Delaware Court Of Chancery Sustains Claims That Company And Major Stockholder Conspired To Fraudulently Induce Investment

The Delaware Court of Chancery, in Diem II, LLC v. Maisonette Inc. recently issued a decision largely denying dismissal of claims brought by Plaintiffs-investors alleging that Maisonette Inc. (“Maisonette” or the “Company”), its executives, directors and largest stockholder engaged in fraud to mislead the investors into participating in two investment rounds.

Allowing Plaintiffs’ claims to survive Maisonette’s motion to dismiss, the Court held that Plaintiffs’ waiver of claims in the relevant stock purchase agreements did not cover fraud. The Court also sustained claims that: (1) the Company, its directors, and CFO had fraudulently induced Plaintiffs to invest; (2) the Company’s largest stockholder, New Enterprise Associates 15, L.P. (“NEA”)—through its designee on the board of directors, Anthony Florence²—engaged in a conspiracy to commit fraud; and (3) all of the Defendants were unjustly enriched.

Background

Founded in 2016, Maisonette is an e-commerce children’s fashion startup incorporated in Delaware. In July 2021, the board of directors discussed Maisonette’s cash position and fundraising efforts, ultimately deciding to conduct a Series C financing round. Later that year, Maisonette’s president, Luisa Mendoza, reached out to potential investors, including the Plaintiffs, to request their participation in the Series C financing round. Mendoza supplied Plaintiffs with PowerPoint slides that laid out the historical and prospective financial data for Maisonette, which the Plaintiffs reviewed before deciding to invest in Maisonette.

In October 2021, Maisonette’s recently hired CFO, Myra Cortado, supplied Plaintiffs with Maisonette’s unaudited financial statements for fiscal year 2020 and the first three quarters of fiscal year 2021—along with financial projections for the balance of 2021 (the “‘21 Financial Statements”). While Plaintiffs were conducting due diligence, in November 2021, the board of directors met to discuss Maisonette’s financing developments. In connection with this meeting, the board of directors received PowerPoint slides that identified flaws and areas of improvement in Maisonette’s financial information. At the end of 2021, Plaintiffs bought a convertible promissory note that would convert into Maisonette Series C preferred stock upon completion of the Series C financing round.

In January 2022, Mendoza sent to Plaintiffs the updated unaudited financial statements for Maisonette (the “New Financial Statements”). The following month, Plaintiffs executed a Series C Preferred Stock Purchase Agreement (the “Series C SPA”), which converted Plaintiffs’ initial investment pursuant to the promissory note into Series C Preferred Stock, and invested an additional $2.4 million in Series C Preferred Stock. The Series C SPA laid out customary representations and warranties by Maisonette with respect to its financial statements. Further, the Series C SPA stated that, upon conversion of the promissory note, Plaintiffs “waive [ ] . . . any and all . . . claims . . . in respect of each of the Note Documents . . .”³

Plaintiffs later agreed to lead Maisonette’s Series D financing round and entered into a purchase agreement (the “Series D SPA”)—investing an additional $2.9 million in exchange for Series D Preferred stock, a contractual right to designate a director on the board of directors, and rights to ratify Maisonette’s budget.

After the Plaintiffs’ designated director joined the board, Plaintiffs discovered that, in 2022, Maisonette had restated its financial statements, which showed lower net revenue, gross profit, and EBITDA figures than those that had been previously disclosed in the ‘21 Financial Statements and the New Financial Statements that had been given to the Plaintiffs before they invested.

In March 2025, Plaintiffs brought an action against Maisonette, its board of directors and several officers, as well as NEA. Plaintiffs asserted numerous claims against different combinations of Defendants: fraud, civil conspiracy to commit fraud, breach of contract, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, violation of the Florida Securities and Investor Protection Act (“FSIPA”), equitable fraud, conversion, and unjust enrichment. Defendants moved to dismiss each of the claims on different grounds.

