Vogel v. Boris et al

Filing 21

DECISION AND ORDER: For the reasons discussed above, it is hereby ORDERED that the motion so deemed by the Court as filed by defendants David Boris and Marshall Kiev to dismiss the Complaint of plaintiff Stephen A. Vogel (Dkt. No. 18) is DENIED. So Ordered. (Signed by Judge Victor Marrero on 4/28/2021) (js)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
STEPHEN A. VOGEL,
:
:
Plaintiff,
:
:
20 Civ. 9301 (VM)
- against :
:
DECISION AND ORDER
DAVID BORIS and MARSHALL KIEV,
:
:
Defendants.
:
-----------------------------------X
VICTOR MARRERO, United States District Judge.
Plaintiff Stephen A. Vogel (“Vogel”) commenced this
action on November 5, 2020, bringing one count each of breach
of contract and imposition of a constructive trust against
defendants David Boris (“Boris”) and Marshall Kiev (“Kiev,”
and together with Boris, “Defendants”). (See “Complaint,”
Dkt. No. 1.)
Now before the Court is Defendants’ premotion letter
regarding

dismissal

of

the

Complaint,

which

the

Court

construes as a motion to dismiss1 pursuant to Federal Rule of
Civil Procedure (“Rule”) 12(b)(6). (See “Letter Motion,” Dkt.
No. 18.) For the reasons set forth below, the Letter Motion
is DENIED in its entirety.

1

See Kapitalforeningen Lægernes Invest. v. United Techs. Corp.,
779 F. App'x 69, 70 (2d Cir. 2019) (affirming the district court ruling
deeming an exchange of letters as a motion to dismiss).

1

I.
A.

BACKGROUND

FACTS2
This case arises from a dispute among three business

partners, culminating in one -- Vogel -- suing the other two
-- Boris and Kiev. At the center of their dispute is a
“special purpose acquisition company,” or “SPAC,” a company
used by investors for the purpose of participating in private
equity transactions. SPACs do not themselves conduct any
commercial
investors,

operations
typically

but

rather

through

an

obtain

initial

capital

public

from

offering

(“IPO”), and in turn use that capital to engage in corporate
acquisitions.
The first step of the typical SPAC process, according to
Vogel, is for those managing the SPAC to create a company to
control it, usually a limited liability company, referred to
as the “sponsor.” The sponsor receives a percentage of the
shares raised in the IPO as a fee and puts the shares aside

2

Except as otherwise noted, the following background derives
from the Complaint. The Court takes all facts alleged therein as true
and construes the justifiable inferences arising therefrom in the
light most favorable to Plaintiff, as required under the standard set
forth in Section II, infra. Insofar as the contract at issue is
attached to the Complaint and integral to the allegations contained
therein, the Court likewise considers its terms for resolution of the
present motion. Chapman v. N.Y. State Div. for Youth, 546 F.3d 230,
234 (2d Cir. 2008) (explaining that on a motion to dismiss, the court’s
review includes “undisputed documents, such as a written contract
attached to, or incorporated by reference in, the complaint”
(citations omitted)).

2

in escrow or trust pending consummation of a potential merger.
Once a successful merger has occurred, the sponsor will
distribute the shares to the SPAC’s managers and/or members
based on certain contractual triggers such as, for example,
termination

of

a

lockout

period

or

the

reaching

of

a

particular share price.
Boris founded the SPAC at issue here, Forum Merger
Corporation (“FMC I”), on December 1, 2014. In 2016, Kiev
joined FMC I. Later in 2016, Vogel, Boris, and Kiev together
formed Forum Capital Management, LLC (“Forum Capital”) as a
sponsor to manage FMC I. Vogel, Boris, and Kiev were the
managers of Forum Capital, and Vogel, Boris, Danielle Boris
2010 Trust, Jamie Boris 2010 Trust, MK 2016 Trust, and AJPM,
LLC were its members.
The

Amended

Operating

and

Agreement

Restated
of

Forum

Limited
Capital

Liability
(the

Company

“Operating

Agreement,” Complaint, Ex. A, Dkt. No. 1-1) governed both
Forum Capital itself and the rights and obligations of its
managers and members. It superseded a prior agreement and was
signed on or about July 31, 2017. Vogel alleges that the
Operating Agreement was negotiated among him, Boris, and
Kiev, with the assistance of an experienced lawyer familiar
with SPACs.

