The Gregory M. Raiff 2000 Trust v. Jenzabar, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

THE GREGORY M. RAIFF 2000 )
TRUST, )
)
Plaintiff, )
)
v. ) C.A. No. 2024-0368-LWW
)
JENZABAR, INC., a Delaware )
Corporation; ROBERT A MAGINN, )
JR.; DANIEL QUINN MILLS; )
JOSEPH SAN MIGUEL; LING CHAI; )
JAMISON BARR; TORRENCE )
HARDER, IV; THE CHAI-MAGINN )
FAMILY LIMITED PARTNERSHIP; )
THE CHAI-MAGINN FAMILY LLC; )
and JOHN and JANE DOES 1-5, )
)
Defendants, )
)
and )
)
JENZABAR INC., )
)
Nominal Defendant. )

MEMORANDUM OPINION

Date Submitted: January 16, 2026
Date Decided: April 13, 2026

David H. Holloway, SHLANSKY LAW GROUP, LLP, Wilmington, Delaware;
Colin R. Hagan, David J. Shlansky, SHLANSKY LAW GROUP, LLP, Chelsea,
Massachusetts; Counsel for Plaintiffs Christopher Barry, Jared Snell, and Laurel
Santmire
Albert H. Manwaring, IV, Kirsten A. Zeberkiewicz, Aubrey J. Morin, MORRIS
JAMES LLP, Wilmington, Delaware; Counsel for Defendant and Nominal
Defendant Jenzabar, Inc.

Jody C. Barillare, Brian Loughnane, MORGAN, LEWIS & BOCKIUS LLP,
Wilmington, Delaware; Michael D. Blanchard, Andrew M. Buttaro, MORGAN,
LEWIS & BOCKIUS LLP, Boston, Massachusetts; Counsel for Defendants Robert
A. Maginn, Jr. and The Chai-Maginn Family LLC

Thad J. Bracegirdle, Sarah T. Andrade, BAYARD, P.A., Wilmington, Delaware;
Counsel for Defendants D. Quinn Mills and Olga Perera San Miguel, Independent
Executor of the Estate of Joseph Girard San Miguel, Deceased

John M. Seaman, Adam K. Schulman, ABRAMS & BAYLISS LLP, Wilmington,
Delaware; Counsel for Defendant Torrence Harder

Jason A. Cincilla, Wade A. Bredin, MANNING GROSS + MASSENBURG LLP,
Wilmington, Delaware; Counsel for Defendant The Chai-Maginn Family Limited
Partnership

Ling Chai, Belmont, Massachusetts; Defendant, Pro Se

WILL, Vice Chancellor
This action is one of several suits brought in the wake of a prior judgment

against Jenzabar, Inc. founder Robert A. Maginn, Jr. In 2022, this court held that

Maginn usurped a corporate opportunity belonging to a Jenzabar investment vehicle

and ordered him to pay $30.7 million in damages. Now, stockholders of Jenzabar

are suing Maginn and his fellow directors for advancing his legal fees and paying

the prior judgment. They also seek relief for a separate purported scheme from 2010

to 2015 to overpay directors and officers while diluting minority stockholders.

The complaint suffers from several threshold defects. First, the claims are

derivative, despite being styled as dual-natured. Some claims are not yet ripe for

adjudication; others are many years stale. The defendants’ motions to dismiss are

therefore granted.

I. BACKGROUND

The following facts are drawn from the First Amended Complaint

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

1
First Am. Compl. (Dkt. 31) (“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) (providing that the court may take
judicial notice of “facts that are not subject to reasonable dispute” (citation omitted)), aff’d,
164 A.3d 56 (Del. 2017) (TABLE).
1
A. Jenzabar

Jenzabar, Inc., a Delaware corporation, is a Massachusetts-based education

technology company.2 It was founded by former spouses Ling Chai and Robert A.

Maginn, Jr.3 At various times, Maginn served as the Chief Executive Officer and

Chairman of Jenzabar. Chai also served as Chief Executive Officer. And both are

members of Jenzabar’s Board of Directors.4

The plaintiffs—Christopher Barry, Jared Snell, and Laurel Santmire—are

Jenzabar stockholders who claim that former and current Jenzabar directors used

“aggressive methods” to increase insiders’ ownership stakes at the minority’s

expense.5 Such tactics included allegedly sharing “misleading information” to

induce investors to sell Jenzabar securities, such as falsely stating that their stock

options and warrants could not be exercised.6 As a result, Jenzabar insiders

2
Am. Compl. ¶¶ 1, 7.
3
Id. ¶ 20.
4
Id. ¶¶ 1, 8, 11.
5
Id. ¶ 20.
6
Id. ¶ 26 (“For example, when a senior officer who owned options for about 4.5% of
Common stock retired and tried to exercise, Jenzabar refused; then he was informed that
he had given an employment release when he took his last paycheck, Jenzabar took him
off of the capitalization table, and reduced the total number of shares issued and
outstanding.”).
2
accumulated most of Jenzabar’s stock for themselves while other stockholders

suffered dilution and financial losses.7

Two purported “patterns of misconduct” took place.8 The first is a “pattern

of breach of fiduciary duty and fraud” that allegedly stripped at least $81 million of

value from Jenzabar, which was the subject of an earlier judgment in this court in

Deane v. Maginn.9 The second is a “previously-unknown pattern” of misconduct

from 2012 to 2015 involving Jenzabar’s Board of Directors and General Counsel,

resulting in a “distribution of tens of millions of dollars in cash,” the dilution of

