Biglari Holdings Inc. v. Funston

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

BIGLARI HOLDINGS, INC., )
)
Plaintiff, )
)
v. ) C.A. No.: N24C-06-187 EMD CCLD
)
BRENT FUNSTON, as executor for the )
estate of LANCE FUNSTON, )
)
Defendant. )
)

Submitted: August 14, 2025
Decided: November 26, 2025

Upon Defendant’s Motion to Dismiss
GRANTED in part and DENIED in part

John M. Seaman, Esquire, S. Michael Blochberger, Esquire, Abrams & Bayliss LLP,
Wilmington, Delaware, Lori Marks-Esterman, Esquire, Daniel M. Stone, Esqure, Olshan Frome
Wolosky LLP, New York, New York. Attorneys for Plaintiff Biglari Holdings, Inc.

Richard L. Renck, Esquire, Michael B. Gonen, Esquire, Duane Morris LLP, Wilmington,
Delaware, Luke McLoughlin, Esquire, Duane Morris LLP, Philadelphia, Pennsylvania.
Attorneys for Defendant Brent Funston as executor for the estate of Lance Funston.

DAVIS, P. J.

I. INTRODUCTION

This is a civil action assigned to the Complex Commercial Litigation Division of the

Court. Plaintiff Biglari Holdings Inc. (“Biglari”) commenced this action against Defendant

Brent Funston, as executor (“Defendant” or “Executor”) for the estate of Lance Funston

(“Decedent” or “Mr. Funston”).

Biglari filed its Complaint (the “Complaint”) against Defendant on June 21, 2024,

asserting a breach of contract claim (Count I) and a fraudulent inducement claim (Count II). 1 0F

1
See Complaint (hereinafter “Compl.”) (D.I. No. 1).
Presently before the Court is Defendant’s Motion to Dismiss which was filed on August

27, 2024. 2 The parties modified the briefing schedule multiple times throughout 2024 and
1F

2025. 3 Defendant timely filed his Opening Brief in Support of his Motion to Dismiss (the
2F

“Motion”) on April 18, 2025. 4 Biglari filed its opposition on June 6, 2025 (the “Opposition”). 5
3F 4F

Defendant filed his reply brief on July 2, 2025 (the “Reply Brief”). 6 The Court held argument on
5F

the Motion on August 14, 2025. At the conclusion of the hearing, the Court took the Motion

under advisement.

For the reasons set forth below, the Court GRANTS the Motion as to Count II and

DENIES the Motion as to I.

II. RELEVANT FACTS

A. THE PARTIES

Biglari is a Delaware corporation with its principal place of business in San Antonio,

Texas. 7 6F

Mr. Funston was a Pennsylvania resident at the time of his death. 8 His last Will and
7F

Testament, dated May 25, 2023 (the “Will”), is currently being probated in Orphan’s Court in

Montgomery County, Pennsylvania. 9 The Will names Mr. Funston’s son, Brent Funston, as
8F

executor and trustee of the estate. 10 The Executor is a California resident who currently serves
9F

2
See Defendant’s Motion to Dismiss (D.I. No. 13)
3
See D.I. Nos. 16, 18, 20, 22, 24.
4
See Defendant’s Opening Brief in Support of His Motion to Dismiss (hereinafter “Mot.”) (D.I. No. 26).
5
See Plaintiff’s Answering Brief in Opposition to Defendant’s Motion to Dismiss (hereinafter “Opp’n”) (D.I. No.
28).
6
See Defendant’s Reply Brief in Further Support of his Motion to Dismiss (hereinafter “Reply Br.”) (D.I. No. 32).
7
Compl. ¶ 8.
8
Id. ¶ 9.
9
Id.
10
Id.

2
as the executor of the Estate of Lance Funston. 11 The Executor is named as Defendant in this
10F

action pursuant to 10 Del. C. § 3701. 12 11F

B. NATURE OF THE DISPUTE

1. Timeline of Events

In September 2014, Mr. Funston and his affiliated companies entered into a loan

agreement and warrant with CCA Industries, Inc. (“CCA” or the “Company”). 13 CCA is “a 12F

Delaware corporation formerly traded on the New York Stock Exchange but traded on the pink

sheets since April 2019.” 14 Throughout the transaction, Mr. Funston and his affiliated
13F

companies beneficially owned approximately 17% of the Company and were entitled to appoint

four of the seven directors of CCA. 15 As a result, Mr. Funston and his affiliated companies
14F

controlled CCA. 16 15F

The Lion Fund, L.P. (“Lion Fund”) is an affiliate of Biglari. 17 When Mr. Funston
16F

acquired control of CCA, Lion Fund was a CCA shareholder. 18 Specifically, Lion Fund owned
17F

776,259 shares of CCA’s common stock (the “CCA Shares”), representing approximately 12.9%

of the outstanding common stock. 19 18F

Sadar Biglari, Lion Fund’s Chairman and CEO, is an entrepreneur and investor with

decades of experience growing successful businesses. 20 Mr. Biglari also had a long history and
19F

11
Id. ¶ 10.
12
Id.; see also 10 Del. C. § 3701, stating in relevant part: "[a]ll causes of action, except actions for defamation,
malicious prosecution, or upon penal statutes, shall survive to and against the executors or administrators of the
person to, or against whom, the cause of action accrued....)."
13
See Compl. ¶¶ 1, 12.
14
See id.
15
See id. ¶ 12.
16
See id.
17
See id. ¶ 2.
18
See id. ¶ 13.
19
See id.
20
See id. ¶ 14.

