CTF Development, Inc. v. BML Properties, LTD

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

CTF DEVELOPMENT, INC. and )
PERFECT LUCK ASSETS LIMITED, )
)
Plaintiffs, )
)
v. ) C.A. No. 2021-0459-KSJM
)
BML PROPERTIES LTD., )
)
Defendant. )

ORDER RESOLVING MOTION TO DISMISS AND
MOTION FOR PARTIAL SUMMARY JUDGMENT

1. In 2010, a subsidiary of defendant BML Properties Ltd. (“BML”) set out to

construct a resort in the Bahamas called the “Baha Mar Resort.” The project floundered

financially and wound up in liquidation proceedings in the Bahamas. Later, BML sued

entities involved in the project in New York state court alleging fraud and intentional delay

in construction. In the New York action, BML served CTF Development, Inc. (“CTFD”)

with a subpoena issued by the Delaware Superior Court seeking documents from CTFD

and its affiliates. Through a September 4, 2020 letter agreement resolving the subpoena,

CTFD stipulated to work with its affiliates to produce documents in exchange for BML’s

agreement not to seek additional discovery from CTFD or its affiliates (the “Letter

Agreement”). In April 2021, BML filed a request for letter rogatory in the New York action

for documents from one of CTFD’s affiliates, Perfect Luck Assets Limited (“Perfect Luck”

and, with CTFD, “Plaintiffs”). In response, CTFD filed this lawsuit to enforce the Letter

Agreement. This Order resolves BML’s motions to dismiss and the plaintiffs’ motion for

partial summary judgment. All of the pending motions are denied for reasons that follow.
 FACTUAL BACKGROUND

2. Unless otherwise stated, the facts are drawn from the plaintiffs’ Verified

Amended Complaint and the exhibits attached thereto.1

3. In May 2010, through its subsidiary Baha Mar Ltd., BML entered into a $2.45

billion secured debt facility with The Export-Import Bank of China (“China Eximbank”)

and a construction contract with CCA Bahamas Ltd. for the construction of the Baha Mar

Resort. Baha Mar Ltd. became insolvent and entered liquidation proceedings in the

Supreme Court of the Bahamas in 2014. In September 2016, judicially appointed receivers

transferred the Baha Mar Resort to Perfect Luck, a Bahamian company that was

beneficially owned at the time by China Eximbank. On December 1, 2017, Chow Tai Fook

Enterprises, Ltd. (“Chow Tai”), a Hong Kong company that indirectly owns CTFD,

acquired Perfect Luck through its subsidiary, CTF BM Holding Ltd., a British Virgin

Islands company. Through that transaction, Perfect Luck became an indirect subsidiary of

Chow Tai and an affiliate of CTFD, as both fell under the umbrella of Chow Tai’s control.

4. In December 2017, BML filed a complaint against CCA Construction, Inc.

and other entities in the Supreme Court of New York, County of New York (the “New York

Action”). BML asserted claims for fraud and breach of contract, alleging that the New

York defendants misrepresented the status of the Baha Mar Resort’s construction and

1
See C.A. No. 2021-0459-KSJM Docket (“Dkt”) 34, Verified Am. Compl. For Breach of
Contract, Specific Performance, Injuctive Relief and Declaratory J. (“Compl.”).

2
intentionally delayed its completion. BML acknowledged in the New York complaint that

control over the Baha Mar Resort’s assets had been transferred.2

5. On January 11, 2018, BML sent letters to CTF BM Operations Ltd., CTF BM

Holdings Ltd., and Perfect Luck requesting that they preserve and voluntarily agree to turn

over any documents related to the Baha Mar Resort project. Bahamian counsel responded

for all three entities on February 5, 2018, indicating that Perfect Luck would comply with

the hold notice and that they, together with the Receivers, had taken steps to preserve

potentially relevant documents in their possession. The joint letter included an admonition

that BML comply with “all applicable legal requirements governing requests for discovery

from non-parties in the Bahamas.”3

6. On October 25, 2019, BML served CTFD with a subpoena issued by the

Delaware Superior Court, seeking discovery materials related to the Baha Mar Resort

project (the “Subpoena”).4 The Subpoena defined “CTF” as “Chow Tai Fook Enterprises,5

including all of its present and former subsidiaries, affiliates, directors, officers, agents and

employees or any person or entity acting or purporting to act on its behalf, including but

2
Actually, the complaint alleged that there had been a “conditional agreement of merger
of ‘Perfect Luck’ into” Chow Tai. Compl. Ex. 9. As Plaintiffs point out, this assertion was
technically incorrect because Chow Tai bought Perfect Luck’s shares and the transaction
was therefore not a merger.
3
Compl. Ex. 13.
4
See Compl. Ex. 2 (“Subpoena”).
5
Plaintiffs consider this to be a reference to Chow Tai, and the court agrees, even though
it does not include the abbreviation “Ltd.”

