Business and Corporate Case Update (2024)

Presentation at the Idaho State Bar Business & Corporate Law Section's Annual Meeting on June 4, 2024

1. Business & Corporate Case Update Wendy Gerwick Couture Idaho State Bar Business & Corporate Law Section Annual Meeting June 4, 2024

2. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

3. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

4. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Eagle Creek Irrigation Co. (Id. nonprofit co.) (owns a water right)

5. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Eagle Creek Irrigation Co. (Id. nonprofit co.) (owns a water right) Other s/ hs Owns 15 shares (about 7.46% of total issued stock) S/h: AC&CE

6. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Eagle Creek Irrigation Co. (Id. nonprofit co.) (owns a water right) Other s/ hs Owns 15 shares (about 7.46% of total issued stock) S/h: AC&CE Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty based on 3 things:

7. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Eagle Creek Irrigation Co. (Id. nonprofit co.) (owns a water right) Other s/ hs Owns 15 shares (about 7.46% of total issued stock) S/h: AC&CE Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty based on 3 things: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares X

8. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Was this claim ripe?

9. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Was this claim ripe? “The purpose of the ripeness requirement is to prevent courts from entangling themselves in purely abstract disagreements .”

10. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Was this claim ripe? “The purpose of the ripeness requirement is to prevent courts from entangling themselves in purely abstract disagreements .” Although additional shares of stock have been authorized, none has been issued. “Any claim of dilution is ‘difference or dispute of a hypothetical or abstract character.’”

11. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Was this claim ripe? “The purpose of the ripeness requirement is to prevent courts from entangling themselves in purely abstract disagreements .” Although additional shares of stock have been authorized, none has been issued. “Any claim of dilution is ‘difference or dispute of a hypothetical or abstract character.’” Dicta (even if there had been dilution): “There is nothing in the Idaho Nonprofit Corporation Act which limits a nonprofit organization’s ability to take on new members, absent such a provision in the articles or bylaws.” “Here, the governing documents contain no such protections.” “While it is unclear whether dilution alone can give rise to a claim, it must be stressed that no dilution has occurred here.”

12. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Was this claim ripe? “The purpose of the ripeness requirement is to prevent courts from entangling themselves in purely abstract disagreements .” Although additional shares of stock have been authorized, none has been issued. “Any claim of dilution is ‘difference or dispute of a hypothetical or abstract character.’” Dicta (even if there had been dilution): “There is nothing in the Idaho Nonprofit Corporation Act which limits a nonprofit organization’s ability to take on new members, absent such a provision in the articles or bylaws.” “Here, the governing documents contain no such protections.” “While it is unclear whether dilution alone can give rise to a claim, it must be stressed that no dilution has occurred here.” Affirm the district court’s grant of summary judgment because the issue is not ripe for adjudication.

13. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Eagle Creek Irrigation Co. (Id. nonprofit co.) (owns a water right) Other s/ hs Owns 15 shares (about 7.46% of total issued stock) S/h: AC&CE Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty based on 3 things: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Bd recommended, & majority of s/ hs approved, amendment to articles to remove language that Eagle Creek held water right “in trust” for s/ hs Eagle Creek entered into a mitigation agreement with a s/h (& board member) allowing the s/h’s water to remain unused (as a mitigation condition for the s/h’s successful application for a IDWR permit to use a ground water right) X X

14. Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty : Bd recommended, & majority of s/ hs approved, amendment to articles to remove language that Eagle Creek held water right “in trust” for s/ hs Eagle Creek entered into a mitigation agreement with a s/h (& board member) allowing the s/h’s water to remain unused (as a mitigation condition for the s/h’s successful application for a IDWR permit to use a ground water right) A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Direct or derivative?

15. Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty : Bd recommended, & majority of s/ hs approved, amendment to articles to remove language that Eagle Creek held water right “in trust” for s/ hs Eagle Creek entered into a mitigation agreement with a s/h (& board member) allowing the s/h’s water to remain unused (as a mitigation condition for the s/h’s successful application for a IDWR permit to use a ground water right) A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Direct or derivative? Did AC&CE demonstrate a distinct harm or a breach of a special duty (in order to assert a direct claim)?

16. Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty : Bd recommended, & majority of s/ hs approved, amendment to articles to remove language that Eagle Creek held water right “in trust” for s/ hs Eagle Creek entered into a mitigation agreement with a s/h (& board member) allowing the s/h’s water to remain unused (as a mitigation condition for the s/h’s successful application for a IDWR permit to use a ground water right) A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Direct or derivative? Did AC&CE demonstrate a distinct harm or a breach of a special duty (in order to assert a direct claim)? NO, all s/ hs , including AC&CE, are equally affected by the decisions & actions of Eagle Creek, its board, and its shareholders. Derivative, not direct.

17. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)?

18. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)? I.R.C.P. 78(a) Prerequisites. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association.

19. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)? I.R.C.P. 78(a) Prerequisites. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association. Here, where no other s/ hs supported the claims or desired to have the amendments revoked, AC&CE did not “adequately represent” the interests of the other shareholders.

20. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)? I.R.C.P. 78(a) Prerequisites. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association. Here, where no other s/ hs supported the claims or desired to have the amendments revoked, AC&CE did not “adequately represent” the interests of the other shareholders. I.R.C.P. 78(b) Pleading Requirements. The complaint must be verified and must: (1) allege that the plaintiff was a shareholder or member at the time of the transaction complained of , or that the plaintiff's share or membership later devolved on it by operation of law; (2) allege that the action is not a collusive one to confer jurisdiction that the court would otherwise lack; . . .

21. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)? I.R.C.P. 78(a) Prerequisites. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association. Here, where no other s/ hs supported the claims or desired to have the amendments revoked, AC&CE did not “adequately represent” the interests of the other shareholders. I.R.C.P. 78(b) Pleading Requirements. The complaint must be verified and must: (1) allege that the plaintiff was a shareholder or member at the time of the transaction complained of, or that the plaintiff's share or membership later devolved on it by operation of law; (2) allege that the action is not a collusive one to confer jurisdiction that the court would otherwise lack; . . . Here, the complaint doesn’t contain these words.

22. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)? I.R.C.P. 78(a) Prerequisites. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association. Here, where no other s/ hs supported the claims or desired to have the amendments revoked, AC&CE did not “adequately represent” the interests of the other shareholders. I.R.C.P. 78(b) Pleading Requirements. The complaint must be verified and must: (1) allege that the plaintiff was a shareholder or member at the time of the transaction complained of, or that the plaintiff's share or membership later devolved on it by operation of law; (2) allege that the action is not a collusive one to confer jurisdiction that the court would otherwise lack; . . . Here, the complaint doesn’t contain these words. I.R.C.P. 78(b) Pleading Requirements. The complaint must be verified and must: (3) state with particularity: (A) any effort by the plaintiff to obtain the desired action from the directors or comparable authority and, if necessary, from the shareholders or members; and (B) the reasons for not obtaining the action or not making the effort .

23. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Comply with I.R.C.P. Rule 78 (re: derivative actions)? I.R.C.P. 78(a) Prerequisites. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association. Here, where no other s/ hs supported the claims or desired to have the amendments revoked, AC&CE did not “adequately represent” the interests of the other shareholders. I.R.C.P. 78(b) Pleading Requirements. The complaint must be verified and must: (1) allege that the plaintiff was a shareholder or member at the time of the transaction complained of, or that the plaintiff's share or membership later devolved on it by operation of law; (2) allege that the action is not a collusive one to confer jurisdiction that the court would otherwise lack; . . . Here, the complaint doesn’t contain these words. I.R.C.P. 78(b) Pleading Requirements. The complaint must be verified and must: (3) state with particularity: (A) any effort by the plaintiff to obtain the desired action from the directors or comparable authority and, if necessary, from the shareholders or members; and (B) the reasons for not obtaining the action or not making the effort. Here, the complaint doesn’t make these allegations.