3
familiarity with CCA, having served as CCA’s director from 2011 through 2014. 21 Mr. Funston
20F

sought to have Mr. Biglari remain as director of CCA and to maintain Lion Fund’s status as a

significant stockholder of the Company. 22 21F

On November 14, 2014, Mr. Funston and Lion Fund entered into a Lock Up and Put

Agreement (the “2014 Lock Up and Put Agreement”). 23 The 2014 Lock Up and Put Agreement
22F

provides that Lion Fund could not sell or otherwise transfer its 776,259 CCA Shares until the

earliest of (a) the sale of the Company; (b) the Company became insolvent; or (c) January 1,

2018. 24 Lion Fund also agreed that Mr. Biglari would continue to serve as a director for so long
23F

as the CCA board nominated him. 25 24F

In exchange, Lion Fund had the right to sell, and Mr. Funston agreed to purchase, Lion

Fund’s CCA Shares for $6 per share within thirty days after the end of the Lock Up Period (the

“Put Right”). 26 During this period, Lion Fund could exercise its Put Right by giving written
25F

notice to Mr. Funston. 27 Upon receipt, Mr. Funston had an obligation to pay, within seven days,
26F

Lion Fund $6 per share for each CCA Share noticed. 28 27F

Mr. Funston explained his rationale for entering the 2014 Lock Up and Put Agreement to

the CCA Board of Directors, stating:

[t]he additional personal risk of $4.2 million dollars [sic] seemed justified given
[Mr. Biglari’s] demonstrated record of building shareholder value… [Mr. Biglari]
wanted to protect his funds downside, with a three-year put at his investment basis
which would give management the time to work to increase CCA’s market cap…
The benefits to both sides were obvious.” 29
28F

21
See id.
22
See id. ¶ 15.
23
See id. ¶ 16.
24
See id.
25
Id.
26
See id. ¶ 17.
27
See id. ¶ 18.
28
See id.
29
See id. ¶ 19.

4
At the time of the 2014 Lock Up and Put Agreement, CCA shares traded at or around $3.40 per

share. 30
29F

In 2016, Lion Fund sought to transfer the CCA Shares to Biglari, a related entity also

controlled by Mr. Biglari; however, the transfer restrictions in the 2014 Lock Up and Put

Agreement precluded this. 31 On June 14, 2016, Mr. Funston, Lion Fund, and Biglari entered
30F

into a second agreement regarding the CCA Shares (the “2016 Lock Up and Put Agreement”). 32 31F

The 2016 Lock Up and Put Agreement amended and superseded the 2014 Lock Up and Put

Agreement. 33 32F

The 2016 Lock Up and Put Agreement authorizes Lion Fund to transfer the CCA Shares

to Biglari and contained the same Put Right as the 2014 Lock Up and Put Agreement. 34 33F

However, the Lock Up period was extended until at the latest January 1, 2019, which had the

corresponding effect of extending the Put Period to January 31, 2019. 35 34F

Mr. Funston represented in the 2016 Lock Up and Put Agreement that he had “the

financial ability to bear the economic risk of his investment,” and that “at all times during the

terms of this Agreement, [Mr.] Funston [would] have sufficient, liquid funds necessary to

purchase the [CCA Shares] for [$6 per share].” 36 At the time of the 2016 Lock Up and Put
35F

Agreement, CCA Shares traded at or around approximately $3.26 per share. 37 36F

As of January 1, 2019, CCA’s share price had fallen to approximately $2.24 per share. 38 37F

The Company had not been sold, nor had a bankruptcy event occurred. Therefore, per the terms

30
Id. ¶ 20.
31
See id. ¶ 21.
32
Id. ¶ 22.
33
See id.
34
See id. ¶ 23.
35
See id.
36
See id. ¶ 24.
37
Id. ¶ 28.
38
Id. ¶ 29.

5
of the 2016 Lock Up and Put Agreement, the Lock Up period expired January 1, 2019, and the

Put Period began. 39 Mr. Funston was unwilling or unable to purchase the CCA Shares and
38F

sought to extend the Put Period. 40
39F

On January 30, 2019, the parties executed an amendment to the 2016 Lock Up and Put

Agreement (the “2019 Amendment”). 41 The 2019 Amendment extended the Put Period to April
40F

30, 2020, in exchange for payment by Mr. Funston to Biglari of $200,000. 42 The 2019
41F

Amendment further provided that if Mr. Funston failed to make the required payment, the 2019

Amendment would instead constitute a Put Right Notice under the 2016 Lock Up and Put

Agreement. 43 42F

Mr. Funston made the payment of $200,000 to Biglari, and both Biglari and Mr. Funston

filed Schedule 13D’s disclosing the 2019 Amendment and the extension of the Put Period. 44 43F

On February 5, 2019, the Company announced that it was deregistering from the New

York Stock Exchange. 45 Biglari was prohibited from selling any of its CCA Shares for years
44F

leading up to the Company’s delisting, per the 2016 Lock Up and Put Agreement. 46 This was
45F

the precise risk that the Put Right was supposed to protect Biglari against. 47
46F

In April 2020, Mr. Funston was again unwilling or unable to purchase the CCA Shares

during the extended Put Period and sought a further extension. 48 Mr. Funston requested that the
47F

parties work on a new deal, but if it was “not in place in 90 days” Mr. Funston would pay

39
See id.
40
See id. ¶ 30.
41
See id.
42
See id.
43
See id.
44
See id. ¶ 31.
45
See id. ¶ 32.
46
See id.
47
See id.
48
See id. ¶ 33.

