IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
PREMIER HEALTHCARE, INC., ) D/B/A NEWARK MANOR NURSING ) HOME, ) ) Plaintiff, ) ) v. ) C.A. No. 2023-1263-BWD ) RENÉ LAMONT WATERS, RENEY ) MAXINE WATERS, and KIA ) WATERS, ) ) Defendants. )
ORDER GRANTING MOTION TO DISMISS
WHEREAS:1
A. On April 16, 2024, plaintiff Premier Healthcare, Inc. (“Plaintiff”) filed
a First Amended Complaint in this action (the “Amended Complaint”). First Am.
Compl. [hereinafter “Am. Compl.”], Dkt. 19.
B. Plaintiff is a long-term nursing care facility in Newark, Delaware. Non-
party James H. Bailey (“Decedent”) was a resident of the facility from February
through December 2023.
1 The following facts are taken from the Amended Complaint and the documents incorporated by reference therein. See Freedman v. Adams, 2012 WL 1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to and heavily relies upon documents in her complaint, these documents are considered to be incorporated by reference into the complaint[.]” (citation omitted)). C. On August 16, 2022, Decedent executed a deed transferring property at
514 Dougfield Road in Newark, Delaware (the “Property”) to his son, René Lamont
Waters, and granddaughter, Reney Maxine Waters, for one dollar. Am. Compl., Ex.
B. The Amended Complaint alleges that Decedent made this transfer when he “was
otherwise insolvent,” “inten[ding] to default the rights of creditors.” Am. Compl.
¶ 6. It does not allege any other facts concerning Decedent’s assets or liabilities at
the time of the transfer.
D. Six months later, on February 14, 2023, Plaintiff, Decedent, and
Decedent’s daughter-in-law, Kia Waters, as “Resident Representative,”2 executed a
Resident Admission Agreement (the “Admission Agreement”) under which
Decedent would receive long-term care services at Newark Manor Nursing Home.
See Am. Compl., Ex. C. The Admission Agreement provides that the Resident
Representative shall “[p]ay for all charges from the Resident’s income or resources”;
“[n]otify Newark Manor immediately and in writing if the Resident’s resources are
depleted”; “[i]f applicable, take all actions necessary to secure Medicaid coverage
on the Resident’s behalf in a timely and proper manner”; and “[n]ot misappropriate
the Resident’s income or resources, or use the Resident’s income or resources to
benefit someone other than the Resident.” Am. Compl., Ex. C § 3.1. The Admission
2 The Admission Agreement states that “Resident Representative has been designated by Resident or the court to make admission and/or financial decisions on behalf of Resident.” 2 Agreement further provides that “Resident shall be responsible to pay the per diem
rate . . . of Newark Manor for the Base Services” and “Resident shall also be
responsible for the payment for Additional Services provided to Resident.” Id. § 4.
E. Decedent passed away on December 7, 2023. Am. Compl. ¶ 2. At that
time, Decedent owed an outstanding balance of $94,730.00 due to Plaintiff. Am.
Compl., Ex. A. The Amended Complaint does not allege any other facts concerning
Decedent’s assets or liabilities at the time of his death.
F. The Amended Complaint asserts five counts. Count I alleges a claim
for fraudulent transfer under 6 Del. C. § 1304 against René Lamont Waters and
Reney Maxine Waters. Count II alleges a claim for unjust enrichment against all
Defendants. Count III alleges a claim for breach of contract against Kia Waters.
Counts IV and V allege claims for fraudulent misrepresentation and negligent
misrepresentation against Kia Waters and René Lamont Waters.
G. On April 26, 2024, Defendants moved to dismiss the Amended
Complaint (the “Motion to Dismiss”).3 Dkt. 21. This action was reassigned to me
on August 1, 2024. Dkt. 29. The Court heard oral argument on October 3, 2024.
