Motion for Summary Judgment in TORRENT PHARMA, INC. V. PRIORITY HEALTHCARE DISTRI| Trellis.Law

On May 09, 2018 a Hearing was filed involving a dispute between Torrent Pharma, Inc., and Denali Ohio Southpark Industrial Llc, Priority Healthcare Distribution, Inc., D B A Curascript Sd, for PROPERTY DAMAGE in the District Court of New Castle County.

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IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

TORRENT PHARMA, INC., )
QBE UNDERWRITERS LTD., )
LIBERTY CORPORATE CAPITAL )
LTD., HAMILTON MANAGEMENT )
AGENCY LTD., RIVERSTONE )
MANAGING AGENCY LTD., BRIT )
SYNDICATES LTD., and ARGO )
MANAGING AGENCY LTD., ) C.A. No. N18C-05-094 CEB
)
Plaintiffs, )
)
v. )
)
PRIORITY HEALTHCARE )
DISTRIBUTION, INC., d/b/a )
CURASCRIPT SD SPECIALTY )
DISTRIBUTION, and DENALI OHIO )
SOUTHPARK INDUSTRIAL LLC, )
)
Defendants. )

Submitted: June 10, 2022
Decided: August 11, 2022

Upon Consideration of Plaintiffs’ Motion for Summary Judgment,
GRANTED IN PART and DENIED IN PART.

Upon Consideration of Defendant Priority Healthcare Distribution, Inc.’s Motion
for Summary Judgment Against Plaintiffs,
GRANTED IN PART and DENIED IN PART.
Upon Consideration of Defendant Priority Healthcare Distribution, Inc.’s Motion
for Summary Judgment Against Defendant Denali Ohio Southpark Industrial LLC,
DENIED.

Upon Consideration of Defendant Priority Healthcare Distribution, Inc.’s Motion
in Limine,
DENIED.

Upon Consideration of Defendant Denali Ohio Southpark Industrial LLC’s Motion
for Summary Judgment On the Issue of Causation,
GRANTED IN PART and DENIED IN PART.

Upon Consideration of Defendant Denali Ohio Southpark Industrial LLC’s Motion
for Summary Judgment On the Issue of Damages,
DENIED.

MEMORANDUM OPINION

Michael B. McCauley, Esquire, PALMER BIEZUP & HENDERSON LLP,
Wilmington, Delaware; Kevin G. O’Donovan, Esquire, PALMER BIEZUP &
HENDERSON LLP, Philadelphia, Pennsylvania. Attorneys for Plaintiffs.

Elizabeth A. Sloan, Esquire, and Brittany M. Giusini, Esquire, BALLARD SPAHR
LLP, Wilmington, Delaware; Matthew D. Knepper, Esquire, and Tanya M. Maerz,
Esquire, HUSCH BLACKWELL LLP, St. Louis, Missouri. Attorneys for Defendant
Priority Healthcare Distribution, Inc.

Sarah B. Cole, Esquire, MARSHALL DENNEHEY WARNER COLEMAN &
GOGGIN, P.C., Wilmington, Delaware. Attorney for Defendant Denali Ohio
Southpark Industrial LLC.

BUTLER, R.J.

2
Plaintiff Torrent Pharma, Inc. is an India-based pharmaceutical manufacturer

that entered a product distribution contract with Defendant Priority Healthcare

Distribution, Inc. (“CuraScript”). CuraScript agreed to manage Torrent’s

prescription drug products at a warehouse in Ohio (the “Warehouse”). CuraScript

leased the Warehouse from Defendant Denali Ohio Southpark Industrial LLC. This

litigation concerns the fallout from a leaking Warehouse pipe.

A few years ago, one of the Warehouse’s overhead sprinklers leaked water

onto 19 pallets of Torrent’s products. The leaks allegedly caused over $200,000 in

damage. Torrent and its insurers (collectively, “Underwriters”) have brought this

tort and contract action against the Defendants to recover their losses. The

Defendants, in turn, have asserted indemnification crossclaims for full coverage of

any award the Plaintiffs receive.

The parties now move for summary judgment.1 After culling a herd of issues,

the Court concludes that the Defendants are entitled to summary judgment as to the

Plaintiffs’ tort and third-party beneficiary claims and the Plaintiffs are entitled to

summary judgment as to CuraScript’s contractual liability. No party is entitled to

summary judgment as to the Plaintiffs’ damages. And neither Defendant is entitled

1
CuraScript also has moved in limine. The motion is based on the same arguments
CuraScript makes in support of summary judgment. Accordingly, it is resolved—
and denied—consistent with this decision. See infra Analysis § C.

