Givaudan SA v. Conagen Inc.

Filing 166

MEMORANDUM OPINION AND ORDER: Conagen is not liable for Breach of Contract, Promissory Estoppel, or Unjust Enrichment, and thus, Givaudan is entitled to no relief on its claims against Conagen. Givaudan's claims against Conagen are dismisse d. The Clerk is directed to enter judgment dismissing this case. The Clerk is also directed to close all pending motions and to close this case. SO ORDERED. (Signed by Judge John G. Koeltl on 7/18/2022) (mml) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
GIVAUDAN SA,

Plaintiff,
18-cv-3588 (JGK)

- against CONAGEN INC . ,

MEMORANDUM OPINION
AND ORDER

Defendant.

JOHN G. KOELTL, District Judge:

The plaintiff Givaudan SA
against

Conagen

Inc.

promissory estoppel,

("Givaudan")

( "Conagen")

alleging

brought this action
breach

of

contract,

and unjust enrichment as a result of a $10

million payment by Givaudan to Conagen in September 2016. Conagen
claims that the payment was made for a 5% investment in Conagen,
evidence of which was eventually produced to Givaudan.

Givaudan

claims that the $10 million payment was only an advance pursuant
to a letter of intent that contained other conditions and that
Conagen

failed

to

satisfy

the

other

conditions

and

failed

to

negotiate in good faith and should not be permitted to retain that
$10 million advance. The Court held a non-jury trial on June 6, 7,
8, and 15, 2022, in this case and the companion case of Phyto Tech
Corp. v.

Givaudan SA,

18-cv-6172

(S.D.N.Y.

filed July 7,

2018).

Having reviewed the evidence and assessed the credibility of the
witnesses, the Court now makes the following Findings of Fact and
reaches the following Conclusions of Law. To the extent relevant,

1

the Court also incorporates the Findings of Fact in the companion
case.

FINDINGS OF FACT
I . Background

1.

Givaudan is a company organized under the laws of

Switzerland. Givaudan is one of the world's largest
manufacturers of flavors,

fragrances, and active cosmetic

__ j,_ngred_.l,en_ts. EC_F__ No. 121 at 10.
2.

Conagen, a Massachusetts corporation with a principal

place of business in Massachusetts,

is in the business of

researching and developing bio-manufacturing processes and
techniques. ECF No. 121 at 10-11.

3.

Juerg Witmer is the former chairman of the board of

directors for Givaudan until he retired in March 2017. ECF No.
121 at 11.
4,

Christian Thoen is the former Head of Science and

Technology for the Flavors Division of Givaudan. Tr. 34.
5.

Roberto Garavagno is in-house general group legal

counsel for Givaudan. Tr.

49, 449.

6.

Steven Chen is the president of Conagen. Tr. 239.

7.

Holly You served as in-house legal counsel for

Conagen. Tr. 49.

2

8.

The relationship between Givaudan and Chen began

sometime prior to 2014 with Conagen affiliate Phyto Tech Corp.
d/b/a Blue California ("Blue Cal") supplying a sweetener product
to Givaudan. See Tr. 242-43.
9.

In 2014, Blue Cal and Givaudan entered into a joint

venture known as BGN Tech LLC as embodied by an operating
agreement (the "BGN LLC Agreement"). DX-49.
10.

Thoen was appointed as one of two Givaudan-appointed

BGN board members. Blue Cal appointed the other three board
members. Tr. 37.
11.

Between 2014 and 2015, Givaudan and Conagen discussed

a potential investment by Givaudan in Conagen. Tr. 40.
II. Givaudan's Investment in Conagen

12.

