Pyott-Boone Electronics, Inc. v. IRR Trust for Donald L. Fetterolf dated December 9,1997 et al

Filing 27

MEMORANDUM OPINION. Signed by Judge James P. Jones on 1/15/13. (flc) (Main Document 27 replaced on 1/15/2013) (flc).

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ABINGDON DIVISION
PYOTT-BOONE ELECTRONICS INC.,
ETC.,
Plaintiff,
v.
IRR TRUST FOR DONALD L.
FETTEROLF DATED DECEMBER 9,
1997, ET AL.,
Defendants.

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Case No. 1:12CV00048
OPINION
By: James P. Jones
United States District Judge

Eric D. Brandfonbrener, Perkins Coie LLP, Chicago, Illinois, and Roman
Lifson, Christian & Barton, LLP, Richmond, Virginia, for Plaintiff; Thomas M.
Wolf and John “Jack” M. Robb, III, LeClairRyan, a Professional Corporation,
Richmond, Virginia, for Defendants.
In this diversity action involving the sale of a Virginia business, the
disappointed buyer has sued for damages for breach of the written contract
governing the transaction, as well as for related tort claims. Because I find that
Delaware law governs the case pursuant to a choice-of-law provision of the
contract and because that law does not support the claims made by the plaintiff, I
will grant the defendants’ Motion to Dismiss. My reasons are as follows.

I
The plaintiff, Pyott-Boone Electronics Inc. (“PBE”), asserts claims in this
case arising from a business transaction in which PBE’s predecessor, PBE
Acquisition, Inc. (“PBE Acquisition”), purchased from PBE’s stockholders all of
the outstanding capital stock of the company. After the closing, PBE Acquisition
merged into PBE, with PBE being the surviving entity.
The plaintiff’s claims include an alleged violation of the Virginia Securities
Act, a breach of certain representations contained in the Stock Purchase Agreement
dated April 1, 2011 (the “SPA”), as well as fraud claims. The defendants include
the IRR Trust for Donald L. Fetterolf Dated December 9, 1997, (the “Donald
Fetterolf Trust”) and the IRR Trust for M. Mitchell Fetterolf Dated December 9,
1997 (the “Mitchell Fetterolf Trust”), which entities were the majority shareholders
of PBE prior to the sale and were parties to the SPA. 1 Other defendants are
Donald L. Fetterolf (“Donald”) and M. Mitchell Fetterolf (“Mitchell”),
individually, who are the trustees of the named trusts and were officers and
directors of PBE prior to the sale; Brian Fetterolf (“Brian”), son of Donald and
alleged to be in charge of day-to-day operations of PBE prior to the sale; and

1

A small percentage of the stock was held by Nancye Howell, PBE’s longtime
Vice President, who is not a defendant in this action, although she was a party to the
SPA.

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Fetterolf Group, Inc. (“Fetterolf Group”), a party to the SPA referred to therein as
“Shareholders [sic] Representative.” The Complaint refers to the Donald Fetterolf
Trust and the Mitchell Fetterolf Trust as the “Shareholder Defendants,” and to
Donald, Mitchell, and Brian as the “Control Person Defendants.”
This court’s subject-matter jurisdiction exists pursuant to 28 U.S.C.A. §
1332(a)(1) (West 2006) and 28 U.S.C.A. §§ 1441(a) and 1446(b) (West Supp.
2012). 2
The defendants have jointly filed a Motion to Dismiss Complaint with
Prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6). The motion has
been briefed and orally argued and is ripe for decision.

II
Federal pleading standards require that a complaint contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a)(2). A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a
complaint to determine whether the plaintiff has properly stated a claim. Edwards
v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). In order to survive this

2

PBE initially filed this suit in the Circuit Court of Tazewell County, Virginia.
The defendants removed the action to this court based upon the parties’ diversity of
citizenship and the amount in controversy. The plaintiff is a Virginia corporation seeking
$17 million in damages from a Pennsylvania corporation and individual citizens of
Pennsylvania. The requirements for diversity jurisdiction are therefore satisfied.
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motion, the plaintiff must state “a plausible claim for relief” that permits “the court
to infer more than the mere possibility of misconduct” based upon its “judicial
experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). In
evaluating a pleading, the court accepts as true all well-pled facts and construes
those facts in the light most favorable to the plaintiff. Id. at 680.
The facts of the case as presented in the Complaint, which I must accept as
true for the purpose of deciding the Motion to Dismiss, are as follows.
PBE is located in Tazewell, Virginia, and manufactures mine safety and
communications equipment. In April of 2010, the defendants began to market the
potential sale of PBE. Among the interested buyers was an investor who would
eventually form PBE Acquisition, the vehicle used to facilitate the purchase of
PBE. On November 17, 2010, during the course of preliminary investigations and
negotiations between these parties regarding a potential sale, the defendants’
investment banker sent a document to PBE Acquisition in response to its request
for information.

This document, which the parties have referred to as the

“Distributor Analysis,” outlined anticipated future sales opportunities for four
major distributors of the Leaky Feeder System (“LFS”), a key PBE product line.
PBE Acquisition requested this information from the defendants because for
confidentiality reasons, it had agreed to refrain from directly contacting any of
PBE’s major customers or distributors.
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Following negotiations, the relevant parties entered into the SPA. The SPA,
which is an exhibit to the Complaint, contains twenty-four pages of express
representations and warranties. Appended to the SPA are more than seventy pages
of schedules and exhibits, representing the information upon which the parties
were to have relied in concluding their agreement.

Neither the Distributor

Analysis nor the information contained therein was referred to in the SPA or
included among the attached schedules and exhibits.
The plaintiff now claims that the Distributor Analysis contained knowing
and negligent misrepresentations about the future marketability of PBE’s LFS. It
alleges that the defendants represented that they expected sales to continue at high
levels as a result of new government safety requirements, despite knowing that the
majority of mines that had yet to install the required technology had already
contracted for installation by a competitor. The plaintiff claims it justifiably and
foreseeably relied upon the representations in the Distributor Analysis and has
suffered damages as a result of the defendants’ misrepresentations.
In its Complaint, the plaintiff asserts eight separate causes of action against
the defendants arising out of these facts. Counts One, Two and Three allege
violations of the Virginia Securities Act. Count Four alleges breaches of the
representations and warranties set forth in sections 3.02(w) and 3.02(r)(i) of the
SPA, for which Count Five seeks indemnification. Count Six alleges a breach of
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the implied covenant of good faith and fair dealing. Counts Seven and Eight allege
fraud, both actual and constructive.
The SPA contains a choice-of-law provision as follows: “This Agreement
shall be governed by the laws of the State of Delaware without regard to any
jurisdiction’s conflicts of laws provisions.” (SPA § 12.05(a).)
The defendants have moved to dismiss each of the counts for failure to state
a claim for which relief can be granted. See Fed. R. Civil P. 12(b)(6).