24. A.C. & C.E. Invs ., Inc. v. Eagle Creek Irrigation Co. , 540 P.3d 349 (Idaho 2023). Eagle Creek Irrigation Co. (Id. nonprofit co.) (owns a water right) Other s/ hs Owns 15 shares (about 7.46% of total issued stock) S/h: AC&CE Complaint against Eagle Creek for declaratory judgment & breach of fiduciary duty based on 3 things: Bd recommended, & majority of s/ hs approved, amendment to articles to double # of authorized shares Bd recommended, & majority of s/ hs approved, amendment to articles to remove language that Eagle Creek held water right “in trust” for s/ hs Eagle Creek entered into a mitigation agreement with a s/h (& board member) allowing the s/h’s water to remain unused (as a mitigation condition for the s/h’s successful application for a IDWR permit to use a ground water right) X X X Affirm grant of summary judgment to Eagle Creek

25. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

26. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt

27. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs

28. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint

29. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest

30. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records.

31. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records. Fordemwalt asserted both derivative & direct claims. In this opinion, the court addressed the defendants’ MTD the direct claims only .

32. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records. Fordemwalt asserted both derivative & direct claims. In this opinion, the court addressed the defendants’ MTD the direct claims only . Breach of fiduciary duty

33. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Direct or derivative? Did Fordemwalt allege a unique injury or breach of a special duty (in order to assert a direct claim)?

34. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Direct or derivative? Did Fordemwalt allege a unique injury or breach of a special duty (in order to assert a direct claim)? There IS Idaho precedent finding a unique injury where a single minority s/h of a closely held corporation alleged that the other s/ hs were attempting to squeeze him out.

35. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Direct or derivative? Did Fordemwalt allege a unique injury or breach of a special duty (in order to assert a direct claim)? There IS Idaho precedent finding a unique injury where a single minority s/h of a closely held corporation alleged that the other s/ hs were attempting to squeeze him out. But here, . . .

36. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records. Fordemwalt asserted both derivative & direct claims. In this opinion, the court addressed the defendants’ MTD the direct claims only . Breach of fiduciary duty

37. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Direct or derivative? Did Fordemwalt allege a unique injury or breach of a special duty (in order to assert a direct claim)? There IS Idaho precedent finding a unique injury where a single minority s/h of a closely held corporation alleged that the other s/ hs were attempting to squeeze him out. But here, Fordemwalt isn’t the only minority s/h; so, as alleged, it isn’t a unique injury to Fordemwalt .

38. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Direct or derivative? Did Fordemwalt allege a unique injury or breach of a special duty (in order to assert a direct claim)? There IS Idaho precedent finding a unique injury where a single minority s/h of a closely held corporation alleged that the other s/ hs were attempting to squeeze him out. But here, Fordemwalt isn’t the only minority s/h; so, as alleged, it isn’t a unique injury to Fordemwalt . Rather, Baseline is the legal person that has allegedly suffered the injury. “This is a textbook derivative lawsuit.”

39. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records. Fordemwalt asserted both derivative & direct claims. In this opinion, the court addressed the defendants’ MTD the direct claims only . Dismissed direct breach of fiduciary claims. Breach of fiduciary duty

40. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records. Fordemwalt asserted both derivative & direct claims. In this opinion, the court addressed the defendants’ MTD the direct claims only . Dismissed direct breach of fiduciary claims. Tortious interference w/ contractual relationship with Baseline

41. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. Board

42. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) Board Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A party can’t interfere with its OWN contract.

43. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) Board Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A party can’t interfere with its OWN contract. Agents of a principal who is in a contract can be viewed as 3 rd parties to the contract IF they are acting outside the course & scope of their agency.

44. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A party can’t interfere with its OWN contract. Agents of a principal who is in a contract can be viewed as 3 rd parties to the contract IF they are acting outside the course & scope of their agency. Board: we were acting on Baseline’s behalf in responding to records request. Board

45. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) Board Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A party can’t interfere with its OWN contract. Agents of a principal who is in a contract can be viewed as 3 rd parties to the contract IF they are acting outside the course & scope of their agency. Board: we were acting on Baseline’s behalf in responding to records request. Fordenhalm : No, the Board was acting on HydroPoint’s behalf.

46. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) Board Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A party can’t interfere with its OWN contract. Agents of a principal who is in a contract can be viewed as 3 rd parties to the contract IF they are acting outside the course & scope of their agency. Board: we were acting on Baseline’s behalf in responding to records request. Fordenhalm : No, the Board was acting on HydroPoint’s behalf. Court: But Hydro Point is ALSO a party to the bylaws & thus the contract. Either way, claim fails.

47. Fordemwalt ex rel. Baseline, Inc. v. HydroPoint Data Sys., Inc. , No. 1:22-CV-00395-BLW, 2023 WL 2868571 (D. Idaho Apr. 9, 2023). Baseline, Inc. (Idaho) Fordemwalt HydroPoint Data Systems, Inc. (Del.) 78.75% Other minority s/ hs Board: board members of both Baseline & HydroPoint Board allegedly caused Baseline to enter into series of conflicted transactions with HydroPoint , e.g.: Overpaying HydroPoint a management fee Diverting sales to HydroPoint Selling products to HydroPoint at cost or substantial discount Lending funds to HydroPoint at below-market interest Board allegedly refused to provide Fordemwalt w/ books & records. Fordemwalt asserted both derivative & direct claims. In this opinion, the court addressed the defendants’ MTD the direct claims only . Dismissed direct breach of fiduciary claims. Dismissed tortious interference claim (w/ leave to amend). Tortious interference w/ contractual relationship with Baseline

48. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

49. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Bronco Elite 106 Garden City & Tricon Props. Lessee Lessor(s)

50. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Bronco Elite 106 Garden City & Tricon Props. 10-year lease w/ option to purchase at year 5 Lessee Lessor(s)

51. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Bronco Elite 106 Garden City & Tricon Props. 10-year lease w/ option to purchase at year 5 Lessee Lessor(s) Anticipatory breach of K & specific performance

52. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Bronco Elite 106 Garden City & Tricon Props. 10-year lease w/ option to purchase at year 5 Lessee Lessor(s) Anticipatory breach of K & specific performance Breach of K

53. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Bronco Elite 106 Garden City & Tricon Props. 10-year lease w/ option to purchase at year 5 Lessee Lessor(s) Anticipatory breach of K & specific performance Breach of K District court : granted summary judgment in favor of lessee (Bronco Elite) & ordered lessors to convey property to lessee

54. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease.

55. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition ; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.

56. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition ; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Was lessee in breach? If so, was option to purchase only foreclosed if it was a “material” breach? If so, was lessee in material breach? If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)?

57. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Was lessee in breach? If so, was option to purchase only foreclosed if it was a “material” breach? If so, was lessee in material breach? If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? X

58. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Was lessee in breach? X Late fees Lessee had paid monthly rent late several times. Under the terms of the lease, late fees were automatically charged if rent was not paid by the 7th day after due. Lessee had not paid any accrued late fees, so was in breach.

59. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Was lessee in breach? X Late fees Lessee had paid monthly rent late several times. Under the terms of the lease, late fees were automatically charged if rent was not paid by the 7th day after due. Lessee had not paid any accrued late fees, so was in breach. Failing to remove a lien An air conditioning company had obtained a lien against property to secure lessee’s payment. Lessee had paid the company in full, but the company had not removed the lien. Lessee failed to get the (valueless) lien removed, so was in breach.

60. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Was lessee in breach? YES If so, was option to purchase only foreclosed if it was a “material” breach? If so, was lessee in material breach? If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? X

61. If so, was option to purchase only foreclosed if it was a “material” breach? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X Lease agreement did not define “breach.” So, district court correctly applied the “plain legal meaning” of the term. Which means that the breach would need to be “material” in order for lessors to prevent lessee from exercising the purchase option.

62. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Was lessee in breach? YES If so, was option to purchase only foreclosed if it was a “material” breach? YES If so, was lessee in material breach? If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? X

63. If so, was lessee in material breach? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X Late fees Lessee had paid monthly rent late several times. Under the terms of the lease, late fees were automatically charged if rent was not paid by the 7th day after due. Lessee had not paid any accrued late fees, so was in breach. Failing to remove a lien An air conditioning company had obtained a lien against property to secure lessee’s payment. Lessee had paid the company in full, but the company had not removed the lien. Lessee failed to get the (valueless) lien removed, so was in breach. Uncontested that a valueless lien being placed on the property wasn’t a material breach.

64. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or conditio n; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Was lessee in breach? YES If so, was option to purchase only foreclosed if it was a “material” breach? YES If so, was lessee in material breach? NO If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? X

65. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X The waiver doctrine is equitable. In Idaho, requires two showings: Voluntary, intentional relinquishment of a known right; & Detrimental reliance by the party asserting waiver.

66. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X The waiver doctrine is equitable. In Idaho, requires two showings: Voluntary, intentional relinquishment of a known right; & Detrimental reliance by the party asserting waiver. The existence of a non-waiver provision doesn’t prevent a finding of waiver b/c . . .

67. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X The waiver doctrine is equitable. In Idaho, requires two showings: Voluntary, intentional relinquishment of a known right; & Detrimental reliance by the party asserting waiver. The existence of a non-waiver provision doesn’t prevent a finding of waiver b/c . . . the non-waiver provision ITSELF can be waived.

68. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X The waiver doctrine is equitable. In Idaho, requires two showings: Voluntary, intentional relinquishment of a known right; & Detrimental reliance by the party asserting waiver. The existence of a non-waiver provision doesn’t prevent a finding of waiver b/c . . . the non-waiver provision ITSELF can be waived. Requires a double-showing by the party asserting waiver of the clear intent to waive BOTH the underlying provision & the non-waiver provision.

69. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X The waiver doctrine is equitable. In Idaho, requires two showings: Voluntary, intentional relinquishment of a known right ; & Detrimental reliance by the party asserting waiver. The existence of a non-waiver provision doesn’t prevent a finding of waiver b/c the non-waiver provision ITSELF can be waived. Requires a double-showing by the party asserting waiver of the clear intent to waive BOTH the underlying provision & the non-waiver provision.

70. Failing to remove a lien An air conditioning company had obtained a lien against property to secure lessee’s payment. Lessee had paid the company in full, but the company had not removed the lien. Lessee failed to get the (valueless) lien removed, so was in breach. Waived breach? If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X Late fees Lessee had paid monthly rent late several times. Under the terms of the lease, late fees were automatically charged if rent was not paid by the 7th day after due. Lessee had not paid any accrued late fees, so was in breach. Waived breach?

71. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X Late fees Lessee had paid monthly rent late several times. Under the terms of the lease, late fees were automatically charged if rent was not paid by the 7th day after due. Lessee had not paid any accrued late fees, so was in breach. Waived breach? YES Although lessor had communicated with lessee re: the possibility of late fees, never attempted to enforce them. Lessor sent lease statements that showed no balance due & owing. Lessor never attempted to recoup until lessee attempted to exercise its purchase option. Failing to remove a lien An air conditioning company had obtained a lien against property to secure lessee’s payment. Lessee had paid the company in full, but the company had not removed the lien. Lessee failed to get the (valueless) lien removed, so was in breach. Waived breach?

72. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X Late fees Lessee had paid monthly rent late several times. Under the terms of the lease, late fees were automatically charged if rent was not paid by the 7th day after due. Lessee had not paid any accrued late fees, so was in breach. Waived breach? YES Although lessor had communicated with lessee re: the possibility of late fees, never attempted to enforce them. Lessor sent lease statements that showed no balance due & owing. Lessor never attempted to recoup until lessee attempted to exercise its purchase option. Failing to remove a lien An air conditioning company had obtained a lien against property to secure lessee’s payment. Lessee had paid the company in full, but the company had not removed the lien. Lessee failed to get the (valueless) lien removed, so was in breach. Waived breach? YES Lessor was not only aware of lien, also facilitated agreement between lessee & company to pay the balance.

73. If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). X The waiver doctrine is equitable. In Idaho, requires two showings: Voluntary, intentional relinquishment of a known right; & Detrimental reliance by the party asserting waiver. The existence of a non-waiver provision doesn’t prevent a finding of waiver b/c the non-waiver provision ITSELF can be waived. Requires a double-showing by the party asserting waiver of the clear intent to waive BOTH the underlying provision & the non-waiver provision.

74. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Option to Purchase Tenant [Bronco Elite] shall have the exclusive option to purchase the [Property] commencing June 30, 2020 and expiring September 30, 2020, provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Tenant must furnish to Landlord [Tricon] written notice of Tenant's intent to purchase and shall specify a closing date not less than 60 and no more than 180 days from the date of notice. The purchase price shall be $1,020,000.00. As consideration for the option to purchase, Tenant shall pay the nonrefundable sum of $85,000.00 to Landlord as option consideration. Said sum shall apply toward the purchase price provided that Tenant timely exercises the option to purchase and is not in default or breach of any terms or conditions of this Lease. Non-Waiver Waiver by the Landlord of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or conditio n; or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Was lessee in breach? YES If so, was option to purchase only foreclosed if it was a “material” breach? YES If so, was lessee in material breach? NO If so, did lessor waive the breach (despite the inclusion of the non-waiver provision)? YES X

75. Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC , 534 P.3d 558 (Idaho 2023). Bronco Elite 106 Garden City & Tricon Props. 10-year lease w/ option to purchase at year 5 Lessee Lessor(s) Anticipatory breach of K & specific performance Breach of K District court : granted summary judgment in favor of lessee (Bronco Elite) & ordered lessors to convey property to lessee Supreme Court : affirmed.

76. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

77. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). D.J. = engineer Engineering Co. Designed road reconstruction project for Teton Cty

78. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). D.J. = engineer Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project

79. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K

80. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock

81. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Per Eagle Rock (contested fact issue), D.J. told Eagle Rock to go ahead & remove the unsuitable material & the county would “make it right.” Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock

82. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Per Eagle Rock (contested fact issue), D.J. told Eagle Rock to go ahead & remove the unsuitable material & the county would “make it right.” Eagle Rock submitted bill for extra $649K; county rejected. Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock

83. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Per Eagle Rock (contested fact issue), D.J. told Eagle Rock to go ahead & remove the unsuitable material & the county would “make it right.” Eagle Rock submitted bill for extra $649K; county rejected. Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock Breach of K

84. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Per Eagle Rock (contested fact issue), D.J. told Eagle Rock to go ahead & remove the unsuitable material & the county would “make it right.” Eagle Rock submitted bill for extra $649K; county rejected. Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock Breach of K District court : granted summary judgment in favor of Teton Cty b/c, even if D.J. did say that, D.J. didn’t have actual or apparent authority to bind the county.

85. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act.

86. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him.

87. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Apparent authority = third party reasonably believes the actor has authority to act on behalf of the principal & that belief is traceable to the principal’s manifestations . Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him.

88. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Apparent authority = third party reasonably believes the actor has authority to act on behalf of the principal & that belief is traceable to the principal’s manifestations . Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him. Here, looking at Eagle Rock’s reasonable belief, based on Teton Cty’s manifestations to it.

89. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Apparent authority = third party reasonably believes the actor has authority to act on behalf of the principal & that belief is traceable to the principal’s manifestations . Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him. Here, looking at Eagle Rock’s reasonable belief, based on Teton Cty’s manifestations to it. Contract is confusing. Variously references an Engineer, a Project Representative, & an owner’s “designated representative or agent,” some of whom have limitations on authority & some of whom don’t. Isn’t clear who all of these people are & whether D.J. is any of them.

90. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Apparent authority = third party reasonably believes the actor has authority to act on behalf of the principal & that belief is traceable to the principal’s manifestations . Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him. Here, looking at Eagle Rock’s reasonable belief, based on Teton Cty’s manifestations to it. Contract is confusing. Variously references an Engineer, a Project Representative, & an owner’s “designated representative or agent,” some of whom have limitations on authority & some of whom don’t. Isn’t clear who all of these people are & whether D.J. is any of them. In email to Eagle Rock, D.J. referred to himself as “the owner.”

91. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Apparent authority = third party reasonably believes the actor has authority to act on behalf of the principal & that belief is traceable to the principal’s manifestations . Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him. Here, looking at Eagle Rock’s reasonable belief, based on Teton Cty’s manifestations to it. Contract is confusing. Variously references an Engineer, a Project Representative, & an owner’s “designated representative or agent,” some of whom have limitations on authority & some of whom don’t. Isn’t clear who all of these people are & whether D.J. is any of them. In email to Eagle Rock, D.J. referred to himself as “the owner.” Teton Cty’s course of conduct: although rejected bill for removing unsuitable material, did pay bill for extra infill.

92. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Actual authority = the agent reasonably believes , in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Apparent authority = third party reasonably believes the actor has authority to act on behalf of the principal & that belief is traceable to the principal’s manifestations . Here, looking at D.J.’s reasonable belief, based on Teton Cty’s manifestations to him. Here, looking at Eagle Rock’s reasonable belief, based on Teton Cty’s manifestations to it. Contract is confusing. Variously references an Engineer, a Project Representative, & an owner’s “designated representative or agent,” some of whom have limitations on authority & some of whom don’t. Isn’t clear who all of these people are & whether D.J. is any of them. In email to Eagle Rock, D.J. referred to himself as “the owner.” Teton Cty’s course of conduct: although rejected bill for removing unsuitable material, did pay bill for extra infill. In sum, fact questions re: Whether D.J. had actual authority &, if so, scope Whether D.J. had apparent authority &, if so, scope What role, if any, K had on D.J.’s authority Whether there were other manifestations by the county that D.J. had apparent authority to vary the K Whether D.J. actually said that the county would “make it right.”

93. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Per Eagle Rock (contested fact issue), D.J. told Eagle Rock to go ahead & remove the unsuitable material & the county would “make it right.” Eagle Rock submitted bill for extra $649K; county rejected. Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock Breach of K “At this stage, it is difficult to look at all of the hats [D.J.] is purported to have worn as not lending at least some support to Eagle Rock’s position that [D.J.] reasonably believed or projected himself as one clothed in authority.”

94. Eagle Rock Timber, Inc. v. Teton Cnty . , 531 P.3d 488 (Idaho 2023). Eagle Rock K D.J. = engineer Discovered unsuitable base material, requiring removal of more material than estimated in K. Per Eagle Rock (contested fact issue), D.J. told Eagle Rock to go ahead & remove the unsuitable material & the county would “make it right.” Eagle Rock submitted bill for extra $649K; county rejected. Engineering Co. Designed road reconstruction project for Teton Cty Teton Cty D.J. = county engineer & public works director D.J. played key role in bidding the project Teton Cty D.J. = apparently drafted the K D.J. = served as a contact for Eagle Rock Breach of K District court : granted summary judgment in favor of Teton Cty b/c, even if D.J. did say that, D.J. didn’t have actual or apparent authority to bind the county. Supreme Court : reversed.

95. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

96. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle

97. 8/7/20 – Written Offer Letter Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle

98. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle

99. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle

100. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21. 4 M 8/7/20 – Taunton’s agent signed Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21. 8 M

101. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M

102. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M Breach of K Tortious interference w/ K

103. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M Breach of K Tortious interference w/ K District court : granted Ds’ MTD both claims b/c Geringer’s offer letter was unenforceable.

104. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M Breach of K Tortious interference w/ K District court : granted Ds’ MTD both claims b/c Geringer’s offer letter was unenforceable.

105. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds?

106. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds? The purpose of the statute of frauds is to ensure the contract speaks for itself.

107. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds? The purpose of the statute of frauds is to ensure the contract speaks for itself. To satisfy the statute of frauds, a property description must “designate ‘exactly’ what property the seller is conveying to the buyer.” A real estate contract satisfies the statute of frauds if the “quantity, identity or boundaries of property can be determined from the face of the instrument, or by reference to extrinsic evidence to which it refers.”

108. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds? The purpose of the statute of frauds is to ensure the contract speaks for itself. To satisfy the statute of frauds, a property description must “designate ‘exactly’ what property the seller is conveying to the buyer.” A real estate contract satisfies the statute of frauds if the “quantity, identity or boundaries of property can be determined from the face of the instrument, or by reference to extrinsic evidence to which it refers.” “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.”

109. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds? The purpose of the statute of frauds is to ensure the contract speaks for itself. To satisfy the statute of frauds, a property description must “designate ‘exactly’ what property the seller is conveying to the buyer.” A real estate contract satisfies the statute of frauds if the “quantity, identity or boundaries of property can be determined from the face of the instrument, or by reference to extrinsic evidence to which it refers.” “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” The physical address doesn’t indicate the metes & bounds of the real property. The physical address only pertains to 1 of the 63 townhomes. “Woodside Villas” isn’t the name in the recorded plat. The description doesn’t reference any external documents to identify the property to be sold. The townhomes themselves aren’t sufficient landmarks b/c it’s a purported purchase of more than the land directly under them.

110. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). But can the Statute of Frauds be used as a “sword”?

111. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). But can the Statute of Frauds be used as a “sword”? Dicta in Tricore Invs ., LLC v. Est. of Warren , 485 P.3d 92, 108 (Idaho 2021). “[W]e voice our concern whether the statute of frauds is even available to the Estate as a defense in this case. “By its plain language, [section 9-505] governs contracts or agreements. . . . Its purpose is to prevent false or fraudulent contract claims by forbidding disputed assertions of certain types of contracts without any written memorandum of the agreement.” . . . The statute of frauds “is to shield persons with interests in land from being deprived of those interests by perjury, not to arm contracting parties with a sword they may use to escape bargains they rue.” . . . The interest and purpose of the statute of frauds is not served by the Estate using it as a sword against Tricore to escape its own breach of contract. . . . Even so, Tricore failed to raise this question directly, and our concerns do not underpin the decision we announce today.”

112. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). But can the Statute of Frauds be used as a “sword”? Dicta in Tricore Invs ., LLC v. Est. of Warren , 485 P.3d 92, 108 (Idaho 2021). “[W]e voice our concern whether the statute of frauds is even available to the Estate as a defense in this case. “By its plain language, [section 9-505] governs contracts or agreements. . . . Its purpose is to prevent false or fraudulent contract claims by forbidding disputed assertions of certain types of contracts without any written memorandum of the agreement.” . . . The statute of frauds “is to shield persons with interests in land from being deprived of those interests by perjury, not to arm contracting parties with a sword they may use to escape bargains they rue.” . . . The interest and purpose of the statute of frauds is not served by the Estate using it as a sword against Tricore to escape its own breach of contract. . . . Even so, Tricore failed to raise this question directly, and our concerns do not underpin the decision we announce today.” “The Tricore dicta is not precedent and we are not bound to follow it in this case.” “[T]his case is distinguishable from Tricore .”

113. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds? The purpose of the statute of frauds is to ensure the contract speaks for itself. To satisfy the statute of frauds, a property description must “designate ‘exactly’ what property the seller is conveying to the buyer.” A real estate contract satisfies the statute of frauds if the “quantity, identity or boundaries of property can be determined from the face of the instrument, or by reference to extrinsic evidence to which it refers.” The Offer Letter failed to satisfy the statute of frauds, so it is “voidable.” “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” The physical address doesn’t indicate the metes & bounds of the real property. The physical address only pertains to 1 of the 63 townhomes. “Woodside Villas” isn’t the name in the recorded plat. The description doesn’t reference any external documents to identify the property to be sold. The townhomes themselves aren’t sufficient landmarks b/c it’s a purported purchase of more than the land directly under them.

114. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M Breach of K Tortious interference w/ K District court : granted Ds’ MTD both claims b/c Geringer’s offer letter was unenforceable. X

115. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M Breach of K Tortious interference w/ K District court : granted Ds’ MTD both claims b/c Geringer’s offer letter was unenforceable.

116. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Can the tortious interference claim still survive?

117. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Can the tortious interference claim still survive? Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach.

118. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Can the tortious interference claim still survive? Tortious interference has 4 elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A claim for tortious interference is available when a contract is “voidable” but is not available when the contract is “void ab initio.”

119. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Did the Offer Letter satisfy the Statute of Frauds? The purpose of the statute of frauds is to ensure the contract speaks for itself. To satisfy the statute of frauds, a property description must “designate ‘exactly’ what property the seller is conveying to the buyer.” A real estate contract satisfies the statute of frauds if the “quantity, identity or boundaries of property can be determined from the face of the instrument, or by reference to extrinsic evidence to which it refers.” The Offer Letter failed to satisfy the statute of frauds, so it is “voidable.” “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” The physical address doesn’t indicate the metes & bounds of the real property. The physical address only pertains to 1 of the 63 townhomes. “Woodside Villas” isn’t the name in the recorded plat. The description doesn’t reference any external documents to identify the property to be sold. The townhomes themselves aren’t sufficient landmarks b/c it’s a purported purchase of more than the land directly under them.

120. Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Can the tortious interference claim still survive? Tortious interference has 4 elements: (1) the existence of a contract ; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A claim for tortious interference is available when a contract is “voidable” but is not available when the contract is “void ab initio.”

121. Tortious interference has 4 elements: (1) the existence of a contract ; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A claim for tortious interference is available when a contract is “voidable” but is not available when the contract is “void ab initio.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Can the tortious interference claim still survive? A party can’t tortiously interfere with an agreement that is too vague & uncertain to be enforceable. The property description is an essential element of a land sale contract.

122. Tortious interference has 4 elements: (1) the existence of a contract ; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing breach of the contract; & (4) injury to the plaintiff resulting from the breach. A claim for tortious interference is available when a contract is “voidable” but is not available when the contract is “void ab initio.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Can the tortious interference claim still survive? A party can’t tortiously interfere with an agreement that is too vague & uncertain to be enforceable. The property description is an essential element of a land sale contract. For the same reasons that the property description failed the statute of frauds, it also failed to be sufficiently certain to be enforceable. “[T]here was no enforceable contract with which to tortiously interfere.”

123. 8/7/20 – Written Offer Letter “The 63 Townhomes identified as Woodside Villas, 1260 E. Lone Creek Drive, Eagle, ID 83616, in addition to the approximately 3.8 acres of adjacent land.” $21.4M 8/7/20 – Taunton’s agent signed 8/8/20 – Taunton’s agent: “Your offer letter is unenforceable; we’re selling to LCA.” Geringer Cap. v. Taunton Properties, LLC , 529 P.3d 760 (Idaho 2023). Geringer Capital Taunton Properties, LLC Owned 63 townhomes & 3.8 acres of adjacent land in Eagle LCA-CA I, LLC 8/8/20 – Offer $21.8M Breach of K Tortious interference w/ K District court : granted Ds’ MTD both claims b/c Geringer’s offer letter was unenforceable. Supreme Court : affirmed. X

124. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

125. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). XRI Investment Holdings LLC Holifield Class B Units

126. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023).

127. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023).

128. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023).

129. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Overall point of transfer : enable the net proceeds from the units’ sale ( after XRI was repaid) to be used to secure a loan to another entity owned by Holifield, without XRI’s losing its status as the sole creditor with a security interest in the units themselves.

130. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Was the transfer “void” under the LLC Agreement? If so, did that bar the equitable defense of XRI’s acquiescence in the transfer? Overall point of transfer : enable the net proceeds from the units’ sale ( after XRI was repaid) to be used to secure a loan to another entity owned by Holifield, without XRI’s losing its status as the sole creditor with a security interest in the units themselves.

131. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Was the transfer “void” under the LLC Agreement? If so, did that bar the equitable defense of XRI’s acquiescence in the transfer? Overall point of transfer : enable the net proceeds from the units’ sale ( after XRI was repaid) to be used to secure a loan to another entity owned by Holifield, without XRI’s losing its status as the sole creditor with a security interest in the units themselves.

132. No Transfer Provision Unless expressly contemplated by another provision of this Agreement, no Member may Transfer any of its Units or other Company Interests except, subject to this Article VIII, . . . (iii) to a Permitted Transferee, . . . Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023).

133. No Transfer Provision Unless expressly contemplated by another provision of this Agreement, no Member may Transfer any of its Units or other Company Interests except, subject to this Article VIII, . . . (iii) to a Permitted Transferee, . . . Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units.

134. No Transfer Provision Unless expressly contemplated by another provision of this Agreement, no Member may Transfer any of its Units or other Company Interests except, subject to this Article VIII, . . . (iii) to a Permitted Transferee , . . . Definition of “Permitted Transferee” [W] ith respect to any Class B Member or Management Member, any Person meeting all of the following requirements: (a) such Person is ( i ) the spouse of such Member, (ii) a lineal descendant of such Member, (iii) any trust, family partnership or limited liability company, the sole beneficiaries, partners or members of which are such Member or Relatives of such Member or (iv) any heir of any such Member who is deceased, (b) the applicable Transfer to such Person is made without consideration and (c) such Member or his or her heirs or legatees have at all times (including after the subject Transfer) the exclusive right to exercise and perform all rights and duties under this Agreement associated with the ownership of the applicable Transferred Units. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units.

135. No Transfer Provision Unless expressly contemplated by another provision of this Agreement, no Member may Transfer any of its Units or other Company Interests except, subject to this Article VIII, . . . (iii) to a Permitted Transferee , . . . Definition of “Permitted Transferee” [W] ith respect to any Class B Member or Management Member, any Person meeting all of the following requirements: (a) such Person is ( i ) the spouse of such Member, (ii) a lineal descendant of such Member, (iii) any trust, family partnership or limited liability company, the sole beneficiaries, partners or members of which are such Member or Relatives of such Member or (iv) any heir of any such Member who is deceased, (b) the applicable Transfer to such Person is made without consideration and (c) such Member or his or her heirs or legatees have at all times (including after the subject Transfer) the exclusive right to exercise and perform all rights and duties under this Agreement associated with the ownership of the applicable Transferred Units. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units.

136. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Overall point of transfer : enable the net proceeds from the units’ sale ( after XRI was repaid) to be used to secure a loan to another entity owned by Holifield, without XRI’s losing its status as the sole creditor with a security interest in the units themselves. Was the transfer “void” under the LLC Agreement? YES If so, did that bar the equitable defense of XRI’s acquiescence in the transfer?

137. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Overall point of transfer : enable the net proceeds from the units’ sale ( after XRI was repaid) to be used to secure a loan to another entity owned by Holifield, without XRI’s losing its status as the sole creditor with a security interest in the units themselves. Was the transfer “void” under the LLC Agreement? YES If so, did that bar the equitable defense of XRI’s acquiescence in the transfer?

138. Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). The d efense of acquiescence is equitable; generally, equitable defenses do not apply if something is void as opposed to voidable .

139. Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). The d efense of acquiescence is equitable; generally, equitable defenses do not apply if something is void as opposed to voidable . Can the parties, by LLC Agreement, agree that something is “void” rather than “voidable,” thereby foreclosing equitable defenses?

140. Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). “LLCs are ‘creatures of contract.’” “[T]he LLCA allows parties to an LLC agreement contractual freedoms not available in the corporate context.” “‘[T]he doctrine of caveat emptor . . . is fitting’ in the alternative entity context.” “[I[ nvest ors in alternative entities must read the entity’s constituent documents carefully to understand their rights, and the limitations on their rights.” “[P] articularly in the alternative entity context, equity will not save a bad contract.” The d efense of acquiescence is equitable; generally, equitable defenses do not apply if something is void as opposed to voidable . Can the parties, by LLC Agreement, agree that something is “void” rather than “voidable,” thereby foreclosing equitable defenses?

141. Transfers In Violation of Agreement. Any Transfer or attempted Transfer in violation of this Article VIII shall be void , and none of the Company or any of its respective Subsidiaries shall record such purported Transfer on its books or treat any purported Transferee as the owner of such Units. Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). “LLCs are ‘creatures of contract.’” “[T]he LLCA allows parties to an LLC agreement contractual freedoms not available in the corporate context.” “‘[T]he doctrine of caveat emptor . . . is fitting’ in the alternative entity context.” “[I[ nvest ors in alternative entities must read the entity’s constituent documents carefully to understand their rights, and the limitations on their rights.” “[P] articularly in the alternative entity context, equity will not save a bad contract.” “Nothing in Delaware law or public policy prohibits parties to an LLC agreement from contracting for incurable voidness.” The d efense of acquiescence is equitable; generally, equitable defenses do not apply if something is void as opposed to voidable . Can the parties, by LLC Agreement, agree that something is “void” rather than “voidable,” thereby foreclosing equitable defenses?

142. GH Blue Holdings, LLC XRI Investment Holdings LLC SPV owned by Holifield Holifield Class B Units Holifield v. XRI Inv. Holdings LLC , 304 A.3d 896 (Del. 2023). Overall point of transfer : enable the net proceeds from the units’ sale ( after XRI was repaid) to be used to secure a loan to another entity owned by Holifield, without XRI’s losing its status as the sole creditor with a security interest in the units themselves. Was the transfer “void” under the LLC Agreement? YES If so, did that bar the equitable defense of XRI’s acquiescence in the transfer? YES

143. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

144. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal

145. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson ) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason”

146. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson ) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason” In 2023, Jackson resigned & joined competitor; over 300 Sunder sales personnel did the same.

147. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson ) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason” In 2023, Jackson resigned & joined competitor; over 300 Sunder sales personnel did the same. Breach of contract to enforce restrictive covenants in LLC agreement

148. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson ) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason” In 2023, Jackson resigned & joined competitor; over 300 Sunder sales personnel did the same. Breach of contract to enforce restrictive covenants in LLC agreement Sunder’s Motion for Preliminary Injunction 1 element = “reasonable probability of success on the merits”

149. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Why is the Delaware Chancery Court hearing this case?

150. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Why is the Delaware Chancery Court hearing this case? “Jurisdictions other than Delaware have a significant interest in how businesses compensate employees and independent contractors and the extent to which businesses can attach restrictive covenants to those arrangements. . . . But Sunder filed suit here—in Delaware—because Sunder is a Delaware LLC and its lawyers deployed the now widespread legal technology of inserting restrictive covenants into an internal governance document. Businesses and their lawyers do that so they can invoke Delaware's contractarian regime and argue that it should override how other jurisdictions regulate restrictive covenant s. . . . That legal technology calls on the Delaware courts to adjudicate post-employment disputes for the country and potentially the world. . . .

151. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Why is the Delaware Chancery Court hearing this case? “Jurisdictions other than Delaware have a significant interest in how businesses compensate employees and independent contractors and the extent to which businesses can attach restrictive covenants to those arrangements. . . . But Sunder filed suit here—in Delaware—because Sunder is a Delaware LLC and its lawyers deployed the now widespread legal technology of inserting restrictive covenants into an internal governance document. Businesses and their lawyers do that so they can invoke Delaware's contractarian regime and argue that it should override how other jurisdictions regulate restrictive covenants. . . . That legal technology calls on the Delaware courts to adjudicate post-employment disputes for the country and potentially the world. . . . For Delaware courts to address these matters is problematic because the Delaware franchise depends on other states deferring to Delaware law to govern the internal affairs of the entities that Delaware charters. . . . For Delaware courts to address these matters is unsustainable because the Court of Chancery will never have sufficient resources to adjudicate restrictive covenant cases for Delaware entities throughout the world. The court's core role is to resolve internal governance disputes for Delaware entities. . . . In an ideal world, this case would have been filed in Utah, Nevada, or Texas. But the case is here, and it must be decided .”

152. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants?

153. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson ) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason” In 2023, Jackson resigned & joined competitor; over 300 Sunder sales personnel did the same. Breach of contract to enforce restrictive covenants in LLC agreement Motion for Preliminary Injunction 1 element = “reasonable probability of success on the merits”

154. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? What law governs the restrictive covenants?

155. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? What law governs the restrictive covenants? The restrictive covenants appear in the LLC Agreement of a Delaware LLC . The LLC Agreement provides explicitly that Delaware law governs its terms.

156. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? What law governs the restrictive covenants? The restrictive covenants appear in the LLC Agreement of a Delaware LLC. The LLC Agreement provides explicitly that Delaware law governs its terms. “This is an example of drafters attempting to use Delaware law to set the rules for what are effectively employment relationships.”

157. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? What law governs the restrictive covenants? The restrictive covenants appear in the LLC Agreement of a Delaware LLC. The LLC Agreement provides explicitly that Delaware law governs its terms. “This is an example of drafters attempting to use Delaware law to set the rules for what are effectively employment relationships.” Delaware follows the R(2d) of Conflict of Laws  won’t enforce choice of law provisions when doing so would circumvent the public policy of another state that has a greater interest in the subject matter.

158. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? What law governs the restrictive covenants? The restrictive covenants appear in the LLC Agreement of a Delaware LLC. The LLC Agreement provides explicitly that Delaware law governs its terms. “This is an example of drafters attempting to use Delaware law to set the rules for what are effectively employment relationships.” Delaware follows the R(2d) of Conflict of Laws  won’t enforce choice of law provisions when doing so would circumvent the public policy of another state that has a greater interest in the subject matter. Here  Utah (LLC’s HQ) or Texas (Jackson’s domicile) has greater interest, but false conflict b/c law is comparable in all 3 states, so apply Delaware law here.

159. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? What law governs the restrictive covenants? The restrictive covenants appear in the LLC Agreement of a Delaware LLC. The LLC Agreement provides explicitly that Delaware law governs its terms. “This is an example of drafters attempting to use Delaware law to set the rules for what are effectively employment relationships.” Delaware follows the R(2d) of Conflict of Laws  won’t enforce choice of law provisions when doing so would circumvent the public policy of another state that has a greater interest in the subject matter. Here  Utah (LLC’s HQ) or Texas (Jackson’s domicile) has greater interest, but false conflict b/c law is comparable in all 3 states, so apply Delaware law here. WARNING: won’t necessarily apply Delaware law in the future if there is a true conflict!

160. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? Does evidence of Nielson’s & Britton’s breach of fiduciary duty to Jackson operate as a defense to Jackson’s breach of the restrictive covenants, so as to prevent Sunder from establishing a reasonable probability of success?

161. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson ) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason” In 2023, Jackson resigned & joined competitor; over 300 Sunder sales personnel did the same. Breach of contract to enforce restrictive covenants in LLC agreement Motion for Preliminary Injunction 1 element = “reasonable probability of success on the merits”

162. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? Does evidence of Nielson’s & Britton’s breach of fiduciary duty to Jackson operate as a defense to Jackson’s breach of the restrictive covenants, so as to prevent Sunder from establishing a reasonable probability of success? The fiduciary obligations of managers & managing members include a duty of disclosure. It’s not a separate fiduciary duty, but a contextual manifestation of the duties of care & loyalty.

163. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? Does evidence of Nielson’s & Britton’s breach of fiduciary duty to Jackson operate as a defense to Jackson’s breach of the restrictive covenants, so as to prevent Sunder from establishing a reasonable probability of success? The fiduciary obligations of managers & managing members include a duty of disclosure. It’s not a separate fiduciary duty, but a contextual manifestation of the duties of care & loyalty. For example, fiduciaries owe a duty of disclosure when they ask their beneficiaries to take action (like asking the members to approve an amendment to an LLC agreement).

164. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? Does evidence of Nielson’s & Britton’s breach of fiduciary duty to Jackson operate as a defense to Jackson’s breach of the restrictive covenants, so as to prevent Sunder from establishing a reasonable probability of success? The fiduciary obligations of managers & managing members include a duty of disclosure. It’s not a separate fiduciary duty, but a contextual manifestation of the duties of care & loyalty. For example, fiduciaries owe a duty of disclosure when they ask their beneficiaries to take action (like asking the members to approve an amendment to an LLC agreement). Written LLC Agreement on 12/31/19: Email sent on NYE & said that the attorneys “highly recommend completing these documents by the end of tonight” (without noting that the attorneys were NOT representing the minority members). Email addressed the minority members as “partners.” Email noted that Nielson & Britton had already executed, as if it were a done deal. LLC agreement sent as a PDF, as if no changes expected or welcomed. Email: “We don’t expect you to sign something if you are uncomfortable with it or if you need more clarification from the attorneys on something.”

165. Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Has Sunder established a “reasonable probability of success on the merits” against Jackson for breaching the restrictive covenants? Does evidence of Nielson’s & Britton’s breach of fiduciary duty to Jackson operate as a defense to Jackson’s breach of the restrictive covenants, so as to prevent Sunder from establishing a reasonable probability of success? The fiduciary obligations of managers & managing members include a duty of disclosure. It’s not a separate fiduciary duty, but a contextual manifestation of the duties of care & loyalty. For example, fiduciaries owe a duty of disclosure when they ask their beneficiaries to take action (like asking the members to approve an amendment to an LLC agreement. Written LLC Agreement on 12/31/19: Email sent on NYE & said that the attorneys “highly recommend completing these documents by the end of tonight” (without noting that the attorneys were NOT representing the minority members). Email addressed the minority members as “partners.” Email noted that Nielson & Britton had already executed, as if it were a done deal. LLC agreement sent as a PDF, as if no changes expected or welcomed. Email: “We don’t expect you to sign something if you are uncomfortable with it or if you need more clarification from the attorneys on something.” Email: Did NOT disclose that this was a major restructuring of the deal, stripping the minority members of their rights & imposing restrictive covenants on them.

166. Sunder Energy, LLC (Del.) HQ: Utah Sunder Energy, LLC v. Jackson , 305 A.3d 723 (Del. Ch. 2023); currently on interlocutory appeal to the Del. Supreme Court! Formed in 8/19: Group of co-founders, including Nielson, Britton & Jackson No written LLC agreement Perhaps oral agreement that Nielson & Britton would manage; otherwise, everything else expected to be equal Written LLC Agreement on 12/31/19: Created 2 classes of units: Common units: Nielson & Britton Incentive units: everyone else (including Jackson) Incentive units: No voting No transfer Restrictive covenants Anti-competition & anti-solicitation While hold or 2 years thereafter LLC had call option at $0 if terminated “for cause” or leave “without good reason” In 2023, Jackson resigned & joined competitor; over 300 Sunder sales personnel did the same. Breach of contract to enforce restrictive covenants in LLC agreement Motion for Preliminary Injunction 1 element = “reasonable probability of success on the merits” DENIED.

167. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

168. In re Match Grp., Inc. Derivative Litig. , No. 368, 2022, 2024 WL 1449815 (Del. Apr. 4, 2024). Delaware Precedent When Reviewing Freeze-Out Mergers “entire fairness” review BUT business judgment rule applies IF controlling s/h conditions transaction from the start on approval by BOTH an independent, empowered special committee that meets its duty of care; AND fully informed, uncoerced vote of a majority of the minority s/ hs . ( MFW )

169. In re Match Grp., Inc. Derivative Litig. , No. 368, 2022, 2024 WL 1449815 (Del. Apr. 4, 2024). Delaware Precedent When Reviewing Freeze-Out Mergers “entire fairness” review BUT business judgment rule applies IF controlling s/h conditions transaction from the start on approval by BOTH an independent, empowered special committee that meets its duty of care; AND fully informed, uncoerced vote of a majority of the minority s/ hs . ( MFW ) Is this the same standard that applies to OTHER conflicted transactions between a corporation & its controlling s/h where the controlling s/h receives a non-ratable benefit?

170. In re Match Grp., Inc. Derivative Litig. , No. 368, 2022, 2024 WL 1449815 (Del. Apr. 4, 2024). Delaware Precedent When Reviewing Freeze-Out Mergers “entire fairness” review; BUT business judgment rule applies IF controlling s/h conditions transaction from the start on approval by BOTH an independent, empowered special committee that meets its duty of care; AND fully informed, uncoerced vote of a majority of the minority s/ hs . ( MFW ) Is this the same standard that applies to OTHER conflicted transactions between a corporation & its controlling s/h where the controlling s/h receives a non-ratable benefit? YES, applies here to reverse spin-off. “Common thread” = “heightened concern for self-dealing when a controlling stockholder stands on both sides of a transaction & receives a non-ratable benefit”

171. In re Match Grp., Inc. Derivative Litig. , No. 368, 2022, 2024 WL 1449815 (Del. Apr. 4, 2024). Delaware Precedent When Reviewing Freeze-Out Mergers “entire fairness” review; BUT business judgment rule applies IF controlling s/h conditions transaction from the start on approval by BOTH an independent, empowered special committee that meets its duty of care ; AND fully informed, uncoerced vote of a majority of the minority s/ hs . ( MFW ) Is this the same standard that applies to OTHER conflicted transactions between a corporation & its controlling s/h where the controlling s/h receives a non-ratable benefit? YES, applies here to reverse spin-off. “Common thread” = “heightened concern for self-dealing when a controlling stockholder stands on both sides of a transaction & receives a non-ratable benefit” Does every member of the special committee have to be independent, or only a majority of the committee?

