dr. Baldwin’s and OCI’s requests.32

       On January 10, 2019, Dr. Baldwin and OCI filed an advancement action in

the Delaware Court of Chancery against New Wood, Holdco, and WPV (the

“Advancement Action”).33 Dr. Baldwin and OCI sought advancement for the fees

incurred in the Delaware Plenary Action, and fees and interest incurred in litigating

the Advancement Action (the “fees on fees”).34

       On March 25, 2019, after the Mississippi State Action was dismissed, Dr.

Baldwin and OCI filed their answer and asserted counterclaims against New Wood,

WPV, Holdco, Atlas, Mr. Bursky, and Mr. Liebich in the Delaware Plenary Action.35

       Thereafter, in May 2019, Dr. Baldwin moved for partial summary judgment

in the Advancement Action.36 The Vice Chancellor ruled that Dr. Baldwin was

entitled to advancement of the litigation expenses that Dr. Baldwin incurred in

30
   See Answering Br., Ex. B § 8.3.
31
   Opening Br., Ex. 2.
32
   See Answering Br. at 12.
33
   Id.; Baldwin, 283 A.3d at 1106.
34
   Answering Br. at 12; Baldwin, 283 A.3d at 1106.
35
   Answering Br. at 13.
36
   Baldwin, 283 A.3d at 1107.
                                              9
defending the claims in the Delaware Plenary Action, plus fees and expenses

incurred in the Advancement Action, following the execution of his “undertaking”

letter.37

       The precise ruling by Court of Chancery was issued in October 2019. It

ordered New Wood to pay: 75% ($269,881.61) of the advancement costs sought for

Dr. Baldwin’s and OCI’s costs and expenses incurred in defending the Delaware

Plenary Action through September 17, 2019; $17,726.97 in pre-judgment interest;

and 75% ($214,459.49) of the fees on fees Dr. Baldwin and OCI incurred in bringing

the Advancement Action.38 New Wood made only a first partial payment but then

objected to subsequent payments.39 Dr. Baldwin thereafter filed a motion for fees

and expenses under Court of Chancery Rule 88 (the “Rule 88 Motion”).40 In the

Rule 88 Motion, Dr. Baldwin asserted that New Wood improperly claimed that it

had insufficient funds to advance the amounts owed.41 Dr. Baldwin acknowledged

in the Rule 88 Motion that New Wood paid $502,068.07 of the $638,702.13, plus

interest, that was requested.42 Dr. Baldwin requested that New Wood be ordered to

pay $233,373.70, plus pre- and post-judgment interest, as well as fees on fees.43

37
   Id.
38
   Id. at 1107-08.
39
   See Answering Br. at 14.
40
   Baldwin, 283 A.3d at 1108.
41
   Id.
42
   Id.
43
   Id.
                                         10
       Meanwhile, in January 2020, New Wood, Holdco, and WPV voluntarily

dismissed their claims in the Delaware Plenary Action, leaving only Dr. Baldwin’s

and OCI’s counterclaims remaining.44 Later, in March 2020, New Wood moved for

partial judgment on the pleadings in the Delaware Plenary Action. After considering

the motion, the Court of Chancery dismissed certain of Dr. Baldwin’s and OCI’s

counterclaims, while others remained.45

     E. April 2020 Written Consent

       To be entitled to indemnification, Section 8.2 of the LLC Agreement requires

Dr. Baldwin to act in good faith and in a manner that he reasonably believed to be

in or not opposed to the best interests of New Wood.46 New Wood sought a

determination as to whether Dr. Baldwin and OCI were entitled to indemnification

under Section 8.2. This Section permits such a determination to be made in one of

three ways—one of which is “by holders of a Majority of then-outstanding Units

(determined without regard to any Members that are parties to such Proceeding).”47

New Wood chose this option. Specifically, at that time, ACR held approximately

85.52% of New Wood’s then-outstanding Units, and Mr. Bursky was the President

of ACR.48 On April 23, 2020, Mr. Bursky executed a Written Consent of Certain

44
   Id.
45
   Id.
46
   See Answering Br., Ex. B § 8.2.
47
   Id.
48
   See Baldwin, 283 A.3d at 1109.
                                          11
Members of New Wood Resources LLC (the “Written Consent”).49 The Written

Consent stated:

       [T]he undersigned Members, constituting a Majority of the currently
       outstanding Units (determined without regard to Members that are
       party to the Lawsuits), (i) are familiar with and have had sufficient time
       to consider the performance, conduct and behavior of Baldwin prior to
       his resignation, (ii) are familiar with and have had sufficient time to
       consider the allegations and claims made by the parties to the Lawsuits,
       and (iii) have determined that Baldwin failed to act in good faith and in
       a manner that he reasonably believed to be in or not opposed to the best
       interest of the Company with respect to the matters at issue in the
       Lawsuits.50
       The Written Consent itself sheds no additional light on ACR’s determination

that Dr. Baldwin failed to act in good faith. After execution by Mr. Bursky, New

Wood adopted the Written Consent and requested that Dr. Baldwin repay the

advanced amounts. Dr. Baldwin refused.51

       Eventually, in August 2020, the Court of Chancery ruled on Dr. Baldwin’s

Rule 88 Motion in the Advancement Action.52 In total, the Court of Chancery

ordered New Wood to pay Dr. Baldwin $867,211.03, which consisted of

$541,664.99 in advancement and $325,546.04 in indemnification.53 New Wood did

49
   See Answering Br., Ex. A.
50
   Id., Ex. A at 2 (emphasis added).
51
   Baldwin, 283 A.3d at 1109.
52
   Id.
53
   Id. at 1110.
                                          12
not pay until Dr. Baldwin domesticated the judgment in Mississippi.54 New Wood

thereafter sought to claw back the money paid and initiated the current action.

