IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

PR ACQUISITIONS, LLC,

 

Plaintiff/Counterclaim Defendant, 

 v.

MIDLAND FUNDING LLC, 

Defendant/Counterclaim 

Plaintiff/Third-Party Plaintiff, 

 v.

OPERATING PARTNERS CO., LLC,

Third-Party Defendant. 

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 C.A. No. 2017-0465-TMR

MEMORANDUM OPINION

Date Submitted: January 23, 2018

Date Decided: April 30, 2018

Garvan F. McDaniel and Daniel K. Hogan, HOGAN MCDANIEL, Wilmington, 

Delaware; Eric D. Herschmann, Michael P. Bowen, and Olga Lucia Fuentes Skinner, 

KASOWITZ BENSON TORRES LLP, New York, New York; Attorneys for 

Plaintiff/Counterclaim Defendant PR Acquisitions, LLC and Third-Party Defendant 

Operating Partners Co., LLC. 

Matthew F. Boyer, Ryan P. Newell, and Mary I. Akhimien, CONNOLLY 

GALLAGHER LLP, Wilmington, Delaware; Alan F. Kaufman and Joseph G. 

Silver, HINSHAW & CULBERTSON LLP, New York, New York; Attorneys for 

Defendant/Counterclaim Plaintiff/Third-Party Plaintiff Midland Funding, LLC. 

MONTGOMERY-REEVES, Vice Chancellor.
1 

In this action, a seller of consumer debt accounts alleges that a buyer’s failure 

to release escrow funds to seller violates the parties’ purchase agreement. Seller 

moves for summary judgment asserting that buyer did not comply with the notice 

provisions of a contemporaneously executed escrow agreement, that any claims 

against the escrow are untimely, and that the escrow funds therefore should be 

released. Buyer cross-moves for partial summary judgment arguing that it provided 

actual notice to seller by sending a letter to the escrow agent, which seller learned of 

before the notice deadline expired.

Buyer also asserts counterclaims for fraud, negligent misrepresentation, 

breach of contract, indemnification, and unjust enrichment against seller. Buyer 

asserts the same claims and an aiding and abetting fraud claim against a servicer to 

the purchased accounts, which was party to a contemporaneously executed servicing 

agreement. Buyer alleges that seller and servicer fraudulently induced buyer to 

agree to the sale by not disclosing changes to collection practices and 

misrepresenting the value of the purchased accounts in documents and 

communications, causing buyer in excess of $6 million in damages. Buyer also 

alleges that seller and servicer owe buyer an additional $350,000 for failing to remit 

payments and pay adjustments for repurchases of certain purchased accounts under 

the relevant agreements. Seller and servicer move to dismiss buyer’s counterclaims 

and third-party claims. Seller contends that buyer’s fraud and misrepresentation 
2 

allegations lack the requisite particularity, that buyer’s indemnification right has 

expired, and that buyer’s failure to comply with the notice provisions of the purchase 

and escrow agreements bars its breach of contract claims. Servicer contends it is not 

bound by the terms of the purchase and escrow agreements and that buyer fails to 

identify any actions by servicer related to buyer’s counterclaims or third-party

claims. 

Buyer also moves to amend its complaint to bolster its claims against seller 

and servicer.

For the reasons discussed herein, I conclude that buyer fails to state a claim 

for fraud and negligent misrepresentation because certain of buyer’s allegations lack 

the requisite particularity and because buyer admits that it possessed data that would 

have allowed it to discern the remaining purported misrepresentations. The breach 

of contract and indemnification claims fail because buyer did not give the notice 

required by the purchase and escrow agreements. Buyer’s unjust enrichment claims 

are dismissed as duplicative. Buyer also fails to state claims against servicer. 

Buyer’s fraud and negligent misrepresentation claims against servicer fail for the 

same reasons buyer’s fraud and negligent misrepresentation claims against seller 

fail, and because buyer does not identify any specific acts of servicer in furthering 

seller’s purported fraud. Buyer’s aiding and abetting fraud claim also fails because 

buyer does not adequately allege any underlying tortious conduct. Buyer’s breach 
3 

of contract claims against servicer fail because servicer is not a party to the purchase 

or escrow agreements and buyer alleges no facts whatsoever relating to a purported 

breach of the servicing agreement. Buyer’s indemnification claim against servicer 

fail because buyer does not allege conditions requiring indemnification under the 

servicing agreement, and buyer’s unjust enrichment claim against servicer is 

duplicative. Finally, I conclude that buyer’s proposed amendments to its 

counterclaims and third-party claims are futile because the amendments would not 

change the Court’s analysis of the claims. Therefore, I grant seller’s Motion for 

Summary Judgment to release the escrow funds, deny buyer’s Motion for Partial 

Summary Judgment to hold the escrow funds, grant seller and servicer’s Motion to 

Dismiss buyer’s counterclaims and third-party claims, and deny buyer’s Motion to 

Amend.

I. BACKGROUND

For purposes of the Motion for Summary Judgment, the facts are drawn from 

the pleadings and the evidence submitted by the parties.

1

 For purposes of the Motion 

to Dismiss, the facts are drawn from Defendant’s Amended Counterclaims and 

Third-Party Complaint and the documents incorporated by reference therein.2

 

1

 See Ct. Ch. R. 56(c). 

2

 On a motion to dismiss under Rule 12(b)(6), the Court may consider a document 

outside the pleadings if “the document is integral to a plaintiff’s claim and 

incorporated into the complaint” or “the document is not being relied upon to prove 

the truth of its contents.” Vanderbilt Income & Growth Assocs., L.L.C. v. 
4 

A. Parties

Plaintiff PR Acquisitions, LLC (“PRA”) is a Nevada limited liability company 

that holds a number of consumer debt accounts in Puerto Rico.3

 Third-Party 

Defendant Operating Partners Co., LLC (“OPC”) is an affiliate of PRA that serviced 

the purchased accounts,4 but it has since been replaced as servicer by Midland Credit 

Management, Inc. (“MCM”), an affiliate of Defendant Midland Funding LLC 

(“Midland”).

5

 Midland is one of the nation’s largest buyers of unpaid debt.6

B. Facts

PRA first approached Midland about a possible sale of PRA’s debt accounts 

sometime in 2013 and, later that year, the parties entered into discussions.

7

 The 

accounts consist of “auto loans, charged-off consumer receivables, and charged-off 

credit card accounts owned by [PRA]” and include, among other things, the right to 

 

Arvida/JMB Managers, Inc., 691 A.2d 609, 613 (Del. 1996) (citing In re Santa Fe 

Pac. Corp. S’holder Litig., 669 A.2d 59, 69-70 (Del. 1995)); see Allen v. Encore 

Energy P’rs, L.P., 72 A.3d 93, 96 n.2 (Del. 2013). 

3

 Pl. & Third-Party Def.’s Mot. to Expedite 6. 

4

 Def.’s Am. Countercls. & Third-Party Compl. ¶ 25. 

5

 Id. ¶ 24. 

6

 Pl.’s Verified Compl. ¶ 2. 

7

 Id.; Def.’s Am. Countercls. & Third-Party Compl. ¶ 28. 
5 

collect “in any litigation or bankruptcy[.]”8

 On November 18, 2013, PRA sent 

Midland an offering memorandum (the “Offering Memorandum”)9 regarding the 

potential sale, which expressly disclaimed the “accuracy or completeness” of the 

information therein.10

Due diligence occurred in the “first and second quarters of 2014, with many 

of the meetings and other interactions concentrated in March, April and May of 

2014.”11 During this time, Midland employees “spent months conducting multiple 

due-diligence sessions at [PRA and OPC’s] offices in Puerto Rico.”12 “Representing 

[PRA and OPC] at these meetings were, among others, owners Nicolas Kogan and 

Rodolfo Sanchez-Colberg, and employees Alejandro Uriarte and Maribel OrtizCastro.”13 PRA and OPC provided data to Midland and “made numerous other 

representations, including written statements in the form of offering memoranda, 

emails and other deal-related documents, and oral statements during in-person and 

 

8

 Purchase Agreement § 1.3. 

9

 Pl. & Third-Party Def.’s Mot. to Dismiss Ex. 7. 

10 Offering Memorandum 1. 

11 Def.’s Am. Countercls. & Third-Party Compl. ¶ 2. 

12 Id. 

13 Id. It is unclear from Midland’s filings whether these individuals are owners and 

employees of PRA or OPC. 
6 

telephone conversations.”14 Among this data were “liquidation curves” purportedly 

showing the “liquidation rates” of the part of the purchased accounts that were “in 

the legal channel.”15 Midland reviewed the diligence provided and did not raise any 

objections at the time.16

On May 30, 2014, PRA sold the debt accounts to Midland pursuant to a 

purchase agreement (the “Purchase Agreement”)17 and an escrow agreement (the 

“Escrow Agreement”).18 On that same day, MCM and OPC entered into an account 

servicing agreement (the “Servicing Agreement”),

19 which provides that OPC 

service the purchased accounts under the auspices of MCM.20 Several provisions of 

these agreements are relevant to the pending motions.