3
to summary judgment as to its indemnification crossclaim. The parties’ motions are

granted and denied accordingly.

BACKGROUND2

A. The Agreements

The parties’ arrangements are expressed through two separate agreements.

Torrent and CuraScript executed a services contract (the “Logistics Agreement”)3

that operated at the Warehouse. CuraScript rented the Warehouse under a lease (the

“Lease”)4 that CuraScript’s corporate predecessor entered with the Warehouse’s

previous owner. Denali assumed the Lease when it acquired the Warehouse. Denali

is not a party to the Logistics Agreement and Torrent is not a party to the Lease.

Each agreement contains several terms that govern the issues in this case.

1. The Logistics Agreement

Under the Logistics Agreement, CuraScript agreed to “store, handle, and

transport” Torrent’s products.5 CuraScript’s duties are measured by three provisions

set out in the Logistics Agreement. The Logistics Agreement required CuraScript

to render its services consistent with (i) a dozen “Key Performance Indicators”

2
The Court draws the relevant facts from the exhibits attached to the parties’
motions. The Court has construed the record in the light most favorable to each non-
movant. See infra Standard of Review.
3
Ex. A to D.I. 101 (Third-Party Logistics Agreement) [hereinafter “LA”].
4
Ex. 1 to D.I. 97 (Lease Agreement) [hereinafter “Lease”].
5
LA § 2.1.

4
(“KPI”);6 (ii) rules promulgated by the United States Food and Drug Administration

(“FDA”);7 and (iii) responsibilities listed in the “Operating Guidelines.”8

a. KPI #9

The KPI are bilaterally negotiated performance standards incorporated in the

Logistics Agreement that use task-specific metrics to determine whether the parties

are meeting each other’s expectations. One of them—KPI #9—is relevant here.

KPI #9 is directed to product damage.9 It imposes liability for “any [product

damage] claim arising out of . . . poor handling while on CuraScript’s premises.”10

In contrast to other provisions in the Logistics Agreement, KPI #9 is not tied to a

standard of care.11

The parties were contractually required to carry insurance coverage to

mitigate any liability for product damage. KPI #9 requires the parties to carry

insurance at a policy cap greater than the products’ “total value” or “replacement

cost.”12 But the Logistics Agreement does not contain language barring an insurer

from bringing a subrogation claim to recoup its payments for covered losses.

6
Id. § 2.5 (incorporating Ex. D to id. [hereinafter “KPI[#]”]).
7
Id. § 8.
8
Id. § 3.2 (incorporating Ex. A to id. [hereinafter “Operating Guidelines”]).
9
Id. § 2.1, 2.5; KPI #9.
10
KPI #9.
11
See, e.g., LA § 3.2 (articulating a “gross negligence or willful misconduct”
standard); LA § 13 (articulating a “negligence” standard).
12
KPI #9.

5
b. Reg 211.208

The field of FDA regulation is vast. Unhelpfully, the Logistics Agreement

generally references FDA’s regulations, but does not identify any particular rule that

CuraScript must obey. The parties, however, agree that FDA’s “drug product

salvaging” rule (“Reg 211.208”) is the applicable rule.13 So the Court starts there.

Reg 211.208 is part of FDA’s “good manufacturing practices” or “GMP.”14

It regulates the sale of “drug products” that have been “subjected to improper storage

conditions.”15 Improper storage conditions are defined to include “extreme”

exposures to chemical and environmental forces caused by “equipment failures.”16

Under Reg 211.208, improperly stored drug products must be discarded.17

This mandate is consistent with GMP. FDA regulations provide that any “failure to

comply with” GMP “in the manufacture, processing, packing, or holding of a drug

shall render such drug . . . adulterated[.]”18 In other words, a drug product that

13
Drug Product Salvaging, 21 C.F.R. § 211.208 (2016).
14
See 21 C.F.R. § 211.1(a) (2015).
15
Id. § 211.208.
16
Id.
17
Id.
18
Id. § 210.1(b) (2009).

