Court Opinion

ID: 4566987
Source: CourtListenerOpinion
Date Created: 2020-09-18 19:02:44.38425+00
Date Added: 2024-06-11T09:25:01.878675
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

PILOT AIR FREIGHT, LLC                          )
                                                )
                             Plaintiff,         )
                                                )
               v.                               )   C.A. No. 2019-0992-JRS
                                                )
MANNA FREIGHT SYSTEMS, INC.,                    )
ALAN J. MEEHAN REVOCABLE TRUST,                 )
and ALAN J. MEEHAN,                             )
                                                )
                             Defendants.        )

                         MEMORANDUM OPINION

                         Date Submitted: June 2, 2020
                       Date Decided: September 18, 2020

Jody C. Barillare, Esquire of Morgan, Lewis & Bockius LLP, Wilmington, Delaware
and Troy S. Brown, Esquire, Margot G. Bloom, Esquire and Brian F. Morris, Esquire
of Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, Attorneys for
Plaintiff Pilot Air Freight, LLC.

Kurt M. Heyman, Esquire and Melissa N. Donimirski, Esquire of Heyman Enerio
Gattuso & Hirzel LLP, Wilmington, Delaware and Michael F. Cockson, Esquire and
Nathaniel J. Zylstra, Esquire of Faegre Drinker Biddle & Reath LLP, Minneapolis,
Minnesota, Attorneys for Defendants Manna Freight Systems, Inc., Alan J. Meehan
Revocable Trust and Alan J. Meehan.

SLIGHTS, Vice Chancellor
         This Action involves disputes relating to an Asset Purchase Agreement

(the “APA”) whereby Plaintiff, Pilot Air Freight, LLC (“Pilot”), purchased

substantially all the assets of Defendant, Manna Freight Systems, Inc. (“Manna,” or

the “Company”) (the “Acquisition”).1 As to be expected, Manna and its direct and

indirect owners, Defendants, Alan J. Meehan Revocable Trust u/a/d/ 8/20/2007

(the “Trust”) and Alan J. Meehan (“Meehan”), as sellers, made contractual

representations and warranties in the APA to Pilot, as buyer, regarding the fitness of

Manna’s trucking business. 2 The parties agreed that Sellers would indemnify Pilot

for any breaches of the representations and warranties, 3 and that any claim for

indemnification must be filed within 15 months of the APA’s closing.4 Apart from

Sellers’ contractual representations and warranties, however, Pilot promised it was

not relying on any extra-contractual promises, representations or warranties.5

1
    Verified Compl. Under Seal (“Compl.”) (D.I. 1) ¶¶ 1–4; Compl. Ex. A (the “APA”).
2
  See, e.g., Compl. ¶ 35; APA Art. 5 (“Each of Seller, the Trust and Meehan jointly and
severally represent . . . .”). Meehan and the Trust together are referred to in the APA as
“Owner.” The APA designates Manna as “Seller.” Throughout this Opinion, when
quoting from the APA, I will follow this convention. For ease of reference, however,
I designate Manna and the Owner, collectively, as “Sellers” when addressing Sellers’
representations and warranties in order to avoid repeated references to “Seller, the Trust
and Meehan jointly and severally” as the actual parties who made the “Representations and
Warranties By Seller” as per the APA. APA Art. 5.
3
    APA § 9.1 (“Indemnification by Seller”).
4
    APA § 9.1, § 9.3 (“Survival”).
5
    APA § 9.8 (“Limitation of Representations and Warranties”).

                                               1
          A significant aspect of Pilot’s thesis in support of the Acquisition was that it

could “market its [own] logistics services to Manna’s customers and therefore

expand its customer base.” 6 Given the “critical importance” of Manna’s existing

customer relationships, a significant component of Pilot’s valuation of Manna was

Manna’s “projected future customer revenues.”7 To buttress its valuation, Pilot

bargained for a specific representation regarding the stability of the Company’s

relationship with its “30 largest customers for calendar year 2017.”8                It also

bargained for post-signing protection in the form of a representation that, between

signing and closing, Sellers had not received notice from any of Manna’s top

customers of an intent materially to decrease the volume of business with the

Company. 9

          The Acquisition closed on July 16, 2018. More than fifteen months later, on

December 11, 2019, Pilot filed this Action alleging fraud, breach of representations

and warranties and breach of the implied covenant of good faith and fair dealing.10

According to Pilot, at some point after closing, it discovered that three of the

6
    Compl. ¶ 2.
7
    Id.
8
    APA § 5.27 (“Customers”).
9
    Compl. ¶ 25; APA § 5.27.
10
     Compl. ¶ 96(a) (alleging Sellers breached various representations and warranties).

                                               2
Company’s top customers from 2017 were “no longer [] customer[s] at all.” 11 This

discovery has prompted Pilot to allege that Sellers “initiated a scheme to

misrepresent to Pilot the declining or essentially ended nature of certain of its

material customer relationships” as soon as Sellers realized “the value Pilot placed”

on Manna’s customer relationships. 12

         Manna has moved to dismiss under Court of Chancery Rule 12(b)(6) for

failure to state viable claims. According to Manna, the indemnification claims are

untimely and the implied covenant and fraud claims are not well-pled.

         Despite the “critical importance” of customer relationships to Pilot’s plans for

Manna’s assets, it offers no viable excuse for waiting until after the 15-month

contractual limitations period expired to seek indemnification.13 To avoid dismissal

of its indemnification claims, Pilot conjures an argument that Sellers “put Pilot off

the ‘trail of inquiry’” by employing an “‘actual artifice’ to [] prevent Pilot from

learning about the true status of [the] customer relationships.”14 But after giving

Pilot the benefit of all reasonable inferences flowing from the Complaint, it is not

11
  Compl. ¶ 43 (Modus was a “lost customer”), ¶ 55 (Personal Comfort was “no longer a
customer at all”), ¶ 72 (Big Fig “no longer intended to be a customer”).
12
     Compl. ¶ 34.
13
     Compl. ¶ 2.
14
  Pl.’s Answering Br. in Opp’n to Defs.’ Mot. to Dismiss Pl.’s Verified Compl. (“PAB”)
(D.I. 23) at 22.

                                             3
reasonably conceivable that the Sellers did anything to prevent Pilot from

discovering within the contractual limitations period that the three “critical”

customers it has identified were, in Pilot’s words, “no longer [] customer[s] at all.”15

         The APA was a “heavily negotiated” contract that “cover[ed] a large number

of specific risks explicitly.” 16 One of those risks was that Manna’s top customers

would go elsewhere. The APA’s bargained-for “representations and warranties

serve an important risk allocation function” by allowing Pilot to fine-tune its risk

preferences regarding these top customers. 17 Given that Pilot knowingly bargained

away the right to seek indemnification for breaches of the relevant representations

and warranties after 15 months from closing, Pilot may not avail itself of a remedy

that, by its own hand, no longer exists. Accordingly, Pilot’s indemnification claims

must be dismissed.

         The implied covenant claim parrots the allegations supporting the claim for

indemnification. This is not surprising given that the gravamen of the claim is that

Sellers acted in bad faith by falsely representing in the APA the state of Manna’s

15
     Compl. ¶ 55.
16
  In re Tibco Software Inc. S’holders Litig., 2014 WL 6674444, at *18 (Del. Ch. Nov. 25,
2014).
17
  Id.; Julius v. Accurus Aerospace Corp., 2019 WL 5681610, at *15 (Del. Ch. Oct. 31,
2019).

                                           4
relationship with key customers. This topic is covered expressly in the APA; there

is no room for the implied covenant. That claim must also be dismissed.

         Apart from a minor dispute involving Manna’s accounts receivable, 18 this

leaves Pilot with fraud claims. In this regard, Pilot alleges Sellers “fraudulently

induce[d] Pilot to proceed to Closing” (later defined) by making certain false

statements regarding a number of customers within the Agreement.19 After carefully

reviewing the Complaint and the APA, I am satisfied the bulk of the alleged fraud is

pled with particularity, not barred by the APA’s non-reliance clause and not

otherwise barred as bootstrapped breach of contract claims. The motion to dismiss

the contractual fraud claims, therefore, must be denied.

                                I. BACKGROUND

         I have drawn the facts from well-pled allegations in the Verified Complaint

and documents incorporated by reference or integral to that pleading.20 For purposes

18
   As explained below, the Complaint does well-plead a breach of contract claim with
respect to certain Excluded Liabilities.
19
     Compl. ¶ 4.
20
   Compl.; Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 (Del. 2004)
(noting that on a Motion to Dismiss, the Court may consider documents that are
“incorporated by reference” or “integral” to the complaint).

                                          5
of Defendants’ Rule 12(b)(6) motion, as I must, I accept those well-pled facts as

true. 21

      A. The Parties and Relevant Non-Parties

           Pilot is a “worldwide provider of transportation and logistics services.”22

Until Pilot acquired substantially all its assets, Manna was also engaged in the

trucking and logistics industry. 23 The Trust is Manna’s sole shareholder.24

           Meehan is an individual who resides in Minnesota.25 He is alleged to be

Manna’s founder and the sole settlor and grantor of the Trust. 26 Meehan was

Manna’s CEO at all relevant times before the closing. 27

           Non-Parties, Modus Furniture International (“Modus”), Personal Comfort

Beds (“Personal Comfort”), Big Fig Mattress (“Big Fig”) and General Electric

21
     In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 169 (Del. 2006).
22
     Compl. ¶¶ 1, 7.
23
     Compl. ¶¶ 1, 8.
24
     Compl. ¶ 9.
25
     Compl. ¶ 10.
26
     Id.
27
     Id.

                                              6
(“GE”) were Manna customers. 28 Non-party, Forward Air Corp. (“Forward Air”),

was a Manna supplier. 29

      B. Pilot and Manna’s Strategic Overlap

           Prior to the Acquisition, Manna’s business focused on providing “final mile”

delivery services, specializing in more difficult deliveries “(i.e., mattress

delivery).” 30      This business relied heavily on revenue generated from repeat

customers. 31 Pilot saw the Acquisition as a means to expand its global transportation

and logistics business by adding “final mile” delivery service to its existing logistics

offerings. 32 By adding this piece of the delivery puzzle, Pilot would be positioned

to “provide customers with a complete package of delivery solutions” and could then

offer its “full mile” services to Manna’s “last mile customers.” 33

28
     Compl. ¶¶ 36, 55, 68, 77, 84.
29
     Compl. ¶ 78.
30
   Compl. ¶ 1. “Final (or last) mile” deliveries take product from intermediate depos to the
final destination.
31
     Id.
32
     Compl. ¶¶ 1, 2, 27.
33
     Compl. ¶ 31. “Full mile” deliveries take product from origination to final destination.

