D.R. Horton, Inc. - New Jersey v. Bunting Macks LLC

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
BONNIE W. DAVID COURT OF CHANCERY COURTHOUSE
MAGISTRATE IN CHANCERY 34 THE CIRCLE
GEORGETOWN, DE 19947
Final Report: July 16, 2024
Date Submitted: July 2, 2024
Daniel F. McAllister, Esquire Sean A. Meluney, Esquire
McAllister Firm LLC William M. Alleman, Jr., Esquire
800 N. King St., Suite 203 Meluney Alleman & Spence, LLC
Wilmington, Delaware 19801 1143 Savannah Rd., Suite 3-A
Lewes, Delaware 19958
RE: D.R. Horton, Inc. - New Jersey v. Bunting Macks LLC, et al.,
C.A. No. 2024-0070-BWD
Dear Counsel:
As you know, on June 18, 2024, I issued a final report resolving Bunting
Macks’ motion for partial judgment on the pleadings (the “Final Report”). 1 See D.R.
Horton, Inc. - New Jersey v. Bunting Macks LLC, 2024 WL 3045169 (Del. Ch. June
18, 2024) [hereinafter, “Final Report”]. I assume the readers’ familiarity with the
Final Report, which concluded that an order of specific performance is unavailable
under the terms of the Agreement and directed the parties to submit supplemental
memoranda addressing the basis (if any) for the Court’s subject matter jurisdiction
over the remaining issues in this action. Id. at *1, *8.
1
Undefined capitalized terms have the meanings ascribed in the Final Report.
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On June 25, 2024, Horton moved for reargument of the Final Report (the
“Motion for Reargument”). D.R. Horton, Inc. - New Jersey’s Mot. For Reargument
[hereinafter, “Mot.”], Dkt. 56. Defendants filed an opposition to the Motion for
Reargument on July 2, 2024. Defs.’ Opp’n To D.R. Horton, Inc. - New Jersey’s
Mot. For Reargument, Dkt. 59. The same day, the parties filed supplemental
memoranda addressing subject matter jurisdiction. See Pl. D.R. Horton, Inc. - New
Jersey’s Mem. Of Law Re: Continuing Jurisdiction [hereinafter, “Pl.’s Supp. Br.”],
Dkt. 58; Defs.’ Supp. Br. Regarding Subject Matter Jurisdiction [hereinafter, “Defs.’
Supp. Br.”], Dkt. 60. This final report addresses the Motion for Reargument and the
lingering question of subject matter jurisdiction.
I. THE MOTION FOR REARGUMENT
Horton moves for reargument of the Final Report under Court of Chancery
Rule 59(f). “On a motion for reargument, the movant bears a heavy burden.”
Biocomposites GmbH v. Artoss, Inc., 2024 WL 2151937, at *1 (Del. Ch. May 14,
2024) (citation and internal quotation marks omitted). “To succeed and obtain
reargument, the moving party must demonstrate that the Court’s decision was
predicated upon a misunderstanding of a material fact or a misapplication of the
law.” Fisk Ventures, LLC v. Segal, 2008 WL 2721743, at *1 (Del. Ch. July 3, 2008)
(citation and internal quotation marks omitted), aff’d, 984 A.2d 124, 2009 WL
D.R. Horton, Inc. - New Jersey v. Bunting Macks LLC, et al.,
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3338094 (Del. 2009) (TABLE). “If a motion for reargument ‘merely rehashes
arguments already made by the parties and considered by the Court’ in rendering the
decision for which reargument is sought, the motion must be denied.” Goldman v.
LBG Real Est. Cos., LLC, 2024 WL 773537, at *1 (Del. Ch. Feb. 26, 2024) (citation
omitted).
