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Patrone v. Commerce Associates LP

Superior Court of Delaware

October 29, 2018

ALDO PATRONE and MADELYN PATRONE, husband and wife, Plaintiffs,
v.
COMMERCE ASSOCIATES LP d/b/a STAT INTERNATIONAL, LLC, STAT OFFICE SOLUTIONS, STAT INTERNATIONAL BUSINESS OFFICE SOLUTIONS, COASTAL INVESTMENT ADVISORS, INC., a Delaware corporation; ENERGY TRANSFER SOLUTIONS, INC., a foreign corporation, and DVL GROUP, INC., a foreign corporation, Defendants. And COMMERCE ASSOCIATES LP d/b/a STAT INTERNATIONAL, LLC, STAT OFFICE SOLUTIONS, STAT INTERNATIONAL BUSINESS OFFICE SOLUTIONS, Defendant/Third-Party Plaintiff,
v.
ENERGY TRANSFER SOLUTIONS, INC.; DVL GROUP, INC.; and ENERGY TRANSFER SOLUTIONS, LLC, Third-Party Defendants,

          Submitted: July 11, 2018

          Upon Third-Party Defendant Energy Transfer Solutions LLC's Motion to Dismiss Second Amended Third-Party Complaint,

         Upon Third-Party Defendant Energy Transfer Solutions LLC's Motion to Dismiss DVL Group, Inc. 's Cross-Claim DENIED in part GRANTED in part.

          Eric M. Davis, Judge

         I. INTRODUCTION

         Commerce Associates, LP ("Commerce Associates")[1] owns a property at 1201 North Orange Street, 9th Floor, Wilmington, Delaware 19801 (the "Property"). On January 12, 2015, Commerce Associates and Energy Transfer Solutions, Inc. ("Energy Solutions"), a division of DVL Group, Inc. ("DVL") entered into an agreement (the "Installment Agreement") on January 12, 2015. Under the Installment Agreement, Energy Solutions would install a water source heat pump at the Property. On November 9, 2015, DVL and Energy Solutions contracted with One Commerce Condominium Council ("Condominium Council") to provide preventative maintenance services (the "Maintenance Agreement") for the heat pump and other equipment at the Property. DVL entered into an asset purchase agreement (the "APA") with Energy Transfer Solutions, LLC ("Energy Solutions LLC") on December 30, 2016. Under the APA, Energy Solutions LLC would purchase DVL's Energy Transfer Solutions division. In addition, Energy Solutions LLC would assume certain liabilities from DVL under the APA.

         On February 27, 2017, Aldo Patrone was working as an HVAC mechanic at the Property when he came into contact with unmarked live electrical wires. Mr. Patrone suffered injuries. Mr. Patrone and Madelyn Patrone filed suit against Commerce Associates, Energy Solutions, and DVL. Thereafter, Commerce Associates filed an answer and asserted third-party claims against Energy Solutions, DVL, and Energy Solutions LLC. DVL, in turn, filed a cross-claim against Energy Solutions LLC. Energy Solutions LLC filed (i) the Third-Party Defendant Energy Solutions LLC's Motion to Dismiss Second Amended Third-Party Complaint and (ii) Third-Party Defendant Energy Transfer Solutions LLC's Motion to Dismiss DVL Group, Inc.'s Cross-Claim (collectively, the "Motion"). Commerce Associates, DVL and the Patrones opposed the Motion. The Court held a hearing (the "Hearing") on the Motion on July 11, 2018. Upon conclusion of the Hearing the Court took the Motion under advisement.

         For the reasons set forth below, the Motion is GRANTED in part and DENIED in part.

         II. RELEVANT FACTS

         On January 12, 2015, Commerce Associates and Energy Solutions, as a division of DVL, entered into the Installment Agreement to remove an existing water source heat pump on the 9th floor of the Property.[2] Energy Solutions would also sell and install a new water source heat pump and "make all connections for wiring, piping, and duct work, as well as inspecting the new system to assure that it worked safely and properly."[3] The Installment Agreement also contains an arbitration clause that provides as follows:

. . .All claims, disputes, and controversies arising out of or relating to this contract, or the breach thereof, shall, in lieu of court action, be submitted to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA") then in effect, and any judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. . . .[4]

         On November 9, 2015, DVL and Energy Solutions contracted, under the Maintenance Agreement, with Condominium Council to provide maintenance service for the heat pump and other equipment at the Property.[5] The maintenance service included testing and inspections, preventative maintenance, and repair and placement of components or parts of all of the heat pumps in the Property, including the heat pump on the ninth floor.[6] As alleged, Commerce Associates is a third-party beneficiary of the Maintenance Agreement.[7] The Maintenance Agreement also explicitly excludes: "Electrical work external to the Equipment or maintenance of accessories, attachments, equipment, features, or other devices no described in the Maintenance Plan."[8]

         Energy Solutions and DVL merged in 2014. On December 30, 2016, DVL entered into an the APA with Energy Solutions LLC.[9] Pursuant to the APA and Assignment and Assumption Agreement (the "Assignment"), Energy Solutions LLC assumed all liabilities and obligations relating to the business of the Division of DVL which accrued after the closing date of the agreement.[10] Specifically, the Assignment states