                                               7
     C. The APA

       Pilot, Manna, the Trust and Meehan signed the APA on June 26, 2018

(the “Signing”).34 The Acquisition of substantially all of Manna’s assets closed

three weeks later, on July 16, 2018 (the “Closing” or “Closing Date”).35

       Not surprisingly, the APA contains a series of interrelated provisions whereby

Sellers (i) disclaimed all extra-contractual representations and warranties,

(ii) explicitly provided Pilot with a discrete list of contractual representations and

warranties about the Company, (iii) represented that the contractual representations

and warranties were true as of the Signing and the Closing, (iv) set aside a portion

of the purchase price in escrow to serve as Pilot’s exclusive source of recovery

should Pilot prove that the representations and warranties were untrue as of the date

they were made, (v) agreed to indemnify Pilot out of the escrow fund for any losses

arising out of a breach of the contractual representations and warranties and

(vi) contractually specified the date by which any claims for breaches of Sellers’

representations and warranties must be brought. 36

34
  APA (recitals); Compl. ¶ 1. The APA includes a Delaware choice-of-law provision and
provides that the exclusive jurisdiction and venue for APA disputes shall be the state and
federal courts of the State of Delaware. APA § 14.7; Compl. ¶ 13.
35
  APA § 1.1 (“Purchased Assets”); Compl. ¶¶ 17–18. The purchase price was $18,000,000
subject to certain net working capital and tax adjustments. APA § 2.1 (“Purchase Price”).
36
  APA § 9.8 (“Limitation of Representations and Warranties”), § 5 (“Representations and
Warranties By Seller”), § 5 (Sellers’ Representations and Warranties made as of the
Signing), § 8.2 (Sellers’ representations and warranties true as of the Closing), § 9.1
                                            8
            The Non-Reliance Provision

         The APA contains a non-reliance provision whereby Pilot agreed that it was

not relying on any extra-contractual representations or warranties when it entered

into the APA. 37 Specifically, in Section 9.8 of the APA, captioned “Limitation of

Representations and Warranties,” Pilot agreed:

         Except for the representations and warranties expressly set forth in
         Article 5, the Seller and the Owners are not making and shall not be
         deemed to have made, any other representations or warranties, written
         or oral, statutory, express or implied, concerning the Seller, the Owners,
         the Purchased Assets, the Assumed Liabilities, the Business or any
         other matter related to this Agreement, all of which are otherwise being
         accepted by Purchaser “AS IS AND WHERE IS.” . . . EXCEPT AS
         EXPRESSLY PROVIDED IN ARTICLE 5, NEITHER THE SELLER
         NOR THE OWNERS HAS MADE, AND THE SELLER AND THE
         OWNERS HEREBY EXPRESSLY DISCLAIM AND NEGATE,
         AND PURCHASER HEREBY EXPRESSLY WAIVES AND
         AGREES THAT IT IS NOT RELYING ON, ANY
         REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT
         COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO,
         AND PURCHASER HEREBY EXPRESSLY WAIVES AND
         RELINQUISHES ANY AND ALL RIGHTS, CLAIMS AND
         CAUSES OF ACTION AGAINST THE SELLER, THE OWNERS
         AND THEIR REPRESENTATIVES IN CONNECTION WITH, THE
         ACCURACY, COMPLETENESS OR MATERIALITY OF ANY
         STATEMENTS, INFORMATION, DATA OR OTHER MATERIALS
         (WRITTEN OR ORAL) OR DOCUMENTS HERETOFORE
         FURNISHED OR MADE AVAILABLE TO PURCHASER AND ITS

(“Indemnification by Seller”), § 9.4(b) (Sellers’ liability “shall not exceed” the “Escrow
Amount” subject to narrow exceptions), § 9.6 (discussing the “Escrow”), § 9.5 (discussing
“Survival”).
37
     APA § 1.1; Compl. ¶ 17.

                                             9
           REPRESENTATIVES BY OR ON BEHALF OF THE SELLER OR
           THE OWNERS. 38

           Relatedly, in Section 14.4, the parties agreed the APA, “together with all

disclosure schedules, . . . constitutes the entire agreement between the parties.”39

To remove all doubt, the APA reiterates that it was to “supersede any prior

understandings, agreements, or representations and warranties by or among the

parties.”40 When read together, Article 9 and Section 14.4 make clear that Pilot had

no right to rely on Sellers’ extra-contractual statements concerning Manna and its

business. 41

           The APA distinguishes between Sellers’ extra-contractual representations and

warranties (on which Pilot agreed it would not rely) and the contractual

representations and warranties for which Pilot bargained in the APA. In Section 9.1,

the APA states:

           Nothing in this Agreement shall limit or restrict any of Purchaser’s
           rights to maintain or recover any amounts at any time in connection
           with any action or claim based upon intentional fraud by Seller or
           Owner in this Agreement.42

38
     APA § 9.8 (capitalization in original).
39
     APA § 14.4 (“Entire Agreement”).
40
     Id.
41
     APA §§ 9.1, 9.8, 14.4.
42
     APA § 9.1 (emphasis supplied).

                                               10
Accordingly, the APA preserves Pilot’s right to bring a claim for “intentional fraud”

at “any time,” provided the basis for the alleged fraud arises out of Sellers’

representations and warranties in the APA.

            Sellers’ Representations and Warranties

         As the relevant provisions make clear, the risk allocation scheme manifested

in the APA placed singular focus on the promises the parties made to each other in

the contract itself. Relevant here, Sellers represented and warranted to Pilot that, as

of the Signing, and then as of Closing: 43

            • Section 5.6 (Financial Statements): except as set forth in the
              disclosure schedules, the Company’s financial statements for the year
              ended 2016 and 2017, as well as the interim period ended April 30,
              2018 (the “Interim Financial Statements”) “present fairly, in all
              material respects, the financial position of Seller at such dates and the
              results of operations of Seller for such respective periods in conformity
              with . . . [GAAP].” 44

43
  APA Art. V (“Each of Seller, the Trust and Meehan jointly and severally represent and
warrant to Purchaser, as of the [Signing], as follows:”); § 8.2(a) (“The representations and
warranties of Seller and Owner contained in Article 5 shall be true and correct in all
respects (without giving effect to any update of the Disclosure Schedules pursuant to
Section 10.7) on and as of the Closing Date with the same effect as though made at and as
of such date (except those representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of that specified date in all
respects), except for any inaccuracy in any representation and warranty that, individually
or in the aggregate with any other such inaccuracy, has not had a Material Adverse
Effect.”); § 8.2(i) (discussing officer certificates). Critically, while Sellers made these
representations at Signing and then again at Closing, to the extent a specific statement
“addresses matters only as of a specified date, the accuracy” of such statement “shall be
determined as of that specified date in all respects.” § 8.2(a) (emphasis supplied).
44
     APA § 5.6.

                                             11
            • Section 5.8 (Absence of Changes): Except as set forth on the
              Company’s disclosure schedules, since April 30, 2018 to Closing, there
              has not been: (a) any Material Adverse Effect, (b) any “damage,
              destruction or loss” adversely affecting the “properties or assets of the
              Business in any material respect” or (c) any “transactions with respect
              to the Business not in the ordinary course.”45
            • Section 5.24 (Accounts Receivable): except as set forth in disclosure
              schedules, all of the accounts receivable reflected on the Company’s
              financial statements “will be actual and bona fide receivables” that are
              stated “in accordance with GAAP.” And, to the Knowledge46 of the
              Seller, there are not any amounts in excess of $10,000 due in respect of
              any such individual account receivable that is in dispute.47
            • Section 5.27 (the “Customer Rep”): “Set forth on Schedule 5.27
              hereof is a true and complete list of Seller’s 30 largest customers for
              calendar year 2017 (by revenue attributable to such customers)
              (“Material Customers”) . . . Except as indicated on Schedule 5.27, . . .
              neither Seller nor Owner has received written notice or, to the
              Knowledge of Seller, any oral notice from any Material Customer that
              any Material Customer intends or expects, after the Closing Date, to
              stop or materially decrease the volume of, or change, adjust or modify
              in any materially adverse manner any of the material terms . . . with
              respect to its purchasing of services from Seller.”48
            • Section 5.28 (Vendors): the Company’s disclosure schedules contain
              “a true and complete list” of the Company’s “30 largest vendors for
              calendar year 2017. . . . Since January 1, 2016, neither Seller nor Owner
              has received written notice, or to the Knowledge of Seller, any oral
              notice” that any such vendor “intends or expects to stop or materially

45
  APA § 5.8; see also APA § 5.6 (discussing the “Interim Balance Sheet”), § 8 (discussing
closing conditions).
46
  The APA defines “Knowledge” to mean the actual knowledge of Meehan or the
Company’s COO or CFO. APA § 9.1(p).
47
     APA § 5.24.
48
     APA § 5.27.

                                           12
               change . . . any of the material terms . . . with respect to its provision of
               goods or services” to the Company. 49

         Two aspects of the Customer Rep are particularly important to Pilot’s breach

and fraud claims. First, Sellers disclosed a list of the Company’s 30 largest

customers “for calendar year 2017.”50 On its face, the Customer Rep says nothing

about Manna’s largest customer during any other time period. This leaves a six-

month gap between the period addressed in the Customer Rep (i.e., the end of 2017)

and the Signing (June 26, 2018).51 Second, Sellers represented that no Material

Customer from the list had notified the Company of an intent to “stop or materially

decrease” their purchases “after the Closing Date” (a “Business Reduction

Notification”). 52

         Another key aspect of Sellers’ disclosure is the “disclosure statements” carve-

out. As noted, Sellers’ representations and warranties are qualified by the phrase

“except as set forth” on the Company’s disclosure statements. 53 Accordingly, if

49
     APA § 5.28.
50
     APA § 5.27.
51
  Compare APA § 5.27 (disclosing the Company’s largest customers “for calendar year
2017), with Compl. ¶ 16 (signing occurred on June 26, 2018).
52
     APA § 5.27 (emphasis supplied).
53
  See, e.g., APA § 5.8 (“Except as set forth on Schedule 5.8”), § 5.6 (“Except as set forth
on Schedule 5.6”).

                                             13
Sellers disclosed a fact in a disclosure statement, that disclosure, in essence, was

carved out of Sellers’ representations and warranties.

         Sellers provided the first disclosure statement to Pilot at Signing

(the “Original Disclosure Schedules”). Under Section 10.7, Sellers then had the

option to update (or not) the disclosure schedules before Closing (the “Updated

Disclosure Schedules”):54

         Seller and the Owners may from time to time before Closing update the
         Disclosure Schedules regarding any matter about which they obtain
         Knowledge after the date hereof that would constitute a breach of any
         of the representations and warranties in this Agreement in the form of
         a written supplement or amendment delivered to Purchaser; provided,
         any such update by Seller and the Owners shall be made within
         seven (7) days of Seller first obtaining such Knowledge. No such
         supplement or amendment shall have any effect on the satisfaction of
         the conditions to closing set forth in Section 8.2; provided, however, if
         Purchaser proceeds with the Closing, then Purchaser and the other
         Purchaser Indemnified Persons shall be deemed to have waived any
         right or claim pursuant to the terms of this Agreement or otherwise,
         including for indemnification pursuant to Article 9, with respect to any
         and all matters disclosed pursuant to any such supplement or
         amendment at or before the Closing, and the representations and
         warranties shall be qualified by any matters set forth in such supplement
         or amendment. 55

As the APA makes clear, the information contained on the Updated Disclosure

Schedules would not affect (one way or the other) Pilot’s obligation to close, but if

54
     APA § 10.7 (“Updating Disclosure Schedules”); Compl. ¶ 22.
55
     APA § 10.7.

                                            14
Pilot “proceeds with the Closing,” then Pilot would waive any claim with respect to

the matters disclosed.56

            Indemnification and Survival

         Section 9.1 of the APA defines Pilot’s indemnification rights:

         From and after the Closing and subject to the limits set forth in this
         Article 9, Seller and each Owner, jointly and severally, shall indemnify,
         defend and hold Purchaser . . . harmless from and against any and all
         loss, liability, damage, or expense . . . (collectively “Losses”) that
         [Purchaser may] suffer, sustain, incur or become subject to, arising out
         of, resulting from or due to: (a) any breach or inaccuracy when made of
         any representation and warranty of Seller or Owner in this Agreement;
         (b) the non-fulfillment of any covenant, agreement or other obligation
         of Seller or Owner under this Agreement; (c) any Excluded Liabilities;
         . . . (g) IC Liabilities incurred by Seller to the extent arising out of
         Seller’s operations prior to the Closing Date, up to the remaining
         Escrow Amount then held in escrow under the Escrow Agreement. 57

While broad, the right to indemnification under the APA, in most instances, is not

indefinite. In a section of the APA entitled “Survival,” Pilot agreed that most of the

Sellers’ representations and warranties, including the key ones at issue here, would

survive for only 15 months after Closing:

         All representations and warranties set forth in this Agreement shall
         survive for a period of 15 months after the Closing; provided, however,
         that the Fundamental Representations and the representations and
         warranties made by Purchaser in Sections 6.1 (Corporate Organization
         and Standing), 6.2 (Authority), and 6.3 (Brokers) shall survive until the
56
    APA § 8.2(i), § 8.2(a) (stating that Pilot was not obligated to close unless
“[t]he representations and warranties of Seller and Owner contained in Article 5 shall be
true . . . as of the Closing Date”).
57
     APA § 9.1.