Jenzabar stock, and a loss of “hundreds of millions of dollars of value[.]”10

B. The Deane Litigation

The first “pattern” of alleged misconduct concerns Jenzabar’s advancement

of legal fees and payment of a judgment on Maginn’s behalf.11

In 2022, this court held in Deane that Maginn wrongfully usurped 19.09% of

Jenzabar common stock worth approximately $81 million through various

7
Id. ¶ 1.
8
Id.
9
Id. ¶¶ 1, 8, 32; see Deane v. Maginn, 2022 WL 16557974 (Del. Ch. Nov. 1, 2022), aff’d,
338 A.2d 1292 (Del. 2025) (TABLE).
10
Am. Compl. ¶ 1; see also id. ¶¶ 71, 118.
11
Id. ¶ 32 (arguing that the payment of $5 million in legal fees and $30.7 million in
damages resulted in the removal of $81 million of stockholder value); id. ¶ 42.
3
investment vehicles known as the “New Media” entities.12 Maginn incurred $5

million in legal fees for the suit, and was ordered to pay $30.77 million in damages.13

Jenzabar advanced the fees and paid the damages on Maginn’s behalf, purportedly

pursuant to its certificate of incorporation and a separate indemnity agreement.14

The plaintiffs assert that these payments to Maginn constitute misconduct by

Jenzabar’s Board. They allege that the payments effectively indemnified Maginn,

and that the Board “has no plans to recoup” them.15 They believe that Chai, Maginn,

and director Quinn Mills made “decisions and extensions of funds” during the Deane

litigation “that aided and supported Maginn’s actions in defrauding Jenzabar” while

“squander[ing] corporate assets.”16 There are no specific allegations pertaining to

the nature of those “decisions and extensions of funds[,]” however.17

The plaintiffs also contend that Maginn misused the voting power flowing

from his wrongfully acquired 19.09% stake to “install and maintain wayward

fiduciaries” who approved additional salary, stock dividends, and bonuses for

12
Id. ¶¶ 29, 33; see Maginn, 2022 WL 16557974, at *2-8.
13
Am. Compl. ¶¶ 42, 103.
14
Id. ¶ 42; Manwaring Aff. (Dkt. 55) Ex. A; see TVI Corp. v. Gallagher, 2013 WL
5809271, at *14 (Del. Ch. Oct. 28, 2013) (“On a motion to dismiss, Delaware courts may
take judicial notice of the terms of a corporation’s governing certificate of incorporation.”).
15
Am. Compl. ¶¶ 42-43, 167.
16
Id. ¶ 44.
17
See id.
4
Maginn.18 These allegations relate to the other purported scheme complained of by

the plaintiffs.

C. The Alleged Dilution and Overcompensation Scheme

The second “pattern” of alleged misconduct concerns “concealed . . .

giveaway[s]” to Maginn and Chai that purportedly increased their ownership stake.19

In 2010, Maginn, Chai, and their affiliates owned about 18% of Jenzabar’s

stock.20 By 2021, their ownership grew to 91%.21 The plaintiffs assert that this

increase was due to awards of unearned “bonuses” and “employee incentive”

programs enacted between 2012 and 2015.22 The cash bonuses were allegedly worth

tens of millions of dollars, and the incentive programs awarded Jenzabar stock worth

hundreds of millions of dollars.23 During this same period, other Jenzabar

stockholders mysteriously disappeared from the capitalization table or lost their

stock by “technical forfeitures . . . or fire-sales.”24

18
Id. ¶ 167.a.ii.
19
Id. ¶¶ 32, 48.
20
Id. ¶ 55.
21
Id. The plaintiffs allege that the newly accreted stock was funneled to various entities
controlled by Maginn and Chai. Id. ¶¶ 58-59.
22
Id. ¶ 52.
23
Id. ¶¶ 83, 91.
24
Id. ¶¶ 87, 90.
5
The plaintiffs state that they learned of these issues in late March 2024. They

allegedly pieced together evidence of “fixing” other stockholder percentages in

dividend communications and the elimination of other stockholders from the

Jenzabar capitalization tables.25 They rely on text messages, public sources, and

their own investigation of “various dockets . . . , third-party interviews, counsel’s

statements, and disclosures by others familiar with the facts.”26

D. This Litigation

On April 5, 2024, the Gregory M. Raiff 2000 Trust (the “Trust”) filed this

lawsuit.27 The operative First Amended Complaint was filed on April 1, 2025,

asserting thirteen causes of action, styled as both direct and derivative claims.28 It

advances claims for breach of fiduciary duty (Counts I, II, III, IV), declaratory

judgment (Count V), unjust enrichment (Count VI), corporate waste (Count VII),

“equitable indemnification” (Count VIII), misappropriation (Count IX), “bad faith”

(Count X), fraud (Count XI), “injunctive relief” (Count XII), and civil conspiracy

(Count XIII). They seek a declaratory judgment regarding the extent of dilution of

Jenzabar stock, indemnification, and injunctive relief.

25
Id. ¶ 93.
26
Id. ¶¶ 47-50, 86.
27
Dkt. 1.
28
Dkt. 31.
6
The defendants moved to dismiss the Complaint under Court of Chancery

