Sime Stantic v. HireApp Technologies, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SIME STANTIC, )
)
Plaintiff, )
)
v. ) C.A. No. 2025-0040-SEM
)
HIREAPP TECHNOLOGIES, INC., )
)
Defendant. )

Final Report: July 2, 2025
Date Submitted: June 25, 2025

FINAL POST-TRIAL REPORT

Rafael X. Xahralddin-Aravena, Sean M. Brennecke, LEWIS BRISBOIS
BISGAARD & SMITH LLP, Wilmington, DE; OF COUNSEL: Oscar A. Gomez,
Jennifer S. Roldan, EPGD ATTORNEYS AT LAW, P.A., Miami, FL; Counsel for
Plaintiff Sime Stantic.

Samuel T. Hirzel, II, Elena M. Sassaman, HEYMAN ENERIO GATTUSO &
HIRZEL LLP, Wilmington, DE; Counsel for Defendant HireApp Technologies, Inc.

MOLINA, Senior Magistrate
Through this action, a purported stockholder seeks to inspect a company’s

books and records to assess its financial health and investigate possible

mismanagement. The company has refused inspection, arguing that the plaintiff is

not a stockholder. I agree. The plaintiff agreed to, and did, separate from the

company, and his shares were properly cancelled. He, therefore, lacks standing, and

his request for a court-ordered inspection of books and records must be denied. I

have also concluded that the parties should bear their own fees, but that costs should

be shifted in the defendant’s favor as the prevailing party.

I. BACKGROUND

This is a books-and-records proceeding initiated by Sime Stantic (the

“Plaintiff”) against HireApp Technologies, Inc. (the “Defendant”). This action was

initially stayed, at the Plaintiff’s request, while the parties attempted to negotiate a

resolution.1 In February of this year, I learned those efforts were unsuccessful and

we moved full steam ahead to our expedited trial on June 25.2 This is my expedited

post-trial decision.

I begin this report with a brief background, which I take from the parties’

stipulations in the pretrial order and from the record developed in advance of and

1
See Docket Item (“D.I.”) 3. The parties’ joint exhibits are cited as JX__.
2
D.I. 9–10, 15.
during trial, at which seventy-three exhibits were admitted into evidence and two

witnesses—the Plaintiff and Nemanja Stefanovic—testified.

A. The Parties

The Defendant is a Delaware corporation, founded in 2019, with the aspiration

of providing a “cutting-edge staffing-as-a-service platform that connects high-end

hospitality businesses with qualified professionals quickly and efficiently.”3 Toward

this goal, the Defendant has a software platform allowing businesses to access a pool

of qualified candidates and manage and maintain their workforce, without the time

and expense of a more complex recruiting process.4

The Plaintiff was a co-founder of the Defendant and became a stockholder of

record of 3,550,000 shares of the Defendant’s common stock through a purchase

agreement dated July 18, 2019.5 The purchase price reflected on the agreement was

de minimis ($0.00001 per share, for a total of $35.50),6 but the parties agree the

Plaintiff had made a sizeable financial investment in the Defendant and dedicated

3
JX61 at 2.
4
Id.
5
JX2. The Plaintiff testified that the agreement was backdated to 2019 and signed much
later. See also JX29 (email chain appearing to confirm backdating). Neither party,
however, contests the Plaintiff’s stock ownership, nor that it was subject to the terms in
this agreement. The parties also agree that the Plaintiff’s purchase was subject to a vesting
schedule through which 1,996,875 shares were vested at the time of the termination and
cancellation.
6
JX2 at 1.

2
“significant time, industry connections, and expertise to build [the Defendant] into

a viable and valuable business.”7

Given his expertise, the Plaintiff also served the Defendant as a consultant and

board member. Through a consulting agreement dated July 18, 2019, the Plaintiff

agreed to provide forty hours of work for merely $1.00 a year.8 In actuality, the

Plaintiff worked without compensation for the first two years of the business. At or

around the two-year mark, the Plaintiff’s compensation grew to $8,000.00 per

month, which was ultimately increased to $15,000.00 per month.9 In connection with

his consulting agreement, the Plaintiff also signed a confidentiality agreement,

which included a twelve-month non-compete provision.10 The Plaintiff was also a

director on the Defendant’s three-member board of directors. But, as of September

