Catawba Associates - Christiana, LLC v. Jayaraman ( 2016 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
CATAWBA ASSOCIATES -
CHRISTIANA LLC,
Plaintiff,
PARTHIBAN JAYARAMAN ,
PRADIP C. SAHA, and PUSAN
)
)
)
§
v. ) C.A. No. N16C-01-250 PRW
)
§
RE NEWARK, LLC, )
)
)
Defendants.
Submitted: August 3, 2016
Decided: August 26, 2016
MEMORANDUM OPINION AND ORDER
Upon Plaintijf Catawba Associates - Christiana LLC ’s,
Motionfor Judgment on the Pleadings,
DENIED.
Somers S. Price, Jr., Esquire, Potter Anderson & Corroon LLP, Attorney for
Plaintiff, Catawba Associates - Christiana LLC.
Gary R. Dodge, Esquire, Curley, Dodge, & Funk LLC, Attorney for Defendants,
Parthiban Jayaraman, Pradip C. Saha, and Pusan RE Newark, LLC.
WALLACE, J.
I. INTRODUCTION
This case arises from an ill-fated real estate negotiation between Plaintiff,
Catawba Associates - Christiana LLC (“Catawba”) and Defendants, Parthiban
Jayaraman and Pradip C. Saha, and Pusan RE Newark, LLC (collectively
“Pusan”), for the sale of property located at 425 Stanton Christiana Road, Newark,
Delaware (the “Property”). As stated in the Agreement of Sale agreed to and
executed between the parties, Catawba was obligated to deliver the Property
“vacant and not subject to any possessory or leasehold rights.”] Catawba placed
$100,000 in escrow, returnable upon completion of that obligation; if Catawba
failed, the funds were payable to Pusan.
On December ll, 2015, when taking possession of the property, Saha
discovered that Catawba had failed to remove items leftover from the Property’s
prior tenant; thus, Pusan alleges that Catawba failed to deliver a “vacant” Property
as agreed. Catawaba objects, arguing that it had no obligation to remove those
items and did successfully deliver the Property “vacant.”
On January 29, 2016, Catawba filed an action for declaratory judgment. It
seeks a declaration that it is entitled to return of the $100,000 escrow funds and an
award of attorney’s fees. Pusan filed a counterclaim seeking the same relief.
Agreement of Sale at ll 5(a), attached as EX. A to Plf.’s Action.
_2_
The Court is now called upon to determine, first, the meaning of the Word
“vacant” as used and understood by the parties in the Agreement of Sale, and,
second, Whether the Property Was in fact delivered “vacant.”
For the reasons set forth below, Catawba’s Motion is DENIED; Pusan’s
counterclaim is likewise DENIED.
II. FACTUAL AND PROCEDURAL BACKGROUND
To realize the Property’s sale, Catawba and Pusan executed three
documents: the Agreement of Sale; the Lease Assignment; and the Lease
Termination Agreement.
A. THE AGREEMENT oF SALE
On May 18, 2015, Catawba, Jayaraman, and Saha executed an Agreement of
Sale Whereby Catawba sold the Property to Jayaraman and Saha for $l .6 million.2
Central to this action is Section 5 of the Agreement of Sale Which concerned
an existing lease for the Property to the then-tenant, Grayling Corporation, Inc.
(“Grayling”).3 Section 5 required Catawba to remove Grayling Within seventy-five
days after closing (the “Tenant Removal Period”).4 Specifically, the clause
required Catawba to “remove [Grayling] pursuant to the Lease, in order to deliver
possession of the Property to [Jayaraman and Saha] vacant and'not subject to any
2 See Plf.’s Action at 11 2; Agreement of Sale at 111 l-2.
3 Grayling operated a Chili’s Grill & Bar Restaurant at the Property.
4 Agreement of Sale at 11 5.
possessory or leasehold rights of [Grayling].”5 Closing on the Property occurred
on October 9, 2015; so, Catavvba Was required to remove Grayling prior to
December 23, 2015.