Rule 12(b)(6).29 Extensive briefing by various defendant groups ensued.30 Oral

argument on the motions took place on September 23, 2025.31

A week after argument, on September 30, 2025, three Jenzabar

stockholders—Barry, Snell, and Santmire (the “Intervenors”)—moved to intervene,

seeking to replace the Trust as plaintiff.32 I granted the motion on

29
Dkts. 32-35, 37-38, 61; see also Def. and Nom. Def. Jenzabar, Inc.’s Opening Br. in
Supp. of Mot. to Dismiss (Dkt. 55) (“Jenzabar’s Opening Br.”); Defs. Ling Chai and Chai-
Maginn Family Limited Partnership’s Opening Br. in Supp. of Mots. to Dismiss (Dkt. 56);
Torrence Harder’s Joinder in Defs.’ Opening Brs. (Dkt. 60); Opening Br. of D. Quinn Mills
and Olga Perera San Miguel in Supp. of Mots. to Dismiss Pl.’s First Am. Compl. (Dkt. 62);
Def. Robert A. Maginn, Jr.’s Opening Br. in Supp. of Mot. to Dismiss (Dkt. 63) (“Maginn’s
Opening Br.”).
30
Pl.’s Answering Br. in Opp’n to Jenzabar, Inc.’s Mot. to Dismiss (Dkt. 67) (“Pls.’ Opp’n
to Jenzabar”); Pl.’s Answering Br. in Opp’n to Robert A. Maginn, Jr.’s Mot. to Dismiss
(Dkt. 68) (“Pls.’ Opp’n to Maginn”); Pl.’s Answering Br. in Opp’n to Jamison Barr’s Mot.
to Dismiss (Dkt. 69); Pl.’s Answering Br. in Opp’n to Ling Chai’s and the Chai-Maginn
Family Limited Partnership’s Mot. to Dismiss (Dkt. 70); Pl.’s Answering Br. in Opp’n to
D. Quinn Mills’s and Est. of Joseph Girard San Miguel’s Mot. to Dismiss (Dkt. 71) (“Pls.’
Opp’n to Mills and San Miguel”); Pl.’s Opp’n to Torrence Harder, IV’s Mot. to Dismiss
(Dkt. 72) (“Pls.’ Opp’n to Harder”); Def. Jamison Barr’s Reply Br. in Further Supp. of
Mot. to Dismiss (Dkt. 77); Def. and Nominal Def. Jenzabar, Inc.’s Reply Br. in Further
Supp. of Mot. to Dismiss (Dkt. 78); Defs. Ling Chai and Chai-Maginn Family Limited
Partnership’s Reply Br. in Supp. of Mots. to Dismiss (Dkt. 80); Def. Robert A. Maginn,
Jr.’s Reply Br. in Supp. of Mot. to Dismiss (Dkt. 81); Def. Chai-Maginn Family LLC’s
Joinder in Def. Robert A. Maginn, Jr.’s Opening Br. and Reply Br. in Supp. of Mot. to
Dismiss (Dkt. 84); Reply Br. of Defs. D. Quinn Mills and Olga Perera San Miguel in Supp.
of Mots. to Dismiss (Dkt. 85); Torrence Harder’s Reply in Supp. of Mot. to Dismiss (Dkt.
86); see also supra note 29.
31
Dkt. 93.
32
Mot. to Intervene (Dkt. 95). Barry and Snell have been Jenzabar stockholders
since 1999, and Santmire since 2004. Id. at 2.
7
December 29, 2025, and directed the Intervenors to adopt the Complaint as their

operative pleading to limit prejudice to the defendants.33 The Intervenors dropped

the civil conspiracy claim (Count XIII).34 Submissions to supplement the prior

motion to dismiss briefing were then filed, and the case was deemed under

advisement as of January 16, 2026.35

II. ANALYSIS

The defendants have moved to dismiss the Complaint under Court of

Chancery Rule 12(b)(1) for lack of subject matter jurisdiction, Rule 12(b)(6) for

failure to state a claim upon which relief can be granted, and Rule 23.1 for lack of

standing to pursue derivative claims.36 The defendants raise numerous procedural

and substantive bases to dismiss the case.

I need not reach the merits of this dispute, however.37 The plaintiffs’ claims

fail on three threshold grounds: the direct claims are exclusively derivative, the

33
Letter Op. Resolving Mot. to Intervene (Dkt. 114) (“Mot. to Intervene Letter Op.”).
34
Dkt. 95. As a result, former defendant Jamison Barr was dismissed from this suit.
Dkt. 123.
35
Def. and Nominal Def. Jenzabar, Inc.’s Suppl. Submission in Supp. of Mot. to Dismiss
(Dkt. 120); Def. Robert A. Maginn, Jr.’s Suppl. Submission in Supp. of Mot. to Dismiss
(Dkt. 122) (“Maginn’s Suppl. Submission”).
36
Ct. Ch. R. 12(b)(1); Ct. Ch. R. 12(b)(6); Ct. Ch. R. 23.1.
37
The Complaint and the plaintiffs’ briefing contain several allegations about events in
2023 and 2024, including a $1.5 million signing bonus paid to Maginn, a $2.5 million
salary paid to Mills, and the purported diversion of corporate resources. See, e.g., Am.
Compl. ¶¶ 38-39; Pls.’ Opp’n to Mills and San Miguel 5-9. But they address these recent
events solely to show entrenchment and lack of independence to excuse demand and trigger
8
indemnification claims are unripe, and the remaining claims are untimely.38 This

case is dismissed in full.

A. Direct or Derivative

I begin with the defendants’ argument that the Complaint pleads only

derivative claims. The determination of whether a claim is direct or derivative is a

question of law assessed under Rule 12(b)(6).39 To resolve the Rule 12(b)(6) 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 non-moving party.”40 I need not

entire fairness review for the underlying historical transactions. See Pls.’ Opp’n to Mills
and San Miguel 9-14 (defining the “Disputed Transactions” for which relief is sought).
Because the plaintiffs do not assert these 2023 and 2024 events as independent bases for
liability or standalone claims for relief, I do not address them further.
38
The operative Complaint describes Count XII as a “three-part derivative claim” seeking
three forms of injunctive relief: (1) enjoining Maginn, Mills, Harder, and Chai from
“causing Jenzabar to indemnify Maginn for the judgment rendered against Maginn in the
Deane litigation . . . or similar litigation[,]” (2) enjoining Maginn, Mills, Harder, and Chai
from “selling all or substantially all of the assets of Jenzabar or otherwise entering into any
merger of Jenzabar,” and (3) “an order or injunction under DGCL § 141(c)” compelling
Jenzabar to hold a stockholder meeting. Am. Compl. ¶¶ 338-42. The first part has been
briefed and is discussed below. See infra Section II.B. The second and third parts were
not briefed beyond a statement that the plaintiffs raise a request for an annual meeting “out
of an abundance of caution” and “reserve[] all rights to seek that remedy through a separate
request for an injunction or through a proceeding pursuant to 8 Del. C. § 211.” Pls.’ Opp’n
to Harder 8; Pls.’ Opp’n to Maginn 56; Pls.’ Opp’n to Jenzabar 27. The plaintiffs’ decision
not to brief that portion of their claim constitutes a waiver. See Emerald P’rs v. Berlin,
726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”).
39
See Brookfield Asset Mgmt., Inc. v. Rosson, 261 A.3d 1251, 1262 (Del. 2021).
40
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)).
9
“accept every strained interpretation of [the plaintiffs’] allegations”41 or conclusory

statements “unsupported by allegations of specific facts.”42 A motion to dismiss

should be granted where a plaintiff cannot recover “under any reasonably

conceivable set of circumstances susceptible of proof.”43

In resolving whether a claim is direct or derivative, the court is not bound by

a plaintiff’s labels, but must independently look to the nature of the wrong alleged.44

