Marc Kulick v. YSA Investments 1, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE MARC KULICK, VESTA HOLDINGS, ) LLC, and ASSET HOLDER, LLC ) ) Plaintiffs, ) ) v. ) C.A. No. 2025-1319-KSJM ) YSA INVESTMENTS 1, LLC, ) ) Defendant. ) ) ) YSA INVESTMENTS 1, LLC, ) ) Counterclaim-Plaintiff and ) Third-Party Plaintiff, ) ) v. ) ) MARC KULICK, VESTA HOLDINGS, ) LLC, et al., ) ) Counterclaim-Defendants ) and Third-Party ) Defendants. ) POST-TRIAL MEMORANDUM OPINION Date Submitted: April 9, 2026 Date Decided: June 9, 2026 Sean J. Bellew, BELLEW LLC, Wilmington, Delaware; Benjamin H. Brodsky, Michael Fisher, BRODSKY FOTIU-WOJTOWICZ, PLLC, Miami, Florida; Counsel for Plaintiffs and Counterclaim-Defendants, Marc Kulick, Vesta Holdings, LLC, and Asset Holder, LLC. Sarah R. Martin, Samuel L. Moultrie, GREENBERG TRAURIG LLP, Wilmington, Delaware; Joel Tasca, Kerry Kleinman, GREENBERG TRAURIG LLP, Las Vegas, Nevada; Counsel for Defendant and Counterclaim and Third-Party Plaintiff YSA Investments 1, LLC. McCORMICK, C.  Plaintiff Marc Kulick controls and manages a portfolio of 34 multifamily real estate assets in Oklahoma, Arkansas, and Kansas. Beginning in October 2024, Defendant YSA Investments 1, LLC loaned the Kulick-led plaintiff entities millions of dollars. In February 2025, Kulick asked YSA for another loan. Because the amount requested was twice as large as any previous loan, YSA demanded better terms and additional security. In response, cash-strapped Kulick proposed an extremely favorable interest rate and agreed to pledge his entire real estate portfolio. YSA accepted the terms. And Kulick signed a joinder committing all entities that he owned, in whole or part, or managed or controlled directly or indirectly, to the obligations in the loan agreements. Kulick later defaulted on four loans, including the February loan, and YSA placed second mortgages on properties in Kulick’s portfolio. Kulick filed this litigation to require that YSA remove the second mortgages and to enjoin YSA from recording additional second mortgages. The case proceeded to trial. The key issue is whether YSA had the right to record mortgages on the properties. Kulick argues that the loan agreements identified as collateral interests in the holding companies, and not the properties at issue. But this argument does not matter, because the loan documents granted YSA expansive rights to take actions against real property owned by the collateral, including the properties. YSA exercised that right by recording the second mortgages. Kulick also argues that the loans cannot be enforced because their terms were predatory, usurious, and against public policy. Setting aside the fact that Kulick proposed the loan terms about which he now complains, this defense fails for a more basic reason—Delaware law does not extend usury defenses to limited liability companies like the plaintiff entities. This decision therefore enters judgment for YSA. I. FACTUAL BACKGROUND The facts are drawn from the 222 joint trial exhibits, live testimony from four witnesses, deposition testimony from two fact witnesses, and 22 stipulations of fact. These are the facts as the court finds them after trial.1 A. Marc Kulick And The Vesta Entities Kulick controls and manages a portfolio of 34 multifamily real estate assets in Oklahoma, Arkansas, and Kansas (the “Properties”).2 The Properties are owned by 1 This decision cites to: C.A. No. 2025-1319-KSJM docket entries (by “Dkt.” number); trial exhibits (by “JX-” number); the trial transcript, Dkt. 98 (by “Trial Tr. at”); stipulated facts set forth in the parties’ Joint Pre-Trial Order, Dkt. 88 (“PTO”); and the Transcript of the November 25, 2025 hearing on Plaintiffs’ Motion for Expedited Proceedings and Motion for Expedited Preliminary and Permanent Injunction, Dkt. 25 (“11/25/25 Hr’g Tr.”). The parties called the following fact witnesses: Marc Kulick (owner and controller of Plaintiffs Vesta and Asset Holder); Efraim Diveroli (YSA’s principal); Robert Miley (YSA’s Rule 30(b)(6) representative); John Hall (Defendant’s expert). The parties submitted the deposition transcripts of the live witnesses, except for John Hall, and called the following witnesses by deposition only: Kara Thomas (Controller at Vesta Realty) and Courtney Merritt (Controller at Vesta Realty). The transcripts of the witnesses’ respective depositions are cited using the witnesses’ last name and “Dep. Tr.” The decision notes in citation form where a witness was designated to testify under Rule 30(b)(6). This decision cites the following declaration by the declarant’s last name: Christopher Rogers (Partner at Capital Fund Law Group), Dkt. 86 (“Rogers Decl.”). 