To ensure Catawba Would fulfill its obligation, Catawba Was required to
deposit $100,000 into an escrow account.6 Once Catavvba certified Grayling’s
successidl removal and that the Property Was vacant, Catawba Was entitled to
receive the money back.7 But if Catawba failed to do so, Jayaraman and Saha
Would receive the escrow funds.8
The Agreement of Sale provided that the Property Was sold “including all
improvements located thereon - ‘Building and Land - AS-IS, WHERE-IS, WITH
ALL FAULTS.”’9 Jayaraman and Saha Were given a 120-day “Due Diligence
Period” to inspect the property. If they Were unsatisfied “for any reason
Whatsoever,” they had the option of terminating the sale and receiving their deposit
5 Id. at 11 5(3).
6 Id.
7 ld. 11 5(3)-(b).
8 Id.
9 ld. 11 6(3).
back.m But they claim that they Were unable to inspect the property because
Grayling continued to operate its restaurant business.ll
Also relevant here is Section 27. That provides for attorney’s fees in the
event that either party seeks to enforce or interpret the rights or obligations
provided under the Agreement of Sale.12 The prevailing party is “entitled to all
reasonable expenses incurred as a result of such action, including but not limited
to, reasonable attorneys’ fees, expert fees, professional fees and related costs and
expenses.”13
B. THE ASSIGNMENT oF THE LEASE
On October 9, 2015, Jayaraman and Saha assigned the Agreement of Sale to
Pusan.14 The same day, Catawba assigned its lease With Grayling to Pusan.l5 The
Assignment of Lease required that Pusan indemnify Catawba for all liens,
demands, and causes of action under the lease.16 Additionally, Section 8 stated that
10 Id.
ll Defs.’ Mem. in Resp. to Plf.’s Action (“Def.’s Resp.”) 5 (“Grayling Was actively
operating a restaurant prior to that date, and any attempt to investigate the structure of the
Property Would have required Grayling to cease its operations and remove its equipment from
against the wall - an unreasonable proposition.”).
12 Agreement of Sale at 1 27.
‘3 ld.
14 See Assignment of Agreement of Sale, attached as EX. B to Plf.’s Action.
15 See Assignment of Lease, attached as Ex. C to Plf.’s Action.
'6 ld. atiis.
Catawba “shall not be responsible to [Grayling] under the Lease for the discharge
and performance of any and all duties and obligations to be performed and/or
discharged by the Landlord” and that Pusan “assumed and agrees to perform all of
the terms Warranties, covenants, and conditions of the Leases on the part of the
Landlord . . .”17
C. THE LEASE TERMINATION AGREEMENT
On October l4, 2015, Pusan entered into a Lease Termination Agreement
With Grayling and Catawba Whereby Grayling Was required to vacate the Property
by December l3, 2015. The lease Would then terminate.18
Section b(2) of the Lease Termination Agreement provided that after the
termination date the parties Would have no further rights under the lease, stating:
. . . the parties hereto mutually release and fully discharge each
other from all claims . . . or liabilities of any kind and nature . . . based
on . . . the negotiation, execution, performance, termination, and/or
release of the Lease, both as to all matters and things now known or
unknown, and also to all matters and things Which may have been
- 19
discovered.
17 ld.amis.
18 See Lease Termination Agreement 11 l (“Effective on the earlier to occur of the date that
Tenant vacates the Property in accordance With the terms of the Lease or sixty (60) days after the
date of this Agreement . . . , the Lease and all respective rights . . . are hereby mutually
terminated . . .”), attached as Ex. D to Plf.’s Action.
‘° 1d.112.
Section (b)(3) provided that:
[The Lease Termination Agreement] would supersede all other
written or oral agreements between the parties relating to the Lease
and shall extinguish any rights, liabilities or obligations which under
the Terms of the Lease or by law survive the termination of the
Lease.20
D. ALLEGED BREACH OF AGREEMENT
Grayling ceased operations of its restaurant business on December 6, 2015.21
On December ll, 2015, Saha performed a walk-through of the Property with a
Grayling representative Saha found a significant amount of Grayling’s property
(primarily leftover kitchen and restaurant equipment) within the Property as well as
a “signiflcant mold problem.”22
On December 15, 2015, Catawba sent written notice to the escrow agent that
the Property was vacant and that Grayling was no longer a tenant. Catawba
demanded return of the escrowed $100,000.
