DONALD A. LOCKWOOD and DARIN A. LOCKWOOD, Defendants Below-Appellants,
LOUIS J. CAPANO, III, Plaintiff Below-Appellee
Submitted October 29, 2014
Case Closed December 2, 2014.
This decision has been designated as "Table of Decisions Without Published Opinions." in the Atlantic Reporter.
Court Below: Superior Court of the State of Delaware in and for New Castle County. C.A. No. 10C-11-228.
Before HOLLAND and RIDGELY, Justices, and BOUCHARD, Chancellor.[*]
Henry duPont Ridgely, Justice
On this 10th day of November 2014, it appears to the Court that:
(1) Defendants-Below/Appellants Donald A. Lockwood (" Donald" ) and Darin A. Lockwood (" Darin" ) (collectively, the " Lockwoods" ) appeal from a Superior Court order denying, in part, their renewed cross-motion for summary judgment and granting, in part, the renewed cross-motion for summary judgment of Plaintiff-Below/Appellee Louis J. Capano, III (" LIII" ). The Lockwoods raise one claim on appeal. The Lockwoods contend that the trial court erred by granting summary judgment in favor of LIII and that it should have entered judgment in their favor. We find a material dispute of fact on the issue of contract formation that precludes summary judgment for any party. Accordingly, we reverse and remand for further proceedings consistent with this Order.
(2) This action arises from a failed business venture that originated in 2004. LIII and his father, Louis J. Capano, Jr. (" LJC" ) (collectively, the " Capanos" ), formed Milton Investments, LLC (" Milton" ), in which they were the sole members. Donald and Darin Lockwood formed, and were the sole members of, Lockwood Brothers II, LLC (" LBII" ). In December 2004, Darin and LIII, as authorized members of their respective companies, signed an agreement to form a new company, North Milton Development Group, LLC (" NMDG" ). Under NMDG, the parties executed a series of agreements in connection with the purchase of land located outside of Milton, Delaware (the " Rust Property" ). The parties planned to use the Rust Property for both commercial and residential real estate development.
(3) In order to purchase the Rust Property, NMDG entered into a loan agreement with Wilmington Trust Company (" WTC" ) for two loans. The first was a 2004 acquisition loan for $7,130,000 (the " Acquisition Loan" ), and the second was a 2007 loan for $1,000,000 (the " Working Capital Loan" ) (collectively, " the Loans" ). The Loans were originally represented to the trial court as having been guaranteed by all of the principals of Milton and LBII. But LJC never signed the loan documents, and during depositions testified that he did not personally guarantee the loans. LIII admits that he personally guaranteed the Loans, but there is no copy of his execution of some critical documents.
(4) One day prior to NMDG's formation, a contribution agreement (the " Contribution Agreement" ) was created. The third recital of the Contribution Agreement states that Donald and Darin " are each guarantors of the Acquisition Loan" along with LJC and LIII. Section 2 of the Contribution Agreement provides that in the event a " demand" was made by WTC upon " one or more but not all of the guarantors," the Lockwoods, on the one hand, and the Capanos, on the other hand, would have reciprocal rights of contribution against the other two individuals, jointly and severally, for payments made in excess of their liability share. The Lockwoods each signed the Contribution Agreement and forwarded it to LIII. LIII, however, failed to produce a signed copy of the Contribution Agreement. LJC also never signed the Contribution Agreement and failed to execute any documents to commit to the personal guarantee.
(5) The downturn in the housing market precluded NMDG's planned development for the Rust Property. By August 2010, NMDG was behind on its loan payments. On September 24, 2010, WTC's then-Vice President Jeremy Abelson (" Abelson" ) sent an email to LIII stating:
Louis, we sent an email to Darin notifying him of the need to pay the October 1 payments for the two North Milton loans. These invoices have still not been paid for September 1. This is a quarter end, so it's extra " special." ...