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Dunn v. Fastmed Urgent Care, P.C.

Court of Chancery of Delaware

August 30, 2019

MICHAEL DUNN, M.D., Plaintiff,
v.
FASTMED URGENT CARE, P.C.; FASTMED HOLDINGS I, LLC; FASTMED HOLDINGS, LLC; URGENT CARES OF AMERICA HOLDINGS I, LLC; and KYLE BOHANNON, Defendants.

          Date Submitted: May 29, 2019

          Neil R. Lapinski, Phillip A. Giordano, and Kate A. Mahoney, GORDON, FOURNARIS & MAMMARELLA, P.A., Wilmington, Delaware, Attorneys for Plaintiff Michael Dunn, M.D.

          Kathleen M. Miller and Kelly A. Green, SMITH, KATZENSTEIN & JENKINS LLP, Wilmington, Delaware; Andrew Federhar and Jessica Gale, SPENCER FANE LLP, Phoenix, Arizona, Attorneys for Defendants FastMed Urgent Care P.C., FastMed Holdings LLC, FastMed Holdings I LLC, Urgent Cares of America Holdings I LLC, and Kyle Bohannon.

          MEMORANDUM OPINION

          ZURN, VICE CHANCELLOR

         The company at the heart of this case provides urgent care medical services in Arizona, and employed the plaintiff, who is trained as a physician, as an executive. The company went through a merger, after which the plaintiff left the company. The plaintiff asserts the post-acquisition company wronged him while negotiating the terms of his employment and by asserting a restrictive covenant after he left. The plaintiff has failed to plead wrongdoing under Delaware law that is justiciable by this Court.

         The first source of wrongdoing is a series of oral promises, which are difficult to enforce in the shadow of a series of written agreements. In connection with the merger, the parties executed a contract selling the plaintiff's interest to the defendants, as well as an employment agreement. The defendants also allegedly promised to deviate from the terms of those agreements, but then failed to deliver; instead, the defendants performed under the written agreements. The plaintiff asserts the defendants defrauded him and breached the implied covenant of good faith and fair dealing. On the defendants' motion to dismiss, I conclude the fraud claims impose a weighty pleading burden that the plaintiff fails to satisfy, and the implied covenant claim is only available in certain circumstances not present here.

         The second source of wrongdoing is the defendants' assertion of a restrictive covenant contained in the contract selling the plaintiff's interest. That five-year restrictive covenant prohibited the plaintiff from working in a competitive executive capacity, but did not prohibit him from practicing medicine. The restrictive covenant contained Delaware forum and choice of law provisions. The plaintiff eventually resigned from the post-merger company, and accepted a similar executive position with an Arizona competitor. The defendants notified the competitor that the plaintiff's employment would be in violation of the restrictive covenant. Consequently, the competitor rescinded its employment offer. The plaintiff contends that the non-compete provision is unenforceable under Delaware's statute governing restrictions on the practice of medicine, and that the defendants' assertion of the restrictive covenant therefore amounts to intentional interference with the plaintiff's relationship with his prospective employer. I disagree.

         The plaintiff also contends that the defendants' efforts to enforce the non-compete amount to defamation per se and that the defendants' acts constitute civil conspiracy. In the absence of any other well-pled claim, this Court lacks subject matter jurisdiction over the plaintiff's defamation claim, and there is no underlying wrong on which to base his conspiracy claim. The motion to dismiss is granted.

         I. BACKGROUND

         I draw the facts from the allegations in and documents incorporated by reference or integral to the Complaint.[1] I must accept as true the Complaint's well-pled factual allegations and draw all reasonable inferences from those allegations in Plaintiff's favor.[2]

         A. Dunn Executes A Letter Of Transmittal As Part Of FastMed's Acquisition Of Urgent Cares.

         Plaintiff Michael Dunn is a physician licensed to practice medicine in the state of Arizona. In 2003, Dunn became a member and manager of an Arizona professional limited liability company, TriCity Express Care, PLLC, dba Urgent Care Express ("Urgent Cares"), that offered urgent care services. Urgent Cares was acquired in 2011; the surviving entity is also referred to as Urgent Cares. In 2012, Dunn became Urgent Cares' Chief Medical Officer, Arizona, and signed an employment agreement. In May 2015, Dunn sold his ownership interest in Urgent Cares to FastMed Holdings, LLC, when that entity acquired Urgent Cares pursuant to a Purchase Agreement and Plan of Merger entered into by several affiliated companies.

