Judge Wallace Grants in Part and Denies in Part Cross Motions to Dismiss

February 13, 2019

Publication

In The GWO Litigation Trust v. Sprint Solutions, Inc., C.A. No. N17C-06-356 PRW CCLD, Judge Wallace granted in part and denied in part defendant Sprint Solutions, Inc.’s (“Sprint”) motion to dismiss certain counts of the complaint and plaintiff General Wireless Organization Litigation Trust’s (“GWO Trust”) partial motion to dismiss Sprint’s counterclaims and third party Sprint e-Wireless’s (“e-Wireless”) third-party claim.

The action arose from a joint effort between Sprint and General Wireless Operations, Inc., the predecessor of GWO Trust, to revitalize the bankrupt RadioShack Corporation. Through a series of contracts, Sprint and General Wireless agreed to establish co-branded retail stores to sell RadioShack and Sprint products exclusively.

Ultimately, the Radioshack/Sprint model failed. General Wireless and Sprint executed a settlement agreement, and three days later General Wireless filed for bankruptcy. The bankruptcy court approved the settlement agreement (“Settlement Approval Order”). Soon thereafter, GWO Trust brought suit against Sprint. Sprint brought five counterclaims, and third-party e-Wireless also brought breach of contract claims against GWO Trust.

In considering Sprint’s motion to dismiss, Judge Wallace first addressed Sprint’s argument that GWO Trust’s breach of the implied covenant of good faith and fair dealing, misappropriation of trade secrets, conversion, unfair competition, and tortious interference claims were time barred by the Settlement Approval Order. Citing to the plain language of the order, the court determined that the claims were not time barred.

Next, Judge Wallace considered the implied covenant of good faith and fair dealing claim and granted and denied in part Sprint’s motion as to this claim, finding that Sprint’s conduct giving rise to the claim was only in part governed by the express contractual terms negotiated by the parties.

With respect to the remaining claims in Sprint’s motion to dismiss, Judge Wallace granted Sprint’s motion as to GWO’s conversion, unfair competition, and tortious interference claims, and denied the motion as to the misappropriation of trade secrets claim. In so holding, Judge Wallace concluded that GWO Trust pled sufficient facts to allege a claim for misappropriation under DUTSA, and the foundation of the conversion and unfair competition claims was the same as the misappropriation claim.

Judge Wallace also granted GWO Trust’s partial motion to dismiss with respect to Sprint’s breach of the implied covenant claim and denied the motion with respect to Sprint’s indemnification and breach of contract claims and e-Wireless’s third-party claim. The implied covenant claim was dismissed because the conduct allegedly violating the implied covenant was squarely addressed by the parties’ agreement. Sprint’s breach of contract claim survived because the parties’ agreement was an executory contract within the meaning of Section 365 of the Bankruptcy Code, and General Wireless rejected the agreement. The court determined that dismissal of Sprint’s indemnification claim was premature and stated that it would address the issue after the claim was amended. Finally, the third-party breach of contract claim survived because GWO Trust was on notice that e-Wireless’s claim was brought against GWI.

Analysis: The CCLD commonly handles disputes involving multiple parties and multiple motions. This case highlights how the CCLD judges are quickly about to resolve complex, dispositive motions and focus on the heart of the disputed issues between the parties. This is particularly true when a party brings overlapping or duplicative claims under both contract and tort. See Data Mgmt. Internationale, Inc. v. Saraga, 2007 WL 2142848 (Del. Super. Ct. July 25, 2007).