Court Opinion

ID: 9226147
Source: CourtListenerOpinion
Date Created: 2022-11-28 15:02:45.786081+00
Date Added: 2024-06-11T17:12:45.323729
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

BAKO PATHOLOGY LP, BPA                  §
HOLDING CORP., and BAKO                 §      No. 382, 2021
PATHOLOGY ASSOCIATES, LLC,              §
                                        §
      Defendants Below,                 §
      Appellants/Cross-Appellees,       §      Court Below—Superior Court
                                        §      of the State of Delaware
             v.                         §
                                        §      C.A. No. N17C-12-337
BRADLEY BAKOTIC and                     §
JOSEPH HACKEL,                          §
                                        §
      Plaintiffs Below,                 §
      Appellees/Cross-Appellants        §

                           Submitted:   September 21, 2022
                           Decided:     November 28, 2022

Before VALIHURA, VAUGHN, and TRAYNOR, Justices.

Upon appeal from the Superior Court. AFFIRMED in part, REVERSED in part, and
REMANDED.

Mary F. Dugan, Esquire, Lauren E.M. Russell, Esquire, Young Conaway Stargatt &
Taylor, LLP, Wilmington, Delaware. Of counsel: Robert W. Capobianco, Esquire
(argued), Adriana R. Midence, Esquire, Kelli N. Church, Esquire, Jackson Lewis P.C.,
Atlanta, Georgia, for Appellants.

Bruce W. McCullough, Esquire, Bodell Bove, LLC, Wilmington, Delaware. Of counsel:
Salmeh K. Fodor, Esquire, Kristoffer V. Sargent, Esquire (argued), KF Law, LLC, Atlanta,
Georgia, for Appellees.

VALIHURA, Justice:
                                     INTRODUCTION

       This is an appeal in a protracted contractual battle between two sides that dispute

the meaning and application of certain restrictive covenants. Since the filing of the action

in the Superior Court in December 2017, the parties proceeded through Rule 12 motions,

then discovery and summary judgment motions, and, ultimately, a seven-day bench trial.

       The Superior Court held that Plaintiffs Below, Appellees/Cross-Appellants, two

doctors who started a laboratory testing enterprise known as Bako Diagnostics (“Bako”),

breached certain restrictive covenants when they left Bako to form a new, competing

laboratory enterprise. Despite fee-shifting provisions in certain of the contracts, the trial

court declined to award attorneys’ fees.

       We agree with the Superior Court’s determinations that the two doctors breached

certain of the restrictive covenants. But because it appears that the Superior Court may

have misapplied the formula that both sides employed for calculating damages, we remand

for the court to clarify how it derived its damages award and for any needed revisions.

Further, we disagree that no attorneys’ fees were warranted under certain of the contracts.

Accordingly, we AFFIRM in part, REVERSE in part, and REMAND for further

proceedings consistent with this Opinion.

                                             2
              I.     RELEVANT FACTS AND PROCEDURAL BACKGROUND1

      A. The Parties

          Defendant Below, Appellant/Cross-Appellee Bako Pathology LP (“Bako LP”) is a

Delaware limited partnership. Defendant Below, Appellant/Cross-Appellee BPA Holding

Corp. (“BPA Holding”) is a Delaware corporation.               Bako LP owns BPA Holding.

Defendant Below, Appellant/Cross-Appellee Bakotic Pathology Associates, LLC

(“Bakotic Associates”) is a limited liability company formed under the laws of the State of

Georgia.2 BPA Holding is the sole member of Bakotic Associates.

          Plaintiff Below, Appellee/Cross-Appellant Dr. Bradley Bakotic, D.P.M., D.O. (“Dr.

Bakotic”) “is a licensed doctor of podiatric medicine and osteopathic medicine.” 3 Dr.

Bakotic served as the CEO of Bakotic Associates until September 2017.

          Plaintiff Below, Appellee/Cross-Appellant Dr. Joseph Hackel, M.D. (“Dr. Hackel”

and together with Dr. Bakotic, the “Doctors”)4 “is a licensed medical doctor”5 who worked

1
  The facts, except as otherwise noted, are taken from the post-trial opinion below, Bakotic &
Hackel v. Bako Pathology LP, et al., C.A. No. N17C-12-337 WCC (Nov. 2, 2021) [hereinafter,
the Opinion].
2
  A232 (Compl. ¶ 10). Bakotic Associates has also been referred to in the trial court proceedings
as “Bako Diagnostics” or “Bako.” B21 (Pretrial Stipulation and Proposed Order at 5). We use the
term “Bako” to refer to the physical laboratory that “provid[es] clinical pathology, anatomic
pathology, and dermatopathology-related services” out of its principal place of business in
Alpharetta, Georgia. Id. Bakotic Associates, as used herein, refers to the same entity’s legal name.
We also note that Appellants incorrectly identified Bakotic Pathology Associates, LLC as “Bako
Pathology Associates, LLC” in the captions of their briefs filed with this Court.
3
    Opinion, at 2.
4
  The Doctors raise five contentions on cross-appeal. For ease of reference, this Opinion refers to
them as the Doctors and to Bako LP, BPA Holding, and Bakotic Associates collectively as the
“Appellants.”
5
    Opinion, at 2.

                                                 3
as Bako’s Medical Director and as a practicing dermatopathologist.

      B. The Doctors Establish Bako

          The Doctors first met in 2000 and, over time, worked together at various pathology

laboratories. In 2007, the two decided to start their own pathology laboratory enterprise

and founded Bako in Alpharetta, Georgia. Bako is a dermatopathology laboratory that

offers four main lab services:       (1) dermatopathology; (2) microbiology testing; (3)

molecular testing; and (4) epidermal nerve fiber density testing. In addition, the lab sells

specialized creams and solutions to medical practitioners, namely podiatrists and some

dermatologists throughout the United States.

          While at Bako, Dr. Bakotic implemented several testing methods. As part of the

testing panel offered by the lab, Dr. Bakotic encouraged the use of Period Acid Schiff

(“PAS”) and GMS histochemical genetic tests. Both the PAS and GMS testing soon

became lucrative aspects of the lab’s business and were touted by Dr. Bakotic, in

communications with potential clients, as tests with “ultrahigh sensitivity with the fewest

false negative results.”6 In addition to the PAS and GMS testing, Bako developed PCR

testing as a faster alternative to other testing options. Bako’s PCR testing was the only

service of its type offered in the field and became a critical component of the lab’s business

model.

          Bako’s laboratory enterprise soon attracted the attention of other entities in the

medical arena. In January 2014, Bako and the Ankle and Foot Centers of Georgia

6
    Opinion, at 5.

                                               4
(“AFCG”) entered into a Medical Director Services Agreement (the “AFCG Agreement”),

whereby Dr. Bakotic would serve as the Medical Director of AFCG.                   The AFCG

Agreement provides that Bako could replace Dr. Bakotic and select a new Medical Director

for AFCG.7

          To augment the lab’s testing services, Bako developed a highly successful

marketing strategy. The lab sponsored various conferences hosted by various podiatry

associations, which allowed Dr. Bakotic to lecture at conferences and to strengthen the

lab’s brand, goodwill, and client base in the process. The lab obtained “booth space” at

these conferences and staffed them with sales representatives who marketed Bako’s

laboratory services to the conference attendees.

          Dr. Bakotic proved to be the driving force behind Bako’s successful marketing

strategy. The lab “sponsored, produced, or provided over 200 lectures, seminars[,] and

small group meetings with podiatrists throughout the year.”8 Dr. Bakotic himself decided

which conferences the lab would sponsor based upon how much business he felt the

conferences could generate. Due to his visibility at the conferences — in particular, his

educational lectures — Dr. Bakotic became known as “the face of Bako” and a leader in

the podiatric community.

7
  A561 (Dr. Bakotic Trial Test. at 216:7–19). Dr. Bakotic, however, remained the Medical
Director of AFCG even after his eventual termination from Bako. See Opinion, at 5; infra section
I.D.
8
    Opinion, at 4 (internal quotations and citation omitted).

                                                    5
    C. The Restrictive Covenants

       Following Bako’s founding in 2007, the lab became quite successful. Starting in

the fall of 2011, the Doctors executed three contracts, each of which contains restrictive

covenants.

        1.    The Employment Agreements

       In 2011, the Doctors sold a percentage of Bakotic Associates to Ampersand 2011

Limited Partnership. As part of that transaction, they entered into separate employment

agreements with BPA Holding, on behalf of its subsidiary, Bakotic Associates.9 The

Bakotic Employment Agreement and the Hackel Employment Agreement (collectively,

the “Employment Agreements”) became effective as of November 18, 2011.

       The Employment Agreements contain several, nearly identical restrictive covenants

binding on the Doctors.       For example, the Employment Agreements contain non-

competition provisions (the “Employment Non-Compete Provisions”) that provide:

       1. NON-COMPETITION. While Employee is engaged by the Company,
          Employee agrees that during the term of Employee’s employment by the
          Company, other than in the proper performance of Employee’s
          employment duties for the Company, and for a period of twenty-four (24)
          months after such employment terminates for any reason (other than
          without cause termination by the Company), Employee shall not perform
          the same or similar duties that he or she performed for the Company on
          behalf of or for the benefit of (i) any laboratory and/or health care
          provider which competes with the Company, or (ii) any customer or client
          of the Company for whom the Company provided services within two
          years prior to Employee’s termination from the Company. The restriction

9
 A93 (the “Bakotic Employment Agreement”); A101 (the “Hackel Employment Agreement”).
The parties to these agreements include “BPA Holding Corp., on behalf of itself and its wholly-
owned subsidiary, Bakotic Pathology Associates, LLC (collectively, ‘Company’)” and then either
Dr. Bakotic or Dr. Hackel, respectively. See id.