 

14 Id. ¶ 3. 

15 Id. ¶¶ 4, 7. 

16 Pl.’s Verified Compl. ¶ 16. Midland made certain representations and warranties in 

the Purchase Agreement, including that “(i) it is a sophisticated purchaser of 

consumer charged-off accounts and has the expertise to evaluate the risks and merits 

of the transaction . . .; (ii) in making its decision to purchase . . . it made an 

independent investigation of them; and (iii) the information provided by PRA to 

Midland was adequate and a sufficient basis on which to determine to acquire, as it 

did, the Accounts.” Id. ¶ 15; Purchase Agreement § 6.1. 

17 Pl. & Third-Party Def.’s Mot. to Dismiss Ex. 1. 

18 Id. at Ex. 2. 

19 Id. at Ex. 6. 

20 Servicing Agreement § 2. OPC was later terminated as servicer. Def.’s Am. 

Countercls. & Third-Party Compl. ¶ 45. 
7 

The Purchase Agreement provides in Section 8.2 that PRA shall indemnify 

Midland “from and against any and all liability and losses” Midland may suffer “as 

a result of . . . the inaccuracy of any of [PRA’s] representations and warranties 

contained in this Agreement . . . the breach of any of [PRA’s] covenants contained 

in this Agreement . . . [or] the origination, servicing, maintenance or administration 

of the Accounts prior to the Closing Date[.]”21 “The obligations of [PRA] under this 

Section 8.2 shall survive until [May 30, 2017].”22 Midland provided no written 

request to PRA for indemnification under Section 8 before May 30, 2017.23

The Purchase Agreement requires in Section 5.1 that PRA repurchase 

“Ineligible Accounts”24 within 180 days after May 30, 2014.25 “[Midland] shall 

notify [PRA] of each Purchased Account which [Midland] seeks to have [PRA] 

repurchase in a mutually agreed upon format accompanied by the following 

applicable documentary evidence in support of [Midland’s] Ineligibility 

Determination.”26 The Purchase Agreement then lists acceptable forms of 

 

21 Purchase Agreement § 8.2(a). 

22 Id. § 8.2(b). 

23 See Pl.’s Mot. for Summ. J. & Pl. & Third-Party Def.’s Mot. to Dismiss Ex. 3. 

24 Purchase Agreement § 1.24.

25 Id. § 5.1. 

26 Id. 
8 

documentary evidence: (1) a copy of “[PRA] letter verifying action[,]” “canceled, 

final check[,]” “[PRA] provided 1099[,]” or “other evidence as mutually agreed” 

verifying a settlement with an account holder; (2) a case number or court papers 

verifying the bankruptcy of an account holder; (3) “police report or an FTC executed 

affidavit” verifying fraud; or (4) “[d]eath certificate or satisfactory evidence from an 

approved third party service” verifying a deceased account holder.27 PRA must pay 

the “Adjustment Amount for each Purchased Account being repurchased to 

[Midland] not later than thirty (30) days after [Midland] provides reasonable 

evidence to [PRA] in support of [Midland’s] determination that the Purchased 

Accounts in question are Ineligible Accounts[.]”28

In addition, Section 12 of the Purchase Agreement provides the following 

requirements for notice under any provision of that agreement: 

Any and all notices, consents or other communications 

required or permitted under this Agreement shall be in 

writing and shall be delivered by either (a) Federal Express 

or similar nationally recognized overnight carrier; or (b) 

certified U.S. mail, postage prepaid and return receipt 

requested; and addressed as indicated below or otherwise 

indicated by the parties in writing.29 

 

27 Id. § 5.2. 

28 Id. § 5.1. 

29 Id. § 12. 
9 

The Purchase Agreement then lists an address for Midland to send notice to PRA.30

Midland provided no written request or documentary evidence to PRA for 

repurchase of “Ineligible Accounts” under Section 5.1 before November 26, 2014, 

180 days after May 30, 2014. 

The Purchase Agreement also requires in Section 2.6.1 that PRA “forward to 

[Midland] all funds received by [PRA] with respect to the Purchased Accounts . . . 

following the Closing Date.”31 PRA also made certain representations in Sections 

7.5, 7.12, 7.13 and 7.14 of the Purchase Agreement as to the accuracy of the 

diligence provided and the character of the purchased accounts, including that the 

purchased accounts were bought, sold, and maintained in compliance with 

“Applicable Laws.”32

The Purchase Agreement then provides that “[PRA’s] total liability” and

“[Midland’s] exclusive remedy with respect to th[e] [Purchase] Agreement, any 

provision hereof, or the transactions contemplated herein (including, without 

limitation, with respect to repurchase of ineligible accounts, indemnification of 

[Midland] . . . and any other obligations of [PRA] pursuant thereto) is limited to the 

 

30 Id. 

31 Id. § 2.6.1. 

32 Id. §§ 7.5, 7.12-14. 
10

amount held in escrow . . . pursuant to the Escrow Agreement[.]”33 The Escrow 

Agreement requires that $6 million be held in escrow for the satisfaction of any 

claims related to the Purchase Agreement,34 provides the terms for reduction of the 

escrow funds, and requires that Midland provide PRA with notice of each claim it 

has against the escrow funds.35 To establish a timely claim, Midland must “provide 

written notice of each Pending Claim and each Anticipated Claim . . . to the Escrow 

Agent and to [PRA] prior to [May 31, 2017].”36 The Escrow Agreement states the 

following requirements for notice:

All notices or other communications hereunder shall be 

deemed to have been duly given and made if in writing and 

if served by personal delivery upon the party for whom it 

is intended, if delivered by registered or certified mail, 

return receipt requested, or by a national courier service, 

or if sent by facsimile, provided, however, that the 

facsimile is promptly followed by telephone confirmation 

thereof to the appropriate person at the address set forth 

below, or at such other address as may be designated in 

writing hereafter, in the same manner, by such person.37

 

33 Id. § 10. This limitation of liability provision provides that “[Midland’s] obligations 

under Section 8.2(c)” are excluded, but neither party argues that any of the claims 

arise from Section 8.2(c). Id. 

34 Escrow Agreement § 1.1. 

35 Id. § 1.3. 

36 Id. 

37 Id. § 4.7. 
11

The Escrow Agreement then gives PRA’s address.38 In the absence of a timely claim 

by Midland, the escrow agent must release the escrow funds “together with any 

interest, dividends and any other income earned thereon” to PRA on May 31, 2017.

39

Also on May 30, 2014, OPC and MCM entered in the Servicing Agreement. 

Several provisions of this agreement are relevant to Midland’s third-party claims 

against OPC. The Servicing Agreement provides in Section 3.2 that OPC shall 

“remit and account for all Net Proceeds to MCM in a mutually agreeable format and 

timeframe” and that OPC shall deposit all “Net Proceeds” by “the end of the next 

Business Day after [OPC’s] receipt thereof.”40 For purposes of this agreement, “Net 

Proceeds” means any payment by a “consumer” to OPC, less certain costs incurred 

by OPC.41 In addition, Section 5.1 provides that OPC shall indemnify Midland 

“from and against any and all losses, claims, damages, expenses (including 

reasonable attorneys’ fees) and costs suffered or incurred (whether suit is instituted 

or not) as a result of, arising out of or otherwise relating in any way to[,]” among 

other things, OPC’s breach of the Servicing Agreement, “any intentional, reckless 

 

38 Id. 

39 Id. § 1.3. 

40 Servicing Agreement § 3.2. 

41 Id. §§ 1.45, 1.58, 3.2. 
12

or negligent acts or omissions” by OPC, or OPC’s “violation of any Applicable Law

in connection with its performance of this Agreement.”42

On May 26, 2017, Midland drafted a letter43 identifying “legal claims [against 

the escrow] in relation to the [Purchase Agreement].”44 In this letter, Midland claims 

that PRA breached: (1) Section 2.6.1 by not forwarding funds received by PRA with 

respect to the purchased accounts; (2) Section 5 by not paying the “Adjustment 

Amount” for “Ineligible Accounts;” and (3) Sections 7.5, 7.10, 7.11, 7.13 and 7.14 

by “misrepresent[ing] the character of the Purchased Accounts . . . engag[ing] in 

Mass Settlement activities . . . adversely select[ing] accounts to be sold . . . [and] 

exclud[ing] certain information relating to [PRA’s] activities from [PRA’s] records 

provided to [Midland].”45 The letter did not contain any indemnification claim. 

Midland’s senior vice president and general counsel gave the letter to his executive 

assistant to send.46 The executive assistant then sent the letter only to the escrow 

 

42 Id. § 5.1. 

43 Pl.’s Mot. for Summ. J. & Pl. & Third-Party Def.’s Mot. to Dismiss Ex. 3. 

44 Def.’s Answering Br. in Opp’n to Summ. J. 8. While the claims in this letter overlap 

with certain of Midland’s counterclaims and third-party claims, Midland only cites 

it in discussing whether it provided adequate notice to PRA and does not otherwise 

specifically discuss the claims therein in setting forth its counterclaims and thirdparty claims. 

