FI RST DI VI SI ON

BA RNES, P. J.

, GOBEI L, J.

, and SENI OR A PPELLA TE JUDGE PHI PPS

N O T IC E : M otions for r e c ons i de r a tion m us t be ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a l s .us /r ule s

A pr i l 6, 2020



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A2 0 A1 09 3

. THE RAINM AKER GROUP VENTURES, LLC v

. BELLACK.

B A R N E S , Pres i d i n g J ud g e.

Fo l l owi n g t h e g ran t o f i t s ap p l i cat i o n fo r i nt erl o cu t o ry ap p eal

, th e Rai n m ak er

Gro up Ven t u res , LLC (“ Rai n m ak er”) a p p eal s t h e t ri al co u rt ’ s o rd er d en y i n g i t s

m o ti o n fo r s u m

m ary ju d g m en t o n Lawren ce J

. Bel lack ’ s cl ai m f o r b r each o f t h e

i m p l i ed co v en an t o f g o o d fai t h an d fai r d eal in g u n d er Del aware l aw. Fo r t h e reas on s

d i s cu s s ed b el ow, we co n cl u d e t h at

, as a m at t er o f Del aware l aw, t he i m p l i ed co v en an t

o f go o d fai th an d fai r d eal in g d oes n o t s u p p l y a v i ab l e t h eo ry o f reco v ery b ecau s e t h e

wri t ten co n tract b et we e n th e p art i es ex p res sl y ad d res s ed t h e co n d u ct at i s s ue.

Acco rd in g ly

, we rev ers e t h e tri al co u rt ’ s o rd er den y i n g Rai n m a k e r ’s m o t i o n fo r

s u m m ary ju d g m en t o n Bel l ack ’ s i m p l i ed co v en an t cl ai m

.Su m

m ary j u d gm en t i s p ro p e r “ i f t h e pl ead i n gs , d ep o s i ti o n s , an s wers to

i n t erro g at o ri es , an d ad m i ss io n s o n fi l e, t o g et h er wi t h t h e affi d av i t s , i f an y , sh o w t h at

t h ere i s no g en u in e i s s ue as t o an y m at eri al fact an d th at t h e m ov i n g p art y i s en t i t l ed

t o a ju d g m en t as a m at t er of l aw.” OCGA § 9 -1 1 -5 6 (c). “ Su m m ary j u d gm en t s en

jo y

n o p res u m

pt i o n o f co rrect n es s o n ap p eal

, an d an ap pel l at e co u rt m us t sat i sfy i t s el f d e

n o v o t h at t h e req u i r e m e n t s o f OCGA § 9 -1 1 -5 6 (c) h av e b een m et .” Co wa r t v.

W i d en er , 2 8 7 Ga. 6 22

, 6 2 4 (1 ) (a) (6 9 7 SE2 d 7 7 9 ) (2 0 10 ). On ap p eal fro m t h e d en i al

o f s u m m ary ju dg m en t

, we co n s t ru e t h e ev i d en ce an d al l i n feren ces t h erefro m i n t h e

l i gh t m o s t fav o rab l e t o t he n o n m ov i n g p art y

. (Pu n ct u at i o n an d fo o t n ot e o m i t t ed .)

McLemo r e v. Gen u i n e Pa r t s C o

. , 3 1 3 Ga. A p p

. 6 4 1

, 6 4 1 (7 2 2 SE2 d 36 6 ) (2 0 1 2 ).

Gu i ded b y

t h es e p ri n ci p l es , we t u rn t o t h e reco rd i n t h e p res en t cas e.

Fa ct u a l B a ckg ro u nd

. Rai n m ak er was a D el aware l i m ite d lia bility c om pa ny t h at

p ro v id ed rev en u e o p ti m izat i o n s o ft ware t o co m p an i es i n sev eral i n d u s t ri es

. Bel l ack

s erv ed as a v ice p res i d en t at Rai n m ak er fro m M arch 2 0 1 0 u n t i l h i s t erm i n at i o n o n

Decem b er 1 , 2 0 1 5.

W h i l e wo r k i n g fo r Rai nm ak er, Bel l ack recei v ed s h ares o f co m m o n s t o ck

g o v ern ed b y an Am en d ed an d Fi rs t Res t at ed Li m i t ed Li ab i l i t y Co m p an y A g reem en t

d at ed Oct o b er 1 8

, 2 0 1 2 (“ L LC Ag reem en t ”). Th e LLC Ag reem en t s t at ed t h at “ [t ] h i s

2LLC Ag reem e n t

, t h e ri g h t s o f t h e p art i es h ereu n d er, an d an y d i s p u t es b et ween t h e

p art i es , s h al l b e g ov ern ed by

, co n s t ru ed

, an d en fo rced in acco rd an ce wi t h t h e l aws o f

t h e St at e o f Del aware, wi t h o u t reg ard t o i ts co n fl i ct s o f l aws ru les .” 1

