Accountable Health Solutions, LLC v. Wellness Corporate Solutions, LLC
This text of 333 F. Supp. 3d 1133 (Accountable Health Solutions, LLC v. Wellness Corporate Solutions, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
[A]ll oral, written, electronic[,] or documentary information disclosed prior to or after execution of this Agreement, either furnished or made available (a) by [Accountable Health] or its Agents ... to [Wellness]; or (b) by [Wellness] or its Agents to [Accountable Health], in connection with the [business opportunity presented by the MSA], including, but not limited to, marketing philosophy, techniques, and objectives; advertising and promotional copy; competitive advantages and disadvantages; financial results; technological developments; loan evaluation programs; customer lists; account information, profiles, demographics and Non-Public Personal Information ...; credit scoring criteria, formulas and programs; research and development efforts;
*1142any investor, financial, commercial, technical or scientific information ... and any and all other business information....
Id. ¶ 2. And last , both the MSA and NDA provide that Delaware law governs all disputes involving these contracts. MSA ¶ 13; NSA ¶ 11.
In May 2015, plaintiff Hooper Holmes, Inc.-a New York corporation with its principal place of business in Kansas-bought Accountable Health and it became a wholly owned subsidiary. Hooper Holmes already competing in the biometric screening business, was looking to expand into the wellness coaching market. Even though it already was providing on-site screenings, Hooper Holmes agreed to continue honoring the MSA and use Wellness as an on-site screener. The MSA thus became binding on it and Accountable Health-the plaintiffs here.
Before turning to the events that led the parties' dispute to their current disagreements, the court pauses to explain the naming convention used by the rest of this Order. Parties on both sides of the caption have asserted claims against the other, so simply calling the parties "plaintiffs" and "defendant" isn't always helpful. So, the court has decided to refer to the parties by their short form names-plaintiff Hooper Holmes, Inc. is simply "Hooper Holmes" and defendant Wellness Corporate Solutions is simply "Wellness." Because Accountable Health is a wholly owned subsidiary of Hooper Holmes, the court typically does not distinguish between Hooper Holmes and Accountable Health unless, in a particular context, that distinction matters to the analysis.
Payment Issues
In May 2015, when Hooper Holmes bought Accountable Health, Accountable Health had accumulated an $8,000 debt to Wellness. By July 2015, that debt had ballooned to more than $600,000-and $300,000 of that balance was overdue by July 31, 2015. Hooper Holmes's debt increased so dramatically in such a short period because most of the screenings services occurred in the spring and summer months. At the same time, Hooper Holmes was waiting for its clients to pay it for the screenings and so, they lacked the cash to pay Wellness as promised.
On July 31, 2015, Wellness emailed Hooper Holmes about the debt and Hooper Holmes offered to pay $64,000. Wellness accepted this partial payment but also demanded full payment of the entire outstanding debt. Hooper Holmes acknowledged Wellness's request and replied that its CFO was aware of the issue and looking for solutions. In September-after hearing nothing from Hooper Holmes since August-Wellness asked again for full payment. Hooper Holmes repeatedly promised that full payment would come but, when prompted by Wellness, merely offered partial payments. In mid-October, with Hooper Holmes's debt amounting to some $575,000-$114,000 of which was overdue-Wellness's CEO Fiona Gathright personally emailed Arielle Band about the unpaid debt. Ms. Band was one of Hooper Holmes's Vice Presidents. Ms. Band responded that Steven Balthazor-Hooper Holmes's new CFO-would respond shortly to Wellness's inquiry and present a plan to pay the outstanding debt.
But after a few more weeks of silence, on October 31, 2015, Wellness's CFO, Jeffrey Taylor, directly contacted Mr. Balthazor about the outstanding debt. The next day, Mr. Balthazor responded with a plan to pay down the full debt. Mr. Balthazor offered to pay $10,000 each week until Hooper Holmes's cash flow had improved. Once that improvement occurred, Hooper Holmes would increase its weekly payments to pay the remainder of the debt as quickly as possible. Mr. Taylor acknowledged *1143Mr. Balthazor's proposal but he explicitly invoked Wellness's contractual right to recover interest on all overdue amounts.1 Later, Mr. Balthazor offered to make a $50,000 good faith payment. Hooper Holmes never made that payment, however. On November 15, 2015, Hooper Holmes began paying $10,000 each week and in February 2016, Hooper Holmes increased its weekly payments to $20,000.
While Wellness was trying to persuade Hooper Holmes to pay its outstanding bills, it continued sending invoices to Hooper Holmes for its services, including screenings and PCP forms. It appears that some employees who had missed Wellness's health screenings mistakenly sent the PCP forms to Wellness instead of sending them to Hooper Holmes. Ms. Gathright testified that Wellness debated whether to forward the forms because Wellness was unsure: (1) whether the MSA was still binding; and (2) whether the MSA-assuming it was still binding-required Wellness to forward the PCP forms. Trial Tr. 181:14-21. Ultimately, Wellness elected to send the forms to Hooper Holmes and bill it $7.50 for each one-the price set by the MSA for this service.
On June 6, 2016, Hooper Holmes made a $20,000 payment to Wellness. It was Hooper Holmes's last payment. But Wellness continued billing Hooper Holmes for PCP forms that employees of Hooper Holmes's clients sent through September 6, 2016. Hooper Holmes's unpaid balance topped out at $235,167.63 on September 6, 2016.2 At trial, Wellness produced an aging summary of the remaining outstanding balance. Def.'s Ex. 411. The outstanding bills and the interest accrued on them are described in detail in Appendix A.
On June 9, 2016-three days after Hooper Holmes sent its final $20,000 payment-Hooper Holmes informed Wellness that it would make no more payments against its outstanding debt. It explained that Hooper Holmes had made this decision because it recently had learned that one of its long-time customers, Building Materials Corporation of America, doing business as GAF ("GAF"), had decided not to renew its contract and, instead, begin contracting directly with Wellness for GAF's wellness services.
GAF
GAF is one of the largest roofing material producers in the country. It was also one of Hooper Holmes's largest clients. In 2012, GAF signed a two-year contract with Principal Wellness-one of Hooper Holmes's predecessors-to provide wellness services. This contract provided that it would renew automatically each year after the initial two-year term ended. The contract included wellness coaching, on-site biometric screenings, and an online portal where GAF employees could track their health status. At first, Principal Wellness performed the screenings. After Accountable Health bought Principal Wellness *1144in 2014, Wellness performed GAF's screenings under the MSA. It did so in 2014 and 2015. To prepare for these screenings, Hooper Holmes provided Wellness with a company overview of GAF. See Pls.' Ex. 42.
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[A]ll oral, written, electronic[,] or documentary information disclosed prior to or after execution of this Agreement, either furnished or made available (a) by [Accountable Health] or its Agents ... to [Wellness]; or (b) by [Wellness] or its Agents to [Accountable Health], in connection with the [business opportunity presented by the MSA], including, but not limited to, marketing philosophy, techniques, and objectives; advertising and promotional copy; competitive advantages and disadvantages; financial results; technological developments; loan evaluation programs; customer lists; account information, profiles, demographics and Non-Public Personal Information ...; credit scoring criteria, formulas and programs; research and development efforts;
*1142any investor, financial, commercial, technical or scientific information ... and any and all other business information....
Id. ¶ 2. And last , both the MSA and NDA provide that Delaware law governs all disputes involving these contracts. MSA ¶ 13; NSA ¶ 11.
In May 2015, plaintiff Hooper Holmes, Inc.-a New York corporation with its principal place of business in Kansas-bought Accountable Health and it became a wholly owned subsidiary. Hooper Holmes already competing in the biometric screening business, was looking to expand into the wellness coaching market. Even though it already was providing on-site screenings, Hooper Holmes agreed to continue honoring the MSA and use Wellness as an on-site screener. The MSA thus became binding on it and Accountable Health-the plaintiffs here.
Before turning to the events that led the parties' dispute to their current disagreements, the court pauses to explain the naming convention used by the rest of this Order. Parties on both sides of the caption have asserted claims against the other, so simply calling the parties "plaintiffs" and "defendant" isn't always helpful. So, the court has decided to refer to the parties by their short form names-plaintiff Hooper Holmes, Inc. is simply "Hooper Holmes" and defendant Wellness Corporate Solutions is simply "Wellness." Because Accountable Health is a wholly owned subsidiary of Hooper Holmes, the court typically does not distinguish between Hooper Holmes and Accountable Health unless, in a particular context, that distinction matters to the analysis.
Payment Issues
In May 2015, when Hooper Holmes bought Accountable Health, Accountable Health had accumulated an $8,000 debt to Wellness. By July 2015, that debt had ballooned to more than $600,000-and $300,000 of that balance was overdue by July 31, 2015. Hooper Holmes's debt increased so dramatically in such a short period because most of the screenings services occurred in the spring and summer months. At the same time, Hooper Holmes was waiting for its clients to pay it for the screenings and so, they lacked the cash to pay Wellness as promised.
