Azadian Group, LLC v. TenX Group, LLC ( 2019 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
AZADIAN GROUP, LLC, a
Delaware limited liability company,
Plaintiff,
V.
TENX GROUP, LLC, a Delaware C.A. No. N19C-04-235 CLS
limited lability company, JAMES
V. PUNELLI, individually, and
RAYMOND C. JONES,
individually,
Defendants.
Date Submitted: September 24, 2019
Date Decided: November 13, 2019
Upon Plaintiff Azadian Group, LLC’s Motion for Summary Judgment
Granted.
Samuel L. Moultrie, Esquire, Greenberg Traurig, LLP, Wilmington, Delaware,
Attorney for Plaintiff.
Steven T. Margolin, Esquire, Greenberg Traurig, LLP, Wilmington, Delaware,
Attorney for Plaintiff.
Rolando Diaz, Esquire, Dunlap, Bennett & Ludwig, PLLC, Wilmington, Delaware,
Attorney for Defendants.
Tracy L. Pearson, Esquire, Dunlap, Bennett & Ludwig, PLLC, Wilmington,
Delaware, Attorney for Defendants.
SCOTT, J.
On September 20, 2019, Defendant TenX Group, LLC—now known as
Panthera Enterprises, LLC—filed a Suggestion of Bankruptcy with this Court.
Accordingly, the proceedings against Panthera Enterprises, LLC/TenX Group, LLC
have been STAYED.
Before the Court is Plaintiff Azadian Group, LLC’s (“Plaintiff”) Motion for
Summary Judgment. For the following reasons, Plaintiff's motion is GRANTED.
Background
On April 25, 2019, Plaintiff filed this action against Defendants James V.
Punnelli and Raymond C. Jones (“Defendants”), alleging breach of contract. On
December 20, 2018, the parties entered into a Settlement Agreement. Plaintiff
alleges Defendants failed to pay $86,829.00 on or before January 30, 2019, as
required by the Settlement Agreement.
Parties’ Assertions
On July 23, 2019, Plaintiff filed this motion for summary judgment. Plaintiff
argues that summary judgment is proper on all of Defendants’ affirmative defenses
because Defendants contractually waived their right to defend against any action
Plaintiff would file to enforce the Settlement Agreement. Plaintiff points out that
Defendants admitted to breaching the terms of the Settlement Agreement. Plaintiff
argues that summary judgment in its favor is appropriate because the terms of the
Settlement Agreement are unambiguous.
On September 5, 2019, Defendants filed their response. Defendants contend
that Plaintiff relies in error on Great Lakes Chemical Corp. v. Pharmacia Corp. for
the proposition that Defendants waived all defenses. Pharmacia Corp., Defendants
argue, concerned express disclaimers in a purchase agreement that prohibited claims
for fraud. Defendants further argue that Plaintiff waived its right to assert the
waiver-of-defenses clause because Plaintiff served process on Defendants via
Federal Express after Defendants moved to dismiss for insufficient service of
process.’ Finally, Defendants argue that the Settlement Agreement is unenforceable
based on the doctrine of unconscionability.
Plaintiff filed a letter with the Court on September 16, 2019 making additional
arguments in support of its position. Because this Court never gave Plaintiff formal
permission to file a reply brief, the Court has not taken into account the arguments
Plaintiff raised in the letter of September 16.
Standard of Review
Under Superior Court Rule of Civil Procedure 56, summary judgment is
proper when there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law.?, Summary judgment will not be granted if
material facts are in dispute or if “it seems desirable to inquire more thoroughly into
' On November 4, 2019, the Court denied Defendants’ motion to dismiss.
? Super. Ct. Civ. R. 56(c).
the facts to clarify the application of the law to the circumstances.”? This Court
considers all of the facts in a light most favorable to the non-moving party.’