Aft er Bel lack w as t erm in at ed i n 2 0 1 5, Rai n m ak er ret ai n ed a ri gh t t o rep u rch as e

h i s v es ted s h ares o f s t o ck u nd er t h e L LC Ag reem en t

. Th e L L C Ag reem en t p ro v i d ed

t h at i f Rai n m ak er ch o s e t o rep u rch as e t h e s hares of a fo rm er em p l o y ee, i t s Bo ard o f

M an ag ers (“ Bo ard ”) wo ul d “ d et erm i n e[ ] i n g oo d fai t h” t h e “ Fai r V al u e” o f t h e s h ares

(“ Fai r Val u e Pro v i s i o n ”). 2 In v al u i n g t h e s h ares , t h e Bo ard was req u i red t o “ as s u m e

t h at t h e en terp ri s e v al u e o f [Rai n m ak er] [was ] eq ual t o t he am o u nt wh i ch wo u l d b e

p ai d in cas h fo r [Rai n m ak er]

, as a g o i n g co n cern , by an u n affi l i at ed t h i rd p art y b u y er”

an d to tak e i n t o acco u n t t h e eco n o m i c ch aract eri s ti cs o f each cl as s of co m p an y s h ares ,

b u t t h e Bo ard al s o had d i s cret i o n t o c o n s i d er ad d i t io n al fact o rs , an d i t s u l t i m at e

d et erm i n at i o n o f fai r v al u e was “ fi n al , b i n d i n g , an d n o nap p eal ab l e.”

1 Th e p art i es d o n o t d i s p u t e o n ap peal th at t h e s ub s t an t i ve l eg al i ss u es rai s ed i n t h i s

cas e are g o vern ed b y

Del aware l aw.

2 If an em p l o y ee was t erm i n at ed fo r “ cau se” o r v o lu n t ari l y res ig n ed aft er l es s t h an

t w o y ears o f em

p l o y m en t

, h i s o r h er s h ares were au t om at i cal l y fo rfei t ed un d er t h e L L C Ag re e m e n t wi t h o u t an y fu rt h er act i o n b y Rai n m ak er. Nei th er of t h o s e ci rcu m s t an ces

ap p l i ed h ere.

3I n a d d i t i o n t o t h e Fai r Val u e Pro v i s i o n , t h e LLC Ag reem en t co nt ai n ed a

“ cl awb ack ” p ro v i s i on t h at affo rd ed p ro tect i o n t o a fo rm er em p l o y ee i f R a i n m ak er

were t o “ effect ” a “ t ran s act i o n ” t h at res u l t ed i n a h ig h er p ri ce p er s h are wi t h i n t h ree

m o nt h s o f t he cl o si n g d at e wh en t h e e m p l o y ee’ s s h ares were rep u rch as ed (t h e

“ Cl awb ack Pro v i s i on ”). Th e Cl awb ack Pro v i s i o n s t at ed :

If th e Co m

p an y el ect s to ex erci s e i t s ri g h t t o p u rch as e Su b ject Sh ares o f

a Su b ject Sh areh o l d er p u r s u an t t o [t h e Fai r V al u e Pro v i s i on ]

, o r

p u rs uan t t o an Ot h er Ag reem en t

, an d wi th i n th ree (3 ) m o n t hs aft er t he

d at e o f t h e cl o s i n g o f s u ch p u rch as e Su b jec t S h a r e s , th e Co m

p an y effect s a Tran s act io n o r Pu b l i c Offeri n g wh i ch res u l t s in a co n s i d erat i o n

p er Sh are wh i ch i s g reat er t h an t h e p er Sh are co n s id erat i o n recei v ed b y

t h e Su b ject Sh areh o l d er i n res p ect o f t h e FV Sh ares , th e Co m p an y wi l l

, at t h e cl o si n g of s u ch Pu b l i c Offeri n g o r Tran s act i o n , p ay t he Su b ject

Sh areh o l d er, in t h e s am e fo rm o f co n s id erat i o n recei v ed in s u ch

t ran s act i o n, o r i n cas h i n t h e cas e o f a Pu b l i c Offeri n g , an am o u n t

s u ffi ci en t to eq u al i ze, o n a p re-t ax b as i s , t h e d ifferen ce b et ween t h e Cal l

Pri ce an d t he am o u nt t hat wo u l d h av e b een r e c e i v ed b y t h e Su b ject

Sh areh o l d er in res p ect o f t h e FV Sh ares in t he Tran s act i o n or t h e p er Sh are p ri ce t o t h e Co m

p an y i n t h e Pu bl i c Offeri n g

.

A “ t ran s act i on ” was d efi ned i n p art as a “ s al e o r t r a n s fer

. . . o f a m ajo ri t y o f t h e

as s et s o f [Rai n m ak er] .” Th e LLC Ag reem en t d i d n ot d efi n e t he wo rd “ effect s .”