On July 31, 2015, Wellness emailed Hooper Holmes about the debt and Hooper Holmes offered to pay $64,000. Wellness accepted this partial payment but also demanded full payment of the entire outstanding debt. Hooper Holmes acknowledged Wellness's request and replied that its CFO was aware of the issue and looking for solutions. In September-after hearing nothing from Hooper Holmes since August-Wellness asked again for full payment. Hooper Holmes repeatedly promised that full payment would come but, when prompted by Wellness, merely offered partial payments. In mid-October, with Hooper Holmes's debt amounting to some $575,000-$114,000 of which was overdue-Wellness's CEO Fiona Gathright personally emailed Arielle Band about the unpaid debt. Ms. Band was one of Hooper Holmes's Vice Presidents. Ms. Band responded that Steven Balthazor-Hooper Holmes's new CFO-would respond shortly to Wellness's inquiry and present a plan to pay the outstanding debt.
But after a few more weeks of silence, on October 31, 2015, Wellness's CFO, Jeffrey Taylor, directly contacted Mr. Balthazor about the outstanding debt. The next day, Mr. Balthazor responded with a plan to pay down the full debt. Mr. Balthazor offered to pay $10,000 each week until Hooper Holmes's cash flow had improved. Once that improvement occurred, Hooper Holmes would increase its weekly payments to pay the remainder of the debt as quickly as possible. Mr. Taylor acknowledged *1143Mr. Balthazor's proposal but he explicitly invoked Wellness's contractual right to recover interest on all overdue amounts.1 Later, Mr. Balthazor offered to make a $50,000 good faith payment. Hooper Holmes never made that payment, however. On November 15, 2015, Hooper Holmes began paying $10,000 each week and in February 2016, Hooper Holmes increased its weekly payments to $20,000.
While Wellness was trying to persuade Hooper Holmes to pay its outstanding bills, it continued sending invoices to Hooper Holmes for its services, including screenings and PCP forms. It appears that some employees who had missed Wellness's health screenings mistakenly sent the PCP forms to Wellness instead of sending them to Hooper Holmes. Ms. Gathright testified that Wellness debated whether to forward the forms because Wellness was unsure: (1) whether the MSA was still binding; and (2) whether the MSA-assuming it was still binding-required Wellness to forward the PCP forms. Trial Tr. 181:14-21. Ultimately, Wellness elected to send the forms to Hooper Holmes and bill it $7.50 for each one-the price set by the MSA for this service.
On June 6, 2016, Hooper Holmes made a $20,000 payment to Wellness. It was Hooper Holmes's last payment. But Wellness continued billing Hooper Holmes for PCP forms that employees of Hooper Holmes's clients sent through September 6, 2016. Hooper Holmes's unpaid balance topped out at $235,167.63 on September 6, 2016.2 At trial, Wellness produced an aging summary of the remaining outstanding balance. Def.'s Ex. 411. The outstanding bills and the interest accrued on them are described in detail in Appendix A.
On June 9, 2016-three days after Hooper Holmes sent its final $20,000 payment-Hooper Holmes informed Wellness that it would make no more payments against its outstanding debt. It explained that Hooper Holmes had made this decision because it recently had learned that one of its long-time customers, Building Materials Corporation of America, doing business as GAF ("GAF"), had decided not to renew its contract and, instead, begin contracting directly with Wellness for GAF's wellness services.
GAF
GAF is one of the largest roofing material producers in the country. It was also one of Hooper Holmes's largest clients. In 2012, GAF signed a two-year contract with Principal Wellness-one of Hooper Holmes's predecessors-to provide wellness services. This contract provided that it would renew automatically each year after the initial two-year term ended. The contract included wellness coaching, on-site biometric screenings, and an online portal where GAF employees could track their health status. At first, Principal Wellness performed the screenings. After Accountable Health bought Principal Wellness *1144in 2014, Wellness performed GAF's screenings under the MSA. It did so in 2014 and 2015. To prepare for these screenings, Hooper Holmes provided Wellness with a company overview of GAF. See Pls.' Ex. 42. This overview included information about GAF's business, where its offices were located, and the date range when GAF's screenings would take place. As the screenings approached, Wellness created a checklist of tasks that it needed to complete to perform the screenings. During the screenings, Wellness collected data about where it performed GAF's screenings, how many GAF employees had participated at each screening site, when Wellness had performed each screening, and the number of screeners that Wellness had dispatched to GAF's various offices. See Pls.' Ex. 41.
In February 2015, GAF hired Jeanine Love as its Senior Benefits Manager. In that role, Ms. Love led a team of people who managed GAF's wellness program. In summer 2015, Ms. Love and her team started evaluating GAF's wellness program. Specifically, they wanted to cut costs. By this time, the original contract between Hooper Holmes and GAF already had renewed under the automatic renewal provision, but Hooper Holmes aspired to form a new contract with GAF before its employees received their 2015 biometric screenings. In short, Hooper Holmes hoped to lock GAF into a new three-year contract that charged higher prices. GAF, on the other hand, wanted to maintain the same prices and sign a one-year contract. In the summer of 2015, the parties came to an agreement whereby Hooper Holmes agreed to maintain existing prices and GAF agreed to a two-year contract. The effective date of the contract was retroactive to August 1, 2014. This contract also contained a provision that automatically extended the contract for a one-year period after the initial term expired unless one of the parties gave 60 days' notice that it would not renew.
After the 2015 screenings were completed, GAF continued debating-internally-whether it should retain Hooper Holmes to administer its wellness program. By February 2016, Ms. Love and her team had decided that GAF was not receiving good value from Hooper Holmes's wellness program. Love Dep. 27:18-21. Ms. Love particularly disliked the online portal because very few GAF employees used it. Id. at 13:12-20. But still, Ms. Love testified, the screenings benefited the company. Id. at 13:4-6. So, GAF reached out to Aon Hewitt-a wellness broker3 -and commanded Aon to look for a suitable replacement provider of wellness services. Aon first contacted a company called Catapult, but Catapult failed to impress GAF because Catapult's screening service provided employees, in effect, with an annual physical. GAF believed that Catapult's model provided more services than it desired to buy.
GAF then turned its attention to Wellness. Ms. Love testified that she and her team believed Wellness would fit well with GAF's goals because Wellness already had performed screenings for GAF and the two had developed a good working relationship. Id. at 15:1-3. So, Ms. Love asked Aon to reach out to Wellness. At no point during this process did GAF consider renewing its contract with Hooper Holmes. Id. at 19:20-20:3. While Ms. Love knew that Hooper Holmes had returned to the screening business when it acquired Accountable Health, she distrusted Hooper Holmes because it was too new to the screening enterprise. Id. at 18:1-15.
*1145On March 7, 2016, Aon contacted Wellness about GAF's wellness work. Kelly Geppi-Wellness's sole salesperson at the time-took charge of formulating a sales pitch to GAF and she set up a meeting with Aon. To prepare for its sales pitch with GAF, Ms. Geppi asked Emily Kolakowski-Wellness's chief operations officer-what Hooper Holmes had charged GAF for the screening services that Wellness performed under the MSA. Pls.' Ex. 37 at 6; Trial Tr. 428:11-21. Ms. Kolakowski replied that she believed Hooper Holmes charged 20% more than Wellness's pricing for the biometric screenings. Ex. 37 at 5. Ms. Geppi testified that 20% is the standard mark-up in the wellness industry. Trial Tr. 428:14-21.
At the sales meeting, Wellness presented a slide show it had prepared for GAF. It showcased Wellness's capabilities and included information about an online health tracking portal licensed through a company called Cerner. Ms. Love quickly informed Wellness that GAF was not considering online portal services. After the meeting, Ms. Geppi used a workbook of information that it had collected while screening GAF employees under the MSA to advise the broker how much GAF likely would spend on screenings. Ari Klenicki-Wellness's Director of Screening Services-also used a workbook Wellness had created in 2015. This workbook described GAF generally, how many employee locations had participated in screenings, the date ranges the screening events took place, and a timeline when Wellness had completed the tasks necessary to conduct the screenings. Pls.' Ex. 42.
Though Ms. Geppi was Wellness's only salesperson at the time, she did not attend the April 27 sales meeting because she was far along in her pregnancy and could not make the airplane trip to GAF's headquarters. Wellness sent two other employees in her place. One was Ms. Torroella and the other was Jennifer Silverman-Wellness's Senior Program Manager. As Senior Program Manager, Ms. Silverman worked with Wellness's clients who used its online wellness portal. She was not in sales. But she had become involved with Wellness's sales pitch to GAF through a chance encounter at a birthday party a few months earlier.
