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Jordan v. Mirra

United States District Court, D. Delaware

December 20, 2019

GIGI JORDAN, Plaintiff/Counterclaim-Defendant,
v.
RAYMOND A. MIRRA, JR. Defendant/Counterclaim-Plaintiff.

          MEMORANDUM OPINION

          Gerald Austin McHugh United States District Judge

         Before me are cross motions for summary judgment in which breach of contract is the principal question. In March 2008, Raymond Mirra and Gigi Jordan executed a Mutual General Release Agreement. In that Release Agreement, each party “irrevocably release[d] and forever discharge[d]” the other party “from any and all manner of actions . . . by reason of any and all facts . . . which occurred, arose or existed at any time on or before the date of this Release Agreement.” ECF 303-1, Ex. 5, ¶¶ 2-3. After the parties executed the Release Agreement, in 2012 and then again in 2013, Jordan filed two diversity actions in federal court asserting various state law claims against Mirra and Mirra-related individuals and entities. In both suits, the majority of Jordan's claims fell within the broad scope of the Release Agreement and were subsequently dismissed.

         After the majority of Jordan's claims were dismissed, in January 2018, Mirra answered Jordan's complaint in this Action and filed two counterclaims. In the counterclaims, Mirra alleged that Jordan breached the Release Agreement by pursuing the two lawsuits barred by the Agreement and, as a result, suffered damages equivalent to the attorneys' fees and costs he expended in defending against the suits. To support his argument for an award of fees and costs, Mirra pointed to a separate contractual provision in a Separation and Distribution Agreement (“Distribution Agreement”), which the parties executed contemporaneous to the Release Agreement. The relevant provision in the Distribution Agreement provides that “[t]he prevailing party in any Dispute that is resolved by . . . a court shall recover his, hers or its actual attorneys fees incurred with regard to such Dispute.” ECF 303-1, ¶¶ 5.6.1, 5.6.5.

         Now, after a round of extensive motions practice, Mirra has moved for summary judgment on his counterclaims. Mirra argues that the record indisputably demonstrates that the Release Agreement is a valid and enforceable contract containing a covenant not to sue; that Jordan breached that Agreement; and, as a result of Jordan's breach, that he incurred significant attorneys' fees and costs to which he is now due as damages. ECF 301, at 1-2. In opposing summary judgment, Jordan argues that Mirra did not “incur” those attorneys' fees and costs because corporate entities he controls (and not he personally) paid them. ECF 346, at 1. Since Mirra the person did not pay the fees and costs, says Jordan, he has suffered no cognizable injury, thus lacks standing, rendering this Court without subject-matter jurisdiction to adjudicate the counterclaims. ECF 346, at 7-8. In the alternative, Jordan argues that other waiver and release agreements have superseded the Mutual General Release Agreement, and that those agreements prevent Mirra from pursuing his counterclaims. ECF 346, at 15-20.

         In previous rulings, I have concluded that the Release Agreement is a valid and enforceable contract, in which both parties covenanted not to sue the other. Memorandum Denying Jordan's Motion to Dismiss, ECF 265, at 5-6. Previous rulings in this Action and the related action also have confirmed that Jordan breached that covenant by pursuing the two lawsuits that gave rise to Mirra's counterclaims. Report & Recommendation, ECF 199, at 22 (adopted by this Court at ECF 202); Report & Recommendation, ECF 457, The Hawk Mountain LLC, et al. v. RAM Capital Group, LLC, et al, No. 13-2083 (D. Del. Dec. 23, 2013) (adopted by the district court at ECF 472 and affirmed by the Third Circuit on appeal by Hawk Mountain LLC, et al v. RAM Capital Group LLC, et al., 689 Fed.Appx. 703 (3d Cir. 2017)).

         I now conclude that Mirra is the prevailing party on nine of ten counts in this Action and the two counts in the related action, and that he “incurred” the attorneys' fees and costs paid by corporate entities he controls to defend against this and the related action. Accordingly, I will partially grant Mirra's motion for summary judgment on his counterclaims. In so doing, I address and reject Jordan's argument that Mirra lacks standing such that this Court is unable to exercise subject-matter jurisdiction. I also reject Jordan's remaining arguments.

         I. Background

         A. The release agreements

         The parties' pending motions chiefly turn on the interpretations of the Distribution and Release Agreements, which the parties executed in the spring of 2008. In the Distribution Agreement, Jordan and Mirra, among other things, agreed to sever their business relationship and distribute the assets and liabilities they jointly held. ECF 303-1, Ex. 4. They also agreed “to execute [a] waiver and release of rights agreement.” Id. ¶ 7.1. Pursuant to that provision, the parties subsequently executed the Release Agreement. ECF 303-1, Ex. 5, ¶¶ 2-3. Both the Distribution Agreement and Release Agreement were signed and became effective March 12, 2008.

