Gone GB LTD v. Intel Services Division, LLC

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
GONE GB LTD. and ORI GERSHT, )
)
Plaintiffs, )
)
v. ) C.A. No. N21C-05-198 EMD CCLD
)
INTEL SERVICES DIVISION, LLC )
and INTEL CORPORATION, )
)
Defendants. )
)
Submitted: December 2, 20221
Decided: December 8, 2022
Upon Defendants’ Motion for Partial Judgment on the Pleadings
Dismissing Counts I and III—VII and Enforcing Limitation of Liability
GRANTED
David E. Wilks, Esquire, Wilks Law, LLC, Wilmington, Delaware, David Leichtman, Esquire,
Leichtman Law PLLC, New York, New York. Attorneys for Plaintiff Gone GB LTD and Ori
Gersht.
Matthew E. Fischer, Esquire, Jonathan A. Choa, Esquire, Jacqueline A. Rogers, Esquire, Carla
M. Jones, Esquire, Potter Anderson & Corroon LLP, Wilmington, Delaware, Vanessa Soriano
Power, Esquire, Stoel Rives LLP, Seattle, Washington, Samantha K. Sondag, Esquire, Stoel
Rives LLP, Portland, Oregon. Attorneys for Defendants Intel Services Division, LLC and Intel
Corporation.
DAVIS, J.
I. INTRODUCTION
This is a breach of contract and torts action assigned to the Complex Commercial
Litigation Division of this Court. Plaintiffs Gone GB LTD (“Gone”) and Ori Gersht
(collectively, “Plaintiffs”) commenced this action against Defendants Intel Services Division,
LLC and Intel Corporation (collectively, “Intel”). Plaintiffs asserted eight (8) counts against
1
D.I. No. 38.
Intel, arguing that Intel wrongfully terminated the contract and committed several torts.
Plaintiffs seek more than $3 million in damages.
Intel filed an answer with defenses to the counts and denying all tort claims asserted by
the Plaintiffs. Intel also moved for partial judgment on Counts I and III—VII and to enforce a
limitation of liability provision (the “Motion”). Intel asserts that the contract among the parties
was fully integrated and provides for an agreed upon liability clause for direct damages arising
from the contract. In addition, Intel contends that Plaintiffs’ tort claims are insufficiently pled.
For the reasons stated below, the Court GRANTS the Motion.
II. RELEVANT FACTS
A. FACTUAL BACKGROUND
Mr. Gersht is an artist working principally with photography and film.2 Mr. Gersht is
based in London, United Kingdom.3 Mr. Gersht utilizes technology in his art.4 Gone is a United
Kingdom company.5 Gone is partially owned by Mr. Gersht.6 Mr. Gersht contracts his services
and art through Gone.
Intel Corporation and its wholly owned subsidiary, Intel Services Division, LLC, are both
incorporated in Delaware, with principal place of business in Los Angeles, and Santa Clara,
California, respectively.7 Intel Corporation founded Intel Studios to “develop, manufacture, and
sell immersive experiences, including virtual reality, through what is known as volumetric
imaging.”8
2
Am. Compl. ¶¶ 2-3, 9.
3
Id.
4
Id. ¶ 13.
5
Id. ¶ 3.
6
Id.
7
Id. ¶¶ 4-5.
8
Defendants’ Motion for Partial Judgment on the Pleadings and Enforcing Limitation of Liability (“Defs.’ Motion
for PJP”) at 3.
2
In 2018, Intel and Plaintiffs “began discussing a potential collaboration on a volumetric
imaging project . . . the initial terms of that discussion were committed to a non-binding
Memorandum of Understanding with an effective date of April 1, 2019.”9 On June 1, 2019,
Gone and Intel entered into the Intel Co-Production Agreement (the “Agreement”).10 The
“Effective Date” of the Agreement is June 1, 2019 and the “Expiration Date” of the Agreement
is June 1, 2022.11 Mr. Gersht signed on behalf of Gone.12 In addition, Gone acknowledges that
all participation under the Agreement will be by Mr. Gersht “personally on behalf of Gone GB
LTD.”13
The agreement was to create a virtual reality-based art piece utilizing Intel’s volumetric
imaging technology to create a 3D environment that participants would “travel” through during
the exhibition (the “Project”).14 Under the Agreement, “Intel and Gone would ‘co-develop, co-
produce, distribute, and exploit one or more Works as described in the relevant [Statement of
Work] and in accordance with the terms and conditions of this Agreement.’”15 Intel would
provide the services of Intel Studio, including use of Intel providing the studio space, Intel
personnel for capturing, processing, and storing the data captured at the studio, and use of Intel’s
proprietary software for developing the data into functioning, volumetric images.16 Mr. Gersht,
standing in place of Gone in the Agreement, would provide the creative direction for the
Project.17
9
Defendants’ Answer and Defenses to First Amendment Complaint (“Defs.’ Answer”) at 15.
