Navidea Biopharmaceuticals, Inc. v. Goldberg
Filing
339
OPINION AND ORDER re: 318 MOTION for Summary Judgment . filed by Michael M. Goldberg, 314 MOTION for Summary Judgment filed by Navidea Biopharmaceuticals, Inc., Macrophage Therapeutics, Inc. Navidea's motion for s ummary judgment on its breach of contract claim and its breach of the implied covenant of good faith and fair dealing claim is DENIED, and Goldberg's cross-motion on those claims is GRANTED. Goldberg's motion for summary judgment on his bre ach of contract claim against Navidea and Navidea's cross-motion on that claim are DENIED. Goldberg's motion for summary judgment on his breach of contract claim against Macrophage is DENIED, and Macrophage's cross-motion on that cl aim is GRANTED. Both parties' respective motions on the Company's declaratory judgment claim are DENIED without prejudice. In light of the denial of summary judgment to both parties on Goldberg's breach of contract claim against Navi dea, the next step is a trial on that claim. Trial will begin on July 8, 2024. Motions in limine are due May 17, 2024; oppositions are due May 31, 2024. The parties' joint pretrial order, requests to charge, and proposed voir dire questions ar e due June 10, 2024. The final pretrial conference will take place on July 2, 2024 at 2:30 P.M. in Courtroom 443 of the Thurgood Marshall Courthouse, 40 Foley Square, New York, New York, 10007. If, at any time, the parties want a settlement conferenc e with Magistrate Judge Figueredo, who is their newly-assigned Magistrate Judge, they may submit a joint letter requesting a referral. The Court will not delay trial for a settlement conference, however, so if this is a desirable option, the parties should act quickly. The Clerk of Court is respectfully directed to close the open motions at docket entries 314 and 318. (Motions due by 5/17/2024., Pretrial Order due by 6/10/2024., Responses due by 5/31/2024, Final Pretrial Conference set for 7/2/2024 at 02:30 PM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni.) (Signed by Judge Valerie E. Caproni on 3/25/2024) (rro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE: NAVIDEA BIOPHARMACEUTICALS :
LITIGATION
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 3/25/2024
19-CV-1578 (VEC)
OPINION AND ORDER
VALERIE CAPRONI, United States District Judge:
Navidea Biopharmaceuticals, Inc. (“Navidea”) sued Michael Goldberg (“Goldberg”) for
breach of contract, breach of the implied covenant of good faith and fair dealing, breach of
fiduciary duty, and for a declaratory judgment establishing the contractual rights and obligations
of the parties. See Am. Compl., Dkt. 15. 1 Goldberg asserted counterclaims against Navidea and
third-party claims against Macrophage Therapeutics, Inc. (“Macrophage” or “MT”), a subsidiary
of Navidea (collectively, the “Company”), for breach of contract, wrongful discharge, injunctive
relief, and quantum meruit. See Answer, Dkt. 31. 2 Over the past five years, the parties have
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engaged in extensive motion practice in this Court, as well as in the Delaware Court of Chancery
(the “Delaware Action”). The parties have cross-moved for summary judgment. See Dkts. 314,
318. On summary judgment, the Company has a breach of contract claim, a breach of the
implied covenant of good faith and fair dealing claim, and a declaratory judgment claim against
The Company commenced this action against Goldberg on February 20, 2019. See Compl., Dkt. 1. The
operative amended complaint was filed on April 26, 2019. See Am. Compl. Goldberg filed a separate suit against
the Company on March 7, 2019, No. 19-cv-2101, and on May 7, 2019, the Court consolidated the cases. See May 7,
2019 Order, Dkt. 26.
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The Company moved to dismiss Goldberg’s counterclaims and third-party claims. See Mot. to Dismiss,
Dkt. 40. Goldberg moved to dismiss Navidea’s breach of fiduciary duty claim and sought attorneys’ fees in
connection with litigating that claim. See Mot. to Dismiss, Dkt. 32. On December 26, 2019, the Undersigned
granted Goldberg’s motion to dismiss the breach of fiduciary duty claim and determined that he was entitled to
attorneys’ fees with respect to his defense of that claim. See Op. & Order, Dkt. 61. The Undersigned also granted
the Company’s motion to dismiss, dismissing Goldberg’s wrongful discharge, injunctive relief, and quantum meruit
claims. See id.
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Goldberg; Goldberg has separate breach of contract claims against Navidea and Macrophage.
For the reasons discussed below, the motions and cross-motions are GRANTED in part and
DENIED in part.
I.
BACKGROUND 3
Navidea is a publicly-traded corporation that focuses on medical diagnostic and imaging
products; it is listed on the New York Stock Exchange (“NYSE”). 56.1 Stmt. ¶¶ 1–2, Dkt. 327. 4
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Navidea’s products utilize intellectual property licensed from the University of California, San
Diego (the “Licensed IP”). 56.1 Stmt. ¶ 2, Dkt. 329. Goldberg served as Navidea’s Chief
Executive Officer (“CEO”) from September 2016 to August 14, 2018; he was also a member of
the Navidea board of directors (“Navidea’s Board”) from November 13, 2013 until August 14,
2018. Id. ¶ 4.
The facts are gathered from the parties’ 56.1 statements, the exhibits attached to the parties’ submissions,
and the parties’ summary judgment briefs. The facts are construed in the light most favorable to the non-moving
party. See Wandering Dago, Inc. v. Destito, 879 F.3d 20, 30 (2d Cir. 2018) (citation omitted). All facts described
herein are undisputed unless otherwise stated. The Court will refer to the relevant submissions as follows: the
Company’s memorandum of law in support of its motion for summary judgment, Dkt. 315, as “Company Mem. of
Law”; Goldberg’s memorandum in opposition to the Company’s motion for summary judgment, Dkt. 328, as
“Goldberg Opp.”; the Company’s Reply memorandum, Dkt. 332, as “Company Reply”; Goldberg’s memorandum
of law in support of his motion for summary judgment, Dkt. 321, as “Goldberg Mem. of Law”; the Company’s
memorandum of law in opposition to Goldberg’s motion for summary judgment, Dkt. 325, as “Company Opp.”;
Goldberg’s Reply Memorandum, Dkt. 334, as “Goldberg Reply”; the Company’s Local Civil Rule 56.1 Statement of
Undisputed Facts, Dkt. 324, as “56.1 Stmt., Dkt. 324”; Goldberg’s Response to the Company’s 56.1 Statement of
Undisputed Facts, Dkt. 329 as “56.1 Stmt., Dkt. 329”; Goldberg’s Local Civil Rule 56.1 Statement of Undisputed
Facts, Dkt. 323, as “56.1 Stmt., Dkt. 323”; the Company’s Response to Goldberg’s 56.1 Statement of Undisputed
Facts, Dkt. 327 as “56.1 Stmt., Dkt. 327”; the Company’s Additional Statements of Undisputed Facts, Dkt. 333 as
“56.1 Stmt., Dkt. 333”; and Goldberg’s Response to the Company’s Additional Statements of Undisputed Facts,
Dkt. 336, as “56.1 Stmt., Dkt. 336.” Citations to the “Kazan Decl.” refer to the exhibits attached to the Declarations
of Barry Kazan, Dkts. 316 and 326, and citations to the “Zimmer Decl.” refer to the exhibits attached to the
Declarations of Gregory Zimmer, Dkts. 320, 330, and 335.