                                              6
          herein is limited to the territory where the Company was doing business
          at the time of the transaction.10
      The Employment Agreements also contain several provisions regarding the use of

proprietary information. Both contain non-use provisions (the “Employment Non-Use

Provisions”) that provide:

      2. NON-DISCLOSURE AND NON-USE OF PROPRIETARY
         INFORMATION.
         a. Maintaining the Company’s Proprietary Information. Employee
            agrees not to use, utilize, disclose, or reverse engineer the Company’s
            Confidential Information or Trade Secrets for any purpose other than
            the Company’s business, except as authorized in writing by the
            Company. The covenants made by the Employee herein are in
            addition to, and not exclusive of, any and all other rights to which the
            Company is entitled under federal and state law, including, but not
            limited to, rights provided under copyright and trade secret laws, and
            laws concerning fiduciary duties. Employee’s obligations under this
            Paragraph 2.a shall remain in effect as long as the information
            constitutes a Trade Secret under applicable law and/or Confidential
            Information, as defined above.11
      The Bakotic Employment Agreement contains an additional provision (the

“Employment Existing Use Provision”), which provides:

       2. NON-DISCLOSURE AND NON-USE OF PROPRIETARY
          INFORMATION.
          d. Existing Materials and Perpetual License. Notwithstanding
          anything herein to the contrary, the parties hereto, hereby acknowledge
          and agree that Employee is the sole owner of those items identified on
          Exhibit A, attached hereto and incorporated herein by reference
          (collectively, the “Employee Information”), and as a result, such
          Employee Information is not considered to be Company Proprietary

10
  A93 (Bakotic Employment Agreement § 1) (emphases added); A101 (Hackel Employment
Agreement § 1) (emphases added).
11
   A94 (Bakotic Employment Agreement § 2(a)); A102–03 (Hackel Employment Agreement
§ 2(a)).

                                            7
                Information. Moreover, the parties hereto hereby acknowledge and
                agree that, upon termination of Employee’s employment with the
                Company for any reason, Employee shall have a non-exclusive,
                perpetual license to use, for educational purposes, any and all
                information of the same general type as the Employee Information
                developed by Employee during the term of his employment by the
                Company.12
Dr. Bakotic testified at trial that he understood the Employment Existing Use Provision to

be an “education carveout[.]”13 The Hackel Employment Agreement does not contain an

Employment Existing Use Provision.

          In addition to the above restrictive covenants, the Employment Agreements contain

fee-shifting provisions for attorneys’ fees (the “Employment Fee-Shifting Provisions”) that

provide:

          8. ATTORNEYS’ FEES If Company is the prevailing party in any legal
          proceeding to construe, apply, interpret, enforce or defend any of Company’s
          rights in this Agreement, Employee agrees to reimburse Company for all
          reasonable costs, expenses and attorney’s fees incurred by Company in such
          proceedings.14

           2.     The Merger Agreement

          On December 3, 2015, the Doctors entered into an Agreement and Plan of Merger

(the “Merger Agreement”) with various corporate entities. The corporate signatories to the

Merger Agreement include: Bako Pathology Holdings Corp. (as the buyer); Bako LP; BPA

Merger Corp. (as the buyer’s subsidiary); BPA Holding (defined as the “Company” in the

12
     A95 (Bakotic Employment Agreement § 2(d)).
13
     A573 (Dr. Bakotic Trial Test. at 265:5–19).
14
  A97 (Bakotic Employment Agreement § 8) (emphases added); A105 (Hackel Employment
Agreement § 8) (emphases added).

                                                   8
Merger Agreement); Ampersand 2011 Limited Partnership (as the securityholder

representative); and various individuals, including the Doctors.15

         Like the Employment Agreements, the Merger Agreement contains a non-

competition provision (the “Merger Non-Compete Provision”), which provides:

         5.11 Non-Competition; Non-Solicitation. (a) Each of Bradley W. Bakotic
         [and] Joseph Hackel . . . agree that, from the Closing Date until the date that
         is five (5) years following the Closing Date, he . . . shall not . . . without the
         prior written consent of Buyer[:]
         (ii)(A) engage in the Competing Business in any manner or capacity
         (whether as an officer, director, employee, consultant, owner, investor or
         otherwise with respect to any Competing Business), (B) own any equity
         interest, or operate, control or participate (including as a joint venture
         partner, agent, representative, consultant or lender) in any Person that
         engages directly or indirectly in the Competing Business, (C) solicit any
         direct or indirect investors, agents, providers/suppliers, distributors or other
         similar parties of the Company or any of its Subsidiaries, in each case, in
         respect of a Competing Business or (D) intentionally interfere with the
         business relationships between the Company or any of its Subsidiaries and
         any of its investors.
         For purposes of this Agreement, “Competing Business” means any business
         in which the Company or any of its Subsidiaries is engaged, or has specific
         plans (as evidenced by documentation of the Company) to become engaged,
         in each case, as of the Closing Date.
         Notwithstanding the foregoing, nothing contained in this Agreement shall
         restrict any of the individuals identified above in Section 5.11(a) from being
         employed by a Competing Business (i) if such individual’s role with such
         Competing Business is limited to a business unit or division that would not
         reasonably be expected to be competitive with any business in which the
         Company or any of its Subsidiaries is engaged, or has specific plans to
         become engaged, in each case, as of the Closing Date[.]16

15
     A114 (Merger Agreement Recital).
16
     A163–64 (Merger Agreement § 5.11(a)(ii)) (emphases added).

                                                 9
The Merger Agreement also contains a non-solicitation provision (the “Merger Non-

Solicitation Provision”), which provides:

          5.11 Non-Competition; Non-Solicitation. (a) Each of Bradley W. Bakotic
          [and] Joseph Hackel . . . agree that, from the Closing Date until the date that
          is five (5) years following the Closing Date, he . . . shall not . . . without the
          prior written consent of Buyer[:]
          (i)(A) hire or solicit for employment any employee of the Company or any
          of its Subsidiaries or any Person who has been an employee of the Company
          or any of its Subsidiaries in the preceding twelve (12) months, except for any
          employee of the Company or any of its Subsidiaries who, following the
          Closing, has been involuntarily terminated by the Company or Buyer for a
          six (6)-month period prior to commencement of employment with such
          Person or (B) induce or encourage any employee of an [sic] the Company or
          any of its Subsidiaries to no longer be employed by the Company or any of
          its Subsidiaries[.]17

Unlike the Employment Agreements, the Merger Agreement does not contain a fee-shifting

clause.

           3.    The Partnership Agreement

          On January 7, 2016, just over a month after the Merger Agreement’s execution, the

Doctors — in their capacity as limited partners of Bako LP — entered into an Amended

and Restated Limited Partnership Agreement of Bako Pathology LP (the “Partnership

Agreement”) with Bako LP, Bako Pathology GP LLC, and various other limited partners.18

Dr. Bakotic’s capital contribution to Bako LP was $16,967,000,19 and Dr. Hackel’s was

17
     A163 (Merger Agreement § 5.11(a)(i)) (emphasis added).
18
  Opinion, at 9. The Partnership Agreement was formed pursuant to the Revised Uniform Limited
Partnership Act of the State of Delaware. See B61 (Partnership Agreement Recital); B63
(Partnership Agreement § 2.2).
19
     B126 (Partnership Agreement Exhibit A).

                                                 10
$6,556,000.20 This translated to an ownership interest in Bako LP of “approximately

11.6% [for Dr. Bakotic] and 3.4% [for Dr. Hackel].”21

         Like the Employment Agreements and the Merger Agreement, the Partnership

Agreement contains a non-competition provision (the “Partnership Non-Compete

Provision”), which provides:

         6.5. Competitive Opportunity. 6.5.1 None of the Limited Partners nor any
         of their respective Affiliates or Affiliated Funds shall have any business
         interests or engage in business activities in addition to those relating to the
         Partnership, including, without limitation, business interests and activities in
         direct competition with the Partnership or any of its Subsidiaries[.]22
In addition to the Partnership Non-Compete Provision, the Partnership Agreement — like

the Employment Agreements but unlike the Merger Agreement — contains a fee-shifting

provision for attorneys’ fees (the “Partnership Fee-Shifting Provision”), which provides:

         12.12. Attorneys’ Fees. If any dispute between the parties hereto should
         result in litigation or arbitration, the prevailing party in such dispute shall be
         entitled to recover from the other party all reasonable fees, costs and
         expenses of enforcing any right of the prevailing party, including without
         limitation, reasonable attorneys’ fees and expenses, all of which shall be
         deemed to have accrued upon the commencement of such action and shall be
         paid whether or not such action is prosecuted to judgment. Any judgment or
         order entered in such action shall contain a specific provision providing for
         the recovery of attorneys’ fees and costs incurred in enforcing such judgment
         and an award of prejudgment interest from the date of the breach at the
         maxim rate of interest allowed by law. For the purposes of this Section
         12.12: (a) attorneys’ fees shall include, without limitation, fees incurred in
         the following: (i) post-judgment motions; (ii) contempt proceedings; (iii)
         garnishment, levy and debtor and third party examinations; (iv) discovery

20
     B127 (Partnership Agreement Exhibit A).
21
     A259 (Def. Ans. & Counterclaims ¶ 14).
22
     B89 (Partnership Agreement § 6.5.1).

                                                11
          and (v) bankruptcy litigation and (b) “prevailing party” means the party who
          is determined in the proceeding to have prevailed or who prevails by
          dismissal, default or otherwise.23
      D. The Doctors Leave Bako and Form the Rhett Foundation
          On September 7, 2017, Dr. Bakotic was terminated as CEO of Bakotic Associates.24

Roughly three weeks later, on September 30, 2017, Dr. Hackel informed Bakotic

Associates that he planned on retiring.25 He resigned following Dr. Bakotic’s termination.

At trial, Dr. Hackel testified that he “didn’t want to work there if [Dr. Bakotic] was no

longer there” but that Dr. Bakotic did not encourage his resignation.26

          A few days later, on October 3, 2017, the Doctors founded the Rhett Foundation

(the “Foundation”) and donated $2.2 million to it. The Doctors both served on the

Foundation’s board of directors, with Dr. Bakotic as chairman.27             Several of the

Foundation’s contributing founders previously gave lectures on behalf of Bako.

          But with the Doctors gone, Bako needed a new Medical Director. On September

25, 2017, Bako entered into a contract with Dr. Bryan Markinson for the position of

Medical Director (the “Bako-Markinson Agreement”). A few days later, Dr. Markinson

shared the contract with Dr. Bakotic, and they discussed the potential implications the

Bako-Markinson Agreement would have on Dr. Markinson joining the Foundation. Dr.

Bakotic informed Dr. Markinson that, despite Bako’s representations, Dr. Bakotic could

23
     B113-14 (Partnership Agreement § 12.12) (emphases added).
24
     Opinion, at 9.
25
     A590 (Dr. Hackel Trial Test. at 50:11–16).
26
     A597 (Dr. Hackel Trial Test. at 77:22–78:4).
27
     A531 (Dr. Bakotic Trial Test. at 97:2–9).

                                                    12
not return to Bako. Shortly after Dr. Bakotic’s conversation with Dr. Markinson, Dr.

