IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

JOHN N. HEARN,
C.A. No.: Nl6C-08-124 RRC
Plaintiff,

V.

TOTE SERVICES, INC.,

Defendant.

Submitted: June 4, 2018
Decided: June 21, 2018

On Plaintiff’ s Motion for Leave to Amend the Complaint. DENIED.

ORDER

Laurence V. Cronin, Esquire, Smith, Katzenstein & Jenkins LLP, Wilmington,
DelaWare, Attomey for Plaintiff John N. Heam.

Meghan A. Adams, Esquire, Morris James LLP, Wilmington, Delaware; John R.
Fornaciari, Esquire and Thomas E. Hogan, Esquire, Baker & Hostetler LLP,
Washington, D.C., pro hac vice, Attomeys for Defendant Tote Services, Inc.

COOCH, R.J.

This 21th day of June 2018, upon consideration of Plaintiff’ s Motion
for Leave to Amend the Complaint, it appears to the Court that:

l. Plaintiff moves this Court for leave to amend the complaint
pursuant to Superior Court Civil Rule 15. Plaintiff seeks to
amend the complaint to add claims of fraud in the inducement
and negligent misrepresentation, as Well as to “clarify other

portions of the original complaint.”l Defendant contends that the
motion to amend should be denied because claims of fraud in the
inducement and negligent misrepresentation “Would be subject
to dismissal under Rule lZ(b)(6) pursuant to Florida law for
failure to State a claim and the motion is therefore futile.”2
Defendant makes two arguments in support of denial due to
futility. First, Defendant argues that a party may not make a
fraud-based tort claim unless such claim is independent from a
breach of contract claim. Second, Defendant asserts that
Plaintiff’ s motion should be denied because a party may not rely
on a litigation adversary’s representations to establish a fraud
claim because in the context of settlement negotiations; those
statements, Defendant argues, are governed by contract law, not
tort.3 This Court concludes that Plaintiff’ s reliance on
Defendant’s statements during settlement negotiations cannot
form the basis of a fraud claim, either in the form of fraud in the
inducement or negligent misrepresentation Therefore, Plaintiff’ s
Motion for Leave to Amend the Complaint is DENIED.

2. The complaint Was filed on August 16, 2016 and originally set
forth only a breach of contract action, Which alleged reputational
harm to Plaintiff. Plaintiff and Defendant had entered in a
settlement agreement, Which arose out of Defendant’s
termination of Plaintiff from his position as Master of the
Florida-based vessel owned by Defendant, the El Morro.4 In the
complaint, Plaintiff alleged that Defendant breached the
settlement agreement When Defendant failed to expunge certain
records pursuant to that agreement The contract terms at issue
provided that Defendant “agree[d] that any records of the

 

l Pl.’s Mot. to Amend at 3.

2 Def.’s Resp. at l.

3 In the briefing, the parties focused substantially on the issue of a tort claim’s independence of a
breach of contract. However, at oral argument the parties gave significant attention to the issue of
the prohibition of a party’s reliance on a litigation adversary’s representations to establish a fraud
claim. Because this Court now concludes that Plaintiff cannot bring a successful fraud in the
inducement or negligent misrepresentation claim based on Defendant’s representation during
settlement negotiations, and denies the motion to amend on that ground, this Court need not reach
the issue of a tort claim’s independence of a breach of contract.

4 For a fuller explication of the background of this case, see Hearn v. Tote Servs., Inc., 2017 WL
8788758 (Del. Super. Ct. Oct. 17, 2017).

circumstances giving rise to [Plaintiff`s] grievance shall be
expunged, and that it shall respond to any future inquiries
concerning [Plaintiff’s] employment by [Defendant] with his
sailing positions, dates of employment, and without reference to
this matter.”5 However, the employment records that were not
expunged were used for cross-examination at a later federal
maritime hearing convened to investigate the circumstances
surrounding the sinking of the El Morro’s sister ship, the El Faro,
near the Bahamas in Hurricane Joaquin in September of 2015.

In its October 17, 2017 opinion, this Court held that Florida law
applies to this action and therefore Florida’s absolute litigation
privilege applies, “which precludes any lawsuit against
Defendant stemming from a court or administrative proceeding .

. .”6 Following this Court’s opinion, the parties engaged in
additional discovery. During a deposition, Defendant apparently
testified through a designee that its interpretation of Defendant’s
duty to expunge Plaintiff’ s employment records, which was set
forth in the settlement agreement, was allegedly different from
the “plain language” of the agreement7 “During negotiation of
the settlement agreement, [Plaintiff’ s counsel] emailed
[Defendant’s counsel] stating that ‘[i]n Paragraph 7, l added the
clean work record provision we had discussed,’ and that
[Defendant’s] counsel responded ‘No problem with
expungement.”’8 Plaintiff now seeks to amend his complaint to
add claims of fraud in the inducement and negligent
misrepresentation because, as Plaintiff claims, “Defendant never
disclosed [its materially different] interpretation to Plaintiff
before the parties signed the agreement.”9

In its motion for leave to amend the complaint, Plaintiff argues
that he should be granted leave to add claims of fraud in the
inducement and negligent misrepresentation because, as Plaintiff
claims, “Defendant never disclosed [its materially different]
interpretation to Plaintiff before the parties signed the

 

51a'.
6Ia'.

