IN RE: NAVIDEA BIOPHARMACEUTICALS LITIGATION

Background

Navidea Biopharmaceuticals, Inc. sued Michael Goldberg for breach of contract, breach of the duty of good faith and fair dealing, and breach of fiduciary duty. Goldberg answered and asserted counterclaims against Navidea and third-party claims against Macrophage Therapeutics, Inc., a Navidea subsidiary. His claims alleged breach of contract, wrongful discharge, entitlement to injunctive relief, and quantum meruit, which is a claim for reasonable payment for services when an enforceable contract does not govern the dispute.

The parties had entered into an August 14, 2018 agreement concerning Goldberg’s separation from Navidea and the ownership, management, and operation of Macrophage. The agreement addressed Goldberg’s resignation, a proposed sale of Navidea shares, a line of credit to Macrophage of up to $750,000, an issuance of Macrophage voting shares, and Goldberg’s waiver of rights to collect certain debt from Navidea.

Navidea’s fiduciary-duty claim focused on Goldberg’s alleged opening of a Macrophage bank account on December 1, 2015, without notifying Capital Royalty Partners II or providing a required control agreement. Navidea alleged that this caused a default under its loan agreement and contributed to losses exceeding $50 million after litigation in Texas.

Goldberg’s Motion

Goldberg moved to dismiss Navidea’s fourth cause of action for breach of fiduciary duty, arguing that it was time-barred and failed to state a claim. He also sought advancement of attorneys’ fees for defending that claim and sanctions under Rule 11.

The court applied Delaware’s three-year limitations period for breach-of-fiduciary-duty claims because Navidea is a Delaware corporation. It held that the limitations period began when Goldberg allegedly opened the account on December 1, 2015. The claim was therefore time-barred when Navidea filed this action on April 26, 2019. The court granted Goldberg’s motion to dismiss that claim on the limitations ground and did not decide whether the claim also failed to state a claim. The court noted that Navidea could move for leave to amend by January 31, 2020 to clarify whether other conduct supported a timely fiduciary-duty claim.

The court granted Goldberg’s request for advancement of attorneys’ fees. It concluded that Navidea’s bylaws treated the indemnification and fee-advancement provisions as a contract that continued to apply to a person who had stopped serving as a director or officer. The parties were required to meet and confer about the amount of fees and notify the court by January 31, 2020 whether they agreed on that amount.

The court denied Goldberg’s request for Rule 11 sanctions. It found that Navidea’s limitations argument, although unpersuasive, was made in good faith and was not frivolous. The court also found the sanctions request procedurally improper because it was not made as a separate motion and Goldberg alleged that Navidea had not been given the required opportunity to withdraw or correct the claim.

Navidea and Macrophage’s Motion

Navidea and Macrophage moved under Rules 12(b)(1), 12(b)(6), and 12(f) to dismiss or strike portions of Goldberg’s counterclaims and third-party claims. A Rule 12(b)(6) motion tests whether the pleading states a legally sufficient claim; a Rule 12(b)(1) motion challenges the court’s authority to hear the claim.

Contract Claims

The court dismissed paragraphs 88 through 94, 101, and 102 of Goldberg’s breach-of-contract counterclaim and third-party claim. Those allegations concerned alleged failures to fund Macrophage, Goldberg’s removal as CEO, board appointments, termination of a sublicense and research projects, and access to Macrophage intellectual property.

The court held that the August Agreement was unambiguous and did not prohibit or address the challenged conduct. In particular, the agreement required Navidea to provide a line of credit not exceeding $750,000, not necessarily to contribute $750,000 outright, and Goldberg did not allege that the line of credit was not provided. The court did not dismiss portions of the contract claims alleging breaches of express terms that Navidea had not challenged.

The court also dismissed Goldberg’s claim based on the implied covenant of good faith and fair dealing. It held that Goldberg could not use that implied covenant to add obligations not contained in the agreement, and that his theory was duplicative of his contract allegations.

Wrongful-Termination Claim

The court granted the motion to dismiss Goldberg’s third-party wrongful-termination claim against Macrophage. It held that Goldberg was an at-will employee and had not identified an express agreement limiting Macrophage’s right to terminate him. The alleged purpose or shared intent of the August Agreement did not replace the required express contractual limitation.

Injunctive-Relief Claims

The court dismissed the requests in paragraphs 125(b), (c), and (e) seeking to remove Michael Rice and Claudine Bruck from Macrophage’s board, invalidate board actions taken on or after November 29, 2018, and reinstate the sublicense to Macrophage.

The court held that Goldberg lacked standing, meaning he had not shown the required personal injury and connection to the requested relief. He alleged no facts showing a continuing or future injury from Rice and Bruck’s presence on the board. He also was not a party to the sublicense and therefore had not shown a direct injury from its termination. The court did not dismiss Goldberg’s thirteen other requests for injunctive relief because Navidea and Macrophage had not specifically addressed them, and it expressed no opinion on whether those requests could proceed. Goldberg could move for leave to amend the injunctive-relief claim by January 31, 2020.

Quantum Meruit Claims

The court dismissed Goldberg’s counterclaim and third-party claim for quantum meruit. Such a claim generally is unavailable when a valid contract governs the subject matter, but it may proceed when the claimant challenges the contract’s validity or enforceability. Goldberg alleged that the August Agreement was valid, binding, and enforceable. Because neither side alleged that the agreement was invalid or unenforceable, the court held that quantum meruit was unavailable.

Disposition

The court stated that Goldberg’s motion to dismiss was granted in part and denied in part: the fiduciary-duty claim was dismissed as time-barred, fee advancement was granted, and sanctions were denied. The court granted Navidea and Macrophage’s motion to dismiss the specified contract, implied-covenant, wrongful-termination, injunctive-relief, and quantum-meruit claims. The clerk was directed to close the two motions at docket entries 32 and 40.