Markinson rescinded the Bako-Markinson Agreement on October 1, 2017.28

           Following the Foundation’s formation, Dr. Bakotic made a post about it on his

personal Facebook page. In his post, Dr. Bakotic wrote that the Foundation was his and

Dr. Hackel’s “second chapter” and that they would “sponsor various educational events

and institutions as we always have[.]”29           Consistent with his post, the Foundation

“sponsored twenty podiatric conferences and provided a speaker at thirty-five other

podiatry events.”30 Dr. Bakotic himself gave some of these lectures, including one on

November 22, 2017, during which he informed a room of podiatrists that the allegations

underlying his internal investigation at Bako had been found to be unsupported.

           On December 28, 2017, the Doctors formed Rhett Diagnostics, LLC (“Rhett

Diagnostics”), which “was intended to be a human anatomic pathology laboratory.” 31 To

staff it, the Doctors “hired several employees to work for Rhett Diagnostics, including

several who were previously Bako employees, and purchased human pathology laboratory

equipment costing between $600,000 and $700,000.”32 Despite those efforts, the lab never

became operational.

 Opinion, at 10. Dr. Markinson would go on to serve on the Foundation’s board and as a founding
28

member. See id. at 10–11.
29
     A532 (Dr. Bakotic Trial Test. at 100:13–101:8).
30
     Opinion, at 11.
31
     Opinion at 14.
32
     Id.

                                                 13
          As time passed, Dr. Bakotic continued to emphasize that the Foundation’s purpose

mirrored that of Bako’s. In an article posted on June 21, 2018, to a website he created, Dr.

Bakotic stated that his departure from Bako was “voluntar[y]” and that, through the

Foundation, he and Dr. Hackel “intend to continue doing what [they have] done throughout

[their] entire professional careers: support the advancement of the podiatric profession[.]”33

      E. Proceedings in the Superior Court and the Court of Chancery
          On December 27, 2017, the Doctors filed their complaint in the Superior Court

against the Appellants. They sought a declaratory judgment that the restrictive covenants

— the Employment Non-Compete Provisions and the Partnership Non-Compete Provision

— were invalid under 6 Del. C. § 2707 (“Section 2707”).34 Appellants answered and filed

counterclaims on February 12, 2018. Appellants sought a declaratory judgment that the

restrictive covenants were valid under Delaware law. In addition, they asserted breach of

contract, breach of the duty of loyalty, unjust enrichment, and tortious interference

counterclaims against both Doctors and a claim for slander against Dr. Bakotic.35

          Appellants subsequently moved for a preliminary injunction in the Court of

Chancery in July 2018. In the meantime, Dr. Bakotic informed a fellow podiatrist, Dr.

David Tarr, that Appellants had sought an injunction against the Doctors. In response, Dr.

Tarr drafted what became known as the “Tarr Petition,” which stated that the undersigned

Dr. Tarr planned to call Bako and:

33
     Id. at 12 (internal quotations omitted).
34
     A235 (Compl. ¶ 29).
35
     Opinion, at 14; A270–76 (Def. Ans. & Counterclaims ¶¶ 64–107).

                                                14
          [G]ive them 30 days’ notice to cease and desist from their attempts to prevent
          Dr. Bakotic from speaking and sponsor activities, all of which benefit our
          collective profession. Should they not reverse course, I will entrust my
          business to a lab that has not chosen to put profits above benevolence, and I
          hope you will consider doing the same.36

Dr. Bakotic helped Dr. Tarr disseminate the Tarr Petition by connecting him “with public

relations professionals who worked for the Rhett Foundation to facilitate the circulation of

[the Tarr Petition].”37

          The Court of Chancery entered a Status Quo Order on September 6, 2018, that

enjoined the Doctors from:

          a. Engaging in any speaking or sponsorship activities at any podiatry or
          dermatology conferences, or at any educational institutions at which
          podiatrists or dermatologists are anticipated to be in attendance . . . b.
          Administering a fellowship or similar internship program for podiatry
          students . . . c. Interfering with any sponsorship and speaking activities of
          Bako Diagnostics at podiatry or dermatology conferences, associations, and
          educational intuitions; and d. Owning, operating, or having any interest in
          or with any laboratory engaged in the provision of anatomic and molecular
          pathology services, microbiology services, and neuropathy-related testing to
          podiatrists and dermatologists.38
          While the parties engaged in the initial stages of litigation, the Doctors continued to

communicate with the podiatric and dermatology communities.                  In November and

December of 2018, Dr. Bakotic contacted approximately 50 members of the podiatric

36
     A302 (Tarr Petition).
37
     Opinion, at 16.
38
  C1–2 (Court of Chancery Status Quo and Scheduling Order). The Court of Chancery withdrew
the Status Quo Order on March 20, 2019, pending resolution of the claims in the Superior Court.
See Opinion, at 15 n.78.

                                                15
community to sign and return affidavits for use against Appellants.39 Dr. Bakotic’s emails

were sent “on behalf of the Rhett Foundation[.]”40

          The Doctors moved for judgment on the pleadings under Superior Court Civil Rule

12(c). On December 10, 2018, the Superior Court denied the Doctors’ motion for a

declaratory judgment on the restrictive covenants, the breach of contract counterclaim, and

the tortious interference counterclaim against Dr. Bakotic.41 The Superior Court dismissed

the breach of the duty of loyalty counterclaim, the unjust enrichment counterclaim, the

slander counterclaim against Dr. Bakotic, and the tortious interference counterclaim

against Dr. Hackel.42

          Both sides later moved for summary judgment under Superior Court Civil Rule 56.

In their brief for summary judgment, the Doctors argued for the first time that neither of

the then-defendants (Bako LP and BPA Holding) had standing to pursue the breach of

contract claims.43 The parties stipulated to adding Bakotic Associates as a third defendant

to address any standing concerns, noting that such “stipulation shall not act as a waiver of

any party’s claims or defenses[.]”44

          On December 11, 2019, the Superior Court denied the Doctors’ motion for summary

39
     A554 (Dr. Bakotic Trial Test. at 188:7–15).
40
     A555 (Dr. Bakotic Trial Test. at 195:14–16).
41
     See Bakotic v. Bako Pathology LP, 2018 WL 6601172, at *3, *4, *6 (Del. Super. Dec. 10, 2018).
42
     See id. at *4–7.
43
  B156–59 (Plaintiff’s Op. Br. for Summary Judgment at 21–24). As of the time the Doctors filed
their brief for summary judgment, the defendants in the action were Bako LP and BPA Holding.
44
     C151 (Stipulation to Add Party ¶ 3).

                                                    16
judgment and granted Appellants’ motion for partial summary judgment with respect to

the parties’ Section 2707 arguments, finding that the statute “cannot be used to invalidate

[the Doctors’] non-competition agreements because the statute does not apply.”45

         The Superior Court conducted a seven-day bench trial in January 2021. On the

breach of contract claims, the Superior Court found that the Doctors breached the

following:       the Employment Non-Compete Provisions, the Employment Non-Use

Provisions, the Partnership Non-Compete Provision, and the Merger Non-Solicitation

Provision. The court found that the Doctors did not breach the Merger Non-Compete

Provision and that Dr. Bakotic did not tortiously interfere with Bakotic Associates’

contracts.

         Regarding the breach of contract claims, Appellants’ damages expert opined that

Bako suffered lost profits of $8,273,121 from January 2018 to February 2019 and a loss in

business value of $65,980,243 as of March 2019, for total damages of $74,253,364.46

Appellants’ expert applied “a growth rate of 9.4 percent and 8.9 percent” to calculate lost

profits, but the court found the growth rate to be “unrealistic” and declined to apply it,

saying that it caused the projected damages “figure to be inflated and unreliable.”47 Instead,

the court accepted the “expert[’s] opinion that some growth did occur” and “decided to

45
  Bakotic v. Bako Pathology LP, 2019 WL 6896465, at *5 (Del. Super. Dec. 11, 2019) [hereinafter
Bako Pathology, 2019 WL 6896465, at _].
46
     A381 (Mark J. Hosfield Expert Report at 34).
47
     Opinion, at 47–48.

                                                17
apply a growth rate of 1.5%[.]”48 The trial court then awarded damages totaling $1,740,254

to Appellants.

          In addition to damages, both sides moved for attorneys’ fees. Appellants asserted

that their fees and costs totaled approximately $2.3 million, while the Doctors asserted their

fees and costs totaled $1,689,395. The court declined to award either side fees, despite the

fee-shifting clauses in the underlying contracts at issue. In analyzing the contract language

on fee shifting, the trial court found that neither side was the “prevailing party” in the

litigation and, thus, no fees would be shifted.49

      F. Contentions on Appeal and Cross-Appeal
          Appellants raise two issues on appeal. First, Appellants contend that the Superior

Court abused its discretion by applying — without explaining how it derived — its own

growth rate. Second, Appellants assert that the Superior Court abused its discretion by not

awarding attorneys’ fees despite the fee-shifting provisions in certain of the contracts.

          The Doctors raise five issues on cross-appeal. First, they contend that the Superior

Court erred in finding Section 2707 to be inapplicable. Second, they assert that the

48
     Id. at 49.
49
  At trial, the court stated that the parties could present evidence regarding the reasonableness and
amounts of their attorneys’ fees at a later time if it became necessary. See A839 (Trial Tr. at
32:10–12) (“I’ll accept [the attorneys’ fees amounts] as submitted. And if I award fees, if I have
any concerns about it, I’ll address it at that time.”). We have no issue with the trial court’s practical
approach and reject the Doctors’ assertions that Appellants waived their ability to pursue fee-
shifting by not presenting evidence of the amount and reasonableness of their fees after the trial
court suggested that they do so later if necessary. See Avaya, Inc. v. Charter Commc’ns Hldg. Co.,
LLC, 2016 WL 381261, at *3 (Del. Ch. Jan. 29, 2016) (“As a general matter, for involved,
complicated litigation, waiting until resolution of the merits before shifting attorneys’ fees has a
common sense appeal.”).

                                                   18
Superior Court erred by not dismissing Appellants’ breach of contract claims under the

Partnership Agreement due to lack of standing. Next, the Doctors contend that the trial

court erred when it found that their conduct was the proximate cause of damage suffered

by Appellants. Fourth, they contend that the trial court erred when it found that their

conduct at the Foundation constituted a breach of the Employment Agreements and the

Partnership Agreement. And finally, the Doctors assert that the Superior Court erred when

it “reformed” the Partnership Agreement.

          We address the cross-appeal arguments first, as they relate to the breach of contract

determinations against the Doctors. Then we address the damages and fees issues raised

by Appellants.

