Maric Healthcare, LLC v. Jacob Guerrero

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MARIC HEALTHCARE, LLC and )
TEXAS TREATMENT SERVICES, )
LLC, )
)
Plaintiffs, )
)
v. ) C.A. No. 2023-1062-NAC
)
JACOB GUERRERO, )
)
Defendant. )
MEMORANDUM OPINION
Date Submitted: April 23, 2024
Date Decided: June 14, 2024
Michael T. Manuel, John M. Seaman, ABRAMS & BAYLISS LLP, Wilmington,
Delaware; Counsel for Plaintiffs Maric Healthcare, LLC and Texas Treatment
Services, LLC.
Margaret F. England, Michael Van Gorder, GELLERT SEITZ BUSENKELL &
BROWN LLC, Wilmington, Delaware; Counsel for Defendant Jacob Guerrero.
COOK, V.C.
This decision resolves the defendant’s motion to dismiss (the “Motion”). The
defendant served as the manager of a Delaware limited liability company operating
an opioid treatment clinic. The plaintiffs—i.e., the clinic-LLC and its sole member—
allege that, while serving as the manager of the clinic-LLC, the defendant opened his
own opioid treatment clinic, diverted the clinic-LLC’s patients to it, and engaged in
other competitive behavior.
The defendant filed the Motion seeking dismissal of all claims for lack of
personal jurisdiction, improper venue, and failure to state a claim. On the facts
alleged, well-settled Delaware law requires that I reject the defendant’s personal
jurisdiction and venue arguments. But, for the reasons set forth below, the Motion is
granted in part for failure to state a claim.
I. FACTUAL BACKGROUND
The facts set forth below are drawn from the Verified Complaint for Injunctive
Relief and Damages (the “Complaint”) and the documents it incorporates by reference
or upon which it relies.1
A. The LLC Agreement
Plaintiff Maric Healthcare, LLC (“Maric”) is the “sole member of” Plaintiff
Texas Treatment Services, LLC (“TTS”), which operates a Texas opioid clinic. 2 Both
1 See Teamsters Loc. 677 Health Servs. & Ins. Plan v. Martell, 2023 WL 1370852, at
*7 (Del. Ch. Jan. 31, 2023).
2Maric Healthcare, LLC v. Guerrero, C.A. No. 2023-1062-NAC, Docket (“Dkt.”) 1
(“Compl.”) ¶¶ 1–2, 9–10.
1
Maric and TTS are Delaware limited liability companies.3 On April 1, 2017, TTS
entered into a Limited Liability Company Agreement (the “LLC Agreement”) with
Defendant Jacob Guerrero, which designated Defendant by name as TTS’s manager
and president.4
As manager, the LLC Agreement provided Defendant with “full, complete, and
exclusive authority and discretion, and the responsibility and duty” to, among other
things, “control the business, policies, property, and affairs of the LLC.”5 The LLC
Agreement also provided that Defendant would be “subject to the fiduciary duties
that would be due by an officer or director of a Delaware corporation to such
corporation,” and that the LLC Agreement would be “governed by” and “construed in
accordance with the laws of the State of Delaware, exclusive of its conflict-of-laws
principles.”6
B. Alleged Competition
Plaintiffs allege that, in the second half of 2020, while serving as manager and
president of TTS, Defendant began taking steps to establish “a competing opioid
3 Id. ¶¶ 9–10.
4 Id. Ex. A (“LLC Agreement”) § 7 (“Management of the LLC shall be vested in the
manager . . . , who shall initially be Jacob Guerrero.”); id. § 6 (“[T]he Sole Member hereby
forms the following office[] and appoints the following persons to such office[]: President
Jacob Guerrero[.]”). Defendant signed the LLC Agreement as manager and president of TTS.
Id.
