IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

KAN-DI-KI, LLC (d/b/a DIAGNOSTIC )

LABORATORIES), )

)

Plaintiff, )

)

v. ) C.A. No. 7937-VCP

)

ROBERT SUER, )

)

Defendant. )

MEMORANDUM OPINION

Date Submitted: February 25, 2015

Date Decided: July 22, 2015

Mary B. Graham, Esq., Kevin M. Coen, Esq., MORRIS, NICHOLS, ARSHT & 

TUNNELL LLP, Wilmington, Delaware; Robert P. Ducatman, Esq., Lisa B. Gates, Esq., 

JONES DAY, Cleveland, Ohio; Attorneys for Plaintiff.

Arthur G. Connolly, III, Esq., Christos T. Adamopoulos, Esq., Ryan P. Newell, Esq., 

CONNOLLY GALLAGHER LLP, Wilmington, Delaware; Attorneys for Defendant.

PARSONS, Vice Chancellor.
1

In this contract action, the plaintiff seeks injunctive relief against the defendant for 

breaches of restrictive covenants, including non-competition, non-interference, and 

confidentiality provisions. Through two agreements, one executed roughly a year after 

the other, the defendant sold his interests in two businesses that provided mobile 

diagnostic laboratory and x-ray services to skilled nursing facilities. The plaintiff, a large 

vendor of that type of services, paid the defendant $4 million in the first transaction, and 

roughly $300,000 in the second. Between two and three years after the execution of the 

second agreement, the defendant began consulting for a management company that 

operates nursing facilities, including some facilities that were serviced by the plaintiff. 

Thereafter, and with the defendant‘s assistance, the management company aggressively 

pursued reductions in the outstanding invoices it owed to the plaintiff, and later 

terminated all its contracts with the plaintiff to replace it with other service providers. 

The plaintiff brought this action for breach of contract and several other claims. 

During the litigation, the defendant filed for bankruptcy, and all claims were 

automatically stayed. Several months later, the plaintiff obtained limited relief from the 

stay to enable it to pursue its breach of contract claim to the extent it seeks injunctive 

relief. The plaintiff pursued that claim, and this Court conducted a five-day trial 

regarding it in October, 2014. The plaintiff contends that the evidence supports the 

conclusion that the defendant breached his obligations under the restrictive covenants, 

and that it is entitled to broad injunctive relief as a result. The defendant disputes that 

assertion, and also contends that the restrictive covenants are unenforceable under both 
2

Delaware and California law, that they have expired and should not be extended, and that 

injunctive relief is not appropriate in this case. 

This Memorandum Opinion represents my post-trial findings of fact and 

conclusions of law. For the reasons stated herein, I hold that the covenants are 

enforceable, and that plaintiff has proven its claim for breach of contract and is entitled to 

injunctive relief. I also grant the plaintiff‘s pending motion for sanctions for alleged 

suppression or spoliation of evidence.

I. BACKGROUND1

A. The Parties

Plaintiff, Kan-Di-Ki, LLC, does business as Diagnostic Laboratories (―DL‖). DL 

is a California limited liability company with its principal place of business in Burbank 

California.

2

 Defendant, Robert D. Suer, is an individual residing in California.3

B. Suer and DL Enter into Various Agreements

1. Suer’s initial work for DL

DL is in the business of providing mobile diagnostic laboratory, ultrasound, and xray and related services to nursing homes, assisted living facilities, correctional facilities, 

and other long-term care facilities.4 At present, DL operates in Louisiana, Texas, 

 

1

To the extent any facts are in dispute, I have used a preponderance of the evidence 

standard to make the factual findings contained herein, unless otherwise noted.

2

Pre-trial Stip. and Order [hereinafter ―Joint Stip.‖] II.A.1.

3

Joint Stip. II.A.2.

4

Id. II.A.3.
3

Arkansas, Kansas, Missouri, Nebraska, Colorado, Utah, Nevada, Arizona, New Mexico, 

California, Oregon, Washington, and Idaho.5 DL is part of the western division of its 

parent entity, non-party TridentUSA Health Services (―Trident‖), which operates in fortythree states.

6

Suer began working in the mobile x-ray business in the late 1980s as an x-ray 

technician.7 In 1998, he took a position with DL‘s predecessor (―Old DL‖), continuing as 

an x-ray technician but also marketing the company‘s services to nursing facilities.8 In 

the early 2000s, Suer was promoted to senior vice president and his duties focused 

entirely on marketing and sales, as well as managing six or seven sales representatives.9 

In about 2006, Dr. Jason Liu, then a radiologist at Old DL, bought out the company‘s 

previous owner.10 Not long thereafter, Liu fired Suer.11 Rick Navarro, who currently is 

the Vice President for National Accounts at DL, reported to Suer in 2007, when Suer was 

 

5

Tr. 6 (McCullum). Citations to the trial transcript are in the form ―Tr. # (X),‖ with 

the testifying witness ―X‖ identified if not apparent from the text.

6

Id.

7

Id. at 209-10, 330-33 (Suer).

8

Id. at 210-11, 332-33.

9

Id. at 211-12. 

10 Id. at 334.

11 Id. 
4

fired.

12

 Navarro testified that Suer was ―extremely frustrated‖ by his termination, and 

stated, ―I‘m going to take down DL. I‘m going to take down their business.‖13

In or around early 2007, Suer and a partner started a company called Reliable 

Mobile Medical Services, which operated in competition with Old DL.14 According to 

Navarro, Suer‘s new company achieved at least some degree of success, and Liu was 

concerned enough about it that only six months after firing Suer, Liu sought to re-hire 

him.15 Old DL re-hired Suer pursuant to an agreement dated August 28, 2007 (the ―2007 

Employment Agreement‖).

16

 The 2007 Employment Agreement provided for Suer to 

become President of Old DL, in exchange for which he would receive a $400,000 annual 

salary and certain other benefits.

17

 While the 2007 Employment Agreement did not give 

Suer any formal ownership interest in Old DL, it provided that if during Suer‘s 

employment either Old DL or substantially all of its assets were sold, Suer would ―be 

entitled to receive an amount equal to ten percent (10%) of the net proceeds payable to 

Dr. Liu (or to any other person or entity who is a shareholder of the Company 

immediately before such sale).‖

18

 

12 Id. at 550 (Navarro).

13 Id. at 555.

14 Id. at 214-15 (Suer).

15 Id. at 555-56.

16 Id. at 344-45 (Suer); JX 19 (the 2007 Employment Agreement).

17 2007 Employment Agreement § 3(a)-(b).

18 Id. § 10.
5

2. The DL Purchase Agreement

At some point in 2008, Frazier Healthcare (―Frazier‖) and Audax Group became 

interested in a transaction with Old DL.19 Kelly McCullum, then an employee of Frazier, 

had conducted due diligence on Old DL since mid- or late-2006. On July 28, 2008, 

Frazier and Audax indirectly acquired Old DL through a Contribution and Equity Interest 

Purchase Agreement (the ―DL Purchase Agreement‖ or ―DLPA‖).

20

 The DLPA was 

structured to include a ―Reorganization‖ in which Old DL was converted into an LLC, 

the interests of which would be owned by Liu and Suer.21 Liu and Suer, as ―Sellers‖ 

under the DLPA, then would transfer their interests in that LLC—namely, Kan-Di-Ki, 

LLC, or DL—to the buyer-affiliated entities in connection with the DLPA closing.22 

McCullum became the President and COO of DL, and he retained that post until 2014.23

McCullum was not involved in the negotiation of the DLPA. Based on his 

familiarity with the transaction itself, however, McCullum testified that Suer was made a 

party to the DLPA because he was an ―integral part‖ of the Old DL business, in that, for 

example, he occupied the position of President and held ―a $4 million stake in the 

 

19 Tr. 7-9 (McCullum).

20 Joint Stip. II.A.5. The parties to the DLPA were: DL Group Holdings, LLC; 

Diagnostic Labs, LLC; Kan-Di-Ki Inc., d/b/a/ Diagnostic Laboratories; and certain 

―Sellers‖ defined as Suer and Liu. 

21 JX 23 (the DLPA), Recitals; id. § 6.14; JX 425.

22 DLPA, Recitals; JX 29.

23 Tr. 5 (McCullum).
6

company.‖24 When the transaction formally closed in September 2008, Suer was paid $4 

million under the terms of the DLPA, as his share of the purchase price for the Old DL 

business.

25

 

Several provisions of the DLPA are important to Plaintiff‘s claims in this case. 

Section 6.9.1 provides in relevant part that:

[E]ach Seller hereby agrees with the Buyer that such Seller 

will not . . . at any time on or after the Closing Date, directly 

or indirectly, without the prior written consent of the Buyer, 

disclose or use, any Confidential Information involving or 

relating to the Business of any Acquired Company; provided, 

however, that the information subject to [this section] will not 

 

24 Tr. 15.

25 JX 28; Tr. 366, 506-08 (Suer). Suer characterizes his inclusion as a ―Seller‖ under 

the DLPA as a sham devised by DL ―to keep [him] under their control,‖ by 

making him a ―nominal  ̳owner‘‖ even though his ownership was in fact 

―momentary‖ and ―illusory.‖ Def.‘s Post-trial Br. 3-4. Suer also testified that he 

never was issued any equity interest or LLC units in DL. Tr. 371-72. But, Suer 

admits that he accepted $4 million in cash from DL in connection with this 

transaction. Tr. 366-67. 

The documents in the record, pursuant to which Suer accepted that sum, refute his 

characterization of the relevant events. For example, in a sworn and notarized 

affidavit dated May 19, 2009, Suer attested that, ―in furtherance of the transactions 

contemplated by the [DLPA], I became an owner of equity interests in Kan-Di-Ki, 

LLC ( ̳KDK‘) . . . . All of my equity interests in KDK were purchased by the 

buyer . . . pursuant to [the DLPA.] I do not believe, and did not intend, my 

ownership of equity interests in KDK to constitute a  ̳sham transaction‘ under 

California law or otherwise.‖ JX 50. Although Suer disputes the validity of 

certain documents that appear to bear his signature, he does not deny having 

signed the affidavit marked JX 50. Tr. 404. I note in this regard that the parties 

each presented expert testimony on the validity of certain documents purporting to 

bear Suer‘s signature, but which Suer denies signing. I found that testimony 

irrelevant to any material issue, factual or legal, because the documents in question 

are not relevant. JX 30-31. For that reason, I do not discuss any further the record 

relating to the alleged signature forgery. 
7

include any information generally available to, or known by, 

the public . . . , or information that is generally known to the 

industry relating to the Business . . . .26

Section 6.11, relating to non-competition and non-solicitation, states:

For a period of five years from and after the Closing Date, no 

Seller will . . . engage directly or indirectly in all or any 

portion of the Business as conducted as of the Closing Date in 

California, Oregon, Washington, Idaho, Nevada, Arizona, 

Utah, Wyoming, Montana, Colorado, New Mexico, Texas, 

Oklahoma, Kansas, Nebraska, South Dakota, North Dakota, 

Minnesota, Iowa, Missouri, Arkansas and Louisiana, and any 

other geographic area in which any of the Acquired 

Companies conduct Business as of the Closing Date . . . . 27

The parties defined ―Business‖ in Section 6.11 as meaning ―the provision of mobile 

diagnostic laboratory, x-ray, pharmacy, and other services to nursing homes, assisted 

living facilities, jails and other long-term care facilities.‖28

Among the transactional documents executed in connection with the DLPA, 

Suer‘s Employment Agreement was cancelled,29 and he entered into a new ―Consulting 

Agreement‖ with DL.30 Under that agreement, Suer was retained to provide services to 

DL in exchange for a base salary of $125,000 per year.31 The Consulting Agreement had 

a twelve-month term with the possibility of renewal, but DL retained the right to 

 

26 DLPA § 6.9.1 (the ―DLPA Confidentiality Provision‖).

27 Id. § 6.11 (the ―DLPA Non-Competition Provision‖).

28 Id.

29 Tr. 365-66 (Suer).

30 JX 24 (the Consulting Agreement).

31 Consulting Agreement § 4(a).
8

terminate the agreement ―at any time, with or without notice,‖ subject to the payment of

specified severance payments.32 

The Consulting Agreement lasted only a couple of months before DL terminated 

it.33 According to McCullum, the termination was in response to reports that Suer was 

preparing to compete with DL in violation of the DLPA covenants, but Suer denied 

having taken such actions.

34

 Navarro testified that Suer, again enraged, called him 

cursing and threatening ―to come back and . . . take business from DL.‖35

3. The APA

Suer consulted an attorney about the covenants in the DLPA and other 

documents.36 His counsel opined that the non-competition provisions were 

unenforceable, and wrote to DL in January of 2009 to advise it of Suer‘s position to that 

effect.37 That same month, DL responded by filing suit in this Court for injunctive relief 

 

32 Id. §§ 2, 5.

33 Tr. 377-79 (Suer); id. at 28 (McCullum); id. at 558-59 (Navarro).

34 Id. at 28 (McCullum); id. at 378-79 (Suer).

35 Id. at 559. 

36 Id. at 380-82 (Suer).

37 JX 35. 
9

against Suer.38 That action was dismissed for lack of personal jurisdiction over Suer in 

March 2009.39 

During that early 2009 time period, Suer began discussions with Cedars Clinical 

Laboratory, a conventional—i.e., non-mobile—laboratory in southern California.40 Suer 

then formed BCCC Holdings, LLC (―BCCC‖), and South Coast Clinical Laboratories

(―South Coast‖), and acquired the assets of Cedars Clinical through those entities.41 

After DL‘s suit against Suer was dismissed in March 2009, it did not attempt to sue him 

in California, where personal jurisdiction ostensibly would have been proper.42 Instead, 

DL engaged Suer in discussions about a transaction relating to South Coast.43 

On May 20, 2009, DL and Suer executed an Asset Purchase Agreement (the 

―APA‖). Under the APA, DL acquired substantially all of South Coast‘s assets, 

including rights and interests in a certain laboratory license, permits, books and records, 

goodwill, intellectual property, claims, and other rights and interests.

44

 The ―Seller‖ 

under the APA was South Coast, but, due to the ownership structure Suer had erected, 

 

38 Tr. 30 (McCullum).

39 Mobile Diagnostic Gp. Hldgs., LLC v. Suer, 972 A.2d 799 (Del. Ch. 2009)

(Chandler, C.).

40 Tr. 382-86 (Suer).

41 Id. 

42 Id. at 30 (McCullum). 

43 Id. The initial outreach in this regard apparently came from Adam Abramson, an 

employee of Audax, not DL. Id. at 391-93 (Suer); id. at 30 (McCullum).

44 JX 52 (the ―APA‖) § 2.1.
10

both he and BCCC were parties and signatories to the agreement as well.45 In exchange 

for transferring the relevant assets and executing the relevant agreements, Suer, through 

South Coast, was paid $294,112 in cash.46 The APA closing occurred in Wilmington, 

Delaware, where Suer physically executed the relevant documents.47

As with the DLPA, Suer characterizes the APA as merely ―an avenue for imposing 

a new non-compete,‖ asserting that ―the business-purchase aspect was illusory‖ given 

South Coast‘s ―negligible income and few assets.‖48 Suer further intimates that he 

decided to enter the APA ―[r]ather than litigate‖ with DL. In that regard, Suer testified 

that Adamson directly or indirectly threatened to file a new lawsuit against Suer in 

California, and the discussions temporarily stopped.49 

Suer is a sophisticated businessman who ultimately decided to bind himself in the 

APA in exchange for negotiated consideration, and I find his reasons for doing so to be 

irrelevant. In any case, he has not contended that he was coerced to sign the APA or that 

it is void on grounds of duress, or made any similar argument. I therefore find 

unpersuasive the oblique comments in Suer‘s brief that purport to undermine the APA‘s 

validity.50 

 

45 APA, Recitals.

46 Id. §§ 2.4, 2.5. 

47 Id. § 2.5. 

48 Def.‘s Post-trial Br. 5.

49 Tr. 394-98.

50 E.g., Def.‘s Post-trial Br. 5-6.
11

Among the provisions the parties agreed to in the APA are three restrictive 

covenants, dealing with confidentiality, non-competition, and non-interference. Section 

5.3, the ―Confidentiality Provision,‖ states in relevant part:

[South Coast] and [Suer and BCCC] hereby agree with Buyer 

that neither [South Coast] nor [Suer and BCCC], nor any of 

their respective Affiliates, will, at any time on or after the 

Closing Date, directly or indirectly, without the prior written 

consent of the Buyer, disclose or use any confidential or 

proprietary information, or any trade secret information, 

involving or relating to the Business.51

As used in the APA, the term ―Business‖ referred to South Coast‘s business, which the 

APA specified as the business of ―providing mobile diagnostic laboratory, pharmacy, 

ultrasound, rehab and x-ray services.‖52

In Section 5.4, the APA imposes certain non-competition and non-solicitation 

restrictions. Section 5.4.1 provides that: 

For a period of five years from and after the Closing Date, 

neither [South Coast] nor [Suer or BCCC] will . . . directly or 

indirectly engage in, or directly or indirectly prepare to 

engage in, in whole or in part, the Business in the Restricted 

Area.53 

The ―Restricted Area‖ under the APA resembles that under the DLPA. It includes:

Delaware, California, Oregon, Washington, Idaho, Nevada, Arizona, Utah, Wyoming, 

 

51 APA § 5.3 (the ―APA Confidentiality Provision,‖ and together with the DLPA 

Confidentiality Provision, the ―Confidentiality Provisions‖).