III
Because it goes to the heart of the plaintiff’s action, I will first address Count
Four, which alleges a breach of certain of the SPA representations and warranties.
“In general, the interpretation of a written contract is a question of law.”
Homeland Training Ctr., LLC v. Summit Point Auto. Research Ctr., 594 F.3d 285,
290 (4th Cir. 2010). As such, contract interpretation is an appropriate question to
be resolved in a motion to dismiss. Given the SPA’s choice-of-law provision, I
will interpret these provisions of the contract according to Delaware law.
The plaintiff first alleges that the Shareholder Defendants and defendant
Fetterolf Group have breached section 3.02(w) of the SPA. 3 According to the

3

Section 3.02(w) of the SPA provides:
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plaintiff, the Distributor Analysis was a statement “furnished to Buyer” in
connection with the acquisition. The plaintiff claims that the Distributor Analysis
contained untrue statements of material fact and omitted material facts that were
necessary to make the document not misleading. The defendants respond that this
interpretation of section 3.02(w) is overbroad and inconsistent with other
provisions of the SPA.
When interpreting a contract, Delaware courts “strive[ ] to determine the
intent of the parties, looking first at the relevant document, read as a whole, in
order to divine that intent.” Matulich v. Aegis Commc’ns Grp., Inc., No. Civ.A.
2601-CC, 2007 WL 1662667, at *4 (Del. Ch. May 31, 2007) (citing Kaiser
Aluminum Corp. v. Matheson, 681 A.2d 392, 395 (Del. 1996)), aff’d, 942 A.2d 596
(Del. 2008). “In interpreting contract language, clear and unambiguous terms are
interpreted according to their ordinary and usual meaning.

Absent some

ambiguity, Delaware courts will not distort or twist contract language under the
guise of construing it.” Allied Capital Corp. v. GC-Sun Holdings, L.P., 910 A.2d
1020, 1030 (Del. Ch. 2006) (internal citations omitted).

“Moreover, when

No representation or warranty by the Company or Stockholders
contained in this Agreement, the Schedules attached hereto or in any
statement or certification furnished or to be furnished to Buyer pursuant
hereto or in connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein not misleading.
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interpreting a contractual provision, a court should attempt to reconcile all of the
agreement’s provisions when read as a whole, giving effect to each and every
term.” Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH, No. 5589VCP, 2011 WL 1348438, at *8 (Del. Ch. April 8, 2011). “In doing so, courts
apply the well settled principle that contracts must be interpreted in a manner that
does not render any provision illusory or meaningless.”

Schuss v. Penfield

Partners, L.P., No. 3132-VCP, 2008 WL 2433842, at *6 (Del. Ch. June 13, 2008)
(internal quotation marks and citation omitted).
In light of these governing principles of contract interpretation, I find that
this claim is founded on an impossibly broad interpretation of section 3.02(w). In
order to reach the conclusion that the plaintiff advocates, the warranties contained
in section 3.02(w) would effectively encompass every statement any of the
defendants ever made to the plaintiff regarding the sale throughout months of
negotiations.

This interpretation is specifically inconsistent with two other

provisions of the SPA.
First, the SPA contains a merger and integration clause in section 12.07.4
Although the Distributor Analysis made representations about the future health of a

4

Section 12.07 of the SPA provides:

This Agreement, including the Schedules and Exhibits hereto,
together with the Confidentiality Agreement constitutes the entire
agreement of the parties hereto respecting its subject matter and supersedes
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key PBE product line, the plaintiff did not negotiate the inclusion of such
representations to be included among the SPA’s many pages of express
representations and attached exhibits. The plain language of section 12.07 states
that the parties made no representations beyond those specifically included in the
agreement. If the plaintiff wished to rely upon the Distributor Analysis, it should
have negotiated for its explicit inclusion in the SPA.
Additionally, the Distributor Analysis cannot be characterized as a
“document required to be executed and delivered” under the SPA. The defendants,
through their investment banker, provided the Distributor Analysis in response to
the plaintiff’s request for information four months before the parties entered into
any agreement. The provisions of the Distributor Analysis could not have been
“required” by an agreement that would not exist until months later. Moreover, the
agreement between the parties did not create an obligation to provide this
information.

all negotiations, preliminary agreements and prior or contemporaneous
discussions and understandings of the parties hereto in connection with the
subject matter hereof. There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto with respect to
the transactions contemplated by this Agreement, the Confidentiality
Agreement, or the Transaction Documents, other than those set forth herein
or therein or in any other document required to be executed and delivered
hereunder or thereunder.
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The plaintiff’s interpretation of section 3.02(w) is also inconsistent with the
plain terms of section 10.02(i) of the SPA, an anti-reliance clause. 5 In this clause,
the plaintiff explicitly disclaimed reliance on information provided to it in
fulfillment of due diligence requests or in preparation for the transaction. It is
impossible to formulate an interpretation of that disclaimer that would uphold the
plaintiff’s assertion that section 3.02(w) warrants the type of information presented
in the Distributor Analysis. Although section 10.02(i) does exclude information
“referenced in” section 3.02, the information contained in the Distributor Analysis
cannot possibly be included within that information for the reasons described
above.
The defendants advance an interpretation of section 3.02(w) that is both true
to its plain language and consistent with these other provisions. This section
warrants statements that were made “pursuant to” or “in connection with” the
agreement, which must reference documents and statements required to be
5

Section 10.02(i) of the SPA provides:

Buyer . . . has not relied upon and shall have no claim or right to
indemnification . . . and none of the Stockholders shall have or be subject to
any liability to Buyer or any other Person with respect to any information,
documents or materials furnished by the Stockholders, [PBE] or any of
their respective officers, directors, employees, agents or advisors to Buyer
. . . relating to [PBE] and any information, documents or material made
available to Buyer in fulfillment of due diligence requests, the management
presentations or in any other form in expectation of the transactions
contemplated hereby, provided, however, that the foregoing shall not apply
to any such information included or referenced in Sections 3.01 or
3.02 . . . .
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furnished to the plaintiff prior to the closing date in order to complete the
transaction. A statement provided to a prospective buyer over four months before
a deal is ultimately struck cannot truly be understood as being “pursuant to” or in
connection with some future and hypothetical agreement.
The SPA in this case is a contract negotiated between two counseled and
sophisticated parties.

