Aleksander Dietrichson v. Martin G. Knott and NxGenEd, LLC, 11965-VCMR

Dietrichson and Knott formed NxGenEd, LLC as 50/50 members; Dietrichson contributed IP and Knott managed business development. The Operating Agreement authorized distributions but prohibited director salaries absent board approval.
In 2015 NxGenEd sold substantially all assets to Blackboard for $250,000 (including a $75,000 holdback). Company cash was scarce and board never approved a budget or any director salary.
After the sale, bank records produced in a books-and-records action showed ~$137,398.91 in payments to Knott dating to January 2015 and transfers of ~$28,488 to counsel. Knott asserted he paid himself a lawful salary.
Dietrichson sued alleging Knott breached fiduciary duties (self-dealing, misappropriation), wasted corporate assets, deprived Dietrichson of contractually-mandated distributions, and asserted unjust enrichment and breach of the implied covenant.
Defendants moved to dismiss arguing the claims are derivative and demand was not pleaded, distribution claims are unripe, and unjust enrichment is precluded by the Operating Agreement. The Court granted dismissal in full.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are fiduciary-duty and waste claims direct or derivative?	Dietrichson: claims include personal harm and thus are direct (or at least dual-natured).	Knott: alleged wrongs depleted company assets; harm is to the company and thus derivative.	Held: Claims are derivative under Tooley because harm is to the company and any recovery would inure to the company.
Was demand or demand-futility adequately pled under Rule 23.1 / LLC Act?	Dietrichson did not make a board demand but did not allege particularized facts showing demand would be futile.	Knott: plaintiff failed to satisfy Rule 23.1 and §18-1003 particularity requirements.	Held: Dismissed for failure to plead demand or demand futility.
Are claims for guaranteed distributions ripe and direct?	Dietrichson: he was entitled to two-thirds of sales proceeds under Deal Terms/Operating Agreement and thus has a direct contract claim.	Knott: no liquidation event was alleged and creditors/members may have priority; distribution claims are premature.	Held: Distribution and related implied-covenant claims are unripe and dismissed.
Is unjust enrichment available?	Dietrichson: alternatively, equity should remedy wrongful transfers to Knott.	Knott: express Operating Agreement and related contracts govern distributions and preclude unjust enrichment.	Held: Unjust enrichment claim fails because express contracts govern the parties’ rights.

Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004) (two-part test for distinguishing direct and derivative claims)
El Paso Pipeline GP Co. v. Brinckerhoff, 152 A.3d 1248 (Del. 2016) (limits on expanding "dual-natured" direct claims where only economic value is transferred)
Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286 (Del. 1999) (corporate derivative principles applied to LLCs)
Allen v. El Paso Pipeline GP Co., LLC, 90 A.3d 1097 (Del. Ch. 2014) (distinguishing contractual distribution claims from generic oversight claims)
Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872 (Del. Ch. 2009) (unjust enrichment unavailable when express contract governs the relationship)