Following the formation of BGN, Givaudan made a direct

investment in Conagen. On July 3, 2015, Conagen and Givaudan
entered into a stock purchase agreement under which Givaudan
invested $10 million in Conagen in exchange for a five-percent
equity interest in the company. DX-12. Givaudan was represented
by Paul Weiss, Rifkind, Wharton

&

Garrison LLP ("Paul Weiss")

and Conagen was represented by Armstrong Teasdale LLP. Tr. 457;
Tr. 304. While the parties discussed future potential
investments and licensing terms, the July 2015 agreement did not
bind the parties to any further agreements and was a

3

straightforward money-for-equity transaction. See Tr. 452-53,
474-75; Tr. 41; DX-12 § 8.11.
13.

Section 8.11 of the July 2015 Stock Purchase Agreement

provides specifically: "This Agreement, along with the Schedules
and Disclosure Schedule hereto, together contain the entire
agreement and understanding between the Parties with respect to
the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters." 1
DX-12 § 8.11. There is no request in this case for the return of
the July 2015 investment that Givaudan made in Conagen.
III. Negotiations Leading to the September 15, 2016 Term Sheet

14.

Following the July 2015 investment, the parties

discussed the terms under which Givaudan might make additional
investments in Conagen and companies related to Conagen such as
SweeGen International Limited ("SweeGen") and Anhui Longjin BioTechnology Co., Ltd.

("Anhui"). Mr. Chen had such discussions

with Dr. Thoen, Dr. Juerg Witmer (the Chairman of Givaudan) and
Mr. Garavagno. DX-01; DX-13; Tr. 43-44. Mr. Chen was interested
in implementing what he called the "three-pillar" concept in
which Givaudan would make investments in all three companies.
Tr. 248-49.

Unless otherwise specified, this Memorandum Opinion and Order
omits all internal alterations, citations, footnotes, and
quotation marks in quoted text.

1

4

15.

In early September 2016, Mr. Chen travelled to

Switzerland at Dr. Witmer's invitation to attend the 50th
anniversary party of Givaudan. DX-1; Tr. 247-48. At the end of
that week, on Friday, September 9, 2016, Holly You, in-house
counsel for the Blue Cal group of companies, sent to Garavagno a
set of agreements, which she referred to as "the COMPLETE
package of all documents updated from Paul Weiss' 2015 set of
drafts." DX-22. These documents included a draft memorandum of
---understanding, DX-23; a araft commoff stocK -piTrchase-agieemenE,DX-24; a draft Conagen officer's certificate, DX-25; a draft
disclosure schedule, DX-26; a draft exclusivity agreement, DX27; a draft specified IP license agreement, DX-28; a draft right
of first offer agreement, DX-29; and two draft confidentiality
non-competition, non-solicitation agreements, DX-30, DX-31.
These drafts were mark-ups of earlier drafts provided by Paul
Weiss in October 2015. DX-22, DX-24, Tr. 452.
16.

The Draft Memorandum of Understanding from September

2016 described a three-part investment by Givaudan into Blue
Cal's family of companies: one part to Conagen, one part to
SweeGen, and one part to Anhui. DX-23.
17.

The Draft Memorandum of Understanding provided in Term

1 that Givaudan would invest $10 million for an additional 5% of
Conagen based on a $200 million valuation of Conagen based on
Givaudan's previous investment, that Conagen would adjust its
5

management structure in certain ways, and that Conagen would
provide Givaudan with "exclusivity to Conagen's Specified IP
(either in concept or mature)

for [Flavors and Fragrances] for

12 months, which will convert to non-exclusivity should Givaudan
fail to scale up to an industrially viable extent within such 12
months.u In items 2 and 3, the Draft Memorandum of Understanding
provided for investments by Givaudan of $15 million for 5% of
SweeGen and $15 million for a 30% interest in Anhui with
specific details or-fhOse investmenfs~- DX-23.
18.

On Monday, September 12, 2016, Dr. Witmer sent an

email to Mr. Chen with a cover note confirming a meeting in San
Francisco for later that week. DX-01. He also provided a
revision to Ms. You's Memorandum of Understanding, which she had
sent on September 9, 2016. Dr. Witmer, who is a lawyer, appears
to have revised the agreement himself. Tr. 252; 475; compare DX23 with DX-01. It is plain that Dr. Witmer and Mr. Chen had a
mutually cooperative relationship.
19.