6
“$100,000 for [a] one year extension, commencing July 30.” 49 On or about April 29, 2020, Mr.
48F

Funston and Biglari executed a written agreement extending the Put Period through July 31,

2020, with the option for Mr. Funston to extend it further to April 30, 2021, if he paid Biglari

$100,000 before July 30, 2020 (the “April 2020 Agreement”). 50 49F

The parties failed to agree to a “new deal” during the 90-day negotiation period and

instead entered into a new executed written agreement on or around July 27, 2020 (the “July

2020 Agreement”). 51 The July 2020 Agreement provided that if Mr. Funston paid $100,000 by
50F

July 30, 2020, the Put Period would be extended until December 31, 2021. 52 Furthermore, the
51F

July 2020 Agreement provided that if Mr. Funston failed to make the required payment, the July

2020 Agreement would instead constitute a Put Right Notice under the 2016 Lock Up and Put

Agreement. 53 52F

Mr. Funston made the $100,000 payment, thereby extending the Put Period to December

31, 2021. 54
53F

On December 14, 2021, Biglari sent Mr. Funston a notice exercising its right under the

2016 Lock Up and Put Agreement, triggering Mr. Funston’s obligation to purchase all 776,259

of the CCA Shares for $6 per share. 55 Mr. Funston failed to make the required payment of
54F

$4,657,554 to Biglari within seven business days 56 to acquire the CCA Shares. 57
55F 56F

49
See id.
50
See id. ¶ 34.
51
See id. ¶ 35.
52
See id.
53
See id.
54
See id. ¶ 36.
55
See id. ¶ 37.
56
The seventh business day was December 23, 2021.
57
See Compl. ¶ 37.

7
Biglari sent an additional notice on December 30, 2021, exercising the Put Right for all

the CCA Shares. 58 Mr. Funston did not make the required payment. 59
57F 58F

On December 31, 2021, Biglari offered to extend the Put Period to January 7, 2022, in a

signed offer (the “December 31 Offer”). 60 The December 31 Offer provided Mr. Funston with
59F

the option to further extend the Put Period to September 30, 2022, if he paid Biglari $100,000 by

January 7, 2022. 61 The December 31 Offer provides that if Mr. Funston did not make the
60F

required payment, the December 31 Offer constituted a third notice of Biglari’s exercise of the

Put Right under the 2016 Lock Up and Put Agreement. 62 61F

Mr. Funston did not make the required payment by January 7, 2022. 63 Accordingly, by
62F

way of its three December 2021 notices, Biglari exercised its Put Right in December 2021. 6463F

Mr. Funston did not purchase the CCA Shares as required, allegedly breaching his

contractual obligations under the 2016 Lock Up and Put Agreement. 65 64F

Throughout 2022, Biglari repeatedly engaged with Mr. Funston seeking to enforce the

2016 Lock Up and Put Agreement, which Mr. Funston ignored until October 2022 directing

Biglari to his attorneys at Duane Morris. 66 Mr. Funston indicated a desire to structure a payment
65F

but never provided a formal offer. 67 Throughout these discussions, Mr. Funston acknowledged
66F

that he owed Biglari the funds; however, Mr. Funston claimed not to have the funds necessary to

58
See id. ¶ 38.
59
See id.
60
See id. ¶ 39.
61
See id.
62
See id.
63
See id. ¶¶ 40-41.
64
See id.
65
See id. ¶ 42.
66
See id. ¶ 43.
67
See id.

8
purchase the CCA Shares. 68 The parties failed to reach a resolution before Mr. Funston died on
67F

July 5, 2023. 69 68F

2. The Alleged Breaches

Biglari asserts that the 2016 Lock Up and Put Agreement, as amended, is a valid contract

that required Mr. Funston to purchase the CCA Shares for $6 per share if Biglari provided notice

exercising its Put Right during the Put Period. 70 Biglari contends that it provided notice in
69F

December 2021, and at all times, fully performed its contractual obligations under the 2016 Lock

Up and Put Agreement. 71 70F

Biglari alleges that Mr. Funston breached the 2016 Lock Up and Put Agreement by

failing to purchase the CCA Shares within the time required by the 2016 Lock Up and Put

Agreement. 72 Biglari further contends Mr. Funston breached the 2016 Lock Up and Put
71F

Agreement by failing to maintain sufficient liquid funds necessary to purchase the CCA Shares,

per his financial representation and covenant. 73
72F

Biglari alleges it has been damaged in the sum of no less than $4,657,554, plus interest,

and that this claim for breach of contract survives Mr. Funston’s death and is assertable against

Defendant. 74 73F

3. The Alleged Fraud

Executor purportedly made repeated statements that there was insufficient liquid assets in

the Funston Estate to comply with Mr. Funston’s obligations under the 2016 Lock Up and Put

68
See id. ¶ 44.
69
See id. ¶ 48.
70
See id. ¶ 54
71
See id. ¶ 55.
72
See id. ¶ 56.
73
See id. ¶ 57.
74
See id. ¶¶ 58-59.

