IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
FIRSTSERVICE ROOFING )
HOLDINGS, INC., FIRSTSERVICE )
CAM HOLDINGS, INC., )
FIRSTSERVICE ROOFING )
ACQUIRECO, INC., ROOFING )
HOLDCO, LLC, and ROOFING ) C.A. No. N25C-09-183 PAW CCLD BUYER, LLC, )
)
Plaintiffs, )
)
v. )
)
TRAVIS WEBB, )
)
Defendant. )
Submitted: June 3, 2026
Decided: September 25, 2026
MEMORANDUM OPINION
Upon Defendant’s Motion to Dismiss;
GRANTED.
Brian E. O’Neill, Esq., of Clark Hill PLC, Attorney for Plaintiffs.
Donna L. Culver, Esq., of Morris, Nichols, Arsht & Tunnell LLP; James F. Banter, Esq., of James Bates Brannan Groover LLP, Attorneys for Defendant.
WINSTON, J.
I. INTRODUCTION
Plaintiffs seek monetary damages, pre-judgment interest, and post-judgment
interest from defendant for breach of contract claims. Now, defendant moves to
dismiss for three reasons: (1) the restrictive covenants in both the Restrictive
Covenant Agreement and the Shareholders’ Agreement are unenforceable because
neither is supported by consideration; (2) the non-competition provisions in the
Restrictive Covenant Agreement and Shareholders’ Agreement, as well as the nonsolicitation provisions in the Restrictive Covenant Agreement, are overbroad in
geographic and temporal scope and exceed the legitimate business interests of
plaintiffs; and (3) plaintiffs failed to plead facts supporting customer or employee
solicitation. For the reasons discussed herein, the Court finds the nationwide scope
of the non-competition and non-solicitation provisions in the Restrictive Covenant
Agreement and Shareholders’ Agreement exceed Plaintiffs’ legitimate business
interests. The claims against the defendant are therefore dismissed.
II. FACTUAL AND PROCEDURAL BACKGROUND1
Plaintiffs FirstService Roofing Holdings, Inc. (“FirstService RHI”),
FirstService CAM Holdings, Inc. (“FirstService CAM”), FirstService Roofing
1
Unless otherwise noted, all factual averments are taken from the complaint, D.I. 1, and the Court must accept them as true—if well-pleaded—for the purposes of this motion.
2
Acquireco, Inc. (“FirstService RAI”), Roofing Holdco, LLC, and Roofing Buyer,
LLC d/b/a Roofing Corp of America (“RCA” or “Roofing Buyer”) bring this action
for breach of contract against Defendant Travis Webb.2
Webb co-founded a roofing services company named Exterior Solutions of
Georgia, Inc. d/b/a Bone Dry Roofing (“Bone Dry”) in 2003 and owned 50% of the
entity. He remained an owner and operator until July 30, 2021, when Bone Dry was
acquired by Roofing Buyer for $17,000,000 and reorganized as a limited liability
company.3 Nearly two years later, on December 15, 2023, Bone Dry became an
indirect subsidiary of FirstService RHI and FirstService RAI through a merger.4
Webb agreed not to compete with the Plaintiffs through July 30, 2026, in connection
with the acquisition.5 Webb remained employed by Bone Dry after the acquisition,
first as a vice president and later as president, and remained in an executive role until
April 15, 2024.6
On December 15, 2023, while employed by Bone Dry, Webb entered into a
Restrictive Covenant Agreement (“RC Agreement”) with FirstService RAI in
2
Compl. ¶¶ 1-6.
3
Id. ¶¶ 10, 13-14.
4
Id. ¶ 14.
5
Id. ¶ 16.
6
Id. ¶ 17.
3
connection with the abovementioned merger.7 The RC Agreement defines a
“Company Group” which includes FirstService RAI (the purchaser in the merger),
Roofing Holdco (the target of the merger), and their respective direct and indirect
subsidiaries.8
There are three sections of the RC Agreement that form the basis for Plaintiffs’
claims in this case. The first, Section 2.3(a), prohibits Webb from “directly or
indirectly . . . without the prior written permission of [FirstService RAI,] engag[ing],
attempt[ing] to engage, financ[ing] or assist[ing] any other Person in engaging in the
Business anywhere in the Territory” during the two year restriction period denoted
in the agreement.9 The RC Agreement’s definition of “Person” encompasses any
individual or entity.10 It defines “Business” as:
“(i) the business of providing roofing services . . . or related products
or services[]; (ii) any other business(es) in which any member(s) of the
Company Group is or are engaged as of, or at any time during the 12-month period prior to [December 15, 2023], including any business
related to roofing maintenance programs and retrofitting; and (iii) any
other business(es) in which any member(s) of the Company Group had
or have taken reasonably substantial steps to engage in as of, or at any
time during the 12-month period prior to [December 15, 2023].11
7
Id. ¶ 19.
