Local Home Care Partners, LLC v. Home Care and Staffing Solutions, LLC

• Court: Superior Court of Delaware
• Decided: August 18, 2025
• Docket: N24C-08-038 EMD CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

LOCAL HOME CARE PARTNERS, LLC, ) ) Plaintiff, ) ) v. ) C.A. No.: N24C-08-038 EMD CCLD ) HOME CARE AND STAFFING ) SOLUTIONS, LLC, WILLIAM ) STINSON, and SUSAN STINSON, ) ) Defendants. )

Submitted: May 28, 2025 Decided: August 18, 2025

Upon Consideration of Defendants’ Motion to Dismiss GRANTED in part, DENIED in part.

Jeffrey J. Lyons, Esquire, Michael E. Neminski, Esquire, Baker & Hostetler, LLP, Wilmington, Delaware; Rachael L. Isreal, Esquire, Sean E. McIntyre, Esquire, Kevin Lissemore, Esquire, Baker & Hostetler, LLP, Cleveland Ohio. Attorneys for Plaintiff Local Home Care Partners, LLC.

S. Michael Sirkin, Esquire, Holly E. Newell, Esquire, Ross Aronstam & Moritz LLP, Wilmington, Delaware; James N. Robinson, Esquire, White & Case LLP, Miami, Florida; Camille M. Shepherd, Esquire, Jade H. Yoo, Esquire, White & Case LLP, New York, New York; Court D. Smith, Esquire, Plunk Smith, PLLC, Frisco, Texas, Attorneys for Defendants Home Care and Staffing Solutions, LLC, William Stinson and Susan Stinson.

DAVIS, P.J.

I. INTRODUCTION

This is a breach of contract and fraud action assigned to the Complex Commercial

Litigation Division of this Court. The dispute here relates to the sale (the “Transaction”) 1 of

Brightstar Care of Plano/North Dallas, TX (the “Business”) by Defendants William Stinson,

Susan Stinson (together with William Stinson, the “Stinsons”), and Home Care and Staffing

1 See Plaintiff’s Amended Complaint for Damages with Certificate of Service (hereafter “Am. Compl.”) (D.I. 13). Solutions’ (“HCSS”, together with the Stinsons, “Defendants”) to Plaintiff Local Home Care

Partners, LLC (“LHCP”). The parties memorialized the Transaction in the Asset Purchase

Agreement (the “APA”). 2

LHCP financed the Transaction through two promissory notes (the “Seller Notes”) 3 and a

loan from non-party Live Oak Banking Company (“Live Oak Bank”) (the “Loan”). 4 As part of

the Transaction, LHCP, HCSS, and Live Oak Bank executed two Standby Creditor’s

Agreements (the “Standby Agreements”), which subordinated the Seller Notes to the Loan. 5 The

Standby Agreements also imposed certain limitations on HCSS’s ability to collect on the Sellers

Notes before LHCP repaid the Loan. 6

The Amended Complaint alleges that, prior to the Transaction, Defendants allowed the

Business to improperly bill customers for medical supplies and services. 7 LHCP claims this

scheme breached, and made fraudulent, several of the APA’s representations and warranties. 8

LHCP also claims Defendants breached the APA by not turning over certain Business assets

post-closing. 9 Additionally, the Amended Complaint alleges HCSS breached the Standby

Agreements by accelerating the Seller Notes before the Loan was satisfied, and without Live

Oak Bank’s consent. 10

Defendants filed a motion to dismiss (the “Motion”) seeking relief under Civil Rule 12(b)

as to the Amended Complaint. 11 The Motion seeks dismissal of all claims against the Stinsons

2 See Am. Compl., Ex. A (hereafter “APA”). 3 See Am. Compl., Ex. B (hereafter “Seller Notes”). 4 See Am. Compl. ¶¶ 52-61. 5 See Am. Compl., Ex. 3 (hereafter “Standby Agreements”). 6 See id. 7 See Am. Compl. ¶¶ 20-22, 41-50. 8 See id. ¶¶ 77-89, 101-17. 9 See id. ¶¶ 80-81, 86. 10 See id. ¶¶ 90-100. 11 See Defendants’ Opening Brief in Support of their Motion to Dismiss (hereafter “MTD”) (D.I. 22).

2 for lack of personal jurisdiction. 12 Separately, the Motion requests dismissal of the entire

Amended Complaint, because: (i) LHCP’s APA-based causes of action fail to state a claim; 13

and (ii) the Standby Agreements based claim based is moot. 14 LHCP opposes dismissal,

maintaining that its claims for relief are well-pled, and the Court has personal jurisdiction over

the Stinsons.15 For the reasons discussed below, the Court GRANTS in part, DENIES in part,

the Motion.

II. FACTUAL BACKGROUND

A. THE PARTIES AND THE BUSINESS

LHCP is a Texas LLC with its principal place of business in Plano, Texas. 16 HCSS is a

Texas LLC with its principal place of business in Frisco, Texas. 17 The Stinsons are each

individual residents of Frisco Texas. 18 Prior to the Transaction, the Stinsons were HCSS’s sole

members. 19 The Business operates two franchised “nursing, therapeutic, and home health aide”

locations in Texas. 20

B. THE TRANSACTION, THE APA, AND THE STANDBY AGREEMENTS

In early 2023, LHCP and HCSS effectuated the Transaction by executing the APA. 21

The Stinsons signed the APA on HCSS’s behalf but are not individual parties to the APA. 22

Delaware law governs the APA, which contains a Delaware forum selection clause. 23

12 See id. at 5-9. 13 See id. at 9-39. 14 See id. at 39-42. 15 See Plaintiff’s Brief in Opposition to Defendants’ Motion to Dismiss (hereafter “MTD Opp’n”) (D.I. 26). 16 Am. Compl. ¶ 10. 17 Id. ¶ 11. 18 Id. ¶¶ 12-13. 19 Id. ¶ 11. 20 Id. ¶¶ 1, 19. 21 See APA at Preamble. 22 See id. 23 Id. § 9.10 (“any legal suit, action, or proceeding arising out of or based upon this Agreement, or the transactions contemplated hereby, may be instituted in . . . the courts of the State of Delaware . . . each party irremovably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding.”).

3 Several provisions of the APA are central to the parties’ dispute. In Section 2.01,

Defendants agreed to deliver all assets associated with the Business to LHCP at Closing. 24

These assets include HCSS’s “proprietary Excel workbook file (and related software and

algorithm) for determining historical payor pricing and collection rates[.]” 25

The APA includes a non-compete provision. In Section 6.07(b), Defendants agreed not

to compete with the Business for two years after the Transaction closed. 26

Article IV of the APA contains various representations and warranties made by HCSS. 27

Section 4.04 states the “Financial Statements” attached to the APA were “prepared in accordance

with GAAP . . . and fairly present in all material respects the financial condition of the

Business.” 28 Section 4.05 represents HCSS “has no liability with respect to the Business, except

(a) those” disclosed in the Financial Statements; “and (b) those . . . incurred in the ordinary

course of business consistent with past practice since the [Financial Statements’ date] which are

not . . . in excess of $150,000.” 29 Section 4.12 warrants the “Accounts Receivable” in the

Financial Statements:

(a) have arisen from bona fide transactions entered into by Seller involving the rendering of services in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of Seller not subject to claims of set-off or other defenses or counterclaims. 30

Section 4.15 states, “to Seller’s Knowledge, no event has occurred or circumstances exists that

may give rise to, or serve as a basis for, any [] Action” “relating to or affecting the Business.” 31

24 Id. § 2.01. 25 Id. § 2.01(l). 26 Id. § 6.07(b). 27 See id. at Article IV. 28 Id. § 4.04. 29 Id. § 4.05. 30 Id. § 4.12. 31 Id. § 4.15. The APA defines “Seller’s Knowledge” as “the actual knowledge of William Stinson or Susan Stinson as of the date of this Agreement, including the knowledge such Persons would have had as of the date of this Agreement after having made reasonable inquiry.” Id. § 1.

