SUPERIOR COURT

OF THE

STATE OF DELAWARE

PAUL R. WALLACE

JUDGE

NEW CASTLE COUNTY COURTHOUSE

500 N. KING STREET, SUITE 10400

WILMINGTON, DELAWARE 19801

(302) 255-0660

Date Submitted: August 25, 2020

Date Decided: September 18, 2020

Date Corrected: October 1, 2020

Joel Friedlander, Esquire 

Christopher M. Foulds, Esquire 

Christopher P. Quinn, Esquire Friedlander 

& Gorris, P.A 

1201 North Market Street, Suite 2200 

Wilmington, Delaware 19801

Dylan P. Kletter, Esquire 

Brown Rudnick LLP 

185 Asylum Street

Hartford, Connecticut 06103

David S. Eagle, Esquire 

Sean M. Brennecke, Esquire 

Gregory R. Sellers, Esquire 

Klehr Harrison Harvey Branzburg LLP 

919 North Market Street, Suite 1000

Wilmington, Delaware 19801

RE: Bobcat North America, LLC v. Inland Waste Holdings, LLC, et al.

 Civil Action No. N17C-06-170 PRW CCLD

Dear Counsel:

Because of this matter’s imminent trial date, the Court issues this Letter Order to 

resolve the Defendants’ pending Motion for Partial Summary Judgment (D.I. 190-198)

in lieu of a more formal written decision. 
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I. INTRODUCTION1

This case involves the sale of several waste-management companies 

(collectively referred to as “Inland”) from Defendants Inland Waste Holdings, LLC, 

Bart A. Begley, Montgomery M. Davison, and Robert A. Smith (collectively, 

“Defendants” or “Sellers”) to Plaintiff Bobcat North America, LLC. The sale was 

governed by the Unit Purchase Agreement (the “UPA”), executed on the closing date, 

May 18, 2016 (the “Closing”). As part of the transaction, the parties purchased a BuyerSide Representations and Warranties insurance policy from QBE Specialty Insurance 

Company, covering any of Bobcat’s losses from Sellers’ breaches of their 

representations in the UPA, including fraudulent breaches (the “QBE Policy”). 

Bobcat filed this action bringing claims for breach of contract, fraudulentinducement, negligent misrepresentation, indemnification and declaratory relief. 

Before the Court is Defendants’ Motion for Partial Summary Judgment through which 

they seek to knock out Bobcat’s breach-of-contract, fraudulent inducement, negligent 

 1 Bobcat has another pending suit in this Court against these same Defendants arising from the 

same UPA. And this is not the first time the Court has had to address either parties’ attempts 

to seek some form of summary disposition of claims brought in those suits. See Bobcat North 

America, LLC v. Inland Waste Holding, LLC, 2019 WL 1877400 (Del. Super. Ct. Apr. 26, 2019) 

(deciding Bobcat’s earlier motion for partial summary judgment in this case) (“Bobcat I”); 

Bobcat North America, LLC v. Inland Waste Holding, LLC, 2020 WL 4757042 (Del. Super. Ct. 

Aug. 17, 2020) (deciding Defendants’ motion to dismiss in the later-filed still-pending suit). 

And so, the Court writes assuming any reader’s familiarity gathered from its prior decisions and 

adding only the additional factual background needed to address this particular motion. 
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misrepresentation, and indemnification claims. For the reasons that follow, 

Defendants’ Motion is GRANTED, IN PART, and DENIED, IN PART.

II. FACTUAL BACKGROUND

Bobcat is a limited liability company with its principle place of business in 

Sarasota, Florida. George W. Dietrich is Bobcat’s Chief Executive Officer. His son, 

William “Billy” Dietrich, is the President.2 

Inland Waste Holdings is a limited liability company and specializes in 

residential and commercial waste management systems and services. Robert Smith’s 

father founded Inland and Smith worked for Inland his entire life before selling the 

majority of his interest in the company to Monty Davison and Bart Begley at the end of 

2012.3

 Begley and Davison each acquired 37.5% of Inland, and Smith retained 25% of 

the equity interest.4

 Begley acted as Inland’s Chief Executive Officer, Davison as its 

President, and Smith claims he had no real role in Inland, as he was retired.5

 

 2 Bobcat I, at *2. 

3 Defs.’ Op. Br. in Supp. of Mot. for Partial Summ. J., at 3 (D.I. 190) [hereinafter “Def. Op. Br.”]. 

4 Bobcat I, at *2.

5 Def. Op. Br., at 3. 
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In 2015, Begley and Davison decided to sell Inland and retained Livingstone 

Partners LLC as their investment banker.6 Bobcat expressed interest in acquiring Inland 

and starting in October 2015 and continuing until the Closing in May 2016, explored 

the company.7 This included formal management meetings, informal interviews of and 

meetings with all members of Inland’s management team, visits to operations and 

regional offices.8 

In January 2016, Bobcat and the Defendants signed a formal letter of intent and 

commenced negotiations.9 According to Inland, Bobcat had examined the EBITDA for 

the years of 2015 and 2016 and was on notice that Inland would fall short of its entire 

year 2016 EBITDA budget.10 And weeks before the Closing, Bobcat requested a price 

reduction citing Inland’s contractual obligation to the City of Augusta, Georgia, to fund 

the construction of two CNG facilities.11 As part of the transaction, Davison, Begley 

 6 Bobcat I, at *2. 

7 Def. Op. Br. at 4; Plf.’s Br. in Opp. to Mot. for Partial Summ. J., at 6–7 (D.I. 206) [hereinafter 

“Plf. Opp. Br.”]. 