8
Compl. ¶ 20; Compl., Ex. A (hereinafter the “RC Agreement”) § 1.1(g). 9
Compl. ¶ 24; RC Agreement § 2.3(a)(i).
10
RC Agreement § 1.1(r).
11
Id. § 1.1(c).
4
The RC Agreement defines “Territory” as anywhere in the United States.12
Additionally, Section 2.3(a) prohibits Webb from marketing, attempting to market,
or assisting another in marketing “Competing Services” within the Territory.13 The
RC Agreement defines “Competing Services” as:
[A]ny product or service that, during the Restriction Period, is of the
same type as, that competes with or that is intended to compete with or
displace in the market, any of the products or services involving the
Business (or any part thereof) performed, offered or sold by the
Company Group at any time during the twelve (12)-month period prior
to [December 15, 2023] for any reason.14
It also prohibits Webb from performing, attempting to perform, or assisting
another to perform Competing Services.15
The second section, Section 2.3(b), prohibits Webb from:
“Solicit[ing] or assist[ing] any other Person to Solicit, any Customer:
(i) to cease doing business with the Company Group; (ii) to alter or limit
its business relationship with the Company Group; (iii) to purchase any
Competing Services other than from the Company Group; or (iv) []
Solicit[ing], attempt[ing] to Solicit, or assist[ing] any other Person in
Soliciting any agent or any other Person who is or has been a supplier,
contractor, subcontractor, dealer, distributor, licensor, licensee or any
other business relation of the Company Group at any time during the
twelve (12)-month period prior to the [December 15, 2023]: (A) to
cease doing business with the Company Group, or (B) to alter or limit
its business relationship with the Company Group[.]”16
12
Id. § 1.1(z).
13
Compl. ¶ 25; RC Agreement § 2.3(a)(ii).
14
RC Agreement § 1.1(h).
15
Compl. ¶ 26; RC Agreement § 2.3(a)(iii).
16
Compl. ¶ 27; RC Agreement § 2.3(b). The RC Agreement defines “Solicit” as meaning to “encourage or induce, or attempt to encourage or induce.” It defines
5
The third section, Section 2.3(c), prohibits Webb from:
“Solicit[ing], attempt[ing] to Solicit or assist any other Person to Solicit
(including by engaging in any recruiting or interviewing activities) any
Business Associate or agent to terminate his, her or its association with
the Company Group, or to commence employment, or any other
services relationship, with any other Person; or (ii) hir[ing] or otherwise
retain[ing] the services of any Business Associate or agent to perform
Competing Services . . . in any [] capacity, attempt[ing] to do so, or
assist[ing] any other Person to do so[.]”17
On the same day the RC Agreement was executed, the shareholders of
FirstService RHI executed a Shareholders’ Agreement, to which Webb is a party as
an Existing Principal of Bone Dry Holdings, Inc, which held shares in FirstService
RHI.18 FirstService CAM and FirstService RHI are also parties to this agreement.19
Like the RC Agreement, the Shareholders’ Agreement contains several restrictive
covenants applying to “Covenantors,” which the Shareholders’ Agreement defines
as “the Executive Shareholders and the Principals[.]”20 Bone Dry Holdings, Inc. is
listed as an Executive Shareholder in Schedule A to the Shareholders’ Agreement,
and Travis Webb (along with non-party Chad Collins) is listed as a principal of Bone
“Customer” as “any Person who is a customer of the Company Group as of [December 15, 2023] or has been a customer of the Company Group at any time within the twelve (12)-month period prior to [December 15, 2023]. 17
Compl. ¶ 28; RC Agreement § 2.3(c).
18
Compl. ¶ 32; Compl., Ex. B (hereinafter “Shareholders’ Agreement”). 19
Compl. ¶ 33; See generally Shareholders’ Agreement.
20
Compl. ¶ 42; Shareholders’ Agreement Art. 11.1(c).
