Contract dispute escrow funds, motion dismissed

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

Date Submitted: December 18, 2025 Date Decided: March 30, 2026 Upon Consideration of the Plaintiff’s Motion to Dismiss. GRANTED. MEMORANDUM OPINION Travis S. Hunter, Esquire of RICHARDS, LAYTON & FINGER, P.A., Attorney for Mark D. Griffis. Jarrett W. Horowitz, Esquire of CONNOLLY GALLAGHER LLP, Attorney for Decision Logic Buyer, Inc.

) MARK D. GRIFFIS, ) ) Plaintiff/Counterclaim ) Defendant, ) SCOTT, J. ) C.A. No. N25C-10-249 CLS v. ) DECISION LOGIC BUYER, INC., ) ) ) Defendant/Counterclaim ) Plaintiff.

This case arises from a contract dispute concerning the Plaintiff and Counterclaim-Defendant’s refusal to release escrow funds to indemnify Defendant and Counterclaim-Plaintiff as provided by a purchase agreement. Before the Court is Plaintiff and Counterclaim-Defendant’s Motion to Dismiss Counts II and III of Defendant and Counterclaim-Plaintiff’s Counterclaim under Superior Court Civil Rule 12(b)(6). For the following reasons, the motion is GRANTED. FACTUAL AND PROCEDURAL BACKGROUND

1. The Parties Plaintiff and Counterclaim-Defendant, Mark D. Griffis (“Griffis”), is a 1resident of Nebraska. Defendant and Counterclaim-Plaintiff, Decision Logic Buyer, Inc. (“Decision

2Logic”), is a Delaware corporation with its principal place of business in Nebraska.

1. The Purchase Agreement and Escrow Agreement This matter stems from a Unit Purchase Agreement (“UPA”) entered into by

3Griffis and Decision Logic on February 28, 2025. Under the UPA, Decision Logic

agreed to purchase Knowledge Management Systems, LLC (the “Company”) from

4Griffis for $23 million.

Compl. ¶ 5, D.I. 1. 1 Id. ¶ 6. 2

3 Id. ¶ 1; Mark Griffis’ Mot. to Dismiss Counts II and III of Def.’s Countercls., Ex. A (“UPA”), D.I. 11 (“MTD”).

4 Compl. ¶ 1; Decision Logic Buyer, Inc.’s Answ. and Affirmative Defenses to Compl. and Countercls. ¶ 8, D.I. 6 (“Countercl.”).

During negotiations for the UPA, Decision Logic alleges that it was concerned about the Company’s pre-closing tax liability given that Griffis “failed for years to register, collect, and remit state sales taxes in multiple states where [the Company]

5had sales tax nexus[.]” Decision Logic alleges that Griffis was aware of the

6Company’s potential tax liability and agreed that the issues “required resolution.”

Indeed, in March 2023, the Company’s President and Chief Operating Officer, Amanda Woolege, purportedly informed Griffis that it would be in the Company’s best interests to file Voluntary Disclosure Agreements (“VDAs”) “for previous tax 7non-compliance.” To address Decision Logic’s concerns, Section 5.3 of the UPA contains a provision requiring Griffis to “indemnify and hold harmless the Buyer . . . from and against any and all Losses[,]” including taxes imposed on the Company during the

8Pre-Closing Period. Because Decision Logic remained responsible for Post-

Closing tax liabilities, it was required to inform Griffis of any “notice of . . . pending or threatened federal, state, local, or foreign tax audits or assessments with respect 9to the Company related to any Pre-Closing Tax Period[.]”

5 Countercl. ¶¶ 9, 13. Id. ¶¶ 10–14. 6

7 Id. ¶ 11. Id. ¶ 15; UPA at 46. 8 UPA at 47. 9

Further, Section 5.3(c)(ii) gives Griffis “the right to control and resolve any Tax claim relating to any taxable period that ends on or before the Closing Date at the Seller’s cost and expense” unless Decision Logic “shall have the right, at its own

10expense, to participate in, and consult with [Griffis] regarding any such Tax claim.”

