IN THE SUPREME COURT OF THE STATE OF DELAWARE 

EXPRESS SCRIPTS, INC. and 

UNITED BIOSOURCE LLC, 

Defendants Below, 

Appellants/CrossAppellees, 

v. 

BRACKET HOLDINGS CORP., 

Plaintiff Below, 

Appellee/CrossAppellant.

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No. 62, 2020

Court Below: Superior Court 

of the State of Delaware 

C.A. No. N15C-02-233 CCLD 

Submitted: December 16, 2020 

Decided: February 23, 2021 

Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and 

MONTGOMERY-REEVES, Justices, constituting the Court en Banc. 

Upon appeal from the Superior Court. REVERSED and REMANDED. 

Kevin G. Abrams, Esquire, Michael A. Barlow, Esquire, Daniel J. McBride, Esquire, 

ABRAMS & BAYLISS LLP, Wilmington, Delaware; Derek L. Shaffer, Esquire 

(argued), Michael Lyle, Esquire, QUINN EMANUEL URQUHART & 

SULLIVAN, LLP, Washington, D.C., Richard I. Werder, Jr., Esquire, Rollo C. 

Baker, Esquire, Silpa Maruri, Esquire, Dominic J. Pody, Esquire, QUINN 

EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; Attorneys 

for Defendants-Appellants/Cross-Appellees Express Scripts, Inc. and United 

BioSource LLC. 

David E. Ross, Esquire, Eric D. Selden, Esquire, ROSS ARONSTAM & MORITZ 

LLP, Wilmington, Delaware; Paul D. Clement, Esquire (argued), C. Harker Rhodes 

IV, KIRKLAND & ELLIS LLP, Washington, D.C.; Kevin M. Neylan, Jr., Esquire, 

KIRKLAND & ELLIS LLP, New York, New York; Attorneys for PlaintiffAppellee/Cross-Appellant Bracket Holdings Corp.
2 

SEITZ, Chief Justice: 

United BioSource LLC (“UBC”), a subsidiary of Express Scripts, Inc. (“ESI”) 

agreed to sell three of UBC’s pharmaceutical research and development businesses 

to Bracket Holding Corp. (“Bracket”), a holding company formed by Parthenon 

Capital Partners, LP (“Parthenon”) for the acquisition. In August 2013, Bracket and 

UBC signed a $187 million securities purchase agreement (the “SPA”). Except for 

claims involving deliberate fraud and certain fundamental representations, Bracket 

agreed to limit its remedy for breach of the SPA’s representations and warranties to 

an insurance policy (the “R&W Policy”) purchased to cover these claims. 

After closing, Bracket claimed that ESI and UBC engaged in fraud by 

inflating the revenue and working capital of one of the divisions of the acquired 

companies. In an arbitration proceeding Bracket recovered $13 million under the 

R&W Policy for breach of the SPA’s representations and warranties. Bracket then 

sued ESI and UBC for fraud in the Superior Court. A jury awarded Bracket over 

$82 million. 

The parties have appealed from the jury verdict and judgment. We find one 

issue dispositive. The SPA provides unambiguously that, except in the case of 

deliberate fraud and certain fundamental representations, Bracket could only recover 

up to the R&W Policy’s limits for breaches of the representations and warranties. 

Over ESI’s objection, however, the Superior Court instructed the jury that it could 
3 

find for Bracket not only for deliberate fraud, but also for recklessness. A deliberate 

state of mind is a different kettle of fish than a reckless one. The court’s erroneous 

jury instruction was not harmless—it violated a key provision of the SPA and how 

the parties allocated risk in the transaction. We therefore reverse the Superior 

Court’s judgment and remand for a new trial. To be helpful to the court and the 

parties on remand, we also address one other meritorious issue raised by ESI and 

UBC in their appeal. 

I.

We review the facts in a light most favorable to the jury’s verdict.1 ESI is a 

Delaware corporation providing pharmaceutical support services and benefits 

management. In 2012, ESI acquired UBC and its three subsidiaries—Bracket 

Global Holdings LLC, Bracket Global K.K., and Bracket Global Limited. 

Parthenon, a private equity fund, formed Bracket to purchase the Company from 

UBC. To distinguish between Bracket Holding Corp., the acquisition entity, and the 

three UBC Bracket subsidiaries, we will refer to the acquisition entity as “Bracket” 

and the three subsidiaries as the “Company.” We will also refer to ESI and UBC 

together as “the defendants.” 

1 Burgos v. Hickok, 695 A.2d 1141, 1142 (Del. 1997). Unless otherwise stated, the facts are drawn 

from the Superior Court’s opinion, In re Bracket Hldg. Corp. Litig., 2020 WL 764148 (Del. Super. 

Ct. Feb. 7, 2020). 
4 

In the fall of 2012, UBC hired Credit Suisse Securities (USA) LLC (“Credit 

Suisse”) as its financial advisor to market the Company and KPMG LLC (“KPMG”) 

to perform sell-side due diligence. Credit Suisse prepared a Confidential 

Information Memorandum (“CIM”), while KPMG conducted a Quality of Earnings 

(“QoE”) investigation, which led to a February 2013 QoE Report. After Parthenon 

received both reports, it submitted a letter of intent to purchase the Company. To 

price the transaction, Parthenon focused on a multiple to the Company’s Earnings 

Before Interest, Taxes, Depreciation, and Amortization—“EBITDA” in the twelvemonth period prior to closing (“TTM EBITDA”). 

During due diligence, Parthenon grew concerned about the high balance of 

unbilled accounts in the QoE Report for Scientific Services, one of the Company’s 

divisions. It raised the issue with Jim Stewart, the Company’s Vice President of 

Finance. Stewart responded that the high receivable balance came from contract 

change orders when additional work was authorized beyond the scope of the original 

contract but had not yet been reflected in a revised contract. According to Stewart, 

unexecuted change orders were common in the industry and did not pose 

collectability problems. KPMG did not express concerns about the collectability of 

the balances. 

On July 12, 2013, Bracket and UBC entered the SPA. UBC represented that 

the January 2011 through March 2013 financial information in the disclosure 
5 

schedule supporting a $29 million TTM EBITDA was true and correct. UBC also 

represented that, as of May 31, 2013, the Company had $11.85 million in working 

capital, subject to a post-closing adjustment. 