Fo l l owi n g Bel lack ’ s term i n at i o n , i n a l et ter dat ed Oct o ber 7

, 2 0 1 6

, Rai n m ak er

n o t i fi ed Bel l ack t hat p u rs uan t t o t h e Fai r Val u e Pro v i s io n , i t p l an n ed t o rep u rch as e

h i s s h ares fo r $ 1,5 6 5 ,9 0 4 bas ed o n t h e Bo ard ’ s v al u at i on o f th o s e sh ares

. On

4No v em

b er 7

, 2 0 16

, Rai n m ak er i s s u ed a pro m i s s ory no t e t o Bel l ack t o rep urch as e h i s

s h ares i n t h e afo rem en ti o n ed am o u n t p l u s i n t eres t

.

I n Decem b er 2 0 1 6 an d J an u ary 2 0 1 7

, Rai n m ak er an d o n e i f i ts co m p et i t o r s ,

Real Pag e, In c., ex ch an g ed co rresponde nc e r e ga r ding R e a l Pag e acq u iri n g Rai n m ak er.

Th e p art i es d i s pu t e wh et her Rai n m ak er an d Real Pag e fo rm ed a b in d i n g ag reem en t in

J an u ary 2 0 1 7 b as ed o n t h ei r co rres p o nd en ce. On Feb ru ary 2 7, 2 0 1 7, Rai n m ak er an d

Real Pag e ex ecu ted an A s s et Pu rch as e Ag reem en t (“ APA”) u n d er wh i ch Rai n m ak er

a g r e e d t o sel l a m ajo ri ty o f it s as s et s , i n cl ud i n g cert ai n o p ti m i zat i o n s oft ware, t o

Real Pag e fo r $ 30 0 m i l l i o n

. Ho wev er, t h e Real Pag e d eal was s u bject t o rev i ew b y t h e

Un i ted St at es D ep art m e n t o f J u s t i ce (“ DOJ ”), an d t h e DOJ rev i ew was on e o f t h e

co n di t i o n s o f cl o s i n g o n t h e d eal

.

In M a r c h 2 01 7, aft er Bel l ack co n t act ed Rai n m ak er i n qu i ri n g w het h er t h e

Cl awb ack Pro v i s io n wo u l d ap p l y t o t h e Real Pag e d eal an d wo ul d res u l t i n t h e

read ju s tm en t o f t h e p ri ce o f h i s rep u rch as ed s h ares , Rai n m ak er in fo rm ed h i m b y l et t er

t h at t h e cl o s i ng wi t h Real Pag e h ad no t y et o ccu rred

. Rai n m ak er fu rt h er as s ert ed i n i t s

l et t er t h at t h e Cl awb ack Pro v is i o n ap p l i ed o n ly i f a t ran sact io n w as “ co n s u m m at ed ”

wi t h i n t h ree m o n t h s o f t h e rep u rch as e o f s h ares , an d t h at

, as a co n s eq u en c e, t h e

Cl awb ack Pro v is i o n d i d no t ap p l y t o t h e Real Pag e d eal b ecau s e i t h ad n o t b een

5co n s u m m at ed wi t h i n th ree m o n t h s of wh en t h e p ro m i s s o ry n o t e w as i s s u ed to

Bel l ack

.

On Decem

b er 4

, 2 0 1 7

, Rai n m ak er an d Real Pag e cl o s ed o n t h ei r d eal s h o rt l y

aft er o b t ai n i n g DOJ ap p ro v al

. Rai n m ak er p ai d o ff Bel l ack ’ s p ro m i ss o ry n o te t h e n ex t

d ay

. In l i g h t o f i t s co n cl u s io n t h at t h e Cl awb ack Pro v i s i o n d id n o t ap p l y , Rai n m ak er

d i d n o t ad ju s t t h e p ri ce p er s hare o wed t o Bel lack b as ed o n t h e Real Pag e d eal

.

Pr o ced u r al Ba ckg r ou n d

. In Sep t em

b er 2 01 7

, b efo re t h e Real Pag e d eal cl o s ed

,

Bel l ack fi l ed t h i s act io n ag ai n s t Rai n m ak er i n t h e Su p eri o r Co u rt o f Fu l t on Co u n t y ,

a n d i n h i s co m

p l ai n t

, as am en d ed

, h e al leg ed t h at Rai n m ak er’ s Bo ard h ad fai l e d t o

d et erm i n e t h e fai r v al u e o f h i s rep u rch as ed s hares accu rat e l y an d i n g o o d fai t h in

acco rd an ce wi t h t h e LLC Ag reem en t. 3 Bel l ack as s ert ed cl ai m s fo r b reach o f co n t ract

,

b reach o f t he i m

p l i ed co v en an t o f g o o d fai th an d fai r deal i n g , p ro m i s s o ry es t o p p el

,

u n ju s t en ri ch m en t , an d at t o rn ey fees an d ex p en s es

.

