Zenith Energy Terminals Joliet Holdings LLC v. CenterPoint Properties Trust

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
ZENITH ENERGY TERMINALS )
JOLIET HOLDINGS LLC, a Delaware )
Limited Liability Company, JOLIET )
BULK, BARGE & RAIL LLC, a )
Delaware Limited Liability Company, )
)
Plaintiffs, ) C.A. No.: N19C-10-054 EMD CCLD
)
v. )
)
CENTERPOINT PROPERTIES TRUST, )
a Maryland Real Estate Investment Trust, )
)
Defendant. )
Submitted: October 28, 2022
Decided: January 23, 2023
Upon the Motion of Plaintiffs Zenith Energy Terminals Joliet Holdings, LLC and Joliet Bulk,
Barge & Rail LLC for Summary Judgment
DENIED
Upon Defendant CenterPoint Trust’s Motion for Summary Judgment
DENIED
Christopher Viceconte, Esquire, Gibbons P.C., Wilmington, Delaware, Patrick J. Lamb, Esquire,
J’Aimee Crockett, Esquire, ElevateNext Law, Chicago, Illinois. Attorneys for Plaintiffs Zenith
Energy Terminals Joliet Holdings LLC and Joliet Bulk, Barge & Rail LLC.
F. Troupe Mickler IV, Esquire, Randall J. Teti, Esquire, Ashby & Geddes, P.A., Wilmington,
Delaware, James D. Dasso, Esquire, Jennifer S. Park, Esquire, Mason D. Roberts, Esquire, Foley
& Lardner LLP, Chicago, Illinois. Attorneys for Defendant CenterPoint Properties Trust.
DAVIS, J.
I. INTRODUCTION
This is a breach of contract action assigned to the Complex Commercial Litigation
Division of this Court. Plaintiffs Zenith Energy Terminals Joliet Holdings LLC (“Zenith”) and
Joliet Bulk, Barge & Rail LLC (“JBBR”) (collectively, “Zenith” or the “Plaintiffs”) filed an
Amended Complaint on September 10, 2021, against Defendants CenterPoint Properties Trust
(“CenterPoint” or the “Defendant”) for breach of contract.1
CenterPoint previously owned JBBR.2 CenterPoint, through JBBR, entered into
contracts to design and build a crude-by-rail off-loading terminal in Joliet, Illinois (the
“Terminal”).3 CenterPoint planned that the Terminal would receive, off-load, store, and
distribute crude oil from the Mojo Pipeline.4
CenterPoint and Arc Terminals Joliet Holdings LLC (now known as Zenith Terminals
Joliet Holdings LLC) entered into a Membership Interest Purchase Agreement (the “Purchase
Agreement”).5 Under the Purchase Agreement, CenterPoint sold JBBR and, in effect, the
Terminal to Zenith before the construction project on the Terminal was completed.6 Thereafter,
Zenith, on behalf of JBBR, and CenterPoint negotiated a Construction Management Agreement,
whereby CenterPoint was to continue to manage the construction project.7 Ultimately, the
construction project was incomplete, not meeting alleged key requirements under the design and
build plans.8
Zenith filed suit, believing CenterPoint breached the Purchase Agreement and the
Construction Management Agreement. CenterPoint believes no such breaches occurred. The
parties filed cross-motions for summary judgment: (i) Motion of Plaintiffs Zenith Energy
Terminals Joliet Holdings, LLC and Joliet Bulk, Barge & Rail LLC for Summary Judgment (the
“Zenith Motion”); and (ii) Defendant CenterPoint Trust’s Motion for Summary Judgment (the
1
Amended Complaint (“Am. Compl.”), Sept. 10, 2021 (D.I. 89).
2
See id. ¶ 4.
3
Id. ¶ 3.
4
Id. ¶ 1.
5
Id. ¶ 4.
6
Id.
7
Id. ¶¶ 4-5.
8
Id. ¶ 6.
2
“CenterPoint Motion”). For the reasons set forth below, the Court is DENYING both the Zenith
Motion and the CenterPoint Motion.
II. RELEVANT FACTS
A. THE PARTIES
“Zenith Energy Terminals Joliet Holdings LLC is a Delaware limited liability company
formerly named Arc Terminals Joliet Holdings LLC.”9 Arc Terminals contracted with
CenterPoint under the Purchase Agreement to purchase JBBR.10 As stated above, JBBR controls
the Terminal.
CenterPoint is a “Maryland real estate investment trust” that “acquires, develops,
manages and leases warehouse, distribution and manufacturing facilities near major
transportation nodes and is an expert in large rail infrastructure assets.”11 CenterPoint was the
owner of the Terminal prior to the execution of the Purchase Agreement.12 Additionally,
CenterPoint managed the continuing construction of the Terminal post-sale under the
Construction Management Agreement.13
JBBR is a Delaware limited liability company formed by CenterPoint on or around
November 9, 2011.14 CenterPoint, through JBBR, negotiated contracts to design and construct
the Terminal.15 JBBR has owned the Terminal and, by extension, the construction project at all
9
Id. ¶ 8. Hereafter, Arc Terminals Joliet Holdings LLC will be defined as “Arc Terminals.”
10
Id.
11
Id. ¶ 10.
12
Id. ¶¶ 2-4; see also Plaintiffs’ Motion for Summary Judgment (“Pls.’ Mot. for Summ. J.”) at 2, Aug 5, 2022 (D.I.
131).
13
Am. Compl. ¶ 4.
14
Id. ¶ 9; Pls.’ Mot. for Summ. J. at 2.
15
Pls.’ Mot. for Summ. J. at 3; Defendant’s Motion for Summary Judgment (“Def.’s Mot. for Summ. J.”) at 5, Aug.
5, 2022 (D.I. 139).
3
relevant times.16 On May 14, 2015, CenterPoint sold JBBR to Zenith (still known as Arc
Terminals at the time) under the Purchase Agreement.17
There are two additional relevant non-parties—Wilson & Company, Inc. Engineers &
Architects (“Wilson”) and Ragnar Benson Construction LLC (“Ragnar”). On April 16, 2014,
Wilson and JBBR entered into a Master Services Agreement (“MSA”).18 The MSA tasked
Wilson with providing design, engineering, and construction oversight on the construction
project.19 Additionally, Wilson entered into various task orders that provided details on the
scope of work for the construction project.20 On August 26, 2014, Ragnar and JBBR entered
into a Construction Contract, where Ragnar was assigned to be the engineering, procurement,
and construction contractor on the construction project.21 Ragnar purportedly “agreed to
construct the Terminal in conformity with [s]pecifications and the provisions of the Construction
Contract.”22
B. THE PURCHASE AGREEMENT AND THE CONSTRUCTION CONTRACT
In 2014, while the Terminal was under construction, CenterPoint began negotiations with
Arc Terminals (later known as Zenith) regarding the sale of JBBR.23 Zenith sought to acquire
JBBR because there was a guaranteed cash flow associated with the Terminal.24 On February
19, 2015, Zenith and CenterPoint entered into the Purchase Agreement. Zenith purchased JBBR
from CenterPoint for $216 million, plus $27 million in deferred payments, for an aggregate
16
Am. Compl. ¶ 9.
17
Def.’s Mot. for Summ. J. at 5; Am. Compl. ¶ 11.
