Atlantic Basin Refining, Inc. v. JP Energy Partners, LP et al

DISTRICT COURT OF THE VIRGIN ISLANDS
DIVISION OF ST. CROIX
ATLANTIC BASIN REFINING, INC., 	)
)
Plaintiff, 	)
v. 	)
) 	Civil Action No. 2015-0071
ARCLIGHT CAPITAL PARTNERS, LLC, 	)
and JP ENERGY PARTNERS, LP, 	)
)
Defendants. 	)
__________________________________________)
Attorneys:
Andrew C. Simpson, Esq.,
Emily A. Shoup, Esq.,
St. Croix, U.S.V.I.
Joseph P. Klock, Jr., Esq.,
Coral Gables, FL
For Plaintiff
Charles E. Lockwood, Esq.,
George Hunter Logan, Esq.,
St. Croix, U.S.V.I.
Blair G. Connelly, Esq.,
Jessica D. Rostoker, Esq.,
Michael A. Watsula, Esq.,
New York, NY
For Defendants
MEMORANDUM OPINION
Lewis, Chief Judge
THIS MATTER comes before the Court on Defendants ArcLight Capital Partners, LLC
(“ArcLight”) and JP Energy Partners, LP’s (“JP Energy”) (collectively “Defendants”) “Motion to
Dismiss or, in the Alternative, to Transfer Pursuant to 28 U.S.C. § 1404” (Dkt. No. 19); Plaintiff
Atlantic Basin Refining, Inc.’s (“Plaintiff” or “ABR”) “Response to Defendants’ Motion to
Dismiss” (Dkt. No. 30); and Defendants’ “Reply Memorandum of Law” (Dkt. No. 34). For the
reasons discussed below, the Court will grant in part and deny in part Defendants’ Motion to
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Dismiss or Transfer. Specifically, the Court will (1) deny Defendants’ Motion to Dismiss based
on the forum selection clause and the Motion to Transfer Pursuant to 28 U.S.C. § 1404; (2) grant
Defendants’ Motion to Dismiss Counts I, V, and VII with prejudice as barred by the Bankruptcy
Court’s Sale Order; (3) grant Defendants’ Motion to Dismiss Count III with prejudice for failure
to state a cause of action; (4) grant Defendants’ Motion to Dismiss Counts II and IV, without
prejudice, and with leave to amend, for failure to satisfy the Iqbal/Twombly pleading requirements;
and (5) deny Defendant’s Motion to Dismiss Count VI.
I. 	BACKGROUND1
This case arises out of Plaintiff ABR’s attempt to acquire Hovensa, LLC (“Hovensa”), the
prior owner of an oil refinery and storage facility located in St. Croix, Virgin Islands. (Dkt. No. 14
¶¶ 8, 11). Plaintiff is a Virgin Islands corporation with its principal place of business in St. Croix.
Id. ¶ 1. Defendant ArcLight is a Delaware limited liability company with its principal place of
business in Massachusetts. Id. ¶ 2. Defendant JP Energy is also a Delaware limited liability
company with its principal place of business in Texas. Id. ¶ 3. ArcLight is a majority owner of JP
Energy. Id. ¶ 4.
1 In deciding a Rule 12(b)(6) motion, the court may consider the facts alleged in the complaint and
its attachments, and matters of public record. Pension Ben. Guar. Corp. v. White Consol. Indus.,
Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). Courts may also consider “an undisputedly authentic
document . . . if the plaintiff’s claims are based on the document.” Id. Moreover, the facts as alleged
in the complaint are taken as true for purposes of a motion to dismiss for failure to state a claim.
S.H. v. Lower Merion Sch. Dist., 729 F.3d 248, 256 (3d Cir. 2013); Stapleton v. WenVI, Inc., 2014
WL 3765855, at *1 (D.V.I. July 30, 2014). The background facts here are taken from Plaintiff’s
Amended Complaint and its exhibits, exhibits attached to Defendants’ Motion to Dismiss, and the
record in the Hovensa bankruptcy case, In re Hovensa, L.L.C., Case No. 15-BK-10003 (D.V.I.
Sept. 9, 2015), specifically, Hovensa’s “First Day Motion” (Dkt. No. 15) and the Bankruptcy
Court’s “Sale Order” (Dkt. No. 394).
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ABR tried to acquire Hovensa’s oil refinery and related storage and terminal assets, which
had operated in St. Croix since the 1960s until it ceased operations in 2012. Id. ¶¶ 8-11. After an
intensive application process, and defeating 141 other candidates, ABR was designated as the
purchaser and proceeded to negotiate a Purchase and Sale Agreement with Hovensa. Id. ¶¶ 19-23.
Closing on the Purchase and Sale Agreement was conditioned on ABR entering into a new
Operating Agreement with the Government of the Virgin Islands, which had to be ratified by the
Legislature of the Virgin Islands. Id. ¶¶ 25, 28. However, the Legislature rejected the Operating
Agreement on December 19, 2014. Id ¶ 28.
Securing a financial partner was a necessary component of ABR’s ability to close on the
Purchase and Sale Agreement with Hovensa. Id. ¶¶ 35-36. To that end, ABR introduced
Defendants to the transaction and brought them on to be ABR’s financial partner and co-equal
partner in the operation of the terminal and storage facility. Id. ¶ 29. According to Plaintiff,
identifying a financial partner and its joinder in the transaction was “time-sensitive.” Id. ¶ 35.
Plaintiff alleges that “[o]nce the financial partner had been identified, the timing of the sale process
would preclude any opportunity for ABR to [secure a] replace[ment].” Id. Plaintiff further alleges
that “Defendants knew [this] to be the case.” Id.
Due to the “high value and uniqueness” of the confidential “business and operational plans,
strategies, projections, financial models, engineering studies, and other information developed by
ABR and its consultants” for the refinery and its related storage and terminal assets, ABR and
ArcLight signed a Mutual Nondisclosure Agreement (“NDA”) on February 10, 2015. Id. ¶¶ 30,
32; (NDA, Dkt. No. 14-1 Ex. A). The NDA expressly prohibited the use or disclosure of
Confidential Information exchanged between the parties “except to evaluate and engage in
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discussions concerning a potential business relationship between the parties.” (NDA ¶ 3). Under
the NDA, “Confidential Information” was broadly defined as encompassing:
[A]ny information concerning any verbal discussions and negotiations between
ABR and JP Energy concerning the Opportunity,2 and all business plans, models,
notes, analyses, compilations, studies, interpretations, business platforms, strategic
interests, 	customer 	information, 	vendor 	information, 	contractor 	information,
pricing, trade secrets, proprietary data, data model(s), data integrators, business
rules and any related adapters, technical data, designs, drawings, specifications,
techniques, models, data, software processes and/or systems, documents, source
code, 	object 	code, 	diagrams, 	flow-charts, 	research, 	development, 	processes,
procedures, analysis and/or analytics, “know-how,” new product or new technology
information, prototypes, samples, information capable of being embodied in a
patent application or copyright application or any international equivalent thereof,
product copies, quantity of products and kind of products licensed, product returns,
unannounced products, manufacturing, development or marketing techniques and
materials, development or marketing timetables, strategies and development plans,
including trade names, trademarks, customer, supplier or personal names and other
information related to customers, suppliers or personnel, pricing policies, financial
information, plant and equipment and other information of a similar nature, and any
trade secrets or nonpublic business information disclosed by one Party to the other
Party . . .
Id. ¶ 2. Publicly available information or information “already in the possession of the Receiving
Party . . . obtained by the Receiving Party from a third party . . . [or] independently developed by
the Receiving Party,” was excluded by the NDA from being designated as “Confidential
Information.” Id. ¶ 2.1. In addition, while nothing in the NDA committed the parties to proceed
with any partnership, id. ¶ 6, in the event of a breach of the non-disclosure or confidentiality
provisions, id. ¶¶ 3-4, the NDA authorized either party to obtain injunctive relief, monetary
damages, and any other remedies to which the party may be entitled at law. Id. ¶ 10. The NDA
2 Per the NDA, “the Opportunity” was defined as a “business opportunity of mutual interest [that
the parties wished to explore], namely potential terminalling, tank leasing, and potential crude oil
supply . . . related to ABR’s purchase of . . . ‘Hovensa’s Oil Refinery’ and/or ABR’s purchase of
100% of the membership interests of Hovensa, LLC.” (NDA ¶ 1).
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also contained a Choice of Law provision which stated that the Agreement “shall be governed by
the laws of the State of Delaware.” Id. ¶ 15.
In connection with the dealings between the parties and pursuant to the NDA, ABR
disclosed Confidential Information to Defendants. (Dkt. No. 14 ¶ 34). According to Plaintiff, the
materials “allowed Defendants to fully understand the economic opportunities afforded by the
facility and to have access to a fully developed plan to realize those opportunities.” Id.
On March 10, 2015, ABR, ABR’s subsidiary Atlantic Basin Refining Holdings, LLC
(“ABRH”), and JP Energy St. Croix, LLC, entered into a Letter Agreement “which included a
structure for partnering on the [Hovensa] transaction.” (Dkt. No. 14 ¶ 43; Letter Agreement, Dkt.
No. 19 Ex. A).3 The Letter Agreement contemplated, among other things, the formation of St.
Croix Terminal (“SCT”), to be jointly owned by JP Energy St. Croix and ABR. (Dkt. No. 14 ¶¶
41, 44). Under the partnership, ABRH—which was to acquire all of Hovensa’s membership
interests—would sublease the storage and terminal facilities to SCT. Id. ¶ 43.
To facilitate the transaction, JP Energy was to prepay ABRH $125 million representing
SCT’s base rent for the storage and terminal facilities. Id. ¶ 44. ABRH would then use these funds
“to pay various closing costs and expenses in order to acquire [Hovensa’s] membership interests
and thereby acquire the Refinery Facility.” Id. Defendants also committed up to $65 million to
fund ABR’s overhead and other post-closing costs. Id. ¶ 45. In total, Defendants committed $190
million to this project. Id.
3 	In the Amended Complaint, Plaintiff generally refers to JP Energy without differentiating
between JP Energy and JP Energy St. Croix—although it is clear from the Letter Agreement that
it was signed by JP Energy St. Croix. In its Response, Plaintiff describes JP Energy St. Croix as a
“special purpose entity . . . created for the [Letter Agreement].” (Dkt. No. 30 at 26). Defendants,
in their Motion to Dismiss, describe Defendants as affiliates of JP Energy St. Croix. (Dkt. No. 19
at 25). JP Energy St. Croix is not a party to this action.
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The Letter Agreement contains several provisions which are relevant to the issues
presented. Paragraph 9, titled “Governing Law; Choice of Forum,” provides as follows:
This Agreement is governed by, and will be construed in accordance with,
the laws of the State of Texas, without regard to any conflict of law
provisions. Each party irrevocably and unconditionally agrees that it will
not commence any action, litigation or proceeding of any kind whatsoever
against any other party in any way arising from or relating to this Agreement
and all contemplated transactions, including, but not limited to, contract,
equity, tort, fraud and statutory claims, in any forum other than the U.S.
District Court for the Northern District of Texas or the courts of the State
of Texas, and any appellate court from any thereof. Each party irrevocably
and unconditionally submits to the exclusive jurisdiction of such courts and
agrees to bring any such action, litigation or proceeding only in the U.S.
District Court for the Northern District of Texas or the courts of the State
of Texas. Each party agrees that a final judgment in any such action,
litigation or proceeding is conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
(Letter Agreement ¶ 9). Meanwhile, Paragraph 10, titled “Conditions Precedent,” provides:
The parties hereto agree that the following shall be conditions precedent to the
terms contained herein (other than paragraph 11, Confidentiality) becoming
binding obligations of the parties:
(a) 	The Senate of the U.S. Virgin Islands ratifies that certain Operating
Agreement entered into by and among the Government of the U.S. Virgin
Islands, Holdings4 and Atlantic Basin Refining, Inc., with Hovensa, LLC to
join in and consent to the Operating Agreement, dated as of October 29,
2014 (the “Operating Agreement”);
(b) 	Holdings forms SCT and the parties finalize and execute the Sublease
for the Terminal Assets in form and substance satisfactory to both
parties prior to the closing on the purchase of the membership interests
of Hovensa, LLC, with the funding of the Base Rent to be paid at time of
said closing; and
(c) 	Holdings 	closes 	on 	the 	purchase 	of 	the 	membership 	interests 	of
Hovensa, LLC pursuant to that certain Purchase and Sale Agreement
entered into by and among Holdings, Atlantic Basin Refining, Inc.,
4 In the Letter Agreement, “ABRH” is referred to as “Holdings.”
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Hovensa, LLC, Hovensa Holdings L.L.C. and Hess Oil Virgin Islands
Corp., in the form agreed upon by said parties on December 11, 2014
(the 	"Purchase 	and 	Sale 	Agreement") 	within 	thirty 	(30) 	days 	of
ratification of the Operating Agreement by the Senate of the U.S. Virgin
Islands;
(d) 	Holdings and JPE5 negotiate and execute a limited liability company
agreement of SCT in form and substance satisfactory to both parties,
that sets forth the governance and other terms relating to the parties’
joint ownership of SCT; and
(e) 	The 	satisfactory 	completion 	by 	JPE 	of 	business, 	safety, 	tax,
environmental, 	accounting 	legal 	and 	other 	due 	diligence. 	The
management team and investment committee of JPE's owner have
reviewed this Agreement and are supportive of the Transaction. Final
approval by such investment committee, which can be obtained within
the proposed diligence period, is required prior to the execution of
definitive documentation.