3 On May 24, 2024, Defendants filed an opening brief in support of the Motion to Dismiss. Defs.’ Op. Br. In Supp. Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “OB”], Dkt. 24. On June 21, 2024, Plaintiff filed an answering brief in opposition to the Motion to Dismiss. Pl.’s Ans. Br. In Opp’n Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “AB”], Dkt. 26. On July 12, 2024,
3 NOW, THEREFORE, IT IS HEREBY ORDERED, this 4th day of October
2024, as follows:
1. Defendants have moved to dismiss the Amended Complaint under
Court of Chancery Rule 12(b)(6) for failure to state a claim. When reviewing a
motion to dismiss under Rule 12(b)(6), Delaware courts “(1) accept all well pleaded
factual allegations as true, (2) accept even vague allegations as ‘well-pleaded’ if they
give the opposing party notice of the claim, [and] (3) draw all reasonable inferences
in favor of the non-moving party . . . .” Cent. Mortg. Co. v. Morgan Stanley Mortg.
Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011). “[T]he governing pleading standard
in Delaware to survive a motion to dismiss is reasonable ‘conceivability.’” Id. at
537.
2. Count I of the Amended Complaint alleges a claim for fraudulent
transfer under Title 6, Section 1304(a) of the Delaware Code, which states:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) With actual intent to hinder, delay or defraud any creditor of the debtor; or
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
Defendants filed a reply brief in further support of the Motion to Dismiss. Defs.’ Reply Br. In Supp. Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “RB”], Dkt. 27. 4 a. Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
b. Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.
6 Del. C. § 1304(a).
3. Defendants seek dismissal of Count I because “Delaware law
recognizes more than one type of fraudulent transfer claim” and “Plaintiff failed to
identify the precise fraudulent transfer claim it intends to pursue . . . .” OB at 12.
That argument fails because Plaintiff may plead actual and constructive transfer
theories in the alternative. See, e.g., Cleveland-Cliffs Burns Harbor LLC v.
Boomerang Tube, LLC, 2023 WL 5688392, at *9-13 (Del. Ch. Sept. 5, 2023)
(declining to dismiss a fraudulent transfer count where the complaint advanced both
actual and constructive fraudulent transfer theories). Still, “a right to plead
alternative theories does not obviate the obligation to provide factual support for
each theory.” Yu v. GSM Nation, LLC, 2018 WL 2272708, at *21 (Del. Super. Apr.
24, 2018).
4. To plead a claim for actual fraudulent transfer under Section
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
PREMIER HEALTHCARE, INC., ) D/B/A NEWARK MANOR NURSING ) HOME, ) ) Plaintiff, ) ) v. ) C.A. No. 2023-1263-BWD ) RENÉ LAMONT WATERS, RENEY ) MAXINE WATERS, and KIA ) WATERS, ) ) Defendants. )
ORDER GRANTING MOTION TO DISMISS
WHEREAS:1
A. On April 16, 2024, plaintiff Premier Healthcare, Inc. (“Plaintiff”) filed
a First Amended Complaint in this action (the “Amended Complaint”). First Am.
Compl. [hereinafter “Am. Compl.”], Dkt. 19.
B. Plaintiff is a long-term nursing care facility in Newark, Delaware. Non-
party James H. Bailey (“Decedent”) was a resident of the facility from February
through December 2023.
1 The following facts are taken from the Amended Complaint and the documents incorporated by reference therein. See Freedman v. Adams, 2012 WL 1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to and heavily relies upon documents in her complaint, these documents are considered to be incorporated by reference into the complaint[.]” (citation omitted)). C. On August 16, 2022, Decedent executed a deed transferring property at
514 Dougfield Road in Newark, Delaware (the “Property”) to his son, René Lamont
Waters, and granddaughter, Reney Maxine Waters, for one dollar. Am. Compl., Ex.
B. The Amended Complaint alleges that Decedent made this transfer when he “was
otherwise insolvent,” “inten[ding] to default the rights of creditors.” Am. Compl.
¶ 6. It does not allege any other facts concerning Decedent’s assets or liabilities at
the time of the transfer.
D. Six months later, on February 14, 2023, Plaintiff, Decedent, and
Decedent’s daughter-in-law, Kia Waters, as “Resident Representative,”2 executed a
Resident Admission Agreement (the “Admission Agreement”) under which
Decedent would receive long-term care services at Newark Manor Nursing Home.
