Court Opinion

ID: 4560625
Source: CourtListenerOpinion
Date Created: 2020-08-26 21:03:00.143675+00
Date Added: 2024-06-11T11:19:20.123921
License: Public Domain

COURT OF CHANCERY
                                       OF THE
                                 STATE OF DELAWARE

MORGAN T. ZURN                                                         LEONARD L. WILLIAMS JUSTICE CENTER
                                                                          500 N. KING STREET, SUITE 11400
VICE CHANCELLOR                                                          WILMINGTON, DELAWARE 19801-3734

                                        August 26, 2020

    Jeffrey M. Weiner, Esquire                         Bartholomew J. Dalton, Esquire
    Law Offices of Jeffrey M. Weiner, P.A.             Michael C. Dalton, Esquire
    1332 King Street                                   Dalton & Associates, P.A.
    Wilmington, DE 19801                               Cool Spring Meeting House
                                                       1106 West Tenth Street
                                                       Wilmington, DE 19806

         RE:    Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
                Civil Action No. 2018-0803-MTZ

Dear Counsel,

         I write regarding the motion for judgment on the pleadings (the “Motion”)

filed by Plaintiffs and Counterclaim Defendants Weik, Nitsche & Dougherty LLC

(“WND”) and Gary S. Nitsche, P.A. (“Nitsche, P.A.,” and together with WND,

“Plaintiffs”) with respect to counterclaims filed by Defendant and Counterclaim

Plaintiffs Samuel Pratcher, III, Nicholas M. Krayer, and Pratcher Krayer LLC

(collectively, “Defendants”).1 For the reasons that follow, today I grant the Motion

in part, deny it in part, and ask the parties to submit supplemental letters of no more

than 1,000 words to assist in resolving the remaining issues.

1
    Docket Item (“D.I.”) 37.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 2 of 22

         A.     Defendants’ Counterclaim And Plaintiffs’ Motion

         The parties are familiar with the factual allegations in this matter, and

therefore, I do not detail them today. This matter primarily involves a schism

between a law firm and its partner, WND and Nitsche, P.A., and two former

associates of the firm.2 Gary S. Nitsche, the individual, owns and controls all of the

issued and outstanding shares of stock of Nitsche, P.A., and the allegations in this

matter refer to Nitsche the individual acting on Nitsche, P.A.’s behalf.

         After years as associates, Pratcher and Krayer co-managed personal injury

cases that Nitsche originated; they also originated and managed their own cases, and

were entitled to one-third of the fees from those cases. To originate cases, Pratcher

and Krayer self-marketed and advertised without explicitly identifying their

affiliation with WND. The parties dispute whether Nitsche and WND knew about

and permitted Pratcher and Krayer’s self-marketing activities.3

         Eventually, Pratcher and Krayer wanted more compensation for their work,

and Nitsche and WND agreed to begin compensating them as “partners” at the firm.

The new terms of Pratcher and Krayer’s employment were memorialized in

documents referred to as “Succession Agreements.” Among other things, the

2
    See generally D.I. 13 [hereinafter “Am. Compl.”]; D.I. 33 [hereinafter “Countercl.”].
3
    See D.I. 36 ¶¶ 16, 18, 19, 26, 36, 37, 38.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 3 of 22

Succession Agreements increased the percentage of fees Pratcher and Krayer were

entitled to from self-originated cases.          Shortly after executing the Succession

Agreements, Nitsche allegedly discovered Pratcher and Krayer’s self-marketing

campaigns and ordered them to desist; the parties’ relationship then fractured.

Pratcher and Krayer resigned from WND and opened their own firm, Pratcher

Krayer LLC.

         This action followed in November 2018.4 In January 2019, Plaintiffs filed

their Amended Complaint against Defendants seeking equitable rescission of the

Succession Agreements; an accounting of all fees recovered for WND clients that

elected to transfer their representation to Pratcher, Krayer, or Pratcher Krayer LLC;

a declaratory judgment that any accounting between the parties be based on the terms

of their pre-Succession Agreement relationship; a constructive trust for any monies

or fees received, or expected to be received, by Defendants from those clients that

elected to transfer their representation to Defendants; an injunction prohibiting

Defendants from disclosing WND’s confidential and proprietary information; and

damages.5

4
    See D.I. 1.
5
    See generally Am. Compl.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 4 of 22

         Defendants       unsuccessfully moved        to dismiss        Plaintiffs’ Amended