Indemnification of Assignee by Assignor. Assignor shall indemnify, defend and hold Assignee harmless from and against any and all loss, damage, cost or expense (including reasonable attorneys' fees incurred by Assignee) arising out of or resulting from any breach by Assignor of obligations under or relating to the Assigned Agreements up to and including the date hereof.
Indemnification of Assignor by Assignee. Assignee shall indemnify, defend and hold Assignor harmless from and against any and all loss, damage, cost or expense (including reasonable attorneys' fees incurred by Assignor) arising out of or resulting from any breach by Assignee of obligations under the Assigned Agreements from and after the date hereof.[11]

         The Assignment states that it only assigns the "rights, obligations, title and interest in and to the contracts and agreements identified in Section 2.1.2 of the [APA]."[12] Schedule 2.1.2 lists the contracts, leases and agreements relating to the Business. They include: "(10) Post sale operating agreement between the companies", "(14) Representative Agreement list (attached)"; "(15) All warranties, extended warranties, and service contracts relating to the Business."[13]

         On February 27, 2017, Mr. Patrone was a business invitee at the Property.[14] Mr. Patrone was working as a HVAC mechanic at the Property and "suddenly and without warning he came into contact with unmarked live electrical wires as a result of the negligence of Defendants."[15]The wire shocked and electrocuted Mr. Patrone causing him to fall off a six foot ladder and become unconscious.[16] At the time of the injury, Energy Solutions LLC was Mr. Patrone's employer.[17]

         On August 7, 2017, the Patrones filed suit against Defendants.[18] The Patrones seek damages resulting from Mr. Patrone's injuries sustained on February 27, 2017 including Ms. Patrone's loss of consortium.[19]

         On October 14, 2017, Commerce Associates filed a third-party complaint. On April 23, 2018, Commerce Associates filed its Second Amended Third-Party Complaint (the "Third-Party Complaint") against Energy Solutions, DVL and Energy Solutions LLC. In the Third-Party Complaint, Commerce associates seeks indemnification if found liable to Plaintiffs. Specifically, the Third-Party Complaint alleges that Energy Solutions and DVL breached the contracts in that they:

(a) sold a heat pump that was not fit for the purpose for which it was intended to be used; (b) breached an implied warranty of merchantability; (c) breached governmental and/or industry standards in testing, inspecting, maintaining, and repairing the aforesaid heat pump; (d) failed to comply with governmental and/or industry standards in training their technicians in the proper methods of testing, inspecting, maintaining, and repairing the aforesaid heat pump.[20]

         On May 31 and July 2, 2018, Energy Solutions LLC filed the Motion. On June 12, 2018, Commerce Associates filed their Response to Third-Party Defendant Energy Transfer Solutions, LLC's Motion to Dismiss (the "Opposition"). On June 15, 2018, DVL filed DVL Group, Inc.'s Response to Third-Party Defendant Energy Transfer Solutions, LLC's Motion to Dismiss Second Amended Third-Part Complaint ("DVL's Opposition"). On June 21, 2018, Plaintiffs filed a Joinder of Plaintiffs, Aldo Patrone and Madelyn Patrone to defendant Raynor Worldwide's Response in Opposition to Third-Party Defendant, Energy Transfer Solutions, LLC's Motion to Dismiss Second Amended Third-Party Complaint ("Plaintiffs' Opposition").[21] The Court heard arguments on the Motion, the Opposition, DVL's Opposition and Plaintiffs' Opposition at the Hearing.

         III. STANDARD OF REVIEW

         Upon a motion to dismiss, the Court (i) accepts all well-pleaded factual allegations as true, (ii) accepts even vague allegations as well-pleaded if they give the opposing party notice of the claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances.[22] However, the court must "ignore conclusory allegations that lack specific supporting factual allegations."[23]

         If the trial court "considers matters outside of the complaint, a motion to dismiss is usually converted into a motion for summary judgment and the parties are permitted to expand the record."[24] Civil Rule 12(b) states:

[i]f, on a motion asserting the defense . . . for failure of the pleadings to state a claim upon which relief can be granted, matters outside the pleadings are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.[25]

         However, a Court is not required to convert a motion to dismiss to a motion for summary judgment when the newly submitted document "is integral to plaintiffs claim and it is incorporated into the complaint."[26]

         Commerce Associates argues that the Court cannot decide the Motion and should convert the Motion into a motion for summary judgment because Energy Solutions LLC relies upon, among other things, Schedules to the APA and Assignment-which were not attached to the Third-Party Complaint. Commerce Associates also argues that discovery is needed in several areas before a decision can be made: (1) whether any warranty or service contract, except for the disclosed Installation and Maintenance Agreements, involve Commerce Association as a party; (2) what is meant by the term "Business" as defined in the APA and whether Business applies to services such as the electrical work on HVAC.

         The Court will not covert the Motion from a motion under Civil Rule 12(b) to one under Civil Rule 56. The Installation Agreement, the Maintenance Agreement, the APA, the Assignment are all documents attached to the Second Amended Third-Party Complaint.[27]Exhibit 1 to the Motion, entitled "2.1.2 Contracts, Leases & Agreements," is a part of the APA and the Assignment. Commerce Associates, not Energy Solutions LLC, chose to omit these schedules. The Court finds, therefore, that ...


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