6
violates GMP “is presumed adulterated.”19 FDA may sue drug makers who sell

improperly stored drug products.20

Reg 211.208 does give drug makers an option to “salvage” their improperly

stored products. Before salvaging improperly stored products, however, the

manufacturer must first subject the products to scientific testing. Under Reg

211.208, “salvaging operations may be conducted only if” there is evidence

[i] from laboratory tests and assays . . . that the drug products meet all
applicable standards of identity, strength, quality, and purity[;] and [ii]
from inspection of the premises that the drug products and their
associated packaging were not subjected to improper storage conditions
as a result of the disaster or accident.21

c. The Operating Guidelines

Finally, CuraScript also must follow the Operating Guidelines. The Operating

Guidelines are incorporated into the Logistics Agreement and allocate a list of

product management functions to CuraScript. For example, the Operating

Guidelines designate CuraScript as the party “responsible” for all “physical

inventory,” including “packing” and “putting away” Torrent’s products.22

19
Patricia I. Carter, Federal Regulations of Pharmaceuticals in the United States
and Canada, 21 Loy. L.A. Int’l & Compar. L.J. 215, 239 (1999) (citing 21 C.F.R. §
210.1(b)). See also United States v. Richlyn Labs., Inc., 827 F. Supp. 1145, 1150–
51 (E.D. Pa. 1992).
20
See 21 C.F.R. § 210.1(b); see also Food, Drug, and Cosmetic Act, 21 U.S.C §
331(c) (2018) (prohibiting introduction of “adulterated” drugs into the market).
21
21 C.F.R. § 211.208 (emphasis added).
22
Operating Guidelines.

7
CuraScript is liable for “Loss,” including for “product damage,”23 that results from

a failure to follow the Operating Guidelines.24

2. The Lease

The Lease governs CuraScript and Denali’s landlord-tenant relationship.

Relevant here, the Lease imposes on the Defendants maintenance duties and accords

them qualified indemnification rights.

a. The Maintenance Provision

Under Lease Section 5 (the “Maintenance Provision”), the Defendants divided

the duties to maintain the Warehouse’s “mechanical systems.”25 Under the

Maintenance Provision, CuraScript must “repair” all mechanical systems and Denali

must “replace” all mechanical systems:

[CuraScript’s] maintenance obligation . . . include[s] the repair (but not
the replacement) of all . . . mechanical systems located within the
[Warehouse] . . . . [Denali] will . . . be responsible for replacing (but
not repairing) all . . . mechanical systems located within the
26
[Warehouse] . . . .

The Defendants agree that the Warehouse’s sprinklers qualify as mechanical

systems. The Lease, however, does not define “repair” or “replace” or specify the

circumstances under which a sprinkler would need to be repaired or replaced. It also

23
LA § 15.
24
Id. § 3.2.
25
Lease § 5.
26
Id.

8
does not define the level of repair or replacement that must be achieved before

maintenance may be deemed adequate.

Moreover, Denali’s replacement duties contain a caveat. The Maintenance

Provision declares that Denali is not required to replace a mechanical system that

needs replacement “due to the fault or negligence of [CuraScript] or its agents[.]”27

b. The Hold Harmless Provision

Under Lease Section 15 (the “Hold Harmless Provision”), the Defendants

enjoy a mutual right to indemnification “from any liability . . . associated with any

damage . . . to any . . . property” that was caused at the Warehouse. CuraScript

agreed to indemnify Denali for property damage that “arises directly from

[CuraScript’s] . . . acts or omissions in connection with [its] use or occupancy of”

the Warehouse.28 Denali agreed to indemnify CuraScript for property damage

“occasioned by [Denali’s] fault or negligence.”29

B. The Sprinklers

The Warehouse contains overhead sprinklers. The sprinklers are structurally

integrated with a fire suppression system that the Warehouse shares with a nearby

facility. The system feeds water from a municipal well to the Warehouse’s

sprinklers through a pump. The pump is located inside the nearby facility.

27
Id.
28
Id. § 15.
29
Id.

9
Denali owns the facility housing the water pump, but CuraScript does not have

access to it. Accordingly, any work on the Warehouse’s sprinklers that involves

detaching the pipes would require CuraScript to enter property it does not own to

close the main valve.

C. The Problems with Riser 6

Denali purchased the Warehouse in January 2016. One of the Warehouse’s

sprinklers, “Riser 6,” started leaking two months later. CuraScript had been storing

some of Torrent’s products underneath Riser 6.

CuraScript told Denali about the leaks. After each leak, Denali would send a

contractor to patch or otherwise reinforce the pipes. Denali also replaced some, but

not all, of Riser 6’s piping. Either way, Denali’s solutions did not work. Even with

bandaging and partial replacements, Riser 6 leaked about eight to ten times.

