DECISION AFTER TRIAL
PAUL R. WALLACE, Judge.
I. FACTUAL AND PROCEDURAL BACKGROUND
This is a breach-of-contract action through which Plaintiff Parexel International (IRL) Limited seeks damages from Defendant Xynomic Pharmaceuticals, Inc., for the latter's failure to pay numerous outstanding invoices.1
In the spring of 2018, Xynomic engaged Parexel to launch and conduct global clinical trials in support of Xynomic's development of Abexinostat, a cancer treating biopharmaceutical product.2 Parexel and Xynomic memorialized their contractual relationship in a Master Services Agreement ("MSA").3 The MSA governed the parties' performance of specific services through the execution of work orders.4 In July 2018, the parties executed their first work order, Work Order for Project No. 240681 ("Work Order 1"), and in December 2018, the parties executed a second, Work Order for Project No. 241812 ("Work Order 2").5
On July 12, 2019, following Xynomic's default on numerous invoices, Parexel brought suit against Xynomic.6
Soon after, Parexel and Xynomic both filed Motions for Summary Judgment.7 Parexel sought summary judgment on Counts I (Breach of Work Order 1) and II (Breach of Work Order 2) of its Amended Complaint, contending there were no factual issues in dispute.8 Xynomic sought summary judgment on both of Parexel's claims, arguing the Court lacked subject matter jurisdiction over this suit.9
In September 2020, the Court denied Xynomic's subject matter jurisdiction challenge as moot, and denied Parexel's summary judgment motion as to Count I (Breach of Work Order 1), finding that Parexel had, as the record then stood, "not met its burden in showing that it performed or was ready to perform its obligations under the MSA and the First Work Order before Xynomic allegedly breached."10 As to Count II (Breach of Work Order 2), however, the Court found no dispute of material fact existed and granted Parexel's motion.11
Consequently, the only issue remaining here is Count I (Breach of Work Order 1) of Parexel's Amended Complaint.
II. THE TRIAL
The Court conducted a three-day bench trial. And the case was deemed fully submitted for decision after the parties submitted their post-trial briefing.12
During trial, the Court heard from and considered the testimony of the following witnesses:
Francesco Paronelli Joseph Scott
Vineeta Prasad Wentao Jason Wu
Erin Williams Sophia Paspal
Bradley McClellan Yinglin Mark Xu
The parties also submitted an extensive number of exhibits, most of which were admitted without objection and are cited herein by their designations as joint exhibits.13
III. FINDINGS OF FACT
It is difficult at times in the trial of certain actions to fully and cleanly segregate findings of fact from conclusions of law. To the extent any one of the Court's findings of fact here might be more appropriately viewed as a conclusion of law, that finding of fact may be considered the Court's conclusion of law on that point.14
A. THE PARTIES AND THE DRUG ROLL OUT.
Parexel is an Irish corporation with its headquarters in Billerica, Massachusetts. Parexel is a clinical research organization providing its clients with "clinical research, drug development, medical communications, data management, [and] market access planning" services.15
Xynomic is a Delaware corporation with its headquarters in Shanghai, China.16 Xynomic is in the business of "develop[ing], manufactur[ing], and marketing biopharmaceutical oncology products."17
Relevant here, Xynomic was in the process of rolling out its "most critical project"—Abexinostat, a cancer treating drug.18 During this time, Xynomic had been conducting the clinical trial phase of its roll out and was seeking a clinical research organization to assist with phase three of its clinical trial.19
B. THE MSA, WORK ORDER 1, AND THE SUBSEQUENT BREAKDOWN OF THE PARTIES' RELATIONSHIP.
In April 2018, the parties executed the MSA through which Parexel was to provide clinical research services for Abexinostat's phase three clinical trials.20 The MSA structured the parties' arrangement in subsequently executed work orders, which outlined details and terms of services to be performed.21
The MSA required Xynomic to pay for three things: (1) Parexel's service fees; (2) Parexel's out-of-pocket expenses; and, (3) any other payments Parexel and its affiliates would make to third parties in connection with services under the work orders ("pass-through fees").22 The MSA also prescribed invoicing procedures: (1) the undisputed portions of any invoice for services performed under the MSA and any work order were due thirty (30) days from receipt; (2) any disputed invoiced items had to be raised, with notice to Parexel in writing and with specificity, within ten (10) business days of the invoice date; (3) any invoiced items that were not disputed by Xynomic within ten (10) business days of the invoice date were deemed approved; and, (4) interest was to be paid on any unpaid invoice at the rate of one percent (1%) until such invoice is paid in full.23
In July 2018, the parties executed Work Order 1 for services related to Abexinostat's clinical research studies.24 The official name of the study was "Protocol XYN602: A Randomized, Phase 3, Double-blind Placebo-controlled Study of Pazopanib With or Without Abexinostat in Patients with Locally Advanced or Metastatic Renal Cell Carcinoma."25 This study was expected to take place over a five-year period ending in October 2023.26
Exhibit A of Work Order 1 outlined the scope and specifications of the services Parexel was to perform under Work Order 1.27 Of significance to Xynomic, Exhibit A laid out the "three most important parameters" of the scope of Work Order 1:28
(1) The nine countries to be included in the study: China, Czech Republic, France, Italy, South Korea, Poland, Spain, the United Kingdom, and the United States.