6
Dry Holdings, Inc.21 The timing provisions in the Shareholders’ Agreement
covenants hinge on a Covenantors’ “Effective Exit Date,” which is defined in
relevant part as “the earlier date on which . . . such Covenantor or the Executive
Shareholder for which such Covenantor is a Principal cease to own any shares.”22
The Shareholders’ Agreement covenants are substantively similar to the
covenants in the RC Agreement. Article 11.4 states that a Covenantor may not “carry
on or be engaged in a Competitive Business or render services to, own, lend money
to, guarantee the debts or obligations of, share in the earnings of or invest in the
securities of any Person carrying on or engaged in a Competitive Business, in each
case, anywhere within the Designated Territory[.]”23
Article 11.3(a) states that a Covenantor may not “at any time during the
Restricted Period: [] solicit, interfere with or endeavour to entice away from a
Company Entity, or any successor to any of its businesses, any of its clients,
customers or accounts for the purpose of providing to such clients, customers or
21
Compl. ¶ 43; Shareholders’ Agreement Schedule A.
22
Shareholders’ Agreement, Art. 11.1(e)(iii).
23
Id. Art. 11.4. The Shareholders’ Agreement defines a “Competitive Business” as either “throughout the period commencing on [December 15, 2023] and ending on the Effective Exit Date, any business which is, in whole or in part, competitive with the respective businesses of the Company Entities during such period” or “on or after the Effective Exit Date, any business which is, in whole or in part, competitive with the respective businesses of the Company Entities as at, or at any time during the two-year period immediately prior to the Effective Exit Date[.]” It defines the “Designated Territory” as anywhere in the United States of America.
7
accounts goods or services related to a Competitive Business anywhere within the
Designated Territory[.]”24
Article 11.3(b) states that a Covenantor may not:
“[at any time during the Restricted Period] offer employment or a
retainer to, hire, retain or endeavour to entice away from a Company
Entity, or any successor to any of its businesses, any Person who is or,
at any time during the period of 365 days immediately prior to the
making of such offer or endeavour or such hiring or retention, was an
employee, independent contractor or consultant of a Company Entity
or any successor to any of its businesses[.]”25
On April 15, 2024, Bone Dry, Webb, FirstService RHI, and FirstService CAM
entered into a Stock Purchase Agreement, under which Bone Dry sold all of its
FirstService RHI shares to FirstService CAM and Webb sold all his shares in RCA
and FirstService RHI, relinquishing all of his equity in the Plaintiff entities.26
Section 8(a) of the Stock Purchase Agreement provides that, except as set forth in
Section 8(b), Webb’s obligations under the Shareholders’ Agreement were
terminated effective April 15, 2024, while Section 8(b) provides that the continuing
obligations under Article 11 and other provisions related to enforcement of the
24
Id. Art. 11.3(a). The Shareholders’ Agreement describes the “Restricted Period” as, in relevant part, “the period commencing on December 15, 2023, and ending on the date which is two (2) years following the Effective Exit Date.” 25
Id. Art. 11.3(b).
26
Compl. ¶¶ 51-52; See Compl., Ex. C (hereinafter “Stock Purchase Agreement”).
8
Shareholders’ Agreement’s restrictive covenants remain in full force and effect for
the stated periods.27
Webb’s employment with Bone Dry was formally terminated on April 15,
2024—the date the Stock Purchase Agreement was executed—when he tendered his
resignation, and, upon termination, he received $300,000 in severance running
through April 2025.28
Plaintiffs allege Webb remains bound by restrictive covenants under the RC
Agreement until December 15, 2025, under the Shareholders’ Agreement until April
15, 2026, and under the 2021 acquisition agreement until July 30, 2026.29 Around
the time of his separation, Webb committed to speaking with his customers at Bone
Dry’s St. Simons Island branch to ask them to remain loyal customers despite his
departure and expressed that he wished Bone Dry, its employees, and Plaintiffs no
ill will.30 However, shortly after his departure, Webb nevertheless began
encouraging and facilitating the departure of Bone Dry employees to work for
competitor and non-party Atacama Roofing, LLC, which operates out of Brunswick,
27
Compl. ¶¶ 54-55; Stock Purchase Agreement §§ 2.8(a)-(b).
28
Id. ¶¶ 57, 60.
29
Id. ¶ 61.
30
Id. ¶¶ 62-63.