3, 2024, and as explained in more detail below, the Plaintiff was terminated from

those roles.11

7
D.I. 31 (“Pretrial Order”) at p. 7 ¶ 2.
8
JX1 at HireApp-000375, -381 (“For [s]ervices rendered by [the Plaintiff] under this
[a]greement, the [Defendant] shall pay [the Plaintiff] at the rate of $1 per year, payable at
the end of each year.”).
9
JX59 at 24:5–11 (Q: “What were you [the Plaintiff] paid as a consultant to [the
Defendant]?” A: “First two years, nothing; next two years, $8,000 a month, and . . . . [w]hen
the investors came, they gave me [the Plaintiff] $15,000 a month.”).
10
JX3 at HireApp-000367.
11
JX45. The Plaintiff now serves as the director of operations for Novu Staffing, a position
he has held since September 2024. JX58.

3
Another key player in the Defendant’s business is Nemanja Stefanovic, its

chief executive officer.12 The Plaintiff and Mr. Stefanovic co-founded the Defendant

and worked closely together for several years before they began to envision a

different future for the business.

B. The Rift

The Plaintiff and Mr. Stefanovic worked in tandem in the early years. But

beginning in or around 2023, their divergent visions for the Defendant’s future drove

them apart. A turning point in their business relationship appears to be a May 2023

investment from the Dutch company SCV Technology Fund III Coöperatief U.A.

(“SCV”). On May 9, 2023, SCV made a $1.5 million investment in the Defendant

in exchange for seed-series preferred stock.13 That investment brought in more

voices and interests, and the company began to turn in a different direction than the

Plaintiff envisioned.

For example, in early 2024, Mr. Stefanovic “began stating that the hospitality

business was not scalable and did not represent a suitable product-market fit for” the

Defendant.14 The future, per Mr. Stefanovic, was in further development of the

Defendant’s platform. The Plaintiff disagreed, expressed his concerns about this

12
JX61.
13
JX8–9.
14
Pretrial Order at p. 8 ¶ 7.

4
direction, and made repeated requests to Mr. Stefanovic for financial reports and

greater insight into the company’s management.15 These requests were a change in

course for the Plaintiff who had largely worked on bringing in and sustaining

business, rather than engaging in bigger picture strategic and management decisions.

As he grew more concerned about the future of the business, the Plaintiff increased

his involvement at the management level. For example, on or about April 3, 2024,

the Plaintiff expressed his concerns regarding the Defendant’s management to its

board of directors.16 A few weeks later, on or about April 26, 2024, the Plaintiff even

“traveled to Serbia to meet with [Mr.] Stefanovic in person to discuss the

[Defendant’s] current position and other relevant stated concerns.”17

Those meetings and discussions did not assuage the Plaintiff’s concerns. The

Plaintiff grew frustrated and disillusioned by the Defendant’s change in course,

especially after its May 2024 acquisition of a Serbian entity, Hire Technologies

D.O.O. That acquisition raised several concerns in the Plaintiff’s mind; he was

worried about, for example: Mr. Stefanovic’s relationship to the company; the

Defendant’s payments or transfers of funds to that company; the logistics of moving

15
JX10; Pretrial Order at p. 8 ¶ 8.
16
Pretrial Order at p. 8 ¶ 9.
17
Id. ¶ 10; see also JX11 (reflecting the Plaintiff’s concerns in a May 3, 2024 email).

5
operations into Serbia; and the culture of the Defendant going forward as a U.S.

versus Serbian enterprise.18

Although they had different visions, Mr. Stefanovic attempted to address the

Plaintiff’s access/control concerns by providing the Plaintiff with insight into the

Defendant’s dealings shortly after the Serbian acquisition. On or about May 30,

2024, Mr. Stefanovic sent the Plaintiff spreadsheets reflecting the Defendant’s 2023

expenses and the year-to-date 2024 expense spreadsheet for the Defendant, both of

which contained accounting of the Defendant’s U.S. and Serbian accounts and

disclosed the expenses of the Serbian entity.19

C. The Split

These disclosures were not enough to resolve the Plaintiff’s concerns. And it

quickly became clear to everyone that something needed to change. As co-founders,

the Plaintiff and Mr. Stefanovic worked hard to find common ground and a path

forward. Mr. Stefanovic made the first proposal. He proposed that the Plaintiff

transition from the operational level into “a more strategic position within the

[b]oard of [d]irectors[.]”20 He acknowledged that the Plaintiff’s “extensive expertise

has greatly benefitted the organization in the past,” and shared his belief that “it will

