Steward Health Care System LLC v. Tenet Business Services Corporation ( 2023 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
STEWARD HEALTH CARE SYSTEM )
LLC, et al. )
)
Plaintiffs and Counterclaim Defendants, )
)
v. ) C.A. No. 2022-0289-SG
)
TENET BUSINESS SERVICES )
CORPORATION, et al., )
)
Defendants and Counterclaim Plaintiffs. )
MEMORANDUM OPINION
Date Submitted: May 9, 2023
Date Decided: August 18, 2023
Michael A. Barlow and Adam K. Schulman, of ABRAMS & BAYLISS LLP,
Wilmington, Delaware; OF COUNSEL: Anthony Bongiorno and Jessica Reese, of
QUINN EMANUEL URQUHART & SULLIVAN, LLP, Boston, Massachusetts;
Rollo C. Baker IV and Eric White, of QUINN EMANUEL URQUHART &
SULLIVAN, LLP, New York, New York, Attorneys for Plaintiffs and Counterclaim
Defendants Steward Health Care System LLC, Steward Medical Group, Inc., Steward
PGH, Inc., Steward NSMC, Inc., Steward CGH, Inc., and Steward HH, Inc.
Lewis H. Lazarus, K. Tyler O’Connell, Albert J. Carroll, and Barnaby Grzaslewicz
of MORRIS JAMES LLP, Wilmington, Delaware; OF COUNSEL: Timothy W.
Knapp, Brendan E. Ryan, and Kent J. Hayden, of KIRKLAND & ELLIS LLP,
Chicago, Illinois, Attorneys for Counsel for Defendants and Counterclaim Plaintiffs
Tenet Business Services Corporation and Tenet Healthcare Corporation.
GLASSCOCK, Vice Chancellor
This matter is before me on the parties’ cross motions for partial summary
judgment. The motions entail resolution of a dispute over discrete contractual
language in an asset purchase agreement. That agreement writ large is the subject
of this litigation, of which what follows is but a part. The assets sold include
Florida hospitals. The discrete language in question involves allocation, between
buyers and sellers, of benefits paid by the state of Florida to the hospitals. The
language is difficult, in part because the drafting is not ideal. In larger part, it is
difficult because understanding it requires reference to a governmental program,
the Florida Direct Payment Program (the “DPP”). The DPP is not only referenced
in the contract but is the explicit subject of the language in question, through which
the parties agreed to apportion the payments, referred to as “distributions”. As I
described it in intentionally simplified form in an earlier opinion in this matter
addressing a request for preliminary injunction:
Under the DPP, Florida established “special assessments” that it
charges to participating hospitals. Florida’s Agency for Health Care
Administration . . . then places the revenue generated from those
assessments into a fund, which is matched by federal funds. The
combined total is then sent to “Managed Care Organizations,” who in
turn distribute the funds to participating hospitals “as supplemental
Medicaid reimbursements” (“DPP Distributions”). Those DPP
1
Distributions are “directly link[ed] . . . to utilization of inpatient and
outpatient services” and “occur retroactively.”1
Once the scheme for repayment under the program is understood and the
contract is read as whole, the language is not ambiguous and the parties’ intent is
readily resolved, in favor of the Defendant/Counterclaim Plaintiffs, the sellers in
the transaction. The parties have submitted extrinsic evidence on which I do not
rely but find supportive of my understanding of the contract language. My
rationale is set out below.
I. BACKGROUND
A. Factual Background
I discussed the facts giving rise to this action in my prior Memorandum
Opinion dated August 1, 2022,2 and I limit myself here to only those facts necessary
to understand this opinion. The Plaintiffs are the buyers and the Defendants the
sellers in the transaction at issue. The parties to this action (the “Buyers” and the
“Sellers”, collectively the “Parties”) executed an Asset Purchase Agreement (the
“APA”) on June 16, 2021, to facilitate the sale of a group of hospitals in Florida.3
Though this dispute spans contracts beyond the APA itself and includes multiple
1
Steward Health Care Sys. LLC v. Tenet Bus. Servs. Corp., 2022 WL 3025587, at *3 (Del. Ch.
Aug. 1, 2022) (“Steward I”) (citations omitted).
2
See id.3
Id. at *2.
2
provisions within that document,4 this opinion focuses on issues relating to APA
Section 8.22, which details the distribution of DPP payments.5 The Parties also
moved for summary judgment with respect to responsibility for repayments under
another governmental program, the Accelerated and Advanced Payment Program. I
leave those issues, which are fact-intensive, for trial.
1. The DPP
The DPP is a Florida state-sponsored, federally-approved program designed
to address uncompensated Medicaid costs borne by Florida’s hospitals.6 Under the
DPP, Florida established “special assessments” that it charges participating
hospitals.7 Florida’s Agency for Health Care Administration (“AHCA”) places the
assessments into a fund, and federal funds match those assessments.8 “Managed
Care Organizations” then distribute the matched funds to participating hospitals “as
supplemental Medicaid reimbursements” (“DPP Distributions”).9 Those DPP
Distributions are “directly link[ed] . . . to utilization of inpatient and outpatient
services” and “occur retroactively,” in the sense that reimbursements, when paid,
4
See id. at *4.
5
Verified Compl. Ex. 1, Dkt. No. 1 (“APA”).
6
Answer and Countercls. to the Verified Compl. ¶ 57, Dkt. No. 24 (“Defs.’ Answer and
Countercls.”); Answer to the Verified Countercls. ¶ 48, Dkt. No. 34 (“Pls.’ Answer”).
7
Defs.’ Answer and Countercls. ¶ 57; Pls.’ Answer ¶¶ 50–51.
8
Id.
9
Defs.’ Answer and Countercls. ¶ 57; Pls.’ Answer ¶ 51.
3
would be for a then-historical period during which assessment fees had been incurred
and services performed.10
To institute the DPP, on November 16, 2020, AHCA submitted an application
to the federal Centers for Medicare and Medicaid Services (“CMS”) for a “rating
period” covering “October 1, 2020 through September 30, 2021.”11 On April 26,
2021, CMS approved a revised version of the application for the October 1, 2020 to
September 30, 2021 rating period.12
The Buyers and Sellers dispute how DPP Distributions should be allocated
under the terms of the APA. As explained in detail below, the APA includes
10
Transmittal Aff. Barnaby Grzaslewicz, Esq. Supp. Defs.’ Answering Br. Opp’n Pls.’ Mot.