                                            15
         expiration of the statute of limitations plus sixty (60) days. All
         covenants, indemnities and agreements of [Manna] and the Owners
         shall survive for three (3) years after the Closing Date (after which such
         obligations shall terminate), except (i) each of Section 10.2 and
         Section 10.3 shall survive in accordance with its terms, and (ii) the
         indemnification obligations of Seller and Owners with respect to
         Fundamental Representations shall continue in accordance with the
         terms of this Section 9.3. . . . No claim for indemnification as to
         representations and warranties under this Agreement may be made after
         the expiration of the applicable period set forth in this Section 9.3 and
         [Manna] and the Owners shall have no Liability for any claims made
         after the expiration of such applicable period for breach of or an
         inaccuracy when made of a representation or warranty. All demands or
         claims for indemnification under this Agreement shall be in writing and
         shall set forth with reasonable specificity the basis for such demand or
         claim and the amount of such claim (if known). 58

The practical impact of the Survival clause is that claims for breach of

representations and warranties subject to the clause must be brought within

15 months of Closing. Thereafter, the claims are time barred.

         On the same day as the Closing, the parties entered into an escrow agreement,

which required that $1,500,000 be placed into escrow to cover timely claims brought

by the buyer (Pilot) for indemnification (the “Escrow Property”). 59 If no claims for

indemnification were presented within 15 months after Closing, any amount

remaining in the escrow was to be distributed to Sellers. 60

58
     APA § 9.3 (emphasis supplied).
59
     Compl. ¶ 19.
60
     Compl. ¶ 20.

                                            16
      D. Business Reduction Notifications

           “In 2017 and 2018, Manna’s business relationships with certain key customers

fell into jeopardy.” 61 Indeed, several customers “advised Manna that they intended

to terminate their relationship with Manna.” 62 According to Pilot, when Manna

learned that several of the Company’s key clients would be leaving the fold, its

management (including Meehan) “initiated a scheme to misrepresent to Pilot the

declining or essentially ended nature of [these] material customer relationships.”63

Pilot flags three troubled customer relationships that it believes Manna had a duty to

disclose under the APA.

              Modus

           In the Original Disclosure Schedules, Sellers identified Modus as Manna’s

fourth largest customer by revenue “for calendar year 2017.” 64 Specifically, the

Sellers represented Modus’ billed revenue for 2017 was $2,317,000.65 Pursuant to

Sellers’ contractual obligation to disclose Business Reduction Notifications, the

Original Disclosure Statement revealed that “[i]n 2018 and in the ordinary course of

61
     Compl. ¶ 3.
62
     Id.
63
     Compl. ¶ 34.
64
     Compl. ¶ 36; APA § 5.27.
65
     Compl. ¶ 36.

                                            17
business, Modus . . . decreased the volume of services purchased from [Manna].” 66

The Original Disclosure Statement did not reveal, however, that six months before

Signing, Modus notified Manna that it intended to terminate its business with the

Company. 67 Upon receiving this notice, Manna’s management began to identify

Modus as a “lost customer.” 68

             Personal Comfort

           The Sellers’ Original Disclosure Schedule listed Personal Comfort as the

Company’s twenty-fifth largest customer during 2017 with aggregated billed

revenue of $446,000. 69 Despite this significant business during 2017, by Signing,

Personal Comfort was no longer a Manna customer. 70 Indeed, Sellers knew at least

a month before Signing that Personal Comfort was no longer transacting business

with the Company due to customer service issues.71

           By the time Sellers received Personal Comfort’s Business Reduction

Notification before Signing, the Original Disclosure Schedules had been issued and

66
     Compl. ¶ 49.
67
     Compl. ¶¶ 37, 38.
68
     Compl. ¶ 39.
69
     Comp. ¶ 55.
70
     Id.
71
     Compl. ¶ 63.

                                          18
made no mention of Personal Comfort’s cessation of business. 72 It was not until

well after receiving Personal Comfort’s Business Reduction Notification that Sellers

finally disclosed the bad news regarding the loss of Personal Comfort’s business on

the Updated Disclosure Schedule. 73

              Big Fig

           On the Original Disclosure Schedule, Sellers listed Big Fig as the Company’s

twenty-fourth largest customer in 2017 with revenue of $452,000. 74 Pilot alleges

Sellers were aware, as of April 20, 2018, that Big Fig was “dissatisf[ied]” with

Manna’s services.75 And, on information and belief, Pilot alleges “Big Fig advised

Sellers prior to Closing that it no longer intended to be a customer of Manna’s.”76

Neither the Original nor the Updated Disclosure Schedule contained any mention of

Big Fig’s Business Reduction Notification. 77

72
     Compl. ¶¶ 63–64.
73
     Compl. ¶¶ 63, 64, 67.
74
     Compl. ¶ 68.
75
     Compl. ¶¶ 70–72.
76
     Compl. ¶ 72.
77
     Id.

                                            19
           Separately, Pilot maintains Sellers never disclosed that a $127,144 receivable

from Big Fig was “uncollectible and in dispute.” 78 Even though Sellers disclosed a

$50,000 reserve against this receivable, Pilot claims Sellers “had actual knowledge

that the full amount of the receivable was uncollectible.”79

                                           *****

           The chart below summarizes the Business Reduction Notifications Pilot

alleges Sellers received and yet failed to disclose in order to induce Pilot to sign the

APA and close the Acquisition:80

                        Remainder of Page Intentionally Left Blank

78
     Compl. ¶ 75.
79
     Id.
80
  Compl. ¶¶ 16, 18. As noted, the APA was signed on June 26, 2018, and the Acquisition
closed on July 16, 2018.

                                             20
                                                     Method and date of
                Alleged date Sellers received
                                                     Sellers’ disclosure of
                     Business Reduction                                                  Content of disclosure
                                                     Business Reduction
                Notification from a customer
                                                          Notification
                                                                                 “In 2018 and in the ordinary course of
                                                     Footnote to Original
                                                                                  business, Modus . . . [has] decreased
     Modus          December 29, 2017 [1]         Disclosure Schedule, dated
                                                                                 the volume of services purchased from
                                                      June 26, 2018 [2]
                                                                                              Seller.” [3]
                                                      Updated Disclosure
                                                   Schedules, dated July 16,      “In 2018 and in the ordinary course of
 Personal       May 24, 2018 or June 27, 2018       2018 (more than 7 days           business, Personal Comfort [] no
 Comfort               at the latest [4]             after Sellers received      longer purchases services from Seller.”
                                                      Business Reduction                            [6]
                                                        Notification) [5]
                On April 20, 2018, the Sellers
                   knew Big Fig had made
                    complaints. [7] “Upon
     Big Fig   information and belief, Big Fig         No disclosure [9]                     No disclosure
               advised Sellers prior to Closing
               that it no longer intended to be
                        a customer.” [8]
       [1] Compl. ¶ 37; [2] Compl. ¶ 49; [3] Compl. ¶ 49; [4] Compl. ¶¶ 59, 63; [5] Compl. ¶ 64; [6] Compl. ¶ 64; [7]
                                      Compl. ¶ 70; [8] Compl. ¶ 72; [9] Compl. ¶ 72.

      E. Vendor Rates and Customer Service Setoff Disputes

           In addition to negative customer relationship developments pre-Signing and

pre-Closing, Manna experienced negative pre-Closing developments related to its

vendors and shipping liabilities. According to Pilot, neither of these issues were

adequately disclosed in either the Original or the Updated Disclosure Schedules.81

           First, in the Original Disclosure Schedule, Sellers disclosed that Forward Air

was Manna’s third largest vendor. 82 Sellers also disclosed that “in 2018 and in the

81
     Compl. ¶¶ 77–82, 83–86.
82
     Compl. ¶ 79.

                                                          21
ordinary course of business, Forward Air [] has increased its prices.”83 Sellers

included this disclosure because “Forward Air gave [notice of] a rate increase of

5.9%” that would “go effective” on “9-1.18” (two months after Closing). 84 Pilot

alleges Sellers’ actual disclosure (i.e., “in 2018” and in the “ordinary course,”

Forward Air increased its prices) led it to believe that Forward Air’s price increase

“had already occurred and was already reflected in” the Company’s financial

disclosures. 85

         Second, GE was a pre-Closing customer of Manna’s. 86 After the Closing, GE

informed Pilot that it was claiming a set-off of payments owed in the aggregate

amount of $69,440 due to certain “shipment issues.”87 Originally, GE claimed these

losses occurred post-Closing. 88 After an investigation, however, GE determined it

83
     Compl. ¶ 79.
84
   Compl. ¶ 81. It is unclear when Pilot alleges the price increase took place. Compare
Compl. ¶ 81 (“beginning of June”), with Compl. ¶ 81 (stating an increase will “go effective
[] 9-1.18”).
85
     Compl. ¶ 80.
86
     Compl. ¶ 84.
87
     Compl. ¶¶ 84–85.
88
     Compl. ¶¶ 84–86.

                                            22
“had made an administrative error, and realized that all of the complained of losses

occurred prior to Closing.” 89

      F. Procedural History

           Pilot sent Sellers an indemnification demand (the “Demand”) on October 14,

2019. 90 The Demand claimed Pilot suffered damages in excess of $6.9 million

because of Sellers’ alleged wrongdoing in connection with the APA.91 Sellers

disagreed and rejected the Demand. With this dispute unresolved, the Escrow

Property cannot be released unless and until the parties issue written joint

instructions for release of the funds to the escrow agent or a court of competent

jurisdiction enters a final, non-appealable judgment resolving the claims. 92

           After negotiations proved unsuccessful, Pilot filed the Complaint in this Court

on December 11, 2019 (more than 15 months post-Closing).93 The Complaint

comprises six counts. In Counts I and II, Pilot claims Sellers breached the APA,

89
     Compl. ¶ 86.
90
     Compl. ¶ 88.
91
     Id.
92
     Compl. ¶ 89.
93
     Compl. ¶ 1.

                                              23
giving Pilot a right to indemnification and release of the Escrow Property. 94 Pilot’s

breach of contract claims fall into four buckets.

           First, Pilot alleges it received inadequate disclosure of the Business Reduction

Notifications from Modus, Personal Comfort and Big Fig before the Closing. 95 With

respect to Modus, Pilot concedes the Original Disclosure Schedules revealed that,

“[i]n 2018 and in the ordinary course of business,” Modus “decreased the volume of

services purchased from Seller.”96 But Pilot alleges this disclosure was false and

intentionally misleading because Modus’ 90% purchasing reduction was not

“ordinary course.”97 As for Personal Comfort, Pilot concedes Sellers disclosed that

“in 2018 and in the ordinary course of business, Personal Comfort Beds no longer

purchases services from Seller.”98 Despite this disclosure, Pilot argues it came too

late because it (a) should have been included on the Original Disclosure Statement

and (b) was added to the Updated Disclosure Schedules more than 7 days after

Sellers received notice from Personal Comfort. 99 Finally, as for Big Fig, Pilot

94
     Compl. ¶¶ 91–110.
95
     Compl. ¶¶ 37, 55, 71–72.
96
     Compl. ¶ 49.
97
     Id.
98
     Compl. ¶¶ 64, 67.
99
  Compl. ¶ 67; see APA § 10.7 (stating that, to be effective, any updated disclosure must
be made “within seven (7) days of [Manna] first obtaining such Knowledge”).

                                              24
contends Sellers did not make any disclosure of Big Fig’s Business Reduction

Notification even though it was received pre-Closing.100

         Taken together, Pilot argues these factual allegations state viable claims for

breach of the Customer Rep (requiring disclosure of Business Reduction

Notifications)—as well as the representations in Section 5.6 (accuracy of financial

statements) and Section 5.8 (absence of material adverse effect). 101 On the latter

claim, it appears Pilot would have the Court conclude that these three customers’

departure had such a severe impact on the Company as a whole that it caused a

“Material Adverse Effect.”102 Pilot levels this claim even though the total loss of

Modus, Personal Comfort and Big Fig would have accounted for no more than 6%

of the Company’s total revenue even if the Company added no new customers during

2018. 103

         Pilot’s theory as to Section 5.6 is even less clear. Pilot does not allege the

Company’s financial statements were inaccurate (i.e., that the Company made more

100
      Compl. ¶¶ 71–72.
101
      Compl. ¶¶ 51–52, 66–67, 73.
102
      Compl. ¶¶ 50, 65.
103
   See Compl. ¶ 36 ($2,317,000 revenue attributed to Modus during 2017), ¶ 47 (Modus’
2017 revenue was 4% of total revenue), ¶ 55 ($446,000 revenue attributed to Personal
Comfort during 2017), ¶ 68 ($452,000 revenue attributed to Big Fig during 2017). The
product of $2,317,000 and 100 divided by 4 renders the Company’s total revenue during
2017 (i.e., $57,925,000).