         The Release Agreement and the Distribution Agreement together contain five provisions relevant to the pending motions:

Release Agreement Paragraphs 2 and 3-Through these parallel paragraphs-one applying to Mirra and one to Jordan-each party (and that party's heirs, affiliates, and the like) agreed to “irrevocably release and forever discharge” the other party (and that other party's heirs, affiliates, and the like) “from any and all manner of actions, causes of action, claims” and the like, “whether known or unknown, accrued or not accrued, ” which the releasing party “ever had, now have or hereafter can, shall or may have or acquire against” the other party, “by reason of any and all facts, circumstances” and the like, “which occurred, arose or existed at any time on or before the date of this Release Agreement.” ECF 303-1, Ex. 5, ¶¶ 2-3.
Release Agreement Paragraph 5-Through this paragraph, each party “acknowledges hereby that he or she is aware that he or she may hereafter discover facts or circumstances in addition to or different from those which he or she now knows or believes to be true with respect to the subject matters of this Release Agreement, but that it is such Party's intention to, and such Party hereby does, fully, finally, completely and forever release, discharge, compromise, settle, satisfy and extinguish any and all such Claims, without regard to the subsequent discovery or existence of such different or additional facts or circumstances. Each of the Parties further expressly acknowledges that the release set forth herein extend to Claims which are presently unknown, as well as known Claims.” ECF 303-1, Ex. 5, ¶ 6.
Distribution Agreement Paragraphs 5.6.1 and 5.6.5-Through these provisions, the parties agreed that “[t]he prevailing party in any Dispute”-defined broadly as any “dispute, controversy or claim”-that is resolved by . . . a court shall recover his, hers or its actual attorneys fees incurred with regard to such Dispute.” ECF 303-1, ¶¶ 5.6.1, 5.6.5.

         As I discussed in denying Jordan's motion to dismiss these counterclaims, the Distribution and Release Agreements must be read in conjunction to be given full effect. See ECF 265, at 2-3 (noting that “I am persuaded that the documents must be considered together”). A main reason supporting that conclusion was the extensive referencing of each agreement in the other. In the Distribution Agreement, for example, the parties agreed “to execute [a] waiver and release of rights agreement, ” ECF 303-1, Ex. 4, ¶ 7.1, which they did the same day, ECF 303-1, Ex. 5, pmbl. The parties also agreed, in the Distribution Agreement, that they “intend[ed] in this Agreement . . . and the exhibits and schedules attached to each agreement, to set forth the principal arrangements and the monetary and proprietary consideration to be exchanged between them in effectuating the Separation.” ECF 303-1, Ex. 5, pmbl (emphasis mine). The Release Agreement likewise refers to the Distribution Agreement. In its preamble, the Release Agreement details the parties' “desire to enter into, concurrently with this Release Agreement, that Separation and Distribution Agreement.” The parties also “acknowledge[d] and agree[d] that this Release Agreement . . . and the Distribution Agreement”-along with two other agreements not relevant here-“represent the entire agreement between them.” ECF 303-1, Ex. 5, ¶ 6. The referencing of each agreement in the other, together with the Agreements being executed on the same day, led me to conclude that they “form one contract and must be examined as such.” ECF 265, at 2 (citing E.I. du Pont de Nemours & Co. v. Shell Oil Co., 498 A.2d 1108, 1115 (Del. 1985), which holds that “[w]here two agreements are executed on the same day and are [sufficiently coordinated], in essence, they form one contract and must be examined as such”).

         Reading the Agreements together, then, the overall effect of the relevant provisions is twofold. First, the relevant Release Agreement provisions broadly release each party and that party's associates from any claim brought by the other party if the claim is supported by facts or circumstances that “occurred, arose or existed” before the execution date of the Release Agreement. Second, the relevant Distribution Agreement provisions provide that the prevailing party in any dispute concerning the performance of the Release Agreement or the Distribution Agreement shall recover the attorneys' fees it incurred with regard to such claim.

         B. The lawsuits

         After executing the Release Agreement, Jordan filed two federal lawsuits against Mirra and corporations and individuals associated with Mirra. Jordan's filing of these lawsuits forms the basis of Mirra's counterclaims.

         1. Jordan files parallel actions in the Southern District of New York and the District of Delaware. In March 2012, four years after executing the Distribution and Release Agreements, Jordan filed her original Complaint in this Action in the Southern District of New York. Complaint, ECF 1, Jordan v. Mirra, No. 14-1485 (S.D.N.Y. Mar. 9, 2012). In that complaint, Jordan asserted nine causes of action against Mirra, including fraud and fraud in the inducement, breaches of various contracts, breach of fiduciary duty, and an accounting. ECF 1, ¶ 2. Each of Jordan's claims were based on numerous financial transactions in which she and Mirra allegedly jointly engaged during their business partnership.