The Court of Chancery's Decision

After hearing oral argument and full briefing, the Delaware Court of Chancery (Vice Chancellor Bonnie W. David) granted in part and denied in part Defendants’ motion to dismiss. While the focus of the Court’s opinion was on the fraud, breach of fiduciary duty, and civil conspiracy claims, the Court briefly addressed each of the Plaintiffs’ other claims as well.

The Court sustained the breach of contract claims (for alleged breach of the Series C SPA and Series D SPA) and the aiding and abetting breach of fiduciary duty claim against NEA. In particular, the Court rejected NEA’s argument that the Complaint failed to allege that it knowingly participated in the alleged breach of the duty of disclosure. The Court held that NEA’s knowledge was adequately pled because, among other things, the knowledge of Florence can be imputed to NEA on a motion to dismiss. To the Court, Plaintiffs’ allegations supported an inference that NEA—through Florence—played an active role in the Director Defendants’ (i.e., the board of directors’ five members during the relevant time period: Sylvana Durrett, Mendoza, Florence, Marissa Mayer, and Pierre Poignant) breach of fiduciary duty.

In allowing the FSIPA claim to survive, the Court found that, given the elements of a FSIPA claim track a claim for common law fraud under Delaware law, “to the extent portions of [the fraud claim] survive, [the FSIPA claim] also survives.”⁴

The Court sustained the equitable fraud claim to the extent it was premised on the Series D SPA. However, the Court agreed with Defendants that the equitable fraud claim could not stand to the extent it was premised on the promissory note or the Series C SPA—as no special relationship existed until the Plaintiffs-investors already owned preferred stock (a prerequisite to the equitable fraud claim). In that vein, the Court said that the claim could not stand with respect to NEA because the Plaintiffs failed to allege that NEA had a special relationship with Plaintiffs.

The Court also sustained the unjust enrichment claim against all of the Defendants, holding that Plaintiffs alleged adequate facts to establish that Maisonette induced Plaintiffs’ investment in the promissory note and Series C SPA through misstatements, enriching Maisonette to Plaintiffs’ detriment. As to the Director Defendants, the Court was persuaded by Plaintiffs’ claims that their investments unjustly enriched all Defendants by “extend[ing] the runway on their investments” to “buy time for Maisonette’s financial position to turn around or for Defendants to ‘offload their equity on some other, unsuspecting investor.’”⁵

The Court dismissed the conversion claim, holding that Defendants’ alleged fraud did not engender the conversion, as conversion was automatic upon the closing of the Series C financing round.

Fraud Claim Against Maisonette, Director Defendants, and Cortado. Plaintiffs alleged that they were fraudulently induced into executing the promissory note, the Series C SPA, and the Series D SPA as a result of misrepresentations with respect to (i) Maisonette’s financial status in the ‘21 Financial Statements and the New Financial Statements, (ii) the absence of pending litigation against the board of directors in the Series C SPA and Series D SPA, and (iii) the status of Mendoza as a “Key Employee” in the Series D SPA. Defendants argued that the fraud claim should be dismissed on the basis that (i) the Series C SPA contained a waiver releasing all claims with regard to the promissory note and (ii) the Complaint neglected to allege sufficient facts to state a claim for fraud. The Court rejected Defendants’ arguments based on waiver, reasoning that, “[u]nder at least one reasonable reading” of the relevant section in the contract, “the parties did not voluntarily and intentionally relinquish the right to pursue unknown fraud claims.”⁶ Moreover, in the Court’s view, if the “parties had intended to broadly release unknown fraud claims, they could have done so explicitly, but they did not.”⁷

Defendants argued that the Complaint failed to plead facts supporting an inference that any Defendant made a false statement. According to Plaintiffs, to induce their investment in the promissory note, the Director Defendants, Maisonette and Cortado supplied them with the Series C PowerPoint slides and ‘21 Financial Statements, which “falsely represented the Company’s financial condition, as later revealed by the Restated Financial Statements.”⁸ Defendants argued that any misstatements of financial information in the ‘21 Financial Statements and Series C PowerPoint slides were immaterial or forward-looking projections. The Court determined that the Complaint sufficiently alleged misstatements of historical information and explained that, at the pleadings stage, it was not in a position to find that inaccurate historical information in the Series C PowerPoint slides and ’21 Financial Statements was immaterial to Plaintiffs’ investment decision as a matter of law.