52 Id., Recitals.

53 Id. §5.4.1 (the ―APA Non-Competition Provision,‖ and, together with the DLPA 

Non-Competition Provision, the ―Non-Competition Provisions‖).
12

Colorado, New Mexico, Texas, Oklahoma, Kansas, Nebraska, South Dakota, North 

Dakota, Minnesota, Iowa, Missouri, Arkansas, and Louisiana, plus ―any other geographic 

area in which [DL] or its Affiliates conduct business as of the Closing Date.‖54 The next 

provision of the APA states in relevant part:

For a period of five years from and after the Closing Date, 

neither [South Coast] nor [Suer or BCCC] will . . . directly or 

indirectly recruit, offer employment to, employ, engage as a 

consultant, lure or entice away . . . any Person who is . . . an 

employee of [DL], [South Coast] or any of their respective 

Affiliates, to leave the employ or engagement of Buyer . . . .

In addition, for a period of five years from and after the 

Closing Date, neither [South Coast] nor [Suer or BCCC] will 

. . . directly or indirectly solicit, divert, interfere with or 

accept business from, or attempt to directly or indirectly 

solicit, divert, interfere with or accept business from any 

Person that is . . . a customer or supplier of [DL] or [South 

Coast], for the purpose of securing business competitive with 

Buyer.55

The parties further agreed in Section 5.4.3 that:

[B]efore providing services, whether as an employee, 

consultant or otherwise, to any entity during the five-year 

period referred to in this Section 5.4, [Suer and BCCC] will 

provide a copy of this Section 5.4 to such employer, and 

cause such employer to acknowledge to the Company in 

writing that it has read this Section 5.4.56 

 

54 Id. § 1 (defining ―Restricted Area‖).

55 Id. § 5.4.2.

56 Id. § 5.4.3.
13

Thus, Section 5.4 contains non-competition and non-solicit covenants. The third 

major restrictive covenant in the APA is in Section 5.6, which pertains to noninterference. It states in part:

Neither [South Coast] nor [Suer or BCCC] will . . . take any 

action that is designed or intended to have the effect of 

encouraging any lessor, licensor, supplier, distributor or 

customer of [DL] or its Affiliates . . . from altering its 

relationship with [DL] or its Affiliates in a manner adverse to 

[DL] or its Affiliates.57

The APA refers back to the DLPA, and in that regard states that, ―Suer hereby 

acknowledges and re-affirms the validity and enforceability of each of his obligations set 

forth under the DL Purchase Agreement, and affirms that he has no intention of violating 

or challenging, and will not violate or challenge, the terms of any such obligations.‖58 

Collectively, I refer to the Non-Competition Provisions, the Non-Interference Provision, 

and the Confidentiality Provisions as the ―Restrictive Covenants.‖

Finally, the APA contains a ―Survival‖ clause. In that regard, Section 6.3 states 

that, ―The representations, warranties, covenants and agreements contained herein will 

survive for the longer of (i) five years, and (ii) the statute of limitations in respect of the 

subject matter described herein.‖59

 

57 Id. § 5.6 (the ―Non-Interference Provision‖). 

58 Id. § 7.3.

59 Id. § 6.3 (the ―Survival Clause‖). The parties dispute the effect of this provision 

on the issue of whether the Restrictive Covenants have expired and are therefore 

unenforceable. As I discuss infra, this dispute is irrelevant for the APA NonCompetition Provision, which expressly states that it runs ―[f]or a period of five 

years from and after the Closing Date,‖ which was May 20, 2009. 
14

The APA was not the only agreement executed in connection with the May 2009 

transaction between DL and Suer. On the same day as the APA, DL and Suer entered 

into a new employment agreement (the ―2009 Employment Agreement‖).60 That

agreement outlined certain duties Suer would perform, and prescribed his base salary 

($87,852 per year) and certain incentive compensation schedules.61 The 2009 

Employment Agreement had a term of three years, but it provided that Suer could be 

terminated with or without Cause before that time period expired.

62

 

C. Suer Begins Working for North American

After the execution of the APA and the 2009 Employment Agreement, Suer 

expected to begin actively working for DL. In fact, however, Suer was not given any 

responsibilities other than completing the discrete tasks that were identified in the 2009 

Employment Agreement, which included effecting a license transfer, among other

things.

63

 Beyond that, Suer was given no responsibility and was not re-integrated into 

DL. Instead, he was told that DL would call him if he was needed.64 

 

60 JX 54 (the ―2009 Employment Agreement‖).

61 2009 Employment Agreement ¶¶ 2-3.

62 Id. ¶¶ 1, 5.

63 Tr. 411-12 (Suer). Suer complains that although he expected to gain experience 

from a management role at DL through the 2009 Employment Agreement, DL 

instead ―froze him out,‖ and ―sent him home and gave him almost no work.‖ 

Def.‘s Post-trial Br. 5-6. To the extent Suer indirectly suggests that these events 

undermine the validity of the APA, I reject that argument. The 2009 Employment 

Agreement did not promise him any particular role within DL, nor did it even 

articulate specific duties he would be engaged in, other than ―all duties as may be 

assigned to you from time to time by the Board of Managers of the Company.‖ 

2009 Employment Agreement ¶ 2. The only concrete duty evident from the 
15

The evidentiary record is largely silent with respect to the time period between 

May 2009 and January 2012, when Plaintiff claims the alleged breaches of the Restrictive 

Covenants began. In late January 2012, Suer began working as an independent 

contractor for North American Health Care (―North American‖).65 North American and

its affiliates operate skilled nursing facilities in California, Arizona, Utah, and 

Washington.

66

 North American also had a long-term business relationship with DL under

which DL provided mobile x-ray and laboratory services to North American facilities.67 

At the recommendation of an administrator at one of North American‘s facilities, 

North American‘s COO, Timothy Paulsen, met with Suer early in 2012.68 Because 

Paulsen believed Suer‘s experience in working for skilled nursing facilities service 

providers could be valuable to North American, he retained Suer as a consultant.69 DL 

contends the provisions of the DLPA and APA required Suer to show North American 

copies of those Agreements and cause North American to acknowledge in writing to DL 

 

Agreement is the ―License Transfer,‖ which was carefully defined and included a 

separate salary payment, the ―Licensing Assistance Salary.‖ Id. ¶ 3(b). Thus, 

Suer‘s vague assertion that he ―rightfully expected‖ a certain degree of 

involvement with DL and was given something less than that is unfounded. 

64 Id. Plaintiff did not dispute this evidence.

65 Tr. 215 (Suer).

66 Id. at 1018 (Paulsen).

67 Id. at 959-60 (Paulsen).

68 Id. at 961 (Paulsen). 

69 Id. at 961-63, 1022. 
16

that it had reviewed the applicable non-competition agreements.70 There is no dispute 

that neither Suer nor North American complied with those obligations.

1. North American cancels its contract with DL

According to Paulsen, Suer was put to work ―digging into stacks and stacks of 

invoices,‖ looking at how each vendor‘s invoices compared to North American‘s 

contracts with that vendor to determine if North American was being billed properly.71 

Suer audited invoices from DL, as well as other vendors that provided pharmacy, oxygen, 

and food services—―basically any vendors‖ North American was using at the time.72 

Suer was the ―primary auditor‖ of North American‘s vendor invoices; he worked

exclusively with Paulsen and provided him written reports.73

On March 21, 2012, Suer emailed Paulsen a draft letter addressed to DL, detailing 

―discrepancies‖ that North American had perceived based on its auditing of vendor 

billing statements.74 Suer‘s cover email stated, ―Tim, attached is a Word document for 

your review that I put together. I hope this gives you some kind of format. Sorry it took 

so long but I really needed to make sure we included as much information as possible.‖75 

The letter concluded by stating that North American was ―currently holding all payments 

 

70 Id. at 1024-29; id. at 219-29 (Suer); DLPA § 6.11; APA § 5.4.3.

71 Tr. 963.

72 Id. at 964 (Paulsen).

73 Id. at 1034, 1045 (Paulsen).

74 Id.

75 JX 86.
17

to Diagnostic Laboratories until we have some type of response from your company in 

regard to the errors that have occurred.‖76 The next day, Paulsen emailed essentially the 

same letter that was attached to Suer‘s email to several individuals at DL.77 Paulsen 

testified that he wrote the draft letter and gave it to Suer with instructions to give Paulsen 

numbers and documents that would illustrate the relevant billing discrepancies.78 

Individuals at DL met with Paulsen after receiving the March 22, 2012 letter to try to 

persuade him that North American‘s auditing analysis was erroneous. But Paulsen 

maintained his position, demanding that DL either write down its receivable balance or 

credit North American to offset the perceived over-billing.79 

North American withheld payment on roughly $800,000 in charges invoiced by 

DL.80 Documentary evidence from the end of March 2012 indicates that North American 

was planning to cancel contracts with DL relating to all of North American‘s skilled 

nursing facilities in the southern California area.

81

 Suer actively assisted Paulsen in this 

 

76 Id. 

77 JX 87. Any differences from the draft letter appear to be immaterial.

78 Tr. 965-66. Because of the language in Suer‘s March 21, 2012 email (JX 87), and 

the fact that it was sent to certain individuals at DL that Suer knew but Paulsen did 

not, it is possible that Suer drafted the JX 87 letter, rather than Paulsen. See Tr. 

186-87 (McCullum). For purposes of my decision, however, I need not resolve 

that factual dispute. 

79 Id. at 116 (McCullum). 

80 Id. at 987-89 (Paulsen). DL apparently has never insisted that the $800,000 

balance be paid. Id.

81 JX 88, 93, 94, 95, 100.
18

regard. On April 10, 2012, Paulsen forwarded Suer an email chain between a North 

American facility administrator and DL entitled ―Cancellation Letter.‖82 In one of those

emails, Paulsen instructed the administrator to ―Please call Bobby [Suer] to discuss a 

response to [DL].‖83 

Events became more contentious in April and early May, 2012. An attorney for 

DL emailed Suer and his attorney, advising Suer that, ―You should stand down from your 

current activities with DL‘s competitors and customers and comply in full with all 

applicable agreements to which you are a party with us.‖84 On May 7, 2012, outside 

counsel for DL sent a letter to John Sorensen, the CEO of North American, advising him 

that DL had become aware of North American‘s affiliation with Suer.85 The letter 

enclosed copies of the APA and the DLPA, and stated that, ―Mr. Suer has, in his recent 

dealings with your organization and others, breached these covenants and other 

obligations. It is possible that, inadvertently or otherwise, you may have induced a 

breach of these contracts.‖86 The same day, DL‘s counsel sent cease and desist letters to 

the following competitors of DL: Town & Country Diagnostics (―Town & Country‖); 

B.O.N. Clinical Laboratories, Ltd. (―B.O.N.‖); First Choice Mobile Radiology; Outreach 

 

82 JX 109.

83 Id. Paulsen and other North American employees forwarded to Suer a number of 

communications with DL. See, e.g., JX 117, 120. 

84 JX 122; see also JX 104 (earlier communications between the same DL attorney 

and Suer).

85 JX 125.

86 Id.
19

Solutions, LLC; Quality Medical Imaging, Inc. (―Quality Medical‖); and UCI Medical 

Center.87 

In late May or early June, 2012, Paulsen met with McCullum and Bill Treese. 

Treese recently had been hired by DL, but he previously worked as a consultant for its 

competitors, including B.O.N. and Quality Medical.

88

 McCullum invited Treese to the 

meeting because Treese had a relationship with Suer, and McCullum wanted him to warn 

Paulsen about doing business with Suer.89 McCullum believed Suer was influencing 

Paulsen and North American‘s decisions about DL, and did not want Suer, ―a disgruntled 

employee,‖ to poison the ―good corporate relationship‖ DL had had with North 

American.90 Paulsen falsely told McCullum, however, that he had no knowledge of 

Suer‘s activities, and that Suer was not working with North American in any capacity.91 

Within the next few days, Paulsen forwarded to Suer a series of emails he had received 

from McCullum, relating to North American‘s contracts with DL at several facilities.92 

According to Paulsen, Suer needed the contract information to complete his audit of the 

 

87 JX 126, 127, 128, 129, 130, 133.

88 Tr. 1231-32 (McCullum). Paulsen‘s and McCullum‘s testimony differed as to 

how many meetings took place between Paulsen and Treese. See id. at 999 

(Paulsen). McCullum‘s testimony was more credible in this regard, but it 

ultimately is immaterial to my decision whether one or two meetings took place or 

precisely when.

89 Id. at 1232-33.

90 Id. at 1237.

91 Id. at 1237-38.

92 JX 148, 254, 145, 146, 147.
20

DL invoices.93 The exchanges between Paulsen and McCullum show that McCullum and 

others at DL were trying to avoid losing North American‘s business over the billing 

disputes.94

Starting on June 26, 2012, at least eighteen North American facilities terminated 

the x-ray and laboratory services contracts they had with DL.95 Each of the Cancellation

Letters contained identical wording. Indeed, thirteen letters dated either June 26 or 28 

contained the same typographical error, beginning the letter ―Dear Mr. McCullem,‖ even 

though the address block correctly identified the recipient as Kelly McCullum, DL‘s 

President. 

Suer was directly involved in this coordinated effort of North American. On June 

25, 2012, Suer emailed the administrator of North American‘s Park Ridge Skilled 

Nursing Center, stating:

Attached is a copy of a cancellation letter for you to sign and 

send to Diagnostic Laboratory and Radiology . . . . As most 

of you are aware we have had severe over billing issues (Not 

charging the facility according to the contracts) . . . At this 

time we will no longer want to utilize their services moving 

forward. Please open the attached cancellation notices with 

your named facility and sign then fax and mail (certified 

mail).96

 

93 Tr. 979.

94 E.g., JX 147.

95 JX 156-164, 168-171, 176-180 (the ―Cancellation Letters‖).

96 JX 155 (emphasis omitted). In this regard, Paulsen testified that he wrote the 

email, but that Suer sent it (from Suer‘s own email) because Paulsen ―was out of 

the office or something.‖ Tr. 975. Based on the totality of the documentary and 
21

Although the email is signed ―Thank you, Tim Paulsen,‖ it was sent by Suer.97 The Park 

Ridge administrator sent its cancellation letter to DL the following day.98 Similarly, in an 

email to Paulsen on July 3, 2012, Suer wrote, ―Tim, here is the cancellation notice for 

Scottsdale to send to Shawn when he is ready. You have the cover letter. Thanks, 

Bobby.‖99

Suer‘s involvement in this regard also is evidenced by several emails from Paulsen 

to North American facilities administrators. On July 5, 2012, Paulsen emailed several 

such administrators, saying North American had identified new vendors to replace some 

of the mobile lab and x-ray services in the southern California area.100 He concluded by 

observing that, ―You should see excellent services and a significant reduction in costs 

with these new vendors. But, as always, let us (Bobby Suer or myself) know if that is not 

the case.‖101 Paulsen also sent an email on July 31, 2012 to numerous recipients, 

including individuals at DL and administrators at various North American nursing 

facilities, confirming that, pursuant to the Cancellation Letters, DL would cease 

 

testamentary evidence surrounding these events, I do not find that assertion 

credible and find, instead, that Suer had a major role in drafting the email. 