                                           25
or less money than Sellers reported). Rather, Pilot appears to argue that because

Manna failed to disclose the Business Reduction Notifications, the Company’s

financial statements no longer “present fairly . . . the financial position of [Manna]”

on a prospective basis. 104 And yet, to be clear, Pilot does not allege Sellers provided

it with any financial forecasts—only backwards-looking financial statements.

         Second, and unrelated to the Business Reduction Notification claims, Pilot

alleges Sellers breached the representation in Section 5.24 of the APA because the

Big Fig receivable of $127,114 on the Company’s disclosure statements was not a

“bona fide” receivable. 105 The Complaint alleges Sellers had “actual knowledge that

the full amount of the receivable was uncollectible.” 106

         Third, Pilot brings a claim predicated on the verb tense of Sellers’ disclosure

related to Forward Air’s price increase. Specifically, Pilot argues that when it was

told Forward Air “has increased its prices,” it was misled to believe that “the price

increase . . . was already reflected” in the Company’s financial statements

104
      Compl. ¶ 51; PAB at 29–31.
105
   Compl. ¶¶ 74–76; see APA § 5.24 (Sellers’ representation that “[a]ll of the accounts
receivable reflected on the Interim Balance Sheet are . . . actual and bona fide
receivables . . . . Such accounts receivable . . . are stated [] in accordance with GAAP . . . .
Except as set forth on [the Original Disclosure Schedule], to the Knowledge of [Manna],
there are not (i) any amounts in excess of $10,000 due . . . that is in dispute”).
106
      Compl. ¶¶ 74–76.

                                              26
(it was not). 107 This, by Pilot’s lights, constitutes a breach of Sellers’ representation

in Section 5.28 (captioned “Vendors”).108

         Fourth, Pilot makes breach claims unrelated to Sellers’ representations and

warranties. Specifically, it alleges Sellers breached Sections 10.7 and 3.2 of the

APA by failing to update the Original Disclosure Schedules within 7 days of

becoming aware of any matter that would constitute a breach of their representations

and warranties (Section 10.7) and failing to accept responsibility for GE’s offset

claim of $69,440 as an “Excluded Liability” (Section 3.2).109

         In Counts III–VI, Pilot repurposes the factual predicates of its breach of

contract claims to plead breach of the implied covenant of good faith and fair

dealing,      fraud,   fraudulent   inducement       and    negligent     misrepresentation,

respectively. 110

107
      Compl. ¶¶ 79–80 (emphasis in original).
108
    Compl. ¶¶ 77–82; see APA § 5.28 (“Set forth on [the Original Disclosure Schedules] is
a true and complete list of [Manna’s] 30 largest vendors . . . . Since January 1, 2016, neither
[Manna] nor Owner has received written notice . . . that any Material Vendor intends or
expects to . . . materially change . . . any of the material terms . . . with respect to its
provision of goods.”).
109
      Compl. ¶¶ 23, 83–86; PAB at 9, 20.
110
      Compl. ¶¶ 111–165.

                                                27
         In response, Sellers have moved to dismiss the Complaint under Court of

Chancery Rule 12(b)(6) for failure to plead viable claims and Rule 9(b) for failure

to plead fraud with particularity. 111

                                        II. ANALYSIS

         The standards for deciding a motion to dismiss under Court of Chancery

Rule 12(b)(6) is well-settled:

         (i) all well-pleaded factual allegations are accepted as true; (ii) even
         vague allegations are “well-pleaded” if they give the opposing party
         notice of the claim; (iii) the Court must draw all reasonable inferences
         in favor of the non-moving party; and (iv) dismissal is inappropriate
         unless the plaintiff would not be entitled to recover under any
         reasonably conceivable set of circumstances susceptible of proof. 112

      A. Breach of Contract Claims (Counts I–II)

         To prevail on a breach of contract claim, Pilot must plead and prove “(1) the

existence of a contract; (2) the breach of an obligation imposed by the contract; and

(3) damages that the plaintiff suffered as a result of the breach.”113 Of these

elements, only the second is in dispute.114

111
      D.I. 12; Ct. Ch. R. 12(b)(6); Ct. Ch. R. 9(b).
112
      Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (citation omitted).
113
  Osram Sylvania Inc. v. Townsend Ventures, LLC, 2013 WL 6199554, at *6 (Del. Ch.
Nov. 19, 2013).
114
   See Defs.’ Opening Br. in Supp. of Mot. to Dismiss Pl.’s Verified Compl. (“DOB”)
(D.I. 14) at 29.

                                                28
            Breach of contract claims are susceptible to disposition on a motion to dismiss

“[w]hen the language of [the] contract is plain and unambiguous.” 115 Contract

language is ambiguous “only when the provisions in controversy are reasonably or

fairly susceptible of different interpretations or may have two or more different

meanings.”116 If the plaintiff has proffered a reasonable construction upon which its

claim of breach rests, the motion to dismiss must be denied.117

               Pilot’s Indemnification Claims

            The main thrust of Pilot’s breach of contract claim is that certain Seller

representations and warranties were untrue (both at Signing and again at Closing)

and that Pilot is thus entitled to indemnification under Section 9.1 of the APA.118

In particular, many of Pilot’s claims turn on the Customer Rep in Section 5.27 and

the allegations that while Modus, Personal Comfort and Big Fig were top customers

during 2017, by the summer of 2018, Sellers knew those customers would no longer

do business with Manna. 119 Pilot maintains these customer departures triggered

115
      Id.
116
      AT&T Corp. v. Lillis, 953 A.2d 241, 252 (Del. 2008) (quotations omitted).
117
  Caspian Alpha Long Credit Fund, L.P. v. GS Mezzanine P’rs 2006, L.P., 93 A.3d 1203,
1205 (Del. 2014); Kahn v. Portnoy, 2008 WL 5197164, at *1 (Del. Ch. Dec. 11, 2008).
118
      Compl. ¶ 96 (alleging breaches of Sections 5.6, 5.8, 5.24, 5.27 and 5.28).
119
      Compl. ¶¶ 37–39, 55, 68–69.

                                               29
Sellers’ obligation to disclose their receipt of a Business Reduction Notification

under Section 5.27. 120 Even though Sellers did disclose that Modus and Personal

Comfort had reduced their purchases during 2018, Pilot alleges the disclosure

schedules were misleading because they stated Modus and Personal Comfort had

decreased purchases “in the ordinary course” of business, and there was no

disclosure as to Big Fig.121

            The default statute of limitations for breach of contract is three years.122

Delaware law, however, permits parties to shorten the three-year statute of

limitations by contract if “(1) the claims are based on a written contract; (2) the

contract involved at least $100,000; and (3) the contract specifies a period for claims

to accrue.”123 There is no dispute that Pilot’s indemnification claims are based on a

written contract that involves at least $100,000.124 The parties dispute the third

element—whether the APA sets a contractual limitations period.

120
      Compl. ¶¶ 49, 64, 72.
121
      Id.
122
      10 Del. C. § 8106(a).
123
  10 Del. C. § 8106(c); AssuredPartners of Va. v. William Patrick Sheehan, 2020
WL 2789706, at *15 (Del. Super. Ct. May 29, 2020).
124
      See APA § 2.2(c) (discussing the “Estimated Cash Purchase Price”).

                                             30
      In Delaware, the default rule is that representations and warranties do not

survive closing, but parties may agree to create a contractual survival period if they

so choose:

      Absent contract language providing to the contrary, pre-closing
      representations about the acquired property interest become ineffective
      post-closing under the same rationale that causes representations about
      real property to merge with a warranty deed. . . . [But] [p]arties can
      contract for representations to survive closing by incorporating a
      survival clause in the transaction agreement. 125

To the extent representations and warranties survive closing, claims that a party’s

representations were false must be brought within the applicable limitations period,

whether contractual or statutory as the case may be. 126

      “There is no special rule requiring that in order to contractually shorten the

statute of limitations, parties [must] utilize clear and explicit language.”127 Rather,

“Delaware courts have interpreted contractual provisions that limit the survival of

representations and warranties as evidencing an intent to shorten the period of time

125
    Bear Stearns Mortg. Funding Tr. 2006-SL1 v. EMC Mortg. LLC, 2015 WL 139731,
at *14 (Del. Ch. Jan. 12, 2015) (internal quotation and citation omitted).
126
   See Shaw v. Aetna Life Ins. Co., 395 A.2d 384, 386 (Del. Super. Ct. 1978) (“The
Delaware decisions follow the general principle that contractual limitation of actions
periods are valid if they are reasonable.”).
127
   GRT, Inc. v. Marathon GTF Tech., Ltd., 2011 WL 2682898, at *12 (Del. Ch. July 11,
2011) (internal quotation omitted).

                                          31
in which a claim for breach of those representations and warranties may be brought,

i.e., the statute of limitations.”128

            In the APA, the parties agreed Sellers’ representations and warranties (other

than fundamental representations and warranties that are not at issue) “shall survive

for a period of 15 months after the Closing.” 129 Pilot filed the Complaint more than

15 months after the Closing. 130 Given this express limitations period, and the settled

law that claims for breaches of representations and warranties accrue at closing,

Pilot’s claims for breaches of Sellers’ representations and warranties are untimely.131

            Pilot attempts to escape this conclusion by making four arguments, each of

which it foreswore in the APA itself. First, Pilot reasons that because Manna’s

indemnity obligations survive for “3 years after the Closing date,” that must mean

that Pilot can sue Manna for breached representations and warranties any time within

128
      Id.
129
      APA § 9.3.
130
   Compare APA § 9.3 (stating “all” representations and warranties “shall survive for a
period of 15 months after the Closing”), and Compl. ¶ 18 (The APA closed on July 16,
2018.), with D.I. 1 (showing that the Complaint was filed on December 11, 2019).
131
   GRT, 2011 WL 2682898, at *6 (“Because representations and warranties about facts
pre-existing, or contemporaneous with, a contract's closing are to be true and accurate when
made, a breach occurs on the date of the contract's closing and hence the cause of action
accrues on that date.”).

                                              32
three years post-Closing. 132      This is wrong.      In Section 9.3, Pilot expressly

acknowledged that:

         No claim for indemnification as to representations and warranties
         under this Agreement may be made after [15 Months] . . . and Seller
         and the Owners shall have no Liability for any claims made after the
         expiration of such applicable period for breach of or an inaccuracy
         when made of a representation or warranty. 133

         Because I must “interpret contractual provisions in a way that gives effect to

every term of the instrument,” I must give effect to Section 9.3, which specifically

and explicitly subjects breach of representation and warranty claims to a truncated

15-month survival period.134 This reading dovetails with the more general 3-year

indemnification period because other indemnification obligations (such as the

obligation to defend against certain third party claims) are not swept into the 15-

month survival clause for inaccurate representations and warranties.135 Stated

differently, Sellers’ obligations to indemnify Pilot for damages caused by inaccurate

representations and warranties subject to the 15-month limitations period are a

132
      PAB at 16.
133
      APA § 9.3 (emphasis supplied).
134
    Aircraft Serv. Int’l, Inc. v. TBI Overseas Hldgs., Inc., 2014 WL 4101660, at *3
(Del. Super. Ct. Aug. 5, 2014); see also DCV Hldgs., Inc. v. Con Agra, Inc., 889 A.2d 954,
961 (Del. 2005) (“Specific language in a contract controls over general language, and
where specific and general provisions conflict, the specific provision ordinarily qualifies
the meaning of the general one.”).
135
      See APA § 9.5 (captioned “Notice and Opportunity to Defend”).

                                            33
subset of the losses for which Pilot is entitled indemnity. 136 But, as to this subset,

Pilot committed that any claims would be brought within 15 months of Closing.

         Second, Pilot argues “written notice is plainly sufficient to” toll the 15-month

survival period.137 As Pilot sees it, because it gave Sellers a written demand notice

on October 14, 2019 (within 15 months of Closing), it had until the expiration of the

3-year indemnification period to file its claims. 138 Pilot points to the following

language from Section 9.3 as support for its tolling argument:

         All demands or claims for indemnification under this Agreement shall
         be in writing and shall set forth with reasonable specificity the basis for
         such demand or claim and the amount of such claim (if known). 139

No matter how emphatically Pilot argues “written notice is plainly sufficient,”

nothing in the APA says that an indemnification demand (rather than filing suit) will

toll the survival period.140          Pilot expressly agreed that “[n]o claim for

indemnification” would be filed after 15 months post-Closing; its post hoc spin is

unreasonable.

