Court Opinion

ID: 4661818
Source: CourtListenerOpinion
Date Created: 2021-02-22 16:02:38.920285+00
Date Added: 2024-06-11T08:02:16.496996
License: Public Domain

SUPERIOR COURT

OF THE
STATE OF DELAWARE
ABIGAIL M. LEGROW LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400

WILMINGTON, DELAWARE 19801
TELEPHONE (302) 255-0669

February 22, 2021

John M. LaRosa, Esq. John L. Reed, Esq.

LaRosa & Associates LLC Peter H. Kyle, Esq.

1225 N. King Street, Suite 802 DLA Piper LLP (US)

Wilmington, DE 19801 1201 North Market Street, Suite 2100

Wilmington, DE 19801
Lawrence P. Schaefer, Esq.
Bert Black, Esq.
Schaefer Halleen, LLC

412 South Fourth Street, Suite 1050
Minneapolis, MN 55415

RE: Michael Buck v. Viking Holding Management Company LLC, et al.
C.A. No. N20C-08-249 AML (CCLD)
Dear Counsel,

This breach of contract case follows the plaintiff's termination from his
employment with one of the three affiliated limited liability companies named as
defendants in this action. The plaintiff's employment compensation included
membership interests in his employer’s controlling entity. Upon termination of

employment, the membership agreement permitted the controlling entity to
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 2

repurchase a member’s interest, with the purchase price dependent on whether
termination was with cause or without cause.

The plaintiff contends the three affiliated defendants mischaracterized his
termination and deprived him of the value of his equity interests. The pending
motion to dismiss requires the Court to determine whether the breach of contract and
tortious interference with contract claims may proceed based on the plaintiffs
conclusory allegation that he did not engage in any conduct within the agreement’s
definition of “cause.” I conclude the complaint fails to state a reasonably
conceivable claim, and I therefore dismiss the complaint without prejudice. My
reasoning follows.

Factual Background

Unless otherwise noted, this factual recitation is drawn from the complaint
and the documents it incorporates by reference. Novus Media, LLC (“Novus”)
employed Plaintiff Michael Buck as its Chief Financial Officer from February 2016
until his termination in April 2020.! Viking Parent LLC (“Parent”) wholly owns

Novus. Viking Holding Management Company LLC (“Holdco” and together with

 

! Compl. {f 21, 31.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 3

Parent and Novus, the “Viking Entities”) is Parent’s controlling stakeholder.* Non-
party David Murphy is the managing member of all three Viking Entities.?

Buck’s employment terms were memorialized in a letter agreement (the
“Employment Agreement”).* Novus and Buck are the Employment Agreement’s
only counterparties.” The Employment Agreement designates Buck as an at-will
employee who may be “terminated . . . at any time with or without notice or cause
for any reason not prohibited by law.”°

In the year after Buck was hired, the Viking Entities engaged in a series of
restructuring transactions that ultimately produced Holdco.’ As an incentive for
continued employment, Novus offered its executives, including Buck, membership
interests under Holdco’s LLC agreement (the “Membership Agreement”).® None of

the Viking Entities except Holdco is a party to the Membership Agreement.’ In

 

2 Id. TF 2, 10.

3 Id. § 3; Holdco’s LLC agreement indicates Murphy is a trust. See id. Exhibit A, Holdco
Membership Agreement § 1 (D.I. 1) (pdf page 11) (“Membership Agreement”). The parties,
however, refer to Murphy as an individual. Any ambiguity here is not relevant to this decision.

4 Compl. J 21; see id Exhibit A, Novus Employment Agreement (D.I. 2) (“Employment
Agreement”).

> See generally Employment Agreement.

