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Kuratle Contracting Inc. v. Linden Green Condominium, Association

Superior Court of Delaware, New Castle

October 22, 2014

KURATLE CONTRACTING, INC., a Delaware Corporation Plaintiff,
LINDEN GREEN CONDOMINIUM, ASSOCIATION, a Delaware Corporation Defendant.

Submitted: July 3, 2014

Thomas C. Marconi, Esq., Losco & Marconi, P.A., Attorney for Plaintiff

Michael F. Duggan, Esq., and Marc Sposato, Esq., Marks, O'Neill, O'Brien, Doherty & Kelly, P.C., Attorneys for Defendant



I. Introduction

The underlying cause of action in this case concerns a contract dispute between Kuratle Corporation, Inc. ("Plaintiff") and Linden Green Condominium Association ("Defendant"). Plaintiff is a Delaware corporation that is engaged in the business of management and maintenance of condominium complexes. Plaintiff is owned and operated by Henry and DruAnne Kuratle (individually, "Mr. Kuratle" and "Mrs. Kuratle"). Defendant is a non-profit Delaware corporation that manages the business and affairs of the Linden Green condominium complex in New Castle County, Delaware.

In 2002, 2007, and 2010, Plaintiff and Defendant entered into a series of contracts under which Plaintiff was to provide management and maintenance for Defendant. In 2011, a dispute arose over the validity of the 2010 Agreement. In 2012, Plaintiff commenced the instant action, asserting that Defendant had breached the 2007 and 2010 agreements. Defendant responded and counterclaimed alleging various kinds of managerial misconduct by Plaintiff. Defendant voluntarily dismissed its counterclaims before trial. Before trial, the Court determined as a matter of law that Defendant breached a valid contract. Trial was held in December 2013 solely to determine the extent to which Plaintiff sustained damages as a result of Defendant's breach. The jury found for Plaintiff in the amount of $165, 000.

After trial, Plaintiff filed a Motion for Additur or New Trial, which was subsequently denied by the Court. Plaintiff also filed the instant Motion for Costs and Fees. Defendant responded in opposition to Plaintiff's Motion. On March 18, 2014, the Court requested simultaneous supplemental briefing on the issue of whether Defendant's counterclaims were made in bad faith. The supplemental briefing was submitted by both Plaintiff and Defendant, and the Court took the matter under consideration on July 3, 2014.

For the reasons set forth below, Plaintiffs Motion for Cost and Fees is GRANTED in part and DENIED in part.

II. Facts and Procedural Background

A. The 2002, 2007, and 2010 Agreements

The parties entered into three agreements, in 2002, 2007, and 2010, respectively. The three agreements all contained nearly identical terms. For each agreement, in addition to the main contract signed by the parties, there were additional documents specifically addressing proposed work by Plaintiff for "Landscaping and Maintenance, " "Snow Removal, " and "Property Management." These additional documents were not signed by the parties, but neither party has disputed that the additional documents were part of the agreements.

In November 2002, the parties executed the first written agreement ("2002 Agreement"), under which Defendant employed Plaintiff "to manage the maintenance, operations, landscaping, snow removal, and finances of [Defendant]."[1] The 2002 Agreement covered the roughly five-year period from December 1, 2002 to December 31, 2007.

In October 2007, prior to the expiration of the 2002 Agreement, the parties executed the second written agreement ("2007 Agreement"), which contained nearly identical terms.[2] The 2007 Agreement was supposed to cover the next five-year period, from January 1, 2008 to December 31, 2012.

In September 2010, the parties executed the third written agreement ("2010 Agreement"), again containing nearly identical terms except for updated pricing.[3] The 2010 Agreement replaced and superseded the 2007 Agreement.[4] The commencement date printed on the agreement was January 1, 2010, and its expiration date was December 31, 2017.[5] Plaintiff argued that the parties hence intended the 2010 Agreement to apply retroactively. However, Defendant argued that the 2010 Agreement was not intended to apply retroactively and offered the deposition testimony of Olive Shepherd, who was Secretary of the Linden Green condominium association at the time, in support of Defendant's view.[6] Prior to trial, upon the parties' cross-motions for partial summary judgment, the Court found that the question of whether the 2010 Agreement was intended by the parties to apply retroactively from January 1, 2010 could not be determined as a matter of law, but that the retroactivity question did not affect the agreement's validity.[7]