7 Pl.’s Mot. to Amend at 3.
8 Def.’s Resp. at 1.
9 Pl.’s Mot. to Amend at 3.

agreement.”'O Plaintiff also asserts that it may seek a these tort
claims in addition to a breach of contract claim because, as he
contends, the alleged misrepresentation here is “independent
from acts that breached the contract.”ll Plaintiff argues that, to
be “sufficiently independent from the acts that breached the
contract,” the representations must be “verifiably true or false at
the time the representation was made.”'2 Plaintiff contends that
“whether Defendant had a “problem” with the requirement
imposed by Plaintiff’s proposed language was verifiably true or
false at the time the representation was made . . . .”'3

5 . In response, Defendant makes two arguments in support of denial
due to futility. First, Defendant argues that Plaintiff may not add
these tort claims because they are not independent from the
breach of contract claim and states that “under Florida law, one
cannot state a claim sounding in tort unless it is independent of
the alleged failure to perform the contract.”'4 Second, Defendant
asserts that Plaintiff’ s motion should be denied because Plaintiff
cannot allege a false statement because a party may not rely on a
litigation adversary’s representations to establish a fraud claim.
Defendant states that, in the context of settlement negotiations,
those statements are governed by contract law, not tort.

6. Plaintiff’ s motion for leave to amend his complaint to add claims
of fraudulent inducement and negligent misrepresentation is
denied because these tort claims would be subject to dismissal
pursuant to Florida law under Rule 12(b)(6) for failure to state a
claim and the motion is therefore futile. Plaintiff cannot
successhllly allege that Defendant made a false statement of
material fact, which is an essential element of each tort claim.15

 

10 Id.

" Pl.’s Reply at 2.

12 Id. at 3.

'3 Ia'. at 4.

14 Def.’s Resp. at l.

15 Pl.’s Reply at 1-2 (quoting Simon v. Celebration C0., 883 So.2d 826, 832 (Fla. Dist. Ct. Ap., 5th
Dist. 2004)) (setting forth the elements of a fraudulent inducement claim)

ln order to assert a viable claim of fraudulent inducement under Florida law, “a
plaintiff must allege that: (l) the defendant made a false statement regarding a

A recent Florida case, Moriber v. Drez`ling, spoke to this issues
in this motion.16 Moriber held that, “as a matter of law, a plaintiff
may not rely on statements made by litigation adversaries to
establish fraud claims.”l7 The court in Moriber held that “[i]n the
context of settlement agreements, one party certainly may insist
upon certain assurances from the other party[,] . . . however, such
assurances are better enforced through contract princip[les] . . .
rather than fraud claims.”18 According to the court in Moriber, a
party may not rely on any representations made by” the opposing
party.19 The Moriber court held that, even if the defendant knew
that the statement was false, the plaintiff could not have relied on
that statement to set forth a fraud claim.ZO Plaintiff may thus not
rely on Defendant’s counsel’s statement that there was “no
problem with expungement” in order to potentially establish a
fraud in the inducement or negligent misrepresentation claim.
Under Florida law, an assurance made by a litigation adversary,
such as here, is controlled by contract, not tort, law.

 

material fact; (2) the defendant knew that the statement was false when he made it
or made the statement knowing that he was without knowledge of its truth or falsity;
(3) the defendant intended that the plaintiff rely and act on the false statement; and
(4) the plaintiff justifiably relied on the false statement to his detriment.”

id. at 2 (quoting Simon v. Celebration Co., 883 So.2d 826, 832 (Fla. Dist. Ct. Ap., 5th Dist.
2004)) (setting forth the elements of a negligent misrepresentation claim)

In order to assert a claim of for negligent misrepresentation under Florida law, “a
plaintiff must allege in his complaint that: (1) the defendant made a
misrepresentation of material fact that he believed to be true but which was in fact
false; (2) the defendant was negligent in making the statement because he should
have known the representation was false; (3) the defendant intended to induce the
plaintiff to rely [sic] on the misrepresentation; and (4) injury resulted to the plaintiff
acting in justifiable reliance upon the misrepresentation.”

16 194 So. 3d 369 (Fla. Dist. Ct. App. 2016), reh'g denied (May 27, 2016).

17 Ia’. at 373. Moriber was decided by the District Court of Appeals of Florida, the state’s second
highest court. Thus, this Court, in its application of Florida law, accepts Moriber as the law of
Florida.

18 Ia'. at 374.
19 Ia'.at 370 (holding that “as a matter of law, Ms. Moriber could not have relied upon any

representations made by the Decedent, thereby precluding Ms. Moriber's fraud claims.”) (emphasis

added).
20 Ia'. at 373 (holding that “even if affirmative misrepresentations were made to Ms. Moriber, Ms.

Moriber could not, as a matter of law, rely upon such misrepresentations.”).

7. ln his Reply Brief, Plaintiff did not rebut this argument raised by
Defendant in its Response. At oral argument, Plaintiff did not
contest Defendant’s position that, if this Court were to follow
Moriber, that Moriber requires denial of the motion to amend
(other than to point out that Moriber was not a decision of the
Florida Supreme Court).

8. In reaching this result, this Court is mindful that Plaintiff has
asserted from the beginning that he was taken by surprise when
he was cross-examined at the maritime hearing with documents
that he asserts he thought Defendant had agreed to “expunge,”
but for purposes of the instant motion, this Court finds Moriber
dispositive.21

Accordingly, Plaintiff’s motion for leave to amend the
complaint is DENIED.

IT IS SO ORDERED.

l/\;!,\.FYLC®L_

Richard R. Cooch, J.

 

cc: Prothonotary

 

21 Three cases have followed Moriber on the issue that a party may not rely on litigation
adversaries’ statements to establish fraud claims. See, e.g., Diaz v. Kosch, 2018 WL 2945390, at
*9 (Fla. Dist. Ct. App. June 13, 2018); Brier v. De Cay, 2017 WL 1164724, at *5 (N.D. Fla. Mar.
l, 2017); In re Tomlin, 2016 WL 1317412, at *27 (Bankr. E.D. Ky. Mar. 31, 2016).

