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THE COURT OF CHANCERY OF THE STATE OF DELAWARE","paragraph_id":"para_1"},{"text":"IRV EDWARDS, M.D., MARK BELL,","paragraph_id":"para_2"},{"text":"M.D., BRUCE HENSEL, M.D., and","paragraph_id":"para_3"},{"text":"STEVE MARON, M.D.,","paragraph_id":"para_4"},{"text":"Plaintiffs,","paragraph_id":"para_5"},{"text":"v.","paragraph_id":"para_6"},{"text":"GIGACQUISITIONS2, LLC,","paragraph_id":"para_7"},{"text":"GIGCAPITAL2, INC., UPHEALTH,","paragraph_id":"para_8"},{"text":"INC., AVI KATZ, RALUCA DINU,","paragraph_id":"para_9"},{"text":"CHIRINJEEV KATHURIA, THE","paragraph_id":"para_10"},{"text":"NEEDHAM GROUP, INC.,","paragraph_id":"para_11"},{"text":"NEEDHAM & COMPANY, LLC,","paragraph_id":"para_12"},{"text":"and CONTINENTAL STOCK","paragraph_id":"para_13"},{"text":"TRANSFER & TRUST,","paragraph_id":"para_14"},{"text":"Defendants.","paragraph_id":"para_15"},{"text":")","paragraph_id":"para_16"},{"text":")","paragraph_id":"para_17"},{"text":")","paragraph_id":"para_18"},{"text":")","paragraph_id":"para_19"},{"text":")","paragraph_id":"para_20"},{"text":")","paragraph_id":"para_21"},{"text":")","paragraph_id":"para_22"},{"text":")","paragraph_id":"para_23"},{"text":")","paragraph_id":"para_24"},{"text":")","paragraph_id":"para_25"},{"text":")","paragraph_id":"para_26"},{"text":")","paragraph_id":"para_27"},{"text":")","paragraph_id":"para_28"},{"text":")","paragraph_id":"para_29"},{"text":")","paragraph_id":"para_30"},{"text":")","paragraph_id":"para_31"},{"text":"C.A. No. 2024-0591-LWW","paragraph_id":"para_32"},{"text":"MEMORANDUM OPINION","paragraph_id":"para_33"},{"text":"Date Submitted: April 4, 2025","paragraph_id":"para_34"},{"text":"Date Decided: July 25, 2025","paragraph_id":"para_35"},{"text":"Elizabeth A. Sloan, BALLARD SPAHR LLP, Wilmington, Delaware; David B.","paragraph_id":"para_36"},{"text":"Harrison, SPIRO HARRISON & NELSON, Montclair, New Jersey; Shomik Ghosh,","paragraph_id":"para_37"},{"text":"SPIRO HARRISON & NELSON, New York, New York; Counsel for the Plaintiffs","paragraph_id":"para_38"},{"text":"Ronald N. Brown, III & Kelly L. Freund, DLA PIPER LLP (US), Wilmington,","paragraph_id":"para_39"},{"text":"Delaware; Melanie E. Walker & Emma C. Peplow, DLA PIPER LLP (US), Los","paragraph_id":"para_40"},{"text":"Angeles, California; Counsel for Defendants GigAcquisitions2, LLC, GigCapital2,","paragraph_id":"para_41"},{"text":"Inc., UpHealth, Inc., Avi Katz, and Raluca Dinu","paragraph_id":"para_42"},{"text":"Michael A. Barlow & Hayden J. Driscoll, QUINN EMANUEL URQUHART &","paragraph_id":"para_43"},{"text":"SULLIVAN, LLP, Wilmington, Delaware; Michael B. Carlinsky, James C. Tecce,","paragraph_id":"para_44"},{"text":"Maxwell R. Hawley & H. Lin Zhu, QUINN EMANUEL URQUHART &","paragraph_id":"para_45"},{"text":"SULLIVAN, LLP, New York, New York; Counsel for Defendant Dr. Chirinjeev","paragraph_id":"para_46"},{"text":"Kathuria","paragraph_id":"para_47"},{"text":"Stephen B. Brauerman & Sarah T. Andrade, BAYARD, P.A., Wilmington,","paragraph_id":"para_48"},{"text":"Delaware; Edward Flanders & Jay D. Dealy, PILLSBURY WINTHROP SHAW","paragraph_id":"para_49"},{"text":"PITTMAN LLP, New York, New York; Counsel for Defendants Needham &","paragraph_id":"para_50"},{"text":"Company, LLC and The Needham Group, Inc.","paragraph_id":"para_51"},{"text":"Peter B. Ladig & Abraham C. Schneider, BAYARD, P.A., Wilmington, Delaware;","paragraph_id":"para_52"},{"text":"Mark A. Harmon & James Van Splinter, CHIESA SHAHINIAN & GIANTOMASI","paragraph_id":"para_53"},{"text":"PC, New York, New York; Counsel for Defendant Continental Stock Transfer &","paragraph_id":"para_54"},{"text":"Trust Company","paragraph_id":"para_55"},{"text":"WILL, Vice Chancellor","paragraph_id":"para_56"},{"text":"1","paragraph_id":"para_57"},{"text":"In November 2020, GigCapital2, Inc.—a SPAC—combined with Cloudbreak","paragraph_id":"para_58","court_paragraph":1},{"text":"Health, LLC and UpHealth Holdings, Inc. Cloudbreak was high performing;","paragraph_id":"para_59"},{"text":"UpHealth was struggling. The combined company went bankrupt.","paragraph_id":"para_60"},{"text":"The plaintiffs are former Cloudbreak members and option holders. They","paragraph_id":"para_61"},{"text":"bring an assortment claims against defendants including GigCapital2 and its","paragraph_id":"para_62"},{"text":"principals, UpHealth Holdings’ cofounder and financial advisor, and the merger","paragraph_id":"para_63"},{"text":"transfer agent. Their overarching complaint is that they were misled about UpHealth","paragraph_id":"para_64"},{"text":"Holdings’ prospects. They also contend that the delivery of their merger","paragraph_id":"para_65"},{"text":"consideration was delayed, leaving them unable to sell at a favorable time.","paragraph_id":"para_66"},{"text":"The plaintiffs’ claims suffer from numerous defects. This court lacks","paragraph_id":"para_67"},{"text":"jurisdiction over the transfer agent. The plaintiffs lack standing to sue for breach of","paragraph_id":"para_68"},{"text":"UpHealth Holdings’ merger agreement. Several claims are time-barred. And the","paragraph_id":"para_69"},{"text":"remainder are not reasonably conceivable. The case is dismissed in full.","paragraph_id":"para_70"},{"text":"I. FACTUAL BACKGROUND","paragraph_id":"para_71"},{"text":"The following facts are drawn from the operative Complaint, the documents","paragraph_id":"para_72"},{"text":"it incorporates by reference, and matters subject to judicial notice.1","paragraph_id":"para_73"},{"text":"1 First Am. Verified Compl. (Dkt. 39) (“Am. Compl.”); see Freedman v. Adams, 2012 WL","paragraph_id":"para_74"},{"text":"1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a [petitioner] expressly refers to and","paragraph_id":"para_75"},{"text":"heavily relies upon documents in her complaint, these documents are considered to be","paragraph_id":"para_76"},{"text":"incorporated by reference into the complaint[.]” (citation omitted)); see also In re","paragraph_id":"para_77"},{"text":"Books-A-Million, Inc. S’holders Litig., 2016 WL 5874974, at *1 (Del. Ch. 2016)","paragraph_id":"para_78"},{"text":"(explaining that the court may take judicial notice of “facts that are not subject to","paragraph_id":"para_79"},{"text":"2","paragraph_id":"para_80"},{"text":"A. Cloudbreak","paragraph_id":"para_81","court_paragraph":2},{"text":"Cloudbreak Health, LLC was founded in 2015 to improve health outcomes","paragraph_id":"para_82"},{"text":"for non-English speaking patients through HIPAA-compliant remote interpretation","paragraph_id":"para_83"},{"text":"and translation services.2 Plaintiffs Dr. Irv Edwards, Dr. Mark Bell, Dr. Steve","paragraph_id":"para_84"},{"text":"Maron, and Dr. Bruce Hensel were among its early investors.3 Edwards and Bell","paragraph_id":"para_85"},{"text":"received Cloudbreak common units, giving them each a 15.7% ownership interest.4","paragraph_id":"para_86"},{"text":"Edwards also became a member of Cloudbreak’s Board of Directors.5 Maron","paragraph_id":"para_87"},{"text":"received units amounting to a 3.16% ownership interest.6 Hensel—Cloudbreak’s","paragraph_id":"para_88"},{"text":"Chief Medical Officer—was granted Cloudbreak options that vested in 2016.7","paragraph_id":"para_89"},{"text":"Cloudbreak’s revenue, valuation, and market share grew rapidly.8 Its success","paragraph_id":"para_90"},{"text":"attracted outside investors. In 2015, alternative asset management firm Kayne","paragraph_id":"para_91"},{"text":"reasonable dispute” (citing In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 170","paragraph_id":"para_92"},{"text":"(Del. 2006))).","paragraph_id":"para_93"},{"text":"2 Am. Compl. ¶ 34.","paragraph_id":"para_94"},{"text":"3 Id. ¶¶ 28-36.","paragraph_id":"para_95"},{"text":"4 Id. ¶ 34.","paragraph_id":"para_96"},{"text":"5 Id.","paragraph_id":"para_97"},{"text":"6 Id.","paragraph_id":"para_98"},{"text":"7 Id.","paragraph_id":"para_99"},{"text":"8 Id. ¶¶ 35-36.","paragraph_id":"para_100"},{"text":"3","paragraph_id":"para_101"},{"text":"Anderson Capital Advisors, L.P. made a large investment in exchange for a financial","paragraph_id":"para_102","court_paragraph":3},{"text":"interest.9","paragraph_id":"para_103"},{"text":"B. Gig2 and UpHealth","paragraph_id":"para_104"},{"text":"In March 2019, defendants Dr. Avi Katz and Raluca Dinu incorporated","paragraph_id":"para_105"},{"text":"GigCapital2, Inc. (“Gig2”) in Delaware as a special purpose acquisition company","paragraph_id":"para_106"},{"text":"(SPAC).10 Defendant GigAcquisitions2, LLC—a Delaware limited liability","paragraph_id":"para_107"},{"text":"company—served as Gig2’s sponsor (the “Sponsor”).11 Katz was the Sponsor’s","paragraph_id":"para_108"},{"text":"managing member and the Chief Executive Officer, President, Secretary, Executive","paragraph_id":"para_109"},{"text":"Chairman, and a director of Gig2.12 Dinu was a founding managing partner and a","paragraph_id":"para_110"},{"text":"director of Gig2.13 In June 2019, Gig2 completed its initial public offering.14","paragraph_id":"para_111"},{"text":"A few months later, in November 2019, defendant Dr. Chirinjeev Kathuria","paragraph_id":"para_112"},{"text":"cofounded UpHealth Services, which later became UpHealth Holdings, Inc.—a","paragraph_id":"para_113"},{"text":"healthcare services company offering a digital platform for healthcare providers,","paragraph_id":"para_114"},{"text":"9 Am. Compl. Ex. A (“Locke Aff.”) ¶ 2; see also Am. Compl. ¶¶ 111, 116 (referring to","paragraph_id":"para_115"},{"text":"Kayne and its subsidiary entity, Martti in the USA, as “Cloudbreak’s private equity","paragraph_id":"para_116"},{"text":"investor” and “the largest shareholder in Cloudbreak at the time”).","paragraph_id":"para_117"},{"text":"10 Am. Compl. ¶¶ 18, 20-21.","paragraph_id":"para_118"},{"text":"11 Id. ¶ 19.","paragraph_id":"para_119"},{"text":"12 Id. ¶ 20.","paragraph_id":"para_120"},{"text":"13 Id. ¶ 21.","paragraph_id":"para_121"},{"text":"14 Id. ¶ 18.","paragraph_id":"para_122"},{"text":"4","paragraph_id":"para_123"},{"text":"health systems, and payors.15 Kathuria’s broader portfolio included five other","paragraph_id":"para_124","court_paragraph":4},{"text":"healthcare companies: Thrasys, Inc., Behavioral Health Services, LLC (“BHS”),","paragraph_id":"para_125"},{"text":"TTC Healthcare, Inc., Glocal Healthcare Systems Private Limited, and Innovations","paragraph_id":"para_126"},{"text":"Group (collectively, the “Portfolio Companies”).16 The Portfolio Companies were","paragraph_id":"para_127"},{"text":"struggling and debt-ridden.17","paragraph_id":"para_128"},{"text":"In March 2020, Kathuria hired defendant investment bank Needham &","paragraph_id":"para_129"},{"text":"Company, LLC to seek out merger partners or secure financing for the Portfolio","paragraph_id":"para_130"},{"text":"Companies.18 Needham’s compensation was largely contingent on completing a","paragraph_id":"para_131"},{"text":"transaction.19 Needham and Kathuria allegedly “gerrymander[ed]” the Portfolio","paragraph_id":"para_132"},{"text":"Companies’ projections and financials to enhance their appeal to potential buyers.20","paragraph_id":"para_133"},{"text":"15 Id. ¶ 22; Locke Aff. Ex. A (“UpHealth Oct. Presentation”) 7, 9. Though the presentation","paragraph_id":"para_134"},{"text":"is labeled “September 2020,” the plaintiffs allege that they were shown the presentation","paragraph_id":"para_135"},{"text":"“on or about October 5, 2020.” Am. Compl. ¶ 85.","paragraph_id":"para_136"},{"text":"16 Am. Compl. ¶¶ 2, 38. Kathuria rejects the notion that these entities were “his","paragraph_id":"para_137"},{"text":"companies.” See Def. Kathuria’s Opening Br. in Supp. of Mot. to Dismiss First Am.","paragraph_id":"para_138"},{"text":"Compl. (Dkt. 55) (“Kathuria Opening Br.”) 13-14.","paragraph_id":"para_139"},{"text":"17 Am. Compl. ¶¶ 2, 7.","paragraph_id":"para_140"},{"text":"18 Id. ¶ 38. I refer to defendants Needham & Company, LLC and The Needham Group,","paragraph_id":"para_141"},{"text":"Inc. collectively as “Needham.”","paragraph_id":"para_142"},{"text":"19 Id. ¶ 39 (“In exchange for these services, Needham was to not only receive an upfront","paragraph_id":"para_143"},{"text":"payment but also various success-based fees, including potentially 5% of the gross","paragraph_id":"para_144"},{"text":"proceeds from the sale of any securities in a private placement offering and 4% of gross","paragraph_id":"para_145"},{"text":"proceeds from sales made via third-party introductions, as well as warrants to buy an","paragraph_id":"para_146"},{"text":"amount equal to 2% of the securities sold in any offering.”).","paragraph_id":"para_147"},{"text":"20 Id. ¶ 41; see also id. ¶¶ 42-50 (discussing alleged manipulations of the Portfolio","paragraph_id":"para_148"},{"text":"Companies’ financials).","paragraph_id":"para_149"},{"text":"5","paragraph_id":"para_150"},{"text":"In internal communications, Needham junior employees expressed that the “only","paragraph_id":"para_151","court_paragraph":5},{"text":"shot” to sell the Portfolio Companies was to “g[e]t lucky with a SPAC.”21","paragraph_id":"para_152"},{"text":"In summer 2020, Needham and Kathuria approached Gig2, which was","paragraph_id":"para_153"},{"text":"seeking out a de-SPAC target. By September, Katz was engaging with Needham","paragraph_id":"para_154"},{"text":"and Kathuria about bringing the Portfolio Companies public.22","paragraph_id":"para_155"},{"text":"C. The Merger Proposal and Due Diligence","paragraph_id":"para_156"},{"text":"Katz and Kathuria approached Cloudbreak to “convince [it] to join the","paragraph_id":"para_157"},{"text":"Portfolio Companies in a SPAC transaction.”23 Because Cloudbreak was initially","paragraph_id":"para_158"},{"text":"unwilling to work with Kathuria, Katz took the lead in negotiations to assure","paragraph_id":"para_159"},{"text":"Cloudbreak of the deal’s merit.24 Katz told Cloudbreak that he had independently","paragraph_id":"para_160"},{"text":"21 Id. ¶¶ 50-51.","paragraph_id":"para_161"},{"text":"22 Id. ¶ 72.","paragraph_id":"para_162"},{"text":"23 Id. ¶ 75. Katz, Dinu, Gig2, the Sponsor, and UpHealth, Inc. (together, the “Gig2","paragraph_id":"para_163"},{"text":"Defendants”) dispute this version of events. See the Gig2 Defs.’ Opening Br. in Supp. of","paragraph_id":"para_164"},{"text":"Mot. to Dismiss Verified First Am. Compl. (Dkt. 59) (“Gig2 Defs.’ Opening Br.”) 10 n.6.","paragraph_id":"para_165"},{"text":"Citing Gig2’s May 2021 prospectus, the Gig2 Defendants contend that UpHealth Holdings","paragraph_id":"para_166"},{"text":"had entered into a term sheet to acquire Cloudbreak before they met with Cloudbreak. Id.","paragraph_id":"para_167"},{"text":"They argue that it was only after Kathuria introduced Cloudbreak’s CEO to Katz that the","paragraph_id":"para_168"},{"text":"parties discussed Gig2 acquiring Cloudbreak directly. Id. They ask that I credit their","paragraph_id":"para_169"},{"text":"version of events because it is recounted in a public filing with the Securities and Exchange","paragraph_id":"para_170"},{"text":"Commission. Id. (citing Omnicare, Inc. v. NCS Healthcare, Inc., 809 A.2d 1163, 1167","paragraph_id":"para_171"},{"text":"(Del. Ch. 2002)). Although I take judicial notice of the prospectus, I cannot assume the","paragraph_id":"para_172"},{"text":"truth of its contents. See Pulieri v. Boardwalk Props., LLC, 2015 WL 691449, at *4 n.24","paragraph_id":"para_173"},{"text":"(Del. Ch. Feb. 18, 2015) (“Taking judicial notice of the truth of the statements . . . is","paragraph_id":"para_174"},{"text":"beyond the scope of what [the Delaware Rules of Evidence] permits.”). I must accept the","paragraph_id":"para_175"},{"text":"plaintiffs’ version of events as true. See infra note 129 and accompanying text.","paragraph_id":"para_176"},{"text":"24 Am. Compl. ¶ 75.","paragraph_id":"para_177"},{"text":"6","paragraph_id":"para_178"},{"text":"“diligence[d] the deal and Cloudbreak could trust that the financial numbers were","paragraph_id":"para_179","court_paragraph":6},{"text":"sound.”25","paragraph_id":"para_180"},{"text":"Katz allegedly gave Cloudbreak “false investor presentations” prepared by","paragraph_id":"para_181"},{"text":"Needham.26 The presentations “falsely showed [that] each of the Portfolio","paragraph_id":"para_182"},{"text":"Companies were in strong financial condition and were positioned for future","paragraph_id":"para_183"},{"text":"success.”27","paragraph_id":"para_184"},{"text":"On October 5, 2020, Cloudbreak “received a series of diligence materials from","paragraph_id":"para_185"},{"text":"Katz, Kathuria, and Needham,” including a management presentation dated","paragraph_id":"para_186"},{"text":"September 2020 (the “October Presentation”) that gave “specific details about each","paragraph_id":"para_187"},{"text":"of the Portfolio Companies.”28 The October Presentation “represented that","paragraph_id":"para_188"},{"text":"UpHealth Services was made up of four companies—Glocal, Thrasys,","paragraph_id":"para_189"},{"text":"Transformations, and MedQuest.”29 The presentation reflected 2019 revenues for","paragraph_id":"para_190"},{"text":"25 Id. ¶¶ 79, 111; Locke Aff. ¶ 8 (“Dr. Kathuria and Katz told the Board that the data and","paragraph_id":"para_191"},{"text":"information they presented about UpHealth Holdings was accurate and that they had","paragraph_id":"para_192"},{"text":"conducted diligence into those companies. Mr. Katz made clear that [Gig2] had","paragraph_id":"para_193"},{"text":"independently diligenced the information.”).","paragraph_id":"para_194"},{"text":"26 Am. Compl. ¶¶ 80, 83.","paragraph_id":"para_195"},{"text":"27 Id. ¶ 84.","paragraph_id":"para_196"},{"text":"28 Id. ¶ 85; Locke Aff. ¶ 7.","paragraph_id":"para_197"},{"text":"29 UpHealth Oct. Presentation 24; see also Am. Compl. ¶ 86.","paragraph_id":"para_198"},{"text":"7","paragraph_id":"para_199"},{"text":"these companies.30 The figures given for Thrasys and Transformations were","paragraph_id":"para_200","court_paragraph":7},{"text":"allegedly “inflated” because they included “hidden” revenues of other companies.31","paragraph_id":"para_201"},{"text":"Kathuria and Needham gave Cloudbreak another presentation “filled with","paragraph_id":"para_202"},{"text":"falsehoods” in June 2020 (the “June Presentation”).32 For example, it showed that","paragraph_id":"para_203"},{"text":"Glocal had signed a $138 million contract but “an alternative presentation, not","paragraph_id":"para_204"},{"text":"shared with Cloudbreak, revealed [that] the purported contract . . . was worth—at","paragraph_id":"para_205"},{"text":"most—$60 million.”33 The October Presentation also represented that Glocal served","paragraph_id":"para_206"},{"text":"2,000 patients per day—twice that shown in the alternative presentation.34 Both the","paragraph_id":"para_207"},{"text":"June and October Presentations “claimed Thrasys had enjoyed 86% growth in 2019,”","paragraph_id":"para_208"},{"text":"but “alternative presentations prepared by the defendants showed 69% growth for","paragraph_id":"para_209"},{"text":"the same period.”35 The June and October Presentations further “incorrectly claimed","paragraph_id":"para_210"},{"text":"Global had signed contracts” with several countries.36","paragraph_id":"para_211"},{"text":"30 Am. Compl. ¶¶ 87-89; UpHealth Oct. Presentation 41, 43-45.","paragraph_id":"para_212"},{"text":"31 Am. Compl. ¶ 91. The plaintiffs say that they discovered this mismatch from internal","paragraph_id":"para_213"},{"text":"chats between Needham junior analysts and by comparing a May 2020 presentation that","paragraph_id":"para_214"},{"text":"broke out revenues by seven companies rather than four. Id. ¶¶ 91-98. The May 2020","paragraph_id":"para_215"},{"text":"presentation is not attached to either the original or amended complaint.","paragraph_id":"para_216"},{"text":"32 Id. ¶ 105. The June Presentation is also not attached to the original or amended","paragraph_id":"para_217"},{"text":"complaint.","paragraph_id":"para_218"},{"text":"33 Id. ¶¶ 106-07.","paragraph_id":"para_219"},{"text":"34 Id. ¶ 100.","paragraph_id":"para_220"},{"text":"35 Id. ¶ 109.","paragraph_id":"para_221"},{"text":"36 Id. ¶ 108. Neither the June Presentation nor the October Presentation disclosed that","paragraph_id":"para_222"},{"text":"Kathuria was a partner in Glocal at the time of the acquisition; Glocal’s insolvency as of","paragraph_id":"para_223"},{"text":"October 2020; Glocal’s default on several loans; Glocal’s nonpayment of certain taxes,","paragraph_id":"para_224"},{"text":"8","paragraph_id":"para_225"},{"text":"Cloudbreak’s Board of Directors and members relied on Katz’s assurances","paragraph_id":"para_226","court_paragraph":8},{"text":"and the June and October Presentations when they voted to approve the proposed","paragraph_id":"para_227"},{"text":"transactions on November 20, 2020.37","paragraph_id":"para_228"},{"text":"D. The Business Combinations","paragraph_id":"para_229"},{"text":"The de-SPAC transaction proceeded in two steps under two agreements, both","paragraph_id":"para_230"},{"text":"dated November 20, 2020.","paragraph_id":"para_231"},{"text":"First, under the UpHealth Business Combination Agreement (the “UpHealth","paragraph_id":"para_232"},{"text":"BCA”), Gig2 would facilitate the merger of five Portfolio Companies (Thrasys,","paragraph_id":"para_233"},{"text":"BHS, Innovations, TTC, and Glocal) into UpHealth Holdings.38 The UpHealth BCA","paragraph_id":"para_234"},{"text":"was signed by Gig2, UpHealth Holdings, and UpHealth Merger Sub, Inc.39","paragraph_id":"para_235"},{"text":"Second, under the Cloudbreak Business Combination Agreement (the","paragraph_id":"para_236"},{"text":"“Cloudbreak BCA”), UpHealth Holdings and Cloudbreak would be merged into","paragraph_id":"para_237"},{"text":"Gig2 and brought public as UpHealth, Inc. (“New UpHealth”).40 The Cloudbreak","paragraph_id":"para_238"},{"text":"BCA was signed by Gig2, Cloudbreak, Cloudbreak Health Merger Sub, LLC,","paragraph_id":"para_239"},{"text":"UpHealth Holdings, Kathuria, his cofounder, and Shareholder Representative","paragraph_id":"para_240"},{"text":"insurance, and customs duties; and the resignation of Glocal’s auditor in 2019. Id. ¶¶ 101,","paragraph_id":"para_241"},{"text":"109.","paragraph_id":"para_242"},{"text":"37 Id. ¶¶ 90, 113, 116, 155, 160-61; Locke Affidavit ¶¶ 9-10.","paragraph_id":"para_243"},{"text":"38 Verified Compl. (Dkt 1) (“Compl.”) Ex. B (“UpHealth BCA”) 1; see also","paragraph_id":"para_244"},{"text":"Am. Compl. ¶ 14.","paragraph_id":"para_245"},{"text":"39 UpHealth BCA 61-62 (signature pages); see also Am. Compl. ¶ 14.","paragraph_id":"para_246"},{"text":"40 Compl. Ex. A (“Cloudbreak BCA”); see also Am. Compl. ¶¶ 7, 72.","paragraph_id":"para_247"},{"text":"9","paragraph_id":"para_248"},{"text":"Services, LLC.41 James Edwards—the CEO of Cloudbreak and nephew of plaintiff","paragraph_id":"para_249","court_paragraph":9},{"text":"Edwards—signed on Cloudbreak’s behalf.42 James Edwards had acted as “a","paragraph_id":"para_250"},{"text":"representative for [the] [p]laintiffs and negotiated on behalf of [the] [p]laintiffs with","paragraph_id":"para_251"},{"text":"[Kathuria and the Gig2 Defendants].”43 The Cloudbreak BCA also required the","paragraph_id":"para_252"},{"text":"support of Cloudbreak’s “Key Members,” including plaintiffs Edwards and Bell and","paragraph_id":"para_253"},{"text":"the entity through which Kayne held its interest.44","paragraph_id":"para_254"},{"text":"On June 2, 2021, Cloudbreak’s Board and members “finalized their support","paragraph_id":"para_255"},{"text":"of the Cloudbreak BCA, authorizing the transaction to move forward.”45 Gig2’s","paragraph_id":"para_256"},{"text":"stockholders approved the business combinations with Cloudbreak and UpHealth","paragraph_id":"para_257"},{"text":"Holdings a few days later.46 The transactions closed on June 9.47","paragraph_id":"para_258"},{"text":"41 Cloudbreak BCA 62-65 (signature pages); see also Am. Compl. ¶ 14.","paragraph_id":"para_259"},{"text":"42 Cloudbreak BCA 63; see also Am. Comp. ¶ 33 (describing the relationship between the","paragraph_id":"para_260"},{"text":"plaintiff Edwards and the CEO).","paragraph_id":"para_261"},{"text":"43 Am. Compl. ¶ 84; see also infra note 23 (defining the “Gig2 Defendants”).","paragraph_id":"para_262"},{"text":"44 Cloudbreak BCA § 7.03; id. at sched. 7.03; see also id. § 1.01 (defining “Key Members”","paragraph_id":"para_263"},{"text":"to include those listed in the schedule).","paragraph_id":"para_264"},{"text":"45 Am. Compl. ¶ 115.","paragraph_id":"para_265"},{"text":"46 Transmittal Aff. of Kelly L. Freund in Supp. of Gig2 Defs.’ Opening Br. in Supp. of","paragraph_id":"para_266"},{"text":"Mot. to Dismiss Verified First Am. Compl. (“Freund Aff.”) Ex. 6 (UpHealth, Inc. Form","paragraph_id":"para_267"},{"text":"8-K, filed June 9, 2021) Item 8.01 & Ex. 99.1; see Omnicare, 809 A.2d at 1167 (explaining","paragraph_id":"para_268"},{"text":"that the court may take judicial notice of public SEC filings).","paragraph_id":"para_269"},{"text":"47 Freund Aff. Ex. 6.","paragraph_id":"para_270"},{"text":"10","paragraph_id":"para_271"},{"text":"After closing, Katz became a managing member and co-chairman of New","paragraph_id":"para_272","court_paragraph":10},{"text":"UpHealth.48 Kathuria and Dinu are also directors of New UpHealth, and Kathuria","paragraph_id":"para_273"},{"text":"served as co-chairman until June 14, 2022.49","paragraph_id":"para_274"},{"text":"E. The Plaintiffs’ Pursuit of New UpHealth Shares","paragraph_id":"para_275"},{"text":"Upon closing, plaintiffs Edwards, Bell, and Maron became New UpHealth","paragraph_id":"para_276"},{"text":"stockholders.50 Unlike other parties to the Cloudbreak BCA, they were not subject","paragraph_id":"para_277"},{"text":"to a contractual lockup and free to sell their shares upon receipt.51 The Cloudbreak","paragraph_id":"para_278"},{"text":"BCA stated that “[w]ithin two (2) Business Days . . . after submission to the","paragraph_id":"para_279"},{"text":"Exchange Agent of a Letter of Transmittal, . . . [the Cloudbreak members would] be","paragraph_id":"para_280"},{"text":"entitled to receive . . . and [Gig2 would] cause the Exchange Agent to deliver, the","paragraph_id":"para_281"},{"text":"applicable [merger consideration]” to members.52 The “Exchange Agent” was","paragraph_id":"para_282"},{"text":"defendant Continental Stock Transfer & Trust Company.53","paragraph_id":"para_283"},{"text":"Edwards and Bell “repeatedly attempted to have Continental provide them","paragraph_id":"para_284"},{"text":"with the necessary [documentation] so that they could access their shares.”54 After","paragraph_id":"para_285"},{"text":"48 Am. Compl. ¶ 20.","paragraph_id":"para_286"},{"text":"49 Id. ¶¶ 21-22.","paragraph_id":"para_287"},{"text":"50 Id. ¶¶ 14-15, 17.","paragraph_id":"para_288"},{"text":"51 Id. ¶¶ 117-18.","paragraph_id":"para_289"},{"text":"52 Cloudbreak BCA § 3.02(b); see Am. Compl. ¶ 119.","paragraph_id":"para_290"},{"text":"53 Cloudbreak BCA § 3.02(a); see Am. Compl. ¶ 24 (“Continental is listed as [New]","paragraph_id":"para_291"},{"text":"UpHealth’s transfer agent.”).","paragraph_id":"para_292"},{"text":"54 Am. Compl. ¶ 120.","paragraph_id":"para_293"},{"text":"11","paragraph_id":"para_294"},{"text":"dedicating “considerable effort” to this process, Edwards and Bell submitted the","paragraph_id":"para_295","court_paragraph":11},{"text":"necessary documentation on June 29 and June 28, respectively.55 But they did not","paragraph_id":"para_296"},{"text":"receive their shares within the two business days contemplated by the Cloudbreak","paragraph_id":"para_297"},{"text":"BCA.56 On July 9, they were told that the transfer process was being restarted.57","paragraph_id":"para_298"},{"text":"Edwards and Bell resubmitted letters of transmittal on July 14.58 They","paragraph_id":"para_299"},{"text":"received their shares “over a month after they initially asked Continental to provide","paragraph_id":"para_300"},{"text":"them with the documentation to receive [them].”59 Delivery of Maron’s shares was","paragraph_id":"para_301"},{"text":"likewise delayed.60","paragraph_id":"para_302"},{"text":"At the time of the merger, Hensel held Cloudbreak options.61 Under the","paragraph_id":"para_303"},{"text":"Cloudbreak BCA, Cloudbreak options were converted into New UpHealth options","paragraph_id":"para_304"},{"text":"exercisable after a Form S-8 was filed.62 The Form S-8 was filed on August 9.63","paragraph_id":"para_305"},{"text":"55 Id. The plaintiffs make contradictory allegations on this topic. They allege both that","paragraph_id":"para_306"},{"text":"Edwards and Bell submitted the necessary information in late June, and that Continental","paragraph_id":"para_307"},{"text":"provided the documents required for submission “in late July.” Id. I assume the reference","paragraph_id":"para_308"},{"text":"to July is an error because the June submission dates accord with other allegations. See id.","paragraph_id":"para_309"},{"text":"¶¶ 121-22.","paragraph_id":"para_310"},{"text":"56 Id. ¶ 120.","paragraph_id":"para_311"},{"text":"57 Id. ¶ 121; see supra note 52 and accompanying text (noting the two-business-day","paragraph_id":"para_312"},{"text":"condition in the Cloudbreak BCA).","paragraph_id":"para_313"},{"text":"58 Am. Compl. ¶ 122.","paragraph_id":"para_314"},{"text":"59 Id.","paragraph_id":"para_315"},{"text":"60 Id. ¶ 124.","paragraph_id":"para_316"},{"text":"61 See supra note 7 and accompanying text.","paragraph_id":"para_317"},{"text":"62 Am. Compl. ¶¶ 130-32; Cloudbreak BCA § 3.01(a)(iv).","paragraph_id":"para_318"},{"text":"63 Am. Compl. ¶ 132.","paragraph_id":"para_319"},{"text":"12","paragraph_id":"para_320"},{"text":"Although Hensel “satisf[ied] all Continental’s conditions,” his shares were not","paragraph_id":"para_321","court_paragraph":12},{"text":"received until late September—or “over an entire month” later.64","paragraph_id":"para_322"},{"text":"F. This Litigation","paragraph_id":"para_323"},{"text":"The plaintiffs filed suit on June 3, 2024.65 An amended complaint was filed","paragraph_id":"para_324"},{"text":"on October 11, 2024, which advances eight counts against four groups of defendants:","paragraph_id":"para_325"},{"text":"Kathuria, the “Gig2 Defendants,” Continental, and Needham.66","paragraph_id":"para_326"},{"text":"Claims for fraudulent inducement (Count I), negligent misrepresentation","paragraph_id":"para_327"},{"text":"(Count III), and breach of the Delaware Deceptive Trade Practices Act (the “DTPA”)","paragraph_id":"para_328"},{"text":"(Count VII) are brought against Kathuria, the Gig2 Defendants, and Needham.67","paragraph_id":"para_329"},{"text":"Separate civil conspiracy claims are brought against Kathuria, the Gig2 Defendants,","paragraph_id":"para_330"},{"text":"and Needham (Count V) and Kathuria, the Gig2 Defendants, and Continental","paragraph_id":"para_331"},{"text":"64 Id. Hensel asserts that Continental and UpHealth ignored several communications in","paragraph_id":"para_332"},{"text":"which he asked for assistance in obtaining his shares. Id. ¶ 134.","paragraph_id":"para_333"},{"text":"65 Dkt. 1. The original complaint named Kayne Anderson Capital Advisors, L.P. and","paragraph_id":"para_334"},{"text":"Nathan Locke, a Managing Partner at Kayne and a Cloudbreak director, as defendants. Id.","paragraph_id":"para_335"},{"text":"It did not name Needham. Id. Each of the defendants named in the complaint moved to","paragraph_id":"para_336"},{"text":"dismiss. Dkts. 13-14, 21 (motions to dismiss); Dkts. 24-25, 29 (opening briefs). The","paragraph_id":"para_337"},{"text":"plaintiffs agreed to dismiss Kayne and Locke, who submitted an affidavit in support of the","paragraph_id":"para_338"},{"text":"amended complaint. Dkt. 38. The amended complaint, filed on October 11, names the","paragraph_id":"para_339"},{"text":"current set of defendants. Dkt. 39.","paragraph_id":"para_340"},{"text":"66 See supra notes 18 and 23 (defining “Needham” and the “Gig2 Defendants”). The","paragraph_id":"para_341"},{"text":"plaintiffs refer to Kathuria and the Gig2 Defendants collectively as the “UpHealth","paragraph_id":"para_342"},{"text":"Defendants.” Am. Compl. 