Summ. J. and Br. Supp. Defs.’ Cross-Mot. Summ. J. Ex. 4 at 5, Dkt. No. 44 (“CMS Approval
Letter”). This comports with Buyers’ counsel’s knowledge of the DPP.
“THE COURT: Can we revisit something you said earlier? I just want to make sure I understand
your position. Your position is that at the time of contracting, the parties didn't know that the DPP
program would both assess and distribute benefits retroactively. That is, they didn't know that
they were going to be assessed and paid a year after the year in which they were incurred.
ATTORNEY BAKER: If I said that, I did not intend to say that. . . .
ATTORNEY BAKER: So I thought the question was, at the time the DPP was signed, was there
certainty as to the time period in which assessments would be collected and payments made. And
the answer to that was no, and that at the time the APA was signed, the different types of
distributions were a possibility. I believe that at the time of signing, the parties did understand that
the amount of payments that hospitals would be receiving would be based on a historical rating
period.
THE COURT: Okay. So they knew at the time of signing that it would be post-September 30,
2021, when assessments and benefits would be paid for the 2021 year.
ATTORNEY BAKER: For the 2021 year?
THE COURT: For the year from October 1, 2020 through September 30, 2021, both assessments
and benefits would be incurred and paid after September 30th. They knew that.
ATTORNEY BAKER: Correct. But they didn’t know when closing would occur.” Tr. 7.12.2022
Oral Arg. 28:4–29:13, Dkt. No. 82.
11
CMS Approval Letter at 1.
12
See id.
4
provisions governing the allocation of DPP Distributions based on contractually
defined “Program Year” periods in relation to when “Closing” occurs.13 The Buyers
argue that they are entitled to the entirety of the DPP Distributions based on the
2020-21 rating period. In contrast, the Sellers contend that, after certain deductions,
they are entitled to approximately 10/12ths of the DPP Distributions for the period
in question, and Buyers should receive only 2/12ths of the DPP Distributions.
2. The APA’s DPP Provision
APA Section 8.22 (the “DPP Provision”) governs the division of DPP
Payments, with allocation governed by “Program Year.”14 Program Year is defined
as “the program year (i.e., October 1 through September 30) in which assessments
are collected and payments are made with respect to the Healthcare Business in
connection with the Florida Directed Payment Program.”15
For the “Program Year in which Closing occurs”—the “straddle” year in
which ownership transitioned from Sellers to Buyers—Buyers are reimbursed for
assessments they paid and the “DPP Payment Amount.”16 The remainder of these
13
See APA § 8.22.
14
Id.
15
Id.
16
Id.
5
“DPP Straddle Distributions” is divided between the Sellers and the Buyers on a
prorated per diem basis.
With respect to any reimbursement or distribution with respect to the
Healthcare Business arising out of, attributable to or received in
connection with the Florida Directed Payment Program and relating to
the Program Year in which the Closing occurs (the “DPP Straddle
Distributions”), Buyers shall first receive from the DPP Straddle
Distributions an amount equal to the total assessments paid by Buyers
or their Affiliates with respect to the Healthcare Business in connection
with the Florida Directed Payment Program plus the DPP Payment
Amount, and, to the extent there is any remaining portion of the DPP
Straddle Distributions after such payment to Buyers, then the Parties
shall prorate such remaining amount of the DPP Straddle Distribution
on a per diem basis with (i) Sellers receiving a portion of such
remaining DPP Straddle Distributions based on a fraction, the
numerator of which is the number of calendar days in such Program
Year that are prior to and include the Closing Date and the denominator
of which is 365 and (ii) Buyers receiving a portion of such remaining
DPP Straddle Distributions based on a fraction, the numerator of which
is the number of calendar days in such Program Year that follow the
Closing Date and the denominator of which is 365.17
Buyers are entitled to 100% of the DPP Distributions for Program Years after
the straddle year.
Buyers shall be entitled to 100% of any reimbursement or distribution
with respect to the Healthcare Business arising out of, attributable to or
received in connection with the Florida Directed Payment Program and
relating to any Program Year after the Program Year in which the
Closing occurs (the “Post-Closing DPP Distributions”).18
17
Id.
18
Id.
6
Sellers, on the other hand, are entitled to the DPP Distributions in Program
Years prior to the Program Year in which the Closing occurs.
Sellers shall be entitled to 100% of any reimbursement or distribution
with respect to the Healthcare Business arising out of, attributable to or
received in connection with the Florida Directed Payment Program and
relating to any Program Year prior to the Program Year in which the
Closing occurs (the “Pre-Closing DPP Distributions” . . .).19
Closing occurred on August 1, 2021.20 The Program Year associated with the
Closing thus ended on September 30, 2021. Assessments and payments under the
DPP began in October 2021, after the Program Year in which Closing occurred,
relating to services performed in the 2020-21 Program Year.21
3. The Negotiations
Ralph de la Torre, Steward’s Chairman and CEO, led the negotiations on
behalf of Buyers.22 Saum Sutaria, Tenet’s CEO, led negotiations on behalf of
Sellers.23 Over the course of negotiations, both Buyers and Sellers were represented
by counsel.24
19
Id.
20
Defs.’ Answer and Countercls. ¶ 60; Pls.’ Answer ¶ 134.
21
See Pls.’ Br. Further Supp. Their Mot. Summ. J. 20, Dkt. No. 53; Defs.’ Answering Br. Opp’n
Pls.’ Mot. Summ. J. and Br. Supp. Defs.’ Cross-Mot. Summ. J. 44, Dkt. No. 43 (“Defs.’ Answering
Br.”).
22
Transmittal Aff. Adam K. Schulman, Esq. Supp. Pls.’ Suppl. Br. Supp. Their Mot. Summ. J.
(“Schulman Aff.”) Ex. 2 at 8:14–16, Dkt. No. 158 (“de la Torre Dep.”).
23
de la Torre Dep. 51:19–52:6.
24
Schulman Aff. Ex. 3 at 75:9–17, 84:22–3, Dkt. No. 158 (“Wales Dep.”); Schulman Aff. Ex. 4
at 29:7–10, Dkt. No. 158, (“Maloney Dep.”).