Complaint,6 then filed their Answer and Counterclaim on January 23, 2020. Count

I asserts a claim for breach of contract based on the Succession Agreements.7 Count

II asserts a claim for breach of the implied covenant of good faith and fair dealing. 8

In the event the Court voids the Succession Agreements as Plaintiffs request,9

Defendants also plead non-contractual counterclaims in the alternative: Count III

asserts breach of implied contract;10 Count IV asserts promissory estoppel;11 Count

6
    See D.I. 15, 27, 30, 35.
7
    See Countercl. ¶¶ 86–93.
8
    See id. ¶¶ 94–100.
9
    See Am. Compl. ¶¶ 32–41.
10
   See Countercl. ¶¶ 101–09. Defendants premise the alleged breaches underlying Counts
I, II, and III on the allegations set forth in paragraph 89 of the Counterclaim. See id. ¶¶ 89,
97, 103. Paragraph 89 states,
         Plaintiffs/Counterclaim-Defendants worked to frustrate the bargained-for
         benefits of the Succession Agreements, including, but not limited to, the
         following conduct: a. Feigning ignorance of Pratcher and Krayer’s self-
         marketing and advertising; b. Removing Pratcher and Krayer’s direct dial
         phone numbers; c. Preventing Pratcher and Krayer’s support staff from
         accessing their client files and cost sheets; d. Belatedly publishing a client
         intake policy that is at once in variance with the established custom of
         attorneys at WND, and contrary to the bargained-for benefits to Pratcher and
         Krayer as outlined in the Succession Agreements; e. Causing the preparation
         of a memorandum that falsely alleged Pratcher and Krayer fraudulently held
         funds settled in 2016 into 2017 to profit to a greater extent when the (then
         inchoate) Succession Agreements would be executed.
11
     See id. ¶¶ 110–15.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 5 of 22

V asserts quantum meruit;12 and Count VI asserts unjust enrichment.13 Finally,

Count VII asserts a violation of 19 Del. C. § 1103 for “wages” Pratcher and Krayer

“were owed” “upon their resignation” from WND,14 and Count VIII asserts a claim

for intentional interference with prospective contractual relationship.15

         On February 11, Plaintiffs filed their reply to the Counterclaim.16 Plaintiffs

also filed their Motion for judgment on the pleadings with respect to “Count VII and

any aspect of any other Counterclaim based upon wages or salary” based on the

statute of limitations.17 In their March 13 opening brief, Plaintiffs contend they are

entitled to judgment on the pleadings with respect to Counts I, II, III, V, VI, and VII

of the Counterclaim because those counts are based on wages, not any expectation

from an underlying promise or contract, and so are subject to the one-year statute of

limitations set forth in 10 Del. C. § 8111, rather than the three-year statute of

limitations set forth in 10 Del. C. § 8106(a).18 Plaintiffs also expanded their grounds

12
     See id. ¶¶ 116–20.
13
     See id. ¶¶ 121–24.
14
Id. ¶¶ 128; see id. ¶¶ 125–27, 129–32.
15
Id. ¶¶ 133–38.
16
     D.I. 36.
17
     D.I. 37 ¶ 6.
18
     D.I. 49.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 6 of 22

for judgment on the pleadings with respect to Counts II and III, asserting that

Defendants failed to properly plead claims for breach of the implied covenant of

good faith and fair dealing and breach of implied contract.

         In their answering brief,19 Defendants concede that Count VII is a claim for

wages subject to Section 8111’s one-year statute of limitations and that, accordingly,

the claim should be dismissed. However, they maintain that the remainder of their

claims are contractual in nature, are not claims for wages under Section 8111, and

are therefore subject to the three-year statute of limitations. Defendants further

contend that Plaintiffs improperly expanded the grounds for the Motion by raising

additional arguments with respect to Counts II and III in their opening brief. But if

the Court is to consider those arguments, Defendants maintain they adequately pled

those claims. Plaintiffs replied.20

         The parties jointly requested that the Court decide the Motion on the papers.21

In considering a motion for judgment on the pleadings, the Court views the facts

pled and the reasonable inferences to be drawn therefrom in a light most favorable

19
     D.I. 55.
20
     D.I. 58.
21
     See D.I. 47.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 7 of 22

to the non-moving party.22 The Court grants such a motion only where no material

issue of fact exists and where the movants—here, Plaintiffs—are entitled to a

judgment as a matter of law.23

         The pleadings and briefing did not adequately apprise the Court of the parties’

respective theories and the application of governing law with respect to Counts I, II,

III, V, and VI. Accordingly, I rule on certain preliminary arguments, share my

thoughts on the applicable law to focus the parties’ arguments, and request

supplemental briefing.