9
Agreement. 75 Biglari contends that this demonstrates that Mr. Funston’s financial
74F

representations were false when made and remain false. 76 Further, Biglari alleges that Mr.
75F

Funston made these representations knowingly, or at least with reckless indifference to the truth.

Specifically, Biglari maintains that Mr. Funston had no intention of performing the financial

covenant to maintain the sufficient liquid funds necessary. 77 76F

Biglari claims that Mr. Funston’s purported inability to pay the Put Purchase Price was a

breach of the Representation and Warranty made in the 2016 Lock Up and Put Agreement to

“have sufficient, liquid funds necessary to purchase the Aggregate Shares for the aggregate Put

Purchase Price.” 78 Biglari alleges that Mr. Funston intended to induce Biglari to enter into the
77F

2016 Lock Up and Put Agreement through false financial representations. 79 Biglari states it
78F

reasonably relied upon Mr. Funston’s financial representations and would not have entered into

the 2016 Lock Up and Put Agreement without a reasonable expectation that he would be able to

exercise the Put Right. 80 79F

Biglari asserts that Mr. Funston’s fraud caused Biglari to be damaged, in an amount to be

proven at trial, because, inter alia, it was not able to access public markets while it could have. 81
80F

Biglari asserts that the claim for fraudulent inducement survives Mr. Funston’s death and is

assertable against Executor. 82 81F

75
See id. ¶ 62.
76
See id.
77
See id. ¶ 63.
78
See id. ¶ 45.
79
See id. ¶ 64.
80
See id. ¶¶ 25, 65.
81
See id. ¶ 66.
82
See id. ¶ 67.

10
III. PARTIES’ CONTENTIONS

A. THE MOTION

Executor contends that, under the facts Biglari has alleged, the “Put Right” obligation

expired unexercised, or the limitations period for claiming breach of contract has long since

elapsed. 83 Further, Executor contends that Biglari cannot succeed because the letters did not
82F

form contracts as they lacked necessary legal consideration. 84 Executor maintains that, in either
8 F

case, and based solely on the Complaint and the documents integral thereto, there is no

reasonably conceivable set of circumstances susceptible of proof under the Complaint upon

which Biglari can recover, and dismissal is appropriate under Superior Court Civil Rule (“Rule”)

12(b)(6). 85 84F

Executor further contends that Biglari’s alternative fraud theory is not sustainable as it is

simply a re-characterization of a contract theory and as such is precluded by Delaware’s anti-

bootstrapping doctrine. 86 Executor further asserts that Mr. Funston’s statements about future
85F

financials cannot be fraudulent as they are not statements of present facts. 87
86F

B. THE OPPOSITION

Biglari contends that this action is not time barred as its contract claim accrued after July

21, 2021. 88 Biglari notes that Executor’s argument that Biglari’s Put Right was exercised on
87F

January 31, 2019, ignores specific allegations regarding the valid extension of the 2019

Amendment. 89 Biglari contends that each extension of the Put Period was supported by valid
88F

83
See generally Mot.
84
See id. at 14.
85
See id.
86
See id. at 1.
87
See Reply Br. at 1.
88
See Opp’n. at 13.
89
See id. at 16.

11
consideration, and the parties conduct further supports this assertion. 90 Furthermore, Biglari
89F

asserts that its Put Right did not expire before it was exercised, as supported by the December

Offer. 91
90F

Biglari also argues that its fraud claim is timely and distinct from its breach of contract

claim. 92
91F

IV. STANDARD OF REVIEW

When reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court

must “view the complaint in the light most favorable to the non-moving party, accepting as true

all well pleaded allegations and drawing reasonable inferences that logically flow from them,”

but “decline … to accept conclusory allegations unsupported by specific facts or to draw

unreasonable inferences in favor of the non-moving party.” 93 “Even vague allegations are
92F

considered well-pleaded if they give the opposing party notice of a claim.” 94 93F

“Dismissal is warranted where the plaintiff has failed to plead facts supporting an

element of the claim, or that under no reasonable interpretation of the facts alleged could the

complaint state a claim for which relief might be granted.” 95 But, if the Court engages the
94F

standards described and finds the claimant may recover, the Court must deny the motion to

dismiss. 96 95F

90
See id. at 16-17.
91
See id. at 20.
92
See id. at 22.
93
Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162, 166 (Del. 2011).
94
Veney v. United Bank, 2017 WL 3822657, at *2 (Del. Super. Aug. 31, 2017).
95
Hedenberg v. Raber, 2004 WL 2191164, at *1 (Del. Super. Aug. 20, 2004).
96
Riverside Fund V, L.P. v. Shyamsundar, 2015 WL 5004924, at *3 (Del. Super. Aug. 17, 2015); Spence v. Funk &
Commc’n Consultants, Inc., 396 A.2d 967, 968 (Del. 1978).