The UPA gives Decision Logic the right to control and resolve any Tax claim where: (1) it “agreed in writing to forgo any indemnification under [the UPA] with respect to such issue[,]” or (2) “where [Griffis] has failed to ‘assume control in accordance with [the Tax Control provision of the UPA . . . provided, prior to any settlement or compromise, [Decision Logic] shall obtain [Griffis’s] written consent, which shall

11not be unreasonably withheld, conditioned, or delayed.” Consequently, in connection with the UPA, the parties executed an Escrow Agreement, whereby Griffis agreed to place $500,000 in an Escrow Account as “a

12simple path [for Decision Logic] to recover indemnifiable sales tax liabilities[.]”

“In the event Buyer requests indemnification, funds are to be released after the

13execution of a ‘Joint Instruction’ from the parties.”

UPA at 48. 10

11 Compl. ¶ 12; UPA at 48.

12 Id. ¶ 9; Counterclaim ¶¶ 8, 16; UPA Ex. B (“Escrow Agreement”).

13 Compl. ¶ 9.

1. Decision Logic Incurs Pre-Closing Tax Liability In April 2025, Woolege gave Griffis an “engagement letter from a sales tax compliance vendor, which detailed specific steps that would be taken by the Company to address the state tax noncompliance, including obtaining VDAs in Ohio

14Tennessee, and Texas.” In June 2025, Woolege also provided Griffis with an

15estimate of the potential tax liability in Tennessee. Decision Logic alleges that

Griffis was “apprised . . . of the ongoing state tax issues, the remediation process,

16the VDAs, and amounts” owed for noncompliance. The VDAs were executed and by September 2025, Decision Logic paid $171,666.20 in sales tax noncompliance and fees to Ohio and Tennessee during the

17Pre-Closing Period to bring the Company’s state taxes for 2025 current. Decision

18Logic also anticipates an additional payment of about $200,000 to Texas. Griffis

allegedly did not intervene or disagree with the taxes before Decision Logic incurred

19the liability for sales taxes in Ohio and Tennessee. Therefore, on September 15,

2025, Decision Logic requested a Joint Instruction from Griffis to release

Countercl. ¶ 21. 14

15 Id. ¶ 22.

16 Id. ¶ 23.

17 Id. ¶¶ 18–19.

18 Id. ¶¶ 19–20. Id. ¶ 24. 19

$171,666.20 from the Escrow Account for indemnifiable Pre-Closing Period tax

20liability.

1. Griffis Refuses to Execute the Joint Instruction On October 1, 2025, Griffis informed Decision Logic that he would not execute the Joint Instruction because Decision Logic forfeited its right to indemnification by unilaterally negotiating the VDAs in violation of Section 5.3(c)(ii) of the UPA and waived its right by failing to properly notify Griffis under

21Section 5.3(c)(i) of the UPA. Griffis also asserts that the computations of tax

22liability in the VDAs were incorrect and included Post-Closing tax liabilities.

Decision Logic disagrees, claiming that “the UPA did not require it to take any 23further steps to secure Griffis’s cooperation with indemnification[.]” To address the “discrepancies in the computations of the VDAs[,]” Griffis

24emailed Buyer’s board members to discuss. Members of Decision Logic’s board

25set a meeting for October 24, 2025, to address Griffis’s concerns. The meeting

never happened, however, as Griffis filed a Complaint against Decision Logic “mere

26hours before the meeting was set to take place.” Decision Logic alleges that Griffis

20 Id. ¶ 25. Id. ¶ 26; Compl. ¶ 15. 21

22 Compl. ¶¶ 15–18.

23 Countercl. ¶ 27. Compl. ¶ 16; Countercl. ¶ 28. 24

25 Countercl. ¶ 28.

26 Id. ¶ 28.

not only violated the UPA, but that the refusal to execute the Joint Instruction

27constitutes bad faith.

