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Heritage Handoff Holdings, LLC v. Fontanella

United States District Court, D. Delaware

July 25, 2018

HERITAGE HANDOFF HOLDINGS, LLC, Plaintiff,
v.
RONALD FONTANELLA, Defendant.

          MEMORANDUM ORDER

         Presently before the Court is Plaintiff Heritage Handoff Holdings' Motion for Partial Summary Judgment. (D.I. 68). The matter is fully briefed. (D.I. 69, 85, 89). For the reasons that follow, Plaintiffs motion is granted in part and denied in part.

          I. Background

         On August 10, 2016, Plaintiff filed this suit against Defendant Ronald Fontanella i asserting claims for breach of contract, violation of federal securities laws, common law fraud, violation of the Connecticut Unfair Trade Practices Act, and declaratory judgment. (D.I. 1).

         The dispute arises out of a stock purchase agreement between the parties pursuant to which Plaintiff acquired from Defendant all issued and outstanding shares of stock in the J. J. Ryan Corporation. (Id. ¶ 2). Plaintiff alleges that Defendant induced it to acquire the company by making various misrepresentations and omissions in regard to the company's customer relationships, the condition of its machinery and equipment, and its finances and operations, among other things. (Id. ¶ 3).

         On September 3G, 2016, Defendant answered Plaintiffs complaint and asserted two counterclaims for breach of contract and breach of the covenant of good faith and fair dealing. (D.I. 8). Plaintiff now moves for summary judgment on those counterclaims.

         II. Legal Standard

         "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party has the initial burden of proving the absence of a genuinely disputed material fact relative to the claims in question. Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). Material facts are those "that could affect the outcome" of the proceeding, and "a dispute about a material fact is 'genuine' if the evidence is sufficient to permit a reasonable jury to return a verdict for the nonmoving party." Lamont v. New Jersey, 637 F.3d 177, 181 (3d Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). When determining whether a genuine issue of material fact exists, the court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Scott v. Harris, 550 U.S. 372, 380 (2007); Wishkin v. Potter, 476 F.3d 180, 184 (3d Cir. 2007).

         III. Discussion

         A. Breach of Contract

         Plaintiff seeks summary judgment on Defendant's breach of contract counterclaim. That claim alleges that Plaintiff breached Section 4.1(d) of the parties' stock purchase agreement by failing to pay Defendant pre-closing tax refunds or credits received by the company. (D.I. 8 at 13-14).

         Plaintiffs principal argument is that Section 4.1(d) unambiguously states that Plaintiff, not Defendant, is entitled to pre-closing tax refunds or credits. (D.I. 69 at 4, 6-7).

         Defendant responds that Section 4.1(d) contains a scrivener's error. More specifically, he maintains that Section 4.1(d) erroneously states that the "Purchaser" will receive pre-closing tax refunds or credits, rather than the "Shareholder," that is, Defendant. (D.I. 85 at 15). According to Defendant, Plaintiffs construction "conflicts with the commercial realities and business context facing the parties" when the agreement was "negotiated and consummated." (Id. at 14 (citation omitted)).

         Section 4.1(d) of the parties' stock purchase agreement provides:

Any tax refunds received by the Company and any amounts credited against Taxes to which the Company and the Purchaser become entitled, that relate to Tax periods or parties [sic] of Tax periods ending on or before the Closing Date shall be for the account of the Shareholder and the Company shall pay to the Purchaser any refund or the amount of any such ...

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