Skye Mineral Investors, LLC and Clarity Cooper, LLC v. DXS Capital (U.S.) Limited

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SKYE MINERAL INVESTORS, LLC )
and CLARITY COPPER, LLC, directly )
and derivatively on behalf of SKYE )
MINERAL PARTNERS, LLC, )
)
Plaintiffs, )
)
v. ) C.A. No. 2018-0059-JRS
)
DXS CAPITAL (U.S.) LIMITED, )
PACNET CAPITAL (U.S.) LIMITED, )
MARSHALL COOPER, SANJIV )
NORONHA, WATERLOO STREET )
LIMITED, LIPPO CHINA )
RESOURCES LTD., MICHAEL )
RIADY, STEPHEN RIADY, and )
NOBLE AMERICAS CORP., )
)
Defendants, )
)
and )
)
SKYE MINERAL PARTNERS LLC, )
)
Nominal Defendant. )

MEMORANDUM OPINION

Date Submitted: November 25, 2019
Date Decided: February 24, 2020
Rudolf Koch, Esquire and Kevin M. Gallagher, Esquire of Richards, Layton &
Finger, P.A., Wilmington, Delaware and Jason Cyrulnik, Esquire, Edward Normand,
Esquire and Marc Ayala, Esquire of Boies Schiller Flexner LLP, Armonk, New
York, Attorneys for Plaintiffs Skye Mineral Investors, LLC and Clarity
Copper, LLC.

Thomas W. Briggs, Jr., Esquire and Aubrey J. Morin, Esquire of Morris, Nichols,
Arsht & Tunnell LLP, Wilmington, Delaware and Pedro A. Jimenez, Esquire,
Kevin C. Logue, Esquire, Kevin P. Broughel, Esquire, Nicholas Bassett, Esquire,
Katherine K. Solomon, Esquire, Katherine Rookard, Esquire of Paul Hastings LLP,
New York, New York, Attorneys for Defendants DXS Capital (U.S.) Limited,
PacNet Capital (U.S.) Limited, Marshall Cooper, Sanjiv Noronha, Waterloo Street
Limited, Lippo China Resources Ltd., Michael Riady and Stephen Riady.

Brett M. McCartney, Esquire and Elizabeth A. Powers, Esquire of Bayard, P.A.,
Wilmington, Delaware and James W. Anderson, Esquire, Walter A. Romney, Jr.,
Esquire and Shaunda L. McNeill, Esquire of Clyde Snow & Sessions, Salt Lake City,
Utah, Attorneys for Defendant Noble Americas Corp.

SLIGHTS, Vice Chancellor
 This dispute is among members of a Delaware limited liability company,

Skye Mineral Partners, LLC (“SMP” or the “Company”). SMP’s majority members

allege that its minority members orchestrated a scheme wrongfully to divest SMP of

its lone asset, a wholly owned operating subsidiary, CS Mining, LLC (“CSM”),

by driving CSM into bankruptcy and then buying its assets at a steep discount in an

auction sale conducted under Section 363 of the United States Bankruptcy Code.

According to SMP’s majority members, the scheme worked; their substantial

investment in SMP has been looted by their one-time partners.

The scenario described above, at first glance, lacks intuitive congruence.

How do minority members possess the means to ace the majority members out of

their investment? The answer, according to Plaintiffs, lies in SMP’s contractual

governance scheme. SMP’s constitutive documents granted the minority members

certain blocking rights. It is alleged the minority members exercised those rights to

drive CSM into bankruptcy, and then pounced on the opportunity to acquire CSM’s

valuable assets on the cheap when they came up for sale as part of the debtor’s

bankruptcy plan.

This scheme to divest SMP of its interests in CSM has prompted the majority

members to bring a fifteen-count complaint in this Court. In their Second Amended

Verified Complaint (the “Complaint”), now the operative complaint, Plaintiffs bring

various iterations of claims against the minority members for breach of contract,

1
breach of the implied covenant of good faith and fair dealing (the “implied

covenant”), breach of fiduciary duty, aiding and abetting breach of fiduciary duty,

tortious interference with contract, civil conspiracy and fraud.1 They also bring

claims for fraud, breach of contract, breach of the implied covenant and aiding and

abetting breach of fiduciary duty against one of CSM’s lenders for assisting the

minority members in their scheme to chouse Plaintiffs out of their ownership

interests in CSM.

All Defendants have moved to dismiss. Before getting to whether Plaintiffs

have well pled their various claims, Defendants maintain that Plaintiffs confront a

legal challenge at the threshold because claims belonging to the bankrupt CSM were

discharged and released as part of the confirmation of CSM’s bankruptcy sale.

According to Defendants, all of the claims asserted here belonged to CSM, have now

been released and cannot be revived on the pretense that SMP and its members have

also suffered harm. Beyond this potentially dispositive threshold barrier, Defendants

argue the Complaint fails for want of proper service and personal jurisdiction over

certain Defendants and for failure to state viable claims under Court of Chancery

Rule 12(b)(6).

1
D.I. 52.

2
 For reasons I explain below, I reserve my ruling on Defendants’ service and

related jurisdictional defenses for another day. As for Defendants’ Rule 12(b)(6)

arguments, my ruling is a mixed bag. Plaintiffs have failed to plead viable claims

against CSM’s lender. Their attempt to hold individuals and entities who sit atop

the minority members’ ownership structure directly accountable for the minority

members’ actions based on strained agency theories also fails as a matter of law.

Plaintiffs, however, have adequately stated claims against the minority members of

SMP for intentionally using their blocking rights to cause harm to SMP in a manner

that was not exculpated by the clear terms of SMP’s constitutive documents. This

alleged conduct supports both the direct and derivative contract-based and fiduciary-

based claims asserted against the minority members in the Complaint. Plaintiffs

have also well pled that entities and individuals within the minority members’

ownership group conceivably aided and abetted the fiduciary breaches. They have

not, however, met the heightened burden imposed by our rules to plead fraud. Thus,

as explained below, the Motions to Dismiss must be granted in part and denied in

part.

I. BACKGROUND

I have drawn the facts from the allegations in the Complaint, documents

incorporated by reference or integral to the Complaint and judicially noticeable

3
facts.2 In resolving the Motions to Dismiss, I accept as true the Complaint’s well-

pled factual allegations and draw all reasonable inferences in Plaintiffs’ favor.3

A. Parties and Relevant Non-Parties

SMP is a Delaware LLC.4 Virtually all of SMP’s assets consisted of its

ownership interest in CSM.5 At all times relevant here, SMP owned more than 99%

of CSM and was its managing and majority member.6

SMP’s Board of Managers (the “Board”) comprised three members, each

appointed by SMP’s members.7 Plaintiffs, Skye Mineral Investors, LLC (“SMI”)

and Clarity Copper, LLC (“CC”) appointed two Board members while Defendants,

DXS Capital (U.S.) Limited (“DXS”) and PacNet Capital (U.S.) Limited

2
Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 (Del. 2004) (noting that
the Court may consider documents “incorporated by reference” or “integral” to the
complaint on a motion to dismiss).
3
Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006).
4
See Defs.’ Mot. to Dismiss Pls.’ Second Verified Am. Compl. Pursuant to Ct. Ch. R.
12(b)(2), 12(b)(4), 12(b)(5) and 12(b)(6) (D.I. 60) (“MTD”) Ex. 1 (“SMP Agreement”),
Recital D. This Court may take judicial notice of Exhibits 1–12 attached to the MTD as
documents publicly filed in the courts of other jurisdictions. See In re Career Educ. Corp.
Deriv. Litig., 2007 WL 2875203, at *9 (Del. Ch. Sept. 28, 2007); see also In re Gardner
Denver, Inc., 2014 WL 715705, at *4 (Del. Ch. Feb. 21, 2014) (observing that, under
Rule 12(b)(6), a court may consider documents integral to a complaint without converting
a motion to dismiss into a motion for summary judgment).
5
Compl. ¶ 33.
6
Compl. ¶ 34.
7
Compl. ¶ 23.

4
(“PacNet”), appointed the third, Defendant, Marshall Cooper.8 Cooper is an

individual residing in Jakarta, Indonesia.9

Defendant, Sanjiv Noronha, is an individual residing in Singapore.10

Plaintiffs allege Noronha is “affiliated” with Defendant, Lippo China Resources Ltd.

(“LCR”), and “represented” Defendant, Waterloo Street Limited (“Waterloo”), in

various matters relating to the claims.11

Defendant, Stephen Riady, is an individual residing in Singapore. 12 He is a

son of non-party, Mochtar Riady (the alleged “patriarch” of the Riady family), and

is the Executive Chairman of LCR.13 Defendant, Michael Riady, is an individual

residing in Florida.14 He is a grandson of Mochtar Riady.15

8
Compl. ¶¶ 23, 27, 37.
9
Compl. ¶ 27.
10
Compl. ¶ 28.
11
Compl. ¶¶ 28, 123.
12
Compl. ¶ 30.
13
Id.
14
Compl. ¶ 29.
15
Id.

5
 The Complaint refers to Defendants DXS, PacNet, Waterloo, LCR, Stephen

Riady, Michael Riady, Noronha and Cooper as the “Lippo Group” or “Lippo.”16

Under the umbrella of the “Lippo Group,” the Complaint describes a hierarchical

structure established to manage the Riady family’s investments.17 Together, the

Lippo Group “generates approximately $8 billion in revenue annually,” contributing

to Mochtar Riady’s $2.3 billion personal net worth.18

Within the Lippo Group, the Complaint alleges (on information and belief)

that “the Riady family, and/or its affiliates and controlled parties” own and control

LCR.19 It is also alleged that Cooper “has been an employee of the Lippo Group for

18 years” and “reported to” Michael Riady and LCR’s board of directors.20 Noronha

“worked for” and “reported to” Stephen Riady.21 According to Plaintiffs, Cooper,

Noronha, PacNet and DXS are “agents” of Michael Riady, Stephen Riady and

16
Compl. ¶ 2. I refer to the Lippo Defendants as “Lippo” or the “Lippo Group.” I refer to
all Defendants (including Noble Americas Corp.) collectively as “Defendants.”
17
Compl. ¶¶ 10, 12–14, 128.
18
Compl. ¶ 82.
19
Compl. ¶ 26.
20
Compl. ¶¶ 128(a), (c), (g) (“Michael Riady had the ability to fire Cooper.”),
(h) (“Cooper . . . would not go against [the Lippo Group’s] direction.”).
21
Compl. ¶ 128(n).

6
LCR.22 As for Cooper, the Complaint alleges he made clear to the other members

of the Board that he would need to confer with “the family” before making any

decision respecting SMP.23

Defendant, Noble Americas Corp. (“Noble”), was a lender to CSM. It is

alleged that Noble’s loan to CSM was a necessary instrument in the Lippo Group’s

scheme to divest SMP of its ownership interests in CSM.24

For clarity, I illustrate the relevant entities and their relationship to each other

in the chart below:25

Remainder of Page Intentionally Left Blank

22
Compl. ¶ 137.
23
Compl. ¶ 128(h).
24
Compl. ¶¶ 50–51.
25
Chart compiled from Compl. ¶¶ 1, 9, 22–32, 34–35.

7
 B. The SMP Agreement

The operative foundational agreement for SMP is the Third Amended and

Restated Limited Liability Company Agreement (the “SMP Agreement”).26

I summarize the relevant provisions of that agreement below.

26
Compl. ¶ 36; MTD (D.I. 60) Ex. 1. The SMP Agreement is governed by Delaware law.
Compl. ¶ 36.

8
 1. Managers’ Fiduciary Duties

SMP is a manager-managed LLC.27 As a baseline, the SMP Agreement did

not eliminate SMP’s managers’ fiduciary duties. Instead, it provides, in relevant

part, “[e]xcept as otherwise set forth in this Agreement, a Manager has a fiduciary

duty to the Company and the Members that is the same as the duty that a director of

a Delaware corporation owes to a corporation and its stockholders.”28

In further refinement of the governance standard for managers, Section 5.1(f)

of the SMP Agreement makes clear that SMP’s managers’ duties are analogous to

those owed by directors of Delaware corporations with exculpatory charter

provisions as authorized under 8 Del. C. § 102(b)(7):

Each Manager will not be liable or obligated to the Members for any
mistake of fact or judgment . . . unless such act or failure to act involved
such Manager’s breach of fiduciary duty or a breach of this Agreement,
in which case such Manager will cease to be exempt from liability to
the Company and the other Members for any such loss to the same
extent such exemption from liability is not permitted by the General
Corporation Law of the State of Delaware [(the “DGCL”)]. A Manager
does not, in any way, guarantee the return of the Members’ Capital
Contributions or a Profit for the Members from the operations of the
Company. A Manager will not be responsible to any Member because
of a loss of their investment or a loss in operations unless such loss is
the result of such Manager’s breach of this Agreement, in which event
such Manager will cease to be exempt from liability to the Company

27
SMP Agreement § 5.1.
28
SMP Agreement § 5.1(g).

9
 and the other Members for any such loss to the same extent such
exemption from liability is not permitted by the [DGCL].29

With respect to corporate opportunities, the SMP Agreement provides that

SMP’s managers “may have other business interests.”30 Specifically, “[e]ach

Manager and its respective affiliates may, notwithstanding the existence of this

Agreement, engage in whatever activities such Manager or its Affiliates may choose,

without having or incurring any obligation to offer any such interest in such activities

to the Company or to the Members.”31

2. Members’ Fiduciary Duties and Control Rights

As for the members of SMP, the SMP Agreement provides, “[i]n view of the

limited purposes of the Company, no Member or any of its Affiliates shall have any

fiduciary obligations with respect to the Company or to the other Members insofar

as making other investment opportunities available to the Company or to the other

Members.”32 Relatedly, SMP’s members can give or withhold, condition or delay

their “votes, approvals, or consents” in their “sole and absolute discretion.”33 This

29
SMP Agreement § 5.1(f).
30
SMP Agreement § 5.1(h).
31
SMP Agreement § 5.1(h).
32
SMP Agreement § 4.3 (emphasis supplied).
33
SMP Agreement § 4.6.

10
right is potent because Section 4.6(b) of the SMP Agreement prohibits SMP and

CSM from taking certain actions unless 75% of the holders of SMP’s outstanding

class A units approve.34 Among the acts requiring 75% approval are:

 Granting or pledging any security interest, lien or encumbrance;35

 Issuing units of any class to an existing member or a new member;36 and

 Entering into a merger or a sale of substantially all the Company’s assets37
(collectively, the “Blocking Rights”).

In short, given that together they held greater than 25% of SMP’s outstanding class

A units, DXS and PacNet, even as minority members, possessed significant control

rights under the SMP Agreement.38

On top of the Blocking Rights, DXS negotiated additional negative control

rights. Relevant here, with the exception of a few narrow carve outs, the Company

could not approve an annual budget or take on material debt without DXS’s

approval.39

34
SMP Agreement § 4.6(b)(i); SMP Agreement (definition of “Requisite Holders”).
35
SMP Agreement § 4.6(b)(i)(7).
36
SMP Agreement § 4.6(b)(i)(10).
37
SMP Agreement § 4.6(b)(i)(12), (13).
38
See Compl. ¶ 35 (DXS and PacNet held 13.8% and 14.27% of the Company’s class A
units.).
39
SMP Agreement § 4.6(b)(ii); Compl. ¶ 44.

11
 3. Observer Rights

The SMP Agreement gave DXS special observer rights. Specifically, DXS

could “appoint a representative” who would “attend all meetings of the [Board] in a

nonvoting observer capacity.”40 In exchange for this right, DXS promised to secure

its representative’s promise “to hold in confidence and trust all information provided

to it or learned by it in connection with its rights under this Agreement.” 41

DXS appointed Noronha as its “representative.”42

4. Member Loans

Section 3.5 of the SMP Agreement authorized the Board to cause the

Company to borrow from the members.43 In the event any member made a loan to

the Company, the other members had a right to participate in the loan on a pro rata

basis.44 As alleged, Section 3.5 requires Board authorization before “a member [can

be] a lender to the [C]ompany.”45

40
SMP Agreement § 5.1(l)(i).
41
SMP Agreement § 5.1(l)(ii).
42
Compl. ¶ 143.
43
SMP Agreement § 3.5.
44
SMP Agreement § 3.5.
45
Compl. ¶ 43.

12
 C. CSM’s Business Prior to the Alleged “Divestiture”

CSM owned valuable mineral deposits.46 Even so, SMP appreciated that 75%

of CSM’s mineral deposits would remain in the ground unless and until CSM

expanded its processing facility.47 To accomplish this required expansion of its

processing capacity, SMP and CSM initiated a capital project known as “Phase II.”48

In the run-up to Phase II, Cooper discovered key information regarding the full value

of CSM’s mineral deposits while acting as a SMP manager.49 Specifically, non-

party Newmont Mining advised Cooper that CSM possessed “world class” (albeit

untapped) mineral deposits worth at least $600 million.50 Even though he learned

this information as a member of the Board, Cooper shared it with only DXS and

PacNet; he kept it from SMI and CC.51

46
Compl. ¶¶ 48–49.
47
Compl. ¶ 49.
48
Id.
49
Compl. ¶ 71.
50
Id.
51
Id.

13
 D. The Noble Loan

In August 2014, Noble loaned $30 million to CSM (the “Noble Loan”)

to finance CSM’s Phase II capital project.52 The contract governing the Noble Loan

(the “NLA”) stated, in its recitals, that it was an agreement “by and between” CSM

(as borrower) and Noble (as lender).53 And CSM and Noble were the only

signatories to the NLA.54 Because it was a part of a broader transaction between

Noble, CSM and SMP, the NLA references SMP in its definition of “Loan Parties.”55

That definition, in turn, references other agreements to which SMP was a party.56

One of those separate agreements was the “Intercreditor Agreement” whereby SMP

agreed to subordinate its loans to CSM to the Noble Loan.57 Notwithstanding the

NLA’s references to other agreements and non-parties, Noble and CSM agreed that

“nothing in [the NLA], express or implied, shall be construed to confer upon any

52
MTD (D.I. 60) Ex. 8; Compl. ¶¶ 50–51.
53
NLA at CSMining0033526 (recitals).
54
NLA at CSMining0033580–81.
55
NLA § 1.01 (definition of “Loan Parties” and “Loan Documents”); Compl. ¶ 55.
56
NLA § 1.01 (definition of “Loan Parties” and “Loan Documents”).
57
Compl. ¶ 55; NLA §§ 1.01 (definition of “Loan Documents”), 8.01(m) (Under the NLA,
the voiding, repudiation or suspension of any Loan Document constituted an event of
default.).