3

The Operating Agreement memorialized what Vogel alleges
was the parties’ intent to “commit their time and energy to
FMC I and, if FMC I proved successful, to work together again
on future SPAC investments.” (Complaint ¶ 31.) In relevant
part,

Section

7.02,

titled

“Business

Opportunities;

Limitation on Other Activities,” provides:
(b) . . . [E]xcept as otherwise approved by all
Managers, other than FMC and its Subsidiaries, no
Manager or Member may, directly or indirectly, (i)
perform any services on behalf of any other special
purpose acquisition company, other than Pacific
Special Acquisition Corp. or related entities or
(ii)
invest
in
any
other
special
purpose
acquisition company or public shell company other
than as a passive investor.
(Operating Agreement § 7.02(b), “Section 7.02(b).”) Section
7.02(b), Vogel argues, expressly prohibited the managers and
members of Forum Capital -- including Kiev and Boris -- from
creating, investing in, or performing services for any other
SPACs without the other managers’ approval. Vogel insists
that

all

three

managers

are

“sophisticated

financial

professionals,” and their agreement to “bind[] their business
activities together” was carefully negotiated to contain two
limited exceptions. (Complaint ¶¶ 33-35.) Under the Operating
Agreement, the parties were permitted (1) to perform services
for Pacific Special Acquisition Corp., an already existing
SPAC; and (2) to participate in SPAC investments as “passive
investors.” (Id. ¶¶ 36-37.) With the exception of these two

4

limited circumstances, the parties were bound to not form
other SPACs without each other’s consent.
Until May 2018, the SPAC worked according to plan. FMC
I merged with ConvergeOne Holdings, Inc. (“ConvergeOne”) on
February 22, 2018, and the control and management of FMC I
then passed to ConvergeOne’s shareholders. Accordingly, Forum
Capital could be dissolved under Section 11.01(b),3 which
provided that Forum Capital “shall be dissolved and its
affairs wound up upon: . . . [either] [t]he sale, disposition
or distribution of all securities and assets held by the
Company”4 or “[t]he election to dissolve the Company made in
writing by all the Members.” (Operating Agreement §§ 11.01
(b), (d).)
Vogel contends that, because he never provided written
consent

for

dissolution,

the

Operating

Agreement

never

terminated. He further argues that, even if the Operating
Agreement did terminate, by its express terms Section 7.02(b)
survived termination.
In support of his argument that Section 7.02(b) was still
in force, Vogel claims that Kiev’s attorney confirmed via

3

The Complaint cites Section 11.05(b), however; there is no
such Section in the Operating Agreement, and Section 11.01 governs
“Events
Causing
Dissolution.”
The
Court
therefore
construes
Plaintiff’s arguments as being made in reliance on Section 11.01.
4 The Operating Agreement defines Forum Capital as the “Company.”
(Operating Agreement at 1.)

5

email

in

December

2017

that

Section

7.02(b)

required

unanimous consent for Forum Capital’s members to provide
services to future SPACs. Vogel also contends that in January
2018, he reached out to Boris and Kiev about pursuing a second
SPAC investment. Vogel alleges that, at a related February
2018

meeting

between

Kiev

and

Vogel,

Kiev

“specifically

stated” that Section 7.02(b) still required approval by Forum
Capital’s managers and members before any party could form
another SPAC. (Complaint ¶ 51.) Vogel further alleges that
Kiev then confirmed this understanding with his attorney.
Vogel continued to pursue the idea of a second SPAC with
Kiev and Boris, but alleges that Boris was unresponsive.
Ultimately, in March 2018, Boris told Kiev that he did intend
to form another SPAC but only with Kiev, not Vogel. To obtain
Vogel’s

consent,

Kiev

and

Boris

discussed

giving

Vogel

financial consideration in exchange, but, according to Vogel,
they ultimately decided against it.
Nevertheless,

because

Kiev

and

Boris

allegedly

understood that they could not squeeze Vogel out without his
consent, Vogel claims that they had an attorney prepare a
draft plan of dissolution and liquidation for Forum Capital
(the “Draft Plan of Dissolution”), which included a provision
under which Vogel would agree to waive his consent rights
under Section 7.02(b). On April 18, 2018, counsel for Boris