See Am. Compl., Ex. C. The Admission Agreement provides that the Resident
Representative shall “[p]ay for all charges from the Resident’s income or resources”;
“[n]otify Newark Manor immediately and in writing if the Resident’s resources are
depleted”; “[i]f applicable, take all actions necessary to secure Medicaid coverage
on the Resident’s behalf in a timely and proper manner”; and “[n]ot misappropriate
the Resident’s income or resources, or use the Resident’s income or resources to
benefit someone other than the Resident.” Am. Compl., Ex. C § 3.1. The Admission
2 The Admission Agreement states that “Resident Representative has been designated by Resident or the court to make admission and/or financial decisions on behalf of Resident.” 2 Agreement further provides that “Resident shall be responsible to pay the per diem
rate . . . of Newark Manor for the Base Services” and “Resident shall also be
responsible for the payment for Additional Services provided to Resident.” Id. § 4.
E. Decedent passed away on December 7, 2023. Am. Compl. ¶ 2. At that
time, Decedent owed an outstanding balance of $94,730.00 due to Plaintiff. Am.
Compl., Ex. A. The Amended Complaint does not allege any other facts concerning
Decedent’s assets or liabilities at the time of his death.
F. The Amended Complaint asserts five counts. Count I alleges a claim
for fraudulent transfer under 6 Del. C. § 1304 against René Lamont Waters and
Reney Maxine Waters. Count II alleges a claim for unjust enrichment against all
Defendants. Count III alleges a claim for breach of contract against Kia Waters.
Counts IV and V allege claims for fraudulent misrepresentation and negligent
misrepresentation against Kia Waters and René Lamont Waters.
G. On April 26, 2024, Defendants moved to dismiss the Amended
Complaint (the “Motion to Dismiss”).3 Dkt. 21. This action was reassigned to me
on August 1, 2024. Dkt. 29. The Court heard oral argument on October 3, 2024.
3 On May 24, 2024, Defendants filed an opening brief in support of the Motion to Dismiss. Defs.’ Op. Br. In Supp. Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “OB”], Dkt. 24. On June 21, 2024, Plaintiff filed an answering brief in opposition to the Motion to Dismiss. Pl.’s Ans. Br. In Opp’n Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “AB”], Dkt. 26. On July 12, 2024,
3 NOW, THEREFORE, IT IS HEREBY ORDERED, this 4th day of October
2024, as follows:
1. Defendants have moved to dismiss the Amended Complaint under
Court of Chancery Rule 12(b)(6) for failure to state a claim. When reviewing a
motion to dismiss under Rule 12(b)(6), Delaware courts “(1) accept all well pleaded
factual allegations as true, (2) accept even vague allegations as ‘well-pleaded’ if they
give the opposing party notice of the claim, [and] (3) draw all reasonable inferences
in favor of the non-moving party . . . .” Cent. Mortg. Co. v. Morgan Stanley Mortg.
Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011). “[T]he governing pleading standard
in Delaware to survive a motion to dismiss is reasonable ‘conceivability.’” Id. at
537.
2. Count I of the Amended Complaint alleges a claim for fraudulent
transfer under Title 6, Section 1304(a) of the Delaware Code, which states:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) With actual intent to hinder, delay or defraud any creditor of the debtor; or
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
Defendants filed a reply brief in further support of the Motion to Dismiss. Defs.’ Reply Br. In Supp. Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “RB”], Dkt. 27. 4 a. Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
b. Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.
6 Del. C. § 1304(a).
3. Defendants seek dismissal of Count I because “Delaware law
recognizes more than one type of fraudulent transfer claim” and “Plaintiff failed to
identify the precise fraudulent transfer claim it intends to pursue . . . .” OB at 12.
That argument fails because Plaintiff may plead actual and constructive transfer
theories in the alternative. See, e.g., Cleveland-Cliffs Burns Harbor LLC v.