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The parties failed to adhere to the Undersigned’s Individual Practices Rule 4(H)(ii), in that they did not
coordinate their 56.1 statements so that the Court has one, final consolidated 56.1 Statement. The function of a Rule
56.1 Statement is to require the parties to clarify the elements of the various claims that are and that are not at issue
and to clearly identify any facts that are contested. See Monahan v. N.Y.C. Dep’t of Corr., 214 F.3d 275, 292 (2d
Cir. 2000). The parties submitted six 56.1 Statements to the Court and, as such, these 56.1 Statements did not serve
their intended purpose and created multiple redundancies and inefficiencies the Court was forced to sort through.
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Macrophage is a wholly owned subsidiary of Navidea. Id. ¶ 3. Goldberg was the CEO
of Macrophage until his termination on February 20, 2019. Id. ¶ 5. When Macrophage was
formed in 2015, its board of directors had three seats, and Goldberg held one of them. 56.1
Stmt. ¶¶ 9, 15, Dkt. 327.
On March 11, 2015, in exchange for 100 percent of the common stock of Macrophage,
Navidea granted Macrophage an exclusive license to use the Licensed IP for therapeutic
purposes. 56.1 Stmt. ¶¶ 14–15, Dkt. 329. Navidea could terminate the sublicense if Macrophage
became insolvent. Id. ¶ 16.
A. The August Agreement
In or around 2018, Macrophage was experiencing difficulty securing third-party
investors; potential investors expressed concerns regarding Navidea’s control of the company.
56.1 Stmt. ¶¶ 26–28, Dkt. 327. Then, on June 6, 2018, the NYSE warned Navidea that it was at
risk of being delisted because of its low common stock price and because its shareholder equity
had experienced net losses in three of its four most recent fiscal years. Id. ¶¶ 32–34.
By August 2018, Navidea’s Board agreed that it should relinquish control of Macrophage
and that Macrophage should be separated from Navidea to increase the likelihood that
Macrophage could obtain third-party investment; Navidea believed that would maximize the
value of its ownership of Macrophage. Id. ¶¶ 38–39. Navidea’s Board appointed a Special
Committee to negotiate an agreement pursuant to which Goldberg would separate from Navidea
to focus on running Macrophage and obtaining third-party investments in that company. Id. ¶
40. Although neither Goldberg nor Macrophage was represented by counsel in those
negotiations, the Special Committee was represented by Maslon, LLP. Id. ¶¶ 43–44. Goldberg
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negotiated on his and Macrophage’s behalf, and Maslon LLP drafted the legal documentation.
Id. ¶¶ 44–48.
On August 14, 2018, Navidea, Goldberg, and Macrophage executed the agreement that is
at the center of this litigation (the “August Agreement”). Id. ¶ 51. The parties dispute whether
the August Agreement was a preliminary agreement, as the Company contends, or a final
agreement, as Goldberg contends. 56.1 Stmt. ¶ 31, Dkt. 329.
The dispute between the parties hinges on the meaning of a handful of terms in the
August Agreement. In relevant part, those terms provide:
Navidea Shares: On the date of the consummation of the Transaction (such date, the
“Closing Date”), Navidea will issue Goldberg 23.5 million shares of Navidea common
stock (the “Shares”), 18.5 million currently, and 5 million on January 2nd, 2019. The
Shares will be issued under Regulation D of the Securities Act of 1933.
MT Super Voting Shares: MT will issue to Goldberg shares of MT Super Voting
Common Stock in a number equal to 5.0% of the outstanding shares of MT. . . . [E]ach
holder of MT Super Voting Common Stock shall have 20 votes for each full share of MT
Common Stock into which the shares of MT Super Voting Common Stock would be
convertible on the record date for the matter to be voted on. Notwithstanding the
foregoing, until such time as MT shall have obtained aggregate gross proceeds of $10
million in one or more financings after the Closing Date, the vote or written consent of
Navidea shall be required to issue to Goldberg or any of his affiliates any equity or rights
to purchase equity, which vote or consent will not be unreasonably withheld. Navidea
will be entitled to appoint one observer to MT’s Board of Directors, who will receive all
notices of board meetings, written consents and board materials in advance of such
meetings.
Severance: . . . Navidea will pay the costs to continue Goldberg’s existing health
coverage for a period of 16 months after the Closing Date, by paying the amounts
required under COBRA to maintain such coverage.
Transaction Documents: The Transaction Documents shall contain other terms,
conditions, representations and warranties of Navidea, MT and Goldberg customary for
transactions of the type set forth in this Agreement. Maslon LLP, counsel to Navidea’s
Special Committee, shall prepare initial drafts of the Transaction Documents. Upon
execution, the terms of such Transaction Documents shall supersede the terms set forth
herein, but any subsequent failure to execute the Transaction Documents shall not render
the provisions of this Agreement invalid.
Zimmer Decl. Ex. D. at 1–2, Dkt. 320.
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B. Events Following Execution of the August Agreement
On September 7, 2018, Maslon LLP sent drafts of the Transaction Documents to
Goldberg. 56.1 Stmt. ¶ 123, Dkt. 327. Goldberg provided comments and stated that he believed
some provisions were not consistent with the parties’ agreement. Id. ¶ 125. Maslon LLP and
Goldberg continued to discuss the contents of the proposed Transaction Documents between
September 7, 2018 and November 16, 2018. Id. ¶ 127.
The August Agreement prohibited Goldberg from issuing himself additional equity in
Macrophage without Navidea’s express consent until Macrophage had obtained $10 million in
one or more financings; Macrophage never obtained $10 million in additional financing. 56.1
Stmt. ¶¶ 48–49, Dkt. 329. On November 20, 2018, although the Transaction Documents had not
been signed, Navidea issued 18.5 million shares of common stock to Goldberg. The Company
asserts that it did so to convince Goldberg to execute the Transaction Documents; Goldberg
asserts that the stock was issued so Navidea could increase shareholder equity. Id. ¶ 45, Dkt.
329.
C. M1M2 –– The Challenged Transactions
On November 29, 2018, Navidea executed a written consent authorized by Macrophage’s
governing documents that removed every director from the Macrophage Board other than
Goldberg and appointed Claudine Bruck and Michael Rice (Navidea directors) to the
Macrophage Board. Id. ¶ 53.
Goldberg, acting in his capacity as CEO of Macrophage and as a member of the
Macrophage Board, formed non-party M1M2 Therapeutics, Inc. (“M1M2”) on February 5, 2019.
56.1 Stmt. ¶ 55, Dkt. 329. Macrophage then sublicensed its Navidea Sublicense (“Navidea
Sublicense”) to M1M2 and issued 95 shares of M1M2 common stock to Macrophage and five
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shares of M1M2 super voting stock to Goldberg (collectively, the “Challenged Transactions”).
Id. On February 11, 2019, Goldberg held a special meeting of the Macrophage Board, during
which he informed Bruck and Rice that he had formed M1M2, had transferred the Navidea
Sublicense to M1M2, and had issued M1M2’s common stock to Macrophage and its super
voting stock to himself. Id. ¶ 58.
On February 19, 2019, Navidea terminated the Navidea Sublicense because Macrophage
was insolvent, and on February 20, 2019, Macrophage terminated Goldberg as CEO because of
his conduct entering into the Challenged Transactions. Id. ¶¶ 60–62.
D. The Delaware Action
On February 20, 2019, Macrophage sued Goldberg in the Delaware Court of Chancery.