2 JX-185; Trial Tr. at 6:23–7:4 (Kulick). Some of Kulick’s 34 assets have a tenancy in common (“TIC”) ownership structure that results in two or more entities serving as the ultimate owners of the TIC assets. Trial Tr. at 7:5–8:1 (Kulick). 2 34 separate, single-purpose limited liability companies (the “Title Owners”).3 Each Title Owner is owned by one or more holding company (the “Intermediate Holding Companies”).4 The Title Owners are capitalized by investments at the Intermediate Holding Company level.5 Plaintiffs Vesta Holdings, LLC and Asset Holder, LLC (with Kulick, the “Plaintiffs”)6 are Kulick’s personal investment vehicles.7 Kulick is the sole owner and manager of Vesta and Asset Holder. 8 Vesta and Asset Holder hold membership interests in several Intermediate Holding Companies.9 Kulick also holds an interest in all the Title Owners.10 B. Plaintiffs Seek Short-Term Loans From Defendant. In 2024, Kulick was in search of short-term financing for one of the Properties.11 An acquaintance introduced Kulick to Efraim Diveroli. Diveroli is the 3 Trial Tr. at 7:5–8:1, 115:22–116:17 (Kulick); JX-27 at 1, 41, 81, 121, 136, 175, 192, 207, 229, 249, 264, 304, 343, 383, 398, 413, 453, 468, 508, 550, 567, 584, 599, 639, 680, 721, 763, 803; see JX-221; JX-215; JX-11; JX-169 §§ 1–3, Ex. A; compare PTO ¶ 6 with JX-27 at 1, 41, 81, 121, 136, 175, 192, 207, 229, 249, 264, 304, 343, 383, 398, 413, 453, 468, 508, 550, 567, 584, 599, 639, 680, 721, 763, 803. 4 Trial Tr. at 7:5–8:1 (Kulick); see JX-198. 5 Trial Tr. at 7:5–8:1 (Kulick). 6 Id. at 8:7–18 (Kulick). 7 Id. at 8:7–24 (Kulick). 8 Id. at 8:7–8:18 (Kulick). 9 Id. at 9:2–9:14 (Kulick). 10 Id. at 49:17–51:1 (Kulick). 11 JX-3 at 1; Trial Tr. at 9:18–10:8 (Kulick); Trial Tr. at 146:21–147:22 (Diveroli). 3 principal of Defendant YSA Investments 1, LLC (“Defendant” or “YSA”),12 a special purpose vehicle for Diveroli’s commercial lending.13 Kulick connected with Diveroli in September 2024. Kulick urged Diveroli to finance some of his loans, claiming “[i]t’s the easiest money you’ll ever make” and that Diveroli has no reason to worry about losing his investment.14 On September 7, 2024, Kulick provided YSA a form agreement for the proposed loan.15 On September 29, Kulick and his counsel provided YSA’s counsel and Diveroli the material loan terms.16 The terms included: a loan of $775,000, an interest rate of 7% per month (84% annualized), a 2% closing fee for YSA, and a right of first refusal in favor of YSA.17 Kulick, Diveroli, and YSA’s counsel discussed the proposed loan.18 After, YSA’s counsel proposed more detailed descriptions of the material terms, and 12 Dkt. 81 ¶ 12. 13 Trial Tr. at 146:10–20 (Diveroli); see Dkt. 81 ¶ 12. 14 JX-3 at 4; JX-4 (attaching a draft loan agreement). The initial draft of the loan document contemplated an interest rate of 20% per annum, compounding annually. JX-4 at 2. Kulick explained his goal for the interest rate was to provide Diveroli “10% over the 3-month term.” JX-3 at 10. 15 JX-4 (providing Diveroli initial versions of a promissory note and a collateral pledge and security agreement); JX-3 at 2–12; see JX-6 at 4. The “form agreement” Kulick provided the borrower would have “[n]o right of rescission, setoff, abatement, diminution, counterclaim, or defense . . . with respect to this Note or any other Loan Documents.” JX-4 at 4. 16 JX-6; Trial Tr. at 10:11–13 (Kulick). 17 JX-5 at 1–2 (“Efraim and I have basically finished our deal for Parc 1010 EM.”); JX-3 at 2–12. 18 See JX-46. 4 the parties deferred to Kulick’s counsel to revise the documents consistent with that proposal.19 Kulick agreed to the revised terms on October 2 and his attorney agreed to update the drafts.20 The parties closed the transaction on October 8, 2024 (the “October 8 Loan”).21 The October 8 Loan included a Promissory Note (“Note”), a Collateral Pledge and Security Agreement (“CPSA”), and a Personal Guaranty and Right of First Offer (the “Guaranty” and collectively, the “Loan Documents”).22 The October 8 Loan made Asset Holder the Borrower, Vesta the Pledgor, and YSA as the Lender.23 YSA loaned Asset Holder $775,000, maturing ninety days after closing.24 Asset Holder and Pledgor secured the October 8 Loan with “Collateral” defined as “Unencumbered Interests” and “Encumbered Interests” in the form of membership interests that Kulick held in the Intermediate Holding Companies.25 19 JX-5 at 1–2 (noting that Kulick’s counsel “prefer[ed] to make the initial edits” to the documents Kulick previously provided); JX-46 at 7–8. 20 JX-6. 21 PTO ¶ 7; JX-10. 22 Kulick Day 1 Dep. Tr. at 28:19–23. 23 JX-10 at 1. 