In late February 2016, Ms. Silverman attended a birthday party for her sister-in-law. At that party, she struck up a conversation with Jennifer Millstone. Ms. Millstone asked Ms. Silverman what she did for a living and she explained that she worked for Wellness. She also described what Wellness did in the wellness marketplace. Ms. Millstone then informed Ms. Silverman that her husband's company-GAF-was looking for a new wellness provider and asked if she could connect Ms. Silverman with someone at GAF. Before Ms. Silverman accepted Ms. Millstone's offer, she emailed Ms. Gathright on March 3, 2016. Ms. Silverman's email asked if anything in the MSA precluded Ms. Silverman from speaking with GAF about Wellness's services. Ms. Gathright replied that she saw no problem. Ms. Millstone then put Ms. Silverman in touch with Scott Carroll-Ms. Love's boss. Mr. Carroll, in turn, directed Ms. Silverman to Ms. Love. On March 31, 2016, Ms. Silverman sent Ms. Love an email asking if they could discuss a potential contract.
Sometime before March 31, 2016, Ms. Geppi discovered that Ms. Silverman was speaking with GAF. On March 21, 2016, she emailed Carisa Herweck-the person at Aon who was working with GAF-to inform her about Ms. Silverman's involvement. Ms. Geppi testified that she did so because she wanted to maintain a strong relationship with Aon and didn't want Aon to think that Wellness had tried to circumvent Aon. Doing so, Ms. Geppi testified, *1146would violate industry norms. Trial Tr. 426:18-427:8. Even though Ms. Silverman had entered the situation in an unusual fashion, Wellness decided to let her continue working with GAF because Ms. Geppi was nearing her delivery date and thus couldn't travel to the April 27 sales meeting at GAF. But despite Ms. Silverman's personal connection to GAF and her direct contact with GAF, Ms. Love testified that Ms. Silverman's involvement did not affect GAF's decision to select Wellness for its new wellness contract. Love Dep. 25:7-13.
On May 6, 2016, GAF awarded Wellness the contract for its wellness screening services. When Ms. Kolakowski emailed Ms. Gathright to inform her about this selection, Ms. Gathright replied, "[Hooper Holmes] going down." Pls.' Ex. 20 at 1.
Shortly afterward, Hooper Holmes learned about GAF's decision and it tried to woo GAF back. On June 9, 2016-nine days after the contract between GAF and Hooper Holmes required GAF to provide notice that it did not intend to renew-GAF gave Hooper Holmes official notice that it did not intend to renew the contract. Hooper Holmes, as noted above, then informed Wellness that it would not pay any more of its outstanding balance. This lawsuit followed.
Analysis and Conclusions of Law
As noted above, the parties presented breach of contract claims at trial. The court structures its analysis of these claims and other issues raised during the trial by, first, discussing which state's law governs these disputes. The court then decides whether Wellness is liable for breaching the MSA because of its contract with GAF. Then the court turns to the claim that Wellness materially breached the NDA. Fourth, the court addresses Hooper Holmes's oral motion for reconsideration. Next, the court discusses whether Hooper Holmes is liable for breach of contract because it failed to pay Wellness's invoices sent under the MSA. And last, the court addresses whether Wellness is entitled to recover its attorneys' fees. The court discusses each issue, in turn, below.
I. Delaware law governs these breach of contract claims.
In a diversity jurisdiction case like this one, federal courts apply the choice of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co. ,
II. Wellness breached the MSA but the court only awards Hooper Holmes $1.00 in nominal damages.
Hooper Holmes claims that Wellness is liable for breach of contract because it contracted with GAF-Hooper Holmes's former client-in violation of the MSA's non-compete provisions. Hooper Holmes claims that Wellness's breach cost it to lose $710,436 in profits it would have earned but for Wellness's breach. To prove a breach of contract claim, under Delaware law, the claiming party must show that (1) a contract existed, (2) a party materially breached an obligation imposed by that contract, and (3) the breach damaged the other party. VLIW Tech., LLC v. Hewlett-Packard Co. ,
Wellness argues that Hooper Holmes cannot prevail on this breach of contract claim for four reasons. First, Wellness argues that Hooper Holmes's earlier material breach discharged any duty Wellness otherwise would have owed under the MSA. Second, Wellness contends that it never breached the MSA-materially or otherwise. Third, Wellness argues that Hooper Holmes failed to prove that Wellness's breach caused Hooper Holmes to lose any lost profits. And last, the MSA's limitation of liability clause, Wellness argues, bars Hooper Holmes from recovering anything. The court discusses these arguments in the following four subsections.
A. Though Hooper Holmes materially breached the MSA by failing to pay its bills on time, Wellness continued to accept the benefits of the MSA. Wellness thus cannot claim that it was no longer bound by the MSA.
Wellness argues that Hooper Holmes's prior material breach of the MSA relieves it from any liability for contracting with GAF. Under Delaware law, a party who materially breaches a contract first cannot recover for the other party's later breach. Hudson v. D & V Mason Contractors, Inc. ,
1. Hooper Holmes materially breached the MSA when it did not pay its bills on time.
To determine if a breach is material, Delaware courts follow the Restatement (Second) of Contracts.
The first factor heavily favors a finding that Hooper Holmes's breach was material. "[A]n important circumstance in determining whether a failure is material is the extent to which the injured party will be deprived of the benefit which he reasonably expected from the exchange." Restatement (Second) of Contracts § 241 cmt. b. This test requires the court to consider how much of the contract's benefit the injured party-here, Wellness-lost by virtue of the breach. Also, the court must consider whether that benefit is one that the aggrieved party reasonably expected to secure from the contract's performance. Norfolk S. Ry. Co. v. Basell USA Inc. ,
Here, Hooper Holmes unmistakably deprived Wellness of an important contractual benefit: the money that Hooper Holmes had promised to pay Wellness for its services under the MSA. In July 2015, over $300,000 of Hooper Holmes's $600,000 debt was overdue. While Hooper Holmes made efforts to reduce the overdue payments-lowering it to just $114,000 by mid-October 2015-it never fully eliminated that debt. Indeed, shortly after mid-October, several more bills became past-due, pushing Hooper Holmes's overdue debt to over $200,000. These amounts-particularly given how long Hooper Holmes has owed the debt-represents a substantial benefit. See Commonwealth Const. Co. v. Cornerstone Fellowship Baptist Church, Inc. , No. 04L-10-101 RRC,
Undeterred, Hooper Holmes argues that Wellness did not have a reasonable expectation that Hooper Holmes would pay its bill on a timely basis. Indeed, on the summary judgment facts, the court held that a reasonable factfinder could conclude as much. Doc. 140 at 12. But after hearing and weighing all the evidence, the court is not persuaded by Hooper Holmes's position.
The parties specifically negotiated for and explicitly agreed to a 45-day pay schedule. They also agreed that Hooper Holmes must pay Wellness even if Hooper Holmes's customers failed to pay it. MSA ¶ 7. And if Hooper Holmes failed to pay its debt on time, Wellness could charge 1.5% interest per month on any overdue amount.
The second factor-the extent to which Hooper Holmes can compensate Wellness adequately for the overdue debt-favors a finding that the breach was not material. When a court cannot calculate damages resulting from the breach with ease and certainty, this factor favors *1149a finding that the breach is a material one. See Norfolk ,
The third factor favors a materiality finding. This factor considers the hardship that the breaching party-for purposes of this section, Hooper Holmes-will sustain if the court concludes that Hooper Holmes's breach discharged the parties from their obligations under the MSA. Norfolk ,
To be sure, discharging Wellness from the MSA's obligations allows Wellness to compete against Hooper Holmes. And that competition constitutes a hardship. But Hooper Holmes's own conduct freed Wellness to impose this hardship because Hooper Holmes failed to pay its bills. See
The fourth factor-likelihood that Hooper Holmes would cure its failure-favors a materiality finding. At first glance, this factor would seem to favor finding that no material breach occurred. After all, Hooper Holmes gave Wellness many assurances that it would fulfill its obligation to pay. But these assurances proved hollow. Hooper Holmes never paid Wellness what it fully owed. While Hooper Holmes proposed a payment plan in November 2015, this payment plan called for weekly payments of $10,000 on a nearly $600,000 debt. Such a small installment can hardly be considered a proper assurance. The court concludes that this fourth factor favors a materiality finding
Last, the fifth factor-whether Hooper Holmes acted in good faith-favors a non-materiality finding. One sign that a party has acted in good faith is conduct displaying that the breaching party was willing to work with its contract partner to satisfy its obligations. Carey v. Estate of Myers , C.A. No. S11C-10-029 MJB,
Summarizing the § 241 analysis, the factors are mixed. The first (the extent to which Hooper Holmes deprived Wellness of a reasonably expected benefit), third (the hardship to Hooper Holmes if its breach is deemed a material one), and fourth (the likelihood that Hooper Holmes would cure its breach) factors favor a materiality finding. But the second (the extent to which Hooper Holmes can compensate Wellness adequately for its breach) and the fifth factors (the extent to which Hooper Holmes acted in good faith) favor a non-materiality finding. In sum, three of them favor a materiality conclusion and two do not.
