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Novipax Holdings LLC v. Sealed Air Corp.

Superior Court of Delaware

November 28, 2017

NOVIPAX HOLDINGS LLC and NOVIPAX LLC, Plaintiffs,
v.
SEALED AIR CORPORATION, CRYOVAC, INC., SEALED AIR CORPORATION (US), and SEALED AIR (CANADA) CO./CIE, Defendants.

          Submitted: September 25, 2017

         Upon Defendants' Motion to Dismiss DENIED

          Jeffrey Moyer, Esquire, Richard P. Rollo, Esquire, Travis S. Hunter, Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware and Robert M. Hoffman, Esquire, Michael J. Chiusano, Esquire, James C. Bookhout, Esquire, Andrews Kurth Kenyon LLP, Dallas, Texas. Attorneys for Novipax Holdings LLC and Novipax LLC.

          Kenneth J. Nachbar, Esquire, John P. DiTomo, Esquire, Barnaby Grzaslewicz, Esquire, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware and Robin L. Cohen, Natasha Romagnoli, Esquire, McKool Smith P.C., New York, New York. Attorneys for Sealed Air Corporation, Cryovac, Inc., Sealed Air Corporation (US), and Sealed Air (Canada) Co./CIE.

          Eric M. Davis, Judge

         I. INTRODUCTION

         This breach of contract and fraud case is assigned to the Complex Commercial Litigation Division of this Court. This civil action arises out of a sale and purchase of a North American foam tray and absorbent pad business. Plaintiffs Novipax Holdings LLC and Novipax LLC (collectively, "Novipax"), the purchasers, allege that Defendants Sealed Air Corporation, Cryovac, Inc., Sealed Air Corporation (US), and Sealed Air (Canada) (collectively, "Sealed Air") intentionally misled and induced Novipax to purchase the business based on omissions, concealments, and material misrepresentations. Novipax now brings an action against Sealed Air. Through a complaint filed on or about March 31, 2017 (the "Complaint"), Novipax asserts claims for: Fraud, Fraudulent Inducement, and Willful or Intentional Misrepresentations (Count I), Breach of Asset Purchase Agreement (Count II); Breach of Transition Services Agreement (Count III); Declaratory Judgment and Setoff (Count IV); and Unjust Enrichment (Count V).

         Sealed Air has filed its Motion to Dismiss (the "Motion to Dismiss"). Through the Motion to Dismiss, Sealed moves to dismiss Counts I-V for failure to state a claim upon which can be granted. For the reasons set forth below, the Court will DENY the Motion to Dismiss.

         II. RELEVANT FACTS[1]

         A. The Foam Tray and Absorbent Pad Industry

         According to the Complaint, there are two types of foam trays in the industry-barrier and non-barrier foam trays.[2] Barrier foam trays provide an airtight package that extends the shelf life of meat, poultry, seafood, and other protein products.[3] Barrier foam trays are sold to processors, who then package the food in the barrier foam trays and sell the packaged food to retail outlets like Walmart.[4] Non-barrier foam trays are more of a "commodity product sold directly to customers for over-wrapped applications."[5]

         Absorbent pads are used in conjunction with both barrier and non-barrier foam trays.[6]Absorbent pads are designed to absorb product fluids in order to create a more attractive presentation of the product to consumers.[7]

         B. Sealed Air Sells its Barrier Foam Tray and Pad Business

         Sealed Air owned and operated a food tray business that sold rigid trays, foam trays, and absorbent pads to food handlers and processors.[8] In 2013, Sealed Air attempted to sell its foam tray and pads business, which at that time included European and South American assets.[9]During the initial sale process, Sealed Air was purportedly receiving bids of over $300 million.[10]Sealed Air, however, was unable to close a sale at that price.[11]

         In the summer of 2014, Sealed Air initiated a second sale process, this time for the North American assets only.[12] Sealed Air sought to sell its North American foam tray and pads business, but not its rigid tray business.[13] On September 16, 2014, Novipax bid $152.5 million for the foam tray and pad business (the "Business").

         Sealed Air conducted its first management presentation to Novipax on October 21, 2014.[14] At this meeting, Sealed Air disclosed to Novipax that the Business's largest customer, Tyson, might demand a price concession in order to continue purchasing foam trays and pads.[15]Sealed Air therefore asked all remaining bidders, including Novipax, for new bids reflecting the valuation impact of Tyson's demand.[16] On November 4, 2014, Novipax reduced its bid to $80 million.

