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IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

R. KEATING & SONS, INC.,

 Plaintiff,

 v.

CHISELCREEK DEVELOPMENT, LLC, ET 

AL.,

 Defendants.

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CHISELCREEK DEVELOPMENT, LLC,

 Crossclaim Plaintiff,

 v.

DARYL HUBER and NANCY HUBER,

 Crossclaim Defendants.

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C.A. No. N17C-05-195 VLM

NANCY FORSHA-HUBER and DARYL 

HUBER,

 Counterclaim Plaintiffs,

 v.

CHISELCREEK DEVELOPMENT, LLC, a 

Delaware limited liability company,

 Counterclaim Defendant,

 v.

SARDO PROPERTIES, LLC, a Delaware 

limited liability company and DAVID D. 

SARDO, individually,

 Third Party Counterclaim 

 Defendants. 

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ORDER

Submitted: July 10, 2020

Decided: October 30, 2020

Upon Consideration of Counterclaim Defendants’ Motion to Dismiss,

DENIED.

Jonathan M. Stemerman, Esquire of Elliot Greenleaf, P.C., Wilmington, Delaware.

Attorney for Defendants, Crossclaim Defendants and Counterclaim Plaintiffs.

Nicholas Kondraschow, Esquire of Rhodunda, Williams & Kondraschow, 

Wilmington, Delaware. Attorney for Counterclaim Defendants.

MEDINILLA, J.
3

AND NOW TO WIT, this 30th day of October, 2020, upon consideration of 

Counterclaim Defendants Chiselcreek, LLC, Sardo Properties, and David D. Sardo’s 

Motion to Dismiss, Counterclaim Plaintiffs’ Response in Opposition, oral 

arguments, and supplemental briefing, IT IS HEREBY ORDERED that 

Counterclaim Defendants’ Motion is DENIED for the following reasons:

Factual Background

1. On or about October 2, 2014, Nancy and Daryl Huber (the Hubers)

entered into a written agreement with Chiselcreek Development LLC (Chiselcreek)1

through its President David D. Sardo (Sardo), to construct their new house in 

Kennett Square, Pennsylvania,

2

at a contract price of $746,475.00.

3

2. Sardo is a Pennsylvania resident, the named president of Chiselcreek, 

and a managing member of Sardo Properties. Chiselcreek and Sardo Properties are 

Delaware limited liability companies with principal places of business in Delaware. 

Both operated and provided invoices to the Hubers under the name Chisel Creek 

Construction Company.4 

3. In September of 2014, Sardo Properties and Sardo presented a Builder 

Information Sheet to the Hubers’ lender, Fulton Bank, indicating that there were no 

 

1

 Though exhibits presented provide a different spelling for Chiselcreek (i.e., Chisel Creek), the 

Court will use the spelling in the court caption as provided by the parties.

2 Counterclaim Defendants’ Second Motion to Dismiss, D.I. 61, at 1-2 [hereinafter D.I. 61].

3

See Counterclaim Plaintiff’s Amended Complaint, D.I. 44, at Ex. A [hereinafter D.I. 44].

4 Chisel Creek Construction is not a named Counterclaim Defendant.
4

outstanding judgments against either Sardo or Sardo Properties.5 Unbeknownst to 

the Hubers, a judgment had been entered against Sardo Properties on July 18, 2014, 

in the amount of $295,584.27.6 

4. On November 10, 2014, building permits were issued, and work began

for a contract completion date of August 7, 2015.7 Chiselcreek or Sardo Properties 

enlisted the services of Plaintiff Keating & Sons, Inc. (Plaintiff), as well as other

subcontractors.8 The work was not completed as planned.

9

 Chiselcreek abandoned 

the project in November 2015

10 and ordered its subcontractors, including Plaintiff to 

cease work—uncompensated for the work performed.11 The Hubers attempted to 

enter into agreements with the subcontractors to finish the construction but contend 

that Defendants prevented them from doing so. 

5. When Defendants abandoned the project in November 2015, the 

Hubers and Fulton Bank had already paid Defendants a sum of $741,254.00 under 

the contract.12 Coincidentally, the Sardo Properties judgment was satisfied by 

February 4, 2016. However, the subcontractors were not paid and they filed liens 

 

5 D.I. 44, ¶ 12.

6

Id. ¶ 10.

7

Id. ¶ 20.

8

Id. ¶ 19.

9

Id. ¶ 21.

10 Id.

11 Id. ¶ 33.

12 Id. ¶ 23.
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against the Hubers’ property.13 This caused the Hubers to default on the mortgage 

they owed to Fulton Bank.14 In addition, Plaintiff filed this civil action against the 

Hubers. 

6. To add insult to injury, in 2016, the Hubers learned that the work 

performed by Defendants was defective.

15

 Among those defects were plumbing 

issues, failure to install insulation for the HVAC unit as was required by the contract, 

the exhaust from the fan in the kitchen directed the exhaust into the basement, and 

the electrical, soil erosion, and control work did not pass inspection.16 As a result, 

the Hubers were unable to obtain a certificate of occupancy (CO).