Id. ¶ 64. Following a three-day trial in late 2020, the Court of Chancery held that Goldberg had
breached his fiduciary duty of loyalty to Macrophage by entering into the Challenged
Transactions. Kazan Decl. Ex. 2 (Del. Op.) at 61, Dkt. 316. The Court of Chancery also held
that Macrophage had failed to prove any damages caused by Goldberg’s breach and awarded
only nominal damages in the amount of $1.00. Id. at 53. The Challenged Transactions were
nullified when Navidea revoked the Navidea Sublicense; the Court of Chancery also declared
that the Challenged Transactions were null and void. Id. at 48. Although the Court of Chancery
held that Goldberg’s conduct regarding the Challenged Transactions violated Delaware law, it
also held his actions were not so “egregious” as to justify awarding Macrophage attorneys’ fees.
Id. at 56–57. The Court of Chancery did not address whether the Challenged Transactions
violated the August Agreement. 56.1 Stmt. ¶ 140, Dkt. 327.
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II.
DISCUSSION
When parties cross-move for summary judgment, the Court analyzes the motions
separately, “in each case construing the evidence in the light most favorable to the non-moving
party.” Wandering Dago Inc. v. Destito, 879 F.3d 20, 30 (2d Cir. 2018) (citation omitted).
Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “Where the record taken as a
whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine
issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (internal quotation marks and citation
omitted).
Although the Court must construe the facts in the light most favorable to the non-moving
party, “a party may not rely on mere speculation or conjecture as to the true nature of the facts to
overcome a motion for summary judgment.” Fed. Trade Comm’n v. Moses, 913 F.3d 297, 305
(2d Cir. 2019) (internal quotation marks and citation omitted).
A. Navidea’s Motion for Summary Judgment on its Claims is Denied; Goldberg’s
Cross-Motion for Summary Judgment is Granted in Part and Denied in Part
Navidea has three remaining claims against Goldberg: breach of contract, breach of the
implied covenant of good faith and fair dealing, and declaratory judgment. Company Mem. of
Law at 1, Dkt. 315. The Company’s motion for summary judgment as to its claim for breach of
contract and breach of the implied covenant of good faith and fair dealing claim is DENIED; the
Company’s motion for summary judgment as to its declaratory judgment claim is DENIED
without prejudice. Goldberg’s cross-motion for summary judgment on Navidea’s claim for
breach of contract and breach of the implied covenant is GRANTED; Goldberg’s cross-motion
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for summary judgment on the Company’s declaratory judgment claim is DENIED without
prejudice.
1. Breach of Contract
To prove breach of contract under Delaware law, 5 the plaintiff must establish “1) a
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contractual obligation; 2) a breach of that obligation by the defendant; and 3) a resulting damage
to the plaintiffs.” WaveDivision Holdings, LLC v. Millennium Digital Media Sys., L.L.C., No.
2993, 2010 WL 3706624, at *13 (Del. Ch. Sept. 17, 2010) (citing H-M Wexford LLC v. Encorp,
Inc., 832 A.2d 129, 140 (Del. Ch. 2003)). The construction of contract language presents a
question of law. See Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d
1192, 1195 (Del. 1992). The court’s “task is to fulfill the parties’ shared expectations at the time
they contracted.” Leaf Invenergy Co. v. Invenergy Renewables LLC, 210 A.3d 688, 696 (Del.
2019) (internal quotation marks and alterations omitted). That task starts with the text of the
contract. Sunline Com. Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 846 (Del.
2019) (citation omitted). When the language of a contract is clear and unambiguous, the court
will give effect to the plain meaning of the contract. Osborn ex rel. Osborn v. Kemp, 991 A.2d
1153, 1159–60 (Del. 2010) (citation omitted). The contract is to be read as a whole, giving
effect to each term and provision, so as not to render any part of the contract mere surplusage.
Id. at 1159.
The Company argues that there is no question of fact that Goldberg breached the contract
in three ways: he failed to execute the Transaction Documents; he entered into the Challenged
Transactions; and he failed to forward funds provided by Navidea for his health insurance
premiums to the insurance carrier.
The parties agree that Delaware law governs the August Agreement. Zimmer Decl. Ex. D. at 2, Dkt. 320;
Company Mem. of Law at 7; Goldberg Mem. of Law at 3.
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This litigation centers around a contract that is so poorly drafted that the Court is unable
to discern the meaning of several key contractual provisions. Contract law dictates that
ambiguities are construed against the drafter – in this case, Navidea. See Norton v. K-Sea
Transp. Partners L.P., 67 A.3d 354, 360 (Del. 2013) (citation omitted). Even so, as to several of
the terms, the Court needs extrinsic evidence to ascertain their meaning.
Recognizing that the August Agreement is ambiguous in part, the Court will,
nevertheless, assume without deciding that Navidea can prove that Goldberg breached the
August Agreement. Even with that assumption, however, Navidea is not entitled to summary
judgment because an element of a breach of contract claim is resulting damanges. The Company
has not shown that the putative breaches about which it complains caused it any damage. 6 Thus,
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even if a jury might conclude that Goldberg breached the contract, it would still have to return a
verdict for Goldberg on the breach of contract claim because the Company has not established
damages that are directly traceable to any of the putative breaches.
The Company asserts that Goldberg’s failure to execute the Transaction Documents
caused Navidea to incur significant expenses by way of attorneys’ fees and administrative costs
in pursuing litigation. Company Opp. at 14. The Company also avers that it suffered reliance
damages in the form of the costs and fees it incurred to fund Macrophage. Id. at 13. The
The Court is skeptical whether the Company could meet its burden to establish the first two elements of its
breach of contract claim. First, as discussed in Part II.B.1., infra, the “Transaction Documents” provision is
ambiguous, and there are questions of fact whether Goldberg was contractually obligated to execute Transation
Documents. Second, although Goldberg engaged in “self-help” by entering into the Challenged Transactions, the
August Agreement does not specifically prohibit him from issuing shares of an affiliate or subsidiary of Macrophage
– in this case, M1M2 – to himself. The Company contends that the notion that the August Agreement did not
prohibit Goldberg from issuing himself shares in a subsidiary of Macrophage elevates form over substance. That
may very well be true, but, as previously noted, Navidea drafted the contract and ambiguities are construed against
the drafter. See Bank of N. Y. Mellon v. Commerzbank Cap. Funding Tr. II, 65 A.3d 539, 551 (Del. 2013) (citation
omitted). Third, the “Severance” provision provides that “Navidea will pay the costs to continue Goldberg’s
existing health coverage for a period of 16 months after the Closing Date, by paying the amounts required under
COBRA to maintain such coverage.” Zimmer Decl. Ex. D at 1–2, Dkt. 320. That provision neither required
Navidea to make the payments directly to the insurance carrier nor required Goldberg to forward the payments he
was provided to the insurance company.
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Company contends that it would not have funded Macrophage had it known that Goldberg would
not work in Macrophage’s interests to raise needed capital. 56.1 Stmt. ¶ 172, Dkt. 336; Kazan
Decl. Ex. 15 at 723, Dkt. 326. Navidea’s CEO testified that the company suffered reputational
damage with the “overhang of litigation and disputes that have hindered the ability of the
company to move forward and get its business done.” Kazan Decl. Ex. 33 at 249, Dkt. 316. The
Company also argues that the Challenged Transactions resulted in damages including attorneys’
fees associated with litigation arising from Goldberg’s conduct, the cost of Goldberg using
Macrophage’s lawyers for his personal use, and lost time on the patent life of the Licensed IP.
Company Mem. of Law at 17–18. Finally, the Company argues that Goldberg’s failure to
forward COBRA premiums that Navidea had advanced to him (approximately $26,000) to the
insurance carrier damaged Navidea because it then had to obtain a special exception to allow it to
renew Goldberg’s coverage and incurred additional costs as a result. 7 56.1 Stmt ¶¶ 170–71, Dkt.
