Court Opinion

ID: 9838146
Source: CourtListenerOpinion
Date Created: 2023-09-05 14:07:18.548898+00
Date Added: 2024-06-11T15:35:25.356324
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

CLEVELAND-CLIFFS BURNS                     )
HARBOR LLC, a Delaware limited             )
liability company, and                     )
CLEVELAND-CLIFFS STEEL LLC,                )
a Delaware limited liability company,      )
                                           )
                  Plaintiffs,              )
                                           )
      v.                                   )     C.A. No. 2022-0378-LWW
                                           )
BOOMERANG TUBE, LLC, a Delaware            )
limited liability company,                 )
BLACK DIAMOND CAPITAL                      )
MANAGEMENT, L.L.C., a Delaware             )
limited liability company, and             )
PTC LIBERTY TUBULARS, LLC, a               )
Delaware limited liability company,        )
                                           )
                  Defendants.              )

                        MEMORANDUM OPINION

                        Date Submitted: May 2, 2023
                       Date Decided: September 5, 2023

Kevin M. Capuzzi & Kate Harmon, BENESCH, FRIEDLANDER, COPLAN &
ARONOFF LLP, Wilmington, Delaware; Andrew G. Fiorella & Nathan H.
Boninger, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland,
Ohio; Counsel for Plaintiffs Cleveland-Cliffs Burns Harbor LLC and
Cleveland-Cliffs Steel LLC
Joseph B. Cicero & Thomas A. Youngman, CHIPMAN BROWN CICERO &
COLE, LLP, Wilmington, Delaware; Jeffrey H. Zaiger & Judd Linden, ZAIGER
LLC, New York, New York; Counsel for Defendant PTC Liberty Tubulars, LLC

David E. Ross, S. Michael Sirkin & Thomas C. Mandracchia, ROSS ARONSTAM
& MORITZ LLP, Wilmington, Delaware; Counsel for Defendant Black Diamond
Capital Management, L.L.C.

WILL, Vice Chancellor
        Boomerang Tube, LLC was a producer of specialized tubing for oil and

natural gas drilling rigs. Its business suffered alongside oil and gas prices during the

height of the COVID-19 pandemic. It was unable to pay unsecured creditors,

including the predecessor of Cleveland-Cliffs Burns Harbor LLC and Cleveland-

Cliffs Steel LLC, which had sold Boomerang $7 million of goods.

        In December 2020, an affiliate of Black Diamond Capital Management,

L.L.C.—Boomerang’s purported controller—initiated an auction of Boomerang’s

assets. According to Cleveland-Cliffs, the sale was a sham intended to place the

assets out of certain creditors’ reach. Notice of the auction was sent on Christmas

Eve of 2020, with the sale occurring just ten days later. The purchaser, PTC Liberty

Tubulars, LLC, is another Black Diamond affiliate.

        Cleveland-Cliffs maintains that PTC Liberty effectively became Boomerang

after the sale. PTC Liberty has the same ownership, officers, facilities, products,

and customers that Boomerang once had. Conversely, Boomerang exists in name

only.

        Cleveland-Cliffs has now sued Boomerang, Black Diamond, and PTC Liberty

on varied (and novel) legal theories to recover the $7 million Boomerang owes it.

Black Diamond and PTC Liberty insist that Cleveland-Cliffs is nothing more than

an unsecured creditor trying to collect from the wrong entities. But, given the shady

circumstances surrounding the asset sale, that may be an oversimplification.
         As described below, Black Diamond’s motion to dismiss is granted in full.

None of Cleveland-Cliffs’ claims against Black Diamond are viable, primarily

because veil piercing is unavailable. As to PTC Liberty, however, Cleveland-Cliffs’

allegations support reasonably conceivable fraudulent transfer and successor

liability claims. The remaining claims against PTC Liberty are dismissed.

I.       FACTUAL BACKGROUND
         Unless otherwise noted, the following facts are drawn from the plaintiffs’

Verified Amended Complaint (the “Complaint”) and the documents it incorporates

by reference.1

         A.     Boomerang’s Bankruptcy
         Boomerang Tube, LLC (“Boomerang”) is a Delaware limited liability

company with its principal place of business in Texas or Missouri. 2 Boomerang

produced highly engineered oil country tubular goods for natural gas and crude oil

drilling markets in the United States and Canada.3 On June 9, 2015, Boomerang and

1
  Verified Am. Compl. (Dkt. 18) (“Am. Compl.”); see In re Books-A-Million, Inc.
S’holders Litig., 2016 WL 5874974, at *1 (Del. Ch. 2016) (explaining that the court may
take judicial notice of “facts that are not subject to reasonable dispute” (citing In re Gen.
Motors (Hughes) S’holder Litig., 897 A.2d 162, 170 (Del. 2006))).
2
    Am. Compl. ¶ 12.
3
    Id. ¶ 20.

                                             2
its affiliated debtors filed for bankruptcy.4 Boomerang emerged from bankruptcy

under a confirmed Chapter 11 plan in January 2016.5

          Under the Chapter 11 plan, Black Diamond Capital Management, L.L.C.

(“Black Diamond”) became Boomerang’s majority owner.6 Black Diamond, a

Delaware limited liability company with headquarters in Connecticut, is an

alternative asset management firm specializing in high-yield credit, stressed and

distressed credit, restructurings, and business turnarounds.7 The Chapter 11 plan

also gave Black Diamond “exclusive control over the election of” a majority of the

members of Boomerang’s board of directors.8 Black Diamond appointed four of its

own employees to the board, with one of its Senior Managing Directors later serving

as Chairman.9 Black Diamond was also a senior secured creditor of Boomerang.10

          B.     Boomerang’s Purchases from ArcelorMittal

          Between June and November 2020, Boomerang conducted business with

ArcelorMittal Burns Harbor LLC and ArcelorMittal USA LLC (together,

4
    Id. ¶ 21.
5
    Id. ¶ 23.
6
    Id. ¶¶ 24, 26.
7
    Id. ¶¶ 15, 19.
8
    Id. ¶ 24.
9
    Id. ¶ 25.
10
     Id. ¶ 5.

                                         3
“ArcelorMittal”) pursuant to a Terms & Conditions of Sale agreement (the

“Terms & Conditions Agreement”).11 In total, Boomerang purchased $7,355,585.91

worth of goods from ArcelorMittal but failed to pay for certain orders and defaulted

on the associated invoices (the “Unpaid Invoices”).12

           C.    Cleveland-Cliffs’ Purchase of ArcelorMittal

           On or around December 9, 2020, Cleveland-Cliffs Burns Harbor LLC and

Cleveland-Cliffs Steel LLC (together, “Cleveland-Cliffs”) acquired ArcelorMittal.13

ArcelorMittal’s rights and accounts associated with Boomerang were transferred to

Cleveland-Cliffs.14 As such, Cleveland-Cliffs became ArcelorMittal’s successor-in-

interest with respect to the Terms & Conditions Agreement.15

           Boomerang remained delinquent on the Unpaid Invoices.16 Shortly after

Cleveland-Cliffs acquired ArcelorMittal, Boomerang sought to purchase another

$1.5 million of goods from Cleveland-Cliffs.17 Boomerang indicated that it had

11
     Id. ¶¶ 30-31, 33; Am. Compl. Ex. 2.
12
     Am. Compl. ¶¶ 31, 38-40; Am. Compl. Ex. 1.
13
  Am. Compl. ¶ 41. Cleveland-Cliffs Steel is the parent company of Cleveland-Cliffs
Burns Harbor. Id. ¶ 11.
14
     Id. ¶ 41.
15
     Id.
16
     Id. ¶ 43.
17
     Id. ¶ 44.

                                           4
“Black Diamond[’]s blessing” to do so.18 Cleveland-Cliffs declined to sell the goods

to Boomerang.19

           D.    Boomerang’s Article 9 Sale
           On December 24, 2020 (Christmas Eve), Black Diamond Commercial

Finance, L.L.C., as administrative agent for Boomerang’s secured creditors, gave

notice of a foreclosure sale under Article 9 of New York’s Uniform Commercial

Code (UCC).20 Black Diamond Commercial Finance is a subsidiary of Black

Diamond.21 The notice stated that the assets of Boomerang and its affiliates would

be sold in a public auction.22 Bids were due within ten days—by Sunday January 3,

2021—and the auction would occur on January 4.23 The notice also explained that

Boomerang owed approximately $110 million “to Black Diamond Commercial

Finance and an unnamed group of lenders.”24 Boomerang did not provide notice of

the sale to Cleveland-Cliffs.25

18
     Id.
19
     Id.
20
     Id. ¶¶ 45-47; Am. Compl. Ex. 3 (“Notice”).
21
     Am. Compl. ¶ 46.
22
   Id. ¶ 47; see id. ¶ 48 (stating that the sale included “all accounts, chattel paper, equipment,
fixtures, general intangibles, inventory and other personal property, wheresoever located,
together with the proceeds thereof” (quoting Notice at 2)).
23
     Id. ¶¶ 50, 52.
24
     Id. ¶ 47; see Notice at 3.
25
     Am. Compl. ¶ 53.

                                                5
         The public auction occurred as scheduled on January 4.26 Two bidders

appeared: 2021 Bidco I, LLC and Centric Pipe, LLC.27 Bidco—now renamed PTC

Liberty Tubulars, LLC (“PTC Liberty”)—is a Delaware limited liability company

with its principal place of business in Texas or Pennsylvania.28 PTC Liberty is “an

affiliate of Black Diamond.”29

         Centric Pipe initially submitted a bid.30 But after learning that the competing

bidder was affiliated with Black Diamond, Centric Pipe bowed out of the auction.31

Bidco submitted the winning $16.5 million bid for all of Boomerang’s assets.32 The

agreement between Black Diamond Commercial Finance as foreclosing seller, and

Bidco as buyer, was memorialized in an Asset Purchase Agreement (the “APA”).33

Black Diamond’s General Counsel executed the APA on behalf of Bidco.34

26
     Id. ¶ 54.
27
     Id. ¶ 55; Am. Compl. Ex. 4.
28
     Am. Compl. ¶¶ 14, 56.
29
     Id. ¶ 56.
30
     Am. Compl. Ex. 4 at 12.
31
     Am. Compl. ¶ 59.
32
     Id. ¶ 60.
33
     Id. ¶ 61; Am. Compl. Ex. 5.
34
     Am. Compl. ¶¶ 62, 79; Am. Compl. Ex. 5 at 10.

