In a dramatic legal battle, a Wisconsin-based limited liability company claims it was defrauded in the sale of its ownership interest in a Delaware corporation. On June 28, 2024, Orange Pelican, LLC filed an appeal in the Appellate Court of Illinois, First Judicial District, against Maestro International Cargo LLC and other associated parties.
The case centers around Orange Pelican's allegation that it was misled into selling its 25.12% stake in Maestro International Cargo at a significantly undervalued price. The plaintiffs—Edip Petkas, Inoa Ventures Management LLC, Maestro International Cargo LLC, and Philip Fornaro—are accused of fraudulent inducement and breach of fiduciary duty. Orange Pelican contends that these parties denied repeated requests for financial information and made false statements about the company's valuation. According to Orange Pelican, while they were paid $3.75 million for their shares in November 2020, Maestro was sold for $90 million just a year later.
Orange Pelican's complaint includes claims of breach of fiduciary duty, fraudulent inducement, and fraudulent concealment. They argue that Inoa’s managing members Edip Pektas and Sanj Rethi, along with Philip Fornaro, withheld crucial financial data while secretly negotiating the sale of Maestro. The plaintiffs assert that this misinformation led them to sell their shares at a "staggeringly discounted rate," resulting in damages exceeding $30 million.
However, the court dismissed these claims based on antireliance language within the redemption agreement between the parties. This decision was influenced by a precedent set in Walworth Investments-LG v. Mu Sigma Inc., where similar fraud claims were barred due to antireliance clauses in the repurchase agreement. The court also enforced an indemnity clause shifting attorney fees to Orange Pelican.
Orange Pelican argued that as a Delaware limited liability company (LLC), Maestro’s managers owed fiduciary duties to disclose honest financial information regardless of any exculpatory terms included in the membership repurchase agreement. However, the court found this argument unpersuasive given that Maestro is structured like a corporation rather than an LLC managed by its members.
The plaintiffs are seeking not only dismissal of Orange Pelican's counterclaims but also summary judgment on their right to indemnification under Section 10.01 of the redemption agreement. They have already been awarded $314,475 in attorney fees and $766 in costs.
The attorneys involved include Husch Blackwell LLP representing Orange Pelican and Fornaro Law representing Maestro International Cargo LLC. The case is presided over by Judge Pamela McLean Meyerson under Case ID No. 1-23-2291.