FAF LIQUIDATION SEVICES, LLC VS. DOMINIC HOLLAND ET AL

Matter on the Law & Motion/Discovery Calendar for Friday, August 22, 2025, line 5, 2 - DEFENDANTS DOMINIC HOLLAND, BRIAN SUGAR, ROBERT MITCHELL'S Motion To Dismiss Complaint (tentative ruling part 1 of 2)

Defendants Dominic Holland, Brian Sugar, and Robert Mitchell's motion to dismiss plaintiff FAF Liquidation Services, LLC's complaint on grounds of forum non conveniens is denied. The complaint alleges mismanagement and breaches of fiduciary duty by the individual defendants, who were directors of the start-up Fast AF Inc, as well as an avoidable transfer cause of action against Mitchell. "By way of a general assignment for the benefit of Fast AF's creditors, FAF became an assignee in charge of conducting the winding down and liquidation of Fast AF and its assets." (Compl. para. 4.)

Defendants now seek dismissal or a stay of this action in light of the forum selection clause in Fast AF's Certificate of Incorporation selecting the Delaware Court of Chancery. The court takes judicial notice of the Certificate of Incorporation. The forum selection clause states that "[u]nless this corporation consents in writing to the selection of an alternative forum," the Court of Chancery or the federal district court for the District of Delaware shall "be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of this corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of this corporation to this corporation or this corporation's stockholders." (Phillips Dec., Ex. B, at p. 18.)

Defendants' opening brief concedes that the claims at issue in this case "belong to FAF by way of its general assignment, including pursuing causes of action for the benefit of the assignment estate." FAF as the assignee stands in the shoes of Fast AF. It therefore may consent to an alternative forum, and has consented by bringing suit in this court. Defendants' contrary argument reads the "unless" clause out of the incorporation certificate.

Defendants also make a passing argument that the "unless" clause must be read out of the agreement because it renders the promises in the Certificate of Incorporation illusory. This argument is meritless. Read in light of the entire document, which elaborates many corporation rights and duties, providing an option exclusively to the corporation to select a different forum in this case does not render the certificate void. (end of tentative ruling part 1 see part 2) = (302/CVA) | |