Soon after closing, Bracket believed it had been misled about the Company’s 

finances. According to Bracket, the Company had inflated historical revenue by 

millions of dollars. The Company’s unbilled receivable balance was way off. 

Contracts did not support the balances and the revenue recognized against them. The 

Company recognized revenue long after work ended. Revenue continued to be 

booked for closed out contracts and was uncollectible. Bracket claimed that the 

Company’s working capital was a negative $2.7 million along with large unbilled 

receivables. 

After some back and forth between the parties, Bracket settled on a negative 

$14 million in working capital, requiring an over $25 million post-closing working 

capital adjustment. Bracket attributed the shortfalls to overstated unbilled 

receivables. Bracket also believed that it overpaid for the Company by tens of 

millions of dollars based on the effect unbilled receivables had on revenue. 

In October 2014, Bracket demanded arbitration to recover under the R&W 

Policy. The arbitration raised many of the same events that led to this litigation. 

Bracket recovered $13 million under the R&W Policy. The defendants did not 

participate in the arbitration. 
6 

In 2015, UBC filed an action in the Court of Chancery to compel Bracket to 

commence arbitration under Section 2.5(b) of the SPA to resolve the working capital 

dispute.2 The court granted UBC’s demand and ordered the parties to commence 

the working capital arbitration process under the SPA.3 Under Section 2.5(b), each 

party submitted a proposed calculation of working capital. The arbiter issued a 

report, ruling in favor of UBC. The arbiter found that the “Final Working Capital” 

was $9,687,383, which gave Bracket a price adjustment of $504,591.4 

Bracket then sued ESI, UBC, and Jim Stewart in the Superior Court for 

fraudulently inducing Bracket to purchase the Company. UBC responded with 

counterclaims for breach of contract and tortious interference for Bracket’s failure 

to pay UBC under a separate contract—a Transition Services Agreement (“TSA”). 

At trial, Bracket called fact witnesses and an expert witness to show that Stewart 

recognized revenue for contracts before the work had been performed, that did not 

exist or had been terminated, and in amounts exceeding totals for active contracts. 

After a ten-day trial the jury found that the defendants committed fraud and that ESI 

aided and abetted UBC’s fraud. The jury awarded Bracket $82.1 million in damages 

and UBC $2.2 million in damages for UBC’s breach of the TSA. 

2

In re Bracket Hldg. Corp. Litig., 2017 WL 3283169, at *4 (Del. Super. Ct. July 31, 2017). 

3

 The Court of Chancery’s Order stated that “the arbiter will not decide defendant Bracket Holding 

Corp.’s fraud claims pending in Delaware Superior Court . . . .” Id.; App. to Answering Br. on 

Appeal at B1–3 (Order, United BioSource LLC v. Bracket Hldg. Corp., C.A. No. 10840-CB (Del. 

Ch. Nov. 12, 2015)). 

4

In re Bracket, 2017 WL 3283169, at *4. 
7 

The parties filed a flurry of post-trial motions. For purposes of this appeal, 

we focus on the Superior Court’s jury instruction addressing the state of mind for 

proof of fraud. The Superior Court first addressed the state of mind requirement in 

its April 11, 2019 pre-trial opinion.5 Bracket argued that the defendants should be 

liable not only for deliberate fraud, but for reckless conduct. The defendants 

objected and relied on the SPA’s deliberate fraud limitation to recover more than the 

R&W Policy. The court concluded that it was “confident there will be a significant 

dispute over how the jury will be instructed regarding fraud and what [Bracket] 

needs to establish to support this allegation” but found that “the extent to which 

others may have had knowledge of or reasonably suspected [Stewart’s conduct] will 

be one for the jury to decide.”6 Continuing, the court concluded that Bracket “will 

be required to establish that the intent of [the] [d]efendants, through their employees, 

was to knowingly create false financial documents . . . . [but] [t]he exact wording of 

the jury instructions will await the submissions by the parties.”7 

In a May 15, 2019 pre-trial hearing, the defendants raised the reckless versus 

deliberate jury instruction issue again, arguing that “it impacts the nature of the case 

statement that plaintiff has proposed. It may also influence the argument that 

plaintiff makes. So that is why the parties had agreed th[is] issue . . . could be 

5

In re Bracket Hldg. Corp. Litig., 2019 WL 1762975 (Del. Super. Ct. Apr. 11, 2019). 

6

Id. at *7. 

7

Id. at *8. 
8 

addressed today as opposed to later during a charging conference.”8 It appears that 

the parties interpreted the court’s April 11 ruling differently.9 After the parties made 

their positions known, the court clarified its prior decision. The court stated that the 

term “deliberate” was not “defined otherwise in the document,” meaning that UBC 

could be liable for recklessness, not just intentional fraud.10 

At trial, the defendants reasserted their objection and argued that there should 

be no “recklessness instruction at all” because “under the contract, only deliberate 

fraud is actionable.”11 The court rejected the argument, stating that the court had 

already ruled on the recklessness issue earlier.12 

The defendants renewed their objection to the fraud jury instruction in a posttrial motion for a new trial.13 Once again, the court turned away their argument. The 

court reasoned that Delaware law requires an “express agreement” to alter the 

common law fraud state of mind requirement, which includes recklessness.14 The 

court found “no clear articulation of the parties’ intent,” and thus, the court “d[id] 

8

 Ex. B to Opening Br. on Appeal at 61. 

9

Id. at 62 (“[The plaintiff’s counsel]: So to the extent that [the defendants] want to reargue this 

issue, I don’t think it’s needed because it’s already been decided in your opinion.”); id. at 65 (“[The 

defendants’ counsel]: We also thought this issue had been decided [i]n . . . Your Honor’s 

opinion.”). 

10 Id. at 71 (“[B]ut if [the defendants] have a situation where they should have known or recklessly 

hid themselves that is a sufficient basis to hold [the defendants] accountable also. So we’ll leave 

it at that. It wasn’t defined otherwise in the document.”); id. (“That was my intent . . . .”). 

11 App. to Opening Br. at A2002 (Trial Tr. at 131). 

12 Id. (Trial Tr. at 132). 

13 See id. at A2626–2360 (Defendants’ Opening Br. in Support of Their Renewed Mot. for 

Judgment as a Matter of Law, Mot. for a New Trial, and Mot. for Remittitur at 8–12). 

