COURT OF CHANCERY

OF THE 

STATE OF DELAWARE

SHELDON K. RENNIE

JUDGE

LEONARD L. WILLIAMS JUSTICE CENTER

500 NORTH KING STREET, SUITE 10400

WILMINGTON, DE 19801

Date Submitted: February 16, 2024

Date Decided: February 20, 2024

Kevin R. Shannon

Christopher N. Kelly

Hayden J. Driscoll

POTTER ANDERSON & CORROON LLP

Hercules Plaza, 6th Floor

1313 N. Market Street

Wilmington, Delaware 19801

Christopher Viceconte

GIBBONS P.C.

300 Delaware Avenue

Suite 1015

Wilmington, Delaware 19801

RE: Andrew Dolce v. WTS International, LLC, 

C.A. No. 2023-0789-SKR 

Defendant’s Motion to Dismiss 

Dear Counsel:

This letter decision resolves Defendant’s Motion to Dismiss. For the reasons 

explained below, this action is stayed pending completion of the Asset Purchase 

Agreement’s alternative dispute resolution process.
2

I. FACTUAL BACKGROUND1

Sellers were engaged in the business of providing design, consulting and 

outsourced management services (the “Meet Hospitality Business Unit” or 

“Business”).2 On December 20, 2021, they sold the Business to WTS International, 

LLC (“WTS” or “Defendant”) by entering into an Asset Purchase Agreement (the 

“APA”).3 As consideration, Sellers received cash and potential earn-out payments.4 

Andrew Dolce served as the Seller Representative (“Dolce” or “Plaintiff”).5

A. The APA

Section 1.6 of the APA provides for earn-out payments based on the Business’ 

2022 and 2023 EBITDA. Exhibit F to the APA defines “EBITDA” and sets out the 

“methodology and rules” to calculate it.6 In relevant part, Exhibit F requires that 

WTS maintain standalone Profit and Loss (“P&L”) statements for the Meet 

1 The facts are drawn from the well-pleaded allegations in the Verified Amended Complaint, and 

documents incorporated by reference. Verified Amended Complaint (“AC”) (D.I. 9). Additional 

facts are drawn from documents outside the Amended Complaint in consideration of Defendant’s 

Motion to Dismiss under Court of Chancery Rule 12(b)(1). See Wildfire Prods., L.P. v. Team 

Lemieux LLC, 2022 WL 2342335, at *3 (Del. Ch. June 29, 2022).

2 AC ¶¶ 2, 14; Transmittal Affidavit of Hayden J. Driscoll to Defendant’s Opening Brief in Support 

of its Motion to Dismiss Plaintiff’s Verified Amended Complaint (“Aff. Driscoll”) (D.I. 15), Ex. 

1 Recitals (“APA”).

3 AC ¶ 2; see APA.

4 AC ¶¶ 16-17. Sellers are Meet Hospitality Services LLC (“Meet Hospitality”), Meet at Chrystie, 

LLC (“Meet at Chrystie”), Dole Family Limited Partnership (“Dolce Family”), Sarah Schiller, 

Paul Dolce and Andrew Dolce. APA Recitals.

5 APA Recitals.

6

Id. §§ 1.6(a)(i) and (b)(i); see id., Ex. F.
3

Hospitality Business Unit in accordance with generally accepted accounting 

principles; identifies items constituting revenue; and prescribes the methodology for 

calculating expenses.7 WTS and Dolce were also to prepare mutually agreeable 

operating budgets for the Meet Hospitality Business Unit.8 

Section 1.6(a) requires WTS to submit its EBITDA Calculation based on the 

methodology and rules set forth in Exhibit F.9 Dolce may object to the calculation:

by notifying [WTS] in writing of each objection and a reasonably 

detailed description of the basis therefor (but only on the basis that the 

[...] EBITDA Calculation contained arithmetic errors or was not 

prepared in accordance with [the APA] and the methodology and rules 

set forth in Exhibit F).10

If the parties fail to resolve the disputes, “either [Dolce] or [WTS] may submit 

any remaining disputes, and only such remaining disputes, to the Accountants for 

review and resolution.”

