MEMORANDUM OPINION

NOBLE, Vice Chancellor.

Petitioners CertiSign Holding, Inc. ("CertiSign" or the "Company") and Nicola Jose Rogerio Cosentino ("Cosentino," and with CertiSign, "Petitioners") brought this action pursuant to Section 205 of the Delaware General Corporation Law (the "DGCL") seeking an order (i) declaring that shares of putative stock of the Company are shares of valid stock and (ii) approving a corresponding stock ledger. They have moved for entry of a final order granting judgment on the pleadings with respect to their Verified Petition for Relief Pursuant to 8 Del. C. § 205 (the "Petition").

Intervenor/Respondent Sergio Kulikovsky ("Kulikovsky"), a former CertiSign director and officer, opposes entry of final relief at this time. Although he agrees that the substance of the Petition should ultimately be granted, he argues that he will suffer harm should final relief be entered before the Court resolves his Verified Counter-Petition for Relief Pursuant to 8 Del. C. § 205 (the "Counter-Petition").

The Court must determine whether partial judgment on the pleadings is warranted in Petitioners' favor and if so, whether there is just cause to delay entry of final partial judgment.

I. BACKGROUND

A. CertiSign's Problematic Capitalization

CertiSign was incorporated in Delaware on December 20, 2004, by non-party Certipar, S.A. ("Certipar") to serve as Certipar's holding company. Certipar wholly owns Certisign Certificadora Digital S.A., which "provides public key infrastructure based solutions to financial institutions, governments, and enterprises that increasingly utilize unsecured IP networks to link business processes, exchange information, and conduct banking and commerce transactions."1

On March 14, 2005, the Company's incorporator executed a written consent naming Cosentino, Kulikovsky, and Edgar Rafael Safdie ("Safdie") to the Company's board of directors. The board then approved, on March 26, 2005, an amendment to, and restatement of, the Company's initial certificate of incorporation (the "Amended Certificate"), which authorized the following classes and series of stock: (i) 15,000,000 shares of Class A Common Stock, (ii) 5,000,000 shares of Class B Common Stock, (iii) 5,000,000 shares of Series A Preferred Stock, and (iv) 3,500,000 shares of Series B Preferred Stock.2 On March 29, 2005, CertiSign purported to issue shares to Certipar's stockholders: CKS Holding, Inc. ("CKS"), Darby Technology Ventures Fund I, LLC ("Darby"), and VeriSign Capital Management, Inc. ("VeriSign"). Those stockholders exchanged their Certipar stock for CertiSign's, with Certipar becoming CertiSign's wholly owned subsidiary.3 Also on March 29, CertiSign and CKS entered into a Stock Purchase Agreement and a Debt Contribution Agreement, and CertiSign, Darby, and Intel Capital Corporation ("Intel") entered into a Series B Preferred Stock Purchase Agreement. The board approved each of the agreements and stock issuances (the "Stock Issuances") by unanimous written consent.4

Importantly however, the Amended Certificate, which authorized the issuance of those shares, was not filed with the Delaware Secretary of State until April 1, 2005. Therefore, the Stock Issuances were invalid.5 The technical defect was not discovered until 2012, during due diligence for a potential transaction. In the interim, CertiSign and all of its constituents had operated under the mistaken assumption that the Company was properly capitalized.

B. CertiSign's Attempts to Rectify the Mistakes and Kulikovsky's Objections

In the second half of 2012, CertiSign's counsel proposed a series of steps to remedy the Company's capitalization defects without judicial intervention. Those measures would have required the Company's board to authorize certain corrective actions. The Company sought approval not only by its then-current directors, but also by Cosentino and Kulikovsky, two of the three original board members. Their support was deemed necessary because actions that had altered the board's composition since incorporation had relied on the validity of the Stock Issuances. Because the Stock Issuances were defective, it was unlikely that the Company's then-current directors had been validly named to the board. In that case, approval by a majority of the original board would have constituted valid board action.6