         B.     Counts IV And VIII May Proceed, And Plaintiffs Are Entitled To
                Judgment On Count VII.

         As an initial matter, because Plaintiffs’ Motion addresses only Counts I, II,

III, V, VI, and VII of the Counterclaim, Defendants’ Counterclaim proceeds on

Count IV for promissory estoppel and Count VIII for intentional interference with

22
     See, e.g., Pullin v. Davis, 2016 WL 4679246, at *1 (Del. Ch. Sept. 7, 2016).
23
  See, e.g., id.; Fiat N. Am. LLC v. UAW Retiree Med. Benefits Tr., 2013 WL 3963684, at
*7 (Del. Ch. July 30, 2013). Based on admissions and denials in Plaintiffs’ reply, I note
several relevant material issues of fact, including whether (1) Plaintiffs “expressly
permitted” “Pratcher and Krayer to engage in self-marketing and advertising” “from the
beginning of their employment,” D.I. 36 ¶¶ 16, 19; (2) “Pratcher made clear to [Nitsche]
that he would only join WND if he were permitted to engage in self-marketing and
advertising,” id. ¶ 18; (3) Nitsche also engaged in self-advertising using a direct dial phone
number, id. ¶ 26; (4) Nitsche had actual knowledge that Defendants were engaged in self-
advertising, id. ¶¶ 36, 37; and (5) if Nitsche did have actual knowledge of Defendants’
conduct, he objected thereto, id. ¶ 38.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 8 of 22

prospective contractual relationship.24 And in light of Defendants’ concession that

Count VII is a claim for wages subject to Section 8111’s one-year statute of

limitations, Plaintiffs are entitled to judgment as a matter of law with respect to

Count VII.25

         C.     Plaintiffs Properly Raised All Arguments In The Motion And
                Opening Brief.

         I now turn to Defendants’ assertion that Plaintiffs improperly expanded the

grounds for the Motion in their opening brief. “Under the briefing rules, a party is

obliged in its motion and opening brief to set forth all of the grounds, authorities and

arguments supporting its motion. A movant should not hold matters in reserve for

reply briefs.”26 The movant must set forth enough information in his motion and

opening brief to present all arguments so that the nonmovant is “afforded an

24
     See D.I. 49, 55.
25
   Accord, e.g., Turner v. Diamond Shamrock Chem. Co., 1987 WL 17175, at *2 (Del.
Feb. 8, 1897) (applying Section 8111’s one-year limitation period to a claim arising under
Section 1108 of the Delaware Wage Payment and Collection Act (“DWPCA”)); Girardot
v. Chemours Co., 2018 WL 1472337, at *3 (Del. Super. Ct. Mar. 26, 2018)
(“Section 8111 of Title 10 of the Delaware Code states that any claim for wages for work
or any other benefits arising from such work expires 1 year from the accruing of the cause
of action on which such action is based. This one-year statute of limitations applies to
DWPCA claims.” (footnotes and quotations omitted)).
26
  Franklin Balance Sheet Inv. Fund v. Crowley, 2006 WL 3095952, at *4 (Del. Ch.
Oct. 19, 2006) (emphasis added) (footnotes omitted).
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 9 of 22

adequate opportunity to assess the pertinent information before filing their

answering brief.”27

           Plaintiffs’ opening brief “set forth all of the grounds, authorities and

arguments supporting [their] motion.”28 As evidenced by Defendants’ answering

brief, Plaintiffs’ Motion and opening brief presented sufficient information to

“afford[] [Defendants] an adequate opportunity to assess the pertinent information

before filing their answering brief.”29 “Moreover, Delaware law has a strong

preference for deciding cases on the merits, rather than on procedural grounds.”30

Accordingly, I consider Plaintiffs’ arguments presented for the first time in their

opening brief.