     F. The Current Action

       1. Superior Court Proceedings

       New Wood filed the current action on October 26, 2020.55 New Wood’s

Amended Complaint alleges that Dr. Baldwin breached the LLC Agreement and the

“undertaking.”56    On January 20, 2021, Dr. Baldwin filed his Answer and a

Counterclaim. In the Answer, Dr. Baldwin asserted three affirmative defenses: (1)

Section 8.2 of the LLC Agreement requires that the findings in the Written Consent

be made in good faith, (2) Dr. Baldwin acted in good faith, and (3) New Wood’s lag

in satisfying the judgment for Dr. Baldwin in the Advancement Action caused him

to incur expenses offsetting any money he owed to New Wood.57

       Dr. Baldwin’s Counterclaim seeks a declaration that: (i) New Wood must pay

Dr. Baldwin the attorneys’ fees and costs he incurred in domesticating the

Advancement Action judgment in Mississippi, including the cost of discovery there;

(ii) Section 8.2 of the LLC Agreement contains an implicit term that any

determination of a right to indemnification must be made in good faith; and (iii) the

54
   Id.
55
   Complaint (D.I. 1).
56
   See Am. Compl. ¶¶ 21-25.
57
   Counterclaim at 13.
                                         13
Written Consent was entered into in a bad faith attempt to avoid New Wood’s

indemnification obligations under Section 8.2.58

      On March 16, 2021, New Wood moved for judgment on the pleadings on its

breach of contract claim and Dr. Baldwin’s Counterclaim.59 This Court heard oral

argument on New Wood’s motion on May 12, 2021.60 During oral argument, Dr.

Baldwin asserted that his Counterclaim was both an implied covenant claim and a

claim seeking to imply a term in the LLC Agreement.61

      On August 23, 2021, this Court entered judgment in New Wood’s favor.62

This Court interpreted the LLC Agreement and undertaking to require Dr. Baldwin

to repay $541,644.99, the amount advanced by New Wood.63 Because the Written

Consent stated that Dr. Baldwin acted in bad faith and was not entitled to

indemnification, this Court held that Dr. Baldwin’s undertaking required him to

repay the money advanced to him by New Wood.64                  Only the advancement

payments, not the indemnification payments, were subject to the undertaking, and

thus, Dr. Baldwin was required to repay only the advancement money.65 This Court

58
   Id. ¶ 58.
59
   See Plaintiff/Counterclaim Defendant’s Motion for Judgment on the Pleadings (D.I. 12).
60
   See Judicial Action Form (D.I. 20).
61
   Baldwin, 283 A.3d at 1112.
62
   See Order (D.I. 23); see also New Wood Res. LLC v. Baldwin, 2021 WL 3784258 (Del. Super.
Aug. 23, 2021), rev’d and remanded, 283 A.3d 1099 (Del. 2022).
63
   Baldwin, 283 A.3d at 1112-13.
64
   Id. at 1113.
65
   Id.
                                            14
also determined that LLC Agreement Section 8.2 did not contain an implied

covenant of good faith and fair dealing that would require New Wood to make the

Written Consent’s indemnification determination in good faith.66        This Court

additionally found that Dr. Baldwin did not plead a cognizable Counterclaim

because the Counterclaim was asserted against New Wood rather than ACR—the

entity that determined Dr. Baldwin failed to act in good faith.67

       2. Appeal to the Supreme Court

       On October 22, 2021, Dr. Baldwin appealed this Court’s ruling to the Supreme

Court.68 The Supreme Court held two arguments on this matter.69 The Supreme

Court determined that Dr. Baldwin asserted his Counterclaim against the correct

party, New Wood. The Supreme Court reasoned that New Wood is the real party-

in-interest because New Wood is the entity obligated to indemnify persons who meet

the requirements under the LLC Agreement.70 Additionally, the Supreme Court held

that Section 8.2 contains an implied covenant of good faith and fair dealing,

obligating New Wood to make the indemnification determination in good faith.71

       The Supreme Court stated:

       [A]lthough Baldwin’s pleadings lack specific facts as to New Wood’s
       conduct vis-à-vis the actual Written Consent entered into on April 23,
66
   See New Wood Res. LLC, 2021 WL 3784258, at *6.
67
   Id. at *5.
68
   See Notice of Appeal to Supreme Court (D.I. 33).
69
   Baldwin, 283 A.3d at 1120.
70
   Id. at 1115-16
71
   Id. at 1118.
                                            15
       2020, he does allege bad faith on the part of New Wood throughout the
       overall advancement proceedings. Albeit in a disorganized fashion,
       Baldwin has sufficiently pleaded enough to create an issue of fact as to
       New Wood’s good faith in discharging its obligations under Section 8.2
       and to overcome New Wood’s contention that it was merely presented
       with, and acted on, a facially valid consent obtained by ACR.72

       The Supreme Court reversed this Court’s decision and remanded it for further

proceedings, noting that “[w]hether Baldwin is able to prove that New Wood

breached the implied covenant of good faith and fair dealing is for another day.”73

       3. Remand to Superior Court

       After remand, the parties conducted written discovery and depositions of Mr.

Bursky, Mr. Liebich, Dr. Baldwin, and Dr. Baldwin’s son, Richard Baldwin.74 After

the parties conducted discovery, New Wood moved for summary judgment on Dr.

