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1
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DEFENDANTS BRIEF IN SUPPORT OF MOTION TO DISMISS THE COMPLAINT
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EXTRACTED KEY WORDS
DELAWARE WESCHLER DANIELS PLAINTIFF COURT DEFENDANT QUAD-C DISMISSEDASAGAINST PURSUANT DEL VIRGINIA CHANCERY COURT RULE SHAREHOLDERS MOTION MANAGEMENT PERSONAL JURISDICTION FINANCIAL ADVISORY ALLEGATIONS INVESTMENT ACTIVITIES SUCCESSOR-IN-INTEREST FINANCIAL ADVISORY SERVICES FINANCIAL ADVISORY FEES CORPORATE OPPORTUNITIES TRANSACTION FIDUCIARY DUTIES VIRGINIA RESIDENT PROCESS CLAUSE FIDUCIARY DUTY FUTURE INVESTMENT |
IN THE COURT OF CHANCERY IOF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
R. TED WESCHLER,
i
Plaintiff,
1
\f C.A. No. 18118-NC
;
QUAD-C, INC., and
TERRENCE D. DANIELS, 1
Defendants.
DEFENDANTS' BRIEF IN SUPPORT OF
THEIR MOTION TO DlsMISS THE COMPLAINT
Samuel A. Nolen
Robert J. Stearn, Jr.
Michael K. Reilly
Richards Layton & Finger, PA
OF COUNSEL: One Rodney Square
P.O. Box 551
White & Case L.L.P. Wilmington, Delaware 19899
I 15 5 Avenue of the Americas (302) 658-6541
New York, New York 10036 Attorneys for Defendants
(212) 819-8200 Quad-C, Inc. and Terrence D. Daniels
Dated: September 15, 2000
TABLE OF CONTENTS
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2
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LETTER OPINION
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EXTRACTED KEY WORDS
DISCOVERY ESQUIRE PENDING DISMISS PLAINTIFF DEL THOMAS PRESTON SAMUEL FAILURE VENUE INTERIM RELIEF COMPLAINT LITIGATION WILMINGTON DISPOSITION DEMAND JURISDICTION IMPROPER EXPECTATION AVOIDING REFILE DEFECTS AMEND LAWSUIT EXCEPTION DISCOVERY PROCEDURES UNCOVER BASIS |
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' ORIGINAL
C O U R T O F C H A N C E R Y L4
OF TtiL
STATE O F DI:LAWARE
September 1.2,2000
Thomas P. Preston, Esquire
Reed Smith Shaw & McClay LLP
1201 Market Street, Suitse 1500
Wilmington, DE 19801-0195
Samuel A. Nolen, Esquire
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Re: R. Ted Weschler v. Quad-C, Lnc. And
Terrence 1). Daniels
`V' ActionNo. 18118
Gentlemen:
Pending is the defendants' motion to stay discovery pending the disposition
of their motion to dismiss for failure to make a demand or plead demand futility,
for lack of personal jurisdiction, for improper venue, and for failure to state a
claim on which relief can be granted. The motion is potentially case dispositive,
Absent special circumstances, discovery will normally be stayed pending
the determination of a motion to dismiss the complaint. "Special circumstances"
Thomas P. Preston, Esquin:
Samuel A. Nolen, Esquire
September 152000
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3
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LETTER TO V.C. JACOBS
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EXTRACTED KEY WORDS
MOTION DISCOVERY DISMISS COURT COMPLAINT ALLEGE PENDING QUAD-C DANIELS DEFENDANTS ASSERTS JACOBS JURISDICTION HONORABLE JACK CHANCELLOR REQUEST FAILS DEMAND MEMORANDUM DISCOVERY PENDING RESOLUTION DEL BASIS DEMAND FUTILITY BREACH DERIVATIVE CLAIM NON-DELAWARE ISSUANCE CONCESSION PROCEEDS |
RICHARDS , L AYTON & FINGER
P.O. Box 55 I
W I L M I N G T O N , D E L A W A R E 19899
T ELEPHON E : (30.2) 658-6541
T ELECOPIER : (302) 658-6548
WEBSITE: WWW.RLF.COM
WArrER'S E-MAIL ADDRESS
NOLEN@RLF.COM
WR~TR'S DIRECT DIAL NUMBER
(302) 65 I-7752
September 7, 2000
BY HAND
- - -
The Honorable Jack B. Jacobs
Vice Chancellor
Court of Chancery
1020 North King Street
:,:
Wilmington, DE 1980 1 L-,.
Re: R. Ted Weschler v. Quad-C, Inc. and Terrence D. Daniels,
C.A. No. 18118NC
Dear Vice Chancellor Jacobs:
This letter constitutes defendants' reply memorandum in support of their motion to
stay discovery pending resolution of defendants' motion to dismiss, With this letter, briefing on
motion to stay is complete and the motion is submitted for decision.
