Partial Disclosure Triggers Inquiry Notice: Fourth Circuit Clarifies Tolling, Accrual, and Unjust Enrichment in Mission Integrated Technologies, LLC v. Clemente

Introduction

This published Fourth Circuit decision arises from a dispute over ownership and control of intellectual property associated with ARES, a vehicle-mounted stairway designed for tactical entry, developed at Mission Integrated Technologies, LLC (MIT). The case sits at the intersection of startup governance, family relationships in closely held companies, and the law of limitations, tolling, and equitable remedies.

MIT (a Delaware LLC with its principal place of business in Virginia) sued its former president and minority member, Timothy (Tim) Clemente, and his son, Joshua (Josh) Clemente. Josh was the principal designer of ARES, had worked for years without pay on the understanding—promised by Tim—that he would receive equity. The company’s majority member, through F2E Holdings, was Fahmi Alubbad, who repeatedly blocked equity transfers to Josh. Josh later filed for and obtained a patent on ARES; Tim did not disclose Josh’s provisional filing during an August 2019 meeting with Alubbad and counsel, though he did state that ARES was Josh’s work and that MIT could not claim it without compensating him. MIT brought multiple state-law claims; Tim sought fees under the Operating Agreement’s fee-shifting clause. A jury later invalidated Josh’s patent on MIT’s counterclaim.

Key issues on appeal included: whether MIT’s fiduciary duty, business conspiracy, fraud, unjust enrichment, and contract claims were time-barred or otherwise infirm; how inquiry notice interacts with tolling doctrines under Delaware and Virginia law; what counts as “injury” for accrual; whether unjust enrichment lies once a defendant’s patent is invalidated; and whether the district court properly awarded attorneys’ fees to Tim as the prevailing party.

Summary of the Opinion

• The Fourth Circuit (Judge Quattlebaum, joined by Judges Niemeyer and Wynn) affirmed summary judgment for Tim and Josh on all challenged counts and affirmed the attorneys’ fees and costs awarded to Tim.
• Count I (fiduciary duty against Tim): Time-barred under Delaware’s three-year limitations period. Even assuming equitable tolling/fraudulent concealment might have applied, MIT was on inquiry notice no later than August 27, 2019, which “universally” limits tolling under Delaware law.
• Count III (business conspiracy against Tim and Josh): Time-barred under a five-year limitations period. The underlying tort identified by MIT was fraud; the alleged misrepresentations and injury (exposure of confidential information) occurred by 2017 at the latest.
• Count IV (unjust enrichment against Josh): Affirmed on an alternative ground. Because Josh’s ARES patent was later invalidated and no other benefit was shown, MIT could not establish the “benefit” element required for unjust enrichment under Virginia law.
• Count V (fraud against Tim): Time-barred under Virginia’s two-year statute, which accrues upon discovery or when a plaintiff should have discovered the fraud with due diligence. By 2019, MIT was on inquiry notice that Josh had not signed an NDA.
• Count VI (breach of contract against Josh): No genuine dispute of material fact—there was no NDA. Multiple admissions and deposition testimony foreclosed the claim.
• Attorneys’ fees: The district court properly awarded Tim fees as the “prevailing party” under Delaware law (per the Operating Agreement). The court was not required to perform an explicit choice-of-law analysis where immaterial, nor did Bako Pathology compel a “no prevailing party” finding. The court’s remarks referencing a $50,000 settlement concept derived from an email, not confidential negotiations.