136
   See APA § 9.1 (obligating Sellers to indemnify Pilot for, among other things, “(a) any
breach . . . of any representation and warranty of [Manna],” “(b) the non-fulfillment of any
covenant,” “(c) any Excluded Liabilities,” “(d) any Excluded Taxes”).
137
      PAB at 18.
138
      Compl. ¶ 88; PAB at 17–18.
139
      PAB at 18 (citing APA § 9.3).
140
      PAB at 18.

                                             34
       This is not a novel proposition.           While it is true that “[p]arties may

contractually agree that an indemnification notice tolls the limitation period until the

underlying claim is resolved,” the APA contains no such tolling provision.141

In Delaware, by default:

       when parties have shortened the statute of limitations by providing that
       representations and warranties survive only through a specified date,
       the party claiming breach must file suit within the specified time period.
       Providing notice within the specified time period is not enough.142

To be sure, the APA requires that indemnification “demands” be made in writing,

but Pilot’s argument conflates contractual conditions precedent to asserting an

indemnification claim (i.e., written notice) with the contractual 15-month limitations

period. There is nothing inconsistent with “a contractual limitations period that

requires the parties to preserve rights by filing a lawsuit, but that still provides for

extrajudicial dispute resolution procedures.” 143

141
   See, e.g., Aircraft, 2014 WL 4101660, at *4 (involving the following contractual
language: “if written notice of a violation or breach of any specified representation . . . is
given to the party charged with such violation or breach during the period provided . . .
such representation [or] warranty . . . shall continue to survive”).
142
   Friedman Fleischer & Lowe, LLC v. Accentcare, Inc., 2016 WL 6967898, at *3
(Del. Ch. Nov. 29, 2016) (citing ENI Hldgs., LLC v. KBR Gp. Hldgs., LLC, 2013
WL 6186326, at *9–10 (Del. Ch. Nov. 27, 2013); GRT, 2011 WL 2682898, at *9–10)
(emphasis supplied).
143
    ENI, 2013 WL 6186326, at *10 (stating “[i]t is not a reasonable interpretation of the
SPA that KBR can preserve a lawsuit based on an expired representation or warranty
merely by providing notice before the applicable Termination Date”); see also Kilcullen v.
Spectro Sci., Inc., 2019 WL 3074569, at *6 (Del. Ch. July 15, 2019) (“Because Spectro’s
claim notice did not toll the statute of limitation, Spectro’s Indemnification Counterclaims
                                             35
         Third, Pilot argues the APA did not require it to file suit within 15 months

because the APA did not expressly state that representations and warranties

“terminated on the survival expiration date.” 144 As noted, Delaware does not require

explicit language to set a contractual limitations period. 145 Where, as here, a contract

provides “the representations and warranties of the Seller . . . shall survive until” a

specified date, such language unambiguously sets a contractual limitations period.146

And even if this language were not enough to set a limitations period (it is), to

reiterate, Section 9.3 states “no claim” for inaccurate representations and warranties

“may be made after” 15 months of Closing. 147

         Finally, Pilot claims the contractual limitations period should be tolled

because Sellers “acted to affirmatively conceal the wrong.”148 In this regard, I gather

based on the representations provision are dismissed as time-barred.”); GRT, 2011
WL 2682898, at *15 (“The most persuasive authorities conclude that [a] survival clause
with a discrete survival period has the effect of granting the non-representing and
warranting party a limited period of time in which to file a post-closing lawsuit.”)
(emphasis supplied).
144
      PAB at 16 (emphasis in original).
145
      GRT, 2011 WL 2682898, at *12.
146
   See Aircraft, 2014 WL 4101660, at *3 (holding the following language set a contractual
limitations period: “the representations and warranties of the Seller contained in
Section 2.15 hereof shall survive until the second anniversary of the Closing Date”).
147
      APA § 9.3.
148
      PAB at 21 (citing Lincoln v. Snyder, 722 F. Supp. 546, 563 (D. Del. 2010)).

                                              36
Pilot seeks to invoke the doctrine of fraudulent concealment. 149           “Under this

doctrine, a plaintiff must allege an affirmative act of ‘actual artifice’ by the defendant

that either prevented the plaintiff from gaining knowledge of material facts or led

the plaintiff away from the truth.” 150 While not stated clearly in its briefs, Pilot’s

theory seems to be that the top Customer Rep “put Pilot off the ‘trail of inquiry,’”

meaning that Pilot relied on the top Customer Rep and did not notice the departure

of key customers until it was too late.151

            The    fraudulent   concealment    doctrine    cannot   resuscitate   Pilot’s

indemnification claims because “relief” from the limitations period “extends only

until the plaintiff is put on inquiry notice.” 152 “No theory will toll the statute beyond

the point where the plaintiff was objectively aware, or should have been aware, of

facts giving rise to the wrong.”153 Importantly, “inquiry notice does not require

actual discovery of the reason for injury,” but instead “exists when plaintiff becomes

149
   PAB at 21 (citing CertainTeed Corp. v. Celotex Corp., 2005 WL 217032, at *8 (Del. Ch.
Jan. 24, 2005)).
150
      In re Tyson Foods, Inc., 919 A.2d 563, 585 (Del. Ch. 2007).
151
      PAB at 22.
152
      Tyson Foods, 919 A.2d at 585.
153
      Id.

                                              37
aware of facts sufficient to put a person of ordinary intelligence and prudence on

inquiry which, if pursued, would lead to the discovery of injury.” 154

         Pilot has pled that when it took over Manna’s business, the Company’s

“fourth” largest customer (accounting for $2,317,000 in revenue) had reduced its

purchases by “90%,” and the Company’s “twenty-fifth” largest customer “was no

longer a customer at all.”155 Pilot alleges these departures were so significant that

they caused a Material Adverse Effect (as defined in the APA) on the Company

before Closing.156 This means that Pilot believes the Company had experienced such

a “significant deterioration” in its business that the “fundamentals of the deal” were

threatened.157 In other words, by the time Pilot took the helm at the Company, ship’s

alarms had been ringing for months. Against this backdrop, even after affording it

all reasonable inferences, Pilot cannot make a reasonably conceivable case for

fraudulent concealment given that it was indisputably on inquiry notice of the

alleged breach well within the limitations period.158

154
      Certainteed, 2005 WL 217032, at *7 (internal quotation omitted).
155
      Compl. ¶¶ 48, 54–55.
156
      Compl. ¶ 101; PAB at 32.
157
   Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347, at *47 (Del. Ch. Oct 1, 2018)
(construing a contractual “MAE Condition”).
158
   See, e.g., Compl. ¶ 55 (“Personal Comfort was no longer a customer at all” by “June 26,
2018”). Pilot’s citation to Vice Chancellor Glasscock’s decision in MKE Holdings v.
Schwartz is misplaced. PAB at 22 (citing MKE Hldgs. LTD., v. Schwartz, 2020
                                             38
         The Survival clause represents bargained-for “risk allocation.”159 If Pilot

wanted a longer period within which to ascertain whether Sellers’ representations

and warranties were accurate, it could have shifted that risk to the Sellers by

negotiating a longer survival period. Now that Pilot memorialized the terms of its

agreement with Sellers in the form of a clear and unambiguous contract, the Court

cannot allow Pilot to re-trade rights it knowingly bargained away. 160 For this reason,

Pilot’s claims for breaches of Sections 5.6, 5.8, 5.24, 5.27 and 5.28 must be

dismissed. 161

WL 467937, at *11 (Del. Ch. Jan. 29, 2020)). There, defendants solicited a $7 million
investment by touting a company’s financial performance while taking affirmative steps to
shield specific, negative accounting reports from plaintiffs’ due diligence review. The
plaintiffs received the relevant accounting memoranda only after they made a books and
records demand. Id. at *11–12. Here, on the other hand, Pilot has not pled that Sellers
stashed away unflattering documents in a forgotten filing cabinet. Rather, key customers
that had been a focus of Pilot’s due diligence review stopped sending any business to
Manna before the APA closed. Under any reasonably conceivable set of circumstances
susceptible of proof, if Pilot had exercised “reasonable diligence,” it would have
discovered its injury from these lost customers immediately after the Closing. Certainteed,
2005 WL 217032, at *7.
159
      In re Tibco, 2014 WL 6674444, at *18.
160
   GMG Capital Inv., LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)
(“The Court will give priority to the parties’ intentions as reflected in the four corners of
the agreement.”).
161
      See Compl. ¶¶ 96(a), 101.

                                              39
            Pilot’s Remaining Breach of Contract Claims

         Having determined that Pilot’s claims for breach of Sellers’ representations

and warranties are untimely, I turn to Pilot’s remaining breach of contract claims.

Pilot maintains that even if its claims under Article 5 (Sellers’ representations and

warranties) are untimely, it has stated a viable claim under two provisions of the

APA that are not subject to the 15-month survival period. I agree, at least as to one

of the remaining breach claims.

         Even though not separately pled in the Complaint, Pilot has argued in its

Answering Brief that it stated a separate claim for breach of Section 10.7. 162 Pilot’s

newfound claim appears to rest on its interpretation of the APA that Sellers “were

required to update” the Original Disclosure Schedules if they received a Business

Reduction Notification. 163 That is not what Section 10.7 says. To the contrary, it

states, in relevant part:

         [Manna] and the Owners may from time to time before Closing update
         the Disclosure Schedules regarding any matter about which they obtain
         Knowledge . . . that would constitute a breach of any of the
         representations and warranties in this Agreement . . . provided, any such
         update . . . shall be made within seven [] days of [Manna] first obtaining
         such Knowledge. No such supplement or amendment shall have any
         effect on the satisfaction of the conditions to closing . . . provided,
         however, if [Pilot] proceeds with the Closing, then [Pilot] . . . shall be

162
    Compare PAB at 20 (arguing Pilot breached Section 10.7), with Compl. ¶¶ 96, 101
(alleging breaches of Sections 3.2, 5.6, 5.8, 5.24, 5.27, 5.28 and 9.1 of the APA).
163
      See Compl. ¶ 23 (citing APA § 10.7).

                                             40
         deemed to have waived any right or claim pursuant to the terms of this
         Agreement . . . with respect to any and all matters disclosed.164

         On its face, Section 10.7 is permissive not mandatory.165 It does not create

new obligations. Indeed, to the extent Sellers provide updated disclosures, the

supplemental disclosure has no impact on whether (or not) their representations and

warranties were accurate when made. 166 It is true that if updated disclosures were

given more than seven days after Manna obtained the relevant Knowledge, then

Sellers could not rely on the Updated Disclosure Schedules to argue that Pilot had

waived its right to seek indemnification by proceeding to Closing. But that is a

separate question from whether Section 10.7 creates an obligation. On its face, it

does not.

         Pilot next alleges it is entitled to indemnification for certain “Excluded

Liabilities” under Sections 3.2 and 9.1(c) of the APA related to Manna’s customer,

164
      APA § 10.7 (emphasis supplied).
165
    See Miller v. Spicer, 602 A.2d 65, 67 (Del. 1991) (“The use of the verb ‘shall’ . . .
generally connotes a mandatory requirement while the verb ‘may’ is deemed permissive.”)
(citation omitted).
166
      APA § 10.7.

                                           41
GE. 167     Since this allegation does not involve an inaccurate representation or

warranty subject to the 15-month survival period, it is not time barred.168

         According to Pilot, after Closing, “GE [] determined that it had made an

administrative error,” and asserted that it had suffered a loss of $69,440 due to a

“shipment issue[]” that Manna caused “prior to Closing.”169 After it discovered the

“shipment issue,” GE “set-off and reduced its payments to Pilot.”170 Tracing this

factual allegation through the APA, Pilot argues this pre-Closing “shipment issue”

was an “Excluded Liability” for which it is entitled to indemnification under

Section 9.1(c). 171

         The APA defines “Excluded Liabilities” as, among other things, “[a]ny

liabilities or obligations with respect to [Manna’s shipping business] arising prior to

the Closing Date”; but, “for the avoidance of doubt,” Excluded Liabilities do not

include any “Assumed Liabilities”—even if they arose prior to Closing. 172 In turn,

167
      Compl. ¶ 83.
168
   See APA § 3.2 (stating Pilot “shall not assume or in any way become liable for . . .
Excluded Liabilities”); § 9.1 (requiring Sellers to indemnify Pilot for “Excluded
Liabilities”).
169
      Compl. ¶ 86.
170
      Compl. ¶ 85.
171
      See APA § 9.1(c).
172
      APA § 3.2(a).