                                            6
         E.      PTC Liberty’s Post-Sale Operations

         After the foreclosure sale, Boomerang allegedly ceased to exist as anything

other than a shell entity.35 It “is no longer in good standing with the Delaware

Department of State and has failed to timely pay its annual taxes.”36 It has yet to

appear in this action.

         PTC Liberty effectively replaced Boomerang.37 PTC Liberty operates the two

manufacturing facilities once run by Boomerang.38 PTC Liberty has the same

officers, manufactures and sells the same products to the same customers, uses the

same equipment at the same facilities, and employs the same individuals as

Boomerang.39 Boomerang’s former website and PTC Liberty’s current website give

nearly identical descriptions of the companies.40 And, like Boomerang, PTC Liberty

“remains under the ownership and control of Black Diamond and its affiliates.”41

35
     Am. Compl. ¶¶ 68, 93.
36
     Id. ¶ 69.
37
     Id. ¶¶ 73-81.
38
     Id. ¶ 76.
39
     Id. ¶¶ 75, 81.
40
  Id. ¶ 77. For example, PTC Liberty’s website proclaims that it was established in 2008—
the date of Boomerang’s establishment. Id. ¶ 78.
41
     Id. ¶ 79.

                                           7
More specifically, PTC Liberty is “supervise[d] and operate[d]” by PTC Alliance,

which is “owned by Black Diamond.”42

         F.        The Demand Letter
         On May 24, 2021, Cleveland-Cliffs sent a letter to Boomerang, Black

Diamond, and PTC Liberty, demanding payment for the Unpaid Invoices.43 The

parties attempted to resolve the matter.44 On June 9, they executed a tolling

agreement that preserved all claims and defenses through August 6.45 The tolling

period was extended until April 29, 2022, but no resolution was reached.46

         G.        This Litigation

         On April 29, 2022, Cleveland-Cliffs filed this action against Black Diamond,

PTC Liberty, and Boomerang.47 Black Diamond and PTC Liberty separately moved

for dismissal on May 25.48 Boomerang, which was served with the complaint on

May 6, has yet to appear.49

42
     Id. ¶ 80.
43
     Id. ¶ 82; Am. Compl. Ex. 7.
44
     Am. Compl. ¶ 83.
45
     Id. ¶ 84.
46
     Id. ¶¶ 84-87.
47
     Dkt. 1.
48
     Dkts. 7-8.
49
     See Dkt. 5.

                                           8
         On July 29, 2022, Cleveland-Cliffs filed a Verified Amended Complaint (the

“Complaint”) advancing six counts.50 Count I is styled as a claim for successor

liability against Black Diamond and PTC Liberty concerning Boomerang’s Unpaid

Invoices.51 Count II is a fraudulent transfer claim under the Delaware Uniform

Fraudulent Transfer Act (DUFTA) against all three defendants concerning

Boomerang’s foreclosure sale.52      Count III seeks a declaratory judgment that

Boomerang, PTC Liberty, and Black Diamond are each liable for Boomerang’s

obligations to Cleveland-Cliffs based on veil piercing theories.53 Count IV is a claim

against Boomerang for breach of the Terms & Conditions Agreement.54 Count V is

an unjust enrichment claim against all three defendants.55 And Count VI seeks a

declaratory judgment that Boomerang’s foreclosure sale was neither commercially

reasonable nor compliant with Article 9 of the New York UCC.56

50
     Dkt. 18.
51
     Am. Compl. ¶¶ 89-96.
52
     Id. ¶¶ 97-102.
53
     Id. ¶¶ 106, 103-13.
54
     Id. ¶¶ 114-21.
55
     Id. ¶¶ 122-27.
56
     Id. ¶¶ 128-32.

                                          9
         On September 23, Black Diamond and PTC Liberty each moved to dismiss

the Complaint.57 Boomerang (again) did not respond. After briefing was complete,

I heard oral argument on the motions to dismiss on May 2, 2023.58

II.      LEGAL ANALYSIS
         The defendants’ motions to dismiss for failure to state a claim on which relief

can be granted are governed by Court of Chancery Rule 12(b)(6). The standard that

applies is as follows:

                (i) all well-pleaded factual allegations are accepted as true;
                (ii) even vague allegations are “well-pleaded” if they give the
                opposing party notice of the claim; (iii) the Court must draw all
                reasonable inferences in favor of the non-moving party; and
                [(iv)] dismissal is inappropriate unless the “plaintiff would not
                be entitled to recover under any reasonably conceivable set of
                circumstances susceptible of proof.”59
         The “pleading standards for purposes of a Rule 12(b)(6) motion ‘are

minimal.’”60 The “reasonable conceivability” standard a plaintiff must meet to

survive a Rule 12(b)(6) motion asks only “whether there is a ‘possibility’ of

57
     Dkts. 23-24.
58
     Dkts. 42-43.
59
     Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (citations omitted).
60
  In re China Agritech, Inc. S’holder Deriv. Litig., 2013 WL 2181514, at *23 (Del. Ch.
May 21, 2013) (quoting Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27
A.3d 531, 536 (Del. 2011)).

                                             10
recovery.”61 I “must draw all reasonable inferences in favor” of the plaintiff but am

“not required to accept every strained interpretation of the [plaintiff’s] allegations.”62

         I begin by assessing Cleveland-Cliffs’ request for veil piercing, since it affects

my analysis of other claims. After concluding that veil piercing is unavailable, I

determine that Cleveland-Cliffs has stated viable claims for fraudulent transfer and

successor liability against PTC Liberty. Its remaining claims are dismissed.

         A.     Veil Piercing

         In Count III of the Complaint, Cleveland-Cliffs seeks a declaratory judgment

that “Boomerang, PTC Liberty, and Black Diamond are legally indistinguishable

and are each equally liable for Boomerang’s obligations to Cleveland-Cliffs.”63

Read literally, this assertion would involve three distinct types of veil piercing based

on an agency or “alter ego” theory: (1) traditional veil piercing from Boomerang and

PTC Liberty up the chain to Black Diamond; (2) reverse veil piercing down the chain

from Black Diamond to Boomerang and PTC Liberty; and (3) horizontal (also called

sideways or sister) veil piercing between Boomerang and PTC Liberty. Only the

first type—traditional veil piercing—is squarely addressed in Cleveland-Cliffs’

61
     China Agritech, 2013 WL 2181514, at *24 (quoting Cent. Mortg., 27 A.3d at 537 n.13).
62
     Gen. Motors (Hughes), 897 A.2d at 168.
63
     Am. Compl. ¶ 106.

                                              11
brief.64 The Complaint also makes a vague reference to enterprise liability, which is

unbriefed.65 Each theory is either deficient or waived.

               1.      Traditional Veil Piercing

         “It is a general principle of corporate law deeply ‘ingrained in our economic

and legal systems’ that a parent corporation (so-called because of control through

ownership of another corporation’s stock) is not liable for the acts of its

subsidiaries.”66 Delaware courts depart from this general rule only in exceptional

circumstances.67

         In the parent/subsidiary context, one exception is the alter ego doctrine—

where the subsidiary and the parent “operate[] as a single economic entity such that

64
  See Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are
deemed waived.”).
65
     Am. Compl. ¶ 9.
66
   United States v. Bestfoods, 524 U.S. 51, 61 (1998) (citation omitted); see also Nieves v.
Insight Bldg. Co., 2020 WL 4463425, at *8 (Del. Ch. Aug. 4, 2020) (“A subsidiary
corporation is presumed to be a separate and distinct entity from its parent corporation.”)
(citation omitted).
67
   Paul Elton, LLC v. Rommel Delaware, LLC, 2020 WL 2203708, at *14 (Del. Ch. May
7, 2020) (“Delaware public policy disfavors disregarding the separate legal existence of
business entities.”); see also Wallace v. Wood, 752 A.2d 1175, 1184 (Del. Ch. 1999)
(“Persuading a Delaware court to disregard the corporate entity is a difficult task.”);
Verdantus Advisors, LLC v. Parker Infrastructure P’rs, LLC, 2022 WL 611274, at *2 (Del.
Ch. Mar. 2, 2022) (“Veil piercing is a tough thing to plead and a tougher thing to get, and
for good reason.”).

                                            12
it would be inequitable for th[e] Court to uphold a legal distinction between them.”68

Piercing the corporate veil under this doctrine “requires that the corporate structure

cause fraud or similar injustice.”69 The subsidiary “must be a sham and exist for no

other purpose than as a vehicle for fraud.”70

         Delaware courts consider various factors in assessing whether to disregard the

corporate form, including: “(1) whether the company was adequately capitalized for

the undertaking; (2) whether the company was solvent; (3) whether corporate

formalities were observed; (4) whether the dominant shareholder siphoned company

funds; and (5) whether, in general, the company simply functioned as a facade for

the dominant shareholder.”71 No single factor is dispositive.72 Rather, “[a]n ultimate

68
  Manichaean Cap., LLC v. Exela Techs., Inc., 251 A.3d 694, 707 (Del. Ch. 2021) (quoting
Mabon, Nugent & Co. v. Texas Am. Energy Corp., 1990 WL 44267, at *5 (Del. Ch. Apr.
12, 1990)).
69
   Wallace, 752 A.2d at 1184 (observing that veil piercing “requires that the corporate
structure cause fraud or similar injustice” and that “[e]ffectively, the corporation must be
a sham and exist for no other purpose than as a vehicle for fraud” (quoting Outokumpu
Eng’g Enters., Inc. v. Kvaerner Enviropower, Inc., 685 A.2d 724, 729 (Del. Super. 1996))).
70
  Wallace, 752 A.2d at 1184; see also In re Sunstates Corp. S’holder Litig., 788 A 2.d 530,
534 (Del. Ch. 2001).
71
  Manichaean, 251 A.3d at 706 (quoting Doberstein v. G-P Indus., Inc., 2015 WL
6606484, at *4 (Del. Ch. Oct. 30, 2015)).
72
     Id. at 707.

