Judge Davis Grants Motion for Judgment on the Pleadings and Enforces Limitation of Liability Clause
February 21, 2023
Publication| Commercial Litigation
In Gone GB LTD, et al. v. Intel Services Division, LLC, et al., C.A. No. N21C-05-198 EMD CCLD, plaintiffs Gone LTD and Ori Gersht asserted eight claims against Intel Services Division, LLC and Intel Corporation (jointly, “Intel”) based on Intel’s alleged wrongful termination of an agreement for the development of imaging technology and various related torts. Intel moved for partial judgment on the pleadings, and Judge Davis granted Intel’s motion and entered judgment in Intel’s favor on seven of eight counts against Intel. At the same time, Judge Davis enforced a limitation of liability clause in the applicable agreement.
The dispute arose out of an agreement between Intel and Gone LTD to create a virtual-reality based art piece utilizing Intel’s volumetric imaging technology. The agreement became effective on June 1, 2019 and had a two-year expiration date. Under the agreement, Intel was to provide the services of Intel Studios, including its studio space, personnel, and use of its proprietary software. Mr. Gersht, an artist and partial owner of Gone, was to provide the creative direction for the project. In September 2020, however, Intel decided to close Intel Studios, in part due to the business impact of COVID. Shortly thereafter, Intel notified Mr. Gersht that the agreement was terminated.
In considering Intel’s motion, the Court first found that a valid agreement existed between Gone and Intel. Accordingly, the Court dismissed a number of quasi-contractual claims brought by the plaintiffs. Specifically, the plaintiffs asserted claims based upon estoppel and promissory estoppel, quantum meruit, conversion, and unjust enrichment and restitution. In dismissing these claims, the Court emphasized that the agreement between the parties controlled, and the plaintiffs’ claims were within the scope of the plaintiffs’ existing contractual obligations.
For the remaining claims (breach of implied covenant of good faith and fair dealing, tortious interference with contract, and tortious interference with prospective economic relationships), the Court found that the plaintiffs failed to state valid claims upon which relief could be granted. With respect to the implied covenant of good faith and fair dealing claim, the Court found that the plaintiffs did not offer any evidence to show that Intel breached an implied contractual obligation owed to the plaintiffs beyond the terms of the agreement. With respect to the tortious interference claims, the Court found that the plaintiffs did not offer evidence of third-party contracts or actual prospective business opportunities for future contracts, and even if such contracts or opportunities existed, the plaintiffs failed to show that Intel intentionally interfered with those ventures.
Finally, the Court found that the limitation of liability clause in the agreement was enforceable. Although the plaintiffs argued that the clause was ambiguous, the Court found that the clause was clear on its face and limited any actual and direct damages arising from and out of the agreement to $50,000. The Court explained that if the parties intended to exclude the termination of the agreement from the $50,000 limitation, the parties would have agreed to such in the agreement.
Analysis: Since its inception, the CCLD has helped to flesh out the contours of Delaware contract law. This action reinforces the long-standing maxim that the contract itself is the best evidence of the parties’ agreement, and the Court will enforce limitations of liability where agreed to by the parties.