Jordan v. Mirra
Filing
524
MEMORANDUM. Signed by Judge Gerald A. McHugh on 2/22/2022. (nmg)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
GIGI JORDAN
v.
RAYMOND A. MIRRA, JR.
:
:
:
:
:
McHUGH, J.
CIVIL ACTION
No. 14-1485
February 22, 2022
MEMORANDUM
This case and related litigation has been ongoing for the better part of a decade. It traces
the bitter fallout of a dispute that followed the division of the extensive financial, real estate, and
business assets of former spouses and business partners Plaintiff Gigi Jordan and Defendant
Raymond Mirra, which was amicable at the beginning. The respective parties have now brought
competing motions for summary judgment to resolve the final surviving claim of Jordan’s Second
Amended Complaint, ECF 176, which is the breach of warranty claim pleaded in Count VII. 1
Jordan alleges that Mirra breached the warranty, found in the parties’ Separation and
Distribution Agreement (“SDA”), in which both parties warranted that the SDA listed all assets in
which both Jordan and Mirra shared an interest. The gist of Jordan’s argument is that, although
Mirra listed all the entities in which Mirra or Jordan had a legal interest personally, he failed to
include various subsidiaries, intellectual property, and revenue streams owned by the listed
business entities that may have augmented her assessment of the value of the parent companies.
Counts I-VI and VIII-X were dismissed pursuant to the Court’s Memorandum and Order of
November 28, 2017, ECF 202 and 203, which adopted in whole Magistrate Judge Sherry R. Fallon’s Report
and Recommendation on the Motion to Dismiss, ECF 199. Claims I-VI, VIII-IX were principally dismissed
as barred by the Release Agreement that was found to apply to all the claims at issue except for the warranty
claim arising from the Separation and Distribution Agreement, with alternative grounds for dismissal found
applicable to individual claims including statute of limitations and insufficient pleadings.
1
She further complains that he failed to list an assortment of assets owned by him personally in
which she had an interest. From there Jordan argues that Mirra’s failure to list these assets deprived
Jordan of the opportunity to negotiate a better deal with Mirra. The damages she alleges are based
on the purported value of the assets at the time the parties entered into the SDA. As to most of the
items, I conclude that Jordan has not pointed to evidence that supports a breach related to Mirra’s
failure to disclose, either because they were subsidiary assets of listed companies, because Jordan
did not in fact have an interest in the assets, or because they did not have any value at the time of
the SDA. Additionally, in light of the terms of the SDA and the course of negotiation that led to
it, I conclude Jordan has not adduced sufficient evidence from the record to support a finding that
Mirra’s alleged breach of the SDA’s warranty caused damages. I will therefore deny Plaintiff
Jordan’s motion for summary judgment and grant Defendant Mirra’s motion for summary
judgment as to Count VII of the SAC. 2
I.
Procedural Background
The litigation between these parties has been long and contentious. While much of it has
been recounted in other opinions in this and related cases, I will briefly summarize it again here.
In the spring of 2008, Jordan and Mirra entered into several agreements that purported to
sever their business relationship and distribute the assets and liabilities which they jointly held.
Both parties were represented by counsel. Jordan was represented by Mark Petersen and Brian
Donnelly of Farella Braun + Martel LLP. See Jordan Opening Br. at 4, ECF 458. Mirra was
represented by his in-house counsel Joseph Triola and Jerald David August of Fox Rothschild.
Jordan’s motion is found at ECF 457 and Mirra’s at ECF 470. Both parties also have pending
motions to exclude the testimony of their opponent’s expert witness. Jordan has moved to exclude the
testimony of Yvette Austin Smith, ECF 467, and Mirra has moved to exclude the testimony of Charles
Lunden, ECF 472. In the order accompanying this memorandum these motions to exclude will both be
denied.
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2
See Mirra Opening Br. at 5, ECF 471. Of particular relevance to this litigation and described in
more detail in the following section of this opinion, were the Separation and Distribution
Agreement (“SDA”) and the Release Agreement. 3
In 2012 and 2013, Gigi Jordan filed parallel actions in the Southern District of New York
and the District of Delaware. The present action was first brought in the Southern District of New
York and later transferred to the District of Delaware. ECF 69. It originally alleged nine causes
of action against Mirra, including fraud and fraud in the inducement, breaches of various contracts,
breach of fiduciary duty, accounting, and the breach of warranty claim at issue today. 4 ECF 1.
The other action, originally filed in Delaware, alleged RICO claims based largely on the same
operative facts in which the SDA provided the crux of a scheme to defraud Jordan. See Complaint,
ECF 1, The Hawk Mountain LLC v. RAM Capital Group LLC, No. 13-2083 (D. Del. Dec. 23,
2013) (the “RICO Action”).
The RICO Action was dismissed on statute of limitations grounds as well as for failure to
state a claim. RICO ECF 457 (Report & Recommendation of M.J. Fallon); RICO ECF 472 (Order
Adopting R&R). A panel of the Third Circuit affirmed the dismissal in May 2017. Hawk
Mountain LLC v. RAM Capital Group LLC, 689 Fed. App’x 703 (3d Cir. 2017).
Following the transfer of the present action to the District of Delaware, Mirra and then codefendants moved to dismiss the operative Amended Complaint. ECF 113. In November 2017,
the Court, adopting the Report and Recommendation of Magistrate Judge Sherry R. Fallon, ECF
199, dismissed nine out of ten of the counts pleaded. ECF 202. The only claim to survive was the
The final and apparently complete set of agreements can be found at ECF 458, Ex. 7. All
references to these respective agreements in this memorandum shall be to that location in the docket.
3
4
There was a tenth count for declaratory judgment.
3
breach of warranty claim against Mirra that is being decided in the present opinion. The other
claims were dismissed on the principal ground that, as a matter of law, the Release Agreement
operated as a broad release of all claims that might arise between the parties related to the
agreements, except for those that arose “under the express terms and conditions of, and specified
in,” the various agreements. ECF 199, at 16 (quoting the Release Agreement). 5
Having largely prevailed on the motions to dismiss in the two actions, Mirra filed a
Counterclaim in the present action to recover legal fees and costs spent in defense of both those
actions on breach of contract claims based in the Release Agreement’s covenant not to sue. ECF
205. The Court granted summary judgment to Mirra on these claims, finding that Jordan breached
the Release Agreement’s covenant not to sue and that a provision in the SDA made attorneys’ fees
and costs available to prevailing party in any dispute. ECF 368 (Memo). The amount of
recoverable fees and costs has been left to be determined by a jury. ECF 369 (Order). 6
II.
Factual Background
A. The Nature of the Parties’ Business Relationships Prior to the SDA
A clear understanding of the nature of the assets in question is necessary to resolve the
pending motions. The parties’ jointly held interests derive from a business and romantic
relationship that lasted over a decade and a half. Their relationship began in the early 1990s and
involved various jointly held businesses, real estate investments, and investment accounts. Mirra
Dep. 43:21-44:22 (Nov. 24, 2015), ECF 458, Ex. 8. Perhaps the most successful of these
Magistrate Judge Fallon also found that many claims were barred by statute of limitations,
insufficient pleading as to fraud, and, as to the declaratory relief, no surviving predicate claim. ECF 199,
22-43.
5
A motion filed by Mirra to exclude the testimony of Jordan’s expert Richard L. Bazelon, whose
testimony concerns the reasonableness of Mirra’s requested attorneys’ fees, is currently pending and will
not be resolved in this memo or accompanying order. ECF 475.
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4
enterprises were Ambulatory Pharmaceutical Services Inc. and Specialty Pharmacy Inc., which
the parties sold to Amerisource Bergen in 2002. Id. 51:8-53:23. The parties viewed their interests
in these endeavors as a 50/50 relationship. See Resp. No. 2, Jordan’s Sec. Am. Resp. to Mirra’s
Aug. 22, 2018 Interrog. (adopting position and citing Mirra’s deposition testimony), ECF 460, Ex.
3. Until at least the early 2000s, both Jordan and Mirra appear to have played active roles in the
creation and development of these interests, though by the time of the SDA in 2008, Jordan had
largely stepped back into a passive investing role. See, e.g., Jordan Dep. 67:10-73:13 (Dec. 4,
2019), ECF 474, Ex. 55; Mirra Dep. 52:2-9, 53:10-55:11, 88:20-89:22 (Nov. 24, 2015), ECF 458,
Ex. 8.