Horton seeks reargument on three grounds. First, Horton asserts that the Final
Report improperly “expanded [the] scope of the issue[s]” presented on Bunting
Macks’ motion for partial judgment on the pleadings. Mot. ¶ 21. Horton claims that
“neither party contended at the time that the passing of the Outside Closing Date
entirely foreclosed specific performance” and, in fact, “both parties agreed that
specific performance was an available remedy for some of Horton’s breach claims
under the Agreement . . . .” Id. ¶ 22. That is wrong. In its opening brief, Bunting
Macks argued that, “[b]ased on settled Delaware law, Horton cannot obtain the
‘specific performance’ or injunctions it seeks because they would extend the Phase
II closing date,” and sought a determination that “Horton cannot obtain Court orders
compelling Bunting Macks to obtain purportedly missing Approvals and then
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require Bunting Macks to sell Phase II to Horton at some unspecified date in the
future.” Dkt. 31 at 5. The Final Report resolves those fairly presented arguments. 2
Second, Horton claims “the Final Report fails to draw all reasonable
inferences in Horton’s favor . . . .” Mot. at 7; see also id. ¶¶ 15-17. Horton’s
explanation raises eyebrows: while Horton’s Complaint alleges that Bunting Macks
breached the Agreement by failing to diligently and in good faith seek the Approvals,
Horton now argues that the Court improperly assumed Bunting Macks breached the
Agreement and should have inferred that “Bunting Macks obtained all the
Approvals.” See Mot. ¶ 16 (“[A] reasonable inference that can be drawn from the
Complaint and 9 Exhibits is that Bunting Macks obtained all the Approvals. If so,
then Section 6(b) did not afford Horton the option to extend the outside closing
date.”); id. ¶ 19 (acknowledging “this might be an inference against Horton”). To
state the obvious, the Court did not err by failing to draw inferences against Horton.
Third, Horton argues that “the Final Report misapprehends the fact that
Horton filed its lawsuit before the cure period expired, and before the parties’
2
While Horton suggests that the Final Report misunderstood or failed to consider Horton’s
positions on the prevention doctrine and material breach, the Final Report considered and
rejected both. See Final Report at *6-*8 (rejecting Horton’s argument that Bunting Macks’
alleged breaches caused the passing of the Phase II Outside Closing Date); id. at *8
(rejecting Horton’s argument that Bunting Macks’ alleged breaches provided a basis to
order specific performance).
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obligation to close was extinguished.” Mot. at 4. It did not. The Final Report
accepted Horton’s allegation that as of the filing of the Complaint, “[t]he outside
closing date ha[d] passed” without Horton “deliver[ing] a Phase II Approvals
Election Notice to extend [it],” and further explained that “Horton did not close on
its purchase of Phase II within the 45-day cure period provided in the Agreement
. . . .” Final Report at *3, *5 n.6. Horton also fails to explain how the Final Report
misapplied the law to those facts. Horton now argues that February 5, 2024 was the
“true outside closing deadline”3 and filing the Complaint one week before that date
excused Horton from “deliver[ing] a Phase II Approvals Election Notice . . . .” 4 But
Horton cites no authority to support its position that filing the Complaint suspended
the parties’ obligations under the Agreement.5
3
Mot. ¶ 8. Horton did not raise this argument in its briefing on the motion for partial
judgment on the pleadings. In fact, during oral argument, Horton conceded that the Phase
II Outside Closing Date was “the date by which the closing must occur.” D.R. Horton, Inc.
- New Jersey v. Bunting Macks LLC, C.A. No. 2024-0070-BWD, at 38 (Del. Ch. May 29,
2024) (TRANSCRIPT), Dkt. 55. See Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del.
1999) (“Issues not briefed are deemed waived.”).
4
See Mot. ¶ 10 (“Because Horton filed before the end of its cure period, before Bunting
Macks terminated the Agreement, and before the parties’ obligation to close was
extinguished, it is unclear why Horton would have needed to deliver a Phase II Approvals
Election Notice, either before the original outside closing date or before the expiration of
the cure period.”).
5
Horton argues that extending the Phase II Outside Closing Date would have been futile
once it filed the Complaint because “[t]rial is scheduled for December 3, 2024, beyond the
180-day extension Section 6(b) affords.” Mot. ¶ 11. But Horton could have sought an
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Accordingly, the Motion for Reargument is denied.
