Blue Rehoboth Marina, LLC v. Marina View Condominium Association of Unit Owners

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
BLUE REHOBOTH MARINA, :
LLC, : C.A. No.: S21C-08-033 CAK
:
Plaintiff, :
:
v. :
:
MARINA VIEW CONDOMINIUM :
ASSOCIATION OF UNIT :
OWNERS, :
:
Defendant. :
Submitted: August 14, 2023
Decided: August 22, 2023
DECISION AFTER TRIAL
Stephen A. Spence, Esquire. Meluney Alleman & Spence, LLC, 1143 Savannah
Road, Suite 3-A, Lewes, Delaware, 19958, Attorney for Plaintiff/Counterclaim
Defendant.
Peter K. Schaeffer, Jr., Esquire, Avenue Law, 1073 South Governors Avenue,
Dover, Delaware 19904, Attorney for Defendant.
KARSNITZ, R. J.
Value is in the eyes of the beholder. This case is a dispute over thirteen
parking spaces in the Town of Dewey Beach. Dewey is such a popular beach
destination it carries its own motto – A Way of Life. Dewey is such a desired
summer playground that its limited space becomes saturated. One result of our
ubiquitous use of motor vehicles is that parking becomes precious. This litigation
combined these features with a development in a space smaller than what the users
of the space would have preferred.
The Rehoboth Marina development consisted of approximately 200 boat slips
with related amenities. Those amenities included boardwalks, dock space and a
marina store. The development also had a hotel. One hundred and forty-nine
parking spaces serviced the uses. In the early part of the 21 st century the owners of
the marina development decided to renovate the hotel buildings, subject the property
to a condominium regime, and then market the condominium units. The owners of
the property intended to retain ownership of and continue to operate the marina.
Two of the principals in the marina project were Chris Redefer and William
Galbraith. The latter testified at the two-day bench trial I held on April 17 and 18,
2023. The former did not. The parties discussed Mr. Redefer and his actions and
conduct repeatedly and often in unkind terms. Mr. Redefer served as dockmaster
for the marina and property manager for the condominium until 2015 when the
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association discharged him. He continued on as dockmaster until Mr. Galbraith
purchased Mr. Redefer’s interest in the project in 2020.
Mr. Galbraith, a professional engineer licensed in a number of states
including Delaware, took the lead in the effort to refurbish the hotel to prepare it for
conversion to condominiums. He worked with, inter alia, the surveyor who
prepared some of the documents for the Condominium Declaration Plan,1 as well as
the architect who prepared the detailed plans for the work on what would become
condominium buildings 1 and 2. Mr. Galbraith’s testimony, which I found to be
credible, showed he was the engineering design force behind the project. He testified
he was careful to consult his partners, but for the most part they relied upon him to
move the development to conclusion.
To effectuate the plan, Mr. Galbraith and his partners utilized several business
entities. Marina Motel Ventures, LLC created the condominium regime which
eventually became the Marina View Condominium Association of Unit Owners.
Marina Motel Ventures, LLC owned the land and subaqueous rights that
encompassed the condominium and the marina. It leased the marina and related
areas as described to Rehoboth Marina Ventures, LLC in a recorded lease dated July
25, 2006.
1
25 Del. C. §2220.
3
At the same time, Marina Motel Ventures, LLC, primarily through Mr.
Galbraith, helped take the land through the condominium process. To do so, Mr.
Galbraith and his partners created an Original Declaration Plan and First
Amendment to the Declaration Plan. The former was recorded with appropriate
authorities on July 26, 2006, and the latter on September 7, 2006. The Declaration
Plan consisted of a cover page, and a page labelled C.1.1, which consisted of a formal
survey of the property, and other details. The Plan also consisted of pages labelled
A-1.1 through A-1.4, and pages A-2.1 and A-2.2. The “A” pages were prepared by
an architect and included many architectural details for Building 1, located at the
southern end of the property.
The First Amendment to the Plan included the same cover, and C-1.1 page,
but a set of “A” pages which showed architectural detail for Building 2, located in
the northwest section of the property. As I will later describe, the Marina View
Condominium Association put significant weight in support of its arguments on the
internal dates on the C-1.1 documents, dated July 25, 2006, and the internal date on
the “A” documents, dated July 14, 2006.