14 In re Bracket, 2020 WL 764148, at *5. 
9 

not believe that the inclusion of one undefined term – ‘deliberate’ – in the 

indemnification section of the SPA alters the mental state required for common law 

fraud.”15 Thus, the court reaffirmed its prior ruling that the court properly instructed 

the jury that the defendants could be liable for fraud if they acted recklessly. The 

court denied the defendants’ post-trial motion to overturn the jury’s verdict. 

II. 

On appeal, the defendants argue that the Superior Court erred by allowing 

Bracket to recover for breach of the representations and warranties not only for 

deliberate fraud, but for recklessness. They point to Section 9.6(d) of the SPA and 

its “deliberate fraud” requirement. In the absence of deliberate fraud, the defendants 

argue, the SPA limited Bracket to the “sole remedy” of the R&W Policy.16 

According to the defendants, because the fraud jury instruction conflicted with a 

fundamental provision of the SPA, they are entitled to a new trial. 

Bracket responds that the SPA contains numerous provisions referring to 

fraud, which refer to common law fraud. When the SPA is read as a whole, Bracket 

argues, the defendants could be liable for common law fraud, which includes 

recklessness. Further, Bracket contends that “deliberate” fraud under the SPA 

covers intentional and reckless mental states. Finally, according to Bracket, if the 

15 Id. (emphasis in original). 

16 Opening Br. on Appeal at 22. 
10 

Superior Court erred, the error was harmless given what they characterize as 

overwhelming evidence of deliberate fraud. 

On appeal, we review de novo the trial court’s jury instructions.17 While “jury 

instructions need not be perfect,” they must “give a correct statement of the 

substance of the law and be reasonably informative and not misleading when read 

as a whole.”18 If the jury misunderstands the law, “its ability to perform its duty is 

undermined and substantial rights of the parties are affected.”19

A. 

In ABRY Partners V, L.P. v. F & W Acquisition LLC, the Court of Chancery 

recognized “a strong tradition in American law that holds that contracts may not 

insulate a party from damages or rescission resulting from the party’s fraudulent 

conduct.”20 There is also “a strong American tradition of freedom of contract, and 

that tradition is especially strong in [Delaware], which prides itself on having 

commercial laws that are efficient.”21 The Court of Chancery in ABRY Partners

17 Spencer v. Wal-Mart Stores E., LP, 930 A.2d 881, 885 (Del. 2007). 

18 Chrysler Corp. (Del.) v. Chaplake Hldgs., Ltd., 822 A.2d 1024, 1034 (Del. 2003) (internal 

quotation marks and citation omitted); see R.T. Vanderbilt Co., Inc. v. Galliher, 98 A.3d 122, 125 

(Del. 2014) (“A party is not entitled to a particular jury instruction but does have the unqualified 

right to have the jury instructed on a correct statement of the substance of the law.”) (quoting 

Koutoufaris v. Dick, 604 A.2d 390, 399 (Del. 1992)). 

19 Duphily v. Del. Elec. Co-op., Inc., 662 A.2d 821, 834 (Del. 1995). We note that ESI and Stewart 

are defendants but not parties to the SPA. For purposes of this appeal, the parties have been content 

not to distinguish the basis for liability among ESI, UBC, and Stewart. Thus, like the parties, we 

focus on the arguments made under the SPA. 

20 891 A.2d 1032, 1059 (Del. Ch. 2006). 

21 Id. at 1059–60. 
11 

resolved the tension between Delaware’s “distaste for immunizing fraud” and “the 

need for commerce to proceed in a rational and certain way,” by concluding that a 

contracting party cannot, as a matter of public policy, “limit . . . exposure for its own 

conscious participation in the communication of lies to the Buyer . . . .”22 But when 

a party “knowingly accepted the risk that the [counterparty] would act with 

inadequate deliberation,” then that party “may not escape the contractual limitations 

on liability by attempting to show that the [counterparty] acted in a reckless, grossly 

negligent, or negligent manner.”23 

The SPA—governed by Delaware law24—and its indemnification framework 

directly reflects the balance struck in ABRY Partners. In Section 9.6(D) of the SPA, 

the parties addressed deliberate fraud and other states of mind and allocated the risks 

associated with post-closing liability for breach of representations and warranties: 

NOTWITHSTANDING ANY OTHER PROVISION HEREIN 

TO THE CONTRARY, EACH OF THE BUYER AND PARENT 

ACKNOWLEDGES AND AGREES, THAT FROM AND AFTER 

THE CLOSING, EXCEPT IN THE CASE OF FRAUD, PARENT 

SHALL NOT HAVE ANY DIRECT OR INDIRECT LIABILITY 

(DERIVATIVELY OR OTHERWISE) WITH RESPECT TO ANY 

BREACH OF ANY REPRESENTATION OR WARRANTY (OTHER 

THAN THE FUNDAMENTAL REPRESENTATIONS) MADE BY 

PARENT IN THIS AGREEMENT. IN FURTHERANCE OF THE 

FOREGOING, THE BUYER AND PARENT EACH 

ACKNOWLEDGES AND AGREES THAT EXCEPT IN THE 

CASE OF ANY DELIBERANT [sic] FRAUDULENT (I) ACT, (II) 

22 Id. at 1061, 1064. 

23 Id. at 1064. 

24 App. to Opening Br. at A2587 (SPA § 10.9). 
12 

STATEMENT, OR (III) OMISSION (1) THE SOLE AND 

EXCLUSIVE REMEDY OF WITH RESPECT TO ANY BREACH 

BY PARENT OF ANY REPRESENTATION OR WARRANTY 

(OTHER THAN THE FUNDAMENTAL REPRESENTATIONS) 

CONTAINED IN THIS AGREEMENT SHALL BE SATISFIED 

SOLELY FROM THE R&W INSURANCE POLICY . . . .25 

Section 9.6(D) is unambiguous. The parties agreed that, except for fraud and 

fundamental representations, the Parent—defined as UBC26—would not be liable 

for any breach of the SPA’s representations and warranties. And absent deliberate 

fraud, Bracket’s exclusive remedy against UBC was the R&W Policy. 