1. Because that term is inaccurate, I decline to adopt it.","paragraph_id":"para_343"},{"text":"67 Am. Compl. ¶¶ 156-61, 170-75, 193-99. Counts VI through VIII are out of order in the","paragraph_id":"para_344"},{"text":"Amended Complaint. I reference the counts according to the plaintiffs’ numbering scheme,","paragraph_id":"para_345"},{"text":"rather than in the order they are presented.","paragraph_id":"para_346"},{"text":"13","paragraph_id":"para_347"},{"text":"(Count VIII).68 A breach of contract claim (Count II) is brought against Gig2.69 A","paragraph_id":"para_348","court_paragraph":13},{"text":"negligence claim (Count IV) is a brought against Continental.70 And an unjust","paragraph_id":"para_349"},{"text":"enrichment claim (Count VII) is brought against the Sponsor and Katz.71","paragraph_id":"para_350"},{"text":"Each of the four defendant groups moved to dismiss.72 After briefing was","paragraph_id":"para_351"},{"text":"complete,73 I heard oral argument on April 4, 2025.74 The motions were taken under","paragraph_id":"para_352"},{"text":"advisement.","paragraph_id":"para_353"},{"text":"II. ANALYSIS","paragraph_id":"para_354"},{"text":"The defendants’ four motions to dismiss offer an assortment of arguments.","paragraph_id":"para_355"},{"text":"The Gig2 Defendants assert that certain claims are untimely, that the plaintiffs failed","paragraph_id":"para_356"},{"text":"to plead fraud with particularity, that the plaintiffs lack contractual standing under","paragraph_id":"para_357"},{"text":"68 Id. ¶¶ 180-87; see supra note 67 (explaining the mislabeling of counts).","paragraph_id":"para_358"},{"text":"69 Am. Compl. ¶¶ 162-69.","paragraph_id":"para_359"},{"text":"70 Id. ¶¶ 176-79.","paragraph_id":"para_360"},{"text":"71 Id. ¶¶ 188-92.","paragraph_id":"para_361"},{"text":"72 Opening Br. in Supp. of Def. Continental’s Mot. to Dismiss Pls.’ First Am. Verified","paragraph_id":"para_362"},{"text":"Compl. (Dkt. 53) (“Continental Opening Br.”); Def. Kathuria’s Opening Br. in Supp. of","paragraph_id":"para_363"},{"text":"Mot. to Dismiss the First Am. Verified Compl. (Dkt. 55) (“Kathuria Opening Br.”); Def.","paragraph_id":"para_364"},{"text":"Needham’s Opening Br. in Supp. of Mot. to Dismiss the First Am. Verified Compl. (Dkt.","paragraph_id":"para_365"},{"text":"57) (“Needham Opening Br.”); Gig2 Opening Br.","paragraph_id":"para_366"},{"text":"73 See Reply Br. in Further Supp. of Def. Continental’s Mot. to Dismiss First Am. Verified","paragraph_id":"para_367"},{"text":"Compl. (Dkt. 71) (“Continental Reply Br.”); Gig2 Defs.’ Reply Brief in Supp. of Mot. to","paragraph_id":"para_368"},{"text":"Dismiss First Am. Verified Compl. (Dkt. 72) (“Gig2 Reply Br.”); Def. Needham’s Reply","paragraph_id":"para_369"},{"text":"Br. in Further Supp. of Mot. to Dismiss First Am. Verified Compl. (Dkt. 73) (“Needham","paragraph_id":"para_370"},{"text":"Reply Br.”); Def. Kathuria’s Reply Br. in Supp. of Mot. to Dismiss the First Am. Compl.","paragraph_id":"para_371"},{"text":"(Dkt. 74) (“Kathuria Reply Br.”).","paragraph_id":"para_372"},{"text":"74 Dkt. 83; Tr. of Apr. 4, 2025 Oral Arg. on Defs.’ Mots. to Dismiss (Dkt. 86) (“Hr’g Tr.”).","paragraph_id":"para_373"},{"text":"14","paragraph_id":"para_374"},{"text":"the UpHealth BCA, and that the remaining claims against it are meritless. Kathuria","paragraph_id":"para_375","court_paragraph":14},{"text":"and Needham separately and similarly argue that claims are time-barred, that the","paragraph_id":"para_376"},{"text":"fraud allegations are inadequate, and that the claims against them are non-viable. As","paragraph_id":"para_377"},{"text":"for Continental, it contends that the court lacks personal jurisdiction over it and that","paragraph_id":"para_378"},{"text":"the sole claim against it fails.","paragraph_id":"para_379"},{"text":"I tackle these arguments categorically. First, I consider the threshold question","paragraph_id":"para_380"},{"text":"of personal jurisdiction over Continental, which I resolve in Continental’s favor.","paragraph_id":"para_381"},{"text":"Second, I address whether the plaintiffs have standing to claim breach of the","paragraph_id":"para_382"},{"text":"UpHealth BCA and conclude they do not. Third, I assess the timeliness of the","paragraph_id":"para_383"},{"text":"plaintiffs’ fraudulent inducement, negligent misrepresentation, and civil conspiracy","paragraph_id":"para_384"},{"text":"claims—all of which are untimely. Finally, I evaluate the two remaining claims—","paragraph_id":"para_385"},{"text":"for violation of the DTPA and unjust enrichment—and conclude that neither has","paragraph_id":"para_386"},{"text":"merit.","paragraph_id":"para_387"},{"text":"A. Personal Jurisdiction Over Continental","paragraph_id":"para_388"},{"text":"Continental moved to dismiss under Court of Chancery Rule 12(b)(2), arguing","paragraph_id":"para_389"},{"text":"that the court lacks personal jurisdiction over it.75 Though the plaintiffs face the","paragraph_id":"para_390"},{"text":"burden of establishing jurisdiction, they “need only make a prima facie showing of","paragraph_id":"para_391"},{"text":"personal jurisdiction” and “the record is construed in the light most favorable to the","paragraph_id":"para_392"},{"text":"75 Continental Opening Br. 7-12.","paragraph_id":"para_393"},{"text":"15","paragraph_id":"para_394"},{"text":"plaintiff[s].”76 The plaintiffs have not met their burden, despite this favorable","paragraph_id":"para_395","court_paragraph":15},{"text":"standard.","paragraph_id":"para_396"},{"text":"Continental is a New York corporation with its sole place of business in New","paragraph_id":"para_397"},{"text":"York.77 For the court to have jurisdiction over it, the plaintiffs must show either","paragraph_id":"para_398"},{"text":"general jurisdiction—i.e., that Continental was “essentially at home” in Delaware—","paragraph_id":"para_399"},{"text":"or specific jurisdiction under Delaware’s long-arm statute.78 The plaintiffs argue","paragraph_id":"para_400"},{"text":"only that there is specific jurisdiction; they do not contest the absence of general","paragraph_id":"para_401"},{"text":"jurisdiction.79","paragraph_id":"para_402"},{"text":"To resolve whether specific jurisdiction can be exercised over a nonresident,","paragraph_id":"para_403"},{"text":"a two-step analysis is applied. “The court must first determine that service of process","paragraph_id":"para_404"},{"text":"76 Crescent/Mach I P’rs, L.P. v. Turner, 846 A.2d 963, 974 (Del. Ch. 2000); Ryan v.","paragraph_id":"para_405"},{"text":"Gifford, 935 A.2d 265, 265 (Del. Ch. 2007).","paragraph_id":"para_406"},{"text":"77 Am. Compl. ¶ 24; Aff. of Steven G. Nelson in Supp. of Continental Stock Transfer &","paragraph_id":"para_407"},{"text":"Tr. Co.’s Mot. to Dismiss First Am. Verified Compl. (Dkt. 54) (“Nelson Aff.”) ¶ 8","paragraph_id":"para_408"},{"text":"(“Continental does not maintain and has never maintained an office or other facility in","paragraph_id":"para_409"},{"text":"Delaware; it has never owned or leased property there; none of its officers, directors,","paragraph_id":"para_410"},{"text":"employees, or agents are domiciled in Delaware; and no meetings of Continental’s board","paragraph_id":"para_411"},{"text":"of directors or shareholders have ever been held there.”).","paragraph_id":"para_412"},{"text":"78 See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (“A","paragraph_id":"para_413"},{"text":"court may assert general jurisdiction over foreign (sister-state or foreign-country)","paragraph_id":"para_414"},{"text":"corporations to hear any and all claims against them when their affiliations with the State","paragraph_id":"para_415"},{"text":"are so ‘continuous and systematic’ as to render them essentially at home in the forum State.","paragraph_id":"para_416"},{"text":"Specific jurisdiction, on the other hand, depends on . . . activity or an occurrence that takes","paragraph_id":"para_417"},{"text":"place in the forum State and is therefore subject to the State’s regulation.” (quoting Int’l","paragraph_id":"para_418"},{"text":"Shoe v. Washington, 326 U.S. 310, 317 (2011))).","paragraph_id":"para_419"},{"text":"79 Am. Compl. ¶ 26; Hr’g Tr. 79-80; see also Genuine Parts Co. v. Cepec, 137 A.3d 123,","paragraph_id":"para_420"},{"text":"135 (Del. 2016) (noting that “[i]n most situations where the foreign corporation does not","paragraph_id":"para_421"},{"text":"have its principal place of business in Delaware, . . . Delaware cannot exercise general","paragraph_id":"para_422"},{"text":"jurisdiction over the foreign corporation”).","paragraph_id":"para_423"},{"text":"16","paragraph_id":"para_424"},{"text":"is authorized by statute and then must determine that the exercise of jurisdiction over","paragraph_id":"para_425","court_paragraph":16},{"text":"the nonresident defendant comports with traditional due process norms of fair play","paragraph_id":"para_426"},{"text":"and substantial justice.”80 The plaintiffs assert that the court has personal jurisdiction","paragraph_id":"para_427"},{"text":"over Continental under Sections 3104(c)(1), (c)(2), and (c)(3) of the long-arm statute","paragraph_id":"para_428"},{"text":"and the conspiracy theory of jurisdiction.81 They fail to show that any of these means","paragraph_id":"para_429"},{"text":"authorize service over Continental, or that due process is unoffended by the exercise","paragraph_id":"para_430"},{"text":"of personal jurisdiction.","paragraph_id":"para_431"},{"text":"1. Transacting Business or Contracting to Supply Services","paragraph_id":"para_432"},{"text":"Under Section 3104(c)(1) and (2), the court may exercise personal jurisdiction","paragraph_id":"para_433"},{"text":"over a nonresident who “[t]ransacts any business or performs any character of work","paragraph_id":"para_434"},{"text":"in [Delaware] or “[c]ontracts to supply services or things in [Delaware].”82 The","paragraph_id":"para_435"},{"text":"plaintiffs allege that Continental “transact[ed] business in the State of Delaware” and","paragraph_id":"para_436"},{"text":"“provide[d] services and enter[ed] into contracts in Delaware.”83 No facts are","paragraph_id":"para_437"},{"text":"pleaded in support of these conclusory statements.","paragraph_id":"para_438"},{"text":"Continental’s motion to dismiss brief accompanied an affidavit from its","paragraph_id":"para_439"},{"text":"President, which explains that Continental performed its work as transfer agent from","paragraph_id":"para_440"},{"text":"80 Ryan, 935 A.2d at 265.","paragraph_id":"para_441"},{"text":"81 Am. Compl. ¶ 26; Pls.’ Answering Br. 68-69; see also 10 Del. C. § 3104(c)(1)-(3).","paragraph_id":"para_442"},{"text":"82 8 Del. C. § 3104(c)(1)-(2).","paragraph_id":"para_443"},{"text":"83 Am. Compl. ¶ 26.","paragraph_id":"para_444"},{"text":"17","paragraph_id":"para_445"},{"text":"its sole place of business in New York.84 The agreement under which Continental","paragraph_id":"para_446","court_paragraph":17},{"text":"performed transfer agent services for Gig2 a clause stating that New York courts","paragraph_id":"para_447"},{"text":"have jurisdiction over any proceedings relating to Continental’s services or arising","paragraph_id":"para_448"},{"text":"from the agreement.85 That agreement identifies Continental’s office in New York","paragraph_id":"para_449"},{"text":"and Gig2’s offices in California for notice purposes.86 Continental signed the","paragraph_id":"para_450"},{"text":"transfer agent agreement in New York.87 Nothing in the agreement discusses","paragraph_id":"para_451"},{"text":"services in Delaware, and Continental affirmed that it took no action in Delaware in","paragraph_id":"para_452"},{"text":"furtherance of its work for Gig2.88","paragraph_id":"para_453"},{"text":"The plaintiffs insist that Continental’s arguments should be disregarded","paragraph_id":"para_454"},{"text":"because they are “based on facts not plead[ed] in the [Complaint].”89 Although","paragraph_id":"para_455"},{"text":"“[g]enerally[] a plaintiff does not have the burden to plead in its complaint facts","paragraph_id":"para_456"},{"text":"establishing a court’s personal jurisdiction over defendant, . . . [w]hen a defendant","paragraph_id":"para_457"},{"text":"84 Nelson Aff. ¶ 6.","paragraph_id":"para_458"},{"text":"85 Nelson Aff. Ex. A (“Transfer Agent Agreement”) § 17 (“In the event that any party","paragraph_id":"para_459"},{"text":"hereto commences a lawsuit or other proceeding relating to or arising from this Agreement","paragraph_id":"para_460"},{"text":"or services provided hereunder, the parties hereto agree that the United States District Court","paragraph_id":"para_461"},{"text":"for the Southern District of New York shall have the sole and exclusive jurisdiction over","paragraph_id":"para_462"},{"text":"any such proceeding. If such court lacks federal subject matter jurisdiction, the parties","paragraph_id":"para_463"},{"text":"hereto agree that the Supreme Court of the State of New York within New York County","paragraph_id":"para_464"},{"text":"shall have sole and exclusive jurisdiction.”); see also Nelson Aff. ¶ 4.","paragraph_id":"para_465"},{"text":"86 Transfer Agent Agreement § 22.","paragraph_id":"para_466"},{"text":"87 Nelson Aff. ¶ 7.","paragraph_id":"para_467"},{"text":"88 Id. ¶ 9.","paragraph_id":"para_468"},{"text":"89 Pls.’ Answering Br. 67.","paragraph_id":"para_469"},{"text":"18","paragraph_id":"para_470"},{"text":"moves to dismiss a complaint pursuant to . . . Rule 12(b)(2), the plaintiff [then] bears","paragraph_id":"para_471","court_paragraph":18},{"text":"the burden of showing a basis for the court’s exercise of jurisdiction over the","paragraph_id":"para_472"},{"text":"defendant.”90 In ruling on a Rule 12(b)(2) motion, I may consider “the pleadings,","paragraph_id":"para_473"},{"text":"affidavits, and any discovery of record.”91","paragraph_id":"para_474"},{"text":"2. Tortious Injury","paragraph_id":"para_475"},{"text":"Under Section 3104(c)(3), the court may exercise personal jurisdiction over a","paragraph_id":"para_476"},{"text":"nonresident who “[c]auses tortious injury in [Delaware] by an act or omission in","paragraph_id":"para_477"},{"text":"[Delaware].”92 The plaintiffs assert that Continental “acted with tortious negligence","paragraph_id":"para_478"},{"text":"in failing to transfer UpHealth[] shares to [the p]laintiffs,” “engaged in a civil","paragraph_id":"para_479"},{"text":"conspiracy with the [Gig2 Defendants, UpHealth,] and Kathuria to violate Delaware","paragraph_id":"para_480"},{"text":"statutory law,” and “violated the [DTPA].”93","paragraph_id":"para_481"},{"text":"90 Harris v. Harris, 289 A.3d 310, 325-26 (Del. Ch. 2023) (first citing Benerofe v. Cha,","paragraph_id":"para_482"},{"text":"1996 WL 535405, at *3 (Del. Ch. Sept. 12, 1996); then citing Ryan, 935 A.2d at 265).","paragraph_id":"para_483"},{"text":"91 Ryan, 935 A.2d at 265; see also Newspan, Inc. v. Hearthstone Funding Corp., 1994 WL","paragraph_id":"para_484"},{"text":"198721, at *3 (Del. Ch. May 10, 1994) (“A determination of whether personal jurisdiction","paragraph_id":"para_485"},{"text":"exists over a party may be accomplished either after a preliminary hearing or based solely","paragraph_id":"para_486"},{"text":"on submitted affidavits and other sworn documents or testimony.”).","paragraph_id":"para_487"},{"text":"92 8 Del. C. § 3104(c)(3).","paragraph_id":"para_488"},{"text":"93 Pls.’ Answering Br. 68 (quoting Am. Compl. ¶¶ 176-79, 184-87, and 193-99); see also","paragraph_id":"para_489"},{"text":"Am. Compl. ¶ 26 (arguing that the court “has personal jurisdiction over","paragraph_id":"para_490"},{"text":"Continental . . . under 10 Del. C. § 3104 . . . [for] causing tortious injury through actions","paragraph_id":"para_491"},{"text":"undertaken within the State”).","paragraph_id":"para_492"},{"text":"19","paragraph_id":"para_493"},{"text":"There is, however, no allegation in the Amended Complaint that Continental","paragraph_id":"para_494","court_paragraph":19},{"text":"violated a Delaware statute, including the DTPA.94 Nor do plaintiffs allege that","paragraph_id":"para_495"},{"text":"Continental injured them through an act or omission taken in this State. “In order to","paragraph_id":"para_496"},{"text":"find jurisdiction under [Section] 3104(c)(3), the defendant must have caused a","paragraph_id":"para_497"},{"text":"tortious injury in Delaware by its acts or omissions in Delaware.”95","paragraph_id":"para_498"},{"text":"3. Conspiracy Theory of Jurisdiction","paragraph_id":"para_499"},{"text":"Finally, the plaintiffs invoke the conspiracy theory of jurisdiction.96 They","paragraph_id":"para_500"},{"text":"assert that jurisdiction exists because Continental conspired with Delaware entities,","paragraph_id":"para_501"},{"text":"and the harmful effects of Continental’s actions were felt by holders of a Delaware","paragraph_id":"para_502"},{"text":"corporation’s stock.97","paragraph_id":"para_503"},{"text":"94 The claim for violation of the DTPA is brought only against Kathuria, the Gig2","paragraph_id":"para_504"},{"text":"Defendants, and Needham—not Continental. Am. Compl. ¶¶ 193-99; see also supra note","paragraph_id":"para_505"},{"text":"67 and accompanying text.","paragraph_id":"para_506"},{"text":"95 Abajian v. Kennedy, 1992 WL 8794, at *10 (Del. Ch. Jan. 17, 1992); see Ohrstrom v.","paragraph_id":"para_507"},{"text":"Harris Tr. Co. of N.Y., 1998 WL 8849, at *3 (Del. Ch. Jan. 8, 1998) (holding that personal","paragraph_id":"para_508"},{"text":"jurisdiction was lacking under Section 3104(c)(3) over a transfer agent because, even if the","paragraph_id":"para_509"},{"text":"defendant injured plaintiffs in Delaware, all relevant acts occurred at the agent’s office in","paragraph_id":"para_510"},{"text":"New York).","paragraph_id":"para_511"},{"text":"96 Pls.’ Answering Br. 69 (arguing that “Continental conspired with [the Gig2 Defendants","paragraph_id":"para_512"},{"text":"and Kathuria]” to “(a) violate 6 Del. C. § 8-401, 407; (b) induce a bad faith breach of the","paragraph_id":"para_513"},{"text":"Cloudbreak and UpHealth BCAs so that plaintiffs could not access their shares and sell","paragraph_id":"para_514"},{"text":"them; (c) wrongfully enrich Katz and Kathuria at the expense of [the p]laintiffs; [and] (d)","paragraph_id":"para_515"},{"text":"engage in deceptive trade practices by deliberately delaying issuance of [the p]laintiffs’","paragraph_id":"para_516"},{"text":"stock[] despite satisfaction of all conditions precedent”).","paragraph_id":"para_517"},{"text":"97 Id.","paragraph_id":"para_518"},{"text":"20","paragraph_id":"para_519"},{"text":"“The conspiracy theory of jurisdiction is not, strictly speaking, an independent","paragraph_id":"para_520","court_paragraph":20},{"text":"jurisdictional basis” but “a shorthand reference to an analytical framework where a","paragraph_id":"para_521"},{"text":"defendant’s conduct that either occurred or had a substantial effect in Delaware is","paragraph_id":"para_522"},{"text":"attributed to a defendant who would not otherwise be amenable to jurisdiction","paragraph_id":"para_523"},{"text":"[here].”98 Under the Istituto Bancario test, a plaintiff invoking the conspiracy theory","paragraph_id":"para_524"},{"text":"of jurisdiction must “make a factual showing” of five elements:","paragraph_id":"para_525"},{"text":"(1) a conspiracy existed; (2) the defendant was a member of that","paragraph_id":"para_526"},{"text":"conspiracy; (3) a substantial act or substantial effect in","paragraph_id":"para_527"},{"text":"furtherance of the conspiracy occurred in Delaware; (4) the","paragraph_id":"para_528"},{"text":"defendant knew or had reason to know of the act in the forum","paragraph_id":"para_529"},{"text":"state or that acts outside the forum state would have an effect in","paragraph_id":"para_530"},{"text":"the forum state; and (5) the act in, or effect on, the forum state","paragraph_id":"para_531"},{"text":"was a direct and foreseeable result of the conduct in furtherance","paragraph_id":"para_532"},{"text":"of the conspiracy.99","paragraph_id":"para_533"},{"text":"“Delaware courts construe this test narrowly and require a plaintiff to assert specific","paragraph_id":"para_534"},{"text":"facts, not conclusory allegations, as to each and every element.”100","paragraph_id":"para_535"},{"text":"The plaintiffs fail to show the third element. The Istituto Bancario test “turns","paragraph_id":"para_536"},{"text":"on the imputation to the [alleged] conspirator of meaningful activity on behalf of the","paragraph_id":"para_537"},{"text":"98 Comput. People, Inc. v. Best Int’l Grp., Inc, 1999 WL 288119, at *5 (Del. Ch. Apr. 27,","paragraph_id":"para_538"},{"text":"1999).","paragraph_id":"para_539"},{"text":"99 Istituto Bancario Italiano SpA v. Hunter Eng’g Co. Inc., 449 A.2d 210, 225 (Del. 1982).","paragraph_id":"para_540"},{"text":"100 See Hartsel v. Vanguard Grp. Inc., 2011 WL 2421003, at *10 (Del. Ch. Jun. 15, 2011),","paragraph_id":"para_541"},{"text":"aff’d, 38 A.3d 1254 (2012) (TABLE); see Iotex Commc’ns, Inc. v. Defries, 1998 WL","paragraph_id":"para_542"},{"text":"914265, at *7 (Del. Ch. Dec. 21, 1998) (describing the test as a “strict” one that requires","paragraph_id":"para_543"},{"text":"“a plaintiff to satisfy each of the five elements”).","paragraph_id":"para_544"},{"text":"21","paragraph_id":"para_545"},{"text":"conspiracy which occurred and caused effects in Delaware.”101 The purported","paragraph_id":"para_546","court_paragraph":21},{"text":"conspiracy complained of in this case involves Continental’s withholding stock from","paragraph_id":"para_547"},{"text":"the plaintiffs. The Court of Chancery has observed that a New York-based transfer","paragraph_id":"para_548"},{"text":"agent’s alleged “failure to furnish [p]laintiffs th[eir] requested stock certificates” on","paragraph_id":"para_549"},{"text":"behalf of a Delaware corporation did not involve any “act or omission that took place","paragraph_id":"para_550"},{"text":"in Delaware.”102 No wrongdoing in Delaware is pleaded here.","paragraph_id":"para_551"},{"text":"The first element is also lacking. The plaintiffs advance only conclusory","paragraph_id":"para_552"},{"text":"allegations that Continental was part of a conspiracy.103 They plead no facts","paragraph_id":"para_553"},{"text":"supporting a reasonable inference that Continental agreed to participate in a scheme","paragraph_id":"para_554"},{"text":"to deprive the plaintiffs of their merger consideration. This claim rests solely on","paragraph_id":"para_555"},{"text":"“information and belief.”104","paragraph_id":"para_556"},{"text":"101 HMG/Courtland Props., Inc. v. Gray, 749 A.2d 300, 307 (Del. Ch. Jan. 13, 1999); see","paragraph_id":"para_557"},{"text":"also Comput. People, 1999 WL 288119, at *7 (concluding no personal jurisdiction under","paragraph_id":"para_558"},{"text":"conspiracy theory when “there is no evidence (or even a claim) that any meaningful,","paragraph_id":"para_559"},{"text":"‘substantial act or effect’ in furtherance of th[e] conspiracy took place in Delaware”","paragraph_id":"para_560"},{"text":"(citation omitted)).","paragraph_id":"para_561"},{"text":"102 See Ohrstrom, 1998 WL 8849, at *3 (emphasis omitted).","paragraph_id":"para_562"},{"text":"103 See Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1036 (Del. Ch. 2006)","paragraph_id":"para_563"},{"text":"(“Under Delaware law, to state a claim for civil conspiracy, a plaintiff must plead facts","paragraph_id":"para_564"},{"text":"supporting: (1) the existence of a confederation or combination of two or more persons; (2)","paragraph_id":"para_565"},{"text":"that an unlawful act was done in furtherance of the conspiracy; and (3) that the conspirators","paragraph_id":"para_566"},{"text":"caused actual damage to the plaintiff.”).","paragraph_id":"para_567"},{"text":"104 See Griffin Corp. Servs., LLC v. Jacobs, 2005 WL 2000775, at *6 (Del. Ch. Aug. 11,","paragraph_id":"para_568"},{"text":"2005) (rejecting a claim of purported interference “[u]pon information and belief” because","paragraph_id":"para_569"},{"text":"“[s]uch a bald statement, without further factual allegations to support it, is merely","paragraph_id":"para_570"},{"text":"conclusory and need not be accepted as true”); see also In re Coca-Cola Enters., Inc., 2007","paragraph_id":"para_571"},{"text":"WL 3122370, at *3 (Del. Ch. Oct. 17, 2007) (“The Court will not . . . give any credence to","paragraph_id":"para_572"},{"text":"conclusory allegations or wildly speculative and unreasonable conjecture.” ); In re","paragraph_id":"para_573"},{"text":"22","paragraph_id":"para_574"},{"text":"4. Due Process","paragraph_id":"para_575","court_paragraph":22},{"text":"The plaintiffs also have not shown that exercising jurisdiction over","paragraph_id":"para_576"},{"text":"Continental comports with the Due Process Clause of United States Constitution.","paragraph_id":"para_577"},{"text":"To satisfy the Due Process Clause, “a nonresident defendant must have sufficient","paragraph_id":"para_578"},{"text":"‘minimum contacts with [the forum state] such that the maintenance of the suit does","paragraph_id":"para_579"},{"text":"not offend traditional notions of fair play and substantial justice.’”105 In making this","paragraph_id":"para_580"},{"text":"assessment, “the Court must determine whether the non-resident’s conduct and","paragraph_id":"para_581"},{"text":"connection with Delaware is such that [it] reasonably would have anticipated being","paragraph_id":"para_582"},{"text":"haled into court here.”106","paragraph_id":"para_583"},{"text":"No facts support a reasonable inference that Continental—a New York","paragraph_id":"para_584"},{"text":"corporation with its sole office in New York107—had enough contacts with Delaware","paragraph_id":"para_585"},{"text":"to reasonably anticipate being sued here. The evidence demonstrates that","paragraph_id":"para_586"},{"text":"Bioclinica, Inc. S’holder Litig., 2013 WL 5631233, at *10 (Del. Ch. Oct. 16, 2013) (“The","paragraph_id":"para_587"},{"text":"Plaintiffs have the burden of bringing claims based on actual facts and reasonable","paragraph_id":"para_588"},{"text":"inferences, rather than speculation.”); infra note 129 and accompanying text (citing the","paragraph_id":"para_589"},{"text":"Rule 12(b)(6) standard).","paragraph_id":"para_590"},{"text":"105 Matthew v. Fläkt Woods Grp. SA, 56 A.3d 1023, 1027 (Del. 2012) (citing Int’l Shoe,","paragraph_id":"para_591"},{"text":"326 U.S. at 316).","paragraph_id":"para_592"},{"text":"106 Hartsel, 2011 WL 2421003, at* 14; see also Albert v. Alex. Brown Mgmt. Servs., Inc.,","paragraph_id":"para_593"},{"text":"2005 WL 2130607, at *15 (Del. Ch. Aug. 26, 2005) (“In order to establish jurisdiction over","paragraph_id":"para_594"},{"text":"a nonresident defendant, the nonresident defendant’s contacts with the forum must rise to","paragraph_id":"para_595"},{"text":"such a level that it should reasonably anticipate being required to defend itself in","paragraph_id":"para_596"},{"text":"Delaware’s courts.”).","paragraph_id":"para_597"},{"text":"107 See supra note 84 and accompanying text.","paragraph_id":"para_598"},{"text":"23","paragraph_id":"para_599"},{"text":"Continental does no business in Delaware. 108 Nothing in the Complaint suggests","paragraph_id":"para_600","court_paragraph":23},{"text":"that Continental took a single action in Delaware. On similar facts, Vice Chancellor","paragraph_id":"para_601"},{"text":"Glasscock held that Continental’s contract with a Delaware corporation was not a","paragraph_id":"para_602"},{"text":"sufficient minimum contact to support the exercise of personal jurisdiction.109","paragraph_id":"para_603"},{"text":"Delaware has no particular interest in adjudicating this commercial dispute between","paragraph_id":"para_604"},{"text":"the plaintiffs and Continental.110","paragraph_id":"para_605"},{"text":"* * *","paragraph_id":"para_606"},{"text":"Continental’s motion to dismiss under Rule 12(b)(2) is granted and it is","paragraph_id":"para_607"},{"text":"dismissed from this suit. As a result, the plaintiffs’ negligence claim (Count IV) is","paragraph_id":"para_608"},{"text":"dismissed. The plaintiffs’ civil conspiracy claim (Count VI) is dismissed as to","paragraph_id":"para_609"},{"text":"Continental, leaving the Gig2 Defendants and Kathuria as the remaining purported","paragraph_id":"para_610"},{"text":"co-conspirators.111","paragraph_id":"para_611"},{"text":"108 See supra notes 85-88 and accompanying text (quoting the Nelson affidavit).","paragraph_id":"para_612"},{"text":"109 Sorenson Impact Found. v. Cont’l Stock Transfer & Tr. Co., 2022 WL 986322, at *9-","paragraph_id":"para_613"},{"text":"10 (Del. Ch. April 1, 2022) (“To the extent there is any connection between [Continental]","paragraph_id":"para_614"},{"text":"and Delaware, it is due to its contract with . . . a Delaware corporation. This . . . is","paragraph_id":"para_615"},{"text":"insufficient to confer personal jurisdiction over [Continental], as it fails to establish","paragraph_id":"para_616"},{"text":"business connections between the agent and the State of Delaware.”).","paragraph_id":"para_617"},{"text":"110 See Ohrstrom, 1998 WL 8849, at *5 (holding that, even if the long-arm statute were","paragraph_id":"para_618"},{"text":"satisfied, due process would not support personal jurisdiction over a transfer agent with no","paragraph_id":"para_619"},{"text":"“continuous and systematic general business contacts with Delaware”).","paragraph_id":"para_620"},{"text":"111 See supra notes 103-104 and accompanying text (explaining that no conspiracy has been","paragraph_id":"para_621"},{"text":"pleaded regarding the transfer of the plaintiffs’ merger consideration); infra Section II.C","paragraph_id":"para_622"},{"text":"(holding that this claim is untimely).","paragraph_id":"para_623"},{"text":"24","paragraph_id":"para_624"},{"text":"B. Standing to Claim Breach of the UpHealth BCA","paragraph_id":"para_625","court_paragraph":24},{"text":"Count II is brought against Gig2 for breaching the UpHealth BCA, which","paragraph_id":"para_626"},{"text":"permitted UpHealth Holdings stockholders to exchange their shares for New","paragraph_id":"para_627"},{"text":"UpHealth stock within two business days of surrender.112 The plaintiffs assert that","paragraph_id":"para_628"},{"text":"Gig2 breached this provision by “instruct[ing] Continental to delay the payment of","paragraph_id":"para_629"},{"text":"[the p]laintiffs’ [p]er [s]hare [m]erger [consideration] to prevent [the p]laintiffs from","paragraph_id":"para_630"},{"text":"liquidating their interest . . . .”113","paragraph_id":"para_631"},{"text":"Gig2 moves to dismiss the claim for lack of standing.114 “The concept of","paragraph_id":"para_632"},{"text":"‘standing’ . . . refers to the right of a party to invoke the jurisdiction of a court to","paragraph_id":"para_633"},{"text":"enforce a claim or redress a grievance.”115","paragraph_id":"para_634"},{"text":"112 Am Compl. ¶ 163; see UpHealth BCA § 3.02(b).","paragraph_id":"para_635"},{"text":"113 Am. Compl. ¶ 167.","paragraph_id":"para_636"},{"text":"114 Gig2 invokes Rule 12(b)(1) in its motion. See Gig2 Defs.’ Mot. to Dismiss (Dkt. 59).","paragraph_id":"para_637"},{"text":"Under Rule 12(b)(1), “[t]he Court of Chancery will dismiss an action for want of subject","paragraph_id":"para_638"},{"text":"matter jurisdiction ‘if it appears from the record that the Court does not have jurisdiction","paragraph_id":"para_639"},{"text":"over the claim.’” Acierno v. New Castle Cty., 2006 WL 1668370, at *3 (Del. Ch. June 8,","paragraph_id":"para_640"},{"text":"2006) (citing AFSCME Locals 1102 & 320 v. City of Wilm., 858 A.2d 962, 965 (Del. Ch.","paragraph_id":"para_641"},{"text":"2004)); see Ct. Ch. R. 12(b)(1). Federal and state courts are “divided” on whether","paragraph_id":"para_642"},{"text":"challenges to standing are properly brought under Rule 12(b)(1) (subject matter","paragraph_id":"para_643"},{"text":"jurisdiction) or Rule 12(b)(6) (failure to state a claim). See Appriva S’holder Litig. Co.,","paragraph_id":"para_644"},{"text":"LLC v. EV3, Inc., 937 A.2d 1275, 1283-84 (Del. 2007). Delaware courts have observed","paragraph_id":"para_645"},{"text":"that “where . . . the issue of standing is . . . closely related to the merits, a motion to dismiss","paragraph_id":"para_646"},{"text":"based on lack of standing is properly considered under Rule 12(b)(6) rather than Rule","paragraph_id":"para_647"},{"text":"12(b)(1).” Id. at 1284. Thus, the reasonable conceivability standard applies. See supra","paragraph_id":"para_648"},{"text":"note 129 and accompanying text.","paragraph_id":"para_649"},{"text":"115 Stuart Kingston, Inc. v. Robinson, 596 A.2d 1378, 1382 (Del. 1991).","paragraph_id":"para_650"},{"text":"25","paragraph_id":"para_651"},{"text":"“As a general rule, only parties to a contract and intended third-party","paragraph_id":"para_652","court_paragraph":25},{"text":"beneficiaries may enforce an agreement’s provisions.”116 None of the plaintiffs were","paragraph_id":"para_653"},{"text":"parties to the UpHealth BCA.117 And the UpHealth BCA disclaims any intent to","paragraph_id":"para_654"},{"text":"convey third-party beneficiary status.118","paragraph_id":"para_655"},{"text":"The plaintiffs were Cloudbreak members—not UpHealth Holdings","paragraph_id":"para_656"},{"text":"stockholders.119 In their briefing, the plaintiffs insist that they meant to claim breach","paragraph_id":"para_657"},{"text":"of the Cloudbreak BCA and cite allegations in the Complaint focusing on the","paragraph_id":"para_658"},{"text":"mechanics of the Cloudbreak BCA.120 The Amended Complaint belies this","paragraph_id":"para_659"},{"text":"116 NAMA Hldgs., LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 434","paragraph_id":"para_660"},{"text":"(Del. Ch. 2007); see also Indep. Realty Tr., Inc. v. USA Carrington Park 20, LLC,","paragraph_id":"para_661"},{"text":"2022 WL 625293, at *3 (Del. Super. Mar. 1, 2022) (dismissing claims brough by an","paragraph_id":"para_662"},{"text":"individual who was “neither a party to any of the relevant contracts, nor . . . own[ed] any","paragraph_id":"para_663"},{"text":"security interest” in the company he sued).","paragraph_id":"para_664"},{"text":"117 See UpHealth BCA 1 (listing as parties Gig2, UpHealth Merger Sub, Inc., and UpHealth","paragraph_id":"para_665"},{"text":"Holdings).","paragraph_id":"para_666"},{"text":"118 See id. § 6.03 (“This Agreement is not intended to confer any rights or benefits on any","paragraph_id":"para_667"},{"text":"persons that are not party hereto other than as expressly set forth in [certain specified","paragraph_id":"para_668"},{"text":"provisions].”); see also id. § 10.05 (“[N]othing in this Agreement, express or implied, is","paragraph_id":"para_669"},{"text":"intended to or shall confer upon any other person any right, benefit or remedy of any nature","paragraph_id":"para_670"},{"text":"whatsoever under or by reason of this Agreement.”); Madison Realty P’rs 7, LLC v. Ag","paragraph_id":"para_671"},{"text":"ISA, LLC, 2001 WL 406268 (Del. Ch. April 17, 2001) (stating that to qualify as a third-","paragraph_id":"para_672"},{"text":"party beneficiary, “(i) the contracting parties must have intended that the third[-]party","paragraph_id":"para_673"},{"text":"beneficiary benefit from the contract, (ii) the benefit must have been intended as a gift or","paragraph_id":"para_674"},{"text":"in satisfaction of a pre-existing obligation to that person, and (iii) the intent to benefit the","paragraph_id":"para_675"},{"text":"third[-]party must be a material part of the parties’ purpose in entering into the contract”","paragraph_id":"para_676"},{"text":"(emphasis added)). The plaintiffs maintain that they are third-party beneficiaries of the","paragraph_id":"para_677"},{"text":"Cloudbreak BCA. See Pls.’ Answering Br. 69-75. I need not reach that arguments since I","paragraph_id":"para_678"},{"text":"cannot ignore that they pleaded their claim based on the wrong agreement. See infra notes","paragraph_id":"para_679"},{"text":"120-126 and accompanying text.","paragraph_id":"para_680"},{"text":"119 See supra notes 4-7 (noting the plaintiffs’ membership interests in Cloudbreak).","paragraph_id":"para_681"},{"text":"120 Pls.’ Answering Br. 70 n.12 (citing Am. Compl. ¶¶ 117-18, 121).","paragraph_id":"para_682"},{"text":"26","paragraph_id":"para_683"},{"text":"recasting. It repeatedly states that Count II is based on breaches of the UpHealth","paragraph_id":"para_684","court_paragraph":26},{"text":"BCA.121 It also pleads purported breaches of the UpHealth BCA that cannot","paragraph_id":"para_685"},{"text":"conceivably be read as breaches of the Cloudbreak BCA.122","paragraph_id":"para_686"},{"text":"Even if the reference to the UpHealth BCA were in error, the plaintiffs had","paragraph_id":"para_687"},{"text":"the opportunity to cure it and declined to do so. Their original complaint contained","paragraph_id":"para_688"},{"text":"the same allegations.123 The Gig2 Defendants’ motion to dismiss pointed out that","paragraph_id":"para_689"},{"text":"the plaintiffs were not parties to the UpHealth BCA.124 The plaintiffs stood on their","paragraph_id":"para_690"},{"text":"121 Am. Compl. ¶ 163 (“The UpHealth BCA provided the holders of UpHealth Holdings","paragraph_id":"para_691"},{"text":"Common Stock to surrender their UpHealth Holdings Common Stock along with a Letter","paragraph_id":"para_692"},{"text":"of Transmittal and the required duly executed documents to an Exchange Agent—later","paragraph_id":"para_693"},{"text":"designed as Continental—to receive their UpHealth stock certificates within 2 Business","paragraph_id":"para_694"},{"text":"Days of surrender” (emphasis added)); id. ¶ 164 (alleging Continental was required to pay","paragraph_id":"para_695"},{"text":"merger consideration “‘in accordance with’ the UpHealth BCA” (emphasis added)); id.","paragraph_id":"para_696"},{"text":"¶ 166 (alleging Continental did not pay “in accordance with the UpHealth BCA” (emphasis","paragraph_id":"para_697"},{"text":"added)); id. ¶ 168 (“As a result, GigCapital2 has breached the UpHealth BCA” (emphasis","paragraph_id":"para_698"},{"text":"added)); id. ¶ 169 (“GigCapital2’s breach of the UpHealth BCA caused significant","paragraph_id":"para_699"},{"text":"damages to Plaintiffs . . . .” (emphasis added)); see also id. ¶ 119 (referring to the UpHealth","paragraph_id":"para_700"},{"text":"BCA).","paragraph_id":"para_701"},{"text":"122 E.g., id. ¶ 163 (repeatedly mentioning “UpHealth Holdings Common Stock” and","paragraph_id":"para_702"},{"text":"“UpHealth stock certificates”). There is no reference to UpHealth Holdings common stock","paragraph_id":"para_703"},{"text":"in the Cloudbreak BCA, which discusses Cloudbreak units. See, e.g., Cloudbreak BCA","paragraph_id":"para_704"},{"text":"§ 1.01 (defining “Common Units”).","paragraph_id":"para_705"},{"text":"123 Compl. ¶¶ 232-39.","paragraph_id":"para_706"},{"text":"124 Gig2 Defs.’ Opening Br. in Supp. of their Mot. to Dismiss Verified Compl. (Dkt. 25)","paragraph_id":"para_707"},{"text":"33-37.","paragraph_id":"para_708"},{"text":"27","paragraph_id":"para_709"},{"text":"allegations, choosing to retain them in their amended Complaint.125 They cannot","paragraph_id":"para_710","court_paragraph":27},{"text":"now amend their pleading through their briefing.126","paragraph_id":"para_711"},{"text":"Accordingly, the plaintiffs’ breach of contract claim in Count II is dismissed","paragraph_id":"para_712"},{"text":"for lack of standing.","paragraph_id":"para_713"},{"text":"C. Timeliness of Claims","paragraph_id":"para_714"},{"text":"The Gig2 Defendants, Kathuria, and Needham argue that several claims","paragraph_id":"para_715"},{"text":"against them should be dismissed in whole or in part as time barred.127 Dismissal","paragraph_id":"para_716"},{"text":"may be warranted where “the complaint itself alleges facts that show the complaint","paragraph_id":"para_717"},{"text":"is filed too late.”128","paragraph_id":"para_718"},{"text":"When reviewing a motion to dismiss under Rule 12(b)(6), Delaware courts","paragraph_id":"para_719"},{"text":"“(1) accept all well pleaded factual allegations as true, (2) accept even vague","paragraph_id":"para_720"},{"text":"allegations as ‘well-pleaded’ if they give the opposing party notice of the claim;","paragraph_id":"para_721"},{"text":"125 See Ct. Ch. R. 15(a)(5)(A) (“If a party wishes to amend the party’s complaint in response","paragraph_id":"para_722"},{"text":"to a motion to dismiss under Rules 12(b)(6) . . . the party must amend the party’s","paragraph_id":"para_723"},{"text":"complaint—or seek leave to amend . . . before the party’s response to the motion is","paragraph_id":"para_724"},{"text":"due . . . .”); In re Dow Chem. Co. Deriv. Litig., 2010 WL 66769, at *1 n.2 (Del. Ch. Jan.","paragraph_id":"para_725"},{"text":"11, 2010) (“A plaintiff must amend his complaint before standing on it in opposition to a","paragraph_id":"para_726"},{"text":"motion to dismiss.”).","paragraph_id":"para_727"},{"text":"126 See MCG Cap. Corp. v. Maginn, 2010 WL 1782271, at *5 (Del. Ch. May 5, 2010)","paragraph_id":"para_728"},{"text":"(“Having chosen [to stand on its complaint and answer the motion to dismiss], [the","paragraph_id":"para_729"},{"text":"plaintiffs are] bound to the factual allegations contained in [their] complaint. [They] cannot","paragraph_id":"para_730"},{"text":"supplement the complaint through [their] brief.”).","paragraph_id":"para_731"},{"text":"127 Gig2 Defs.’ Opening Br. 15-20; Needham Opening Br. 20-24; Kathuria Opening Br.","paragraph_id":"para_732"},{"text":"19-22.","paragraph_id":"para_733"},{"text":"128 Kahn v. Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. 1993).","paragraph_id":"para_734"},{"text":"28","paragraph_id":"para_735"},{"text":"[and] (3) draw all reasonable inferences in favor of the non-moving party.”129","paragraph_id":"para_736","court_paragraph":28},{"text":"Although this is a plaintiff-friendly standard, I am “not required to accept every","paragraph_id":"para_737"},{"text":"strained interpretation of [the plaintiffs’] allegations.”130 Nor must I accept","paragraph_id":"para_738"},{"text":"conclusory assertions “unsupported by allegations of specific facts.”131","paragraph_id":"para_739"},{"text":"Five claims are at issue. They are: fraudulent inducement against the Gig2","paragraph_id":"para_740"},{"text":"Defendants, Kathuria, and Needham (Count I); negligent misrepresentation against","paragraph_id":"para_741"},{"text":"the Gig2 Defendants, Kathuria, and Needham (Count III); civil conspiracy against","paragraph_id":"para_742"},{"text":"the Gig2 Defendants, Kathuria, and Needham (Count V); and violation of the DTPA","paragraph_id":"para_743"},{"text":"against the Gig2 Defendants, UpHealth, Kathuria, and Needham (Count VII) in","paragraph_id":"para_744"},{"text":"129 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del.","paragraph_id":"para_745"},{"text":"2011).","paragraph_id":"para_746"},{"text":"130 Gen. Motors (Hughes), 897 A.2d at 168 (quoting Malpiede v. Townson, 780 A.2d 1075,","paragraph_id":"para_747"},{"text":"1083 (Del. 2001)).","paragraph_id":"para_748"},{"text":"131 In re Lukens Inc. S’holders Litig., 757 A.2d 720, 727 (Del. Ch. 1999), aff’d sub nom.","paragraph_id":"para_749"},{"text":"Walker v. Lukens, Inc., 757 A.2d 1278 (Del. 2000)","paragraph_id":"para_750"},{"text":"29","paragraph_id":"para_751"},{"text":"part.132 Each of these claims is subject to a three-year statute of limitations.133","paragraph_id":"para_752","court_paragraph":29},{"text":"“[C]laims filed beyond the statutory limitations period are presumptively barred.”134","paragraph_id":"para_753"},{"text":"The plaintiffs maintain that their claims are timely for two reasons. First, they","paragraph_id":"para_754"},{"text":"argue that their claims accrued either on June 9, 2021 when the merger closed, or on","paragraph_id":"para_755"},{"text":"June 2, 2021 when Cloudbreak’s members voted for the merger. I disagree and","paragraph_id":"para_756"},{"text":"conclude that the claims accrued no later than November 2020. Second, the","paragraph_id":"para_757"},{"text":"plaintiffs assert that, even if more than three years passed before they filed suit, they","paragraph_id":"para_758"},{"text":"132 The defendants argue that the DTPA claim is time-barred only as it relates to the alleged","paragraph_id":"para_759"},{"text":"misstatements and omissions in the diligence presentations. See infra Section II.D.1","paragraph_id":"para_760"},{"text":"(discussing the various DTPA allegations).","paragraph_id":"para_761"},{"text":"133 See 10 Del. C. § 8106; Solow v. Aspect Res., LLC, 2004 WL 2694916, at *3 (Del. Ch.","paragraph_id":"para_762"},{"text":"Oct. 19, 2004) (applying a three-year statute of limitations to fraudulent inducement","paragraph_id":"para_763"},{"text":"claims); Krahmer v. Christie’s, Inc., 903 A.2d 773, 778 (Del. Ch. 2006) (stating that the","paragraph_id":"para_764"},{"text":"“applicable statute of limitations” for negligent misrepresentation claims is a “three-year","paragraph_id":"para_765"},{"text":"period”); State ex rel. Brady v. Pettinaro Enters., 870 A.2d 513, 533 (Del. Ch. 2005)","paragraph_id":"para_766"},{"text":"(“Actions by individual consumers under . . . the Deceptive Trade Practices Act are","paragraph_id":"para_767"},{"text":"governed by a three-year statute of limitations.”); see also Tusha v. Pediatric Assocs., PA,","paragraph_id":"para_768"},{"text":"2022 WL 823583, at *4 (D. Del. Mar. 18, 2022) (explaining that a civil conspiracy claim","paragraph_id":"para_769"},{"text":"is “subject to the same three-year statute of limitations applicable to the underlying” tort","paragraph_id":"para_770"},{"text":"claim).","paragraph_id":"para_771"},{"text":"134 In re Sirius XM S’holder Litig., 2013 WL 5411268, at *4 (Del. Ch. Sept. 27, 2013). In","paragraph_id":"para_772"},{"text":"this court, the applicable defense for the untimely commencement of an action for an","paragraph_id":"para_773"},{"text":"equitable claim is laches. See Stevanov v. O’Connor, 2009 WL 1059640, at *7 (Del. Ch.","paragraph_id":"para_774"},{"text":"Apr. 21, 2009). “[T]he statute of limitations will apply by analogy” and “claims filed","paragraph_id":"para_775"},{"text":"beyond the statutory limitations period are presumptively barred.” Sirius XM, 2013 WL","paragraph_id":"para_776"},{"text":"5411268, at *4. “[A] filing after the analogous statute of limitations has run cannot be","paragraph_id":"para_777"},{"text":"justified except in the ‘rare’ and ‘unusual’ circumstance that a recognized tolling doctrine","paragraph_id":"para_778"},{"text":"excuses the late filing.” Id. When this court is “exercising ancillary jurisdiction over legal","paragraph_id":"para_779"},{"text":"claims, [it] will apply the applicable statute of limitations found at law.” Stevanov, 2009","paragraph_id":"para_780"},{"text":"WL 1059640, at *7; see also Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 983 (Del. Ch.","paragraph_id":"para_781"},{"text":"2016).","paragraph_id":"para_782"},{"text":"30","paragraph_id":"para_783"},{"text":"were not on inquiry notice until 2023 when certain documents became available","paragraph_id":"para_784","court_paragraph":30},{"text":"through separate litigation. They have failed to show that any tolling doctrine","paragraph_id":"para_785"},{"text":"applies, however. Because this suit was filed after the statute of limitations lapsed,","paragraph_id":"para_786"},{"text":"the claims are time-barred.","paragraph_id":"para_787"},{"text":"1. Claim Accrual","paragraph_id":"para_788"},{"text":"Under Delaware law, “a cause of action ‘accrues’ under [10 Del. C. §] 8106","paragraph_id":"para_789"},{"text":"at the time of the wrongful act, even if the plaintiff is ignorant of the cause of","paragraph_id":"para_790"},{"text":"action.”135 A fraudulent inducement claim accrues when the alleged","paragraph_id":"para_791"},{"text":"misrepresentations were made.136 That is, a claim for fraudulently inducing a party","paragraph_id":"para_792"},{"text":"to enter a contract accrues no later than the date of the contract’s execution.137 A","paragraph_id":"para_793"},{"text":"135 Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312 (Del. 2004); see Coca-","paragraph_id":"para_794"},{"text":"Cola, 2007 WL 3122370, at *5 (“[A] plaintiff’s cause of action accrues at the moment of","paragraph_id":"para_795"},{"text":"the wrongful act—not when the harmful effects of the act are felt—even if the plaintiff is","paragraph_id":"para_796"},{"text":"unaware of the wrong.”).","paragraph_id":"para_797"},{"text":"136 See Winkelvoss Cap. Fund, Ltd. Liab. Co. v. Shaw, 2019 WL 994534, at *5 (Del. Ch.","paragraph_id":"para_798"},{"text":"Mar. 1, 2019); Jeter v. Revolutionwear, Inc., 2016 WL 3947951, at *9 (Del. Ch. July 19,","paragraph_id":"para_799"},{"text":"2016).","paragraph_id":"para_800"},{"text":"137 See Puig v. Seminole Night Club, LLC, 2011 WL 3275948, at *3-4 (Del. Ch. July 29,","paragraph_id":"para_801"},{"text":"2011) (“[T]he claims raised in the Amended Complaint must have accrued by September","paragraph_id":"para_802"},{"text":"22, 2004—the date that Puig entered into the SPA and the LLC Agreement . . . .”); Pivotal","paragraph_id":"para_803"},{"text":"Payments Direct Corp. v. Planet Payment, Inc., 2020 WL 7028597, at *5 (Del. Ch. Nov.","paragraph_id":"para_804"},{"text":"3, 2020) (“A claim for fraudulent inducement accrues when the fraudulent statements were","paragraph_id":"para_805"},{"text":"made, which must be on or before the date when the parties entered into the contract.”);","paragraph_id":"para_806"},{"text":"Optical Air Data Sys., LLC v. L-3 Commc’ns Corp., 2019 WL 328429, at *6 (Del. Super.","paragraph_id":"para_807"},{"text":"Jan. 23, 2019) (explaining that for a fraudulent inducement claim, “[a] plaintiff cannot rely","paragraph_id":"para_808"},{"text":"on a misrepresentation made after the parties executed [their] agreement”); see also