7
At the start of negotiations, the DPP was a possibility rather than a
probability.25 The program was awaiting approvals from CMS, the Florida state
legislature, and Miami-Dade County.26
Sellers sought to include estimates of the potential DPP Distributions in their
valuation and included an annual receivable of $29.1 million in projected DPP
Distributions.27 However, given the risk of the DPP not coming to fruition, the
Parties agreed to discount the DPP Distributions by the likelihood of non-passage.28
In January 2021, the Parties executed a letter of intent for the sale of the
hospitals with a $1 billion price tag.29 That price included the agreed upon value of
the DPP.30
On January 28, 2021, in accordance with the letter of intent, the Sellers-
drafted first draft of the APA included a $1 billion purchase price and an adjustment
in the event that the DPP failed to be enacted.31
The Sellers proposed the first pro-rating provision on March 18, 2021.32 The
provision called for pro rata division of DPP Distributions “received by Buyers . . .
25
Wales Dep. 135:5–20.
26
Schulman Aff. Ex. 5 at STE_DE_0002872, Dkt. No. 158.
27
Id. at -2872.
28
de la Torre Dep. 158:16–22; Schulman Aff. Ex. 11 at STE_DE_0023402-3404, Dkt. No. 159.
29
Schulman Aff. Ex. 7 at STE_DE_0024535, Dkt. No. 158.
30
Id. at -4535 n.5 (“In the event the legislation regarding the Directed Payment Program impacting
the Hospitals is not enacted by the closing, then the parties will discuss an appropriate adjustment
to the Purchase Price.”).
31
Schulman Aff. Ex. 8 at ALSTON00008331, -8343 n.3, Dkt. No. 158.
32
See Schulman Aff. Ex. 9 at ALSTON00007253, Dkt. No. 158.
8
following the Closing Date . . . that relate to any measurement period under the DPP
Program that ends on or prior to the Closing Date.”33 The Parties discussed the value
of the DPP and on April 19, 2021, Sellers sent a revised draft of the APA decreasing
the purchase price, removing the pro rata provision, and adding a provision for an
upwards price adjustment for DPP assessments paid by Sellers prior to Closing.34
The Buyers agreed with these changes and added that they were entitled to “all
reimbursements and distributions . . . received in connection with the Florida
Directed Payment Program, whether such reimbursements or distributions relate to
measurement periods before or after the Closing Date.”35 Subsequent drafts
maintained the zero sum DPP Provision but allowed Sellers reimbursement for DPP
assessments paid to CMS.36
By June 2021, DPP passage looked likely. Notably, in late April 2021, the
DPP received state approval,37 and on May 6, 2021, it received CMS approval for
33
Id. at -7339.
34
Schulman Aff. Ex. 14 at Tenet00000910, -0917, -0978, Dkt. No. 159.
35
Schulman Aff. Ex. 15 at Tenet00009987, -9992, Dkt. No. 159; Pls.’ Suppl. Br. in Supp. of Their
Mot. for Summ. J. 9, Dkt. No. 157 (“Pls.’ Suppl. Br.”).
36
Schulman Aff. Ex. 16 at Tenet00001381, -1383, -1388, Dkt. No. 159; see Schulman Aff. Ex. 17
at ALSTON00006002, -6004, -6009, Dkt. No. 159; Schulman Aff. Ex. 18 at STE_DE_0002485,
-2487, -2492, Dkt. No. 160; Schulman Aff. Ex. 19 at STE_DE_0027538, -7540, -7545, Dkt. No.
160.
37
Schulman Aff. Ex. 20 Dkt. No. 160.
9
the measurement period October 1, 2020 through September 30, 2021.38 The final
puzzle piece was local approval and implementation.39
Certainty, or at least near certainty, has value, and on May 8, 2021, Sellers
“blew up the deal” and stated that they were no longer interested in pursuing the
transaction.40 Internally, Sellers had discussed abandoning the transaction in light
of the DPP’s approvals.41
Negotiations began anew in June.42 Sellers sought an increased purchase
price.43 Specifically, Sellers sought an increased price of between $1.07 and $1.15
billion.44 In addition, Sellers proposed that they should receive a pro rata portion of
the DPP Distribution but did so outside of the purchase price.45 As such, they
expected their DPP Distribution share would be $31 million. In connection with
their renewed proposal, Sellers noted,
38
Schulman Aff. Ex. 21 Dkt. No. 160; Schulman Aff. Ex. 22 Dkt. No. 160.
39
Schulman Aff. Ex. 20.
40
Schulman Aff. Ex. 24 (“Tenet has gone pencils down on the deal. They are reconsidering price
now that the DPP is likely passing and the business is performing well.”), Dkt. No. 160; Schulman
Aff. Ex. 6 at 55:4–15, Dkt. No. 158.
41
Schulman Aff. Ex. 23 (“Don’t flip (though your new center of gravity probably helps prevent
that) but I may blow up Miami deal. DPP fully approved. No Medicaid cuts. Your BD successful
so far. And they are demanding 137M in working capital (we are off by 75M with our estimates
closer to 65M) which means effective multiple on the deal is 7. Just the working capital difference
pays the capital.”), Dkt. No. 160.
42
Schulman Aff. Ex. 25 at Tenet00010771, Dkt. No. 160; Maloney Dep. 201:12–16.
43
Schulman Aff. Ex. 26 at STE_DE_0021283 (“Considering the elimination of DPP risk and the
substantially increased performance at the hospitals, the Miami hospitals have increased in
valuation”), Dkt. No. 160.
44
Id. at -1285.
45
Id.
10
• In April, DPP funding was approved by the Florida legislature and
contemplated Florida Medicaid cuts were not approved by the state
legislature
• In addition to these positive developments, the Florida Market
continues to outperform performance targets due to improved acuity
and payor mix
• Through May, the Miami hospitals are 27% ahead of plan. As a result,
we now expect the market to achieve $115 - $125mm in pre-DPP
EBITDA ($120mm equates to performing at plan for the final 7
months). [. . . .]