6

and Kiev sent the Draft Plan of Dissolution, claiming to Vogel
that it was “customary” to dissolve Forum Capital and FMC I
“since they distributed and liquidated their securities and
assets.” (Complaint ¶ 66.) On May 10, 2018, Vogel indicated
that he did not accept the terms of the Draft Plan of
Dissolution

as

written

and

proposed

certain

revisions.

Without accepting the revised terms, on May 25, 2018, counsel
for Boris and Kiev wrote to Vogel’s counsel indicating that
Forum Capital and FMC I had been dissolved and wound up.
By then, according to Vogel, Section 7.02(b) had already
been breached. Vogel alleges that on May 4, 2018, a few days
before he rejected the Draft Plan of Dissolution, Boris and
Kiev created another SPAC, Forum Merger II Corporation (“FMC
II”), without Vogel’s consent. Sometime prior to that, and
also without Vogel’s consent, Kiev and Boris formed a sponsor
for FMC II called Forum Investors II LLC (“Forum Investors
II”), of which both Kiev and Boris are managers or members.
Consistent with its goals, on August 7, 2018, FMC II closed
a $250 million IPO. The prospectus indicated that following
the IPO, Boris and Kiev, as officers and directors, were
entitled to 21.7% of FMC II’s outstanding common stock.
On June 12, 2020, FMC II announced it would merge with
an entity called Ittella International, LLC (“Ittella”) to
form a new entity called Tattooed Chef, Inc. (“Tattooed

7

Chef”). Vogel alleges that after that merger was consummated,
Forum Investors II was dissolved and the interests it held
were distributed. Accordingly, Defendants each received the
economic value of their investment.
Vogel alleges that as a result of Defendants’ breach, he
“has been damaged in an amount no less than the value of any
equity ownership held by Defendants’ [sic] in either or both
FMC II, Forum Investors II, Itella, and/or Tattooed Chef.”
(Complaint ¶ 96.) He also argues that he is entitled to the
reasonable

fees

and

costs

associated

with

enforcing

his

rights under the Operating Agreement. (Id. ¶ 97 (citing
Operating Agreement § 12.07).)
For his part, Vogel acknowledges that he was approached
on May 8, 2018 by third parties inviting him to participate
in another SPAC investment with Twelve Seas Investment Corp.
According to Vogel, his only option was to pursue this new
opportunity, which he did beginning in June 2018.
B.

PARTIES’ ARGUMENTS
Consistent

with

the

Court’s

Individual

Practices,

Defendants notified Vogel of perceived deficiencies in the
Complaint by letter dated January 19, 2021. (See “Premotion
Letter,” Dkt. No. 12.) Defendants argue that the Complaint
should be dismissed for four reasons. First, the Operating
Agreement was intended to govern a single deal, only “while

8

the current deal was ongoing,” and Vogel’s efforts to “freeride” on his former partners’ later business transactions
fails as a matter of law. (Id. at 1-2.) Second, Defendants
contend

that

Vogel’s

interpretation

of

the

Operating

Agreement is “absurd and unenforceable” because it serves no
“legitimate business interest” and “lacks reasonable scope
and duration.” (Id. at 2.) Third, Defendants contend that
Vogel cannot seek damages for breach of a contract that he
himself breached under the “election of remedies” doctrine.
Lastly, Vogel would be in the same position he is in now had
the breach not occurred because Defendants would simply not
have done the Ittella deal had they been forced to seek
Vogel’s

consent;

therefore

Vogel

has

not

suffered

any

damages.
Vogel

responded

by

letter

dated

January

26,

2021,

challenging three of these asserted grounds for dismissal.
(See

“Opposition,”

interpretation
Defendants’

of

Dkt.