10
Defs.’ Mot. at 4.
11
Agreement at 1.
12
Id. at 15.
13
Id. § 2.2.
14
Id. at 1.
15
Id. § 2.1.
16
Defs.’ Mot. at 5.
17
Agreement § 2.2.
3
In September 2020, Intel decided to close Intel Studios, partly due to the business impact
of COVID.18 On September 23, 2020, Intel notified Mr. Gersht that Intel was closing Intel
Services and terminating the Agreement between Gone and Intel.19
B. PROCEDURAL HISTORY
On June 1, 2021, Plaintiffs filed the complaint with the Court.20 On July 1, 2021, Intel
removed the case to the United States District Court for the District of Delaware.21 On March
28. 2022, the District Court dismissed with prejudice Plaintiffs’ federal claim for Computer
Fraud and Abuse Act and remanded the civil action back to the Court.22
On June 9, 2022, Plaintiffs filed an Amended Complaint asserting eight counts against
Intel.23 On June 24, 2022, Intel filed an Answer and the Motion.24 On July 27, 2022, Plaintiffs
filed an Answering Brief in Opposition to Intel’s Motion for Partial Judgment on the Pleadings
(the “Opposition”).25 On August 10, 2022, Intel filed a Reply in Support of their Motion for
Partial Judgment on the Pleadings (the “Reply”).26
The Court held a hearing on the Motion, the Opposition and the Reply on September 23,
2022.27 At the conclusion of the hearing, the Court took the Motion under advisement. This is
the Court’s decision on the Motion.
18
Defs.’ Mot. at 8.
19
Am. Compl. ¶ 138.
20
D.I. No. 1
21
D.I. No. 4
22
D.I. No. 5
23
D.I. No. 21.
24
D.I. No. 23
25
D.I. No. 28
26
D.I. No. 30
27
D.I. No. 37.
4
III. PARTIES’ CONTENTIONS
A. THE MOTION
Intel contends that Counts I and III – VIII should be dismissed because: (i) the claims are
already within the scope of the Agreement and Plaintiffs’ existing contractual obligations, and
(ii) Plaintiffs failed to state a claim upon which relief can be granted. Intel also maintains that
the Limitations of Liability clause already provides an agreed-upon remedy for the present
matter.
Intel notes that Count I (Estoppel and Promissory Estoppel), Count VI (Quantum Meruit),
Count VII (Conversion), and Count VIII (Unjust Enrichment and Restitution) are quasi-
contractual claims that apply when there is no written agreement between the parties. As such,
Intel contends that these counts should be dismissed because the Agreement governs the
relationship between the parties, and Plaintiffs’ claims are already within the scope of Plaintiffs’
existing contractual obligations under the Agreement.
Intel also argues that Count III (Breach of the Implied Covenant of Good Faith and Fair
Dealing), Count IV (Tortious Interference with Contract), and Count V (Tortious Interference
with Prospective Economic Relationships) fail to state valid claims upon which relief can be
granted. Lastly, Intel asserts that the Agreement’s Limitation of Liability clause should limit any
surviving claims. Intel notes that the clause caps any actual and direct damages arising from and
out of the Agreement to $50,000.
B. THE OPPOSITION
Plaintiffs contend that Intel induced Mr. Gersht to make contractual commitments to third
parties in furtherance of the Project by making additional promises and undertakings beyond the
5
Agreement to Gone.28 When Intel terminated the Agreement, Plaintiffs claim this led to a “chain
of consequences that [Intel] knew would cause irretrievable harm to [Gone],” resulting in Gone
incurring damages and reputational injury in the art industry.
Plaintiffs also argue that Intel was aware of Mr. Gersht’s two-year commitment cycles to
art projects. By terminating the Project near the two-year mark, therefore, Intel caused Plaintiffs
to lose out on the expected millions of dollars in profit from the Project. Plaintiffs contend that
the damages resulting from Intel’s breach of contract and torts amounts to at least $3 million,
with the exact amount to be determined at trial.