Analysis

Precedents Cited and Their Role

• Summary Judgment Standard:
  • Mountain Valley Pipeline, LLC v. W. Pocahontas Props. Ltd. P’ship (4th Cir. 2019) reaffirmed de novo review and the Rule 56 standard; the panel drew all reasonable inferences for MIT but found the claims barred or unsupported.
• Choice-of-Law:
  • World Fuel Services Trading, DMCC v. Hebei Prince Shipping Co. (4th Cir. 2015): A court need not resolve choice-of-law issues when doing so makes no difference to the analysis. The panel applied that approach here, noting the parties largely agreed on Virginia law for most counts and assuming Delaware law for Count I without deciding because the result was the same.
• Delaware Accrual and Tolling:
  • Wal-Mart Stores, Inc. v. AIG Life Ins. Co. (Del. 2004), Lehman Bros. Holdings, Inc. v. Kee (Del. 2021), and Lebanon County Employees’ Retirement Fund v. Collis (Del. Ch. 2022): Claims accrue at the time of the wrongful act, absent tolling.
  • Ontario Provincial Council v. Walton (Del. Ch. 2023) and In re Tyson Foods, Inc. (Del. Ch. 2007): Equitable tolling applies while the plaintiff reasonably relies on a fiduciary’s good faith.
  • LGM Holdings, LLC v. Schurder (Del. 2025): Fraudulent concealment requires an affirmative act of concealment; tolling ends at inquiry notice.
  • Norman v. Elkin (3d Cir. 2020) (applying Delaware law): A plaintiff’s suspicions and prompt investigation show inquiry notice; the Fourth Circuit analogized that MIT should have investigated after the 2019 meeting.
• Virginia Accrual and Limitations:
  • Detrick v. Panalpina, Inc. (4th Cir. 1997) and Eshbaugh v. Amoco Oil Co. (Va. 1987): Five years is the outer bound for statutory business conspiracy claims; the panel did not need to resolve whether a shorter period might apply because the claim was untimely even at five years.
  • L-3 Communications Corp. v. Serco, Inc. (4th Cir. 2019): Conspiracy accrues when all elements of the underlying tort are present.
  • Evaluation Research Corp. v. Alequin (Va. 1994): Elements of fraud; used to analyze both the conspiracy’s underlying tort and the independent fraud count.
  • Street v. Consumers Mining Corp. (Va. 1946): The limitations clock runs when any legally cognizable injury occurs, even if substantial damages arise later—used to mark injury when confidential information was first exposed to Josh.
  • Zeng v. Wang (Va. Ct. App. 2024): Inquiry notice triggers accrual upon evidence of the possibility of fraud, not full exposure of the scheme—applied to the 2019 NDA uncertainties.
  • Virginia Uniform Trade Secrets Act (VUTSA), Va. Code § 59.1-341(A): The panel noted that if Count I were treated as a Virginia tort, VUTSA preemption would independently bar it to the extent it rests on trade secret misappropriation theories.
• Unjust Enrichment:
  • James G. Davis Constr. Corp. v. FTJ, Inc. (Va. 2020) and Schmidt v. Household Fin. Corp., II (Va. 2008): Elements of unjust enrichment in Virginia.
  • T. Musgrove Constr. Co. v. Young (Va. 2020): Recovery is limited to the actual benefit conferred on the defendant; absence of realized benefit defeats the claim.
  • Tao of Systems Integration, Inc. v. Analytical Services & Materials, Inc. (E.D. Va. 2004): Discussed accrual mechanics for unjust enrichment, though the panel affirmed on the “no benefit” ground.
  • United States v. Williams (4th Cir. 2025) and United States v. Bowman (4th Cir. 2018): The court of appeals may affirm on any ground supported by the record.
• Attorneys’ Fees:
  • South Walk at Broadlands Homeowner’s Ass’n, Inc. v. OpenBand at Broadlands, LLC (4th Cir. 2013): De novo review for contract-interpretation issues in fee awards.
  • Bako Pathology LP v. Bakotic (Del. 2022): A trial court may, in its discretion, find no “prevailing party” under fee-shifting provisions in certain circumstances; it does not compel that outcome. The district court distinguished those circumstances here and awarded fees to Tim.