No.

Section

interpretation

17.)

With

7.02(b),
requires

respect

Vogel

to

counters

improperly

the
that

reading

additional terms into the Operating Agreement. Vogel asserts
that by its plain terms, the contract prohibited Defendants
from entering another SPAC transaction without his consent,
even after consumation of the ConvergeOne deal. Second, Vogel
argues that contrary to Defendants’ argument, Section 7.02(b)

9

is not unenforceable as a matter of public policy. Rather,
contracts

such

as

this

one,

negotiated

by

sophisticated

parties at arm’s length, should not be disturbed. Likewise,
Defendants’ argument that the provision is a restrictive
covenant fails for the same reason, especially on a motion to
dismiss at which the pleading is viewed in the light most
favorable to Plaintiff. Lastly, Vogel argues that he has
properly pled damages because, according to the Complaint,
absent a breach, Defendants would have gone forward with the
Ittella transaction with Vogel, so he would have enjoyed
economic gains as a result. Thus, Vogel argues that his
expectation damages are properly pled and should not be
dismissed at this stage.
In his Opposition, Vogel did not address Defendants’
argument regarding the “election of remedies” doctrine. The
Court directed Vogel to address this argument (Dkt. No. 19),
which he did on April 23, 2021 (Dkt. No. 20). Vogel counters
that the “election of remedies” doctrine is inapplicable and
does not bar his claim because he has not sought inconsistent
damages. Vogel claims that he seeks only one remedy. Further,
Vogel urges that his later breach does not bar recovery, and
Defendants’ arguments to the contrary are either inapplicable
or unsupported by Delaware law.

10

II.

LEGAL STANDARD

“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). This standard is met “when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for

the

misconduct

dismissed

if

allegations

the

alleged.”
plaintiff

sufficient

to

Id.

A

complaint

should

be

has

not

offered

factual

render

the

claims

facially

plausible. See id. However, a court should not dismiss a
complaint

for

failure

to

state

a

claim

if

the

factual

allegations sufficiently “raise a right to relief about the
speculative level.” Twombly, 550 U.S. at 555.
In resolving a motion to dismiss, the Court's task is
“to assess the legal feasibility of the complaint, not to
assay the weight of the evidence which might be offered in
support thereof.” In re Initial Pub. Offering Sec. Litig.,
383 F. Supp. 2d 566, 574 (S.D.N.Y. 2005) (internal quotation
marks omitted), aff’d sub nom. Tenney v. Credit Suisse First
Bos. Corp., No. 05 Civ. 3430, 2006 WL 1423785 (2d Cir. May
19, 2006). In this context, the Court must draw reasonable
inferences in favor of the nonmoving party. See Chambers v.

11

TimeWarner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). However,
the requirement that a court accept the factual allegations
in the complaint as true does not extend to legal conclusions.
See Iqbal, 556 U.S. at 678.
III. DISCUSSION
As a threshold matter, the Court notes, and the parties
do not dispute, that under the Operating Agreement, “the
rights and obligations of the parties hereunder shall be
governed

by

and

interpreted,

construed

and

enforced

in

accordance with the laws of the State of Delaware.” (See
Operating
Delaware

Agreement
law

to

§

its

12.04.)

Thus,

interpretation

the

Court

of

the

applies
Operating

Agreement.
When interpreting a contract under Delaware law, the
court must “give priority to the parties’ intentions as
reflected in the four corners of the agreement.” GMG Cap.
Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776,
779 (Del. 2012). In determining the parties’ intent, the court
will interpret the words in the contract “using their common
or ordinary meaning, unless the contract clearly shows that
the

parties’

intent

was

otherwise.”

Schuss

v.