(Letter Agreement ¶ 10).
Defendants’ funding commitment and support for the partnership structure was set out in
a letter dated May 18, 2015, that was sent to the company marketing Hovensa’s assets. Id. ¶ 46.
Based on Defendants’ representations, ABR used this letter “to demonstrate to Hovensa that
[ABR] had the ability to close on the Purchase and Sale Agreement.” Id. Then, according to
Plaintiff, during June and July 2015, negotiations over the terms of the partnership became fraught
with uncertainty as Defendants “unilaterally” attempted to “change the structure of the transaction
from a long-term lease of the terminal facility to SCT to a transaction whereby the title to the
terminal facility would be transferred to JP Energy.” Id. ¶¶ 47-53. Plaintiff rejected this change in
the partnership because it eliminated its interest in the storage and terminal facilities. Id. ¶¶ 47-48.
Plaintiff alleges that, “Defendants pursued this tactic knowing that if they withdrew their financial
support at that late stage, it would be highly unlikely that ABR would secure another financial
5 In the Letter Agreement, JPE refers to JP Energy St. Croix, LLC.
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partner in time to close on the Purchase and Sale Agreement [with Hovensa], and that ABR would
lose the opportunity to acquire the Refinery Facility.” Id. ¶ 52.
Without 	Plaintiff’s 	knowledge 	or 	participation, 	Defendants 	entered 	into 	separate
negotiations with Hovensa to purchase—through an ArcLight subsidiary—Hovensa’s storage and
terminal facilities. Id. ¶ 54. On September 15, 2015, Hovensa filed for bankruptcy and an auction
was held to sell its assets on November 10, 2015. (Sale Order at 2). ABR did not participate in
Hovensa’s bankruptcy auction. (See Sale Order at 2-4, 7-8).
Limetree Bay Holdings, LLC (“Limetree”), ArcLight’s subsidiary, ultimately purchased
the storage and terminal assets during Hovensa’s bankruptcy auction, for $190 million—the same
amount that Defendants had initially committed to the aborted transaction with Plaintiff. Id. ¶¶ 54-
55. 6 A Bankruptcy Sale Order was entered on December 1, 2015, Paragraph 10 of which reads as
follows:
Except as expressly permitted by the Asset Purchase Agreement or this Sale
Order, all Persons and entities holding Interests (other than the Permitted Liens
and Assumed Liabilities) are hereby forever barred, estopped and permanently
enjoined from asserting their respective Interests against the Buyer, any of its
Affiliates and Subsidiaries, and any of their respective Representatives, and
each of their respective property and assets, including, without limitation, the
Purchased Assets.
(Sale Order ¶ 10). The Sale Order defines “Interests” as including:
[A]ll of the following, in each case to the extent against or with respect to the
Debtor or in, on, or against or with respect to any of the Purchased Assets . . .
claims (as defined in section 101(5) of the Bankruptcy Code), debts (as defined
in section 101(12) of the Bankruptcy Code), encumbrances, obligations,
Liabilities, demands, guarantees, actions, suits, defenses, deposits, credits,
allowances, options, rights, restrictions, limitations, contractual commitments,
rights of first refusal, rights of setoff or recoupment, or interests of any kind or
6 On September 4, 2015—prior to the bankruptcy auction—Limetree executed a stalking horse
agreement with Hovensa, whereby it agreed to buy the terminal assets for a total purchase price of
$190 million, subject to higher or better bids at the auction. (First Day Motion ¶¶ 17, 21; see also
Dkt. No. 14 ¶ 55).
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nature whatsoever, whether known or unknown, legal or equitable, matured or
unmatured, contingent or noncontingent, liquidated or unliquidated, asserted or
unasserted, whether arising prior to or subsequent to the commencement of this
Chapter 11 Case, whether imposed by agreement, understanding, Law, equity
or otherwise[.]
Id. ¶ V.
Plaintiff alleges that, from the outset, Defendants acted “under false pretenses” by entering
into negotiations—not with the intention of actually forming a partnership with ABR—but “with
the purpose and intent to convert ABR’s activities and efforts . . . to gain access to [Hovensa] and
the Refinery Facility, to co-opt for their own purpose the good will and preferred negotiating
position enjoyed by ABR (while excluding ABR from the transaction), and ultimately to execute
an [agreement] to acquire the terminal facility only.” (Dkt. No. 14 ¶ 58). In doing so, Plaintiff
claims that Defendants breached the parties’ NDA by “improperly us[ing]” Confidential
Information provided by Plaintiff, including its “plans, strategies, projections, engineering
information, and financial models,” to purloin ABR’s business opportunity with Hovensa for itself.
Id. ¶¶ 58-60. In addition to Confidential Information, Plaintiff alleges that Defendants also
benefitted from Plaintiff’s “position in the transaction . . . contacts with Hovensa and the
government, prior negotiations with the EPA, prior negotiated documents with Hovensa and the
[G]overnment of the Virgin Islands, and knowledge and diligence regarding the Refinery Facility.”
Id. ¶ 59. Plaintiff further alleges that, as a result, Defendants’ actions “divert[ed] the transaction to
ArcLight” and “deprived ABR of the substantial profit it expected to obtain from reconfiguration,
restart, and operation of the refinery,” and also robbed ABR of its 50% share in SCT—whose
storage and terminal business would have generated millions of dollars per year in profit. Id. ¶¶
60-61.
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Plaintiff ABR commenced suit against Defendants in this Court on November 16, 2015
(Dkt. No. 1), and filed an Amended Complaint on January 22, 2016 (Dkt. No. 14). Plaintiff alleges
several 	causes 	of 	action: 	Tortious 	Interference 	with 	Existing 	and 	Prospective 	Business
Relationships (Count I); Breach of Contract (Count II); Breach of Contract (Injunction) (Count
III); Misappropriation (Count IV); Unjust Enrichment (Count V); Quantum Meruit (Count VI);
and Breach of Fiduciary Duty (Count VII). (Dkt. No. 14 ¶¶ 63-107).
Defendant filed the instant Motion to Dismiss or Transfer (Dkt. No. 19), seeking dismissal
of the Amended Complaint or, in the alternative, transfer of the case to the District Court for the
Northern District of Texas pursuant to 28 U.S.C. § 1404. (Dkt. No. 19 at 13-18). Defendants’
primary argument for both the dismissal and transfer is that ABR brought this action in the wrong
forum in violation of the Letter Agreement’s forum selection clause. (Letter Agreement ¶ 9).
Alternatively, Defendants argue that dismissal of Plaintiff’s claims is warranted on two grounds:
1) Plaintiff’s claims are extinguished by the Bankruptcy Court’s Sale Order as “interests”
connected to, or arising from, Hovensa’s purchased assets; and 2) Plaintiff otherwise fails to state
claims sufficient to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).
(Dkt. No. 19 at 18-44). Plaintiff opposed Defendants’ Motion (Dkt. No. 30), and Defendants filed
a Reply (Dkt. No. 34).
II. 	FORUM SELECTION
Defendants seek dismissal of Plaintiff’s Amended Complaint pursuant to Fed. R. Civ. P.
12(b)(6) or, alternatively, to transfer the case to the U.S. District Court for the Northern District of
Texas pursuant to 28 U.S.C. § 1404(a). (Dkt. No. 19 at 13-18; Dkt. No. 34 at 3-8). Defendants’
Motion to Dismiss or Transfer is based on the forum selection clause contained in the Letter
Agreement. Id. Defendants argue that Paragraph 10 of the Letter Agreement requires the parties
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to construe the Agreement in accordance with the laws of the state of Texas and to litigate any
claims “arising from or relating to” the “contemplated transactions” in the Letter Agreement only
in Texas. (Letter Agreement ¶ 9; Dkt. No. 34 at 3).7 Plaintiff counters that the forum selection
clause was not triggered because the Letter Agreement was subject to several conditions
precedent—which were not met—before the contract as a whole became binding upon the parties.
(Dkt. No. 30 at 6-8).
Because the Court finds that the forum selection clause in the Letter Agreement was not
triggered under the circumstances here, and that transfer pursuant to 28 U.S.C. § 1404(a) is also
unavailing, Defendants’ Motion to Dismiss or Transfer based on the forum selection clause will
be denied.
A. 	Applicable Legal Principles
The Third Circuit recognizes two avenues for challenging a plaintiff’s choice of forum
based on the applicability of a forum selection clause. One avenue is to file a motion to dismiss
under Rule 12(b)(6). Salovaara v. Jackson Nat’l Life Ins. Co., 246 F.3d 289, 298 (3d Cir. 2001).
Alternatively, a motion to transfer venue may be filed pursuant to 28 U.S.C. § 1404. Id. at 297-98.
Neither avenue provides the relief that Defendants seek here.
In view of Defendants’ reliance on the forum selection clause in the Letter Agreement, the
Court must first determine whether the clause applies, and thus will turn to an interpretation of the
language of the Agreement. In that regard, the Court will apply Virgin Islands contract law in this
7 	While Defendants ArcLight and JP Energy were not signatories to the Letter Agreement,
Defendants contend that the forum selection clause applies to them even as non-signatories
because they are affiliates of one of the signatories, JP Energy St. Croix. (Dkt. No. 19 at 15-16;
Dkt. No. 34 at 7-8). Plaintiff argues to the contrary. (Dkt. No. 30 at 15-16). The Court need not
address this issue in light of its ultimate ruling that the forum selection clause does not apply here.
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diversity action because contract interpretation is “quintessentially [a] substantive [issue], rather
than [a] procedural [one].” Collins on behalf of herself v. Mary Kay, Inc., 874 F.3d 176, 181 (3d
Cir. 2017) (a federal court with diversity jurisdiction must apply state law to substantive issues
and federal law to procedural issues) (citing Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)).8
Generally, in applying principles of contract interpretation, a court must first determine
whether the provision’s language states the parties’ intentions clearly and unambiguously.
Citibank, N.A. v. Chammah, 2001 WL 1568553, at *5 (Terr. V.I. Oct. 2, 2001); see also Forbau
v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994) (“When construing a contract, the court’s
primary concern is to give effect to the written expression of the parties’ intent.”). To be
unambiguous, a contract clause must be reasonably capable of only one meaning. Walker v. Virgin
Islands Waste Mgmt. Auth., 2015 WL 404007, at *4 n.6 (V.I. Super. Jan. 26, 2015) (finding a
contract clause unambiguous because there was “only one way to interpret” it); Addie v. Kjaer,
2009 WL 482497, at *5 (D.V.I. Feb. 23, 2009) (“To be unambiguous, an agreement must be
reasonably capable of only one construction.”) (quoting Washington Hosp. v. White, 889 F.2d
1294, 1301 (3d Cir.1989)); Virgin Islands Mar. Serv., Inc. v. Puerto Rico Mar. Shipping Auth.,
978 F. Supp. 637, 647 (D.V.I. 1997), aff’d, 162 F.3d 1153 (3d Cir. 1998) (finding a contract
unambiguous because when each word of the contract is “given its natural meaning without any
need for interpretation, implication or importation,” there was “only [one] legally acceptable
construction”); see also Evergreen Nat. Indem. Co. v. Tan It All, Inc., 111 S.W.3d 669, 676 (Tex.
8 The Court notes, as reflected in the discussion that follows, that the application of Texas contract
law would not change the analysis or outcome. Defendants appear to agree that Texas law and
Virgin Islands law on the relevant points are not materially different. (Dkt. No. 19 at 12) (“[T]he
points of law relevant to this motion do not differ substantially between Texas and the law of the
Virgin Islands and other Third Circuit authority, rendering an extensive choice of law analysis
unnecessary.”).
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App. 2003) (“If a [contract] can be given only one reasonable meaning, it is not ambiguous and
will be enforced as written.”) (citing State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931,
933 (Tex.1998)); Universal C. I. T. Credit Corp. v. Daniel, 150 Tex. 513, 517 (1951) (“if after
applying established rules of interpretation to the contract . . . [and] if only one reasonable meaning
clearly emerges [the contract] is not ambiguous.”). “[W]here the language of a contract is clear
and unambiguous, the parties’ intent must be derived from the plain meaning of its terms.” Davies
v. Certain Underwriters at Lloyds of London, 2017 WL 3759810, at *6 (V.I. Super. Aug. 25, 2017)
(internal citation and quotation marks omitted); see also Heritage Res., Inc., v. NationsBank, 939
S.W.2d 118, 121 (Tex. 1996) (“In construing an unambiguous [contract] . . . [w]e presume that the
parties to a contract intend every clause to have some effect 	. . . [w]e give terms their plain,
ordinary, and generally accepted meaning unless the instrument shows that the parties used them
in a technical or different sense.”).
Further, “[t]he meaning of a condition precedent in the context of a contract is an event
which must occur before performance under a contract becomes due.” Isaac v. Guardian Ins. Co.,
2016 WL 6024475, at *5 (V.I. Super. Oct. 12, 2016) (internal quotation marks and ellipses
omitted); United Corp. v. Reed, Wible & Brown, Inc., 626 F. Supp. 1255, 1258 (D.V.I. 1986)
(defining condition precedent in a contract as “an event which must occur before there is a right to
performance and a resulting breach of duty”); see also Solar Applications Eng’g, Inc. v. T.A.
Operating Corp., 327 S.W.3d 104, 108 (Tex. 2010) (“A condition precedent is an event that must
happen or be performed before a right can accrue to enforce an obligation.”) (internal citation and
quotation marks omitted).