Boomerang Tube, LLC, 2023 WL 5688392, at *9-13 (Del. Ch. Sept. 5, 2023)
(declining to dismiss a fraudulent transfer count where the complaint advanced both
actual and constructive fraudulent transfer theories). Still, “a right to plead
alternative theories does not obviate the obligation to provide factual support for
each theory.” Yu v. GSM Nation, LLC, 2018 WL 2272708, at *21 (Del. Super. Apr.
24, 2018).
4. To plead a claim for actual fraudulent transfer under Section
1304(a)(1), “a plaintiff must meet the particularity standard of Rule 9(b) by pleading
‘specific supporting facts describing the circumstances of the transfer,’ such as the
5 who, what, and when of the challenged transfer.” Cleveland-Cliffs Burns Harbor
LLC, 2023 WL 5688392, at *10. Intent may be averred generally, but the complaint
nevertheless must “plead facts showing intent to defraud with specific supporting
facts describing the circumstances of the transfer.” JPMorgan Chase Bank, N.A. v.
Ballard, 213 A.3d 1211, 1245 (Del. Ch. 2019); see also 6 Del. C. § 1304(b)
(providing a non-exhaustive list of factors to consider “[i]n determining actual intent
under paragraph (a)(1)”).
5. The Amended Complaint fails to state a claim under Section 1304(a)(1)
because it does not allege specific supporting facts describing the circumstances of
the transfer from which the Court can infer an actual intent to hinder, delay, or
defraud any creditor. While the Amended Complaint alleges that the Property was
transferred to family members for nominal value in August 2022, it does not allege,
other than in conclusory fashion, that Decedent was insolvent at the time of that
transfer, nor does it allege that at the time the Property was transferred, Decedent
was ill, in need of nursing assistance, or expected (or should have expected) to incur
expenses or liabilities for any other reason.4
4 The Amended Complaint alleges that the transfer was made “with intent to default the rights of creditors.” Am. Compl. ¶ 6. But even on a motion to dismiss, the Court “need not ‘accept conclusory allegations unsupported by specific facts or . . . draw unreasonable inferences in favor of the non-moving party.’” McMillan v. Nelson, 2024 WL 3311812, at *7 (Del. Ch. July 5, 2024) (alteration in original) (quoting Price v. E.I. DuPont de Nemours & Co., Inc., 26 A.3d 162, 166 (Del. 2011), overruled on other grounds by Ramsey v. Ga. S. Univ. Advanced Dev. Ctr., 189 A.3d 1255 (Del. 2018)). 6 6. To plead a claim for constructive fraudulent transfer under Section
1304(a)(2), “a plaintiff must allege ‘(i) that the transferor failed to receive reasonably
equivalent value for the asset transferred; and (ii) that the transferor was insolvent at
the time of the transfer, or was rendered insolvent by the transfer.’” Cleveland-Cliffs
Burns Harbor LLC, 2023 WL 5688392, at *9 (quoting In re Samson Res. Corp.,
2023 WL 4003814, at *24 (Bankr. D. Del. June 14, 2023)). Plaintiff “is not required
to plead these elements with particularity. Rather, the claim is subject to the more
lenient Rule 8(a) notice pleading standard.” Id.
7. The Amended Complaint fails to state a claim under Section 1304(a)(2)
because it does not allege facts from which the Court can infer that at the time of the
transfer, Decedent reasonably should have believed he would incur debts beyond his
ability to pay as they became due—in other words, that he was, or expected to
become, insolvent. Despite conclusory allegations that “[a] substantial portion of
[Decedent’s] assets, funds, and income” was transferred and Decedent “was
otherwise insolvent,”5 Plaintiff pleads no facts supporting an inference that Decedent
was insolvent. Indeed, the Amended Complaint does not allege any facts about
Decedent’s assets or income. See BV Advisory P’rs, LLC v. Quantum Computing
Inc., 2024 WL 2723119, at *20 (Del. Ch. May 28, 2024) (dismissing claim under
5 Am. Compl. ¶ 5. 7 Section 1304(a)(2) where “Plaintiff ha[d] not adequately alleged that [the
transferor’s] liabilities [we]re in excess of a reasonable market value of its assets”).
