Yu v. GSM Nation, LLC

Full title: WARREN DAVID YU, Plaintiff, v. GSM NATION, LLC, AHMED KHATTAK, US MOBILE…

Court: SUPERIOR COURT OF THE STATE OF DELAWARE

Date published: Apr 24, 2018

C.A. No. N17C-07-200 JRJ (Del. Super. Ct. Apr. 24, 2018)

Opinion

C.A. No. N17C-07-200 JRJ

04-24-2018

WARREN DAVID YU, Plaintiff, v. GSM NATION, LLC, AHMED KHATTAK, US MOBILE LLC, and US MOBILE INC., Defendants.

Attorneys and Law Firms David A. Dorey, Esquire (argued), Larry R. Wood, Jr., Esquire, Adam V. Orlacchio, Esquire, Craig N. Haring, Esquire, of Blank Rome LLP, 1201 N. Market Street, Suite 800, Wilmington, Delaware; and Frank A. Dante, Esquire (pro hac vice), of Blank Rome LLP, One Logan Square, Philadelphia, Pennsylvania, Attorneys for Plaintiff. Margaret F. England, Esquire (argued) and Michael Busenkell, Esquire, of Gellert Scali Busenkell & Brown, LLC, 1201 N. Orange Street, Suite 300, Wilmington, Delaware, Attorneys for Defendant GSM Nation, LLC. Alexandra M. Cumings, Esquire (argued) and John P. DiTomo, Esquire (argued), of Morris, Nichols, Arsht & Tunnell LLP, 1201 N. Market Street, P.O. Box 1347, Wilmington, Delaware, Attorneys for Defendant Ahmed Khattak. Blake Rohrbacher, Esquire (argued), Susan M. Hannigan, Esquire, and Katharine L. Mowery, Esquire, of Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware, Attorneys for Defendants US Mobile LLC and US Mobile Inc.

Jurden, P.J.

OPINION

Upon Defendant GSM Nation, LLC's Motion to Dismiss Counts II, III, and IV of the Amended Complaint: GRANTED in part, and DENIED in part. Upon Defendant Ahmed Khattak's Motion to Dismiss Counts II, III, IV, and V of the Amended Complaint: GRANTED. Upon Defendant US Mobile LLC's Motion to Dismiss Counts III, IV, and V of the Amended Complaint: GRANTED in part, and DENIED in part. Upon Defendant US Mobile Inc.'s Motion to Dismiss Counts III, IV, and V of the Amended Complaint: GRANTED.

Attorneys and Law Firms

David A. Dorey, Esquire (argued), Larry R. Wood, Jr., Esquire, Adam V. Orlacchio, Esquire, Craig N. Haring, Esquire, of Blank Rome LLP, 1201 N. Market Street, Suite 800, Wilmington, Delaware; and Frank A. Dante, Esquire (pro hac vice), of Blank Rome LLP, One Logan Square, Philadelphia, Pennsylvania, Attorneys for Plaintiff. Margaret F. England, Esquire (argued) and Michael Busenkell, Esquire, of Gellert Scali Busenkell & Brown, LLC, 1201 N. Orange Street, Suite 300, Wilmington, Delaware, Attorneys for Defendant GSM Nation, LLC. Alexandra M. Cumings, Esquire (argued) and John P. DiTomo, Esquire (argued), of Morris, Nichols, Arsht & Tunnell LLP, 1201 N. Market Street, P.O. Box 1347, Wilmington, Delaware, Attorneys for Defendant Ahmed Khattak. Blake Rohrbacher, Esquire (argued), Susan M. Hannigan, Esquire, and Katharine L. Mowery, Esquire, of Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware, Attorneys for Defendants US Mobile LLC and US Mobile Inc. Jurden, P.J.

I. INTRODUCTION

Plaintiff, Warren David Yu, brings this action against Defendants GSM Nation, LLC ("GSM"), Ahmed Khattak, US Mobile LLC, and US Mobile Inc. (collectively, "Defendants"), alleging Breach of Contract, Fraudulent Inducement, Fraudulent Transfer, Unjust Enrichment, and Tortious Interference in connection with a series of loans Yu made to GSM.¹ Before the Court are Defendants' Motions to Dismiss. For the reasons explained below, all the motions, except Khattak's Motion to Dismiss for lack of personal jurisdiction and GSM's and US Mobile LLC's Motions to Dismiss Yu's fraudulent transfer claim, are GRANTED.

1 See Am. Compl. ¶ 91 (Trans. ID 61288661) (D.I. 14).

II. FACTUAL BACKGROUND

A. The Parties

GSM is a Delaware limited liability company in the mobile phone retail and wholesale business.² Khattak is the chief executive officer, co-founder, and manager of GSM, and owns 85% of the GSM units.³ Junaid Shams is the other co-founder of GSM.⁴ Shams was acquainted with Yu through medical studies at the George Washington University before Yu loaned money to GSM in the series of transactions that gave rise to this controversy.⁵ US Mobile Inc. was a Delaware corporation that was merged with and into US Mobile LLC, a Delaware limited liability company, on July 1, 2015.⁶ Khattak allegedly controls US Mobile LLC.⁷

2 Am Compl. ¶ 5.

3 Id. at ¶ 6.

4 Def. Ahmed Khattak's Opening Br. in Support of Mot. Dismiss the Am. Compl. ("Khattak Opening Br.") at 2 (Trans. ID 61422772) (D.I. 27).

5 Am. Compl. ¶ 17.

6 Id. at Ex. A ¶ 16; Opening Br. in Support of US Mobile's Mot. Dismiss ("US Mobile Opening Br."), Ex. 4 (Trans. ID 61422291) (D.I. 26) ("Certificate of Merger"). Khattak formed US Mobile LLC, a Delaware limited liability company with its principal office in Washington, D.C. ("US Mobile LLC (D.C.)"), on August 11, 2014. Am. Compl. Ex. A ¶ 12. On November 21, 2014, Khattak converted US Mobile LLC (D.C.) into US Mobile Inc., a Delaware corporation. Id. at Ex. A ¶ 13. Khattak then formed US Mobile LLC, a Delaware limited liability company with its principal office in Connecticut ("US Mobile LLC (Conn.)") on May 13, 2015. Id. at Ex. A ¶ 14. US Mobile LLC (Conn.) is the entity into which US Mobile Inc. was merged. It is undisputed that personal jurisdiction exists over GSM and both US Mobile LLC entities. See 6 Del. C. § 18-105.

7 Am. Compl. ¶¶ 1, 57, 133, 154, Ex. A ¶ 14.

B. The Loan Agreements

GSM was founded in 2010.⁸ In mid-2012, GSM sought to expand by developing a mobile virtual network operator ("MVNO"), which would allow it to provide cellular service plans to its customers.⁹ According to the Amended Complaint, GSM was cash strapped at the time, so "[a]t Khattak's request," Shams approached Yu for the purpose of soliciting loans to GSM, and "GSM represented, through Khattak," that Yu's loan would supply the capital GSM needed to launch an MVNO.¹⁰ In October 2012, GSM provided Yu with a prospectus that included the plan to form an MVNO as a division of GSM.¹¹ Yu alleges that based on the prospectus, he loaned $3,500,000 to GSM under a series of sixteen separate loan agreements (the "Loan Agreements") from October 15, 2012 through September 1, 2014.¹² The Loan Agreements provide that the loans accrue 12% simple interest, payable monthly,¹³ and Yu was entitled to call the loan at any time with 60 days' notice to GSM.¹⁴

8 Id. at ¶ 14.

9 Id. at ¶¶ 15-16.

10 Id. at ¶¶ 18-19.

11 Id. at ¶¶ 20-21; see Khattak Opening Br. Ex. B.

12 Am. Compl. ¶ 91; see Khattak Opening Br. Ex. C. Checks from Yu to GSM date back to October 15, 2012. The Loan Agreements are dated from February 2, 2013 through September 1, 2014.

13 See Am. Compl. Ex. B.

14 Id.

GSM paid Yu the required monthly interest payments for approximately 34 months¹⁵ and employed personnel to develop MVNO capabilities.¹⁶ Yu alleges Khattak paid himself "a draw" of $10,000 to $15,000 per month from GSM while Yu was making loans to GSM.¹⁷ Yu further alleges Khattak used $5,000 from GSM each month to cover his personal living expenses,¹⁸ and "even tried to buy a luxury car using a cashier's check from GSM."¹⁹

15 See Am. Compl. ¶¶ 77, 80. The Loan Agreements are dated from February 2, 2013 through September 1, 2014. GSM checks were returned for insufficient funds in early 2016.

16 Id. at ¶¶ 30-32.

17 Id. at ¶ 49.

18 Id. at ¶ 50.

19 Id. at ¶ 51.

C. The MVNO

In April 2013, GSM released an MVNO business plan, which stated that the MVNO GSM was developing would be a part of GSM.²⁰ Yu alleges that instead of completing the MVNO development within GSM, Khattak applied to the Federal Communications Commission on behalf of US Mobile LLC, on August 14, 2014, to provide global or limited international facilities and resale services.²¹ As a result, US Mobile LLC, not GSM, became the MVNO.²² Yu also alleges, on information and belief, that Khattak caused GSM to purchase cellular phones and transfer them to US Mobile LLC without consideration.²³

20 Am. Compl. ¶ 40.

21 Id. at ¶ 58.

22 Id. at ¶¶ 60-64.

23 Id. at ¶ 68. Yu does not allege when this transfer occurred.

D. GSM's Default

According to the Amended Complaint, GSM paid Yu the required monthly interest payments under the Loan Agreements until early 2016, when GSM's interest check for January 2016 was returned for insufficient funds and the interest check for February 2016 was returned twice for insufficient funds.²⁴ Because GSM was in default, Yu made a demand for full payment of the debt under the Loan Agreements on February 17, 2016,²⁵ to which GSM allegedly responded, "given the current state of the business, GSM is not able to repay or service the loan."²⁶ Yu alleges GSM provided him with a GSM income statement dated December 4, 2015 which showed a net loss of $812,257, and a GSM balance sheet dated January 31, 2016 which showed total assets of $112,730,27 and total liabilities of $4,403,083.35.²⁷ Yu also alleges GSM told him that if he filed suit against GSM, GSM would file for bankruptcy.²⁸

24 Id. at ¶¶ 77, 80.

25 Am. Compl. ¶¶ 81-82.

26 Id. at ¶ 87.

27 Id. at ¶ 86.

28 Id. at ¶ 88.

E. Yu Files Suit

On May 3, 2016, Yu filed a complaint against the Defendants in the Court of Chancery for breach of contract, fraudulent inducement, equitable fraud, fraudulent transfer, unjust enrichment, and sought to pierce the corporate veils of GSM and US Mobile under an alter ego theory of liability against Khattak.²⁹ Yu also sought "equitable rescission" of the Loan Agreements, "reformation," a "constructive trust" voiding the transfers from GSM to US Mobile, and an "equitable accounting."³⁰ Yu filed an amended complaint in Chancery on July 26, 2016.³¹ The Court of Chancery dismissed the suit for lack of subject matter jurisdiction on July 7, 2017.³² According to the Vice Chancellor, the "[allegations] suggest that a monetary judgment is Yu's best remedy to collect the debt he is owed..." and "[a]ssuming Yu succeeds on the merits of his claims, he can obtain that remedy against GSM under the Loan Agreements or against US Mobile LLC as the transferee of a fraudulent transfer."³³

29 See Yu v. GSM Nation, LLC, 2017 WL 2889515, at *2 (Del. Ch. July 7, 2017).

30 Id.

31 Id.

32 Id. at *1.

33 Id. at *4-5.

Yu transferred his amended complaint from Chancery to this Court on July 20, 2017.³⁴ Once in Superior Court, he amended his complaint to strike the equitable claims.³⁵ The Verified Amended Complaint ("Amended Complaint") was filed on October 26, 2017.³⁶ On November 13, shortly thereafter, the Defendants moved to dismiss.

34 Hereinafter, "Original Complaint."

35 Yu struck from his Amended Complaint claims for equitable rescission, reformation, constructive trust, equitable accounting, and piercing the corporate veil. See Am. Compl. Ex. 1 (Redline).

36 On October 4, 2017, the Court gave Yu 20 days to amend his Original Complaint by striking the equitable causes of action (i.e., constructive trust, equitable rescission, pierce the corporate veil). See Transcript for Mot. to Stay Hearing Dated October 4, 2017, 30:12-20.

