Lionel D. Batty v. UCar International Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

LIONEL D. BATTY, )
)
Plaintiff, )
)
v. ) C.A. No. 2018-0376-KSJM
)
UCAR INTERNATIONAL INC., )
UCAR CARBON COMPANY INC., )
GRAFTECH INTERNATIONAL )
LTD., GRAFTECH )
INTERNATIONAL HOLDINGS INC., )
BCP IV GRAFTECH HOLDINGS LP, )
and ATHENA ACQUISITION )
SUBSIDIARY INC., )
)
Defendants. )

MEMORANDUM OPINION
Date Submitted: January 10, 2019
Date Decided: April 3, 2019

Charles A. McCauley III, OFFIT KURMAN, P.A., Wilmington, Delaware; Counsel
for Plaintiff Lionel D. Batty.
Bradley R. Aronstam, Eric D. Selden, ROSS ARONSTAM & MORITZ LLP,
Wilmington, Delaware; Counsel for Defendants UCAR International Inc., UCAR
Carbon Company Inc., GrafTech International Ltd., GrafTech International
Holdings Inc., BCP IV GrafTech Holdings LP, and Athena Acquisition Subsidiary
Inc.

McCORMICK, V.C.
 Plaintiff Lionel D. Batty was employed by certain of the entity defendants for

over thirty-four years. They compensated Batty over that time in various

combinations of cash and equity. On July 13, 2000, Batty signed a severance

compensation agreement (the “Agreement”). The Agreement sets the compensation

that Batty would receive from the defendants in the event he resigned for “good

reason” following a “change in control.” A change of control occurred in 2015, and

Batty resigned in early 2017. The defendants accepted Batty’s resignation no-

contest and paid him over $1 million in compensation. Batty then filed this suit on

May 29, 2018, seeking the over $1.5 million that the defendants allegedly

shortchanged him under the Agreement. The defendants have moved to dismiss the

complaint.

The parties do not dispute that the change of control occurred or that Batty’s

resignation triggered his entitlement to compensation under the Agreement. The

parties dispute whether the plain language of the Agreement entitles Batty to

compensation for his equity awards. This decision finds that the parties’ competing

interpretations of the Agreement are both reasonable. That finding renders the

Agreement ambiguous. At the pleadings stage, the Court may not choose between

reasonable interpretations of an ambiguous contract. As to Batty’s claim for breach

of the Agreement, therefore, the defendants’ motion is denied.

1
 Not all of Batty’s claims survive. The complaint lumps Batty’s core

contractual grievance with four alternative counts for compensation and two counts

for attorneys’ fees. Plus, two of the entities listed as a “defendants” do not belong

on the caption: one no longer exists and another is redundant. Cutting the clutter,

the Court grants the motion to dismiss as to those six counts and two “defendants.”

I. FACTUAL BACKGROUND
The facts are drawn from the Verified Complaint 1 and documents

incorporated by reference therein.

The defendants (“Defendants”) are GrafTech International Ltd. (“GrafTech”)

and its predecessors and successors in interest: UCAR International Inc. (“UCAR

International”); UCAR Carbon Company Inc. (“UCAR Carbon”); GrafTech

International Holdings Inc.; BCP IV GrafTech Holdings LP (“BCP IV”); and Athena

Acquisition Subsidiary Inc. (“Athena”).

Batty worked for Defendants for over 34 years. UCAR International entered

into the Agreement with Batty on July 13, 2000. The Agreement was later assigned

to GrafTech.

In 2005, GrafTech adopted an Equity Incentive Plan. Batty contends that this

equity plan entitled him to equity awards as part of his annual compensation.

1
C.A. No. 2018-0376-KSJM Docket (“Dkt.”) 1, Verified Complaint (“Compl.”).
2
 On January 4, 2017, Batty resigned from GrafTech “for good reason,”

effective February 15, 2017. GrafTech sent a letter to Batty dated February 8, 2017,

acknowledging receipt of the notice of termination. The letter lists five amounts due

to Batty under the Agreement.

Batty alleges that he has been underpaid for the amounts he is owed under

Sections 2(a)(iv), 2(a)(ii)(A), 2(a)(ii)(B), 2(a)(iii), 2(a)(vi), and 9 of the Agreement.

Batty’s position concerning the first three amounts is reflected in the following table.

The latter three amounts, not reflected in the table, are for health insurance, tax

benefits, and attorneys’ fees.

Base Salary Incentive Long-term Total
Compensation Incentive Plan
Plan
2(a)(iv) Due: 2 * 300,000 2 * 195,000 2 * 450,000 $1,890,000
= $600,000 = $390,000 = $900,000
Paid: $600,000 $390,000 $0 $990,000
Owed: $0 $0 $900,000 $900,000

2(a)(ii)(A) Due: N/A $195,000 $450,000 $645,000
Paid: N/A $29,250 $0 $29,250
Owed: N/A $165,750 $450,000 $615,750
2(a)(ii)(B) Due: N/A 46/365 * $195,000 46/365 * $81,287
= $24,575 $450,000
= $56,712
Paid: N/A $24,590 0 $24,590
Owed: N/A -$15 $56,712 $56,697
$1,572,447

Batty filed this action on May 29, 2018. His Verified Complaint asserts seven

causes of action. Count IV asserts Batty’s claim to additional compensation under

3
the Agreement. Counts I through III and Count VII assert Batty’s claims to

additional compensation under alternative legal theories. Counts V and VI seek

attorneys’ fees and expenses under the Agreement, Defendants’ governance

documents, and 8 Del. C. § 145.