Penfield

Partners, L.P., No. Civ.A. 3132, 2008 WL 2433842, at *6 (Del.
Ch. June 13, 2008) (citations omitted). As part of this
review, the court must attempt to “reconcile all of the

12

agreement’s provisions when read as a whole, giving effect to
each and every term.” Id. (citations omitted).
In the context of a Rule 12(b)(6) motion to dismiss,
courts

are

“not

required

to

accept

every

strained

interpretation proposed by the plaintiff.” Caspian Alpha Long
Credit Fund, L.P. v. GS Mezzanine Partners 2006, L.P., 93
A.3d 1203, 1205 (Del. 2014) (citation omitted). However,
dismissal is improper unless “the defendants’ interpretation
is the only reasonable construction as a matter of law.” Id.
A.

PLAIN MEANING
Section 7.02(b) provides that, “except as otherwise

approved by all Managers . . . no Manager or Member may,
directly or indirectly, (i) perform any services on behalf of
any other [SPAC] . . . or (ii) invest in any other [SPAC].”
(Operating Agreement § 7.02(b).) The parties do not dispute
that

under

Section

7.02(b),

but

for

the

two

exceptions

identified, Kiev and Boris were not permitted to enter any
other SPAC transactions without Vogel’s approval.
B.

TERMINATION AND SURVIVAL
The parties disagree on the scope and duration of this

provision, and specifically, whether it survives termination
of the Operating Agreement. For the reasons discussed herein,
the Court is not persuaded that the Operating Agreement

13

terminated, thus it need not address whether Section 7.02(b)
survives termination.
The Operating Agreement provides numerous avenues for
termination,

including

“[t]he

election

to

dissolve

the

Company made in writing by all the Members,” or “[t]he sale,
disposition or distribution of all securities and assets held
by

the

Company,”

11.01(b),

(d).)

contention
dissolve

While

that

Forum

among

the

others.
the

allegations

parties

Capital,

it

(Operating

never
is

support

agreed

less

Agreement

in

clear

§§

Vogel’s

writing

whether

to

Forum

Capital’s assets were “sold, disposed, or distributed.”
The Complaint alleges that FMC I merged with ConvergeOne
on

February

management

22,
of

2018,

FMC

I

“pursuant
passed

to

to

which

the

control

shareholders

and
of

ConvergeOne.” (Complaint ¶ 40.) Thus, the Operating Agreement
“could be dissolved and its affairs wound up.” (Id. ¶ 41.)
According to the typical SPAC process Vogel outlines, the
next step would involve FMC I “distribut[ing] shares to its
managers and/or members.” (Id. ¶ 19.) However, the Complaint
does

not

allege

distribution”
Complaint

of

that
assets

repeatedly

such

“sale,

disposition,

ever

took

place.

suggests

that

Forum

Instead,
Capital

or
the

never

dissolved. (E.g., id. ¶ 70 (“[T]he parties were required . . .
to agree in advance to the plan of dissolution, which had not

14

yet occurred.”); ¶ 71 (“[N]o plan of dissolution had been
agreed to or executed.”); ¶ 73 (“At no time did Plaintiff
Vogel give his consent for Boris and Kiev to dissolve either
Forum Capital or FMC I.”))
The

Complaint

contains

two

passing

references

to

Defendants’ position with respect to termination. First, when
Defendants sent Vogel the Draft Plan of Dissolution on April
18, 2018, they explained it was “‘customary’ to dissolve both
[FMC

I

and

Forum

Capital]

since

they

distributed

and

liquidated their securities and assets.’” (Id. ¶ 66.) While
Vogel claims he never signed the Draft Plan of Dissolution,
he alleges that later, on May 25, 2018, counsel for Defendants
advised him that Forum Capital and FMC I “had been dissolved
and wound up.” (Id. ¶ 71.) While these allegations suggest
that Defendants believed that Forum Capital had dissolved,
they do not sufficiently demonstrate that such dissolution
actually

occurred,

especially

when

considering

Vogel’s

repeated allegations to the contrary.
Construing the allegations in Vogel’s favor, as it must
at the pleading stage, the Court is not persuaded that the
Operating Agreement terminated. No doubt, the allegations
create a muddled picture of what was required for termination
of the Operating Agreement, and it is unclear whether those
conditions were ever satisfied. Nevertheless, Vogel asserts

