Mark G. Schaeffer, Sr. v. Donald Lockwood ( 2021 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MARK G. SCHAEFFER, SR., )
)
Plaintiff/Counterclaim- )
Defendant )
)
v. ) C.A. No. 2018-0926-MTZ
)
DONALD LOCKWOOD, )
)
Defendant/Counterclaim- )
Plaintiff. )
MEMORANDUM OPINION
Date Submitted: July 2, 2021
Date Decided: November 30, 2021
Theodore A. Kittila and James G. McMillan, III, HALLORAN FARKAS +
KITTILA LLP, Wilmington, Delaware, Attorneys for Plaintiff/Counterclaim-
Defendant.
Richard E. Berl, Jr., HUDSON, JONES, JAYWORK & FISHER, LLC, Lewes,
Delaware, Attorney for Defendant/Counterclaim-Plaintiff.
ZURN, Vice Chancellor.
A bird dog is a hunting dog that locates game birds, flushes them out, and then
retrieves any birds the hunter successfully shoots. The bird dog is a useful
companion. It adds value to a hunter’s efforts by finding attractive birds hidden in
the bushes that the hunter might otherwise miss. Thanks to the bird dog’s assistance,
the hunter can shoot at visible targets, instead of indiscriminately shooting into the
brush. The real estate industry has adopted the term “bird-dogging” to refer to
seeking out undervalued, attractive real estate properties, and passing them along to
motivated investors. Like the hunter, a real estate investor aided by a bird dog has
access to hidden opportunities other buyers might miss. In exchange for these
valuable efforts, bird-dogging real estate brokers typically earn a percentage or a
fee.1
The plaintiff in this case is a real estate broker and a self-described bird dog.
In 2015, he located an undervalued, attractive real estate opportunity, a residential
subdivision in Milton, Delaware that was available in a foreclosure sale. True to his
role, the broker brought the project to two potential co-investors: the defendant, a
real estate developer, and the developer’s consultant. The three were well-
acquainted, being partners in an interconnected web of real estate ventures. The
broker, developer, and consultant negotiated to purchase the subdivision from the
1
See Bird Dog, Investopedia, https://www.investopedia.com/terms/b/bird-dog.asp (last
visited Nov. 30, 2021); see also Bird-Dog, Merriam-Webster’s Dictionary,
https://www.merriam-webster.com/dictionary/bird-dog (last visited Nov. 30, 2021).
1
foreclosing bank. They also had characteristically informal discussions among
themselves about how to structure their collective investment in the subdivision. But
they never came to a final meeting of the minds on what that structure would look
like. And the need for financing led the developer to partner with a new investor
instead, with whom he formed a new entity, secured financing, and purchased the
subdivision.
In the years that followed, the subdivision project’s structure shifted. The
developer, who previously held a 70% stake in the entity owning the subdivision,
swapped his share to the investor in exchange for a percentage of the subdivision’s
profits. The broker stayed in the picture and helped with the subdivision’s
development, despite not having any formally memorialized stake. Eventually, the
parties discussed a buyout for the broker’s undefined interest in the subdivision, but
no such transaction ever materialized. The broker and developer’s relationship
soured, the subdivision project fell apart, and the developer traded his profit interest
to the investor for the investor’s stake in a different venture.
The broker brings this action to recover his allegedly promised share of the
subdivision’s profits. His primary claim overplays his hand: he argues that he, the
developer, and the consultant contracted to equally split the subdivision’s profits.
The parties’ fluid arrangements and informal discussions do not support his
contention. While there is evidence the parties contemplated a business relationship,
2
this post-trial opinion finds that the parties never formed a contract. In the
alternative, the broker brings quasi-contract claims for promissory estoppel and
unjust enrichment. Lacking clear and convincing evidence of a sufficiently definite
promise, I find the broker is not entitled to recover under a promissory estoppel
theory. But the broker’s claim for unjust enrichment has merit; he should be
compensated for his bird-dogging and other work on the project. Judgment is
entered in his favor on that basis. Judgment is also entered for the broker on the
developer’s counterclaim. My reasons follow.
I. BACKGROUND
This matter was tried on February 9 and 10, 2021, and post-trial briefing
concluded on April 12.2 I took the matter under advisement on July 2.3 The trial
record includes seventy-six exhibits and live testimony from four witnesses.4 I find
the following facts based on a preponderance of that evidence.5
2
See Docket Item (“D.I”) 56; D.I. 65; D.I. 66.
3
D.I. 69.
4
Citations in the form “Tr. —” refer to the trial transcript, available at D.I. 57 and D.I. 58.
Citations in the form “JX —” refer to the parties’ joint trial exhibits. See D.I. 44.
5
Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967) (“The side on which the greater
weight of the evidence is found is the side on which the preponderance of the evidence
exists.”); accord Taylor v. State, 748 A.2d 914, 2000 WL 313501, at *2 (Del. 2000)
(TABLE) (“The phrase ‘preponderance of the evidence’ has been defined to mean the side
on which ‘the greater weight of the evidence’ is found.” (quoting Reynolds, 237 A.2d at
711)).
3
A. The Parties Make An Offer To Purchase The Deep Branch
Woods Subdivision.
Deep Branch Woods (the “Subdivision”) is a thirty-acre residential
subdivision located on Draper Road (Route 5) in Sussex County, near Milton,
Delaware.6 The County approved twenty-six lots in the Subdivision for
development, and its owners began improving it and cutting in roads.7 In 2015,
nonparty Cecil Bank initiated foreclosure proceedings on the Subdivision. This case
concerns the subsequent purchase and ownership stake of the Subdivision.
A Cecil Bank representative approached plaintiff Mark Schaeffer to see if he
would be interested in purchasing or developing the Subdivision.8 Schaeffer is a real
estate broker and has worked in real estate for approximately forty years.9 He
believed the Subdivision was an attractive investment opportunity because of its
proximity to the Delaware beaches.10 But he could not finance the project alone,
and, as a matter of practice, did not invest cash in his real estate deals.11 To fund the
project, he approached John O’Brien, a former attorney, and defendant Don
6
D.I. 42 ¶ 8; JX 1.
7
JX 1; Tr. 9, 293–94.
8
Tr. 292.
9
D.I. 42 ¶ 5; Tr. 291.
10
D.I. 42 ¶ 8.
11
Tr. 299.
4
Lockwood, a real estate developer.12 The three men are well-acquainted. Schaeffer
and O’Brien are longtime social and professional acquaintances.13 O’Brien
represented Lockwood as an attorney and then worked for him as a consultant,
becoming friends along the way.14 Schaeffer and Lockwood also have a professional
and personal history, albeit not as longstanding.15 Their relationship has
deteriorated.
Schaeffer, Lockwood, and O’Brien worked on real estate projects together in
the past, and maintain an interconnected web of ventures.16 Their projects were not
always successful,17 and they often traded stakes in their various ventures to
compensate one another in other deals.18 Around the time Schaeffer approached
Lockwood and O’Brien about the Subdivision, the three were working on a student
12
Id. 297–99. While the caption in this matter indicates Lockwood’s first name is
“Donald,” Lockwood testified that his first name is simply “Don.” Id. 221.
13
Id. 6, 297–98.
14
Id. 6–7.
Id. 298 (“So, you know, I’ve known John [O’Brien] probably 40-plus years. I’ve known
15
Don Lockwood now probably five years.”).
16
E.g., id. 64–70, 262.
17
E.g., id. 64–65.
18
E.g., id. 136, 140–41, 167.
5
housing development project.19 They were also involved in a separate real estate
venture in Washington state, through an entity known as 222 Enterprises.20
Schaeffer, Lockwood, and O’Brien set out to purchase the Subdivision,
believing they could do so at a substantial discount and make a good profit.21 In
March 2015, the trio began to negotiate with John Long at Cecil Bank.22 In their
initial May 7 letter of intent, the three gentlemen proposed to buy the Subdivision
for $180,000.23 Their letter indicated the buyer would be an entity called FDDC,
LLC. FDDC was not a real entity and was never formed.24 Schaeffer signed his
own initials and Lockwood’s name as FDDC’s “managing member,” with
Lockwood’s authorization.25 Schaeffer emailed the letter of intent to Long on
May 8.26
19
Id. 7.
20
E.g., id. 7, 69.
21
See id. 12–13.
22
Id. 294–95; JX 2.
23
JX 3 at 1.
24
E.g., Tr. 14, 73–74, 110. According to Schaeffer, Lockwood indicated FDDC had
already been formed at this time. Id. 301. Lockwood had another separate entity, known
as Four Diamonds Development Consulting, which did exist. See id. 219–20. Even after
the Subdivision deal’s structure changed, the parties continued to use the FDDC name in
correspondence with the bank because they did not want “to let on to the bank that FDDC
wasn’t a -- wasn’t a formed entity at the time” for fear Cecil Bank would have tried to “get
out of the deal.” Id. 119–20; see also JX 23; JX 24.
25
JX 3 at 2; Tr. 220–21, 300, 360.
26
JX 4.
6
Cecil Bank refused that offer.27 On June 5, O’Brien raised their bid, emailing
Long as well as Schaeffer and Lockwood:
John,[ ]spoke with Mark and Don. You will have LOI for 265,500 on
the above by tomorrow. We will be ready to go to contract within 30
days as due diligence is almost complete and settle shortly after Cecil
obtains Title.28
On June 10, Long emailed Schaeffer, indicating that the $265,500 offer was
acceptable, that Cecil would not shop the offer, and that Cecil was working toward
finalizing the transaction.29
With those assurances, the parties began their venture. Lockwood suggested
they use an LLC.30 On June 22, Lockwood emailed O’Brien and Schaeffer:
John can u set up new llc with you Mark and myself as 33% partners.
I think we should call it deep Branchwoods LLC if the name is
available.31
O’Brien and Schaeffer understood from this message that the three would be equal,
one-third members in a new entity and that the new entity would purchase the
Subdivision.32 But O’Brien never formed any such entity.33 With trademark
27
Tr. 16, 222.
28
JX 5 at 2. I have reproduced the parties’ correspondence in its original form, only altering
it where absolutely necessary for readability.
29
JX 12 at 2.
30
See Tr. 13, 301, JX 6.
31
JX 6.
32
See Tr. 13, 303.
33
See id. 16–17, 223, 358–59.
7
informality,34 Schaeffer, Lockwood, and O’Brien never drafted a written LLC
agreement on these or any other terms.
Schaeffer prepared the venture to begin building as soon as the sale closed.
He ensured the necessary approvals were in place, protected existing approvals, and
pulled together existing engineering documents; these efforts required him to speak
with contractors who had worked on the Subdivision, as well as County officials.35
He also did a title search on the Subdivision and sent the results to Lockwood and
O’Brien.36
On September 15, Bob Galoubandi, counsel for Cecil Bank, sent Long a
proposed sales contract, which Long forwarded to Schaeffer.37 Per the terms of that
proposal, FDDC would purchase the Subdivision for $265,500,38 with closing set for
September 28 to allow time for Cecil Bank to obtain a deed.39
34
See Tr. 71–72, 77, 95 (discussing the informality of the parties’ business dealings); see
also Tr. 216, 262, 320 (describing the parties’ business relationship as “fluid”).
35
See Tr. 312–17; see also Tr. 22–23.
36
See JX 10 at 1, 253.
37
JX 9 at 1, 213.
38
The proposed agreement reads: “The purchase price for the [Subdivision] shall be Two
Hundred Forty [sic] Thousand Dollars ($265,000.00).” JX 9 at 2. It appears this was a
mistake, and Long emailed Schaeffer and Galoubandi the next day to correct it. JX 15 at
90. The exhibit the parties submitted did not have this correction, but Schaeffer responded
to Long’s email indicating his version listed $265,500. Id. at 90, 92.
39
JX 9 at 2–3.
8
Schaeffer, Lockwood, and O’Brien did not have the cash to fund the
Subdivision project.40
B. Cecil Bank Receives A Higher Offer And Lockwood Enlists
Legal Help.
After the September 15 proposal, Cecil Bank received an “unsolicited” higher
offer on the Subdivision from Insight Homes and thereafter attempted to renegotiate
the terms of the deal.41 Lockwood recruited Constantine Malmberg, a local attorney
who also had a series of business partnerships with Lockwood, to “rattl[e] the
saber”42 and hold Cecil Bank to its original price. Lockwood and Malmberg also
discussed Malmberg joining the Subdivision project as an investor, which he
eventually did.43
Malmberg’s entrance into the Subdivision project marked a major shift in the
relationship among O’Brien, Schaeffer, and Lockwood. Malmberg has a positive
relationship with Lockwood, and his brother Peter works for Lockwood’s
construction company.44 While Malmberg and Schaeffer used to be business
partners, they have not spoken to each other in a decade and have been hostile to
40
E.g., Tr. 23, 86, 367–68, 380.