Two of the parties’ business entities are at the center of the present dispute. The first is
RAM Capital Group LLC. RAM Capital Group LLC, which was listed on Schedule 2.1.1
“Recognized Joint Assets” of the SDA, was the parties’ principal investment and business services
vehicle. RAM Capital invested capital, made loans, and earned revenue by providing management
services to other companies that were owned by the parties. Both parties understood that RAM
Capital’s various interests were complex, but that the company generally functioned as a passthrough for the parties’ shared business interests. See RAM Capital Balance Sheet, ECF 474, Exs.
37, 38; Email between Jordan’s lawyers (Mar. 4, 2008), ECF 474, Ex. 21 (“I was told that this
LLC held notes, A/R and various investments.”); Jordan Dep. 72:19-24 (Dec. 4, 2019), ECF 474,
Ex. 55 (“Just as a general holding company for many of the other – managed and sort of implicated
overall the investing and operations of many other companies.”). There were various other entities
that also used the “RAM” name including, as relevant here, RAM Business Holdings LLC, and
RAM Realty Holdings LLC. By the time of the SDA, RAM Realty Holdings was the only other
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active and distinct RAM entity in which the parties shared a joint interest, 7 and it was listed on
Schedule 2.1.1, with its real estate holdings also separately identified on the schedule. Jordan
alleges that Mirra breached the warranty found in the SDA by failing to list “various undisclosed
RAM Capital notes, investments, and intangible assets,” Jordan Opening Br. at 16, ECF 458, and
values that breach at approximately $15 million. 8
The other business entity at the center of the present dispute is Biomed America Inc. In
2007, Mirra formed Biomed America along with numerous state-specific subsidiaries wholly
owned by Biomed America. Unlike their other assets, which both parties agreed were shared
50/50, the parties recognized that Mirra held a greater interest in Biomed than Jordan. Mirra
suggested in his deposition that this was because “Gigi hadn’t helped me build the company [for]
almost ten years,” which is why he “requested more of the stock” and suggested that they split
their 65% interest in the company 50/15. Mirra Dep. 88:22-89:19 (Nov. 24, 2015), ECF 458, Ex.
8. Jordan in her deposition claimed to have participated in some marketing efforts of Biomed up
to the SDA, though the extent is not clear. Jordan Dep. 66:9-67:24 (Dec. 4, 2019), ECF 474, Ex.
RAM Business Holdings filed for and was issued a certificate of cancelation by the Delaware
Secretary of State in June 2006. ECF 474, Ex. 4. However, Mirra’s general ledger from 2008 still reflected
an investment balance of approximate $1.6 million. ECF 474, Ex. 12 at 32-33. Jordan argues that, despite
the LLC’s dissolution two years prior, the general ledger entry reflects an undisclosed asset in which both
parties had an interest. Lunden Report at Ex. E, ECF 462-1.
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There were many entities with the “RAM” name, most of which appear to have been dissolved
before the assets were divided according to Mirra’s interrogatory responses. See Resp. 1, Mirra’s Sec. Am.
Resp. to Jordan’s First Interrogs., ECF 460, Ex. 2. Regardless, none of them appear to be directly at issue
in the present dispute except a note from RAM Capital II LLC held by RAM Capital Group. Lunden Report
at Ex. F, ECF 462-1.
The report of Jordan’s expert is less than clear but appears to envision three pots of damages
related to the failure to disclose RAM’s underlying assets including ~$10 million for its valuation based on
management fee charges, ~$5 million for accounts receivable, and ~$15 million for various investments
and notes. See Lunden Rep. at Exs. B, E, F, ECF 462. These values are then halved to reflect Jordan’s
share. Id. at Ex. A.
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55. Even if there wasn’t complete agreement on the extent of Jordan’s involvement in the new
company, the course of negotiations indicate that the parties agreed that Biomed was not a clean
50/50 split. As further detailed below, numerous communications from Mirra to Jordan proposed
that the 50/50 split would not apply to Biomed. See, e.g., Schedule of Assets (Feb. 21, 2008), ECF
474, Ex. 15 (schedule of assets provided by Mirra at beginning of negotiations listing all other
private company ownership as 50/50, but Biomed as “to be discussed”); Email of Mirra attorney
Troilo to Jordan attorney Petersen (Feb. 26, 2008), ECF 474, Ex. 18 (with schedule of assets listing
options for either lump sum deal or split ownership deal where “Gigi gets 15% of Biomed, 50%
of other businesses, 50% of debt”). When the structure of the deal finally came together, the $4.9
million payment that would be made from Mirra to Jordan would be “really solely for [her] 15%
interest in Biomed.” Email from counsel to Jordan (Mar. 4, 2008), ECF 458, Ex. 2. Jordan later
executed a stock purchase agreement for 120 shares of Biomed, ECF 458, Ex. 7 at
RAM000030020, which was done pursuant to the SDA’s Plan of Distribution in consideration for
the $4.9 million, id. at RAM000030017. 9 Jordan alleges that Mirra breached the warranty at issue
by his “failure to list BioMed America’s ownership stake in [] nine BioMed subsidiaries and their
respective assets,” Jordan Opening Br. at 16, ECF 458, and values that breach at approximately
$65.5 million. See Lunden Rep. at Ex. A, ECF 462. 10
Jordan’s litigation posture recognizes the 120 shares as a 15% stake in Biomed in light of her
accusation that, through Parallex (the straw entity used to accomplish the merger with Allion), Mirra held
408 shares of Biomed, which would be equivalent to 51% of the company were 800 shares issued prior to
the merger, such that her 120 shares would be a 15% stake. See Lunden Rep. at 10, ECF 462; Mirra Dep.
118:24-119:12 (Nov. 24, 2015), ECF 474, Ex. 51.
9
Jordan’s expert also provides two alternative models that value the damages from the Biomed
transaction at $39 million and $47 million respectively. See Lunden Rep. at Exs. G, H, ECF 462.
10
7
The final set of interests that Jordan alleges are at stake in the present litigation are more
diverse. Mirra’s alleged failure to list them on the asset schedule would account for approximately
$27 million of the damages claimed. See Lunden Rep. at Ex. E, ECF 462. 11 These assets include
the private companies Apogenics and Hometech, shares in Vasgene held by Mirra personally,
various fees and bonuses, various investments including in “RAM Bus” and “Asia Ame,” debt
relief from the payment of the CIT Loan, and various notes/loans including “Loan Receivable
Kuo,” “RAM Note to Mirra and Jordan,” and “Note to Mirra – Consideration for Atlas Shares.”
See Jordan Opening Br. at 16, ECF 458; Lunden Rep. at Ex. E, ECF 462. 12
B. Negotiation of the SDA
The context in which the parties agreed to part ways, and the model adopted to accomplish
that, are also important to an accurate understanding of the parties’ agreements. By early 2008,
Biomed America was in talks with Allion, a publicly traded pharmacy services company, regarding
a possible merger. Spurred by the anticipated merger, Jordan and Mirra began discussions over
unwinding their shared financial situation. See Mirra Dep. 88:8-90:19 (Nov. 24, 2014), ECF 474,
Ex. 51. As noted above, both parties were represented by multiple, sophisticated attorneys in the
discussions.
In Jordan’s reply brief she withdrew “any request for damages as to Vasgene shares held by
RAM Capital,” Jordan Reply Br. at 16 n.5, ECF 498, which accounted for an additional $13.7 million in
damages according to Lunden’s report.
11
As will be discussed further below, the various fees, excluding the alleged bonus, were all paid
to RAM capital rather than Jordan personally; these account for $7.7 million ($3.85 million in damages).
The debt relief related to the CIT loan is attributable to Biomed America; it accounts for $14.9 million
($7.45 million in damages). After these assets are removed, the miscellaneous assets remaining account
for approximately $15.7 million in alleged damages, $7.5 million of which is attributable to the Hometech
note and $2.25 million of which is attributable to Vasgene shares held directly in Mirra’s name.
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8
The negotiations began amicably. Email from counsel to Jordan (Feb. 20, 2008) (“Our
conversation was very pleasant … Joe was very cordial … In other words, this will all be
amicable.”). And Jordan’s counsel confirmed at deposition that both parties were interested in
getting a deal done quickly. Email from counsel to Jordan (Feb. 22, 2008), ECF 458, Ex. 11;
Donnelly Dep. 282:18-23 (Jan. 13, 2016), ECF 458, Ex. 1 (“[M]y marching orders were to
determine what assets Mrs. Jordan was going to receive, what potential liabilities she would be
exposed to post-closing, and to move quickly in light of the alleged child abuse and her concerns
for her safety.”); Petersen Dep. 153:21-23 (Oct. 14, 2015), ECF 458, Ex. 9. The parties’ desire to
move quickly foreclosed the possibility of an exhaustive investigation of the then-present values
of all the private companies, investments, and liabilities at stake. Mirra’s attorneys made it clear
to Jordan’s attorneys at the beginning that “Ray will not value these companies, and he will not
buy [Jordan] out of them (Joe told me).” Email from counsel to Jordan (Feb. 22, 2008), ECF 458,
Ex. 11. And Jordan’s attorneys seem to have accepted as much, even over the course of the
negotiations, admitting that they had “sufficient information to close the deal … with the caveat
that [they] would have preferred to do more due diligence,” which did not occur in light of the
parties’ desire to move quickly. Petersen Dep. 153:4-18 (Oct. 14, 2015), ECF 458, Ex. 9.
