Templeton v. Emcare, Inc.
868 F. Supp. 2d 333
D. Del.2012Background
- Plaintiff Templeton, M.D., P.A. sues EmCare seeking declaratory relief and, in the alternative, breach of contract and implied covenant claims tied to an Earn-Out under a 2008 Purchase Agreement.
- Defendant EmCare answers with counterclaims (counts 1–5) and plaintiff moves to dismiss counts 1, 3, 4, and 5.
- Templeton is Maryland single shareholder; plaintiff is a Maryland professional association; EmCare is a Delaware corporation.
- The Earn-Out under §2.3 contemplates seven times EBITDA over/above thresholds up to $10 million, with a March 1, 2010 deadline for a Deficiency Amount calculation.
- §11.12 provides that time is of the essence; the court must determine if this creates a valid condition precedent and whether alleged oral extensions plausibly modify the deadline.
- The court applies Rule 12(b)(6) to evaluate the sufficiency of the counterclaims at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of §2.3 claim viability | Templeton argues no Deficiency Amount due due to lack of timely written calculation. | EmCare contends extensions and time extensions preserved obligations. | Count 1 survives; pleaded orally extended deadline supports an obligation. |
| Implied covenant claim viability | Count three involves implied good faith; allege denial of fruits of contract. | If extensions were proper, conduct may violate implied covenant. | Count 3 survives; duplicative pleading not fatal under Rule 8(d). |
| Fraudulent misrepresentation viability | Plaintiff claims misstatements relate to performance, not formation. | Economic losses; no independent fraud apart from contract performance. | Count 4 dismissed under the economic loss doctrine (no independent fraud). |
| Fraudulent inducement viability | Fraud alleged at contract formation; claims fall within exception to the economic loss doctrine. | Fraud claims require particularity and scienter; plausibility shown. | Count 5 survives given heightened pleading standard and pleaded scienter. |
Key Cases Cited
- VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606 (Del. 2003) (elements for breach of contract; damages proof standards)
- Iacono v. Barici, 2006 WL 3844208 (Del. Super. 2006) (relied upon for contract pleading standards (official reporter not provided))
- Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728 (Del. 2006) (ordinary meaning of contract language; time is of the essence discussions)
- Anderson v. Wachovia Mortg. Corp., 497 F. Supp. 2d 572 (D. Del. 2007) (implied covenant in contracts; fact-intensive consideration)
- Wal–Mart Stores, Inc. v. AIG Life Ins. Co., 901 A.2d 106 (Del. 2006) (implied covenant and interpretation in contracts)
- Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434 (Del. 2005) (implied covenant; reasonableness standard)
- Calloway v. Green Tree Servicing, LLC, 599 F. Supp. 2d 543 (D. Del. 2009) (pleading scope under Rule 8 and 12(b)(6) in contract disputes)
- Kuhn Const. Co. v. Ocean and Coastal Consultants, Inc., 844 F. Supp. 2d 519 (D. Del. 2012) (fraud claims addressing performance of contract; economic loss doctrine)
- Pryor v. Aviola, 301 A.2d 306 (Del. Super. 1973) (independent duty outside merger context)