                                          42
“Assumed Liabilities” include “all Services Liabilities to the extent of the reserves,

accruals, and allowances in the Final Net Working Capital.” 173 Finally, the APA

defines “Services Liabilities” as “all liabilities and obligations incurred in

connection with Seller’s delivery of products in the ordinary course of business,

including related to customer claims for cargo damages or loss, or related to property

damage incurred in the ordinary course of business in connection with the delivery

of products.”174

         The upshot is that the APA allocates Manna’s pre-Closing liabilities to

Sellers—except for all “Services Liabilities” which Pilot assumes up to the net

working capital target. 175 Pilot has not alleged the GE liability would cause Services

Liabilities to exceed the net working capital target. This means the parties’ dispute

turns on whether (or not) it is reasonably conceivable the GE liability is something

other than a “Services Liability.” 176 To put an even finer point on the disagreement,

I must decide whether it is reasonably conceivable that GE’s set-off of $69,440—

caused by “shipment issue[s]”—is a liability “incurred in connection with [Manna’s]

173
      APA § 3.1(c).
174
      APA § 12(aa) (definition of “Services Liabilities”) (emphasis supplied).
175
      See APA §§ 3.1–3.2.
176
   APA § 3.1(c) (stating Pilot assumed all “Services Liabilities to the extent of . . . the
Final Net Working Capital”).

                                              43
delivery of products in the ordinary course of business” (i.e., a “Services

Liability”). 177

            If the GE liability is a “Services Liability,” then the GE liability is Pilot’s to

bear as an “Assumed Liability.” 178 While Pilot has pled nothing more about the GE

liability than a vague reference to its origin (“shipment issues”) and its amount, I am

satisfied there exists a “reasonably conceivable set of circumstances susceptible of

proof” in which a reasonable factfinder could conclude the GE liability was incurred

outside the ordinary course of business.179 As such, it is reasonably conceivable that

Pilot is entitled to indemnification for the GE liability as an Excluded Liability under

Section 3.2, and Pilot has stated a viable (albeit narrow) claim for breach of contract

on that basis.

      B. Pilot’s Implied Covenant Claim (Count III)

            In Count III, Pilot alleges Sellers breached the implied covenant of good faith

and fair dealing by:

            (i) intentionally misrepresenting and omitting material information in
            order to fraudulently induce Pilot into signing the Asset Purchase
            Agreement and to subsequently close the acquisition; (ii) falsely
            engineering its disclosures to misrepresent and overstate customer
            revenue; (iii) intentionally delaying making disclosures and making
            disclosures that are intentionally ambiguous and misleading;

177
      APA § 12(aa) (definition of “Services Liabilities”).
178
      Id.
179
      CML V, LLC v. Bax, 28 A.3d 1037, 1040 (Del. 2011).

                                                44
          (iv) manipulating [Manna’s] gross revenue calculations to reflect a time
          period that did not fairly and accurately portray the financial condition
          of Manna prior to closing; and (v) refusing to execute the joint written
          instructions in order to release the Escrow Property. 180

While the laundry list of generalized grievances is lengthy, Count III rests on the

same factual allegations that support Pilot’s breach of contract claims. 181 And for

that reason, none of the grievances can sustain a viable claim for breach of the

implied covenant.

          The implied covenant of good faith and fair dealing “involves a ‘cautious

enterprise,’ inferring contractual terms to handle developments or contractual gaps

that the asserting party pleads neither party anticipated.”182 Courts will not “rewrite

the contract to appease a party who later wishes to rewrite a contract he now believes

to have been a bad deal. Parties have a right to enter into good and bad contracts,

the law enforces both.” 183

          Each of Pilot’s implied covenant allegations fails for two reasons. First, Pilot

cannot state a viable implied covenant claim by recycling its allegations that Sellers

180
      APA § 120.
181
   Compl. ¶¶ 111–124 (“Sellers covenanted that [they] would act in good faith to provide
accurate and truthful representations.”).
182
      Nemec v. Schrader, 991 A.2d 1120, 1125 (Del. 2010).
183
      Id. at 1126.

                                             45
breached express provisions in the APA. 184 It is black letter law that where the APA

“expressly addresses a particular matter” (such as Manna’s top Customers and the

absence of Business Reduction Notifications), Manna cannot salvage its untimely

breach of contract claims by recasting them under the implied covenant. 185

          Second, and relatedly, Pilot has not identified a “gap that the implied

covenant might fill.”186 Pilot would have the Court infer a “free-floating duty,”

unattached to the APA, requiring Sellers to “provide accurate and honest

representations of Manna’s financial condition.”187 Specifically, Pilot takes issue

with Sellers’ strategic negotiation of the Customer Rep (by only agreeing to disclose

Manna’s top customers in 2017 rather than 2018), and argues this negotiation tactic

amounted to bad faith “manipulat[ion]” of the “substance and timing” of Sellers’

184
   Narrowstep, Inc. v. Onstream Media Corp., 2010 WL 5422405, at *10 (Del. Ch.
Dec. 22, 2010) (finding implied covenant claim not available when “the subject at issue is
expressly covered by the contract”) (internal quotations & citation omitted); see also Fortis
Advisors LLC v. Dialog Semiconductor PLC, 2015 WL 401371, at *3 (Del. Ch. Jan. 30,
2015) (“Where the contract speaks directly regarding the issue in dispute, existing contract
terms control . . . such that implied good faith cannot be used to circumvent the parties’
bargain.”) (internal quotations and citation omitted).
185
   Brightstar Corp. v. PCS Wireless, LLC, 2019 WL 3714917, at *12 (Del. Super. Ct.
Aug. 7, 2019) (“Where a contract expressly addresses a particular matter, ‘an implied
covenant claim respecting that matter is duplicative and not viable.’”) (quoting Edinburgh
Hldgs. v. Educ. Affiliates, Inc., 2018 WL 2727542, at *9 (Del. Ch. June 6, 2018)).
186
      Allen v. El Paso Pipeline GP Co., L.L.C., 113 A.3d 167, 183 (Del. Ch. June 20, 2014).
187
    PAB at 39; Longerman v. EPE Hldgs., LLC, 5 A.3d 1008, 1017 (Del. Ch. 2010)
(“Implied good faith cannot be used to circumvent the parties’ bargain, or to create a free-
floating duty unattached to the underlying legal documents.”).

                                             46
disclosures. 188 If the implied covenant worked to circumvent carefully negotiated

representations and warranties in this manner, then it could be weaponized by any

dissatisfied deal party to re-trade the deal regardless of what was bargained-for. That

is not how contractarian expectations or the implied covenant work.

          Contrary to Pilot’s argument, it is precisely because the parties carefully

negotiated the “substance and timing” of Sellers’ representations and warranties that

Pilot cannot identify a gap within which the implied covenant might fit.189 Indeed,

the representations and warranties Sellers are alleged to have breached served an

“important risk allocation function” regarding the possibility that Manna’s financial

position would deteriorate before Closing.190           Because the parties explicitly

addressed the issues about which Pilot now complains, the implied covenant cannot

188
   PAB at 39; see, e.g., APA § 5.27 (requiring disclosure of the Company’s to customers
for “calendar year 2017”).
189
      See PAB at 39.
190
    In re Tibco, 2014 WL 6674444, at *18 (discussing the role of representations and
warranties in “heavily negotiated” agreements and their “important risk allocation
function”) (internal quotations omitted); see also Emp.’s Ret. Sys. of City of St. Louis v.
TC Pipelines GP, Inc., 2016 WL 2859790, at *6 (Del. Ch. May 11, 2016) (“The Courts
apply the implied covenant . . . cautiously to infer contractual terms or gaps to address
situations that the contracting parties did not anticipate.”).

                                            47
“create rights that contradict an express contractual provision” of the APA.191

Count III fails as a matter of law.

      C. Fraud Claims (Counts IV-VI)

         Even though Pilot packages its fraud claims in three, separate counts, it is hard

to tell them apart—not only from each other, but also from the breach of contract

claims I have addressed above. In Counts IV–VI, Pilot alleges that the same course

of conduct underlying its breach of contract claims also gives rise to actionable

fraud, fraudulent inducement and negligent misrepresentation.192             In response,

Sellers maintain all of Pilot’s fraud claims should be dismissed because they (i) are

untimely, (ii) impermissibly bypass the APA’s non-reliance provision, (iii) fail to

plead fraud with particularity as required by Court of Chancery Rule 9(b) and (iv) are

duplicative of Pilot’s breach of contract claims. 193 I address each argument seriatim.

191
   Great-West Inv’rs LP v. Thomas H. Lee P’rs, L.P., 2011 WL 284992, at *5 (Del. Ch.
Jan. 14, 2011); see APA § 5.8 (captioned “Absence of Changes”); § 5.27 (requiring notice
of Business Reduction Notifications).
192
    See Compl. ¶ 127(a) (alleging representations regarding Modus were false), ¶ 129
(alleging representations in Section 5.6, 5.8, 5.24 and 5.28 were false), ¶¶ 139–54, 156–65
(similar); see also Fortis Advisors, 2015 WL 401371, at *9 (noting that “a claim for
negligent misrepresentation is often referred to interchangeably as equitable fraud”).
193
      DOB at 44–52, 54–55.

                                            48
               The APA Does Not Unambiguously Require Pilot’s Fraud Claims to
               be Brought Within 15 Months

            Before turning to the other aspects of Pilot’s fraud claims, I address Sellers’

threshold argument that Pilot’s fraud claims are untimely. “Delaware’s statute of

limitations for claims sounding in fraud . . . is three years.”194 Even though Pilot has

brought this action within the statutory limitations period, Sellers argue that

Section 9.3 not only bars Pilot’s breach of representation and warranty claims

(as discussed above), but also requires dismissal of Pilot’s fraud claims. 195

            Sellers concede that no Delaware court has adopted this line of reasoning, but

urges the Court to embark on a three-step analytical expedition to reach their

heretofore-uncharted destination.196 First, the default rule in Delaware is that

representations and warranties do not survive closing. 197 A survival clause, in

essence, gives breath to any claim predicated on a party’s representations and

warranties only for as long as the clause allows. Second, Pilot promised not to rely

on any statements about the Company other than those embodied in Sellers’

194
    Winklevoss Capital Fund, LLC v. Shaw, 2019 WL 994534, at *5 (Del. Ch. Mar. 1, 2019)
(citing 10 Del. C. § 8106).
195
      Telephonic Oral Arg. on Defs.’ Mot. to Dismiss (D.I. 34) at 18–20.
196
      Id.
197
   Bear Stearns, 2015 WL 139731, at *14 (“Absent contract language providing to the
contrary, pre-closing representations about the acquired property interest become
ineffective post-closing.”).

                                               49
contractual representations and warranties. 198 Third, in the APA, Pilot agreed that

Sellers would have “no Liability for any claims made after the expiration” of the 15-

month survival period “for breach of or an inaccuracy when made of a representation

or warranty.” 199 Together, Sellers argue these three steps lead to the inescapable

conclusion that Pilot’s fraud claims, which must be based on Sellers’ representations

and warranties in the APA, come too late.200 In other words, while Delaware law

does not permit a party to “‘lie’ intentionally” in a contract, and a non-reliance

provision cannot bar claims for “intentional fraud” predicated upon knowing

falsehoods in a party’s “written representations,” nothing in our law prohibits a party

from agreeing not to bring such a claim after a prescribed limitations period

expires.201

198
      APA § 9.3.
199
      Id. (emphasis supplied).
200
   H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 144 (Del. Ch. 2003) (stating a plaintiff
must plead he “acted or did not act in justifiable reliance on” defendant’s representation)
(emphasis supplied).
201
   See Abry P’rs V, L.P. v. F&W Acq. LLC, 891 A.2d 1032, 1062 (Del. Ch. 2006) (cited
approvingly in RAA Mgmt., LLC v. Savage Sports Hldgs., Inc., 45 A.3d 107, 116 (Del.
2012)) (stating “there is little support for the notion that it is efficient to exculpate parties
when they lie about the material facts on which a contract is premised” (i.e., contractual
representations and warranties); CLP Toxicology, Inc. v. Casla Bio Hldgs. LLC, 2020
WL 3564622, at *17 (Del. Ch. June 29, 2020) (discussing “intentional fraud” claims
generally and stating that, even though plaintiffs “expressly represented . . . that they were
not relying on any extra-contractual representations,” their “fraud claims may proceed
based on the written representations in the SPA”).