17

 They claim they 

incurred additional costs to obtain a CO and complete the construction of their house 

as intended under the contract. 

Relevant Procedural Background

7. As stated, on May 17, 2017, Plaintiff filed its suit against the Hubers 

and Chiselcreek. Chiselcreek filed its Answer and Cross-Claimed the Hubers. The 

Hubers also filed their Answer to Plaintiff’s Complaint and Chiselcreek’s Cross-

 

13 Id. ¶¶ 33-34.

14 Id. ¶ 34.

15 Id. ¶ 41.

16 Id.

17 Id. ¶ 42.
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Claim. In their Answer, the Hubers asserted Counterclaims against Chiselcreek and 

filed a Third Party Complaint against Sardo Properties and Sardo.18 

8. On July 20, 2018, Defendants filed a Motion to Dismiss the Original 

Counterclaim seeking dismissal of all claims minus the breach of contract claim.19 

On October 7, 2019, the Court entered an Order granting Defendants’ Motion to 

Dismiss (Order) as unopposed,20 and later allowed the Amended Counterclaim21 to 

proceed.22 

9. The Amended Counterclaim alleges breach of contract against 

Chiselcreek (Count I), Fraudulent Inducement against Defendants (Count II), 

Fraudulent Misrepresentation against Chiselcreek and Sardo (Count III), Negligence 

against Chiselcreek (Count IV), Breaches of Implied Warranty of Workmanship and 

Habitability against Chiselcreek (Count V and VI). Against all Defendants, the 

Hubers allege Tortious Interference (Count VII), Conversion and/or violation of 10 

 

18 The Hubers’ Counterclaims and Third Party Complaint made claims for breach of contract, 

fraudulent inducement, fraudulent misrepresentation, negligence, breach of implied warranty of 

workmanship and habitability, tortious interference, conversion, intentional infliction of emotional 

distress, and loss of consortium (the Original Complaint). 

19 The Honorable John A. Parkins was the assigned judicial officer and scheduled a hearing for 

October 15, 2018. After a series of continuances sought by the parties, and the passing of J. 

Parkins, the matter was assigned to this Court on April 15, 2019. See D.I. 60 for additional 

procedural history.

20 See D.I. 60 for additional procedural history.

21 The Amended Counterclaim replaced the claims for loss of consortium and intentional 

infliction of emotional distress with claims under the Pennsylvania Unfair Trade Practices and 

Consumer Protection Law (UTPCPL) and the Delaware Consumer Fraud Act.

22 See R. Keating & Sons, Inc. v. Huber, 2020 WL 975435 (Del. Super. Feb. 27, 

2020)(ORDER)(clarifying that although the Original Counterclaim was dismissed, the Hubers 

could pursue their claims under the Amended Counterclaim).
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Del. C. § 3501 et seq. (Count VIII), and violations under the Pennsylvania Unfair 

Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. § 201 et seq. 

(Count IX), and the Delaware Consumer Fraud Act under 6 Del. C. § 2513 et seq. 

(Count X). Through these various legal theories, they seek to hold Defendants liable 

for damages of over $250,000 to include legal fees.

10. On March 10, 2020, Counterclaim Defendants filed this Motion to 

Dismiss.23 The Hubers filed a Response in Opposition24 with oral arguments heard 

on June 17, 2020. The Court reserved its decision on the matter and requested 

supplemental briefing on the issue. On July 10, 2020, supplemental briefing 

concluded. The matter is ripe for review.

Contentions of the Parties

11. Maintaining that this is a straight-forward breach of contract claim, 

Defendants argue the remaining claims should be dismissed as duplicative of the 

breach of contract claim, redundant, barred by the economic loss doctrine, and/or 

fail to state a claim.25 They assert that the Hubers’ fraud claims fail to satisfy the 

particularity requirements of Superior Court Civil Rule 9(b),26 or are barred by the 

Statute of Limitations.27 Finally, Defendants argue the Hubers fail to allege facts that 

 

23 D.I. 61.

24 Counterclaim Plaintiffs’ Response to Counterclaim Defendants’ Motion to Dismiss, D.I. 63 

[hereinafter D.I. 63].

25 D.I. 61 at 3.

26 Id. at 5.

27 Id.
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satisfy the requirements of personal jurisdiction over Sardo,28 or to state a claim that 

Sardo acted outside the scope of his employment.29 

12. Defendants concede that the economic loss doctrine does not bar the 

Hubers’ negligence claim under 6 Del. C. § 3652.30 Accordingly, they acknowledge 

that the negligence claim is not duplicative of the Hubers’ breach of contract claim.31 

Therefore, the Court does not consider dismissal of the breach of contract (Count I) 

or negligence (Count IV) claims. 