15

that termination did not occur, and he supports that assertion
with

allegations

that

Defendants

took

further

steps

to

affirmatively terminate the Operating Agreement -- by sending
him the Draft Plan of Dissolution -- which presumably would
have

been

unnecessary

had

the

Operating

Agreement

automatically terminated. Furthermore, even if Forum Capital
and

FMC

I

had

dissolved

on

May

25,

2018

as

Defendants

represented, that fact would not undermine Vogel’s claims.
The Operating Agreement would have been in effect on May 4,
2018 when Defendants created FMC II. Thus, construing any
reasonable ambiguity or doubt in Vogel’s favor, as the Court
must do at this stage of the litigation, the Court finds that
Vogel has sufficiently pled that the Operating Agreement was
in effect at the time of the alleged breach.
C.

ENFORCEABILITY
The Court likewise rejects Defendants’ argument that

Vogel’s interpretation of Section 7.02(b) is “absurd and
unenforceable as a matter of public policy” because it “serves
no legitimate business interest.” (Premotion Letter at 2.) A
restrictive covenant is enforceable under Delaware law if:
“(1) it meets general contract law requirements, (2) is
reasonable in scope and duration, (3) advances a legitimate
economic interest of the party enforcing the covenant, and
(4) survives a balance of the equities.” Kan-Di-Ki, LLC v.

16

Suer, C.A. No. 7937, 2015 WL 4503210, at *19 (Del. Ch. July
22, 2015) (citations omitted). Here, Defendants appear to
allege that the Complaint fails on the second and third prongs
of this analysis.
However, the “legitimate economic interest” of Section
7.02(b) is clear, and therefore Defendants’ argument on this
prong fails. Vogel alleges that the parties agreed to create
“an

ongoing

business

agreement

between

themselves.”

(Complaint ¶ 34.) That sophisticated parties planning to
undertake numerous profitable transactions together would
agree to work exclusively with one another is neither “absurd”
nor does it lack a “legitimate business interest.” To the
contrary, the inclusion of Section 7.02(b) protected Vogel’s
interest in maintaining an exclusive, lucrative business
relationship with Defendants. See, e.g., Kan-Di-Ki, 2015 WL
4503210, at *20 (“DL was protecting its legitimate economic
interest in maintaining the business relationships it or its
predecessor had.”).
Whether Section 7.02(b) is “reasonable in scope and
duration” is less obvious. Under Vogel’s interpretation, this
provision could end only upon consent of the parties and would
otherwise survive indefinitely. In other words, the parties
could participate in other SPAC transactions in the future
only with each other’s consent.

17

While the indefinite duration of the agreement may seem
unreasonable at first impression, Delaware courts have deemed
restrictive covenants of unlimited duration reasonable in the
context

of

certain

confidentiality

provisions.

E.g.,

Presidio, Inc. v. Semler, C.A. No. 20-965, 2020 WL 8619101,
at *7 (D. Del. Sept. 28, 2020). Likewise, in other cases in
which reasonableness was not at issue, Delaware courts have
recognized

restrictive

covenants

that

imposed

lasting

limitations on competitive conduct. E.g., Concord Steel, Inc.
v. Wilmington Steel Processing Co., Civ.A. No. 3369, 2008 WL
902406, at *6 (Del. Ch. Apr. 3, 2008) (“That is, WSP and Neary
are

precluded

from

engaging

in

particular

types

of

transactions or enterprises related to the steel industry.”);
Allied Cap. Corp. v. GC-Sun Holdings, L.P., 910 A.2d 1020,
1024–25

(Del.

Ch.

2006)

(noting

that

the

defendant

was

prohibited “from making a discrete form of investment” but
could make other investments because “[r]estrictive covenants
are carefully negotiated and our law requires that their
unambiguous terms be given effect”).
On the other hand, in employment contracts, Delaware
courts have determined that reasonable noncompete clauses may
last only a few years and no more. TP Group–CI, Inc. v.
Vetecnik, No. 16 Civ. 00623, 2016 WL 5864030, at *2 (D. Del.
Oct.