Pusan objected to the release of the escrow funds the next day, citing the
remaining Grayling property and an alleged mold problem.23 Through counsel,
Pusan requested fourteen items be removed from the Property, including: a walk-in
20 Id. 11 3.
21 Plf.’s Mot. for J. on the Pleadings 5.
22 Defs.’ Ans. and Counter-Claim ar W 26, 29.
23 Ia'. 1 29; Email from Gary R. Dodge, Defendants’ counsel, to Stacy Stine, Catawaba’s
representative (December l6, 2015), attached as Ex. A to Defs.’ Counter-Claim.
_7_
freezer/cooler; outside shed; ice-cuber; two kitchen hoods; steel tables; dish
Washing tables; bar cabinets; bar sinks; bar and kitchen coolers; office furniture;
beer tower/lines; beverage prep tables; beverage racks/lines; and the building’s
awning.24 Pusan claimed that possession Was not tendered as directed under the
Agreement of Sale’s terms, specifically Section 5’s requirement that the Property
be delivered “vacant and not subject to any possessory interest or leasehold rights”
by Grayling.25 Absent the items’ removal, Pusan refused to accept.
Catawba refused to remove either the leftover items or mold, arguing that it
had satisfied all of`` its contractual obligations
On January 29, 2016, Catawba filed its action for declaratory judgment in
this Court against Pusan, seeking the $100,000 in escrow funds and attorney’s f``ees.
Pusan’s Answer Was filed on March 9, 2016; it asserts a counterclaim for the same
relief.
E. JUSTICE oF THE PEACE ACTIoN
Nearly parallel to this action, Pusan filed an action for summary possession
in the Justice of the Peace Court (“JP Court”) against Grayling. Pusan sought full
possession of the Property and prorated rent. lt argued that because Grayling had
left items behind, Grayling had failed to surrender the property in accordance With
24 Id.
25 Def``s.’ Resp. 6; Counter-Claim 1111 31-32.
_8_
the lease’s provision that “upon termination of the lease term, the tenant shall quit
and surrender the demised premises and all buildings and improvements thereon,
in good condition and repair, except for reasonable wear and tear.”26
On l\/Iay 23, 2016, a trial was held on Pusan’s claim. After Grayling moved
for directed verdict, the JP Court held that the Property had been surrendered and
that Pusan received legal possession as of December ll, 2015.27 Pusan was able to
take possession of the Property, remove the offending leftover items, and make
significant renovations to the property.28 Grayling’s items, the JP Court said, were
unwanted “trash” and not a reflection of its failure to surrender the Property.29
Pusan appealed. Grayling filed a motion to dismiss, asserting that
Section (b)(2) of the Termination Agreement extinguished all legal remedies
between the parties. The Court agreed and granted Grayling’s motion to dismiss,
holding that the Agreement clearly precluded “either party from bringing legal
26 order, Pusan RE Newark, LLC v. Grayling Corp., No. JP13-16-004033, 1-2 (Del. J.P.
May 25, 2015).
27 Id.
28 ld.
29 Id.
actions or claims for any reason Whatsoever associated With the termination of the
0
lease.”3
The parties agree that this Court may take judicial notice of both JP Court
decisions.31
III. PARTIES’ CONTENTIONS
Both Catawba and Pusan seem to agree that the question before the Court
now is Whether the Property Was delivered “vacant” in accordance With Section 5’s
requirement that the Property be delivered “vacant and not subject to any
possessory interest or leasehold rights” of Grayling. The JP Court has resolved
Whether the Property Was subject to a possessory interest, finding that the Property
was delivered to Pusan on December ll, 2015 free of any possessory or leasehold
rights. Yet the parties contest Whether the Property Was “vacant” When delivered.
“Vacant” is not defined in the Agreement of Sale.
Pusan argues that Where a contract term is not defined, a Delaware court
should adopt the plain dictionary meaning.32 Citing Black’s Law Dictionary and
30 Order on Trial De Novo, Pusan RE Newark, LLC v. Grayling Corp., No. JPl3-l6-
004033, 1-2 (Del. J.P. July 18, 2016).
3 ' Letter from Pusan to the Court (July 12, 2016) (“The Defendant concedes that the Court
is entitled to take judicial notice of that disposition, and, furthermore, that the decision is binding
upon the Defendant as to the issue of Whether it Was in legal possession of the subject property
on or around December ll, 2015.”).