1. Procedural History On October 24, 2025, Griffis filed the Complaint underlying the present motion, seeking declaratory judgment and alleging that Decision Logic breached the

28UPA. On November 14, 2025, Decision Logic filed its Answer and Counterclaims,

denying that it breached the UPA and asserted the following counterclaims: breach of contract, breach of the implied covenant of good faith and fair dealing, and

29declaratory judgment. On December 4, 2025, Griffis filed a Motion to Dismiss Decision Logic’s

30claims for breach of the implied covenant and declaratory judgment. Decision

31Logic filed a Response in opposition on December 18, 2025. The matter is now

ripe for decision. STANDARD OF REVIEW Upon a motion to dismiss under Superior Court Civil Rule 12(b)(6), the Court (i) accepts all well-pled factual allegations as true, (ii) accepts even vague allegations as well-pled if they give the opposing party notice of the claim, (iii) draws all

27 Id. ¶ 29. See generally Compl. 28

29 See generally Countercl.

30 See generally MTD.

31 See generally Def.’s Resp. to Pl.’s Mot. to Dismiss Count II and III of Def.’s Countercls., D.I.

15 (“Def.’s Resp.”).

reasonable inferences in favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be entitled to recover under any reasonably

32conceivable set of circumstances. The Court does not, however, accept

33“conclusory allegations that lack specific supporting factual allegations.” But “it

is appropriate . . . to give the pleader the benefit of all reasonable inferences that can

34be drawn from the pleading.” Generally, when considering a Rule 12(b)(6) motion

35to dismiss, the Court “may not consider matters outside the complaint” unless the

36documents “are integral to or incorporated by reference[.]” DISCUSSION

Griffis seeks dismissal of Counts II and III of Decision Logic’s Counterclaim.

First, he argues that Decision Logic fails to state a claim for breach of the implied covenant of good faith and fair dealing because the UPA expressly covers Decision Logic’s “ability to enter VDAs with local tax authorities and Mr. Griffis’s duty to

37execute a joint instruction.” Decision Logic concedes that the UPA expressly

grants Griffis discretion, but claims that Delaware law permits a claim for the

32 ET Aggregator, LLC v. PFJE AssetCo Holdings LLC, 2023 WL 8535181, at *6 (Del. Super.

Dec. 8, 2023); see also World Energy Ventures, LLC v. Northwind Gulf Coast LLC, 2015 WL 6772638, at *6 (Del. Super. Nov. 2, 2015).

33 ET Aggregator, LLC, 2023 WL 8535181, at *6 (quoting Ramunno v. Crawley, 705 A.2d 1029, 1034 (Del. 1998)).

34 TrueBlue Inc. v. Leeds Equity Partners IV, LP, 2015 WL 5968726, at *2 (Del. Super. Sept. 25,

1. (internal quotation marks omitted). ET Aggregator, LLC, 2023 WL 8535181, at *6 (quoting Super. Ct. Civ. R. 12(b)). 35 Id. at *6 (quoting In re Santa Fe Pac. Corp. S’Holder Litig., 669 A.2d 59, 70 (Del. 1995)). 36 MTD at 3. 37 implied covenant where the contract “omits standards governing [such]

38discretion.”

Second, Griffis avers that declaratory judgment is “overripe” because it

“serves no independent purpose aside from restating Decision Logic’s breach of

39contract claim.” On the other hand, Decision Logic proffers that the claim is

necessary to “trigger escrow disbursement absent a joint instruction, and to avoid 40serial litigation over recurring pre-closing tax liabilities.”

1. The Counterclaim Fails to Identify a Contractual Gap Such that the Covenant of Good Faith and Fair Dealing Applies Griffis argues that dismissal is appropriate on Decision Logic’s counterclaim for breach of the implied covenant because the UPA expressly covers the conduct at issue. The implied covenant of good faith and fair dealing is inherent in all

41contracts and “‘best understood as a way of implying terms in the agreement,’

whether employed to analyze unanticipated developments or to fill gaps in the

42contract’s provisions.” The implied covenant “does not establish a free-floating

38 Def.’s Resp. at 3.

39 MTD at 6.

40 Def.’s Resp. at 5.

41 Merrill v. Crothall-American Inc., 606 A.2d 96, 101 (Del. 1992) (citing Blish v. Thompson

Automatic Arms Corp., 64 A.2d 581, 597 (Del. 1948)).