Plaintiffs disagree with Intel’s interpretation of the Limitation of Liability clause.
Plaintiffs argue that as the clause does not speak to a termination without cause. In support,
Plaintiffs cite to (i) Section 12.4: “Parties have all other remedies at law or in equity available
whether or not this Agreement is terminated,”29 and (ii) Section 12.2: “[i]n addition to any other
remedies under this Agreement, or as may be available at law or in equity, either party may
terminate this Agreement for cause. . . .”30 Plaintiffs contend that Sections 12.2 and 12.4 render
the Limitation of Liability clause ambiguous, and the most plausible interpretation of the
provisions shows that “the parties intended different remedies to apply to claims of improper
termination, where the parties would have available all remedies for all harm actually suffered,
as opposed to other types of breach.”31
28
Plaintiffs’ Answering Brief in Opposition to Defendants’ Motion (“Pls.’ Answering Br.”) at 2.
29
Pls.’ Answering Br. at 24, citing Agreement § 12.4.
30
Intel Co-Production Agreement (“Agreement”) § 12.2.
31
Pls.’ Answering Br. at 25.
6
IV. STANDARD OF REVIEW
A party may move for judgment on the pleadings pursuant to Civil Rule 12(c).32 In
determining a motion under Civil Rule 12(c) for judgment on the pleadings, the Court is required
to view the facts pleaded and the inferences to be drawn from such facts in a light most favorable
to the non-moving party.33 The Court must take the well-pleaded facts alleged in the complaint
as admitted.34 When considering a motion under Civil Rule 12(c), the Court also assumes the
truthfulness of all well-pled allegations of fact in the complaint.35 The Court must, therefore,
accord plaintiffs opposing a Rule 12(c) motion the same benefits as a plaintiff defending a
motion under Civil Rule 12(b)(6).36 The Court may grant a motion for judgment on the
pleadings only when no material issue of fact exists and the movant is entitled to judgment as a
matter of law.37
V. DISCUSSION
As an initial point, the Court finds that a valid agreement exists between Gone and Intel.
While not specifically argued, the Agreement is supported by consideration, contains all material
provisions, and the parties performed numerous obligations under the Agreement prior to Intel
notifying Mr. Gersht, on September 23, 2020, that Intel was closing Intel Services and
32
Civil Rule 12(c) provides:
Motion for judgment on the pleadings. -- After the pleadings are closed but within such time as not
to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment
on the pleadings, matters outside the pleadings are presented to and not excluded by the Court, the
motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and
all parties shall be given reasonable opportunity to present all material made pertinent to such a
motion by Rule 56.
Del. Super. Civ. R. 12(c).
33
See Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1205 (Del. 1993);
see also Warner Commc’ns, Inc. v. Chris–Craft Indus., Inc., 583 A.2d 962, 965 (Del. Super. 1989), aff’d without
opinion 567 A.2d 419 (Del. 1989).
34
See Desert Equities, 624 A.2d at 1205; Warner Commc’ns, 583 A.2d at 965.
35
See McMillan v. Intercargo Corp., 768 A.2d 492, 500 (Del. Ch. 2000).
36
See id.37
See Desert Equities, 624 A.2d at 1205; Warner Commc’ns, 583 A.2d at 965.
7
terminating the Agreement between Gone and Intel.38 The Court makes this finding owing to the
number of quasi-contractual claims made in the Amended Complaint.
A. COUNT I IS NOT A VIABLE CAUSE OF ACTION FOR PROMISSORY ESTOPPEL.
Under Delaware law, a party seeking a promissory estoppel claim must show: (i) a
promise was made; (ii) it was the reasonable expectation of the promisor to induce action or
forbearance on the part of the promise; (iii) the promisee reasonably relied on the promise and
took action to his detriment; and (iv) such promise is binding because injustice can be avoided
only by enforcement of the promise.39 Promissory estoppel is also not applicable when there is a
fully integrated, binding contract governing the “promise” in contention.40
It is unclear from the Plaintiffs’ arguments how Plaintiffs were induced by Intel to act in
furtherance of the Project beyond their contractual duties in the Agreement. While Plaintiffs
allege that there is both an estoppel and a promissory estoppel present, the arguments only
vaguely refer to a contractual promissory estoppel claim. As stated in the Reply, Plaintiffs failed
to address arguments as to the estoppel claim in the Opposition.