8 Def. Op. Br., at 4; Plf. Opp. Br., at 7. 

9 Bobcat I, at *2.

10 Def. Op. Br., at 7. 

11 Id. at 8, 12. 
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and Smith received rollover equity in Bobcat in the approximate amount of $3.3 million

through their entity RSMDBB Holdings, LLC.12 The acquisition was finalized when 

on May 18, 2016, when Bobcat and Inland entered into the UPA.13 In sum, Bobcat 

purchased Inland through the UPA at a price of $64.9 million.14 

A. INLAND’S AUGUSTA CONTRACT LIABILITIES

Inland was obligated to make two $2.65 million payments to the City of Augusta

related to the construction of two of the city’s CNG filling stations and related 

infrastructure. Inland was also obligated to pay other substantial fees and expenses 

associated with its service obligations over the life of its the contract with Augusta. In

return, Inland was awarded the rights to certain waste collection areas within the city.15 

Construction of the first CNG station began in 2014 and was not yet complete at 

the time of Closing.16 While construction of the second CNG station had not yet 

started.

17 Both Bobcat and Sellers were aware of Inland’s obligations to the City of 

 12 Id. 

13 Bobcat I, at *2.

14 Id. 

15 Def. Op. Br., at 9–10; Plf. Opp. Br., at 7.

16 Def. Op. Br., at 10–11.

17 Id. at 11. 
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Augusta, as evidenced by email exchanges between Dietrich and Davison, and Dietrich 

and Ryan Franco, a principal of a Bobcat investor.

18

No UPA provision relieved Inland’s successor’s obligation to fund the second 

CNG station or to pay remaining expenses due under Inland’s 2015 agreement with the 

construction manager for the first CNG station.

19 Defendants assert that the Augusta 

contract was provided to Bobcat and that its effect was fully analyzed, considered, and 

understood before the Closing.

20 Bobcat alleges that Sellers improperly accounted

Inland’s contractual obligations owed to the City of Augusta and fraudulently withheld 

the nature of the liabilities.21 Further, Bobcat contends that Inland failed to record these 

liabilities or reflect them in its December 2015 financial statements.22 This resulted in 

Defendants understating the Company’s liabilities by $5,090,043 (the “Augusta 

Contract Liabilities”).23 Bobcat also accuses Inland of underreporting certain expenses 

 18 Trans. Aff. of Sean M. Brennecke in Support of Mot. for Partial Summ. J., Ex. 37–40 (D.I. 191-

98) [hereinafter “Brennecke Aff.”]. 

19 Brennecke Aff., Ex. 31. 

20 Def. Op. Br., at 9–15. 

21 Plf. Opp. Br., at 9–10.

22 Id. at 10.

23 Plf. Opp. Br. Ex. 7 at 4.
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for the Augusta contract by $84,410, causing Inland’s 2015 EBITDA to be overstated 

by the same amount.24 

B. BOBCAT’S ENVIRONMENTAL CLAIMS 

Bobcat hired ATC, an environmental diligence provider, to perform assessments 

and compliance reviews of all eight Inland properties.25 Bobcat, through its 30(b)(6) 

designee, identified three violations—(1) removal of an underground storage tank in 

Memphis, (2) a drainage issue in Memphis, and (3) soil contamination in Delaware.26 

And prior to Closing, ATC provided Buyers with cost estimates for potential 

environmental work at the Inland locations.27 ATC estimated that “compliance costs” 

would be $56,800 and estimated in three scenarios the costs of potential remedial work: 

(i) “Reasonable Best Case”: $103,000 - $142,000; “Reasonable Case”: $395,000 -

$525,000; and (iii) “Reasonable Worst Case”: $1,265,000 - $1,395,000.28 Bobcat 

 

24 Id. 

25 Def. Op. Br., at 15–16.

26 Brennecke Aff., Ex. 47.

27 Id., Ex. 48.

28 Id. 
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contends that Inland made false representations with regards to the environmental 

claims.29 

C. THE QBE POLICY

In connection with the UPA, the parties agreed to jointly purchase the QBE 

Policy to cover certain potential Bobcat losses if there were inaccurate representations

and warranties in the UPA. The parties split the cost of the $400,000 premium evenly. 