42 Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 441 (Del. 2005) (citing E.I. DuPont de

Nemours & Co. v. Pressman, 679 A.2d 436, 443 (Del. 1996); Glenfed Fin. Corp., Commercial Fin. Div. v. Penick Corp., 647 A.2d 852, 858 (Del. 1994)).

requirement that a party act in some morally commendable sense,” nor does it

43“require that a party have acted in subjective good faith.” The implied covenant only applies when the underlying contract is “truly

44silent” on the issue. “The covenant does not allow for judicial rewriting of

contracts, ‘[p]arties have a right to enter into good and bad contracts, the law

45enforces both.’” Thus, “[i]t does not apply when the contract addresses the conduct

46at issue.” The party claiming the covenant has been breached bears the burden to

47identify the contractual gap. Decision Logic’s counterclaim for breach of the implied covenant alleges that the “UPA implies, but does not expressly include, a term that Griffis will not exercise his discretion to sign a joint instruction in bad faith to deny Decision Logic the The Court disagrees. 48bargained-for fruits of the UPA, i.e., indemnification.”

43 Allen v. El Paso Pipeline GP Co., L.L.C., 113 A.3d 167, 182–83 (Del. Ch. 2014) (citing

Gerber v. Enter. Pros. Holdings, LLC, 67 A.3d 400, 418 (Del. 2013); ASB Allegiance Real Estate Fund v. Scion Breckenridge Managing Member, LLC, 50 A.3d 434, 442, 444 (Del. Ch. 2012)).

44 Oxbow Carbon & Mins. Holdings, Inc. v. Crestview-Oxbow Acquisition, LLC, 202 A.3d 482,

507 (Del. 2019) (quoting Allied Capital Corp. v. GC-Sun Holdings, L.P., 910 A.2d 1020, 1033 (Del. Ch. 2006)) (internal quotation marks omitted).

45 I Am Athlete, LLC v. IM EnMotive, LLC, 2024 WL 4904685, at *8 (Del. Super. Nov. 27, 2024)

(quoting Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010)).

46 Id. (quoting Nationalwide Emerging Managers, LLC v. Northpointe Holdings, LLC, 112 A.3d 878, 896 (Del. 2015)) (internal quotation marks omitted).

47 Id. (citing Miller v. HCP & Co., 2018 WL 656378, at *2 (Del. Ch. 2018), aff’d sub nom., 194

A.3d 908 (Del. 2018)).

48 Countercl. ¶ 40.

Decision Logic cites various decisions supporting its assertion that “Delaware courts uphold implied covenant claims where . . . a contract confers discretion yet

49omits standards governing its exercise.” While the Court agrees with Decision

Logic, the facts at bar are distinguishable from those cases given the nature of the parties’ relationship that the UPA creates. In other words, the UPA is not representative of a continuing business entity relationship that warrants the application of the Baldwin Court’s holding under the facts of this case. 50 Further, the indemnification provision in Baldwin permitted indemnification “to the fullest extent permitted by the” Delaware Limited Liability Company Act, qualified by a determination as to whether the indemnitee acted in good faith and in the best

51interests of the company. Therefore, it was implicit in the agreement that the

52determination would not be made in bad faith. Here, however, Section 5.3 of the UPA is not governed by the Delaware Limited Liability Company Act and there is a clear standard for Decision Logic’s right to indemnification. The provisions of Section 5.3 of the UPA state the indemnifiable losses, the control Griffis has regarding the indemnifiable losses

49 Def.’s Resp. at 3–4 (citing Baldwin v. New Wood Resources LLC, 283 A.3d 1099 (Del. 2022);

Dieckman v. Regency GP LP, 155 A.3d 358 (Del. 2017); Wilmington Leasing, Inc. v. Parrish Leasing Co., LP, 1996 WL 560190, at *1 (Del. Ch. Sept. 25, 1996); Sheehan v. AssuredPartners, Inc., 2020 WL 2838575, at *1 (Del. Ch. May 29, 2020)).

50 Baldwin, 283 A.3d at 1118–21.

51 Id. at 1118.

52 Id.

during the Pre-Closing Period, when Decision Logic may assume control, and Griffis’s role and obligations if he withholds consent to Decision Logic assuming control of a tax liability settlement or compromise during the Pre-Closing Period. These provisions leave no room for the Court to imply additional terms governing the same subject matter. The UPA is not truly silent on the issue of the obligations governing the rights to indemnification and the execution of a Joint Instruction to release the escrow funds. Accordingly, the terms of the UPA govern whether Griffis breached the agreement. Thus, Count II warrants dismissal.