On June 29, 2018, Defendants moved to dismiss all claims asserted in the

Verified Complaint. Defendants’ motion was fully briefed by November 14, 2018,

and argued on January 10, 2019.2

II. LEGAL ANALYSIS
This Court may grant a motion to dismiss under Rule 12(b)(6) for failure to

state a claim if a complaint does not allege facts that, if proven, would entitle the

plaintiff to relief.3 “[T]he governing pleading standard in Delaware to survive a

motion to dismiss is reasonable ‘conceivability.’” 4 When considering such a motion,

the Court must “accept all well-pleaded factual allegations in the [c]omplaint as

true . . . , draw all reasonable inferences in favor of the plaintiff, and deny the motion

unless the plaintiff could not recover under any reasonably conceivable set of

2
Dkt. 27, Tr. of Jan. 10, 2019 Oral Arg. on Defs.’ Mot. to Dismiss and Pl.’s Mot. for the
Interim Reimbursement of Fees, Costs, and Expenses (“Oral Arg. Tr.”). Also, on
September 17, 2018, while the dismissal motion was being briefed, Batty moved for the
interim reimbursement of his attorneys’ fees and expenses under Section 9 of the
Agreement. Dkt. 9. That motion was fully briefed; the parties presented argument at the
hearing on Defendants’ motion to dismiss.
3
Ct. Ch. R. 12(b)(6).
4
Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 537 (Del.
2011).
4
circumstances susceptible of proof.”5 This reasonable conceivability standard asks

whether there is a possibility of recovery. 6 The Court, however, need not “accept

conclusory allegations unsupported by specific facts or . . . draw unreasonable

inferences in favor of the non-moving party.” 7

A. Breach of Contract
Count IV claims that Defendants breached four different subsections of

Section 2 of the Agreement by failing to pay Batty certain compensation upon his

resignation.

To state a claim for breach of contract, Batty must allege: “1) a contractual

obligation; 2) a breach of that obligation by the defendant; and 3) a resulting damage

to the plaintiff.” 8

On a motion to dismiss, the Court must determine whether the contract

contains “plain and unambiguous” terms “as a matter of law” to determine the

absence of a breach.9 “Contract language is not rendered ambiguous simply because

5
Id. at 536 (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002)).
6
Id. at 537 & n.13.
7
Price v. E.I. du Pont de Nemours Co., Inc., 26 A.3d 162, 166 (Del. 2011) (citing Clinton
v. Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009)).
8
Huff Energy Fund, L.P. v. Gershen, 2016 WL 5462958, at *6 (Del. Ch. Sept. 29, 2016)
(internal quotation marks omitted).
9
In re Ronald J. Mount 2012 Irrevocable Dynasty Tr. U/A/D/ Dec. 5, 2012, 2017
WL 4082886, at *3 (Del. Ch. Sept. 7, 2017) (internal quotation marks omitted).
5
the parties in litigation differ concerning its meaning.”10 “A contract is ambiguous

only when the provisions in controversy are reasonably or fairly susceptible of

different interpretations or may have two or more different meanings.” 11

1. Accrued Incentive Compensation
Section 2(a)(ii) of the Agreement entitles Batty to the amount of his “accrued

Incentive Compensation” upon his resignation.12 Section 2(a)(ii) specifically

requires GrafTech to pay accrued amounts of Batty’s “target variable compensation

payment.” 13 Batty alleges that the term “target variable compensation” includes

equity awards, and that Defendants breached the Agreement by failing to pay him

his equity awards that accrued in 2016 and 2017. Batty values these awards at

around $1.5 million.

Defendants argue that “accrued Incentive Compensation” is limited to cash

compensation and thus excludes equity awards. Defendants rely on Section 1(f),

which defines “Incentive Compensation” as “any compensation, variable

compensation, bonus, benefit or award paid or payable in cash under an Incentive

Compensation Plan.”14 According to Defendants, Section 1(f)’s phrase “paid or

10
Matulich v. Aegis Commc’ns Gp., Inc., 942 A.2d 596, 600 (Del. 2008) (internal quotation
marks omitted).
11
Id. (internal quotation marks omitted) (emphasis in original).
12
Compl. Ex. A § 2(a)(ii).
13
Id. § 2(a)(ii)(A) (emphasis added).
14
Id. (emphasis added).
6
payable in cash” modifies all preceding nouns (“compensation, variable

compensation, bonus, benefit or award”). In the alternative, Defendants argue that

they prevail even if “paid or payable in cash” modifies only the nearest noun,

“awards,” because equity awards are “awards” and thus subject to the cash

limitation.15 To bolster their interpretation, Defendants point to the definition of

