Opinion
C.A. No. 2017-0036-TMR
03-28-2018
In re Morrow Park Holding LLC
ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
WHEREAS, on February 1, 2016, Village Green Residential Properties, LLC ("Village Green Residential"), CCI Historic, Inc. ("CCI Historic"), Village Green Holding LLC ("VG Holding"), VGM Clearing, LLC ("VGM Clearing"), VG ECU Holdings LLC, and Jonathan Holtzman entered into a Redemption Agreement (the "Redemption Agreement");
WHEREAS, on May 27, 2017, CCI Historic, Village Green Residential, and VG ECU Holdings LLC became members of Morrow Park Holding LLC pursuant to a limited liability company agreement (the "LLC Agreement");
WHEREAS, Section 10.10 of the LLC Agreement laid out purchase rights for the apartment project owned and operated by Morrow Park City Apartments LLC;
WHEREAS, Section 10.10(h) of the LLC Agreement requires the execution of a mutual release as a condition precedent of any purchase under Section 10.10;
WHEREAS, on January 17, 2017, Village Green Residential filed a complaint against CCI Historic, Compatriot Capital Inc. ("Compatriot"), VG ECU Holdings, and Morrow Park Holding LLC (the "First Action");
WHEREAS, on April 20, 2017, VG Holding filed the Verified Complaint against Village Green Residential, VGM Clearing, Holtzman, and City Club Apartments, LLC ("City Club") in a separate action (the "Second Action");
WHEREAS, on May 1, 2017, representatives of Compatriot and its affiliated entities testified in the Court of Common Pleas of Allegheny County, Pennsylvania about the release required by Section 10.10(h) of the Redemption Agreement;
WHEREAS, on August 4, 2017, Village Green Residential, VGM Clearing, and Holtzman moved for partial summary judgment related to the interpretation and meaning of Section 10.10(h) of the Redemption Agreement;
WHEREAS, on October 10, 2017, the Court consolidated the First Action and the Second Action;
WHEREAS, on December 13, 2017, the Court heard oral argument on the motion;
NOW, THEREFORE, THE COURT HEREBY FINDS AND ORDERS AS FOLLOWS:
1. The Court has reviewed the parties' briefs, supporting submissions, and the applicable law.
2. The Motion for Partial Summary Judgment is DENIED.
3. Court of Chancery Rule 56(a) allows "[a] party seeking to recover upon a claim, [counterclaim], cross-claim or declaratory judgment may, . . . move with or without supporting affidavits for a summary judgment in the party's favor upon all or any part thereof." There are three pleadings in this case: a complaint filed on January 17, 2017 in the First Action, a complaint filed on April 20, 2017 in the Second Action, and counterclaims and third-party claims filed on April 20, 2017 in the First Action. None of those pleadings request relief from the Court that requires the Court to interpret Section 10.10(h) and determine the scope of the release required therein. The complaint in the Second Action and the counterclaims and third-party claims in the First Action do not mention the release. The complaint in the First Action mentions the release in only three ways. First, the complaint states "as a condition to closing, Plaintiff must provide a full and broad release at closing effective as of the date of closing that waives all rights Plaintiff has in connection with the transaction including his ability to contest the improper actions which Defendants have engaged in." Compl. ¶ 2 (Jan. 17, 2017). Second, the complaint argues Plaintiff will suffer irreparable harm if it "does consummate its purchase at CCI Historic's improper, manipulated price, then pursuant to Section 10.10(h) of the Operating Agreement, it must deliver a release to CCI Historic at closing and will relinquish its claims and ability to challenge CCI Historic's price post-closing and any other improper acts." Id. ¶¶ 15, 70(b). Third and finally, Plaintiff requests, as alternative relief, that the release be held in escrow until the completion of the Griffith appraisal. Id. at 22. These references to the release do not mention any debate or controversy about the release or the scope of the release. There is no claim requesting that the Court interpret the release. Therefore, the Motion is procedurally deficient, and the Motion for Partial Summary Judgment is DENIED.
4. Even if the language in the complaint filed in the First Action is broad enough to constitute a claim under Court of Chancery Rule 56(a), the Court would exercise its discretion and deny the Motion for Partial Summary Judgment. "There is no 'right' to a summary judgment." Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002). Summary judgment is appropriate only where the moving party demonstrates that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Twin Bridges Ltd. P'ship v. Draper, 2007 WL 2744609, at *8 (Sept. 14, 2007) (citing Ct. Ch. R. 56(c)). The Court may, in its discretion, deny summary judgment if it decides, upon examination of the facts presented, that it is desirable to inquire into or develop more thoroughly the facts at trial in order to clarify the law or its application. See, e.g., Alexander Indus., Inc. v. Hill, 211 A.2d 917 (Del. 1965); Ebersole v. Lowengrub, 180 A.2d 467 (Del. 1962); Phillips v. Schifino, 2009 WL 5174328, at *1 (Del. Ch. Dec. 18, 2009). As Chancellor Chandler explained while serving on the Delaware Superior Court:
Before a court can apply the law, it must have an adequate factual basis for doing so. And in some situations a fuller development of the facts may serve to clarify the law or help the Court determine its application to the case . . . . In other words, summary judgment, with ever-lurking issues of fact, is a treacherous shortcut. . . .[S]ound
judicial administration may dictate withholding judgment until the whole factual structure stands upon a solid foundation following a plenary trial where proof can be fully developed, questions answered and issues clearly focused.McCabe v. Wilson, 1986 WL 8008, at *2 (Del. Super. June 26, 1986).
5. The language of the release at issue here is: "[A]ll members, as well as Jonathan Holtzman, individually, shall execute a mutual release in substantially the same form of Section 11.16 of the Redemption Agreement, but effective as of the date of such consummation and appropriately modified to fit the circumstances of such purchase." The parties dispute the meaning and effect of the final phrase, "appropriately modified to fit the circumstances of such purchase." Determining what this language means requires, on its face, that the Court examine and understand the circumstances of the purchase. There has not yet been adequate development in the record to allow the Court to do so at this juncture. This issue may ultimately be decided as a matter of law, but a fuller development of the facts will serve to clarify the law and help the Court determine its application to this case. Accordingly, the Motion for Partial Summary Judgment is DENIED.
/s/ Tamika Montgomery-Reeves
Vice Chancellor
Dated: March 28, 2018