13. The Hubers argue that in Delaware and Pennsylvania, the economic 

loss doctrine does not bar claims for fraudulent inducement of contract,32 fraudulent 

misrepresentation,33 tortious contract interference,34 negligent misrepresentation,35

or implied warranties of workmanship and habitability.36 They also suggest that the 

doctrine does not bar conversion claims in Delaware,

37

 is inapplicable to private 

actions under the Pennsylvania UTPCPL, and that the same rule should apply to the 

Delaware Consumer Fraud Act.38 Moreover, the homeowners argue that their claims 

 

28 Id. at 6.

29 Id.

30 Defendants’ Letter dated June 30, 2020, D.I. 67 [hereinafter D.I. 67].

31 Id.

32 D.I. 63 at 2. 

33 Id. at 3.

34 Id. at 4.

35 Id. at 3.

36 Id. at 4-5.

37 Id. at 4.

38 Id. at 1-2.
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are not statutorily barred,

39 and that the Court has personal jurisdiction over Sardo.40

 

In the alternative, they request jurisdictional discovery.41

Standard of Review

14. On a Motion to Dismiss for failure to state a claim under Superior Court 

Civil Rule 12(b)(6), all well-pleaded allegations in the complaint must be accepted 

as true.42 Even vague allegations are considered well plead if they give the opposing 

party notice of a claim.43 The Court must draw all reasonable inferences in favor of 

the non-moving party.44 However, it will not “accept conclusory allegations 

unsupported by specific facts,” nor will it “draw unreasonable inferences in favor of 

the non-moving party.”45 The Court will grant the motion to dismiss “only if it 

appears with reasonable certainty that the plaintiff could not prove any set of facts 

that would entitle [the plaintiff] to relief.”46

 

39 Id. at 5-6.

40 Id. at 6.

41 Id.

42 Spence v. Funk, 396 A.2d 967, 968 (Del. 1978). 

43 In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006) (quoting Savor, 

Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002)).

44 Id.

45 Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162, 166 (Del. 2011) (citation omitted).

46 Sliney v. New Castle Cty., 2019 WL 7163356, at *1 (Del. Super. Dec. 23, 2019).
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Discussion

A. The Fraud Claims (Inducement and Misrepresentation)

I. The Fraud claims are not duplicative

15. To be clear, the breach of contract claim against Chiselcreek focuses on 

its failure to complete construction of the house, missing delivery dates, not 

constructing to the specification of drawings and not obtaining the documentation 

necessary to obtain a CO.47 

16. The allegations of fraud, on the other hand, are not only against 

Chiselcreek but rather all three Defendants and involve a different set of facts. These 

claims focus on false statements memorialized in the Builder Information Sheet that 

allegedly led the Hubers to enter into the contract. It is alleged that Defendants, 

individually or combined, further falsely represented that payments made by the 

Hubers would be applied to construct their house, and were used instead to satisfy 

Defendants’ unrelated debts.

17. Defendants’ reliance on Khushaim v. Tullow Inc.48 is misplaced. The 

Khushaim Court determined that plaintiff’s claims were barred by the economic loss 

doctrine because plaintiff failed to claim a duty independent of the duties imposed 

 

47 D.I. 44, ¶ 56.

48 Khushaim v. Tullow Inc., 2016 WL 3594752 (Del. Super. June 27, 2006).
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by the contract.49 Further, the economic loss doctrine does not always bar fraud 

claims, even where purely economic losses are asserted.50 A plaintiff must allege 

the defendant’s breach of duty independent from the contract in order to assert both 

contract and tort claims in an action.51 

18. Here, as to the fraudulent inducement claim, it is neither redundant nor 

barred by the economic loss doctrine. Claiming Defendants breached the duty 

independent of the duties imposed by the contract in their counterclaims, i.e, that 

Defendants had a duty to be truthful in the Builder Information Sheet,

52 these 

allegations directly relate to the inducement of the contract, instead of the 

performance of the contract, and thus establish an independent tort claim.53 

Pennsylvania has similarly held that the economic loss doctrine may not be applied 

to fraudulent inducement claims.54 Therefore, dismissal is not appropriate.

 

49 Id. at *4-5, 7-8 (applying the economic loss doctrine for negligence and conversion). Though 

“[t]he economic loss doctrine was adopted to prohibit a plaintiff from bringing a tort claim where 

overlapping claim based in contract adequately address the injury alleged,” the Court made clear 

that “a tort and contract claim might co-exist if the defendant breached a duty that is independent

of the duties imporsed by the contract. Id. at *4 (internal quotations omitted) (emphasis in 

original).

50 See Brasby v. Morris, 2007 WL 949485, at *6-7 (Del. Super. Mar. 29, 2007); see also Kuhn 

Constr. Co. v. Ocean & Coastal Consultants, Inc., 844 F. Supp. 2d 519, 529 (D. Del. 2012); Cavi 

v. Evolving Sys., Inc., 2017 WL 658470, at *7 (D. Del. Feb. 17, 2017).