The policy covered up to $10 million in damages for any of Seller’s breaches of their 

representations and warranties in the UPA.30 The UPA divides Bobcat’s potential 

claims against Sellers into two categories: “R&W Insurance Claims” and “Non-R&W 

Insurance Claims.”31 The R&W Insurance Claims consist of any claim for breach of a 

representation and warranty that is not classified as a Non-R&W Insurance Claim.32 

According to Defendants’ read of the QBE Policy, there are four types of Non-R&W 

Insurance Claims; two of which the policy covers, two of which it does not.33 And 

Defendants suggest that “Fraud claims”—which the UPA defines as “Claims related to 

 29 Plf. Opp. Br., at 11.

30 Plf. Opp. Br., at 16; Def. Op. Br., at 22–23.

31 UPA § 7.4(b) & (c).

32 Id. at § 7.4(b).

33 Def. Op. Br., at 23.
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any fraud or willful or knowing breach of any representation or warranty”34—are a type 

of Non-R&W Insurance Claim that the QBE Policy covers.35 

So, Defendants say, under the UPA: (1) Bobcat must submit R&W Insurance 

Claims to QBE; (2) such claims are subject to a $649,000 deductible; and, (3) Sellers 

are liable for 50% of any damages for such claims that QBE denied, up to the $10 

million policy limit.36 While Non-R&W Insurance Claims (such as Fraud Claims),

Defendants say, are not subject to those limitations.37 

In September 2016, Bobcat submitted a claim notice to QBE after discovering 

certain inaccuracies in Sellers’ UPA representations and warranties.

38 After Bobcat 

filed an arbitration action against QBE to enforce its policy, QBE settled with Bobcat

in October 2017. In sum, after assessing its risk of insurance liability related to Bobcat’s

claims, QBE agreed to pay Bobcat $7.1 million.39 Both sides agree that the BobcatQBE’s settlement agreement is ambiguous as to how QBE apportioned the settlement 

 34 UPA §§ 7.4(b)(1), 10.17(b).

35 Def. Op. Br., at 23-24. 

36 Id. at 24. 

37 Id. 

38 Plf. Opp. Br., at 16.

39 Id. 
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across Bobcat’s insurance claims. But, Bobcat suggests, how that apportionment breaks 

down is of no consequence to its claims here. What matters, Bobcat says, is that Sellers’ 

representations and warranties inaccuracies induced it to enter into the UPA.40 

III. THE PARTIES’ CONTENTIONS

A. BOBCAT’S COMPLAINT IN THIS CASE

In this suit, Bobcat brings five causes of action against Sellers via its Second 

Amended Complaint: Count I—Fraud in the Inducement; Count II—Negligent 

Misrepresentation (in the alternative to Fraud in the Inducement); Count III—Breach 

of Contract; Count IV—a request for Indemnification; and, Count IV—a prayer for

certain Declaratory Relief.

41

B. DEFENDANTS’ CURRENT MOTION

And through this motion, Defendants now seek:

1. Dismissal of Bobcat’s fraudulent-inducement and contract claims 

insofar as they seek a double recovery of the $7.1 million already 

received from QBE, because that is prohibited by the UPA and 

Delaware law;

2. Dismissal of Bobcat’s fraudulent-inducement and contract claims 

concerning allegations of non-GAAP accounting for contractual 

obligations Inland owed to the City of Augusta, because Sellers 

disclosed everything about that issue before Closing, and refused 

 40 Id. at 17–18. 

41 D.I. 91.
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Bobcat’s request for a purchase-price reduction on account of this 

same issue;

3. Dismissal of Bobcat’s fraudulent-inducement and contract claim 

concerning alleged environmental violations, because Bobcat learned 

about every such issue from its environmental diligence provider 

before Closing, chose not to share the information with Sellers even 

though it knew Sellers were unaware of it, and waited until after the 

Closing to sandbag Sellers in this lawsuit;

4. Dismissal of Bobcat’s fraudulent-inducement claim against Defendant 

Robert Smith, who retired from Inland at the end of 2012, and against 

whom no evidence whatsoever exists of any fraud; and

5. Dismissal of Bobcat’s claim for negligent misrepresentation, because 

this Court lacks subject-matter jurisdiction over the claim, and in any 

event it impermissibly duplicates the breach-of-contract claim.42

C. BOBCAT’S OPPOSITION TO SUMMARY JUDGMENT

Bobcat argues that the QBE payment should not be offset as a matter of law 

because: (1) the UPA excludes the QBE Payment from Defendants’ potentiallyavailable setoff rights; (2) there is a genuine issue of material fact regarding the 

allocation of the QBE Payment; and (3) even if the UPA did not prohibit setoff, the 

collateral source rule requires, at most, a 50% setoff. 

As for the Augusta contract liabilities, Bobcat further argues there is a genuine 

issue of material fact about whether Bobcat knew: (1) that the accounting treatment of 

 

42 Def. Op. Br., at 2. 
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the Augusta Contract Liabilities were not in accordance with GAAP; and (2) that the 

representation that Defendants recorded the Augusta Contract Liabilities in accordance 

with GAAP was false. According to Bobcat, even if Defendants contend that Bobcat 

did not justifiably rely on the representations about the August Contract Liabilities, 

Bobcat’s breach-of-contract claim succeeds.

As for the environmental violations, Bobcat argues there is a genuine issue of 

material fact regarding whether Bobcat had knowledge of the actual environmental 

issues and that even if it had actual knowledge, Bobcat’s breach-of-contract claim 

survives.

Next, Bobcat contends there is a genuine issue of material fact as to whether 

Robert Smith had the requisite scienter to commit fraud.

Lastly, Bobcat suggests that this Court does have subject matter over its negligent 

misrepresentation claim.

