Kravetz v. Bridge to Life, LTD., a Wyoming Corporation, 1:16-cv-09194

Background

Plaintiffs Lawrence, Jonathan, and Carrie Kravetz and Steven Brooks are shareholders of Bridge to Life, Ltd. (BTL); Lawrence alleges he received 1,200,000 shares from 2005–2010 but defendants claim an issuing error limits him to 600,000.
BTL redomesticated from Delaware to Wyoming in February 2014; shareholders were asked to surrender Delaware certificates to receive Wyoming certificates, and plaintiffs did so.
Defendants (BTL and its directors) failed to reissue Wyoming certificates to Jonathan, Carrie, and Brooks and disputed Lawrence’s share count and his fundraising contributions.
The Kravetzes previously sued BTL and the directors in the Delaware Court of Chancery (December 2015); that court dismissed with prejudice all claims against the directors and dismissed most claims against BTL except breach of contract and unjust enrichment; plaintiffs later voluntarily dismissed the Delaware case after filing an amended complaint.
In this federal action plaintiffs assert breach of contract, promissory estoppel, unjust enrichment, breach of fiduciary duty, breach of implied covenant of good faith and fair dealing (Count V), conversion (Count VI), and declaratory judgment under the Wyoming Business Corporation Act (Count VII).
Defendants moved under Rule 12(b)(6), arguing res judicata bars claims against the directors and certain claims against BTL, and that Counts V–VII should be dismissed on substantive grounds or as duplicative.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether res judicata bars claims against the individual directors	Plaintiffs contended the Wyoming redomesticated BTL is a different entity and directors are not the same parties; therefore prior Delaware dismissal should not preclude these claims	Defendants argued the Delaware judgment precludes reassertion because BTL’s continuance into Wyoming preserves prior judgments and the directors are the same parties	Court held res judicata applies: Delaware and Wyoming BTL are the same entity, directors are same parties, and prior Delaware dismissal with prejudice bars all counts against the directors
Whether Counts V (good faith/fair dealing) and VI (conversion) against BTL are barred by res judicata	Plaintiffs reasserted these counts despite prior Delaware dismissal	Defendants argued those counts were dismissed with prejudice previously and are therefore precluded	Court held Counts V and VI against BTL are barred by res judicata and dismissed with prejudice
Whether Count VII (declaratory judgment under WBCA) is duplicative of contract/promissory estoppel claims	Plaintiffs asserted a statutory duty under the WBCA arising from surrendering Delaware certificates, requiring declaratory relief	Defendants argued Count VII is duplicative because it arises from the same operative facts and injury as the contract/quasi-contract claims	Court denied dismissal of Count VII without prejudice, finding declaratory relief requires statutory interpretation of the WBCA and could require different proof than breach/promissory estoppel claims

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausible claim requirement)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must raise claim above speculative level)
Parungo v. Comty. Health Sys., Inc., 858 F.3d 452 (7th Cir. 2017) (res judicata may be considered on Rule 12(b)(6) where record and complaint clearly show bar)
Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785 (7th Cir. 2013) (explaining elements of judicial estoppel inquiry)
New Hampshire v. Maine, 532 U.S. 742 (2001) (factors for judicial estoppel; whether a party persuaded a court to accept an earlier position)
Sternberg v. O'Neil, 550 A.2d 1105 (Del. 1988) (consent as a basis for personal jurisdiction)
RBC Capital Markets, LLC v. Educ. Loan Tr. IV, 87 A.3d 632 (Del. 2014) (elements for res judicata under Delaware law)
LaPoint v. AmerisourceBergen Corp., 970 A.2d 185 (Del. 2009) (transactional approach to res judicata)