6 Id. (.pdf page 4).

7 Compl. § 24.

8 Id. 9F 27-30.

° See generally Membership Agreement.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 4

2017, Buck accepted Holdco’s proposal and received 100 of Holdco’s Class B Units
(i.e., a 12.5% stake).!°

Holdco’s Class B Units are non-voting ownership interests subject to a
number of conditions, including Holdco’s option to repurchase them should a
member’s employment ever be terminated with or without “Cause.”'' The
Membership Agreement defines Cause as an employee-member’s:

(i) material breach of the Membership Agreement or the Employment
Agreement;

(ii) conviction of, guilty plea or nolo plea to, any felony or crime
involving moral turpitude or one that could be reasonably expected to
have a significant adverse effect on the business or affairs of Holdco;

(iii) substantial and repeated failure, after written notice from Holdco,
to perform duties (or to refrain from actions) as reasonably directed by
the Viking Entities;

(iv) gross negligence, willful misconduct or breach of fiduciary duty
with respect to the Viking Entities . . . or their business relations that
results (or reasonably could be expected to result) in a significant
adverse effect on the business or affairs of the Viking Entities; or

(v) commission of any material act of dishonesty, fraud, theft or
embezzlement, or breach of fiduciary duty, against the Viking Entities
... or their business relations that results (or reasonably could be
expected to result) in a significant adverse effect on the business or
affairs of the Viking Entities. !

 

10 Compl. § 21; Membership Agreement, Schedule of Unit Holders (.pdf page 63). Buck alleges
his Holdco investment rose to a 17.17% stake by the time he was terminated. Compl. { 34.

"1 See Membership Agreement §§ 9.10(a)-(b).

2 Td. § 1 (.pdf pages 7-8).
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 5

If Holdco elects to exercise its repurchase option, the purchase price depends
on whether a unitholder is terminated with or without Cause.'? If an employee-
member is terminated without Cause, Holdco is limited to repurchasing the
member’s units at their current fair market value.'* If an employee-member is
terminated with Cause, however, Holdco may repurchase the units for “the lesser”
of their (i) original cost, and (ii) current fair market value."

On April 17, 2020, Novus fired Buck.'© Holdco later determined Buck’s
termination was for Cause.'’ Holdco then exercised its repurchase option and
“repurchased” Buck’s units for $0.00, which was their original cost.'? The fair
market value of Buck’s units was between $9 million and $10 million.’? Buck,
however, contends this repurchase contravened the Membership Agreement because
there was no Cause for his termination. Believing he wrongfully was deprived of a
valuable membership interest in Holdco, Buck sued the Viking Entities, alleging

claims for breach of contract, breach of the implied covenant of good faith and fair

 

3 Td. § 9.10(b).

14 Td.

15 Td.

'6 Compl. ¥ 31.

7 Td. 9§ 31-32. Buck collapses or ignores the Viking Entities’ legal separateness repeatedly
throughout his complaint as needed to fit his theories. It seems reasonably clear (but not free from
doubt) that Holdco allegedly was responsible for the Cause mischaracterization.

8 Td. 9 44.

19 Id. 9§ 35, 44. Buck alleges a contemporaneous appraisal produced a value ranging from
approximately $9.46 million to approximately $10.49 million. Jd. 35.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 6

dealing, and tortious interference with contract. Buck named all three Viking
Entities as defendants for his breach of contract and implied covenant claims and
named only Novus as a defendant for his tortious interference claim.

In support of his claims, Buck alleges the decision to fire him with Cause was
“effectively either made by [Novus], and executed by [Parent and Holdco], or made
by [Novus] in conjunction with [Parent and Holdco]” because Murphy manages all
three entities.2° Buck avers he did not commit any of the acts defined as constituting
“Cause” in the Membership Agreement.*! He alleges the Viking Entities breached
the Membership Agreement by mischaracterizing his termination as Cause-based,
which led Holdco to repurchase Buck’s units for cost.** The Cause characterization,
Buck maintains, was “arbitrary” and contravened his expectation to be “treated
honestly and fairly with regard to the characterization of any termination.”” Finally,
Buck contends Novus induced the breach by influencing Holdco in “bad faith” “for
the sole purpose of . . . depriving him” of the fair market value of his investment.”*

On October 12, 2020, the Viking Entities moved to dismiss Buck’s complaint

in its entirety under Superior Court Civil Rule 12(b)(6).”° The defendants contend

 

