AHP Services, LLC v. Miles ( 2022 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
AHP SERVICES, LLC, )
)
Plaintiff, )
)
v. )
) C.A. No.: N22C-04-179 FWW
PEGGY MILES, )
)
Defendant. )
Submitted: August 2, 2022
Decided: October 25, 2022
Upon Defendant’s Motion to Dismiss
DENIED.
ORDER
Joelle E. Polesky, Esquire, STRADLEY, RONON, STEVENS, & YOUNG, LLP,
1000 North West Street, Suite 1279, Wilmington, DE 19801, Attorney for
Plaintiff, AHP Services, LLC.
Scott G. Wilcox, Esquire, MOORE AND RUTT, P.A., 1007 North Orange Street,
Suite 437, Wilmington, DE 19801, Attorney for Defendant, Peggy Miles.
WHARTON, J.
This 25th day of October, 2022, upon consideration of Defendant Peggy
Miles’ (“Miles”) Motion to Dismiss (“Motion”),1 the Opposition of Plaintiff AHP
Services, LLC (“AHP”),2 and the record in this case, it appears to the Court:
1. AHP brings this action against Miles, alleging breach of contract, unjust
enrichment, and conversion related to a payment Miles received from AHP
following her election of certain benefits under a November 14, 2018, Investment
Agreement.3
2. Willie Miles, Defendant Miles’ deceased husband, was a client of AHP.
Pursuant to an Investment Agreement dated November 14, 2018, Willie Miles
purchased 6015.049 shares of Series A Preferred Securities at a price of $60,150.49.4
3. Willie Miles passed away in March, 2019.5 Miles, as her husband’s
heir, elected to redeem Willie Miles’ investment and, to accomplish that end,
completed and returned to AHP a Liquidity Request Form requesting to withdraw
$64,147.39.6 AHP paid Miles $64,147.39 on December 19, 2019.7 Later, Miles was
issued another check for $60,150.49 by AHP on January 31, 2020, which represented
1
Def.’s Mot. to Dismiss, D.I. 16.
2
Pl.’s Opp to Mot. to Dismiss, D.I. 20.
3
Amend. Compl., D.I. 9.
4
Id. The Investment Agreement is attached to the Def.’s Mot. to Dismiss, at Ex. 2,
D.I. 16.
5
Id.
6
Id.
7
Id.
2
Willie Mile’s initial investment under the Investment Agreement.8 AHP alleges this
check was issued by mistake.9 Despite a demand for repayment, Miles has refused.10
4. Miles asks the Court to dismiss AHP’S claims for lack of subject matter
jurisdiction pursuant to Delaware Superior Court Civil Rule 12(b)(1) and lack of
personal jurisdiction over Miles under Rule 12(b)(2).11 Alternatively, Miles asks the
Court to dismiss the breach of contract claim because: (1) the Amended Complaint
lacks any allegations that Miles intended to be bound by any agreements Willie
Miles entered into with AHP; (2) the agreements lack sufficient detail regarding the
withdrawal of funds; and (3) there was a failure of consideration between APH and
Miles.12
5. Superior Court Civil Rule 12(b)(1) mandates that the Court dismiss an
action for lack of subject matter jurisdiction if it appears from the record that the
Court does not have jurisdiction over the claim. Despite a passing reference to Rule
12(b)(1), it does not appear from the Motion, however, that AHP is challenging the
Court’s jurisdiction over the claim.13 Instead, the Motion argues that the Court lacks
jurisdiction over Miles’ person.
8
Id.
9
Id.
10
Id.
11
Def.’s Mot to Dismiss, D.I. 16.
12
Id.
13
Id., at ⁋⁋ 7-15.