The plaintiff’s interpretation of section 3.02(w) — the

interpretation that would be required to sustain its claim for breach — is
unreasonable and inconsistent with the other provisions for which the parties
negotiated.6 The interpretation that would best reflect the intentions of the parties
at the time of contracting, in light of the entire agreement and the plain language of
these provisions is that statements like the Distributor Analysis were not intended
to be within the scope of section 3.02(w). The plaintiff’s claim for breach of this
provision, therefore, must be dismissed for failure to state a claim.
Count Four of the Complaint alleges with respect to the Distributor Analysis
that the Shareholder Defendants and the Fetterolf Group also breached the terms of

6

The plaintiff argues that its interpretation of section 3.02(w) is reasonable
because it was prevented from conducting more complete due diligence due to a
restrictive Confidentiality Agreement between the parties. Rather than making
reasonable an otherwise strained interpretation of the SPA, however, such restrictions
would have made more reasonable the inclusion of the Distributor Analysis among the
exhibits attached to the SPA.
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section 3.02(r)(i). 7 In order to state a claim under this section of the SPA, the
plaintiff must have pleaded facts that would tend to show that at the time of the
sale (1) a material change had occurred in PBE’s business relationship with at least
one of its “Material Customers,” 8 and (2) PBE had notice of this material change
or “Material Adverse Effect.”9
The defendants argue that the plaintiff has not and cannot plead sufficient
facts that would tend to show a breach of this section and the claim should be
dismissed with prejudice. I agree that the plaintiff has inadequately asserted a

7

Section 3.02(r)(i) of the SPA provides:

Except as set forth in Schedule 3.02(r)(i) and changes in product and
purchasing requests and levels in the ordinary course of business that are
consistent with the Company’s projections for 2011, there has not been any
material change in the Company’s business relationship with any of the
Material Customers and the Company has not received notice from any
Material Customer that said customer intends to terminate its business
relationship with the Company, materially reduce, increase, delay, or
accelerate any purchases from the Company, materially and adversely
change the terms upon which it purchases goods or services from the
Company (other than changes in terms and conditions in the ordinary
course of business), modify the volume of purchases from the Company in
2011 by more than $100,000 as compared to 2010 levels, or otherwise
reflecting a Material Adverse Effect on the business relationship between
any such Material Customer and the Company.
8

Section 3.02(r)(i) of the SPA defines “Material Customers” to be “the ten (10)
largest customers of the Company . . . based on the gross revenues of the Company for
the fiscal year ended on December 31, 2010.”
9

The SPA defines a “Material Adverse Effect” to be “any effect that, individually
or in the aggregate, is both material and adverse to the financial condition, results of
operation, assets or business of the Company, taken as a whole.” (SPA § 1.01.)
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violation of this provision of the SPA. Such facts that have been alleged are not
presented in “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). I can only infer “the mere possibility of
misconduct,” Iqbal, 556 U.S. at 679, which is insufficient for pleading purposes.
Nevertheless, the facts alleged do not foreclose such a claim and accordingly upon
proper motion the plaintiff will be granted leave to amend with regard to its claim
under section 3.02(r)(i). 10

IV
In Count Six, the plaintiff claims breach of the implied covenant of good
faith and fair dealing in connection with the Distributor Analysis. The plaintiff
alleges the SPA incorporated this implied covenant and that the Shareholder
Defendants breached it by knowingly making untrue statements of material fact
and by omitting to state material facts necessary to make other statements not
misleading.

The plaintiff claims it relied upon these misrepresentations and

suffered damages as a result.
10

In Count Five of the Complaint, the plaintiff seeks a declaratory judgment that
it is entitled to indemnification from the Shareholder Defendants for the breaches of the
SPA it alleged in Count Four. In section 10.02(a)(i)-(iii) of the SPA, the Shareholder
Defendants agreed to indemnify the plaintiff against any breaches of the agreement’s
representations and warranties, even if those claims were to exceed the amount of the
purchase price placed into escrow. Because the plaintiff has failed to state a claim
alleging a breach of these representations and warranties, it has also failed to state a claim
for a declaratory judgment awarding it indemnification. Count Five, therefore, must also
be dismissed.
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A covenant of good faith and fair dealing is impliedly incorporated into
every contract under Delaware Law. Katz v. Oak Indus. Inc., 508 A.2d 873, 880
(Del. Ch. 1986). Courts have characterized this implied covenant as “contractual
in nature,” noting that it “was created to promote the spirit of the agreement and to
protect against one side using underhanded tactics to deny the other side the fruits
of the parties’ bargain.” Gloucester Holding Corp. v. U.S. Tape & Sticky Prods.,
LLC, 832 A.2d 116, 128 (Del. Ch. 2003) (internal quotation marks and citation
omitted). Contrary to the defendants’ assertion, it does not appear that Delaware
courts allow parties to generally disclaim this implied covenant through broad
merger and integration clauses. “Express contractual provisions always supersede
the implied covenant, but even the most carefully drafted agreements will harbor
residual nooks and crannies for the implied covenant to fill.” ASB Allegiance Real
Estate Fund v. Scion Breckenridge Managing Member, LLC, 50 A.3d 434, 441
(Del. Ch. 2012). Courts will, however, apply this legal theory “only in narrow
circumstances.” Chamison v. HealthTrust, Inc-The Hosp. Co., 735 A.2d 912, 921
(Del. Ch. 1999), aff’d, No. 392, 1999, 2000 WL 275649 (Del. Mar. 6, 2000). “The
implied covenant cannot contravene the parties’ express agreement and cannot be
used to forge a new agreement beyond the scope of the written contract.” 735
A.2d at 921 (citing Cincinnati SMSA Ltd. P’ship v. Cincinnati Bell Cellular Sys.
Co., 708 A.2d 989, 990 (Del. 1998)). The covenant requires that the parties “deal
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‘fairly’ in the sense of consistently with the terms of the . . . agreement and its
purpose.” ASB Allegiance, 50 A.3d at 440. “Good faith” envisions “faithfulness to
the scope, purpose, and terms of the parties’ contract.” Id. The implied covenant
asks “what the parties would have agreed to themselves had they considered the
issue in their original bargaining positions at the time of contracting.” Id.
In this case, the parties did consider the potential for a situation like the one
alleged, and they addressed that potential directly in their agreement.