           D.     Defendants Have Adequately Pled Count III In The Alternative.

           Having determined that Plaintiffs appropriately raised an additional ground

for judgment with respect to Count III, I address that argument today. Plaintiffs

contend that, in my December 2019 ruling on Defendants’ motion to dismiss, I

“ruled that an agreement exists between the parties,” and so Count III “should be

27
Id. at *5.
28
Id. at *4.
29
 Id. at *5.
30
Id.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 10 of 22

dismissed, as a claim for breach of implied contract cannot proceed when an express

contract has been found.”31 This argument is inconsistent with Plaintiffs’ affirmative

claims in the Amended Complaint seeking to void or rescind the Succession

Agreements. Defendants retort, and I agree, that Count III is pled in the alternative

“if the Succession Agreements are voided”32 as Plaintiffs request in the Amended

Complaint.

         Plaintiffs are correct that if the parties’ relationship is comprehensively

governed by contract, a claim for implied contract cannot stand.33 “A contractual

obligation cannot be implied where an express obligation exists. A court will only

consider recovery under an implied contract if there is no express contract which

governs the parties’ rights and obligations. An implied contractual obligation cannot

‘flow from matters expressly addressed’ in a written contract.”34 Rather, “[a]

contract will be implied in fact only when the Court may fairly infer such an intent

31
  D.I. 49 at 27 (citing Klehr, Harrison, Harvey, Bransburg & Ellers, LLP v. Mosacia Educ.
Inc., 2009 WL 5177144, at *2 (Del. Super. Dec. 14, 2009)).
32
  Countercl. ¶¶ 102 (“If the Succession Agreements are voided, then the parties are subject
to an implied-in-fact contract of employment.”), 111 (“If the Succession Agreements are
voided, then the parties are subject to an implied-in-fact contract of employment.”), 117
(“If the Succession Agreements are voided, then Defendants/Counterclaim-Plaintiffs
substantially contributed to the recovery of proceeds from settling cases . . . .”).
33
     See, e.g., Good v. Moyer, 2012 WL 4857367, at *5 (Del. Super. Ct. Oct. 10, 2012).
34
Id. (footnotes omitted) (quoting Moore Bus. Forms v. Cordant Hldgs. Corp., 1995 WL
662685, at *9 (Del. Ch. Nov. 2, 1995)).
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 11 of 22

from the evidence; it represents the presumed intention of the parties as indicated by

their conduct.”35

         The Succession Agreements are express contracts that govern the parties’

employment relationship. But Plaintiffs’ Count I “respectfully request[s] that this

Court declare the June 6, 2017 Succession Agreements void ab initio, cancel/rescind

the June 6, 2017 Succession Agreements, and return the parties to the status quo

ante.”36 And contrary to Plaintiffs’ argument on this Motion, I did not previously

“rule[] that an agreement exists between the parties.”37 I ruled that Plaintiffs’ claim

to void the Succession Agreement survived Defendants’ motion for failure to state a

claim.38 Plaintiffs’ claim for equitable recession, and their theory that the Succession

35
  Parfi Hldg. AB v. Mirror Image Internet, Inc., 794 A.2d 1211, 1238 (Del. Ch. 2001)
(quoting Creditors’ Comm. of Essex Builders, Inc. v. Farmers Bank, 251 A.2d 546, 548
(Del. 1969)), rev’d on other grounds, 817 A.2d 149 (Del. 2002).
36
     Am. Compl. at 18.
37
     D.I. 49 at 27.
38
  See D.I. 35 at 16 (“The amended complaint also requests that this Court declare the
agreements void or cancel or rescind the agreements and return the parties to the status
quo. Defendants have failed to show that plaintiffs could not recover under any reasonably
conceivable set of circumstances susceptible of proof. Defendants’ motion to dismiss
Count I for failure to state a claim is denied.”).
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 12 of 22

Agreements should be void to return the parties to their pre-June 2017 position,

remains a viable claim in this case.

