Halpert v. Zhang et al

Filing 20

MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 8/7/2013. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

PHILIP HALPERT, derivatively on
behalf of ASIAINFO-LINKAGE, INC,
Plaintiff,
v.
STEVE ZHANG, JIAN DING, LIBIN
SUN, SEAN SHAO, YUNGANG LU,
DAVIN A. MACKENZIE, THOMAS J.
MANNING, SUNING TIAN, XIWEI
HUANG, and GUOXIANG LIU,

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Civ. No. 12-1339-SLR

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Defendants,
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and
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ASIAINFO-LINKAGE, INC., a Delaware )
Corporation,
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Nominal Defendant.
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Brian E. Farnan, Esquire of Farnan LLP, Wilmington, Delaware. Counsel for Plaintiff.
Of Counsel: Eduard Korsinsky, Esquire, and Steven J. Purcell, Esquire of Levi &
Korsinsky, LLP.
Arthur Dent, Esquire of Potter Anderson & Corroon LLP, Wilmington, Delaware.
Counsel for Defendants. Of Counsel: David H. Kistenbroker, Esquire, Joni S.
Jacobsen, Esquire, and Angela M. Liu, Esquire of Dechert LLP.

MEMORANDUM OPINION

1,

2013
Dated: August
Wilmington, Delaware

R~N,~~ge
I. INTRODUCTION

Plaintiff Philip Halpert ("Halpert"), as a shareholder, brings this action derivatively
on behalf of Asialnfo-Linkage, Inc. ("Asialnfo"), a Delaware corporation that sells
telecommunications software and information technology. (0.1. 1 at 1J1J 10, 33) Halpert
alleges demand futility, a breach of fiduciary duty, waste of corporate assets, and unjust
enrichment against defendants, who include the members of Asialnfo's board of
directors and some of Asialnfo's executives. (/d. at 1J1J 37, 45, 51, 56) Specifically,
Halpert alleges that defendants knowingly violated the terms of a shareholder-approved
2011 Stock Incentive Plan ("the Plan"), which limited the number of stock options
granted as "performance-based compensation" to 100,000 per year per recipient. (/d.
at 1J1J 29, 30) Under this supposed abuse of authority, defendant Steve Zhang
("Zhang"), an officer and director of Asialnfo, received 750,000 stock options and
defendant Guoxiang Liu ("Liu"), an officer of Asia Info, received 110,000 stock options.

(/d. at 1J 30) Halpert requests damages, injunctive relief, and rescission of the excess
stock options, as well as corrective measures. (/d. at 1J1J A, B, C)
Currently before the court is defendants' motion to dismiss under Federal Rules
of Civil Procedure 23.1 and 12(b)(6). 1 (0.1. 10) The court has jurisdiction over this
matter pursuant to 28 U.S.C. § 1332(a).

II. BACKGROUND

1

AII defendants move to dismiss the case pursuant to Rule 23.1, while only the
individual defendants move to dismiss pursuant to Rule 12(b)(6).

Nominal defendant Asialnfo is a Delaware corporation and a provider of
telecommunications software and information technology. (D.I. 1 at 11 10) Asia Info had
a nine-member board of directors (hereinafter, the "Board") at the time of the alleged
misconduct, comprising defendants Jian Ding ("Ding"), Xiwei Huang ("Huang"), Yugang
Lu ("Lu"), David MacKenzie ("Mackenzie"), Thomas Manning ("Manning"), Sean Shao
("Shao"), Libin Sun ("Sun"), Suning Tian ("Tian"), and Zhang. (/d. at1111 11-19) Ofthe
directors, both Zhang and Sun are employed by Asialnfo, while the others are not. (/d.
at 1111 11, 13) Zhang is the President and CEO of Asia Info and Sun is the Executive CoChairman of the Board. (/d.) Defendant Liu is the Executive Vice President of Asia Info.
(/d. at 1f 20)

