B/E Aerospace, Inc. v. J.A. Reinhardt Holdings, LLC ( 2020 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
B/E AEROSPACE, INC.
Plaintiff,
Vv.
J.A. REINHARDT HOLDINGS, LLC,
ARLINGTON TSI INVESTMENTS, LLC,
MADISON CAPITAL FUNDING LLC
AUDAX MEZZANINE FUND, L.P.,
AUDAX CO-INVEST, L.P.,
AUDAX TRUST CO-INVEST, L.P.,
AFF CO-INVEST, L.P.,
ARES CAPITAL CORPORATION,
NORTHWESTERN MUTUAL,
CSP EQUITY PARTNERS 41, LLC,
ROBERT TERENZI, DALE JESSICK,
DAVE ECKLAND, ED GAGER,
BLAIR GAIDA, SAL SCILINGO,
HENRY T. LITTLE, JR., EJ MONDOR,
RT HUNT, TOM LAPPIN, BILL ORR,
DOUG PIPER, LEE CROUCH, KAY IRVIN, )
BARRY TATE, MARGUERITE BURNETTE, )
BOB GILMAN, TOM BROWNING, )
GREG TUCKER, DAVID HELMS, )
MIKE MASTERGEORGE, STEVE HORTON, )
ROBERT MANNING, CHRIS BELL,
KEVIN ROWAN, VINCE CORTI,
YTZHAK LCHE GEWELBER,
JIM JENKINS, JOHN DARMODY,
SCOTT DUPRE, DAVID REYNOLDS,
BRIAN DIETZ, DANIELLE KEANEY,
MOHAMED SHAHIN, and
SCOTT CHESTER,
me eee ce ee ee” ee ee Nm ee Nee Ne ee eee ee” ee”
Defendants.
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C.A. No. N20C-01-187
PRW CCLD
Submitted: July 1, 2020
Decided: July 21, 2020
Upon Defendants’ Motion to Dismiss,
GRANTED.
MEMORANDUM OPINION AND ORDER
Davis Wright, Esquire, and James Ray, Esquire (pro hac vice) (argued),
ROBINSON+COLE LLP, Wilmington, Delaware, Attorneys for Plaintiff.
Philip Lee Trainer, Jr., Esquire (argued), and Marie Degnan, Esquire, ASHBY &
GEDDES, P.A., Wilmington, Delaware, Attorneys for Defendants.
WALLACE, J.
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B/E Aerospace, Inc. (“B/E Aerospace”) brings this action against dozens of
entities and individuals (“Defendants”) who are the former owners of certain capital
stock B/E Aerospace acquired through a Security Purchase Agreement (“SPA”).!
As part of that transaction, Defendants set up an escrow account (“Escow”) from
which to make post-transition payments.
B/E Aerospace filed suit in the Court of Chancery” alleging that degraded
environmental conditions of a South Carolina site (“Simpsonville Site”) breached
the SPA’s warranties. B/E Aerospace later obtained transfer to the Superior Court.
B/E Aerospace’s Complaint alleges two counts—first, an action for damages for
breach of the SPA’s warranties and representations, and second a prayer for
declaratory judgment that liability for that breach can proceed against the
Defendants on a pro rata basis if the Escrow is exhausted.
Defendants have moved to dismiss the suit as unripe (with respect to the
Escrow) and moot (with respect to already-accrued environmental remediation
expenses).
1 Am. Compl. (§ 1-14 (DI. 1).
2 Ver. Compl., B/E Aerospace, Inc. v. J.A. Reinhardt Holdings, LLC, et. al, C.A. No. 2019-0748-
VC (Del. Ch. Sept. 18, 2019) (Del. Ch. 1).
3 Trans. Order, B/E Aerospace, Inc. v. J.A. Reinhardt Holdings, LLC, et. al, C.A. No. 2019-
0748-VC (Del. Ch. Jan. 6, 2020) (Del. Ch. D.I. 9); see also Am. Compl. ex. 1 (D.I. 1).
