Court Opinion

ID: 3217300
Source: CourtListenerOpinion
Date Created: 2016-06-27 19:07:31.052733+00
Date Added: 2024-06-11T14:04:27.582150
License: Public Domain

1N THE SvPERIQR CQURT 0F THE STATE 0F DELAWARE
HASAN I@?HUSHAIM,
Plaintiff,

v. C.A. No. NISC-ll-ZIZ-PRW
TULLOW INC. d/b/a
APPOSTROPHIC,
APPOSTROPHIC LLC,
OUTREACH GLOBAL, LTD.,
and NATHAN GIBSON,

é\J\»/€€€&\/€€€SS

Defendants.

Submitted: June 15, 2016
Decided: June 27, 2016

MEMORANDUM OPINION AND ORDER

Upon Defendant, Tullow, Inc. ’s, Motion to Dz`smiss Plaintijj"s Complaint,
DENIED in part, and GRANTED, in part.

G0rd0n J. Zuiderweg, Esquire, (pro hac vice), Law Offlces of Barry K. Rothman,
L0s Angeles, California, Nicholas G. Kondraschow, Esquire, (Argued), Rh0dunda
& Williams, Wilmington, Delaware, Attorney for Plaintiff.

Todd A. Hollernan, Esquire, R0bert E. Murkowski, Esquire, Miller, Canfleld,

Padd0ck and Stone, PLC, Detroit, Michigan, J0hn A. Sensing, Esquire, (Argued),
Potter Anders0n & Corroon LLP, Attorneys for Defendant, Tu110w Inc.

WALLACE, J.

I. INTRODUCTION

Before the Court is Defendant Tullow, Inc.’s d/b/a Appostrophic ("Tullow")
motion to dismiss Counts I-V and VII-X of Plaintiff’s, Hasan Khushaim
("Khushaim"), Complaint.' In January 2013, Khushaim hired TulloW to design
and build a mobile application. TulloW was to be paid in four installments totaling
$75,000. The parties memorialized the terms of their agreement in a "Project
Development Contract," dated January 29, 2013. Khushaim now alleges multiple
contract, tort, and fraud claims against Tullow based on their failure to deliver a
completed version of the mobile application and their failure to return Khushaim’s
original softWare, as required under the PDC.

TulloW maintains that Khushaim’s sole claim centers on breach of contract,
such that all other claims should be dismissed under Superior Court Civil Rule
l2(b)(6). Additionally, Tullow argues that, even if Tullow is found in breach of
contract, the terms of the PDC expressly limit Khushaim’s recovery to specific
perforrnance. Thus, Tullow moves to dismiss the breach of contract claim to the
extent that it seeks monetary damages.

For the reasons set forth beloW, Tullow’s Motion is DENIED as to Count l

(breach of contract), and is GRANTED as to Count ll (breach of the implied

Tullow is not the named Defendant in Count VI of Khushaim’s Complaint. See Compl_,
1111 62-72.

l

short, where the contract specifically addresses the alleged misconduct, its terms
will be applied and an implied covenant claim will not stand.36

Here, the PDC specifically addresses Khushaim’s claims regarding Tullow’s
alleged failure to complete the development and delivery of the mobile application.
Section l of the PDC, titled "Duties and Responsibilities," expressly outlines the
specific requirements that Tullow must satisfy to avoid breaching the contract.
Tullow "shall design, develop, and implement applications" and return the
software to Khushaim.” Khushaim merely realleges his breach of contract claim
as an implied breach of covenant. 38 Because this latter claim relies completely on
rights and obligations provided in the PDC, it must be dismissed. Tullow’s motion
is GRANTED as to COUNT II, which alleges breach of the implied covenant of
good faith and fair dealing.

C. NEGLIGENCE (CoUNT IV)

Khushaim also alleges a claim for negligence, specifically that Tullow
breached their "duty to provide full and accurate information" regarding the

development and delivery of the mobile application by "providing Khushaim with

36 Dunlap, 878 A.2d at 441 ("one generally cannot base a claim for breach of the implied

covenant on conduct authorized by the tenns of the agreement.").

37 Def.’s Mot. to Dismiss EX. 1 at 11 l. See also z`a'. at 1 10(C) (agreeing to return Software in
the event of default).

38 Compare language in breach of contract claim, Compl. 1[ 25, with nearly identical

language in breach of implied covenant claim, z`a’. 11 32.

_11_

1339

false, inadequate, inaccurate, and misleading information. The economic loss

doctrine bars this claim.