18
Am. Compl. ¶ 12, Ex. C (MSA).
19
Id.
20
Id. ¶ 12.
21
Id. ¶ 13, Ex. E (Construction Agreement), Ex. G (laying out the “Scope of Work & Specifications”).
22
Def.’s Mot. for Summ. J. at 8-9.
23
Pls.’ Mot. for Summ. J. at 5.
24
Id.
4
amount of $243 million.25 Because Zenith was allegedly unwilling to assume responsibility for
completion of the Terminal, the parties agreed that CenterPoint would “see the project through to
completion.”26 The parties memorialized this in Section 6.15(a) of the Purchase Agreement,
titled “Final Completion,” which states:
After Closing, on and subject to the terms of the Construction Contract [with
Ragnar] and the Construction Management Agreement, [CenterPoint] shall use its
reasonable best efforts to achieve, and to cause the EPC Contractor [Ragnar] (and
any other applicable third party contractors or service providers) to achieve, Final
Completion in accordance with the Approved Cost Plan and the Project Schedule
and otherwise in accordance with the terms and conditions of the Construction
Contract and the Construction Management Agreement in all material respects.27
In the Purchase Agreement, “Final Completion” is defined as “the meaning given in the
Construction Contract.”28 The Construction Contract between JBBR and Ragnar, dated August
26, 2014, defines “Final Completion” as:
[T]hat point in time in the progress of the Work after Mechanical Completion when
(a) the Work has been completed and is operational; (b) all testing (including
hydrotesting) and coating is complete; (c) all pipe, valves, and Equipment
installation and tie-ins are complete; (d) all essential Equipment and lines have been
hydrotested and had a geometry tool run through them; (e) the Work is capable of
transporting refined products in a safe uninterrupted manner 24 hours per day,
seven days per week without further anticipated shutdowns, except for preventative
maintenance; (f) and all other requirements of this [Construction Contract] with
respect to Final Completion ([including those set forth in Construction Contract
Exhibit A]) have been satisfied.29
Exhibit A of the Construction Contract sets out the “Minimum Requirements for Final
Completion” and defines them as:
(a) Final Completion includes, at a minimum, the following: (i) any liquidated
damages payable by [Ragnar] to [JBBR] pursuant to th[is Construction Contract]
25
Am. Compl. ¶ 4.
26
Pls.’ Mot. for Summ. J. at 6
27
Id., Ex. N (Purchase Agreement) § 6.15(a) (emphasis added).
28
Id., Ex. N at Annex I.
29
Am. Compl., Ex. E (Construction Contract) § 1.1; see also id. (“’Work’ shall mean all of [Ragnar’s] obligations,
duties and responsibilities under this [Construction Contract], including the design, engineering, procurement,
manufacturing, supply, installation, erection, construction, commissioning, and testing of the Facilities, all work and
services described in Exhibit A and all Warranty Work.”) (underlining in original).
5
have been paid and/or satisfied; (ii) [Ragnar] has completed all the Work required
by this [Construction Contract]; (iii) [Ragnar] has executed and delivered to [JBBR]
and [JBBR] has accepted the lien waiver . . .; (iv) [Ragnar] has provided the final
close-out report to [JBBR]; (v) there are no outstanding claims or disputes as
between [Ragnar and JBBR]; and (vi) [administrative].30
On May 14, 2015, the parties closed the sale of JBBR to Zenith, and Zenith became
JBBR’s parent company.31 Additionally, as part of the closing, Zenith, on behalf of JBBR, and
CenterPoint executed the Construction Management Agreement on May 14, 2015.32
C. THE CONSTRUCTION MANAGEMENT AGREEMENT
In tandem with the Purchase Agreement, Zenith and CenterPoint executed the
Construction Management Agreement.33 The Construction Management Agreement made
CenterPoint the agent of JBBR,34 and it states that “[JBBR] has requested that [CenterPoint]
provide certain construction management services to [JBBR] . . . for a limited period following
the Closing Date, and [CenterPoint] has agreed to provide such services.”35
The Zenith Motion and the CenterPoint Motion rely on certain sections of the
Construction Management Agreement. The motions both reference Section 2(a), titled
“Construction Management Services,” which states:
Subject to the terms of this Agreement, [CenterPoint] agrees to provide to [JBBR]
and [JBBR] agrees to accept from [CenterPoint], the construction management
services described on Schedule A . . .. [JBBR] hereby (i) [appoints CenterPoint as
its agent for all purposes] under the Construction Contract [and CenterPoint
accepts], and (ii) authorizes [CenterPoint] to take all actions on behalf of [JBBR]
that [CenterPoint], in [CenterPoint]’s sole and good faith discretion, considers
reasonably necessary to provide the Services, including all invoices, payments,
change orders and certifications under the Construction Contract; provided that
[CenterPoint] shall (A) obtain [JBBR]’s prior written consent (which shall not be
unreasonably withheld, conditioned or delayed) before (1) issuing the Final
30
Id., Ex. E at Exhibit A to Construction Contract.
31
Pls.’ Mot. for Summ. J. at 11; Def.’s Mot. for Summ. J. at 5.
32
Def.’s Mot. for Summ. J. at 19.
33
See Am. Compl., Ex. B (Construction Management Agreement).
34
See id. ¶ 34.
35
Id., Ex. B at Recitals.
6
Completion Certificate (as defined in the Construction Contract) and making
payment therefor.36
Construction Management Agreement Schedule A states that “[CenterPoint] shall
manage EPC Contractor’s [Ragnar’s] performance and completion of the Work under the
Construction Contract until the Final Completion Certificate is issued and accepted by [JBBR]
thereunder and payment is made therefor.”37
Construction Management Section 2(b) is also referenced. Section 2(b) provides:
[CenterPoint] shall perform the Services with substantially the same standard of
care (including quality) as the Services were performed by or on behalf of [JBBR]
prior to the Effective Date, including, without limitation, by performing the
Services, at all times, as would a reasonably prudent construction manager in the
construction management industry.38
Construction Management Agreement Section 2(h) limits the obligations under Section 2,
and it provides that “except as expressly set forth in Section 2, no representations, warranties or
guaranties of any kind, express or implied . . . are made by [CenterPoint] with respect to the
services provided under [the Construction Management Agreement],” and that all representations
and warranties are waived and disclaimed to the fullest extent of the law.39
D. EVENTS AFTER EXECUTION OF THE AGREEMENTS AT THE TERMINAL
On May 19, 2015, CenterPoint sent Ragnar’s “punchlist” to Zenith’s Terminal manager,
Doug Haduch.40 The “punchlist” was a “list of all of the items on a particular contract that need
to be addressed before the project is completed.”41 Originally, the punchlist contained more than
seventy (70) items, but, by September 4, 2015, only six remained.42 On October 16, 2015,
36
Id., Ex. B § 2(a) (underlining in original).
37
Id., Ex. B at Schedule A.
38
Id., Ex. B § 2(b).
39
Id., Ex. B § 2(h).
40
Def.’s Mot. for Summ. J. at 20.
41
Id.
42
Id. at 20-21.