97 JX 155.

98 JX 162.

99 JX 175. Paulsen also denied that Suer would have written this cancellation notice, 

suggesting that he ―may have sent it to [Suer] for review or something to look at.‖ 

Tr. 977. As with JX 155, supra note 96, Paulsen‘s explanation is not credible.

100 JX 181.

101 Id.
22

providing services to certain North American facilities as of that date.

102

 Suer was blindcopied on the email, along with three other North American employees. 

Ultimately, all of DL‘s twenty-seven contracts with North American facilities 

were cancelled.103 Sorensen, North American‘s CEO, testified that he believed DL to 

have engaged in ―gross overbilling, calculatingly, very cleverly done, on a consistent 

basis for many, many, many months.‖104 Sorensen believed that DL overbilled North 

American by about $950,000.105 He also admitted that he ―wouldn‘t know about it if it 

weren‘t for [Suer].‖106 Throughout August and September 2012, administrators at the 

North American facilities sent letters to DL, in which they detailed the final results of the

billing audit for that particular facility, and then subtracted the purported overbillings 

from the total invoices outstanding to calculate a reduced, net amount North American 

owed to DL for that facility.

107

 Paulsen testified that he drafted these letters, and Suer 

―provided numbers‖ for them.

108

 By letters dated September 27, 2012, DL disputed 

 

102 JX 190.

103 JX 426; Tr. 44-45 (McCullum).

104 Tr. 1088.

105 Id. at 1089.

106 Id. at 1087.

107 JX 192-194, 196, 197, 199-203, 205-207, 209-215, 218, 219, 224-230, 244.

108 Tr. 1067 (Paulsen). Based on the documentary evidence, I find that Suer was at 

least a co-author of these letters. See, e.g., JX 192 (―Tim[,] attached and complete 

[is] Palm Terrace . . . Be there shortly to review[.] Bobby.‖); JX 204 (―Tim, Please 

disregard any previous versions of Brentwood this is the final version [sic]. I 
23

North American‘s claims of overbilling, and rejected its suggestion that, by remitting 

payment for the undisputed amount, North American had paid DL in full.109 On October 

5, 2012, a North American facility administrator forwarded one such DL letter to Suer.

110

Paulsen, with approval from Sorensen, made the final decision to terminate the 

contracts with DL.111 Paulsen specifically denied that Suer encouraged Paulsen to cancel 

DL‘s contracts or had any part in that decision, except for reviewing the contracts and 

invoices and ―giving [Paulsen] accurate numbers.‖

112

 As in the situations previously 

noted, however, I consider Paulsen‘s efforts to minimize the importance of Suer‘s role in 

North American‘s decision to cancel its contracts with DL to be unreliable, at a 

minimum. Rather, I find that Suer played a key role in bringing about those decisions 

and that the preponderance of the evidence shows that it was unlikely that, based on 

Suer‘s prior interactions with DL, including his entry into the DLPA and APA, that Suer 

could or, in fact, did conduct the underlying North American ―audits‖ of DL‘s invoices in 

an impartial and fair way, consistent with his contractual obligations to DL. 

Suer attempts to rebut this proposition by pointing to emails from the June-July 

2012 time period in which he communicated with McCullum and Thomas McCaffery, 

 

eliminated x-ray on this one because . . . Also I rewrote the lab portion of the letter 

. . . Let me know . . . Bobby.‖).

109 JX 231-243.

110 JX 245.

111 Tr. 985 (Paulsen). 

112 Id. at 986. 
24

DL‘s general counsel, and offered to help resolve the situation between DL and North 

American.113 In addition, Suer communicated with Bill Treese, then an employee of DL, 

and sought to use Treese as a ―conduit‖ to facilitate discussions between DL and North 

American.114 Even assuming Suer made these overtures to DL in good faith, however, I 

consider it more likely than not that Suer was interested in trying to broker some form of 

compromise between North American and DL. But, that still would leave DL in a worse 

position than it was in when Suer began the course of conduct with North American that 

DL claims breached one or more of the Restrictive Covenants. 

This aspect of Suer‘s version of the relevant events brings up a related theory 

Defendant has advanced: that Treese was ―brought into the fold‖ by DL in early 2012 ―as 

its eventual star witness‖ in this litigation.

115

 Suer further asserts that even before Treese 

left B.O.N. to work for DL, he ―served as a mole, conversing with Suer and secretly 

reporting back to DL.‖116 As colorful as those contentions are, they are only somewhat 

supported by the documentary evidence. For example, on April 4, 2012, Treese emailed 

Navarro and McCullum, writing:

I received a call from Bobby last night frantically questioning 

who I had spoken to re N American [sic]. . . . I am positive 

that he is at the breaking point and can be pushed off 

changing DL at the N American buildings. I believe that if he 

is given the option of an expensive, prolonged lawsuit or of 

 

113 JX 183, 435. 

114 Tr. 725 (Treese); JX 435; Tr. 155-56 (McCullum).

115 Defs.‘ Br. 8.

116 Id.
25

suggesting to Tim that DL remain as the sole provider, he will 

choose the latter. 

I will get another call from him this morning . . . . It is 

imperative that I keep these lines of communication open so I 

continue to get information. It is in our best interest . . . . If 

we have to alter course on this plan I will do what is 

necessary to keep the accounts.117

That email was sent from Treese‘s B.O.N. email address, although he admits he was 

―transitioning from B.O.N. to become an employee of [DL]‖ at that time.118 Three weeks 

later, McCaffery, DL‘s general counsel, sent an email entitled ―litigation call‖ to Treese 

and Jones Day, DL‘s counsel in this action, in which he instructed an assistant to ―set up 

a 60 minute call for Bill, [Jones Day] and me early next week.‖119 In July 2012, 

McCaffery asked Treese if he would travel to Cleveland, ―[a]ll expenses paid.‖120 Treese 

accepted, and spent at least a day and a night in Cleveland, meeting with Jones Day.121 

Before the end of July, Treese emailed Jones Day to say that he had ―searched far and 

wide‖ and was going to send Jones Day his email correspondence with Suer.122 

 

117 JX 102.

118 Tr. 740 (Treese).

119 JX 436. Treese did not recall whether such a conference call took place. Tr. 748.

120 JX 439.

121 Tr. 750-55 (Treese).

122 JX 450. At trial, Treese admitted that his statement to Jones Day in JX 450 was 

false, as he had ―searched his emails quickly,‖ and that it was ―a little 

exaggeration‖ to say he searched far and wide. Tr. 756. Treese also admitted that 

he exaggerates from time to time. Id.
26

Treese‘s employment with DL lasted only from April to December of 2012.123 

Treese testified both evasively and unconvincingly about the circumstances in which his 

employment with DL ended. He described it as ―a mutual parting of the ways,‖ but also 

indicated that he knew he was going to be fired, for reasons unknown to him then or 

now.

124

 The unpersuasive nature of that situation is enhanced by the fact that DL chose 

and paid for an attorney to represent Treese in connection with this ―parting of the 

ways.‖

125 On December 11, 2012, Treese and DL executed a release and settlement 

agreement in connection with Treese‘s termination, not for cause.126 Pursuant to that 

agreement, DL agreed to pay Treese $450,000 in equal installments until December 

2015.

127

 Among the obligations Treese undertook as consideration for that remarkably 

 

123 Tr. 743-47 (Treese).

124 Id. at 744; see also id. at 744-45 (―Q. Were you told why you were going to be 

terminated? A. No. Q. Did you ask? A. I did. Q. Were you told? A. There 

were a lot of reasons. Q. Were any cited? A. Nope. Q. Did you accept that 

answer? A. I did.‖); id. at 776 (―And I had asked you before why you were 

terminated from DL. A. Yes, sir. Q. And do you have an answer for that yet? 

A. No. I told you that I had counsel and I was told that there were many reasons. 

And I was given an offer and I took it. Q. Now, if I remember, you said you 

didn't ask what the reasons were. A. I said I did ask. Q. You did ask but didn‘t 

get an answer? A. I got a lot of answers. Q. What were the answers? A. I don‘t 

recall the answers.‖). Apparently, once Treese found out he was going to be 

terminated, he understood that an attorney would be hired to represent him, and 

that he was to communicate only through the attorney regarding this matter. Id. at 

778.

125 Tr. 745-47 (Treese).

126 JX 249. 

127 Id. § 3.1(a). Treese also is receiving certain health insurance benefits. Id. § 3.1. 

Suer improperly attempted in his post-trial brief to present evidence of a standard 

or typical severance package, in an effort to show that Treese‘s was excessive. 
27

high severance payment was that he ―shall be obligated to cooperate with [DL] in any 

litigation or administrative proceeding involving [DL],‖ and to refrain from ―voluntarily 

aid[ing] or assist[ing] any person . . . involved in any proceeding . . . against [DL or its 

affiliates and employees].‖128 Treese also testified that Trident, DL‘s parent, is paying 

his legal fees and costs in defending a lawsuit B.O.N. brought against him in Nevada.

129

 

According to Treese, he took ninety to ninety-five percent of B.O.N.‘s mobile x-ray and 

laboratory business when he moved to DL.130 

Based on those facts and other perceived inconsistencies, Suer urges this Court to 

disregard Treese‘s testimony entirely. I find the circumstances of Treese‘s departure 

from DL and his entry into a seemingly far more than generous settlement agreement 

sufficiently suspicious that they render Treese‘s credibility questionable, at best. As 

noted in several instances, infra, that lack of credibility is problematic for Plaintiff‘s 

effort to prove certain of the breaches of contract it has alleged. I decline, however, to 

disregard Treese‘s testimony entirely, and afford it some credibility, particularly in 

instances where it is corroborated by other witnesses‘ accounts or documentary evidence. 

 

DOB 44-45. Because Suer failed to provide advance notice of such evidence in 

accordance with the Rules and orders of this Court, I have not considered it. 

McCullum testified that DL‘s standard practice for such severance payments 

varied according to the situation. Tr. 178-82.

128 JX 249 § 4.4(b).

129 Tr. 754.

130 Tr. 742.
28

2. North American finds vendors to replace DL

Plaintiff contends that Suer breached his obligations under the DLPA and the APA

in numerous respects, and presented extensive evidence in that regard. The following 

facts, which I address in the order Plaintiff presented them, are relevant to the claimed 

breaches.

a. Schryver Medical

As to Schryver Medical, DL asserts that an April 2012 email from Suer to Mark 

Schryver evidences Suer‘s competition with DL.131 Schryver owns Schryver Medical, 

which provided mobile laboratory and x-ray services to certain North American facilities 

in Washington, Utah, and Arizona.132 The April 2012 email itself is ambiguous. A fair 

reading of that document, however, gives the impression that Suer‘s activity in this 

regard was nothing more than auditing the relevant bills and attempting to obtain credits 

for North American facilities already serviced by Schryver Medical, rather than 

attempting to replace DL with Schryver Medical at other facilities.

133

 Schryver‘s 

deposition testimony does not alter that impression,134 and it was the only testimony DL 

cited in support of its position on this issue.

135

 

131 JX 118.

132 Id. 

133 Id.

134 Schryver Dep. 11-26, 41-43.

135 Pl.‘s Opening Br. (―POB‖) 28-29; Pl.‘s Reply Br. (―PRB‖) 12.
29

b. B.O.N.

Treese testified that in late 2011 or early 2012, while he was with B.O.N., Suer 

met with him and proposed that Suer would help Treese acquire North American‘s

business in southern California, if B.O.N. would pay Suer $2,000 per facility.136 Suer 

called that testimony ―absolutely false,‖ and denied that he ever made such a proposal to 

Treese.137 Suer did exchange emails with Treese about meeting in August 2011, but 

those communications do not reflect whether the meeting took place, or the substance of 

what was discussed if they did.138 

Treese further testified that he met with Paulsen and Suer on or around February 

28, 2012, about a proposal for B.O.N. to provide mobile laboratory services for sixteen 

North American facilities in southern California.139 Suer and Paulsen emphatically 

denied that Suer attended that meeting.140 On March 1, 2012, Treese and Paulsen

exchanged emails, in which Treese thanked Paulsen for the meeting and the two 

discussed potential services contracts.141 Suer is neither copied on the emails, nor 

 

136 Tr. 699-700. Treese testified that he took that proposal to Mike and Sonia 

Avedissian, the owners of B.O.N. Id.

137 Tr. 1131-32.

138 JX 66.

139 Tr. 701-02; JX 455.

140 Tr. 1132-33 (Suer); id. at 998-99 (Paulsen).

141 JX 455. 
30

mentioned directly or indirectly in them.

142

 Treese testified that he provided draft 

agreements to Paulsen, but that B.O.N.‘s owners ultimately decided not to proceed with 

the contracts because they did not want to pay Suer‘s fee of $2,000 per-facility. 

Suer‘s and Paulsen‘s accounts of these events differed dramatically from Treese‘s. 

Suer and Paulsen each testified that a deal for B.O.N. to service North American‘s 

southern California facilities made no sense because B.O.N. was located in Nevada.143 

The contemporaneous documents in the record do not indicate that Suer had a part in the 

discussions between Treese and Paulsen in late February and early March, 2012.144 The 

only evidence of Suer‘s involvement in the potential transactions between B.O.N. and 

North American is Treese‘s testimony, which, for the reasons I discussed above, is not 

entirely credible. Specifically, in relation to the facts surrounding Suer and B.O.N., I find 

Treese‘s account less credible than the weight of the documentary and other testimonial 

evidence. Thus, DL has not proven by a preponderance of the evidence that Suer ―acted 

as a facilitator and liaison between North American and B.O.N. to assist B.O.N.‖145 in 

competing with DL.146

 

142 Id.

143 Tr. 997-98 (Paulsen); id. 1133 (Suer).

144 JX 455; JX 135 (Letter from B.O.N. responding to a letter from DL, in which

B.O.N. asserted that it was ―in no way affiliated with Suer, nor has it been 

affiliated with Suer in the past.‖).

145 PRB 12; see also POB 29-30. 

146 As discussed infra in Section IV, DL‘s successful Motion for Sanctions did relate 

to the Treese evidence insofar as Suer deleted his email communications with 

Treese in early 2012, and at least some of those deletions took place after Suer was 
31

c. Quality Medical

Treese also testified that Suer proposed to help Quality Medical, another direct 

competitor of DL‘s, to obtain mobile x-ray contracts with North American facilities, in 

exchange for a $10,000 per-month consulting fee.147 On January 5, 2012, Treese emailed 

the administrator at Coventry Court, a North American facility then serviced by DL, with 

a proposed contract for Quality Medical to provide mobile x-ray and ultrasound services 

to Coventry Court.148 Treese copied Suer on the email, and opened by saying that, ―Our 

mutual friend asked that I email you the attached [contract] for your review.‖149 Suer 

admitted that he was the ―mutual friend,‖ but he denied having told Treese to send the 

email.150 Two weeks later, Suer emailed a list of North American facilities to Treese, 

writing simply, ―here you go brother.‖151

 

under a duty to preserve. DL is thus entitled to an adverse inference against Suer 

regarding the Treese situation, as it is with the UCI, Town & Country, and CERF 

Laboratories. As noted below, in terms of UCI and Town & Country, the adverse 

inference against Suer materially impacted my findings relating to those alleged 

breaches. See infra Section I.C.2.d-e. The evidentiary record as to B.O.N., 

however, is sufficiently strong that an adverse inference does not cause me to 

reach a different conclusion. Additionally, as discussed supra, there are serious 

questions about the credibility of Treese‘s testimony in favor of DL, and I decline 

to overlook those concerns based on Suer‘s improper deletion of certain emails. 

Thus, despite its successful Motion for Sanctions, DL has not proven this 

particular alleged breach.

147 Tr. 709-10.

148 JX 73.

149 Id.

150 Tr. 1137 (―All I said is,  ̳You can contact them directly.‘ [Treese] wrote the e-mail. 

I did not respond to the e-mail. I did not say that you can go out—you know, it‘s 
32

Unlike with B.O.N., the contemporaneous documents relating to Quality Medical 

corroborate Treese‘s testimony that Suer was assisting him in attempting to acquire

business from North American for Quality Medical. On January 30, 2012, Roger Faselt, 

the owner of Quality Medical, emailed Treese contract proposals for x-ray services at 

eleven North American facilities.152 Faselt wrote:

Bill, I have attached the contracts. They are at 80% which 

would be a much better place for us to be. Discuss with BS, 

do we really need to go in that low at 70%, considering how 

high there [sic] charges are now? I know he is trying to save 

them money and justify his cut, but that whacks a lot of our 

profit right off the top. . . . Let me know what you think.153 

The following morning, Treese forwarded that email to Suer without comment.154 On 

April 3, 2012, Faselt again emailed Treese, attaching revised contracts for the North 

American facilities, and writing, ―This is revised for BS.‖155 Treese forwarded this email, 

 

not up to me. It has no bearing on me. I just—all I said to him was,  ̳If you want 

to contact them directly, be my guest. Contact them directly.‘‖).