“Incentive Compensation Award,” which too is limited to “cash payment or

payments awarded to [Batty] under any Incentive Compensation Plan.” 16

Defendants’ interpretation of Section 2(a)(ii) is reasonable, but it is not the

only reasonable interpretation. Just as conceivable, the term “Incentive

Compensation” could mean certain items that may be paid in cash or equity

(“compensation, variable compensation, bonus, benefit”) as well as one item that is

only paid or payable in cash (“award”). Under this interpretation, regardless of

whether the equity awards are “paid or payable in cash,” they are included in Batty’s

accrued Incentive Compensation.

Both parties point to selective SEC filings as supportive of their plain

language arguments. For example, Batty cites as supportive UCAR International’s

2015 10-K reference to “total target variable compensation” as both “annual and

15
Dkt. 5, Opening Br. in Supp. of Defs.’ Mot. to Dismiss (“Defs.’ Opening Br.”) at 17.
16
Compl. Ex. A § 1(g) (emphasis added).
7
long-term performance-based incentive compensation.”17 Defendants cite other

aspects of this filing as supportive. 18 While it is true that the Court “may take notice

of SEC filings,” this is only true “to the extent that the facts put forth in those filings

are not subject to reasonable dispute.” 19 Here, the parties dispute the significance of

statements made in the filings, and those statements do not clearly resolve any aspect

of the Agreement’s ambiguity in any event. 20

When deciding a motion to dismiss, the Court may not “choose between two

differing reasonable interpretations of ambiguous provisions.” 21 Rather, “any

17
Dkt. 10, Answering Br. in Opp’n to Defs.’ Mot. to Dismiss (“Pl.’s Ans. Br.”) (citing
UCAR Int’l Inc. Annual Report (Form 10-K) at 135 (Mar. 7, 2016) (“UCAR 2015 10-K”)).
18
Defs.’ Opening Br. at 10–11 (citing UCAR 2015 10-K at 147–48).
19
Fleischman v. Huang, 2007 WL 2410386, at *3 (Del. Ch. Aug. 22, 2007) (citing In re
Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 171 (Del. 2006) (“The record
supports the Court of Chancery’s determination that there are no allegations in the
Complaint that challenge ‘whether the conditions necessary to consummate the transaction
were actually met (i.e., a majority vote of holders of each class of GM stock).’ Moreover,
at the oral argument in the Court of Chancery, the Plaintiffs’ counsel stated that they ‘have
no reason to dispute that [defendants’] disclosures regarding their vote totals are correct.’
Under these two circumstances, it was proper for the Court of Chancery to take judicial
notice of the publicly available fact, reported by GM in a Form 10-Q filed with the SEC,
that a majority of both classes of GM stockholders voted to approve the Hughes
transactions.”)).
20
In re Rural Metro Corp. S’holders Litig., 2013 WL 6634009, at *7 (Del. Ch. Dec. 17,
2013) (“the fact that a document may be suitable for judicial notice for certain purposes
does not mean that its contents can be used for any conceivable purpose”) (citing In re
Santa Fe Pacific Corp. S’holder Litig., 669 A.2d 59, 69 (Del. 1995)).
21
VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 615 (Del. 2003).
8
ambiguity must be resolved in favor of the nonmoving party . . . .” 22 Defendants are

“not entitled to dismissal under Rule 12(b)(6) unless the interpretation of the contract

on which [its] theory of the case rests is the ‘only reasonable construction as a matter

of law.’” 23 Because Section 2(a)(ii) is susceptible to multiple reasonable

interpretations, Defendants’ motion as to Section 2(a)(ii) fails.24

2. Severance Payment
Section 2(a)(iv) entitles Batty to a “Severance Payment” in the amount of two

times the greater of Batty’s “target variable compensation payment” in either the

year that his employment terminates or the year that the change in control occurs. 25

Defendants argue that the phrase “target variable compensation” as used in Section

2(a)(iv) must be interpreted consistently with Section 2(a)(ii). 26 In light of the

Court’s ruling as to Section 2(a)(ii), interpreting the provisions consistently at the

22
Kahn v. Portnoy, 2008 WL 5197164, at *3 (Del. Ch. Dec. 11, 2008) (quoting VLIW
Tech., 840 A.2d at 615 (emphasis original)).
23
Id.
24
Defendants further argue that Batty did not accrue equity awards under the Equity
Incentive Plan in 2016 or 2017, because GrafTech’s authority to grant new awards
terminated on May 25, 2015. Batty responds that GrafTech’s authority to grant new awards
is irrelevant because, as alleged in the Verified Complaint, prior authorized awards were
still effective through the end of 2017. Pl.’s Ans. Br. at 31; Compl. ¶ 50. The Court accepts
Batty’s allegation as true for the purpose of this Rule 12(b)(6) motion. Cent. Mortg., 27
A.3d at 535.
25
Compl. Ex. A § 2(a)(iv).
26
Defs.’ Opening Br. at 9–10.
9
pleadings stage renders Section 2(a)(iv) ambiguous. Accordingly, Defendants’

motion to dismiss Batty’s claims under Section 2(a)(iv) is denied.

