PREMIER HEALTHCARE, INC., D/B/A NEWARK MANOR NURSING HOME v. RENÉ LAMONT WATERS, RENEY MAXINE WATERS, and KIA WATERS

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

PREMIER HEALTHCARE, INC., )
D/B/A NEWARK MANOR NURSING )
HOME, )
)
Plaintiff, )
)
v. ) C.A. No. 2023-1263-BWD
)
RENÉ LAMONT WATERS, RENEY )
MAXINE WATERS, and KIA )
WATERS, )
)
Defendants. )

ORDER GRANTING MOTION TO DISMISS

WHEREAS:1

A. On April 16, 2024, plaintiff Premier Healthcare, Inc. (“Plaintiff”) filed

a First Amended Complaint in this action (the “Amended Complaint”). First Am.

Compl. [hereinafter “Am. Compl.”], Dkt. 19.

B. Plaintiff is a long-term nursing care facility in Newark, Delaware. Non-

party James H. Bailey (“Decedent”) was a resident of the facility from February

through December 2023.

1
The following facts are taken from the Amended Complaint and the documents
incorporated by reference therein. See Freedman v. Adams, 2012 WL 1345638, at *5 (Del.
Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to and heavily relies upon
documents in her complaint, these documents are considered to be incorporated by
reference into the complaint[.]” (citation omitted)).
C. On August 16, 2022, Decedent executed a deed transferring property at

514 Dougfield Road in Newark, Delaware (the “Property”) to his son, René Lamont

Waters, and granddaughter, Reney Maxine Waters, for one dollar. Am. Compl., Ex.

B. The Amended Complaint alleges that Decedent made this transfer when he “was

otherwise insolvent,” “inten[ding] to default the rights of creditors.” Am. Compl.

¶ 6. It does not allege any other facts concerning Decedent’s assets or liabilities at

the time of the transfer.

D. Six months later, on February 14, 2023, Plaintiff, Decedent, and

Decedent’s daughter-in-law, Kia Waters, as “Resident Representative,”2 executed a

Resident Admission Agreement (the “Admission Agreement”) under which

Decedent would receive long-term care services at Newark Manor Nursing Home.

See Am. Compl., Ex. C. The Admission Agreement provides that the Resident

Representative shall “[p]ay for all charges from the Resident’s income or resources”;

“[n]otify Newark Manor immediately and in writing if the Resident’s resources are

depleted”; “[i]f applicable, take all actions necessary to secure Medicaid coverage

on the Resident’s behalf in a timely and proper manner”; and “[n]ot misappropriate

the Resident’s income or resources, or use the Resident’s income or resources to

benefit someone other than the Resident.” Am. Compl., Ex. C § 3.1. The Admission

2
The Admission Agreement states that “Resident Representative has been designated by
Resident or the court to make admission and/or financial decisions on behalf of Resident.”
2
Agreement further provides that “Resident shall be responsible to pay the per diem

rate . . . of Newark Manor for the Base Services” and “Resident shall also be

responsible for the payment for Additional Services provided to Resident.” Id. § 4.

E. Decedent passed away on December 7, 2023. Am. Compl. ¶ 2. At that

time, Decedent owed an outstanding balance of $94,730.00 due to Plaintiff. Am.

Compl., Ex. A. The Amended Complaint does not allege any other facts concerning

Decedent’s assets or liabilities at the time of his death.

F. The Amended Complaint asserts five counts. Count I alleges a claim

for fraudulent transfer under 6 Del. C. § 1304 against René Lamont Waters and

Reney Maxine Waters. Count II alleges a claim for unjust enrichment against all

Defendants. Count III alleges a claim for breach of contract against Kia Waters.

Counts IV and V allege claims for fraudulent misrepresentation and negligent

misrepresentation against Kia Waters and René Lamont Waters.

G. On April 26, 2024, Defendants moved to dismiss the Amended

Complaint (the “Motion to Dismiss”).3 Dkt. 21. This action was reassigned to me

on August 1, 2024. Dkt. 29. The Court heard oral argument on October 3, 2024.

3
On May 24, 2024, Defendants filed an opening brief in support of the Motion to Dismiss.
Defs.’ Op. Br. In Supp. Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters,
And Kia Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “OB”], Dkt. 24. On June
21, 2024, Plaintiff filed an answering brief in opposition to the Motion to Dismiss. Pl.’s
Ans. Br. In Opp’n Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia
Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “AB”], Dkt. 26. On July 12, 2024,

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NOW, THEREFORE, IT IS HEREBY ORDERED, this 4th day of October

2024, as follows:

1. Defendants have moved to dismiss the Amended Complaint under

Court of Chancery Rule 12(b)(6) for failure to state a claim. When reviewing a

motion to dismiss under Rule 12(b)(6), Delaware courts “(1) accept all well pleaded

factual allegations as true, (2) accept even vague allegations as ‘well-pleaded’ if they

give the opposing party notice of the claim, [and] (3) draw all reasonable inferences

in favor of the non-moving party . . . .” Cent. Mortg. Co. v. Morgan Stanley Mortg.

Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011). “[T]he governing pleading standard

in Delaware to survive a motion to dismiss is reasonable ‘conceivability.’” Id. at

537.

2. Count I of the Amended Complaint alleges a claim for fraudulent

transfer under Title 6, Section 1304(a) of the Delaware Code, which states:

(a) A transfer made or obligation incurred by a debtor is fraudulent as
to a creditor, whether the creditor’s claim arose before or after the
transfer was made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation:

(1) With actual intent to hinder, delay or defraud any creditor of
the debtor; or

(2) Without receiving a reasonably equivalent value in exchange
for the transfer or obligation, and the debtor:

Defendants filed a reply brief in further support of the Motion to Dismiss. Defs.’ Reply
Br. In Supp. Of Mot. Of Defs. René Lamont Waters, Reney Maxine Waters, And Kia
Waters To Dismiss Pl.’s First Am. Compl. [hereinafter “RB”], Dkt. 27.
4
a. Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor
were unreasonably small in relation to the business or
transaction; or

b. Intended to incur, or believed or reasonably should have
believed that the debtor would incur, debts beyond the
debtor’s ability to pay as they became due.

6 Del. C. § 1304(a).

3. Defendants seek dismissal of Count I because “Delaware law

recognizes more than one type of fraudulent transfer claim” and “Plaintiff failed to

identify the precise fraudulent transfer claim it intends to pursue . . . .” OB at 12.

That argument fails because Plaintiff may plead actual and constructive transfer

theories in the alternative. See, e.g., Cleveland-Cliffs Burns Harbor LLC v.

Boomerang Tube, LLC, 2023 WL 5688392, at *9-13 (Del. Ch. Sept. 5, 2023)

(declining to dismiss a fraudulent transfer count where the complaint advanced both

actual and constructive fraudulent transfer theories). Still, “a right to plead

alternative theories does not obviate the obligation to provide factual support for

each theory.” Yu v. GSM Nation, LLC, 2018 WL 2272708, at *21 (Del. Super. Apr.

24, 2018).

4. To plead a claim for actual fraudulent transfer under Section

1304(a)(1), “a plaintiff must meet the particularity standard of Rule 9(b) by pleading

‘specific supporting facts describing the circumstances of the transfer,’ such as the

5
who, what, and when of the challenged transfer.” Cleveland-Cliffs Burns Harbor

LLC, 2023 WL 5688392, at *10. Intent may be averred generally, but the complaint

nevertheless must “plead facts showing intent to defraud with specific supporting

facts describing the circumstances of the transfer.” JPMorgan Chase Bank, N.A. v.

Ballard, 213 A.3d 1211, 1245 (Del. Ch. 2019); see also 6 Del. C. § 1304(b)

(providing a non-exhaustive list of factors to consider “[i]n determining actual intent

under paragraph (a)(1)”).

5. The Amended Complaint fails to state a claim under Section 1304(a)(1)

because it does not allege specific supporting facts describing the circumstances of

the transfer from which the Court can infer an actual intent to hinder, delay, or

defraud any creditor. While the Amended Complaint alleges that the Property was

transferred to family members for nominal value in August 2022, it does not allege,

other than in conclusory fashion, that Decedent was insolvent at the time of that

transfer, nor does it allege that at the time the Property was transferred, Decedent

was ill, in need of nursing assistance, or expected (or should have expected) to incur

expenses or liabilities for any other reason.4

4
The Amended Complaint alleges that the transfer was made “with intent to default the
rights of creditors.” Am. Compl. ¶ 6. But even on a motion to dismiss, the Court “need
not ‘accept conclusory allegations unsupported by specific facts or . . . draw unreasonable
inferences in favor of the non-moving party.’” McMillan v. Nelson, 2024 WL 3311812, at
*7 (Del. Ch. July 5, 2024) (alteration in original) (quoting Price v. E.I. DuPont de Nemours
& Co., Inc., 26 A.3d 162, 166 (Del. 2011), overruled on other grounds by Ramsey v. Ga.
S. Univ. Advanced Dev. Ctr., 189 A.3d 1255 (Del. 2018)).
6
6. To plead a claim for constructive fraudulent transfer under Section

1304(a)(2), “a plaintiff must allege ‘(i) that the transferor failed to receive reasonably

equivalent value for the asset transferred; and (ii) that the transferor was insolvent at

the time of the transfer, or was rendered insolvent by the transfer.’” Cleveland-Cliffs

Burns Harbor LLC, 2023 WL 5688392, at *9 (quoting In re Samson Res. Corp.,

2023 WL 4003814, at *24 (Bankr. D. Del. June 14, 2023)). Plaintiff “is not required

to plead these elements with particularity. Rather, the claim is subject to the more

lenient Rule 8(a) notice pleading standard.” Id.