Delaware courts apply the test established in Tooley v. Donaldson, Lufkin &

Jenrette, Inc., which asks: “(1) who suffered the alleged harm (the corporation or the

suing stockholders, individually); and (2) who would receive the benefit of any

recovery or other remedy (the corporation or the stockholders, individually)?”45

The plaintiffs purport to plead several causes of action—Counts I, II, IV, V,

VI, and X—as either direct or “both direct and derivative.”46 The core harms alleged

are that Maginn and Chai caused Jenzabar to issue them “tens of millions of dollars

41
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.,
42

Walker v. Lukens, Inc., 757 A.2d 1278 (Del. 2000) (TABLE).
43
Savor, 812 A.2d at 896-97.
44
See Hartsel v. Vanguard Gp., Inc., 2011 WL 2421003, at *16 (Del. Ch. June 15, 2011),
aff’d, 38 A.3d 1254 (Del. 2012) (TABLE).
45
845 A.2d 1031, 1033 (Del. 2004).
46
Am. Compl. ¶¶ 164, 175, 192, 217, 239, 256, 275, 315, 348. The plaintiffs concede that
Count VII for corporate waste is exclusively derivative, despite styling it otherwise in the
Complaint. See Pls.’ Opp’n to Jenzabar 15 n.4. They also plead Counts III, VIII, IX, XI,
and XII as derivative. See Am. Compl. ¶¶ 207, 283, 299, 322, 338.
10
of unearned cash bonuses and hundreds of millions of dollars of stockholder

value[.]”47 Through these issuances, Maginn and Chai allegedly inflated their

ownership of Jenzabar “from 18% or less to 90.56% (or 90.62%)[.]”48 The plaintiffs

argue that this conduct constituted a direct harm because it “impaired the [plaintiffs’]

voting power by diluting [their] equity.”49

These are quintessential derivative claims. In Brookfield Asset Management,

Inc. v. Rosson, the Delaware Supreme Court confirmed that “equity

overpayment/dilution claims, absent more, are exclusively derivative.”50 The harm

alleged here—the improper extraction of corporate assets and equity—was suffered

in the first instance by Jenzabar.51 Any resulting dilution of the minority

stockholders’ voting power or economic interest is a secondary harm shared

proportionally among all stockholders.52 The recovery for such claims flows to the

corporation.53

The plaintiffs attempt to evade Brookfield by shoehorning their allegations

into two recognized exceptions. Both arguments are unavailing.

47
See Am. Compl. ¶ 32.
48
Id. ¶¶ 69, 109.
49
See id. ¶ 178; see also Pls.’ Opp’n to Jenzabar 9.
50
Brookfield, 261 A.3d at 1267.
51
See, e.g., Jenzabar’s Opening Br. 10-11.
52
Id.
53
Brookfield, 261 A.3d at 1262-63.
11
First, the plaintiffs argue that the dilution claims are direct because the

cumulative transactions “resulted in a . . . change in control” under Revlon, Inc. v.

MacAndrews & Forbes Holdings, Inc.54 Brookfield acknowledged that a dilution-

based claim might be direct if it involves a transaction that shifts control from a

diversified group of stockholders to a controlling interest, depriving the minority of

a control premium.55 But a creeping accumulation of stock over a decade is not a

Revlon transaction.56 There was no active bidding process, merger, or sale where

Jenzabar’s stockholders were wrongfully deprived of a control premium.57

Second, the plaintiffs rely on In re Gaylord Container Corp. Shareholders

Litigation to argue that the defendants’ actions constituted a “wrongful impairment

by fiduciaries of the stockholders’ voting power.”58 But Gaylord applied to the

adoption of defensive measures—such as a poison pill—designed to entrench

management and impede the stockholder franchise.59 Equity dilution resulting from

54
See, e.g., Pls.’ Opp’n to Jenzabar 12-13 (citing Revlon, 506 A.2d 173 (Del. 1986)).
55
Brookfield, 261 A.3d at 1266-67.
56
See Am. Compl. ¶ 69; see also Maginn’s Reply Br. 5.
57
See In re Paxson Commc’n Corp. S’holders Litig., 2001 WL 812028, at *7 (Del. Ch.
July 12, 2001) (holding that Revlon does not apply where plaintiffs fail to allege a sale or
change of control such that stockholders “have been or will be deprived of a control
premium”).
58
See Pls.’ Opp’n to Jenzabar 13 (citing Gaylord, 747 A.2d 71, 79 (Del. Ch. 1999)).
59
Gaylord, 747 A.2d at 74.
12
an alleged corporate overpayment does not transform a derivative claim into a direct

one.60

Because these claims are exclusively derivative, they belong to Jenzabar and

are subject to the standing and demand requirements of Court of Chancery

Rule 23.1.61 Furthermore, Count V and Count XII improperly name Jenzabar as a

defendant.62 Jenzabar cannot logically be named as a direct defendant on claims

brought on its own behalf.63

Accordingly, the direct claims asserted in Counts I, II, IV, V, VI, and X are

dismissed under Rule 12(b)(6), and Jenzabar is dismissed as a defendant.