IV. STANDARD OF REVIEW

Summary judgment is appropriate where the record demonstrates that “there is 

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

judgment as a matter of law.”43 “Summary judgment will not be granted under 

 43 Super. Ct. Civ. R. 56(c); Burkhart v. Davies, 602 A.2d 56, 58–59 (Del. 1991).
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circumstances where the record reasonably indicates that a material fact is in dispute or 

if it seems desirable to inquire more thoroughly into the facts in order to clarify the 

application of law to the circumstances.”44 Unless the Court is reasonably certain that 

there is no triable issue, it is within the Court’s discretion to decline to decide the merits 

of the case in a summary adjudication, and to remit the parties to trial.45

The moving party must establish that the undisputed facts support its claims or 

defenses; if so, then the burden shifts to the non-moving party to demonstrate that there 

are material issues of fact to be resolved at trial.46 And in determining whether there 

are material issues of fact, the Court must view the facts in the light most favorable to 

the non-moving party.47 Where no such genuine issue of any material fact exists, the 

 44 Burris v. Penn Mart Supermarkets, Inc., 2006 WL 2329373, at *1 (Del. Super. Ct. July 13, 

2006) (citing Ebersole v. Lowengrub, 180 A.2d 467, 468–69 (Del. 1962)); see also Cross v. 

Hair, 258 A.2d 277, 279 (Del. 1969) (“Moreover, although the record is silent as to the Superior 

Court's reason for denying the defendant’s motion for summary judgment, it needed no more 

reason than to conclude, upon preliminary examination of the facts, that it found it desirable to 

inquire thoroughly into all the facts in order to clarify the application of the law.”) (citing 

Alexander Indus., Inc. v. Hill, 211 A.2d 917, 919 (Del. 1965)); Cont’l Ins. Co. v. Rutledge & 

Co., 750 A.2d 1219, 1227–28 (Del. Ch. 2000) (“[T]he Court also maintains the discretion to 

deny summary judgment if it decides that a more thorough development of the record would 

clarify the law or its application.”).

45 Cross, 258 A.2d at 278.

46 Parexel Int’l (IRL) Ltd. v. Xynomic Pharmaceuticals Inc., 2020 WL 5202083, at *5 (Del. Super. 

Ct. Sept. 1, 2020). 

47 Tanzer v. Int’l Gen. Indus., Inc., 402 A.2d 382, 385 (Del. Ch. 1979) (citing Judah v. Del. Trust 

Co., 378 A.2d 624, 632 (Del. Super. Ct. 1977)).
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moving party is entitled to judgment as a matter of law.48

V. DISCUSSION OF DISPUTED CLAIMS

A. SUMMARY JUDGMENT APPROPRIATE ON THE FRAUD CLAIM (COUNT I).

Defendants argue that Bobcat seek precisely the same damages via its contract 

and fraud claims.49 In its expert Report on Economic Damages, Bobcat’s expert John 

O’Donnell concludes that Bobcat overpaid Sellers $26.967 million, or alternatively, 

$30.6 million.50 Mr. O’Donnell’s opinions supporting those figures make no distinction 

between contract and fraud damages.51 Although this Court has certainly had occasion 

to allow companion fraud and breach-of-contract claims to survive past the motion-todismiss stage in certain case, such fraud claims are supported by prayers for recission 

or rescissory damages.52 But Bobcat seeks no such damages here. And this Court has 

 48 Id.

49 Def. Op. Br., at 22. 

50 Brennecke Aff., Ex. 62 at 35.

51 See id. at 28–35.

52 See Novipax Hldgs. LLC v. Sealed Air Corp., 2017 WL 5713307, at *14 (Del. Super. Ct. Nov. 

28, 2017) (finding that a claim for rescission or rescissory damages separates a fraudulent 

inducement claim from breach-of-contract count); ITW Glob. Investments Inc. v. Am. Indus. 

P’rs Capital Fund IV, 2015 WL 3970908, at *6 (Del. Super. Ct. June 24, 2015) (“Count I for 

fraud must be dismissed because it pleads damages that are simply a ‘rehash’ of the breach of 

contract damages. Because Count II for fraud in the inducement pleads damages for rescission 

or rescissory damages, the Court will not address Count II.”); see also EZLinks Golf, LLC v. 

PCMS Datafit, Inc., 2017 WL 1312209, at *6 (Del. Super. Ct. Mar. 21, 2017) (finding that 
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held consistently that the “mere addition of punitive damages to [a plaintiff’s] 

fraudulent inducement charge is not enough to distinguish it from the contract 

damages.”53 “Failure to plead separate damages is an independent ground for 

dismissal.”54 Accordingly, the Defendants’ Motion is GRANTED as to Count I. 

B. THE BREACH-OF-CONTRACT CLAIM (COUNT III) AND ITS COMPANION

REQUEST FOR INDEMNIFICATION (COUNT IV) SURVIVE SUMMARY 

JUDGMENT.

Defendants argue that, because the factual circumstances underlying Bobcat’s 

insurance claims to QBE are similar to its claims in this action, any payment from QBE 

necessarily must constitute a double recovery of any damages Bobcat might recover 

through this litigation. 

 

plaintiff’s count for fraud in the inducement is materially identical to the breach-of-contract 

count and rejecting plaintiff’s reliance on ITW because plaintiff pled neither for rescission nor 

rescissory damages as did the ITW complainant); AssuredPartners of Virginia, LLC v. Sheehan, 

2020 WL 2789706, at *11 (Del. Super. Ct. May 29, 2020); Firmenich Inc. v. Nat. Flavors, Inc., 

2019 WL 6522055, at *4 (Del. Super. Ct. Oct. 29, 2019).

53 EZLinks, 2017 WL 1312209, at *6; Ashland LLC v. Samuel J. Heyman 1981 Continuing Trust 

for Heyman, 2018 WL 3084975, at * 16 (Del. Super. Ct. June 21, 2018).