45 Pl.’s Mot. for Summ. J. & Pl. & Third-Party Def.’s Mot. to Dismiss Ex. 3. 

46 Def.’s Answering Br. in Opp’n to Summ. J. 9. 
13

agent by facsimile and Federal Express.47 Midland never sent a copy of the letter or 

any other form of notice to PRA.48 On May 30, 2017, the escrow agent informed 

PRA of the letter containing Midland’s claims.49 Midland concedes that the sole 

reason for its failure to provide notice pursuant to the Purchase Agreement and 

Escrow Agreement was “[h]uman error” on Midland’s side.50 On June 7, 2017, PRA 

asked Midland to release the escrow funds and disputed the claims set forth in 

Midland’s letter.51 Midland refused to release the escrow funds, and PRA filed this 

action. 

C. Procedural History

On June 21, 2017, PRA filed a complaint seeking the release of the escrow 

funds. On July 25, 2017, Midland brought counterclaims against PRA and thirdparty claims against OPC. The counterclaims and third-party claims allege 

contractual breaches, fraud, aiding and abetting fraud, negligent misrepresentation, 

indemnification claims, and unjust enrichment arising from the sale of the accounts. 

On August 11, 2017, PRA moved for summary judgment on its request to release 

 

47 Id. at 9-10. 

48 Id. 

49 Oral Arg. Tr. 7. 

50 Id. at 34. 

51 Pl.’s Verified Compl. ¶¶ 36-41. 
14

the escrow funds, and PRA and OPC moved to dismiss the counterclaims and thirdparty claims, respectively. On September 15, 2017, Midland amended its 

counterclaims and third-party claims, and PRA and OPC moved to dismiss the 

amended counterclaims and third-party claims, respectively, on October 4, 2017. On 

December 8, 2017, Midland moved for partial summary judgment seeking 

declaratory judgment that the escrow funds should not be released until Midland’s 

counterclaims and third-party claims are adjudicated. On December 19, 2017, 

Midland moved to amend its counterclaims and third-party claims a second time. 

Following the completion of briefing for all four motions, the Court held oral 

argument on January 23, 2018.

II. MOTION FOR SUMMARY JUDGMENT ANALYSIS

PRA moves for summary judgment and seeks the release of the escrow funds

arguing that Midland failed to give proper notice of any claims against the escrow

under the terms of the Purchase Agreement and Escrow Agreement.

52 Midland 

cross-moves for partial summary judgment on the issue of notice, arguing that PRA 

received actual notice of Midland’s claims and that actual notice substantially 

complies with the requirements of the Purchase Agreement and Escrow 

 

52 Pl. & Third-Party Def.’s Br. in Support of Pl.’s Mot. for Summ. J. & Pl. & ThirdParty Def.’s Mot. to Dismiss 1. 
15

Agreement.53 Midland further “seek[s] a declaration that the escrow funds should 

remain in escrow pending the resolution of Midland’s claims against [PRA and 

OPC].”54

Summary judgment will be “granted if the pleadings, depositions, answers to 

interrogatories and admissions on file, together with the affidavits, show that there 

is no genuine issue as to any material fact and that the moving party is entitled to a 

judgment as a matter of law.”55 The movant bears the initial burden of 

demonstrating that there is no question of material fact.56 When the movant carries 

that burden, the burden shifts to the nonmoving party “to present some specific, 

admissible evidence that there is a genuine issue of fact for a trial.”57 When 

considering a motion for summary judgment, the evidence and the inferences drawn 

from the evidence are to be viewed in the light most favorable to the nonmoving 

 

53 Def.’s Answering Br. in Opp’n to Summ. J. 15. 

54 Id. at 3. 

55 Twin Bridges Ltd. P’ship v. Draper, 2007 WL 2744609, at *8 (Del. Ch. Sept. 14, 

2007) (citing Ct. Ch. R. 56(c)). 

56 Deloitte LLP v. Flanagan, 2009 WL 5200657, at *3 (Del. Ch. Dec. 29, 2009). 

57 Id. 
16

party.

58 Even so, the non-moving party may not rely on allegations or denials in the 

pleadings to create a material factual dispute.59

The pending motions for summary judgment require me to examine the 

Purchase Agreement and Escrow Agreement. “Delaware law adheres to the 

objective theory of contracts, i.e., a contract’s construction should be that which 

would be understood by an objective, reasonable third party.”60 “When interpreting 

a contract, this Court ‘will give priority to the parties’ intentions as reflected in the 

four corners of the agreement,’ construing the agreement as a whole and giving 

effect to all its provisions.”61 The terms of the contract control “when they establish 

the parties’ common meaning so that a reasonable person in the position of either 

party would have no expectations inconsistent with the contract language.”62 

Standard rules of contract interpretation state that “a court must determine the intent 

 

58 Ct. Ch. R. 56(e); Judah v. Del. Trust Co., 378 A.2d 624, 632 (Del. 1977); Fike v. 

Ruger, 754 A.2d 254, 260 (Del. Ch. 1999), aff’d, 752 A.2d 112 (Del. 2000). 

59 Fike, 754 A.2d at 260. 

60 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010). 

61 Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (quoting GMG Capital Invs., 

LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)). 

62 Id. at 368 (quoting Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 

1232 (Del. 1997)). 
17

of the parties from the language of the contract.”63 “In giving sensible life to a realworld contract, courts must read the specific provisions of the contract in light of the 

entire contract.”64 

The applicable provisions in the Purchase Agreement and Escrow Agreement 

are express and clear. The Purchase Agreement provides that the escrow funds will 

be held in accordance with the Escrow Agreement.65 The Escrow Agreement 

requires the release of the escrow funds if there is no timely claim before the 

expiration date on May 31, 2017.66 To establish a timely claim, the Escrow 

Agreement requires that notice be sent either by a nationally recognized courier 

service or by certified mail to a specified PRA address, or by facsimile to a specified 

PRA location followed by a telephone call to confirm receipt thereof.

67 If Midland 

 

63 Id. (quoting Twin City Fire Ins. Co. v. Del. Racing Ass’n, 840 A.2d 624, 628 (Del. 

2003)). 

64 Chi. Bridge & Iron Co. N.V. v. Westinghouse Elec. Co. LLC, 166 A.3d 912, 913-14 

(Del. 2017). 

65 Purchase Agreement § 10. 

66 Escrow Agreement § 1.13. Compliance with the Purchase Agreement notice 

provision is not relevant to whether the escrow funds should be released. As 

discussed above, Midland also had to provide written notice to PRA to enforce 

certain provisions of the Purchase Agreement. The Purchase Agreement notice 

provision requires written notice of any “Ineligible Accounts” under Section 5.1 by 

November 26, 2014, and written notice to enforce its indemnification rights under 

Section 8.2 by May 30, 2017. Purchase Agreement §§ 5.1, 8.2. 

67 Escrow Agreement § 4.7. 
18

fails to provide notice by these methods by the expiration date, then the terms of the 

transaction documents negotiated by the parties dictate that the escrow funds should 

be released.68

Midland acknowledges that it did not comply with these requirements.69 But 

Midland notes that the escrow agent made PRA aware of Midland’s escrow claims 

before the expiration date.

70 Midland argues that because PRA received actual 

notice, case law allows the Court to ignore the terms of the notice requirements in 

the Escrow Agreement. Midland further argues that the actual text of the Purchase 

Agreement and Escrow Agreement do not require strict compliance with the notice 

provision. These arguments fail.

The cases upon which Midland relies to argue that actual notice reflects 

substantial compliance with the requisite notice provision in the Escrow Agreement 

are inapposite and inapplicable here. Corporate Property Associates 6 v. Hallwood 

Group Inc. concerned the validity of an agreement to prepay the principal on certain 

debt in exchange for a release of claims.71 The plaintiffs argued that the agreement 

was invalid because the opposing party did not follow the precise terms of the notice 

 

68 Id. § 1.3. 

69 Oral Arg. Tr. 34. 

70 Def.’s Answering Br. in Opp’n to Summ. J. 1. 

71 792 A.2d 993 (Del. Ch. 2002), rev’d on other grounds, 817 A.2d 777 (Del. 2003). 
19

provision contained in a prior settlement agreement.

72 But this Court found that 

“literal compliance with th[e] [notice] provision would have been impossible” 

because the named individual to whom notice was directed no longer worked at the 

organization to which notice was due.73 In the instant case, Midland does not argue 

that compliance with the notice provision was impossible; instead, Midland admits 

that the cause of non-compliance was “[h]uman error.”74

In Kelly v. Blum, the plaintiff contended that a merger was void for failure to 

comply with notice provisions in a contract, which required that certain classes of 

LLC interests receive notice at least five business days before a merger.