60
See New Enter. Assocs. 14, L.P. v. Rich, 292 A.3d 112, 156 (Del. Ch. 2023) (“[T]he
Delaware Supreme Court h[eld] definitively [in Brookfield] that claims for equity dilution
are only and always derivative.”).
61
See Ct. Ch. R. 23.1. As noted, the plaintiffs intervened in this action, seeking to replace
the Trust as the plaintiff. See supra notes 32-35 and accompanying text. I permitted the
defendants to provide supplemental briefing to address outstanding issues. Mot. to
Intervene Letter Op. 7-8.
In his supplemental brief, Maginn argued that the Trust’s lack of derivative standing
could not be retroactively cured by the current plaintiffs’ intervention. Maginn’s Suppl.
Submission 2-4. This argument is meritless. Delaware courts have permitted stockholders,
who satisfy the requirements of Rule 23.1, to retroactively cure a prior derivative plaintiff’s
lack of standing. See, e.g., In re MAXXAM, Inc./Federated Dev. S’holders Lit.,
698 A.2d 949, 954 (Del. Ch. 1996). Doing so squares with bedrock “considerations of
justice and practicality” and is consistent with this court’s desire to resolve cases on their
merits. Id.
62
See Am. Compl. ¶¶ 226-47, 337-46.
63
Cf. Brookfield, 261 A.3d at 1262-63.
13
B. Ripeness

The plaintiffs seek a declaration that the defendants breached their fiduciary

duties and committed corporate waste by “causing Jenzabar to indemnify Maginn

for millions of dollars of defense fees” in Deane and “other” suits.64 The defendants

counter that Jenzabar has only advanced Maginn’s legal fees and posted an appeal

bond as contractually required, and has yet to determine that those amounts are

indemnifiable.65 Thus, they argue that the indemnification-related claims must be

dismissed under Court of Chancery Rule 12(b)(1).66

“Delaware courts decline to exercise jurisdiction over a case unless the

underlying controversy is ripe, i.e., has ‘matured to a point where judicial action is

appropriate.’”67 A dispute is not ripe when “the claim is based on ‘uncertain and

contingent events’ that may not occur, or where ‘future events may obviate the need’

64
Am. Compl. ¶ 174.
65
See Jenzabar’s Reply Br. 25.
66
See Shahin v. City of Dover, 2018 WL 4635730, at *3 (Del. Ch. Sept. 26, 2018) (“[T]he
standards governing a Rule 12(b)(1) motion to dismiss for lack of subject matter
jurisdiction are far more demanding of the non-movant [than Rule 12(b)(6)]. The burden
is on the plaintiff to demonstrate that subject matter jurisdiction exists. In deciding whether
the plaintiff has met that burden, the [c]ourt need not accept the plaintiff’s factual
allegations as true and is free to consider facts not alleged in the complaint.”); Sloan v.
Segal, 2008 WL 81513, at *6 (Del. Ch. Jan. 3, 2008) (“This court has the discretion to
consider evidence outside the pleadings in deciding motions under Rule 12(b)(1) . . . .”).
67
XL Specialty Ins. v. WMI Liquidating Tr., 93 A.3d 1208, 1217 (Del. 2014) (citing Stroud
v. Milliken Ents., Inc., 552 A.2d 476, 480 (Del. 1989)).
14
for judicial intervention.”68 This principle seeks to “conserve limited judicial

resources and to avoid rendering a legally binding decision that could result in

premature . . . lawmaking.”69 The court maintains broad discretion in determining

whether a claim is ripe.70

The plaintiffs assert several claims regarding Jenzabar’s indemnification of

Maginn in Deane, and the extent to which other defendants are complicit in causing

such indemnification.71 They claim breach of fiduciary duty (Counts II and III),

corporate waste (Count VII), and misappropriation (Count IX).72 They also ask that

I order certain defendants to indemnify Jenzabar for the judgment entered against

Maginn in Deane (Count VIII), declare that those defendants owe Jenzabar

“equitable indemnification” (Count V), and enjoin the same defendants from

providing further indemnification (Count XII).73

68
Id. at 1217-18 (citation omitted).
69
Id. at 1217.
70
See In re Straight Path Commc’ns Inc. Consol. S’holder Litig., 2017 WL 5565264, at *3
(Del. Ch. Nov. 20, 2017).
71
Am. Compl. ¶¶ 190, 201-12 (Counts II and III); id. ¶¶ 269-72 (Count VII); id. ¶¶ 293-305
(Count IX).
72
Id. ¶¶ 233-37 (Count V); id. ¶¶ 282-92 (Count VIII); id. ¶¶ 337-46 (Count XII).
73
See Pls.’ Opp’n to Jenzabar 23-24 (“Plaintiff seeks to enjoin or otherwise prevent further
indemnification of Maginn.”).
15
None of these claims are ripe. The plaintiffs concede that no final

indemnification decision has been made. Indeed, Count XII asks that I preemptively

stop any such decision.74

At bottom, the plaintiffs conflate two different legal concepts: advancement

and indemnification.75 “Advancement is an especially important corollary to

indemnification as an inducement for attracting capable individuals into corporate

service.”76 The right to advancement is distinct from the right to indemnification.77