         At first, Dunn refused to sign a Letter of Transmittal to sell his interest in Urgent Cares "due to disagreements regarding the scope of [its] non-compete clause."[3] On May 28, 2015, Dunn communicated these concerns to two representatives of FastMed affiliates: Kyle Bohannon, a manager of FastMed Holdings I, LLC, and Kevin Blank, CEO of FastMed Urgent Care, P.C. "Bohannon and Blank responded to Dunn's concerns by communicating to Dunn that he would be unable to redeem his Profits Interest Units if he refused to sign the Letter of Transmittal."[4] Blank then suggested "amend[ing] the language of the non-compete to allow for Dunn to continue to work in the urgent care field."[5] The three "agreed that at the conclusion of the Purchase Agreement and Plan of Merger, Bohannon would redraft the Letter of Transmittal's non-compete clause to be for only three years, and that there would be a separate carve out that would permit Dunn to work as a medical director immediately following separation."[6]

         Based on this agreement, Dunn signed the Letter of Transmittal that same day, exchanging his interest in Urgent Cares for approximately $1, 000, 000. The Letter of Transmittal contained the following restrictive covenant (the "Restrictive Covenant"):

Effective as of the Closing … [Dunn] hereby agrees that, from the Closing Date until the five (5) year anniversary of the Closing Date, [Dunn] will not, without the prior written consent of Buyer, directly or indirectly, engage in any activity, or participate or invest in, or provide or facilitate the provision of financing to, or assist, in each case, whether as owner, part-owner, equity holder, member, partner, director, officer, trustee, employee, agent or consultant, or in any other capacity, or by providing any financial, operational or technical assistance to any Person that engages in, any business, organization or other Person other than the Surviving Company or a Company Subsidiary whose business activities, products or services are competitive with the Business or that otherwise competes with the Business, or interview for any potential employment, directorship, advising or consulting relationship with any such business, organization or other Person, in each case, anywhere in the United States (collectively, "Prohibited Activities").[7]

         The non-compete provision would not apply "in the case [that Dunn] is a physician, being employed as (and providing customary services of) a physician."[8] The Letter of Transmittal contained a Delaware choice of law and forum selection clause.[9]

         B. Dunn Signs An Employment Agreement With FastMed, Then Resigns After FastMed Demotes Him.

         On or about June 22, 2015, Dunn entered into the Second Amended and Restated Employment Agreement (the "Second Employment Agreement") with FastMed Urgent Care, P.C. ("FastMed"), as Urgent Cares' successor in interest, and assumed the title of "Regional Chief Medical Officer, and President, Arizona."[10]The Second Employment Agreement applied during Dunn's employment and for six months thereafter. The Second Employment Agreement was contingent upon the consummation and closing of the Purchase Agreement. The Purchase Agreement closed as planned, and Dunn became subject to the Second Employment Agreement.

         At some point, "Bohannon and other executives expressly assured Dunn that the position of employment offered to Dunn pursuant to the [Second Employment Agreement] was a long-term position."[11] But the Second Employment Agreement provided that Dunn was an at-will employee.[12] It also gave Dunn the right to terminate his employment for "Good Reason" as defined thereunder; if he did so, he would receive certain payments and benefits.[13] The Second Employment Agreement defined "Good Reason" as including "the Company's assignment of [Dunn] (without his consent) to a position, responsibilities, or duties of a materially lesser status or degree of responsibility than his position, responsibilities, and duties set forth [herein]."[14]

         In August 2015, Bohannon informed Dunn that FastMed had eliminated Dunn's position, and that Dunn would be reporting to a then-junior physician that was being promoted to Chief Medical Officer. Dunn resigned for Good Reason, and the parties entered into a Separation Agreement dated September 21, 2015.[15] The Separation Agreement contained an Arizona choice of law and forum selection clause.[16]