Dr. Witmer made a number of important changes to the

draft Memorandum of Understanding, which he named a "term
sheet.u With respect to the first term, which governed the
Conagen deal, Dr. Witmer divided out the language relating to
the equity purchase and kept that in Key Term 1. He then placed
the terms relating to "specified IPu in Key Terms 2 and 3.
Compare DX-23 with DX-01. At the same time, he wrote in the
6

cover email: "In order to show our commitment I am perfectly
happy to sign a term sheet on Conagen as per the attachment
together with you when we meet next Thursday in San Francisco
and to effect the additional equity payment for Conagen
immediately." DX-01 (emphasis added). Notably, the first item in
the September 12 Term Sheet provided only for a $10 million
investment by Givaudan for 5% of Conagen with certain managerial
changes at Conagen and confidentiality agreements for Mr. Chen
-- and Oliver Yu, Ccinagen' s CfiTef Science Officer:':--There were no
agreements with respect to IP in Key Term 1. DX-01.
20.

With respect to SweeGen and Anhui, instead of a

detailed set of transaction terms, Dr. Witmer proposed in Key
Term 4 to negotiate in good faith over future investments. He
also added a preamble section, which made it clear that the
parties had substantial flexibility with respect to further
negotiations over the IP rights and future investments.
Accordingly, the draft states that the parties "envision that
they will negotiate in good faith and enter into one or more
agreements which will contain terms and conditions similar to
those detailed below and other terms and conditions to be
negotiated between the parties." DX-01. The September 12 Term
Sheet also contemplated that no subsequent agreements might be
executed, using the language "if any" to refer to future
agreements. DX-01.
7

IV. The September 15, 2016 Term Sheet

21.

On September 15, 2016, Mr. Chen, Ms. You, Dr. Witmer,

Dr. Thoen, and Scott May (Givaudan's Senior Vice President) met
in San Francisco to finalize the Term Sheet. Tr. 248; 395. At
the meeting, Mr. Chen, Dr. Witmer and Dr. Thoen executed the
term sheet (the "Term Sheet") that contains six "Key Terms." DX02. The Term Sheet executed on September 15, 2016 is
substantially the same as the Term Sheet prepared by Dr. Witmer
dated September 12, 2016. Compare DX-2 with DX-1. The September
15, 2016 Term Sheet is the key document reflecting Givaudan's
investment of its additional $10 million investment in Conagen.
22.

As proposed in Dr. Witmer's September 12 Term Sheet,

the Preamble of the final Term Sheet states that the agreement
is "in regards to Givaudan taking an equity stake in Conagen."
It also states that "[t]he parties currently envision that they
will negotiate in good faith and enter into one or more
agreements which will contain terms and conditions similar to
those detailed below and other terms and conditions to be
negotiated between the parties." DX-02. The Term Sheet also
provides: "This Term Sheet will be succeeded by the terms and
conditions of the executed agreements, if any." DX-02
added) .
23.

Key Terms 1-4 provide:

8

(emphasis

1.
Givaudan will invest an additional $10 M for an
additional 5% of Conagen, based upon a $200 M evaluation
from the 2015 Givaudan/Conagen deal. Conagen will adjust
its management structure to include legal/finance, CSO
and office
and
regulator managers,
and
securing
confidentiality and non-compete agreements from its CSO
Oliver Yu and CEO Steven Chen.
2.
Conagen will provide Givaudan with exclusivity to
Conagen's specified IP (including sweeteners) either in
concept or mature for F&F. Exclusivity will convert to
non-exclusivity should Givaudan fail to use reasonable
efforts to commercially exploit mature IP,
to an
industrially viable extent, within 12 months from it
being licensed to Givaudan. DX-02.
3.
The parties will agree on licensing terms for the
commercial expl-oi tat ion of the-specified IP-by Givaudan.
DX-02.
4.
The parties will discuss in good faith separately
whether and at which conditions further investments in
Blue California Group companies may be made.
DX-02.
24.