If a party meets the requirements for advancement, then the party’s legal fees

in defense of the action are advanced until the action is resolved. 78 Only then can

one determine whether the party is ultimately entitled to indemnification. Once the

underlying legal action is complete, a separate process commences to determine

74
Am. Compl. ¶ 340.
75
Advanced Min. Sys., Inc. v. Fricke, 623 A.2d 82, 84 (Del. Ch. 1992).
76
Homestore, Inc. v. Tafeen, 888 A.2d 204, 211 (Del. 2005); see Citadel Hldg. Corp. v.
Roven, 603 A.2d 818, 822-23 (Del. 1992).
77
See Senior Tour Players 207 Mgmt. Co. v. Golftown 207 Hldg. Co., 853 A.2d 124, 128
(Del. Ch. 2004) (observing that advancement and indemnification are “distinct types of
legal rights” (citation omitted)).
78
See Batty v. UCAR Int’l Inc., 2019 WL 1489082, at *8 (Del. Ch. Apr. 3, 2019)
(explaining that indemnification accrues “upon the conclusion of a matter or upon
resolution of one or more claims” (quoting William D. Johnston et al., Indemnification and
Insurance for Directors and Officers, 54-3rd Corporate Practice Portfolio Series § III.A.1
at A-17 (BNA 2014))).
16
whether a party is subject to indemnification or if any advanced sums must be

repaid.79

Here, Jenzabar advanced Maginn’s legal fees and posted an appeal bond to

secure the judgment in Deane.80 Maginn was contractually entitled to this

advancement under both Jenzabar’s certificate of incorporation and his indemnity

agreement.81 No legal determination has yet been made as to whether Maginn is

entitled to indemnification.82 Maginn’s indemnity agreement outlines a specific

adjudicatory process for determining indemnification, which requires the

appointment of independent counsel.83 That process is ongoing.

In addition, an indemnification action is pending before this court regarding

Maginn’s losses and expenses incurred in Deane.84 There, the parties are litigating

over the appointment of independent counsel as required by Maginn’s indemnity

agreement.85 Because Maginn’s entitlement to indemnification is currently being

79
See InterMune, Inc. v. Harkonen, 2024 WL 3619692, at *16 (Del. Ch. Aug. 1, 2024)
(ordering the repayment of advanced sums).
80
See Jenzabar’s Reply Br. 26-27.
81
Id.
82
Id.
83
Id. at 26 (citing the indemnity agreement).
84
Compl., Maginn v. Jenzabar, Inc., C.A. No. 2025-0913-LWW (Del. Ch. Aug. 11, 2025);
see also Del. R. Evid. 202(d)(1)(C) (permitting a court to take judicial notice of the records
of the court in which the action is pending).
85
See, e.g., Compl., Maginn v. Jenzabar, Inc., C.A. No. 2025-0913-LWW (Del. Ch.
Aug. 11, 2025); Def.’s Answer and Counterclaim, Maginn v. Jenzabar, Inc., C.A.
17
litigated, there are “future events” that “‘may obviate the need’ for judicial

intervention[.]”86

“Under settled principles of Delaware law, ‘indemnification claims do not

typically ripen until after the merits of an action have been decided, and all appeals

have been resolved.’”87 A cause of action regarding indemnification does not accrue

until the party “can be confident any claim against him has been resolved with

certainty.”88 Jenzabar has only paid Maginn his contractually-owed advancement.

It has not yet approved indemnification. Thus, the plaintiffs’ claims challenging

indemnification have not “matured to the point where the plaintiff has suffered or

will imminently suffer an injury” and are unripe.89

The motion to dismiss is granted without prejudice as to Counts III, VIII, and

XII in their entirety, and as to Counts I, II, V, VII, IX, and X to the extent they are

premised on the indemnification of Maginn.90

No. 2025-0913-LWW (Del. Ch. Sept. 3, 2025); Pl.’s Reply to Def.’s Countercl., Maginn
v. Jenzabar, Inc., C.A. No. 2025-0913-LWW (Del. Ch. Sept. 23, 2025).
86
XL Specialty Ins., 93 A.3d at 1217-18.
87
Huff v. Longview Energy Co., 2013 WL 4084077, at *2 (Del. Ch. Aug. 12, 2013) (quoting
Hampshire Gp., Ltd. v. Kuttner, 2010 WL 2739995, at *53 (Del. Ch. July 12, 2010)).
88
O’Brien v. IAC/Interactive Corp., 2009 WL 2490845, at *5 (Del. Ch. Aug. 14, 2009)
(citing Scharf v. Edgcomb Corp., 864 A.2d 909, 919 (Del. 2004)).
89
Town of Cheswold v. Cent. Del. Bus. Park, 188 A.3d 810, 816 (Del. 2018).
90
To the extent the plaintiffs attempt to base their claims on Jenzabar’s indemnification of
Maginn in “other litigation in regard to similar topics” (Am. Compl. ¶ 174), those
allegations fail to state a claim under Rule 12(b)(6). Although Rule 12(b)(6) is a
plaintiff-friendly standard, “vague allegations” must “give the opposing party notice of the
18
C. Timeliness

Finally, the defendants assert that the plaintiffs’ remaining claims are

time-barred.91 The plaintiffs allege that the purported misconduct took place “in and

around 2010-2015[.]”92 But they sued many years later. To prevail, the defendants

must demonstrate “that the plaintiff knew of the invasion of his rights, that he

unreasonably delayed in bringing suit to vindicate those rights, and resulting

prejudice to the defendant.”93 They have met their burden.

1. Claim Accrual

As a baseline matter, “a claim accrues as soon as the wrongful act occurs.”94

The relevant acts in this case concern purported dilution and overpayment between

2010 and 2015. To that end, the Complaint raises a “concealed pattern of the

giveaway, apparently during 2012-2015, of tens of millions of dollars of unearned

claim.” Cent. Mortg., 27 A.3d at 535. The plaintiffs failed to identify any “other” lawsuit,
which falls short of the notice pleading standard. Ct. Ch. R. 8.
91
See Maginn’s Opening Br. 26-45; Jenzabar’s Opening Br. 34-35.
92
Am. Compl. ¶ 26.
93
Stein v. Blankfein, 2019 WL 2323790, at *10 (Del. Ch. May 31, 2019); see also Reid v.
Spazio, 970 A.2d 176, 182 (Del. 2009) (reiterating the bedrock principle that “equity aids
the vigilant, not those who slumber on their rights[]” (citing 2 Pomeroy’s Equity
Jurisprudence §§ 418, 419 (5th ed. 1941))).
94
Tilden v. Cunningham, 2018 WL 5307706, at *14 (Del. Ch. Oct. 26, 2018).
19
cash bonuses and hundreds of millions of dollars of stockholder value”95 and

Jenzabar’s purported removal of “investors and employees” from the Company’s

capitalization table from 2010 onward.96 The plaintiffs’ claims therefore accrued no

later than 2015.