4 Similarly, Section 4.16 represents the Business “materially complied and is now complying, with

all Laws applicable to the conduct of the Business.” 32

Article VIII outlines the parties’ contractual indemnification obligations. 33 HCSS agreed,

in Section 8.02, to indemnify LHCP:

[s]ubject to the other terms and conditions of this ARTICLE VIII . . . [for] any and all Losses . . . arising out of . . . (a) any inaccuracy in or breach of any representations or warranties of [HCSS] contained in this Agreement . . . [and] (b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by [HCSS] pursuant to this Agreement[.]” 34

The parties agreed to submit any direct indemnity claim in Section 8.05:

[b]y the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event no later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reasons of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. 35

Section 8.09 states indemnification under the APA is the “sole and exclusive remedy with

respect to any and all claims (other than claims [asserting] fraud, criminal activity or willful

misconduct . . . ) for any breach of any representation [or] warranty[.]” 36

The Transaction provides for a “Purchase Price” to be paid to HCSS. 37 The total amount

of the Purchase Price is $12,565,000. 38 Of that Purchase Price, $9,810,000 in “Cash

32 Id. § 4.16. 33 See id. at Article VIII. 34 Id. § 8.02. HCSS’s indemnification obligation is subject to a tipping basket of “one percent (1.0%) of the Purchase Price,” and an aggregate cap of “fifteen percent (15%) of the Purchase Price” for losses related to non- Fundamental Representations. Id. § 8.04(a). See id. § 8.01 (“Fundamental Representations” mean the representations in “Section 4.01, Section 4.02, Section 4.22, Section 5.01, Section 5.02, Section 5.03, and Section 5.04[.]”). 35 Id. § 8.05(c). 36 Id. § 8.09. 37 Id. § 2.05. 38 Id.

5 Consideration” was due at Closing. 39 LHCP paid the remaining $2,755,000 through the two

Seller Notes. 40

LHCP financed the Cash Consideration with the Loan. 41 As a condition of the Loan,

Live Oak Bank, LHCP, and HCSS executed the Standby Agreements, subordinating the Seller

Notes to the Loan. 42 In the Standby Agreements, HCSS agreed to:

1. “[n]ot [] to accept or demand . . . with respect to the [Seller Notes] any [] [] default interest . . . late fees, penalties, expenses, [or] accelerated payments of interest or principle . . . without Lender’s prior express written consent”; 43

2. “take no action to enforce claims against [LHCP] on the [Seller Notes] until [the] Loan[s] [are] satisfied”; 44 and

3. “take no action to enforce any claims against any guarantor of the [Seller Notes] until [the] Loan[s] [are] satisfied.” 45

C. THE BUSINESS’S PRE-TRANSACTION BILLING PRACTICES

While negotiating the Transaction, the parties discussed the Business’s operations and

standard procedures. 46 A recuring topic was how the Business “cod[ed] and bill[ed] for supplies

and services . . . used when providing care.” 47 During these discussions, Susan Stinson stressed

the lucrative nature of the Business’s supply billing practice. 48 Additionally, William Stinson

represented billing was straightforward and “based on a fee schedule.” 49

LHCP alleges the Stinsons’ statements were false, because:

39 Id. § 2.05(a). 40 Id. § 2.05(b); see Seller Notes. 41 See Am. Compl. ¶¶ 54. 42 See id. ¶¶ 54-56; Standby Agreements. 43 Standby Agreements § 2. 44 Id. § 4. 45 Id. § 10. 46 Am. Compl. ¶ 41. 47 Id. ¶¶ 42-43, 46-46; see also id. ¶ 21 (“medical coding refers to the entry of a code corresponding to specific supplies or services, which would then be transmitted to the Business’s payers – private individuals and insurance companies. The payers use the codes to calculate amounts that the Business is to be reimburse for the supply and/or service it rendered to the payers’ patients.”). 48 Id. ¶¶ 42-43. 49 Id. ¶¶ 46-47.

6 HCSS’s billing team was [] systematically using billing codes corresponding to supplies and services which it never used. Moreover, the billing codes Defendants used were reimbursable by payers at rates . . . [significantly] higher than the code corresponding to the supplies and services which the business was actually ordering and using. 50

LHCP contends that this allegedly illegal 51 scheme “grossly inflated the Business’s financial

performance, inducing Plaintiff to pay more than the Business’s assets were worth.” 52

After closing, LHCP discovered Defendants’ improper billing practices. 53 Although

Defendants allegedly miscoded “numerous” supplies and services, the Amended Complaint only

gives one example – gauze pads. 54 Specifically, the Amended Complaint alleges “Defendants

billed payers extensively with a code which corresponded to gauze with a pad size of more than

16 square inches. However, the Business was actually using a small pad size gauze.” 55 This

miscoding alone, “goosed up the Business’s financial performance by nearly a million dollars a

year.” 56

D. PROCEDURAL HISTORY

LHCP filed its initial Complaint on August 5, 2024. 57 A week later, HCSS sent a letter to

LHCP, alleging LHCP defaulted on the Seller Notes and accelerated payment of all outstanding

principal and interest (the “Notice of Default”). 58 HCSS did not get Live Oak Bank’s consent

before sending the Notice of Default. 59 The Loan remains outstanding. 60

50 Id. ¶¶ 44, 47. 51 See id. ¶ 48 (alleging Defendants’ “coding scheme” violated “18 U.S.C. § 1035.”). 52 Id. ¶¶ 22, 44, 48, 50. 53 See id. ¶¶ 65-67. 54 Id. 55 Id. ¶ 66. 56 Id. 57 See generally Plaintiff’s Complaint for Damages (D.I. 1). 58 See MTD, Ex. A (hereafter “Notice of Default”); Am. Compl. ¶¶ 73-74. 59 Am. Compl. ¶ 75; see also id. ¶ 76 (“[a]t the time Defendants issued the Notice of Default, [the Loans] had not been satisfied.”). 60 Id. ¶ 76 (“[a]t the time Defendants issued the Notice of Default, [the Loans] had not been satisfied.”).

7 The Notice of Default prompted LHCP to file its operative Amended Complaint in late

August 2024. 61 The Amended Complaint asserts three causes of action: (1) Count I – Breach of

the APA against all Defendants; 62 (2) Count II – Breach of the Standby Agreements against

HCSS; 63 and (3) Count III – Fraudulent Inducement against all Defendants. 64 Two weeks after

LHCP filed the Amended Complaint, HCSS sent a second letter to LHCP (the “Amended

Default Notice”). 65 The Amended Default Notice re-noticed LHCP’s Seller Notes default, but

retracted the Notice of Default’s “election to accelerate the outstanding principal and accrued

interest[.]” 66

Defendants filed the Motion in late September 2024. 67 The parties completed briefing on

the Motion in the following months. 68 The Court heard oral argument regarding the Motion on

May 28, 2025. After hearing argument, the Court took the Motion under advisement.

III. THE PARTIES’ ARGUMENTS

A. WHETHER THE COURT HAS PERSONAL JURISDICTION OVER THE STINSONS.

Defendants argue the Court lacks personal jurisdiction over the Stinsons. 69 The Motion

contends the APA’s forum selection clause does not bind the Stinsons, who are non-signatories,

61 See generally id. 62 See id. ¶¶ 77-89. 63 See id. ¶¶ 90-100. 64 See id. ¶¶ 101-17. 65 See MTD, Ex. B (hereafter “Amended Default Notice”). 66 Id. 67 See generally MTD. 68 See generally MTD Opp’n; Defendants’ Reply Brief in Further Support of Their Motion to Dismiss (hereafter “MTD Reply”) (D.I. 29). 69 MTD at 5-9. The Amended Complaint relies exclusively on the APA’s forum selection clause as establishing personal jurisdiction over all Defendants. Am. Compl. ¶ 15 (“because in Section 9.10 of the [APA], Defendants irrevocably consented to the jurisdiction of the court of the state of Delaware for any ‘suit, action, or proceeding arising out of or based upon’ the [APA].” (quoting APA § 9.10(a))).