3. Payment of Taxes
Section 2(a)(vi) of the Agreement entitles Batty to “Payment of Taxes.”27

Batty alleges that Defendants are responsible to pay the excise tax due on the

additional severance compensation Batty demands in this lawsuit. But Batty does

not allege that Defendants have failed to pay taxes on any amounts due to Batty.

Nor has Batty alleged any other facts demonstrating that this is a ripe controversy.

Accordingly, Batty’s claim for breach of Section 2(a)(vi) is dismissed.

4. Insurance Benefits
Section 2(a)(iii) of the Agreement entitles Batty to “Insurance Benefits” that

are substantially equivalent to those he received from the Defendants prior to the

Resignation.28 Section 2(a)(iii) further provides that “[s]uch benefits shall be

provided . . . in lieu of any continuation of coverage [Batty] would be eligible for

under COBRA.”29

Batty contends that GrafTech breached Section 2(a)(iii) by failing to timely

arrange for insurance coverage. Before the end of August 2018, GrafTech merely

27
Compl. Ex. A § 2(a)(vi).
28
Id. § 2(a)(iii).
29
Id.
10
reimbursed Batty for his payments under COBRA. GrafTech has since arranged for

coverage effective September 1, 2018, but Batty argues that the benefits provided

might not be “substantially equivalent.”30

Batty has stated a claim that GrafTech breached the Agreement before

September 1, 2018, by failing to comply with the requirements of Section 2(a)(iii).

What, if any, relief is appropriate for such a claim is not a pleadings-stage

determination.

Batty has failed to state a claim that GrafTech breached the Agreement since

September 1, 2018. Batty’s claim of breach under Section 2(a)(iii) with respect to

this time period is dismissed without prejudice.

5. Non-Parties to the Contract
Defendants argue that the Court should dismiss Count IV as to certain

Defendants. For the purposes of these arguments, the Court takes judicial notice of

filings with the Delaware Secretary of State, which are not subject to dispute. 31

UCAR Carbon changed its name to GrafTech International Holdings Inc. in

2007. 32 Because UCAR Carbon is GrafTech, and not a separate or independent

30
Pl.’s Ans. Br. at 37 (“It remains to be seen whether the health benefits GrafTech
International selected for Plaintiff (a change of providers) as of September 1, 2018—when
COBRA ended on August 31, 2018—are equivalent.”).
31
In re Baxter Int’l, Inc. S’holders Litig., 654 A.2d 1268, 1270 (Del. Ch. 1995).
32
Dkt. 5, Transmittal Aff. of Eric D. Selden (“Selden Aff.”) Ex. 12 (Sec’y of State filing).
11
entity, 33 the name “UCAR Carbon” is struck from the caption as redundant.34

Athena merged with GrafTech in 2015; GrafTech is the surviving

corporation.35 When corporations merge under Delaware law, their separate

existences end 36 and the surviving corporation has all the rights and obligations of

the former corporations.37 Having no ongoing separate or distinct legal existence,

the constituent corporations to a merger cannot be sued after the merger has closed.38

33
See 6 William M. Fletcher et al., Fletcher Cyclopedia of the Law of Private Corporations
§ 2456, Westlaw (last up-dated Sept. 2018) (“A mere change in the name of a corporation
generally does not destroy the identity of the corporation, nor in any way affect its rights
and liabilities. A corporation that changes its name remains the same continuous corporate
entity.”).
34
Ct. Ch. R. 12(f) (“[U]pon the Court’s own initiative at any time, the Court may order
stricken from any pleading . . . any redundant . . . matter.”).
35
Selden Aff. Ex. 13 (Sec’y of State filing).
36
2 Edward P. Welch et al., Folk on the Delaware General Corporation Law § 259.01 at
9-142–43 (6th ed. 2019) (“In a merger, a constituent corporation that is not the surviving
entity continues as part of the surviving entity but no longer exists as a separate and distinct
legal entity.”); Beals v. Washington Int’l, Inc., 386 A.2d 1156, 1161 (Del. Ch. 1978)
(“Since by statute, corporate existence is terminated on the date of merger, a corporation
ceases to exist on merger for all purposes, including service of process, unless the
legislature provides otherwise.”); Fitzsimmons v. W. Airlines, Inc., 290 A.2d 682, 685 (Del.
Ch. 1972) (“It is thus a matter of statutory law that a Delaware corporation may not avoid
its contractual obligations by merger; those duties ‘attach’ to the surviving corporation and
may be ‘enforced against it.’ In short, the survivor must assume the obligations of the
constituent.”); Argenbright v. Phoenix Fin. Co. of Iowa, 187 A. 124, 126 (Del. Ch. 1936)
(“When a consolidation or merger has taken place under the statute, the old corporations
have their identity absorbed into that of the new corporation or the one into which they
were merged.”).
37
8 Del. C. § 259(a).
38
See Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Stauffer Chem. Co., 1991 WL 138431,
at *3 (Del. Super. July 15, 1991) (“[T]he separate corporate existence of Stauffer Basic
Chemical Holdings Inc. ceased on August 28, 1987, shortly before this action was filed,
when it was merged into Atkemix One Inc. Without legal existence, Stauffer Basic
12
Athena should therefore be removed as a defendant.