2. Statute of Limitations

When evaluating whether a claim is timely, the Court of Chancery looks to

the statute of limitations by analogy.97 The plaintiffs’ remaining claims—for breach

of fiduciary duty (Counts I, II, and IV),98 unjust enrichment (Count VI),99 corporate

95
Am. Compl. ¶ 32; id. ¶ 54 (alleging that, in 2012, Maginn “arranged for Jenzabar to
borrow $38 million” as part of its purported dilution scheme); id. ¶¶ 76, 89 (raising the
“taking of cash and stock in 2012-2015”).
96
Id. ¶ 26; id. ¶ 55 (explaining that Chai and Maginn’s stock ownership increased
from 18% in 2010 to approximately 91% in 2021).
97
See Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 983 (Del. Ch. 2016); In re Am. Int’l
Gp., Inc., 965 A.2d 763, 812 (Del. Ch. 2009) (“Even though this is a court of equity, equity
follows the law, and this court will apply statutes of limitations by analogy.”).
98
Am. Compl. ¶¶ 168-200, 213-25; see In re Dean Witter P’ship Litig., 1998 WL 442456,
at *4 (Del. Ch. July 17, 1998) (“It is well-settled under Delaware law that a three-year
statute of limitations applies to claims for breach of fiduciary duty.”), aff’d, 725 A.2d 441
(Del. 1999) (TABLE).
99
Am. Compl. ¶¶ 248-63; see Vichi v. Koninklijke Philips Elecs. N.V., 62 A.3d 26, 42
(Del. Ch. 2012) (explaining that “the analogous statute of limitations . . . for both unjust
enrichment and fraud is three years”).
20
waste (Count VII),100 misappropriation (Count IX),101 “bad faith” (Count X),102 and

fraud (Count XI)103—are subject to a three-year limitations period.104 The plaintiffs’

request for a declaratory judgment about the extent of dilution as a result of various

defendants’ breaches of fiduciary duty (Count V) is likewise subject to the three-

year statute of limitations.105

As explained above, these claims accrued between 2010 and 2015.106

Accordingly, the three-year limitations period expired between 2013 and 2018. This

lawsuit was filed in April 2024.107 Absent tolling, the claims are time-barred.

100
Am. Compl. ¶¶ 264-81; see Tilden, 2018 WL 5307706, at *14 (citing “a three-year
limitations period applies to claims sounding in breach of fiduciary duty[,]” such as
corporate waste).
101
Am. Compl. ¶¶ 293-305; see Tilden, 2018 WL 5307706, at *14.
102
Am. Compl. ¶¶ 306-21; 10 Del. C. § 8106.
Am. Compl. ¶¶ 322-36; see Stevanov v. O’Connor, 2009 WL 1059640, at *12 n.63 (Del.
103

Ch. Apr. 21, 2009) (“The analogous statute of limitations for fraud is three years.”).
104
See generally 10 Del. C. § 8106.
105
Am. Compl. ¶¶ 226-32; see 10 Del. C. § 8106 (subjecting statutory claims to the three-
year limitations period); In re Sirius XM S’holder Litig., 2013 WL 5411268, at *4 (Del.
Ch. Sept. 27, 2013) (explaining that a declaratory judgment claim and underlying breach
of fiduciary duty claim were time-barred).
106
See supra Section II.C.1.
107
See supra note 27 and accompanying text.
21
3. Tolling

Delaware courts “will toll the limitation period under certain

circumstances[.]”108 There are three tolling doctrines that may apply: “(1) inherently

unknowable injuries, (2) fraudulent concealment, and (3) equitable tolling following

a breach of fiduciary duties.”109 The plaintiff must plead facts supporting the

application of a tolling doctrine.110 “Mere ignorance of the facts by a plaintiff . . . is

no obstacle to operation of the statute [of limitations].”111

The plaintiffs invoke each of these three tolling doctrines.112 None applies.

A limitations period “is tolled only until the plaintiff discovers (or exercising

reasonable diligence should have discovered) his injury. Thus, the limitations period

108
Tilden, 2018 WL 5307706, at *14.
109
Murray v. Rolquin, 2023 WL 2421687, at *10 (Del. Ch. Mar. 9, 2023) (citation omitted),
aff’d sub nom., McGuigan v. Murray, 319 A.3d 271 (Del. 2024) (TABLE).
110
See Dean Witter, 1998 WL 442456, at *5-6 (“As the party asserting that tolling applies,
plaintiffs bear the burden of pleading specific facts to demonstrate that the statute of
limitations was, in fact, tolled.”); Bocock v. INNOVATE Corp., 2022 WL 15800273, at *12
(Del. Ch. Oct. 28, 2022) (“When a plaintiff invokes equitable tolling, it does not enjoy the
plaintiff-friendly standard under Court of Chancery Rule 12(b)(6), and the court is not
required to draw plaintiff-friendly inferences when determining whether the pleadings
support tolling.”).
111
Tilden, 2018 WL 5307706, at *14 (citing Dean Witter, 1998 WL 442456, at *5).
112
See, e.g., Am. Compl. ¶ 28 (arguing, for purposes of the “inherently unknowable
injuries” exception, that the “misconduct . . . was not known and could not have been
known” to the plaintiffs and invoking equitable tolling on the grounds that the plaintiffs
“relied in confidence on the fiduciaries of Jenzabar, who concealed their misconduct”); id.
¶ 85 (stating, for purposes of the fraudulent concealment exception, that the defendants
“deliberately concealed” the misconduct at issue).
22
begins to run when the plaintiff is . . . on inquiry notice.”113 “Inquiry notice does not

require full knowledge of the material facts; rather, plaintiffs are on inquiry notice

when they have sufficient knowledge to raise their suspicions to the point where

persons of ordinary intelligence and prudence would commence an investigation

that, if pursued[,] would lead to the discovery of the injury.”114

As the Complaint itself reveals, the plaintiffs have been on notice of their

claims since at least July 30, 2014, when the Court of Chancery resolved a motion

to dismiss a lawsuit captioned In re Jenzabar, Inc. Derivative Litigation (the “2014