The Court finds that this failure constitutes a waiver as to Count I. In addition, Plaintiffs
do not present sufficient evidence or facts to support the claim beyond simply stating that Intel
made “new promises and representations to Plaintiffs after the signing of the [Agreement] to
induce Mr. Gersht to perform additional work . . .”41
Accordingly, Plaintiffs do not meet the legal standard for pleading promissory estoppel.
Plaintiffs refer to the fact that Intel sent Intel Studios employees to work with Plaintiffs on the
Project to evince that Intel made promises outside of the Agreement. Plaintiffs state that “the
38
Am. Compl. ¶ 138.
39
Windsor I, LLC v. CWCapital Asset Management LLC, 238 A.3d 863, 876 (Del. 2020).
40
See SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d 330, 348 (Del. 2013).
41
Am. Compl. ¶ 185
8
sole purpose of Plaintiffs’ work with the Architect, the Project Producer and the Development
Assistant, all commitments made by Intel not required by the [Agreement] but made after its
effective date and its signing date, was the preparation for the physical installation and exhibition
of the final work . . . .”42 Plaintiffs allege that these contributions by Intel, and Intel’s
“inducement” for Gersht to “extend his relationships with art galleries, art venues, and museums
to find multiple venues for the Project” amounted to “new promises and representations” post-
Agreement.43 Plaintiffs also point to Intel’s promises to fund the installation of the Project as an
inducing promise beyond the Agreement.44
Intel contends that Intel’s contributions made to the Project were already within its
contractual obligations under the Agreement, and do not amount to any new promises or
engagements outside of the Agreement.45 The Statement of Work attached to the executed
Agreement states:
Contribution of the Parties
Intel intends to provide Studio services throughout all phases of the collaboration.
Studio services include creative consultation, technology implementation, and use
of Intel facilities. For the capture of volumetric video, Intel intends to provide Pre-
Production services including material testing and technology consultations to the
Artist, Production crew, Intel Studios stage . . . [Plaintiffs] intends to support
outreach to galleries and artistic community to secure locations for the Catalyst
Phase.
[Plaintiffs] intends to support outreach to galleries and artistic community to secure
locations for the Catalyst Phase, collaborating with members of Intel Studios team
in the process. [Plaintiffs] intends to support all Intel distribution and promotional
efforts through attendance at prioritized festivals and events, providing Press
interviews and testimony.
Financial Terms
Intel will fund Production and Development activities for the Work. Intel and
[Plaintiffs] will endeavor to obtain additional funding from a third party for large
42
Am. Compl. ¶ 187.
43
Id. ¶¶ 185 – 189.
44
Id. ¶ 148.
45
Defs.’ Mot. at 13.
9
scale installation and distribution. The Parties will jointly identify a list of potential
targets to approach and engage. Intel will compensate the Artiest with fees totaling
$108,000.
The Court notes that Intel’s actions in sending their employees to assist Plaintiffs in the
Project and funding the installation of the Project falls within Intel’s existing contractual
obligations under the Agreement and the Statement of Work. As pled and argued, Plaintiffs do
not present any new evidence or arguments of Intel’s alleged promises or inducements beyond
the Agreement to support their promissory estoppel claim. As such, the Court finds that
Plaintiffs fail to meet any of the elements for a promissory estoppel claim. The Court will
therefore dismiss Count I.
B. THE COURT WILL DISMISS COUNT III FOR FAILING TO STATE A CLAIM FOR
BREACH OF THE IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING.
Under Delaware law, a claim for a breach of the implied duty of good faith and fair
dealing requires the plaintiff to adequately show: (i) a specific implied contractual obligation, (ii)
a breach of that obligation by the defendant, and (iii) resulting damages.46 Courts should “assess
the parties’ reasonable expectations at the time of contracting, and not rewrite the contract to
appease a party who later wishes to rewrite a contract he now believes to have been a bad
deal.”47 A party generally cannot “base a claim for breach of the implied covenant on conduct
authorized by the agreement. We will only imply contract terms when the party asserting the
implied covenant proves that the other party has acted arbitrarily or unreasonably, thereby
frustrating the fruits of the bargain that the asserting party reasonably expected.”48
Plaintiffs argue that Intel acted in bad faith when Intel “falsely [told] Plaintiffs that it was
working on the technical issues throughout June and July 2020, misleading Mr. Gersht into
46
See Blaustein v. Lord Baltimore Capital Corp., 2012 WL 2126111, at *5 (Del. Ch. May 31, 2012)
47
Nemec v. Shrader, 991 A.2d 1120, 1125-26 (Del. 2010).