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I. APPLICABLE LEGAL STANDARDS
A ripeness challenge is an attack on the subject matter jurisdiction of the
Court, and so falls under Superior Court Civil Rule 12(b)(1).4 “Delaware courts
decline to exercise jurisdiction over a case unless the underlying controversy is ripe,
”5 “Ripeness is
i.e., has matured to a point where judicial action is appropriate.
analyzed on a claim-by-claim basis.” ® And “[t]he burden of establishing the Court’s
subject matter jurisdiction [over a claim] rests with the party seeking the Court’s
intervention.”” Jurisdiction is determined based on the allegations on the face of the
complaint, “assum[ing] that all material factual allegations are true.”® Such
challenges are “far more demanding of the non-movant” than Rule 12(b)(6) motions
4 See Ladenburg Thalmann Fin. Servs., Inc. v. Ameriprise Fin., Inc., 2017 WL 685577, at *3
(Del. Super. Ct. Jan. 30, 2017) (“[A] Motion to Dismiss for lack of ripeness, on the other hand, ‘is
properly considered under Superior Court Civil Rule 12(6)(1) for lack of subject matter
jurisdiction.””) (quoting Homeland Ins. Co. of N.Y. v. Corvel Corp., 2011 WL 7122367, at *3 (Del.
Super. Ct. Nov. 30, 2011)); Bebchuk v. CA, Inc., 902 A.2d 737, 740 (Del. Ch. 2006) (“Ripeness,
the simple question of whether a suit has been brought at the correct time, goes to the very heart
of whether a court has subject matter jurisdiction.”).
5 XL Specialty Ins. Co. v. WMI Liquidating Trust, 93 A.3d 1208, 1217 (Del. 2014) (internal
citations omitted).
6 Athene Life and Annuity Co. v. American General Life Insurance Co., 2020 WL 2521557, at
*11 (Del. Super. Ct. May 18, 2020).
7 State ex rel. French v. Card Compliant, LLC, 2017 WL 1483523, at *8 (Del. Super. Ct. Apr.
21, 2017) (quoting Ropp v. King, 2007 WL 2198771, at *2 (Del. Ch. July 25, 2007)).
8 Janowski v. Division of State Police, Dept. of Safety and Homeland Sec., State, 981 A.2d
1166, 1169 (Del. 2009).
mL
to dismiss, and “the Court need not accept Plaintiffs factual allegations as true [but]
is free to consider facts not alleged in the complaint.”?
By contrast, mootness—another species of justiciability challenge’’— does
not always mandate dismissal.'' “Mootness arises when controversy between the
parties no longer exists such that a court can no longer grant relief in the matter.”!
“The doctrine of mootness requires a court to dismiss a claim if the substance of the
dispute disappears due to the occurrence of certain events following the filing of an
”13- And while “a controversy that has become moot normally will be
action.
dismissed,”!* this Court has the discretion to hear matters “which are capable of
repetition but would, upon dismissal, evade review . . . [when the litigant] retain[s]
° Appriva Shareholder Litigation Co., LLC v. EV3, Inc., 937 A.2d 1275, 1284 n.14 (Del. 2007)
(citing Phillips v. County of Bucks, 1999 WL 600541, at *1 (E.D.Pa. Aug. 9, 1999)).
0 Cresent/Mach I Partners, L.P. v. Dr. Pepper Bottling Co. of Texas, 962 A.2d 205, 208 (Del.
2008) (“Delaware courts analyze mootness and ripeness in determining whether a justiciable
controversy exists. Our law requires that a dispute not be moot and that it be ripe for adjudication
to avoid wasting judicial resources on academic disputes.”).
11 See Howell v. Justice of the Peace Court No. 16,2007 WL 2319147, at *5 (Del. Super. Ct. Jul.
10, 2007); see also Glazer v. Pasternak, 693 A.2d 319, 320-21 (Del. 1997) (“Mootness does not
mandate dismissal, however, if the issue on appeal is one that is likely to recur.”); Gen. Motors
Corp. v. New Castle County, 701 A.2d 819, 824 n.5 (Del. 1997) (“Two recognized exceptions to
[the] mootness doctrine are situations that are capable of repetition but evade review and matters
of public importance.”).