Rai n m ak er fi led a m o t i o n t o d is m i s s t h e co m p l ai nt o r, al t ern at i v el y , fo r

ju d g m en t o n t h e p l ead i n g s

. Ap pl y i n g Del aware l a w, t h e t ri al co u rt g ran t ed

3 Bel lack p rev i o u s l y fi l ed a co m p l ai n t i n fed eral co u rt ag ai n s t Rai n m ak er, as s ert i n g

s ev eral c l ai m s th at were s i m i l ar t o t h e cl ai m s rai s ed i n t h i s cas e. Th e fed eral act i o n

u l t i m at el y

was d i s m is s ed fo r l ack o f d i v ers i t y ju ri s d i ct io n

.

6Rai n m ak er’ s m o t i o n t o d i sm i s s Bel l ack ’ s cl ai m s fo r b reach o f co n t ract

, p ro m i s s o ry

es t o p p el

, an d u n

j u s t en ri ch m en t

. 4 Th e t ri al co u rt

, h o wev er, d en i ed Rai nm ak er’ s

m o ti o n t o di s m i ss Bel l ack ’s c l a i m fo r breach o f t h e i m p l i ed co v en an t o f go o d fai th

an d fai r d eal i n g t o th e ex t en t t h at i t was pred i cat ed o n al l eg ed “ co n t ract u al g ap s ” in

t h e Cl awb ack Pro v i s i o n o f t h e LLC Ag reem en t . Th e t ri al co u rt reas o ned :

Bel l ack h as a l l eg ed t h at co n t ract u al g ap s ex is t i n t h e LLC Ag reem en t

. Fo r ex am p l e, t h e Cl awb ack Pro v i s i o n i s a cl au s e i n t h e L LC A g reem en t

t h at p ro t ect s t h e s h areh o l d er fro m t h e Bo ard as s i g ni n g a l o wb al l v al ue

i n an t i ci p at i o n o f s o m e t ran s act i o n t hat wi l l i n creas e t h e v al u e o f

Rai n m ak er’ s s h ares

. Acco rd i n g to t h e Pr o v i s i o n , i f a tran sact i o n i s

“ effect ed ” wi t hi n n i n et y

d ay s o f t h e cl o s i n g o f t h e rep u rch as e, Bel lack

wo u ld b e en t i t l ed to an y i n creas ed v al u e p er s hare real i ze d i n th e

t ran s act i o n. Bel l ack al l eg es th at t h e p h ras e “ effect s a t r a n s act i o n ” i s

am b i g u o u s

. If a tran s act i o n were “ effect ed ’ [i n J an u ary 2 0 1 7 ]

, t h e deal

wo u ld fal l wi t h i n th e Cl awb ack p eri o d

, b u t if i t was o n ly “ effect ed ” aft er

t h e APA was s ig ned [o n Feb ru ary 2 7

, 2 01 7 ]

, t h e t ran s act i o n fal l s o u ts id e

o f t h e Cl awb ack p eri o d

. Dep en d i n g o n t h e i n t erp ret at i o n o f t he p h ras e

an d th e d ut i es i m

p li ed t h erei n , [Bel l ack ] m ay b e en t i t l ed t o d am ag es

co m m en s urat e wi th b reach o f t h e i m p l i ed co v en an t o f g o o d fai t h an d

fai r d eal i n g [u n d er Del aware l aw]

.

4 Th e d i s m i ss al o f t h os e cl ai m s i s n o t b efo re u s

.

7Becau s e t h e LLC A g r e e m e n t i s u ncl ear, t h e Co urt m u s t m ak e a

d et erm i nat i o n an d fi l l i n t h e g ap s

. Acco rd i n g t o Bel l ack

, t h e Cl awb ack

Pro v i s io n is ev i d en ce o f t h e i n t en t o f t h e p art i es t o p r o v i d e th e

s h a r e h o l d er w i t h p ro tect i o n fro m t h i s t y p e o f act i o n b y Rai n m ak er.

Co n st ru i n g t he p l ead i n g s i n

. . . Bel l ack ’ s fav or an d t ak i n g t h e co n tract

t o b e am b i g u o u s i n so m e o f i t s t erm s , i t i s p os s i b l e fo r [Bel l ack ] t o

i n t ro d u ce ev i d en ce t o s up p o rt t h i s cl ai m

. As s u ch

, . . . Rai n m ak er[‘ ] s

M o t io n t o Di s m i ss i s D ENIED as t o t h e c l ai m fo r breach of i m p l ied

co v en an t o f g oo d fai t h an d fai r d eal i n g

.