75 This Court 

found that the express terms of the contract allowed for several different forms of 

notice, including by commercial delivery service.

76 Thus, this Court found that the 

plaintiff could not complain that he received notice by commercial delivery service 

instead of by U.S. mail under the terms of that contract.77 Additionally, while the 

plaintiff in that case alleged that notice was not timely sent, this Court simply 

 

72 Id. at 1000. 

73 Id. 

74 Oral Arg. Tr. 34. 

75 2010 WL 629850, at *8 (Del. Ch. Feb. 24, 2010). 

76 Id. 

77 Id. 
20

disagreed with the plaintiff’s contention about the proper count of calendar days 

around a holiday, concluding that the notice met the terms of the contract regarding

timing as well.78 In the instant case, Midland never directly gave notice to PRA in 

any form before the expiration date. 

HCR-Manor Care v. Fugee involved a son who took his mother to a 

rehabilitation center following an injury.

79 At the time of admission, the son “stated 

his intention to take his mother home at the conclusion of her therapy[.]” 80 He 

executed an “Admission Agreement” with the rehabilitation center that required 

written notice of termination in advance of a patient’s departure. 81 In the middle of 

an ensuing guardianship fight with his sister, the son requested that the hospital move 

his mother to a new facility.

82 The son later delivered written notice to the hospital

and moved his mother.83 The hospital attempted to bill the son for the time between 

his first verbal request to move his mother and the second written request on the 

 

78 Id. 

79 2010 WL 780020, at *1 (Del. Super. Jan. 26, 2010), recons. granted in part, denied 

in part, 2010 WL 1175209 (Del. Super. Mar. 25, 2010). 

80 Id. 

81 Id. at *2. 

82 Id. 

83 Id. 
21

grounds that the son had failed to provide written notice at the earlier date.84 The 

Delaware Superior Court began its analysis by noting that the Admission Agreement 

was a contract of adhesion, arising from the imbalance of bargaining power.85 The 

Superior Court then concluded that the son’s earlier notice substantially complied 

with the notice requirement in the Admission Agreement.

86 But the instant case does 

not involve a contract of adhesion. PRA and Midland are sophisticated parties who 

negotiated the Purchase Agreement and Escrow Agreement at arm’s length. Further, 

in each case to which Midland points, the party actually transmitted notice to whom 

it was due. Here, Midland sent notice to a third party (the escrow agent) who then 

informed PRA of Midland’s escrow claims. Thus, I reject Midland’s argument that 

Midland substantially complied with the notice provision in the Escrow Agreement.

Midland’s argument that the contract does not call for strict compliance with 

its own terms also fails.

87 Midland relies on Eurofin Panlabs, Inc. v. Ricerca 

Biosciences, LLC for the proposition that failure to comply with a notice requirement 

should not be strictly construed. 88 But that case is inapplicable. In Eurofin, the 

 

84 Id. 

85 Id. at *5. 

86 Id. at *6. 

87 Def.’s Answering Br. in Opp’n to Summ. J. 15, 19. 

88 2014 WL 2457515 (Del. Ch. May 30, 2014). 
22

contract at issue “d[id] not define reasonable notice or explain how the Court should 

enforce a failure to comply with the provision.”89 In the instant case, however, the 

Escrow Agreement specifies what constitutes notice and requires the release of the 

escrow funds if such notice is not provided by May 31, 2017. 

Midland offers no reason other than its own error for its failure to comply with 

the notice provision it negotiated in the Escrow Agreement. Thus, I grant PRA’s 

Motion for Summary Judgment and deny Midland’s Motion for Partial Summary 

Judgment. I need not address Midland’s request that funds not be released pending 

resolution of the counterclaims and third-party claims because I dismiss all those 

claims for the reasons discussed below. 

III. MOTION TO DISMISS ANALYSIS

Midland asserts fraud, negligent misrepresentation, breach of contract, 

indemnification, and unjust enrichment counterclaims and third-party claims against 

PRA and OPC, respectively, regarding the accounts Midland purchased. Midland 

also asserts an aiding and abetting fraud claim against OPC. PRA and OPC move 

to dismiss Midland’s counterclaims and third-party claims pursuant to Court of 

Chancery Rule 12(b)(6) and, with respect to fraud and negligent misrepresentation, 

Rule 9(b).

 

89 Id. at *4. 
23

In considering a motion to dismiss under Rule 12(b)(6), “(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; [and] (iii) the Court must draw 

all reasonable inferences in favor of the non-moving party.”90 While I must draw all 

reasonable inferences in Midland’s favor, I need not “accept as true conclusory 

allegations ‘without specific supporting factual allegations.’”91 “[D]ismissal is 

inappropriate unless the ‘plaintiff would not be entitled to recover under any 

reasonably conceivable set of circumstances susceptible of proof.’”92

Court of Chancery Rule 9(b) statesthat “[i]n all averments of fraud or mistake, 

the circumstances constituting fraud or mistake shall be stated with particularity,” 

while “[m]alice, intent, knowledge and other condition of mind of a person may be 

averred generally.”93 “To satisfy Rule 9(b), a complaint must allege: (1) the time, 

place, and contents of the false representation; (2) the identity of the person making 

the representation; and (3) what the person intended to gain by making the 

 

90 In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006) (quoting 

Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002)). 

91 Id. (quoting In re Santa Fe Pac. Corp. S’holder Litig., 669 A.2d 59, 65-66 (Del. 

1995)). 

92 Id. (quoting Savor, 812 A.2d at 896-97). 

93 Ct. Ch. R. 9(b); Trusa v. Nepo, 2017 WL 1379594, at *9 (Del. Ch. Apr. 13, 2017) 

(citing Addy v. Piedmonte, 2009 WL 707641, at *19 (Del. Ch. Mar. 18, 2009); Abry 

P’rs V, L.P. v. F & W Acquisitions LLC, 891 A.2d 1032, 1050 (Del. Ch. 2006)).
24

representations.”94 “Despite these particularity requirements for the circumstances, 

though, state of mind and knowledge may be averred generally pursuant to Rule 9(b) 

because ‘any attempt to require specificity in pleading a condition of mind would be 

unworkable and undesirable.’”95

A. Midland’s Counterclaims Against PRA

All of Midland’s counterclaims against PRA relate to the purchased accounts 

and PRA’s sale of those accounts to Midland pursuant to the Purchase Agreement. 

The Purchase Agreement, however, provides that Midland’s “exclusive remedy” for 

claims arising from the Purchase Agreement or any transactions contemplated 

thereby “is limited to the amount held in escrow . . . pursuant to the Escrow 

Agreement.”96 As discussed, the Escrow Agreement requires that Midland provide 

notice of any escrow claim arising from the sale in a particular manner by May 31, 

2017. The Escrow Agreement further requires the release of all escrow funds to 

PRA if Midland fails to give the necessary notice of the claims before that date.

97 

Midland did not provide the necessary notice of its claims in time. Thus, unless 

 

94 Abry P’rs, 891 A.2d at 1050 (citing H-M Wexford LLC v. Encorp, Inc., 832 A.2d 

129, 145 (Del. Ch. 2003)). 

95 Id. (citing Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 

624 A.2d 1199, 1208 (Del. 1993)). 

96 Purchase Agreement § 10. 

97 Escrow Agreement § 1.3. 
25

Midland can present a reason for the Court not to enforce the terms of the Purchase 

Agreement, Midland cannot sustain its claims against PRA.

1. Midland fails to state a claim for fraud

Midland alleges several fraudulent “schemes” by PRA and OPC in connection 

with the sale of the purchased accounts.

98 PRA contends that it “may not be held 

liable for any amount beyond the funds held in escrow at the time the claim is 

asserted” and that “[t]o the extent the escrow is released by grant of summary 

judgment in PRA’s favor, Midland cannot sustain any claims for damages on any 

grounds against PRA.”99 Midland responds that its failure to provide proper notice 

should not bar Midland’s claims because PRA fraudulently induced Midland into 

agreeing to the sale. 

Midland argues that the limitation of liability provision in the Purchase 

Agreement cannot bar Midland’s claims, because this Court, in Abry Partners V, 

L.P. v. F & W Acquisitions LLC held that “to the extent that the Stock Purchase 

Agreement purports to limit the [s]eller’s exposure for its own conscious 

participation in the communication of lies to the [b]uyer, it is invalid under the public 

 

98 Def.’s Am. Countercls. & Third-Party Compl. ¶ 1. Midland does not distinguish 

between PRA’s and OPC’s actions in these “schemes”—referring to them as “PRA 

Defendants”—but for purposes of this discussion I will only refer to PRA because 

Midland’s fraud claims are primarily directed at PRA. 