Within these constraints, Mirra proposed two possible structures for a deal. First, either
Jordan and Mirra would split their assets/liabilities and explicitly divide their interests in the
private companies so that Jordan would hold her interests directly in her name. Alternatively,
Jordan would give up all her interests in the private companies in exchange for a lump sum
payment which, when combined with a division of their then-present brokerage and investment
accounts, would equal half of their combined net worth based upon when their shared interests
were most liquid between 2002 and 2003, with an added a 5% annual interest calculation up to the
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division in 2008. As Jordan’s attorney related Mirra’s offer to Jordan, “He said that if you’d like
to stay in them, and share the risk and cost, then you could participate in any upside. He also said
that Ray would be happy to figure out what your share was in 2002 when the business was sold,
and apply some interest calculation to that, and then pay you that.” Email from counsel to Jordan
(Feb. 22, 2008), ECF 458, Ex. 11; see also Mirra Dep. 120:18-121:22 (Nov. 24, 2015), ECF 474,
Ex. 51 (“So I went back to 2003 when she wanted out, I thought the proposal we go back to when
we have the highest number of cash, which is January of 2003, we applied an interest rate to that
of, I believe, 5 percent. Round that off through 2008 and that’s where that number came from.”).
Jordan and her attorneys from the outset preferred the lump sum structure. In an unsent
draft email, Petersen suggests that “Gigi is ultimately interested in extricating herself from all of
these businesses, so if there is a mutually acceptable way to do that, we would be interested in
exploring that idea. That is, there might be a way for Ray to end up with all the upside in these
companies for some modest adjustment in the other assets.” Email of Petersen to Jordan (Feb. 23,
2008), ECF 474, Ex. 18. On February 26, Mirra’s attorney sent Jordan’s attorney a “proposal with
the detail” which provided for an “Option 1” lump sum settlement of $46.6 million based on a
schedule of net assets from 2003, with 5% interest added in, then divided in half, along with an
“Option 2” where “Gigi gets 15% of Biomed, 50% of other businesses, 50% of debt.” Email of
Troilo to Petersen (Feb. 26, 2008), ECF 474, Ex. 18. Jordan’s attorney responded a couple days
later, “Sorry that I couldn’t get back to you sooner. The bottom line is that the first option set forth
in your proposal is conceptually acceptable to Gigi—we just need to get some of the supporting
or underlying documents, and work out some of the details. … As I said, Gigi believes that Option
1 … is a reasonable approach to unwinding her from all of this, so we are proceeding in that way—
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we just need updated figures and the backup to understand what has been proposed.” Email of
Petersen to Troilo (Feb. 28, 2008), ECF 458, Ex. 12.
Over the next week, the parties exchanged several communications, driven principally by
Jordan’s attorneys’ desire to understand the underlying details about the private businesses at issue.
After Mirra’s counsel Troilo provided a schedule of the private companies on February 29, an
edited version of which would later become part of Schedule 2.1.1’s list of assets in the SDA,
Email of Troilo to Petersen (Feb. 29, 2008), ECF 474, Ex. 21, Jordan’s attorney responded by
stating that “we’ll want to understand the form of ownership for each property/business (LLC,
LLP, S Corp, etc.), percent ownership interest, cost/tax basis of property and information on
current debt. And we should get the most current audited or unaudited financial statements that
exist for any of the entities. It would also be good for us to get the relevant tax returns as well.”
Email of Petersen to Troilo (Mar. 1, 2008), ECF 458, Ex. 13. When asked at his deposition if he
received all the documents requested, Mr. Petersen, Jordan’s attorney, was unable to remember
but could point to no reason to believe that they didn’t, conceding that they received “sufficient
information to close the deal.” Petersen Dep. 153:7-11 (Oct. 14, 2015), ECF 458, Ex. 9. 13
During the first week of March, Jordan’s lawyers’ needs for additional documentation
satisfied, the agreement began to take shape. The key arguments at this point appeared to be over
There are references in the record to key documents that Jordan indisputably received. For
instance, Jordan’s attorney Donnelly acknowledges receipt of documents, including tax returns, from RAM
Capital and perhaps other RAM entities that indicated how complex the network of assets and liabilities
were for those companies: “Notwithstanding that, based upon the information we have received over the
last several days, it appears that we will be able to structure this settlement with minimal tax impact, there
are simply too many RAM entities, affiliate transactions, and moving parts for us to be in a position to give
Gigi comfort that there will not be potential tax or other claims against Gigi post-settlement. … Note that I
took a quick look through some of tax returns Mike sent earlier today and I noted that there were a lot of
related party due-to’s, and due-from’s, there was an LLC (RAM Business Holdings, LLC) that held 90%
of the interests in RAM Capital, and other material transactions.” Email of Donnelly to Troilo (Mar. 11,
2008), ECF 474, Ex. 29
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whether the schedules and proposed divisions that Mirra’s lawyers provided would accomplish the
goal of getting Jordan to the promised $46.6 million without her continued involvement in the
companies or real estate interests. In an email sent early in the morning of March 4, Jordan
indicates that she spoke to Mirra the night before and that their conversation had addressed Mirra’s
suggestion to share interest in a piece of real estate until it could be profitably sold well past the
SDA’s settlement.
Jordan in no uncertain terms pushed back against this suggestion and
communicated to Mirra that the lump sum deal was meant to be a “quick out,” where she should
“in an expeditious manner” receive consideration of “no ongoing involvement, as well as the dollar
amount mentioned with no diminution of that final amount by tax implications (or otherwise)” in
exchange for her “walking away from the substantial value on the Bio and Vasgene companies
(for 6 million).” Email of Jordan to counsel (Mar. 4, 2008), ECF 474, Ex. 23. Later that day,
Jordan’s attorney Donnelly spoke with several of Mirra’s advisers and was able to communicate
an outline of how some of the more complicated assets, including debt and real estate would be
divided. Email between Jordan’s lawyers, (Mar. 4, 2008), ECF 458, Ex. 2.
At this juncture a problem arose. The deal on the table only included $4.9 million in cash
for the business interest buyout, seemingly less than the approximate $6 million that Jordan and
her attorneys thought was necessary to bring the total to $46.6 million. Id. (“Ray would make an
immediate cash payment to you of $4.9M in cash. … This payment would be for your 15% interest
in Biomed America, Inc. as well as your interests in the other corporations. … I know you had a
certain $ amount in mind to walk away from the Biomed stock upside and I’m not sure the above
proposal will get you there.”); see also Email from counsel to Jordan (Mar. 5, 2008), ECF 474,
Ex. 26 (“We will need to discuss: … Why the proposed payment from Mr. Mirra is $4.9M and not
an amount that, when added to the cash and investments and real estate she is to receive, will equal
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the $46.6M amount.”). Around this time, the parties supplemented the $4.9 million cash payment
for the private company interests with a $1.2 million payment for a note related to the parties’ real
estate holdings that brought the total cash to Jordan at settlement to $6.1 million.14 Throughout
these discussions, the “conceptual agreement” dividing up the value of the 2003 net worth and
giving Jordan half of that out of the 2008 assets remained central to Jordan’s bargaining. Donnelly
detailed Jordan’s contemporaneous understanding in an email that was drafted as a possible
response during this phase of the negotiations:
While the draft plan and detail schedule is consistent with the proposal you
provided to me on our call yesterday, Ms. Jordan does not think it is consistent with
the conceptual agreement that Ms. Jordan previously discussed with Mr. Mirra. As
I understand it, the conceptual agreement was that the parties looked to their
combined net assets as of 1/31/03 ($79.58M). This amount was split 50/50
($39.8M each). From this amount, taxes and personal expenses were backed out
and a 5% interest component was added. This resulted in a current asset calculation
of $93.2M, with 50% of this being $46.6M
Email of Donnelly to Jordan (Mar. 5, 2008), ECF 474, Ex. 26.