9
Georgia in the same county as Bone Dry’s St. Simons location and is a direct
competitor of Bone Dry.31
In or around May 2024, non-party Brian Kinney, Bone Dry’s operations
manager for its Athens branch, began working at Atacama. Kinney had little to no
exposure to St. Simons customers while at Bone Dry, but after his departure, St.
Simons customers followed to Atacama, at Webb’s urging.32 Approximately a year
later, in May 2025, Webb publicly affiliated himself with Atacama, a fact which was
reflected on Atacama’s website, which noted that Webb joined the company in April
2025.33
Five months later, Plaintiffs brought this six-count complaint. All the counts
are breach of contract claims. Counts I-III concern the RC Agreement. Count I
alleges Webb breached Section 2.3(a) of the RC Agreement by working for Atacama,
a direct competitor of Plaintiffs.34 Count II alleges Webb breached Section 2.3(b)
by diverting Bone Dry customers to Atacama.35 Count III alleges Webb breached
Section 2.3(c) by recruiting Bone Dry team members to Atacama.36
31
Id. ¶¶ 64-66.
32
Id. ¶¶ 67-71.
33
Id. ¶¶ 72-73.
34
Id. ¶¶ 78-86.
35
Id. ¶¶ 87-94.
36
Compl. ¶¶ 95-100.
10
Counts IV-VI concern the Shareholders’ Agreement. Count IV alleges Webb
breached Article 11.4 of the Shareholders’ Agreement for the same reasons
articulated in Count I.37 Count V alleges Webb breached Article 11.3(a) for the same
reasons articulated in Count II.38 Count VI alleges Webb breached Article 11.3(b)
for the same reasons articulated in Count III.
Plaintiffs request judgment in their favor on all counts, and seek money
damages, pre- and post-judgment interest, and other relief as is just and equitable.39
They do not seek equitable relief.40
Webb moved to dismiss under Rule 12(b)(6) for failure to state a claim on
grounds that the restrictive covenants in both agreements are unenforceable and
Counts II, III, V, and VI are not well pleaded.41 After oral argument, at the Court’s
request, the parties provided supplemental briefing on the issue of this Court’s
authority to blue-pencil agreements.42
37
Id. ¶¶ 101-109.
38
Id. ¶¶ 110-118.
39
Id. at 20.
40
Id.
41
See generally D.I. 16 (hereinafter “Op. Br.”).
42
D.I. 32; D.I. 33.
11
III. STANDARD OF REVIEW
On a Rule 12(b)(6) motion to dismiss, the Court: (i) accepts all well-pleaded
factual allegations as true; (ii) credits vague allegations if they give the opposing
party notice of the claim; (iii) draws all reasonable inferences for the non-moving
party; and (iv) denies dismissal if recovery on the claim is reasonably conceivable.43
The Court does not, however, accept conclusory allegations unsupported by the facts
or draw unreasonable inferences in favor of the nonmovant.44
IV. ANALYSIS
A. AS PLED, THE RESTRICTIVE COVENANTS ARE SUPPORTED BY
CONSIDERATION.
“Under Delaware law, a valid contract requires mutual assent to definite terms
supported by consideration.”45 Delaware courts, however, must “limit [their] inquiry
into consideration [only as] to its existence[.]”46 Consideration is defined as “a
benefit to a promisor or a detriment to a promisee pursuant to the promisor’s
request.”47 Past consideration, however, cannot form the basis for a binding
43
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Holdings, LLC, 27 A.3d 531, 535 (Del. 2011).
44
Windsor I, LLC v. CWCapital Asset Mgmt. LLC, 238 A.3d 863, 871 (Del. 2020). 45
Donofrio v. Peninsula Healthcare Servs., LLC, 2022 WL 1054969, at *4 (Del. Super. Apr. 8, 2022).
46
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010).
47
Cont’l Ins. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1232 (Del. Ch. 2000).
12
contract.48 The effect of this rule–“contract modifications require new consideration
to be enforceable.”49
1. PLAINTIFFS ADEQUATELY PLED THE RESTRICTIVE COVENANTS
IN THE RC AGREEMENT ARE SUPPORTED BY CONSIDERATION.