II. SUBJECT MATTER JURISDICTION
The Court has an “independent obligation to consider whether it has subject
matter jurisdiction,” even if the parties have not raised the issue. Naughty Monkey
LLC v. Marinemax Ne. LLC, 2010 WL 5545409, at *3 n.35 (Del. Ch. Dec. 23, 2010).
The Court of Chancery is a court of limited jurisdiction. Title 10, Section 342 of the
Delaware Code states that “[t]he Court of Chancery shall not have jurisdiction to
determine any matter wherein sufficient remedy may be had by common law, or
statute, before any other court or jurisdiction of this State.” 10 Del. C. § 342. This
Court “maintains subject matter jurisdiction ‘only when (1) the complaint states a
claim for relief that is equitable in character, (2) the complaint requests an equitable
expedited trial prior to the extended Phase II Outside Closing Date, or the parties could
have agreed to an extension to avoid a breakneck schedule. See, e.g., Tiffany & Co. v.
LVMH Moet Hennessy-Louis Vuitton SE, C.A. No. 2020-0768-JRS, at 52 (Del. Ch. Sept.
21, 2020 (TRANSCRIPT) (explaining on a motion to expedite that “relevant factors in the
balancing of how fast to go in cases like this are the outside or drop-dead date and other
contingencies that might make it necessary to decide the matter by a date certain[,]” but
noting that the buyer had agreed that “‘if the Court were to determine that [the buyer] was
not entitled to refuse to close under the terms of the Agreement as of the Outside Date, [the
buyer] would agree to specific performance at that time’”); Akorn, Inc. v. Fresenius Kabi
AG, C.A. No. 2018-0300-JTL, at 31-32 (Del. Ch. May 2, 2018) (TRANSCRIPT) (noting on
a motion to expedite, in response to the Court’s concerns that a scheduling ruling could
eliminate the prospect of specific performance, that the buyer would not rely on the passing
of the outside date).
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remedy when there is no adequate remedy at law or (3) Chancery is vested with
jurisdiction by statute.’” Smith v. Scott, 2021 WL 1592463, at *14 (Del. Ch. Apr.
23, 2021) (citation omitted). “Chancery jurisdiction is not conferred by the
incantation of magic words[,]” and simply asking for an equitable remedy is not an
“open sesame” to equity jurisdiction. Yu v. GSM Nation, LLC, 2017 WL 2889515,
at *3 (Del. Ch. July 7, 2017) (first quoting McMahon v. New Castle Assocs., 532
A.2d 601, 603 (Del. Ch. 1987); and then Int’l Bus. Machs. Corp. v. Comdisco, Inc.,
602 A.2d 74, 78 (Del. Ch. 1991)). Rather, “‘[i]f a realistic evaluation [of the
pleadings] leads to the conclusion that an adequate remedy is available, this court,
in conformity with the command of Section 342 of Title 10 of the Delaware Code,
will not accept jurisdiction over the matter.’” Id. at *3 (quoting McMahon, 532 A.2d
at 603).
After concluding that specific performance is not an available remedy under
the Agreement, the Final Report instructed the parties to submit supplemental
memoranda addressing the basis for the Court’s subject matter jurisdiction. The
parties now dispute whether Horton’s additional requests for equitable remedies
support the Court’s continuing exercise of subject matter jurisdiction.
Horton contends that Counts III and IV and aspects of Count II seek additional
equitable remedies that support the Court’s subject matter jurisdiction. Pl.’s Supp.
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Br. at 2-3. Those counts concern a recorded Joint Development and Reciprocal
Easement Agreement (the “Declaration”), which permits a “Bunting Affiliate” to
expand and share the pump station and force main (the “Pump Station System”) for
Coastal Villages, “provided such Bunting Affiliate enters into a cost sharing and
easement agreement to share the cost of the construction.” Compl. ¶ 30. The
Complaint alleges that Bunting Macks has submitted plans for a Pump Station
System that will service not only Phases II through IV of Coastal Villages, but also
a neighboring property, “Downey/Hickman,” being developed by Bunting Macks
affiliate Roxana Road LLC (“Roxana”). Id. ¶¶ 31-35. Horton contends Bunting
Macks’ plans will expand the force main in Phase I, requiring Bunting Macks and
Roxana to “enter into [a] cost sharing agreement” with Horton. Id. ¶ 52.