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B. 	Analysis
The Letter Agreement contains a forum selection clause in Paragraph 9, which calls for
“any action . . . arising from or relating to this Agreement and all contemplated transactions” to be
brought in the federal or local courts in Texas. (Letter Agreement ¶ 9). In the very next paragraph,
however, the Letter Agreement provides that: “The parties hereto agree that the following shall be
conditions precedent to the terms contained herein (other than paragraph 11, Confidentiality)
becoming binding obligations of the parties.” Id. ¶ 10 (emphasis added). The paragraph then
continues with a list of the conditions precedent, including: obtaining Senate ratification of the
Operating Agreement; forming SCT and executing the sublease of the terminal; closing on the
purchase of Hovensa’s membership interests; and completing various aspects of due diligence by
JP Energy St. Croix. Id.
The Court finds that the plain language of the Letter Agreement in Paragraph 10 as it
pertains to the conditions precedent is capable of only one meaning. Walker, 2015 WL 404007 at
*4 n.6; Evergreen, 111 S.W.3d at 676. Paragraph 10 is entitled “Conditions Precedent,” and it
states explicitly and unequivocally that there were certain conditions precedent before the Letter
Agreement as a whole—including the forum selection clause—became binding on the parties. In
other words, the “binding obligations of the parties” in the Letter Agreement were “condition[ed]”
upon the satisfaction of several conditions precedent, which were listed by the parties therein. See
Letter Agreement ¶ 10. The Court finds that the only reasonable construction of Paragraph 10 is
that before any of the provisions of the Letter Agreement could be binding on the parties (with
only one exception), the conditions precedent must first be satisfied. See Davies, 2017 WL
3759810 at *6 (finding that in unambiguous contracts, the “parties’ intent must be derived from
the plain meaning of its terms”) (internal citation and quotation marks omitted); Pac. Emp’rs. Ins.
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Co. v. Glob. Reinsurance Corp. of Am., 693 F.3d 417, 426 (3d Cir. 2012) (“If we determine that
the language is unambiguous, we follow its plain meaning”); Heritage, 939 S.W.2d at 121.9
Buttressing this finding is the fact that Paragraph 10 is specific in identifying the only
provision in the Letter Agreement that was not subject to the conditions precedent, i.e. Paragraph
11, which pertains to confidentiality. This single exception illustrates that the parties to the Letter
Agreement were quite capable of exempting the “Governing Law; Choice of Forum” provision
from the “Conditions Precedent” precondition if they so desired. They chose not to do so. “Because
the law does not assume that the language of the contract was chosen carelessly, that language is
of paramount importance.” Pac. Emp’rs., 693 F.3d at 426 (internal citation and quotation marks
omitted). The Court will not write language into the Letter Agreement that does not exist nor
interpret the Agreement in a manner that is inconsistent with its plain meaning.
In light of the finding that the Letter Agreement here contains plain, unambiguous language
which confirms that the “Conditions Precedent” set out in Paragraph 10 were terms that had to be
fulfilled before other terms contained in the Letter Agreement (with the exception of Paragraph
11) became binding obligations of the parties, and because it is undisputed that the conditions
precedent in Paragraph 10 were not satisfied (Dkt. No. 19 at 6-9; Dkt. No. 30 at 6-8), the forum
9 Citing one case, Defendants assert that “[c]ourts routinely reject” arguments that forum selection
clauses should be ignored based on unfulfilled conditions precedent, thus preventing parties with
buyer’s remorse from being able to invalidate the clauses by asserting that unfulfilled conditions
render the contract void. (Dkt. No. 34 at 3-4). Defendants subsequently note that “it was Plaintiff
who failed to satisfy the March Letter’s conditions precedent. A party cannot use its own failure
to perform to avoid its contract.” Id. at 5 n.4 (citations omitted). According to Plaintiff’s
allegations, however, there was no buyer’s remorse on Plaintiff’s part that resulted in the
unfulfilled conditions precedent, but rather calculated bad faith conduct by Defendants in the
withdrawal of their financial commitment with Plaintiff that precipitated what Defendants knew
would be Plaintiff’s inability to proceed with the Hovensa transaction. (Dkt. No. 14 ¶¶ 66-67). In
any event, as discussed below, there is certainly support for honoring clear and unambiguous
conditions precedent language even when a forum selection clause is at issue.
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selection clause in Paragraph 9 was not triggered. Therefore, Plaintiff was not required to file this
lawsuit in the federal or local courts in Texas. Knopick v. UBS Fin. Servs., Inc., 2015 WL 1650070,
at *4 (E.D. Pa. Apr. 14, 2015) (holding that because “the language preceding the forum selection
clause describes a condition precedent to its applicability . . . the non-occurrence of this condition
precedent renders the forum selection clause inapplicable”); Visalus Inc. v. Bohn, 2013 WL
1759420, at *3 (E.D. Mich. Apr. 24, 2013) (finding that the forum selection clause in the
Agreement is not binding because the condition precedent to the enforceability of the Agreement
did not occur); see OHM Hotel Grp., LLC v. Dewberry Consultants, LLC, 2016 WL 427959, at *8
(E.D. Mo. Feb. 4, 2016) (“Conditions precedent [to an applicability of a forum selection clause]
. . . are construed as such only if unambiguous language so requires.”); Vogt-Nem, Inc. v. M/V
Tramper, 263 F. Supp. 2d 1226, 1232 (N.D. Cal. 2002) (“The court will not construe contract
terms as conditions [to an applicability of a forum selection clause] unless required to do so by
‘plain, unambiguous language.’”) (internal citation omitted); see also Cajun Constructors, Inc. v.
Velasco Drainage Dist., 380 S.W.3d 819, 826 (Tex. App. 2012) (“Courts will not construe a
contract provision as a condition precedent unless compelled to do so by language that may be
construed no other way.”).10 Accordingly, Defendants’ Rule 12(b)(6) Motion to Dismiss based on
the forum selection clause will be denied.11
10 Because the Court has found as a threshold matter that the forum selection clause in the Letter
Agreement was not triggered, the Court need not address the parties’ arguments as to whether the
allegations in the Amended Complaint fall within the scope of that clause, so as to render it
applicable to this matter. (See Dkt. No. 19 at 14; Dkt. No. 30 at 9-11).
11 	In its Reply, Defendants rely on Grand Cent. Sanitary Landfill, Inc. v. C-E Huntington Ltd.
P’ship, 1995 WL 92377 (E.D. Pa. Mar. 1, 1995), to argue that a forum selection clause should not
be invalidated “based upon a failure to fulfill conditions precedent because such a ruling would
contravene the parties’ agreement that all disputes arising out of the contract, including its validity
and enforceability, must be litigated in the specified forum.” (Dkt. No. 34 at 4-5). But the Court
finds the circumstances in Grand Cent., distinguishable from those presented here. The issue in
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Title 28 U.S.C. § 1404(a) is equally unavailing. Section 1404(a) provides that “[f]or the
convenience of parties and witnesses, in the interest of justice, a district court may transfer any
civil action to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a).
Usually, “because the overarching consideration under § 1404(a) is whether a transfer would
promote the interest of justice, a valid forum-selection clause [should be] given controlling weight
in all but the most exceptional cases.” Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of
Texas, 571 U.S. 49, 63 (2013) (internal citation and quotations omitted). However, as discussed
above, the Court finds that the forum selection clause was not triggered under the circumstances
here, thus rendering it inapplicable to support a transfer.
Beyond their reliance on the Letter Agreement’s forum selection clause, Defendants did
not argue Section 1404(a)’s other factors concerning the convenience of the parties and witnesses
and the interest of justice, thereby providing no other support for a transfer request.12 Beberman v.
U.S. Dep’t of State, 2016 WL 3014665, at *3 (D.V.I. May 24, 2016) (“[t]he burden is on the
moving party to establish that a balancing of proper interests weigh[s] in favor of the transfer . . .
[and] unless the balance of convenience of the parties is strongly in favor of defendant, the
plaintiff's choice of forum should prevail”) (internal citation and quotation marks omitted).
Grand Cent., centered around whether “the contract as a whole [was] valid and enforceable.” 1995
WL 92377 at *2. The court found that the defendant, “under the guise of challenging only the
enforceability of the forum selection clause,” was actually “truly seeking an adjudication from
th[e] [c]ourt on th[is] ultimate issue.” Id. However, in this case, there is no issue that has been
advanced regarding the validity of the Letter Agreement, and there is no dispute that the conditions
precedent have not been fulfilled. The only issue here is one of contract interpretation, i.e., whether
the forum selection clause was triggered in light of the terms of the conditions precedent provision.
12 	Defendants state only that parties and third parties “are scattered among Texas, the Virgin
Islands, and Massachusetts,” (Dkt. No. 19 at 17), thus giving “no other forum [] a superior claim
[in light of] the controlling authority of the forum selection clause.” Id.
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On the other hand, Plaintiff’s choice of forum in this District is entitled to deference. “[A]
plaintiff’s choice of a proper forum is a paramount consideration in any determination of a transfer
request, and that choice should not be lightly disturbed.” Beberman, 2016 WL 3014665 at *3
(quoting Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970)); see also Wm. H. McGee &
Co. v. United Arab Shipping Co., 6 F. Supp. 2d 283, 289 (D.N.J. 1997) (“a plaintiff’s choice . . .
is entitled to greater deference [especially] when a plaintiff chooses its home forum”) (internal
citation and quotation marks omitted). “In deciding transfers under § 1404(a), courts, therefore,
generally assign the plaintiff’s choice of forum significant weight.” Job Haines Home for the Aged
v. Young, 936 F. Supp. 223, 227 (D.N.J. 1996).
Here, the Plaintiff is a Virgin Islands corporation with its principal place of business in St.
Croix, where the Hovensa facility is located and where Plaintiff asserts that “numerous witnesses”
are present. (Dkt. No. 14 ¶ 1; Dkt. No. 30 at 16). Because “[a] plaintiff’s choice of forum is
considered to be presumptively correct,” Wm. H. McGee, 6 F. Supp. 2d at 290, the Court will not
disturb Plaintiff’s choice of forum here. Accordingly, Defendant’s Motion to Transfer pursuant to
28 U.S.C. §1404 will be denied.
III. 	BANKRUPTCY SALE ORDER
Having determined that the forum selection clause was not triggered, and that a transfer of
this action from this jurisdiction is not otherwise warranted, the Court next considers whether the
Bankruptcy Court’s Sale Order (“Sale Order”) bars any or all of Plaintiff’s claims.
Defendants argue that, as affiliates of Limetree (the successful bidder in the bankruptcy
auction), the Sale Order expressly relieves them of liability for any claims related to the purchased
Hovensa assets. (Dkt. No. 19 at 18-23; Dkt. No. 34 at 8-14). Thus, Plaintiff’s lawsuit is an
impermissible collateral attack on the Sale Order. Id.
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Plaintiff, on the other hand, argues that its claims relate not to the purchased assets but to
Defendants’ conduct, which occurred prior to, and separate from, the bankruptcy proceedings, and
should thus remain unaffected by the Sale Order. (Dkt. No. 30 at 16-25). In further support,
Plaintiff argues that it does not seek to undo the bankruptcy sale, challenge the outcome of the
sale, or pursue successor liability against the buyer. Id. Thus, its claims against Defendants should
not be viewed as a collateral attack on the Sale Order. See id.
The Court finds that some of Plaintiff’s claims—specifically, Counts I, V, and VII—are
indeed “interests” that are “connected to or arise from” the purchased Hovensa assets, and
therefore represent an impermissible collateral attack on the Sale Order. Accordingly, Counts I, V,
and VII will be dismissed with prejudice. However, Counts II, III, IV, and VI are not “interests,”
and thus are not barred by the Sale Order.
A. 	Applicable Legal Principles
Section 363 of the Bankruptcy Code permits a debtor or trustee to sell assets “free and clear
of any interest in such property.” 11 U.S.C. § 363(f). Section 363(f) states, in pertinent part:
The trustee may sell property under subsection (b) or (c) of this section free and
clear of any interest in such property of an entity other than the estate, only if—
(1) 	applicable nonbankruptcy law permits sale of such property free and clear
of such interest;
(2) 	such entity consents;
(3) 	such interest is a lien and the price at which such property is to be sold is
greater than the aggregate value of all liens on such property;
(4) 	such interest is in bona fide dispute; or
(5) 	such entity could be compelled, in a legal or equitable proceeding, to accept
a money satisfaction of such interest.
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Id. The “free and clear” provision of § 363(f) serves two important policy considerations: to foster
finality in bankruptcy sales and to maximize the value of the debtor’s assets which are subject to
the sale. In re NE Opco, Inc., 513 B.R. 871, 877 (Bankr. D. Del. 2014).
While the Bankruptcy Code does not define the term “any interest” as used in § 363(f), the
Third Circuit, along with other courts, has established that “the trend seems to be towards a broader
interpretation which includes other obligations that may flow from ownership of the property.”