                                            13
decision regarding veil-piercing is largely based on some combination of these

factors, in addition to ‘an overall element of injustice or unfairness.’”73

         Only the second factor is satisfied as to Boomerang, which was left insolvent

after the Article 9 sale.74 There are no allegations about PTC Liberty’s solvency.75

The remaining factors are unmet.

         Regarding the first and third factors, Cleveland-Cliffs has not alleged that

Boomerang or PTC Liberty was “[in]adequately capitalized for the undertaking” or

failed to observe corporate formalities.76 And other than a conclusory assertion that

73
   Id.; see Crosse v. BCBSD, Inc., 836 A.2d 492, 497 (Del. 2003) (“To state a ‘veil-piercing
claim,’ the plaintiff must plead facts supporting an inference that the corporation, through
its alter-ego, has created a sham entity designed to defraud investors and creditors.”);
Wenske v. Blue Bell Creameries, Inc., 2018 WL 3337531, at *15 (Del. Ch. July 6, 2018)
(dismissing a veil piercing claim where there were no facts supporting an inference that the
corporation “exists solely as a vehicle for fraud”); Gadsden v. Home Pres. Co., 2004 WL
485468, at *4 (Del. Ch. Feb. 20, 2004, revised Mar. 12, 2004) (“A court of equity will
disregard the separate legal existence of a corporation where it is shown that the corporate
form has been used to perpetrate a fraud or similar injustice.”); see also United States v.
Golden Acres, Inc., 702 F. Supp. 1097, 1104 (D. Del. 1988) (“[N]o single factor could
justify a decision to disregard the corporate entity, but . . . some combination of them [is]
required, and . . . an overall element of injustice or unfairness must always be present, as
well.”), aff’d, 879 F.2d 860 (3d Cir. 1989) (TABLE).
74
     Am. Compl. ¶ 67.
75
  If anything, Cleveland-Cliffs asserts otherwise. See id. ¶ 76 (alleging that “PTC Liberty
now operates . . . two manufacturing plants”).
76
  Manichaean, 251 A.3d at 706. At oral argument, counsel for Cleveland-Cliffs conceded
that corporate formalities were likely observed. Tr. of Oral Arg. on Defs.’ Mots. to Dismiss
(Dkt. 43) (“Hr’g Tr.”) 73 (“I would suspect, given the counsel that’s here and the counsel
that was representing the companies, that all corporate formalities were observed. I think
there’s no question about that.”).

                                             14
Black Diamond was “on both sides of the purported sale transaction,” there is no

allegation that Black Diamond siphoned funds from Boomerang or PTC Liberty (the

fourth factor).77

         Cleveland-Cliffs also falls short of satisfying the fifth factor. With respect to

Boomerang, Cleveland-Cliffs avers that Black Diamond was Boomerang’s

“majority owner” and appointed four of its employees to Boomerang’s seven-

member board.78 But “[a] parent corporation is not liable for the acts of its subsidiary

merely because it owns (and votes) a majority of the subsidiary’s stock or shares

common shareholders, directors or officers with the subsidiary.”79 As to PTC

Liberty, the fact that Black Diamond’s General Counsel was PTC Liberty’s

representative and signatory on the APA is insufficient to support an inference that

the two entities are alter egos.80 It is a “well established principle [of corporate law]

77
   Am. Compl. ¶ 5. This assertion yields a circular argument: Black Diamond was not on
either side of the Article 9 sale unless the separate corporate existences of the entities are
ignored. At argument, Cleveland-Cliffs averred that the siphoning factor is met because
Black Diamond purportedly put its secured debt ahead of other creditors. Hr’g Tr. 73.
Even if the allegations in the Complaint could be read to support this contention, the
balance of factors would still weigh against veil piercing.
78
     Am. Compl. ¶¶ 5, 24.
79
   Wenske, 2018 WL 5994971, at *6 (“Nor will conclusory allegations that the parent’s
management exclusively dominated and controlled the subsidiary’s management suffice to
state a claim for veil-piercing.”).
80
  See Am. Compl. ¶¶ 62, 79; APA § X.3. Cleveland-Cliffs’ allegation that “PTC Liberty
has the same ownership, the same officers, manufactures and sells the same products to the
same customers, uses the same equipment at the same facilities, and uses the same

                                             15
that directors and officers holding positions with a parent and its subsidiary can and

do ‘change hats’ to represent the two corporations separately, despite their common

ownership.”81         Black Diamond does not even directly oversee PTC Liberty’s

business. Rather, PTC Alliance “supervise[s] and operate[s] PTC Liberty.”82 Black

Diamond, in turn, “own[s]” PTC Alliance.83

           On balance, these factors weigh against viewing Black Diamond as a single

economic entity with Boomerang or PTC Liberty. But even if it were reasonably

conceivable that Cleveland-Cliffs could satisfy certain factors, its own allegations

subvert the notion that Black Diamond is indistinguishable from PTC Liberty or

Boomerang. At the parent level, Cleveland-Cliffs describes Black Diamond as an

alternative asset management firm based in Connecticut.84 At the subsidiary level,

Boomerang and PTC Liberty purportedly operate tubular goods businesses from a

Texas location and have manufacturing facilities, employees, products, and

customers.85 These facts not only belie any inference that Boomerang or PTC

employees previously used by Boomerang” is irrelevant to veil piercing vis-à-vis these
entities and Black Diamond. Am. Compl. ¶ 75 (emphasis added).
81
     Bestfoods, 524 U.S. at 69 (citation omitted).
82
     Am. Compl. ¶ 80.
83
     Id.
84
     Id. ¶¶ 15, 19.
85
  Id. ¶¶ 7, 75-76. The allegation that Boomerang sought to purchase an additional $1.5
million worth of goods from Cleveland-Cliffs with “Black Diamond[’]s blessing” is
another acknowledgement of Black Diamond and Boomerang’s separateness. Id. ¶ 44.

                                               16
Liberty functioned as a single economic entity with Black Diamond.86 They also

make it unreasonable to infer that Boomerang or PTC Liberty are sham entities.87

       In terms of the fraud or injustice inquiry, Cleveland-Cliffs’ contentions center

on the Article 9 sale that it claims was a fraudulent transfer.88 The fraud or injustice

must, however, “come from an inequitable use of the corporate form itself as a sham,

and not from the underlying claim.”89 “To hold otherwise would render the fraud or

injustice element meaningless, and would sanction bootstrapping.”90

86
  See Altabef v. Neugarten, 2021 WL 5919459, at *12 (Del. Ch. Dec. 15, 2021) (rejecting
a conclusory alter ego allegation where the plaintiff acknowledged that the company had
actual business operations).
87
  See Crosse, 836 A.2d at 497 (“[T]he plaintiff must plead facts supporting an inference
that the corporation, through its alter-ego, has created a sham entity designed to defraud
investors and creditors.”) (citation omitted).
88
  See Pls.’ Combined Answering Br. in Opp’n to Defs.’ Mots. to Dismiss (Dkt. 30) (“Pls.’
Answering Br.”) 54-55 (“Black Diamond abused the corporate form by transferring assets
between two of its affiliate entities[.]”).
89
  EBG Hldgs. LLC v. Vredezicht’s Gravenhage 109 B.V., 2008 WL 4057745, at *12 (Del.
Ch. Sept. 2, 2008); see also Medi-Tec of Egypt Corp. v. Bausch & Lomb Surgical, 2004
WL 415251, at *4 (Del. Ch. Mar. 4, 2004) (explaining that the plaintiff must allege facts
showing “that the corporate form in and of itself operates to serve some fraud or injustice,
distinct from the alleged wrongs”).
90
   Mobil Oil Corp. v. Linear Films, Inc., 718 F. Supp. 260, 268 (D. Del. 1989); see also
Sears, Roebuck & Co. v. Sears plc, 744 F. Supp. 1297, 1305 (D. Del. 1990) (“[T]he alleged
fraud or inequity must be distinct from the tort alleged in the complaint.”); Yu v. GSM
Nation, LLC, 2017 WL 2889515, at *4 (Del. Ch. July 7, 2017) (characterizing an alter ego
veil piercing claim brought in parallel to a viable DUFTA claim as an “attempt to bootstrap
a legal claim into the Court of Chancery’s jurisdiction through the ‘invocation of familiar
chancery terms”’) (citation omitted).

                                            17
         Thus, Black Diamond cannot be held liable for the Unpaid Invoices through

veil piercing. Cleveland-Cliffs has failed to demonstrate that Black Diamond

functions a single economic entity with Boomerang or PTC Liberty. If anything, the

Complaint suggests the opposite. It has also not shown that Boomerang or PTC

Liberty exists solely to perpetrate fraud.

                2.     Other Veil Piercing Theories

         Cleveland-Cliffs does not explicitly seek to recover based on reverse or

horizontal veil piercing or enterprise liability. These theories were unbriefed and

therefore waived.91 Regardless, each would fail on the merits.