Legal Reasoning

1) Fiduciary Duty (Count I) – Delaware’s Inquiry Notice Ends Tolling

• Accrual: Under Delaware law, fiduciary duty and contract claims accrue at the time of the breach, not when harm is discovered, absent tolling.
• Tolling Theories: MIT argued equitable tolling and fraudulent concealment, premised on Tim’s failure to disclose Josh’s patent filings at the August 27, 2019 meeting.
• Inquiry Notice: The court assumed arguendo that tolling could have applied, but held tolling ceased no later than that same meeting because Tim simultaneously told Alubbad and counsel that:
  • ARES was Josh’s work,
  • Josh was not bound by a work-for-hire agreement, and
  • MIT could not claim ownership without compensating Josh.
  These statements were enough “smoke” to require a reasonable investigation—thereby triggering inquiry notice and limiting any tolling. Because suit was filed in 2023, the three-year statute barred the claim.
• Additional Note: The panel observed that if the claim were a Virginia tort, it would be preempted by the Virginia Uniform Trade Secrets Act to the extent it overlapped with trade secret misappropriation theories—an alternative, non-dispositive basis that reinforces the result.

2) Business Conspiracy (Count III) – Accrual When Underlying Fraud Is Actionable; Early Injury Counts

• Statute of Limitations: Assuming a five-year period, the claim was still untimely.
• Underlying Tort: MIT framed the conspiracy as grounded in fraud allegedly used to “usurp” MIT’s IP. The alleged misrepresentations necessarily predated (or at latest coincided with) Josh’s access to MIT’s files (2013–2017).
• Injury: Under Virginia law, the limitations clock starts upon any legally cognizable injury. The exposure of MIT’s confidential information to Josh without an NDA was itself an actionable injury, triggering accrual years before suit.

3) Unjust Enrichment (Count IV) – No Benefit, No Restitution

• Elements: Virginia requires proof that (i) plaintiff conferred a benefit; (ii) defendant knew and reasonably should expect to repay; and (iii) defendant accepted/retained the benefit without payment.
• Holding on Alternative Ground: Even if timely, the claim fails because Josh realized no cognizable benefit. His ARES patent was invalidated by a jury, and the record reflected no other realized advantage. Without a benefit, unjust enrichment cannot lie.

4) Fraud (Count V) – Two-Year Discovery Rule; Inquiry Notice in 2019

• Accrual: Virginia’s two-year limitations period runs from discovery or when the fraud should have been discovered through reasonable diligence.
• Inquiry Notice: By August 2019, the combination of Tim’s equivocal statements about whether an NDA existed, his inability to produce it, Josh’s non-response to NDA requests, and concerns about Tim’s loyalties placed MIT on notice of at least the possibility of fraud. That sufficed to trigger the statute. Suit in 2023 was too late.

5) Breach of Contract (Count VI) – No NDA; No Genuine Issue

• Record Admissions: Tim and Josh both denied the existence of an NDA, and MIT’s own filings and Alubbad’s deposition repeatedly acknowledged that no NDA was signed. Those admissions extinguished any genuine factual dispute. Summary judgment for Josh was appropriate.

6) Attorneys’ Fees – Prevailing Party Clause Enforced Under Delaware Law

• Contractual Basis: The Operating Agreement’s fee-shifting clause entitled the prevailing party to reasonable fees and costs in disputes “arising as a result of or by reason of” the Agreement.
• Choice-of-Law: The district court did not need to recite a choice-of-law analysis where immaterial; both sides agreed Delaware law governed the Operating Agreement.
• Bako Pathology: The district court did not abuse its discretion by awarding fees rather than finding no prevailing party. The court found MIT largely at fault for pursuing weak claims and not settling.
• No Improper Consideration: The district court’s reference to a $50,000 settlement figure was drawn from Josh’s email, not privileged settlement communications.