Webb contends that the complaint does not adequately plead that the
restrictive covenants in the RC Agreement are supported by consideration. As noted,
Webb sold Bone Dry on July 30, 2021, and the RC Agreement purporting to restrict
Webb’s conduct was executed on December 15, 2023, over two years later. Webb
notes that the complaint does not allege that Webb received any additional
consideration in exchange for signing the RC Agreement.50 Webb cites to the Court
of Chancery’s recent opinion in N. Am. Fire Ultimate Holdings, LP v. Doorly,51
which held that “[a] contract that imposes new restrictive covenants on an existing
48
Id.
49
CFGI, LLC v. Common C Holdings LP, 2024 WL 325567, at *5 (Del. Super. Jan. 29, 2024).
50
Op. Br. 10.
51
N. Am. Fire Ultimate Holdings, LP v. Doorly 2025 WL 736624 (Del. Ch. Mar. 7, 2025). This opinion was reversed by the Supreme Court in February of this year. See Am. Fire Ultimate Holdings, LP v. Doorly, 2026 WL 274647. However, the basis for the reversal was that the Court of Chancery improperly considered the value of the consideration at the time of attempted enforcement of the restrictive covenant, rather than at the time of contract formation. The Supreme Court did not disagree with the Court’s holding regarding the necessity of consideration in imposing new restrictive covenants.
13
employee requires new consideration.”52 Because the RC Agreement imposes new
obligations on Webb two years after the sale of Bone Dry—at which point Webb
became an employee of the company—and because the complaint does not refer to
any new consideration Webb received for entering into the RC Agreement, Webb
contends the RC Agreements impose restrictions on him retroactively.53
In opposition, Plaintiffs point to the recitals section of the RC Agreement,
which they note, are also incorporated into the body of the RC Agreement at Section
4.11.54 The recitals state: “As [Webb] is a member of the Target, [Webb] will receive
an immediate and direct benefit from the consummation of the [merger], including
the receipt of significant monetary proceeds as a direct result of [the merger].”55
Webb replies that the complaint and RC Agreement do not contain any information
concerning the nature and value the consideration.56
Webb is correct that the complaint does not explicitly allege that Webb
received new consideration for having agreed to the RC Agreement. He is also
correct that, because the RC Agreement is a new agreement separate from the
original transaction in which Webb sold Bone Dry, the covenants must be supported
52
Id. at *3.
53
Op. Br. 11-12.
54
D.I. 20 (Hereinafter “Ans. Br.”) at 12-13; RC Agreement § 4.11.
55
RC Agreement, Recitals.
56
D.I. 26 (hereinafter “Reply Br.”) at 4.
14
by new consideration to be enforceable. And the Court of Chancery has held that
“[o]rdinarily, recitals are not binding and only provide context. But parties can make
them binding” by incorporating the recitals into the agreement itself.57
Here, the parties opted to make the recitals a substantive part of the contract
by adopting them into the body of the RC Agreement. Because the RC Agreement
recitals stipulate that Webb will receive valuable consideration from the
consummation of the merger, drawing all inferences in Plaintiffs’ favor, it can be
inferred that Webb received new and valuable consideration in exchange for
agreeing to the covenants.58 As to the value of the consideration, “[t]he contractformation analysis of consideration turns on whether some consideration was
exchanged at the time of contracting, not whether that consideration was “adequate”
to support the accompanying restriction.”59
57
Glob. Capital Partners LLC v. Green Sapphire Holdings, Inc., 2026 WL 709819, at *30 (Del. Ch. Mar. 13, 2026).
58
Plaintiffs’ argument that the RC Agreement and the merger agreement should be treated as one contract is unavailing the argument. While Plaintiffs are correct that contemporaneous contracts executed by the same parties as to the same subject matter should be treated as one agreement, Plaintiffs do not allege that the RC Agreement and the merger agreement were between the same parties. The RC Agreement was between RAI and Webb. The merger agreement, while not attached to any of the filings, was between the business entities involved in the merger. The entities who were party to the merger agreement are listed in the recitals pages in the Shareholders’ Agreement.
59
Payscale Inc. v. Norman, --- A.3d ---, 2026 WL 774876, at *6 (Del. Mar. 19, 2026) (explaining “consideration for a restrictive covenant is reviewed at the time of
15
2. PLAINTIFFS ADEQUATELY PLED THE RESTRICTIVE COVENANTS
IN THE SHAREHOLDERS’ AGREEMENT ARE SUPPORTED BY
CONSIDERATION.