The Superior Court “d[id] not believe that the inclusion of one undefined term 

– ‘deliberate’ – in the indemnification section of the SPA alters the mental state 

required for common law fraud.”27 We disagree. When sophisticated parties craft 

purchase agreements, they typically follow a time-tested template.28 Specific to 

25 Id. at A2582–83 (SPA § 9.6(D)) (emphasis added). “Deliberant” is obviously a typographical 

error and means “deliberate.” We will use deliberate in this opinion. 

26 Id. at A2512. 

27 In re Bracket, 2020 WL 764148, at *5 (emphasis in original). The SPA notes that “[t]he article 

and section headings contained in this Agreement are inserted for convenience only and shall not 

affect in any way the meaning or interpretation of this Agreement.” App. to Opening Br. at A2587 

(SPA § 10.8). 

28 See Robert Anderson & Jeffrey Manns, The Inefficient Evolution of Merger Agreements, 85 

GEO. WASH. L. REV. 57, 64 (2017) (“To create [deal] documents, transactional lawyers do not 

write new documents from scratch, but instead work from one or more ‘precedents’ from past 

deals that provide a template of established law and practice with provisions that reflect firmspecific or partner-specific conventions. . . .The widespread use of precedent-based drafting means 

that the first draft of the terms of virtually every deal are based upon and adapted from a prior 

deal—its ‘precedent’”); see also Victor Fleischer, Deals: Bringing Corporate Transactions Into 

The Law School Classroom, 2002 COLUM. BUS. L. REV. 475, 483 (2002) (“Forms and precedents 

are undoubtedly the backbone of corporate practice and there is often no reason to start from 

scratch.”). 
13 

indemnification provisions, the buyer wants to be sure it is getting what is 

represented and secures representations and warranties specific to the seller’s 

financial information. The seller wants to limit its liability for post-closing disputes 

over representations and warranties. The parties channel post-closing representation 

and warranty disputes to the indemnification provisions of their agreement.29 

Here, the parties followed this well-worn path and used Section 9.6(D) to 

address fraud and allocate risk associated with post-closing disputes. Following 

Delaware law, the parties carved out deliberate fraud from the limits of the 

indemnification provision.30 But for all other states of mind, Bracket agreed to limit 

29 See White v. Curo Tex. Hldgs., LLC, 2016 WL 6091692, at *11 (Del. Ch. Sept. 9, 2016) 

(recognizing that “[d]eal-related indemnification provisions address post-closing risk allocation”) 

(citation and internal quotation marks omitted); CertainTeed Corp. v. Celotex Corp., 2005 WL 

217032, at *3 & n.5 (Del. Ch. Jan. 24, 2005) (“In the context of a merger or asset acquisition, the 

term ‘indemnification’ refers generally to the responsibility retained by the seller to make the buyer 

whole for liabilities related to the assets sold or for breaches of representations and warranties.”); 

see also ABA Mergers & Acquisitions Comm’n, Model Stock Purchase Agreement with 

Commentary 302–303 (2d ed. 2010) (“[I]t is customary in the acquisition of a privately held 

company for the buyer to be given a clearly specified right of indemnification for breaches of 

representations, warranties, covenants, and obligations, and against certain other remedies.”); 

Glenn D. West & W. Benton Lewis, Jr., Contracting to Avoid Extra-Contractual Liability—Can 

Your Contractual Deal Ever Really Be The “Entire” Deal?, 64 BUS. LAW. 999, 1017 (2009) 

(discussing extra-contractual liability consequences in “carefully crafted deductibles and caps on 

a seller’s obligation to indemnify a buyer for losses arising from breaches of contractually 

bargained-for warranties, which are designed to define precisely the parameters of each party’s 

post-closing liability”). 

30 See Airborne Health, Inc. v. Squid Soap, LP, 984 A.2d 126, 136–37 (Del. Ch. 2009) (“Because 

of Delaware’s strong public policy against intentional fraud, a knowingly false contractual 

representation can form the basis for a fraud claim, regardless of the degree to which the agreement 

purports to disclaim or eliminate tort remedies.”); EMSI Acquisition, Inc. v. Contrarian Funds, 

LLC, 2017 WL 1732369, at *9 (Del. Ch. May 3, 2017) (“Under Abry and its progeny, therefore, 

absent a contractual portal, the Plaintiff (Buyer) cannot reach the Defendants (Sellers) on an 

indemnification claim beyond the bargained-for limits (the Escrow Funds) unless Plaintiff can 

demonstrate that Defendants acted with an ‘illicit state of mind’ or ‘knew that the Company’s 
14 

its remedy to the R&W Policy for breaches of the SPA’s representations and 

warranties. 

Our reading of Section 9.6(D) is confirmed when read in conjunction with 

Article 4, which addresses the “Representations and Warranties of the Buyer.”31 

Consistent with the indemnification limitations in Section 9.6(D), and specifically 

the carveout for deliberate fraud, the parties agreed in Section 4.6 (Insurance) that 

“[t]he R&W Policy shall not provide for, or increase, any liability of Parent or its 

Affiliates . . . except as may result in the case of any deliberate fraudulent (a) act, (b) 

statement or (c) omission.”32 Further, the R&W Policy had to include “a waiver by 

the insurer(s) that issued the R&W Policy of any and all rights of subrogation . . . 

except in the case of any deliberate fraudulent (a) act, (b) statement or (c) 

omission.”33 In other words, the scope of the R&W Policy had to “conform to the 

representations and warranties were false.’”) (quoting ABRY PARTNERS, 891 A.2d at 1064); see 

also Lou R. Kling & Eileen Nugent, Negotiated Acquisitions of Companies, Subsidiaries, and 

Divisions, § 15.02 (2020) (discussing the ambiguity problem of undefined fraud parameters and 

suggesting “a clause which narrowly defines fraud based on a concept of intentional, knowing 

misrepresentation by the Seller”); Model Stock Purchase Agreement with Commentary 294 (“If 

the sellers are successful in negotiating one or more liability-limiting provisions, they often agree 

to remain fully liable for ‘willful’ or ‘intentional’ misconduct such as fraud or intentional 

misrepresentation.”); Steven M. Haas, Contracting Around Fraud Under Delaware Law, 10 DEL. 