These

sophisticated parties negotiated for the inclusion of pages of representations and
exhibits in the SPA.

The parties agreed that they would rely on those

representations, and if any of one party’s representations proved to be false or
misleading, the other party would have a remedy. The parties further agreed that
they would not and should not rely on any information that was not included in
these representations. Given these carefully negotiated provisions, and the fact that
the implied covenant “cannot be used to forge a new agreement beyond the scope
of the written contract,” the court should refrain from reading in an additional
representation in this case. Chamison, 735 A.2d at 921. Moreover, the plaintiff
has not stated a claim for breach of the express contractual terms, nor has it
identified what term it would have the court read into the contract to remedy any
insufficiencies. See Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 901 A.2d 106, 116
(Del. 2006). Absent this showing of a need for an implied term to give effect to
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the original contractual intent of the parties, the plaintiff has not stated a claim for
relief under the implied covenant. For that reason, Count Six fails to state a claim
upon which relief can be granted.

V
To address the remaining counts of the Complaint, the court must first
resolve a dispute between the parties and determine which state’s law should
apply.
A federal district court sitting in diversity will apply the substantive law of
the forum state. Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938). The substantive
law of the forum state for purposes of Erie includes its choice-of-law rules.
Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941). Therefore, I
will apply Virginia’s choice-of-law rules.
The parties disagree about what law governs the plaintiff’s remaining
claims. The choice-of-law provision, section 12.05(a) of the SPA, states, “This
Agreement shall be governed by the laws of the State of Delaware without regard
to any jurisdiction’s conflicts of laws provisions.”

Virginia courts generally

enforce choice-of-law clauses, “unless the party challenging enforcement
establishes that such provisions are unfair or unreasonable, or are affected by fraud
or unequal bargaining power.” Paul Bus. Sys., Inc. v. Canon U.S.A., Inc., 397 S.E.
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2d 804, 807 (Va. 1990). Neither party has claimed that this provision is somehow
unfair or affected by fraud.
The plaintiff asserts, however, that its tort claims for fraud and its claims
under the Virginia Securities Act fall outside the scope of the SPA’s choice-of-law
provision and are not subject to Delaware law. The defendants respond that these
claims are governed, pursuant to the contractual choice-of-law provision, by
Delaware law.
As a threshold issue, the parties disagree as to which state’s law — that of
the forum state or the state identified in the provision — should be used to
determine the scope of the contractual choice-of-law provision. This question is
itself a matter of the choice-of-law rules of the forum state. Therefore, this court
should determine the scope of a choice-of-law provision in the same manner as the
courts of Virginia. It does not appear, however, that any Virginia courts have had
occasion to undertake this analysis. It is my responsibility, therefore, to approach
this issue in the manner I conclude the Virginia Supreme Court would employ if it
were to address the question. See Wells v. Liddy, 186 F.3d 505, 528 (4th Cir.
1999) (“To forecast a decision of the state’s highest court we can consider, inter
alia: canons of construction, restatements of the law, treatises, recent
pronouncements of general rules or policies by the state’s highest court, well
considered dicta, and the state’s trial court decisions.”) .
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Jurisdictions across the United States are split regarding what law to apply in
defining the scope of a choice-of-law provision. The Second Circuit noted this
division of authority in Finance One Public Co. v. Lehman Brothers Special
Financing, Inc., 414 F.3d 325, 332-33 (2d Cir. 2005):
On the one hand, once a court finds that a contractual choice-of-law
clause is valid, the law selected in the clause dictates how the
contract’s provisions should be interpreted, and so arguably that law
should also dictate how the choice-of-law clause — which is itself one
of the contract’s provisions — should be interpreted. . . . More
commonly, however, courts consider the scope of a contractual choice
of law clause to be a threshold question like the clause’s validity.
Courts therefore determine a choice-of-law clause’s scope under the
same law that governs the clause’s validity — the law of the forum.
The defendants have cited several cases in which courts have concluded that
the scope of a choice-of-law provision is a matter of contract interpretation subject
to the law chosen in that provision. The Fourth Circuit reached this conclusion in
Bunker Holdings, LTD v. Green Pacific A/S, 346 F. App’x 969, 973 (4th Cir. 2009)
(unpublished). The Ninth Circuit found the same in Odin Shipping LTD. v. Drive
Ocean V MV, No. 98-56794, 2000 WL 576436, at *1 (9th Cir. May 11, 2000)
(unpublished). Both of these cases, however, were decided under the conflict-oflaws rules of federal maritime law and therefore do not directly inform the analysis
that would be appropriate under Virginia law. Additionally, the Supreme Court of
California and the Delaware Chancery Court have reached similar conclusions.
Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148, 1154 n.7 (Cal. 1992); Weil
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v. Morgan Stanley DW Inc., 877 A.2d 1024, 1032 (Del. Ch.), aff’d, 894 A.2d 407
(Del. 2005). The Weil court even characterized this approach as a “matter of
hornbook law.” 877 A.2d at 1032.
On the other hand, it appears that a majority, albeit not an overwhelming
one, of courts that have addressed this issue have concluded that the scope of a
choice-of-law provision is a threshold issue of enforceability to be decided under
forum law. The Eighth Circuit provided perhaps the best justification for this
result in Schwan’s Sales Enterprises, Inc. v. SIG Pack, Inc., 476 F.3d 594 (8th Cir.
2007).