(2) The number of test sites in each country, totaling seventy-five: twenty in China, three in Czech Republic, six in France, nine in Italy, five in South Korea, seven in Poland, five in Spain, five in the the United Kingdom, and fifteen in the United States.
(3) The number of patients enrolled—534 screened patients and 413 patients enrolled in the study.29
Exhibit B of Work Order 1 set out the tasks and responsibilities to be undertaken by each party.30 And Exhibit C set forth estimated timelines for the services Parexel was to provide under Work Order 1.31
Work Order 1 provided for $41,279,270 of payments to Parexel throughout the five-year course of the study.32 Together, the MSA and Work Order 1 provided for three types of payments:
(1) Milestone Payments—which were only due upon Parexel's completion of the identified achievements in Exhibit G of Work Order 1;
(2) Monthly Payments—which amounted to sixty-three monthly payments of $187,498 from August 2018 to October 2023, and were due regardless of whether work was actually done; and,
(3) Pass-through and Investigator Fees—which Xynomic was to make in the form of two advance payments of $1 million upon the execution of Work Order 1.33
Shortly after the execution of Work Order 1, the parties' relationship began to deteriorate. Most notably, Xynomic became increasingly dissatisfied with Parexel's performance in China.34 Related to the studies to be conducted in China, Xynomic criticized: the communication between Parexel's global team and its local team in China; Parexel's lack of effort regarding patient recruitment; mistakes made in key documents; and the Clinical Research Assistant hired by Parexel.35 In late August 2018, Xynomic and Parexel representatives met to discuss the issues regarding the China study.36 The parties were unable to resolve the issues raised, leading to Xynomic's eventual termination of Parexel's services in China on April 16, 2019.37
From October 31, 2018, to June 18, 2019, Parexel sent Xynomic twenty-five invoices for services rendered, milestones accomplished, and pass-through fees incurred and expected under Work Order 1.38 Xynomic did not object to any of the amounts reflected in any of the invoices within ten (10) days of the invoice date.39 Between March and May 2019, Xynomic and Parexel attempted to implement new payment plans for the full payment of Xynomic's outstanding balance, but Xynomic failed to meet the payment schedules it proposed.40 Following these defaults, Parexel informed Xynomic that it would continue its support related to patient safety for current active sites and patients, but that it would not initiate any additional sites.41
In May 2019, Xynomic made two $500,000 payments to Parexel. The parties agreed this $1,000,000 would be applied to Xynomic's oldest outstanding invoices.42 Also in May 2019, after Xynomic continued to miss its scheduled payments, Parexel informed Xynomic that it would not initiate any new sites until Xynomic became current on its outstanding balance.43 On May 24, 2019, Parexel sent Xynomic a Notice of Material Breach of the MSA and Work Order 1.44 MSA Section 5.2 required Xynomic to cure its material breach within thirty (30) days from receipt of that notice.45 Xynomic didn't. Instead, Xynomic continued to make empty promises of payment.46
In July 2019, Parexel brought this action seeking payment owed under the MSA and Work Order 1.47 In September 2019, Parexel ceased all Work Order 1's non-patient-safety work.48 Xynomic tried to get Parexel to resume its work under Work Order 1 by continuing to promise full payment of its outstanding invoices.49 These attempts were unsuccessful and on October 31, 2019, Parexel amended its complaint in this action to include additional incurred invoices Parexel had submitted to Xynomic.50 Parexel is now seeking the total unpaid remainder on those invoices—$5,530,579.30—and corresponding interest.51
C. TRIAL TESTIMONY.
Parexel's first witness in this three-day trial was Francesco Paronelli, a Senior Project Leader with Parexel, who explained the MSA and Parexel's role in Xynomic's clinical trials.52 Mr. Paronelli testified that the parties signed a change order to Work Order 1 in or around April 2019 that reflected the additional responsibilities Parexel took on.53
Mr. Paronelli laid out the responsibilities of Parexel under Work Order 1 and how the contract provided for both regular monthly payments and milestone-based payments; the latter of these required Parexel to achieve certain performance milestones to receive compensation.54 In addition to describing the milestone structure of the contract, Mr. Paronelli explained that the contract allowed Parexel to invoice Xynomic in advance for the investigator and pass-through fees.55
Mr. Paronelli told the Court that Parexel had performed services in China before Xynomic suspended Parexel's services there.56 According to Mr. Paronelli, after Xynomic suspended Parexel's work in China, Parexel "met at the global level a couple of times and ... organized several meeting[s] on the kind of one-to-one to transfer and to train our counterpart ... on how to run the global study."57
In response to Xynomic's allegations that Parexel underperformed, or failed to perform in China, Mr. Paronelli admitted that "[t]here were some miscommunication or communication problem[s,]" but Parexel addressed those issues through staffing changes.58 To Mr. Paronelli, any issue that remained was attributable to Xynomic.59 Additionally, Mr. Paronelli testified that Parexel and Xynomic mutually agreed to stop performing activities in certain countries due to either: (1) a joint agreement to do so or, (2) Xynomic's failure to pay Parexel.60 Specifically addressing services in the United Kingdom, Mr. Paronelli said that Xynomic and Parexel jointly agreed to "hold on activities ... waiting for a new protocol to be created."61