At this point, tax and post-closing liability concerns took center stage in the negotiations.
As Jordan’s’s counsel noted in an email to Mirra’s counsel Troilo, “Now that it appears that the
parties are back to the $46.6M agreed upon amount, we had some questions and tax structuring
suggestions. … [I]t appears there is economic agreement on the $46.6M amount, so now the focus
should be shifting on how to transfer the assets in a tax efficient manner.” Email of Donnelly to
Paragraph 2 of the Plan of Distribution details where Jordan received an additional $1.2 million
to satisfy a loan payable to Jordan on a real estate holding company, Valley Creak Estate LLC, which Jordan
then relinquished her rights in. See also Email of Troilo to Petersen (Mar. 7, 2008), ECF 474, Ex. 27
(including draft schedule of assets that lists cash to Jordan at settlement of $6,192,000) and Email of Troilo
to Petersen (Mar. 5, 2008), ECF 474, Ex. 25 (adding consideration of Valley Creek note of $1,238,000 to
cash of $4,954,000 to total $6,192,000 consideration as a category distinct from investment accounts and
real estate).
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Troilo (Mar. 9, 2008), ECF 474, Ex. 28. 15 In a follow-up email a couple days later, Donnelly notes
how the cash payment for the Biomed shares combined with the assumption of certain debts and
the capital loss related to selling her interest in Ram Capital provided tax benefits for both Mirra
and Jordan. Email of Donnelly to Troilo (Mar. 11, 2008), ECF 474, Ex. 29. Perhaps most
importantly, Donnelly notes that the number of moving parts in the deal, especially as related to
the RAM entities, might expose Jordan to “potential tax or other claims against Gigi postsettlement.” Id. Donnelly therefore requested “a broad indemnification from Ray with regard to
any claims against Gigi in connection with any of the LLCs, stock holdings, debt, etc. that may be
brought against Gigi post-closing.” Id. This is in line with Donnelly’s later testimony that Jordan
“was most concerned with any potential post-closing liability that she either was not aware of and
she would be liable for or that was not appropriately addressed.” Donnelly Dep. 105:20-23 (Jan.
13, 2016), ECF 474, Ex. 52. And it was out of these discussions that the parties developed an
indemnification agreement that was included in the SDA.
With the indemnification issue settled, the next day was spent finalizing the papers. On
March 12, 2008, the parties exchanged a flurry of emails containing drafts of various components
of the SDA. One sent by Jordan’s attorneys at 5:49 p.m. contained a liquidated damages provision
in case Mirra delayed in transferring any assets, the warranty section, and the attorneys’ fees
section. Email of Donnelly to Troilo (Mar. 12, 2008), ECF 458, Ex. 5 (including redline of SDA
Internally, Jordan and her attorneys expressed some concerns about the Biomed deal and
specifically wanted to request more information about “how the outstanding stock of Biomed is allocated”
and some of the “fundamental economic terms [including] cash at closing, amount and type of preferred
shares, [and the] additional contingent purchase price.” Draft email of counsel sent to Jordan (Mar. 10,
2008), ECF 458, Ex. 14. But an hour after sending that draft to Jordan, and in the same email thread,
Jordan’s attorney suggests that the concerns were resolved by a phone call with Mirra or his attorneys, with
Petersen noting that “In light of this call we’re on right now, maybe we don’t want to send the draft message
presented below.” ECF 458, Ex. 14.
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with “FB+M Comments”). 16 The warranty section, which appeared unchanged on the signed
versions, included a warrant from Mirra that “as of the Effective Date, the Recognized Joint Assets
listed on Schedule 2.1.1 represent all of the assets in which the parties have a joint interest.” SDA
¶ 5.3.1, ECF 458, Ex. 7. Later that evening, in addition to other components of the SDA, the
parties exchanged several drafts of Schedule 2.1.1, Recognized Joint Assets, which grounded the
warranty. Email of Petersen to Jordan (Mar. 12, 2008 at 6:46 p.m.), ECF 474, Ex. 31; Email of
Donnelly to Troilo (Mar. 12, 2008 at 7:22 p.m.), ECF 474, Ex. 32; Email of Troilo to Donnelly
(Mar. 12, 2008 at 9:40 p.m.), ECF 474, Ex. 35. The content of these schedules was negotiated by
both parties, with Donnelly noting on Jordan’s behalf that some of the previously exchanged
schedules included “assets that Ray and Gigi already hold separately” that were listed so as “to be
clear as to what the parties were taking.” Email of Donnelly to Troilo (Mar. 12, 2008 at 7:22 p.m.),
ECF 474, Ex. 32. The critical objective for Jordan’s team remained, through this eleventh hour of
negotiations, ensuring that the assets that Jordan was taking from the deal added up to $46.6
million. Id. (“I am pretty certain I am not going to get Gigi comfortable with these agreements
unless I can show her these schedules ultimately tie into the $46.610M amount.”). By late night,
early morning, final versions of the documents had been exchanged with “no major issues
outstanding;” Jordan’s attorneys promised signature pages the next day following Jordan’s final
read through of all the documents. Email of Donnelly to Troilo (Mar. 12, 2008 at 11:23 p.m.),
ECF 474, Ex. 36.
It was against this background of negotiations that the parties ultimately reached the
agreements, including the warranty, now before the Court.
Jordan’s attorneys also added the paragraph about Parallex, the straw company Mirra used to
complete the Biomed merger, to the recitals section of the document.
16
15
III.
Legal Standards
The parties’ motions for summary judgment are governed by the well-established standard
for summary judgment set forth in Fed. R. Civ. P. 56(a), as amplified by Celotex Corp. v. Catrett,
477 U.S. 317, 322–23 (1986). That standard does not change when the parties cross-move for
summary judgment, with each party’s motion to be determined on its own merits in accordance
with the Rule 56 standard. Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F. 3d 388, 402 (3d
Cir. 2016).
IV.
Discussion
Jordan’s claim is brought as a breach of warranty claim against Mirra. Delaware law treats
general breach of warranty claims the same as it treats breach of contract claims. 17 Osram Sylvania
Inc. v. Townsend Ventures, LLC, CV 8123-VCP, 2013 WL 6199554, at *6 (Del. Ch. Nov. 19,
2013) (dismissing a breach of warranty claim as duplicative where breach of contract was also
brought, noting that “[a]ny breach of an express warranty also would qualify as a breach of
contract, however, and the remedies available under either claim are equivalent”).
“For a
successful breach of contract claim, a party must prove: ‘(1) a contractual obligation; (2) a breach
of that obligation by the defendant; and (3) a resulting damage to the plaintiff.’” In re G-I Holdings,
Inc., 755 F.3d 195, 202 (3d Cir. 2014) (quoting H–M Wexford LLC v. Encorp, Inc., 832 A.2d 129,
140 (Del. Ch. 2003)).
“The proper construction of any contract … is purely a question of law.” Rhone-Poulenc
Basic Chemicals Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992). “When
interpreting a contract, the role of a court is to effectuate the parties’ intent. In doing so, we are
17
471 at 16.
The parties agree that Delaware law governs the contract and the dispute. See ECF 458 at 8; ECF
16
constrained by a combination of the parties’ words and the plain meaning of those words where
no special meaning is intended.” Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739
(Del. 2006). “In upholding the intentions of the parties, a court must construe the agreement as a
whole, giving effect to all provisions therein.” E.I. du Pont de Nemours and Co., Inc. v. Shell Oil
Co., 498 A.2d 1108, 1113 (Del. 1985). “Courts consider extrinsic evidence to interpret the
agreement only if there is an ambiguity in the contract.” N.W. Nat. Ins. Co. v. Esmark, Inc., 672
A.2d 41, 43 (Del. 1996). “A contract is not rendered ambiguous simply because the parties do not
agree upon its proper construction. Rather, a contract is ambiguous only when the provisions in
controversy are reasonably or fairly susceptible of different interpretations or may have two or
more different meanings.” Rhone-Poulenc Basic Chemicals, 616 A.2d at 1196.
There is no dispute as to the terms of the warranty. Under the SDA, under the section
“Representations, Warranties, Covenants, and Other Matters,” “Mirra represents and warrants that
as of the Effective Date, the Recognized Joint Assets listed on Schedule 2.1.1 represent all of the
assets in which the parties have a joint interest.” SDA ¶ 5.3.1. The question is whether Mirra
breached the warranty and if so, caused damages. After reviewing the record, I conclude that there
are no material facts in genuine dispute as to these issues and that Defendant Mirra is entitled to
judgment as a matter of law. Plaintiff Jordan cannot point to evidence to create a factual dispute
for the vast majority of breaches alleged and, even if there were a breach, prove damages resulting
from any alleged breach.