The economic loss doctrine was adopted to prohibit a plaintiff from bringing
a tort claim "where overlapping claims based in contract adequately address the
injury alleged.""o "The driving principle for the rule is the notion that contract law

)4]

provides a better and more specific remedy than tort law.’ Application of the

doctrine is "es eciall suited to cases where rivit of contract" exists between the
P y 19 Y
arties/12 But even where arties are connected in contract, a tort and contract
19 P

claim might co-exist if "the defendant breached a duty that is independent of the

duties imposed by the contract."43

Not so here. Khushaim’s negligence claim is based entirely on the parties’
contractual rights and obligations. Tullow’s alleged "duty to provide information"
is not independent from the PDC itself. Under its terms, Tullow must "report all

findings and make all recommendations directly to" Khushaim.“ Likewise, the

zd. 1111 50_53.-,
"° Bmsby v. Mom's, 2007 WL 949485, *6 (Dei. Super. ct Mar. 29, 2007); M¢Kenna v.

Terminex Int’l Co., 2006 WL 1229674, at *2 (Del. Super. Ct. Mar. l3, 2006) (discussing history
of the doctrine in Delaware).

Brasby, 2007 WL 949485, at *6.
Danforth v. Acorn Structures, Inc., 608 A.2d 1194, 1200 (Del. 1992).
McKenna, 2006 WL 1229674, at *2 (emphasis added).

Def.’s Mot to Dismiss Ex. 1 at 11 l.

_12_

alleged damages stem directly from the breached contract and are solely economic

5 As such, the traditional damages afforded under contract law will

in nature.4
provide a more appropriate remedy than offered under tort law.lé

Khushaim’s negligence claim has alleged neither a duty nor damages
independent from the parties’ contractual obligations. Tullow’s motion is
GRANTED as to COUNT IV, for negligence.

D.FRAUD(CoUNTlH)

In Count III, Kushaim alleges that Tullow made "several false statements
and representations of material fact regarding essential parts of the transaction
including, . . . that they would develop the subject mobile applications, that they
would deliver final versions of the two mobile applications, and that they would
return Kushaim’s copyrighted software designs."47 Tullow urges, first, that these

allegations do not meet Civil Rule 9’s particularity standard, in that the fraud claim

is entirely duplicative of his breach of contract claim/m In the altemative, Tullow

45 See McKenna, 2006 WL 1229674, at *4 ("Economic loss has been defined as any
monetary loss, costs of repair or replacement, loss of employment, loss of business or
employment opportunities, loss of good will, and diminution in value.") (citations omitted).

46 See Brasby, 2007 WL 949485, at *7 (dismissing negligence claims where the "damages

alleged were the foreseeable consequence of the unfulfilled [contract]. . .").
‘" c@mpi. 11 40-.

48 Def.’s Mot. to Dismiss at 7-10.

_13_

argues that the economic loss doctrine bars this claim because the alleged
fraudulent behavior only relates to the performance of the contract.49

To state a claim for common law fraud Khushaim must plead facts
supporting an inference that: (l) Tullow falsely represented or omitted facts that it
had a duty to disclose; (2) Tullow knew or believed that the representation was
false or made the representation with a reckless indifference to the truth;
(3) Tullow intended to induce Khushaim to act or refrain from acting;
(4) Khushaim acted in justifiable reliance on the representation; and (5) Khushaim
was injured by his reliance.50 Under Civil Rule 9(b), claims of fraud must "be
stated with particularity"§ 1 and detail the "time, place and content" of the alleged
misconduct and the identity of the alleged bad actor.52 This heightened standard
applies equally to the pleading for damages alleged to flow from fraud.”

Nothing in Khushaim’s Complaint approaches Rule 9(b)’s particularized

facts standard. He alleges that Tullow "l611 A.2d 467, 472 (Del. 1992),;
Super. Ct. Civ. R. 9(b).

52 Universal Capz'tal Mgmt. v. Micco World, Inc., 2012 WL 1413598, *4 (Del. Super. Ct.
Feb. 1, 2012).

53 see cornell Glasg@w, LLC v. La orange Pmperzzes, LLC, 2012 wL 2106945, ar *8 (Del.

Super. Ct. June 6, 2012) (dismissing fraud claim that failed to allege damages "caused by the
fraud separate and apart from the alleged breach [of contract] damages.").

_14_

"several false statements and representations of material fact regarding" their
performance under the contract. But the Complaint provides scant content for any

of the "several" allegedly false statements.

And what little content Khushaim provides is a simple reprise of the

4 At its core, the

allegations made in Khushaim’s breach of contract claim.§
Complaint supports its fraud claim with nothing more than Tullow’s alleged
intention not to follow through with its contractual obligations under the PDC.55
Merely stating that Tullow never intended to comply with the PDC when the
parties entered into it does not satisfy fraud’s pleading requirement.% While the
Court can interpret statements of future intent to perform as the basis for a fraud

claim, it will do so only if the plaintiff alleges "particularized facts that allow the

Court to infer that, at the time the promise was made, the speaker had no intention

.54 Compare Compl. 1[ 25 (The claim for breach of contract alleges that Tullow breached the

PDC by "failing to complete the development of two mobile applications, failing to deliver final
versions of the two mobile applications to Khushaim and failing to retum Khushaim’s
copyrighted software design.") with id. 11 40 (Khushaim’s fraud claim alleges that Tullow falsely
represented that "they would develop the subject mobile applications, that they would deliver
final versions of the two mobile applications, and that they would retum Khushaim’s copyrighted
software designs."). These are identical allegations

55 1a 1111 40-42.