54 EZLinks, 2017 WL 1312209, at *6 (citing Cornell Glasgow, LLC v. La Grange Props. LLC, 

2012 WL 2106945, at *8 (Del. Super. Ct. June 6, 2012) (“[Plaintiff] has failed to plead fraud 

damages separate and apart from its breach damages. The fraud claim, therefore, must be 

dismissed for this reason as well.”)) and ITW Glob. Investments, 2015 WL 3970908, at *5.
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Bobcat counters that unlike its insurance claims to QBE, which were allegedly 

R&W Insurance Claims, it is pursuing Non-R&W Insurance Claims in this action. The 

UPA differentiates Non-R&W Insurance Claims from R&W Insurance Claims. 

In Section 7.4 of the UPA, “Non-R&W Insurance Claims” are defined, in relevant part, 

as:

(i) Claims related to any fraud or willful or knowing breach of any 

representation or warranty of the Company Group, Newco or any 

Member set forth in this Agreement (the “Fraud Claims”);

(ii) Claims related to inaccuracies or breaches of any representation or 

warranty set forth in Section 3.12(c) (Environmental Matters). . . .

Bobcat contends that its claims in this action all fall under the definition of either Fraud 

Claims or Environmental Matters and that these Non-R&W Insurance Claims are not 

subject to liability limitations that apply to R&W Insurance Claims. 

Certainly, one read of the myriad documents controlling this complex transaction 

may be that Fraud Claims are covered by the QBE Policy, while claims regarding 

environmental matters are not covered by the QBE Policy.55 And that Bobcat may—

 55 Compare e.g. UPA, § 7.4(b) with Brennecke Aff., Ex. 31 at ALTOS-0023851 (QBE Policy’s 

Exclusions). 
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but is not required to—submit Fraud Claims to QBE. If so, according to Defendants, 

Bobcat chose to submit its Fraud Claims to QBE. 

Under UPA Section 7.4(c), “R&W Insurance Claims” means any claim made by 

the Buyer and its Affiliates (including the Company Group after the Closing Date), and 

their respective members, directors, officers, employees, agents and other 

representatives (collectively, “Buyer Indemnified Parties”) pursuant to Section 7.1(a)—

other than any Non-R&W Insurance Claim. Under Article 7, Smith, Begley, and 

Davidson (identified in the UPA’s preamble as the “Members”), Inland Waste Holding 

(identified therein as “IWH”) and RSMDBB Holdings (collectively referred to in 

Section 7.1 as the “Seller Indemnifying Parties”), are responsible for indemnifying:

all Claims asserted against, resulting to, imposed upon or incurred by any 

Buyer Indemnified Party directly or indirectly, by reason of, arising out of 

or resulting from: (a) any inaccuracy or breach of any representation or 

warranty of the Company Group, IWH, Newco or any Member contained 

in or made pursuant to this Agreement (disregarding for the purposes of 

this Article 7 any qualifications of such representations or warranties 

relating to “materiality” or “knowledge” or similar language).

56

These R&W claims have their own regime under the UPA that requires Bobcat to first 

go to QBE to obtain relief. Specifically, Section 7.4(c)(v) states that Buyers “shall seek 

 56 UPA § 7.1(a).
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and collect payment related to any R&W Insurance Claim solely from [QBE].”57 After 

Buyers seek such payment, if there are R&W Insurance Claims that QBE denied, 

Bobcat can obtain from Sellers either 50% or 100% of its damages for such denied 

claims, depending on the type of representation breached, up to the QBE Policy limit 

of $10 million.58

The limitations under Section 7.7 refer to the obligation of Seller Indemnifying 

Parties for claims under Section 7.1—and those Section 7.1 claims are the R&W 

Insurance Claims. But Section 7.7 places such no limitations on the Seller 

Indemnifying Parties’ obligations for the Non-R&W Insurance Claims. Under the 

UPA’s plain language, Defendants’ argument that it requires the amounts obtained 

under the QBE Policy to offset these Fraud Claims, a type of non-R&W insurance 

claim, fails. 

It is undisputed that the QBE settlement agreement is silent as to how the QBE 

payment was allocated across Bobcat’s R&W Insurance Claims. Yet, Defendants 

assume that any damages the Court awards in this case will correspond to the QBE 

payment on a dollar-for-dollar basis. Not so. There remains in dispute a genuine issue 

 57 UPA § 7.4(c)(v).

58 Id.
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of material fact as to if or how the QBE settlement payment should be allocated across 

Bobcat’s insurance claims and its effect on any potential award here. 

Undeterred, Defendants argue further that the QBE payment “was based, at least 

in part, on Sellers’ fraud” because: (i) Bobcat’s claim notice alleged “knowing” 

breaches; and (ii) the QBE settlement agreement addresses any subrogation rights QBE 

may have had against Defendants, which are only available in the case of fraud.