III. PARTIES' CONTENTIONS

Count I of Yu's Amended Complaint alleges a claim for breach of contract against GSM for failure to repay the loans.³⁷ Count II alleges a claim for fraudulent inducement against GSM and Khattak in connection with the Loan Agreements based on GSM's and Khattak's alleged representations that the MVNO would be developed within GSM.³⁸ Count III alleges a claim for fraudulent transfer of the loan monies against GSM, Khattak, US Mobile LLC, and US Mobile Inc.³⁹ Count IV alleges a claim for unjust enrichment against GSM, Khattak, US Mobile LLC, and US Mobile Inc.,⁴⁰ and Count V alleges a claim for tortious interference against Khattak, US Mobile LLC, and US Mobile Inc.⁴¹

37 Am. Compl. ¶¶ 90-101. GSM does not seek to dismiss the breach of contract claim against it. See Defendant GSM Nation, LLC's Opening Br. in Support of Mot. Dismiss the Am. Compl. ("GSM Opening Br.") at 1 (Trans. ID 61421763) (D.I. 24).

38 Am. Compl. ¶¶ 102-11.

39 Id. at ¶¶ 112-36.

40 Id. at ¶¶ 137-58.

41 Id. at ¶¶ 159-66.

Khattak argues the Amended Complaint should be dismissed for lack of personal jurisdiction, failure to state a claim generally, and failure to plead the fraud claims with sufficient particularity.⁴² He further contends that even if the Court has personal jurisdiction over him, Yu's fraudulent inducement claim should be dismissed because Yu does not allege any representations made by Khattak,⁴³ the alleged misrepresentations are statements of future performance that are not actionable,⁴⁴ and the fraudulent inducement claim constitutes an impermissible bootstrap to the breach of contract claim.⁴⁵ With regard to Yu's fraudulent transfer claim, Khattak argues he is not the transferor or transferee, and because Yu fails to "allege any specific transfer of assets from GSM to US Mobile LLC," the Amended Complaint fails to meet the particularity standard under Superior Court Civil Rule 9(b).⁴⁶ With regard to the unjust enrichment claim, Khattak argues Yu lacks standing as a creditor to complain about the manner in which the loan funds were used, and even if that were not the case the breach of contract claim supplants the unjust enrichment claim.⁴⁷ Finally, Khattak argues that the tortious interference claim is time-barred by the statute of limitations and the "affiliate exception" precludes personal liability of directors of a contracting corporation for tortious interference.⁴⁸

42 See Super. Ct. Civ. R. 12(b)(6), 9(b).

43 Khattak Opening Br. at 21.

44 Id. at 23.

45 Id. at 24.

46 Id. at 26-27.

47 Id. at 30-31.

48 Khattak Opening Br. at 32-33.

GSM argues dismissal is warranted because Yu fails to state a claim generally and fails to plead the fraud claims with sufficient particularity.⁴⁹ With regard to the fraudulent inducement claim, GSM argues that Yu fails to plead any actionable false statements, GSM's knowledge of the misconduct, its intent to induce Yu's action, and Yu's reliance on the misrepresentations.⁵⁰ GSM also asserts that because the fraudulent inducement claim is impermissibly bootstrapped to, and shares identically pled damages with, Yu's breach of contract claim - it cannot survive.⁵¹ Second, GSM maintains that the fraudulent transfer claim against it fails under the particularity pleading standard.⁵² With regard to Yu's unjust enrichment claim, GSM maintains it must be dismissed because a contract governs the relationship between GSM and Yu, and the appropriate recovery is based in law.⁵³

49 See Super. Ct. Civ. R. 12(b)(6), 9(b).

50 GSM Opening Br. at 6, 8-10.

51 Id. at 9-11.

52 Id. at 12-13; Super. Ct. Civ. R. 9(b).

53 GSM Opening Br. at 14-15.

US Mobile Inc. argues that it should be dismissed because it was merged into US Mobile LLC and, therefore, "any surviving claims [against US Mobile Inc.] would remain against US Mobile LLC."⁵⁴

54 US Mobile Opening Br. at 7. After the merger, US Mobile LLC was the surviving entity and US Mobile Inc. ceased to exist.

US Mobile LLC argues that it should be dismissed because neither the fraudulent transfer claim, unjust enrichment claim, nor tortious interference claim state a claim against US Mobile LLC. US Mobile LLC maintains that Yu's fraudulent transfer claim fails to allege the purported transfers were related to GSM's insolvency, and fails to allege any assets were transferred from GSM to US Mobile LLC.⁵⁵ US Mobile LLC also maintains that the unjust enrichment claim is unable to survive its Motion because the Amended Complaint lacks allegations of a relationship between Yu and US Mobile LLC.⁵⁶ Finally, US Mobile LLC contends that Yu's tortious interference claim against it should be dismissed because it is based entirely on conclusory allegations.⁵⁷

55 Id. at 8.

56 Id. at 15. One of the elements of unjust enrichment is a relation between the enrichment and impoverishment.

57 Id. at 19.

IV. STANDARD OF REVIEW

On a motion to dismiss for failure to state a claim upon which relief can be granted,⁵⁸ the Court must read the complaint generously, accept all well-pled allegations contained therein as true, and draw all reasonable inferences in the light most favorable to the non-moving party.⁵⁹ A complaint is well-pled if it puts the opposing party on notice of the claim being brought against it.⁶⁰ "Dismissal is inappropriate unless the 'plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof.'"⁶¹ Allegations that are merely conclusory and lacking factual basis will not survive a motion to dismiss.⁶²

58 See Super. Ct. Civ. R. 12(b)(6).

59 In re Gen. Motors (Hughes) S'holder Litig., 897 A.2d 162, 168 (Del. 2006); Lagrone v. Am. Mortell Corp., 2008 WL 4152677, at *4 (Del. Super. Sept. 4, 2008).

60 Lagrone, 2008 WL 4152677, at *4 (citing Precision Air v. Standard Chlorine of Del., 654 A.2d 403, 406 (Del. 1995)).

61 In re Gen. Motors (Hughes) S'holder Litig., 897 A.2d at 168 (quoting Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002)). See also Cent. Mortgage Co. v. Morgan Stanley Mortgage Capital Holdings LLC, 27 A.3d 531, 535 (Del. 2011).

62 Brevet Capital Special Opportunities Fund, LP v. Fourth Third, LLC, 2011 WL 3452821, at *6 (Del. Super. Aug. 5, 2011).

A plaintiff alleging actual fraud must plead the circumstances constituting the fraud with particularity.⁶³ The underlying purpose of Rule 9(b) is to ensure that a defendant is put on sufficient notice so that it may defend itself against a plaintiff's allegations.⁶⁴ To satisfy this purpose, it is usually necessary to allege "the time, place and contents of the false representations," while "[m]alice, intent knowledge, and other condition of mind of a person may be averred generally."⁶⁵ However, the "particularity requirement must be applied in light of the facts of the case and less particularity is required when the facts lie more in the knowledge of the opposing party than of the pleading party."⁶⁶

63 Super. Ct. Civ. R. 9(b); see Ki-Poong Lee v. So, 2016 WL 6806247, at *3 (Del. Super. Nov. 17, 2016) ("Claims for actual fraudulent transfer brought under § 1304(a)(1) must meet the heightened pleading standard of Superior Court Civil Rule 9(b).").

64 WP Devon Assocs. v. Hartstrings, LLC, 2012 WL 3060513, at *4 (Del. Super. July 26, 2012) (citing Chesapeake & Potomac Tel. Co. v. Chesapeake Utils. Corp., 436 A.2d 314, 338 (Del. 1981)).

65 ITW Global Inv. Inc. v. American Industrial Partners Capital Fund IV, L.P., 2015 WL 3970908, at *5 (Del. Super. June 24, 2015); but see Seiden v. Kaneko, 2015 WL 7289338, at *12 (Del. Ch. Nov. 2, 2015) (citing Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989) ("Courts must be sensitive to the fact that application of Rule 9(b) prior to discovery 'may permit sophisticated defrauders to successfully conceal the details of their fraud.'").

66 H-M Wexford LLC v. Encorp, LLC, 832 A.2d 129, 146 (Del. Ch. May 27, 2003) (acknowledging the precedent of applying the particularity requirement in light of the facts of the case and less particularity is required when the facts lie more in the knowledge of the opposing party.) (citing Carello v. PricewaterhouseCoopers, 2002 WL 1454111, at *8 (Del. Super. July 3, 2002); see also Phillips v. Delaware Power & Light Co., 194 A.2d 690, 697 (Del. Super. Oct. 1, 1963).

When, prior to discovery, a non-resident defendant challenges personal jurisdiction under Superior Court Civil Rule 12(b)(2), the plaintiff bears the burden of establishing a prima facie case that the Court has personal jurisdiction over the non-resident defendant, and "the record is construed in the light most favorable to the plaintiff."⁶⁷ A prima facie case requires the "production of enough evidence to allow the fact-trier to infer the fact at issue and rule in the party's favor."⁶⁸ In the case of a non-resident defendant, Delaware courts apply a two-step personal jurisdiction analysis. First, the Court assesses whether there is a statutory basis for personal jurisdiction.⁶⁹ Second, the Court determines whether the exercise of personal jurisdiction over the non-resident defendant comports with the Due Process Clause of the Fourteenth Amendment to the United States Constitution (the "minimum contacts" requirement).⁷⁰ In assessing whether this Court can exercise personal jurisdiction in a motion to dismiss under Superior Court Civil Rule 12(b)(2), the burden of establishing a defendant's amenability to suit is not merely restricted to the allegations contained in the complaint.⁷¹ Rather, extra-pleading material may be used to supplement the complaint and establish jurisdiction.⁷² All allegations of fact concerning personal jurisdiction are presumed true unless contradicted by affidavit.⁷³

67 Wright v. American Home Products Corp., 768 A.2d 518, 526 (Del. Super. Apr. 20, 2000); Aeroglobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 437 (Del. 2005); Cornerstone Tech., LLC v. Conrad, 2003 WL 1787959, at *3 (Del. Ch. Mar. 31, 2003).

68 Danny David Czarninski Baier v. Upper New York Inv. Co., LLC, et al., 2018 WL 1791996, at *5 (Del. Ch. Apr. 16, 2018) (citing Prima facie case, Black's Law Dictionary (10th ed. 2014)).

69 Id. at *8; Aeroglobal Capital Mgmt., 871 A.2d at 437; Mktg. Prod. Mgmt., LLC v. HealthandBeautyDirect.com, Inc., 2004 WL 249581, at *1 (Del. Super. Jan. 28, 2004) (Delaware's long-arm statute, 10 Del. C. § 3104, is to be construed to the maximum extent possible, consistent with due process).

70 Id.

71 Hart Holding Co. Inc. v. Drexel Burnham Lambert Inc., 593 A.2d 535, 538-39 (Del. Ch. Feb. 13, 1991).

72 Id.

73 See Haisfield v. Cruver, 1994 WL 497868, at *5 (Del. Ch. Aug. 25, 1994).

V. DISCUSSION

A. US Mobile Inc. is Improperly Named as a Defendant Because it No Longer Exists

Yu alleges US Mobile Inc. was merged into US Mobile LLC.⁷⁴ Defendant US Mobile Inc. argues it should be dismissed because as a result of that merger, it no longer exists as a corporate entity separate from US Mobile LLC.⁷⁵ Yu agrees that US Mobile Inc. no longer exists separate from US Mobile LLC, but argues that US Mobile Inc. should not be dismissed because he "has a right to understand and discover the details behind" the merger.⁷⁶

74 Am. Compl. ¶ 8.

75 US Mobile Opening Br. at 5.

76 Pl.'s Br. in Opp'n to Def. US Mobile's Mot. Dismiss ("Pl.'s Answering Br. to US Mobile") at 6 (Trans. ID 61501509) (D.I. 38).

Mergers of corporations into limited liability companies are governed by 8 Del. C. § 264. Pursuant to 8 Del. C. § 259, which is incorporated in § 264(e),⁷⁷ the entity that merges into the surviving entity must cease to exist.⁷⁸ Where a corporation is dissolved by an absolute repeal of its charter or by any other legal mode, it no longer exists for any purpose, unless there is some statutory provision continuing its existence, and it cannot sue or be sued.⁷⁹

77 See 8 Del. C. § 264(e):

Sections 251(d)-(f), 255(c) (second sentence) and (d)-(f), 259-261 and 328 of this title shall, insofar as they are applicable, apply to mergers or consolidations between corporations and limited liability companies.

78 8 Del. C. § 259(a):

When any merger...shall have become effective...all debts, liabilities and duties of the respective constituent corporations shall thenceforth attach to said surviving or resulting corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.