3
not limited to [CTFD].”6 It defined “Affiliate(s)” as “an entity that directly, or indirectly

through one or more intermediaries, controls, or is controlled by, or is under common

control with another person or entity.”7 It further defined “control” as “the possession,

direct or indirect, of the power to direct or cause the direction of the management and

policies of an entity, whether through the ownership of voting securities, by contract, or

otherwise.”8

7. The Subpoena defined “PERFECT LUCK ASSETS” as Perfect Luck,

“including all of its present and former subsidiaries, affiliates, directors, officers, agents

and employees or any person or entity acting or purporting to act on its behalf, including

but not limited to Perfect Luck Claims Limited.”9 The Subpoena made specific reference

to Perfect Luck in three document requests. Request 1 sought documents concerning

“agreements entered into between CTF, on the one hand, and Baha Mar Ltd., Perfect Luck

Assets, or [the New York defendants], on the other” relating to the Baha Mar Resort

project.10 Request 19 sought communications “between YOU and PERFECT LUCK

ASSETS” concerning the Baha Mar Resort project.11 Request 20 sought “DOCUMENTS

CONCERNING PERFECT LUCK ASSETS.”12

6
Subpoena at Definitions (f).
7
Id. at Definitions (p).
8
Id. at Definitions (p).
9
Id. at Definitions (g).
10
Id. at Doc. Req. 1.
11
Id. at Doc. Req. 19.
12
Id. at Doc. Req. 20.

4
 8. CTFD objected to the Subpoena on a number of grounds, including that the

Subpoena sought documents from affiliates that CTFD did not control because they were

not its subsidiaries and that the Subpoena sought documents from Bahamian entities in

violation of procedures established by treaty.13

9. Despite these objections, CTFD agreed to confer with its affiliates to obtain

documents and make a production to BML to satisfy the Subpoena.

10. CTFD and BML entered into the Letter Agreement on September 4, 2020 to

memorialize their settlement of the Subpoena.14

11. CTFD agreed to gather and provide documents from the “Baha Mar

Affiliates,” defined as “affiliated companies” of CTFD “that own and operate assets in the

Bahamas comprising” the Baha Mar Resort.15 CTFD specifically agreed to obtain copies

of emails, documents, and data from the Baha Mar Affiliates and produce them to BML.

12. In exchange, BML agreed to withdraw the Subpoena, which would be of “no

further force or effect.”16 BML further agreed that the production of documents pursuant

to the Letter Agreement “shall be in complete satisfaction of (i) the Subpoena, and (ii) any

and all other potential discovery obligations of [CTFD] and/or any of its parents,

subsidiaries and affiliates (including the Baha Mar Affiliates) in connection with the” New

13
See Dkt. 43 (“Def.’s Opening MTD Br.”) Ex. A. These objections and responses are
incorporated by reference into the Complaint. See Compl. ¶ 49.
14
See Compl. Ex. 1 (“Letter Agreement”).
15
Id. § 1.
16
Id. § 3(a).

5
York Action.17 BML expressly agreed not to “seek or request either the Production, or the

information previously requested in the Subpoena, in any other forum, from [CTFD] or

any of its parents, subsidiaries and affiliates (including the Baha Mar Affiliates).”18

13. The Letter Agreement contained a choice-of-law clause selecting Delaware

law and a forum-selection clause requiring actions arising out of the Letter Agreement to

be brought in Delaware.

14. CTFD produced documents to BML on December 26, 2020, and BML

voluntarily dismissed the Subpoena and related action that it had brought in the Delaware

Superior Court on February 2, 2021.

15. On April 5, 2021, BML filed a “Request for International Judicial Assistance

Obtaining Evidence Abroad for Use in a Civil Matter” in the New York Action (the

“Proposed Letter Rogatory”).19 If approved, the Proposed Letter Rogatory would function

as a request from the New York Supreme Court to the Supreme Court of the Bahamas to

compel Perfect Luck, a Bahamian company, to comply with a request for production of

documents. The Proposed Letter Rogatory, though directed at Perfect Luck rather than

CTFD, requests six categories of documents that allegedly overlap with several categories

of documents requested in the Subpoena. The Proposed Letter Rogatory identifies the

person from whom evidence is requested as a person with an “@ctfdi.com” email address.

17
Id. § 5(a).
18
Id. § 5(b).
19
Compl. Ex. 3 (“Proposed Letter Rogatory”).

6
 16. On Saturday, May 22, 2021, CTFD sent a letter to BML objecting to the

Proposed Letter Rogatory as a breach of the Letter Agreement and demanding that BML

notify the New York Supreme Court that it would withdraw the Proposed Letter Rogatory

by 5:00pm on Monday, May 24, 2021. On May 24, 2021, BML’s counsel responded that

it would reply to CTFD’s letter later that week.