41
JX 11; see Tr. 18–19, 75–76; see also id. 224, 306.
42
Id. 109.
43
See id. 28, 107–08, 224–26; JX 10 at 1.
44
See, e.g., Tr. 96. This opinion refers to Peter Malmberg by his full name to distinguish
him from Constantine Malmberg.
9
each other for quite some time predating this case.45 Malmberg insisted he would
not participate in any business deal with Schaeffer.46
Though Lockwood recruited Malmberg, Schaeffer and O’Brien continued to
pursue the Subdivision. On September 21, O’Brien emailed Long, copying
Schaeffer and Lockwood, with a “revised offer” for $420,000, with $265,500
payable at settlement, and the remainder paid in installments.47 Long responded later
that afternoon, advising that Cecil Bank was “going to accept an all-cash deal in the
high 3’s” from an unsolicited bidder, but would “circle back” to O’Brien, Schaeffer,
and Lockwood “if this falls out.”48
45
See, e.g., id. 132. Both men were conspicuously guarded about their feud. Malmberg
and Schaeffer have known one another for approximately fifty years. Compare id. 310,
with id. 107. Malmberg knows Schaeffer’s wife, Ruby, and speaks with her regularly. See
id. 132, 161–62, 201; see also id. 370 (Schaeffer testifying he “did not talk to Conny
Malmberg, no. Conny Malmberg and I had a personal falling out, and we do not speak.
He speaks to my wife a couple times a week.”).
46
See, e.g., id. 123 (“I don’t deal with Mr. Schaeffer”); id. 126 (“Q. You claimed that you
weren’t going to enter into any agreements with Mark Schaeffer; isn’t that true? A.
Correct. I will not. . . . Q. Okay. And you state in your email to Mr. Lockwood, ‘Not
entering into any agreement or borrowing any money as a co-obligor with Mark.’ You’re
referring to Mark Schaeffer; correct? A. Yes, I am.”), id. 146 (“But I was bristling at him
even emailing me, because I don’t deal with Mark Schaeffer.”); see also id. 152, 163, 185–
86 (discussing Malmberg’s desire to not be involved with any arrangement between
Lockwood, O’Brien, and Schaeffer).
47
JX 11; JX 15 at 94.
48
JX 11; JX 15 at 95.
10
Schaeffer continued to pursue the project for Lockwood. On September 22,
he emailed Long threatening litigation, purportedly on behalf of Lockwood alone.49
He emailed Long again the next day on behalf of Lockwood and “his attorney,
[Malmberg].”50
At this point, Malmberg became involved, and engaged in substantial back-
and-forth with Galoubandi. Malmberg testified he was serving as counsel for
Lockwood, but not for Schaeffer or O’Brien.51 Galoubandi sparred with Malmberg,
and at times Lockwood, over whether Long had committed Cecil Bank to sell the
Subdivision for $265,500.52 Between themselves, Lockwood and Malmberg
discussed whether and how they could enforce that alleged contract. In reference to
filing a lawsuit, Malmberg wrote to Lockwood:
You would have to have a winner case. Apparently FDDC, LLC does
not even exist. If the intention is to file it will have to be as individuals
trading as FDDC, LLC. I am not “in” and not yet decided on any
interest in filing.53
49
JX 15 at 96 (“Per our conversation yesterday, you were giving me until this morning to
speak with Don Lockwood regarding his purchase of the [Subdivision]. I spoke with Don.
I was unaware that he had already signed your contract and has delivered it to the escrow
agent. He asked me to inform you that if Cecil Bank does not honor the contract they sent
him for the sale of [the Subdivision] that his attorney will be filing an action in Chancery
Court today to prevent the transfer of title to a third party. Please let me know the banks
position as Don would like to purchase this property.”).
50
JX 16.
See Tr. 182–83; see also id. 224. Malmberg also served as Lockwood’s attorney on other
51
matters. See id. 76, 173, 181.
52
See, e.g., JX 18 at 1–5.
53
JX 14 at 1.
11
Eventually, Lockwood, Malmberg, and Long settled on a $390,000 purchase
price. Lockwood emailed Malmberg, Long, and Galoubandi on September 24:
Mr Malmberg, it is my understanding that Mr. Galoubandi has
proposed that I deposit 30k non Refundable and the balance of 360k by
the end of the month and the [Subdivision] would be sold to my group.
Are these terms acceptable to purchase the project; Please confirm ?54
Though the parties continued to negotiate over price, they ultimately settled on
$390,000.55 Schaeffer “left it up to [Lockwood and O’Brien] to come up with the
funding,” though he understood neither had the money themselves.56
C. Lockwood And Malmberg Form A New Entity, Secure
Funding, And Purchase The Subdivision.
Around September 28, in a series of steps, Lockwood turned from O’Brien
and Schaeffer to Malmberg; formed a new entity with Malmberg called Deep Branch
Creek, LLC (“DBC”); and used that entity to secure financing and purchase the
Subdivision.
Malmberg formed DBC and filed DBC’s certificate of formation with the
Delaware Secretary of State, listing himself as DBC’s registered agent and his law
office as DBC’s registered office.57 Malmberg emailed Lockwood an LLC
54
JX 17 at 4.
55
See JX 24 at 2.
56
Tr. 367–69.
57
JX 20.
12
agreement for DBC, with the message: “LLC agreement. You 70% me 30%. Please
review and sign and send if all good.”58 The agreement listed Malmberg and
Lockwood as DBC’s sole members, with Malmberg holding 30% and Lockwood
holding 70%.59 The “capital contribution” line for both Malmberg and Lockwood
was left blank.60 Schaeffer and O’Brien were not mentioned in DBC’s LLC
agreement.
Malmberg also sent Lockwood a conflict waiver because Lockwood was
Malmberg’s client.61 In the waiver, Lockwood acknowledged Malmberg was taking
an interest in the Subdivision project while simultaneously advising Lockwood on
the same.62 There are not conflict waivers in the record for Schaeffer or O’Brien,
consistent with the fact that Malmberg represented Lockwood personally, and
Lockwood alone.63
With DBC formed, Lockwood and Malmberg finalized their purchase of the
Subdivision. On the morning of September 28, Malmberg and Galoubandi
exchanged emails to finalize the agreement and schedule closing.64 Malmberg
58
JX 25 at 1.
59
Id. at 35; JX 26 at 34.
60
JX 25 at 35; JX 26 at 34.
61
JX 21 at 1–3.
62
JX 21 at 3.
63
See, e.g., Tr. 182–83.
64
See JX 22 at 1–4.
13
suggested, and Galoubandi prepared, an addendum to the purchase agreement,
reflecting that DBC would purchase the Subdivision instead of FDDC.65 The
addendum assigned FDDC’s rights in the Subdivision to DBC.66 Malmberg
forwarded it to Lockwood later that afternoon, instructing him to sign on behalf of
both FDDC and DBC and “send back ASAP.”67 Ultimately, DBC purchased the
Subdivision on $390,000, with $280,000 to be paid at closing, scheduled for
September 29.68 The parties closed that day and executed a deed transferring the
Subdivision to DBC.69
To finance the purchase of the Subdivision, DBC relied on a loan from Dian
Stein, a mutual friend and local short-term lender. O’Brien brought Stein to the
table, and he and Lockwood together negotiated with Stein to secure a short-term
loan of $350,000.70 That loan was also finalized around September 28. That
afternoon, Lockwood emailed Stein and O’Brien a draft loan agreement, and asked
them to review it and call him.71 Under the terms of that agreement, Stein, through
65
JX 22 at 2–3; JX 24.
66
JX 24 § 2; see also Tr. 231.
67
JX 23 at 1.
68
See JX 22 at 2.
69
JX 29; D.I. 42 ¶ 9.
70
See Tr. 23–24, 367, 376; JX 19 at 1. O’Brien and Lockwood both boasted about their
relationship with Stein and took credit for recruiting her. See Tr. 23–24 (O’Brien); id. 280–
83 (Lockwood).
71
JX 19 at 1–5.
14
a trust, agreed to loan DBC $350,000.72 The loan was secured by a mortgage on the
Subdivision and had to be repaid by January 1, 2016—little more than ninety days
later.73 DBC also executed a $50,000 promissory note, payable to Stein’s trust by
January 1, 2016, as further consideration for the loan.74 Lockwood was personally
liable on the promissory note.75 Thus, DBC obtained the cash needed to purchase
the Subdivision on the bank’s tight timeline, but DBC was obliged to repay Stein
$400,000 by January 1, 2016.76 The final loan documents were signed on
September 30, after DBC closed on the Subdivision.77 DBC used the loan from Stein
to pay the majority of the Subdivision’s purchase price. Malmberg covered the
balance.78
D. DBC Begins Developing The Subdivision And Secures New
Funding; Malmberg And Lockwood Reorganize The
Venture.
After closing, the parties got to work developing the Subdivision. On October
8, Jeff Clark, a landscape architect who worked with the Subdivision’s former
owner, emailed Peter Malmberg, Lockwood, and Schaeffer: “Pete, I understand that
72
Id. at 2.
73
See id.
74
See generally JX 30.
75
See id. at 1–4; see also Tr. 239.
76
See JX 19 at 2–5; JX 30 at 1–8.
77
JX 30 at 8.
78
See Tr. 187.
15
the Deep Branch Woods site is now owned by Don Lockwood, Mark Schaeffer et
al. We look forward to working with your team. As always, if you have questions,
please contact me.”79 Clark attached several documents, including approvals and
deeds.80
During this time, the Subdivision faced the possibility that the County would
“sunset” the project, which would have required the parties to restart the approval
process.81 Schaeffer worked to ensure the parties had completed enough work on
the Subdivision to avoid this outcome.82 Clark directed Schaeffer to the relevant
County officials and Schaeffer spoke with them, compiling a “paper trail” to
document the Subdivision’s progress.83
DBC also secured a real estate agent to list completed lots in the Subdivision.
On October 8, DBC entered into an exclusive listing agreement (the “Listing
Agreement”) with Berkshire Hathaway HomeService Gallo Realty (“Gallo
Realty”).84 Both Schaeffer and his wife, Ruby Schaeffer, worked at Gallo Realty,
and Ruby Schaeffer was designated on the Listing Agreement as the exclusive listing
79
JX 31.
80
Id.; Tr. 322–23.
81
Tr. 296–97; see also id. 313–15.
82
Id. 313–14.
83
Id. 314–15. Schaeffer testified that this was an ongoing process, id. 315, though it does
not appear to have been full-time work.
84
JX 32.
16
agent, with the promise of a stake of Gallo Realty’s 8% commission on each lot.85
Lockwood and Malmberg testified they chose Ruby Schaeffer as the listing agent as
“compensation” for Schaeffer’s role in the Subdivision, though Schaeffer did not
assent to such a structure, and the parties’ subsequent dealings indicated Schaeffer
remained uncompensated even after Ruby Schaeffer got the listing.86 The Listing
Agreement also set list prices for certain lots: $89,900 for ten lots and $104,900 for
the remaining sixteen lots.87
Meanwhile, Malmberg and Lockwood were facing a funding crunch. The
deadline to repay Stein’s was fast approaching, and DBC needed funds to pay for
the Subdivision’s construction.88 Neither DBC nor its members, Malmberg and
Lockwood, could foot the bill. Lockwood approached several banks, but his
financial troubles precluded a loan.89 On November 20, a representative from
Applied Bank emailed Lockwood asking for certain financial statements from
Malmberg: “In regard to Deep Branch please ask Conny [Malmberg] to send me the
85
JX 32 at 1, 5; Tr. 372. This opinion refers to Ruby Schaeffer by her full name to
distinguish her from Mark Schaeffer.
86
See Tr. 242, 285. Schaeffer denied that this was the result of any agreement between the
parties, calling it “absolutely ridiculous to suggest” Ruby Schaeffer’s commission would
be compensation for his work on the Subdivision. Id. 324.
87
JX 32 at 1.
88
See Tr. 85, 233–34; JX 30 at 1.
89
Tr. 130, 194.
