Oshidar v. Asura Development Group, Inc.
N14C-09-169 EMD
| Del. Super. Ct. | Mar 24, 2017Background
- Plaintiffs Xerxes Oshidar (CA) and Ranga (Kanga) Krishna (NJ) are colleagues who loaned Asura Development Group, Inc. cash in early 2011 based on representations by Asura’s CEO, Brian Hoekstra.
- Plaintiffs received subscription agreements, term sheets, and senior convertible promissory notes: Krishna purchased four $50,000 notes; Oshidar purchased one $250,000 note; repayment was due one year after issuance.
- Asura defaulted on the notes when payment became due. Plaintiffs later learned the touted merger with a Japanese company had not been completed and that financial/SEC disclosures were allegedly false.
- Plaintiffs amended to add fraud claims against Hoekstra (in his corporate capacity) and filed suit in 2014; Hoekstra moved for judgment on the pleadings arguing statute of limitations and failure to plead fraud with particularity.
- The Court reviewed accrual and tolling issues under Delaware law, found factual disputes about when the fraud claim accrued and whether fraudulent concealment tolled the statute, and evaluated Rule 9(b) pleading sufficiency.
- Holding: Motions for judgment on the pleadings denied — plaintiffs’ fraud claims survive at this stage (facts viewed in plaintiffs’ favor), though the Court noted the statute-of-limitations argument was strong and unresolved factual questions remain.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud claims are time-barred under 10 Del. C. § 8106 (3-year limit) | Fraud was discovered only when Asura defaulted; tolling (fraudulent concealment) delayed accrual | Claims accrued at the time the misrepresentations were made (on or before note execution in Feb 2011), so suits filed in late 2014 are untimely | Court: accrual date is factual; cannot decide on Rule 12(c) — question of fact exists; denied motion but noted defendant’s argument is strong |
| Whether plaintiffs pleaded fraud with the particularity required by Rule 9(b) | Amended complaints identify meetings, representations, documents (SEC filings, financials) and reliance — sufficient to infer misrepresentation and inducement | Pleadings are too general on the specific false statements and details to meet 9(b) | Court: allegations are minimal but adequate at pleading stage; Rule 9(b) satisfied for now |
| Whether fraudulent concealment or other tolling doctrines apply | Plaintiffs pleaded facts that imply affirmative concealment (documents and false SEC filings), supporting tolling until default | No adequate concealment alleged; plaintiffs were on inquiry notice earlier | Court: reasonable inference of fraudulent concealment exists on the pleadings; tolling is a factual issue for later stages |
| Whether defendant waived statute-of-limitations or failure-to-state defenses by prior motions | Plaintiffs argued procedural defaults could bar the defenses | Hoekstra argued defenses preserved in answer and may be raised on Rule 12(c) | Court: defenses not waived; statute-of-limitations and failure-to-state may be raised on Rule 12(c) |
Key Cases Cited
- Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199 (Del. 1993) (standards for pleading and Rule 12(c) review; elements of fraud)
- Warner Commc’ns, Inc. v. Chris–Craft Indus., Inc., 583 A.2d 962 (Del. Super. 1989) (pleading facts viewed in the light most favorable to non-moving party for dismissal motions)