The court concluded that interpreting the scope of a choice-of-law

provision under the chosen law rather than forum law “would basically give effect
to that provision before the court’s analytical determination of what effect it should
have.” Id. at 597. The court noted that in the absence of a contrary indication of
intention, the law selected in a choice-of-law provision is the “local law” of the
state, exclusive of its choice-of-law rules. Id. (citing Restatement (Second) of
Conflict of Laws § 186 cmt. b (1969)). The court concluded that “[v]alues of
certainty of result and ease of application dictate that the forum should apply the
local law of the selected state and not concern itself with the complications that
might arise if the forum were to apply that state’s choice-of-law rules.” Id.
The Eleventh Circuit similarly applied forum law in its decision in Rayle
Tech, Inc. v. DEKALB Swine Breeders, Inc., 133 F.3d 1405, 1409 (11th Cir. 1998).
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The court concluded that “[t]he Illinois choice of law provision does not, however,
incorporate all Illinois law into the contract. No Georgia case has ever held that
such a stipulation will bring in the entire body of law of a chosen state.” Id.;
accord Krock v. Lipsay, 97 F.3d 640, 645 (2d Cir. 1996) (concluding that New
York courts apply New York law to determine the scope of a choice-of-law
provision); Cunningham Charter Corp. v. Learjet, Inc., 870 F. Supp. 2d 571, 575
(S.D. Ill. 2012) (applying the conflict-of-laws rules of the forum to determine the
scope of a choice-of-law provision); Cypress Pharm., Inc. v. CRS Mgmt., Inc., 827
F. Supp. 2d 710, 724 (S.D. Miss. 2011) (concluding that Mississippi courts “would
likely follow the ‘more common’ view that determining the scope of the choice-oflaw provision is a threshold issue to which its law would apply.”).
I believe the Virginia court would side with the majority of courts that have
concluded that scope is a threshold issue to be determined under forum law.
Although applying chosen law may lead to greater certainty in future
interpretations of a choice-of-law provision, such an approach is inconsistent with
the manner in which modern courts evaluate the enforceability of these provisions.
Enforceability is a threshold issue determined according to forum law. Most states
give effect to these provisions absent a showing that the chosen law has no
substantial relationship with the agreement or would contravene the public policy
of the forum state. Restatement (Second) of Conflict of Laws § 187. Courts in
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Virginia enforce these agreements unless the provision is “unfair or unreasonable”
or the result of “unequal bargaining power.” Paul Bus. Sys., 397 S.E.2d at 807.
Whether a provision violated the public policy of a state, or whether it is “unfair or
unreasonable,” will often depend on the scope of that provision’s application and
whether it would preclude otherwise meritorious claims. The scope of the choiceof-law provision is, therefore, a necessary part of the threshold inquiry into
enforceability. The Virginia Supreme Court, therefore, would be likely to apply
the law of Virginia in determining the scope of a choice-of-law provision.11
Having decided that Virginia law should apply, I must now estimate how a
Virginia court would interpret the scope of a choice-of-law provision. I first look
to the foundational principles of Virginia contract law regarding choice-of-law
provisions.

The Virginia Supreme Court has found contractual choice-of-law

provisions enforceable because such provisions effectuate the intent of the
contracting parties. See Tate v. Hain, 25 S.E.2d 321, 324 (Va. 1943). “[T]his
intent whether express or implied, will always be given effect except under
exceptional circumstances evincing a purpose in making the contract to commit a

11

Several other Virginia district courts have applied Virginia conflict-of-laws
rules in a similar fashion. See, e.g., LTD Mgmt. Co. v. Holiday Hospitality Franchising,
Inc., No. 2:07cv530, 2008 WL 7281926, at *10 (E.D. Va. Mar. 11, 2008) (applying
forum law to interpret the scope of a choice-of-law provision selecting Georgia law);
Boston Mut. Life Ins. Co. v. Ludwig, No. 1:06CV1072(JCC), 2007 WL 1448708, at *4
(E.D. Va. May 10, 2007) (applying forum law to interpret the scope of a choice-of-law
provision selecting Pennsylvania law).
-21-

fraud on the law.” Id. at 324 (internal quotation marks and citations omitted). A
court interpreting one of these provisions, therefore, should always be guided
primarily by its effort to effectuate the intent of the parties as reflected in the
language of their agreement.
Sophisticated parties, like the ones in this case, use express contractual
choice-of-law provisions “as a business planning device which, if properly
executed, should enhance the security of the party expectations and reduce
uncertainties in litigation.”

Robert L. Felix & Ralph U. Whitten, American

Conflicts Law § 126 (6th ed. 2011). Perhaps the clearest description of this
contractual intent is found in a decision from the Supreme Court of California:
When two sophisticated, commercial entities agree to a choiceof-law clause like the one in this case, the most reasonable
interpretation of their actions is that they intended for the clause to
apply to all causes of action arising from or related to their contract.
....

. . . When a rational businessperson enters into an agreement
establishing a transaction or relationship and provides that disputes
arising from the agreement shall be governed by the law of an
identified jurisdiction, the logical conclusion is that he or she intended
that law to apply to all disputes arising out of the transaction or
relationship. We seriously doubt that any rational businessperson,
attempting to provide by contract for an efficient and businesslike
resolution of possible future disputes, would intend that the laws of
multiple jurisdictions would apply to a single controversy having its
origin in a single, contract-based relationship. Nor do we believe such
a person would reasonably desire a protracted litigation battle
concerning only the threshold question of what law was to be applied
-22-

to which asserted claims or issues. Indeed, the manifest purpose of a
choice-of-law clause is precisely to avoid such a battle.
Nedlloyd Lines B.V., 834 P.2d at 1153-54. The courts of Delaware have similarly
described contractual intent:
Parties operating in interstate and international commerce seek,
by a choice of law provision, certainty as to the rules that govern their
relationship. To hold that their choice is only effective as to the
determination of contract claims, but not as to tort claims seeking to
rescind the contract on grounds of misrepresentation, would create
uncertainty of precisely the kind that the parties’ choice of law
provision sought to avoid . . . . To layer the tort law of one state on the
contract law of another state compounds that complexity and makes
the outcome of disputes less predictable, the type of eventuality that a
sound commercial law should not seek to promote.
ABRY Partners V, L.P. v. F&W Acquisition LLC, 891 A.2d 1032, 1048 (Del. Ch.
2006).
One writer on the subject has noted that whether choice-of-law provisions
encompass torts and other non-contract claims is unsettled. See Peter Hay, et al.,
Conflict of Laws § 18.10 (5th ed. 2010). Hay notes that a majority of courts have
held that choice-of-law provisions do not encompass related torts, but that many
courts have reached the opposite conclusion. Id. Hay has further remarked that, in
declining to apply the chosen law to torts, most courts closely follow and apply the
language of the clause.