Kulikovsky refused to participate in the self-help process for reasons that the parties now debate.7 The Company then decided to file the Petition, seeking the Court's ratification of its capital structure. It provided notice to each of its stockholders, CKS, Darby, Intel, and GeoTrust, Inc., and to some former directors, including Kulikovsky.8 Each party other than Kulikovsky approved and supported the Petition and requested relief. Kulikovsky's counsel wrote to the Company on June 6, 2014, expressing his concern that "the proposed Petition does not seek to regularize the Company's entire capital structure."9 Kulikovsky indicated that he would consent to the entry of the relief sought through the Petition only if the Petition were amended to also address "(a) the 3 million warrants held by CKS Holding; (b) the 1 million options held by Mr. Kulikovsky and Nicola Cosentino, and (c) the 9% debt of approximately $3.5 million (US) owed by CertiSign to Mr. Kulikovsky."10

II. NATURE AND STAGE OF THE PROCEEDINGS

Petitioners initiated proceedings in this Court seeking an order validating the Stock Issuances and approving a stock ledger reflecting those shares.11 Kulikovsky intervened and filed the Counter-Petition, which seeks judicial validation of (i) 1,150,000 options to purchase shares of CertiSign's Class A common stock and (ii) a debt of $4,337,693.58 in principal and interest (as of August 31, 2014) owed to an entity owned by Kulikovsky.12 Petitioners subsequently moved for a final order entering judgment on the pleadings with respect to the Petition.

Kulikovsky does not deny that the Stock Issuances should eventually be ratified. However, he contends that it would not be fair and equitable to validate that putative stock before determining whether the other purported components of CertiSign's capital structure should also be validated. Petitioners counter that unlike the relief they seek, the relief sought by the Counter-Petition raises issues subject to numerous factual disputes, which would require extended proceedings to resolve.13 The Court must now determine whether it is proper to grant judgment on the Petition while other questions related to CertiSign's capital structure remain unresolved. If Petitioners are entitled to judgment, then the Court must decide whether to enter a partial final order pursuant to Court of Chancery Rule 54(b).

III. ANALYSIS

The Court will grant a motion for judgment on the pleadings pursuant to Court of Chancery Rule 12(c) "only when no material issue of fact exists and the movant is entitled to judgment as a matter of law."14 The facts pleaded and the inferences drawn from them are viewed in the light most favorable to the non-moving party.15

The Court's discretion to make an otherwise interlocutory order a final judgment is guided by Rule 54(b).16 The Court may exercise that discretion only when "(1) the action involves multiple claims or parties, (2) at least one claim or the rights and liabilities of at least one party has been finally decided, and (3) . . . there is no just reason for delaying an appeal."17 Recognizing "[t]he long established policy against piecemeal appeals," this Court exercises its discretion cautiously, and only to "afford a remedy in the infrequent harsh case . . . ."18 The Court may "consider any factor relevant to judicial administrative interests or the equities of the case," but must at least be satisfied that "the moving party can show some danger of hardship or injustice through delay which would be alleviated by immediate appeal."19

A. Petitioners Are Entitled to Partial Judgment on the Pleadings

Section 205 of the DGCL authorizes the Court to "[d]etermine the validity of any corporate act or transaction and any stock, rights or options to acquire stock . . . .20

The Court may "[d]eclare that shares of putative stock are shares of valid stock" and may "[a]pprove a stock ledger for the corporation that includes any stock ratified or validated in accordance with [Section 205]."22

The Petition appears tailor-made for Section 205 relief. The Company's outstanding stock is defective because it was issued days before the Amended Certificate authorizing those shares was filed with the Delaware Secretary of State. CertiSign operated for years under the assumption that it was validly capitalized, eventually discovering the issue in 2012 during due diligence for a potential transaction. The Company and all of its stockholders agree that the current predicament arose from a ministerial error, and all record stockholders have signed acknowledgements consenting to the relief requested in the Petition.23 As noted, Kulikovsky acknowledges that Petitioners will ultimately obtain relief, but suggests that it would be inequitable to grant the Petition before the Court addresses his Counter-Petition, arguing that all components of the Company's capital structure should be considered together.24 His Counter-Petition allegedly raises factual issues relevant to whether it would be equitable to grant judgment on the Petition at this time.