18
See JX13; see also JX14–16 (Mr. Stefanovic responding).
19
See JX64; JX69.
20
JX16 at HireApp-000453.

6
continue to do so in this new capacity.”21 Specifically, he was looking for the

Plaintiff to remain actively involved in the higher-level strategic planning and

management, “while empowering the operational team to function independently

and efficiently.”22

Inherent in this proposal was the expectation that Mr. Stefanovic’s vision

would prevail; the Defendant would reduce its role in the industry and region the

Plaintiff championed and would increase its focus on development. Cognizant that

this shift was not the Plaintiff’s preference, Mr. Stefanovic included in his proposal

a buyout of sorts. Mr. Stefanovic proposed that the Plaintiff receive $5,000.00 per

month for his continued role on the board for ten months, plus a $10,000.00 monthly

incentive for the same ten-month period for the Plaintiff to return his vested shares.23

The Plaintiff was “deeply disappointed with” this proposal and unequivocally

rejected it on June 7, 2024.24 He explained that he could not continue in a business

where he would have restricted access, including with clients he procured. He also

expressed concerns about remaining bound by a personal guaranty he signed for the

21
Id.
22
Id. at HireApp-000454.
23
JX17. This first proposal valued the Plaintiff’s shares around $100,000.00, based on
“[t]he amount of money that [the Defendant] actually [could] pay out.” JX60 at 71:6–21.
24
JX18.

7
Defendant’s business.25 Finally, the Plaintiff pushed back on the level of financial

compensation offered and seeming lack of support that would be provided to him to

carve off and continue the rejected aspect of the Defendant’s business.26

The Plaintiff did not, however, leave the negotiating table. On June 12, he

made an offer of his own. Through email to Mr. Stefanovic, the Plaintiff shared his

understanding that his departure was best for all involved and that he was “glad that

everyone will go out on their own to do what they believe in.”27 To make that work,

he proposed a few things: that he (1) retain certain clients he would otherwise be

barred from working with under his non-compete, (2) be removed as personal

guarantor, (3) be paid $25,000.00 per month for July and August 2024, with his exit

finalized by September 1, 2024, and (4), “[a]s part of the transition, . . . hand over

all [his] . . . shares” of the Defendant (the “Counteroffer”).28 The Plaintiff asked that

Mr. Stefanovic confirm agreement and promptly schedule a board meeting.

On June 12, Mr. Stefanovic responded by email indicating that “[i]n principle”

he agreed with the Counteroffer, although they needed to discuss one client and hash

out the terms.29 He offered to meet with the Plaintiff that weekend, whenever

25
Id.
26
Id.
27
JX19.
28
Id.
29
JX20.

8
convenient for him. The parties were, presumably, able to connect because on June

18, the Plaintiff wrote to Mr. Stefanovic to “confirm [their] agreement” before

sending it to the final board member and scheduling a meeting (the

“Confirmation”).30 In the Confirmation, the Plaintiff reiterated the terms from the

Counteroffer, with one modification—the client Mr. Stefanovic raised concerns

about would stay with the Defendant “for now,” but the Plaintiff could still solicit

that client and work to transition it over to his new enterprise.31 In pertinent part, the

Confirmation reiterated the Plaintiff’s agreement to have his shares “handed back”

by September 1.32

On June 19, the Plaintiff sent the Confirmation to the remaining board

member.33 The Plaintiff explained that he and Mr. Stefanovic were “agreed almost

entirely on how to proceed[,]” and he shared the agreed-upon itemized list.34

Regarding his shares, the Plaintiff again explained that they would “be handed back

by” September 1.35 The final board member asked questions about the deal,

including the monetary payouts to the Plaintiff for July and August, which the

30
JX21.
31
Id.
32
Id.
33
JX23.
34
Id.
35
Id.

9
Plaintiff explained in response were “symbolic exit pay[.]”36 With that explanation,

the board met and finalized the separation. Ultimately, it had five parts: (1) the

Plaintiff would “hand back” his stock, (2) the Defendant would permit the Plaintiff

to carve out his preferred portion of the enterprise by transferring certain clients to

him and terminating, and permitting the Plaintiff to hire and work with, some of the

Defendant’s current employees, (3) the Plaintiff would receive $50,000.00, half in

July and half in August, (4) the Plaintiff would be relieved of his personal guarantee,

and (5) the parties would be separated and on their own way by September 1st (the

“Agreement”).

