Clearly, any attempt to analogize options to stocks in order to suggest a fiduciary duty are to no avail.
As for the purported distinction between "sweat equity" employee options and options "purchased on the open market for speculative purposes [or] granted as a quid pro quo for lending money," plaintiff does not offer a single case that even suggests this distinction within the context of fiduciary duties. Plaintiff offers no explanation as to why one who receives options as a form of employee compensation differs from one who receives options as a result of lending money to a company; both involve the exchange of value for options directly with the company. I doubt such Delaware cases exist, since a focus on the method of procuring the option interest would run counter to the command in Simons v. Cogan to focus upon the "nature of the interest or entitlement" to determine if a fiduciary duty arises.
Plaintiff cites Gandal v. Telemundo Group, Inc., 306 U.S. App. D.C. 231, 23 F.3d 539, 543 (D.C. Cir. 1994) as supporting the "piggybacking" of an option claim on a stock claim. In Gandal, the court noted that a warrant holder who had a contractual right to receive the same merger consideration as shareholders could bring a claim that the Telemundo board breached its fiduciary duty to its stockholders in the merger. Here, there is no alleged breach of fiduciary duty to the stockholders, only to option holders. Moreover, the Gandal court went on to note that the "board may owe no fiduciary duty to the warrant holders themselves."
Accordingly, the motion to dismiss count II is granted.
COUNT III -- UNJUST ENRICHMENT
Defendants also attack the count III for unjust enrichment against defendants British Vita and TCW. They argue that a party cannot seek recovery for unjust enrichment where an express contract is "the measure of plaintiffs' right." Wood v. Coastal States Gas Corp., 401 A.2d 932 (Del. 1979). In Wood, preferred stockholders felt that their certificate entitled them to a piece of the action in a spin-off of a subsidiary to common stockholders. The Court in Wood found that because any claim by the preferred stockholders -- including an unjust enrichment claim -- would necessarily be predicated on the certificate, there could "be no recovery under an unjust enrichment theory independent of [the contract]." Id. at 942. Thus, Wood seems to be directly on point and controlling precedent.
Plaintiff correctly contends that both an unjust enrichment claim and a contract claim concerning the same transaction may be permitted in some situations but not where "the remedy available at law will afford the plaintiffs full, fair, and complete relief." Hughes Tool Company v. Fawcett Publications, Inc., 315 A.2d 577, 579 (Del. 1974) (allowing equitable claim where it is not clear that disputed copyright could be acquired by an action at law). Powers' contract action could supply him with a complete remedy. Powers seeks the antidilution options which would have maintained his proportional ownership vis-a-vis British Vita and TCW and can gain relief either directly from Spartech based on a contract claim or indirectly from British Vita and TCW through an equitable claim. Plaintiff argues that where there are multiple parties responsible for one harm, a claim against only one of those parties does not afford "complete" relief. He does not, however, offer any precedent in support of this proposition.
It is true that the proper measure of recovery for breach of fiduciary duty may be "predicated upon a restitutionary theory of 'unjust enrichment'" independent of the harm suffered by the corporation or the shareholders. In re Tri-Star Pictures, Inc., Litig., 18 Del. J. Corp. L. 347, 358 (Del. Ch. 1992), affirmed in part, 634 A.2d 319 (Del. 1993). Thus, plaintiff argues that he is entitled to an accounting. See, e.g., Harman v. Masoneilan International, Inc., 442 A.2d 487, 496-500 (Del. 1982).
Besides bottoming their claim to equity upon a questionable breach of fiduciary, plaintiff makes the mistake of confusing the substantive claim of "unjust enrichment" and the restitutionary theory of damages for breach of fiduciary duty based on the concept of unjust enrichment. Although plaintiff might be entitled to an accounting if he succeeded in showing a breach of fiduciary duty, he cannot maintain a substantive unjust enrichment claim if a contract is the measure of his damages.
Plaintiff also contends that a party may maintain both an equitable remedy and a remedy at law based on one contract, and may elect inconsistent theories even after trial. See Nova International, Inc. v. American Express Bank Ltd., 1996 U.S. Dist. LEXIS 969, 1996 WL 39317, *5 (S.D.N.Y. Jan. 31, 1996) (applying New York law); Croce v. Kurnit, 565 F. Supp. 884, 894 (S.D.N.Y.1982) (same).
Admittedly, these cases seem to contradict the doctrine that an equitable remedy may not lie where a remedy at law offers complete relief. Possibly New York law does not impose as rigorous a boundary between equity and law and thus affords greater latitude in bringing equitable actions.
It appears to me that count III fails to state a claim on which relief can be predicated, and accordingly, count III is also dismissed.
February 7, 1997
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