                                  II.    STANDARD OF REVIEW
          “We review questions of law and contractual interpretation . . . de novo.”50 This

Court “reviews questions relating to standing under the de novo standard of review.”51

          “We review [the Superior Court’s] damages award for abuse of discretion.”52 “We

review for an abuse of discretion the trial court’s assessment of attorney[s’] fees.”53 “While

we review an award of attorneys’ fees for abuse of discretion, we review the [trial court’s]

interpretation of a contractual fee-shifting provision de novo.”54 This Court will not disturb

50
     Baldwin v. New Wood Res. LLC, __ A.3d __, 2022 WL 3364169, at *13 (Del. Aug. 16, 2022).
51
  Brookfield Asset Mgmt., Inc. v. Rosson, 261 A.3d 1251, 1262 (Del. 2021) (citing El Paso
Pipeline GP Co., L.L.C. v. Brinckerhoff, 152 A.3d 1248, 1256 (Del. 2016)).
52
     Bhole, Inc. v. Shore Invs., Inc., 67 A.3d 444, 449 (Del. 2013).
53
     Sternberg v. Nanticoke Mem’l Hosp., Inc., 62 A.3d 1212, 1220 (Del. 2013).
54
  Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665,
675 (Del. 2013) (internal citations omitted).

                                                   19
the trial court’s “factual findings unless they are clearly erroneous.”55

                                          III.   ANALYSIS

      A. The Cross-Appeal Arguments

           1.    Section 2707 Does Not Apply

         The Doctors argue that the Superior Court erred in determining that Section 2707

does not apply to the contracts at issue. We disagree.

         Section 2707 reads in relevant part:
         Any covenant not to compete provision of an employment, partnership or
         corporate agreement between and/or among physicians which restricts the
         right of a physician to practice medicine in a particular locale and/or for a
         defined period of time, upon the termination of the principal agreement of
         which the said provision is a part, shall be void[.]56
The Superior Court dismissed the Doctors’ Section 2707 argument at summary

judgment, holding that “Section 2707 cannot be used to invalidate [their] non-

competition agreements because the statute does not apply.”57

         “The ‘most important consideration for a court in interpretating a statute is the words

the General Assembly used in writing it.’”58 As the Superior Court observed, the statute

55
   Bäcker v. Palisades Growth Cap. II, L.P., 246 A.3d 81, 94 (Del. 2021) (internal quotations and
citation omitted).
56
     6 Del. C. § 2707 (emphasis added).
57
     Bako Pathology, 2019 WL 6896465, at *5.
58
  Salzberg v. Sciabacucchi, 227 A.3d 102, 113 (Del. 2020) (quoting Boilermakers Loc. 154 Ret.
Fund v. Chevron Corp., 73 A.3d 934, 950 (Del. Ch. 2013)). See also Stream TV Networks, Inc. v.
SeeCubic, Inc., 279 A.3d 323, 354 (Del. 2022) (quoting Salzberg, 227 A.3d at 113).

                                                 20
governs agreements not to compete “between and/or among physicians” which restrict “the

right of a physician to practice medicine[.]”59 It held that:

          It is evident that the Employment Agreement, Merger Agreement, and
          Partnership Agreement are executed by Bakotic and Hackel on the one hand,
          arguably in their capacity as physicians. However, the other parties that
          executed the documents are largely corporate entities unrelated to the
          practice of medicine. Accordingly, the Court finds that Section 2707 is
          inapplicable because the agreements at issue cannot be considered “between
          and/or among physicians.”60

          On appeal, the Doctors contend that the trial court’s holding is erroneous because it

renders the term “among” superfluous. An overview of the contracting parties to each

agreement is a helpful starting point in addressing this contention. The Employment

Agreements are between the Doctors, on one side, and BPA Holding and Bakotic

Associates, on the other.61 The following are parties to the Merger Agreement: Bako

Pathology Holdings Corp., Bako LP, BPA Merger Corp., BPA Holding, and — solely for

certain provisions — Ampersand 2011 Limited Partnership. Solely for the purposes of the

Merger Non-Compete Provision, the Merger Non-Solicitation Provision, the amendment

provision, and the miscellaneous provisions, the Merger Agreement is also executed

individually by the Doctors and eight other individuals.62 The signatories to the Partnership

Agreement are: Bako Pathology GP LLC as general partner, and the following limited

59
     6 Del. C. § 2707.
60
     Bako Pathology, 2019 WL 6896465, at *5 (quoting 6 Del. C. § 2707).
61
     A93 (Bakotic Employment Agreement); A101 (Hackel Employment Agreement).
62
     A114 (Merger Agreement Recital).

                                               21
partners:     the Doctors, Consonance Bako Holdings LP, Ampersand 2006 Limited

Partnership, and Ampersand 2011 Limited Partnership, as well as five other individuals.63

         We disagree with the Doctors that the Superior Court ignored the word “among.”

Clearly it did not. It simply concluded that the agreements are not “between and/or among

physicians.”64 We agree with the trial court that the statute requires that “physicians,”

which could include multiple physicians, be counterparties.65               The Doctors raise no

challenge to the Superior Court’s conclusion that the Merger Agreement and the

Employment Agreements lack physician counterparties. Nor did they contest, in their

briefing on appeal, the Superior Court’s finding that “the other parties that executed the

documents are largely corporate entities, unrelated to the practice of medicine.”66

         However, at oral argument before this Court, the Doctors argued for the first time

that two of the limited partners who executed the Partnership Agreement were also

63
     B61 (Partnership Agreement Recital); B126–27 (Partnership Agreement Exhibit A).
64
   See, B.F. Goodrich Co. v. Aircraft Braking Sys. Corp., 1994 WL 16019986, at *8 (D. Del. Nov.
10, 1994) (“In its definition of ‘among,’ the same dictionary states: ‘Precise users of English use
AMONG when more than two . . . things are involved . . . and use BETWEEN when only two . . .
things are involved.”).
65
  Also, “[t]he synopsis for the bill that became Section 2707 explains: ‘Because patients establish
relationships with their physicians and/or enter into courses of treatment with particular physicians,
the patients should not be deprived of the services of the physician of their choice because of an
economic contract entered into between two physicians.’” Dunn v. FastMed Urgent Care, P.C.,
2019 WL 4131010, at *14 (Del. Ch. Aug. 30, 2019) (quoting Del. S.B. 294 syn., 132nd Gen.
Assem. (Del. 1983)) (emphasis added). “[T]he General Assembly adopted Section 2707 in
furtherance of ‘the importance of maintaining the continuity of care by protecting the physician-
patient relationship.’” Id. (quoting Total Care Physicians, P.A. v. O’Hara, 2002 WL 31667901,
at *6 (Del. Super. Oct. 29, 2002)). In Dunn, the restriction preventing the plaintiff from engaging
in a competing executive position was held to not be violative of the statute because it did not
“provoke Section 2707’s protections of the physician-patient relationship” and the restriction was
wholly unconnected to patient care. Id. at *15.
66
     Bako Pathology, 2019 WL 6896465, at *5.

                                                 22
physicians.67 Appellants responded that these limited partners were not counterparties to

the Doctors, but instead were “on the same side” with the Doctors as counterparties to the

partnership entity, Bako LP.68 Because the Doctors did not raise this argument in their

briefing before this Court, it is waived.69 But even if we were to consider the Doctors’

belated challenge, there is nothing in the record before this Court that suggests that the

signatories were acting other than in their capacity as investors in Bako LP, as opposed to

acting as “physicians” within the meaning of Section 2707.70

67
                See             Oral               Argument,               at             31:37–59,
https://livestream.com/delawaresupremecourt/events/10612702/videos/233007566               (Doctors’
counsel noting that the presence of the two additional physicians triggers Section 2707’s preclusive
effect). The Doctors did not advance this argument below in their briefing on § 2707 for summary
judgment.
68
   See id. at 33:10–32 (Appellants’ counsel noting that the other two physicians are on the same
side of the Partnership Agreement as the Doctors).
The partnership itself is a counterparty to the Doctors and the other limited partners: Bako LP is
equally bound by the Partnership Agreement and may sue for rights under it, as occurred here. See
6 Del. C. § 17-101(14) (a limited partnership is bound by a partnership agreement regardless of
whether it executes the agreement).
69
  Del. Supr. Ct. R. 14(b)(vi)(A)(3) (“The merits of any argument that is not raised in the body of
the opening brief shall be deemed waived and will not be considered by the Court on appeal.”).
70
   We note, but do not address, the existence of other issues that raise questions as to Section
2707’s applicability here. The Superior Court observed that the court in Dunn suggested that
Section 2707 was intended to protect the physician/patient relationship in Delaware and was not
intended to manage the practice of physicians in other states. See, e.g., Dunn, 2019 WL 4131010,
at *14 (“I conclude that the term ‘practice medicine’ in Section 2707 refers to a physician’s
provision of medical services or treatment to patients in Delaware.”). The Superior Court stated
that “[a]t most, the Court would believe the prohibitions found in Section 2707 would only apply
to the treatment or diagnosis of Delaware patients.” Bako Pathology, 2019 WL 6896465, at *5.
Otherwise, such a reading “would expand Section 2707 beyond that intended by the General
Assembly.” Id. Although the Doctors were licensed in various states, they were not licensed in
Delaware. See C44 (Dr. Hackel Dep. Tran. at 7:13–15); C63 (Dr. Bakotic Dep. Tran. at 17:4–6).
The record contains no evidence of the Doctors identifying or treating any patients in Delaware.
Other colorable arguments were raised below and/or on appeal calling into question the
applicability of Section 2707. For example, Appellants contended that Section 2707 requires “the
termination of the principal agreement” in order for Section 2707 to apply. Appellants’ Reply Br.
                                                23
       Accordingly, we AFFIRM the trial court’s determination.

