Appeal: Pending In re [2026] FCR 8 | [2026] SCR 8

[ToadKing]

Username: ToadKing__

I am representing a client

Who is your Client?: Brick and Browse Inc.

What Case are you Appealing?: [2026] FCR 8

Link to the Original Case: Lawsuit: Adjourned - Brick and Browse Inc. v. Pepecuu [2026] FCR 8

Basis for Appeal: See Below

Supporting Evidence:

 

[ToadKing]

Appeal

IN THE SUPREME COURT OF THE COMMONWEALTH OF REDMONT
BASIS FOR APPEAL & APPELLANT BRIEF

The Federal Court has committed multiple fundamental errors of law in denying compensatory damages while acknowledging that Defendant engaged in "outrageous conduct" through "self-dealing, breach of fiduciary duties and failure to disclose the transactions to shareholders all in violations of the bylaws." The Court's reasoning is legally flawed, internally contradictory, and ignores entire claims for relief.

I. UNDISPUTED FACTS​

The undisputed facts, as affirmed by Defendant in her Answer to Complaint and relied upon in Appellant's Motion for Summary Judgment, establish:

1. $1,080,000 in cash was taken from corporate accounts (Fact 28)
2. This cash went to Pepecuu personally through the purchase of her own shares:
   • The shares repurchased on 12 January 2026 were Pepecuu's own shares, "constituting direct self-dealing" (Fact 15)
   • The shares purchased on 5 February 2026 were the same shares Pepecuu had personally acquired at auction one day earlier (Fact 23)
   • Both transactions exclusively benefited Pepecuu (Fact 33)
3. No disclosure was made to shareholders or regulatory bodies:
   • Pepecuu did not disclose to DOC or shareholders that she was bidding on behalf of the Corporation (Fact 24)
   • Neither transaction was disclosed to shareholders or announced publicly (Fact 36)
   • No disclosure, announcement, or communication was made to shareholders (Fact 41)
4. No required shareholder approval was obtained:
   • The 12 January buyback represented 28.59% of Class A shares, exceeding the 20% threshold (Fact 17)
   • Pepecuu never possessed 75% Class A voting power (Fact 18)
   • Pepecuu did not obtain approval from shareholders holding 75% of Class A voting rights (Fact 31)
5. This violated express provisions of the Articles of Incorporation:
   • Article VIII, Section 1 requires buybacks not harm the corporation's ability to meet financial obligations (Fact 32); violated by depleting 97.4% of cash reserves (Fact 10)
   • Article VIII, Section 3 requires disclosure to shareholders and regulatory bodies (Fact 34); violated as shown in Facts 24, 36, 41
   • Article VIII, Section 4 prohibits buybacks that disproportionately benefit insiders (Fact 32); violated as shown in Fact 33
6. This was self-dealing (Fact 15 and found by the Federal Court)
7. This breached fiduciary duties (Found by the Federal Court)
8. This was "outrageous conduct" (Found by the Federal Court)

​

II. ARGUMENT​

1. The Court Misapplied the Business Judgment Rule to Self-Dealing Transactions​

The Court stated:

As Pepecuu's actions as CEO were actions of Brick and Browse, the court cannot substitute its judgment on what a company should or shouldn't do in managing itself.

This is a fundamental misapplication of the business judgment rule under Section 8(10)(d) of the LEA.

Section 8(10)(d) provides:

The business judgement rule presumes that the requirements for the duty of care and the duty of loyalty have been met, subject to clear and convincing evidence proving otherwise.

The business judgment rule does not apply when there is clear evidence of a breach of fiduciary duty, as the Court explicitly found. This legal argument was laid out clearly twice, in the Intitial Complaint, and the Motion for Summary Judgement. Despite expressly providing reasons against its applicability, the Court, whether deliberately or from incompetence, simultaneously found that Pepecuu engaged in "self-dealing" and "breach of fiduciary duties" and also applyed the business judgment rule.

These findings should be categorically mutually exclusive.

Section 8(10)(b) provides that the duty of loyalty has a "rebuttable presumption of being met if the person has disclosed their conflicts of interest." The Court found - and Pepecuu admitted - that no disclosure was made. Therefore, the presumption is rebutted, and the business judgment rule does not apply.