20 Id. Ff 32, 43, 52, 56.

21 Tq. Ff 36-41 (copying Cause definition and stating line-by-line that he committed none of those
acts).

22 Td. Tf 47-48, 55, 61-62.

3 Td. 4 56.

4 Td. J 62.

> DI. 2.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 7

Buck’s complaint (1) is comprised exclusively of conclusory allegations; and (2) to
the extent it is well-pleaded, fails to state a viable claim.® Buck elected to stand on
his complaint as originally pleaded, arguing the claims satisfy Delaware’s notice
pleading standard.*’
Analysis

Dismissal is appropriate under Rule 12(b)(6) if the complaint fails to state a
claim upon which relief can be granted.”* In considering a motion to dismiss, the
Court must: “(1) accept all well pleaded factual allegations as true, (2) accept even
vague allegations as ‘well pleaded’ if they give the opposing party notice of the
claim, (3) draw all reasonable inferences in favor of the non-moving party, and (4)
[not dismiss the claim] unless the plaintiff would not be entitled to recover under
any reasonably conceivable set of circumstances.””?

Delaware’s pleading standard is “minimal.” But “the benefits of liberal
construction afforded [a plaintiff] do not extend to ‘conclusory allegations that lack

specific supporting factual allegations.’”*' Accordingly, the Court will dismiss a

complaint if the plaintiff fails to plead specific allegations supporting each element

 

26 See generally The Viking Entities’ Opening Brief (D.I. 2).

27 See generally Buck’s Answering Brief at 2 (D.I. 11) (“Ans. Br.”).

28 See Del. Super. Ct. Civ. R. 12(b)(6).

29 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Holdings LLC, 27 A.34 531, 535 (Del. 2011).
30 Td. at 536 (citation omitted).

31 Surf’s Up Legacy Partners, LLC v. Virgin Fest, LLC, 2021 WL 117036, at *6 (Del. Super. Ct.
Jan. 13, 2021) (quoting Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998)).
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 8

of a claim or if no reasonable interpretation of the alleged facts reveals a remediable
injury.”

As an initial matter, Buck concedes Novus and Parent cannot breach express
or implied obligations in the Membership Agreement because they are not parties to
it33 Accordingly, Buck’s breach of contract and implied covenant claims are
dismissed with prejudice as to those parties. The remaining claims before the Court
are (1) Holdco’s alleged breach of contract; (2) Holdco’s alleged breach of the
implied covenant of good faith and fair dealing; and (3) Novus’s alleged tortious
interference with contract.

A. The complaint fails to state a breach of contract claim against
Holdco.

In order to plead a breach of contract claim under Delaware law, a claimant
must plead (1) the existence of a contractual obligation; (2) a breach of that
obligation; and (3) damages resulting from the breach.** Buck does not argue Novus
lacked authority to terminate him or that Novus violated the terms of the

Employment Agreement by doing so. Instead, he contends Holdco wrongfully

 

32 Surf’s Up, 2021 WL 117036, at *6 (quotation marks and citations omitted); see Malpiede v.
Townson, 780 A.2d 1075, 1083 (Del. 2001); see also Price v. E.Il DuPont de Nemours & Co., Inc.,
26 A.3d 162, 166 (Del. 2011) (observing that a court need not draw “unreasonable inferences in
favor of the non-moving party”), overruled on other grounds by Ramsey v. Ga. S. Univ. Advanced
Dey. Ctr., 185 A.3d 1255, 1277 (Del. 2018).

33 Ans. Br. at 2.

34 VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 9

characterized his termination as Cause-based.*> That amounted to a breach of the
Membership Agreement, Buck maintains, because it allowed Holdco to reacquire
his units for cost rather than for their fair market value. But simply disagreeing with
Holdco’s Cause characterization in a conclusory fashion—without proffering facts
suggesting the characterization actionably is incorrect—does not state a claim for
breach of contract.2° Buck cannot plead the “breach” element of his claim unless he
makes non-conclusory allegations showing his termination does not meet the
definition of Cause.

This Buck fails to do. His complaint merely echoes the five Cause definitions
and baldly states he did not commit any of the described acts.7” He neither articulates
why he was (or may have been) terminated nor tethers Holdco to any findings
implicated in Novus’s termination decision. Indeed, Buck’s allegation that Holdco
“knew that the ‘for [C]ause’” characterization was improper’® does not even suggest

how Holdco knew that was so.

