IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ROD JARDINE, derivatively, on behalf )
of HEALTHBOOKPLUS HOLDINGS, )
INC., )
)
Plaintiff, )
)
v. ) C.A. No. 2023-0672-KSJM
)
CHRISTOPHER TURNER, PANOS )
SECHOPOULOUS, AND STATHIS )
TOPOUZOGLOU, )
)
Defendants, and )
)
HEALTHBOOKPLUS HOLDINGS )
INC., )
)
Nominal Defendant. )
ORDER GRANTING STAY OF PROCEEDINGS
1. HealthBrookPlus Holdings, Inc. (“HB+”) is a start-up health technology
company. Its “product is an early identification and guided health platform for
individuals and their families that provides the user with immediate and
personalized health solutions based on the individuals’ needs.”1 The three current
members of the HB+ Board of Directors are Defendants Christopher Turner, Panos
Sechopoulous, and Stathis Topouzoglou (the “Director Defendants”). Each Director
is a founder of HB+.
1 The factual background is drawn from the Verified Derivative Complaint. See C.A.
2023-0672-KSJM, Docket (“Dkt.”) 1 (“Compl.”) ¶ 9.
1
2. Plaintiff Rod Jardine is a current stockholder, former chief technology
officer, and former director of HB+. In addition, Jardine owns Agile CxO LLC
(“Agile”). On January 9, 2022, HB+ and Agile entered into a contractor agreement
where Agile would provide management consulting services to HB+.
3. HB+ is in its pre-revenue phase. As such, it relies heavily on its sales
pipeline projections to raise funds. Turner was in charge of sales pitches and product
sales. Jardine assisted Turner with these duties. In November 2022, Jardine
observed that the sales pipeline numbers that Turner was using in his investor
pitches were different from HB+’s internal numbers. Jardine’s complaint gives three
specific examples of these discrepancies.
4. In February 2023, in anticipation of a meeting with investors, Turner
sent Jardine a “Business Plan Presentation.” Jardine realized certain information in
the Business Plan Presentation was incorrect and revised it. Turner rejected
Jardine’s edits. Jardine called Turner and Sechopoulous and told them the
information in the presentation was incorrect.
5. In March 2023, Jardine met with Topouzoglou to discuss the incorrect
information that was shared to investors and potential investors. Topouzoglou
informed Jardine that he would schedule a meeting of the founders. Instead of a
meeting, on March 21, 2023, Turner told Jardine that HB+ was terminating all of its
agreements with Agile. On April 12, 2023, HB+ informed Jardine that he had been
terminated as an officer and director of HB+ as well.
2
6. In addition to allegedly misleading investors and potential investors,
Jardine claims that Turner used corporate assets to fund personal trips. Specifically,
Jardine claims that Turner traveled to Maui, Hawaii at HB+’s expense to visit his
girlfriend, although Turner had told Jardine it was to meet with Maui Health’s CEO.
Additionally, Jardine alleges that Turner and Sechopoulous both used a rental
property in Maui that was either paid for or reimbursed by HB+.
7. After HB+ terminated Jardine and Agile, litigation ensued. On April
13, 2023, HB+ filed a lawsuit against Jardine in Colorado federal court alleging
fraudulent inducement, misappropriation of trade secrets, civil theft, and violation of
the federal computer fraud and abuse act.2 On June 13, 2023, Agile filed an
arbitration action in California asserting breach of contract. 3 On June 29, 2023,
Jardine filed this action asserting derivative claims against the Director Defendants.4