Kulikovsky points to Section 205(d), which allows the Court to consider, when determining whether to exercise its Section 205 powers,

Kulikovsky suggests that "validating some corporate acts without determining the validity of the Company's full capital structure would substantially prejudice [his] and other interested parties' rights."26 Because the Court may shape the equitable relief it grants under Section 205 to minimize adverse consequences to affected parties, Kulikovsky contends that it would be premature to enter relief for Petitioners before the Court hears facts regarding the potential harm he faces.27 He hypothesizes that harm as follows:

Kulikovsky counters that even if the harm he alleges cannot be considered under Section 205(d)(3), the Court could recognize it under Section 205(d)(5), which allows consideration of "[a]ny other factors or considerations the Court deems just and equitable." However, his attempt to avoid Section 205(d)(3) violates accepted rules of statutory construction that provide "that specific provisions should prevail over general provisions, and that words in a statute should not be construed as surplusage if there is a reasonable construction which will give them meaning."30 Reading Section 205(d)(5) as authorizing the Court to analyze factors that are specifically barred from consideration by Section 205(d)(3) would be unreasonable.31 Kulikovsky has not identified any persuasive reason why the Petition should not be granted now; indeed, he accepts that Petitioners will ultimately obtain the relief they seek.32 Therefore, judgment on the Petition's sole count is warranted in Petitioners' favor.33

B. A Rule 54(b) Partial Final Judgment Will Not Be Entered

For the Court to enter a Rule 54(b) partial final judgment, it must be satisfied that this is the "infrequent harsh case" to justify departure from the policy against piecemeal appeals.34 This action involves multiple claims and the claims raised in the Petition have been finally decided; the Rule 54(b) inquiry thus focuses on board's engaging in conduct that will adversely affect him. One way to reduce the magnitude of that risk is to provide him with certain informational rights pending resolution of the Counter-Petition. Thus, the Company will provide Kulikovsky with advanced notice of any fundamental transactions that would alter the Company's capitalization or result in the sale of the Company or material assets of the Company or its subsidiaries outside the ordinary course of business. whether there is just reason for delaying an appeal.35 Even when a "claim can be severed from the other claims without delaying or otherwise affecting this Court's adjudication of the remaining claims," a Rule 54(b) order will not be entered absent "some danger of hardship or injustice through delay which would be alleviated by immediate appeal."36

Petitioners have failed to establish a sufficient danger of hardship or injustice to justify entry of a final order on the Petition. The Court acknowledges that the defective Stock Issuances do create some uncertainty that could be lifted by a final, non-appealable judgment. How much uncertainty exists is questionable. For example, on or about June 3, 2013, CKS removed Kulikovsky from the board, a corporate action that Kulikovsky does not dispute. The Company has operated for a decade despite the technical defects associated its stock, and it has identified no imminent danger of hardship or injustice that would be avoided by an immediate entry of final judgment, as opposed to the entry of a final order in the ordinary course.37

This is not a case where a party might benefit from an immediate appeal to reverse a possible error by the Court.38 Rather, Petitioners want the finality that could be achieved by the expiration of the period for an appeal.39 There is no serious doubt or disagreement that the relief sought by the Petition will ultimately be granted; only the circumstances and conditions surrounding the final entry of a judgment are unsettled. Petitioners have not adequately explained the injustice they would suffer by the Court's entry of a partial judgment in their favor but without Rule 54(b) finality.40

Petitioners invoke considerations of judicial economy, which may weigh in favor of entering a Rule 54(b) order. They argue that if the Court grants them relief, CertiSign will be able to put in place an indisputably valid board that could then consider the relief Kulikovsky requests in the Counter-Petition, possibly narrowing or mooting certain issues. As a practical matter, it seems doubtful that the parties would resolve the issues raised by the Counter-Petition absent judicial intervention. After all, their inability to do so necessitated these proceedings. As a legal matter, the Court should not grant Rule 54(b) relief merely because doing so may be "more convenient for the future course of the case."41 For these reasons, the Court will not enter a partial final judgment pursuant to Rule 54(b).

IV. CONCLUSION

Petitioners' Motion for Partial Judgment on the Pleadings is granted. Their request for a final order pursuant to Court of Chancery Rule 54(b) is denied.

Counsel are requested to confer and to submit an implementing form of order.