14
Person (other than the parties hereto,[)] . . . any legal or equitable right, remedy or

claim under or by reason of [the NLA].”58

The NLA was not a typical commercial financing agreement in that Noble did

not extend credit under the NLA as a traditional lender but as the exclusive purchaser

of CSM’s copper.59 Because of the significant leverages Noble enjoyed as CSM’s

senior secured creditor and exclusive customer, Noble was prohibited from selling

the Noble Loan to a member of the Lippo Group (the “Insider Sale Prohibition”).60

SMP’s members negotiated the Insider Sale Prohibition specifically “to prevent one

of SMP’s members from benefitting from a default by [CSM].”61

As explained below, CSM fell behind on its Noble Loan payments. This

delinquency eventually prompted Noble to declare an event of default.62 Under the

NLA, upon declaring an event of default, Noble could accelerate payments,

foreclose on CSM’s assets or sell the Noble Loan without CSM’s consent.63

Following Noble’s declaration of default, on December 7, 2015, CSM and Noble

58
NLA § 9.07(a).
59
Compl. ¶ 56.
60
Compl. ¶ 92.
61
Id.
62
Compl. ¶ 95.
63
Id.; NLA § 8.02.

15
negotiated a fourth amendment to the NLA (the “Fourth Amendment”) to forestall

Noble’s acceleration of the debt.64 The Fourth Amendment, in turn, waived the

Insider Sale Prohibition.65 Thus, once CSM defaulted and the parties signed the

Fourth Amendment, Noble was free to sell the Noble Loan to whomever it wanted,

including members of the Lippo Group.66

E. The Lippo Group’s Alleged Scheme

Plaintiffs allege the Lippo Group hatched a scheme in 2014 to wrest control

of SMP’s valuable assets from CC and SMI.67 Step one of the scheme began in late

2014, when DXS and PacNet began to block “reasonable financing proposals” for

SMP.68 For instance, they blocked a pro rata equity round for SMP in 2015 despite

knowing that SMP needed capital to fund CSM’s obligations under the NLA and

Phase II.69 SMI and CC tried to save the Company with a $5 million equity

investment.70 In response, DXS and PacNet filed a declaratory judgment action in

64
Compl. ¶¶ 93, 98, 102.
65
Compl. ¶ 93.
66
Id.
67
Compl. ¶ 9.
68
Compl. ¶ 57.
69
Id.
70
Compl. ¶ 64.

16
this court, where they sought to enforce the Blocking Rights in order to prevent the

$5 million investment.71 In their complaint, DXS and PacNet alleged, “pursuant to

the SMP [Agreement], DXS and PacNet’s prior written approval is required before

(i) SMP issues any Membership interest to any existing Member or new Member of

SMP, or (ii) SMP or [CSM] enters into any agreement with respect to incurring

significant debt or pledging its assets as security to any creditor.”72

With step one of the scheme in full swing, and CSM withering on the vine,

the Lippo Group initiated step two in the summer of 2015.73 As revealed in an

October 2015 email from Cooper to Noronha (the “Cooper/Noronha Email”), the

Lippo Group commenced discussions with Noble to buy the Noble Loan

notwithstanding the Insider Sale Prohibition:

Then I would at request of Noble, consider buying that debt at a large
discount, which the [Riady] family would then have full security and
take some upside on debt. Then we can sit back and hold our position
and when this collapses we have the first lien and can buy it out of
bankruptcy very cheap.74

71
Id.
72
Compl. ¶ 45 (citing Verified Compl. for Declaratory J. ¶ 30, DXS Capital (U.S.) Ltd. v.
Skye Mineral Inv’rs LLC, C.A. No. 10794-VCG (Del. Ch. May 15, 2015)).
73
Compl. ¶¶ 69, 77.
74
Compl. ¶ 80 (emphasis in original).

17
 Because of CSM’s deteriorating condition, Noble notified SMP and all of its

members that it would be interested in selling the Noble Loan.75 But, “contrary to

what [Noble] actually had been negotiating with the Lippo Group behind Plaintiffs’

backs,” Noble did not tell Plaintiffs “that it would be willing to [sell its loan] at a

substantial discount.”76 Plaintiffs now allege Noble was motivated to keep its

discussions with the Lippo Group hidden from Plaintiffs because Noble had

significant commercial relationships with the Lippo Group apart from its dealings

with SMP and CSM.77

Noble had loaned real money to CSM.78 When CSM defaulted, therefore, it

came as little surprise that Noble insisted that CSM agree to the Fourth

Amendment.79 Plaintiffs now dispute whether it was in Noble’s interest actually to

foreclose on CSM’s assets, but Noble at least had the right to accelerate the

$30 million loan and foreclose—which would have doomed CSM.80

75
Compl. ¶ 82.
76
Id.
77
Id.
78
Compl. ¶ 50.
79
Compl. ¶¶ 93, 95.
80
NLA § 8.02; Compl. ¶¶ 96, 102.

18
 On December 7, 2015, CSM and Noble executed the Fourth Amendment,

thereby waiving CSM’s event of default while also deleting the Insider Sale

Prohibition from the NLA.81 At about this time, Cooper “flat-out lied” when he

stated to the other Board members that he was not involved in any discussions to

purchase the Noble Loan.82 Even so, Plaintiffs knew this was false given the Lippo

Group’s prior revelation “that they had been negotiating with Noble” as early as

2015.83

While the Fourth Amendment gave SMP a reprieve from the impending Noble

Loan default, DXS and PacNet advanced their scheme to the third step by inducing

SMI and CC to infuse more equity capital into SMP in order to keep CSM afloat

while intending to seize CSM’s assets when it “collapsed.”84 In late 2015, SMI and

CC invested another $6.8 million in SMP.85 They agreed to make this investment

knowing the Lippo Group had been in discussions to acquire the Noble Loan and

that the Insider Sale Prohibition was gone.86

81
NLA at CSMining0033692–93; Compl. ¶ 102.
82
Compl. ¶ 104.
83
Compl. ¶ 66.
84
Compl. ¶¶ 91, 107.
85
Id.
86
Compl. ¶¶ 54, 66–68.

19
 On December 24, 2015, Plaintiffs learned Lippo was on the brink of acquiring

the Noble Loan when they were “mistakenly” copied on an email between Noble

and the Lippo Group.87 Plaintiffs objected and sought to stop the sale, but on

December 31, 2015, Noble sold the Noble Loan to Waterloo (a Lippo affiliate) for

$23 million, a substantial loss for Noble.88 LCR (an entity for which Stephen Riady

served as Executive Chairman) specifically approved Waterloo’s acquisition of the

Noble Loan.89

After acquiring the Noble Loan, Noronha represented Waterloo in its dealings

with CSM.90 Noronha, in turn, “worked for” and “reported to” Stephen Riady.91

Through this web of relationships, Plaintiffs allege the “Lippo Group” caused “its

agents,” Cooper and Noronha, to take harmful actions in furtherance of the

divestiture scheme that were not approved by SMP’s Board.92 Specifically, Cooper

and Noronha:

87
Compl. ¶ 108.
88
Compl. ¶ 111.
89
Compl. ¶¶ 30, 128(p)
90
Compl. ¶ 123.
91
Compl. ¶ 128(n).
92
Compl. ¶ 115.

20
  “directed SMP management how to spend [] funds to advance Lippo’s
self-interest[]” and “depress[ed] the value and financial abilities of
SMP”93 and

 “instructed SMP management” to cause CSM to ramp-up borrowing
under the Noble Loan and directed SMP’s management “as to which
account payables to satisfy” (collectively, the “Unauthorized Acts”).94

The Unauthorized Acts improved the Lippo Group’s position in CSM’s looming

bankruptcy.95 And, as the Lippo Group had planned, CSM entered bankruptcy in

June 2016.96

F. The CSM Bankruptcy

On August 18, 2017, the United States Bankruptcy Court for the District of

Utah (the “Utah Bankruptcy Court”) issued an order (the “Sale Order”) approving

the sale of CSM’s assets under Section 363 of the Bankruptcy Code.97 Non-party,

Tamra Mining Company, LLC (the “Buyer”), acquired all of CSM’s assets for

93
Compl. ¶¶ 115 (alleging the Lippo Group caused its agents to take harmful actions such
as “substantial staff reductions, directing payments to specific vendors, suggested
modifications to equipment loans, and material changes to operational plans”), 121
(alleging Cooper and Noronha “instructed SMP management to cause CSM to draw down
the full principal amount of the Noble Loan and caused CSM to undertake a $5 million
high-interest-rate loan” and then “directed SMP management how to spend the funds”).
94
Compl. ¶¶ 116, 120, 121–22, 128(r).
95
Compl. ¶¶ 116, 120, 121–22.
96
Compl. ¶ 126.
97
11 U.S.C. § 363; Transmittal Aff. of Aubrey J. Morin in Supp. of Defs.’ Opening Br. in
Supp. of Mot. to Dismiss Pls.’ Second Am. Verified Compl. Pursuant to Ct. Ch. R.
12(b)(2), 12(b)(4), 12(b)(5) and 12(b)(6) (“Morin Aff.”) (D.I. 60) Ex. 2 (the “Sale Order”).

21
$40 million in a court-supervised sale.98 The Buyer is not a party to this litigation,

but it is affiliated with the Lippo Group.99

The Sale Order provided that the Buyer purchased CSM’s assets “free and

clear of all Interests of any kind or nature whatsoever.”100 Among the purchased

assets were any claims CSM had against Lippo.101 But the Sale Order said nothing

about claims SMP might have against Lippo. Indeed, during the hearing to approve

the Sale Order, the parties represented to the Utah Bankruptcy Court that the Sale

Order contained “no releases with respect to any direct claims at any other third

parties or any impairment of any other third party’s legal rights and recoveries

against anyone else in connection with this particular sale of claims.”102

G. Procedural Posture

Plaintiffs filed their original complaint on January 24, 2018.103 Later, on

February 16, 2018, PacNet, DXS and Cooper removed the case to the United States

98
Compl. ¶ 126.
99
Id.
100
Sale Order at 21.
101
Morin Aff. Ex. 3 at 96.
102
Morin Aff. Ex. 3 at 100.
103
D.I. 1.

22
Bankruptcy Court for the District of Delaware (the “Delaware Bankruptcy

Court”).104

Meanwhile, the Utah Bankruptcy Court had entered the Sale Order, but

litigation between Lippo and Plaintiffs dragged on in that court as well.

On February 15, 2018, the Buyer sought to enjoin Plaintiffs from proceeding in this

court on grounds that the claims asserted here are barred by the Sale Order.

On June 1, 2018, the Utah Bankruptcy Court held it lacked jurisdiction to issue such

an injunction.105 And, on December 3, 2018, the Delaware Bankruptcy Court

remanded the case to this court.106

On January 14, 2019, Plaintiffs amended their original complaint.107 After

Defendants filed Motions to Dismiss, Plaintiffs filed the now operative

Complaint.108 Defendants have again filed Motions to Dismiss under Court of

Chancery Rules 12(b)(2), 12(b)(4), 12(b)(5) and 12(b)(6).109

104
D.I. 11.
105
In re CS Mining, LLC, 2018 WL 2670457, at *8–9 (Bankr. D. Utah. June 1, 2018).
106
D.I. 17.
107
D.I. 18.
108
D.I. 52.
109
D.I. 60.

23
 II. ANALYSIS

While the arguments raised in the Motions to Dismiss are multi-layered, as

one might expect when several defendants seek dismissal of a fifteen-count

Complaint, the arguments can be placed into four broad categories:

 Stephen Riady and Noronha have not been properly served, so the
claims against them should be dismissed under Rule 12(b)(4) & (5);110

 This Court lacks personal jurisdiction over Noronha, LCR, Waterloo,
Stephen Riady and Michael Riady, so the claims against them should
be dismissed under Rule 12(b)(2);111

 Plaintiffs have failed to meet the heightened pleading standard of Rule
9(b) required to state a claim for fraud;112

 Plaintiffs’ other claims should be dismissed under Rule 12(b)(6) for
failure to plead viable claims.113

During the hearing on Defendants’ Motions to Dismiss, I observed that

Lippo’s Motions concerning inadequate service of process had not been properly

110
Opening Br. in Supp. of Defs.’ Mot. to Dismiss the Verified Second Am. Compl.
(“DOB”) (D.I. 60) at 10–12.
111
DOB at 13–17.

Def. Noble Am. Corp.’s Opening Br. in Supp. of Mot. to Dismiss Second Am. Verified
112

Compl. (“NOB”) (D.I. 59) at 36; DOB at 42.
113
DOB at 18–58. I note that Lippo does not raise Rule 23.1 in the Motions to Dismiss
even though Plaintiffs purport to bring derivative claims on behalf of SMP. As a result,
I do not analyze whether the Complaint meets the heightened pleading standards of
Rule 23.1.

24
joined for decision.114 That issue turns on a foreign sovereign’s legal standards

concerning which the record, as it stands, contains directly competing affidavits

from foreign law experts.115 I am reserving judgment on Lippo’s Rule 12(b)(4) and

(5) Motions until the record on foreign law is further developed.116 I address the

remaining grounds stated in Defendants’ Motions below.

A. Personal Jurisdiction

The Lippo Group contends this Court lacks personal jurisdiction over

Noronha, Stephen Riady, Michael Riady, Waterloo and LCR.117 When responding

to a motion to dismiss under Court of Chancery Rule 12(b)(2), “the plaintiff bears

the burden of showing a basis for the court’s exercise of jurisdiction.”118 “In ruling

on a 12(b)(2) motion, the court may consider the pleadings, affidavits, and any

discovery record. If [as here] . . . no evidentiary hearing has been held, plaintiffs

114
See Tr. of Oral Arg. on Defs.’ Mot. to Dismiss (“Tr.”) (D.I. 95) at 109.
115
Tr. at 109.
116
See Germaninvestments AG v. Allomet Corp., 2020 WL 414426 (Del. Jan. 27, 2020)
(reversing trial court for failing to develop adequate record of foreign law before applying
that law to decide a motion to dismiss under Rule 12(b)(3)).
117
D.I. 60.
118
Konstantino v. AngioScore, Inc., 2015 WL 5770582, at *6 (Del. Ch. Oct. 2, 2015).

25
need only make a prima facie showing of personal jurisdiction, and the record is

construed in the light most favorable to the plaintiff.”119

Determining whether a Delaware court may exercise personal jurisdiction

over a non-resident involves a two-step inquiry.120

The court must determine, first, whether an applicable Delaware statute
provides a means of exercising personal jurisdiction over a nonresident,
and second, whether “subjecting the nonresident defendant to
jurisdiction would violate due process.” Due process requires that the
“nonresident defendant . . . have sufficient minimum contacts with [the
forum state] such that the maintenance of the suit does not offend
traditional notions of fair play and substantial justice.”121

Plaintiffs assert jurisdiction is proper under several theories. 122 As to

Noronha, Stephen Riady, Michael Riady, Waterloo and LCR, Plaintiffs assert

jurisdiction over these defendants under the Delaware long-arm statute, 10 Del. C.

§ 3104(c), and the conspiracy theory of jurisdiction, among other theories.123

Because I find Plaintiffs have made a prima facie showing to establish personal

jurisdiction under both theories, I end the analysis there.

119
Id. (internal citation and quotation omitted).
120
Boulden v. Albiorix, Inc., 2013 WL 396254, at *5–6 (Del. Ch. Jan. 31, 2013), revised
(Feb. 7, 2013).
121
Boulden, 2013 WL 396254, at *5 (quoting Matthew v. Fläkt Woods Gp. S.A., 56 A.3d
1023, 1027 (Del. 2012)) (quotations omitted).
122
See Pls.’ Corrected Answering Br. in Opp’n to Defs.’ Mots. to Dismiss (“PAB”)
(D.I. 77) at 15–24.
123
See id. at 20.

26
 The conspiracy theory of jurisdiction “is based on the legal principle that one

conspirator’s acts are attributable to the other conspirators.”124 Thus, “if the

purposeful act or acts of one conspirator are of a nature and quality that would

subject the actor to the jurisdiction of the court, all of the conspirators are subject to

the jurisdiction of the court.”125 The conspiracy theory is not an independent basis

to demonstrate personal jurisdiction; it is, rather, a means by which a plaintiff may

advance his case for personal jurisdiction under the long-arm statute.126

As our Supreme Court explained in Instituto Bancario, the conspiracy theory

of personal jurisdiction requires the satisfaction of a five-part test:

[A] conspirator who is absent from the forum state is subject to the
jurisdiction of the court, assuming he is properly served under state law,
if the plaintiff can make a factual showing that: (1) a conspiracy to
defraud existed; (2) the defendant was a member of that conspiracy;
(3) a substantial act or substantial effect in furtherance of the conspiracy
occurred in the forum state; (4) the defendant knew or had reason to
know of the act in the forum state or that acts outside the forum state
would have an effect in the forum state; and (5) the act in, or effect on,
the forum state was a direct and foreseeable result of the conduct in
furtherance of the conspiracy.127

124
Matthew, 56 A.3d at 1027.
125
Instituto Bancario Italiano SpA v. Hunter Eng’g Co., 449 A.2d 210, 222 (Del. 1982).
126
Virtus Capital L.P. v. Eastman Chem. Co., 2015 WL 580553, at *12 (Del. Ch. Feb. 11,
2015).
127
449 A.2d at 225.

27
This five-part test “functionally encompass[es]” both prongs of the Delaware long-

arm statute—which requires both a statutorily defined nexus to the state as well as

compliance with constitutional notions of due process.128 “Therefore, if a plaintiff

can address satisfactorily all five elements of the conspiracy theory, then the plaintiff

will have met both prongs of the jurisdictional test.”129

Plaintiffs maintain they have met the Instituto Bancario test with well-pled

allegations in their Complaint. Defendants disagree, arguing the Complaint fails

adequately to allege that (i) a conspiracy was formed, and (ii) members of the

supposed-conspiracy knew of and participated in substantial acts in furtherance of

the conspiracy in Delaware.130 I reject both challenges below.

1. The Conspiracy Among the Lippo Group

Under the Instituto Bancario test, I must first ask whether Plaintiffs have

carried their prima facie burden to demonstrate a conspiracy existed and that each

Lippo defendant was a member of the conspiracy. Although the first element of the

test specifically mentions “a conspiracy to defraud,” the test is not limited to that

particular tort, and has been found to apply to conspiracies to breach fiduciary duties

128
Konstantino, 2015 WL 5770582, at *7 (citing Virtus, 2015 WL 580553, at *12).
129
Id. (quoting Virtus, 2015 WL 580553, at *12).
130
See Reply Br. in Supp. of Defs.’ Mot. to Dismiss the Verified Second Am. Compl.
(“DRB”) (D.I. 82) at 32; DOB at 55.