Principals in all the entities were originally the same. They included Joseph
J. Corrado, Jr., Chris R. Redefer and William Galbraith. In achieving this goal of
separating the marina from the motel, and in turning the motel into condominium
units, the principals stood on both (all) sides of the transactions. The owners created
4
the world of the Rehoboth Bay Marina, and the Marina View Condominiums, and
determined the rights for future owners. It is commonplace and perhaps ubiquitous
for the original owners of property subject to condominium conversion to stand on
both sides of a transaction. In this case, because of the disputes between the parties,
I must decide what the original owners intended to create.
The lease between Marina Motel Ventures, LLC and Blue Rehoboth Marina,
LLC (formerly Rehoboth Marina Ventures, LLC) recited that the lessor intended to
subject its property to the Delaware Unit Property Act (the condominium creation
law).2 The lease also referenced the Marina View Condominium Declaration Plan
for its designation of the areas leased to Blue Rehoboth Marina, LLC (formerly
Rehoboth Marina Ventures, LLC). Paragraph 1 of the lease reads in pertinent part:
Description of Premises. The leased premises shall consist of the
following:
(a) Those portions of the Common Elements of the
Condominium, as depicted upon the Marina View
Condominium Declaration Plan, including: the
Marina Building and adjacent parking/storage area
on the north side; the boat ramp area; the fuel tank
and storage area; the fuel pump areas; the ice
machine/vending area; the pump-out station;
wooden walkways adjacent to piers over
subaqueous lands; utility areas at the northwest
and southwest corners of the Property; the sign
area on the northeast corner of Tract 2 of the
Property; an office/storage area on the second
floor of the Marina View Condominium; and
other areas specifically designated as “Marina
Area” among the aforesaid Declaration Plan; and
2
25 Del. C. §2201 et seq.
5
(b) Those portions of the Common Elements of
Marina View Condominium, as depicted upon the
Marina View Condominium Declaration Plan,
parking areas designated as “Marina Area.”
The leased premises shall hereinafter be referred
to as the “Leased Property.”
The difficulty with the lease designation of the leased property is there are
inconsistencies between the designation of parking areas allocated to the marina and
those allocated to the condominiums. Specifically, there are differences between
what is shown on document C-1.1, and document A-1.1 as to the parking space
allocation.3
The primary question in this case is which document, as between C-1.1 and
A-1.1, controls the allocation of parking spaces. The disputants are the marina entity
lessee and the condominium association, which succeeded in interest to the original
lessor.
PROCEDURAL BACKGROUND
I held a two-day bench trial on April 17 and 18, 2023. At the end of the trial,
I gave the parties 30 days after receipt of the trial transcript to submit their opening
post-trial briefs, and 15 days thereafter to file their answering post-trial briefs.
3
The other “A” documents deal with upper floors of the building and do not show the ground
floor parking. They have no bearing on this dispute.
6
On May 15, 2023, the Plaintiff, Rehoboth Marina Ventures, LLC assigned,
transferred, and conveyed, among other things, all of its right, title, and interest in
the lease, the Marina, and the claims and defenses asserted in this action, to Blue
Rehoboth Marina, LLC. The caption of this case was correspondingly changed.
On June 7, 2023, the parties filed a stipulation that they would file their
opening post-trial briefs on July 15 and their answering post-trial briefs on August
14, 2023. On June 28, 2023, I denied a modification of the stipulation which would
have extended these dates.
Both parties filed their post-trial opening briefs on July 14, 2023, and their
post-trial answering briefs on August 14, 2023. This is my decision on the merits.
THE PARKING SPACES AT ISSUE
There are disputes over 13 spaces in groupings of 4 spaces, 5 spaces, 3 spaces
and 1 space.
The four space issue involves four spaces on the southwestern edge of the
property, two under the western edge of Building 1, and two just outside the western
edge. These spaces have traditionally served the marina and have done so from the
creation of Rehoboth Marina View Condominiums, and the Rehoboth Marina lease
arrangement, until 2020. In 2020 the Condominium Association gave notice to all
it would be repainting the parking area. When it repainted, the Condominium
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Association eliminated one of the four parking spaces and designated the other three
for handicapped parking. The Association raised a factual issue as to whether the
Marina approved the reworking of these spaces. The evidence was slim on this issue.