12
V. DISCUSSION

A. THE MOTION IS DENIED AS TO THE BREACH OF CONTRACT CLAIM (COUNT I).

The Court finds that Biglari provides sufficient evidence in its Complaint to survive a

Rule 12(b)(6) challenge. Biglari sufficiently alleges that Mr. Funston breached the 2016 Lock

Up and Put Agreement by: (i) failing to purchase the CCA Shares within the time required; and

(ii) failing to maintain sufficient liquid funds necessary to purchase the CCA Shares per his

financial representation and covenant.

1. The Extension Letters Contained Valid Consideration

A contract must be supported by mutual assent and consideration. 97 “Delaware courts
96F

define consideration as a benefit to a promise or a detriment to a promise pursuant to the

promisor’s request.” 98 97F

Executor contends the letters following the Amendments lack the necessary legal

consideration. 99 Executor argues that each letter contemplated: (i) a wire payment from Mr.
98F

Funston to Biglari, and (ii) an expansion of the Put Period, not a refraining of any action by

Biglari. 100 Executor argues that the letters provide that the Put Period shall be “extended,” rather
99F

than replaced, highlighting that Biglari’s existing obligations were the basis of the “new”

contract. 101 100F

Executor relies on James J. Gory Mech. Contracting, Inc. v. BPG Residential Partners V,

LLC. 102 BPG states that “[p]ast consideration, as opposed to true consideration, however, cannot
101F

97
Continental Ins. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1232 (Del. Ch. 2000).
98
Id.
99
See Mot. at 14.
100
See id. at 15.
101
See id.
102
2011 WL 6935279 (Del. Ch. Dec. 20, 2011)

13
form the basis for a binding contract.” 103 However, as Biglari points out, BPG applies to the
102F

“Pre-Existing Duty Rule,” under which a “commitment to honor a pre-existing obligation works

neither benefit nor detriment that it cannot serve as valid consideration.” 104 103F

Across all the letters, Mr. Funston paid to extend the Put Period, which is sufficient

consideration because a promise to extend the period by which money must be paid is valid

consideration. 105 The Court discounts Executor’s attempt to analyze the adequacy of this
10 F

consideration because Delaware courts limit inquiry to the consideration’s existence. 106 Mr. 105F

Funston repeatedly bargained for, paid for, and received numerous extensions of the Put Period

(impending $4.7 million liability) on the understanding that Biglari would forbear from

exercising its Put Right for the duration of the Put Period. 107 Executor argues that an
106F

“understanding” is insufficient to find consideration. 108 107F

Biglari’s implied forbearance should be deemed consideration at this stage of the

proceedings. “[A]ctual forbearance is generally evidence of an agreement to forbear, and when

viewed in connection with other facts and circumstances relating to the promise, an implied

promise to forbear may be established which will be deemed to supply the necessary

consideration.” 109 108F

As the Complaint makes clear, Mr. Funston requested and paid for each extension, which

Mr. Funston would not have asked nor acted on if he did not reasonably believe it was a benefit

to him. 110 Mr. Funston’s $300,000 payment to Biglari provides sufficient evidence to show that
109F

103
Id., at *2 (citing Roam-Tel Partners v. AT & T Mobility Wireless Operations Holdings Inc., 2010 WL 5276991,
at 6* (Del. Ch. Dec. 17, 2010)).
104
See Opp’n at 20 (quoting James J. Gory Mech. Contracting, Inc., *2).
105
See id. at 17 (referencing Hensel v. U.S. Electronics Corp., 262 A.2d 648, 650 (Del. 1970)).
106
See id. at 19 (referencing Schell Bros., LLC v. Pickard, 2023 WL 2581711, at 4* (Del. Ch. Mar. 21, 2023)).
107
See id.
108
See Reply Br. at 4.
109
See id. (paraphrasing from Szymanska v. Equitable Life Ins. Co., 183 A. 309, 314 (Del. Super, 1936).
110
See Opp’n at 16; see also Compl. ¶¶ 30, 33, 35

14
each extension was supported by valid consideration. Otherwise, Mr. Funston’s payments would

be pointless had he not believed he was benefitting in any way.

2. Biglari’s Breach of Contract Claim is Not Time-Barred

Delaware applies a three-year limitation period to contract claims and fraudulent

inducement claims. 111 In Delaware, a breach of contract claim accrues at the time of the alleged
110F

wrongful act, which is the breach itself. 112 111F

Executor asserts that the letters do not grant any forbearance which could furnish

consideration. The Executor then contends the latest the Put Right could have been exercised

was January 31, 2019. Therefore, Executor maintains that the breach of contract claim accrued

on January 31, 2019 and is time barred. 113 Executor states that only if the later letters constitute
112F

contracts would Biglari possibly obtain a later accrual date that is not time-barred. 114 Executor
113F

argues that, even assuming, arguendo, the contracts are found to have valid consideration, the

claims are time barred. 115 114F

As the Complaint alleges, Biglari and Mr. Funston extended the Put Period in the 2019

Amendment as Mr. Funston made the required payment, despite Executor’s attempt to state

otherwise. 116 The parties filed Scheduled 13D’s disclosing the 2019 Amendment and the
11 F

extension. 117 Executor does not address or otherwise explain why Mr. Funston would file this
116F

Schedule 13D and pay $100,000 to Biglari had it not been a valid extension. 118 The parties’
117F

111
10 Del. C. § 8106.
112
See Isaacson, Stolper & Co. v. Artisan’s Sav. Bank, 330 A.2d 130, 132 (Del. 1974); see also Meso Scale
Diagnostics, LLC v. Roche Diagnostics GmbH, 62 A.3 62, 77 (Del. Ch. 2013).
113
See Mot. at 16.
114
See id. at 12-13.
115
See id. at 10.
116
See Opp’n at 14; see also Compl. ¶¶ 30-31.
117
See id. at 14.
118
See Opp’n at 15.