Mr. Paronelli explained that, other than certain communications issues in China, Xynomic had not raised, either when they allegedly occurred or shortly thereafter, any of the issues it now alleges against Parexel.62 He also clarified that only after this litigation commenced did he learn of any complaints, besides the China study, that Xynomic had with Parexel's service or performance.63
Next, Parexel's Director of Project Leadership, Vineeta Prasad, described her interactions with Xynomic and what data Xynomic had access to.64 Ms. Prasad testified that Parexel only billed Xynomic for the work Parexel actually performed in China.65 Additionally, she said that, through the course of the clinical trial, Xynomic had access to the electronic trial master file for each study, and moreover was provided all necessary information, data, and vendor contracts.66 Around September 2019, after Xynomic ended Parexel's work in China, Ms. Prasad said Parexel shut down access to the imaging database, but did not shut down access to any safety-related data or information.67 Ms. Prasad confirmed that Xynomic never complained about the work performed by Parexel or about any of the invoices.68
On the second trial day, Erin Williams, Parexel's Senior Director and Global Head of Site Contracts, testified.69 Ms. Williams countered Xynomic's assertions about Parexel's billing practices. Specifically, Ms. Williams testified that the United States clinical site agreement did not provide that Pazopanib, a drug used in the clinical trial, was within the standard of care.70 So, Pazopanib would not be covered by insurance and Xynomic was, therefore, contractually obligated to reimburse Parexel for this drug as a pass-through fee.71
Bradley McClellan, Parexel's Senior Finance Business Partner, then clarified the billing procedures under Work Order 1 and the MSA.72 Mr. McClellan explained that, as the contract was partially milestone-based, Parexel could not invoice Xynomic certain sums until certain milestones were achieved.73 Mr. McClellan described the investigator fees as the "expenses that confirm individual sites that are treating patients."74 And he described the pass-through fees as those expenses incurred by third-parties, including Parexel employees.75 Parexel makes no profit on either the investigator or pass-through fees.76 And the invoices Parexel sent Xynomic included individual sites and individual expenses broken down to the "granular level."77
According to Mr. McClellan, under the MSA's dispute provision, Xynomic had ten days to dispute any invoiced charge, and if Xynomic didn't dispute an invoice, Parexel would, per the MSA's language, deem that invoice approved.78 Mr. McClellan went through a number of invoices that Xynomic never objected to.79
As to the investigator and pass-through fees, Mr. McClellan recounted that the contract provides that Parexel invoice each of these $1 million fees in advance, yet Xynomic paid neither of those advance fees.80
Next, Ronald Kraus, former Corporate Vice President and Head of Global Project Leadership for Parexel, outlined Xynomic's outstanding payments due.81 And Mr. Kraus confirmed that Xynomic never raised any Parexel performance issues during the many pre-suit discussions trying to resolve its delinquencies.82
Mr. Kraus told of the April 16, 2019 phone call with Xynomic's Yinglin Mark Xu concerning Xynomic's next steps to pay Parexel for outstanding invoices. He recalled that Xynomic failed to make the payment that Mr. Xu promised for the following week of April 22, 2019.83 Mr. Xu had then said Xynomic would start making all outstanding late-invoice payments during the week of May 15, 2019; it didn't.84 Mr. Kraus acknowledged that Xynomic did pay some outstanding balances to Parexel, but that Xynomic was still well behind on its total outstanding invoices.85
As observed, Parexel sent Xynomic a Notice of Material Breach, which gave Xynomic thirty days to cure the alleged breach.86 After this notice, Xynomic asked Parexel to continue working on the clinical trials and promised it was raising the money to pay Parexel.87 Again, Mr. Kraus affirmed that Xynomic simply never raised concerns or issues with Parexel's performance—neither before nor after Parexel sent the Notice of Material Breach.88 The core of Mr. Kraus's testimony: Xynomic continued to promise to pay Parexel the full amount due, but that just never happened.89
Dr. Wentao Jason Wu, Xynomic's co-founder and its current Chief Operating Officer, took the stand to detail the clinical trials.90 According to Dr. Wu, Xynomic was dependent on Parexel's knowledge and connections in the countries where its trials were being conducted.91
Xynomic was obligated to pay monthly invoices that were separate from the milestone payments and were due each month regardless of the work performed.92 Dr. Wu offered that "if [he] ha[d] [the] chance to redo the contract, [he] wouldn't construct the contract this way[,]" i.e. with monthly payments due regardless of work performed.93
According to Dr. Wu, Parexel didn't complete all the services required under Work Order 1.94 He said he had difficulty communicating with Parexel's local team in China and he had brought those issues to Parexel.95 He claimed to have met with Parexel's team and to have communicated some of the issues Xynomic had with Parexel's performance.96
Last, Dr. Wu testified that after Xynomic ended Parexel's work in China, Xynomic had asked Parexel to transfer some of the non-safety-related data to Xynomic. Dr. Wu told the Court that Parexel did that.97
On the last day of trial, Sophia Paspal, Xynomic's Chief Development Officer, gave her view of Parexel's performance of its contractual obligations.98 Ms. Paspal pointed to the proposed timeline attached to Work Order 1 as evidencing what Xynomic had expected Parexel to perform and when those things were expected.99 Specifically, Ms. Paspal testified to a March 2019 invoice from Parexel that showed 25% of sites had been initiated. According to Ms. Paspal, Xynomic expected all sites to have been initiated by then.100 In addition, Ms. Paspal used the March 2019 invoices as exemplars of Parexel's invoices that, in her view, failed to provide sufficient detail to justify the charges within.101