The Court held that the Complaint sufficiently alleged misstatements in connection with the Series C SPA as well.⁹ Similar to the Series C PowerPoint slides and the ‘21 Financial Statements, the New Financial Statements given to Plaintiffs contained higher net revenue and gross profit, among other figures, than those later reflected in the restated financial statements. The Court found that the Complaint alleged an actional misrepresentation in the New Financial Statements.

Plaintiffs further alleged that the Absence of Litigation Representation in the Series C SPA was false and misleading. The representation stated that there was no litigation pending against any director. However, in actuality, Florence was a defendant in numerous federal securities lawsuits. The Court flatly rejected Defendants’ argument that the representation was immaterial, noting that, “at the pleadings stage, the fact that Plaintiffs bargained for, and were entitled to rely on, the Absence of Litigation Representation supports a reasonable inference that the misrepresentation was material to Plaintiffs.”¹⁰

Moreover, the Court concluded that Plaintiffs’ Complaint sufficiently alleged scienter.¹¹ Plaintiffs argued that the Director Defendants, Maisonette, and Cortado either knew the ‘21 Financial Statements and the New Financial Statements misstated Maisonette’s historical financial performance or acted with reckless indifference to the truth of the information reported in those documents. The Court said that it was “reasonably conceivable” that the Director Defendants distributed the ‘21 Financial Statements and New Financial Statements “knowing that the financial information therein was ‘not entirely accurate.’”¹² The Court also gave credence to Plaintiffs’ allegation that Cortado prepared the financial statements to provide to investors—including Plaintiffs—knowing that the financial information was not accurate. What is more, the Court maintained that, given the Director Defendants and Cortado distributed false statements to benefit Maisonette, their knowledge is imputed to Maisonette, meaning that the Complaint sufficiently pled scienter as applied to Maisonette. The Court also found that the Complaint sufficiently alleged that Florence knew that the Absence of Litigation Representations were false, given that he was a litigant in the federal securities lawsuits.¹³

According to the Court, the Complaint adequately pled the remaining elements of a fraud claim under Delaware law (i.e., that Plaintiffs relied on the alleged misrepresentations when deciding to invest and suffered damages as a consequence).

Breach of Fiduciary Duty Claim Against Director Defendants. Plaintiffs alleged that the Director Defendants breached their fiduciary duty of disclosure by approving the inaccurate Absence of Litigation Representation in the Series D SPA when seeking shareholder approval to amend Maisonette’s certificate of incorporation with regard to the Series D financing round. The Court allowed the breach of fiduciary duty claim to proceed, rejecting Defendants’ contention that the breach of fiduciary duty claim was duplicative of Plaintiffs’ breach of contract claim. As noted by the Court, “[directors of Delaware corporations] are under a fiduciary duty to disclose fully and fairly all material information within the board’s control when it seeks shareholder action.”¹⁴ The Court concluded: “[f]or the same reasons the Absence of Litigation Representation supports a claim for fraud against the Director Defendants, it also supports a conceivable breach of the duty of disclosure.”¹⁵

