Court Opinion

ID: 4310933
Source: CourtListenerOpinion
Date Created: 2018-09-10 14:07:09.536236+00
Date Added: 2024-06-11T14:44:24.818997
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

TRASCENT MANAGEMENT                           )
CONSULTING, LLC,                              )
                                              )
          Plaintiff/Counterclaim Defendant,   )
                                              )
     v.                                       ) C.A. No. 10915-VCMR
                                              )
GEORGE BOURI,                                 )
                                              )
          Defendant/Counterclaim Plaintiff.   )

                      MEMORANDUM OPINION
                     Date Submitted: August 7, 2018
                    Date Decided: September 10, 2018.

Michael W. Arrington and Michael W. Teichman, PARKOWSKI, GUERKE &
SWAYZE, P.A., Wilmington, Delaware; Michael S. Gardner, Eric P. Haas, and
Jeremy R. Wilson, GARDNER HAAS PLLC, Dallas, Texas; Attorneys for
Plaintiff and Counterclaim Defendant.

Todd C. Schiltz and Ryan T. Costa, DRINKER BIDDLE & REATH LLP,
Wilmington, Delaware; Damian Christian Shammas and Kristen Jasket Piper,
LAW OFFICES OF DAMIAN CHRISTIAN, Morristown, New Jersey; Attorneys
for Defendant and Counterclaim Plaintiff.

MONTGOMERY-REEVES, Vice Chancellor.
      In 2011, a real estate management consultant started looking for investors or

a partner for his consulting firm. He wanted to grow the business globally, but he

spent too much time working abroad to focus on the United States business. He

reached out to a business acquaintance to see if he was interested in investing or

becoming a partner. The business acquaintance, the defendant in this case, was not

interested in giving the consultant cash, but he persuaded the consultant to set up a

new entity, pour the consultant’s clients, reputation, and goodwill into that new

entity, and make the defendant a manager and equity owner of the new entity. The

defendant persuaded the consultant to take these steps by presenting himself as an

attractive partner with immense business success and personal wealth. Little did the

consultant know that the defendant’s representations were false. The defendant was

struggling financially and had been terminated from his previous job because his

superiors had lost confidence in his business judgment after complaints regarding

his management style and workplace behavior.

      Truth is never far from the spotlight in legal proceedings, but this is a case

where questions about truth take a prominent role. The plaintiff alleges that the

defendant fraudulently induced the consultant to form a new limited liability

company and grant the defendant a significant portion of the equity in the new

company by representing that he had voluntarily resigned from his last position,

when he actually had been terminated, and that he was a man of significant means,

                                         1
when he actually was struggling financially. The plaintiff also alleges that the

defendant’s employment agreement with it was a product of the same fraud. The

plaintiff seeks rescission of the employment agreement procured by fraud; a

declaration that the limited liability company agreement is unenforceable by the

defendant; and attorneys’ fees and costs incurred in this litigation. In the alternative,

the plaintiff requests a declaration that the defendant was terminated from the

company for cause and damages related to the defendant’s breaches of contract and

fiduciary duty. I find that the defendant not only fraudulently induced the formation

of the limited liability company and his employment agreement but also, unable to

let go of the fraud, made numerous false statements during this litigation. Thus, I

rescind the employment agreement, declare the limited liability company agreement

unenforceable by the defendant, and award some, but not all, attorneys’ fees and

costs as a sanction for bad faith litigation conduct.

I.    BACKGROUND
      Below are my findings of fact based on the parties’ stipulations, trial exhibits,

and the testimony of live witnesses during a five-day trial.1

1
      Citations to testimony presented at trial are in the form “Tr. # (X)” with “X”
      representing the surname of the speaker. Joint Trial Exhibits are cited as “JX #,”
      and facts drawn from the parties’ Joint Pretrial Stipulation and Order are cited as
      “PTO #.” Unless otherwise indicated, citations to the parties’ briefs are to post-trial
      briefs. After being identified initially, individuals are referenced herein by their
      surnames without honorifics or regard to formal titles such as “Doctor.” No
      disrespect is intended.

                                             2
      A.       Parties and Relevant Non-Parties
      Trascent Management Consulting, LLC (“Trascent”) is a Delaware limited

liability company (“LLC”). 2 As of January 1, 2014, there were three members and

holders of Class A Units of Trascent: Rakesh Kishan, George Bouri, and Itay

Fastovsky. 3

      Kishan manages the European affairs of Trascent and has served as a member

of the board of managers of Trascent (the “Board”) since 2014. 4 He was the sole

member of the Board from April 8, 2015, until he reinstated Fastovsky several days

later. 5 He owns a majority of Trascent’s Class A Units.6

      Bouri was Managing Principle of the Americas and also in charge of finance,

human resources (“HR”), information technology (“IT”), and operations for

Trascent from January 1, 2014, to April 8, 2015. 7 He was also a member of the

2
      JX 56, at 1.
3
      Id. at Schedule I.
4
      Tr. 43 (Kishan); PTO ¶ II.16.
5
      PTO ¶ II.55; Tr. 1080 (Fastovsky).
6
      PTO ¶ II.18.
7
      Id. ¶¶ II.23, II.24, II.55, II.58.

                                           3
Board during that time. 8 He owned forty-three percent of Trascent’s Class A Units

until his separation from Trascent.9

      Fastovsky manages the Asian affairs of Trascent.10 He was also a member of

the Board from January 1, 2014, to April 8, 2015. 11 Several days after April 8, 2015,

Kishan reinstated Fastovsky to the Board.12 He owns eight percent of Trascent’s

Class A Units. 13

      Neha Patel Kishan is Kishan’s wife.14 She served as Director of Finance for

UMS Advisory, Inc. (“UMS Advisory”), Trascent’s predecessor entity, 15 and

Director of Finance for Trascent until May 2014.16

8
      Id. ¶¶ II.16, II.55, II.58.
9
      Id. ¶¶ II.22; JX 56, at 3, 27.
10
      Tr. 43 (Kishan).
11
      PTO ¶¶ II.16, II.55.
12
      Tr. 1080 (Fastovsky).
13
      PTO ¶¶ II.17, II.20, II.21; Tr. 1080 (Fastovsky).
14
      PTO ¶ II.10.
15
      Id. ¶ II.33.
16
      Id. ¶¶ II.10, II.13, II.33, II.34.

                                            4
      B.      Facts
      The astute reader may find the below facts confusing at times. I remind the

reader that this is a quintessential case of “he-said/he-said,” and the below recitation

of facts includes the misrepresentations made by one party to the other. I endeavor

to show the actual series of events as best the record will allow.

              1.      Kishan and UMS Advisory
      In 2000, Kishan began working for a real estate consulting business that

ultimately became UMS Advisory. 17 Kishan managed UMS Advisory and, in 2006,

became the sole owner.18       UMS Advisory “provided management consulting

services to top Fortune 200 companies . . . around real estate, which is buying and

selling property, managing properties and portfolios of corporations, large global

corporations, as well as facilities management, which is the operations of those

portfolios.”19

      UMS Advisory performed well financially. 20 It made a profit each year and

paid bonuses every year except for 2008.21 It also expanded globally with offices in

17
      Id. ¶ II.1.
18
      Id.
19
      Tr. 7 (Kishan).
20
      Id.
21
      Tr. 7-8 (Kishan).

                                           5
Singapore and Switzerland.22 Kishan moved to Switzerland at the end of 2010 to

run the office there and “lead a significant project with Novartis.”23 Kishan’s

“presence in Switzerland and residency in Switzerland, which was then sponsored

by Novartis, required [him] to spend significant attention in the European market

and [he] needed somebody [he] could trust to then manage the operations in the

[United States] and [he] started to entertain bringing in a partner.” 24 By mid-2011,

Kishan thought of Bouri, whom he had met when Bouri was an executive at Time

Warner, as a potential candidate to become his partner in the United States. 25

             2.     Bouri’s departure from Time Warner
      Meanwhile, on May 2, 2011, Bouri returned from a vacation to his job as

Senior Vice President (“SVP”), Real Estate and Facilities Management at Time

Warner. 26 He was informed upon his return that people in his department had made

complaints against him and that Time Warner’s HR department had launched an

investigation.27 He was told he could not “be in the building or anywhere near the

22
      Tr. 8 (Kishan).
23
      Tr. 9 (Kishan).
24
      Id.
25
      Tr. 10-11 (Kishan).
26
      Tr. 613-14 (Bouri).
27
      Tr. 613-15 (Bouri).

                                          6
employees so that there was no perception of . . . favoritism towards [him] the

executive.”28 That was the last time he “was at Time Warner as an employee.” 29

      The investigation proceeded, and three days later Bouri spoke by telephone

with one of Time Warner’s attorneys regarding complaints about his management

style and behavior.30 The attorney had compiled a list of complaints about Bouri’s

management style, including that he was “unreasonable, blaming others for his

mistakes, aggressive, disrespectful, bullying, ‘act[ing with a] regal air [and]

entitlement,’ bad mouthing other [Time Warner] leaders and team members,

[displaying] erratic behaviors [and] mood swings, [and making] consistent

comments about his role/title: [like] ‘I’m a f[***]ing SVP.’” 31 The attorney also had

a list of complaints about sexual comments and conduct:

             [T]alk about sex all the time, graphic detail, open marriage
             [with] wife—girlfriends, try anything once, oral sex, the
             box, look good have to fire you to date you, date your
             sister, are you gay, going down on people, hand on thigh
             with discussion about ‘keeping’ thai [sic] girlfriends, full
             body bear hugs, hands on shoulder/thighs, hugs, kisses on
             lips (closed mouth), kisses on lips open mouth, hugs—full

28
      Tr. 613-14 (Bouri).
29
      Tr. 614 (Bouri).
30
      JX 306, at TW0050; Tr. 554-56 (Bouri).
31
      JX 306, at TW0051.

                                          7
            body uncomfortable to watch, has seen kisses with
            [redacted]. 32

      The attorney took notes on Bouri’s responses to the allegations during their

meeting. She wrote the following statements:

            Denied open relationship, talking about sex/initiating,
            never asked about sex. [sic] orientation, never talked about
            sex ever with anyone at work, doesn’t like to socialize, has
            wife 3 kids wants to get home, doesn’t drink a lot only 1
            drink, never mentioned about having girlfriends, denied
            ever having taken anyone to the box, never kissed anyone
            at work ever, never in a cab except previous [D]eloitte,
            doesn’t lose his temper, is a Libra, so well-balanced.33

      On May 6, 2011, Time Warner terminated Bouri without cause.34 Bouri met,

by telephone, with his manager and the CEO of Time Warner, John Martin, and a

HR representative, Mark Henderson, about his termination.35 There were talking

points prepared for this meeting.36 The talking points indicate that Martin reminded

Bouri that Time Warner had “received complaints from [Bouri’s] team . . . about

[Bouri’s] management and [his] behavior. A prompt and thorough review was

32
      Id. at TW0051-52.
33
      Id. at TW0052.
34
      Id. at TW0010.
35
      Id. at TW0001-03.
36
      Id.

                                         8
completed and [Martin was] briefed on the data gathered during the review.” 37 The

talking points also say that Bouri’s “previous manager, [Martin,] and other Time

Warner leaders . . . spent considerable time during the last year addressing areas of

[Bouri’s] performance that are not meeting the needs of [Time Warner],” and “[t]his

feedback has included multiple occasions where [Bouri’s supervisors] . . . addressed

[Bouri’s] failure to use sound business judgment on business matters as well as with

[his] team.” 38 Martin was to inform Bouri that he “no longer had confidence in

[Bouri’s] business judgment,” and “it is in the best interest of [Time Warner] to make

a change.”39 Henderson then reviewed the key points of the notice of termination,

termination agreement, and release with Bouri.40

      Bouri received the notice of termination dated May 6, 2011, which explained

that he was being terminated without cause. 41        Bouri signed the termination

agreement as revised, which also stated that he was being terminated without cause,

on May 16, 2011.42 Under the termination agreement, Bouri would continue to

37
      Id. at TW0002-03.
38
      Id. at TW0002.
39
      Id.
40
      Id. at TW0003.
41
      Id. at TW0010.
42
      Id. at TW0011.