         “The natural starting place when reviewing a claim for reverse veil-piercing

are the [five] traditional factors Delaware courts consider when reviewing a

traditional veil-piercing claim.”92 “The court should then ask whether the owner is

utilizing the corporate form to perpetuate fraud or an injustice.”93 Horizontal veil

piercing and enterprise liability—which have not been adopted in Delaware—would

seemingly also require a prerequisite finding of traditional veil piercing.94 Because

91
     See Emerald P’rs, 726 A.2d at 1224.
92
     Manichaean, 251 A.3d at 714.
93
     Id. at 714-15 (describing additional factors to consider in reverse veil piercing).
94
   See 1 William Meade Fletcher et al., Fletcher Cyc. Corps. § 43 (perm. ed., rev. vol.
2022), Westlaw (database updated Sept. 2022) (“If sister entities share common
shareholders, owners, or parents, ‘horizontal veil piercing’ might be allowed if the veils
separating each entity from the parent or common owners are first pierced to find that each
sister entity is the alter ego of its owners.”); see also David J. Marchitelli, Disregard of

                                               18
Cleveland-Cliffs has not pleaded a viable basis for traditional veil piercing, these

other theories are likewise defective.

       B.     Fraudulent Transfer
       In Count II of the Complaint, Cleveland-Cliffs asserts that Boomerang, Black

Diamond, and PTC Liberty are liable for a fraudulent transfer under DUFTA.

Specifically, it advances constructive fraudulent transfer and actual fraudulent

transfer theories against Boomerang (the transferor) and PTC Liberty (the

transferee).95 Cleveland-Cliffs further alleges that Black Diamond is liable as a

transfer beneficiary under Section 1308(b)(1).96

Separate Existence of Corporations Under Single Business Enterprise Theory, 50 A.L.R.
7th art. 2 (2020), Westlaw (database updated weekly) (discussing case law); Sentry Supply
Inc. v. NLMK N. Am. Plate LLC, 2019 WL 1388793, at *5 (W.D. La. Mar. 27, 2019)
(“Delaware has not adopted the single business enterprise doctrine as a means of piercing
the corporate veil.”); cf. Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1043 n.
59 (Del. Ch. 2006) (“As I understand the tests for enterprise liability used in some states,
they are not markedly more certain than the traditional veil piercing or alter ego inquiries.”)
(citation omitted).
95
   Am. Compl. ¶¶ 99-101. Constructive fraudulent transfer is codified at 6 Del. C.
§§ 1304(a)(2), 1305(a), and 1305(b). Actual fraudulent transfer is codified at 6 Del. C.
§ 1304(a)(1).
96
   Id. ¶¶ 6-7. A careful read of the Complaint reveals hints of a constructive fraudulent
transfer claim under Section 1305(b). Id. ¶ 101(e). This provision of the statute “renders
a preferential transfer—i.e., a transfer by an insolvent debtor for or on account of an
antecedent debt—to an insider vulnerable as a fraudulent transfer when the insider had
reasonable cause to believe that the debtor was insolvent.” Wilm. Sav. Fund Soc., FSB v.
Kaczmarczyk, 2007 WL 704937, at *7 (Del. Ch. Mar. 1, 2007) (citation omitted).
Cleveland-Cliffs makes no mention of any such claim in its brief, thereby waiving it. See
Emerald P’rs, 726 A.2d at 1224. Regardless, Boomerang is not alleged to owe any
antecedent debt to PTC Liberty. See Kaczmarczyk, 2007 WL 704937, at *8 (“[T]he phrase

                                              19
         As a threshold matter, it is reasonably conceivable that the Article 9 sale was

a transfer under DUFTA. Cleveland-Cliffs has sufficiently pleaded constructive

fraudulent transfer (under Sections 1304(a)(2) and 1305(a)) and actual fraudulent

transfer (under Sections 1304(a)(1)) claims against PTC Liberty.               Its transfer

beneficiary claim against Black Diamond, however, is dismissed.

                1.       Qualifying “Transfers” of “Assets”

         DUFTA applies to “transfers,” which are defined by the statute as “every

mode . . . of disposing of or parting with an asset or an interest in an asset.”97 An

“asset” is “property of a debtor,” but excludes “[p]roperty to the extent it is

encumbered by a valid lien.”98 And a “valid lien” “means a lien that is effective

against the holder of a judicial lien subsequently obtained by legal or equitable

process or proceedings.”99 Thus, for a transaction to qualify as a “transfer” of

“assets” under DUFTA, the value of the transferred property must exceed the value

of any valid liens.100

‘antecedent debt’ in section 1305(b) . . . refer[s] to a debt owed by the transferor to the
insider transferee.”).
97
     6 Del. C. § 1301(12).
98
     Id. § 1301(2)(a).
99
     Id. § 1301(13).
100
     See Rsrvs. Mgmt. Corp. v. 30 Lots, LLC, 2009 WL 4652991, at *5 (Del. Super. Nov.
30, 2009) (concluding that because the “mortgage lien was valid and exceeded the value
of the property, the lots [we]re not an ‘asset’” and the “mortgage foreclosure sale was not
. . . a ‘transfer’ by the debtor that the Act recognizes”); see also In re Valente, 360 F.3d
256, 260 (1st Cir. 2004) (holding that because a “property was only worth $150,000 but

                                             20
         PTC Liberty argues that Boomerang’s foreclosure sale is not a qualifying

“transfer” of “assets.”101 It avers that Boomerang’s assets were encumbered by $126

million in valid liens, including $110 million owed pursuant to a term credit

agreement and $16 million owed to a bank.102 But to dismiss the claim on this basis

would require me to reject well-pleaded allegations in the Complaint and draw

inferences against Cleveland-Cliffs. At present, I can do neither.103

         Cleveland-Cliffs has sufficiently pleaded that the value of the transferred

assets exceeds $126 million. The Complaint includes allegations that Boomerang’s

inventory and raw goods were worth $27.5 million, that its Liberty, Texas plant

housed $100 million worth of equipment, and that its Houston, Texas plant held

state-of-the art equipment of unspecified value.104 Cleveland-Cliffs also avers that

was encumbered by a $168,000 first mortgage, as well as a number of state and federal tax
liens, it did not qualify as an ‘asset’ under the UFTA at the time of the transfer”); Mussetter
v. Lyke, 10 F. Supp. 2d 944, 958 (N.D. Ill. 1998) (“Uniform case law confirms the self-
evident proposition that the unencumbered portion of a debtor’s property is an ‘asset’ for
UFTA purposes.”), aff’d, 202 F.3d 274 (7th Cir. 1999). The “DUFTA is modeled on UFTA
[Uniform Fraudulent Transfer Act], a uniform act, [so] the decisions of other jurisdictions
interpreting the same (or substantially similar) model statutes [are appropriate] guidance.”
Burkhart v. Genworth Fin., Inc., 275 A.3d 1259, 1270 (Del. Ch. 2022).
101
   Def. PTC Liberty Tubular, LLC’s Opening Br. in Supp. of Mot. to Dismiss (Dkt. 24)
(“PTC Liberty’s Opening Br.”) 13-17.
102
      Notice at 2-3; Am. Compl. ¶ 65.
103
      See Savor, 812 A.2d at 896-97.
104
      Am. Compl. ¶¶ 28-29, 64.

                                              21
during the bankruptcy proceeding, Boomerang was valued at over $300 million.105

Based on these facts, it is reasonably conceivable that the value of the assets sold

during the Article 9 sale exceeded that of any valid liens.106

                  2.   Constructive Fraudulent Transfer

          Sections 1304(a)(2) and 1305(a) provide causes of action for constructive

fraudulent transfer.107 To state a claim under either provision, a plaintiff must allege

“(i) that the transferor failed to receive reasonably equivalent value for the asset

transferred; and (ii) that the transferor was insolvent at the time of the transfer, or

was rendered insolvent by the transfer.”108 Cleveland-Cliffs is not required to plead

105
      Id. ¶ 64.
106
   Further factual development is necessary to determine the value of the assets. Cf. Ryan
Racing, LLC v. Gentilozzi, 2015 WL 728468, at *9 (W.D. Mich. Feb. 19, 2015) (denying
summary judgment where “[t]here [we]re significant factual disputes concerning which
loans to consider and what value should be ascribed to [the transferred] assets”).
107
    The difference between DUFTA Sections 1304(a)(2) and 1305(a) is that the latter
“provides a cause of action only to present creditors.” Quadrant Structured Prod. Co. v.
Vertin, 102 A.3d 155, 195 (Del. Ch. 2014); see also CIBC Bank USA v. JH Portfolio Debt
Equities, LLC, 2021 WL 2230976, at *11 (Del. Super. June 2, 2021). Otherwise, the two
sections are essentially identical. See In re Mobilactive Media, LLC, 2013 WL 297950, at
*30 (Del. Ch. Jan. 25, 2013) (discussing 6 Del. C. § 1305(a)); Burkhart v. Genworth Fin.,
Inc., 250 A.3d 842, 854-55 & n.81 (Del. Ch. 2020) (discussing 6 Del. C. § 1304(a)(2)).
108
    In re Samson Res. Corp., 2023 WL 4003815, at *24 (Bankr. D. Del. June 14, 2023)
(citing 6 Del. C. §§ 1304(a)(2), 1305(a)).

                                           22
these elements with particularity.109 Rather, the claim is subject to the more lenient

Rule 8(a) notice pleading standard.110

         The defendants do not dispute that the second element—insolvency of the

transferor at the time of or due to the transfer—is met. Nor could they. “A debtor

who is generally not paying debts as they become due is presumed to be

insolvent.”111 Before its foreclosure sale, Boomerang defaulted on the Unpaid

Invoices and it remains in default.112          The foreclosure sale was prompted by

Boomerang defaulting on its loans.113 After the sale, Boomerang allegedly “ceased

to exist.”114

         Regarding the first element, Cleveland-Cliffs adequately pleads that the

foreclosure failed to net Boomerang a “reasonably equivalent” value for “the assets

109
   Cf. Renco Grp., Inc. v. MacAndrews AMG Hldgs. LLC, 2015 WL 394011, at *10 (Del.
Ch. Jan. 29, 2015) (“Although this is a notice pleading jurisdiction, Chancery Court Rule
9(b) requires a plaintiff to ‘plead fraud with particularity’ [for an actual fraudulent transfer
claim].”).
110
    See Ki-Poong Lee v. So, 2016 WL 6806247, at *5 (Del. Super. Nov. 17, 2016)
(explaining that constructive fraud claims only require the plaintiff to plead “a short and
plain statement of the claim” demonstrating its entitlement to relief); Renco Grp, 2015 WL
394011, at *10 (“[A] plaintiff can focus on an inadequate exchange [i.e., a constructive
fraudulent transfer claim], in which fraudulent intent is presumed.”).
111
      6 Del. C. § 1302(b).
112
      Am. Compl. ¶¶ 38, 82-88.
113
      APA at Recitals.
114
      Am. Compl. ¶ 67; see id. ¶¶ 68-72.