UCAR International assigned the Agreement to GrafTech as part of a

corporate reorganization in late 2010, as the Verified Complaint acknowledges.39

Defendants submit evidence reflecting that Batty consented to this assignment, 40 but

such evidence is not appropriately considered by the Court on a Rule 12(b)(6)

motion. Accordingly, Defendants’ motion as to UCAR International is denied.

BCP IV is GrafTech’s corporate parent. BCP IV is not alleged to have signed

the Agreement on which Batty’s claims are predicated, but BCP IV is a successor

for purposes of the Agreement, and expressly assumed GrafTech’s obligations under

the Agreement, according to Batty. 41 Defendants’ motion as to BCP IV is denied.

B. Non-Contractual Claims for Compensation
1. Count I: Specific Performance and Mandatory Injunction
Count I seeks specific performance and a mandatory injunction for breach of

contract. In substance, Count I seeks an order requiring Defendants to remedy the

contractual breaches identified in Count IV. The claims for contractual breach not

Chemical Holdings Inc. lacks capacity to sue or be sued.”). See also Damon Alarm Corp.
v. Am. Dist. Tel. Co., 304 F. Supp. 83, 84 (S.D.N.Y. 1969) (“Delaware law provides that
when a merger becomes effective the separate existence of all corporations except the
survivor shall cease to exist. Consequently, the moving defendant no longer exists and the
action cannot be maintained against it.” (internal citations omitted)).
39
Compl. ¶ 8.
40
Selden Aff. Ex. 11 (Nov. 15, 2010, letter reflecting Batty’s consent to assignment).
41
Pl.’s Ans. Br. Ex. E at 1.
13
dismissed by this decision, however, seek money damages only. Batty’s request for

specific performance and injunctive relief thus fails because Batty has an adequate

remedy at law. 42 Count I is dismissed.

2. Count II: Unjust Enrichment
Count II claims that Defendants have been unjustly enriched by Batty’s “over

thirty-four (34) years of dedicated and loyal service . . . to the Defendants.”43 Batty

contends “[i]t would be unjust to allow Defendants to retain such benefits without

recognizing the terms of the Agreement . . . .” 44 At oral argument, counsel for Batty

suggested that the unjust enrichment claim was necessary in the event that the Court

determined the Agreement does not provide Batty with all the rights he believes it

was intended to provide. 45

42
Messick v. Diamond State Truck Bros., Inc., 1980 WL 81865, at *1 (Del. Ch. Mar. 12,
1980) (“an accounting for interference with contract rights which actually seeks nothing
more than money damages, and which does not allege that the compilation of damages is
in any way complicated, sets forth a claim for which there is an adequate remedy at law
and thus one not within the jurisdiction of this Court”). See also Godwin v. Collins, 1869
WL 1008, at *13 (Del. Super. June 1869) (“Courts of Equity have never treated specific
performance as a merely alternative relief to that of damages at law, such as might be
resorted to at a plaintiff’s bare election; but they have always administered it only as a
supplementary remedy, in order to effect more complete justice in cases where damages
afford an inadequate redress.”).
43
Compl. ¶ 95.
44
Id. ¶ 96.
45
Oral Arg. Tr. at 73:13–22.
14
 The Verified Complaint must allege the five elements of unjust enrichment to

survive the motion to dismiss: “(1) an enrichment, (2) an impoverishment, (3) a

relation between the enrichment and impoverishment, (4) the absence of

justification, and (5) the absence of a remedy provided by law.” 46 A necessary

consequence of the fifth factor—absence of a legal remedy—is that this Court

dismisses unjust enrichment claims where the parties’ relationship is

comprehensively governed by a contract. 47 There are exceptions to the rule;48

however, “a right to plead alternative theories does not obviate the obligation to