L. REV. 49, 57 (2008) (“As one would expect, exclusive remedy provisions are intensely 

negotiated and contain various carve-outs for different occurrences. . . . Most often, these carveouts exempt claims relating to intentional misrepresentations from the exclusive remedy provisions 

such that all claims except for fraud must be brought as indemnification claims.”).

31 App. to Opening Br. at A2552 (SPA art. 4). 

32 Id. at A2553 (SPA § 4.6). 

33 Id.
15 

representation in Section 4.6.”34 The R&W Policy incorporated the deliberate fraud 

limitations—“[t]he insurer shall only be entitled to exercise rights of subrogation 

against the Seller(s) . . . if the Loss arose in whole or in part out of any deliberate 

fraudulent act, statement or omission.”35 Through Section 4.6, the parties made clear 

that deliberate fraudulent “acts, statements, and omissions” were not covered by the 

R&W Policy and the carrier could subrogate a claim for these actions and omissions. 

Otherwise, the R&W Policy was the exclusive remedy. 

A plain reading of the SPA shows that the parties took great care to distinguish 

between deliberate fraud and other states of mind and conduct. If the defendants 

committed deliberate fraud, Bracket could recover damages in addition to the R&W 

Policy. Absent that, Bracket’s sole remedy was a claim against the R&W Policy. 

B. 

Bracket argues that references to common law fraud throughout the SPA “fit 

together seamlessly with the indemnification provision in Article 9.”36 The 

argument goes as follows. Section 9.6(D) states that “[n]otwithstanding any other 

provision herein to the contrary, . . . except in the case of fraud,” the defendants will 

not be liable for “any breach of any representation or warranty.”37 Section 9.8 states 

34 Id. at A2566 (SPA § 6.6). 

35 Id. at A586 (R&W Policy § 9.2). 

36 Answering Br. on Appeal at 27. 

37 Id. (emphasis in original) (quoting App. to Opening Br. at A2582–83 (SPA § 9.6(D))). 
16 

that “[i]n the absence of fraud and except for [Bracket’s] and its Affiliates’ rights 

under the R&W Policy,” the SPA’s indemnification provisions “shall provide the 

exclusive remedy for breach of any covenant, agreement or representation or 

warranty.”38 Section 9.8 also states that “in absence of fraud,” the defendants will 

not be liable for breach of a “Non-Fundamental Representation,” including the 

representations at issue here.39 Without explaining further, Bracket concludes that, 

“[t]aken together, these provisions form a coherent liability regime that allows 

Bracket to hold Defendants liable in court if it can prove common-law fraud, and 

limits Bracket to recovering under the R&W Policy if it cannot.”40 

Bracket’s attempt to import fraud references from other provisions into the 

indemnification provision suffers from glaring errors. First, it ignores the language 

in Section 9.6(D) that the indemnification provision supersedes “any other provision 

herein to the contrary,” meaning anything in Section 9.8 or other SPA provisions 

that are inconsistent with Section 9.6(D).41 In Section 9.6(D) the parties treated 

deliberate fraud as a matter separate from other general references to fraud in the 

SPA.42 Further, Section 9.6(D)’s lead-in phrase following the general fraud 

38 Id. (emphasis and alteration in original) (quoting App. to Opening Br. at A2583 (SPA § 9.8)). 

39 Id. (emphasis in original). 

40 Id. 

41 App. to Opening Br. at A2582 (SPA § 9.6(D)). 

42 DCV Hldgs., Inc. v. ConAgra, Inc., 889 A.2d 954, 961 (Del. 2005) (“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.”). 
17 

exception—“[i]n furtherance of the foregoing”—means that more is coming to 

refine the fraud exception. The parties made clear that, other than for instances of 

deliberate fraud, the R&W Policy is the exclusive remedy. Section 9.6(D)’s specific 

treatment of fraud also controls over general references to fraud elsewhere in the 

SPA.43

Next, Bracket resorts to grammatical rules to override the plain meaning of 

Section 9.6(D). It argues that “‘delibera[te]’ in §9.6(d) is an adjective that modifies 

the nouns ‘act,’ ‘statement,’ and ‘omission,’ not an adverb that modifies 

‘fraudulent.’”44 Thus, according to Bracket, “[e]ven if Defendants were right to 

claim that ‘deliberate’ means ‘intentional,’ §9.6(d) would require only an intentional 

act, statement, or omission; it would not alter the scienter standard for whether such 

intentional act were fraudulent.”45 This is a tortured reading of Section 9.6(D). 

States of mind are often paired with, and modify, the legal description of claims that 

follow them.46 Although grammatical parsing can at times be useful to clarify 

43 Brinckerhoff v. Enbridge Energy Co., Inc., 159 A.3d 242, 255 (Del. 2017) (recognizing the 

“settled rules of contract interpretation, requiring that the court prefer specific provisions over 

more general ones”). 

44 Answering Br. on Appeal at 28 (alteration and emphasis in original). 

45 Id. at 28–29 (emphasis in original). 

46

 See Glenn D. West, That Pesky Little Thing Called Fraud: An Examination of Buyers’ Insistence 

Upon (And Sellers’ Too Ready Acceptance Of) Undefined “Fraud Carve-Outs” In Acquisition 

Agreements, 69 BUS. LAW. 1049, 1074 (2014) (“defining fraud by adding a descriptive adjective” 

is a “step in the right direction” for a trend in U.S. markets to “define fraud with some specificity 

when including it as an exception to an [exclusive remedy] provision”) (alteration in original) 

(citation omitted); West & Lewis, 64 BUS. LAW. at 1033 (“If your counterparty insists on a ‘fraud 

exclusion,’ limit the exclusion to ‘intentional fraud . . . .’ And make certain that the effect of such 

an exclusion . . . eliminate[s] the applicability of deductibles and caps as to those breached 
18 

ambiguous language,47 here Section 9.6(D) has a plain meaning—the parties sought 

to distinguish deliberate fraud from other mental states. 