79 Harned v. Beacon Hill Real Estate Co., 84 A. 229, 230 (Del. 1912).

US Mobile Inc. was merged into US Mobile LLC, the surviving entity, on July 1, 2015.⁸⁰ Because US Mobile Inc. did not survive the merger, its liabilities are attached to US Mobile LLC (hereinafter, "US Mobile").⁸¹ US Mobile Inc.'s Motion to Dismiss is GRANTED.

80 See US Mobile Opening Br. at 3, 5-6; Certificate of Merger, US Mobile Opening Br. Ex. 4.

81 See 8 Del. C. § 259(a). US Mobile Inc. argues that claims against it must be brought against US Mobile LLC because its liabilities are attached to US Mobile LLC. See US Mobile Opening Br. at 6.

B. Personal Jurisdiction Over Khattak

Yu argues the Court has personal jurisdiction over Khattak because he is the alter ego of GSM and US Mobile,⁸² transacts and solicits business in Delaware,⁸³ was a director of US Mobile Inc.,⁸⁴ and manages GSM, which was involved in a fraudulent scheme.⁸⁵ Khattak argues he cannot be subject to jurisdiction in Delaware for liability on contracts he never negotiated and did not sign, and exercising jurisdiction over him would not comport with due process.⁸⁶

82 Am. Compl. ¶ 10.

83 See 10 Del. C. § 3104.

84 Am. Compl. ¶ 10; see 10 Del. C. § 3114.

85 See 6 Del. C. § 18-109.

86 Def. Khattak's Reply Br. in Support of Mot. Dismiss ("Khattak Reply Br.") at 1 (Trans. ID 61554299) (D.I. 45).

1. Alter Ego Theory of Jurisdiction

The Amended Complaint asserts Khattak is subject to personal liability under an alter ego or veil piercing theory, which is an equitable claim.⁸⁷ The alter ego theory of jurisdiction is based on the premise that the contacts of a Delaware entity may be attributed to another person if the Delaware entity is the mere alter ego of such other person.⁸⁸ The theory permits courts to ignore corporate boundaries where fraud or inequity in the use of the corporate form is found.⁸⁹ This practice is termed "piercing the corporate veil." Because the Delaware Court of Chancery has sole subject matter jurisdiction over actions to "pierce the corporate veil,"⁹⁰ this Court cannot properly exercise personal jurisdiction over Khattak under an alter ego theory.⁹¹

87 Am. Compl. ¶ 10; see Sonne v. Sacks, 314 A.2d 194, 197 (Del. 1973).

88 Mktg. Prod. Mgmt., 2004 WL 249581, at *3 (citing Fitzgerald v. Cantor, 1998 WL 842316 at *2 (Del. Ch. Nov. 10, 1998)).

89 Id.

90 Sonne, 314 A.2d at 197 ("[P]iercing the corporate veil may be done only in the Court of Chancery....").

91 See id. This Court lacks jurisdiction to "pierce the corporate veil."

2. 10 Del. C. § 3104 , Delaware Long-Arm Statute

Yu contends that personal jurisdiction over Khattak is proper under the Delaware long-arm statute, 10 Del. C. § 3104, because Khattak formed US Mobile for the purpose of fraudulently transferring assets from GSM to an entity that did not owe a debt to Yu.⁹² The long-arm statute contemplates any non-resident who commits certain acts or causes certain injuries in Delaware is subject to Delaware's jurisdiction.⁹³ The long-arm statute states, in pertinent part:

92 Pl.'s Br. in Opp'n to Def. Khattak's Mot. Dismiss ("Pl.'s Answering Br. to Khattak") at 6 (Trans. ID 61501485) (D.I. 37).

93 Czarninski Baier, 2018 WL 1791996, at *8.

(c)...a [Delaware] court may exercise personal jurisdiction over any nonresident...who in person or through an agent:

(1) Transacts any business of performs any character of work or service in the State....⁹⁴

94 10 Del. C. § 3104.

"In order for this Court to exercise jurisdiction under 10 Del. C. § 3104(c)(1), 'some act must actually occur in Delaware.'"⁹⁵ Mere ownership of stock in a Delaware corporation is insufficient to establish jurisdiction over a majority shareholder.⁹⁶ However, an act of incorporation is sufficient to confer personal jurisdiction under 10 Del. C. § 3104(c)(1) if incorporation was for the purpose of executing an agreement central to the litigation and there are significant contacts between the defendant, the State of Delaware, and the litigation.⁹⁷

95 Mobile Diagnostic Grp. Holdings, LLC v. Suer, 972 A.2d 799, 804 (Del. Ch. Mar. 24, 2009) (citing Kelly v. McKesson HBOC, Inc., 2002 WL 88939, at *17 (Del. Super. Jan. 17, 2002)).

96 Shaffer v. Heitner, 433 U.S. 186, 212 (1977).

97 Cf. Papendick v. Bosch, 410 A.2d 148, 152 (Del. 1979) (holding that the act of incorporating a subsidiary in Delaware to be the vehicle for channeling purchase money and stock in an acquisition is sufficient to exercise personal jurisdiction over its non-resident incorporator); Vichi v. Koninklijke Philips Elec. N.V., 2009 WL 4345724, at *2, *6 (Del. Ch. Dec. 1, 2009) (holding a single act of incorporation in Delaware, if integral to the transaction between the parties and done as part of a wrongful scheme, will suffice to exercise personal jurisdiction over the non-resident defendant responsible for the scheme).

Papendick, an in rem action involving the attachment of a parent-foreign corporation's stock interest in a wholly owned Delaware subsidiary,⁹⁸ included a claim for breach of contract.⁹⁹ The parent-foreign corporation had formed a Delaware subsidiary for the purpose of executing a contract that was allegedly breached.¹⁰⁰ The Delaware Supreme Court concluded that the parent-foreign corporation, by forming a Delaware subsidiary for the purpose of implementing a contract, implicitly consented to personal jurisdiction in an action brought against it and its Delaware subsidiary for breach of that contract.¹⁰¹ As noted by the Delaware Supreme Court in Papendick, "[t]he decision of the foreign-parent corporation to maintain a direct and continuing connection between Delaware and itself, as the owner of a Delaware subsidiary, was found to be a 'minimum contact' of paramount importance in the specific jurisdictional analysis of Papendick...."¹⁰²

98 Papendick, 410 A.2d at 149.

99 Id. at 148.

100 Id. at 149-50.

101 Id. at 152.

102 See Sternberg v. O'Neil, 550 A.2d 1105, 1120 (Del. 1988) (explaining the Delaware Supreme Court's decision in Papendick).

Yu does not allege that Khattak signed the Loan Agreements in Delaware, participated in negotiations in Delaware, or organized US Mobile to implement a transaction between the parties (e.g., to use the entity as a vehicle to execute the Loan Agreements).¹⁰³ Had the well-pled facts alleged that Khattak formed US Mobile LLC for the purpose of accepting Yu's loan money directly and developing an MVNO, personal jurisdiction over Khattak under Delaware's long-arm statute might exist.¹⁰⁴ Because these facts are not pled, however, 10 Del. C. § 3104(c)(1) does not authorize service on Khattak.

103 Yu alleges breach of contract against GSM only. See Am. Compl. ¶ 91.

104 GSM pre-dates the Loan Agreements, so it would be US Mobile's formation as central issue.

10 Del. C. § 3104(c)(4) addresses a situation in which a defendant is generally affiliated with the forum jurisdiction.¹⁰⁵ That is, 10 Del. C. § 3104(c)(4) is applicable when a defendant has contacts with this State that are so extensive and continuing that it is fair and consistent with State policy to require that he appear here and defend a claim, even when that claim arose outside of this State and caused injury outside of this State.¹⁰⁶ Based on the facts as pled, Khattak's minimal contacts with Delaware are insufficient to allow service under 10 Del. C. § 3104(c)(4). Yu fails to allege facts establishing Khattak engaged in a "persistent course of conduct in the State," or that Khattak "derives substantial revenue from services, or things used or consumed in the State."¹⁰⁷ As Khattak correctly notes, mere formation of a Delaware entity is not sufficient to establish general jurisdiction under 10 Del. C. § 3104(c)(4).¹⁰⁸

105 Red Sail Easter Ltd. Partners, L.P. v. Radio City Music Hall Productions, Inc., 1991 WL 129174, at *3 (Del. Ch. July 10, 1991).

106 See Sternberg, 550 A.2d at 1117.

107 See 10 Del. C. § 3104(c)(4).

108 Khattak Opening Br. at 16 (citing Red Sail, 1991 WL 129174, at *3).

Based on the facts as pled, there is no basis to authorize service upon Khattak under 10 Del. C. § 3104.

3. 10 Del. C. § 3114, Implied Consent Statute for Non-Resident Directors of Delaware Corporations

Yu also asserts the Court has personal jurisdiction over Khattak pursuant to 10 Del. C. § 3114, which provides for the service of process on non-resident directors:

in all civil actions or proceedings brought in this State, by or on behalf of, or against such corporation, in which such director, trustee or member is a necessary or proper party, or in any action or proceeding against such director, trustee or member for violation of a duty in such capacity....¹⁰⁹

109 10 Del. C. § 3114.

The Court has exercised personal jurisdiction over a non-resident director under 10 Del. C. § 3114 when the non-resident director "used his position as director of a Delaware corporation to commit fraud," making him a necessary or proper party.¹¹⁰ Khattak notes that Yu has not alleged any misconduct by Khattak in his capacity as a director of US Mobile Inc.¹¹¹ In response, Yu argues that Khattak "availed himself of certain duties under Delaware law because he formed and acted as a director and officer of...US Mobile (all entities)," and therefore Yu is entitled to discovery on the US Mobile Inc./US Mobile LLC merger.¹¹² At this stage, it is the well-pled allegations in the Amended Complaint on which the Court must focus, and Yu alleges GSM and Khattak transferred resources and assets for inadequate exchange,¹¹³ and US Mobile was a transferee, through and separate from Khattak.¹¹⁴ Under the facts as pled, service is not authorized on Khattak under 10 Del. C. § 3114.

110 See id.; see Tsang Mun Ting v. Silver Dragon Resources, Inc., 2015 WL 3551871, at *4 (Del. Super. June 3, 2015), affirmed by Hazout, 134 A.3d 274 (Del. 2016).

111 Khattak Opening Br. at 16.

112 Pl.'s Answering Br. to Khattak at 10.

113 Am. Compl. ¶ 135.

114 Id. at ¶¶ 117-18.

4. 6 Del. C. § 18-109 , Implied Consent Statute for Non-Resident Managers of Delaware Limited Liability Companies

Finally, Yu asserts that personal jurisdiction over Khattak is proper under 6 Del. C. § 18-109(a) because Khattak is a manager of GSM and US Mobile.¹¹⁵ Because jurisdictional discovery has not been completed, the Court gives Yu the benefit of the doubt and holds him to the lower burden of establishing a prima facie case for this Court's exercise of jurisdiction over Khattak.¹¹⁶

115 The Court notes that Khattak twice represents US Mobile LLC is a Connecticut LLC. Khattak Opening Br. at 9, 16. If that were true, Delaware's limited, liability company implied consent statute would not apply. However, Yu filed a District of Columbia Superior Court affidavit with his Amended Complaint, signed by Khattak, that declares Khattak "formed a new Delaware LLC, US Mobile, LLC, with its principal office in Connecticut." Am. Compl. Ex. A ¶ 14 (emphasis added).