5 LLC Agreement § 7.1.
6 Id. §§ 14, 17.
2
treatment center.”7 First, on August 31, 2020, Guerrero and Jessica Robbins (then
serving as TTS’s medical director) filed a certificate of formation for a Texas limited
liability company, TX OTP.8 The certificate of formation identified Guerrero and
Robbins as managers of TX OTP.9
On September 24, 2020, “an assumed name certificate was filed with the Texas
Secretary of State” identifying “MAT Texas” as the assumed name under which the
business of TX OTP would be conducted.10 Guerrero signed the assumed name
certificate.11
A Texas Franchise Tax Public Information Report, dated April 20, 2021, “was
also filed with Texas Secretary of State on behalf of TX OTP.”12 Guerrero signed the
report, which identified Guerrero and Robbins “as members of Texas OTP.”13
Plaintiffs allege that “[s]etting up an opioid treatment center requires
substantial time and effort.”14
According to the Substance Abuse and Mental Health Services
Administration (an agency within the U.S. Department of Health and
Human Services) website, federal law requires, among other things, that
7 See Compl. ¶¶ 24–25.
8 Id. ¶¶ 12, 25.
9 Id. ¶ 25.
10 Id. ¶ 26.
11 Id.
12 Id. ¶ 27.
13 Id.
14 Id. ¶ 28.
3
an opioid treatment program be (i) both certified and accredited; (ii)
licensed by the state in which it operates and (iii) registered with the
Drug Enforcement Administration through its local DEA office.15
“Based on National Provider Identifier [(“NPI”)] records, TX OTP was certified as a
healthcare provider on February 22, 2022.”16 NPI records “identify TX OTP as a
methadone clinic” in Texas and “indicate that Guerrero is the Executive Director of
TX OTP.”17
Plaintiffs allege that in 2021, before receiving accreditation, Guerrero,
Robbins, and former-TTS nurse Nikki Erb “conspired to transfer existing patients to
the competing opioid treatment center.”18
The patients that were transferred did not require federal or state
licensure to be treated, which is why these specific patients were chosen
to transfer prior to receiving licensure. Approximately five days after
effecting the transfer of the patients to the Guerrero/Robbins clinic,
nurse Nikki Erb resigned from TTS and began employment at the
competing clinic.19
According to Plaintiffs, on September 29, 2022, Maric terminated Defendant
“for poor performance.”20 But Maric did not learn that Guerrero and Robbins “had
set up the competing opioid treatment center” until November 2022—just over a
15 Id.
16 Id. ¶ 29.
17 Id.
18 Id. ¶ 4.
19 Id.
20 Id. ¶ 30.
4
month after terminating Defendant.21 Maric confirmed the “ownership of the new
clinic and patient poaching” in a “discussion with Nikki Erb in or around November
2022.”22
Plaintiffs thus allege that, “for at least two years (until his termination in
September 2022), Guerrero, with Robbins’s assistance, had been operating, in some
capacity, TX OPT, which directly competes with TTS, while simultaneously acting as
Manager and President of TTS.”23
Because Guerrero and Robbins concealed their competitive activities
from Maric, the full extent of their involvement with TX OTP is not
known to Plaintiffs at this time. But Maric knows that Guerrero
actively participated in the operations of TX OTP while simultaneously
receiving a salary from Maric to act as Manager and President of TTS.24
Plaintiffs allege “on information and belief,” that Defendant ultimately, “with the
help of Robbins and Erb, facilitated the transfer of approximately 70 patients from
TTS to TX OTP” and “caused at least five employees of TTS to leave for TX OTP.”25
C. Procedural History
Maric filed the Complaint in this action on October 20, 2023, asserting four
claims: breach of fiduciary duty, conversion, intentional interference with existing
21 Id. ¶ 6.
22 Id. ¶ 37.
23 Id. ¶ 31.
24 Id. ¶ 32.
25 Id. ¶ 33.
5
contractual or prospective business advantages, and misappropriation of trade
secrets under the Delaware Uniform Trade Secrets Act (“DUTSA”).26
Defendant filed the Motion on December 4, 2023. Following briefing, I heard
oral argument on April 23, 2024.
II. LEGAL ANALYSIS
Defendant asserts three separate bases for dismissal of the claims against him:
lack of personal jurisdiction, improper venue, and failure to state a claim. I address
each in turn.