151 JX 77. Suer explained that, ―after I told [Treese] that I could not help him with 

anything, [he] asked me if I would forward him a copy of the North American 

facility list to him so that he could directly call any administrator or anybody. And 

so it was an attached list, just a list of all the facilities. That‘s all I gave to him, 

was a list.‖ Tr. 1136-37.

152 JX 78; Tr. 710, 713-16 (Treese).

153 JX 78.

154 Id.

155 JX 96. The ―BS‖ referred to in these emails was Suer. Tr. 714, 716 (Treese). I 

note that Suer did not deny that ―BS‖ referred to him.
33

too, almost immediately to Suer, with the annotation, ―Roger‘s new contract.‖156 Treese 

testified that Suer had requested the revised contracts.157

Suer ―[a]bsolutely‖ denied having proposed to Treese any such arrangement with 

respect to Quality Medical.158 He attributed his being copied on the emails from Treese 

concerning Quality Medical to Treese having asked Suer if he would help him obtain 

business from North American facilities, but Suer says he responded that he had no 

power to assist.159 He further denied ever requesting any proposed contracts from 

Quality Medical, and dismissed all the emails as ―a setup.‖160 Suer‘s explanations in this 

regard are not credible in light of the contemporaneous documents that indicate his role 

was more active than he admits. Specifically, the emails involving Suer, Treese, and 

Faselt demonstrate that Suer was providing information to Quality Medical about the 

pricing they should offer to North American to capture its business—i.e., whether Quality 

Medical needed to bid at 70% of a certain pricing schedule, or if 80% would be 

sufficiently low to ensure success. I infer that the 80% and 70% figures were with 

 

156 JX 96.

157 Tr. 716

158 Id. at 1134.

159 Id. at 1135-36.

160 Tr. 1140-41 (Suer). Suer also notes that the emails do not reference the alleged 

$10,000 fee, and that he ―barely respond[ed] if at all‖ to those on which he was 

copied. DAB 41. As explained in the text, it is ultimately immaterial whether the 

alleged offer of a $10,000 per month consulting fee that Treese referred to actually 

was received by Suer. Further, I find Suer‘s minimal or non-existent responses 

insufficient to absolve him in this regard. 
34

reference to the pricing schedules North American had in place with its then-current 

vendor, DL, and that Suer‘s input allowed Quality Medical to undercut DL. The 

documentary evidence also supports Treese‘s testimony that Suer expected some form of 

compensation for his assistance. In any event, the salient fact is that Quality Medical was 

bidding for North American‘s business with the active assistance of Suer.

Taking all of the evidence regarding Quality Medical into consideration, I find that 

Suer did facilitate Quality Medical‘s acquisition of business from certain North American 

facilities that previously had been serviced by DL. In that regard, the record also shows

that Quality Medical was one of the vendors selected to replace DL after North American 

cancelled its DL contracts in 2012.161 Quality Medical currently provides x-ray services 

to twelve North American facilities.162

d. UCI and Town & Country

DL asserts that Suer assisted North American in communicating with, and 

evaluating proposals from, University of California Irvine Medical Center (―UCI‖), 

which provides x-ray and laboratory services in competition with DL.163 Shaun Dahl, an 

administrator at North American‘s Coventry Court facility, was contacted by Kelly 

Ewing of UCI in or around December 2011 about the possibility of UCI providing 

services to Coventry Court.164 DL contends that Dahl‘s testimony and certain text 

 

161 JX 423; JX 315; Tr. 716 (Treese); id. at 1154 (Suer). 

162 Tr. 1061 (Paulsen).

163 Dahl Dep. 114; JX 140.

164 Dahl Dep. 112-15.
35

messages between Dahl and Suer from the April 2012 time period show that Suer helped

UCI compete with DL.165 

Dahl‘s testimony is inconclusive at best. The strongest impression it leaves is that, 

while Suer and Dahl had some communications relating to UCI, Suer did not take any 

action to facilitate UCI‘s acquisition of North American business.166 The documentary 

evidence consists of a small number of text messages and one email that Dahl forwarded 

to Suer. That evidence reinforces the overall impression from Dahl‘s testimony, which is 

that Ewing repeatedly pursued him for business, and on occasion Dahl tried to direct him 

 

165 POB 34-35; JX 98-99.

166 Dahl Dep. 115-34; see, e.g., id. at 116 (―Q. Why did you connect UCI to Bobby? 

A. Bobby was consulting with Tim Paulsen, and since UCI was wanting to be in 

the business, I made that introduction.‖); id. at 119 (―Q. What did Bobby say upon 

receiving the UCI proposal? A. To the best of my recollection, I don‘t recall 

really discussing the UCI contract with Bobby. It was more with Tim that I had 

the conversations with. Q. Did Tim indicate that he had discussed it with Bobby? 

A. I don‘t recall.‖); id. at 125 (―Q. Was [Suer] giving you insights about UCI? A. 

He wasn‘t necessarily talking to me. As you can see, there was some time gap [in 

the text messages], so we weren‘t in direct communication. I think probably more 

so with Tim.‖).
36

to Suer or Paulsen.

167

 Ultimately, UCI failed to acquire any of North American‘s

business.168 

DL also relies on Dahl‘s testimony and text messages with Suer to prove that Suer 

assisted Town & Country, another DL competitor.169 Unlike UCI, Town & Country was 

successful in obtaining contracts to service certain North American facilities previously 

serviced by DL.

170

 One text message from Dahl to Suer references a Rick Greene of 

Town & Country, but neither that message nor the context of the text messages in general 

suggest that Suer actively assisted Town & Country in acquiring business from North 

American.171 As in the case of UCI, Dahl‘s testimony in this regard was inconclusive.172 

 

167 The text messages reflect a relatively small number of communications spread 

over the period from April through December, 2012. JX 98-99, 221-222. They 

add little, if anything, to the weight of Dahl‘s deposition in relation to DL‘s 

assertions regarding UCI. Indeed, many of the texts appear to relate to Suer‘s 

auditing of bills for North American, and have nothing to do with UCI or other 

vendors. The April 10, 2012 email from Ewing to Dahl, which Dahl forwarded 

without comment to Suer, provides no basis for me to conclude otherwise. JX 

108.

168 Dahl Dep. 118-19.

169 POB 37. 

170 Dahl Dep. 132-33; JX 181.

171 JX 98-99, 221-222.

172 Dahl Dep. 132-37; id. at 135-36 (―Q. . . . Why are you and [Suer] communicating 

about Town & Country? . . . [A.] Rick [Greene] had called me about Beachside,

and so I think I forwarded – I needed Rick‘s number here . . . So I knew Bobby 

would have the number and so I thought it would be just the easiest thing to text 

him.‖). Treese‘s testimony about Suer‘s involvement with Town & Country 

contains no factual information that would cause me to alter my finding in this 

regard. Tr. 716-17 (Treese).
37

I note also that both UCI and Town & Country disclaimed in writing to DL that they had 

any affiliation whatsoever with Suer.173 

On its own, this evidence would not enable me to find, by a preponderance of the 

evidence, that Suer assisted UCI or Town & Country in competing with DL for North 

American‘s business. As discussed infra in Section IV, however, DL has shown in its 

Motion for Sanctions that Suer recklessly destroyed or failed to preserve evidence that 

relates directly to the text messages exchanged between Dahl and Suer in connection 

with, among other things, the UCI and Town & Country situations. I therefore draw an 

adverse inference against Suer in this regard, and conclude that the apparently missing

text message evidence involving Suer would have supported DL‘s allegations.174 For 

that reason, I find that Suer did assist UCI and Town & Country in competing with DL.

e. CERF Laboratories

DL avers that Suer assisted CERF Laboratories, a DL competitor, after it replaced 

DL as the provider for certain North American facilities. On July 24, 2012, Paulsen 

emailed administrators at several North American facilities, as follows:

I understand that Elena from CERF Lab has been to visit a 

few of you this week (and will visit all soon). I apologize that 

her visit may seem rushed (―here‘s a contract, please sign 

. . .‖) but we wanted to ensure that your lab services would 

not be interrupted when Diag Lab term[inates] on July 31st. If 

you have any concerns with the transition process, please 

 

173 JX 137, 140.

174 See Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 552 (Del. 2006).
38

contact me or Bobby Suer and we will make sure your needs 

are met.175

Suer evidently did have some contact with North American administrators in connection 

with the CERF transition. A text message from Suer to Dahl that also references 

―Elena,‖ states, ―I told Elena from cerf labs to get a hold of you to try a test with your 

computer e faxing. Not sure if u two connected to test it let me know.‖176 Thus, Suer was 

involved in at least some capacity in assisting North American and CERF when CERF 

began servicing some of North American‘s facilities in July 2012.177 This finding is 

corroborated by other evidence suggesting that Suer was involved on behalf of North 

American with the transition to new service providers generally in the July-August, 2012 

time frame.178

 

175 JX 187. 

176 JX 98-99. Dahl‘s testimony about Suer and CERF comported with what can be 

gleaned from the face of the texts and email. JX 187; JX 98-99; Dahl Dep. 137-

41, 196-97.

177 As noted supra in connection with UCI and Town & Country and discussed infra

in Section IV, DL is entitled to have certain adverse inferences drawn against Suer 

because DL prevailed on its Motion for Sanctions. I did not rely on such an 

inference in finding that Suer assisted CERF Laboratories in this regard, but it 

would reinforce that conclusion.

178 On July 5, 2012, for example, Paulsen stated in an email to several North 

American facility administrators that: ―As you are aware, we have been reviewing 

proposals from New Lab and Radiology vendors to replace some of our current 

contractors in southern California. Through this RFP process three new vendors

have been identified. . . . You should see excellent services and a significant 

reduction in costs with these vendors. But, as always, let us (Bobby Suer or 

myself) know if that is not the case.‖ JX 181. I therefore reject as unreliable 

Suer‘s testimony that North American ―never asked me to do anything with 

replacement vendors.‖ Tr. 431.
39

3. Suer’s use of DL’s Confidential Information

Plaintiff also asserts that Suer breached his obligations under the Confidentiality 

Provision of the APA, based, in part, on the following. First, the record shows that in 

April 2012, when Suer was assisting Paulsen and North American in auditing invoices 

and confronting its service providers, Suer accessed a DL customer receivables list (the 

―Receivables List‖) that he had obtained in the course of his employment with DL and 

saved in his email account since 2008.

179

 The Receivables List contained detailed 

information about DL‘s customers, including the volume of services DL was providing to 

each, as well as their outstanding invoices and payment history.180 Aside from an email 

receipt showing that on April 16, 2012 Suer opened the email to which the Receivables

List was attached, DL did not adduce any evidence that Suer actually accessed the List or 

used it. Thus, the record indicates, at most, that Suer read that particular email in April 

2012. Beyond that, DL‘s evidence is circumstantial only and of limited probative value.

Second, DL contends that the facts surrounding Suer‘s assistance of Quality 

Medical in its pursuit of North American‘s business show that he used DL confidential 

information. Based on the relevant facts recited supra, I find that Suer was providing 

information and insight to Faselt and Quality Medical about DL‘s pricing schedule, and 

that more likely than not Suer used or disclosed DL‘s Confidential Information in that 

context. 

 

179 JX 454.

180 Tr. 107-08 (McCullum); id. at 623-26 (Navarro).
40

Third, DL accuses Suer in general terms of improperly using his knowledge of 

DL‘s business to assist North American in altering its relationship with DL. The most 

particularized facts in this regard relate to Suer‘s knowledge that DL relied on certain 

large customers like North American, and that, because of pressures from its investors, if 

DL were confronted by its customers during the relevant time period about perceived 

over-billing, it would capitulate to their demands for invoice reductions or credits. The 

record supports DL‘s allegations that, during his meetings and communications with DL, 

Paulsen exhibited more than public knowledge of DL‘s vulnerability and business 

practices, and that Paulsen‘s approach to DL was particularly hard-nosed as a result.

181

 

4. Later-occurring evidence

As the preceding sections demonstrate, the record DL adduced through testimony 

and documentary evidence focused heavily on Suer‘s actions during the first half of 2012. 

Only one written communication cited thus far occurred in August 2012,182 and one other 

occurred in October 2012.183 The rest are densely clustered in the months of March 

through July 2012. In that sense, the factual record goes mostly cold after July 2012, and 

totally cold after December 2012.184 DL commenced this action on October 10, 2012. At 

 

181 Tr. 22-23 (McCullum).

182 JX 192 (Aug. 2, 2012 email from Suer to Paulsen).

183 JX 245 (Oct. 5, 2012 email from Dahl to Suer).

184 As discussed infra in Section IV, a small number of text messages between Dahl 

and Suer, which were implicated in DL‘s Motion for Sanctions, were sent in early 

December.
41

trial in late 2014, DL also presented evidence of certain actions that occurred after 2012. 

I note two such actions in particular. 

First, on September 16, 2013, an administrator at one of North American‘s 

facilities sent Suer an email on the subject ―Lab Contract.‖ The email stated, ―Do you 

have any updates on a lab company for NorCal? Who are you looking at? Thank you for 

your assistance.‖185 Two weeks later, the same administrator forwarded Suer an email 

that appears to be from a potential lab company, which stated: ―Bobby, I received this in 

the email. Is this the company you have already been speaking with?‖ Two minutes 

later, Suer replied, ―James yes. I will call u later [to] discuss.‖186 Regarding these emails, 

Suer testified that a laboratory in northern California ―went out of business completely 

and all the nursing homes up there were going to be without lab service,‖ so North 

American was ―frantically‖ looking for a replacement provider.187 DL accuses Suer of 

improperly helping to ―find a laboratory service provider for North American facilities in 

Northern California, a region previously served by DL.‖188 

The cited emails arguably support that assertion, but only in the most general 

sense. Suer testified that North American ―had asked me to just research if I knew any 

laboratories up there.‖

189 DL presented no evidence as to what, if anything, Suer actually 

 

185 JX 286.

186 JX 292.

187 Tr. 527 (Suer).

188 POB 38-39; PRB 17-18.

189 Tr. 537 (Suer). 
42

did in response to the September 13 email, or what he meant when he wrote his

September 26 email, or whether he had further communications with the author and to 

what effect.190 Thus, the evidence shows only that in September 2013 Suer provided 

some minimal assistance to North American in finding a laboratory services provider in 

northern California by searching for a vendor, and possibly spoke with at least one such 

vendor.

The second action taken by Suer in September 2013 that DL highlights involves 

his mother, Chris Walter. She is a retired nurse who did some infection control work at 

Coventry Court, a North American facility. Walter emailed Suer when a payment owed 

to her was delayed, and he forwarded the email, without comment, to someone at North 

American.191 DL complains that by ―serving as a liaison to facilitate payment for an 

invoice from‖ his mother, Suer was ―able to keep some of the North American business 

in the family‖ while also ―displacing DL,‖ which previously provided infection control 

services to Coventry Court.192 Other than the email thread containing Suer‘s forwarding 

email, the record on this issue is paper thin.

193

 According to Dahl, the administrator at 

 

190 Id. at 308 (Suer) (―Q. . . . You wrote that e-mail [JX 292]; isn‘t that true, sir? A. 

Yes.‖). Suer‘s deposition testimony failed to provide any additional detail. Suer 

Dep. 325-27 (referring to JX 292; ―Q. What was the company with which you 

were speaking of [sic]? A. I have no idea.‖).

