Jackson Lehr v. Aspen Power Partners LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

JACKSON LEHR, and DAVID )
BEVVINO-BERV, individually and )
derivatively, on behalf of APP )
MANAGEMENT HOLDCO LLC, )
MICHAEL LEHR and )
ENKELKINDER SOLAR TRUST, )
)
Plaintiffs, )
)
v. ) C.A. No. 2025-0116-LWW
)
ASPEN POWER PARTNERS LLC, )
JORGE VARGAS and SCOTT )
DELANEY, )
)
Defendants, )
)
and )
)
APP MANAGEMENT HOLDCO )
LLC, a Delaware limited liability )
company, )
)
Nominal Defendant. )

MEMORANDUM OPINION

Date Submitted: December 9, 2025
Date Decided: March 30, 2026

Paul D. Brown, Joseph B. Cicero, Ryan M. Lindsay, Samantha Callejas, CHIPMAN
BROWN CICERO & COLE, LLP, Wilmington, Delaware; Attorneys for Plaintiffs
Jackson Lehr, David Bevvino-Berv, Michael Lehr, and Enkelkinder Solar Trust
Michael A. Barlow, Hayden J. Driscoll, QUINN EMANUEL URQUHART &
SULLIVAN, LLP, Wilmington, Delaware; Michael B. Carlinsky, QUINN
EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; Keith H.
Forst, Maia Livengood, QUINN EMANUEL URQUHART & SULLIVAN, LLP,
Washington, D.C.; Attorneys for Defendants Aspen Power Partners LLC, Jorge
Vargas, and Scott Delaney and Nominal Defendant APP Management HoldCo LLC

David E. Ross, Garrett B. Moritz, ROSS ARONSTAM & MORITZ LLP,
Wilmington, Delaware; Kathy D. Patrick, Sam W. Cruse, III, Sydney Ballesteros,
Michael D. Doman, GIBBS & BRUNS LLP, Houston, Texas; Attorneys for
Intervenor-Plaintiff Carlyle Hunt HoldCo, L.L.C.

WILL, Vice Chancellor
This dispute centers on the governance and economic restructuring of Aspen

Power Partners LLC after a major capital infusion by a private equity sponsor.

Displeased with the restructuring, early investors filed this lawsuit challenging the

adoption of an amended limited liability company agreement that purportedly

impairs their rights.

The plaintiffs’ claims implicate two entities’ limited liability company

agreements and fall into two groups: direct claims by holders of Class B units, and

derivative claims on behalf of a holding vehicle that owns Class A units. The Class

B plaintiffs bring direct claims against Aspen Power, alleging its amended

agreement was adopted in breach of their consent rights under the predecessor

agreement. They also challenge the resulting composition of the board under 6 Del.

C. § 18-110. The Class A plaintiffs advance derivative claims on the holding

vehicle’s behalf, accusing two managers of breaching their fiduciary duties and that

vehicle’s limited liability company agreement by approving the transaction.

The defendants’ motion to dismiss the lawsuit is largely granted. The Class A

plaintiffs lack standing to pursue the derivative claims, which otherwise fail on the

merits because the individual defendants contractually waived fiduciary duties and

were acting in a separate corporate capacity. The statutory governance claim is also

dismissed.

1
The motion is denied as to two narrow aspects of the Class B plaintiffs’ breach

of contract claims. At the pleading stage, it is reasonably conceivable that the Fifth

LLC Agreement adversely modified the plaintiffs’ preemptive rights and economic

distribution hurdles without their prior written consent. Those limited theories

survive.

I. BACKGROUND

The following facts are drawn from the Verified Amended Complaint (the

“Complaint”) and the documents it incorporates by reference. 1

A. Aspen Power and APP Management

Defendant Aspen Power Partners LLC (“Aspen Power”) is a renewable

energy company.2 It was founded in 2020 by plaintiff Jackson Lehr (“J. Lehr”) and

defendant Jorge Vargas.3

Aspen Power has four classes of membership units: Class A Units,

Class B-1 Units, Class C Units, and Preferred Units. 4

1
Am. Verified Compl. (Dkt. 46) (“Am. Compl.”); see Freedman v. Adams,
2012 WL 1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to
and heavily relies upon documents in her complaint, these documents are considered to be
incorporated by reference into the complaint[.]” (citation omitted)); In re Books-A-Million,
Inc. S’holders Litig., 2016 WL 5874974, at *1 (Del. Ch. Oct. 10, 2016) (stating that the
court can take judicial notice of “facts that are not subject to reasonable dispute” (citation
omitted)).
2
Am. Compl. ¶ 1.
3
Id.
4
Id. ¶ 39.

2
Plaintiff Michael Lehr (“M. Lehr”), the father of J. Lehr, was a Class B-1 Unit

holder alongside plaintiff Enkelkinder Solar Trust, a grantor trust he established for

the benefit of his grandchildren.5 Together, M. Lehr and the trust are the “Class B

Plaintiffs.”

Most of Aspen Power’s Class A Units were initially held by nominal

defendant APP Management HoldCo LLC (“APP Management”), an entity created

for the sole purpose of holding those units.6 APP Management had five members:

J. Lehr, plaintiff David Bevvino-Berv (with J. Lehr, the “Class A Plaintiffs”),

Vargas, defendant Scott Delaney, and non-party Daniel Gulick.7 The entity was

designed to “pass along to each of its Members such rights, as each such Member

would have if such Member directly owned” the Class A Units.8

APP Management was governed by the APP Management HoldCo LLC

Limited Liability Company Agreement (“APP Management LLC Agreement”). 9

Under that agreement, majority member approval was required to effectuate

ordinary decisions.10 But the unanimous approval of all APP Management members

5
Id. ¶¶ 33-34.
6
Id. ¶ 38.
7
Id. ¶ 2. APP Management is a member-managed limited liability company. Id. ¶ 5.5.
8
Id. at Ex. C (“APP Management LLC Agreement”) Recitals.
9
Id.
10
Am. Compl. ¶ 5.

3
was required to “grant any consent or the waiving or exercising of any rights under

the [Aspen Power] Operating Agreement.”11

B. The Aspen Fourth LLC Agreement

Aspen Power’s limited liability company agreement was amended three times

to account for its growth and evolving needs.12 On September 29, 2022, the Fourth

Amended and Restated Limited Liability Company Agreement (the “Aspen Fourth

LLC Agreement”) took effect. 13 The amendments were designed, in part, to admit

Carlyle Hunt HoldCo, L.L.C. (“Carlyle”), an affiliate of The Carlyle Group, as a

member of Aspen Power.14 After the Aspen Fourth LLC Agreement was executed,

Carlyle contributed $200 million in exchange for Preferred Units. 15

Under the Aspen Fourth LLC Agreement, Aspen Power’s management was

exclusively delegated to a seven-member board of managers (the “Board”).16 APP

Management held the unilateral right to designate four managers, Carlyle had the

right to designate one, and Ultra Capital—a Class B member—designated one.17

11
APP Management LLC Agreement § 5.5(i).
12
Am. Compl. ¶ 9.
13
Am. Compl. Ex. A (“Aspen Fourth LLC Agreement”).
14
Am. Compl. ¶ 9.
15
Id.
16
Id. ¶¶ 46-47.
17
Aspen Fourth LLC Agreement § 5.2(a)(i).

4
The seventh—an independent manager—was designated by the mutual selection of

Carlyle and APP Management.18 As of December 2024, the Board was composed

of: Vargas, Delaney, Bill DeLong, and Peter Sherk (APP Management designees);

Saurabh Anand (Carlyle designee); Kristian Hanelt (Ultra Capital designee); and

Barry Welch (jointly designated).19

The Aspen Fourth LLC Agreement addressed the process to amend it. Under

Section 14.2, the agreement could “only be amended, amended and restated,

modified or otherwise supplemented . . . with the consent of [Carlyle] and upon the

unanimous approval of the Board.”20 In addition, the “prior written consent of an

affected Member (or class of Members)” was required if an amendment would:

• “alter the interest of a Member in Company Distributions, other than
as a result of the admission or withdrawal of a Member, or issuance or
Transfer of any Equity Securities”;

• “adversely and disproportionately affect the rights or obligations of
any class vis-à-vis the rights or obligations of any other class”; or

• “adversely modify or waive the preemptive rights” of any member.21

18
Id.
19
Am. Compl. ¶ 101.
20
Aspen Fourth LLC Agreement § 14.2; Am. Compl. ¶¶ 96-97 (explaining that Carlyle
was the “Investor Majority”).
21
Aspen Fourth LLC Agreement § 14.2.

5
C. The Amendment Process

At the close of December 2024, Aspen Power management took steps to

amend the Aspen Fourth LLC Agreement.