8 not third-party beneficiaries to the matters at issue here, and “never purported to bind themselves

under the APA in their individual capacities.” 70

LHCP maintains the APA’s forum selection clause provides personal jurisdiction over

the Stinsons. 71 LHCP acknowledges the Stinsons did not sign the APA in the individual

capacities, but insists they are nevertheless bound by the forum selection clause as third-party

beneficiaries. 72 To support that position, LHCP relies on the Stinsons’ contractual right to: (i)

seek indemnification for third party claims; 73 and (ii) bring direct claims related to the APA. 74

LHCP contends the Stinsons’ “individual rights to enforce all the APA’s representations and

promises are identical to the rights of the signatories.” 75

Even if the Stinsons are not third-party beneficiaries, LHCP asserts they are “equitably

estopped from disclaiming the forum selection clause.” 76 Specifically, LHCP maintains the

Stinsons received a direct benefit under the APA, and it was foreseeable the Stinsons would be

bound by the forum selection clause. 77 LHCP again relies on the Stinsons’ right as “Seller

Indemnitees” as the direct benefit. 78 Similarly, LHCP argues it was foreseeable the APA would

70 MTD at 6-7. Defendants acknowledge the Stinson Defendants signed the APA on HCSS’s behalf in their roles as officers and members of the company but insists that does not bind the Stinton Defendants personally. See id.; Ruggiero v. FuturaGene, plc., 948 A.2d 1124, 1132 (Del. Ch. 2008) (“[d]irectors of a corporation, however, are not parties to a contract simply because the corporation is a party to a contract.”). Additionally, Defendants maintain the APA’s “No Third-Party Beneficiaries” clause refutes the Amended Complaint’s allegations that the Stinsons’ are third party beneficiaries to the agreement. MTD at 7 (citing APA § 9.08); see Am. Compl. ¶¶ 12-13. 71 MTD Opp’n at 32-42. Alternatively, Plaintiff requests jurisdictional discovery. Id. at 43 (citing Hart Hldg. Co. Inc. v. Drexel Burnham Lambert Inc., 593 A.2d 535, 539 (Del. Ch. 1991)). 72 Id. at 35-39. Plaintiff insists the APA’s “No Third-Party Beneficiaries” clause does not preclude such a finding, because it contains a carve-out – namely, “except as provided in Article VIII.” See id.; APA § 9.08. 73 See id. § 8.03. 74 See id. § 8.05(c). 75 MTD at 36-37 (citing APA § 8.03). 76 Id. at 39-42. 77 MTD at 40-42. 78 Id. at 40-41 (citing APA §§ 8.03, 805(a)-(c)).

9 bind the Stinsons, because they “received a direct benefit under the APA and were involved in

negotiating the APA[.]” 79

Defendants reject both arguments. 80 Defendants maintain the “No Third-Party

Beneficiaries” clause’s limited exception does not obviate its otherwise broad disclaimer or

“render the Stinson[s] beneficiaries to the entire APA.” 81 Regarding equitable estoppel,

Defendants assert the Stinsons’ indemnification rights are an indirect benefit “because they

depend on an indemnification claim.” 82 Additionally, Defendants insist the “foreseeability” test

does not provide a standalone basis to enforce the forum selection clause against the Stinsons. 83

B. WHETHER COUNT III IS DUPLICATIVE OR WELL-PLED

The Motion contends Count III: (i) does not plead fraud with particularity; (ii) merely

bootstraps Plaintiff’s contract claims; and (iii) improperly asserts extra-contractual fraud which

the APA disclaims. 84 LHCP clarifies Count III only alleges intra-contractual fraud, and relies on

the Stinson’s extra-contractual statements only as evidence of scienter. 85 Given this, the Court

will not address the parties’ extra-contractual fraud arguments.

79 Id. at 42. 80 MTD Reply at 2-12. 81 Id. at 3; APA § 9.08. Defendants assert the Delaware Court of Chancery rejected an argument that an indemnification provision, covering non-signatory affiliates, extended a forum selection clause to those affiliates. See EBG Holdings LLC v. Vredezicht’s Gravenhage 109 B.V., 2008 WL 4057745, at *9-10 (Del. Ch. Sept. 2, 2008) (“expressly including Affiliates [] [] within the ambit of [the indemnification provision] . . . while referring only to parties in the jurisdiction provision, manifested and intent not to include Affiliates under [the jurisdiction provision].”). 82 Id. at 6-7. 83 MTD Reply at 8-10. 84 See MTD at 9-30. Defendants also briefly argue Plaintiff cannot maintain a fraud claim against the Stinson Defendants specifically. See id. at 26-27 (“Plaintiff does not allege that the Stinson Defendants personally made any of the fraudulent statements within the APA.”). 85 MTD Opp’n at 14 n.5 (citing American Auto Ass’n of Northern California v. Barnes Associates, Inc., 2020 WL 4729063, at *3 (Del. Ch. Aug. 13, 2020) (holding a plaintiff can rely on extra-contractual statements “for purposes of supporting an inference of scienter” in an intra-contractual fraud case)).

10 Defendants argue that the Amended Complaint fails to plead fraud with the particularity

required under Civil Rule 9(b). 86 The Motion maintains LHCP does not plead how “the

allegedly improper billing practices 87 render the APA’s representations knowingly false.” 88

Defendants address each of the four allegedly fraudulent representations cited in the Amended

Complaint: (i) Section 4.04; 89 (ii) Section 4.12; 90 (iii) Section 4.15; 91 and (iv) Section 4.16. 92

The Motion also argues that Count III is duplicative of Plaintiff’s breach of contract

claim. 93 Defendants contend “[t]he [Amended] Complaint does not draw any distinction

86 MTD at 10-20; see Del. Super. Ct. Civ. R. 9(b); Albert v. Alex. Brown Mgmt. Servs., 2005 WL 2130607, at *7 (Del. Ch. Aug. 26, 2006) (stating a fraud claim must identify “the time, place and contents of the false representations, the facts misrepresented, as well as the identity of the person making the misrepresentation and what he obtained thereby.”). 87 Defendants note that all of Plaintiff’s fraud claims rely on the same general underlying conduct – allegedly widespread pre-closing improper billing and coding which inflated HCSS’s value. MTD at 11-14. Yet, Defendants argue the Amended Complaint does not allege “any payor disputed the Business’ [] billing methods, refused to pay . . . sought recoupment of claims that have been paid . . . [or] that any of the supposed improper coding or billing submissions were made with knowledge of their falsity. Id. at 11-12. Moreover, the Amended Complaint omits the fact that a third-party, not Defendants, coded claims and billed payors. Id. at 12-13. See also APA § 4.07(a) (disclosing that HSCC contracted with a third party to provide billing services). 88 MTD at 11-20. 89 Plaintiff alleges Section 4.04 was false, because HSCC’s financial statements would have reflected a loss but for billing irregularities. See Am. Compl. ¶¶ 82, 105. Defendants argue this is “a claim for fraud based on an expectation of future performance, which fails as a matter of law.” MTD at 16 (citing Noerr v. Greenwood, 1997 WL 419633, at *4 (Del. Ch. July 16, 1997)). 90 The Amended Complaint alleges Section 4.12 was false because “the charges Defendants were transmitting to various payers were artificially inflated” by the improper coding practices. Am. Compl. ¶ 106. The Motion contends the allegations concerning Section 4.12 are too vague to state a claim. MTD at 17 (“Plaintiff does not allege that any of the accounts receivable referenced in Section 4.12 did not arise from bona fide transactions, were not valid, were disputed, or are subject to set-off or defenses. Nor does Plaintiff identify which accounts receivable were inflated, the amount by which they were inflated, or when such bills were issued.”). 91 Plaintiff asserts Section 4.15 was false because Defendants “failed to adequately disclose” facts regarding a payor’s annual compliance review. Am. Compl. ¶ 68. Defendants maintain they complied Section 4.15, thus LHCP’s claim is invalid. Id. at 18-19 (“HCSS’s disclosure – that a payor ‘had asked to review a list of patients as part of their annual compliance review’ . . . was ‘not a partial disclosure,’ it was ‘the representation that [LHCP] bargained for.’”). 92 The Amended Complaint asserts Section 4.16 was false because HSCC’s improper billing practices “violated the Business’s permits and licensures, as well as several provisions of state and federal law.” Am. Compl. ¶ 108 (citing 18 U.S.C. § 1035). Defendants assert the Section 4.16 claim fails, because “Plaintiff does not identify the laws, licenses, or permits that were supposedly violated[.]” Id. at 19-20. Defendants insist the citation to 18 U.S.C. § 1035 is irrelevant, as only the government can bring claims thereunder, and “Plaintiff does not allege any such claim is being investigated or indicted.” Id. at 20 n. 6 (citing Jones v. Crisis Intervention Servs., 239 F. Supp. 3d 795, 800 (D. Del.), aff’d, 686 F. App’x 81 (3d Cir. 2017)). 93 MTD at 27-30.