When the Court requested letter memoranda on defendants' motion to stay it did so
in light of the plaintiffs concession that if defendants' motion to dismiss is potentially case-
dispositive (i.e., goes to all counts asserted in the complaint), then a stay of discovery pending
resolution of that motion would be appropriate. Accordingly, the Court requested that the parties
limit their memoranda to that narrow question.
Without expressly reneging on his concession that a stay would be appropriate if
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4
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LETTER BRIEF
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EXTRACTED KEY WORDS
MOTION PLAINTIFF DANIELS DEFENDANTS DISCOVERY COMPLAINT VICE CHANCELLOR JACOBS LLP DISMISS DUTY COURT CORPORATE OPPORTUNITY DEL FORUM PERSONAL JURISDICTION LETTER MEMORANDUM FIDUCIARY DUTIES QUAD-C MANAGEMENT REASONABLE EXPECTATION DELAWARE CORPORATION MCCLAY LLP REED SMITH SHAW IMPROPER VENUE LITIGATION DEFENDANTS ASSERT PLEAD FUTILITY TED WESCHLER MISAPPROPRIATION EXTENSION |
R.EEDSMITHSHAW&MCCLAY LLP
1201 MARKETSTREET- SUITE 1500 '" ,ir , .:~
WILMINGTON, DELAWARE 19801-0195
PHONE: 302-778-7500
FAX: 302-778-7575
September 1,200O
BY HAND
The Honorable Jack B. Jacobs
C0~u-t of Chancery
New Castle County Offices
1020 North King Street
Wilmington, DE 19801
Re: R. Ted Weschler v. Quad-C, Inc. and
Terrence D. Daniels. C.A. NoJSllS-NC
Dear Vice Chancellor Jacobs:
In accordance with the parties' telephone conference with Your Honor on August 22,
2000, please accept this letter memorandum opposing Defendants' Motion to Stay Discovery in
lieu of a more formal brief.
L RELEVANT FACTUAL BACKGROUND AND POSTURE
__-
On June 21, 2000, the Plaintiff, R. Ted Weschler ("Plaintiff'), filed a complaint (the
"Complaint")1 requesting injunctive, declaratory and monetary relief resulting from breaches of
fid~&u-y duty and misappropriation of corporate opportunities by Quad-C, Inc. ("Quad-C") and
Terrence ID. Daniels ("Daniels") (collectively, the "Defendants"). On `or about July 11,
Defendants requested a sixty-day (60) extension to answer the Complaint. The Plaintiff agreed
to a thirty-day (30) extension, and or about July 13, 2000, the parties executed a stipulation and
agreed order to extend Defendants' time to answer the Complaint until August 15,200O.
On or about August 4, 2000, Plaintiff served upon Defendants Plaintiffs First Set of
Interrogatories and Requests for Production Directed to Defendant, to which the Defendants
have yet to answer or object. On August 15, 2000, the Defendants filed a two-page motion to
1 References to "Compl., I-" are to the Complaint filed by the Plaintiff in this action on
June 2 1, 2000.
Vice Chancellor Jacobs
September 1, 2000
Page 2
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5
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COMPLAINT
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EXTRACTED KEY WORDS
WESCHLER PARTNERSHIPS MANAGEMENT DANIELS INVESTMENT FINANCIAL ADVISORY DEFENDANT DANIELS ASSETS FINANCIAL ADVISORY FEES SHAREHOLDER EMPLOYEES BREACH FIDUCIAIRY MISAPPROPRIATION PLAINTIFF WESCHLER SOLE OWNERSHIP PURPOSE PAID SUCCESSOR ADVISORY SERVICES C-IV DEPRIVING PARAGRAPHS REFERENCE PROFITS QUAD-C AFFILIATES ASSIGNING ALLEGATIONS SET |
IN THE COURT OF CHANCERY
IN AND FOR NEW CASTLE COUNTY
R. TED WESCHLER,
Plaintiff,
V. C.A. No.
.
QUAD-C, INC., and : -7
__.
TERRENCE D. DANIELS, s 3%
".
/
Defendants. 8
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COMPLAINT
Summarv of Action -.
1. This is an action for injunctive, declaratory and monetary relief resulting
from breaches of fiduciary duty and the misappropriation of corporate opportunities by the
corporate defendant and Terrence D. Daniels ("Daniels"), the individual defendant. Plaintiff R.
Ted Weschler ("Weschler") was and is a 15% shareholder in Quad-C, Inc. ("Quad-C"). He was
also a partner with Defendant Daniels in various investment partnerships, a relationship which
was consensually terminated as of December 3 1, 1999. Thereafter, effective January 1, 2000,
Daniels transferred all or substantially all of the assets and employees of Quad-C to a newly
created entity, Quad-C Management, Inc. ("Management") for the sole purpose of preventing
Weschler from continuing to benefit from his 15% ownership in Quad-C.
Parties
2. Plaintiff Weschler is a resident of the Commonwealth of Virginia, with a
business address at 404B East Main Street, Second Floor, Charlottesville, Virginia 22902
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