                                          9
receive his current base salary of $481,000 and a pro rata share of his annual bonus

until the effective termination date of July 5, 2011. 43 The termination agreement

shows that Time Warner and Bouri agreed that the average annual bonus amount

was $360,825.07. 44 The termination agreement also shows that Bouri agreed to

“resign as an officer of Time Warner Inc.” as of May 6, 2011, and agreed “to sign

the enclosed officer resignation letter to effectuate [his] removal from [Time

Warner’s] books as an officer.”45 The termination agreement goes on to say, “The

officer resignation letter is not intended to alter the nature of your departure and, as

stated below, your termination will for all purposes be considered a termination

without cause.”46 Bouri signed the officer resignation letter on May 16, 2011.47 On

May 18, 2011, he signed a release stating that in exchange for the benefits he

43
      Id.
44
      Id. This agreed-to amount is seventy-five percent of Bouri’s base salary under the
      Time Warner employment agreement, which is consistent with the seventy-five
      percent target bonus also in that agreement. See id. at TW0020.
45
      Id. (emphasis added). In an email on May 10, 2011, Bouri states that he is “not able
      to sign the resignation letter in its present form. A ‘resignation’ is inconsistent with
      a ‘termination without cause.’ I would not want someone to state that I resigned
      from Time Warner.” Id. at TW0047-48.
46
      Id. at TW0011.
47
      Id. at TW0018.

                                            10
received under his employment agreement, he released Time Warner from all claims

arising from his employment or termination. 48

              3.   Formation of Trascent
      In the summer of 2011, Kishan learned that Bouri no longer worked at Time

Warner. On July 26, 2011, Kishan emailed Bouri, “I understand that you have

moved on from Time Warner. Just wanted to connect to see what you are up [to] –

perhaps there may be opportunities to collaborate.” 49 On August 5, Bouri responded,

“Thank you for reaching out. Yes, I have since resigned from Time Warner. I will

happily explain the reasons when we speak.” 50

      During their initial conversations, Bouri explained that he had resigned from

Time Warner because he was being “micromanaged.” 51 He told Kishan that his

supervisor was annoyed that Bouri drove his Bentley into the office at 10:30 a.m.

because “it set a bad example to the other employees.”52 Bouri also told Kishan he

was making $2.5 million a year in total compensation at Time Warner as the head

48
      Id. at TW0017.
49
      JX 6.
50
      Id.
51
      Tr. 12 (Kishan).
52
      Tr. 13 (Kishan).

                                        11
of Global Shared Services and Senior Vice President.53 The two spoke again in

2012, and Bouri provided Kishan with a copy of his Time Warner employment

agreement.54 The employment agreement Bouri sent to Kishan said that Bouri was

“Senior Vice President, Global Shared Services & Real Estate and Facilities

Management” and that his base salary was $600,000 per year with a target annual

bonus of eighty-five percent of his base salary. 55

53
      Tr. 13-14 (Kishan). The title head of Global Shared Services indicated “a much
      broader role” than Senior Vice President for Real Estate and Facilities. Tr. 32
      (Kishan). Compare Tr. 13-14 (Kishan) with JX 306, at TW0019.
54
      Kishan testified that he did not follow the usual, formal practice for employees
      where the company would verify employment and compensation because Bouri was
      coming on as a partner. Tr. 18-19 (Kishan). Instead, Kishan believed the
      representations Bouri made to him because he trusted him, which was “vital.” Tr.
      19, 24 (Kishan).
55
      JX 13. There are a series of discrepancies between the purported Time Warner
      employment agreement Bouri sent to Kishan and the employment agreement Time
      Warner produced in this litigation. The differences include Bouri’s base salary,
      title, bonus percent, and amount of stock options. Compare JX 306 with JX 13.
      When asked about these differences at trial, Bouri testified that he went back and
      forth in negotiations with Time Warner and must have inadvertently sent Kishan
      one of the draft agreements. Tr. 533 (Bouri). This testimony lacks credibility
      because the documents are both signed by the same representative of Time Warner,
      but with different signatures, and both versions are marked with the same version
      control number, version three. Compare JX 306 with JX 13 and Tr. 534-35 (Bouri).
      There are also numerous typographical errors in the version Bouri sent to Kishan.
      JX 13; Tr. 538-41 (Bouri). Bouri testified that he did not edit the document he sent
      to Kishan, and any discrepancies were a result of the editing process between him
      and Time Warner. Tr. 536, 542 (Bouri). I excluded JX 13 for the purpose of
      showing fraudulent inducement because Trascent failed to raise the exhibit in a
      timely manner. Pretrial Conference Tr. 18. I allowed JX 13 to be introduced for
      other reasons, such as impeachment or credibility. Id.

                                           12
       Kishan testified that during the conversations he had with Bouri between 2012

and 2013, Bouri “always represented himself as a man of substantial financial

means.”56 Kishan testified that Bouri “talked about his Aston Martins. He talked

about his home in Atherton, California, where the average price per home, he

informed me, was $5 million. He talked about growing up in the south of France.

He said his father was the largest cement trader in the world” and “that he grew up

in lavish homes all around the world.” 57 Bouri told Kishan that while Bouri “was at

Sun Microsystems he earned hundreds of millions of dollars and he gave a lot of that

money away.” 58 This wealth was important to Kishan because Kishan was looking

for a partner who would be able to invest capital in the business in exchange for

equity. 59

       Bouri also informed Kishan that he wanted to join Kishan’s small company

because Bouri had been advised by “his recruiting agent or, you know, recruiting

firm, Heidrick & Struggles or Korn Ferry, one of those big placement agencies,” that

56
       Tr. 22 (Kishan).
57
       Id.
58
       Tr. 22-23 (Kishan).
59
       JX 21 (email from Kishan to Bouri explaining that Trascent will be valued “based
       on cash contributions” and that “[e]quity is not granted, it is paid for,” and the buy-
       in process is “you give cash and you [get] equity immediately”). Trascent’s ultimate
       LLC Agreement also supports this. JX 56, at Art. III.

                                             13
“given where he was in his career, he needed to show that he could be

entrepreneurial, that he can join a small firm . . . and develop it further, that would

be good for his career.” 60

      The two continued to negotiate going into business together. 61             Bouri

“insisted” that he would only come on board as an equity partner. 62 Bouri testified

that Kishan first approached him with an offer to join UMS Advisory, but Bouri

responded, “‘Unless [Kishan] form[ed] a different corporate structure that [made

Bouri] an equity partner,’ [he] would not be interested in joining.” 63 In April 2013,

Kishan formed a limited liability company, UMS Advisory, LLC, which later

changed its name to Trascent, to help move the negotiations along.64 Bouri joined

UMS Advisory on a temporary basis in June 2013 as “managing director or

managing principle of the U.S. and [was] handed . . . the HR function and the finance

60
      Tr. 23-24 (Kishan).
61
      JX 7; JX 9; JX 10; JX 17; JX 20; JX 21.
62
      Tr. 20 (Kishan).
63
      Tr. 639 (Bouri).
64
      Tr. 241 (Patel Kishan) (“Q: Was the original intent to do business under that name,
      UMS Advisory, LLC? A: No. We just opened it using that name just to make sure
      we can open the company and then a new name would be found and then later
      adapted -- adopted.”); Tr. 119 (Kishan).

                                          14
function and the IT function.”65 This interim arrangement was to be, and in fact was,

in effect only until Kishan and Bouri completed the LLC documents.66

      As of January 1, 2014, Trascent would initiate operations, take over all of

UMS Advisory’s consulting projects, and hire all of UMS advisory’s employees.67

UMS Advisory, however, would retain its existing assets and liabilities.68

      Trascent’s operating agreement (the “LLC Agreement”) was effective

January 1, 2014, and Bouri’s role in the newly formed Trascent was “head of the HR

function, the finance function, the IT function, and head of the U.S. consulting

business.” 69 The members of Trascent acquired their interests with promissory

notes. 70 Bouri “was averse to putting in cash. So he came up with the idea of a

65
      Tr. 39 (Kishan). “UMS[ Advisory’s] hire of Bouri was understood by both parties
      to be an interim arrangement. Kishan and Bouri agreed that Bouri would acquire a
      minority stake in an entity to be co-owned by Kishan.” PTO ¶ II.9.
66
      JX 27; Tr. 666-67 (Bouri).
67
      Tr. 44 (Kishan). The original date was December 2, 2013, but in March 2014, the
      members of Trascent decided to retroactively adjust the starting date to January 1,
      2015. JX 66; Tr. 250 (Patel Kishan).
68
      Id.
69
      Tr. 39 (Kishan).
70
      Tr. 24 (Kishan).

                                          15
promissory note instead as a substitute for cash.” 71 In fact, “[h]e insisted on it.”72

The other members “agreed to it because [they] felt here’s a wealthy man who will

fulfill his obligation to meet the note, that he had the means of doing so. [They]

trusted him.” 73

             4.     Trouble at Trascent
      Everything went well for the first several months of 2014. Bouri was bringing

in business, and Trascent was celebrating milestones.74 But behind the scenes,

known to some and unknown to others, Bouri was exacerbating cash flow issues at

Trascent, sowing seeds of dissent, and plotting to overthrow Kishan.

                    a.       Trascent’s cash flow issues
      Trascent was undercapitalized from the start. 75 Patel Kishan testified that the

startup date for Trascent was December 2, 2013, but the only cash available to

Trascent as of that date was $25,000 contributed by Fastovsky. 76 Neither Bouri nor

Kishan put any cash into Trascent, instead financing their equity purchases with

71
      Tr. 24, 43 (Kishan).
72
      Tr. 20 (Kishan).
73
      Tr. 24-25 (Kishan).
74
      JX 80; JX 195.
75
      Tr. 255-57 (Patel Kishan).
76
      Tr. 250, 253 (Patel Kishan).

                                           16
promissory notes. 77 In order for Trascent to meet its financial obligations, Patel

Kishan started “throwing money from” UMS Advisory into Trascent as a courtesy

because so many people were “depending” on Trascent. 78 In January 2014, Patel

Kishan informed Bouri of the situation, but she testified that she got no guidance or

leadership from Bouri. 79 For the first four months of Trascent, UMS Advisory gave

Trascent “hundreds of thousands of dollars . . . to [ensure] Trascent made it.” 80

      Trascent finally started bringing in revenue in 2014, but despite all the new

business, Trascent was not profitable that first year. 81 This was, in part, because

Bouri increased Trascent’s overhead costs substantially, putting a strain on

Trascent’s resources.82 In October 2014, Trascent’s director of finance, Janice

Shaffer, emailed the Board to let them know Trascent was “in a cash shortage

position and [the Board] need[ed] to make hard decisions regarding staffing and that

this cash shortage is due to the fixed employee costs in the company.” 83 After that

77
      See Tr. 253 (Patel Kishan).
78
      Tr. 259 (Patel Kishan).
79
      Tr. 257-58 (Patel Kishan).
80
      Tr. 263 (Patel Kishan).
81
      Tr. 200 (Kishan).
82
      In 2012, the net income of UMS Advisory was $915,000. In 2013, when Bouri
      signed on, the net income was $78,000. Tr. 244 (Patel Kishan).
83
      Tr. 52-53 (Kishan).

                                          17
email, Fastovsky and Kishan started to pressure Bouri about cost reduction and

headcount reduction to match the lack of revenues in the U.S. “[Bouri] became

exceedingly erratic, hostile towards the board.”84

      A few days later, Shaffer reached out to Bouri and Kishan because “there was

an [American Express] payment that was due [in October] and if [Trascent] did not

make that payment, the entire balance on the corporate credit card would be

immediately due to [American Express].” 85 Kishan testified, “[Shaffer] needed

[$]50,000 to cover that bill that was due and she asked me to put in [$]25,000 and

she asked Mr. Bouri to put in the remaining [$]25,000 to meet this company

obligation.”86 “She called me in a panic and said he is not willing to talk to her until

Monday, when it would be too late, and she asked me if I can put in the full amount.

So I did.” 87 Shaffer testified that Bouri actually told her, “You go tell Mr. Kishan

he can go f[**]k himself. I am not giving a dime,” and “when [she] had to call

84
      Id.
85
      Tr. 53 (Kishan).
86
      Id.
87
      Tr. 53-54 (Kishan).

                                          18
[Kishan] and ask him for the money, [she] didn’t tell him what [Bouri] said.”88

Kishan “gave [her] the money right away.” 89

      Despite Trascent’s cash flow situation, and Bouri’s refusal to contribute any

cash to help avert the credit card issue,90 Bouri requested advances on his paycheck

three times: November 2014, December 2014, and March 2015. 91 For the first two

requests for an advance, Bouri explained to Shaffer that his accountant had run afoul

of Regulation D. 92 The third time, he gave Shaffer a very long explanation involving

identity theft in two states, a diminished credit score from Trascent’s line of credit,

and the fact that he had taken a significant pay cut when he started at Trascent.93

Bouri asked Shaffer not to share his requests for these advancements, or his personal

financial matters, with the other members of Trascent.94

88
      JX 331, at 81-83.
89
      Id. at 83.
90
      Id.
91
      JX 117; JX 124; JX 353. Bouri also requested and received a $50,000 advance on
      his bonus in December 2013. JX 77; Tr. 438 (Patel Kishan).
92
      JX 117; JX 124.
93
      JX 353. Bouri repaid each advance through deductions from his paycheck or by
      cashing out his accrued vacation time. Tr. 868-69 (Bouri).
94
      Tr. 868-69 (Bouri).

