JOHN R. TOEDTMAN, Plaintiff,
TURNPOINT MEDICAL DEVICES, INC., Defendant.
Submitted: October 30, 2018
Plaintiff John R. Toedtman's Cross-Motion for Summary
Judgment. GRANTED IN PART.
Defendant TurnPoint Medical Devices, Inc.'s Cross-Motion
for Summary Judgment. DENIED.
Theodore A. Kittila, Esquire, and James G. McMillan, III,
Esquire, Halloran Farkas Kittila, LLP, Wilmington,
Delaware, Attorneys for Plaintiff.
Oras Morgan, Esquire, and Courtney A. Emerson, Esquire, Fox
Rothschild LLP, Wilmington, Delaware, Attorneys for
Richard R. Cooch, R.J.
John R. Toedtman ("Plaintiff) and Defendant TurnPoint
Medical Devices, Inc. ("TurnPoint/Defendant") have
filed cross-motions for summary judgment in the above
captioned matter. Plaintiff asserts that he has a valid
employment agreement with TurnPoint which TurnPoint allegedly
breached when it failed to pay severance and other benefits
totaling $250, 900 after Plaintiffs termination without
cause. Contrarily, TurnPoint contends the employment
agreement was voidable under 8 Del. C. §
144(a), was properly voided, and that Plaintiff is not
entitled to recovery.
Court concludes, in the context of this case where both
parties have filed cross-motions for summary judgment, that
Plaintiffs employment agreement is valid, that TurnPoint
breached the employment agreement, and that Plaintiff is
entitled to recover severance and other fees totaling $250,
900 owed to him under the employment agreement. Furthermore,
Plaintiff has established that he is entitled to recovery
under the doctrine of promissory estoppel. However, Plaintiff
has not demonstrated that he is entitled to recover
attorneys' fees and costs based on alleged bad faith.
Further, the Court lacks jurisdiction to determine Plaintiffs
claim for indemnification under the company's bylaws.
Therefore, Plaintiffs Motion for Summary Judgment is
GRANTED IN PART. Defendant's Motion for
Summary Judgment is DENIED.
PROCEDURAL HISTORY AND FACTUAL BACKGROUND
the parties each filed cross-motions for summary judgment as
to all disputed claims, the Court asked the parties to submit
a joint stipulation of the procedural history and the factual
background to aid the Court in rendering its decision. The
stipulation was submitted to the Court on October 30, 2018,
The stipulated procedural history and facts are set forth
below. It is somewhat lengthy, and the Court has later
restated only those facts necessary to this decision.
1. On August 14, 2017, Toedtman filed the above-captioned
civil action against the Company. The Complaint alleged four
counts: (1) Breach of Contract; (2) Promissory Estoppel; (3)
Quasi-Contract/Quantum Meruit; and (4) Unjust
2. On September 28, 2017, the Company filed a Motion for
Summary Judgment. This motion was withdrawn without prejudice
following a scheduling conference before Judge Cooch on
October 23, 2017. The Court set a trial date of September 24
and 25, 2018.
3. The Company filed its Answer and Affirmative Defenses on
November 14, 2017.
4. Thereafter, the Parties engaged in discovery. Documents
were produced by both sides and depositions were taken of
various persons. Experts were designated by both Parties and
expert reports were exchanged.
5. On June 8, 2018, following the completion of discovery,
both Parties filed Motions for Summary Judgment (the
"Cross-Motions"). Both motions were fully briefed
by August 8, 2018. Additionally, both Parties filed Motions
in Limine seeking to exclude the testimony and
expert reports of the experts. Both motions were fully
briefed by the Parties.
6. On August 17, 2018, the Court heard oral argument on the
Cross- Motions. The Court determined that the Cross-Motions
would be treated as a stipulation for decision on the merits
based on the record submitted with the motions pursuant to
Superior Court Civil Rule 56(h), and that no trial would be
necessary. The Court ordered that the Parties submit this
stipulation to aid the Court in rendering its decision. With
respect to the pending Motions in Limine, the Court
determined that it would defer any such decision on that
until a later time.
parties stipulated to the following facts:
7. The Company was incorporated in Delaware on or about
August 23, 2013, under the name "Point Medical,
Inc.," and later changed its name to "TurnPoint
Medical Devices, Inc."