7. The Amended Complaint fails to state a claim under Section 1304(a)(2)

because it does not allege facts from which the Court can infer that at the time of the

transfer, Decedent reasonably should have believed he would incur debts beyond his

ability to pay as they became due—in other words, that he was, or expected to

become, insolvent. Despite conclusory allegations that “[a] substantial portion of

[Decedent’s] assets, funds, and income” was transferred and Decedent “was

otherwise insolvent,”5 Plaintiff pleads no facts supporting an inference that Decedent

was insolvent. Indeed, the Amended Complaint does not allege any facts about

Decedent’s assets or income. See BV Advisory P’rs, LLC v. Quantum Computing

Inc., 2024 WL 2723119, at *20 (Del. Ch. May 28, 2024) (dismissing claim under

5
Am. Compl. ¶ 5.
7
Section 1304(a)(2) where “Plaintiff ha[d] not adequately alleged that [the

transferor’s] liabilities [we]re in excess of a reasonable market value of its assets”).

And again, the Amended Complaint does not plead facts supporting an inference

that at the time of the transfer, Decedent knew he would need care that his other

assets and Medicare or Medicaid would not cover. Count I therefore fails to state a

claim for actual or constructive fraudulent transfer and should be dismissed.

8. Count V of the Amended Complaint alleges a claim for negligent

misrepresentation. “A claim of negligent misrepresentation, or equitable fraud,

requires proof of all of the elements of common law fraud except ‘that plaintiff need

not demonstrate that the misstatement or omission was made knowingly or

recklessly.’” Fortis Advisors LLC v. Dialog Semiconductor PLC, 2015 WL 401371,

at *9 (Del. Ch. Jan. 30, 2015). “[A]n equitable fraud or negligent misrepresentation

claim lies only if there is either: (i) a special relationship between the parties over

which equity takes jurisdiction (like a fiduciary relationship) or (ii) justification for

a remedy that only equity can afford.” Id.

9. The Amended Complaint does not allege a special relationship between

Plaintiff and Defendants; “[t]o the contrary, the gravamen of the present dispute

arises from a transaction that ostensibly was the product of arms-length negotiation

. . . .” Id. Nor does the Amended Complaint seek an equitable remedy in connection

with Count V. See Am. Compl. ¶ 34 (“As a direct and proximate result of the

8
negligent misrepresentations of Defendants Kia Waters and René Lamont Waters,

Newark Manor has suffered, and will continue to suffer, compensatory damages,

consequential damages, direct damages, punitive damages,6 and attorney’s fees.”).

Count V therefore fails to state a claim and should be dismissed.

10. Counts II, III, and IV—claims for unjust enrichment, breach of

contract, and fraudulent misrepresentation, respectively—are legal claims for which

Plaintiff seeks monetary damages. See Am. Compl. ¶ 14 (“Newark Manor is entitled

to judgment against Defendants, René Lamont Waters, Reney Maxine Waters and

Kia Waters in an amount determined to be the fair value for the residence and care

of James H. Bailey, which is the amount due Plaintiff as set forth in Exhibit A

hereto.”); id. ¶ 18 (“Newark Manor is entitled to Judgement against Defendant Kia

Waters in the amount of $94,730.00; plus pre-judgement interest at the rate of 18%

per annum; attorney’s fees; and the costs of this action.”); id. ¶ 26 (“Newark Manor

is entitled to compensatory damages, consequential damages, direct damages,

punitive damages, the costs of this action, and attorney’s fees.”). Without an

equitable hook on which to base jurisdiction, Counts II, III, and IV should be

dismissed with leave to transfer to the Superior Court pursuant to 10 Del. C. § 1902.

6
“The Court of Chancery does not award punitive damages.” Envo, Inc. v. Walters, 2009
WL 5173807, at *18 (Del. Ch. Dec. 30, 2009).
9
11. Accordingly, the Motion to Dismiss is GRANTED with leave to

transfer Counts II, III, and IV to the Superior Court.7

12. This order is a final report pursuant to Court of Chancery Rules 143 and

144.8

/s/ Bonnie W. David

Bonnie W. David
Magistrate in Chancery

7
At oral argument, Plaintiff argued that if the Motion to Dismiss is granted, it should be
permitted leave to amend the Amended Complaint. Under Court of Chancery Rule
15(a)(5)(A), however, “[i]f a party wishes to amend the party’s complaint in response to a
motion to dismiss under Rules 12(b)(6) or 23.1, the party must amend the party’s
complaint—or seek leave to amend . . . before the party’s response to the motion is due
. . . .” Ct. Ch. R. 15(a)(5)(A)(1). Plaintiff’s request to amend is, therefore, denied.
8
See Ct. Ch. R. 144(d)(1) (“In actions that are not summary in nature or in which the Court
has not ordered expedited proceedings, any party taking exception shall file a notice of
exceptions within eleven days of the date of the report.”).
10