COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: November 25, 2015
Date Decided: December 10, 2015
Andrew S. Dupre, Esquire Robert A. Penza, Esquire
Michael P. Kelly, Esquire Christopher M. Coggins, Esquire
Brian R. Lemon, Esquire Polsinelli PC
Benjamin A. Smyth, Esquire 222 Delaware Avenue, Suite 1101
McCarter & English, LLP Wilmington, DE 19801
Renaissance Centre
405 N. King Street, 8th Floor
Wilmington, DE 19801
Re: Brace Industrial Contracting, Inc. v. Peterson Enterprises, Inc.,
Civil Action No. 11189-VCG
Dear Counsel:
The Plaintiffs have filed a Motion for Partial Summary Judgment (the
“Motion”) contending that the Defendants have received payments from Plaintiffs’
customers, which payments the Defendants are contractually bound to pay over to
the Plaintiffs; but which payments, amounting to nearly $3.5 million, the Defendants
have retained as an improper self-help offset against claims they assert against the
Plaintiffs. At the conclusion of argument on the Motion, on November 4, 2015, I
instructed the parties to meet and confer on whether any of the funds held by the
Defendants are not in dispute and can be immediately released to the Plaintiffs,
bearing in mind that any release of funds by the Defendants would not necessarily
fully resolve the issues raised in the Motion, the remainder of which would await
resolution at trial in March.
After reviewing your concurrent letter submissions of November 24 and 25,
2015, I understand that on November 24, 2015, the parties agreed to an escrow
release in the amount of $1,650,422.10, but that the agreement subsequently broke
down because the Plaintiffs conditioned their acceptance on the Court still issuing a
ruling on the Motion at this stage of the litigation.
In their post-meet-and-confer submissions, the Plaintiffs maintain that nothing
short of complete repayment will cause them to withdraw the Motion, arguing that
they are entitled to the entire $3.475 million that the Defendants have received from
their customers; in other words, that “Defendants either have a right in Delaware law
to self-help themselves to $3.457 million of the Plaintiffs’ money as an offset against
different purported unliquidated claims, or not.”
At oral argument, the Plaintiffs represented that the Motion should be
immediately addressed—despite the impending trial date—because of their exigent
need of funds to maintain their business. In light of that argument, my intent in
asking the parties to meet and confer was to determine an amount that could be
released immediately, allowing all other claims to await trial without inefficient
motion practice. Accepting the Plaintiffs’ current position—that I should both order
release of a portion of the escrow funds and deliver a decision on their outstanding
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Motion for Summary Judgment—would render the meet-and-confers a futile
exercise, as any amount agreed to by the parties would immediately thereafter be
obviated by my determination of the full amount of the funds owed to the Plaintiffs.
The issue the Plaintiffs present for consideration in the Motion—whether the
Defendants have a right under Delaware law to retain $3.457 million of the
Plaintiffs’ money as a “self-help” offset against different purported unliquidated
claims, or not—is not as clear-cut as the Plaintiffs suggest. The Defendants do not
concede that the entire $3.475 million is the property of the Plaintiffs, which they
seek to retain for purposes of a set-off. The $3.457 million figure itself is at issue,
as the Defendants vigorously contended at oral argument. Without describing in this
brief letter the contractual and factual issues raised at argument, I simply note that
resolving those issues is more efficient after the impending trial.
For those reasons, the Defendants should tender the amount of Plaintiffs’
funds not in dispute, $1,650,422.10, to the Plaintiffs within 10 days. The Plaintiffs’
claim to the balance of the amount sought in the Motion is preserved, and I reserve
decision on the Motion pending trial scheduled in March, 2016. In light of this letter,
the parties should confer and let the Court know by Friday, December 18, 2015 what
outstanding motions, if any, remain to be resolved before trial.
To the extent the forgoing requires an order to take effect, IT IS SO
ORDERED.
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Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
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