Civil Conspiracy to Commit Fraud Claim Against All Defendants. Plaintiffs alleged that “Maisonette, the Director Defendants, and Cortado made or directed fraudulent statements to Plaintiffs to induce them to enter into the [promissory note], the Series C SPA, and the Series D SPA, and [NEA] conspired with them to do so.”¹⁶ The Court concluded that the Complaint sufficiently alleged that NEA conspired with Maisonette’s fiduciaries to commit fraud in connection with the promissory note and Series C SPA. The Court rejected NEA’s argument that the alleged facts did not support an inference that there was a meeting of the minds between the co-conspirators. Specifically, the Court said that, by 2021, NEA “learned of Maisonette’s ‘dire financial condition’ through Florence’s service on the Board.”¹⁷ As the Complaint alleged, to “bail out their existing investments and preserve their existing roles in Maisonette[,]” NEA “conspired to induce Plaintiffs to invest ‘substantial new money’” in Maisonette “to ‘keep [NEA’s] substantial prior investments in Maisonette afloat.’”¹⁸ Based on the manifold allegations, the Court maintained that it is conceivable that NEA reached an agreement with Maisonette and the other Defendants to defraud Plaintiffs. Thus, the Court sustained the civil conspiracy claim, stating that, on the pleadings, it is not in a position to determine that “Florence acted solely on behalf of Maisonette, rather than at the behest of”¹⁹ NEA.

Takeaways

• Hurdle for Dismissal of Fraud Claims. It is generally difficult for defendants to dismiss fraud claims at the pleadings stage, particularly when the plaintiff(s) allege blatant misrepresentations. Indeed, the Court repeatedly pointed to the procedural posture in its analysis—that it “cannot weigh competing inferences and must instead draw all reasonable inferences in Plaintiffs’ favor.”²⁰
• General Waivers May Not Protect Against Fraud Claims. While Plaintiffs waived any claims “in respect of” the investment, broad waivers do not necessarily mean that a party to a contract relinquishes their right to sue for fraud. Practitioners should not rely on boilerplate waiver provisions if they want to protect themselves against fraud claims. Rather, practitioners should keep in mind that waivers or release of claims must be unambiguous as to whether unknown claims are/are not waived. If the desired outcome is to have a broad waiver or release, the contractual language should explicitly state that the party releases all claims, whether unknown or known, including fraud claims.
• Designees to the Board of Directors Can Face Liability. A stockholder can face potential liability for aiding and abetting breaches of fiduciary duty if the director they appointed acted at the stockholder’s behest and not in the company’s best interest. To that end, designees to the board of directors should take care to refrain from carelessly sharing information with their nominating stockholder. Directors should also take proactive measures in the event that they receive information that the company’s financial reporting is deficient. Under such circumstances, directors should promptly reevaluate the company’s financial statements and determine whether new financial documents need to be provided to potential investors.
• Unjust Enrichment Claims Are Available Against Non-Recipients. This decision illustrates that even if directors, the CFO, and a stockholder did not personally receive monetary proceeds as a result of their misconduct, they could still face exposure under an unjust

Footnotes

1. C.A. No. 2025-0338-BWD, 2026 WL 922982 (Del. Ch. 2026).

2. In 2018, NEA led Maisonette’s Series A financing round and obtained a right to designate a director on the board of directors; NEA designated Florence—the CEO and managing General Partner of NEA’s parent. See id. at *2.

3. Id. at *3 (internal quotation marks and citations omitted).

4. Id. at *15.

5. Id. at *21 (internal quotations and citations omitted).

6. Id. at *7.

7. Id.

8.Id. at *8.

9. The Court also held that the Complaint sufficiently alleged “a misstatement in connection with the Series D SPA for the same reasons explained” with regard to the Series C SPA. Id. at *9.

10. Id.

11. The Court held that it is reasonably conceivable that “the Director Defendants knew or should have known that the Absence of Litigation Representation were false.” Id. at *12.

12. Id. at *11 (internal citations omitted).

13. The Court also held that the Complaint supported “a reasonable inference of scienter on the part of the other Director Defendants with respect to this representation[.]” Id. at 12.

14. Id. at *14 (internal citations and quotations omitted).

15. Id.

16. Id. at *15.

17. Id. at *16 (internal citations omitted).

18. Id. (internal citations and quotations omitted).

19. Id. at *17.

20. Id.