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Carter Farm, LLC v. New Castle County

Court of Chancery of Delaware

July 17, 2014

CARTER FARM, LLC, a Delaware Limited Liability Company, Plaintiff,
v.
NEW CASTLE COUNTY, a political subdivision of the State of Delaware, Defendant.

Date Submitted: July 1, 2014

Samuel J. Frabizzio, Wilmington, Delaware, Attorney for the Plaintiff.

Bernard Pepukayi, Mary A. Jacobson, and Brian Merritt, of New Castle County Office of Law, New Castle, Delaware, Attorneys for the Defendant.

MEMORANDUM OPINION

GLASSCOCK, Vice Chancellor

On September 10, 2001, the Plaintiff submitted a plan to New Castle County for a residential development in a rural area north of Middletown. That plan, and the Defendant's actions upon it, allegedly created vested rights in the Plaintiff, and ultimately became the subject of this suit, filed in 2005.

Much has happened since that long-ago submission in 2001. The twin towers were destroyed. The United States has fought two wars. A new president was elected, and re-elected. The Black Berry was introduced, became ubiquitous, then obsolete. The stock market waxed fat, waned, then waxed again. Not incidental to this action, the land boom went bust. Then-kindergarteners are now high school graduates, and the best part of a generation has passed away. And yet, this suit remains. It has spent nearly all of the last nine years stayed, as the parties negotiated, reaching a settlement of the action in 2007, and then attempted to renegotiate a new agreement which would have superseded that settlement.

That this action has persisted, dormant under a series of status quo orders, reflects no credit on my administration of it as a part of my docket. In any event, for the reasons that follow, I find that the parties reached a final settlement of the action in 2007, failed to rescind that settlement, and that this suit must be dismissed, leaving the parties to abide by the settlement, modify it, or litigate over its breach, as they find appropriate.

I. FACTS

The Plaintiff here, Carter Farm LLC, is a real estate developer attempting to develop approximately 400 single-family residential lots in southwestern New Castle County. The Plaintiff filed its initial Complaint in this action in September 2005, seeking to enjoin the Defendant, New Castle County, from determining that a development plan, initiated on behalf of the Plaintiff in 2001, had expired. That initial development plan anticipated providing the Carter Farm development sewer services through construction of a sewer trunk line that would connect to a proposed County sewer system; in other words, the plan anticipated "the installation (initially at Plaintiffs expense) of a permanent sewer system extending from the Development approximately five miles to a connection point with [the County's] planned sewer system for southern New Castle County."[1] According to the Defendant, however, partway through the Carter Farm approval process, plans for the construction of a new County sewer system were "scaled back, "[2] rendering the sewer provisions in the initial plan untenable.

On November 20, 2007, the parties entered into a settlement agreement (the "2007 Settlement Agreement")—approved by New Castle County Council and the County Executive—resolving the underlying litigation.[3] Under the terms of the 2007 Settlement Agreement, the Defendant agreed to "approve a sewer project [consisting of a Rapid Infiltration Basins System, or 'RIBS'] constructed by Carter Farm on the Carter Farm property with a total capacity of 300, 000 gallons to service" the development; in exchange, the Plaintiff agreed to pay the Defendant $24 million, in $4 million installments, with the first payment due "five business days after final non-appealable record approval for" the development.[4] The 2007 Settlement Agreement further provides that:

The parties acknowledge that final settlement documents implementing the details of this Agreement shall be necessary and if, for technical reasons, the precise requirements of the Agreement cannot be fully met, the parties agree to use their best efforts to achieve their mutual objectives as set forth in this Agreement. At such time as the final settlement documents are executed, the parties shall also execute a Stipulation of Dismissal of the Litigation and Mutual Releases with respect to those items encompassed within the Litigation with each party to bear their own costs and attorney fees.
Time is of the essence and material to the provisions of this Agreement.[5]

Despite that provision, the parties have never executed final settlement documents and the Plaintiff has never executed a Stipulation of Dismissal.