                                               50
            I do not dwell on the soundness of Sellers’ argument because the APA does

not purport to limit “intentional fraud” claims to a 15-month contractual limitations

period. While Section 9.3 does provide that Sellers will have “no Liability for any

claims” based upon “breach” or “inaccuracy” of their representations and warranties

beyond 15 months,202 Section 9.1 makes clear that “[n]othing in this Agreement shall

limit” Pilot’s right to recover “any amounts at any time in connection with any action

or claim based upon intentional fraud by [Sellers] in this Agreement.” 203

            Section 9.1 can be reconciled with Section 9.3 because the former expressly

trumps the latter’s broad language when it states “nothing in this agreement” shall

limit Pilot’s right to bring a claim for “intentional fraud.”204 At some point, in

another case, this court may be called upon to assess the enforceability of a party’s

unambiguous promise to bring intentional fraud claims only within a contractual

limitations period, but the APA does not call this question. Indeed, Section 9.1

unambiguously preserves Pilot’s right to bring intentional fraud claims “at any

time.” 205 Given this clear language, Sellers cannot credibly argue that Pilot’s

intentional fraud claims are untimely.

202
      APA § 9.3 (emphasis supplied).
203
      APA § 9.1 (emphasis supplied).
204
      Id.
205
      Id.

                                             51
            The APA Precludes Extra-Contractual Fraud Claims

         Sellers read the APA as precluding fraud claims based on extra-contractual

promises, representations or warranties.206 I agree.

         In his seminal Abry Partners decision, then-Vice Chancellor Strine reinforced

this court’s dedication to upholding the “free will” of sophisticated parties by

enforcing non-reliance provisions like those in the APA. 207             Abry offers the

following guidance: do not disavow reliance on extra-contractual statements unless

you mean it.208        If a sophisticated party agrees he is relying only on those

representations and warranties in a written contract, and says as much in the contract,

he “may not reasonably rely on information that [he] contractually agreed did not

form a part of the basis for [his] decision to contract.”209 With this in mind, this

court does not hesitate to dismiss fraud claims premised on extra-contractual

representations when the parties’ contract contains an unambiguous mutual covenant

206
      See DOB at 46.
207
      Abry, 891 A.2d at 1058.
208
   Id. (“The enforcement of non-reliance clauses recognizes that parties with free will
should say no rather than lie in a contract.”).
209
   H-M Wexford, 832 A.2d at 142 n.18; see also ev3, Inc. v. Lesh, 114 A.3d 527, 529 n.3
(Del. 2014) (“Delaware courts seek to ensure freedom of contract and promote clarity in
the law in order to facilitate commerce.”); RAA Mgmt., 45 A.3d at 118–19 (“Abry Partners
accurately states Delaware law and explains Delaware’s public policy in favor of enforcing
contractually binding written disclaimers of reliance on representations outside of a final
agreement of sale or merger.”).

                                            52
that neither relied upon extra-contractual promises in connection with their decision

to enter the contract or to make (or receive) promises within the contract.210

         In Section 9.8, Pilot agreed Sellers did not make and “shall not be deemed to

have made, any [] representations or warranties, written or oral, statutory, express or

implied.” 211 And Pilot “EXPRESSLY WAIVE[D] AND AGREE[D] THAT IT IS

NOT RELYING ON, ANY REPRESENTATION OR WARRANTY” (other than

those embodied in the APA) whether “EXPRESS” or “IMPLIED.” 212 In other

words, if Sellers did not say it in the APA, as a matter of law, it was not said. In a

futile effort to escape the legal consequence of its promise, Pilot attempts to expand

the universe of statements (or omissions) on which it is entitled to rely in two ways;

neither are persuasive.

         First, Pilot argues the non-reliance provision does not extend to “Pilot’s

fraudulent omission and concealment claims” because Pilot did not disclaim reliance

210
      Abry, 891 A.2d at 1057.
211
      APA § 9.8.
212
    Id. (emphasis in original); see also id. (Pilot “expressly waives and relinquishes any and
all rights, claims and causes of action against the [Sellers] . . . in connection with, the
accuracy, completeness or materiality of any statements, information data or other
materials (written or oral) or documents heretofore furnished or made available to
[Pilot] . . . by or on behalf of the [Sellers.]”); APA § 14.4 (“This Agreement . . . constitutes
the entire agreement between the parties with respect to the subject matter hereof . . . and
supersede any prior understandings, agreements, or representations and warranties by or
among the parties, written or oral, to the extent they related in any way to the subject matter
hereof or thereof.”).

                                              53
on the “omission” of information or the “completeness” of the information in

Sellers’ representations and warranties.213 Wrong. Pilot promised not to rely on the

“completeness or materiality of any statements, information, data or other materials

(written or oral) or documents heretofore furnished . . . to [it].” 214 This non-reliance

provision is unambiguous, explicit and comprehensive; Pilot “forthrightly affirm[ed]

that [it was] not relying upon any representation or statement of fact not contained

[in the contract],” including whether any statement was “complete.”215

213
      PAB at 49.
214
      APA § 9.8 (emphasis supplied, original in all caps).
215
    Kronenberg v. Katz, 872 A.2d 568, 591 (Del. Ch. 2004); see also Infomedia Gp., Inc. v.
Orange Health Sols., Inc., 2020 WL 4384087, at *8 (Del. Super. Ct. July 31, 2020) (“[T]he
TransDigm court distinguished its holding from other Delaware precedent on the basis that
the anti-reliance clause at issue did not refer to ‘omissions’ and did not disclaim the
‘accuracy or completeness’ of information provided in due diligence.”) (citing TransDigm
Inc. v. Alcoa Glob. Fasteners, Inc., 2013 WL 2326881, at *8 (Del. Ch. May 29, 2013)
(“There is no argument, however, that Alcoa agreed in the Purchase Agreement that
TransDigm was making no representation as to the ‘accuracy and completeness’ of the
information TransDigm provided to Alcoa.”)); RAA Mgmt., 45 A.3d at 115 (addressing a
non-reliance provision including “completeness” language, “RAA acknowledged that . . .
Savage would have no liability, and could not be sued, for any allegedly inaccurate or
incomplete information provided by Savage to RAA during the due diligence process.”);
Infomedia, 2020 WL 4384087, at *8 (“That express repudiation of the validity and
completeness of information provided during due diligence distinguishes the Purchase
Agreement from the stock purchase agreement at issue in TransDigm.”); Wind Point P’rs
VII-A, L.P. v. Insight Equity A.P. X Co., LLC, 2020 WL 5054791, at *17 (Del. Super. Ct.
Aug. 17, 2020) (noting that in the absence of an “accuracy and completeness” clause,
“Wind Point has adequately pleaded fraudulent concealment in the Complaint”
notwithstanding the non-reliance provision). I note that some aspects of TransDigm have
been questioned (or, at least, distinguished) by some Delaware authority—see, e.g., Prairie
Capital III, L.P. v. Double E Hldg. Corp., 132 A.3d 35, 54 (Del. Ch. 2015) (noting that
“[t]o the extent TransDigm suggests that an agreement must use a magic word like
“omissions,” then I respectfully disagree with that interpretation”—but TransDigm’s
                                              54
         Pilot concedes that when there is “an express waiver with respect to the

accuracy or completeness of the information provided,” all extra-contractual

fraudulent omission claims are waived.216 As illustrated in TransDigm, where the

parties elect not to include a “completeness” provision in their non-reliance clause,

they are expressing an intent not to include fraudulent omission claims within the

prohibitive scope of the clause.217 Their decision to include the “completeness”

language, on the other hand, exemplifies an unambiguous intent to preclude extra-

contractual fraudulent concealment and omission claims. 218

         Second, Pilot argues that Sellers deceptively negotiated limitations on the

scope of the Customer Rep, thereby rendering those pre-contract negotiations

fraudulent and yet not barred by the non-reliance clause because they resulted in a

knowingly false contractual promise. 219 I gather the theory is that while the APA

was being negotiated, Pilot requested a representation of the Company’s 30 largest

observation regarding the effect of “completeness” language has not been questioned and,
in my view, the court got the construction of a non-reliance clause with that language just
right.
216
   PAB at 49 (“Delaware Courts have long held that even when a buyer promises not to
rely on representations outside a contract, this does not waive otherwise-viable claims for
fraudulent omissions in the absence of . . . ‘an express waiver with respect to the accuracy
or completeness of the information provided by the Defendants.’”).
217
      TransDigm Inc., 2013 WL 2326881, at *8.
218
      Id.; RAA Mgmt., 45 A.3d at 115; Wind Point, 2020 WL 5054791, at *17.
219
      Compl. ¶¶ 45–50.

                                            55
customers during 2018—which would have revealed falling revenue attributed to

Modus, Personal Comfort and Big Fig. 220 Sellers allegedly recognized that a top

customer list for 2018 would torpedo the deal, so they pushed Pilot to agree that the

top customer list would be limited to 2017. This dynamic, according to Pilot, takes

the non-reliance clause out of the picture.

       Pilot misapprehends the scope of the clause it agreed to as interpreted under

our law. If a dissatisfied buyer could bring a fraud claim against a seller for truthful

representations and warranties that allegedly are the product of a failure to “fairly

and accurately portray the financial condition” of a company, non-reliance

provisions would be meaningless, and sellers would have a free-floating (legally

enforceable) duty to disclose any and all information relevant to a company’s value,

whether asked for or not. 221 If critical information lurks within the interstices of a

220
   Id.; ¶ 127(f) (alleging Sellers fraudulently “manipulate[ed] [Manna’s] gross revenue
calculations to reflect a time period that did not fairly and accurately portray the financial
condition of Manna prior to closing.”) (emphasis supplied); PAB at 47 (“Pilot seeks fraud
damages because it has discovered damning emails that reveal that Sellers intentionally
manipulated and engineered the disclosures in the APA to misrepresent the true status of
Manna’s pre-Closing customer relationships.”) (emphasis supplied).
221
   Compl. ¶ 127(f). Indeed, if a seller negotiated an agreement with no representations
and warranties, a dissatisfied buyer could bring a claim for fraud arguing (as Pilot does
here) that the seller had “engineered” its disclosures to “misrepresent the true status” of the
Company. PAB at 47.

                                              56
counterparty’s truthful representations and warranties, a sophisticated party has a

means to flush that out: negotiate for more fulsome disclosures, full stop.222

          The net effect of an enforceable non-reliance provision and carefully

negotiated representations and warranties is to “define what information the Buyer

relied upon in deciding to execute the Agreement.” 223 In connection with Pilot’s

investigation of the Company’s value, each representation and warranty is like a

piece of a puzzle that Sellers placed on the puzzle table for Pilot’s benefit. Once

Pilot was satisfied it had seen enough of the picture, it stopped negotiating for

additional puzzle pieces and agreed to purchase the Company. 224 Of course, each of

the individual puzzle pieces must be free from defect so that the image depicted is

true. But now that Pilot has assumed control of the Company after assembling the

puzzle to its satisfaction, it cannot construct a fraud claim upon the notion that it

222
   For example, if a seller represents that a car has not been crashed any time during 2012–
2017 or 2019–2020, and a buyer purchases a car promising to rely only on that
representation, the buyer cannot bring a fraud claim if the car was, in fact, crashed during
2018. In the face of a non-reliance provision, the parties’ representations and warranties
“form[] the reality upon which the parties premise[] their decision to bargain.” Abry, 891
A.2d at 1058. With that said, nothing here should be read as prohibiting a buyer from
presenting evidence of extra-contractual omissions as part of its broader presentation in
support of a contractual fraud claim. The point is that the omissions, themselves, cannot
be the bases of fraud claims when the contract contains a non-reliance clause as broad as
the one in the APA.
223
      Id. at 1041.
224
   Id. at 1058 (Representations and warranties “form[] the reality upon which the parties
premised their decision to bargain.”).

                                            57
needed more, or different, pieces in the APA to see the full picture.225 Aggressive

bargaining is not fraud.