         C. Dunn Receives A Job Offer That Leads To Litigation Over The Scope Of Prior Agreements.

         In August 2016, nonparty Banner Health offered Dunn the position of Physician Executive, which Dunn accepted. FastMed's counsel threatened legal action, "stating that Dunn and Banner Health would be in violation of Dunn's alleged ongoing restrictive covenant arising out of the Letter of Transmittal agreed to on May 28, 2015."[17] Banner Health backed away and did not let Dunn start his job, informing him that it would rescind the employment offer if he could not resolve the matter.[18] Dunn's counsel and FastMed exchanged letters that did not resolve the dispute, leading Dunn to seek judicial relief in Arizona.[19]

         Dunn's Arizona complaint, filed on September 26, 2016, sought a temporary restraining order, preliminary injunction, and order to show cause concerning FastMed's alleged interference with his employment with Banner Health. On February 7, 2017, the Arizona Court dismissed Dunn's complaint, ruling that the Letter of Transmittal's Delaware forum selection clause applied such that Dunn had to sue in Delaware.[20] Dunn appealed the decision, but lost in the Arizona Court of Appeals in June 2018.[21]

         On December 26, 2018, Dunn filed suit here against FastMed; Urgent Cares of America Holdings I, LLC; FastMed Holdings, LLC; FastMed Holdings I, LLC; and Bohannon (together, "Defendants").[22] The Complaint seeks injunctive relief to prevent Defendants from applying the Restrictive Covenant (Count One) and a declaratory judgment that the Restrictive Covenant violates Delaware law and public policy (Count Seven). It also seeks damages for alleged breach of the implied covenant of good faith and fair dealing (Count Two), negligent misrepresentations (Count Three), fraud (Count Four), intentional interference with contractual relationship (Count Five), and civil conspiracy (Count Six). Dunn also seeks injunctive relief and damages for defamation per se (Count Eight).

         Defendants moved to dismiss on February 8, 2019. The parties completed briefing on April 23, and I heard oral argument on May 29.

         II. ANALYSIS

         The standards for reviewing a motion to dismiss for failure to state a claim for relief are well settled:

[A] trial court should accept all well-pleaded factual allegations in the Complaint as true, accept even vague allegations in the Complaint as "well-pleaded" if they provide the defendant notice of the claim, draw all reasonable inferences in favor of the plaintiff, and deny the motion unless the plaintiff could not recover under any reasonably conceivable set of circumstances susceptible of proof.[23]

         The motion to dismiss "will be granted where it appears with 'reasonable certainty' that the plaintiff could not prevail on any set of facts that can be inferred from the pleadings."[24] Applying this standard, each of Dunn's counts is dismissed.

         A. Dunn Has Not Stated A Claim For Breach Of The Implied Covenant.

         According to Dunn, the Letter of Transmittal and the Second Employment Agreement "were part of the plan by which he would continue operating in his executive role as Regional Chief Medical Officer and President, Arizona, as contemplated by the [Second Employment Agreement]."[25] He claims Defendants "breached the implied covenant of good faith and fair dealing by accepting the benefits of Dunn's cooperation, his surrender of Profits Interest Units, and his good faith attempts to continue his position of employment with FastMed Urgent Care, P.C. pursuant to their contracts" and then "[eliminating] his position shortly after, and attempting to enforce an inapplicable restrictive covenant ."[26] Dunn fails to state a claim for breach of the implied covenant of good faith and fair dealing.

         "The implied covenant of good faith and fair dealing inheres in every contract and 'requires "a party in a contractual relationship to refrain from arbitrary or unreasonable conduct which has the effect of preventing the other party to the contract from receiving the fruits" of the bargain.'"[27] "To state a claim for breach of the implied covenant, a litigant must allege a specific obligation implied in the contract, a breach of that obligation, and resulting damages."[28] The implied covenant is often invoked in two situations:

[O]ne … is when it is argued that a situation has arisen that was unforeseen by the parties and where the agreement's express terms do not cover what should happen. The other situation … is when a party to the contract is given discretion to act as to a certain subject and it is argued that the discretion has been used in a way that is impliedly proscribed by the contract's express terms.[29]

         The implied covenant may also be invoked when the parties' "conduct frustrates the 'overarching purpose' of the contract by taking advantage of their position to control implementation of the agreement's terms."[30]