51 Brasby, 2007 WL 949485, at *7; McKenna v. Terminex Int’l Co., 2006 WL 1229674, at *2

(Del. Super. Mar. 13, 2006).

52 See D.I. 44, ¶¶ 60-62.

53 Id.

54 See Price v. Freeze & Fizz Inc., 11 Pa. D. & C.5th 486, 492 (Pa. Com.Pl. 2009).
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19. On the fraudulent misrepresentation claim, the Court reaches the same 

conclusion and remains unpersuaded by the Khushaim decision. There, the Court 

found against the plaintiff where “the [c]omplaint support[ed] its fraud claim with 

nothing more than [the defendant]’s alleged intention not to follow through with its 

contractual obligations under the [contract].”55 “Merely stating that [the defendant] 

never intended to comply with the [contract] when the parties entered into it does 

not satisfy fraud’s pleading requirement.”56 Noting that the alleged damages for the 

fraud claim were identical to the breach of contract claim,57 the Khushaim Court 

dismissed the fraud claim.58 Again, this case is distinguishable.

20. Notably, the Hubers allege fraudulent misrepresentation against all

three Defendants. They do not allege breach of contract claims against Sardo or 

Sardo Properties. Therefore, any alleged damages for the fraud claim, if identical, 

would only apply to Chiselcreek since the breach of contract claim is only against 

this entity. Perhaps with further discovery, the economic loss doctrine will bar a 

fraudulent misrepresentation claim against Chiselcreek. However, the Court must 

draw all reasonable inferences in favor of the non-moving party. The Hubers allege

that Chiselcreek and Sardo Properties operated and provided invoices to the Hubers 

 

55 Khushaim v. Tullow Inc., 2016 WL 3594752, at *6 (Del. Super. June 27, 2006).

56 Id. 

57 Id.

58 Id. at *7.
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under the name Chisel Creek Construction Company. At this juncture, it is unclear 

what role Sardo or Sardo Properties played in the alleged misrepresentations, 

independent or in conjunction with Chiselcreek. 

21. In sum, the fraud claims are not barred by the economic loss doctrine 

because the inducement claims are independent from the breach of contract claims 

under either Delaware or Pennsylvania law, and no claims for breach of contract 

exist to trigger the doctrine for the misrepresentation claims as to Sardo or Sardo 

Properties. Therefore, dismissal is not appropriate. Defendants may seek to move 

for summary judgment after discovery has provided more information as to 

Defendants. 

II. The Fraud claims are stated with particularity.

22. Under Superior Court Civil Rule 9(b), claims of fraud must “be stated 

with particularity.”59 The claim must also “detail the ‘time, place and content’ of 

the alleged misconduct and the identity of the alleged bad actor.”60 The Hubers 

allege that Defendants knew that the Hubers would only agree to contract with

 

59 DEL. SUPER. CT. CIV. R. 9(b).

60 Khushaim, 2016 WL 3594752, at *5 (quoting Universal Capital Mgmt. v. Micco World, Inc., 

2012 WL 1413598, at *4 (Del. Super. Feb. 1, 2012)). Noting, a plaintiff should plead facts showing 

an inference that:

(1) [the defendant] falsely represented or omitted facts that it had a duty to disclose; (2) 

[the defendant] knew or believed that the representation was false or made the 

representation with a reckless indifference to the truth; (3) [the defendant] intended to 

induce [the plaintiff] to act or refrain from acting; (4) [the plaintiff] acted in justifiable 

reliance on the representation; and (5) [the plaintiff] was injured by his reliance.
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Chiselcreek if the Builder Information Sheet submitted satisfied the lender.61 The 

Hubers allege Defendants had a duty to provide true facts in a Builder Information 

Sheet;

62 they knowingly or recklessly put false representations in the sheet in 

September of 2014 to induce the Hubers into entering into the contract on October 

2, 2014;

63 they justifiably relied on the representation; and were injured by the 

reliance.64 This Court finds the claim is particular under Rule 9(b) demonstrating 

details of time, place, and content of the alleged wrongful act.65 Dismissal is not 

appropriate. 

III. The Fraud claims are not barred by the Statute of Limitations

23. Defendants contend that the fraudulent inducement claim is barred by 

the statute of limitations66 under 10 Del. C. § 8106. Accordingly, under 10 Del. C.

§ 8106, the statute of limitations for fraud is three years, and it begins to run when a 

plaintiff’s claim accrues, which occurs at the moment of the wrongful act.67 

24. Though the statute may be tolled, it is plaintiff’s burden to plead facts 

to establish a basis to do so.

68

 The statute of limitations can only be tolled until the 

 

61 D.I. 44, ¶ 60.

62 See id. ¶¶ 60-62.

63 Id. ¶¶ 12, 14.

64 Id. ¶ 63.

65 Id. ¶¶ 61-63.

66 D.I. 61, at 5.

67Van Lake v. Sorin CRM USA, Inc., 2013 WL 1087583, at *6 (Del. Super. Feb. 15, 2013); see 

also 10 Del. C. § 8106(a).