Key Term 6 provided that the law and jurisdiction

clauses agreed to in the BGN LLC Agreement would govern. DX-02.
Because that agreement incorporates Delaware law, DX-49 at 56,
the parties have agreed that Delaware law applies to this
dispute. __
25.

The Term Sheet was signed on September 15, 2016 in San

Francisco by Mr. Chen, Dr. Witmer, and Dr. Thoen. DX-02.
V. Events Subsequent to Execution of the Term Sheet

26.

Following execution of the Term Sheet, Givaudan

immediately transferred $10 million to Conagen via wire
transfer. Tr. 113-14, 311.

9

27.

While Givaudan now claims that the payment of the $10

million is a reversible "advance," there is no basis to infer
that was the mutual intent of the parties at the time the Term
Sheet was executed. The Term Sheet makes no reference to an
"advance," and it was undisputed at trial that the term
"advance" did not come up during the negotiations. Tr. 114. As
an experienced businessman and indeed a lawyer, Dr. Witmer was
well aware that there was a chance that further negotiations
might-fail, but he m2ide no provision for--ieturri-of the $TO
million in that eventuality. As Dr. Theon conceded, an objective
observer could reasonably conclude from the fact that Givaudan
wired the $10 million to Conagen that Givaudan thought the
parties had a deal on the second 5% tranche of equity. Tr. 11516.
28.

Givaudan's internal documents reflect that the $10

million was a payment for equity, not an advance. In an October
2016 slide deck used by Dr. Thoen for a presentation to the
Givaudan board of directors, one slide used in the presentation
stated:
This informs the Board on an increase in
equity stake in Conagen from 5 to 10% for an
additional $10,000,000: Givaudan acquired an
initial 5% equity stake in Conagen for a
consideration of $10,000,000 on July 3, 2015.
The Givaudan's Board of Directors is informed
that another 5% stake for $10,000,000 has been
acquired.Ff

10

DX-03 at 2; Tr. 51-52, 116-18. In the same presentation, the
board was informed of an "increase in equity stake in Conagen
from 5 to 10% for an additional $10,000,000 .

. Another 5%

stake for $10,000,000 has been acquired." DX-03 at 9.
29.

The slide presentation describes the 5% equity

interest for an additional $10 million as having been acquired,
although it also described other items:
Givaudan for certain IP,

(i) exclusivity for

(ii) non-competes from Mr. Chen and Mr.

Yu, and (iii) a position on Conagen's Science Advisory Board.
DX-03 at 9.
30.

On October 12, 2016, Ms. You sent an updated set of

mark-ups of various documents to Roberto Garavagno, reiterating
Conagen's September 9, 2016, positions on IP rights and other
matters. DX-34, DX-35, DX-36, DX-37, DX-38, DX-39. This set of
documents did not include a draft of a stock purchase agreement.
DX-34. There were no significant changes between the draft
exclusivity agreement sent by Ms. You in September 2016 and the
draft sent by Ms. You in October 2016. Tr. 477.
31.

On October 28, 2016, Mr. Garavagno wrote to Ms. You

rejecting Conagen's proposal and claiming that Givaudan was
entitled to exclusivity to all "Concept IP," which Givaudan
understood to mean initial development work still in the lab.
DX-40; Tr. 45. Givaudan did not provide a list of the "specified
IP" to be covered by Key Terms 2 and 3. Tr. 122-23, 250.
11

Instead, Mr. Garavagno took the position that Givaudan must have
exclusivity over even early-stage IP. Conagen offered a right of
first refusal with respect to such IP, which would have provided
exclusivity, but for which exclusivity would lapse if Givaudan
was uninterested in funding further research. Tr. 303; 281.
32.