         On February 11, 2015, Novipax and Sealed Air entered into an Asset Purchase Agreement (the "APA") for the Business.[17] Novipax and Sealed Air also executed a Transition Services Agreement (the "TSA"). Novipax closed its purchase of the Business on April 1, 2015 (the "Closing").[18]

         C. The APA

         The APA defines the parties as: (i) Sealed Air Corporation, referred to as the "Parent"; (ii) Cryovac, Inc., (iii) Sealed Air Corporation (US), and (iv) Sealed Air Corporation (Canada), referred to with the Parent as the "Sellers"; and (iii) DankPak LLC[19], referred to as the "Buyer." For internal consistency, unless quoting the language of the APA, the Court will refer to the "Sellers" as "Sealed Air, " and the Court will refer to the "Buyer" as Novipax.

         As part of the sale and purchase of the Business, the APA imposes certain disclosure duties and alike on Sealed Air and Novipax. This includes representations and warranties and affirmative and negative covenants.

         i. Sealed Air's Representations and Warranties

         Article IV of the APA specifies Sealed Air's representations and warranties.[20] Section 4.5 requires Sealed Air to represent and warrant about changes related to the Business.[21] Under Section 4.5, Sealed Air represents and warrants that:

(a) there has not been any Material Adverse Effect, (b) the Business has been operated in the Ordinary Course in all material respects . . . (d) except as set forth on Section 4.5 of the Disclosure Schedule, there has not been any action by any Seller that, if taken during the period from the date of this Agreement through the Closing Date, would constitute a breach of Section 6.1(a), (f), (g), (i), or (1).[22]

         Material Adverse Effect is defined as "any change, event, circumstance, condition, or effect that is materially adverse to . . . (ii) the condition (financial or otherwise), assets, business, operations, or results of operations of the Business."[23] Ordinary Course is defined as the ordinary and usual course of normal day-to-day operations consistent with past practice.[24]

         Section 4.6(b) requires Sealed Air to represent and warrant regarding possible changes to certain Material Contracts.[25] Under Section 4.6(b), Sealed Air represents and warrants that:

There is not any existing material default or event of material default, or any event which, with or without notice or lapse or time or both, would constitute a material default under any Material Contract by any Seller, or, to the Knowledge of Parent, by any other party thereto. No Seller has received any notice of the intention of any party to terminate any such Material Contract.[26]

         The Material Contracts are listed in Section 4.6(a) to the Disclosure Schedule and include the supply agreements with certain customers of the Business such as Tyson, Perdue, and Cargill.[27]

         Section 4.7 then requires Sealed Air to represent and warrant about Purchased Assets, specifically that the Purchased Assets "constitute the rights, assets, and services required to conduct the Business following the Closing."[28] Purchased Assets include tangible and intangible assets of the Business, including Sealed Air's goodwill.[29]

         Finally, Section 4.18 requires Sealed Air to make certain representations related to the Business's Major Customers.[30] Under Section 4.18, Sealed Air represents and warrants that "in the last 12 months, no Major Customer has provided written notice to Sellers of its intention to terminate its relationship with any Seller with respect to the Business, whether as a result of the Transaction or otherwise."[31] The Major Customers are the ten largest customers of the Business (in terms of dollar volume of purchases from Sellers) and are defined on Section 4.18 of the Disclosure Schedule and include Tyson, Perdue, and Cargill.[32]

         Article IV of the APA concludes by providing a disclaimer about Sealed Air's representations and warranties-that neither Sealed Air nor any of its representatives or alike made any other representation or warranty, express or implied, other than those provided in Article TV.[33]

         ii Novipax's Representations and Warranties

         Article V of the APA sets forth Novipax's representations and warranties.[34] Under Section 5.7, Novipax must represent and warrant that it has conducted a financial investigation of the Business, which includes Novipax's "own estimate of the value of the Business and the Purchased Assets.[35] Section 5.7 also requires Novipax to represent and warrant that:

Buyer has received certain estimates, budges, forecasts, plans and financial projections (collectively, "Forward Looking Statements"). There are uncertainties inherent in the Forward Looking Statements, and Buyer is familiar with such uncertainties. Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all Forward Looking Statements (including the reasonableness of the assumptions underlying the Forward Looking Statements).[36]