Webb argues that the Shareholders’ Agreement is not supported by valid
consideration, because the entity receiving the benefits in the Shareholders’
Agreement is Bone Dry Holdings, Inc.60 Webb notes that he is not listed as a
shareholder in the Shareholders’ Agreement, and instead is merely listed as one of
the two principals of the Shareholders’ Agreement.61 He cites Section 11.6 of the
agreement, which reads:
Each Covenantor acknowledges and agrees that: (a) neither the
Company nor FirstServiceCo would not have [sic] entered into this
Agreement but for such Covenantor’s agreement to be bound by those
of the provisions of this Article 11 to which such Covenantor is subject,
which agreement is an essential element of this Agreement and forms
an integral and immeasurably significant, important and valuable
portion of the consideration to be received by each of the Company and
FirstServiceCo for its having entered into this Agreement and for
FirstServiceCo agreeing to bind itself under the Put Right hereunder;
and (b) the obligations imposed on such Covenantor under this Article
11 are independent covenants, the performance of which are not
conditioned on any action or obligation of the Company or
FirstServiceCo under this Agreement. Each Covenantor further
acknowledges and agrees that this Article 11 is in addition to (and not
in substitution for or derogation from) any other confidentiality, nonsolicitation and non-competition covenants which may, at any time and
from time to time (and whether on, before or after the Effective Date),
contracting and that ‘somewhat contingent’ consideration, which does not hold value at the time a party seeks to enforce the contract, still constitutes consideration.”). 60
Op. Br. 12-13.
61
Op. Br. 13.
16
be given by such Covenantor to or for the benefit of a Company Entity
pursuant to any agreement in writing which had been executed and
delivered by such Covenantor, including pursuant to the Merger
Agreement.
Webb reads this acknowledgments provision as explicitly noting that only the
Executive Shareholders (including Bone Dry Holdings, Inc.) received consideration,
because only the Executive Shareholders held the described Put Right.62 He also
argues that the later Stock Purchase Agreement highlights this deficiency, because
Bone Dry Holdings, Inc. was identified as the sole seller in that agreement.63
At this stage, it is reasonably inferable that Webb received consideration under
the Shareholders’ Agreement. Whether a contract is supported by consideration is a
mixed question of law and fact, and drawing all inferences in Plaintiffs’ favor, they
have adequately alleged its existence.64 Webb is named as a beneficial owner of
Bone Dry Holdings, Inc., which was a party to the Shareholders’ Agreement, and
Webb was expressly named as a Covenantor. Bone Dry Holdings, Inc.—a company
Webb was the beneficial owner of—received a valuable Put Right in exchange for
Webb’s covenants. The company eventually sold all its shares, presumably by
62
Op. Br. 14-15.
63
Op. Br. 15; Stock Purchase Agreement.
64
See Blagg v. HB2 Alternative Holdings, LLC, 2024 WL 4836715, at *1 (Del. Super. Nov. 20, 2024) (“There remains a genuine issue of fact [] regarding whether consideration supported” the at-issue contract); Seiden v. Kaneko, 2017 WL 1093937, at *6 n.41 (Del. Ch. Mar. 22, 2017) (“[W]hether a contract is supported by adequate consideration is a mixed question of law and fact.”).
17
exercising the Put Right, in a Stock Purchase Agreement in which Webb was the sole
principal. Because it is reasonably conceivable that Webb received consideration
from the Shareholders’ Agreement, Plaintiffs have adequately pleaded the existence
of consideration as to the Shareholders’ Agreement.
B. AS A MATTER OF LAW, THE RESTRICTIVE COVENANTS ARE
UNENFORCEABLE AS DRAFTED.
While as a matter of Delaware law “individuals can agree to covenants that
restrict their ability to work for a competitor,”65 Delaware courts do not
“mechanically enforce non-competes.”66 Instead, Delaware courts evaluate
restrictive covenants “with an eye toward reasonableness, . . . and the advancement
of legitimate business interests.”67 Accordingly, covenants must be (1) reasonable
in geographic scope and temporal duration, (2) advance a legitimate economic
interest of the party seeking its enforcement, and (3) survive the balancing of
equities.68
65
New Enter. Associates 14, L.P. v. Rich, 295 A.3d 520, 576 (Del. Ch. 2023). 66
Intertek Testing Services NA Inc. v. Eastman, 2023 WL 2544236, at *3 (Del. Ch. Mar. 16, 2023) (quoting FP UC Hldg., LLC v. Hamilton, 2020 WL 1492783, at *6 (Del. Ch. Mar. 27, 2020)).
