Murphy Marine Services of Delaware, Inc. v. GT USA, L.L.C.

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: May 28, 2019
Date Decided: August 8, 2019
Geoffrey G. Grivner, Esquire David A. Dorey, Esquire
Buchanan Ingersoll & Rooney PC Adam V. Orlacchio, Esquire
919 North Market Street, Suite 1500 Blank Rome LLP
Wilmington, DE 19801 1201 N. Market Street, Suite 800
Wilmington, DE 19801
Michael P. Kelly, Esquire
Daniel M. Silver, Esquire
Alexandra M. Joyce, Esquire
McCarter & English, LLP
Renaissance Centre
405 North King Street, 8th Floor
Wilmington, DE 19801
Re: Murphy Marine Services of Delaware, Inc. et al. v. GT USA
Wilmington, LLC and GT USA, L.L.C.,
C.A. No. 2018-0664-SG
Dear Counsel:
This state has but one general commercial port, the Port of Wilmington, which
is located on the Christina River where it enters the Delaware River, just below the
City of Wilmington. The Port has deep-water access to the Atlantic Ocean, and
caters to oceangoing commercial vessels. It is owned by the State of Delaware. This
matter involves the State’s recent privatization of management of the Port of
Wilmington. The entity that Delaware has chosen to provide that management,
Defendant GT USA, LLC (“GT USA”) has created a subsidiary, GT USA
Wilmington, LLC (“GT Wilmington”), to conduct operations at the Port. GT
Wilmington entered a contract with Murphy Marine Services of Delaware, Inc.
(“Murphy Marine”), a Delaware corporation that has provided stevedoring service
at the Port for many years. Under the contract between GT Wilmington and Murphy
Marine, the former would purchase the latter, at a price to be set by a third party.
The contract has not been consummated, and Murphy Marine has sued GT
Wilmington, alleging breach. That cause of action has withstood a Motion to
Dismiss, and is proceeding toward trial.
In the same suit, Murphy Marine sued GT Wilmington’s parent company, GT
USA. That entity also moved to dismiss. In its Amended Complaint, I note, Murphy
Marine pleads causes of action arising only from breach of the contract with GT
Wilmington. It seeks declaratory and equitable relief for that breach. It does not,
however, plead a cause of action under which GT USA, which is not a party to the
contract, can be liable for any breach by GT Wilmington. Therefore, GT USA must
be dismissed from this matter. My reasoning is below.
2
I. BACKGROUND
For purposes of this Letter Opinion, I summarize only the facts pled that are
relevant to my decision.1 The State of Delaware entered into an agreement with
Defendant GT USA to partially privatize management of the Port of Wilmington;
for that purpose, GT USA formed GT Wilmington.2 Murphy Marine provides
stevedore services at the Port of Wilmington.3 GT Wilmington offered to purchase
Murphy Marine “so that the Port could continue to provide critical stevedoring
services without interruption after the change in control” at the Port.4 Because the
parties were unable to agree on a value for Murphy Marine, they decided to engage
an accounting firm to determine Murphy Marine’s fair market price.5 Accordingly,
on July 3, 2018, GT Wilmington and Murphy Marine engaged KPMG LLP
(“KPMG”) to conduct a pricing analysis.6 Shortly thereafter, on July 6, 2018, GT
Wilmington and Murphy Marine memorialized their agreement in a Binding Letter
Agreement (“BLA”).7
1
At this Motion to Dismiss stage, I accept all well-pled facts in the Amended Complaint as true.
See Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011).
2
Am. Compl. ¶¶ 24–25.
3
Id. ¶ 23.
4
Id. ¶ 24.
5
Id. ¶¶ 27–29.
6
Id. at Ex. B.
7
Id. at Ex. A.