Baldwin’s Counterclaim and New Wood’s breach of contract claim.75 The Court

heard oral argument on New Wood’s Motion for Summary Judgment on June 14,

2023. This memorandum opinion addresses that Motion.

                            III. STANDARD OF REVIEW

       The Court “will grant summary judgment if, after viewing the record in a light

most favorable to the non-moving party, no genuine issues of material fact exist and

72
   Id. at 1123 (citations omitted).
73
   Id. at 1124.
74
   Answering Br. at 17.
75
   As discussed further below, New Wood contends this Court already found for New Wood on its
breach of contract claim. The Court notes New Wood’s position but will address the breach claim
below.
                                              16
the movant is entitled to judgment as a matter of law.”76 On a motion for summary

judgment, the Court: “(i) construes the record in the light most favorable to the non-

moving party; (ii) detects, but does not decide, genuine issues of material fact; and

(iii) denies the motion if a material fact is in dispute.”77 The moving party bears the

initial burden of showing that its motion is supported by the undisputed factual

record.78 If the moving party meets that burden, the burden shifts to the non-moving

party to show a genuine issue of material fact remains for trial.79

       Even though the Court construes the factual record in the light most favorable

to the non-moving party,80 the Court “will not indulge in speculation and conjecture;

a motion for summary judgment is decided on the record presented and not on

evidence potentially possible.”81

                            IV. PARTIES’ CONTENTIONS

       New Wood filed its Motion for Summary Judgment on Dr. Baldwin’s

Counterclaim and New Wood’s breach of contract claim. First, New Wood contends

76
   CVR Refin., LP v. XL Specialty Ins. Co., 2021 WL 5492671, at *8 (Del. Super. Nov. 23, 2021)
(citing Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99-100 (Del. 1992)); see also Del. Super. Ct.
Civ. R. 56.
77
   CVR Refin., LP, 2021 WL 5492671, at *8 (citing Judah v. Del. Tr. Co., 378 A.2d 624, 632 (Del.
1997); Merrill, 606 A.2d at 99; Ebersole v. Lowengrub, 180 A.2d 467, 468-69 (Del. 1962)).
78
   Id. (citing Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979)).
79
   Id. (citing Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995)).
80
   Id. (citing Judah, 378 A.2d at 632).
81
   In re Asbestos Litig., 509 A.2d 1116, 1118 (Del. Super. 1986) (citing Rochester v. Katalan, 320
A.2d 704, 708 n.7 (Del. 1974); Chrysler Corp. v. New Castle Cnty., 464 A.2d 75, 85 (Del Super.
1983)).
                                               17
that Dr. Baldwin has no basis to obtain a declaration about the Mississippi

proceeding because he is already seeking this declaration in the Court of Chancery.82

Second, New Wood maintains that Dr. Baldwin has not presented any facts to

dispute that the Written Consent was executed and acted on in good faith, which

defeats Dr. Baldwin’s Counterclaim and, in effect, also mandates a finding for New

Wood on the breach of contract claim.83

       Dr. Baldwin takes the opposite position. Dr. Baldwin’s primarily contends

that New Wood is not entitled to summary judgment because the evidence does not

establish New Wood’s good faith, but in fact suggests New Wood acted in bad

faith.84 Dr. Baldwin argues, inter alia, that Mr. Bursky and Mr. Liebich failed to

cite any facts upon which the Written Consent is based and instead offered only

conclusory statements and irrelevant complaints about job performance and

unrelated litigation.85 Dr. Baldwin withdrew the part of his Counterclaim relating to

collecting fees from domesticating the Advancement Action judgment in

Mississippi, because that claim is being litigated in the Court of Chancery.86 In short,

Dr. Baldwin maintains that the evidence does not support finding that New Wood

acted in good faith.

82
   See Opening Br. at 13-14.
83
   See id. at 15-22.
84
   See Answering Br. at 20.
85
   See id. at 29-34.
86
   See id. at 2 n.1.
                                          18
                                       V. DISCUSSION

     A. The Counterclaim

       Dr. Baldwin’s Counterclaim states:

       Dr. Baldwin is entitled to a declaratory judgment that: (i) New Wood is
       required to pay Dr. Baldwin the attorneys’ fees and costs he incurred in
       domesticating the [Advancement Action judgment in] Mississippi
       (including the discovery efforts Dr. Baldwin was required to engage in
       prior to New Wood paying the [j]udgment) in an amount to be proved
       at trial; (ii) Section 8.2 of the LLC Agreement contains an implicit term
       that any determination of a right to indemnification must be made in
       good faith; and (iii) the Written Consent by ACR was entered into in a
       bad faith attempt to avoid New Wood’s indemnification obligations
       under Section 8.2 of the LLC Agreement.87
       Dr. Baldwin withdrew part (i) of his Counterclaim.88 With respect to part (ii)

of the Counterclaim, the Supreme Court held that Section 8.2 contains an implicit

term that any indemnification determination must be made in good faith.89

Therefore, the only remaining issue to decide with respect to the Counterclaim is

whether New Wood acted on the Written Consent in bad faith.90

       New Wood contends that there is a rebuttable presumption that all persons act

in good faith, and that Dr. Baldwin has no facts to dispute that the Written Consent

87
   Counterclaim ¶ 58.
88
   See Answering Br. at 2 n.1.
89
   See Baldwin, 283 A.3d at 1118 (“We hold that although a good faith requirement is not expressly
stated in Section 8.2, it is implicit in Section 8.2’s language.”).
90
   See id. at 1124 (“Whether Baldwin is able to prove that New Wood breached the implied
covenant of good faith and fair dealing is for another day.”); see also Amirsaleh v. Bd. of Trade of
City of New York, Inc., 2009 WL 3756700, at *5 (Del. Ch. Nov. 9, 2009) (“[T]o prove a breach of
the implied covenant [Dr. Baldwin] must demonstrate that [New Wood] acted in ‘bad faith.’”).
                                                19
was executed and acted on in good faith.91 Dr. Baldwin counters that Mr. Bursky

and Mr. Liebich failed to cite any facts upon which the Written Consent is based and

instead offered only conclusory and irrelevant statements concerning job

performance and unrelated litigation.92 Dr. Baldwin misapprehends who holds the

burden to demonstrate bad faith.

       It is well established that Delaware law presumes a person acts in good faith.93

So to prove a breach of the implied covenant of good faith and fair dealing, Dr.