Rai n m ak er l at er fi l ed a m o t i o n fo r s um m ary ju d g m en t , arg ui n g , am on g o t h er

t h i n g s, t h at t h e i m

pl ied co v en an t o f g o o d fai t h an d fai r d eal i n g d i d n o t p ro v i d e a

v i ab l e t h eo ry o f reco v ery u n der t h e ci rcu m s t an ces b ecau se t h e ex pres s term s o f t h e

Cl awb ack Pro v i s i o n co v ered t h e p art ies ’ d i s p ut e. Th e tri al co u r t d i s ag reed

,

co n cl u d in g t hat ”[t ] h ere s t il l rem ai ns a l ev el o f am b i g u i t y wi th reg ard s t o t h e m ean i n g

o f d i s p u t ed co n t ract t erm i n ol og y an d co n st ru ct io n ,” s u ch t h at Bel l ack co u l d p ro ceed

fo rward o n h i s i m

p li ed co ven an t cl ai m

. 5 Th e t ri al co u rt

, h o wev er, cert i fi ed th e i s s u e

5 Th e t ri al co u rt al s o s t ru ck an ex p ert affi d av i t s u b m i t t ed b y Rai nm ak er i n s u p p o rt

o f i t s su m m ary ju d g m en t m o t i o n

. R a i n m a k e r d o es n o t en u m erat e t h at ru l in g as erro r o n

ap p eal

.

8fo r i m

m ed i a t e r e vi ew, an d Rai n m ak er fi l ed a t i m el y ap p l i cat i o n fo r i n t erl o cu t o ry

ap p eal , wh i ch we g ran t ed . Th i s ap peal fo l l o w ed

.

Rai n m ak er co n ten d s th at t h e t r i a l co u rt erred i n d en y i n g i t s m o t i o n fo r

s u m m ary ju d g m e n t o n Bel l ack ’ s cl ai m fo r breach o f t h e i m p l i ed co v en an t o f g o o d

fai t h a n d fai r d eal i ng u n d er Del aware l aw b ecau se t h e i m p l ied co v en an t i s

i n ap p l i cab l e i n t hi s cas e. W e co n cl u d e t h at

, as a m at t er o f l aw, t he im pl ied co v en an t

d o es n o t ap p l y i n t h e ci rcu m s t an ce t h at Bel lack s eek s to in v o k e i t h ere an d t h at t h e

t ri al co u rt ’ s s u m

m ary ju d gm en t ru l i n g t h u s was erro n eo u s

.

“ Th e i m pl i ed co v en an t o f g oo d fai t h an d fai r d eal i n g i n h eres i n ev ery co n t ract

g o v ern ed b y Del aware l aw an d req u i res a p art y i n a co n t ract u al rel at i o n s h ip t o refrai n

fro m arb i t rary o r u n reas o nab l e co n d u ct wh i ch h as t h e effect of prev en t i n g t h e o t h er

p art y t o t h e co n tract f

r o m recei v i n g t h e fru i ts o f t h e b arg ai n .” (Ci t at i o n an d

p u n ct u at i o n o m it t ed .) Ai r b o r n e Hea lt h v. S q u i d S oa p , 9 8 4 A2 d 12 6

, 1 4 5 -1 4 6 (II) (D)

(Del

. Ch

. 2 0 0 9 ). See Mi l l er v. F i b er Li g h t

, 3 43 Ga. Ap p

. 5 9 3

, 60 7 (4 ) (8 0 8 SE2 d 7 5 )

(2 0 1 7) (ap p l y i n g Del aware l aw). “ Th e i m p l ied co ven an t o f g o o d fai th an d fai r d eal i n g

i n v o l v es i n ferri n g co nt ract u al t erm s t o h an d le dev el o pm en t s o r co n t ract ual g ap s t h at

n ei t h er part y an t ici p at ed

. ” (Pu n ct u at i o n an d fo o tn o te o m i t t ed

. ) Na t i o nwi d e Emer g i n g

Ma n a g er s v. No r t hp o i n t e Ho l d i n g

s , 1 1 2 A 3 d 8 7 8

, 89 6 (IV) (E) (Del

. 2 0 1 5). Bu t “ t h e

9co v en an t i s a l i m i ted an d ex t rao rd i n ary l eg al rem ed y .” (Pu n ct u at i o n an d fo o t n o t e

o m it t ed .) Oxb o w Ca r b o n & M i n er a l s Ho l d i n gs v. Cr es t vi ew-Oxb o w A cq u i s i t i o n , 2 0 2

A3 d 4 8 2

, 5 0 7 (IV) (B) (Del

. 2 0 1 9 ). An d “ it i s n o t an ex cep t i o n t o t h e ru le t h at co u rt s

wi l l n o t al t er t h e t erm s o f a b arg ai n s o p hi s t i cat ed p a r t i es en t ered i nt o wi l l i n g l y

b ecau s e a p art y n o w reg ret s t h e d eal .” Al l i a n ce Da t a S ys

. Co r p

. v. Bl acks t o n e Ca

p i t al

Pa r tn er s V

, 9 6 3 A2 d 7 4 6

, 77 0 (III) (D) (Del

. Ch

. 2 0 0 9 )