Finally, Bracket claims that “deliberate” fraud can include recklessness. But 

as explained earlier, fairly read, the parties used Section 9.6(D) to distinguish 

“deliberate fraud” from other states of mind. Even though the parties did not define 

“deliberate,” its use in context shows that it was meant to refer to an intentional state 

of mind. Dictionary definitions back this up.48 Black’s Law Dictionary defines 

“deliberate” as “1. Intentional; premediated; fully considered” and “2. Unimpulsive; 

slow in deciding.”49 “Deliberate,” in its plainer meaning, is defined as “[o]f a person: 

that acts or takes decisions after careful thought or consideration; measured and 

represented that were, in fact, ‘intentionally fraudulent.’”); see also, e.g., In re Massey Energy Co.,

Deriv. & Class Litig., 2011 WL 2176479, at *27 n.180 (Del. Ch. May 31, 2011) (“Typical 

exclusions [from D & O insurance coverage] include acts arising out of, based upon, or attributable 

to . . . committing any deliberate criminal or deliberate fraudulent act.”) (alteration in original) 

(citation omitted). 

47 See CelestialRX Invs., LLC v. Krivulka, 2017 WL 416990, at *16 (Del. Ch. Jan. 31, 2017) 

(“Despite the linguistic, grammar and punctuation arguments each side advances, I read this 

provision by what I view as its plain meaning in accordance with Delaware law.”); 17A AM. JUR. 

2D Contracts § 358, Westlaw (database updated February 2021) (“While a court, in construing a 

contract, will give due force to the grammatical arrangement of the clauses, it will disregard the 

grammatical construction if it is at variance with the intent of the parties as indicated by the 

contract as a whole.”). 

48 Lorillard Tobacco Co. v. Am. Legacy Foundation, 903 A.2d 728, 738 (Del. 2006) (“Under wellsettled case law, Delaware courts look to dictionaries for assistance in determining the plain 

meaning of terms which are not defined in a contract.”). 

49 Deliberate, Black’s Law Dictionary (11th ed. 2019). 
19 

thoughtful. Also: that acts purposely or with intent.”50 What the parties intended to 

describe here was an intentional state of mind, not recklessness. 

A deliberate state of mind does not equate to a reckless state of mind.51 The 

parties used “deliberate” to describe a specific state of mind. Bracket agreed that, 

absent deliberate fraud, its sole and exclusive remedy for breach of the 

representations and warranties was the R&W Policy. The Superior Court erred when 

it instructed the jury that it could find for Bracket if it proved that the defendants 

acted with a reckless state of mind. 

C. 

Bracket argues in the alternative that we should treat the legal error as 

harmless. Bracket claims that the “overwhelming evidence at trial . . . [that] showed 

that [the] [d]efendants committed intentional not merely reckless fraud” should 

50 Deliberate, Oxford English Dictionary (2d ed. 1989), available at Oxford English Dictionary 

Online (last visited February 21, 2021). 

51 See Staub v. Proctor Hosp., 562 U.S. 411, 417 (2011) (distinguishing intentional torts from 

“negligent or reckless torts”); Daniels v. Williams, 474 U.S. 327, 334 & n.3 (1986) (distinguishing 

“something less than intentional conduct, such as recklessness . . .”); Restatement (Second) of 

Torts § 8A (1965) (“If the actor knows that the consequences are certain, or substantially certain, 

to result from his act, and still goes ahead, he is treated by the law as if he had in fact desired to 

produce the result. As the probability that the consequences will follow decreases, and becomes 

less than substantially certainty, the actor’s conduct loses the character of intent, and becomes 

mere recklessness[.]”); Restatement (Second) of Torts § 500 cmt. f (“Reckless misconduct differs 

from intentional wrongdoing in a very important particular. While an act to be reckless must be 

intended by the actor, the actor does not intend to cause the harm which results from it. It is enough 

that he realizes or, from facts which he knows, should realize that there is a strong probability that 

harm may result, even though he hopes or even expects that his conduct will prove harmless. 

However, a strong probability is a different thing from the substantial certainty without which he 

cannot be said to intend the harm in which his act results.”). 
20 

excuse the erroneous instruction.52 According to Bracket, the reckless instruction 

“did not ‘undermine[] the jury’s ability to intelligently perform its duty.’”53 We 

disagree. 

As noted earlier, “[a] party is not entitled to a particular jury instruction but 

does have the unqualified right to have the jury instructed on a correct statement of 

the substance of the law.”54 “While some inaccuracies and inaptness in statement 

are to be expected in any [jury] charge, this Court will reverse if the alleged 

deficiency in the jury instructions undermined the jury’s ability to intelligently 

perform its duty in returning a verdict.”55 

The erroneous jury instruction was not harmless error. Bracket was able to 

argue for a lesser mental state to establish liability notwithstanding the parties’ 

agreement to limit fraud liability in excess of the R&W Policy to deliberate fraud.56 

Rather than focus on deliberate or intentional misrepresentations, the jury was 

instructed that it could also find in favor of Bracket by focusing on the defendants’ 

“recklessly indifferent” conduct, meaning the defendants “we[re] aware of and 

52 Answering Br. on Appeal at 31–32. 

53 Id. at 31 (alteration in original) (quoting Sammons v. Doctors for Emergency Servs., P.A., 913 

A.2d 519, 540 (Del. 2006)). 

54 R.T. Vanderbilt, 98 A.3d at 125 (quoting Koutoufaris, 604 A.2d at 399). 

55 Culver v. Bennett, 588 A.2d 1094, 1098 (Del. 1991). 

56 See App. to Opening Br. at A2063 (Trial Tr. at 44) (the plaintiff’s counsel stating in closing 

argument that “what this tells [the jury] is, [ESI] . . . knew or sure as hell should have known as of 

June 11th, a month before we signed up to do the deal, there was something wrong with these 

financial statements. There was something wrong with [Mr.] Stewart.”). 
21 

consciously disregarded a substantial and unjustifiable risk.”57 The jury instruction 

misstated the law and undermined how the parties allocated risk in the SPA.58 The 

defendants were entitled to a correct statement of the law.59 

57 Id. at A2087 (Trial Tr. at 139) (“[The Court]: Bracket contends that UBC and ESI knew, or 

were recklessly indifferent to, the fact that the company’s financial statements provided in the 

[SPA] . . . .”); id. at A2088 (Tr. Trial at 143) (“[The Court]: The second element [of fraud] is that 

the defendant knew or believed that this representation or concealment was false, or that they were 

recklessly indifferent as to whether it was false. [Bracket] is required to establish the defendant, 

at the time the [SPA] was executed, knew the financial documents attached to the SPA were false 

or to be recklessly indifferent as to whether they were false, and recognizing those documents 

would be relied upon by the plaintiff in determining whether to purchase the business, they 

certified them to be true and correct. Now, ‘reckless’ means that a defendant was aware of and 

consciously disregarded a substantial and unjustifiable risk would result from the conduct.”). 