• Given the likely timing of the transaction and Tenet's lobbying efforts
to secure the passage of DPP legislation we have also included the
impact of Tenet retaining its pro-rata share of the 2021 DPP payment46
Accordingly, Sellers followed up with an APA draft dated June 11, 2021, that
increased the purchase price to $1.1 billion.47 The purchase price, however, was
exclusive of the new DPP Provision which allocated distributions “relating to
measurement periods before the Closing Date” on a pro rata basis.48
8.22 DPP Distributions. With respect to any reimbursement or
distribution with respect to the Healthcare Business arising out of,
attributable to or received in connection with the Florida Directed
Payment Program and relating to measurement periods before the
Closing Date (the “DPP Distributions”), the Parties shall prorate such
amounts on a per diem basis with (i) Sellers receiving a portion of the
DPP Distributions based on a fraction, the numerator of which is the
number of calendar days in the calendar year in which the Closing
occurs that are prior to and include the Closing Date and the
denominator of which is 365 and (ii) Buyers receiving a portion of the
DPP Distributions based on a fraction, the numerator of which is the
number of calendar days in the calendar year in which the Closing
46
Id.
47
Second Suppl. Transmittal Aff. Barnaby Grzaslewicz, Esq. (“Second Suppl. Grzaslewicz Aff.”)
Ex. 13 at Tenet00004179, -4195, Dkt. No. 165; Schulman Aff. Ex. 27 at ALSTON00001352, -
1368, Dkt. No. 160.
48
Second Suppl. Grzaslewicz Aff. Ex. 13 at Tenet00004195; Schulman Aff. Ex. 27 at
ALSTON00001368, -1438.
11
occurs that follow the Closing Date and the denominator of which is
365.49
On June 14, the Parties met at Sellers’ headquarters in Dallas, Texas.50 Buyers
state that they agreed to increase the purchase price.51 Post-close DPP Distributions
were also discussed.52 In deposition, when asked about the DPP discussions at the
June 14 meeting, Buyers’ deal counsel stated,
I recall, generally speaking, that we were concerned with the language
that [Sellers’] counsel Alston & Bird sent across in the June 12 revised
APA. I recall that we had discomfort about the fact that it had words
relating to a measurement period, and I was being concerned that that
was very vague and swishy language. I also remember us being
concerned that there was no discussion of we, [Buyers], were entitled
to post-closing period amounts. I recall those two things being raised
in the June 14 meeting. I don’t recall the specifics of the conversation.53
An internal Sellers email sent on the day of the meeting stated that “[Buyers
have] now agreed to pay us $1.10 billion at closing, and we will also receive
49
The drafting history documents here follow the convention that deleted language (from the prior
draft) is struck through and added language is underlined.
50
Wales Dep. 165:11–16; Maloney Dep. 47:15–22.
51
Pls.’ Suppl. Br. 13.
52
Buyers contend that “because they had already agreed to the additional $100 million, Buyers
did not agree to guarantee Sellers a pro rata share of the Year 1 DPP distributions, as Sellers had
demanded.” Pls.’ Suppl. Br. 13. The evidence cited includes testimony by Buyers’ chief
negotiator, de la Torre, and its deal counsel. In deposition, de la Torre stated “we didn’t agree to
[pro rate DPP distributions.]” de la Torre Dep. 61:4–10. Deal counsel, when asked about the June
14 meeting, stated that he was concerned with the “measurement period” language and the lack of
discussion that “Steward, w[as] entitled to post-closing period amounts.” Wales Dep. 176:14–
177:7.
53
Wales Dep. 176:19–177:7.
12
our pro-rata share of this year’s supplemental revenue program, estimated to
be $25-30 million.”54
That evening, Buyers’ counsel sent the following markup to Sellers:
8.22 DPP Distributions. With respect to any reimbursement or
distribution with respect to the Healthcare Business arising out of,
attributable to or received in connection with the Florida Directed
Payment Program and relating to measurement periods beforethe
program hear (i.e., October 1 through September 30) in which the
Closing Dateoccurs (the “DPP Distributions”), the Parties shall prorate
such amounts on a per diem basis with (i) Seller receiving a portion of
the DPP Distributions based on a fraction, the numerator of which is
the number of calendar days in the calendarsuch program year in which
the Closing occurs that are prior to and include the Closing Date and
the denominator is 365 and (ii) Buyers receiving a portion of the DPP
Distributions based on a fraction, the numerator of which is the number
of calendar days in the Calendar such program year in which the
Closing occurs that follow the Closing Date and the denominator of
which is 365. Buyers shall be entitled to 100% of any reimbursement
or distribution with respect to the Healthcare Business arising out of
attributable to or received in connection with the Florida Directed
Payment Program and relating to any program year after the year in
which the Closing occurs.
Buyers eliminated “measurement periods,” replaced them with cleanly denominated
“program years,” and clarified that they were “entitled to 100% of any
reimbursement or distribution . . . relating to any program year after the year in which
the Closing occurs.”55
54
Second Suppl. Grzaslewicz Aff. Ex. 2, Dkt. No. 165.
55
Schulman Aff. Ex. 28 at ALSTON00002211, Dkt. No. 160.
13
Sellers revised the draft and sent it back to the Buyers on June 15, 2021.56 In
the revised draft, Sellers had accepted Buyers’ changes relating to DPP
Distributions.57 Sellers also laid the groundwork for the division of DPP
Distributions into three periods by adding language guaranteeing Sellers 100% of
any DPP Distributions made in a “program year prior to the program year in which
the Closing occurs” and adding the defined terms “DPP Straddle Distributions,”
“Post-Closing DPP Distributions,” and “Pre-Closing DPP Distributions.”58
On June 15, 2021, the Parties’ counsel spoke by phone “to walk through some
of [Buyers’] changes . . . in an effort to finalize this agreement.”59 The proposed
changes included: (i) clarifying the meaning of “program year,” and (ii) making clear
that if there were any DPP Straddle Distributions, Buyers would receive back any
assessments they paid into the DPP before any DPP Straddle Distributions were
divided pro rata.60 The next day, by email, Buyers’ counsel followed up to ask if
Sellers’ counsel had run the changes by their client.61 Sellers’ counsel replied in the
negative but stated that the concept made sense on its face, and noted that Sellers’
counsel would need to see the language before advising Sellers.62
56
Schulman Aff. Ex. 29 at ALSTON00001713, -1804-1805, Dkt. No. 160.
57
See Schulman Aff. Ex. 29.
58
Id. at ALSTON00001804-1805.
59
See Schulman Aff. Ex. 30 at 82:20–84:3, Dkt. No. 161; Schulman Aff. Ex. 31 at
STE_DE_00031427, Dkt. No. 161.
60
See Schulman Aff. Ex. 35 at ALSTON00002987, Dkt. No. 161.