. H e n c e, “ [t ] h e i m p l i ed

co v en an t d o es no t ap p l y wh en t h e s u b ject at i s s u e i s ex p res s l y co v ered b y t h e

co n tract

. ” (Ci t at i o n an d p un ct u at i o n o m i t ted .) A ir bo r ne Hea lt h

, 9 8 4 A2 d at 1 4 6 (II)

(D). See Oxb o w Ca r b o n & Mi n er a l s Ho l d i n gs , 2 0 2 A3 d at 5 0 7 (IV) (B) (p o in t i n g o ut

t h at “ t he i m

p l i ed co v en an t d oes n o t ap p l y wh en t h e co n tract ad d res s es t h e co n d u ct

at i s s u e, b u t on l y wh en th e co n t ract i s t ru l y si l en t co n cern i n g t h e m a t t e r a t h an d ”)

(p u n ct u at i o n an d fo o tn o t e o m i t t e d ); Al l i an ce Da t a S ys

. Co r p

. , 9 6 3 A2 d at 7 7 0 (III)

( D ) (n o t i ng t h at “ t h e i m

p l i ed co v en an t o n l y ap p li es wh ere a co n t ract l ack s s p eci fi c

l an g u ag e g o v ern i n g an i s s ue an d t he o b l ig at io n th e co u rt i s as ked t o i m pl y ad v an ces ,

an d d o es n o t co n t rad ict

, t h e p u rp o s e refl ect ed i n th e ex p r e s s l an g u ag e o f t h e

co n tract ”).

In t h e p res en t cas e, th e p art i es ’ d i s p u t e o v er wh et h er t h e p ri ce o f B e l l a c k ’ s

rep u rch as ed s h ares s h ou l d b e u p ward l y ad ju s t ed i n l i gh t o f t h e Real Pag e d eal i s

10cl earl y g o v ern ed b y t h e t erm s o f t h e Cl awb ack Pro vi s i o n in t h e LLC Ag r e em en t

.

Hen ce, t h e s u b

ject at is s u e i s ex pres s l y co v ered b y th e p art i es ’ co n tract

, an d t h e

im p lie d c oven an t is in ap p li cab l e u n d er Del aware l aw. See Oxb ow Ca r bo n & Mi n er als

H o l d i n g s , 2 0 2 A 3 d at 5 0 7 (IV) (B); Ai r b or n e Hea l t h

, 9 8 4 A2 d at 1 4 6 (II) (D);

Al l i an ce Da t a S

ys

. Co r p

. , 96 3 A2 d at 7 70 (III) (D). Bel l ack ’ s “ i m p l i ed co v en an t cl ai m

i s p rem i s ed o n t h e fai l u re o f [Rai n m ak er] t o p ay m o n ey du e u n d er t h e co n t ract

, [an d,

t h erefo re,] t h e cl ai m m

u st fai l b ecau s e t h e ex p res s t erm s o f th e co n tract wi l l co n tro l

s u ch a cl ai m

. Ag ai n , t h e i m p l i ed co v en an t can no t b e i n v o k ed t o o v erri d e ex p res s

p ro v is i o n s o f a co n t ract

. ” 6 Ku r o d a v. S PJS H ol d i n g s , 97 1 A2 d 8 7 2

, 88 8 (II) (E) (Del

.

Ch

. 2 00 9 ). Th us , Rai n m ak er’ s “ refu s al t o p ay was ei t her a b reach o f t he [Cl awb ack ]

Pro v i s i o n o r n ot a b reach at al l .” Na t i o nwi d e Emer g i n g Ma n a g er s , 1 1 2 A3 d at 8 9 6

(IV) (E). Acco rd i n g l y , t o t h e ex t en t t h at Bel l ack h ad a v i ab l e cau s e o f act i o n , i t was

6 Bel l a c k do es n ot cl ai m t h at Rai n m ak er m an i p u lat ed t h e t i m i n g o f i t s d eal w i t h

Real Pag e u n reas o n ab ly

, arb i t rari l y , an d i n b ad fai t h s o as t o t ech n ical ly co m p l y wi t h t h e

ex p res s t erm s o f t h e Cl awb ack Pro v i si o n b ut d ep ri ve Bel l ack o f h i s l eg i t i m at e ex p ect at i o n s

o f h i g h er p ay m en t u n d er t h at Pro v i s i o n

. Co m p are Kea t i n g v. Ap

p l u s + Tech n o l o g i es , No

. CIV. A. 0 8 -3 3 2 0

, 2 0 0 9 W L 26 1 0 9 1

, at * 4

, 2 0 09 U.S. Di s t

. LEXIS 8 0 2 8, at * 12 -1 3 (E.D.

