810 F. Supp. 2d 601
S.D.N.Y.2011Background
- Defendants Belnovo, S.A. and Grupo Mundial Tenedora, S.A. move to dismiss the SAC under Rule 9(b) and 12(b)(6).
- Plaintiffs Marino and Serpa allege breach of fiduciary duty, civil conspiracy, and aiding and abetting a fiduciary breach in the GPIM/GPIM Holdings context.
- GPIM is governed by a Delaware LLC Agreement allocating voting and economic interests; Belnovo owns 27.5% and is not a manager/controlling member.
- The LLC Agreement permits a Required Sale and ROFO mechanics; it waives dissenters’ rights for a sale under §7.3 and ties to sale to GPIM Holdings.
- Plaintiffs contend GM engineered a self-dealing transfer to GPIM Holdings at an unfair price, and Plaintiffs offered a nominal $1 bid; Defendants challenge under Delaware law and the LLC exculpation clause.
- Court grants dismissal as to Belnovo and GM, with leave to replead within 20 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the SAC's claims sound in fraud and require Rule 9(b) pleading. | SAC alleges false statements and self-dealing as underlying fraud. | Allegations are contractual/structural, not pure fraud; insufficent facts for 9(b) standards. | Rule 9(b) applies; but (overall) other defects predominate in dismissal. |
| Whether Belnovo owed a fiduciary duty and breached it under Delaware law. | Belnovo, as a member, owed fiduciary duties to GPIM and Plaintiffs. | Delaware LLC Act allows duty restriction/elimination by contract; Belnovo not a manager controlling member; waiver applies. | No breach; exculpation and lack of controlling status shield Belnovo. |
| Whether Plaintiffs' civil conspiracy claim is viable without an underlying tort. | Conspiracy to transfer GPIM to GPIM Holdings at an unfair price. | Conspiracy requires an underlying tort; none adequately pleaded. | Conspiracy claim dismissed for lack of underlying tort. |
| Whether the aiding-and-abetting claim against GM survives. | GM knowingly participated in Belnovo’s alleged breach. | No viable underlying breach; failure to plead knowing participation and damages. | Aiding-and-abetting claim dismissed for lack of underlying breach and failure to plead with particularity. |
| Whether the claims are barred by the LLC Agreement’s exculpation provisions. | Exculpation does not bar claims here. | Exculpation applies where no bad faith or improper profit shown; waiver applies to sale. | Claims barred by exculpation provisions; dismissal with leave to replead. |
Key Cases Cited
- Rombach v. Chang, 355 F.3d 164 (2d Cir. 2004) (Rule 9(b) pleading requires specifics of fraud)
- Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d Cir. 2006) (strong inference of fraud via motive/opportunity or conscious misbehavior)
- Gatz v. Ponsoldt, 925 A.2d 1265 (Del. 2007) (elements for aiding and abetting fiduciary breach under Delaware law)
- Crigger v. Fahnestock & Co., 443 F.3d 230 (2d Cir. 2006) (conspiracy/predicate acts; underlying tort requirement)
- Pappas v. Passias, 271 A.D.2d 420 (N.Y. App. Div. 2000) (civil conspiracy requires underlying tort)