In early November 2016, Givaudan informed Mr. Chen for

the first time that it had no intention of making any equity
investments in SweeGen or Anhui. See DX-04.
33.

Givaudan interprets this decision as being a motive

for Conagen's alleged intransigence in reaching a decision on
terms for Givaudan's exclusivity for Conagen Specified IP. But
Givaudan's decision can as easily be read as a failure to comply
with Key Term 4 of the Term Sheet that provided: "The parties
will discuss in good faith separately whether and at which
conditions further investments in Blue California Group
companies may be made." DX-02. In any event, Givaudan's decision
did not prevent good faith negotiations from proceeding on the
issue of Givaudan's access to Conagen's IP. DX-07; DX-08; Tr.
484-86.
34.

On November 7, 2016, Mr. Chen asked Ms. You to stand

down in the ongoing negotiations so that he could negotiate
directly with the businesspeople on both sides, as opposed to
going through the lawyers. Tr. 280-81.

12

35.

Mr. Chen and Mauricio Graber, a top executive of

Givaudan, then continued to negotiate. In late November or early
December 2016, Mr. Chen, Mr. Graber, and Dr. Thoen had a phone
call about the status of the negotiations. Mr. Chen then sent an
email on December 1, 2016, memorializing that call, and Mr.
Graber replied confirming that "Givaudan is a 10% equity
investor of Conagen" and stating that the parties needed to
discuss the "right of first refusal versus exclusivity." DX-08;
Tr. 125-26-.--36.

Negotiations continued into early 2017. Tr. 485-86.

On February 10, 2017, Dr. Thoen emailed Dr. Witmer stating that
he "continue[d] to be in constant contact with Steven [Chen]."
DX-07. Also in February 2017, Ms. You sent an email to Mr.
Garavagno and Dr. Thoen following up on draft agreements related
to the Term Sheet. DX-09. At that time, negotiations between the
parties were still ongoing. Tr. 486.
37.

On May 10, 2017, Conagen delivered the stock

certificates to Givaudan reflecting Givaudan's additional 5%
equity interest in Conagen. DX-10. Givaudan received those stock
certificates via Federal Express on May 11, 2017 and retains the
certificates and the benefit of ownership to this day. Tr. 486,
491.
38.

On May 11, 2017, Mr. Garavagno sent an email to Ms.

You purporting to reserve "the right to refuse this second
13

capital increase." DX-10. Mr. Garavagno's email refers to the
second $10 million investment as an "advance." DX-10. Prior to
this email from Mr. Garavagno, no document describes the second
$10 million investment by Givaudan as an "advance." Tr. 114;
130.
39.

During May and June 2017, Mr. Garavagno took no steps

to contact Ms. You, request a negotiation session, or otherwise
engage Conagen in negotiations. Tr. 488.
40.

On June 26, 2017, Mr. Garavagno sent a letter breaking

off negotiations. He demanded not only a return of the second
$10 million investment but "to redeem Givaudan's entire existing
5% interest in Conagen at the initial investment price of
US$10,000,000," namely the first $10 million investment. DX-11.
Mr. Garavagno made the request even though Conagen had no legal
obligation to comply. Tr. 487. He admitted that this constituted
a proposal for a new agreement that was different from the Term
Sheet. Tr. 487-88.
41.

From July 2017 through November 2017 there followed

some posturing between the parties as to whether Conagen was
required to return the second $10 million investment. See, e.g.,
DX-20, DX-47, PTX-73. That back and forth does not change the
Term Sheet, the second $10 million investment, or the agreement
pursuant to which that second $10 million investment was made,

14

which was effected in September 2016. The parties never reached
any further written agreements. Tr. 53.
42.