24 Id. 25 Id.at 9. For the October 8 Loan, the Unencumbered Interests were Kulick’s membership interest in the following Intermediate Holding Companies: Capitol on 28th Investors, LLC, Remington Ranch Investors, LLC, Copperfield Investors, LLC, and Putnam Investors, LLC. Id. Kulick represented that Asset Holder, as borrower, “owns the Unencumbered Collateral absolutely and free of any . . . encumbrance” and Asset Holder “has the unencumbered and unrestricted right to pledge the Unencumbered Collateral.” Id. at 11. 5  The CPSA included a Power of Attorney provision applicable in the event of a borrower breach proposed by YSA on October 3. That day, YSA’s counsel asked Kulick to provide a list of suits filed against “Vesta and its affiliated entities” and to identify any UCC liens.26 A UCC search precipitated YSA’s request.27 Kulick then identified nine civil actions and stated that “none of the entities that are a party to this loan have any UCCs filed against them[.]”28 YSA proposed additional terms, including the Power of Attorney provision. The Power of Attorney provision, quoted more fully in the below legal analysis, gave YSA the right to “take whatever steps that it deems necessary in its sole discretion to secure and protect its interests . . . includ[ing] but not be limited to taking any action against any of the Collateral or any real or personal property owned by the Collateral.”29 Kulick agreed to most of the proposed terms but noted that he would need a few hours to consider the Power of Attorney,30 which Kulick later agreed to.31 26 JX-7 at 4. 27 Id. 28 Id. at 3. 29 JX-9 at 2–3. 30 Id. at 2; JX-3 at 15; JX-46 (discussing representations and warranties of the loan). For instance, Kulick agreed to “waive any defense or asset protection mechanism that may be available in the event of a default.” JX-9 at 2. 31 Trial Tr. at 54:2–56:5 (Kulick); JX-46. 6  The October 8 Loan was due with interest on January 8, 2025,32 when Kulick was obligated to remit payment of $829,250. 33 But Kulick requested a one-week extension on January 8,34 when he informed Diveroli he was short over $500,000.35 Diveroli agreed to a short extension on the condition that Kulick pay an additional $25,000.36 Kulick paid the $829,250 and additional $25,000 on January 21.37 And YSA continued loaning Kulick money. C. Defendants Provide Additional Loans Subject To A Joinder. By February 2025, YSA had loaned Kulick $4,775,000 over six loans.38 That month, Kulick approached YSA requesting a $1,500,000 loan, nearly twice the amount of any previous Loan. 39 Diveroli wanted to loan the money to Kulick. Diveroli considered Kulick “a fantastic salesman” and “very persist[ent],” noting that Kulick “presents as trustworthy.”40 32 Id. at 2; JX-3 at 22–23 (“If money doesn’t come in as expected would you be open to a week extension for an additional 25k of interest paid today.”). 33 JX-10 at 2. 34 JX-3 at 22–24. 35 JX-3 at 23. 36 Id. at 22–24. 37 JX-58; JX-22. 38 JX-10 at 1 (October 8 Loan for $775,000); JX-60 at 2 (loaning Plaintiffs $750,000 on January 21, 2025); JX-63 at 2 (loaning Plaintiffs $750,000 on January 24, 2025); JX-65 at 2 (loaning Plaintiffs $800,000 on January 30, 2025); JX-67 at 2 (loaning Plaintiffs $850,000 on February 4, 2025); JX-71 at 2 (loaning Plaintiffs $850,000 on February 10, 2025). 39 Trial Tr. at 149:3–22 (Diveroli); Rogers Decl. ¶ 4; compare JX-16 at 1 with JX-71 at 2. 40 Trial Tr. at 151:19–152:5 (Diveroli). 7  But given that Kulick repaid the October 8 Loan late, and the amount requested, YSA “made it crystal clear” it would need “significantly more collateral” before agreeing to Kulick’s request.41 Diveroli directed his office to “cease almost all other activities” to review Kulick’s portfolio of assets prior to extending additional capital.42 And YSA searched for a consultant “familiar with multi-family residential real estate” who could assist in “making sure [YSA] [is] as protected by the collateral” as it was made to believe.43 On February 13, YSA requested that Kulick provide preliminary diligence materials.44 Kulick resisted YSA’s requests initially,45 expressing his desire to end the parties’ relationship, and even requested that YSA “release all liens . . . from the [October 8 Loan].”46 Kulick then changed his tune. The next morning, Kulick offered to move forward if YSA would accept a subset of the requested materials.47 YSA agreed based on Kulick’s offer to provide: “[a]ll tax returns”; “[a]ll mortgage statements”; “a 41 Id. at 149:23–152:5 (Diveroli). 42 Id. at 149:23–151:10 (Diveroli); JX-73; see JX-222. 43 JX-222; see JX-73. 