8. In this action, Jardine asserts three Counts derivatively.
• In Count I, for breach of the fiduciary duty of loyalty against the Director
Defendants, Jardine advances three theories. First, Jardine claims that
“Turner and Sechopoulous breached their fiduciary duty of loyalty by
engaging in an illegal scheme to violate federal and state law by
intentionally causing [HB+] to make false or misleading representations
during communications with potential investors and solicitations of
investors, such that expose[d] [HB+] to serious legal liabilities and
reputational harm.”5 Second, Jardine claims that Turner breached his
duty of loyalty by engaging in waste of HB+’s assets for his personal
leisure and entertainment.6 Third, Jardine claims that Turner,
2 Dkt. 16 (“Defs.’ Opening Br.”), Ex. 1.
3 Id., Ex. 3.
4 Dkt. 1.
5 Compl. ¶ 103.
6 Id. ¶ 104.
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Sechopoulous, and Topouzoglou breached their duty of loyalty by (a)
terminating Jardine as CTO in a retaliatory manner, (b) breaching
HB+’s contract with Agile, (c) permitting Turner to waste corporate
assets, and (d) failing to follow corporate formalities.7
• In Count II, for breach of the fiduciary duty of care against Turner and
Sechopoulous, Jardine alleges Turner and Sechopoulous were “at least
grossly negligent in causing [HB+] to make false and misleading
representations during [their] communications with prospective
investors.”8 And both “acted grossly negligent[] by failing to make sure
the represented financial information of [HB+] was correct[.]”9
• In Count III, for waste of corporate assets against Turner and
Sechopoulous, Jardine alleges that Turner spent HB+ money flying to
Hawaii, California, and New York for non-HB+ related purposes. And
that Sechopoulous contributed to this misuse by living at a property in
Maui that Turner rented with HB+ money and that had no business
purpose.10
9. The Director Defendants have moved to dismiss or stay this action.
Their lead argument is that the court should stay or dismiss this action in favor of
the Colorado and California proceedings. They also advance arguments under Court
of Chancery Rules 12(b)(6) and 23.1. Because a stay of proceedings is appropriate,
the court does not reach the Director Defendants’ arguments under Rules 12(b)(6) or
23.1.
10. The Director Defendants rely on McWane to argue that a stay or
dismissal is appropriate.11 To be entitled to relief under McWane, a defendant must
7 Id. ¶ 105.
8 Id. ¶¶ 112–13.
9 Id.
10 Id. ¶ 118–19.
11 McWane Cast Iron Pipe Corp. v. McDowell–Wellman Eng’g Co., 263 A.2d 281 (Del.
1970).
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demonstrate: (i) the existence of “a first-filed prior pending action . . . in another
jurisdiction;” (ii) that the first-filed action “involves similar parties and issues;” and
(iii) that “the court in the other jurisdiction is capable of rendering prompt and
complete justice.”12
11. As to the first McWane element, the Director Defendants point to the
Colorado and California proceedings. The Colorado action was filed on April 13. The
California arbitration was filed on June 13. This action was filed on June 29. Both
the Colorado and California proceedings were filed first. Jardine argues that this
sequence lacks legal relevance because the Colorado and California proceedings were
filed within a few months of this action, rendering Delaware “contemporaneously
filed.”13 Generally speaking, the difference of a few hours14 or even a few weeks15
may turn a second-filed action into a contemporaneously filed action for the purposes
of McWane. But the more-than-two-month window between the Colorado action (filed
April 13) and the Delaware action (filed June 29) is not contemporaneous, nor do the
12 Abraham v. D.O.C.-Del. Dep’t of Corrs., 2008 WL 242026, at *1 (Del. Ch. Jan. 24,
2008) (quoting Kaufman v. Kumar, 2007 WL 1765617, at *2 (Del. Ch. 2007)).
13 Dkt. 19 (“Pl.’s Answering Br.”) at 12–13.
14 See, e.g., BP Oil Supply Co. v. ConocoPhillips Co., 2010 WL 702382, at *2 (Del.
Super. Feb. 25, 2010) (“Delaware courts consistently have held that where two suits
are filed mere hours apart, they are considered contemporaneously filed for purposes
of forum non conveniens.” (citing cases)).
15 Zilberstein v. Frankenstein, 2021 WL 5289104, at *4 (Del. Super. Nov. 12, 2021)
(finding two actions filed less than two weeks apart contemporaneously filed).
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facts here warrant finding the California and Delaware actions to be
contemporaneous.16 The first element is met.