When a director engages in self-dealing transactions, the business judgment rule is displaced, and the transaction must survive "entire fairness" review (LEA, Section 8(13)(b)). The Court's application of business judgment protection to admitted self-dealing is reversible error.

2. The Court Fundamentally Misunderstood the Nature of Compensable Harm​

The Court held:

Because every transaction was under market value, the plaintiff never experienced harm, as the value never left. If anything, the plaintiff Brick and Browse increased in valuation, which means they benefited from such a deal.

This reasoning is legally erroneous in multiple respects.

1. Cash Depletion Is Harm, Regardless of Asset Valuation​

The Corporation suffered $1,080,000 in cash depletion, reducing cash reserves from $965,000 to near zero. This is indisputable harm. The Court's focus on whether the shares retained "value" ignores that:

• Liquid cash was converted to illiquid shares
• The Corporation's ability to meet financial obligations was destroyed (violating Article VIII, Section 1)
• The Corporation faced insolvency risk (violating Article VIII, Section 4)

A corporation that loses $1,080,000 in cash has suffered $1,080,000 in compensable harm, regardless of what assets it received in exchange. The Court's reasoning would mean a CEO could drain all corporate cash to buy assets at "below market value" without liability - an absurd and unjust result.

2. The "Below Market Value" Finding Is Unsupported​

Pepecuu neither affirmed nor denied the market valuation facts (Facts 11-12 in the Answer). The Court states, "even if we take the plaintiff at their word," but then bases its entire compensatory damages ruling on contested facts about market value.

Moreover, the Court ignores that these were Pepecuu's own shares. The "value" to the Corporation is irrelevant when the transaction was prohibited self-dealing. A CEO cannot defend theft by arguing, "I sold the company a good deal."

3. The Court Ignored Multiple Independent Harms​

The Complaint alleged harm from:

• Depletion of 97.4% of corporate liquidity
• Creation of insolvency risk
• Violation of mandatory approval requirements (28.59% buyback without 75% shareholder approval)
• Undisclosed self-dealing
• Usurpation of the corporate decision-making process
• Disproportionate benefit to an insider (violating Article VIII, Section 4)

The Court addressed none of these harms. Each constitutes independent, compensable damage.

Under the Redmont Civil Code Act, Part III, Section 2, Compensatory damages restore "what the party has lost." Appellant lost $1,080,000 in cash. That is the harm. The Court's novel theory that acquiring shares at "below market value" negates the loss of cash has no basis in law.

3. The Court Failed to Address the Breach of Contract Claims​

The Complaint alleged Violation of Articles of Incorporation (Claim 1) and Breach of the Implied Covenant of Good Faith and Fair Dealing (Claim 2) as independent contract-based claims under the Contracts Act. The Court's verdict makes zero mention of these claims and dismisses the legal significance of the violations with a single sentence: "The breach of the bylaws in and of themselves is not a statutory violation, as bylaws are not required to be followed as defined in the Legal Entity Act."

This statement reveals a fundamental misunderstanding of the case. Appellant never alleged breach of bylaws. Claim 1 explicitly alleged "Violation of Articles of Incorporation." The violated provisions are part of the Certificate of Incorporation under the LEA, not bylaws.

1. The Articles of Incorporation ARE a Contract Under Redmont Law​

The Contracts Act, Section 4(1) defines a contract as:

4 - Contract Formation
(1) A contract is a legally binding agreement between two or more parties that creates an obligation to do or not do a particular thing.

The Articles of Incorporation satisfy every element:

• Agreement between parties: The Articles constitute an agreement between the Corporation, its directors, and its shareholders.
  • The LEA Section 4(1): "every legal entity, its officers, directors (and, if applicable, stockholders and members) shall possess and may exercise all the powers and privileges granted by this Act or by any other law or by its formation instrument"
• Legally binding: The LEA Section 8(2) establishes that "The formation instrument of the Corporation is the Certificate of Incorporation."
  • Section 8(7)(b)(ii) expressly authorises Articles of Incorporation to contain "Any provision creating, defining, limiting and regulating the powers of the Corporation, the directors, the third parties, and the stockholders, or any class of the stockholders."
  • Article VIII does precisely what Section 8(7)(b)(ii) contemplates - it "creates, defines, limits, and regulates the power of directors" to execute share buybacks.
  • These limitations are binding contractual restrictions on director authority. When Pepecuu executed buybacks exceeding these limitations, she violated the contractual terms that governed her authority. The LEA explicitly recognises that provisions in the Articles of Incorporation limit and regulate director powers.
• Creates obligations: Article VIII of the Articles creates express obligations - share buybacks "must not harm the corporation's ability to meet its financial obligations," buybacks exceeding 20% of Class A shares "must be approved by 75% of Class A voting rights," and the corporation "must disclose" buyback programs to shareholders.