On December 11, 2024, Vargas—then Aspen Power’s CEO—emailed

members to notify them of an intention to amend the Aspen Fourth LLC

Agreement.22 He asked that members be prepared to execute the proposed

amendment two days later, promising to send a “near-final” draft in short order. 23

Counsel for Aspen Power circulated a draft on December 12. Various

plaintiffs (J. Lehr, Bevvino-Berv, and M. Lehr) felt the draft had material errors and

omissions.24 They protested the timeline and asked for a revised draft.25 The initial

approval deadline was pushed back and revisions were made.26

At 2:30 a.m. on December 24, a new draft was circulated.27 Counsel for

Aspen Power described the changes as “limited modifications . . . that [would]

22
Am. Compl. ¶ 54.
23
Id.
24
Id. ¶ 55.
25
Id. ¶ 56.
26
Id. ¶¶ 57-58.
27
Id. ¶ 61.

6
simplify the approval process for [an upcoming] equity raise.” 28 The email

summarized the proposed amendments, including terms:

• allowing Carlyle to appoint four managers and allocating it a
“sufficient number of votes to control the [B]oard”;

• affording members preemptive rights for future issuances but
providing that signing the amended agreement would waive those
rights as to the upcoming capital raise; and

• creating new “Upside Preferred Units” and “Phantom Preferred Units”
for issuance to management.29

Counsel explained that Aspen Power intended to finalize the amendment “before

Christmas.”30

At 10:10 p.m. on December 24, M. Lehr told Aspen Power’s counsel that he

“d[id] not approve this transaction.”31 He also expressed concerns about approval,

writing: “It appears that your position is that my approval is not required. To avoid

any misunderstanding, I think that your position violates the current governing LLC

[Agreement].”32 J. Lehr and Bevvino-Berv sent emails expressing the same

sentiment.33

28
Id.; see Am. Compl. Ex. F (email summarizing the proposed amendments).
29
Am. Compl. Ex. F.
30
Am. Compl. ¶ 64.
31
Id. ¶ 65 (quoting Am. Compl. Ex. F).
32
Id.
33
Id.

7
D. The Aspen Fifth LLC Agreement

Despite these objections, the Fifth Amended and Restated Limited Liability

Company Agreement (the “Aspen Fifth LLC Agreement”) was executed later that

night, pursuant to a unanimous written consent of the Board.34 APP Management

did not consent to the amendments. 35 A copy of the executed Aspen Fifth LLC

Agreement was distributed to the plaintiffs on December 28, 2024 at 11:23 p.m. 36

The Aspen Fifth LLC Agreement made several substantive changes to Aspen

Power’s governance and economics.

First, it changed the Board composition, increasing the Board from seven to

ten managers.37 Carlyle was given the right to appoint four managers, each with four

votes on all matters.38 All other managers retained one vote each.39 The Aspen Fifth

LLC Agreement also permitted a single Carlyle-appointed manager to cast up to

sixteen votes in the case of vacancies.40 As a result, control of the Board was

transferred from APP Management to Carlyle. 41

34
Id. ¶ 66; see Am. Compl. Ex. B (“Aspen Fifth LLC Agreement”).
35
Am. Compl. ¶ 66.
36
Id.
37
Id. ¶ 71.
38
Id. ¶ 100.
39
Id. ¶ 72.
40
Id. (describing Section 5.3 of the Aspen Fifth LLC Agreement).
41
Am. Compl. Ex. F.

8
Second, it eliminated APP Management’s “consulting rights” and transferred

its “drag-along rights” to Carlyle.42

Third, it created Phantom Preferred Units (“PPUs”). 43 An attached term sheet

stated that the PPUs were “not equity interests[,]” and that “an award of [PPUs] shall

not by itself in any way entitle the recipient thereof to any rights as an equityholder

of the Company[.]”44

Fourth, it modified the “MOIC Uplift” schedule. 45 Under the Aspen Fourth

LLC Agreement’s distribution waterfall, Carlyle—as the sole Preferred Unit

holder—was entitled to a return based on its outstanding capital contributions

against a set multiplier that increased annually.46 The Aspen Fifth LLC Agreement

changed this multiplier schedule to increase quarterly rather than yearly.47

Finally, it altered members’ preemptive rights. The Aspen Fourth LLC

Agreement gave members the right to purchase a proportional share when new

securities were issued by Aspen Power.48 This preemptive right was not invoked

42
Am. Compl. ¶ 74.
43
Id. ¶ 76.
44
Am. Compl. Ex. B at Ex. F at 5.
45
See id. at Ex. D (setting out the MOIC Uplift schedule). “MOIC” stands for “multiple
on invested capital.”
46
Am. Compl. ¶ 79; see Aspen Fourth LLC Agreement § 4.1; id. at Ex. D.
47
Am. Compl. ¶ 78.
48
Aspen Fourth LLC Agreement § 3.1(f)(i).

9
when “Excluded Securities” were at issue.49 Under the Aspen Fifth LLC Agreement,

however, the definition of “Excluded Securities” was expanded.50 The Aspen Fifth

LLC Agreement also waived all preemptive rights to “Effective Date Related

Issuances” upon its execution.51

E. This Litigation

The plaintiffs filed this lawsuit on January 31, 2025.52 The operative amended

Complaint, filed on May 15, advances direct and derivative claims for: breach of

contract (Counts IV, V, VI, and VIII); breach of fiduciary duty (Count VII); and

breach of the implied covenant of good faith and fair dealing (Count IX). 53 The

plaintiffs also seek declaratory judgments regarding the invalidity of the Aspen Fifth

LLC Agreement, the legal composition of the Board, and the extent to which their

approvals were required to amend the Aspen Fourth LLC Agreement (Counts I, II,

and III).54

49
Id.
50
Am. Compl. ¶ 81 (comparing Am. Compl. Ex. B § 3.1, with Am. Compl. Ex. J at 11-12).
51
Id.; Aspen Fifth LLC Agreement, Definitions (defining “Effective Date Related
Issuances”).
52
Verified Compl. (Dkt. 1).
53
Am. Compl. ¶¶ 162-78 (breach of contract); id. ¶¶ 179-86 (breach of fiduciary duty);
id. ¶¶ 187-96 (breach of contract); id. ¶¶ 197-209 (implied covenant).
54
Id. ¶¶ 127-61.

10
On February 17, 2025, Carlyle filed a motion to intervene pursuant to Court

of Chancery Rule 24.55 That motion was unopposed and subsequently granted.56

Carlyle filed an intervenor complaint on March 3, 2025, seeking a declaration that

the Aspen Fifth LLC Agreement governs.57

On July 14, the defendants moved to dismiss the Complaint and filed an

opening brief in support.58 Briefing was complete as of September 18. 59 Oral

argument took place on December 9, and the matter was taken under advisement.60

II. ANALYSIS

The defendants move for dismissal under Court of Chancery Rule 12(b)(6). 61

In resolving the motion, I must “(1) accept all well pleaded factual allegations as

true, (2) accept even vague allegations as ‘well pleaded’ if they give the opposing

party notice of the claim, [and] (3) draw all reasonable inferences in favor of the

55
Carlyle Hunt HoldCo, L.L.C.’s Mot. to Intervene (Dkt. 17).
56
Order Granting Mot. to Intervene (Dkt. 38).
57
Verified Compl. in Intervention (Dkt. 39) ¶¶ 44-47.
58
Defs.’ Opening Br. in Supp. of Mot. to Dismiss Pls.’ Verified Am. Compl. (Dkt. 52)
(“Defs.’ Opening Br.”).
59
Pls.’ Answering Br. in Opp’n to Defs.’ Mot. to Dismiss Verified Am. Compl. (Dkt. 58)
(“Pls.’ Answering Br.”); Defs.’ Reply Br. in Further Supp. of Mot. to Dismiss Pls.’ Verified
Am. Compl. (Dkt. 61) (“Defs.’ Reply Br.”).
60
See Dkt. 64.
61
Ct. Ch. R. 12(b)(6).

11
non-moving party.”62 I need not “accept every strained interpretation of [the

plaintiffs’] allegations”63 nor conclusory statements “unsupported by allegations of

specific facts.”64 Dismissal is appropriate only if the plaintiffs cannot “recover under

any reasonably conceivable set of circumstances susceptible of proof.” 65

I begin my analysis by assessing the plaintiffs’ standing. I conclude that the

Class A Plaintiffs lack standing entirely, and the Class B Plaintiffs lack standing to

pursue a claim under 6 Del. C. § 18-110(b).

I then turn to the merits of the surviving claims, which fall into two categories

corresponding to two entities. First, I evaluate the Class B Plaintiffs’ claims

concerning Aspen Power (Counts I, III, and VI). Two limited aspects of the contract

claims survive, but the statutory claim under Section 18-110(a) is dismissed.

Second, I address the remaining derivative claims brought by the Class A Plaintiffs

on behalf of APP Management against Delaney and Vargas for breach of fiduciary

duty (Count VII), breach of contract (Count VIII), and breach of the implied

62
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535
(Del. 2011) (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002)).
63
In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006).
In re Lukens Inc. S’holders Litig., 757 A.2d 720, 727 (Del. Ch. 1999), aff’d sub nom.,
64

Walker v. Lukens, Inc., 757 A.2d 1278 (Del. 2000) (TABLE).
65
Savor, 812 A.2d at 896-97.