7
Ragnar contacted CenterPoint, JBBR’s agent pursuant to the Construction Management
Agreement, and requested the issuance of a Final Completion Certificate.43 CenterPoint
forwarded the request to JBBR and Zenith the same day.44
On October 29, 2015, JBBR denied Ragnar’s request to issue a Final Completion
Certificate.45 Construction Contract Section 12.3 required JBBR to “list[] the items of Work that
remain to be completed, remedied or reperformed before Final Completion is achieved.”46 On
October 29, 2019, and in compliance with Section 12.3, JBBR notified CenterPoint and Ragnar
that only three (3) of six (6) railcar-unloading pumps operated simultaneously, whereas the Work
required five (5) of six (6) to operate.47 Ragnar agreed to address the unloading deficiencies.48
In February 2016, “efforts were made to test/commission the unloading system when the
weather was sufficiently cold and rail cars with crude oil were delivered to the facility.”49 On
February 24, 2016, Ragnar monitored the unloading of rail cars and determined all pumps “met
or exceeded all performance[] specifications” and requested a Final Completion Certificate.50
Zenith states that during the February testing, JBBR “discovered additional deficiencies with the
steam/condensate and hot oil systems” and on March 7, 2016, notified Ragnar that these
deficiencies precluded achievement of Final Completion.51 Zenith also states there were
additional deficiencies regarding: non-conforming boilers, inadequate steam traps, improper
valves, lack of hydraulic analysis, among other alleged deficiencies.52 It appears that from
43
Pls.’ Mot. for Summ. J. at 11; Def.’s Mot. for Summ. J. at 21.
44
Def.’s Mot. for Summ. J. at 21.
45
Pls.’ Mot. for Summ. J. at 12-13, Ex. T at 8-10.
46
Am. Compl., Ex. E § 12.3(b).
47
Def.’s Mot. for Summ. J., Ex. 28 (Final Completion Rejection from JBBR to CenterPoint).
48
Pls.’ Mot. for Summ. J. at 13.
49
Id.
50
Def.’s Mot. for Summ. J. at 22, Ex. 29
51
Pls.’ Mot. for Summ. J. at 13, Ex. T at 28 (Letter from JBBR to Ragnar, dated March 7, 2016).
52
Id. at 14-16.
8
around December 2016 through January 2017 there were attempts to fix these deficiencies.53
However, they were not resolved.54
By February 2017, Zenith says “CenterPoint abandoned all efforts to obtain Final
Completion.”55 CenterPoint counters and states that the letter Zenith relies on to make that claim
actually “confirms CenterPoint’s intention to continue to comply with its obligations.”56 In
March 2017, Zenith hired the engineering firm, Ambitech, “to diagnose the deficiencies with the
[Terminal] and undertake mitigation/remediation efforts.”57 Ambitech found deficiencies.58 In
essence, these deficiencies related to the Terminal’s alleged inability to operate in cold weather,
and the failure to engage in allegedly required testing procedures.59 Zenith admits that these
“deficiencies resulted from the failures of Wilson and Ragnar,” but Zenith also believes
“CenterPoint . . . was responsible under the [Construction Management Agreement] for the
[Terminal] reaching Final Completion.”60
E. RELATED LITIGATION
On January 23, 2017, Ragnar filed a lawsuit against JBBR in Will County, Illinois
seeking $992,990.40 (the “Illinois Action”).61 Ragnar seeks payment due upon Final
Completion under the Construction Contract.62 JBBR filed a counterclaim against Ragnar for
53
Id., Ex. T at 137-51
54
Id. at 17.
55
Id.
56
Defendant’s Opposition to Plaintiffs’ Motion for Summary Judgment (“Def.’s Opp’n”) at 28-29, Sept. 6, 2022
(D.I. 145); see also Pls.’ Mot. for Summ. J., Ex. T at 152-53. This is a letter from CenterPoint to JBBR, in which
CenterPoint states “[CenterPoint] would also ask [JBBR] to consider whether [JBBR is] acting reasonably in
withholding and conditioning consent to the issuance of the Final Completion Certificate [based on the enumerated
issues].” Pls.’ Mot. for Summ. J., Ex. T at 152. The same letter also kept lines of communication open. See id. (“If
[JBBR] would like to discuss the matter further, please feel free to contact [CenterPoint].”).
57
Pls.’ Mot. for Summ. J. at 17; see also id., Ex. Y (Ambitech Engagement Report).
58
Id. at 17-18; see also id., Ex. Y.
59
Id. at 19-22.
60
Id. at 18.
61
Am. Compl. ¶ 49; Def.’s Mot. for Summ. J. at 23.
62
Def.’s Mot. for Summ. J. at 23.
9
breach of the Construction Contract.63 On July 23, 2017, JBBR filed a third-party complaint
against Wilson for breach of the MSA (Master Services Agreement).64
F. THIS LITIGATION
On October 7, 2019, Zenith filed its original Complaint, asserting (1) breach of contract
against CenterPoint under the Purchase Agreement between Zenith and CenterPoint, and (2)
breach of contract against CenterPoint under the Construction Management Agreement between
JBBR and CenterPoint.65 On November 9, 2019, CenterPoint filed its first Motion to Dismiss,
or, in the Alternative, Motion to Stay the Action Pending Resolution of the Related Litigation
(the Motion to Dismiss”).66 On January 28, 2020, the Court heard argument on the Motion to
Dismiss.67 On February 14, 2020, the Court denied the Motion to Dismiss.68 On February 21,
2020, CenterPoint filed its Answer and Affirmative Defenses.69
On August 27, 2021, Zenith filed a Motion to Amend the Complaint under Delaware
Superior Court Civil Rule 15(a),70 which the Court granted on September 9, 2021.71 Zenith filed
the current Amended Complaint on September 10, 2021, which asserts the same two breach of
contract counts as the original Complaint.72 CenterPoint thereafter filed its Answer and
Affirmative Defenses on September 24, 2021.73 CenterPoint then filed a Motion to Amend the
Answer (the “Motion to Amend”) to assert counterclaims on the same day.74 The Court heard
63
Am. Compl. ¶ 49 (noting the filing occurred on April 26, 2017); Def.’s Mot. for Summ. J. at 23 (noting the filing
occurred on March 23, 2017).
64
Am. Compl. ¶ 49; Def.’s Mot. for Summ. J. at 23.
65
See Original Complaint (“Original Compl.”), Oct. 7, 2019 (D.I. 1).
66
See Defendant’s First Motion to Dismiss (“First Mot. to Dismiss”), Nov. 19, 2019 (D.I. 9).
67
See Judicial Action Form, Jan. 28, 2020 (D.I. 25).
68
See Order, Feb. 14, 2020 (D.I. 27).
69
See Answer, Feb. 21, 2020 (D.I. 28).
70
See Motion to Amend Complaint, Aug. 27, 2021 (D.I. 86).
71
Order, Sept. 9, 2021 (D.I. 88).
72
See Am. Compl.
73
See Answer, Sept. 24, 2021 (D.I. 90).
74
See Motion to Amend Answer, Sept. 24, 2021 (D.I. 91).
10
argument on the Motion to Amend on October 18, 2021,75 and denied the Motion to Amend on
January 7, 2022.76
On August 5, 2022, Zenith filed the Zenith Motion, seeking judgment in its favor on both
counts as it relates to liability and requesting a trial as to damages.77 Also on August 5, 2022,
CenterPoint filed the CenterPoint Motion, requesting judgment in its favor on both counts in the
Amended Complaint.78 The Court heard argument on the Zenith Motion and the CenterPoint
Motion on October 28, 2022. At the end of the hearing, the Court took the motions under
advisement.