         Section 5.7 also required Novipax to represent and warrant that:

Buyer is not relying on any representations, warranties, omission or covenants of Sellers or any of their Representatives (including any financial statements not expressly covered in Section 4.4, any projections, and the information contained in the confidential information memorandum, management presentation and other due diligence materials made available to Buyer) except as expressly set forth in this Agreement and any Seller Related Agreement executed and delivered to any Buyer Party pursuant to this Agreement.[37]

         iii The Covenants

         Article VI of the APA places certain affirmative and negative covenants on the parties before the Closing.[38] As it related to Sealed Air's operation of the Business, Section 6.1 states that:

Sellers shall conduct the Business in all material respects in the Ordinary Course and, to such extent, use reasonable best efforts to preserve intact its current business organization and the goodwill of the Business . . . maintain its existing relationships with customers, suppliers, vendors, distributors, agents . . . including the Major Customers and Major Suppliers . . . Sellers shall maintain all of the Purchased Assets in their current condition, ordinary wear and tear excepted.[39]

         Section 6.1 further places negative covenants on Sealed Air's operation of the Business:

Sellers shall not do any of the following with respect to the Business without the prior written consent of Buyer (which consent will not be unreasonably withheld, conditioned, or delayed):
(a) breach any material obligation or duty imposed upon a Seller by any applicable Law;
(b) except in the Ordinary Course, make any purchase, sale, or disposition of any Purchased Asset
(c) except in the Ordinary Course, (i) amend or terminate any Assumed Contract or (ii) materially amend or terminate any material business arrangements[40]

         Section 6.3(b) then places affirmative duties on Sealed Air and Novipax related to party communications.[41] Section 6.3 states that:

Parent and Buyer shall give written notice to the other promptly upon becoming aware of (i) any representation or warranty contained in this Agreement becoming untrue or (ii) the failure of any party to comply with or satisfy in any respect any covenant, condition, or agreement to be complied with or satisfied by it under this Agreement.[42]

         Article VII makes compliance with the foregoing representations, warranties and covenants a condition precedent to the Closing.[43] Sections 7.2 and 7.3 state that the obligations of Novipax and Sealed Air to effect the Closing shall be subject to the fulfillment of the representations, warranties, and covenants contained in the Agreement.[44]

         iv. Indemnification Rights

         Article IX provides indemnification rights to Sealed Air and Novipax.[45] Under Sections 9.1 and 9.2, Sealed Air and Novipax are entitled to indemnification for all losses arising from breach of any representation or warranty or breach or non-fulfillment of any covenant in the APA.[46] Section 9.3, however, places limits on these indemnification rights.[47] Section 9.3(b) requires the indemnifying party to receive notice of the indemnification claim within certain timeframes:

A party otherwise liable for indemnification under this Article IX (an "Indemnifying Party") shall have no liability for and Indemnification Claim under Section 9.1(a) or 9.2(a) unless such Indemnifying Party shall have received a Claim Notice with respect thereto on or before the following applicable deadline: (A) for a claim relating to a Core Representation or a claim that involves fraud, at any time after Closing . . . (C) for any other claim, the eighteen (18) month anniversary of the Closing Date.[48]

         Section 9.3(h) then provides that:

From and after the Closing, the indemnification rights provided by this Article IX shall constitute the sole and exclusive remedy of the Indemnified Parties for any breach of representation, warranties, covenants, or agreements contained in this Agreement or any Closing Instrument; provided, however, that nothing herein shall limit (i) any claim based on fraud, willful misrepresentation or willful breach, or (ii) any party's right to seek specific performance, injunctive relief, or other equitable remedies.[49]

         Finally, Article X, Section 10.3 affirms that the APA and the other instruments and agreements contemplated by the APA "constitute the entire agreement amount the parties and supersede any prior understanding, agreement, or representations by or among the parties.[50]

         D. The TSA

         Novipax and Sealed Air executed the TSA concurrently with the APA. The only parties to the TSA are Sealed Air Corporation and Novipax LLC.

         The TSA specifies certain transition services that Sealed Air must provide to Novipax following the Closing.[51] For example, Service Schedule 1, A requires Sealed Air to work to maintain its relationship with customers of the Business as of the Closing.[52] In addition, Service Schedule 1, B requires Sealed Air to provide sales administration support for: (i) formula pricing for U.S. customers, and (ii) U.S. barrier foam tray pricing and rebate management.[53]

         In the event of a dispute or an alleged breach of the TSA, the parties agreed under Section 5.15 to engage in good faith negotiations to resolve the dispute.[54] Specifically, Section 5.15 provides that:

         In the event of a dispute or alleged breach of the Agreement by either Party, the Parties agree to engage in a good faith effort and negotiation in an attempt to resolve the dispute or alleged breach.