32 Id. (ciring Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 738 (Del. 2006)).
_10_
Merriam Webster, Pusan Would define “vacant” as “a state of being empty and
devoid of contents.”33
lt also suggests a number of cases that define “vacant” as lacking items of
substantial value.34 Pusan asserts that the leftover items Were functional and had
substantial value - but it does nothing quantify that amount or value. Instead, it
implies that value is inferred because Grayling attempted to sell to Pusan those
remaining items. So, says Pusan, because the Property contained Grayling’s
leftover valuable items, it Was not empty, and thus Was not vacant.35
In response, Catawba argues that even under Pusan’s definition - Which
Catawba argues is inapplicable ~ the Property Was clearly vacant. The leftover
items had little to no value; in the Words of the JP Court, they Were “trash.”36
Catawba maintains that the meaning of “vacant” must be construed in the
context of all the parties’ documents Under the parties’ agreements, neither
Catawba nor Grayling had an obligation to remove Grayling’s items from the
Property.
33
Id.34 Id. (citing, e.g., Bishop’s Comer Associates Ltd. P’shz``p v. Serv. Merch. Co., 720 A.Zd
531 (Conn. Super. Ct. 1997), ajj”d, 718 A.Zd 966 (Conn. 1998); Liqui-Box Corp. v. Estate of
Elkman, 570 A.Zd 472 (N.J. Super. Ct. App. Div. 1990); Foureal Co. v. Nat’l Molding Corp.,
344 N.Y.S.Zd 598 (N.Y. Dist. Ct. 1973)).
35 Id.36 Letter from Catawba to the Court (July 15, 2016) (distinguishing cases cited by Pusan).
_11_
First, Grayling had no obligation to remove items from the Property under
its lease’s terms. Grayling was only required to “quit and surrender the Demised
Premises and all buildings and improvements thereon, in good condition and
repair, except for reasonable Wear and tear.”37 Catawba argues that this provision
did not require Grayling to remove leftover items outside its general obligation to
leave the property in “good condition.”
Second, Section 2 of the Lease Termination Agreement released Catawba
and Grayling from all claims related to the tenancy. The section effectively
severed Catawba’s legal right to force Grayling to remove its items. Because
Catawba could not remove the leftover items or force Grayling to do so, Catawba
cannot be liable for them. Moreover, Section 3 of the Lease Termination
Agreement extinguished all rights or liabilities between the parties relating to the
Lease.
IV. STANDARD OF REVIEW
Similar to a motion to dismiss, a party is entitled to judgment on the
pleadings When there is no material fact in dispute and the moving party is entitled
to judgment under the laW.38 “A court should not grant such a motion unless it
37 Id. at 2-3; Grayling Ground Lease at 11 30, attached as EX. l to Plf.’s Action.
38 Silver Lake Ojj€ce Plaza, LLC v. Lanard & Axilbund, lnc., 2014 WL 595378, at *6 (Del.
Super. Ct. Jan. 17, 2014); City of Harrington v. Delaware State Fair, Inc., 2015 WL 4464899, at
*2 (Del. Super. Ct. June 22, 2015) (“The procedural standard of review for a motion for
judgment on the pleadings under Rule 12(0) is similar to that for a motion to dismiss under rule
_12_
appears to a reasonable certainty that the non-movant would not be entitled to
relief for its claims under any set of facts that could be proven in support of its
allegations.”39
ln reviewing the motion, the Court must accept all the “complaint’s well-
pled facts as true and construe all reasonable inferences in favor of the non-moving
party.”40 The Court may consider exhibits and documents incorporated by
reference into the complaint.41 Here the Court will consider: the Agreement of
Sale; the Assignment of the Agreement of Sale; the Lease Assignment; and the
Lease Termination Agreement.
V. DISCUSSION
The Court is called upon to interpret the term “vacant” as used in the
Agreement of Sale and determine whether the Property was in fact “vacant” before
expiration of the Tenant Removal Period (December 23, 2015). The interpretation
12(b)(6).”); Velocily Exp., Inc. v. Oj]ice Depot, Inc., 2009 WL 406807, at *3 (Del. Super. Ct.