99 Pl. & Third-Party Def.’s Mem. of Law in Support of Mot. to Dismiss 19. 
26

policy of this State.”100 That is, public policy in Delaware prohibits a seller from 

“insulat[ing] itself from the possibility that the sale would be rescinded if the [b]uyer 

can show either: 1) that the [s]eller knew that the Company’s contractual 

representations and warranties were false; or 2) that the [s]eller itself lied to the 

[b]uyer about a contractual representation and warranty.”101 To make such a 

showing, a buyer must “prove that the [s]eller acted with an illicit state of mind, in 

the sense that the [s]eller knew that the representation was false and [] communicated 

it to the [b]uyer.”102 “The [b]uyer may not escape the contractual limitations on 

liability by attempting to show that the [s]eller acted in a reckless, grossly negligent, 

or negligent manner.”103

As discussed, the limitation of liability clause provides that PRA’s total 

liability and Midland’s exclusive remedy with respect to the Purchase Agreement is 

limited to the amount held in escrow pursuant to the Escrow Agreement. Thus to 

avoid this limit on its recovery, Midland must sufficiently allege fraud by PRA with 

respect to the sale. To state a claim for fraud, a claimant must: 

[P]lead facts supporting an inference that: (1) the 

defendant falsely represented or omitted facts that the 

 

100 891 A.2d at 1064 

101 Id. 

102 Id. 

103 Id. 
27

defendant had a duty to disclose; (2) the defendant knew 

or believed that the representation was false or made the 

representation with a reckless indifference to the truth; (3) 

the defendant intended to induce the plaintiff to act or 

refrain from acting; (4) the plaintiff acted in justifiable 

reliance on the representation; and (5) the plaintiff was 

injured by its reliance.104

As explained above, fraud claims must be stated with particularity.

a. The legal channel scheme

Midland alleges that PRA misrepresented the value of the purchased accounts 

by omitting information about its collection practices and falsely representing the 

performance of the purchased accounts in the “legal channel.” Midland claims that 

PRA failed to disclose during due diligence that it had changed its “long-standing 

practice[] of only filing collection litigation on higher-quality accounts and began to 

flood the ‘legal channel’ with lawsuits related to lower-quality accounts.”105

Midland alleges that this omission made various purported representations in 

the Offering Memorandum false. First, Midland claims that PRA provided 

misleading “liquidation curves” that “purported to show the rate at which the 

Accounts could be expected to be converted to cash.”106 Midland claims this rate 

 

104 Id. at 1050. 

105 Def.’s Am. Countercls. & Third-Party Compl. ¶ 7. 

106 Id. ¶ 3. Midland alleges that PRA also provided the “liquidation curves” under 

separate cover. Id. ¶ 8. 
28

would have been much different if the “liquidation curves” had included that “[PRA

and OPC] had [] begun suing on low-quality Accounts that they had historically 

avoided pursuing.”107 

Second, Midland alleges that PRA misrepresented that “there was an 

opportunity to create additional value by filing more collection lawsuits in the 

future.”108 Midland states that the following excerpts of the Offering Memorandum

reflect the false statements regarding the opportunity to file more collection lawsuits: 

OPC has steadily identified and sent a growing population 

of accounts to the legal process . . . OPC has not pursued 

legal activity on almost 400,000 accounts. With an 

average age since charge-off of approximately 80 months 

(6.67 years) there is plenty of time and material to continue 

to build upon a robust legal stream. OPC was unable to 

pursue all that were deemed to be suit-worthy due to 

budgetary constraints – leaving opportunity to ramp up 

legal efforts in the short-term.

***

[Liquidation rates] achieved from 2008-2012 have been 

relatively constant and early results on 2013 litigation 

appear to be tracking prior years.

***

Conventional wisdom would generally assume that as the 

time between legal placement and the charge-off gets 

more distant that returns available from litigation would 

get progressively lower or more volatile. The data from 

 

107 Id. ¶ 9. 

108 Id. ¶ 33. 
29

OPC’s performance on PR Acquisitions’ accounts 

suggests that while there may be some modest softening 

in liquidation rates, accounts deemed suitworthy have 

relatively stable liquidation rates and consistent curves 

until they push towards the outer-end of Puerto Rico’s [15 

year] statute [of limitations].109

 Third, Midland claims that PRA misrepresented that the purchased accounts 

“contained ‘substantial legal opportunity.’”110 Midland states that the following 

parts of the Offering Memorandum reflect the false statements regarding the

substantial legal opportunity in the purchased accounts.

With a 15-year statute of limitations, litigation can be 

successfully deployed over an extended period of time – 

even on an aging portfolio . . . Significant inventory – and 

time – are still available for pursuit of litigation . . .

Liquidation rates through the legal process are sustainable 

– even with an aging portfolio . . . Liquidation rates aren’t 

just stable based on the calendar year accounts were placed 

into legal, but have also been stable based on the time 

difference between legal assignment and charge-off . . .

Low level of dismissals and fallouts – and many are 

curable over time.111

Midland alleges that the omission and the resulting misstatements in the Offering 

Memorandum inflated Midland’s valuation of the purchased accounts because it 

 

109 Id. ¶ 33 (citing Offering Memorandum 44, 46, 47). 

110 Id. ¶ 5. 

111 Id. ¶ 32 (citing Offering Memorandum 1). 
30

“created the misimpression that the Accounts were of far higher-quality, and would 

generate far greater cash flows, than was likely in reality.”112

 Midland has stated the facts regarding the alleged misrepresentations in the 

Offering Memorandum with the requisite particularity under Rule 9(b). Midland 

alleges that it incurred $6 million in damages, and, with the Offering Memorandum, 

Midland “can readily identify who made what representations where and when [and] 

what the defendant gained, which was to induce the plaintiff to enter into the 

contract.”113 PRA provided the Offering Memorandum to Midland on November 

18, 2013 to induce it to enter into the Purchase Agreement. The Offering 

Memorandum contained the purported false statements—the “liquidation curves,” 

 

112 Id. ¶ 1; see also id. ¶ 29. Midland defines “Accounts” as the totality of PRA’s 

“charged-off credit accounts . . . related to Puerto Rican consumers[,]” as 

distinguished from the purchased accounts that Midland bought from PRA pursuant 

to the Purchase Agreement. 

113 LVI Grp. Invs., LLC v. NCM Grp. Hldgs., LLC, 2017 WL 1174438, at *4 (Del. Ch. 

Mar. 29, 2017) (quoting Prairie Capital III, L.P. v. Double E Hldg. Corp., 132 A.3d 

35, 62 (Del. Ch. 2015)). Midland also alleges that PRA made these 

misrepresentations throughout the due diligence process. Midland alleges that these 

misrepresentations occurred during a six-month period, with the “interactions 

concentrated in March, April and May of 2014,” in “written statements in the form 

of offering memoranda, emails and other deal-related documents, and oral 

statements during in-person and telephone conversations” and in “multiple duediligence sessions” attended by four identified individuals “among others” at PRA 

and OPC’s offices in Puerto Rico. Def.’s Am. Countercls. & Third-Party Compl.

¶¶ 2-3; see also id. ¶¶ 28-32. Midland fails to identify any reasonable limited date 

range that any individual made any specific misrepresentation, other than its 

Offering Memorandum claims. These claims lack the requisite particularity. They 

also fail for the same reason as the Offering Memorandum claims fail. 
31

information about PRA’s collection practices, and information about the 

performance of the purchased accounts—that support Midland’s fraud claim. But 

Midland’s claim still fails because Midland cannot allege that it justifiably relied on 

the purported misrepresentations in the Offering Memorandum.

 In its Amended Counterclaims and Third-Party Complaint, Midland alleges 

that PRA and OPC “intentionally omitted detailed data that would have made it 

possible for Midland to discover that [PRA and OPC] had begun filing collection 

litigation on lower-quality accounts.”114 Specifically, PRA and OPC “failed to 

provide detailed ‘back book’ data (i.e., detailed account-level data showing the past 

performance) for the [purchased accounts].”115 Midland then alleges that had PRA 

given Midland “complete ‘back book’ data, it would have determined not only that

[PRA and OPC] had begun filing a slew of collection litigation on lower-quality 

accounts, but that the liquidation curves provided were inaccurate.”116 Midland also 

states that the “back book” data would have allowed it to determine “that there was 

only a very limited probability that Midland would be able to increase the [purchased 

accounts’] value in the future by filing additional collection litigation.”117 But, 

 

114 Def.’s Am. Countercls. & Third-Party Compl. ¶ 8. 

115 Id. 

116 Id. ¶ 38. 

117 Id. 
32

according to Midland, PRA and OPC failed to “provide the ‘robust’ data they 

promised, and, therefore left Midland in the dark about the true nature and value of 

the [purchased accounts].”118

 In response to a written notice from PRA to Midland of PRA’s intention to 

file a motion for sanctions under Court of Chancery Rule 11, however, Midland has 

now admitted that it indeed received the “back book” data for the purchased 

accounts.119 In fact, Midland now admits that it also received the “back book” data 

for all the accounts marketed by PRA, not just the ones that it purchased.120 Thus, 

because by its own admission Midland possessed the data that would have 

illuminated “the true nature and value of the [purchased accounts],”121 Midland 

cannot credibly allege that it justifiably relied on the purported false statements, and 

Midland’s fraud claim relating to this scheme fails.