2 State Farm Mut. Auto. Ins. Co. v. Davis, 80 A.3d 628, 632 (Del. 2013) (quoting Mentor
Graphics Corp. v. Shapiro, 818 A.2d 959, 963 (Del. 2003)).
13 NAMA Hldgs., LLC v. Related World Market Center, LLC, 922 A.2d 417, 435 (Del. Ch. 2007).
'4 Glazer, 693 A.2d at 320.
a sufficient personal stake in the litigation to move to the next phase of the
proceedings, despite the mootness of his individual claim.”!° Too, “if the [litigant’s]
alleged injury still exists despite the occurrence of intervening events, a justiciable
controversy remains, and the mootness doctrine will not operate to deprive a court
of jurisdiction to hear the case.”'®
Both ripeness and mootness challenge a court’s subject matter jurisdiction and
so are analyzed under Rule 12(b)(1).'’ As subject matter jurisdiction challenges,
both might be raised sua sponte by the Court at any time.'® And for both, the Court
pragmatically determines whether the dispute is currently concrete enough to justify
adversarial litigation.!? The key distinction is that mootness only justifies dismissal
13 Stratton v. American Independent Ins. Co., 2011 WL 3812570, at *3 (Del. Super. Ct. Aug. 12,
2011).
16 NAMA Hidgs., 922 A.2d at 435.
17 Td. at n.43 (noting in mootness challenge: “Because the requirement of an actual controversy
goes directly to the court’s subject matter jurisdiction over an action, a motion to dismiss based on
justiciability grounds is properly viewed in the context of [ ] Rule 12(b)(1).”); Ladenburg
Thalmann Fin. Servs., 2017 WL 685577, at *3 (same for ripeness).
18 Eg. Stearn v. Koch, 628 A.2d 44, 47 (Del. 1993) (affirming trial court’s sua sponte dismissal
for mootness); Stroud v. Milliken Enters., Inc., 552 A.2d 476, 477 (Del. 1989) (dismissing an
appeal because the underlying matter was unripe, when the issue of ripeness was first raised by
the Supreme Court swa sponte at oral arguments).
'9 Compare XL Specialty, 93 A.3d at 1217-18 (Del. 2014) (“A ripeness determination requires a
common sense assessment of whether the interests of the party seeking immediate relief outweigh
the concerns of the court in postponing review until the question arises in some more concrete and
final form.”) with Re: PPL Corp. v. Riverstone Hldgs., LLC, 2020 WL 3422397, at *3 (Del. Ch.
Jun. 22, 2020) (“[M]ootness is fundamentally a matter of degree; there is no precise test for
ascertaining with precision whether a particular claim has become moot. . . . Such a determination
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when “it is certain” that a favorable judgment “could have no practical effect on the
parties.”2° By contrast, a court dismisses a dispute as unripe if future events may
“obviate the need for judicial intervention.””’ So in practical terms, mootness and
ripeness both require a weighing of whether the non-movant presents a controversy
currently within the court’s subject matter jurisdiction.
Il. FACTUAL BACKGROUND
In October 2010, B/E Aerospace entered into the SPA with Defendants to
purchase capital stock in two firms from Defendants, the firms’ previous owners.””
The SPA includes warranties and representations, including that “there have been
no Releases of or exposure to any Hazardous Material that could reasonably be
expected to form the basis of any Action against, or Liability of, any [of the
purchased entities] under or pursuant to any Environmental Law.””
The SPA also provided for indemnification to B/E Aerospace for any breach
in the representations and warranties,” first against the Escrow and then, B/E
therefore becomes an intensely factual inquiry, guided primarily by pragmatic considerations.”)
(quoting Int’ Bhd. of Boilermakers v. Kelly, 815 F.2d 912, 915 (3d Cir.1987)) (ellipsis in original).
20 PPL Corp., 2020 WL 3422397, at *3 (citations omitted).
21 XL Specialty, 93 A.3d at 1218.
22 Am. Compl. J 19 (D.L. 1).
23 Id. at J 20 (quoting the SPA § 4.15) (capitalization in the original).
24 Id. at § 22 (quoting the SPA § 9.1(b)).
Aerospace alleges, in a pro rata share among all named Defendants themselves.”