On February 19, 2011, the Board adopted the Plan, which "authorizes the
[c]ompany to grant restricted stock awards, stock options, and other types of equity
awards to the [c]ompany's executive officers, directors, and other employees." (/d. at 1f
22) The shareholders approved the Plan on April 21, 2011. (ld.) Grants under the
Plan are determined by the Compensation Committee. (/d. at 1f 23) At the relevant
time, directors Ding, Mackenzie, Tian, and Shao were on the Compensation
Committee. (D. I. 1 at 11 21) According to the 2012 Proxy Statement, "Zhang ... and
... Sun [also] participate[d] in the discussions and decisions regarding salaries and
incentive compensation for all of [Asialnfo's] executive officers, except ... regarding
their own salary and incentive compensation." (D. I. 15, ex. A at 9)2

2

The court can consider documents that are referenced in the complaint,
including exhibits, on a motion to dismiss. Tellabs, 551 U.S. at 322; Oshiver, 38 F.3d at
1384-85 n.2.

2

On December 6, 2011, the Compensation Committee granted 750,000 stock
options to Zhang and 110,000 stock options to Liu, ostensibly under the Plan. (D. I. 1 at
1J24) Halpert alleges that these actions directly contradicted Section 4.2 of the Plan,
which states that "no individual may be granted within any one fiscal year of [Asialnfo]
one or more Awards intended to qualify as Performance-Based Compensation which in
the aggregate are for more than (a) 100,000 shares ... [or] up to 200,000 shares ... to
newly hired or newly promoted individuals." (/d. at 1J26) The Plan defines
"performance-based compensation" as that which satisfies§ 162(m) of the Internal
Revenue Code ("IRC"), which generally disallows a tax deduction to public companies
for compensation in excess of $1 million, but carves out an exception for performancebased compensation. (ld. at 1J28) Halpert avers that the grants to Zhang and Liu
exceeded the Board's authority and harmed Asialnfo and its shareholders. (ld. at 1J1l
30, 32)

Ill. STANDARD OF REVIEW
A. Federal Rule of Civil Procedure 23.1
Pursuant to Federal Rule of Civil Procedure 23.1 (b)(3), a shareholder bringing a
derivative action must file a verified complaint that "state[s] with particularity:"
(A) any effort by the plaintiff to obtain the desired action from the directors
or comparable authority and, if necessary, from the shareholders or
members; and
(B) the reasons for not obtaining the action or not making the effort.
Therefore, Rule 23.1 provides a heightened pleading standard. "Although Rule 23.1
provides the pleading standard for derivative actions in federal court, the substantive

3

rules for determining whether a plaintiff has satisfied that standard 'are a matter of state
law."' King v. Baldino, 409 F. App'x 535, 537 (3d Cir. 2010) (citing Blasband v. Rales,
971 F.2d 1034, 1047 (3d Cir. 1992)). "Thus, federal courts hearing shareholders'
derivative actions involving state law claims apply the federal procedural requirement of
particularized pleading, but apply state substantive law to determine whether the facts
demonstrate [that] demand would have been futile and can be excused." Kantor v.
Barella, 489 F.3d 170, 176 (3d Cir. 2007).
In this regard, the Delaware Supreme Court has explained that
the entire question of demand futility is inextricably bound to issues of
business judgment and the standard of that doctrine's applicability .... It
is a presumption that in making a business decision the directors of a
corporation acted on an informed basis, in good faith and in the honest
belief that the action taken was in the best interests of the company.
Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984), overruled on other grounds by Brehm
v. Eisner, 746 A.2d 244, 253-54 (Del. 2000). "The key principle upon which this area
of ... jurisprudence is based is that the directors are entitled to a presumption that
they were faithful to their fiduciary duties." Beam ex. ref. Martha Stewart Living
Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1048 (Del. 2004). Therefore, the burden is
on the party challenging a board's decision to establish facts rebutting the presumption
that the business judgment rule applies. Levine v. Smith, 591 A.2d 194, 205-06 (Del.
1991 ). By promoting the exhaustion of intracorporate remedies as an alternate dispute
resolution over immediate recourse to litigation, "the demand requirement is a
recognition of the fundamental precept that directors manage the business and affairs
of corporations." Aronson, 473 A.2d at 811-12.