61
Schulman Aff. Ex. 36 at ALSTON00018419, Dkt. No. 161.
62
Id.
14
Buyers followed up with proposed changes.63
8.22 DPP Distributions. With respect to any reimbursement or
distribution with respect to the Healthcare Business arising out of,
attributable to or received in connection with the Florida Directed
Payment Program and relating to the program year (i.e., October
through September 30)Program Year in which the Closing occurs (the
“DPP Straddle Distributions”), Buyers shall first receive from the DPP
Straddle Distributions an amount equal to the total assessments paid by
Buyers or their Affiliates with respect to the Healthcare Business in
connection with the Florida Directed Payment Program, and, to the
extent there is any remaining portion of the DPP Straddle Distributions
after such payment to Buyers, then the Parties shall prorate such
amountsremaining Amount of the DPP Straddle Distribution on a per
diem basis with (i) Sellers receiving a portion of thesuch remaining
DPP Straddle Distributions based on a fraction, the numerator of which
is the number of calendar days in such program yearProgram Year that
are prior to and include the Closing Date and the denominator of which
is 365 and (ii) Buyers receiving a portion of thesuch remaining DPP
Straddle Distributions based on a fraction, the numerator of which is
the number of calendar days in such program yearProgram Year that
follow the Closing Date and the denominator of which is 365. Buyers
shall be entitled to 100% of any reimbursement or distribution with
respect to the Healthcare Business arising out of, attributable to or
received in connection with the Florida Directed Payment Program and
relating to any program yearProgram Year prior to the program
yearProgram Year in which the Closing occurs (the “Post-Closing DPP
Distributions”), and Sellers shall be entitled to 100% of any
reimbursement or distribution with respect to the Healthcare Business
arising out of, attributable to or received in connection with the Florida
Directed Payment Program and relating to any program yearProgram
Year prior to the program yearProgram Year in which the Closing
occurs (the “Pre-Closing DPP Distributions” and collectively with the
DPP Straddle Distributions and the Post-Closing DPP Distributions, the
“DPP Distributions”). For purposes of this Section 8.22, “Program
Year” means the program year (i.e., October 1 through September 30)
in which assessments are collected and payments are made with respect
63
Schulman Aff. Ex. 35 at ALSTON00002987.
15
to the Healthcare Business in connection with the Florida Directed
Payment Program.
The changes included creating and defining the term “Program Year” as well
as ensuring Buyers were remunerated for the total assessments they paid prior to pro
rata distribution of the remainder of DPP Distributions.64 Sellers discussed this
penultimate draft among themselves65 and later sent a revised draft that was
substantively the same regarding the DPP to Buyers.
On June 16, 2021, the Parties executed the APA.66 The transaction closed on
August 1, 2021.67
B. Procedural History
This matter and the related matter concerning arbitration of APA Section 2.568
have been hard-fought. Buyers filed the initial complaint (the “Complaint”) in this
action as well as a motion to expedite on March 25, 2022.69 The Complaint brought
four causes of action, seeking a declaratory judgment affirming Buyers’
interpretation of the APA and Sellers’ alleged breaches of these agreements, specific
performance of the APA and a Transition Services Agreement (the “TSA”), a
64
Id.
65
Schulman Aff. Ex. 37 at Tenet00007617–7619, Dkt. No. 161.
66
See APA.
67
Defs.’ Answer and Countercls. ¶ 60; Pls.’ Answer ¶ 134.
68
See Tenet Healthcare Corp. v. Steward Health Care Sys. LLC, 2023 WL 2778295, at *1 (Del.
Ch. Apr. 4, 2023).
69
See Verified Compl., Dkt. No. 1 (“Compl.”).
16
permanent injunction directing Sellers to comply with the agreements and enjoining
termination of the TSA, and attorneys’ fees pursuant to the prevailing party
provision of the APA.70 The Parties jointly requested expedition on April 6, 2022,
which I granted on April 7, 2022.71 Sellers filed their answer and counterclaims on
April 22, 2022.72 Sellers’ countercomplaint brought eight causes of action, seeking
a declaration affirming Sellers’ conception of contractual offset rights, damages for
breaching the APA by not remitting DPP Distributions, damages for breaching the
TSA, a declaration that Sellers were entitled to terminate the TSA, damages for
breach of the implied covenant of good faith and fair dealing, quantum meruit
damages, the right to collect any damages from Buyers’ parent organization, and
attorneys’ fees.73
On May 3, 2022, Buyers moved for summary judgment on all claims and
counterclaims.74 Buyers’ answer to the counterclaims followed shortly.75 Sellers
cross-moved for summary judgment on May 24, 2022.76 In the course of briefing
the cross-motions for summary judgment, Buyers filed a motion for preliminary
70
Id. ¶¶ 123–155.
71
Stipulation and [Proposed] Order Governing Expedited Trial Schedule, Dkt. No. 18; Judicial
Action Form, Dkt. No. 19.
72
Defs.’ Answer and Countercls.
73
Id. ¶¶ 120–220.
74
Pls.’ Mot. Summ. J., Dkt. No. 31.
75
Pls.’ Answer.
76
Defs.' Cross-Mot. Summ. J., Dkt. No. 42.
17
injunction on June 11, 2022.77 By letter, I informed the Parties that the motion for a
preliminary injunction would be heard on July 12, 2022, alongside the motions for
summary judgment.78 Briefing on the cross-motions for summary judgment and the
motion for a preliminary injunction concluded on July 6, 2022.79
I held oral argument on July 12, 2022, and issued a Memorandum Opinion on
August 1, 2022.80 In that Memorandum Opinion, I granted the Buyers’ motion for
a preliminary injunction but reserved decision on the cross-motions for summary
judgment to allow the Parties to determine if expedition was still required.81 The
Parties agreed that expedition was no longer necessary but disagreed as to whether
a decision should be rendered on the record as it stood.82 Buyers requested that I
permit additional discovery and briefing regarding the Parties’ intent.83 Sellers
disagreed.84 I instructed the Parties to perform discovery and supplement their
motions for summary judgment.85
77
Pls.' Mot. Prelim. Inj., Dkt. No. 51.
78
Letter to Counsel, Dkt. No. 54.
79
Pls.’ Reply Br. Supp. Their Mot. Prelim. Inj., Dkt. No. 62.