In the event that this initial negotiation is not successful, the parties agree to elevate the dispute or alleged breach to the executive level of each Party, and the senior executives of each Party agree to negotiate in good faith and attempt to arrive at a mutual resolution of such dispute or alleged breach. In the event that this discussion is unable to resolve the controversy within a reasonable period of time, the Parties may then pursue their respective remedies pursuant to applicable Law and in accordance with Section 10.6 of the [APA].[55]

         E. NOVIPAX MAKES CERTAIN DISCOVERIES AFTER CLOSING

         Following the Closing, Sealed Air gave Novipax access to its pre-acquisition e-mails pursuant to the terms of the APA and the TSA.[56] Through such e-mails, Novipax contends that it discovered various representations and discussion about the Business that were contrary to the representations in the APA.[57]

         i. Sealed Air failed to disclose material information about the Business

         Novipax claims that Sealed Air knew of material information relevant to the value of the Business but failed to disclose it to Novipax.[58] Specifically, Novipax alleges that Sealed Air knew that: (i) major customers were migrating, or preparing to migrate, to rigid trays; (ii) barrier foam trays were not cost advantaged relative to rigid trays; and (iii) the cost for customers to shift from barrier foam trays to rigid trays was de minimus[59]

         In early December 2014, Bimal Kalvania (VP & GM Rigids & Absorbents) sent an e-mail to others at Sealed Air chastising them for working to switch Cargill (one of its clients) from foam trays to rigid trays, stating, "it will confirm their worst fears that [foam] is changing to [rigid] ... we can expect buyers to walk away or deeply discount the valuation/price for the business."[60] In another e-mail, Sealed Air decided to withhold information about then on-going customer negotiations with Cargill for a 2% foam tray price reduction because disclosing it "could put the deal at risk."[61]

         ii. Sealed Air concealed material information about the Business

         Novipax also alleges that Sealed Air concealed material information about the Business, mainly the Business's customer base.[62] While Sealed Air disclosed Tyson's demand for a price reduction, Sealed Air purportedly concealed facts undermining the value of the Perdue and Cargill businesses.[63]

         On March 2, 2015, Perdue advised Sealed Air of its intent to transition its foam business to rigid trays sometime in "the middle of April."[64] In an e-mail dated March 3, 2015, Sealed Air confirmed that it "[l]ooks like Perdue is planning on moving all of its foam trays to a solid barrier rigid tray mid-April."[65] Another e-mail dated March 4, 2015 included a statement from Perdue that orders for two of the barrier foam trays "will taper down beginning the week of March 23rd."[66] Despite acknowledging that this information likely had to be disclosed to Novipax, Sealed Air's in-house counsel claimed there was no "legal obligation" to notify Novipax and left it up to Sealed Air's VP of Global Mergers to inform Novipax.[67] Sealed Air supposedly never notified Novipax.

         As noted above, Novipax contends that Sealed Air concealed the potential loss of Cargill before the APA was signed.[68] In Mr. Kalvani's December 14, 2014 e-mail, he instructed sales teams to stop attempting to switch Cargill from soft to rigid trays because it could undermine the transaction with Novipax since the Cargill business "represents more than 33% of barrier trays."[69] Sealed Air also discussed Cargill's request for a 2% price reduction on barrier foam for the next contract cycle based on the fact that the price of rigid trays was becoming competitive with the price of foam trays.[70] In an internal e-mail pertaining to the 2% reduction, Sealed Air's Jackie Anderson stated that it "must disclose anything above $150, 000 P&L change to the Business, " and confirmed that the Cargill P&L change would have exceeded $300, 000.[71] Rather than disclose the facts undermining the value of Cargill, Sealed Air concealed the information to preserve the deal-"having this discussion with [Buyer] could put the deal at risk as we already have difficult conversations about Tyson RFP."[72]

         iii Sealed Air provided false assurances about the Business

         Finally, Novipax alleges that Sealed Air made false assurances about the Business after execution of the APA and before the Closing.[73] First, Sealed Air purportedly misrepresented that the Business constituted a viable, sustainable product line which was protected from competing packaging, including Sealed Air's rigid tray business.[74] In the Confidential Information Memorandum, provided pursuant to Section 6.4 of the APA, Sealed Air stated that "foam will remain the material of choice going forward due to consumer preference, pricing advantages, and the significant capital investment required to upgrade equipment to other resin-based packaging solutions."[75] Sealed Air's management presentation also confirmed that "foam is the resin of choice, " that "switching to rigid trays negatively impacted retailer sales, " and that "foam trays are more cost effective than rigid trays."[76]