44 JX-76 at 2 (Defendant requested the following materials: (i) bank statements for the preceding six months for all entities; (ii) financial statements from the last three years; (iii) tax returns from the last three years; (iv) internal analytics for the properties Kulick developed; (v) “all Loan Documents related to loans currently encumbering one or multiple properties that will be securing the loan”; and (vi) “[a]ny and all active UCC filings related to any of the entities/properties.”). 45 JX-73. 46 JX-76 at 1. 47 Id. 8 portfolio p&l” statement; and “[c]onstant live access to data curated between [Kulick’s] team and [YSA].”48 YSA’s counsel reviewed the materials. Because the materials did not clearly identify the entity associated with each property, YSA’s counsel requested additional information.49 YSA also asked whether any encumbrances on the properties would be senior to the contemplated loan. 50 Kulick provided additional documentation, including a broker’s valuation opinion for one property and operating agreements for five of the entities.51 The following morning, Kulick texted Diveroli and Robert Miley, YSA’s counsel, to check on the status of the Loan.52 Miley responded by sharing an image of the CPSA provision that defined “Unencumbered Interests” and “Encumbered Interests.” 53 Miley asked Kulick: “Where this had previously included 17 total entities (4 unencumbered), are we expanding to rest of portfolio? If so, could you please send me a paragraph that I can copy into it with the other entities?”54 Kulick immediately responded stating: “The answer is yes and no. I suggest we keep that the same but maybe add a joinder to the portfolio as a whole[.]”55 48 Id. 49 JX-77 at 2–3. 50 Id. 51 JX-77 at 1. 52 JX-12. 53 Id. at 2. 54 Id. 55 Id. 9  Miley then asked the group for “consensus on the entity language for the collateral agreement.”56 He noted that, given certain covenants in the CPSA, it was critical to keep the unencumbered and encumbered interests separate. 57 Kulick responded stating: “Yes the collateral needs to remain the same but does my idea for a joinder with any asset controlled by any affiliate of mine work?”58 Miley said that the joinder “may” work.59 Miley then emailed Kulick updated drafts of the Confession of Judgment and Guaranty.60 In the same email, Miley again flagged for the group Kulick’s suggestion of adding a joinder to the CPSA. He noted that the CPSA does not clearly state which entities are intended to be “unencumbered vs encumbered.”61 Kulick responded: “No change to this document at all except to add a joinder that joins any asset controlled by any affiliate of mine.”62 YSA’s counsel circulated a revised CPSA that included a one-paragraph joinder consistent with Kulick’s proposal (the “February Joinder”).63 On February 18, 2025, the parties entered the new loan agreement (the “February 2025 Loan”).64 The February 2025 Loan comprises: a promissory note (the 56 Id. at 3. 57 Id. 58 Id. 59 Id. 60 JX-13 at 1. 61 Id. 62 Id. (emphasis added). 63 JX-15 at 1, 18, 32. 64 PTO ¶ 7; see generally JX-16. 10 “February Note”); a collateral pledge and security agreement (the “February CPSA”), a Personal Guaranty and Right of First Offer (the “February Guaranty”); and a Joinder.65 The February 2025 Loan is governed by Delaware law.66 Section 5(c) of the February Guaranty requires Kulick, as Guarantor, to “deliver to Lender a true, correct, and complete schedule of real estate and entities owned (whether directly or indirectly, and whether wholly or partly) by Guarantor. . . .”67 Kulick delivered the required schedule of real estate owned, which identified the Title Owners.68 Again, requiring a schedule of real estate owned by Kulick, the Guarantor, reinforces the terms and purpose of the February Joinder. The February Guaranty, like the February CPSA, granted YSA a broad power of attorney (the “February Guaranty POA”).69 The February POA, in relevant part, provided: “Lender may take whatever steps that it deems necessary in its sole discretion to secure and protect its interests, including but not limited to filing any action and doing whatever else is necessary to protect its interests. . . .”70 65 JX-16 66 Id. at 6–7. 67 Id. at 26. 68 JX-27 at 39–40; JX-169 §§ 1–3, Ex. A (providing Louis Investments, LLC an entity solely owned and managed by Kulick “directly or indirectly, owns or controls” the entities listed on Exhibit A, which includes the Title Owners). 69 JX-16 at 28. 