Concerning services in China, Ms. Paspal said there were no initiated sites or patients enrolled there.102 Concerning services in the United Kingdom, Ms. Paspal believed that five sites were supposed to have been initiated, but that none were.103 Ms. Paspal told the Court that the United Kingdom's regulatory authority denied Parexel's submission for Xynomic's study because Parexel misclassified the investigational medicinal product.104 And no sites were initiated in France, Italy, or the Czech Republic, Ms. Paspal declared, because Parexel allegedly failed to properly submit Xynomic's clinical trial package.105
Last, Ms. Paspal complained that, after Parexel left the China study, Parexel gave Xynomic no access to the data collected during the parties' relationship except for certain safety-related data.106
Another Xynomic co-founder who is now its Chairman and Chief Executive Officer, Yinglin Mark Xu, then recounted how Parexel was selected to conduct the clinical trials and explained Xynomic's expectation of Parexel's performance.107
Mr. Xu said Parexel promised "that a lot of work would be done front ended."108 According to Mr. Xu, Parexel was to have started on all seventy-five sites by the end of July 2018, but, come seven months later, had delivered only 25% of the sites. So, he purported, Parexel was "nine months late and 75 percent underperformed."109 Mr. Xu deponed that Xynomic selected another clinical research organization for China and it was able to open sites there.110
Mr. Xu told the Court that Xynomic paid Parexel $1 million in May 2019, and that as of May 27, 2019, it had paid Parexel $4.56 million.111 He claimed that, in an email he sent to Mr. Kraus, he asked for a 25% discount, which—while not stated in the email—was to account for Parexel's poor performance.112
Joseph Scott, former Senior Vice President of Finance at Parexel, was the final trial witness. He recounted his communications with Xynomic about the payments due.113 During the many phone and email conversations Mr. Scott had with Mr. Xu, the latter never mentioned Parexel's performance issues.114 Instead, Mr. Xu gave his approval for Parexel to use the $1 million Xynomic had paid Parexel to offset outstanding invoices.115 And Mr. Scott confirmed that Mr. Xu's reason for Xynomic's non-payment was "[c]ontinuing operating cash flow challenges and working capital issues."116 Neither Mr. Xu nor anyone else at Xynomic ever told him that Xynomic "was withholding payment of unpaid invoices because of the performance issues[.]"117
IV. GENERAL LEGAL PRINCIPLES
Though the Court sits without a jury, it has applied the same principles of law in its deliberations and consideration of each individual claim and counterclaim that it would have more formally instructed a jury to follow. The Court may highlight here some of those that are most applicable to this particular case. But the fact that some particular point or concept may be mentioned here should not be regarded as any indication that the Court did not—during its deliberations—consider all legal principles applicable to this case and to the parties' claims and counterclaims.
In reaching its verdict, the Court has examined the joint exhibits submitted and considered the testimony of all witnesses, both direct and cross. The Court has also considered the applicable Delaware case law that has defined the legal precepts applicable to the claims and defenses the parties have forwarded. The Court has applied the Delaware Rules of Evidence to the testimony and exhibits and only used for its deliberation that which would be allowed under those rules—consistent with the Court's knowledge of those rules and the specific rulings that may have been made and articulated both pre-trial, during the trial proceedings, and post-trial. And, of course, the Court has considered each party's respective arguments on the weight to be accorded the testimony and evidence.
The Court then reviewed and applied the very instructions that it would give a jury in these circumstances.118
In this particular case, Parexel carries the burden of proof by a preponderance119 of the evidence on the only remaining claim, Count I (Breach of Work Order 1), in its Complaint.
V. FINDINGS AND VERDICT
"To recover on a breach[-]of[-]contract claim, a party must prove the existence of an enforceable contract; the party performed or was ready to perform; that the other contracting party failed to perform; and that the failure to perform caused damages."120 The parties agree they had a valid contract. So, the three contentions to be resolved here are: (1) whether Parexel performed under the MSA and Work Order 1; (2) whether Xynomic breached the MSA and Work Order 1; and (3) whether Parexel supported its alleged damages.
A. PAREXEL PERFORMED UNDER THE MSA AND WORK ORDER 1.
Parexel contends that it performed under the MSA and Work Order 1 and that Xynomic never raised any issues with Parexel's performance or its invoices before this litigation proceeded.121 As such, it asks the Court to enter judgment in its favor and award it damages in the amount of the total outstanding invoices, $5,530,609.30, and also pre- and post-judgment interest.122
Xynomic says that Parexel failed to perform under the contracts and deserves no recovery.123 Xynomic's complaints about Parexel's supposed deficient performance (or non-performance) come down to: (1) minor incidents stitched together to try to fabricate a material breach; and (2) a suggestion that Parexel didn't adhere to Xynomic's expected performance timeline. To determine whether Parexel performed under the contract and deserves payment, the Court has examined Xynomic's allegations and see whether Xynomic could be excused from performance because of Parexel's alleged material breach.124
1. Xynomic did not exercise its contracted-for avenues of contesting Parexel's alleged deficient performance and deficient invoices.