The Defendant’s counsel got to work preparing written agreements to

memorialize the Agreement. On July 11, 2024, Mr. Stefanovic sent draft documents

to the Plaintiff, including a resignation letter for the Plaintiff, a repurchase agreement

for the Plaintiff’s shares, and a founder separation agreement.37 But, upon review,

the Plaintiff had concerns about the non-compete and his ability to develop his

business after separation.38 He also noted that a few clients appeared to be missing

from the list in the drafts and that his additional compensation and removal as

36
JX27.
37
JX65; see also JX28 (email chain and draft documents).
38
See JX31.

10
guarantor should be reflected.39 By email dated July 24, Mr. Stefanovic requested

that the drafts be revised to make the corrections requested by the Plaintiff.40

All of Mr. Stefanovic’s concerns were addressed and the documents were

revised. By August 2, 2024, the final documents were ready for signature and were

sent to the Plaintiff through Dropbox Sign.41 Through a WhatsApp message on

August 12, 2024, the Plaintiff told Mr. Stefanovic he would be “back to California

on Wednesday”—August 14—“and [would] send [him] the signed documents.”42

Ultimately, August 14 came and went, and the Plaintiff still had not signed. But, on

August 16, the Plaintiff reached out about being removed from the guaranty and, in

doing so, explained he was “on the verge of signing [his] release documents[.]”43

Around this time, the Plaintiff also communicated with third parties about the

parties’ deal and plan moving forward, indicating the deal was final.44

39
Id.
40
JX33.
41
JX35. The final version of the founder separation agreement reflected $50,000.00 as
“final compensation” to the Plaintiff, JX70, while the stock repurchase agreement reflected
the repurchase price as $0.00001 per share for a total of $15.53. JX71.
42
JX36.
43
JX37. Removal proved a bit more complicated than contemplated, but the parties worked
their way through it. See JX38.
44
JX40.

11
Then came August 29. Despite these representations and indications, on

August 29, the Plaintiff attempted to reverse course.45 Through email to one of the

Defendant’s board members and the representative of SCV—excluding Mr.

Stefanovic—the Plaintiff tried to back out of the deal. He explained that “[o]ver the

last month, [he] looked at everything from a different angle,” and decided “with a

clearer head, . . . to change [his] mind about [his] departure from the company, and

[was then] consulting with [his] attorney on the next steps.”46 As for the reason he

changed his mind, he represented that he was “too exhausted and too blinded” in

trying to save the company that he “lost the perspective over what [he] invested” in

the business.47

Not only did this email conflict with the Plaintiff’s earlier representations, but

it was also sent after the Plaintiff had already received the monetary consideration

he expected from the Agreement ($50,000.00). He received the first $25,000.00

payment on July 31, 2024 (initiated by Mr. Stefanovic), and he initiated the second

payment to himself on August 26, 2024, three days before his email.48 All that was

left in the Agreement to be accomplished was: (1) the guaranty issue, which was

resolved on September 4, (2) the transfer of employees, which occurred by

45
JX44.
46
Id.
47
Id.
48
JX34; JX39.

12
September 1, and (3) the handing back of the Plaintiff’s shares, which the Defendant

effectuated by cancellation on September 4.49

Before this final step, and while he was protesting the deal he made, the

Plaintiff was making (or attempting to make) purchases on, and payments through,

his company credit card, which caused the Defendant concern.50 Those transactions

led the Defendant to issue a letter of termination to the Plaintiff on September 3,

2024, terminating him from his positions as consultant and director.51

D. The Demands

On September 20, 2024, the Plaintiff demanded to inspect the Defendant’s

books and records under Section 220 of the Delaware General Corporation Law.52

The Defendant responded through counsel on September 27, refusing to permit any

inspection.53 Specifically, the Defendant explained that the Agreement had been

fully consummated, leaving the Plaintiff with no standing to seek inspection of

books and records.54

49
See JX50; JX66. The cancellation was noted as a “buyback” for $50,000.00. JX50 at
HireApp-000418; accord JX55 (stock ledger as of March 5, 2025, on which the Plaintiff
is not reflected).
50
See JX62–63 (charts reflecting card charges).
51
JX45.
52
JX49.
53
JX50.
54
Id.

13
On October 23, 2024, the Plaintiff sent a second demand to inspect the same

books and records requested in September (the “Demand”).55 In the Demand, the

Plaintiff again self-identified as a stockholder, with the support of his initial stock

certificate, and he provided no response or counter to the standing issue raised by

the Defendant. On October 28, the Defendant, through counsel, reiterated its

September response and declined the request for inspection.