III. PARTIES’ CONTENTIONS
A. THE ZENITH MOTION
Zenith seeks summary judgment on Count I (breach of the Purchase Agreement between
Zenith and CenterPoint) and Count II (breach of the Construction Management Agreement
between JBBR and CenterPoint) “as to liability . . . and that the case be set for a trail as to
[Zenith]’s damages.”79 Zenith’s overarching argument is that CenterPoint failed to achieve Final
Completion under the contracts.80
Zenith does not make distinct arguments under the various agreements and, instead,
combines the two together and seemingly argues as if the contracts are one. First, Zenith claims
that the Court may interpret both the Purchase Agreement and the Construction Management
Agreement because “they are clear and unambiguous.”81 Zenith provides that both contracts
“unambiguously require” CenterPoint to cause Ragnar and any other contractor to achieve Final
75
See Judicial Action Form, Oct. 18, 2021 (D.I. 94).
76
See Order, Jan. 27, 2022 (D.I. 105).
77
See Pls.’ Mot. for Summ. J.
78
See Def.’s Mot. for Summ. J.
79
Pls.’ Mot. for Summ. J. at 32.
80
See id. at 31-32.
81
Id. at 23.
11
Completion.82 Zenith relies on the language in the Purchase Agreement that requires
CenterPoint to “use its reasonable best efforts to achieve, and to cause [Ragnar] (and any other
applicable third party contractors or service providers) to achieve, Final Completion.”83 Zenith
also points to the language of the Construction Management Agreement that requires
CenterPoint to “manage [Ragnar’s] performance and completion of the Work under the
Construction Contract until the Final Completion Certificate is issued and accepted by
[JBBR].”84 As such, Zenith claims that the contracts’ language is clear and unambiguous, and
the only remaining issue is “whether there is any factual dispute that CenterPoint failed to
achieve Final Completion.”85
Second, Zenith argues that it is undisputed that CenterPoint failed to achieve Final
Completion for several reasons.86 Zenith states that the Terminal had to operate in cold weather
to satisfy the requirements of the ExxonMobil contract with the Terminal, and the installations
relating to cold-weather operations were not completed.87 Zenith, anticipating CenterPoint’s
argument, contends that simply completing the items on the “punchlist” does not equate to Final
Completion.88 As a final point, Zenith argues that CenterPoint failed to use its “reasonable best
efforts” to achieve Final Completion and failed to act as a “reasonably prudent construction
manager in the construction industry.”89
82
Id. at 24.
83
Id. at 24, Ex. N (Purchase Agreement) § 6.15(a).
84
Id. at 24, Ex. O (Construction Management Agreement) at Schedule A.
85
Id. at 25.
86
See id. at 26.
87
Id. at 26-27. On May 28, 2014, JBBR and ExxonMobil entered into a “Terminal Services Agreement,” whereby
ExxonMobil was to supply minimum amounts of crude oil to the Terminal or make monthly payments if the target
amounts of oil were not supplied. See id. at 3, Ex. F (Terminal Services Agreement). ExxonMobil was the only
customer of the Terminal. See id. at 3.
88
See id. at 27-28.
89
See id. at 29-31; see also id., Ex. N (Purchase Agreement) § 6.15(a) (providing the “reasonable best efforts”
language), Ex. O (Construction Management Agreement) § 2(b) (providing the “reasonably prudent construction
manager” language).
12
In sum, Zenith says no genuine dispute as to any material fact exists relating to
CenterPoint’s alleged failure to achieve Final Completion such that summary judgment should
be granted in its favor on liability, plus there should be a trial for damages.90
B. THE CENTERPOINT MOTION
CenterPoint seeks summary judgment on Count I (breach of the Purchase Agreement
between Zenith and CenterPoint) and Count II (breach of the Construction Management
Agreement between JBBR and CenterPoint). CenterPoint contends that it is entitled to summary
judgment because: (1) there was no breach of either contract;91 (2) the statute of limitations bars
the claims;92 and (3) Zenith failed to submit evidence that it suffered damages resulting from
CenterPoint’s conduct.93
First, with respect to the Purchase Agreement, CenterPoint argues it complied with all
obligations under the Purchase Agreement, and the alleged deficiencies of which Zenith now
complains are not required to achieve Final Completion.94 CenterPoint maintains that it
completed all items on the punchlist sufficient to achieve Final Completion.95 Moreover,
CenterPoint claims the later-discovered issues with steam/condensate and hot oil systems are the
fault of Wilson’s design, not any construction work supervised by CenterPoint, and Zenith never
listed these deficiencies on its letter that formed the basis for its refusal to issue the Final
Completion Certificate.96
On the Construction Management Agreement, CenterPoint advances largely the same
arguments as it did for the Purchase Agreement. Specifically, CenterPoint says it properly
90
See id. at 31-32.
91
See Def.’s Mot. for Summ. J. at 24-30.
92
See id. at 30-31.
93
See id. at 31-34.
94
Id. at 25.
95
Id. at 25-26.
96
Id. at 26-27.
13
supervised Ragnar’s punchlist work, and nothing more was required to achieve Final
Completion.97 In addition, CenterPoint notes that the Construction Management Agreement did
not place any obligations on CenterPoint for Wilson’s design of the Terminal.98 As such,
CenterPoint achieved Final Completion and is not responsible for Wilson’s deficiencies.
Second, CenterPoint argues Zenith’s claims are barred by Delaware’s three-year statute
of limitations on contract claims.99 CenterPoint states that Zenith discovered the alleged
deficiencies no later than March 2016; the limitations period ran by March 2019; and Zenith did
not file this lawsuit until October 2019.100
Finally, CenterPoint claims that Zenith “has not adduced any evidence that it suffered any
damages as a proximate cause of any contract breach by CenterPoint.”101 CenterPoint says that
any issues with the steam/condensate and hot oil systems, and the lack of testing of those
systems, goes to the liability of Ragnar and Wilson, which have been asserted in the related
litigation in Illinois.102 Moreover, the “submission of a request for issuance of a Final
Completion Certificate [by CenterPoint] in October 2015 did not prejudice Zenith’s claims
against Ragnar[] and Wilson.”103
IV. STANDARD OF REVIEW
The standard of review on a motion for summary judgment is well-settled. The Court’s
principal function when considering a motion for summary judgment is to examine the record to
determine whether genuine issues of material fact exist, “but not to decide such issues.”104
97
Id. at 29.
98
Id. at 29-30.
99
Id. at 30.
100
Id. at 31.
101
Id.
102
Id. at 32-33.
103
Id. at 33.
104
Merrill v. Crothall-American Inc., 606 A.2d 96, 99-100 (Del. 1992) (internal citations omitted); Oliver B.
Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322, 325 (Del. Super. 1973).