Baldwin must demonstrate that New Wood acted in bad faith.94 And to prove bad

faith, Dr. Baldwin must demonstrate that New Wood’s “conduct was motivated by

91
   Opening Br. at 15.
92
   Answering Br. at 24.
93
   Thomas v. King, 99 A.2d 778, 781 (Del. 1953); see also KE Prop. Mgmt. Inc. v. 275 Madison
Mgmt. Corp., 1993 WL 285900, at *7 (Del. Ch. July 27, 1993) (“There is a rebuttable presumption
that all persons act honestly, properly, in good faith and without fraud.” (citing Thomas, 99 A.2d
at 781)); Amirsaleh, 2009 WL 3756700, at *4 (“[The] Court [of Chancery] has previously held
that a breach of the implied covenant of good faith and fair dealing ‘implicitly indicates bad faith
conduct.’” (quoting Cont’l Ins. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1234 (Del. Ch. 2000))).
94
   Amirsaleh, 2009 WL 3756700, at *5. Dr. Baldwin’s counsel suggests that “bad faith” is defined
as an “intentional dereliction of duty.” Answering Br. at 29 (citing Goldstein v. Denner, 2022 WL
1671006, at *40 (Del. Ch. May 26, 2022)). The “intentional dereliction of duty” language arises
in the fiduciary duty context. See, e.g., Goldstein, 2022 WL 1671006, at *40-41 (discussing bad
faith and “intentional dereliction of duty” in the breach of fiduciary duty context); Lydonell Chem.
Co. v. Ryan, 970 A.2d 235, 240 (Del. 2009) (discussing “intentional dereliction of duty” and good
faith in the breach of fiduciary duty context); In re Walt Disney Co. Derivative Litig., 906 A.2d
27, 64 (Del. 2006) (“The precise question is whether the Chancellor’s articulated standard for bad
faith corporate fiduciary conduct—intentional dereliction of duty, a conscious disregard for one’s
responsibilities—is legally correct.” (emphasis added)). The current action concerns the implied
covenant of good faith and fair dealing, not fiduciary duties. The Court employs caselaw from
implied covenant cases for its bad faith standard. It will not consider the “intentional dereliction
of duty” standard.
                                                20
a culpable mental state.”95 The term “‘bad faith’ is not simply bad [judgment] or

negligence, but rather it implies the conscious doing of a wrong because of dishonest

purpose or moral obliquity; it is different from the negative idea of negligence in

that it contemplates a state of mind affirmatively operating with furtive design or ill

will.”96 Bad faith has been defined in many ways,97 but in essence it means that New

Wood’s conduct “must be driven by an improper purpose.”98 Dr. Baldwin must

present evidence to “rebut the presumption” of good faith; otherwise, summary

judgment for New Wood is proper.99

       1. Neither ACR’s Nor New Wood’s Actions Constitute Bad Faith.

       Mr. Bursky, President of ACR, was deposed for this case.100 Dr. Baldwin’s

counsel asked Mr. Bursky how ACR came to the determination that Dr. Baldwin did

not act in good faith.101 Mr. Bursky responded that ACR “carefully assessed the

95
   Amirsaleh, 2009 WL 3756700, at *5; see also id. at *5 n.24 (collecting cases discussing “bad
faith” in the implied covenant context).
96
   Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1208
n.16 (Del. 1993) (citing Bad Faith, BLACK’S LAW DICTIONARY (5th ed. 1983)); see also Baldwin,
283 A.3d at 1118 n.110 (citing Desert Equities for the same proposition).
97
   See, e.g., Amirsaleh, 2009 WL 3756700, at *5 n.24 (collecting cases).
98
   Id. at *5.
99
   KE Prop. Mgmt. Inc., 1993 WL 285900, at *9 (citing Burkhart v. Davies, 602 A.2d 56, 59 (Del.
1991)). KE Property Management Inc. aptly states that an “allegation of bad faith ‘raises
essentially a question of fact’, which means that such an allegation generally is sufficient to defeat
a motion . . . for judgment on the pleadings”; but, where “the non-moving party bears the burden
of persuasion at trial, as [Dr. Baldwin] does here as to overcoming the presumption of good faith,
the non-moving party, after adequate opportunity for discovery, must introduce competent
evidence, which, if true, would rebut the presumption or summary judgment will be granted against
it.” KE Prop. Mgmt. Inc., 1993 WL 285900, at *9 (citing Desert Equities, Inc., 624 A.2d at 1208-
09; Burkhart, 602 A.2d at 59).
100
    See Exhibit (“Bursky Tr.”) (D.I. 71).
101
    Id. at 160:5-12, 162:9-11.
                                                 21
track record” of Dr. Baldwin’s behavior pre- and post-exit from WPV, and ACR

assessed Dr. Baldwin’s claims in the multiple lawsuits between the relevant

parties.102 From that assessment, ACR determined in the Written Consent that Dr.

Baldwin did not act in good faith and was not entitled to indemnification. Dr.

Baldwin takes Mr. Bursky’s deposition responses and claims that the Written

Consent was executed in bad faith, because it was based on irrelevant facts.103

Specifically, Dr. Baldwin emphasizes that Section 8.2 of the LLC Agreement

requires that the determination of good faith (or lack thereof) must be based on facts

relating to the action for which Dr. Baldwin sought indemnification.104 Dr. Baldwin

maintains that the “action” at issue for purposes of indemnification is the Delaware

Plenary Action.105

       Even assuming that Dr. Baldwin’s interpretation of Section 8.2 is correct,

ACR’s considerations underlying the Written Consent do not amount to bad faith.