The Articles of Incorporation are unquestionably a contract. The LEA itself authorises them to "limit and regulate" director powers. Violations of these express contractual limitations constitute breach of contract under Section 7 of the Contracts Act.

2. Article VIII Is Part of the Certificate of Incorporation, NOT Bylaws​

The Court's fundamental error is treating Article VIII as "bylaws." The LEA clearly distinguishes between provisions in the Certificate of Incorporation and those in the bylaws.

Under Section 8(7)(b) of the LEA, the Certificate of Incorporation may contain:

(ii) Any provision creating, defining, limiting and regulating the powers of the Corporation, the directors, the third parties, and the stockholders, or any class of the stockholders

Article VIII governing share buybacks falls squarely within this category. It creates provisions that:

• Limit the power of directors to authorise share buybacks ("must not harm the corporation's ability to meet its financial obligations")
• Regulate the power to execute Class A buybacks (requiring 75% shareholder approval for buybacks exceeding 20%)
• Define mandatory disclosure requirements for buyback programs
• Create prohibitions on buybacks that benefit insiders

These provisions are expressly authorised as part of the Certificate of Incorporation under Section 8(7)(b)(ii). They are not bylaws.

Section 8(8) governs bylaws:

(a) The Bylaws of a Corporation may regulate any matter concerning the Corporation, provided that such authority is delegated to the Bylaws by the Certificate of Incorporation and does not conflict with applicable law.

(d) If there are Bylaws, they shall be added to the Incorporated Entity summary and any amendments must be posted to the company docket.

Brick and Browse Inc. has NO bylaws. The Incorporated Entity Summary contains no bylaws. Nothing was delegated to the bylaws. The document titled "Articles of Incorporation and Bylaws of Brick and Browse Inc." contains only provisions that constitute the Certificate of Incorporation under Section 8(7).

Article VIII was never "delegated to bylaws" as Section 8(8)(a) would require. It is, by definition and statutory construction, part of the Certificate of Incorporation under Section 8(7)(b)(ii) as a provision "limiting and regulating the powers of the Corporation, the directors, the third parties, and the stockholders."

3. The Certificate of Incorporation IS "Required to be Followed" Under the Legal Entity Act​

The LEA expressly requires compliance with the Certificate of Incorporation:

• Section 4(1): Legal entities and their officers and directors "shall possess and may exercise all the powers and privileges granted by this Act or by any other law or by its formation instrument." This means directors' powers are limited by the Certificate of Incorporation. They cannot exceed those limits.
• Section 8(7)(b)(ii): The Certificate of Incorporation may contain provisions "limiting and regulating the powers" of directors. Article VIII does exactly this - it limits and regulates the power to execute share buybacks. These limits are binding.
• Section 8(9)(e): "Directors shall have a fiduciary duty of care and loyalty to the Corporation and by extension to the shareholders." This duty includes compliance with the Certificate of Incorporation that protects shareholders.
• Section 8(14)(a): "Contractual counterparties and third parties may presume that a director or officer who legally binds the Corporation, shall be within their power to do so. The Corporation shall be legally bound even though the director or officer was without power to sign. The director or officer may be sued civilly for the damages."

This provision explicitly contemplates civil liability when directors act outside their authority as defined by the Certificate of Incorporation. Article VIII limited Pepecuu's authority to execute buybacks without shareholder approval. She exceeded that authority and may be "sued civilly for the damages" under Section 8(14)(a).

The Certificate of Incorporation is not optional. It is the foundational contract that creates and governs the corporation. The Court's statement that "bylaws are not required to be followed" is both factually wrong (these aren't bylaws) and legally irrelevant (the Certificate of Incorporation IS required to be followed).