A. The Breach of Warranty
The question of breach turns on the interpretation of two words in the warranty: “assets”
and “interest.” The parties dispute whether the parties would have an “interest” in entities and
assets that are owned by private companies in which they undisputedly do have an interest. Jordan
17
contends that if she has an interest in a company, she then also has an interest in the assets or other
entities owned by that company. Jordan further contends that Mirra was obligated to list as “assets”
even business entities with no operations or capital. Mirra disagrees.
1. The Key Legal Issues in Interpreting the Warranty and Schedule 2.1.1
The definition of “interest” is critical to the question of whether Mirra breached the contract
by failing to list the subsidiary entities of Biomed America, the various subordinate assets of RAM
Capital, and the patents of Vasgene. Both parties cite Black’s Law Dictionary (11th ed. 2019),
which defines an interest as “[a] legal share in something; all or part of a legal or equitable claim
to or right in property.” Jordan leans on the “equitable claim” language to argue that her direct
interests in Biomed America, RAM Capital, and Vasgene give her indirect interests in the
subordinate assets of those entities that Mirra was responsible for listing.
For the purposes of this agreement, Delaware courts have defined an “interest” and a
business owner’s personal legal claim to a company’s assets so as to be dispositive of this issue.
Delaware courts have long recognized that a shareholder’s equitable interest “in the profits and in
the distribution of assets on liquidation” does not grant them any “interest [in] any specific assets
of the corporation.” Buechner v. Farbenfabriken Bayer Aktiengesellschaft, 154 A.2d 684, 686
(Del. 1959). “The corporation is an entity, distinct from its stockholders even if the subsidiary’s
stock is wholly owned by one person or corporation.” Id. at 686-87. This holds equally true for
the non-incorporated business entities such as LLCs. The Delaware LLC Act states that “[a]
member has no interest in specific limited liability company property.” 6 Del. Code § 18-701; see
also Credit Suisse Securities (USA) LLC v. W. Coast Opportunity Fund, LLC, CIVA 4380-VCN,
2009 WL 2356881, *3 (Del. Ch. July 30, 2009). Thus, a plain reading of the contractual language,
18
interpreted through the prism of Delaware law, requires a construction of the contract that excludes
the subordinate assets of the owned business entities.
Jordan’s alternative reading, which is both internally inconsistent and fails to identify any
limiting principal as to the obligations of the parties, would be “unreasonable since it would render
the parties’ rights and obligations uncertain and indefinite.” Gulf Oil Corp. v. F. P. C., 563 F.2d
588 (3d Cir. 1977). Jordan argues that the warranties obligated both parties to disclose “all ‘cash,
inventory, real estate, accounts receivable, and goodwill’ in which the parties had a joint interest—
whether directly, indirectly, legally, or equitably—including the property held by their jointly
owned holding companies.” Jordan Opening Br. at 11 (quoting Asset, Black’s Law Dictionary (8th
ed. 2004)), ECF 458. Jordan herself admits that she did not list several assets she owned or
controlled for reasons that don’t fit with her expansive definition of “interest.” See Jordan Dep.
41:11-45:25 (Dec. 4, 2019), ECF 474, Ex. 55 (not listing a brownstone owned by Jordan and office
building owned by Mirra because “for tax reasons, it would be better not to list certain assets that
... were individually titled in our respective names, and we were going to continue to maintain
separate ownership after the SDA.”); Jordan Dep. 360:18-362:17 (Dec. 5, 2019), ECF 474, Ex.
56 (not disclosing bank account in Jordan’s name because it was funded by a trust that she
controlled). Yet Jordan’s understanding that the SDA permitted her to exclude interests for “tax
reasons” or because she held them as a legal but not equitable owner, as with a trust, is plainly
inconsistent with the expansive, all-inclusive definition of interest that Jordan has adopted for the
purposes of this litigation. 18
Moreover, Jordan suggests no consistent limiting principal to define the universe of assets that
the parties were obligated to list. In Appendix 1 to her Reply Brief where she poses a “demonstrative”
example of how Mirra could have listed the assets in question, she includes at least one subsidiary of a
subsidiary, and for one entity, RAM Capital, she includes a schedule of “Notes, Investments, and Intangible
18
19
Jordan also contends that Schedule 2.1.1’s listing, in some instances, of several subordinate
assets of closely held companies, proves her more expansive construction. Not so. Rather, in light
of the agreement as a whole, what she points to is consistent with the primary purpose of Schedule
2.1.1: to identify the pool of assets that it was necessary for the SDA to reassign ownership in
some way. The section of SDA that establishes Schedule 2.1.1, Article 2 “Identification of Assets
and Liabilities,” demonstrates this, as it shows how Schedule 2.1.1 identifies joint assets in the
corresponding section of the agreement, ¶ 2.1.1, so that all those assets listed can be transferred to
Jordan. Another paragraph of the agreement, and related schedule, accomplishes the same as to
Mirra. (¶ 2.2.2 and Schedule 2.2.2). Where subordinate assets such as property were specifically
listed on Schedule 2.1.1, it’s because those subordinate assets were transferred between the parties
independent of the business entity that formally held the interest. Thus, this was only the case for
closely held companies such as RAM Realty Holdings, West Highland Co., and Valley Creek
Estate, which the parties had the right to apportion at their discretion. This understanding of
Schedule 2.1.1, that it operated to identify the assets that needed some combination of transfer and
renunciation of rights, is borne out by Jordan’s testimony that the parties agreed not to list certain
assets that “were individually titled in [their] respective names, and [for which they] were going
to continue to maintain separate ownership after the SDA.” Jordan Dep. 41:11-45:25 (Dec. 4,
2019), ECF 474, Ex. 55. It also explains why the parties did not treat “assets” as an accountant
might and list all “cash, inventory, real estate, accounts receivable, and goodwill” owned by any
entity, as such granular details were not necessary to identify the overarching joint interests that
needed to be transferred to implement the agreement.
Assets,” something she does not demand for the other twenty-three entities. Jordan Reply Br. Appx 1, ECF
498.
20
Even if I were to assume some ambiguity in the agreement, the parties “prior agreements
and communications” together with their “course of dealing” support the conclusion I reach here.
Eagle Indus. Inc. v. DeVilbiss Health Care, Inc. 702 A.2d 1228, 1233 (Del. 1997). And where the
evidence of record “points in one direction,” it can serve to “conclusively resolve the ambiguity”
in one party’s favor. Sunline Commercial Carriers Inc. v. Citgo Petroleum Corp., 206 A.3d 836,
849 (Del. 2019). The conclusion I reach here is entirely consistent with the history of the parties’
relationship and negotiations discussed in detail above.
2. The Subordinate Assets of Biomed America, RAM Capital, and Vasgene Were Not
Separate Interests That Required Listing
Because I have concluded the subordinate assets of business entities that were listed on
Schedule 2.1.1 did not, according to the terms of the contract need to be listed, it follows as a
matter of law that Mirra did not breach the warranty as to such interests. This conclusion applies
to all the Biomed America subsidiaries, 19 the payment by Allion of the debt owed by Biomed
America to CIT, 20 all of the fees paid or owing to RAM Capital 21 (including those which Jordan’s
expert lists as personal assets of Mirra) 22 and all RAM notes and investments, 23 the increased value
19
Lunden Rep. Ex. C, ECF 462 ($131.1 million).
20
Id. Ex. E ($14.9 million)
21
Id. Ex. B ($10.0 million); id. Ex. E ($5.1 million)
Id. Ex. E ($7.7 million). The Management Agreement between Biomed America and RAM
Capital provided that the management fees were payable to the “Manager” defined as RAM Capital. ECF
474, Ex. 8. This was recognized on the draft due diligence report made to Allion prior to the merger. ECF
474, Ex. 13 at 5 (“The Company recognized management fees payable to RAM … “). Mirra affirms that
all management fees would have been paid to RAM Capital and not to him personally. Mirra Aff. ¶ 5, ECF
481. And Jordan points to nothing in the record to create a genuine dispute of material fact against a finding
that the management fees were paid to RAM Capital.
22
23
Id. Ex. F ($15.5 million).
21
of Vasgene interests held by RAM Capital based on the undisclosed patents, 24 and the interest in
Apogenics. 25 These assets represent the bulk of the damages Jordan claims.