17
following, i did send this out to him when I ask for yours and Mark [Schaeffer’s].”90
Lockwood forwarded the message to Malmberg, who responded, “[n]ot entering into
any agreement nor borrowing any money as a co-obligor with Mark.”91
Eventually, Malmberg approached the loan committee chairman at MidCoast
Bank, with whom he had worked before.92 But MidCoast Bank was not willing to
loan to an entity owned by Lockwood and would only loan to DBC if Malmberg was
the sole owner.93 MidCoast Bank also required a takedown agreement, which is
essentially an installment sales contract on a development’s lots that obliges a home
builder to purchase a certain amount of lots at set prices on a set timeline, assuring
the bank that lots would be sold and the developer would be able to repay the loan.94
Schaeffer pursued a takedown agreement and was ultimately responsible for
bringing a developer to the table to make a deal.95 Schaeffer approached Scott
Dailey, the managing partner of a development company called Statera LLC.96 On
90
JX 33 at 2.
91
Id. at 1.
Malmberg’s business partner and connection at MidCoast Bank was Ron Schaeffer, who
92
was well-acquainted with, but not related to, plaintiff Mark Schaeffer. See Tr. 320.
Malmberg was also an initial investor in MidCoast Bank and had borrowed money from
MidCoast Bank before. See id. 130–31.
93
Id. 194, 236. According to Malmberg, Lockwood “had some remnant issues as a builder
that came out of the big crash” and made it difficult for him to get a loan. Id. 194.
94
See id. 29–30, 33, 200–01, 236–37; see also id. 142–43; JX 44 at 1.
95
Id. 142.
96
See id. 327.
18
November 30, Dailey sent Schaeffer a letter of intent to purchase up to eighteen lots
in the Subdivision for between $72,000 and $92,000 per lot. 97 The letter was
addressed to Schaeffer at his Gallo Realty office.98 The draft purchase agreement
attached to the letter listed DBC as the seller.99 Schaeffer forwarded the message to
Ruby Schaeffer and Lockwood, with the message “[l]et’s meet him Wednesday
[December 1.]”100 On December 3, Schaeffer sent the takedown agreement to
Lockwood, copying O’Brien, with the instruction “[s]ign this and get it back to me
ASAP.”101 Lockwood responded by asking for a version Malmberg could edit so
they could modify the agreement.102 Schaeffer responded to Lockwood, copying
O’Brien, Malmberg, and Peter Malmberg, encouraging them to take the deal: “[t]his
buyer is more than interested he’s ready to roll[.]”103 Lockwood forwarded Statera’s
letter of intent to Malmberg and Peter Malmberg shortly thereafter, and the three
men discussed it.104
97
JX 34 at 12.
98
Id. at 2.
99
Id. at 3.
100
Id. at 1.
101
JX 35 at 2.
102
Id.
103
Id. at 1.
104
JX 36.
19
Malmberg grew frustrated with the imbalance between his primary financial
role and the presence of O’Brien and Schaeffer.105 On December 17, Malmberg
emailed Lockwood:
When I got in, it was with the understanding that my fund investment
would be minimal and short lived. Also, when I reduced my share to
30% it was because I was not going to deal with Obrien or Schaeffer as
partners. I expected you to take care of them out of your 70%. In that
regard, the 30% was not after development fees, other padding and add
ons, etc. . . . [N]ow it appears I will be the sole borrower and sole funder
of all improvements and the lone party at risk. At this point, if you like,
You can take me out for my net investment with no negative feelings
about it. I’m guessing Dian [Stein] would stay in under the right
circumstances.106
Malmberg went on to propose alternative structures for their investment.107
Malmberg forwarded the message to Peter Malmberg under separate cover.108
Lockwood responded later that day, proposing a structure whereby Malmberg would
receive upfront payments on the lots and Lockwood would keep the proceeds:109
105
Malmberg explained he was “bristling at [Schaeffer] even emailing me, because I don’t
deal with Mark Schaeffer.” Tr. 146.
106
JX 37 at 1; JX 38 at 1.
107
JX 37 at 1; JX 38 at 1–2.
108
JX 37 at 1.
109
JX 38 at 1.
20
The “wolfs” were Schaeffer and O’Brien.110 Lockwood and Malmberg understood
that any compensation for Schaeffer and O’Brien would be Lockwood’s
responsibility.
Lockwood and Malmberg thereafter agreed to restructure their investment in
DBC with Malmberg as the sole owner. This structure had several complementary
benefits. First, Malmberg’s ownership satisfied MidCoast Bank, which then
contributed new financing and relieved Lockwood of his personal liability on Stein’s
note.111 The new structure also insulated Malmberg from Schaeffer and O’Brien,
with whom Malmberg refused to do business.
Lockwood agreed to surrender his 70% interest.112 In exchange, Lockwood
and his construction company secured a construction management agreement (the
110
Tr. 236; see also id. 129.
111
See id. 194; JX 30 at 1–4. Indeed, Lockwood assented to this structure in part because
it helped relieve him of his personal liability on Stein’s loan. See Tr. 229, 235, 239.
112
Tr. 238–39.
21
“Development Agreement”), wherein Lockwood’s company would provide
development and project management services on the Subdivision.113 Under an
attached incentive bonus addendum, Lockwood’s company would receive $1,500 as
a “project management fee” for every lot finished.114 Malmberg, through DBC, then
received a $12,500 per lot payment.115 After paying creditors, capital contributions,
and other debts, the net profit from the project would be split, 85% going to
Lockwood, and the rest going to Malmberg through DBC.116 Lockwood’s
Development Agreement was finalized on January 20, 2016.117 Malmberg executed
a new LLC agreement for DBC, reflecting his sole ownership, on January 1.118
113
Tr. 238–41; see generally JX 41; JX 42.
114
JX 42 § 1. Lockwood explained that the management fees supported his team working
the project, which included Peter Malmberg. Tr. 239.
115
See JX 42 § 2(c); Tr. 137–40 (resolving discrepancy).
116
JX 42 § 2.
117
JX 41 at 1; JX 42 at 1. In May 2016, Lockwood assigned the Development Agreement
to another of his entities, known as Limitless Development Consulting LLC. JX 46; see
JX 47. He testified that this was because in May 2016, his parents held a stake in his
construction company and no longer wanted to be part of the Subdivision project. See Tr.
267–68.
118
See JX 39; Tr. 131–32. I note that the record also includes an earlier LLC agreement
for DBC, effective September 28, 2015, that indicates Malmberg was the 100% owner.
See JX 27. There is also an “Assignment and Assumption of Limited Liability Company
Interests and Resignation Agreement,” with an “effective date” of September 28, 2015,
assigning Lockwood’s 70% interest to Malmberg. JX 48. Taking these documents at face
value, it would appear that on a single day, September 28, Lockwood and Malmberg: (1)
formed DBC; (2) executed an LLC agreement indicating Lockwood had a 70% interest in
the entity; (3) executed an agreement assigning Lockwood’s 70% interest to Malmberg;
and (4) executed a new LLC agreement indicating Malmberg as the sole owner. Aside
from being illogical, this bizarre string of transactions is inconsistent with the story the
parties told in their testimony. Malmberg and Lockwood both testified that in connection
22
Throughout January and early February, Lockwood and Malmberg continued
to negotiate a takedown agreement with Statera. The email exchanges during these
negotiations included Dailey, Malmberg, Lockwood, and Lockwood’s employees
Peter Malmberg and Jen Biggs.119 They do not include Schaeffer.
On February 16, Schaeffer emailed Malmberg, Lockwood, and O’Brien
regarding unpaid debts owed to Clark. Malmberg responded to the group, indicating
that “there is no construction funding until we have a signed takedown agreement”
and encouraging the others to contribute money to pay Clark if they would like: “If
any of the project beneficiaries would like to advance funds of their own that can get
repaid from construction monies. I currently have 130k in.”120 Malmberg’s
reference to the “project beneficiaries” included Schaeffer and O’Brien.121
DBC and Statera closed their takedown agreement on February 29.122 The
final agreement obliged Statera to purchase twelve lots on a set schedule, with the
with their efforts to secure a loan from MidCoast Bank, Lockwood traded his interest in
DBC in exchange for the Development Agreement in January 2016. Tr. 238–41; see also
Tr. 33–34, 133–36. And so, despite the unexplained date discrepancy in some of the
documents, I find Lockwood ceased holding an interest in DBC in January 2016, not in
September 2015.
119
See JX 40 at 1 (Biggs, Dailey, Lockwood); JX 43 at 1 (Biggs, Dailey, Malmberg, and
Peter Malmberg). Peter Malmberg later forwarded some of these messages to O’Brien.
JX 43 at 1.
120
JX 44 at 1.
121
Tr. 146.
122
JX 45 at 25.
23
option to purchase six more lots.123 Malmberg signed as DBC’s “sole member.”124
Lockwood and Malmberg are both listed in the “Notices” section; Schaeffer is not
mentioned.125
When the dust settled, Malmberg was DBC’s sole owner, Statera had signed
a takedown agreement, and Lockwood was no longer a member of DBC, holding
the Development Agreement instead.126 With this structure in place, DBC secured
a loan for approximately $1.1 million from MidCoast Bank.127 The first $400,000
was used to repay Stein; the balance was earmarked for construction in the
Subdivision.128
123
Id. §§ 2(a), 2(b)(I)–(III).
124
Id. at 25.
125
See id. § 12.
126
Despite these changes, the record includes a “personal financial statement” for
Lockwood on a form from M&T Bank, dated October 5, 2016. JX 49 at 1. Among
Lockwood’s real estate assets, the form lists the Subdivision, with the notation “25%” in
parenthesis. Id. at 3. It lists the Subdivision’s present market value as of that date as
$625,000, purportedly derived from an appraisal. Id. Lockwood maintains that he did not
prepare this document, which he says was a draft, and that it was instead prepared by his
accountant, without his knowledge or signature. Tr. 245–47. I am unable to tell whether
the signature on the document is authentic. Lockwood insists he did not see the document
until his deposition and that O’Brien must have taken it out of the office. Id. 246–47.
O’Brien did not testify on this subject.
127
See Tr. 33, 91, 195, 238. The loan documents from MidCoast Bank are not in the record
and the testimony on when the loan actually closed is unclear. O’Brien speculated it was
at some point between December 2015 and February 2016; Malmberg suggested it was
January or February 2016. Id. 33, 192, 196. DBC was obliged to repay Stein on January 1,
but did not restructure the entity until late January and did not secure a takedown agreement
until late February.
128
E.g., id. 28–29, 32, 196.
24
E. Development Stalls And Lockwood Tries To Arrange A
“Buy Out” For Schaeffer And O’Brien.
Schaeffer and O’Brien remained at least tangentially involved with the project
through 2016. Though there was an experienced contractor overseeing the
Subdivision’s construction, Schaeffer paid “almost . . . weekly” visits to the site,
noting problems with landscaping and swales.129 It does not appear he did so at
anyone’s direction or that his visits involved substantial work.
The Subdivision project stalled in late 2016. Statera fell behind on their
promised lot purchases, leaving DBC without expected revenue.130 At some point
in 2016, Lockwood and Schaeffer stopped speaking, and O’Brien became the
“conduit” between them.131 Lockwood’s relationship with O’Brien was also
rocky.132
By 2017, only one lot had been sold and Lockwood was having second
thoughts about the project.133 On April 27, 2017, Malmberg emailed Lockwood
“fast and dirty” estimates for Lockwood’s profits under the Development Agreement
129
Id. 328–30. Lockwood properly objected to, and I have ignored, Schaeffer’s hearsay
testimony in this portion of the transcript.
130
E.g., id. 176, 245, 248, 251.
131
Id. 263.
132
E.g, id. 255.
133
See JX 54 at 2.
25
if all twenty-six lots sold.134 Malmberg estimated Lockwood would earn $39,000
from his $1,500 per lot “project management fee.”135 Based on an estimated $90,000
per lot sales price, minus development costs and other expenses, Malmberg
projected the Subdivision project would net around $692,500 in profits, entitling
Lockwood to an 85% share, or $588,625.136 He concluded his message, “Hopefully
this puts you in a possession to make some decisions.”137
Around this time, Lockwood approached Jeff Garrison, the president of
another home building company called Garrison Homes, LLC, to gauge his interest
in “buy[ing] out” Schaeffer and O’Brien’s interests in the Subdivision.138 Lockwood
was looking to “get [himself] out of that whole situation”139 with Schaeffer and
O’Brien, given their souring relationship; in short, he was looking to appease them
and “get[] them out of the deal and move forward.”140 O’Brien and Schaeffer were
both aware of Garrison’s involvement and, by the time buyout discussions began,
knew Malmberg was the sole owner of the Subdivision and that Lockwood only held
134
Id. at 2–3.
135
Id. at 2.
136
Id. at 2–3.
137
Id. at 3.
138
JX 50; see Tr. 334. Schaeffer explained he had discussions with Garrison about
Garrison Homes building “spec houses” in the Subdivision and Lockwood later approached
Garrison behind Schaeffer’s back. Id.