172. In re Match Grp., Inc. Derivative Litig. , No. 368, 2022, 2024 WL 1449815 (Del. Apr. 4, 2024). Delaware Precedent When Reviewing Freeze-Out Mergers “entire fairness” review; BUT business judgment rule applies IF controlling s/h conditions transaction from the start on approval by BOTH an independent, empowered special committee that meets its duty of care ; AND fully informed, uncoerced vote of a majority of the minority s/ hs . ( MFW ) Is this the same standard that applies to OTHER conflicted transactions between a corporation & its controlling s/h where the controlling s/h receives a non-ratable benefit? YES, applies here to reverse spin-off. “Common thread” = “heightened concern for self-dealing when a controlling stockholder stands on both sides of a transaction & receives a non-ratable benefit” Does every member of the special committee have to be independent, or only a majority of the committee? EVERY member. B/c of the “inherently coercive presence of the controlling stockholder,” need to “ensure an ‘arm’s-length transaction.’”

173. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

174. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Crypto Traders Management, LLC Alleged cryptocurrency-related Ponzi scheme

175. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Crypto Traders Management, LLC Alleged cryptocurrency-related Ponzi scheme Investors Father Daughter Securities fraud

176. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Crypto Traders Management, LLC Alleged cryptocurrency-related Ponzi scheme Investors Father Daughter Securities fraud Plaintiffs (investors) moved for summary judgment.

177. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages

178. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Knowledge or recklessness

179. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Knowledge or recklessness Plaintiffs (investors) presented evidence that: Worked with her father Sent false emails to investors that had a “competent legal team,” “an admin team,” & that withdrawals were suspended “due to hackers”

180. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Knowledge or recklessness Plaintiffs (investors) presented evidence that: Worked with her father Sent false emails to investors that had a “competent legal team,” “an admin team,” & that withdrawals were suspended “due to hackers” Daughter presented evidence that: Helped her father from ages 19 to 20 Did basic data entry Responded to emails using her father’s email account Her father would tell her what to write in the emails to investors Trusted her father & believed that he was a successful crypto trader

181. Powell v. Crypto Traders Mgmt. , LLC, No. 2:20-CV-00352-BLW, 2024 WL 1330000 (D. Idaho Mar. 28, 2024). Crypto Traders Management, LLC Alleged cryptocurrency-related Ponzi scheme Investors Father Daughter Securities fraud Plaintiffs (investors) moved for summary judgment. Court denied b/c issues of material fact rendering summary judgment improper.

182. THEMES Direct v. derivative claims Tortious interference with contract Breach of contract Waiver of breach Actual & apparent authority Statute of frauds LLC agreements Fiduciary duties Restrictive covenants Securities fraud

183. Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024). Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages

184. Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Is the complete failure to make an SEC-mandated disclosure in an SEC filing actionable as securities fraud? Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

185. Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Half-truths Pure omissions Is the complete failure to make an SEC-mandated disclosure in an SEC filing actionable as securities fraud? Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

186. Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Half-truths Pure omissions “[T]he difference between a pure omission & a half-truth is the difference between a child not telling his parents he ate a whole cake & telling them he had dessert.” Is the complete failure to make an SEC-mandated disclosure in an SEC filing actionable as securities fraud? Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

187. Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Half-truths Pure omissions E.g., in an SEC report, only discussing a portion of a known trend. E.g., in an SEC report, omitting a known trend altogether. Item 303 of Reg. S-K [MD&A] = requires management discussion & analysis of known trends Is the complete failure to make an SEC-mandated disclosure in an SEC filing actionable as securities fraud? Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

188. Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Half-truths Pure omissions E.g., in an SEC report, only discussing a portion of a known trend. E.g., in an SEC report, omitting a known trend altogether. Item 303 of Reg. S-K [MD&A] = requires management discussion & analysis of known trends Rule 10b-5(b) – prohibits “omit[ting] to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading” Is the complete failure to make an SEC-mandated disclosure in an SEC filing actionable as securities fraud? Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

189. Section 10(b) & Rule 10b-5 Misrepresentation or omission of a material fact; Scienter Causation Reliance Damages Is the complete failure to make an SEC-mandated disclosure in an SEC filing actionable as securities fraud? NO Half-truths Pure omissions E.g., in an SEC report, only discussing a portion of a known trend. E.g., in an SEC report, omitting a known trend altogether. Item 303 of Reg. S-K [MD&A] = requires management discussion & analysis of known trends Rule 10b-5(b) – prohibits “omit[ting] to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading” “Rule 10b-5(b) does not proscribe pure omissions.” Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

190. Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

191. SIGNIFICANCE The most direct impact of this case will be the future viability of private and SEC securities fraud claims premised on MD&A omissions. . . . If Item 303 omissions are not actionable as securities fraud, then the SEC will be the sole enforcer of Item 303 violations (outside the context of registration statements, which are actionable under Section 11), and the SEC will be forced to rely on Section 21B of the Exchange Act rather than Section 10(b) and Rule 10b-5 when enforcing Item 303 violations. Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

192. SIGNIFICANCE The most direct impact of this case will be the future viability of private and SEC securities fraud claims premised on MD&A omissions. . . . If Item 303 omissions are not actionable as securities fraud, then the SEC will be the sole enforcer of Item 303 violations (outside the context of registration statements, which are actionable under Section 11), and the SEC will be forced to rely on Section 21B of the Exchange Act rather than Section 10(b) and Rule 10b-5 when enforcing Item 303 violations. This case will also impact managements’ disclosure incentives under Item 303. . . . If these claims are not viable, management will face lesser incentives to disclose, perhaps to under-disclose. Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

193. SIGNIFICANCE The most direct impact of this case will be the future viability of private and SEC securities fraud claims premised on MD&A omissions. . . . If Item 303 omissions are not actionable as securities fraud, then the SEC will be the sole enforcer of Item 303 violations (outside the context of registration statements, which are actionable under Section 11), and the SEC will be forced to rely on Section 21B of the Exchange Act rather than Section 10(b) and Rule 10b-5 when enforcing Item 303 violations. This case will also impact managements’ disclosure incentives under Item 303. . . . If these claims are not viable, management will face lesser incentives to disclose, perhaps to under-disclose. Finally, unless the Court identifies a limiting principle such that its holding is limited to Item 303-mandated disclosures , this case will impact the viability of future securities fraud claims based on failures to make other SEC-mandated disclosures, with the same resultant impacts on companies’ disclosure incentives. Those mandated disclosures are myriad but include Items 103 (Legal Proceedings), 105 (Risk Factors), 402 (Executive Compensation), 404 (Related-Party Transactions), and 504 (Use of Proceeds) of Regulation S-K. Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

194. SIGNIFICANCE The most direct impact of this case will be the future viability of private and SEC securities fraud claims premised on MD&A omissions. . . . If Item 303 omissions are not actionable as securities fraud, then the SEC will be the sole enforcer of Item 303 violations (outside the context of registration statements, which are actionable under Section 11), and the SEC will be forced to rely on Section 21B of the Exchange Act rather than Section 10(b) and Rule 10b-5 when enforcing Item 303 violations. This case will also impact managements’ disclosure incentives under Item 303. . . . If these claims are not viable, management will face lesser incentives to disclose, perhaps to under-disclose. Finally, unless the Court identifies a limiting principle such that its holding is limited to Item 303-mandated disclosures , this case will impact the viability of future securities fraud claims based on failures to make other SEC-mandated disclosures, with the same resultant impacts on companies’ disclosure incentives. Those mandated disclosures are myriad but include Items 103 (Legal Proceedings), 105 (Risk Factors), 402 (Executive Compensation), 404 (Related-Party Transactions), and 504 (Use of Proceeds) of Regulation S-K . Macquarie Infrastructure Corp. v. Moab Partners, L.P. , 601 U.S. 257 (2024).

195. Thank you! ***Slides available on SlideShare [email protected]