70 Id. 11  D. Plaintiffs Default On Four Loans. Plaintiffs ultimately defaulted on four loans (the “Defaulted Loans”): (1) the February 2025 Loan; (2) the “April 2025 Loan”; (3) the “July 16, 2025 Loan”; and (4) the “July 31, 2025 Loan.”71 Each Defaulted Loan followed the format of the February 2025 Loan,72 in that each involved a Note, a CPSA, a Guaranty, and a Joinder.73 The principal amount of the February 2025 Loan is $1,500,000. Plaintiffs defaulted on May 19, 2025.74 The interest rate is 133.333% per annum, compounded monthly. 75 Plaintiffs owe approximately $3.3 million under the February 2025 Loan.76 The principal amount of the April 2025 Loan is $300,000.77 The purpose of the April 2025 Loan was to finance Kulick’s closing costs related to the acquisition of Parc 71 JX-16; JX-17; JX-20; JX-21; see JX-28. 72 Trial Tr. at 14:2–8, 51:6–54:12 (Kulick). 73 See generally JX-16; JX-17; JX-20; JX-21.The identity of the Borrower Entity providing the “Encumbered Interests” and the Pledgor Entity providing the “Unencumbered Interests” differ. JX-16 at 9 (identifying Vesta as Pledgor and Asset Holder as Borrower); JX-17 at 11 (identifying Kulick Manager, LLC as Pledgor and Parc 1010 HoldCo., LLC, Parc 1010 GP, LLC, and Parc 1010 Investors, LLC as Borrowers); JX-20 at 9 (identifying Vesta as Pledgor and Borrower); JX-21 at 9 (identifying Vesta as Pledgor and Borrower). The April 2025 Loan included one bespoke feature, a membership interest pledge and assignment agreement (“MIPAA”). JX-17 at 34–42. The April 2025 Loan stands apart from the other Defaulted Loans in that regard. The MIPAA is not relevant to the resolution of this action. 74 JX-94; JX-201; JX-28 at 2–4; see JX-104. 75 JX-16 at 1. 76 JX-28 at 2–4. 77 PTO ¶ 17. The loan went to three entities owned by Kulick Manager, LLC—Parc 1010 HoldCo., LLC, Parc 1010 GP, LLC, and Parc 1010 Investors, LLC. PTO ¶ 17. 12 1010, an apartment complex in Tulsa, Oklahoma.78 It was a short-term loan, due to be repaid ten days after closing.79 But the transaction never closed.80 The interest rate of the April 2025 Loan was 1,500% per annum, compounded monthly. 81 Plaintiffs owe approximately $3 million on the loan.82 Kulick manages each of the entities. JX-17 at 8–9. Under the April 2025 Loan, Parc 1010 HoldCo., LLC, Parc 1010 GP, LLC, and Parc 1010 Investors, LLC are each a “Borrower” and the “Pledgor” is Kulick Manager, LLC. Id. at 1. 78 PTO ¶ 17. 79 Id. at 1–2. 80 Trial Tr. at 117:20–118:1 (Kulick). 81 JX-17 at 1. Kulick proposed repaying YSA $425,000, inclusive of principal and interest, in exchange for April 2025 Loan with a face value of $300,000. JX-3 at 53. 82 Diveroli consistently messaged Kulick seeking payment once Kulick defaulted on the April 2025 Loan. JX-3 at 56–82; see JX-99 at 1. On June 16, Diveroli contacted Kulick to work out a plan for the two defaulted Loans, Kulick responded asking for a new loan and stating that: “you already have way more secure loan docs than anything else I’ve ever used.” JX-3 at 83; see JX-104 at 1. On June 15, Kulick requested a new loan of $315,000 from Diveroli (the “June 2025 Loan”). JX-104. Kulick proposed satisfying the June 2025 Loan by repaying Diveroli $515,000 by July 1. Id. Kulick acknowledged he was in default under the April 2025 Loan and that failure to satisfy that Loan “would be a default on this loan.” Id. Kulick also proposed including a $1,000,000 penalty if the June 2025 Loan negatively impact either the February 2025 Loan or the April 2025 Loan. Id. On June 19, Kulick and YSA closed on the June 2025 Loan. JX-108; JX-109; JX-110; JX-111. The June 2025 Loan included a Note, an Affidavit of Confession of Judgment, a CPSA, and a Guaranty. JX-108; JX-109; JX-110; JX-111. The June 2025 Loan reflected the terms proposed by Kulick. Compare JX-104 with JX-108. The principal amount of the June 2025 Loan was $315,000 and Kulick was obligated to repay $515,000 by July 1. JX-108 at 1–2. The interest rate of the June 2025 Loan is for 1565% per annum, compounded daily. JX-108 at 1. Also on June 19, Kulick executed a Confidential Side Letter Related to the February 2025 Loan, April 2025 Loan, and June 2025 Loan granting YSA the right to seek repayment from reserves held by entities identified on Schedule 3. JX-112; Trial Tr. at 114:4–116:22 (Kulick). The properties on Schedule 3 appear to overlap significantly with properties owned by the Title Owners. Compare JX-112 at Schedule 3 with PTO ¶ 6. Exhibit C to the Confidential Side Letter does not provide the full names of the listed entities and, since the names of the Title Owner 13  The principal amount of the July 15, 2025 Loan is $365,000. 