80
Judicial Action Form, Dkt. No. 75.
81
Steward I at *11.
82
Letter to The Honorable Sam Glasscock III from Michael A. Barlow, Dkt. No. 92 (“Pls.’ Aug.
26, 2022 Letter”); Letter to The Honorable Sam Glasscock III from Lewis H. Lazarus, Dkt. No.
93 (“Defs.’ Aug. 26, 2022 Letter”).
83
Pls.’ Aug. 26, 2022 Letter at 2.
84
See Defs.’ Aug. 26, 2022 Letter.
85
Tr. 11.29.22 Telephonic Status Conference, Dkt. No. 134; see also Tr. 10.25.2022 Telephonic
Status Conference, Dkt. No. 123.
18
Supplemental briefing of the summary judgment motions began March 17,
2023,86 and concluded March 31, 2023.87 I held oral argument on the supplemented
motions for summary judgment on May 9, 2023, and I consider the motions fully
submitted as of that date.88
II. ANALYSIS
“Under Court of Chancery Rule 56, summary judgment may be granted if
‘there is no genuine issue as to any material fact and . . . the moving party is entitled
to judgment as a matter of law.’”89
“When interpreting a contract, this Court ‘will give priority to the parties’
intentions as reflected in the four corners of the agreement,’ construing the
agreement as a whole and giving effect to all its provisions.”90 As such, to divine
the intent of the parties’ to a contract, the Court always starts with the text.91 “When
the contract is clear and unambiguous, [the Court] will give effect to the plain-
meaning of the contract’s terms and provisions.”92 To do so, the Court will “read a
86
See Pls.’ Suppl. Br.
87
See Pls.’ Reply Br. Supp. Their Mot. Summ. J. and Opp’n Defs.’ Cross-Mot. Summ. J., Dkt.
No. 170.
88
Judicial Action Form, Dkt. No. 176.
89
Roma Landmark Theaters, LLC v. Cohen Exhibition Co., 2021 WL 2182828, at *6 (Del. Ch.
May 28, 2021) (quoting Ct. Ch. R. 56(c)).
90
Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (quoting GMG Cap. Invs., LLC v. Athenian
Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)).
91
Sunline Com. Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 846 (Del. 2019).
92
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159–60 (Del. 2010).
19
contract as a whole and . . . give each provision and term effect, so as not to render
any part of the contract mere surplusage.”93
“[A] contract is ambiguous only when the provisions in controversy are
reasonably or fairly susceptible of different interpretations or may have two or more
different meanings.”94 Conversely, where there is only one reasonable interpretation
of the contractual language, the contract is unambiguous.95
“[E]xtrinsic evidence may not be used to interpret the intent of the parties, to
vary the terms of the contract or to create an ambiguity” in an otherwise
unambiguous contract.96 However, if ambiguity is present, extrinsic evidence may
be used to “arrive at a proper interpretation of contractual terms.”97
Put simply, the contract in question anticipates the DPP to operate in discrete
“Program Years.” The Sellers interpret the APA to require proration of any DPP
Distributions relating to the Program Year in which the Closing occurred, October
1, 2020 through September 30, 2021 (the “CPY”), on the basis of the fraction of that
year each of the Parties owned the hospitals for whose services reimbursements were
made. Per Sellers, this results in about 80% of payments relating to the CPY
belonging to Sellers. The Buyers, for their part, note that the DPP Distributions
93
Kuhn Const., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396–97 (Del. 2010).
94
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
95
Sassano v. CIBC World Markets Corp., 948 A.2d 453, 462 (Del. Ch. 2008).
96
Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
97
Id.20
relating to the period set out above were not made until early 2022, and thus occurred
in the Program Year after Closing occurred; and, per their reading of the APA, all
the reimbursements belong to Buyers. In my assessment of the motion for a
preliminary injunction in Steward I, I considered Sellers’ chances of prevailing on
the merits of the DPP issue and concluded that success was “substantially
conceivable.”98 I specifically adopt, without repeating in full, the analysis of this
issue in Steward I. The additional evidence produced since that time has not changed
my thinking on the matter and served only to solidify it. Simply put, the Sellers’
interpretation of the DPP Provision is correct; this is clear when the agreement is
examined as a whole, even in light of the Buyers’ extrinsic evidence interpreted in
their favor. The Parties created a scheme for prorating payments relating to the CPY,
which operates under the Sellers’ construction of the contract but is largely
impracticable under that of the Buyers.
As stated, the allocation of DPP Distributions depends on the interaction of
the “Closing” and “Program Year.”99 Of those, only “Program Year” is in
question.100 The APA provides that “[f]or purposes of this Section 8.22, ‘Program
Year’ means the program year (i.e., October 1 through September 30) in which
98
Steward I at *7.
99
Id. at *8.
100
Compl. ¶ 60; Defs.’ Answer and Countercls. ¶ 135.
21
assessments are collected and payments are made with respect to the Healthcare
Business in connection with the Florida Directed Payment Program.”101
The Parties here agree that this provision is unambiguous but disagree on its
meaning. Buyers’ interpretation hews closely to the plain text of the “Program
Year” clause in isolation but is problematic viewed in light of the DPP Provision
and APA as a whole. In context, I find the Sellers’ interpretation is the logical
reading of the DPP Provision.
Buyers contend that based upon the plain language of the “Program Year”
definition they are entitled to the entirety of the DPP Distributions. Specifically,
“Closing” occurred on August 1, 2021, and thus the Program Year in which the
Closing occurred—the CPY—was October 1, 2020 to September 30, 2021.
However, the first round of “assessments and distributions” began in October
2021, reimbursing hospitals for procedures undertaken during the prior CPY.102
Noting that “Program Year” is defined by when “assessments are collected and
payments are made,” the Buyers contend that the “DPP Payments” all relate to the
“Program Year after the Program Year in which the Closing occurs”—October 1,
2021 to September 30, 2022—which, under the APA, belong to Buyers.
101
APA § 8.22.
102
Pls.’ Br. Further Supp. Their Mot. Summ. J. 20; Defs.’ Answering Br. 44, Dkt. No. 43.