Bad faith “is different from the negative idea of negligence in that it contemplates a

state of mind affirmatively operating with furtive design or ill will.” 106 While one

could argue negligence from these facts, or that ACR was just plain wrong in its

102
    See id. at 162:12-163:20. This is consistent with New Wood’s supplemental interrogatory
responses. See Opening Br., Ex. 13 at 4-7.
103
    See Answering Br. at 34.
104
    See id. at 31.
105
    See id. at 36.
106
    Desert Equities, Inc., 624 A.2d at 1208 n.16 (citing Bad Faith, BLACK’S LAW DICTIONARY);
see also Baldwin, 283 A.3d at 1118 n.110 (citing Desert Equities for the same proposition).
                                            22
assessment, no reasonable jury could find bad faith from them. Further, no other

facts exist in this record to show, for instance, that Mr. Bursky harbored any personal

animus or intentionally sought to harm Dr. Baldwin, when he executed the Written

Consent as President of ACR. It should be emphasized that at this stage of the

proceedings discovery is complete and the record is set. The current record is the

well from which the parties must dip to present evidence supporting or buttressing

their respective positions. There is no evidence presented from the record to suggest

that ACR executed the Written Consent with “furtive design or ill will.”

          There is also no evidence to support the contention that New Wood acted in

bad faith when it relied on ACR’s Written Consent. Mr. Liebich, former CEO of

WPV and New Wood’s 30(b)(6) witness, testified that ACR made the determination

that Dr. Baldwin failed to act in good faith, and New Wood acted based on that

determination.107 Dr. Baldwin does not explain how New Wood’s act of reliance on

ACR’s Written Consent constitutes bad faith under Delaware law.

          Further, Dr. Baldwin’s interrogatory responses do nothing to support his bad

faith contention. In February 2023, Dr. Baldwin’s counsel responded to New

Wood’s “First Set of Interrogatories and First Requests for Production of

Documents.”108 Interrogatory number one asked Dr. Baldwin to identify “each and

107
      See Opening Br., Ex. 16 at 100:24-101:7.
108
      See id., Ex. 7.
                                                 23
every factual basis” for the contention that the Written Consent was not executed in

good faith.109 Dr. Baldwin responded in pertinent part:

       By way of further answer, on August 10, 2020 the Court of Chancery
       held a final hearing on the issue of Dr. Baldwin’s right to
       indemnification . . . , and on August 26, 2020 the Court issued its final
       Order . . . , which in combination with its prior Order awarded Dr.
       Baldwin the combined sum of $867,211.03. During the entirety of
       these proceedings, and including during the oral argument on August
       10, [New Wood] never disclosed to the Court of Chancery its purported
       “resolution” of April 23, 2020 [i.e., the Written Consent] that Dr.
       Baldwin had been acting in “bad faith” and was never entitled to
       indemnification or advancement at all. Moreover, [New Wood] raised
       the argument in this Court that its resolution was never subject to any
       “good faith” standard, an argument that the Delaware Supreme Court
       squarely rejected in its written opinion of August 16, 2022.110

       The contents of the above answer do not rise to a showing of bad faith by

ACR or New Wood. New Wood’s tactical decision to not raise the Written Consent

as an argument in the Court of Chancery does not constitute bad faith. The same is

true for New Wood’s position during argument in this Court or the Supreme Court.

Bad faith requires “conduct [] motivated by a culpable mental state” that is “driven

by an improper purpose.”111 These tactical decisions do not establish the “conscious

doing of a wrong because of dishonest purpose or moral obliquity.”112 Instead, these

109
    Id., Ex. 7 at 3.
110
    Id., Ex. 7 at 4.
111
    Amirsaleh, 2009 WL 3756700, at *5 (citation omitted).
112
    Desert Equities, Inc., 624 A.2d at 1208 n.16 (citing Bad Faith, Black’s Law Dictionary).
                                               24
are merely tactical and strategic decisions. A reasonable jury could not find that

these tactical decisions constitute “bad faith.”113

       The discovery record further cuts against Dr. Baldwin’s position. New

Wood’s counsel asked Dr. Baldwin, during a deposition, if Dr. Baldwin had any

basis “to assert that Mr. Bursky didn’t execute” the Written Consent “in good

faith.”114 Dr. Baldwin responded that he “ha[d] no idea what Mr. Bursky did” and

that Dr. Baldwin had “no basis to answer that question.”115

       While Dr. Baldwin has presented multiple conclusory arguments that ACR

and New Wood acted in bad faith, Dr. Baldwin has presented no evidence of bad

faith by ACR or New Wood with respect to executing and acting on the Written

Consent. Absent that anchoring evidence of bad faith related to the Written Consent,

Dr. Baldwin’s claim cannot withstand summary judgment.

       2. Even If ACR’s Actions Could Be Viewed as Bad Faith, There Is No
          Evidence of Bad Faith by New Wood.

       Even assuming arguendo that ACR’s actions rose to the level of bad faith,

there is no evidence that New Wood colluded with, or had any knowledge of, ACR’s

actions. In other words, there is no evidence that New Wood had any knowledge

113
    See Gap 41 Ventures, L.L.C. v. Snehyasmeena Corp., 2020 WL 95857, at *1 (Del. Super. Jan.
8, 2020) (“Summary judgment is only appropriate if [the claim] lack[s] evidentiary support such
that no reasonable jury could find in its favor.” (citing Hecksher v. Fairwinds Baptist Church, Inc.,
115 A.3d 1187, 1200-05 (Del. 2015); Edmisten v. Greyhound Lines, Inc., 2012 WL 3264925, at
*2 (Del. Aug. 13, 2012))).
114
    Opening Br., Ex. 8 at 73:20-23.
115
    Id., Ex. 8 at 74:3-4, 74:11-12.
                                                25
leading New Wood to doubt ACR’s determination that Dr. Baldwin failed to act in

good faith. For instance, Mr. Liebich, New Wood’s 30(b)(6) witness, stated at his

deposition: “The determination that [Dr. Baldwin] acted in bad faith was made by

our majority member, ACR.”116 Mr. Liebich further stated that “[t]he finding of bad

faith was made by, as I said earlier, ACR. . . . [T]he [de]termination [sic] of bad faith

pursuant to Section 8.2 in the LLC [A]greement was made by ACR. That’s where

that determination was made.”117 Even further, in answering questions about ACR’s

assessment, Mr. Liebich stated that “I’m not a party to ACR, nor was I involved in

the conversations with ACR.”118 Mr. Liebich’s testimony remains unrebutted, and

no evidence exists to show that New Wood was aware of ACR’s decision-making

process. Moreover, no evidence exists to show that New Wood had any reason to

doubt ACR’s determination in the Written Consent.