Bobcat suggests that there is contrary evidence that the QBE payment addressed

any claims for fraud. As Defendants acknowledge, Bobcat’s claim notice clearly 

identifies the type of claims Bobcat was seeking to recover from QBE: “R&W 

Insurance Claims.”59 As Defendants also acknowledge, under the UPA, R&W 

Insurance Claims “includes only non-fraudulent breaches.”60 According to Bobcat, this 

evidences that it only sought reimbursement of R&W Insurance Claims, so the QBE 

payment was and should be applied only to those claims.61 

The QBE settlement agreement expressly covers “the claims set forth in the 

Claim Notice,” which are specifically identified as “R&W Insurance Claims”—not 

 59 Def. Op. Br., at 27; Brennecke Aff., Ex. 44.

60 Def. Op. Br., at 27.

61 Plf. Opp. Br., at 23.
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fraud claims.62 Bobcat’s arbitration demand also contained no allegations regarding 

knowledge or fraud.63

So there is a genuine issue of material fact concerning whether the QBE Payment 

covered claims for fraud. And so, the Court cannot grant the summary judgment 

Defendants’ seek. Any offset now, before the Court even determines if an award of 

damages is appropriate, would be premature. No doubt it is not only desirable, but 

necessary, to inquire more thoroughly into the facts in order to clarify the application 

of law to these circumstances. The Court must hear the evidence as to what QBE paid 

to determine whether or not damages awarded would in fact be duplicative. 

Accordingly, Defendants’ request for summary judgment to the effect that it is now 

entitled to offset of the full QBE payment must be DENIED.

Moreover, Defendants argue that Bobcat “sandbagged” Defendants as to Count 

III’s breach-of-contract claims because Bobcat: (1) knew the Augusta Contract 

Liabilities were not in the financial statements; and (2) knew of the environmental risks 

from their own due diligence materials. 

 62 Brennecke Aff., Ex. 44 (Claim Notice identifying R&W Insurance Claims); id., Ex. 64 (QBE 

agreement settling claims from Claim Notice); UPA § 7.4(b)(1) (UPA definition of Fraud Claims); 

UPA § 7.4(c) (UPA definition of R&W Insurance Claims).

63 Brennecke Aff., Ex. 63. 
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But this does not conclusively demonstrate that Bobcat, in fact, knew the 

disputed representations made in the UPA were false. Bobcat says that it trusted 

Defendants to make accurate representations as to these issues and bargained for the 

right to shift the risk of knowing inaccuracy onto Defendants. Whether Bobcat believed 

that Inland’s accounting of the Augusta Contract Liabilities was improper, and therefore 

believed that the financial-statement representations in UPA Section 3.5(a) were 

inaccurate are highly fact-sensitive and credibility-based issues inappropriate for 

resolution via summary judgment.64 Because the Court when deciding a summary 

judgment motion “may not weigh qualitatively or quantitatively the evidence adduced 

on the summary judgment record.”65 Given the extant genuine dispute of material fact, 

Bobcat’s breach-of-contract claim cannot be knocked out on a mere call of 

“sandbagging.” 

Accordingly, the breach-of-contract claim (Count III) and its companion 

indemnification claim (Count IV) shall proceed to trial.

 64 See Amirsaleh v. Bd. of Trade of City of N.Y., Inc., 2009 WL 3756700, at *4 (Del. Ch. Nov. 9, 

2009) (“Where intent or state of mind is material to the claim at issue-as is the case heresummary judgment is not appropriate.”); see also Cerebus Int’l, Ltd. v. Apollo Mgmt., L.P., 794 

A.2d 1141, 1150 (“If the matter depends to any material extent upon a determination of 

credibility, summary judgment is inappropriate. . . . If a trial court must weigh the evidence to 

a greater degree than to determine that it is hopelessly inadequate ultimately to sustain the 

substantive burden, judgment is inappropriate.”). 

65 Cerebus, 794 A.2d at 1150. 
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 C. UNDER THE UPA, SMITH IS JOINTLY AND SEVERALLY LIABLE 

FOR “FRAUD CLAIMS.”

According to Defendants, the Court should dismiss Smith from this case because 

he has been retired since the end of 2012 and there is no evidence demonstrating that 

he is liable for damages related to fraud or willful or knowing breach of any 

representation or warranty. Indisputably, Smith is a “Member,”66 a “Seller 

Indemnifying Party,”67 and a signatory to the UPA.

68 Under Section 7.1 of the UPA, 

the Seller Indemnifying Parties (which include all “Members”) are “jointly and 

severally” liable for indemnifying Bobcat under the agreement for “Fraud Claims.” And 

“Fraud Claims” are defined in Section 7.4(b)(i) as “[c]laims related to any fraud or 

willful or knowing breach of any representation or warranty of the Company Group, 

Newco, or any Member set forth in this Agreement.”69 Thus, as a matter of contract, 

Smith may be jointly and severally liable for any damages related to any fraud or willful 

 66 UPA, Preamble.

67 UPA § 7.1.

68 Brennecke Aff., Ex. 31 at ALTOS-0023789.

69 Brennecke Aff., Ex. 31 at ALTOS-0023754.
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or knowing breach of any representation or warranty committed by any Defendant.70

And, notwithstanding Defendants’ contrary protestations, there certainly is a genuine 

issue of material fact as to Smith’s actual knowledge of the alleged fraud. 

