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Esprit Health, LLC v. University of Delaware

United States District Court, Third Circuit

December 19, 2013

ESPRIT HEALTH, LLC, Plaintiff,
v.
UNIVERSITY OF DELAWARE and STEVEN J. STANHOPE, Defendants.

Jeffrey S. Cianciulli, Esq., WEIR & PARTNERS LLP, Wilmington, DE Attorney for Plaintiff Esprit Health, LLC.

William E. Manning, Esq., SAUL EWING LLP, Wilmington, DE; James D. Taylor, Esq., SAUL EWING LLP, Wilmington, DE, Attorneys for Defendants University of Delaware and Steven J. Stanhope.

MEMORANDUM OPINION

RICHARD G. ANDREWS, District Judge.

Esprit Health, LLC initiated this action against the University of Delaware and Dr. Steven J. Stanhope (collectively, the "Defendants") on August 2, 2013. (D.I. 1). On September 4, 2013, Esprit filed an amended complaint asserting six causes of action: breach of contract and implied duty of good faith and fair dealing against the University; fraud against the University and Dr. Stanhope; unjust enrichment against the University and Dr. Stanhope; negligent misrepresentation against the University and Dr. Stanhope; promissory estoppel against the University; and third party beneficiary against the University. (D.I. 6). The Defendants filed the instant motion to dismiss Counts Two, Three, and Four of the amended complaint. (D.I. 8). For the reasons that follow, the Court will deny the Defendants' Motion to Dismiss.

I. BACKGROUND

The amended complaint tells the following story.

In April 2010, the United States Department of Defense sought bids to provide it with a product that would provide better outcomes to wounded military service members by assembling research and expertise on physical trauma. (D.I. 6, ¶ 13). The University wanted to submit a bid for this Department of Defense project. (D.I. 6, ¶ 14). Dr. Stanhope was a professor at the University at the time. (D.I. 6, ¶ 4).

Realizing that the project would require a research IT infrastructure, Dr. Stanhope contacted Esprit's president, Frank Pierce, in July 2010. (D.I. 6, ¶ ¶ 15, 17). Dr. Stanhope hoped that Esprit would be able to provide the University with eSphere™ as the IT infrastructure in its proposal to the Department of Defense. (D.I. 6, ¶ 17). eSphere™ is a system that uses meta-data to model research protocols. (D.I. 6, ¶ 9).

Esprit expected that it would require considerable cost, time, and effort to integrate eSphere™ into the University's proposal. (D.I. 6, ¶ 18). Stanhope promised that the University would use eSphere™ if it was awarded the Department of Defense Contract and agreed to pay Esprit approximately $1, 200, 000. (D.I. 6, ¶¶ 18, 19).

In reliance on the promises made by Stanhope, Esprit invested 200 days of man-labor to prepare the proposal by: providing descriptive materials to be included in the proposal, integrating eSphere™ into the product, developing necessary models, installing the software on a University computer, educating University employees about preimplementation issues, assisting the University in certification programs, and making presentations to the Department of Defense. (D.I. 6, ¶¶ 20, 21, 22). Esprit estimated that such labor amounted to $600, 000 in time and expenses. (D.I. 6, ¶ 21). To meet Dr. Stanhope's demands, Esprit forewent other opportunities and maintained a larger workforce than was otherwise necessary. (D.I. 6, ¶¶ 23, 24).

The University ultimately submitted a proposal to the Department of Defense which specifically named Esprit as the provider of IT infrastructure. (D.I. 6, ¶ 26).

Dr. Stanhope told Pierce that a formal written contract was not necessary. (D.I. 6, ¶ 28). Instead, Dr. Stanhope confirmed verbally to Pierce that Esprit had been awarded a contract with the University. (D.I. 6, ¶ 28). Dr. Stanhope made other promises of additional business between Esprit and the University. (D.I. 6, ¶ 32). On October 10, 2010, Dr. Stanhope emailed that eSphere™ had been chosen for inclusion in the University's proposal. (D.I. 6, ¶ 29).

On March 1, 2011, Dr. Stanhope informed Pierce that the University's proposal, including Esprit's function, had been accepted by the Department of Defense. (D.I. 6, ¶ 33). On May 10, 2011, Dr. Stanhope presented eSphere™ as the IT infrastructure for the project to military representatives responsible for the project. (D.I. 6, ¶ 35). On September 30, 2011 the University was actually awarded the contract by the Department of Defense. (D.I. 6, ¶ 37).

Dr. Stanhope directed Esprit to continue implementation and customization of the infrastructure for incorporation into the final product. (D.I. 6, ¶ 37). Esprit trained University employees on how to use eSphere™, customized eSphere™ for known specifications, developed eSphere™ for ...


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