       Dr. Baldwin must present evidence of New Wood’s bad faith for his implied

covenant claim to survive summary judgment.119                    Dr. Baldwin asserted his

116
    Id., Ex. 16 at 100:24-25.
117
    Id., Ex. 16 at 105:12-18.
118
    Id., Ex. 16 at 105:21-22. While Mr. Liebich stated that he “believe[d] [Dr. Baldwin] has acted
in bad faith,” that does not mean that New Wood knew what ACR did. See id., Ex. 16 at 101:15.
119
     See Amirsaleh, 2009 WL 3756700, at *5 (“[T]o prove a breach of the implied covenant
[counterclaim] plaintiff must demonstrate that [counterclaim] defendant[] acted in ‘bad faith’”.);
see also KE Prop. Mgmt. Inc., 1993 WL 285900, at *9 (noting on summary judgment that party
asserting bad faith must overcome the presumption of good faith and “must introduce competent
evidence which, if true, would rebut the presumption or summary judgment will be granted against
it” (citation omitted)).
                                               26
Counterclaim against New Wood, not ACR.120 Further, Dr. Baldwin’s implied

covenant claim is premised on the LLC Agreement, to which New Wood is a party,

not ACR.121      Dr. Baldwin executed the undertaking pursuant to the LLC

Agreement.122 And, in the words of the Supreme Court, “[a]lthough [Dr.] Baldwin

has alleged bad faith on the part of ACR, ACR is not a party.”123

      Even assuming there is evidence of ACR’s bad faith, which ultimately the

Court does not find, that is not enough. Dr. Baldwin must present evidence of New

Wood’s bad faith. Dr. Baldwin has not done so.124

      3. The Court Is Not Permitted to Independently Determine Whether Dr.
         Baldwin Acted in Good Faith.

      It is important to note that the Court cannot make an independent

determination regarding whether Dr. Baldwin acted in good faith.            The LLC

Agreement does not permit it. Delaware law does not permit it.

      Section 8.2 of the LLC Agreement governs the good faith determination

procedure which states in pertinent part:

      [N]o Person shall be entitled to indemnification hereunder unless it is
      found (in the manner described below in this Section 8.2) that, with
      respect to the matter for which such Person seeks indemnification, such
      Person acted in good faith and in a manner that he or she reasonably
      believed to be in or not opposed to the best interest of the Company[.]

120
    See Counterclaim.
121
    See Answering Br., Ex. B at preamble.
122
    See Opening Br., Ex. 2.
123
    Baldwin, 283 A.3d at 1121.
124
    Additionally, the LLC Agreement does not contain a provision permitting New Wood to
reassess ACR’s determination in the Written Consent.
                                            27
       . . . The finding of the standard of conduct required above shall be made
       (a) by a majority vote of all of the Managers who are not parties to such
       Proceeding even though less than a quorum or (b) if there are no such
       Managers, or if such Managers so direct, by independent legal counsel
       in a written opinion or (c) by holders of a Majority of the then-
       outstanding Units (determined without regard to any Members that are
       parties to such Proceeding).125
       Recently, in a related action, the Court of Chancery examined Section 8.2 and

noted that its “language is similar to [Delaware General Corporation Law] Section

145(d), with one crucial difference: it specifically omits Section 145(d)’s reference

to ‘unless ordered by a court.’”126 DGCL Section 145(d) relates to indemnification

and states that determinations on indemnification shall be made in one of four

enumerated ways, “unless ordered by a court.”127 The Vice Chancellor expounded

on the above, stating:

       Section 8.2’s applicable standard-of-conduct condition decision-
       making process roughly mirrors [DGCL] Section 145(d), with one quite
       notable exception. The drafters of Section 8.2 omitted the key phrase .
       . . “unless otherwise ordered by a court . . . .” Applying the plain terms
       of Section 8.2, then, it is clear to me that [Dr. Baldwin’s and OCI’s]
       request for indemnification via a fees-on-fees award [in the Court of
       Chancery] would be improper at this time since Section 8.2 identifies
       the decision-makers for entitlement to indemnification and, in this
       posture, I [i.e., a court] am not among them. Unlike [DGCL] Section
       145(d), the contracted-for language of Section 8.2 quite specifically

125
    Answering Br., Ex. B. § 8.2.
126
    See Supplemental Authority, Ex. A at 7:16-19 (D.I. 73) [hereinafter Chancery Ruling]. For
context, this quote is from a transcript of a telephonic bench ruling by Vice Chancellor Cook in a
related action, captioned as: Richard F. Baldwin and Oak Creek Investments, LLC, v. New Wood
Resources LLC, Winston Plywood & Veneer LLC, and WPV Holdco LLC, C.A. No: 2022-1059-
NAC. The bench ruling occurred on June 12, 2023, and the Vice Chancellor ruled that Dr. Baldwin
was not entitled to advancement in this action in Superior Court. See id. at 3:20-4:6.
127
    See 8 Del. C. § 145(d) (2023).
                                               28
       does not include the “unless otherwise ordered by the court” language.
       In considering this, then, I cannot ignore the Written Consent and the
       conditions that generated the [W]ritten [C]onsent.128