4

B. Federal Rule of Civil Procedure 12(b)(6)
A motion filed under Federal Rule of Civil Procedure 12(b)(6) tests the
sufficiency of a complaint's factual allegations. Bell At/. Corp. v. Twombly, 550 U.S.
544, 555; Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A complaint must
contain "a short and plain statement of the claim showing that the pleader is entitled to
relief, in order to give the defendant fair notice of what the ... claim is and the grounds
upon which it rests." Twombly, 550 U.S. at 545 (internal quotation marks omitted)
(interpreting Fed. R. Civ. P. 8(a)). Consistent with the Supreme Court's rulings in

Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Third Circuit requires a twopart analysis when reviewing a Rule 12(b)(6) motion. Edwards v. A.H. Cornell & Son,

Inc., 610 F.3d 217,219 (3d Cir. 2010); Fowlerv. UPMC Shadyside, 578 F.3d 203,210
(3d Cir. 2009). First, a court should separate the factual and legal elements of a claim,
accepting the facts and disregarding the legal conclusions. Fowler, 578 F.3d. at 21011. Second, a court should determine whether the remaining well-pled facts sufficiently
show that the plaintiff "has a 'plausible claim for relief."' /d. at 211 (quoting Iqbal, 556
U.S. at 679). As part of the analysis, a court must accept all well-pleaded factual
allegations in the complaint as true, and view them in the light most favorable to the
plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Christopher v. Harbury, 536
U.S. 403, 406 (2002); Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
In this regard, a court may consider the pleadings, public record, orders, exhibits
attached to the complaint, and documents incorporated into the complaint by reference.

5

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Oshiver v. Levin,
Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n.2 (3d Cir. 1994).

The court's determination is not whether the non-moving party "will ultimately
prevail" but whether that party is "entitled to offer evidence to support the claims."
United States ex ref. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir.

2011 ). This "does not impose a probability requirement at the pleading stage," but
instead "simply calls for enough facts to raise a reasonable expectation that discovery
will reveal evidence of [the necessary element]." Phillips, 515 F.3d at 234 (quoting
Twombly, 550 U.S. at 556). The court's analysis is a context-specific task requiring the

court "to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 66364.
IV. DISCUSSION
A. Demand Futility
Halpert first alleges that demand on the Board would have been futile and was
therefore excused. (0.1. 1 at 111133-42) There are two tests that may establish demand
futility. In cases challenging a board's action, demand is excused if a plaintiff raises a
reasonable doubt that a majority of the board was disinterested and independent, or
that the challenged acts were a result of the board's valid business judgment. See
Aronson, 473 A.2d at 814. When a board did not act or refrained from acting, however,

the plaintiff must "create a reasonable doubt that, as of the time the complaint [wa]s
filed, the board of directors could have properly exercised its independent and

6

disinterested business judgment in responding to a demand." Rales v. 8/asband, 634
A.2d 927, 933-34 (Del. 1993).
Halpert and defendants disagree as to which test applies to the instant case.
While the Aronson test applies when half or more of the directors approved the
transaction at issue, the Rales test is appropriate when less than half of the directors
participated, i.e., when a committee's action is not attributed to the entire board. See
Ryan v. Gifford, 918 A.2d 341, 352 (Del. Ch. 2007). Defendants aver that the Rales
test applies because the Compensation Committee that "made the stock options
awards challenged herein" consisted of four members: Ding, Mackenzie, Tian, and
Shao. (D.I. 11 at 7) Since these four members constituted less than half of the ninemember board, defendants assert that the stock option grants were not the decision of
the Board. /d. Halpert, however, alleges that, consistent with representations in the
2012 Proxy Statement, Sun also participated "in the discussions and decisions
regarding salaries and incentive compensation," including the challenged stock option
grants to Zhang and Liu. 3 (D. I. 15, ex. A at 9)
The court takes Halpert's allegation that Sun participated in granting the stock
options at issue as true at the motion to dismiss stage, as his participation is explicitly
noted in the 2012 Proxy Statement. Therefore, the court counts Sun as a director who
participated in making the challenged grants. As Sun, together with the Compensation

3

Zhang was also mentioned in the 2012 Proxy Statement as a participant in
salary and incentive conversations, but the proxy statement notes that he did not
participate in setting his own compensation, which would include his receipt of options
being challenged herein.