Feb. 4, 2009); Potomac Ins. Co. of Illinois v. Corp. Interiors of Delaware, Inc., 2001 WL
1474813, at *2 (Del. Super. Ct. Nov. l, 2001), a]j”’d, 808 A.2d 1204 (Del. 2002). See also Del.
Super. Ct. Civ. R. 12 (“After the pleadings are closed but within such time as not to delay the
trial, any party may move for judgment on the pleadings.”).
39 Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199,
1205 n. 7 (Del. 1993) (quoting lower court’s decision); Wamer Commc’ns Inc. v. Chris-Crc_zft
Ina'us., Inc., 583 A.2d 962, 965 (Del. Ch.), qu”’a', 567 A.2d 419 (Del. 1989).
40 Silver Lake, 2014 wL 595378, at *6.
41 Schwan’S Home Serv., Inc. v. Microwave Scl'., JV, LLC, 2013 WL 3350881, at *4 (Del.
Super. Ct. June 24, 2013).
_13_
of “vacant” is a question of lavv, but the application of that term to the Property is a
question of fact.42
For the reasons discussed below, the Court finds that “vacant” as used in the
Agreement of Sale is unambiguous, but that a question of fact remains as to
Whether the Property Was in fact rendered vacant.
A. INTERPRETATION oF “VACANT”
The Court’s first task is to determine Whether “vacant” as used in the
Agreement of Sale is ambiguous43
“In deciding a contract interpretation dispute, the court Will flrst ‘examine
the entire agreement to determine Whether the parties’ intent can be discerned from
the express Words used or, altematively, Whether its terms are ambiguous.”’44 “If
the relevant contract language is clear and unambiguous, courts must give the
42 Pellaton v. Bank of New York, 592 A.2d 473, 478 (Del. 1991) (“The proper interpretation
of language in a contract, While analytically a question of fact, is treated as a question of law.”)
(quotation omitted); Wesfwood Dev. Partners, LLC v. Draper, 2012 WL 1415456, at *3 (Del.
Super. Ct. Mar. 29, 2012) (contract presented question of law as to its interpretation and question
of fact as to application of that interpretation).
43 Lillis v. AT & T Corp., 904 A.2d 325, 330 (Del. ch. 2006) (“Whar the court must do to
resolve this case, therefore, is to decide Whether the contract at issue is in any Way ambiguous. . .
If the contract’s meaning is unambiguous, the court must grant judgment on the pleadings in
favor of the moving party.”).
44 lmemcn've C@rp. v. Vivendi Universaz, S.A., 2004 WL 1572932, at*9(De1. Ch. June 30,
2004) (quoting Comrie v. Enterasys Nerworks, Inc., 837 A.Zd 1, 13 (Del. Ch. 2003)). See also
Lillz's, 904 A.2d at 330 (“What the court must do to resolve this case, therefore, is to decide
Whether the contract at issue is in any Way ambiguous . . . If the contract’s meaning is
unambiguous, the court must grant judgment on the pleadings in favor of the moving party.”).
_14_
language its plain meaning.”45 To determine Whether the contract is unambiguous,
Delaware “adheres to the objective theory of contracts.”46 That requires a court to
interpret a particular contractual term to mean “What a reasonable person in the
position of the parties Would have thought it meant.”47 The parties’ disagreement
as to the meaning of the contract does not render it unambiguous48 “Rather,
contracts are ambiguous When the provisions in controversy are reasonably or
fairly susceptible of different interpretations or may have two or more different
. 4
meanings.” 9
The parties don’t seem to disagree much on the definition of “vacant;” they
do disagree as to the extent of the Property’s emptiness before it can be deemed
“vacant.” Pusan Would have “vacant” mean perfectly or completely empty;
Catawba Would have it mean substantially or mostly empty.
45 Weszfzeld lns. Grp. v. JP. 'S Wharf L¢d., 859 A.2d 74, 76 (Del. 2004); lmemc¢ive Corp.,
2004 WL 1572932, at *9 (“If the contract is clear on its face, the court Will rely solely on the
clear, literal meaning of those words.”).