In addition, the Declaration grants Horton and Bunting Macks a reciprocal
temporary access easement for “vehicular ingress, egress, and circulation between
and among the Phases.” Compl., Ex. H § 2.3. According to the Complaint, Roxana
has submitted development approvals seeking to use a planned interconnection for
Coastal Villages (the “Interconnection”) to connect Phase II to Downey/Hickman.
Compl. ¶ 46. The Complaint alleges that the Interconnection improperly
“encumbers” Phase II and may harm Phase I by “provid[ing] unwanted traffic and
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encourag[ing] misuse of amenities, increasing management costs and devaluing the
lots within [Coastal Villages].” Id. ¶¶ 48-49.
Count II seeks “an injunction preventing Bunting Macks from processing
plans for the Pump Station System unless a Bunting Affiliate exercises its rights
under the Declaration and complies with its [cost sharing] obligations thereunder.”
Id. ¶ 60. Count III alleges that Bunting Macks and Roxana will be unjustly enriched
by the Interconnection and the Pump Station System. Id. ¶ 63. Count IV asserts a
claim against Roxana for tortious interference with contractual relations and seeks
to “enjoin Roxana . . . from pursuing plans and approvals based in any way on the
Interconnection or Pump Station System, and from proceeding with construction of
the Interconnection or with any development based on approvals obtained using
development plans showing the Interconnection or Pump Station System.” Id. ¶ 74.
Horton’s requests for equitable relief premised on the Pump Station System
and the Interconnection are insufficient to create subject matter jurisdiction.
Notwithstanding Horton’s purported request to enjoin Bunting Macks from
proceeding with plans for the Pump Station System, the Complaint makes clear that
Horton’s claim is monetary—Horton alleges that Bunting Macks’ plans will expand
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the Pump Station System6 and seeks to require Bunting Macks and Roxana to share
in the increased costs. 7 A court of law can determine whether cost sharing is required
under the Declaration and award damages if appropriate. See Delta Eta Corp. v.
City of Newark, 2023 WL 2982180, at *8 (Del. Ch. Feb. 2, 2023) (“[A] request for
an injunction will not invoke this Court’s subject matter jurisdiction if the plaintiff
has an adequate remedy at law.”); Hillsboro Energy, LLC v. Secure Energy, Inc.,
2008 WL 4561227, at *2 (Del. Ch. Oct. 3, 2008) (“A simple contract claim lacking
the requisite equitable hooks will not swing open the doors of equity[.] [The
plaintiff] does not provide sufficient reason for me to believe that a legal remedy
will not be ‘sufficiently adequate.’” (footnote omitted)).
6
Horton alleges that “Bunting Macks’s proposed Pump Station System design will require
the force main in Phase I (currently under development by Horton) to increase in size.”
Compl. ¶ 33. Bunting Macks responds that it “contemplate[s] constructing a forcemain
that conforms to the original Phase I plans and shouldering the entire cost of constructing
a Pump Station System to serve their properties in Phases II-IV and Downey/Hickman[,]”
but “[t]o the extent necessary, Defendants have repeatedly stated that they would enter into
a cost sharing agreement concerning an increased-capacity Pump Station System, and
would compensate Horton as may be necessary, commensurate with any burden on Phase
I.” Defs.’ Supp. Br. at 11.
7
See Pl.’s Supp. Br. at 3 (“Without Court intervention, Defendants will burden Phase I
with development approvals that require Horton to build entrances and infrastructure for
the benefit of the later Phases and for a second development on Roxana Road’s property,
without any just compensation to Horton.” (emphasis added)); id. at 12 (same).