12
covenant of good faith and fair dealing (Count IX). Those claims are dismissed in

their entirety.

A. Standing

As a threshold matter, I must assess whether the plaintiffs have standing to

pursue their claims. The defendants challenge the Class A Plaintiffs’ standing to

pursue Counts I, II, IV, and V, and the Class B Plaintiffs’ standing to pursue Count

I.66 The Class B Plaintiffs have standing to bring Count I; the Class A Plaintiffs

cannot press their claims for want of standing.

1. Standing Under Section 18-110

In Count I, the plaintiffs seek a declaratory judgment under 6 Del. C. § 18-110

regarding the proper composition of the Board and the validity of its decision to

amend the Aspen Fourth LLC Agreement.67 Only the Class B Plaintiffs have

standing to pursue these claims.

a. Section 18-110(a)

Section 18-110(a) empowers the court to “hear and determine the validity of

any admission, election, appointment, removal or resignation of a manager of a

66
As defined above, the Class A Plaintiffs (J. Lehr and Bevvino-Berv) are members of
APP Management, which holds Aspen Power’s Class A Units. The Class B Plaintiffs (M.
Lehr and the Trust) directly hold Aspen Power’s Class B-1 Units.
67
Am. Compl. ¶¶ 127-41.

13
limited liability company.” 68 Under the statute, “[a]ny member or manager” has

standing to bring such a claim.69

The Class A Plaintiffs lack standing under this provision because they are

neither members nor managers of Aspen Power.70 They are members of APP

Management, which is a member of Aspen Power.71 The Class B Plaintiffs,

however, have standing under Section 18-110(a). M. Lehr and Enkelkinder Solar

Trust are Class B-1 Unit holders and therefore members of Aspen Power.72

b. Section 18-110(b)

Section 18-110(b) permits the court, “[u]pon application of any member or

manager” to “hear and determine the result of any vote of members or managers

upon matters as to which the members or managers . . . have the right to vote.”73

The plaintiffs argue that this provision grants any member of a limited liability

68
6 Del. C. § 18-110(a).
69
Id.
70
See supra notes 6-8 and accompanying text; Aspen Fourth LLC Agreement, Schedule A.
71
Aspen Fourth LLC Agreement, Schedule A. To the extent the Class A Plaintiffs rely on
the APP Management LLC Agreement’s recital—which states an intent to “pass along”
rights to its members—that reliance is unavailing. See supra note 8 and accompanying
text (quoting APP Management LLC Agreement, Recitals). Standing under
Section 18-110 strictly requires a plaintiff to be an actual member or manager of the
specific LLC whose governance is at issue. The Class A Plaintiffs cite no authority
providing that beneficial ownership or pass-through rights created by a holding vehicle’s
operating agreement satisfy the strict statutory standing requirements of the LLC Act.
72
Aspen Fourth LLC Agreement, Schedule A.
73
6 Del. C. § 18-110(b) (emphasis added).

14
company the right to challenge a vote, regardless of whether they had the right to

participate. 74 Alternatively, they assert that their consent was required to amend the

Aspen Fourth LLC Agreement, giving them a right to a member vote and thus

standing under Section 18-110(b).75 Neither theory creates standing to pursue the

claim.

The plaintiffs’ reading of the statute is contrary to its plain text. “The ‘most

important consideration for a court in interpreting a statute is [the language] the

General Assembly used in writing [the statute].’” 76 When “a statute is clear and

unambiguous, ‘the plain meaning of the statutory language controls.’” 77 “[A] statute

is ambiguous only if it is reasonably susceptible to different interpretations, or ‘if a

literal reading of the statute would lead to an unreasonable or absurd result not

contemplated by the legislature.’”78

Section 18-110(b) unambiguously permits “any member” to apply to

determine the validity of “any vote of . . . managers,” but only “upon matters as to

74
Pls.’ Answering Br. 27-28.
75
Id. at 30-31.
76
Salzberg v. Sciabacucchi, 227 A.3d 102, 113 (Del. 2020).
77
Shawe v. Elting, 157 A.3d 152, 164 (Del. 2017) (quoting LeVan v. Indep. Mall, Inc.,
940 A.2d 929, 932-33 (Del. 2007)).
78
Ins. Comm’r of Del. v. Sun Life Assurance Co. of Can. (U.S.), 21 A.3d 15, 20 (Del. 2011)
(quoting Dir. of Rev. v. CNA Hldgs., Inc., 818 A.2d 953, 957 (Del. 2003)).
15
which the members or managers . . . have the right to vote.”79 The statute uses the

definite article “the” to modify “members or managers,” signaling a reference to the

specific individuals who applied to the court. 80 This text means that the moving

party may only challenge matters on which they possessed the right to vote pursuant

to the limited liability company agreement. To hold otherwise would render the

statutory reference to voting rights mere surplusage. 81

Moreover, the statute limits challenges to matters on which the applicant has

the right to vote “pursuant to the limited liability company agreement.” 82 This

phrase aligns with the Delaware Limited Liability Company Act’s (the “LLC Act”)

stated policy of “giv[ing] the maximum effect to the principle of freedom of contract

and to the enforceability of limited liability company agreements.”83 The Aspen

Fourth LLC Agreement vests the Board with “exclusive authority” to manage Aspen

79
6 Del. C. § 18-110(b).
80
See 6 Del. C. § 18-110(b) (granting the court authority to hear an “application of any
member or manager” challenging “the result of any vote of members or managers upon
matters as to which the members or managers of the limited liability company, or any class
or group of members or managers, have the right to vote” (emphasis added)).
81
See Matter of Rehab. of Scot. RE (U.S.), Inc., 273 A.3d 277, 300 (Del. Ch. 2022)
(“Delaware courts ‘also ascribe a purpose to the General Assembly’s use of statutory
language, construing it against surplusage, if reasonably possible.’” (quoting Taylor v.
Diamond State Port Corp., 14 A.3d 536, 538 (Del. 2011))); see also Defs.’ Suppl. Br.
Regarding 6 Del. C. § 18-110(b) (Dkt. 34) 6-7.
82
6 Del. C. § 18-110(b).
83
Id.
16
Power’s business and affairs.84 Section 5.8 specifically grants the Board the power

to “change the number of Managers or composition of the Board, or the number of

votes a given Manager is entitled to cast.”85

Analogous law in the corporate context supports this reading. Under 8 Del.

C. § 225(b), a stockholder lacks standing to assert a claim contesting a vote they

were not entitled to participate in.86 The Court of Chancery has held that a

stockholder lacked standing under Section 225(b) to dispute a merger vote because

the stockholder owned no shares on the record date and was not entitled to vote. 87

The same logic applies here. The plaintiffs, as members, had no right to participate

in the Board’s written consent. Permitting them to utilize Section 18-110(b) to

challenge a board vote they were contractually excluded from would upend Aspen

Power’s negotiated governance structure.

Even if the plaintiffs had standing, their claim falls outside the substantive

scope of the statute. Section 18-110(b) allows the court to determine the “result” of

84
Aspen Fourth LLC Agreement § 5.1(a); see also id. § 5.1(b) (providing that “Members,
in their capacities as such, shall not manage the business and affairs of the Company, except
to the extent that the affirmative vote or written consent of any of the Members is expressly
required by th[e] Agreement or non-waivable provisions of applicable law”).
85
Id. § 5.8(a).
86
8 Del. C. § 225(b).
87
In re Banyan Mortg. Inv. Fund S’holders Litig., 1997 WL 428584, at *4 n.19 (Del. Ch.
July 23, 1997).
17
a vote.88 But there was no member vote whose result is in dispute. The plaintiffs’

true grievance is that the Board’s action was insufficient without a parallel member

consent.

When a company takes an action without obtaining a contractually-required

approval, the aggrieved party may have a breach of contract claim.89 Such claims

may also invoke Section 18-111, which provides for actions to “interpret, apply or

enforce the provisions of a limited liability company agreement.”90 They do not,

however, necessarily support a summary governance dispute under Section 18-

110(b).

The motion to dismiss the Section 18-110(b) claim is therefore granted, and

Count I is dismissed in part.

2. Derivative Standing

Counts II and V are derivative claims brought by the Class A Plaintiffs on

behalf of APP Management against Aspen Power.91 The defendants argue that the

88
6 Del. C. § 18-110(b).
89
See VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)
(explaining that the “breach of an obligation imposed by [a governing] contract” is one of
three elements necessary to give rise to a claim for breach of contract).
90
6 Del. C. § 18-111.
91
Am. Compl. ¶¶ 142, 170.

18
Class A Plaintiffs “contracted away their right to bring derivative claims” on behalf

of APP Management, so these claims fail as a gating matter. 92 I agree.