                                          19
                      b.    Bouri’s hidden fraud
      The cash advances were not the only thing Bouri was hiding from the other

members of Trascent. On May 6, 2014, Bouri attended an annual fundraising event

hosted by Michael Herklots, the Vice President of Retail & Brand Development for

Nat Sherman International, Inc. (“Nat Sherman”), a New York cigar company. 95

Bouri purchased several lots, totaling $7,050.96           Bouri later submitted his

reimbursement to Trascent, claiming the purchased items as business expenses;

however, he did not list the items he actually purchased.97 Instead, unbeknownst to

anyone at Trascent, Bouri fabricated a letter on Nat Sherman letterhead purporting

to thank Bouri for Bouri’s purchase of alternative lots.98 Bouri then submitted that

letter to Trascent as part of his business expenses.

      Bouri testified that he fabricated the letter because there were clients with him

at the fundraiser, and he did not want the actual purchases to reflect poorly on them. 99

Bouri explained this was because the clients’ companies had procurement policies

regulating what employees could receive from consultants, to avoid corruption and

95
      JX 314, at 3.
96
      Id. at Ex. A-2.
97
      Tr. 465 (Bouri).
98
      JX 314, at Ex. A-5; Tr. 449, 465-66 (Bouri).
99
      Tr. 473-75 (Bouri).

                                           20
undue influence, and receiving the actual lots purchased at the auction, as they had,

violated those policies. 100 If a company client audited Trascent’s records at some

point in the future, as Bouri testified was a relatively common occurrence, the

company client would not see that Trascent had violated the company’s procurement

policies because the forged documentation would deceive them. 101 Trascent did not

discover the forgery until after Bouri had left Trascent.102

100
      Tr. 477-78 (Bouri).
101
      Tr. 479-81 (Bouri).
102
      Tr. 95-96 (Kishan). The other members of Trascent did not discover the rest of
      Bouri’s other questionable expenses until after he had departed Trascent. Schaffer
      emailed Kishan on April 20, 2015, with a compilation of Bouri’s expenses saying,
      “[Bouri] certainly liked to spend extravagantly. . . . Constant use of limos,
      entertaining clients, and expensive meals are more than I think is necessary for a
      company of this size, but that is a business decision.” JX 331.15. She went on to
      list the areas of “invalid or suspicious” charges she focused on. Id. She listed the
      following charges:
                     1) Dinners and theater events without stating client
                     names or purpose 2) Personal cigar club membership
                     charged to Trascent 3) Coat checks equating to $1,145
                     without receipts ($20 each time, avg) . . . The Kings
                     supermarket $986 purchases were for wine that
                     supposedly went to clients, but Tina never sent anything
                     to anyone. . . . 6) **Recruiting meetings when we had
                     no jobs. In the USA, Tina would handle the resumes
                     and set up recruiting and had no copies of resumes. For
                     several, specifically “Athena”, this recruiting meeting
                     was so late it went into the next day and involved heavy
                     drinking. . . . 7) The last ship theatre event: he claims
                     he was with Sharon Lee, but in his calendar it states an
                     11am meeting in lieu of dinner. 8) **Wedding for Paul
                     Begin’s daughter: it appears he charged Trascent for
                     this personal event. And claimed he was at a TR

                                           21
                    c.     Internal investigations at Trascent
      By October 2014, Bouri initiated an internal investigation into the financials

of Trascent (the “Internal Investigation”).103 Before Bouri’s arrival at Trascent, Patel

Kishan, Kishan’s wife, handled the finances in a relatively informal manner. 104 Patel

Kishan facilitated the fiscal transition from UMS Advisory to Trascent 105 and

admitted that she was overwhelmed with that role because of the way the handover

of business from UMS Advisory to Trascent took place.106 As a result, Trascent’s

books were rather disorderly. Thus, the Internal Investigation was not completely

baseless.

      But, Bouri also had ulterior motives for the Internal Investigation. Bouri

wanted Kishan out and was going to use the Internal Investigation to do it. He told

                    leadership meeting. . . . 9) **Large expenditures for
                    fundraisers that are unrelated to Trascent.
      Id.
103
      JX 331, at 28.
104
      Tr. 314-15 (Patel Kishan).
105
      Tr. 260-62 (Patel Kishan).
106
      Tr. 316-17 (Patel Kishan) (“It was crazy. All the way until, you know, a little --
      maybe a month before [Shaffer] joined and even then so, so busy. I’m running three
      entities across 12 time zones. I’m doing -- you know, I got to look at what’s coming
      up for payables, predominantly payroll. I have to do all the invoicing. I have to fend
      e-mails from all over the world. You know, I’m dealing with different time zones.
      It was crazy. I was -- I was, you know, drinking water through a fire hose. I mean,
      I could just barely keep up, but -- I was so, so busy.”).

                                            22
the finance department, which he supervised, that Kishan was using Trascent as his

own personal “piggy bank”107 and that Kishan had “his hand in the cookie jar.”108

He also told them that Kishan was “financially irresponsible and irrational, and

dragging [Trascent] into a financial catastrophe each month with him.” 109

      The Internal Investigation centered on Kishan’s promissory note with

Trascent (the “Note”). Initially, the Internal Investigation was about reconciling the

amounts UMS Advisory paid to or for Trascent during the first several months of

Trascent’s existence. Because the transition was so hectic, Bouri and Shaffer had

questions about whether the correct amounts were credited against the Note.110

      As the Internal Investigation progressed, however, it became focused on

Kishan’s spending and reimbursements.111 Bouri also voiced concerns about the fact

that Kishan had two employment agreements that paid him a greater salary than what

had been agreed upon, charged Trascent for the preparation and filing of his personal

tax returns, and insisted on reimbursement for exorbitant cell phone bills for both

107
      Tr. 924 (Ryan).
108
      JX 331, at 176-77.
109
      JX 184.
110
      See JX 132; JX 147; JX 180.
111
      See JX 157; JX 172.

                                         23
himself and Patel Kishan. 112 Bouri made it clear to the finance team as they

continued to reconcile the Note that “the end goal result” of the Internal Investigation

was to find a way to force out Kishan.113 Eventually, Schaffer and Bouri hired an

external accounting firm, EisnerAmper LLP, to take over the Internal

Investigation. 114

       On March 13, 2015, Bouri, Shaffer, and another Trascent employee, Kristine

McArdle, met with two EisnerAmper partners, Gerard Abbattista and Terry

Simonds. 115     During that meeting, the EisnerAmper partners determined that

EisnerAmper was not needed for a forensic investigation, but instead would “go

through the books and records, clean up the records based on [their] interpretations

of the [LLC Agreement] and the transactions that occurred in order to prepare an

112
       JX 81; JX 116; JX 154; JX 205; JX 208; Tr. 111-12, 133-137 (Kishan); Tr. 737-38,
       749-52, 789, 904-06 (Bouri). Plaintiff objects to JX 81, 116, 154, and 205 under
       Delaware Rule of Evidence 802. These objections are overruled because these
       exhibits are not being used to show the truth of the matter asserted in the statements
       therein.
113
       Tr. 929 (Ryan); see JX 144 (email in which Shaffer informs Bouri that she might
       have found a $200,000 “bogus charge to [the N]ote,” and Bouri responds “I hope
       so”); JX 188 (email in which Bouri tells Shaffer, “I can’t wait until you uncover the
       smoking gun(s) we are all waiting for. Then a new chapter begins for Trascent.”);
       JX 200 (email in which Bouri tells Shaffer, “Remember, we need a smoking
       Bazooka!”).
114
       JX 198.
115
       JX 369; Tr. 830-33 (Abbattista).

                                             24
accurate tax return.” 116 EisnerAmper concluded their work with Trascent in July

2015. 117 They did not find “any evidence of intentional wrongdoing” or perform “a

forensic investigation.” 118

             5.     Automated Data Processing investigation
      The Internal Investigation was not the only investigation Bouri initiated due

to his ulterior motives. On January 20, 2015, Bouri filed a complaint with Trascent’s

outside HR company, Automated Data Processing (“ADP”), on behalf of some

female Trascent employees, including Schaffer, and a female Trascent client. 119 In

the complaint, Bouri alleged that the women complained to Bouri during the month

of January about Kishan’s “unprofessional and inappropriate behaviors.”120 ADP

initiated an investigation (the “HR Investigation”).121

      Bouri told Fastovsky about the HR Investigation. Fastovsky testified that

Bouri “contacted [him] . . . sometime in early 2015 and informed [him] that a number

116
      Tr. 834 (Abbattista).
117
      Tr. 841 (Abbattista).
118
      Tr. 844 (Abbattista).
119
      JX 137; JX 279. Plaintiff objects to JX 137 under Delaware Rule of Evidence 802.
      This objection is overruled because this exhibit is not being offered to show the truth
      of the matter asserted in the statements therein.
120
      JX 279.
121
      Id.

                                            25
of women had approached [Bouri] with concerns about being mistreated by Mr.

Kishan.” 122 Bouri “also informed [Fastovsky] that Jody Brown [who worked at one

of Trascent’s biggest clients] had witnessed a nude photograph at a dinner. And that

because of these incidents . . . an ADP investigation would have to be launched to

make sure and go after these incidents.” 123 Kishan did not know about the ADP

investigation until late March 2015.124

      As the HR Investigation continued, Bouri encouraged the alleged

complainants to take part.      His executive assistant, Tina Ryan, described her

interactions with Bouri regarding the HR Investigation.

             [Bouri] wanted to know, you know, had the people called
             and made their complaints. And then when he received
             updates from Heather at ADP as to who had or hadn’t
             called in, I would get the phone call from [Bouri] directing
             me to contact those individuals that had not called in on
             their own and ask them are they going to call in. When are
             they going to call in? And then in a conversation in that
             time frame with [Bouri], I had asked him -- you know, I
             stated I wasn’t feeling very comfortable with it because it
             could be collusive. We’re asking people to participate in
             something they weren’t doing of their own accord. But
             that was not met well.125

122
      Tr. 1049 (Fastovsky).
123
      Id.
124
      See Tr. 59-60 (Kishan).
125
      Tr. 926-27 (Ryan).

                                          26
      In response to this “encouragement,” several women made statements to

ADP. The ADP final report includes these statements, which allege that Kishan

created “a hostile work environment.” 126 There were four complainants. The first

stated that Kishan embarrassed her by criticizing her and saying “derogatory things”

in front of her project team. 127 The second complainant stated that Kishan told her

things were “going to get really ugly and you’re not going to like it” if she did not

approve his $40,000-$50,000 cell phone bill.128 The second complainant also stated

that she was “extremely uncomfortable” being in the middle of Bouri and Kishan

and that she saw a document that Kishan had put together alleging she was “trying

to rip off the company.” 129 The third complainant alleged that she got a “verbal

lashing” from Kishan when she was out sick and did not respond to one of his emails

and that Bouri told her Kishan had been bad mouthing her. 130 The fourth and final

complainant, Brown, alleged that “[i]n September 2014, the project team (25-30)

people went out to dinner at a restaurant in Singapore. At the dinner [Kishan] was

talking about his recent vacation and he showed pictures (on his cell phone), of his

126
      JX 279.
127
      Id.
128
      Id.
129
      Id.
130
      Id.

                                         27
nanny in a bikini,” which made her “uncomfortable” and was “inappropriate at a

business function.” 131

      In March 2015, the Board had “a very difficult board meeting.”132 According

to Kishan, Bouri told him, “You have to leave the firm or I leave the firm or you

back down.”133 Kishan continued, “It was very hostile. It was a profanity-laced rant

by Mr. Bouri. It was a very difficult board meeting.”134 Kishan testified that he did

not understand what Bouri was saying at first. Kishan testified that Bouri “made

representations such as, you know, you’re a bully and they’re coming to me. I didn’t

know what that meant at that time. But he seemed to say back down and things like

that. It was a little perplexing as to what he was getting at.”135 But, Kishan testified,

“It was definitely a veiled threat of some sort.”136

      Kishan finally understood the threat when he got a call from ADP on March

26, 2015, informing him that they were investigating allegations that he was creating

131
      Id. When Bouri found out ADP had spoken to this complainant he responded,
      “Hallelujah!!! Isn’t that all we were looking for, i.e. for her to corroborate as the
      client and as a female executive who was offended by his behaviors? Please
      confirm.” JX 232.
132
      Tr. 58 (Kishan).
133
      Id.
134
      Id.
135
      Tr. 58-59 (Kishan).
136
      Tr. 59 (Kishan).