Folger Adam Sec., Inc. v. DeMatteis/MacGregor JV, 209 F.3d 252, 258 (3d Cir. 2000); In re Christ
Hosp., 2014 WL 4613316, at *11 (D.N.J. Sept. 12, 2014) (“[C]ourts have recognized the
broadening trend in defining the scope of sale-affected interests in property”); In re Precision
Indus., Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537, 545 (7th Cir. 2003) (“[T]he term ‘interest’
is a broad term no doubt selected by Congress to avoid ‘rigid and technical definitions drawn from
other areas of law[.]’”) (quoting Russello v. United States, 464 U.S. 16, 21 (1983)). “[A]ny interest
is therefore intended to refer to obligations that are connected to, or arise from, the property being
sold,” Folger Adam, 209 F.3d at 259 (3d Cir. 2000) (internal citation omitted), or obligations “that
could ‘potentially travel with the property being sold.’” In re La Paloma Generating, Co., 2017
WL 5197116, at *4 (Bankr. D. Del. Nov. 9, 2017) (internal citation and quotations omitted); see
also In re Trans World Airlines, Inc., 322 F.3d 283, 290 (3d Cir. 2003) (finding that while “the
interests of the EEOC and the [travel voucher holders] in the assets of TWA’s bankruptcy estate
are not interests in property in the sense that they are not in rem interests, . . . they are interests in
property within the meaning of section 363(f) in the sense that they arise from the property being
sold”) (emphasis added).13
13 See also Myers v. United States, 297 B.R. 774, 781-82 (S.D. Cal. 2003) (finding that Plaintiff’s
claim for personal injury are ‘interests’ in property within the meaning of § 363(f) in the sense that
they arise from the property being sold, i.e. the contracts to transport toxic materials); In re Leckie
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Determining what constitutes “interest” under § 363(f) requires a case-by-case analysis. In
re Christ Hosp., 502 B.R. 158, 171 (Bankr. D.N.J. 2013), aff’d, 2014 WL 4613316 (D.N.J. Sept.
12, 2014). “The overarching factor in evaluating [a plaintiff’s] claims as § 363(f) ‘interests’ is the
undeniable linkage” to the property being sold in the bankruptcy proceeding. Id. at 172. If the
claims fall within the category of interests under § 363(f), the property is subject to a sale “free
and clear” of the interests. Id. at 185.
Bankruptcy sale orders pursuant to § 363’s “free and clear” provisions are immune from
collateral attack through litigation elsewhere. See id; see also Celotex Corp. v. Edwards, 514 U.S.
300, 313 (U.S. 1995) (a collateral attack on a bankruptcy injunction, “cannot be permitted . . .
without seriously undercutting the orderly process of the law”); Douglas v. Stamco, 363 F. App’x
100, 102-03 (2d Cir. 2010) (“the potential chilling effect of allowing a tort claim subsequent to the
[bankruptcy] sale would run counter to a core aim of the Bankruptcy Code, which is to maximize
the value of the assets and thereby maximize potential recovery to the creditors”).
Further, if adequate notice was given, a party’s “failure to object to a § 363 sale has been
found to constitute consent per § 363(f)(2) to a ‘free and clear’ sale of the nonobjector’s interests
in property being sold.” In re Christ Hosp., 502 B.R. at 174. Accordingly, “such consent-based
bankruptcy sale orders . . . are not subject to collateral attacks.” Id. at 175.
Smokeless Coal Co., 99 F.3d 573, 582 (4th Cir. 1996) (holding that coal miners’ retirement funds
and plan’s “rights to collect premium payments from Appellees constitute [§ 363(f)] interests in
the assets that [they] now wish to sell, or have sold already”); In re WBQ Partnership, 189 B.R.
97, 105 (Bankr. E.D.Va.1995) (Virginia’s right to recover depreciation overpayment upon sale of
debtor’s assets was an “interest” within the meaning of section 363(f)); In re All American of
Ashburn, Inc., 56 B.R. 186, 190 (Bankr. N.D. Ga.1986) (sale pursuant to § 363(f) precluded mobile
home owners from prosecuting product liability action against purchaser of debtor’s assets).
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B. 	Analysis
1. 	Parties’ Arguments
Defendants argue that Plaintiff’s claims are § 363(f) “interests” that are “connected to” or
“arise from” the purchased Hovensa assets. (Dkt. No. 19 at 19-20). Thus, the Sale Order bars
Plaintiff from asserting these “interests” against Defendants because they are affiliates of
Limetree—the successful purchaser at auction. (Id.; Dkt. No. 34 at 9-10).
According to Defendants, Plaintiffs’ allegations are “obviously intertwined” with the
purchased assets in several ways. (Dkt. No. 19 at 21). First, Plaintiff alleges that ArcLight
“misappropriat[ed] the business opportunity” created by ABR by creating Limetree to become the
bankruptcy stalking horse bidder. Id. Second, Plaintiff asserts that Defendants’ structure of the
transaction and the bankruptcy sale itself resulted in damaging ABR by “making it highly unlikely
if not impossible for ABR to be able to secure the project financing needed to reconfigure, restart
and operate the Refinery Facility.” Id. Third, Plaintiff’s claim that Defendants breached the NDA
and misappropriated trade secrets is premised on Limetree’s alleged use of ABR’s Confidential
Information to purchase Hovensa’s storage facilities. (Dkt. No. 34 at 10). Because the Sale Order
therefore extinguished Plaintiff’s claims, Defendants maintain that Plaintiff’s lawsuit is an
improper collateral attack on the Sale Order and should be dismissed. (Dkt. No. 19 at 18-23).
Alternatively, Defendants argue that Plaintiff effectively “consented” to the release of its
claims because Plaintiff did nothing to object to the sale of Hovensa’s assets during the bankruptcy
proceeding. (Dkt. No. 19 at 22; Dkt. No. 34 at 12-13). According to Defendants, despite being
aware of the bankruptcy auction and monitoring the bankruptcy case, Plaintiff “did not assert its
rights or object to that sale process (let alone make a competing bid or ask for more time to arrange
financing)[,] . . . ABR did not assert its supposed right to participate in the bid with Limetree [],
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or to protect its [Confidential Information] (which it now claims was improperly used during the
proceedings).” (Dkt. No. 19 at 22). Defendants claim such inaction is “fatal to [Plaintiff’s] case.”
(Dkt. No. 34 at 12).
In opposition, Plaintiff argues that the Bankruptcy Court’s Sale Order does not insulate
Defendants from their tortious conduct and breach of the NDA. (Dkt. No. 30 at 16-25). According
to Plaintiff, the Sale Order does not bar the claims against Defendants because the claims are not
“interests” under § 363(f) that “flow from” the purchased assets. Id. at 17-19. Plaintiff argues that
the bankruptcy proceedings involved only Hovensa and Limetree—neither of which are parties to
this case or signatories to the NDA. Id. at 17-18; 22-23. Plaintiff further argues that it does not
seek to challenge the bankruptcy proceedings or assert claims against the purchased assets. Id. at
17-19. Instead, Plaintiff insists that this lawsuit arises from Defendants’ breach of the NDA and
their conduct to undermine Plaintiff prior to the bankruptcy proceedings. Id. Plaintiff contends
that, “[t]he liability in this case is based upon Defendants having orchestrated a series of actions
designed to frustrate ABR’s acquisition [of Hovensa] while working under the guise of being
ABR’s partners and using ABR’s Confidential Information in breach of the NDA.” Id. at 18.
According to Plaintiff, this “outrageous and inexcusable conduct . . . taken and completed before
the bankruptcy filing” are “independent” of Hovensa’s bankruptcy sale of the storage and terminal
facilities or the purchase of those assets by Limetree. Id.
The scope of the Sale Order, and hence the effect of that Order on Plaintiff’s claims, turns
on whether those claims are in fact § 363(f) “interests” that are “connected to, or arise from,” the
purchased assets. Folger Adam, 209 F.3d at 259. In contemplating such a determination, it is
helpful for the Court’s analysis to first set forth Plaintiff’s claims, which are seven-fold:
• 	Count 	I 	(Tortious 	Interference 	with 	Existing 	and 	Prospective 	Business
Relationships): Plaintiff alleges that Defendants “wrongfully interfered” with Plaintiff’s
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attempted acquisition of Hovensa by initially agreeing to act as ABR’s financial partner
and co-operator of the terminal and then strategically pulling out funding at a critical
juncture of ABR’s negotiations with Hovensa. As a result, ABR was deprived of its
expected earnings as the full owner of all of Hovensa’s assets and sole operator of the
refinery, as well as its 50% interest as an operator of the terminal facility. Plaintiff alleges
that Defendants knew of ABR’s expectations and in fact were privy to ABR’s financial
projections. (Dkt. No. 14 ¶¶ 63-69).
• 	Count II (Breach of Contract): Plaintiff alleges that Defendants misused the Confidential
Information that ABR developed and subsequently provided to Defendants in their dealings
with Hovensa, in violation of the parties’ NDA. Plaintiff further alleges that Defendants
continued to use this Confidential Information even after completing the purchase of
Hovensa’s terminal facility. Id. ¶¶ 70-76.
• 	Count III (Breach of Contract (Injunction)): Plaintiff alleges that the parties’ NDA
authorizes either party to obtain an injunction to prevent the misuse of Confidential
Information. Plaintiff requests that an injunction be entered against Defendants to prevent
their, and their subsidiaries’, unauthorized use of Confidential Information. Id. ¶¶ 77-82.
• 	Count IV (Misappropriation): Plaintiff alleges that Defendants are using Confidential
Information gained from ABR in their dealings with Hovensa and in their future plans for
the terminal facility. Id. ¶¶ 83-91. Defendants obtained the Confidential Information “for
use in acting as ABR’s partners” and “with the express understanding that the material
would be confidential.” Id. ¶¶ 84-85. However, the information has been used by
Defendants “to pursue the [Hovensa] transaction without ABR.” Id. ¶ 90.
• 	Count V (Unjust Enrichment): Plaintiff alleges that because ABR had an expectation of
benefitting from the purchase and operation of the Hovensa terminal and refinery,
Defendants’ self-dealing in purchasing outright Hovensa’s storage and terminal assets for
itself deprived ABR of these earnings and enriched themselves by taking what would have
been ABR’s share of the storage and terminal business. Moreover, Plaintiff alleges that
Defendants knew of ABR’s expectation and in fact were privy to ABR’s operational plans
and financial projections. Id. ¶¶ 92-96.
• 	Count VI (Quantum Meruit): Plaintiff alleges that since it was ABR which “introduced”
Defendants to the Hovensa transaction and provided them with the necessary information,
which the latter in turn improperly used for their own benefit, “[i]t would be inequitable
for Defendants to retain the benefits of ABR’s work, prior negotiations, contacts, and
business, engineering and operational plans without payment of value to ABR.” Id. ¶¶ 97-
101.
• 	Count VII (Breach of Fiduciary Duty): Plaintiff alleges that because Defendants were
ABR’s financial and operational partner in a joint venture to operate the terminal facility,
Defendants owed ABR a fiduciary duty, which they breached when they “took actions to
undermine ABR’s” transaction with Hovensa and acquire for an ArcLight subsidiary
ABR’s share of the terminal facility. Id. ¶¶ 102-107.
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2. 	Counts I, V, and VII: Tortious Interference with Existing and
Prospective Business Relationship, Unjust Enrichment, and Breach of
Fiduciary Duty
The Court finds that Counts I, V, and VII are “interests” that are “connected to, or arise
from,” the purchased Hovensa assets, i.e., the storage and terminal facility, and are thus subject to
the Sale Order’s injunction. The “clear factual connection” between these claims—which center
on the deprivation of ABR’s expected earnings from the Hovensa transaction—and the sale of
Hovensa’s storage and terminal facilities to Defendants’ affiliate is evident. See In re Christ Hosp.,
502 B.R. at 181.
The Court finds that In re Christ Hosp., is instructive under the circumstances here. 502
B.R. 158. In that case, two companies vied to acquire a debtor’s assets in bankruptcy, with the
loser (Prime) accusing the winner (Hudson) of tortious conduct prior to the bankruptcy
proceedings which “unfairly and irreparably destroyed” Prime’s acquisition efforts by making “the
deal economically unfeasible, requiring Prime [] to withdraw its offer to purchase.” Id. at 166. At
the conclusion of an open bid auction, the bankruptcy court issued a sale order which transferred
the debtor’s assets to Hudson “free and clear” of claims, pursuant to § 363(f). Id. at 161. Thereafter,
Prime filed a lawsuit in state court against Hudson. Id. at 161, 165. The suit alleged, inter alia,
tortious interference in contractual relations as it related to Hudson’s acquisition of the purchased
assets. Id. at 161. Such tortious interference, according to Prime, resulted in deliberately driving
the debtor into bankruptcy where Hudson was then able to purchase the assets at a significantly
lower price than what Prime had negotiated with the debtor. Id. at 167.
In finding that Prime’s economic tort claims were § 363(f) “interests,” the bankruptcy court
stated:
[T]he overarching factor in evaluating Prime’s economic tort claims as § 363(f)
“interests” is the undeniable linkage—as Prime has claimed it—of Prime’s asset
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26
purchase agreement of December 2011 [and] its purported “loss” of the benefit of
that agreement, the supposed “forcing” of the hospital into bankruptcy, and the sale
of hospital assets at a diminished price to Hudson in a bankruptcy auction. The
culmination of this chain of events has been the transfer to and use of hospital assets
by Hudson, very much in opposition to Prime’s goal for the transfer and use of
those same assets. Thus, Prime’s stated factual claims “are connected to, or arise
from, the property being sold,” consistent with Third Circuit precedent establishing
the scope of § 363(f) interests.
In re Christ Hosp., 502 B.R. at 172 (emphasis added). The bankruptcy court further noted: “[T]he
transfer to and use by Hudson of hospital assets underpins Prime’s economic tort allegations—that
is, Prime’s claims arise out of Hudson’s ultimate use of the hospital’s assets. As such, those claims
are § 363(f) ‘interests,’” which are barred from being asserted against Hudson by the bankruptcy
court’s sale order affirming the assets as “free and clear” for the purchaser. Id. at 173 n.15
(emphasis added). The bankruptcy court thus found that Prime’s lawsuit—which sought damages
from Hudson—was a “frontal attack on the economic integrity of the [bankruptcy] sale, and is thus
no less a collateral attack than one which seeks to set aside that sale.” Id. at 185.