48
Id.10
believing his work was safe while Intel was in the process of destroying it.”49 Plaintiffs allege
that Intel made the decision to shut down Intel Studios in February or March of 2020 but
continued to express to Plaintiffs that the Project was on track.50
Plaintiffs also claim that when Intel shut down the Intel Studios subsidiary, Intel acted in
bad faith by failing to “timely advise Mr. Gersht and Gone GB of Intel’s decision to shut down
intel Studios” which would have allegedly provided Plaintiffs an opportunity to “raise the funds
to engage the software engineers and license Intel’s proprietary software” before the Project was
terminated.51 In short, Plaintiffs allege that Intel had an implied duty to notify Plaintiffs of
Intel’s business decision to shut down Intel Studios and offer the Plaintiffs an opportunity to
purchase or license the proprietary software necessary to complete the Project. Nothing in the
Agreement, however, supports these claims.
Here, Plaintiffs fail to offer any evidence that shows Intel breached an implied
contractual obligation owed to Plaintiff beyond the terms of the Agreement. Plaintiffs’ argument
that Intel purposely hid the fact that Intel was closing Intel Studios while “destroying” the
Plaintiffs’ work is unsupported by any evidence on the record. Additionally, the idea that the
Plaintiffs could have licensed the proprietary software to finish the Project is contradicted by the
Agreement itself, which states:
No Other Licenses
Neither party grants to the other Party any license or rights (by implication,
estoppel, or otherwise) in Intellectual Property Rights it owns, is licensed to, or
controls before, during or after entering into this Agreement, except as expressly
granted in this Agreement.52
49
Pls.’ Answering Br. 13.
50
Am. Compl. ¶¶ 144-47.
51
Id. ¶¶ 200-203.
52
Agreement § 4.3.
11
Plaintiffs’ arguments do not sufficiently show that Intel acted “arbitrarily or
unreasonably” in a way that frustrated the Agreement. Moreover, Plaintiffs do not sufficiently
plead an implied duty by Intel to give advanced notice of the business decision to close Intel
Studios. Plaintiffs’ claims that Intel acted in bad faith and misled Plaintiffs is also
unsubstantiated, and not supported by any factual allegations. The Court will therefore dismiss
Count III.
C. THE COURT WILL DISMISS COUNT IV AND COUNT V FOR FAILING TO STATE
CLAIMS UPON WHICH RELIEF CAN BE GRANTED.
Under Delaware law, a claim for tortious interference with a contract requires plaintiffs to
show: (i) a contract, (ii) of which the defendant knew, and (iii) an intentional act by the
defendant that is a significant factor in causing the breach of such contract, (iv) without
justification, and (v) causes injury.53 The plaintiff has the burden of showing that the defendant
acted “maliciously or in bad faith to injure plaintiff.”54
Under Delaware law, a claim for tortious interference with prospective business relations
requires plaintiffs to establish (i) the reasonable probability of a business opportunity, (ii) the
intentional interference by defendant with that opportunity, (iii) proximate causation, and (iv)
damages.55 The business opportunity must not be a mere “perception” by the plaintiff and
requires the existence of “an actual prospective business opportunity.”56
Plaintiffs argue that if the Court does not find the existence of valid contracts to support a
tortious interference with existing contracts, at minimum, there was an interference with
prospective business relations.57 Plaintiffs make identical arguments for both Counts IV and V.
53
Bhole, Inc. v. Shore Investments, Inc., 67 A.3d 444, 453 (Del. 2013).
54
Id.55
Kable Products Services, Inc. v. TNG GP, 2017 WL 2558270, at *10 (Del. Super. June 13, 2017).
56
Id.57
Am. Compl. ¶ 221.
12
Plaintiffs argue that Intel induced Plaintiffs to “reach out to galleries, museums and other venues
to host the Project” which resulted in Mr. Gersht entering into “binding oral agreements” at three
art galleries to exhibit the Project upon its completion.58 However, the Court notes that the
Agreement anticipates this scenario. The Plaintiffs were under an existing contractual obligation
under the Agreement to utilize its connections in the art industry to find venues for the Project.