28
and aid and abet such breaches.131 The existence of a conspiracy is tested by

reference to an additional five elements: “(1) two or more persons; (2) some object

to be accomplished; (3) a meeting of the minds between or among such persons

relating to the object or a course of action; (4) one or more unlawful acts; and

(5) resulting proximate damages.”132

As discussed in greater detail below when addressing the viability of

Plaintiffs’ pled claims, the conspiracy that fairly can be gleaned from the record is

that the members of the Lippo Group implemented a plan to starve SMP of capital

and then drive CSM into bankruptcy so that Lippo could “buy [CSM’s assets] out of

bankruptcy very cheap.”133 This conspiracy, as alleged, meets the five requisite

elements under Delaware law.

Lippo cites In re Transamerica Airlines, for the proposition that

“a corporation generally cannot be deemed to have conspired with its wholly owned

131
See Virtus, 2015 WL 580553, at *13; Carsanaro v. Bloodhound Techs., Inc., 65 A.3d
618, 636 (Del. Ch. 2013), abrogated on other grounds, El Paso Pipeline GP Co. v.
Brinckerhoff, 152 A.3d 1248, 1264 (Del. 2016) (noting that theory encompasses claims of
breach of fiduciary duty and aiding and abetting); Hamilton P’rs v. Englard, 11 A.3d 1180,
1197 (Del. Ch. 2010) (same); Crescent/Mach I P’rs, L.P. v. Turner, 846 A.2d 963, 977
(Del. Ch. 2000) (rejecting construction of Instituto Bancario that would require a “specific
allegation that [the defendants] agreed to conspire ‘to defraud’ minority stockholders”).
132
Hartsel v. Vanguard Gp., Inc., 2011 WL 2421003, at *10 (Del. Ch. June 15, 2011).
133
Compl. ¶ 80.

29
subsidiary, or its officers and agents.”134 But Transamerica, itself, noted that

“this general rule does not apply [] when the officer or agent of the corporation steps

out of her corporate role and acts pursuant to personal motives.” 135 With this in

mind, “[Lippo’s] argument—that entities with common equity ownership can never

conspire illegally with one another—is not one that convinces me,” at least not at

this stage.136

I am also unpersuaded by Lippo’s argument that the Complaint does not

“include the necessary factual allegations reflecting a ‘meeting of the minds.’”137

“A plaintiff does not need to prove the existence of an explicit agreement; a

conspiracy can be inferred from the pled behavior of the alleged conspirators.”138

134
DOB at 57 (citing 2006 WL 587846, at *6 (Del. Ch. Feb. 28, 2006)).
135
In re Transamerica, 2006 WL 587846, at *6.
136
Allied Capital Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1044 (Del. Ch. 2006).
In Allied Capital, then-Vice Chancellor Strine rejected the notion “that a parent and its
subsidiary cannot conspire with one another because they don't possess two separate
corporate consciousnesses (i.e., that they have but one mind) and are thus incapable of
agreement.” Id. Instead, he held, “[t]he fact that a corporation owns all of the equity of
another corporation and that both corporations have the same directors and officers does
not mean the separate corporations cannot collaborate on a common illegal scheme. It is
precisely because the corporations have, as a presumptive matter, a separate legal existence
irrespective of their common control, that doctrines like conspiracy and aiding and abetting
may have a policy purpose.” Id.
137
DRB at 24.
138
CMS Inv. Hldgs., LLC v. Castle, 2015 WL 3894021, at *22 (Del. Ch. June 23, 2015)
(internal quotation omitted).

30
The Cooper/Noronha Email, by itself and on its own terms, supports a strong

inference of an agreement between Cooper, Noronha, Stephen and Michael Riady

and the entities they controlled (LCR, DXS, PacNet and Waterloo) to engage in the

scheme at the heart of the alleged conspiracy.139 The email uses the collective

pronoun “we” to refer to Noronha, Cooper and the Riady family. 140 It is also

reasonable to infer that the email describes, in detail, the Lippo Group’s plan to tank

SMP.141 After the email was sent, Stephen and Michael Riady allegedly “directed”

Cooper and Noronha as they implemented the Lippo Group’s scheme while

Waterloo acquired the Noble Loan (an acquisition LCR’s board formally

approved).142 Given these acts, on top of the aligned incentives created by the Lippo

Group’s common ownership and direction under the Riady family, I find Plaintiffs

have pled facts supporting a reasonable inference that Stephen Riady, Michael

Riady, LCR, Cooper, Noronha and Waterloo agreed intentionally to scuttle SMP by

divesting it of its ownership of CSM.

139
Compl. ¶ 80 (“[T]he [Riady] family would then have full security and take some upside
on debt. Then we can sit back and hold our position and when this collapses, we have the
first lien and can buy it out of bankruptcy very cheap.”) (emphasis supplied).
140
Compl. ¶ 80.
141
Id.
142
Compl. ¶ 128(f), (k), (n), (p), (q).

31
 2. The Acts in Delaware

The third, fourth and fifth elements of the Instituto Bancario test focus on acts

committed in Delaware to advance the alleged conspiracy about which members of

the conspiracy either knew or had reason to know.143 The test does not require that

any specific defendant perform such acts; instead, “one conspirator’s acts are

attributable to the other conspirators.”144 Ultimately, I am persuaded each member

of the Lippo Group knew or had reason to know that members of the conspiracy

acted in Delaware to further the conspiracy.

DXS and PacNet sued in Delaware to enforce their Blocking Rights.145 Lippo

cannot reasonably contend, at this stage, that this was not an act in furtherance of the

group’s plan.146 Based on the scheme described in the Complaint, it is reasonable to

infer that each member of the Lippo Group knew about the Delaware lawsuit,

especially given Cooper’s frequent consultation with “the [Riady] family.”147

143
449 A.2d at 225.
144
Id. at 222; accord Fläkt Woods, 56 A.3d at 1027; Virtus, 2015 WL 580553, at *13.
145
Compl. ¶ 64.
146
See Mobil Oil Corp. v. Advanced Envtl. Recycling Techs., Inc., 833 F. Supp. 437, 446
(D. Del. 1993) (“By authorizing and directing the filing of Mobil’s declaratory judgment
lawsuit in Delaware, Mr. Herbst and Mr. Ferguson purposefully availed themselves of the
benefits and protections of Delaware.”).
147
Compl. ¶ 128(h).

32
 As for LCR and Waterloo’s knowledge, “[w]hen a corporation empowers

managers with the discretion to handle certain matters and to deal with third parties,

the corporation is charged with the knowledge of those managers when the

corporation is sued by innocent parties.”148 Cooper and Noronha allegedly were

agents and representatives for both LCR and Waterloo, so their knowledge is

imputed to their principals.149 Moreover, since a central purpose of the alleged

conspiracy was to drive SMP into insolvency by employing the Blocking Rights, it

was foreseeable that DXS and PacNet would have to file suit in SMP’s home

(Delaware) to enforce their rights.

3. Due Process

Finally, this Court’s exercise of personal jurisdiction over the members of the

Lippo Group comports with due process (assuming proper service of process).

Because it is reasonable to infer that the Lippo Group voluntarily participated in a

conspiracy to harm SMP knowing that the scheme would require DXS, PacNet and

Cooper to breach the fiduciary duties they owed to SMP, a Delaware LLC, it is fair

148
In re Am. Int’l Gp., Inc., Consol. Deriv. Litig., 976 A.2d 872, 887 (Del. Ch. 2009);
see also 3 WILLIAM MEADE FLETCHER, CYCLOPEDIA OF THE LAW OF
CORPORATIONS § 790 (Sept. 2019) (“[T]he general rule is well established that a
corporation is charged with constructive knowledge . . . of all material facts of which
its officer or agent receives notice or acquires knowledge while acting in the course of
employment within the scope of his or her authority, even though the officer or agent does
not in fact communicate the knowledge to the corporation.”).
149
Compl. ¶¶ 123, 137.

33
and reasonable to require them to defend their conduct here, in the same forum the

Lippo Group chose to adjudicate its declaratory judgment claims in the first place.150

Put differently, by any reasonable measure, the Lippo Group should have expected

that its plan might well lead Plaintiffs to haul them into this court to answer, at least,

for their role in allegedly aiding and abetting breaches of fiduciary duty by Cooper

as DXS and PacNet’s Board designee.

******

For the reasons explained above, I conclude Plaintiffs have made a prima facie

showing that all of the Instituto Bancario factors are satisfied such that this Court

has personal jurisdiction over the Lippo Group’s members (assuming proper service

of process) under Delaware’s long-arm statute and the conspiracy theory of

jurisdiction.

B. Defendants’ Rule 12(b)(6) Arguments

In considering a motion to dismiss under Court of Chancery Rule 12(b)(6),

the Court applies a well-settled standard:

(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

150
See Konstantino, 2015 WL 5770582, at *10 (reaching a similar conclusion).

34
 unless the plaintiff would not be entitled to recover under any
reasonably conceivable set of circumstances susceptible of proof.151

I first take up Defendants’ arguments that the Sale Order bars Plaintiffs’ claims.

I then address, in turn, Plaintiffs’ breach of contract, breach of fiduciary duty, aiding

and abetting, civil conspiracy, tortious interference with contract and fraud claims.

1. The Preclusive Effect of CSM’s Bankruptcy Sale

Defendants argue the Sale Order precludes Plaintiffs’ claims on three separate

grounds: the claims are barred by res judicata; the en rem protections expressly

provided for in the Sale Order bar the claims; and the claims are derivative on behalf

of CSM, a now discharged bankrupt debtor, and cannot be brought by or on behalf

of SMP. I address each ground below.

a. Res Judicata

Res judicata will bar a claim if the party asserting the defense can establish

each of the following elements: (1) the court making the prior determination had

jurisdiction; (2) the parties in the present action are either the same parties or are in

privity with the parties from the prior adjudication; (3) the prior adjudication was

final; (4) the causes of action were the same in both cases or the issues decided in

the prior action were the same as those raised in the present case; and (5) the issues

in the prior action were decided adversely to the party’s contention in the instant

151
Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (citations omitted).

35
action.152 Lippo’s res judicata argument fails to satisfy either the fourth or fifth

element.

In their effort to demonstrate the requisite consonance between the bankruptcy

proceedings and the claims advanced here, Lippo vaguely points to certain

objections Plaintiffs lodged with the Utah Bankruptcy Court before that court

approved the Sale Order.153 In those objections, Plaintiffs leveled many of the same

factual allegations against Defendants they now raise in the Complaint.154

According to the Complaint, however, the Utah Bankruptcy Court never reached the

merits of Plaintiffs’ allegations because it did not have to.155 The allegations were

152
Banet v. Fonds de Regulation et de Contro le Café Cacao, 2010 WL 1066993, at *3
(Del. Ch. Mar. 12, 2010).
153
DOB at 21 (citing Morin Aff. Ex. 4 at 7).
154
See, e.g., Morin Aff. Ex. 4 at 7 (“Lippo is, upon approval and closing of the Tamra
Mining APA, on the cusp of successfully executing this illegal plan [of] . . . acquir[ing] the
[Noble Loan] using inside information obtained from [the SMP Board] meetings and
several hundred days on site at [CSM], us[ing] it as a leverage point to drive [CSM] into
bankruptcy, and [] acquir[ing] the assets of [CSM] cheaply.”).
155
Compl. ¶ 4 (Plaintiffs are only bringing SMP’s claims); see also Morin Aff. Ex. 4 at 5
(The objection quoted in the language, above, is found in a document titled “Objection to
Sale Conducted by Auction on August 7, 2017” and a section titled “The Debtor Lacked
Authority to Assign, Sell, or Release Certain Fiduciary Claims.”); Morin Aff. Ex. 3 at 14,
16, 20–25, 28–31, 36–37 (alleging before the Utah Bankruptcy Court that the Lippo Group
“embarked on a secret plan in violation of the Corporate Opportunity Doctrine”), 41–42,
45 (Plaintiffs arguing “there wasn’t proper notice that the sale would include the sale of
litigation assets”), 47 (the Utah Bankruptcy Court responding to Plaintiffs’ allegations by
granting the debtor’s motion to strike testimony from a SMP witness who would support
the allegations).

36
deemed irrelevant to the question before the court—was the sale of assets

procedurally proper?156 In other words, as alleged here, the Utah Bankruptcy Court

did not consider, much less adjudicate, the merits of Plaintiffs’ allegations that the

Lippo Group had executed a plan wrongfully to divest SMP of its ownership interest

in CSM. Thus, it is not clear from the Complaint that Plaintiffs “can prove no set of

facts to avoid” the res judicata defense.157

b. En Rem Protections Under 11 U.S.C. § 363

Lippo’s next argument is that the Bankruptcy Code “comes with inherent

protections designed to ensure [the] finality [of the bankruptcy proceedings].”158

Specifically, according to Lippo, the Sale Order “judicially sanctioned” the transfer

of assets “free and clear” of all interests, including litigation claims. 159 While not

entirely clear, Lippo’s theory seems to be that the Bankruptcy Code grants the Buyer

156
As noted, the Utah Bankruptcy Court responded to Plaintiffs’ allegations about Lippo’s
plan by granting a motion to strike and denying a motion that challenged the Sale Order.
Morin Aff. Ex. 3 at 36–37, 47, 64–65, 67. Plaintiffs challenged the Sale Order because
they “were excluded from bidding,” which Plaintiffs alleged was inconsistent “with the
business judgment rule.” Id. The Utah Bankruptcy Court acknowledged Plaintiffs had
made “strong representations.” Id. at 69. But, because Plaintiffs failed to present any
competent evidence at the hearing, the Utah Bankruptcy Court granted a motion to exclude
Plaintiffs’ objections without addressing them on the merits. Id. at 70.
157
Reid v. Spazio, 970 A.2d 176, 183–84 (Del. 2009) (observing that “affirmative
defenses . . . are not ordinarily well-suited for treatment” on a motion to dismiss).
158
DOB at 22.
159
Id.

37
certain en rem protections from collateral attack thereby cleansing any wrongdoing

arising out of, or related to, the purchase of CSM’s assets.160

Lippo’s en rem argument leaves them well short of where they are trying to

go. At most, the Bankruptcy Code protects the Buyer from collateral attacks; it does

not protect others.161 In this regard, a case Lippo cites, In re Christ Hospital, is

instructive.162 There, it was alleged that the successful bidder in a Section 363 sale

had “forced” the debtor into bankruptcy and had committed various torts “in

connection with” the 363 sale.163 Nevertheless, the court held Section 363 barred

the plaintiff from bringing its tort claims against the defendant-bidder because the

claims were “obviously intertwined” with the sale.164 But the court stopped

noticeably short of suggesting that Section 363 protected any party other than the

160
See id. at 22–23; DRB at 5–6.
161
In re Farmland Indus. Inc., 376 B.R. 718, 729 (Bankr. W.D. Mo. 2007), aff’d,
408 B.R. 497 (B.A.P. 8th Cir. 2009) (Section 363 “provides purchasers . . . protections
from attacks.”) (emphasis supplied); In re Christ Hosp., 502 B.R. 158, 173 (Bankr. D.N.J.
2013) (same).
162
502 B.R. at 163.
163
Id. at 163, 166.
164
Id. at 163.

38
buyer from collateral attacks.165 Because the Buyer is not a party to this case,

Section 363 does not, on its face, bar the Complaint.

c. The Claims, As Pled, Belong to SMP, Not CSM

In a last-ditch effort to salvage a defense to the claims sub judice out of CSM’s

bankruptcy, Defendants argue the Complaint brings claims that were sold to the

Buyer, as reflected in the Sale Order.166 In other words, Defendants claim Plaintiffs

are misappropriating the Buyer’s property—the litigation asset acquired under the

Sale Order. Yet, the Complaint acknowledges that Plaintiffs “do[] not assert any

legal claims that CSM ever owned itself.”167 According to the Complaint, while

“Defendants’ misconduct also may have harmed other parties, including CSM, []

Plaintiffs are not asserting claims to recover for the harm suffered exclusively by

those other parties.”168 Indeed, Plaintiffs acknowledge any claims CSM ever owned

have been “disposed of” through CSM’s asset sale under 11 U.S.C. § 363.169

165
Id.; see also In re NE Opco, Inc., 513 B.R. 871, 873, 876 (Bankr. D. Del. 2014) (granting
a Section 363 purchaser protection from claims related to its pre-bankruptcy conduct
because such claims were “related to [the purchaser’s] impending purchase of assets”).
166
DOB at 19, 26–27; DRB at 2–3; NOB at 15–21.
167
Compl. ¶ 4.
168
Id.

Id.; see also Compl. ¶ 19 n.1 (“This action does not challenge the bankruptcy sale itself,
169

which was conducted in the wake of the destruction in value [at the SMP level] that
Defendants’ actions had caused.”).

39
 Defendants cannot bar the Complaint with the Sale Order. That document

only purports to transfer CSM’s assets.170 It says nothing of assets belonging to SMP.

Moreover, the parties represented to the Utah Bankruptcy Court that the Sale Order

did not release “any direct claims of any other third parties” or impair “any other

party’s legal rights.”171

To be sure, CSM could not have sold any claims belonging to SMP in the

bankruptcy proceedings or otherwise. In this regard, this court’s decision in

Case Financial, Inc. v. Alden is directly on point.172 There, the court addressed

whether a parent corporation had standing to sue for breach of fiduciary duty arising

out of transactions entered into by its wholly owned subsidiary.173 The defendant,

“Alden,” was a director and officer of both the parent and the subsidiary, yet the

subsidiary had not sued Alden even though he had allegedly misappropriated the

subsidiary’s assets.174 In a post-trial decision, the court observed that, in a parent-

subsidiary context, each entity has its own set of fiduciaries.175 Thus, even though

170
Morin Aff. Ex. 2 at 2.
171
Morin Aff. Ex. 3 at 100.
172
2009 WL 2581873 (Del. Ch. Aug. 21, 2009).
173
Id., at *3.
174
Id., at *3–7.
175
Id., at *7.

40
the subsidiary probably had derivative claims that it could have brought against

Alden, the parent had its own standing to sue Alden for breach of fiduciary duty.

The court wrote:

Alden, as a director of [the parent], had a duty not to intentionally or
knowingly participate in conduct that would injure [the parent].
Because Alden owed this duty to [parent] directly, [the parent’s] ability
to pursue a suit against Alden directly would not depend, in this sense,
on whether the entirety of the damage was sustained directly by [parent]
or derivatively through [the subsidiary]. To the contrary, if Alden was
substantially certain his conduct would injure [parent] unjustifiably,
regardless of how far down the causal chain the injury would occur,
Alden should have refrained from the conduct.176

Similarly, SMP is owed fiduciary obligations from the fiduciaries named as

defendants here that are separate from duties that may have been owed to CSM.