22
This reading, focusing myopically on the definition of Program Year, leads
to incongruities. Notably, given that there were no assessments or distributions in
the period between October 1, 2020 and September 30, 2021, under the Buyers’
reading that period was not a Program Year. But Closing undoubtedly occurred
during that non-Program Year period. In that case, there was no “Program Year in
which the Closing occurs.” Absent a “Program Year in which the Closing occurs,”
the DPP Provision is nugatory, as the three periods of distribution—Pre-Closing,
Straddle, and Post-Closing—are defined in relation to the “Program Year in which
the Closing occurs.”103
Further, though this is not the case here, the DPP Provision leaves open the
possibility that “assessments are collected” and “payments are made” in different
October 1 through September 30 periods. In such an instance, there would be no
contractual “Program Year” relating to those payments. Thus, Buyers’
construction is unworkable under the proration scheme read as a whole.
The Sellers argue that the prepositional phrase “in which” in the Program
Year definition should more properly be read as “for which.”104 Akin to taxes or
an end of year bonus, where “in” is used to refer to the year accrued rather the year
103
See APA § 8.22 “Program Year in which the Closing occurs (the ‘DPP Straddle Distributions’),”
“Program Year after the Program Year in which the Closing occurs (the ‘Post-Closing DPP
Distributions’),” “Program Year prior to the Program Year in which the Closing occurs (the ‘Pre-
Closing DPP Distributions’ . . . ).”.
104
Defs.’ Answering Br. 35–36.
23
paid, “in” here, in Sellers’ view, arises out of or relates to a previously completed
time period.105 Thus, in their interpretation, “‘Program Year’ means the program
year (i.e., October 1 through September 30) [for] which assessments are collected
and payments are made with respect to the Healthcare Business in connection with
the Florida Directed Payment Program.”
As explained above, this reading harmonizes the contract as a whole. APA
Section 8.22 memorializes the Parties’ intent that reimbursements or distributions
“with respect to the Healthcare Business arising out of, attributable to or received
in connection with the [DPP] and relating to the Program Year in which the
Closing occurs” are DPP Straddle Distributions,106 for which the Parties provided a
proration formula based upon the fraction of the Program Year for which each
party owned the facilities to which the DPP Distributions “relate.” “Relating to”
suggests that the DPP Distributions could take place at any time, the operative fact
being the Program Year in which incurred. The Buyers’ construction of the
Program Year definition would frustrate this expressed intent.
Under Sellers’ definition, October 1, 2020 through September 30, 2021,
comprises the Program Year in which Closing occurred, and relating to which
“assessments are collected and payments are made.” This reading gives meaning
105
Id. at 3–4, 36.
106
APA § 8.22 (emphasis added).
24
to all the language and avoids the absurd results that Buyers’ construction entails.
Thus, DPP Distributions relating to the CPY of October 2020 through September
2021 would be “Straddle Distributions” divided on a “my watch, your watch”
basis.
Put differently and as stated in my prior Memorandum Opinion,
[T]he [Buyers]’ reading of the Program Year definition is unworkable
in context to the rest of the APA's DPP Distribution provision. No
assessments were collected and no payments were made during the
October 1, 2020 through September 30, 2021 time period. Therefore,
if the [Buyers] are correct that Program Years are defined by when
“assessments are collected and payments are made,” that would mean
that there was no “Program Year in which Closing occurs.” And if
there is no “Program Year in which Closing occurs” (i.e. DPP
Straddle Distributions), then there can be no “Program Year after the
Program Year in which Closing occurs” (i.e. Post-Closing DPP
Distributions), and there can be no “Program Year prior to the
Program Year in which Closing occurs” (i.e. Pre-Closing DPP
Distributions).
Indeed, for there to be a “Program Year in which Closing occurs”
under [Buyers’] reading, Closing would have had to be October 1,
2021 or later. And for there to be a “Program Year prior to the
Program Year in which Closing occurs” under [Buyers’] reading,
Closing would have had to be October 1, 2022 or later. But the
parties negotiated a Termination Date of October 1, 2021, after which
either party could terminate the APA if Closing had not yet occurred.
The APA allows for an extension of the Termination Date only until
December 1, 2021. Thus, under the [Buyers’] reading, the “DPP
Straddle Distributions” could only exist if the parties closed the APA
on the Termination Date or exercised an extension. And “Pre-Closing
DPP Distributions” could only exist if the parties blew the Outside
Date by a full year. The existence of a Termination Date suggests that
the parties intended to close the Sale by that date. It is unlikely that
25
the parties negotiated a bespoke allocation of DPP Distributions that
would only be relevant if they failed to do so by a full year.107
In light of this understanding, Sellers’ reading, in the context of the APA, is
the reasonable interpretation, based on the four corners reading of the contract
itself.
I do not find the language ambiguous, reading the contract as a whole. The
Parties have provided extrinsic evidence, which to my mind only reinforces my
understanding of the meaning of the APA. To the extent I considered extrinsic
evidence, my decision would be the same.
Here, the crucial commercial context is the structuring of the DPP itself as it
relates to the timing of assessments and distributions. Buyers suggest that during
negotiations, the timing and structure of DPP Distributions was unsettled. In a
Miami Market Proforma EBITDA Analysis that Sellers sent to Buyers in January
2021, Sellers sent an overview to the DPP.
This DPP requires each participant hospital to pay an assessment (the
non-federal share) into a local provider participation fund (“LPPF”).
Each LPPF’s membership is comprised of the hospitals in the
respective counties mentioned above. After collecting provider fees
from its member hospitals, the LPPF (via an intergovernmental
transfer) sends the total collected provider fees to the state of Florida.
The state draws down federal matching funds (the Federal Share)
based on the applicable Federal Medical Assistance Percentage. The
total non-Federal and Federal share is then distributed to Managed
Medicaid payers, who then distribute these fees to the LPPF members.
107
Steward I at *10.
26
The distribution of the pool of funds is based on Medicaid Managed
Care paid in-network inpatient admission and outpatient visits.
Although authorization for the state Medicaid agency was granted as a
result of emergency powers utilized by the Governor, the Florida
legislature will ultimately need to formally authorize implementation
of the DPP through a budget proviso during the 2021 legislative
session in March — May of 2021. Furthermore, the bill has received
bipartisan support as a beneficial program. The Centers for Medicare
and Medicaid Services must approve the DPP; assuming CMS
approves the DPP, it is expected that eligible hospitals will receive
their first quarterly DPP payment beginning May 2021. Hospitals
would receive quarterly DPP payments, based on each hospital's
inpatient and outpatient utilization in the prior quarter.108
Buyers argue that this shows that payments were expected to be made before the
closure of the relevant measurement period.109 However, even in the light most
favorable to the Buyers, it is clear that payments relate to past services.