191 JX 288.

192 POB 38. 

193 The parties did not cite to any trial or deposition testimony regarding JX 288 or 

the incident involving Walter, and the Court knows of none other than that from 

the Dahl deposition discussed in the text.
43

Coventry Court, Paulsen referred Walter to him, not Suer.194 Dahl did not know that she 

was related to Suer, and did not know why she sent the invoice to Suer.195 

Plaintiff also claims that Suer‘s decision to depose Daniel Almblade in August 

2014 amounts to a breach of the Non-Interference Provision of the APA. Almblade is an 

employee of LTC Supply, a company that adjudicates bills for skilled nursing 

facilities.196 LTC is not a competitor of DL, but it is important to DL‘s business. That is 

because, in fulfilling its bill adjudication function, LTC Supply can stand between DL 

and some of its customer-facilities, insofar as the facilities rely on LTC‘s expertise with 

billing to review requests for proposals and to determine if the vendors, like DL, are 

fairly charging the facilities under their relevant services contracts.197 When Suer sought 

the deposition of Almblade, an individual he knows through working in the industry, 

Almblade asked him why.198 The only reason Suer gave was that Almblade would find 

the deposition ―very informative.‖199 

DL posits that this statement, combined with some of the information provided to 

Almblade through Suer‘s counsel‘s questioning during the deposition, demonstrates that 

Suer‘s entire purpose in taking the deposition was to harm DL by undermining it in the 

 

194 Dahl Dep. 173.

195 Id. at 176-77.

196 Tr. 564-68 (Navarro).

197 Id. 

198 Id. at 853 (Almblade).

199 Id.; id. at 600 (Navarro).
44

eyes of LTC Supply. On balance, I find the evidence as to this aspect of DL‘s claim

lacking. It could be inferred from the fact that Suer told Almblade that he would find the 

deposition ―informative‖ that Suer intended to give information to Almblade in an effort 

to prejudice DL. That inference, however, has little else in the record to support it. 

Moreover, Suer, in defending against aggressive litigation from DL, reasonably could 

have concluded deposing Almblade, who is knowledgeable about bill adjudication and 

the nature of the skilled nursing facility industry, probably would lead to relevant 

evidence in this case. Based on the paucity of evidence as to Suer‘s allegedly improper

motive in this regard, I find that DL failed to satisfy its burden of proof on this point.

D. Procedural History200

Plaintiff, DL, commenced this action on October 10, 2012 and amended its 

complaint on February 4, 2013. The amended complaint (the ―Complaint‖) charges Suer 

with breaches of the DLPA and the APA (Count I), misappropriation of trade secrets

(Count II), and tortious interference with DL‘s contracts with North American (Count 

III).

201

 DL‘s Complaint seeks the following by way of relief: a permanent injunction 

against further breaches of the Agreements; specific performance of the Restrictive 

Covenants; damages; and reimbursement of its attorneys‘ fees and costs.202 On March 8, 

 

200 In addition to the motions described in this Section, a number of other motions 

were filed, argued, and decided in this action. I note here only those that are 

relevant for purposes of this Memorandum Opinion. 

201 Compl. ¶¶ 22-42.

202 Id. at Prayer for Relief A-F.
45

2013, Defendant, Suer, moved to dismiss or stay this action in favor of arbitration. After 

full briefing and argument, I denied that motion.

203

 

On January 7, 2014, Suer filed a petition under Chapter 7 of the U.S. Bankruptcy 

Code, resulting in an automatic stay of this action.204 On March 27, 2014, upon a motion 

by DL, the U.S. Bankruptcy Court for the Central District of California modified the 

automatic stay to permit Plaintiff to proceed with this action ―with respect to its claims 

for injunctive relief from breach of contract.‖205 DL‘s claims for misappropriation of 

trade secrets and tortious interference with contract remain stayed, as do any claims for

monetary damages based on the alleged breaches of contract.

Suer moved for partial summary judgment on April 7, 2014, and amended that 

motion on May 23, 2014. Before argument on that motion, DL filed a motion of its own

for sanctions for suppression or spoliation of evidence (the ―Motion for Sanctions‖).

206

 

Defendant responded by cross-moving for sanctions for witness tampering.207 

At the pre-trial conference on September 24, 2014, I denied Suer‘s motion for 

summary judgment. Specifically, I held that material issues of fact precluded entry of 

judgment in favor of Defendant as to each of his three grounds for summary judgment. 

 

203 Kan-Di-Ki, LLC d/b/a Diagnostic Labs. v. Suer, C.A. No. 7937-VCP, at 32 (Del. 

Ch. June 19, 2013) (TRANSCRIPT).

204 D.I. Nos. 131-132; Joint Stip. II.A.14.

205 D.I. No. 133 Ex. A.; Joint Stip. II.A.15.

206 D.I. No. 215.

207 D.I. No. 220.
46

Those issues of fact related to: (1) the alleged expiration of the Restrictive Covenants 

under the terms of the DLPA and APA;208 (2) the possibility of this Court tolling or 

otherwise extending those Covenants for purposes of an equitable remedy;209 and (3) the 

validity of the Covenants under California law.210

A five-day trial was held from September 29 to October 3, 2014. At the close of 

trial, I reserved judgment as to Plaintiff‘s Motion for Sanctions,211 and denied 

Defendant‘s cross-motion for witness tampering.212 This Memorandum Opinion contains 

both my post-trial findings of fact and conclusions of law relating to the merits of DL‘s 

case, and my ruling on the outstanding Motion for Sanctions.

E. Parties’ Contentions

DL contends that it has proven that Suer breached the Non-Interference Provision 

of the APA, the Non-Competition Provisions in both the DLPA and the APA, and the 

Confidentiality Provisions in both the DLPA and the APA. Thus, Plaintiff argues that it 

is entitled to an injunction preventing Defendant from breaching those provisions in the 

future. In particular, DL asserts that: ―Suer will continue hurting DL unless an injunction 

 

208 Kan-Di-Ki, LLC d/b/a Diagnostic Labs. v. Suer, C.A. No. 7937-VCP, at 90 (Del. 

Ch. Sept. 24, 2013) (TRANSCRIPT).

209 Id. at 94.

210 Id. at 95-96.

211 Tr. 1275-76.

212 Tr. 1289.
47

issues that prevents him from working for skilled nursing facilities, mobile x-ray vendors, 

and mobile laboratory vendors.‖213

Suer contends that the Covenants are unenforceable under both California and

Delaware law. He also asserts that, in any event, the provisions of the DLPA and the 

APA have expired, and that no equitable tolling is appropriate here. Finally, Defendant 

denies that the record supports a finding that he violated the Covenants, and further 

argues that, even if such a breach is found, no injunctive relief is warranted here. 

II. LEGAL STANDARD

A. Delaware Law Governs Both the DLPA and the APA

The parties dispute whether California or Delaware law governs the DLPA and the 

APA. ―Delaware courts will generally honor a contractually-designated choice of law 

provision so long as the jurisdiction selected bears some material relationship to the 

transaction.‖

214

 By statute in Delaware, when parties to a contract memorialize in writing 

their agreement that Delaware law governs that contract, such a choice of law ―shall 

conclusively be presumed to be a significant, material and reasonable relationship with 

this State and shall be enforced whether or not there are other relationships with this 

State.‖215 

 

213 PRB 1-2.

214 J.S. Alberici Constr. Co. v. Mid-W. Conveyor Co., 750 A.2d 518, 520 (Del. 2000). 

215 6 Del. C. § 2708(a); Total Hldgs. USA, Inc. v. Curran Composites, Inc., 999 A.2d 

873, 884 (Del. Ch. 2009) (―In light of [Section 2708(a)], Delaware courts will 

generally honor a contractually-designated choice of law provision so long as the 

jurisdiction selected is reasonable in light of the parties‘ contractual objectives.‖).
48

The DLPA and the APA each contain a provision in which the parties agreed to be 

bound by Delaware law.

216

 Additionally, Suer signed an affidavit in connection with his

execution of the APA, in which he affirmed that he intended for Delaware law to apply to 

the APA, and for the provisions of that Agreement to prevent the parties to the APA from 

even arguing that the law of any jurisdiction other than Delaware should apply to that 

Agreement.217 When sophisticated parties, like those in this case, execute agreements 

pursuant to which millions of dollars and control of various business entities change 

hands, this Court generally will enforce the parties‘ own choice of law provisions.

218

 

Allowing Suer later to walk away from the agreements he admittedly signed, and under 

which he was paid roughly $4.4 million in the aggregate, would both deprive DL of the 

benefit of its bargain and undermine the ability of commercial parties to establish with 

certainty the rules that will govern their relationship in future cases.219 My decision to 

honor the parties‘ choice of Delaware law here is buttressed by the facts that multiple 

parties to the earlier of the relevant agreements are Delaware business entities, and the 

later agreement was executed in Delaware.

220

 Thus, I find the parties‘ selection of 

Delaware law to be reasonable in light of their apparent contractual objectives. In 

 

216 DLPA § 12.10; APA § 7.6.

217 JX 50; Tr. 404-05 (Suer); supra note 25.

218 E.g., Abry P’rs V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1047 (Del. Ch. 2006).

219 Id. at 1048.

220 See DLPA, Preamble; APA § 2.5; JX 51.
49

accordance with 6 Del. C. § 2708(a) and the Total Holding USA case, therefore, I accept 

the contractually designated choice of Delaware law in this matter.

Suer argues that because DL seeks to enforce non-competition provisions, which 

are disfavored under California law,221 adhering to the parties‘ contractual choice-of-law 

provisions would undermine California public policy and run afoul of interstate comity. 

While Defendant invokes a valid principle of law in this regard,222 his argument is not 

persuasive. To take advantage of this Restatement-based exception, Suer would have to 

demonstrate both: (1) that enforcement of the Non-Competition Provisions would be 

contrary to California public policy—even assuming that California would be the state 

whose law would apply if not for the choice-of-law provisions; and (2) that California has 

a ―materially greater interest‖ than Delaware in the enforcement or non-enforcement of 

the Non-Competition Provisions.223 California law generally does enforce non-

 

221 Cal. Bus. & Prof. Code § 16600 (―Except as provided in this chapter, every 

contract by which anyone is restrained from engaging in a lawful profession, trade, 

or business of any kind is to that extent void.‖).

222 E.g., Ascension Ins. Hldgs., LLC v. Underwood, 2015 WL 356002, at *2 (Del. Ch. 

Jan. 28, 2015) (―[The Restatement (Second) of Conflict of Laws, which Delaware 

follows,] is generally supportive of choice-of-law provisions, but recognizes that 

allowing parties to circumvent state policy-based contractual prohibitions through 

the promiscuous use of such provisions would eliminate the right of the default 

state to have control over enforceability of contracts concerning its citizens.‖).

223 Those elements would have to exist under the relevant Restatement analysis for 

Suer to succeed on his argument. See RESTATEMENT (SECOND) OF CONFLICT OF 

LAWS § 187 (―The law of the state chosen by the parties to govern their 

contractual rights and duties will be applied, even if the particular issue is one 

which the parties could not have resolved by an explicit provision in their 

agreement directed to that issue, unless . . . application of the law of the chosen 

state would be contrary to a fundamental policy of a state which has a materially 
50

competition agreements that were executed in connection with the sale of the goodwill of 

a business.

224

 Based on the evidence adduced at trial, that carve-out from California‘s 

general rule against non-competes would apply to Suer in that he was a seller of the 

goodwill of a business under both the DLPA and the APA.225 Suer makes no serious 

attempt to contend that those agreements were not legitimate sales of businesses within 

the meaning of the relevant carve-out. Admittedly, there could be scenarios in which an 

employer tries to skirt California‘s policy against non-competes by orchestrating a sham 

transaction. Based on the evidentiary record in this case, however, I am convinced that 

did not occur here. I therefore reject Defendant‘s arguments in this regard and conclude 

that Delaware law applies to both the DLPA and the APA.

 

greater interest than the chosen state in the determination of the particular issue 

and which, under the rule of § 188, would be the state of the applicable law in the 

absence of an effective choice of law by the parties.‖).

224 Cal. Bus. & Prof. Code § 16601 (―Any person who sells the goodwill of a business 

. . . may agree with the buyer to refrain from carrying on a similar business within 

a specified geographic area in which the business so sold, or that of the business 

entity, division, or subsidiary has been carried on . . . .‖).

225 See supra Section I.B.1-2. The non-competition provisions DL seeks to enforce 

are found within, and were integral to, the agreements pursuant to which Suer sold 

the goodwill of his businesses, not within a separate employment agreement. That 

fact makes this case materially distinct from cases like Ascension Insurance 

Holdings, which Defendant cited in support of Suer‘s position at oral argument. 

Ascension Ins. Hldgs., LLC, 2015 WL 356002, at *3 (―The evidence does not 

support a finding that the covenant not to compete found in the EIA was a

negotiated part of the asset purchase; thus, it could not have been relied upon by 

the parties as security against competitive impairment by the seller of the goodwill 

and assets purchased, which is the sole ground upon which California relaxes its 

public policy prohibition against covenants not to compete.‖).
51

B. Applicable Legal Principles

To prove a breach of contract under Delaware law, DL must show: (1) the 

existence of a contract; (2) breach of an obligation imposed by that contract; and (3) 

resulting damages.226 After a full trial on the merits, a plaintiff bears the burden of 

proving the elements of its contract claim by a preponderance of the evidence.227 

III. ANALYSIS

Applying those principles to the evidence adduced at trial, I first conclude that the 

Restrictive Covenants in the DLPA and APA are enforceable under Delaware law. I next 

address whether the evidence shows that Suer breached those Covenants, and determine

that it does. As to Defendant‘s contention that the Covenants have expired, I conclude 

that the plain language of the Agreements supports his assertion, but only as it relates to 

the Non-Competition Provisions, which were limited to five years. As to Suer‘s 

contention that the Covenants have expired, I conclude that the language of the 

Agreements supports that assertion, but find that fact ultimately irrelevant to the 

determinative issues of whether DL: (1) proved its breach of contract claim; and (2) is 

entitled to injunctive relief.

A. The Covenants are Enforceable Under Delaware Law

Under Delaware law, a restrictive covenant, such as a non-competition provision, 

is enforceable if: (1) it meets general contract law requirements, (2) is reasonable in 

 

226 VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).

227 PharmAthene, Inc. v. SIGA Techs., Inc., 2011 WL 4390726, at *13 (Del. Ch. Sept. 

22, 2011), aff’d in part and rev’d in part on other grounds, 67 A.3d 330 (Del. 

2013).
52

scope and duration, (3) advances a legitimate economic interest of the party enforcing the 

covenant, and (4) survives a balance of the equities.228 If the restrictive covenant in 

question was obtained as ―part of a contract for the sale of stock, this inquiry is less 

searching than if the Covenant had been contained in an employment contract.‖229 Suer

does not dispute that the DLPA and the APA meet the general contract law requirements 

of offer, acceptance, and consideration.230 Thus, I limit my inquiry to the contested 

issues of whether the Restrictive Covenants are reasonable in scope and duration, 

advance a legitimate interest of DL‘s, and are not so inequitable that the Court should 

refuse to enforce them. For the reasons stated below, I conclude that the Covenants are 

enforceable under Delaware law.

First, the scope and duration of the Restrictive Covenants are reasonable under the 

circumstances of this case.231 The Non-Competition Provisions have a term of five years, 

and their geographic scope includes the twenty-three states west of the Mississippi 

 

228 Tristate Courier & Carriage, Inc. v. Berryman, 2004 WL 835886, at *10 (Del. Ch. 

Apr. 15, 2004) (citing Research & Trading Corp. v. Pfuhl, 1992 WL 345465, at 

*11 (Del. Ch. Nov. 18, 1992)).

229 Tristate Courier & Carriage, Inc., 2004 WL 835886, at *10 (citing Faw, Casson 

& Co. v. Cranston, 375 A.2d 463, 465 (Del. Ch. 1977)).

230 E.g., Def.‘s Br. 29-35.

231 ―When evaluating the reasonableness of a restrictive covenant, a court must 

consider how the temporal and geographic restrictions operate together. The two 

dimensions necessarily interact.‖ Del. Elevator, Inc. v. Williams, 2011 WL 

1005181, at *8 (Del. Ch. Mar. 16, 2011).
53

River.

232

 Non-competition agreements of that length, and of that geographical scope and 

broader, have been found reasonable by Delaware courts in cases where the restrictive 

covenant is executed as part of the sale of a business as a going concern.233 Based on the 

circumstances of this case, especially including the competitive nature of the industry and 

the depth of Suer‘s knowledge of DL‘s business practices, I find that the temporal and 

geographic limits of the Restrictive Covenants were reasonable in light of the parties‘ 

commercial goals in executing the DLPA and the APA.