                                           28
a hostile work environment. 137 During this phone call, Kishan concluded that Bouri

had fabricated the HR Investigation and involved a client in an internal HR matter,

which he determined constituted “cause” for termination under Bouri’s employment

agreement (the “Employment Agreement”). 138 On April 8, 2015, Kishan, as the

majority holder of Class A Units, removed Bouri and Fastovsky from the Board by

written consent. 139 Kishan, as the only remaining member of the Board, then

terminated Bouri’s employment for cause under the Employment Agreement.140

Several days later Kishan reinstated Fastovsky to the Board.141

      Shaffer recanted her complaint before ADP issued its final report. A footnote

in the final ADP report states, “On April 15, 2015, after Mr. Bouri was terminated

from the company, Ms. Shaffer alleged she was coerced to participate in the

investigation. Ms. Shaffer further alleged that Mr. Bouri told her if she didn’t

participate in the investigation, she would be fired.”142 Shaffer testified that she felt

137
      Tr. 60 (Kishan); JX 279.
138
      Tr. 73, 80, 84-85 (Kishan).
139
      PTO ¶ II.55.
140
      PTO ¶¶ II.56, II.58.
141
      Tr. 1080 (Fastovsky).
142
      JX 279.

                                           29
coerced by Bouri into making the complaint. 143 Later in her deposition, she testified

that Kishan encouraged her to recant her statement after Bouri’s termination.144

Ultimately, ADP concluded that “[t]he evidence does not establish that a violation

of the Harassment Prevention Policy has occurred, as alleged by [the Trascent

employees and client].” 145 After ADP completed its report, one of the complainants

filed a charge of discrimination with the Equal Employment Opportunity

Commission against Trascent.146 Additionally in this litigation, two of the other

complainants testified that Bouri encouraged or pressured them to submit their

statements.147

      C.     Credibility
      The credibility of the two main actors, Kishan and Bouri, is central to the

outcome of this litigation. So much so that the parties included a separate credibility

section in each of the four post-trial briefs. 148 Judicial opinions typically exist in a

closed universe of only the record presented by the parties.             My credibility

143
      JX 331, at 99-100.
144
      JX 331, at 333.
145
      JX 279.
146
      JX 438.
147
      JX 339, at 17-18, 41-42; Tr. 999-1001 (Liu).
148
      See Pl.’s Opening Br. 9; Def.’s Answering Br. 5; Pl.’s Reply Br. 2; Def.’s Sur-Reply
      Br. 2.

                                           30
determinations are based on the testimony and evidence submitted to make up that

record and the patterns of behavior reflected in the testimony and evidence. While

I discuss some examples point by point, my determination is holistic—made by

looking at the record in its entirety. My credibility determinations should not be

taken as a statement of universal truth as to a person’s character. Instead, they

provide the explanation for why certain evidence carries more weight.

      I tend to give more weight to the contemporaneous evidence, as it is free from

the realities of litigation and closer in time to the events that transpired. But this

evidence does not always resolve all disputes. When I only have testimony, and the

testimony conflicts, I must determine whose testimony to credit. Within the limited

context of this litigation, for the reasons that follow, I find Kishan to be more credible

than Bouri and, thus, tend to place more weight on his testimony when it conflicts

with Bouri’s and there is an absence of contemporaneous evidence.

                                           31
      Neither Kishan nor Bouri has been portrayed in the best light during this

litigation, but the salient difference is that while Kishan may not make the best

decisions, 149 Bouri has repeatedly lied, before and during this litigation.150

      Bouri repeatedly asserted under oath that he resigned from Time Warner until

eventually admitting he never resigned before he was terminated, which Time

Warner’s contemporaneous business records (the “Business Records”) confirm.151

Bouri also has repeatedly asserted that he did not and does not know of any basis for

his termination from Time Warner, but the Business Records show that Bouri was

warned that he was being terminated because his superiors lost confidence in his

business judgment. 152 Bouri also repeatedly asserted that he was never told of any

allegations against him, but again, the Business Records show he was told in detail

149
      See JX 128 (spending extravagantly despite limited finances); JX 184 (requesting
      $40,000 loan from Trascent’s line of credit to pay personal credit card bill); JX 273-
      74 (directing Shaffer to pay his $2,000/month cell phone bill, which was
      $1,700/month higher than approved under Trascent’s policy, immediately after
      firing Bouri who would not approve payment of the bill); JX 361 (continuing to
      spend extravagantly despite limited finances); Tr. 172-74 (Kishan) (removing both
      Bouri and Fastovsky from the Board before firing Bouri for initiating an HR
      investigation into Kishan that Kishan determined was fraudulent).
150
      Tr. 448 (Bouri).
151
      Compare JX 6, JX 304, JX 305 and Tr. 520, 521, 550, 612, 620 (Bouri) with JX 306
      and Tr. 855 (Bouri).
152
      Compare JX 304 and Tr. 550-51 (Bouri) with JX 306, at TW 0002-03.

                                            32
about the allegations made against him. 153         Further, Bouri forged expense

documentation and presented the forgery for reimbursement purposes in order to

help his clients circumvent the monitoring policies of their employers intended to

prevent fraud and undue influence.154 Finally, Bouri presented to Kishan an altered

version of his Time Warner employment agreement that inflated his position, salary,

and bonus. 155 Bouri admits that he forged the Nat Sherman letter, 156 and the Time

Warner business documents show that he knew of at least some basis for his

termination and that he gave a false employment agreement to Kishan.157 In the face

of such a pattern, I do not find Bouri to be a credible witness regarding the events

leading to this litigation.

       Conversely, Kishan’s actions, while evidencing questionable judgment, do

not give me reason to doubt the credibility of his testimony during the course of this

litigation. Bouri points to three examples of behavior that he argues undermine

153
       Compare JX 304 and JX 305 with JX 306, at TW0052.
154
       PTO ¶ II.50; Tr. 473-77 (Bouri).
155
       Compare JX 13, at D192757-58 with JX 306, at TW0019-20. Bouri testified that
       he “inadvertent[ly]” gave Kishan a preliminary version of his Time Warner
       employment agreement and “did not purport that [it] was [his] final Time Warner
       agreement.” Tr. 447 (Bouri). This statement is belied by the evidence. See supra
       note 55.
156
       Tr. 448 (Bouri).
157
       JX 306, at TW0019-41, TW0052.

                                          33
Kishan’s credibility. 158 First, Trascent was erroneously charged $20,000 for the

preparation of Kishan’s personal tax returns.           The same accountant prepared

Trascent’s and Kishan’s tax returns and sent a single, unclear invoice that Patel

Kishan mistakenly paid.159 This error was discovered and corrected. 160 Second,

Bouri alleges that Kishan attempted “to offset Kishan’s $520,000 promissory note

with questionable credits, falsely claiming that the [N]ote had been fully satisfied

and that Trascent owed Kishan money on top of that.”161 As the discussion above

about the transition from UMS Advisory to Trascent makes clear, UMS Advisory

gave Trascent significant loans during the first few months of Trascent’s

158
      Bouri also points to two facts he claims undermine Patel Kishan’s credibility. First,
      he claims that Patel Kishan “submitted to Trascent thousands of dollars of expense
      reimbursement requests on Kishan’s behalf without the required back-up
      documentation.” Def.’s Sur-Reply Br. 3. Patel Kishan testified that she used the
      American Express statement as backup for the expense reimbursement requests she
      submitted because it provided extensive detail. Tr. 299-300 (Patel Kishan) (“It
      provides the date, the name of the vendor, the amount. It provides additional
      information. If it was an airfare, it would provide date of departure, the airline that
      was used. If it was a hotel charge, it would provide date of arrival, date of departure.
      If it was a meal, it would state the amount of the meal and then the tip that was
      provided for.”). Second, Bouri claims that Patel Kishan “purposefully and
      improperly kept herself on Trascent’s payroll to maintain certain US benefits while
      simultaneously also remaining on the payroll of Trascent’s Swiss subsidiary.”
      Def.’s Sur-Reply Br. 3. The only evidence Bouri points to as support for this
      contention is his testimony. I do not find this sufficient evidence to show that Patel
      Kishan did anything dishonest.
159
      JX 331, at 600-01.
160
      Id.
161
      Def.’s Sur-Reply Br. 3.

                                            34
operation.162 Patel Kishan kept a log of these loans in Trascent’s books as credits

against Kishan’s note because it was better for Trascent than having large payables

on its books. 163 The Note itself was never altered. 164 Nor did the Kishans try to

avoid a proper accounting and reconciliation of Trascent’s finances and Kishan’s

note.165   In fact, Kishan encouraged it.166     Both Shaffer and EisnerAmper

independently reconciled the Note.167 What Bouri tries to paint as “false claims”

were nothing more than statements based on incomplete data or hopes about what

the outcome might be. 168 Finally, Bouri points to the fact that Kishan had two

employment agreements, one with Trascent and one with the Swiss entity, that

resulted in him receiving higher compensation than Kishan and Bouri had agreed.169

While I do not condone Kishan’s two employment agreements, that one action does

not completely undermine Kishan’s credibility or overcome the evidence against

162
       Tr. 288 (Patel Kishan).
163
       Tr. 291 (Patel Kishan).
164
       Tr. 289 (Patel Kishan).
165
       JX 331, at 249.
166
       Id. at 603.
167
       Id. at 278-79; JX 331.18.
168
       JX 109.
169
       Def.’s Sur-Reply Br. 3.

                                        35
Bouri’s veracity. Thus, when the testimony of Kishan and Bouri conflicts, I tend to

credit Kishan’s testimony over Bouri’s testimony.

II.   ANALYSIS
      “To succeed at trial, ‘Plaintiffs, as well as Counterclaim–Plaintiffs, have the

burden of proving each element . . . of each of their causes of action against each

Defendant or Counterclaim–Defendant, as the case may be, by a preponderance of

the evidence.’” 170 “Proof by a preponderance of the evidence means proof that

something is more likely than not. It means that certain evidence, when compared

to the evidence opposed to it, has the more convincing force and makes you believe

that something is more likely true than not.” 171

      A.     Fraudulent Inducement
      Trascent argues that Bouri fraudulently induced it to enter into the

Employment Agreement and the LLC Agreement. As a result, Trascent seeks to

rescind the Employment Agreement, and it seeks a declaration that Bouri may not

enforce the LLC Agreement. “The elements of fraudulent inducement are the same

170
      S’holder Representative Servs. LLC v. Gilead Scis., Inc., 2017 WL 1015621, at *15
      (Del. Ch. Mar. 15, 2017) (quoting inTEAM Assocs., LLC v. Heartland Payment Sys.,
      Inc., 2016 WL 5660282, at *13 (Del. Ch. Sept. 30, 2016)), aff’d, 177 A.3d 610 (Del.
      2017).
171
      Agilent Techs., Inc. v. Kirkland, 2010 WL 610725, at *13 (Del. Ch. Feb. 18, 2010)
      (quoting Del. Express Shuttle, Inc. v. Older, 2002 WL 31458243, at *17 (Del. Ch.
      Oct. 23, 2002)).

                                          36
[as] those of common law fraud.”172 The Supreme Court of Delaware defines those

elements:

            (1) a false representation, usually one of fact, made by the
            defendant; (2) the defendant’s knowledge or belief that the
            representation was false, or was made with reckless
            indifference to the truth; (3) an intent to induce the
            plaintiff to act or to refrain from acting; (4) the plaintiff’s
            action or inaction taken in justifiable reliance upon the
            representation; and (5) damage to the plaintiff as a result
            of such reliance.173

As more fully explained below, Bouri made false representations about his departure

from Time Warner and his personal wealth that he knew were misleading to induce

Kishan to form Trascent and make Bouri a member and manager. Kishan and

Trascent relied upon these statements by forming Trascent and making Bouri a

member and manager, which resulted in damage to Trascent.

            1.     Trascent can rely on statements made before it existed
      Bouri first argues that Trascent’s claim must fail because “[a]s a matter of

law, Trascent cannot base its claim upon alleged misrepresentations that predate its

existence,” and Trascent was not formed until after Bouri made the statements in

172
      LVI Grp. Invs., LLC v. NCM Grp. Hldgs., LLC, 2018 WL 1559936, at *11 (Del. Ch.
      Mar. 28, 2018) (alteration in original) (quoting Smith v. Mattia, 2010 WL 412030,
      at *5 n.37 (Del. Ch. Feb. 1, 2010)).
173
      E.I. DuPont de Nemours & Co. v. Fla. Evergreen Foliage, 744 A.2d 457, 461-62
      (Del. 1999).