A. Personal Jurisdiction
To satisfy personal jurisdiction requirements, a plaintiff must clear two
hurdles: a statutory hurdle and a due process hurdle. 27 At oral argument,
Defendant’s counsel conceded that Plaintiffs satisfied the first hurdle under
Delaware’s consent to service statute for managers of Delaware limited liability
companies.28
When considering the due process hurdle, this Court has recognized that “[a]
chartering state has a strong interest in resolving disputes involving the internal
affairs of the entities that it creates.”29 Thus, “[a]n individual who chooses to become
26 Id. ¶¶ 39–58.
27 See In re P3 Health Grp. Hldgs., LLC, 285 A.3d 143, 146 (Del. Ch. 2022).
28 See Dkt. 19 (“OA Tr.”) 14:9–13.
29 In re P3 Health Grp. Hldgs., LLC, 285 A.3d at 147.
6
involved in the business and affairs of a Delaware entity must expect to be subject to
suit in the courts of the chartering state for actions taken on the entity’s behalf.”30
Defendant argues “[t]here is no indication that [he] purposefully availed
himself of the privilege of conducting activities in the State of Delaware.” 31 Not so.
“By becoming a [manager] of a Delaware [LLC, Guerrero] purposefully availed
himself of certain duties and protections under our law.”32 As this Court explained
in In re P3 Health Group Holdings, LLC, “when the action relates to a violation by
the manager of a fiduciary duty owed to the LLC and its members, then the exercise
of jurisdiction under Section 18-109 complies with due process.”33 There is no
question this action relates to Guerrero’s alleged breach of the fiduciary duties he
owed as the manager of a Delaware LLC.34 Accordingly, due process is satisfied.
30 Id.
31 See Dkt. 11 (“Def’s OB”) at 12 (internal quotation marks omitted).
32 Hazout v. Tsang Mun Ting, 134 A.3d 274, 292 (Del. 2016) (citations omitted); see
Next Level Ventures, LLC v. AVID USA Techs. LLC, 2023 WL 3141054, at *20 n.203 (Del. Ch.
Mar. 16, 2023) (applying the Delaware Supreme Court’s approach to 10 Del. C. § 3114 in
Hazout for 6 Del. C. § 18-109). Indeed, Guerrero contractually agreed to serve as the
president and manager of a Delaware LLC. See LLC Agreement §§ 6–7. He expressly bound
himself to the fiduciary duties owed by directors and officers of Delaware corporations. See
id. § 14. And he signed the LLC Agreement, which set forth a clear Delaware choice of law
provision. See id. § 17; cf. Next Level Ventures, LLC, 2023 WL 3141054, at *25 n.235 (noting
that “ties to Delaware” for due process purposes are strengthened “where contracts reflect[]
the parties’ intention that Delaware would resolve any disputes”).
33 In re P3 Health Grp. Hldgs., LLC, 282 A.3d 1054, 1072 (Del. Ch. 2022); see also Next
Level Ventures, LLC, 2023 WL 3141054, at *25 n.235 (finding personal jurisdiction because
“by becoming [managers] of a Delaware [LLC], the [defendants] purposefully availed
[themselves] of certain duties and protections under our law, and the claims against them
involve their actions in their official capacity” (third alteration added) (internal quotation
marks omitted)).
34 See Compl. ¶¶ 6, 39–44.
7
“From there, ‘[o]nce a defendant is subject to personal jurisdiction under 6 Del.
C. § 18-109(a) as to certain claims, the Court may exercise personal jurisdiction over
the defendant with respect to any claims that are sufficiently related to the cause of
action.’”35 “Sufficiently related [claims]” unquestionably include “those predicated on
the same set of facts.”36
Plaintiffs’ remaining claims are predicated on the same facts concerning
Guerrero’s alleged competing activities. Although Plaintiffs’ allegations are often
thin or conclusory, as I discuss below, Plaintiffs allege Guerrero had access to trade
secrets and removed property during his tenure and tortiously interfered “[u]sing his
position as a fiduciary,”37 all in connection with the alleged competitive activities that
form the basis for Plaintiffs’ breach of fiduciary duty claim.
Accordingly, I reject Defendant’s personal jurisdiction argument.