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336; Kazan Decl. Ex. 20 at 153, Dkt. 316.
Goldberg contends that attorneys’ fees associated with litigation cannot constitute
damages necessary to establish a breach of contract claim. Goldberg Opp. at 19–20 (citing
Serviz, Inc. v. ServiceMaster Co., LLC, No. N20C-03-070, 2022 WL 1164859, at *7 (Del. Sup.
Ct. Apr. 19, 2022) (noting that the “Court is always reluctant to treat attorneys’ fees as contract
damages”)). As for Goldberg’s use of Macrophage’s lawyers, he argues that the Company
cannot show that any such damages flowed from his alleged breach of the contract, especially
because he was not represented by counsel when the August Agreement was negotiated.
The record is unclear on exactly what happened relative to the approximately $26,000 that Navidea
advanced to Goldberg to cover his COBRA payments. As worded, paragraph 170 of the parties’ 56.1 statement
suggests that Goldberg failed to forward the entire amount to the insurance carrier, see 56.1 Stmt. ¶¶ 170–71, Dkt.
336 (“As a result of Dr. Goldberg’s failure to forward Navidea’s payment to the insurance carrier . . .”), but the
citation it relies on as support for that point, Jed Latkin’s deposition, indicates that Goldberg failed to forward one
month’s premium to the insurance carrier, see Kazan Decl. Ex. 20 at 153: 7-9, Dkt. 316 (“[W]e advanced
[Goldberg] the full COBRA amount, he actually did not pay the second month in, he didn’t pay his COBRA . . .”).
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Goldberg Opp. at 20 (citing Del. Exp. Shuttle, Inc. v. Sam Waltz & Assocs. LLC, No. CPU4-10000005, 2013 WL 3776523, at *3 (Del. C.P. July 1, 2013)). With regard to the Company’s
argument that Navidea “lost time on the patent” of certain intellectual property, Goldberg argues
that the Company cannot attribute that loss to Goldberg’s alleged breaches, because Goldberg
worked at Macrophage until February 20, 2019, when he was removed as CEO, and Navidea
terminated its Sublicense on that same day. Goldberg Opp. at 21 n.8.
The Company has not established any damages resulting from Goldberg’s failure to
execute the Transaction Documents and has not demonstrated that any of the purported breaches
harmed the ability of Macrophage to operate as a separate entity. The Company put forth no
evidence to refute Goldberg’s claim that he worked to advance Macrophage’s business between
the time the August Agreement was signed and the time that Goldberg’s employment was
terminated. To the contrary, the record includes emails Goldberg sent between August 2018 and
January 2019, working in his capacity as Macrophage CEO to advance its day-to-day business.
Zimmer Decl. Ex. 24, Dkt. 330. The Company’s contentions that it suffered reputational
damage and that Goldberg’s alleged breaches thwarted its goal of having Macrophage operate as
a separate entity capable of garnering outside investment are entirely conclusory. The
Company’s complaint that Goldberg used lawyers hired by Macrophage for personal legal
advice, Kazan Decl. Ex. 33 at 243–244, Dkt. 316, was previously considered by the Court of
Chancery. That Court held that even if those lawyers did give personal advice to Goldberg that
was outside the scope of Macrophage’s business, Macrophage was not entitled to recoup its legal
fees because it presented no evidence that the firm ever charged Macrophage for legal advice it
provided to Goldberg. Kazan Decl. Ex. 2 (Del. Op.) at 50–51, Dkt. 316. That lack of evidence
has continued into this case. Similarly, the Company did not proffer any evidence of the cost
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incurred in obtaining a “special exception” to renew Goldberg’s health insurance coverage after
he failed to forward a premium payment to the insurer. Kazan Decl. Ex. 20 at 153–56, Dkt. 316.
The Company cannot claim as damages its litigation costs and administrative fees.
Delaware courts adhere to the American Rule, pursuant to which each party must bear its own
attorneys’ fees. That rule can, of course, be modified when “the parties agree by contract to shift
the costs and expenses of litigation.” Nichols v. Chrysler Grp. LLC, No. 4348, 2010 WL
5549048, at *3 (Del. Ch. Dec. 29, 2010) (citation omitted). A court may also award attorneys’
fees in cases where the losing party brought the action in bad faith or where the losing party
acted in bad faith to increase the costs of the litigation. See also ION Geophysical Corp. v.
Fletcher Intern., Ltd., No. 5050, 2010 WL 4378400, at *16 (Del. Ch. Nov. 5, 2010) (citation
omitted). In the Delaware Action, despite finding that Goldberg’s self-help “was misguided and
ultimately unlawful,” the Court of Chancery held that his conduct was not so “egregious” as to
justify fee-shifting. Kazan Decl. Ex. 2 (Del. Op.) at 55, 57, Dkt. 316. This Court finds the issue
to be a close one, but ultimately agrees with the Court of Chancery that Navidea has not
demonstrated that Goldberg’s conduct was so egregious that Navidea’s fees can be viewed as
contract damages.
Because the Company has not adduced evidence that would allow a reasonable fact
finder to conclude that it was damaged by Goldberg’s failure to execute the Transaction
Documents, orchestration and execution of the Challenged Transactions, or failure to forward
payments Navidea provided to his health insurance carrier, it has failed to prove damages, a
required element of a breach of contract claim. 8 Accordingly, the Company’s motion for
Although the August Agreement provides that “[t]he prevailing party in any such dispute will be entitled to
recover its reasonable attorneys’ fees and costs,” Zimmer Decl. Ex. D. at 2, Dkt. 320, the Company is only entitled
to recover fees if it is the prevailing party. Because it is necessary to prove damages to be the prevailing party on its
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summary judgment on its breach of contract claims is denied, and Goldberg’s cross motion for
summary judgment on Navidea’s breach of contract claims is granted. 9
2. Breach of the Implied Covenant of Good Faith and Fair Dealing Claim
The Company alleges that Goldberg breached the implied covenant of good faith and fair
dealing by refusing to execute the Transaction Documents and entering into the Challenged
Transactions. Company Mem. of Law at 19–20.
The implied covenant of good faith and fair dealing inheres in every contract governed by
Delaware law 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.” Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442
(Del. 2005) (quoting Wilgus v. Salt Pond Inv. Co., 498 A.2d 151, 159 (Del. Ch. 1995) (internal
quotation marks omitted)). “[T]he implied covenant only applies where a contract lacks specific
language governing an issue and the obligation the court is asked to imply advances, and does
not contradict, the purposes reflected in the express language of the contract.” Alliance Data
Sys. Corp. v. Blackstone Cap. Partners V L.P., 963 A.2d 746, 770 (Del. Ch.), aff’d, 976 A.2d
170 (Del. 2009). “The doctrine thus operates only in that narrow band of cases where the
contract as a whole speaks sufficiently to suggest an obligation and point to a result, but does not
speak directly enough to provide an explicit answer.” Airborne Health, Inc. v. Squid Soap, LP,
984 A.2d 126, 146 (Del. Ch. 2009).
claims for breach of contract, the contractual obligation to pay fees to the prevailing party does not rescue the
Company’s breach of contract claims.
Because Goldberg is the prevailing party on that claim, under the August Agreement, he is entitled to
recover reasonable attorneys’ fees and costs associated with defending against that claim.