 

35 Ans. Br. at 11.

36 See, e.g., id. at 14 (“Plaintiff has readily met Delaware’s pleading requirements” by only alleging
the Cause characterization was improper).

37 Compl. ff 36-41.

38 Id. | 48.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 10

In an attempt to salvage his complaint, Buck argued in his answering brief
that he remains unaware of the basis for his termination.*? Even if the Court accepted
that unpleaded allegation, it does not support an inference that Novus lacked cause
to terminate him or Holdco mischaracterized the termination. Buck’s uncertainty,
real or imagined, simply leads to the conclusion that he has not pleaded facts one
way or the other. The Court need not strain to read an untold narrative into the
complaint.*° But, in any event, Buck’s counsel conceded at oral argument that the
assertion that Buck had no details regarding the reasons for his termination was
false“! As such, the Court accords his argument no weight.

To resist the argument that his breach of contract allegations are conclusory,

Buck relies on Sheehan v. AssuredPartners, Inc. for the proposition that an

 

39 See Ans. Br. at 5-6 (“Defendants have refused to provide [Buck] any details about” an
investigative report purportedly leading to Buck’s termination (emphasis added)); id. at 14
(‘Defendants allude to [termination] documents . . . that have [been] hidden” from Buck).

40 See Malpiede, 780 A.2d at 1083 (Court not required to advance “strained interpretations” of
conclusory pleadings).

“1 Buck argued in his answering brief that he could not plead any facts because the defendants
refused to provide “any details” regarding the investigation that prompted his termination. The
defendants then attached to their reply brief a four-page, single-spaced letter sent to Buck’s counsel
setting forth the reasons for his termination. The Court considered that document only to rebut
Buck’s demonstrably false assertion that the details of the investigation were hidden from him.
Buck’s counsel admitted at oral argument that he was aware of the letter before he filed the
answering brief. Buck’s counsel’s dissembling explanation for the false averments in Buck’s
answering brief do little to mollify the Court’s concerns. Buck’s counsel is hereby on notice that
any similar incident in the future immediately will result in the Court (1) referring the issue to
Delaware’s Office of Disciplinary Counsel, and (2) issuing a rule to show cause as to why
counsel’s pro hac vice admission should not be revoked.

42 9020 WL 2838575 (Del. Ch. May 29, 2020).
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 11

employer’s for-Cause termination decision, when rendered wrongfully, can sustain
a breach of contract claim challenging an undervalued buyout. The Sheehan case,
however, is distinguishable from this case in at least one important way. In Sheehan,
the plaintiffs actually marshaled the putative reasons for their terminations and
attacked those reasons as having been fabricated.*? Presented with the specifics of
the Sheehans’ termination and non-conclusory allegations that the reasons for the
termination were contrived, the Sheehan Court denied the defendants’ motion to
dismiss consistent with Delaware’s minimal pleading standard. Here, in sharp
contrast, Buck has not pleaded any of the Viking Entities’ putative reasons for
terminating him or alleged that those reasons were manufactured or false. And so,
unlike in Sheehan, the Court cannot determine whether it is reasonably conceivable
that Holdco’s Cause characterization was rendered wrongfully. Accordingly, the
breach of contract claim is dismissed for failure to plead breach.

B. The complaint fails to state an implied covenant claim against
Holdco.

The implied covenant of good faith and fair dealing inheres in all contracts
and exists to fill unanticipated contractual gaps.“ To state a claim for breach of the

implied covenant, a claimant must allege: (1) a specific implied contractual

 

43 Id. at *9-10; see id at *10 n.98 (citing Verified Amended Complaint at Exhibit 8, Sheehan vy.
AssuredPartners, Inc., 2019 WL 5196660 (Del. Ch. Oct. 10, 2019)).
44 See Dieckman v. Regency GP LP, 155 A.3d 358, 367 (Del. 2017).
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 12

obligation; (2) a breach of that obligation; and (3) resulting damage. The implied
covenant “involves a cautious enterprise” in which a court infers contractual terms
to fill gaps or developments that neither party anticipated.*° A contracting party may
not use the implied covenant to vary a contract’s express terms.*’ Put differently,
Delaware courts will use the implied covenant to fill gaps only when a contract truly
is silent on the disputed issue.*® As a result, where the express terms of an agreement
govern a particular matter, an implied covenant claim regarding that matter is not
viable and must be dismissed.”