But the court's conclusion does not rely merely on a majority of factors. Instead, the court's conclusion considers the guiding principle of the materiality analysis: " 'the consequences in the light of the actual custom of [people] in the performance of contracts similar to the one that is involved in the specific case.' " BioLife Sols., Inc. ,
2. Wellness waived its right to claim that Hooper Holmes materially breached the MSA.
Ordinarily, finding that Hooper Holmes materially breached the MSA before Wellness breached would end the analysis. But Hooper Holmes argues that the analysis must continue because Wellness waived its right to claim that Hooper Holmes's actions discharged Wellness from the MSA. The court agrees.
Under Delaware law, " 'the nonbreaching party may not, on the one hand, preserve or accept the benefits of a contract, while on the other hand, assert that the contract is void and unenforceable.' " In re Mobilactive Media, LLC , C.A. No. 5725-VCP,
Plaintiff sued, arguing that defendant had breached the joint venture agreement by competing with the joint venture. Id. In response, defendant argued that plaintiff had breached the contract first by failing to contribute the full $75,000 the joint venture agreement required him to invest. Id. The case proceeded to trial and the court found that, even if plaintiff had breached the contract materially, defendant could not claim that the contract was unenforceable because defendant accepted the benefits of the contract after it knew plaintiff had failed to contribute the $75,000, i.e. , using plaintiff's connections to executives who could jumpstart the joint venture. Id. at *14. The court explained that when an aggrieved party knows about the other party's breach but still acts as if the contract is valid, the aggrieved party later cannot claim that the breach discharges it from the contract's obligations. Id. Because defendant continued working with plaintiff and continued accepting plaintiff's invitations to meet with key executives in the interactive video industry, it could not claim that plaintiff's breach-which it knew about-voided defendant's contractual duties. Id.
An analogous situation presents itself here. Wellness knew that Hooper Holmes was well behind on its payments. It sent Hooper Holmes multiple emails in 2015 about its debt under the MSA. Nevertheless, Wellness continued supplying PCP forms to Hooper Holmes and billing it for them at the contract rate. By forwarding the PCP forms to Hooper Holmes, Wellness acted as if the MSA was a binding contract that permitted Wellness to bill Hooper Holmes. Wellness thus cannot " 'on the one hand, ... accept the benefits of a contract, while on the other hand, assert that contract is void and unenforceable.' " Id. (quoting DeMarie ,
Thus, while Hooper Holmes materially breached the MSA first, Wellness cannot assert that Hooper Holmes's prior material breach frees it from the MSA's obligations because Wellness continued to accept the benefits of the MSA. The court rejects Wellness's first argument that Hooper Holmes cannot recover a breach of the MSA because Hooper Holmes materially breached the MSA first.
B. Wellness materially breached the MSA by giving a sales presentation to GAF and using information it gathered about GAF while working for Hooper Holmes.
The court now turns to Wellness's second defense to Hooper Holmes's contract claim. Wellness argues that it never committed a breach. Wellness argues that it never breached the MSA's non-compete provisions because Aon-GAF's wellness broker-reached out to it and so, according to Wellness, it never competed with Hooper Holmes. Wellness also contends that even if it breached the MSA, the breach was not material because it only took one customer from Hooper Holmes's larger stable of clients.
Starting with Wellness's first argument, the court concludes that Wellness breached the MSA's non-compete clause. First, Wellness breached the non-compete clause when Ms. Silverman contacted GAF about Wellness's services in March 2016 and then, the next month, made a sales pitch to GAF. The MSA prohibited Wellness from (i) "encourage[ing] any [client of Hooper Holmes], either directly or indirectly, to terminate its relationship with [Hooper Holmes]" and (ii) "directly solicit[ing] or market[ing] [Wellness's] Services to a[ ] [client of Hooper Holmes] in any way to compete with [Hooper Holmes]." MSA
*1152¶ 23(i)(i), (i)(ii). When it made the sales pitch to GAF, Wellness indirectly encouraged GAF to terminate its relationship with Hooper Holmes. This action violated ¶ 23(i)(i) of the MSA. Wellness's participation in this sales meeting also amounted to a direct solicitation of Hooper Holmes's customer because Wellness's goal for the meeting was to advertise its capabilities to GAF in a way that competes with Hooper Holmes. This conduct violated ¶ 23(i)(ii). Similarly, Ms. Silverman's contact with GAF also constitutes solicitation because Ms. Silverman contacted GAF to advertise Wellness's services to GAF.
Wellness also breached the part of the MSA's non-compete clause prohibiting Wellness from "us[ing] any confidential information, intellectual property, or any other data or information provided by [Hooper Holmes], or gained pursuant to this Agreement , to compete ... with [Hooper Holmes]...." Id. ¶ 23(ii) (emphasis added). The workbooks Wellness used before and after the sales meeting contained employee information about GAF's employees and qualified as "information ... gained pursuant to this Agreement," MSA ¶ 23(ii), because Wellness gained access to it while screening GAF's employees for Hooper Holmes under the MSA. Wellness's use of this information violated ¶ 23(ii) because Wellness used this information to land a contract with GAF. These acts are garden variety forms of competition.
Wellness argues that even if it breached the MSA, the breach was not material. As noted above, Delaware uses the factors listed in the Restatement (Second) of Contracts to evaluate if a breach is material. BioLife ,
The first factor favors finding that the breach was material. Here, Hooper Holmes bargained for-and procured-language in the MSA that prevented Wellness from competing with it. The value of this non-competition agreement to Hooper Holmes was a reasonably expected benefit of the contract. See Norfolk ,
The second factor also favors finding that Wellness's breach was material. When a court cannot calculate the damages caused by a breach with ease and certainty, this factor favors a finding that the breach is a material one.
The third factor also favors materiality. This third factor asks whether Wellness would sustain a "forfeiture if [Hooper Holmes] is permitted not to perform" its obligations in the MSA.
The fourth factor-likelihood that Wellness will cure its failure-also favors finding that Wellness's breach was material. The likelihood that Wellness will cure its breach is low because Wellness signed a contract with GAF. And no evidence suggested that Wellness would terminate its contract with GAF so that GAF could resume contracting with Hooper Holmes.
Last, the fifth factor-extent to which Wellness acted in good faith-favors a materiality finding. Evidence that a party was justified in its breach or did not realize it made a mistake can establish good faith. Restatement (Second) of Contracts § 241 cmt. f. Here, Ms. Gathright plainly expressed her delight over the prospect of Hooper Holmes losing GAF's business. Wellness plainly understood the effect of its conduct. And while Hooper Holmes's delinquency irked Wellness, it does not provide sufficient justification to poach one of Hooper Holmes's largest clients. Because all five Restatement factors favor the conclusion that Wellness's breach of the MSA was a material one, the court concludes that Wellness materially breached the MSA by violating its non-compete obligations.
C. Wellness's conduct did not cause Hooper Holmes to sustain lost profit damages.
Having concluded that Wellness materially breached the MSA, the court must determine the damages, if any, Hooper Holmes should recover for that breach. Hooper Holmes claims that Wellness's material breach caused it to lose more than $700,000 in lost profits because Wellness cost Hooper Holmes the opportunity to continue contracting with GAF. Wellness responds that GAF would have moved its wellness business to another vendor even if Wellness never had contacted GAF.
Delaware follows the familiar contract principle that Hooper Holmes is entitled to recover its expectation damages. Siga Techs., Inc. v. PharmAthene, Inc. ,
Here, Hooper Holmes argues that in the world that would have developed "but-for" Wellness's conduct, GAF would still be contracting with it for wellness services. But the evidence presented at trial won't support this proposition. Ms. Love, GAF's Senior Benefits Manager, testified that before the April sales meeting with Wellness and Ms. Silverman's interaction at the February birthday party, GAF had decided to end its wellness relationship with Hooper Holmes. Love Dep. 24:11-22. She testified that GAF did not see any benefit from using Hooper Holmes's comprehensive wellness services and simply wanted to continue with biometric screenings for its employees. Id. at 12:19-13:8. By February 2016, Ms. Love testified that GAF had no intention to renew its contract with Hooper Holmes. Id. at 27:18-21. Ms. Love acknowledged that Hooper Holmes recently had entered the biometric screening business when it bought Accountable Health, but she was skeptical of its capabilities because it was so new to the screening endeavor. Id. at 18:1-9. And, despite Hooper Holmes's assertions to the contrary, Ms. Silverman played no role in GAF's decision to contract with Wellness. Id. at 24:23-25. So, if Ms. Silverman never had contacted Ms. Love, and even if Wellness never made a sales presentation to GAF, Hooper Holmes has not carried its damages burden. It has failed to show "with reasonable certainty" that it would have continued to earn profits from a relationship with GAF.