         In any case, the implied covenant cannot be used to "base a claim … on conduct authorized by the terms of the agreement."[31] "Only when it is clear from the writing that the contracting parties would have agreed to proscribe the act later complained of … had they thought to negotiate with respect to that matter may a party invoke the covenant's protections."[32] "Where the contract speaks directly regarding the issue in dispute, '[e]xisting contract terms control … such that implied good faith cannot be used to circumvent the parties' bargain, or to create a "free-floating duty unattached to the underlying legal documents."'"[33]

         Dunn premises his implied covenant claim on "a set of contracts [that] existed between Dunn and Defendants, including: the Letter of Transmittal, the [Second Employment Agreement], and the Separation Agreement."[34] Dunn does not allege the implied covenant fills a gap, nor does he allege any misuse of a granted discretionary power. Rather, he contends Defendants engaged in a bait-and-switch to induce him into signing the Letter of Transmittal and Second Employment Agreement, by promising long-term employment at a senior level, but then eliminating his position, demoting him, and enforcing the Restrictive Covenant. Dunn's claim flows from his expectation that that the Letter of Transmittal and Second Employment Agreement "were part of the plan by which he would continue operating in his executive role."[35]

         Dunn's implied covenant claim is belied by the contracts he signed. There are no terms to be implied in those contracts. Rather, Dunn agreed to terms that contradict those he wishes to imply. Dunn expected that surrendering his interests in Urgent Cares would lead to a less restrictive non-compete agreement and a long-term, senior position with the post-merger company.[36] But he signed the Letter of Transmittal with a contradictory five-year term. He also signed the Second Employment Agreement with contradictory terms providing that: (1) FastMed could terminate Dunn's employment with or without cause, [37] and (2) Dunn could be demoted and thereafter resign for Good Reason.[38] Because the Letter of Transmittal and Second Employment Agreement speak directly to the issues in dispute, Dunn has failed to state a claim for breach of the implied covenant.[39]

         Because Dunn brings his implied covenant claim in the context of his at-will employment, additional discussion is warranted. Delaware law carefully circumscribes implied covenant claims in the at-will employment context.[40] Dunn relies on one such case, E.I. DuPont de Nemours & Co. v. Pressman, [41] in claiming Defendants' deception breached the implied covenant. "In Delaware, there is a 'heavy presumption that a contract for employment, unless otherwise expressly stated, is at-will in nature, with duration indefinite.' Although at-will employment remains a heavy presumption in this State, every employment contract contains an implied covenant of good faith and fair dealing."[42] However, "the implied covenant is to be narrowly construed."[43] "Courts have been reluctant to recognize a broad application of the [implied] Covenant out of a concern that the Covenant could thereby swallow the [employment-at-will] Doctrine and effectively end at-will employment."[44] In this balance, Dunn fails to state an implied covenant claim.

         In Pressman, a supervisor "set out on a campaign to discredit" an employee and manufactured materially false grounds to cause his dismissal.[45] Pressman "relates solely to an act or acts of the employer manifesting bad faith or unfair dealing achieved by deceit or misrepresentation in falsifying or manipulating a record to create fictitious grounds to terminate employment."[46] Where the employee resigned, and was not terminated, the employee cannot show a breach of the implied covenant under Pressman.[47] It is undisputed that Dunn was not terminated; Dunn's employment ended with his resignation. Further, Dunn does not allege that Defendants falsified the grounds for his separation from FastMed. Although informative, Pressman cannot bear the weight of Count Two.

         Pressman is among the progeny of Merrill v. Crothall-American, Inc., in which a terminated employee alleged the employer "induced him to enter into the employment contract by concealing from him its intention to employ him only temporarily while allowing him to proceed under the belief that the duration of the employment was, at the least, indefinite. So stated, a valid claim for breach of an implied covenant of fair dealing is properly pleaded."[48] The Delaware Supreme Court explained that bad faith exists where an employer induces another to enter into an employment contract and its actions in doing so are intentionally deceptive.[49]

         At first glance, the claim in Merrill appears to resemble Dunn's. But "the exceptions to the employment at-will doctrine are narrow and discrete."[50] Upon closer inspection, the facts before the Court and the facts in Merrill diverge in distinct and important ways. In Merrill and its progeny, the permissible claims were brought by employees who were terminated.[51] That is not the case here: Dunn voluntarily resigned for a contractually sanctioned reason.