         2.    Appellants Have Standing

       The Doctors’ second contention on cross-appeal relates to the Partnership

Agreement and an alleged lack of standing to sue for claims arising under it. They assert

that the Superior Court erred by not dismissing the claim for breach of the Partnership Non-

Compete Provision due to lack of standing for all three Bako-affiliated entities. They argue

that Bakotic Associates lacks standing because it is neither a signatory to the Partnership

Agreement nor a third-party beneficiary, although they later assert that Bakotic Associates

is the only Defendant who could possibly have injury-in-fact standing to pursue the breach

of contract claims in this case. For BPA Holding, they contend that it has no customers

and lacks an injury-in-fact to confer standing. They make the same argument for Bako LP,

namely, that it is too high up the corporate entity ladder to have suffered an injury.71

at 17. But here, the partnership remains in force and, as the Superior Court noted, the Doctors are
still limited partners in Bako LP. See Opinion, at 35–36. The Appellants also questioned whether
the Doctors were treating patients and whether their professional activities fell within the ambit of
Section 2707. Appellants’ Reply Br. at 16–17.
71
   At oral argument before this Court, the Doctors went a step beyond their briefing. Counsel
argued that no Bako-affiliated entity — Bakotic Associates, BPA Holding, or Bako LP — has
standing to sue under the Partnership Agreement. See Oral Argument, at 40:41–49,
https://livestream.com/delawaresupremecourt/events/10612702/videos/233007566           (Doctors’
Counsel: “The result is that nobody has standing under the Partnership Agreement to pursue the
injuries that were pursued in this case.”). When the Court asked if that argument “made any
sense,” the Doctors’ counsel responded by diagnosing their position as a “cautionary tale from a
contracting perspective.” Id. at 40:59–41:03.
We note the trial court’s understandable frustration with the standing concerns raised well into the
more advanced stages of this litigation. See C137 (Oral Arg. Tran. at 36:9–16) (“[L]et’s stop the
gamesmanship, figure out who the parties are, who should be in the case, who has standing, and
try the case . . . it’s crazy that now in September when the court is going to trial in a few months I
have people standing in front of me talking about standing.”). As this Court has stated, “[s]tanding
is [] properly viewed as a threshold issue to ensure that the litigation before the tribunal is a case
                                                 24
       Appellants raise several points in response. First, they assert that the Doctors

waived their standing arguments with respect to Bakotic Associates. Second, Appellants

assert that Bakotic Associates and BPA Holding are third-party beneficiaries under the

Partnership Agreement. Third, Appellants assert that Bako LP did suffer an injury-in-fact

sufficient to have standing.

       We agree that the Doctors waived certain arguments by not fairly presenting them

to the trial court or to this Court. For example, the Doctors raise two third-party beneficiary

standing arguments for the first time on appeal. Of these, one was raised for the first time

in the Doctors’ reply brief on cross appeal, and another was raised for the first time at oral

argument.72 We decline to consider these two contract-based incorporation-by-reference

arguments seemingly conjured up as pure afterthoughts.73

or controversy that is appropriate for the exercise of the court’s judicial powers.” Brookfield Asset
Mgmt., Inc. v. Rosson, 261 A.3d 1251, 1262 (Del. 2021) (internal quotations and citation omitted).
72
    See Appellees’ Reply Br. at 7–8.            See also Oral Argument, at 38:50–59,
https://livestream.com/delawaresupremecourt/events/10612702/videos/233007566.
73
   The Doctors argue that the Merger Agreement contains a provision disclaiming third-party
beneficiaries and that the Merger Agreement is expressly incorporated into the Partnership
Agreement. See, e.g., A198 (Merger Agreement § 11.2), B74 (Partnership Agreement § 2.98),
B113 (Partnership Agreement §12.8). However, they raised this argument for the first time in their
reply brief on cross-appeal and did not raise it in their opening brief on appeal. See Appellees’
Reply Br. at 7. As noted above, it is waived. See Del. Supr. Ct. R. 14(c)(i) (a party “shall not
reserve material for reply brief which should have been included in a full and fair opening brief.”).
Additionally, at oral argument before this Court, the Doctors raised — for the first time — that
§ 12.6 of the Partnership Agreement “rules out Bako Labs being an intended beneficiary.” See
Oral                         Argument,                           at                       38:50–59,
https://livestream.com/delawaresupremecourt/events/10612702/videos/233007566. Section 12.6
provides that “[t]he covenants and agreements” in the Partnership Agreement “inure to the benefit
of, the heirs, executors, administrators, personal representatives, successors and permitted assigns
of the respective parties hereto.” B113 (Partnership Agreement § 12.6). Like their § 11.2
argument, this argument also has been waived.

                                                 25
          However, we address the remaining aspects of the standing arguments raised by the

Doctors that are, at least arguably, properly before this Court.74 We turn first to the

Doctors’ argument that BPA Holding and Bakotic Associates lack standing because neither

is a third-party beneficiary to the Partnership Agreement. This argument lacks merit. “A

third-party beneficiary’s rights are measured by the terms of the contract.”75 “As a general

rule, only parties to a contract and intended third-party beneficiaries may enforce an

agreement’s provisions.”76 A third-party beneficiary is “an individual who is not a party

to a contract [but] can nevertheless enforce it under certain circumstances.”77 As Delaware

courts have held:

          Equally settled is the principle that a third person, who is, in effect, a stranger
          to the contract, may enforce a contractual promise in his own right and name
          if the contract has been made for his benefit. Essential to a third party’s right
          of enforceability is the intention of the contracting parties to view that party
          as either a donee or a creditor beneficiary.78

74
   We note that the Doctors did not raise standing concerns regarding Bakotic Associates before
trial and that Bakotic Associates was not yet a party to the action. It was only during oral argument
on the motions for summary judgment that Bakotic Associates became a topic of discussion. At
that oral argument, counsel for the Doctors stated they were “prepared to allow [Bakotic
Associates] to be added to the extent that [Bakotic Associates] also has standing.” C137 (Oral
Arg. Tran. at 34:17–18). Following instruction from the trial court, the parties stipulated to adding
Bakotic Associates as a defendant. No specific argument was made as to Bakotic Associates’ lack
of standing until the briefing before this Court, but because of the unique procedural
circumstances, we consider this standing argument.
75
     NAMA Hldgs., LLC v. Related World Mkt. Center, LLC, 922 A.2d 417, 431 (Del. Ch. 2007).
76
  Id. at 434 (internal citation omitted). See also Triple C Railcar Serv., Inc. v. City of Wilm., 630
A.2d 629, 633 (Del. 1993) (“It is axiomatic that either party to an agreement may enforce its terms
for breach thereof.”).
77
     13 Williston on Contracts § 37:1 (4th ed.).
78
     Triple C Railcar, 630 A.2d at 633 (internal citations omitted).

                                                   26
          “To qualify as a third party beneficiary of a contract, (i) the contracting parties must

have intended that the third party beneficiary benefit from the contract, (ii) the benefit must

have been intended as a gift or in satisfaction of a pre-existing obligation to that person,

and (iii) the intent to benefit the third party must be a material part of the parties’ purpose

in entering into the contract.”79 “When a promised performance is rendered directly to the

beneficiary, ‘it is presumed that the contract was for the beneficiary’s benefit.’”80

          We agree with Appellants that BPA Holding and Bakotic Associates are third-party

beneficiaries to the Partnership Agreement.             Appellants focus on the Partnership

Agreement’s explicit reference to these entities as “Subsidiaries.”              The Partnership

Agreement defines “Subsidiary” as:

          [A]ny corporation [or] limited liability company . . . of which more than 50%
          of the total voting power of the equity interests entitled . . . to vote in the
          election of the board of directors . . . thereof are at the time owned or control,
          directly or indirectly, by such Person[.]81

Both BPA Holding and Bakotic Associates meet the definition of “Subsidiary.” Bako LP

owns BPA Holding and Bakotic Associates is an LLC whose sole member is BPA

Holding.82       Further, the Partnership Agreement’s Non-Compete Provision expressly

applies to Subsidiaries.

79
     Madison Realty P’rs 7, LLC v. Ag ISA, LLC, 2001 WL 406268, at *5 (Del. Ch. Apr. 17, 2001).
80
  Comrie v. Enterasys Networks, Inc., 2004 WL 293337, at *3 (Del. Ch. Feb. 17, 2004) (quoting
13 Williston on Contracts § 37:7 (4th ed.)).
81
     B74 (Partnership Agreement § 2.103).
82
     See supra section I.A.

                                                 27
         The Doctors fail to address the specific language in the Partnership Agreement that

the provisions at issue here apply to Bako LP and its Subsidiaries.83 Rather than addressing

Appellants’ various arguments directly, the Doctors rebut Appellants’ third-party

beneficiary standing arguments by raising the entirely new arguments which we have

deemed waived.84 We are satisfied, based upon the record and on the lack of any focused

joining of the issues regarding the entities’ third-party beneficiary standing, that BPA

Holding and Bakotic Associates have standing to assert claims under the Partnership

Agreement as third-party beneficiaries.

         The Doctors also contend in their opening brief on appeal that Bako LP did not

suffer an injury-in-fact. Delaware law is clear that “a party to a commercial contract who

sues to enforce its contractual rights can bring a direct contract action under Delaware

law.”85 That is what Bako LP did. Bako LP asserted counterclaims — brought under

contracts it signed — against the Doctors, who remain limited partners under the

partnership, alleging that the Doctors violated their contracts and competed with Bako.86

Thus, we reject the Doctors’ challenges to Bako LP’s standing, and we agree with the

83
     See B89 (Partnership Agreement § 6.5.1); B93 (Partnership Agreement § 6.8).
84
   See supra n.73. We sympathize with the trial court’s understandable frustration with this
scattershot approach to what should be a threshold issue.
85
   NAF Hldgs., LLC v. Li & Fung (Trading) Ltd., 118 A.3d 175, 176 (Del. 2015) (holding that
where the plaintiff — a stockholder of the third-party beneficiary — has secured a contractual
commitment of the defendant counterparty to render a benefit to that third-party, and the
counterparty defendant breaches that commitment, the promissee-plaintiff may bring a direct suit
against the promisor for damages suffered by the plaintiff resulting from that breach,
notwithstanding that the promisee-plaintiff’s loss derives indirectly from the loss suffered by the
third-party beneficiary corporation.).
86
     A267–68 (Def. Ans. & Counterclaims ¶¶ 42–51).

                                                28
Superior Court, as explained below, that those counterclaims are meritorious.87

            3.    The Doctors Breached the Employment and Partnership Agreements and
                  Proximately Caused Damage
          The Doctors’ third and fourth arguments on cross-appeal can be combined. They

contend that the Superior Court erred when it found that their participation in conferences

(including serving as sponsors and lecturers) breached the Employment Agreements and

Partnership Agreement and that such breaches proximately caused damage to Appellants.

We reject their arguments and affirm the trial court’s ruling on both issues.

          The Doctors’ arguments here strike at the heart of the entire dispute: whether their

actions violated certain restrictive covenants in the various contracts. The Superior Court

found that they did. We agree.

          To start, the Doctors argue that the Employee Non-Compete Provisions do not bar

them from sponsoring and lecturing at podiatric medical conferences. They contend that

the trial court improperly determined that the Employee Non-Compete Provisions cover

“not just commercial benefits, but apparently a whole galaxy of non-commercial benefits

like positive feelings and subjective increases in medical knowledge.”88 An examination

of the facts found below is helpful.

