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Nexsis, Inc. v. Robinson

Court of Common Pleas of Delaware, New Castle

September 25, 2017


          Douglas A. Shachtman, Esq. of The Shachtman Law Firm, Attorney for Plaintiff

          David L. Baumberger, Esq. of Chrissinger & Baumberger, Attorney for Defendant-Liberty Mutual Ins. Co.


          JOHN K. WELCH, JUDGE

         On June 30, 2017, this Court held a hearing on Defendant Liberty Mutual Insurance Company's Motion to Dismiss for Failure to State a Claim. After legal argument from both parties, the Court heard rebuttal by defense counsel who argued, "Again, I don't think the approval to an estimate rises to the level of an intended beneficiary under the insurance policy, as Nexsis claims it would." The Court then responded, "You know what, I agree. I am signing your order."[1] The Court then granted Defendant's motion.

         Following the Court's judgment, Plaintiff filed a timely Motion for Re-argument on July 10, 2017. On July 21, 2017, the Court wrote defense counsel a letter posing a preliminary question and requesting supplemental briefing. On August 7, 2017, defense counsel for Liberty Mutual apologized for his late reply to the Court's letter and noted that he would file a response by August 16, 2017. On August 16, 2017, Liberty Mutual filed its Response to Plaintiff's Motion for Re-argument. Plaintiff then filed its Reply in Support of Its Motion for Re-argument on August 23, 2017.

         In the case subjudice, Defendant Andrea Robinson ("Robinson") sought to have repairs performed to fix a leak in her roof. Robinson contacted her home insurance carrier, Defendant Liberty Mutual Insurance Company ("Liberty Mutual") and requested that her home repairs be covered. Liberty Mutual requested that Robinson send it the repair estimates in order to confirm that damage to the property surrounding the water leak was related to the water leak, as the water leak itself was not insured. Robinson sent Liberty Mutual an estimate from Plaintiff Benjamin Franklin Plumbing ("Plaintiff) and Liberty Mutual deemed the estimate to be reasonable and necessary. Liberty Mutual authorized the repairs and paid Robinson directly. Plaintiff then sued Robinson, alleging that she failed to pay it for the repairs, and Liberty Mutual, claiming that a contract was created when Liberty Mutual authorized the repairs and issued payment for those repairs.[2]

         Standard of Review

         Pursuant to Court of Common Pleas Civil Rule 59(e), a Motion for Re-argument is a request for the Court to reconsider its findings of fact, conclusions of law, or judgment.[3] "New arguments, or arguments that could have been raised prior to the Court's decision, cannot be raised in a motion for re-argument."[4] Moreover, a Motion for Re-argument is not an opportunity for litigants to reargue positions the court has previously resolved.[5] Motions for Re-argument "will be denied unless the Court has overlooked a controlling precedent or legal principles, or the Court has misapprehended the law or facts such as would have changed the outcome of the underlying decision."[6] "A party seeking to have the trial court reconsider the earlier ruling must demonstrate newly discovered evidence, a change in the law, or manifest injustice."[7]

         Parties' Contentions

         In Plaintiffs Motion for Re-argument, Plaintiff reiterates that it either "contracted directly" with Liberty Mutual by Liberty Mutual "obtaining and approving the repair quote" or, alternatively, Plaintiff was an intended beneficiary of Liberty Mutual's promise to pay Robinson for the repair costs.[8] In Defendant's Response, Liberty Mutual argues that Plaintiff cannot be an intended beneficiary of the contract between Defendants because there was no specific intent to create such a right when the contract was created.[9] In fact, in its Motion to Dismiss, Liberty Mutual pointed to the plain language of the contract between Defendants as evidencing a lack of intent, "No one will have the right to join us as a party to any action against an 'insured.'"[10] Thus, it claims Plaintiff is simply an incidental beneficiary, and not an intended one.[11] Secondarily, Liberty Mutual asserts that there are no facts to support Plaintiffs assertion that a direct contract exists between Plaintiff and itself.[12] Finally, in Plaintiffs Reply, Plaintiff claims that Liberty Mutual "is wrong as to contract law."[13] Plaintiff reasserts that the pled facts-Liberty Mutual insured Robinson's residence, Liberty Mutual had an obligation to pay for the repairs, and it reviewed and approved Plaintiffs estimate-are indicative of an intended beneficiary.[14]


         Plaintiffs Motion for Re-argument does not allege the existence of newly discovered evidence or that the Court overlooked controlling precedent. Instead, Plaintiffs arguments imply that the Court misapprehended the law and/or facts. The Court disagrees and will not order Liberty Mutual to pay twice.