46 osborn ex rel. Osbom v. Kemp, 991 A.2d 1153, 1159 (Del. 2010).
47 Lorillard Tobacco C0. v. Am. Legacy Found., 903 A.Zd 728, 740 (Del. 2006).
48 wired Remals, lnc. v. RAM Holdmgs, lnc., 937 A.2d 810, 830 (Del. Ch. 2007) (intemal
citations omitted). See also Nw. Nat. Ins. C0. v. Esmark, Inc., 672 A.2d 41, 43 (Del. 1996);
Rhone-Poulenc Basz``c Chemicals C0. v. Am. Motorists lns. Co., 616 A.2d 1192, 1196 (Del.
1992)
49 Unired Remals, 937 A.2d at 830.
_15_
The Agreement of Sale does not define “vacant.” And a search of Delaware
law does not unearth a satisfactorily cogent definition But “[a] term is not
ambiguous simply because it is not def``lned.”50
Pusan cites a few foreign cases that have interpreted “vacant” to mean
“deprived of contents of ‘substantial’ value” and Would seemingly have the Court
adopt that defmition.$' In those cases, the issue centered on the interpretation of
“vacate” as used in a tenancy lease’s “vacate or abandon” clause. Such clauses
give the landlord the right to terminate a lease Where the tenant had vacated or
abandoned the premises after a specified time.52
For example, in Liqui-Box Corporation v. Estate of Elkman, a tenant’s
commercial lease stated that if the tenant “vacated or abandoned” the building for
at least thirty days, he Would be in default of the lease and the landlord could
3
reenter and repossess the building.5 The tenant closed his business and entered
into negotiations With the landlord to terminate the lease.54 The tenant sought
50 Sassano v. CIBC World Mkts. Corp., 948 A.2d 453, 468 n. 86 (Del. Ch. 2008) (citations
omitted); ClubCorp, lnc. v. Pinehurst, LLC, 2011 WL 5554944, at *13 (Del. Ch. Nov. 15, 2011).
51 See, e.g., Bishop’s Corner Associates Ltd. P’ship v. Serv. Merch. Co., 720 A.2d 531(Conn. Super. Ct. 1997), ajj"d, 718 A.2d 966 (Conn. 1998); Liqui-Box Corp. v. Estate of Elkman,
570 A.2d 472 (N.J. Super. Ct. App. Div. 1990).
52 see, e.g., Bishop ’s Comer, 720 A.2d 531, 533.
55 see Liqui-Box Corp. v. Esmze ofElkman, 570 A.zd 472, 474 (N.J. App. Div. 1990).
54 Id._16_
compensation for ending the lease early or in the alternative to sublet the
premises55 Upon learning that the property had become vacant, the landlord
immediately sought possession of the property due to the tenant’s alleged lease
violation.56
The tenant had left behind equipment With an estimated Worth of
approximately 5517,000.57 Prior to the business’s closure, the equipment had been
Worth approximately $1,000,000, but it had been stripped down and become
rusted, and Was thus practically unusable.58
The New Jersey court there reasoned that “vacate” in this particular context
meant “deprived of contents of ‘substantial’ value.”59 Evidence submitted at trial
demonstrated that the tenant “completely moved out and left behind only that
3)60
equipment Which it had no intention of using or Which Was not usable.
l\/loreover, the “employees Were all laid off, operations Were shut down, utilities
55 Id.55 1a at 475.
57 Ia'. (leftover items included two Water towers, two air handlers, an air curtain, five
chillers, a pit pump, and some piping and duct Work).
55 1a
59 Id. at 477.
50 Id.
_17_
were no longer needed and the building was left unsecured.ӎl Based on these
facts, the court found that the tenant had vacated the building.
A Connecticut court in Bishop ’s Corner applied the same “substantial value”
test, but came to a different result.62 A commercial landlord sought declaratory
judgment that the lessee violated a similar “vacate or abandon” lease provision.63
The lessee discontinued its business on the premises, but allowed its sublessor to
continue operating as a retail store.64 The lessee had left a number of items
behind.66
The Bishop’s Corner court refused to find that the lessee had “vacated” the
building in a sufficient manner to allow the landlord to effectively terminate the
lease.66 Although finding the question “exceedingly close,” the court found that
because the value of the remaining equipment amounted to nearly half the value
6‘ Id.