3
Murphy Marine alleges that after KPMG issued its initial pricing analysis, the
Defendants became angry and criticized KPMG’s methodologies.8 GT Wilmington
did not accept the pricing as final and binding. Rather than finalizing its pricing
analysis, KPMG withdrew from the engagement.9
On September 7, 2018, Murphy Marine and its shareholders brought this
action for specific performance and declaratory judgment. Murphy Marine asserted
that by failing to honor the valuation in KPMG’s initial pricing analysis, GT USA
and GT Wilmington breached the BLA and the covenant of good faith and fair
dealing.10 It sought a declaratory judgment that the Defendants are bound by
KPMG’s pricing analysis, as well as specific performance to enforce the BLA
(including KPMG’s pricing analysis).11 After various motion practice, Murphy
Marine amended its complaint on January 8, 2019. The Amended Complaint pleads
the same three counts: breach of the BLA, breach of the implied covenant of good
faith and fair dealing, and declaratory judgment.12
The Defendants moved to dismiss the Amended Complaint on January 23,
2019. I held oral argument on the Motion on May 28, 2019. In a bench decision, I
denied the Motion to Dismiss as to Defendant GT Wilmington because at this stage,
8
Id. ¶¶ 39–52.
9
Id. ¶ 52.
10
Compl. ¶¶ 57–72.
11
Id. ¶¶ 57–75.
12
See Am. Compl. ¶¶ 58–76.
4
there are issues of fact that must be developed.13 This Letter Opinion addresses only
whether the Motion to Dismiss must be granted as to Defendant GT USA.
II. ANALYSIS
On a motion to dismiss, this Court assumes the truth of the facts asserted in
the complaint and draws all inferences in the plaintiff’s favor.14 Nevertheless, a
motion to dismiss will be granted “if a complaint does not allege sufficient facts that,
if proven, would entitle the plaintiff to relief.”15
Here, the three counts Murphy Marine pleads in its Amended Complaint all
relate to the BLA: breach of the BLA, breach of the duty of good faith and fair
dealing inherent in the BLA, and declaratory judgment that the Defendants are
bound by KPMG’s pricing analysis, in accordance with the BLA. The BLA,
however, is between only two parties: Murphy Marine and GT Wilmington.16
Although GT USA is named as a defendant in this action, it was not a signatory to
the BLA. The KPMG engagement letter, also, was between KPMG, Murphy
Marine, and GT Wilmington—not GT USA.17
13
See May 28, 2019 Oral Argument Tr., at 55:12–57:18.
14
See Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 536 (Del.
2011).
15
Kilcullen v. Spectro Scientific, Inc., 2019 WL 3074569, at *3 (Del. Ch. July 15, 2019).
16
Am. Compl., at Ex. A.
17
Id. at Ex. B.
5
Under basic contract law, a party cannot be held to a contract without its
assent. “A nonparty ordinarily has no rights under [a] contract”;18 correspondingly,
it also has no obligations. Murphy Marine has pled no facts, and articulated no
theory, under which GT USA can be held liable for breach of the BLA, to which it
is a stranger. Because all of Murphy Marine’s claims in this matter relate to the
BLA, and because GT USA was not a party to the BLA, GT USA must be dismissed
as a defendant.
GT USA and GT Wilmington are separate entities, each able to bind itself to
contractual duties. Murphy Marine chose to contract with GT Wilmington and not
GT USA; likewise, GT USA chose not to contract with Murphy Marine. Our law of
contracts recognizes the separate nature of entities and the choice of the contracting
parties. Nonetheless, at oral argument, counsel for Murphy Marine advanced two
theories under which it argues GT USA can be liable here. First, Murphy Marine
alleges that GT Wilmington was acting as a mere agent of GT USA (or the reverse;
I confess that I do not clearly understand this argument).19 In the alternative, Murphy
Marine submits that employees of GT USA interfered with the contractually-bound
parties’ abilities to execute the BLA.20
18
Kronenberg v. Katz, 872 A.2d 568, 605 n.74 (Del. Ch. 2004).
19
May 28, 2019 Oral Argument Tr., at 45:20–47:10.
20
Id. at 46:10–21.
6
Both arguments contain the same fatal flaw. The Amended Complaint
contains no facts supporting agency theory, nor does it plead a cause of action based
on agency. Likewise, Murphy Marine could have pled (but did not plead) intentional
interference with contract, and facts to support that tort. At oral argument, counsel
for Murphy Marine orally sought leave to amend the Complaint.21 Such amendment,
however, is precluded by Rule 15(aaa).22
III. CONCLUSION
For the reasons above, the Motion to Dismiss GT USA is granted. To the
extent the foregoing requires an order to take effect, IT IS SO ORDERED.
Sincerely,
/s/ Sam Glasscock III
Vice Chancellor
21
Id. at 53:16–19.
22
Ct. Chan. R. 15(aaa).
7