Givaudan currently retains stock certificates totaling

10% equity of Conagen, including the stock certificates provided
for Givaudan's second $10 million investment. Tr. 129; Tr. 491.
CONCLUSIONS OF LAW
I. Givaudan's Count I - Breach of Contract

_l ~-

Under De_la_vJE!re law, tQ_RJ::ove a brea<;;h_<::,f contract:

claim, the plaintiff must establish: "(l) the existence of a
contract,

(2) a breach of the contract,

(3) and that the breach

of the contract was the proximate cause of damages." Johnson v.
Gov't Emps. Ins. Co., No. 06-cv-408, 2014 WL 2708300, at *1 (D.
Del. June 16, 2014), aff'd sub nom. Johnson v. GEICO Cas. Co.,
672 F. App'x 150 (3d Cir. 2016)

(citing VLIW Tech., LLC v.

Hewlett-Packard Co., 840 A.2d 606, 612
2.

(Del. 2003)).

The Term Sheet constitutes a contract. The fact that

some of the terms required further negotiation does not negate
the binding nature of the agreement. Under Delaware law, "an
express contractual obligation to negotiate in good faith is
binding on the contracting parties." SIGA Techs., Inc. v.
PharmAthene, Inc., 67 A.3d 330, 344
3.

(Del. 2013).

Key Term 1 describes a cash for equity stock

transaction that was performed. Givaudan voluntarily paid $10

15

million upon execution of the Term Sheet, and Conagen
reciprocated by delivering stock certificates evidencing an
additional 5% equity interest in Conagen. While Key Term I
included certain management changes at Conagen and
confidentiality and non-compete agreements from Steven Chen and
Oliver Yu, Givaudan has not argued that these agreements were
not provided or that the failure to provide any management
changes was a material breach of Key Terms.
4.

While Givaudan claims that the $10 million was an

"advance," the credible evidence fails to support that argument.
There is no language in the Term Sheet referring to an advance
and that term was not discussed during the negotiations. Dr.
Witmer drafted the relevant language, and as an attorney, he
certainly knew how to draft a provision requiring return of the
money should negotiations over the IP rights, SweeGen or Anhui
prove unsuccessful. Dr. Witmer did not indicate orally or in
writing that he viewed the $10 million as an advance, and the
Givaudan board was informed that the equity acquisition had been
completed by October 2016.
5.

Givaudan argues that the $10 million payment was

dependent on the successful conclusion of the negotiation for
agreements accomplishing Key Terms 2 and 3 relating to
exclusivity for Conagen's specified IP and licensing terms for
the commercial exploitation of the specified IP by Givaudan. But
16

that is not a reasonable interpretation of the Term Sheet. Dr.
Witmer specifically separated the IP provisions from Key Term 1
relating to the $10 million payment and the negotiations with
respect to the IP provisions had not come close to being
finalized when the $10 million was paid. Givaudan also argues
that the $10 million was necessarily payment for Conagen's IP,
but Key Terms 2 and 3 are more reasonably read as a distinct
part of the Term Sheet in which Givaudan would receive rights to

- -IF arid would lTcense that IP from Conagen for--commercial -- -- -- -exploitation. The definiteness of Key Term 1 is to be contrasted
with the specifics of Key Terms 2 and 3 which were left to be
negotiated in good faith,

including the IP that was to be

included and the licensing terms that were yet to be determined.
6.

Nor has Conagen breached the requirement to negotiate

in good faith in relation to Key Terms 2 and 3. Under Delaware
law, proof that a party breached a duty of good faith generally
requires demonstrating bad faith. See DV Realty Advisors LLC v.
Policemen's Annuity and Benefit Fund of Chi., 75 A.3d 101, 110
(Del. 2013); see also W. Palm Beach Hotel, LLC v. Atlanta
Underground, LLC,

626 F. App'x. 37, 42 (3d Cir. 2015)

(noting

that to breach a duty to negotiate in good faith generally
requires "deliberate misconduct, such as reneging on closed
contractual terms, imposing unreasonable terms solely in the
. exploiting a counterparty's

hope of scuttling a deal, or .
17

sunk costs"). Bad faith "is not simply bad judgment or
negligence, but rather it implies the conscious doing of a wrong
because of dishonest purpose or moral obliquity; it is different
from the negative idea of negligence in that it contemplates a
state of mind affirmatively operating with furtive design or ill
will." SIGA, 67 A. 3d at 34 6.
7.