Opinion”).115 There, a plaintiff brought direct and derivative claims for breach of

fiduciary duty based on allegedly questionable bonuses paid to Maginn and

approved by Jenzabar’s Board.116 The publicly-filed 2014 Opinion dismissing the

suit provided Jenzabar stockholders with notice of similar derivative claims

113
Dean Witter, 1998 WL 442456, at *6.
114
Pomeranz v. Museum P’rs, L.P., 2005 WL 217039, at *3 (Del. Ch. Jan. 24, 2005); see
also Whittington v. Dragon Gp. LLC, 991 A.2d 1, 8 n.9 (Del. 2009) (explaining that, when
a plaintiff is put on inquiry notice, she is on notice “of everything to which such [an
investigation] may have led” (citation omitted)).
115
See generally In re Jenzabar, Inc. Deriv. Litig., 2014 WL 3827501, at *1 (Del. Ch.
July 30, 2014) (highlighting compensation structures “reflect[ing] breaches of fiduciary
duties by the [d]efendants”). The court takes judicial notice of the filings in that case. See
Metro. Life Ins. v. Tremont Gp. Hldgs., Inc., 2012 WL 6632681, at *12 (Del. Ch.
Dec. 20, 2012) (taking judicial notice of documents filed in another action pursuant to
Delaware Uniform Rules of Evidence Rules 201 and 202).
116
Jenzabar, 2014 WL 3827501, at *1. The predecessor to that action is MCG Capital
Corp. v. Maginn, 2010 WL 1782271 (Del. Ch. May 5, 2010).
23
pertaining to purportedly improper compensation practices and the potential

appeasement of Maginn by the Jenzabar Board.117

The plaintiffs may have received actual notice even sooner. The 2014

Opinion notes that Jenzabar mailed a Notice of Stipulation and Petition of Dismissal

(the “Notice”) to Jenzabar stockholders on June 27, 2013, which described the

lawsuit’s claims and informed stockholders of their rights to intervene.118 This

Notice was mailed to all stockholders of record who held Jenzabar stock

continuously from December 2008 to June 2013.119 That would have included the

Intervenors, who have been Jenzabar stockholders since 1999 and 2004.120

Moreover, when the Trust—the original plaintiff in this action—sought to

intervene in the 2014 lawsuit, its representatives publicly testified that they believed

Maginn was “stealing from the company” and engaging in “malfeasance.”121

Because the Intervenors stepped into the shoes of the Trust and adopted its

117
See, e.g., Jepsco, Ltd. v. B.F. Rich Co., 2013 WL 593664, at *8 (Del. Ch. Feb. 14, 2013)
(explaining that “once the information underlying the plaintiff’s claim is readily available,
that plaintiff is on inquiry notice”).
118
Jenzabar, 2014 WL 3827501, at *1; Ex. A. to Phan Aff. of Mailing, In re Jenzabar Inc.
Deriv. Litig., C.A. No. 4521-VCG (Del. Ch. Aug. 22, 2013).
119
Ex. A. to Phan Aff. of Mailing, In re Jenzabar Inc. Deriv. Litig., C.A. No. 4521-VCG
(Del. Ch. Aug. 22, 2013).
120
See supra note 32.
121
See Maginn’s Opening Br. 31 (quoting Trust’s Answering Br. in Opp’n to Defs.’ Mot.
to Dismiss, In re Jenzabar, Inc. Deriv. Litig., C.A. No. 4521-VCG (Del. Ch.
Feb. 14, 2014) 11, 17, 20, 22).
24
Complaint as their own,122 they inherit these timeliness defects. Both the 2014

Opinion and Notice would have spurred a stockholder of “ordinary intelligence” to

investigate further.123

To the extent the plaintiffs argue that the “giveaway” pattern described in their

Complaint persisted until 2015—after the 2014 Opinion was issued—it does not

save their claims.124 Even if the post-2014 acts gave rise to a separate limitations

period for the later acts,125 it expired in 2018. The plaintiffs then sat on their hands

for over six years: the Trust until 2024 when it filed this suit, and the Intervenors

until 2025.126

* * *

The plaintiffs’ claims accrued between 2010 and 2015. They have been on

inquiry notice of the overarching scheme giving rise to their claims since at least

July 2014. Tolling doctrines are therefore inapplicable. Because this suit was filed

over six years after the statute of limitations expired, it is time-barred.

122
See Mot. to Intervene Letter Op. 7.
123
Pomeranz, 2005 WL 217039, at *3.
124
See Pls.’ Opp’n to Maginn 32, 34.
125
See Lebanon Cnty. Empls.’ Ret. Fund v. Collis, 287 A.3d 1160, 1214 (Del. Ch. 2022)
(explaining that inquiry notice cuts off the ability to toll past acts, but a plaintiff may still
sue for separately accrued breaches occurring thereafter, provided they do so within the
limitations period for those later acts).
126
See Dkts. 1, 95.
25
III. CONCLUSION

Counts I to II, IV to VI, and X are derivative in nature. Counts III, VIII, and

XII are unripe in full, and Counts I to II, V, VII, IX, and X are unripe to the extent

they are premised on the indemnification of Maginn. Counts I to II, IV to VII, and

IX to XI are time-barred. The defendants’ motion to dismiss is therefore granted.

Counts III, VIII, and XII are dismissed without prejudice, and the portions of Counts

I to II, V, VII, IX, and X pertaining to indemnification are dismissed without

prejudice. The remainder of the Complaint is dismissed with prejudice.

26