6,

2016)

(“Delaware

courts

18

have

routinely

found

restrictive covenants with a duration of two years to be
reasonable in duration.” (citing Weichert Co. of Pa. v. Young,
C.A. No. 2223, 2007 WL 4372823, at *3 (Del. Ch. Dec. 7,
2007))).
The reasonableness analysis, therefore, depends on the
context

in

which

the

restrictive

covenant

arises.

This

inquiry in turn involves questions related to the nature of
the

transaction

and

the

typical

conduct

of

market

participants.
Given the novelty and complexity of the transaction at
issue here, the Court finds that a determination regarding
the reasonableness of the scope and duration of Section
7.02(b)

involves

questions

of

fact

inappropriate

for

resolution at the pleading stage. See Wells Fargo & Co. v.
First Interstate Bancorp., Civ. A. No. 14623, 1996 WL 32169,
at *6 (Del. Ch. Jan. 18, 1996) (denying a motion to dismiss
entrenchment

claims,

explaining

that

the

requisite

reasonableness inquiry “will of course quite often be illsuited

to

pre-trial

resolution

since

the

question

of

reasonableness is necessarily highly contextual”); cf. Lumber
Liquidators, Inc. v. Cabinets To Go, LLC, 415 F. Supp. 3d
703, 717 (E.D. Va. 2019) (denying a motion to dismiss in part
because

“[t]he

validity

of

a

restrictive

covenant

is

intertwined with questions of fact particular to each case.

19

The

Court

cannot

determine

the

reasonableness

of

the

restrictive covenants ‘in a factual vacuum.’”); Apex Physical
Therapy, LLC v. Ball, No. 17 Civ. 00119, 2018 WL 3120651, at
*2 (S.D. Ill. June 25, 2018) (denying a motion to dismiss
because

“whether

restrictive

covenants

are

enforceable

depends ‘on the specific facts and circumstances of the
individual case’” and this “fact-specific inquiry . . . is
not

appropriate

to

adjudicate

at

the

motion

to

dismiss

stage”); Crom Corp. v. Harvey, No. 12 Civ. 00141, 2012 WL
13018540, at *4 (N.D. Fla. Nov. 29, 2012) (“The issue of
whether a restrictive covenant is reasonable is generally a
question of fact, which cannot be determined at the motion to
dismiss stage.”).
Moreover, as the Court has previously noted, “dismissal,
pursuant

to

defendant’s

Rule

12(b)(6),

interpretation

is
of

appropriate
the

terms

only
is

if

the

the
sole

reasonable interpretation.” Presidio, 2020 WL 8619101, at *7.
And as Vogel points out, courts apply a “less searching”
inquiry when, as here, “sophisticated parties contract to
exchange securities.” Revolution Retail Sys., LLC v. Sentinel
Techs., Inc., No. Civ 10605, 2015 WL 6611601, at *10 (Del.
Ch. Oct. 30, 2015); see also Tristate Courier & Carriage,
Inc. v. Berryman, No. C.A. 20574, 2004 WL 835886, at *10 (Del.
Ch. Apr. 15, 2004) (explaining that when the covenant at issue

20

“is part of a contract for the sale of stock, this inquiry is
less searching than if the Covenant had been contained in an
employment contract”). Bearing these principles in mind, the
Court

is

not

persuaded

that

the

only

reasonable

interpretation of Section 7.02(b) is that it constitutes an
unenforceable

restrictive

covenant

as

a

matter

of

law.

Whether Section 7.02(b) constitutes a restrictive covenant
requires a fact-intensive reasonableness inquiry that is
inappropriate at this stage of the litigation.
D.

ELECTION OF REMEDIES
Vogel admits that he entered another SPAC transaction

without Defendants’ consent in violation of his interpterion
of

the

Operating

Agreement.