Irrespective of when paid, DPP payments are tied to—"arise out of” in the
language of the contract—the past provision of services, and reimbursements relate
to those services previously performed.
In deposition, Buyers’ deal counsel testified that he spoke with a lobbyist
who gave him a “general overview of how the DPP program works.” He was told
that
because CHS had approved this within the year started October 1,
2020, through September of 2021, it was possible that assessments
could be made collected [sic] from the hospitals during that time
period. So just to repeat that, that it was possible that assessments and
108
Schulman Aff. Ex. 5 at STE_DE_0002872
109
Pls.’ Suppl. Br. 30.
27
distributions could be paid, certain assessments could be paid into the
program during the time period of October 1, 2020, through
September 30, 2021, and distributions paid out during that same time
period and that it could also be the year following. This is the most
likely outcome in this lobbyist’s mind was that it might be that second
time period.110
This conversation, in the light most favorable to the Buyers, suggests that
there was uncertainty of when assessments and distributions would be paid,
but it does not speak to the purpose of those payments or their retroactive
nature.
Notably, the Parties negotiated knowing the retroactive nature of prospective
DPP Distributions.111 Thus, the Parties expected that distributions for periods
between October 1 and September 30 would arrive after each period. This
corroborates Sellers’ reading of the DPP Provision as the logical reading of the
APA.
Moreover, the Parties’ negotiations, set out in Section I.A.3., are supportive
of the Sellers’ interpretation of the contract. Buyers’ reading of the contract
represents the state of play in the negotiations before the DPP became, practically
speaking, a fait accompli, which made the hospitals more valuable. At that point,
Sellers walked away from the contemplated deal, and used their improved leverage
110
Wales Dep. 140:4–141:5.
111
CMS Approval Letter at 5.
28
to renegotiate. One aspect of that renegotiation was Sellers’ proposal that the Parties
divide DPP reimbursements based on the date of sale. Specifically, Buyers’ draft of
June 14 responsive to this proposal demonstrates that they intended to pro rate DPP
Distributions “relating to the program year (i.e., October 1 through September 30)
in which the Closing occurs.”112 “Relating to” shows that, irrespective of when
payments were made, DPP Distributions were tied to the underlying services they
reimbursed for. Buyers’ reading of the language at issue would make the proration
provision illusory. If I were to consider this drafting history, it would only reinforce
my view that the Parties agreed to proration for distributions relating to the Straddle
Year, and not prorations of reimbursements highly unlikely to occur.
The Parties also provided extrinsic evidence of Buyers’ post-Closing
conduct.113 Even if I were to consider this evidence, it further supports that Sellers’
reading of the DPP Provision accurately represents the Parties’ intentions as the
evidence clearly demonstrates that, immediately following the Closing, Buyers
adopted and acted in accordance with Sellers’ interpretation.114
112
Schulman Aff. Ex. 28 at ALSTON00002211 (emphasis added).
113
Defs.’ Suppl. Br. Supp. of Defs.’ Cross-Mot. Summ. J. and Opp’n Pls.’ Mot. Summ. J. 18–25,
Dkt. No. 165 (“Defs.’ Suppl. Br.”); Pls.’ Suppl. Br. 20–21.
114
See, e.g., de la Torre Dep. 29:1–32:12, 119:4–19; Second Suppl. Grzaslewicz Aff. Ex. 42 at
165:24–166:5, Dkt. No. 156.
29
III. THE AAPP ISSUE
The Parties also submitted their dispute over reimbursements associated with
CMS’s Accelerated and Advanced Payment Program (“AAPP Program”) for
summary judgment. The AAPP Program was a program in which CMS advanced
Medicare funds that would, at least in part, be recouped from recipients at a later
date.115 Prior to Closing, Sellers received these advancements.116 After Closing, the
Buyers allegedly reimbursed or were on the brink of reimbursing CMS for amounts
that the CMS had advanced to the Sellers before Closing.117 The Buyers are entitled
under APA Section 8.16 to recover from the Sellers the funds that were advanced to
Sellers but recouped from Buyers.118 Section 8.16 provides the process for Buyers’
recoupment from Sellers:
At the beginning of each calendar month following the Closing Date,
or at some other mutually agreeable time, and until the later of
September 30, 2022 or the latest date on which any AAPP
Reimbursement Amounts would be due to CMS in accordance with
CMS’ publicly announced AAPP repayment terms and conditions (the
“AAPP Extension Date”), Buyers shall provide Sellers with a written
statement setting forth the actual or anticipated AAPP Reimbursement
Amounts to be paid by Buyers or recouped by CMS from any Buyer
(or its Affiliates) in that month, in the immediately following month,
and/or as a result of identified corrections regarding past months (each
a “Monthly AAPP Statement”), together with reasonable supporting
documentation (e.g., remittance advices reflecting the AAPP Program
recoupment from the applicable month(s)).
115
Defs.’ Answering Br. 11.
116
Defs.’ Answer and Countercls. ¶ 50.
117
Compl. ¶ 4.
118
APA § 8.16.
30
The Buyers contend that the Sellers did not reimburse them for the requisite
payments and that Sellers must therefore pay them.119 Sellers contend that Buyers
did not pay CMS and that the amounts owed to CMS are not “anticipated” within
the meaning of Section 8.16.120 Accordingly, Sellers argue that they need not make
payments to Buyers.
Thus, the contention here is not whether paid amounts must be reimbursed,
but rather, what amounts were actually paid or anticipated, and the proof required to
evidence such payments.121 As such, and given the state of the record, this is a highly
fact intensive dispute better suited for trial than summary judgment. Accordingly, I
deny the cross-motions for summary judgment on the AAPP issue.122
IV. CONCLUSION
With respect to the allocation of DPP Distributions relating to the year ending
September 30, 2021, the Sellers’ motion for summary judgment is granted and the
Buyers’ denied. With respect to the AAPP Program issues, the cross-motions are
denied. The Parties should provide an appropriate form of order.
119
Pls.’ Suppl. Br. 31.
120
Defs.’ Suppl. Br. 38–42.
121
Id.
122
Cross v. Hair, 258 A.2d 277, 278 (Del. 1969).
31