To the extent the Association is claiming waiver of the Marina’s rights under the
lease, I find insufficient factual support and no writing consistent with the lease
requirements.
The Association also argued that applicable law required the handicapped
spaces, and the two spaces allocable to the Marina (by the C-1.1 document) could
be used by the Marina as handicapped spaces. However, the Association has no
right under the lease to dictate how the Marina uses its spaces. The argument that it
does is specious, and I reject it. For the same reason I reject the Association’s
argument it could eliminate one space because an electric meter box exists at the
space’s southern end, and people parking in the space keep running into the box.
The only remaining issue for the four spaces is the central one of which
drawing controls. I will address this issue after I finish addressing the facts
concerning the other groupings of parking spaces.
The five spaces are partially under Building 2. They abut the walkway and
bulkhead at the northeast section of the property. Drawing C-1.1 does not show
these five spaces. Drawing A-1.1 does, and allocates them to the Marina. One might
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conclude that the C-1.1 drawing does not show these spots because they are largely
under Building 2 and cannot be seen. The only issue with these spots is the conflict
between the two drawings.
The three parking spots are, perhaps, the most problematic. These spots are
just south of Building 2, next to the Rehoboth Bay, and generally just to the west of
the Marina building. They are convenient drop off spots for both the Marina and
Building 2, and constituents of both parties used them from the creation of this world
until around 2015. In 2015 a dispute arose between Mr. Redefer and the
Condominium Association. At the time Mr. Redefer was both dockmaster for the
Marina, and property manager for the Condominium Association. The Association
fired him, and in what the Association representatives described as a fit of anger, the
day after his firing he repainted the three spaces for use by the Marina. I never heard
Mr. Redefer’s explanation of what happened. Despite the remarking of these spots,
Condominium Association members and guests and Marina constituents continued
to use the three spaces as they had before the repainting.
Document C-1.1 shows these spots as common elements. Document A-1.1
marks them for use by the Marina. A determination of the three spots’ proper
allocation depends upon the determination of the controlling document.
9
Finally, one spot, on the north side of the area set aside for the Marina
building, has been used by the Marina manager. Again, this is marked as part of the
common elements on C-1.1, and for Marina use on A-1.1.
THE DOCUMENTS AND EXPERT TESTIMONY
As I have described, the documents are inconsistent as to the parking spaces
at issue. I look to several sources for guidance. If the documents give specific
guidance on the issue they control.4 If they are not clear, I attempt to divine the
intent of the preparers.5 As to both issues, I consider both the lay testimony and the
expert opinions offered at trial.
THE DOCUMENTS
C-1.1 is an overview of the property and a formal survey. It is a document
required by the Unit Property Act.6 Counsel for Plaintiff described it accurately as
the 10,000 foot view. It contains many details. To further confuse matters, the plans
contain a C-1.1 in the original plans, as well as a separate one in the First Amended
Plans, although the internal markings show the same date, July 25, 2006. As best I
can tell, the difference between the two C-1.1 plans is that the one in the First
Amended Declaration contained details of Building 2, not shown on the original
4
Travis v. Escape Hosp., 2020 WL 1170768, at *3 (Del. Super. Feb. 28, 2020) (footnotes omitted).
5
AT&T Corp. v. Lillis, 953 A.2d 241, 253 (Del. 2008); Comrie v. Enterasys Networks, Inc., 837
A.2d 1, 13 (Del. Ch. 2003).
6
25 Del. C. §2220.
10
Declaration Plan. No testimony pointed out any other difference, and my untrained
eye has discerned none. No testimony explained why these separate documents
would contain the same preparation date. The parties make no issue of this, so I
make no issue of it.7
C-1.1 has one note central to the issue. It has what the parties described as a
“call out”. The Call Out says:
See Floor Plans for Parking Spaces, Stairwells, Mechanical Areas,
Community Room, Office Areas, Etc. (Bold in the original)
“Floor Plans” means A-1.1, so the Call Out is telling.