B. Venue
“Forum non conveniens motions are addressed to the trial court’s discretion.”38
To determine whether to dismiss an action under forum non conveniens, Delaware
courts consider the following “Cryo-Maid factors”:
(1) the relative ease of access to proof; (2) the availability of a compulsory
process for witnesses; (3) the possibility to view the premises, if
appropriate; (4) all other practical problems that would make the trial
easy, expeditious, and inexpensive; (5) whether the controversy is
35 Next Level Ventures, LLC, 2023 WL 3141054, at *21 (citations omitted).
36 Id.37 Compl. ¶ 51.
38 GXP Cap., LLC v. Argonaut Mfg. Servs., Inc., 253 A.3d 93, 97 (Del. 2021).
8
dependent upon Delaware law, which the courts of this State should
decide rather than those of another jurisdiction; and (6) the pendency or
non-pendency of a similar action in another jurisdiction.39
When a plaintiff files first in Delaware and there is no pending case elsewhere,
“the defendant must show ‘with particularity’ that one or more of these factors,
individually or together, imposes an ‘overwhelming hardship’ on the defendant” to
obtain dismissal.40 “It is insufficient that all of the Cryo-Maid factors may favor
defendant or that another court would be a more appropriate forum.”41 “Indeed, only
in a ‘rare case’ will a complaint filed in Delaware be dismissed on the grounds of
forum non conveniens.”42 This comports with the notion that “[m]ost corporate
litigation in the Court of Chancery involves companies and documents located outside
of Delaware, and [so] mere inconvenience, without more, does not warrant a stay or
dismissal.”43
In an effort to meet its burden, Defendant asserts two primary arguments for
dismissal. First, Defendant argues it would be easier to litigate in Texas because
39 Id. at 101.
40 Mar-Land Indus. Contr., Inc. v. Caribbean Petroleum Ref., L.P., 777 A.2d 774, 778
(Del. 2001) (emphasis added) (quoting Ison v. E.I. DuPont de Nemours & Co., 729 A.2d 832,
838 (Del. 1999)). At oral argument, Defendant’s counsel agreed that “overwhelming
hardship” is the “correct” standard for determining dismissal on forum non conveniens
grounds in this action. OA Tr. 57:10–14.
41 Mar-Land Indus. Contr., Inc., 777 A.2d at 778 (quoting E.I. DuPont de Nemours &
Co., 729 A.2d at 838).
42 Id. (quoting E.I. DuPont de Nemours & Co., 729 A.2d at 842).
43 See Harris v. Harris, 2023 WL 355179, at *12 (Del. Ch. Jan. 23, 2023) (quoting
Rosen v. Wind River Sys., Inc., 2009 WL 1856460, at *6 (Del. Ch. June 26, 2009)).
9
that is where some of the documents and witnesses are, the latter of which may
require compulsory process to secure their attendance at trial.44 Second, Defendant
contends that this Court need not resolve the parties’ dispute in this action because
the application of Delaware fiduciary law will be straightforward and Texas law
applies to the other claims.45 But Defendant never connects either of these
arguments to the imposition of an “overwhelming burden”—which, alone, is fatal.46
Even if considered for their substance, Defendant’s arguments are to no avail.
Although Defendant points to the location of witnesses in Texas, he fails to explain
how the lack of compulsory process presents more than an inconvenience. Yet, our
high court has explained that the lack of compulsory process over witnesses does not
warrant dismissal absent some showing of how it burdens the party seeking
dismissal—mere inconvenience is not enough.47
Likewise, Defendant does not assert that the location of documents in Texas
gives rise to any sort of hardship, much less an “overwhelming hardship.” As our
courts have explained on many occasions, “[m]odern methods of information transfer
render concerns about transmission of documents virtually irrelevant.”48 Moreover,
44 See Def’s OB at 13–15; Dkt. 16 (“Def’s RB”) at 10–11.
45 See Def’s OB at 14; Def’s RB at 11–12.
46 See Mar-Land Indus. Contr., Inc., 777 A.2d at 778.
47 See Berger v. Intelident Sols., Inc., 906 A.2d 134, 136–37 (Del. 2006) (“[A]lthough it
would be more convenient for [out of state] witnesses to give testimony [out of state], they
could testify in Delaware by deposition or appear here voluntarily if requested . . . .”).