56 See Narrowstep, Inc. v. Onstream Mea'ia Corp., 2010 WL 5422405, at *15 (Del. Ch. Dec.
22, 2010); Iotex Commc’ns, Inc. v. Defrz`es, 1998 WL 914265, at *4 (Del. Ch. Dec. 21, 1998)
(stating the "general rule of law that one cannot ‘bootstrap’ a claim of breach of contract into a
claim of fraud merely by alleging that a contracting party never intended to perform its
obligations.").

_15_

"57 Khushaim’s pleadings lack any specific factual allegations

of keeping it.
supporting a reasonable inference that Tullow never intended to comply with the
PDC’s terrns. His allegations are vague, conclusory,58 and fail to provide Tullow
with sufficient information concerning the circumstances of the alleged fraud. In
turn, Khushaim fails to satisfy Rule 9(b)’s particularity requirement.$g

Too, the damages alleged lack any particularity and merely repeat the
damages alleged in Khushaim’s breach of contract claim. Under Delaware’s

pleading standard, a plaintiff’ s fraud claim "may not simply ‘rehash’ the damages

allegedly caused by the breach of contract."éo The breach of contract claim pleads,

57 Mzcms¢razegy ma v. Acacza Research Corp., 2010 wL 5550455, ar *15, n. 107 (Del.
Ch. Dec. 30, 20l0) (citing Grunstez`n v. Sz`lva, 2009 WL 4698541, at * 13 (Del. Ch. Dec. 8, 2009)
("Courts, however, will convert an unfulfilled promise of future performance into a fraud claim
if particularized facts are alleged that collectively allow the inference that, at the time the
promise was made, the speaker had no intention of performing.")). See also BAE Sys. N. Am. Inc.
v. Lockheea’ Martin Corp., 2004 WL 1739522, at *8 (Del. Ch. Aug. 3, 2004) (dismissing claim
for fraud because plaintiffs claim was based on the defendant’s failure to disclose its intent not
to perform its obligations under the parties contract).

58 See CSH Theatres, LLC v. Nederlana'er of Scm Francisco Assocs., 2015 WL 1839684, at
*22 (Del. Ch. Apr. 21, 2015) (dismissing fraudulent inducement claim where allegations were
conclusory in nature, describing the misstatements as only "false when made"). See also Compl.
11 41 (describing representations as "false at the time they were made.").

59 To the extent that Khushaim argues that more discovery is necessary to develop his fraud
claim, this Court agrees that "this kind of conclusory allegation in the absence of any
particularized facts is contrary to the limitations of Rule 9(b)." Crescent/Mach 1 Partners, L.P. v.
Turner, 846 A.Zd 963, 988-89 (Del. Ch. 2000) (stating that "no Delaware precedent that permits
a conclusory allegation to proceed on the basis `that later discovery will fill in the purported gaps
if only the pleading is allowed to survive a motion to dismiss.").

60 1TW Gz@b. znvs. ma v. Am. lndus. partners Capz¢az Fund 11/, L_P., 2015 wL 3970908, ar
*5 (Del. Super. Ct. June 24, 2015) (citing cases).

_16_

"[a]s a direct and proximate result of [Tullow’s] breaches, Khushaim has . . . paid
$76,250.00 to Defendants without receiving the final versions of the two mobile
applications; Khushaim lost $27,()00,000.00 in subscription revenue from the two
mobile applications; and [Tullow has] failed to return Khushaim’s copyrighted

361

software designs.’ Khushaim seeks for the alleged breach of contract

"compensatory damages, consequential damages, direct damages, expectation
damages, incidental damages and punitive damages, cost of this action, and

"62 The fraud damages are a copy-and-paste recitation of these

attomey’s fees.
contract damages, replacing only the word "breaches" with the word "fraud."63
Khushaim has merely pled identical damages; he fails to separate the damages
incurred by any alleged fraudulent conduct from those incurred by any alleged

breach of contract under the PDC. His damages pleading is the precise type of

"rehash" that Delaware courts prohibit.64

6‘ carrrpl. 11 27.

62 Id. 11 28_

63 Ia'. 111 46-47 ("As a direct and proximate result of [Tullow’s] fraud, Khushaim has ...paid
$76,250.0() to Defendants without receiving the final versions of the two mobile applications;
Khushaim lost $27,000,000.00 in subscription revenue from the two mobile applications; and
[Tullow has] failed to return Khushaim’s copyrighted software designs...[damages include]
compensatory damages, consequential damages, direct damages, expectation damages, incidental
damages and punitive damages, cost of this action, and attorney’s fees.").