                                          37
question. 174 In Nye Odorless Incinerator Corp. v. Felton, 175 the Delaware Superior

Court outlined a two-part test to determine whether an entity could assert a claim

based on fraudulent misrepresentations made before it was formed. An entity can

maintain a claim based on misstatements made before its formation when (1) the

fraudulent statements were made to an innocent individual to induce him/her to form

an entity and have that entity take certain actions, and (2) that individual forms the

entity and causes it to take said actions. 176

       Nye concerned the acquisition of a Georgia company by a Delaware entity

formed solely for the acquisition. The question the Superior Court answered in Nye

is essentially the same question posed here: “[C]an a suit be maintained at law,

sounding in tort, at the instance and in the name of a corporation based upon alleged

fraudulent misrepresentations by a vendor to the promoter of the proposed

corporation, which was afterwards incorporated?” 177 The court summarized the

parties’ arguments:

              The defendant contends that the suit cannot be maintained
              by the corporation for any supposed misrepresentation
              prior to the existence of the corporation. . . . The plaintiff
              contends      that    where      false    and      fraudulent
174
       Def.’s Answering Br. 9-10.
175
       162 A. 504 (Del. Super. 1931).
176
       See id. at 508.
177
       Id.

                                            38
             misrepresentations are made to individuals to induce them
             to form a corporation for the purpose of purchasing
             property, or rights, or entering into a contract, and the
             corporation, when created by such individuals, who
             become its stockholders and officers, acts upon such
             representations to its injury, it may maintain an action.178

      The court explained its analysis:

             The plaintiff bases its contention on the general and
             underlying proposition that where misrepresentations are
             made to one person, with the intention that they be
             communicated to another, and acted upon by such other,
             and as a fact such representations are communicated and
             acted upon to the prejudice of a stranger, an action of
             deceit will lie. This general proposition is not disputed by
             the defendant but only its application to the case of a
             nonexistent corporation.179

      The court then looked to Ehrich on Promoters:

             If representations are made with the purpose of inducing
             persons to organize a corporation, to take over certain
             property or to enter upon particular engagements and the
             persons deceived do, in reliance upon the representations
             made, organize the corporation and cause it to take the
             contemplated action, it may fairly be said that the
             representations were made with intent to deceive the
             corporation, that it was deceived thereby and acted thereon
             to its damage. 180

178
      Id. (citation omitted).
179
      Id.
180
      Id.

                                          39
Ultimately, the court found that the corporation could bring the fraud claim relying

on statements made before it existed when the statements were made to induce the

creation of said corporation and to have the corporation take certain actions.

      The events that transpired here are directly in line with the holding of Nye and

the two-part test established therein. In Nye, the vendor made statements to the

promoter that induced the promoter to form a corporation and cause that corporation

to purchase the assets of a Georgia corporation.181 Here, Bouri made statements to

Kishan, discussed below, that induced Kishan to form Trascent and caused Trascent

to enter into an employment agreement with Bouri. 182 Moreover, Bouri’s statements

to Kishan induced Trascent, once formed, to make Bouri not just an employee but a

unitholder and manager. In that way, this case is even more compelling than Nye.

To hold otherwise would be to ignore the harm suffered by Trascent in its very

conception, structure, and management.

      Relying on Trenwick America Litigation Trust v. Ernst & Young, L.L.P., Bouri

contends that Trascent’s claims must fail as a matter of law.183 This Court described

181
      Id. at 505.
182
      Tr. 20 (Kishan); JX 15 (explaining that Bouri told Kishan the formation of an LLC
      would “entice” him to join); JX 18 (“[W]e discussed in the past the concept of an
      ‘employment agreement’ so as to protect both of us. In that spirit, I sent you a copy
      of my Time Warner Agreement.”).
183
      906 A.2d 168 (Del. Ch. 2006), aff’d sub nom. Trenwick Am. Litig. Tr. v. Billett, 931
      A.2d 438 (Del. 2007).

                                           40
Trenwick as an “unusual” case. 184 “The primary defendants . . . were directors of a

publicly listed insurance holding company. All but one of the eleven directors [were

independent]. The other director was the chief executive officer of the holding

company.” 185       “The holding company and its top U.S. subsidiary filed for

bankruptcy. The cause of the failure was that the claims made by the insureds

against the holding company’s operating subsidiaries . . . exceeded estimates and

outstripped the holding company’s capacity to service the claims and its debt.”186

As part of the bankruptcy, a Litigation Trust was created. “That Trust was assigned

all the causes of action that the U.S. subsidiary owned.”187

      The Litigation Trust then brought a case and supported its claim with the

following allegations:

             [T]he majority independent board of the holding company
             engaged in an imprudent business strategy by acquiring
             other insurers who had underestimated their potential
             claims exposure. As a result of that imprudent strategy,
             the holding company and its top U.S. subsidiary were
             eventually rendered insolvent, to the detriment of their
             creditors. Not only that, because the top U.S. subsidiary
             took on obligations to support its parent’s debt and
             actually assumed some of that debt, the top U.S. subsidiary

184
      Id. at 172.
185
      Id.
186
      Id.
187
      Id.

                                         41
             and its creditors suffered even greater injury than the
             holding company and its creditors.188

      “At the tail end of its complaint, the Litigation Trust allege[d] that the

Trenwick and Trenwick America directors committed fraud, in concert with each

other and with outside advisors to Trenwick. The fraud alleged consists of non-

disclosures and material misstatements of fact.”189 “The complaint allege[d] that the

Trenwick and Trenwick America officers and directors had a duty to disclose

[certain] facts to [the] ‘Plaintiff.’” 190 This Court supposed that by “Plaintiff,” the

party bringing the suit, the Litigation Trust, meant “the entity whose claims it now

possesses, Trenwick America.” 191

      “Allegedly, the Trenwick directors knew ‘these statements were false when

made.’ . . . ‘Plaintiff’—i.e., Trenwick America—supposedly relied detrimentally on

the statement.” 192 This Court went on to say, “Remember that the Litigation Trust

only has the ability to assert a claim that Trenwick America possesses.”193

188
      Id.
189
      Id. at 186.
190
      Id. at 187.
191
      Id.
192
      Id.
193
      Id. at 191.

                                          42
             The final claim made against the directors of both
             Trenwick and Trenwick America is that they worked
             together to commit fraud that injured Trenwick America.
             This is an extremely odd claim to be advanced on behalf
             of Trenwick America for an obvious reason: the claim
             depends on the notion that Trenwick America’s
             controlling stockholder, Trenwick, and Trenwick
             America’s board, in particular, Billett, who was on the
             parent board as well, knew facts about Trenwick America
             that they concealed from Trenwick America. 194

      This Court held that “the plain vanilla reason the fraud claim fails, . . . is that

the complaint does not satisfy the stringent pleading standard governing fraud

claims.” 195 In addition to this holding, this Court went on to say,

             [T]he Litigation Trust fails to plead a fraud claim for
             another important reason . . . . The Litigation Trust is only
             entitled to bring claims possessed by Trenwick America.
             By the Litigation Trust’s own admission, Trenwick
             America’s board of directors knew the true facts about all
             the issues said to have been misrepresented. As a result,
             Trenwick America—as an entity—did not rely to its
             detriment on any of the misstatements, despite the cursory
             statement in the complaint that the “plaintiff” relied on the
             false statements to its detriment. 196

This Court then stated,

             To the extent that the Litigation Trust is referring to itself,
             it could not have relied on the statements at issue as it did
             not exist when those statements were made. To the extent

194
      Id. at 207.
195
      Id.
196
      Id. at 211.

                                           43
             that the Litigation Trust is referring to Trenwick America,
             its statement makes no sense because the complaint
             alleges that those who controlled Trenwick America knew
             the statements were inaccurate.
             ...
             [T]he entity would not have been relying to its detriment
             on the fraudulent statement because its controllers were
             aware of the actual state of affairs. For this reason, our
             law has treated claims by stockholders that corporate
             disclosures in connection with a stockholder vote or tender
             were materially misleading as direct claims belonging to
             the stockholders who were asked to vote or tender.197

      The line on which Bouri’s entire argument rests, “[t]o the extent that the

Litigation Trust is referring to itself, it could not have relied on the statements at

issue as it did not exist when those statements were made,” 198 is dicta, in a case with

completely different facts than the one here. More importantly, Trenwick does not

pass the first step of the Nye test as the supposedly fraudulent statements did not

induce the formation of the Litigation Trust. In fact, the Litigation Trust had no

relation to the alleged fraudulent statements whatsoever. The inducement to form a

new entity and the intent to have the new entity rely upon the statements makes this

case akin to Nye and distinguishable from Trenwick. Thus, Trascent could rely on

the statements made to Kishan.199

197
      Id. at 211-12.
198
      Id. at 211.
199
      Bouri argues that Nye does not support Trascent’s position because in Nye “the
      underlying transaction documents demonstrated that the individuals to whom the

                                          44
             2.     Bouri made representations he knew were false with the
                    intent of inducing action by Trascent
      To succeed on its fraud claim, Trascent must show that Bouri made

misrepresentations he knew were false with the intent to induce action by Trascent.

Trascent argues that Bouri made false and misleading statements about his departure

from Time Warner and his personal wealth. For the reasons that follow, I find that

Bouri knowingly made false and misleading statements about his personal wealth

and his reasons for leaving Time Warner to induce Trascent to enter into the LLC

Agreement and Employment Agreement.

                    a.     The false statements about Bouri’s departure from
                           Time Warner and his personal wealth
      “A misrepresentation is an assertion that is not in accord with the facts.”200

“[F]raud does not consist merely of overt misrepresentations,” but “[i]t may also

occur through deliberate concealment of material facts, or by silence in the face of a

duty to speak.” 201 One has a duty to speak to correct an omission “in order to prevent

      statements were made should be viewed as ‘equitable stockholders, potential
      stockholders, or . . . some other name which would indicate that they had rights in
      the corporation . . . .’ at the time of the misrepresentation,” but here there are no
      documents indicating Kishan or Fastovsky should be treated as owners of Trascent
      in August 2011. Def.’s Sur-Reply Br. 5-6, 6 n.5. The court in Nye discusses
      equitable stockholders because of a rule regarding promoters and assignment of
      stock that is inapplicable here. See Ehrich on Promoters §§ 120-23.
200
      Restatement (Second) of Contracts § 159 (Am. Law. Inst. 1981); accord Norton v.
      Poplos, 443 A.2d 1, 5 (Del. 1982).
201
      Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del. 1983).

                                           45
statements actually made from being misleading.”202 “[A]lthough a statement or

assertion may be facially true, it may constitute an actionable misrepresentation if it

causes a false impression as to the true state of affairs, and the actor fails to provide

qualifying information to cure the mistaken belief.”203

      There are two sources of information about what happened with Bouri’s

departure from Time Warner: Bouri’s testimony and the Business Records. Bouri

challenges the Business Records with two arguments, neither of which I find

persuasive. First, Bouri argues that if the allegations in the Business Records had

been substantiated, then he would have been terminated for cause. This does not

necessarily follow. A company may choose not to terminate someone for cause for

any number of business reasons, including to avoid costly litigation related to the

termination. In fact, Bouri signed a release as part of his termination without cause.

Second, Bouri argues that the allegations in the Business Records cannot be true

because he had received a “glowing” evaluation in March 2011. Again, this

conclusion does not necessarily follow because the allegations all could have been

made between Bouri’s evaluation in March and the investigation in May.

202
      Id.
203
      Norton, 443 A.2d at 5 (“For example a true statement that an event has recently
      occurred may carry the false implication that the situation has not changed since its
      occurrence. Such half-truths may be as misleading as an assertion that is wholly
      false.”).

                                           46
Regardless, whether the allegations were substantiated does not mean they were

unrelated to his termination from Time Warner. Further, neither argument discredits

the Business Records in their entirety or undercuts the fact that the Business Records

show that Bouri’s departure from Time Warner was completely different than the

story presented to Kishan.

      Bouri told Kishan he voluntarily resigned from Time Warner because he was

being micromanaged. 204 He even gave examples of this “micromanagement,”

including that his boss wanted him to stop driving his Bentley into the office at

10:30 a.m. on workdays because “it set a bad example [for] the other employees.”205

In reality, he had been terminated without cause because Time Warner “had received

complaints from [Bouri’s] team . . . about [his] management and [his behavior,]” and

the CEO of Time Warner and other leaders “ha[d] spent considerable time during

the last year [of Bouri’s employment] addressing areas of [Bouri’s] performance that

[were] not meeting the needs of [Time Warner].” 206 This led the CEO to lose

confidence in Bouri’s business judgment.207 Further, shortly before Bouri’s

termination, Time Warner received and investigated serious allegations of

204
      Tr. 12 (Kishan).
205
      Tr. 13 (Kishan).
206
      JX 306, at TW0002.
207
      Id.

                                         47
mismanagement and sexual harassment, including that he was “unreasonable,

blaming others for his mistakes, aggressive, disrespectful, bullying” and that he

“talk[ed] about sex all the time [in] graphic detail [and] . . . [told employees: you]

look good [but I’d] have to fire you to date you.” 208 One of Time Warner’s attorneys

discussed these allegations in detail with Bouri, and Bouri responded in detail at the

same meeting.209     Shortly thereafter, the CEO of Time Warner and an HR

representative met with Bouri to inform him that he was being terminated. Finally,

Bouri admitted at trial that he had not resigned before he was terminated.210 Bouri’s

statement that he had resigned because he was being micromanaged was not in

accord with the facts, and he knew it was not in accord with the facts. What is more,

his statements gave “a false impression as to the true state of affairs,” and he failed

“to provide qualifying information to cure the mistaken belief.” 211

      Bouri also made statements that gave the impression that he was a man of

considerable personal wealth.212 Kishan testified that Bouri “talked about his Aston

Martins. He talked about his home in Atherton, California, where the average price

208
      Id. at TW0051-52.
209
      Id. at TW0002, TW0052.
210
      Tr. 557-59 (Bouri).
211
      Norton, 443 A.2d at 5.
212
      Tr. 22-24 (Kishan).