Pa. Feb

. 4

, 2 0 0 9 ) (h ol d i n g t h at i m p l i ed c o v e n a n t cl ai m was v iab l e un d er Del aware l aw wh ere t he p l ai n t i ffs al l eg ed t hat t h e d efen d an t co m pan y , “ act i n g i n bad f

ai t h

, arb i t rari l y an d

u n reas o n ab l y , . . . en g ag ed in a co n cert ed effo rt to del ay t h e b i d d i n g pro ces s ” so t h at a n ew

co n t ract wo u l d n o t b e en tered i n t o d u ri n g th e t i m e p eri o d wh en t h e p l ai n t i ffs wo u l d h av e b een co n t ract u al l y en ti t led t o a s h are o f t h e rev en u e fro m t h at co n t ract ).

11a breach -o f-co n t ract cl ai m fo r b reach o f t h e Cl awb a c k Pro v i s io n, wh i ch Bel l ack

fai l ed t o p u rs u e, rat h er t han an i m p l ied co v en an t cl ai m

.

In ru l i n g th at Bel l ack co u l d p ro ceed wi th an i m p l i ed co v en an t cl ai m , t h e t ri al

co u r t co n cl u d ed t h at t he p h ras e “ effect s a Tran s act i o n ” i n t h e Cl awb ack Pro v i s i o n

was am b ig u o u s an d t h at

, as a res u l t o f t h e p art i es ’ fai lu re t o i n cl u d e a d efi n i t i o n o f

t h at p h ras e i n t h e L L C Ag r e e m en t

, t h ere was a co n t ract u al g ap t h at au t h o ri zed an

i m p l i ed co v en an t cl ai m

. Ho wev er, wh et h er t h ere i s an am b i gu i ty i n t he m ean i n g o f

an u n defi n ed t erm o f a co n tract i s a s ep arat e qu es t i o n fro m wh et h er a co nt ract h as a

g ap t h at n eed s t o b e fi l l ed b y an i m p l i ed t erm

.

W h en p res en t ed wi th a cl ai m u n d er t h e i m p l i ed co v en an t

, t h e fi rs t s tep

i n t h e an a l y s i s i s t o det erm i n e wh et h er t h ere i s a g ap t h at n eed s to be

fi ll ed

. Sch o l ars refer t o t h i s s t ep as th e p ro ces s of co n t ract co n s t ru ct i o n , wh i ch i s d i s t i n ct fro m t h e p ro ces s of co n t ract i n t erp ret at i o n

. In t erp ret at io n i s t h e p ro ces s b y wh i ch a co u rt res o l ves am b i g u it y i n th e

ex p res s t erm s o f a co n t ract . By co n t ras t , co n s t ru ct i o n i s t h e p ro ces s b y

wh i ch a co u rt d et e r m i n e s t h e s co p e an d leg al effect o f t h o s e t erm s

. Th ro u g h t h e p ro ces s o f co n tract co n s tru ct i o n , a co u rt d e t e rm i n es

wh et h er t he l an g u ag e o f t h e co n t ract ex pres s l y co v ers a p art i cu l ar i s su e,

i n w h i c h cas e t h e i m

pl i ed co v en an t wi l l n o t ap p l y , or wh et her t h e

co n t ract i s s i l en t on t h e s u b ject

, rev eal i n g a g ap t h at t h e i m p l i ed

co v en an t m i g h t fi ll

.

12(Ci t at i o n s , p un ct u at i o n , an d fo o t n o t e om i t ted .) In r e El Pa s o Pi pel i ne Pa r t n er

s

, L.P.

Der iva ti ve Li t ig at i o n , No

. CIV.A. 7 1 4 1 -VCL, 20 1 4 W L 2 76 8 7 8 2

, at * 1 7

, 2 0 1 4 Del

.

Ch . LEXIS 1 0 1 , at * 5 7 -5 8 (Del . Ch . J u n e 1 2, 2 0 14 ).

Here, t h e LLC Ag reem en t w as n o t s i l en t o n t h e s u b ject o f wh et h er a fo rm er

em pl o y ee wh o se s h ares h ad b een rep u rch as ed was en t i t l ed t o hav e t h e p ri ce ad ju s t ed

i n l ig h t o f a s u bs eq u en t tran s act i o n b et w een Rai n m ak er an d a th i rd p art y en t i t y

refl ect i n g a h i g h er s h are pri ce; rat h er, th at s i t u at i on was ex p r e ss l y co v ered b y t h e

Cl awb ack Pro v is i o n , an d t h u s t h ere was n o co n t ract u al g ap fo r t h e i m p l i ed co v en an t

t o fi l l

. An d t o t h e ex t en t t h at an y o f t h e ex p res s t erm s i n t h e Cl awb ack Pro vi si o n were

u n d efi n ed , t h ereb y

creat i n g an am

b i g u i t y as t o wh et h er a t ran s act i o n fel l wi t h i n t h e

t h ree-m o n t h cl awb ack p eri o d

, t h e s t a n d ard ru l es o f co n t ract in t erp ret at io n wo u ld

ap p ly t o a d d r es s t he m at t er rat h er t h an t h e i m p l ied co v en an t

. 7 See, e.g ., S u n l i n e

Co mmer ci a l Ca r r i er

s v. Ci tg o Pet r o leu m Co rp

. , 2 0 6 A3 d 83 6

, 8 46 ( I I I ) (A) (Del

.

