The Court of Chancery’s recent decision in Maric Healthcare, LLC v. Guerrero, captioned C.A. No. 2023-1062-NAC (Del. Ch. June 14, 2024), resolves a motion to dismiss claims arising from allegations that the defendant—the former manager of a Delaware LLC plaintiff—had improperly set up a competing business while still serving as manager of the company.
The plaintiffs—the Delaware LLC, which operated an opioid clinic, and its sole member—alleged that, while serving as the manager of the plaintiff LLC, the defendant opened his own opioid treatment clinic, diverted the LLC’s patients to it, and engaged in other competitive behavior. The plaintiffs asserted four claims: breach of fiduciary duty, conversion, intentional interference with existing contractual or prospective business advantages, and misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act (DUTSA). The defendant moved to dismiss all claims for lack of personal jurisdiction, improper venue, and failure to state a claim.
The Court denied the motion as to the plaintiffs’ claim for breach of fiduciary duty, finding that the plaintiffs had alleged enough supporting facts relating to the defendant’s alleged solicitation of patients during his tenure as manager to make the claim reasonably conceivable. However, it dismissed the conversion and DUTSA claims, and it dismissed in part the tortious interference claim to the extent it alleged interference with existing contractual relationships. As to the latter, the Court found it reasonably conceivable that at least some of the patients allegedly solicited by the former manager would have returned to the plaintiff LLC’s clinic for treatment but for the alleged solicitation.
Most notably, in reaching these holdings, the Court ruled that (i) due process is satisfied for fiduciary duty claims against a non-resident LLC manager brought pursuant to 6 Del. C. § 18-109 and is likely satisfied for any other “sufficiently related” claim; (ii) the plaintiffs had failed to state a claim under DUTSA because they conceded that the claim was governed by Texas law; and (iii) the plaintiffs were not entitled to rely at oral argument on allegations related to the DUTSA claim to bolster insufficient allegations underlying the conversion claim when they had not made that argument in their complaint or briefing.
The Court’s opinion serves as a helpful reminder to be thoughtful of applicable law when bringing ancillary claims relating to Delaware entities. It further establishes that the Court will not credit allegations expressly attributed to a particular claim when evaluating a motion to dismiss, when those allegations have not previously been cross-referenced in a pleading or briefing. These procedural considerations may be the deciding factor in whether a claim survives.