Section 4.2 of the MSA provided Xynomic a mechanism for challenging Parexel's invoices, and Section 18 gave Xynomic the ability to elevate such a challenge through a dispute resolution procedure.125 Specifically, Section 4.2 provides:
All invoiced amounts for Services performed in accordance with the terms and conditions of this Agreement and any Work Order are due net thirty (30) days from the receipt of PAREXEL's electronic invoice. If [Xynomic] identifies items in an invoice which are disputed, [Xynomic] will notify PAREXEL in writing, noting its objection to the disputed item(s) with specificity, within ten (10) working days of the date of the invoice. All items that are not disputed by [Xynomic] in writing within such period shall be deemed to have been approved by [Xynomic]. All disputes of which [Xynomic] notifies PAREXEL in accordance with this Section shall be addressed as set forth in Section 18 below. [Xynomic] will pay any undisputed portions of any invoice per the agreed upon payment terms. [Xynomic] will pay interest on any unpaid invoice (including any undisputed portion of a disputed invoice) at the rate of one percent (1%) per month until such invoice(s) is paid in full. Payments will be made to PAREXEL in accordance with the instructions set forth in the applicable Work Order or such other written instructions as may be provided by PAREXEL from time to time.126
And Section 18.1 provides:
If a dispute arises between the parties relating to this Agreement or any Work Order, the parties to this Agreement or such Work Order will meet and attempt to resolve the dispute in good faith. In the event the dispute is not resolved through negotiation within ten (10) business days after said meeting, the parties will submit to confidential, nonbinding mediation before a mutually acceptable mediator. Each party will designate at least one corporate officer with full authority to resolve the dispute who will attend and participate in the mediation. If the dispute remains unresolved after mediation, then each party will be free to pursue any available remedy at law or in equity.127
In short, after Xynomic received an invoice, it had a ten-day window to raise any objections. If Xynomic didn't object within this ten-day window, the invoice was deemed approved, and twenty days later (thirty days after the invoice was sent) the undisputed portions of the invoice became due.
According to Xynomic, it could not exercise its contractual rights to challenge the invoices it received because Parexel "did not provide any detail or back up."128 As Xynomic tells it, it just didn't know what it was paying for.129
Xynomic says that it only agreed to these contractual terms because of its "lack of experience at the time the MSA and [Work Order 1] were signed."130 That might account for Xynomic's initial acceptance of the terms. But it does nothing to explain why Xynomic didn't challenge Parexel's billing under Section 4.2 or elevate any issue to dispute resolution as provided in Section 18. Instead, Xynomic blithely maintains that it was just "impossible to ascertain what work Parexel had actually completed within ten days of receipt of an invoice[.]"131
So Xynomic had the contractual right to challenge the invoices, but it failed to do so. Xynomic also had the ability to contemporaneously voice its performance issues with Parexel, but it failed to do so. When asked why, Xynomic answers: it "need[ed] to keep Parexel involved in the project."132 Xynomic's previous silence would indicate consent to Parexel's performance—i.e., there really was nothing wrong on Parexel's side. And, having considered all the evidence and testimony, that previous silence is a strong indicator of Xynomic's concoction of post-hoc rationales for non-payment as defenses to this action. That is, Xynomic's now-minted allegations of Parexel's deficient performance and deficient invoices seem conveniently contrived and give Xynomic no cover here.
2. Parexel did not materially breach the MSA or Work Order 1.
Once litigation commenced, Xynomic started complaining about Parexel's performance. Now, according to Xynomic, Parexel's performance under Work Order 1 was inexcusably deficient. It calls out certain discrete "failures" under Work Order 1, including Parexel's alleged failure: to provide Site Initiation Visits and corresponding reports to Xynomic; to deliver an adequate and workable model Informed Consent Form; and, to review safety data listings, including failure to deliver documents to demonstrate whether monitoring was being completed.133 Xynomic argues that these, "in addition to the failures in China, resulted in the non-delivery of approximately 40 of the 75 anticipated sites, 5 out of the 9 anticipated countries involved, and most of the 413 patients to be enrolled."134 Similar to Xynomic's reason for not asserting its right to challenge the invoices, Xynomic says that it didn't raise performance concerns with Parexel because of its "need to keep Parexel involved in the project."135 Xynomic goes further, saying it was "held captive by Parexel."136 And that "Parexel took advantage of Xynomic's dependence on its services — knowing that Xynomic could not complete the study without Parexel, Parexel continued to bill for services not performed."137
Xynomic asserts, and Parexel acknowledges, that some performance issues were raised concerning China; the credible evidence demonstrates that, when noticed, Parexel sought to remedied those issues.138 But as to any other alleged performance issues, Xynomic admits it never raised those with Parexel explicitly. And it now asks the Court to read between the lines in email conversations between the parties.139
The Court finds Xynomic's tardy claims of deficient performance unavailing. Xynomic has—through both trial and post-trial briefing—failed to present any credible evidence supporting its protestation of material breach by Parexel or its own powerlessness to call Parexel on such material breach as it was supposedly occurring. Indeed, aside from operations in China, the record is devoid of any contemporaneous complaints regarding performance, any use of the performance dispute procedures outlined in the MSA, or anything to show that these alleged failures existed at the time Xynomic now says they were so obvious.140 But what the record does bear is Xynomic's repeated failure to engage the MSA's dispute methods, its promises to pay, its statements regarding lack of adequate funding, and its pleas to keep Parexel on its projects.141
One last point here: Xynomic's cries of being beholden to Parexel and needing to keep Parexel on the project ring hollow. When Xynomic terminated Parexel's services in China, it almost seamlessly replaced Parexel with a new clinical research organization that was able to open clinical sites there.142