          The Superior Court found “that a key function of Dr. Bakotic’s role at Bako, and

critical to the company’s marketing strategy and success, was to sponsor podiatric

87
     See Opinion, at 21–26, 31–39.
88
     Appellees’ Ans. Br. at 54.

                                               29
conferences and provide lectures at the events to educate attendees.”89 “It was a critical

piece of the strategy developed by Dr. Bakotic to enhance Bako’s presence in the market

and upon which the business gained its success.”90 The trial court found that, “[t]here is

no doubt that Dr. Bakotic intended to duplicate this success at the Rhett entities using the

same marketing strategy and to replace Bako as the leader in this industry.” 91 It further

found that “[a]s he once did at Bako, Dr. Bakotic selected the conferences the Rhett

Foundation would sponsor and he, along with Dr. Hackel, provided lectures at those events,

which were attended by and for the benefit of Bako’s client base.”92 It was “the duplication

of this marketing process, to the detriment of Bako, that was prohibited under the

[Employment] Non-Compete Provision[s].”93

           In the face of these factual findings, the Doctors strenuously argue that the

Employment Agreements’ definition of “business” dictates that activities such as

sponsoring and providing lectures fall outside the scope of the prohibited activities.94 But

neither the Employment Non-Compete Provisions nor the Employment Agreements define

89
     Opinion, at 23.
90
     Id.
91
     Id.
92
     Id. at 24.
93
     Id. at 23.
94
   Appellees’ Ans. Br. at 55. The Doctors, though, merely reference a recital in the Employment
Agreements, which states that the “Company is a provider of anatomic pathology testing
services[.]” A93 (Bakotic Employment Agreement recital); A101 (Hackel Employment
Agreement recital). The Employment Agreements do not contain a “definitions” section.
“Company” is defined collectively in the initial paragraph as “BPA Holding Corp., on behalf of
itself and its wholly-owned subsidiary, Bakotic Pathology Associates, LLC[.]” Id.

                                              30
“business.”95 In addition, the word “business” does not appear in the Employment Non-

Compete Provisions.

          However, the Employment Non-Compete Provisions do contain a clear statement

that the Doctors may “not perform the same or similar duties that [they] performed for the

Company[.]”96 As the trial court found, the Doctors routinely sponsored and gave lectures

on podiatry topics at medical conferences which the court found helped “the business gain[]

its success.”97 The Doctors engaged in these activities while employed at Bako, and they

continued to do so after they started the Foundation. Based on the facts as found by the

trial court — which are not clearly erroneous — and the clear contractual language in the

Employment Agreements, we affirm the trial court’s ruling that the Doctors violated the

Employment Non-Compete Provisions.

          Regarding the Partnership Non-Compete Provision, the Doctors contend that the

Merger Agreement is expressly incorporated into the Partnership Agreement and that the

meaning of “business” within the Partnership Non-Compete Provision is governed by the

Merger Agreement’s definition of “business.”98 We note that § 12.8 of the Partnership

Agreement, defining “Entire Agreement,” provides that the Partnership Agreement “and

the Related Agreements constitute the entire agreement[.]”99         Section 2.98 of the

95
     A93 (Bakotic Employment Agreement); A101 (Hackel Employment Agreement).
96
  A93 (Bakotic Employment Agreement § 1) (emphasis added); A101 (Hackel Employment
Agreement § 1) (emphasis added).
97
     Opinion, at 23.
98
     Appellees’ Reply Br. at 13.
99
     B113 (Partnership Agreement § 12.8).

                                            31
Partnership Agreement defines “Related Agreements” to include the Merger Agreement.100

The Merger Agreement defines “business” as “the business of providing anatomic

pathology, proprietary molecular microbiology and neurology testing services and

physician dispensed therapeutics as currently conducted or specifically planned to be

conducted by the Company and its Subsidiaries on the date hereof.”101 The Doctors

contend that this definition precludes a finding that their activities on behalf of the

Foundation — lecturing and sponsoring conferences — violated the Partnership Non-

Compete Provision.

          We disagree.    The fact that the Partnership Agreement provides that the Merger

Agreement is part of the “Entire Agreement” does not mean that the Merger Agreement’s

narrower definition of “business” overrides language in the Partnership Non-Compete

Provision and, specifically, its broader restriction on “business interests and activities in

direct competition with the Partnership or any of its Subsidiaries[.]”102 Rather, the Superior

Court acknowledged the differences in the provisions and read them in harmony, giving

100
      B74 (Partnership Agreement § 2.98).
101
    A181 (Merger Agreement § 10.1). The Merger Non-Compete Provision and the Merger Non-
Solicitation Provision, both found in § 5.11 of the Merger Agreement, restrict “Competing
Business” activities. A163 (Merger Agreement § 5.11(a)). As the Superior Court observed, “the
Merger Agreement defines Competing Business as ‘any business in which the Company or any of
its Subsidiaries is engaged, or has specific plans (as evidenced by documentation of the Company)
to become engaged.’” Opinion, at 27 (emphasis in original).
102
   B89 (Partnership Agreement § 6.5.1). We note that § 10.1 of the Merger Agreement — entitled
“Definitions” — provides that “the following terms [including ‘Business’] when used in this
Agreement shall have the respective meanings set forth below[.]” A180 (Merger Agreement
§ 10.1) (emphasis added). “Agreement” is defined as the Merger Agreement. See id.

                                               32
effect to both.103 It expressly found that the Merger Non-Compete Provision was not

violated “[s]ince there [was] no competing lab created by Plaintiffs[.]”104

          But the court also gave effect to the specific, broader language in the Partnership

Non-Compete Provision. As the Superior Court found:

          Drs. Bakotic and Hackel did engage in business activities and held business
          interests that competed with Bako’s interests through the Rhett brand, and
          therefore they breached the Non-Competition provision of the Partnership
          Agreement. The Court finds that the activities performed by Drs. Bakotic
          and Hackel in the name of the Rhett entities were detrimental to the historical
          marketing practices that Bako relied upon and that was key to their success.
          There is no doubt that [the Doctors] intended to conduct their new business
          activities with the intent of undermining the Bako brand. That is simply not
          allowed under the Partnership Agreement.105

          The trial court found that the Doctors hired several employees to work for Rhett

Diagnostics, including several who were previously Bako employees, and that they

purchased lab equipment. Although there is no indication that the Rhett lab ever became

operational, the record does support the trial court’s conclusions, following a seven-day

bench trial, that the Doctors engaged in “business interests and activities in direct

competition with the Partnership or any of its Subsidiaries.”106 We find no error in this

aspect of the trial court’s ruling.

103
   See Opinion, at 26–27, 34–36. The Doctors agree that the two agreements should be read
together. See Appellees’ Reply Br. at 16.
104
      Opinion, at 30.
105
      Id. at 36.
106
    B89 (Partnership Agreement § 6.5.1); see also Opinion at 33–36. The trial court was not
persuaded that the Doctors were merely focused on educating the podiatric community. Rather,
the court observed that “[o]ne does not buy hundreds of thousands of dollars of equipment and
hire employees to simply sit for two years waiting for the Non-Compete time frame to end.”
Opinion, at 21.

                                                33
          In addition to challenging the findings that the Doctors breached the Employment

Agreements and Partnership Agreement, the Doctors also contend that the trial court erred

when it found that such activities “proximately caused” Appellants damage. The Superior

Court found “no doubt that [the Doctors’] violation of their contractual Non-Competition

restrictions caused Bako to lose business. In fact, there is an identifiable group of doctors

who clearly decided to stop using Bako or to reduce their volume of business because of

the conduct of [the Doctors].”107 In particular, the Superior Court noted that a list in the

Appellants’ expert report “identifies those individuals who Bako’s sales representatives

had reported reduced their orders to Bako because of the perceived mistreatment of Drs.

Bakotic and Hackel.”108 The trial court then determined the amount of damages to award

Appellants for the breaches suffered.

          “On appeal, this Court reviews the issue of proximate cause for clear error, as the

question ‘is ordinarily a question of fact to be determined by the trier of fact.’”109 We find

no error in the Superior Court’s determination that the Doctors’ conduct proximately

caused damage to Appellants. “Under Delaware law, a proximate cause is one ‘which in

natural and continuous sequence, unbroken by any efficient intervening cause, produces

107
      Opinion, at 46.
108
      Id. See also A483–86 (Mark J. Hosfield Expert Report at Appendix D).
109
   RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 864 (Del. 2015) (quoting Duphily v. Del. Elec.
Co-op., Inc., 662 A.2d 821, 830 (Del. 1995)). See also Siga Techs., Inc. v. PharmAthene, Inc., 132
A.3d 1108, 1128 (Del. 2015) (noting that this Court “will uphold [a trial court’s] factual findings
unless they are clearly erroneous.”) (internal citation omitted).

                                                34
the injury and without which the result would not have occurred.’”110 The trial court’s

determination of proximate cause was based on a careful examination of the record

evidence.

            4.     The Partnership Agreement was not “Reformed”
          The Doctors’ final argument on cross-appeal is that “the Superior Court erred when

it removed the limiting term ‘business’ when reforming the Partnership Non-Compete” and

“determined what the parties intended when they executed such provision.”111 They argue

that the Partnership Non-Compete Provision “is unlimited in territory and also unlimited

in the type of conduct it prohibits[,]” which, they contend, renders it “void as a matter of

law.”112

          In addressing this argument, the trial court found that:

          Although [the Doctors] argue that the Non-Competition provision of the
          Partnership Agreement is unlimited in scope, territory, and duration, the
          Court disagrees. While Drs. Bakotic and Hackel remain limited partners, the
          restrictions on competition remain. However, if they choose to withdraw
          from their position as limited partners, they have the power to end the
          restrictive covenants immediately.113
It determined that the Partnership Non-Compete Provision “was intended to prevent [the

Doctors] from engaging in similar and competitive activity that would be detrimental to

110
   RBC Cap. Mkts., LLC, 129 A.3d at 864 (quoting Russell v. K-Mart Corp., 761 A.2d 1, 5 (Del.
2000)).
111
      Appellees’ Ans. Br. at 61.
112
      Id. at 62.
113
      Opinion, at 36.

                                                35
the partnership.”114 The trial court concluded that the Doctors did breach the Partnership

Agreement through their actions with the Rhett entities.

          We do not agree that the Superior Court “reformed” the contract by removing the

word “business” from the Partnership Non-Compete Provision. The Doctors’ argument is

not a fair reading of the trial court’s opinion. The trial court interpreted the term “business”

and the phrase “business interests and activities” based upon the evidence, including the

intentions of the parties to the Partnership Agreement. For example, the court concluded

that

          The Court simply cannot accept or condone a provision that in essence
          prohibits engaging in any activity regardless of how remote or unrelated to
          the partnership’s business. The Court is equally convinced this was never
          the intent of those who were participants in the Partnership Agreement.
          There is no question that provision was intended to prevent [the Doctors]
          from engaging in similar and competitive activity that would be detrimental
          to the Partnership. However, the Court finds Drs. Bakotic and Hackel did
          engage in business activities and held business interests that competed with
          Bako’s interests through the Rhett brand, and therefore they breached the
          Non-Competition provision of the Partnership Agreement. The Court finds
          that the activities performed by Drs. Bakotic and Hackel in the name of the
          Rhett entities were detrimental to the historical marketing practices that Bako
          relied upon and that was key to their success.115

As we have discussed above, the trial court correctly found that the Doctors’ conduct

violated the Partnership Non-Compete Provision’s express terms. Accordingly, we reject

their final argument on cross-appeal.