provide factual support for each theory.” 49

46
Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).
47
Lyons Ins. Agency, Inc. v. Kirtley, 2019 WL 1244605, at *2 (Del. Super. Ct. Mar. 18,
2019) (“If the relationship between the parties is comprehensively governed by contract,
the contract alone must provide the measure of the plaintiff’s rights, and a claim for unjust
enrichment will be denied.”); Nemec v. Shrader, 2009 WL 1204346, at *6 (Del. Ch.
Apr. 30, 2009), aff’d on other grounds, 991 A.2d 1120 (“Delaware courts . . . have
consistently refused to permit a claim for unjust enrichment when the alleged wrong arises
from a relationship governed by contract.”) (citing Res. Ventures, Inc. v. Res. Mgmt. Int’l,
Inc., 42 F. Supp. 2d 423, 440 (D. Del. 1999) and ID Biomedical Corp. v. TM Techs., 1995
WL 130743, at * 15 (Del. Ch. Mar. 16, 1995) (“A party cannot seek recovery under an
unjust enrichment theory if a contract is the measure of the plaintiff’s rights.”)).
48
BAE Sys. Info. & Elec. Sys. Integration, Inc. v. Lockheed Martin Corp., 2009
WL 264088, at *8 (Del. Ch. Feb. 3, 2009) (“In some instances, both a breach of contract
and an unjust enrichment claim may survive a motion to dismiss when pled as alternative
theories for recovery.”).
49
Id. (“[Breach of contract and unjust enrichment theories] are factually
distinguishable . . . and, more importantly, do not stand for the proposition that an unjust
enrichment claim must survive a motion to dismiss when pled alternatively with a contract
claim that will move beyond the motion to dismiss stage.”).
15
 In this case, Batty provides no independent support for his unjust enrichment

claim. He merely contends that it would be unjust for Defendants, having received

the benefit of his loyal employment, to fail to deliver him his contractual expectation

under the Agreement. Unjust enrichment is “the unjust retention of a benefit” in

contravention of “the fundamental principles of justice or equity . . . .” 50 Here, no

recourse to fundamental principles is necessary. The fulcrum of Batty’s request for

relief is the Agreement, and it is on the terms of the Agreement that the Verified

Complaint will pivot Batty to success or not. Count II is dismissed.

3. Count III: Promissory Estoppel
Count III claims promissory estoppel. Batty articulates the basis for this claim

as follows: “Defendants repeatedly made assurances in SEC filings and e-mails to

[Batty] that Defendants would honor the Agreement and all benefit and

compensation plans.” 51 Put differently, Batty claims that Defendants promised to

honor their contractual commitments. Promissory estoppel is designed to enforce a

contract where some contract formation problem would otherwise prevent

enforcement.52 Here, the parties do not dispute that the Agreement is binding and

50
Nemec, 991 A.2d 1120, 1130 (quoting Fleer Corp. v. Topps Chewing Gum, Inc., 539
A.2d 1060, 1062 (Del. 1988)).
51
Compl. ¶ 99.
52
Defs.’ Opening Br. at 35 (citing J.C. Trading Ltd. v. Wal-Mart Stores, Inc., 947
F. Supp. 2d 449, 457 (D. Del. 2013)).
16
enforceable. Rather, they dispute how its terms are to be interpreted. Under these

circumstances, dismissal of the promissory estoppel claim is appropriate. 53

4. Count VII: Ohio Prompt Payment Act
Count VII seeks liquidated damages under Section 4113.15 of the Ohio

Prompt Payment Act. A court cannot award liquidated damages under the Ohio

Prompt Payment Act where the employer has a basis for disputing the allegedly

unpaid compensation. 54 Because Defendants dispute that Batty is owed any of the

53
SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d 330, 348 (Del. 2013) (“Promissory
estoppel does not apply . . . where a fully integrated, enforceable contract governs the
promise at issue.”); Standard Gen. L.P. v. Charney, 2017 WL 6498063, at *15 n.118 (Del.
Ch. Dec. 19, 2017) (citing SIGA Techs., 67 A.3d at 348), judgment entered, (Del. Ch.
2018), and aff’d, 195 A.3d 16 (Del. 2018). See also Sun Life Assurance Co. of Canada v.
Wilm. Tr., Nat’l Ass’n, 2018 WL 3805740, at *3 (Del. Super. Aug. 9, 2018) (“Logically, if
the contract is found to be valid, estoppel would no longer be an available claim.” (citing
SIGA Techs., 67 A.3d at 348)); Alltrista Plastics, LLC v. Rockline Indus., Inc., 2013 WL
5210255, at *9 (Del. Super. Sept. 4, 2013) (“[I]f there is an enforceable contract,
promissory estoppel will apply only if the contract governs other aspects of the parties’
relationship and not when the relied-upon promises were incorporated into the contract.”).
Batty cites Ramone v. Lang, 2006 WL 905347 (Del. Ch. Apr. 3, 2006), for the assertion
that “contractual claims and promissory estoppel claims [may] persist[] simultaneously
pending discovery and ultimately trial . . . .” Pl.’s Ans. Br. at 47. In Ramone, however,
the parties disputed whether negotiations had led to a binding and enforceable contract.
2006 WL 905347, at *1. In this case, the parties do not dispute the enforceability of the
Agreement.
54
Ohio Rev. Code §§ 4113.15(B) (section applies where “wages remain unpaid for thirty
days beyond the regularly scheduled payday . . . and no contest[,] court order or dispute of
any wage claim including the assertion of a counterclaim exists accounting for
nonpayment . . . .”); Jones v. Select Indus. Corp., 2006 WL 1705201, at *6 (S.D. Ohio
June 16, 2006) (“where the employer disputes the wage claim, no liquidated damages are
due”); Fridrich v. Seuffert Constr. Co., 2006 WL 562156, at *4 (Ohio Ct. App. Mar. 9,
2006) (“Since an actual dispute existed as to [the plaintiff’s] unused vacation pay, we find
[the defendant] is not liable for liquidated damages.”); Sutka v. Yazaki N. Am. Inc., 256 F.
Supp. 3d 677, 683 (E.D. Mich. 2017) (granting motion to dismiss against 4113.15 claim,
where court found relief was “not available under § 4113.15(B) when the underlying
17
unpaid wages he seeks, Batty is not entitled to liquidated damages under

Section 4113.15 of the Ohio Prompt Payment Act. Count VII’s request for

liquidated damages is dismissed.