There is no evidence to support a finding of bad faith

on the part of Conagen. Instead, the course of negotiations here
shows a reasonable back and forth between Conagen and Givaudan.
The parties remained in constant communication into 2017
regarding possible agreements. Tr. 59; DX-07; Tr. 486. It was
Givaudan, not Conagen, that broke off negotiations by demanding
a return of Givaudan's second $10 million investment, as well as
the original $10 million investment paid in 2015, as to which
Givaudan had no colorable right. See DX-11; Tr. 487-88.
8.

Conagen's negotiation positions were pursued in good

faith. The Term Sheet itself provided significant flexibility to
the negotiators, stating that "[t]he parties currently envision
that they will negotiate in good faith and enter into one or
more agreements which will contain terms and conditions similar
to those detailed below and other terms and conditions to be
negotiated between the parties." DX-02.
9.

Both before and after the execution of the Term Sheet,

Conagen proposed a right of first refusal on "Proof of Concept"
18

IP, which is a subset of early stage "specified IP." Givaudan
never identified the specified IP that would be licensed under
Key Terms 2 and 3, making the negotiation rather abstract. Tr.
250, 122. A right of first refusal is a form of exclusivity,
which terminates following waiver of the right. Conagen was
concerned that it might present a new idea, Givaudan would
refuse to fund or develop the idea, but at the same time block
Conagen from doing so. Givaudan appears to have been seeking a

veTo

right-over newprojects, even-ones th-,3.t it

haci

no ii1terest

in pursuing on its own. The right of first refusal was a
reasonable compromise to resolve the parties' conflicting goals,
not an exercise in bad faith negotiation.
10.

Givaudan's claim for breach of contract also fails

because Givaudan has failed to prove any damages. "It is well
established in Delaware law that expectation damages are the
standard remedy for breach of contract." Delaware Exp. Shuttle,
Inc. v. Sam Waltz

&

Assocs. LLC, No. CPU4-10-000005, 2013 WL

3776523, at *3 (Del. Com. Pl. July 1, 2013); see Reserves Dev.,
LLC v. Crystal Props., LLC, 986 A.2d 362, 367 (Del. 2009)

("In a

breach of contract action, we determine plaintiff's damages as
if the parties had fully performed the contract.").
11.

Givaudan has expressly disclaimed expectation damages.

ECF No. 128

91. Instead, Givaudan purports to claim reliance

damages, which are "measured by its actually-incurred costs and
19

expenses.n Titan Inv. Fund II, LP v. Freedom Mortg. Corp., 58
A. 3d 984
12.

(Table), 2012 WL 6049157, at *3 (Del. Dec. 5, 2012).
Givaudan has made no showing that it has incurred any

costs or expenses. Givaudan presented no evidence that the stock
it is holding has diminished in value or that it has incurred
any cognizable costs or expenses. In 2015, Givaudan paid $10
million for 5% of the equity of Conagen, and it did the same in
2016. Conagen has not sold stock below that implied $200 million
-------

-

- ----

valuation, and at least one subsequent investment in Conagen
used a valuation above $200 million. Tr. 252-53. All the
evidence shows that Givaudan received fair value for the $10
million that it transferred to Conagen in exchange for the
Conagen equity. Givaudan has failed to show that it has incurred
any damages from paying $10 million for a 5% interest in Conagen
that it continues to hold.
13.

Accordingly, Givaudan has failed to meet its burden to

establish the necessary elements, including damages, for its
claim of breach of contract. Therefore, Conagen is not liable to
Givaudan for breach of contract.
II. Givaudan's Count II - Promissory Estoppel

14.