D. Even if Wellness's breach caused Hooper Holmes's damages, the MSA's limitation of liability clause precludes it from recovering lost profits.
But even if Hooper Holmes had proved lost profits, the MSA precludes it from recovering lost profits. In relevant part, the MSA provides, "[N]either party to this agreement shall be liable to the other party for loss of profits, loss of business, or special, indirect, incidental, exemplary, consequential, or punitive damages arising from the performance or nonperformance of this agreement, or any acts or omissions associated therewith." MSA ¶ 11. Hooper Holmes claims only just one form of damages-lost profits-and the simple language to which the parties agreed precludes Hooper Holmes from recovery.
Hooper Holmes makes three arguments trying to avert this damages limitation clause. First, it argues that the lost profit damages it seeks are direct damages, and thus the limitation clause does not apply. Second, Hooper Holmes argues that the UCC would not enforce the MSA's limitation of liability clause. And last, it contends that Delaware common law does not enforce limitation of liability clauses when the breaching party breaches the contract in bad faith. None of these arguments persuade the court. The next three sections explain why.
1. Even though Hooper Holmes's lost profit damages are direct damages, the limitation of liability clause still bars their recovery.
Hooper Holmes argues that its lost profits damages are direct damages and the limitation of liability thus does not apply. Hooper Holmes notes that in eCommerce , the Delaware Chancery Court allowed the plaintiff to recover lost profit damages for breach of contract even though the contract contained a limitation of liability clause. But the limitation of liability clause *1155in eCommerce differs substantially from the one in the MSA here. In eCommerce , the contract at issue precluded recovery for " 'special, incidental, indirect, statutory or consequential damages (including lost revenue or profits )' arising out of or related to that party's breach of the Agreement." eCommerce ,
The Chancery Court disagreed. Id. It concluded that profits lost because of impermissible competition are the direct and natural consequence of a breach of a non-compete clause. Id. Since consequential damages are damages that " 'do not flow directly and immediately from an injurious act but that result indirectly from the act,' " these lost profit damages did not constitute consequential damages. Id. (quoting Consequential Damages , Black's Law Dictionary (9th ed. 2009) ). The contract's limitation of liability clause thus did not bar plaintiff's recovery because it only covered lost-profit damages not flowing directly and immediately from the breach.
Here, the MSA's limitation of liability clause is different. It uses different words. The MSA-unlike the contract at issue in eCommerce -does not categorize "loss of profits" as a type of "consequential damages." Instead, the MSA lists "loss of profit" damages separately from "consequential" damages and prohibits recovery of both forms of damages. See MSA ¶ 11 ("Neither party to this agreement shall be liable to the other party for loss of profits ... or ... consequential ... damages arising from the performance or non-performance of this agreement...." (emphasis added) ). The MSA bars loss of profit damages that result directly from a breach-the type of damages Hooper Holmes seeks here.
2. Delaware common law-not the UCC as adopted by Delaware-governs the entire MSA.
Next, Hooper Holmes argues that the MSA is a mixed goods and services contract, partially governed by the UCC and the UCC would not enforce the MSA's limitation of liability clause. The court agrees with Hooper Holmes, in part. The MSA is a mixed goods and services contract because the MSA involves the service of selling wellness screenings and it also involves selling at-home test kits-which are goods. See Del. Code Ann. tit. 6 § 2-105(1) (" 'Goods' means all things ... which are movable at the time of identification to the contract for sale...."). Because the MSA covers both goods and services, the court must decide whether Delaware common law or the UCC-as adopted in Delaware-governs the limitation of liability clause.
Article Two of the Uniform Commercial Code applies to "transactions in goods." Id. § 2-102. When a contract involves both goods and services, the court must determine whether the goods or services portion of the contract dominates. Neilson Bus. Equip. Ctr., Inc. v. Italo V. Monteleone, M.D., P.A. ,
Neilson illustrates how Delaware law applies this test. In Neilson , a doctor *1156bought a computer to help him maintain patient files.
Here, the court concludes that the common law governs the MSA. The evidence adduced at trial establishes that the fundamental goals of the parties when they entered into the MSA called for Wellness to provide health screening services previously provided by Principal-Hooper Holmes's predecessor. The evidence established that biometric screenings easily was the primary benefit of the MSA and thus it dominated the essence of the contract. It is true that the MSA also called for Wellness to provide some goods to Hooper Holmes-i.e. , at-home testing kits. But both in scale and purpose, the MSA centered on services. The MSA required Wellness to perform basic fingerstick blood screenings, conduct cheek swab tests, create reports about employees' overall health, perform venipuncture screenings, set up screenings, and provide a registered dietician-among other services. MSA Ex. B § F. Only a discrete and isolated portion of the MSA's performance involved goods (health education booklets, PCP forms, and at-home test kits).
3. Delaware common law enforces limitation of liability clauses in breach of contract cases even when the breaching party acts in bad faith.
Finally, Hooper Holmes argues that even under Delaware common law, the court should not enforce the limitation of liability clause. It argues that Delaware law does not enforce those types of provisions when the breaching party acted in bad faith.
"Under Delaware law, limitation on liability clauses that preclude various types of damages, such as consequential damages, are typically enforceable." eCommerce Indus. ,
[F]reedom of contract would suggest that parties to a contract should be entitled to draft agreements so as to avoid certain ... duties and liabilities that are normally part of a contractual relationship. Had the parties desired to carve out an exception to the Agreement's limitation of liability provision for instances of bad faith or willful breach, they could have done so, but they did not. For this reason, and because of the sophisticated nature of the parties, I find that, even if Plaintiffs breached the Agreement in bad faith, that would not absolve [defendant] from the consequences of the limitation on liability provision to which it agreed.
Hooper Holmes acknowledges eCommerce , but urges the court to follow J.A. Jones Construction Co. v. Dover ,
In J.A. Jones , the City of Dover contracted with plaintiff for plaintiff to install part of an electrical grid.
But J.A. Jones never extended this reasoning to the implied covenant claim at issue there. To the contrary, the court enforced the limitation of liability clause against plaintiff's implied covenant claim. See J.A. Jones ,
Here, Hooper Holmes only can recover under a breach of contract theory because the court already has granted summary judgment against all its tort claims. See Doc. 140. J.A. Jones does not apply, and Hooper Holmes's argument is unpersuasive.4
E. Because Wellness breached the MSA, Hooper Holmes is entitled to nominal damages.
Even though Hooper Holmes cannot prove or recover any expectation damages, *1158Delaware law still permits Hooper Holmes to recover nominal damages. Palmer v. Moffat , No. CIV.A.01C-03-114JEB,
III. Wellness is liable for breaching the NDA but the court only awards Hooper Holmes $1.00 in nominal damages.
The court now considers Hooper Holmes's remaining claim for breach of contract. This claim contends that Wellness breached the NDA-a binding and enforceable contract-causing Hooper Holmes damages. See VLIW Tech., LLC ,
The parties agree that the NDA is a binding and enforceable contract. But Wellness contends that it is not liable for breaching the NDA for two distinct reasons. First, Wellness argues, it never breached the NDA. And second, even if it did, Hooper Holmes has not proved that Wellness's alleged NDA breach caused any damages. The court addresses each argument, separately, below.
A. Wellness breached the NDA.
Wellness argues that it never breached the NDA. To evaluate this argument, the court must begin with the terms of the contract. The NDA required both parties to "keep Confidential Information confidential and secure" and to "use and disclose Confidential Information solely for the purpose of evaluating the [business opportunity presented by the MSA]." NDA ¶ 3. It defined "Confidential Information" as:
[A]ll ... information disclosed prior to or after the execution of this agreement, either furnished or made available (a) by [Hooper Holmes] or [its] Agents ... to [Wellness] or (b) by [Wellness] or its Agents to [Hooper Holmes], in connection with the Opportunity, including, but not limited to, marketing philosophy, techniques, and objectives; advertising and promotional copy; competitive advantages and disadvantages; financial results; technological developments; loan evaluation programs; customer lists; account information, profiles, demographics and Non-Public Personal Information ...; credit scoring criteria, formulas and programs; research and development efforts; any investor, financial, commercial, technical or scientific information ... and any and all other business information....
Id. ¶ 2. Hooper Holmes claims Wellness impermissibly used three sources of such information: its pricing data, see Pls.' Ex. 37, and two workbooks containing information about GAF that Wellness had collected during its 2015 screenings, see Pls.' Exs. 41, 42. Hooper Holmes's pricing data is confidential information.