64 Saa, a.g., ITW Gzab_, 2015 wL 3970908, ar *5 (dismissing ¢iairrr far fraud where plaintiff
pleaded materially identical damages) (quoting Cornell, 2012 WL 2106945, at *8 (dismissing
fraud claims where breach of contract claim alleged identical damages)).

_17_

65

Khushaim fails to plead a fraud claim meeting Rule 9(b)’s particularity
standard. Tullow’s motion to dismiss Count III for fraud is GRANTED. And so,
this Court need not address the application of the economic loss doctrine.65

E. NEGLIGENT PRoVISIoN oF INFoRMATIoN, RESTATEMENT (SEcoNl))
oF ToRTs § 552 (CouNT \O

Count V of the Complaint brings a claim under § 552 of the Restatement
(Second) of Torts ~ recognized in Delaware as the tort for negligent provision of

6 To bring a claim for economic loss under the § 552 exception,

information.é
Khushaim must prove two things: (l) that Tullow supplied information to
Khushaim for use in business transactions with third parties, and (2) that Khushaim
is in the business of supplying information.67

Even considering all facts in the Complaint as true, nothing brings this claim
within the scope of § 552. The Complaint does not say that Tullow supplied false

information to Khushaim that would be used in transactions with anyone other than

Khushaim himself. And it is not clear from the Complaint that Tullow is in the

Even if Khushaim’s fraud claim met Rule 9(b)’s requirement, under the economic loss
doctrine, "a fraud claim alleged contemporaneously with a breach of contract claim may survive,
so long as the claim is based on conduct that is separate and distinct from the conduct
constituting breach." Aviation W Charters, LLC v. Freer, 2015 WL 5138285, at *6 (Del. Super.
Ct. July 2, 2015 (quoting Furnari v. Walllvang, Inc., 2014 WL l6784l9, at *8 (Del. Super. Ct.
Apr. 16, 2014) (dismissing fraud claim where it was duplicative of breach of contract claim)).
For the above-mentioned reasons, the doctrine would likely apply here.

66 RESTATEMENT (SECoND) oF ToRTs § 552 (1977); see Palma, Inc. v. Claymont Fire Co.,

N0. ], 2009 WL 3865395, at *l (Del. Super. Ct. Nov. l8, 2009).

67 see Palma, 2009 wL 3865395, ar *1_

_]8_

business of supplying information to its customers. So Khushaim has not pled
sufficient facts to support a claim for negligent provision of information and
Tullow’s Motion to Dismiss Count V must be GRANTED.

F. CoNVERSIoN (CouNT VII)

In Count VII, Kushaim brings a claim for conversion. The Complaint
alleges Tullow "intentionally and unlawfully took possession" of and failed to
return Kushaim’s software designs.68

At oral argument on this motion, Tullow said that the software had been
returned to Khushaim.69 Khushaim denied any knowledge of the software’s
return.m In a letter dated June l5, 2016, Tullow’s counsel notified this Court that
"to the best of Defendant Tullow, Inc.’s knowledge, information, and belief,
Plaintiff has the application and the software in his possession."n The Court

cannot find that the letter is dispositive, and so it will address the merits of

Khushaim’s claim under Rule l2(b)(6).

Compl. 111 75-77.

Hr’g Tr., June l, 2016, at 6 (D.I. 26).

70 Ia'. at l7; see also ia’. at 21 (statement from co-counsel Mr. Gordon Zuiderweg denying

knowledge of the return of Khushaim’s software).

71 Letter from John A. Sensing, Esq., June 15, 2016 (D.I. 27). See also Letter from Nicholas
G. Kondraschow, Esq., June 15, 2016 (D.I. 28).

_19_

To plead the tort of conversion, Kushaim must demonstrate "any distinct act
of dominion wrongfully exerted over the property of another, in denial of [the
plaintiff s] right, or inconsistent with it."72 Traditionally, claims for conversion
only apply to tangible goods or intangible goods "where the intangible property

9)73

relations are merged into a document. Whether copyrighted software designs

qualify as "intangible property" under Delaware law may be unsettled, but the
Court need not resolve that question because the Complaint fails to otherwise state
a claim for conversion. The conversion claim is (like his several others) merely
duplicative of Khushaim’s breach of contract claim.

Like the negligence and fraud claims discussed before, where a claim for
conversion arises solely from a breach of contract, a plaintiff must allege that a
defendant violated a legal duty independent from his contractually-imposed

74

duties. Khushaim attempts to meet this requirement by alleging that Tullow’s

retention of the software design breaches a duty under "general common law tort

72 Data Mgmt. Internationale, Inc. v. Saraga, 2007 WL 2142848, at *3 (Del. Super. Ct. July
25, 2007) (quoting Drug, Inc. v. Hunt, 168 A. 87, 93 (Del. 1933)).