Plaintiffs only purport to bring SMP’s claims.177 Whether Plaintiffs will be able to

prove up claims and damages separate and apart from the claims belonging to CSM

is a question for another day.178 For now, Plaintiffs have standing to prosecute

SMP’s derivative and their direct claims as pled.

176
Id.
177
Compl. ¶ 4.
178
Plaintiffs also bring direct breach of contract and fraud claims that could not have been
sold under the Sale Order. See NAF Hldgs., LLC v. Li & Fung (Trading) Ltd., 118 A.3d
175, 176 (Del. 2015) (citing Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031
(Del. 2004) (holding that Tooley “has no bearing on whether a party with its own rights as
a signatory to a commercial contract may sue directly to enforce those rights”);
In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1056 (Del. Ch. 2015)
41
 2. Breach of Contract/Implied Covenant (Counts 2, 3, 5, 13 and 14)

Plaintiffs bring the following breach of contract claims:

 Count 2 alleges DXS and Noronha breached their confidentiality
obligations under the SMP Agreement;179

 Count 5 alleges DXS and PacNet breached the SMP Agreement when
the Lippo Group acquired the Noble Loan without approval from
SMP’s Board;180 and

 Count 13 alleges Noble breached the NLA when it sold the Noble Loan
to the Lippo Group.181
Relatedly, Plaintiffs assert the following breaches of the implied covenant:

 Count 3 alleges DXS and PacNet breached the implied covenant by
exercising the Blocking Rights in bad faith;182 and

 Count 14 alleges Noble breached the implied covenant by not notifying
Plaintiffs that Noble was planning to sell the Noble Loan until it was
too late.183

Under Delaware law, “the elements of a breach of contract claim are:

(1) a contractual obligation; (2) a breach of that obligation by the defendant; and

(“[F]raud in connection with the purchase or sale of shares” is a “[q]uintessential example[]
of [a] personal claim.”).
179
Compl. ¶¶ 139–45.
180
Compl. ¶¶ 155–62.
181
Compl. ¶¶ 205–11.
182
I address Count 3 in Section II.B.3.b (below).
183
Compl. ¶¶ 212–17.

42
(3) a resulting damage to the plaintiff.”184 When addressing whether a plaintiff has

well pled the first two elements, the court must consider, and often construe, the

proffered contract at the heart of the claim of breach. The construction of a contract

is a question of law, and Defendants have no right to dismissal under Rule 12(b)(6)

unless “the interpretation of the contract on which their theory of the case rests is the

only reasonable construction as a matter of law.”185 On the other hand, if there is

more than one “reasonable construction” of contractual language, then the contract

is ambiguous, and Defendants’ Motions to Dismiss cannot be granted.186 Of course,

“[a] contract is not rendered ambiguous simply because the parties do not agree upon

its proper construction.”187 Instead, the court will apply standard canons of contract

interpretation in construing the contract to ascertain whether the contract is

ambiguous.188

184
H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 140 (Del. Ch. 2003).
185
CSH Theatres, LLC v. Nederlander of San Francisco Assoc., 2015 WL 1839684, at *8
(Del. Ch. Apr. 21, 2015).
186
Id., at *8.
187
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196
(Del. 1992).
188
CSH Theatres, 2015 WL 1839684, at *8.

43
 a. DXS and Noronha’s Confidentiality Obligations (Count 2)

In Count 2, Plaintiffs allege DXS and Noronha breached Section 5.1(l)(ii) of

the SMP Agreement.189 Section 5.1(l)(i) grants DXS and Noronha observation rights

on the SMP Board.190 But Section 5.1(l)(ii) conditions those rights on DXS and

Noronha’s promise to “hold in confidence and trust all information” they learned “in

connection with [their] rights under [the SMP Agreement.]”191

According to Plaintiffs, Noronha and DXS breached Section 5.1(l)(ii) in two

steps.192 First, they used their observation rights to learn about the significant

inherent value of CSM’s “world class” assets.193 Second, Noronha and DXS “leaked

their knowledge, in breach of the SMP Agreement, to non-SMP members.”194 The

non-SMP members (Waterloo, Stephen and Michael Riady and LCR), in turn, were

“positioned” to value and later acquire the Noble Loan based on confidential

information and then exploit the Noble Loan to harm SMP.195

189
Compl. ¶¶ 139–45.
190
SMP Agreement § 5.1(l)(i).
191
SMP Agreement § 5.1(l)(ii).
192
PAB at 90–91.
193
Id. at 90 (citing Compl. ¶¶ 70, 71); SMP Agreement § 5.1(l)(ii).
194
PAB at 90–91 (citing Compl. ¶¶ 84, 142, 144).
195
Id. at 91 (citing Compl. ¶¶ 10, 84, 114, 126).

44
 Lippo counters that Plaintiffs have not well pled “what” confidential

information DXS and Noronha wrongfully discovered, “how or when” they obtained

such information or “to whom” they wrongfully leaked the information.196

I disagree. While Count 2 is not a paragon of specificity, it adequately provides

“general notice of the claim asserted.”197

Reading the Complaint holistically, Plaintiffs have well pled the following

facts:

 The Lippo Group “secretly hatched a plan” to “depress the value of
SMP and its assets” and then take those assets for itself—to SMP’s
detriment.198

 Stephen Riady is LCR’s Chairman—one of the key entities in the Lippo
Group.199

196
DOB at 47–48 (citing Savor, Inc. v. FMR Corp., 2001 WL 541484, at *3 (Del. Super.
Ct. Apr. 24, 2001) (dismissing a trade secret misappropriation claim in part because
plaintiff failed to allege what information was misappropriated)). Lippo’s citation to Savor
is inapt since that case reviewed a claim under the Uniform Trade Secrets Act. Savor, 2001
WL 541484, at *3. There, the court rightly reviewed whether the complaint had well pled
the defendant had “misappropriated” a “trade secret”—which required an analysis of
multiple statutory elements and definitions. Id. In this case, the question is simply whether
Plaintiffs have pled facts supporting a reasonable inference that DXS and Noronha shared
confidential information in breach of the SMP Agreement. See UtiliSave, LLC v. Miele,
2015 WL 5458960, at *10 (Del. Ch. Sept. 17, 2015).
197
Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998); see also McDonald v. Baldy,
2014 WL 7009715, at *1 (Del. Com. Pl. Nov. 25, 2014) (To survive a motion to dismiss,
a breach of contract claim need only “plead enough facts to plausibly suggest” that the
plaintiff will ultimately be entitled to relief.) (internal quotation omitted).
198
Compl. ¶ 8.
199
Compl. ¶ 128(c).

45
  Besides his role as DXS’s “representative” on the SMP Board, Noronha
was hired by, reports to and worked for Stephen Riady while also
“representing” Waterloo.200

 Noronha and Cooper kept Michael Riady “regularly informed” of the
Lippo Group’s investment in SMP.201

 As a member of the Board, Cooper learned, on a confidential basis
outside of a Board meeting, that CSM’s assets were worth at least $600
million. Rather than share that information with the Board, he secretly
told DXS and PacNet about the valuation.202

 Cooper and Noronha would negotiate with SMI and CC on behalf of
the broader Lippo Group.203

 The Cooper/Noronha Email uses the pronoun “we” to include Noronha,
Cooper and the Riady family while also discussing the Lippo Group’s
larger plan to tank SMP and scoop up its assets.204

 LCR’s subsidiary, Waterloo (which Noronha represents), eventually
acquired the Noble Loan, over SMI and CC’s objections, as the
penultimate step in the Lippo Group’s plan to harm SMP.205

In light of these allegations, I find it reasonably conceivable that Noronha and

DXS used their rights under the SMP Agreement to learn the true value of CSM’s

200
Compl. ¶¶ 123, 128(n).
201
Compl. ¶ 128(d); see also Compl. ¶ 143 (“Noronha revealed confidential information
that he obtained in his capacity as DXS Representative to Waterloo.”).
202
Compl. ¶¶ 10, 71.
203
Compl. ¶ 78.
204
Compl. ¶ 80.
205
Compl. ¶¶ 30, 108, 111, 123, 128(q).

46
assets, and then shared that information with LCR and its managers in breach of

Section 5.1(l)(ii). The Cooper/Noronha Email, specifically, supports a reasonable

inference that Noronha was actively trying to advance the Lippo Group’s interest at

SMP’s expense.206 Given Noronha’s access to SMP’s confidential information and

his allegiance to the Lippo Group, as alleged, it is reasonable to infer he breached

his confidentiality obligations. Defendants’ Motions to Dismiss Count 2 must be

denied.

b. Breach of Section 3.5 Relating to SMP Member Loans (Count 5)

In Count 5, Plaintiffs allege DXS and PacNet breached Section 3.5 of the SMP

Agreement when Waterloo acquired the Noble Loan.207 Section 3.5 provides: “the

[Board] is authorized to cause [SMP] to [borrow funds from members].” 208 In the

event a member makes a loan to SMP, “each Member [is] entitled . . . to make its

pro rata share . . . of any such loans.”209

Plaintiffs and Lippo proffer dueling interpretations of Section 3.5. While not

entirely clear, Plaintiffs seem to argue Section 3.5 prohibits SMP’s members and

any member’s affiliate from “possess[ing]” any loan made to SMP or CSM absent

206
Compl. ¶ 80.
207
Compl. ¶¶ 155–62.
208
SMP Agreement § 3.5.
209
SMP Agreement § 3.5.

47
SMP Board approval.210 In contrast, Lippo argues Section 3.5 requires SMP Board

approval only when a member makes a loan to SMP.211 Lippo offers the only

reasonable interpretation of Section 3.5.

Section 3.5’s plain meaning speaks only of “the Company” (i.e., SMP)

“borrowing funds from Members” and members’ rights to participate when “any

Member is making any such loan to [SMP].”212 Other provisions in the SMP

Agreement reveal that the SMP Agreement’s drafters knew how to prohibit loans at

the CSM level, but they did not include parallel language in Section 3.5.213

Plaintiffs’ construction stretches the SMP Agreement’s plain language beyond

reason and cannot support its claims of breach related to Section 3.5.214 Count 5

must be dismissed.

210
Compl. ¶ 158; PAB at 88–89.
211
DOB at 46 (I do not address Lippo’s other arguments).
212
SMP Agreement § 3.5 (emphasis supplied).
213
See, e.g., SMP Agreement § 4.6(b)(i)(7), (17) (The Company “shall not . . . cause or
permit any Subsidiary to undertake any action in the nature of the foregoing” including
“grant[ing] or pledg[ing] of any security interest.”); Norton v. K-Sea Transp. P’rs L.P.,
67 A.3d 354, 360, 364 (Del. 2013) (interpreting a contract according to its “plain meaning”
when read “as a whole” and declining to infer that the challenged language resulted from
“sloppy drafting” when the agreement’s drafters “knew how to impose an affirmative
obligation when they so intended”).
214
Compl. ¶¶ 9, 31.

48
 c. Breach of the NLA (Count 13 and 14)

In Counts 13 and 14, Plaintiffs assert derivative claims on behalf of SMP

against Noble for breach of the NLA.215 Specifically, Plaintiffs allege Noble

breached the NLA when it agreed to sell the Noble Loan to Waterloo without “prior

notice” or “approval.”216 Count 14 alleges Noble breached the NLA’s implied

covenant by “concealing its agreement to sell the Noble Loan to Waterloo until the

day before it was effectuated, thereby . . . depriving SMP . . . of the benefit of the

notice requirement in Section 9.07(b) of the [NLA].”217 New York substantive law

governs the NLA.218

As for Count 13, Plaintiffs’ theory of breach rests on at least two key axioms.

First, Plaintiffs argue the Fourth Amendment, which deleted the Insider Sale

Prohibition, was void because it was procured by fraudulent means.219 If true, this

215
Compl. ¶¶ 205–17.
216
Compl. ¶ 210.
217
Compl. ¶ 216.
218
NLA § 9.15(a). New York and Delaware share many, if not most, of the same principles
of substantive contract law. Viking Pump, Inc. v. Century Indem. Co., 2 A.3d 76, 90
(Del. Ch. 2009). Like Delaware, New York requires the plaintiff alleging breach of
contract to prove: “(1) formation of a contract between plaintiff and defendant,
(2) performance by plaintiff, (3) defendant’s failure to perform, (4) resulting damage.”
U.S. Nonwovens Corp. v. Pack Line Corp., 4 N.Y.S.3d 868, 872 (N.Y. Sup. Ct. 2015).
219
Compl. ¶ 209.

49
would leave the Insider Sale Prohibition intact.220 Plaintiffs argue Noble violated

the Insider Sale Prohibition when it sold the Noble Loan to Waterloo.221 Second,

Plaintiffs assert SMP has standing to enforce the NLA (and its Insider Sale

Prohibition) either (i) as a party or (ii) as an intended third-party beneficiary.222

As I explain below, even assuming Plaintiffs’ first axiom is solid, their breach of

contract claim against Noble still fails because they lack standing to enforce the

NLA. Because Plaintiffs cannot enforce the NLA, their implied covenant claim in

Count 14 also fails.223 Counts 13 and 14 must be dismissed.

i. SMP Has No Direct Party Standing Under the NLA

To have standing to enforce a contract, a plaintiff must be a contract party,

assignee or an intended third-party beneficiary.224 As Noble correctly observes, the

220
Compl. ¶ 92.
221
Compl. ¶ 210.
222
Compl. ¶ 206.
223
511 W. 232 Owners Corp. v. Jennifer Realty Co., 773 N.E.2d 496, 500 (N.Y. Ct.
App. 2002) (The implied covenant “embraces a pledge that neither party shall do anything
which will have the effect of destroying or injuring the right of the other party to receive
the fruits of the contract.”) (emphasis supplied) (internal quotation omitted). Because I
find Plaintiffs lacked standing to bring Count 14, I do not consider whether they have
otherwise well pled a breach of the implied covenant under Rule 12(b)(6).
224
Decolator, Cohen & DiPrisco, LLP v. Lysaght, Lysaght & Kramer, P.C., 304 A.D.2d
86, 90 (N.Y. Ct. App. 2003).

50
NLA unambiguously states that the only parties to the NLA are CSM and Noble.225

Even so, Plaintiffs argue the definition of “Loan Party” in the NLA somehow

contradicts the contract’s clear identification of the parties and thus creates an

ambiguity regarding who, exactly, are the parties to the contract.226 As in all

questions of contract interpretation, the “parties’ intent” guides the court’s

determination of standing under the NLA.227 And “[t]he best evidence of what

parties to a written agreement intend is what they say in their writing.”228

Plaintiffs correctly observe that the NLA mentions SMP in its definition of

Loan Parties and contains a cross-default provision related to the Intercreditor

Agreement to which SMP was a party.229 These references reflect that the NLA was

a component of a larger financing arrangement between a lender and an operating

subsidiary for which a parent provided collateral support.230 That is a far cry,

however, from reflecting an intent by the actual parties to the NLA to include SMP

225
NLA at CSMining0033526 (recitals); NOB at 27.
226
NOB at 27–31; PAB at 96–101.
227
Buchovecky v. S & J Morrell, Inc., 175 A.D.3d 945, 946 (N.Y. Sup. Ct. App. Div. 2019).
228
Id.
229
PAB at 96–97; NLA §§ 9.12 (referencing “Loan Documents”) 1.01 (definitions of
“Loan Party” and “Loan Documents”).
230
Compl. ¶¶ 55–56.

51
as an additional party to whom rights and obligations under the NLA would directly

flow.

Plaintiffs cite This Is Me, Inc. v. Taylor, for the sweeping proposition that

“each party to [an] integrated transaction has standing to enforce the transaction’s

constituent documents.”231 The premise appears to be that a party to one contract

among a suite of related contracts has direct party standing to enforce other contracts

within the suite to which it is not a party. The United States District Court for the

Southern District of New York has squarely rejected such a broad reading of

This Is Me, writing, “[t]he mere fact that a document is an ‘integral part’ of a larger

transaction does not mean that any provision contained in that document must be

applied to all other documents.”232 The court then made clear:

[E]ven though several instruments relating to the same subject and
executed at the same time should be considered in order to ascertain the
intention of the parties, it does not necessarily follow that those
instruments constitute one contract or that one contract was
accordingly merged in or unified with another so that every provision
in one becomes a part of every other.233

With respect to who are, and who are not, parties to the NLA, Noble offers

the only reasonable construction of the contract. On its face, the NLA makes clear

231
PAB at 96 (citing 157 F.3d 139, 143 (2d Cir. 1998)).
232
See Rosen v. Mega Bloks Inc., 2007 WL 1958968, at *4–5 (S.D.N.Y. July 6, 2007).
233
Id., at *5 (citing 11 WILLISTON ON CONTRACTS § 30:26 (4th ed.)) (emphasis supplied).

52
that the “parties” to the contract are CSM and Noble.234 For example: (i) the NLA’s

cover page lists only CSM and Noble;235 (ii) the NLA’s recitals describe the

agreement as one “entered into . . . by and between [CSM] . . . (the ‘Borrower’) and

Noble . . . (the ‘Lender’)”;236 (iii) in Article II, titled “THE COMMITMENT AND

LOANS,” Noble was obligated to “make loans” to CSM while CSM had a

corresponding obligation to “repay” Noble;237 and (iv) the NLA’s signature page

was “executed” by “the parties hereto” and signed by only CSM and Noble.238

Even though the NLA was a part of a larger relationship between Noble, CSM

and SMP, I must give effect to the parties’ choice to structure the NLA as an

agreement “between” CSM and Noble.239 If a parent entity wishes to provide

security for a subsidiary’s loan, it can either (i) become a party to the subsidiary’s

loan agreement and promise to repay the subsidiary’s debt, or (ii) form a separate

234
NLA at CSMining0033526 (recitals).
235
NLA at CSMining0033522.
236
NLA at CSMining0033526 (recitals).
237
NLA §§ 2.01, 2.06.
238
NLA at CSMining0033580–81.
239
NLA at CSMining0033526 (recitals).