17. CTFD filed this action on May 25, 2021 for breach of contract, specific

performance, and injunctive relief to prevent BML from pursuing discovery against Perfect

Luck. CTFD also filed a motion for a temporary restraining order.20 In the bench ruling

denying the motion for a temporary restraining order, the court noted its concern that CTFD

would have difficulty asserting its claim without Perfect Luck as a plaintiff.21 CTFD then

amended its complaint on July 2, 2021, joining Perfect Luck as a plaintiff, continuing to

seek specific performance for breach of contract and injunctive relief in Counts I and II,

and adding Count III for declaratory judgment.

18. On July 22, 2021, Plaintiffs moved for partial summary judgment as to Count

III.22 BML moved to dismiss the Complaint for failure to state a claim on July 26, 202123

20
See Dkt. 2.
21
See Dkt. 38, (“TRO Ruling”) at 7:13–8:4.
22
Dkt. 39.
23
Dkt. 40.

7
and for lack of subject matter jurisdiction on August 2, 2021.24 The parties completed

briefing by August 26, 2021,25 and the court heard oral argument on November 5, 2021.26

LEGAL ANALYSIS

19. The court first addresses the motion to dismiss for lack of subject matter

jurisdiction under Rule 12(b)(1).27 This court is one “of ‘limited jurisdiction’; it acquires

subject matter jurisdiction ‘only when (1) the complaint states a claim for relief that is

equitable in character, (2) the complaint requests an equitable remedy when there is no

adequate remedy at law or (3) Chancery is vested with jurisdiction by statute.’”28 Equitable

“jurisdiction over a matter is properly determined as of the time the complaint is filed and

not ousted by later changes in circumstances that may alter the availability of equitable

relief.”29

24
Dkt. 42.
25
See Dkt. 39 (“Pls.’ Opening MSJ Br.”); Dkt. 45 (“Def.’s Answering MSJ Br.”); Dkt. 51
(“Pls.’ Reply MSJ Br.”); Def.’s Opening MTD Br.; Dkt. 46, Pls.’ Answering Br. in Opp’n
to BML’s Mot. to Dismiss Pls.’ Am. Compl. Pursuant to Rules 12(b)(1) and 12(b)(6); Dkt.
49 (“Def.’s Reply MTD Br.”).
26
See Dkt. 62 (“Oral Arg. Tr.”).
27
See Ct. Ch. R. 12(b)(1).
28
Vama F.Z. Co. v. WS02, Inc., 2021 WL 1174690, at *2 (Del. Ch. Mar. 29, 2021) (quoting
Perlman v. Vox Media, Inc., 2019 WL 2647520, at *4 (Del. Ch. June 27, 2019), aff’d, 2021
WL 1042985 (Del. Mar. 18, 2021) (TABLE)); see also 10 Del. C. § 341 (“The Court of
Chancery shall have jurisdiction to hear and determine all matters and causes in equity.”);
id. § 342 (“The Court of Chancery shall not have jurisdiction to determine any matter
wherein sufficient remedy may be had by common law, or statute, before any other court
or jurisdiction of this State.”).
29
See Newberger v. Sandy River 2000, L.L.C., 2001 WL 432450, at *1 (Del. Ch. Apr. 20,
2001).

8
 a. Count II of the Complaint is for injunctive relief. Plaintiffs “seek an

injunction restraining [BML] from pursuing the Proposed Letter Rogatory and/or

requesting any other information from Perfect Luck that was previously sought by

[BML] in the Subpoena.”30 Count I is for breach of contract and seeks specific

performance of the Letter Agreement, alleging that Plaintiffs have suffered

irreparable harm by (i) “incurring the expense, risk, inconvenience and disruption

of litigation, as contemplated under Section 5(d) of the Letter Agreement;” (ii)

“facing the potential that the Supreme Court of New York endorses a discovery

request that [BML] promised never to make;” (iii) “facing costly and invidious

litigation under The Bahamas Statute with The Bahamas Attorney General in the

courts of The Bahamas;” and (iv) “having to produce documents that [BML]

contractually promised never to seek.”31

b. Plaintiffs’ requests for specific performance and the functionally

equivalent claim for injunctive relief satisfy the second basis for the court’s subject

matter jurisdiction.32

30
Compl. ¶ 135.
31
Id. ¶ 123.
32
Klita v. Cyclo3pss Corp., 1997 WL 33174421, at *1 (Del. Ch. Apr. 8, 1997) (“Specific
performance is a remedy available when damages may not be adequately ascertained or
would not adequately compensate the plaintiff.”); TRO Ruling at 5:15–21(observing that
the claims for specific performance and injunctive relief were functional equivalents in this
context); see also CertainTeed Corp. v. Celotex Corp., 2005 WL 217032, at *6 (Del. Ch.
Jan. 24, 2005) (observing that “claim for specific performance is a specialized request for
a mandatory injunction, requiring a party to perform its contractual duties”).