73 Carlton lnvestments v. TLC Beatrice Int’l Holdings, Inc,, 1995 WL 694397, *16 (Del_._
Ch. Nov. 21, l995).

74 1¢1.; see also Kumda v. SPJS H@zdzngs, L.L_C_, 971 A.zd 872, 389-90 (Dei. Ch. 2009)
(dismissing conversion claim that was duplicative of breach of contract claim).

_20_

covenant of good faith and fair dealing); Count III (fraud); Count IV (negligence);
Count V (negligent provision of information/ § 522 of the Restatement (Second) of
Torts); Count VII (conversion); Count VIII (unjust enrichment); Count IX
(intentional infliction of emotional distress); and Count X (civil conspiracy).
II. FACTUAL AND PROCEDURAL BACKGROUND

In January 2()13, Khushaim sent an internet inquiry to Tullow requesting
that they develop a mobile application based on two Arabic card games for Apple
and Android phones.z The parties entered into a Project Development Contract
(the "PDC"), which was electronically signed by Khushaim on January 29, 2()13.3
Under the terms of the PDC, Khushaim contracted Tullow to "develop, design, and
implement" the applications for a total of $75,000, to be paid in four payments of
$18,750, due after specified benchmarks.4

Khushaim alleges that he was then in "constant" communication with

Tullow from January 2013 until June 2()14.5 During that time, Khushaim made the

2 1¢1. 1111 7-8.

3 1a 1111 9-11; Def.’s Mor. to Dismiss Ex. 1_

4 Def.’s M0t. to Dismiss, Ex. 1 (Under the terms of the "Payment Schedule," 25% of the
total payment was due after "Design and Delivery of Prototype," "Programming &
Development," "User Acceptance Testing," and "Deployment"). See also Compl. 1]1[ ll, 13.

5 Compl. 11 12&_

principles" against misappropriating another’s property which "exists independent

of any contractual obligations."”

The Complaint lacks any substantive allegation that Tullow violated a duty

independent from the contract. Simply citing Tullow’s contract-based duty to

return property does not satisfy the duty requirement for the tort of conversion.%

Instead, "to establish a claim for conversion apart from the contract claim,
[Khushaim must] show that he had a right to the [property] - other than a right
pursuant to the contract - that was violated by the defendants’ exercise of
dominion over the [property]."" Here, Khushaim’s right to repossess the software
from Tullow derives wholly and only from the PDC. Because the Complaint fails
to identify any interference with a right to the software independent of rights

granted under the contract, Tullow’s motion to dismiss Cou_nt VII for conversion

is GRANTED.

75 Pif.’s Aas. Br. in opp’a ar 16 (qaaang Daza Mgmr., 2007 WL 2142348, ar *4). see alsa
Compl. w 75-78.

76 See Kuroa'a, 971 A.2d at 889-90 ("Merely alleging that defendants violated their duty
against conversion of property is circular, and the Court is not required to accept such a
conclusory allegation as true."); Int’l Bus. Machs. Corp. v. Coma'z`sco, Inc., 1993 WL 259102, at
*4 (Del. Super. Ct. June 30, 1993) ("Plaintiffs begin their conversion argument by stating that
while an immediate right to possession is an element of conversion, [the defendant’s] tortious
conversion of the system gave [the plaintiff] an immediate right to possession. This reasoning is
circular, and functions to eliminate an element of the tort.").

Kuroda, 971 A.Zd at 890.

_21_

G. UNJUST ENRICHMENT (CouNT VIII)

Khushaim brings a claim for unjust enrichment. He posits this can be pled

78

in the alternative to his breach of contract claim. His allegation is that Tullow

was unjustly enriched when it retained payments for the incomplete mobile
applications and failed to return the copyrighted software.79
Unjust enrichment is "the unjust retention of a benefit to the loss of another,

or the retention of money or property of another against the fundamental principles

1980

of justice or equity and good conscience. "A claim for unjust enrichment is not

available if there is a contract that governs the relationship between parties that

9>8]

gives rise to the unjust enrichment claim. While Khushaim claims that he may

plead unjust enrichment in the alternative to his breach of contract claim,
alternative pleading of this kind is generally only allowed "when there is doubt

surrounding the enforceability or the existence of the contract."gz

See Plf.’s Ans. Br. in bpp’n at l7.

Compl. 11 84.

Schock v. Nash, 732 A.2d 217, 232 (Del. l999) (inner quotations omitted).
Kuroda, 971 A.2d at 89l.