The Statement of Work states:
[Plaintiffs] intends to support outreach to galleries and artistic community to secure
locations for the Catalyst Phase, collaborating with members of Intel Studios team
in the process. [Plaintiffs] intends to support all Intel distribution and promotional
efforts through attendance at prioritized festivals and events, providing Press
interviews and testimony.59
Plaintiffs contend that Intel “intentionally decided not to complete the Project for its own
‘convenience’” despite Intel’s “knowledge that its actions would interfere with the business
opportunities already secured by, and those being pursued by [Plaintiffs].”60 Plaintiffs do not
sufficiently show that there were existing contracts, or an actual prospective business opportunity
of which Intel intentionally and maliciously interfered with to cause damage to the Plaintiffs.
While the Plaintiffs offer letters from art galleries as evidence confirming the cancellation of the
plans to showcase the Project, the letters do not support Plaintiff’s arguments that they equate to
the existence of valid contracts necessary for tortious interference with a contract.
Even if the third-party contracts existed, or there was an actual prospective business
opportunity for future contracts, Plaintiffs fail to show that Intel intentionally interfered with
those ventures. This is a critical element for both claims. Intel’s decision to shut down Intel
Studios and terminate the Project with Plaintiffs is insufficient by itself to show actual intent to
58
Id. ¶¶ 207 – 225.
59
Agreement, Ex. A-1.
60
Am. Compl. ¶¶ 207-225.
13
interfere with an existing or prospective contracts of Plaintiffs. Plaintiffs’ claims that Intel
“intentionally decided not to complete the Project for Intel’s own “convenience” and despite
knowledge that its actions would interfere with Plaintiffs’ present and future business
opportunities are conclusory statements not supported by evidence or fact.61 As pled, Intel is
acting “selfishly” and internally, and not externally with the intent to interfere with third-party
arrangements with Plaintiffs. Furthermore, Intel alleges that Intel had no knowledge about the
oral commitments made by Plaintiff to the art galleries, the existences of which were only shown
after the Agreement was terminated.
At the hearing, Plaintiffs failed to demonstrate the specific terms of the purported oral
contracts with the art galleries, whether Intel was aware of these contracts prior to the
termination of the Agreement, actual injuries suffered because of Intel’s termination aside from
the $3 million conclusory alleged, and any further details necessary to ascertain the actual
existence of the contracts or the prospective contract opportunities as Plaintiff claims. The Court
therefore finds that Plaintiffs fail to state supportable claims in Counts IV and V.
D. PLAINTIFFS HAVE FAILED TO PLEAD A VIABLE QUANTUM MERUIT IN COUNT VI.
A quantum meruit claim permits a party to “recover the reasonable value of his or her
services if: (i) the party performed the services with the expectation that the recipient would pay
for them; and (ii) the recipient should have known that the party expected to be paid.”62 “Courts
generally dismiss claims for quantum meruit on the pleadings when it is clear from the face of
the complaint that there exists an express contract that controls.”63
61
Am. Compl. ¶¶ 212-213, 222-223.
62
Petrosky v. Peterson, 859 A.2d 77, 79 (Del. 2004).
63
Albert v. Alex. Brown Management Services, Inc., 2005 WL 2130607, at *8 (Del. Ch. August 26, 2005).
14
Plaintiffs allege that Intel benefited from services performed by Plaintiffs for the
Project.64 Plaintiffs state that Plaintiffs made these expenditures in “advance.”65 Also, Plaintiffs
assert that “Plaintiffs reasonably and foreseeably expected to be compensated for their services
to Intel and to be reimbursed for any advanced funds.”66 Plaintiffs further plead that as Mr.
Gersht is not a party to the Agreement, Mr. Gersht’s services were made to Intel absent an
express contract.67 Plaintiffs argue that these allegations support a quantum merit claim.
The Court does not agree with Plaintiffs’ arguments. The Agreement was a contractual
venture between Gone and Intel, with clauses providing for an equal share of the profits from the
venture.68 Plaintiffs did not provide quasi-contractual services directly to Intel, but instead,
performed as contractually obligated under the Agreement towards the mutual goal of
completing the Project. Plaintiffs fail to show how Intel benefitted from Plaintiffs’ services
beyond the confines of the Agreement and the Project.