62 Bishop’s Comer Associazes de. P’ship v. Serv. Merch. Co., 720 A.2d 531, 533 (Conn.
super. Ct. 1997), q;jf’d, 718 A.2d 966 (conn. 1998).
63 Id. at 533.
66 1d.at534.
65 Id. (items included: on the first floor: a jewelry display, some shelving, some of which
was disassembled, and other miscellaneous items; in the basement: metal shelving on which
inventory had been placed, two conveyor belts designed to move merchandise between floors;
and some desks and chairs).
66 ld. at 537-38.
_18_
before the lessee left the building, the building Was not vacant.67 The court also
found it telling that the building Was still operated by a sublessor retail business.68
The Court is not persuaded that these interpretations of “vacant” are as
helpful as Pusan Would like. The effect of a “vacate or abandon clause” is
substantially different from that of the provision at play here. In Liqui-Box and
Bi``shop ’s Corner, the courts Were called upon to interpret Whether the tenants had
vacated the property in order to determine Whether they Were in default of their
lease - i.e. to determine Whether the landlord could possess the property.
Possession Was the end goal for all parties and vacancy Was solely relevant to
determine Who maintained possession. In crafting their definitions of “vacant” the
Liqui-Box and Bishop ’s Corner courts Were far more concerned about the potential
loss of property rights. But that higher test created Would not be appropriate for
the purpose here.
So the Court finds the definition and analysis provided by Liqui-Box and
Bishop’s Corner informative, but not dispositive. The cases are not sufficiently
analogous. Here, possession is not the goal. If vacancy Was only relevant to
determine possession, then the JP Court’s decision Would have already resolved
that issue and the Court Would inquire no further. But not so here. The Court
67 Id.
68 Id.
_19_
declines to read such a specific definition of “vacant” into the parties’ Agreement,
especially given the limited application of`` that definition across jurisdictions
Most importantly, the parties themselves did not include this “limited” definition.69
Besides, the Court finds that “vacant” can be understood as it is plainly and
ordinarily used. Where a contract’s term is not defined, DelaWare courts routinely
. . . . . . . . . 70
“look to dictlonaries f``or asslstance m determlnlng the plain meanlng of terms.”
Black’s Law Dictionary defines “vacant” as generally meaning “empty;
unoccupied; [d]eprived of contents . . . lt implies abandonment, nonoccupancy for
any purpose.”71 Webster’S Encyclopedic Unabridged Dictionary defines “vacant”
as “having no contents; empty” and, With regard to law specifically, as “having no
9972
tenant and devoid of furniture, fixtures, etc. Similarly, Roget’s Thesaurus
69 Lorillard Tobacco Co. v. Am. Legacy Founa'ation, 903 A.Zd 728, 739 (Del. 2006)
(“When the language of a . . . contract is clear and unequivocal, a party Will be bound by its plain
meaning because creating an ambiguity Where none exists could, in effect, create a new contract
with rights, liabilities and duties to Which the parties had not assented . . .”).
70 Id. at 738 (Del. 2006) (using dictionary definitions to determine meaning of “personal
attack” and “vilification” in parties’ agreement); Evraz Claymont Steel, Inc. v. Harleysville Mut.
Ins. Co., 2011 WL 6000780, at *4 n. 31 (Del. Super. Ct. Nov. 30, 2011) (defining “liability” as
used in an insurance policy in line With its dictionary definition); McGinnis Commercial Real
Estate Co. v. Jankes, 2016 WL 1221427, at *2 (Del. Com. Pl. Mar. 29, 2016) (using dictionary to
define “maintenance” as used in lease).
7' BLACK’S LAW DICTIONARY 1388 (9th Ed. 2009). As used in fire insurance policies,
Black’s distinguishes “vacant” - meaning empty - from “unoccupied” - meaning lack of
habitual presence of human beings. Ia'.
72 WEBsTER’s ENCYCLoPEDlC UNABRIDGED DlCTIoNARY 2100 (1996).
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provides synonyms of “containing nothing,” “not occupied or put to use,” “lacking
73
value, use, or substance.”
