RAA Management, LLC v. Savage Sports Holdings, Inc.
2012 Del. LEXIS 271
| Del. | 2012Background
- RAA, a Delaware investment firm, sought to buy Savage; NDA required to access confidential information.
- NDA provided that Savage made no representations about the accuracy of due diligence information and limited liability to representations in a final sale agreement.
- RAA conducted due diligence, then walked away and demanded $1.2 million in sunk costs; Savage declined.
- RAA alleged Savage misrepresented or concealed three unrecorded liabilities during diligence, including a Superfund investigation, unionization at BowTeeh, and a Bow-Tech litigation risk.
- Superior Court dismissed the complaint under the NDA’s non-reliance and waiver provisions, and did not decide choice-of-law but assumed New York law applied.
- This Court affirmed, holding the NDA’s non-reliance and waiver clauses bar RAA’s fraud claims, and that the peculiar-knowledge exception does not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the NDA’s non-reliance clause bar fraud claims? | RAA argues the clause is misread and does not bar intentional fraud. | Savage contends the clause unambiguously bars all due diligence fraud claims. | Yes; the clause unambiguously bars such fraud claims. |
| Is the NDA’s disclaimer ambiguous and thus insufficient to bar fraud? | RAA claims ambiguity could permit fraud claims to proceed. | Savage argues the disclaimer is unambiguous and enforceable under NY/Delaware law. | No; the disclaimer is unambiguous and enforceable. |
| Does the peculiar-knowledge exception apply to bar enforcement here? | RAA invokes peculiar-knowledge to avoid the disclaimer. | Savage notes the exception is inapt for sophisticated bidders negotiating pre-agreement terms. | No; peculiarity exception does not apply. |
| Should public policy considerations prevent enforcing non-reliance provisions? | RAA argues against contractually shielding lies. | Savage cites Abry Partners endorsing enforcement of such clauses. | No; strong policy favors enforcing the non-reliance and waiver terms. |
Key Cases Cited
- Great Lakes Chem. Corp. v. Pharmacia Corp., 788 A.2d 544 (Del.Ch.2001) (disclaimers preclude fraud claims in due diligence.)
- In re IBP, Inc. S’holders Litig., 789 A.2d 14 (Del.Ch.2001) (confidentiality agreements bar fraud where disclosures are not in final contract.)
- Warner Theatre Assocs. Ltd. P’ship v. Metro. Life Ins. Co., 149 F.3d 134 (2d Cir.1998) (disclaimers in negotiation agreements limit litigation and fraud claims.)
- Abry Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032 (Del.Ch.2006) (public policy supports enforcing contractually binding non-reliance clauses.)
- Norton v. Poplos, 443 A.2d 1 (Del.1982) (distinguishes when a non-reliance clause applies; see Great Lakes/IBP lineage.)