Discussion
A. Defendants’ Breach of the Settlement Agreement
Plaintiff sued Defendants for one count: Breach of Agreement.? Under
Delaware law, the elements of a breach of contract claim are: 1) a contractual
obligation; 2) a breach of that obligation; and 3) resulting damages.® Plaintiff and
Defendants entered into a Settlement Agreement. Pursuant to the terms of this
Settlement Agreement, Defendants were obligated to pay Plaintiff $86,829.00 on or
before January 30, 2019.? Defendants did not make this payment.® Defendants’
failure to pay constitutes a breach of the Settlement Agreement, as expressly laid out
in Paragraph 3(a)(i) of the Agreement.”
Plaintiff suffered damages as a result of Defendants’ breach. The Settlement
Agreement superseded two previous agreements between the parties where Plaintiff
3 Infante v. Horizon Servs., Inc., 2019 WL 3992101, at *1 (Del. Super. Aug. 23,
2019); Triumph Mortg. Corp. v. Glasgow Citgo, Inc., 2018 WL 1935968, at *3
(Del. Super. Apr. 19, 2018).
* Infante, 2019 WL 3992101, at *1; Triumph Mortg. Corp., 2018 WL 1935968, at
*3,
> Compl. 4—5.
6 Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 548 (Del. Super.
2005).
7 Compl. Ex. A, § 2(b).
§ Answer § 15.
° Compl. Ex. A, 4 3(a)(i).
agreed to buy future receivables from Defendants. Plaintiff paid Defendants for
these receivables. Plaintiff did not receive $126,829.00 of these receivables.'? In
order to try to “avoid the expense and inconvenience of legal proceedings,” Plaintiff
and Defendants entered into the Settlement Agreement.'' In this Settlement
Agreement, Defendants agreed to pay Plaintiff $126,829.00 for the receivables that
it never transferred to Plaintiff.'? Plaintiff has been damaged by Defendants breach;
Plaintiff has paid for items which it did not receive from Defendants and has not
been repaid for those items.
There is no genuine dispute of material fact regarding Plaintiff's breach of
contract claim. Defendants admit that they entered into the Settlement Agreement
with Plaintiff and admit that they did not pay $86,829.00 on or before January 30,
2019.3 It is clear from the terms of the Settlement Agreement that Defendants’
failure to make this payment constitutes a breach of the Agreement.
At issue is whether or not Plaintiff is entitled to judgment as a matter of law.
B. — Unconscionability of the Settlement Agreement
A contract is unconscionable when “no man in his senses and not under
delusion would make [it] on the one hand, and no honest or fair man would accept
'0 Compl. Ex. A.
'l Compl. Ex. A.
12 Compl. Ex. A, ¥ 2.
13 Answer 9f 12, 15.
[it], on the other.”'* Unconscionability is an affirmative defense which must be
raised in an answer to a complaint.'> Defendants did not list unconscionability as
one of their affirmative defenses in their Answer. Accordingly, Defendants are
precluded from raising the doctrine of unconscionability now.
C. _—Plaintiff’s Waiver of the Waiver-of-Defenses Clause
Although waiver is an equitable defense, it “has been, for some time, used at
law as a valid defense to contract suits.”!© Waiver is the voluntary and intentional
relinquishment of a known right. The standards for proving waiver are “quite
exacting,” and the facts relied upon to prove waiver must be unequivocal.'’ Three
elements must be satisfied before this Court will conclude a party has waived a
contractual provision: 1) there is a requirement or condition to be waived; 2) the
waiving party knows of the requirement or condition; and 3) the waiving party
intended to waive that requirement or condition.'®
'4 Tylowitzki v. Atl. Richfield Co., 396 A.2d 956, 960 (Del. 1978).
15 Super. Ct. Civ. R. 8(c); Jeffery v. Seven Seventeen Corp., 461 A.2d 1009, 1011
(Del. 1983); BAC Home Loans Servicing v. Brooks, 2012 WL 1405703, at *3 n.10
(Del. Super. Feb. 3, 2012); see Cannelongo v. Fidelity America Small Bus. Inv.