9
 c. Of course, this court reviews a pleading for substance over form when

evaluating subject matter jurisdiction, and BML asserts three arguments for why the

substance of the Complaint fails to establish a foothold in equity.

d. BML first argues that Plaintiffs have not adequately alleged

irreparable harm justifying the invocation of the court’s equitable jurisdiction

because BML would respond to a declaratory judgment in Plaintiffs’ favor by

withdrawing the Proposed Letter Rogatory. Thus, BML maintains that declaratory

judgment would afford Plaintiffs all relief necessary to make them whole and the

court therefore has no equitable jurisdiction over the Complaint.33

e. This argument fails. A party’s representation that it will respond to a

declaratory judgment by attempting to undo its breach does not necessarily divest

the court of equitable jurisdiction, and none of the cases that BML cites compel a

contrary result. Athene Life34 and Alliance Compressors35 each stand for the

proposition that the court will not exercise subject matter jurisdiction over breach

of contract actions in which past breaches are remediable by monetary damages and

future breaches are speculative. That is not the scenario presented here.

f. Here, Plaintiffs seek to invoke the court’s equitable powers to compel

BML to withdraw the Proposed Letter Rogatory, the pendency of which is alleged

33
See Def.’s Opening MTD Br. at 14–16; Def.’s Reply MTD Br. at 3–10.
34
Athene Life & Annuity Co. v. Am. Gen. Life Ins. Co., 2019 WL 3451376, at *8 (Del. Ch.
July 31, 2019).
35
All. Compressors LLC v. Lennox Indus. Inc., 2020 WL 57897, at *1 (Del. Ch. Jan. 6,
2020).

10
 to be a present and ongoing breach of the Letter Agreement. A declaratory judgment

in Plaintiffs’ favor will clarify the parties’ rights and obligations with respect to the

Letter Agreement, but not necessarily compel BML to take affirmative actions to

remedy the alleged ongoing breach. BML’s averments that it will withdraw the

Proposed Letter Rogatory should the court issue declaratory judgment in Plaintiffs’

favor are well-taken and may render an injunction or an order compelling specific

performance unnecessary. That said, “if equity jurisdiction is properly invoked, this

Court may retain jurisdiction even though circumstances arising after the filing of

the complaint make it inappropriate or improper to grant equitable relief.”36

g. BML’s second argument is that the Letter Agreement does not provide

for equitable relief for the alleged breach. The Letter Agreement mentions equitable

relief once, in Section 8(d), by authorizing the parties to seek “emergency equitable

relief” for the “improper disclosure of any confidential information contained

herein.”37 BML contends that the “parties’ decision to authorize specific

performance for certain breaches of the Letter Agreement but not the breach alleged

here” weighs against the availability of equitable jurisdiction.38

h. This argument too fails. Delaware courts “have refused to construe a

contract as taking away a common law remedy unless that result is imperatively

36
Lord & Burnham Corp. v. Four Seasons Solar Prods. Corp., 1984 WL 8233, at *4 (Del.
Ch. Aug. 28, 1984).
37
Letter Agreement § 8(d).
38
Def.’s Opening MTD Br. at 16–17 (emphasis in original); see also Def.’s Reply MTD
Br. at 5–6 n.4.

11
 required,” and therefore, “the Supreme Court has held that, even if a contract

specifies a remedy for breach of that contract, a contractual remedy cannot be read

as exclusive of all other remedies if it lacks the requisite expression of exclusivity.”39

i. Thus, neither the parties’ decision not to stipulate to equitable relief

for the alleged breach nor the provision of its availability in another circumstance

mandate a holding that specific performance or injunctive relief are unavailable.

j. BML’s final argument is that, because the requested equitable relief is

directed at compelling BML to take actions in a different court, principles of comity

weigh against allowing the case to move forward.40 This argument is more

compelling, as it would be perhaps more efficient for the New York court to resolve

the parties’ dispute. But the parties stipulated that such disputes be brought in

Delaware, and for good reason—the Letter Agreement resolved a Subpoena issued

by a Delaware court. The parties had the opportunity to present their disputes in the

New York Action. They instead ceded to their contractually selected forum. And

in the end, this court would not be doing its sister court any favors by sending this

dispute its way. Comity does not compel such a discourtesy.41

39
Reid v. Thompson Homes at Centreville, Inc., 2007 WL 4248478, at *5 (Del. Super. Nov.
21, 2007).
40
See Def.’s Opening MTD Br. at 17–18; Def.’s Reply MTD Br. at 7 n.5.
41
See also Nat’l Indus. Gp. (Hldg.) v. Carlyle Inv. Mgmt. L.L.C., 67 A.3d 373, 387 (Del.
2013) (holding that the “enforcement of an international forum selection clause is not an
issue of comity” but rather “a matter of contract enforcement and giving effect to
substantive rights that the parties have agreed upon” and further that “[a]n anti-suit
injunction operates in personam to enjoin the breaching party, not the foreign court”).

12
 k. For the foregoing reasons, the court holds that it has subject matter

jurisdiction over the Complaint. BML’s motion to dismiss under Rule 12(b)(1) is

denied.