The Court need not find that the property Was completely empty. A number
of courts - albeit in different contexts not including sale agreements - have held
that a property may still be considered vacant if some items are left behind.74 In
short, a property may be found vacant, despite the presence of some items, as long
as the property is reasonably empty. And here the Court notes that the Agreement
of Sale stated that the Property Was to be delivered “as-is,” including all
improvements and all faults. Hence, the parties here must have considered that at
least some items could be left behind and Within the Property.75
73 RoGET’s II: THE NEW THESAURUS 1084 (1988).
74 See, e.g., Liqui-Box Corp. v. Estate of Elkman, 570 A.Zd 472, 477 (N.J. App. Div. 1990)
(“the use of a building, formerly used for other purposes, to store a few articles cannot defeat a
claim of vacancy . . . nor can the mere presence of several minimal items left behind”); Myers v.
Merrimack Mut. Fire Ins. Co., 788 F.2d 468, 472 (7th Cir. 1986) (noting that the presence of
minimal items did not prevent the court from concluding that the building Was vacant); Dunton v.
Connecticut Fire Ins. Co., 371 F.2d 329, 330 (7th Cir. 1967) (explaining that “[i]t is Well settled
that the use of a building to store a few articles” did not refute vacancy); Drulmcm Really C0.
P'ship v. Jina'o Corp., 865 F. Supp. 1093, 1103 (S.D.N.Y. 1994) (“The mere presence of several
minimal items left behind is insufficient to avoid a finding that the premises are vacated.”) (inner
quotations omitted); 6A COUCH ON INS. (3d ed. 2016) § 94:132 (“For property to be considered
vacant, it need not be totally free of any fixtures and fumishings; it is enough if the state of the
structure’s interior, combined With surrounding circumstances, indicate that the premises are not
being used in any regular manner.”).
75 Agreement of Sale at 11 6(a) (specifically disclaiming any representations concerning
improvements on the Property).
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The Court finds that the term “vacant” as used in Section 5 of the Agreement
of Sale is clear and unambiguous and will be used in accordance with its ordinary
meaning.
B. APPLICATIoN oF “VACANT” To THE PRoPERTY
ln applying the plain meaning of “vacant,” the Court finds that, although this
is an extremely close case, a question of fact remains as to whether the Property
was indeed vacant.
Pusan identified fourteen items it wanted removed from the Property: a
walk-in freezer/cooler; outside shed; ice-cuber; two kitchen hoods; steel tables;
dish washing tables; bar cabinets; bar sinks; bar and kitchen coolers; office
fumiture; beer tower/lines; beverage prep tables; beverage racks/lines; and the
building’s awning.76
Even engaging Liqui-Box’s and Bishop’s Corner’s “substantial value” test,
the Court is highly doubtful that the leftover items’ value would come anywhere
close to “substantial” given the parties’ ease with abandoning them. The JP Court
determined that these items constituted “trash.” Pusan conceded at oral argument
that it was able to simply remove them from the Property. And, as also admitted at
oral argument, Pusan does not know where these items are now located. This leads
76 Email from Gary R. Dodge, Defendants’ counsel, to Stacy Stine, Catawaba’s
representative (December l6, 2015), attached as Ex. A to Defs.’ Counter-Claim.
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the Court to conclude that the items Were not valuable enough to secure and Were
easy enough to lose.
But the pleadings lack any specificity as to the extent, size, condition,
location, or value of any of the leftover items. The Court cannot determine, for
example, Whether the leftover “oftice furniture” Was one beat-up chair or twenty
almost-new ones. The Pleadings lack any documentary evidence, such as
photographs, detailing What condition the Property Was left. Without more
specifics, the Court cannot yet determine factually Whether the Property Was
vacant despite the presence of a few items; or Was, in fact, not vacant because of
the presence of numerous and/or large pieces of equipment This absence of
evidence creates a question of material fact as to Whether the Property Was vacant
When possession Was delivered to Pusan on December ll, 2015.
VI. CONCLUSION
Accordingly, for the reasons stated above, both Catawba’s Motion for
Judgment on the Pleadings and Pusan’s indistinguishable counterclaim are
DENIED.
IT IS SO ORDERED. § _
_¢»¢..¢_»2-\)
Paul R. Wallace, Judge
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