The elements of a promissory estoppel claim are that:
1) a promise was made; 2) it was the reasonable
expectation of the promiser to induce action
or forbearance on the part of the promisee; 3)
the promisee reasonably relied on the promise
and took action to his or her detriment; and,
20

4) such promise is binding because injustice
can be avoided only by enforcement of the
promise.
Fanean v. Rite Aid Corp. of Del., Inc.,

984 A.2d 812, 822

(Del.

Super. Ct. 2009).
15.

"Promissory estoppel does not apply .

. where a

fully integrated, enforceable contract governs the promise at
issue." SIGA, 67 A.3d at 348; TrueBlue, Inc. v. Leeds Equity
Partners IV, LP, No. Nl4C-12-112, 2015 WL 5968726, at *5 (Del.
Super. Ct. Sept.- 25, 2015);-see also Cavr-v. Evolving Sys.,
Inc., No. 15-1211, 2017 WL 658470, at *10 (D. Del. Feb. 17,
201 7) .
16.

In this case, the Term Sheet, coupled with Dr.

Witmer's agreement to transfer immediately the $10 million
equity payment, constituted a binding agreement. Key Term 1
governs the exchange of cash for equity. Because there is an
enforceable contract governing that promise, there can be no
liability under a theory of promissory estoppel. Givaudan cannot
use a claim of promissory estoppel to vary the written agreement
that the parties executed.
17.

Givaudan's promissory estoppel claim fails for the

additional reasons that it cannot show an injury or that
injustice can be avoided only by enforcement of the promise.
Givaudan retains a valuable 5% interest in Conagen, which was a

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fair exchange for its payment. It would be unjust to require
Conagen to reverse the equity transaction against its will.
18.

Conagen is not liable to Givaudan under a theory of

promissory estoppel.
III. Givaudan's Count III - Unjust Enrichment

19.

To establish unjust enrichment, Givaudan must show:

"(1) an enrichment,

(2) an impoverishment,

between the enrichment and impoverishment,

(3) a relation
(4) the absence of

justification, and (5) the absence of a remedy provided by law."
Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).
20.

A claim for unjust enrichment is unavailable when

there is a contract that governs the parties' relationship.
Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872, 891 (Del. Ch.
2009). As discussed above, the Term Sheet constitutes a
contract. Because there is an enforceable contract that governs
the promise at issue, there can be no liability under a theory
of unjust enrichment.
21.

Moreover, there can be no unjust enrichment here

because Givaudan provided no proof that it has been
impoverished, much less in the amount of the claimed damages of
$10 million. It retains a 5% interest in Conagen, which is a
fair exchange for its payment. Givaudan has not been

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"impoverished" by the investment, for which it still holds the
benefit.
22.

Furthermore, there was ample justification for the

exchange. The price paid was fair and reflective of a prior
transaction between the parties. Givaudan voluntarily paid the
amount and received valuable equity in return. Conagen has every
right to retain the proceeds, particularly when Givaudan has
held the stock certificates and benefits of ownership for over
five years.
23.

Nor is this a proper case for the application of

unjust enrichment because there is an adequate remedy at law.
Givaudan could have sued under the Term Sheet for damages, and
indeed has pleaded a cause of action in Count I for breach of
contract, even though that claim was unsuccessful because there
was no breach of contract. See, e.g., Intermec IP Corp. v.
TransCore, LP, No. 20-cv-3254, 2021 WL 3620435, at *17 (Del.
Super. Ct. Aug. 16, 2021).
24.

Conagen is not liable for unjust enrichment.

Givaudan's claim for unjust enrichment is dismissed.
CONCLUSION

Conagen is not liable for Breach of Contract, Promissory
Estoppel, or Unjust Enrichment, and thus, Givaudan is entitled
to no relief on its claims against Conagen. Givaudan's claims

23

against Conagen are dismissed. The Clerk is directed to enter
judgment dismissing this case. The Clerk is also directed to
close all pending motions and to close this case.
SO ORDERED.
New York, New York
Dated:
July 18, 2022
c
/ o n G . Keel tl
United, States District Judge

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