48 Pipal Tech Ventures Priv. Ltd. v. MoEngage, Inc., 2015 WL 9257869, at *6 (Del. Ch.
Dec. 17, 2015) (internal quotation marks omitted).
10
Defendant never argues that this Court’s application of Delaware fiduciary law or
Texas tort law impairs him or otherwise constitutes an overwhelming hardship.49
And, although stated in a different context, I note the text quoted above explaining
Delaware’s clear policy interest “in resolving disputes involving the internal affairs
of the entities that it creates.”50
Having considered Defendant’s arguments carefully, I conclude that
Defendant does not meet his burden of showing overwhelming hardship. This action
is not the “rare case” in which a Delaware court may dismiss on forum non conveniens
grounds.
C. Failure to State a Claim
The standards governing a motion to dismiss for failure to state a claim
are well settled: (i) all well-pleaded factual allegations are accepted as
true; (ii) even vague allegations are well-pleaded if they give the
opposing party notice of the claim; (iii) the Court must draw all
reasonable inferences in favor of the non-moving party; and (i[v])
dismissal is inappropriate unless the plaintiff would not be entitled to
recover under any reasonably conceivable set of circumstances
susceptible of proof.51
“We do not, however, simply accept conclusory allegations unsupported by specific
facts, nor do we draw unreasonable inferences in the plaintiff’s favor.”52
49 See Def’s OB at 13–15; Def’s RB at 9–12.
50 In re P3 Health Grp. Hldgs., LLC, 285 A.3d at 147.
51 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (footnotes omitted)
(internal quotation marks omitted).
52 Clinton v. Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009).
11
The parties agree that Delaware law governs the claim for breach of fiduciary
duty, and Texas law governs the remaining claims.53
1. Breach Of Fiduciary Duty
For a claim for breach of fiduciary duty to survive a Rule 12(b)(6) motion to
dismiss, the complaint “must sufficiently plead the existence of a fiduciary duty, and
a breach of such a duty.”54 “By default, limited liability company managers owe
fiduciary duties akin to those owed by directors of a corporation.”55 “Although
Delaware law permits a limited liability company to eliminate fiduciary duties in the
governing agreement, the LLC Agreement does not do so.”56 Quite to the contrary,
Guerrero expressly agreed in the LLC Agreement that “[t]he Manager in his capacity
as Manager shall be subject to the fiduciary duties that would be due by an officer or
a director of a Delaware corporation to such corporation.”57 Plaintiffs’ Complaint thus
satisfies the first requirement for a breach of fiduciary duty claim.58
53 See Def’s OB at 14; OA Tr. 40:18–23.
54 Beach to Bay Real Est. Ctr. LLC v. Beach to Bay Realtors Inc., 2017 WL 2928033, at
*5 (Del. Ch. July 10, 2017).
55 Mehra v. Teller, 2021 WL 300352, at *28 (Del. Ch. Jan. 29, 2021) (citing 6 Del. C. §
18-1104); accord Auriga Cap. Corp. v. Gatz Props., 40 A.3d 839, 851 (Del. Ch.), aff’d, 59 A.3d
1206 (Del. 2012); Feeley v. NHAOCG, LLC, 62 A.3d 649, 661 (Del. Ch. 2012) (“[T]he Delaware
Limited Liability Company Act . . . contemplates that equitable fiduciary duties will apply by
default to a manager or managing member of a Delaware LLC.”).