3. Other Interests Where There Was No Breach of Warranty
Jordan further argues that several items that she believes were owned by Mirra directly,
including interests in private entities, notes, loans, investments, and bonuses, were improperly left
off Schedule 2.1.1. As an initial matter, the fact that an asset was listed in Mirra’s name does not
rule out the possibility that Jordan might be able to assert a “joint” interest, given the way the
parties structured their dealings and given their model for unraveling their affairs. These interests
must be addressed individually.
By way of overview, it appears that the methodology of Jordan’s expert Lunden was to
identify any asset where Jordan might conceivably claim an interest, and then list it as an item in
dispute. In evaluating a motion for summary judgment, a court is not grading a first-year law school
exam and awarding partial credit for “spotting an issue.” The question is whether the party
opposing the motion can point to sufficient evidence of record to create an issue of material fact.
Here, with two exceptions discussed below, I conclude that Jordan does not meet that standard
Id. Ex. E ($27.3 million). There are also shares of Vasgene held directly in Mirra’s name as
opposed to those held in RAM’s name, which Lunden values at $4.5 million.
24
Lunden does not list Apogenics independently in his report, but merely lists it as an entity that
paid management fees RAM Capital which, according to Jordan, deflated the company’s value to zero. See
Lunden Rep. Ex. B, ECF 462; Jordan Opening Br. at 7, 16, ECF 458. As discussed above, the management
fees were assets owned by RAM Capital and did not need to be separately disclosed. With respect to
Apogenics, according to a draft due diligence report of Biomed prepared to Allion in February 2008, “On
January 1, 2008, [Biomed America] acquired Apogenics Healthcare, Inc. (“Apogenics”). … Management
asserts that the Apogenics transactions was [sic] effectuated to provide a certain amount of Biomed equity
to the former shaerholders of Apogenics … .” ECF 474, Ex. 13. Therefore, by the time the SDA was
negotiated, Apogenics was no longer a joint interest of Jordan and Mirra. Any shared interest they had was
subsumed by their joint interest in Biomed America.
25
22
either because the record does not support her claim of an interest in the specific asset, or because
the assets identified did not have any value within the relevant timeframe of the SDA.
Interests in Private Companies
Parallex, LLC. Jordan lists Parallex LLC on Appendix 1 to her Reply Brief, which she
styles as a “Demonstrative Schedule 2.1.1 with Unlisted Assets” that, per Jordan, shows “just one
among myriad ways that Mirra could have met his obligations as we have described them.” Jordan
Reply Br. at 16, ECF 498. “Parallex was a holding company established before the BioMed merger
to accomplish the reverse merger.” Lunden Rep. at 10, ECF 462. Through the SDA and plan of
distribution, Parallex was the entity that would purchase Jordan’s shares of Biomed. The plan of
distribution specifically identifies Parallex as an LLC “wholly owned by Mirra,” ECF 474, Ex. 7
at Exhibit 3.1.1, and alongside the warranty at issue in this litigation, Mirra also “represents and
warrants that he is the sole owner of Parallex LLC,” id. at ¶ 5.3.5. Jordan not only accepted that
representation, but in fact edited the recitals to include reference to Parallex. Email of Jordan’s
attorney to Troilo (Mar. 12, 2008), ECF 458, Ex. 5 (including redline of SDA with “FB+M
Comments 3/12/08,” with Parallex recital found at SDA at 1). It is nonsensical for Jordan either
to claim a breach when the asset was specifically identified in the agreement or to claim an interest
in an asset that the agreement itself identifies as one Mirra wholly owned.
Access Pharmaceutical Services, LLC. Jordan lists Access Pharmaceutical Services on
Appendix 1 to her Reply Brief, which she styles as a “Demonstrative Schedule 2.1.1 with Unlisted
Assets” that, per Jordan, shows “just one among myriad ways that Mirra could have met his
obligations as we have described them.” Jordan Reply Br. at 16, ECF 498. Jordan points to no
evidence in the record that Mirra owned an entity called Access Pharmaceutical Services at the
23
time of the SDA. And her expert Lunden identifies no damages that flow from the failure to list
Access Pharmaceutical Services. 26
4.47% Vasgene Shares, Held by Mirra. Lunden lists this asset as a personal asset of
Mirra valued at $4,516,498, Lunden Rep. at Ex. E, ECF 462, based on a common stock ledger that
lists an issuance of 5,000 shares to Mirra in 2001 (reissued in 2002) in addition to several issues
and reissues to RAM Capital through May of 2008, ECF 474, Ex. 13. Although Schedule 2.1.1
lists Vasgene, it does so with a note of “Shares held by RAM Capital Group, LLC.” Jordan
contends that although the RAM-held shares were listed, there were separate shares held by Mirra
that were not, in violation of the warranty. At the time that the SDA was being negotiated, both
parties appear to have believed that the shares were held by RAM Capital. See Jordan Dep. 456:69 (June 9, 2021), ECF 474, Ex. 61 (“Q. And at the time when you signed the SDA, was it your
belief that those shares were … held by RAM Capital? A. Correct.”); Mirra Dep. 165:7-10 (Nov.
24, 2015), ECF 474, Ex. 51 (“I don’t believe I ever owned stock personally in VasGene. I may
have, but I think it [was] only [held by] RAM Capital.”). There is no evidence of the existence of
such separate shares aside from the ledger entry, and though the entry may raise a question, at
summary judgement the question must be at least partially answered with evidence, and Jordan
supplies none. Of some relevance, however, is how Jordan herself treated what appears to be the
same 5,000 shares, 27 claiming half of them as hers in legal documents from 2001 when she was
divorced from Mirra, ECF 474, Ex. 1 at 7 (assigning Jordan one half the interest in VBI Inc (the
There are several similarly named companies distinct from Access Pharmaceutical Services that
are subsidiaries (or sub-subsidiaries) of Biomed America from which Lunden claims various damages.
Lunden Rep. Exs. C, E, ECF 462. These relate to RAM and Biomed, and no breach of warranty can be
claimed for the reasons set forth above.
26
27
Jordan has not pointed to any stock reflecting a duplicate issue of 5,000 shares in the company.
24
original name of Vasgene)). Specifically, she remarried another individual subject to a premarital
agreement which listed as separate property of Jordan “VBI, Inc. (2,500 shares),” ECF 474, Ex. 2.
This undercuts any inference that the ledger entry reflects an asset of which Jordan was unaware.
Beyond that, by her own logic she would likewise be required to disclose them, and her failure to
list them offsets any breach by Mira and forecloses any possibility that she could have been harmed
as a result. But in any event, the ledger entry alone does not create a triable issue of fact.
Hometech Undisclosed Assets. Lunden lists this asset as a personal asset of Mirra, further
described as “Hometech Note Sale in 2009,” which he valued at $15,000,000, Lunden Rep. at Ex.
E, ECF 462. But Lunden deemed it an asset of value based upon a later document, specifically a
“Schedule of Advanced Research Corp. Acquisition as of 12/31/09,” ECF 474, Ex. 49. This
schedule merely reflects that at some point in 2009 Hometech acquired Advanced Research Corp.
in exchange for a $15 million note. Advanced Research Corp., which the note nominally values at
$15 million, was in fact disclosed on Schedule 2.1.1. The fact that Hometech later purchased
Advanced Research Corp provides no evidence that Hometech had any value at the time the SDA
was negotiated in early 2008. Mirra stated in his interrogatory answers that Hometech Therapies,
Inc. had nominal or no value as of 3/11/08. ECF 460, Ex. 2. 28 Standing alone, evidence of this
later transaction at the end of 2009 does not create a material issue of fact as to an agreement
negotiated in early 2008.
Jordan again resorts to Black’s Law Dictionary, which provides that an asset is “[a]n item that is
owned and has value.” (11th ed. 2019) Jordan argues that the second entry in Black’s Law Dictionary
should apply, which treats assets as “entries on a balance sheet showing the items of property owned,
including cash, inventory, equipment, real estate, accounts receivable, and goodwill.” Jordan Opening Br.
at 9, ECF 458. She also argues that this is consistent with “the meaning of ‘assets’ for accounting purposes,”
citing FASB accounting standards. Id. This is inconsistent with her deposition testimony as to the model
used for negotiation, where she conceded that “the SDA was a common sense deal.” Jordan Dep. 359:1315 (Dec. 5, 2019), ECF 474, Ex. 56. As discussed in a review of the background of negotiations, neither
party provided the granular detail that would be expected from an accounting-like treatment of “assets.”