                                          48
per home, he informed me, was $5 million. He talked about growing up in the south

of France. He said his father was the largest cement trader in the world” and “that

he grew up in lavish homes all around the world.” 213 Bouri told Kishan that while

Bouri “was at Sun Microsystems he earned hundreds of millions of dollars and he

gave a lot of that money away.” 214 In fact, before and around the time Bouri made

these statements to Kishan, Bouri knew he was struggling financially; he had

significant tax liens on his home in New Jersey, had sold his Atherton, California

home in a short sale, and had been forced to sell much of his stock. 215 Again, Bouri’s

statements gave a false impression of the true state of affairs, and Bouri never

corrected the mistaken impression.

                    b.      Bouri made the false statements with the intent of
                            inducing action by Trascent
      “A result is intended if the actor either acts with the desire to cause it or acts

believing that there is a substantial certainty that the result will follow from his

213
      Tr. 22 (Kishan).
214
      Tr. 22-23 (Kishan).
215
      JX 117; JX 119; JX 124; JX 308; JX 353. Defendant objects to JX 308 under
      Delaware Rule of Evidence 901. This objection is overruled because under
      Delaware Rule of Evidence 901(b)(7) the exhibit is a public record filed in a public
      office, and under Delaware Rule of Evidence 902(1) the exhibit is a domestic public
      document under seal.

                                           49
conduct.” 216 The discussions and emails between Kishan and Bouri were essentially

“an extended job interview” where Kishan vetted Bouri to become his partner and

take over certain portions of the business, including overseeing operations and

managing the U.S. consulting business.217          Bouri knew this.       In overseeing

operations, Bouri would be, and in fact was, the only member with direct oversight

of Trascent’s HR, finances, and IT. As head of the U.S. consulting business, Bouri

was also the only member in North America; the other two members of Trascent,

the only people with the ability to check Bouri in any meaningful way, were on other

continents.

      Bouri made statements related to his previous employment and wealth to

increase Bouri’s chances of inducing Kishan to form Trascent and give Bouri an

equity interest in Trascent.      Bouri made these statements to strengthen his

negotiating position relative to Kishan. Without the misrepresentations about how

and why Bouri left Time Warner and the actual state of his personal finances, Bouri

would not have been able to induce Trascent to employ him as the sole manager of

the entire U.S. consulting business as well as the sole member in charge of global

operations, without any oversight by the other members.

216
      Vichi v. Koninklijke Philips Elecs., N.V., 85 A.3d 725, 811 (Del. Ch. 2014) (quoting
      In re Wayport, Inc. Litig., 76 A.3d 296, 325 (Del. Ch. 2013)).
217
      Tr. 18, 20 (Kishan); Tr. 639 (Bouri).

                                              50
      Bouri’s misrepresentations had the intended impact on Trascent’s decision to

enter into business with him, on the terms of the business, and on his role at the

company. Thus, Trascent has proven the first three elements of its fraudulent

inducement claim by a preponderance of the evidence.

             3.        Trascent justifiably relied on Bouri’s false statements
      To succeed on its fraud claim, Trascent must show that it justifiably relied on

Bouri’s misrepresentations. Under Delaware law, justifiable reliance is measured

objectively 218 and “requires that the representations relied upon involve matters

which a reasonable person would consider important in determining his course of

action in the transaction in question.”219 “A misrepresentation induces a party’s

manifestation of assent if it substantially contributes to his decision to manifest his

assent.”220 “It is not necessary that [the] reliance have been the sole . . . factor in

influencing his conduct. . . . It is, therefore, immaterial that he may also have been

influenced by other considerations.”221

      Bouri made material misrepresentations regarding his departure from Time

Warner and his personal finances that a reasonable person would consider important

218
      Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del. 1983).
219
      Craft v. Bariglio, 1984 WL 8207, at *8 (Del. Ch. Mar. 1, 1984).
220
      Restatement (Second) of Contracts § 167 (Am. Law. Inst. 1981).
221
      Id. at cmt. a.

                                           51
in deciding whether to make him a member of Trascent and a manager of Trascent

with responsibility for the U.S. consulting business, finance, and HR. In Kronenberg

v. Katz, this Court found that “it is inconceivable that reasonable investors would

have proceeded to invest, knowing that Katz intended for Robins,” who had multiple

felony convictions, “to be the Chief Operating Officer of the company and to have

control over corporate funds” without “full and complete disclosure” of Robins’s

criminal record.222 Even then, this Court reasoned that Robins “would only be

permitted to play carefully constrained and supervised roles.”223

      I likewise find it inconceivable that if Bouri had been truthful about why and

how he departed from Time Warner and the particulars of the allegations made

against him, Kishan would have made Bouri the head of HR, finance, or the U.S.

consulting business without any oversight. Bouri was terminated from Time Warner

in part because his supervisors had lost confidence in his business judgment. He

also was terminated after an investigation into allegations of inappropriate sexual

comments and behaviors in the workplace. Kishan was looking for a partner who

could handle the entire U.S. consulting business because Kishan was too focused on

the European market to give the U.S. market the attention it required. It is highly

222
      872 A.2d 568, 587 (Del. Ch. 2004).
223
      Id. at 586.

                                           52
unlikely that Kishan would have handed over that entire section of his business to

Bouri if he had known that a sophisticated business like Time Warner had lost

confidence in Bouri’s business judgment.224          Furthermore, the nature of the

allegations made at Time Warner would have been material information for Kishan

and Trascent to have before consenting to Bouri’s role as the head of Trascent’s HR.

      Nor is it conceivable that had Kishan known the truth about Bouri’s finances,

he would made him a member of Trascent. 225 Kishan was looking for someone to

invest in the company, and members had to be able to invest cash when necessary.226

Kishan testified that the only reason he accepted Bouri’s promissory note in

exchange for Bouri’s equity was that he believed Bouri was a wealthy man and

would be able to invest cash when Trascent needed. 227 Instead, Bouri refused to give

224
      JX 306, at TW0002.
225
      It is also questionable whether Kishan would have made Bouri the head of finance
      if he knew the truth. Kishan made a presentation to the Board in which he pointed
      out that Shaffer had “recently eloped” and been “involved in multiple housing sale
      transactions.” JX 139. He further stated, “I had warned [Bouri] on several
      occasions that in other smaller consulting firms I had been with, both CFO’s were
      siphoning cash.” Id. If Kishan was this concerned about the CFO’s elopement and
      multiple house sales, he likely would have been similarly concerned about putting
      a man with significant financial woes at the head of finance for Trascent. This
      inference is supported by emails from Kishan after Bouri’s departure where he
      reiterates that he thought Bouri was “rich” and thanks Shaffer for keeping an eye on
      the accounts that Bouri accessed. JX 353.
226
      JX 56; JX 21.
227
      Tr. 24-25 (Kishan).

                                           53
Trascent needed cash infusions and took loans and advances from the cash-strapped

company. 228 The fact that Bouri did not have cash to infuse should Trascent need it,

as it in fact did, was material information for Kishan to consider.

      Once Bouri embarked upon his explanation for his departure from Time

Warner, he had to give Kishan a “full and open disclosure” of the real circumstances

around that departure. 229 Once Bouri volunteered information to Kishan that gave a

certain impression about Bouri’s financial status, Bouri had to correct that

impression by telling Kishan about the true state of his financial affairs. While it is

hard to believe Kishan still would have formed Trascent, made Bouri a member, and

entrusted Bouri with the U.S. business and Trascent’s operations had he known the

truth of these matters, at the very least there would have been different constraints

on Bouri’s ownership and role at Trascent. Instead, Kishan offered Bouri “complete

independence, decision-making without political entanglements, . . . and the ability

to exert [his] vision and leadership and harness the power of a talented global team

to execute [his] vision.” 230     Thus, “it is clear that [Bouri] made material

228
      Tr. 53 (Kishan); Tr. 437-38 (Patel Kishan); JX 77; JX 117; JX 124; JX 331, at 81-
      84; JX 353.
229
      Kronenberg, 872 A.2d at 586.
230
      JX 23.

                                          54
misrepresentations of facts that would have been important to a reasonable [person]

considering [this business venture].” 231

      Bouri argues that Trascent did not justifiably rely on Bouri’s statements for

two reasons: (1) the negotiations to form Trascent took place over a long period of

time and (2) Kishan needed to “rejuvenate [UMS Advisory’s] struggling

business.” 232 Bouri never corrected the misrepresentations he made to Kishan,233

and nothing in the record suggests the information became stale over the course of

Trascent’s formation. The time between when Bouri made the statements and when

231
      Kronenberg, 872 A.2d at 587.
232
      Def.’s Answering Br. 14. Bouri also argues that his “employment history and
      personal wealth were [not] important considerations” for Trascent because
      “1) Kishan’s admitted desire to bring in someone like Bouri who had more
      ‘capacity, talent and capability’ than UMS ever had, who would be ‘instrumental’
      in ‘transforming’ UMS into a global force, and whose ambition was ‘far greater’
      than what UMS had for itself in the past; 2)” that Kishan failed to run a background
      check on Bouri; “3) Kishan’s omission of personal wealth as a requirement for
      partnership when Bouri questioned him about the prerequisites; and 4) Trascent’s
      willingness to fund initial capital contributions for all three members through non-
      recourse promissory notes.” Def.’s Sur-Reply Br. 8-9. The first, second, and fourth
      arguments address reliance by Kishan that was in direct response to the lies Bouri
      told him. Kishan’s reliance was justifiable based on the information that Bouri gave
      him. He had no duty to gather independent information. See Restatement (Second)
      of Contracts § 172 (Am. Law. Inst. 1981). As for the third argument, the list of
      prerequisites in the cited email comes after extensive discussion of purchasing
      equity for cash. JX 21. This fact actually cuts against Bouri’s argument and makes
      clear that putting cash into the business was an essential prerequisite to becoming a
      member.
233
      In fact, he maintained that he had resigned from Time Warner until his third day of
      testimony at trial. See infra Section C.

                                            55
Trascent was ultimately formed therefore is irrelevant. And as to whether it was

UMS Advisory’s financial struggles that primarily motivated Kishan to bring on

Bouri, the evidence does not support this contention. Patel Kishan, UMS Advisory’s

Director of Finance, credibly testified that in 2012 UMS Advisory made a net profit

of over $915,000 in the U.S. alone. 234 Kishan testified that UMS Advisory paid

bonuses every year except 2008. 235 These facts undercut Bouri’s position that

Kishan was so desperate to bring on Bouri that Kishan would have ignored the

circumstances surrounding Bouri’s termination from Time Warner and that Bouri

was struggling with his personal finances. Moreover, even if UMS Advisory was

struggling, the reliance is still justified even if the statements were not the sole factor

influencing the reliance. 236 A reasonable person would have considered it important

to know that the person he was going to make a member in a new entity and to whom

he was handing the U.S. business and worldwide operations had been terminated

from his last job after an investigation into his management style and inappropriate

behavior and was struggling to make ends meet financially. Thus, Trascent has

proven the fourth element of its fraudulent inducement claim by a preponderance of

the evidence.

234
       Tr. 235-36 (Patel Kishan).
235
       Tr. 7-8 (Kishan).
236
       Restatement (Second) of Contracts § 167 cmt. a (Am. Law. Inst. 1981).

                                            56
             4.     Trascent was damaged as a result of its justifiable reliance
      The final element of the fraudulent inducement claim is satisfied because

Trascent entered into the Employment Agreement and LLC Agreement when it

otherwise would not have.237       Thus, Trascent has proven each element of its

fraudulent inducement claim by a preponderance of the evidence and shown that

Bouri fraudulently induced Trascent to enter into the LLC Agreement and the

Employment Agreement.

