Repairify Executive Chairman John Lindle filed a motion to dismiss a lawsuit against him by VK Investments, which claims he breached his fiduciary duty and failed to appropriately perform management responsibilities, including attending leadership meetings. 

Lindle claims that VK Investment controller, Maurice Tuff, became disgruntled when an expected sale of Repairify failed to materialize. VK Investments is a minority member of Repairify Holdings, which is majority-owned and controlled by Kinderhook, according to the suit.

“Now, through his investment firm, Plaintiff VK Investments Inc., Tuff attempts to turn his dissatisfaction with Repairify’s strategic decisions into claims for breaches of fiduciary duty,” Lindle’s motion says. 

The motion also says VK’s breach of fiduciary duty claim fails to state a claim needed under the Court of Chancery.

“Plaintiff’s scattershot allegations, based chiefly on Tuff’s disagreement with the strategic decisions at Repairify, do not support a claim that Lindle breached his fiduciary duties,” the motion says. “Plaintiff offers only supposition and conclusory allegations about Lindle’s  conduct that do not come close to pleading the gross negligence and recklessness  this court requires to state a claim for a breach of the duty of care.”

The suit claims Repairify purchased BlueDriver, created by Tuff,  in 2021 on the condition that Tuff allocate a portion of the purchase price to an investment in the membership interest of Repairify. It alleges that Tuff was resistant to using his funds for a membership interest but agreed to it because Kinderhook and Repairify told him that the sale of Repairify was imminent and would occur at a higher value. 

Tuff also agreed to serve as Repairify’s chief technology officer and assumed the role of chief marketing officer, the suit says. 

The suit was filed derivatively on behalf of Repairify and also against Repairify, Kinderhook, Paul Cifelli, Kinderhook’s managing director, and Lindle in the Court of Chancery of the State of Delaware on Dec. 12. 

Kinderhook and Cifelli filed a motion to dismiss the complaint last month. 

The complaint alleges Lindle failed to appropriately supervise and direct senior management and “imprinted on Repairify a haphazard strategic path accentuated by a churn through management personnel, all while disengaging from Repairify.” 

It also claims Lindle has systematically hired unqualified friends and relatives. 

“Further, Lindle has engaged in pervasive self-dealing, draining Repairify’s cash to fund his and his family’s lifestyle,” the suit says. 

Lindle’s motion asks to dismiss the complaint because it fails to allege a “reasonable conceivable set of facts.” The motion also says VK Investments failed to make a demand on the board of Repairify and failed to state a claim for breach of fiduciary duty. 

The motion also states allegations that Lindle breached his duty of care fail to prove the chairman acted in gross negligence. 

“Regarding the first allegation, Plaintiff does not allege that Lindle was required to attend executive leadership meetings, or that his absence caused any issues at Repairify,” Lindle’s motion says.

It adds that Lindle’s position focused on “strategic oversight and management guidance to [Repairify].” It says that Lindle’s job description shows that his duties were not focused on day-to-day management or leadership of the executive team. 

“Plaintiff alleges Lindle hired family members to work in non-executive, low-level roles in customer service and finance,” the motion says. “This allegation fails on two levels. First, Plaintiff does not attempt to plead that Lindle had powers of hiring and firing at Repairify. His Executive Chairman Agreement only offers powers of oversight, guidance, and reporting to the board. Even if the Court finds it reasonably conceivable that Lindle could engineer hires at Repairify, Plaintiff does not attempt to explain why lower-level personnel hiring creates an issue of gross mismanagement at the company, or that these hires caused any deleterious effects.” 

VK also offers no supporting allegations of fact to show that Lindle played any role in high turnover among senior executives, the motion says. 

“Finally, Plaintiff alleges that Repairify Board meetings lack strategic discussions and detailed minutes,” the motion says. “Delaware precedent is clear that the fiduciary duty of care is not synonymous with best practices.”

Lindle’s motion also claims VK investments failed to allege the chairman breached his duty of loyalty. 

VK’s suit claims Repairify pays the rent for Lindle’s property, Repairify devices are stored in a warehouse owned by another Lindle company, and that Lindle is running expenses from other companies through Repairify while booking travel for other companies as Repairify travel. 

“Similar to Plaintiff’s allegations of a breach of the duty of care, these allegations are based upon supposition while also too vague and conclusory to state a claim that Lindle breached a fiduciary duty of loyalty,” the motion says. “First, Plaintiff does not allege that Lindle orchestrated, negotiated, or approved the use of the property in Key West, or that he had any ability to authorize this setup.  Instead, Plaintiff implicitly asks the Court to make the unreasonable inference that because a property exists that is rented from an entity Lindle purportedly controls, Lindle must have breached his duty of loyalty to achieve this setup.  There are no allegations to support that conclusion.” 

The motion states that VK’s suit fails to allege that Repairify is charged for the storage of devices at Lindle warehouses or that Lindle derives any personal benefit from the storage. 

Lindle’s motion also says that VK’s allegation that he’s running expenses through Repairify is vague and cannot support a claim for a breach of duty of loyalty. It says VK does not identify the type or amount of expenses, other companies, or whether they are related to Lindle or how he derives a benefit from the activity. 

“Finally, Plaintiff appears to allege that Lindle, in addition to Kinderhook (through Cifelli) has blocked potential sales of Repairify,” Lindle’s motion says. 

The motion says an officer does not have the authority to compel or prevent a sale from occurring. It says Kinderhook, as “the controlling member of the boards of Repairify Holdings and Repairify Inc.,” determines whether a sale proceeds. 

“An officer cannot breach fiduciary duties for actions or non-actions taken by others,” the motion says.

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