       In view of that claim, Defendants brought Count III in the alternative. Under

Court of Chancery Rule 8, they are permitted to do so:

       A party may set forth 2 or more statements of a claim or defense
       alternately or hypothetically, either in 1 count or defense or in separate
       counts or defenses. When 2 or more statements are made in the
       alternative and 1 of them if made independently would be sufficient,
       the pleading is not made insufficient by the insufficiency of 1 or more
       of the alternative statements. A party may also state as many separate
       claims or defenses as the party has regardless of consistency.39

Although Defendants have the right to plead an alternative theory of recovery to a

breach of contract claim, “[a] right to plead alternative theories does not obviate the

obligation to provide factual support for each theory.”40 The alternative claim must

have an independent basis that is not comprehensively governed by the

39
  Ct. Ch. R. 8(e)(2); see also CMS Inv. Hldgs., LLC v. Castle, 2015 WL 3894021, at *17
(Del. Ch. June 23, 2015) (“[I]t is not unusual for plaintiffs to attempt to supplement claims
for breach of contract with additional claims [pled in the alternative], generally as a hedge
against the possibility that the court might conclude that there was no formal contract
between the parties.”).
40
   BAE Sys. Info. & Elec. Sys. Integration, Inc. v. Lockheed Martin Corp., 2009 WL
264088, at *8 (Del. Ch. Feb. 3, 2009); accord CMS Inv. Hldgs., 2015 WL 3894021, at *17
n.97.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 13 of 22

accompanying breach of contract claim.41 Defendants offer such a basis for their

implied contract claim: Plaintiffs’ claim that no express contract exists.

          Defendants have also provided independent factual support for their implied

contract theory, based on reading the Counterclaim in the light most favorable to

Defendants.42 Pratcher and Krayer joined WND as associate attorneys in 2012,

executed the Succession Agreements in June 2017, and resigned in November

2017.43 Defendants allege, and Plaintiffs do not meaningfully dispute, that no

express or formal employment contract governed their employment relationship

from 2012 until June 2017, when the parties executed the Succession Agreements.44

Further, if the Succession Agreements are voided in Plaintiffs’ favor, then no express

contract would control the parties’ employment relationship from June 2017 onward.

Defendants allege a course of dealing that governed the parties’ relationship between

2012 and the June 2017 execution of the Succession Agreements,45 in addition to a

course of dealing between the parties from execution through resignation.46 Under

41
  See CMS Inv. Hldgs., 2015 WL 3894021, at *17; BAE Sys. Info. & Elec. Sys. Integration,
2009 WL 264088, at *8.
42
     BAE Sys. Info. & Elec. Sys. Integration, 2009 WL 264088, at *8.
43
     See Countercl. ¶¶ 2, 3, 60, 81.
44
Id. ¶¶ 7, 60.
45
     See, e.g., id. ¶¶ 8–15, 20–21, 41, 56, 101–02, 106–08.
46
     See id. ¶¶ 61, 63, 65, 66, 69, 71–76, 78, 80.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 14 of 22

that course of dealing, Defendants were paid approximately $150,000 per year until

that salary was reduced in 2017;47 Defendants were entitled to a percentage of fees

from cases they originated while at WND;48 Defendants were entitled to a year-end

bonus of approximately $30,000 in 2017;49 Defendants openly self-advertised and

marketed through the duration of their employment for WND, and Plaintiff at least

reasonably could have discovered that conduct, but did not address or prohibit such

conduct until August 2017;50 and Defendants expended out-of-pocket marketing and

advertising costs that WND did not agree to reimburse until June 2017.51 Assuming

that the Succession Agreements are void, Defendants allege that these terms, among

others, governed the parties’ relationship and that Plaintiffs breached.52

         Defendants have adequately alleged, and the Court may reasonably infer, an

implied contract between the parties to “represent[] the presumed intention of the

parties as indicated by their conduct.”53 Count III is not duplicative of Count I. It

47
     See id. ¶¶ 8, 106.
48
     See id. ¶¶ 14, 15.
49
     See id. ¶¶ 10, 11, 13, 107.
50
     See, e.g., id. ¶¶ 39–45, 66, 104.
51
     See id. ¶¶ 20, 108.
52
     See id. ¶¶ 102–03, 105–07.
53
     Parfi Hldg. AB, 794 A.2d at 1238.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 15 of 22

may proceed as long as it is not a claim for wages barred by the statute of limitations,

which I discuss next.

         E.     The One-Year Statute Of Limitations Applies To Any Claim For
                Services Performed.

         Finally, I turn to Plaintiffs’ primary argument that Counts I, II, III, V, and VI

are claims for wages subject to a one-year statute of limitations under 10 Del. C.