As early as March 2016, CuraScript began demanding that Denali replace

Riser 6 entirely. Denali, however, did not think a full replacement was necessary.30

The real problem, in Denali’s view, was not the pipes themselves, but rather the

potential presence of corrosive contaminants in the water.31 Despite Denali’s

position, CuraScript continued to call for Riser 6’s replacement. Indeed, CuraScript

warned that a failure to fully replace Riser 6 could cause serious damage one day.32

30
Ex. L to D.I. 101 at 3 (E-mails) (Denali states that Riser 6 is “fine” as is).
31
Id. at 4 (E-mails).
32
Ex. 8 to D.I. 97 at 3 (E-mails).

10
D. The May Leak

That fear came true. On May 9, 2016, CuraScript reported another leak (the

“May Leak”). The May Leak happened overnight, i.e., when CuraScript personnel

were not there to intervene. Consequently, more of Torrent’s products were

damaged than ever had been previously.33

CuraScript sent photos of the damage to Torrent. The photos depicted exterior

water damage to the products’ packaging. Based on CuraScript’s photos, Torrent

concluded that 19 pallets of its prescription drugs were “unsalvageable” within the

meaning of Reg 211.208. Torrent did not conduct any further investigation into

whether the water penetrated the packaging or soaked or physically altered the pills

inside the boxes. Instead, Torrent directed CuraScript to discard them all.

Having reviewed its “purchase register,” Torrent determined that the damaged

products were worth at least $215,110.34 Underwriters fully covered the loss after

Torrent paid a $50,000 deductible.

After the May Leak, CuraScript reasserted its demand that Denali replace

Riser 6 entirely. In response, Denali retained an inspector to diagnose the pipes. At

the time, Riser 6 was long overdue for an inspection. The inspector’s analysis

revealed that the pipes were irreparably deteriorated. Additional consultants opined

33
Riser 6’s leaks previously caused $20,000 in damage to Torrent’s products.
CuraScript paid Torrent for that damage.
34
See Exs. N & O to D.I. 101 (Dep. & Spreadsheet).

11
that the erosion likely was caused by age and wear-and-tear. Denali acknowledged

that this explanation effectively debunked its contaminated pipes theory.35

Denali replaced Riser 6 in August 2016. No leaks were reported ever again.

E. This Litigation

The Plaintiffs36 have sued the Defendants alleging torts and breaches of

contract based on the damage to Torrent’s products. Their complaint brings three

counts: (i) breach of a “bailment” against both Defendants (“Count I”); (ii) breach

of the Logistics Agreement against CuraScript (“Count II”); and (iii) breach of the

Lease against Denali (“Count III”).37 The Plaintiffs seek $265,110 in damages,

35
Ex. 11 to D.I. 97 (E-mail).
36
Initially, Torrent did not name Underwriters as co-plaintiffs. Nor was there
any suggestion that Underwriters were subrogating in Torrent’s name. And none of
the parties’ motions mentioned that Torrent received insurance coverage for its
claims. All this led to several months of letter briefing on Torrent’s right to recover
double damages as a compensated insured. D.I. 125, 127–28, 132–35. It turned out
that Delaware law permits a “partially compensated insured,” like Torrent, to seek a
deficiency judgment from the wrongdoer. See generally Catalfano v. Higgins, 188
A.2d 357, 358–59 (Del. 1962).
Still, Torrent sought the entire loss—i.e., $265,110, not just the $50,000
deductible. Torrent explained that it could do this because it had an undisclosed
agreement with Underwriters to disgorge any award above $50,000. Given no good
reason to accept that representation, the Court ordered Torrent either to name
Underwriters as plaintiffs or docket an affidavit of ratification from them. D.I. 136
¶ 9 (Order); see generally Del. Super. Ct. Civ. R. 17(a). Torrent chose to name
Underwriters. Underwriters then joined Torrent’s summary judgment motion and
its oppositions. At a post-joinder hearing, the Defendants insisted that their
summary judgment motions applied equally against Underwriters. Accordingly, the
parties’ motions will be decided as originally submitted.
37
D.I. 137 ¶¶ 20–31 (Pls.’ Am. Compl.).

12
which allegedly represents the products’ “total value” or “replacement cost.”38 The

Defendants have denied liability, raised defenses, and asserted indemnification

crossclaims based on the Hold Harmless and Maintenance Provisions.