In plaintiffs' Exhibit 37, Ms. Geppi emailed Ms. Kolakowski, asking what Hooper Holmes charged GAF for screening services. Pls.' Ex. 37 at 5. Ms. Kolakowski replied that Hooper Holmes charged GAF 20% more than Wellness had charged Hooper Holmes for the screenings. Id. Ms. Geppi testified that 20% is a common mark-up in the wellness industry. Trial Tr. 428:14-21. Wellness argues that Ms. Kolakowski arrived at this number by taking the industry standard for up-charging employers-20%-and adding it to the $39 the MSA charged. The court views the evidence differently.
*1159When Ms. Kolakowski responded, she answered in definitive fashion-implying that she knew that Hooper Holmes followed industry norms and was not simply guessing that it followed industry norms. And this information must have come from Hooper Holmes because this email was sent shortly after Aon-GAF's wellness broker-first contacted Wellness about the potential opportunity with GAF. This inquiry occurred long before GAF could have shared information with Wellness about the prices that Hooper Holmes was charging. And this information easily fell within the scope of the NDA's protection because it is "account information" about GAF, i.e. , information about what prices Hooper Holmes charges GAF.
B. Hooper Holmes sustained no damages because of Wellness's breach.
This leads to Wellness's second argument: Hooper Holmes cannot prove that it sustained any damages because of Wellness's actions. As explained above, Delaware law follows the familiar contract principle that Hooper Holmes may recover its expectation damages when a breach occurs. Siga Techs. ,
As already explained in detail, GAF was not planning on renewing its contract with Hooper Holmes. See supra , Part II.C. Ms. Love, GAF's Senior Benefits Manager, testified that GAF decided in February 2016 not to renew its wellness contract with Hooper Holmes. Wellness created and used the "confidential information" in March and May 2016-after GAF made its decision. So, Hooper Holmes sustained no lost profit damages from Wellness's actions. The court thus awards $1.00 in nominal damages to Hooper Holmes. See USH Ventures ,
IV. The court denies Hooper Holmes's oral motion to reconsider.
In closing argument, Hooper Holmes's counsel asked the court to reconsider its ruling at summary judgment. Specifically, Hooper Holmes asked the court to revisit its order entering judgment against Hooper Holmes's claims for tortious interference with contract and tortious interference with prospective business expectancies or relationships. Hooper Holmes argued that if the court finds that Hooper Holmes cannot recover any damages on its contract claim, the court should permit it to pursue its tort claims. The court denies Hooper Holmes's motion for two reasons. First, this motion is untimely. Second, Hooper Holmes's arguments are wrong. The court briefly explains both conclusions, below.
A. Hooper Holmes's motion is untimely.
On December 6, 2017, the court entered its Memorandum and Order on *1160Wellness's two summary judgment motions. Doc. 140. One of the motions asked the court, in part, to enter summary judgment against Hooper Holmes's two tort claims because they duplicated Hooper Holmes's contract claim. Doc. 101 at 16. The court agreed with the legal premise of Wellness's motion and granted summary judgment against both tort claims. Doc. 140 at 27.
Because the court did not dispose of the case fully, D. Kan. Rule 7.3(b) governs Hooper Holmes's motion for reconsideration. See Ferluga v. Eickhoff ,
Moreover, apart from Rule 7.3(b), the timing of Hooper Holmes's motion is unfair. In effect, it asks the court to reinstate two claims after the evidence had closed. Doing so would deprive Wellness of the chance to put on its defense. The court denies the motion for this reason as well.
B. The court correctly dismissed Hooper Holmes's tort claims.
Even if Hooper Holmes had made a timely motion, the court still would not reverse its summary judgment ruling. Hooper Holmes argues the court should not have entered summary judgment against its tort claims because Kansas5 law allows a plaintiff to pursue a tort claim that duplicates a contract claim if plaintiff cannot recover under a breach of contract theory. It cites Bittel v. Farm Credit Services of Central Kansas, P.C. ,
Typically, a plaintiff cannot assert a tort claim that duplicates a contract claim. One claim duplicates another claim when both claims assert that defendant breached the same duty imposed by contract and tort law. Burcham v. Unison Bancorp, Inc. ,
On appeal, the Kansas Supreme Court held that the trial court properly granted summary judgment against the contract claim but reversed the decision about the *1161tort claim. Id. at 497-98. The court held that in situations "where a plaintiff is unable to recover under a breach of contract theory because an enforceable contract was never made ," Kansas law allows the plaintiff to pursue a tort claim even though it asserts the "same claim" as a contract claim. Id. (emphasis added). In contrast, here, both parties agree that the MSA and the NDA are binding contracts. Bittel thus does not apply. The court correctly granted summary judgment against Hooper Holmes's tort claims and the court denies its reconsideration motion for this reason as well.6
V. Hooper Holmes owes Wellness $346,226.10.
The court now turns to Wellness's Counterclaim. In its Counterclaim, Wellness asserts that Hooper Holmes breached the MSA when it failed to pay Wellness's outstanding invoices. As a result, Wellness argues, Hooper Holmes owes $235,156.58 plus interest at a rate of 1.5% per month.
As explained above, to succeed on its breach of contract claim, Wellness must show that (1) the MSA is a valid and enforceable contract, (2) Hooper Holmes materially breached that contract, and (3) Wellness sustained damages because of Hooper Holmes's material breach. VLIW Tech. ,
Here, Wellness conferred part performance after June 9 by forwarding PCP forms. See Def.'s Ex. 411. And because no evidence proves otherwise, the court concludes that the price listed in the MSA is a fair price. See Preferred Inv. Servs. ,
*1162Wellness also asserts that it is entitled to recover prejudgment interest on the overdue amount. Because Delaware law governs the contract, Delaware law governs the amount, if any, of prejudgment interest Wellness can collect. See Travelers Cas. & Sur. Co. v. Ins. Co. of N.A. ,
Here, the MSA required Hooper Holmes to pay Wellness within 45 days of receiving the invoices. So, before June 9, Hooper Holmes's liability accrued 45 days after the invoice date. After June 9, Hooper Holmes's liability did not arise from a breach of contract. Instead, its recovery is based on restitution. Preferred Inv. Servs. ,
But the court also must consider how the award to Hooper Holmes affects the interest calculation. Fleet Fin. Grp., Inc. v. Advanta Corp. , No. CIV.A. 16912-NC,
*1163In total, Hooper Holmes owes $111,069.52 in prejudgment interest, and the court awards that amount to Wellness.
VI. Wellness is not entitled to any attorneys' fees.
Wellness contends that if it prevails on its Counterclaim, then the MSA allows it to recover its attorneys' fees from Hooper Holmes. The court disagrees.
Delaware, like most states, generally requires litigants to pay their own attorneys' fees. Maurer v. Int'l Re-Ins. Corp. ,
Each Party agrees to indemnify, defend, and hold harmless the other Party ... from and against any and all third party claims, demands, damages or any other financial demands (including, without limitation, attorneys' fees and expenses) arising from or related to the indemnifying Party's breach of this Agreement.
MSA ¶ 10. Wellness argues that this indemnification clause is sufficiently broad to support an attorneys' fees award against Hooper Holmes.
Pinkert v. John J. Olivieri, P.A. , No. CIV. A. 99-380-SLR,
"[Defendant] agrees to defend, indemnify and hold [plaintiffs] harmless from and against any and all loss, cost, expense, liability, actions, and claims whatsoever (including, without limitation, reasonable attorneys['] fees and court costs) incurred by [plaintiffs] incident to any malfeasance or nonfeasance by [defendant] with respect to [defendant's] responsibilities under the terms of this Agreement."
Id. (quoting the contract).
Defendant moved for summary judgment against plaintiffs' claim for attorneys' fees. Id. The court sided with defendant, holding that the contract did not allow plaintiffs to recover their attorneys' fees. Id. The court explained that "[t]he language 'defend, indemnify and hold [plaintiffs] harmless' clearly renders [this provision] an indemnification provision which acts to protect plaintiffs from liability if they are sued by a third party...." Id. (quoting the contract). Because defendant "cannot agree to 'defend, indemnify and hold plaintiffs harmless' from a lawsuit filed ... by the plaintiffs themselves," plaintiffs could not collect their attorney's fees under the indemnification clause. Id. (internal brackets omitted) (quoting the contract).
Here, the MSA's indemnification clause is nearly identical to the one in Pinkert . Both require a breaching party-here, Hooper Holmes-to defend, indemnify, and hold harmless the non-breaching party-Wellness-for a lawsuit brought by a third party against the non-breaching party. There is no such party third in this case. See Doc. 120 at 1 (listing Hooper Holmes, Accountable Health, and Wellness as the only parties to this suit). And, just as in Pinkert , Hooper Holmes cannot "indemnify, defend, and hold harmless [Wellness] from and against any and all [of Wellness's] claims...." MSA ¶ 10. The indemnification *1164clause does not apply to Wellness's claim against Hooper Holmes. It does not entitle Wellness to recover any attorneys' fees incurred in this case.