15
conduct supports Biglari’s allegations that the 2019 Amendment was validly executed and the

Put Period was extended. 119 118F

The parties extended the Put Period twice more, in each case providing Mr. Funston with

valuable forbearance of Biglari’s exercise of the Put Right. 120 As Biglari alleged in its
119F

Complaint, Biglari exercised the Put Right in December 2021 by way of three Put Notices,

which Mr. Funston failed to act upon as required by the 2016 Lock Up and Put Agreement. 121 120F

Therefore, the wrongful act could not have occurred until after July 21, 2021, providing Biglari’s

allegations on a timely claim with sufficient evidence.

3. As alleged, Biglari’s Put Right Was Exercised Timely

Executor argues, in the alternative, that Biglari’s Put Right expired unexercised on

December 31, 2021. 122 Executor provides that the letter dated June 27, 2020, describes an
121F

extension of the Put Right Period to December 31, 2021. 123 Executor contends the letter in July
122F

does not state that the Put Right shall be deemed exercised on December, 31, 2021, in the

absence of other extensions. 124 Executor contends that Biglari’s acknowledgement in the
123F

December 31, 2021, letter that the Put Right was expiring on the same day nullifies the previous

letters from December 14 and 30 purporting to invoke the Put Right. 125 124F

Further, Executor asserts that, within the letter, Biglari was holding off on the decision of

whether to exercise the option until a week after the expiration. 126 Executor correctly states that
125F

time requirements on options are strictly enforced, and when “an option lapses, the option

119
See id.
120
See id. at 14; see also Compl. ¶¶ 34-36.
121
See id. at 14; see also Compl. ¶¶ 37-42.
122
See Mot. at 16.
123
See id. at 17; see also Ex. E to Mot., ¶ 3.
124
See Mot. at 17.
125
See id.
126
See id.

16
becomes void, and all rights under the contract, along with any consideration given, are

forfeit.” 127 Executor contends that Biglari operated under the misapprehension that it could
126F

contrive a retroactive notice, after the Put Period lapses. 128 Biglari did not “un-exercise” the Put
127F

Right in the December Offer, allowing the Put Period to lapse. Rather, Biglari provided Mr.

Funston with an option to further extend, consistent with the parties’ previous conduct. 129 128F

However, the plain language of the December Offer states that “if the Amendment

Payment is not made by January 7, 2022, this letter will constitute as a Put Right Notice under

the Agreement….” 130 Here, the December Offer constituted notice while providing Mr. Funston
129F

an option to convert the offer to an extension. 131 Mr. Funston did not make the payment of
130F

$100,000 to satisfy the extension. 132 Therefore, the December Offer included a timely notice.
131F

For these reasons, the Court finds that Biglari alleges sufficient facts to support the breach of

contract claim. Accordingly, the Court DENIES the Motion as to Count I.

127
See id. (referencing Morris v. Delmarva Real Estate Holdings, LLC, 2024 WL 413512, at *7 (Del. Ch. Feb. 5,
2024) (quoting 77 Paul M. Coltoff, Am. Jur. Vendor § 44 (2d ed. 2024))).
128
See Reply Br. at 11.
129
See id. at 10; see also Opp’n at 21 n.1.
130
See Opp’n at 21; see also Ex. F to Mot.
131
See Opp’n at 21.
132
See id.; see also Compl. ¶ 40.

17
B. THE COURT GRANTS THE MOTION ON THE FRAUD CLAIM (COUNT II).

Biglari contends Mr. Funston knowingly made false representations, or at a minimum,

with reckless indifferent to the truth to induce Biglari to enter into the 2016 Lock Up and Put

Agreement. 133 As set forth below, the Court finds that this claim is time barred based on the
132F

Complaint’s own allegations.

1. Bootstrapping

“A contracting party may not ‘bootstrap’ a breach of contract claim into a fraud claim

‘merely by adding the words “fraudulently induced” or alleging that the contracting parties never

intended to perform.’” 134 “A bootstrapped fraud claim thus takes the simple fact of
133F

nonperformance, adds a dollop of the counterparty’s subjective intent not to perform, and claims

fraud.” 135
134F

Executor argues that Biglari puts forth the fraud claim by alleging that Mr. Funston, and

later the Estate, breached the 2016 Lock Up and Put Agreement and that Mr. Funston “clearly

had no intention of performing.” 136 Executor contends this type of claim is prohibited
135F