4. The Violated Provisions Create Independent Contractual Obligations​

The Court found that Pepecuu's conduct violated the governing documents and constituted "outrageous conduct." But the Court failed to recognise that violations of the Certificate of Incorporation are independently actionable as breach of contract, separate from any tort-based fiduciary duty claims.

Article VIII, Section 1 states: "Share buybacks must not harm the corporation's ability to meet its financial obligations." This is a mandatory contractual prohibition in the Certificate of Incorporation under Section 8(7)(b)(ii). Depleting 97.4% of cash reserves (Fact 10) objectively violated this provision.

Article VIII, Section 2 requires: "Class A share buybacks that...exceed 20% of outstanding Class A shares must be approved by 75% of Class A voting rights." Executing a 28.59% buyback without this approval (Facts 17, 18, 31) violated this mandatory contractual requirement in the Certificate of Incorporation.

Article VIII, Section 3 mandates: "The corporation must disclose the terms, purpose, and financial impact of any share buyback program to shareholders and regulatory bodies." Making no disclosure (Facts 24, 36, 41) violated this mandatory contractual obligation in the Certificate of Incorporation.

Article VIII, Section 4 prohibits: "The corporation shall not repurchase shares if doing so would...disproportionately benefit specific shareholders or insiders." Executing transactions that exclusively benefited Pepecuu (Fact 33) violated this contractual prohibition in the Certificate of Incorporation.

These are contractual obligations in the Certificate of Incorporation using mandatory language: "must," "must not," "shall not" (See [2025] SCR 18, Opening I, [2024] SCR 11). Under Section 7 of the Contracts Act, "A breach of contract occurs when a party fails to fulfil its contractual obligations." Pepecuu, acting as the Corporation's agent, breached the contractual obligations set forth in the Certificate of Incorporation.

5. Breach of the Implied Covenant of Good Faith and Fair Dealing​

Section 12 of the Contracts Act provides:

12 - Duty of Good Faith and Fair Dealing.
(1) Parties to a contract shall perform their respective duties and exercise their rights under the contract in good faith and in a manner that is fair and just.
(2) There exists an implied covenant of good faith and fair dealing in every contract covered by this Act, whether or not expressly stated. This covenant shall be read into contracts to ensure that the parties act with honesty, integrity, and fairness in all aspects of their contractual relationship.

The Federal Court found Pepecuu engaged in "self-dealing" and "failure to disclose" in violation of the Certificate of Incorporation. This conduct - using the CEO position to extract $1,080,000 for personal benefit while concealing the transactions from shareholders - is the antithesis of "good faith," "honesty, integrity, and fairness."

Even if the Court believed the business judgment rule applied to fiduciary duty claims (which it does not in cases of self-dealing), nothing in the business judgment rule excuses breach of the implied covenant of good faith and fair dealing in a contract. The Court's complete failure to address this independent claim is reversible error.

​

4. The Court May Have Applied the Wrong Version of the Legal Entity Act​

The Complaint cited Section 8(10) of the LEA "as it was at the time" the violations occurred. The Court's verdict links to the current version of the Legal Entity Act, as seen below:

The breach of the bylaws in and of themselves is not a statutory violation, as bylaws are not required to be followed as defined in the Legal Entity Act.

If the Court applied the amended version rather than the version in effect at the time of the violations, this constitutes error. The law in effect when the conduct occurs governs liability.

​

5. The 28.59% Class A Buyback Was Ultra Vires and Void Ab Initio​

Beyond the breach of contract, breach of fiduciary duty, and misapplication of business judgment, there exists a more fundamental defect: the 28.59% Class A buyback exceeded the Corporation's legal authority to act.

Article VIII, Section 2 requires that Class A buybacks exceeding 20% "must be approved by 75% of Class A voting rights." This limitation on corporate power is embedded in the Certificate of Incorporation. Without that approval, the Corporation had no authority to execute the transaction, regardless of whether it was a "good deal" or "sound business judgment."

The LEA confirms that directors possess only the powers granted by the formation instrument. Section 4(1) states that legal entities "shall possess and may exercise all the powers and privileges granted by this Act or by any other law or by its formation instrument." Section 8(7)(b)(ii) explicitly authorises the Certificate of Incorporation to contain provisions "limiting and regulating the powers of the Corporation, the directors, the third parties, and the stockholders." Article VIII, Section 2 does precisely that - it limits the power to execute large Class A buybacks to situations where shareholder approval exists. Pepecuu executed the buyback without that approval. She acted beyond her authority. The transaction was ultra vires.