139
Tr. 255.
140
Id.
26
a profit interest.141 Over the months that followed, Garrison and Lockwood
negotiated a price for Garrison to buy out O’Brien and Schaeffer’s interests, which
Garrison eventually came to understand were a share of Lockwood’s profits rather
than an ownership stake.142 The communications also support the continued
treatment of O’Brien and Schaeffer as Lockwood’s responsibility.143
Lockwood, Biggs, and O’Brien prepared a draft agreement, titled “Transfer
of Profit Interest” (the “First Draft Release”).144 The First Draft Release read, in its
entirety:
141
See, e.g., id. 59–60, 92–94. But see id. 46. Schaeffer insisted that at this point, he
“didn’t really know what that 85 percent really meant” and maintained that he owned 33%
of the Subdivision. Id. 337, 383–86. I do not find his testimony credible on this point,
given that he saw and perhaps helped prepare documents referencing Lockwood’s profit
interest, and given his pursuit of a share of Lockwood’s profits. See id. 47, 100, 336.
O’Brien, who worked in Lockwood’s office, was aware that Malmberg owned DBC and
Lockwood owned a profit interest. See id. 59; see also id. 81. It is not credible that O’Brien
knew about Lockwood’s interest but Schaeffer, who was working with O’Brien and
Lockwood to negotiate a buyout involving that interest, somehow did not. But see id. 332.
See JX 54 at 1. Garrison initially believed that in buying out O’Brien and Schaeffer, he
142
was buying “50 percent ownership of the development.” JX 50.
143
See JX 54 at 1; see also JX 50 (“I do realize that this does not really benefit Conny or
Don BUT . . . . I have no interest in dealing with the other 2 Dirt bags that I am buying out.
If you want to pass this on to them thats fine BUT . . they have horrible reputations in the
industry and I’m not dealing with them. So, if you want a better partner to go forward with
I am your guy and your better off to keep this to yourself. If the deal doesn’t pan out I still
have 35 mil in custom homes this year to build and it won’t hurt my feelings. Conny, you
are a top notch guy and I have the utmost respect for you. Don, the same to you. This is a
chicken shit deal and we can do tons together going forward.” (ellipses in original)).
144
Tr. 42; JX 52 at 2. It is unclear whether Schaeffer participated in drafting this document,
though O’Brien testified Schaeffer prepared some version of a release. Tr. 100.
27
Whereas, Deep Branch Creek, LLC a Delaware limited liability
company is the fee simple owner of 26 improved residential lots located
off Route 5 Milton, Delaware and
Whereas, Deep Branch Creek, LLC hereinafter (DBC) and Lockwood
Design & Construction hereinafter (LDC) did enter into an agreement
dated January 20, 2016 for a Construction Management Agreement and
improvements as to the aforesaid lots and
Whereas, pursuant to said agreement LDC was to receive a
Construction Management fee and an additional fee of 85% of the Net
profit from the sale of the aforesaid residential lots and
Whereas, pursuant to an agreement with LDC, John E. O’Brien
hereinafter (JEO) and Mark G. Schaeffer hereinafter (MGS) were to
respectfully receive an equal interest in the 85% profit or 28.33% each.
Now therefor, for and in consideration of the sum of One Dollar and
other good and valuable consideration as set forth herein the
undersigned parties do hereby agree as follows to wit
1. It is hereby agreed that MGS and JEO for and in consideration
of the Sum Of $100,000 shall transfer their aforesaid share of
28.33% profit to Garrison Homes, Inc. as follows
a. Garrison Homes, Inc. shall pay the sum of $50,000 each
to JEO and MGS on or before May 2, 2017 which shall
transfer ½ of the aforesaid profit interest or 14.16% each.
b. Garrison Homes shall pay an additional sum of $50,000
each to JEO and MGS on or before June 2, 2017 which
shall transfer the remaining ½ of the aforesaid profit
interest
2. JEO and MGS do hereby release LDC from any and all
obligations as to their respective share of the net profit.
3. This agreement may only be modified by the parties in writing.
28
4. This agreement is made pursuant to the laws of the State of
Delaware.145
On May 1, Biggs sent it to Malmberg and O’Brien.146 Schaeffer did not sign the
First Draft Release.147
Later that afternoon, Biggs sent Malmberg a revised version (the “Second
Draft Release”).148 This release did not mention Schaeffer and O’Brien, but instead
contemplated Garrison would buy 50% of Lockwood’s 85% profit interest from
Lockwood for the same $200,000.149 Biggs did not send the Second Draft Release
to O’Brien.150
On May 2, Lockwood, Malmberg, and Garrison exchanged more emails about
the Subdivision’s development plan and its profit estimates.151 Garrison asked
Malmberg:
145
JX 52 at 2.
146
Id. at 1.
147
See id. at 2; Tr. 336. O’Brien could not remember if he ever signed his, but it appears
he did not. Tr. 100; JX 52 at 2.
148
JX 53 at 12.
149
Id. at 2.
150
Id. at 1. Cf. JX 52 at 1 (copying O’Brien on the email sending the First Draft Release).
151
See JX 54 at 13.
29
Conny, just a little further clarification. My 50 percent will be
considered an investment and I am an “investor” not an “owner”?
Please correct me if I’m wrong? If I am correct then you will be
responsible for finaling out the subdivision with SDC, Deldot etc etc.
is this correct? I’m just trying to continue to clarify and understand
what I am buying and what my responsibilities are and are not.152
Malmberg responded:
By way of further answer. I own and am developing the subdivision
and am selling lots. Dons company is acting as project manager and in
return gets 1500 a lot and 85% of net profits after my investment the
loan and a return on my investment is repaid. I am not now nor have I
ever been involved in the arrangement between don and john and mark
and frankly did not know of it until very recently. I am guessing [your
attorney] will want some sort of partnership agreement between you
and Don regarding spelling out the same.153
On May 3, Lockwood sent Malmberg and Garrison a signed version of the Second
Draft Release.154 On May 8, Malmberg explained to Kevin Baird, Garrison’s
attorney, that Garrison would purchase “50% of LDC’s [Lockwood’s] interest which
is 85% of the net profit,” attaching the Development Agreement and forwarding his
April 27 projection email.155 Baird responded: “That’s what I thought too from the
agreement. But I guess that’s not what Don [Lockwood] was telling Jeff [Garrison].
I’ll see what Jeff wants to do.”156 Malmberg answered: “I do not have a dog in the
152
Id. at 1.
153
Id.
154
JX 55 at 13.
155
JX 56 at 13.
156
Id. at 1.
30
fight. Don basically wants to get rid of John O’Brien and Mark Schaeffer as partners
and replace with Jeff. (Understandable plan) and they both need cash.”157
Through late May and June, Lockwood, Malmberg, Garrison, and Baird
continued to discuss Garrison’s terms.158 Lockwood sent O’Brien and Schaeffer a
third draft document, which recited that Lockwood’s construction company “is
entitled to 85% of the Net Profit” from selling lots in the Subdivision, that Schaeffer
“is entitled to a percentage of that Net Profit,” and that in exchange for $100,000,
Schaeffer would “release all of his right title and interest in any and all Net Profit”
to Lockwood’s company.159 Schaeffer never signed this document, though
Lockwood sent it to him with instructions to do so.160
Discussions between Lockwood and Garrison stalled, and Garrison backed
out entirely on June 13.161 Malmberg forwarded Garrison’s exit message to O’Brien,
letting him know talks had ended.162
157
Id.
158
Id.; JX 57; JX 59; JX 60.
159
JX 58 at 5. Lockwood did not dispute that Schaeffer was “entitled to” a percentage of
the Subdivision’s profits. See Tr. 253 (“Q. In the draft release of net profit interest, it says,
‘Whereas, Mark G. Schaeffer is entitled to a percentage of that Net Profit.’ Was that just
not true? He was not entitled to a percentage? A. He was entitled to a percentage at the
end of the day, after the whole project was done. I mean, I gave, you know, John O’Brien
and Mark, if we make money, we’ll disburse it.”).
160
JX 58 at 1.
161
JX 60 at 1.
162
Id.; Tr. 48.
31
Garrison’s decision created a “dilemma” for O’Brien.163 He needed cash and
was counting on a buyout to help. On June 15, he emailed Malmberg, indicating he
had interested buyers for his “interest,” but those offers were contingent on the
buyers striking a takedown agreement for the remaining lots.164 O’Brien suggested
per lot prices between $100,000 and $125,000.165 Malmberg responded, “I would
go lower to get them sold.”166
F. Lockwood Trades Malmberg His Profit Interest In The
Subdivision; Schaeffer and O’Brien Confront Lockwood.
By late 2017, Lockwood and Malmberg were experiencing “partner fatigue”
and Lockwood was looking for an exit.167 The pair also had joint investments and
unrelated debts in other business ventures, including Lockhaven Farm, LLC, which
owned a 125-acre farm in Sussex County called Hoch Farm.168 Lockwood’s entity
controlled two-thirds of the Hoch Farm project, while Malmberg’s entity controlled
the other third.169 Malmberg and Lockwood began discussing a swap whereby
Lockwood would exit the Subdivision project in exchange for consideration in other
163
JX 61.
164
Id.
165
Id.
166
Id.
167
Tr. 203; see also id. 256–57.
168
See, e.g., id. 163–64, 211–12.
169
Id. 163–64; JX 62 at 35; JX 63 at 1.
32
projects.170 On December 6, Malmberg sent Lockwood a lengthy email discussing
a potential deal.171 He wrote, “I do not know what your arrangements are with Mark
[Schaeffer] and John [O’Brien] on DBW but you would need to work that out.
Maybe give them my share of Riverwalk [another property] which I would
relinquish for just a return of my 155k cash in.”172
Lockwood and Malmberg eventually struck a deal. Lockwood agreed to
release the Development Agreement and his associated interest in the Subdivision.173
In exchange, Malmberg assigned his interest in Hoch Farm to Lockwood.174 Their
deal also included settling certain debts and other obligations associated with the
Hoch Farm project; Lockwood paid Malmberg $500,000 in connection with these
settlements.175 Lockwood and Malmberg reduced their agreement to writing on
December 21.176
Schaeffer and O’Brien were not privy to Malmberg and Lockwood’s swap.
O’Brien first learned about it in April 2018, during a phone call with Malmberg in a
170
Tr. 165–68; JX 62 at 1; JX 63 at 1; see also JX 64; JX 65.
171
See JX 63 at 1.
172
Id.
173
JX 64 at 1.
174
JX 65 at 1.
175
Id.; JX 66 at 2; Tr. 167, 180–81.
176
JX 64 at 1; JX 65 at 1.
33
Wawa parking lot.177 At Malmberg’s suggestion, O’Brien confronted Lockwood.178
Lockwood initially denied the transfer, but later admitted it.179 Lockwood then paid
O’Brien three checks, totaling $8,000, with the notation “DBW,” as payment for
O’Brien’s efforts in the Subdivision.180 This payment was consistent with
Lockwood and O’Brien’s past dealings.181
Schaeffer learned of Lockwood’s Hoch Farm swap from O’Brien and Ruby
Schaeffer.182 On April 11, Schaeffer emailed Lockwood, copying Ruby Schaeffer.
Don it has come to my attention that you have unilaterally sold our joint
ownership in Deepbranch Woods. Please let me know when I can pick
my check up. Thanks183
177
See Tr. 36–39, 52, 56, 59. O’Brien and Malmberg testified inconsistently on this point.
O’Brien variously suggested that he learned about not only the Hoch Farm swap, but also
Lockwood’s 85% profit interest during this conversation. He initially had trouble
remembering the correct year. Malmberg suggested O’Brien learned about the
Development Agreement before their April 2018 conversation. See id. 171–72. I have
already concluded O’Brien and Schaeffer were aware of the Development Agreement by
the time buyout conversations with Garrison were underway. But O’Brien’s testimony that
he learned about the Hoch Farm transaction in April 2018 is both credible and supported
by the record.
178
Id. 36–37.
179
Id. 37–39.
180
Id. 38, 61, 285.
181
See id. 173 (“And that was consistent with my understanding that in the history of Don
and John’s relationship, whereby John would assist Don with various projects, and Don
would pay John 5 grand here, 10 grand there, depending upon the success or failure of the
project.”).
182
Id. 38.
183
JX 67 at 1.
34
Lockwood responded the next day, “I thought John told you that you will get your
share profits as lots settle and conny [Malmberg] is paid off what he’s taking.”184
Schaeffer replied, alluding to the Hoch Farm transaction, and asking to see written
agreements with Malmberg.
