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Chen v. Sagrera

United States District Court, D. Delaware

September 11, 2017

ED ITE CHEN, Plaintiff,
RICARDO SAGRERA, et al., Defendants.

          Ed Ite Chen, Captain Cook, Hawaii. Pro Se Plaintiff.

          Ryan Patrick Newell, Esquire, and David Bolton, Esquire, Connolly Gallagher LLP, Wilmington, Delaware. Counsel for Defendant Ricardo Sagrera.

          Thomas Godfroy, Huntsville, Alabama. Pro Se Defendant.



         Plaintiff Ed Ite Chen, who appears pro se, filed this action on May 24, 2016. (D.I. 1). Plaintiff asserts jurisdiction by reason of a federal question under 28 U.S.C. § 1331 and diversity of citizenship of the parties under 28 U.S.C. § 1332. Defendants Ricardo Sagrera and Thomas Godfroy move to dismiss the Complaint pursuant to Rules 9 and 12(b)(1), (2), (3), (5), and (6) of the Federal Rules of Civil Procedure.[1] (D.I. 13, 35). Plaintiff opposes. (D.I. 21, 25). Plaintiff moves to submit newly discovered evidence. (D.I. 48). Defendant Sagrera opposes. (D.I. 51). The motions have been briefed by the parties.


         The Complaint raises claims of breach of fiduciary duty, common law fraud, computer fraud, and tortious interference with prospective business relationships. (D.I. 1). As alleged, Plaintiff's claims arise out of his status as a shareholder and founder of Viceroy Chemical, Inc. and the actions of Defendants Sagrera and Godfroy. (Id. at p.4). Sagrera is described as the sole director and incorporator of Viceroy Chemical and, from 2014 to the present, the treasurer and secretary of Viceroy Chemical.[2] Godfroy is described as a NASA contractor and, from June 2014 to May 2015, a director and the chief executive officer of Viceroy Chemical.[3] (Id. at pp.3, 7).

         On May 9, 2012, Plaintiff signed a memorandum of understanding ("MOU") in New York that provided for the creation of a new entity, ultimately named Viceroy Chemical, Inc., and which gave him special financial, voting, veto, and patent or other intellectual work product reversion rights. (Id. at pp.5, 7, 19 at Ex. 3). Plaintiff alleges the MOU that established Viceroy Chemical and his rights as set forth therein give him a unique position in the company and give him standing to sue as an individual as opposed to bringing a derivative action. (Id. at p. 19). In addition to Plaintiff, the MOU is signed by Sagrera for Riarma Investments and John T. Preston for Continuum Energy Tech. ("CET").[4] (Id. at p. 9, Ex. 3 at pp.38-44). The MOU provides that it shall be interpreted and construed under the laws of the State of New York, exclusive of its conflicts of law provisions, as if it were between and among New York residents entered into and to be performed entirely within New York. (Id. at Ex. 3 at p.43). It provides for dispute resolution through binding arbitration in New York and, if adequate remedies are not available at arbitration, the parties consent to the jurisdiction of courts located in New York. (Id.). Viceroy Chemical, Inc. was incorporated in the State of Delaware on June 12, 2012. (Id. at Ex. 4 at p.47).

         In August 2012, Sagrera began a subtle and escalating campaign of intimidation and harassment "which culminated with Sagrera and his confederates sapping Viceroy of its capital, circulating forged documents among board members while hiding them from [Plaintiff]" and refusing to provide "the new general counsel of Viceroy Chemical with the allegedly executed documents." (Id. at pp.8-9). This occurred when Plaintiffs signature from the MOU was cut and pasted into the signature blocks of several other documents including a nondisclosure invention assignment agreement, an employment agreement, a Viceroy Chemical shareholder agreement, [5] and an amended incorporation document sent to the Delaware Secretary of State.[6] (Id. at pp.9-14, Ex. 4). The documents were prepared by Lowenstein Sandler, LLP ("Lowenstein Sandler"), a law firm retained by Sagrera. (Id. at pp.9, 12). Plaintiff alleges that Sagrera and Lowenstein Sandler transmitted a document to the Delaware Secretary of State without Plaintiffs permission. (Id. at p. 12). Plaintiff never authorized Godfroy, Sagrera, or Lowenstein Sandler to use his signature or to authorize any corporate actions on his behalf. (Id. at p. 10). Plaintiff alleges that the documents were never finalized, no individual has original copies of the contracts, no one has a signature page with everyone's signature, and no one from Viceroy Chemical has been able to produce signed physical copies of the documents. (Id. at pp. 11 -12).