Under Delaware law, “scienter can be proven by establishing that the defendant 

acted with knowledge of the falsity of a statement or with reckless indifference to its 

truth.”71 And, in the case of fraud,“[w]hen an ultimate fact to be determined is one of 

motive, intention or other subjective matter, summary judgment is ordinarily 

inappropriate.”72 Here, Bobcat alleges Defendant Smith held a senior position at the 

Company, had access to all Company records, and had the motive and opportunity to 

commit fraud. According to Bobcat, Smith explicitly expressed concern regarding 

“misrepresent[ations]” in connection with “this deal” and raised the alarm that Bobcat 

might bring a lawsuit against Defendants in connection with “what we are signing.”73

 70 See AssuredPartners of Virginia, 2020 WL 2789706, at *7 (finding plain language of 

transaction agreement to impose joint and several liability among signatories even where one 

signatory disclaimed involvement in breached provision).

71 In re Wayport, Inc. Litig., 76 A.3d 296, 326 (Del. Ch. 2013).

72 Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLP, 2017 WL 3168966, at 

*2 (Del. Ch. July 26, 2017); see also Continental Oil Co. v. Pauley Petroleum, Inc., 251 A.2d 824 

(Del. 1969) (same); Amirsaleh, 2009 WL 3756700, at *4. 

73 Trans. Dec. of Christopher M. Foulds in Opposition to Mot. for Partial Summ. J., Ex. 2 (D.I. 

206).
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On this record, the Court cannot grant summary judgment absolving Smith from 

liability of damages. The Court therefore DENIES Defendants’ request to dismiss 

Smith from this case.

D. THIS COURT HAS NO SUBJECT MATTER JURISDICTION OVER BOBCAT’S 

NEGLIGENT MISREPRESENTATION CLAIM (COUNT II).

Jurisdiction over the subject matter a claim is an indispensable element in any 

judicial proceeding, and so, “a threshold inquiry must be made to determine whether a 

Court has proper jurisdiction over the claim before it.”74 “Whenever a question of 

subject matter jurisdiction is brought to the attention of the trial court, the issue must be 

decided before any further action is taken, and the issue of jurisdiction must be disposed 

of regardless of the form of motion.”75 

It is well-settled that the Court of Chancery has exclusive jurisdiction over a 

claim of negligent misrepresentation.76 Yet, this issue continues to arise time and again 

 74 Texcel v. Commercial Fiberglass, 1987 WL 19717, at *2 (Del. Super. Ct. Nov. 3, 1987).

75 Texcel, 1987 WL 19717, at *2.

76 Van Lake v. Sorin CRM USA, Inc., 2013 WL 1087583, at * 11 (Del. Super. Ct. Feb. 15, 2013) 

(citing State Dep’t of Transp. v. Figg Bridge Eng’rs, Inc., 2011 WL 5593163, at *4 (Del. Super. 

Ct. Nov. 9, 2011)). See Mark Fox Group, Inc. v. E. I. DuPont de Nemours & Co., 2003 WL 

21524886, at *5 (Del. Ch. July 2, 2003) (“In addition to developing the concept of claims for 

negligent or innocent misrepresentation, the Court of Chancery has retained exclusive, rather 

than concurrent, jurisdiction over such causes of action.”); see also WyPie Investments, LLC v. 

Homschek, 2018 WL 1581981, at *16 (Del. Super. Ct. Mar. 28, 2018) (“[T]he negligent 
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in this Court’s complex commercial cases. And the Court has been persistently 

consistent in its approach to claims framed as Bobcat has.

77 Indeed, this Court can 

hardly have been clearer when putting parties on notice of the impropriety of bringing

these claims here: “With such a bright line, counsel would clearly understand the 

obligation to raise such issues in our equity court and stop including them in contract 

disputes hoping the Superior Court will decide to keep the claim under the disguise of 

simple negligence.”78 Or hoping, as Bobcat does, that its fallback position that some 

specified leave to transfer—not outright dismissal or summary judgment—is the 

appropriate remedy now.

79 

 

providing of false information relied upon by the claiming party is a matter for the Court of 

Chancery and not the Superior Court.”).

77 E.g. GEA Systems North America LLC v. Golden State Foods Corp., 2020 WL 3047207, at *6 

(Del. Super. Ct. June 8, 2020); Affy Tapple, LLC v. ShopVisible, LLC, 2019 WL 1324500, at 

*4 (Sel. Super. Ct. Mar. 7, 2019); Optical Air Data Systems v. L-3 Communications Corp., 

2019 WL 210543, at *2 (Del. Super. Ct. Jan. 14, 2019); Otto Candies, LLC v. KPMG LLP, 

2018 WL 1960344, at *3–4 (Del. Super. Ct. Apr. 25, 2018); WyPie Investments, 2018 WL 

1581981, at *16; Raytheon Company v. BAE Systems Technology Solutions & Services Inc., 

2017 WL 5075376, at *12 (Del. Super. Ct. Oct. 30, 2017). 

78 WyPie Investments, 2018 WL 1581981, at *16 (Del. Super. Ct. Mar. 28, 2018) (“[T]he negligent 

providing of false information relied upon by the claiming party is a matter for the Court of 

Chancery and not the Superior Court.”).