82 Alberr v_ Azex. Bmwn Mgm¢, Servsr, lnc_, 2005 wL 2130607, ar *8 (Del. ch. Aug_ 26,
2005yH

_22_

No doubt the relationship between Khushaim and Tullovv is governed via
enforcement of the existing PDC. TulloW’s motion to dismiss Count VIII for
unjust enrichment is GRANTED.

H. INTENTIoNAL INFL1cT1oN oF EMoTIoNAL D1sTREss ("IIED")
(CoUNT IX)

Khushaim alleges that Tullow’s "scheme" involving fraud and conversion
demonstrates "outrageous conduct" that intentionally or recklessly could have
caused Khushaim to suffer emotional distress.83 But to qualify as "extreme or
outrageous," the alleged conduct must be behavior that goes "beyond all possible
bounds of decency," is "atrocious," and "utterly intolerable in a civilized
community."m Allegations of a breach of contract rarely constitute outrageous
conduct.85 And Khushaim’s don’t here.

Tullow’s motion to dismiss COUNT IX, for intentional infliction of

emotional distress, is GRANTED.

83 Compl. 1[1[ 94-95; Plf.’s Ans. Br. in Opp’n at 181.

34 spence v. Cherzan, _ A.zd _, _, 2016 WL 2996895, ar *4-5 (Dei. sup@r. Ct. May 20,
2016); Mattern v. Hudson, 532 A.2d 85, 86 (Del. Super. Ct. l987).

85 See, e.g., Q’Leary v. Tezec@m Res. serv., LLC, 2011 WL 379300, ar *6 (Del. super. Ct.
Jan. l4, 201 l) ("a mere breach of an employment contract, without accompanying ‘extreme and

outrageous behavior,’ is never sufficient cause to recover damages for emotional distress."); E.I.
DuPont de Nemours & C0. v. Pressman, 679 A.2d 436, 444-45 (Del. l996) ("Damages for

emotional distress are not available for breach of contract in the absence of physical injury or
intentional infliction of emotional distress.").

_23_

I. C1v1L CoNSPIRACY (CoUNT X)

Lastly, Count X of the Complaint alleges a claim for civil conspiracy,
specifically asserting that Tullow engaged in a conspiracy to commit fraud,
conversion, and intentional infliction of emotional distress.% Civil conspiracy is
not an independent cause of action, and instead, must be based on an underlying
unlawful act.87 If the plaintiff fails to adequately allege the elements of the
underlying claim, the conspiracy claim must be dismissed.gg

As explained above, Khushaim has failed to state a claim for fraud,
conversion, and intentional infliction of emotional distress.gg Because Khushaim
failed to state an actionable claim (or claims) for the underlying wrong (or wrongs)
alleged in his conspiracy claim, Tullow’s motion to dismiss Count X is

GRANTED.

88 compl. 1111 100-102; Plf.’s Ans. Br. in opp’n ar 19.
87 Ramunno v. Cawzey, 705 A.2d 1029, 1039 (Del. 1998)

88 Trans@hed sys. Lzd. v, Versyss Transn s@zun'ons, LLC, 2008 WL 948307, ar *4 (Del.
Super. Ct. Apr. 2, 2008) ("To succeed on a claim of civil conspiracy Plaintiff must first have a
valid underlying claim."); Connolly v. Labowitz, 519 A.2d 138, 143 (Del. Super. Ct. l986) ("To
be actionable a civil conspiracy must embody an underlying wrong which would be actionable in
the absence of the conspiracy.").

89 See supra Part IV-D, F, and H.

_24_

V. CONCLUSION

For the reasons stated above, Tullow’s Motion to Dismiss is DENIED as to

Count I, for breach of contract, and GRANTED as to Counts II-V and VII-X, for

each of the claims recited therein.

1T Is so oRDERED.   `_>

Paul R. Wallace, Judge

_25_

first three installment payments.6 He paid an additional $2(),000 on May 28, 2013 ’
for upgrades to the programs.7

Despite numerous promises by Tullow, the final stage of the contract -
"Deployment" - was never completed.s Khushaim never received final versions of
the mobile applications.9 And, since June 2014, he has been unable to reach any
TulloW representative.m Khushaim also maintains that Tullow has failed to retum

his original copyrighted software designs."

As a result of Tullow’s failure to complete the applications, Khushaim
initiated suit in the Superior Court of the State of Califomia, County of Los
Angeles, on October 3, 2014.12 The Califomia court dismissed Khushaim’s
complaint against Tullow for lack of personal jurisdiction, noting that the PDC

included a Delaware forum selection clause.'3

°" 1¢1.1113.

7 Id.

it 1¢1.111113-14.
9 1¢1.1114_

‘0 1¢1.1115.

" 1¢1.1116.

‘2 Id. 11 13 (referencing case No. 13€559795).