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Committee, constituted a majority of the Board, the Aronson analysis, rather than the

Rales analysis, applies.
With this framework in mind, the Delaware Supreme Court has characterized the
exercise of determining demand futility as deciding whether, under the particularized
facts alleged, a reasonable doubt is created that (1) "the directors are disinterested and
independent," or (2) "the challenged transaction was otherwise the product of a valid
exercise of business judgment." /d. at 814; see also Brehm, 746 A.2d at 256 ("These
prongs are in the disjunctive. Therefore, if either prong is satisfied, demand is
excused."). "The spirit that clearly animates [this] test is a [c]ourt's unwillingness to set
aside the prerogatives of a board of directors unless the derivative plaintiff has shown
some reason to doubt that the board will exercise its discretion [in responding to
demand] impartially and in good faith." In re infoUSA, Inc. v. S'holders Litig., 953 A.2d
963, 986 (Del. Ch. 2007).
Under the first prong of Aronson, plaintiff avers that at least five members of the
Board - Sun and the four members of the Compensation Committee -are interested or
lack independence for reasons of substantial liability, special business relationships,
and/or Asialnfo's determination that they are not independent under NASDAQ
standards. Since the instant case involves facts that raise a reasonable doubt that the
stock option grants were a valid exercise of business judgment, the court need not
address whether a majority of the Board lacks disinterestedness or independence. See

Sanders v. Wang, Civ. No. 16640, 1999 WL 1044880, at *5 (Del. Ch. Nov. 8, 1999).
The second prong of Aronson examines whether a plaintiff's particularized
allegations raise a reasonable doubt that the challenged transaction was the product of

8

a valid exercise of business judgment. Aronson, 473 A.2d 805 at 814. Defendants'
business decisions are generally presumed valid. Beam, 845 A.2d at 1048. However,
"[a] board's knowing and intentional decision to exceed the shareholders' grant of
express (but limited) authority raises doubt regarding whether such a decision is a valid
exercise of business judgment and is sufficient to excuse a failure to make demand."
Ryan, 918 A.2d at 354; see also Weiss v. Swanson, 948 A.2d 433, 441 (Del. Ch. 2008)

("Allegations in a complaint rebut the business judgment rule where they support an
inference that the directors intended to violate the terms of the stockholder-approved
option plans.").
Halpert alleges that, since the Plan explicitly limits the number of stock options
that can be granted to an individual, the Board "violated an express, unambiguous
provision of the shareholder-approved ... Plan." (D.I. 1 at 1]38) Defendants do not
dispute that the annual ceiling on performance-based stock options per individual is
100,000 shares. Rather, they argue that the limitation applies only to "performancebased compensation" and that Halpert has not pled any facts to indicate that the stock
options at issue in this case were intended or required under the terms of the Plan to be
performance-based compensation. (D.I. 11 at 11) Specifically, defendants assert that
"the structure, types of awards, nature, and objectives of the Plan are 'more complex,
more intricate, and more nuanced' than [Halpert] alleges" and, thus, the challenged
stock options may not, in fact, have been performance-based compensation subject to
the 100,000 stock option limitation. (/d.)
Contrary to defendant's assertion, Halpert has pled particular facts to raise a
reasonable inference that the challenged grants were performance-based

9

compensation. Halpert avers that the challenged stock options were granted under the
Plan and intended to qualify as "tax deductible 'Performance-Based Compensation' as
defined in the ... Plan." (D. I. 1 at 111124, 28) Moreover, the 2012 Proxy Statement
provides that "awards issued under [Asialnfo's] stock incentive plans (including stock
options ... ) have been structured so that any taxable compensation derived ... should
not be subject to ... deductibility limitations" under§ 162(m) of the IRC. (/d. at 1128;
D. I. 5, ex. A) Any "compensation under an Award that satisfies the requirements of
Section 162(m)" paid to a CEO, CFO, or any of the three most highly compensated
executive officers - which includes Zhang and Liu - is "performance-based
compensation." (D.I. 1 at 1127) Therefore, under the well-pled facts and Asialnfo's own
characterization of the challenged grants, Halpert has established a prima facie case
that the Board exceeded its authority by awarding more stock options than authorized
under the Plan.
Defendants submit that this court's decision in Freedman v. Redstone, Civ. No.
12-1052, 2013 WL 3753426 (D. Del. July 16, 2013), supports their argument that the
Board's conduct was an exercise of valid business judgment under Aronson. (D.I. 19)
In Freedman, the court found that the terms of the shareholder-approved plan at issue
were not so unambiguous as to give rise to an inference, under the undisputed facts,
that a clear violation occurred. Without a particularized pleading that the board acted
knowingly or intentionally, the alleged violation, by itself, did not give rise to a
reasonable doubt that the board's action was a product of valid business judgment.