122

 

118 Id. 

119 Def.’s Mot. to Amend ¶ 3; Oral Arg. Tr. 64-68. 

120 Oral Arg. Tr. 64-68; Pl. & Third-Party Def.’s Mot. for Rule 11 Sanctions Ex. 6. 

121 Def.’s Am. Countercls. & Third-Party Compl. ¶ 38. 

122 At oral argument, Midland asserted yet another theory related to the “back book” 

data that does not appear in Midland’s Counterclaims and Third-Party Complaint, 

the Amended Counterclaims and Third-Party Complaint, the proposed second 

amended counterclaims and third-party complaint, or any of the briefing. Midland 

argued that although it received the data for the marketed accounts, it did not receive 

the data for the non-marketed accounts. Oral Arg. Tr. 64-68. I will not consider 

this argument because Midland may not amend its complaint through oral argument 

in opposition to a fully-briefed motion to dismiss, see Stern v. LF Capital P’rs, LLC, 
33

b. The collections scheme

Midland also argues that PRA omitted material information regarding its 

collection practices. In particular, Midland alleges that PRA and OPC employed

“various questionable (and perhaps even unlawful) collection methods, designed to 

give the false appearance of increased cash flows. [PRA and OPC] knew that 

Midland would not use such questionable methods and therefore would never be 

able to achieve the same cash flows as represented by [PRA and OPC].”123 Midland 

further alleges that PRA and OPC failed to “disclose that their agents were not 

abiding by certain consumer collection laws, including the [Telephone Consumer 

Protection Act], which prohibits, among other things, calling consumers on their cell 

phones using automatic dialers.”124 Similarly, Midland contends, PRA and OPC 

concealed the fact that its agents “were using ‘burner’ cell phones (i.e., cell phones 

that are used and then disposed so that their source cannot be traced), which enabled 

them to contact consumers without fear of violating laws such as the [Telephone 

 

820 A.2d 1143, 1146 (Del. Ch. 2003), and “[i]ssues not briefed are deemed waived.” 

Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (citing Murphy v. State, 

632 A.2d 1150, 1152 (Del. 1993); Loudon v. Archer, 700 A.2d 135, 140 (Del. 

1997)). I note, however, that PRA filed a motion for sanctions under Court of 

Chancery Rule 11 in which it alleges that Midland did in fact have the “back book” 

data for all of PRA’s accounts. 

123 Def.’s Am. Countercls. & Third-Party Compl. ¶ 58. 

124 Id. ¶ 40; see also id. ¶ 10. 
34

Consumer Protection Act] regulating the permissible timing and frequency of 

contact with consumers.”125 Midland argues that these methods generated “the 

perception during due diligence that the cash flows being generated by the 

[purchased accounts] were far higher than they actually were.”126 

Although unclear, Midland seems to allege that the “cash flows being 

generated” were unsustainable because PRA used “questionable (and perhaps even 

unlawful) collection methods” that Midland would not use.127 But Midland does not 

allege that PRA had an affirmative duty to disclose “questionable” collection 

practices.128 Likewise, Midland does not allege that PRA lied about any 

“questionable” collection practices.129 Further, although Midland alleges that PRA 

represented in the Offering Memorandum that it had a “[l]ong-term track record of 

 

125 Id. ¶ 40. 

126 Id. 

127 Id. ¶ 58. 

128 Trusa, 2017 WL 1379594, at *10 (“In an arm’s length negotiation, where no special 

relationship between the parties exists, ‘a party has no affirmative duty to speak’

and ‘is under no duty to disclose facts of which he knows the other is ignorant even 

if he further knows the other, if he knew of them, would regard them as material in 

determining his course of action in the transaction in question.’ Thus, ‘any claim of 

fraud in an arms’ length setting necessarily depends on some form of 

representation,’ and ‘[a] fraud claim in that setting cannot start from an omission.’”) 

(quoting Prairie Capital III, L.P., 132 A.3d at 52). 

129 Id. (“But, if a party ‘chooses to speak then it cannot lie,’ and ‘once the party speaks, 

it also cannot do so partially or obliquely such that what the party conveys becomes 

misleading.’”) (quoting Prairie Capital III, L.P., 132 A.3d at 52).
35

regulatory compliance[,]”130 Midland fails to adequately allege that PRA used 

“illegal” or “unlawful” collection methods. Simply providing examples of illegal 

conduct, without actually stating that PRA engaged in that illegal conduct, fails to 

state a claim.131 Likewise, pointing to conduct that Midland disapproves of, but that 

is not illegal, also fails to state a claim. Such a lack of any facts regarding the 

purported fraud fails to apprise PRA and OPC of sufficient information concerning 

the circumstances of the alleged fraud and, thus, does not satisfy the particularity 

requirement of Rule 9(b).

2. Midland fails to state a claim for negligent 

misrepresentation

Midland also alleges negligent misrepresentation claims. But Midland “may 

not escape the contractual limitations on liability by attempting to show that [PRA] 

acted in a reckless, grossly negligent, or negligent manner.”132 Even assuming the 

 

130 Def.’s Am. Countercls. & Third-Party Compl. ¶ 34. 

131 Id. ¶¶ 10, 40, 58. See Spring Real Estate, LLC v. Echo/RT Hldgs., LLC, 2013 WL 

6916277, at *7 (Del. Ch. Dec. 31, 2013) (“The Complaint does not state a claim . . 

. because the[] allegations are conclusory and mere recitations of the . . . statute.”); 

Hospitalists of Del., LLC v. Lutz, 2012 WL 3679219, at *13 (Del. Ch. Aug. 28, 

2012) (“In the circumstances of this case, even under Delaware’s minimal notice 

pleading standard, simply reciting the statutory or common law elements of [a 

fraudulent transfer], as Plaintiffs have here, is insufficient to state a claim upon 

which relief may be granted.”). 

132 Abry P’rs, 891 A.2d at 1064. 
36

limitation of liability clause in the Purchase Agreement does not preclude Midland’s 

negligent misrepresentation claim, Midland’s claim still fails. 

To plead negligent misrepresentation, Midland must allege that “(1) the 

defendant had a pecuniary duty to provide accurate information, (2) the defendant 

supplied false information, (3) the defendant failed to exercise reasonable care in 

obtaining or communicating the information, and (4) the plaintiff suffered a 

pecuniary loss caused by justifiable reliance upon the false information.”133 “A 

claim of negligent misrepresentation, or equitable fraud, requires proof of all the 

elements of common law fraud except that plaintiff need not demonstrate that the 

misstatement or omission was made knowingly or recklessly.”134 A negligent 

misrepresentation claim must be stated with the same particularly required for 

fraud.135 For all the reasons stated above, Midland fails to (1) adequately allege that 

 

133 Steinman v. Levine, 2002 WL 31761252, at *15 (Del. Ch. Nov. 27, 2002), aff’d, 822 

A.2d 397 (Del. 2003). 

134 Fortis Advisors LLC v. Dialog Semiconductor PLC, 2015 WL 401371, at *9 (Del. 

Ch. Jan. 30, 2015) (citing Williams v. White Oak Builders, Inc., 2006 WL 1668348, 

at *7 (Del. Ch. June 6, 2006)) (internal quotation marks omitted). 

135 Id. at *9 n.57 (“See Zebroski v. Progressive Direct Ins. Co., 2014 WL 2156984, at 

*7 (Del. Ch. Apr. 30, 2014) (applying Rule 9(b) pleading standard to equitable fraud 

claim); see also Those Certain Underwriters at Lloyd’s London v. National 

Installment Ins. Svcs., 2007 WL 1207106, at *5 (Del. Ch. Feb. 8, 2007) (‘Court of 

Chancery Rule 9(b) requires that fraud be pled with particularity. This rule almost 

certainly extends to negligent misrepresentation (equitable fraud) as well.’) (citing 

In re Dataproducts Corp. S’holders Litig, 1991 WL 165301 (Del. Ch. Aug. 22, 

1991), reprinted at 17 Del. J. Corp. L. 1159, 1170 [n.5]).”). 
37

it justifiably relied on the supposed false information in the Offering Memorandum

and (2) allege with the requisite particularity that PRA omitted material information 

regarding its collection practices. Thus, for the same reasons its fraud claim fails, 

Midland’s negligent misrepresentation claim also fails.

3. Midland fails to state a claim for breach of contract 

Midland asserts breach of contract claims against PRA for breaching the 

following provisions of the Purchase Agreement in the following ways: (1) Section 

5 by failing to repurchase certain “Ineligible Accounts;” (2) Section 2.6.1 by failing 

to remit certain funds received by creditors; and (3) Sections 7.5, 7.12, 7.13 and 7.14

by misrepresenting the accuracy of the diligence provided and the character of the 

purchased accounts.