83 Plaintiffs defaulted on July 30, 2025.84 The interest rate is 960% per year, compounded daily.85 Plaintiffs owe approximately $5 million on the loan.86 The principal amount of the July 31, 2025 Loan is $317,000. Plaintiffs defaulted on August 5, 2025.87 The interest rate is 7,000% per year, compounded daily.88 Plaintiffs owe a staggering $921 million on the loan.89 Kulick testified that he proposed the interest rates on each loan by reverse engineering whatever payment he thought appropriate on the loan amount.90 He calculated that payment amount assuming timely payment.91 But he knew that YSA implied the interest rate that appeared in the Loan Documents from those amounts.92 When asked at trial about the interest rates of the Defaulted Loans, Kulick testified that “I’m not playing the victim on paying high interest rates on my loans. I and Intermediate Holding Companies share some names, it is difficult to discern the exact identity of each entity provided on Exhibit C. Also around this time, Diveroli offered Kulick a $5 to $10 million payoff option, which Kulick declined. Trial Tr. at 188:17–189:13 (Diveroli). 83 JX-20 at 1 84Id. 85Id. 86 JX-28 at 2. 87 Id. 88 Id. 89 Id. at 3. 90 Trial Tr. at 91:9–19 (Kulick). 91 Id. at 29:9–18 (Kulick). 92 Id. at 91:9–93:3 (Kulick). 14 understand that, you know, my cash position was bad, it was stressed. I was having trouble getting investors to fund pro rata capital calls.”93 He also acknowledged that he kept returning to YSA because he was “desperate” for funding.94 E. Defendant Records Second Mortgages. By August 2025, Plaintiffs had defaulted on four loans and owed approximately $900 million under the Defaulted Loans.95 (By trial, Plaintiffs owed $932,149,606.85 under the Defaulted Loans.)96 In October 2025, Diveroli and two YSA representatives visited Kulick in Tulsa, Oklahoma, to diligence the Properties in connection with a contemplated loan where YSA would provide Plaintiffs tranche financing.97 Diveroli asked to see “the worst units at the worst properties” to evaluate whether it made sense to move forward 93 Id. at 94:20–24 (Kulick). 94 Id. at 29:11–17, 84:16–18, 122:24–123:1 (Kulick). 95 JX-28 at 4; see JX-24 (informing Kulick he owed $897,744,576 under the Defaulted Loans on December 2, 2025). Kulick complained throughout this litigation about Defendant’s delays in providing a payoff summary. He testified that he made multiple requests for a payoff summary as early as November 2025. Dkt. 22 ¶ 28 (“On December 2, 2025, Defendant informed Plaintiffs that it would “limit” the amount owed to approximately $900 million dollars. . . .”). At trial Kulick testified he did not receive a payoff from YSA until February 6, 2026. Trial Tr. at 45:15–46:5 (Kulick); Dkt. 103 at 11. But in the Amended Complaint Plaintiffs plead having received a payoff summary on December 2, 2025, which is supported by contemporaneous evidence. JX-24. 96 JX-28 at 2. 97 Trial Tr. at 29:22–35:7 (Kulick). 15 with the requested tranche financing.98 After the tour, they asked Kulick to join for a meeting at their hotel conference room.99 During the meeting, Diveroli informed Kulick that he owed them “well over a billion dollars” due to the compounding interest rates.100 Diveroli told Kulick that he could “either do this the easy way or the hard way[.]”101 As Kulick recalled, “[t]hey told me that basically they now own my entire portfolio[.]”102 Kulick understood the “easy way” would entail handing over to YSA the deeds to the Properties in lieu of YSA seeking to foreclose on the Properties.103 Kulick claims YSA offered cash if he were to hand over the deeds. 104 Kulick understood the “hard way” as involving litigation, as YSA had brought a draft complaint to the meeting. 105 YSA also threatened to alert persons in Kulick’s professional network, including his Rabi and wife.106 98 Id. at 32:2–24 (Kulick). 99 Id. at 33:1–20 (Kulick). 100 Id. at 33:1–19 (Kulick). 101 Id. at 33:13–33:19 (Kulick) (emphasis added). 102 Id. (Kulick) (emphasis added). 103 Id. at 34:6–35:6 (Kulick). 104 Id. (Kulick). 105 Id. at 34:6–37:14 (Kulick). 106 Id. at 34:19–35:6 (Kulick); see JX-23 (providing Plaintiffs and Plaintiffs’ counsel the Complaint YSA filed in Superior Court noting “YSA also intends to submit litigation preservation letters to various third parties, including but not limited to Vesta employees, investors, and lenders that are believed to have either benefited from or borne witness to Defendants’ misconduct”). In addition to attaching the Superior Court Complaint, YSA shared with Plaintiffs and Plaintiffs’ counsel drafts of an amended complaint and motion for a temporary restraining order and noted 16  Diveroli pursued the hard way.107 On October 31, 2025, YSA recorded second mortgages against at least 25 Properties located in Oklahoma and Kansas.108 The Properties are owned by the Title Owners. 