3. Parties' failure to meet certain timelines does not constitute material breach.
Xynomic says Parexel failed to perform because it did not meet Work Order 1's proposed timeline.143 Specifically, Xynomic asserts that, because it is a start-up biopharmaceutical company, any delay could cause Xynomic to incur more expenses, which, in turn, could impact its existence as a business.144 In effect, Xynomic wants the Court to enforce an otherwise unwritten and unbargained-for time-of-the-essence requirement here.145 But this, the Court cannot do.
Xynomic can't point to a single MSA or Work Order 1 provision that explicitly states time is of the essence. Instead, Xynomic relies on Exhibit C of Work Order 1—the estimated timeline between the parties.146 But, as Exhibit C's name itself suggests, this timeline was "estimated." It set no deadlines. And it certainly cannot be read as engrafting an enforceable time-of-the-essence clause into the MSA or Work Order 1.
Delaware "law presumes contracting parties are familiar with time of the essence clauses and that they know how to make time of the essence if they so desire, especially in contracts between sophisticated business[es].147 While Xynomic contends that it was naive to the MSA's contractual terms and obligations, and that Parexel took advantage of Xynomic's ignorance, this is not Xynomic's (and its principals') first time around the drug trial block.148 Xynomic's two co-founders, Wentao Jason Wu and Yinglin Mark Xu, have significant experience working in the pharmaceutical industry and had each previously worked for or with industry-leading drug companies.149 As such, the parties are experienced and sophisticated enough in the industry that if they intended to make time of the essence, they could and would have done so.150
The facts here are similar to those in HIFN, Inc. v. Intel Corp., where Intel asserted that the Court of Chancery should read a time of the essence clause into the parties' contract governing certain technology development.151 The HIFN court rightly observed that "judicially insert[ing] a time is of the essence clause automatically into every contract ... would be inconsistent with fundamental rules of contract interpretation."152 Even more so here. These parties directly spoke to the element of time in their scrivening. And they decided to set forth estimated timelines, not hard deadlines backed with time-of-the-essence verbiage.
Not to be deterred, Xynomic continues its time-of-the-essence contention with the suggestion that Parexel's complained-of delay was unreasonable.153 Here, Xynomic again turns to HIFN, Inc. It argues that a court can—even absent an express time-of-the-essence provision in the contracting papers—find that a party failed to perform when it did not complete its obligations in a reasonable time.154 Perhaps so, under the right circumstances. But HIFN, Inc. provides a good example of what those circumstances might be. There, the Court of Chancery concluded that HFIN hadn't performed in a reasonable time only after finding that HIFN spent three times as long to fulfill its contractual obligations than was expected and after finding further that "failure to perform was not caused in any way by Intel's alleged repudiation."155
Not so here. Here, the parties' expected timeline was delayed by Xynomic's failure to pay and with the parties' mutual assent.156 What's more, Xynomic has failed to demonstrate what would have been a reasonable time period for performance; it's said only that Parexel should have known time was of the essence. As such, Xynomic has not proven that any delay was outside of "reasonable time" and, therefore, has not shown Parexel materially breached the MSA or Work Order 1.157
B. XYNOMIC MATERIALLY BREACHED THE CONTRACT.
Xynomic admits it didn't pay Parexel. Xynomic has tried to defend that failure by decrying what it says was Parexel's alleged deficient performance.158 Of course, for Xynomic to have any success, it would need to demonstrate that Parexel materially breached the contracts.159 And, of course, the Court just found that Parexel didn't. So none of Xynomic's contracted-for performance obligations (i.e., payment) can be excused on that basis. Accordingly, the question remaining for the Court to now resolve is whether Xynomic's failure to pay was a material breach of the subject contracts.
This Court has adopted the Restatement (Second) of Contracts for determining whether a breach is material.160 Restatement (Second) of Contracts, § 241 provides:
In determining whether a failure to render or to offer performance is material, the following circumstances are significant:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;
(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.161
Xynomic materially breached the MSA and Work Order 1. Simply put, Xynomic continually promised to pay Parexel for its outstanding invoices but never did.162 Xynomic's repeated excuse for not paying those invoices: internal funding issues. Yet, when Parexel's forbearance finally ended and it sued for Xynomic's persistent non-payment, Xynomic dropped its funding-issues excuse and went on offense, complaining for the first time of Parexel's alleged performance deficiencies.163
No doubt, Xynomic's chronic failure to pay the invoices owed to Parexel, after many assurances of payment, constitutes a material breach.