We understand from John Obrien that our interest in Deepbranch Woods was
sold and a “farm” was acquired in the Milton area. If that information is not
correct please let us know. Please forward us a copy of the contractual
agreements we have with Conny Malmberg.185
Lockwood responded, “I never had any signed agreements.”186
With Lockwood out of the picture, Malmberg eventually sold off the
remaining lots in the Subdivision. Lockwood characterized this as a “fire sale.”187
Today, neither Lockwood nor Malmberg owns any interest in the Subdivision.
Schaeffer’s complaint followed on December 21, 2018.188
G. After Litigation Begins, Lockwood Reaches Out To O’Brien
About The Subdivision.
Litigation only fueled the parties’ dispute, which spread to another venture
among Lockwood, O’Brien, and Schaeffer. As background, Lockwood, Schaeffer,
and O’Brien jointly own a Washington state cannabis farm through 222
184
Id.
185
JX 68 at 1.
186
Id.
187
Tr. 256–57.
188
D.I. 1 [hereinafter “Compl.”].
35
Enterprises.189 In June 2015, Lockwood sold 5% of his interest in the entity to Stein
for $300,000.190 Lockwood planned to recoup part of his interest by purchasing
1.66% interests from Schaeffer and O’Brien for $100,000 each.191 O’Brien does not
dispute that Lockwood paid him $100,000, but contends it was meant to cover
outstanding consulting fees.192
As for Schaeffer, in August 2015 Lockwood’s holding company wrote two
checks to Schaeffer Management, a company Ruby Schaeffer owns: one check for
$51,190 for “Consulting,” and one for $50,000.193 Lockwood contends these checks
paid Schaeffer for a 1.66% interest in 222 Enterprises, but Schaeffer never
transferred the interest.194 The record contains a bill of sale for such a transaction
between Lockwood and Schaeffer, but Schaeffer did not sign it.195 Lockwood also
explained that Ruby Schaeffer asked him to make out the checks to Schaeffer
189
Tr. 53–54, 69, 271.
190
Id. 53–54, 260–62.
191
Id. 54, 260–62.
192
Id. 55.
193
JX 8 at12.
194
Tr. 263–65.
195
JX 7 at 12.
36
Management.196 Schaeffer disputes that these checks were for any interest in 222
Enterprises.197
On January 31, 2019, weeks after Schaeffer initiated this action, Lockwood
saw an opportunity to arrange for global peace regarding both the Subdivision and
222 Enterprises. He sent a message to O’Brien, referencing an earlier phone call.198
Lockwood suggested redirecting the 2015 payments he made to O’Brien and
Schaeffer Management to serve as satisfaction for any interest Schaeffer and
O’Brien had in the Subdivision, and surrendering his claim for part of their stakes in
222 Enterprises.
As you stated today on the call . . . you and Mark will retain you 12.5%
and are not transferring 1.66% for the $100,000 you received from me
as was agreed. Plse acknowledge that is will serve as all compensation
for any potential profits from deep branch. I will be sending a similar
email to Mark Schaffer as his interest has not reflected him transferring
1.66% to me for the $100,000 he received from me.199
196
Tr. 263–64.
197
E.g., id. 340–41.
198
JX 71.
199
Id.
37
The record does not include any response from O’Brien, nor does it include a similar
message to Schaeffer.
H. This Litigation
On December 21, 2018, Schaeffer filed his Verified Complaint in this action
(the “Complaint”).200 The Complaint asserts five causes of action. Counts I through
III, for “specific performance,” breach of contract, and breach of the implied
covenant of good faith and fair dealing, are based in Schaeffer’s view that he and
Lockwood had a contract related to his interest in the Subdivision.201 Counts IV and
V assert quasi-contract claims for promissory estoppel and unjust enrichment.202
Lockwood answered the Complaint on February 4, 2019, asserting a counterclaim
against Schaeffer for failing to transfer the 1.66% interest in 222 Enterprises.203
After discovery and an ill-fated attempt at summary judgment,204 the parties
proceeded towards trial, which was rescheduled multiple times.205 This matter was
200
See generally Compl.
201
See id. ¶¶ 27–40.
202
See id. ¶¶ 41–49.
203
See D.I. 6.
204
See, e.g., D.I. 26; D.I. 27; D.I. 28; D.I. 33; D.I. 34.
205
E.g., D.I. 36; D.I. 45; D.I. 47.
38
tried on February 9 and 10, 2021.206 The parties completed their post-trial briefs and
I took this matter under advisement on July 2.207
II. ANALYSIS
The parties have the burden of proving their respective claims at trial by a
preponderance of the evidence.208 “Proof by a preponderance of the evidence means
proof that something is more likely than not.”209 This “means that certain evidence,
when compared to the evidence opposed to it, has the more convincing force and
makes you believe that something is more likely true than not. By implication, the
preponderance of the evidence standard also means that if the evidence is in
equipoise, Plaintiffs lose.”210
Schaeffer seeks a share of the Subdivision or its profits. Nobody involved in
the project—including Lockwood—meaningfully disputes Schaeffer’s involvement
with the Subdivision or his entitlement to some payment as a result. Indeed,
Lockwood has consistently recognized, both before and after this litigation began,
206
D.I .56.
207
D.I. 69.
208
Martin v. Med-Dev Corp., 2015 WL 6472597, at *10 (Del. Ch. Oct. 27, 2015).
209
Id. (quoting Agilent Techs., Inc. v. Kirkland, 2010 WL 610725, at *13 (Del. Ch.
Feb. 18, 2010)).
210
Id. (internal quotation marks and footnotes omitted) (quoting Agilent Techs., 2010 WL
610725, at *13, and then quoting OptimisCorp v. Waite, 2015 WL 5147038, at *55 (Del.
Ch. Aug. 26, 2015)).
39
that Schaeffer is entitled to some compensation for his efforts on the Subdivision
project.
Schaeffer advances three broad legal theories to capture this essentially
undisputed payment. Only one fits the facts. He primarily argues that he, O’Brien,
and Lockwood struck an oral agreement to split the Subdivision’s profits equally.
Schaeffer failed to make that showing by a preponderance of the evidence, dooming
his contract-based claims. He also failed to establish promissory estoppel by clear
and convincing evidence. But Schaeffer has proven the elements of unjust
enrichment and is entitled to a remedy under that theory.
A. Schaeffer Has Not Proven A Contract.
Schaeffer’s claims in Counts I, II, and III depend on the existence of a
contract. He attempts to support these claims by showing he and Lockwood were
parties to an oral contract. Whether an oral contract exists is a question of fact.211
“Under Delaware law, a party asserting a breach of an oral agreement must prove
the existence of an enforceable contract by a preponderance of the evidence. Where
a party seeks an award of specific performance, however, the burden of proof is clear
211
E.g., Cole v. State, 922 A.2d 354, 359 (Del. 2005) (citing Wheeler v. Clerkin, 871 A.2d
1129 (Del. 2005) (TABLE), and Philips Bros. Elec. Contrs., Inc. v. Great Am. Ins. Co.,
133 Fed. Appx. 815, 816 (3d Cir. 2005)). Cf. Eagle Force Hldgs., LLC v. Campbell, 187
A.3d 1209, 1213 (Del. 2018) (noting the parties’ “inten[t] to be bound . . . is a question of
fact,” but “whether the contract’s terms are sufficiently definite[] is largely a question of
law”).
40
and convincing evidence.”212 Schaeffer has failed to meet the more lenient
preponderance of the evidence standard.
Under Delaware law, “the formation of a contract requires a bargain in which
there is a manifestation of mutual assent to the exchange and a consideration.”213 A
valid contract exists only if “the parties have manifested mutual assent to be bound
by that bargain.”214 Parties may be bound by an oral or written agreement only where
“evidence reveals manifestations of assent that are in themselves sufficient to
conclude a contract.”215
“[M]anifestation of mutual assent is an external or objective standard for
interpreting conduct.”216 A party “manifests an intention [to be bound] if he believes
or has reason to believe that the promisee will infer that intention from his words or
212
Pulieri v. Boardwalk Props., LLC, 2015 WL 691449, at *5 (Del. Ch. Feb. 18, 2015)
(footnote omitted) (citing Grunstein v. Silva, 2014 WL 4473641, at *16 (Del. Ch.
Sept. 5, 2014) aff’d, 113 A.3d 1080 (Del. 2015) (ORDER)).
213
Sarissa Cap. Domestic Fund LP v. Innoviva, Inc., 2017 WL 6209597, at *21 (Del. Ch.
Dec. 8, 2017) (quoting Wood v. State, 2003 WL 168455, at *2 (Del. Jan. 23, 2003)
(ORDER)); Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (“[A] valid
contract exists when (1) the parties intended that the contract would bind them, (2) the
terms of the contract are sufficiently definite, and (3) the parties exchange legal
consideration.” (citing Carlson v. Hallinan, 925 A.2d 506, 524 (Del. Ch. 2006))).
214
Innoviva, 2017 WL 6209597, at *21 (citing Osborn, 991 A.2d at 1158).
215
Id. (alterations and internal quotation marks omitted) (quoting Loppert v. WindsorTech,
Inc., 865 A.2d 1282, 1288 (Del. Ch. 2004)).
216
Chemours Co. v. DowDuPont Inc., 2020 WL 1527783, at *10 n.130 (Del. Ch.
Mar. 30, 2020) (internal quotation marks omitted) (quoting Restatement (Second) of
Contracts § 2 cmt. b (1981)).
41
conduct.”217 Mutual assent “means the external expression of intention as
distinguished from undisclosed intention.”218 The Court determines whether there
has been mutual assent “based upon [the parties’] expressed words and deeds as
manifested at the time rather than by their after-the-fact professed subjective
intent.”219
“A contract must contain all material terms in order to be enforceable, and
specific performance will only be granted when an agreement is clear and definite
and a court does not need to supply essential contract terms.”220 Even if the parties
agree to be bound, “where the[y] fail to agree on one or more essential terms, there
is no binding contract.”221 Thus, the “relevant inquiry” is
whether a reasonable negotiator in the position of one asserting the
existence of a contract would have concluded, in that setting, that the
agreement reached constituted agreement on all of the terms that the
parties themselves regarded as essential and thus that agreement
concluded the negotiations.222
217
Restatement (Second) of Contracts § 2 cmt. b (1981).
218
Id.
219
Innoviva, 2017 WL 6209597, at *21 (alterations omitted) (quoting Debbs v. Berman,
1986 WL 1243, at *7 (Del. Ch. Jan. 29, 1986)).
220
Osborn, 991 A.2d at 1159 (alterations and internal quotation marks removed) (quoting
Ramone v. Lang, 2006 WL 905347, at *10 (Del. Ch. Apr. 3, 2006)); see also Eagle Force,
187 A.3d at 1229–30.
221
Patel v. Patel, 2009 WL 427977, at *3 (Del. Super. Feb. 20, 2009) (citing Corbin on
Contracts § 30 (1963)).
222
Innoviva, 2017 WL 6209597, at *21 (alterations omitted) (quoting Leeds v. First Allied
Conn. Corp., 521 A.2d 1095, 1097 (Del. Ch. 1986)); see Harrison v. Dixon, 2013 WL
4759681, at *2 (Del. Ch. Sept. 5, 2013) (MASTER’S REPORT) (quoting Loppert, 865
A.2d at 1285); see also Restatement (Second) of Contracts § 2 (1981).
42
“Where the objective, contemporaneous evidence indicates that the parties have
reached an agreement, they are bound by it, regardless of its form or the manner in
which it was manifested.”223 With these principles in mind, I consider the factual
question of whether Schaeffer has proved a contract by a preponderance of the
evidence. I find he has not.
Schaeffer argues that in 2015, he, Lockwood, and O’Brien orally agreed to
split the Subdivision’s net profits in equal one-third shares.224 He relies on an
eleven-item list of circumstantial evidence, including emails between the trio,
statements by Lockwood and Malmberg, buyout discussions with Garrison, and
other after-the-fact comments.225 But the evidence that Schaeffer, Lockwood, and
O’Brien agreed to be equal partners in 2015 is thin. The strongest piece of evidence
is Lockwood’s June 2015 email to O’Brien and Schaeffer, asking O’Brien to set up
an LLC called “deep Branchwoods LLC” with the three as “33% partners.”226 But
223
Innoviva, 2017 WL 620597, at *21 (quoting Debbs, 1986 WL 1243, at *); see also
Restatement (Second) of Contracts §§ 18, 19 (noting that party may assent by conduct,
rather than words, promise, or performance). In making that determination, I consider “all
of the surrounding circumstances, including the course and substance of the negotiations,
prior dealings between the parties, customary practices in the trade or business involved
and the formality and completeness of the document (if there is a document) that is asserted
as culminating and concluding the negotiations.” Leeds, 521 A.2d at 1102.