As referenced above, the Plaintiff then initiated this action on January 14,

2025, and after a brief stay, it was set for an expedited trial which I held on June 25.

This is my final post-trial report.

II. ANALYSIS

Through this action, the Plaintiff seeks a court-ordered production of the

books and records requested in the Demand under 8 Del. C. § 220.56 The parties’

primary, and gatekeeping, dispute is whether the Plaintiff has standing. As I will

explain, he does not. Costs should be shifted to the Defendant as the prevailing party,

but the parties should bear their own expenses, including attorneys’ fees.

55
JX51.
56
Because the Demand was served before February 17, 2025, the retroactivity date for the
recent amendments to Section 220, the prior version applies. See Del. Sen. Sub. 1 for S.B.
21, 153rd Gen. Assem. § 3 (Mar. 24, 2025) (“Sections 1 and 2 of this Act take effect on
the enactment of this Act and apply to all acts and transactions, whether occurring before,
on, or after the enactment of this Act, except that Sections 1 and 2 of this Act do not apply
to or affect any action or proceeding commenced in a court of competent jurisdiction that
is completed or pending, or any demand to inspect books and records made, on or before
February 17, 2025.”).

14
A. The Plaintiff does not have standing for a court-ordered inspection.

“To inspect books and records under Section 220, a plaintiff must establish

by a preponderance of the evidence that the plaintiff is a stockholder, has complied

with the statutory form and manner requirements for making a demand, and has a

proper purpose for conducting the inspection.”57 The first part of this three-part test

imposes a current ownership requirement. As emphasized recently by Vice

Chancellor Will:

The legislative intent behind the current ownership requirement of
Section 220(c) is not difficult to glean. A plaintiff must have first made
a demand at a time when she was a stockholder. And the plaintiff must
continue to be a stockholder when she initiates Section 220 litigation in
this court.58

This dual requirement is why many stockholder plaintiffs will file placeholder

books-and-records actions to preserve their standing pending a contemplated merger

or acquisition. Here, the Plaintiff needed to prove that he was a stockholder both at

the time of the Demand and at the time this litigation was filed. He failed to do so.

57
Pettry v. Gilead Scis., Inc., 2020 WL 6870461, at *9 (Del. Ch. Nov. 24, 2020), judgment
entered, (Del. Ch. 2020). “Proof by a preponderance of the evidence means proof that
something is more likely than not. It means that certain evidence, when compared to the
evidence opposed to it, has the more convincing force and makes you believe that
something is more likely true than not.” In re Oxbow Carbon LLC Unitholder Litig., 2018
WL 818760, at *48 n.478 (Del. Ch. Feb. 12, 2018), rev’d in part on other grounds sub
nom., Oxbow Carbon & Mins. Hldgs., Inc. v. Crestview-Oxbow Acq., LLC, 204 A.3d 482
(Del. 2019) (quoting Agilent Techs., Inc. v. Kirkland, 2010 WL 610725, at *13 (Del. Ch.
Feb. 18, 2010)).
58
Swift v. Hou. Wire & Cable Co., 2021 WL 5763903, at *4 (Del. Ch. Dec. 3, 2021).

15
In so holding, I look beyond the original stock certificate, relied upon by the

Plaintiff, and the current stock ledger, relied upon by the Defendant, which are in

conflict. Typically, either would be strong, or even conclusive, evidence, “as

Delaware courts require strict adherence to the Section 220 inspection demand

procedural requirements.”59 But this Court has “exclusive jurisdiction to determine

whether or not the person seeking inspection is entitled to the inspection sought.”60

Thus, the Delaware Supreme Court has acknowledged, in certain circumstances, that

“the Court of Chancery, in making its determination of a person’s status as a

stockholder of record, is empowered to examine all pertinent evidence with the view

of reaching a determination of where justice lies.”61

Vice Chancellor Glasscock expanded on the sound reasoning underlying this

framework in Knott Partners L.P. v. Telepathy Labs, Inc., where he explained:

There is great value in allowing corporations to rely on the stock ledger
in responding to purported demands by record stockholders under
Section 220. Any wholesale departure from this rule would involve

59
Knott P’rs L.P. v. Telepathy Labs, Inc., 2021 WL 5493092, at *4 (Del. Ch. Nov. 23,
2021) (citation modified); see also Viele v. Devaney, 679 A.2d 993, 999 (Del. Ch. 1996)
(“The stock certificate is strong evidence that [the named party] owned those shares.”).
60
8 Del. C. § 220(c) (Aug. 1, 2010) (amended Mar. 24, 2025).
61
Rainbow Nav., Inc. v. Pan Ocean Nav., Inc., 535 A.2d 1357, 1359 (Del. 1987) (citation
modified); cf. Pogue v. Hybrid Energy, Inc., 2016 WL 4154253, at *3–4 (Del. Ch. Aug. 5,
2016) (holding “that inclusion on a stock ledger is prima facie evidence of stock ownership,
but . . . the corporate defendant may rebut that presumption by clear and convincing
evidence” and questioning, and declining to follow, Rainbow).