28
25
Other Financial Interests
RAM Note to Mirra and Jordan. Lunden’s report identifies as an undisclosed personal
asset of Mirra an item entitled “RAM Note to Mirra and Jordan” valued at $6,959,299. Id. Ex. E,
ECF 462. This note represents a loan made to RAM Capital out of the combined assets of Mirra
and Jordan. During their negotiations, Jordan’s lawyers explained to her that “You and Ray have
also each loaned [RAM Capital Group] approximately $3.6M each.
This debt would be
contributed to the LLC prior to the split, and you would not get paid anything for this note.” Email
of Donnelly to Petersen (Mar. 4, 2008), ECF 258, Ex. 2. The SDA’s Plan of Distribution then
provided that “both Mirra and Jordan shall contribute all advances each has made to RAM Capital
Group, LLC as a capital contribution upon execution of the Separation Agreement.” SDA, Ex.
3.1.1 at ¶ 3(iii). The loans are thus recognized by the SDA itself as separate assets of the respective
parties and it would be inconsistent for them to also be listed as joint assets. Furthermore, because
Jordan agreed to its extinction upon the execution of the SDA, she cannot as a matter of law
establish any damages related to Mirra’s failure to disclose it on Schedule 2.1.1.
Investment in RAM Business. Lunden lists this asset as a personal asset of Mirra valued
at $1,635,063, Lunden Rep. at Ex. E, ECF 462, based on Mirra’s general ledger trial balance in
2008, ECF 474, Ex. 12. RAM Business Holdings had filed for and was issued a certificate of
cancelation by the Delaware Secretary of State in June 2006. ECF 474, Ex. 4. According to an
affidavit by Mirra’s accountant Bruce Kolleda, the continued entry for RAM Business on Mirra’s
general ledger was an accounting error. Kolleda Aff. ¶ 4, ECF 481. Jordan contends that “[t]he
liquidation of a company disperses its assets, here the $1.6 million investment was transferred to
Mirra’s personal ledger in February of 2006, just before he dissolved RAM Business, and he then
held it on his ledger through at least December 2008.” Jordan Reply at 16-17, ECF 498. Jordan
26
is correct that “the liquidation of a company disperses its assets.” However, just as a map is not
the territory it describes, a personal ledger is not a legal entity capable of holding capital, merely
one that “record[s] financial transactions in the form of debits and credits.” Ledger, Black’s Law
Dictionary (11th ed. 2019). In February 2006, the general ledger records a $1,589,047.80 increase
in the investment, to a balance of $1,635,062.80, described as “GENJ to reclass amount due from
RAM Capital.” ECF 499, Ex. 7. 29 The $1.6 million figure represented some form of equity in
RAM Business Holdings. When RAM Business Holdings was dissolved in June 2006, that equity
disappeared. Whether the liquidation of the company resulted in assets being transferred to Mirra
at that time or if the investment was effectively written off is unclear from the record.
Nevertheless, there is no evidence in the record to suggest that by the time of the SDA negotiations
in 2008 that the $1.6 million general ledger entry was anything but an artifact, or that at that time
there still existed some tangible assets in the form of accounts or capital that might remain from
the defunct entity. Given the formal dissolution in 2006 and the explanation from the accountant,
once again, a single ledger entry does not suffice to create a material issue of fact. I therefore
conclude that there is no genuine issue of material fact.
Loan Receivable Kuo. Lunden identifies this as a personal asset of Mirra valued at
$31,343, Lunden Rep. at Ex. E, ECF 462, based on Mirra’s general ledger trial balance in 2008,
ECF 474, Ex. 12. Mirra and his accountant Bruce Kolleda have submitted affidavits that this was
a personal loan made to James Kuo who died in June 2007, and that it should have been written
off at his passing and it has since been written off. Mirra Aff. ¶ 4, ECF 479; Kolleda Aff. ¶ 6, ECF
481. Jordan points to nothing in the record that suggests that this was not the case or that a claim
The wording of this entry suggests that this was principally an accounting convention used to
track the complex relationships between a variety of closely held entities. No other documents have been
identified to demonstrate that any funds or property changed hands or were transferred among accounts.
29
27
was ever made against the estate related to this loan. I therefore conclude that there is no genuine
issue of material fact as to whether this remained an asset at the time that the SDA was negotiated.
Year End Bonus from Biomed. Lunden lists this asset as a personal asset of Mirra that
should have been listed, valued at $1,000,000, Lunden Rep. at Ex. E, ECF 462, based on a draft
due diligence report for Biomed America from February 2008, ECF 474, Ex. 13. Notably, the
report states that $1,000,000 and $500,000 bonuses were paid both to Mirra and Jordan,
respectively, in their capacity as “principals/executives of RAM.” Jordan argues that the bonus
was “deposited to Mirra’s unlisted bank account.” Jordan Opening Br. at 8, ECF 458. Jordan
points to Mirra’s ledger balance showing a $599,022.27 credit in February 2008 and argues that it
reflects a $1 million payment minus taxes. Jordan Reply Br. at 17-18, ECF 498. Mirra contends
that given the timing of the due diligence report, it reflects bonuses paid in late 2007 that would
have been deposited in joint accounts. Mirra’s position rests on his deposition testimony, with no
further documentation. Mirra Opening Br. at 31, ECF 471. Regardless of when or into which
accounts the bonus payments were made, the warranty at issue specifically applies to assets in
which the parties held a joint interest. Given that Jordan’s only proof is a report explicitly showing
bonuses to both parties, albeit in different amounts, I am hard-pressed to see how this in any way
supports an inference that Mirra was hiding an asset in which Jordan could claim an interest. The
very document on which she relies seemingly refutes such a position.
4. Assorted Interests Where Genuine Factual Disputes Preclude Summary Judgment
as to the Issue of Breach
In two instances, Jordan identifies potential assets where, in addition to raising a question,
there is some evidence in the record that might support an inference of a breach of the warranty to
disclose.
28
Investment in Asia Ame. Lunden lists this asset as a personal asset of Mirra valued at
$25,000, Lunden Rep. at Ex. E, ECF 462, based on Mirra’s general ledger trial balance in 2008,
ECF 474, Ex. 12. Mirra response is that the asset was actually owned by RAM Capital, based on
RAM Capital’s March 2008 balance sheet reflecting a $25,000 investment in “Colonial Amer.
Bank.” ECF 474, Ex. 37. According to Mirra, the investment in Colonial American Bank was
listed on his own ledger by mistake and was described as “Asia Ame” due to one of its director’s
involvements with Asia America Law Group. Mirra Aff. ¶ 3, ECF 479. Even if “Asia Ame” in
fact refers to Colonial American, the Colonial American public offering lists Mirra’s investment
as $50,000. ECF 474, Ex. 5. In light of these conflicts in the documentary evidence, there is
enough to raise a genuine dispute of material fact regarding whether Mirra personally held an
interest in Colonial American Bank which should have been listed as a joint asset on Schedule
2.1.1. Consequently, I cannot resolve the issue of breach as a matter of law.
Note to Mirra – Consideration for Atlas Shares. Lunden lists this asset as a personal
asset of Mirra valued at $3,000,000, Lunden Rep. at Ex. E, ECF 462, based on three things: (1)
the Allion/Biomed merger documents that define the “Mirra Note” due to Mirra personally as the
payee, ECF 474, Ex.39; (2) Biomed’s Schedule of Notes listing Mirra and RAM Capital as separate
lenders on separate obligations, ECF 474, Ex. 47; and (3) the note itself identifying Mirra as the
payee, ECF 474 Ex. 9. The note appears to be in consideration for Biomed’s purchase of Atlas
Respiratory Services, Inc. Mirra argues that the value of the note to Mirra “is merely the value of
Biomed’s subsidiary Atlas” and that, as of March 2008, Mirra did not list the note as an asset on
his personal ledger. ECF 471 Appx. 1 at line 2. Looking to Mirra’s table of contested assets, he
appears to contend that this note was disclosed through the disclosure of Biomed America because
it is included in “Biomed Assets / Liabilities.” Id. Although it is in fact a Biomed liability, it may
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simultaneously be a Mirra asset. Mirra’s failure to list it on his personal ledger at the same time
that he included a $3 million “Intangible Asset” on RAM Capital’s balance sheet creates a genuine
issue of fact as to whether Mirra or RAM Capital actually owned the asset, and whether disclosure
was required. Compare ECF 474, Ex. 12 (Mirra’s ledger) with ECF 474, Ex. 37 (RAM Capital
balance sheet).
B. Jordan Cannot Establish Damages Caused by Any Alleged Breach
To prevail on her breach of warranty claim, Jordan must also be able to prove that she
suffered damages that resulted from the alleged breaches. Under Delaware law, proof of damages
is one element of a breach of contract claim. H–M Wexford LLC v. Encorp, Inc., 832 A.2d 129,
140 (Del. Ch.2003). “Contract damages are designed to place the injured party in an action for
breach of contract in the same place as he would have been if the contract had been performed.”