For purposes of conducting the transaction, the SPA provided for Defendants to
appoint a single entity as their representative for transaction-related disputes, which
they did (“Representative”).*° Also in October 2010, Defendants established the
Escrow just as the SPA required.?’
After closing on the transaction, B/E Aerospace took possession of the
Simpsonville Site, discovered tetrachloroethylene”*® contamination in the site’s
groundwater, informed the Representative, and demanded indemnification.” The
25 Jd. at {23 (quoting the SPA § 9.4).
26 Id. at Ff 25, 26.
27 Td. at | 24.
28 An organic solvent with many commercial and industrial applications, tetrachloroethylene is
often used in dry-cleaning and metal-cleaning products and for textile processing. Leese v.
Lockheed Martin Corp., 2013 WL 5476415, at *2 (D.N.J. Aug. 12, 2014) (“[T]etrachloroethylene,
also known as perchloroethylene (“PCE”), [ ] is a [volatile organic compound] used in dry-cleaning
and metal-cleaning products and for textile processing.”); H&H Holding, L.P. v. Chi Choul Lee,
2014 WL 958878, at *1 (E.D. Pa. Mar. 6, 2014) (‘“Tetrachloroethylene (also known as
Perchloroethylene) (“PCE”), [is] a chemical widely employed for dry cleaning fabrics and
classified by the EPA as a likely human carcinogen.”). And tetrachloroethylene contamination
has led to many a lawsuit. See, e.g, Litgo New Jersey Inc. v. Commissioner New Jersey Dept. of
Environmental Protection, 725 F.3d 369, 374 (3d Cir. 2013) (involving groundwater contaminated
by tetrachloroethylene due to its extensive commercial and industrial use on-site); Black Horse
Lane Assoc., L.P. v. Dow Chemical Corp., 228 F.3d 275, 279 (3d Cir. 2000) (addressing
groundwater contamination from tetrachloroethylene due to its use as a solvent in manufacturing);
Westfarm Assocs. Ltd. P’ship v. Washington Suburban Sanitary Com’n, 66 F.3d 669, 679 (4th Cir.
1995) (addressing groundwater contamination by tetrachloroethylene from its use in dry cleaning).
29 Am. Compl. {§ 29, 30, 32 (D.I. 1).
Representative initially disputed liability.>° Nevertheless, thereafter the
Representative disbursed funds from the Escrow to pay the invoices B/E Aerospace
submitted.3! After the tetracholoethylene contamination was discovered, the parties
agreed to a distribution to the Representative (on Defendants’ behalf)
of all Escrow funds except for $2,500,000; that amount represented the then-current
estimate of cleanup and remediation costs for the Simpsonville Site.*?
Since that time, B/E Aerospace has made several demands for indemnification
3 While one invoice was outstanding when B/E
payments from the Escrow.?
Aerospace filed the initial Complaint in this case, B/E Aerospace received payment
from the Escrow even before argument was heard on this motion.** And another
invoice, submitted subsequent to the filing of the lawsuit, was likewise paid in full
within months.35 At present, $1,857,378.99 remains in the Escrow.*° And the
30 Id. at § 33.
31 Id. at Ff 35, 36. The Amended Complaint does not make clear that B/E Aerospace agreed to
the escrow disbursal, but the company makes its contemporaneous agreement clear in its
Opposition Brief. PIf. Br. in Opp’n at 3.
32 Id. at § 36.
33 Jd. at § 37.
34 lf. Ltr. at 2 (D.L. 14); Def. Ltr. at 3 (D.L. 15).
35. Plf. Ltr. at 2-3 (D.I. 14); Def. Ltr. at 3 (D.I. 15).
36 Def. Ltr. at 3 (D.I. 15).
preponderance of all payments against the Escrow have been related to the
Simpsonville site.*”
Of greatest concern to Plaintiffs is the fact that Defendants, through the
Representative, asserted to B/E Aerospace that their liability is limited to the retained
Escrow amount.3®
HI. DISCUSSION
A. COUNT I - BREACH OF CONTRACT IS Moot.”
“Under Delaware law, the elements of a breach of contract claim are: 1) a
contractual obligation; 2) a breach of that obligation by the defendant; and 3) a
resulting damage to the plaintiff.”“° In circumstances like this, a party may fulfill its
obligation in either of two ways: “perform the contract or fully compensate the
promisee for non-performance.”*!