         Merrill also requires that the employer intend, at the moment of the misrepresentation, to act otherwise. "[T]o constitute a breach of the implied covenant of good faith, the conduct of the employer must constitute an aspect of fraud, deceit or misrepresentation."[52]

The lodestar here is candor. An employer acts in bad faith when it induces another to enter into an employment contract through actions, words, or the withholding of information, which is intentionally deceptive in some way material to the contract. Such conduct constitutes an aspect of fraud, deceit or misrepresentation.[53]

         "Absent bad faith, an employer has the freedom to terminate an at-will employment relationship for its own legitimate business, or even highly subjective, reasons."[54]

         Dunn does not assert Defendants intended to employ him only temporarily, or to demote him, at the time they induced him to sign the Letter of Transmittal and Second Employment Agreement with promises of long-term senior employment. Dunn only pleads

Defendants breached the covenant of good faith and fair dealing by accepting the benefits of Dunn's cooperation, his surrender of Profits Interest Units, and his good faith attempts to continue in his position of employment with FastMed Urgent Care, P.C. pursuant to their contracts, and proceeded to eliminate his position shortly after, and attempting to enforce an inapplicable restrictive covenant to ensure that Dunn cannot compete with FastMed Urgent Care, P.C.[55]

         Dunn's pleading is premised on what he "expected," not what Defendants intended.[56] Dunn fails to plead the requisite intent and has therefore failed to state a claim for breach of the implied covenant under Merrill. Count Two is dismissed.

         B. Dunn Has Not Stated A Claim For Negligent Misrepresentation or Fraud.

         Dunn asserts claims of negligent misrepresentation (Count Three) and fraud (Count Four). Dunn's negligent misrepresentation claim is based on the Letter of Transmittal.[57] Specifically, Dunn alleges that "Defendants made statements to induce [him] to surrender his Profits Interest Units and to become subject to the restrictive covenant stated in the Letter of Transmittal."[58] Dunn's fraud claim is based on those same alleged statements, as well as alleged representations that he would have a "long-term position" under the Second Employment Agreement.[59] Because events unfolded differently, Dunn argues the representations must be interpreted as fraudulent and intended to induce him into surrendering his Profits Interest Units and agreeing to the Restrictive Covenant.[60] Assuming for the sake of this motion that Dunn is permitted to rely on Defendants' extra-contractual statements, [61] Dunn has failed to state claims for fraud and negligent misrepresentation.

         1. Dunn Has Failed To Plead Fraudulent Intent To Break A Promise.

         In Delaware, fraud requires that the plaintiff allege "(i) a false representation, (ii) the defendant's knowledge of or belief in its falsity or the defendant's reckless indifference to its truth, (iii) the defendant's intention to induce action based on the representation, (iv) reasonable reliance by the plaintiff on the representation, and (v) causally related damages."[62] Court of Chancery Rule 9(b) requires a plaintiff to plead fraud with particularity.[63] Specifically, Rule 9(b) mandates that

[t]he factual circumstances to be "stated with particularity refer to the time, place, and contents of the false representations; the facts misrepresented; the identity of the person(s) making the misrepresentation; and what that person(s) gained from making the misrepresentation."[64]

         Usually, intent can be pled generally.[65] But when a fraud claim hinges on promissory statements, or expressions as to what will happen in the future, a plaintiff must plead "particularized facts that allow the Court to infer that, at the time the promise was made, the speaker had no intention of keeping it."[66] In Grunstein v. Silva, this Court stated:

[B]ecause the factual predicate of a promissory fraud claim is the speaker's state of mind at the time the statement is made, a general averment of a culpable state of mind is insufficient. Instead, the plaintiff "must plead specific facts that lead to a reasonable inference that the promissor had no intention of performing at the time the promise was made."[67]

         "This is, in part, because of the general rule that 'statements which are merely promissory in nature and expressions as to what will happen in the future are not actionable as fraud.'"[68] "To anticipate the future and predicate falsehood upon an act to be done or omitted at a future day would change a mere broken promise into a fraud on the part of him who was bound to fulfill the engagement … ."[69] "[A] party's failure to keep a promise does not prove the promise was false when made."[70]