53
guarantee agreement with the subsidiary’s lender.240 SMP chose the latter, so it is

not a party to the NLA.241

ii. SMP Has No Third-Party Beneficiary Standing Under the NLA

Even if SMP is not a party to the NLA, Plaintiffs contend SMP has standing

to enforce the NLA as its intended third-party beneficiary.242 To demonstrate SMP

enjoys third-party beneficiary status, Plaintiffs must plead facts that allow a

reasonable inference that (i) the NLA “was intended for [SMP]’s benefit” and

(ii) “the benefit to [SMP] is sufficiently immediate, rather than incidental.”243 “Mere

intent to confer third-party rights is insufficient; there must be a benefit that is

240
Midland Steel Warehouse Corp. v. Godinger Silver Art Ltd., 276 A.D.2d 341, 343
(N.Y. Sup. Ct. App. Div. 2000) (“A guarantee is an agreement to pay a debt owed by
another which creates a secondary liability and thus is collateral to the contractual
obligation. The principal debtor is not a party to the guarantee and the guarantor is not a
party to the principal obligation.”).
241
Id. (SMP’s rights and obligations as a guarantor are “distinct.”).
242
PAB at 98.
243
Fishbein v. Miranda, 670 F. Supp. 2d 264, 274 (S.D.N.Y. 2009); Strauss v. Belle
Realty Co., 98 A.D.2d 424, 426 (N.Y. App. Div. 1983) (“An incidental beneficiary is a
third party who may derive benefit from the performance of a contract though he is neither
the promisee nor the one to whom performance is to be rendered.”).

54
explicit and direct.”244 In this regard, “a benefit received through corporate

ownership is insufficient to establish rights as a third-party beneficiary.”245

Predictably, the parties proffer conflicting interpretations of the NLA with

respect to its conferral of third-party beneficiary status upon SMP. Plaintiffs argue

Section 9.07 of the NLA evinces an intent to confer a “clear” and “direct” benefit

upon SMP.246 Noble disagrees. By Noble’s lights, Plaintiffs have not identified

“an independent duty [that] run[s] from [Noble] to [SMP] that bears on the

claims.”247 In my view, Noble, once again, has offered the only reasonable

construction of the NLA.

Plaintiffs’ proffered contract construction cannot be squared with the NLA’s

plain language. Section 9.07(a) states, “nothing in this Agreement, express or

implied, shall be construed to confer upon any Person (other than the parties

244
Solutia Inc. v. FMC Corp., 385 F. Supp. 2d 324, 337–38 (S.D.N.Y. 2005); Del Norte v.
WorldBusiness Capital, Inc., 2017 WL 4334005, at *12 (S.D.N.Y. Apr. 5, 2017) (“Even
when the contracting parties specifically intend to confer benefits on a third party, not all
consequential damages which flow from a breach of the contract are recoverable by the
third party. The contract must evince a discernible intent to allow recovery for the specific
damages to the third party that result from a breach thereof before a cause of action is
stated.”).
245
Solutia, 385 F. Supp. 2d at 338; United Int’l Hldgs., Inc. v. Wharf (Hldgs.) Ltd.,
988 F. Supp. 367, 372 (S.D.N.Y. 1997) (To be a third-party beneficiary of a contract with
its subsidiary, a parent must establish a benefit “beyond that provided to any parent
corporation from assets held by its wholly owned subsidiaries.”).
246
PAB at 100.
247
NOB at 31 (quoting Solutia, 385 F. Supp. 2d at 338).

55
hereto,[)] . . . any legal or equitable right.”248 New York law, like Delaware’s, is

clear that “[t]he best evidence of the intent to bestow a benefit upon a third party is

the language of the contract itself,” and a court will be reluctant to find third-party

beneficiary status when, as here, “a provision of the agreement expressly negates

enforcement by third parties.”249

Staggering, but undeterred, Plaintiffs clinch on to the Intercreditor Agreement

in search of a mutual statement of intent by Noble and CSM to confer third-party

beneficiary status upon SMP.250 That agreement, in its recitals, states, “[SMP]

anticipates to benefit directly from the [NLA].”251 Even if it were appropriate to

look beyond the NLA to establish an intent to benefit SMP with the NLA, a dubious

proposition of New York law, a unilateral statement that SMP “anticipates” benefits

from the NLA cannot reflect a mutual intent to provide third-party benefits under

the NLA. Both parties to a contract must “specifically intend to confer benefits on

a third party” to create third-party beneficiary status.252 SMP’s unilateral, extra-

248
NLA § 9.07(a).
249
767 Third Ave. LLC v. Orix Capital Mkts., LLC, 26 A.D.3d 216, 218 (N.Y. Sup. Ct.
App. Div. 2006); Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., Inc., 485 N.E.2d
208, 212 (N.Y. Ct. App. 1985) (To confer third-party beneficiary status, a contract must
“clearly evidence[] an intent to permit enforcement by the third party.”).
250
PAB at 99.
251
Id. (citing NOB at Ex. C (the Intercreditor Agreement)).
252
Strauss, 98 A.D.2d at 427.

56
contractual statement that it “anticipates” benefits is hardly an expression of mutual

intent.

Plaintiffs also fail to identify a direct benefit to SMP in the NLA. “Mere intent

to confer third-party rights is insufficient; there must be a benefit that is explicit and

direct.”253 By its own terms, Section 9.07 contains no “independent duty [that] run[s]

from [Noble] to [SMP] that bears on the claims.”254 Instead, Section 9.07 contains

two relevant promises that Noble made to CSM. First, Noble promised CSM not to

assign or transfer the Noble Loan to a member of the Lippo Group.255 Second, Noble

promised to give CSM “prior notice” before assigning the Noble Loan.256 On their

face, these are obligations Noble owed to CSM.257 Any benefit SMP received from

253
Solutia, 385 F. Supp. 2d at 337.
254
Id. In their Answering Brief, Plaintiffs vaguely reference certain duties Noble owed to
SMP under the NLA. Specifically, Plaintiffs reference duties “in connection with loan
documentation, amending other related contracts (e.g., the “Skye Credit Agreement” to
which SMP was a party), events of default, amendments to the [NLA], and confidentiality.”
PAB at 99. But a vague reference to these unrelated rights has nothing to do with the
specific provision SMP now seeks to enforce. See, e.g., Tradition Chile Agentes de Valores
Ltda. v. ICAP Sec. USA LLC, 2010 WL 4739938, at *9 (S.D.N.Y. Nov. 5, 2010) (holding
a parent lacked standing to enforce its subsidiary’s rights when its subsidiary signed a
contract that “expressly [made] reference to” the parent, but the specific provision the
parent sought to enforce (related to employment obligations) “makes no reference to [the
parent]”).
255
NLA § 9.07(a).
256
NLA § 9.07(b).
257
It is appropriate to observe here that Plaintiffs cannot have it both ways—they have
emphasized they are asserting derivative claims only on behalf of SMP, not CSM, in order
to avoid the preclusive effect of the Sale Order. They cannot attempt to have SMP slide
57
these provisions is an indirect result of its investment in CSM and is, therefore,

insufficient to confer third-party beneficiary status upon SMP.258 Of course, SMP

could have caused CSM to bargain for SMP’s third-party beneficiary rights. For

example, SMP could have caused CSM to bargain for notice or approval rights for

SMP before Noble could sell or assign the Noble Loan. But, again, it bargained for

no such thing.

*****

SMP is neither a party to the NLA nor a third-party beneficiary of that

contract. Thus, it lacks standing to enforce the NLA, and Count 13 must be

dismissed.

This holding has two consequences. First, because Plaintiffs lack standing to

enforce the NLA, Plaintiffs’ Count 14, alleging breach of the NLA’s implied

covenant, must also be dismissed.259 Second, because Plaintiffs have failed to allege

back into CSM’s shoes to assert claims under the NLA with a weak assertion of third-party
beneficiary status.
258
United Int’l Hldgs., 988 F. Supp. at 372 (“[Plaintiff] has not established that receipt of
the payments provided a direct benefit to the [parent] beyond that provided to any parent
corporation from assets held by its wholly owned subsidiaries, and this indirect benefit is
insufficient to establish third-party beneficiary status.”).
259
See OptimisCorp. v. Waite, 2015 WL 5147038, at *76 (Del. Ch. Aug. 26, 2015)
(“Only parties to an agreement can assert a claim for breach of the implied covenant.”).

58
an underlying breach of the NLA, Plaintiffs’ Count 12, alleging tortious interference

with the NLA, must also be dismissed.260

3. Breach of Fiduciary Duty Claims (Counts 6–8)

Three Counts in the Complaint assert breach of fiduciary duty claims:

 Count 6 alleges Cooper breached his contractual and common law fiduciary
duties and that Cooper’s breaches are attributable to Noronha, Michael Riady,
Stephen Riady and LCR as Cooper’s principals.261

 Count 7 alleges DXS and PacNet owed fiduciary duties because they
exercised “actual control” over SMP, and further alleges these breaches are
attributable to Noronha, Michael Riady, Stephen Riady and LCR as DXS and
PacNet’s principals.262

 Count 8 alleges Michael Riady, Stephen Riady and LCR owed fiduciary
duties as SMP’s controllers.263

SMP is a Delaware LLC and, as such, the Delaware Limited Liability

Company Act permits its members to “expand or restrict” the “member’s or

manager’s . . . duties.”264 Given the centrality of the operating agreement in

260
eCommerce Indus., Inc. v. MWA Intelligence, Inc., 2013 WL 5621678, at *37 (Del. Ch.
Sept. 30, 2013) (One of the elements of a claim for tortious interference with a contract is
a viable claim for “a breach of [] contract.”).
261
Compl. ¶¶ 163–69.
262
Compl. ¶¶ 170–76.
263
Compl. ¶¶ 177–82.
264
6 Del. C. §§ 18-1101(c), 18-1104; CHS Theatres, 2015 WL 1839684, at *11; Douzinas
v. Am. Bureau of Shipping, Inc., 888 A.2d 1146, 1149–50 (Del. Ch. 2006).

59
governance disputes involving alternative entities, “it is frequently impossible to

decide fiduciary duty claims without close examination and interpretation of the

governing instrument of the entity giving rise to what would be, under default law,

a fiduciary relationship.”265 And, because a LLC agreement is a contract, its

interpretation is generally subject to ordinary contract law principles.266

Without language in an LLC agreement to the contrary, the managers of a

Delaware LLC owe traditional fiduciary duties of care and loyalty.267 “Although

fiduciary duties may be disclaimed, agreements’ drafters must do so clearly, and

should not be incentivized to obfuscate or surprise investors by ambiguously

stripping away the protections investors would ordinarily receive.”268 Thus, this

court has consistently found that removal of default fiduciary duties through an LLC

agreement must be clear and unambiguous.269

With these basic principles in mind, the first step in my analysis of each of the

fiduciary duty claims is to construe the terms of the SMP Agreement against the

265
Douzinas, 888 A.2d at 1149–50.
266
Domain Assocs., L.L.C. v. Saha, 2018 WL 3853531, at *18 (Del. Ch. Aug. 13, 2018).
267
6 Del. C. § 18-1104; CHS Theatres, 2015 WL 1839684, at *11.
268
Ross Hldg. & Mgmt. Co. v. Advance Realty Gp., LLC, 2014 WL 4374261, at *15
(Del. Ch. Sept. 4, 2014).
269
CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *16 (Del. Ch. Jan. 31, 2017)
(citing Feeley v. NHAOCG, LLC, 62 A.3d 649, 664 (Del. Ch. 2012)).

60
backdrop of the applicable default rules to discern (i) which, if any, of the

Defendants owe fiduciary duties, (ii) the scope of those fiduciary duties and

(iii) whether the Complaint well pleads a breach of those duties.

a. Count 6

In Count 6, Plaintiffs allege Cooper owed SMP and its members fiduciary

duties of care, loyalty and candor as a manager of SMP.270 Plaintiffs also claim

Cooper breached those duties when he used his position to leak confidential

information and help the Lippo Group cut off SMP from capital in furtherance of its

scheme to acquire the Noble Loan and ultimately CSM’s assets.271 According to

Plaintiffs, because Cooper was acting as an agent for Noronha, Michael Riady,

Stephen Riady and LCR (the “Count 6 Defendants”) when he breached his duties,

these Lippo Group members are also liable for his fiduciary breaches.272

The parties draw the battle lines regarding Count 6 around the scope of

Cooper’s fiduciary duties.273 Lippo seizes on Section 5.1(h), which allows SMP’s

managers to “engage in whatever activities such Manager or its Affiliates may

270
Compl. ¶ 164.
271
Compl ¶¶ 163–69.
272
Compl ¶ 168.
273
PAB at 42; DOB at 35.

61
choose” without having an obligation to share opportunities with SMP.274

According to Lippo, because SMP’s managers need not share corporate

opportunities with the Company, “[t]he Noble Loan was not a corporate opportunity

that needed to be presented to SMP.”275 Thus, Cooper’s efforts to help the Lippo

Group acquire the Noble Loan could not be a breach of fiduciary duty.276

Plaintiffs’ riposte rests on Sections 5.1(f) and (g), which provide that SMP’s

managers are not exempt from liability any more than would be “permitted by the

[DGCL],” and emphasize that “a Manager has a fiduciary duty to the Company and

the Members that is the same as the duty that a director of a Delaware corporation

owes to a corporation and its stockholders.”277 According to Plaintiffs, these

provisions clearly express the parties’ intent to hold SMP’s managers to the same

fiduciary duties they would owe if they were directors of a Delaware corporation.278

After carefully reviewing the SMP Agreement, I am satisfied that it

unambiguously holds SMP’s managers to contractual fiduciary duties that are the

same as common law fiduciary duties in all regards, except with respect to corporate

274
DRB at 19; SMP Agreement § 5.1(h).
275
DRB at 20.
276
Id.
277
SMP Agreement §§ 5.1(f), (g).
278
PAB at 47–48.

62
opportunities.279 When viewed through this lens, Lippo’s arguments that Plaintiffs

have failed to state viable breach of fiduciary duty claims, at least as against some

members of the Lippo Group, miss the mark.

Considering the Complaint as a whole, Cooper allegedly:

 learned CSM’s assets were worth $600 million through his role as a
SMP Board member and shared that information with the Lippo Group
while concealing it from SMP’s other Board members;280

 filed a lawsuit along with DXS and PacNet seeking to cut off SMP from
capital in order to harm SMP and increase the Lippo Group’s
leverage;281

 lied to SMP’s other Board members when they asked whether he was
involved in any discussions regarding purchasing the Noble Loan;282

 refused to attend SMP Board meetings to prevent SMP from responding
to the liquidity crisis;283 and

 used his position on the Board to engage in the Unauthorized Acts—
harming SMP and benefitting the Lippo Group.284

279
See CelestialRX, 2017 WL 416990, at *17–18 (interpreting similar language to
“eschew[] the corporate opportunity doctrine”); Scion Breckenridge Managing Member,
LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665, 683 (Del. 2013) (observing that
under Delaware law, courts “interpret clear and unambiguous contract terms according to
their plain meaning”).
280
Compl. ¶¶ 70–71.
281
Compl. ¶ 64.
282
Compl. ¶ 104.
283
Compl. ¶¶ 81, 85.
284
Compl. ¶¶ 121–22.

63
Lurking behind each of these allegations is the Cooper/Noronha Email where

Cooper, referring to himself, Noronha and the Riady family stated, “. . . then we can

sit back and hold our position and when this [i.e., CSM] collapses we have the first

lien and can buy it out of bankruptcy very cheap.”285

In sum, Plaintiffs have pled facts supporting a reasonable inference that

Cooper used his status as a SMP fiduciary to harm SMP and benefit the Lippo

Group.286 When a fiduciary, in his own words, intentionally “sit[s] back” while his

company “collapses” so that another to whom he is beholden can buy the company’s

assets “out of bankruptcy very cheap,” it is reasonably conceivable that he has

breached the fiduciary duty of loyalty.287 It is also reasonably conceivable that his

breach exceeds the scope of behavior the corporate opportunity doctrine prohibits

such that the contractual corporate opportunity carve-out does not bar the claim.288

285
Compl. ¶ 80.
286
Compl. ¶¶ 64, 70–71, 80–81, 85, 104, 121–22.
287
See Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993), decision modified
on reargument, 636 A.2d 956 (Del. 1994) (“Essentially, the duty of loyalty mandates that
the best interest of the corporation and its shareholders takes precedence over any interest
possessed by a director, officer or controlling shareholder and not shared by the
stockholders generally.”); Obeid v. Hogan, 2016 WL 3356851, at *6 (Del. Ch. June 10,
2016) (“If the drafters [of an LLC agreement] have opted for manager-managed entity,
created a board of directors, and adopted other corporate features, then the parties to the
agreement should expect a court to draw on analogies to corporate law.”).
288
See Broz v. Cellular Info. Sys., Inc., 673 A.2d 148, 154–55 (Del. 1996) (“The corporate
opportunity doctrine . . . holds that a [fiduciary] may not take a business opportunity for
his own if: (1) the corporation is financially able to exploit the opportunity; (2) the
opportunity is within the corporation’s line of business; (3) the corporation has an interest
64
Even if Cooper was not obliged to “share” the Noble Loan with Plaintiffs, that

allowance did not give him license to harm SMP by conspiring to drive CSM into

bankruptcy through the acquisition of the Noble Loan or otherwise.289 As a result,

Lippo’s Motions to Dismiss Count 6 against Cooper must be denied.290

Having found that Plaintiffs have well pled Count 6 against Cooper, I must

address Plaintiffs’ theory that Cooper breached his fiduciary duties as an agent for

the Count 6 Defendants such that those defendants are also answerable for Cooper’s

breach(es).291 To establish a principal’s liability for the acts of his agent, a plaintiff

must allege facts supporting a reasonable inference that a principal-agent

or expectancy in the opportunity; and (4) by taking the opportunity for his own, the
corporate fiduciary will thereby be placed in a position inimicable to his duties to the
corporation.”); see also Feeley, 62 A.3d at 664 (If they seek to eliminate fiduciary duties,
an LLC agreement’s drafters “must make their intent . . . plain and unambiguous.”).
289
See, e.g., Compl. ¶¶ 121–22 (Cooper allegedly took specific actions as a SMP manager
to help the Lippo Group “divest SMP of its interest” in CSM.).
290
Lippo misplaces its arguments that Plaintiffs’ allegations “have nothing to do with
Cooper’s role as SMP’s Manager” and that “Cooper had no ability to control the Board.”
See DOB at 35. First, a fiduciary cannot simply “change hats” and thereby shed himself
of fiduciary obligations. See Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983) (“There
is no dilution of [fiduciary] obligation[s] where one holds dual or multiple directorships.”);
Emerald P’rs v. Berlin, 787 A.2d 85, 90 (Del. 2001) (“[F]iduciary responsibilities do not
operate intermittently.”). Second, while Cooper’s ability to control a majority of the Board
might be relevant at times, such as when undertaking a demand futility analysis under Court
of Chancery Rule 23.1, it does not change whether Cooper owed fiduciary duties in the
first instance or whether it is reasonably conceivable that he breached those duties.
291
Compl. ¶ 168 (“[A]t all relevant times, Cooper was an agent of Noronha, Michael Riady,
Stephen Riady, and LCR, who acted on their behalves and at their direction in pursuing the
interests of the Lippo Group.”).