109 Kulick identified the Properties in compliance with Section 5(c)’s requirement under the February Guaranty to provide YSA the “complete schedule of real estate and entities owned (whether directly or indirectly, and whether wholly or partly)” by Kulick, in connection with the February “YSA is willing to forego further litigation, including the filing of the amended complaint, in exchange for Mr. Kulick executing deeds-in-lieu of foreclosure voluntarily turning over ownership of each of the subject properties. . . .” Id. 107 Diveroli testified that it was only because YSA “discovered the fraud and deceit” coupled with the poor conditions of the Properties that YSA decided to record the second mortgages. Trial Tr. at 188:21–189:13 (Diveroli). Kulick acknowledged at trial that he repeatedly recorded second mortgages on properties owned by Title Owners. Id. at 110:24–113:7 (Kulick). Kulick admitted that two weeks before commencing this action he granted a second mortgage on another property owned by a Title Owner. Id. at 112:1–20 (Kulick); JX-170 (granting second mortgage on Jenk’s Best Living on October 30, 2025); JX-168 (granting second mortgage on Eaton Place Best Living, LLC on October 24, 2025); JX-155 (granting second mortgage on Bartlesville Best Living, LLC on September 24, 2025). Kulick explained that 32 of Vesta’s 34 properties routinely need cash, and his solution was to have Vesta make a loan to the cash-strapped property, to allow the property to get their reserve funded, and then subsequently pay back to the loan to Vesta. Trial Tr. at 115:7–116:18 (Kulick). Kulick acknowledged comingling his personal funds with Vesta’s to create a “lending pool” to move cash around to pay the debts of one property with proceeds from another. Trial Tr. at 128:15–18, 129:9–13, 131:6–22 (Kulick). YSA’s forensic accountant confirmed as much, based on his limited review of Kulick’s bank accounts. JX-198; JX-194 (“In summary, from November 2024-July 2025 $33.2 million was deposited from the associated real estate portfolio of Vesta and from the net operational flows of the Vesta accounts, and these $33.2 million were comingled and sent to unidentified entities controlled by the controller.”). 108 Dkt. 81 ¶ 21; JX-27; PTO ¶ 6. 109 JX-27 at 1, 41, 81, 121, 136, 175, 192, 207, 229, 249, 264, 304, 343, 383, 398, 413, 453, 468, 508, 550, 567, 584, 599, 639, 680, 721, 763, 803; see JX-221; JX-215; JX-11; JX-169 §§ 1–3, Ex. A. 17 2025 Loan. 110 Kulick testified that he personally owns interests in each Title Owner.111 F. Plaintiffs File This Litigation. Plaintiffs were first to file litigation. On November 13, 2025, Plaintiffs filed their Complaint against YSA, seeking an order from this Court requiring Defendant to remove the second mortgages.112 At the same time, Plaintiffs moved for expedition and separately moved for expedited preliminary and permanent injunctive relief.113 On November 25, 2025, the court heard argument on Plaintiffs’ motions to expedite and for injunctive relief. 114 In seeking preliminary injunctive relief, Plaintiffs claimed “many of these properties are under contract or actively being marketed for sale” including one property set to close the next day. 115 At the 110 JX-16 at 26 (“By February 28, 2025, Guarantor shall deliver to Lender a true, correct, and complete schedule of real estate and entities owned (whether directly or indirectly, and whether wholly or partly) by Guarantor; provided, however, that in the event that the schedule of real estate as of February 28, 2025 is identical to the schedule of real estate most recently provided by Guarantor to Lender, then Guarantor may instead email Lender confirmation that the schedule of provided as of [Date] remains true, correct and complete as of February 14, 2025, in lieu of resubmitting the schedule of real estate. The same schedule shall provide the percentage of ownership attributable to Guarantor with respect to such real estate and entities and, with respect to real estate, identify which entity the real estate is owned through. Upon delivering same to Lender, Guarantor shall be deemed to have represented and warranted that such schedule is true, correct, and complete as of the date thereof.”); JX-27 at 39–40. 111 Trial Tr. at 8:2–9:11 (Kulick). 112 Dkt. 1 ¶¶ 37–44. 113 Dkt. 1 at Plaintiffs’ Motion to Expedite; Dkt. 1 at Plaintiffs’ Motion for Expedited Preliminary and Permanent Injunction. 114 Dkt. 14. 115 11/25/25 Hr’g Tr. at 4:6–5:10. 