“[B]ecause the policy of the [LLC] Act is to give the maximum effect to the

principle of freedom of contract and to the enforceability of LLC agreements, the

parties may contract to avoid the applicability of Section [18-1001],” which grants

members the right to bring derivative actions.93 Section 5.5 of the APP Management

LLC Agreement does just that. It reads: “[w]ithout the unanimous written consent

of the [APP Management] Class A Members, the Company shall not, and no

Member o[r] Officer shall, cause the Company to . . . grant any consent or the

waiving or exercising of any rights under the [Aspen Fourth LLC Agreement].” 94

92
Defs.’ Opening Br. 53. The defendants argue that the Class A Plaintiffs did not satisfy
their obligation to file an affidavit within ten days under Rule 23.1. Ct. Ch. R. 23.1(b)
(requiring that the plaintiff file an affidavit “stat[ing] that the person has not received, been
promised, or been offered . . . any form of compensation . . . for serving as a derivative
plaintiff[]”); Defs.’ Opening Br. 49. The Class A Plaintiffs filed their Amended Complaint
on May 15, 2025. Dkt. 46. They filed the requisite verifications and affidavits on July 15,
2025, after the defendants called attention to the issue. Letter Attaching Verifications to
Am. Compl. (Dkt. 53). The defendants argue that the Class A Plaintiffs’ failure to timely
file the affidavits was not an oversight but reflective of self-interest. Defs.’ Opening
Br. 49-51. I cannot know the plaintiffs’ intent. But even if the defendants were right, I
resolve the motion on other grounds and need not reach this issue.
93
Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 295 (Del. 1999); see 6 Del. C.
§ 18-1001.
94
APP Management LLC Agreement § 5.5(i).

19
Thus, the Class A members of APP Management cannot exercise any rights on APP

Management’s behalf without the unanimous consent of all members. 95

Pursuing derivative litigation falls within that provision. A derivative suit is,

by definition, an exercise of the entity’s rights. 96 Here, two APP Management

members—J. Lehr and Bevvino-Berv—seek to exercise APP Management’s rights

as an Aspen Power member through derivative litigation.

To the extent the plaintiffs rely on the remedies provision in Section 13.3 of

the APP Management LLC Agreement to bypass this restriction, that argument fails.

Under Delaware law, specific contractual provisions control over general ones. 97

Section 13.3 generally entitles a member to enforce their rights under the APP

95
Under Delaware law, limited liability company agreements are interpreted using
standard principles of contract interpretation. See Godden v. Franco, 2018 WL 3998431,
at *8 (Del. Ch. Aug. 21, 2018) (“When analyzing an LLC agreement, a court applies the
same principles that are used when construing and interpreting other contracts.”). The
court construes the contract as a whole, giving each word its plain meaning and effect, so
as not to render any provision illusory or meaningless. See Nw. Nat’l Ins. v. Esmark, Inc.,
672 A.2d 41, 43 (Del. 1996); Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del.
2010).
96
Cf. Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1036 (Del. 2004)
(explaining that a derivative suit “enables a stockholder to bring suit on behalf of the
corporation for harm done to the corporation”).
97
See DCV Hldgs., Inc. v. ConAgra, Inc., 889 A.2d 954, 961 (Del. 2005) (“Specific
language in a contract controls over general language, and where specific and general
provisions conflict, the specific provision ordinarily qualifies the meaning of the general
one.”).
20
Management LLC Agreement. 98 But Section 5.5(i) acts as a specific limitation,

expressly prohibiting any member from causing APP Management to exercise its

rights under the Aspen Fourth LLC Agreement without unanimity.99

Unanimous consent was not obtained. Instead, two APP Management

members—J. Lehr and Bevvino-Berv—seek to press derivative claims without the

involvement of their fellow members. Thus, the Class A Plaintiffs lack standing to

bring Counts II and V derivatively on behalf of APP Management. Counts II and V

are dismissed on that basis.100

3. Direct Standing

In Count IV, the Class A Plaintiffs assert a direct breach of contract claim

against Aspen Power. Because they are neither parties to nor third-party

beneficiaries of the Aspen Fourth LLC Agreement, they lack standing to pursue this

claim.

98
APP Management Agreement § 13.3 (providing that “[e]ach Member shall have all rights
and remedies set forth in this Agreement” and that “[a]ny Person having any rights under
any provision of this Agreement . . . shall be entitled to enforce such rights specifically”).
99
Id. § 5.5(i); see supra note 94 (quoting the provision).
100
Even if the Class A Plaintiffs had standing to bring these claims derivatively on behalf
of APP Management, Counts II and V would nevertheless be dismissed. As discussed
infra in Section II.B.2, the plaintiffs fail to state a claim for breach of the Aspen Fourth
LLC Agreement. Because the underlying breach of contract claims fail on the merits, the
derivative claims are likewise meritless.
21
“As a general rule, only parties to a contract and intended third-party

beneficiaries may enforce an agreement’s provisions. Mere incidental beneficiaries

have no legally enforceable rights under a contract.”101 “To qualify as a third party

beneficiary of a contract, (i) the contracting parties must have intended that the third

party beneficiary benefit from the contract, (ii) the benefit must have been intended

as a gift or in satisfaction of a pre-existing obligation to that person, and (iii) the

intent to benefit the third party must be a material part of the parties’ purpose in

entering into the contract.”102

The Class A Plaintiffs are not parties to the Aspen Fourth LLC Agreement.103

They are members of APP Management, which is a member of Aspen Power.104

101
NAMA Hldgs., LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 434 (Del.
Ch. 2007); see also Kronenberg v. Katz, 872 A.2d 568, 605 n.74 (Del. Ch. 2004).
102
Madison Realty P’rs 7, LLC v. Ag ISA, LLC, 2001 WL 406268, at *5 (Del. Ch.
Apr. 17, 2001).
103
Am. Compl. ¶¶ 31, 32. The plaintiffs claim that they are “beneficial owners” of Aspen
Power, by virtue of their membership in APP Management. Id. Such beneficial ownership
is generally insufficient to assert standing to sue or other rights inherent to membership.
See, e.g., R.R Cap., LLC v. Buck & Doe Run Valley Farms, LLC, 2008 WL 3846318, at *2
(Del. Ch. Aug. 19, 2008) (“There is no authority for the proposition that a member of an
LLC which is itself a member of another LLC can seek dissolution or the winding up of
the latter LLC.”); Prokupek v. Consumer Cap. P’rs LLC, 2014 WL 7452205, at *7 (Del.
Ch. Dec. 30, 2014) (finding that, though the plaintiff was “recently a member” of an LLC
via beneficial ownership, such “circumstances [did] not justify stretching the LLC Act’s
plain language in order to find standing”).
104
Aspen Fourth LLC Agreement, Schedule A.

22
The Class A Plaintiffs are also not intended third-party beneficiaries of the

Aspen Fourth LLC Agreement. Consistent with Delaware’s pro-contractarian policy

in the LLC context, the parties’ intent to create a third-party beneficiary depends on

the text of the operative agreement.105 Here, the Aspen Fourth LLC Agreement

makes no mention of third-party beneficiaries, suggesting that no such beneficiaries

exist.106

The Complaint also lacks well pleaded facts to satisfy the requirements of a

third-party beneficiary status.107 The plaintiffs do not allege that the Aspen Fourth

LLC Agreement was intended to benefit them, let alone to confer a “gift” or satisfy

a preexisting obligation.108 Rather, the Complaint acknowledges that the Aspen

Fourth LLC Agreement was designed to govern its core operations and define its

members’ evolving rights and responsibilities.109

The plaintiffs’ rebuttal is unavailing. They argue that the Class A Plaintiffs

are third-party beneficiaries because the “sole purpose of APP Management is to

105
See Kronenberg, 872 A.2d at 605.
106
See id. (explaining that because an LLC agreement “d[id] not expressly provide for [the
purported beneficiary] to benefit from its terms . . . the plain language of the LLC
[a]greement preclude[d] [any] attempt to claim third-party beneficiary status”).
107
See supra note 102 and accompanying text (summarizing the elements).
108
MetCap Secs. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *7 (Del. Ch.
May 16, 2007) (dismissing a third-party beneficiary claim where the complaint failed to
allege facts supporting the creation of third-party beneficiary status).
109
Am. Compl. ¶¶ 9, 46.

23
hold the Class A Units of Aspen on behalf of the founding members and to grant

[them] the same rights they would have if they were Class A Members of the

Company.”110 This argument misconstrues the focus of the relevant inquiry. My

role is not to examine the purposes for forming APP Management; it is to consider

whether the parties to the Aspen Fourth LLC Agreement intended to confer a benefit

on the Class A Plaintiffs. Given the text of the Aspen Fourth LLC Agreement and

the allegations in the Complaint, there is no basis to infer that the Class A Plaintiffs

were anything more than incidental beneficiaries.111

Because the Class A Plaintiffs are neither parties to nor third-party

beneficiaries of the Aspen Fourth LLC Agreement, the motion to dismiss is granted

as to Count IV.