20. The court next turns to the motion to dismiss for failure to state a claim

pursuant to Court of Chancery Rule 12(b)(6).42 Under Rule 12(b)(6), “the governing

pleading standard in Delaware to survive a motion to dismiss is reasonable

‘conceivability.’”43 When considering a motion to dismiss under Rule 12(b)(6), the court

must “accept all well-pleaded factual allegations in the [c]omplaint as true . . . , draw all

reasonable inferences in favor of the plaintiff, and deny the motion unless the plaintiff

could not recover under any reasonably conceivable set of circumstances susceptible of

proof.”44 The court, however, need not “accept conclusory allegations unsupported by

specific facts or . . . draw unreasonable inferences in favor of the non-moving party.”45

a. To survive a motion to dismiss under Rule 12(b)(6), a plaintiff

claiming breach of contract must demonstrate: the existence of a contract, the breach

of an obligation imposed by that contract, and damage resulting from the breach.46

“A plaintiff must properly allege each of these elements, even where the plaintiff is

42
See Ct. Ch. R. 12(b)(6).
43
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 537 (Del.
2011).
44
Id. at 536 (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002)).
45
Price v. E.I. DuPont de Nemours & Co., Inc., 26 A.3d 162, 166 (Del. 2011) (citing
Clinton v. Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009)), overruled on other
grounds by Ramsey v. Ga. S. Univ. Advanced Dev. Ctr., 189 A.3d 1255 (Del. 2018).
46
See VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).

13
 seeking an equitable remedy such as specific performance.” 47 The court “cannot

choose between two differing reasonable interpretations of ambiguous

documents.”48 “[A] contract is ambiguous only when the provisions in controversy

are reasonably or fairly susceptible of different interpretations or may have two or

more different meanings.”49 The “true test is not what the parties to the contract

intended it to mean, but what a reasonable person in the position of the parties would

have thought it meant.”50 For dismissal to be appropriate under 12(b)(6), BML’s

interpretation of the Letter Agreement must be “the only reasonable construction as

a matter of law.”51

b. BML argues that Plaintiffs’ claim for breach of contract is facially

deficient in two ways. It first advances a plain language argument, that the Proposed

Letter Rogatory does not seek information previously requested by the Subpoena,

and thus BML did not breach the Letter Agreement. Its second is an argument that

Plaintiffs failed to properly allege damages, but as discussed above, Plaintiffs have

sufficiently alleged irreparable harm justifying the imposition of the court’s

47
Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 883 (Del. Ch. 2009).
48
Vanderbilt Income & Growth Assocs., L.L.C. v. Arvida/JMB Managers, Inc., 691 A.2d
609, 613 (Del. 1996).
49
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del.
1992).
50
Id.
51
VLIW Tech., 840 A.2d at 615 (emphasis in original).

14
 equitable jurisdiction, rendering a claim for damages non-essential to Plaintiffs’

claim for breach of contract.

c. For its plain language argument, BML does not dispute that CTFD

and Perfect Luck are in fact under common ownership and thus affiliates in any

conventional sense of that word, as discussed more fully below. Rather, BML

argues that the parties intended to carve out Perfect Luck from the definition of

affiliates in the Letter Agreement. As its sole support, BML notes that Perfect Luck

and “CTF” are defined separately in the Subpoena.

d. Contrary to BML’s assertion, Perfect Luck was not expressly carved

out from the definition of CTF. BML correctly observes that “CTF” and “PERFECT

LUCK ASSETS” are defined separately in the Subpoena. “PERFECT LUCK

ASSETS” was defined as Perfect Luck and any person or entity purporting to act on

its behalf.52 “CTF” meant Chow Tai, any person or entity purporting to act on its

behalf, and its “affiliates . . . including but not limited to [CTFD].”53 The mere fact

of two separate definitions does not amount to an express carve-out of one from the

other; BML cites no cases to the contrary.

e. Moreover, separate definitions for Chow Tai and Perfect Luck are

readily explainable based on the timeline. The parties do not dispute that the

timeline relevant to BML’s involvement with the construction of the Baha Mar

52
Subpoena at Definitions (g).
53
Id. at Definitions (f).

15
 Resort begins long before Perfect Luck acquired Baha Mar Ltd.’s assets and before

Chow Tai indirectly acquired Perfect Luck.54 Nor do they appear to dispute that

Chow Tai and Perfect Luck’s original parent company negotiated Perfect Luck’s

acquisition for more than a year before it was finalized.55

f. The Subpoena’s separate definitions for Chow Tai and Perfect Luck

are consistent with the evolving nature of their relationship, which is reflected in the

requests to which those separate definitions may be relevant. The Subpoena sought

documents concerning agreements entered into between Chow Tai and Perfect

Luck,56 communications between Chow Tai and Perfect Luck,57 and non-privileged

documents “which were turned over to” Chow Tai by Perfect Luck.58 Further, even

if Chow Tai had owned Perfect Luck since its creation, parent corporations and their

subsidiaries are separate entities that may enter into agreements and communicate

with one another.59 Indeed, this court has seen requests that a defendant produce