                                              23
transferred.”115 Cleveland-Cliffs alleges that the assets Bidco (i.e., PTC Liberty)

bought in the foreclosure sale were worth over $100 million and that Boomerang’s

“outstanding debt obligations” were not assumed through the purchase.116                 In

exchange, PTC Liberty paid $16.5 million.117 If true, this is obviously a significant

disparity in value.118

         The assets purchased by PTC Liberty came encumbered with security

interests.119 And a below market price is not unusual in a foreclosure sale.120 But

115
      Id. ¶ 101(c).
116
   Id. ¶¶ 64(b), 74; see APA § I.2 (providing that Bidco/PTC Liberty did not “assume or
become responsible for any liabilities or obligations”).
117
      Am. Compl. ¶ 60.
118
   See In re Straight Path Commc’ns Inc. Consol. S’holder Litig., 2018 WL 3120804, at
*20 (Del. Ch. June 25, 2018) (concluding that a lack of reasonably equivalent value was
adequately pleaded where assets worth $50 million were sold for $6 million); see also
Quadrant, 102 A.3d at 199-200 (concluding that the payment of service fees exceeding
market rates by $5 to $7 million annually in return for a diminished scope of service
supported a reasonable inference that the value exchanged was not reasonably equivalent);
Mobilactive Media, 2013 WL 297950, at *31 (noting that the exchange of assets worth
$72,920,00 for a deed of indemnity made it reasonably conceivable that the exchange was
not reasonably equivalent).
119
   APA § IV.c (“The Foreclosing Seller has not waived any of its rights with respect to,
or released any of the collateral currently in the possession or control of the Grantors
securing, any obligations of the Borrower under the Loan Documents[.]”).
120
    See BFP v. Resol. Tr. Corp., 511 U.S. 531, 531 (1994) (holding that “reasonably
equivalent value” under the federal fraudulent transfer statute was not “fair market value”
because “fair market value presumes market conditions that, by definition, do not obtain in
the forced-sale context, since property sold within the time and manner strictures of state-
prescribed foreclosure is simply worth less than property sold without such restrictions”).

                                            24
whether the encumbrances or the circumstances of a foreclosure sale affected the

value of Boomerang’s assets is a factual question that I cannot presently resolve.121

         Accordingly, I decline to dismiss the constructive fraudulent transfer claim

against PTC Liberty under Sections 1304(a)(2) and 1305(a).122

                3.     Actual Fraudulent Transfer

         Section 1304(a)(1) provides a cause of action for actual fraudulent transfer

where “the debtor made the transfer . . . [w]ith actual intent to hinder, delay or

defraud any creditor of the debtor.”123 To plead a claim under this provision, a

plaintiff must meet the particularity standard of Rule 9(b) by pleading “specific

supporting facts describing the circumstances of the transfer,” such as the who, what,

121
    See In re Image Worldwide, Ltd., 139 F.3d 574, 576 (7th Cir. 1998) (“Whether
‘reasonably equivalent value’ was received in a transaction is a question of fact.”); see also
Barber v. Golden Seed Co., 129 F.3d 382, 387 (7th Cir. 1997) (“We have held that the
formula for determining reasonably equivalent value is not a fixed mathematical formula;
rather, the standard for ‘[r]easonable equivalence should depend on all the facts of each
case,’ an important element of which is fair market value. Another important factor in
assessing reasonably equivalent value is whether the sale was ‘an arm’s length transaction
between a willing buyer and a willing seller.’” (quoting In re Bundles, 856 F.2d 815, 824
(7th Cir. 1988))).
122
      This claim also survives against Boomerang, which is in default.
123
    6 Del. C. § 1304(a)(1). “The ‘intent’ that must be established under section 548(a) [the
federal equivalent of DUFTA Section 1304(a)(1)] is the debtor’s actual fraudulent intent.”
In re Park S. Sec., LLC., 326 B.R. 505, 517 (Bankr. S.D.N.Y. 2005) (citation omitted); see
also Seiden v. Kaneko, 2015 WL 7289338, at *13 (Del. Ch. Nov. 3, 2015) (reciting 6 Del.
C. § 1304(a)(1)). That is, Boomerang’s intent is at issue.

                                              25
and when of the challenged transfer.124             Intent, though, “may be averred

generally.”125

         Cleveland-Cliffs describes the circumstances of the transfer with the requisite

specificity. The Complaint details the parties to the transfer, the transferred assets,

the nature of the notice and bidding process, and the date of the transfer.126

         The Complaint also sets out multiple facts making it reasonably conceivable

that Boomerang had a fraudulent intent.                  Section 1304(b) provides a

“nonexhaustive” list of factors that may be considered in finding “actual intent” for

purposes of Section 1304(a)(1).127 “The confluence of several of these factors,

124
    Ki-Poong Lee, 2016 WL 6806247, at *4; see also Trusa v. Nepo, 2017 WL 1379594, at
*11 (Del. Ch. Apr. 13, 2017) (“A claim for fraudulent transfer also must comport with Rule
9(b) and be pled with particularity.”); Winner Acceptance Corp. v. Return on Cap. Corp.,
2008 WL 5352063, at *7 (Del. Ch. Dec. 23, 2008) (“To satisfy Rule 9(b), a complaint must
allege: (1) the time, place, and contents of the [transfer]; (2) the identity of the person
making the [transfer]; and (3) what the person intended to gain by making the[transfer].”).
125
    JPMorgan Chase Bank, N.A. v. Ballard, 213 A.3d 1211, 1245 (Del. Ch. 2019) ([T]o
state a fraudulent transfer claim, [the plaintiff] must generally plead facts showing intent
to defraud with specific supporting facts describing the circumstances of the transfer.”);
see also Winner Acceptance, 2008 WL 5352063, at *7 (“State of mind . . . may be averred
generally.”).
126
      See Am. Compl. ¶¶ 45-66.
127
   Kibler v. Wooters, 2007 WL 1756595, at *4 (Del. Ch. June 6, 2007). The factors include
whether: “(1) The transfer or obligation was to an insider; (2) The debtor retained
possession or control of the property transferred after the transfer; (3) The transfer or
obligation was disclosed or concealed; (4) Before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with suit; (5) The transfer was of
substantially all the debtor’s assets; (6) The debtor absconded; (7) The debtor removed or
concealed assets; (8) The value of the consideration received by the debtor was reasonably
equivalent to the value of the asset transferred or the amount of the obligation incurred;
(9) The debtor was insolvent or became insolvent shortly after the transfer was made or the

                                            26
without the presence of all of them, is generally sufficient to support a conclusion

that one acted with the actual intent to defraud.”128 The allegations serving as

“badges of fraud”129 that support several of the Section 1304(b) factors include:

         •      The transfer was made by one insider (Boomerang) to another insider
                (PTC Liberty), insofar as both entities are ultimately owned and
                controlled by Black Diamond.130

         •      The transfer was concealed. Bids for the sale were accepted over a ten-
                day period from Christmas Eve of 2020 to January 3, 2021—a
                suspiciously fast turnaround during the winter holidays.131

         •      The transfer was of substantially all Boomerang assets.132

obligation was incurred; (10) The transfer occurred shortly before or shortly after a
substantial debt was incurred; and (11) The debtor transferred the essential assets of the
business to a lienor who transferred the assets to an insider of the debtor.” 6 Del. C.
§ 1304(b).
128
      Kibler, 2007 WL 1756595, at *4.
129
   See Paul Elton, 2020 WL 2203708, at *10 (describing “badges of fraud” as “a phrase
that generally refers to circumstances that would allow a court to find (or, at the pleading
stage, infer) the intent required to support a claim of fraud”).
130
      Am. Compl. ¶¶ 23-26, 56, 75, 79-80, 100, 110; see 6 Del. C. § 1304(b)(1).
131
    Am. Compl. ¶¶ 50-53; see 6 Del. C. § 1304(b)(3). The defendants maintain that the
notice was compliant with New York UCC Section 9-611(b) and that Boomerang was not
entitled to notice. See Def. Black Diamond Capital Management, L.L.C.’s Mot. to Dismiss
Br. (Dkt. 7). That argument may carry weight later in the case but is not determinative
now when multiple badges of fraud are sufficiently pleaded. See SungChang Interfashion
Co., Ltd. v. Stone Mountain Accessories, Inc., 2013 WL 5366373, at *9 (S.D.N.Y. Sept.
25, 2013) (denying a motion to dismiss an actual fraudulent transfer claim where “notice
of the public auction was statutorily sufficient” because multiple badges of fraud were
alleged, including “unusual timing” and “that creditors were not informed of a sale
allegedly involving some of their assets”).
132
   Am. Compl. ¶ 73; see 6 Del. C. § 1304(b)(5). As noted below, the Complaint does not
provide that “all” assets were transferred. See infra note 162 and accompanying text.