Freedman, 2013 WL 3753426; see also Ryan, 918 A.2d at 354 (requiring a "knowing
and intentional decision to exceed a shareholders' grant of authority"); Weiss, 948 A.2d
10

at 441 (requiring "an inference that the directors intended to violate" a shareholderapproved plan).
The instant case is distinguishable from Freedman because the Plan's limitation
on the Board's authority is undisputed, and the reasonable inference of a clear
violation, given the uncontroverted facts, is much stronger. The pleadings at bar are
analogous to those in Sanders, in which executives were granted at least 9.5 million
more shares than authorized by a shareholder-approved plan. Sanders, 1999 WL
1044880, at *1-*2. The Sanders court held that, when "it is clear from the
uncontroverted facts that the number of shares the board actually awarded exceeded
its limitation," the facts raise doubt that the board's actions were the result of a valid
exercise of business judgment. /d. at *5. Although the Sanders court did not mention
whether or not the plaintiffs alleged a knowing or intentional violation, it appears that the
challenged transaction was such a clear and undisputed violation that the violation,
alone, created a reasonable doubt that the board acted without knowledge. See id. at
*5 ("[T]he provision ... [was] not ambiguous and it [was] clear from the uncontroverted
facts that the number of shares the board actually awarded exceeded its limitation of six
million shares."); see also Landy v. D'Aiessandro, 316 F. Supp. 2d 49, 65-66 (D. Mass.
2004) (discussing the import of Sanders).
Here, the Plan contains a limitation on the number of stock options that the
Board can grant per year, similar to the provision in Sanders. Given the particularized
pleadings and Asialnfo's own characterization in the 2012 Proxy Statement that the
challenged grants were performance-based compensation, Halpert has established a
prima facie case that the Board exceeded its authority. Such a prima facie showing of
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a clear violation, alone, gives rise to a reasonable doubt that the challenged grants
were a valid excuse of business judgment. Accordingly, demand is excused under the
second prong of Aronson.

B. Federal Rule of Civil Procedure 12(b)(6)
Defendants also argue that Halpert's allegations of breach of fiduciary duty,
waste of corporate assets, and unjust enrichment fail to state a claim. The court
addresses each cause of action in turn.

1. Breach of fiduciary duty
To bring an action premised on the theory that directors breached their fiduciary
duties, a plaintiff must allege that directors intentionally engaged in bad faith or in
self-interested conduct that is not immunized by the exculpatory charter provision
permitted by 8 Del. C.§ 102(b)(7}. 4 McMillan v. lntercargo Corp., 768 A.2d 492, 495
(Del. Ch. 2000); see also Malpiede v. Townson, 780 A.2d 1075, 1094 (Del. 2001 ).
Halpert alleges that all defendants breached their fiduciary duty to Asia Info and
to the shareholders by exceeding the authority granted to them under the Plan and not
acting in good faith. (0.1. 1 at 111144-45) The court has found that, for purposes of
demand excusal, Halpert's particularized pleadings give rise to a reasonable doubt that
the Board's granting of stock options to Zhang and Liu was a valid exercise of business
4

Pursuant to 8 Del. C. § 102(b)(7}, the certificate of incorporation may contain:

A provision eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director: (i) For any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; ... or (iv) for any transaction from which the
director derived an improper personal benefit.
12

judgment. Because the standard under Rule 12(b)(6) is less stringent than that for
pleading factual particularity under Rule 23.1, "where [a] plaintiff alleges particularized
facts sufficient to prove demand futility under the second prong of Aronson, that plaintiff
a fortiori rebuts the business judgment rule for the purpose of surviving a motion to
dismiss pursuant to Rule 12(b)(6)." Ryan, 918 A.2d at 357; see also Weiss, 948 A.2d
at 448; McPadden v. Sidhu, 964 A.2d 1262, 1270 (Del. Ch. 2008). Therefore, Halpert
sufficiently pleads a breach of fiduciary duty.