B/E Aerospace’s Complaint in sum alleges that Defendants made warranties
and representations under the SPA, and that the Simpsonville Site’s groundwater
37 Argument Transcript, May 5, 2020, at 13. (“[B]y far and away the lion’s share is the South
Carolina property.”) (D.I. 16).
38 Am. Compl. at 41 (D.I. 1).
39 The issue of Count I’s mootness was raised at argument and was the subject of post-argument
briefing. Arg. Tr. at 5-6, 23-28; Plf. Ltr. (D.I. 14); Def. Ltr. (D.I. 15).
40 Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 548 (Del. Super. Ct. 2005).
4l_ Leaf Invenergy Co. v. Invenergy Renewables LLC, 210 A.3d 688, 703 (Del. 2019).
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contamination breached those obligations. But B/E Aerospace concedes that
Defendants have, to the present, consistently paid all invoices for remediation of that
contamination from the $2,500, 000 Escrow fund retainer the parties agreed to.” So
long as Defendants continue to pay B/E Aerospace in full for the breach of the
warranty, there is no “resulting damage” to perfect B/E Aerospace’s cause of
action.*2 Defendants thus have, according to B/E Aerospace’s own allegations,
fulfilled the warranties and representations through payment.
In the briefs, B/E Aerospace notes that months may elapse between
submission of an invoice and its payment.** But pay without fail Defendants’
42 Arg. Tr. at 24 (“There are no outstanding requests, but they have never accepted our tender of
indemnification.”) (D.I. 16).
43 Try as it may, B/E Aerospace has been unable to identify any damages—other than
reimbursement of the actual site cleanup costs (which have been paid as incurred)—that are
recoverable under its breach-of-contract claim. See id. at 24-27.
44 Note that as B/E Aerospace does not allege that any of the agreements contained a clause
asserting that time is of the essence, Defendants are entitled to reasonable time to perform the
obligation. See Brasby v. Morris, 2007 WL 949485, at *3-4 (Del. Super. Ct. Mar. 29,
2007) (“Where the language of a contract does not contain a specific declaration that time is of the
essence, the law permits the parties a reasonable time in which to tender performance. The
reasonable time for performance is given ‘regardless of whether the contract designates a specific
date on which such performance is to be tendered.’”) (internal citations omitted). Nor does B/E
Aerospace ask the Court to interpret any of the agreements to have such a time-is-of-the-essense
clause or other required payment period, which, if appropriate in this case, might invoke this
Court’s power to construe contracts. See Heartland Delaware Inc. v. Rehoboth Mall Ltd. P ship,
57 A.3d 917, 923 n.25 (Del. Ch. 2012).
Representative has done—and, as both parties agree, continues to do—eliminating
any injury and thereby rendering the matter moot.”
Situations which are “capable of repetition but evade review” are nevertheless
justiciable as an exception to the mootness doctrine.” A matter is capable of evading
review and should not be dismissed as moot, “when a defendant ‘continues to defend
the legality of its actions, making it not clear why the [defendant] would necessarily
refrain from [the same conduct] in the future.”’*” Defendants acknowledge this
exception, but argue it is inapplicable as they no longer “continue[] to defend the
conduct at issue”—i.e., any denial of liability for reimbursement of Simpsonville
Site environmental cleanup costs from the Escrow—in Count I."* Prior to argument,
Defendants had resisted acknowledging such breach of the warranties.” Because
45 See Mentor Graphics, 818 A.2d at 963 (“A matter may become moot if the legal issue in
dispute is no longer amenable to a judicial resolution; or, ifa party has been divested of standing.”)
(quoting General Motors Corporation v. New Castle County, 701 A.2d 819, 821 (Del.1997)).
46 State Farm v. Davis, 80 A.3d at 632-33.
47 Sanborn v. GEICO Gen. Ins. Co., 2016 WL 520010, at *10 (Del. Super. Ct. Feb. 1, 2016)
(quoting Cooper v. Charter Comm. Entm'ts, I, LLC, 760 F.3d 103, 108 (1st Cir. 2014)).