116 Cf. Czarninski Baier, 2018 WL 1791996, at *5.

The Court looks to instructive Delaware Supreme Court cases addressing the exercise of personal jurisdiction over non-resident directors of Delaware corporations in non-breach of fiduciary duty claims, such as fraud claims that are sufficiently related to and "predicated on the same nucleus of facts" as a fiduciary duty claim.¹¹⁷ In Tsang Mun Ting v. Silver Dragon Resources, Inc., the Court found personal jurisdiction over a non-resident director with no State contacts because he was "a necessary or proper party" to the action.¹¹⁸ The Court held there must "be a close nexus between the claims involving the corporation which made it a party to the suit, and the conduct of the non-resident fiduciary."¹¹⁹ Thus, "only claims that involve conduct by the non-resident fiduciary using his corporate power will make him a necessary or proper party."¹²⁰ Although no fiduciary duty claims were alleged, this Court held, and the Delaware Supreme Court affirmed, that jurisdiction over the non-resident director was proper under 10 Del. C. § 3114 because it was clear to the Court that the alleged misconduct would be adverse to the non-resident director's fiduciary duties.¹²¹

117 10 Del. C. § 3114 is substantially similar to 6 Del. C. § 18-109. In light of the scarcity of cases construing § 18-109, most of which predate the Delaware Supreme Court's Hazout decision that broadened its interpretation, the Court looks to the cases construing § 3114. Cf. Assist Stock Mgmt. LLC v. Rosheim, 753 A.2d 974, 979 n. 19 (Del. Ch. Feb. 3, 2000); Tsang Mun Ting, 2015 WL 3551871, at *4 (citing Canadian Commercial Workers Indus. Pension Plan v. Alden, 2006 WL 456786, at *11 (Del. Ch. Feb. 22, 2006) (citing Hovde Acquisition, LLC v. Thomas, 2002 WL 1271681, at *4 n.16 (Del. Ch. June 5, 2002); Infinity Investors Ltd. v. Takefman, 2000 WL 130622, at *6 (Del. Ch. Jan. 28, 2000))), affirmed by Hazout, 134 A.3d 274 (Del. 2016) (rejecting a long line of decisions that had significantly limited the circumstances in which Delaware courts could exercise personal jurisdiction over non-resident directors and officers of Delaware corporations under the implied consent statute).

118 10 Del. C. § 3114(a), (b); Hazout, 134 A.3d at 289.

119 Hazout, 134 A.3d at 289.

120 Id.

121 Tsang Mun Ting, 2015 WL 3551871, at *4. Although such an action looks similar to a derivative action, which must be brought in the Court of Chancery by a shareholder on behalf of the entity, the Court emphasizes that Ting did not sue as a shareholder of Silver Dragon and the Delaware Supreme Court affirmed this Court's decision in Hazout, 134 A.3d 274.

The Court's decision in Tsang Mun Ting makes clear the breadth of 10 Del. C. § 3114. There, a group of investors negotiated to acquire operating control of Silver Dragon Resources, Inc. ("Silver Dragon") by appointing a new slate of directors in exchange for making loans to Silver Dragon totaling over three million dollars.¹²² One of the creditors, Tsang Mun Ting ("Ting"), made a wire transfer to Silver Dragon in the amount of $1,014,140 in reliance upon representations that the executed documents would be delivered the following day.¹²³ The deal was never completed because one of Silver Dragon's existing directors refused to execute the agreement, and thereafter the defendants refused to return Ting's loan.¹²⁴ Accordingly, Ting brought suit against Hazout, a Canadian resident who was a director and officer of Silver Dragon, and others, for unjust enrichment, fraud, and fraudulent transfer.¹²⁵ Hazout moved to dismiss the complaint against him, arguing that 10 Del. C. § 3114 did not permit jurisdiction over him because the complaint did not allege a breach of fiduciary duty.¹²⁶ Ting alleged that Hazout acted in his corporate capacity as a Silver Dragon director and officer to commit fraud by transferring approximately $750,000 of Ting's Silver Dragon loan to a creditor of Silver Dragon that Hazout owned.¹²⁷ The Court held, "[i]f proven, that conduct would be in contradiction to [Hazout's] obligations as a director of a Delaware corporation and traditional notions of justice and fair play require the Court to hold Hazout accountable for misusing his position."¹²⁸

122 Id. at *1.

123 Id. Ting was not a shareholder of Silver Dragon.

124 Id.

125 Id.

126 Hazout, 134 A.3d at 277.

127 Tsang Mun Ting, 2015 WL 3551871, at *4.

128 Id.

a. Statutory Basis to Authorize Service

Section 18-109(a) is an implied consent statute applicable only to a manager of a limited liability company, which is defined as either a manager fixed under the operative limited liability company agreement or a "person who participates materially in the management of the limited liability company."¹²⁹ 6 Del. C. § 18-109(a) states, in pertinent part:

129 Vichi, 2009 WL 4345724, at *7; 6 Del. C. § 18-109(a).

A manager...of a limited liability company may be served with process...in all civil actions...brought in the State of Delaware involving or relating to the business of the limited liability company or a violation by the manager...of a duty to the limited liability company...whether or not the manager...is a manager...at the time suit is commenced. A manager's...serving as such constitutes such person's consent to the appointment of the registered agent of the limited liability company...as such person's agent upon whom service of process may be made as provided in this section. Such service as a manager...shall signify the consent of such manager...that any process when so served shall be of the same legal force and validity as if served upon such manager...within the State of Delaware and such appointment of the registered agent...shall be irrevocable.¹³⁰

An action "involves or relates to the business of a limited liability company" if:

(1) the allegations against [the manager] focus centrally on his "rights, duties and obligations" as a manager of a Delaware limited liability company;
(2) the resolution of this matter is "inextricably bound up in Delaware law;" and
(3) Delaware has a strong interest in providing a forum for disputes relating to the ability of managers of a limited liability company formed under its law to properly discharge their respective managerial functions.¹³¹

130 6 Del. C. § 18-109(a) (emphasis added).

131 Assist, 753 A.2d at 981 (citing Hana Ranch, Inc. v. Lent, 424 A.2d 28, 30 (Del. Ch. Dec. 19, 1980), overruled on other grounds by Hazout, 134 A.3d 274; Armstrong v. Pomerance, 423 A.2d 174 (Del. 1980)).

First, the claims at issue focus on Khattak's rights, duties, and obligations as manager of GSM. The claims arise from Khattak allegedly misusing his position as manager of GSM to commit fraudulent transfers by moving Yu's GSM loan money to an entity incorporated and controlled by Khattak.¹³² If proven, such conduct would be in contradiction to Khattak's obligations as manager of GSM, a Delaware limited liability company.¹³³

132 See Am. Compl. ¶¶ 10, 114.

133 Cf. Tsang Mun Ting, 2015 WL 3551871, at *4.

Second, the resolution of this matter is inextricably bound up in Delaware law. The alleged fraudulent transfers were facilitated through the formation, conversion, and merger of several Delaware entities.¹³⁴ The question of whether GSM's assets were wrongfully transferred will be determined by Delaware law.¹³⁵

134 Am. Compl. ¶ 113.

135 See 6 Del. C. § 1304(a)(2).

Third, Delaware has a strong interest in providing a forum for the resolution of disputes regarding the internal affairs of limited liability companies formed under its laws.¹³⁶ The wrongs Yu alleges are not tort or contract claims unrelated to the internal affairs of a Delaware limited liability company; rather, these claims involve the alleged misuse of Khattak's position as a manager of a Delaware limited liability company to commit fraud.

136 Cf. Cornerstone, 2003 WL 1787959, at *13 ("[T]his state has a strong interest in resolving disputes regarding the internal affairs of LLCs formed under its laws."); Assist, 753 A.2d at 981 ("Delaware has a strong interest in providing a forum for disputes relating to the ability of managers of an LLC formed under its law to properly discharge their respective managerial functions.").

Construing the well-pled allegations in the Amended Complaint in the light most favorable to the Plaintiff, Yu has established a prima facie case that: (1) the allegations against Khattak, a non-resident defendant-manager, focus centrally on Khattak's rights, duties, and obligations as a manager of a Delaware limited liability company; (2) the resolution of the matter is inextricably bound up in Delaware law; and (3) Delaware has a strong interest in providing a forum for the resolution of the dispute.¹³⁷ Thus, the suit involves or relates to the business of GSM, a necessary predicate to jurisdiction under 6 Del. C. § 18-109. In light of the General Assembly's decision to write 6 Del. C. § 18-109 more broadly than 10 Del. C. § 3114,¹³⁸ this conclusion is consistent with the Delaware Supreme Court's exercise of personal jurisdiction over non-resident directors of Delaware corporations in non-breach of fiduciary duty claims.¹³⁹ Therefore, the Court concludes that service of process is authorized under 6 Del. C. § 18-109(a).

137 See Republic Bus. Credit, LLC v. Metro Design USA, LLC, 2016 WL 3640349, at *9 (Del. Super. June 29, 2016); cf. Hazout, 134 A.3d at 285.

138 Compare 6 Del. C. § 18-109 with 10 Del. C. § 3114; see Assist, 753 A.2d at 981 (holding that a dispute about the LLC manager's ownership interests in the LLC could be adjudicated when "the ownership question is related in some respect to the [management] matter" in dispute) (emphasis added); Cornerstone, 2003 WL 1787959, at *12 (acknowledging Chancery's broad interpretation of 6 Del. C. § 18-109, relative to 10 Del. C. § 3114, and the General Assembly's intent).

139 Tsang Mun Ting, 2015 WL 3551871, at *4 (citing Canadian Commercial Workers Indus. Pension Plan v. Alden, 2006 WL 456786, at *11 (Del. Ch. Feb. 22, 2006) (citing Hovde Acquisition, 2002 WL 1271681, at *4 n.16 (Del. Ch. June 5, 2002); Infinity Investors, 2000 WL 130622, at *6 (Del. Ch. Jan. 28, 2000)), affirmed by Hazout, 134 A.3d 274 (Del. 2016) (rejecting a long line of decisions that had significantly limited the circumstances in which Delaware courts could exercise personal jurisdiction over non-resident directors and officers of Delaware corporations under the implied consent statute).

b. Due Process

Having determined that service is statutorily authorized, the Court must next determine whether exercising personal jurisdiction over Khattak is consistent with the Due Process Clause of the Fourteenth Amendment to the United States Constitution.¹⁴⁰ "The constitutional standard for determining whether a state may exercise judicial power over a person is fairness and substantial justice."¹⁴¹ International Shoe, World-Wide Volkswagen, and their progeny require a specific judgment in balancing the interests of the incorporating state and the fairness to the defendant under all of the particular circumstances.¹⁴² Central to the particularized inquiry into the fairness of asserting jurisdiction are the "purposive actions of the would-be defendant and the reasonable expectation of one in his position."¹⁴³ The Court must determine whether it should have been reasonably anticipated by such a person that his actions might result in the forum state asserting personal jurisdiction over him to adjudicate disputes arising from those actions.¹⁴⁴ The purposeful acts of the defendant are the focus of attention, but those acts need not occur within the jurisdiction, so long as they create some substantial relationship with the forum jurisdiction.¹⁴⁵ When a person purposefully acts to create a relationship, "even of some minimal kind, with the forum state, then 'the forum state's interest in adjudicating the dispute' should be given weight in determining if [] exercise of jurisdiction would comport with fundamental notions of fair play and substantial justice."¹⁴⁶

140 See In re USACafes, L.P. Litigation, 600 A.2d 43, 50 (Del. Ch. June 7, 1991). Yu bears the burden of showing a basis for the Court's jurisdiction over Khattak. Czarninski Baier, 2018 WL 1791996, at *8; Ryan v. Gifford, 935 A.2d 258, 265 (Del. Ch. Nov. 21, 2007); see also Greenly v. Davis, 486 A.2d 669, 670 (Del. 1984) ("The burden was upon the plaintiff to make a specific showing that the Delaware court has jurisdiction under the long-arm statute.").

141 Id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980); Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

142 Id. at 52.

143 Id. at 50.

144 Id. at 50-51 (citing World-Wide Volkswagen Corp., 444 U.S. at 297).

145 USACafes, 600 A.2d at 51 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)).

146 Id. (quoting World-Wide Volkswagen Corp., 444 U.S. at 292).

Delaware can compel the appearance of directors and managers to litigate claims other than claims for breach of their fiduciary duties.¹⁴⁷ By purposefully availing oneself of the privilege of becoming a manager of a Delaware limited liability company, a manager accepts significant benefits and protections under the laws of this State.¹⁴⁸ As such, requiring managers to impliedly consent to the assertion of Delaware in personam jurisdiction in actions "predicated on the same nucleus of facts" as a fiduciary duty claim is not unreasonable so long as the consent requirement serves a legitimate State purpose.¹⁴⁹

147 Cf. Armstrong, 423 A.2d at 176 n. 5; See USACafes, 600 A.2d at 52 (Chancellor Allen holding, "[E]arlier cases [that] have supposed or implied that it would be unconstitutional for Delaware to attempt to compel the appearance of directors here to litigate any claims other than claims for breach of their fiduciary duty to the corporation...can be an important guide in that judgment but cannot, in my opinion, be the exclusive test); Tsang Mun Ting, 2015 WL 3551871, affirmed by Hazout, 134 A.3d 274 (Del. 2016).