16
great potential for mischief and inefficiency. It would, moreover, be
incompatible with the required strict reading of the statute.62

But he went on to explain that “[t]hese considerations cannot amount to a license for

corporations to manipulate their stock ledgers to frustrate inspection rights[.]”63

Looking at the suspicious facts before him, he held:

[W]here a corporation has failed to update its stock ledger to reflect a
new stockholder on a date certain, but is otherwise aware of the bona
fides of the stockholder’s status as of that date, and concedes in
documentation circulated outside the corporation that the same entity
was in fact a stockholder as of that date, that corporation cannot rely
on the deficient stock ledger to deprive the stockholder of its inspection
rights under Section 220.64

This type of inequitable positioning is also what compelled Vice Chancellor

David, as then-Magistrate in Chancery, to look deeper than a purported stock

cancellation in Myers v. Academy Securities.65 Therein, the corporate defendant

conceded that the plaintiff was a stockholder at one time, but argued that his shares

were properly cancelled before he served his demand for books and records. 66

Looking at the evidence before her, the Vice Chancellor disagreed. In her post-trial

62
Knott P’rs, 2021 WL 5493092, at *6.
63
Id.
64
Id. (emphasis in original).
65
2023 WL 4782948, at *1 (Del. Ch. July 27, 2023), adopted, (Del. Ch. 2023); accord
Holtzman v. Gruen Hldg. Corp., 1994 WL 444756, at *2–3 (Del. Ch. Aug. 5, 1994)
(acknowledging that this Court can look deeper when “reason appears to question [a
ledger’s] authenticity or accuracy”).
66
Academy Sec., 2023 WL 4782948, at *8.

17
ruling, she showed how the defendant’s justifications continued to shift in

incredulous ways and the evidence supporting any bases for cancellation was

weak.67 She thus concluded that the shares were not validly cancelled, and the

plaintiff remained a stockholder with standing to seek a court-ordered inspection.68

The Plaintiff’s reliance on Academy Securities is understandable. Like

Academy Securities, the Defendant, here, also has a stock ledger which does not list

the Plaintiff as a stockholder, solely because of a cancellation initiated by the

Defendant.69 But the similarities end there. Unlike in Academy Securities, the reason

for the cancellation here is clear, consistent, and valid—the parties entered into a

binding separation agreement (the Agreement, as earlier defined), through which the

Plaintiff agreed to “hand back” his shares; when he did not do so affirmatively, the

Defendant did so for him through the cancellation. Such was the natural next step to

consummate the parties’ transaction. Through that transaction, and as of September

4, at the latest, the Plaintiff was no longer a stockholder, and he therefore lacks

standing.

67
Id. at *11.
68
Id.
69
See JX55 (stock ledger as of March 5, 2025).

18
1. The parties agreed to the Plaintiff’s separation from the
Defendant, which included the return of his shares.

The Plaintiff contends the Agreement is not binding and makes several

arguments against its validity or enforceability. I address and reject them in turn.

First, the Plaintiff argues that the Agreement was not final because he did not

sign the final documents. Not so. By June 19, the parties had agreed on all material

terms in the Agreement.70 It does not matter that the drafts were not signed, because

the parties’ agreement was not expressly conditioned on memorialization.

“Generally, when parties to a contract have agreed on all substantial terms of the

contract and intend to be bound, the fact that one of the parties understood that the

contract should be formally drawn up and put in writing does not leave the

transaction incomplete” unless the parties had “a positive agreement that it should

not be binding until so reduced in writing and formally executed.”71 The evidence

before me reflects no such positive agreement.

Second, the Plaintiff is incorrect that the “inconsistencies in the

characterization of what was contemplated consideration for shares versus

consulting service compensation”72 reflect that there was no meeting of the minds.