         When Jordan filed her civil complaint, she also was a defendant in a criminal proceeding before the Supreme Court of the State of New York, County of New York, in which she had been charged with second degree murder for the poisoning of her eight-year old son. Because the civil and criminal proceedings allegedly involved overlapping questions of law and fact, New York County's district attorney sought a stay of the civil proceeding pending resolution of the criminal matter, arguing that a stay was necessary to prevent Jordan from gaining access to evidence through civil discovery to which she would not be entitled in the criminal matter. ECF 23, at 2. The District Court granted the motion to stay the civil action pending the resolution of Jordan's criminal trial. ECF 23. The civil stay remained in place until February 2015, when Jordan was sentenced in her criminal matter. ECF 82.

         While the civil stay was in place, in December 2013, Jordan, Hawk Mountain LLC, and two other individuals filed a RICO action in the District of Delaware. See Complaint and Demand for Jury Trial, ECF 1, The Hawk Mountain LLC, et al. v. RAM Capital Group, LLC, et al., No. 13-2083 (D. Del. Dec. 23, 2013) (“RICO Action”). The operative complaint alleged largely the same facts as the action filed in the Southern District of New York. RICO ECF 47. Jordan and the RICO Plaintiffs alleged that Mirra, his companies, and employees perpetuated a “massive fraud” by establishing “a highly complex network of holding companies, active businesses and real estate holdings and trusts, which were falsely represented to the Plaintiffs as established for the mutual and equal benefit of Jordan and Mirra.” RICO ECF 47, ¶¶ 1, 7. The RICO Plaintiffs further alleged that, through the operation of the fraudulent enterprise, the RICO Defendants were able to cheat Jordan of her share of those assets by inducing her to execute the Separation and Distribution Agreement. See RICO ECF ¶¶ 10-11.

         Eventually, the parties jointly petitioned the district court to transfer this Action from the Southern District of New York to the District of Delaware. ECF 68. The District Court granted that request, and the case was transferred to this District, where the RICO Action was pending. ECF 69.

         2. Mirra seeks to dismiss all claims filed against him. In September 2014, Mirra and the other RICO Defendants moved to dismiss the RICO Complaint. In its memorandum supporting dismissal, the RICO Defendants argued, among other things, that the RICO claims were barred by the statute of limitations and failed to allege the “essential elements” of a civil RICO claim. RICO Action, ECF 64, at 2. Magistrate Judge Sherry R. Fallon recommended dismissing the federal RICO claims on virtually every ground raised by the RICO Defendants. RICO ECF 457. In August 2016, the District Court adopted Judge Fallon's recommendations in full and dismissed the RICO Action in its entirety. RICO ECF 472. A unanimous three-judge panel of the Court of Appeals affirmed the dismissal in May 2017. Hawk Mountain LLC v. RAM Capital Grp. LLC, 689 Fed.Appx. 703 (3d Cir. 2017).[1]

         Parallel to Mirra and the other RICO Defendants securing dismissal of the RICO claims, the parties were engaged in extensive motions practice in this Action. On March 9, 2015, after this Action was transferred to the District of Delaware, Jordan filed an Amended Complaint, which added multiple new causes of action and defendants, including certain Mirra-controlled corporate entities, known as the “RAM Defendants.”[2] ECF 84. A few months later, Mirra and the RAM Defendants moved to dismiss the Amended Complaint on numerous grounds, including that the Release Agreement barred the suit, that the statute of limitations had run, and that the operative complaint contained various pleading deficiencies. ECF 113. After a preliminary recommendation from Magistrate Judge Fallon and a renewed Motion to Dismiss, see ECF 179, Judge Fallon eventually recommended that this Court grant the RAM Defendants' motion with respect to all claims but breach of warranties. ECF 199. Judge Fallon supported that recommendation on several grounds, including that the counts for which she recommended dismissal were barred by the Release Agreement. In particular, Judge Fallon recommended the district court find as a matter of law that the language in Paragraphs 2 and 3 of the Release Agreement “demonstrates the parties' intent to enter into a broad, mutual release of all claims.” ECF 199, at 16. I adopted Judge Fallon's recommendations on November 28, 2017, leaving a single claim by Jordan against Mirra for breach of warranties. ECF 202.

         3. Mirra files his counterclaims and the aftermath. Soon after I adopted Judge Fallon's recommendation to dismiss all claims but one in this Action, in January 2018, Mirra answered Jordan's Second Amended Complaint and, in doing so, asserted two counterclaims. Those counterclaims alleged that Jordan breached the Release Agreement by pursuing the actions in the District of Delaware and the Southern District of New York. ECF 205, ¶¶ 60-71.

         In March 2018, Jordan moved to dismiss Mirra's counterclaims, arguing that a release without a covenant not to sue can only be a defense to a claim, and cannot form the basis of an independent claim for breach of contract; that, in any case, the Release Agreement did not contain a covenant not to sue; that the so-called American Rule proscribed the type of fee shifting for which Mirra was advocating; and that the fees and costs “incurred in ...


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