56 Mehra, 2021 WL 300352, at *28 (citing 6 Del. C. § 18-1101(e)).
57 LLC Agreement § 14.
58 Compl. ¶ 21 (quoting LLC Agreement § 14); accord id. ¶¶ 2, 40.
12
As to the second requirement, “[a] breach of fiduciary duty occurs when a
fiduciary commits an unfair, fraudulent, or wrongful act, including . . . solicitation of
employer’s customers before cessation of employment” and “conspiracy to bring about
mass resignation of an employer’s key employees.”59 Plaintiffs adequately allege this,
too.60
Defendant asserts (1) the allegations of patient poaching are not pled with
“specificity” since they are pled on “information and belief” and (2) Plaintiffs fail to
allege the breaching conduct occurred while Defendant was employed by TTS.61
Plaintiffs counter that (1) “Delaware law permits pleading facts on information and
belief when the complaint includes further factual allegations to support that belief”
and (2) the Complaint’s description of the “two-year-long history of Guerrero setting
up and operating a competing opioid clinic while a fiduciary . . . state[s] a claim for
breach.”62
To be sure, certain facts surrounding the diversion of customers are alleged, at
least in part, on information and belief.63 But Plaintiffs have sufficiently pled other,
unchallenged facts to make it reasonably conceivable that Defendant breached his
fiduciary duty by soliciting TTS’s patients during his employment. For example,
59 Beard Rsch., Inc. v. Kates, 8 A.3d 573, 602 (Del. Ch.), aff’d, 11 A.3d 749 (Del. 2010).
60 Compl. ¶¶ 3–5, 24–33, 41–42.
61 See Def’s OB at 17.
62 Dkt. 15 (“Pls’ AB”) at 21–22.
63 See, e.g., Compl. ¶ 33.
13
Plaintiffs allege Defendant was fired on September 29, 2022.64 And Plaintiffs allege
Erb confirmed suspicions of patient poaching in November 2022, just over one month
after Defendant’s termination.65 Given the close temporal proximity between
Defendant’s termination and Plaintiffs’ allegedly confirmatory conversation with Erb
about the patient poaching, it is reasonably conceivable that Defendant diverted at
least some portion of the seventy alleged patients to TX OTP before his termination.66
As I must at this stage, I draw all reasonable inferences in Plaintiffs’ favor.
Notice pleading is not an onerous requirement, and the facts alleged provided
Defendant with the requisite notice to marshal his defense. Accordingly, I must reject
Defendant’s challenges to this first claim.67
64 Id. ¶ 30.
65 Id. ¶ 37.
66 Separately, Defendant does not challenge Plaintiffs’ allegation that he “caused at
least five employees of TTS to leave TTS to work for TX OTP.” Id. ¶ 33. Compare id., with
Beard Rsch., Inc., 8 A.3d at 602.
67 That said, Defendant’s assertion is well-taken that Plaintiffs cannot bring a breach
claim for acts Defendant took when he owed them no fiduciary duty. Even Plaintiffs concede
“that setting up to begin to compete after you are no longer a fiduciary is permitted.” OA Tr.
34:13–16. Plaintiffs’ Complaint is not a model of clarity. But I also am “not a robed gardener”
required to “prune individual theories from an otherwise healthily pled claim.” InVentiv
Health Clinical, LLC v. Odonate Therapeutics, Inc., 2021 WL 252823, at *4 (Del. Super. Jan.
26, 2021). As Plaintiffs’ claim arises in equity, Defendant might also conceivably question
where the equities lie in restricting access to treatment for substance abuse and addiction.
Plaintiffs might respond that, but for the profit motive, there would be no TTS clinic in the
first place. Although I acknowledge them, such considerations do not affect my analysis at
this pleading stage.
14
2. Conversion
In Texas,
[t]he elements of conversion are: (1) the plaintiff owned, had legal
possession of, or was entitled to possession of the property; (2) the
defendant assumed and exercised dominion and control over the
property in an unlawful and unauthorized manner, to the exclusion of
and inconsistent with the plaintiff’s rights; and (3) the defendant
refused the plaintiff’s demand for return of the property.68
For conversion, Plaintiffs allege Defendant “removed, without permission,
Plaintiffs’ confidential and propriety [sic] documents.”69 Plaintiffs continue that, “[b]y
such removal, [Defendant] wrongfully exercised dominion over and converted
Plaintiffs’ property.”70 If the foregoing seems like a summary of Plaintiffs’ conversion
allegations, it is not. That is basically the extent of the allegations.71
Defendant correctly argues the Complaint never identifies the “confidential,
proprietary materials” Defendant converted, making the allegation conclusory.72 In
their answering brief, Plaintiffs weakly respond that Defendant should understand
the converted materials to be unidentified “customer lists and policies and procedure
manuals.”73 But Plaintiffs concede the Complaint’s sole reference to customer lists
and policies and procedure manuals appears in the text of Plaintiffs’