8. Toedtman was the initial Chairman and President of the
Company under its Bylaws and Mr. Joerg Klaube was the initial
Secretary and Chief Financial Officer. Toedtman and George
Boyajian were the initial directors.
9. On or about January 3, 2014, the Company entered into a
Personal Services Agreement with Toedtman, agreeing to pay
him $4, 000.00 per month on a consulting basis to serve as
interim CEO, which would increase to $150, 000 annually if
Boyajian did not become CEO by May 31, 2015.
10.On or about December 10, 2014, the Company's
directors, John Toedtman and George Boyajian, executed a
Unanimous Written Consent which contains a resolution as
follows: "RESOLVED, that the management of the Company
negotiate, and enter into, employment agreements with John
Toedtman, George Boyajian and Jerry Ruddle to serve as
officers of the Company" (the "Dec. 10
Consent"). Additionally, the Dec. 10 Consent adopted the
following resolution: "RESOLVED, that the proper
officers of the Corporation are hereby authorized to take all
necessary and proper actions to effectuate the foregoing
resolutions adopted by this Board of Directors ...."
11. In December 2014, the Company entered into an employment
agreement with Mr. Jerry Ruddle to become the President and
COO. At his deposition, Mr. Ruddle testified as follows:
Q [By Plaintiffs Counsel]. Do you remember
ever getting a contract with TurnPoint?
A [By Mr. Ruddle]. Yes, December of 2014.
Q. How did that employment contract come about?
A. So how did it come about? It was time to step up the
relationship between myself and the company and so I provided
the boilerplate of the employment agreement to John Toedtman
and we negotiated final terms.
Q. Where did you get that boilerplate from?
A. As I recall, I got it from Jeff Nicholas at Fox
Q. Had you reached out to Jeff yourself to get that?
Ruddle Dep. 12:20-13:13.
November 10, 2015, the Board signed a Unanimous Written
Consent of Directors (the "Nov. 10 Consent") which
provided: "RESOLVED, that the base salary of John
Toedtman, Chairman and Chief Executive Officer of the
Company, be increased to $240, 000 per year, effective
October 1, 2015, payable in accordance with applicable
Nov. 10 Consent further provided, "RESOLVED, that the
proper officers of the Corporation are hereby authorized to
take all necessary and proper actions to effectuate the
foregoing resolutions adopted by this Board of
Directors." The Nov. 10 Written Consent was signed by
both directors of the Company, Toedtman and Mr. Christopher
Toedtman and Klaube prepared an employment agreement (the
"Employment Agreement" or the
"Agreement") between Toedtman and the Company which
provided that Toedtman was Chairman and CEO of the Company.
One version of the Employment Agreement was signed by
Toedtman for himself and by Klaube on behalf of the Company;
the version on file with the SEC indicates that was signed by
Toedtman both for the Company and for himself. The Employment
Agreement is "dated as of November 10, 2015."
testified at his deposition as follows:
Q [By Defendant's
Counsel]. And on the last page Bates numbered
Toedtman 2810 there is a signature of Joerg Klaube, correct?
A [By Mr. Toedtman]. Correct.
Q. And did you ask Joerg to sign this document?
A. I reviewed the changes with Joerg in his capacity as a
company officer. He was aware that the salary change had been
approved by the board as reflected in the minutes of a recent
board meeting and he signed the agreement.
Q. Did you ask him to sign the agreement?
Toedtman Dep. 27:8-22.
testified at his deposition as follows:
Q [By Defendant's Counsel]. So after you
completed or after you made the changes to the employment
agreement, did you show it to anybody prior to signing it
other than Joerg?
A [By Mr. Toedtman]. I don't recall.
Q. Did you provide copies of it to any of the board members?
A. The copies of it provided to the board members were in the
S-1 registration statement.