* * *

The motion to dismiss is granted as to Counts II, IV, and V for lack of

standing. The motion to dismiss is also granted, in part, as to Count I on the same

basis. As explained below, what remains of Count I fails on the merits. I proceed

to analyze the merits of the claims on which the plaintiffs have standing.

110
Pl.’s Answering Br. 32 (emphasis omitted).
111
Madison Realty, 2001 WL 406268, at *5 (providing an illustration from the Restatement
(Second) of Contracts to parse the distinction between incidental and intended third-party
beneficiaries); Restatement (Second) of Contracts § 302 cmt. b, illus. 3 (A.L.I. 1979).
24
B. The Merits

The remaining claims in the Amended Complaint fall into two categories,

each focused on a different entity. I address each set separately.

First, I address the Class B Plaintiffs’ claims concerning Aspen Power

(Counts I, III, and VI). Count I seeks a declaration under 6 Del. C. § 18-110(a)

regarding the proper composition of the Board. Counts III and VI advance direct

claims for declaratory judgment and breach of contract, alleging that the adoption of

the Aspen Fifth LLC Agreement violated the plaintiffs’ consent rights in

Section 14.2 of the Aspen Fourth LLC Agreement. Two limited aspects of the

contract claims survive, but the statutory claim is dismissed.

Second, having dismissed Counts II and V for lack of derivative standing, I

address the remaining derivative claims brought by the Class A Plaintiffs on behalf

of APP Management against Delaney and Vargas. These claims allege breaches of

fiduciary duty (Count VII), and breaches of contract (Count VIII) and of the implied

covenant of good faith and fair dealing (Count IX) arising out of the APP

Management LLC Agreement. These claims are dismissed in full.

1. Section 18-110(a)

In Count I, the Class B Plaintiffs seek a declaratory judgment under 6 Del. C.

§ 18-110 regarding the proper composition of the Board and the voting power of

25
each manager.112 As explained above, only the Class B Plaintiffs have standing to

pursue the Section 18-110(a) claim; none of the plaintiffs have standing under

Section 18-110(b).113 The remaining claim under Section 18-110(a) fails on the

merits.

“A proceeding under Section 18-110(a) ‘is summary in character, and its

scope is limited to determining those issues that pertain to the validity of actions to

elect or remove’ a manager.”114 The statute permits the court to “hear and determine

the validity of any admission, election, appointment, removal or resignation of a

manager of a limited liability company, and the right of any person to become or

continue to be a manager of a limited liability company.” 115 “In determining what

claims are cognizable in a [Section 18-110(a)] action, the most important question

that must be answered is whether the claims, if meritorious, would help the court

decide the proper composition of the [company’s] board or management team.”116

Here, the Board composition is unchanged. After the Aspen Fifth LLC

Agreement purportedly took effect, the Board retained the same seven managers it

112
Am. Compl. ¶¶ 127-41.
113
See supra notes 68-72 and accompanying text.
114
Llamas v. Titus, 2019 WL 2505374, at *15 (Del. Ch. June 18, 2019) (citing Genger v.
TR Invs., LLC, 26 A.3d 180, 199 (Del. 2011)).
115
6 Del. C. § 18-110(a).
116
Lynch v. Gonzalez Gonzalez, 2020 WL 3422399, at *5 (Del. Ch. June 22, 2020) (citing
Agranoff v. Miller, 1999 WL 219650, at *17 (Del. Ch. Apr. 12, 1999)).
26
had when the Aspen Fourth LLC Agreement was in place: Anand, Vargas, DeLong,

Delaney, Sherk, Hanelt, and Welch. 117 The creation of three “open spots” under the

Aspen Fifth LLC Agreement is of no import because no new managers have been

appointed to fill them, nor have any existing managers been removed.118

Accordingly, the limited scope of Section 18-110(a) is not implicated, and the

motion to dismiss what remains of Count I is granted for failure to state a claim.119

2. Breach of the Aspen Fourth LLC Agreement

The Class B Plaintiffs advance direct claims for declaratory relief (Count III)

and for breach of contract (Count VI).120 Both claims allege that Aspen Power

breached Section 14.2 of the Aspen Fourth LLC Agreement by adopting the Aspen

Fifth LLC Agreement without the Class B Plaintiffs’ prior written consent.121 To

state a claim for breach of contract, a plaintiff must plead: (1) the existence of a valid

117
Am. Compl. ¶¶ 101-02.
118
See id. ¶ 102.
119
Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice in
the Delaware Court of Chancery § 9.09[b], at 9-202 (2018) (“It has been said to be
improper to employ this statutory proceeding as a vehicle for the determination of
individual disputes that do not directly affect the specific claims referenced in the statute.”).
120
Am. Compl. ¶¶ 152-61, 175-78.
121
Id. ¶¶ 159-61, 177.

27
contract; (2) a breach of an obligation imposed by that contract; and (3) resulting

damages.122

Settled principles of contract interpretation govern the motion to dismiss these

claims.123 Delaware follows the “objective theory of contracts,” which provides that

“a contract’s construction should be that which would be understood by an objective,

reasonable third party.”124 Language that is “clear and unambiguous” must “be

given its ordinary and usual meaning.”125 The court must analyze the contract “as a

whole and . . . give each provision and term effect, so as not to render any part of the

contract mere surplusage.”126

Section 14.2 states:

[T]he prior written consent of an affected Member (or class of
Members) shall also be required if any such amendment,
amendment and restatement, modification or other supplement,
or waiver on behalf of the Company, would . . . (b) alter the
interest of a Member in Company Distributions, other than as a

122
See VLIW Tech., 840 A.2d 606, 612 (Del. 2003); see also H-M Wexford LLC v. Encorp,
Inc., 832 A.2d 129, 140 (Del. Ch. 2003).
123
Holifield v. XRI Inv. Hldgs. LLC, 304 A.3d 896, 923-24 (Del. 2023) (explaining that
“[w]hen analyzing an LLC agreement, a court applies the same principles that are used
when construing and interpreting other contracts” (citation omitted)); see also 6 Del. C.
§ 18-1101(b) (“It is the policy of this chapter to give the maximum effect to the principle
of freedom of contract and to the enforceability of limited liability company agreements.”).
124
Salamone v. Gorman, 106 A.3d 354, 367-68 (Del. 2014) (quoting Osborn, 991 A.2d
at 1159).
125
Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006).
126
Osborn, 991 A.2d at 1159 (quoting Kuhn Constr., Inc. v. Diamond State Port Corp.,
990 A.2d 393, 397 (Del. 2010)).
28
result of the admission or withdrawal of a Member, or issuance
or Transfer of any Equity Securities, (c) modify Section 3.1(c) or
otherwise require the making of an additional Capital
Contribution other than upon the terms set forth herein . . . (e)
adversely and disproportionately affect the rights or obligations
of any class vis-à-vis the rights or obligations of any other class;
or (f) notwithstanding Section 5.9(a), adversely modify or waive
the preemptive rights of such Member or class or group of
Members[.]127

The Class B Plaintiffs assert that six amendments required their prior written

consent: (1) giving Carlyle three additional Board seats with four times the voting

power; (2) creating the PPUs; (3) modifying the “MOIC Uplift” schedule;128 (4)

removing APP Management’s consulting rights; (5) transferring APP

Management’s drag-along rights to Carlyle; and (6) modifying the plaintiffs’

preemptive rights.129 These theories have mixed success. The defendants’ motion

to dismiss is denied as to the modifications of the MOIC Uplift schedule and to the

plaintiffs’ preemptive rights. It is otherwise granted.

127
Aspen Fourth LLC Agreement § 14.2.
128
See id. at Ex. D (setting out the applicable MOIC Uplift multiplier schedule).
129
Am. Compl. ¶ 177. The Complaint also identifies that the Aspen Fifth LLC Agreement
had “material modifications to the definition and mechanics of an Approved Repayment
Transaction[.]” Id. ¶ 23. But the plaintiffs did not brief this issue in their opposition to the
motion to dismiss. “Issues not briefed are deemed waived.” See Emerald P’rs v. Berlin,
726 A.2d 1215, 1224 (Del. 1999).
29
a. Board Seats and Voting Power

First, the Class B Plaintiffs claim that, under Section 14.2, their consent was

required before the Aspen Fourth LLC Agreement was amended to add three Board

seats and give Carlyle’s designees four times the voting power.130 This argument is

without merit because a separate, specific provision of the Aspen Fourth LLC

Agreement governs the issue.