In briefing Count VII, the parties focused on Batty’s claim for liquidated

damages under the Ohio Prompt Payment Act. If Batty purports to seek relief other

than liquidated damages through Count VII, within ten business days of the issuance

of this opinion, Batty shall submit a supplemental answering brief setting forth the

basis for any such request in 4,000 words or fewer. Defendants shall be entitled to

submit a supplemental reply brief of not more than 4,000 words within ten business

days thereafter. If Batty fails to submit briefing by this deadline, Count VII shall be

deemed dismissed in its entirety.

C. Attorneys’ Fees

1. Count V: Indemnification under the Agreement
Count V seeks attorneys’ fees and expenses under Section 9 of the Agreement,

which provides:

Fees and Expenses. The Company shall pay all legal fees
and related expenses incurred [1] by you as a result of your
termination following a Change in Control of the
Corporation or [2] by you in seeking to obtain or enforce
any right or benefit provided by this Agreement (including

unpaid wage claim is disputed by the employer.” The court distinguished cases refusing
to dismiss such claims by differentiating situations where a § 4113.15 claim was litigated
to enforce a clear right to wages from situations where the employer had genuinely disputed
the plaintiff’s entitlement to the wages sought).
18
 all fees and expenses, if any, incurred in contesting or
disputing any such termination or incurred by you in
seeking advice in connection therewith).55

This language entitles Batty to legal fees and related expenses in two

circumstances: first, “as a result of [Batty’s] termination following a change in

Control of the Corporation,” or second, “in seeking to obtain or enforce any right or

benefit provided by this Agreement.”56 Batty contends that both sets of

circumstances are present here, but he has failed to adequately plead the

circumstances under either.

First, Batty’s claim for fees “as a result of [his] termination following a

change in Control of the Corporation” fails because Batty has not pled that he

incurred fees and expenses as a result of those events. Under the language of

Section 9, it is not sufficient that Batty was terminated. Nor is it sufficient that a

change in control occurred. Rather, Batty must plead a causal connection between

the termination event and the attorneys’ fees. Batty’s sole allegation in support of

this causal factor states: “[Batty] has incurred significant legal fees and expenses as

a result of his termination (resignation) . . . .” 57 This conclusory language does not

55
Compl. Ex. A § 9.
56
Id.
57
Compl. ¶ 117.
19
support the inference of a causal connection. 58 There are also no well-pleaded facts

from which the Court could reasonably infer the necessary causal connection. To

the contrary, the Verified Complaint alleges that Batty resigned for good reason, and

Defendants never challenged his resignation. The only reasonable inference that can

be made from the allegations is that the termination did not give rise to legal fees

and expenses.

Second, at this stage, Batty is not entitled to costs and attorneys’ fees “in

seeking to obtain or enforce any right or benefit provided by” the Agreement.

Indemnification and advancement are distinct legal rights.59 Both rights entitle a

covered person to costs and attorneys’ fees, but they accrue at different times.

Indemnification rights accrue “upon the conclusion of a matter or upon resolution of

one or more claims.” 60 Advancement is the right to payment of costs and fees

incurred in connection with certain claims before those claims are resolved.

58
In re Gen. Motors (Hughes), 897 A.2d at 168 (“A trial court is not . . . required to accept
as true conclusory allegations without specific supporting factual allegations.”) (quotation
marks omitted).
59
See Emerging Europe Growth Fund, L.P. v. Figlus, 2013 WL 1250836, at *4 (Del. Ch.
Mar. 28, 2018) (“[A]dvancement and indemnification, although related, are ‘distinct types
of legal rights.’”) (quoting Senior Tour Players 2017 Mgmt. Co. v. Golftown 207 Hldg.
Co., 853 A.2d 124, 128 (Del. Ch. 2004)).
60
William D. Johnston et al., Indemnification and Insurance for Directors and Officers,
54-3rd Corporate Practice Portfolio Series § III.A.1 at A-17 (BNA 2014) [hereinafter
“Johnston, Indemnification”] (emphasis added).
20
Advancement rights accrue “prior to the end of the matter or resolution of certain

claims.” 61 Batty seeks advancement, not indemnification.