65
relationship existed.292 “An agency relationship, as a matter of law, is a fiduciary

relationship . . . that arises when one person (a ‘principal’) manifests assent to

another person (an ‘agent’) that the agent shall act on the principal’s behalf and

subject to the principal’s control, and the agent manifests assent or otherwise

consents so to act.”293

Lippo argues Plaintiffs have failed to allege that the Count 6 Defendants

“consented to have [Cooper] act on [their] behalf.”294 Plaintiffs counter that they

deserve a “reasonable inference” that “Noronha, the Riadys, and LCR consented to

292
See, e.g., Baccellieri v. HDM Furniture Indus., Inc., 2013 WL 1088338, at *3–4
(Del. Super. Ct. Feb. 28, 2013), aff’d, 74 A.3d 653 (Del. 2013) (reviewing whether
plaintiffs had adequately alleged facts supporting an inference that a principal-agent
relationship existed).
293
NAMA Hldgs., LLC v. Related WMC LLC, 2014 WL 6436647, at *20 (Del. Ch. Nov. 17,
2014) (internal quotation omitted). “There are three distinct bases on which the common
law of agency attributes the legal consequences of one person’s action to another person:
actual authority, apparent authority, and respondeat superior.” Hospitalists of Del., LLC v.
Lutz, 2012 WL 3679219, at *17 n.102 (Del. Ch. Aug. 28, 2012) (citing RESTATEMENT
(THIRD) OF AGENCY ch. 2, intro. note (2006)) (internal quotation omitted). While not
entirely clear, in their Answering Brief, Plaintiffs appear to argue Cooper acted with the
Count 6 Defendants’ actual authority when he breached his fiduciary duties. See PAB at
64 (“Under Delaware law, a principal is liable for the torts of his agent when the agent acts
with the principal’s actual authority, i.e., that authority which a principal expressly or
implicitly grants to an agent.”) (emphasis supplied) (internal quotation omitted). “Actual
authority, then, is created by a principal’s manifestation to an agent that, as reasonably
understood by the agent, expresses the principal’s assent that the agent take action on the
principal’s behalf.” Sarissa Capital Domestic Fund LP v. Innoviva, Inc.,
2017 WL 6209597, at *16 (Del. Ch. Dec. 8, 2017) (internal quotation omitted). Ultimately,
for the reasons I explain below, it makes no difference whether one analyzes Plaintiffs’
claims under actual authority, apparent authority or respondeat superior.
294
DOB at 40.

66
Cooper, DXS, and PacNet acting on their behalves where . . . these defendants

directed and controlled Cooper, DXS, and PacNet in connection with the conduct at

issue.”295

The problem with Plaintiffs’ principal-agent theory is that it misconstrues the

fundamentals of agency law. A defining feature of the principal-agent relationship

is the principal’s right to control the agent’s conduct.296 Plaintiffs have not well pled

that the Count 6 Defendants had any right to force Cooper to take the actions that

allegedly comprise his breach of fiduciary duties. Instead, what Plaintiffs have

alleged is that Cooper breached his fiduciary duties when he exercised his own rights

and obligations as a SMP Board member.297 Cooper derived these rights from

Section 5.1 of the SMP Agreement—not from any alleged principal-agency

relationship.298

295
PAB at 64.
296
3 AM. JUR. 2D AGENCY § 18 (“Fundamental to the existence of an agency relationship
is the right to control the conduct of the agent with respect to the matters entrusted to him
or her.”); RESTATEMENT (THIRD) OF AGENCY § 1.01(c) (“An agent who has actual
authority holds power as a result of a voluntary conferral by the principal and is privileged,
in relation to the principal, to exercise that power.”).
297
See, e.g., Compl. ¶¶ 60 (“Cooper refused to sign a January 15, 2015, written consent
[Board] action.”).
298
SMP Agreement §§ 4.5 (“[T]he day-to-day management of the Company is vested in
the [Board]. The Members shall have no power, as Members, to participate in the
management of the Company.”), 5.1 (“The business and affairs of the Company will be
managed and all Company power will be exercised by or under the direction of the
[Board].”); PAB at 64.

67
 Plaintiffs ask me to “infer” a principal-agent relationship based on the Count 6

Defendants’ ability to “direct[] and control[] Cooper, DXS, and PacNet in

connection with the conduct at issue.”299 But “effective power to control” is not

enough to establish a principal-agent relationship.300 Indeed, “[e]ven when the

parent owns all the stock in the subsidiary, [the subsidiary’s directors] are not agents

of the parent.”301 As our Supreme Court explained in Weinstein Enterprises, Inc. v.

Orloff:

The parent, once having elected directors, does not have a right
thereafter to intervene. To impose a duty of obedience on directors,
moreover, would conflict with the fundamental point that corporate law
assigns ultimate managerial power and responsibility to directors. The
parent thus lacks the right to assert control through interim instructions,
a defining hallmark of a legal relationship of agency. This is not a point
of merely formal or definitional significance. As the preceding
discussion illustrates, the distinction between a right of control and the
effective power to control often has practical consequences. In the
absence of a right to control the directors it elects, the parent must either
disregard their existence, a move disrespectful of the corporate
paraphernalia that jeopardizes the corporate veil, . . . or the parent must
take steps to exercise its power by coercing the directors or removing
them, moves that have drawbacks of their own.302

299
PAB at 64.
300
Weinstein Enters., Inc. v. Orloff, 870 A.2d 499, 509 (Del. 2005).
301
Cochran v. Stifel Fin. Corp., 2000 WL 286722, at *17 n.70 (Del. Ch. Mar. 8, 2000),
rev’d on other grounds, 809 A.2d 555 (Del. 2002).
302
Weinstein, 870 A.2d at 509 (citing Deborah A. DeMott, The Mechanisms of Control, 13
CONN. J. OF INT. L. 233, 253 (1999) (“DeMott”)). In her thoughtful article, Professor
DeMott provides a helpful explanation of the agency relationships created when a parent
places directors on a subsidiary’s board. Concerning such directors, she writes, “[t]o the
extent they serve as the parent’s agents, the scope of their agency is limited to the faithful
68
 If a 100% controlling stockholder lacks the requisite rights and authority to

establish a principal-agent relationship with the directors of its subsidiary, then, a

fortiori, the Count 6 Defendants (who held no SMP units) cannot be held liable under

a principal-agent theory for Cooper’s alleged fiduciary breaches. The Count 6

Defendants’ efforts to coerce Cooper may expose them to liability based on other

applications of Delaware law, but that liability, if it exists, cannot arise from a

principal-agent relationship.

*****

For these reasons, Lippo’s Motions to Dismiss Count 6 must be denied as to

the claims against Cooper, but granted as to the direct claims for breach of fiduciary

duty brought against Noronha, Michael Riady, Stephen Riady and LCR.

b. Counts 7 and 8

In Counts 7 and 8, Plaintiffs bring direct and derivative breach of fiduciary

duty claims against DXS, PacNet, Noronha, Michael Riady, Stephen Riady and LCR

(the “Alleged Controllers”).303 Plaintiffs argue the Alleged Controllers owed

expression of the parent’s instructions and, if so instructed, faithful reporting back to the
parent. The scope of the agency does not encompass decisions directors make that
implicate the interests of the corporation. A broader scope is inconsistent with deeply
entrenched assumptions about corporate governance.” DeMott at 254 (emphasis supplied).
303
Compl. ¶¶ 163–76.

69
fiduciary duties to SMP and its members even though they were neither SMP’s

managers nor holders of a majority of its outstanding membership units.304 Indeed,

of the Alleged Controllers, only DXS and PacNet held any SMP units.305 For reasons

explained below, I find Plaintiffs have well pled contractual breach of fiduciary duty

claims against PacNet and DXS, but not against the other Alleged Controllers.

Because Delaware law recognizes the primacy of contract when addressing

governance issues in the alternative entity space, Plaintiffs may not saddle the

Alleged Controllers with common law fiduciary duties if doing so would contradict

the SMP Agreement’s plain language.306 On the other hand, if the SMP Agreement

does not unambiguously disavow common law fiduciary duties, I must look to

304
Compl. ¶¶ 172, 179.
305
Compl. ¶ 35. Three theories animate the allegations in Counts 7 and 8. First, Plaintiffs
allege DXS and PacNet exercised actual control over SMP, albeit from a minority position,
by virtue of their Blocking Rights. In turn, this actual control gives DXS and PacNet
fiduciary duties, which they breached by starving SMP of capital and “diverting to
Waterloo a corporate opportunity belonging to SMP.” Compl. ¶ 173. Second, DXS and
PacNet allegedly are “agents” of the remaining Alleged Controllers such that they are liable
for DXS and PacNet’s alleged breaches of fiduciary duty. Compl. ¶ 175. Third, Plaintiffs
summarily allege Michael Riady, Stephen Riady, and LCR exercised actual control over
SMP such that they owe fiduciary duties. See Compl. ¶¶ 173, 178.
306
See 6 Del. C. §§ 18-1101(c), (e); Fisk Ventures LLC v. Segal et al., 2008 WL 1961156,
at *8 (Del. Ch. May 7, 2008) (“In the context of [LLCs], which are creatures . . . of contract,
those duties or obligations [among parties] must be found in the LLC Agreement or some
other contract.”); Related Westpac LLC v. JER Snowmass LLC, 2010 WL 2929708, at *8
(Del. Ch. July 23, 2010) (“When . . . parties . . . cover a particular subject in an express
manner, their contractual choice governs and cannot be supplanted by the application of
inconsistent fiduciary duty principles that might otherwise apply as a default.”).

70
corporate law principles by analogy when determining whether and to what extent

fiduciary duties are owed.307

The parties have identified two relevant provisions in the SMP Agreement.

First, Section 4.3 addresses members’ fiduciary duties: “In view of the limited

purposes of the Company, no Member nor any of its Affiliates shall have any

fiduciary obligations with respect to the Company or to the other Members insofar

as making other investment opportunities available to the Company or to the other

Members.”308 Second, Section 4.6 provides that “except as otherwise specifically

provided in this Agreement, all votes, approvals, or consents of a Member may be

given or withheld, conditioned or delayed, as such Member may determine in such

Member’s sole and absolute discretion.”309

The clear import of both Sections 4.3 and 4.6 is that the SMP Agreement

modifies, but does not eliminate, common law fiduciary duties for members.310

307
Obeid, 2016 WL 3356851, at *6.
308
SMP Agreement § 4.3. The SMP Agreement defines “Affiliate” to mean “any Person,
directly or indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with, a Member, Manager, or any other entity, as applicable.”
SMP Agreement § 1.01 (definition of “Affiliate”). Thus, the term “Affiliate” would
include all of the Alleged Controllers. See Compl. ¶ 6 (“Defendant LCR is an entity that
owns and controls DXS and PacNet and, on information and belief, is owned and controlled
by the Riady family, and/or its affiliates and controlled parties.”).
309
SMP Agreement § 4.6(a).
310
See, e.g., Norton, 67 A.3d at 361 (discussing agreements in the alternative entity space
that “attempt to modify, rather than eliminate, fiduciary duties” and holding that a
71
Section 4.3 unambiguously “eschews the corporate opportunity doctrine.”311

Section 4.6, however, is more complicated. As noted, that provision affords

members the right to “vote, approve or consent,” or not, in that member’s “sole and

absolute discretion.”312 According to the Alleged Controllers, the “sole discretion”

language in Section 4.6 is an unambiguous waiver of any “Member-level fiduciary

duty.”313 I disagree.

If the SMP Agreement’s drafters wished to exempt members from the

fiduciary duty of loyalty, they could do so only with express disclaimer language,

not “by implication.”314 Plaintiffs have alleged member fiduciaries took a “bad faith

action to injure [SMP] for [their] own personal advantage.”315 This allegation

implicates the “core aspect of the duty of loyalty,” which the “sole discretion”

controller’s “sole discretion” approval right was inconsistent with the duties a controlling
shareholder would owe under corporate law principles).
311
CelestialRX, 2017 WL 416990, at *18 (interpreting similar language).
312
See Norton, 67 A.3d at 362 (construing similar language).
313
DOB at 29.
314
Miller v. Am. Real Estate P’rs, L.P., 2001 WL 1045643, at *7 (Del. Ch. Sept. 6, 2001).
315
Id., at *11; Compl. ¶¶ 76 (“The Lippo Group . . . use[d] its blocking rights over any
financing proposals to hold SMP hostage.”), 173 (DXS and PacNet “plac[ed] their own
and the Lippo Group’s interests, to control and own CSM or its assets, above the interests
of SMP.”), 180 (“Michael Riady, Stephen Riady, and LCR breached their fiduciary duties
to SMP . . . by . . . using DXS’s and PacNet’s blocking rights to starve SMP of capital.”).

72
language cannot “coyly” eliminate.316 “To the extent that an Agreement purports to

insulate a [fiduciary] from liability even for acts of bad faith . . . it should do so in

the most painstakingly clear terms.”317 The day may come when this court must

decide whether to enforce express language that “permits a [fiduciary]—by its

unmistakable terms—to exercise its discretion in bad faith,” but today is not that

day.318

Having determined the SMP Agreement imposes a contractual governance

standard that leaves open the possibility that a member fiduciary breached its

common law duty of loyalty by acting in bad faith to injure SMP, the next analytical

step is to consider whether it is reasonably conceivable the Alleged Controllers

actually were member fiduciaries by virtue of their status as conflicted controlling

members. As a general rule, stockholders owe no fiduciary duties to their fellow

stockholders.319 Under Delaware law, however, a stockholder may owe fiduciary

duties if he is a “controlling stockholder,” a status that is acquired when the

stockholder (1) “owns more than 50% of the company’s voting power” or (2) “owns

316
Miller, 2001 WL 1045643, at *9, *11.
317
Id., at *11.
318
Id. (noting that such a provision could conflict with Delaware public policy.).
319
Basho Tech. Holdco B, LLC v. Georgetown Basho Inv’rs, LLC, 2018 WL 3326693,
at *25 (Del. Ch. July 6, 2018).

73
less than 50% of the voting power of the corporation but exercises control over the

business affairs of the corporation.”320

Plaintiffs concede the Alleged Controllers held less than 50% of SMP’s

outstanding membership units.321 Thus, Plaintiffs must plead facts that allow a

reasonable inference that the Alleged Controllers “exercise[d] such formidable

voting and managerial power that, as a practical matter, [they were] no differently

situated than if [they] had majority voting control.”322

As pled, it is reasonably conceivable that DXS and PacNet possessed actual

control over SMP.323 Multiple factors can support such a finding, but the focal point

of my analysis is DXS and PacNet’s Blocking Rights in context with the Noble

Loan.324 A reasonable inference can be drawn from the Complaint that the Blocking

320
In re KKR Fin. Hldgs. LLC S’holder Litig., 101 A.3d 980, 991 (Del. Ch. 2014)
(emphasis in original) (internal quotation omitted). A collection of stockholders, acting in
concert, may be deemed to exercise a “control block” and, together, may be deemed
controlling stockholders even if, alone, that label would not fit. See Buttonwood Tree
Value P’rs, LP v. R.L. Polk & Co., Inc., 2017 WL 3172722, at *6 (Del. Ch. July 24, 2017).
321
Compl. ¶ 35.
322
In re Morton’s Rest. Gp., Inc. S’holders Litig., 74 A.3d 656, 665 (Del. Ch. 2013)
(internal citations and quotations omitted); In re PNB Hldg. Co. S’holders Litig.,
2006 WL 2403999, at *9 (Del. Ch. Aug. 18, 2006).
323
See Basho, 2018 WL 3326693, at *25 (“If a defendant wields control over a
corporation” either “generally or with regard to a particular transaction,” then “the
defendant takes on fiduciary duties, even if the defendant is a stockholder who otherwise
would not owe duties in that capacity.”).
324
Id., at *26 (noting that a plaintiff can show a minority blockholder’s domination and
control in various ways including personal relationships with board members, contractual
74
Rights amounted to a self-destruct button which allowed DXS and PacNet to “wield

control” by driving SMP into the ground if it suited their interests.325 Once SMP’s

operating subsidiary took on the Noble Loan and started Phase II, Plaintiffs deserve

an inference that SMP would require imminent, substantial and ongoing capital

contributions to fund that all-important project and service that debt.326 Under these

circumstances, it is reasonably conceivable that the Blocking Rights amounted to an

on/off switch for SMP that could be, and allegedly was, manipulated by DXS and

PacNet to serve their interests at the expense of SMP.

Citing Basho Technologies v. Georgetown Basho Investors, Lippo argues that

a mere “blocking right standing alone is highly unlikely to support either a finding

or a reasonable inference of control.”327 I agree. But Plaintiffs have alleged more.

Specifically, they have alleged DXS and PacNet participated in a concerted effort to

place SMP in a precarious financial condition (i.e. a conspiracy to harm, as discussed

rights, commercial relationships, de facto ability to remove directors or the company’s own
characterizations of the minority blockholder’s influence).
325
Id., at *25.
326
Compl. ¶¶ 49–50.
327
DRB at 12 (citing Id., at *26 n.315). In Basho, this court held it was reasonably
conceivable that a minority stockholder owed fiduciary duties when, among other factors,
it “used its contractual rights to cut off the Company’s access to other sources of
financing.” Id., at *29. Then, when the company was in a “position of maximum financial
distress,” the company was forced to accept financing from the minority stockholder. Id.

75
below), and then exercised their leverage with the Blocking Rights to steer CSM off

the cliff into the bankruptcy ravine below.328 The Complaint well-pleads that the

Blocking Rights allowed DXS and PacNet to block all of SMP’s efforts to finance

any of its ongoing operations—with either debt or equity.329 That, in turn, prompted

the Noble Loan default, the Fourth Amendment and the subsequent acquisition of

the Noble Loan by Waterloo. When blocking rights empower a minority investor to

“channel the corporation into a particular outcome,” they contribute to an inference

of control.330 Here, Plaintiffs make an even stronger case as the Blocking Rights did

more than “channel” SMP to a particular outcome.331 Instead, as pled, the Blocking

Rights gave DXS and PacNet the unilateral power to shut SMP down—full stop.332

Indeed, DXS and PacNet did exercise the Blocking Rights to prevent capital

contributions by SMI and CC (even at levels of $2.5 million and $3.75 million),

328
Compl. ¶¶ 6, 27, 37, 45–45, 57, 68–69, 85–87, 115–20, 126, 128.
329
Compl. ¶¶ 44–46, 76; SMP Agreement §§ 4.6(b)(i)(1)–(18).
330
Basho, 2018 WL 3326693, at *29; see also Thermopylae Capital P’rs, L.P. v. Simbol,
Inc., 2016 WL 368170, at *14 (Del. Ch. Jan. 29, 2016) (discussing the difference between
“operat[ing] the decision-making machinery of the corporation” (a “classic fiduciary”) and
“an individual who owns a contractual right, and who exploits that right,” forcing a
corporation to “react[]” (which does not support a fiduciary status)).
331
Basho, 2018 WL 3326693, at *26.
332
SMP’s sole asset was its investment in CSM, and without access to capital, CSM would
fail given its obligations under the Noble Loan and need to complete Phase II. Compl. ¶¶ 9,
48–51, 57–58.