VII. Conclusion
For the reasons explained above, the court finds for plaintiffs Hooper Holmes and Accountable Health on their breach of contract claim for Wellness's breach of the MSA and NDA and awards them a total of $2.00 in nominal damages. On Wellness's Counterclaim for breach of contract, the court awards Wellness $235,156.58 plus $111,069.52 in prejudgment interest.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs Hooper Holmes and Accountable Health are awarded $2.00 in nominal damages.
IT IS FURTHER ORDERED THAT counterclaim-plaintiff Wellness Corporate Solutions is awarded $346,226.10 in damages.
FINALLY, THE COURT DIRECTS the Clerk of the Court to enter without delay a Judgment in Hooper Holmes and Accountable Health's favor for $2.00 and a Judgment in Wellness Corporate Solutions's favor for $346,226.10 under Rule 58.
IT IS SO ORDERED.
Appendix A-Interest Accrued
Invoice Number8 Invoice Date9 Due Date10 Days Overdue Amount Owed Interest Accrued11 7051 4/8/2015 5/23/2015 1116 $0.0012,13 $0.00 598214 9/2/2015 10/17/2015 1019 $10.70 $5.38 5983 9/2/2015 10/17/2015 1019 $15.00 $7.54 5984 9/2/2015 10/17/2015 1019 $742.50 $373.12 5985 9/2/2015 10/17/2015 1019 $82.50 $41.46 5986 9/2/2015 10/17/2015 1019 $285.00 $143.22 5987 9/2/2015 10/17/2015 1019 $1,852.50 $930.92 5988 9/2/2015 10/17/2015 1019 $15.00 $7.54 5989 9/2/2015 10/17/2015 1019 $97.50 $49.00 *11655990 9/2/2015 10/17/2015 1019 $45.00 $22.61 5991 9/2/2015 10/17/2015 1019 $15.00 $7.54 5992 9/2/2015 10/17/2015 1019 $570.00 $286.44 5993 9/2/2015 10/17/2015 1019 $570.00 $286.44 6007 9/8/2015 10/23/2015 1013 $2,962.50 $1,479.95 6065 9/28/2015 11/12/2015 993 $13,259.76 $6,493.28 6016 9/28/2015 11/12/2015 993 $19,033.95 $9,320.89 6066 9/28/2015 11/12/2015 993 $2,577.50 $1,262.20 6064 10/7/2015 11/21/2015 984 $8,340.65 $4,047.38 6013 10/7/2015 11/21/2015 984 $72,266.13 $35,067.83 6015 10/14/2015 11/28/2015 977 $25,064.00 $12,076.02 6271 11/3/2015 12/18/2015 957 $37.50 $17.70 6272 11/3/2015 12/18/2015 957 $225.00 $106.19 6273 11/3/2015 12/18/2015 957 $90.00 $42.48 6274 11/3/2015 12/18/2015 957 $5,227.50 $2,467.09 6275 11/3/2015 12/18/2015 957 $15.00 $7.08 6276 11/3/2015 12/18/2015 957 $60.00 $28.32 6278 11/3/2015 12/18/2015 957 $82.50 $38.94 6277 11/3/2015 12/18/2015 957 $510.00 $240.69 6279 11/3/2015 12/18/2015 957 $52.50 $24.78 6280 11/3/2015 12/18/2015 957 $172.50 $81.41 6281 11/3/2015 12/18/2015 957 $45.00 $21.24 6282 11/3/2015 12/18/2015 957 $30.00 $14.16 6283 11/3/2015 12/18/2015 957 $7.50 $3.54 6284 11/3/2015 12/18/2015 957 $510.00 $240.69 6285 11/3/2015 12/18/2015 957 $7.50 $3.54 6286 11/3/2015 12/18/2015 957 $1,402.50 $661.90 6287 11/3/2015 12/18/2015 957 $30.00 $14.16 6288 11/3/2015 12/18/2015 957 $157.50 $74.33 6289 11/3/2015 12/18/2015 957 $22.50 $10.62 6290 11/3/2015 12/18/2015 957 $2,010.00 $948.61 6291 11/3/2015 12/18/2015 957 $532.50 $251.31 *11666292 11/3/2015 12/18/2015 957 $22.50 $10.62 6293 11/3/2015 12/18/2015 957 $337.50 $159.28 6294 11/3/2015 12/18/2015 957 $3,367.50 $1,589.27 6295 11/3/2015 12/18/2015 957 $112.50 $53.09 6296 11/3/2015 12/18/2015 957 $112.50 $53.09 6297 11/3/2015 12/18/2015 957 $60.00 $28.32 6298 11/3/2015 12/18/2015 957 $615.00 $290.25 6299 11/3/2015 12/18/2015 957 $7.50 $3.54 6300 11/3/2015 12/18/2015 957 $22.50 $10.62 6301 11/3/2015 12/18/2015 957 $52.50 $24.78 6302 11/3/2015 12/18/2015 957 $60.00 $28.32 6303 11/3/2015 12/18/2015 957 $487.50 $230.07 6304 11/3/2015 12/18/2015 957 $967.50 $456.61 6327 11/4/2015 12/19/2015 956 $7.50 $3.54 6370 11/12/2015 12/27/2015 948 $9,506.89 $4,444.53 6512 12/21/2015 2/4/2016 909 $7.50 $3.36 6513 12/21/2015 2/4/2016 909 $15.00 $6.72 6514 12/21/2015 2/4/2016 909 $1,177.50 $527.84 6515 12/21/2015 2/4/2016 909 $60.00 $26.90 6516 12/21/2015 2/4/2016 909 $6,225.00 $2,790.50 6517 12/21/2015 2/4/2016 909 $7.50 $3.36 6518 12/21/2015 2/4/2016 909 $112.50 $50.43 6519 12/21/2015 2/4/2016 909 $150.00 $67.24 6520 12/21/2015 2/4/2016 909 $15.00 $6.72 6521 12/21/2015 2/4/2016 909 $15.00 $6.72 6522 12/21/2015 2/4/2016 909 $187.50 $84.05 6523 12/21/2015 2/4/2016 909 $52.50 $23.53 6524 12/21/2015 2/4/2016 909 $75.00 $33.62 6525 12/21/2015 2/4/2016 909 $22.50 $10.09 6526 12/21/2015 2/4/2016 909 $532.50 $238.71 6527 12/21/2015 2/4/2016 909 $2,610.00 $1,169.99 6528 12/21/2015 2/4/2016 909 $187.50 $84.05 *11676529 12/21/2015 2/4/2016 909 $67.50 $30.26 6530 12/21/2015 2/4/2016 909 $3,202.50 $1,435.60 6531 12/21/2015 2/4/2016 909 $855.00 $383.27 6532 12/21/2015 2/4/2016 909 $517.50 $231.98 6533 12/21/2015 2/4/2016 909 $37.50 $16.81 6534 12/21/2015 2/4/2016 909 $37.50 $16.81 6535 12/21/2015 2/4/2016 909 $622.50 $279.05 6536 12/21/2015 2/4/2016 909 $1,515.00 $679.13 6537 12/21/2015 2/4/2016 909 $7.50 $3.36 6538 12/21/2015 2/4/2016 909 $15.00 $6.72 6539 12/21/2015 2/4/2016 909 $75.00 $33.62 6540 12/21/2015 2/4/2016 909 $30.00 $13.45 6541 12/21/2015 2/4/2016 909 $7.50 $3.36 6542 12/21/2015 2/4/2016 909 $30.00 $13.45 6543 12/21/2015 2/4/2016 909 $127.50 $57.15 6544 12/21/2015 2/4/2016 909 $1,500.00 $672.41 6545 12/21/2015 2/4/2016 909 $2,910.00 $1,304.48 6633 1/12/2016 2/26/2016 887 $7.50 $3.28 6634 1/12/2016 2/26/2016 887 $7.50 $3.28 6635 1/12/2016 2/26/2016 887 $1,327.50 $580.68 6636 1/12/2016 2/26/2016 887 $67.50 $29.53 6637 1/12/2016 2/26/2016 887 $10,387.50 $4,543.74 6638 1/12/2016 2/26/2016 887 $7.50 $3.28 6639 