70
See JX23.
71
Schwartz v. Chase, 2010 WL 2601608, at *8 (Del. Ch. June 29, 2010).
72
D.I. 27 at 14.

19
There is no material inconsistency regarding the role or purpose of the $50,000.00

payment, and the evidence reflects a clear meeting of the minds.

Under Delaware contract law, “[t]o form an enforceable contract, the parties

must have a meeting of the minds on all essential terms.”73 Whether they have, and

whether they “manifested an intent to be bound is to be determined objectively based

upon their expressed words and deeds as manifested at the time rather than by their

after-the-fact professed subjective intent.”74 My “inquiry is whether a reasonable

negotiator in the position of one asserting the existence of a contract would have

concluded, in that setting, that the agreement reached constituted agreement on all

of the terms that the parties themselves regarded as essential and thus that agreement

concluded the negotiations.”75

The answer, here, is “yes.” The parties’ email communications reflect a

meeting of the minds on all essential terms, to which the Plaintiff objectively

manifested his intent to be bound. Those communications are clear and direct about

the terms of the Agreement. The “get” and the “give” was equally clear; the Plaintiff

would get $50,000.00 over two months, several clients and employees (a carve out

73
Kotler v. Shipman Assocs., LLC, 2019 WL 4025634, at *16 (Del. Ch. Aug. 21, 2019),
judgment entered, (Del. Ch. 2019).
74
Black Horse Cap., LP v. Xstelos Hldgs., Inc., 2014 WL 5025926, at *12 (Del. Ch. Sep.
30, 2014) (citation modified).
75
Sarissa Cap. Domestic Fund LP v. Innoviva, Inc., 2017 WL 6209597, at *21 (Del. Ch.
Dec. 8, 2017), judgment entered, (Del. Ch. 2019) (citation modified).

20
from his non-compete and non-solicit), and relief from the guaranty, and he would

“give” to the Defendant—the Defendant’s “get”—his stock, separating him from the

business as it goes in a different direction. The Plaintiff confirmed his agreement to

those terms several times both to the Defendant’s representatives and third parties.

He also expressly manifested that he would sign the documents drafted by the

Defendant’s counsel to memorialize the Agreement. The Plaintiff’s attempt to

segregate the Agreement into discreet pieces, whereby the $50,000.00 must be

payable as either compensation or stock repurchase, is unavailing. The parties’

global resolution, which I must interpret based on its plain meaning, did not tie the

$50,000.00 to any specific “give,” and was just another factor in the consideration.76

Third, the Plaintiff also appears to contest the sufficiency of the $50,000.00,

if treated as consideration for his shares. At best, this argument is akin to buyer’s

remorse, in that the Plaintiff may now feel the deal was not a good one, particularly

when compared to the Defendant’s initial offer which would have valued his shares

at $100,000.00. But that is no basis on which to undo the Agreement. After all,

“[p]arties have a right to enter into good and bad contracts[;] the law enforces

both.”77 And to the extent the Plaintiff is inviting me to judge the adequacy of the

76
“When interpreting a contract, the court’s role is to effectuate the parties’ intent based
on the parties’ words and the plain meaning of those words.” Zimmerman v. Crothall, 62
A.3d 676, 690 (Del. Ch. Jan. 31, 2013).
77
Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010).

21
consideration myself, I decline to do so; this Court limits its inquiry “into

consideration to its existence and not whether it is fair or adequate. Mere inadequacy

of consideration, in the absence of any unfairness or overreaching, does not justify”

disregarding any otherwise binding agreement.78

Finally, the Plaintiff argues that because the parties continued to negotiate the

complications of transitioning one final client, they never reached a final agreement.

I disagree. The Plaintiff’s June 19 email reflects that the parties had a plan to

transition that client out of the Defendant but that “the paperwork of switching is

more complicated compared to other clients.”79 Despite recognizing as much, the

parties’ objective manifestations demonstrate that the mechanics of that transfer

were not material to the separation and the material terms were locked in.80

The Plaintiff’s challenges fail, and the Agreement is binding. Through their

email communications and board meetings, the parties reached agreement on all

material terms of the Plaintiff’s separation from the Defendant. Thereafter, the

78
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (citation modified);
see also Glenn v. Tide Water Associated Oil Co., 101 A.2d 339, 344 (Del. Ch. 1953) (“A
court of equity does not attempt to weigh the actual value nor to insist upon the equivalent
in contracts, when each party had equal competence.”).
79
JX23.
80
See Eagle Force Hldgs. LLC v. Campbell, 187 A.3d 1209, 1230 (Del. 2018) (“[A]ll
essential or material terms must be agreed upon before a court can find that the parties
intended to be bound by it and, thus, enforce an agreement as a binding contract. What
terms are material is determined on a case-by-case basis, depending on the subject matter
of the agreement and on the contemporaneous evidence of what terms the parties
considered essential.”) (citations omitted).