Section 5.8 states, in relevant part:

Notwithstanding anything to the contrary herein, the Company
shall not, and shall cause each of its Subsidiaries to not, directly
or indirectly, and the Officers shall not . . . cause the Company
or any of its Subsidiaries, without the unanimous approval of the
Board . . . to . . . change the number of Managers or composition
of the Board, or the number of votes a given Manager is entitled
to cast with [respect to] a given matter, or amend, alter,
supplement, or repeal the procedures of the Company for the
election of Managers.131

This provision delegates exclusive authority to the Board to “change the

number of Managers,” the “composition of the Board,” or the “number of votes a

given Manager is entitled to cast[.]”132 The Class B Plaintiffs’ claims involve these

precise changes.133

130
Pls.’ Answering Br. 10-15.
131
Aspen Fourth LLC Agreement § 5.8.
132
Id.
133
Am. Compl. ¶ 177.

30
As explained above, “where specific and general provisions conflict, the

specific provision ordinarily qualifies the meaning of the general one.”134 Here,

Section 5.8 addresses amendments to the composition or structure of the Board. It

also includes a “notwithstanding anything to the contrary herein” clause, which this

court has previously read to prevail over more general language elsewhere in the

contract.135 Section 14.2(e), by contrast, generally provides for consent when

members’ rights are “adversely and disproportionately” affected vis-à-vis other

members.136 Because Section 5.8 is the “more specific clause” regarding

amendments affecting Board composition, it controls over the more general

provision.137

134
DCV Hldgs., 889 A.2d at 961; see supra note 97 and accompanying text.
135
Katell v. Morgan Stanley Gp., Inc., 1993 WL 205033, at *3 (Del. Ch. Jun. 8, 1993)
(explaining that a “notwithstanding” clause suggests that a term is “paramount to all other
provisions” in a given contract); Medicis Pharm. Corp. v. Anacor Pharms., Inc.,
2013 WL 4509652, at *8 n.46 (Del. Ch. Aug. 12, 2013) (“[T]he use of such a
‘notwithstanding’ clause clearly signals the drafter’s intention that the provisions of the
‘notwithstanding’ section override [potentially] conflicting provisions of any other
section.” (citing Cisneros v. Alpine Ridge Gp., 508 U.S. 10, 18 (1993))).
136
Aspen Fourth LLC Agreement § 14.2(e).
137
Katell, 1993 WL 205033, at *4 (“When there is an [alleged] inconsistency between
general and specific provisions, the specific provisions ordinarily qualify the meaning of
the general ones, due to the reasonable inference that specific provisions express more
exactly what the parties intended.”).
31
The Class B plaintiffs do not allege that the Board violated Section 5.8’s

requirements. All seven Board members voted in favor of the amendment.138 The

motion to dismiss is granted as to this aspect of Counts III and VI.

b. Phantom Preferred Units and MOIC Uplift

Next, the Class B Plaintiffs argue that the Aspen Fifth LLC Agreement’s

creation of PPUs and alterations to the MOIC Uplift schedule modified their interest

in Aspen Power distributions, triggering a consent right under Section 14.2(b).139

This claim is not reasonably conceivable as to the PPUs. But it survives regarding

the MOIC Uplift schedule.

Prior member consent of an affected member is required when an amendment

would “alter the interest of a Member in Company Distributions.” 140 The Aspen

Fourth LLC Agreement defines “Distributions” as “each distribution made by the

Company to a Member, whether in cash or other property of the Company.”141 The

definition excludes, among other things, “any fees, other remuneration or expense

reimbursement paid to any Member in such Member’s capacity as an employee,

138
Am. Compl. ¶ 19.
139
Id. ¶¶ 23, 75-80; see Aspen Fourth LLC Agreement § 14.2(b) (requiring prior written
consent where an amendment would “alter the interest of a Member in Company
Distributions”); id. at Definitions (defining “Company Distributions”); id. at Ex. D.
140
Aspen Fourth LLC Agreement § 14.2(b); id. at Definitions (defining “Member” and
“Distributions”).
141
Id. at Definitions.

32
director, manager, officer, consultant or other service provider of the Company.”142

Further, the LLC Act defines “[l]imited liability company interest” as “a member’s

share of the profits and losses of a limited liability company and a member’s right

to receive distributions of the limited liability company’s assets.”143

i. PPUs

PPUs “represent the right to receive a cash bonus in an amount equal to the

Fair Market Value of a Preferred Unit” of Aspen Power equity, “payable upon a

[sale of the company] or a [l]iquidation [e]vent” occurring within ten years of the

PPU’s issuance.144 They are part of a management incentive program. 145 The

“Member Economics Term Sheet” attached to the Aspen Fourth LLC Agreement

states that “[f]or the avoidance of doubt, the [PPUs] are not equity interests and an

award of [PPUs] shall not by itself in any way entitle the recipient thereof to any

rights as an equityholder of the Company or any of its Affiliates.”146

PPUs do not create interest in Aspen Power or a right to distributions. They

are deferred cash compensation for employees to be drawn from the proceeds from

142
Id.
143
6 Del. C. § 18-101(10).
144
Aspen Fifth LLC Agreement Ex. F.
145
Am. Compl. ¶ 110.
146
Aspen Fifth LLC Agreement Ex. F.

33
a sale of the company or termination event. 147 The Aspen Fourth LLC Agreement’s

definition of Distributions excludes “fees, [or] other remuneration . . . paid . . . in [a]

Member’s capacity as an employee . . . of the Company.” 148 Because PPUs are

explicitly defined as a “cash bonus” established as an incentive arrangement for

“certain key employees,” they fall within this exclusion.149

ii. MOIC Uplift Schedule

Section 4.1 of the Aspen Fourth LLC Agreement sets out a distribution

waterfall. It states that holders of Preferred Units (i.e., Carlyle) are allocated 100%

of certain Distributions until they receive an amount equal to the MOIC Uplift. 150

The MOIC Uplift is determined by multiplying unreturned capital contributions

against a multiplier.151 Under the Aspen Fourth LLC Agreement, that multiplier was

set initially at 0.15 and subject to annual increases of 0.10 over a seven-year

period.152 The Aspen Fifth LLC Agreement maintained the base multiplier of 0.15,

147
Id.
148
Aspen Fourth LLC Agreement, Definitions.
149
Aspen Fifth LLC Agreement Ex. F.
150
Aspen Fourth LLC Agreement § 4.1.
151
Am. Compl. ¶ 78 (citing Aspen Fourth LLC Agreement Ex. D).
152
Aspen Fourth LLC Agreement Ex. D.

34
but altered the MOIC Uplift schedule to increase the multiplier by 0.025 at quarterly

intervals.153

The plaintiffs assert that this change steers more distributable proceeds to

Carlyle faster, before funds can “trickle down to the lower levels of the distribution

waterfall.”154 The defendants respond that the Aspen Fifth LLC Agreement merely

apportioned the existing schedule from annually to quarterly, while keeping the

aggregate annual and total MOIC Uplift multiplier the same. 155 But I must credit the

plaintiffs’ allegation that the change structurally subordinates or delays the

distributions reaching the junior Class B units. 156 If the quarterly compounding

accelerates or increases Carlyle’s entitlement under the distribution waterfall, it is

reasonably conceivable that the amendment altered the Class B Plaintiffs’ “interest

. . . in Company Distributions” within the meaning of Section 14.2(b). 157

The defendants additionally argue that even if the plaintiffs’ interests were

altered, Section 14.2(b) of the Aspen Fourth LLC Agreement contains a safe harbor

exempting alterations that occur “as a result of the . . . issuance or Transfer of any

153
Compare id., with Aspen Fifth LLC Agreement Ex. D.
154
Am. Compl. ¶ 79.
155
Defs.’ Opening Br. 20-21.
156
See Am. Compl. ¶ 79.
157
Aspen Fourth LLC Agreement § 14.2(b).

35
Equity Securities.”158 They say the MOIC Uplift changes were a direct result of

Carlyle’s new equity investment. 159 The plaintiffs, however, allege that Aspen

Power had alternative capital available and that Carlyle opportunistically demanded

these changes as a condition of its investment.160 Resolving how the MOIC Uplift

functions and whether its modification in the Aspen Fifth LLC Agreement was a

mechanical result of issuing new equity is a factual dispute unfit for resolution on a

motion to dismiss.

c. Drag-Along Rights and Consulting Rights

The Aspen Fifth LLC Agreement also transferred drag-along rights from APP

Management to Carlyle and removed APP Management’s consulting rights.161 The

Class B Plaintiffs contend that these changes violate Section 14.2(e) of the Aspen

Fourth LLC Agreement, which requires prior written consent when an amendment

“adversely and disproportionately” affects the rights of a given class.162 These

claims are without merit.

158
Id.; see Defs.’ Opening Br. 21.
159
Defs.’ Opening Br. 21.
160
Am. Compl. ¶¶ 11-12.
161
Id. ¶ 172.
162
Id. ¶¶ 69, 74; see Aspen Fourth LLC Agreement § 14.2(e).