54
See Compl. ¶¶ 18–23; Def.’s Opening MTD Br. at 3.
55
See Compl. ¶¶ 26–30; Def.’s Opening MTD Br. at 4.
56
Subpoena at Doc. Req. 1.
57
Id. at Doc. Req. 19.
58
Id. at Doc. Req. 37.
59
See Feeley v. NHAOCG, LLC, 62 A.3d 649, 667 (Del. Ch. 2012) (noting that “the
separate legal existence of juridical entities is fundamental to Delaware law.”); Wenske v.
Blue Bell Creameries, Inc., 2018 WL 5994971, at *5 (Del. Ch. Nov. 13, 2018) (noting that
“there exists a presumption of corporate separateness, even when a parent wholly owns its
subsidiary and the entities have identical officers and directors.”); see, e.g., Reading Co. v.
Trailer Train Co., 1984 WL 8212, at *5 (Del. Ch. Mar. 15, 1984) (describing transactions
between parents and subsidiaries).

16
 parent-subsidiary communications before.60 Thus, the court cannot accept BML’s

contention that Perfect Luck was carved out from the definition of Chow Tai.

g. BML alternatively argues that dismissal is appropriate under Section

5(b) of the Letter Agreement, which prohibits BML from seeking “the information

previously requested in the Subpoena.”61 BML argues that the Proposed Letter

Rogatory’s six requests seek specific communications between Perfect Luck and a

third party, none of which is a Chow Tai entity, while the Subpoena seeks Chow

Tai’s documents and communications, not Perfect Luck’s. But if Perfect Luck

qualifies as a Chow Tai affiliate, then it is reasonably conceivable that the Subpoena

did seek Perfect Luck’s documents and communications. At this stage, it is

reasonably conceivable that the Proposed Letter Rogatory seeks discovery that was

requested by the Subpoena and thus violates the Letter Agreement.

h. For the foregoing reasons, the court holds that it is reasonably

conceivable that BML breached the Letter Agreement by submitting the Proposed

Letter Rogatory. BML’s motion to dismiss for failure to state a claim is denied.

21. Finally, the court resolves Plaintiffs’ motion for partial summary judgment

as to Count III. Under Court of Chancery Rule 56, summary judgment is appropriate when

“there is no genuine issue as to any material fact and . . . the moving party is entitled to a

60
See, e.g., Mennen v. Wilm. Tr. Co., 2013 WL 5288900, at *10–11 (Del. Ch. Sept. 18,
2013) (addressing a motion to compel, among other things, the production of
communications shared between a parent and subsidiary).
61
See Letter Agreement § 5(b).

17
judgment as a matter of law.”62 On a motion for summary judgment, unlike a motion to

dismiss, the court may consider evidence obtained in discovery, affidavits, and

declarations.63 The court must view the evidence “in the light most favorable to the non-

moving party, and the moving party bears the burden of demonstrating the absence of a

material factual dispute.”64 On the other hand, if “there are material factual disputes, that

is, if the parties are in disagreement concerning the factual predicate for the legal principles

they advance, summary judgment is not warranted.”65 “There is no ‘right’ to a summary

judgment.”66

a. The court must resolve three issues to determine whether Plaintiffs are

entitled to summary judgment. The first is whether Perfect Luck qualifies as an

affiliate of CTFD under the Letter Agreement. The second is whether Plaintiffs

have standing to enforce the Letter Agreement. The third is whether the Proposed

Letter Rogatory breaches Section 5 of the Letter Agreement.

b. First, Plaintiffs contend that Perfect Luck qualifies as an affiliate

under the Letter Agreement in two ways, both under the common definition of

62
Ct. Ch. R. 56(c).
63
See id.; 10 Del. C. § 3927; see also In re Gardner Denver, Inc., 2014 WL 715705, at *4
(Del. Ch. Feb. 21, 2014) (describing the standard for converting a motion to dismiss to a
motion for summary judgment when matters outside the pleadings are presented to the
court).
64
XO Commc’ns, LLC v. Level 3 Commc’ns, Inc., 948 A.2d 1111, 1117 (Del. 2007)
(citation omitted).
65
Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del. 1992).
66
Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002) (quoting Anglin v. Bergold,
565 A.2d 279 (Del. 1989)).