Here, as in In re Christ Hosp., Hovensa, the debtor, sold its storage and terminal assets in
an open auction. Defendants’ affiliate, Limetree, which had executed an Asset Purchase
Agreement with Hovensa and negotiated with Hovensa to become its stalking horse bidder prior
to the auction, ultimately was the successful purchaser of those assets. (Dkt. No. 14 ¶¶ 54-55).
After the auction, the Bankruptcy Court here issued a Sale Order which defined “interests” as
“claims . . . encumbrances, obligations, Liabilities, demands, [], actions, suits . . . contractual
commitments . . . or interests of any kind or nature whatsoever,” to the extent those interests are
“against or with respect to the Debtor or in, on, or against or with respect to any of the Purchased
Assets.” Sale Order ¶ V (emphasis added).
As in In re Christ Hosp., the “undeniable linkage” between Plaintiff’s allegations in Counts
I, V, and VII and the purchased Hovensa assets confirms that Plaintiff’s claims—as alleged in
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those Counts—are barred by § 363(f). In re Christ Hosp., 502 B.R. at 172. In Count I, Plaintiff
alleges that Defendants knew that ABR had an “expectation of benefitting from the purchase of
the [Hovensa] terminal and refinery, a 50% ownership in the terminal and storage business, and
the ownership and operation of the refinery.” (Dkt. No. 14 ¶¶ 64-65) (emphasis added). Plaintiff
further alleges that “Defendants wrongfully interfered by initially agreeing to act as ABR’s
financial partner and to operate the terminal facility, and then pulling out at a moment strategically
calculated to disrupt and terminate ABR’s transaction to acquire the HOVENSA site, which
increased the likelihood that the Defendants could acquire the terminal portions, and eliminate
ABR’s 50 percent interest in SCT.” Id. ¶ 66 (emphasis added). Plaintiff goes on to allege that “due
to Defendant’s interference,” ABR was “deprived of its expected profit from the transaction and
its ownership of the Refinery Facility, including a 50 percent interest in the terminal and storage
business, and profits from the reconfiguration, restart and operation of the refinery, as well as its
share of any eventual resale of the Refinery Facility.” Id. ¶ 68 (emphasis added). According to
Plaintiff, “ABR would have received these expected benefits absent Defendants’ acts.” Id. ¶ 64
(emphasis added).
Plaintiff’s allegations in Count I thus portray a link between Defendants’ actions—which
form the basis of the claim—and Plaintiff’s loss of its expected profits from owning and operating
the Hovensa facilities. After agreeing to be ABR’s partner, Defendants pulled out at a strategic
moment allegedly designed to disrupt ABR’s transaction to acquire the Hovensa assets. Id. ¶ 66.
According to Plaintiff, Defendants’ wrongful actions increased their chances of acquiring the
property and robbed ABR of the profits it had expected to make from acquiring those same assets.
Id. ¶¶ 67-68.
A similar sequence of events is depicted in Count V. In that Count, Plaintiff alleges that it
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“had an expectation of benefitting from the purchase and operation of the HOVENSA terminal
facility and the refinery.” Id. ¶ 93 (emphasis added). Plaintiff further alleges that “Defendants’
self-dealing deprived ABR of the benefits of these transactions causing it substantial damages,
including loss of the profits ABR reasonably expected to realize as a 50% owner of SCT, the tenant
under the lease of the terminal and storage facility.” Id. ¶ 94 (emphasis added). Plaintiff went on
to allege that Defendants “enriched themselves by co-opting the terminal and storage facility and
taking for themselves Plaintiff’s share of the terminal and storage business.” Id. ¶ 95 (emphasis
added). According to Plaintiff, ABR “would have received the[se] expected benefits absent
Defendants’ acts.” Id. ¶ 93 (emphasis added).
The direct connection here between the claims in Count V and the purchased Hovensa
assets is again apparent. The linkage here is grounded in Plaintiff’s allegations that Defendants’
self-dealing and self-enrichment—achieved “by co-opting the terminal and storage facility and
taking for themselves Plaintiff’s share of the terminal and storage business”—directly resulted in
the loss of Plaintiff’s share of the transaction, which deprived Plaintiff of the profits it had expected
to garner from acquiring the Hovensa assets. (Dkt. No. 14 ¶¶ 94-96) (emphasis added).
In Count VII, Plaintiff alleges that ABR and Defendants “had expressed the intention to
form, and had established, a joint venture partnership for acquisition and operation of the marine
terminal and storage facilities.” Id. ¶ 103 (emphasis added). Plaintiff further alleges that because
“Defendants were ABR’s financial and operational partner, and through JP Energy were its co-
owner in SCT, [] they owed a fiduciary duty to ABR.” Id. ¶ 104. According to Plaintiff, Defendants
breached that duty when “they took actions to undermine ABR’s participation in the transaction
so as to gain full ownership and control for themselves through an ArcLight affiliate created for
that purpose.” Id. ¶ 104 (emphasis added). These actions, according to Plaintiff, included
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“secur[ing] for ArcLight ABR’s share of the marine terminal and storage business . . . and by
strategically withdrawing ArcLight’s financial commitment at a time that left, and which ArcLight
knew would leave, ABR without the ability to secure another financial partner and proceed with
the transaction, and thereby eliminated [ABR] . . . in order to make straight the path for the
Defendants to acquire the marine terminal and storage business for its own account.” Id. ¶ 106
(emphasis added).
Here again, there is a clear linkage between the claims in Count VII and the Hovensa assets.
Plaintiff alleges that Defendants breached their fiduciary duty to ABR when they withdrew their
financial commitment at a time that Defendants knew would leave ABR unable to proceed with
the Hovensa transaction, thereby undermining ABR’s position and ultimately eliminating ABR
from the transaction. Id. ¶¶ 104-106. Defendants then created a new affiliate (Limetree) for the
specific purpose of securing for themselves ABR’s share of the storage and terminal business. Id.
¶ 104. In Plaintiff’s own words, Defendants eliminated ABR from the transaction “in order to
make straight the path for the Defendants to acquire the marine terminal and storage business for
its own account.” Id. ¶ 106. As in Counts I and V, Plaintiff alleges that Defendants’ deliberate and
successive acts directly resulted in Plaintiff’s loss of the Hovensa assets and Defendants’
acquisition of the same.
The Court finds that Counts I, V, and VII portray a “chain of events” which “culminat[ed]”
in Defendants’ affiliate (Limetree) possessing and using Hovensa’s storage and terminal facilities
without ABR—a development “very much in opposition to” ABR’s goal “for the transfer and use
of those same assets.” See In re Christ Hosp., 502 B.R. at 172. Indeed, Plaintiff admits as much,
stating: “The liability in this case is based upon Defendants having orchestrated a series of actions
designed to frustrate ABR’s acquisition” of the Hovensa assets—actions which served to
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“undermine” and eliminate[]” ABR from the transaction and “tak[e] for Defendants Plaintiff’s
share of the terminal and storage business.” Id. ¶¶ 66, 95, 104, 106. This “series of actions” include:
Defendants’ agreement to act as ABR’s partner; Defendants strategic withdrawal from their
financial commitment at a time which left ABR vulnerable; and Defendants’ acquisition for
themselves—via a newly formed affiliate created for that purpose—of the same assets that ABR
was attempting to procure. Thus, as a result of Defendants’ alleged “interference,” “self-dealing,”
and self-enrichment, ABR was deprived of the benefits it anticipated from the ownership and
operation of the storage, terminal, and refinery facilities—benefits which, Plaintiff argues, ABR
would have received “absent Defendant’s acts,” and the loss of which forms the bases of Plaintiffs
claims in Counts I, V, and VII. As noted in In re Christ Hosp., “[t]he overarching factor [] is
whether [plaintiff’s] claims have an ‘undeniable linkage’ to the property being sold in the
bankruptcy proceeding.” 502 B.R. at 172 (internal citation and quotations omitted). Such a linkage
clearly exists here. ABR’s claims in Counts I, V, and VII are therefore “interests” under § 363(f)
which are barred by the Bankruptcy Court’s Sale Order.
Plaintiff’s arguments to the contrary do not alter the Court’s conclusion. ABR contends
that In re Christ Hosp. is distinguishable because “that case involved a claim directly premised on
the bankruptcy process, based upon an alleged subversion of that process to drive down the price
paid for certain assets of the debtor.” (Dkt. No. 30 at 22). While it is true that the facts of In re
Christ Hosp., are not identical to those in the instant matter, the case-by-case analysis that is called
for in determining what constitutes an “interest” under § 363(f), 502 B.R. at 171, suggests that the
focus is more appropriately placed on the essence of the bankruptcy court’s ruling. “The
overarching factor” is whether there is a linkage or connection between Plaintiff’s claims and the
purchased assets. Id. at 172. As discussed above, with regard to Counts I, V, and VII, ABR’s
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“stated factual claims are connected to, or arise from, the [sold] property.” Id.
Moreover, the fact that ABR is not seeking to challenge the bankruptcy proceedings or
undo the bankruptcy sale (Dkt. No. 30 at 22-23, 24), does not change the outcome. See In re Christ
Hosp., 502 B.R. at 177. Simply put, at the heart of Plaintiffs’ claims in Counts I, V, and VII is that
Defendants deliberately acted to thwart ABR’s efforts to acquire the Hovensa assets, and Plaintiff
now seeks recompense for the loss that it suffered. The District Court’s reasoning in In re Christ
Hosp., is instructive here:
It is the nature of Prime’s common-law claims—which arose prepetition and
continued post-petition—that “are connected to, or arise from, the property being
sold” and thus fall within the scope of § 363(f). See In re Trans World Airlines,
Inc., 322 F.3d at 289 (citing Folger Adam, 209 F.3d at 259). Prime’s argument fails.
It argues that its ‘state court action does not allege any interest in Christ Hospital
property,’ but arises ‘from Hudson’s pre-bankruptcy action meant to undermine
Prime Healthcare’s contract to purchase Christ Hospital.’ [] But Prime improperly
divorces the factual allegations that are connected to the hospital assets being sold,
i.e., the pre-petition [Asset Purchase Agreement] that Prime withdrew, allegedly as
a result of Hudson’s bad faith, that led to the “forced” bankruptcy sale of Christ
Hospital’s assets at a lower price. As such, the common-law claims were “interests”
in the sale of Christ Hospital’s assets that were entitled to free and clear protections
in the Sale Order and Confirmation Order.
In re Christ Hosp., 2014 WL 4613316 at *12 (D.N.J. Sept. 12, 2014) (emphasis added).
As in In re Christ Hosp., Plaintiff here is challenging Defendants’ “pre-bankruptcy action
meant to undermine” ABR’s efforts to acquire Hovensa’s assets (Dkt. No. 30 at 17-18, 25), and
contends that such a challenge allows it to escape the scope of “interests” under § 363(f) that are
barred by the Bankruptcy Court’s Sale Order. (Dkt. No. 30 at 17-19, 25). In making this argument,
Plaintiff, like Prime, “divorces the factual allegations that are “connected to the [Hovensa] assets”
that were sold. Evidence of this connection is manifest in various allegations in the Amended
Complaint. For example, Plaintiff describes how “ArcLight Steals the Deal,” by alleging:
Defendants then proceeded, without ABR’s knowledge or participation, to negotiate
with HOVENSA an Asset Purchase Agreement . . . to purchase -- through a newly-
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formed ArcLight subsidiary, Limetree Bay Holdings [] -- the same marine terminal and
storage facility which the Defendants had agreed to lease pursuant to the Letter
Agreement, for the same amount of money the Defendants were to pay under the Letter
Agreement ($190 million), but without having to share in the ownership with ABR.
(Dkt. No. 14 ¶54). Plaintiff continues:
Defendants negotiated the Letter Agreement with ABR under false pretenses . . .
Defendants acted with the purpose and intent to convert ABR’s activities and efforts,
. . . to gain access to HOVENSA and the Refinery Facility, to co-opt for their own
purposes the goodwill and preferred negotiating position enjoyed by ABR (while
excluding ABR from the transaction), and ultimately, to execute an Asset Purchase
Agreement to acquire the terminal facility only.
Id. ¶ 58. Again, in Plaintiff’s own words:
Defendants acted in bad faith . . . to secure for ArcLight ABR’s share of the marine
terminal and storage business, and by strategically withdrawing ArcLight’s financial
commitment at a time that left, and which ArcLight knew would leave, ABR without the
ability to secure another financial partner and proceed with the transaction, and thereby
eliminated [ABR] . . . in order to make straight the path for the Defendants to acquire the
marine terminal and storage business for its own account.
Id. ¶ 106.14 Thus, Plaintiff’s attempt to avoid the Sale Order’s injunction’s reach is to no avail.
In addition, the fact that Defendants’ alleged bad faith conduct occurred prior to the
bankruptcy proceedings is also of no import here. (Dkt. No. 30 at 17-18). The Sale Order declared
that “interests” were prohibited “whether arising prior to or subsequent to the commencement
of this Chapter 11 Case.” (Sale Order ¶ V) (emphasis added). Indeed, the bankruptcy court in In
14 Plaintiffs’ claims are replete with allegations that Defendants acted in bad faith which resulted
in “undermining,” “eliminating,” “damaging,” and “depriving” ABR of its expected benefits from
the Hovensa transaction and securing for Defendants the Hovensa assets. For example in Count I,
Plaintiffs allege that “Defendants manipulated ABR in bad faith in order to frustrate ABR’s ability
to acquire the [Hovensa] site.” (Dkt. No. 14 ¶ 67) (emphasis added). In Count V, Plaintiffs allege
that Defendants indulged in “self-dealing” and “enriched themselves by co-opting the terminal and
storage facility and taking for themselves Plaintiff’s share of the terminal and storage business.”