9
13
To state a claim for breach of the implied covenant, the plaintiff must allege a specific
implied contractual obligation, a breach of that obligation by the defendant, and resulting
damage. Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872, 888 (Del. Ch. 2009) (citation
omitted). Alleging general bad faith is not sufficient to make out a claim; the plaintiff must
allege a specific implied contractual obligation and how the defendant’s alleged violation of that
obligation denied the plaintiff “the fruits of the contract.” See id. “[T]he covenant is a limited
and extraordinary legal remedy. As such, the implied covenant does not apply when the contract
addresses the conduct at issue, but only when the contract is truly silent concerning the matter at
hand.” Oxbow Carbon & Minerals Holdings, Inc. v. Crestview-Oxbow Acquisition, LLC, 202
A.3d 482, 507 (Del. 2019) (cleaned up).
Goldberg breached the covenant, according to the Company, by failing to execute the
Transaction Documents and by attempting, in bad faith, to renegotiate the agreed-upon terms of
the August Agreement. Company Opp. at 16. Further, the Company argues that Goldberg’s
orchestration of the Challenged Transaction “frustrate[d] the fruits of the bargain that Navidea
reasonably expected.” Company Mem. of Law at 20. Although the Company concedes that the
August Agreement does not expressly bar Goldberg from creating a separate entity, it argues that
Goldberg’s machinations to obtain an interest in Macrophage through M1M2 is the type of
contractual gap that an implied covenant claim is intended to fill. Company Opp. at 17. Finally,
the Company argues that it expected Goldberg to work to advance Macrophage’s interests and,
although that was not specifically spelled out in the August Agreement, this duty was implied
and arose from the relationship that the Agreement formed. See id. at 18.
14
Goldberg argues that the Court should dismiss this claim because it is duplicative of the
Company’s contractual claim. 10 Goldberg Mem. of Law at 20 n.8 (citing Affy Tapple, LLC v.
9F
ShopVisible, LLC, No. N18C-07-216, 2019 WL 1324500, at *4 (Del. Super. Ct. Mar. 7, 2019)
(explaining that “there cannot be a separate implied covenant claim involving the same conduct
as the breach of contract claim”)). Moreover, he argues, the Company cannot simultaneously
argue that his failure to execute the Transaction Documents and his entering into the Challenged
Transactions breached an express provision of the August Agreement and an implied obligation.
See id. at 21. Finally, Goldberg argues that this claim must fail for the same reason that the
Company’s breach of contract claim fails – the Company has not adduced evidence of damages.
Goldberg Mem. of Law at 21.
As a starting matter, the Court has already held that the Company has not established its
breach of contract claims against Goldberg, supra, and, accordingly, the Company’s implied
covenant claim is not duplicative. See Whitestone REIT Operating P’ship, L.P. v. Pillarstone
Cap. REIT, No. 2022-0607, 2024 WL 274227, at *6 (Del. Ch. Jan. 25, 2024) (finding plaintiff’s
breach of the implied covenant of good faith and fair dealing claim was not duplicative when it
was brought in the alternative to its breach of contract claim).
Although the Company claims that Goldberg “acted arbitrarily and unreasonably in
refusing to execute the Transaction Documents,” it has not adduced facts showing that
The Company concedes that it cannot prevail on both its breach of contract and breach of the implied
covenant claim. It notes, however, that some Delaware courts have held that the implied covenant claim can be pled
in the alternative. Company Opp. at 16–17 (citing Renco Grp., Inc. v. MacAndrews AMG Holdings LLC, No. 7668,
2015 WL 394011, at *7 (Del. Ch. Jan. 29, 2015) (denying motion to dismiss an implied covenant claim pled in
alternative where plaintiff alleged defendant’s misconduct affected matters so fundamental to contract that plaintiff’s
reasonable expectations were frustrated); eCommerce Indus., Inc. v. MWA Intelligence, Inc., No. 7471, 2013 WL
5621678, at *33–35 (Del. Ch. Sept. 30, 2013) (finding party breached express provision in contract but also
concluding, in alternative, that gap existed in parties’ contract and if they had foreseen the conduct that constituted
the breach, they would have agreed to proscribe it)).
10
15
Goldberg’s attempts to negotiate the terms of the draft Transaction Documents sent to him was a
breach of the implied covenant of good faith and fair dealing. See Company Mem. of Law at 20.
The Court has already noted its hesitation whether the Company could prove that Goldberg
breached the August Agreement by failing to execute the Transaction Documents, as the poorly
drafted contract does not explicitly obligate Goldberg to execute them. See supra n.6. The
August Agreement addresses the conduct at issue, but because it is ambiguous, the parties
dispute their respective obligations.
The Company’s assertion that Goldberg’s attempt to negotiate the terms of the
Transaction Documents was in bad faith is entirely conclusory. Bill Mower, of Maslon LLP who
drafted the August Agreement, testified that the August Agreement was intended to be “a
binding agreement with an understanding that we had some cleanup to do later.” Zimmer Decl.
Ex. R at 48–49, Dkt. 320. After receiving the proposed drafts of Transaction Documents,
Goldberg provided comments and noted which documents he contended were inconsistent with
the parties’ agreement; he offered to continue discussions and asked Maslon LLP to provide
certain documents and information to Macrophage’s counsel. 56.1 Stmt. ¶¶ 125–26, Dkt. 327. It
can hardly be said that Goldberg’s attempt to clarify inconsistencies was done in bad faith.
Because the implied covenant is “an extraordinary legal remedy,” and the August Agreement is
not “truly silent” concerning the execution of Transaction Documents, given the undisputed facts
surrounding Golberg’s actions, his failure to execute the Transaction Documents did not
constitute a breach of the implied covenant of good faith and fair dealing. See Oxbow Carbon &
Minerals Holdings, Inc., 202 A.3d at 507 (Del. 2019).
Goldberg’s conduct in orchestrating and entering into the Challenged Transactions, on
the other hand, is a different matter. The Court of Chancery held that Goldberg breached his
16
fiduciary duty of loyalty to Macrophage; instead of pursuing his claims against Navidea in court,
he “exploited the parties’ inability to come to terms on definitive agreements implementing the
August Agreement by surreptitiously removing Navidea from the process and taking the Navidea
Sub-License for his own.” Kazan Decl. Ex. 2 (Del. Op.) at 40, Dkt. 316. “The essence of a duty
of loyalty claim is the assertion that a corporate officer or director has misused power over
corporate property or processes in order to benefit himself rather than advance corporate
purposes.” Steiner v. Meyerson, No. 13139, 1995 WL 441999, at *2 (Del. Ch. July 19, 1995).
Although breach of fiduciary duty and breach of the implied covenant of good faith and
fair dealing are not the same, the elements of each claim are exceedingly similar and at times
overlapping. An implied covenant claim requires a party to a contract to “refrain from arbitrary
or unreasonable conduct that has the effect of preventing a counterparty from receiving the fruits
of the bargain.” See Cygnus Opportunity Fund, LLC v. Washington Prime Grp., LLC, 302 A.3d
430, 460 (Del. Ch. 2023). The fiduciary duty of loyalty requires the fiduciary – in this case,
Goldberg – to act in good faith to “not advantage himself at the expense of [Macrophage].” In re
Walt Disney Co. Derivative Litig., 907 A.2d 693, 751 (Del. Ch. 2005) (citation omitted). The
Court of Chancery held that, by entering into the Challenged Transactions, Goldberg “failed to
follow a fair process and ultimately failed to deliver a fair price in breach of his duty of loyalty.”
Kazan Decl. Ex. 2 (Del. Op.) at 40, Dkt. 316. In essence, Goldberg deprived Navidea “the fruits
of the bargain.” As the Court of Chancery held, Goldberg “failed to prove that he engaged in a
transaction that duplicated what the parties would have agreed to had they ever been able to
finalize contracts implementing the August Agreement.” 11 Id. at 43; Dunlap, 878 A.2d at 442.