18
 “affiliate” and as a “Baha Mar Affiliate.”67 While the Letter Agreement does not

define the first term, “Delaware courts look to dictionaries for assistance in

determining the plain meaning of terms which are not defined in a contract.”68

Black’s Law Dictionary defines “affiliate” as a “corporation that is related to another

corporation by shareholdings or other means of control; a subsidiary, parent, or

sibling corporation.”69 Plaintiffs have submitted a declaration in support of their

motion demonstrating that CTFD and Perfect Luck are indirect subsidiaries of Chow

Tai and therefore sibling corporations.70 Further, Plaintiffs submit that Perfect Luck

is a defined “Baha Mar Affiliate” because it controls the Baha Mar Resort’s assets,

and thus “own[s] and operate[s] assets in the Bahamas comprising” the Baha Mar

Resort, satisfying the definition.71

c. BML does not meaningfully dispute that Perfect Luck is an affiliate

of CTFD. Rather, BML premises its opposition on its purported lack of knowledge

that Perfect Luck was a CTFD affiliate at the time it was negotiating the Letter

Agreement.72 This argument is unavailing because “the private, subjective feelings

67
Pls.’ Opening MSJ Br. at 23–26.
68
Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 738 (Del. 2006).
69
Affiliate, Black’s Law Dictionary (11th ed. 2019) (emphasis added).
70
See Dkt. 39, Decl. of Bradley D. Hornbacher in Supp. of Pls.’ Br. in Supp. of their Mot.
for Partial Summ. J. on Count III for Declaratory J. ¶¶ 5–8.
71
Letter Agreement § 1; see also Transmittal Decl. of Daniel S. Atlas in Supp. of Pls.’
Brief in Supp. of their Mot. for Partial Summ. J. on Count III for Declaratory J. Ex. 7 ¶ 6.
See Def.’s Answering MSJ Br. at 19–23; Dkt. 45, Decl. of Peter C. Sheridan in Supp. of
72

Def.’s Opp’n to Mot. for Partial Summ. J. on Count III for Declaratory J. ¶¶ 12–14.

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 of the negotiators are irrelevant and unhelpful to the Court’s consideration of a

contract’s meaning, because the meaning of a properly formed contract must be

shared or common.”73 The court holds that Perfect Luck qualifies as an affiliate of

CTFD, and indeed as a Baha Mar Affiliate, under the plain meaning of the Letter

Agreement.

d. Second, the court turns to standing. BML argues that CTFD’s harm

from Perfect Luck being forced to respond to discovery is speculative and suggests

that CTFD therefore does not have standing to enforce the Letter Agreement.74

e. It is difficult to conceive of any practical utility to this argument.

Perfect Luck is a Plaintiff. Perfect Luck is also a third-party beneficiary with

standing to enforce the Letter Agreement. In Delaware, “intended third-party

beneficiaries have an enforceable right under contracts conferring a benefit to them,

even though they are not parties to those contracts.”75 To demonstrate third-party

beneficiary status, a plaintiff must show

(i) the contracting parties must have intended that the third
party beneficiary benefit from the contract, (ii) the benefit must
have been intended as a gift or in satisfaction of a pre-existing
obligation to that person, and (iii) the intent to benefit the third
party must be a material part of the parties' purpose in entering
into the contract.76

73
United Rentals, Inc. v. RAM Hldgs., Inc., 937 A.2d 810, 835 (Del. Ch. 2007).
74
See Def.’s Answering MSJ Br. at 27–28; Oral Arg. Tr. at 61.
75
Comrie v. Enterasys Networks, Inc., 2004 WL 293337, at *2 (Del. Ch. Feb. 17, 2004).
76
Madison Realty P’rs 7, LLC v. Ag ISA, LLC, 2001 WL 406268, at *5 (Del. Ch. Apr. 17,
2001).

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 f. Section 5(a) of the Letter Agreement provides that the production the

parties agreed to thereunder would “be in complete satisfaction of . . . (ii) any and

all other discovery obligations of [CTFD] and/or any of its parents, subsidiaries and

affiliates (including the Baha Mar Affiliates) in connection with the” New York

Action.77 The court holds that Perfect Luck is a third-party beneficiary under the

Letter Agreement because, as a CTFD affiliate, Section 5(a) clearly contemplates

that its discovery obligations in connection with the New York Action would be

satisfied by the Letter Agreement. BML’s argument in opposition is premised again

on its lack of knowledge that Perfect Luck was an affiliate of CTFD and is again

rejected.

g. Because Perfect Luck has standing, knocking out CTFD has no

practical effect on the case. In any event, as Plaintiffs point out, however, CTFD is

a signatory to the Letter Agreement, and “[i]t is axiomatic that either party to an

agreement may enforce its terms for breach thereof.”78 Thus, the court holds that

CTFD has standing to enforce the Letter Agreement.

h. Finally, Plaintiffs argue that the Proposed Letter Rogatory breaches

two subsections of the Letter Agreement: Section 5(a) for seeking any discovery

whatsoever from Perfect Luck, a CTFD affiliate, in connection with the New York

Action and Section 5(b) for seeking “the information previously requested in the

77
Letter Agreement § 5(a).
78
Triple C Railcar Serv., Inc., v. City of Wilm., 630 A.2d 629, 635 (Del. 1993).

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 Subpoena.”79 The parties dispute the interplay of Section 5(a) and Section 5(b),

with each side accusing the other of failing to reconcile the two.80 This court has