§ 8111, rather than contract claims subject to the three-year statute of limitations

under 10 Del. C. § 8106(a).54 Plaintiffs contend they are entitled to judgment on

those Counts as a matter of law. Defendants maintain that Counts I, II, III, V, and

VI are contractual, not claims for wages, and are therefore subject to the three-year

statute of limitations.55 “The parties’ dueling arguments once again present a

54
     D.I. 49.
55
   Defendants also argue that “Delaware law is inequitable in its application of statutes of
limitations for a compulsory counterclaim involving the same transaction or occurrence
stated in the complaint.” D.I. 55 at 8. That argument is contrary to Delaware law. See, e.g.,
Del. Chems., Inc. v. Reichhold Chems., Inc., 121 A.2d 913, 918 (Del. Ch. 1956) (rejecting
a defendant’s argument that the statute of limitations did not apply to a compulsory
counterclaim, and holding, “The three year statute of limitations relied upon by plaintiff,
10 Del. C. § 8106, applies to any ‘action’ enumerated therein. I believe a counterclaim
seeking affirmative relief is an ‘action’ within the meaning of the statute. The fact that it
appears in a counterclaim cannot obscure the fact that it has all the characteristics of an
independent action.”).
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 16 of 22

Delaware trial court with a question about the appropriate spheres of § 8111 and

§ 8106.”56

         Section 8106(a) establishes a three-year statute of limitations for contract

claims or any “action based on a promise.”57 Section 8111 establishes the applicable

statute of limitations for “work, labor or personal services”:

         No action for recovery upon a claim for wages, salary, or overtime for
         work, labor or personal services performed, or for damages (actual,
         compensatory or punitive, liquidated or otherwise), or for interest or
         penalties resulting from the failure to pay any such claim, or for any
         other benefits arising from such work, labor or personal services
         performed or in connection with any such action, shall be brought after
         the expiration of 1 year from the accruing of the cause of action on
         which such action is based.58

The Delaware Code defines “wages” as “compensation for labor or services

rendered by an employee, whether the amount is fixed or determined on a time, task,

piece, commission or other basis of calculation.”59                     Section 8111 “has a

comprehensive sweep,”60 and “‘was intended to bar all claims arising out of the

56
     Little Switz., Inc. v. Hopper, 867 A.2d 955, 958 (Del. Ch. 2005).
57
     10 Del. C. § 8106(a).
58
     10 Del. C. § 8111.
59
   19 Del. C. § 1101(a)(5). Although this definition of “wages” originates from the
DWPCA, I find the definition instructive, especially given that Section 8111 often arises
in the context of the DWPCA. See, e.g., Turner, 1987 WL 17175, at *2; Girardot, 2018
WL 1472337, at *1.
60
  Sorensen v. Overland Corp., 142 F. Supp. 354, 360 (D. Del. 1956), aff’d 242 F.2d 70
(3d Cir. 1957); see also Hopper, 867 A.2d at 956–57. In Stifel Fin. Corp. v. Cochran
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 17 of 22

employer-employee relationship’, for the reason that a claim arising out of that

relationship would necessarily be one referable to the period during which the

relationship existed, not after its termination.”61

         As this Court has recognized,

         [t]he relationship between the statutes is obvious because an
         employee’s entitlement to wages, salary, overtime or other benefits will
         usually arise out of a written or oral contract that specifies the amount
         and nature of the reward the employee was to receive for her efforts.
         Put otherwise, almost every claim for an item specifically mentioned in
         § 8111 will arise out of a contract generally covered by § 8106.62

To determine what statute of limitations applies, the Court asks “whether [the]

claims are properly characterized as employment claims or contract/statutory

claims.”63 This Court uses a “temporal test” to determine whether a claim is “for

wages” or arises from an expectancy related to some underlying promise.64 Section