67
Kodiak Bldg. Partners, LLC v. Adams, 2022 WL 5240507, at *6 (Del. Ch. Oct. 6, 2022).
68
Id. at *4.
18
“In the context of a sale of a business, the acquirer has a legitimate economic
interest with regard to the assets and information it acquired in the sale.”69
Accordingly, covenants not to compete made in relation to the sale of a business are
subject to a “less searching” inquiry than those made in relation to an employment
contract.70 Even in the context of a sale of a business, however, “such covenants
must be tailored to the competitive space reached by the seller and serve the buyer’s
legitimate economic interests.”71 Delaware courts have repeatedly refused to
enforce restrictive covenants barring competition that stretch beyond this space.72
The same reasonableness test is applied to non-solicitation provisions.73
Webb argues that the non-compete provisions in both the RC Agreement and
Shareholders’ Agreement—as well as the non-solicitation provisions in the
Shareholders Agreement—are overbroad, because they purport to bar Webb from
competing anywhere in the United States.74 The non-solicitation provisions in the
69
Id. at *8.
70
Tristate Courier & Carriage, Inc. v. Berryman, 2004 WL 835886, at *10 (Del. Ch. Apr. 15, 2004).
71
Intertek, 2023 WL 2544236, at *4.
72
See id.; Cleveland Integrity Servs., LLC v. Byers, 2025 WL 658369, at *10 (Del. Ch. Feb. 28, 2025); Weil Holdings II, LLC v. Alexander, 2025 WL 689191, at *6 (Del. Ch. Mar. 4, 2025); BluSky Restoration Contractors, LLC v. Robbins, 2026 WL 599148, at *4 (Del. Ch. Mar. 4, 2026) (Report).
73
Sunder Energy, LLC v. Jackson, 332 A.3d 472, 485 (Del. 2024) (applying the same reasonableness test to both non-compete and non-solicitation agreements). 74
Op. Br. 21.
19
RC Agreement bar Webb from soliciting anywhere without geographic limitation.75
Webb notes that the complaint does not allege Plaintiffs have any customers,
operations, confidential information, or goodwill anywhere outside of two states:
Georgia and South Carolina.76
Plaintiffs respond by pointing to two instances in which Delaware courts have
upheld nationwide restrictive covenants in the context of the sale of a business.77
However, in both of those cases (one of which was not even actually about a
nationwide covenant, but rather a covenant restricting the seller from competing in
23 states) the relevant businesses operated either nationwide, or nearly nationwide.78
Here, the nationwide restrictive covenants extend far beyond the geographic
areas in which the complaint alleges Plaintiffs do business, and the complaint does
not allege they have any reach beyond the states of Georgia and South Carolina. “A
non-competition agreement will only be enforced to protect the legitimate economic
interests of the employer. Interests which the law has recognized as legitimate
75
Compl. ¶¶ 27-28; RC Agreement §§ 2.3(b)-(c).
76
Op. Br. 21.
77
Ans. Br. 18-21.
78
O’Leary v. Telecom Res. Serv., LLC, 2011 WL 379300, at *5 (Del. Super. Jan. 14, 2011) (noting that “Plaintiffs’ business operated nationwide before the sale” of the business); Kan-Di-Ki, LLC v. Suer, 2015 WL 4503210, at *20 (Del. Ch. July 22, 2015) (noting that the plaintiff’s business operated in all but four of the states covered by the restricted area).
20
include protection of employer goodwill and protection of employer confidential
information from misuse.”79
First, the “Territory” under the RC Agreement and the “Designated Territory”
under the Shareholders’ Agreement are each defined as the entire United States.
Taking the complaint’s allegations as true, the business Webb sold operates branches
in Georgia and serves customers in Georgia and South Carolina. There are no facts
in the complaint from which the Court can reasonably infer that Plaintiffs have any
operations or business outside of those two states.
Second, the RC Agreement forbids Webb from engaging in the “Business,”
which includes not only roofing services, but any other business in which any
member of the Company Group was engaged during the preceding twelve months,
or has “taken reasonably substantial steps to engage in.”80 Accordingly, this
restriction extends to lines of business outside of roofing, that Webb never was
alleged to have participated in, and (in the case of businesses the group has taken
substantial steps toward) areas of business that Webb could not necessarily identify.