                                             27
         •      The transfer occurred less than two months after ArcelorMittal issued
                its last invoice to Boomerang, which put Boomerang more than $7
                million in debt.133

         •      Boomerang was insolvent at the time of the sale or became insolvent
                shortly afterward.134

         •      The assets sold were worth over $100 million but purchased by PTC
                Liberty for $16.5 million.135

         PTC Liberty argues that these allegations of fraudulent intent are deficient

because they are keyed to Black Diamond (or Black Diamond Commercial Finance)

rather than Boomerang.136 In PTC Liberty’s view, “unless alter ego [liability]

applies . . . Black Diamond’s intent cannot be imputed to Boomerang.”137 No

authority is cited for this proposition. This conclusory argument raises a thorny (and

seemingly novel) question: can fraudulent intent be imputed from one entity to

another absent alter ego liability?

         Because I conclude that Cleveland-Cliffs has generally pleaded facts showing

Boomerang’s intent, I need not definitively resolve this question today.

Nevertheless, I pause on it since PTC Liberty seems to think it is a slam dunk. I tend

133
   Am. Compl. ¶¶ 32, 54; see 6 Del. C. § 1304(b)(10). The last invoice was dated
November 6, 2020, and the foreclosure sale was noticed on December 24, 2020. Am.
Compl. ¶¶ 32, 46.
134
      Am. Compl. ¶ 67; see 6 Del. C. § 1304(b)(9).
135
      Am. Compl. ¶ 64; see 6 Del. C. § 1304(b)(8).
136
      PTC Liberty’s Opening Br. 19; see Hr’g Tr. 61-63.
137
      PTC Liberty’s Opening Br. 19.

                                             28
to disagree.      There are subtle—yet crucial—differences between the relevant

doctrines that suggest the imputation of one entity’s fraudulent intent to another is

not foreclosed solely because they are not alter egos.

         Veil piercing on an alter ego theory requires entities to be functionally one in

the same.138 But several of the factors Delaware courts consider when assessing alter

ego liability (such as solvency, adequate capitalization, or observation of corporate

formalities) have little bearing on the issues of control central to the imputation

inquiry. For a fraudulent conveyance claim, the actual fraudulent intent of an entity

exercising control over a transferor may be imputed to the transferor.139 The

imputation inquiry—at least in the bankruptcy context—can also look to the intent

of the controller’s officers and directors who caused the transfer.140

138
      See Sunstates, 788 A.2d at 534; supra Section II.A.1.
139
    U.S. Bank Nat. Ass’n v. Verizon Commc’ns Inc., 817 F. Supp. 2d 934, 941 (N.D. Tex.
2011) (“Most courts recognize that when a transferee is in a position to dominate or control
the debtor’s disposition of . . . property, the transferee’s intent to hinder, delay, or defraud
will be imputed to the debtor/transferor.” (quoting ASARCO LLC v. Americas Mining
Corporation, 396 B.R. 278, 369 (S.D. Tex. 2008))). In Verizon, the plaintiff alleged that
the parent corporation “used its control” over three of its subsidiaries to effectuate
fraudulent transfers to two of its other subsidiaries. Verizon, 817 F. Supp. 2d at 940-41.
Applying the imputed intent doctrine, the court held that the parent’s control over the
transferor subsidiaries was sufficient to impute the parent’s actual fraudulent intent to the
transferors and denied a motion to dismiss. Id. at 941-42.
140
   See In re Syntax-Brillian Corp., 2016 WL 1165634, at *6 (Bankr. D. Del. Feb. 8, 2016)
(“[F]or the purpose of recovering impermissibly transferred corporate assets and thereby
facilitating creditor recovery, the intent of the officers and directors may be imputed to the
corporation.” (quoting In re Nat’l Audit Def. Network, 367 B.R. 207, 220 (Bankr. D. Nev.
2007))); Verizon, 817 F. Supp. 2d at 942; In re Trib. Co. Fraudulent Conv. Litig., 2017 WL
82391, at *5 (S.D.N.Y. Jan. 6, 2017) (“Because all corporations must act through agents,

                                              29
         Here, Black Diamond allegedly controlled the transferor and the

administrative agent that ran the foreclosure sale. Cleveland-Cliffs has alleged

badges of fraud casting suspicion on the circumstances and timing of the sale—some

of which pertain to Black Diamond’s involvement. To the extent that the imputation

of intent from Black Diamond to Boomerang is necessary for Cleveland-Cliffs’

claim to survive (it is not), these facts arguably support a reasonable inference that

Black Diamond controlled the sale to effectuate the transfer of Boomerang’s assets

to PTC Liberty.141

         The motion to dismiss is therefore denied as to the actual fraudulent transfer

claim against PTC Liberty.142

                4.    Transfer Beneficiary

         Finally, Cleveland-Cliffs seeks relief under DUFTA from Black Diamond,

which was not a party to the sale.143 Section 1308(b)(1) allows a creditor to recover

courts assessing the intent of a corporation in a fraudulent conveyance claim will look to
the intent of the corporate actors who effectuated the transaction on behalf of the
corporation.”), aff’d, 10 F.4th 147 (2d Cir. 2021).
141
    See In re Adler, Coleman Clearing Corp., 263 B.R. 406, 447 (S.D.N.Y. 2001) (“[B]y
virtue of the common relationship to both sides of the disposition, the wrongful intent
embodied in the controlling transferee may be presumed to flow on to the debtor-transferor
as the property passes, for all practical purposes, from one hand to the other of the same
person, ending with the intended transferee.”).
142
      The claim likewise survives against Boomerang.
143
    See Am. Compl. ¶ 101 (“The transfer of assets by Boomerang to PTC Liberty constitutes
a fraudulent transfer[.]”).

                                             30
on a fraudulent transfer claim against “[t]he first transferee of the asset or the person

for whose benefit the transfer was made.”144 Cleveland-Cliffs argues the latter—

that Black Diamond was a transfer beneficiary.145

       Delaware courts have applied a three-factor test used by bankruptcy courts to

detect beneficiary status: “(1) whether the benefit was received by the beneficiary;

(2) whether the benefit is quantifiable; and (3) whether the benefit is ‘accessible to

the beneficiary.’”146 This case hinges on the first and third factors. Cleveland-Cliffs

144
    6 Del. C. § 1308(b)(1). Delaware courts have construed the remedial provisions of the
statute narrowly and rejected attempts to create secondary liability. See Trenwick Am.
Litig. Tr. v. Ernst & Young, L.L.P., 906 A.2d 168, 203 (Del. Ch. 2006) (“Despite the
breadth of remedies available under state and federal fraudulent conveyance statutes, those
laws have not been interpreted as creating a cause of action for ‘aiding and abetting.’
Rather, as [] both the defendants and the Litigation Trust agree, the only proper defendants
in a fraudulent conveyance action under federal bankruptcy law or Delaware law are the
transferor and any transferees.”), aff’d sub nom. Trenwick Am. Litig. Tr. v. Billett, 931 A.2d
438 (Del. 2007) (TABLE); see also Edgewater Growth Cap. P’rs, L.P. v. H.I.G. Cap., Inc.,
2010 WL 720150, at *2 (Del. Ch. Mar. 3, 2010) (rejecting a claim for fraudulent transfer
where the directors were alleged to have “conspired with [the transferees] to cause the
transfer to occur”).
145
   Cleveland-Cliffs does not argue that Black Diamond is the “first” or “initial” transferee.
“[A] ‘transferee’ has ‘dominion over the money or other asset, the right to put the money
to one’s own purposes.’ The ‘initial’ transferee is the first entity to have such a dominion
or right.” In re Hansen, 341 B.R. 638, 643 (Bankr. N.D. Ill. 2006) (quoting Bonded Fin.
Servs., Inc. v. Eur. Am. Bank, 838 F.2d 890 (7th Cir. 1988); citing In re Ausman Jewelers,
Inc., 177 B.R. 282, 286 (Bankr. W.D. Wis. 1995)).
146
   Humanigen, Inc. v. Savant Neglected Diseases, LLC, 2021 WL 4344172, at *16 (Del.
Super. Sept. 23, 2021) (“To detect beneficiary status, this Court engages the same three-
factor test bankruptcy courts use.”).

                                             31
contends that Black Diamond’s alleged ownership and control of PTC Liberty is

sufficient to satisfy them.147

         In support of this argument, Cleveland-Cliffs relies on In re McCook Metals,

L.L.C.—a decision by the United States District Court for the Northern District of

Illinois.148        There, the court interpreted transfer beneficiary language in the

Bankruptcy Code as permitting a fraudulent transfer claim against an individual

controller of an LLC that received contract rights through a challenged

transaction.149 The court reasoned that the defendant “received an actual benefit

[through] his share of the value of the assets” and that the benefit was accessible to

him “through [his] control of [the transferee].”150

         The approach taken in McCook has (rightly) been criticized. One year after

McCook was issued, the Northern District of Illinois opined that: “The problem with

McCook and the few other decisions authorizing this sort of status-based recovery is

that they ignore the fundamental nature of corporations. . . . [A] corporation is a

legal entity separate from its shareholders, officers, and directors.”151 In another

decision, the court observed that because McCook “does not define ‘control,’” it

147
      Pls.’ Answering Br. 34.
148
      319 B.R. 570 (N.D. Ill. 2005).
149
      Id. at 590-92.
150
      Id. at 592.
151
      Hansen, 341 B.R. at 645.