Goldberg is collaterally estopped from relitigating whether he engaged in the Challenged Transactions or
the Court of Chancery’s fairness holding. See M.G. Bancorp. v. Le Beau, 737 A.2d 513, 520 (Del. 1999)
(“Collateral estoppel prohibits a party from relitigating a factual issue that was adjudicated previously.”).
11
17
As noted previously in note 6, supra, the August Agreement does not expressly prohibit
Goldberg from creating a separate entity owned by himself, transferring Macrophage’s only real
asset to that entity, and thereby increasing his equity in Macrophage indirectly. “[P]arties
occasionally have understandings or expectations that were so fundamental that they did not
need to negotiate about those expectations.” Buckeye Partners, L.P. v. GT USA Wilmington,
LLC, No. 2020-0255, 2022 WL 906521, at *22 (Del. Ch. March 29, 2022) (citation omitted). An
implied covenant claim works to “imply contractual terms that are so obvious . . . that the drafter
would not have needed to include the conditions as express terms in the agreement.” Id. (citation
omitted). The absence of contractual language barring the type of self-dealing transaction
orchestrated by Goldberg is exactly the type of gap that an implied covenant claim is intended to
cover. The Court of Chancery noted that Goldberg’s “attempt to remedy the wrong he perceived
when Navidea failed to engage with him to effectuate the August Agreement was misguided and
ultimately unlawful,” and is an example “of why contractual self-help rarely can be effected
within the bounds of our law.” Kazan Decl. Ex. 2 (Del. Op.) at 55, Dkt. 316.
The Company also asserts that Goldberg breached the implied covenant of good faith and
fair dealing by failing to advance Macrophage’s interests. After Goldberg formed M1M2 but
before the Court of Chancery found its creation to be void ab initio, the parties dispute the extent
to which M1M2 possessed the exclusive right to Macrophage’s intellectual property. The
Company argues that Goldberg owned five percent of M1M2, had voting control of that entity
and “effectively, Macrophage” through his ownership of five shares of M1M2 Super Voting
Stock; Goldberg denies that the Challenged Transactions gave him effective control of
Macrophage because the voting control of M1M2 had no effect on voting rights relative to
Macrophage, and M1M2 owned only a license, not the exclusive right to Macrophage’s
18
intellectual property. 56.1 Stmt. ¶ 159, Dkt. 336. Goldberg’s argument that Macrophage owned
intellectual property other than the Navidea Sublicense is disingenuous. The Court of Chancery
found that the Challenged Transactions resulted in the transfer of substantially all of
Macrophage’s assets, as the Navidea Sublicense was Macrophage’s “primary asset.” Kazan
Decl. Ex. 2 (Del. Op.) at 32, Dkt. 316. This Court concurs. 12 There is no evidence in the record
11F
that Macrophage owned any intellectual property beyond what it licensed to M1M2.
Although the Court agrees with the Company that there is no question of fact that
Goldberg breached the implied covenant of good faith and fair dealing by entering into the
Challenged Transactions, the Company’s claim, and therefore its motion for summary judgment,
founders for the same reason that its breach of contract claim failed – the Company has not
demonstrated any damage from that breach. See Part II.A.1., supra.
The Company’s motion for summary judgment on the breach of the implied covenant of
good faith and fair dealing is, therefore, denied, and Goldberg’s cross motion for summary
judgment on that claim is granted. 13
3. Declaratory Judgment Claim
The Declaratory Judgment Act provides that “any court of the United States . . . may
declare the rights and other legal relations of any interested party seeking such a declaration,
whether or not further relief is or could be sought” in “a case of actual controversy.” 28 U.S.C. §
2201(a). “[A] declaratory judgment action is a creature of statute, and therefore is neither fish
Goldberg is collaterally estopped from relitigating the extent to which Macrophage possessed assets other
than the Navidea Sublicense. See n.11, supra.
12
As the prevailing party on this claim, Goldberg is entitled to recover reasonable attorneys’ fees and costs
associated with defending against this claim.
13
19
nor fowl, neither legal nor equitable.” Diematic Mfg. Corp. v. Packaging Indus., Inc., 516 F.2d
975, 978 (2d Cir. 1975) (internal quotation marks and citation omitted).
An “actual controversy” exists if there is a “substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.” Frontier Airlines, Inc. v. AMCK Aviation Holdings Ireland Ltd., No. 22cv-2943, 2023 WL 3868585, at *14 (S.D.N.Y. June 7, 2023) (citation omitted). The controversy
between the parties must “have taken on fixed and final shape so that a court can see what legal
issues it is deciding, what effect its decision will have on the adversaries, and some useful
purpose to be achieved in deciding them.” Jenkins v. United States, 386 F.3d 415, 418 (2d Cir.
2004) (citation omitted). “Even where an actual controversy has been established, a court must
still decide whether it will exercise its discretion to entertain a request for declaratory judgment.”
Amusement Indus., Inc. v. Stern, 693 F. Supp. 2d 301, 311 (S.D.N.Y. 2010). Courts retain
“broad discretion” to decline jurisdiction under the Declaratory Judgment Act and look to the
following factors in guiding their decision whether to do so:
(1) whether the [declaratory] judgment [sought] will serve a useful purpose in
clarifying or settling the legal issues involved; (2) whether [such] a judgment
would finalize the controversy and offer relief from uncertainty; (3) whether the
proposed remedy is being used merely for procedural fencing or a race to res
judicata; (4) whether the use of a declaratory judgment would increase friction
between sovereign legal systems or improperly encroach on the domain of a state
or foreign court; (5) whether there is a better or more effective remedy; and (6)
whether concerns for judicial efficiency and judicial economy favor declining to
exercise jurisdiction.
Admiral Ins. Co. v. Niagara Transformer Corp., 57 F.4th 85, 99–100 (2d Cir. 2023) (internal
quotation marks and citation omitted).
The Company seeks a declaratory judgment that it is entitled to terminate the August
20
Agreement and that any outstanding performance on its part is excused due to Goldberg’s
breach. Alternatively, even if the Court finds that the Company is not entitled to terminate the
August Agreement, the Company seeks a declaratory judgment articulating the rights and
obligations of the parties moving forward.
Goldberg primarily argues that the Company’s declaratory judgment claim cannot
survive because the Declaratory Judgment Act does not create substantive rights. Goldberg
Mem. of Law at 22 (citing Hoechst Celanese v. Nat’l Union Ins.Co. of Pittsburgh, Pa., 623 A.2d
1133, 1136 (Del. Sup. Ct. 1992)). Because a declaratory judgment claim is a dependent claim,
Goldberg contends that because the Court should deny the Company’s motion for summary
judgment on its underlying substantive claims, the corresponding declaratory judgment claim
should also be denied. Goldberg Mem. of Law at 22 (citing Renco Grp., Inc., 2015 WL 394011,
at *6 n.70 (“The motion to dismiss Plaintiff’s declaratory judgment claims is resolved, here and
throughout the balance of this opinion, with the Court’s conclusions on the underlying
substantive claims.”)). Alternatively, Goldberg argues that if the Court denies both parties’
summary judgment motions, the Court should reserve ruling on the Company’s declaratory
judgment claim. See Goldberg Opp. at 25 (citing Kulp v. Mann-Beebe, No. 06C-01-031, 2006
WL 1149146, *3 (Del. Super. Ct. Mar. 21, 2006) (finding declaratory judgment not appropriate
for resolution on summary judgment when factual developments could have an impact on the
outcome of the case)).