224
See D.I. 62 at 1.
225
See id. at 20–22; D.I. 66 at 9–11.
226
JX 6.
43
O’Brien and Schaeffer understood this message as proposing a joint venture in an
entity purchasing the Subdivision, not each taking an equal share of profits while
someone else owned the Subdivision.227
More fundamentally, O’Brien and Schaeffer both admit they did not follow
through on this arrangement. Neither man responded to the message. And O’Brien
never formed the entity Lockwood mentioned.228 When Malmberg and Lockwood
formed DBC, Schaeffer and O’Brien never objected. In fact, O’Brien testified that
he and Schaeffer “were never to be owners in the entity” because “[t]hat was Conny
[Malmberg]’s deal” and that he and Schaeffer were, instead, “always [going] to get
just a profit share.”229 Without evidence of an “outward, objective manifestation[]
227
See Tr. 13 (“So it was my [O’Brien’s] understanding -- and I think it’s evidenced by an
email that Don sent to me -- that, you know, we would all have an equal -- some type of
equal interest in the property, one-third, one-third, one-third. And I believe at one time he
asked me to go ahead online and create an LLC, you know, reflecting that Mark, he, and
myself each had a one-third equal interest.”); id. 303 (“Q. . . . Who, to your understanding,
would be ready to go to contract? A. John, myself [Schaeffer], and Don Lockwood. John
O’Brien, myself, and Don Lockwood. Q. Okay. Was there any discussion about how the
project would be shared, if any? A. Yeah. We had extensive discussions. It was -- we
were all going to be equal partners, 33 percent split. Q. Okay. Let’s go to JX 6, please.
There is an email from Don Lockwood to John O’Brien and Mark Schaeffer. Can you take
a look at that and see if you recognize that. A. Yeah. That’s Don Lockwood asking John
O’Brien to make sure that he got the LLC together, putting us in each as 33 percent partners
in the Deep Branch Woods subdivision.”). Schaeffer doubled down on his argument that
the parties agreed to form an LLC in an attempt to overcome Lockwood’s statute of frauds
defense. See D.I. 66 at 13–14. I do not reach the issue of whether an oral agreement would
be enforceable here, as I find the parties never reached such an agreement in the first place.
228
See Tr. 16 17, 223, 358–59.
229
See Tr. 81 (“My understanding of the deal was always, is that -- and this, I think, is
evidenced from the emails and the conduct, you know, that we had amongst us -- was that
Mark, myself, and Don were always to get just a profit share. We were never to be owners
44
of assent,” I cannot conclude the parties reached an agreement on the terms of
Lockwood’s June 2015 email.230 A reasonable negotiator in Schaeffer’s position
would not have concluded this unilateral email constituted the end of discussions
between the parties.231
Beyond that initial email, Schaeffer seizes on several other “admissions” by
Lockwood that evidence a decision to go into business together, but are too vague
and varying to serve as contractual terms.232 “Where terms in an agreement are so
vague that a Court cannot determine the existence of a breach, then the parties have
not reached a meeting of the minds, and a Court should deny the existence of the
alleged agreement.”233 For example, Schaeffer relies on a document disclosing
Lockwood’s interest in the Subdivision; that document reflects Lockwood owned
in the entity. That was Conny’s deal. That was part of his participation for getting his
interest in the deal, was that he was going to arrange for the financing, and in return for
that, we were going to put him in the deal as an equal partner.”).
230
See Eagle Force, 187 A.3d at 1230 n.143 (“Since the formation of informal contracts
depends not upon an actual subjective meeting of the minds, but instead upon outward,
objective manifestations of assent, an actual intention to accept is unimportant except in
those situations when the acts or words of the offeree are ambiguous.” (alteration and
internal quotation marks omitted) (quoting 2 Williston on Contracts § 6:3 (4th ed.))).
231
See Innoviva, 2017 WL 6209597, at *21; see also Leeds, 521 A.2d at 1102 (“Until it is
reasonable to conclude, in light of all of these surrounding circumstances, that all of the
points that the parties themselves regard as essential have been expressly or (through prior
practice or commercial custom) implicitly resolved, the parties have not finished their
negotiations and have not formed a contract.”).
232
See D.I. 61 at 23; D.I. 66 at 2.
233
Eagle Force, 187 A.3d at 1232 n.160 (internal quotation marks omitted) (quoting Cont’l
Ins. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1230 (Del. Ch. 2000)).
45
25%, not 33%.234 He also points to Lockwood’s conversations with Garrison about
Garrison “buy[ing] out” a 50% interest held by Schaeffer and O’Brien for $100,000
each.235 Lockwood later corrected Garrison that Schaeffer and O’Brien each held
an “equal interest” in his 85% profit share, or approximately 28.33% profit
interests.236 As time passed, the descriptions about Schaeffer’s stake became more
vague. Malmberg generally referenced Lockwood trying to “get rid of John O’Brien
and Mark Schaeffer as partners.”237 In 2017 and 2018, Lockwood referenced
O’Brien and Schaeffer being broadly entitled to “a percentage” 238 or his “share
profits.”239
These statements support the conclusion that the parties had some kind of
arrangement, and that Lockwood understood Schaeffer deserved something in
recognition of his “bird-dogging” efforts. The men may have considered themselves
“partners,” at least in the colloquial sense.240 But Schaeffer, Lockwood, and O’Brien
234
See JX 49 at 3; see also Tr. 245–47.
235
See JX 50.
236
JX 52 at 2.
237
JX 56.
238
JX 58 at 5.
239
JX 68 at 2.
240
Schaeffer has not presented any argument that the trio formed a common law
partnership. Cf. Jackson v. Nocks, 2018 WL 1935961, at *4–5 (Del. Ch. Apr. 24, 2018)
(addressing an argument that the parties formed a partnership under 6 Del. C. § 15-202 in
the alternative to a breach of contract claim).
46
never reached a meeting of the minds on what that relationship would look like.
Schaeffer has variously suggested he owns an interest in 25%, 28.33%, and 33.33%
in the Subdivision or its profits.241 While Lockwood’s understanding sharpened
when he perceived Garrison offered a way to appease Schaeffer and O’Brien and
remove them from the project, even these more concrete statements fail to illustrate
any mutually agreed-upon terms. Indeed, the uncertainty surrounding Schaeffer’s
and O’Brien’s interest is part of what drove Garrison away from the buyout talks.
The terms were uncertain because the parties never had a meeting of the minds.242
The shifting and uncertain terms reflect the parties’ overarching dynamic of
side conversations, pacifying broad promises, and “fluid” negotiations.243 The
evidence at trial supports the existence of a business relationship, but does not permit
the conclusion that a reasonable negotiator in Schaeffer’s position would have
concluded that these discussions “constituted agreement on all of the terms that the
parties themselves regarded as essential and thus that agreement concluded the
241
E.g., D.I. 62 at 20–21; D.I. 66 at 9–10.
242
When pressed, Schaeffer fell back on vague statements that do not illuminate any
agreement’s terms. See Tr. 375 (“I just knew I was a partner in the deal.”); id. 383 (“I
knew I had an interest in this project”); id. 360 (“I just knew that we were doing this deal
and we were all partners.”).
243
E.g., Tr. 216, 262, 320.
47
negotiations.”244 Thus, I find Schaeffer has failed to establish the existence of a
contract with Lockwood by a preponderance of the evidence.
This finding has several consequences. First, it dooms Count II, Schaeffer’s
breach of contract claim. Because he cannot show the existence of a contract by
preponderance of the evidence, he also cannot show the necessary clear and
convincing evidence required to earn specific performance, dooming Count I.
Count III for breach of the implied covenant of good faith and fair dealing
also fails. “Despite the appearance in its name of the terms ‘good faith’ and ‘fair
dealing,’ the covenant does not establish a free-floating requirement that a party act
in some morally commendable sense.”245 Rather, the implied covenant is a limited
gap-filling mechanism, tied to the language of an existing contract. Imposing
obligations through the implied covenant is a “cautious enterprise,”246 guided by
“what was expressly agreed upon” in the language of the contract itself.247 The
implied covenant does not exist in the absence of a contract.
Judgment is entered for Lockwood on Counts I, II, and III.
244
Innoviva, 2017 WL 6209597, at *21 (quoting Leeds, 521 A.2d at 1097).
Allen v. El Paso Pipeline GP Co., L.L.C., 113 A.3d 167, 182–83 (Del. Ch. 2014), aff’d,
245
2015 WL 803053 (Del. Feb. 26, 2015) (TABLE).
246
Superior Vision Servs., Inc. v. ReliaStar Life Ins. Co., 2006 WL 2521426, at *6 (Del.
Ch. Aug. 25, 2006).
247
Lonergan v. EPE Hldgs., LLC, 5 A.3d 1008, 1018 (Del. Ch. 2010) (quoting Katz v. Oak
Indus. Inc., 508 A.2d 873, 880 (Del. Ch. 1986)); see El Paso Pipeline, 113 A.3d at 183.
48
B. Schaeffer Has Not Proven Promissory Estoppel.
Schaeffer also presents two quasi-contract claims. Count IV is for promissory
estoppel. “Promissory estoppel is fundamentally a narrow doctrine, designed to
protect the legitimate expectations of parties rendered vulnerable by the very
processing of attempting to form commercial relationships.”248 To establish this
claim,
a plaintiff must prove by clear and convincing evidence that: “(i) a
promise was made; (ii) it was the reasonable expectation of the
promisor to induce action or forbearance on the part of the promisee;
(iii) the promisee reasonably relied on the promise and took action to
his detriment; and (iv) such promise is binding because injustice can be
avoided only by enforcement of the promise.”249
248
Ramone, 2006 WL 905347, at *14; see also id. (“For that reason, although it is
permissible to award a party prevailing on a claim for promissory estoppel expectation
damages comparable to that it would have received had the hoped-for contract actually
been effected, the more routine role of promissory estoppel should be to assure that those
who are reasonably induced to take injurious action in reliance upon non-contractual
promises receive recompense for that harm. Even when used in that careful manner, the
doctrine of promissory estoppel hazards unfairness, as many possible contractual
relationships in commerce require the hopeful partners to expend costs and put aside other
opportunities in the hopes of forging an agreement. Therefore, courts must be chary about
invoking the doctrine lightly, lest the normal failure of parties to reach a binding contract
be penalized by an imprecise judicial cost-shifting exercise.” (footnote omitted)).
249
Windsor I, LLC v. CWCapital Asset Mgmt. LLC, 238 A.3d 863, 876 (Del. 2020) (quoting
SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d 330, 347–48 (Del. 2013)); see McKee v.
McKee, 2007 WL 1378349, at *23 (Del. Ch. May 3, 2007) (reciting this standard and
applying it in a post-trial opinion) (citing Lord v. Souder, 748 A.2d 393, 399 (Del. 2000)).
49
Promissory estoppel requires “a real promise, not just mere expressions of
expectation, opinion, or assumption.”250 Such a promise must be “reasonably
definite and certain.”251 Schaeffer’s burden of clear and convincing evidence
requires evidence that “produces an abiding conviction that the truth of the
contention is highly probable.”252
Schaeffer failed to carry this heavy burden at trial. He has not established the
first element: that Lockwood made a reasonably definite and certain promise.
Schaeffer, Lockwood, and O’Brien had discussions on how to structure their joint
venture from March to June 2015, and Schaeffer particularly relies on Lockwood’s
June 2015 email asking O’Brien to set up an LLC with the trio as equal one-third
members. As I have explained, this statement conflicts with other evidence in the
250
James Cable, LLC v. Millennium Digital Media Sys., L.L.C., 2009 WL 1638634, at *5
(Del. Ch. June 11, 2009) (internal quotation marks omitted) (quoting Addy v. Piedmonte,
2009 WL 707641, at *22 (Del. Ch. Mar. 18, 2009)).
251
Id.252
In re Martin, 105 A.3d 967, 975 (Del. 2014) (internal quotation marks omitted) (quoting
In re Bailey, 821 A.2d 851, 863 (Del. 2003)). This is an exacting standard:
The clear and convincing standard requires evidence that produces in the
mind of the trier of fact an abiding conviction that the truth of the factual
contentions is highly probable. Similarly, the pattern civil jury instruction
used by the Delaware Superior Court provides, in part, [t]o establish proof
by clear and convincing evidence means to prove something that is highly
probable, reasonably certain, and free from serious doubt. We believe that
this pattern jury instruction is a proper articulation of the standard.