136

Section 5.1 required Midland to provide written notice and documentary 

evidence of the “Ineligible Accounts” by November 26, 2014 to trigger PRA’s 

obligation to repurchase the “Ineligible Accounts.”137 Midland does not argue that 

it sent anything to PRA by November 26, 2014. Further, even though Midland stated 

repurchase claims in its May 26, 2017 letter to the escrow agent,138 Midland does 

not argue that that letter attached the documentary evidence required by Section 5.1 

 

136 Def.’s Am. Countercls. & Third-Party Compl. ¶¶ 71-92. 

137 Purchase Agreement §§ 5.1-5.2. 

138 Pl.’s Mot. for Summ. J. & Pl. & Third-Party Def.’s Mot. to Dismiss Ex. 3. 
38

or that it has otherwise provided that evidence. As a result, Midland’s claims under 

Section 5 are untimely.

The limitation of liability clause in the Purchase Agreement provides that 

Midland’s “exclusive remedy” for claims arising from the Purchase Agreement or 

any transactions contemplated thereby “is limited to the amount held in escrow . . . 

pursuant to the Escrow Agreement.”139 This requires that claims related to the

remittance of payments under Section 2.6.1 and representations made in Section 7 

had to be raised in a particular manner by May 31, 2017 per the Escrow Agreement 

notice provision. As discussed, Midland’s escrow claims were not timely. Thus, 

Midland cannot sustain its breach of contract claims against PRA.

4. Midland fails to state a claim for indemnification

Midland asserts a separate claim for indemnification under Section 8.2 of the 

Purchase Agreement.

140 But this claim is untimely. As the Purchase Agreement

makes clear: “The obligations of [PRA] under this Section 8.2 shall survive until the 

third anniversary of the Closing Date.”141 In other words, any obligation for PRA to 

indemnify Midland expired on May 30, 2017. Midland did not seek indemnification 

from PRA by that date. Thus, Midland’s indemnification claim also fails.

 

139 Purchase Agreement § 10. 

140 Def.’s Am. Countercls. & Third-Party Compl. ¶¶ 93-97. 

141 Purchase Agreement § 8.2. 
39

5. Midland fails to state a claim for unjust enrichment

Midland asserts an unjust enrichment claim against PRA for “(1) causing 

Midland to overpay for the [purchased accounts], (2) failing to remit funds related 

to Putback/Buyback Claims, and/or (3) failing to remit the Bankruptcy 

Payments.”142 “Unjust enrichment is ‘the unjust retention of a benefit to the loss of 

another, or the retention of money or property of another against the fundamental 

principles of justice or equity and good conscience.’”143 To assert a claim for unjust 

enrichment, a plaintiff must prove the following elements: “(1) an enrichment, (2) 

an impoverishment, (3) a relation between the enrichment and impoverishment, (4) 

the absence of justification, and (5) the absence of a remedy provided by law.’”144 

But the Court “must first determine ‘whether a contract already [comprehensively] 

 

142 Def.’s Am. Countercls. & Third-Party Compl. ¶ 99. The terms “Putback/Buyback 

Claims” and “Bankruptcy Payments” are not defined or otherwise used in the 

Purchase Agreement. Midland states that PRA’s failure to remit the funds 

associated with these terms is a breach of Section 2.6.1 of the Purchase Agreement. 

Id. ¶ 81, 89. Midland also suggests that the “Putback/Buyback Claims” relate to 

repurchases of “Ineligible Accounts” purportedly due under of the Purchase 

Agreement. Id. ¶ 49. For purposes of this discussion, I treat “Bankruptcy 

Payments” as creditor payments due to Midland by operation of Section 2.6.1, and 

“Putback/Buyback Claims” as creditor or repurchase payments due under Sections 

2.6.1 or 5. 

143 RCS Creditor Tr. v. Schorsch, 2018 WL 1640169, at *7 (Del. Ch. Apr. 5, 2018)

(quoting Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010)). 

144 Id. 
40

governs the relevant relationship between the parties.’”145 If so, “then it alone must 

provide the measure of the plaintiff’s rights and any claim of unjust enrichment will 

be denied.”146 If, however, the contract itself is the unjust enrichment, then “the 

existence of the contract does not bar the unjust enrichment claim.”147 “In other 

words, ‘[t]he contract itself is not necessarily the measure of [the] plaintiff’s right 

where the claim is premised on an allegation that the contract arose from wrongdoing 

(such as breach of fiduciary duty or fraud) or mistake and the [defendant] has been 

unjustly enriched by the benefits flowing from the contract.’”148

PRA argues that Midland’s unjust enrichment claim must be dismissed

because the conduct at issue is governed by the Purchase Agreement.149 Midland’s 

claim that PRA “caus[ed] Midland to overpay for the Portfolio”150 appears related to 

Midland’s fraud claim. The Purchase Agreement cannot be the measure of 

Midland’s right where Midland claims that PRA secured the Purchase Agreement 

 

145 Id. (quoting BAE Sys. Info. & Elec. Sys. Integration, Inc. v. Lockheed Martin Corp., 

2009 WL 264088, at *7 (Del. Ch. Feb. 3, 2009)). 

146 Id. 

147 Id. 

148 Id. (citing Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial 

Practice in the Delaware Court of Chancery § 12.01[b] (2016)). 

149 Pl. & Third-Party Def.’s Mem. of Law in Support of Mot. to Dismiss 32. 

150 Def.’s Am. Countercls. & Third-Party Compl. ¶ 99. 
41

through fraud.151 But, for the reasons discussed above, Midland’s counterclaims fail 

to adequately state a claim for fraud. Midland’s allegations that PRA failed to remit 

“Bankruptcy Payments” and funds related to “Putback/Buyback Claims” are 

sufficiently covered by the Purchase Agreement in Sections 2.6.1 and 5, and they 

are duplicative of Midland’s breach of contract claims with respect to those sections. 

Thus, because Midland fails to sufficiently plead fraud and the Purchase Agreement 

“comprehensively governs the parties’ relationship”152 with respect to the purported 

non-remittances and repurchases, Midland’s unjust enrichment claim fails.

B. Midland’s Third-Party Claims Against OPC

Midland asserts the following third-party claims against OPC: (1) fraud, (2) 

negligent misrepresentation, (3) aiding and abetting fraud, (4) breach of contract, (5) 

indemnification, and (6) unjust enrichment.

First, Midland’s fraud and negligent misrepresentation claims fail. Midland 

lumps PRA and OPC together in its fraud and negligent misrepresentation claims

and does not identify any specific acts by OPC to further the purported fraudulent 

schemes. Thus, for all the reasons stated above in my analysis of the fraud and 

negligent misrepresentation claims against PRA, Midland’s fraud and negligent 

misrepresentation claims against OPC fail. 

 

151 RCS Creditor Tr., 2018 WL 1640169, at *7. 

152 Id. (citing BAE Sys. Info. & Elec. Sys. Integration, Inc., 2009 WL 264088, at *7). 
42

Next, Midland’s aiding and abetting fraud claim also fails. The elements of 

aiding and abetting fraud are “(i) underlying tortious conduct, (ii) knowledge, and 

(iii) substantial assistance.”153 Because the underlying tortious conduct claim fails, 

Midland’s aiding and abetting claim against OPC also fails. 

As discussed more fully above, Midland alleges that OPC and PRA breached 

the Purchase Agreement by failing to remit certain funds, not repurchasing certain 

purchased accounts, and misrepresenting the accuracy of the diligence provided and 

the character of the purchased accounts. OPC, however, is not a party to the 

Purchase Agreement. Midland acknowledges this fact, but it nonetheless argues that 

OPC should be liable because PRA and OPC “act[ed] in disregard of their corporate 

form.”154 Thus, Midland seems to argue that this Court should pierce the corporate 

veil and hold OPC liable for PRA’s actions. “Persuading a Delaware court to 

disregard the corporate entity is a difficult task.”155 To assert a claim to pierce the 

corporate veil, Midland must allege facts that, if taken as true, demonstrate PRA’s 

 

153 Trusa, 2017 WL 1379594, at *12 (citing Great Hill Equity P’rs IV, LP v. SIG 

Growth Equity Fund I, LLLP, 2014 WL 6703980, at *22 (Del. Ch. Nov. 26, 2014)). 

154 Def.’s Answering Br. in Opp’n to Mot. to Dismiss 42 n.13. 

155 Wallace ex rel. Cencom Cable Income P’rs II, Inc., L.P. v. Wood, 752 A.2d 1175, 

1183 (Del. Ch. 1999) (citing Harco Nat’l Ins. Co. v. Green Farms, Inc., 1989 WL 

110537, at*4 (Sept. 19, 1989)). 
43

“complete domination and control” of OPC.