11 between the harms resulting from the alleged breach of contract and fraudulent

misrepresentation/inducement.” 94

LHCP maintains Count III states a well-pled intra-contractual fraud claim. 95 LHCP

insists that the Amended Complaint alleges Defendants “falsely represented [] the Business

complied with all applicable laws in generating the financial performance reflected in the

financial statements attached to the APA.” 96 LHCP asserts that the APA speaks for itself

regarding who made the misrepresentations, where and when they were made, and what

Defendants gained therefrom. 97 Additionally, LHCP argues it alleged the Stinsons – who

“possessed intimate knowledge of the Business’s financial performance” – knew the challenged

representations were false. 98 LHCP rejects the notion that Count III is duplicative of Count I, 99

because the remedies available for fraud are “broader, more flexible, and more encompassing

that the remed[ies] for breach of contract.” 100

94 Id. at 28-30. Defendants note Plaintiff requests the same “$1,000,000 for Defendants’ fraud, including punitive damages, and breach of contract.” Id. at Prayer for Relief. 95 MTD Opp’n at 9-16 (citing Roma Landmark Theaters, LLC v. Cohen Exhibition Co. LLC, 2020 WL 5816759, at *12 (Del. Ch. Sept. 30, 2020); Prairie Cap. III, L.P. v. Double E. Holding Corp., 132 A.3d 35, 62 (Del. Ch. 2015)). 96 Id. at 10 (citing Compl. ¶¶ 2-3, 22, 25, 29, 32-34, 44, 48-49). Plaintiff maintains that at the pleading stage “an allegation that identifies the specific statements and explains why plaintiff believes it to be false is sufficient.” Id. at 10-11 (citing Pilot Air Freight, LLC v. Manna Freight Sys., Inc., 2020 WL 5588671, at *24-25 (Del. Ch. Sept. 18, 2020)). 97 MTD Opp’n at 10; see Am. Compl. ¶¶ 110-12 (alleging the fraudulent representations inflated the Company’s purchase price). Additionally, Plaintiff maintains the APA evidences its justifiable reliance on the alleged misrepresentations “[i]n agreeing to acquire the assets of the Business.” Am. Compl. ¶¶ 112-13; see MTD Opp at 15-16. 98 MTD Opp’n at 12-14 (citing Am. Compl. ¶¶ 45, 49, 102, 105, 107, 109). 99 Id. at 28-30. 100 American Auto Ass’n, 2020 WL 4729063, at *5. For example, Plaintiff notes its fraud claim is not subject to Section 8.04’s liability provisions which may cap its recoverable breach of contract damages. MTD Opp’n at 29-30. LHCP also insists the Court cannot determine whether its recoverable damages for Count I and Count III are identical on a motion to dismiss. Id. at 29 (citing American Auto Ass’n, 2020 WL 4729063, at *5).

12 C. WHETHER COUNT I IS RIPE AND WELL-PLED

The Motion requests dismissal of Count I for two reasons. 101 First, Defendants contend

Count I is not ripe, because LHCP did not satisfy the conditions precedent to litigation in the

APA’s indemnification procedure. 102 Specifically, Defendants insist LHCP did not fulfil the

“pre-suit notice requirements” mandated by Section 8.05(c). 103

Second, Defendants argue Count I does not “identify facts that demonstrate a breach of

an express contract term[.]” 104 To support that position, the Motion relies on the same arguments

proffered regarding the alleged lack of specificity concerning LHCP’s fraud claim. 105

LHCP maintains Count I states a reasonably conceivable breach of contract claim. 106

LHCP rejects the notion that Count I falls within the APA’s indemnification provision. 107 Rather,

Count I states a willful breach claim, 108 which the parties carved-out of Section 8.09. 109 Even if

101 MTD at 30-35, 36-39. Defendants also assert Count II fails concerning the Stinson Defendants, again relying on the fact that “the Stinson Defendants are not parties to the APA.” MTD at 35-36. 102 MTD at 30-35. 103 MTD at 31-34 (quoting APA § 8.05(c) (“[any] Direct Claim” “shall be asserted by the Indemnified Party giving the Indemnifying Party responsibly prompt written notice thereof . . . [which] shall describe the Direct Claim in reasonable detail . . . If the Indemnifying Party does not [] respond . . . the Indemnified Party shall be free to pursue such remedies as may be available” including litigation)). Because “Plaintiff does not allege it provided . . . any form of pre-suit notice,” Defendants argue Count I is not ripe. Id. at 32-34 (citing MSCM Hldgs. v. PCS-Mosaic Hldgs., 2024 WL 3595934, at *7 (Del. Ch. July 31, 2024) (dismissing a claim “because the [Counterclaim Plaintiffs] did not satisfy the pre-suit notice and objection procedure as required under [the contract].”); Lennox Indus. v. All. Compressors LLC, 2020 WL 4596840, at *3 (Del. Super. Aug. 10, 2020) (similar)). 104 Id. at 36-39 (citing Related Westpac v. JER Snowmass, 2010 WL 2929708, at *6 (Del. Ch. July 23, 2010)). 105 Compare id. at 37-39 (discussing the lack of specific factual allegations in LHCP’s breach claim), with id. at 14- 20 (arguing LHCP’s fraud claim lacks the requisite specificity). 106 MTD Opp’n at 20-28. 107 Id. at 21-22. 108 See XRI Inv. Hldgs. LLC v. Holifield, 2024 WL 3517630, at *23 (Del. Ch. July 23, 2024) (“willful breach . . . requires that a party intentionally act while knowing the conduct would constitute a breach.”); see Am. Compl. ¶ 87 (“[e]ach of the breaches referenced above were made willfully and intentionally.”). Defendants take issue with that classification. MTD Reply at 21-23. Defendants note the “Exclusive Remedies” clause exempts “willful misconduct” which both caselaw and the APA confirm is different than “willful breach.” MTD Reply at 22 (citing APA §§ 8.04(c), 8.09) (noting the APA’s damage cap exempts both “willful breach” and “willful misconduct); see Dieckman v. Regency GP, 2021 WL 537325, at *36 (Del. Ch. Feb. 15, 2021) (defining “willful misconduct” as “intentional wrongdoing, not mere negligence, gross negligence or recklessness and [] ‘wrongdoing’ as malicious conduct or conduct designed to defraud or seek an unconscionable advantage.” (internal quotations omitted)). Properly construed, Defendants assert LHCP has not pled any “willful misconduct” occurred in connection with the Transaction, such that the breach claim is exempt from the APA’s indemnification procedure. MTD Reply at 23. 109 See Agreement § 8.09 (excluding “claims arising [from] fraud, criminal activity, or willful misconduct.”).