These courts have looked to nuances in contractual

language, concluding that a narrowly-drawn clause, providing only that the
“agreement” be governed by the law of a certain state, represents a conscious and
-23-

negotiated decision by the parties to exclude other causes of action arising in tort
or by statute, from its scope of coverage. See, e.g., Krock, 97 F. 3d at 645 (stating
that there was “no way” to read a choice of law provision indicating that a contract
would be governed by a certain body of law broadly enough to apply to fraudulent
misrepresentation and other torts).

This “formalistic position,” however, has

significant problems. Hay, Conflict of Laws §18.10.
[T]oo many choice-of-law clauses are poorly or haphazardly drafted
(and often wholesale copied from other contracts or cases). As such,
these clauses provide a very weak basis from which to safely infer that
the parties did or did not contemplate non-contractual issues. Under
these circumstances, slavish reliance on the wording of the clauses
amounts to an unwise subservience to form over substance and
produces random results.
Id. Hay, therefore, counsels that courts that have been willing to parse choice-oflaw provisions based on nuances of language may actually subvert contractual
intent and exacerbate the uncertainty associated with contracting and litigation.
I believe that the Virginia Supreme Court would seek to apply sound
commercial law that promotes outcomes consistent with the intent of the parties.
For that reason, the scope of a choice-of-law provision should, absent a showing of
intent otherwise, be read to encompass all disputes that arise from or are related to
an agreement. If parties wish to exclude causes of action arising in tort or by
statute from the coverage of their agreement, they may do so, but they should

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reflect that intent in their contract. I believe this disposition will most closely
reflect the actual intent of the parties at the time they reached their agreement.
Many other courts have reached similar conclusions. In Northwest Airlines,
Inc. v. Astraea Aviation Services, Inc., the Eighth Circuit held that claims for
misrepresentation and deceptive trade practices fell within the scope of the parties’
specification that their agreement be “governed by and interpreted in accordance
with” Minnesota law. 111 F.3d 1386, 1392 (8th Cir. 1997). The court noted that,
although styled as torts, “[t]hese claims are closely related to the interpretation of
the contracts and fall within the ambit of the express agreement . . . .”

Id.

Similarly, the Southern District of Illinois has concluded that “[c]laims involving
fraud in the formation of the contract are subject to that contract’s choice of law
provisions.” Custom Foam Works, Inc. v. Hydotech Sys., Ltd., No. 09-cv-0710MJR, 2011 WL 1102812 at *2 (S.D. Ill. Mar. 23, 2011) (internal quotation marks
and citations omitted). The court focused on determining whether the claims at
issue were dependent on the contract.

The court concluded that claims for

misrepresentation, fraud in the inducement, reliance and resulting damages each
involved “the formation, interpretation and/or construction of the contract.” Id. at
*3.
These decisions represent a sound approach to determining the scope of a
choice-of-law provision. These courts looked to whether the tortious conduct
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arose as a result of the parties’ performance or failure to perform under the
contract, or whether the tort arose as a result of an obligation imposed by the law
independently of the contract. If the legal obligations were independent of the
contract, so would be the determination of what law should govern the action.
Accord, Rayle Tech, 133 F.3d at 1410 (“For an action stemming from a breach of a
duty growing out of a contractual relation to be classified as tortious, the breach
must be shown to have been a breach of duty imposed by law and not merely the
breach of a duty imposed by the contract itself.”).
In support of its argument that Virginia law should apply to its non-contract
claims, the plaintiff relies upon language in Hitachi Credit America Corp. v. Signet
Bank, 166 F.3d 614 (4th Cir. 1999). There, applying Virginia choice-of-law rules,
the court concluded that a choice-of-law provision calling for the application of
Virginia law to “[t]his Agreement and the rights and obligations of the parties
hereunder . . . including all matters of construction, validity and performance” was
sufficiently broad to encompass contract-related torts.

Id. at 624 (internal

quotation marks and citation omitted). The court stated that the language of the
provision indicated an intention to cover more than mere contract claims and,
“recognizing the close relationship of the tort claims to the contract,” it would
apply the chosen law. Id. at 628.

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The plaintiff points to the court’s statement in Hitachi that “[w]here a choice
of law clause in the contract is sufficiently broad to encompass contract-related tort
claims such as fraudulent inducement, other courts have honored the intent of the
parties to choose the applicable law.” Id. The plaintiff thus implies that this
sentence indicates that the provision at issue in this case is one of those provisions
that is not “sufficiently broad.” As I have explained, however, I believe that the
choice-of-law provision in this case, when viewed in the context of the entire
agreement between these parties, evinces the intent to reduce uncertainty. Given
this intention, as well as “the close relationship of the tort claims to the contract,”
id., applying the chosen law is appropriate. 12

12

The Eastern District of Virginia has twice considered the import of the Fourth
Circuit’s holding in Hitachi. In Freedman v. America Online, Inc., the court concluded
that a choice-of-law provision indicating that not only the agreement but also “your
membership” would be governed by the chosen law was sufficiently broad to encompass
contract-related torts. 325 F. Supp. 2d 638, 653 (E.D. Va. 2004). In LTD Management
Co., LLC v. Holiday Hospitality Franchising, Inc., the court concluded that a contract
that stated, “[The Agreement] shall be governed and construed under, and in accordance
with the laws . . . of the State of Georgia” was not broad enough to encompass contractrelated torts, including fraud. 2008 WL 7281926, at *10. The plaintiff emphasizes the
Freedman court’s statement that “a choice-of-law provision that, by its terms, applies
only to the parties’ contract or agreement must not be construed to govern the entirety of
the parties’ relationship and any claim that may arise from that relationship.” Freedman,
325 F. Supp. 2d at 653. As outlined above, I believe the better reading of Hitachi and
Virginia contract law would incorporate contract-related torts under the scope of a
choice-of-law provision. The LTD Management Co. court also made a passing reference
to the conflict-of-laws principle of lex loci delicti, which generally governs torts in
Virginia. 2008 WL 7281926, at *10 n.1. Focusing on this principle, however, would fail
to give full effect to the contractual intent of the parties to these agreements and would
thereby be inconsistent with Virginia contract law.
-27-

For all of these reasons, all of the plaintiff’s non-contract claims must be
governed by Delaware law pursuant to the SPA’s choice-of-law provision.