      B.     Remedies
      Trascent essentially seeks three remedies for its fraudulent inducement claim:

(1) rescission of the Employment Agreement; (2) a declaratory judgment that the

LLC Agreement is unenforceable by Bouri; and (3) attorneys’ fees and costs. 238

             1.     Rescission of the Employment Agreement
      “By ordering rescission, whether at law or in equity, the court endeavors to

unwind the transaction and thereby restore both parties to the status quo.”239 Legal

237
      Prairie Capital III, L.P. v. Double E Hldg. Corp., 132 A.3d 35, 62 (Del. Ch. 2015)
      (“The plaintiff can claim causally related harm because it entered into an agreement
      it otherwise would not have signed.”).
238
      PTO § V.A. In the alternative, should the Court have found that the contracts were
      not induced by fraud, Plaintiff requested a declaration that Defendant was
      terminated for cause and related monetary relief. PTO § I. Because I held that the
      contracts were induced by fraud, I do not consider the alternative arguments and
      requests for relief.
239
      Ravenswood Inv. Co. v. Estate of Winmill, 2018 WL 1410860, at *21 (Del. Ch. Mar.
      21, 2018), as revised (Mar. 22, 2018).

                                           57
rescission refers to the “judicial declaration that a contract is invalid and a judicial

award of money or property.” 240 Here, Trascent appears to request legal rescission

of the Employment Agreement.241 Bouri argues, relying on Ravenswood Investment

Co. v. Estate of Winmill,242 that rescission is not available in this case because it is

not possible to return the parties to the status quo ante for two reasons. 243 First,

“Bouri contributed greatly to Trascent’s business during his tenure, and removing

the Employment Agreement would permit Trascent to reap the benefits of his

contribution while Bouri loses all benefits and protections.”244 Second, Bouri argues

that he was limited in his post-termination employment opportunities because he

abided by the eighteen-month post-termination noncompete provision in the

Employment Agreement.245 Neither of these arguments convince me that I cannot

return the parties to the status quo ante.

      While it may be true that Bouri contributed to the business of Trascent, it is

also true that Bouri cost Trascent a significant amount of money during his tenure.

240
      Id.
241
      PTO ¶ V.A.1.
242
      2018 WL 1410860, at *22 (Del. Ch. Mar. 21, 2018), as revised (Mar. 22, 2018).
243
      Def.’s Answering Br. 20.
244
      Id. at 20-21.
245
      Id. at 21.

                                             58
In the second half of 2013, Bouri increased the size of the firm from ten employees

to eighteen. 246 In 2012, the net income of UMS Advisory was $915,000, but in 2013,

after Bouri signed on, the net income was $78,000. 247 In 2014, Trascent did not

make a profit at all.248 The benefits bestowed by Bouri and the expenses incurred

by Trascent are comparable. No further compensation of the parties is required to

substantially return them to the pre-Employment Agreement status quo.

      Bouri also argues that he was limited in his post-termination employment

opportunities because he abided by the eighteen-month post-termination

noncompete provision in the Employment Agreement. 249            The noncompete

provision in the Employment Agreement prevents certain actions “in the business of

providing consulting services in the real estate/facilities management market

anywhere within the United States and in such other jurisdictions as the Company is

then providing such services or has provided such services within the prior 24

months.”250 Bouri separated from Trascent in April 2015 and moved to Beirut,

Lebanon, in August 2015 “[f]or simply personal reasons,” including being closer to

246
      Tr. 251 (Patel Kishan).
247
      Tr. 244 (Patel Kishan).
248
      Tr. 200 (Kishan).
249
      Def.’s Answering Br. 21.
250
      JX 55, at 8.

                                        59
his aging mother.251 He has resided there since.252 In November 2015, Bouri was

diagnosed with certain medical conditions that make it dangerous for him to travel

to the U.S., Europe, Asia, or anywhere requiring plane travel.253 Neither party has

pointed to any evidence that Trascent provided any real estate/facilities management

consulting services in or around Lebanon during the twenty-four months before

Bouri’s departure in April 2015 such that the noncompete provision would prevent

Bouri from finding employment in Lebanon if he so wished. Therefore, I find that

Bouri chose not to work due to personal reasons. As such, I can place the parties in

substantially the same position they were in before the Employment Agreement by

rescinding the Employment Agreement, making rescission an appropriate remedy.

             2.     Declaratory judgment that the LLC Agreement is
                    unenforceable by Bouri
      When “there is fraud in the inducement, the contract is enforceable against at

least one party,” and the “agreement is ‘voidable’ at the option of the innocent

party.” 254 Trascent requests a declaratory judgment that the LLC Agreement is

251
      Tr. 802-03 (Bouri); Bouri Aff. ¶ 2 (Sept. 19, 2017).
252
      Bouri Aff. ¶ 2 (Sept. 19, 2017).
253
      Def.’s Mot. for Protective Order ¶¶ 2-11 (Sept. 19, 2017).
254
      PHL Variable Ins. Co. v. Price Dawe 2006 Ins. Tr. ex rel. Christiana Bank & Tr.
      Co., 28 A.3d 1059, 1067 (Del. 2011) (quoting Dougherty v. Mieczkowski, 661 F.
      Supp. 267, 274 (D. Del. 1987)).

                                           60
unenforceable by Bouri. Bouri’s only response is that the LLC Agreement was not

procured by fraud. 255 As discussed at length above, I find that the LLC Agreement

was procured by fraud, and therefore, I grant Trascent the declaratory judgment it

seeks. 256

              3.      Attorneys’ fees and costs
       Trascent requests attorneys’ fees and costs in four different ways. Trascent

requests these fees as: (1) “restitution sufficient to return Trascent to the position

that it would have been had the [Employment Agreement] not been entered,

including recovery of its own attorneys’ fees and costs incurred in connection with

the [Employment Agreement] and recovery of all attorneys’ fees and costs advanced

to Bouri for indemnification in connection with this litigation and pre-judgment

interest on all amounts so recovered;” 257 (2) “restitution sufficient to return Trascent

255
       Def.’s Answering Br. 21.
256
       Bouri also seeks three forms of relief: (1) a declaration that Kishan terminated Bouri
       without cause, that Bouri is entitled to advancement, and that Bouri is the rightful
       owner of forty-three percent of the Class A units of Trascent; (2) an award of
       damages and attorneys’ fees and costs; and (3) an injunction requiring Plaintiff to
       turn over all of Bouri’s personal property remaining at its offices. PTO § V.B.
       Bouri withdrew his request for advancement as moot in the pretrial stipulation. PTO
       2 n.2. My above findings moot Bouri’s requests for a declaratory judgment or an
       award of attorneys’ fees and costs. While Bouri made his request for return of his
       personal property in his counterclaim and introduced evidence at trial relating to the
       personal property, he omitted the request from the Pretrial Stipulation and did not
       mention it in the post-trial briefing. All Bouri’s requests for relief therefore are
       denied.
257
       PTO ¶ V.A.1.

                                            61
to the position that it would have been had the [LLC Agreement] not been entered,

including recovery of its own attorneys’ fees and costs incurred in connection with

the [LLC Agreement] and recovery of all attorneys’ fees and costs advanced to Bouri

for indemnification in connection with this litigation;” 258 (3) “[a]n award of

Trascent’s reasonable costs of investigation, litigation and appeal, including

reasonable attorneys’ fees, costs, and disbursements;”259 and (4) “[a]n award of

immediate reimbursement by Bouri of all sums advanced by Trascent to indemnify

him for his attorneys’ fees and costs incurred in this litigation.”260

      As to the requests for the return of the attorneys’ fees and costs advanced to

Bouri, those claims are denied. The Court heard Bouri’s advancement case and

found that Bouri is entitled to advancement under both the Employment Agreement

and the LLC Agreement. Trascent appealed that decision to the Supreme Court of

Delaware, and the Supreme Court affirmed the Court’s decision. Bouri therefore is

entitled to advancement until a final, non-appealable order has been entered in this

plenary action. 261 Should this post-trial memorandum opinion be affirmed or should

258
      Id. ¶ V.A.2.
259
      Id. ¶ V.A.5.
260
      Id. ¶ V.A.6.
261
      8 Del. C. § 145(e) (“Expenses (including attorneys’ fees) incurred by an officer or
      director of the corporation in defending any civil, criminal, administrative or

                                           62
Bouri choose not to appeal this decision, Trascent may then be entitled to a return of

advanced attorneys’ fees and costs.262 To the extent that Trascent is arguing that

Bouri is not entitled to indemnification, those claims are not yet ripe as there is no

final, non-appealable judgment in this plenary action. 263 Thus, this relief is denied.

      As for the return of Trascent’s own attorneys’ fees and costs, Trascent

requests those (1) as “[a]n award of Trascent’s reasonable costs of investigation,

litigation and appeal, including reasonable attorneys’ fees, costs, and

disbursements;”264 and (2) under a theory of restitution related to the fraudulent

inducement of both the Employment Agreement and the LLC Agreement. 265 As to

the first request, Trascent does not argue that an exception to the American Rule

applies, and thus, that request is denied. 266 As for the second request, Trascent

requests “restitution sufficient to return Trascent to the status quo before Bouri

joined Trascent; specifically, . . . recoupment of all attorneys’ fees and litigation

      investigative action, suit or proceeding may be paid by the corporation in advance
      of the final disposition of such action, suit or proceeding . . . .” (emphasis added)).
262
      See Edward P. Welch, Robert S. Saunders & Jennifer C. Voss, Folk on the Delaware
      General Corporate Law § 145.08 (6th ed. 2018).
263
      See Scharf v. Edgcomb Corp., 864 A.2d 909, 919-20 (Del. 2004).
264
      PTO ¶ V.A.5.
265
      Id. ¶¶ V.A.1-2.
266
      See Section II.C infra for a discussion of the American Rule. I address separately
      Trascent’s Motion for Sanctions and the fees sought therein.

                                            63
costs it has expended to litigate this matter.” 267 Trascent points to no authority that

supports this request. In the context of rescission, restitution is awarded as a way of

returning consideration that needs to be returned when the contract is “unmade.”268

The attorneys’ fees and costs Trascent has paid to bring its case were not part of that

consideration. Moreover, “[t]he cost[s] of litigation are not available in this Court

as damages . . .[except] under special circumstances not present here.” 269 Thus, this

relief is also denied.

       C.     Sanctions
       “Candor and fair-dealing are, or should be, the hallmark of litigation and

required attributes of those who resort to the judicial process.”270 Trascent seeks

267
       Pl.’s Opening Br. 27.
268
       Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice
       in the Delaware Court of Chancery § 12.04 (2017).
269
       Morabito v. Harris, 2003 WL 22290934, at *1 (Del. Ch. Sept. 29, 2003); E. I. Du
       Pont de Nemours & Co. v. Admiral Ins. Co., 1994 WL 465547, at *7 (Del. Super.
       Aug. 3, 1994) (“I cannot change the common law rule by disguising the claim for
       attorney’s fees under the cloak of compensatory damages.”); cf. Arbitrium (Cayman
       Islands) Handels AG v. Johnston, 705 A.2d 225, 231 (Del. Ch. 1997) (exceptions to
       the American Rule include “cases where the underlying (pre-litigation) conduct of
       the losing party was so egregious as to justify an award of attorneys’ fees as an
       element of damages”), aff’d, 720 A.2d 542 (Del. 1998); Cantor Fitzgerald, L.P. v.
       Cantor, 2001 WL 536911, at *3 (Del. Ch. May 11, 2001) (“[T]his Court, exercising
       the discretion given it, determined that damages, as measured by attorneys’ fees and
       expenses spent to address the defendants’ conduct, is an appropriate remedy for this
       egregious breach of the duty of loyalty.”).
270
       E.I. DuPont de Nemours & Co. v. Fla. Evergreen Foliage, 744 A.2d 457, 461 (Del.
       1999).

                                            64
sanctions against Bouri for repeatedly misrepresenting in discovery and before the

Court the true nature of his departure from Time Warner. It is understandable that

Bouri would be hesitant to share the true details of his departure from Time Warner,

but I find that his lack of candor in discovery and during trial endangered the

legitimacy of the litigation process and, thus, is deserving of sanctions.

      “The American Rule applies in Delaware.” 271 “Under the American Rule,

litigants are expected to bear their own costs of litigation absent some special

circumstances that warrant a shifting of attorneys’ fees, which, in equity, may be

awarded at the discretion of the court.”272 “[Delaware] courts have, however,

recognized bad faith litigation conduct as a valid exception to that rule.” 273 “To

justify an award under the bad faith exception, ‘the Court must conclude that the

party against whom the fee award is sought has acted in subjective bad faith.’”274

271
      Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206, 1221 (Del. 2012).
272
      Beck v. Atl. Coast PLC, 868 A.2d 840, 850 (Del. Ch. 2005).
273
      Gatz Props., 59 A.3d at 1222.
274
      K & G Concord, LLC v. Charcap, LLC, 2018 WL 3199214, at *1 (Del. Ch. June 28,
      2018) (quoting Reagan v. Randell, 2002 WL 1402233, at *3 (Del. Ch. June 21,
      2002)).