         Novipax discovered numerous e-mails from Sealed Air's Regional Sales Manager Scott Mauer admitting that foam trays were not as cost advantageous as originally believed. Mr. Mauer stated that "to move from foam to solid is not too expensive . . . around $2000-2, 500 for a single lane, " and that for certain processing machines "no changes are required" to switch from foam to rigid trays.[77] Mr. Mauer also stated that the estimate provided to Novipax of the cost to convert production lines was "significantly high" and "much higher than would actually occur, " and acknowledged that he may have "misled the decision" and caused Novipax to believe that "foam barrier trays don't have serious competition."[78]

         Second, Novipax alleges that Sealed Air provided the false assurance that it would preserve and protect the value of the Business to be transitioned to Buyer. Novipax contends that Sealed Air breached the representations and warranties under Article IV by migrating the Business's Major Customers to non-Business products, failing to conduct the Business in the Ordinary Course, and amending material business arrangements. Novipax points to the fact that Sealed Air helped transition Perdue from the Business's barrier foam trays to its retained rigid trays. Novipax also argues that Sealed Air knew Cargill planned to perform testing on rigid tray replacement and confirmed that Cargill would use Sealed Air's rigid tray product.

         Finally, Novipax contends that Sealed Air provided the false assurance that it would advise Novipax if it breached a representation or covenant between the signing and the Closing pursuant to Section 6.3 of the APA. Instead, in March of 2015, Sealed Air provided notice of certain de minimus inaccuracies under Section 6.3, but did not disclose any of the inaccuracies surrounding foam trays and rigid trays, the Business, and the Business's customer base. The closing certificate provided before the Closing did not disclose any of the foregoing inaccuracies or material changes.[79]

         F. NOVIPAX INITIATES THIS CIVIL ACTION AGAINST SEALED AIR

         Based on these discoveries, Novipax filed the Complaint against Sealed Air principally for fraud. The Complaint also asserts claims for breach of the APA and TSA, unjust enrichment, and declaratory judgment.

         On May 16, 2017, Sealed Air moved to dismiss Counts I-V and filed Defendants' Opening Brief in Support of Motion to Dismiss. Novipax filed Plaintiffs' Answering Brief in Opposition to Defendants' Motion to Dismiss (the "Opposition") on July 21, 2017. On August 15, 2017, Sealed Air filed Defendants' Reply Brief in Further Support of their Motion to Dismiss (the "Reply").

         The Court heard argument on the Motion to Dismiss, the Opposition and the Reply on August 25, 2017. At this hearing, the Court also heard argument on the Motion for a Protective Order to Stay Discovery, filed by Sealed Air and the Opposition to Defendants' Motion for Protection Order and to Stay Discovery, filed by Novipax. By Order dated July 21, 2017, the Court temporarily stayed discovery, but must decide at the hearing whether a further stay is required pending resolution of the Motion to Dismiss.

         IV. PARTIES' CONTENTIONS

         A. Sealed Air's Contentions

         Sealed Air argues that the Complaint must be dismissed in its entirety because Novipax failed to comply with certain contractual prerequisites to litigation. Sealed Air next contends that the individual claims in Counts I-V fail to state cognizable causes of action. On the fraud claim, Sealed Air claims that the non-reliance and integration provisions of the APA-Sections 4.20, 5.7, and 10.3-bar Novipax from claiming it relied on extra-contractual representations or warranties. Sealed Air also argues that the fraud claim is not pleaded with particularity and fails to demonstrate that the damages are separate from the breach of contract damages. On the breach of contract claims, Sealed Air contends that the Complaint fails to allege any act that constitutes a breach of the APA or the TSA. On the equitable claims, Sealed Air alleges that the claim for unjust enrichment fails because it arises out of the parties' contractual relationship. Finally, Sealed Air claims that Novipax is not entitled to declaratory judgment negating the APA's requirement with respect to alternative dispute resolution ("ADR").