“bootstrapping.” 137 13 F

Biglari correctly states that Delaware courts will not dismiss a fraud claim pled alongside

a breach of contract claim “so long as the claim is based on conduct that is separate and distinct

from the conduct constituting breach.” 138 “Allegations that are focused on inducement to
137F

contract are ‘separate and distinct’ conduct.” 139 138F

133
See Compl. ¶¶ 63-64.
134
See Iotex Commc’ns, Inc. v. Defries, 1998 WL 914265, at *5 (Del. Ch. Dec. 21, 1998).
135
Smash Franchise P’rs, LLC v. Kanda Hldgs., Inc., 2020 WL 4692287, at *16 (Del. Ch. Aug. 13, 2020)).
136
See id. at 20; see also Compl. ¶ 63.
137
See Mot. at 20.
138
Furnari v. Wallpang, Inc., 2014 WL 1678419, at *8 (Del. Super. Apr. 16, 2014).
139
ITW Glob. Inv. Inc. v. Am. Indus. P’rs Cap. Fund IV, L.P., 2015 WL 3970908, at *6 (Del. Super. June 24, 2015).

18
Biglari relies on three cases that allowed a fraud claim to coexist with a contract claim

when the fraud that was alleged involved separate wrongful conduct and damages. 140 The Court139F

notes that the duplicative allegations in those cases involve extracontractual injuries which could

not be remedied by performance of the contractual duties. 141 “Failure to plead separate damages
140F

is an independent ground for dismissal.” 142 141F

For example, the Court in Medlink Health Solutions, LLC v. JL Kaya, Inc. 143 dismissed
142F

the fraudulent inducement claims except as to one defendant who was alleged (with detail) to

have induced a settlement agreement based on extracontractual actions. 144 In Medlink, a
143F

supplier contracted with a shipping company in order to assist with a government contract. 145 144F

The supplier later sued alleging the shipping company breached the settlement agreement, and

that it had fraudulently induced the settlement by inflating its reported costs under the original

government contract. 146 The two claims were allowed to stand because they depended on
145F

different facts, pled with specificity, related to different obligations, and work different injuries

compensable by different damages. 147 146F

Here, Biglari’s allegations all relate to Mr. Funston’s contractual promise to maintain the

ability to perform under the Put Option. 148 The “fraud” and injury is Biglari not obtaining the
147F

benefit of its bargain under the same contract for which Biglari claims has been breached. 149 148F

The Court notes that Biglari pleads no extracontractual representation, duty, or damages. 150 149F

140
See Mot. at 20.
141
See Reply Br. at 15.
142
See id. at 14.
143
2023 WL 1859785 (Del. Super. Feb 9, 2023).
144
See id. at *9.
145
See id. at *1.
146
Id.
147
See id. at *7.
148
See id; see also Opp’n at 22.
149
See Reply Br. at 16.
150
See id.

19
However, Biglari agreed to lock up its CCA Shares for three years, unable to sell the shares

while CCA traded on the public market. 151 This alleged injury or damage differs from Biglari’s
150F

damages in its breach of contract claim. 152 151F

A plaintiff is allowed to plead claims in the alternative, which are distinct at this stage of

litigation. 153 Therefore, even if Executor is correct that Biglari improperly bootstrapped its
152F

fraudulent inducement claim, the Court finds the fraudulent inducement claim would still be

permitted as an alternative to its breach of contract claim.

2. Future Fraud

“Predications about the future cannot give rise to actionable common law fraud,” and to

be fraudulent, the challenged representation must be “a statement of present fact.” 154 Executor
153F

contends Biglari’s fraud claim fails this requirement. 155 Executor argues that because the Put
154F

Period had not begun, the Put Right was not yet ripe. 156 Therefore, Mr. Funston’s statements
155F

regarding his financial capacity and liquidity to cover the price of the CCA Shares were

statements about Mr. Funston’s future financial capacity and liquidity. 157 Executor contends
156F

that failure to adhere to this ‘financial covenant,” is a claim for breach not fraud and such an

allegation is directed to events before the three-year statute of limitation. 158 157F

When Mr. Funston’s representations are read as a whole, Mr. Funston represented that (i)

at the time of execution he had approximately $4.7 million in liquid assets; and (ii) that he would

151
See Opp’n at 25; see also Compl. ¶ 32.
152
See Opp’n at 25.
153
See Ashland LLC v. Samuel J. Heyman 1981 Continuing Tr. ex rel. Heyman, 2018 WL 3084975, at *15 (Del.
Super. June 21, 2018).
154
See Mot. at 20; see also Great Lakes Chem. Corp. v. Pharmacia Corp., 788 A.2d 544, 554 (Del. Ch. 2001).
155
See Mot. at 20.
156
See id.
157
See id.
158
See id.; see also 10 Del. C. § 8106.