Hudak v. Procek, 806 A.2d 140, 147 (Del. 2002) (footnotes, alterations, and internal
quotation marks omitted) (compiling sources).
50
record, which variously suggests Lockwood contemplated Schaeffer would hold
25% or 28.33% in the Subdivision or its profits. And while Lockwood’s 2017 and
2018 acknowledgements of Schaeffer’s “percentage”253 or “share profits”254 support
the idea that Lockwood believed Schaeffer had some interest in the project, they fall
well short of clear and convincing evidence that Lockwood made a “reasonably
definite and certain” promise to Schaeffer of 33% of the Subdivision or its profits.255
These fluid conversations over the years never solidified into a promise. For
the same reasons these statements do not form the basis of a contract, I conclude
they are not clear and convincing evidence of a reasonably definite and certain
promise that Schaeffer would receive a one-third interest in an LLC owning the
Subdivision, nor one third of its profits.256
253
JX 58 at 5.
254
JX 68 at 2.
255
See James Cable, 2009 WL 1638634, at *5; see also McKee, 2007 WL 1378349, at *1
(rejecting promissory estoppel claim and noting “[v]arious agreements were drafted to
define [the parties’] business relationships, but none was ever accepted or signed” by the
claimant). The promissory estoppel plaintiff in McKee similarly attempted to cobble
together a “promise” based on circumstantial evidence. The Court noted that it failed to
meet its burden to show clear and convincing evidence: “George and JoAnn discussed, on
many occasions, George’s acquisition of an ownership interest in the Marina. They never
reached common ground and there is no credible direct evidence that JoAnn ever promised
George a one-half (or any other specific fractional) interest in the Marina.” McKee, 2007
WL 1378349, at *3 (footnotes omitted).
256
Malmberg testified that if Lockwood ever promised Schaeffer any particular interest,
he did not know what that interest was. See Tr. 161 (“And I think that if John [O’Brien]
and Mark [Schaeffer] were promised something, then they deserve what they were
promised. But I don’t know what it was.”).
51
Even Lockwood’s most concrete statements, made during buyout negotiations
with Garrison and beyond, cannot support a promissory estoppel claim. Schaeffer
fails to prove, as he must, that Lockwood made these statements with the expectation
they would induce Schaeffer into further work on the Subdivision.257 The First Draft
Release, which recited that Schaeffer and O’Brien were entitled to 28.33% of the
Subdivision’s profits,258 was made as part of Lockwood’s efforts to “feed the
wolfs”259 and ensure Schaeffer’s exit, not to induce him to stay. So were other draft
buyout documents Lockwood prepared.260 And more fundamentally, Schaeffer has
failed to prove he relied on Lockwood’s later statements. Schaeffer’s claimed
reliance was his “sweat equity”:261 the time and effort he put into “getting the
permits together, getting the approvals in place, keeping the approvals in place, and
helping manage the project through development and sale.”262 Most, if not all, of
these efforts occurred in 2015 and 2016, after Lockwood’s indefinite statements but
257
See, e.g., Windsor I, LLC, 238 A.3d at 876.
258
JX 52 at 2.
259
JX 38 at 1.
260
E.g., JX 58 at 5 (reciting that Schaeffer is “entitled to a percentage” of Lockwood’s 85%
profit interest).
261
See D.I. 62 at 28.
262
See Tr. 380. Schaeffer consistently described these efforts as his “equity” in the project.
E.g., id. 352, 368, 380.
52
long before the more specific 2017 buyout negotiations with Garrison.263 By the
time Lockwood emailed Schaeffer acknowledging his “share profits”264 in April
2018, Schaeffer was no longer involved in the project and, instead, was feuding with
Lockwood. Thus, Schaeffer’s early work was not induced by Lockwood’s more
particular 2017 statements.
Schaeffer has failed to establish the necessary elements for promissory
estoppel. Judgment is entered for Lockwood on Count IV.
C. Schaeffer Has Proven Unjust Enrichment.
Schaeffer’s final claim is for unjust enrichment. “Unjust enrichment is the
‘unjust retention of a benefit to the loss of another, or the retention of money or
property of another against the fundamental principles of justice or equity and good
conscience.’”265 “As its name implies, unjust enrichment is a flexible doctrine that
a court can deploy to avoid injustice.”266 It is “a theory of recovery to remedy the
263
See D.I. 62 at 28 (arguing Schaeffer’s efforts “[t]hroughout the summer of 2015”
support his promissory estoppel claim).
264
JX 68 at 2.
265
E.g., Doberstein v. G-P Indus., Inc., 2015 WL 6606484, at *6 (Del. Ch. Oct. 30, 2015)
(quoting Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 891–92 (Del. Ch. 2009)); Nemec
v. Shrader, 991 A.2d 1120, 1130 (Del. 2010) (quoting Fleer Corp. v. Topps Chewing Gum,
Inc., 539 A.2d 1060, 1062 (Del. 1988)).
266
Frederick Hsu Living Tr. v. ODN Hldg. Corp., 2017 WL 1437308, at *42 (Del. Ch.
Apr. 14, 2017).
53
absence of a formal contract.”267 To prevail on his unjust enrichment claim,
Schaeffer must prove the following elements by a preponderance of the evidence:
(1) an enrichment, (2) an impoverishment, (3) a relation between the enrichment and
impoverishment, (4) the absence of justification, and (5) the absence of a remedy
provided by law.268
Schaeffer has carried his burden. The first two elements—an enrichment and
an impoverishment—are connected.269 Lockwood received the benefit of
Schaeffer’s work as a real estate broker in finding and securing the Subdivision, as
well as his support of the project after Lockwood and Malmberg purchased it.270
267
Choupak v. Rivkin, 2015 WL 1589610, at *20 (Del. Ch. Apr. 6, 2015) (quoting ID
Biomedical Corp. v. TM Techs., Inc., 1995 WL 130743, at *15 (Del. Ch. Mar. 16, 1995)).
268
Nemec, 991 A.2d at 1130 (citing Jackson Nat. Life Ins. Co. v. Kennedy, 741 A.2d 377,
394 (Del. Ch. 1999), and Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 585 (Del. Ch.
1998)).
269
See id. at 1130 n.37 (“‘Impoverishment’ does not require that the plaintiff seeking a
restitutionary remedy suffer an actual financial loss, as distinguished from being deprived
of the benefit unjustifiably conferred upon the defendant.” (citing MetCap Sec. LLC v.
Pearl Senior Care, Inc., 2009 WL 513756, at *5 n. 26 (Del.Ch. Feb. 27, 2009), aff’d, 977
A.2d 899 (Del. 2009) (ORDER))).
270
I note that Schaeffer’s efforts may have, indirectly, enriched Malmberg, as well.
Malmberg is not a defendant in this action. “Unjust enrichment only is available to the
impoverished party if the enriched party is the defendant.” Encore Preakness, Inc. v.
Chestnut Health & Rehab. Gp., Inc., 2017 WL 5068753, at *3 (Del. Super. Nov. 1, 2017).
In Encore Preakness, the Superior Court quoted the following discussion from this Court’s
decision in United Health Alliance, LLC v. United Medical, LLC, 2014 WL 6488659 (Del.
Ch. Nov. 20, 2014):
54
Schaeffer’s emails to Cecil Bank during the initial negotiations suggest that
Lockwood would buy the Subdivision and that Schaeffer was representing him in
that endeavor.271 Lockwood, Malmberg, and Schaeffer all agreed Schaeffer “bird-
dogged” the project, attempting to secure the deal and compensation.272 After DBC
To recover under a theory of quasi contract, a plaintiff must demonstrate that
services were performed for the defendant resulting in its unjust enrichment.
It is not enough that the defendant received a benefit from the activities of
the plaintiff; if the services were performed at the behest of someone other
than the defendants, the plaintiff must look to that person for recovery.
Encore Preakness, 2017 WL 5068753, at *3 (alteration omitted) (quoting United Health,
2014 WL 6488659, at *8). The Encore Preakness Court then dismissed the unjust
enrichment claim because the plaintiff performed no services for the named defendants,
and, if those defendants were enriched, it was at the expense of a third party. 2017 WL
5068753, at *4.
Lockwood did not argue Schaeffer’s decision not to sue Malmberg bars recovery
here, and so, strictly speaking, it is waived. See Emerald P’rs v. Berlin, 726 A.2d 1215,
1224 (Del. 1999). Because the parties’ briefs were remarkably thin on unjust enrichment,
I have considered this issue anyway. I conclude that it does not bar recovery here because
Schaeffer’s efforts, especially early in the Subdivision project, were performed for
Lockwood, not Malmberg. Moreover, Lockwood and Malmberg understood that any role
Schaeffer and O’Brien had was part of Lockwood’s contribution to the deal and that it
would therefore be Lockwood’s responsibility to “feed the wolfs.” JX 38 at 1; Tr. 129,
236.
271
See, e.g., JX 15 at 96 (“Per our conversation yesterday, you were giving me until this
morning to speak with Don Lockwood regarding his purchase of the [Subdivision]. I spoke
with Don. I was unaware that he had already signed your contract and delivered it to the
escrow agent. He asked me to inform you that if Cecil Bank does not honor the contract
they sent him for the sale of [the Subdivision] that his attorney will be filing an action in
Chancery Court today to prevent the transfer of title to a third party. Please let me know
the banks position as Don would like to purchase this property.”).
272
See Tr. 114, 116, 185; see id. 317 (“But, you know, I was -- I was the one that was bird-
dogging this whole project.”); see also id. 146 (Malmberg discussing Schaeffer’s role as a
“project beneficiar[y]” and noting he had an “interest in getting paid a commission or some
other benefit out of the project . . . because he was putting effort into it”). I note that
Schaeffer testified that he “wasn’t a broker in this transaction,” but I discredit this
55
purchased the Subdivision, Schaeffer continued to aid the project by helping secure
a takedown agreement with Statera, working to avoid the County “sunsetting” the
project, and making periodic site visits. Lockwood engaged in protracted
negotiations with Garrison, recognizing Schaeffer had to be compensated.
Lockwood got the benefit of Schaeffer’s services, but did not compensate Schaeffer.
Thus, Lockwood was enriched, and Schaeffer suffered a related impoverishment.
In so many words, Lockwood argues that Schaeffer has not been
impoverished because DBC awarded Ruby Schaeffer the Listing Agreement on the
Subdivision as compensation for Schaeffer’s efforts.273 This contention has several
flaws. First, Ruby Schaeffer is not Mark Schaeffer. And there is no evidence in the
record to suggest Schaeffer agreed to this structure. Further, Ruby Schaeffer and
Gallo Realty had to work for their commissions; simply securing the Listing
Agreement was not enough to pocket the money. Finally, Lockwood’s argument
ignores the fact that even after the Listing Agreement, he continued to try to secure
a buyout for Schaeffer or otherwise have him surrender his interest in the
testimony as part of his effort to secure a profit share through litigation. See id. 352; see
also id. 318, 362.
273
See id. 242 (“That’s why we gave Ruby Schaeffer the listing, for compensation; and I
was paying Mr. O’Brien on a monthly basis to work the deal. And everyone knew the
deal.”); Tr. 285 (“I agreed with Conny [Malmberg] to allow Ruby Schaeffer, Mark
[Schaeffer]’s partner in the real estate, to list all the lots with the Statera takedown with my
potential Lockwood Design & Construction build, gave her the listings on all that at a
higher rate for compensation for Mr. Schaeffer.”).
56
Subdivision,274 to “get [him] out of the deal.”275 Never during these discussions did
Lockwood suggest Schaeffer’s “sweat equity” had been compensated by the Listing
Agreement. Even after the Listing Agreement, Lockwood did not believe Schaeffer
had been fully compensated.
The fourth element of an unjust enrichment claim is the absence of a
justification. As explained, Lockwood has repeatedly acknowledged, both before
and after this litigation began, that Schaeffer was owed something for his efforts in
the Subdivision. In his brief, Lockwood continues this trend, arguing Schaeffer
“might have qualified for a real estate commission” and that the proper legal theory
would have been quantum meruit.276 This theory overlaps substantially with unjust
enrichment and is animated by the same fundamental principle: that Schaeffer’s
work on the project should not go uncompensated.277 Lockwood does not
274
E.g., JX 56; JX 57; JX 58; JX 71.
275
Tr. 255.
276
D.I. 61 at 19; see also D.I. 65 at 14.
277
Quantum meruit is “a quasi-contract claim that allows a party to recover the reasonable
value of his or her services if: (i) the party performed the services with the expectation that
the recipient would pay for them; and (ii) the recipient should have known that the party
expected to be paid.” Petrosky v. Peterson, 859 A.2d 77, 79 (Del. 2004) (citing Constr.