B. The Parties Exchange Letters

On December 12, 2011, over a year after the 2010 Agreement was executed, Defendant sent a letter to Plaintiff advising that Defendant had submitted the 2010 Agreement to an attorney who advised that the 2010 Agreement was "invalid and unenforceable."[8] Defendant's letter further advised that Defendant would expect Plaintiff to continue to operate under the 2007 Agreement, but added that the attorney had found "some problems" with the 2007 Agreement. [9]Defendant proposed an "Addendum, " which provided for a consultant to oversee various aspects of Plaintiff's performance.[10] Defendant requested that Plaintiff "sign the Addendum and keep a copy for [Plaintiff's] records."[11] The Addendum itself stated that Plaintiff's failure to sign the Addendum would be considered a default, which could result in the termination of the 2007 Agreement.[12]

On December 29, 2011, Thomas B. Ferry, Esq. ("Ferry"), who was then counsel for Plaintiff, wrote to Defendant in response.[13] In the letter to Defendant, Ferry stated that he had reviewed to 2010 Agreement and concluded that it was valid and enforceable.[14] Ferry's letter also stated that the Addendum was not acceptable to Plaintiff and that Plaintiff would not sign the Addendum.[15] Finally, Ferry's letter stated that Plaintiff intended to comply with the original 2010 Agreement (without the Addendum) and expected Defendant to do likewise.[16]

Thereafter, in a letter dated January 16, 2012, Defendant declared Plaintiff to be in default of the 2007 Agreement for failing to execute the addendum.[17] The letter stated that because of the default, Defendant was hereby terminating its 2007 contract with Plaintiff.[18]

C. The Instant Action

Plaintiff filed suit on March 7, 2012, asserting two alternative theories under which Defendant had breached the contract between the parties. First, Plaintiff contended that the 2010 Agreement was valid and enforceable, and that Defendant had breached the 2010 Agreement by trying to impose the Addendum, [19] wrongfully locking Plaintiff out of the Condominium Association's office, failing to pay invoices for specific maintenance services, and prematurely terminating the parties' business relationship.[20] Second, Plaintiff alleged that even if the Court were to find the 2010 Agreement invalid, Defendant breached the 2007 Agreement by terminating the parties' business relationship prematurely.[21] Plaintiff contended that Defendant had no right to terminate the 2007 Agreement on the basis of Plaintiff's refusal to sign the addendum.[22]

On April 13, 2012, Defendant filed an Answer, Affirmative Defenses, and a Counterclaim.[23] Defendant's Counterclaim and Affirmative Defenses stated that Plaintiff had acted tortuously and breached the contract by mismanaging the Linden Green complex and failing to perform under the 2002 and 2007 Agreements in various ways.[24]

D. Pre-Trial Motions

Plaintiff filed a Motion for Partial Summary Judgment on September 17, 2013, contending that the undisputed facts support a finding that Defendant breached a valid, enforceable contract—namely, the 2010 Agreement.[25] On October 15, 2013, Defendant filed a Motion for Partial Summary Judgment, asserting that (a) the 2010 Agreement was unenforceable because the provision stating the contract's term was indefinite, and (b) even if the 2010 Agreement was enforceable, it was properly terminated by Defendant.[26] Finally, also on October 15, 2013, Plaintiff filed a second Motion for Partial Summary Judgment, arguing that Defendant was barred from pursuing a counterclaim for any conduct that occurred prior to April 13, 2009, citing a three-year statute of limitations.[27]

On November 19, 2013, the Court granted both of Plaintiff's Motions for Partial Summary Judgment and denied Defendant's Motion for Partial Summary Judgment. Concerning Plaintiff's Motions, the Court concluded that (1) the 2010 Agreement was valid and enforceable, and Defendant breached the 2010 Agreement when it ultimately terminated the parties' business relationship, and (2) the three-year statute of limitations, under 10 Del. C. §8106, barred Defendant from asserting any claims after April 13, 2009. The Court found that Defendant failed to satisfy its burden of pleading adequate facts to support an application of the time-of-discovery rule, which would have allowed Defendant to assert tort claims after April 13, 2009.[28]

Concerning Defendant's Motion, the Court found that (1) the 2010 Agreement was valid and enforceable despite the dispute over its effective date, and (2) Defendant breached the 2010 Agreement when it terminated the parties' business ...

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