       “Delaware ‘is a freedom of contract state, with a policy of enforcing the

voluntary agreements of sophisticated parties in commerce.’”129 Other sections of

the LLC Agreement contemplate judicial determinations.130 If the Court injected

itself into Section 8.2’s good faith determination, the Court would nullify the explicit

language of other LLC Agreement sections.                   Doing so would disregard long

established Delaware precedent requiring the Court to “construe the agreement as a

whole, giving effect to all provisions therein.”131 If the parties intended that the good

faith determination be made by a court, they could have written it into the LLC

Agreement.132 The fact that Section 8.2 roughly mirrors DGCL Section 145(d),

128
    Chancery Ruling at 23:10-24:2.
129
    Terrell v. Kiromic Biopharma, Inc., -- A.3d --, 2023 WL 3237142, at *7 (Del. May 4, 2023)
(quoting Pers. Decisions, Inc. v. Bus. Planning Sys., Inc., 2008 WL 1932404, at *6 (Del. Ch. May
5, 2008), aff’d, 970 A.2d 256 (Del. 2009)).
130
    See, e.g., Answering Br., Ex. B. §§ 8.1 (employing the language “as determined by a final,
nonappealable order of a court of competent jurisdiction” in the “Exculpation” provision), 12.1(c)
(employing the language “entry of a decree of judicial dissolution of the Company” in the
“Dissolution” provision).
131
    See, e.g., E.I. du Pont de Nemours & Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del.
1985) (citation omitted); see also Sonitrol Hldg. Co. v. Marceau Investissements, 607 A.2d 1177,
1183 (Del. 1992) (“Under general principles of contract law, a contract should be interpreted in
such a way as to not render any of its provisions illusory or meaningless.” (citation omitted)); Kuhn
Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396-97 (Del. 2010) (“We will read a
contract as whole and we will give each provision and term effect, so as not to render any part of
the contract mere surplusage.” (citation omitted)).
132
    See Sarraf 2018 Fam. Tr. v. RP Holdco, LLC, 2022 WL 10093538, at *9 (Del. Super. Oct. 17,
2022) (noting that in an unambiguous contract, when a party sought relief that was not in the
language of the contract, the Court would not write it in post hoc, and further noting that if “the
parties intended such a result, they could have written it into the” contract).
                                                29
except that Section 8.2 excludes the language “unless ordered by a court,” suggests

that the parties contemplated judicial review and decided against it. Thus, it would

be a stark deviation from this jurisdiction’s adherence to freedom of contract

principles if the Court were to override the clear terms of the LLC Agreement and

exercise judicial review of Dr. Baldwin’s actions.133

       Separately, although not raised by any of the parties in their briefing, the Court

finds it pertinent to address a recent Supreme Court decision—Terrell v. Kiromic

Biopharma, Inc.134 In Terrell, a former director sought declaratory and injunctive

relief against a corporation regarding the meaning of a stock option agreement and

an option grant notice.135 Dr. Terrell was compensated for his work at Kiromic

Biopharma, Inc. through three stock-option grants.136 The third option grant notice

contained provisions that Kiromic interpreted to mean that the two previous grants

were supplanted by the third.137           Dr. Terrell disagreed.138        The stock option

agreement vested a “committee,” made up of at least one Kiromic director, with the

authority to interpret the stock option agreement.139 The committee determined that

133
    Terrell, -- A.3d --, 2023 WL 3237142, at *7 (“Delaware ‘is a freedom of contract state, with a
policy of enforcing the voluntary agreements of sophisticated parties in commerce.’” (quoting
Pers. Decisions, Inc., 2008 WL 1932404, at *6)).
134
    -- A.3d --, 2023 WL 3237142 (Del. May 4, 2023).
135
    Id. at *1.
136
    Id.
137
    Id. at *2.
138
    Id.
139
    Id. at *2, *4.
                                               30
its authority to interpret the stock option agreement extended to interpreting the

option grant notices.140 The committee concluded that the third option grant notice

superseded and nullified the previous two grants, but offered no basis for its

reasoning.141 The Court of Chancery deferred to the committee’s determination and

dismissed Dr. Terrell’s claim on the basis that it lacked subject matter jurisdiction.142

       Dr. Terrell appealed the Court of Chancery’s ruling and argued that it erred

by failing to review the committee’s determination before dismissing his claim.143

The Supreme Court held that the Court of Chancery erred by failing to review the

committee’s determination.144 The Supreme Court found that even though the Court

of Chancery determined that the stock option agreement’s interpretation provision

was not an arbitration provision, but more like an expert determination,145 that expert

determination was reached by relying on contract interpretation principles, and,

ultimately, resulted in a legal determination by the committee.146

       Hence, the Supreme Court held that review of the expert determination, which

was based on legal conclusions reached by the committee, required a de novo review

140
    Id. at *3.
141
    Id.
142
    See id. at *4.
143
    Id.
144
    Id. at *9 (“Because [the interpretation provision] is an expert determination, not an arbitration
[provision], and because it requires the Committee to reach legal determinations, not issue findings
of fact within its area of expertise, the Court of Chancery is not required to defer to the
Committee’s conclusions.”).
145
    See id. at *5-6.
146
    Id. at *6-7.
                                                31
of the interpretation of the relevant agreements.147 Simply put, Terrell states that a

court must review a committee’s (or some other similar decision-maker’s) contract-

interpretation-based legal conclusions de novo if the appropriate circumstances arise.

          Those circumstances are not present here. This action between Dr. Baldwin

and New Wood is distinct from Terrell. In this case, the LLC Agreement vested

ACR, as a holder of a majority of then-outstanding units, with the authority to

determine whether Dr. Baldwin acted in good faith and, thus whether Dr. Baldwin

was entitled to indemnification. Importantly, “Good faith” is defined in the LLC

Agreement:

          [N]o Person shall be entitled to indemnification hereunder unless it is
          found (in the manner described below in this Section 8.2) that, with
          respect to the matter for which such Person seeks indemnification, such
          Person acted in good faith and in a manner that he or she reasonably
          believed to be in or not opposed to the best interests of the Company.148

          Thus, ACR did not make a legal interpretation of the LLC Agreement, nor

did it reach a legal conclusion, because good faith is defined in the LLC Agreement.