“consistently held that an interpretation that gives effect to each term of an

agreement is preferable to any interpretation that would result in a conclusion that

some terms are uselessly repetitive.”81

i. BML contends that Section 5(a) generally states that the production

will satisfy the Chow Tai entities’ discovery obligations with respect to the New

York Action while Section 5(b) sets specific limits on what could be sought going

forward.82 Plaintiffs, meanwhile, argue that Section 5(a) provides that, “regardless

of subject matter,” BML may request no more discovery from Chow Tai entities in

connection with the New York Action, while Section 5(b) then ensures that BML

may not re-request previously sought information.83

j. The court adopts BML’s reading, which best interprets the Letter

Agreement “in such a way as to not render any of its provisions illusory or

meaningless.”84 Under well-settled rules of contract construction, a contract must

79
See id. § 5(a)–(b).
80
See Def.’s Answering MSJ Br. at 25; Pls.’ Reply MSJ Br. at 15–16.
81
O’Brien v. Progressive N. Ins. Co., 785 A.2d 281, 287 (Del. 2001).
82
See Oral Arg. Tr. at 17:10–14.
83
Id. at 34. See also id. at 37–38 (Plaintiffs’ counsel arguing that “5(a) may overlap with
5(b). But, again, frankly, so what? 5(a) of our contract obliterates the target as far as we’re
concerned. 5(b) comes back for more, because we wanted to make it absolutely clear we
are done.”).
84
Sonitrol Hldg. Co. v. Marceau Investissements, 607 A.2d 1177, 1183 (Del. 1992).

22
 be construed “as a whole,” such that “[s]pecific language in a contract controls over

general language, and where specific and general provisions conflict, the specific

provision ordinarily qualifies the meaning of the general one.”85 Thus, the court

holds that Section 5(a) is a general provision establishing that the Chow Tai entities’

discovery obligations were satisfied by the agreed-upon production, while Section

5(b) establishes the specific limits on what BML may request in the future.

k. The final question is whether the Proposed Letter Rogatory breaches

Section 5(b) by seeking information previously requested by the Subpoena. Many

of the requests appear to overlap.86 However, the requests are not identical, and the

parties dispute the extent to which the Proposed Letter Rogatory and the Subpoena

seek the same information.87 This strikes the court as a material factual dispute

precluding summary judgment in Plaintiffs’ favor, as additional discovery could aid

the court in resolving this issue.88

l. BML raises an additional question of material fact precluding

summary judgment. Section 1 of the Letter Agreement states that CTFD “does not

85
DCV Hldgs., Inc. v. ConAgra, Inc., 889 A.2d 954, 961 (Del. 2005).
86
Compare Proposed Letter Rogatory at Doc. Req. 1, with Subpoena at Doc. Req. 6;
compare Proposed Letter Rogatory at Doc. Req. 2, with Subpoena at Doc. Req. 23;
compare Proposed Letter Rogatory at Doc. Req. 3, with Subpoena at Doc. Req. 15;
compare Proposed Letter Rogatory at Doc. Req. 4, with Subpoena at Doc. Req. 17;
compare Proposed Letter Rogatory at Doc. Req. 5, with Subpoena at Doc. Req. 1; compare
Proposed Letter Rogatory at Doc. Req. 6, with Subpoena at Doc. Req. 8–11.
87
See Def.’s Answering MSJ Br. at 24–25; Pl.’s Opening MSJ Br. at 27–30.
88
See Dkt. 45, Rule 56(f) Decl. of Elisha Barron in Supp. of Def.’s Opp’n to Mot. for
Partial Summ. J. on Count III for Declaratory J.

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 have access to the records of the Baha Mar Affiliates or the Resort in the ordinary

course of business.” This may prove untrue, because some of Perfect Luck’s officers

are officers of CTFD, the two entities share an office, and the @ctfdi.com email

address on the Proposed Letter Rogatory indicates that the companies also share

email servers.89 Thus, whether CTFD made a misrepresentation about its access to

Perfect Luck’s records is a question of fact precluding summary judgment, because

such a misrepresentation would call into question the validity of the entire Letter

Agreement.90

m. Due to the existence of material factual issues that remain in dispute,

Plaintiffs’ motion for partial summary judgment is denied.

22. For the foregoing reasons, BML’s motions to dismiss are DENIED and

Plaintiffs’ motion for partial summary judgment is DENIED.

/s/ Kathaleen St. J. McCormick
Chancellor Kathaleen St. J. McCormick
Dated: January 5, 2022

89
See Proposed Letter Rogatory; Dkt. 47, Transmittal Decl. of Brian Farnan in Supp. of
Def.’s Opp’n to Mot. for Partial Summ. J. Ex. I; Ex. K.
90
See Martin v. Med-Dev Corp., 2015 WL 6472597, at *12 (Del. Ch. Oct. 27, 2015)
(“Transactions entered into in reliance on material misrepresentations are voidable.”).

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