United States District Court, D. Delaware
MARSHAL T. SIMPSON TRUST, DONALD S. SIMPSON TRUST, and CHRISTOPHER BOYD, Plaintiffs,
INVICTA NETWORKS, INC., VICTOR SHEYMOV, WILLIAM ESREY, ROBERT J. HALLMAN, and R. JAMES WOOLSEY, Defendants.
B. Andrews, Esquire, Craig J. Springer, Esquire, and David M.
Sborz, Esquire of Andrews & Springer LLC, Wilmington,
Delaware. Counsel for Plaintiffs. Of Counsel: Matthew L.
Dameron, Esquire of Williams Dirks Dameron LLC, Kansas City,
M. Heyman, Esquire and Dominick T. Gattuso, Esquire of
Proctor Heyman Enerio LLP, Wilmington, Delaware. Counsel for
Defendants. Of Counsel: Mark A. Thornhill, Esquire and Angus
Dwyer, Esquire of Spencer Fane LLP, Kansas City, Missouri.
Robinson, Senior District Judge
Marshal T. Simpson Trust, Donald S. Simpson Trust, and
Christopher Boyd (collectively, "plaintiffs") are
shareholders of Invicta Networks, Inc. ("Invicta"),
a company in the field of cyber-security technology no longer
operating as a going concern. (D.I. 1 ¶ 66; Dl. 51 at 1)
During some or all of the relevant time period, Invicta's
board of directors was comprised of defendants Victor Sheymov
("Sheymov"), William Esrey ("Esrey"),
Robert J. Hallman ("Hallman"), and R. James Woolsey
("Woolsey"). (D.I. 51 at 1) Sheymov also served as
Invicta's president, chief executive officer, and
chairman of the board. (D.I. 1 ¶ 7).
Invicta to be a "failed" business, plaintiffs filed
a complaint on November 14, 2014 asserting various claims
against different combinations of defendants. (D.I. 1)
Defendants Esrey, Hallman, and Woolsey (collectively, the
"director defendants") have moved to dismiss any
claims or parts of claims asserted against them. (D.I. 50)
Those claims include count 1 against all defendants for
breach of fiduciary duty, count 2 against all defendants for
negligence, count 7 against Esrey for fraud, and count 8
against Esrey for negligent misrepresentation. (D.I. 1
¶¶ 93-104, 137-52) The court has subject matter
jurisdiction over this action pursuant to 28 U.S.C. §
1332(a). For the reasons discussed below, the director
defendants' motion to dismiss is granted.
initial product InvisiLAN provided network computer security
technology that Invicta intended to market to government and
corporate clients. (D.I. 1 ¶¶ 13-14) Invicta
developed a similar product called WizArmor intended for
individual consumers. (Id. at ¶ 15) In 2006,
representatives of Invicta, including Sheymov, solicited
Marshal Simpson for investments in the company. (Id.
at ¶ 19) Marshal Simpson shared the information he
received with Donald Simpson and Christopher Boyd.
(Id. at ¶ 34) After receiving additional
information about Invicta, Donald Simpson, on behalf of the
Donald S. Simpson Trust, invested in Invicta in January 2007.
(Id. at ¶ 44) Marshal Simpson, on behalf of the
Marshal T. Simpson Trust, and Christopher Boyd invested in
Invicta in January 2009. (Id. at ¶ 61 -62)
2011, plaintiffs received various updates about Invicta's
product development, marketing, and sales. (Id. at
¶¶ 65-70) Sheymov stated that the past year had
been "very disappointing." (Id. at ¶
68) In May 2013, Sheymov emailed Marshal Simpson that Invicta
continued to be ignored, and he was considering leasing or
selling the company's intellectual property.
(Id. at ¶ 75) In September 2013, Sheymov
emailed Marshal Simpson that WizArmor was no longer available
due to lack of funds to support distribution. (Id.
at ¶ 76) Sheymov added that he was in discussions with a
buyer for Invicta. (Id.) In October 2013, Sheymov
emailed Marshal Simpson that he was still working on a sale
of Invicta and there were no other activities at the company
at that time. (Id. at ¶ 80) Plaintiffs filed
their complaint almost a year later alleging fraud, negligent
misrepresentation, and breach of fiduciary duty. (D.I. 1)
STANDARD OF REVIEW
survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a
plaintiff must plead facts sufficient to "state a claim
to relief that is plausible on its face." Ashcroft
v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The
factual allegations do not have to be detailed, but they must
provide more than labels, conclusions, or a "formulaic
recitation" of the claim elements. Id. at 678.
Finally, the court must accept "as true the factual
allegations in the complaint and all reasonable inferences
that can be drawn therefrom." Trump Hotels &
Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d
478, 483 (3d Cir. 1998).
director defendants have moved to dismiss the counts asserted
against them based on the failure to state a claim pursuant
to Fed.R.Civ.P. 12(b)(6), the failure to join an
indispensable party pursuant to Fed.R.Civ.P. 12(b)(7), the
failure to plead demand futility pursuant to Fed.R.Civ.P.
23.1, and untimeliness under the applicable statute of
limitations. (D.I. 51) The court need not address each of
these arguments as it is sufficient grounds to dismiss counts
1 and 2 for failure to plead demand futility and counts 7 and
8 for failure to state a claim.
Counts 1 and 2: ...