3
6. On a motion to dismiss pursuant to Superior Court Rule 12(b)(2) for
lack of personal jurisdiction over a defendant, “A plaintiff bears the burden of
showing a basis for a trial court’s exercise of jurisdiction over a nonresident
defendant.”14 “In ruling on a Rule 12(b)(2) motion, the Court may consider the
pleadings, affidavits, and discovery of record.”15 Normally, the Court applies a two-
pronged analysis, first considering whether Delaware’s Long Arm Statute is
applicable, and then determining whether subjecting the nonresident defendant to
jurisdiction in Delaware violates the Due Process clause of the Fourteenth
Amendment.16 Here, however, AHP asserts personal jurisdiction because “the
Investment Agreement Miles availed herself of, and received a direct benefit from,
contains a forum selection clause naming Delaware state and federal courts as the
proper fora for disputes arising from that agreement, and includes consent to
personal jurisdiction.”17 Miles contends that she is not bound by the provisions of
the Investment Agreement because she was not a party to it.18 Further, because the
Investment Agreement did not contain a provision relating to the withdrawal of
14
AeroGlobal Capital Management, LLC v. Cirrus Industries, Inc., 871 A.2d 428,
437 (Del. 2005).
15
Economical Steel Building Technologies, LLC v. E. West Construction, Inc., 2020
WL 1866869, at *1 (Del. Super. Ct. Apr. 14, 2020) (quoting Ryan v. Gifford, 935
A.2d 258, 265 (Del. Ch. 2007).
16
Biomeme, Inc. v. McAnallen, 2021 WL 5411094, at *2 (Del. Super. Nov. 10,
2021).
17
Amend. Compl., at ⁋ 4, D.I. 9.
18
Def.’s Mot. to Dismiss, at ⁋ 9, D.I. 16.
4
funds, the forum selection provision is inapplicable.19 Thus, Court must determine
whether Miles, as a non-signatory to the Investment Agreement, is bound by the
forum selection provision and whether this dispute is subject to that provision.
7. Personal jurisdiction may be waived through a forum selection clause
in a contract.20 A forum selection clause allows parties to agree to a specific forum
to litigate their disputes.21 Forum selection clauses are presumptively valid, and the
Court need not consider the Delaware Long Arm Statute or the nonresident's
minimum contacts with the forum.22 Delaware courts defer to forum selection
clauses and routinely “give effect to the terms of private agreements to resolve
disputes in a designated judicial forum out of respect for the parties’ contractual
designation.”23
19
Id., at ⁋ 10.
20
Biomeme v. McAnallen, at *3, (citing Genuine Parts Co. v. Cepec, 137 A.3d 123,
130 (Del. 2016)).
21
Id. (citing Nat'l Indus. Grp. (Holding) v. Carlyle Inv. Mgmt. L.L.C., 67 A.3d 373,
385 (Del. 2013)).
22
Id. See also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985)
(“Where such forum selection provisions have been obtained through ‘freely
negotiated’ agreements and are not ‘unreasonable and unjust,’ their enforcement
does not offend due process.”); Eagle Force Holdings, LLC v. Campbell, 187 A.3d
1209, 1228 (Del. 2018) (“Where a party commits to the jurisdiction of a particular
court or forum by contract, such as through a forum selection clause, a ‘minimum
contacts’ analysis is not required as it should clearly anticipate being required to
litigate in that forum.”).
23
Id. (quoting Halpern Eye Assocs., P.A. v. E.A. Crowell & Assocs., Inc., 2007 WL
3231617, at *1 (Del. Com. Pl. Sept. 18, 2007)).
5
8. When determining whether a non-signatory is bound by a forum
selection clause, Delaware courts apply the three-part test set forth in Capitol Group
Companies v. Armour.24 “First, is the forum selection clause valid? Second, are the
[non-signatories] third-party beneficiaries, or closely related to, the contract? Third,
does the claim arise from the standing relating to the agreement? If all three
questions are answered in the affirmative, the forum selection clause will bind the
non-signatory.”25
9. Here, the validity of the forum selection clause is not in dispute, so the
first Capitol Group factor is satisfied. The Court finds that the second Capitol Group
factor is satisfied as well. The closely related test is an expanded form of equitable
estoppel where either the party receives a direct benefit from the agreement or it was
foreseeable that the party would be bound by the agreement.26 When Miles
redeemed Willie Miles’ investment, as his heir, she received a direct benefit from
the Investment Agreement. But for the Investment Agreement contract between
Willie Miles and AHP, there would have been nothing for Miles to redeem. Miles,
as a nonsignatory, cannot accept the benefit of the contract - Willie Miles’
investment – and reject her obligations under that contract – to litigate in Delaware
24
2004 WL 2521295 (Del. Ch. Oct 29, 2004)(revised Nov.3, 2004).
25
Id., at *5.
