GPB Stockholder Grp., LLC v. P'ship Capital Growth Investors Iii, L.P.

2023 IL App (1st) 211351 -B

219 N.E.3d 1231

467 Ill.Dec. 832

GPB STOCKHOLDER GROUP, LLC, and Julia Stamberger, Plaintiffs-Appellants,

v.PARTNERSHIP CAPITAL GROWTH INVESTORS III, L.P. ; Clif White Road Investments, LLC ; Janica Lane; Gregg Bagni; and Brent Knudsen, Defendants-Appellees.

No. 1-21-1351

Appellate Court of Illinois, First District, First Division.

Filed May 8, 2023

Nancy A. Temple and William B. Bruce, of Katten & Temple, LLP, of Chicago, for appellants.

Amy M. Gibson, of Aronberg Goldgehn Davis & Garmisa, and Mark J. Altschul, of Chuhak & Tecson, P.C., both of Chicago, for appellees.

OPINION

PRESIDING JUSTICE LAVIN delivered the judgment of the court, with opinion.

¶ 1 This appeal arises from a dispute between various individuals and entities related to GoPicnic Brands, Inc. (GoPicnic). Specifically, plaintiffs GPB Stockholder Group, LLC (GPB), and Julia Stamberger asserted claims of breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and civil conspiracy to breach fiduciary duty against defendants Partnership Capital Growth Investors III, L.P. (PCGI); Clif White Road Investments, LLC (White Road); Janica Lane; Gregg Bagni; and Brent Knudsen. Ultimately, the circuit court granted defendants’ motions to dismiss, finding that plaintiffs needed to have filed their lawsuit in Delaware. Plaintiffs appealed.

¶ 2 Initially, we affirmed the court's judgment, finding that plaintiffs’ opening brief had failed to address every basis for dismissal raised by defendants. GPB Stockholder Group, LLC v. Partnership Capital Growth Investors III, L.P. , 2022 IL App (1st) 211351-U, 2022 WL 4299775. In an exercise of its supervisory authority, the supreme court directed us to vacate our prior judgment and "address on the merits plaintiffs’ arguments on whether the Series B Agreements required the lawsuit to be maintained in Delaware and determine if a different result is warranted." GPB Stockholder Group, LLC v. Partnership Capital Growth Investors III, L.P. , No. 129111, 201 N.E.3d 594 (Ill. Jan. 25, 2023) (supervisory order). Having vacated our prior decision, we now revisit this appeal.

¶ 3 I. Background

¶ 4 GoPicnic was a Delaware corporation headquartered in Illinois. At its founding, Stamberger served as its president and chief executive officer as well as a director. She was also GoPicnic's largest investor. In September 2012, GoPicnic's articles of incorporation (Charter) were amended to include the following provision:

"Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Corporation's certificate of incorporation or bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine."

This forum selection clause survived subsequent amendments to the Charter.

¶ 5 In that same month, September 2012, PCGI and White Road purchased a minority stake in GoPicnic through Series B preferred stock and entered into several related agreements (Series B Agreements). Pursuant to the Series B Agreements, PCGI and White Road appointed Lane and Bagni to GoPicnic's five-member board. Additionally, those agreements included the following forum consent clause:

"The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the Court of Chancery of the State of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the Court of Chancery of the State of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, *** that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court."

¶ 6 On April 30, 2014, the board unanimously terminated Stamberger for cause after an outside forensic accounting firm issued a problematic report, although Stamberger maintains that no cause existed. Knudsen then replaced Lane on the board in June 2014. In December 2014, GoPicnic filed for bankruptcy. The bankruptcy action was converted from Chapter 11 to Chapter 7 in January 2016, and a bankruptcy trustee was appointed shortly thereafter.