While discovery was ongoing, the Defendants filed dispositive motions to

resolve their crossclaims. The Court denied the motions.39 Discovery proceeded

and then culminated in these five summary judgment motions. All the motions are

opposed. The motions are now ripe for decision.

STANDARD OF REVIEW

The Court will grant summary judgment if “there is no genuine issue as to any

material fact and . . . the moving party is entitled to judgment as a matter of law.” 40

In considering a motion for summary judgment, the Court construes the record in

the light most favorable to the non-movant.41 The movant bears the initial burden

of demonstrating “clearly the absence of any genuine issue of fact.”42 If that burden

is met, then the non-movant must offer “some evidence” of a material factual issue.43

“If the facts permit reasonable persons to draw but one inference, the question is ripe

38
See KPI #9; D.I. 137 ¶¶ 22, 26, 31.
39
See generally Torrent Pharma, Inc. v. Priority Healthcare Distrib., Inc., 2020 WL
6066275 (Del. Super. Ct. Oct. 15, 2020).
40
Del. Super. Ct. Civ. R. 56(c).
41
E.g., Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del. 1992).
42
Brown v. Ocean Drilling & Expl. Co., 403 A.2d 1114, 1115 (Del. 1979).
43
Phillips v. Del. Power & Light Co., 216 A.2d 281, 285 (Del. 1966).

13
for summary judgment.”44 Conversely, summary judgment is inappropriate “if there

is any reasonable hypothesis by which the opposing party may recover, or if there is

a dispute as to a material fact or the inferences to be drawn therefrom.”45

On summary judgment, the Court “cannot try issues of fact . . . but only is

empowered to determine whether there are issues to be tried.”46 “[T]he function of

the judge in passing on a motion for summary judgment is not to weigh evidence

and to accept that which seems . . . to have the greater weight.”47 “The test is not

whether the judge considering summary judgment is skeptical that [the non-movant]

will ultimately prevail.”48

“There is no ‘right’ to a summary judgment.”49 The Court may, in its

discretion, deny summary judgment if it determines further factual development

would clarify the law or its application.50 Summary judgment also may be denied

“even if its technical requirements seem to be met” if the Court finds “a trial record

is necessary in the interests of justice.”51

44
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).
45
Vanaman v. Milford Mem’l Hosp., Inc., 272 A.2d 718, 720 (Del. 1970).
46
GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783
(Del. 2012) (internal quotation marks omitted).
47
Cont’l Oil Co. v. Pauley Petroleum, Inc., 251 A.2d 824, 826 (Del. 1969).
48
Cerberus Int’l, Ltd. v. Apollo Mgmt., L.P., 794 A.2d 1141, 1150 (Del. 2002).
49
Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002).
50
E.g., Alexander Indus., Inc. v. Hill, 211 A.2d 917, 918–19 (Del. 1965); Ebersole
v. Lowengrub, 180 A.2d 467, 468–69 (Del. 1962).
51
Unbound Partners Ltd. P’ship v. Invoy Holdings Inc., 251 A.3d 1016, 1024 (Del.
Super. Ct. 2021) (internal quotation marks omitted).

14
“[C]ross-motions for summary judgment are not the procedural equivalent of

a stipulation for a decision on a ‘paper record.’”52 As a result, the mere presence of

cross-motions for summary judgment “does not act per se as a concession” that there

are no material facts in dispute.53 Civil Rule 56 permits the Court to deem cross

motions for summary judgment “to be the equivalent of a stipulation for decision on

the merits based on the record submitted with the motions” only if the parties “have

not presented argument” on the existence of a material factual issue.54 In this case,

the parties have presented such argument. So the Court must evaluate each motion

independently to determine whether factual issues exist.55

ANALYSIS

A. The Defendants are entitled to summary judgment as to Counts I & III.

The parties have cross-moved for summary judgment as to Counts I & III. As

explained below, Counts I & III fail as a matter of law and undisputed fact because

Torrent (1) cannot bring tort claims against CuraScript; (2) did not enter a bailment

with Denali; and (3) is not an intended beneficiary of the Lease. Accordingly, as to

52
Empire of Am. Relocation Servs., Inc. v. Com. Credit Co., 551 A.2d 433, 435 (Del.
1988).
53
United Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997).
54
Del. Super. Ct. Civ. R. 56(h).
55
E.g., Cont’l Airlines Corp. v. Am. Gen. Corp., 575 A.2d 1160, 1164 n.5 (Del.
1990); accord Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228,
1233 n.9 (Del. 1997).