48 See Def. Ltr. at 3 (D.I. 15) (“[T]he cases on which Plaintiff most heavily relies involve claims
that were found not to be moot because the defendants both: (a) continued to defend the conduct
at issue; and (b) could resume it at any time in the future. Those circumstances are not present
here.”) (emphasis added); id. at 4 (“The Representative has paid all outstanding reimbursement
requests. . .. There is no dispute about the propriety of such payments, and . . . Defendants do not
contest them in any way. Nor have Defendants argued that the Representative should not authorize
payment of future appropriate reimbursement requests.”).
49 Arg. Tr. at 25. (“They’ve not formally accepted our request for indemnification, but they have
paid the outstanding requests.”) (D.I. 16).
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they have abandoned that position and no longer dispute the factual contention of
the Simpsonville Site’s contamination at the time of the transaction,’ dismissal
would not evade review.
B. Count II — THE DECLARATORY JUDGMENT SOUGHT IS A QUESTION OF
AVAILABLE REMEDIES FOR BREACH OF THE WARRANTIES AT ISSUE IN
COUNT I THAT IS NOT SUFFICIENTLY RIPE.
‘Delaware courts are statutorily authorized to entertain an action for a
declaratory judgment, provided that an ‘actual controversy’ exists between the
parties.”°! An actual controversy exists where four criteria are satisfied:
(1) It must be a controversy involving the rights or other legal
relations of the party seeking declaratory relief; (2) it must be a
controversy in which the claim of right or other legal interest is
asserted against one who has an interest in contesting the claim;
(3) the controversy must be between parties whose interests are
real and adverse; (4) the issue involved in the controversy must be
ripe for judicial determination.”
50 See AT&T Corp. v. Lillis, 953 A.2d 241, 257 (Del. 2008) (“The scope of a judicial admission
by counsel is restricted to unequivocal statements as to matters of fact which otherwise would []
require evidentiary proof.”) (quoting Michael Graham, HANDBOOK OF FEDERAL EVIDENCE,
801:26 at 906 (6th ed. 2006)); see also Merritt v. United Parcel Service, 956 A.2d 1196, 1201-02
(Del. 2008) (“[J]udicial admissions, as distinguished from evidentiary admissions, are traditionally
considered conclusive and binding both upon the party against whom they operate, and upon the
court.”’).
5! XZ Specialty Ins. Co., 93 A.3d at 1216-17.
52 Rollins International, Inc. v. International Hydronics Corp., 303 A.2d 660, 662-63 (Del. 1973)
(quoting Marshall v. Hill, 93 A.2d 524, 525 (Del. Super. Ct. 1952)).
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The ripeness doctrine and inquiry’s “central concern is to avoid hypothetical
questions.” An action for declaratory judgment challenged on ripeness grounds
presents two principal dangers—squandering scarce judicial resources, and
intervening in a controversy where the specific facts do not necessitate judicial
intervention.** Making this determination involves a “weighing process . . . which
should turn importantly upon a practical evaluation of the circumstances of the
case.”°> A matter “is not ripe when it is contingent, meaning that it is dependent on
the occurrence of some future event(s) before its factual predicate is complete.”°°
Whether the remediation costs will overrun the Escrow and thereby require a
judicial determination of Count II is a question of the magnitude of damages
accruing from the contamination in breach of the warranties—the nub of Count I. If
remediation is eventually completed without exhausting the Escrow, the issue of
whether the Escrow is the limit of Defendants’ liability will never be litigated.
Likewise, if the remediation eventually breaches the Escrow ceiling and Defendants
agree at that time to pay the deficiency, again the matter will never be litigated. Only
53 Schick Inc. v. Amalgamated Clothing & Textile Workers Union, 533 A.2d 1235, 1239 (Del.
Ch. 1987).
4 Id.55 Stroud, 552 A.2d at 480 (internal citations omitted).
56 K&K Screw Products, L.L.C. v. Emerick Capital Investments, Inc., 2011 WL 3505354, at *9
(Del. Ch. Aug. 9, 2011).
