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Oshidar v. Asura Development Group, Inc.

Superior Court of Delaware

March 24, 2017

XERXES OSHIDAR, Plaintiff,
v.
ASURA DEVELOPMENT GROUP, INC., f/k/a/ IA GLOBAL, INC. and BRIAN HOEKSTRA, Defendants.

          Submitted: December 7, 2017

         Upon Motion of Defendant Brian Hoekstra for Judgment on the Pleading DENIED

          David L. Finger, Esquire, Finger & Slanina, LLC, Wilmington, Delaware. Attorneys for Brian Hoekstra

          Xerxes Oshidar. Pro se

          Eric M. Davis, Judge

         I. INTRODUCTION

         Before the Court are two separate but identical civil actions for breach of contract and fraud. In this first civil action, N14C-09-169 EMD, Plaintiff Xerxes Oshidar filed a Complaint against Defendant Asura Development Group, Inc. for breach of contract and Defendant Brian Hoekstra in his capacity as Chief Executive Officer of Asura Development Group, Inc. for fraud. The second civil action, N14C-12-227 EMD, filed by Plaintiff Kanga Krishna, asserts the same causes of action against the same defendants.

         Mr. Hoekstra filed a Motion of Defendant Brian Hoekstra for Judgment on the Pleadings in both civil actions (collectively, the "Motions"). In the Motions, Mr. Hoekstra argues that the fraud claim is barred by the three-year statute of limitations. Mr. Hoekstra also argues that the Complaints fail to state a claim for fraud. Mr. Krishna filed Plaintiff Ranga Krishna's Opposition to Defendant's Motion for Judgment on the Pleadings and Mr. Oshidar filed a Notice of Adoption and Joinder in Plaintiff Ranga Krishna's Opposition to Defendant's Motion for Judgment on the Pleadings (collectively, the "Oppositions").

         After reviewing the Motions, the Oppositions, the entire record in this civil action and determining that a hearing does not need to be held, the Court will DENY the relief sought in the Motions.

         II. PROCEDURAL AND FACTUAL BACKGROUND[1]

         Mr. Oshidar is an individual and resident of California. Mr. Krishna is an individual and resident of New Jersey. Mr. Oshidar and Mr. Krishna are business colleagues. Asura Development Group, Inc. ("Asura"), formerly known as IAG Global Inc., is a Delaware corporation. Brian Hoekstra is the former Chief Executive Officer ("CEO") of Asura.

         Mr. Hoekstra, in his capacity as CEO of Asura, met with Mr. Krishna on multiple occasions concerning the possibility of Mr. Krishna lending money to Asura. During these meetings, Mr. Hoekstra spoke at length about Asura's finances, including Asura's existing capital and debt structure and Asura's ability to repay its debts. Mr. Hoekstra also discussed and provided Mr. Krishna with materials concerning Asura's recent merger with a Japanese company. Specifically, Mr. Hoekstra provided Mr. Krishna with Asura's annual statements and SEC filings, all of which discussed the merger with the Japanese company. Mr. Krishna shared the financial information with Mr. Oshidar. Based on the information and statements made to Mr. Krishna by Mr. Hoekstra, Mr. Oshidar expressed an interest in also lending money to Asura.

         On February 16, 2011, February 17, 2011, February 22, 2011, and March 24, 2011, Asura and Mr. Hoekstra executed and delivered to Mr. Krishna four separate Subscription Agreements, Term Sheets, and Senior Convertible Promissory Notes (the "Krishna Notes"), each in the amount of $50, 000. Under the terms of the Krishna Notes, Asura would repay the Krishna Notes, plus interest, one year after execution.

         On February 18, 2011, Asura and Mr. Hoekstra executed and delivered to Mr. Oshidar a Subscription Agreement, Term Sheet, and Senior Convertible Promissory Note (the "Oshidar Note") in the amount of $250, 000. Under the terms of the Oshidar Note, Asura would repay the Oshidar Note, plus interest, one year after execution.

         Asura defaulted on its obligations under the Oshidar Note and the Krishna Notes by failing to remit payment on the maturity date. Mr. Oshidar and Mr. Krishna allege that Asura's failure to remit payment constitutes a material breach of the Notes.

         After Asura defaulted, Mr. Oshidar and Mr. Krishna learned that Asura never finalized the critical merger with the Japanese company. Additionally, Mr. Oshidar and Mr. Krishna discovered that Mr. Hoekstra's representations concerning Asura's finances and its capital and debt structure were false. Finally, Mr. Oshidar and Mr. Krishna discovered that the information set forth in the SEC filings, including the information about the merger, were incorrect.