                                             32
“renders every majority shareholder of a closely-held corporation . . . liable for

transfers to the corporation, although the corporation is entirely legitimate and all

corporate formalities have been carefully observed.”152

         To follow McCook and adopt Cleveland-Cliffs’ reasoning would be

inconsistent with Delaware’s policy of safeguarding corporate separateness.153

Courts have widely rejected attempts to pursue fraudulent transfer claims using

similar logic.154 Having rejected Cleveland-Cliffs’ attempt to pierce the corporate

152
      In re Delta Phones, Inc., 2005 WL 3542667, at *10 n.4 (Bankr. N.D. Ill. Dec. 23, 2005).
153
    See, e.g., All. Data Sys. Corp., 963 A.2d 746, 769 (Del. Ch. 2009) (“Delaware law
respects corporate formalities, absent a basis for veil-piercing, recognizing that the wealth-
generating potential of corporate and other limited liability entities would be stymied if it
did otherwise.”); see also Nieves, 2020 WL 4463425, at *8 (“Delaware law presumes
respect for the corporate form: A subsidiary corporation is presumed to be a separate and
distinct entity from its parent corporation.”) (cleaned up). As noted above, however, it is
at least arguable that intent is imputable absent alter ego liability. See supra notes 138-41
and accompanying text.
154
    See Yu v. GSM Nation, LLC, 2018 WL 2272708, at *13 (Del. Super. Apr. 24, 2018)
(dismissing a fraudulent transfer claim against a defendant who allegedly controlled the
transferor and transferee because the claim “read[] like an attempt to pierce the corporate
veil”); see also In re Brown Publ’g Co., 2015 WL 1009177, at *7-8 (Bankr. E.D.N.Y. Mar.
4, 2015) (collecting cases and observing that “[t]he majority of cases addressing this issue
have held that a shareholder in a corporation which receives the benefit of a fraudulent
transfer is not personally liable” under the transfer statute); In re Harris Agency, LLC, 477
B.R. 590, 593 n.3 (Bankr. E.D. Pa. 2012) (“[T]he Trustee has merely stated that the Moving
Defendants are in control and directed the actions of the Entity Defendants. This does not
necessarily mean that the alleged transfers benefitted them and is, therefore, an insufficient
factual allegation to survive a motion to dismiss.”); In re Green Field Energy Servs., Inc.,
2018 WL 1116374, at *3 (Bankr. D. Del. Feb. 27, 2018) (“Control of an entity is not
enough to show access to the benefit. The party must show that there was actual access.”);
In re Imageset, Inc., 299 B.R. 709, 718 (Bankr. D. Me. 2003) (“[T]he individuals’ rights
as interest holders in the LLC is not alone sufficient to qualify them as persons ‘for whose
benefit [the] transfer[s were] made’ within § 550(a)(1)’s meaning.”); Sher v. SAF Fin., Inc.,
2011 WL 4835700, at *2 (D. Md. Oct. 11, 2011) (“[A] shareholder may not be held liable

                                              33
veil, I decline to extend liability to Black Diamond—a stockholder that allegedly

benefitted from a fraudulent transfer to the entity. To the extent that such liability is

even legally possible under Delaware law, it fails here given the absence of well-

pleaded allegations suggesting that Black Diamond was a transfer beneficiary. The

fraudulent transfer claim against Black Diamond is dismissed.

       C.     Successor Liability
       In Count I of the Complaint, Cleveland-Cliffs claims that PTC Liberty bears

successor liability for the Unpaid Invoices since it “acquired substantially all of

Boomerang’s assets.”155 “In Delaware, when one company sells or otherwise

transfers all of its assets to another company, the buyer generally is not responsible

for the seller’s liabilities, including claims arising out of the seller’s tortious

conduct.”156 “Exceptions include: (1) the buyer’s assumption of liability; (2) defacto

without a showing that he had actually received distributions of the transferred property or
unless ‘a showing can be made to pierce the corporate veil.’” (quoting Hansen, 341 B.R.
at 646)).
155
   Am. Compl. ¶¶ 90-91. This claim was initially also brought against Black Diamond
but abandoned. See Hr’g Tr. 56-57. It would fail in any event because Black Diamond is
not alleged to have bought any assets from Boomerang. See Spring Real Est., LLC v.
Echo/RT Hldgs., LLC, 2013 WL 6916277, at *4 (Del. Ch. Dec. 31, 2013) (recognizing
successor liability as to a “purchaser of assets”).
156
    Ross v. Desa Hldgs. Corp., 2008 WL 4899226, at *4 (Del. Super. Sept. 30, 2008).
Originally, the Cleveland-Cliffs argued that New York law should apply to the successor
liability claim. At oral argument, it conceded that Delaware law applies, consistent with
the defendants’ position. Hr’g Tr. 57-58. This concession was apt. See Xperex Corp. v.
Viasystems Techs. Corp., LLC, 2004 WL 3053649, at *2 (Del. Ch. July 22, 2004)
(“Whether or not a Delaware corporation is liable for the conduct of another corporation is
a question of Delaware law.”); see also Energy Intel. Grp., Inc. v. Cowen & Co., LLC, 2016

                                            34
merger or consolidation; (3) mere continuation of the predecessor under a different

name; or (4) fraud.”157       Under the APA, PTC Liberty expressly disclaimed

“responsib[ility] for any liabilities or obligations of [Boomerang].”158 That leaves

three potential exceptions. Cleveland-Cliffs has invoked two, asserting that “PTC

Liberty is merely a continuation of Boomerang and/or a de facto merger

occurred.”159

               1.     De Facto Merger

         “The elements necessary to create a de facto merger under Delaware law are

the following: (1) one corporation transfers all of its assets to another corporation;

(2) payment is made in stock, issued by the transferee directly to the shareholders of

the transferring corporation; and (3) in exchange for their stock in that corporation,

the transferee agreeing to assume all the debts and liabilities of the transferor.”160

WL 3939747, at *11 (S.D.N.Y. July 15, 2016) (applying the law of the state of
incorporation to a successor liability claim); Restatement (Second) of Conflict of Laws §
302 (1971).
157
      Ross, 2008 WL 4899226, at *4.
158
      APA § I.2.
159
    Am. Compl. ¶ 94. It is not apparent whether Cleveland-Cliffs seeks to invoke the fraud
exception. Given my analysis of the fraudulent transfer claims, it arguably applies. To the
extent that the mere continuation exception cannot support the claim, it could survive on
this basis.
160
    Magnolia’s at Bethany, LLC v. Artesian Consulting Engineers, Inc., 2011 WL 4826106,
at *3 (Del. Super. Sept. 19, 2011).

                                            35
None of these elements are met.161 The allegation that Boomerang transferred all of

its assets is belied by APA’s terms, which provide for certain exclusions.162 Further,

PTC Liberty paid for the assets in cash and expressly disclaimed the assumption of

Boomerang’s liabilities.163

              2.     Mere Continuation

       The mere continuation exception requires that “the purchaser of the assets to

be a continuation of ‘the same legal entity,’ not just a continuation of the same

business in which the seller of the assets engaged.”164 “The ‘primary elements’ of

being the same legal entity have been said to include ‘the common identity of the

161
    See Spring Real Est., 2013 WL 6916277, at *5 (dismissing successor liability claim
arising out of asset purchase agreement); Magnolia’s at Bethany, 2011 WL 4826106, at
*2-3 (same); Marnavi S.p.A. v. Keehan, 900 F. Supp. 2d 377, 397 (D. Del. 2012) (same);
but see Xperex, 2004 WL 3053649, at *2.
162
  Excluded assets included all real estate, certain equipment, and certain equity interests.
APA § I.1(a); id. Ex. B.
163
    APA §§ I.2, I.3; id. Ex. C (“Buyer shall not assume or become responsible for any
liabilities or obligations of the Grantors or any of its Affiliates . . . . The consideration
payable at the Closing (the “Purchase Price”) shall be $16,500,000[.]”); see Energy Intel.
Grp., 2016 WL 3939747, at *10 (S.D.N.Y. July 15, 2016) (observing a difference between
New York and Delaware law in assessing a de facto merger because “the elements of a de
facto merger in Delaware are clearly more rigorous: they require a transfer of all of the
transferor’s assets and an assumption of all its liabilities, in exchange for a payment made
in the stock of the transferee directly to the shareholders of the transferor”).
164
    Spring Real Est., 2013 WL 6916277, at *5; see Mason v. Network of Wilm., Inc., 2005
WL 1653954, at *5 (Del. Ch. July 1, 2005) (explaining that “the doctrine of successor
liability . . . involves asset purchasers or, perhaps, the entity that picks up the business of
the entity burdened (or likely to be burdened) by the creditor’s claim”).

                                              36
officers, directors, or stockholders of the predecessor and successor corporations,

and the existence of only one corporation at the completion of the transfer.’”165

         Although Delaware courts have construed this theory “very narrowly,”166 the

Complaint supports its application here.           Cleveland-Cliffs alleges that PTC

Liberty—like Boomerang—“remains under the ownership and control of Black

Diamond and its affiliates.”167 It asserts that Boomerang effectively ceased to exist

after the Article 9 sale and was replaced by PTC Liberty—which operates the same

business, employs the same facilities, employees, and equipment, has a similar

website, and sells to the same customers as Boomerang.168 Cleveland-Cliffs also

states that the “same Vice President of Sales, Chief Technical Officer, Plant

Manager, Operations Manager, and Product Technology and Field Services

Manager” employed by PTC Liberty once worked for Boomerang, among other

165
      Id. (quoting Magnolia’s at Bethany, 2011 WL 4826106, at *3).
166
    Spring Real Est., 2013 WL 6916277, at *5 (questioning whether the “continuation
theory” finds support in our law given the absence of “explicit support in the precedent of
the Supreme Court or this Court”); see also Fehl v. S. W. C. Corp., 433 F. Supp. 939, 946
(D. Del. 1977) (“The continuation theory, which has rarely been raised, has been construed
narrowly by the Delaware courts.”).
167
      Am. Compl. ¶ 79.
168
      Id. ¶¶ 75-78.

                                            37
“officers and employees.”169        Taken together, these facts make it reasonably

conceivable that PTC Liberty is a continuation of Boomerang.

         PTC Liberty’s arguments to the contrary would require me to draw inferences

against Cleveland-Cliffs. Specifically, PTC Liberty argues that Boomerang existed

after the Article 9 sale because PTC Liberty did not purchase certain real property,

stock and membership interests in other companies, and equipment.170 Still, it is

reasonable to infer from the Complaint that Boomerang no longer exists as a going

concern, has effectively been dissolved, and was replaced by PTC Liberty.171 The

motion to dismiss Count I is therefore denied as to PTC Liberty.