18 preliminary stage, Plaintiffs also claimed Kulick lacked authority to record second mortgages directly on the Title Owners’ properties.116 The court denied Plaintiffs’ request for preliminary injunctive relief because the relief requested—ordering Defendant to lift the second mortgages—was mandatory in nature and thus foreclosed, absent discovery to resolve factual disputes.117 But the court granted expedition. The court directed the parties to “take some targeted discovery” to allow the court to determine “whether the defendant has the authority to impose these mortgages on a full discovery record that reflects the parties’ intent.” 118 The court did enjoin YSA from imposing additional second mortgages.119 On December 5, Plaintiffs filed their Amended Complaint.120 The Amended Complaint asserts one claim.121 Plaintiffs claim that Defendant unlawfully recorded the second mortgages and seek a declaratory judgment that the second mortgages are void, coupled with an order from this court directing Defendant to immediately execute and record withdrawals, cancellations, or releases of the second mortgages.122 116 Id. at 15:24–17:5. 117 Id. at 42:17–43:8. 118 Id. at 44:1–8. 119 Id. at 43:9–24. 120 Dkt. 22. 121Id. ¶¶ 39–48 (alleging the second mortgages “are invalid” and seeking a “permanent injunction directing Defendant to immediately execute and record withdrawals, cancellations, or releases of the invalid second mortgage[s].”). 122 Id. ¶¶ 42–48. 19 Plaintiffs again moved for Expedited Preliminary and Permanent Injunctive relief (the “Motion”).123 Defendant opposed the Motion.124 After the court preliminarily enjoined additional second mortgages, Defendants moved to set an injunction bond under Court of Chancery Rule 65 (the “Bond Motion”).125 On December 30, the court granted the Bond Motion, requiring Plaintiffs to post a bond in the amount of $22,368,257.93.126 On January 7, 2026, Defendant informed the court that Plaintiffs were unable to post the bond. 127 Plaintiffs’ failure to post bond caused the ordered injunction to dissolve by operation of law.128 On February 11, Defendant filed an Amended Answer and brought counterclaims and third-party claims.129 Defendant asserted counterclaims against Kulick and Vesta and brought third-party claims against 46 named third-party defendants and Does 1-100 and Roe Entities 1-100. 130 On March 6, Plaintiffs 123 Dkt. 23. 124 Dkt. 32. 125 Dkt. 29; Ct. Ch. R. 65(c). 126 Dkt. 60 (“In connection with this Court’s entry of a temporary restraining order [] in connection with the above-captioned action, within five (5) calendar days of the entry of this Order, Plaintiffs shall post with this Court a secured bond. . . .”). 127 Dkt. 64. 128 Ct. Ch. R. 65(c). 129 Dkt. 81. 130 Id. ¶¶ 4–49. 20 answered the Counterclaims.131 In May, Defendant began to effectuate service on the counterclaim/third-party defendants.132 The court held trial on March 5, 2026. 133 The parties completed post-trial briefing on March 26, 2026.134 II. LEGAL ANALYSIS Plaintiffs seek permanent injunctive relief, asking the court to order Defendant to immediately execute and record withdrawals, cancellations, or releases of the second mortgages.135 To obtain a permanent injunction, “a party must show (i) actual success on the merits, (ii) the inadequacy of remedies at law, and (iii) a balancing of the equities that favors an injunction.” 136 A party need not show imminent irreparable harm to obtain a permanent injunction. 137 There are other ways to demonstrate no adequate remedy at law.138 Permanent injunctive relief comes in one of two forms: prohibitive or mandatory. “A permanent injunction is a form of final relief that prohibits a party 131 Dkt. 93. 132 Dkt. 107; Dkt. 108; Dkt. 109; Dkt. 110; Dkt. 111; Dkt. 112; Dkt. 113. 133 Dkt. 92. 134 Dkt. 103. 135 Dkt. 22 ¶ 48. 136 In re COVID-Related Restrictions on Religious Svcs., 285 A.3d 1205, 1232–33 (Del. Ch. 2022), aff’d, 326 A.3d 626 (Del. 2024). 137 Id. at 1228–31; 11A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2944 (3d ed.) (“[I]rreparable injury is not an independent requirement for obtaining a permanent injunction; it is only one basis for showing the inadequacy of the legal remedy.”). 138 Id. at 1230. 21 from taking action or compels a party to take action.”139 Its negative version serves as a prohibitive injunction, “whereby defendant is perpetually inhibited from the assertion of an assumed right, or perpetually restrained from the commission of an act which would be contrary to equity and good conscience.” 140 Its affirmative or mandatory version compels a party to take specific action.141 An order directing YSA to undertake specific affirmative actions to remove the second mortgages is mandatory in nature.142 Kulick bears the burden of proving that the second mortgages are “invalid” as a matter of law and