76
which, predictably, bankrupted SMP’s sole asset.333 Giving all reasonable

inferences to Plaintiffs, I am persuaded the Complaint pleads a reasonably

conceivable claim that DXS and PacNet exercised actual control over SMP. The

Complaint also supports a reasonable inference that DXS and PacNet breached their

duties by exercising their Blocking Rights in bad faith intending to harm SMP.

As for the remaining Alleged Controllers, however, it is not reasonably

conceivable they exercised “actual control” over SMP.334 Noronha, Michael Riady,

Stephen Riady and LCR owned no SMP units, appointed none of SMP’s Board

members and held no contractual blocking rights.335

Plaintiffs’ arguments concerning Noronha, Michael Riady, Stephen Riady and

LCR ask me to lash the individual rights of the separate entities and individuals

comprising the “Lippo Group” together when assessing the degree of control

333
Compl. ¶ 46.
334
Basho, 2018 WL 3326693, at *26.
335
See Compl. ¶¶ 27 (DXS and PacNet appointed Cooper to the SMP Board.), 35
(The remaining Alleged Controllers held no SMP membership units.); SMP Agreement
§§ 1.01 (definition of “Requisite Holders”), 4.6(b)(i) (The Blocking Rights were held by
the holders of 75% of SMP’s class A units.). Waterloo held the Noble Loan (which could
be considered a lender relationship supporting an inference of control), but Waterloo is not
named among the Alleged Controllers. Compl. ¶¶ 163–76. As for Noronha, his
observation rights gave him no power to control SMP’s actions. See SMP Agreement
§ 5.1(l).

77
exercised by each non-member.336 The Lippo Group is not, itself, a business

organization recognized as such under Delaware Law.337 In the absence of some

legally cognizable association, I must show “respect for corporate separateness,” and

analyze each individual Lippo Group member’s control over SMP separately.338

Through this lens, Plaintiffs’ arguments concerning Noronha, Michael and Stephen

Riady and LCR fail for two reasons.

First, any influence these Alleged Controllers had over Cooper cannot, by

itself, support an inference of actual control.339 This must be the case because the

ability to control Cooper does not amount to influence over a majority of SMP’s

Board.340

336
See, e.g., Compl. ¶ 6 (“During the relevant period, the Lippo Group effectively
controlled SMP’s and (through SMP) [CSM’s] operations.”).
337
Compl. ¶ 5 (“The Lippo Group consists of a global network of entities primarily owned
and operated by, and primarily for the benefit of, the Riady family.”).
338
NAMA Hldgs., 2014 WL 6436647, at *26.
339
See, e.g., Compl. ¶¶ 128(f) (“Michael Riady had the ability to fire Cooper.”), (h)
(“Before making decisions, Cooper would check with ‘the family’ or the ‘group.’”).
340
Calesa Assocs. L.P. v. Am. Capital, Ltd., 2016 WL 770251, at *11 (Del. Ch. Feb. 29,
2016) (finding it was reasonably conceivable that a minority stockholder exercised actual
control over a specific transaction when a plaintiff pled facts supporting a reasonable
inference that “a majority of the Board was not independent or disinterested, but rather was
under the influence of, or shared a special interest with [the minority stockholder]”);
Thermopylae, 2016 WL 368170, at *14 (“It is, of course, conceivable that [a minority
stockholder] was a fiduciary controller at the time of the re-pricing transaction, assuming
it had achieved control or influence over a majority of directors through non-contractual
means.”).

78
 Second, any attempts either to (i) hold these defendants liable as DXS and

PacNet’s “principals” or (ii) attribute DXS and PacNet’s Blocking Rights to the

Lippo Group, conflict with fundamental corporate law.341 As to the former, as

explained above, without more, Plaintiffs cannot rely on principal-agent theory to

attribute DXS and PacNet’s exercise of control to their alleged principals. To the

extent DXS and PacNet owed fiduciary duties to SMP and its other members, no

person or entity had a right to direct their actions as SMP fiduciaries.342 The lack of

such a right undermines a principal-agent relationship for purposes of imputing

fiduciary duties to non-fiduciaries.343 Likewise, Plaintiffs cannot somehow impute

the Blocking Rights possessed by DXS and PacNet to other members of the Lippo

Group. Put simply, a conclusory statement that someone is a “controller of a

controller,” without more, does not get Plaintiffs where they want to go.344 Delaware

341
While Weinstein only addressed principal-agent law in context of a principal’s
relationship to her agent as a member of a board of directors, the same reasoning applies
to a controlling stockholder’s fiduciary duties. That is, fiduciary responsibilities are
“independent” duties. Weinstein, 870 A.2d at 509. Once a principal places her agent in a
position of fiduciary responsibility, whether as a director or a controlling stockholder, she
no longer has the right to tell the agent-fiduciary how to make decisions implicating those
fiduciary duties. Id.
342
Weinstein, 870 A.2d at 509.
343
3 AM. JUR. 2D AGENCY § 18 (“Fundamental to the existence of an agency relationship
is the right to control the conduct of the agent with respect to the matters entrusted to him
or her.”).
344
Hospitalists of Del., 2012 WL 3679219, at *10. Plaintiffs cite three cases in their
Answering Brief for the proposition that “[c]ourts have repeatedly imposed fiduciary duties
79
respects “corporate separateness, which recognizes that because a subsidiary is a

separate entity, a parent and its subsidiary are not regarded as a single economic

unit.”345 Thus, in the absence of other allegation of “control of the controllers,” any

control rights DXS and PacNet held as parties to the SMP Agreement belong to DXS

and PacNet alone, not to LCR, Noronha or the Riadys.346

In summary, the Motions to Dismiss Count 7 are denied as to DXS and

PacNet. The Motions to Dismiss Counts 7 and 8 are granted as to Noronha, Michael

Riady, Stephen Riady and LCR. By extension, Count 9, which is pled in the

alternative to Count 7 against DXS and PacNet, is dismissed. Count 3, alleging DXS

on the persons who ultimately control the entity, including those who ultimately control
the entities’ fiduciaries, such as its managers, board members, general partners, or
controlling stockholders.” PAB at 62. None of the cases Plaintiffs cite stand for the
proposition that a controller of a controller owes fiduciary duties to its indirect subsidiaries
based on its ownership interests alone. See Gotham P’rs, L.P. v. Hallwood Realty P’rs,
L.P., 817 A.2d 160, 173 (Del. 2002) (holding certain individuals liable for aiding and
abetting a breach of fiduciary duty); Glidepath Ltd. v. Beumer Corp., 2019 WL 855660, at
*18 (Del. Ch. Feb. 21, 2019) (involving an individual who both (i) controlled a controlling
LLC’s member and was designated veto rights, in his individual capacity, to veto certain
actions); Virtus, 2015 WL 580553, at *4, *17–18 (involving an individual who both
(i) controlled entities that controlled the corporation at issue and (ii) had personal
relationships with the corporation’s board of directors so that it was not the individual’s
ownership of a controller, alone, that subjected him to breach of fiduciary duty claims).
345
NAMA Hldgs., 2014 WL 6436647, at *35.
346
See SMP Agreement § 4.6.

80
and PacNet exercised their Blocking Rights in breach of the implied covenant, also

must be dismissed.347

4. Aiding and Abetting (Count 10)

In Count 10, Plaintiffs allege aiding and abetting breaches of fiduciary duty

against Noronha, Waterloo, Michael Riady, Stephen Riady, LCR and Noble.348

To state a claim of aiding and abetting, a complaint must plead facts in support of

four elements: (1) the existence of a fiduciary relationship, (2) a breach of a fiduciary

duty, (3) defendant’s knowing participation in that breach and (4) damages

proximately caused by the breach.349 I addressed the first two elements in my

previous findings that the Complaint states a reasonably conceivable claim of breach

of fiduciary duty against Cooper, DXS and PacNet. Defendants do not attack the

Complaint’s causation allegations. Thus, as is often the case in aiding and abetting

litigation, given the Court’s finding that Plaintiffs have pled breach claims, the

347
Count 3 alleges DXS and PacNet “exercise[ed] their [B]locking [R]ights under the SMP
Agreement” in bad faith by “starving SMP of timely capital.” Compl. ¶¶ 147–48.
As I have found Plaintiffs have well pled a breach of a contractual fiduciary duty based on
the same underlying conduct, Count 3 is duplicative of Count 7 and must be dismissed.
See Edinburgh Hldgs., Inc. v. Educ. Affiliates, Inc., 2018 WL 2727542, at *8 (Del. Ch.
June 6, 2018) (dismissing an implied covenant claim “based upon the same conduct as
[a] contract claim[]”).
348
Compl. ¶¶ 188–92.
349
Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001).

81
parties focus their arguments on whether Plaintiffs have adequately pled “knowing

participation” by the alleged aiders and abettors.350

An adequate pleading of “knowing participation” requires the plaintiff to well

plead scienter.351 “To establish scienter, the plaintiff must demonstrate that the aider

and abettor had actual or constructive knowledge that their conduct was legally

improper,” and that he acted with “an illicit state of mind.”352 “[T]he requirement

that the aider and abettor act with scienter makes an aiding and abetting claim among

the most difficult to [plead and] prove.”353 Yet it is not impossible.

“A claim of knowing participation need not be pled with particularity.” 354

There must, however, “be factual allegations in the complaint from which knowing

participation can be reasonably inferred.”355 Under Delaware law, “the knowledge

350
See DOB at 53 (“Plaintiffs fail the ‘high bar’ heightened aiding and abetting pleading
standard that a defendant must have ‘acted with scienter.’”).
351
See RBC Capital Mkts., LLC v. Jervis, 129 A.3d 816, 861–62 (Del. 2015) (quoting
Malpiede, 780 A.2d at 1097) (“As an example, this Court has said that ‘a bidder may be
liable to the target’s stockholders if the bidder attempts to create or exploit conflicts of
interest in the board.’”).
352
Id. at 862 (internal quotation omitted).
353
Id.
354
Carr v. New Enter. Assocs., Inc., 2018 WL 1472336, at *16 (Del. Ch. Mar. 26, 2018)
(internal citation and quotation omitted).
355
In re Shoe-Town, Inc. S’holders Litig., 1990 WL 13475, at *8 (Del. Ch. Feb. 12, 1990).

82
of an agent acquired while acting within the scope of his or her authority [and the

acts of agents within that scope] [are] imputed to the principal.”356

a. Noronha, Michael Riady, Stephen Riady, Waterloo and LCR

The Complaint alleges that a complex web of principal-agent relationships

existed inside the Lippo Group. A careful study of the Complaint reveals well-pled

allegations that Cooper, DXS and PacNet were “agents” acting for each of the other

members of the Lippo Group.357

In Metropolitan Life Insurance Company v. Tremont Group Holdings, the

court applied agency law to find that plaintiffs had stated a claim against a corporate

parent for aiding and abetting its subsidiary’s breach of fiduciary duty.358 The court

based this holding on three allegations: (i) the parent “dominated and controlled” its

356
Metro. Life Ins. Co. v. Tremont Gp. Hldgs., Inc., 2012 WL 6632681, at *19 (Del. Ch.
Dec. 20, 2012).
357
Compl. ¶¶ 65 (“Michael Riady, Stephen Riady, LCR, and Noronha directed DXS,
PacNet, and Cooper to file the declaratory judgment action in Delaware.”), 72 (“Stephen
and Michael Riady . . . directed and controlled Cooper, Noronha, DXS and PacNet as their
agents at all relevant times.”), 122 (“The Riadys . . . directed Cooper and Noronha to” take
the Unauthorized Acts.), 137 (“Cooper, Noronha, PacNet, and DXS were agents of Michael
Riady, Stephen Riady and LCR.”), 168 (“Cooper was an agent of Noronha, Michael Riady,
Stephen Riady, and LCR.”), 175 (“DXS and PacNet were agents of Noronha, Michael
Riady, Stephen Riady, and LCR.”), 128(c), (g) (Michael Riady was Cooper’s boss and
could fire Cooper.), 128(h) (Stephen Riady hired Noronha and directed him to participate
in SMP’s management.), 128(h) (Cooper would check with the “family” before making
decisions.), 128(p), (f) (The LCR board approved the Lippo Group’s acquisition of the
Noble Loan and selected Cooper as DXS and PacNet’s representative on the SMP Board.),
35 (DXS and PacNet were LCR’s wholly owned subsidiaries.).
358
2012 WL 6632681, at *19.

83
subsidiary, (ii) the parent “was aware of the existence of” its subsidiary’s fiduciary

duty and (iii) the parent was aware “that [it] exerted exclusive control over” the

subsidiary.359 Indeed, as noted, under general tenets of principal-agent law, an

agent’s knowledge is imputed to its principal.360

As in Metropolitan Life, the Complaint alleges DXS and PacNet’s

principals—Michael Riady, Stephen Riady and LCR—were aware of their agents’

fiduciary obligations.361 Because it is reasonably conceivable that DXS, PacNet and

Cooper were each of Michael Riady, Stephen Riady and LCR’s agents, the knowing

participation element has been well pled since an agent’s knowledge is imputed to

its principal.362

Id., at *19; see also In re Emerging Commc’ns, Inc. S’holders Litig., 2004 WL 1305745
359

(Del. Ch. May, 3, 2004) (same).
360
In re Am. Int’l Gp., 976 A.2d at 887; see also 3 WILLIAM MEADE FLETCHER,
CYCLOPEDIA OF THE LAW OF CORPORATIONS § 790 (“[T]he general rule is well established
that a corporation is charged with constructive knowledge . . . of all material facts of which
its officer or agent receives notice or acquires knowledge while acting in the course of
employment within the scope of his or her authority, even though the officer or agent does
not in fact communicate the knowledge to the corporation.”).
361
Compl. ¶ 151.
362
Metro. Life, 2012 WL 6632681, at *19. At first glance, it might appear inconsistent to
impute DXS, PacNet and Cooper’s knowledge up to their principals for purposes of aiding
and abetting liability but not to impute fiduciary duties that may lie with the
agent/controller up to that fiduciary’s principal. The key distinction lies in the scope of
DXS, PacNet and Cooper’s agency. While the Alleged Controllers may not have had a
right to force fiduciaries to breach their duties, “[t]o the extent they serve as [agents of the
Lippo Group], the scope of their agency [could include] the faithful expression of the
[Lippo Group’s] instructions and, if so instructed, faithful reporting back to the parent.”
DeMott at 254. Accordingly, it is reasonably conceivable that DXS, PacNet and Cooper
84
 Noronha and Waterloo, however, present a different story, albeit with the

same ending. The Complaint alleges Noronha was Cooper, DXS and PacNet’s

principal, but no facts corroborate that conclusory assertion.363 If anything, the

Complaint depicts Noronha more as DXS’s agent and Cooper’s peer since he was

DXS’s Board observer.364 While Noronha may not have been a principal, I am

satisfied Plaintiffs have well pled his knowing participation since Noronha

personally assisted Cooper as he engaged in the Unauthorized Acts.365 Similarly,

I find it reasonably conceivable Waterloo knowingly participated in Cooper’s breach

since it was the entity the Lippo Group used to acquire the Noble Loan.366

Lippo argues the Complaint fails to plead facts in support of an inference that

Stephen and Michael Riady and LCR consented to DXS, PacNet and Cooper acting

agreed to serve as agents for Michael and Stephen Riady and LCR by keeping them
informed, and that the knowledge the acquired as fiduciaries, therefore, can, as a matter of
law, be imputed to their principals.
363
Compl. ¶¶ 168, 175.
364
Compl. ¶ 28.
365
Compl. ¶¶ 121, 128(r).
366
Compl. ¶ 17.

85
as agents on their behalf.367 I disagree. Given the overall ownership and

organizational structure, as alleged, it is reasonable to infer this consent.368

b. Noble

Plaintiffs assert they deserve an inference that Noble knowingly participated

in DXS, PacNet and Cooper’s breaches of fiduciary duties.369 I disagree. After

reading the Complaint as a whole and granting Plaintiffs all reasonable inferences,

it is not reasonably conceivable that Noble knowingly “attempt[ed] to create or

exploit conflicts of interest” at the SMP level.370 Noble was not in a principal-agent

relationship with any constituents of the Lippo Group and, therefore, there is no basis

to impute knowledge of DXS, PacNet and Cooper’s breaches to Noble on that

ground. Noble was an arm’s length lender and customer to CSM; it was in no way

affiliated with the Lippo Group. And Noble sold the Noble Loan at a substantial

loss—undercutting any inference it was exploiting conflicts of interest.371

Plaintiffs’ speculative allegations that Noble was motivated to sell the Noble

Loan to the Lippo Group out of some self-interest, at best, recount an arms-length

367
DOB at 40; PAB at 64.
368
Compl. ¶¶ 72, 128, 137, 168, 175.
369
Compl. ¶¶ 188–92.
370
Malpiede, 780 A.2d at 1097.
371
Compl. ¶ 111.

86
contractual counter-party’s commercial incentives.372 Reading the Complaint as a

whole, Noble was a third-party lender (and customer) that got stiffed for

$30 million.373 When CSM defaulted, Noble negotiated the Fourth Amendment and

told all parties (including Plaintiffs) that it “may be willing to sell the Noble

Loan.”374 Plaintiffs’ conclusory allegations that Noble was obliged to open the

bidding process for the Noble Loan by advising Plaintiffs it was willing to sell

“at a substantial discount” are not well pled.375 More to the point, Noble’s alleged

“failure” to tell Plaintiffs it was willing to discount is a far cry from “knowing

participation” in a breach of fiduciary duty.376

*****

Defendants’ Motions to Dismiss Count 10 are denied as to Noronha, Michael

Riady, Stephen Riady, Waterloo and LCR, but granted as to Noble.

372
Compl. ¶ 82. See Malpiede, 780 A.2d at 1097 (noting that a putative contractual
counter-party is entitled to negotiate in furtherance of its self-interest without facing aiding
and abetting liability) (citations omitted).
373
Compl. ¶ 50.
374
Compl. ¶ 82.
375
Id.
376
RBC Capital, 129 A.3d at 862 (“[T]he requirement that the aider and abettor act with
scienter makes an aiding and abetting claim among the most difficult to [plead and]
prove.”).