20
maintain that level of liquidity for the duration of the contract. 159 As Biglari contends, Mr.
158F

Funston’s representation at closing that he had the liquidity to bear the risk of the Put Right was

linked to his future ability to bear Biglari’s eventual exercise. 160 As alleged, Mr. Funston’s
159F

representations about his financial liquidity were purportedly false when made and, therefore,

sufficient to state a claim for fraud. 161
160F

3. Time-Barred

Executor seeks to dismiss the fraudulent inducement claim, alleging that the statute of

limitations for Biglari’s fraud claim is three years. 162 Biglari contends this claim is timely
161F

because the fraud claim was tolled until Biglari’s discovery of the fraud in October 2022. 163 162F

As discussed, Mr. Funston made financial representations in the 2016 Lock Up and Put

Agreement, which Biglari relied on when entering into this agreement. 164 Biglari did not learn
163F

that Mr. Funston had misrepresented his liquidity until October 2022, after Biglari submitted its

Put Notice and sought payment from Mr. Funston and/or the Estate. 165 164F

Delaware is an occurrence-rule jurisdiction where the cause of action for fraud accrues at

the at the time the fraud is perpetrated. 166 Tolling doctrines can delay the running of a
165F

limitations period, and Biglari states that under the discovery rule, “the statute of limitations does

not begin to run until the discovery of facts ‘constituting the basis of the cause of action or the

existence of facts sufficient to put a person of ordinary intelligence and prudence on inquiry

159
See Opp’n at 26; see also Compl. ¶¶ 61-63.
160
See Opp’n at 26.
161
See id.; see also Compl. ¶¶ 26-27, 43-47.
162
See Opp’n at 22.
163
See id.
164
See id.
165
See id.; see also Compl. ¶¶ 24-26, 43-47.
166
See ISN Software Corp. v. Richards Layton & Finger, P.A., 226 A.3d 727 (Del. 2020); see also Reading Int’l,
Inc. v. St. Francis, 2005 WL 1654343, at *1 (Del. Super. June 17, 2005).

21
which, if pursued, would lead to discovery’ of such facts.” 167 Thus, Biglari contends the
166F

discovery rule is particularly appropriate here, where the fraud was “inherently unknowable” and

Biglari’s ignorance of the fraud was “caused by ‘concealment or fraud.’” 168 1 7F

The Court looks to the Complaint to determine whether to dismiss on timeliness

grounds. 169 When evaluating whether the Complaint’s factual allegations, the Court “must draw
168F

the same plaintiff-friendly inferences required in a 12(b)(6) analysis. 170 While the 12(b)(6)
169F

analysis is “plaintiff friendly,” Biglari must meet its burden of pleading that a tolling exception

applies. 171
170F

The Complaint alleges that Mr. Funston did not reveal his financial inability until 2022

and Biglari had no way to discover such other than from Mr. Funston himself. 172 Thus, the 171F

statute of limitations would have been tolled until October 2022, when Mr. Funston finally

revealed he did not have the liquidity to purchase the CCA Shares, rendering the claim timely. 173 172F

However, Executor asserts that Biglari made no claim of tolling in the Complaint and

Biglari’s failure to properly join the issue of tolling concedes the issue. 174 Executor contends
173F

that even if the Court were to consider tolling doctrines, the fraud claim would still be time-

barred because inquiry notice universally limits tolling. 175 174F

167
See Opp’n at 22; see also Estate of Buonamici v. Morici, 2010 WL 2185966, at *3 (Del. Super. June 1, 2010).
168
See Opp’n at 23 (citing Lehman Brothers Hldgs., Inc. v. Kee, 268 A.3d 178, 186 (Del. 2021)).
169
Lebanon Cnty. Employees’ Ret. Fund v. Collis, 287 A.3d 1160, 1193 (Del. Ch. Dec. 15, 2022) (citing Kahn v.
Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. Jan. 14, 1993)).
170
Id. (citing State ex rel. Brady v. Pettinaro Enterprises, 870 A.2d 513, 524-25 (Del. Ch. 2005)).
171
Id.
172
See id.
173
See id.
174
See Reply Br. at 17-18 (referencing Jung v. El Tinieblo Int’l Inc., 2022 WL 16557663, at *12 (Del. Ch. Oct. 31,
2022)).
175
See id. at 18 (referencing Ontario Provincial Council of Carpenters’ Pension Tr. Fund v. Walton, 294 A.3d 65,
96 (Del. Ch. 2023)).

22
“Inquiry notice does not require a plaintiff to have actual knowledge of a wrong… a

plaintiff is put on inquiry notice when he gains possession of facts sufficient to make him

suspicious, or that ought to make him suspicious.” 176 Here, Biglari specifically alleges that it
17 F

was aware that Mr. Funston was seeking to avoid the Put Right obligation “almost immediately”

after the contract’s inception. 177 Biglari also pleads that “[i]n January 2019, Funston was
176F

unwilling or unable to purchase the CCA Shares.” 178 177F

Under Biglari’s own alleged facts, Biglari was on inquiry notice that Mr. Funston might

lack the financial capacity to purchase the CCA Sharese no later than January 2019. 179 Thus, the 178F

statute of limitations ended in January 2022, and this claim is time-barred.

Therefore, the Court GRANTS the Motion with respect to Count II.

VI. CONCLUSION

For the reasons stated above, the Court GRANTS in part and DENIES in part the

Motion.

IT IS SO ORDERED.

November 26, 2025
Wilmington, Delaware

/s/ Eric M. Davis
Eric M. Davis, President Judge

cc: File&ServeXpress

176
See id. at 18; see also Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 363845, at *7 (Del.
Ch. Jan. 27, 2010).
177
See Reply Br. at 18; see also Compl. ¶¶ 27, 63
178
See Reply Br. at 18; see also Compl. ¶ 30.
179
See Reply Br. at 19.

23