In this case, the declaratory judgment claim is not duplicative of the Company’s breach
of contract claim; the Company sought to recover damages allegedly caused by Goldberg’s
breaches of the August Agreement while the claim for declaratory relief is to prevent future harm
that it would experience if it were required to perform its outstanding contractual obligations.
21
The Company’s declaratory judgment claim is, however, not ripe for adjudication given the
Court’s finding that genuine issues of material fact exist regarding whether either party breached
the August Agreement, see Part II.A.1., supra, and Part II.B.1., infra. See Adchemy, Inc. v.
Plateau Data Servs., LLC, No. N15C-03-096, 2017 WL 3412159, at *6 (Del. Super. Ct. June 28,
2017) (denying declaratory relief where there exists a genuine issue of material fact).
Both parties’ motions for summary judgment on the Company’s declaratory judgment
claim are denied without prejudice. The parties will be afforded the opportunity to re-brief their
respective motions after trial.
B. Goldberg’s Motion for Summary Judgment On His Breach of Contract Claims is
Denied; the Company’s Cross-Motion is Denied in Part and Granted in Part
Goldberg has two counterclaims remaining, both for breach of the August Agreement: a
claim against Navidea for its failure to issue him 23.5 million shares of Navidea common stock
issued pursuant to Regulation D; and a claim against Macrophage for its failure to issue him
Macrophage Super Voting Common Stock. Answer at 35-37. For the following reasons,
Goldberg’s motion is DENIED, and the Company’s cross-motion for summary judgment is
DENIED in part and GRANTED in part.
1. Breach of Contract Claim Against Navidea
The August Agreement provides: “[o]n the date of the consummation of the
Transactions (such date the “Closing Date”), Navidea will issue to Goldberg 23.5 million shares
of Navidea common stock (the “Shares”), 18.5 million currently, and 5 million on January 2nd,
2019. The Shares will be issued under Regulation D of the Securities Act of 1933.” Zimmer
Decl. Ex. D. at 1, Dkt. 320. There is no dispute that in November 2018, Navidea issued
Goldberg 18.5 million shares of Navidea common stock; 13.5 million shares were delivered to
Goldberg and five million shares were placed into escrow. 56.1 Stmt. ¶¶ 64–66, Dkt. 327.
22
Approximately 17.7 million of the shares were issued under Regulation D; the balance were not.
Id. ¶¶ 68–69.
Navidea never issued the five million shares that, pursuant to the August
Agreement, were supposed to be issued to Goldberg on January 2, 2019. Id. ¶ 72.
Goldberg asserts that he is entitled to summary judgment on his breach of contract claim
because it is undisputed that Navidea did not issue him the contractually-agreed upon shares.
The Company argues that it is entitled to summary judgment on Goldberg’s breach of contract
claim because: (i) Navidea’s obligation to issue the Navidea shares was never triggered because
the “consummation of the Transaction” never occurred; and (ii) Goldberg breached the August
Agreement by entering into the Challenged Transactions. Company Mem. of Law at 7–11. His
breach, Navidea argues, excused it from its obligations under the August Agreement, including
its obligation to issue Navidea common shares to Goldberg. Id. at 11.
According to the Company, “consummation of the Transaction” is a condition
precedent 14 to Navidea’s obligation to issue Goldberg the Navidea shares. Id. at 8. Although
13F
Draft Transaction Documents were sent to Goldberg on September 7, 2018, Transaction
Documents were never executed so the Closing Date never occurred. 56.1 Stmt. ¶ 123, Dkt. 327.
Because the Closing Date never occurred, the Company argues, Navidea was not required to
issue the shares. Company Mem. of Law at 9 (citing Oyola v. 21st Century Centennial Ins. Co.,
No. N19C-02-200, 2020 WL 4344553, at *4 (Del. Super. July 28, 2020) (granting insurer
summary judgment where insured did not satisfy condition precedent)).
The Company also argues that Goldberg’s material breach of the August Agreement
excused Navidea from any obligation under the Agreement. Id. at 10. Specifically, Navidea
A condition precedent is “[a]n act or event, other than a lapse of time, that must exist or occur before a duty
to perform something promised arises.” Seaford Assocs. Ltd. P’ship v. Subway Real Estate Corp., No. Civ. A. 2248,
2003 WL 21254847, at *5 n.30 (Del. Ch. May 21, 2003) (citing Black’s Law Dictionary 289 (7th ed. 1999)).
14
23
argues that the August Agreement prohibited Goldberg from issuing Macrophage equity to
himself without Navidea’s consent until Macrophage had received at least $10 million in
additional financing following the Closing Date. Zimmer Decl. Ex. D. at 1, Dkt. 320. Goldberg
allegedly violated that provision when he engaged in the Challenged Transactions, which he did
without Navidea’s written consent and before Macrophage had obtained the required financing.
56.1 Stmt. ¶ 55, Dkt. 329.
The Court must evaluate both the “Navidea Shares” and “Transaction Documents”
clauses to determine whether, as a matter of law, there was a condition precedent to Navidea’s
obligation to issue shares to Goldberg. The “Navidea Shares” clause defines the “date of the
consummation of the Transaction” as the “Closing Date,” but it is unclear from the text whether
the parties intended for the occurrence of the Closing Date to be a condition precedent to
Navidea’s obligation to issue the shares. Although both parties have reasonable arguments about
what the contract means, the Court is left with an ambiguous contract.
As to the obligation to issue shares, on the one hand, as written, the obligation to issue the
shares seems tied to the “Closing Date,” and the “Closing Date” clearly refers to the date on
which the Transaction Documents are executed. The Transaction Documents, in turn, are not
particularly well defined, but it is clear from the plain language that they are something other
than the “August Agreement.” 15 On the other hand, the August Agreement expressly provides
14F
that “any subsequent failure to execute the Transaction Documents shall not render the
provisions of [the August] Agreement invalid.” Zimmer Decl. Ex. D. at 2, Dkt. 320. Moreover,
Navidea issued Goldberg 18.5 million shares in November, even though the Closing Date had
Specifically, Transaction Documents are defined as documents that “contain other terms, conditions, [and]
representations . . . customary for tranactions of the type set forth in [the August] Agreement.” Zimmer Decl. Ex. D.
at 2, Dkt. 320.
15
24
not occurred, suggesting that it did not understand the occurrence of the Closing Date to be a
condition precedent. Finally, the August Agreement set a date certain on which the second
tranche of shares would be issued to Goldberg, significantly undercutting Navidea’s argument
that occurrence of the Closing Date was a condition precedent for its obligation to issue any
shares.
There is similar ambiguity with respect to Goldberg’s obligation vel non to execute
Transaction Documents. The provision states that Maslon LLP, counsel to Navidea’s Special
Committee, “will prepare the initial drafts of the Transaction Documents” and that “[u]pon
execution, the terms of such Transaction Documents shall supersede the terms set” in the August
Agreement. Zimmer Decl. Ex. D. at 2, Dkt. 320. The Company concedes that the August
Agreement “may not be perfectly drafted” but insists that the only reasonable interpretation of
the provision is that Goldberg was required to execute the Transaction Documents. Company
Opp. at 8. But that is not the only reasonable interpretation of that provision. It is entirely
possible that the provision contemplated the very negotiations in which the parties engaged, and
that, upon reaching agreement on the additional terms, both parties would execute the
Transaction Documents. The parties never reached an agreement, so it is entirely possible that
the parties intended, in that eventuality, for the August Agreement to control their respective
rights and duties. 16
In short, as to both Navidea’s obligation to issue shares to Goldberg and Goldberg’s
obligation to execute Transaction Documents, the Agreement is ambiguous, and the intent of the
parties is a question of fact. Accordingly, Goldberg’s motion for summary judgment and the
As noted supra, the August Agreement itself provides that “any subsequent failure to execute the
Transaction Documents shall not render the provisions of [the August] Agreement invalid,” further suggesting that
the parties did not view the execution of the Transaction Documents as a contractual obligation.