12. As to the second McWane element, the Director Defendants argue that
“there is sufficient overlap and privity among the parties to all of the actions” because
“[a]ll three of these actions involve core allegations of a conspiracy by the Board to
improperly fire Jardine (and terminate Agile’s independent consulting agreement) in
retaliation against him for claiming that Turner engaged in fraudulent misconduct
and to cover-up the same at the Company level.”17 But the parties are different and
the issues only partially overlap. The second element is not fully met.
13. The Director Defendants do not make an argument in support of the
third element.18
14. Given the dissimilarities in the proceedings, the Colorado and California
proceedings will not resolve all of the claims at issue in this litigation. The claims for
breach of fiduciary duty are unique to this action. For these reasons, McWane is “not
a perfect fit.”19
16 Id. (treating the first-filed and second-filed actions as contemporaneous because
the first-filed action appeared anticipatory, and deeming the actions
contemporaneous had the effect of discouraging a race to the courthouse); In re
Chambers Dev. Co., Inc. S’holders Litig., 1993 WL 179335, at *7 (Del. Ch. May 20,
1993) (noting that whether or not a federal derivative suit filed on April 14, which
was later consolidated with 20 lawsuits filed between March 17 and June 29, was
deemed contemporaneously filed with a Delaware state action filed on April 1, the
Cryo-Maid factors overwhelmingly favored staying the Delaware state action).
17 Defs.’ Opening Br. at 16.
18 See id. at 15–17.
19 Park G.P., Inc. v. CCSB Fin. Corp., 2020 WL 7706962, at *2 (Del. Ch. Dec. 29,
2020).
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15. In the end, however, “[g]ranting a stay is a discretionary enterprise and
derives from a court’s inherent power to control its docket.”20 “A court may grant a
stay ‘on the basis of comity, efficiency, or common sense.’” 21 “A stay of any aspect of
litigation shouldn’t be granted automatically; it should be granted only if the
opponent wouldn’t be prejudiced by the delay and considerations of expense and
litigation economy predominate.”22 “And when resolving whether to stay or not, the
Court ‘must make a particularized judgment evaluating the weight that [purported]
efficiency should be afforded . . . and the significance of any risk of injury to [a party]
. . . that might eventuate from a stay.’”23
16. There are good reasons to stay this action in favor of the Colorado and
California proceedings. For one, although the parties and issues in each proceeding
are not identical, they substantially overlap. The parties in all three actions are
closely related. In the Colorado action, HB+ brought suit against Jardine. In the
California action, Jardine’s wholly owned entity Agile brought suit against HB+. And
in the Delaware action, Jardine brought suit derivatively against HB+’s directors.
20 Lima USA, Inc. v. Mahfouz, 2021 WL 5774394, at *7 (Del. Super. Aug. 31, 2021)
(citing Solow v. Aspect Res., LLC, 46 A.3d 1074, 1075 (Del. 2012)).
21 LightLab Imaging, Inc. v. Axsun Techs., Inc., 2012 WL 1764225, at *1 (Del. Ch.
May 10, 2012) (quoting Julian v. Julian, 2009 WL 2937121, at *8 (Del. Ch. Sept. 9,
2009)).
22 Lima USA, 2021 WL 5774394, at *7 (Del. Super. Aug. 31, 2021) (citing Schick, Inc.
v. Amalgamated Clothing & Textile Workers Union, 1987 WL 12450, at *2 (Del. Ch.
June 18, 1987)).
23 Id. (alterations in original) (quoting In re McCrory Parent Corp., 1991 WL 137145,
at *1 (Del. Ch. July 3, 1991)).
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17. As another reason, the proceedings will involve overlapping issues. The
Colorado action concerns Jardine’s alleged fraudulent conduct and seeks rescission of
Jardine’s entire equity interest in HB+. The California action concerns HB+’s alleged
breach of Agile’s contract and seeks monetary relief. The Delaware action concerns
HB+’s directors’ fiduciary breaches and seeks monetary and to-be-determined
equitable relief.