Plaintiffs make a final conclusory claim that Intel retained benefits from the Plaintiffs by
being able to raise the value of Intel’s volumetric imaging software to potential buyers to the
detriment of the Plaintiffs. Plaintiffs, however, offer no factual support for this argument.69 Intel
never sold Intel Studios or the volumetric imaging software after the termination of the
Agreement.70
Additionally, the Plaintiffs contend that they advanced funds for the Project to the benefit
of Intel is also unsupported by any evidence on the record. Moreover, this contention overlooks
the Costs and Expenses clause in the Agreement, stating: “[E]ach Party is responsible for its own
64
Am. Compl. ¶¶ 230-32.
65
Id.66
Id.67
Pls.’ Answering Br. at 4.
68
Agreement § 3.2.
69
Am. Compl. ¶ 234.
70
Id. ¶ 132.
15
Budget and all costs and expenses related to performing under this Agreement . . .”71 The
Agreement also provided the Plaintiffs with $108,000 from Intel on or before December 30,
2019 as compensation for any fees or costs incurred by the Plaintiffs for the Project.72
Furthermore, the Court cannot agree with the claim that Mr. Gersht is not a party to the
Agreement. While the Agreement does identify the parties as Intel Services Division, LLC and
Gone GB Ltd, Mr. Gersht signed the Agreement under his own name for Gone, and personally
performed Gone’s contractual obligations under the Agreement. While not a named party to the
Agreement, at minimum, Mr. Gersht is an agent of Gone—i.e., working “on behalf of Gone GB
LTD.”73 The Agreement controls and Mr. Gersht cannot act as if he is a stranger to the
Agreement.
E. THE COURT WILL DISMISS COUNT VII AS FAILING TO STATE A CLAIM FOR
CONVERSION.
Conversion is the act of dominion wrongfully exerted over the property of another, in
denial of the plaintiff’s right, or inconsistent with it.74
Plaintiffs allege that they owned or had the right to possess the property stored within
Intel’s “Unique Electronic Production Environment” servers, and Intel, with bad intent,
“wrongfully deleted, destroyed, altered, or otherwise rendered useless, and also otherwise
retained such property.”75 Plaintiffs also contend that Intel “violated an independent duty to Mr.
Gersht by destroying his authored works.”76 Plaintiffs concede that Intel, at Intel’s cost, sent all
71
Agreement § 3.1
72
Defs.’ Motion for PJP 15.
73
Agreement § 2.2.
74
Kuroda v. SPJS holdings, LLC, 971 A.2d 872, 889 (Del. Ch. 2009).
75
Am. Compl. ¶ 238.
76
Pls.’ Answering Br. at 10.
16
the data files created during the Project to the Plaintiffs, but argues that without the use of Intel’s
proprietary software to convert the files to useable images, the data files are useless.77
Plaintiffs fail to show how Intel wrongfully exerted dominion over the Plaintiffs’
property or define exactly what the “property" is in context of the conversion claim. Plaintiffs’
arguments seems to be that by no longer permitting Plaintiffs to utilize Intel’s proprietary
software, Intel effectively appropriated Plaintiffs’ right to continue using Intel’s software to
complete the Project. While Plaintiffs did have access and usage of Intel’s proprietary software
during the duration of the Agreement, this “right” divested at the time Intel terminated the
Agreement.
The Court finds that Plaintiffs have failed to demonstrate that Intel wrongfully exerted
control over or otherwise converted Plaintiffs’ property. As such, the Court finds that Plaintiffs
fail to sufficiently plead for a Conversion claim.
F. PLAINTIFFS HAVE FAILED TO PLEAD A VIABLE CLAIM FOR UNJUST ENRICHMENT
AND RESTITUTION.
Unjust enrichment is the “unjust retention of a benefit to the loss of another, or the
retention of money or property of another against the fundamental principles of justice or equity
and good conscience.”78 A claim for unjust enrichment is unavailable if “there is a contract that
governs the relationship between the parties that gives rise to the unjust enrichment claim.”79
Plaintiffs’ arguments on Count VIII are like those made in support of Count VI.
Plaintiffs maintain that Plaintiffs performed services and advanced funds to the benefit of Intel
between 2018 and 2020, and that Intel was unjustly enriched by accepting these benefits and the
Plaintiffs were damaged to the amount of $3 million as a result.
77
Am. Compl. ¶ 239.