(Cochran II), 809 A.2d 555, 558–59 (Del. 2002), our Supreme Court flagged that it did not
expressly approve Sorenson in prior rulings, but explained that Sorensen’s broad reading
of Section 8111 was consistent with Goldman v. Braunstein’s, Inc., 240 A.2d 577 (Del.
1968).
61
     Goldman, 240 A.2d at 578 (quoting Sorensen, 142 F. Supp. at 360).
62
     Hopper, 867 A.2d at 958.
63
     Cochran II, 809 A.2d at 558.
64
   Hopper, 867 A.2d at 960; Goldman, 240 A.2d at 578; see also Cochran v. Stifel Fin.
Corp. (Cochran I), 2000 WL 286722, at *7 (Del. Ch. Mar. 8, 2000) (“Delaware courts have
since followed the temporal line drawn by Goldman. In situations where the benefit sought
by the plaintiff arose out of the plaintiff’s past service as an employee, Delaware courts
have applied § 8111. But where the damages sought by the plaintiff were for benefits
connected with services the plaintiff would have performed but for his allegedly wrongful
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 18 of 22

8111 applies to “claims arising out of services [already] performed,” and

consequently “damages” “arising from services which have been performed.”65 This

is true “even though the work may have originally been undertaken on the strength

of a promise. Since the services have been completed, the action is based upon the

service performed rather than on the original promise.”66 And this Court has warned

that “Delaware courts should resist the further erosion of § 8111, by respecting the

intention reflected in its plain language to cover in broad terms most claims arising

out of the employment relationship.”67

         In contrast to Section 8111, Section 8106 applies to “claims arising upon or

after termination of the employer-employee relationship.”68 “The three-year statute

applies to claims based on work or services not yet completed as to which a promise

termination, our courts have applied § 8106.” (footnotes omitted)), aff’d in part, rev’d in
part, Cochran II, 809 A.2d 555 (Del. 2002); Compass v. Am. Mirrex Corp., 72 F. Supp. 2d
462, 467–68 (D. Del. 1999) (holding that if plaintiff alleges a breach of a duty to provide
benefits for work already performed, then Section 8111 applies, but if plaintiff alleges
employer breached a different duty arising out of employment agreement, then Section
8106 applies).
65
     Goldman, 240 A.2d at 578; accord Cochran II, 809 A.2d at 558.
66
  Cochran I, 2000 WL 286722, at *7 (quoting Brown v. Colonial Chevrolet Co., 249 A.2d
439, 441 (Del. Super. 1968) (“No doubt most employment relationships, even if fully
executed on the part of the employee, are originally undertaken on the strength of some
sort of promise.”)).
67
     Hopper, 867 A.2d at 956–57.
68
  Cochran II, 809 A.2d at 558 (citing Goldman, 240 A.2d at 578); accord Hopper, 867
A.2d at 959.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 19 of 22

has been made. Since the work remains uncompleted, an action with respect such

work is necessarily based upon the underlying promise.”69 But “if there is doubt as

to which of two statutes of limitations applies, that doubt should be resolved in favor

of the longer period.”70

         Here, I agree with Plaintiffs that Counts I, II, III, V, and VI, at least in part,

are claims for wages that are subject to Section 8111’s one-year statute of

limitations. This conclusion is based primarily on the plain language of Defendants’

allegations, which indicate that Defendants seek compensation for cases they

originated and settled before resigning from WND,71 despite conclusory allegations

that their claims are based on Pratcher and Krayer’s “expectancy in the contracts.”72

69
     Cochran I, 2000 WL 286722, at *7 (quoting Brown, 249 A.2d at 441).
70
     Cochran II, 809 A.2d at 559 (citing Sonne v. Sacks, 314 A.2d 194, 196 (Del. 1973)).
71
   See, e.g., Countercl. ¶¶ 93 (hinging damages on “Fees Generated as of Nov. 7, 2017”
and “Cases Settled”), 109 (hinging damages on “Fees Generated in Originated Cases as of
Nov. 7, 2017” and “Cases Settled”), 118 (stating Pratcher and Krayer “contributed to the
recovery of proceeds from settling cases,” and they “are entitled to the attorneys’ fees
recovered based on the substantial value they added to [cases they originated while working
for WND] through their efforts”), 119 (stating Pratcher and Krayer “assumed
representation of several cases”), 120 (stating Plaintiffs “failed to pay [Defendants] a
portion of the attorneys’ fees in these cases”), 122 (stating Pratcher and Krayer
“substantially contributed to the recovery of proceeds from settling cases for which they
may not be adequately compensated”), 124 (stating Pratcher and Krayer are “without a
remedy for the unjust retention of fees they are owned”), 128 (stating Pratcher and Krayer
“were owed ‘wages’ . . . as that term is defined in § 1101”), 130 (stating Plaintiffs “failed
to pay such wages).
72
Id. ¶ 92; see also, e.g., id. ¶¶ 93 (noting what Pratcher and Krayer “expected to recover”),
100 (noting Plaintiffs’ alleged breach caused Pratcher and Krayer “to resign and lose their
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 20 of 22

To the extent any alleged damages are unpaid compensation for services performed,

the claims are subject to Section 8111. But to the extent any alleged damages would

have been owed to Pratcher and Krayer after and because of a breach of the

Succession Agreements, the claims are subject to Section 8106.