         Dunn predicates his claim on promissory statements, or "expressions as to what will happen in the future."[71] When Dunn signed the Letter of Transmittal, he was aware of the five-year Restrictive Covenant. Dunn's fraud claim is based on his "oral agreement" with Bohannon and Blank to amend the Restrictive Covenant in the future, after the Letter of Transmittal had been signed. Similarly, when Dunn signed the Second Employment Agreement, its terms expressly rendered him an at-will employee who was subject to demotion. Dunn relies on promises by "Bohannon and other executives" that he would be retained in a "long-term position."[72]Defendants' statements that contradicted the written terms were promises to deviate from those terms in the future. Because Defendants failed to fulfill those promises, Dunn concludes that he has been defrauded. Without a proper pleading of intent, these promissory statements cannot support Dunn's fraud claim.

         Dunn has not pled specific facts that lead to a reasonable inference that the Defendants had no intention of performing at the time of their promises. Dunn only pleads general averments of a culpable state of mind, stating that the "Defendants knew that the representations were false"[73] and that the sequence of events leads to the "logical conclusion" that Defendants intended to induce Dunn to sign the agreements without fulfilling their promises.[74]

         In particular, Dunn does not plead that Bohannon and Blank intended to break their alleged promise to renegotiate the Restrictive Covenant. He does not plead any explanation for why the alleged agreement altering the terms never materialized. All that is before the Court is that the parties subsequently entered into the Second Employment Agreement, which left the Restrictive Covenant in place. Similarly, Dunn has failed to plead that Defendants never intended to keep him in his senior position as promised. He does not plead any explanation as to why the Second Employment Agreement contradicted the alleged promises by enumerating Dunn's at-will employment status and permitting his demotion. Dunn has failed to plead that the Defendants never intended to keep their promises to renegotiate the Restrictive Covenant or to keep Dunn in a long-term position. He has failed to state a claim for promissory fraud.

         2. Dunn Has Failed To Plead The Other Elements Of Fraud Under Rule 9(b).

         To plead the other elements of his fraud claim under Rule 9(b), Dunn must adequately identify the "time, place, and contents of the false representations; the facts misrepresented; the identity of the person(s) making the misrepresentation; and what that person(s) gained from making the misrepresentation."[75] Dunn is also required to identify specific statements by individual defendants.[76] Dunn's claim "has simply mirrored the language of the necessary fraud elements. [His] complaint contains no facts to support his conclusory allegations, as to the time, place or contents of the false representations."[77]

         In support of his fraud claim under the Letter of Transmittal, Dunn alleges:

Directly preceding Dunn's signing of the Letter of Transmittal on or about May 28, 2015, Kyle Bohannon and Kevin Blank, then-CEO of FastMed Urgent Care, P.C., made specific representations to Dunn regarding the terms of the restrictive covenant and acknowledged Dunn's concerns regarding the scope of the agreement, ultimately culminating in an oral agreement to alter the terms of the restrictive covenant that would permit Dunn to work as a medical director immediately following separation.[78]

         Dunn premises his claim on "specific representations" made by Bohannon and Blank, grouped together.[79] Dunn cannot adequately plead fraud based on allegations that Bohannon and Blank together represented a certain result without distinguishing as between them and identifying their specific statements.[80]

         Dunn's allegations of fraud in the execution of the Second Employment Agreement are similarly untethered to any individual speaker. Dunn relies on assurances "that the position of employment offered to [him] pursuant to the [Second Employment Agreement] was a long-term position."[81] He alleges:

Kyle Bohannon expressly stated to Dunn that Dunn's employment under the Second Amended and Restated Employment Agreement that he was needed not only to continue to run the Arizona market, but also that he would assist[] with running the Texas market, and that he was very much needed as an asset going forward.[82]

         He also alleges "Kyle Bohannon and other executives of the Affiliated Companies further expressly assured Dunn that the position of employment offered to [him] pursuant to the [Second Employment Agreement] was a long-term position."[83]

         "[T]he [C]omplaint fails to identify who made any particular misrepresentation … . Instead, the [C]omplaint asserts that one of [Bohannon and other executives] made the representations, but we do not know who allegedly made which statement(s)."[84] While Dunn alleges that Bohannon "expressly stated" that he was "very much needed as an asset going forward, "[85] he improperly groups Bohannon together with "other executives" who allegedly assured Dunn that his was a "long-term position."[86] Dunn cannot premise his claim on statements by Bohannon and "other executives" without identifying specific statements made by specific persons.[87]

         Dunn also fails to allege when he was assured a long-term position.