156 “The degree of control required to 

pierce the veil is ‘exclusive domination and control . . . to the point that [OPC] no 

longer ha[s] legal or independent significance of [its] own.’”157 Piercing the 

corporate veil under the alter ego theory requires showing that the corporation is “a 

sham and exist[s] for no other purpose than as a vehicle for fraud.”158

Midland argues that PRA and OPC “have affirmatively provided sworn facts 

that suggest that they act in disregard of their corporate form.”159 The only “facts” 

that Midland identifies are that: (1) “in the context of their Motion to Expedite, PRA 

claimed it needed the immediate release of the Escrow Funds to benefit other 

companies owned by the principals of PRA (a limited liability company), Rodolfo 

Sanchez-Colberg and Nicolas Kogan[;]” and (2) “in the context of PRA’s Motion 

for Summary Judgment, PRA submitted the Affidavit of Monica B. Romero, who 

testified that she is Corporate Legal Counsel employed with Americas Leading 

Finance, LLC (an entity owned by Mr. Kogan), yet was tasked with attempting to 

 

156 Id. at 1183-84. 

157 Id. at 1184 (citing Hart Hldg. Co. v. Drexel Burnham Lambert, Inc., 1992 WL 

127567, at *11 (Del. Ch. May 28, 1992)). 

158 Id. 

159 Def.’s Answering Br. in Opp’n to Mot. to Dismiss 42 n.13. 
44

collect the Escrow Funds on behalf of PRA.”160 These facts do not suggest in any 

way that PRA dominates or controls OPC or that OPC exists as a vehicle for PRA’s 

purported fraud. Thus, Midland’s claims for breach of the Purchase Agreement fail 

because OPC is not party to that agreement, and Midland’s allegations do not support 

a reasonably conceivable claim for piercing the corporate veil.

161

Next, Midland attempts to plead breach of contract claims relating to the 

Servicing Agreement. Midland argues that OPC breached Section 3.2 of the 

Servicing Agreement by failing to remit “received proceeds ‘by the end of the next 

Business Day’ after receipt.”162 This is the extent of Midland’s allegations with 

respect to OPC’s purported breach of the Servicing Agreement. Midland fails to 

allege any facts whatsoever about the proceeds supposedly withheld by OPC. In 

fact, Midland actually lumps this purported breach in with alleged breaches by PRA 

 

160 Id. 

161 See Kleinberg v. Aharon, 2017 WL 4444216, at *4 (Del. Ch. Oct. 4, 2017) 

(ORDER).

162 Def.’s Am. Countercls. & Third-Party Compl. ¶¶ 82, 90 (quoting Servicing 

Agreement § 3.2). Midland is not a party to the Servicing Agreement, but it is a 

designated third-party beneficiary. Servicing Agreement § 6.9.
45

and OPC of the Purchase Agreement.163 Thus, Midland fails to state a claim for 

breach of the Servicing Agreement by OPC. 164

Midland also alleges an indemnification claim against OPC under Section 5.1 

of the Servicing Agreement.

165 That section requires that OPC indemnify Midland 

“from and against any and all losses, claims, damages, expenses (including 

reasonable attorneys’ fees) and costs suffered or incurred (whether suit is instituted 

or not) as a result of, arising out of or otherwise relating in any way to,” among other 

things, OPC’s breach of the Servicing Agreement, “any intentional, reckless or 

negligent acts or omissions” by OPC, or OPC’s “violation of any Applicable 

Law.”166 Midland asserts no allegations whatsoever that OPC specifically violated 

any “Applicable Law,” committed any “intentional, reckless or negligent acts or 

 

163 Specifically, Midland alleges, in the same counts it discusses PRA’s purported 

breach of Sections 2.6.1 and 5.1 of the Purchase Agreement, that “[a]s a direct and 

proximate result of [PRA and OPC’s] breaches, Midland has suffered or will suffer 

actual damages in an amount to be determined at trial but not less than” $300,000 

for “Breach of Contract (With Respect To Putback/Buyback Claims)” and $50,000 

for “Breach of Contract (With Respect to Bankruptcy Payments).” Def.’s Am. 

Countercls. & Third-Party Compl. ¶¶ 84, 92. 

164 See Hospitalists of Del., LLC, 2012 WL 3679219, at *15 (“[E]ven under Delaware’s 

minimal notice pleading standard, simply reciting the statutory or common law 

elements of an offense, as Plaintiff has here, is insufficient to state a claim upon 

which relief may be granted.”). 

165 Def.’s Am. Countercls. & Third-Party Compl. ¶¶ 93-97. 

166 Servicing Agreement § 5.1. 
46

omissions,” or breached the Servicing Agreement. 167 Thus, Midland’s 

indemnification claim also fails.

Finally, Midland’s unjust enrichment claim against OPC also fails. Midland 

does not adequately state a claim for fraud against OPC, and Midland’s nonremittance claims are covered by the Servicing Agreement and duplicative of its 

failed breach of contract claims.

168 Thus, I grant the Motion to Dismiss the thirdparty claims against OPC.

IV. MOTION TO AMEND ANALYSIS

Midland moves to amend its counterclaims and third-party claims under Court 

of Chancery Rule 15(a), which states that leave to amend “shall be freely given when 

justice so requires.”169 “A court will not grant a motion to amend, however, if the 

amendment would be futile.”170 “In exercising its discretion, the court also considers 

 

167 Id. Even if the Court assumes that the collections practices allegations in Section 

III.A.1.b. are stated specifically against OPC, they fail for the reasons stated. 

168 The Servicing Agreement does not require OPC to repurchase ineligible accounts. 

169 Ct. Ch. R. 15(a). Midland withdrew its original counterclaims and third-party 

claims that were filed on July 25, 2017 and amended and substituted those 

counterclaims and third-party claims on September 15, 2017. 

170 Cartanza v. Lebeau, 2006 WL 903541, at *2 (Del. Ch. Apr. 3, 2006) (citing 

Zimmerman v. Braddock, 2005 WL 2266566, at *6 (Del. Ch. Sept. 8, 2005), rev’d 

on other grounds, 906 A.2d 776 (Del. 2006)). 
47

factors such as bad faith, undue delay, dilatory motive, repeated failures to cure by 

prior amendment, undue prejudice, and futility of amendment.”171

Midland seeks to amend four areas of its counterclaims and third-party claims. 

First, Midland attempts to clarify that, while it alleged that PRA and OPC did not 

provide “back book” data for accounts that Midland did not purchase, Midland did

receive such data for the purchased accounts.

172 Second, Midland wants to clarify 

that Midland personnel observed PRA and OPC employees using cellphones on a 

call center floor, and that those calls allegedly were “not monitored/recorded by the 

call center.”173 Third, Midland seeks to remove language in its counterclaims and 

third-party claims indicating that PRA requested that OPC remain an account 

servicer following the sale.

174 Fourth, Midland wants to state that it gave notice to 

the escrow agent of its claims against the escrow and did not merely “send notice.”175 

PRA and OPC contend that Midland’s “third rewrite of its countercharges against 

PRA and OPC” should be denied because Midland’s amendments are futile.176 

 

171 NACCO Indus., Inc. v. Applica Inc., 2008 WL 2082145, at *1 (Del. Ch. May 7, 

2008). 

172 Def.’s Mot. to Amend ¶ 3. 

173 Id. 

174 Id. 

175 Id. 

176 Pl. & Third-Party Def.’s Opp’n to Mot. to Amend 1 (emphasis omitted). 
48

All of Midland’s amendments are futile. First, as discussed more fully above, 

Midland’s correction that it did receive “back book” data of the purchased accounts 

strengthens my fraud analysis above because it shows that Midland had access to 

data underlying the relevant portions of the Offering Memorandum, which Midland 

could have used to discern the purported fraudulent schemes in the Offering 

Memorandum. Second, Midland’s clarification that PRA employees used 

cellphones at the call center that were not monitored, like its allegation that PRA 

used “burner” cellphones, fails to sufficiently allege that PRA or OPC changed its 

collection practices in an illegal way and failed to disclose the same to Midland, 

even in view of the other facts plead by Midland. Third, Midland’s proposed 

removal of its claim that PRA requested that OPC remain servicer of the purchased 

accounts is irrelevant to my analysis. Even if PRA had made such a request, my 

analysis of Midland’s third-party claims would not change because OPC is only 

party to the Servicing Agreement, Midland does not state a claim to pierce the 

corporate veil, and Midland fails to identify any actions by OPC in its counterclaims

and third-party claims, except that OPC serviced the purchased accounts. Fourth, 

Midland’s clarifications that it specifically sent notice to the escrow agent, and not 

to PRA, merely reinforces Midland’s failure to provide proper notice under the 

Escrow Agreement. Thus, these amendments do not change my above analyses of 
49

the Motion for Summary Judgment, the Motion for Partial Summary Judgment, or 

the Motion to Dismiss, and the Motion to Amend is denied as futile.

V. CONCLUSION

For the reasons stated above, I grant PRA’s Motion for Summary Judgment 

and order release of the $6 million from the escrow fund, deny Midland’s Motion 

for Partial Summary Judgment, grant PRA and OPC’s Motion to Dismiss Midland’s 

counterclaims and third-party claims, and deny Midland’s Motion to Amend.

IT IS SO ORDERED.