148 See Armstrong, 423 A.2d at 176 n. 5.

149 Id.

A "realistic evaluation of the relationship" Khattak has established with Delaware requires the conclusion that it is in keeping with traditional notions of fair play and substantial justice to require him to defend these claims in this jurisdiction.¹⁵⁰ There is no dispute that Khattak was GSM's chief executive officer, original founder, manager, and 85% owner at the time of the alleged misconduct.¹⁵¹ In assuming his position as a manager of a Delaware limited liability company (GSM), Khattak accepted certain duties under Delaware law, and this State has a public interest in enforcing those duties. The State is "obliged to govern the exercise of that power insofar as the issues of corporate power and fiduciary obligation are concerned."¹⁵²

150 USACafes, 600 A.2d at 52.

151 Am. Compl. ¶ 6.

152 USACafes, 600 A.2d at 52.

Akin to the creditor-plaintiff in Tsang Mun Ting, Yu does not allege a fiduciary duty claim against Khattak, he brings claims of fraudulent inducement, fraudulent transfer, unjust enrichment, and tortious interference.¹⁵³ Yu alleges that through his position as manager of GSM, Khattak fraudulently transferred Yu's GSM loan money to an entity incorporated and controlled by Khattak in an effort to defraud Yu.¹⁵⁴ If proven, such conduct would be in contradiction to Khattak's obligations as a manager of a Delaware limited liability company and traditional notions of justice and fair play require the Court to hold Khattak accountable for misusing his position.¹⁵⁵ Khattak should not be surprised that he has been haled into a Delaware court when disputes have arisen over matters so inherently intertwined with his fiduciary position - he impliedly consented to just that.¹⁵⁶ Therefore, the Court concludes that requiring Khattak to defend his alleged actions in this Court constitutes no offense to traditional notions of fairness and, therefore, personal jurisdiction over Khattak for the fraudulent transfer claim is proper under 6 Del. C. § 18-109(a).¹⁵⁷

153 Ting sued Hazout for fraud, fraudulent transfer, and unjust enrichment. Tsang Mun Ting, 2015 WL 3551871, at *1.

154 See Am. Compl. ¶¶ 10, 114.

155 Cf. Tsang Mun Ting, 2015 WL 3551871, at *4.

156 See Assist, 753 A.2d at 981.

157 Cf. Tsang Mun Ting, 2015 WL 3551871, affirmed by Hazout, 134 A.3d 274.

Once a defendant is subject to personal jurisdiction under 6 Del. C. § 18-109(a) as to certain claims, the Court may exercise personal jurisdiction over the defendant with respect to any claims that are sufficiently related to the cause of action.¹⁵⁸ Sufficiently related claims are those predicated on the same set of facts.¹⁵⁹ All of the counts in the Amended Complaint arise out of a common nucleus of operative fact and challenge alleged acts carried out by Khattak in his managerial capacity. The Court has personal jurisdiction over Khattak under 6 Del. C. §18-109(a) for purposes of Count III, the fraudulent transfer claim, and thus, the Court also has personal jurisdiction over Khattak for purposes of the fraudulent inducement, unjust enrichment, and tortious interference claims against him. Khattak's Motion to Dismiss Counts II, III, IV, and V for lack of personal jurisdiction is therefore DENIED.

158 See Infinity Investors, 2000 WL 130622, at *6 ("[O]nce jurisdiction is properly obtained over a non-resident director pursuant to § 3114, such non-resident director is properly before the Court for any claims that are sufficiently related to the cause of action asserted against such directors in their capacity as directors."); see Assist, 753 A.2d at 981 (applying the same to a Delaware limited liability company).

159 See id.

C. Fraudulent Inducement Claim Against Khattak

Yu alleges that Khattak knowingly, or with reckless indifference to the truth, misrepresented to Yu that GSM would use Yu's loan funds to develop an MVNO with GSM as the MVNO, and Yu relied on such representations in loaning GSM money.¹⁶⁰ In order to survive a motion to dismiss a fraud claim, a plaintiff must allege that: (1) defendant falsely represented a material fact or omitted facts that the defendant has a duty to disclose; (2) defendant knew that the representation was false or made with a reckless indifference to the truth; (3) defendant intended to induce plaintiff to act or refrain from action; (4) plaintiff acted in justifiable reliance on the representation; and (5) plaintiff was injured by its reliance on defendant's representation.¹⁶¹ Khattak argues that because "Yu identifies zero representations that came from Khattak," Yu's fraudulent inducement claim should be dismissed for failing to meet the particularity standard under Superior Court Civil Rule 9(b).¹⁶²

160 Am. Compl. ¶ 103; Pl.'s Answering Br. to Khattak at 13.

161 See, e.g., ABRY Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032, 1050 (Del. Ch. Feb. 14, 2006).

162 Khattak Opening Br. at 21.

A claim of fraudulent inducement is subject to the heightened pleading requirement of Superior Court Civil Rule 9(b).¹⁶³ Yu does not allege that he ever met or spoke directly with Khattak. Khattak did not approach Yu to solicit the loans to GSM; rather, Shams was Yu's initial point of contact.¹⁶⁴ The Amended Complaint is devoid of allegations of misrepresentations made directly by Khattak to Yu.¹⁶⁵ The Amended Complaint fails to identify any particular misrepresentation from Khattak.¹⁶⁶ Yu has not pled with particularity the detail required to state a fraudulent inducement claim against Khattak.¹⁶⁷

163 MicroStrategy Inc. v. Acacia Research Corp., 2010 WL 5550455, at* 15 (Del. Ch. Dec. 30, 2010).

164 Am. Compl. ¶ 18.

165 Khattak Opening Br. at 22; see Transcript of Mot. to Dismiss Hearing Dated January 22, 2018, 66:13-16 (Trans. ID 61624868) (D.I. 49); Am. Compl. ¶¶ 18-19, 21, 23, 41, 55, 65. "GSM wanted to secure [] funds...to start developing an MVNO." "GSM represented, through Khattak, that Dr. Yu's loans would be used...GSM represented that it would create an MVNO." "The Prospectus stated that GSM's growth profile would be significantly accelerated with infusion of capital for new business development." "GSM continually represented to Dr. Yu that the company had documented success in business magazine outlets as described above, including continuous updates on MVNO plans for GSM." "GSM, at Khattak's direction, represented to Dr. Yu...." "GSM provided Dr. Yu with updates...." "GSM was sending emails...urging potential customers to 'Join US Mobile.'" (Emphasis added)

166 See Fortis Advisors LLC v. Dialog Semiconductor PLC, 2015 WL 401371, at *8 (Del. Ch. Jan. 30, 2015).

167 Khattak Opening Br. at 22.

In Abbott Laboratories v. Owens,¹⁶⁸ the Court found that the plaintiff's fraudulent inducement claim failed to set forth sufficient allegations that the defendant officers actively participated in the tortious act. The Court held that under the personal participation doctrine,¹⁶⁹ individual liability attaches only where an officer "directed, ordered, ratified, approved, or consented to" the tortious act in question.¹⁷⁰ Yu alleges GSM and Shams made representations to Yu on Khattak's behalf or at Khattak's direction.¹⁷¹ There are no factual allegations supporting this, and there are no specific allegations of what these misrepresentations were, when they were made, or why they are attributable to Khattak.¹⁷² The Court does not accept conclusory allegations that lack factual support.¹⁷³ Yu's fraudulent inducement claim against Khattak falls far short of the Rule 9(b) standard. Yu fails to adequately allege that Khattak falsely misrepresented a material fact or omitted facts that he had a duty to disclose. Consequently, Khattak's Motion to Dismiss the fraudulent inducement claim against him is GRANTED.

168 2014 WL 8407613 (Del. Super. Sept. 15, 2014).

169 "Under the personal participation doctrine, 'in certain situations, an officer in a corporation can be held liable for his own wrongful acts.'" Id. at *9 (citing Brasby v. Morris, 2007 WL 949485, at *8 (Del. Super. Mar. 29, 2007); see also T.V. Spano Bldg. Corp. v. Dep't of Natural Res. & Envtl. Control, 628 A.2d 53, 61 (Del. 1993); Heronemus v. Ulrick, 1997 WL 524127, *2 (Del. Super. July 9, 1997); Brandt v. Rokeby Realty Co., 2004 WL 2050519, *9 (Del. Super. Sept. 8, 2004)).

170 Id. at *9.

171 Am. Compl., supra note 166 (emphasis added).

172 As noted earlier, Yu does not allege that he ever met or spoke directly with Khattak.

173 Brevet Capital, 2011 WL 3452821, at *6 (Del. Super. Aug. 5, 2011).

D. Fraudulent Transfer Claim Against Khattak

Yu alleges Khattak violated the Delaware Uniform Fraudulent Transfers Act ("DUFTA").¹⁷⁴ According to Yu, "with actual intent to hinder, delay, or defraud its creditors," Khattak caused GSM to transfer resources and assets to US Mobile without a fair exchange of value and with at least constructive knowledge that GSM had no way of fulfilling its obligations to creditors (particularly Yu) in due course.¹⁷⁵ Yu further alleges Khattak as co-founder, controller, and 85% owner of GSM,¹⁷⁶ "transferred cash and assets of GSM,"¹⁷⁷ and that GSM and US Mobile were acting "through its director and officer Khattak."¹⁷⁸ Khattak argues there is no aiding and abetting liability for directors, and challenges the factual bases for the allegations regarding GSM's insolvency, fair exchange, and other elements necessary for Yu to prevail, including the requirement to plead with sufficient particularity.¹⁷⁹

174 See 6 Del. C. § 1304(a).

175 Am. Compl. ¶¶ 113-15.

176 Id. at ¶ 6.

177 Id. at ¶ 115.

178 See id. at ¶¶ 114, 119, 122.

179 Khattak Opening Br. at 25, 28-29; Super. Ct. Civ. R. 9(b).

To establish a fraudulent transfer claim, a plaintiff must show either "actual intent to hinder, delay or defraud any creditor" or inadequate value received for a transfer, combined with either insufficient assets for business or at least constructive belief that the transferor would incur debts exceeding its ability to repay them as they come due.¹⁸⁰ Only the transferor and transferee may be liable under DUFTA; there is no aiding and abetting liability for directors.¹⁸¹ It is not enough to make conclusory allegations mirroring the elements in the fraudulent transfer statute.¹⁸²

180 6 Del. C. § 1304(a)(2).

181 Edgewater Growth Capital Partners, L.P. v. H.I.G. Capital, Inc., 2010 WL 720150, at *2 (Del. Ch. Mar. 3, 2010) (refusing to hold liable individual directors who allegedly caused the company to fraudulently transfer assets because DUFTA "does not create a cause of action for aiding and abetting, or conspiring to commit a fraudulent transfer.") (citing Trenwick Am. Litig. Trust v. Ernst & Young, L.L.P., 906 A.2d 168, 199, 203 (Del. Ch. 2006)) (noting that, under DUFTA, only the transferor and transferee may be liable and there is no aiding and abetting liability for directors of the transferee), aff'd, 931 A.2d 438 (Del. 2007); Cornell Glasgow, LLC v. LaGrange Properties, LLC, 2012 WL 3157124, at *5 (Del. Super. Aug. 1, 2012) ("[C]onspiracy cannot be predicated on fraudulent transfer."); In re The Brown Schools, 386 B.R. 37, 58 (Bankr. D. Del. 2008) (dismissing aiding and abetting fraudulent transfer claim because no claim existed under Delaware law). Indeed, the Court of Chancery advised, "Assuming Yu succeeds on the merits of his claims, he can obtain [money damages] against...US Mobile LLC as the transferee of a fraudulent transfer." See Yu, 2017 WL 2889515, at *4.

182 See Hospitalists of Del., LLC v. Lutz, 2012 WL 3679219, at *13 (Del. Ch. Aug. 28, 2012) ("[S]imply reciting the statutory or common law elements of an offense...is insufficient to state a claim upon which relief may be granted.").

Yu's DUFTA claim against Khattak reads like an attempt to pierce the corporate veil.¹⁸³ Recognizing that this is an equitable claim over which this Court has no jurisdiction,¹⁸⁴ Yu alleges (without any factual support) that "Khattak benefitted from those transfers" and "made transfers by himself in his individual capacity."¹⁸⁵ Yu pleads no facts to support his allegation that Khattak was a transferee, and prosecuting him as a transferor would require the Court to improperly pierce the corporate veil.¹⁸⁶ Khattak's Motion to Dismiss the fraudulent transfer claim against him is therefore GRANTED.

183 On October 4, 2017, the Court granted Yu leave to amend the Original Complaint to strike the equitable causes of action (i.e., constructive trust, equitable rescission, pierce the corporate veil). See Transcript for Mot. to Stay Hearing Dated October 4, 2017, 30:12-20. Although Yu struck the equitable causes of action, portions of his Amended Complaint read as if he is still asserting equitable claims, i.e., alter ego theory and piercing the corporate veil. See Am. Compl. ¶¶ 10, 19, 114, 119.