The strongest argument Suer makes in this regard is that DL has overreached 

geographically. When the more recent of the contracts (the APA) was entered into, DL 

apparently operated only in Delaware and California. Through affiliates that were 

encompassed by the Non-Competition Provisions, however, DL also operated in New 

Mexico, Texas, Missouri, Oklahoma, Kansas, and Nebraska at that time. More 

importantly, during the period of the Non-Competition Provisions‘ effectiveness, DL‘s 

business expanded to include all the states covered by the ―Restricted Area‖ except for 

 

232 APA § 1 (defining ―Restricted Area‖). As discussed infra in Section III.C, the 

temporal duration of the Restrictive Covenants is a disputed issue in terms of 

whether an equitable basis exists for extending their effect. The Non-Competition 

Provisions were limited expressly to five years. The other Restrictive Covenants 

are not expressly limited to five years, but arguably are so limited by Section 6.3 

of the APA. The parties‘ competing arguments on that issue, however, are not 

relevant to the question of enforceability. 

233 See Tull v. Turek, 147 A.2d 658, 663-64 (Del. 1958) (finding reasonable a ten-year 

non-compete that covered the State of Delaware); O’Leary v. Telecom Res. Serv., 

LLC, 2011 WL 379300, at *5 (Del. Super. Jan. 14, 2011) (finding reasonable a 

four-year non-compete that covered the entire United States); Hough Assocs., Inc., 

2007 WL 148751, at *14 (finding reasonable a five-year non-compete that 

extended for a fifty-mile radius around plaintiff‘s business).
54

Montana, Wyoming, North Dakota, Minnesota, and Iowa. Furthermore, for a noncompetition agreement to satisfy this element of the reasonableness test, Delaware law 

does not impose a strict requirement that the area covered by the covenant map perfectly 

onto the geographical area of the plaintiff‘s business. ―[T]he reality is that it is the 

employer‘s goodwill in a particular market which is entitled to protection.‖

234

 If that 

market or the customer base of the business ―extends throughout the nation, or indeed 

even internationally, and the employee would gain from the employment some advantage 

in any part of that market,‖ then the employer and the business may enter into an 

enforceable contract prohibiting the employee ―from soliciting those customers on behalf 

of a competitor regardless of their geographic location.‖

235 Applying these legal 

principles to the facts of this case, I find unpersuasive Defendant‘s argument that the 

Restrictive Covenants were unreasonable based on the imperfect manner in which the 

Restricted Area mapped onto the actual area in which DL operated at the time of 

contracting.236 The facts bear out the reasonableness of DL‘s desire to prevent Suer from 

 

234 Pfuhl, 1992 WL 345465, at *12.

235 Id. (emphasis in original).

236 DL and Suer dispute whether the geographic scope of a reasonable non-compete 

can extend to areas where a party‘s business is likely to go. DL cites nonDelaware case law supporting its argument, but I need not dilate further on the 

issue other than to say that DL has satisfied the relevant analysis as it is articulated

in cases like Pfuhl, on which Suer heavily relies in this regard. DAB 30-31. If

DL‘s business, in fact, had not expanded to cover nearly all of the states subject to 

the Restrictive Covenants, the geographical reasonableness of the Covenants 

might have presented a closer question. But, the facts bore out the expanding and 

geographically far-flung nature of DL‘s business in such a way that the parties 
55

competing or interfering in their business operations after they purchased his businesses, 

and the temporal and geographic scope of the Restrictive Covenants were reasonably 

calibrated to accomplish those mutually agreed upon goals. 

The Restrictive Covenants also protect legitimate interests of DL. ―Legitimate 

interests‖ recognized by Delaware law include protection of employer goodwill, and

protection of employer confidential information from misuse.237 By bargaining for the 

inclusion of the Restrictive Covenants in the DLPA and APA, DL was protecting its 

legitimate economic interest in maintaining the business relationships it or its predecessor 

had with the various skilled nursing facilities it provided services to, including the North 

American facilities, some of which ultimately terminated their relationship with DL. 

When it paid $4 million and then roughly $300,000 to acquire Suer‘s interests in two 

successive businesses, DL acted reasonably and legitimately in insisting on some 

measure of protection from the possibility that Suer simply would go out and take those 

clients or otherwise undermine DL‘s business to Suer‘s benefit by using information he 

gained during his involvement with the businesses DL had purchased. ―In other words, 

[DL] safeguarded its investment in [Suer] by ensuring that he could not sell himself 

directly to a competitor serving [DL clients] and cut out [DL].‖

238

 The Restrictive 

 

reasonably could have required Suer to accept a non-compete of the scope and 

duration prescribed.

237 Pfuhl, 1992 WL 345465, at *12; see also, e.g., Tristate Courier & Carriage, Inc.,

2004 WL 835886, at *10.

238 Hough Assocs., Inc., 2007 WL 148751, at *14.
56

Covenants DL obtained therefore served a legitimate purpose for DL, and by seeking to 

enforce the terms of those Covenants, DL has not exceeded the scope of that legitimate 

interest. These same considerations lead me to conclude that, on balance, there is nothing 

inequitable about allowing DL to enforce the Restrictive Covenants according to the 

terms for which Suer and DL bargained.

239

 

In sum, the Restrictive Covenants are enforceable under Delaware law, because 

they meet general contract law requirements, are reasonable in scope and duration,

advance a legitimate economic interest of the party enforcing the covenant, and will 

survive a balancing of the equities.

B. Defendant Breached the Restrictive Covenants

1. The Non-Competition Provisions 

The DLPA Non-Competition and the APA Non-Competition Provisions are 

similarly worded, and each provides that for a period of five years from the execution of 

the respective agreement, Suer would not ―engage directly or indirectly in all or any 

portion of the Business‖ within the Restricted Area.240 The DLPA generally defines 

Business as the business of the Acquired Companies; the Acquired Companies in that 

instance were essentially Old DL and related entities.241 The APA specifically defines 

 

239 I discuss the relevant equitable balancing issues raised in this case in more detail 

infra, in connection with my analysis of whether injunctive relief is appropriate.

240 DLPA § 6.11; APA § 5.4.1.

241 As discussed supra, Suer had approximately a ten percent profit participation 

interest in Old DL, which accounted for his being paid $4 million in connection 

with the DLPA. 
57

―Business‖ as ―the business of providing mobile diagnostic laboratory, pharmacy, 

ultrasound, rehab and x-ray services.‖ Thus, the Non-Competition Provisions appear to 

be garden-variety covenants designed to prevent the seller of a business (Suer) from 

quickly going back to his established customers and re-taking their business from the 

buyer. 

The factual record supports the conclusion that Defendant breached the NonCompetition Provisions, although not quite to the extent Plaintiff contends. The entirety 

of Suer‘s wrongful activity was committed in his capacity as a consultant for North 

American. North American operates skilled nursing facilities; it does not engage in the 

Business from which Suer was barred by the Non-Competition Provisions—i.e., 

providing mobile diagnostic services. Rather, North American was a customer of DL‘s 

services, not a competitor seeking to provide those same services in the market. Actions 

Suer took on behalf of North American were, therefore, by definition, generally not in 

competition with DL. Thus, I conclude that the record does not support DL‘s assertion 

that Suer directly engaged in competition that was proscribed by the DLPA or the 

APA.242

 

242 Plaintiff asserts that, because Suer was paid for assisting competitors of DL, which 

Suer denies, he directly engaged in competitive Business. PRB 12. I conclude 

that that argument, including the factual dispute over whether and how much Suer 

was paid, is a red herring. Whether or not Suer received payment in exchange for 

his allegedly impermissible actions does not change the nature of those actions as 

either direct or indirect competition. Directly engaging in the proscribed Business 

would entail the actual provision of mobile diagnostic services to nursing facilities 

by Suer himself. DL does not assert that Suer, or his employer, North American, 

provided any such services directly, on their own account—nor could it so assert, 

based on the record adduced at trial. Assisting or facilitating another in the 
58

Each of the Non-Competition Provisions, however, also prohibits Suer from 

engaging in competitive Business indirectly. The evidence supports to some extent DL‘s

claim that Defendant breached the Non-Competition Provisions by engaging indirectly in 

competitive Business by assisting competitors of DL. In particular, the factual record 

shows that Suer was involved in Quality Medical‘s efforts to replace DL as the service 

provider for several North American facilities. Those efforts were successful and Quality 

Medical was among the vendors North American selected to provide services to its 

facilities after cancelling the DL contracts. The emails from Faselt, combined with the 

testimonial evidence and other documents, demonstrate that Suer provided Quality 

Medical with information about DL‘s pricing that would have enhanced Quality 

Medical‘s ability to under-bid DL and succeed in acquiring some of the contracts 

previously held by DL. Thus, in those instances, Suer indirectly engaged in the Business 

of DL, by assisting one of its competitors in the provision of relevant services. 

Plaintiff also proved that Suer provided assistance to at least UCI, Town & 

Country, and CERF Laboratories during the transition period after North American 

cancelled its DL contracts and began obtaining service from new vendors. Paulsen‘s 

email identifying Suer as a point person for making sure the North American facilities 

administrators‘ needs for such services were met evidenced Suer‘s involvement in this 

regard. I conclude, therefore, that by assisting CERF Laboratories and other vendors to

replace DL as service providers at various North American facilities, Suer indirectly 

 

provision of those services amounts, at most, to indirectly engaging in the 

Business, regardless of whether Suer was paid for his assistance.
59

engaged in the Business in violation of the Non-Competition Provisions. That is, Suer 

lent his knowledge and expertise to North American on behalf of DL‘s competitors to 

facilitate their provision of the relevant mobile diagnostic services.

DL failed to prove, however, that Defendant breached the Non-Competition 

Provisions in connection with his alleged activities with Schryver Medical and B.O.N. 

For the reasons discussed above, the record does not support a finding that Suer‘s 

involvement with those companies rose to the level of assisting or facilitating their efforts 

to engage in DL‘s Business. One material difference between the facts relating to those 

competitors as compared to Quality Medical and CERF Laboratories is that the evidence 

regarding the latter two companies shows that Suer, in violation of the Non-Competition 

Provisions, took actions that advanced those companies‘ efforts to provide mobile 

diagnostic services. The same is not true with the others, despite Plaintiff‘s arguments to 

the contrary. The best example in this regard is with B.O.N. DL relied almost entirely 

on Treese‘s testimony to prove this particular breach. As previously discussed, however, 

the credibility of Treese‘s testimony is suspect. Based on that circumstance, together 

with absence of any contemporaneous documents showing that Suer played a role in 

B.O.N.‘s attempt to engage in DL‘s Business in southern California, which ultimately 

failed anyway, I find that DL failed to meet its burden of proof in terms of the alleged 

breach involving B.O.N. 

As it relates to Chris Walter, Suer‘s mother, the record also is devoid of adequate 

support for DL‘s claim that Suer breached the Non-Competition Provisions by 

forwarding an email from her to North American. Even if Walter‘s provision of infection 
60

control services fell within the proscribed Business of the DLPA and APA, Suer‘s 

forwarding of her email in search of payment of an invoice does not prove that he 

assisted her in acquiring the contract to provide those services in the first place. Indeed, 

the only evidence in the record, Dahl‘s deposition testimony, indicates that Suer did not 

have such a role. The other action Suer took in September 2013, communicating with 

unidentified laboratory services providers in northern California, similarly lacked 

sufficient detail or evidentiary foundation to support a conclusion that DL had shown, by 

a preponderance of the evidence, that Suer breached the Non-Competition Provisions in 

that regard. 

2. The Non-Interference Provision 

Pursuant to the Non-Interference Provision of the APA, Suer agreed that he would 

not take any action that is designed or intended to have the effect of encouraging any 

customer of DL to alter its relationship with DL. The evidence clearly shows that Suer 

violated this covenant by auditing DL‘s invoices and playing a pivotal role in North 

American‘s decision to make wholesale challenges to DL‘s billing. Even if the only 

result that flowed from Suer‘s actions in this regard was that North American succeeded 

in obtaining invoice credits from DL, that may have been enough to demonstrate that he

―encourage[ed] a customer of DL‘s to alter its relationship with DL,‖ and thereby 

violated the Non-Interference Provision. The record shows far more, however. In fact, I 

find that Suer‘s actions contributed significantly to North American‘s decision to cancel 

all of its contracts with DL. During the relevant time period, North American and Suer 

attempted to conceal from DL the fact that Suer was working at North American. In 
61

addition, Suer expressed his intent on more than one occasion to ―take down DL.‖ 

Considering all of these facts in the context of the evidence as a whole, I find that,

through his actions, Suer not only encouraged, but actively facilitated, North American‘s 

drastic alteration of its relationship with DL.

In denying that he engaged in actionable interference, Suer contends that simply 

auditing DL‘s bills should not qualify as interference under the APA. He asserts that the 

act of auditing was ―neutral,‖ and that he never ―encouraged‖ North American to take 

actions adverse to DL, but rather tried to patch up the relationship at various points.243 

The evidence, however, belies Suer‘s benign characterization of the events relating to the 

relationship between North American and DL. Preliminarily, I question whether 

someone with Suer‘s extensive knowledge of DL‘s confidential information could 

perform the auditing function Suer undertook for such a major customer of DL as North 

American without inevitably violating either the Non-Interference Provision or the 

Confidentiality Provision. But, even assuming Suer could, the evidence shows that Suer

not only audited DL‘s bills with an eye toward finding areas to dispute DL‘s invoices and 

extract concessions, but he also materially assisted North American in effectuating the 

resulting cancellations. Thus, Suer breached the Non-Interference Provision by 

participating in a partisan way adverse to DL in the auditing of DL‘s billing of North 

 

243 Def.‘s Br. 56-57.
62

American, in encouraging and assisting North American to challenge DL‘s invoices and 

seek credits, stop payment, and ultimately terminate its contracts with DL.

244

 

3. The Confidentiality Provision

The Confidentiality Provision of the APA prohibits Suer from directly or 

indirectly using or disclosing any of DL‘s confidential or proprietary information or trade 

secrets relating to the Business. The evidence demonstrated that Suer breached this 

covenant. The most prominent instance of Suer using and disclosing DL confidential 

information was in his assistance of Quality Medical. The Faselt emails showed that 

Quality Medical was able to pursue North American‘s business with the knowledge of 

exactly how low it needed to bid in order to beat DL‘s pricing. Defendant‘s only 

counter-arguments in this regard are that there is no evidence proving that Suer provided 

Quality Medical with any pricing information, and that the pricing information was wellknown. Both of those contentions are controverted by the record, and in particular by the 

contemporaneous emails demonstrating that ―BS‖ was being consulted as to the pricing 

of DL‘s services contracts.245

 

244 DL asserts that Suer also breached the Non-Interference Provision by ―failing to 

refer customer inquiries to DL,‖ and using the deposition of Daniel Almblade to 

smear DL. POB 49-50; PRB 10. As to the first point, I assume DL is referring to 

the September 2013 emails involving Suer and a potential replacement lab for a 

North American facility that had cancelled its contract with DL. Both that 

situation and the Almblade deposition are discussed supra in Section I.C.4. In 

both situations, the evidence is too weak to prove any breach of the NonInterference Provision by Suer.

245 My specific conclusion as to Suer‘s use of DL confidential information in 

connection with Quality Medical comports with the evidence showing that Suer 

knew of DL‘s reliance on certain large customers, and knew that, because of 
63

The record also shows that Suer accessed a DL customer Receivables List through 

his email account in April 2012. That List contained the names of DL‘s customers and 

provided for each customer contact information, and information as to the volume of its 

contract services and outstanding balances, among other things. Although this type of 

information appears to fall within the Confidentiality Provision, the weight of the 

evidence does not support a finding that Suer ―disclosed‖ or ―used‖ it in connection with 

his work at North American. Thus, this aspect of Plaintiff‘s claim for breach of the 

Confidentiality Provision has not been proven. DL counters that Suer never denied 

accessing or using the confidential customer Receivables List, but it was DL‘s burden to 

prove that he did so. DL did not prove by a preponderance of the evidence that Suer, in 

fact, did disclose or use information from the Receivables List.

C. The Restrictive Covenants Have Expired

The Survival Clause in Section 6.3 of the APA provides that, ―The 

representations, warranties, covenants and agreements contained herein will survive for 

the longer of (i) five years [i.e., until May 20, 2014] , and (ii) the statute of limitations in 

respect of the subject matter described herein.‖ The parties vigorously dispute the effect 

of this provision on the issue of whether the Restrictive Covenants have expired.246 DL

 

certain pressures from its investors, DL would be willing to negotiate and 

capitulate to North American‘s demands for invoice reductions.