68 Freezia v. IS Storage Venture, LLC, 474 S.W.3d 379, 386–87 (Tex. App. 2015).
69 Compl. ¶ 46.
70 Id. ¶ 47.
71 See id. ¶¶ 45–48.
72 Def’s OB at 18.
73 Pls’ AB at 23 (internal quotation marks omitted).
15
misappropriation of trade secrets count, which is identifiably not incorporated in
Plaintiffs’ conversion allegations.74
Plaintiffs’ bare allegations fail to give Defendant notice of the documents or
property Plaintiffs claim he converted. In the Complaint, Plaintiffs fail to tie even a
single, non-conclusory fact to their conversion claim. Although not an onerous
standard, notice pleading is not a non-existent requirement. Here the Complaint
does not give Defendant adequate notice so that he is afforded a fair opportunity to
respond.
Plaintiffs cannot retroactively patch their threadbare conversion claim by
asserting an unpled explanation, namely that Defendant should understand
Plaintiffs’ DUTSA claim as cross-applied to Plaintiffs’ conversion claim. Indeed, even
the need for such after-the-fact explanations is itself a clear indicator that the
Complaint does not satisfy the manifestly low threshold housed in the notice pleading
requirement. And absent Plaintiffs’ attempts at clarification through briefing, I am
left with skeletal assertions of the elements of the claim. But “[i]f a complaint were
held sufficient simply because it restates the legal elements of a particular cause of
action, Rule 8(a) would be rendered meaningless.”75 Accordingly, I must grant the
Motion as to Plaintiffs’ conversion claim.
74 Id.; see also Compl. ¶¶ 45, 54–58.
75 In re Coca-Cola Enter., Inc., 2007 WL 3122370, at *7 n.28 (Del. Ch. Oct. 17, 2007).
16
3. Tortious Interference
In Count III, Plaintiffs attempt to plead a claim for “intentional interference
with existing contractual relationships and prospective business advantage.”76 On
its face, this seems to be two potentially separate causes of action. The first, tortious
interference with an existing contractual relationship, unsurprisingly requires that a
plaintiff plead the existence of a contract with which the defendant is alleged to have
interfered.77
Here, Defendant correctly argues the Complaint lacked any allegation that
“there was a contract that obligated the patients to receive treatment from TTS either
at the time that the patients left the facility or in the future.” 78 Plaintiffs offer no
response other than to suggest that such a pleading failure is not fatal to the second
potential claim housed in Count III—tortious interference with a prospective business
relationship.79 Accordingly, to the extent Plaintiffs’ claim is based on interference
with existing contractual relationships, they have failed to state a claim in that
regard.80
76 Compl. ¶¶ 49–53 (capitalization altered).
77 See Hart v. Manriquez Hldgs., LLC, 661 S.W.3d 432, 439 (Tex. App. 2023) (observing
that, among other things, one must plead “the existence of a valid contract” in order “to
establish a claim for tortious interference with contract”).
78 See Def’s OB at 20.
79 See Pls’ AB at 23–24.
80 See In re Crimson Expl. Inc. S’holder Litig., 2014 WL 5449419, at *8 (Del. Ch. Oct.
24, 2014) (“Failure to plead an element of a claim precludes entitlement to relief and,
therefore, is grounds to dismiss that claim.”).
17
The latter claim housed in Count III, however, survives the Motion.81
Defendant raises his only remaining challenge to Count III in a single, three-sentence
paragraph in which he confusingly asserts that “Plaintiffs fail to plead in the
Complaint what it [sic] wants the Court to infer—that a patient who was at their
clinic was likely to stay at the clinic.”82
But things that are inferred are, by their very nature, not express. To the
contrary, inferences are necessarily conclusions that are “derived” from “facts or
premises.”83 One would have to ignore the pleading standard altogether to conclude
that the reasonable inferences to which Plaintiffs are entitled at this stage must be
expressly stated in the Complaint to survive a motion to dismiss.