         B. Novipax's Contentions

         Novipax argues that there are no contractual prerequisites that bar this civil action. On the fraud claim, Novipax contends that the non-reliance and integration provisions do not unambiguously bar a fraud claim and that Section 9.3(h) in fact expressly permits a fraud claim. Novipax also asserts that the fraud damages are separate from the breach of contract damages. On the breach of contract claim, Novipax claims that the Complaint asserts numerous breaches of the APA, specifically Sections 4.5, 4.18, 6.1, and 6.3(b). As to the equitable claims, Novipax contends it may bring an unjust enrichment claim as an alternative remedy based on the theory that no contract exists because of Sealed Air's fraud. Finally, Novipax argues that it is entitled to declaratory judgment as to its right to offset the damages in this suit from the Closing Net Working Capital, and that this determination can only be made by this Court.

         V. STANDARD OF REVIEW

         Upon a motion to dismiss, the Court (i) accepts all well-pleaded factual allegations as true, (ii) accepts even vague allegations as well-pleaded if they give the opposing party notice of the claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances.[80] However, the Court must "ignore conclusory allegations that lack specific supporting factual allegations."[81]

         V. DISCUSSION

         A. Sealed Air has not demonstrated that there are procedural or time bars

         THAT REQUIRE DISMISSAL OF THIS CIVIL ACTION IN ITS ENTIRETY

         Sealed Air first argues that the lawsuit must be dismissed because Novipax has not complied with certain contractual prerequisites to litigation set forth in the APA and TSA.

         i. Sealed Air's construction of Article IX of the APA is not the only reasonable construction as a matter of law

         Sealed Air first argues that Novipax did not provide appropriate Claim Notice (as defined in the APA) that Sealed Air breached a representation or warranty as required by Section 9.4 of the APA. Section 9.4, under Article IX "Indemnification, " provides that "any claim for indemnification under this Article IX shall be brought and asserted by Buyer or Parent... by delivering written notice of such claim to the Indemnifying Party."[82] Section 9.4 clarifies that the Claim Notice must set forth the facts giving rise to the claim and, in the event of any claim for indemnification against Sealed Air, Novipax must provide Sealed Air access to its books and records.[83] Sealed Air asserts the Claim Notice was insufficient and that it was not provided access to Novipax's books and records and seeks to dismiss the entire Complaint on this basis.

         Under this same theory, Sealed Air also seeks to dismiss the breach of contract and equitable claims because Novipax did not provide Sealed Air notice of those claims within eighteen months as required under Section 9.3(a). Section 9.3(a) clarifies that no party shall be liable for an indemnification claim unless it has received notice of the claim within certain timeframes-for a fraud claim, the party must receive notice "at any time after Closing" and for "any other claim" within the "eighteen (18) month anniversary of the Closing Date."[84] Sealed Air contends it did not receive notice of the claim until Novipax filed the Complaint on March 31, 2017-long after the time to serve notice expired on October 1, 2016.

         In response to the above arguments, Novipax contends that Sections 9.4 and 9.3(a) do not apply because they are under Article IX, which is entitled "Indemnification." Moreover, the language in Sections 9.4 and 9.3(a) are conditioned on a claim for indemnification. Novipax contends these indemnification provisions do not apply to this case or its claims because Novipax is not seeking indemnification. In fact, the Complaint does not mention indemnification or seek a declaration from the Court as to its right to indemnification. Instead, Novipax asserts fraud, willful misrepresentation, willful breach, and equitable claims, which are exempt from Article IX under Section 3.9(h).[85] Therefore, Novipax argues that the requirements in Sections 9.4 and 9.3(a) do not impose any prerequisites to litigation.

         In deciding a motion under Rule 12, the Court cannot choose between two differing reasonable interpretations of a contract. Rather, dismissal is proper only if the defendant's interpretation is the only reasonable construction as a matter of law. Here, the language of the APA is reasonably susceptible to different interpretations, as illustrated by the above discussion.[86] The Court, therefore, must resolve any ambiguity in favor of Novipax at this stage in the litigation and, on this basis, cannot grant the Motion to Dismiss on this basis.

         ii. Sealed Air does not demonstrate that Section 5.15 is a clear and unambiguous condition precedent ...


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