VI
Having concluded that Delaware law should apply to all the plaintiff’s
remaining claims, I now turn to the defendants’ motion to dismiss Counts One,
Two and Three, which assert claims under the Virginia Securities Act.

The

defendants argue that the Virginia Securities Act should not apply to an agreement
that identifies Delaware law as the governing law. I agree.
The facts presented in this case are analogous to those considered by the
District of Delaware in Organ v. Byron, 435 F. Supp. 2d 388 (D. Del. 2006). The
plaintiff in Organ asserted claims arising from the defendants’ alleged failure to
disclose “critical, adverse facts” related to a merger transaction. Id. at 389. The
plaintiff contended that he could state claims under the Illinois Security Law,
despite the agreement’s choice-of-law provision specifying that the merger “and all
other aspects of this Agreement” would be governed by Delaware law. Id. at 391.
The plaintiff argued that its securities claims did not implicate the “merger
transaction itself” or “the enforcement and interpretation” of the merger agreement
and therefore were not subject to the choice of law provision. Id. at 392.

-28-

The court declined to give “force to such ambiguous semantic arguments in
the application of a choice of law clause” out of concern that it “would contradict
Delaware’s policy ‘to respect the chosen law of the contracting parties, so long as
that law has a material relationship to the transaction.’”

Id. (quoting ABRY

Partners, 891 A.2d at 1046.). The court further noted that, because the Illinois
Securities Law was “virtually identical” to the securities statute in Delaware,
application of the choice-of-law provision to the securities claims would not
violate Illinois public policy. 13 Organ, 435 F. Supp. 2d at 393. Accordingly, the
court dismissed the plaintiff’s claims under the Illinois Securities Law.
I believe the same analysis should be applied here. As I have described
above, I do not believe a Virginia court would parse a choice-of-law provision like
the one presented in this case to apply one state’s law to contractual claims but
another state’s law to non-contractual or statutory claims. Moreover, the plaintiff
has not made any showing that applying the choice-of-law provision to these
claims would be unfair or unreasonable. In substance and effect, the provisions of
the Virginia Securities Act under which the plaintiff seeks to state claims appear

13

The case at issue in Organ had originally been filed in the Northern District of
Illinois until venue was transferred to the District of Delaware. The conflict-of-laws rules
of the Northern District of Illinois, therefore, applied to the action before the court.
Courts in Illinois will apply a contractual choice-of-law provision, absent a showing that
the provision violates Illinois public policy.
-29-

virtually identical to the relevant provisions of the Delaware Securities Act. 14
Although the Commonwealth of Virginia certainly has an interest in this
transaction, given that the sale happened in Virginia and the resulting entity is a
Virginia corporation, application of the Delaware law would not appear to deprive
any Virginia citizens of the protections afforded them by domestic law.
The plaintiff makes the additional argument that it should be permitted to
state these claims despite the enforcement of the Delaware choice-of-law provision
because state Blue Sky laws are not subject to choice-of-law analyses. Citing a
decision from another judge of this court, the plaintiff argues that the only relevant
inquiry in the Blue Sky context is whether a particular state has a sufficient factual
nexus to the securities transaction. Lintz v. Carey Manor Ltd., 613 F. Supp. 543,
550 (W.D. Va. 1985). In Lintz, the court concluded that the securities laws of three
states could be applied to a given transaction, so long as such an application did
not afford multiple recoveries to the plaintiff. Id. at 550-51.
This case must, however, be distinguished from Lintz. It does not appear
that case involved a choice-of-law provision or that the court considered the effect
of a choice-of-law provision on its analysis. It is true that Lintz and other cases
that have followed it have viewed “[t]he situation created when two state securities
law apply to a transaction . . . more as an election of remedies, rather than a
14

Compare Va. Code Ann. §§ 13.1-502 and 13.1-522 (2011) with Del. Code Ann.
tit. 6 §§ 73-201 and 73-605 (West 2012).
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potential conflict of laws problem.” Simms Inv. Co. v. E.F. Hutton & Co., 699 F.
Supp. 543, 546 (M.D.N.C. 1988). Where the parties have identified the applicable
law in a contractual choice-of-law provision, however, it seems clear that they
intended to make a selection of remedy ex ante. Contractual elections of remedies
have been upheld in any number of contexts, and that is the scenario the parties
have created for themselves here.
For these reasons, the plaintiff’s claims under the Virginia Security Act —
Counts One, Two and Three of the Complaint — must be dismissed.

VII
Finally, in Counts Seven and Eight of its Complaint, the plaintiff alleges
claims for both actual and constructive fraud.

The plaintiff alleges that the

defendants made untrue statements of material fact and omitted material facts
when their agent provided the Distributor Analysis to the plaintiff. As explained
above, these claims are also governed by Delaware law. The defendants argue
that, because the plaintiff founds these claims on statements and representations
that were made before the time of contracting and were not incorporated into the
SPA, they are barred by the SPA’s anti-reliance and integration clauses. I agree.
It is clear that Delaware law precludes these types of claims where the
parties’ written agreement contains clear anti-reliance and integration language.
-31-

For example, the Delaware Chancery Court rejected a plaintiff’s claim for fraud in
the context of a similar agreement in Great Lakes Chemical Corp. v. Pharmacia
Corp., 788 A.2d 544, 551 (Del. Ch. 2001). The purchase agreement in Great
Lakes contained three separate disclaimers all of which mirror those in this case.
First, the agreement included a disclaimer of liability for information provided to
the buyer in fulfillment of due diligence requests. 15 In addition, the agreement
included an anti-reliance clause that substantially follows section 10.02(i) of the
SPA in this case.16 Finally, the purchase agreement in Great Lakes contained a
disclaimer of all representations and warranties not explicitly included in the
agreement, similar to section 12.07 of the SPA in this case.