184 Sonne, 314 A.2d at 197 ("[P]iercing the corporate veil may be done only in the Court of Chancery...").

185 Am. Compl. ¶¶ 116-17.

186 Yu's vague allegations that Khattak used the funds to "subsidiz[e] his own lavish lifestyle" do not meet the pleading standard. Id. at ¶¶ 74, 152. This Court cannot pierce the corporate veil. Sonne, supra note 184.

E. Unjust Enrichment Claims Against Khattak and US Mobile

Yu alleges he gave GSM loan money pursuant to the Loan Agreements, GSM transferred the loan money and GSM resources to Khattak and US Mobile, and US Mobile wrongfully retained the loan money and GSM resources.¹⁸⁷ Yu alleges that Khattak and US Mobile have been unjustly enriched by their access to the loan money.¹⁸⁸ According to Yu, Khattak was unjustly enriched when he used Yu's loan to pay himself and relatives and fund his "lavish lifestyle,"¹⁸⁹ and US Mobile was unjustly enriched because it was Yu's loan money, transferred from GSM, that funded US Mobile's launch, first year expenses, and payroll.¹⁹⁰

187 Am. Compl. ¶¶ 147-48.

188 Id. at ¶¶ 146, 151-52.

189 Id. at ¶ 152.

190 Id. at ¶ 146.

Khattak argues that Yu has failed to state a claim for unjust enrichment as a matter of law because a contractual relationship governs the transactions, including the matters upon which the unjust enrichment claim is based.¹⁹¹ US Mobile argues any transfer to US Mobile from GSM was GSM's money, and Yu must look to the party he contracted with for repayment of the loans, not US Mobile.¹⁹²

191 Khattak Opening Br. at 30.

192 US Mobile's Opening Br. at 16-17.

Delaware courts define unjust enrichment as "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience."¹⁹³ To state a claim for unjust enrichment, the complaint must allege sufficient facts to show: (1) an enrichment; (2) an impoverishment; (3) a relation between the enrichment and impoverishment; (4) the absence of justification; and (5) the absence of a remedy provided by law.¹⁹⁴

193 Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).

194 See, e.g., id. at 1130; BAE Sys. Info. & Elec. Sys. Integration, Inc. v. Lockheed Martin Corp., 2009 WL 264088, at *7 (Del. Ch. Feb. 3, 2009).

Accepting all well-pled allegations as true, Yu's unjust enrichment claim against Khattak and US Mobile fails for lack of a relationship between their enrichment and Yu's impoverishment.¹⁹⁵ Yu alleges Khattak and US Mobile unjustly benefitted from the loans he made to GSM. Those loans are governed by the Loan Agreements. This claim is not independent from the breach of contract claim.¹⁹⁶

195 Am. Compl. ¶¶ 146, 152.

196 See BAE Sys., 2009 WL 264088, at *7-8 (holding that, to bring a proper claim for unjust enrichment, the plaintiff must allege a factual basis independent from an alleged breach of contract); Yu, 2017 WL 2889515 at *4 ("Yu primarily seeks to collect a debt that is governed by the Loan Agreements through his unjust enrichment claim. Pleading such a claim as "unjust enrichment" is not sufficient to invoke equity jurisdiction where unjust enrichment is an alternative to breach of contract.").

In an attempt to avoid dismissal of his unjust enrichment claim, Yu, as a creditor of GSM, alleges what the Court interprets as an alter ego theory claim¹⁹⁷ and a derivative claim,¹⁹⁸ both of which the Court lacks jurisdiction to adjudicate.¹⁹⁹ Khattak's and US Mobile's Motions to Dismiss the unjust enrichment claims against them are therefore GRANTED.

197 Am. Compl. ¶¶ 3, 10, 152-53. Yu alleges that Khattak used the money Yu loaned to GSM to pay himself and his relatives, subsidized his lavish lifestyle, tried leasing a luxury case, and paying for his clothing and Amazon.com account. Yu further alleges that US Mobile received mobile phones, purchased with "GSM monies," without consideration, and that GSM and US Mobile were operated by Khattak as a single entity.

198 Id. at ¶ 153. Yu alleges that Khattak purchased mobile phones using "GSM monies" and gave them to US Mobile without consideration. These allegations suggest that US Mobile was unjustly enriched by GSM's impoverishment. These alleged facts could be used by a shareholder when litigating a derivative suit in the Court of Chancery, but this Court lacks such jurisdiction. See US Mobile Opening Br. at 20-23.

199 Mktg. Prod. Mgmt., 2004 WL 249581, at *3 ("[T]his court lacks jurisdiction to "pierce the corporate veil. As an equitable remedy, Delaware Court of Chancery has sole jurisdiction over actions to "pierce the corporate veil.") (citing Sonne, 314 A.2d at 197 ("[Piercing the corporate veil may be done only in the Court of Chancery, when the purpose of the action is to obtain a judgment against individual stockholders or officers, or against other corporations which have received assets without consideration.")); Stevenson v. Del. Dep't of Natural Res. & Envtl. Control, 2016 WL 4473145, at *4 (Del. Super. Aug. 19, 2016) ("In a derivative suit, a shareholder sues on behalf of the corporation for harm done to the corporation." "[A] derivative action must be filed in Chancery Court, even if the action would be one the corporation could bring at law.").

F. Tortious Interference Claim Against Khattak

Yu alleges Khattak tortiuously interfered with Yu's contractual interests under the Loan Agreements with GSM.²⁰⁰ Yu avers he had an existing contractual relationship with GSM, Khattak and US Mobile had knowledge of that relationship, and they intentionally caused GSM to breach the Loan Agreements.²⁰¹ Khattak maintains that the tortious interference claim must be dismissed because it was filed beyond the three-year statute of limitations under 10 Del. C. § 8106, and because there is no personal liability for inducing a breach of contract by GSM when acting within his role.²⁰²

200 Am. Compl. ¶ 162.

201 Id. at ¶¶ 161-62.

202 Khattak Opening Br. at 32-33.

To establish a claim for tortious interference under Delaware law, a plaintiff must show that there was: (1) a contract; (2) about which defendants knew; and (3) an intentional and improper act that is a significant factor in causing the breach of such contract (4) without justification (5) which causes injury.²⁰³

203 AM Gen. Holdings LLC v. Renco Grp., Inc., 2013 WL 5863010, at *12 (Del. Ch. Oct. 31, 2013) (quoting Grunstein v. Silva, 2009 WL 4698541, at *16 (Del. Ch. Dec. 8, 2009) (citing Restatement (Second) of Torts § 766 (1979))).

It is well settled that a party to a contract cannot be held liable for both breach of that contract and for inducing that breach.²⁰⁴ This is the so-called "affiliate exception." To state a claim for tortious interference, a complaint must contain factual allegations that support a reasonable inference that the defendant was "a stranger to both the contract and the business relationship giving rise to and underpinning the contract."²⁰⁵ If the defendant was not a stranger to the contract and business relationship, the plaintiff must adequately plead that the affiliate was not pursuing legitimate profit-seeking activities of the affiliated enterprise in good faith, or was "motivated by some malicious or other bad faith purpose to injure the plaintiff."²⁰⁶

204 Shearin v. E.F. Hutton Grp., Inc., 652 A.2d 578, 590 (Del. Ch. Dec. 8, 1994).

205 Tenneco Auto., Inc. v. El Paso Corp., 2007 WL 92621, at *5 (Del. Ch. Jan. 8, 2007) (quoting Atlanta Mkt. Ctr. Mgmt. Co. v. McLane, 503 S.E.2d 278, 283 (Ga. 1998)).

206 See Shearin, 652 A.2d at 591 ("By slight extension it has been held that employees or directors of a contracting corporation cannot be held personally liable for inducing a breach of contract by their corporations when they act within their role.") (citing Local Union 42 v. Absolute Envtl. Serv., 814 F.Supp. 392, 400-01 (D. Del. 1993)); see WP Devon, 2012 WL 3060513, at *4 (Del. Super. July 26, 2012) (holding that the tortious interference claim against the tortfeasor-parent survives dismissal because it acted in bad faith and was not pursuing a legitimate profit-seeking activity when it caused its debtor-subsidiary (and co-defendant) to liquidate its assets, "[m]ake a total of $7,255,393 in payments to [the parent] in the two weeks following the sale of [the subsidiary's] assets," and breach a lease the subsidiary had with the plaintiff).

According to the allegations in the Amended Complaint, Khattak controlled GSM and US Mobile.²⁰⁷ Given his role as owner and manager of GSM, as long as Khattak was acting within the scope of his authority, he cannot be liable for tortious interference with contract.²⁰⁸ The Court must determine whether Yu has alleged facts to rebut the presumption that Khattak was acting with the same legitimate economic interests as GSM, and instead acted in bad faith to injure Yu.²⁰⁹

207 Am. Compl. ¶ 1 ("This is an action brought...against Khattak and [GSM, US Mobile Inc., and US Mobile LLC], the three Delaware entities her formed, managed, and controlled."); Am. Compl. ¶ 6 ("[Khattak] is GSM's CEO, original founder, and Manager, and an 85% owner." "Khattak is the sole founder, incorporator, and CEO of the US Mobile entities.").

208 See Shearin, 652 A.2d at 590 ("[I]t has been held that employees or directors of a contracting corporation cannot be held personally liable for inducing a breach of contract by their corporations when they act within their role.") (citations omitted).

209 Renco Grp., Inc. v. MacAndrews AMG Holdings LLC, 2015 WL 394011, at *9 (Del. Ch. Jan. 29, 2015).

Yu's Amended Complaint does not include specific facts that could support his allegations of bad faith and overcome the qualified affiliate exception. Yu alleges no non-conclusory allegations that Khattak shifted GSM's assets such that GSM was insolvent and could not satisfy its obligations to Yu.²¹⁰ Yu's allegations do not offer facts permitting the inference of egregious conduct or malice necessary to sustain a bad faith claim that can overcome the affiliate exception. The Amended Complaint repeats the elements of tortious interference, and alleges Khattak stripped GSM of its assets and formed US Mobile,²¹¹ US Mobile's launch in 2014 caused GSM's breach in 2016,²¹² and Khattak transferred GSM's cash to US Mobile in January 2016.²¹³ It does not include well-pled allegations that Khattak caused GSM to transfer specific assets to US Mobile,²¹⁴ nor does it allege GSM made unusual payments to Khattak or US Mobile.²¹⁵ Yu fails to allege the requisite level of bad faith or malice needed to plead a claim for tortious interference against Khattak and, therefore, Khattak's Motion to Dismiss the tortious interference claim against him is GRANTED.

210 See id. at *1 (where the alleged tortfeasor purportedly liquidated investments such that there were no assets with which to satisfy lease payments owed to creditor plaintiff); see also Pl.'s Answering Br. to Khattak at 30.

211 Am. Compl. ¶ 162.

212 Id. at ¶¶ 61, 64, 77, 80-82, 146.

213 Id. at ¶ 76.

214 The Court acknowledges that, upon Yu's information and belief, Khattak purchased mobile phones with GSM monies, which he then gave to US Mobile, but does not accept this conclusory allegation as well-pled.

215 See WP Devon, 2012 WL 3060513, at *4.

G. Fraudulent Inducement Claim Against GSM

GSM argues that Yu's fraudulent inducement claim fails to plead separate damages from his breach of contract claim and impermissibly bootstraps the fraud claim to the breach of contract claim.²¹⁶ "Delaware courts have consistently held that to successfully plead a fraud claim, the allegedly defrauded plaintiff must have sustained damages as a result of a defendant's action."²¹⁷ Fraud damages allegations cannot simply "rehash" the damages that were allegedly caused by the claimed breach of contract.²¹⁸ Failure to plead separate damages is an independent ground for dismissal.²¹⁹

216 GSM Opening Br. at 9-10.

217 ITW Global Inv., 2015 WL 3970908, at *5 (citing Cornell Glasgow, LLC v. La Grange Properties, LLC, 2012 WL 2106945, at *8 (Del. Super. June 6, 2012) (quoting Dalton v. Ford Motor Co., 2002 WL 338081, at *6 (Del. Super. Feb. 28, 2002))).