Similarly, the Shareholders’ Agreement states that a Covenantor may not
“carry on or be engaged in a Competitive Business or render services to, own, lend
money to, guarantee the debts or obligations of, share in the earnings of or invest in
79
Kodiak, 2022 WL 5240507, at *8.
80
RC Agreement § 1.1(c).
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the securities of any Person carrying on or engaged in a Competitive Business, in
each case, anywhere within the Designated Territory[,]”81 with no carve out for de
minimis investment, defining a Competitive Business as any business that is “in
whole or in part” competitive with the business of the Company Entities, and
defining the Designated Territory (as discussed above) as the entire country. As
written, this provision could prohibit Webb from buying shares in an index fund that
owns a national homebuilder. Prohibitions this broad do not protect Plaintiffs’
legitimate economic interests.
The non-solicitation provisions fare similarly because the non-solicitation
provision of the Shareholders’ Agreement contains a similarly broad nationwide
restriction, and the non-solicitation provision of the RC Agreement contains no
geographic limitation whatsoever. The incongruity between the geographic scope
of the covenants and Plaintiffs’ business equates to an unreasonably broad and
unenforceable noncompete.
81
Shareholders’ Agreement, Art. 11.4. The Shareholders’ Agreement defines a “Competitive Business” as either “throughout the period commencing on [December 15, 2023] and ending on the Effective Exit Date, any business which is, in whole or in part, competitive with the respective businesses of the Company Entities during such period” or “on or after the Effective Exit Date, any business which is, in whole or in part, competitive with the respective businesses of the Company Entities as at, or at any time during the two-year period immediately prior to the Effective Exit Date[.]” It defines the “Designated Territory” as anywhere in the United States of America.
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In the alternative, Plaintiffs ask the Court to enforce a provision in the RC
Agreement purporting to entitle Plaintiffs to partial enforcement. The RC
Agreement has a provision which states “if [Plaintiffs] seek[] partial enforcement of
[the restrictive covenants] as to only a Territory, time, scope of activity or other
limitation that is reasonable, then [Plaintiffs] shall be entitled to such reasonable
partial enforcement.”82 Plaintiffs further argue that, in its discretion, the Court may
blue-pencil the offending provisions.83
First, Plaintiffs do not seek partial enforcement of the restrictive covenants in
the complaint. “A post hoc attempt to clarify allegations in a complaint in response
to a motion to dismiss cannot be received as a supplement or amendment to the
pleading itself.”84 Second, Plaintiffs are essentially asking the Court to treat the
restrictive covenants as if they were drafted with narrower geography, narrower
protected interests, and narrower covered conduct, and that this is effectively the
same as blue-penciling.85
This Court lacks the authority to blue-pencil an agreement. The Court, and
the parties in supplemental briefing submitted after argument, were only able to
82
RC Agreement § 2.4.
83
Ans. Br. 29.
84
Murray v. Mason, 244 A.3d 187, 193 (Del. Super. 2020), modified (Jan. 5, 2021) (internal quotations omitted).
85
Reply Br. 18.
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identify one case from the Superior Court even mentioning the doctrine of bluepenciling. In that case, the Court discussed blue-penciling principles in the context
of a request to modify an unenforceable liquidated damages provision, citing only
to Court of Chancery precedent and without asserting independent authority to bluepencil, which it declined to do.86 The Supreme Court, however, has specifically
described blue-penciling as an “exercise of equitable authority,” which strongly
suggests that the power to blue-pencil an agreement is based in principles of equity,
not law.87
V. CONCLUSION88
For the foregoing reasons, the Court grants Webb’s motion to dismiss because
every count in the complaint alleges Webb breached a restrictive covenant that this
Court cannot enforce as drafted, and because the Court lacks authority to modify the
restrictive covenants.
IT IS SO ORDERED.
/s/ Patricia A. Winston
Patricia A. Winston, Judge
86
Newark Shopping Ctr. Owner, L.L.C. v. Saudades Grp., LLC, 2025 WL 655063, at *10 (Del. Super. Feb. 26, 2025).
87
Sunder Energy, 332 A.3d at 485 (Del. 2024); C&J Energy Servs., Inc. v. City of Miami Gen. Employees’, 107 A.3d 1049, 1054 (Del. 2014).
88
The Court need not reach Webb’s arguments concerning the covenants’ duration or that Counts II, II, V, and VI are not well pleaded, because the covenants fail for the reasons articulated above.
24