Q. Other than the S-1 registration statement, did you provide
a copy of it to any of the board members either prior to it
being signed or after it being signed?
A. I don't believe so.
Toedtman Dep. 30:11-31:1.
Klaube testified that he had an employment agreement with
TurnPoint. Mr. Klaube testified that the "Ruddle
agreement served as a template" for his employment
agreement and the Toedtman Employment Agreement. Klaube Dep.
August 11, 2016, a version of the Employment Agreement signed
by Toedtman both for himself and on behalf of the Company was
filed with the SEC as Exhibit 10.9 to its Form S-1/A
Registration Statement (the "S-1/A") with the SEC.
Mr. Klaube testified that he prepared this version as part of
the filing of the S-1/A:
Q [By Plaintiffs Counsel]. Do you know why
there's a difference between these two [versions of the
A [By Mr. Klaube]. Yes.
Q. What happened?
A. Okay. The signature.
Q. I'm looking at the signature, yes, so that is a
A. Okay. Initially there was a back-and-forth with counsel at
that time. Initially he [counsel] received the PDF files of
the signed employment agreement and he said he can't use
this; it needs to be a Word document.
So I remember running this through a translation from PDF to
A. And I stripped out the unreadable signatures because
they're gobbledygook. I don't know that he had ever
converted a document to Word.
Q. Yes, I have done that before.
A. And so I sent the Word document to counsel and he said it
has to be signed.
A. Electronically signed. So he sent it back to me and I put
in Toedtman's signature. And at that moment I did not
connect that the original was signed by me. I put
Toedtman's name in the and sent it back and that's
the way it was filed. Obviously it was a mistake when I
translated the document.
Q. So you're the one that put Toedtman's signature in
Klaube Dep. 38:10-39:20.
Toedtman testified as follows:
Q [By Defendant's Counsel]. Turn back to
the S-1 's for a moment. How involved were you in the
drafting of the actual S-1 statement?
A [By Mr. Toedtman]. Very.
Q. Would you say that you were the chief drafter?
A. That's fair to say.
Toedtman Dep. 66:13-20.
S-1 /A, which Toedtman participated in drafting, stated:
The Company has employment agreements with its chief
executive officer and other key executives. Even though we
have an employment agreement with our Chief Executive Officer
and our Chief Financial Officer, we could not prevent these
executives from terminating employment with us. The Company
currently has "key man" life insurance on our Chief
Executive Officer and on the principal member of Leveraged
S-1/A at p. 12. The S-1/A, which Toedtman participated in
drafting, further stated with respect to Mr. Toedtman:
Mr. Toedtman has served as a director and as the CEO of the
company since August 2013. Prior to that and beginning in May
2011, he was managing partner of Strategy Advisors, LLC. With
over 40 years of business experience, Mr. Toedtman has held
senior management positions as Group VP of the Metallurgical
Group at Engelhard Industries, a Fortune 100 company, and as
President and CEO of a number of early stage companies in the
diagnostic and medical device fields. He has been on the
board of 7 public companies including Vital Signs, Inc. and a
number of private companies, and brings substantial
experience in M&A, technology transfer and corporate
strategy. He was a Managing Director at Bluestone Capital and
is presently a Senior Advisor at Griffin Securities. Mr.
Toedtman earned a BA in Economics and an MA in International
Economics from Georgetown University.
Id. at p. 50. The S-1/A "Signatures" page
appears as follows: [Image redacted] Id. at pp.
signatures on the S-1 documents, Mr. York testified as
Q [By Plaintiffs Counsel]. You weren't
involved at all in that?
A [By Mr. York]. I was not specifically
involved in any of the information or the posting of
information for the S-1.
York Dep. 44:9-13. Additionally, Mr. York testified:
Q [By Plaintiffs Counsel]. You don't
recall signing this document?
A [By Mr. York]. No.
Q. So you never signed this document?
A. I don't recall ever signing any of the S-1 documents.
Q. At any point in time did you actually tell any of your
directors hey, I didn't sign this?
Q. At any point in time did you object to an S-1 being
publicly filed that has ...