16
25
Company’s cross-motion for summary judgment as to Goldberg’s claim that Navidea breached
the August Agreement when it failed to issue him 23.5 million shares of Navidea common stock,
are denied. That issue must be tried.
2. Breach of Contract Claim Against Macrophage
Goldberg also claims that Macrophage breached the August Agreement because it failed
to issue Macrophage Super Voting Common Stock to him as required. See Answer at 36–37.
The August Agreement provides: “MT will issue to Goldberg shares of MT Super Voting
Common Stock in a number equal to 5.0% of the outstanding shares of MT.” Zimmer Decl. Ex.
D. at 1, Dkt. 320. It is undisputed that Macrophage never issued any shares of Super Voting
Common Stock to Goldberg. 56.1 Stmt. ¶ 89, Dkt. 327.
Goldberg contends that he is entitled to summary judgment on this breach of contract
claim because Macrophage never issued the super voting common stock to him, and there were
no conditions precedent to its obligation to do so. Goldberg Opp. at 13. Macrophage argues,
among other things, that, as a matter of law, Goldberg cannot maintain a breach of contract claim
because he himself breached the contract. Company Mem. of Law at 14. Specifically,
Macrophage argues that Goldberg engaged in a material breach by entering into the Challenged
Transactions, and that breach relieves Macrophage of its obligation to issue Goldberg the super
voting common stock. See id. at 14. 17
16F
It is black letter contract law that “one who first breaches a contract cannot maintain an
action against the other contracting party for his subsequent breach or failure to perform.” IFM
Therapeutics, Inc. v. Lycera Corp., No. 17-608, 2018 WL 4223192, at *4 (D. Del. Aug. 31,
Macrophage contends that Goldberg cannot establish that he suffered any damages from the alleged breach,
as the Court previously excluded his expert testimony on damages. Company Opp. at 23–24. Goldberg argues that
the Court’s prior Daubert opinion does not preclude him from seeking specific performance as a remedy. Goldberg
Opp. at 16–18. Because Goldberg breached the contract, the Court need not wade into that issue.
17
26
2018) (citation omitted). Moreover, “[a] party is excused from performance under a contract if
the other party is in material breach thereof.” BioLife Solutions, Inc. v. Endocare, Inc., 838 A.2d
268, 278 (Del. Ch. 2003) (citation omitted). See also Mrs. Fields Brand, Inc. v. Interbake Foods
LLC, No. 12201, 2017 WL 2729860, at *28 (Del. Ch. June 26, 2017) (citation omitted). “A
‘material breach’ is a failure to do something that is so fundamental to a contract that the failure
to perform that obligation defeats the essential purpose of the contract or makes it impossible for
the other party to perform under the contract.” Medicalgorithmics S.A. v. AMI Monitoring, Inc.,
No. 10948, 2016 WL 4401038, at *24 (Del. Ch. Aug. 18, 2016) (citation omitted). “The
question whether the breach is of sufficient importance to justify nonperformance by the nonbreaching party is one of degree.” Id. (citation omitted).
Delaware courts look to Section 241 of the Restatement (Second) of Contracts to
determine whether a breach is material. The Restatement points to these considerations: “the
extent to which the injured party will be deprived of the benefit which [it] reasonably expected”;
“the extent to which the injured party can be adequately compensated for the part of that benefit
of which [it] will be deprived”; “the extent to which the party failing to perform or to offer to
perform will suffer forfeiture”; “the likelihood that the party failing to perform or to offer to
perform will cure [its] failure, taking account of all the circumstances including any reasonable
assurances”; and “the extent to which the behavior of the party failing to perform or to offer to
perform comports with the standards of good faith and fair dealing.” RESTATEMENT (SECOND)
OF CONTRACTS §
241 (1981); 2009 Caiola Family Trust v. PWA, LLC, No. 8028, 2015 WL
6007596, at *18 (Del. Ch. Oct. 14, 2015).
Although Navidea cannot prevail on its breach of the implied covenant of good faith and
fair dealing claim on account of its failure to prove damages, there is no question of fact that
27
Goldberg breached the implied covenant by engaging in the Challenged Transactions. See Part
II.A.2., supra. A claim for breach of the implied covenant is a claim for breach of contract with
the “only difference [being] the source of the provision.” Cygnus Opportunity Fund, LLC, 302
A.3d at 457. Accordingly, Goldberg cannot maintain an action against Macrophage for breach
of contract, when he was the party who breached first. 18 As a result, Goldberg’s motion for
17F
summary judgment against Macrophage is denied, and the Company’s cross-motion on that
claim is granted. 19
18F
CONCLUSION
Navidea’s motion for summary judgment on its breach of contract claim and its breach of
the implied covenant of good faith and fair dealing claim is DENIED, and Goldberg’s crossmotion on those claims is GRANTED. Goldberg’s motion for summary judgment on his breach
of contract claim against Navidea and Navidea’s cross-motion on that claim are DENIED.
Goldberg’s motion for summary judgment on his breach of contract claim against Macrophage is
DENIED, and Macrophage’s cross-motion on that claim is GRANTED. Both parties’ respective
motions on the Company’s declaratory judgment claim are DENIED without prejudice.
In light of the denial of summary judgment to both parties on Goldberg’s breach of
contract claim against Navidea, the next step is a trial on that claim. Trial will begin on July 8,
18
Goldberg argues that the Challenged Transactions cannot excuse Macrophage’s performance because,
unlike the Navidea Shares provision, the MT Super Voting Shares clause does not condition Macrophage’s
contractual performance on the occurrence of the “Closing Date.” Goldberg Opp. at 15. As such, Goldberg
contends that Macrophage’s performance was due when the August Agreement was executed and not at a
contemplated future date, and that the Challenged Transactions which occurred six months after the execution
cannot serve as a valid excuse for non-performance. The Court is not persuaded by Goldberg’s argument. See
Preferred Inv. Servs., Inc. v. T & H Bail Bonds, Inc., No. 5886, 2013 WL 3934992, at *11 (Del. Ch. July 24, 2013)
(“The party first guilty of a material breach of contract cannot complain if the other party subsequently refuses to
perform.”). The August Agreement does not establish a date by which Macrophage was obligated to issue the
shares, and Goldberg has provided the Court with no evidence that that the parties intended for Macrophage to do so
immediately.
Because the Company is the prevailing party on this aspect of Goldberg’s breach of contract claim, it is
entitled to reasonable attorney’s fees and costs incurred in defendant against this claim.
19
28
2024. Motions in limine are due May 17, 2024; oppositions are due May 31, 2024. The parties’
joint pretrial order, requests to charge, and proposed voir dire questions are due June 10, 2024.
The final pretrial conference will take place on July 2, 2024 at 2:30 P.M. in Courtroom 443 of
the Thurgood Marshall Courthouse, 40 Foley Square, New York, New York, 10007.
If, at any time, the parties want a settlement conference with Magistrate Judge Figueredo,
who is their newly-assigned Magistrate Judge, they may submit a joint letter requesting a
referral. The Court will not delay trial for a settlement conference, however, so if this is a
desirable option, the parties should act quickly.
The Clerk of Court is respectfully directed to close the open motions at docket entries
314 and 318.
SO ORDERED.
_________________________________
VALERIE CAPRONI
United States District Judge
Date: March 25, 2024
New York, NY
29
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