Self-Serving Affidavits, Implied Covenant, and Unjust Enrichment: Daimler v. Moehle Precedent

1. Introduction

Eric Daimler and Chris Moehle, both early-stage robotics investors, formed two joint ventures—Robotics Hub Fund 1, LLC and Coal Hill Ventures LLC—in March 2016. They each executed operating agreements and award agreements that granted 42 common units in each company, subject to differing vesting schedules. Daimler delayed full-time employment to complete a White House Fellowship, contributing capital but not meeting his vesting condition. After a Deadlock Adviser denied his return, none of Daimler’s units vested. He then sued Moehle and the companies for breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud in the inducement, and other contract-related claims. The companies counterclaimed under the Lanham Act, Computer Fraud and Abuse Act, and Anti-Cybersquatting Consumer Protection Act.

The District Court dismissed Daimler’s good faith and unjust enrichment claims, granted summary judgment against his fraud claim, and after a jury verdict for the defendants on intellectual property counts, awarded attorney’s fees under the Lanham Act. Daimler appealed the dismissals, the summary judgment order, and the post-trial rulings. The Third Circuit affirmed in part, vacated in part, and remanded in part.

2. Summary of the Judgment

Good Faith Claim: Under Delaware law, the implied covenant cannot override clear contractual terms. The court affirmed dismissal because Daimler’s Award Agreements explicitly disclaimed any right to employment.
Unjust Enrichment: Under Pennsylvania law, a plaintiff may plead unjust enrichment in the alternative to contract claims. Daimler’s allegations of unreimbursed financial contributions survived dismissal. The court vacated the dismissal and remanded.
Fraud in the Inducement: The court held that non-conclusory, self-serving affidavit and deposition testimony can defeat summary judgment. Daimler’s specific recollection of the “$20 million GE representation” raised genuine issues of fact on representation and justifiable reliance. The Third Circuit vacated the summary judgment order on fraud and remanded.
Post-Trial Rulings: The court upheld the denial of Daimler’s motion for a new trial or remittitur, finding the $225,000 damage award grounded in proper jury instructions and evidence. It also affirmed the award of $129,183 in attorney’s fees under the Lanham Act, deeming Daimler’s conduct “exceptional” and in bad faith.

3. Analysis

3.1. Precedents Cited

Implied Covenant (Delaware Law): Nemec v. Shrader, 991 A.2d 1120 (Del. 2010); Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434 (Del. 2005); Oxbow Carbon & Mins. Holdings, Inc. v. Crestview-Oxbow Acquisitions, LLC, 202 A.3d 482 (Del. 2019). These cases teach that the implied covenant fills genuine contractual gaps but cannot contradict express terms.
Unjust Enrichment (Pennsylvania Law): Wilson Area Sch. Dist. v. Skepton, 895 A.2d 1250 (Pa. 2006); Toppy v. Passage Bio, Inc., 285 A.3d 672 (Pa. Super. Ct. 2022). The doctrine is unavailable where an express contract covers the dispute, but it may be pleaded in the alternative under Fed. R. Civ. P. 8(d) and Pa. R. Civ. P. 1020(c).
Summary Judgment & Self-Serving Testimony: Paladino v. Newsome, 885 F.3d 203 (3d Cir. 2018); Lupyan v. Corinthian Colls., Inc., 761 F.3d 314 (3d Cir. 2014); Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156 (3d Cir. 2009). Non-conclusory, personal-knowledge affidavit or deposition testimony—even if self-serving—can defeat summary judgment.
Lanham Act Fees: Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014); Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303 (3d Cir. 2014). A case is “exceptional” for fee awards when positions are meritless or litigation tactics unreasonable, assessed in the district court’s discretion.

3.2. Legal Reasoning

Implied Covenant: The Third Circuit held that Delaware’s implied covenant of good faith and fair dealing cannot be used to override or rewrite clear contractual text. Daimler’s Award Agreements expressly disclaimed any right to employment; his strategic choice to accept vesting conditions in exchange for the Fellowship prevented a good-faith claim.

Unjust Enrichment: Under Pennsylvania law, although an express contract ordinarily bars unjust enrichment, courts allow alternative pleading. Daimler’s claim for reimbursement of his capital contributions, apart from the Agreements’ vesting provisions, stated a plausible quasi-contractual claim.

Fraud in the Inducement: The court clarified that a self-serving affidavit or deposition may defeat summary judgment provided it (1) is based on personal knowledge, (2) is non-conclusory, and (3) addresses material facts. Daimler’s sworn statements about Moehle’s “$20 million GE Representation,” including date, context, and reliance, raised triable issues.

Attorney’s Fees: Applying Octane Fitness, the court found that Daimler’s post-departure conduct—redirecting Robotics Hub’s website, misusing marketing materials, and delaying resolution—demonstrated bad faith and unreasonable litigation, justifying an award of fees.

3.3. Impact

Contract Litigation: Parties should be cautious invoking the implied covenant to escape clear contractual disclaimers.
Pleading Strategy: Plaintiffs may and should plead unjust enrichment in the alternative when contract provisions do not fully address alleged wrongful retention of benefits.
Summary Judgment Practice: Defense motions must carefully challenge the substance of any affidavit or deposition; courts will not summarily reject self-serving testimony if it is specific and factual.
Lanham Act Enforcement: Trademark and false-advertising defendants risk fee awards if their post-litigation conduct or litigation strategy is deemed unreasonable or in bad faith.

4. Complex Concepts Simplified

Implied Covenant of Good Faith: A “gap-filler” duty in Delaware contracts that cannot undo express terms. It ensures parties do not undermine mutual contract benefits but does not guarantee employment or outcomes not written into the deal.
Unjust Enrichment: A legal principle forcing someone who benefits unfairly at another’s expense to pay for that benefit, even absent a formal contract—often pleaded alongside breach of contract.
Self-Serving Affidavit: A sworn statement by a party in their own favor. It can oppose summary judgment if it provides concrete facts (e.g., who, what, when) rather than mere conclusions (e.g., “I felt misled”).
Exceptionality under the Lanham Act: A case is “exceptional” when one side’s behavior—either in taking frivolous positions or in bad-faith tactics—warrants shifting legal fees to the loser.

5. Conclusion

The Third Circuit’s decision in Eric Daimler v. Chris Moehle clarifies three pivotal areas:

The implied covenant of good faith cannot trump express contract terms, reinforcing the sanctity of negotiated agreements.
Alternative unjust enrichment claims survive dismissal when parties seek recovery outside strict contractual entitlements.
Non-conclusory, self-serving testimony can defeat summary judgment; courts must evaluate its factual specificity, not dismiss it wholesale.

These principles will guide practitioners in drafting clear contracts, structuring pleadings, and litigating summary judgment motions. Moreover, the ruling underscores the Third Circuit’s willingness to award Lanham Act fees when litigation tactics or post-verdict conduct reflect bad faith. Daimler v. Moehle thus sets an important precedent for contract, trust, and intellectual property disputes in the federal courts.