2 0 1 9 ); Twi n Ci t

y Fi r e In s

. Co

. v. Del a wa re Ra ci n g A s s n. , 8 40 A 2 d 6 24

, 62 8 (1 ) (Del

.

2 0 0 3 ). To s u st ai n an i m

p l i ed co v en an t cl ai m , “ t he p l ai n ti ff m u s t al l eg e a s p eci fi c

7 Ad d i t i o nal l y , if Rai n m ak er t oo k a l i t i g at io n p o s i t i o n reg ard i n g t he ap p l i cat i o n o f

t h e Cl awb ack Pro v i s i o n t h at was i t s el f fri v ol o u s an d i n b ad fai t h

, t h at wo u ld b e ad d res s ed

t h ro u g h a req u es t fo r at t o rn ey fees

, n o t b y m ean s of t h e im p l i ed co v en an t

. See Na t i o n wi d e Emer g i n g Ma n a g er s , 1 1 2 A3 d at 8 9 7 (IV) (E). See g en eral l y OCGA § 9 -1 5 -1 4

.

13i m

p l i ed co n t ract u al o b l i

g a t i o n an d al l eg e h o w t h e v i o l at i o n of t hat o b l i gat i o n d en i ed

t h e p l ai n ti ff t h e fru i t s o f t h e co n t r a c t

, ” K u r o d a , 9 7 1 A 2 d at 8 88 (II) (E) (em p h as i s

s u p p li ed ), n o t si m

p l y t h at t h e p art i es ’ co n t ract h as an u n d efi ned

, am bi g u o u s t erm

. If

t h a t w e r e n o t th e cas e, t h en i m p l i ed co ven an t cl ai m s w o u ld be ap p l i cab l e i n ev ery

co n tract w i t h an am

b i g u o u s t erm an d wo u l d n ot b e t h e l i m i t ed

, ex t rao rd i n ary rem ed y

t h at Del aware co u rt s rep eat ed l y h av e ex p res s ed g reat h es i t an cy ab o u t ap p l y i n g

. See

g en eral l y Nemec v. S

hr a der

, 99 1 A2 d 1 1 20

, 11 2 6, 1 12 8 (Del

. 2 0 1 0 ) (d es cri b i n g t h e

i m p l i e d c o v en an t as a “ cau t i o u s en t erp ri s e” an d a “ l i m it ed an d ex t rao rd i n ary l eg al

rem ed y ”) (p u n ct u at i o n an d fo o t n o t e om i t t ed ); D un l a p v. S t a t e Fa r m Fi r e & Ca s

. Co

. ,

8 7 8 A2 d 4 3 4

, 4 4 2 (C) (Del

. 2 0 05 ) (ap p l i cat i o n o f i m p l i ed co ven an t sh o ul d b e “ rare”

ex erci s e) (p u n ct u at i on an d fo o t n o t e o m i tt ed ); Ku ro d a , 9 71 A 2 d at 8 88 (II) (E)

(“ Co n s i s t e n t wi th i t s n arro w p u rp o s e, t h e im p l i ed co v en an t is o nl y rarel y i n v o k ed

s u cces s fu l ly .”); Ci n ci n n a ti S MS A L. P. v. Ci n ci nn a ti B el l Cel lu l a r S ys

. Co

. , 7 0 8 A2 d

9 8 9

, 9 92 (Del

. 1 9 98 ) (d es cri b i n g “ narro w co n t ex t ” g i v i n g ri s e to “ o ccas i o n al

n eces s i t y o f i m p l y i n g . . . t erm s ”).

Fo r t h es e reas o n s , th e t ri al co u rt erred i n co n cl u d i n g t h at Bel l ack co u l d p ro ceed

o n h is cl ai m fo r b reach o f th e i m p l i ed co v en an t o f g o o d fai th an d fai r d e a l i n g.

14Acco rd in g ly

, we rev ers e t h e d en i al o f Rai n m ak er’ s m o t i o n fo r s u m m ary ju d g m en t o n

t h e i m p l i ed co ven an t cl ai m

.

Ju d g men t r ever

s ed

. Go b ei l

, J., a nd S en i o r Ap pel l a t e Ju d

g e Her b er t E. Ph i

pp s

co n cu r

.

15