¶ 7 Eventually, Stamberger and others formed GPB, which purchased GoPicnic's remnant assets from the bankruptcy trustee for $6000 in January 2018. According to the asset purchase agreement (APA), "there may be property of the Estate remaining, consisting of known or unknown assets or claims which have not been previously sold, assigned, or transferred." The trustee "irrevocably and unconditionally sells, assigns, transfers, and conveys all of the Seller's right, title and interest under, in and to the Remnant Assets as well as any and all claims and rights related to the remnant assets, including, without limitation, all cash, securities, instruments and other property that may be paid or issued in conjunction with the Remnant Assets and all amounts, interest, and costs due under the Remnant Assets." Under the "Seller's Representations and warranties," the agreement stated that the sale of remnant assets was "AS IS, WHERE IS," with no representations or warranties. The APA also conveyed the following "Limited Power of Attorney":

"Solely with respect to the Remnant Assets, and to the extent permitted by law, Seller hereby irrevocably appoints Purchaser as its true and lawful attorney and authorizes Purchaser to act in Seller's stead to demand, sue for, compromise and recover all such amounts as now are, or may hereafter become, due and payable for or on account of the Remnant Assets herein assigned. Seller grants unto Purchaser the authority to do all things necessary to enforce the Remnant Assets and its rights thereunder pursuant to this Agreement."

Moreover, the trustee agreed to document the assignment of assets and rights to GPB "to evidence and effectuate the transfer" by the APA. The United States Bankruptcy Court for the Northern District of Illinois entered an order approving the sale and APA on January 4, 2018, and the trustee issued a bill of sale several months later.

¶ 8 On February 11, 2019, Stamberger's attorney, Adam Merrill, wrote to the bankruptcy trustee requesting that she waive the Charter's forum selection clause. "Although we do not believe such a consent is required to pursue claims transferred pursuant to the [APA] in an alternative forum," Merrill was acting "out of an abundance of caution and to minimize future disputes with defendants." In addition, Merrill noted that, under the APA, the trustee had agreed to "execute and deliver to [GPB] such documents reasonably requested by [GPB] to evidence and effectuate the transfer" of the remnant assets. The APA further authorized the trustee to "take such actions as are necessary to effectuate the terms of the [APA], together with all additional instruments and documents that may be reasonably necessary to implement the [APA]."

¶ 9 The trustee did not sign the consent drafted by Merrill, and instead, Merrill wrote to the trustee with an attached forum consent waiver that he proposed Stamberger sign. The trustee responded, "Thanks for providing this to me. If and when [Stamberger] does sign the waiver, please send me a signed copy ***." On February 25, 2019, Stamberger signed the document on GPB's behalf. The document stated that "GPB Stockholder Group LLC, as attorney in fact for the Trustee, hereby waives the Charter's Forum Selection Clause with respect to any claims GPB Stockholder Group LLC, Julia Stamberger, or other current or former stockholders of the Corporation hereafter bring (to the extent the forum selection clause would otherwise be applicable)." More specifically, "[t]o further evidence and effectuate and as reasonably necessary to implement the [APA], [GoPicnic] hereby consents in writing to the selection of any state or federal court sitting in Chicago, Illinois as an ‘alternative forum’ (other than the Delaware Court of Chancery)" as to any type of claim enumerated in the Charter's forum selection clause that GPB, Stamberger, or other stockholders may bring.

¶ 10 On April 29, 2019, plaintiffs filed the present lawsuit in the circuit court of Cook County alleging that defendants had breached their fiduciary duties. Defendants then filed a motion to dismiss, which the circuit court granted without prejudice. With respect to the forum consent clause, the court stated "what [waiver] authority did the trustee have was less than clear to me." In addition, the trial court questioned whether the assignment of the right to waive a Delaware forum would be a nullity if the bankruptcy court did not approve of it and found it "a little bit odd" that GPB exercised the forum consent clause only after the APA was approved.

¶ 11 On December 16, 2019, plaintiffs filed an amended complaint asserting claims against defendants for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and civil conspiracy to breach fiduciary duty. Defendants again moved to dismiss ( 735 ILCS 5/2-619.1 (West 2020) ), asserting, among other things, that the Charter and the Series B Agreements required this dispute to be resolved in Delaware. Subsequently, the circuit court granted defendants’ motion to strike certain...