         Paragraphs 93 and 109 of the Counterclaim provide charts of funds sought.

Those charts, in view of Defendants’ competing specific allegations of wages and

conclusory allegations of an expectancy, do not explain which funds are unpaid

compensation for services performed, and which, if any, are damages flowing from

a breach of the Succession Agreement.                I am unable to apply Defendants’

characterizations of “fees generated in originated cases” and “expected” salary and

bonus.73 To ensure my ruling is fully informed and that I am properly making

reasonable inferences in Defendants’ favor, I invite the parties to explain and further

parse what portion of funds in the charts arise from attorneys’ fees from cases

Pratcher and Krayer originated and settled that WND received before November 7,

2017, as opposed to any expectancy under the Succession Agreements.

expected profits from the Succession Agreement”), 109 (hinging damages, in part, on
“Expected 2017 Salary” and “Expected 2017 Bonus”).
73
Id. ¶¶ 93, 109.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 21 of 22

         With respect to the latter, considering this Court’s recognition that “almost

every claim for an item specifically mentioned in § 8111 will arise out of a contract

generally covered by § 8106”74 and admonition to maintain Section 8111’s reach

and significance,75 I expect Defendants to specifically identify any expectancy under

the Succession Agreements and distinguish any such expectancy from services

already performed.76 I also invite the parties to explain the quantitative differences

between the charts in paragraphs 93 and 109.77

         Accordingly, the parties shall submit supplemental letter briefs of no more

than 1,000 words. Defendants shall submit their letter first, and then Plaintiffs shall

74
     Hopper, 867 A.2d at 958.
75
Id. at 956–57.
76
   By this request for supplemental briefing, I do not mean to impose any particular
pleading standard on expectancy claims that are otherwise in tension with Section 8111. I
simply find the pleadings here confusing.
77
  Defendants argue that, based on my December 30, 2019, ruling on the motion to dismiss,
they should not be considered “employees” and therefore their claims are not subject to
Section 8106. See D.I. 55 at 15–17. I reject this position. Section 8111’s application does
not hinge on whether Pratcher and Krayer are “employees” of WND, but instead on
whether their claims are for services already performed. See 10 Del. C. § 8111. And
Defendants asserted Count VII, which expressly relies on characterizing them as
“employees,” after I ruled on the motion to dismiss that it was reasonably conceivable that
Pratcher and Krayer entered into a partnership with Nitsche under the Succession
Agreements. Nowhere in their Counterclaim do Defendants plead they were, in fact, WND
partners or that they seek to recoup partnership proceeds. To the extent Defendants contend
my December ruling bears on this Motion, I invite the parties to address the extent to which
the damages Defendants seek are partnership proceeds and whether that alters my inquiry
under Section 8111 in their supplemental letter briefs.
Weik, Nitsche & Dougherty, LLC et al., v. Samuel D. Pratcher, et al.,
Civil Action No. 2018-0803-MTZ
August 26, 2020
Page 22 of 22

respond, on a stipulated briefing schedule. Thereafter, I will issue my final decision

on the Motion.

       In conclusion, Plaintiffs are entitled to judgment as a matter of law with

respect to Count VII; Plaintiffs’ Motion is denied as to Count III; and Plaintiffs’

Motion is granted insofar as Counts I, II, III, V, and VI are claims for wages that are

subject to Section 8111’s one-year statute of limitations, to be delineated with the

benefit of supplemental briefing. Plaintiffs’ Motion also remains under advisement

with regard to whether Defendants’ Count II states a claim for breach of the implied

covenant of good faith and fair dealing. To the extent an order is necessary to

implement my holdings today, IT IS SO ORDERED.

                                                            Sincerely,
                                                            /s/ Morgan T. Zurn
                                                            Vice Chancellor

MTZ/ms
cc: All Counsel of Record via File & ServeXpress