78
In re Verizon Insurance Coverage Appeals, 222 A.3d 566, 577 (Del. 2019).
79
Kuroda, 971 A.2d at 891.
17
Plaintiffs fail to provide any supporting facts or evidence to buttress their arguments and
alleges only conclusory statements. Plaintiffs make no attempt to explain how Intel was
enriched. Plaintiffs only state that Plaintiffs’ work enhanced the value of Intel’s technology.
There is no factual allegation to suggest that this occurred, as Intel never sold the technology of
Intel Studios to another party. Moreover, Plaintiffs do not allege any facts that show the
purported increase in value of Intel’s technology stemming from the Plaintiffs’ services and
work. Plaintiffs cannot seek restitution for a benefit that Plaintiffs cannot quantify or identify on
the pleadings. Moreover, the Agreement governs the relationship between the parties and makes
restitution and unjust enrichment claims unavailable.
G. THE LIMITATION OF LIABILITY CLAUSE IS APPLICABLE
The parties dispute the applicability of the Limitation of Liability clause. This clause
provides:
Types of Damages. Except for obligations under Section 10 (Indemnity) and breach
of Section 7 (Confidentiality) and the CNDA, for which no limitations apply,
[Plaintiffs] and Intel will have no liability to each other for any damages arising
from loss of profits, loss of business, or loss of good will, or for any indirect,
incidental, special, punitive, exemplary, or consequential damages, in any way
arising out of or related to this Agreement or the Work, however caused.
Total Liability. Except for obligations under Section 10 (Indemnity) and breach of
Section 8 (Confidentiality) and the CNDA, for which no limitations apply, each
Party’s maximum aggregate, cumulative liability to the other relating to this
Agreement will not exceed $50,000.
Intent. The Parties intend that these limitations of liability will apply to the
maximum extent permitted by applicable law. The Parties also intend that these
limitations will apply even if their application causes any remedy to fail of its
essential purpose.
Plaintiffs contend that Sections 12.2 and 12.4 create ambiguity on the application of
Section 11 in cases where the Agreement was terminated without cause and with bad faith.
Plaintiffs rely on Section 12.4’s language, “A Party’s right to terminate this Agreement is not an
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exclusive remedy. The Parties have all other remedies at law or in equity available whether or
not this Agreement is terminated”80 to argue that this clause clashes with Section 11, and denotes
that Plaintiffs are afforded additional remedies beyond the $50,000 limit as per Section 11.2.
The Court finds there is no ambiguity as to the applicability of Section 11. When
Section 12.4 is read within the context of the entirety of Section 12, it can only be reasonably
interpreted as providing additional remedies to the non-breaching party if the non-breaching
party terminated the Agreement after a breach. Section 12.2 reads:
In addition to any other remedies under this Agreement, or as may be available at
law or in equity, either Party may terminate this Agreement for cause if the other
Party materially breaches this Agreement and fails to cure such breach within thirty
(30) days after receiving written notice from the non-breaching Party of the breach.
If the breach is incurable, the non-breaching Party may terminate immediately
without granting the breaching Party any cure period.
Plaintiffs rely on Intel’s termination of the Agreement as a breach, but that is not the case
here. Intel’s decision to terminate the Agreement did just that—it terminated the Agreement.
Plaintiffs do not provide evidence that Intel breached any part of the Agreement during the time
the Agreement was in force, and Plaintiffs’ arguments that Intel acted in bad faith by
misinforming the Plaintiffs of the pending Intel Studios shut down is not persuasive or supported
by evidence. Section 12 does not create any ambiguity to the application of Section 11.
The Limitation of Liability clause is clear on its face: the parties agreed to limit the
amount recoverable for actual, direct damages arising out of or related to the Agreement or the
Project. Only breaches of the Indemnity and Confidentiality clause of the Agreement have no
limits for liability. If the parties intended to exclude the possibility of a termination of the
Agreement from the $50,000 limitation, the parties would have agreed as such in the Agreement.
80
Agreement § 12.4.
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VI. CONCLUSION
For the reasons stated above, the Court GRANTS the Motion and DISMISSES Counts I,
III, IV, V, VI, VII, and VIII. In addition, the Court holds that the Limitation of Liability clause
is enforceable.
December 8, 2022
Wilmington, Delaware
/s/ Eric M. Davis
Eric M. Davis, Judge
cc: File&ServeXpress
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