114
      Id. at 35.
115
      Opinion, at 35–36.

                                                36
      B. The Damages Calculation
          Having found no merit in any of the Doctors’ contentions on cross-appeal, we now

turn to the arguments presented by Appellants. Appellants claim that the trial court’s

damages analysis was flawed in two ways. First, they contend that the court abused its

discretion by arbitrarily applying a 1.5% growth rate without explaining how it derived that

growth rate. Second, they assert that even if the growth rate were found to be appropriate,

the court incorrectly applied the two-step damages formula that the parties employed in

this case.

          Appellants’ expert, Mark J. Hosfield (“Hosfield”), “opined that Bako suffered lost

profits of $8,273,121 from January 2018 to February 2019 and a loss in business value of

$65,980,243 as of March 2019.”116 We note that both the Doctors and the Appellants

agreed with the basic framework of Hosfield’s two-step analysis to calculate damages for

lost profits.117 Hosfield’s two-step analysis involved calculating the lost unit sales because

of the Doctors’ conduct and then, secondly, determining the lost profits resulting from

those lost unit sales. To determine Bako’s lost unit sales, Hosfield first calculated the unit

sales Bako expected to generate in the relevant period. The lost unit sales number was

derived by applying an expected growth rate to Bako’s past sales. After calculating Bako’s

expected sales units (which Hosfield referred to as the “but for” units), he then subtracted

Bako’s actual sales for the relevant period from the “but for” unit sales.

116
      Id. at 44 (citing A381 (Mark J. Hosfield Expert Report at 34)).
117
             See        Oral        Argument,         at       6:55–7:23,           26:24–50,
https://livestream.com/delawaresupremecourt/events/10612702/videos/233007566.

                                                  37
            As for the second step in the analysis, in order to calculate Bako’s lost profits arising

from these “but for” unit sales, Hosfield multiplied the amount of lost “but for” unit sales

by the actual price of the units for that given month. He then subtracted costs and bad debt

expenses. He concluded that Bako’s lost profits from those lost units totaled $8,273,121.

            We address the growth rate challenge first. Appellants contend that the trial court

abused its discretion when the court selected a growth rate of 1.5% to calculate Bako’s lost

profits and failed to provide any calculation or record support for its selection.118

            The trial court concluded that Hosfield’s growth rate of 9.4 percent and 8.9 percent

was “inappropriate.”119 It then stated that “the fact that Drs. Bakotic and Hackel were no

longer employed by Bako would have greatly reduced any projected growth rate.”120 Thus,

the court found:

            [A] growth rate of around 9% suggested by Mr. Hosfield is unrealistic and
            would have caused the “but for” figure to be inflated and unreliable. Since
            Mr. Hosfield’s subsequent projections as to the lost profits and loss of
            business value rely upon the acceptance of his growth rate, they will not be
            adopted by the Court.121
After rejecting Hosfield’s growth rate, the court stated:

            [I] will accept Mr. Hosfield’s expert opinion that some growth did occur
            during that timeframe. Therefore, based on the testimony of what was
            occurring in the industry and the turbulent situation at Bako, the Court has
            decided to apply a growth rate of 1.5% to the “but for” figure calculated by
            Mr. Hosfield. This will result in a damages figure of $1,433,814.00 in 2018

118
   The Doctors raise this same challenge, but they argue that Appellants submitted no competent
evidence of damages. See Appellees’ Ans. Br. at 18–19.
119
      Opinion, at 47–48.
120
      Id. at 48.
121
      Id.

                                                   38
          and $306,440.00 in 2019. Therefore, the Court finds the contractual breaches
          by [the Doctors] resulted in a damage award of $1,740,254.00 for lost
          business.122
          Appellants contend that the Superior Court arbitrarily chose the 1.5% growth rate.

They point out that if the Superior Court took issue with the higher growth rates offered by

Hosfield, Hosfield also provided alternative growth rates of 4.7% in 2018 and 4.45% in

2019.123 Appellants also assert that the expert called at trial by the Doctors, Robert J.

Taylor, IV, testified that he used a 3% growth rate.124

          We have explained that “[i]n making a decision on damages, or any other matter,

the trial court must set forth its reasons. This provides the parties with a record basis to

challenge the decision. It also enables a reviewing court to properly discharge its appellate

function.”125 Here, the Superior Court did offer some reasoning behind its view that the

Appellants’ proffered growth rate was too high. The court reasoned that “the fact that Drs.

Bakotic and Hackel were no longer employed by Bako would have greatly reduced any

122
      Id. at 49 (emphases added).
123
    See A844 (Mark J. Hosfield Trial Test. at 54:11–17); A432–35 (Mark J. Hosfield Expert Rep.
at Exhibit 7).
124
      Appellants’ Op. Br. at 25 n.5 (citing A795 (Robert J. Taylor, IV Trial Test. at 37:9–15)).
125
    Ams. Mining Corp. v. Theriault, 51 A.3d 1213, 1251 (Del. 2012). In Americas Mining
Corporation, for example, we affirmed a damages award that was “the product of a logical
deductive reasoning process.” Id. at 1249. Although the parties here rely, in part, on appraisal
cases in their briefing, we note that a damages calculation in a contract dispute differs from a trial
court’s exercise of determining fair value in an appraisal action. Cf. DFC Global Corp. v.
Muirfield Value P’rs, L.P., 172 A.3d 346 (Del. 2017); Dell, Inc. v. Magnetar Global Event Driven
Master Fund Ltd., 177 A.3d 1 (Del. 2017). But even in a contractual dispute, the trial court must
sufficiently explain its analysis, so that there can be effective appellate review. See Theriault, 51
A.3d at 1251.

                                                   39
projected growth rate.”126 The court was also persuaded that “Bako had reached a market

saturation that would hamper any additional growth [and] that many of the podiatry

services were being insourced by the doctors, and hospitals, with their own labs, and were

beginning to purchase podiatric practices.”127

            Accordingly, the court “decided to apply a growth rate of 1.5%[.]”128 It properly

weighed the testimony offered by Hosfield and examined the calculations in Hosfield’s

report. We do not agree with the Appellants that the chosen growth rate of 1.5% was not

grounded in the record. Although its explanation for choosing that growth rate could have

been more fulsome, the trial court did not abuse its discretion in selecting the 1.5% growth

rate, and we, thus, affirm that aspect of the court’s ruling.

            We turn next to Appellants’ contention that the court did not properly apply that

growth rate in the lost units analysis. Appellants assert, and it does indeed appear, based

upon the Superior Court’s explanation in its opinion, that the court incorrectly applied the

1.5% growth rate to the “but for” figure calculated by Hosfield. In the first step, the growth

rate should have been applied to Bako’s historical sales data to determine Bako’s expected

or “but for” sales. Actual sales are then subtracted from the “but for” sales to derive the

lost unit sales. However, the court stated that it “has decided to apply a growth rate of

126
      Opinion, at 48.
127
      Id.
128
      Id. at 49.

                                                40
1.5% to the ‘but for’ figure calculated by Mr. Hosfield.”129 But the growth rate should not

have been applied to the “but for” sales.

            Appellants argue that because the Superior Court did not explain and set forth its

calculations, it is unclear how it arrived at its awarded damages amount. We, too, cannot

determine for certain whether the court simply misstated what it did or whether it

misapplied the damages formula in performing its actual calculations.130 Accordingly, we

remand this issue to the trial court for clarification and to make any necessary revisions.

            Appellants also argue that the trial court erred in its calculation of units lost by

misinterpreting Hosfield’s calculation of units in Schedules 2.a, 2.b, and 2.c of his report.

They assert that these schedules contain the monthly units bought during the relevant

period for three small subsets of customers who ceased or reduced their business with

Bako. They further assert that the Superior Court concluded that these schedules contain

52,419 units that were affected by the Doctors’ misconduct. They claim the court erred by

stating that the 52,419 units represent the total actual units sold to this subset of customers

during the relevant time, not the number of units lost due to the Doctors’ misconduct.

            Based upon the record before this Court, it is unclear to us whether the disputed

figure of 52,419 units constitutes a subset of units sold or the actual number of units lost.

We direct the trial court on remand to address and clarify this additional point and to set

129
      Id.
130
   We are unaided by the Doctors’ briefing, which did not respond to Appellants’ arguments
regarding these alleged miscalculations.

                                                 41
forth the basis for its damages calculations. We anticipate that any further submissions on

these damages issues would be based upon the evidence already submitted.131

            As for the Appellants’ contention that the trial court erred in not awarding damages

for lost business value, we find no error. The trial court found that Appellants “simply

have not met their burden to establish a sufficient causal connection between the actual

conduct of [the Doctors] and the proposed nearly 66-million-dollar loss in business

value.”132 The court found that “[t]he proposed loss is simply a theoretical one without

support as to what actually occurred.”133 We find no abuse of discretion with that

determination.

      C. Failure to Award Attorneys’ Fees for Breach of the Employment Agreements was
         Error
            Appellants’ second set of issues concerns whether the Superior Court abused its

discretion when it declined to award “attorneys’ fees to Bako consistent with the fee-

shifting provisions in the Employment and Partnership Agreements[.]”134 The Doctors

argue that the trial court correctly declined to award attorneys’ fees because neither side

prevailed at trial.

131
   We note that the Superior Court did not allocate its damages award among the various corporate
entities. However, it appears that counsel did not seek such apportionment. See Oral Argument,
at                                                                                  12:38–13:51,
https://livestream.com/delawaresupremecourt/events/10612702/videos/233007566.
132
      Opinion, at 50.
133
      Id.
134
   Appellants’ Op. Br. at 35. Appellants contend that their attorneys’ fees “totaled approximately
$2.3 million.” Id. (citing A701 (Daniel Spragle Trial Test. at 148:18–20)).