C. PAREXEL SUPPORTED ITS ALLEGED DAMAGES.
To succeed on its breach-of-contract claim, Parexel must prove damages stemming from the breach.164 Here, Parexel presents a number of invoices sent to Xynomic, which were deemed accepted under the terms of the MSA but still went unpaid.165 Parexel presents a breakdown of the figures and types of payments due under each invoice.166 Parexel is seeking:
(1) Nine monthly payments for August 2018, September 2018, and December 2018 through June 2019, totaling 1,687.482.00;167
(2) Three milestone payments for the following: (a) $1,200,000 for the Start of the Work Order; (b) $300,000 for reaching 25% of Sites Initiated; and (c) $1,476,548 for the First Patient Enrolled, totaling $2,976,548.00;168 and
(3) Pass-through fees totaling 1,866,579.30.169
The total amount due under these invoices is $6,530,609.30. This amount is reduced by two $500,000 payments made by Xynomic in May 2019, adjusting Parexel's sought damages to $5,530,609.30.170
1. Monthly Invoices.
As Xynomic sees it, Parexel's invoices—which are the basis for its damages claim—are "based entirely on assumptions contained in Exhibit A to Work Order 1 that were not met[,]" so Parexel isn't entitled to damages.171 Too, according to Xynomic, the parties never executed a change order to reflect Xynomic's termination of Parexel's work in China, so the monthly invoiced totals are not accurate.172
Parexel says that it was forced to halt opening sites and enrolling patients because of Xynomic's repeated failures to pay its bills.173 And so it was Xynomic's own failure that caused the delayed timeline.174
The Court must determine whether Parexel properly invoiced Xynomic for assumptions that were made, but not met, under Work Order 1 and whether Parexel's invoices sent to Xynomic after it terminated Parexel's work in China were accurate.
Xynomic and Parexel executed a contract, and subsequent work orders, under which Xynomic took on three types of payment obligations: "milestone payments, monthly payments, and reimbursement for pass [-]through expenses[.]"175 Both sides agree, the monthly invoices weren't contingent on any event or milestone but were due every month regardless of the actual work completed.176
Xynomic says that, when it terminated Parexel's work in China, "no sites had been initiated in China, no patients had been enrolled in China, and no regulatory approvals had been submitted by Parexel in China."177 This alleged inaction by Parexel, according to Xynomic, precludes Parexel from being awarded damages.178
Along with this, Xynomic argues that the fact that the monthly billing was not changed after Xynomic ended Parexel's work in China shows that the monthly invoices were inaccurate.179 Moreover, Xynomic contends that Parexel has not provided "any detailed basis for the services actually provided in connection with those invoices [.]"180
Parexel first disputes Xynomic's suggestion that, because no sites were opened or patients enrolled in China, Parexel didn't do any work.181 To the contrary, Parexel says that it laid the groundwork for its eventual opening of sites and enrollment of patients in China.182 And while it had not yet opened sites or enrolled patients, Parexel notes that it did perform services in China.183 And even after the April 2019 termination from China, Parexel maintains that it continued "working on China sites/activities until the handover with the selected new CRO [was] completed."184
Next, Parexel disputes Xynomic's assertion that the parties never executed a change order that reflected Xynomic's termination of Parexel's work in China.185 The parties did indeed execute a change order on April 15, 2019, contemporaneous with Xynomic's termination of Parexel's work in China.186 As Parexel points out, Xynomic had already determined it would remove Parexel from China, so when it signed the change order it could have requested a lower monthly fee. Xynomic didn't.187 No doubt, the monthly fees were in consideration of the parties' overall ongoing commitment and relationship that was meant to last five years—not the specific work completed in any given month or period. The latter was to be compensated upon the meeting of milestones.
Even if the parties' inclusion of monthly fees, regardless of work performed, was not as beneficial to Xynomic as it might have seemed, the Court cannot save Xynomic from its decision to agree to those terms.188 Delaware courts "do not relieve [sophisticated parties] of the burden of [their contracts] simply because of their after-the-fact regrets. To do so would greatly undermine the utility of contracts."189
The Court finds that Parexel accurately invoiced Xynomic under Work Order 1 and that the invoices Parexel sent to Xynomic even after it terminated Parexel's work in China were, likewise, accurate.
2. Milestone Payments.
Concerning milestone payments, it's clear that Parexel only invoiced those upon Parexel's accomplishment of the milestones.190 And Xynomic has conceded that those specific milestones billed-for were met.191 Though Xynomic expected Parexel to have initiated all sites by March 2019, Parexel didn't. And Parexel didn't invoice for any milestone not yet met.192 Had it done so, Parexel would indeed be invoicing for work not completed. And that the written agreements would not allow. But, having only billed for the milestones it accomplished, and having confirmed the achievement of those milestones, Parexel has proven its damages thereon.