14
Summary judgment will be granted if, after viewing the record in a light most favorable to a
nonmoving party, no genuine issues of material fact exist and the moving party is entitled to
judgment as a matter of law.105 If, however, the record reveals that material facts are in dispute,
or if the factual record has not been developed thoroughly enough to allow the Court to apply the
law to the factual record, then summary judgment will not be granted.106 The moving party bears
the initial burden of demonstrating that the undisputed facts support its claims or defenses.107 If
the motion is properly supported, then the burden shifts to the non-moving party to demonstrate
that there are material issues of fact for the resolution by the ultimate fact-finder.108
“These well-established standards and rules equally apply [to the extent] the parties have
filed cross-motions for summary judgment.”109 Where cross-motions for summary judgment are
filed and neither party argues the existence of a genuine issue of material fact, “the Court shall
deem the motions to be the equivalent of a stipulation for decision on the merits based on the
record submitted with the motions.”110 But where cross-motions for summary judgment are filed
and an issue of material fact exists, summary judgment is not appropriate.111 To determine
whether there is a genuine issue of material fact, the Court evaluates each motion
105
See Merrill, 606 A.2d at 99-100.
106
Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962); see also Cook v. City of Harrington, 1990 WL 35244, at
*3 (Del. Super. Feb. 22, 1990) (citing Ebersole, 180 A.2d at 467) (“Summary judgment will not be granted under
any circumstances when the record indicates . . . that it is desirable to inquire more thoroughly into the facts in order
to clarify the application of law to the circumstances.”).
107
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1970) (citing Ebersole, 180 A.2d at 470).
108
See Brzoska v. Olsen, 668 A.2d 1355, 1364 (Del. 1995).
109
IDT Corp. v. U.S. Specialty Ins. Co., 2019 WL 413692, at *5 (Del. Super. Jan. 31, 2019) (citations omitted); see
Capano v. Lockwood, 2013 WL 2724634, at *2 (Del. Super. May 31, 2013) (citing Total Care Physicians, P.A. v.
O'Hara, 798 A.2d 1043, 1050 (Del. Super. 2001)).
110
Del. Super. Ct. Civ. R. 56(h).
111
Motors Liquidation Co. DIP Lenders Tr. v. Allianz Ins. Co., 2017 WL 2495417, at *5 (Del. Super. June 19,
2017), aff’d sub nom., Motors Liquidation Co. DIP Lenders Tr. v. Allstate Ins. Co., 191 A.3d 1109 (Del. 2018);
Comet Sys., Inc. S’holders’ Agent v. MIVA, Inc., 980 A.2d 1024, 1029 (Del. Ch. 2008); see also Anolick v. Holy
Trinity Greek Orthodox Church, Inc., 787 A.2d 732, 738 (Del. Ch. 2001) (“[T]he presence of cross-motions ‘does
not act per se as a concession that there is an absence of factual issues.’” (quoting United Vanguard Fund, Inc. v.
TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997))).
15
independently.112 And again, where it seems prudent to make a more thorough inquiry into the
facts, summary judgment will be denied.113
V. DISCUSSION
A. DELAWARE’S STATUTE OF LIMITATIONS DOES NOT BAR THE CLAIMS.
“The statute of limitations [under] 10 Del. C. § 8106 requires a plaintiff to bring a breach
of contract claim within three years of the accrual of the cause of action.”114 “The cause of
action for a breach of contract accrues at ‘the moment of the wrongful act,’”115 and “not when
actual damage results or is ascertained.”116
CenterPoint argues that Zenith discovered the alleged deficiencies with the
steam/condensate and hot oil systems no later than March 2016, but Zenith did not file this
action until October 2019.117 Thus, CenterPoint claims the three-year statute of limitations bars
the claims.118 Zenith counters that the events of March 2016 “merely triggered CenterPoint’s
obligations under Section 6.15 of the [Purchase] Agreement to cause the [steam/condensate and
hot oil system] deficiencies to be fixed and to pay for the repairs.”119 Zenith argues that
throughout 2016 Ragnar and Wilson made repairs and alterations to the Terminal.120 Zenith
maintains that, at the earliest, it was not until January 2017 that Ragnar and Wilson refused to
112
Motors Liquidation, 2017 WL 2495417, at *5; see Fasciana v. Elec. Data Sys. Corp., 829 A.2d 160, 167 (Del.
Ch. 2003).
113
Ebersole, 180 A.2d at 470-72; Pathmark Stores, Inc. v. 3821 Assocs., L.P., 663 A.2d 1189, 1191 (Del. Ch. 1995).
114
AM Gen. Hldg.’s LLC v. The Renco Grp., Inc., 2016 WL 4440476, at *7 (Del. Ch. Aug. 22, 2016); see also 10
Del. C. § 8106(a) (laying out the types of claims subject to a three-year statute of limitations period).
115
AM Gen. Hldg.’s LLC, 2016 WL 4440476, at *7 (quoting Fike v. Ruger, 754 A.2d 254, 260 (Del. Ch. 1999);
AssuredPartners of Virginia, LLC v. Sheehan, 2020 WL 2789706, at *12 (Del. Super. May 29, 2020) (“For breach
of contract claims, the wrongful act is the breach, and the cause of action accrues at the time of the breach.” (internal
quotations omitted)).
116
Davis, Bowen & Friedel, Inc. v. Disabatino, 2016 WL 7469691, at *4 (Del. Super. Dec. 27, 2016).
117
Def.’s Mot. for Summ. J. at 31.
118
Id.119
Plaintiffs’ Opposition to Defendant’s Motion for Summary Judgment (“Pls.’ Opp’n”) at 22, Sept. 6, 2022 (D.I.
146).
120
Id. at 22-23.
16
take further measures.121 Zenith further contends that CenterPoint did not abandon its
contractual obligations until June 9, 2017, when “CenterPoint sent a letter to Zenith telling it to
pursue Ragnar and Wilson for the [T]erminal defects, and refusing to indemnify JBBR as
required by Section 10 of the [Purchase] Agreement.”122
The Court finds that the statute of limitations does not bar the claims. CenterPoint
appears to have chosen a date and claim it was the date of the alleged breach. On March 7, 2016,
JBBR notified Ragnar that deficiencies existed relating the steam/condensate system’s
functioning and asked Ragnar to remedy them.123 Throughout the remainder of March 2016,
JBBR and Ragnar went back and forth regarding the deficiencies, with Ragnar stating it was
“prepared to remedy, as a warranty item, deficiencies of [Ragnar]’s work to the extent its work
does not comply with the Scope of Work found in the Construction Contract.”124 Moreover, in
April 2016, Wilson contacted Zenith to discuss improving the “steam system.”125 This does not
seem to be “the moment of the wrongful act” to trigger the breach.126
CenterPoint’s own letter to JBBR proves there was no breach until January 2017 or later.
On January 24, 2017, CenterPoint wrote to JBBR and stated that “as [JBBR] is aware, with
CenterPoint’s support, [Ragnar] and Wilson have been onsite [at the Terminal] seeking to
address the issues raised in the [letter from JBBR on January 20, 2017].”127 The Court notes that
CenterPoint told JBBR in January 2017 that Ragnar and Wilson were continuing to address
issues raised by Zenith and JBBR. This means that, at that time, a breach had not yet
121
Id. at 23.
122
Id.
123
See Pls.’ Mot. for Summ. J., Ex. T at 28-29.
124
See id., Ex. T at 30-32.
125
See id., Ex. T at 33-34.
126
See Fike, 754 A.2d at 260.
127
Pls.’ Mot. for Summ. J., Ex. T at 152.