68 Van Lake, 2013 WL 1087583, at *7.
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plaintiff “discovers the facts constituting a basis for the cause of action, or knows 

facts sufficient ‘to put a person of ordinary intelligence . . . on inquiry, which, if 

pursued, would lead to the discovery of such facts.’”69 “Inquiry notice does not 

require a plaintiff to have actual knowledge of a wrong, but simply an objective 

awareness of the facts giving rise to the wrong.”70 The Court must see if there were 

any “red flags that clearly and unmistakably would have led a prudent person of 

ordinary intelligence to inquire and if pursued, would have led to discovery of the 

elements of the claim being asserted.”71

25. It is true that if the alleged fraudulent inducement occurred on 

September 2, 2014, and the Hubers filed their original complaint on June 12, 2018, 

they are outside of the three-year statutory timeframe after the alleged wrongful act 

occurred.72 The Hubers made payments of over $740,000 in 2015. Yet, it was not 

until 2016 that the Hubers learned that Defendants had not paid the subcontractors 

despite having received all disbursements for the work completed.73 This appears to 

be the first “red flag.” Following this information, they obtained the Builder 

Information Sheet from Fulton Bank in October of 2017 and discovered that Sardo’s 

 

69 Id. (quoting Russum v. Russum, 2011 WL 4731120, at *2 (Del. Super. Sept. 28, 2011)).

70 Id. (quoting E.I. duPont de Nemours and Co. v. Medtronic Vascular, Inc., 2013 WL 261415, at 

*11 (Del. Super. Jan. 18, 2013)).

71 Id. (quoting Coleman v. Price Waterhouse Coopers LLC, 854 A.2d 838, 842 (Del. 2004)) 

(internal quotations omitted).

72 D.I. 61, at 5.

73 D.I. 44, ¶ 33.
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statements were false.74 Accepting they were first placed on notice in 2016, the 

Hubers timely filed their claims. Dismissal on this basis is not appropriate.

B. The Breach of Implied Warranty Claims (Workmanship and 

Habitability)

26. No authority is provided to support Defendants’ request for dismissal 

of the implied warranty claims based solely because it is duplicative of a breach of 

contract claim.75 Moreover, the Hubers claim that Delaware and Pennsylvania 

courts require construction contractual privity between the parties for a plaintiff to 

claim implied warranties.76 

27. At this juncture, the Court accepts the reasoning in Ellixson v. O’shea

against dismissal.77 There, the Court of Common Pleas ruled in favor of plaintiffs 

finding that the defendants breached the sales contract, the implied warranty of good 

quality and workmanship, and the express warranty contained in the contract.78 

Following Malinak v. Kramer, the court noted there must exist a builder-customer 

contractual relationship between the parties for an implied warranty to bind.79 And 

in Pennsylvania, the Supreme Court in Conway v. Cutler Group, Inc. established the 

requirement of a builder-customer contractual relationship between parties to permit 

 

74 Id. ¶¶ 13, 64.

75 Counterclaim Plaintiffs’ Letter dated July 20, 2020, D.I. 71, at 2.

76 Id. at 3.

77 See Ellixson v. O’Shea, 2003 WL 22931339, at *1 (Del. Com. Pl. Nov. 20, 2003).

78 Id. at *4.

79 Malinak v. Kramer, 2012 WL 174958, at *2 (Del. Com. Pl. Jan 5, 2012).
17

a breach of an implied warranty claim action.80 Thus, where in both Delaware and 

Pennsylvania, implied warranty arises by operation of law, not by a contract,81

dismissal of the implied warranty claims is not appropriate.

C. The Tortious Interference Claim

28. In Delaware, tortious interference with contractual relations is an 

exception to the economic loss doctrine.82 If the claimed duty is independent from 

the duties imposed by the contract, the tortious interference claim should survive. In 

Pennsylvania, the economic loss doctrine will not bar a claim for tortious 

interference if the interference was intentional.83

29. Here, after Chiselcreek told the Hubers that it would not complete the 

construction work, the homeowners attempted to enter into a contract with the 

subcontractors.84 If the Hubers can establish that Defendants took actions to prevent 

the subcontractors from agreeing to complete the construction work and suffered 

damages as a result, these claims would be independent of the contract. 

30. In other words, if a duty existed for Defendants not interfere with the 

possible contract between the subcontractor and the Hubers, it did not arise from any 

 

80 Conway v. Cutler Group, Inc., 99 A.3d 67, 69 (Pa. 2014).

81 Marcucilli v. Boardwalk Builders, Inc., 2002 WL 1038818, at *4 (Del. Super. May 16, 2002); 

Tyus v. Resta, 476 A.2d 427 (Pa. Super. 1984).