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if the remediation eventually exhausts the Escrow prior to completion and
Defendants insist at that time that the Escrow is the limit of their liability will the
issues presented in Count II be ripe for judicial determination.
The current rate of remediation expensing would need to continue until the
2040s to exhaust the Escrow.>’ Any dispute over liability beyond the Escrow is thus
highly remote and contingent.
Though the future costs of site remediation are of uncertain measure, courts
are competent to—with proper expert testimony—reduce the cost of the breach of
an environmental contamination warranty to a present judgment.°® Had B/E
57 $1,857,378.99 represents slightly over seventy-four percent of the original $2,500,000 retained
in the Escrow nine years ago at the conclusion of the transaction. That expenditure rate implies
an exhaustion date twenty-five years hence, in the mid-2040s. In the face of this record, the Court
cannot now accept B/E Aerospace’s mere caution—unadorned with any supporting evidence or
well-pleaded allegation set forth in its complaint—as the necessary ripening agent for its
declaratory judgment claim. E.g. Arg. Tr. at 28 (“I don’t know that you can equate the past spend
rate on an environmental contamination and remediation case with what will be applied in the
future.”); id. at 29 (“[W]e can’t equate the pace at which the costs have been incurred to date with
future costs.”); Am. Compl. at 53 (D.L. 1) (“B/E Aerospace expects that the future environmental
cleanup and remediation costs at the Simpsonville Site alone will exceed two million dollars
($2,000,000), which exceeds the amount currently in the Escrow Account.”). See Malpiede v.
Townson, 780 A.2d 1075, 1083 (Del. 2001) (Court “is not required to accept every strained
interpretation of the allegations proposed by the plaintiff.”); Anderson v. Tingle, 2011 WL
3654531, at *2 (Del. Super. Ct. Aug. 15, 2011) (quoting Ramunno v. Cawley, 705 A.2d 1029, 1034
(Del. 1998)). (Court should “ignore conclusory allegations that lack specific supporting factual
allegations.”).
38 See Action Mfg. Co., Inc. v. Simon Wrecking Co., Inc., 287 Fed.Appx. 171, 176 (3d Cir. 2008)
(“[W]here past costs are known and future costs are speculative” in cleaning up environmental
degradation, courts are capable of such estimation and are even justified in applying an
“uncertainty premium . . . ‘to ensure that the parties assuming cleanup are not unduly burdened by
unforeseen future costs, and to acknowledge the benefit settling parties receive in resolving their
liability early.’”).
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Aerospace sought such a consolidated action for breach of warranty, the suit would
likely be ripe. It has chosen instead to pursue indemnification for expenses as they
come up, a view of contractual obligations by which the dispute is unripe. This is a
substantive and not technical distinction—indemnifying bills as they accrue places
the risk that the contamination costs will rise on Defendants, where a singular money
judgment for breach of warranty would place the risk on B/E Aerospace.
IV. CONCLUSION
B/E Aerospace alleges that it purchased capital assets that included ownership
of the Simpsonville Site through the SPA. It says that agreement warrants and
represents that there was no contamination at the Simpsonville Site, and those
watranties and representations are enforceable by indemnification provisions.
B/E Aerospace further alleges that the Simpsonville Site was contaminated in
violation of those representations and warranties and that it has incurred expenses
remediating that contamination. But, because Defendants have fully compensated
every dollar of injury B/E Aerospace claims as a result of the failure of the warranty,
any cause of action that would have accrued under B/E Aerospace complaint has
been rendered moot.
Despite that mootness, it would still be appropriate for the Court to exercise
its discretion to try the case if Defendants resisted liability. But, because Defendants
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concede the breach of the warranties, the controversy no longer requires judicial
intervention.
Likewise, B/E Aerospace’s second Count, seeking a declaration that its
potential recovery or indemnification is not limited to the Escrow account, is not yet
ripe. That Count is a question of damages, asking the Court to speculate on liability
limits that may never be reached. There is no reason for the Court to make such a
ruling at the present time.
For those reasons, the Defendants’ Motion is GRANTED, and this action is
DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.
Paul R. Wallace, Judge
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