Section 9 creates a right to indemnification, not advancement. To create a

right to payment of costs and attorneys’ fees in advance of final determination of the

underlying claims, contracting parties use variants of the word “advance” or phrases

such as “as incurred.” 62 Section 9 does not contain any of these phrases, or any

comparable language indicating an intent to pay Batty fees in advance of the final

disposition of the underlying claims. Batty argues that the phrase “in seeking” in

Section 9 creates a right to advancement. Much like similar phrases commonly

found in indemnification provisions—such as “in defending” or “in connection

with”63—the phrase “in seeking” refers to the category of covered expenses (i.e.,

expenses incurred “in seeking”), not the time at which the right to obtain payment

for such expenses accrues.

61
Id. (emphasis added).
62
See, e.g., Martinez v. Regions Fin. Corp., 2009 WL 2413858, at *13 (Del. Ch.
Aug. 6, 2009) (recognizing a right to advancement where the governing provision required
the company “to pay as incurred . . . all legal fees and expenses”) (emphasis added);
O’Brien v. IAC/Interactive Corp., 2009 WL 2490845, at *10 (Del. Ch. Aug. 14, 2009)
(enforcing a right to advancement where the provision at issue required the company to
“advance all Costs to any Indemnitee incurred . . . .” (emphasis added)).
63
See, e.g., Johnston, Indemnification, Sample Board Advancement and Indemnification
Provisions B-401 & B-501.
21
 Under Delaware law, “[i]ndemnification claims . . . do not accrue until the

underlying claim is finally decided.”64 Batty’s rights under Section 9, therefore, do

not accrue until an underlying claim is finally decided. Accordingly, Count V is

dismissed without prejudice.

2. Count VI: Indemnification Under 8 Del. C. § 145 and
GrafTech’s Corporate Documents
Count VI seeks indemnification under GrafTech’s bylaws, charter, and

Section 145 of the Delaware General Corporation Law. Like Batty’s contractual

claim for fees and expenses, Count VI fails to state a claim.

Section 145 of the Delaware General Corporation Law limits the extent to

which GrafTech may provide advancement and indemnification in its corporate

documents. Sections 145(a) and 145(b) permit corporations to indemnify former

officers for claims brought “by reason of the fact” that they served as officers.65 The

indemnification provisions in both GrafTech’s certificate of incorporation and

64
LaPoint v. AmerisourceBergen Corp., 970 A.2d 185, 198 (Del. 2009). Further, “[i]n a
contract such as the [merger agreement here], in which one party agrees to indemnify the
other for damages, including attorneys’ fees, arising from that party’s breach of the
contract, the term ‘indemnity’ has a distinct legal meaning that permits the party seeking
indemnification to bring a separate cause of action for indemnification after first bringing
a successful action for breach of the contract.” Id. at 197–98.
65
8 Del. C. § 145(a)–(b).
22
bylaws reference Section 145 and contain the “by reason of the fact” requirement,

as they must. 66

Delaware courts have interpreted “by reason of the fact” to require “a nexus

or causal connection between [a claim] and one’s official corporate capacity.” 67 The

“by reason of the fact” standard is not met where the claims at issue concern “a

specific and personal contractual obligation that does not involve the exercise of

judgment, discretion, or decision-making authority on behalf of the corporation.” 68

The claims in this case concern specific and limited contractual obligations—

those set forth in the Agreement. This litigation does not challenge Batty’s exercise

of judgment, discretion, or decision-making authority on behalf of the corporation.

Accordingly, the claims are not “by reason of the fact” that Batty served in a covered

capacity.

66
Selden Aff. Ex. 14 (Amended and Restated Certificate of Incorporation of Graftech
International Ltd.) Art. VII § 2; Selden Aff. Ex. 15 (Bylaws of GrafTech International Ltd.)
Art. XIII §§ 1, 3.
67
Homestore, Inc. v. Tafeen, 888 A.2d 204, 213–14 (Del. 2005).
68
Paolino v. Mac Sec. Int’l, Inc., 985 A.2d 392, 403 (Del. Ch. 2009). See also Cochran v.
Stifel Fin. Corp., 809 A.2d 555, 562 (Del. 2002) (“When a corporate officer signs an
employment contract committing to fill an office, he is acting in a personal capacity in an
adversarial, arm[’]s-length transaction. To the extent that he binds himself to certain
obligations under that contract, he owes a personal obligation to the corporation. When
the corporation brings a claim and proves its entitlement to relief because the officer has
breached his individual obligations, it is problematic to conclude that the suit has been
rendered an ‘official capacity’ suit subject to indemnification under § 145 and
implementing bylaws. Such a conclusion would render the officer’s duty to perform his
side of the contract in many respects illusory.”), aff’g in part, rev’g in part on other
grounds, 2000 WL 184767, at *6 (Del. Ch. Dec. 13, 2000).
23
III. CONCLUSION
Defendants’ Motion to Dismiss the Verified Complaint as to Count IV is

GRANTED IN PART and DENIED IN PART, as discussed above. As to Counts I

through III and V through VI, the motion is GRANTED. As to Count VII, the

motion is GRANTED IN PART and subject to further briefing in part, as discussed

above. Defendants UCAR Carbon and Athena are struck from the caption.

24