                                                 42
          Where “an award [for attorneys’ fees] is legally permissible, [] the determination of

the appropriate amount is a classic matter for the trial court’s discretion.” 135 This Court

“conduct[s] a highly deferential abuse-of-discretion review by keeping in mind the non-

exhaustive factors of Rule 1.5(a) of the Delaware Lawyer’s Rules of Professional

Conduct.”136 “[A]lthough we review an award of attorneys’ fees for abuse of discretion,

we consider the [trial] court’s interpretation of relevant [] contractual provisions de

novo.”137

          “Delaware generally follows the American Rule, under which litigants are

responsible for their own attorneys’ fees, regardless of the outcome of the lawsuit.”138 One

exception to the American Rule “is found in contract litigation that involves a fee shifting

provision.”139 “In contract litigation, where the contract contains a fee-shifting provision,

we will enforce that provision.”140

135
      TransPerfect Global, Inc. v. Pincus, 278 A.3d 630, 653 (Del. 2022) (internal citation omitted).
136
    Id. See also Mahani v. Edix Media Grp., Inc., 935 A.2d 242, 245–6 (Del. 2007). The Rule
1.5(a) factors are “(1) the time and labor required, the novelty and difficulty of the questions
involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent
to the client, that the acceptance of the particular employment will preclude other employment by
the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount
involved and the results obtained; (5) the time limitations imposed by the client or by the
circumstances; (6) the nature and length of the professional relationship with the client; (7) the
experience, reputation, and ability of the lawyer or lawyers performing the services; and (8)
whether the fee is fixed or contingent.” Id. at 246. Trial court judges in this State are directed by
case law “to consider [these] factors” when “assess[ing] a fee’s reasonableness[.]” Id. at 245–6.
137
      TransPerfect, 278 A.3d at 656 (internal citation omitted).
138
   Alaska Elec. Pension Fund v. Brown, 988 A.2d 412, 417 (Del. 2007) (internal citation omitted).
See also Reserves Dev. LLC v. Crystal Props., LLC, 986 A.2d 362, 369 (Del. 2009).
139
      Mahani, 935 A.2d at 245.
140
   SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d 330, 352 (Del. 2013) (internal citation
omitted).

                                                  43
          Here, the trial court declined to award attorneys’ fees despite the fee-shifting

provisions in the Employment Agreements and the Partnership Agreement. At the outset

of its fees discussion, the trial court stated:

          While the Court will explain its reasoning below, it does not believe the
          conduct of the parties justifies such relief. Both failed to exercise good
          business judgment and have used the justice system to obtain some form of
          revenge. For the Court to deviate from the American Rule would only give
          some degree of countenance to this litigation. Justice demands that both
          parties pay for litigation that should have ended years ago.141
          The court then examined the fee-shifting provisions in the Employment Agreements

and the Partnership Agreement. Both the Employment Fee-Shifting Provisions and the

Partnership Fee-Shifting Provision contain the phrase “prevailing party” as a precondition

to shifting fees.142 However, the provisions differ in a significant respect. The Partnership

Fee-Shifting Provision provides that fees are to be shifted to the prevailing party in “any

dispute between the parties hereto[.]”143 Further, the Partnership Agreement defines

“prevailing party” to mean “the party who is determined in the proceeding to have

prevailed or who prevails by dismissal, default or otherwise.”144             However, the

Employment Fee-Shifting Provisions provide that fees are to be shifted to “the prevailing

141
      Opinion, at 51.
142
  See A97 (Bakotic Employment Agreement § 8); A105 (Hackel Employment Agreement § 8);
B113–14 (Partnership Agreement § 12.12).
143
      B113 (Partnership Agreement § 12.12) (emphasis added).
144
      B114 (Partnership Agreement § 12.12) (emphasis added).

                                                  44
party in any legal proceeding to construe, apply, interpret, enforce or defend any of the

Company’s rights in this Agreement[.]”145

          Both the Employment Fee-Shifting Provisions and the Partnership Fee-Shifting

Provision are contractual provisions and, as such, require this Court’s traditional approach

to contract interpretation. “We interpret clear and unambiguous contract terms according

to their plain meaning.”146 “Prevailing party” is a term of art that the parties bargained for

in the contracts. “Having chosen the common term ‘prevailing party,’ the parties can be

presumed to have intended that that term would be applied by the court as it has

traditionally done so.”147 “That traditional application is an all-or-nothing approach

involving an inquiry into which party predominated in the litigation[,]” as opposed to a

claim-by-claim or other partial basis approach.148

          Our trial courts have frequently dealt with such “prevailing party” clauses in

contracts. In Brandin v. Gottlieb, for example, the Court of Chancery determined that a

“prevailing party” clause awards fees to a party “who has prevailed on most of her

145
   A97 (Bakotic Employment Agreement § 8) (emphases added); A105 (Hackel Employment
Agreement § 8) (emphases added).
146
  Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665,
683 (Del. 2013) (internal citation omitted).
147
      Brandin v. Gottlieb, 2000 WL 1005954, at *28 (Del. Ch. July 13, 2000).
148
   Comrie v. Enterasys Networks, Inc., 2004 WL 936505, at *2 (Del. Ch. Apr. 27, 2004), aff’d
864 A.2d 929 (Del. 2004) (TABLE). See also Aloha Power Co., LLC v. Regenesis Power, LLC,
2017 WL 6550429, at *5 (Del. Ch. Dec. 22, 2017) (“‘Absent any qualifying language that fees are
to be award claim-by-claim or on some other partial basis, a contractual provision entitling the
prevailing party to fees will usually be applied in an all-or nothing manner.’”) (quoting W. Willow-
Bay Court, LLC v. Robino-Bay Court Plaza, LLC, 2009 WL 458779, at *8 (Del. Ch. Feb. 23,
2009)).

                                                45
claims[.]”149 There, one party had “succeeded on a variety of important claims, having

prevailed in her previous summary judgment motion [and then] having won most of the

claims she pressed at trial.”150 The party who was deemed the “prevailing party” in

Gottlieb did not win on every issue — and yet the court still shifted fees.151 In 2009 Caiola

Family Trust v. PWA, LLC, the Court of Chancery articulated that “[t]o achieve

predominance, a litigant should prevail on the case’s ‘chief issue.’”152

            With that backdrop, our analysis turns to the trial court’s application of the fee-

shifting provisions. The differences in the fee-shifting provisions present some novel

issues. Unlike the typical case where there are multiple claims and the court must

determine which party prevailed — often with both sides having won on some and lost on

some — this case involves not only multiple claims, but also different agreements

containing different fee-shifting provisions. As noted above, the Partnership Agreement

speaks of the “prevailing party” in terms of the overall dispute, whereas the Employment

Agreements speak to the “prevailing party” in terms of success on claims involving rights

under those specific Employment Agreements. We think this difference is important here.

            However, the trial court’s analysis did not consider these differences in the

contracts. Instead, it looked at the “prevailing party” language more globally, holding that:

149
      Gottlieb, 2000 WL 1005954, at *27.
150
      Id.
151
   See id. (noting that the other party prevailed on a material breach claim, “which involved a
good deal of litigation effort on both sides.”).
152
   2015 WL 6007596, at *33 (Del. Ch. Oct. 14, 2015) (quoting W. Willow-Bay Court, 2009 WL
458779, at *9).

                                                46
            The fee-shifting language chosen by the parties requires the Court to perform
            the traditional analysis and look to the overall substance of the litigation.
            Both the [Doctors] and the [Appellants] have won some claims and lost on
            others. However, after years of excessive litigation, that culminated in a
            seven-day trial, the parties recovered much less than sought. Under those
            circumstances, the Court has discretion to find that neither party is a
            “prevailing party.”153
The Superior Court concluded that there were “two chief issues present at trial[.]”154 These

“boil[ed] down to five breach of contract claims and two tortious interference claims.”155

The Superior Court noted that the Doctors won “on the two tortious interference claims

and one of the contract claims[,] [w]hile [the Appellants] prevailed on the four-remaining

breach of contract claims only.”156 By ignoring the different language in the Employment

Fee-Shifting Provisions, the trial court’s analysis is only partly correct.

            Under the Partnership Fee-Shifting Provision, the prevailing party must prevail in

the overall dispute itself. The trial court’s focus on the overall dispute and its conclusion

that there was no prevailing party in the overall dispute here is not an abuse of discretion.

Thus, we find no error in the trial court’s decision to not award attorneys’ fees under the

Partnership Agreement.

            However, the narrower language in the Employment Fee-Shifting Provisions

focuses on vindicating rights under those specific contracts. With regard to the claims

raised under the Employment Agreements, the trial court ruled for Appellants on all claims:

153
      Opinion, at 53.
154
      Id.
155
      Id.
156
  Id. The one breach of contract claim that the Doctors won on was asserted under the Merger
Agreement, which does not contain a fee-shifting provision.

                                                 47
the Doctors breached the Employment Non-Compete Provisions and the Employment

Non-Use Provisions.157 Thus, the Appellants are the clear “prevailing party” on the claims

raised in connection with the Employment Agreements.158

          We reject the Doctors’ assertions that their win on the tortious interference claims

undercuts this conclusion. The tortious interference claims asserted by Appellants against

Dr. Bakotic as compulsory counterclaims were based upon other agreements with third-

parties, not upon the Employment Agreements.159 The Doctors cite no case holding that

success on a tortious interference claim not based on the agreement containing the fee-

shifting provision negates fee-shifting where a party prevails on all claims based upon that

agreement and where the agreement’s “prevailing party” language focuses on claims

involving rights under that agreement. Accordingly, we conclude that the Superior Court

erred by not awarding attorneys’ fees in connection with the litigation of the claims arising

under the Employment Agreements. Accordingly, we REVERSE and REMAND for

further proceedings consistent with this Opinion.

                                         IV. CONCLUSION
          In sum and based on the foregoing, we reject all claims raised by the Doctors in

their cross-appeal and AFFIRM the Superior Court’s decisions on those claims. We

157
      Id. at 54.
158
   See AFH Hldg. & Advisory, LLC v. Emmaus Life Scis., Inc., 2014 WL 1760935, at *3 (Del.
Super. Apr. 16, 2014) (awarding attorneys’ fees under fee-shifting provision where party won on
the breach of contract issues).
159
   Appellants asserted “that Dr. Bakotic tortiously interfered with two contracts: (1) the Podiatric
Medical Director Services Agreement between Bako and Dr. Bryan Markinson; and (2) the
Medical Director Services Agreement between Bako and the AFCG.” Opinion, at 18. Neither
contract is at issue on appeal.

                                                48
REMAND to the Superior Court the two aspects of the lost profits damages calculations

for clarification and revision, if needed, consistent with this Opinion.   Finally, we

REVERSE the Superior Court’s decision declining to award attorneys’ fees under the

Employment Agreements and REMAND for additional development of the record on that

issue consistent with this Opinion.

                                         49