‘3 1a

Khushaim reinitiated action against Tullow here in Delaware on November
24, 2014. He brings nine claims against Tullow - alleging damages of 27 million
dollars for lost mobile game subscription sales - including: (l) breach of contract;
(2) breach of the implied covenant of good faith and fair dealing; (3) fraud;
(4) negligence; (5) negligent provision of information/§ 522 of the Restatement
(Second) of Torts; (6) conversion; (7) unjust enrichment; (8) intentional infliction
of emotional distress; and (9) civil conspiracy.m
Tullow now moves to dismiss all claims under Superior Court Civil
Rule l2(b)(6).
III. STANDARD OF REVIEW
A motion to dismiss under Civil Rule l2(b)(6) will be granted where the
plaintiff cannot recover "under any reasonably conceivable set of circumstances
susceptible of proof."l5 In considering a motion to dismiss, the Court will:
(l) accept all well pleaded factual allegations as true, (2)
accept even vague allegations as "well pleaded" if they
give the opposing party notice of the claim, (3) draw all

reasonable inferences in favor of the non-moving party,
and (4) [not dismiss the claims] unless the plaintiff would

14 Id. 111 17, 19-61, 73-1()5. Khushaim also brings a claim for conversion against Defendant
Outreach Global, which is not addressed in this Opinion. See z`d. at 111 62-72.

‘5 Begum v_ Szngh, 2013 WL 5274408, ar *3 (Del. sup@r. Cr. sept 18, 2013) marion
omitted).

not be entitled to recover under any reasonably
conceivable set of circumstances.lé

Yet, "[w]here allegations are merely conclusory . . . (i.e., without specific
allegations of fact to support them) they may be deemed insufficient to withstand a
motion to dismiss."w

A plaintiff bringing a claim for fraud or misrepresentation faces a heightened
particularity standard under this Court’s Civil Rule 9(b).'8 This requires the
plaintiff to allege the "time, place, and contents of the alleged fraud" as well as the
identity of the person accused of committing the fraud.]g

In deciding this Rule l2(b)(6) dismissal motion, the Court may consider

certain material documents referenced in Khushaim’s Complaint - in this case, the

PDC?°

16 See Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 53l, 535
(Del. 201 l) (stating standard for motions to dismiss).

" L@rd v. s@uder, 743 A.zd 393, 398 (Del. 2000), citing 111 re Trz_s¢ar Pzczures, ma Lm'g,,
634 A.zd 319, 326 (Del. 1993).

18 Super. Ct. Civ. R. 9(b); Um`versal Capz'tal Mgmt. Inc. v. Micco Worla', Inc., 2012 WL
1413598, at *2 (Del. Super. Ct. Feb. l, 20l2).

19 Ia'. (quoting Northpointe Holdings, Inc. v. Natz'onwide Emerging Managers, LLC, 2010
WL 3707677, at *8 (Del. Super. Ct. Sept. l4, 2010)).

20 1a re santa Fe Pac. C@rp. s’h@zder Lm'g., 669 A.zd 59, 69-70 (Del. 1995) (adopring the
rule that "[i]n particular instances and for carefully limited purposes" a court may consider a
document outside of the pleadings when the document is "integral to a plaintiffs claim and
incorporated in the complaint. . .").

IV. DISCUSSION

A. BREACH oF CoNTRAcT (CoUNT I)

In Count I, Khushaim claims that Tullow breached the PDC by failing to
deliver a completed mobile application and failing to return his original software.
In order to survive a motion to dismiss, a plaintiff pleading breach of contract must
allege: (1) the existence of a contract; (2) that the contract was breached; and
(3) damages suffered as a result of the breach.z' At the motion to dismiss stage,
this Court "cannot choose between two differing reasonable interpretations of
ambiguous provisions."zz In other words, "[d]ismissal is proper only if the
defendant[’s] interpretation is the only reasonable construction as a matter of

9)23

law But "when parties present differing - but reasonable - interpretations of a

contract tenn," the Court must examine extrinsic evidence to discem the parties’

agreement; "[s]uch an inquiry cannot proceed on a motion to dismiss."24

2‘ ecommerce mdus., ma v. MWA m¢elzzgence, Inc_, 2013 WL 5621673, ar *13 (Dei. Ch.

Sept. 30, 2013); VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).

22 VLIW Tech., 840 A.2d at 615 ("[F]or purposes of deciding a motion to dismiss,
[ambiguous provisions’] meaning must be construed in the light most favorable to the non-
moving party.").

23 Vana’erbz`lt Income & Growth Assocs., L.L.C. v. Arvia'a/JMB Managers, Inc., 691 A.2d
609, 613 (Del. 1996).

24 R@nc@ Grp,, ma v. Mac,2015 WL 394011, ar *5 (D@i. Ch.
Jan. 29, 2015) (citing Appriva S’hola'er Lz`tig. Co., LLC v. EV3, Inc., 937 A.2d 1275, 1291 (Del.
2007)).