13 the indemnification procedure applies, LHCP asserts any noncompliance with Section 8.05(c)’s

notice requirement does not compel dismissal. 110 Regarding the Motion’s substantive challenges

to Count I, LHCP argues the Amended Complaint alleges specific facts which state a reasonably

conceivable breach claim. 111

D. WHETHER COUNT II IS MOOT

The Motion asserts Count II is moot. 112 Defendants insist there is no justiciable

controversy regarding the Standby Agreements, because the Amended Default Notice retracted

the Notice of Default’s acceleration demand. 113 Additionally, Defendants argue the harms

alleged in Count II are not cognizable. 114

LHCP insists Count II is not moot. 115 LHCP argues a redressable injury exists, because

the Notice of Default “caused [it] to expend time, effort and financial resources . . . which

otherwise would have been dedicated to growing [its] business.” 116 LHCP notes the Amended

110 MTD Opp’n at 23-25 (citing APA § 8.05(c) (“failure to give [] prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure.”)). Thus, any failure to provide notice is inconsequential, because “HCSS does not argue that it forfeited any rights or defenses.” MTD Opp’n at 23. 111 Id. at 26-28 (citing Am. Compl. ¶¶ 47, 65-67, 71 (allegations concerning the Financial Statements Representation); id. ¶¶ 66, 82 (allegations regarding the Financial Statements Representation); id. ¶ 83 (allegation addressing the Accounts Receivable Representation)). LHCP notes the Motion does not challenge the allegations that Defendants breached Sections 2.01, 4.15, and 4.16. Id. at 25 (citing Am. Compl. ¶¶ 81, 84-85). 112 MTD at 39-42 (“‘[b]ecause the requirement of actual controversy goes direct to the court’s subject matter jurisdiction over an action, a motion to dismiss based’ on mootness is properly examined under Rule 12(b)(1), and ‘the court may consider documents and materials extrinsic to the complaint.’” (quoting NAMA Hldgs. v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 435 n.43 (Del. Ch. Apr. 27, 2007))). 113 See MTD at 40; Amended Default Notice. 114 MTD at 41-42. First, LHCP’s requested “costs associated with responding to the [Notice of Default] and acting to enforce the Standby Agreements,” are not an independent injury. MTD at 41 n.10 (citing Diamond v. Charles, 476 U.S. 54, 70-71 (1986) (holding “the mere fact that continued adjudication would provide a remedy for an injury that is only a byproduct of the suit itself does not mean that the injury is cognizable[.]”)); Am. Compl. ¶¶ 98-99. Second, losses associated with “jeopardize[ing] LHCP’s relationship with Live Oak[,]” are speculative. MTD at 42 (noting the Amended Complaint does not allege “any action by Live Oak” or “any actual change to LHCP’s relationship with Live Oak.”); Am. Compl. ¶ 100. 115 MTD Opp’n at 30-32. 116 Id. at 30-31 (citing Am. Compl. ¶ 98; NAMA, 922 A.2d at 435 (holding where “an alleged injury still exists despite the occurrence of intervening events, a justiciable controversy remains, and the mootness doctrine will not operate to deprive a court of jurisdiction to hear the case.”)).

14 Default Notice, “reserve[d] all rights to accelerate, enforce, or collect upon the” Standby

Agreements. 117 Thus, the issue is not moot, because HCSS voluntarily ceased the injurious

conduct due to this litigation, while retaining the ability to resume it at any time. 118

IV. STANDARD OF REVIEW

Civil Rule 12(b)(2) applies to a motion to dismiss for lack of personal jurisdiction. 119

While a plaintiff need not plead facts establishing personal jurisdiction in its complaint, 120 on a

Civil Rule 12(b)(2) motion the “plaintiff bears the burden of showing a basis for [the] exercise of

jurisdiction over a nonresident defendant.” 121 When ruling on such a motion, “the Court may

consider the pleadings, affidavits, and discovery of record.” 122

Civil Rule 12(b)(6) governs motions to dismiss for failure to state a claim upon which

relief can be granted. 123 The Civil Rule 12(b)(6) standard is:

(i) all well-pleaded factual allegations are accepted as true; (ii) even vague allegations are ‘well-pleaded’ if they give the opposing party notice of the claim; (iii) the Court must draw all reasonable inferences in favor of the non-moving party; and (iv) dismissal is inappropriate unless the ‘plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof.’ 124

The Court, however, ignores “conclusory allegations that lack specific supporting factual

allegations.” 125

117 Amended Default Notice. 118 MTD Opp’n at 31-32 (citing Sanborn v. Geico Gen. Ins. Co., 2016 WL 520010, at *10 (Del. Super. Feb. 1, 2016)). Defendants assert this reservation of rights does not abrogate Count II’s mootness, because the Amended Default Notice does not “threaten a breach of the Standby Agreements.” MTD Reply at 26-28. 119 Del. Super. Ct. Civ. R. 12(b)(2). 120 Green Am. Recycling, LLC v. Clean Earth, Inc., 2021 WL 2211696, at *3 (Del. Super. June 1, 2021). 121 AeroGlobal Capital Management, LLC v. Cirrus Industries, Inc., 871 A.2d 428, 437 (Del. 2005). 122 Economical Steel Building Technologies, LLC v. E. West Construction, Inc., 2020 WL 1866869, at *1 (Del. Super. Apr. 14, 2020) (citing Ryan v. Gifford, 935 A.2d 258, 265 (Del. Ch. 2007)). 123 Del. Super. Ct. Civ. R. 12(b)(6). 124 In re General Motors (Hughes) Shareholder Litigation, 897 A.2d 162, 168 (Del. 2006) (quoting Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002)). 125 Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998).

15 V. DISCUSSION

A. THE COURT LACKS PERSONAL JURISDICTION OVER THE STINSONS.

The Motion seeks dismissal of all claims against the Stinsons for lack of personal

jurisdiction. 126 The only basis for personal jurisdiction LHCP proffers, is the APA’s forum

selection clause. 127 Yet, the Stinsons did not sign the APA in their individual capacity, 128 and

“officers of a corporation are not liable on corporate contracts as long as they do not purport to

bind themselves individually.” 129 As such, the Court lacks personal jurisdiction over the

Stinsons, unless they fall within one of the exceptions pursuant to which a non-signatory can be

bound by a forum selection clause.

Courts enforce a forum selection clause against a non-signatory if: “(i) the agreement

contains a valid forum selection provision; (ii) the non-signatory has a sufficiently close

relationship to the agreement, either as an intended third-party beneficiary under the agreement

or under principles of estoppel; and (iii) the claim potentially subject to the forum selection

provision arises from the non-signatory’s standing relating to the agreement.” 130 Here, the

parties only dispute the second element. 131

126 See MTD at 5-9. 127 See Am. Compl. ¶ 15; MTD Opp’n at 32-42; see also National Indus. Group (Holding) v. Carlyle Inv. Mgmt. L.L.C., 67 A.3d 373, 381 (Del. 2013) (“[w]here the parties to the forum selection clause have consented freely and knowingly to the court’s exercise of jurisdiction, the clause is sufficient to confer personal jurisdiction on a court.”). 128 See generally APA. 129 Ruggiero v. FuturaGene, plc., 948 A.2d 1124, 1132 (Del. Ch. 2008). 130 Florida Chemical Company, LLC v. Flotek Industries, Inc., 262 A.3d 1066, 1090 (Del. Ch. Aug. 17, 2021) (citing Capital Group Cos., Inc. v. Armour, 2004 WL 2521295, at *5 (Del. Ch. Oct. 29, 2004)). 131 See supra III.A.