79 Plf. Opp. Br., at 49–50,
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But we are not at the pleading motions stage of this case as in Otto Candies80 (or 

most other cases addressing this jurisdictional quandry), and Bobcat is not requesting

leave to transfer the entire “civil action, suit or [ ] proceeding” so that “[s]uch 

proceeding may be transferred to an appropriate court for hearing and determination.”81 

Nor is Bobcat asking the Court to grant leave to transfer some readily severable and 

isolated unit of civil action. No, Bobcat after years of litigation here—and with a trial 

date looming—asks the Court to now cull just that offending count from its Second 

Amended Complaint and to express in its disposition that Bobcat is “afforded an 

opportunity to transfer the claim” to the Court of Chancery.82 Bobcat leaves one to 

wonder what then will actually happen in these circumstances. 

And it is tempting, given the stage of the proceedings, to enter a simple 

unadorned order of summary judgment on the negligent misrepresentation claim to just 

 80 2018 WL 1960344, at *2-3. 

81 See DEL. CODE ANN. tit. 10, § 1902 (2020) (“No civil action, suit or other proceeding 

brought in any court of this State shall be dismissed solely on the ground that such court is 

without jurisdiction of the subject matter . . . . Such proceeding may be transferred to an 

appropriate court for hearing and determination, provided that the party otherwise adversely 

affected, within 60 days after the order denying the jurisdiction of the first court has become 

final, files in that court a written election of transfer, discharges all costs accrued in the first 

court, and makes the usual deposit for costs in the second court.”).

82 Plf. Opp. Br., at 6, 49–50.
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remove it from this litigation in this Court.

83 But to what end? Bobcat would try to 

figure it out from there? The Court of Chancery, if called upon, would be left to address 

any attempt by Bobcat to initiate prosecution of the lone claim? 

The Court can’t do that. Because the Court can’t ignore the language of its own 

rules—a Rule 56(c) grant requires a finding “that the moving party is entitled to a 

judgment as a matter of law” and entry of that judgment. The Court can neither make 

such finding nor enter any such judgment on a claim over which a sister court exercises 

exclusive subject matter jurisdiction. Too, the Court can’t ignore both a statute and the 

manner it has addressed similar circumstances in the past.84 The Court can only now

lament the fact that Bobcat stands with the many other parties that haven’t heeded the 

Court’s admonitions to stop putting it in this jurisdictional and judicial resource-wasting

pickle, figuratively shrug its shoulders, and enter an ill-fitting order on that lone count.

 83 See WyPie Investments, 2018 WL 1581981, at *16.

84 E.g. Farm Family Casualty Co. v. Cumberland Insurance Co, Inc., 2013 WL 5496779, at *3 

(Del. Super. Ct. Oct. 3, 2013) (on motion for summary judgment, Court ordered that “Count 

VII, negligent misrepresentation, and Count VIII, equitable fraud, are dismissed without 

prejudice to [plaintiff’s] right to transfer the action to the Court of Chancery within 60 days.”) 

(emphasis in original); Optical Air Data Systems, 2019 WL 210543, at *2 (Del. Super. Ct. Jan. 

14, 2019) (on motion for summary judgment, Court “grant[ed] the Motion as to the [negligent 

misrepresentation] Counterclaim . . . [and] stay[ed] entry of judgment on the [negligent 

misrepresentation] Counterclaim for ten (10) days in order to allow [counterclaimant] the 

opportunity to request transfer of the counterclaim to Chancery Court under 10 Del. § 1902”).
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So the Defendants’ motion is DENIED insofar as they seek outright dismissal 

of the negligent representation claim. Bobcat may seek its transfer to the Court of 

Chancery under 10 Del. C. § 1902, or elect to have this Court enter an order of dismissal 

without prejudice.85 Bobcat’s counsel are to submit, within 10 days: (1) an order on 

notice; and (2) if transfer is sought, a status report explaining the practical effect of the 

remainder of this case here.

VI. CONCLUSION

For the foregoing reasons, this Court DENIES the Defendants’ Motion as to the 

breach-of-contract claim (Count III) and the related indemnification claim (Count IV),

GRANTS the Motion as to the fraudulent inducement claim (Count I), and provides 

relief as described on the negligent misrepresentation claim (Count II).

IT IS SO ORDERED.

/s/ Paul R. Wallace

 

Paul R. Wallace, Judge

cc: All Counsel via File and Serve 

 85 See Otto Candies, 2018 WL 1960344, at *4 (granting such relief on motion to dismiss, but 

notably where the entire case then transferred to—and perhaps bedeviled—the Court of 

Chancery). E.g. Otto Candies, LLC v. KPMG LLP, 2019 WL 994050, at*2-6 (Del. Ch. Feb. 

28, 2019) (dismissing plaintiffs’ complaint for lack of personal jurisdiction and for failure to 

state a claim on the fully briefed motion transferred with the case from this Court); Otto 

Candies, LLC v. KPMG LLP, 2019 WL 1856766, at*1 (Del. Ch. Apr. 25, 2019) (court 

constrained—because of a specific Chancery rule not applicable here—to give plaintiffs “a 

mulligan” on that dismissal); Otto Candies, LLC v. KPMG LLP, 2020 WL 4917596 (Del. Ch. 

Aug. 21, 2020) (final dismissal of any and all negligent misrepresentation claims).