22
Plaintiff confirmed he would sign the drafts shortly. In doing so, he reaffirmed his

unequivocal manifestation of assent to be bound. His change of mind, buyer’s

remorse, and litigation-induced arguments are unpersuasive and herein rejected.

2. The Agreement was fully consummated.

Not only did the Plaintiff enter into a binding agreement, but the Agreement

was also fully consummated before the Plaintiff made the Demand and brought this

action. The Plaintiff does not dispute that he (1) received the $50,000.00, (2) took

clients and employees with him to his new enterprise, (3) is no longer personally

bound as guarantor, and (4) had his shares cancelled by the Defendant. The only

thing “missing” is (5), that the parties be separated and on their own way by

September 1. The Plaintiff contests how (4) was accomplished and makes much of

the “missing” (5); I address those arguments in turn.

The Plaintiff appears to argue that the Defendant was wrong to cancel his

shares on its end. I struggle to understand this position. A material term in the

Agreement was that the Plaintiff would “hand back” his shares. When everything

else was complete and the shares were not “handed back,” the Defendant was within

its rights under the Agreement to cancel the shares on its end.

The Plaintiff also appears to argue that the delayed separation—September 4

instead of September 1—supports a finding that there was no binding agreement in

the first place or the Agreement has not been timely completed, relieving him of the

23
consequences thereof. Not so. Merely stating a date in an agreement does not make

such “of the essence.”81 Rather, “[t]he law presumes contracting parties are familiar

with time of the essence clauses and that they know how to make time of the essence

if they so desire, especially in contracts between sophisticated business entities[.]”82

Absent such a provision, Delaware law implies a reasonable time.83 Here, the

Agreement was no expressly conditioned on September 1 as a drop-dead date.

Further, September 4, as compared to September 1, was a reasonable separation date

and provides no basis on which to rescind, void, or cancel the parties’ agreement.

The Agreement was fully consummated as of September 4.

3. The Plaintiff has failed to prove that he was a stockholder
when he made the Demand and filed this action.

The Agreement was binding on the Plaintiff and fully consummated with the

cancellation of his shares on September 4, 2024. That cancellation was appropriate,

and the Plaintiff has not provided any basis on which I should declare it otherwise.

With that cancellation, the Plaintiff was no longer a stockholder of the Defendant

and he has, therefore, failed to meet his burden to prove standing to seek a court-

ordered inspection under Section 220.

81
HIFN, Inc. v. Intel Corp., 2007 WL 1309376, at *10 (Del. Ch. May 2, 2007).
82
Id.
83
Id.

24
B. Each side should bear its own fees under the American Rule, but
costs should be shifted in the Defendant’s favor.

Through the pre-trial order, the parties each asked that I shift fees in their

favor. I see no basis to do so. I do, however, deem the Defendant the overall

“prevailing party,” and accordingly shift costs in its favor.

“Under the American Rule, litigants are expected to bear their own costs of

litigation absent some special circumstances that warrant a shifting of attorneys’

fees, which, in equity, may be awarded at the discretion of the court.”84 Conversely,

under Court of Chancery Rule 54(d), “costs shall be allowed as of course to the

prevailing party unless the Court otherwise directs.”

In short, the briefing and trial presentations are devoid of any legal argument

or support from which I can find an exception to the American Rule. But the

Defendant is “the party who successfully prevail[ed] on the merits of the main

issue”85 making it the prevailing party entitled to recover its costs.

III. CONCLUSION

For these reasons, the Plaintiff lacks standing to pursue relief in this action

and his complaint should be dismissed. The parties should meet and confer about the

costs shifted to the Defendant and, if they are unable to agree, the parties can submit

84
Beck v. Atl. Coast PLC, 868 A.2d 840, 850 (Del. Ch. 2005).
85
Adams v. Calvarese Farms Maint. Corp., 2011 WL 383862, at *3 (Del. Ch. Jan. 13,
2011) (emphasis in original).

25
competing proposals. I will not delay, however, the time for exceptions pending a

final decision on costs; I have designated this a final report, and exceptions may be

filed under the expedited schedule in Court of Chancery Rule 144(d)(2).

26