Further, ACR did not make an expert determination. Instead, it made a factual

determination based on a contractually defined standard and found only that Dr.

Baldwin’s actions were not in the best interests of New Wood. Therefore, the basis

for judicial review, set out in Terrell, does not apply here.

147
      Id. at *9.
148
      Answering Br., Ex. B § 8.2 (underlining in original) (italics added).
                                                   32
        This Court reviewed whether ACR and New Wood acted in bad faith by

executing and acting on the Written Consent. The Court has determined that New

Wood did not engage in a concerted course of bad faith with ACR. Terrell does not

sanction judicial override of the LLC Agreement to engage in de novo review of

ACR’s determination that Dr. Baldwin acted in bad faith. Hence, the “parties are

stuck with what they bargained for.”149

        With discovery complete, there is no evidence in the record for a reasonable

trier of fact to conclude that New Wood acted in bad faith. Dr. Baldwin cannot rebut

the presumption that New Wood acted in good faith. As a result, New Wood’s

Motion for Summary Judgment on the Counterclaim is GRANTED.

      B. The Breach of Contract Claim

        This Court originally granted New Wood’s 12(c) motion on its breach of

contract claim against Dr. Baldwin and against Dr. Baldwin on his Counterclaim.150

On appeal, the Supreme Court addressed “the narrow issue of whether the LLC

Agreement contains an implied covenant of good faith that would require this

determination of a Person’s entitlement to indemnification to be made in good

faith.”151 The Supreme Court held that there is an implied covenant, so it reversed

149
    See Senior Hous. Cap., LLC v. SHP Senior Hous. Fund, LLC, 2013 WL 1955012, at *3 (Del.
Ch. May 13, 2013); see also Terrell, 2023 WL 3237142, at *8 (quoting Senior Hous. Cap., LLC,
2013 WL 1955012, at *3).
150
    See New Wood Res., 2021 WL 3784258, at *1.
151
    Baldwin, 283 A.3d at 1102.
                                            33
and remanded the case back to this Court. Notably, the Supreme Court did not

address New Wood’s breach of contract claim. New Wood contends this Court’s

prior ruling on the breach of contract claim stands and is not at issue now.152 Based

on the procedural history of this case, the Court tends to agree.153 Nonetheless, the

Court briefly addresses New Wood’s breach of contract claim.

       The elements of a breach of contract claim are: “(1) the existence of a

contractual obligation; (2) a breach of that obligation; and (3) damages resulting

from the breach.”154

       Here, the LLC Agreement and Dr. Baldwin’s undertaking created a valid

contract between New Wood and Dr. Baldwin.155 New Wood provided Dr. Baldwin

$541,664.99 in advancement.156 ACR, and in effect New Wood, later determined

that Dr. Baldwin was not entitled to that money via the Written Consent,157 and Dr.

Baldwin did not repay that money to New Wood when New Wood requested it.158

Dr. Baldwin therefore breached his contractual obligation to repay New Wood. New

152
    See Plaintiff/Counterclaim Defendant’s Reply Brief (“Reply Br.”) at 9 n.12 (D.I. 72).
153
    The breach of contract claim was not an issue raised by the parties in their respective briefs to
the Supreme Court. See Richard Baldwin v. New Wood Resources LLC, No. 303,2021 (D.I. 15,
D.I. 19, D.I. 20).
154
    Buck v. Viking Hldg. Mgmt. Co. LLC, 2021 WL 673459, at *3 (Del. Super. Feb. 22, 2021)
(citing VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)).
155
    See Baldwin, 283 A.3d at 1104 (“Section 8.3 conditions [Dr. Baldwin’s] receipt of advancement
on: (1) delivery of the written affirmation by [Dr. Baldwin] . . . , and (2) execution of a written
undertaking to repay all advanced amounts if it is ultimately determined that [Dr. Baldwin] is not
entitled to indemnification.”).
156
    See id. at 1110.
157
    See Answering Br., Ex. A; Baldwin, 283 A.3d at 1109.
158
    Baldwin, 283 A.3d at 1109.
                                                34
Wood suffered damages from the breach in the amount of $541,664.99 that New

Wood advanced to Dr. Baldwin.

       Based on this Court’s ruling on the Counterclaim, Dr. Baldwin has no valid

remaining defenses to his breach. To be sure, Dr. Baldwin’s second affirmative

defense to New Wood’s breach claim is that “New Wood’s claims are barred because

at all relevant times hereto Dr. Baldwin acted in good faith and in a manner that he

reasonably believed to be in or not opposed to the best interest of New Wood.”159

As explained above, the LLC Agreement contains no provision for this Court to

decide whether Dr. Baldwin acted in good faith. Instead, that decision is to be made

by (1) a manager vote, (2) a written opinion by independent legal counsel, or (3) a

member vote.160 Because that decision was made pursuant to a valid member vote,

Dr. Baldwin has no viable affirmative defense. And, as determined above, Dr.

Baldwin’s Counterclaim fails, and he has no claim to counter his breach.

       Therefore, New Wood’s Motion for Summary Judgment on the breach of

contract claim is GRANTED.

159
    Counterclaim at 13. Dr. Baldwin’s two other affirmative defenses are inapplicable because one
is covered by his Counterclaim, and the other is based on offset for domesticating the Advancement
Action judgment in Mississippi. See id.
160
    See Answering Br., Ex. B § 8.2.
                                               35
                                 VI. CONCLUSION

Summary Judgment on New Wood’s Breach of Contract claim and on the

Counterclaim is GRANTED. Dr. Baldwin shall repay the $541,664.99 advanced

to him, together with applicable prejudgment interest. Counsel for New Wood shall

submit a proposed order to this effect by August 11, 2023.

   IT IS SO ORDERED.

                                         ______________________________
                                              Sheldon K. Rennie, Judge

                                           36