17
occurred.128 Moreover, Zenith filed this lawsuit in October 2019.129 Without even reaching
Zenith’s contention that the real breach occurred in June 2017, it is clear that Zenith’s October
2019 filing was well within the three-year limitations period based on CenterPoint’s January
2017 letter. Therefore, Zenith’s claims are not barred by the statute of limitations.
B. BREACH OF CONTRACT CLAIMS
The elements of a breach of contract claim are: “(1) the existence of a contractual
obligation; (2) a breach of that obligation; and (3) damages resulting from the breach.”130
1. The language of both contracts is unambiguous.
“Delaware adheres to the ‘objective’ theory of contracts, i.e.[,] a contract’s construction
should be that which would be understood by an objective, reasonable third party.”131 “Contract
terms themselves will be controlling when they establish the parties’ common meaning so that a
reasonable person in the position of either party would have no expectations inconsistent with the
contract language.”132
“When the issue before the Court involves the interpretation of a contract, summary
judgment is appropriate only if the contract in question is unambiguous.”133 Thus, the threshold
inquiry on summary judgment is “whether the contract is ambiguous.”134 When a contract is
128
See Fike, 754 A.2d at 260 (stating that the breach is the “moment of the wrongful act”). Neither party
persuasively argues one, specific moment that constitutes the “wrongful act” leading to the alleged breaches. See
Def.’s Mot. for Summ. J. at 30-31; Pls.’ Opp’n at 22-23. However, the breach claims are premised on CenterPoint’s
failure to use its “reasonable best efforts” to achieve Final Completion, (see Am. Compl. ¶¶ 51-70), which, in
essence, means that the heart of the breach claims goes to the moments that CenterPoint stopped working with
Zenith on the Terminal. In January 2017, all parties were still working together. See Pls.’ Mot. for Summ. J., Ex. T
at 152.
129
See Original Compl.
130
Buck v. Viking Hldg. Mgmt. Co. LLC, 2021 WL 673459, at *3 (Del. Super. Feb. 22, 2021) (citing VLIW Tech.,
LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)).
131
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (citing NBC Universal v. Paxson Commc’ns,
2005 WL 1038997, at *5 (Del. Ch. Apr. 29, 2005)).
132
Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
133
United Rentals, Inc. v. RAM Hldgs., Inc., 937 A.2d 810, 830 (Del. Ch. 2007).
134
Id.18
“clear and unambiguous,” the Court “will give effect to the plain-meaning of the contract’s terms
and provisions.”135 “Ambiguity does not exist simply because the parties disagree about what
the contract means.”136 Instead, contracts are ambiguous “when the provisions in controversy
are reasonably or fairly susceptible of different interpretations or may have two or more different
meanings.”137
a. The Purchase Agreement is unambiguous.
Purchase Agreement Section 6.15(a) is especially relevant. Section 6.15(a) is labeled
“Final Completion,” and it states:
After Closing, on and subject to the terms of the Construction Contract [with
Ragnar] and the Construction Management Agreement, [CenterPoint] shall use its
reasonable best efforts to achieve, and to cause the EPC Contractor [Ragnar] (and
any other applicable third party contractors or service providers) to achieve, Final
Completion in accordance with the Approved Cost Plan and the Project Schedule
and otherwise in accordance with the terms and conditions of the Construction
Contract and the Construction Management Agreement in all material respects.138
There appears no serious dispute that Section 6.15(a) is ambiguous.139 The Court finds
that Section 6.15(a) is subject to only one reasonable interpretation—CenterPoint was required to
use its “reasonable best efforts” to achieve, and cause any contractor to achieve, Final
Completion. “The determination of ambiguity lies within the sole province of the court,”140 and
the Court finds that Section 6.15(a) unambiguous.
While the parties argue whether CenterPoint used its “reasonable best efforts” to achieve
“Final Completion,” that goes to the facts surrounding CenterPoint’s efforts, not the language of
135
Osborn, 991 A.2d at 1159-60.
136
United Rentals, Inc., 937 A.2d at 830.
137
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
138
Pls.’ Mot. for Summ. J., Ex. N (Purchase Agreement) § 6.15(a).
139
See id. at 23-24 (stating Section 6.15(a) is unambiguous); Def.’s Mot. for Summ. J. at 25 (stating that Section
6.15(a) required CenterPoint to use its best efforts to cause Ragnar to achieve Final Completion).
140
Osborn, 991 A.2d at 1160.
19
Section 6.15(a) setting out the expectations of the parties. As such, Section 6.15(a) of the
Purchase Agreement is unambiguous.
b. The Construction Management Agreement is unambiguous.
Construction Management Agreement Section 2(b), titled “Construction Management
Services,” states:
[CenterPoint] shall perform the Services with substantially the same standard of
care (including quality) as the Services were performed by or on behalf of [JBBR]
prior to the Effective Date, including, without limitation, by performing the
Services, at all times, as would a reasonably prudent construction manager in the
construction management industry.141
Construction Management Agreement Section 2(h) limits Section 2, and it provides that
“except as expressly set forth in Section 2, no representations, warranties or guaranties of any
kind, express or implied . . . are made by [CenterPoint] with respect to the services provided
under [the Construction Management Agreement],” and that all representations and warranties
are waived and disclaimed to the fullest extent of the law.142
The Court finds that the language of the Construction Management Agreement is
unambiguous and subject to only one reasonable interpretation. The Court finds that CenterPoint
was required to oversee the construction project in the same way it did when it owned the
Terminal, and in the same way a “reasonably prudent construction manager in the construction
industry” would oversee the project.
Here, the parties argue whether CenterPoint fulfilled its duty to act as a “reasonably
prudent construction manager.”143 The Court notes that goes to the facts surrounding
141
Pls.’ Mot. for Summ. J., Ex. O § 2(b).
142
Id., Ex. O § 2(h).
143
See id. at 30-31 (arguing that if CenterPoint continued as owner of the Terminal, it would not have accepted a
facility “that did not perform at the level required by the contracts”); Def.’s Mot. for Summ. J. at 19-20 (arguing that
JBBR knew that “CenterPoint was not a professional provider of these services, and that CenterPoint personnel
would not spend full time on providing” services outside the alleged scope of the contracts).
20
CenterPoint’s efforts, not the language of the Construction Management Agreement Section
2(b). Thus, Section 2(b) is unambiguous.
2. Genuine issues of material fact exist for the Purchase Agreement.
As to Count I, the difficulty is to demonstrate that no genuine issue of material fact exists
with respect to Purchase Agreement Section 6.15(a). The key language is “reasonable best
efforts,” i.e., whether CenterPoint used “reasonable best efforts” to achieve, and cause any
contractor to achieve, Final Completion.144
Zenith argues that the Purchase Agreement “unambiguously require[s]” CenterPoint to
cause Ragnar and any other contractor to achieve Final Completion.145 Moreover, Zenith
complains that CenterPoint “did not use reasonable best efforts”146 and “failed to achieve Final
Completion.”147 Conversely, CenterPoint maintains it complied with all obligations under the
Purchase Agreement, and the alleged deficiencies were not required to achieve Final
Completion.148 Interestingly, in its Opposition, CenterPoint seems to concede that “[a]t the very
least, a genuine issue of fact exists as to whether CenterPoint used its ‘reasonable best
efforts.’”149 In the CenterPoint Motion’s Opening Brief, however, CenterPoint argues that it
used its reasonable best efforts to cause Ragnar to achieve Final Completion when it oversaw
Ragnar’s completion of the “punchlist” items.150 These arguments seem to contradict.