Pleading when the alleged misrepresentations occurred is especially important where, as here, the alleged promises are of future performance … . To defend against such assertions, a defendant logically must be apprised when the alleged statements were made in order to counter the assertion that it did not intend to keep its promise at that time.[88]

         Dunn's Complaint does not allege when Defendants promised him long-term employment. If Dunn's Complaint is read chronologically, any assurances of a long-term position were made after Dunn executed the Second Employment Agreement.[89]But Dunn's brief describes these statements as "the promise that Dunn would remain employed by one of the FastMed Defendants following the closing, inducing him to sign the Second Agreement," indicating his position that the assurances were made before or during the execution.[90] Dunn's claim for fraud under the Second Employment Agreement fails to apprise Defendants of when the alleged statements were made.

         As to both the Letter of Transmittal and the Second Employment Agreement, "the [C]omplaint makes no mention of where or by what means any of the misrepresentations were made."[91] The Complaint does not describe where (e.g., at Urgent Cares' offices, FastMed's offices, a mutual meeting place) or how (e.g., in person, by phone, by email) any of these representations occurred. As the Court pointed out in Fortis Advisors LLC v. Dialog Semiconductor PLC,

[t]he lack of these details, in isolation, may not warrant dismissal under Rule 9(b). But when the lack of any such details is considered together with the failure of the [C]omplaint to identify when any of the alleged misrepresentations were made and who made any of them, the complaint fails in my view to apprise [the Defendants] of sufficient information concerning the circumstances of the alleged fraud and thus does not satisfy the particularity requirement of Rule 9(b).[92]

         Dunn has failed to state a claim for fraud in the execution of the Letter of Transmittal and Second Employment Agreement under Rule 9(b).

         3. Dunn Has Failed To State A Claim For Negligent Misrepresentation.

         Dunn has also failed to adequately plead the required elements of negligent misrepresentation. To state a negligent misrepresentation claim, Dunn must allege "(1) the defendant had a pecuniary duty to provide accurate information, (2) the defendant supplied false information, (3) the defendant failed to exercise reasonable care in obtaining or communicating the information, and (4) the plaintiff suffered a pecuniary loss caused by justifiable reliance upon the false information."[93] As a matter of law, promissory statements are insufficient to support a negligent misrepresentation claim.[94]

Negligent misrepresentation, however, "cannot lie where the underlying representations take the form of promises" because promissory fraud requires an intentional or knowing act. That is because the promise to honor an agreement is only a misrepresentation if the promisor knows at the time of the promise that he will ultimately breach; such a misrepresentation cannot occur unknowingly or negligently.[95]

         Dunn's claim for negligent misrepresentation is based on Defendants' promise to redraft the Restrictive Covenant at a later time.[96] These promissory statements cannot sustain Dunn's negligent misrepresentation claim.

         In addition, Dunn's negligent misrepresentation claim fails under Rule 9(b). Although a separate and distinct claim, negligent misrepresentation is closely related to fraud. "A claim of negligent misrepresentation, or equitable fraud, requires proof of all of the elements of common law fraud except that plaintiff need not demonstrate that the misstatement or omission was made knowingly or recklessly."[97] Both fraud and negligent misrepresentation require pleading with particularity under Rule 9(b).[98] If a plaintiff brings both fraud and negligent misrepresentation claims and fails to plead his common law fraud claim with the requisite particularity, his negligent misrepresentation claim must fail for the same reason.[99] As discussed above, Dunn has failed to adequately plead fraud premised on the Letter of Transmittal under Rule 9(b). For those same reasons, Dunn's negligent misrepresentation claim is dismissed.

         C. The Restrictive Covenant Does Not Violate Delaware's Statute Encouraging The Unrestricted Practice Of Medicine.

         Dunn seeks relief in the form of a declaratory judgment and injunction preventing Defendants from attempting to enforce the Restrictive Covenant. He argues the Restrictive ...


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