THE EXPERT TESTIMONY
The Defendant presented two expert reports and expert witness’ trial
testimony. David Naples is a principal in Code Solutions International, LLC with
an address in Harbeson, Delaware. Mr. Naples is superbly qualified in all things
related to building or other municipal codes. He opines in his report that all the
parking spaces at issue belong to the Condominium Association. Nowhere in his
report does he tell me why he reaches these conclusions. I infer that he does so
7
One of defendant’s experts, David Naples, in his written report opined that the First Amended
Plans would be controlling. However, he never said in either his testimony or in his report any
differences he may have found between the original and first amended plans that bore upon the
issue of which document controlled parking space allocation.
11
because he considers the C-1.1 documents as controlling, because they are internally
dated later than the A-1.1 documents. I also infer this because the Defendant’s other
expert, Thomas G. Wilkes, says that the internal date which is the latest – the one in
the C-1.1 documents -- controls. It appears to me Mr. Naples simply piggy backed
off Mr. Wilkes and then accurately read C-1.1.
I found Mr. Naples’ opinions unhelpful. His qualifications are not on point
as to the issues raised. His report is conclusory. He did at trial try to buttress his
opinions by referencing document C-1.1’s quality as a survey. From this he
concluded that C-1.1 controls. I have two problems with this opinion. First, it was
not disclosed prior to trial, and Plaintiff’s counsel properly objected to it. Even were
I to consider it, I found no reason to use the quality of a survey as creating an order
of merit which would raise document C-1.1 over document A-1.1.
Mr. Wilkes is a professional Civil Engineer licensed in a number of States,
including Delaware. He is well qualified to address and give opinions concerning
the proper reading of drawings. He too gave opinions at trial that were not stated in
his report. Plaintiff’s counsel rightly objected. I will, however, address all his
opinions.
12
His report, as noted, gave the later date of the C-1.1 documents as the reason
to rely upon them and not A-1.1.8 The reliance upon the internal date for me is not
controlling, for a number of reasons. The date appears to me internal only, and not
any determination as to which document controls. Plaintiff’s expert, Matthew
Burns, P.E., testified to this, and I found his testimony credible, and consistent with
their drafting. In addition, the documents were part of a comprehensive plan for the
construction of the project and its submission under the Unit Property Act. Mr.
Galbraith and the creators of the documents recorded The Declaration Plan, with
both C-1.1 and A-1.1 Documents, together as one package. They did the same with
the First Amended Declaration Plan, and its version of C-1.1 and A-1.1. This shows
me that the creators of the plans never intended that they were separate or
independent documents. I reject the “separate dates” argument.
Mr. Wilkes also at trial espoused the “a survey gets additional credence”
argument. I reject this for the same reasons I rejected the same argument made by
Mr. Naples. Also, it was not in Mr. Wilkes’ report.
Two final comments about Mr. Wilkes. First, he only discussed four parking
spaces “…near the Marina building.” These would be the “three spaces” and the
“manager’s space” as I have labelled them. He does not address the others. I can
8
See Wilkes report, Defendant’s Ex. 2, Tab D.
13
only find expert evidence to the other spaces by piecing together Mr. Wilkes’ “date
theory” with Mr. Naples’ unsubstantiated opinions. I decline to do this.
Second, I asked Mr. Wilkes if I should simply ignore the “call out” language
of document C-1.1 in making my determination of which document controls.
Tellingly, he told me I should not ignore the “call out.” Stated affirmatively, his
view was I had to consider the “call out” language when making the decision as to
which document controls.
THE “CALL OUT” AND THE TESTIMONY OF MR. GALBRAITH
For me, the “call out” language controls this case. It is an express direction
to look to document A-1.1 for determining parking spaces. The language could not
be more direct and clear, and the law requires me to give effect to the clear language.9
To the extent necessary Mr. Galbraith’s testimony buttressed the specific
language. Mr. Galbraith was intimately involved with the process of creating the
condominiums and the Marina, including the lease. He told me he determined (and
cleared with his partners), an allocation of 50 parking space to the Marina, and 99 to
the condominiums. I found Mr. Galbraith’s testimony credible and logical. That
9
Travis v. Escape Hosp., 2020 WL 1170768, at *3 (Del. Super. Feb. 28, 2020) (footnotes omitted).
14
allocation was set forth in Documents A-1.1 and it is the controlling document. I
believe ultimately Mr. Wilkes agreed.
I grant judgment in favor of the Plaintiff and against the Defendant as to all
parking spaces at issue.