36
i. Drag-Along Rights

Section 8.5 of the Aspen Fourth LLC Agreement provides drag-along rights,

which allow a controlling member to force all other members to participate in a sale

of the company to an unaffiliated third party.163 The agreement grants this right to

the “Member having Control of the Company.”164 The Aspen Fifth LLC Agreement

did not amend the substance of Section 8.5. Rather, the holder of the “Member

Having Control of the Company” title shifted from APP Management to Carlyle by

virtue of the changes to the Board composition and voting power. 165

Section 14.2(e) protects the rights and obligation of “any class vis-à-vis the

rights or obligations of any other class.”166 The drag-along right is not a “class

right.” It is an individual right belonging to whichever member holds “Control” of

Aspen Power. Because the drag-along right never belonged to the Class A Unit

holders as a class, transferring it from APP Management to Carlyle does not trigger

Section 14.2(e)’s class consent protections.167

163
Aspen Fifth LLC Agreement § 8.5.
164
Id.
165
Id. There are no substantive changes to Section 8.5 beyond redefining who constitutes
the control member. Compare Aspen Fourth LLC Agreement § 8.5, with Aspen Fifth LLC
Agreement § 8.5.
166
Aspen Fourth LLC Agreement § 14.2(e).
167
Aspen Fifth LLC Agreement § 8.5; see Aspen Fourth LLC Agreement, Definitions
(defining “Control”); see also supra notes 130-138 (explaining why expanding the board
by three and altering voting power is lawful under the Aspen Fourth LLC Agreement).
37
ii. Consulting Rights

In Section 6.10 of the Aspen Fourth LLC Agreement, APP Management

was granted specific consulting rights:

Each of APP Management HoldCo and the Preferred Members
constituting an Investor Majority shall use commercially
reasonable efforts to meet within sixty (60) days of the first
anniversary of the Effective Date to review the capital call
process . . . to consider in good faith any reasonable amendments
that may be required to this Agreement. 168

The “Effective Date” of the Aspen Fourth LLC Agreement is

September 29, 2022.169 Sixty days after the first anniversary of the Aspen

Fourth LLC Agreement’s effective date was November 28, 2023. APP

Management’s right to consult with Carlyle thus passed well before the Aspen Fifth

LLC Agreement took effect on December 24, 2024.170 Because the consultation

right already expired, its removal from the Aspen Fifth LLC Agreement could not

conceivably have had an adverse effect on APP Management’s rights. The removal

of Section 6.10 simply abrogated a provision that was no longer operative.

168
Aspen Fourth LLC Agreement § 6.10.
169
Id. at Preamble.
170
Id.

38
d. Preemptive Rights

Finally, the Class B Plaintiffs argue that two changes in the Aspen Fifth LLC

Agreement—the expansion of the “Excluded Securities” definition and inclusion of

a preemptive rights waiver—breached Section 14.2(f) of the Aspen Fourth LLC

Agreement. 171 Section 14.2(f) requires prior written approval for amendments that

would “adversely modify or waive the preemptive rights” of a given member, class,

or group of members.172

Section 3.1(f) of the Aspen Fourth LLC Agreement gave members the right

to purchase their proportional share of new equity issuances, subject to a defined list

of “Excluded Securities.”173 The Aspen Fifth LLC Agreement expanded this list to

include “Equity Securities issued or sold pursuant to any employment agreement . . .

incentive [] plan,” and “Effective Date-Related Issuances.”174

171
Pls.’ Answering Br. 21.
172
Aspen Fourth LLC Agreement § 14.2(f).
173
Id. § 3.1(f)(1).
174
Aspen Fifth LLC Agreement, Definitions (adding to the definition of Excluded
Securities “Equity Securities issued or sold pursuant to any employment agreement or
arrangement, employee equity ownership programs, unit option plan, restricted unit
agreement, incentive compensation plan or program or similar incentive compensation
program[]” and “Effective Date-Related Issuances”); id. (defining “Effective Date Related
Securities” as “issuances of Equity Securities in the Company occurring on the Effective
Date under this Agreement or contemplated to occur after the Effective Date” pursuant to
a member economics plan).
39
The defendants argue that these amendments did not “adversely modify or

waive” members’ preemptive rights because the new exclusions apply to categories

of securities that did not exist under the Aspen Fourth LLC Agreement. 175 Under

the Aspen Fourth LLC Agreement, however, the preemptive right was broad. It

functioned as a catch-all, granting members the right to participate in any equity

issuance not expressly excluded. 176 Because the baseline right captured all

unspecified future securities, adding new categories to the exclusion list—even those

that did not previously exist—shrunk the universe of securities to which it applies.

At the pleading stage, it is reasonably conceivable that this reduction adversely

modified the plaintiffs’ preemptive rights, triggering the pre-approval requirement

in Section 14.2(f).

The Class B Plaintiffs’ position is bolstered by the addition of Section 8.15 of

the Aspen Fifth LLC Agreement. Under that provision, members “waive[d] any and

all rights to notice and participation in the Effective Date-Related Issuances.”177

This waiver dovetails with the expanded definition of the “Excluded Securities” list

and achieves the same practical result of removing the plaintiffs’ preemptive rights

175
Defs.’ Opening Br. 31.
176
Aspen Fourth LLC Agreement § 3.1(f)(1).
177
Aspen Fifth LLC Agreement § 8.15.

40
for such issuances.178 It can be reasonably inferred that the Section 8.15 waiver

adversely modified the Class B Plaintiffs’ preemptive rights.

* * *

The motion to dismiss Counts III and VI is denied as to the Class B Plaintiffs’

claims regarding the modification of the MOIC Uplift Schedule and their preemptive

rights. The motion to dismiss the claims in Counts III and VI is otherwise granted.

3. Breach of Fiduciary Duty to APP Management

In Count VII, the Class A Plaintiffs advance a derivative claim on behalf of

APP Management for breach of fiduciary duty against Delaney and Vargas. 179 “A

claim for breach of fiduciary duty requires proof of two elements: (1) that a fiduciary

duty existed and (2) that the defendant breached that duty.”180 The Class A Plaintiffs

allege that Delaney and Vargas breached their fiduciary duties to APP Management

by “eviscerating APP Management’s right to control the [Aspen Power Board] in

178
Id. at Definitions (Effective Date-Related Issuances).
179
Am. Compl. ¶¶ 179-86. Count VII, like Counts II and V, is a derivative claim brought
on behalf of APP Management. Counts II and V were dismissed for lack of standing
because Section 5.5(i) of the APP Management LLC Agreement bars APP Management
members from bringing derivative claims to enforce rights under the Aspen Fourth LLC
Agreement without unanimous consent. See supra Section II.A.2. Count VII, however,
asserts breaches of fiduciary duty under Delaware law and the APP Management LLC
Agreement itself. Because Count VII does not seek to enforce rights under the Aspen
Fourth LLC Agreement, Section 5.5(i) does not serve as a procedural bar. I therefore
evaluate Count VII on its merits under the APP Management LLC Agreement.
180
Beard Rsch., Inc. v. Kates, 8 A.3d 573, 601 (Del. Ch. 2010).

41
exchange for personal monetary gain” through “lucrative compensation

packages.”181 The parties offer competing provisions of the APP Management LLC

Agreement that they believe resolve the claim.

The Class A Plaintiffs invoke Section 5.4(d) of the APP Management LLC

Agreement, the duties of “Officers.”182 That provision states that:

Officers [of APP Management], in the performance of their
duties as such, shall owe to [APP Management] and its Members
duties of loyalty and due care of the type owed by the officers of
a corporation to such corporation and its stockholders under the
Laws of the State of Delaware.183

When this lawsuit was filed, both Delaney and Vargas held Officer positions at APP

Management.184

The defendants, for their part, argue that Section 6.4 of the APP Management

LLC Agreement is dispositive.185 The LLC Act permits parties to restrict or

eliminate fiduciary duties in an LLC agreement.186 Section 6.4 does just that:

181
Am. Compl. ¶¶ 183-84.
182
APP Management LLC Agreement § 5.4(d). Section 5.4(a) states that the list of
Officers was in Appendix II to the APP Management LLC Agreement. APP Management
LLC Agreement § 5.4(a). The list was in Appendix I. Id. at Appendix I.
183
Id. § 5.4(d) (emphasis added).
184
Id. at Appendix I.
185
Defs.’ Opening Br. 57-58.
186
6 Del. C. § 18-1101(c) (“To the extent that, at law or in equity, a member or manager
or other person has duties (including fiduciary duties) to a limited liability company or to
another member or manager or to another person that is a party to or is otherwise bound by
a limited liability company agreement, the member’s or manager’s or other person's duties
42
The Members expressly acknowledge that, subject to applicable
Law, (i) each Member and its Affiliates are permitted to have,
and may presently or in the future have, investments or other
business relationships with entities engaged in the Business other
than through the Company or its Subsidiaries, and/or may
otherwise engage in other activities (such activities, collectively,
the “Other Business”) . . . and, to the fullest extent permitted by
Law, the Members shall not have or be under any fiduciary
duty, duty of loyalty, duty of care or duty to act in good faith or
in the best interests of the Company or any of its Subsidiaries or
Members and shall not be liable to the Company or any of its
Subsidiaries or Members for any breach or alleged breach thereof
. . . .187

The defendants aver that this provision waives members’ fiduciary duties regarding

corporate opportunities outside of APP Management.188

Sections 5.4(d) and 6.4 contemplate two spheres of conduct—one in which

members owe fiduciary duties, and the other in which fiduciary duties are

disclaimed. Section 5.4(d) makes plain that members of APP Management only owe

fiduciary duties in the “performance of their duties as [Officers],” meaning that the

provision applies when one is acting in his official capacity.189 But when members

may be expanded or restricted or eliminated by provisions in the limited liability company
agreement[.]”); see also 6 Del. C. § 18-1101(b); Abry P’rs V, L.P. v. F & W Acq. LLC,
891 A.2d 1032, 1063 (Del. Ch. 2006) (“In the alternative entity context, where it is more
likely that sophisticated parties have carefully negotiated the governing agreement, the
General Assembly has authorized even broader exculpation, to the extent of eliminating
fiduciary duties altogether.”).
187
APP Management LLC Agreement § 6.4 (emphasis added).
188
Defs.’ Opening Br. 58.
189
APP Management LLC Agreement § 5.4(d).