The “gap” Buck identifies in the Membership Agreement is the absence of
any language prohibiting Holdco from arbitrarily characterizing a member’s
termination as Cause-based when the termination lacked Cause.>’ This claim fails
at its inception because the Membership Agreement’s plain language expressly
addresses this issue. Under Section 9.10(b), Holdco only may repurchase a

member’s units for the lesser of cost or fair market value if the termination is

 

45 Brightstar Corp. v. PCS Wireless, LLC, 2019 WL 3714917, at *11 (Del. Super. Ct. Aug. 7,
2019) (quotation marks and citations omitted).

46 Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010) (internal quotation marks omitted).

47 See Brightstar, 2019 WL 3714917, at *11 (When reviewing an implied covenant claim, “the
express terms of a contract must always control.” (citing Dunlap v. State Farm Fire & Cas. Co.,
878 A.2d 434, 441 (Del. 2005))).

48 See Brightstar, 2019 WL 3714917, at *11; accord Dunlap, 878 A.2d at 441; see also E.I. DuPont
de Nemours & Co. v. Pressman, 679 A.2d 436, 443-44 (Del. 1996).

49 Edinburgh Holdings, Inc. v. Educ. Affiliates, Inc., 2018 WL 2727542, at *9 (Del. Ch. June 8,
2018).

°° Compl. § 55.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 13

supported by Cause, which the Membership Agreement defines. If Holdco
nevertheless applies that repurchase methodology when a member is terminated
without Cause, then it breaches an express prohibition in the agreement. In other
words, Buck’s implied covenant claim merely repackages his breach of contract
claim.>! And, since he already has sued Holdco for breach of contract, the implied
covenant claim is duplicative and must be dismissed.*

C. The complaint fails to state a tortious interference claim against
Novus.

As explained, Buck has not sufficiently pleaded an underlying breach of the
Membership Agreement. That alone precludes Buck from maintaining the
associated tortious interference claim. Because I have determined, however, that
Buck should be granted leave to amend his breach of contract claim, I also have
considered Novus’s alternative argument for dismissal.

To state a claim for tortious interference with contract, a plaintiff must plead
(1) the existence of a contract, (2) about which the defendant knew, (3) an intentional

and unjustified act that was a significant factor in causing the breach, and (4)

 

5! See Brightstar, 2019 WL 3714917, at *11 (“[A]n implied covenant claim can’t be used to re-
write the agreement” or “create a free-floating duty unattached to the underlying document.”
(internal quotation marks and citations omitted)); accord Nationwide Emerging Managers, LLC v.
NorthPointe Holdings, LLC, 112 A.3d 878, 897 (Del. 2015).

52 See Edinburgh Holdings, 2018 WL 2727542, at *9 (“[I]f the contract at issue expressly addresses
a particular matter, an implied covenant claim respecting that matter is duplicative and not viable.”
(citations omitted)).
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 14

damages.*? As explained above, Buck does not challenge Novus’s termination
decision. Instead, he speculates that Novus—because it is controlled by Murphy,
who also controls Holdco—must have induced Holdco to mischaracterize his
termination as being with “Cause.”°* That theory, however, contravenes Delaware’s
affiliate privilege doctrine.»