15

The agreement provided that the seller would not “have or be subject to any
liability to the Buyer” for any “information, document, or material made available to the
Buyer in certain ‘data rooms,’ management presentations or any other form in
expectation of the transactions contemplated by this Agreement.” Id. at 552.
16

This clause provided that the Buyer

has not relied upon . . . and none of the Stockholders shall have or be
subject to any liability to Buyer or any other Person with respect to any
information, documents or materials furnished by the Stockholders, the
Company or any of their respective officers, directors, employees, agents or
advisors to Buyer . . . relating to the Company and any information
documents or material made available to Buyer in fulfillment of due
diligence requests, the management presentations or in any other form in
expectation of the transactions contemplated hereby . . . .
(SPA § 10.02(i).)
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The court concluded that these disclaimers were both unambiguous and
enforceable. The court noted that “two highly sophisticated parties, assisted by
industry consultants and experienced legal counsel, entered into carefully
negotiated disclaimer language after months of extensive due diligence.” Great
Lakes, 788 A.2d. at 555. This environment of negotiation, therefore, warranted
enforcement of a provision disclaiming liability for representations not included in
the agreement. ‘“[W]ere we to permit plaintiffs’ use of the defendants’ prior
representations . . . to defeat the clear words and purpose of the Final Agreement’s
integration clause, contracts would not be worth the paper on which they are
written.”’ Id. at 555-56 (quoting One-O-One Enters., Inc. v. Caruso, 848 F.2d
1283 (D.C. Cir. 1988)). The court added that allowing the assertion “under the
rubric of fraud, [of] claims that are explicitly precluded by contract, would defeat
the reasonable commercial expectations of the contracting parties and eviscerate
the utility of written contractual agreements.” Great Lakes, 788 A.2d at 556. The
Great Lakes court’s analysis has been subsequently reviewed and approved by a
number of courts. See, e.g., Hovis v. Gen. Dynamics Corp. (In re Marine Energy
Sys. Corp.), 299 F. App’x 222, 231 (4th Cir. 2008) (unpublished) (construing
Delaware law); RAA Mgmt., LLC v. Savage Sports Holdings, Inc., 45 A.3d 107,
113 (Del. 2012).

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I believe the same analysis is appropriate here. Perhaps the plaintiff regrets
failing to negotiate for the explicit inclusion of the information presented to it in
the Distributor Analysis, but this regret cannot serve as the basis for its fraud
claims. The plaintiff cannot justifiably have relied on information when it has
already contractually promised not to rely. 17
The plaintiff adds two collateral arguments that cannot save its claims. First,
the plaintiff submits that, because it has alleged omissions on the part of the
defendants, it need not prove that it justifiably relied on any statements of the
defendants. The plaintiff cites a decision from the Southern District of Florida,
which held that in fraud cases “involving primarily a failure to disclose, positive
proof of reliance is not a prerequisite to recovery.” Sierra Equity Grp., Inc. v.
White Oak Equity Partners, LLC, 650 F. Supp. 2d 1213, 1233 (S.D. Fla. 2009).
The fatal flaw in this argument is apparent on the face of this sentence. The
plaintiff primarily alleges in this Complaint that the defendants made false
representations in the Distributor Analysis, and thereby omitted to make
representations about the true state of the plaintiff’s future business opportunities.
17

It should be noted that section 3.02(w) of the SPA specifically provides that,
except for the explicit representations of the SPA, “Buyer understands and agrees that
neither the Company, any Stockholder nor anyone acting on their respective behalf
makes any express or implied representations or warranties with respect to the Company
or its business assets.” The plaintiff, therefore, cannot claim that it justifiably relied on
any extra-contractual statements, even those of the individual defendants who were not
actual parties to the SPA. Donald, Mitchell and Brian Fetterolf are, therefore, third party
beneficiaries of the terms of this anti-reliance provision. Any claims for fraud against
these individual defendants are subject to the analysis I have outlined above.
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According to the plaintiff’s analysis, any misstatement of fact would necessarily
also involve an omission of truth.

Applying the law in this manner would

eviscerate the justifiable reliance requirement of fraud and negligent fraud claims.
This argument cannot succeed.
The plaintiff has further averred in its Complaint that its reliance on the
Distributor Analysis was justified by its inability to conduct its own due diligence
as a result of the parties’ Confidentiality Agreement. The defendants correctly
point out that Delaware courts have not found such a prohibition to support
reliance on due diligence when the parties have promised not to rely.

See

Progressive Int’l Corp. v. E.I. Du Pont de Nemours & Co., No. 19209, 2002 WL
1558382, at *8 (Del. Ch. July 9, 2002). Rather than relying on due diligence not
included in the agreement, the plaintiff could simply have walked away from the
transaction if it believed the risk to be too high, or the plaintiff could have
negotiated for the inclusion of this information in the agreement.
The plaintiff further argues that sections 12.07 and 10.02(i) are not
sufficiently clear to function as anti-reliance clauses for purposes of disclaiming
this form of liability. Under Delaware law:
For a contract to bar fraud claims, the contract must contain language
that, when considered in the context of the contract as a whole, can be
said to constitute a clear anti-reliance clause by which the plaintiff has
promised contractually that it did not rely upon statements outside the
contract’s four corners in deciding to sign the contract.
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Addy v. Piedmonte, No. 3571-VCP, 2009 WL 707641, at *19 (Del. Ch. Mar. 18,
2009). The plaintiff claims that the language of sections 3.02(w) and 3.02(r)(i)
makes the anti-reliance provisions in the SPA unclear and thereby ineffective to
disclaim liability.

This argument is founded upon an interpretation of these

contractual provisions that I have already analyzed and rejected. For that reason, I
find that the anti-reliance provision in section 12.07 of the SPA in this case is clear
and precludes the plaintiff’s claim for fraud.
Counts Seven and Eight of the Complaint must, therefore, be dismissed.

VIII
For the reasons stated, the defendants’ Motion to Dismiss will be granted.
Provided that the plaintiff files a timely motion seeking to amend its Complaint,
leave will be granted to amend as to the claim presently set forth in Count Four
alleging a breach of section 3.02(r)(i) of the SPA. 18
A separate Final Order will be entered herewith.
DATED: January 15, 2013
/s/ James P. Jones
United States District Judge

18

The plaintiff alternatively moved the court to strike the plaintiff’s demand for a
jury trial, based upon a waiver contained in section 12.05(c) of the SPA. Because of my
ruling on the Motion to Dismiss, it is not necessary for me to consider this alternative
motion and it will be considered moot.
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