11

 The resolution by the Accountants “shall be within the 

range of dispute between [Dolce] and [WTS] and shall be set forth in a written 

report.”12 The resolution shall “be final and binding upon the parties.”13

7

See id., Ex. F.

8

Id.

9

Id. §§ 1.6(a)(i) and (b)(i).

10 Id. §§ 1.6(a)(ii) and (b)(ii).

11 Id. “Accountants” is defined as “FTI Consulting Inc. or, if such firm is not available for such 

assignment, such other firm upon which [WTS], on the one hand, and [Dolce], on the other hand, 

shall reasonably agree.” Id. § 1.5(a)(ii).

12 Id. §§ 1.6(a)(ii) and (b)(ii).

13 Id.
4

Section 1.6(e)(i) also required WTS to provide Sellers with “unaudited 

quarterly financial statements for the Meet Hospitality Business Unit, as and when 

prepared in the ordinary course of business.”

14

 

B. The Notice

On multiple occasions between April 2022 and October 2022, Sellers 

requested preliminary Profit and Loss (“P&L”) statements.15 WTS provided them, 

but according to Dolce, denied the meeting requests due to WTS’ lack of 

availability.16 On April 17, 2023, WTS submitted an EBITDA calculation for 2022 

that was below the required threshold to entitle Sellers to an earn-out payment.17 On 

May 4, 2023, Dolce objected to the calculation (the “Notice”).

18

 In the Notice, Dolce

argued that WTS improperly allocated general charges of WTS to the Meet 

Hospitality Business Unit.

19

 As support, WTS identified the absence of any 

corporate allocations in WTS’ preliminary P&L statements.20 It also identified two 

provisions in Section 5 of Exhibit F.21 Bullet point one of Section 5 requires that 

14 Id. § 1.6(e)(i).

15 AC ¶ 33.

16 Id. ¶¶ 33, 34.

17 Id. ¶¶ 28, 29. 

18 Id. ¶ 32. 

19 Aff. Driscoll, Ex. 4 (“Notice”) at 1.

20 Id. at 2.

21 Id.
5

expenses include “expenses incurred by WTS that are directly attributable” to the 

Meet Hospitality Business.22 Bullet point four provides that:

[e]xpenses related to any other employees or contractors shared 

between the Meet Hospitality Business Unit and [WTS] will be 

allocated between the Meet Hospitality Business Unit and [WTS] based 

on the relative proportion of work done for each entity as reasonably 

agreed between [WTS] and [Dolce] in good faith in writing (including 

via email). Such allocations shall be subject to periodic review and may 

be modified as reasonably agreed between [WTS] and [Dolce] in good 

faith in writing (including via email).23

WTS argued that under bullet point one, the general charges of WTS are not 

“directly attributable” to the Meet Hospitality Business Unit, and thus should have 

been excluded.

24

 Likewise, under bullet point four, any expenses for general 

corporate charges shared between the Meet Hospitality Business Unit should have 

been reasonably agreed by the parties in good faith, in writing and subject to periodic 

review – but allegedly were not.25 Dolce claimed that these “unilateral[]” cost 

allocations that were done “in hindsight” by WTS caused an “artificial EBITDA 

reduction” and prevented the “unit leader of the Meet Hospitality business” from 

managing the business differently to reduce costs.26 

22 APA, Ex. F § 5.

23 Id.

24 Notice at 2.

25 Id.

26 Id.; see also AC ¶ 36.
6

Dolce made two additional objections. It said that WTS failed to provide 

quarterly financial statements, an operating budget and forecasts.