Sys. Gp., Inc. v. Council of Sea Colony, Phase I, 670 A.2d 1337 (Del. 1995)). It literally
means “as much as he deserves.” ITEC Drywall, LLC v. S. Main St. Plaza, LLC,
2021 WL 3783645, at *5 (Del. Super. Aug. 3, 2021) (quoting Marta v. Nepa, 385 A.2d
727, 730 (Del. 1978)). Several cases have recognized the overlap between quantum meruit
and unjust enrichment. E.g., Applied Energetics, Inc. v. Farley, 239 A.3d 409, 413, 450
(Del. Ch. 2020) (compiling sources)); Endowment Rsch. Gp., LLC v. Wildcat Venture P’rs,
LLC, 2021 WL 841049, at *13 (Del. Ch. Mar. 5, 2021) (quoting Nemec, 991 A.2d at 1130,
and Petrosky, 859 A.2d at 79); Greto v. Joseph L. Messa, Jr. & Assocs., P.C.,
57
meaningfully dispute that Schaeffer earned something for his work on the
Subdivision, or that it would be unjust to permit that work to go uncompensated.
The final element is the absence of an adequate remedy at law. This element
is not meaningfully in dispute, especially given that I have concluded Schaeffer’s
contract claims fail. “Because there is no contract between [Schaeffer] and
[Lockwood] (or any other basis for recovery at law from [Lockwood]), [Schaeffer]
does not have an adequate remedy at law.”278
In sum, “[f]inding for [Schaeffer] on the basis of unjust enrichment is the
equitable remedy here.”279 It fairly compensates him for the time and effort he put
in “bird-dogging” and otherwise supporting the Subdivision project, which unfairly
enriched Lockwood and made it easier for him to purchase and develop the
Subdivision with Malmberg. Judgment is entered for Schaeffer on Count V.
D. Schaeffer Is Entitled To Damages For Unjust Enrichment.
Having found Schaeffer is entitled to recover on his unjust enrichment claim,
I turn to the difficult question of assessing his damages. “Once liability has been
found, and the court’s powers shift to the appropriate remedy, the Court of Chancery
2018 WL 3559262, at *3 (Del. Super. July 23, 2018). Though they are related, quantum
meruit and unjust enrichment are separate claims. See Hynansky v. 1492 Hosp. Gp., Inc.,
2007 WL 2319191, at *2 (Del. Super. Aug. 15, 2007).
278
MetCap, 2009 WL 513756, at *6.
279
Jackson, 2018 WL 1935961, at *9.
58
has broad discretion to craft a remedy to address the wrong.”280 “The most likely
measure for damages under an unjust enrichment claim would be the amount by
which [Lockwood] was unjustly enriched.”281 This often involves quantifying the
defendant’s profits.282
Schaeffer faces an uphill climb in proving damages. He effectively presented
no evidence about Lockwood’s profits from the Subdivision. Instead, Schaeffer
relied exclusively on his counsel’s back-of-the-napkin damages model, based
entirely on his hypothetical estimates for the Subdivision’s “total potential
revenue,”283 as distinguished from the money DBC actually made. Extrapolating
from that model, Schaeffer claims he would have made $453,638.46.284 Schaeffer’s
thought experiment is speculative and deeply flawed.285 More fundamentally, it is
280
Brinckerhoff v. Enbridge Energy Co., 159 A.3d 242, 262 (Del. 2017); see also Harman
v. Masoneilan Int’l, Inc., 442 A.2d 487, 499 (Del. 1982) (“On the other hand, equity adopts
its decrees to fit the nature and gravity of the breach and the consequences to the
beneficiaries and trustee. The choice of relief to be accorded a prevailing plaintiff in equity
is largely a matter of discretion with the Chancellor.” (alterations internal quotation marks
omitted) (compiling sources)).
281
Mehta v. Smurfit-Stone Container Corp., 2014 WL 5438534, at *6 (Del. Ch.
Oct. 20, 2014).
282
See Del. Express Shuttle, Inc. v. Older, 2002 WL 31458243, at *15 (Del. Ch.
Oct. 3, 2002).
283
D.I. 62, Ex. 1; see also Tr. 341, 343–46.
284
D.I. 62, Ex. 1; see also Tr. 346.
285
See Mehta, 2014 WL 5438534, at *6 (“The law does not promote speculative damages
at the defendant’s expense.” (alterations and internal quotation marks omitted) (quoting
Ryan v. Tad’s Enters., Inc., 709 A.2d 682, 689 (Del. Ch. 1996), aff’d, 693 A.2d 1082 (Del.
1997))).
59
keyed to what Schaeffer claims Lockwood promised him, not to any amount by
which Lockwood was unjustly enriched.
As I see it, Lockwood was enriched, and Schaeffer was impoverished, because
Lockwood got the benefit of Schaeffer’s work without paying for it. In effect,
Schaeffer served as a bird-dogging real estate broker, helping Lockwood negotiate
the Subdivision’s purchase, sending emails to Cecil Bank, and running down
permits. Customarily, real estate brokers earn commissions for their work, a
percentage of the purchase price.286 The only evidence in the record about what a
fair commission would be on a project comparable to the Subdivision is that Ruby
Schaeffer and her firm earned an 8% commission on lots sold.287 Credible testimony
in the record suggests this figure is slightly high and that a typical real estate broker
would earn between 5% and 6%.288 But I conclude that any overpayment in
Schaeffer’s commission is justified in light of the other work he did on the project.
In addition to his work as a broker connecting Lockwood with the Subdivision deal,
Schaeffer continued to help with the Subdivision project after Lockwood and
Malmberg purchased it. He helped secure and negotiate the takedown agreement
286
See, e.g., Tr. 185–86, 318, 372.
287
JX 32 at 1, 5; see also Tr. 372.
288
See Tr. 202.
60
with Statera, worked on avoiding “sunsetting” from the County, and made periodic
site visits.
I believe that an 8% commission is fair to Schaeffer in these circumstances.
Lockwood and Malmberg purchased the Subdivision for $390,000;289 an 8%
commission on that purchase is $31,200.290 Judgment is entered for Schaeffer on
Count V in the amount of $31,200.
E. Lockwood Has Not Established His Counterclaim.
Lockwood also presented a counterclaim, alleging he and Schaeffer “agreed
Schaeffer would sell 1.66% of his interest in [222 Enterprises] to Lockwood” for
$100,000, and that Lockwood satisfied his end of the bargain by paying Schaeffer
$100,000 but Schaeffer did not transfer his 1.66% interest.291 Though he does not
specify in his answer or his briefs, I understand Lockwood’s counterclaim to assert
a breach of contract theory.
Lockwood bears the burden of establishing a contract with Schaeffer to sell
him a 1.66% interest in 222 Enterprises for $100,000 by a preponderance of the
289
See JX 24 at 2.
290
I note that Lockwood ultimately paid O’Brien $8,000 for his efforts on the Subdivision.
Tr. 36–39, 61, 285. I have no insight into whether that arrangement was fair, but it appears
to have appeased O’Brien. Schaeffer’s efforts were more substantial than O’Brien’s,
justifying a higher award.
291
D.I. 6 at 20.
61
evidence.292 There is little documentary evidence on the subject, and Lockwood
allotted it less than three double-spaced pages across his three trial briefs.293 The
only evidence in the record supporting Lockwood’s position is: (1) an unsigned “bill
of sale” indicating Schaeffer would sell Lockwood his 1.66% interest in 222
Enterprises for $100,000;294 (2) two checks Lockwood paid to Schaeffer
Management Company, totaling $101,190, one with the memo line “consulting”;295
and (3) Lockwood’s own testimony that the checks were meant to serve as
consideration for Schaeffer transferring the 1.66% interest.296
The unsigned bill of sale Lockwood presented to Schaeffer is no more a
contract evidencing Lockwood’s entitlement to 1.66% of 222 Enterprises than the
unsigned First Draft Release is a contract evidencing Schaeffer’s interest in the
Subdivision’s profits. They both suggest an offer was made but lack any indicia of
mutual assent. While the checks Lockwood paid to Schaeffer Management
Company, owned by Ruby Schaeffer, suggest an oral contract, there are
292
See, e.g., Pulieri, 2015 WL 691449, at *5.
293
See D.I. 38 at 29; D.I. 61 at 26–27. Lockwood did not address his counterclaim in his
post-trial answering brief. See generally D.I. 65.
294
JX 7.
295
JX 8.
296
E.g., Tr. 260–64.
62
inconsistencies. The checks were not for exactly $100,000, and notably, one
included a notation indicating the payment was for “consulting.”297
Lockwood faults Schaeffer for not producing invoices reflecting that he
served as Lockwood’s consultant.298 The lack of invoices is consistent with the
parties’ extremely informal business relationship; invoices would be surprising.
More fundamentally, it is not Schaeffer’s burden to disprove Lockwood’s
counterclaim; Lockwood bears the burden to prove it was more likely than not the
parties formed a contract.299 I cannot make that finding on this scant record.
At best, the evidence here is in equipoise. It is conceivable to me that
Lockwood is telling the truth, and only the extra $1,190 in Schaeffer’s second check
was meant to cover “consulting,” per the memo line. But it is also conceivable to
me that Schaeffer is telling the truth and Lockwood’s large checks were for
consulting, paid after the fact and to a different entity per their custom. Neither
Schaeffer nor Lockwood’s testimony prevails as more credible. O’Brien’s
testimony favored Schaeffer, as he testified Lockwood’s payments to O’Brien
around that time were also for consulting.300 Ultimately, “the preponderance of the
297
See JX 8.
298
See D.I. 61 at 27.
299
See, e.g., Pulieri, 2015 WL 691449, at *5 (“Under Delaware law, a party asserting a
breach of an oral agreement must prove the existence of an enforceable contract by a
preponderance of the evidence.”).
300
See Tr. 54–55; see also id. 102.
63
evidence standard [] means that if the evidence is in equipoise, Plaintiffs lose.”301
This is the case here. Judgment is entered for Schaeffer on Lockwood’s
counterclaim.
F. Fee Shifting Is Not Appropriate In This Case.
Schaeffer also asks the Court to shift his legal fees to Lockwood.302
Under the American Rule, litigants are expected to bear their own costs
of litigation absent some special circumstances that warrant a shifting
of attorneys’ fees, which, in equity, may be awarded at the discretion
of the court. The bad faith exception to the American Rule applies in
cases where the court finds litigation to have been brought in bad faith
or finds that a party conducted the litigation process itself in bad faith,
thereby unjustifiably increasing the costs of litigation.303
The Court does not invoke this exception lightly.304 Of course, “[t]here is no single
standard of bad faith that warrants an award of attorneys’ fees in such situations;
rather, bad faith is assessed on the basis of the facts presented in the case.” 305 But
vigorous litigation is not enough. “Bad faith means a litigation position in
furtherance of abuse of process that is manifestly incompatible with justice. It means
301
Martin, 2015 WL 6472597, at *10 (internal quotation marks and footnotes omitted)
(quoting OptimisCorp, 2015 WL 5147038, at *55).
302
See D.I. 61 at 32–35.
303
Beck v. Atl. Coast PLC, 868 A.2d 840, 850–51 (Del. Ch. 2005) (footnotes omitted)
(citing Barrows v. Bowen, 1994 WL 514868, at *1 (Del. Ch. Sept. 7, 1994), and Arbitrium
(Cayman Islands) Handels v. Johnston, 705 A.2d 225, 231 (Del. Ch. 1997)).
304
See id. at 851.
305
Id.
64
frivolous opposition in an attempt to game the system.”306 Schaeffer has submitted
no evidence that Lockwood’s litigation positions come anywhere close to bad faith.
Schaeffer’s argument rests exclusively on his belief that Lockwood was unjustified
in denying a “deal between the three partners [Schaeffer, O’Brien, and Lockwood]
to split the project three ways, and that Schaeffer was entitled to a one-third
interest.”307 I disagree, and in fact have found that Schaeffer and Lockwood never
reached such an agreement. Schaeffer and Lockwood will each bear his own costs.
III. CONCLUSION
For the foregoing reasons, judgment is entered for Lockwood on Counts I, II,
III and IV. Judgment is entered for Schaeffer on Count V in the amount of $31,200.
Judgment is also entered for Schaeffer on Lockwood’s counterclaim. Each will bear
his own costs. The parties will confer and submit a stipulated final order within
thirty days.
306
Donnelly v. Keryx Biopharmaceuticals, Inc., 2019 WL 5446015, at *6 (Del. Ch.
Oct. 24, 2019).
307
See D.I. 61 at 34.
65