The affiliate privilege immunizes business organizations from tort liability for
their affiliates’ contractual breaches. The privilege is qualified, however, and does
not protect non-party affiliates that induce breaches in bad faith.°’ Delaware courts
are reluctant to find bad faith because affiliate interference often is a legitimate

business strategy.°® When evaluating a plaintiffs claim of unjustified interference,

 

3 Bhole, Inc. v. Shore Invs., Inc., 67 A.3d 444, 453 (Del. 2013).

4 Compl. 4 3, 32, 43, 52, 56, 62-63.

55 See Skye Min. Invs., LLC v. DXS Cap. (U.S.) Ltd., 2020 WL 881544, at *33 (Del. Ch. Feb. 24,
2020) (Affiliate privilege doctrine summoned when the alleged tortfeasor “share[s] [a] common
economic interest{] with a party to the contract.” (internal quotation marks omitted)); see also
Shearin v. E.F. Hutton Grp., Inc., 652 A.2d 578, 589 (Del. Ch. 1994) (reasoning that the affiliate
privilege doctrine undermines the “without justification” element in tortious interference claims).
56 See Shearin, 652 A.2d at 589-91; see also Surf’s Up, 2021 WL 117036, at *6-9 (explaining and
applying the affiliate privilege doctrine and collecting pertinent authority).

57 See Bhole, 67 A.3d at 453; Shearin, 652 A.2d at 591.

58 See Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP, 2019 WL 4927053, at *25
(Del. Ch. Oct. 7, 2019) (“The tort of interference with contractual relations is intended to protect
a promisee’s economic interest in the performance of a contract by making actionable improper
interference with the promisor’s performance. The adjective ‘improper’ is critical. For
participants in a competitive capitalist economy, some types of intentional interference are a
legitimate part of doing business.” (internal quotation marks and citations omitted)); accord NAMA
Holdings, LLC v. Related WMC LLC, 2014 WL 6436647, at *26 (Del. Ch. Nov. 17, 2014) (same);
Shearin, 652 A.2d at 591 (“[T]here can be no non-contractual liability to the affiliated corporation,
which is privileged to consult and counsel with its affiliates, unless the plaintiff pleads . . . the
affiliate sought not to achieve permissible financial goals but sought maliciously or in bad faith to
injure plaintiff.”); see also Surf's Up, 2021 WL 117036, at *6 (“The privilege supplies a defense
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 15

therefore, Delaware courts must “balance the important policies served by a claim
for tortious interference with contract against the similarly important policies served
by the corporate form.”*? That balance is struck to avoid endorsing haphazard
respondeat superior theories and faulty approaches to corporate veil piercing.” The
doctrine also serves to prevent judicial frustration of inter-firm consultation on

matters of commercial significance.°! Accordingly, to maintain a tortious

 

to overbroad attacks on the ‘justification’ element for a controller’s involvement with its affiliates’
contracts that might otherwise convert any of the controller’s business judgments into personal
guarantees.” (citations omitted)); Renco Grp., Inc. v. MacAndrews AMG Holdings LLC, 2015 WL
394011, at *9 (Del. Ch. Jan. 29, 2015) (rejecting a tortious interference claim on affiliate privilege
grounds and observing “[t]he standard for finding liability for controllers must “be high or every-
day consultation or direction between parent corporations and subsidiaries about contractual
implementation would lead parents to be always brought into breach of contract cases.”” (quoting
Allied Cap. Corp. v. GC-Sun Holdings, L.P.,910 A.2d 1020, 1039 (Del. Ch. 2006))).

59 Bandera, 2019 WL 4927053, at *26; see Shearin, 652 A.2d at 591 (observing that inter-firm
“interference” is not necessarily improper unless the plaintiff demonstrates that it is (citation
omitted)); see also Feeley v. NHAOCG, LLC, 62 A.3d 649, 667 (Del. Ch. 2012) (“[T]he separate
legal existence of juridical entities is fundamental to Delaware law.”).