27 It also identified 

purported inconsistencies in the allocation items in WTS’ “Acquisition Income 

Statement.”28 To resolve these disputes, Dolce advised that the parties engage in 

discussions pursuant to Section 1.6(a)(ii)’s resolution process.29

Following discussions among the parties, on May 18, 2023, WTS submitted 

a revised EBITDA calculation, concluding (again) that Sellers were entitled to no 

earn-out payment.30 Dolce contends that WTS made its revisions for the improper 

purpose of reducing the earn-out payments in breach of the APA.31 On June 2, 2023, 

Dolce notified the designated Accountants that their services may be required.32 

27 Notice at 1-2.

28 Id. at 2.

29 Id. at 3.

30 APA ¶ 39; Ex. 5 (Acquisition Income Statement from January 2022 to December 2022 –

05.15.2023 (Revised EBITDA Calculation)).

31 APA § 1.6(f)(ii) states that “[WTS] agrees that, except as required by Law or GAAP, as 

otherwise permitted or contemplated by this Agreement or as consented to in writing by Seller, 

during the EBITDA Period, it will not take any of the following actions: ...

(ii) take any other action, the primary purpose of which is to reduce any of the 

Contingent Payments.”

32 Transmittal Affidavit of Christopher Viceconte in Support of Plaintiff’s Answering Brief in 

Opposition to Defendant’s Motion to Dismiss Plaintiff’s Verified Amended Complaint (D.I. 21), 

Ex. A.
7

C. This Litigation

On June 22, 2023, WTS submitted its 2023 budget, which Dolce argues is 

based on improper allocations.33 On August 2, 2023, Dolce initiated this action by 

filing a Verified Complaint, which it amended on September 11, 2023. The 

Amended Complaint raises breach of contract and implied covenant of good faith 

and fair dealing claims. WTS moves to dismiss the complaint in favor of Section 

1.6(a) of the APA. The Court held oral argument on February 16, 2024 and took the 

motion under advisement.

II. STANDARD OF REVIEW34

A motion to dismiss based on an alternative dispute resolution provision goes 

to the court’s subject matter jurisdiction and is properly reviewed under Court of 

Chancery Rule 12(b)(1).35 The burden is on the non-movant to establish that 

jurisdiction exists.36 “In deciding a 12(b)(1) motion to dismiss, the court may 

consider documents outside the complaint.”37

33 AC ¶ 42.

34 The Court is resolving the motion under Court of Chancery Rule 12(b)(1), and therefore does 

not address Count II under the 12(b)(6) standard.

35 Rummel Klepper & Kahl, LLP v. Delaware River & Bay Auth., 2022 WL 29831, at *4 (Del. Ch. 

Jan. 3, 2022); see also Gandhi-Kapoor v. Hone Cap. LLC, 2023 WL 8480970, at *5 (Del. Ch. 

Nov. 22, 2023), as corrected (Dec. 4, 2023), motion to certify appeal granted sub nom. Gandhikapoor v. Hone Cap. LLC & Csc Upshot Ventures I, L.P (Del. Ch. 2023) (“By agreeing to litigate 

a dispute in a particular forum, parties can commit among themselves not to ask a court to exercise 

the subject matter jurisdiction it possesses.”).

36 Wildfire Prods., L.P. v. Team Lemieux LLC, 2022 WL 2342335, at *3 (Del. Ch. June 29, 2022).

37 Id. (citation omitted).
8

III. DISCUSSION

Dolce’s objections relate to issues the parties delegated to a third-party 

accounting firm for resolution. Dolce’s allegations, however, suggest that WTS has 

not provided it with the required information under the APA. Dolce will have the 

opportunity to submit revised objections to the Accountants after WTS provides the

required information. The Court will revisit the claims in this action after the 

Accountants’ determination. 

As an initial matter, the APA limits the grounds upon which Dolce may object 

to the calculation of EBITDA. Section 1.6(a) provides that any objections as to the 

EBITDA calculation must be limited on the basis of either (a) “arithmetic errors” or 

(b) that the calculation “was not prepared in accordance with [the APA] and the 

methodology and rules set forth in Exhibit F.”38 If any component of the EBITDA 

calculation is “not subject to an objection,” i.e., not subject to the grounds listed 

above, that component of the calculation is final and binding.39 Only then may the 

parties “submit any remaining disputes, and only such remaining disputes, to the 

Accountants for review and resolution.”