16 1. The Stinsons are Not Third-Party Beneficiaries to the APA for purposes of the Amended Complaint’s claims.

LHCP argues the Stinsons are third-party beneficiaries to the APA. 132 To be a third-party

beneficiary:

(i) the contracting parties must have intended that the third party beneficiary benefit from the contract, (ii) the benefit must have been intended as a gift or in satisfaction of a pre-existing obligation to that person, and (iii) the intent to benefit the third party must be a material part of the parties’ purpose in entering into the contract. 133

While a contractual third-party beneficiary disclaimer does not preclude a party receiving a

“specific grant of benefits” from being a third-party beneficiary, 134 Courts enforce “customized”

no third-party beneficiary provisions under freedom of contract principles. 135 A single carve-out

to an otherwise comprehensive third-party beneficiary disclaimer, evidences a customized

provision. 136

APA Section 9.08 states, “[e]xcept as provided in ARTICLE VIII, this Agreement is for

the sole benefit of the parties hereto . . . and nothing herein . . . is intended to or shall confer upon

any other Person [] [] any legal or equitable right, benefit, or remedy[.]” 137 This customized no

third-party beneficiary provision, shows the parties disclaimed any third-party beneficiary except

for the circumstances covered by Article VIII. While the Stinsons can seek indemnification

under Section 8.03, 138 that does not make them third-party beneficiaries for the purpose of

132 See MTD Opp’n at 35-39. 133 Bako Pathology LP v. Bakotic, 288 A.3d 252, 271 (Del. 2022) (internal quotes omitted). 134 Amirsaleh v. Board of Trade of City of New York, Inc., 2008 WL 4182998, at *4-5 (Del. Ch. Sept. 11, 2008). 135 See Crispo v. Musk, 2022 WL 6693660, at *4 (Del. Ch. Oct. 11, 2022) (“[w]hen a no third-party beneficiaries provision is ‘customized’, however, such as when it ‘contains a carve-out’ listing some groups as third-party beneficiaries, this court has concluded that the parties knew how to confer third-party beneficiary status and deliberately chose not to do so with respect to any unlisted groups.” (quoting Fortis Advisors LLC v. Med. Co., & Melinta Therapeutics, Inc., 2019 WL 7290945, at *4 (Del. Ch. Dec. 18, 2019)). 136 See Fortis Advisors, 2019 WL 7290945, at *4. 137 APA § 9.08. 138 See id. § 8.03 (allowing Seller’s “Affiliates” and “Representatives” to seek indemnification from LHCP).

17 conferring personal jurisdiction in this case for two reasons. First, LHCP specifically denies it is

bringing an Article VIII indemnification claim. 139 More fundamentally, the Stinsons are not

seeking indemnification, rather the Amended Complaint requests damages from them. 140 The

inclusion of a carve-out making individuals third-party beneficiaries “expressly for [one]

purpose[] . . . [demonstrates they] are not third part[y] [beneficiaries] in other contexts.” 141

Therefore, the forum selection clause does not convey personal jurisdiction over the Stinsons,

because this case does not fall within the narrow situation where they are third-party

beneficiaries to the APA.

2. Equitable Estoppel does Not Provide Personal Jurisdiction over the Stinsons.

LHCP contends the APA’s forum selection clause independently binds the Stinsons

under equitable estoppel principles. 142 A forum selection clause binds a non-signatory based on

equitable estoppel if: (1) “the non-signatory accepted a direct benefit from the agreement”; or (2)

it was “foreseeable” the non-signatory would be bound by the agreement. 143 As discussed

above, the Court notes that the customized forum selection provision defeats arguments over

foreseeability. This case does not fit into either of the two instances where “foreseeability” alone

provides personal jurisdiction. 144 This leaves the “direct benefit” test as the sole possible basis

for personal jurisdiction over the Stinsons.

139 See MTD Opp’n at 21-22 (“the [breach of contract] claim is expressly excepted from the APA’s indemnification procedure.”). 140 See Am. Compl. at Prayer for Relief. 141 Crispo, 304 A.3d at 578. 142 MTD Opp’n at 39-42. 143 Florida Chemical, 262 A.3d at 1090 (citing Sustainability P’rs LLC v. Jacobs, 2020 WL 3119034, at *6 (Del. Ch. June 11, 2020)); see also Neurvana Med., LLC v. Balt USA, LLC, 2019 WL 4464268, at *5 (Del. Ch. Sept. 18, 2019) (“[a]lthough the direct-benefit and foreseeability inquiries have been articulated as disjunctive, many Delaware cases have relegated the foreseeability inquiry to a subordinate role.”). 144 Courts have “applied the foreseeability inquiry as a standalone basis for satisfying the closely-related test in two scenarios: (1) where a nonsignatory defendant seeks to enforce a forum selection clause against a signatory plaintiff; or (2) where a controlled nonsignatory, who bears a clear and significant connection to the subject matter of the agreement, could be manipulated by controller signatories in an end-run around the agreement’s forum selection clause.” Golden v. ShootProof Holdings, LP, 2023 WL 2255953, at *7 (Del. Ch. Feb. 28, 2023) (internal

18 A non-signatory “is estopped from refusing to comply with a forum selection clause

when she receives a ‘direct benefit’ from a contract containing a forum selection clause.” 145 The

direct benefit can arise before or after the relevant agreement is executed 146 and “both pecuniary

and non-pecuniary benefits [are] sufficient.” 147 Critically, the benefit must be “actually received,

‘the mere contemplation of a benefit does not directly confer one.’” 148

Here, the Stinsons did not receive a direct benefit under the APA. First, LHCP paid

HCSS the Purchase Price. The Court understands the Stinsons are HCSS’s sole members, but

the Purchase Price was directly paid to HCSS and not the Stinsons. Second, Section 8.03 allows

the Stinsons to seek indemnification from LHCP for breaches of the APA. 149 However, the

Stinsons have never asserted any indemnification claim. Therefore, while the APA contemplates

a direct benefit, the Stinsons have not yet received any benefit. Accordingly, the direct benefit

test does not provide personal jurisdiction over the Stinsons.

The Court can obtain personal jurisdiction over someone through: (i) general personal

jurisdiction; (ii) specific personal jurisdiction that satisfies the long-arm statute and due process;

(iii) transient personal jurisdiction; (iv) waiver; or (v) by contractual agreement. Here the parties

drafted a customized forum selection clause. The parties could have easily drafted the clause to

include the Stinsons for all matters arising under the APA; however, the parties did not do that.

Given this, the Court is not inclined to exercise personal jurisdiction over non-resident

quotations omitted) (citations omitted). Neither situation applies here. The Stinsons, are not the ones seeking to enforce the APA’s forum selection clause. Additionally, the controlled entity, HCSS, not the controllers, signed the APA. See BAM International, LLC v. MSBA Group Inc., 2021 WL 5905878, at *13 (Del. Ch. Dec. 14, 2021) (rejecting the applicability of “the second [foreseeability] factual scenario,” because “the Moving Defendants are alleged to have themselves caused the signatory to act, not the other way around.”). 145 Capital Group, 2004 WL 2521295, at *6. 146 Florida Chemical, 262 A.3d at 1091. 147 Neurvana, 2019 WL 4464268, at *4. 148 Florida Chemical, 262 A.3d at 1091 (quoting Neurvana, 2019 WL 4464268, at *4). 149 See APA § 8.03.

19 individuals who lack a connection with Delaware. The Court GRANTS the Motion and dismiss

all claims against the Stinsons for lack of personal jurisdiction. 150

B. Count III is Duplicative of Count I.

The Motion asks the Court to dismiss LHCP’s fraud claim, because it: (1) fails to comply

with Rule 9(b); and (2) is duplicative of the breach of contract claim. 151 The Court need not

reach the Rule 9(b) issue, because Count III is impermissibly duplicative of Count I.

