Premium Choice Ins. Servs. v. Innovative Fin. Group Holdings, LLC, C.A. No. N24C-01-006 PRW CCLD (Del. Super. Ct. July 9, 2024)
Plaintiff Premium and defendant IFG were middlemen in the market for Medicare Advantage policies. They entered into a contract under which Premium would sell to consumers policies that large insurers offered through IFG. Under the contract, IFG had three avenues to terminate the agreement: immediately for unsatisfactory performance by Premium, with 30 days' notice for Premium’s failure to cure a breach, or for convenience with 90 days' notice. November 20, 2023, IFG sent Premium a notice of termination for convenience, effective immediately. Premium protested that the agreement did not permit this termination. On November 21, IFG restyled its notice as one for unsatisfactory performance. Premium filed suit, alleging breach of contract and breach of the implied covenant of good faith and fair dealing, as well as tortious interference by IFG’s parent company. Defendants moved to dismiss all claims.
The Superior Court sustained the contract claims and dismissed the claim for tortious interference. For the contract claims, the Court explained that breach of contract and breach of the implied covenant could proceed in parallel as alternative claims. Both claims were reasonably conceivable at the pleadings stage; their fate ultimately would turn on whether IFG’s November 20 email was an effective repudiation of the contract—which rested on whether Premium had accepted the November 20 email as a repudiation—or whether its November 21 email was an effective retraction of repudiation, a permissible termination of the contract, and not a breach of the implied covenant. The Court noted that it could not say the vague content of the November 21 email did not smell strongly of pretext. The Court dismissed the tortious interference claim, explaining that Premium had not met the standard for pleading that the parent company was motivated by some malicious or bad faith purpose and, indeed, that Premium itself had pleaded the parent company had directed IFG to terminate the agreement for business purposes. In that context, Delaware courts will respect the separate existence of legal entities and not subject a corporate parent to a claim for its subsidiary's breach of contract.