Paul v. Deloitte & Touche, LLP, 974 A.2d 140, 146-147 (Del. 2009). Although Jordan at this
stage need not prove the amount of damages, she must still “prove the fact of damages with
reasonable certainty.” Siga Techs., Inc. v. PharmAthene, Inc., 132 A.3d 1108 (Del. 2015), as
corrected (Dec. 28, 2015) (emphasis in original).
Jordan’s sole argument on damages is that the “disclosure of assets was necessary for
Jordan to have a full picture of the assets in which the parties had a joint interest so that she could
reach an informed decision about whether the proposed consideration was equitable.” Jordan
Reply Br. at 18, ECF 498. In her version of the case, Mirra’s failure to disclose was apparently
part of a scheme “to deflate the value of the parties’ property, inducing Jordan to accept a lower
amount than she would have had he been forthcoming about the parties’ joint assets.” Id. Jordan
goes on to argue that based on the parties’ general principle of owning their property prior to the
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SDA 50/50, “any failure by Mirra to list an asset necessarily caused damage to Jordan by depriving
her of the information she needed to protect her 50% share.” Id.
I note at the outset that Jordan’s claim for fraudulent inducement related to the SDA has
been dismissed as barred by the Release Agreement, ECF 203, and therefore her claims are barred
to the extent that Jordan’s damages flow specifically from misrepresentations made in the course
of negotiations. Nevertheless, even assuming that Jordan’s claim for damages here doesn’t simply
dress up her fraudulent inducement claim in a new outfit, the course of negotiations demonstrates
that the parties did not negotiate the SDA based on a contemporaneous valuation of the parties’
assets, but instead based on a valuation of the parties’ assets as of 2003. As a result, a more
complete picture of the 2008 assets would not have changed the course of negotiations.
At the core of her argument, Jordan wants a “Mulligan” on the 2008 deal. She believes
that the Court should retroactively apply the 50/50 principle of divided ownership that governed
the parties’ assets from the early 1990s to the early 2000s to reform the deal the parties struck in
2008. Jordan Reply Br. at 19-20. But the record is clear that the parties did in fact use the 50/50
principle to guide their original negotiations of the SDA, choosing as their lodestar the year 2003,
in light of various practical considerations including the liquidity (and therefore calculability) of
their interests at the time and a preference for liquidity of Jordan’s share going forward. To
accomplish this 50/50 valuation as of 2003, they calculated the parties’ shared assets as of 2003,
added an interest calculation to bring them present to 2008, and then divide by two, with Jordan
giving up her interests in the companies. See Email of Petersen to Jordan (Feb. 22, 2008), ECF
458, Ex. 11; see also Mirra Dep. 120:18-121:22 (Nov. 24, 2015), ECF 474, Ex. 51. Jordan’s take
from this method of distribution would be $46.6 million. Email from Mirra’s counsel to Jordan’s
counsel (Feb. 26, 2008), ECF 474, Ex. 18.
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She chose this path with an awareness of the complex nature of the financial interests that
she and Mirra shared, particularly with regards to RAM Capital and its constellation of notes,
investments, and liabilities. Email between Jordan’s counsel (Mar. 4, 2008.), ECF 474, Ex. 21;
Email from Jordan’s counsel to Mirra’s counsel (Mar. 11, 2008), ECF 474, Ex. 29. In that regard,
specifically with respect to the Atlas note, though Mirra may not have listed it as a personal asset,
it appeared as a $3 million “Intangible Asset” on RAM Capital’s balance sheet, to which Jordan
and her counsel had access. Jordan was well represented by attorneys who requested information
about Mirra’s various business interests and apparently received sufficient information to ensure
that during the negotiations they could close the deal. Email from Jordan’s counsel to Mirra’s
counsel (Feb. 20, 2008), ECF 459, Ex. 1; Draft Email of counsel to Jordan (Mar. 10, 2008), ECF
458, Ex. 14. Petersen Dep. 153:4-18 (Oct. 14, 2015), ECF 458, Ex. 9.
Jordan knowingly gave up her potential upside from those business interests and
particularly her potential upside in the Biomed America merger, as consideration for a “quick out”
that provided her with extensive liquidity without any ongoing responsibilities or liabilities related
to the business interests. Email of counsel to Jordan (Feb. 23, 2008), ECF 474, Ex. 18; Email of
Jordan to counsel (Mar. 4, 2008), ECF 474, Ex. 23. 30 She set a price for this particular interest at
around $6 million that fit into the structure of getting her to a total of $46.6 million. Email between
counsel (Mar. 4, 2008), ECF 458, Ex. 2; Email from Jordan to counsel (Mar. 4, 2008), ECF 474,
Ex. 23; Email from counsel to Jordan (Mar. 5, 2008), ECF 474, Ex. 26. This was an express choice
Jordan’s email to her counsel on Mar. 4, 2008, where she explains how she refused Mirra’s
suggestion to maintain a shared interest in a property for 6 months post-closing in order to sell the property
because it didn’t represent “a quick ‘liquid out’ in terms of asset division,” reinforces how even the disputed
$3 million note Biomed owed Mirra for the Atlas shares would have had no bearing on Jordan’s negotiation
because it would only become valuable after Allion transaction. Email of Jordan to counsel (Mar. 4, 2008),
ECF 474, Ex. 23.
30
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by Jordan. Early in the negotiations, Mirra indicated that he “[would] not value these companies,
and he [would] not buy [her] out of them,” but he offered that if Jordan wanted “to stay in them,
and share the risk and cost, then [she] could participate in any upside.” Email from Jordan’s
counsel to Jordan (Feb. 22, 2008), ECF 474, Ex. 16. This was later formalized as “Option 2,”
where Jordan would have gotten “15% of Biomed, 50% of other businesses, 50% of debt.” Email
from Mirra’s counsel to Jordan’s counsel (Feb. 26, 2008), ECF 474, Ex. 18. As an alternative,
Mirra suggested that they “figure out what [Jordan’s] share was in 2002 when the business was
sold, and apply some interest calculations to that, and then pay [her] that.” Email from Jordan’s
counsel to Jordan (Feb. 22, 2008), ECF 474, Ex. 16. Jordan chose the latter path and doing so
chose not to negotiate based on the value of the private business interests in 2008 because she put
greater worth on extricating herself quickly from the shared enterprises. In choosing that path she
knowingly gave up the potential upsides that her interests in the businesses represented. Her only
argument for damages now relies on a retrospective theory of the course of negotiations that has
no support in the record.
Jordan would now prefer that 2008 be the lodestar year, so that the 50/50 principle can be
applied to the shared business interests now forensically quantified with the benefit of hindsight
and damages calculated accordingly. Mirra cogently argues that this theory of damages would
entitle Jordan to the benefit of a bargain she declined to make, and in the process risk a windfall.
Jordan could have rejected a buy-out based on a 2003 evaluation and insisted upon a
contemporaneous valuation. She did not. In that respect, this action is very similar to Interim
Healthcare, Inc. v. Spherion Corp., 884 A.2d 513 (Del. Super. Ct.), aff’d 886 A.2d 1278 (Del.
2005). “The expectations of both parties …were shaped by the risks of which they were aware.”
Id. at 550. And she could have bargained for specific warranties about the value of current assets,
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see, e.g., Aviation W. Charters, LLC v. Freer, 2015 W.L. 5138285 (Del. Super. Ct. July 2, 2015),
or bargained for protection if a quick sale of assets yielded a windfall to Mirra, see, e.g., Charron
v. Sallyport Global Holdings, Inc., 2014 W.L. 7336463 (S.D. N.Y. Dec. 24, 2014). Jordan
ultimately seeks a windfall for herself, having already been compensated for the value of her
interests according to a model Jordan embraced with full cognizance of the bargained for benefits
and risks, linked to a specific timeframe, she now seeks additional compensation based upon a
different series of assumptions.
The benefit of hindsight may leave Jordan with some regrets in how she conducted her
negotiations, but those regrets do not translate into a viable claim.
V.
Conclusion
Because Jordan cannot establish liability for breach as to the vast majority of items
complained of as being left off the schedule of joint assets and cannot establish the existence of
damages for any of those items, Plaintiff Jordan’s motion for summary judgment is denied and
Defendant Mirra’s motion for summary judgment as to the breach of the warranty claim is granted.
An appropriate order follows.
/s/ Gerald Austin McHugh
United States District Judge
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