82 Commonwealth Constr. Co. v. Endecon, Inc., 2009 WL 609426, at *5 (Del. Super. Mar. 9, 

2009).

83 Paola Amico v. Radius Commc’n, 2001 WL 1807924, at *3 (Pa. Com. Pl. Jan. 9, 2001).

84 D.I. 44, ¶ 97.
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duty owed under the contract. This alleged duty is independent and not barred by 

the economic loss doctrine. Of course, if Pennsylvania law applies, the economic 

loss doctrine does not bar intentional tortious interference, as alleged in the 

Amended Complaint. Dismissal of the tortious interference claim under Rule 

12(b)(6) is inappropriate.

D. The Conversion Claim

31. To plead conversion, a plaintiff must show “any distinct act of 

dominion wrongfully exerted over the property of another, in denial of a plaintiff’s 

right, or inconsistent with it.”85 

32. Here, the Hubers claim that the conversion is based on the rights from 

a statute, specifically 6 Del. C. § 3501 et. seq.

86

 Specifically, the Hubers point to §§

3502 and 3503 of the statute.87 Section 3502 states that all funds received by a 

contractor for the construction of a building are “trust funds in the hands of the 

contractor.”88 Section 3503 states that a contractor who receives funds under § 3502 

must first be used to pay “the full amount of all moneys due and owing by the 

 

85 Khushaim v. Tullow, Inc., 2016 WL 3594752, at *7 (Del. Super. June 27, 2016) (quoting Data 

Mgmt. Internationale, Inc. v. Saraga, 2007 WL 2142848, at *3 (Del. Super. July 25, 2007))

(internal quotations omitted). 

86 Counterclaim Plaintiffs’ Letter dated July 2, 2020, D.I. 68, at 3-4.

87 Id.

88 6 Del. C. § 3502.
19

contractor to all persons . . . furnishing labor or material” for the construction of any 

building.89 

33. The Hubers allege Defendants committed a statutory violation when 

they used funds from the Hubers and Fulton Bank to pay unrelated debts instead of 

the subcontractors.

90

 The claim for conversion arises from an independent duty other 

than the duty under the contract where Defendants allegedly divested or 

misappropriated funds held in trust in violation of the statutory provisions under 6 

Del. C. § 3501 et. seq. Therefore, the conversion claim survives. 

E. The UTPCPL Claim

34. The Pennsylvania UTPCPL prohibits “[m]aking repairs, 

improvements, replacements on . . . real or personal property, of a nature or quality 

inferior to or below the standard of that agreed to in writing[,]”91 and “[e]ngaging in 

any other fraudulent or deceptive conduct which creates a likelihood of confusion or 

of misunderstanding.”92 

35. The claims are that Defendants’ plumbing, HVAC equipment, exhaust 

for the fan, and certain control work were inferior to the standard agreed to in 

writing.93 The Hubers also claim that Defendants engaged in fraudulent 

 

89 Id. § 3503.

90 D.I. 44, ¶¶ 109-113.

91 73 PA. STAT. ANN. § 201-2(4)(xvi) (West).

92 Id. § 201-2(4)(xxi).

93 D.I. 44, ¶ 123.
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misrepresentations on the Builder Information Sheet, which created “a likelihood of 

misunderstanding that the Defendants were in compliance with the requirement for 

the lender to make disbursements.”94 Further, that these misrepresentations created 

“a likelihood that the Hubers would believe that their house would qualify for a 

[certificate of occupancy].”95 Lastly, Defendants allegedly falsely represented how 

they would use the funds, misusing them to pay debts not relevant to the contract.96 

Any argument that these claims are barred by the economic loss doctrine is 

unpersuasive for the reasons previously stated. 

36. Further, in Toth v. Northwest Savings Bank, the Pennsylvania Court of 

Common Pleas held that the economic loss doctrine does not apply to private action 

under the Pennsylvania UTPCPL.97 The court explained that while the economic 

loss doctrine is case law, the UTPCPL contains the Legislature’s will.98 Unless 

legislation violates the Constitution, Court-created law may not interfere with 

legislation.99 The Toth court acknowledged that the clear language of the law 

“provide[d] for any victims of consumer fraud to recover, not only actual damage, 

but also punitive damages and counsel fees.”100

 

94 Id. ¶ 124.

95 Id. ¶ 125.

96 Id. ¶ 126.

97 Toth v. Northwest Sav. Bank, 2013 WL 8538695, at *3-4 (Pa. Com. Pl. Mar. 1, 2013).

98 Id. at *4.

99 Id. 

100 Id. at *3.
21

37. The Hubers have made out a viable claim under the Pennsylvania 

UTPCPL. As noted in Toth, the economic loss doctrine does not bar a claim under 

the Pennsylvania UTPCPL. This claim survives. 