DAMAGES
“A tenant may sue the landlord for damages resulting from the landlord’s
breach of his duties under a lease.”10 “The appropriate measure of damages in a
breach of contract action is that amount which will return the damaged parties to the
position they would have been in had the breach not occurred. Those damages
include those which might have been foreseen or anticipated as being likely to flow
from the breach.”11 In my view, Plaintiff has showed that Defendant breached the
Lease and caused Plaintiff damages. Defendant unilaterally eliminated one of the
Four Spaces and redesignated the other three spaces as handicapped parking only.
Defendant made those changes without advance notice to, or the prior consent of,
Plaintiff. Defendant conceded two of the Four Spaces were always Plaintiff’s to
control. Moreover, two of the Four Spaces were also allocated to Plaintiff. Although
Defendant did not actively exclude Plaintiff’s customers from the Four Spaces, it
eliminated one space and redesignated the other three spaces as handicapped parking
10
Brown v. Robyn Realty Co., 367 A.2d 183, 189 (Del. Super. 1976).
11
Gerstley v. Mayer, 2015 WL 756981, at *5 (Del. Super. Feb. 11, 2015).
15
only, negatively impacting Plaintiff’s parking rights under the Lease. Plaintiff
demonstrated that it spent $1,800 for additional public parking passes to make up
for the four spaces to which it no longer had full access. For breach of the Lease, I
award Plaintiff $1,800 in damages, as well as pre- and post-judgment interest of
those damages.
LEGAL FEES AND COSTS
Plaintiff concedes that it cannot seek an award of its legal fees under the
Lease’s fee-shifting provision because that provision runs only in favor of
Defendant.12 However, Plaintiff nonetheless seeks to recover a portion of its legal
fees and costs under the bad-faith exception to the American Rule that each party
bears its own legal fees and costs. It argues that Defendant’s claim with respect to
the Five Spaces which Plaintiff had used for decades (the “Five Spaces Claim”)
should never have been pursued. I allowed the addition of the Five Spaces Claim by
amendment at the end of the discovery period after the motion to amend deadline
had passed. Plaintiff defended the Five Spaces Claim against Defendant’s motion
for summary judgment. Defendant included the Five Spaces Claim in the Pre-Trial
Stipulation. However, neither the written reports nor the testimony at trial of
12
Pl. Ex. 1, Tab 1 ¶20.
16
Defendant’s experts supported the Five Spaces Claim. Indeed, at trial, Defendant
quickly capitulated on the Five Spaces Claim.13
Delaware Courts have found bad faith where parties have unnecessarily
prolonged or delayed litigation, knowingly asserted frivolous claims, misled the
court, or changed position on an issue.14 Plaintiff argues that Defendant did all those
things: delayed the case, filed a frivolous claim, misled me, and changed position on
an issue. The facts suggest that there was a delay in the proceedings, but not
necessarily that the delay was exclusively or primarily due to the Five Spaces Claim.
Defendant did change its position on the Five Spaces Claim at the last minute. But
the facts do not suggest to me that Defendant intentionally delayed the case,
knowingly asserted a frivolous claim, or deliberately misled me. I do not disagree
that Plaintiff incurred additional legal fees and expenses defending against the Five
Spaces Claim in its pleadings, motions, expert preparation, and trial preparation.
However, in my mind Defendant’s conduct, while it might have been better, does
not rise to the standard set out in Delaware law to require Defendant to pay Plaintiff’s
legal fees and costs associated with the defense of the Five Spaces Claim.
I deny this claim.
13
Tr. A 214-215 (Naples), Tr. A 243 (Wilkes).
14
See RBC Capital Markets, LLC v. Jervis, 129 A.3d 816, 877 (Del. 2015) (stating standard).
17
CONCLUSION
It is unfortunate that the parties litigated these issues to the degree they did. The
Blue Rehoboth Marina and the Marina View Condominiums live in a world of tight
quarters. There was never going to be enough parking for the intended uses. The
plans set in place an area rife for conflict. The testimony of the Condominium
Association representatives showed they felt misled from the time of the purchase
of their units. But that is not the issue before me, and is long in the past.
Plaintiff’s counsel is directed to submit an Order consistent with and
effectuating this Opinion. The Order shall be submitted to counsel for Defendant
for review as to form.
/s/ Craig A. Karsnitz
cc: Prothonotary
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