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Chancery Explains Pleading Standard and Sustains Unjust Enrichment Claim Related to Plaintiff’s Forfeiture of LLC Acquisition Rights

Angel v. Warrior Met Coal, Inc., C.A. No. 2019-0235-SG (Del. Ch. Jun. 30, 2021)

Under Delaware’s notice pleading standard, a plaintiff’s claim will survive a motion to dismiss if it is “reasonably conceivable” that the plaintiff might prevail. The Court here explained that test is whether a “claim’s success seems possible to a rational objective observer.” Notwithstanding this plaintiff-friendly standard, Delaware courts will dismiss a claim if a plaintiff fails to plead all necessary elements.

In Angel, the plaintiff, who was a debtholder in a bankrupt company, forfeited his rights to acquire equity in the restructured Delaware limited liability company when he did not timely provide requisite paperwork to the company. According to the plaintiff, his forfeiture occurred because the defendants (the parties responsible for providing notice) sent the plaintiff’s notice to an incorrect e-mail address. 

On the defendants’ motion to dismiss, the Court concluded that the majority of the plaintiff’s claims could not proceed. Claim by claim, the Court explained that the plaintiff had failed to plead necessary elements to support his contract, fiduciary duty, conversion, and declaratory judgment claims. Nonetheless, the Court allowed the plaintiff’s unjust enrichment claim to move forward. The plaintiff alleged that the defendants sent the plaintiff’s notice to the wrong e-mail address, which prevented the plaintiff from exercising his acquisition rights. It should have been apparent to the defendants that a person in the plaintiff’s situation had no reason not to submit the required paperwork, which the Court emphasized was “was the only step needed to receive the only possible compensation for the [plaintiff’s] lost rights against the Debtor.” With the dismissal of his other claims, the plaintiff lacked an adequate remedy at law. As such, the Court found it was reasonably conceivable that the plaintiff could prove that the defendants were wrongfully enriched to the plaintiff’s detriment. Thus, the unjust enrichment claim, alone, survived.

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