1/12/2016 2/26/2016 887 $187.50 $82.02 6640 1/12/2016 2/26/2016 887 $232.50 $101.70 6641 1/12/2016 2/26/2016 887 $37.50 $16.40 6642 1/12/2016 2/26/2016 887 $187.50 $82.02 6643 1/12/2016 2/26/2016 887 $15.00 $6.56 6644 1/12/2016 2/26/2016 887 $15.00 $6.56 6645 1/12/2016 2/26/2016 887 $30.00 $13.12 6646 1/12/2016 2/26/2016 887 $7.50 $3.28 6647 1/12/2016 2/26/2016 887 $225.00 $98.42 *11686648 1/12/2016 2/26/2016 887 $330.00 $144.35 6649 1/12/2016 2/26/2016 887 $37.50 $16.40 6650 1/12/2016 2/26/2016 887 $82.50 $36.09 6651 1/12/2016 2/26/2016 887 $7,777.50 $3,402.07 6652 1/12/2016 2/26/2016 887 $67.50 $29.53 6653 1/12/2016 2/26/2016 887 $15.00 $6.56 6654 1/12/2016 2/26/2016 887 $37.50 $16.40 6655 1/12/2016 2/26/2016 887 $7.50 $3.28 6656 1/12/2016 2/26/2016 887 $255.00 $111.54 6657 1/12/2016 2/26/2016 887 $45.00 $19.68 6658 1/12/2016 2/26/2016 887 $15.00 $6.56 6659 1/12/2016 2/26/2016 887 $45.00 $19.68 6660 1/12/2016 2/26/2016 887 $7.50 $3.28 6661 1/12/2016 2/26/2016 887 $105.00 $45.93 6662 1/12/2016 2/26/2016 887 $1,327.50 $580.68 6663 1/12/2016 2/26/2016 887 $4,912.50 $2,148.85 6711 2/1/2016 3/17/2016 867 $7.50 $3.21 6712 2/1/2016 3/17/2016 867 $7.50 $3.21 6713 2/1/2016 3/17/2016 867 $75.00 $32.07 6714 2/1/2016 3/17/2016 867 $82.50 $35.27 6715 2/1/2016 3/17/2016 867 $2,940.00 $1,257.03 6716 2/1/2016 3/17/2016 867 $7.50 $3.21 6717 2/1/2016 3/17/2016 867 $7.50 $3.21 6718 2/1/2016 3/17/2016 867 $67.50 $28.86 6719 2/1/2016 3/17/2016 867 $67.50 $28.86 6720 2/1/2016 3/17/2016 867 $15.00 $6.41 6721 2/1/2016 3/17/2016 867 $7.50 $3.21 6722 2/1/2016 3/17/2016 867 $142.50 $60.93 6723 2/1/2016 3/17/2016 867 $3,120.00 $1,333.99 6724 2/1/2016 3/17/2016 867 $7.50 $3.21 6725 2/1/2016 3/17/2016 867 $15.00 $6.41 6726 2/1/2016 3/17/2016 867 $7.50 $3.21 *11696727 2/1/2016 3/17/2016 867 $45.00 $19.24 6728 2/1/2016 3/17/2016 867 $7.50 $3.21 6729 2/1/2016 3/17/2016 867 $7.50 $3.21 6730 2/1/2016 3/17/2016 867 $30.00 $12.83 6731 2/1/2016 3/17/2016 867 $607.50 $259.74 6896 3/6/2016 4/20/2016 833 $7.50 $3.08 6897 3/6/2016 4/20/2016 833 $120.00 $49.30 6898 3/6/2016 4/20/2016 833 $90.00 $36.97 6899 3/6/2016 4/20/2016 833 $52.50 $21.57 6900 3/6/2016 4/20/2016 833 $45.00 $18.49 6901 3/6/2016 4/20/2016 833 $45.00 $18.49 6902 3/6/2016 4/20/2016 833 $7.50 $3.08 6903 3/6/2016 4/20/2016 833 $112.50 $46.21 6904 3/6/2016 4/20/2016 833 $120.00 $49.30 6905 3/6/2016 4/20/2016 833 $15.00 $6.16 6906 3/6/2016 4/20/2016 833 $60.00 $24.65 6907 3/6/2016 4/20/2016 833 $7.50 $3.08 6908 3/6/2016 4/20/2016 833 $30.00 $12.32 6909 3/6/2016 4/20/2016 833 $187.50 $77.02 7046 4/8/2016 5/23/2016 800 $30.00 $11.84 7047 4/8/2016 5/23/2016 800 $7.50 $2.96 7048 4/8/2016 5/23/2016 800 $45.00 $17.75 7049 4/8/2016 5/23/2016 800 $7.50 $2.96 7050 4/8/2016 5/23/2016 800 $15.00 $5.92 7062 4/8/2016 5/23/2016 800 $22.50 $8.88 7063 4/8/2016 5/23/2016 800 $15.00 $5.92 7064 4/8/2016 5/23/2016 800 $7.50 $2.96 7065 4/8/2016 5/23/2016 800 $7.50 $2.96 7052 4/11/2016 5/26/2016 797 $7.50 $2.95 7054 4/11/2016 5/26/2016 797 $15.00 $5.90 7055 4/11/2016 5/26/2016 797 $15.00 $5.90 7056 4/11/2016 5/26/2016 797 $37.50 $14.74 *11707066 4/11/2016 5/26/2016 797 $22.50 $8.84 7067 4/11/2016 5/26/2016 797 $82.50 $32.43 7141 5/6/2016 6/20/2016 772 $37.50 $14.28 7142 5/6/2016 6/20/2016 772 $7.50 $2.86 7207 5/6/2016 6/20/2016 772 $67.50 $25.70 7143 5/6/2016 6/20/2016 772 $7.50 $2.86 7144 5/6/2016 6/20/2016 772 $52.50 $19.99 7145 5/6/2016 6/20/2016 772 $7.50 $2.86 7146 5/6/2016 6/20/2016 772 $45.00 $17.13 7147 5/6/2016 6/20/2016 772 $15.00 $5.71 7208 5/6/2016 6/20/2016 772 $7.50 $2.86 7148 5/6/2016 6/20/2016 772 $15.00 $5.71 7149 5/6/2016 6/20/2016 772 $7.50 $2.86 7150 5/6/2016 6/20/2016 772 $15.00 $5.71 7151 5/6/2016 6/20/2016 772 $7.50 $2.86 7152 5/6/2016 6/20/2016 772 $22.50 $8.57 7209 5/6/2016 6/20/2016 772 $52.50 $19.99 7297 6/1/2016 7/16/2016 746 $7.50 $2.76 7298 6/1/2016 7/16/2016 746 $45.00 $16.56 7299 6/1/2016 7/16/2016 746 $37.50 $13.80 7321 6/1/2016 7/16/2016 746 $22.50 $8.28 7300 6/1/2016 7/16/2016 746 $37.50 $13.80 7301 6/1/2016 7/16/2016 746 $7.50 $2.76 7302 6/1/2016 7/16/2016 746 $22.50 $8.28 7303 6/1/2016 7/16/2016 746 $30.00 $11.04 7304 6/1/2016 7/16/2016 746 $37.50 $13.80 7305 6/1/2016 7/16/2016 746 $75.00 $27.59 7441 6/29/2016 8/13/2016 718 $7.50 $2.66 7442 6/29/2016 8/13/2016 718 $7.50 $2.66 7443 6/29/2016 8/13/2016 718 $7.50 $2.66 7454 7/6/2016 8/20/2016 711 $7.50 $2.63 7455 7/6/2016 8/20/2016 711 $37.50 $13.15 *11717456 7/6/2016 8/20/2016 711 $22.50 $7.89 7457 7/6/2016 8/20/2016 711 $15.00 $5.26 7458 7/6/2016 8/20/2016 711 $7.50 $2.63 7459 7/6/2016 8/20/2016 711 $15.00 $5.26 7460 7/6/2016 8/20/2016 711 $7.50 $2.63 7461 7/6/2016 8/20/2016 711 $15.00 $5.26 7462 7/6/2016 8/20/2016 711 $75.00 $26.30 7463 7/6/2016 8/20/2016 711 $22.50 $7.89 7464 7/6/2016 8/20/2016 711 $22.50 $7.89 7634 8/4/2016 9/18/2016 682 $7.50 $2.52 7635 8/4/2016 9/18/2016 682 $7.50 $2.52 7636 8/4/2016 9/18/2016 682 $22.50 $7.57 7637 8/4/2016 9/18/2016 682 $7.50 $2.52 7638 8/4/2016 9/18/2016 682 $7.50 $2.52 7639 8/4/2016 9/18/2016 682 $15.00 $5.04 7706 8/5/2016 9/19/2016 681 $7.50 $2.52 7772 9/6/2016 10/21/2016 649 $7.50 $2.40 7773 9/6/2016 10/21/2016 649 $7.50 $2.40 Total $111,069.52
[Editor's Note: The preceding image contains the reference for footnotes8 ,9 ,10 ,11 ,12 ,13 ,14 ].
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