Id. ¶¶ 94-95 (emphasis added). Finally, in Count VII, Plaintiffs allege that “Defendants acted in
bad faith, against ABR’s interests and in favor of their own, to secure for ArcLight ABR’s share
of the marine terminal and storage business.” Id. ¶ 106 (emphasis added).
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re Christ Hosp., noted: Ҥ 363(f), would have little functional value if interests created prepetition
were not to be affected [by the sale order]. Hence, it is not the timeline that controls [], but rather
the nature of the interest at issue.” 502 B.R. at 170 (emphasis added); see also In re Christ Hosp.,
2014 WL 4613316 at *11 (D.N.J. Sept. 12, 2014) (“courts have routinely included interests that
arose pre-petition under Section 363(f)”); Food King, Inc. v. Norkus Enter., Inc., 2006 WL
3674997, at *4-6 (D.N.J. Dec. 13, 2006) (finding that whether defendants’ tortious conduct
occurred prior to the bankruptcy sale is not relevant for the purpose of considering whether its
claims are barred by the sale order); In re Abbotts Dairies of Pennsylvania, Inc., 788 F.2d 143,
148-9 (3d Cir. 1986) (examining the purchaser’s conduct prior to the sale).
Further, Plaintiff’s argument that they should not be subject to the Sale Order because its
claims here are not against Limetree, is also unavailing. (Dkt. No. 30 at 22-25). The Sale Order
plainly encompasses Defendants in its scope because it bars any “Interests” asserted against “the
Buyer, any of its Affiliates and Subsidiaries.” (Sale Order ¶ 10) (emphasis added). The Buyer here
was Limetree, which is affiliated with both Defendants ArcLight and JP Energy—facts that are
not in dispute.15 Thus, the Sale Order covers this lawsuit against Defendants.
15 In the Amended Complaint, Plaintiff itself recognizes the connection between Defendants and
Limetree. (See e.g., Dkt. No. 14 ¶ 38) (“Defendants . . . [then] proceeded to divert the transaction
to ArcLight and its subsidiaries”); id. ¶ 54 (“Defendants then proceeded . . . to negotiate with
Hovensa an Asset Purchase Agreement [] to purchase—through a newly-formed ArcLight
subsidiary, [Limetree]—the same marine terminal and storage facility”). Separate entities, such as
Limetree and JP Energy, are affiliated with each other if they have the same parent company, i.e.,
ArcLight. Geo-Cleanse Int’l, Inc. v. In-Situ Technieken, B.V., 2008 WL 183740, at *1 (D.N.J. Jan.
18, 2008); accord Shoop v. Devon Energy Prod. Co., L.P., 2013 WL 12251353, at *2 (N.D. Tex.
Mar. 28, 2013); Axis Specialty Ins. Co. v. Doty-Moore Tower Servs., LLC, 2008 WL 11335004, at
*7 (N.D. Ga. Sept. 22, 2008); Gomez v. MasTec N. Am., Inc., 284 F. App’x 517, 519 (9th Cir.
2008).
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Finally, as in In re Christ Hosp., Plaintiff did not object or intervene in the bankruptcy
proceedings to protect its interests. (See Sale Order at 2-4; 7-8). ABR’s conduct is thus properly
deemed “consent” to releasing its claims that were derivative of the purchased assets. In re Christ
Hosp., 502 B.R. at 174 (“given adequate notice, failure to object to a § 363 sale has been found to
constitute consent per § 363(f)(2) to a ‘free and clear’ sale of the nonobjector’s interests in property
being sold”).16
In sum, the Court finds that Plaintiff’s claims in Counts I, V, and VII, are “interests” which
are “connected to, or arise from,” the purchased Hovensa assets, and they were extinguished by
the Bankruptcy Court’s Sale Order which established that Hovensa’s assets were sold “free and
clear” pursuant to § 363(f). Folger Adam, 209 F.3d at 259. As such, Plaintiff’s claims constitute
an impermissible collateral attack on the Bankruptcy Court’s Sale Order. The impermissibility of
such collateral attacks is well grounded in law. See Celotex, 514 U.S. at 313 (holding that a
collateral attack on a bankruptcy order cannot be allowed “without seriously undercutting the
orderly process of law”). The Court will therefore dismiss Plaintiff’s Counts I, V, and VII with
prejudice.17
16 The parties also argue as to whether the Sale Order’s “good faith” finding pursuant to 11 U.S.C.
§ 363(m) was limited only to Limetree, as the purchaser of Hovensa’s assets, or whether it also
encompassed Defendants. Defendants contend that the good faith finding also included them as
affiliates of Limetree and thus “protected” them from Plaintiff’s claims. (Dkt. No. 19 at 20; Dkt.
No. 34 at 9, 13). In contrast, Plaintiff argues that the Sale Order’s “good faith” finding applied
only to Limetree and not Defendants. (Dkt. No. 30 at 19). However, because the Court has found
that Plaintiff’s claims constitute a collateral attack on the “free and clear” provisions of § 363(f),
it need not address the good faith issue.
17 In its Response to Defendants’ Motion to Dismiss, Plaintiff relies on Copelin v. Sprico, Inc.,
182 F.3d 174, 181 (3d Cir. 1999) to argue that Defendants, neither of whom were non-debtors in
the bankruptcy proceedings here, cannot use the bankruptcy proceedings to insulate themselves
from ABR’s claims for liability that existed outside of the bankruptcy. (Dkt. No. 30 at 23-25). The
Court, however, finds Copelin inapposite. Copelin did not involve a sale order from the bankruptcy
court. Rather, the issue in Copelin was whether plaintiff, who sued and won a state court judgment
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3. 	Counts II, III, IV, and VI
On the other hand, the Court finds that Defendants’ alleged breach of the NDA and
Plaintiff’s claims related thereto—specifically Counts II, III, IV, and VI—are not “interests” that
are “connected to, or arise from,” the purchased Hovensa assets. Instead, the source of these claims
arose independently from an NDA between Plaintiff and Defendant ArcLight, which Defendants
allegedly breached by using Confidential Information provided by ABR for their own self-dealings
outside the parameters of the NDA. See In re Farmland Indus., Inc., 376 B.R. at 725 (noting that
if plaintiff’s complaint “alleges a truly independent tort,” it is not considered a collateral attack on
the sale orders).18
That the claims in Counts II, III, IV, and VI are not “interests” barred by the Bankruptcy
Court’s Sale Order is confirmed by a review of the Counts. In Count II, Plaintiff alleges that
“[p]ursuant to the NDA, ABR presented troves of valuable [Confidential Information] to
Defendants, including business information, plans, strategies, projections, engineering information
and financial models,” much of which were “developed by ABR over a period of several years.”
(Dkt. No. 14 ¶ 74-75). Plaintiff goes on to allege that “Defendants used ABR’s Confidential
for unpaid wages, had the right to collect that judgment from the defendant—a non-debtor who
only became involved in a bankruptcy court proceeding because an Amended Reorganization Plan
absorbed the debtor into defendant as the former’s parent corporation. 182 F.3d at 180. The Court
found that the issue of whether defendant owed plaintiff on the state court judgment was a non-
core proceeding, i.e., an issue that did not arise from bankruptcy law, and that the Amended
Reorganization Plan did not include plaintiff’s state court judgment against defendant. Thus,
plaintiff’s claim against defendant was not discharged by the bankruptcy and was thus payable by
defendant. Id. at 180-183. The issue in the instant matter, however, is whether Plaintiff’s claims
are “interests” under § 363(f) that are “connected to or, or arise from,” the purchased Hovensa
assets—a completely different issue and context from that in Copelin.
18 At one point, Defendants contend that “[i]n this matter, the only alleged relationship between
the Plaintiff and any other entity is the [Letter Agreement].” (Dkt. No. 19 at 33). This argument
completely ignores the existence of a separate contract, i.e., the NDA, to which the Amended
Complaint refers repeatedly.
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Information in analyzing the terminal and refinery business and self-dealing with Hovensa to
appropriate ABR’s business plans for ArcLight,” in violation of the NDA, and that even after
purchasing the Hovensa assets, “Defendants continued to use the Confidential Information in
breach of the NDA.” Id. ¶ 76.
In Count III, Plaintiffs allege that “Defendants have used and continue to use Plaintiff’s
Confidential Information (as defined in the NDA) in the acquisition and development of
operational plans for the Hovensa facility,” in violation of the NDA. Id. ¶ 80. Thus, Plaintiff seeks
an injunction against Defendants to prevent them from “further us[ing]” the Confidential
Information. Id. ¶ 82.
Meanwhile, in Count IV, Plaintiff alleges that “ABR took steps to protect the secrecy of its
plans and other [Confidential Information], as these were disclosed to Defendants pursuant to [the]
NDA, with the express understanding that the material would be confidential.” Id. ¶ 85. Plaintiff
further alleges that “Defendants misappropriated this information,” and “are using information
gained from ABR in their dealings with [Hovensa] and future plans for the Terminal Facility.” Id.
¶¶ 89-90.
Finally, in Count VI, Plaintiff alleges that “ABR conferred a benefit on Defendants, inter
alia, [by] introducing Defendants to the transaction and ABR’s strategies, plans and analyses for
the purchase, restart and operation of the Refinery Facility,” and by “also negotiat[ing] [a]
resolution of complex environmental issues relating to the Refinery Facility with [the] EPA to
facilitate the operation of the refinery.” Id. ¶¶ 98-99. Plaintiff also alleges that “Defendants later
improperly used the introduction and information for their own benefit, appropriated selected
portions of the transaction and ran with it on their own.” Id. ¶ 98. In addition, Plaintiff alleges that
“Defendants accepted and retained the benefits of the terminal purchase, using ABR’s strategies,
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plans and analyses, and working from ABR’s prior neg[oti]ations . . . but failed to honor its
financial commitment to ABR in order for ABR to close pursuant to the Purchase and Sale
Agreement.” (Dkt. No. 14 ¶ 100).
These claims are not linked to the sold property as with Counts I, V, and VII, but rather are
focused on the NDA and the alleged breach resulting from Defendants’ allegedly improper use of
Confidential Information. Accordingly, the Court finds that the claims in Counts II, III, IV, and VI
are not “interests” that are “connected to, or arising from,” the Hovensa assets that were sold at
the bankruptcy auction, and therefore are not barred by the Bankruptcy Court’s Sale Order.
IV. 	THE IQBAL/TWOMBLY ANALYSIS
The Court now turns to whether Plaintiff’s remaining claims, while not barred by the Sale
Order, are otherwise subject to dismissal for failure to state a claim upon which relief can be
granted pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. No. 19 at 23-36). For the reasons discussed
below, Defendants’ Motion to Dismiss Plaintiff’s remaining claims pursuant to Rule 12(b)(6) will
be granted as to Counts II and IV, with leave to amend, and denied as to VI. Count III will be
dismissed with prejudice for failure to state a cause of action.
A. 	Applicable Legal Principles
Federal Rule of Civil Procedure 12(b)(6) calls for dismissal of a complaint if it “fail[s] to
state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6)
motion to dismiss, a plaintiff need not provide detailed factual allegations, Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007); rather, the question is whether “the facts alleged in the
complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Fowler v.
UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009)). While the Court accepts all well-pleaded allegations in the complaint as true and draws
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all reasonable inferences in favor of the nonmoving party in determining a motion to dismiss,
Capogrosso v. The Supreme Court of New Jersey, 588 F.3d 180, 184 (3d Cir. 2009), a plaintiff
cannot rely on mere “labels and conclusions, and a formulaic recitation of the elements of a cause
of action[.]” Twombly, 550 U.S. at 555; see also Emrit v. Indep. Music Awards, IMA, 605 Fed.
App’x. 103, 104 (3d Cir. 2015) (“Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements,” are insufficient to defeat a Rule 12(b)(6) motion to
dismiss) (quoting Iqbal, 556 U.S. at 678); Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d
Cir. 2011) (“Mere restatements of the elements of a claim are not entitled to the assumption of
truth.”) (internal citation and quotations omitted)); McTernan v. City of York, Penn., 577 F.3d 521,
531 (3d Cir. 2009) (“[T]he tenet that a court must accept as true all of the allegations contained in
a complaint is inapplicable to legal conclusions.”) (quoting Iqbal, 556 U.S. at 678). Rather, a
plaintiff must cite enough facts to state a claim for relief that is plausible on its face. Iqbal, 556
U.S. at 678.
To establish facial plausibility, the plaintiff must plead factual content that allows the court
to draw the reasonable inference that the defendant may be liable for the misconduct alleged. Id.
“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged—but it has not show[n]—that the pleader is entitled to
relief.” Id. at 679 (internal quotations and citation omitted). Determining whether the well-pleaded
facts plausibly give rise to a claim for relief “is a context-specific task that requires the reviewing
court to draw on its judicial experience and common sense.” Connelly v. Lane Const. Corp., 809
F.3d 780, 786-7 (3d Cir. 2016) (quoting Iqbal, 556 U.S. at 679) (quotations omitted).