Defendants

argue

that

this

conduct bars Vogel’s recovery under the doctrine of “election
of remedies.” (Premotion Letter at 3.)
Under the election of remedies doctrine, “a party who
has two or more inconsistent remedies available, and elects
to pursue one of them to the exclusion of the others, may not
later

pursue

other

inconsistent

remedies.”

Carlyle

Inv.

Mgmt., L.L.C. v. Moonmouth Co. S.A., C.A. No. 7841, 2018 WL
5045716, at *1 (Del. Ch. June 28, 2018) (citations omitted).
This doctrine does not bar Vogel’s claim because he does not
seek “inconsistent remedies.” See Israel Disc. Bank of N.Y.
v. First State Depository Co., LLC, Civ.A. No. 7237, 2013 WL

21

2326875, at *22 (Del. Ch. May 29, 2013) (explaining that the
“doctrine of election of remedies is applicable only where
inconsistent remedies are asserted against the same party”).
The Court is unpersuaded by Defendants’ argument that by
breaching the contract, Vogel elected a remedy inconsistent
with his action for money damages. Vogel’s own breach was not
an action to rescind the Operating Agreement nor an effort to
unwind the contract he simultaneously seeks to enforce. See
Falco v. Alpha Affiliates, Inc., No. Civ.A. 97-494, 2000 WL
727116, at *18 n.23 (D. Del. Feb. 9, 2000) (“[I]f the contract
is

breached,

the

non-breaching

party

must

elect

from

affirming the contract and suing for damages or bringing an
action to rescind the contract.” (citations omitted)).
Insofar

as

Defendants

suggest

that

Vogel’s

breach

undermines his entitlement to relief, that argument also
fails. See SmithKline Beecham Pharms. Co. v. Merck & Co., 766
A.2d 442, 450 (Del. 2000) (explaining that a plaintiff’s
breach “does not necessarily require the application of the
unclean hands doctrine”); see also Heritage Handoff Holdings,
LLC v. Fontanella, No. 16 Civ. 00691, 2019 WL 1056270, at *13
n.9 (D. Del. Mar. 6, 2019) (“Although I do find that Plaintiff
has breached the SPA, I do not find its conduct so shocking
as to warrant invoking the [unclean hands] doctrine.”).

22

E.

DAMAGES
The standard remedy for breach of contract claims is

expectation damages measured by “the amount of money that
would put the promisee in the same position as if the promisor
had

performed

the

contract.”

Siga

Techs.,

Inc.

v.

PharmAthene, Inc., 132 A.3d 1108, 1130 (Del. 2015) (citation
omitted). Here, the Court is satisfied that the Complaint
adequately alleges that Vogel suffered expectation damages as
a result of the alleged breach.
While Defendants argue that Vogel suffered no damages
because they would not have entered the Ittella deal had they
been

compelled

to

seek

Vogel’s

consent,

insofar

as

any

reasonable doubt or ambiguity of interpretation exists, the
Court must credit Vogel’s contrary allegations at this stage.
Vogel alleges that Defendants derived “economic value on an
investment

that

Vogel

was

contractually

entitled

to

participate in” and that he “would have participated in FMC
II, had the Defendants not impermissibly formed the SPAC
without

him.”

acknowledges

(Complaint
that

these

¶¶

82,

damages

95.)

While

the

Court

allegations

are

thin,

“[p]roof of . . . damages and of their certainty need not be
offered in the complaint in order to state a claim.” Anglo
Am. Sec. Fund, L.P. v. S.R. Glob. Int'l Fund, L.P., 829 A.2d

23

143, 156 (Del. Ch. 2003). Accordingly, Defendants’ motion to
dismiss on this basis is also denied.
IV.

ORDER

For the reasons discussed above, it is hereby
ORDERED that the motion so deemed by the Court as filed
by defendants David Boris and Marshall Kiev to dismiss the
Complaint of plaintiff Stephen A. Vogel (Dkt. No. 18) is
DENIED.

SO ORDERED.
Dated:
New York, New York
28 April 2021
_________________________
VICTOR MARRERO
U.S.D.J.

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