FLOWSHARE, LLC, a Delaware limited liability company, and ERIC D. FOGLE Plaintiffs/Counterclaim Defendants,
GEORESULTS, INC., a Georgia corporation, THOMAS E. SHIELDS and DAWN SHIELDS, Defendants/Counterclaim Plaintiffs.
Submitted: April 9, 2018
Defendant-Counterclaim Plaintiff's Motion to Dismiss
Count V of the Counterclaim DENIED
Stephen B. Brauerman, Esquire, Sara E. Bussiere, Esquire,
Bayard, P.A., Wilmington, Delaware, John E. Petite, Esquire,
John C. Drake, Esquire, Greensfelder, Hemker and Gale P.C.,
St. Louis, Missouri, Attorneys for Plaintiffs and
Jeffrey L. Moyer, Esquire, Travis S. Hunter, Esquire,
Richards Layton & Finger, Wilmington, Delaware, Stephen
P. Fuller, Esquire, CKR LAW, LLP, Johns Creek, Georgia,
Attorneys for Defendants and Counterclaim Plaintiffs.
M. DAVIS, JUDGE
civil action is assigned to the Complex Commercial Litigation
Division of the Court. On November 6, 2015, Plaintiff
Flowshare, LLC d/b/a ShareTracker ("Flowshare")
entered into an Asset Purchase Agreement ("APA")
with Defendants GeoResults, Inc. ("GeoResults"),
Thomas E. Shields, and Dawn Shields (collectively with Thomas
Shields and GeoResults, the "Defendants").
According to the pleadings filed, Plaintiff Eric D. Fogle,
CEO and lead negotiator of Flowshare, repeatedly
indicated-prior to execution of the APA-that he would
personally pay any shortfall in the purchase price. Mr.
Fogle's promises were memorialized into an agreement (the
"Shortfall Agreement") dated three days after the
execution of the APA.
and Mr. Fogle (collectively, "Plaintiffs") filed
suit against Defendants, asserting rights under the APA.
Defendants answered and filed counterclaims. The
Plaintiffs' claims and the Defendants' counterclaims
all arise out the APA-performance under the APA or the
negotiations surrounding the APA.
filed a Motion to Dismiss Count V of the Counterclaim (the
"Motion"). Defendants filed their Opposition to
Counterclaim Defendants' Motion to Dismiss Count V of the
Counterclaim (the "Opposition"). Plaintiffs filed
their Reply Brief in Support of Their Motion to Dismiss Count
V of the Counterclaim (the "Reply"). After a
hearing on the Motion, the Opposition and the Reply, the
Court took the Motion under advisement.
reasons set forth below, the Court DENIES
RELEVANT FACTS 
November 2015, the parties were in the process of negotiating
an asset purchase agreement whereby Flowshare would purchase
GeoResults. On November 6, 2015, Flowshare entered into the
APA with GeoResults and the Shieldses. Through the APA,
the Shieldses would sell GeoResults to Flowshare. Section
11.09 of the APA provides:
This Agreement (including all Exhibits and the Disclosure
Schedules hereto) and all other Transaction Documents contain
the entire agreement between the Parties with respect to the
subject matter herein and therein and supersede all prior
agreements and understandings, oral or written, with respect
to such matters."
Mr. Fogle did not sign the APA in an individual capacity. Mr.
Fogle only signed the APA in his capacity as the sole manager
Fogle, Flowshare's CEO and lead negotiator, made promises
to the Shieldses that he would personally fund additional
amounts that Flowshare could not finance under the
APA.The Shieldses and Mr. Fogle negotiated the
Shortfall Agreement leading up to the execution of the
The Shieldses and Mr. Fogle changed language in the Shortfall
Agreement and negotiated the amount that Mr. Fogle would
cover. Mr. Fogle stated that he had "more than enough
money to work with to make you whole." In fact, Mr.
Fogle stated that he is "personally on the hook for
these obligations, in addition to the companies [he]
November 4, 2015, prior to executing the APA, Mr. Shields
sent Mr. Fogle an email indicating that the Shortfall
Agreement should post-date the APA. The parties dated the
Shortfall Agreement November 9, 2015 and Mr. Shields sent a
draft of the Shortfall Agreement to Mr. Fogle for
assurances were made prior to the closing of the APA. The
promises were memorialized into the Shortfall Agreement. The
Shortfall Agreement is dated November 9, 2015 and requires:
(1) payment for $2, 500, 000 to employees of GeoResults; and
(2) payment to the Shieldses for the difference between $5,
500, 000 and the final purchase price in the APA and a real
estate purchase agreement.
Fogle signed the Shortfall Agreement in his individual
capacity as well as the sole manager of
Flowshare. The Shortfall agreement also states:
"This agreement is independent of and in addition to the
APA. The obligations of Purchaser in this agreement are the
joint and several obligations of Purchaser and Eric
Telecom Customer was a material customer to the APA based on
the revenue GeoResults generated from Telecom Customer. On
November 30, 2015, Telecom Customer notified ShareTracker
that it was terminating the contract.
21, 2017, Flowshare initiated this action. On October 20,
2017, Flowshare filed an amended complaint (the
"Complaint") alleging: (1) breach of contract; (2)
declaratory judgment; (3) fraud in the inducement; and (4)
declaratory judgment with respect to the Shortfall Agreement.
On November 3, 2017, GeoResults filed their answer, which
included counterclaims (the "Counterclaims") for:
(1) breach of contract with respect to the APA; (2) breach of
contract with respect to the Shortfall Agreement; (3) unjust
enrichment; (4) promissory estoppel; and (5) fraud in the
December 22, 2017, Flowshare filed the Motion. On January 31,
2017, GeoResults filed the Opposition. On February 21, 2018,
Flowshare filed the Reply.
April 9, 2018, the Court held a hearing (the
"Hearing") on the Motion, Opposition, and Reply. At
the Hearing, Defendants conceded that the fraud claim is
pleaded in the alternative to the contractual claim.
Motion, Flowshare argues that GeoResults' claim for
fraudulent inducement fails. First, Flowshare contends that
the APA's integration clause bars any promises of future
intent made before the execution of the APA. Second,
Flowshare claims that the alleged pre-closing promises are
inconsistent with the price term contained in the APA.
Finally, Flowshare states that the fraudulent inducement
claim is a "bootstrap" claim to the breach of the
Reply, Flowshare reiterates that the integration clause
precludes the fraudulent inducement claim. Flowshare also
argues that GeoResults failed to plead the fraudulent
inducement with particularity.
argue that the APA's integration clause does not preclude
the fraudulent inducement claim because the clause does not
foreclose causes of action based on fraud. Further,
Defendants contend that the fraudulent inducement claim is
sufficiently pleaded under Civil Rule 9. Also, Defendants
claim that Mr. Fogle's statements that he was currently
able to cover the Shortfall are sufficient to establish
STANDARD OF REVIEW
A.12(b)(6) Failure to State a Claim Upon Which Relief