26
See, McWane, Inc. v. Lanier, 2015 WL 399582, at *7 (Del. Ch. Jan. 30, 2015).
6
under the forum selection provision.27 Similarly, it was entirely foreseeable, that, as
Willie Miles’ heir, Miles would be bound by the Investment Agreement if she chose
to obtain benefits under it.
10. The third Capital Group factor is satisfied as well. This third factor
requires that “the agreement containing the forum selection clause must also be the
agreement that gives rise to the substantive claims brought by or against a non-
signatory in order for the forum selection clause be enforceable against the non-
signatory.”28 In order to answer affirmatively, the claims asserted in Amended
Complaint must arise from the Investment Agreement. They do. The fundamental
issue here is the amount of Willie Miles investment to which Miles might be entitled
as his heir. That amount is determined by the Investment Agreement. Miles’
argument that, because the Investment Agreement does not address the mechanics
of withdrawing funds, the forum selection provision does not apply, reads the forum
selection provision too narrowly. The forum selection provision of the Investment
Agreement reads in pertinent part:
Governing Law. This agreement shall be governed by the
internal laws of Delaware without giving effect to the
principles of conflicts of laws. You hereby (i) consent to
the personal jurisdiction of the Delaware courts or the
Federal courts located in Delaware, (ii) agree that all
27
See, Florida Chemical Co., LLC v. Flotek Industries, Inc., 262 A.3d 1066, 1091
(Del. Ch. 2021).
28
Weygandt v. Weco, LLC, 2009 WL 1351898, at *4n.15 (Del. Ch. May, 14,
2009).
7
disputes arising from this Agreement shall be prosecuted
in such courts, (iii) agree that any such court shall have
personal jurisdiction over you…29
This litigation is a “dispute arising from this Agreement” because it is a dispute about
the amount of the investment to which Miles is entitled as set out in the agreement,
not the mechanics to the withdrawal. Accordingly, this Court has personal
jurisdiction over Miles.
11. Miles next claims that Count I (Breach of Contract) must be dismissed
for failure to state a claim pursuant to Delaware Superior Court Rule 12(b)(6)
because no contractual relationship was formed between Miles and AHP. A motion
to dismiss for failure to state a claim pursuant to Superior Court Rule 12(b)(6) will
not be granted if the “plaintiff may recover under any reasonably conceivable set of
circumstances susceptible of proof under the complaint.”30 The Court’s review is
limited to the well-pled allegations in the complaint.31 In ruling on a 12(b)(6)
motion, the Court “must draw all reasonable factual inferences in favor of the party
opposing the motion.”32 Dismissal is warranted “only if it appears with reasonable
certainty that the plaintiff could not prove any set of facts that would entitle him to
relief.”33
29
Def.’s Mot. to Dismiss, at Ex. 2, D.I. 16.
30
Browne v. Robb, 583 A.2d 949, 950 (Del. 1990).
31
Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005).
32
Id.33
Id.8
12. Dismissal is not warranted here because the Amended Complaint
alleges a viable breach of contract based on a contractual relationship between Miles
and AHP. It does not appear with any reasonable certainty that AHP could fail to
prove the facts alleged. AHP’s Amended Complaint alleges that Miles stepped into
Willie Miles’ place by submitting a Liquidity Request Form requesting to withdraw
$64,147.39.34 Based on the pleadings, a contract existed and when Miles filed a
form requesting benefits, she subjected herself to the terms and conditions of the
contract, despite not signing the contract. AHP also plead that it mistakenly sent
Miles an additional $60,135.49 check, requested the amount to be returned, and that
Miles refused to return this amount, breaching the contract.35 Accordingly, the Court
determines that AHP adequately alleges a breach of contract claim against Miles.
THEREFORE, because this Court has personal jurisdiction over Miles, and
because the Complaint adequately states a claim for breach of contract, Defendant
Peggy Miles’ Motion to Dismiss is DENIED.
IT IS SO ORDERED.
/s/ Ferris W. Wharton
Ferris W. Wharton, J.
34
D.I. 9.
35
D.I. 9.
9