246 For reasons I explain more fully infra, this aspect of the parties‘ dispute is 

overblown and largely irrelevant. Whether the Restrictive Covenants remain in 

effect or already have expired does not impact the issue of whether Suer breached 

his obligations under the Covenants during the time period when they indisputably 

were in effect. I have concluded that he did. Thus, the relevant question becomes 
64

interprets the Survival Clause to mean that, because Delaware has a three-year statute of 

limitations for breaches of contract, the Restrictive Covenants—including the NonCompetition Provisions—were to remain in effect for a period of three years following 

the latest breach of those Covenants. Thus, Plaintiff asserts that: (1) because Suer 

continued breaching the Non-Competition Provisions until September 26, 2013, the NonCompetition Provisions will continue in effect until September 26, 2016; (2) because 

Suer continued breaching the Non-Interference Provision until August 2014, that 

covenant survives until August 2017; and (3) because Suer breached the Confidentiality 

Provision in April 2012, that covenant survived until April 2015.247 Alternatively, DL

contends that the Court should equitably toll the relevant obligations under the Restrictive 

Covenants so that DL can enjoy the bargained-for benefit that it was deprived of by

Suer‘s breaches. For the reasons stated in this Section, I conclude that the Restrictive 

Covenants have expired, and that DL‘s request for equitable tolling should be analyzed as 

a request for equitable relief from Suer‘s breaches, which I address in Section III.D infra.

1. Under the terms of the Agreements, the Restrictive Covenants have expired

The parties executed the DLPA on July 28, 2008, and the APA on May 20, 2009. 

Because the APA came later (and ―reaffirmed‖ Suer‘s commitments under the DLPA), I 

consider only the APA for purposes of whether any of Suer‘s obligations under the 

 

what injunctive remedy, if any, is appropriate. The squabble about whether the 

Restrictive Covenants already expired or still have a few months to run does not 

materially affect my determination in that regard.

247 POB 56-57. 
65

Restrictive Covenants remain in effect as a matter of contract law. The Survival Clause, 

which Plaintiff relies on for its interpretation of the length of the Non-Competition 

Provision, appears in Section 6.3, the final subsection of Section 6, which relates to 

―Indemnification.‖248 The Non-Competition Provision in Section 5.4 of the APA, 

however, expressly states that, ―For a period of five years from and after the Closing 

Date, neither [South Coast] nor [Suer and BCCC] will . . . directly or indirectly engage in 

. . . the Business in the Restricted Area.‖249 DL either glosses over this language, or 

contends that the Survival Clause somehow overrides it, so that the Non-competition 

Provision does not expire five years after the Closing Date, but rather is extended for the 

statute of limitations period (three years) each time a breach occurs. 

In effect, therefore, Plaintiff is asking the Court to apply a general clause in an 

unrelated part of the APA to override the specific language of the Non-Competition 

Provision in Section 5.4, so that potentially the length of that restrictive covenant will be 

longer. Under Delaware contract law, ―Specific language in a contract controls over 

general language, and where specific and general provisions conflict, the specific 

provision ordinarily qualifies the meaning of the general one.‖

250

 As it relates to the 

Non-Competition Provisions, therefore, DL‘s interpretation of the APA is unreasonable. 

 

248 APA § 6.

249 APA § 5.4.1 (emphasis added).

250 DCV Hldgs., Inc. v. ConAgra, Inc., 889 A.2d 954, 961 (Del. 2005).
66

The Non-Competition Provision of the APA, by the plain language of Section 5.4, began 

on the Closing Date of May 20, 2009, and expired five years later, on May 20, 2014.251 

In arguing to the contrary, DL contends that if the Non-Competition Provisions are 

limited to the fixed five-year time period expressly contained within them, that would 

render Section 6.3(ii) mere surplusage, a result eschewed by the applicable canons of 

contract interpretation under Delaware law.252 I disagree. Reading the APA as a whole, 

which Delaware law requires me to do, makes it clear that Plaintiff‘s argument artificially 

puts Section 5.4 and Section 6.3 in conflict with one another, such that one or the other 

would contain a meaningless provision. Applying the statute-of-limitations extension 

trigger in Section 6.3(ii) would require me to ignore the plain statement in Section 5.4.1 

that the Non-Competition Provision lasts for five years from the Closing Date. The more 

reasonable reading of Section 6.3(ii) is that it relates to the representations, warranties, 

covenants, and agreements ―contained herein‖—i.e., in Section 6, concerning the parties‘ 

Indemnification obligations.253 Thus, if a party has a right to Indemnification under 

 

251 Although I need no other basis to reject DL‘s argument as to the expiration of the 

Non-Competition Provisions, I note that, under its interpretation, that Provision 

theoretically could extend for eternity. Suer could breach before May 20, 2014,

triggering a three-year extension, and then breach again just before that extension 

ran out, and so on. Such an interpretation, however, would lead to an absurd result 

and thereby violate a basic canon of contract interpretation. E.g., Osborn ex rel. 

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

252 Id. 

253 APA § 6.3 (emphasis added) (―Survival. The representations, warranties, 

covenants and agreements contained herein will survive for the longer of (i) five 

years, and (ii) the statute of limitations in respect of the subject matter described 

herein.‖).
67

Section 6.1 or 6.2, that right survives, under Section 6.3, for the longer of five years 

(romanette (i)), and the statute of limitations relating to the indemnified claim (romanette 

(ii)). That interpretation harmonizes Section 6.3 with the unambiguous language in 

Section 5.4 limiting the Non-Competition Provision to ―a period of five years,‖ and gives 

effect to the more specific of the two provisions.

254 I therefore conclude that the NonCompetition Provision lasted only for a period of five years from the Closing Date, and 

therefore expired on May 20, 2014.

Unlike the Non-Competition Provision, neither the Non-Interference Provision nor 

the Confidentiality Provision contains a specific time limitation.255 Relying again on the 

Survival Clause in Section 6.3(ii), DL contends that the Non-Interference Provision 

survives until August 2017 because Suer continued breaching it until August 2014, and 

that the Confidentiality Provision survived until April 2015, based on Suer‘s breach in 

April 2012. I need not address continuing effectiveness of the Confidentiality Provision

as a contractual matter, because even under Plaintiff‘s interpretation, it already has 

expired.

 

254 In a transcript ruling at the pre-trial conference, I denied Suer‘s motion for 

summary judgment in part on grounds that the Survival Clause was ambiguous. 

Having now had the benefit of a trial and post-trial briefing, I have concluded that 

the Survival Clause is not ambiguous and should be read as discussed here. That 

conclusion, however, does not mean that Suer is entitled to judgment as a matter 

of law, as he contends. See discussion on the propriety of injunctive relief here in 

Section III.D infra.

255 APA §§ 5.3, 5.6.
68

As to the Non-Interference Provision, DL relies on Suer‘s deposition of Almblade 

as evidence that an alleged breached occurred as late as August 2014, thereby causing 

that Provision to extend until August 2017. Even if I accept, arguendo,

256 that DL‘s 

application of the Survival Clause to the Non-Interference Provision is sound, the factual 

record does not support this aspect of Plaintiff‘s argument. As I found earlier, DL failed 

to prove that Suer improperly interfered with DL‘s Business when he took Almblade‘s 

deposition. I also previously concluded that Suer‘s actions in connection with the 

unidentified vendor replacement in September 2013 did not amount to a breach of the 

Non-Interference Provision.

257

 Thus, the last of the breaches of the Non-Interference 

Provision that DL proved at trial had ended by July 2012. Thus, even if Plaintiff‘s 

reading of the Survival clause were correct, the Non-Interference Provision expired at the 

end of July 2015, making it essentially moot, except as a potential basis for entry of a 

prospective permanent injunction.

2. Plaintiff’s plea for “equitable tolling” is misplaced

DL also contends that, if this Court concludes the Restrictive Covenants have

expired according to their terms, the Court can, and should, extend those Covenants on 

the ground of equitable tolling.

258

 What DL really is seeking, however, is for the Court to 

 

256 As stated supra in this Section III.C.1, I read Section 6.3(ii) as relating to the 

Indemnification obligations in Section 6, rather than any of the Restrictive 

Covenants in particular. In terms of the Non-Interference Provision, however, I 

need not even reach that issue.

257 See supra Section III.B.1.

258 POB 57-60; PRB 24-28.
69

consider the contractual time period for which Suer had agreed to refrain from breaching

the Restrictive Covenants in fashioning what DL considers an appropriate injunction that 

will make Plaintiff whole and confer upon DL the benefit for which it bargained.259 I 

address the availability of such relief in the context of discussing an appropriate remedy 

in the following Section. In my opinion, it is neither necessary nor productive to analyze 

the issue within the framework of attempting to use equitable tolling to enlarge the 

effective time periods of the Restrictive Covenants. 

D. Remedy

As noted above, Plaintiff‘s claims against Suer automatically were stayed when he 

filed for bankruptcy in January 2014, with the limited exception of DL‘s claim for 

injunctive relief for breaches of the DLPA and the APA. Thus, to the extent DL might 

have a valid claim for damages based on loss of business or other harm caused by Suer‘s 

breaches, no such claim is before me at this time. Instead, DL asks the Court to enjoin 

Suer from continued breaches of his obligations under the Restrictive Covenants. To 

merit a permanent injunction, as DL seeks, it must demonstrate: (1) actual success on the 

merits, (2) irreparable harm, and (3) that the balance of the equities weighs in favor of 

 

259 E.g., POB 1 (―DL, therefore, seeks an order enjoining Suer, for at least two years 

and five months from the date of judgment, from engaging in activities that are in 

breach of his covenants.‖).
70

issuing the injunction.260 ―Further, to gain specific performance of a covenant not to 

compete, these elements must be established by clear and convincing evidence.‖

261

Before I address whether Plaintiff has satisfied those elements and is entitled to 

injunctive relief, I note that the parties dispute whether the Court‘s analysis must include 

a determination as to the allegedly ―willful‖ nature of Suer‘s breaches.262 DL cites cases 

from other jurisdictions that it contends support the proposition that ―when determining 

whether an equitable remedy is appropriate courts look to whether the breach of a 

restrictive covenant was  ̳willful.‘‖263 It is an equitable maxim that ―he who comes into 

equity must come with clean hands.‖264 But, the unclean hands doctrine has no 

application to DL‘s affirmative claims. Had Suer counterclaimed against Plaintiff and 

sought some form of equitable relief against it, which he has not, the unclean hands 

 

260 Concord Steel, Inc. v. Wilm. Steel Processing Co., 2009 WL 3161643, at *14 (Del. 

Ch. Sept. 30, 2009), aff’d, 7 A.3d 486 (Del. 2010).

261 Hough Assocs., Inc. v. Hill, 2007 WL 148751, at *14 (Del. Ch. Jan. 17, 2007); see 

also, e.g., Cirrus Hldg. Co. v. Cirrus Indus., Inc., 794 A.2d 1191, 1201-02 (Del. 

Ch. 2001) (―[W]here, as here, the plaintiff ultimately seeks relief in the form of a 

decree of specific performance, the court must keep in mind, in assessing the 

reasonable likelihood of success, that the plaintiff will bear the burden of 

establishing its case by  ̳clear and convincing‘ evidence.‖).

262 Def.‘s Br. 11; PRB 27. Suer asserts that the reason DL has advanced this issue is 

because a finding of willfulness here might have an effect in the bankruptcy action 

in California—i.e., it might strengthen DL‘s hand in arguing against affording 

Suer a discharge in that proceeding.

263 PRB 27 n.6. 

264 2 JOHN NORTON POMEROY, EQUITY JURISPRUDENCE §§ 363, 397 (5th ed. 1941).
71

defense might have provided a basis to deny him such relief.265 In analyzing a plaintiff‘s 

claim for breach of contract under Delaware law, however, the Court generally does not 

inquire into the defendant‘s state of mind.266 I also see no merit in any argument by DL 

that the willfulness of Suer‘s breaches are relevant as part of balancing the equities in 

connection with my decision about the propriety of injunctive relief. The balancing of 

equities in that regard focuses on ―balancing the interests sought to be protected by [DL] 

against the injury that injunctive relief would cause to [Suer].‖

267

 I therefore express no 

opinion as to whether Suer‘s breaches of the DLPA and the APA were ―willful.‖

1. DL is entitled to injunctive relief

The first element in deciding whether injunctive relief is appropriate is actual 

success on the merits. As the foregoing analysis shows, DL has proven that Suer

breached the Non-Competition Provisions, the Non-Interference Provision, and the 

Confidentiality Provision. The first of those breaches occurred, based on the evidence 

adduced, in or around January 2012 when Suer began working for North American and 

interfering with DL‘s business relationship with North American‘s facilities.

 

265 Nakahara v. NS 1991 Am. Trust, 718 A.2d 518, 522 (Del. Ch. 1998) (―The 

unclean hands doctrine is aimed at providing courts of equity with a shield from 

the potentially entangling misdeeds of the litigants in any given case. The Court 

invokes the doctrine when faced with a litigant whose acts threaten to tarnish the 

Court‘s good name. In effect, the Court refuses to consider requests for equitable 

relief in circumstances where the litigant‘s own acts offend the very sense of 

equity to which he appeals.‖).

266 See supra note 226 and related text (identifying elements of a breach of contract 

claim). Whether the breach was intentional or willful is irrelevant.

267 Pfuhl, 1992 WL 345465, at *13.
72

In terms of irreparable harm, I note that each of the parties to the APA 

―acknowledge[d] and agree[d] that the other parties hereto would be damaged irreparably 

in the event any of the provisions of this Agreement are not performed . . . or otherwise 

are breached or violated,‖ and that ―each party hereto will be entitled to an injunction . . . 

to enforce specifically this Agreement . . . .‖268 The DLPA contains a similar 

provision.

269

 In the context of ordering injunctive relief stemming from breaches of a 

non-competition agreement, Chief Justice Strine, then writing as Vice Chancellor, 

observed that ―our law has consistently found a threat of irreparable injury in 

circumstances when a covenant not to compete is breached.‖270 Based on the arm‘slength agreement between DL and Suer that any breaches of the DLPA or the APA 

would result in irreparable harm, and on the factual record presented as to the nature, 

extent, and effect of Suer‘s breaches, I find that this requirement for injunctive relief has 

been satisfied.

Finally, I consider whether the harm that the requested injunction would cause to 

Suer outweighs the benefits of granting DL the injunctive relief it seeks. Defendant 

asserts that DL‘s relationship with North American is broken beyond repair, and that 

there is therefore likely to be little benefit to DL from a grant of injunctive relief here. 

 

268 APA § 7.8.

269 DLPA § 12.12.

270 Hough Assocs., Inc., 2007 WL 148751, at *18; see also id. (―Measuring the effects 

of breaches like this involves a costly process of educated guesswork with no real 

pretense of accuracy. This court has been candid to admit this reality and to use 

injunctive relief as the principal tool of enforcing covenants not to compete.‖).
73

Suer also alleges that he is the sole breadwinner of his family and would suffer greatly if 

enjoined from continuing to work in the industry. I find no merit to the argument that, 

because a defendant irreparably may have destroyed a business relationship with a major 

customer of a plaintiff, there is nothing to be gained by holding the defendant to the 

promises he made and later broke. As to the alleged hardship to Suer personally, as I 

discuss in more detail below, Suer will not be prevented from working in the nursing 

home field altogether. He will be enjoined, instead, from continuing to breach the 

obligations he undertook in the DLPA and the APA. Thus, I conclude that the balancing 

of the equities supports the issuance of injunctive relief in DL‘s favor.

2. The scope of the Court’s injunction

At various points throughout the briefing, DL offered differing definitions of what, 

precisely, it seeks to enjoin Suer from doing.271 Plaintiff ultimately requested at 

argument that Suer be enjoined ―from working with any mobile x-ray or laboratory 

vendor, skilled nursing facility, or skilled nursing management company for a period of 

. . . two years and five months from the date of the injunction.‖272 This request, however,

 

271 Compare PRB 1 (seeking injunction ―prevent[ing] [Suer] from working for skilled 

nursing facilities, mobile x-ray vendors, and mobile laboratory vendors.‖), and

PRB 35 (―Suer should be enjoined from working for nursing homes, nursing home 

operating companies, and mobile x-ray and mobile laboratory providers. Under 

DL‘s proposed injunction, Suer could work for any vendor that does not compete 

with DL—for example, an oxygen company such as Pulmocare.‖), with POB 60 

(―Suer will continue to cause harm to DL unless he is enjoined from working in 

the nursing home industry.‖), and POB 63 (―[I]f an injunction is granted, but Suer 

is permitted to continue working at North American or in the nursing home 

industry, it will be impossible to ensure his compliance.‖).