Under the plausibility standard, when considering whether dismissal is appropriate, a court
must: (1) “tak[e] note of the elements a plaintiff must plead to state a claim”; (2) “identify
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allegations that, because they are no more than conclusions, are not entitled to the assumption of
truth”; and (3) where there are “well-pleaded factual allegations, [] assume their veracity and then
determine whether they plausibly give rise to an entitlement for relief.” Smith v. Virgin Islands
Hous. Auth., 2016 WL 2637824, at *3 (D.V.I. May 6, 2016) (quoting Santiago v. Warminster
Twp., 629 F.3d 121, 130 (3d Cir. 2010) (internal quotation marks and ellipses omitted)).19 The
Court will now examine Plaintiff’s remaining causes of action.
B. 	Analysis
1. 	Counts II and IV: Breach of Contract and Misappropriation
Because Plaintiff’s claims in Counts II and IV pertain to the parties’ NDA, the Court will
apply that contract’s express choice of law provision, requiring these claims to be examined under
the laws of the state of Delaware. (NDA ¶ 15) (“The Agreement shall be governed by the laws of
the State of Delaware, without regard to the principles of conflict of laws thereof.”). See Bell v.
USAA Cas. Ins. Co., 2009 WL 2524351, at *2 (D.V.I. Aug. 14, 2009) (“a contract is interpreted
according to the law chosen by the parties so long as the particular issue is one which the parties
[] resolved by an explicit provision in their agreement directed to that issue”) (internal citation and
quotations omitted).
Plaintiff’s 	breach 	of 	contract 	and 	misappropriation 	claims 	involve 	the 	following
allegations. ABR and Defendant ArcLight entered into a non-disclosure agreement in this matter
on February 10, 2015. (Dkt. No. 14 ¶¶ 30, 71; NDA, Dkt. No. 14-1). The NDA prohibited either
party from using any Confidential Information for any purpose other than to explore the parties’
19 While Iqbal describes the process as a “two-pronged approach,” the Supreme Court took note
of the elements a plaintiff must plead to state a claim before proceeding to its two-step approach.
Accordingly, the Third Circuit has deemed the process a three-step approach. Santiago, 629 F.3d
at 130 n.7.
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prospective business relationship pertaining to the acquisition of Hovensa’s storage and terminal
facility and refinery. (Dkt. No. 14 ¶ 31; NDA ¶ 1). According to Plaintiff, ABR shared with
Defendants “troves of valuable [Confidential Information]”—much of which was developed by
ABR over several years prior to its dealings with Defendants—with the express understanding that
it would be kept confidential. (Dkt. No. 14 ¶¶ 74-75, 85). This material allegedly included
“analyses, modeling, business strategies and other information not available elsewhere and of
significant and tangible value to anyone seeking to enter the refinery or terminal business in St.
Croix.” (Dkt. No. 14 ¶ 75). ABR’s materials also allegedly contained “novel ideas on how to revive
the [] terminal and refinery . . . [and] detailed supporting financial models and projections,
operational plans and engineering plans for both the terminal/storage and the reengineering and
restart of the refinery.” (Dkt. No. 14 ¶ 86). This Confidential Information allegedly “allowed
Defendants to fully understand the economic opportunities afforded by the facility and to have
access to a fully developed plan to realize those opportunities.” (Dkt. No. 14 ¶ 34).
Plaintiff alleges that Defendants “used ABR’s [Confidential Information] in analyzing the
terminal and refinery business and self-dealing with Hovensa to appropriate ABR’s business plans
for ArcLight,” and continued to use the Confidential Information after the Hovensa purchase was
completed. (Dkt. No. 14 ¶ 76). ABR also alleges that, as of the filing of the Complaint, Defendants
were still using ABR’s Confidential Information “in their dealings with Hovensa and their future
plans for the Terminal Facility.” (Dkt. No. 14 ¶ 89). Accordingly, per Plaintiff, Defendants
breached the NDA and “ABR has been damaged by Defendants’ appropriation of its business
ideas, plans and strategies, and using such information to pursue the Hovensa transaction without
ABR.” (Dkt. No. 14 ¶¶ 76, 90).
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Defendants argue that Plaintiffs’ claims are speculative. (See Dkt. No. 19 at 28-31). In this
regard, Defendants contend, inter alia, that the “Complaint only generically describes Plaintiff’s
so-called strategic information” (Dkt. No. 19 at 28); that Plaintiff fails to identify what information
Defendants supposedly misused (Id. at 30); and that Plaintiff fails to specify “how Defendants
used th[e] information improperly.” (Id. at 29).
Under Delaware law, to survive a Rule 12(b)(6) motion to dismiss for failure to state a
claim for breach of contract, the plaintiff must demonstrate: “first, the existence of the contract,
whether express or implied; second, the breach of an obligation imposed by that contract; and
third, the resultant damage to the plaintiff.” VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d
606, 612 (Del. 2003). The final element requires a plaintiff to demonstrate “both the existence of
damages provable to a reasonable certainty, and that the damages flowed from the defendant’s
violation of the contract.” eCommerce Indus., Inc. v. MWA Intelligence, Inc., 2013 WL 5621678,
at *13 (Del. Ch. Sept. 30, 2013).
Plaintiff’s claim for breach of contract is factually insufficient to survive a Rule 12(b)(6)
motion to dismiss. Specifically, the allegations in the Amended Complaint do not include sufficient
facts for the second element which, at this stage, calls for a “showing,” for plausibility purposes,
of a breach. See Phillips, 515 F.3d at 232-34 (finding that the plausibility standard under Twombly
requires plaintiffs to provide a “showing” which sets forth “enough facts to raise a reasonable
expectation that discovery will reveal evidence of the necessary element”) (quoting Twombly, 550
U.S. at 545).
In its Amended Complaint, Plaintiff states that “Defendants used ABR’s Confidential
Information in analyzing the terminal and refinery business and self-dealing with Hovensa to
appropriate ABR’s business plans for ArcLight.” (Dkt. No. 14 ¶ 76). While the Court finds—
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contrary to Defendants’ argument (Dkt. No. 19 at 28-29)—that Plaintiff has sufficiently identified
the types of confidential material at issue,20 the Complaint does not include any factual allegations
to support Plaintiff’s conclusory allegation that Defendants “used” this confidential material. For
example, the Complaint mentions “no specific time, place, or person involved” in the alleged use
of Plaintiff’s Confidential Information. See Twombly, 550 U.S. at 565 n. 10. In contrast, in NACCO
Indus., Inc. v. Applica Inc., the court found that the complaint contained sufficient allegations to
support a claim for breach of contract in part because plaintiff was able to pinpoint the dates and
the precise manner as to how the defendant violated the contract’s exclusivity and confidentiality
provisions, as well identify the persons involved. 997 A.2d 1, 15 (Del. Ch. 2009); see also Eastman
Chem. Co. v. AlphaPet Inc., 2011 WL 5402767, at *12-13 (D. Del. Nov. 4, 2011), report and
recommendation adopted, 2011 WL 6148637 (D. Del. Dec. 9, 2011) (denying a motion to dismiss
plaintiff’s claim for breach of confidentiality agreement because plaintiff was able to identify the
disclosed information, the source, and the circumstances giving rise to its breach of contract claim,
i.e., “where and when [confidential] statements] were made, and which person or company made
them”).
20 Plaintiff claims that the Confidential Information impermissibly used by Defendants included
“business information, plans, strategies, projections, engineering information and financial
models,” which provided information “of significant and tangible value to anyone seeking to enter
the refinery or terminal business in St. Croix.” (Dkt. No. 14 ¶¶ 74-76). This description of material
is factually sufficient as the NDA broadly defines what constitutes “Confidential Information” and
the materials alleged fall within its scope. (See NDA ¶ 2). Wiggins v. Physiologic Assessment
Servs., LLC, 141 A.3d 1058, 1065 (Del. Super. Ct. 2016) (finding Defendant had sufficiently
pleaded its misappropriation counterclaim by specifically defining its 	“confidential [and]
proprietary information” at issue as, inter alia, “billing methods, processes and practices, customer
lists and contact information, services ordered, ordering patterns, insurance company relationships,
and other billing and collections information, as well as the names of all of its physician and
hospital customers, the contact information of its customers’ payers, and billing codes”).
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Moreover, to adequately state a claim for breach of contract under Rule 12(b)(6), Plaintiff
must do more than simply assert that, “[a]fter completing the Hovensa purchase, Defendants
continued to use the Confidential Information in breach of the NDA.” (Dkt. No. 14 ¶ 76) (emphasis
added). “Conclusory allegations will not be accepted as true without specific supporting factual
allegations.” In re Santa Fe Pac. Corp. S’holder Litig., 669 A.2d 59, 66 (Del. 1995). Indeed,
“[s]tating that a contract was breached is merely a legal conclusion,” and “[c]onclusory allegations
in a complaint, if they stand alone, are a danger sign that the plaintiff is engaged in a fishing
expedition.” Chemtech Int’l, Inc. v. Chem. Injection Techs., Inc., 170 F. App’x 805, 808 (3d Cir.
2006) (quoting DM Research, Inc., v. Coll. of Am. Pathologists, 170 F.3d 53, 55 (1st Cir.1999)).
Such lack of factual information fails to give Defendants “fair notice” of the grounds upon which
Plaintiff’s claim for a breach of contract rests. Twombly, 550 U.S. at 555. Accordingly, the Court
finds that Plaintiff has not stated sufficient facts for the Court to conclude that it has a plausible
claim for breach of contract against Defendants.
Plaintiff’s misappropriation claim fails for similar reasons. To assert a claim for
misappropriation of confidential information under Delaware law, a plaintiff must meet the
following elements: (1) “it had a property interest in the confidential information; (2) [] the
defendant wrongfully exerted dominion over the confidential information; and (3) [] the plaintiff
sustained damages as a result.” Sustainable Energy Generation Grp., LLC v. Photon Energy
Projects B.V., 2014 WL 2433096, at *14 (Del. Ch. May 30, 2014).21
21 In its Motion to Dismiss, Defendants analyze this claim under misappropriation of a trade secret.
(Dkt. No. 19 at 29-30). However, while claims for misappropriation of a trade secret and
misappropriation of confidential information may have analytical similarities, they are two
separate claims under Delaware law. The former is a statutory claim under the Delaware Uniform
Trade Secrets Act (“DUTSA”) and the latter is a claim under common law. Adtile Techs. Inc. v.
Perion Network Ltd., 2016 WL 3457152, at *3-4 (D. Del. June 23, 2016). A review of the
Amended Complaint suggests that Plaintiff is asserting a common law claim as there is no mention
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Plaintiff falls short in setting forth sufficient facts to meet the plausibility standard for the
second element, i.e., that Defendants wrongfully exerted dominion over the Confidential
Information. Here, again, Plaintiff relies on conclusory allegations, stating that “Defendants
misappropriated this [Confidential] [I]nformation which ABR presented to Defendants for use in
acting as ABR’s partners.” (Dkt. No. 14 ¶ 84) (emphasis added). The Court must similarly
disregard Plaintiff’s conclusory assertions that Defendants “follow[ed] through on the ideas and
plans developed by ABR and disclosed to Defendants” in “improperly negotiat[ing] with
Hovensa” (Dkt. No. 14 ¶ 87), and that “ABR has been damaged by Defendants’ appropriation of
its business ideas, plans and strategies, and using such information to pursue the Hovensa
transaction without ABR” (Dkt. No. 14 ¶ 90) (emphasis added). These assertions also lack factual
allegations as to how and in what way Defendants appropriated and used Plaintiff’s confidential
material.
In Sustainable Energy Generation, the parties executed a confidentiality agreement to
explore a partnership for potential business projects, whereupon plaintiff shared confidential
information with defendants pursuant to a non-disclosure agreement. 2014 WL 2433096 at *1. The
of DUTSA. (Dkt. No. 14 ¶ 83-91). However, Plaintiff defended a purported trade secret claim by
arguing in its Response that “the issue of whether or not [Confidential Information] alleged to have
been misappropriated is a ‘trade secret,’ is a question of fact which is inappropriate at the motion
to dismiss stage.” (Dkt. No. 30 at 30). While the Court agrees with Plaintiff’s contention, see e.g.,
Beard Research, Inc. v. Kates, 8 A.3d 573, 591 (Del. Ch.), aff’d sub nom. ASDI, Inc. v. Beard
Research, Inc., 11 A.3d 749 (Del. 2010), any trade secret claim should be clearly identified, and
would, in any event, suffer from the same deficiency as the common law claim discussed above.
Under Delaware law, “to maintain a successful claim for misappropriation of trade secrets, a
plaintiff must show both the existence of a trade secret and its misappropriation.” Id. at 589.
DUTSA defines misappropriation of a “trade secret” as the “acquisition, disclosure, or use of a
trade secret through improper means or in conjunction with another who acquired the secret by
improper means.” Id. at 597 (emphasis added). As in the common law claim discussed above,
Plaintiff has not pleaded sufficient facts to identify how Defendants disclosed or used alleged trade
secrets.
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parties ultimately did not consummate a partnership, with plaintiff alleging that the defendants’
main intention was never to partner with plaintiff but to acquire the latter’s confidential
information for their own self-dealing, i.e., to help them raise capital via a bond offering. Id. The
plaintiff alleged that during a public meeting with prospective investors, defendants impermissibly
incorporated plaintiff’s confidential information in several materials it distributed and presented
to the investors, precipitating plaintiff’s suit which included claims for breach of contract and
misappropriation of confidential information. Id. at *4-5.