Co., 540 A.2d 435, 440 (Del. 1988) (“The failure to timely assert an affirmative
defense constitutes waiver of the right to do so.”).
'6 USH Ventures v. Global Telesystems Grp., Inc., 796 A.2d 7, 19 (Del. Super.
2000).
17 4eroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 444 (Del.
2005).
18 Te.
In the instant case, there is a requirement or condition to be waived—the
waiver-of-defenses clause—and Plaintiff had knowledge of this requirement or
condition. The waiver-of-defenses clause is found in Paragraph 7 of the Settlement
Agreement. In Paragraph 7, Defendants agreed to “waive any defenses that may be
available to them at law or equity as to any action filed against them by [Plaintiff].”!
Plaintiff and Defendants both signed the Settlement Agreement, which evidences
Plaintiff's knowledge of Paragraph 7. The crux of Defendants’ waiver argument
turns on whether or not Plaintiff intended to waive Paragraph 7.
Defendants contend that Plaintiff waived its right to assert Paragraph 7 when
Plaintiff served Defendants with process via Federal Express after Defendants filed
a motion to dismiss with this Court based on insufficient service of process. In
Paragraph 19 of the Settlement Agreement, both parties agreed to send all process
via Federal Express. Contrary to that provision, Plaintiff originally served
Defendants via certified mail. At its core, Defendants’ argument is that: Plaintiff
waived its right to assert Paragraph 7 because it re-served Defendants with process
instead of relying on Paragraph 7 to dispose of Defendants’ motion to dismiss.
The Court finds that Plaintiff did not intend to waive Paragraph 7. “[A]n
intention to waive must appear clear from the record evidence before summary
'? Compl. Ex. A., § 7.
judgment is granted on this issue.”*° At most, Plaintiffs actions might reasonably
be construed as a waiver of Paragraph 6, where Defendants agreed to “waive any
and all available defenses with regard to service of process.”*! It is not reasonable
to construe Plaintiffs decision to re-serve process on Defendants as a waiver of
Paragraph 7. This Court reads a contract as a whole and gives effect to all provisions
of the contract.”* If the Court reads Paragraph 7 to cover defenses regarding service
of process, then Paragraph 6 would be rendered superfluous. This Court declines to
read Paragraph 7 in such a manner. Plaintiffs act of re-serving process on
Defendants does not manifest an intent to waive the provisions of Paragraph 7.
D. Judgment asa Matter of Law
The Court respects the freedom of contract and will uphold clear and
unambiguous contracts between sophisticated parties.2?> Paragraph 7 prevents
Defendants from raising any defenses to Plaintiffs claim.*4 Thus, Defendants
waived their ability to raise all of the affirmative defenses listed in their Answer.
20 AeroGlobal Capital Mgmt., LLC, 871 A.2d at 445.
21 Compl. Ex. A, J 6.
22 Sonitrol Holding Co. v. Marceau Investissements, 607 A.2d 1177, 1184 (Del.
1992); Troumouhis v. State, 2006 WL 1579776, at *4 (Del. Super. May 31, 2006).
23 NACCO Indus., Inc. v. Applica, Inc., 997 A.2d 1, 35 (Del. Ch. 2009).
4 This Court finds the language used in the waiver-of-defenses clause to be clear
and unambiguous. Accordingly, the Court shall give effect to the clause’s plain-
meaning. Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159-60 (Del. 2010).
8
Defendants may not assert any of their affirmative defenses. Also, Defendants
admitted that they failed to pay $86,829.00 to Plaintiff, as per the terms of the
Settlement Agreement. Therefore, Plaintiff is entitled to judgment as a matter of
law.
Conclusion
For the aforementioned reasons, there are no genuine disputes of material fact
and Plaintiff is entitled to judgment as a matter of law. Accordingly, Plaintiffs
Motion for Summary Judgment is GRANTED.
IT IS SO ORDERED.
Lett
The Honorabk Calvin L. Scott, Jr.