Khushaim and Tullow don’t dispute the existence of a valid contract. They
disagree as to the proper measure of damages if Tullow is found to be in breach.
Tullow says that relief should be limited to specific performance - i.e., the return
of the software - rather than monetary damages.25 In support, Tullow points to one
sentence in the PDC’s section l0(C): "In the event of early termination due to
Appostrophic’s default, Appostrophic agrees to deliver the Software then
completed."%

Whether this provision even relates to contractual damages is, at best,
ambiguous. Tullow ignores that the cited sentence lies within a section titled
"Ownership of Software." lt is reasonable, therefore, to conclude that the
paragraph relates only to the parties’ property ownership rights, rather than
limiting parties to specific damages. Additionally, there is no indication that the
parties intended to override the traditional preference for damages as the remedy
for nonperformance of a contract.27 Nowhere does the PDC use the term

97

"remedy," "damage," or "sole remedy. While no "magic words" are required to

create a sole remedy clause, the parties must demonstrate some showing of intent

25 Def.’s Mot. to Dismiss at 4.

26 Def.’s Mot. to Dismiss Ex. l at 11 IO(C),
27 See Universal Enter. Grp., L.P. v. Duncan Petroleum Corp., 2013 WL 3353743, at *18
(Del. Ch. July l, 2013) ("[t]he primary if not the only remedy for injuries caused by the

nonperformance of most contracts is an action for damages. . .") (quoting 24 Williston on
Contracts § 64:l (4th ed.)).

that they planned to create one.zg Absent this intent, the PDC is ambiguous as to

whether specific performance is the sole remedy for its breach.n Therefore,

Tullow’s motion to dismiss COUNT I, for breach of contract, is DENIED.

B. BREACH oF THE IMPLIED CovENANT oF Goo1) FAITH AND
FA1R DEALING (CoUNT II)

Tullow also moves to dismiss Khushaim’s claim for breach of the implied
covenant of good faith and fair dealing. To state a claim for breach of the implied
covenant, a plaintiff must allege: (l) a specific implied contractual obligation;
(2) a breach of that obligation; and (3) resulting damage.zg In his complaint,
Khushaim identifies three "implied" duties that Tullow breached: (l) "accepting
payment and failing to complete the development of the two mobile applications";

(2) "failing to deliver final versions of the two mobile applications"; and

))30

(3) "failing to return Khushaim’s copyrighted software designs. Khushaim also

alleges that, as a result of these breaches, he "did not receive the benefit of his

bargain" with Tullow.3'

28 See GMG Capital Investments, LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776,
782 (Del. 20l2) ("Stretching the ‘sole remedy’ clause to cover" additional contractual
obligations "is difficult . . . where the clause is couched in seemingly irrelevant language. One
would expect the ‘sole remedy’ language to exist in a separate clause if the parties’ intended it to
cover any breach of the Agreement.").

Kuroda v. SPJS Holdz`ngs, L.L.C., 971 A.2d 872, 888 (Del. Ch. 2()09).
Compl. 11 32_

1¢1_ 11 36.

Because a breach of the implied covenant claim cannot be based on conduct
that the contract expressly addresses, this claim must be dismissed. The implied
covenant of good faith and fair dealing cannot be used to create a "free-floating
duty . . . unattached to the underlying legal document."” Even when applied in
contract matters, it "should be rare and fact-intensive, turning on issues of
compelling fairness."33 And so it is invoked only "when the contract is truly silent
with respect to the matter at hand, and . . . when . . . the expectations of the parties
were so fundamental that it is clear that they did not feel a need to negotiate about

9)34

them. "[M]erely repeating the defendant’s allegedly improper acts or omissions

already the subject of a separate breach of contract claim is insufficient to support

5

a claim for breach of the implied covenant of good faith and fair dealing."3 In

33 l)llnlap v. slale Farm Flre & Cas. C@., 878 A.zd 434, 441 (Del_ 2005).

33 Clnclnnall SMSA Ll¢l. P’shlp v_ Clnclnnall Bell cellular sys. C@., 708 A.zd 989, 992
(Dei. 1998).

34 Allled capital C@rp. v. GC-slln Hollllngs, L.P., 910 A.zd 1020, 1032-33 (Del. Ch. 2006).

33 Haney v. Blackhawk Nelwolk Holdlngs, lnc., 2016 WL 769595, ar *9 (Dei. Ch. Feb. 26,
2()16) (dismissing claim for breach of the implied covenant where the plaintiff relied entirely on
his claim that the defendant violated provisions of the contract); Forll`s Advl`sors LLC v. Dl'alog
Seml'conductor PLC, 2015 WL 401371, at *5 (Del. Ch. Jan. 30, 2015) (dismissing implied
covenant claim where defendant mimicked the language of its breach of contract claim and failed
to allege any actions or failures not controlled by the agreement).

_]0_