In denying defendants’ Rule 12(b)(6) motion to dismiss, the court found that plaintiff had
adequately pleaded factual allegations that supported these claims—namely, that plaintiff was able
to identify with specificity when, how, and in what circumstances its confidential information was
improperly disclosed by defendants, i.e., during two investor presentations and by inclusion of the
information in credit analyst reports handed out to third-parties. Id. at *12-15 (“[I]t is reasonably
conceivable that [plaintiff’s confidential information] appeared in those reports as a result of
Defendant’s disclosures and remains publicly available in violation of the [non-disclosure
agreement]”). Thus, the court concluded that “because it is reasonably conceivable that Defendants
used or disclosed impermissibly [plaintiff’s] confidential information, it is also reasonably
conceivable 	that 	Defendants 	wrongfully 	exerted 	dominion 	over 	[plaintiff’s] 	confidential
Proprietary Information,” for the purposes of the second element of a misappropriation claim. Id.
at *15.
Here, in contrast, the dearth of facts in the Amended Complaint prevents the Court from
concluding that a sufficient showing has been made for the Court to conclude that ABR has a
plausible claim for relief as to Defendants’ alleged impermissible use of ABR’s Confidential
Information. Unlike in Sustainable Energy Generation, Plaintiff’s factual allegations do not
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include information addressing how, when, where, and by and to whom ABR’s Confidential
Information was improperly disclosed. Instead, Plaintiff only vaguely describes the alleged
violations, such as Defendants having “improperly negotiated with Hovensa for the terminal only[,
having] follow[ed] through on the ideas and plans developed by ABR and disclosed to
Defendants” (Dkt. No. 14 ¶ 87) (emphasis added); and Defendants “using information gained from
ABR in their dealings with Hovensa and future plans for the Terminal facility.” (Dkt. No. 14 ¶ 89)
(emphasis added). Such conclusory descriptions do not meet the plausibility standard under
Twombly, wherein the “[f]actual allegations must be enough to raise a right to relief above the
speculative level.” Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 555). Accordingly,
Plaintiff has failed to make a sufficient showing of plausibility with regard to the second element
of a misappropriation claim.
In sum, because Plaintiff has not sufficiently pleaded claims for a breach of contract or
misappropriation (either common law or under DUTSA) to survive a Rule 12(b)(6) Motion, the
Court will dismiss Counts II and IV against Defendants for failure to state a claim. However, while
Plaintiff’s claims in Counts II and IV are deficient and are thus subject to dismissal, “district courts
are instructed to provide the plaintiff with leave to amend even if the plaintiff has not requested
such leave,” unless the district court finds that amendment would be inequitable or futile. Great
Bay, 2015 WL 4531715 at *6 (citing Phillips, 515 F.3d at 245). Here, the Court is unaware of any
basis for concluding that amendment would be inequitable or futile. Accordingly, the Court will
dismiss Counts II and IV without prejudice, and with leave to further amend the Complaint to
address the deficiencies identified herein.
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2. 	Count III: Breach of Contract (Injunction)
The NDA contains a provision authorizing either party to obtain an injunction to prevent a
party from “breaching or continuing to breach” any non-disclosure and confidentiality provisions
in the Agreement. (NDA ¶ 10). Plaintiff requests an injunction against Defendants, alleging that
“Defendants have used and continue to use Plaintiff’s Confidential Information (as defined in the
NDA) in the acquisition and development of operational plans for the Hovensa facility.” (Dkt. No.
14 ¶ 80).
Plaintiff’s request in this regard does not state a cause of action because it is instead a
request for a certain type of relief. Chruby v. Kowaleski, 534 F. App’x 156, 160 n. 2 (3d Cir. 2013)
(“injunction is a remedy rather than a cause of action, so a separate claim for injunctive relief is
unnecessary”); accord Townsend v. E. Specialty Fin., Inc., 2015 WL 604074, at *2 (D. Del. Feb.
12, 2015) (“[i]njunctive relief is a remedy, not a cause of action”) (citing Birdman v. Office of the
Governor, 677 F.3d 167, 172 (3d Cir. 2012)); see also Slemmer v. McGlaughlin Spray Foam
Insulation, Inc., 955 F. Supp. 2d 452, 465 (E.D. Pa. 2013) (“A pleading can request injunctive
relief in connection with a substantive claim, but a separately pled claim or cause of action for
injunctive relief is inappropriate.”) (internal citation, quotation marks and ellipses are omitted);
Tolia v. Dunkin Brands, 2011 WL 6132102, at *6 n.5 (D.N.J. Oct. 7, 2011) report and
recommendation adopted, 2011 WL 6132271 (D.N.J. Dec. 7, 2011) (citing cases from various
federal jurisdictions finding that injunction is not a distinct cause of action). In other words, such
relief is more properly construed as a remedy for Defendants’ alleged breach of contract, but not
a separate cause of action. Accordingly, the Court will dismiss Count III of the Amended
Complaint against Defendants for failure to state a claim and allow Plaintiff in a Second Amended
Complaint to seek injunctive relief as an additional remedy for the alleged breach of contract.
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3. 	Count VI: Quantum Meruit
Plaintiff asserts quantum meruit as another cause of action against Defendants. In support
of its quantum meruit claim, Plaintiff alleges that it has conferred upon Defendants benefits for
which ABR has not been fully compensated, and that it would be “inequitable” to allow Defendants
to retain these benefits without compensation to Plaintiff. (Dkt. No. 14 ¶¶ 97-101). These benefits
include “ABR’s strategies, plans and analyses,” and ABR’s “neg[oti]ations with Hovensa, the
Government of the Virgin Islands, and the United States [Environmental Protection Agency].”
(Dkt. No. 14 ¶ 100).
Defendants contend that Count VI fails to state a claim upon which relief can be granted
because there is no right to bring an action based on quasi-contract principles where an express
contract governs. (Dkt. No. 19 at 31-32). Specifically, Defendants argue that because the parties’
Letter Agreement “governs the subject matter of the dispute, claims in quasi-contract are barred.”
(Dkt. No. 19 at 32).
In response, Plaintiff argues that the NDA, and not the Letter Agreement, governs its
claims. (Dkt. No. 30 at 31 n. 24). According to Plaintiff, its “action is based on a[] signed NDA
that [D]efendants violated which was the direct cause of the damage to Plaintiffs.” Id. Plaintiff
further argues that, even assuming it had brought a breach of contract claim under the Letter
Agreement, ABR is “permitted to plead alternative theories of recovery based on breach of contract
and unjust enrichment in cases where [as here] there is a ‘question as to the validity of the contract
in question.’” (Dkt. No. 30 at 31).
In their Reply, Defendants argue that pleading alternative theories of recovery is limited to
instances where the contract’s validity is disputed but that no party here has challenged the validity
of the Letter Agreement. (Dkt. No. 34 at 18). Further, Defendants insist that it is the Letter
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Agreement which governs Plaintiff’s quasi-contract claims because it specifically covers ABR’s
expectations with regard to the acquisition of Hovensa and details the financial terms of the parties’
relationship. (Dkt. No. 19 at 33; Dkt. No. 34 at 18). Thus, because the Letter Agreement expressly
governs this issue, Defendants contend that dismissal of Plaintiff’s quantum meruit claim is
warranted. (Dkt. No. 34 at 19).
The Court agrees with Plaintiff, based on the information currently before the Court, that
it is the NDA, not the Letter Agreement, that governs Plaintiff’s quasi-contract claims. Plaintiff’s
factual allegations in its Amended Complaint describe the benefits Plaintiff “conferred” upon
Defendants 	as 	its 	introduction 	to 	the 	Hovensa transaction, 	its 	negotiations 	with 	various
governmental entities, and “its strategies, plans and analyses for the purchase, restart and operation
of the Refinery Facility.” (Dkt. No. 14 ¶¶ 98, 100). As in its breach of contract and
misappropriation claims, Plaintiff alleges that “Defendants later improperly used the introduction
and information for their own benefit, appropriated selected portions of the transaction, and ran
with it on their own.” Id. ¶ 98. Even Plaintiff’s claims that Defendants exploited both Plaintiff’s
introduction to the Hovensa business opportunity, id. ¶ 98, and Plaintiff’s prior negotiations with
Hovensa and other governmental parties, id. ¶ 99-100, implicate the NDA because information
from Plaintiff’s introduction, relationships, and negotiations, are seemingly part of the confidential
material which Plaintiff offered Defendants. Accordingly, because the Court finds that the parties’
NDA governs the issue at hand, it will apply Delaware law in its analysis of Plaintiff’s claim, in
accordance with the NDA’s choice of law provision.
Quantum meruit is “a quasi-contract claim that allows a party to recover the reasonable
value of his or her services.” Petrosky v. Peterson, 859 A.2d 77, 79 (Del. 2004); accord Underhill
Inv. Corp. v. Fixed Income Disc. Advisory Co., 540 F. Supp. 2d 528, 536 (D. Del. 2008), aff’d on
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other grounds, 319 F. App’x 137 (3d Cir. 2009) (“Quantum meruit means literally ‘as much as he
deserves’ and permits a plaintiff to recover the reasonable value of the services he provided to the
defendant in the absence of a contract, provided those services were not gratuitous”). Applying
this theory allows a plaintiff to “ask the Court to imply a promise by defendants to pay for
plaintiff’s extra work. Such an implied promise to pay for work performed gives rise to a quasi-
contract upon which plaintiff may recover.” Id. at 988.
The Court agrees with Defendants that there generally is no right to bring an action based
on quasi-contract principles, such as quantum meruit, where an express contract governs. (Dkt.
No. 19 at 31-32); Patterson Woods & Assocs., LLC v. Realty Enter., LLC, 2008 WL 2231511, at
15 (Del. Super. Ct. May 21, 2008) (finding “where an enforceable contract exists between the
parties, recovery on a theory of quantum meruit is inapplicable.”); accord J.A. Moore Const. Co.
v. Sussex Assocs. Ltd. P’ship, 688 F. Supp. 982, 988 (D. Del. 1988) (“[t]he existence of an express
agreement, whether written or oral, precludes the finding of a quasi-contract.”). However, the
Court also recognizes that in addition to a contract claim, a party may also seek a quantum meruit
claim in the alternative. Cavi v. Evolving Sys., Inc., 245 F. Supp. 3d 604, 605 (D. Del. 2017);
Greenberg v. Thomas Edison Charter Sch., 2011 WL 6210632, at *2 (Del. Com. Pl. Nov. 21,
2011); see also Weydert Homes, Inc. v. Kammes, 395 Ill. App. 3d 512, 522 (2009) (“The fact that
plaintiff pleaded the existence of a written contract does not preclude it from pleading quantum
meruit in the alternative.”); TSC Research, LLC v. Bayer Chemicals Corp., 552 F. Supp. 2d 534,
540 (M.D.N.C. 2008) (“Notably, a claim for quantum meruit can only exist in the absence of an
enforceable, express contract . . . Therefore, where a plaintiff also alleges breach of contract,
quantum meruit must be presented as an alternative pleading.”); Loheac v. Children’s Corner
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Learning Ctr., 857 N.Y.S.2d 143, 144 (2008) (“Plaintiff was not precluded from bringing an action
for breach of contract and, as alternative theories, quantum meruit and unjust enrichment”).
Here, Defendants’ position as to the validity of the NDA has not been explored since
Defendants’ focus in its Motion to Dismiss and Reply has been the applicability of the Letter
Agreement, rather than the NDA, to Plaintiff’s claims. (Dkt. No. 19 at 31-33; Dkt. No. 34 at 18-
19). Thus, the Court finds that dismissing Plaintiff’s quantum meruit claim at this juncture of the
proceedings would be premature. See Hiller & Arban, LLC v. Reserves Mgmt., LLC, 2016 WL
3678544, at *3 (Del. Super. Ct. July 1, 2016) (allowing plaintiff to plead quantum meruit claim in
the alternative to its contract claims partly because “Defendants have not stipulated to the existence
of a valid contract and the instant Motion to Dismiss does not directly respond to H & A’s breach
of contract allegations.”); see also Kammes, 395 Ill. App. 3d at 522 (finding that, despite breach
of contract claim, dismissal of plaintiff’s quantum meruit claim was “premature” as the lower court
“had not considered any evidence . . . concerning the formation of, or performance of, the
contract.”); MK Strategies, LLC v. Ann Taylor Stores Corp., 567 F. Supp. 2d 729, 736 (D.N.J.
2008) (permitting plaintiffs’ breach of contract and unjust enrichment claims “to proceed at the
motion to dismiss stage, [because] dismissal of one of these claims would be premature,”
particularly since the facts needed to support a breach of contract claim “must await further
proceedings” during discovery). Accordingly, in addition to a breach of contract claim, the Court
will allow Plaintiff to plead a quantum meruit claim in the alternative.22
22 In their Motion to Dismiss, Defendants also argue that dismissal of Plaintiffs’ claims is further
warranted for failure to name JP Energy St. Croix and ABRH as necessary parties pursuant to Fed.
R. Civ. P. 19. (Dkt. No. 19 at 35). This argument is moot, as the three remaining Counts which
survive Defendants’ Motion to Dismiss—namely Counts II, IV, and VI—all pertain to the NDA,
to which JP Energy St. Croix and ABRH are not signatories.
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V. 	CONCLUSION
For the reasons set forth above, Defendants’ Motion to Dismiss or, in the Alternative, to
Transfer Pursuant to 28 U.S.C. § 1404 will be granted in part and denied in part. Defendants’
Motion to Dismiss based on the forum selection clause and Motion to Transfer Pursuant to 28
U.S.C. § 1404 will be denied. The Motion to Dismiss for failure to state a claim will be granted as
to Counts I, III, V, and VII with prejudice; granted as to Counts II and IV, without prejudice and
with leave to amend; and denied as to Count VI.
An appropriate Order accompanies this Memorandum Opinion.
Date: July 16, 2018 	_______/s/________
WILMA A. LEWIS
Chief Judge
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