Impact

• Inquiry Notice as a Limiting Principle:
  • This opinion underscores that even partial or collateral disclosures can trigger inquiry notice and thereby limit tolling—particularly in fiduciary contexts. If a fiduciary says, in substance, “the company does not own this IP without paying the creator,” a plaintiff cannot sit on its rights and later rely on tolling simply because the fiduciary’s answer to a narrow question was literally true.
• Accrual Upon Early Injury:
  • For conspiracy claims predicated on fraud, Virginia’s rule that accrual begins upon the first legally cognizable injury matters. Granting a non-employee access to confidential information without an NDA is enough to start the clock—even if larger harms emerge later (e.g., a published patent application).
• Unjust Enrichment After Patent Invalidation:
  • Invalidation of a defendant’s patent can foreclose unjust enrichment by erasing the defendant’s benefit. Plaintiffs seeking restitution should develop proof of realized value (e.g., licensing revenue, investment, market leverage) independent of the patent’s validity.
• VUTSA Preemption Caution:
  • Virginia trade secret preemption remains a powerful defense against tort claims that duplicate misappropriation theories—even when styled as fiduciary duty breaches. Counsel should plead carefully and consider whether contract or statutory claims are the proper vehicles.
• Prevailing-Party Fees in Corporate Governance Disputes:
  • Delaware-governed fee-shifting provisions will be enforced by federal courts in the Fourth Circuit. Bako Pathology does not prevent a prevailing party finding simply because both sides bear some blame; it preserves discretion. Here, the court held the plaintiff to account for overreach and failure to settle.
• Practical Governance Lessons:
  • Informal arrangements in startups can prove costly. Equity promises should be formalized; NDAs and IP assignments must be signed before confidential disclosures; and officers must promptly disclose material IP developments—including third-party patent filings—to avoid tolling fights and fiduciary exposure.

Complex Concepts Simplified

• Inquiry Notice:
  • A claimant is on inquiry notice when facts would make a reasonable person suspicious enough to investigate. It does not require proof of the entire scheme—only a reason to start looking. Once on inquiry notice, tolling of the limitations period usually stops.
• Equitable Tolling vs. Fraudulent Concealment:
  • Equitable tolling pauses the statute while a plaintiff reasonably relies on a fiduciary’s good faith.
  • Fraudulent concealment requires an affirmative act designed to hide the truth. Both doctrines end when inquiry notice arises.
• Accrual:
  • Delaware: For contract and fiduciary claims, accrual occurs at breach, not when harm is discovered.
  • Virginia: For fraud, accrual occurs at discovery or when it should have been discovered with reasonable diligence; for conspiracy, accrual aligns with the underlying tort’s accrual and requires injury.
• Unjust Enrichment (Virginia):
  • Even if the plaintiff suffered costs, the claim fails unless the defendant actually gained a benefit from the plaintiff. No benefit means no restitution.
• VUTSA Preemption:
  • Virginia’s trade secret statute displaces overlapping tort claims (e.g., conversion, some fiduciary duty claims) based on misappropriation of trade secrets. Plaintiffs must rely on the statutory misappropriation claim or distinct theories.
• Prevailing Party Fee Clauses:
  • Contracts often provide that the prevailing party gets fees and costs in disputes. Courts interpret “prevailing party” pragmatically; substantial success on claims tied to the contract usually suffices.
• Provisional vs. Non-Provisional Patents:
  • A provisional filing secures a priority date for one year; a non-provisional application must follow to pursue a patent. The publication of the non-provisional application can publicly disclose technical content—an event with legal significance for accrual and injury analysis.

Conclusion

Mission Integrated Technologies, LLC v. Clemente delivers a clear message on diligence and documentation in closely held companies, and it crystallizes several limitations and remedies principles:

• Partial disclosures in fiduciary settings can trigger inquiry notice and limit tolling, even if a direct question is answered literally and narrowly. Plaintiffs must act when they smell smoke.
• For Virginia conspiracy claims anchored in fraud, early injury—such as unauthorized exposure of confidential information—starts the clock, regardless of later, more dramatic harms.
• Unjust enrichment requires proof that the defendant actually benefitted; an invalidated patent without more does not support restitution.
• Prevailing-party fee clauses governed by Delaware law will be enforced, and courts need not perform a formal choice-of-law analysis when it makes no difference to the outcome.

On these facts, the Fourth Circuit affirmed the summary judgments and the fee award, emphasizing that statutes of limitations are designed to spur timely action. The case is a cautionary tale for founders and investors: formalize equity promises, secure IP assignments and NDAs before sharing confidential information, and promptly address red flags. Litigation strategies premised on tolling will face a high bar when contemporaneous disclosures place a company on inquiry notice.