Section 8(14)(a) addresses this exact scenario: when a director binds the Corporation while "without power to sign," the "director or officer may be sued civilly for the damages." The Court cannot shield an unauthorised transaction with the business judgment rule. That rule protects discretionary decisions within lawful authority - it does not validate acts that exceed the authority conferred by the Certificate of Incorporation.

When the governing document says "must be approved," and no approval exists, there is no discretion to protect. There is only an unauthorised expenditure of $940,000 for which Pepecuu is personally liable under Section 8(14)(a). This is the simplest ground for reversal. She lacked authority; she spent the money anyway, and compensatory damages must follow.

​

III. RELIEF REQUESTED​

Appellant respectfully requests that this Court:

1. Reverse the Federal Court's denial of Compensatory Damages;
2. Award $1,080,000 in Compensatory Damages under Part III, Section 2 of the Redmont Civil Code Act or the Legal Damages Act as it then applied;
3. Alternatively, declare the 12 January 2026 transaction ultra vires and void ab initio, requiring return of the $940,000 spent on that unauthorised transaction;
4. Increase the Punitive Damages award to the full $500,000 requested;
5. Increase the Legal Fees to the full 30% requested; and
6. Grant such other and further relief as the Court deems just and proper.

Motion

IN THE SUPREME COURT OF THE COMMONWEALTH OF REDMONT
MOTION FOR EMERGENCY INJUNCTION

Your Honour,
Appellant respectfully requests that this Court issue an emergency injunction to immediately freeze all assets and property of Pepecuu pending resolution of this appeal.

Pepecuu improperly extracted $1,080,000 from the Corporation's treasury through unauthorised self-dealing transactions - conduct the Federal Court acknowledged as "outrageous" and "self-dealing." These funds represent all of the Corporation's cash reserves substantially at the time.

Critically, Pepecuu has a proven record of dissipating assets during litigation. The Federal Court found that Pepecuu violated an Emergency Injunction by transferring/relocating funds. The Court held Pepecuu in contempt and ordered her to "retrieve the relocated funds and return them to her personal balance."

The Federal Court further noted: "there has been nothing from the DHS or the defendant's legal counsel showing any effort by the defendant to retrieve such funds as this court has ordered." Pepecuu was charged with 53 counts of contempt for her continued violation of the Federal Court's Emergency Injunction.

This is proven conduct. Pepecuu has demonstrated her willingness to violate court orders and dissipate assets during litigation. With this appeal pending and $1,080,000 at stake, there is substantial and demonstrated risk that Pepecuu will AGAIN, transfer, hide, or dissipate assets to render herself judgment-proof and deprive the Corporation of recovery.

Pepecuu requests that this Court:

1. Freeze all of Pepecuu's current assets, including:
   1. All real estate plots owned by Pepecuu;
   2. All money held by Pepecuu, including in-game balance, business balances, bank account balances at any financial institution, and any cash held anywhere in Redmont;
   3. All items and blocks held in Pepecuu's inventory, EnderChest, supporter chests, and any containers owned by Pepecuu anywhere in Redmont; and
   4. Any other assets, property, or securities owned or controlled by Pepecuu.
2. Order the reversal of any and all transactions, transfers, sales, or dispositions of assets made by Pepecuu between the date of the Federal Court verdict and the date of this Court's ruling on this Motion, to restore those assets to Pepecuu's possession for purposes of the asset freeze; and
3. Order DOC/DHS to investigate and report all asset transfers made by Pepecuu during this period to identify any attempts at dissipation.

This freeze is necessary to preserve the status quo, prevent further violations of court orders, and ensure that assets remain available to satisfy any judgment entered in this matter. Pepecuu's proven willingness to violate an Emergency Injunction during the Federal Court proceedings demonstrates that no lesser measure will suffice.

 

[Smallfries]

The second [2026] has been removed in line with same-year formatting.

 

[Smallfries]

Re-renamed after a 2-0 Supreme Court vote. Case name as it appears is final and is the standard naming schemes for all appeals going forward. All appeals this year will be similarly renamed.