Jeter,","paragraph_id":"para_809"},{"text":"2016 WL 3947951, at *9 (evaluating “when the alleged contract-inducing misstatements","paragraph_id":"para_810"},{"text":"were made”).","paragraph_id":"para_811"},{"text":"31","paragraph_id":"para_812"},{"text":"negligent misrepresentation claim similarly accrues when the challenged statements","paragraph_id":"para_813","court_paragraph":31},{"text":"are made.138 A civil conspiracy claim also “runs from the time of the overt act which","paragraph_id":"para_814"},{"text":"is alleged to have caused the damages complained of.”139","paragraph_id":"para_815"},{"text":"The plaintiffs’ fraud, negligent misrepresentation, and related civil conspiracy","paragraph_id":"para_816"},{"text":"claims are based on alleged misrepresentations and omissions that induced the","paragraph_id":"para_817"},{"text":"plaintiffs to approve the Cloudbreak BCA.140 The Cloudbreak BCA was executed","paragraph_id":"para_818"},{"text":"on November 20, 2020.141 The Cloudbreak member vote and closing occurred later,","paragraph_id":"para_819"},{"text":"in June 2021.142","paragraph_id":"para_820"},{"text":"The fraudulent misrepresentations complained of are presentations, financial","paragraph_id":"para_821"},{"text":"information, and oral representations made by the defendants before November","paragraph_id":"para_822"},{"text":"2020. The plaintiffs’ main focus is on statements in the October and June","paragraph_id":"para_823"},{"text":"Presentations.143 More broadly, according to the Complaint, “[t]hroughout August,","paragraph_id":"para_824"},{"text":"138 See Krahmer, 903 A.2d at 778 (explaining that a negligent misrepresentation claim","paragraph_id":"para_825"},{"text":"accrues “at the time of the wrongful act,” i.e., on the date of the alleged misrepresentation).","paragraph_id":"para_826"},{"text":"139 Glassberg v. Boyd, 116 A.2d 711, 717 (Del. Ch. 1955); see also Freedman v. Beneficial","paragraph_id":"para_827"},{"text":"Corp., 406 F. Supp. 917, 924 (D. Del. 1975).","paragraph_id":"para_828"},{"text":"140 See Am. Compl. ¶¶ 158, 161.","paragraph_id":"para_829"},{"text":"141 See Cloudbreak BCA (cover page).","paragraph_id":"para_830"},{"text":"142 Am. Compl. ¶ 115; see also supra notes 45-47 and accompanying text.","paragraph_id":"para_831"},{"text":"143 Am. Compl. ¶ 83 (“At the root of Defendants’ fraudulent inducements were materially","paragraph_id":"para_832"},{"text":"false investor presentations shared with Cloudbreak.”); id. ¶ 84 (“Throughout 2020, Katz,","paragraph_id":"para_833"},{"text":"Kathuria, and the other [Gig2] Defendants provided Plaintiffs with presentations and","paragraph_id":"para_834"},{"text":"analyses that falsely showed each of the [Portfolio] Companies were in strong financial","paragraph_id":"para_835"},{"text":"condition and were positioned for significant future success.”); see also id. ¶¶ 85-109.","paragraph_id":"para_836"},{"text":"32","paragraph_id":"para_837"},{"text":"September, and October, Katz, Kathuria, and Needham repeatedly claimed that","paragraph_id":"para_838","court_paragraph":32},{"text":"Glocal, Thrasys, and the other [Portfolio] [C]ompanies were in strong financial","paragraph_id":"para_839"},{"text":"shape and were, in fact, healthier than Cloudbreak.”144 “At the same time, Katz","paragraph_id":"para_840"},{"text":"repeatedly informed [the plaintiffs and Kayne] that he had diligenced the deal.”145","paragraph_id":"para_841"},{"text":"The diligence presentations allegedly plagued by misrepresentations and omissions","paragraph_id":"para_842"},{"text":"were given to the plaintiffs in or before October.146 No later fraudulent statements","paragraph_id":"para_843"},{"text":"are mentioned in the Complaint. The relevant claims therefore accrued by","paragraph_id":"para_844"},{"text":"November 2020.147","paragraph_id":"para_845"},{"text":"The plaintiffs refute that their claims accrued that early. They cite two","paragraph_id":"para_846"},{"text":"alternate dates: the June 9, 2021 closing and the June 2, 2021 date of the Cloudbreak","paragraph_id":"para_847"},{"text":"member vote. Neither event changes the claims’ untimeliness because the purported","paragraph_id":"para_848"},{"text":"fraudulent and misleading statements were made months prior.","paragraph_id":"para_849"},{"text":"a. Date of Closing","paragraph_id":"para_850"},{"text":"The business combination of Cloudbreak and Gig2 closed on June 9, 2021.148","paragraph_id":"para_851"},{"text":"The plaintiffs assert that their claims accrued then because “a claim for fraudulent","paragraph_id":"para_852"},{"text":"144 Id. ¶ 110.","paragraph_id":"para_853"},{"text":"145 Id. ¶ 111. The plaintiffs emphasize their reliance on these representations. See supra","paragraph_id":"para_854"},{"text":"note 37 and accompanying text.","paragraph_id":"para_855"},{"text":"146 See supra notes 28-36 and accompanying text (detailing alleged misrepresentations in","paragraph_id":"para_856"},{"text":"the June and October Presentations).","paragraph_id":"para_857"},{"text":"147 See supra note 137 and accompanying text.","paragraph_id":"para_858"},{"text":"148 See supra note 47 and accompanying text.","paragraph_id":"para_859"},{"text":"33","paragraph_id":"para_860"},{"text":"inducement cannot be ripe [when] the induced transaction has not yet occurred.”149","paragraph_id":"para_861","court_paragraph":33},{"text":"They chiefly rely on Price v. Wilmington Trust, which held that “a statute of","paragraph_id":"para_862"},{"text":"limitations will not begin to run until all of the elements of the claim have","paragraph_id":"para_863"},{"text":"occurred.”150 Based on that statement, they assert that they could not have been","paragraph_id":"para_864"},{"text":"injured by their reliance on the defendants’ misstatements or omissions until","paragraph_id":"para_865"},{"text":"closing.151","paragraph_id":"para_866"},{"text":"The plaintiffs take the holding in Price out of context. Immediately after the","paragraph_id":"para_867"},{"text":"text highlighted by the plaintiffs, it states that “[t]he pertinent question then becomes","paragraph_id":"para_868"},{"text":"when . . . the wrongful conduct occurred . . . where there are alleged to be numerous","paragraph_id":"para_869"},{"text":"repeated wrongs of similar, if not same, character over an extended period.”152 The","paragraph_id":"para_870"},{"text":"court explained that each completed wrong triggered a three-year limitations period.","paragraph_id":"para_871"},{"text":"149 Pls.’ Answering Br. 9.","paragraph_id":"para_872"},{"text":"150 Id. (citing 1995 WL 317017, at *2 (Del. Ch. May 19, 1995)).","paragraph_id":"para_873"},{"text":"151 Id. (“[A] fraudulent inducement claim accrues for purposes of laches when the","paragraph_id":"para_874"},{"text":"actionable misstatement or omission was relied upon to a plaintiff’s detriment.”); see ABRY","paragraph_id":"para_875"},{"text":"P’rs V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1050 (Del. Ch. Feb. 14, 2006) (explaining","paragraph_id":"para_876"},{"text":"that the five elements of common-law fraud are “(1) the defendant falsely represented or","paragraph_id":"para_877"},{"text":"omitted facts that the defendant had a duty to disclose; (2) the defendant knew or believed","paragraph_id":"para_878"},{"text":"that the representation was false or made the representation with a reckless indifference to","paragraph_id":"para_879"},{"text":"the truth; (3) the defendant intended to induce the plaintiff to act or refrain from acting; (4)","paragraph_id":"para_880"},{"text":"the plaintiff acted in justifiable reliance on the representation; and (5) the plaintiff was","paragraph_id":"para_881"},{"text":"injured by its reliance”).","paragraph_id":"para_882"},{"text":"152 Price, 1995 WL 317017, at *2 (emphasis added).","paragraph_id":"para_883"},{"text":"34","paragraph_id":"para_884"},{"text":"It did not confront the question of claim accrual in the merger context, or even when","paragraph_id":"para_885","court_paragraph":34},{"text":"the purported injury occurs in that circumstance.153","paragraph_id":"para_886"},{"text":"The plaintiffs also argue that “accrual for tort claims arising out of a [complex","paragraph_id":"para_887"},{"text":"business] transaction occurs at the transaction’s closing.”154 That may be true where","paragraph_id":"para_888"},{"text":"the purported fraud is contained within the transaction agreement itself, as in the","paragraph_id":"para_889"},{"text":"cases cited by the plaintiffs.155 But the plaintiffs do not claim intra-contractual fraud","paragraph_id":"para_890"},{"text":"or negligent misrepresentations in the Cloudbreak BCA.156 They address","paragraph_id":"para_891"},{"text":"misrepresentations and omissions orally or in presentations delivered before the","paragraph_id":"para_892"},{"text":"Cloudbreak BCA was signed in November 2020.157 Thus, the plaintiffs’ claims did","paragraph_id":"para_893"},{"text":"not accrue at closing.","paragraph_id":"para_894"},{"text":"153 Price observed that a statute of limitations only “begin[s] to run [when] the beneficiary","paragraph_id":"para_895"},{"text":"knew or had good reason to know of the allegedly wrongful conduct.” Id. This is a separate","paragraph_id":"para_896"},{"text":"question from the point of injury and better addressed in the discussion of tolling below.","paragraph_id":"para_897"},{"text":"See infra Section II.C.2.","paragraph_id":"para_898"},{"text":"154 Pls.’ Answering Br. 9.","paragraph_id":"para_899"},{"text":"155 See Kilcullen v. Spectro Sci., Inc., 2019 WL 3074569, at *7 (Del. Ch. July 15, 2019)","paragraph_id":"para_900"},{"text":"(“Where a fraud claim alleges false representations and warranties in a purchase agreement,","paragraph_id":"para_901"},{"text":"the fraud claim accrues at closing.”); Certainteed Corp. v. Celotex Corp., 2005 WL","paragraph_id":"para_902"},{"text":"217032, at *29 (Del. Ch. Jan. 24, 2005) (“CertainTeed has also pled that Celotex committed","paragraph_id":"para_903"},{"text":"fraudulent misrepresentation by providing false representations and warranties of the","paragraph_id":"para_904"},{"text":"conditions of the [loan f]acilities. Even assuming these claims are viable, . . . [they] are","paragraph_id":"para_905"},{"text":"also subject to a three-year statute of limitations, and whether treated as breach of contract","paragraph_id":"para_906"},{"text":"or as tort, the accrual date as to all of these claims was the date of [c]losing.”); see also","paragraph_id":"para_907"},{"text":"Pls.’ Answering Br. 9-10.","paragraph_id":"para_908"},{"text":"156 Nor could they. The Cloudbreak BCA contains no representations or warranties","paragraph_id":"para_909"},{"text":"regarding UpHealth or Gig2’s due diligence into UpHealth.","paragraph_id":"para_910"},{"text":"157 See supra notes 28-37 and accompanying text.","paragraph_id":"para_911"},{"text":"35","paragraph_id":"para_912"},{"text":"b. Date of Member Vote","paragraph_id":"para_913","court_paragraph":35},{"text":"The plaintiffs argue in the alternative that their claim accrued on June 2,","paragraph_id":"para_914"},{"text":"2021—when Cloudbreak’s members voted on the transactions contemplated by","paragraph_id":"para_915"},{"text":"Cloudbreak BCA.158 Because the member vote was required for Cloudbreak to","paragraph_id":"para_916"},{"text":"participate in the de-SPAC, the plaintiffs insist that their “reliance on","paragraph_id":"para_917"},{"text":"the . . . misstatements were effectuated through the decisive member vote.”159","paragraph_id":"para_918"},{"text":"This position finds no support in the Complaint or the law.160 The alleged","paragraph_id":"para_919"},{"text":"wrongful acts are fraudulent or misleading statements predating the Cloudbreak","paragraph_id":"para_920"},{"text":"BCA’s execution in November 2020.161 The plaintiffs have not pleaded that they","paragraph_id":"para_921"},{"text":"relied on post-November 2020 statements in casting their votes. That the “damage-","paragraph_id":"para_922"},{"text":"causing event (i.e., the [de-]SPAC)” could not have occurred without the member","paragraph_id":"para_923"},{"text":"158 Pls.’ Answering Br. 10-11; see supra note 45 and accompanying text.","paragraph_id":"para_924"},{"text":"159 Pls.’ Answering Br. 11.","paragraph_id":"para_925"},{"text":"160 Kathuria and the Gig2 Defendants assert that the plaintiffs’ claims could not have","paragraph_id":"para_926"},{"text":"accrued upon the member vote for more reasons. Cloudbreak’s “Key Members,” including","paragraph_id":"para_927"},{"text":"Bell and Edwards, were bound by Member Support Agreements. See Gig2 Defs.’ Opening","paragraph_id":"para_928"},{"text":"Br. 13-14, 18-20; Freund Aff. Ex. 4 at 2, 7, sch. 7.03. Cloudbreak’s LLC Agreement also","paragraph_id":"para_929"},{"text":"contained a drag-along right. See Kathuria’s Opening Br. 20-21; Freund Aff. Ex. 1","paragraph_id":"para_930"},{"text":"(Cloudbreak LLC Agreement) § 9.07. Regardless of whether the member vote was","paragraph_id":"para_931"},{"text":"predetermined, the Complaint cites no statements after November 2020 relied on by the","paragraph_id":"para_932"},{"text":"plaintiffs in voting on the merger.","paragraph_id":"para_933"},{"text":"161 The plaintiffs’ original complaint discussed presentations that post-dated the November","paragraph_id":"para_934"},{"text":"20, 2020 vote. Compl. ¶¶ 81-82. Those allegations were dropped from the amended","paragraph_id":"para_935"},{"text":"Complaint.","paragraph_id":"para_936"},{"text":"36","paragraph_id":"para_937"},{"text":"vote is irrelevant.162 “A fraud claim accrues, and the statute of limitations begins to","paragraph_id":"para_938","court_paragraph":36},{"text":"run, at the moment of the wrongful act and not when the effects of the act are felt.”163","paragraph_id":"para_939"},{"text":"2. Tolling of the Statute of Limitations","paragraph_id":"para_940"},{"text":"The plaintiffs next submit that they lacked inquiry notice until 2023 when “a","paragraph_id":"para_941"},{"text":"trove of confidential and proprietary internal documents” were produced in unrelated","paragraph_id":"para_942"},{"text":"litigation between Needham and UpHealth.164 Before then, the plaintiffs maintain","paragraph_id":"para_943"},{"text":"they were unaware that the June and October Presentations were false.165 They relied","paragraph_id":"para_944"},{"text":"on “assurances from Kathuria and Needham regarding the [presentations’]","paragraph_id":"para_945"},{"text":"accuracy” and Katz’s statement that he had independently diligenced UpHealth and","paragraph_id":"para_946"},{"text":"its financial information.166","paragraph_id":"para_947"},{"text":"Delaware courts recognize three doctrines that may toll the statute of","paragraph_id":"para_948"},{"text":"limitations: (1) fraudulent concealment; (2) inherent unknowable injury; and","paragraph_id":"para_949"},{"text":"162 Pls.’ Answering Br. 12.","paragraph_id":"para_950"},{"text":"163 Kilcullen, 2019 WL 3074569, at *7.","paragraph_id":"para_951"},{"text":"164 Pls.’ Answering Br. 14-15.","paragraph_id":"para_952"},{"text":"165 Id. at 17 (“[The Gig2 Defendants, Kathuria, and Needham] provided [the p]laintiffs with","paragraph_id":"para_953"},{"text":"multiple presentations during the diligence process which made direct representations","paragraph_id":"para_954"},{"text":"regarding the [Portfolio] Companies’ revenue figures, business contracts, and","paragraph_id":"para_955"},{"text":"operations.”); Am. Compl. ¶ 153 (“As part of the conspiracy, [Kathuria and the Gig2","paragraph_id":"para_956"},{"text":"Defendants] went to great lengths to create the appearance of a financially viable public","paragraph_id":"para_957"},{"text":"company resulting from the series of business combinations through fraudulent financial","paragraph_id":"para_958"},{"text":"reporting and projections.”); see also id. ¶¶ 77-81, 83.","paragraph_id":"para_959"},{"text":"166 Pls.’ Answering Br. 17; see supra note 25 and accompanying text.","paragraph_id":"para_960"},{"text":"37","paragraph_id":"para_961"},{"text":"(3) equitable tolling.167 The doctrines are similar in that each “permits tolling of the","paragraph_id":"para_962","court_paragraph":37},{"text":"limitations period where the facts underlying a claim were so hidden that a","paragraph_id":"para_963"},{"text":"reasonable plaintiff could not timely discover them.”168","paragraph_id":"para_964"},{"text":"There are also meaningful differences. Fraudulent concealment involves “an","paragraph_id":"para_965"},{"text":"affirmative act of concealment by a defendant . . . intended to put a plaintiff off the","paragraph_id":"para_966"},{"text":"trail of inquiry.”169 Under the “inherently unknowable injuries” doctrine, “there","paragraph_id":"para_967"},{"text":"must have been no observable or objective factors to put a party on notice of an","paragraph_id":"para_968"},{"text":"injury, and plaintiffs must show that they were blamelessly ignorant of the act or","paragraph_id":"para_969"},{"text":"omission and the injury.”170 And equitable tolling applies in the event of wrongful","paragraph_id":"para_970"},{"text":"self-dealing, where a plaintiff reasonably relies on the competence and good faith of","paragraph_id":"para_971"},{"text":"a fiduciary—even in the absence of fraudulent conduct.171","paragraph_id":"para_972"},{"text":"167 Krahmer, 903 A.2d at 778; In re Dean Witter P’ship Litig., 1998 WL 442456, at *5","paragraph_id":"para_973"},{"text":"(Del. Ch. July 17, 1998).","paragraph_id":"para_974"},{"text":"168 Dean Witter, 1998 WL 442456, at *5.","paragraph_id":"para_975"},{"text":"169 Id. (citing Halpern v. Barran, 313 A.2d 139, 143 (Del. Ch. 1973)); see also Firemen’s","paragraph_id":"para_976"},{"text":"Ret. Sys. v. Sorenson, 2021 WL 4593777, at *10 (Del. Ch. Oct. 5, 2021) (noting that an","paragraph_id":"para_977"},{"text":"affirmative act is required for tolling under the fraudulent concealment doctrine and that","paragraph_id":"para_978"},{"text":"“mere silence is insufficient”).","paragraph_id":"para_979"},{"text":"170 Dean Witter, 1998 WL 442456, at *5; see also Wal-Mart Stores, 860 A.2d at 319","paragraph_id":"para_980"},{"text":"(citation omitted).","paragraph_id":"para_981"},{"text":"171 Dean Witter, 1998 WL 442456, at *6.","paragraph_id":"para_982"},{"text":"38","paragraph_id":"para_983"},{"text":"The plaintiffs conflate these distinct tolling doctrines.172 Substantively, their","paragraph_id":"para_984","court_paragraph":38},{"text":"theory most aligns with inherently unknowable injuries.173 They posit that, because","paragraph_id":"para_985"},{"text":"they relied on representations by Katz and others, the state of UpHealth and the","paragraph_id":"para_986"},{"text":"Portfolio Companies “was entirely in [the d]efendants’ hands” and undiscoverable","paragraph_id":"para_987"},{"text":"“[i]n the usual course of events”—i.e., the intervening Needham litigation.174 This","paragraph_id":"para_988"},{"text":"argument draws from the fact that the Portfolio Companies “were private, did not","paragraph_id":"para_989"},{"text":"172 See Am. Compl. ¶ 153 (“[Kathuria and the Gig2 Defendants] affirmatively and","paragraph_id":"para_990"},{"text":"fraudulently concealed their unlawful scheme, course of conduct, and conspiracy from","paragraph_id":"para_991"},{"text":"Plaintiffs.” (emphasis added)); but see Pls.’ Answering Br. 16 (“If a reasonable inference","paragraph_id":"para_992"},{"text":"can be made [that] the plaintiff was blamelessly ignorant of the ‘wrongful acts’ until a time","paragraph_id":"para_993"},{"text":"that is within the applicable statute of limitations, that is all that is required at the motion","paragraph_id":"para_994"},{"text":"to dismiss stage.” (citing Wal-Mart Stores, 860 A.2d at 319)); id. at 20-21 (analogizing to","paragraph_id":"para_995"},{"text":"a case in which tolling applied under the “discovery rule,” which is often associated in the","paragraph_id":"para_996"},{"text":"case law with the “inherently unknowable injuries” doctrine).","paragraph_id":"para_997"},{"text":"173 As discussed above, the main difference between fraudulent concealment and inherently","paragraph_id":"para_998"},{"text":"unknowable injuries is that the former requires “an affirmative act” taken to obscure the","paragraph_id":"para_999"},{"text":"truth. See supra notes 169-170 and accompanying text. Even if the plaintiffs allege","paragraph_id":"para_1000"},{"text":"fraudulent concealment—rather than an inherently unknowable injury—they plead no","paragraph_id":"para_1001"},{"text":"affirmative act that could support tolling under that doctrine. In their brief, the plaintiffs","paragraph_id":"para_1002"},{"text":"assert that the “active manipulation of documents” is such an affirmative act. Pls.’","paragraph_id":"para_1003"},{"text":"Answering Br. 23. But they do not allege with particularity any manipulation “designed","paragraph_id":"para_1004"},{"text":"or intended to prevent . . . the discovery of facts giving rise to the fraud claim.”","paragraph_id":"para_1005"},{"text":"Wolstenholme v. Hygienic Exterminating Co., 1988 WL 90575, at *3 (Del. Super. Aug. 19,","paragraph_id":"para_1006"},{"text":"1988) (citation omitted); see also Halpern, 313 A.2d at 143 (explaining that a plaintiff","paragraph_id":"para_1007"},{"text":"invoking fraudulent concealment must “plead with particularity the circumstances","paragraph_id":"para_1008"},{"text":"constituting fraud” under Rule 9(b)”). They also argue that Katz’s statement that he","paragraph_id":"para_1009"},{"text":"“diligenced the [Portfolio] Companies on behalf of Cloudbreak’s Board when he had not”","paragraph_id":"para_1010"},{"text":"supports fraudulent concealment. Pls.’ Answering Br. 23 (emphasis added). But the","paragraph_id":"para_1011"},{"text":"Amended Complaint does not plead with particularly that Katz ever acted on behalf of","paragraph_id":"para_1012"},{"text":"Cloudbreak. There is no allegation that Katz concealed his role as Gig2’s agent.","paragraph_id":"para_1013"},{"text":"174 Pls.’ Answering Br. 18.","paragraph_id":"para_1014"},{"text":"39","paragraph_id":"para_1015"},{"text":"engage in any meaningful public reporting, and many were headquartered","paragraph_id":"para_1016","court_paragraph":39},{"text":"internationally.”175","paragraph_id":"para_1017"},{"text":"The inherently unknowable injury doctrine is a “narrowly confined” exception","paragraph_id":"para_1018"},{"text":"to the statute of limitations.176 It applies only “where it would be practically","paragraph_id":"para_1019"},{"text":"impossible for a plaintiff to discover the existence of a cause of action.”177 “No","paragraph_id":"para_1020"},{"text":"objective or observable factors may exist that might have put the plaintiffs on notice","paragraph_id":"para_1021"},{"text":"of an injury, and the plaintiffs bear the burden to show that they were ‘blamelessly","paragraph_id":"para_1022"},{"text":"ignorant’ of both the wrongful act and the resulting harm.”178 The doctrine supports","paragraph_id":"para_1023"},{"text":"tolling until plaintiffs are on inquiry notice—when “person[s] of ordinary","paragraph_id":"para_1024"},{"text":"intelligence and prudence [have facts sufficient to place them] on inquiry which, if","paragraph_id":"para_1025"},{"text":"pursued, would lead to the discovery” of the injury.179","paragraph_id":"para_1026"},{"text":"Vice Chancellor Lamb’s decision in Krahmer v. Christie’s Inc. provides","paragraph_id":"para_1027"},{"text":"useful guidance for assessing whether the doctrine is implicated.180 There, he","paragraph_id":"para_1028"},{"text":"175 Id.","paragraph_id":"para_1029"},{"text":"176 Kaufman v. CL McCabe & Sons, Inc., 603 A.2d 831, 835 (Del. 1992); see also Tropical","paragraph_id":"para_1030"},{"text":"Nursing, Inc. v. Accord Health Serv., Inc., 2006 WL 3604783, at *3 (Del. Super. Dec. 7,","paragraph_id":"para_1031"},{"text":"2006) (explaining that the doctrine applies “only in exceptional circumstances in which","paragraph_id":"para_1032"},{"text":"discovery of the existence of the cause of action at the time of injury was a practical","paragraph_id":"para_1033"},{"text":"impossibility”).","paragraph_id":"para_1034"},{"text":"177 In re Tyson Foods, Inc., 919 A.2d 563, 584 (Del. Ch. 2007).","paragraph_id":"para_1035"},{"text":"178 Id. at 584-85.","paragraph_id":"para_1036"},{"text":"179 Dean Witter, 1998 WL 442456, at *7.","paragraph_id":"para_1037"},{"text":"180 903 A.2d 773 (Del. Ch. 2006).","paragraph_id":"para_1038"},{"text":"40","paragraph_id":"para_1039"},{"text":"addressed an issue “of first impression in Delaware—whether the inherently","paragraph_id":"para_1040","court_paragraph":40},{"text":"unknowable injuries rule applies where an auction house sells an allegedly fake work","paragraph_id":"para_1041"},{"text":"of art to one who has no specific reason to question its authenticity until long after","paragraph_id":"para_1042"},{"text":"the three-year statute of limitations has expired.”181 Resembling the allegations here,","paragraph_id":"para_1043"},{"text":"the plaintiffs in Krahmer claimed that Christie’s defrauded them by “intentional[ly]","paragraph_id":"para_1044"},{"text":"misrepresent[ing] [] the authenticity” of a painting they bought and by appraising it","paragraph_id":"para_1045"},{"text":"at a high value.182 The court sided with Christie’s, holding that Christie’s “interests","paragraph_id":"para_1046"},{"text":"[were] aligned with the consignors not the purchasers” and that the plaintiffs could","paragraph_id":"para_1047"},{"text":"have discovered the truth about the painting’s authenticity by obtaining an appraisal","paragraph_id":"para_1048"},{"text":"from another art expert.183","paragraph_id":"para_1049"},{"text":"Like the purchasers in Krahmer who were owed no duty by Christie’s, the","paragraph_id":"para_1050"},{"text":"plaintiffs and Cloudbreak were owed no duty by the Gig2 Defendants, Needham, or","paragraph_id":"para_1051"},{"text":"Kathuria—their counterparties in the negotiations. Katz was acting on behalf of","paragraph_id":"para_1052"},{"text":"Gig2, and Kathuria and Needham were acting on behalf of UpHealth.184","paragraph_id":"para_1053"},{"text":"181 Id. at 780.","paragraph_id":"para_1054"},{"text":"182 Id. at 777.","paragraph_id":"para_1055"},{"text":"183 Id. at 781.","paragraph_id":"para_1056"},{"text":"184 The plaintiffs rely in part on BTIG, LLC v. Palantir Technologies, where the court held","paragraph_id":"para_1057"},{"text":"that the statute of limitations was tolled until “previously secret documents” became public,","paragraph_id":"para_1058"},{"text":"which revealed an alleged scheme to undercut BTIG’s brokered deal of Palantir stock. Pls.’","paragraph_id":"para_1059"},{"text":"Answering Br. 20 (citing 2020 WL 95660, at *2, 5 (Del. Super. Jan. 3, 2020)). There is a","paragraph_id":"para_1060"},{"text":"critical difference, though. The court in BTIG observed that agreements requiring BTIG","paragraph_id":"para_1061"},{"text":"to disclose to Palantir any brokered deal of Palantir stock “present[ed] a situation that","paragraph_id":"para_1062"},{"text":"seemingly involves good faith and fair dealing,” noting that it would be “strange” to allow","paragraph_id":"para_1063"},{"text":"41","paragraph_id":"para_1064"},{"text":"Additionally, as in Krahmer, nothing prevented the plaintiffs from doing their own","paragraph_id":"para_1065","court_paragraph":41},{"text":"diligence into the Portfolio Companies and requesting additional information on","paragraph_id":"para_1066"},{"text":"their financial wellbeing. Their failure to do so does not make any injury suffered","paragraph_id":"para_1067"},{"text":"inherently unknowable.","paragraph_id":"para_1068"},{"text":"The disclaimers in the June and October Presentations also would have put","paragraph_id":"para_1069"},{"text":"the plaintiffs on inquiry notice that Needham had not “diligenced” the information","paragraph_id":"para_1070"},{"text":"provided.185 The October Presentation stated that Needham was not responsible for","paragraph_id":"para_1071"},{"text":"its veracity and that the information provided “had been prepared by management","paragraph_id":"para_1072"},{"text":"of [UpHealth] and involve[d] significant elements of subjective judgment and","paragraph_id":"para_1073"},{"text":"analysis, which may or may not be correct.”186 The June Presentation included a","paragraph_id":"para_1074"},{"text":"similar warning.187 These disclaimers would have put the plaintiffs on notice of","paragraph_id":"para_1075"},{"text":"potential inaccuracies in the presentations and that they should conduct their own","paragraph_id":"para_1076"},{"text":"analysis.188","paragraph_id":"para_1077"},{"text":"Palantir to “use this information, with impunity, and negotiate side deals that cut out the","paragraph_id":"para_1078"},{"text":"disclosing parties.” 2020 WL 95660, at *6. This reasoning was based on a duty Palantir","paragraph_id":"para_1079"},{"text":"purportedly owed to BTIG. Id. The court contrasted that situation to the one in Krahmer","paragraph_id":"para_1080"},{"text":"“where the auction house’s only duty was to the owner of the artwork and not to the","paragraph_id":"para_1081"},{"text":"[purchasers].” Id. at *5. In this way, the present case is more like Krahmer than BTIG.","paragraph_id":"para_1082"},{"text":"The defendants were acting on behalf of a counterparty bargaining across the table from","paragraph_id":"para_1083"},{"text":"Cloudbreak and the plaintiffs.","paragraph_id":"para_1084"},{"text":"185 Pls.’ Answering Br. 20.","paragraph_id":"para_1085"},{"text":"186 See UpHealth Oct. Presentation (Disclaimer & Process Overview).","paragraph_id":"para_1086"},{"text":"187 See Needham Opening Br. 8-9.","paragraph_id":"para_1087"},{"text":"188 See, e.g., Vichi v. Koninklijke Philips Elecs., N.V., 85 A.3d 725, 790-91 (Del. Ch. 2014)","paragraph_id":"para_1088"},{"text":"(holding that plaintiff was on inquiry notice of its claim that defendant fraudulently induced","paragraph_id":"para_1089"},{"text":"42","paragraph_id":"para_1090"},{"text":"* * *","paragraph_id":"para_1091","court_paragraph":42},{"text":"The plaintiffs’ claims in Counts I, III, V, and VI (insofar as it relates to alleged","paragraph_id":"para_1092"},{"text":"misrepresentations and omissions in diligence materials) accrued no later than","paragraph_id":"para_1093"},{"text":"November 2020. The plaintiffs were on inquiry notice by that time. But this lawsuit","paragraph_id":"para_1094"},{"text":"was not filed until June 3, 2024—more than three years later. These claims are","paragraph_id":"para_1095"},{"text":"dismissed as untimely.","paragraph_id":"para_1096"},{"text":"D. The Remaining Claims","paragraph_id":"para_1097"},{"text":"With several claims dismissed for untimeliness (Counts I, III, V, and part of","paragraph_id":"para_1098"},{"text":"VIII), lack of standing (Count II), or absence of personal jurisdiction over","paragraph_id":"para_1099"},{"text":"Continental (Count IV), just three remain. They are: (1) the timely aspects of the","paragraph_id":"para_1100"},{"text":"DTPA claim again the Gig2 Defendants, UpHealth, Kathuria, and Needham","paragraph_id":"para_1101"},{"text":"(Count VIII); (2) civil conspiracy against the Gig2 Defendants, UpHealth and","paragraph_id":"para_1102"},{"text":"Kathuria (Count VI); and (3) unjust enrichment against the Sponsor and Katz","paragraph_id":"para_1103"},{"text":"(Count VII). Each of these claims is subject to the reasonable conceivability","paragraph_id":"para_1104"},{"text":"standard.189 None meet it.","paragraph_id":"para_1105"},{"text":"it to enter a loan agreement by falsely promising to stand behind a joint venture, where the","paragraph_id":"para_1106"},{"text":"loan documents included “express statements” that the defendant was not a guarantor to","paragraph_id":"para_1107"},{"text":"loan).","paragraph_id":"para_1108"},{"text":"189 The applicable pleading standard is explained above. See supra notes 129-131 and","paragraph_id":"para_1109"},{"text":"accompanying text.","paragraph_id":"para_1110"},{"text":"43","paragraph_id":"para_1111"},{"text":"1. The DTPA Claim","paragraph_id":"para_1112","court_paragraph":43},{"text":"The DTPA prohibits participation in a “deceptive trade practice . . . in the","paragraph_id":"para_1113"},{"text":"course of a business, vocation, or occupation.”190 Its purpose is “to prevent ‘patterns","paragraph_id":"para_1114"},{"text":"of deceptive conduct,’ rather than isolated incidents.”191 A DTPA claim cannot be","paragraph_id":"para_1115"},{"text":"arise from wrongdoing “in the past” that is not ongoing.192 A plaintiff must","paragraph_id":"para_1116"},{"text":"demonstrate “a reasonable apprehension of a future wrong” that could support","paragraph_id":"para_1117"},{"text":"injunctive relief.193","paragraph_id":"para_1118"},{"text":"The DTPA claim here concerns actions taken years ago.194 