18. Whether the Director Defendants retaliated against Jardine will be at
issue in all of these proceedings.24 Here, Jardine claims in part that the Director
Defendants harmed HB+ by wrongfully terminating Jardine and breaching the
contract with Agile, which was “motivated by a desire to punish Jardine” for reporting
Turner and Sechopoulous’s misstatements and fraudulent
representations.25 Although the California and Colorado forums could find
retaliation occurred without making factual findings as to an underlying wrongful
fiduciary act, it is likely that the discovery and arguments made in those forums will
overlap with the Delaware action. Given HB+’s allegations, and Jardine’s defenses,
the California and Colorado forums may make findings that would impact the
Delaware action. If allowed to continue simultaneously, that might lead to an
inconsistency, which this court tries to avoid.26
24 See Defs.’ Opening Br., Ex. 2 ¶ 2(c) (Jardine’s answer and affirmative defenses to
the Colorado complaint); id., Ex. 3 ¶¶ 27–28 (California JAMS complaint).
25 Compl. ¶ 104.
26 See Gramercy Emerging Mkts Fund v. Allied Irish Banks, p.l.c., 2016 WL 7494898,
at *8 (Del. Ch. Dec. 30, 2016) (noting that absent a first-filed doctrine, “comity would
8
19. For these reasons, a stay in favor of the California and Colorado
proceedings is appropriate.
20. The outcome is the same under the six-factor Cryo-Maid test.27 Factors
one (relative ease of access to proof) and two28 (compulsory process) favor Colorado or
California as HB+’s principal place of business is in Colorado, Jardine resides in
California, Turner resides in Colorado, and Sechopoulous and Topouzoglou reside in
Greece.29 Most of the evidence and employees, who might be deposed or called to
testify, are presumably located in Colorado or California, and most likely not located
in Delaware. Factor three (view of the premises) is neutral. Factor four30 (practical
be damaged and inconsistent judicial decisions could result”), aff’d 173 A.3d 1033
(Del. 2017).
27 Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681 (Del. 1964); Gramercy Emerging
Mkts. Fund, 173 A.3d at 1036–07 (identifying the six Cryo-Maid factors as: “(1) the
relative ease of access to proof; (2) the availability of compulsory process for
witnesses; (3) the possibility of the view of the premises, if appropriate; (4) all other
practical problems that would make the trial of the case easy, expeditious and
inexpensive; (5) whether or not the controversy is dependent upon the application of
Delaware law which the courts of this State more properly should decide than those
of another jurisdiction; and (6) the pendency or nonpendency of a similar action in
another jurisdiction.” (cleaned up)).
28 Mt. Hawley Ins. Co. v. Jenny Craig, Inc., 668 A.2d 763, 769 (Del. Super. 1995)
(stating that under the second factor, the court evaluates whether “another forum
would provide a substantial improvement as to the number of witnesses who would
be subject to compulsory process” (citation omitted)).
29 As Jardine notes, this court can compel the presence of the Director Defendants,
but presumably this action will involve third-party witnesses most likely located in
either Colorado or California.
30 Martinez v. E.I. DuPont de Nemours & Co., Inc., 86 A.3d 1102, 1104 (Del. 2014)
(stating that under the fourth factor, the court examines “all other practical problems
that would make the trial of the case easy, expeditious and inexpensive” (citation
omitted)).
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problems) favors Colorado or California because, as with factors one and two,
presumably all the evidence and employees with relative knowledge are located in
those states, and not in Delaware. Factor five (application of Delaware law) favors
Delaware as Delaware law applies. Factor six (pendency or nonpendency of similar
action) favors California or Colorado as similar actions were filed in those states
before the Delaware action was filed. In sum, factors one, two, four, and six favor
either California or Colorado. Factor five favors Delaware, and factor three is
neutral. On balance, a stay is warranted in favor of the California and Colorado
proceedings.
21. Counsel shall send quarterly reports on the status of the litigation in
California and Colorado. In the meantime, Jardine may seek leave to lift the stay if
events in the parallel proceedings warrant. In all events, the parties shall update the
court of the status of the parallel proceedings at the end of each quarter, with the
first report to be filed at the end of September.
/s/ Kathaleen St. J. McCormick
Chancellor Kathaleen St. J. McCormick
Dated: April 25, 2024
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