And again, the Amended Complaint does not plead facts supporting an inference
that at the time of the transfer, Decedent knew he would need care that his other
assets and Medicare or Medicaid would not cover. Count I therefore fails to state a
claim for actual or constructive fraudulent transfer and should be dismissed.
8. Count V of the Amended Complaint alleges a claim for negligent
misrepresentation. “A claim of negligent misrepresentation, or equitable fraud,
requires proof of all of the elements of common law fraud except ‘that plaintiff need
not demonstrate that the misstatement or omission was made knowingly or
recklessly.’” Fortis Advisors LLC v. Dialog Semiconductor PLC, 2015 WL 401371,
at *9 (Del. Ch. Jan. 30, 2015). “[A]n equitable fraud or negligent misrepresentation
claim lies only if there is either: (i) a special relationship between the parties over
which equity takes jurisdiction (like a fiduciary relationship) or (ii) justification for
a remedy that only equity can afford.” Id.
9. The Amended Complaint does not allege a special relationship between
Plaintiff and Defendants; “[t]o the contrary, the gravamen of the present dispute
arises from a transaction that ostensibly was the product of arms-length negotiation
. . . .” Id. Nor does the Amended Complaint seek an equitable remedy in connection
with Count V. See Am. Compl. ¶ 34 (“As a direct and proximate result of the
8 negligent misrepresentations of Defendants Kia Waters and René Lamont Waters,
Newark Manor has suffered, and will continue to suffer, compensatory damages,
consequential damages, direct damages, punitive damages,6 and attorney’s fees.”).
Count V therefore fails to state a claim and should be dismissed.
10. Counts II, III, and IV—claims for unjust enrichment, breach of
contract, and fraudulent misrepresentation, respectively—are legal claims for which
Plaintiff seeks monetary damages. See Am. Compl. ¶ 14 (“Newark Manor is entitled
to judgment against Defendants, René Lamont Waters, Reney Maxine Waters and
Kia Waters in an amount determined to be the fair value for the residence and care
of James H. Bailey, which is the amount due Plaintiff as set forth in Exhibit A
hereto.”); id. ¶ 18 (“Newark Manor is entitled to Judgement against Defendant Kia
Waters in the amount of $94,730.00; plus pre-judgement interest at the rate of 18%
per annum; attorney’s fees; and the costs of this action.”); id. ¶ 26 (“Newark Manor
is entitled to compensatory damages, consequential damages, direct damages,
punitive damages, the costs of this action, and attorney’s fees.”). Without an
equitable hook on which to base jurisdiction, Counts II, III, and IV should be
dismissed with leave to transfer to the Superior Court pursuant to 10 Del. C. § 1902.
6 “The Court of Chancery does not award punitive damages.” Envo, Inc. v. Walters, 2009 WL 5173807, at *18 (Del. Ch. Dec. 30, 2009). 9 11. Accordingly, the Motion to Dismiss is GRANTED with leave to
transfer Counts II, III, and IV to the Superior Court.7
12. This order is a final report pursuant to Court of Chancery Rules 143 and
144.8
/s/ Bonnie W. David
Bonnie W. David Magistrate in Chancery
7 At oral argument, Plaintiff argued that if the Motion to Dismiss is granted, it should be permitted leave to amend the Amended Complaint. Under Court of Chancery Rule 15(a)(5)(A), however, “[i]f a party wishes to amend the party’s complaint in response to a motion to dismiss under Rules 12(b)(6) or 23.1, the party must amend the party’s complaint—or seek leave to amend . . . before the party’s response to the motion is due . . . .” Ct. Ch. R. 15(a)(5)(A)(1). Plaintiff’s request to amend is, therefore, denied. 8 See Ct. Ch. R. 144(d)(1) (“In actions that are not summary in nature or in which the Court has not ordered expedited proceedings, any party taking exception shall file a notice of exceptions within eleven days of the date of the report.”). 10