43
are not functioning as APP Management Officers, they owe no fiduciary duties.190

Reconciling the text in this manner ensures that no provision of the APP

Management LLC Agreement is rendered “mere surplusage.” 191

The Complaint describes no action taken by Delaney or Vargas in an Officer

capacity. The Class A Plaintiffs complain only of actions taken by Delaney and

Vargas while acting as managers of Aspen Power in amending the Aspen Fourth

LLC Agreement. 192 Although APP Management designated Delaney and Vargas to

the Aspen Power Board, Delaware law respects the distinct corporate capacities in

which individuals serve.193 When evaluating and voting on the amendments to the

Aspen Fourth LLC Agreement, Delaney and Vargas were acting as fiduciaries of

Aspen Power, not performing duties as Officers of APP Management.194

As a result, Section 5.4(d) does not apply to the present scenario, and Section

6.4 governs. Because the plaintiffs challenge conduct that Delaney and Vargas took

190
Id. § 6.4.
191
Osborn, 991 A.2d at 1159 (quoting Kuhn Constr., 990 A.2d at 397).
192
Am. Compl. ¶¶ 183-85 (describing Delaney and Vargas voting as Managers of Aspen
Power to amend the Aspen Fourth LLC Agreement).
193
See, e.g., In re Trados Inc. S’holder Litig., 73 A.3d 17, 46-47 (Del. Ch. 2013)
(explaining that directors owe duties to the entity on whose board they sit, even if appointed
by a specific stockholder).
194
See Aspen Fourth LLC Agreement § 5.2(a)(i).

44
in an entirely different capacity—as Aspen Power managers—the claim for breach

of fiduciary duty fails. The motion to dismiss Count VII is granted.

4. Breach of the APP Management LLC Agreement

Counts VIII and IX are claims for breach of the APP Management LLC

Agreement, brought directly by the Class A Plaintiffs against Vargas and Delaney.195

In Count VIII, the Class A Plaintiffs allege that by consenting to amend the Aspen

Fourth LLC Agreement, Delaney and Vargas breached a unanimous consent

provision in the APP Management LLC Agreement. 196 In Count IX, they raise an

alternative theory that Delaney and Vargas breached the implied covenant of good

faith and fair dealing.197 Neither claim succeeds.

a. Breach of Section 5.5

Section 5.5(i) of the APP Management LLC Agreement states:

Without the unanimous written consent of the Class A Members,
the Company shall not, and no Member o[r] Officer shall cause
the Company to . . . (i) grant any consent or the waiving or
exercising of any rights under the APP HoldCo Operating
Agreement. 198

195
Am. Compl. ¶¶ 187-209.
196
Id. ¶¶ 187-96.
197
Id. ¶¶ 197-209.
198
APP Management LLC Agreement § 5.5(i).

45
The plaintiffs allege that Delaney and Vargas breached this provision by voting to

approve the Aspen Fifth LLC Agreement without first obtaining unanimous consent

from APP Management’s Class A members.199 But they have not pleaded facts to

support this claim.200

Section 5.5(i) of the APP Management LLC Agreement requires unanimous

consent of the Class A members only when APP Management is acting to

affirmatively waive or exercise its rights under the Aspen Fourth LLC Agreement.201

The Class A Plaintiffs do not, however, allege that APP Management took any action

in adopting the Aspen Fifth LLC Agreement. The Complaint addresses only actions

that Vargas and Delaney took in their capacities as Aspen Power managers.202

Because APP Management is not alleged to have engaged in any conduct relating to

the amendment of the Aspen Fourth LLC Agreement, no reasonably conceivable

breach of Section 5.5(i) is pleaded.

The reference to “Officers” and “Members” in Section 5.5(i) does not

resuscitate the claim. That text limits officers and members’ ability to bind APP

Management, stating that “no Member [or] Officer shall cause [APP Management]”

199
Am. Compl. ¶¶ 189-90.
200
See supra note 122 and accompanying text (listing the elements for a breach of contract
claim).
201
APP Management LLC Agreement § 5.5(i).
202
Am. Compl. ¶¶ 84-85.

46
to take any actions that might “waiv[e] or exercis[e]” its rights under the APP

Management LLC Agreement.203 Again, there is no allegation that APP

Management acted.204 The fact that Delaney and Vargas were the “designees of APP

Management” on the Aspen Power Board is not equivalent to APP Management

acting.205 When acting as managers, Delaney and Vargas owed duties to Aspen

Power and its equityholders, regardless of who appointed them to the Board. Their

votes to amend the Aspen Fourth LLC Agreement were made in their capacities as

fiduciaries of Aspen Power, not as agents acting for APP Management.

Put differently, Section 5.5(i) restricts APP Management’s ability to act. It

does not require Aspen Power managers to obtain consent from APP Management’s

members before acting in their separate fiduciary capacities. Count VIII is

dismissed.

b. Breach of the Implied Covenant

The Class A Plaintiffs’ claim for breach of the implied covenant of good faith

and fair dealing in Count IX is pleaded in the alternative to Count VIII.206 They

allege that Delaney and Vargas breached the implied covenant by using their

203
APP Management LLC Agreement § 5.5(i).
204
See Am. Compl. ¶ 19.
205
Am. Compl. ¶ 19; Aspen Fourth LLC Agreement § 5.2(a)(i).
206
Am. Compl. ¶¶ 197-209.

47
positions on the Aspen Power Board to circumvent the unanimous consent

requirement in Section 5.5(i) of the APP Management LLC Agreement.207

The implied covenant involves a “cautious enterprise.” 208 It “infer[s]

contractual terms to handle developments or contractual gaps that the asserting party

pleads neither party anticipated.”209 It cannot be used to “override the express terms

of [a] contract.”210 Nor can it be deployed to rewrite a contract to “rebalanc[e]

economic interests after events that could have been anticipated, but were not, that

later adversely affected one party to a contract.”211

Here, the express terms of the APP Management LLC Agreement preclude

the implied covenant claim. The contract makes plain when unanimous consent of

APP Management’s Class A members is required. Section 5.5 enumerates

15 circumstances requiring unanimous Class A member consent before APP

Management—or its “Member” or “Officer”—may cause APP Management to

207
Id. ¶¶ 198, 200-03.
208
Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 nn. 30-31 (Del. 2005)
(citation omitted).
209
Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010).
210
Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 888 (Del. Ch. 2009); Dunlap, 878 A.2d
at 441 (“[O]ne generally cannot base a claim for breach of the implied covenant on conduct
authorized by the agreement.”).
211
Nemec, 991 A.2d at 1128.

48
act.212 One such circumstance is “grant[ing] any consent or the waiving or exercising

of any rights under the [Aspen Fourth LLC Agreement].”213

Because the parties negotiated a comprehensive list of scenarios requiring

unanimous consent, there is no contractual gap for the implied covenant to fill. The

APP Management LLC Agreement cannot now be “rewrit[ten] . . . to appease a party

who later wishes to rewrite a contract he now believes to have been a bad deal.

Parties have a right to enter into good and bad contracts[;] the law enforces both.”214

Count IX is therefore dismissed.

III. CONCLUSION

For the above reasons, the plaintiffs have stated viable claims in Counts III

and VI in the Complaint, albeit narrowly. The only surviving claims are for breach

of the Aspen Fourth LLC Agreement regarding the Class B Plaintiffs’ preemptive

rights and the modification of the MOIC Uplift Schedule. The motion to dismiss is

granted as to all other claims, which are dismissed with prejudice.

The parties must confer and submit a proposed form of order implementing

this decision within ten days. They must also confer on a proposed schedule to

govern the resolution of Counts III and VI.

212
APP Management LLC Agreement § 5.5.
213
Id. § 5.5(i).
214
Nemec, 991 A.2d at 1126.

49