The plaintiffs state","paragraph_id":"para_1119"},{"text":"that “[Kathuria and the Gig2 Defendants] Defendants engaged in deceptive trade","paragraph_id":"para_1120"},{"text":"practices by making false representations and omissions of material facts in","paragraph_id":"para_1121"},{"text":"connection with and regarding the sponsor and management services . . . in","paragraph_id":"para_1122"},{"text":"connection with the merger.”195 They identify four such matters: (1) “[f]alse","paragraph_id":"para_1123"},{"text":"190 6 Del. C. § 2532; see also Am. Compl. ¶ 194.","paragraph_id":"para_1124"},{"text":"191 EDIX Media Grp., Inc. v. Mahani, 2006 WL 3742595, at *12 (Del. Ch. Dec. 12, 2006)","paragraph_id":"para_1125"},{"text":"(citation omitted); see also Coretel Am., Inc. v. Oak Point P’rs, LLC, 2022 WL 2903104,","paragraph_id":"para_1126"},{"text":"at *11 (Del. Super. July 21, 2022).","paragraph_id":"para_1127"},{"text":"192 Coretel, 2022 WL 2903104, at *11 (dismissing a DTPA claim based on past conduct);","paragraph_id":"para_1128"},{"text":"see also Registered Agent Sols., Inc. v. Corp. Serv. Co., 2022 WL 911253, at *6 (D. Del.","paragraph_id":"para_1129"},{"text":"Mar. 28, 2022).","paragraph_id":"para_1130"},{"text":"193 Coretel, 2022 WL 2903104, at *9 (citing Agilent Techs., Inc. v. Kirkland, 2009 WL","paragraph_id":"para_1131"},{"text":"119865, at *10 (Del. Ch. Jan. 20, 2009)); see also Agilent, 2022 WL 2903104, at *10","paragraph_id":"para_1132"},{"text":"(explaining that “relief under the statute is dependent on the plaintiff’s entitlement to","paragraph_id":"para_1133"},{"text":"injunctive relief”).","paragraph_id":"para_1134"},{"text":"194 Am. Compl. ¶¶ 195-96.","paragraph_id":"para_1135"},{"text":"195 Id. ¶ 195.","paragraph_id":"para_1136"},{"text":"44","paragraph_id":"para_1137"},{"text":"statements regarding the financial stability and projected growth of UpHealth’s","paragraph_id":"para_1138","court_paragraph":44},{"text":"subsidiaries”; (2) the “[f]ailure to disclose material adverse information regarding","paragraph_id":"para_1139"},{"text":"the financial condition and business operations of UpHealth’s subsidiaries”;","paragraph_id":"para_1140"},{"text":"(3) “[d]eliberate delay and obstruction in providing the necessary documentation for","paragraph_id":"para_1141"},{"text":"Plaintiffs to exercise their options and sell their shares”; and (4) “[m]isleading","paragraph_id":"para_1142"},{"text":"statements and omissions about the timing and filing of the [Form] S-8 registration","paragraph_id":"para_1143"},{"text":"statement.”196 The claim is time-barred insofar as it rests on the first two purported","paragraph_id":"para_1144"},{"text":"deceptions.197","paragraph_id":"para_1145"},{"text":"The plaintiffs never identify which of the twelve types of “deceptive trade","paragraph_id":"para_1146"},{"text":"practices” in the statute are implicated.198 Of the two “broad areas” encompassed by","paragraph_id":"para_1147"},{"text":"the statute—“(i) false or misleading use of trademarks or other trade identification","paragraph_id":"para_1148"},{"text":"and (ii) deceptive advertising”199—their allegations fall closer to the latter category.","paragraph_id":"para_1149"},{"text":"It is a stretch to say that either category applies with respect to the third and fourth","paragraph_id":"para_1150"},{"text":"alleged misstatements or omissions highlighted by the plaintiffs.","paragraph_id":"para_1151"},{"text":"196 Id. The plaintiffs caveat this allegation by stating that their claim is not expressly limited","paragraph_id":"para_1152"},{"text":"to these four identified misrepresentations or omissions. Id. But they do not explain what","paragraph_id":"para_1153"},{"text":"other problematic trade practices give rise to their claim.","paragraph_id":"para_1154"},{"text":"197 See supra Section II.C.","paragraph_id":"para_1155"},{"text":"198 See 6 Del. C. § 2532(a).","paragraph_id":"para_1156"},{"text":"199 See Del. Solid Waste Auth. v. E. Shore Env’t, Inc., 2002 WL 537691, at *4 (Del. Ch.","paragraph_id":"para_1157"},{"text":"Mar. 28, 2002).","paragraph_id":"para_1158"},{"text":"45","paragraph_id":"para_1159"},{"text":"Even if deceptive advertising were pleaded, however, the claim would fail","paragraph_id":"para_1160","court_paragraph":45},{"text":"because the plaintiffs did not plead a “pattern of conduct or any reasonable","paragraph_id":"para_1161"},{"text":"apprehension of a future wrong.”200 For the portion of the claim that is not","paragraph_id":"para_1162"},{"text":"time-barred, the challenged conduct concerns the plaintiffs’ receipt of merger","paragraph_id":"para_1163"},{"text":"consideration. The pertinent events are isolated ones in the past; none involve","paragraph_id":"para_1164"},{"text":"continuing harm. The plaintiffs argue otherwise because New UpHealth recently","paragraph_id":"para_1165"},{"text":"profited by selling its Cloudbreak subsidiary to a private equity firm, which they say","paragraph_id":"para_1166"},{"text":"shows “the theft of Cloudbreak, and [that] Defendants[’] enrichment as a result of","paragraph_id":"para_1167"},{"text":"that theft, is continuing to present day.”201 But they cannot explain how this sale—","paragraph_id":"para_1168"},{"text":"or any “theft”—reveals an “pattern” of deceptive conduct.202 If anything, it confirms","paragraph_id":"para_1169"},{"text":"that the alleged misconduct is in the past.203","paragraph_id":"para_1170"},{"text":"The DTPA claim is therefore dismissed.","paragraph_id":"para_1171"},{"text":"200 Tycon Peak Cap. Mgmt., LLC v. Mobile Invs. Investco, LLC, 2022 WL 34688, at *28","paragraph_id":"para_1172"},{"text":"(Del. Ch. Jan. 4, 2022) (dismissing a DTPA claim where the plaintiff “d[id] not identify a","paragraph_id":"para_1173"},{"text":"specific statutory provision in the DTPA that [the defendants] breached” and failed to plead","paragraph_id":"para_1174"},{"text":"future harm).","paragraph_id":"para_1175"},{"text":"201 Pls.’ Answering Br. 75-76.","paragraph_id":"para_1176"},{"text":"202 See supra note 131 and accompanying text (explaining that there is no requirement that","paragraph_id":"para_1177"},{"text":"the court accept conclusory assertions “unsupported by allegations of specific facts” on a","paragraph_id":"para_1178"},{"text":"motion to dismiss); Lukens, 757 A.2d at 727.","paragraph_id":"para_1179"},{"text":"203 See Am. Compl. ¶¶ 122, 124, 132, 148.","paragraph_id":"para_1180"},{"text":"46","paragraph_id":"para_1181"},{"text":"2. Civil Conspiracy Regarding Share Transfer","paragraph_id":"para_1182","court_paragraph":46},{"text":"The plaintiffs aver that the Gig2 Defendants, Kathuria, and Continental","paragraph_id":"para_1183"},{"text":"engaged in a civil conspiracy to “inhibit and delay [their] contractual right to obtain","paragraph_id":"para_1184"},{"text":"their [p]er [s]hare [m]erger [c]onsideration to protect the perceived financial health","paragraph_id":"para_1185"},{"text":"of UpHealth.”204 Because the court lacks personal jurisdiction over Continental,205","paragraph_id":"para_1186"},{"text":"I consider the claim as alleged against the remaining defendants. This claim has","paragraph_id":"para_1187"},{"text":"several defects and must be dismissed.","paragraph_id":"para_1188"},{"text":"“Civil conspiracy is not an independent cause of action; it must be predicated","paragraph_id":"para_1189"},{"text":"on an underlying wrong.”206 The alleged underlying act is the defendants’","paragraph_id":"para_1190"},{"text":"“wrongful[] enrich[ment] . . . through breach of the UpHealth BCA.”207 But “unless","paragraph_id":"para_1191"},{"text":"the breach also constitutes an independent tort, a breach of contract cannot constitute","paragraph_id":"para_1192"},{"text":"an underlying wrong on which a claim for civil conspiracy could be based.”208","paragraph_id":"para_1193"},{"text":"Even if an underlying tort were present, there are no well-pleaded facts from","paragraph_id":"para_1194"},{"text":"which it can be reasonably inferred that a meeting of the minds was reached to deny","paragraph_id":"para_1195"},{"text":"204 Id. ¶ 186.","paragraph_id":"para_1196"},{"text":"205 See supra Section II.A.","paragraph_id":"para_1197"},{"text":"206 Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 893 (Del. Ch. 2009).","paragraph_id":"para_1198"},{"text":"207 Am. Compl. ¶ 185.","paragraph_id":"para_1199"},{"text":"208 Kuroda, L.L.C., 971 A.2d at 893. The plaintiffs were not parties to the UpHealth BCA,","paragraph_id":"para_1200"},{"text":"and the UpHealth BCA expressly disclaimed any intent to convey third-party beneficiary","paragraph_id":"para_1201"},{"text":"status. See supra notes 117-118 and accompanying text. A civil conspiracy claim is not a","paragraph_id":"para_1202"},{"text":"back door for a contractual non-party to qualify as a third-party beneficiary. See Sinex v.","paragraph_id":"para_1203"},{"text":"Bishop, 2005 WL 3007805, at *3 (Del. Super. Oct. 27, 2005).","paragraph_id":"para_1204"},{"text":"47","paragraph_id":"para_1205"},{"text":"the plaintiffs timely delivery of their merger consideration. The sole alleged","paragraph_id":"para_1206","court_paragraph":47},{"text":"participation in the supposed conspiracy is: “[u]pon information and belief,","paragraph_id":"para_1207"},{"text":"[Kathuria and the Gig2 Defendants] instructed Continental to delay the payment” to","paragraph_id":"para_1208"},{"text":"the plaintiffs.209 This conclusory and speculative assertion cannot sustain a claim.210","paragraph_id":"para_1209"},{"text":"3. Unjust Enrichment","paragraph_id":"para_1210"},{"text":"The last remaining claim is for unjust enrichment against the Sponsor and","paragraph_id":"para_1211"},{"text":"Katz. The plaintiffs posit that the Sponsor and Katz’s “wrongful conduct” destroyed","paragraph_id":"para_1212"},{"text":"the value of the plaintiffs’ investment in Cloudbreak, making it inequitable for those","paragraph_id":"para_1213"},{"text":"defendants to retain a benefit.211","paragraph_id":"para_1214"},{"text":"Unjust enrichment is the “unjust retention of a benefit to the loss of another,","paragraph_id":"para_1215"},{"text":"or the retention of money or property of another against the fundamental principles","paragraph_id":"para_1216"},{"text":"of justice or equity and good conscience.”212 The plaintiffs must plead (1) an","paragraph_id":"para_1217"},{"text":"enrichment, (2) an impoverishment, (3) a relation between the enrichment and","paragraph_id":"para_1218"},{"text":"impoverishment, and (4) the absence of justification.213 The third element is lacking.","paragraph_id":"para_1219"},{"text":"209 Am. Compl. ¶ 167.","paragraph_id":"para_1220"},{"text":"210 See supra note 104 (citing cases observing that conclusory allegations cannot sustain a","paragraph_id":"para_1221"},{"text":"claim).","paragraph_id":"para_1222"},{"text":"211 Am. Compl. ¶¶ 188-92.","paragraph_id":"para_1223"},{"text":"212 Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).","paragraph_id":"para_1224"},{"text":"213 Capano v. Ecofibre Ltd., 2025 WL 419494, at *1 (Del. Ch. Feb. 5, 2025).","paragraph_id":"para_1225"},{"text":"48","paragraph_id":"para_1226"},{"text":"The alleged impoverishment is the plaintiffs’ loss of “significant value in","paragraph_id":"para_1227","court_paragraph":48},{"text":"[their] investment in Cloudbreak.”214 The Sponsor and Katz (through his control of","paragraph_id":"para_1228"},{"text":"the Sponsor) were allegedly enriched through two forms of consideration: (1) the","paragraph_id":"para_1229"},{"text":"“Sponsor Shares” received in the SPAC for a nominal price and (2) management","paragraph_id":"para_1230"},{"text":"fees charged in searching for a target.215 Yet the plaintiffs plead no a link between","paragraph_id":"para_1231"},{"text":"the impoverishment and enrichment. Any alleged tie is attenuated at best.","paragraph_id":"para_1232"},{"text":"The plaintiffs likely cannot make this connection because they are not","paragraph_id":"para_1233"},{"text":"associated with Katz or the Sponsor.216 “Although the doctrine of unjust enrichment","paragraph_id":"para_1234"},{"text":"is one of ‘substantial flexibility,’ it is axiomatic that there must be some relationship","paragraph_id":"para_1235"},{"text":"between the parties.”217 The plaintiffs must “show[] that the defendant[s] w[ere]","paragraph_id":"para_1236"},{"text":"unjustly enriched by the plaintiff[s] who acted for the defendant[s’] benefit.”218","paragraph_id":"para_1237"},{"text":"214 Am. Compl. ¶ 189.","paragraph_id":"para_1238"},{"text":"215 Id. ¶ 190; see id. ¶ 65 (defining “Sponsor Shares” and “Management Fees”). Aside","paragraph_id":"para_1239"},{"text":"from this description of SPACs’ practices generally, the plaintiffs do not allege that the","paragraph_id":"para_1240"},{"text":"Sponsor ever received management fees.","paragraph_id":"para_1241"},{"text":"216 The plaintiffs allege that the unjust enrichment claim survives because Edwards voted","paragraph_id":"para_1242"},{"text":"for the merger during the UpHealth Board vote. Pls.’ Answering Br. 63-64. This purported","paragraph_id":"para_1243"},{"text":"“enrichment” is unpleaded in the Complaint. Regardless, Edwards’s vote as an UpHealth","paragraph_id":"para_1244"},{"text":"director is distinct from the impoverishment he allegedly suffered as a Cloudbreak member.","paragraph_id":"para_1245"},{"text":"217 MetCap Secs. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *6 (Del. Ch. May","paragraph_id":"para_1246"},{"text":"16, 2007) (citing Palese, 2006 WL 1875915, at *5); see also Stein v. Wind Energy Hldgs.,","paragraph_id":"para_1247"},{"text":"2022 WL 17590862, at *9 (Del. Super. Dec. 13, 2022) (dismissing an unjust enrichment","paragraph_id":"para_1248"},{"text":"claim where it was “not reasonably conceivable that [the defendant] benefitted from","paragraph_id":"para_1249"},{"text":"anything the [p]laintiffs did” because the plaintiffs were “not essential to the merger”).","paragraph_id":"para_1250"},{"text":"218 Coretel, 2022 WL 2903104, at *11 (emphasis added); see also MetCap, 2007 WL","paragraph_id":"para_1251"},{"text":"1498989, at *6 (“A showing that the defendant was enriched unjustly by the plaintiff who","paragraph_id":"para_1252"},{"text":"acted for the defendant’s benefit is essential.”).","paragraph_id":"para_1253"},{"text":"49","paragraph_id":"para_1254"},{"text":"Nothing of the sort is pleaded in the Complaint. The only action cited is the","paragraph_id":"para_1255","court_paragraph":49},{"text":"plaintiffs’ consent to the Cloudbreak BCA.219 But “[i]t is not enough that the","paragraph_id":"para_1256"},{"text":"defendant[s] received a benefit from the activities of the plaintiff[s].”220","paragraph_id":"para_1257"},{"text":"Because the plaintiffs have not established all elements of their unjust","paragraph_id":"para_1258"},{"text":"enrichment claim, it is dismissed.","paragraph_id":"para_1259"},{"text":"III. CONCLUSION","paragraph_id":"para_1260"},{"text":"The defendants’ motions to dismiss are granted. The court lacks personal","paragraph_id":"para_1261"},{"text":"jurisdiction over Continental, requiring the dismissal of Count IV in full and Count","paragraph_id":"para_1262"},{"text":"VIII as to Continental. Count II is dismissed for lack of standing. Counts I, III, V,","paragraph_id":"para_1263"},{"text":"and VII (in part) are dismissed as untimely. 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Supp. 2d 331, 338 (S.D.N.Y.1998), aff’d, 173 F.3d","paragraph_id":"para_1271"},{"text":"845 (2d Cir. 1999)).","paragraph_id":"para_1272"}],"word_count":13280,"cites":["564 U.S. 915","326 U.S. 310","173 F.3d\n845"],"cited_by":[],"sha256":"afe248f4330d9c158385446ada0623b339a3d89b1002057f6d7b0950377c8521","source_url":"http://courts.delaware.gov/Opinions/Download.aspx?id=382710","fetched_at":"2026-10-17T18:27:51.954+00:00","canonical":"https://legal.exploreworldai.com/ai/judgments/us/delch-2024-0591-lww-2025-07-25","risk_graph":"https://legal.exploreworldai.com/api/public/v1/risk?id=us:delch-2024-0591-lww-2025-07-25","relations_graph":"https://legal.exploreworldai.com/api/public/v1/relations?id=us:delch-2024-0591-lww-2025-07-25","changes":"https://legal.exploreworldai.com/api/public/v1/us-praxis/changes","agent":"https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:delch-2024-0591-lww-2025-07-25","neighbors":[{"id":"us:mdctspecapp-0284-24-2026-10-05","name":"3919 NEH v. 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