169
   Id. ¶ 81 (alleging that PTC Liberty “continue[s] to employ many of the same officers
and employees as Boomerang”).
170
      PTC Liberty’s Opening Br. 16, 25-26.
171
    See AJZN, Inc. v. Yu, 2015 WL 331937, at *15-16 (D. Del. Jan. 26, 2015) (denying a
motion to dismiss a successor liability claim based on the mere continuation exception
where the plaintiff alleged the successor “continued to conduct the same business as [the
prior company], using the same assets, domain name and websites, and retaining most
employees . . . [and] held itself out to the public as a continuation of the business”); see
also Simple Glob., Inc. v. Brathwait Watches, Inc., 2022 WL 100363, at *3 (Del. Super.
Jan. 10, 2022) (denying a motion for summary judgment where the successor “fill[ed] the
same role” in selling products “once filled by” the prior company, the two used the same
website, and it seemed that “a relationship of some degree exists, or existed”); see generally
SungChang Interfashion, 2013 WL 5366373, at *15-16 (applying New York law, which
the court observed was substantively identical to Delaware law, and denying a motion to
dismiss a successor liability claim where the plaintiff alleged the prior company engaged
in a fraudulent conveyance and was functionally insolvent, that the successor company was
in the same line of business and operated in the same location as the prior company, and
that the same individual served as president of both companies).

                                             38
         D.    Unjust Enrichment

         Count V is a claim for unjust enrichment brought in the alternative against

Boomerang, PTC Liberty, and Black Diamond.172             To prevail on an unjust

enrichment claim, a plaintiff “must show an enrichment, an impoverishment, a

relation between the enrichment and impoverishment, and the absence of

justification.”173 “Of cardinal significance is whether a contract already governs the

parties’ relationship.”174 If so, the contract is “the measure of [the] plaintiff’s

right.”175

         Here, Cleveland-Cliffs alleges that its relationship with Boomerang was

governed by the Terms & Conditions Agreement and brings a claim against

Boomerang for breaching that contract.176 The Complaint makes clear that the issues

underlying the unjust enrichment claim against PTC Liberty and Black Diamond are

172
      Am. Compl. ¶¶ 122-27.
173
   Laidlaw v. GigAcquisitions2, LLC, 2023 WL 2292488, at *14 (Del. Ch. Mar. 1, 2023);
see also Garfield ex rel. ODP Corp. v. Allen, 277 A.3d 296, 351 (Del. Ch. 2022).
174
   MetCap Secs. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *5 (Del. Ch. May
16, 2007).
175
   Wood v. Coastal States Gas Corp., 401 A.2d 932, 942 (Del. 1979); see also Choupak
v. Rivkin, 2015 WL 1589610, at *20 (Del. Ch. Apr. 6, 2015) (dismissing an unjust
enrichment claim because the parties’ agreements “established the measure of [the
plaintiff’s] rights”), aff’d, 129 A.3d 232 (Del. 2015) (TABLE).
176
   Am. Compl. ¶ 33 (“Boomerang’s purchases pursuant to the Invoices were governed by
a certain Terms & Conditions of Sale[.]”).

                                          39
the same raised in the breach of contract claim against Boomerang.177 For example,

Cleveland-Cliffs alleges that “it would be inequitable for [the defendants] to retain

the benefits conferred by ArcelorMittal without full payment to ArcelorMittal’s

successor-in-interest, Cleveland-Cliffs, for the value of those benefits.”178 The

unjust enrichment complained of is the defendants’ purported receipt of “the benefit

of the products provided without reimbursing Cleveland-Cliffs.”179 Cleveland-

Cliffs cannot circumvent the terms of the Terms & Conditions Agreement by

claiming that non-parties to the contract (Black Diamond and PTC Liberty) were

unjustly enriched.180

         Cleveland-Cliffs argues that the unjust enrichment claim should survive

because “it is unknown whether Boomerang, which has not appeared yet, will

challenge the [Terms & Conditions Agreement’s] validity.”181 That argument is

177
   Id. ¶ 31; see Albert v. Alex. Brown Mgmt. Servs., 2005 WL 2130607, at *8 (Del. Ch.
Aug. 26, 2005) (dismissing an unjust enrichment claim where it was “undisputed that a
written contract existed between” the parties and “the plaintiffs specifically brought claims
based on these contracts”).
178
      Am. Compl. ¶ 125.
179
      Id. ¶ 126.
180
    Tygon Peak Cap. Mgmt., LLC v. Mobil Invs. Investco, LLC, 2022 WL 34688, at *15
(Del. Ch. Jan. 4, 2022) (“It is well settled that [a plaintiff] may not use a claim for unjust
enrichment ‘to circumvent basic contract principles recognizing that a person not a party
to a contract cannot be held liable to it.’” (quoting MetCap Secs., 2007 WL 1498989, at
*6), reargument granted in part, 2022 WL 414399 (Del. Ch. Feb. 10, 2022).
181
   Pls.’ Answering Br. 50 (citing Lyons Ins. Agency, Inc. v. Kirtley, 2019 WL 1244605, at
*2 (Del. Super. Mar. 18, 2019) and non-Delaware precedent applying other states’ laws).

                                             40
entirely hypothetical. Unlike the precedent Cleveland-Cliffs relies on, there is no

live dispute about “the validity and enforceability” of the contract.182 Cleveland-

Cliffs acknowledges that the Terms & Conditions Agreement is enforceable.183

         In any event, Cleveland-Cliffs has failed to support the elements of an unjust

enrichment claim. For example, there are no well-pleaded allegations that Black

Diamond was “enriched” by the Article 9 sale. Nor can “some direct relationship”184

between the defendants’ purported enrichment (acquiring assets for less than fair

value) and Cleveland-Cliffs’ impoverishment (the inability, as an unsecured creditor

of Boomerang, to collect on debts) be reasonably inferred.

         Thus, Count V is dismissed against PTC Liberty and Black Diamond.185

         E.    Declaratory Judgment
         Finally, in Count VI, Cleveland Cliffs requests a declaration that the Article 9

sale was not commercially reasonable and therefore noncompliant with the New

182
      Lyons, 2019 WL 1244605, at *2.
183
     Pls.’ Answering Br. 50 (“Cliffs has alleged an enforceable agreement with
Boomerang.”). Moreover, Boomerang has defaulted, waiving its right to assert affirmative
defenses. Am. Compl. ¶¶ 13, 70, 88; cf. Chewning v. JPMorgan Chase Bank, 133 A.3d
971 (Del. 2016) (“To the extent that the [appellants] are now attempting to offer a defense
to the foreclosure action, they waived any such defenses by failing to appear and file an
answer to the complaint.”).
184
      MetCap Secs., 2007 WL 1498989, at *5.
185
    I cannot dismiss the claim against Boomerang since it has not moved for dismissal and
is in default.

                                            41
York UCC.186 But Cleveland-Cliffs lacks standing to challenge the Article 9 sale

under the New York statute. Article 9 Section 625 of the New York UCC provides

a cause of action only to a debtor, an obligor, or a secured creditor. 187 Cleveland-

Cliffs concedes that it is none of these; it was a contract creditor of Boomerang that

does not claim any security interest.188

         Cleveland-Cliffs insists that it can nonetheless ask this court to decide whether

it would prevail on a statutory claim under Article 9 if it theoretically had standing.

This is proper, it argues, because the defendants raised the sale’s compliance with

Article 9 when moving to dismiss the original complaint.189 But if Cleveland-Cliffs

wants to show that the Article 9 sale was noncompliant to defeat a defense, it can

litigate the issue as such. It is neither necessary nor appropriate to bring an

186
      Am. Compl. ¶ 131.
187
    N.Y. U.C.C. Law § 9-625 (McKinney) (“Persons entitled to recover damages; statutory
damages if collateral is consumer goods. Except as otherwise provided in Section 9-628:
(1) a person that, at the time of the failure, was a debtor, was an obligor, or held a security
interest in or other lien on the collateral may recover damages under subsection (b) for its
loss.”).
188
    Pls.’ Answering Br. 15; see also Opacmare USA, LLC v. Lazzara Custom Yachts, LLC,
314 F. Supp. 3d 1276, 1282 (M.D. Fla. 2018) (“Article 9 does not afford . . . an unsecured
creditor . . . a statutory basis to challenge the sale or set aside the sale.”) (citation omitted);
iFlex Inc. v. Electroply, Inc., 2004 WL 502179, at *3 (D. Minn. Mar. 4, 2004) (concluding
that an unsecured creditor lacked standing to challenge the fair market value or commercial
reasonableness of an Article 9 sale); Burton v. Hardwood Pallets, Inc., 2001 WL 1589162,
at *5 (Tenn. Ct. App. Dec. 13, 2001) (“As unsecured creditors, [plaintiffs] have no interest
in the collateral. As such, they were not entitled to notice of the sale, and they have no
standing to challenge the manner in which it was sold.”) (citation omitted).
189
      Pls.’ Answering Br. 14-15.

                                               42
affirmative claim to rebut a defense—much less one that neither defendant is

presently asserting. I decline to issue an advisory opinion on a New York statute

that does not give Cleveland-Cliffs a key to the courthouse door.190

III.   CONCLUSION
       For the foregoing reasons, Black Diamond’s motion to dismiss is granted and

PTC Liberty’s motion to dismiss is granted in part and denied in part. Counts I, II,

III, V, and VI are dismissed with prejudice as to Black Diamond. Counts III, V, and

VI are dismissed with prejudice as to PTC Liberty. Counts I and II as brought against

PTC Liberty survive.

       Within ten days, the parties shall submit a proposed order to implement this

decision. Additionally, within thirty days, Cleveland-Cliffs shall inform the court

by letter how it intends to proceed as to Boomerang.

190
   See generally In re Merrill Lynch & Co., Inc. Secs., Deriv. & ERISA Litig., 597 F. Supp.
2d 427, 431 (S.D.N.Y. 2009) (“Standing is the key to the courthouse door; those who
possess the key, possess power.”).

                                            43