Under Delaware law, “reasonable best efforts” means a party is “obligat[ed] to take all
reasonable steps to solve problems and consummate the transaction.”151 However, “it cannot
144
See Pls.’ Mot. for Summ. J, Ex. N § 6.15(a).
145
Id. at 24.
146
Id. at 29.
147
Id. at 26.
148
Def.’s Mot. for Summ. J. at 25.
149
Def.’s Opp’n at 28-29.
150
Def.’s Mot. for Summ. J. at 25-26.
151
Williams Cos., Inc. v. Energy Transfer Equity, L.P., 159 A.3d 264, 272 (Del. 2017) (citing Hexion Specialty
Chems., Inc. v. Huntsman Corp, 965 A.2d 715, 755-56 (Del. Ch. 2008)).
21
mean everything possible under the sun.”152 In the context of merger agreements, the Court of
Chancery has “looked to whether the party subject to the clause (i) had reasonable grounds to
take the action it did and (ii) sought to address problems with its counterparty” in determining
whether the “reasonable best efforts” standard was met.153 “Determining whether a party used
reasonable best efforts is an inherently factual inquiry.”154
The Court finds that there exists a factual question as to whether CenterPoint took “all
reasonable steps to solve problems.” For instance, after JBBR denied the request for a Final
Completion Certificate in October 2015,155 CenterPoint oversaw Ragnar to finish the items on
the punchlist, which was completed in February 2016.156 The correspondence between the
parties from December 2016 to January 2017 appears show there was engagement to construct
the Terminal and achieve Final Completion.157 However, it appears Final Completion was never
achieved. For example, under the definition of “Final Completion,” “all testing (including
hydrotesting) and coating” must be completed.158 Gavin Palmer, “JBBR’s engineering expert,”
testified during his deposition that there was no evidence the steam system was hydrotested.159
CenterPoint does not address this alleged defect in its briefing. While Final Completion was not
achieved, it is not clear whether CenterPoint made “reasonable best efforts” to achieve Final
152
AB Stable VIII LLC v. Maps Hotels & Resorts One LLC, 2020 WL 7024929, at *91 (Del. Ch. Nov. 30, 2020)
(citing Alliance Data Sys. Corp. v. Blackstone Cap. P’rs V L.P., 963 A.2d 746, 763 n.60 (Del. Ch. 2009)).
153
Menn v. ConMed Corp., 2022 WL 2387802, at *35 (Del. Ch. June 30, 2022) (citing Akron, Inc. v. Fresenius Kabi
AG, 2018 WL 4719347, at *91 (Del. Ch. Oct. 1, 2018)).
154
In re WeWork Litig., 2020 WL 6375438, at *9 (Del. Ch. Oct. 30, 2020). The Chancery Court stated this rule in
the context of a motion to dismiss, noting that whether a party used reasonable best efforts is an inquiry “not readily
amenable to resolution at the pleadings stage.” Id. Nonetheless, the inquiry is still “inherently factual.” See id.155
See Pls.’ Mot. for Summ. J., Ex. T at 8-10.
156
Def.’s Mot. for Summ. J. at 22, Ex. 29 (displaying the letter from Ragnar to JBBR requesting Final Completion
Certificate).
157
See Pls’. Mot. for Summ. J., Ex. T at 137-53.
158
See Am. Compl., Ex. E (Construction Contract) § 1.1.
159
See Pls.’ Mot. for Summ. J., Ex. Z (Palmer Dep.) at 45:22-48:2.
22
Completion because the Court is not clear on whether hydrotesting, for example, was a necessary
and “reasonable step to solve [a] problem[] and consummate the transaction.”160
CenterPoint, in essence, attempts to sidestep the deficiency issues by placing blame on
Ragnar and Wilson and claiming CenterPoint has no responsibility for them.161 However, the
Court notes that the plain language of the Purchase Agreement requires CenterPoint to achieve,
and cause any third party contractor to achieve, Final Completion.162 Thus, CenterPoint could be
responsible for the contractors’ deficient performances, if any, in failing to achieve Final
Completion.
CenterPoint was responsible for Ragnar’s and Wilson’s work. Moreover, there exists a
genuine issue of material fact as to whether CenterPoint used its “reasonable best efforts” to
achieve Final Completion. Due to this dispute of fact, the Court DENIES both the Zenith
Motion on Count I, and the CenterPoint Motion on Count I.
3. Genuine issues of material fact exist for the Construction Management Agreement.
On Count II, the Court notes that the issue for each party is whether CenterPoint
performed its services “as would a reasonably prudent construction manager in the construction
management industry.”163 Largely, the parties make similar arguments for the Construction
Management Agreement and the Purchase Agreement.
Zenith argues, again, that the Construction Management Agreement “unambiguously
require[s] CenterPoint to cause Ragnar or any other contractor to achieve Final Completion.”164
Zenith points to Schedule A of the Construction Management Agreement, which requires
160
Williams Cos., Inc., 159 A.3d at 272.
161
See, e.g., Def.’s Opp’n at 21-25 (arguing that CenterPoint is not responsible for the design of the Terminal).
162
See Pls.’ Mot. for Summ. J., Ex. N § 6.15(a).
163
See id., Ex. O § 2(b).
164
Id. at 24.
23
CenterPoint to “manage [Ragnar’s] performance and completion of the Work under the
Construction Contract until the Final Completion Certificate is issued and accepted by [JBBR]
and payment is made therefor.”165 Zenith complains that CenterPoint breached the Construction
Management Agreement because, inter alia, the proper cold-weather installations were not made
at the Terminal, and completing the punchlist, alone, was insufficient to achieve Final
Completion.166
CenterPoint argues it properly supervised Ragnar’s punchlist work, and nothing more
was required.167 Moreover, CenterPoint says that “[n]othing in the Construction Management
Agreement required CenterPoint to manage any work by Wilson,” such that CenterPoint is not
responsible for Wilson’s design deficiencies.168 To CenterPoint, the punchlist was enough, and
Zenith’s “complaints” regarding cold weather installations are outside the scope of the
Construction Management Agreement.169
The Court notices that the parties do not really address the factual arguments of the other.
The issue regarding the Construction Management Agreement is the “reasonably prudent
construction manager” language in Section 2(b). The “reasonably prudent person” standard “is
an objective standard” and a “fact-intensive inquiry.”170
Section 2(b) of the Construction Management Agreement states:
[CenterPoint] shall perform the Services with substantially the same standard of
care (including quality) as the Services were performed by or on behalf of [JBBR]
prior to the Effective Date, including, without limitation, by performing the
Services, at all times, as would a reasonably prudent construction manager in the
construction management industry.171
165
Id., Ex. O at Schedule A. It also argues CenterPoint did not act as a “reasonably prudent construction manager”
as required by Section 2(b). See id. at 31, Ex. O § 2(b).
166
See id. at 26-28.
167
Def.’s Mot. for Summ. J. at 29.
168
Id. at 19-20.
169
Id. at 29-30.
170
CMS Inv. Hldgs., LLC v. Castle, 2015 WL 3894021, at *11 (Del. Ch. June 23, 2015).
171
Am. Compl., Ex. B § 2(b).