6 Surf's Up, 2021 WL 117036, at *7; see Bandera, 2019 WL 4927053, at *26 (“A party who
wishes to have a parent entity or other controller backstop the obligations of the controlled entity
can do so by contract, either by making the parent a party to the agreement or by obtaining a
guarantee. A party should not be able to use a claim of tortious interference with contract to reap
the benefits of protections that it did not obtain at the bargaining table.”); see also, e.g., Otto
Candies, LLC v. KPMG, LLP, 2020 WL 4917596, at *9-13 (Del. Ch. Aug. 21, 2020) (discussing
the relationship between agency law and corporate veil piercing and the ways in which vicarious
liability in tort and contract differ from direct liability imposed when the corporate veil is pierced);
Wenske v. Blue Bell Creameries, Inc., 2018 WL 5994971, at *5 (Del. Ch. Nov. 13, 2018) (“{A]
true novelty would be to disregard the separateness of a parent and a subsidiary simply because a
plaintiff would prefer to hold both liable for the subsidiary’s breach of contract. Our law does not
countenance this result.”); Wallace ex rel. Cencom Cable Income Partners If, Inc., L.P. v. Wood,
752 A.2d 1175, 1183 (Del. Ch. 1999) (“Persuading a Delaware court to disregard the corporate
entity is a difficult task” and counterparties should do so bilaterally if they wish (internal quotation
marks omitted)).

61 Surf’s Up, 2021 WL 117036, at *6 (citing Shearin, 652 A.2d at 589-91); accord NACCO Indus.,
Inc. v. Applica Inc., 997 A.2d 1, 35 (Del. Ch. 2009) (In contract disputes, damages should be
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 16

interference claim against an affiliate of a contracting party, the complaint must
allege facts to rebut the presumption that the non-party was “pursuing . . . legitimate
profit seeking” goals “in good faith’©’*—“z.e., by showing that the non-party’s ‘sole
motive’ in interfering was ‘bad faith to injure plaintiff.’’®> Otherwise, the privilege
shields an affiliate from primary or vicarious tort liability for the breach of a contract
to which the affiliate itself was not a signatory.”

Buck’s complaint does not meet this standard. He does not allege any act
Novus took to interfere with the Membership Agreement, let alone an act the Court
could infer was taken in bad faith. The only apparent nexus between Holdco’s
alleged breach and Novus is that the two entities share a common controller®—
precisely the type of residual liability the privilege was intended to eliminate.
Buck’s bare legal conclusion that Novus meddled in “bad faith” “for the sole purpose

of injuring [him],”® cannot undermine the presumption that any interference Novus

 

dictated, whenever possible, by the “predictability of the parties’ agreement,” rather than by any
“far less certain, after-the-fact, judicially-fashioned tort remedy.”).

62 Renco, 2015 WL 394011, at *9 (emphasis in original); Shearin, 652 A.2d at 591.

63 Surf’s Up, 2021 WL 117036, at *7 (first quoting WaveDivision Holdings, LLC v. Highland Cap.
Memt., L.P., 49 A.3d 1168, 1174 (Del. 2012) (emphasis in original); then quoting Bhole, 67 A.3d
at 453).

64 Surf’s Up, 2021 WL 117036, at *7; see Bhole, 67 A.3d at 453; Shearin, 652 A.2d at 591.

6 See, e.g., Compl. Ff 3, 32, 43, 52, 56; see also James Cable, LLC v. Millenium Digit. Media
Sys., L.L.C., 2009 WL 1638634, at *4-5 (Del. Ch. June 11, 2009) (observing that two entities
subject to common control are affiliates).

66 Id, J 62.
Michael Buck v. Viking Holding Mgmt. Co., et al.
February 22, 2021
Page 17

may have undertaken was justified economically.®’ Accordingly, because the
privilege applies and this claim seeks to collapse two legally-separate firms into
one, the tortious interference claim also must be dismissed on the basis of the
affiliate privilege.
Conclusion

For the foregoing reasons, the Viking Entities’ motion is GRANTED and
Buck’s complaint is DISMISSED. Buck’s claims against Parent and his breach of
contract and implied covenant claims against Novus are dismissed with prejudice,
while his claims against Holdco and his tortious interference claim against Novus

are dismissed without prejudice. IT ISSO ORDERED.

 

Sincerely,
di] G i
Abigail Chea udge

 

67 See, e.g., Shearin, 652 A.2d at 591; see also Ramunno, 705 A.2d at 1034 (Court can dismiss
complaint when it relied on “conclusory allegations that lack specific supporting factual
allegations.”).

68 But see Surf’s Up, 2021 WL 117036, at *6 (“[I]t is primarily [these] scattergun approaches that
ignore the legal distinctness inherent to the corporate personality that the privilege unloads.”
(citation omitted)).