58 See, e.g., R.T. Vanderbilt, 98 A.3d at 127 (reversing and remanding for new trial where jury 

instructions “left the jury without a correct statement of the applicable law”); Volkswagen of Am., 

Inc. v. Costello, 880 A.2d 230, 236 (Del. 2005) (reversing and remanding for a new trial after 

finding that erroneous jury instructions on landowner liability law meant that “the jury could not 

intelligently perform its factfinding function”) (internal quotation makes omitted); E.I. DuPont de 

Nemours & Co. v. Pressman, 679 A.2d 436, 444 (Del. 1996) (reversing and remanding for new 

trial because erroneous jury instruction overstated the effect of the implied covenant of good faith 

in an at-will employment contract); Riggins v. Mauriello, 603 A.2d 827, 831 (Del. 1992) (reversing 

and remanding for new trial where the jury instruction “was inappropriate as a matter of law”); 

Tydings v. Loewenstein, 505 A.2d 443, 445 (Del. 1986) (reversing and remanding for new trial 

where jury instruction was incomplete as to the proper standard of care); see also Duphily, 662 

A.2d at 834 (“It is fundamental that the jury have a basic understanding of the law which it is asked 

to apply in order to intelligently perform its duty in reaching a verdict. . . . When it is manifest, as 

here, that the jury has misunderstood the applicable law, its ability to perform its duty is 

undermined and substantial rights of the parties are affected.”). 

59 Sammons v. Doctors for Emergency Servs., P.A., 913 A.2d 519 (Del. 2006), is distinguishable. 

There, even though the instructions were erroneous, the jury was still able to “make a reasoned 

and informed decision in the case.” Id. at 541. Likewise, we found no error in the trial court’s 

response to a jury question regarding whether the jury was limited to the plaintiff’s theory of the 

case because the court’s responses were consistent with the plaintiff’s theory of the case and 

reiterated correct pattern jury instructions. Id. at 541–42. By contrast, this case presents a more 

fundamental problem—the jury instruction incorrectly stated what the plaintiff had to establish at 

trial to hold the defendants liable for fraud. Under the SPA, Bracket only had recourse for 

deliberate fraud, but the trial court’s instructions led the jury to believe, instead, that it could 

ground its judgment on a lesser standard—recklessness. 
22 

III. 

Although we reverse the Superior Court’s judgment based on its erroneous 

fraud jury instruction, to be as helpful as possible to the court on remand, we address 

another meritorious evidentiary issue the defendants raised on appeal.60 

Throughout the case, Bracket alleged that it calculated its purchase price based 

on a multiple of EBITDA during the TTM period. If the defendants overstated 

EBITDA, Bracket argued, it overpaid for the Company. But Bracket’s overstated 

EBITDA claim depended on the financial statements represented in the SPA. In its 

summary judgment ruling, the Superior Court limited Bracket’s fraud claim to the 

Company’s March 2013 financial statements based on what it characterized as a 

representation that Bracket relied on those statements. The court ruled: 

[T]he financial statements that were certified in § 3.1 of the SPA are set 

forth in disclosure statement § 3.4(a). It is the representation as to these 

statements that Plaintiff alleges is false. It has also been represented to 

the Court that Plaintiff determined its pricing based upon these 

disclosure statements. Therefore, the Court believes it is the difference 

60 Bracket argues that the defendants raise their relevance argument for the first time on appeal. 

We are satisfied, however, that the defendants raised substantially the same argument below. See

App. to Opening Br. at A1779 (Trial Tr. at 60) (“[The defendants’ counsel]: But as a factual 

matter, [Bracket] ha[s] to establish that [Bracket] relied on the represented financials. And what 

the documents show is [Bracket] didn’t.”); id. at A1780 (Trial Tr. at 62) ([The defendants’ 

counsel]: The fact that [Bracket] [is] asked multiple times what TTM did you base the purchase 

price on, it changes every other day. It demonstrates that [Bracket] didn’t actually value the 

company in that way. [Bracket] [was not] simply relying on March TTM financials.”); see also

id. at A2637 (Defendants’ Opening Br. in Support of Their Renewed Mot. for Judgment as a Matter 

of Law, Mot. for New Trial, and Mot. for Remittitur at 19) (arguing for a new trial because the 

defendants “attempted to proffer evidence showing that [Bracket] did not, in fact, determine its 

pricing based upon the March 2013 financial statements—and, therefore, that [Bracket] could not 

prove reliance on any actionable false statement.”). 
23 

between the financial statements ending as of March 2013 and those 

recalculated by [Bracket’s expert] that are at issue. As a result, the 

calculations set forth in Exhibit 2 of [Bracket’s expert]’s report would 

appear to reflect the relevant difference and are the calculations that the 

Court will allow testimony about.”61 

 

At trial, the defendants sought to introduce three exhibits to show that Bracket 

allegedly relied on financial information not covered by the SPA’s representations 

and warranties to price the transaction.62 The Superior Court refused to admit the 

exhibits based on its summary judgment ruling. As the court ruled, “[i]t’s what I 

said it was before. It’s what it’s going to be utilized for. . . . The Court made the 

ruling and they have relied upon it. You knew it up front[.]”63 Then, post-trial, when 

the defendants raised the issue again, the Court ruled: 

As established before trial, Bracket relied upon the March 2013 

financial statements in setting the purchase price for the transaction. 

The evidence that Defendants sought to introduce regarding Bracket’s 

evaluation of other statements would have been prejudicial and 

irrelevant to whether Bracket was defrauded. The decision as to [the 

relevant exhibits’] exclusion was set forth in the Court’s Memorandum 

Opinion of April 11, 2019, which resolved the dispute over the 

appropriate TTM period. As a result of the Court’s [summary 

61 In re Bracket, 2019 WL 1762975, at *11. 

62 The three exhibits were (1) a Parthenon executive’s affidavit stating that it relied in part on 

financial information outside the SPA’s representations and warranties period to price the 

transaction; (2) emails between the Parthenon executive and Bracket’s financial expert supposedly 

showing that Bracket set the purchase price based on June 2013 financial statements; and (3) 

spreadsheets purportedly showing that the multiples used to price the transaction were not tied to 

financial statements covered by the SPA. App. to Opening Br. at A2656–62; id. at A2665; id. at 

A2663, A2669–93. 