It is well-settle that “fraud claims cannot be bootstrapped to breach of contract

claims.” 152 For a fraud claim to coexist with a breach of contract claim “the plaintiff must allege

[] the defendant breached a duty [] [] independent of the duties imposed by the contract.” 153 This

includes alleging “distinct” “damages [] under each cause of action[.]” 154 Therefore, even when

a fraudulent inducement claim challenges “separate and distinct conduct” from a breach of

contract claim, failing to allege “separate damages . . . is an independent ground for

dismissal.” 155

LHCP’s fraud claim does not allege damages separate from those sought in its breach of

contract claim. Both Counts I and III seek damages arising from the Business’s improper billing

150 Because the Court lacks personal jurisdiction over the Stinsons, it does not analyze Defendants’ substantive arguments regarding why Counts I and III fail as they related to the Stinsons specifically. 151 See supra III.B. 152 E.g., Anschutz Corporation v. Brown Robin Capital, LLC, 2020 WL 3096744, at *15 (Del. Ch. June 11, 2020). 153 EZLinks Golf, LLC v. PCMS Datafit, Inc., 2017 WL 1312209, at *3 (Del. Super. Mar. 21, 2017) (internal quotation omitted); see Anschutz, 2020 WL 3096744, at *15 (“[w]hen a party claims he was fraudulently induced into entering a contract by promises that were then included in the negotiated language of that very contract, his remedy should be in contract, not tort. Both claims lead to the same destination—a remedy in damages causally related to the broken promises.”). 154 Ridley v. Bayhealth Medical Center, Inc., 2018 WL 1567609, at *6 (Del. Super. Mar. 20, 2018); see inVentiv Health Clinical, LLC v. Odonate Therapeutics, Inc., 2021 WL 252823, at *8 (Del. Super. Jan. 26, 2021) (“[u]nder Delaware’s pleading standard, the damages may not simply ‘rehash’ the damages allegedly caused by the breach-of- contract.” (quoting Khushaim v. Tullow Inc., 2016 WL 3594752 at *6 (Del. Super. June 27, 2016)). 155 inVentiv Health, 2021 WL 252823, at *8 (citing Cornell Glasgow, LLC v. La Grange Props. LLC, 2012 WL 2106945, at *9 (Del. Super. Ct. June 6, 2012)).

20 practices before the Transaction. 156 The Amended Complaint’s Prayer for Relief seeks an

identical quantum of damages for both breach of contract and fraud – $1,000,000. 157 Moreover,

LHCP’s requested relief for Count III explicitly includes “damages . . . [for] breach of

contract.” 158 These allegations show Count III is “a repackaging of the breach of contract

claim.” 159 Hence, LHCP’s fraud claim impermissibly bootstraps its breach of contract claim and

the Court GRANTS the Motion, dismissing Count III.

C. Count I is Ripe and Well-Pled, Except for the Allegation that HCSS Breached the APA’s Non-Competition Provision.

HCSS first argues Count I is not ripe because LHCP did not comply with the APA’s

indemnification procedure – namely the requirement to provide notice before making an

indemnity claim. 160 LHCP argues notice was not required, because Count I states a claim for

willful misconduct, which the parties carved-out of the indemnification requirement. The Court

need not determine whether the APA’s indemnification provisions cover Count I. Even if

Section 8.05(c) applies, LHCP’s failure to provide notice does not make Count I unripe.

156 See Am. Compl. ¶¶ 88 (“[a]s a result of HCSS’s breaches of the Asset Purchase Agreement, LHCP has suffered and will continue to suffer significant financial damages in the form of costs associated with correcting HCSS’s improper and false billing and coding procedures[.]”), 116 (“[i]n addition to the damages to Plaintiff’s expectancy under the Asset Purchase Agreement, Plaintiff is entitled to losses and other costs incurred in attempting to correct Defendants’ invalid business practices.”). LHCP’s breach of contract claim also requests damages associated with HCSS’s alleged failure to provide the “proprietary Excel workbook” described in Section 2.01. Id. ¶ 81. This additional component of Count I’s requested damages does not impact the “bootstrapping” analysis because the relevant inquiry is if the damages sought for fraud are “‘separate and apart from’ the allege breach of contract damages.” Ridley v. Bayhealth Medical Center, Inc., 2018 WL 1567609, at *6 n.60 (Del. Super. Mar. 20, 2018) (quoting Greenstar, LLC v. Heller, 934 F.Supp.2d 672, 697 (D. Del. 2013)). Moreover, exact overlap in requested damages is not required. So long as the fraud claim “seek[s] essentially the same recovery” as the breach of contract claim, it “cannot survive.” Collab9, LLC v. En Pointe Technologies Sales, LLC, 2019 WL 4454412, at *3 (Del. Super. Sept. 17, 2019). 157 Am. Compl. at Prayer for Relief. 158 Id. 159 Collab9, 2019 WL 4454412, at *3. This conclusion is confirmed by the fact that the allegedly fraudulent representations and warranties challenged in Count III are the same provisions LHCP alleges HCSS breached in Count I. Compare Am. Compl. ¶¶ 82-85 (alleging HCSS breached Sections 4.04, 4.12, 4.15, and 4.16 of the APA), with id. ¶¶ 105-108 (alleging Section 4.04, 4.12, 4.15, and 4.16 were fraudulent). 160 MTD at 30-34.

21 The APA’s plain text undercuts HCSS’s ripeness argument. The APA states any failure

to provide notice “shall not [] relieve the Indemnifying Party of its indemnification obligations,

except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of

such failure.” 161 HCSS does not argue it forfeited any rights or defenses because LHCP did not

give notice of its breach claims. 162 Thus, while failure to comply with a contractual pre-

litigation notice provision can justify dismissing a claim, 163 Section 8.05(c)’s text shows that is

not the case here. Hence, the Court finds that Count I is ripe.

Ripeness notwithstanding, the Motion asks the Court to dismiss Count I for failure to

state a claim. 164 To state a breach of contract claim, “a plaintiff must allege the existence of a

contract, breach, and causally related damages.” 165 HCSS only challenges whether LHCP

alleges facts supporting a reasonable inference of breach. The Court concludes, however, the

Amended Complaint states a reasonably conceivable breach claim. 166

161 APA § 8.05(c). 162 See generally MTD; MTD Reply. 163 See, e.g., AluminumSource, LLC v. LLFlex, LLC, 2023 WL 2547996, at *18-19 (Del. Super. Mar. 16, 2023); see also LG Electronics Inc. v. Invention Investment Fund I, L.P., 2024 WL 4675050, at *7 (Del. Super. Sept. 25, 2024) (“where the contract has no language that ‘clearly evidence an intent that litigation be pursued only after notice and an opportunity to cure,’ a breach claim will not fail for lack of notice.” (quoting WyPie Invs., LLC v, Homschek, 2018 WL 1581981, at *13 (Del. Super. Mar. 28, 2018)). 164 MTD at 36-39. Notably, the Motion only challenges the sufficiency of LHCP’s pleadings regarding HCSS’s alleged breach of Sections 4.04, 4.12, 6.07(b)(iii). See id. Therefore, even if the Court were to grant the portion of the Motion dealing with Count I, some part of LHCP’s breach claim would remain. 165 ESG Capital Partners II, LP v. Passport Special Opportunities Master Fund, LP, 2015 WL 9060982, at *3 (Del. Ch. Dec. 16, 2015) (citing VLIW Tech, LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)). 166 See Channel PES Acquisition Co., LLC v. Heritage-Crystal Clean, Inc., 2024 WL 3252166, at *12 (Del. Super. June 30, 2024) (“[Plaintiff] could have pled more detail as to how [the contract was breached], but is not required to. At this stage, it is ‘reasonably conceivable’ that [Plaintiff] could prove the [contract was breached] . . . therefore, the Court declines to dismiss the claim at this point.”). The only specific breach allegation that fails to state a claim, is LHCP’s assertion that HCSS breached Section 6.07 of the APA by competing with the Business post-closing. See Am. Compl. ¶ 38 (citing APA § 6.07). LHCP’s opposition brief does not respond to the Motion’s convincing argument that any Section 6.07 breach claim is not well-pled. See MTD at 37-38. See generally MTD Opp’n. Therefore, LHCP has waived any claim based on Section 6.07. See In re Dow Chem. O. Deriv. Litig., 2010 WL 66769, at *7 (Del. Ch. Jan 11, 2010) (holding a plaintiff abandons a claim when it fails to respond or address defendants’ argument in their motion to dismiss). Accordingly, the Court GRANTS the Motion regarding the portion of Count I based on Section 6.07.