The parties worked together under the terms of the 2007 Settlement Agreement until August 2010. At that time, according to the Defendant, the Plaintiff "determined the terms of the Settlement Agreement were no longer economically feasible, " and as a result, requested that the Defendant "agree [to] terminate the Settlement Agreement and agree to new terms."[6] The parties subsequently engaged in negotiations over a period of several years, throughout 2010, 2011, 2012, and 2013, in an attempt to reach a new settlement agreement; the significant change anticipated was abandoning the construction of a RIBS system in favor of building a regional County sewer system, ultimately to connect to the County's existing sewer system. Despite many meetings between the parties, highlighted below, a new agreement was never memorialized in writing or approved by the New Castle County Council or Executive. Nevertheless, as described in greater detail below, the Plaintiff now contends that the parties orally agreed to rescind the 2007 Settlement Agreement at an August 11, 2010 meeting, and subsequently reached a new oral settlement agreement on August 10, 2012. Shortly after that alleged oral agreement was entered, however, County administration changed, and in October 2013, the Defendant informed the Plaintiff that it understood the parties were still bound by the 2007 Settlement Agreement. Nevertheless, the Plaintiff has declined to proceed under the terms of the 2007 Settlement Agreement, which at this time require the Plaintiffs submission of a final development plan for the Defendant's approval.

On February 12, 2014, the Defendant filed a "Motion to Enforce the 2007 Settlement Agreement." In its briefing, the Defendant requests an order directing the Plaintiff to specifically perform its obligations under the 2007 Settlement Agreement by submitting a final plan for the Defendant's approval; alternatively, the Defendant requests that the Court find the Plaintiff in material breach of the Settlement Agreement, and dismiss the underlying action. The Defendant's Motion is peculiar, in that it has never filed a counterclaim or any other affirmative request for relief, aside from its "Motion to Enforce." On March 26, 2014, the Plaintiff filed a Third Amended Complaint. The Third Amended Complaint asserts six counts for relief. Counts I, II, and III—which form the basis of the underlying litigation concerning the 2001 development plan—assert claims based on promissory estoppel, protection of vested rights, and regulatory taking. Count IV seeks a declaration that the parties agreed in August 2010 to rescind the 2007 Settlement Agreement; Count V seeks a declaration that the parties entered into a new settlement agreement in August 2012; and Count VI alleges breach of the covenant of good faith and fair dealing. On the same day, the Plaintiff moved to specifically enforce the purported 2012 oral settlement agreement, and for a judgment that the 2007 Settlement Agreement was abandoned and that the subsequent 2012 oral settlement agreement binds the parties.

On July 1, 2014, I heard oral argument on the Cross-Motions, which the parties agree are governed by Court of Chancery Rule 56. I denied the Plaintiffs Motions under that standard at the conclusion of oral argument. The remainder of this Memorandum Opinion addresses the Defendant's "Motion to Enforce the 2007 Settlement Agreement, " which is, in reality, a motion for summary judgment on Counts IV, V, and VI of the Plaintiffs Third Amended Complaint. For the reasons that follow, the Defendant's Motion—so construed—is granted.

II. STANDARD OF REVIEW

As noted above, the parties agree that the Defendant's "Motion to Enforce the 2007 Settlement Agreement" is governed by Court of Chancery Rule 56. This Court may grant a motion for summary judgment under Rule 56 where the movant demonstrates that there exists "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."[7] "In considering the motion, the Court must view the facts in the manner most favorable to the nonmoving party and make all factual inferences in favor of the nonmoving party."[8] However, "when the nonmoving party would have the burden of proof at trial, he must show specific facts demonstrating a plausible ground for his claim, and cannot rely merely upon allegations in the pleadings or conclusory assertions in the affidavits."[9]

III. ANALYSIS

The Defendant seeks to enforce the November 20, 2007 Settlement Agreement on the basis that no genuine issue of material fact exists that could call into question the validity of that Agreement. The Plaintiff agrees that the 2007 Settlement Agreement bound the parties at the time it was entered, but contends that (1) the parties entered into an oral agreement on August 11, 2010 rescinding the Settlement Agreement, and (2) the parties entered into a new, oral settlement agreement on August 10, 2012. For the reasons that follow, 1 find that the Plaintiff has failed to demonstrate the existence of a genuine issue of material fact bearing on the enforceability of the 2007 Settlement Agreement.

1. The Alleged August 11, 2010 Agreement to Rescind the 2007 Settlement Agreement

As noted above, Count IV of the Plaintiffs Third Amended Complaint seeks a declaration that on August 11, 2010, the parties entered into an oral agreement to rescind the 2007 Settlement Agreement. According to the Plaintiff, "[b]ased on [negotiations] that occurred between January 4, 2010, and the August 11, 2010 meeting, the parties had agreed as of that August 11, 2010 meeting that the 2007 Settlement Agreement had been abandoned and the parties would continue negotiations to agree upon all essential terms and conditions of a new Agreement."[10] Despite that bare assertion, the record upon which the Plaintiff relies overwhelmingly demonstrates that no such agreement was ever reached. Specifically, Exhibit 14 to the Plaintiffs Answering ...


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