40

 The Accountants, therefore, have a 

38 APA §§ 1.6(a)(ii) and (b)(ii).

39 Id.

40 Id.
9

limited role. The grounds upon which WTS may dispute the calculation is also

narrow. 

On that limited basis, Dolce objected to (1) the allocation of general charges 

of WTS to the Business; (2) apparent inconsistencies in the Acquisition Income 

Statement and (3) missing information WTS was required to produce.41 Under 

category (1), whether the general charges of WTS was proper or not falls under the 

provisions of Exhibit F, and thus, is a question for the Accountants.42 Similarly, the 

line-item objections to the entries in the Acquisition Income Statement, which WTS 

responded to on May 18, 2023, is a question for resolution by the Accountants. Both 

categories of objections are the sort of fact-intensive and technical questions that fall 

within the ambit of the expertise of an accounting expert, and the parties agreed to 

delegate under Section 1.6(a).43

41 See Notice.

42 To the extent Dolce argues that the allocation of general charges can be resolved on no other

provision but bullet point four of Section 5, the Accountants can and should be able to use their 

accounting discretion to recognize that allocation or not based on WTS’ alleged failure to allocate 

the relative proportion of work for each entity. Other provisions of Exhibit F may also moot this 

question, and so weeding into the factual details of whether or not the general charges were due to 

work by a shared employee or contractor, and what, if any, efforts WTS took to agree to the 

proportion of work by the employee or contractor for each entity may be unnecessary depending 

on the Accountants’ application of other provisions in Exhibit F. If this is ultimately beyond the 

scope of the Accountants’ expertise, the parties’ should include those arguments before the 

Accountants in their submissions.

43 See Stone v. Nationstar Mortg. LLC, 2020 WL 4037337, at *8 (Del. Ch. July 6, 2020) (finding 

that disputes involving accounting methodology issues fall squarely within an accounting firm's 

expertise); LDC Parent, LLC v. Essential Utilities, Inc., 2021 WL 1884847, at *5 (Del. Super. 

Apr. 28, 2021) (finding question of what is a “Capital Expenditure” in purchase agreement to be 

dispute for accountant to resolve); ArchKey Intermediate Holdings Inc. v. Mona, 302 A.3d 975, 
10

In a letter to the Court, and at oral argument, Dolce raised AQSR India Priv., 

Ltd. v. Bureau Veritas Holdings, Inc. to the Court’s attention.44 In AQSR, the parties 

re-negotiated the acquisition of a company in India, and through an asset purchase 

agreement, they structured a process for the transfer and acquisition of certain 

customer contracts (the “Review Process”).45 The Review Process entailed a backand-forth, in which the sellers and buyers reviewed the company’s customer 

contracts for the buyers to purchase based on certain technical criteria; the buyers 

were required to submit notices on a weekly basis and a final closing statement that 

provided an accounting of the purchased contracts and final purchase price.46 Any 

disputes as to the qualifying criteria for, or purchase price of, a contract went to a 

“referee,” who was an expert from the relevant industrial board (the “Referee 

Procedure”).47 

The asset purchase agreement, however, never closed because of the buyers’ 

non-cooperation with the Review Process.48 The buyers did not cooperate in 

transferring the contracts, nor did they submit the weekly notices or final closing 

997 (Del. Ch. 2023) (providing that accountant must resolve disputes regarding adjusted postclosing balance sheet’s accounting methodology). 

44 2009 WL 1707910, at *1 (Del. Ch. June 16, 2009).