1. The Claim for Declaratory Judgment Fails Decision Logic’s claim for declaratory judgment fails because it is duplicative. A declaratory judgment “is a statutory action . . . meant to provide relief in situations where a claim is ripe but would not support an action under common-

53law[.]” “[T]here is no need for a declaratory judgment . . . where a claimant merely

has repackaged in the language of a declaration an adequately[]pleaded affirmative

54count[.]” Delaware courts reject a declaratory judgment claim if it is “wholly and

53 Loeffler v. MNTN, Inc., 2025 WL1256148, at *4 (Del. Super. Apr. 28, 2025) (quoting Great

Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 2014 WL 6703980, at *29 (Del. Ch. Nov. 16, 2024)) (internal quotation marks omitted).

54 Id. (quoting Blue Cube Spinco LLC v. Dow Chem. Co., 2021 WL 4453460, at *15 (Del. Super.

Sept. 29, 2021)).

completely duplicative.” To survive dismissal, “a declaratory count must be ‘distinct’ from the affirmative counts in the complaint such that a decision on the

56affirmative counts would not resolve the declaratory count.” The Court finds Griffis’s argument persuasive. The declaratory judgment claim seeks a ruling on the same legal issue addressed in Count I—whether Decision Logic is entitled to indemnification because Griffis violated the UPA by failing to

57execute a joint instruction. The Court’s resolution for Count I would resolve the

declaratory judgment claim given that a finding that Griffis breached the UPA would

58trigger the disbursement of the escrow funds. Consequently, the declaratory

judgment claim adds nothing new, it is duplicative, and dismissal is warranted. To the extent Decision Logic avers that a declaration is necessary for additional indemnifiable losses in the future, such a claim is speculative and not ripe for decision. The Counterclaim does allege that Decision Logic will pay around $200,000 to Texas in sales tax noncompliance for the Pre-Closing Period, but there

55 DuPont De Nemours, Inc. v. Hemlock Semiconductor Operations, LLC, 2024 WL 3161799,

*11 (Del. Super. June 10, 2024) (quoting IP Network Solutions, Inc. v. Nutanix, Inc., 2022 WL 369951, at *7 (Del. Super. Feb. 8, 2022)) (internal quotation marks omitted).

56 Blue Cube Spinco LLC, 2021 WL 4453460, at *15 (citing Sweetwater Point, LLC v. Kee, 2020

WL 6561567, at *12, *17 (Del. Super. Nov. 5, 2020); Trusa v. Nepo, 2017 WL 1379594, at *8 n.71 (Del. Ch. Apr. 13, 2017); Veloric v. J.G. Wentworth, Inc., 2014 WL4639217, at *20 (Del. Ch. Sept. 18, 2014)).

57 Compare Countercl. ¶¶ 32–35 with id. ¶¶ 44–46.

58 See e.g., ESG Capital Partners II, LP v. Passport Special Opportunities Master Fund, LP,

2015 WL 9060982, at *15 (concluding that in making “the necessary determinations in the course of resolving the claim for breach of contract[,]” declaratory judgment did “not add anything”); Loeffler, 2025 WL 1256148, at *4–5.

are no allegations that Griffis will not execute a joint instruction for those taxes. Moreover, the possibility that Griffis will refuse to indemnify Decision Logic for the taxes in Texas, on its own, is too speculative to conclude that “Decision Logic will be forced to return to court each time Griffis flouts the UPA’s indemnification

59requirements.” “If for some currently unforeseeable reason it turns out later that

the declaratory judgment claim was not superfluous, it can be reinstated without any

60prejudice” to Griffis. Accordingly, dismissal as to Count III is appropriate. CONCLUSION For the foregoing reasons, Plaintiff and Counterclaim-Defendant Mark D. Griffis’s Motion to Dismiss is GRANTED. IT IS SO ORDERED.

/s/ Calvin Scott

Judge Calvin L. Scott, Jr.

59 Def.’s Resp. at 6.

60 ESG Cap. Partners II, LP, 2015 WL 9060982, at *15.