         Plaintiffs secondary argument-that a contract existed between Plaintiff and Liberty Mutual based on the latter's promise to Robinson-is meritless.[15] Under Delaware law, a contract is defined "as an agreement upon sufficient consideration to do or not to do a particular thing."[16]"Consideration is a bargained-for-exchange of legal value."[17] In order to create a contract, there must be "mutual assent to the terms of the agreement, also known as the meeting of the minds."[18] "Mutual assent requires an offer and an acceptance wherein 'all the essential terms of the proposal must have been reasonably certain and definite.'"[19] If the meeting of the minds does not occur, then the contract is unenforceable according to Delaware law.[20] Because there is no evidence of a verbal or written agreement between Plaintiff and Liberty Mutual, proceeding to analyze whether a breach occurred would be premature.

         Plaintiffs primary argument is also misplaced. This Court recently addressed the issue of third-party beneficiaries:

Generally, a stranger to a contract cannot enforce rights under the contract. However, a non-party may enforce the contract as a third party beneficiary if the following is established: (1) the contracting parties intended to benefit the third party; (2) the benefit is intended to be a gift or in satisfaction of a pre-existing obligation; and (3) the intent to benefit the third party is a material part of the contracting parties' purpose in entering into the contract. If there is no intent by the contracting parties to confer a benefit, a third party who receives such a benefit under the contract is merely an incidental beneficiary with no enforceable rights.[21]

         The Court further states that one "must look to the language of the contract" to decipher the intent of the parties when they entered into the contract.[22]

         There are no facts here which support that Robinson and Liberty Mutual intended to benefit Plaintiff when they entered into the subject contract. Indeed, regarding insurance policies and third-party beneficiaries, the Superior Court has held that the language of a policy preventing direct actions by third parties indicates "clear" intent not to allow direct actions by third parties.[23] The language thus solidifies that the third party is not an intended beneficiary, but an incidental one.[24] Here, the contractual language for liability coverage, which nearly mirrors the language in Broadway v. Allstate Property & Casualty Insurance Company[25] states:

Suit Against Us. No action can be brought against us unless there has been compliance with the policy provisions.
No one will have the right to join us as a party to any action against an "insured." Also, no action with respect to Cover E [Personal Liability] can be brought against us until the obligation of the "insured" has been determined by final judgment or agreement signed by us.[26]

         The contract language in this case is unambiguous; Plaintiff is unable to bring suit against Liberty Mutual as an incidental beneficiary to the contract.

Despite the dispositive contractual language, [27] Plaintiff relies on the Chancery Court's analogy in Madison Realty Partners 7, LLC v. AG ISA, LLC to a RESTATEMENT (SECOND) OF Contracts illustration.[28] Under § 302(1)(a), the Restatement suggests the following:

B promises A to pay whatever debts A may incur in a certain undertaking. A incurs in the undertaking debts to C, D and E. If the promise is interpreted as a promise that B will pay C, D and E, they are intended beneficiaries under Subsection (1)(a); if the money is to be paid to A in order that he may be provided with money to pay C, D and E, they are at most incidental beneficiaries.[29]

         Plaintiff believes this illustration supports its position.[30] Yet, theoretical musings are rarely helpful. Relevant to the case at bar, Madison involved claimed third-party beneficiaries to the Partnership Agreement ("Agreement") and beneficiaries to a subsequent contract between an affiliate and controlling entity of the general partners.[31] Madison Realty Partners 7 LLC ("Madison"), managing general partner of the general partnership, sued AG ISA LLC ("AGGP"), second general partner responsible for providing all funding, claiming AGGP breached the Agreement when it failed to notify Madison that it would no longer provide funding.[32]

         Prior to this dispute, Madison contracted with Investment Services of America LLC ("ISA") and The Madison Avenue Capital Group II LLC ("MACGII"), affiliates and co-plaintiffs, to provide personnel and services to the partnership.[33] Likewise, Madison Avenue Investment Partners LLC ("MAIP"), a Madison affiliate, contracted with Angelo Gordon, who held a controlling interest in AGGP, to require AGGP to satisfy its "obligations" to the partnership under the Agreement ("Umbrella Contract").[34] In the defendants' motion to dismiss, they argued that the non-signatory plaintiffs to the Agreement, ISA and MACG II, and to the Umbrella Contract, Madison, ISA and MACG II, were only incidental beneficiaries to the agreements.[35]

         Regarding the Agreement, the Court found that even though all parties were aware that the partnership would rely on its Agreement when it came time to pay ISA and MACG II for their services, this simply made ISA and MACG II "expected creditors, " not intended beneficiaries.[36]Similarly, under the Umbrella Contract, even though Madison would receive proceeds as a general partner when Angelo Gordon caused AGGP to honor its pledge under the Agreement, and ISA and MACG II would receive payments under their service agreements when the partnership received funding from AGGP, the non-signatory parties were still incidental beneficiaries.[37]

         Presumably, the Madison Court inferred that AGGP, as B, promised to provide funding to the partnership as well as Madison indirectly, collectively A, under the Agreement assuming that ISA and MACG II would be paid by A under the service agreements. Also, under the Umbrella Contract, Angelo Gordon, as B, would cause AGGP, as A, to continue providing funding to the partnership, which in turn would provide ...

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