63 During trial the court also stated that “[t]his is all the argument that was made months ago,” 

“[b]ut at the moment, the Court ruled that the financials that were important to the decision as to 

how they were going to proceed, end of . . . March and beyond that, it doesn’t matter.” App. to 

Opening Br. at A1779–80 (Trial Tr. at 61, 64); see also id. at A1899 (Trial Tr. at 64) (“The line of 

questioning is not relevant.”). 
24 

judgment] ruling, the Plaintiff was limited to this period, which had a 

significant impact on the damages they were claiming. In spite of the 

Court’s ruling, at trial, the Defendants tried to introduce, through nonexpert witness testimony, evidence regarding other potential periods. 

This was simply a back door effort to get around the Court’s previous 

ruling.”64 

 

It appears that the court misapprehended the basis for the defendants’ use of 

the three exhibits. To prove its fraud claim, Bracket had to demonstrate, among 

other elements, reliance.65 The defendants sought to introduce the exhibits to show 

that Bracket relied on financial information outside the March 2013 financial 

statements to set the purchase price. What Bracket relied on to fix the purchase price 

was both relevant and a question for the jury that was not susceptible to resolution 

at summary judgment. 

Having concluded that the exhibits are relevant, under Delaware Rule of 

Evidence 403, to exclude the exhibits, the prejudice must substantially outweigh the 

probative value of the exhibits.66 The court did not explain the nature of the 

64 In re Bracket, 2020 WL 764148, at *6. 

65 DCV Hldgs., 889 A.2d at 958 (“To prevail on its claim of common law fraud, the Buyer was 

required to show that: . . . the plaintiff acted in justifiable reliance on the [defendant’s] 

representation[.]”); Lord v. Souder, 748 A.2d 393, 402 (Del. 2000) (“A party claiming fraud must 

allege: . . . the plaintiff’s action or inaction taken in justifiable reliance upon the representation; 

and . . . damage to the plaintiff as a result of such reliance.”). 

66 D.R.E. 403 (“The court may exclude relevant evidence if its probative value is substantially 

outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, 

misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”); 

see also Kiser v. State, 769 A.2d 736, 741 (Del. 2001) (“Rule 403 requires the probative value of 

relevant evidence to be ‘substantially outweighed’ by the danger of confusing the issues or 

misleading the jury.”). 
25 

prejudice. It appears from the court’s rulings that the prejudice stemmed from the 

court’s prior ruling that Bracket was limited to the March 2013 financials. Thus, as 

we understand it, Bracket would be unfairly prejudiced if it was limited to the March 

2013 financial statements, but the defendants could use post-March financial 

statements to undermine Bracket’s reliance.67

Once again, we think that the prejudice finding stemmed from a lack of clarity 

about the intended use of the evidence. The defendants sought to use the evidence 

to undercut Bracket’s claim that it relied exclusively on financial statements covered 

by the SPA. Bracket could still rebut this evidence with proof that it relied on the 

March 2013 financial statements. Relevant evidence is, for the most part, prejudicial 

to the other party’s case.68 The prejudice must be unfair when balanced against 

67 See In re Bracket, 2020 WL 764148, at *6 (“As established before trial, Bracket relied upon the 

March 2013 financial statements in setting the purchase price for the transaction. The evidence 

that [the] [d]efendants sought to introduce regarding Bracket’s evaluation of other statements 

would have been prejudicial and irrelevant to whether Bracket was defrauded. . . . In spite of the 

Court’s ruling, at trial, the [d]efendants tried to introduce, through non-expert witness testimony, 

evidence regarding other potential periods.”); App. to Opening Br. at A1780 (Trial Tr. at 64) (“The 

Court made the ruling and they [Bracket] have relied upon it. You knew it up front[.]”). 

68 See Lecompte v. State, 150 A.3d 1200, 2016 WL 6519002, at *1 n.2 (Del. Nov. 2, 2016) 

(TABLE) (“Virtually all evidence is prejudicial to one party or another.”) (quoting 2 JOSEPH M. 

MCLAUGHLIN, WEINSTEIN’S FEDERAL EVIDENCE § 403.04 [1] (2d ed. 2016)); Stevenson 

v. State, 709 A.2d 619, 632 (Del. 1998) (“Any evidence that is properly admissible . . . is prejudicial 

to the defendant in the sense that it enhances the likelihood of a conviction.”); see also Hinojosa 

v. Butler, 547 F.3d 285, 295 (5th Cir. 2008) (“‘Prejudice’ to one party is the natural and intended 

consequence of the admission of evidence by another.”). 
26 

relevance.69 On the record before us, the balance tips decidedly in favor of 

admission. 

IV. 

The Superior Court’s judgment is reversed. The case is remanded for a new 

trial consistent with this opinion. The issues raised on cross-appeal are moot. Thus, 

we do not comment on the merits of the arguments on cross-appeal. 

69 See, e.g., Hines v. Joy Mfg. Co., 850 F.2d 1146, 1154 (6th Cir. 1988) (“In order to exclude 

evidence under [R]ule 403, it must be more than damaging to the adverse party; it must be unfairly 

prejudicial.”); Dollar v. Long Mfg., N.C., Inc., 561 F.2d 613, 618 (5th Cir. 1977) (“Of course, 

‘unfair prejudice’ as used in Rule 403 is not to be equated with testimony simply adverse to the 

opposing party. Virtually all evidence is prejudicial or it isn’t material. The prejudice must be 

‘unfair.’”), cert. denied, 435 U.S. 996 (1978); see also Smith v. State, 813 A.2d 1141, 2002 WL 

31873704, at *2 (Del. Dec. 23, 2002) (TABLE) (explaining that the policy behind Rule 403 “is to 

provide the jury with an ‘adequate factual base and breadth of understanding that it needs to render 

a fair verdict consistent with the truth’”) (citation omitted).