218 Cornell Glasgow, 2012 WL 2106945, at *8 (citing Albert v. Alex Brown Mgt. Serv., Inc., 2005 WL 2130607, at *7 (Del. Ch. Aug. 26, 2005)) ("Cornell's fraud, negligent misrepresentation and one of its tortious interference with contract claims all arise from or are related to the [Agreement]. Cornell also seeks damages for La Grange's alleged breach of the [Agreement]. Delaware courts will not permit a plaintiff to "bootstrap" a breach of contract claim into a tort claim merely by intoning the prima facie elements of the tort while telling the story of the defendant's failure to perform under the contract. To be viable, the tort claim must 'involve violation of a duty which arises by operation of law and not by the mere agreement of the parties.'").

219 Id. at *9 (Del. Super. June 6, 2012) ("[Plaintiff] has failed to plead fraud damages separate and apart from its breach damages. The fraud claim, therefore, must be dismissed for this reason as well."); See also ITW Global Inv., 2015 WL 3970908, at *5.

Yu's alleged damages for his fraud claim and his breach of contract are almost identical. The prayer for relief in Yu's breach of contract claim requests judgment "in an amount to be determined, but not less than $3,605,000, plus costs interest and grant all further relief as may be just and appropriate."²²⁰ The prayer for relief for Yu's fraudulent inducement claim requests judgment "in an amount to be determined, but not less than $3,605,000, plus costs, punitive damages, interest and any and all such other and further relief as may be just and appropriate."²²¹ Yu's addition of punitive damages to his fraudulent inducement prayer for relief cannot change the fact that his fraud claim is premised on an alleged breach of the Loan Agreements.²²² Yu has failed to plead fraud damages separate and apart from his breach of contract damages.

220 Am. Compl. ¶ 101.

221 Id. at ¶ 111 (emphasis added).

222 Cf. EZLinks Golf LLC v. PCMS Datafit, Inc., 2017 WL 1312209, at *6 (Del. Super. Mar. 21, 2017); See Transcript of Mot. to Dismiss Hearing Dated January 22, 2018, 45:1-7.

Leave to Amend to Add Rescissory Damages

In an attempt to salvage his fraudulent inducement claim, Yu requests leave to amend under Superior Court Civil Rule 15 to include rescissory damages in the prayer for relief attached to his fraudulent inducement.²²³ GSM opposes, noting that "Yu has had four chances to review the case law and to ensure his pleading complies" with the particularity pleading requirement.²²⁴

223 See EZLinks, 2017 WL 1312209, at *6; Pl.'s Answering Br. to GSM at 24 (Trans. ID 61501442) (D.I. 36). Yu also made a global request to cure any deficiency in by requesting that the Court grant leave to amend "any of Plaintiff's claims against any Defendant" (emphasis in original). Pl.'s Answering Br. to US Mobile at 23, n. 10. This global request was denied. As the Defendants correctly note: Yu filed his original complaint in Chancery on May 3, 2016. Yu then filed an amended complaint in Chancery on July 26, 2016. The litigation was transferred to this Court on July 20, 2017, and the Amended Complaint was filed on October 26, 2017. Yu has had three bites at the apple with regard to deficient pleadings.

224 Def. GSM's Reply Br. in Support of Mot. Dismiss ("GSM Reply Br.") at 6-7 (Trans. ID 61553527) (D.I. 42). Yu filed his Original Complaint in this Court on July 20, 2017, and the Amended Complaint on October 26, 2017.

A motion for leave to amend is within the sound discretion of the Court and leave "shall be freely given when justice so requires."²²⁵ A motion to amend must be denied if the amendment would be futile in the sense that it would not survive a motion to dismiss under Rule 12(b)(6).²²⁶ The standard for assessing the legal sufficiency of a proposed amended complaint is the same standard applicable to a motion to dismiss under Rule 12(b)(6)²²⁷ - all allegations in the amended complaint must be accepted as true,²²⁸ and the proposed amendment will not be dismissed unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof.²²⁹ If there is no set of facts which could be proved under the amendment which would constitute a valid and sufficient claim or defense, leave should be denied.²³⁰ Therefore, the Court must determine whether amending the fraudulent inducement claim to include rescissory damages constitutes a valid and sufficient claim.

225 Super. Ct. Civ. R. 15(a).

226 E.I. Du Pont Nemours & Co. v. Allstate Ins. Co., 2008 WL 555919, at *1 (Del. 2008) (citing Cartanza v. Lebeau, 2006 WL 903541, at *2 (Del. Ch. Apr. 3, 2006).

227 Id.

228 Id.

229 Id.

230 3 Moore's Federal Practice, ¶ 15.08(4) (2d ed. 1974).

As noted above, to state a claim for fraudulent inducement a plaintiff must plead that he was injured by his reliance on the defendant's misrepresentation ²³¹ The traditional measure of damages is an award of compensatory damages - damages to compensate a plaintiff for his proven, actual loss caused by the defendant's wrongful conduct.²³² Compensatory damages are measured by the plaintiff's out-of-pocket, actual loss.²³³

231 See, e.g., ABRY Partners, 891 A.2d at 1050.

232 Strassburger v. Earley, 752 A.2d 557, 579 (Del. Ch. Jan. 27, 2000).

233 Id.

Rescissory damages are an exception to the normal out-of-pocket measure because they are measured at a point in time after the transaction.²³⁴ Delaware courts award rescissory damages when equitable rescission of a transaction would be appropriate, but not feasible.²³⁵ "At the most general level, this remedy is premised upon the idea that: (1) the transaction whereby the party gave up an asset was wrongful in some way, and (2) the nature of the wrong perpetuated is such that plaintiff is entitled to more than his 'out-of-pocket' harm, as measured by the market value of the asset at or around the time of the wrong."²³⁶ Where rescission calls for the cancellation of the bargain and the return of the parties to the status quo, rescissory damages are the equivalent value of stock or property at the time of resale or at the time of judgment.²³⁷ The remedy is generally available for an adjudicated breach of the duty of loyalty, such as cases involving self-dealing or where a fiduciary puts personal interests ahead of the interests of its beneficiary.²³⁸

234 Id.

235 Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1134, 1144 (Del. Ch. Oct. 12, 1994).

236 Id. (emphasis added).

237 Lynch v. Vickers Energy Corp., 429 A.2d 497, 502 (Del. 1981) (Lynch II), overruled on other grounds by Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983) ("To the extent that Lynch II, 429 A.2d at 505-506, purports to limit the Chancellor's discretion to a single remedial formula for monetary damages in a cash-out merger, it is overruled).

238 See id.; Strassburger, 752 A.2d at 581.

Yu does not plead that he was fraudulently induced to exchange property (e.g., stock or other assets) of appreciating value that GSM subsequently disposed of;²³⁹ nor is it reasonable to infer from the allegations that rescissory damages should be awarded because rescission is appropriate, but not feasible.²⁴⁰ As a matter of law, rescissory damages are not a proper remedy given the pled facts.²⁴¹ Amending the Amended Complaint to include rescissory damages for fraudulent inducement would be futile. Consequently, Yu's request for leave to amend is denied, and GSM's Motion to Dismiss the fraudulent inducement claim against it is GRANTED.

239 Strassburger, 752 A.2d at 581 ("In order to be equitably appropriate, rescissory damages must redress an adjudicated breach of the duty of loyalty, specifically, cases that involve self-dealing or where the board puts its conflicting personal interests ahead of the interests of the shareholders.").

240 See Catamaran Acquisition Corp. v. Spherion Corp., 2001 WL 755387, at *4 (Del. Super. May 31, 2001) ("Rescissory damages may be appropriate when 'the equitable remedy of rescission is impractical' but otherwise warranted."); Myzel, 386 F.2d at 742 ("Rescission calls for cancellation of the bargain, and the return of the parties to the status quo ante; where this is impossible because of the disposal or retirement of the stock, then equivalent value of the stock at the time of resale or at the time of judgment, should be the proper measure of damage." (citations omitted)).

241 As noted by the Court of Chancery in its decision on Defendants' Motions to Dismiss for lack of subject matter jurisdiction, "[T]he remedy that will make [Yu] whole—is money damages in the amount owed on his debt...[H]e can obtain that remedy against GSM under the Loan Agreements or against US Mobile LLC as the transferee of a fraudulent transfer." Yu, 2017 WL 2889515, at *4.

H. Fraudulent Transfer Claims Against GSM and US Mobile

US Mobile submitted invoices for mobile phone orders (with its Opening Brief) to support its argument that no fraudulent transfer occurred.²⁴² Yu argues that US Mobile asserted "a meritorious defense" when it submitted the phone invoices, and therefore converted the motion to dismiss the fraudulent transfer claim against it to a motion for summary judgment.²⁴³

242 US Mobile Opening Br. Ex. 5.

243 Pl.'s Answering Br. to US Mobile at 12; Transcript of Mot. to Dismiss Hearing Dated January 22, 2018, 29:3-10, 125:5-11.

The general rule is that matters outside the pleadings should not be considered on a Rule 12(b)(6) motion to dismiss.²⁴⁴ There are two exceptions to the rule: (1) where an extrinsic document (or set of documents) is integral to a plaintiff's claim and is incorporated into the complaint by reference; and (2) where the document (or set of documents) is not being relied upon to prove the truth of its contents.²⁴⁵ Neither exception applies here,²⁴⁶ and therefore Superior Court Civil Rule 12(b)(6) prohibits the Court's consideration of the invoices. Consequently, the Court will not convert the Motion to Dismiss the fraudulent transfer claim against US Mobile into a motion for summary judgment.

244 Vanderbilt Income and Growth Assocs. L.L.C. v. Arvida/JMB Managers, Inc., 691 A.2d 609, 612 (Del. 1996) (citing In re Santa Fe Pac. Corp. Shareholder Litig., 669 A.2d 59, 68 (Del. 1995)).

245 Price v. Koski Trucking, Inc., 2012 WL 3549729, at *2 (Del. Super. July 27, 2012).

246 The invoices were not incorporated into the Amended Complaint by reference, and the invoices are being relied upon to prove that US Mobile paid consideration for mobile phones from GSM.

Yu alleges that GSM and US Mobile violated DUFTA. According to Yu, "with actual intent to hinder, delay, or defraud its creditors," GSM transferred resources and assets to US Mobile without a fair exchange of value and with at least constructive knowledge that GSM had no way of fulfilling its obligations to creditors (particularly Yu) in due course.²⁴⁷ GSM and US Mobile challenge the factual bases for the allegations regarding GSM's insolvency, fair exchange, and other elements necessary for Yu to prevail, including the requirement to plead with sufficient particularity under Rule 9(b).²⁴⁸

247 Am. Compl. ¶¶ 121-22, 126-28.

248 US Mobile Opening Br. at 8-11; Super. Ct. Civ. R. 9(b).

To establish a fraudulent transfer claim, a plaintiff must show either "actual intent to hinder, delay or defraud any creditor" or inadequate value received for a transfer, combined with either insufficient assets for business or at least constructive belief that the transferor would incur debts exceeding its ability to repay them as they come due.²⁴⁹ Although Delaware is a notice pleading jurisdiction, Superior Court Civil Rule 9(b) requires a plaintiff to plead actual fraud with particularity.²⁵⁰ "Rule 9(b) does not require an exhaustive cataloguing of facts but on sufficient factual specificity to provide assurance that the plaintiff has investigated [...] the alleged fraud and reasonably believes that a wrong has occurred."²⁵¹ However, it is not enough to make conclusory allegations mirroring the elements in the fraudulent transfer statute.²⁵²

249 6 Del. C. § 1304(a).

250 See Ki-Poong Lee, 2016 WL 6806247, at *3 ("Claims for actual fraudulent transfer brought under § 1304(a)(1) must meet the heightened pleading standard of Superior Court Civil Rule 9(b).").

251 Id. at *4.

252 See Hospitalists of Del., 2012 WL 3679219, at *13 ("[S]imply reciting the statutory or common law elements of an offense...is insufficient to state a claim upon which relief may be granted.").

With regard to GSM and US Mobile as transferor and transferee, respectively, accepting all well-pled allegations as true, and viewing the facts in the light most favorable to the non-movant, Yu alleges a reasonably conceivable set of circumstances from which it could be inferred GSM transferred its cash and assets with an actual intent to defraud Yu. While an actual fraud claim must meet a heightened pleading standard requiring particularized facts,²⁵³ "[c]ourts must be sensitive to the fact that application of Rule 9(b) prior to discovery 'may permit sophisticated defrauders to successfully conceal the details of their fraud.'"²⁵⁴ The "particularity requirement must be applied in light of the facts of the case and less particularity is required when the facts lie more in the knowledge of the opposing party than of the pleading party."²⁵⁵

253 Super. Ct. Civ. R. 9(b).

254 Seiden, 2015 WL 7289338, at *12 (citing Craftmatic Sec. Litig., 890 F.2d at 645).

255 H-M Wexford, 832 A.2d at 146 (acknowledging the precedent of applying the particularity requirement in light of the facts of the case and less particularity is required when the facts lie more in the knowledge of the opposing party) (citing Carello, 2002 WL 1454111, at *8; see also Phillips, 194 A.2d at 697).