         On September 18, 2014, Mr. Krishna filed a Complaint against Asura for breach of its obligations under the Krishna Notes. Mr. Krishna amended the Complaint on April 17, 2015 to include a fraud claim against Mr. Hoekstra. Mr. Hoekstra then filed a motion to dismiss, alleging that the Court lacked personal jurisdiction. The Court granted the motion, but allowed Mr. Krishna to amend the Complaint to include information about Mr. Hoekstra's role as CEO of Asura. Mr. Krishna filed the Second Amended Complaint on September 4, 2015. Mr. Hoekstra again filed a motion to dismiss for lack of personal jurisdiction. This time, the Court found that it possessed personal jurisdiction because the claims against Mr. Hoekstra involve conduct taken in Mr. Hoekstra's official corporate capacity for Asura, a Delaware corporation.

         The procedural history of Mr. Oshidar's civil action is identical to Mr. Krishna's civil action. On December 23, 2014, Mr. Oshidar filed a Complaint against Asura for breach of its obligations under the Oshidar Note. Mr. Oshidar amended the Complaint on April 1, 2015 to include a fraud claim against Mr. Hoekstra. Mr. Hoekstra then filed a motion to dismiss, alleging that the Court lacked personal jurisdiction. The Court granted the motion, but allowed Mr. Oshidar to amend the Complaint to include information about Mr. Hoekstra's role as CEO of Asura. Mr. Oshidar filed the Second Amended Complaint on September 4, 2015.[2] Mr. Hoekstra again filed a motion to dismiss for lack of personal jurisdiction. This time, the Court found that it possessed personal jurisdiction because the claims against Mr. Hoekstra involve conduct taken in Mr. Hoekstra's official corporate capacity for Asura, a Delaware corporation.

         On May 4, 2016, Mr. Hoekstra filed an Answer in both civil actions. On May 10, 2016, Mr. Hoekstra filed the Motions. The facts and legal arguments presented in the Motions are identical. On July 12, 2016, Mr. Krishna and Mr. Oshidar filed the Oppositions. Subsequent to the filing of the Oppositions, the Court granted the request of Mr. Oshidar's attorneys to withdraw from representation on November 18, 2016. The Court then gave Mr. Oshidar thirty (30) days to obtain another attorney or notify the Court that Mr. Oshidar intended to proceed pro se. On or about December 7, 2016, Mr. Oshidar responded to the Court. While more clarification may be necessary, it appears that Mr. Oshidar does not intend to hire another attorney but may wish to engage in the discovery stages of these civil actions.

         III. PARTIES' CONTENTIONS

         Mr. Hoekstra contends that the fraud claim is time-barred as outside the three-year statute of limitations. Mr. Hoekstra further contends that Mr. Oshidar and Mr. Krishna fail to state a claim upon which relief can be granted because the fraud claim is not pled with the requisite specificity.

         Mr. Oshidar and Mr. Krishna contend that the fraud claim is not time-barred because the three-year statute of limitations was tolled until they discovered the fraud. Mr. Oshidar and Mr. Krishna further argue that the factual allegations pled in the Amended Complaints are sufficient to support a claim of fraud.

         IV. LEGAL STANDARD

         A party may move for judgment on the pleadings pursuant to Civil Rule 12(c).[3] In determining a motion under Civil Rule 12(c) for judgment on the pleadings, the Court is required to view the facts pled and the inferences to be drawn from such facts in a light most favorable to the non-moving party.[4] The Court must take the well-pleaded facts alleged in the complaint as admitted.[5] When considering a motion under Civil Rule 12(c), the Court also assumes the truthfulness of all well-plead allegations of fact in the complaint.[6] The Court must, therefore, accord plaintiffs opposing a Rule 12(c) motion the same benefits as a plaintiff defending a motion under Civil Rule 12(b)(6).[7] The Court may grant a motion for judgment on the pleadings only when no material issue of fact exists and the movant is entitled to judgment as a matter of law.[8]

         V. DISCUSSION

         A. Mr. Hoekstra has not waived the defenses asserted in the Motions.

         As a threshold matter, Mr. Hoekstra has not waived the defense of failure to state a claim upon which relief may be granted. Certain defenses, including a defense of lack of jurisdiction or improper venue, are waived if a defendant omits the defenses from an initial motion.[9]However, the defense of failure to state a claim can be raised even after an initial motion, including in any pleading permitted under Rule 7(a), in a motion for judgment on the pleadings, or at the trial on the merits.[10] Here, while Mr. Hoekstra did not ...


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