F. The Delaware Consumer Fraud Act Claim

38. For the same reasons above, this Court will not dismiss the claim 

alleging violations of Delaware Consumer Fraud Act. The Act states that:

“[t]he act, use or employment by any person of any deception, 

fraud, false pretense, false promise, misrepresentation, or the 

concealment, suppression, or omission of any material fact with 

intent that others rely upon such concealment, suppression or 

omission, in connection with the sale, lease or advertisement of 

any merchandise, whether or not any person has in fact been 

misled, deceived or damaged thereby, is an unlawful practice.”101

39. Defendant offers no Delaware authority to support their argument for 

dismissal. The Court in Bromwich v. Handy noted that “[t]he Consumer Fraud Act 

parallels common law fraud but does not require proof of (1) intent to make a 

deceptive or untrue statement, (2) actual reliance by the plaintiff, or (3) intent to 

induce reliance.”102 Since the fraudulent inducement claim is not barred by the 

economic loss doctrine, and where the Consumer Fraud Act is parallel to common 

law but with less proof requirements, the same result is reached here. This Court 

agrees with the reasoning of the Toth court. Like the UTPCPL, the Delaware 

 

101 6 Del. C. § 2513.

102 Bromwich v. Hanby, 2010 WL 8250796, at *7 (Del. Super. July 1, 2010) (citing Pack & 

Process, Inc. v. Celotex Corp., 503 A.2d 646, 658 (Del.Super.1985)).
22

Consumer Fraud Act is a legislative creation whereas the economic loss doctrine is 

judicially created.

103

 Absent a constitutional violation, and in the absence of any 

authority, the Court will not apply a judicially created doctrine over legislation.

104

 

This claim also survives. 

G. Personal Jurisdiction over Sardo

40. Finally, the Court turns to the individual claims against Sardo. The 

principal place of business for both Chiselcreek and Sardo Properties is Delaware. 

Sardo is the president and the managing member of those entities, respectively. 

Defendants assert that the Amended Complaint fails to allege facts that satisfy the 

requirements of personal jurisdiction over Sardo that requires dismissal under Rule 

12(b)(2).105 Specifically, that being a president or a managing member of a 

Delaware entity, without more, does not provide a basis for jurisdiction under 

Delaware’s long-arm statute.106 

41. When determining whether to dismiss an action for lack of personal 

jurisdiction under Superior Court Civil Rule 12(b)(2), the Court performs a twoprong analysis.107 The Court first considers “whether Delaware’s long-arm statute 

 

103 See Brasby v. Morris, 2007 WL 949485, at *6 (Del. Super. Mar. 29, 2007) (stating that the 

economic loss doctrine is judicially created).

104 See Schoon v. Smith, 953 A.2d 196, 205 (Del. 2008) (implying that judicially created law may 

not overrule a statute).

105 See D.I. 61, at 5-6.

106 Id. at 6.

107 Sparebank 1 SR-Bank ASA v. Wilhelm Maass GMBH, 2019 WL 6033950, at *2 (Del. Super. 

Nov. 5, 2019).
23

is applicable, recognizing that 10 Del. C. § 3104(c) is to be broadly construed to 

confer jurisdiction to the maximum extent possible under the Due Process 

Clause.”108 The Court then must “evaluate whether subjecting the nonresident 

defendant to jurisdiction in Delaware violates the Due Process Clause of the 

Fourteenth Amendment (the so-called ‘minimum contacts’ requirement).”109 The 

burden of showing a basis for a trial court’s personal jurisdiction over a nonresident 

defendant rests with a plaintiff.110 Where the defendant does not have minimum 

contacts with Delaware, the Court may only assert personal jurisdiction if the State’s 

implied consent statute allows.111 The Hubers assert implied consent confers 

jurisdiction over Sardo. This Court agrees. 

42. Defendants cite to Harstel v. Vanguard Group., Inc., where the Court 

of Chancery granted dismissal of individual defendants112 and noted “[t]he mere fact 

that [the individual defendants] are employed by a Delaware entity does not, without 

more, provide a basis for jurisdiction under § 3104(c)(3).”113 However, this case is 

 

108 Hercules Inc. v. Leu Tr. and Banking (Bahamas) Ltd., 611 A.2d 476, 480 (Del. 1992) (citation 

omitted).

109 AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., 871 A.2d 428, 438 (Del. 2005).

110 Id. at 437.

111 Assist Stock Mgmt. LLC, v. Roshem, 753 A.29 974, 978 (Del. Ch. 2000).

112 Hartsel v. Vanguard Grp., Inc., 2011 WL 2421003, at *28 (Del. Ch. June 15, 2011), aff'd, 38 

A.3d 1254 (Del. 2012).