            Pilot Has Pled Contractual Fraud With Particularity

         Having determined that Pilot may only rely upon the representations and

warranties within the APA to state a claim for fraud, I address the Sellers’ third

ground for dismissal—that Pilot has failed to plead fraud with the particularity

required by our law. The prima facie elements of fraud are well settled:

         (1) the defendant falsely represented or omitted facts that the defendant
         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 its
         reliance. 226

         To meet the particularity requirement, Rule 9(b) often will require a plaintiff

making a fraud claim to allege: “the time, place, and contents of the false

representation, the identity of the person(s) making the representation, and what he

intended to obtain thereby.” 227 “When a party sues based on a written contract, as

225
    Cf. Compl. ¶ 127(f); PAB at 42 (“Sellers fraudulently manipulated the disclosures they
made regarding the status of Manna’s customer relationships to make it appear that the
business was worth more than it actually was in order to induce Pilot to purchase Manna
at an inflated price.” (citing Compl. ¶¶ 37–49, 67, 72, 129–133, 142–48, 150)).
226
      Abry, 891 A.2d at 1050.
227
   Wexford, 832 A.2d at 145; see also Trenwick Am. Litig. Tr. v. Ernst & Young LLP, 906
A.2d 168, 207–08 (Del. Ch. 2006) (Strine, V.C.), aff’d sub nom. Trenwick Am. Litig. Tr. v.
Billett, 931 A.2d 438 (Del. 2007) (noting that the relevant factors include “the time, place,
                                               58
[Pilot] has done here, it is relatively easy to plead a particularized claim of fraud.”228

“The plaintiff can readily identify who made what representations where and when,

because the specific representations appear in the contract. The plaintiff likewise

can readily identify what the defendant gained, which was to induce the plaintiff to

enter into the contract.” 229 Given that state of mind and knowledge may be averred

generally when pleading fraud, an allegation that a contractual representation is

knowingly false typically will be deemed well pled (even if ultimately difficult to

prove).230

         The Complaint well-pleads that Sellers made three knowingly false statements

in the APA that conceivably amount to fraud. 231 First, Pilot alleges Sellers stated in

and contents of the false representations; the facts misrepresented; the identity of the
person(s) making the misrepresentation; and what that person(s) gained from making the
misrepresentation”).
228
   Prairie Capital, 132 A.3d at 62; see also Swipe Acq. Corp. v. Peter M. Krauss, et al.,
2020 WL 5015863, at *9 (Del. Ch. Aug. 25, 2020) (same).
229
      Prairie Capital, 132 A.3d at 62; see also Swipe, 2020 WL 5015863, at *9 (same).
230
      Abry, 891 A.2d at 1050.
231
    Pilot’s allegations with respect to Forward Air fall short of a viable fraud claim. Pilot
alleges that Sellers disclosed that Forward Air, a vendor of Manna, had increased its prices
and made it seem as if “the price increase had already occurred and was already reflected
in the Interim Balance Sheet.” Compl. ¶ 80. Pilot stops short of alleging that the balance
sheet or income statements themselves were fraudulent, instead insisting that Sellers
intentionally misled Pilot into thinking “the price increase was already booked as an
expense in Manna’s Financial Statement.” Compl. ¶ 82. Yet, nothing in either
Schedule 5.28 or the related representation says or even implies the price increase was or
was not reflected in the Interim Balance Sheet. And Pilot does not even generally plead
that Sellers intended or had knowledge that the representation they made to Pilot regarding
                                             59
the APA that Modus “decreased the volume of services purchased” from the

Company “in the ordinary course of business.”232 In reality, Modus had decreased

its purchases by “90%,” a reduction that “can hardly be considered ‘ordinary

course.’” 233

         Second, Sellers disclosed in the APA that Personal Comfort “no longer

purchases services from” the Company “in the ordinary course of business.” 234 This

statement is alleged to be false because Sellers knew Personal Comfort’s decision to

terminate its business with Manna was anything but “ordinary course.” Instead, the

the price increase was false when made. Even if Sellers had knowledge of a price increase,
this does not support an inference they knew that their disclosures gave the impression that
the price increase had already occurred. It is not surprising, therefore, that the Complaint
makes no such allegation. The fraud claim based on allegedly manipulated “gross revenue
calculations to reflect a time period that did not fairly and accurately portray the financial
condition of Manna prior to Closing” also fails. Compl. ¶ 127f. Pilot fails to cite a single
case where the court found a plaintiff had pled a viable fraud claim based on revenue
calculations that were the subject of highly fluid negotiations between the parties. Pilot
could have negotiated for access to gross revenue calculations for the time periods in
question, but it surely cannot blame Sellers for failing to give it something that it did not
bargain for in the agreement. Finally, the fraud claim based upon Big Fig’s accounts
receivable likewise fails to state a claim. The Updated Disclosure Schedule plainly refutes
that the Sellers “had actual knowledge that the full amount of the receivable was
uncollectible.” Compl. ¶ 74; DOB, Ex. 2 at 28. The schedule indicates that Big Fig had in
fact paid down some of its accounts receivable and Pilot alleges nothing to suggest that Big
Fig had given any indication the payments would stop. DOB, Ex. 2 at 28.
232
      Compl. ¶ 49.
233
      Id. (emphasis in original).
234
      Compl. ¶ 64 (emphasis omitted).

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abrupt departure “resulted from, among other things, ‘several failures that went

horribly wrong.’” 235

         Third, Pilot alleges Sellers represented they had not received a Business

Reduction Notification from Big Fig even though Big Fig “advised Sellers prior to

Closing that it no longer intended to be a customer of Manna’s.” 236 According to

Pilot, Sellers affirmatively made “the false statement that Big Fig was Sellers’

twenty-fourth largest customer . . . despite having Knowledge that Big Fig was no

longer a customer at all.”237 While the APA makes no specific reference to “the size

of various customers at any time after December 31, 2017,” 238 Section 5.27 of the

APA does provide that “neither Seller nor Owner has received written notice or, to

the Knowledge of the Seller, any oral notice from any Material Customer that any

Material Customer intends or expects, after the Closing Date, to stop or materially

decrease” its business. 239 Pilot alleges Big Fig did precisely that, and that Sellers

knew it when they made the Customer Rep. 240

235
      Compl. ¶ 65.
236
      Compl. ¶ 72.
237
      Compl. ¶ 127c.
238
      DOB at 17–18.
239
      APA § 5.27.
240
   Compl. ¶ 127a–b. Sellers argue that “after the Closing Date” implies that if Big Fig
notifies Sellers of their intent to end their relationship pre-Closing, that information need
not be disclosed. APA § 5.27; DOB 30–32. Pilot responds that this is an “absurd” reading
                                             61
                                           *****

       Pilot has pled reasonably conceivable fraud claims regarding the status of

Modus, Personal Comfort and Big Fig as Manna customers. Otherwise, its claims

of contractual fraud are not well-pled and must be dismissed.

          Pilot’s Fraud Claims Are Not Bootstrapped Breach of Contract
          Claims

       As has become customary in cases involving fraud claims asserted alongside

breach of contract claims, Sellers argue Pilot’s fraud claims must be dismissed

because they are nothing more than “bootstrapped” breach of contract claims.241

Delaware courts will find that improper bootstrapping has occurred when the

plaintiff simply “add[s] the words ‘fraudulently induced’ or alleg[es] that the

contracting parties never intended to perform” as a means to plead fraud in cases

of Section 5.27. PAB at 24. While I do not favor the characterization, I agree that Sellers’
construction is unreasonable. Under Sellers’ reading, even if Sellers knew pre-Closing that
a major customer they had disclosed as in the fold had, in fact, left the fold, they would
have no obligation to alert Pilot to that fact since Pilot bargained only for an assurance that
a major customer would not leave after Closing. That is not what the contract says. Sellers
also contend that Pilot categorically cannot rest its allegations of fraud with respect to Big
Fig on mere “information and belief.” Compl. ¶ 72; DOB at 51. I reject that argument as
well. See H-M Wexford, 832 A.2d at 145–46 (allowing a fraud claim based upon
“information and belief” to survive dismissal when plaintiff well pled “the representations
[in a contract] were false when made” and “the defendants knew they were false”). Given
the facts pled regarding the circumstances of Big Fig’s departure, the Complaint places
Sellers on heightened notice of the bases for Pilot’s allegation that Sellers knew prior to
Closing that Big Fig would cease doing business with Manna. Compl. ¶¶ 69–71, 75, 143.
241
   A key word search on the Westlaw™ Legal Research site, Delaware database, for
“bootstrap! /s fraud!” revealed 64 hits as of this writing.

                                              62
where the parties are bound by contract. 242 The bootstrapping is deemed improper

because the plaintiff has simply tacked on conclusory allegations that the defendant

made the contract knowing it would not or could not deliver on its promises.243

         As our law in this area has evolved, it is now clear that improper bootstrapping

does not occur: (1) “where a plaintiff has made particularized allegations that a seller

knew contractual representations were false or lied regarding the contractual

representation,”244 (2) “where damages for plaintiff's fraud claim may be different

from plaintiff's breach of contract claim,” 245 (3) when the conduct occurs prior to the

execution of the contract “and thus with the goal of inducing the plaintiff’s signature

and willingness to close on the transaction”246 or (4) when the breach of contract

242
      Iotex Commc’ns, Inc. v. Defries, 1998 WL 914265, at *5 (Del. Ch. Dec. 21, 1998).
243
    Swipe, 2020 WL 5015863, at *11; Smash Franchise P’rs, LLC v. Kanda Hldgs., Inc.,
2020 WL 4692287, at *16 (Del. Ch. Aug. 13, 2020) (“A bootstrapped fraud claim thus
takes the simple fact of nonperformance, adds a dollop of the counterparty’s subjective
intent not to perform, and claims fraud.”).
244
   Swipe, 2020 WL 5015863, at *11; Anschutz Corp. v. Brown Robin Capital, LLC, 2020
WL 3096744, at *15 (Del. Ch. June 11, 2020) (recognizing that the bootstrapping rule does
not apply where the plaintiff/buyer . . . can plead “either: (1) that the Seller knew that the
Company’s contractual representations and warranties were false; (2) that the Seller itself
lied to Buyer about a contractual representation and warranty” or (3) because damages for
fraud would be distinct from damages for breach of contract (quoting Abry, 891 A.2d at
1064)).
245
      Swipe, 2020 WL 5015863, at *11.
246
   In re Bracket Hldg. Corp. Litig., 2017 WL 3283169, at *8–9 (Del. Super. Ct. July 31,
2017).

                                             63
claim is not well-pled such that there is no breach claim on which to “bootstrap” the

fraud claim. Pilot’s fraud claims fall squarely within several, if not all, of these non-

bootstrapping spaces.

         At the outset, this clearly is not a case where Sellers are alleged to have entered

into the APA with no intent to perform. According to Pilot, Sellers had every intent

to sell Manna’s assets. They just hoped Pilot would not discover that the business

was not as valuable as Sellers represented it was. In this regard, Pilot has alleged

with particularity three instances in which Sellers knew that its contractual

representations with respect to its customers were false.             Pilot alleges these

statements were made in the APA to induce Pilot into Closing; a separate and distinct

claim from any of its breach of contract claims. 247 And Pilot’s fraud damages are

arguably distinct from its breach damages. As the APA makes clear, Pilot’s breach

of contract damages are capped at the Escrow amount.248 Finally, no breach of

contract claim implicated by the fraud claims has survived dismissal. There is,

therefore, no claim to which the fraud claims can be bootstrapped.

247
      Compl. ¶ 4.
248
   APA § 9.1; Swipe, 2020 WL 5015863, at *12 (“The anti-bootstrapping rule also does
not apply here because Plaintiff might be entitled to greater damages through its fraud
claim than its breach of contract claim.”).

                                             64
                              III.   CONCLUSION

      For the foregoing reasons, the Motion to Dismiss is GRANTED as to

Counts I, II, III, and VI, except as to the breach of contract claim regarding GE and

the “Excluded Liability.” The Motion to Dismiss Count IV and V is DENIED,

except to the extent the claims rest on alleged Forward Air price increases,

manipulation of gross revenue calculations, the Big Figs accounts receivable or

extra-contractual statements or omissions.

      IT IS SO ORDERED.

                                         65