                                          65
“The party seeking a fee award bears the stringent evidentiary burden of producing

‘clear evidence’ of bad-faith conduct.” 275

       The purpose of the bad faith exception “is not to award attorney’s fees to the

prevailing party as a matter of right, but rather to . . . [protect] the integrity of the

judicial process.’” 276 “Although there is no single definition of bad faith conduct,

courts have found bad faith where parties have unnecessarily prolonged or delayed

litigation, falsified records or knowingly asserted frivolous claims.” 277 Bad faith has

also included “misleading the court, altering testimony, . . . changing position on an

issue,” 278 and perjury. 279

       Trascent points to at least three instances where, in bad faith, Bouri

misrepresented the nature of his departure from Time Warner during these

proceedings in sworn statements and while under oath. The first was in response to

275
       Beck, 868 A.2d at 851 (citing Shapiro v. Healthcare Acq., Inc., 2004 WL 878018,
       at *1 (Del. Ch. Apr. 20, 2004) and Arbitrium (Cayman Islands) Handels AG, 705
       A.2d at 232).
276
       In re Shawe & Elting LLC, 2016 WL 3951339, at *12 (Del. Ch. July 20, 2016)
       (quoting Brice v. State Dept. of Corr., 704 A.2d 1176, 1179 (Del. 1998)), aff’d sub
       nom. Shawe v. Elting, 157 A.3d 142 (Del. 2017).
277
       Gatz Props., 59 A.3d at 1222 (quoting Johnston v. Arbitrium (Cayman Islands)
       Handels AG, 720 A.2d 542, 546 (Del. 1998)).
278
       Beck, 868 A.2d at 851.
279
       Choupak v. Rivkin, 2015 WL 1589610, at *23 (Del. Ch. Apr. 6, 2015), aff’d, 129
       A.3d 232 (Del. 2015).

                                           66
interrogatories; the second was in response to requests for admissions; and the third

was while testifying at trial. I find that this constitutes bad faith litigation conduct

that warrants the shifting of attorneys’ fees and costs as sanctions.

      The interrogatory asks, “Describe in detail the circumstances regarding your

termination from Time Warner, including identifying all persons with knowledge of

facts regarding the decision to terminate your employment.” 280 Bouri responds,

             Defendant objects to this Interrogatory on the grounds that
             it is vague, ambiguous, overbroad, unduly burdensome,
             and harassing. Defendant also objects to this Interrogatory
             to the extent it calls for disclosure of information or
             communications protected by the attorney-client privilege
             and/or attorney work product doctrine. Subject to and
             without waiving these objections and the General
             Objections,

             Defendant became employed by Time Warner Inc.
             (“TWX”) in April 2010. Initially, defendant reported to
             the EVP/Chief Administrative Officer, Pat Fili-Krushel,
             but she subsequently left TWX in November 2010.
             Defendant and all other administrative functions began
             reporting to the EVP/CFO, John Martin.

             In May 2011, Defendant tendered his voluntary
             resignation from TWX based on his frustrations with his
             day-to-day professional working relationship with his
             supervisor, Defendant’s overall professional unhappiness
             at the company, and Defendant’s view that his business
             philosophy did not fit with TWX’s risk
             averse/conservative business philosophy. Upon further
             discussions with TWX, John Martin, and Mark Henderson
             (Director of Human Resources), TWX offered to

280
      JX 305, at 5.

                                          67
              designate Defendant’s departure as a termination without
              cause, which triggered the payout of certain benefits to
              Defendant. Defendant agreed to this and the termination
              without cause was made effective May 6, 2011. TWX
              never informed or advised Defendant that any grounds
              existed to discipline him or terminate him for cause. 281

The first request for admission asks, “Admit that you were terminated by your

former employer, Time Warner Inc. (“Time Warner”) for reasons concerning or

relating to allegations of sexual harassment or misconduct.” 282 Bouri responds,

              Mr. Bouri objects to this Request on the grounds that it is
              vague, ambiguous, and harassing. Mr. Bouri also objects
              to this Request on the grounds that “misconduct” is not
              defined. Subject to and without waiving these objections,
              Mr. Bouri denies this Request. Mr. Bouri tendered his
              voluntary resignation and, after further discussion with
              Time Warner, the parties agreed to designate his
              separation from the company as a termination without
              cause. Time Warner never informed or advised Mr. Bouri
              that allegations of sexual harassment or misconduct had
              been made against him, or that his termination was due to
              or related to any such allegations.283

The second request for admission asks, “Admit that an employee of Time Warner

made allegations against you of sexual harassment or misconduct during the time

you were employed at Time Warner.” 284 Bouri responds,

281
      Id. at 5-6.
282
      JX 304, at 1.
283
      Id. at 1-2.
284
      Id. at 2.

                                          68
            Mr. Bouri objects to this Request on the grounds that it is
            vague, ambiguous, and harassing. Mr. Bouri also objects
            to this Request on the grounds that “misconduct” is not
            defined. Subject to and without waiving these objections,
            Mr. Bouri denies this Request. Mr. Bouri was never made
            aware that any allegations of sexual harassment or
            misconduct had been made against him during his
            employment at Time Warner. However, prior to his
            termination from Time Warner, Mr. Bouri was
            interviewed in connection with an internal investigation
            into individuals who worked in his department and he was
            asked questions about, among other things, alleged
            comments of a sexual nature that had been attributed to
            him. Time Warner never advised Mr. Bouri regarding the
            findings or outcome of the investigation and he was never
            disciplined for any alleged sexual harassment or
            misconduct.285

The third request for admission asks, “Admit that you did not disclose to Plaintiff

that you were terminated by Time Warner for reasons concerning or relating to

allegations of sexual harassment or misconduct.” Bouri responds,

            Mr. Bouri objects to this Request on the grounds that it is
            vague, ambiguous, and harassing. Mr. Bouri also objects
            to this Request on the grounds that “misconduct” is not
            defined. Subject to and without waiving these objections,
            Mr. Bouri admits this Request. Mr. Bouri further states
            that Time Warner never informed or advised him that
            allegations of sexual harassment or misconduct were made
            against him, or that his termination was due to or related
            to any such allegations. 286

285
      Id.
286
      Id.

                                        69
At trial, Bouri repeatedly testified that he voluntarily resigned from Time Warner.287

        The Business Records and Bouri’s own testimony both show that Bouri lied

under oath about the following:

      • Bouri did not voluntarily resign from Time Warner but was terminated

        without cause.288 This termination without cause was explicitly stated in the

        notice of termination Time Warner gave to and reviewed with Bouri 289 and in

        the termination agreement that Bouri signed. 290 Furthermore, the termination

        agreement explicitly stated that the officer resignation letter Bouri signed did

        not change the nature of his termination without cause. 291 Finally, Bouri

        eventually admitted that he did not resign before he was terminated from Time

        Warner. 292

287
        Tr. 520 (Bouri) (“Q. Are those your words that you resigned from Time Warner? A.
        I did, and, yes, those are my words. Q. You didn’t voluntarily resign from Time
        Warner, did you, sir? A. Yes, I did.”); Tr. 521 (Bouri) (“I was not required to resign.
        I offered my resignation and tendered it to Time Warner.”); Tr. 620 (Bouri) (“Q.
        Okay. Now, Mr. Bouri, did you resign from Time Warner? A. I did.”).
288
        JX 306, at TW0010-11; Tr. 620 (Bouri).
289
        JX 306, at TW0010.
290
        Id. at TW0011-15.
291
        Id. at TW0011.
292
        Tr. 855 (Bouri).

                                              70
      • Bouri did not depart from Time Warner due to “frustrations with his day-to-

         day professional working relationship with his supervisor, Bouri’s overall

         professional unhappiness at the company, and Bouri’s view that his business

         philosophy did not fit with [Time Warner’s] risk averse/conservative business

         philosophy;” 293 instead, he was terminated without cause because his

         superiors “no longer had confidence in his business judgment.” 294 Further,

         Bouri was terminated at the conclusion of an investigation into allegations of

         inappropriate workplace behaviors, including mismanagement and sexual

         harassment.295

      • Bouri knew about the allegations of mismanagement and sexual misconduct

         made against him. 296 He met with a Time Warner attorney who informed

         Bouri of the allegations against him and recorded Bouri’s specific denials to

293
         JX 305, at 5-6.
294
         JX 306, at TW0002.
295
         Id. at TW0002.
296
         Id. at TW0052 (including notes on Bouri’s specific and detailed denials of the
         allegations against him); id. at TW0045 (email from Bouri to Henderson stating “I
         am surprised that you are allowing people that have levied these wrongful
         accusations access to my affairs.”).

                                            71
      each allegation.297 Moreover, Bouri eventually admitted that he knew about

      the specific allegations against him. 298

      Bouri argues that his conduct is not sanctionable because he has the right to

present his explanation for why and how he separated from Time Warner and that

he has consistently maintained that he resigned and that the resignation was

structured as a termination without cause.299 I agree that every litigant has a right to

present his or her side of the story, but that does not allow for the submission of false

statements. Bouri’s consistent assertion that he voluntarily resigned is not consistent

with the independent facts. 300 Moreover, his side of the story is not consistent with

his eventual testimony that he did not resign. 301

      Bouri also argues that his behavior was not sanctionable because it is merely

inconsistent. This argument relates to Bouri’s sworn statements about the internal

investigation at Time Warner. Bouri does not deny that he lied in at least three of

his responses. Instead, Bouri argues that his answer to Request for Admission No.

71 makes his answers internally inconsistent. First, this is not true. Bouri’s answer

297
      JX 306, at TW0052.
298
      Tr. 557 (Bouri).
299
      Def.’s Opp. to Pl.’s Mot. for Sanctions 1-2, 7.
300
      JX 306, at TW0001-03, TW0010-21.
301
      Tr. 855 (Bouri).

                                           72
to Request for Admission No. 71 says, in relevant part, “Mr. Bouri was interviewed

in connection with an internal investigation into individuals who worked in his

department and he was asked questions about, among other things, alleged

comments of a sexual nature that had been attributed to him.” 302 This answer is

consistent with his other answers because it strongly suggests that he was questioned

only ancillary to an investigation into other people in his department and implies that

comments were mistakenly attributed to him. Second, even if this answer was

actually inconsistent, it does nothing to change the fact that Bouri lied in his other

responses.   Contrary to Bouri’s argument, this alleged inconsistency did not

somehow shift the burden to Trascent to ask Bouri to “clarify or reconcile” his

discovery responses. Bouri knew all along that people at Time Warner made

allegations against him. 303 And if he had somehow forgotten, then the Time Warner

documents would have refreshed his recollection. Bouri had a duty to tell the truth

in his discovery responses and before this Court. He failed in that duty. 304 Trascent

has carried its burden of showing by clear evidence that Bouri took part in bad faith

302
      JX 304, at 2 (emphasis added).
303
      JX 306, at TW0052 (including notes on Bouri’s specific and detailed denials of the
      allegations against him); id. at TW0045.
304
      See Tr. 550-51 (Bouri) (trial testimony affirming that his discovery answers that he
      was never informed of any allegations made against him at Time Warner were true).

                                           73
litigation tactics by misleading Trascent and the Court in sworn statements about the

events surrounding his departure from Time Warner.

       The only question then is the appropriate measure of sanctions. “The Court

of Chancery has broad discretion in fixing the amount of attorney fees to be

awarded.”305 “The Court evaluates the totality of a party’s misconduct to determine

whether the party litigated in bad faith and to determine the amount of fees to

award.”306 “In exercising its discretion to determine an appropriate sanction for bad

faith and vexatious litigation conduct, this Court has shifted a portion of, and on

occasion the entirety of, the opposing side’s attorneys’ fees.” 307 Because Bouri’s

false statements go to the heart of two of the five counts brought by Trascent, I award

Trascent its reasonable attorneys’ fees and costs incurred in bringing the Motion for

Sanctions and two-fifths of its reasonable attorneys’ fees and costs incurred in this

litigation.

III.   CONCLUSION
       For the foregoing reasons, the Employment Agreement is rescinded; I grant a

declaratory judgment that the LLC Agreement is unenforceable by Bouri; and I

305
       Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 547 (Del.
       1998).
306
       In re Shawe, 2016 WL 3951339, at *19.
307
       Id.

                                          74
award Trascent all of its reasonable attorneys’ fees and costs incurred in bringing

the Motion for Sanctions and two-fifths of its reasonable attorneys’ fees and costs

incurred in this litigation. All other relief is DENIED. Trascent shall prepare and

file with the Court within ten business days an implementing order stating the

amount of the reasonable attorneys’ fees and costs it incurred in bringing the Motion

for Sanctions and two-fifths of the litigation, along with an affidavit documenting

the same. The implementing order shall provide for the sanctions to be paid within

ten business days of entry of that order.

      IT IS SO ORDERED.

                                            75