272 Arg. Tr. 50.
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goes considerably beyond the subject matter scope of the Restrictive Covenants DL 

bargained for from Suer. I address that issue next, and then will discuss the appropriate 

temporal duration of an injunction.

In terms of his obligations under the Non-Competition Provisions, Suer agreed not 

to ―directly or indirectly engage . . . in the Business,‖ with ―Business‖ meaning 

―providing mobile diagnostic laboratory, pharmacy, ultrasound, rehab and x-ray 

services.‖ That was and is DL‘s line of business, and Suer promised not to compete with 

DL. Suer did not agree that he would refrain from working for skilled nursing facilities 

or skilled nursing management companies, except, perhaps, to the extent such a facility or 

company might engage in the business of providing mobile diagnostic services like DL. 

As for the Non-Interference Provision, Suer undertook not to ―take any action that is 

designed or intended to have the effect of encouraging any lessor, licensor, supplier, 

distributor or customer of [DL] or its Affiliates . . . from altering its relationship with 

[DL] or its Affiliates in a manner adverse to [DL] or its Affiliates.‖ Nothing in that 

Provision precludes Suer from working for any particular company or type of company, 

but it does preclude him—regardless of where he works or the nature of his 

responsibilities—from taking actions designed to interfere with DL‘s business 

relationships. In determining an appropriate remedy, therefore, my initial focus will be 

on enjoining Suer from: competing with DL, as defined in the Non-Competition 

Provisions; interfering in DL‘s business relationships, as defined in the Non-Interference 

Provision; and disclosing or using DL Confidential Information, as that term is defined in 

the Confidentiality Provisions. 
75

The crux of this issue, and the reason the parties dispute it so vigorously, is 

whether Suer can continue to work for North American, and especially in the bill auditing 

function that gave rise to his multiple breaches of the Restrictive Covenants. Based on 

the record adduced at trial, it does seem to me that Suer will not be able to work on bill 

adjudication or auditing for North American or any other skilled nursing management 

company or for any skilled nursing facility for which DL currently provides services, 

because Suer has exhibited sufficient bias toward DL to make it unlikely that Suer could 

work in such a position without interfering with DL‘s current or prospective business 

relations. For that reason, Suer will be barred from bill adjudication or auditing at North 

American and the other types of companies mentioned above. 

There is nothing about working for North American or another skilled nursing 

management company or skilled nursing facility, however, that is inherently violative of 

the terms of the Restrictive Covenants. Thus, I will decline to bar Suer from otherwise 

continuing to work for North American generally or from working for another skilled 

nursing management company or skilled nursing facility. Delaware courts ―will not 

rewrite contractual language covering particular topics just because one party failed to 

extract as complete a range of protections as it, after the fact, claims to have desired 

during the negotiation process.‖273 DL did not negotiate for restrictive covenants that 

would preclude Suer from working in the ―nursing home industry,‖ or for skilled nursing

 

273 Allied Capital Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1033 (Del. Ch. 

2006).
76

management companies generally. Had it wanted such a broad restrictive covenant, DL

could have attempted to obtain it at the bargaining table. 

Turning to the temporal component of the injunction, and consistent with my

conclusion that DL is entitled to the benefit of its bargain, I have determined that the 

injunction should remain in effect for two years. DL contends that it bargained for five 

years of compliance with the Restrictive Covenants, and because Suer began breaching in 

January 2012, DL only received that benefit for roughly two years and seven months. 

Accordingly, DL seeks an injunction for the remaining two years and five months. 

Although I generally agree with DL‘s premise, I conclude based on all the circumstances 

of this case, that a slightly shorter injunction is warranted. For example, some of the 

more significant breaches of the Restrictive Covenants did not occur until several months 

after January 2012. In this regard, I note that North American did not send out its 

Cancellation Letters until the end of June or early July, 2012. Defendant offers several 

reasons why the length of DL‘s requested injunction is unreasonable, but none of them 

justify shortening its length more materially. I reject in particular the argument that the

injunction against Suer should be reduced for the time that elapsed during the pendency 

of this litigation as ―time served.‖ DL did not bargain for the right to litigate endlessly 

with Suer, and I decline to adopt a rule that might incentivize contractual parties to 

breach their agreements and then run out the clock during litigation. For all of these 

reasons, I have decided to limit the length of the injunction to two years from its entry.
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IV. PLAINTIFF’S MOTION FOR SANCTIONS OR SPOLIATION

Before trial, DL moved the Court to order sanctions against Suer for alleged 

suppression or spoliation of evidence. Plaintiff relies most heavily on documents it 

received from non-parties during discovery that it says Suer should have produced, but 

did not. In particular, Plaintiff points to three sets of text messages between Suer and 

Dahl of Coventry Court: (1) texts from between April and September 2012 relating to 

UCI, Town & Country, and CERF Laboratories; (2) texts from the early December 2012 

timeframe relating to CERF Laboratories and UCI; and (3) texts from early December 

2012 relating to Terrace View, another North American facility. DL also points to 

certain emails between Treese and Suer in April 2012 that were produced by Treese but 

not Suer. Finally, DL asserts that Suer violated this Court‘s May 20, 2014 order granting 

DL‘s motion to compel certain discovery (the ―May 2014 Discovery Order‖),274 by 

failing to supplement his interrogatory responses and provide documents relating to his 

work for Pulmocare, an oxygen services vendor for skilled nursing homes. Based on this 

alleged misconduct, DL urges the Court to draw adverse inferences against Suer with 

respect to his alleged breaches of the Non-Competition Provisions and the Confidentiality 

Provision, and to afford no weight to any of Suer‘s testimony.275 DL also seeks its fees 

and costs associated with its Motion for Sanctions.

 

274 D.I. No. 168.

275 Pl.‘s Mot. for Sanctions for Suppression or Spoliation (the ―Motion for 

Sanctions‖) 2; Pl.‘s Reply in Supp. of Mot. 15.
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Suer essentially concedes that his duty to preserve evidence attached by April 4, 

2012, at the latest, by which time he was communicating with his attorneys about 

possible allegations by DL that Suer was breaching his non-competition obligations.276 

As to why he failed to produce the relevant text messages, Suer now avers that he lost his 

cell phone in March of 2013.277 Regarding the Treese emails, Suer asserts that, because 

they were sent and received between January and mid-April 2012, Suer deleted them in 

the ordinary course before his duty to preserve attached.

A. Legal Standard

―A party in litigation or who has reason to anticipate litigation has an affirmative 

duty to preserve evidence that might be relevant to the issues in the lawsuit.‖

278 Whether 

a person has reason to anticipate litigation depends on whether the facts and 

circumstances lead to a conclusion that litigation is imminent or should otherwise be 

expected.279 This Court may sanction a party who breaches this duty by destroying 

relevant evidence or by failing to prevent the destruction of such evidence.280 It is 

appropriate, for example, for the Court to draw an adverse inference ―where a litigant 

intentionally or recklessly destroys evidence, when it knows that the item in question is 

 

276 Def.‘s Opp. to Pl.‘s Mot for Sanctions 8-9.

277 Id. at 12 n.6.

278 Beard Research, Inc. v. Kates, 981 A.2d 1175, 1185 (Del. Ch. 2009), aff’d sub. 

nom. ASDI, Inc. v. Beard Research, Inc., 11 A.3d 749, 750 (Del. 2010).

279 Id. (quotation marks and citation omitted).

280 Id.
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relevant to a legal dispute or it was otherwise under a legal duty to preserve the item 

. . . .‖281 In this context, Delaware courts have defined recklessness as ―a conscious

awareness of the risk that one‘s action or inaction may cause evidence to be 

despoiled.‖

282

B. Analysis

Based on the evidence discussed at length in this Memorandum Opinion, I find 

that Suer had reason to anticipate litigation by April 4, 2012, at the latest, when he began 

communicating with his attorney about the matters in dispute. Indeed, Suer makes no 

serious argument to the contrary. DL has at least a colorable argument that Suer‘s duty to 

preserve attached as early as January 2012, because Suer‘s summary judgment brief 

states that when he went to work for North American in January 2012, he ―kn[ew] well 

that it could lead to a campaign of scorched-earth litigation against him.‖283 This 

evidence buttresses my primary conclusion that Suer had reason to expect litigation by at 

least April 4, 2012. For purposes of the Motion for Sanctions, I need not decide whether 

Suer‘s duty to preserve arose even earlier, in January. 

Based on the evidence presented, I am convinced that Suer was at least reckless 

with respect to his duty to preserve potentially relevant information and documents. With 

respect to the Treese emails, Suer does not dispute that he intentionally deleted them as 

 

281 Id. at 1191.

282 TR Investors, LLC v. Genger, 2009 WL 4696062, at *17 (Del. Ch. Dec. 9, 2009),

aff’d, 26 A.3d 180 (Del. 2011).

283 Pl.‘s Reply in Supp. of Mot. 5.
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late as April 18, 2012, which was two weeks after his duty to preserve attached. Thus, 

the deletion of those emails provides grounds for a finding of spoliation. This finding is 

supported further by the incriminating nature of the Treese emails and the fact that in a 

bankruptcy filing on April 16, 2012, Suer‘s wife explicitly mentioned the possibility that 

Suer would be involved in litigation with his former employer, i.e., DL.

As to the text messages produced by Dahl but missing from Suer‘s production, the 

record on the Motion for Sanctions and at trial demonstrates that Suer‘s conduct was 

reckless. By December 2012, DL formally had requested production of relevant 

documents from Suer, including text messages. Suer represented to this Court in 

connection with his then pending motion to stay discovery that, ―There is no reason for 

concern that any of the[] materials [DL sought in discovery] are  ̳subject to deterioration, 

manipulation, or even just being forgotten.‘‖284 Relying in part on that representation, I 

granted Suer‘s motion and stayed discovery for a brief period of time.285 In March 2013, 

only a few months after he assured the Court that no potentially relevant discovery would 

be in jeopardy, Suer allegedly lost his cell phone. While I infer no bad motive as to 

Suer‘s loss of this device, at no time has he ever explained to the Court what, if any, 

actions he or his counsel took between April 2012, when his duty to preserve arose, and 

March 2013 to attempt to preserve any information that might be on his phone or even to 

 

284 Def.‘s Mot. to Stay Discovery [D.I. No. 20] 3.

285 Kan-Di-Ki, LLC d/b/a Diagnostic Labs. v. Suer, C.A. No. 7937-VCP, at 69 (Del. 

Ch. May 9, 2013) (TRANSCRIPT); D.I. No. 56; see also D.I. No. 50.
81

consider that issue.286 Moreover, DL pressed Suer in 2014 as to whether he had produced 

all responsive text messages in his possession. Instead of admitting that Suer‘s phone 

was gone, his counsel stated that Suer had no text messages, and represented that Suer 

―emails for business purposes but generally does not text.‖287 Based on these 

circumstances, I find that Suer was at least reckless in failing to take reasonable steps to 

ensure the preservation of potentially responsive information stored on his cell phone. 

Suer makes several arguments against a finding of spoliation, but none are 

availing. He asserts that if he had used text messages frequently for business purposes, 

DL would have obtained a larger number of them in its far-reaching third party discovery 

and proffered them as evidence. Even if that were true, however, Suer still was reckless 

in failing to preserve and produce the text messages that he had that were responsive to 

DL‘s requests for production. Second, Suer contends that because DL‘s third-party 

discovery failed to produce many ―other-ends‖ of the purportedly missing 

communications that he failed to provide, it should be inferred that no such 

 

286 I am not suggesting that Suer had to go to arguably unreasonable or unduly costly 

lengths to satisfy his obligations in this regard. If Suer or his counsel had 

proffered evidence that they had considered whether and how to preserve any 

evidence that might exist on his cell phone, but concluded in good faith that it 

would have been impractical to do anything more than exercise care not to lose it, 

and that he did so but lost the phone anyway, perhaps that would have been 

enough to avoid a finding of recklessness. But, in the circumstances here, with no 

evidence to the contrary, I conclude that Suer consciously disregarded the risk that 

evidence regarding the requested texts might be lost and did nothing to mitigate 

that risk, even after affirmatively assuring the Court that there was no reason for 

concern in that regard. See Tr. 465-73 (Suer) (discussing measures taken to 

preserve emails, but not text messages).

287 Def.‘s Mot. for Sanctions [D.I. No. 215], Ex. J.
82

communications exist. I disagree. Unlike Suer, the third parties were not under an

obligation to preserve potentially relevant evidence, and it is plausible that, in the 

ordinary course of business, they could have deleted or failed to preserve texts that would 

have been relevant. Third, Suer insinuates that because DL failed to produce a large 

number, or perhaps any, text messages of its own, DL is in no position to challenge

Suer‘s failure to do so. I reject that argument as well. DL‘s production or lack thereof is 

not at issue on the pending Motion for Sanctions. Moreover, there has been no showing 

that Suer ever made any motion to compel related to the absence of text messages from 

DL‘s production.288

In terms of sanctions for the spoliation, DL requests that I draw sweeping adverse 

inferences that Suer breached all of his Restrictive Covenants in relation to every breach 

DL alleges, and that I categorically disregard Suer‘s testimony as not credible. Although 

I grant DL‘s motion, I do not consider such broad adverse inferences to be justified. 

Instead, I have drawn more narrowly tailored inferences as indicated at several points 

throughout this Memorandum Opinion.289 For example, where I found that the 

 

288 DL also accuses Suer of spoliation relating to Pulmocare based on allegations that 

arose after this Motion for Sanctions was briefed. Those allegations, therefore, are 

not fully developed in the parties‘ papers, and have not been shown to rise to the 

level of an independent instance of spoliation. They do confirm, however, that on 

more than one occasion, Suer took his discovery obligations under the Rules and 

this Court‘s orders too casually. The 2014 Discovery Order required Suer to 

produce, among other things, any evidence relating to his receipt of funds in the 

skilled nursing industry after January 2010. Yet, Suer never disclosed that he 

worked for Pulmocare nor appropriately supplemented his responses to 

interrogatories or requests for production after the 2014 Discovery Order. 

289 See supra Sections I.C.2.d-e.
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evidentiary record appeared to be incomplete due to the absence of text messages that 

probably existed and should have been produced, I concluded that DL proved the specific 

breach it was attempting to prove, notwithstanding that the evidence of record, without 

more, might not have satisfied the preponderance of the evidence standard. Such 

inferences generally only confirmed conclusions that I otherwise reached on the basis of 

evidence DL did adduce. The few exceptions involved the Non-Competition Provision 

breaches relating to UCI and Town & Country. 

Finally, I conclude that DL is entitled to the reasonable attorneys‘ fees and 

expenses it incurred in filing and prosecuting its Motion for Sanctions. This will include 

all such reasonable fees and expenses incurred through the date of the pre-trial 

conference, at which the Motion for Sanctions was argued. In terms of the trial and DL‘s 

post-trial briefing and oral argument, I hereby award DL its reasonable fees and expenses 

related to the Motion for Sanctions up to a maximum of $20,000.290 If DL spent more 

than that amount after the pre-trial conference, it simply may include a statement to that 

effect in its affidavit and need not provide more detail. 

V. CONCLUSION

For the reasons stated in this Memorandum Opinion, I conclude that the 

Restrictive Covenants are enforceable under Delaware law, and that Plaintiff proved that 

Defendant breached those Covenants in the specific instances identified herein. Plaintiff, 

therefore, is entitled to injunctive relief in accordance with Section III.D.2, supra. 

 

290 In this regard, I note that DL devoted just over seven percent of its post-trial 

briefing to the Motion for Sanctions, and much of that referred back to the earlier 

briefing.
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Plaintiff shall submit, on notice to Suer, a proposed form of final order and judgment 

implementing the rulings contained herein. In addition, Counsel for DL, within ten days 

of the date of this Memorandum Opinion, shall submit an affidavit indicating the 

reasonable amount of such fees and costs. To the extent Suer objects to any aspect of that 

affidavit or the amount of fees and costs claimed, he shall state all such objections in a 

written filing within ten days after the date DL files its affidavit. DL may file a brief 

reply within five days thereafter.