15
Counts I & III, the Defendants’ summary judgment motions are granted and the

Plaintiffs’ summary judgment motion is denied.

1. Torrent cannot bring tort claims against CuraScript.

Count I alleges that CuraScript “negligently” breached a “bailment” by

accepting Torrent’s products and then returning them in damaged condition.

Negligent breach of bailment is a tort claim.56 A tort claim must be dismissed if it

is based on the same duty asserted in a breach of contract claim.57 Here, the Plaintiffs

concede that they have not stated a duty independent of the obligations imposed on

CuraScript by the Logistics Agreement.58 Accordingly, Count I fails as a matter of

law as to CuraScript.

2. Torrent and Denali did not enter a bailment.

Count I also asserts a negligent bailment claim against Denali. According to

the Plaintiffs, Denali became a bailee when Torrent’s products arrived at the

Warehouse. This argument fails because Torrent delivered its products to

CuraScript, not Denali.

56
See Lee Tire & Rubber Co. v. Dormer, 108 A.2d 168, 172 (Del. 1953); see also
Devincentis v. Eur. Performance, Inc., 2012 WL 1646347, at *4 (Del. Super. Ct.
Apr. 17, 2012); see generally 8A Am. Jur. 2d Bailments §§ 206–07, Westlaw (2d
ed. database) (last updated May 2022).
57
E.g., Cornell Glasgow, LLC v. La Grange Props., LLC, 2012 WL 2106945, at *8–
9 (Del. Super. Ct. June 6, 2012); Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872,
889 (Del. Ch. 2009).
58
D.I. 111 at 2.

16
“A bailment arises when one party delivers property to another for some

purpose after which the property will be returned to the original party.”59 “In other

words, an essential element of a bailment is that the property be taken into the

possession of the bailee[] or that custody of the property be entrusted to her.”60

Accordingly, “Delaware law requires either an express or implied contract before a

bailment will be found.”61

Torrent did not deliver its products to Denali with the expectation that Denali

would return them. To the contrary, Torrent delivered its products to CuraScript

with the expectation that they would be shipped to buyers.62 The mere fact that

Denali owned the Warehouse does not mean Denali was responsible for Torrent’s

products. Finding otherwise would make commercial landlords bailees of whatever

items end up inside their properties. That is neither a logical policy nor supported

by anything in the Plaintiffs’ motion.

59
Golt by Golt v. Sports Complex, Inc., 644 A.2d 989, 992 (Del. Super. Ct. 1994).
60
8 C.J.S. Bailments § 20, Westlaw (May 2022 ed.) (citations omitted). See Beattie
v. Beattie, 786 A.2d 549, 555 (Del. Super. Ct. 2001) (“[A] bailment occurs only if
both possession and control of the property are transferred to the bailee.” (emphasis
omitted)); see also In re Wechsler, 121 F. Supp. 2d 404, 437 (D. Del. 2000)
(identifying voluntary acceptance as an element of a bailment).
61
Manchester Equip. Co., Inc. v. Am. Way Moving & Storage, Inc., 176 F. Supp. 2d
239, 245–46 (D. Del. 2001).
62
See LA § 2.1 (“CuraScript shall .. . receive, warehouse, and .. . ship [p]roducts
from the facilities . . . .” (cross-references and enumeration omitted)).

17
Torrent contracted with CuraScript, not Denali. So the Logistics Agreement,

if anything, supplies Torrent with remedies for product damage. The Plaintiffs

cannot use free-floating tort claims to secure more contractual protections than

Torrent bargained for. Accordingly, Count I fails as to Denali.

3. Torrent is not a third-party beneficiary of the Lease.

Unable to sue Denali under the Logistics Agreement, the Plaintiffs invoke the

Lease. But Torrent is not a party to the Lease. So Count III asserts a “third-party

beneficiary” claim.

The Plaintiffs contend that they are entitled to enforce the Maintenance

Provision of the Lease against Denali because of its alleged failure to replace the

sprinklers caused damage to Torrent’s products. The Plaintiffs thus reason that the

mere act of shipping products to a tenant makes the shipper a tenant too. Unsound

as an idea, Count III also fails as a matter of law. The Defendants did not intend for

Torrent to benefit from the Lease.