         Plaintiff learned his signature had been forged in May 2014, August 2014, and May 2015, through emails that originated with Sagrera and were forwarded to Plaintiff. (Id. at p. 14). On May 28, 2014, Lowenstein Sandler sent Plaintiff and Viceroy Chemical's then general counsel, David Pernas, a set of contracts with Plaintiff's signature, and indicated Plaintiff had electronically signed and sent the documents from his email account. (Id. at pp.15, 17). Plaintiff did not send the documents and they did not originate from his computer. (Id.). Plaintiff was unaware that the shareholder agreement, invention assignment agreement, and the employment agreement were signed and finalized and were the governing documents until Lowenstein Sandler sent the documents on May 30, 2014. (Id. at pp.16). At the time, Viceroy Chemical directors had been working on a set of governing documents with Pemas who was unable to secure the directors' signatures. (Id. at p. 16). Although Plaintiff never agreed to a final version of the shareholder agreement, Sagrera presented different versions of a signature page as electronically signed by Plaintiff. (Id.). The shareholder agreement names the stockholders as Plaintiff, Roger W. Kirby, Harold Edgar, Viceroy Ventures, Inc., and CET. (D.I. 15-2 at Ex. C). Plaintiff alleges Sagrera threatened him after he informed Sagrera of the forged signatures. (Id. at pp.14, 17, at Ex. 9 p.76).

         Also, in May 2014, Sagrera was reappointed to CET's contractual board seat and Godfroy was appointed director and CEO of Viceroy Chemical by Sagrera and his affiliate, CET. (Id. at pp.7-8.) Two out of the three directors for Viceroy Chemical shared this relationship with CET and voted as a bloc, thus controlling the three member board of directors and Viceroy Chemical's outstanding shares. (Id. at p.8). On July 30, 2014, Godfroy sent an email to Viceroy Chemical shareholders advising the board had met the previous day on an emergency basis, and was presenting a rescue financing proposal to the shareholders because Viceroy Chemical's cash had been completely depleted and it was need of an immediate capital infusion. (D.I. 1 at Ex. 21). The email provided the general terms of the rescue financing. (Id.). Plaintiff states, "after breaching his fiduciary duties, Sagrera diluted Chen of his shares, and became the majority shareholder of the company giving him additional fiduciary duties to minority shareholders." (Id. at p.8).

         In July 2014, Plaintiff met with oil executives to discuss technology that was never part of Viceroy Chemical's contemplated inventions in the contribution agreement[7] and the MOU. (Id. at p.30). The potential investors began their due diligence and, at this time, Sagrera produced documents forged by Lowenstein Sandler that cast into question all intellectual property produced by Chen. (Id.). Sagrera and Godfroy made a written demand to Plaintiff to cease and desist from seeking investors. (Id. at pp.17, 31; Ex. 16 at p.86). Plaintiff alleges the inventions were outside the scope of the contribution agreement and MOU, and Sagrera interfered with Plaintiffs prospective business relationship when he told third parties that Plaintiff was precluded from discussing any of his inventions with investors due to contractual agreements. (Id. at pp.17, 30-31).

         In August 2014, Sagrera produced the email allegedly sent by Plaintiff with the signature pages. (Id. at p. 15). Plaintiff asked Godfroy, who at the time was the CEO and director of Viceroy Chemical, to obtain the original emails from Sagrera. (Id. at p.15). Godfroy told Plaintiff that Sagrera had left the country in September 2014 and refused to tell Plaintiff if Sagrera had returned from abroad. (Id. at pp.15-16).

         In Count One, Plaintiff alleges that Sagrera breached his fiduciary duties when he: (1) committed fraud and forgery; (2) participated in violations of federal law (i.e., Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030(a)(4) and (b)); (3) submitted misleading and fraudulent contracts to New York courts; (4) threatened Plaintiff; (5) diluted the value of Plaintiffs (and all other shareholders') shares by 98 percent and increased his equity position to that of a majority shareholder when Sagrera claimed the new discounted valuation was fair; (6) tortiously interfered with Plaintiff's prospective business relationship with investors; (7) failed to investigate Plaintiff's complaints of fraud and claimed the discounted valuation was fair because Plaintiff refused to cooperate with Sagrera and overlook the forgery and fraud; (8) refused to produce emails that Plaintiff requested; and (9) presented fraudulent documents as original and valid legal documents. (Id. at pp. 19-21).

         Plaintiff alleges that Godfroy breached his fiduciary duties when he: (1) refused to investigate fraud and forgery and covered up Sagrera's actions; (2) voted on and participated in an emergency financing round which was actually a scheme to dilute Plaintiffs shares by 98 percent in valuation and that advanced his own equity position in the company; and (3) advised Plaintiff he would be liable for trying to find investors for his invention. (Id. at pp.21-22).

         In Count Two, Plaintiff alleges that Sagrera engaged in common law fraud when he: (1) failed to provide Plaintiff with hard copies of contracts purportedly signed by Plaintiff; (2) failed to inform Plaintiff that he purportedly signed contracts; (3) provided Plaintiff with an amended submission to the Delaware Secretary of State signed by Sagrera, but actually submitted the document as signed by Plaintiff; (4) coordinated in submitting documents with Plaintiff's falsified ...

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