2. Waste of corporate assets and unjust enrichment
Halpert further alleges that defendants caused a waste of corporate assets and
unjust enrichment. (D.I. 1 at 1J1l 51, 58) A claim of waste refers to "an exchange of
corporate assets for consideration so disproportionately small as to lie beyond the
range at which any reasonable person might be willing to trade."' White v. Panic, 783
A.2d 543, 554 (Del. 2001) (quoting Brehm, 746 A.2d at 263). "To prevail on a waste
claim ... , the plaintiff must overcome the general presumption of good faith by
showing that the board's decision was so egregious or irrational that it could not have
been based on a valid assessment of the corporation's best interests." /d. at 554 n. 36.
"[T]he decision must go so far beyond the bounds of reasonable business judgment
that its only explanation is bad faith." Stanziale v. Nachtomi (In re Tower Air, Inc.), 416
F.3d 229, 238 (3d Cir. 2005). "Unjust enrichment is the unjust retention of a benefit to
the loss of another, or the retention of money or property of another against the
fundamental principles of justice or equity and good conscience." Nemec v. Shrader,
991 A.2d 1120, 1130 (Del. 201 0) (citation omitted) (internal quotation marks omitted). It
requires: "(1) an enrichment, (2) an impoverishment, (3) a relation between the
13

enrichment and impoverishment, (4) the absence of justification, and (5) the absence of
a remedy at law." /d.
Halpert alleges that the Board caused Asialnfo to "waste valuable corporate
assets by granting the ... awards in excess of what was authorized under the ... Plan"
and that the directors acted in a manner that "no director of ordinary sound business
judgment" would act by awarding the stock options in question. (D.I. 1 at~ 51) Halpert
further alleges that defendants Zhang and Liu were unjustly enriched, at the expense of
Asialnfo, through the receipt of unauthorized personal financial benefits. (/d.

at~~

56,

58) Halpert avers that to allow the officers to retain the benefits "would be
unconscionable and against fundamental principles of justice, equity, and good
conscience." (/d.

at~

57) Defendants assert that Halpert's allegations of waste and

unjust enrichment fail to state a claim because Halpert has not alleged plausible facts
that the stock options were granted without justification. (/d. at 20)
The court has found that Halpert's complaint sufficiently alleges that the Board
violated an express provision of the Plan. The alleged breach of fiduciary duty calls into
question whether the challenged stock option grants could have been in Asia Info's best
interests and whether they caused Zhang and Liu to be unjustly enriched. Sanders,
1999 WL 1044880 at *1 0. At the motion to dismiss stage, the court cannot conclude
that there is no conceivable set of circumstances under which defendants unjustifiably
retained something of value. Moreover, the court cannot conclude at this time that
Halpert's breach of fiduciary duty claims provide an adequate remedy at law to bar
Halpert from also asserting unjust enrichment. In fact, the Delaware Court of Chancery
has held that a breach of fiduciary duty, if successful, may help a plaintiff prove a claim
14

for unjust enrichment. See Jackson Nat'/ Life Ins. Co. v. Kennedy, 741 A.2d 377, 394
(Del. Ch. 1999) ("If Plaintiffs succeed on the merits of their breach of fiduciary duty and
aiding and abetting claims, it is likely they will also be able to prove that neither
[defendant] can retain any benefit resulting from the disputed transaction 'justifiably' or
in accordance with 'the fundamental principles of justice or equity and good
conscience."'). Therefore, Halpert sufficiently pleads a claim for waste and unjust
enrichment, and defendants' motion to dismiss under Rule 12(b)(6) is denied in this
regard.

V. CONCLUSION
For the foregoing reasons, the court denies defendants' motion to dismiss under
Rule 23.1 and Rule 12(b)(6). (0.1. 11) An appropriate order shall issue.

15