In general, only parties to a contract may enforce that contract.63 An exception

exists for non-parties who benefit from someone else’s contract. But not all

beneficiaries have enforcement rights. Only “intended beneficiaries” do.64

63
E.g., Triple C Railcar Serv., Inc. v. City of Wilmington, 630 A.2d 629, 633 (Del.
1993).
64
See, e.g., Manti Holdings, LLC v. Authentix Acquisition Co., Inc., 261 A.3d 1199,
1213 (Del. 2021); Envolve Pharm. Sols., Inc. v. Rite Aid Hdqtrs. Corp., 2021 WL
140919, at *10 (Del. Super. Ct. Jan. 15, 2021).

18
To create an intended beneficiary, the contracting parties must intend to

benefit the non-party and their intent to benefit the non-party “must be a material

part of [their] purpose in entering the contract.”65 Conversely, a non-party who

“happens to benefit from . . . a contract either coincidentally or indirectly” is an

incidental beneficiary.66 Unlike intended beneficiaries, “incidental beneficiaries

have no legally enforceable rights under a contract.”67

Torrent is not an intended beneficiary of the Lease. The material purpose of

the Maintenance Provision is to keep the Warehouse in good repair. Proper

maintenance promotes the point of the Lease. CuraScript is a distributor whose

business depends on undamaged freight. Denali is a landlord whose business

depends on tenants. Keeping the Warehouse in good repair thus would both protect

CuraScript from liability for damaged cargo and ensure current and future rents for

Denali. In performing the Maintenance Provision, the Defendants intended to

benefit themselves, not Torrent.

True, Torrent benefits from Denali’s maintenance too. Working pipes do not

leak. But those trickle-down benefits are incidental. They flow indirectly from the

repairs the Defendants intended for their own business models. Plus, the Lease was

65
Madison Realty Partners 7, LLC v. Ag ISA, LLC, 2001 WL 406268, at *5 (Del.
Ch. Apr. 17, 2001).
66
Insituform of N. Am., Inc. v. Chandler, 534 A.2d 257, 269 (Del. Ch. 1987).
67
NAMA Holdings, LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 434 (Del.
Ch. 2007).

19
drafted before Torrent contracted with CuraScript. Indeed, the Lease existed even

before CuraScript and Denali did. The Maintenance Provision therefore could not

have been drafted with Torrent in mind. Accordingly, Torrent is an incidental

beneficiary and so the Plaintiffs are not entitled to enforce the Lease against Denali.

The Plaintiffs, however, are entitled to enforce the Logistics Agreement

against CuraScript. Torrent contracted with CuraScript to obtain the very type of

remedies it seeks from Denali. And as explained below, that recourse attaches

regardless of who caused the loss. So Denali’s negligence, if any, is CuraScript’s

problem, not Torrent’s problem. Count III fails as a matter of law.

B. The Plaintiffs are entitled to summary judgment as to Count II’s liability
element.

The Court now turns to the Plaintiffs’ principal theory: Count II. Count II

alleges a breach of contract claim against CuraScript. To state a breach of contract

claim, the Plaintiffs must allege (1) a contractual obligation; (2) a breach of that

obligation; and (3) resulting damage.68 Determining whether CuraScript breached

the Logistics Agreement involves contract interpretation. Although the parties give

68
E.g., VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).

20
little attention to the contractual language,69 the proper construction of a contract is

a question of law that the Court must decide on its own.70

The principles of contract interpretation are well-established and grounded on

the parties’ objective intent at the time of contracting as expressed by the plain

language contained within their agreement’s fo

Case Info

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BUTLER, CHARLES E Track Judge’s New Case

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Document Filed Date

August 11, 2022

Case Filing Date

May 09, 2018

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Parties

BUTLER, CHARLES E Judge
COLE, SARAH B Attorney for the Plaintiff
DENALI OHIO SOUTHPARK INDUSTRIAL LLC Defendant
KENT COUNTY, SHERIFF Sheriff
MCCAULEY, MICHAEL B Attorney for the Plaintiff
NEW CASTLE COUNTY, SHERIFF Sheriff
PRIORITY HEALTHCARE DISTRIBUTION, INC., D/B/A CURASCRIPT SD Defendant
SLOAN, ELIZABETH A Attorney for the Plaintiff
SLOAN, ELIZABETH A Attorney For The Plaintiff
TORRENT PHARMA, INC. Plaintiff

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Hearing: TORRENT PHARMA, INC. V. PRIORITY HEALTHCARE DISTRI

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