22 The Amended Complaint contains extensive allegations regarding the allegedly improper

billing scheme before the Transaction when Defendants controlled the Business. 167 LHCP ties

Defendants’ billing scheme to the allegedly breached contractual representations and

warranties. 168 These allegations “are sufficient to put [HCSS] on notice of the claim against

[it].” 169 While HCSS challenges the factual sufficiency of LHCP’s allegations, 170 that argument

does not compel dismissal. 171 Because the Amended Complaint alleges facts which “if true,

would satisfy the elements of breach of contract,” Count I is well-pled. 172 The Court DENIES

the Motion regarding Count I, except for the portion based on APA Section 6.07. 173

E. Count II is Moot.

The Motion argues that the Court should dismiss Count II as moot. 174 Count II alleges

HCSS breached the Standby Agreements by accelerating payment of the Seller Notes without

Live Oak Bank’s consent and before satisfying the Loan. 175 HCSS insists Count II is moot,

because the Amended Default Notice retracted the Notice of Default’s “election to accelerate the

outstanding principal and accrued interest[.]” 176

The mootness doctrine “requires a court to dismiss a claim ‘if the substance of the dispute

disappears due to the occurrence of certain events following the filing of an action.’” 177

167 See Am. Compl. ¶¶ 2-3, 20-22, 44-45, 49-50, 65-67. 168 See id. ¶¶ 82-85 169 LaPoint v. AmerisourceBergen Corp., 2007 WL 1454744, at *2 (Del. Ch. May 3, 2007) (holding dismissal of a breach of contract claim is inappropriate where such notice exists). 170 See MTD at 38-39. 171 See D’Antonio v. Wesley College, Inc., 2023 WL 9021767, at *4 (Del. Super. Dec. 29, 2023) (holding a breach of contract claim should not be dismissed if there are “material issues of fact” regarding the claim). 172 Sorantino v. Newton, 2019 WL 2355018, at *1 (Del. Super. June 4, 2019). 173 See supra n.164. 174 MTD at 39-42. As the party invoking the mootness doctrine, HCSS has “the burden of establishing that the controversy has become moot.” Employers Insurance Company of Wausau v. First State Orthopedics, PA, 312 A.3d 597, 608 (Del. 2024). 175 See Am. Compl. ¶¶ 90-100 (citing Notice of Default). 176 Amended Default Notice. 177 NAMA Holdings, LLC, 922 A.2d at 435 (quoting Multi–Fineline Electronix, Inc. v. WBL Corp. Ltd., 2007 WL 431050, at *8 (Del. Ch. Feb. 2, 2007)); see General Motors Corp. v. New Castle County, 701 A.2d 819, 823 (Del.

23 Conversely, “if the alleged injury still exists despite the occurrence of intervening events, a

justiciable controversy remains” and the mootness doctrine is inapplicable. 178 Hence, “mootness

only justifies dismissal when ‘it is certain’ that a favorable judgment ‘could have no practical

effect on the parties.’” 179 Voluntary cessation of allegedly wrongful conduct after litigation

commences does not automatically render a dispute moot. 180 A claim is not moot “when a

defendant continues to defend the legality of its actions, making it not clear why the defendant

would refrain from the same conduct in the future.” 181

LHCP argues HCSS’s reservation of rights in the Amended Default Notice is akin to

defending the legality of the Notice of Default’s acceleration of the Seller Notes. 182 Yet, the

Amended Default Notice did not represent that HCSS has a current right to accelerate payment

of the Seller Notes, or that doing so would not breach the Standby Agreements. 183 Nor did

HCSS threaten to reaccelerate payment in the immediate future. 184 Rather, the Amended Default

Notice simply reiterated the position that LHCP defaulted on the Seller Notes, and reserved

HCSS’s rights to respond appropriately. 185 Such a reservation of rights is not the same as

defending the legality of a previous course of conduct. Thus, because HCSS rectified its alleged

1997) (“[a]ccording to the mootness doctrine, although there may have been a justiciable controversy at the time the litigation was commenced, the action will be dismissed if that controversy ceases to exist.” (emphasis in original)). 178 NAMA Holdings, 922 A.2d at 435. 179 B/E Aerospace, Inc. v. J.A. Reinhardt Holdings, LLC, 2020 WL 4195762, at *2 (Del. Super. July 21, 2020) (quoting PPL Corp. v. Riverstone Hldgs., LLC, 2020 WL 3422397, at *3 (Del. Ch. Jun. 22, 2020)). 180 See Employers Insurance Company of Wausau, 312 A.3d at 608. For example, the mootness doctrine does not compel dismissal if the challenged conduct is “capable of repetition yet evading review. Id. at 611. That exception does not apply here, however, because while HCSS’s conduct “is capable of repetition, it will not necessarily evade review.” See, e.g., City of Wilmington v. K.J.C., 931 A.2d 436 (Table) (Del. 2007) (discussing when the capable of repetition but evading review exception applies). Specifically, HCSS’s demand for payment under the Standby Agreements is not the type of conduct that is inherently unlikely to cease or become moot before the merits of any alleged breach are litigated. 181 Sanborn v. Geico General Insurance Company, 2016 WL 520010, at *10 (Del. Super. Feb. 1, 2016) (internal quotes omitted) (cleaned up). 182 See MTD Opp’n at 30-32. 183 See Amended Default Notice. 184 See id. 185 See id.

24 breach of the Standby Agreements and LHCP articulates no cognizable remaining harm, 186

Count II is moot. The Court GRANTS the Motion, dismissing Count II.

VI. CONCLUSION

For the foregoing reasons, the Court GRANTS in part, and DENIES in part, Defendants’

Motion. Specifically, the Court: (i) dismisses all claims against the Stinsons for lack of personal

jurisdiction; (ii) dismisses Count III as duplicative of Count I; and (iii) dismisses Count II as

moot. Count I remains pending, except for the exception discussed above.

IT IS SO ORDERED.

August 18, 2025 Wilmington, Delaware

/s/ Eric M. Davis Eric M. Davis, President Judge

cc: File&ServeXpress

186 Allegation that HCSS’s breach of the Standby Agreements harmed LHCP’s relationship with Live Oak Bank are unsupported by any specific factual allegations and are thus be rejected as conclusory. See In re General Motors, 897 A.2d at 168. See generally Am. Compl. Therefore, that alleged harm does not obviate Count II’s mootness. Similarly, LHCP’s suggestion that its request for attorneys’ fees associated with HCSS’s alleged breach of the Standby Agreements is a cognizable harm that overcomes mootness, is contrary to United States Supreme Court precedent. See Diamond, 476 U.S. at 70-71 (rejecting the argument that a claim for attorneys’ fees along gave a plaintiff Article III standing, because “the mere fact that continued adjudication would provide a remedy for an injury that is only a byproduct of the suit itself does not mean that the injury is cognizable[.]”).