3. Pass-Through and Investigator Fees.
Xynomic argues that Parexel is double billing for the pass-through and investigator fees.193 Under Exhibit G of Work Order 1, Xynomic was to make two advance payments of $1 million for the investigator and pass-through fees.194 Xynomic never made those advance payments.195 Up until trial, Parexel was seeking payment on those advance payments and on the pass-through and investigator fees it actually incurred.196 At trial, Parexel stipulated that it was no longer seeking payment of the two invoices for the advance payment of the fees.197
Xynomic doesn't dispute Parexel's right to collect the pass-through and investigator fees it actually incurred. But Xynomic does maintain that Parexel cannot recover for the invoiced $2 million advance payments.198 Parexel agrees. At trial, Parexel produced a reevaluated figure of $5.53 million, excluding the invoices for the $2 million advance payments, and has reaffirmed that lower sum throughout its post-trial briefing.199 Given that the amount of actually incurred pass-through and investigator fees is uncontested, and that Parexel has provided a breakdown of such fees, Parexel has proven its damages on those as well.
D. ATTORNEY'S FEES
Parexel contends that it is entitled to attorney's fees under the bad faith exception to the American Rule.200 And Parexel cites to two instances of Xynomic's conduct that it says qualifies under that exception. First, Parexel claims that, by acknowledging that it owed Parexel money, but failing to identify the invoiced amounts in dispute, Xynomic wasted Parexel's time and money and needlessly prolonged this litigation.201 Second, Parexel alleges that Xynomic's Chief Executive Officer, Yinglin Mark Xu, submitted a false, unsworn foreign declaration.202
Under the American Rule, it is generally presumed that each party will pay its own attorney's fees203 unless the bad faith exception applies.204 The bad faith exception applies only under "extraordinary circumstances."205 It should not be invoked merely because some party's "allegations were disproven at trial."206 Instead, the party seeking attorney's fees must show by "clear evidence" that the opposing party "acted in subjective bad faith."207 This subjective bad faith must relate to those actions taken either in the "commencement of' or "during" litigation.208
According to Xynomic, this trial exposed the fact that Parexel hadn't engaged and provided the required reconciliation that would have avoided double billing had Xynomic not resisted and pressed its defense.209 And as to Mr. Xu's declaration, Xynomic claims it was made to the "best of his knowledge at the time[,]" and not in bad faith.210
Under the American Rule, the bad faith inquiry is fact-intensive and reserved for the most serious and extraordinary circumstances that, if not sanctioned, would harm the judicial process.211 The Court has examined the entire record in this matter and cannot find that Parexel's allegations, even if true, rise to a level justifying the award of such a serious sanction.212 And so, no fee shifting is appropriate. Each party must pay its own attorney's fees.
E. PRE- AND POST-JUDGMENT INTEREST
A non-breaching party is entitled to pre- and post-judgment interest as a matter of right, and Delaware courts will not disturb that right.213 When the parties have contractually expressed an interest rate, the Court will abide by that expressed interest rate.214
MSA Section 4.2 does provide that "[Xynomic] will pay interest on any unpaid invoice (including any undisputed portion of a disputed invoice) at the rate of one percent (1%) per month until such invoice(s) is paid in full."215 And Parexel asks that interest rate be applied here.216 Xynomic never responds to Parexel's invocation of Section 4.2—which the Court deems as Xynomic's concession to the rate's application.
Accordingly, Parexel is entitled to pre- and post-judgment interest at the rate of one percent (1%) per month of the unpaid invoices.
When it wasn't paying its accumulating bills, Xynomic engaged a check's-in-the-mail approach with Parexel. Once sued, Xynomic took a different tack. It now says, Parexel didn't earn those phantom checks.
In more formal legal terms, Xynomic's defense here has been that it was excused from any obligation to pay its outstanding invoices because Parexel either deficiently performed or failed to perform under the MSA and Work Order 1 to an extent that Parexel was in material breach of those agreements. Not so. Xynomic had the contractual right to challenge any invoice it wanted, and moreover was free to express issues with work performed or withheld. When asked why it didn't raise objections to Parexel's performance before now, the best Xynomic could offer was that it "need[ed] to keep Parexel involved in the project."217
But that begs the question of when, if ever, Xynomic was going to raise its supposed objections with Parexel. At best, Xynomic sat on its rights and, by not asserting its objections, agreed to the volume, substance, and quality of the work performed. At worst, Xynomic held valid performance complaints in its back pocket just waiting for litigation over non-payment. And at very worst, these dire performance issues were nothing more than the bumps expected along road to approval of a promising drug that are now being miscast to try to excuse Xynomic's failure to pay its toll. No matter which it is, Xynomic's free ride must now end.
In determining whether the elements of breach of contract were met, the Court credits the many witnesses who testified that Parexel consistently provided the consideration required and was performing in the manner agreed to. Though Xynomic claims that in certain instances Parexel was underperforming or not performing at all, the Court is unconvinced. Parexel did perform as required under the contracts, and Xynomic materially breached those same agreements by failing to pay its properly invoiced obligations thereunder.
As a result, Xynomic is ordered to pay Parexel $5,530,609.30 and the corresponding one percent (1%) pre- and post-judgment interest as derived from the contracts.
VII. VERDICT AND JUDGMENT
ON PAREXEL'S COMPLAINT:
— Count I — Breach of Contract (Work Order 1): For Parexel. Parexel is entitled to pre- and post-judgment interest on Count I. But Parexel is not entitled to its Attorney's Fees.
The parties shall confer and, within 15 days, submit to the Court a proposed form of Order of Final Judgment consistent with these findings and verdicts.
IT IS SO ORDERED.