87
 5. Civil Conspiracy (Count 11)

In Count 11, Plaintiffs bring a civil conspiracy claim against Cooper,

Noronha, DXS, PacNet, Waterloo, Michael Riady, Stephen Riady and LCR.377

“Delaware law imposing liability for civil conspiracy is well settled.”378 Plaintiffs

must allege “(1) [a] confederation or combination of two or more persons;

(2) [a]n unlawful act done in furtherance of the conspiracy; and (3) [a]ctual

damage.”379

I have already determined that Plaintiffs have well pled a conspiracy among

Stephen Riady, Michael Riady, LCR, Cooper, Noronha and Waterloo—satisfying

the first element. Lippo has not challenged the third element (actual damage),

so I focus on the sufficiency of Plaintiffs’ pleading of the second element (an

unlawful act in furtherance of the conspiracy).

377
Compl. ¶¶ 193–97. At the outset, I observe the similarity between Plaintiffs’ aiding and
abetting claims and their civil conspiracy claims renders the Motions to Dismiss Count 11
“almost without real-world purpose.” Allied Capital, 910 A.2d at 1039. This is because
“the prime distinction between civil conspiracies and aiding-abetting is that a conspiracy
involves an agreement to participate in wrongful activity [while] aiding-abetting focuses
on whether a defendant knowingly gave ‘substantial assistance’ to someone who performed
wrongful conduct.” Anderson v. Airco, Inc., 2004 WL 2827887, at *2 (Del. Super. Ct.
Nov. 30, 2004). Given my holding that Plaintiffs have stated a claim for aiding and
abetting, it is unclear what the real-world distinction between Counts 10 and 11 will be.
See Malpiede, 780 A.2d at 1098 n.82 (questioning whether there is a “meaningful”
distinction between aiding and abetting and civil conspiracy under similar circumstances).
But, for the sake of completeness, I address Plaintiffs’ civil conspiracy claim separately.
378
Nicolet, Inc. v. Nutt, 525 A.2d 146, 149 (Del. 1987).
379
Id. at 149–50.

88
 Lippo argues Plaintiffs have failed to allege a “wrong by each defendant

individually which would be actionable absent the conspiracy.”380 Even if this were

a legal requirement to state a civil conspiracy claim, I disagree with the argument as

a matter of pleading. I have already determined the Complaint pleads facts

supporting a reasonable inference the members of the Lippo Group agreed to harm

SMP.381 To advance this plan, it is reasonably conceivable DXS, PacNet and Cooper

breached their fiduciary duties, while Stephen Riady, Michael Riady, Noronha,

Waterloo and LCR aided and abetted those breaches.382 As a result, Lippo’s Motion

to Dismiss Count 11 must be denied.

380
DOB at 56 (citing Atlantis Plastics Corp. v. Sammons, 558 A.2d 1062, 1066 (Del. Ch.
1989)); DRB at 25 (citing Abbott v. Gordon, 2008 WL 821522 (Del. Super. Ct. Mar. 27,
2008), aff’d, 957 A.2d 1 (Del. 2008)).
381
I address the Lippo Group’s conspiracy in Section II.A.1. CMS Inv. Hldgs., 2015 WL
3894021, at *22 (The existence of a conspiracy “can be inferred from the pled behavior of
the alleged conspirators.”). For reasons stated above, Plaintiffs have stated a claim
(i) against PacNet, DXS and Cooper for breaches of contractual fiduciary duties and
(ii) against Stephen Riady, Michael Riady, Noronha and LCR for aiding and abetting
breaches of fiduciary duties.
382
Hamilton P’rs, 11 A.3d at 1198 (“Sufficiently pleading a claim for aiding and abetting
a breach of fiduciary duty satisfies the first and second elements of the Instituto Bancario
test” which requires pleading that “a conspiracy existed.”); Triton Const. Co., Inc. v.
Eastern Shore Elec. Serv., Inc., 2009 WL 1387115, at *17 (Del. Ch. May 18, 2009) (“[T]he
underlying conduct that might give rise to a civil conspiracy is identical to that which forms
the basis for the claims against Elliott and Eastern for aiding and abetting a breach of Kirk’s
fiduciary duty. Kirk is liable for the underlying breach of fiduciary duty, and Elliot and
Eastern are liable for aiding and abetting that breach.”).

89
 6. Tortious Interference (Count 4)

In Count 4, Plaintiffs allege Cooper, Noronha, Waterloo, Michael Riady,

Stephen Riady and LCR were aware of DXS and PacNet’s obligations under the

SMP Agreement, yet these defendants “caused” DXS and PacNet to breach their

obligations.383 According to Plaintiffs, taken together, these actions constitute

tortious interference with the SMP Agreement.384

“Under Delaware law, the elements of a claim for tortious interference with a

contract are: (1) a contract, (2) about which defendant knew, and (3) an intentional

act that is a significant factor in causing the breach of such contract, (4) without

justification, (5) which causes injury.”385 The tort is “intended to protect a

promisee’s economic interest in the performance of a contract by making actionable

‘improper’ intentional interference with the promisor’s performance.”386 I have

already determined the Complaint well pleads the existence of a contract (the SMP

Agreement) and reasonably conceivable breaches of the contract (DXS, PacNet and

Cooper’s breach of contractual fiduciary duties). I address the issues that remain in

dispute below.

383
Compl. ¶¶ 150–54.
384
PAB at 91–93.
385
Bhole, Inc. v. Shore Invs., Inc., 67 A.3d 444, 453 (Del. 2013).
386
Shearin v. E.F. Hutton Gp., Inc., 652 A.2d 578, 589 (Del. Ch. 1994).

90
 First, Lippo rightly asserts “employees or directors of a contracting

corporation cannot be held personally liable for inducing a breach of contract by

their corporations when they act within their role.”387 Plaintiffs do not allege Cooper

exceeded the scope of his authority. To the contrary, Plaintiffs allege Cooper, as

agent for DXS and PacNet, implemented their exercise of contractual Blocking

Rights.388 Under these pled facts, Lippo is correct that Cooper, as an agent of two

parties to the SMP Agreement, cannot be held liable for tortiously interfering with

the SMP Agreement.

Second, Lippo makes several arguments based on the “affiliate exception” to

tortious interference with contract to support dismissal of the claim as to other

members of the Lippo Group.389 The affiliate exception “requires that the defendant

be a stranger to both the contract and the business relationship giving rise to and

underpinning the contract.”390 When, as here, the alleged interference comes from

individuals or entities that share common “economic interests” with a party to the

contract, plaintiffs must “demonstrate that an interference by an affiliated entity was

387
DOB at 50 (quoting Shearin, 652 A.2d at 590; DRB at 26).
388
Compl. ¶ 69.
389
AM Gen. Hldgs. LLC v. Renco Gp., Inc., 2013 WL 5863010, at *12 (Del. Ch. Oct. 31,
2013); DOB at 51.
390
AM Gen. Hldgs., 2013 WL 5863010, at *12 (internal quotation omitted).

91
motivated by some malicious or other bad faith purpose.”391 Our courts have

characterized this standard as a “stringent bad faith standard.”392 And, in this

context, a defendant acts in bad faith when it is not “pursuing [] the legitimate profit

seeking activities of the affiliated enterprises.”393 Because the affiliate exception

turns on the same bad-faith standard as Lippo’s third argument (justification), for

the sake of efficiency, I address both, together, below.

Third, Lippo asserts that Plaintiffs have not pled that the Lippo Group’s “sole

motive” was to interfere with the SMP Agreement with no business purpose.394 This

is an attempt to invoke the “justification defense” to tortious interference with

contract.395 To determine whether an interference is improper, or unjustified,

Delaware courts turn to the RESTATEMENT (SECOND) OF TORTS and employ a multi-

factor balancing test.396 One of the factors in the test is the alleged interferer’s motive

for interference.397 In this regard, our law seeks to preserve a parent’s ability to

391
Id. (internal quotation omitted).
392
Allied Capital, 910 A.2d at 1039; see also NAMA Hldgs., 2014 WL 6436647, at *26–
36.
393
AM Gen. Hldgs. LLC, 2013 WL 5863010, at *12.
394
DOB at 51; DRB at 26.
395
NAMA Hldgs., 2014 WL 6436647, at *25–36; DOB at 51; DRB at 26.
396
NAMA Hldgs., 2014 WL 6436647, at *26.
397
Id., at *29–30.

92
cause its subsidiaries to breach contracts when doing so would “increase[] societal

wealth by enabling parties to exit from inefficient contracts and transfer assets or

services to a higher valued use.”398 In other words, Delaware preserves a corporate

parent’s ability to engage (or cause its subsidiary to engage) in efficient breach of

contract. As a result, “the relevant inquiry in the parent-subsidiary context is

whether the parent was pursuing in good faith the legitimate profit-seeking activities

of the subsidiary that was a party to contract.”399

The affiliate exception and the justification defense both turn on good faith,

or more precisely, the absence of bad faith. Given my findings with respect to other

aspects of the Complaint, it should come as no surprise that I find it reasonably

conceivable from the pled facts that Noronha, Michael Riady, Stephen Riady and

LCR “intended to injure [SMP] maliciously or in bad faith” in a manner that goes

beyond mere efficient breach of contract.400 Efficient breach assumes the breach of

contract will “increase societal wealth.”401 Here, in stark contrast, as pled, the Lippo

Group’s plan was to “sit back,” cause SMP to “collapse[],” and then “buy [CSM]

398
Id., at *30.
399
Id. (internal quotation omitted).
400
Id.
401
Id.

93
out of bankruptcy very cheap.”402 In short, as pled, the Lippo Group was engaging

in a zero-sum-game that is inconsistent with a pleading-stage justification defense

or application of the affiliate exception.

For reasons explained at length elsewhere in this Opinion, I am satisfied

Plaintiffs have pled facts supporting a reasonable inference that Noronha, Waterloo,

Michael Riady, Stephen Riady and LCR each committed an “intentional act” that

was “a significant factor” in DXS and PacNet’s alleged breach.403 For these reasons,

the Motions to Dismiss Count 4 must be granted as to Cooper, but denied as to

Noronha, Michael Riady, Stephen Riady, Waterloo, and LCR.

C. Fraud (Counts 1 and 15)

In Counts 1 and 15, Plaintiffs bring fraud claims against Noble, Cooper,

Noronha, PacNet, DXS, Michael Riady, Stephen Riady and LCR

(the “Fraud Defendants”).404 To state a prima facie case for fraud under Delaware

law,405 Plaintiffs must allege:

402
Compl. ¶ 80.
403
Bhole, 67 A.3d at 453.
404
Compl. ¶¶ 133–38.
405
In its Opening Brief, Noble asserts Utah substantive law governs Count 15 because
“Utah is the center of the conduct surrounding the negotiation and sale of the [NLA].”
NOB at 44 n.32. Plaintiffs do not challenge this assertion. See PAB at 69–72. I need not
decide which state’s law governs Count 15, however, because I find no relevant substantive
differences between Utah and Delaware law. Ameritrans Capital Corp. v. XL Specialty
Ins. Co., 2015 WL 13697702, at *6 (Del. Super. Ct. Nov. 30, 2015) (If there is a “false
94
 (1) A false representation, usually one of fact, made by the
defendant; (2) the defendant’s knowledge or belief that the
representation was false, or was made with reckless indifference to
the truth; (3) an intent to induce the plaintiff to act or to refrain from
acting; (4) the plaintiff’s action or inaction taken in justifiable
reliance upon the representation; and (5) damage to the plaintiff as
a result of such reliance.406
Under Court of Chancery Rule 9(b), Plaintiffs must plead fraud with

particularity.407 “To satisfy Rule 9(b), a complaint must allege: (1) the time, place,

and contents of the false representation; (2) the identity of the person making the

representation; and (3) what the person intended to gain by making the

representations.”408 Plaintiffs must also plead their reasonable reliance on allegedly

fraudulent misstatements and omissions with particularity. 409

Plaintiffs allege all three types of common law fraud: affirmative

misstatements, silence in the face of a duty to speak and active concealment of facts

conflict” in which “a court’s decision would be the same under either choice of law,” then
“a court does not need to conduct a choice of law analysis.”).
406
Gaffin v. Teledyne, Inc., 611 A.2d 467, 472 (Del. 1992) (internal quotation marks and
citation omitted).
407
Ct. Ch. R. 9(b); Trusa v. Nepo, 2017 WL 1379594, at *9 (Del. Ch. Apr. 13, 2017).
408
Abry P’rs V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032, 1050 (Del. Ch. 2006)
(internal citation omitted).
409
Mooney v. Pioneer Nat. Res. Co., 2017 WL 4857133, at *8 (Del. Super. Ct. Oct. 24,
2017).

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to prevent their discovery.410 In response, the Fraud Defendants fault the Complaint

for, inter alia, failure to plead reasonable reliance on any of the allegedly fraudulent

statements.411 Specifically, they argue the Complaint acknowledges the Plaintiffs

knew all the facts the Fraud Defendants allegedly omitted or misstated. In support

of this argument, the Fraud Defendants cite the following language from the

Complaint:

 “In early April 2015, the Lippo Group . . . revealed that they had
been negotiating with Noble in a series of meetings in Jakarta and
Singapore to encourage Noble to cooperate with the Lippo Group
in furtherance of its plan to try to forcibly take over the company
under imminent threat of declared default.”412

 On January 15, 2015, Cooper “refused to sign” a written consent SMP
Board action “authorizing a straightforward pro rata equity financing
by the SMP members. Instead, the Lippo Group began pushing for
a transaction whereby they, through their affiliate PacNet, would lead
a contribution of $18 million, but would in exchange demand full
operational and strategic control of the company.”413

410
Compl. ¶ 134; see Corp. Prop. Assocs. 14 Inc. v. CHR Hldg. Corp., 2008 WL 963048,
at *6 (Del. Ch. Apr. 10, 2008) (“A claim of common law fraud can arise from three types
of conduct: (1) a representation of false statements as true; (2) active concealment of facts
that prevents their discovery; or (3) remaining silent in the face of a duty to speak.”).
See also KnighTek, LLC v. Jive Commc’ns, Inc., 2020 WL 414434, at *7–8 (Del. Jan. 27,
2020) (holding under Utah law that plaintiff must plead justificable reliance under one of
these three theories).
411
See DOB at 44–45.
412
Compl. ¶ 66 (emphasis supplied).
413
Compl. ¶ 60 (emphasis supplied).

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  “In a March 2015 pleading” DXS and PacNet filed suit to prevent SMI
and CC from making capital contributions to SMP—including
contributions as little as $2.5 million.414

Against this backdrop, Plaintiffs say the Fraud Defendants made both

intentional misrepresentations and intentional omissions of material facts about:

“(i) Noble’s willingness to sell the [Noble Loan] at a substantial discount; (ii) their

negotiations and agreement with Noble to acquire the Noble Loan through Waterloo

[and] (iii) the preparation of the Fourth Amendment. . . .”415 Plaintiffs allege they

justifiably relied on these misstatements and omissions by “contribut[ing] funds to

SMP” and not acting “to prevent these Defendants from executing their plan.”416

Even after affording Plaintiffs all reasonable inferences, they cannot make a

reasonably conceivable case for justifiable reliance given what they admit they

already knew when the alleged fraud occurred. In their efforts to plead claims for

breach of contractual fiduciary duty and breach of contract, Plaintiffs have alleged

the Lippo Group brazenly used the Blocking Rights to starve SMP of capital and

then acquire its assets on the cheap.417 As the Complaint acknowledges, this plan

was hardly a secret. Indeed, Plaintiffs allege the Lippo Group “revealed” they had

414
Compl. ¶¶ 45–46 (emphasis supplied).
415
Compl. ¶¶ 134, 219.
416
Compl. ¶¶ 135, 220.
417
Compl. ¶¶ 45–46, 60, 66, 80.

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been “negotiating with Noble” “in furtherance of its plan to try to forcibly take over

the company under imminent threat of a declared default” as early as 2015.418 When

Plaintiffs contributed capital after the Fourth Amendment, they did so knowing the

Lippo Group was trying to tank SMP.419 The Complaint states that the very purpose

of the Insider Sale Prohibition (which the Fourth Amendment deleted) was to

“prevent one of SMP’s members from benefitting from a default by [CSM].” 420

Thus, Plaintiffs contributed capital knowing (i) the Lippo Group was trying to strong

arm SMP by acquiring the Noble Loan and (ii) they had lost their only contractual

means to prevent this outcome.421

Plaintiffs argue they relied on the misstatements and omissions by not acting

“to prevent” Lippo’s “plan.”422 Yet, here again, the Complaint contradicts this claim.

When Plaintiffs “promptly and vehemently objected” to Noble selling the Noble

Loan, “Defendants ignored Plaintiffs’ objections, and the Lippo Group . . . closed

418
Compl. ¶ 66.
419
Id.
420
Compl. ¶ 92.
421
Compl. ¶¶ 66, 92.
422
Compl. ¶ 135.

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on its acquisition of the Noble Loan the next day.”423 In other words, as Plaintiffs

have pled it, there was nothing they could have done to stop the Lippo Group.

As I have decided elsewhere in this Opinion, Plaintiffs have pled actionable

wrongdoing. They, however, have not pled actionable fraud. As relates to the fraud

claims, this is an example of a complaint that pleads itself “out of court by alleging

information that defeats [its] claim.”424 Plaintiffs have not pled justifiable reliance

with particularity under Court of Chancery Rule 9(b). As a result, Counts 1 and 15

must be dismissed.

III. CONCLUSION

For the foregoing reasons Defendants’ Motions to Dismiss are GRANTED in

part and DENIED in part. Defendants’ Motions to Dismiss Counts 1, 3, 5, 8–9 and

12–15 are GRANTED. Defendants’ Motions to Dismiss Counts 2 and 11 are

DENIED. As for the remaining counts:

 Defendants’ Motions to Dismiss Count 4 are GRANTED as to Cooper
but DENIED as to Noronha, Michael Riady, Stephen Riady, Waterloo
and LCR.

 Defendants’ Motions to Dismiss Count 6 are GRANTED as to
Noronha, Michael Riady, Stephen Riady and LCR but DENIED as to
Cooper.

423
Compl. ¶ 17.
424
Stolow v. Greg Manning Auctions Inc., 258 F. Supp. 2d 236, 249 (S.D.N.Y. 2003), aff’d,
80 F. App’x 722 (2d Cir. 2003).

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  Defendants’ Motions to Dismiss Count 7 are GRANTED as to
Noronha, Michael Riady, Stephen Riady and LCR but DENIED as to
DXS and PacNet.

 Defendants’ Motions to Dismiss Count 10 are GRANTED as to Noble
but DENIED as to Noronha, Michael Riady, Stephen Riady, Waterloo
and LCR.

IT IS SO ORDERED.

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