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Coeur Mining, Inc. v. Compania Minera Pangea, S.A. DE C.V.

Superior Court of Delaware

August 22, 2019

COEUR MINING, INC, and 0986566 B.C., ULC, Plaintiffs,
v.
COMPANIA MINERA PANGEA, S.A. DE C.V., Defendant.

          Submitted: July 8, 2019

         Defendant's Motion to Dismiss: Granted

          ORDER

          ABIGAIL M. LEGROW, JUDGE

         1. This dispute arises from Defendant's purchase of mineral rights from Plaintiffs' subsidiary. The purchase agreement required Defendant to pay the subsidiary cash at closing along with an additional payment two years later if the mine remained operational on that date. After Defendant purchased the mineral rights, but before the additional payment was due, Plaintiffs sold the subsidiary to another company. Plaintiffs contend they retained the right to the conditional payment when they sold the subsidiary.

         2. Plaintiffs filed this breach of contract action after Defendant refused to make the conditional payment. Defendant moved to dismiss Plaintiffs' claim, arguing that Plaintiffs, who were not parties to the agreement, have no right to enforce the subsidiary's conditional payment right. Defendant further argues Plaintiffs cannot be the assignees of the subsidiary's right because the agreement contains an unambiguous anti-assignment clause. Plaintiffs advance various theories as to why their claim to the conditional payment did not constitute an "assignment" or did not violate the anti-assignment clause, and offer several strained interpretations of the agreement to support their theories. For the reasons that follow, I conclude Plaintiffs do not have a right to the conditional payment by virtue of their former ownership of the subsidiary, and any assignment of the conditional payment by the subsidiary is void under the purchase agreement's anti-assignment clause. Plaintiffs therefore lack standing to enforce the conditional payment, and Defendant's motion to dismiss is granted.

         BACKGROUND

         3. The following facts are drawn from the complaint and the documents incorporated by reference therein. In 2016, Defendant Compania Minera Pangea, S.A. DE C.V. ("CMP") purchased certain mineral rights in the El Gallo Mine from non-party 1570926 Alberta Ltd. ("Alberta"). CMP and Alberta executed an Assignment and Assumption Agreement (the "Agreement") on April 13, 2016. At the time of the transaction, Plaintiff Coeur Mining, Inc. ("Coeur") owned all Alberta's stock through Coeur's subsidiary, Plaintiff 0986566 B.C., ULC ("BC ULC") (collectively with Coeur, "Plaintiffs").

         4. As consideration for the sale, CMP paid Alberta $5.25 million in cash at closing. Under Section 2.6 of the Agreement, an additional $1 million payment (the "Conditional Payment") was due on June 30, 2018 if the El Gallo mine continued to operate on that date. The agreement specified that "operation" would not include "activities solely pertaining to reclamation of the mine or exploration."[1]

         5. Article VI of the Agreement contains several "General Provisions," including an anti-assignment clause (the "Anti-Assignment Clause") prohibiting Alberta from assigning its rights to any other party without CMP's consent. That clause specifically provides:

Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by [Alberta] without the prior written consent of each other party, and any such assignment without such prior written consent shall be null and void.[2]

         Article VI also includes a non-survival clause (the "Non-Survival Clause") providing that the representations, warranties, and covenants in the Agreement terminate at closing, except for "any covenant or agreement of the parties that by its terms requires performance after the [c]losing."[3]

         6. In 2017, Coeur and BC ULC sold 100% of their Alberta shares to non-party Metalla Royalty & Streaming Ltd. ("Metalla"). The parties executed a Share and Asset Purchase Agreement (the "SAPA") on June 9, 2017. Plaintiffs allege that under Section 5.14(a) of the SAP A, they retained the right to the Conditional Payment.[4] Section 5.14(a) states:

Any payments pursuant to the Subject Agreements, including any interest thereon, that are received by [Metalla or Alberta] that relate to the Pre-Closing Period . . . shall be for the account of [Coeur, BC ULC, and other sellers], and, if applicable, [Metalla or Alberta] shall pay over to [Coeur, BC ULC, and other sellers] such payments within five Business Days after receipt thereof.[5]

         7. On June 18, 2018, Metalla contacted CMP and requested that CMP wire the Conditional Payment to BC ULC. CMP responded that it would not be making the Conditional Payment because the El Gallo Mine had ceased operations on May 31, 2018. In the months following, Plaintiffs made several more demands for payment, all of which CMP rebuffed. Coeur then filed this breach of contract action against CMP. On March 21, 2019, Coeur filed an amended complaint (the "Amended Complaint") adding BC ULC as a plaintiff. CMP moved to dismiss the Amended Complaint under Superior Court Civil Rule 12(b)(6), and the parties briefed and argued that motion.[6]

         THE ...


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