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As for the Interconnection, Horton’s contention that the Interconnection
improperly “encumbers” Phase II is premised on Horton’s ability to close on Phase
II, a proposition the Final Report rejected. 8 And the allegation that the
Interconnection could harm Horton’s interests in Phase I likewise does not support
injunctive relief, notwithstanding Horton’s incantation of the words “quiet title.”9
For one, a court of law can interpret Horton’s rights under the Declaration; again,
there is no reason that Horton’s challenge to the Interconnection based on the
8
Horton argues that it still “has standing to challenge the Interconnection under Section
15(c) of the Agreement[,]” which states:
[F]rom and after the final Closing hereunder or any termination of this
Contract and for a period of twelve (12) months following the final Closing
hereunder, each party shall have the right to pursue its actual (but not
consequential or punitive) damages against the other party for: (1) a breach
of any covenant or agreement contained herein that is performable after or
that expressly survives the final Closing or termination of this Contract
(including the indemnification obligations contained in this Contract), and
(2) a breach in any material respect of any representation or warranty in this
Contract.
Pl.’s Supp. Br. at 18; Compl., Ex. A § 15(c). The availability of damages under Section
15(c) does not support equitable jurisdiction.
9
See Pl.’s Supp. Br. at 3 (“Horton’s Count II seeks to void the Phase II Plans showing the
Interconnection and Pump Station System, and in doing so also effectively seeks to quiet
Horton’s title in Phase I.” (citing Compl. ¶¶ 53-61)); id. (“[I]f specific performance is
unavailable under the Agreement, Horton’s need to quiet title and for injunctive relief as
the Phase I owner is even greater.”); id. at 11 (“In seeking to void the Phase II plans, Horton
seeks in essence to quiet its title in Phase I, which provides yet another basis for equitable
jurisdiction[.]”).
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Declaration cannot be resolved through a declaratory judgment.10 See, e.g.,
Clevenger v. Insight Bldg. Co., LLC, 2023 WL 8997734, at *4 (Del. Ch. Dec. 28,
2023) (“[W]hile the [Petition] includes the ‘magic words’ of certain equitable
remedies in an attempt to invoke equity jurisdiction, the Superior Court can grant a
full, fair, and complete remedy” through a declaratory judgment.”), R & R approved
by, 2024 WL 115879 (Del. Ch. 2024). Moreover, Horton’s allegation that the
Interconnection may provide unwanted traffic and encourage misuse of amenities in
Phase I is too speculative to support injunctive relief at this time. 11 See In re COVID-
Related Restrictions on Religious Servs., 285 A.3d 1205, 1211 (Del. Ch. 2022)
(granting motion to dismiss for lack of subject matter jurisdiction where the
“plaintiffs ha[d] not shown at this point . . . any basis for a prophylactic permanent
injunction”); see also Kroll v. City of Wilm., 2023 WL 6012795, at *6 (Del. Ch. Sept.
15, 2023) (“[B]ecause the harm against which the plaintiff seeks protection is
10
Horton suggests that its unjust enrichment claim is equitable, but “unjust enrichment is
historically a legal, not an equitable, claim. The absence of an adequate remedy at law is
required only if an unjust enrichment claim is brought in the Court of Chancery and there
is no other independent basis for equitable jurisdiction.” State ex rel. Jennings v. Monsanto
Co., 299 A.3d 372, 391 (Del. 2023) (footnote omitted).
11
As Bunting Macks points out, the Interconnection ultimately will become a public road.
Defs.’ Supp. Br. at 19. Thus, this theoretical harm to Horton could exist only after the
Interconnection is constructed but before it is dedicated to the town.
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speculative, the . . . [i]njunction may not serve as a basis for this court to assert
subject matter jurisdiction.”).
Because this Court lacks subject matter jurisdiction over Horton’s remaining
claims, the Complaint should be dismissed with leave to transfer.
III. CONCLUSION
For the reasons explained above, the Motion for Reargument is denied. I
further recommend that the Court dismiss the Complaint for lack of subject matter
jurisdiction, with leave to transfer to the Superior Court pursuant to 10 Del. C.
§ 1902. This is a final report under Court of Chancery Rule 144. The stay of
exceptions is lifted; exceptions to this final report and all prior reports must be filed
within eleven days.
Sincerely,
/s/ Bonnie W. David
Bonnie W. David
Magistrate in Chancery
cc: All counsel of record (by File & ServeXpress)