24
The Court finds that a genuine issue of material fact exists as to whether CenterPoint
acted as a reasonably prudent construction manager. For its part, CenterPoint says that
overseeing Ragnar’s punchlist completion is enough for a Final Completion Certificate and
enough to meet its duties under the Construction Management Agreement.172 Zenith says that
completing the punchlist was not enough for Final Completion, and it was not enough for
CenterPoint to satisfy its duties. Zenith points to Schedule A of the Construction Management
Agreement, requiring CenterPoint to manage Ragnar and other contractors until JBBR issues a
Final Completion Certificate.173 Zenith even tells the Court that it “need not consider the
standard of care issue” because Final Completion was not achieved.174
While it is true that Final Completion was not achieved, as explained supra, in section
V(B)(2), that does not end this inquiry. Lack of Final Completion does not, per se, constitute a
breach resulting in damages, especially considering the Purchase Agreement’s language
requiring CenterPoint to use “reasonable best efforts” to achieve Final Completion.175 Similarly,
a crucial determination is whether CenterPoint acted as a “reasonably prudent construction
manager” in performing its duties under the Construction Management Agreement. CenterPoint
says it did and provides factual support.176 Zenith says CenterPoint did not and provides factual
172
See Def.’s Mot. for Summ. J. at 29-30.
173
See Pls.’ Opp’n at 19-20; Pls.’ Mot. for Summ. J., Ex. O at Schedule A.
174
Pls.’ Opp’n at 19.
175
See Pls.’ Mot. for Summ. J., Ex. N § 6.15(a). Here, Purchase Agreement between Zenith and CenterPoint
required CenterPoint to use “reasonable best efforts” to achieve Final Completion. See id. The Construction
Management Agreement between JBBR and CenterPoint required CenterPoint to oversee contractors’ work until
Final Completion was achieved. See id., Ex. O at Schedule A. Final Completion was not achieved, but there exists a
question of fact regarding whether CenterPoint oversaw the contractors until the contractors stopped performing,
and a question of fact regarding whether damages were suffered if CenterPoint failed to oversee the contractors. The
two agreements at the center of this litigation are tied together in many respects, and at some points they appear to
conflict. Cf. id., Ex. N § 6.15(a) (requiring CenterPoint to use reasonable best efforts to cause contractors to achieve
Final Completion), with id., Ex. O at Schedule A (requiring CenterPoint to manage the contractors’ performance
until Final Completion was achieved).
176
Def.’s Mot. for Summ. J. at 19-20.
25
support.177 When such conflicting arguments are given regarding a “reasonably prudent”
standard, and the evidence is not persuasive to one side, “[i]t is for a [factfinder] to reconcile the
conflicting [arguments and evidence] of” Zenith and CenterPoint.178
Therefore, while it is likely that Final Completion was not achieved, the Court finds that
there are genuine issues of material fact regarding whether CenterPoint acted as a “reasonably
prudent construction manager” as required by the Construction Management Agreement.
Accordingly, the Court must DENY the Zenith Motion and the CenterPoint Motion as to Count
II.
4. CenterPoint’s argument for lack of damages fails.
CenterPoint’s final argument is that Zenith has produced no evidence that it suffered
damages as a proximate cause of any contract breach by CenterPoint.179 CenterPoint argues that,
at most, Zenith suffered damages relating to the steam/condensate and hot oil systems, and that
those damages will be assessed against Ragnar and Wilson in the Illinois Action.180
Zenith counters that its damages arise from CenterPoint’s breaches relating to
CenterPoint’s failure to: (i) cause Ragnar to achieve Final Completion; (ii) remedy defects at the
Terminal relating to cold weather installations; (iii) cause liquidated damages to be paid; and (iv)
indemnify Zenith. Zenith also seeks damages for fees and cost incurred in the Illinois Action.181
Zenith argues that all the damages arise from CenterPoint’s breach of the Purchase Agreement
and breach of the Construction Management Agreement.182
177
Pls.’ Mot. for Summ. J. at 31.
178
See Garcia-Trujilio v. Atl. Bldg. Assocs., Inc., 2020 WL 4816343, at *3 (Del. Super. Aug. 13, 2020) (finding, in
the context of the “reasonably prudent” standard, that when the parties disagreed regarding the construction
manager’s control over a work site, and conflicting evidence existed, summary judgment was improper).
179
Def.’s Mot. for Summ. J. at 31.
180
Id. at 33-34.
181
Pls.’ Opp’n at 24. Zenith provides money damages figures for all of the alleged deficiencies, which come from an
engineering report. See id. at 26-27; see also Pls.’ Mot. for Summ. J., Ex. Y (Ambitech Report).
182
Pls.’ Opp’n at 24-25.
26
“Contract damages are designed to place the injured party in an action for breach of
contract in the same place as [the party] would have been if the contract had been performed.”183
The non-breaching party is “entitled to recover damages that arise naturally from the breach or
that were reasonably foreseeable at the time the contract was made.”184
The Court finds that Zenith has demonstrated a factual issue on damages. CenterPoint
essentially blames Ragnar and Wilson, and attempts to avoid wrongdoing at the Terminal.185
Zenith pled damages resulting from the various deficiencies at the Terminal, as highlighted in its
argument above.186 Zenith has also implicitly conceded that the actual damages sum is a fact
issue because Zenith requests a trial for damages in the Zenith Motion.187 The Court finds that
there is a fact issue as to whether CenterPoint breached the Purchase Agreement and/or the
Construction Management Agreement.188 If CenterPoint breached either, Zenith likely suffered
damages from CenterPoint’s breach; namely, in failing to properly oversee Ragnar, which would
be “damages that arise naturally from the breach or that were reasonably foreseeable at the time
the contract was made.”189 Ultimately, CenterPoint’s claim that Zenith suffered no damages
cannot be determined at this time because there exist factual disputes regarding whether a breach
occurred. Zenith has set forth circumstances that will lead to money damages if a breach is later
determined to have occurred.
Therefore, the Court is DENYING the CenterPoint Motion on the issue of whether
Zenith has suffered damages.
183
Paul v. Deloitte & Touche, LLP, 974 A.2d 140, 146 (Del. 2009) (internal quotations omitted).
184
Id. (internal quotations omitted).
185
See Def.’s Mot. for Summ. J. at 33-34 (arguing that CenterPoint only forwarded Ragnar’s Final Completion
request to JBBR, and that CenterPoint suffered no damages from such a request).
186
See Pls.’ Opp’n at 26-27; Am. Compl. ¶¶ 51-70, Prayer for Relief.
187
Pls.’ Mot. for Summ. J. at 32 (“Plaintiffs respectfully request that summary [j]udgment as to liability be entered
against CenterPoint, and that the case be set for a trial as to Plaintiffs’ damages.”).
188
See supra sections V(B)(2)-(3).
189
Deloitte & Touche, LLP, 974 A.2d at 146 (internal quotations omitted).
27
VI. CONCLUSION
The Court finds there are genuine issues of material fact on CenterPoint’s performance
and liability under both the Purchase Agreement and the Construction Management Agreement.
For the foregoing reasons, the Court DENIES the Zenith Motion and the CenterPoint Motion.
IT IS SO ORDERED
Dated: January 23, 2023
Wilmington, Delaware
/s/ Eric M. Davis
Eric M. Davis, Judge
cc: File&ServeXpress
28