45 Id. at *5. 

46 Id. 

47 Id. 

48 Id. at *6.
11

statement.49 They also changed the criteria for the contracts halfway through the 

Review Process.50 Because the transaction did not close and due to the resulting 

uncertainty, the company lost nearly all its key employees and customers.51 

The court denied buyers’ motion for judgment on the pleadings to require the 

sellers to participate in the Referee Procedure. It found that before the referee could 

resolve the technical issues under its expertise, the referree would “first need to wade 

through a mire of procedural and general factual issues,” and that the referee was not 

“well-positioned” to do so.52 The court reserved the right to award a form of 

modified Referee Procedure as an ultimate remedy, but believed that before it could 

do so, a development of the factual record before the court was necessary to 

determine whether and how to “equitably salvage” the process.53

The instant case bears similarities to AQSR, but they are superficial and do not 

warrant the factual development Dolce seeks before submission of the accounting 

disputes can go to the Accountants. To be clear, Dolce raises allegations that WTS 

did not fully cooperate in the process outlined in Exhibit F of the APA, nor provide 

the information Dolce should have received under the APA. WTS has not provided 

49 Id. at *5.

50 Id.

51 Id. at *6.

52 Id. at *7.

53 Id. at *8.
12

a 2022 budget, unaudited quarterly financial statements, or timely profit and loss 

statements. 

Nonetheless, failure to provide that information does not require a bypass of 

the parties’ agreement to submit disputes as to the EBITDA calculation for expert 

resolution. The Court is not convinced that the failure to provide this information in 

real-time had an adverse effect that cannot now be cured by allowing Dolce to submit 

a revised objection based on the new information it receives, and for which the 

Accountants can resolve. Dolce’s objections, as explained above, primarily relate

to whether WTS improperly allocated general charges of WTS to the Meet 

Hospitality Business Unit, as well as line-item objections to the Acquisition Income 

Statement. 

Dolce argues that the failure of WTS to engage in good faith in the process 

outlined in Exhibit F resulted in an “artificial EBITDA reduction.”54 But any 

information rights or access to personnel that the APA provided Sellers did not come 

in parallel with the right to manage the Business.55 Based on Dolce’s allegations, 

and in contrast to those in AQSR, the Court finds that, with production of the missing 

54 Notice at 2; AC ¶ 36.

55 See APA § 2(f)(e)(i); id., Ex. F §§ 1 and 3; APA § 2(e)(ii) (WTS agreed to provide Sellers “with 

reasonable access during normal business hours to the responsible personnel of the Meet 

Hospitality Business Unit for a discussion regarding the financial condition of the Meet Hospitality 

Business Unit and [WTS], it being understood that Seller Equityholders will not interfere in any 

regard with the day to day operation of the Meet Hospitality Business Unit.”) (emphasis added).
13

information and opportunity to submit revised objections, the parties may be able to 

“tee[] up a narrow, technical question” under the purview of the Accountants.56 

Allowing the contractually designated resolution process to proceed after 

Dolce has the opportunity to submit a revised objection with the information that 

was purportedly missing will thus help to resolve the accounting issues first. The 

accounting determination will better inform the determination of this Court as to 

whether Dolce states a valid claim for breach of Section 1.6(f)(ii) and breach of the 

implied covenant of good faith and fair dealing for WTS’ alleged refusal to meet 

with Sellers and engage in good faith negotiations. 

56 AQSR India Priv., Ltd., 2009 WL 1707910, at *2.
14

IV. CONCLUSION

To the extent that WTS has failed to provide a 2022 budget, standalone profit 

and loss statements, and unaudited quarterly financial statements, WTS must either 

produce those documents or show that they are not necessary for Dolce to submit its 

objections to the Accountants. Dolce will then have the opportunity to submit 

revised objections to the Accountants for final and binding resolution of the 

EBITDA calculation. 

Upon these conditions, this action is stayed in favor of the APA’s alternative 

resolution process. Once the Accountants have made their determination, the Court 

will revisit the claims in this action.

IT IS SO ORDERED.

 _______________________ 

 Sheldon K. Rennie, Judge57

57 Sitting as a Vice Chancellor of the Court of Chancery of the State of Delaware by designation of the 

Chief Justice of the Supreme Court of Delaware pursuant to In re Designation of Actions Filed 

Pursuant to 8 Del. C. § 111 (Del. Feb. 23, 2023) (ORDER).