In Snyder v. Butcher & Co., defendants filed a motion to dismiss predicated on plaintiffs' alleged failure to plead fraud with particularity, even though the plaintiffs had identified: (1) the promotional materials they relied upon in deciding to invest in privately-owned radio stations; (2) the alleged misrepresentations contained in those promotional materials; and (3) the parties who prepared and distributed the promotional materials.²⁵⁶ There, the Court permitted the fraud claim to survive the motion to dismiss, holding:

256 1992 WL 240344 (Del. Super. Sept. 15, 1992).

The three purposes of Rule 9(b) have been fulfilled. First, Defendants are informed of the act Plaintiff complains of and may adequately prepare for response and defense. Second, the Amended Complaint does not seem to be a pretext for a fishing expedition, but contains allegations of a substantial suit. Third, Defendants are being exposed to a suit which, while it may not ultimately be successful, cannot correctly be characterized as unfounded.²⁵⁷

257 Id. at *10.

The Snyder decision is instructive. Because the facts of a fraudulent transfer lie more in the knowledge of GSM and US Mobile than of Yu, less particularity is required at this preliminary stage in the litigation.²⁵⁸ The analysis of actual intent is informed by a number of factors, including whether the transfer was to an insider, the transfer was concealed, and the debtor was or became insolvent after the transfer.²⁵⁹ Yu adequately alleges that: (1) Yu loaned $3,500,000 to GSM;²⁶⁰ (2) GSM made timely interest payments until early 2016;²⁶¹ (3) Khattak formed the first US Mobile entity on August 11, 2014;²⁶² (4) Khattak launched an MVNO within US Mobile in or around September 2014, within weeks of Yu making his final loan to GSM;²⁶³ (5) GSM transferred all or substantially all of its assets to US Mobile, a limited liability company owned by GSM's controller;²⁶⁴ (6) the transfers from GSM to US Mobile were concealed;²⁶⁵ (7) GSM funds and assets were transferred to US Mobile without fair value or consideration;²⁶⁶ and (8) GSM is insolvent and has advised Yu that it cannot service the loans.²⁶⁷ The three purposes of Rule 9(b) are fulfilled: (1) GSM and US Mobile are informed of the act Yu complains of and may adequately prepare for response and defense; (2) the Amended Complaint does not appear to be a pretext for a fishing expedition, but contains allegations of a substantial suit; and (3) GSM and US Mobile are being exposed to a suit which, while it may not ultimately be successful, cannot correctly be characterized as unfounded at this juncture.

258 Cf. H-M Wexford, 832 A.2d at 146.

259 See 6 Del. C. § 1304(b).

260 Am. Compl. ¶ 91.

261 Id. at ¶¶ 77, 80. GSM made payments on the Loan Agreements dated February 2013 through September 2014 until early 2016.

262 Id. at Ex. A ¶ 12.

263 Id.; Am. Compl. ¶¶ 61, 91. US Mobile formed on August, 11, 2014, Yu made final GSM loan on September 1, 2014, and the MVNO was launched within six to eight weeks of September 2014.

264 Am. Compl. ¶¶ 6, 118, 136.

265 Id. at ¶ 124.

266 Id. at ¶¶ 113, 126, 153.

267 "A debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets..." 6 Del. C. § 1302(a). "A debtor who is generally not paying debts as they become due is presumed to be insolvent." 6 Del. C. § 1302(b). GSM provided Yu with a GSM income statement dated December 4, 2015, which showed a net loss of $812,257, and a GSM balance sheet dated January 31, 2016, which show total assets of $112,730.27 and total liabilities of $4,403,083.35. The balance sheet yields a current ratio of 0.025, indicating an inability to pay off obligations if they came due. Further, Yu alleges that GSM notified Yu it would file for bankruptcy if Yu initiated suit to collect on the loan. Am. Compl. ¶¶ 86-88, 140. See Renco Grp., Inc., 2015 WL 394011, at *11 (dismissing a plaintiff's fraudulent transfer claims because the complaint lacked facts supporting an unequal exchange and insolvency).

Accepting all well-pled allegations as true, a reasonable jury could infer that GSM assets were fraudulently transferred to US Mobile. A determination as to whether GSM received "reasonably equivalent value" in exchange for allegedly improper transfers requires additional discovery. Therefore, GSM's and US Mobile's Motions to Dismiss the fraudulent transfer claim against them are DENIED.

I. Unjust Enrichment Claim Against GSM

Yu alleges he gave GSM loan money pursuant to the Loan Agreements, GSM transferred the loan money and GSM resources to US Mobile and Khattak, and US Mobile wrongfully retained the loan money and resources.²⁶⁸ Yu alleges that GSM has been unjustly enriched by its access to the loan money and its use to cover operations, including operating expenses and payroll.²⁶⁹

268 Am. Compl. ¶¶ 147-48.

269 Id. at ¶ 144.

GSM argues that Yu has failed to state a claim for unjust enrichment as a matter of law because the parties have a contractual relationship governing the transaction, including the matters upon which the unjust enrichment claim is based.²⁷⁰ Yu responds that he may validly plead an unjust enrichment claim in the alternative because GSM briefly challenged the validity of the Loan Agreements.²⁷¹

270 GSM Opening Br. at 15; Khattak Opening Br. at 30; GSM Reply Br. at 10.

271 Pl.'s Answering Br. to GSM at 31.

This Court has recognized that in some situations both a breach of contract and an unjust enrichment claim may survive a motion to dismiss when pled as alternative theories of recovery. Specifically, if the validity of that agreement is challenged, a claim of unjust enrichment may survive a motion to dismiss. At this stage, while GSM does not now seek to dismiss the breach of contract claim, GSM opens its brief with a challenge to the validity of the Loan Agreements.... (citations omitted)

As mentioned previously, Delaware courts define unjust enrichment as "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience."²⁷² Before reaching the elements of a challenged unjust enrichment claim, a court first must satisfy itself that no contract already governs the relevant relationship between the parties.²⁷³ "If a contract comprehensively governs the parties' relationship, then it alone must provide the measure of the plaintiff's rights and any claim of unjust enrichment will be denied."²⁷⁴ In some cases, however, both a breach of contract and an unjust enrichment claim may survive a motion to dismiss when pled as alternative theories of recovery.²⁷⁵ But "a right to plead alternative theories does not obviate the obligation to provide factual support for each theory."²⁷⁶

272 Nemec, supra note 193. To state a claim, the Amended Complaint must allege sufficient facts to show: (1) an enrichment; (2) an impoverishment; (3) a relation between the enrichment and impoverishment; (4) the absence of justification; and (5) the absence of a remedy provided by law. See, e.g., id.; BAE Sys., 2009 WL 264088, at *7.

273 See BAE Sys., 2009 WL 264088, at *7-8 (holding that, to bring a proper claim for unjust enrichment, the plaintiff must allege a factual basis independent from an alleged breach of contract).

274 See id.

275 See id. at *8 (The Court of Chancery rejected the argument that an unjust enrichment claim must survive a motion to dismiss when pled alternatively with a contract claim that will move beyond the motion to dismiss stage).

276 See id.

The transactions at issue - the loans Yu made to GSM and GSM's failure to service the loans - are governed by the Loan Agreements.²⁷⁷ The Defendants do not dispute this.²⁷⁸ Yu does not plead his unjust enrichment claim as an alternative theory to his breach of contract claim. Rather, he alleges that he conferred a benefit upon GSM, and is directly impoverished thereby, in two respects. First, Yu paid over three million dollars in loan money to GSM under the Loan Agreements, and second, "GSM was enriched with Dr. Yu's money as loaned in the Loan Agreement [and] operated based on the loan proceeds...."²⁷⁹ In both instances the Loan Agreements, which were negotiated by the parties, govern the relevant rights between Yu and GSM. The factual basis for Yu's unjust enrichment claim against GSM is not independent from the factual basis of his breach of contract claim.²⁸⁰ Given these pled facts, Yu is not entitled to recover for unjust enrichment under any reasonably conceivable set of circumstances susceptible of proof. Thus, GSM's Motion to Dismiss the unjust enrichment claim is GRANTED.

277 See Am. Compl. ¶ 91.

278 Khattak Reply Br. at 2 ("Little needs to be said on the unjust enrichment claim - the claim lacks merit given the contracts that control."); Def. US Mobile's Reply Br. in Support of Mot. Dismiss ("US Mobile Reply Br.") at 9 (Trans. ID 61553286) (D.I. 43) (arguing that the unjust enrichment claim is not appropriate because "unjust enrichment, or quasi-contract, [i]s a theory of recovery to remedy the absence of a formal contract," and one exists here.); GSM Opening Br. at 15 (arguing unjust enrichment is not appropriate because the wrong resulted from a contractual relationship); Transcript of Mot. to Dismiss Hearing Dated January 22, 2018, 5:22-23; Transcript of Mot. to Dismiss Hearing Dated January 22, 2018, 98:23 (Khattak's counsel argues, "There's no allegation that these contracts are defective in a way that Khattak should be a party to them.").

279 Am. Compl. ¶¶ 140, 144-45; cf. BAE Sys., 2009 WL 264088, at *7-8.

280 See BAE Sys., 2009 WL 264088, at *7-8 (holding that, to bring a proper claim for unjust enrichment, the plaintiff must allege a factual basis independent from an alleged breach of contract).

J. Tortious Interference Claim Against US Mobile

Yu alleges that US Mobile tortiuously interfered with Yu's contractual interests under the Loan Agreements with GSM.²⁸¹ Yu alleges he had an existing contractual relationship with GSM, US Mobile had knowledge of that relationship, and it intentionally caused GSM to breach the Loan Agreements.²⁸² US Mobile argues that Yu makes only conclusory allegations as to the elements of tortious interference against US Mobile, warranting the claim's dismissal.²⁸³ The Amended Complaint repeats the elements of tortious interference, and alleges that Khattak stripped GSM of its assets and formed US Mobile,²⁸⁴ US Mobile's launch in 2014 caused GSM's breach in 2016,²⁸⁵ and Khattak transferred GSM's cash to US Mobile in January 2016.²⁸⁶ Noticeably absent in the Amended Complaint is any allegation that US Mobile committed an intentional act that was a significant factor in causing GSM's breach of the Loan Agreements.²⁸⁷ Moreover, the Amended Complaint contains no allegations demonstrating why or how US Mobile knew or should have known about the Loan Agreements. Because the Amended Complaint pleads only conclusory allegations that US Mobile intentionally caused GSM to breach the Loan Agreements, US Mobile's Motion to Dismiss the tortious interference claim against it is GRANTED.

281 Am. Compl. ¶ 162.

282 Pl.'s Answering Br. to US Mobile at 17; Am. Compl. ¶¶ 161-62.

283 US Mobile Opening Br. at 19. Recall the elements of tortious interference: A plaintiff must show that there was: (1) a contract; (2) about which defendants knew; and (3) an intentional and improper act that is a significant factor in causing the breach of such contract (4) without justification (5) which causes injury. AM Gen. Holdings, supra note 203.

284 Am. Compl. ¶ 162.

285 Id. at ¶¶ 61, 64, 77, 80-82, 146.

286 Id. at ¶ 76.

287 See the third element of tortious interference. AM Gen. Holdings, supra note 203. --------

VI. CONCLUSION

In conclusion, for the reasons explained above:

GSM's Motion to Dismiss Counts II and IV of the Amended Complaint is GRANTED, and its Motion to Dismiss Count III of the Amended Complaint is DENIED;

Khattak's Motion to Dismiss Counts II, III, IV, and V of the Amended Complaint is GRANTED;

US Mobile LLC's Motion to Dismiss Counts IV and V of the Amended Complaint is GRANTED, and its Motion to Dismiss Count III of the Amended Complaint is DENIED; and

US Mobile Inc.'s Motion to Dismiss Counts III, IV, and V of the Amended Complaint is GRANTED.

Plaintiff's surviving claims are breach of contract against GSM (Count I), and fraudulent transfer against GSM and US Mobile LLC (Count III).

IT IS SO ORDERED.

/s/_________

Jan R. Jurden, President Judge Original to Prothonotary