113 Id., at *14 n.85; 10 Del. C. § 3104. 10 Del. C. § 3104 is Delaware’s long-arm statute. In 

subsection (c)(3), it is written that “(c) As to a cause of action brought by any person arising 

from any of the acts enumerated in this section, a court may exercise personal jurisdiction over 

any nonresident, or a personal representative, who in person or through an agent: . . . (3) Causes 

tortious injury in the State by an act or omission in this State[.]”
24

in line with Assist Stock Management L.L.C. v. Rosheim,

114 where the Court of 

Chancery denied dismissal for lack of personal jurisdiction. There, both parties 

agreed that the manager defendant had no contact with Delaware other than his 

involvement as founder and manager of the Delaware limited liability company.115

Under the “implied consent” statute, 6 Del. C. § 18-109, Delaware courts had 

jurisdiction over the manager defendant in an action properly alleging a breach of 

fiduciary duty in his managerial capacity.116 

43. The “implied consent” statute reads: 

A manager . . . of a limited liability company may be served with process . . . 

in all civil actions or proceedings brought in the State of Delaware involving 

or relating to the business of the limited liability company or a violation by 

the manager . . . of a duty to the limited liability company. . . .117

44. Here, the Hubers allege that Chiselcreek entered into the contract with 

the Hubers through Sardo. He is the common denominator and at the center of the 

agreement in dispute. As president of Chiselcreek and a managing member of Sardo 

Properties,118 he played an instrumental role. Under both LLC’s, he represented that 

Sardo Properties had no outstanding judgments against it or himself, as its principal 

owner.119

 

114 Assist Stock Mgmt, L.L.C., 753 A.2d at 983.

115 Id. at 978.

116 Id. at 981.

117 Id. at 978 (citing 6 Del. C. § 18-109).

118 D.I. 44, ¶ 5.

119 See id. ¶¶ 60-63.
25

45. Delaware has a strong interest in providing a forum for disputes relating 

to the managers of Delaware LLCs. The instant civil suit is related to the business 

of the limited liability company under the provisions of 6 Del. C. § 18-109. In his 

capacity of the Delaware LLCs, he impliedly consented to being sued in a Delaware 

court regarding the companies’ civil suits when he personally engaged in the 

wrongful conduct as alleged by the Hubers.120 Thus, Delaware courts have personal 

jurisdiction over Sardo. Dismissal on jurisdictional grounds is denied.

H. The Sardo Claims

46. Defendants lastly move under Rule 12(b)(6) for failure to state a claim 

against Sardo in his individual capacity because the Amended Complaint fails to 

show that he acted outside the scope of his employment.121 

47. The Restatement (Third) of Agency § 7.01, followed by our courts,122

states that “[u]nless an applicable statute provides otherwise, an actor remains 

subject to liability although the actor acts as an agent or an employee, with actual or 

 

120 Defendants cited to Amaysing Techs. Corp. v. Cyberair Comm’ns, Inc., 2005 WL 578972, 

(Del. Ch. Mar. 3, 2005) arguing that the implied consent statute would not apply. There, the 

court reasoned that the third-party defendant, a corporate officer, in that case had signed two 

previous agreements, but had not signed the agreement in dispute where the third-party plaintiff 

alleged the fraudulent misrepresentation. The court found that because the third-party defendant 

was not involved with the actual agreement in dispute, the nexus between him and the alleged 

fraudulent misrepresentation was “tenuous at best.” The Court finds Defendants case is 

distinguishable.

121 D.I. 61, at 5-6.

122 See Hughes v. Imperial Home Remodeling LLC, 2018 WL 2264413, at *1 (Del. Super. May 

17, 2018).
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apparent authority, or within the scope of employment.”123 Thus, while a limited 

liability company’s corporate veil may shield a managing member or officer from 

individual liability for damages caused by the company, it will not shield the 

managing member “from his own torts, whether committed in his individual capacity 

or as an agent for his . . . company.”124

48. The claims against Sardo may go beyond his role as president of 

Chiselcreek and a managing member of Sardo Properties. They allege individual 

liability for his conduct: that he fraudulently misrepresented that neither he nor 

Sardo Properties had outstanding judgments against them;125 that he, along with both 

limited liability companies, kept the subcontractors from agreeing to the possible 

contract between the Hubers and the subcontractors;126 and diverted payments 

received from the Hubers and/or the lender.127 Therefore, the Hubers have made out 

a viable claim against Mr. Sardo, whether he was acting as an agent or in an 

individual capacity. For the reasons stated above, dismissal is also not appropriate.

 

123 RESTATEMENT (THIRD) OF AGENCY § 7.01 (AM. LAW INST. 2006).

124 Hughes, 2018 WL 2264413, at *1; see, e.g., State ex rel. Brady v. Preferred Florist Network, 

Inc., 791 A.2d 8, 21-22 (Del. Ch. 2001) (finding defendant was not shielded from liability 

“simply because he was acting in a corporate capacity” when engaged in alleged deceptive 

business practices).

125 See D.I. 44, ¶¶ 60-63.

126 See id. ¶¶ 97-102.

127 See id. ¶¶ 110-114.
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Conclusion

For all of the foregoing reasons, Counterclaim Defendants’ Motion to Dismiss 

is DENIED.

/s/ Vivian L. Medinilla 

Judge Vivian L. Medinilla