81 To state a claim for tortious interference with prospective business relations under
Texas law, a plaintiff must adequately allege:
(1) there was a reasonable probability that the plaintiff would have entered
into a business relationship with a third party; (2) the defendant either acted
with a conscious desire to prevent the relationship from occurring or knew the
interference was certain or substantially certain to occur as a result of the
conduct; (3) the defendant’s conduct was independently tortious or unlawful;
(4) the interference proximately caused the plaintiff injury; and (5) the plaintiff
suffered actual damage or loss as a result.
Cantu v. Falcon Int’l Bank, 2018 WL 1831651, at *3 (Tex. App. Apr. 18, 2018).
82 Def’s RB at 16. I note the parties addressed neither the interplay of Defendant’s
fiduciary status with a tortious interference claim, nor Defendant’s privilege to compete with
a former employer in a fair and lawful manner. Cf. Triton Const. Co. v. E. Shore Elec. Servs.,
Inc., 2009 WL 1387115, at *30 (Del. Ch. May 18, 2009) (applying Delaware law) (holding
employee liable “for breach of . . . fiduciary duties . . . and tortious interference with
prospective economic advantage” based on individual’s competitive conduct moonlighting
part-time for direct competitor), aff’d, 988 A.2d 938 (Del. 2010); Beard Rsch., Inc., 8 A.3d at
608 (applying Delaware law) (“[Tortious interference with prospective business relations]
‘must be considered in light of a defendant’s privilege to compete or protect his business
interests in a fair and lawful manner.’” (citation omitted)).
83 Infer, THE MERRIAM-WEBSTER DICTIONARY (2022).
18
Moreover, I have already determined that it is reasonably conceivable
Defendant solicited Plaintiffs’ patients during his employment. Here, I further
conclude it is reasonably conceivable that at least some of the seventy patients
Defendant allegedly solicited would have returned to TTS for treatment, absent the
alleged solicitation.84
Accordingly, I must reject Defendant’s remaining argument since, as Plaintiffs
note, a claim for tortious interference with prospective business relationships only
requires a party to plead facts from which it can be reasonably inferred that there
existed “a reasonable probability of a business opportunity.”85 Plaintiffs have done
so, and Defendant raises no valid objection.
4. Trade Secrets (DUTSA)
Plaintiffs’ counsel conceded at oral argument that this claim is governed by
Texas law and that Plaintiffs only bring this claim under Delaware law.86
Nonetheless, Plaintiffs argue that “Texas has adopted the Uniform Trade Secrets
Act.”87 So, they continue, if the Court finds that the Complaint states a claim under
DUTSA, then it likely also states a claim under Texas law.88
84 Here, the inertial nature of human behavior seems, at the very least, reasonably
conceivable—if not, to some degree, inevitable.
85 See Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex.
2013).
86 See OA Tr. 41:1–24 (“[P]laintiffs’ position would be that the complaint does reference
DUTSA, and Texas law applies to it.”).
87 Id. 41:23–24.
88 See id. 42:1–5.
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First, Plaintiffs plainly did not make this argument in their briefing.89 Second,
behind Plaintiffs’ concededly “muddled”90 argument waves a white flag. Plaintiffs
admit Delaware law does not apply. Thus, the claim, expressly brought under
Delaware statute,91 is admittedly not one under which Plaintiffs are “entitled to
relief.”92 The Court bears no duty here to spin counsel’s straw into gold.93
Accordingly, this claim is dismissed.
III. CONCLUSION
For the foregoing reasons, the Motion is denied as to Plaintiffs’ claim for breach
of fiduciary duty (Count I); it is granted as to Plaintiffs’ conversion and DUTSA claims
(Counts II and IV); and it is granted in part as to Plaintiffs’ tortious interference claim
(Count III), to the extent it seeks to assert a claim for tortious interference with
existing contractual relationships. The parties are to confer on a form of order
implementing this decision.
89 See Pls’ AB at 24–25.
90 See OA Tr. 42:2.
91 Compl. ¶ 54 (alleging “[t]his information constituted trade secrets belonging to
Plaintiffs under 6 Del. C. § 2001”).
92 See Ct. Ch. R. 8(a).
93 See Rudd v. Brown, 2020 WL 5494526, at *12 (Del. Ch. Sept. 11, 2020).
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