IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
ASHLAND LLC, INTERNATIONAL ) SPECIALTY PRODUCTS INC., ISP ) ENVIRONMENTAL SERVICES INC., ) AND ISP CHEMCO LLC, ) ) Plaintiffs/Counterclaim ) Defendants, ) ) v. ) C.A. No. N15C-10-176 CCLD EMD ) THE SAMUEL J. HEYMAN 1981 ) CONTINUING TRUST FOR LAZARUS ) S. HEYMAN, et al., ) ) Defendants/Counterclaim ) Plaintiffs.
Submitted: February 19, 2018 Decided: June 21, 2018
Upon Defendant the Heyman Parties’ Motion to Dismiss Count III of the Second Amended Complaint DENIED
Christopher Viceconte, Esquire, Gibbons P.C., Wilmington, Delaware, and Michael R. Griffinger, Esquire, William S. Hatfield, Esquire, and Camille V. Otero, Esquire, Gibbons P.C., Newark, New Jersey. Attorneys for Ashland LLC, International Specialty Products, Inc., ISP Environmental Services, Inc., and ISP Chemco LLC
Kevin G. Abrams, Esquire, John M. Seaman, Esquire, and April M. Ferraro, Esquire, Abrams & Bayliss LLP, Wilmington, Delaware, and Andrew J. Rossman, Esquire, Jonathan B. Oblak, and Sylvia E. Simson, Esquire, Quinn Emanuel Urquhart & Sullivan, LLP, New York, New York. Attorneys for The Samuel J. Heyman 1981 Continuing Trust for Lazarus S. Heyman, et al.
DAVIS, J.
I. INTRODUCTION
This breach of contract case stemming from environmental liability allocation is assigned
to the Complex Commercial Litigation Division of the Court. Plaintiffs1 Ashland LLC,
1 Plaintiff Chemco is a subsidiary of Plaintiff ISP. Plaintiff IES is a subsidiary of Plaintiff Chemco. International Specialty Products, Inc. (“ISP”), ISP Environmental Services Inc. (“IES”), and ISP
Chemco LLC (“Chemco,” collectively with all other plaintiffs “Ashland”) filed the declaratory
judgment and breach of contract case against Heyman Defendants—The Heyman Seller
Defendants, The Heyman Trust Defendants, and Linden Property Holdings LLC (“LPH”
collectively with all other defendants “Heyman Defendants”).
On October 26, 2017, Ashland filed a second amended complaint (the “Second Amended
Complaint”) against the Heyman Defendants. The Second Amended Complaint included a claim
for fraud as Count III. Heyman Defendants filed a Motion to Dismiss Count III (the “Motion”).
Ashland filed their Answering Brief in Opposition to Defendants/Counterclaim Plaintiffs’
Motion to Dismiss Count III of the Second Amended Complaint (the “Opposition”). Heyman
Defendants filed their Reply Brief in Further Support of Heyman Parties’ Motion to Dismiss
Count III of the Second Amended Complaint (the “Reply”).
For the reasons set forth below, the Court DENIES the Motion.
II. RELEVANT FACTS2
The property involved in this civil action is located at 4000 Road to Grasselli, Linden,
New Jersey (the “Linden Property”).3 The Linden Property has a chemical manufacturing
history. From 1919 to 1991, non-parties GAF Corporation and GAF Chemicals Corporation
owned and operated the Linden Property.4 GAF Corporation and GAF Chemicals Corporation
2 Unless otherwise indicated, the facts provided in this Opinion are the facts alleged in the Second Amended Complaint filed by Ashland. For purposes of the Motion, the Court must view the Second Amended Complaint’s alleged facts in a light most favorable to Ashland. See, e.g., Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 536 (Del. 2011); Doe v. Cedars Acad., LLC, 2010 WL 5825343, at *3 (Del. Super. Oct. 27, 2010). 3 2d Am. Compl. ¶ 32. 4 Id. ¶ 33.
2 discovered extensive contamination at the Linden Property during the 1970s-80s.5 The Heyman
Defendants have owned GAF Corporation and GAF Chemicals Corporation since the 1980s.6
On June 16, 1989, GAF Chemicals Corporation and the New Jersey Department of
Environmental Protection (“NJDEP”) entered into an Administrative Consent Order (the
“ACO”) regarding environmental contamination and cleanup at the Linden Property. 7 The ACO
made GAF Chemicals Corporation and “its principals, directors, officers, agents, successors,
[and] assignees . . .” responsible for environmental remediation until the NJDEP gave GAF
written notice it satisfied the ACO.8
In 1991, the Heyman Defendants incorporated ISP as a subsidiary of GAF Chemicals
Corporation and incorporated IES as ISP’s subsidiary.9 GAF Chemicals Corporation then
transferred ownership of the Linden Property to IES.10 The parties agree that IES became the
entity responsible for the ACO. In 1996, the Heyman Defendants spun off ISP (and IES) from
GAF Chemicals Corporation.11
In 2006, Chemco executed an Administrative Consent Order Amendment (the “Amended
ACO”) with the NJDEP.12 The Amended ACO did not replace the ACO. Instead, the Amended
5 Id. ¶ 34. 6 Id. ¶ 35. 7 Id. ¶ 37. See also Compl. Ex. B. 8 See Ex. B. at pp. 18, 22. 9 2d Am. Compl. ¶¶ 38–39. 10 Id. ¶ 40. 11 Id. ¶ 42. 12 Id. ¶ 45. See also Compl. Ex. C, ¶ 4.
3 ACO supplemented and became a part of the ACO.13 The Amended ACO expressly provided
that IES would continue to comply with the terms of the ACO.14
In 2005 and 2007, the NJDEP sent letters advising the Heyman Defendants how to
address off-site contamination remediation efforts.15 The letters stated that the remedial efforts
were not complete and LPH did not have a fully implemented cleanup.16 Specifically, the 2005
NJDEP letter states:
The Remedial Action Workplan and Remedial Action Report have addressed specific on-site remedial actions. The Department remains committed to the investigation, remediation and restoration of off-site impacts that have resulted from historic discharges by GAF/ISP. The comments contained in this letter do not address GAF/ISP requirements (pursuant to the Spill Act, Technical Requirements for Site Remediation and the 1989 ACO) to expedite the resolution of these off-site discharges. GAF/ISP must address these discharges through submissions required by these regulatory requirements as well as several correspondences (including but not limited to NJDEP letter to James Bizarro, GAF dated October 6, 1995)[emphasis added].17
The Heyman Defendants’ outside environmental counsel had a copy of the 2005 NJDEP Letter.
Ashland never received the 2005 or 2007 NJDEP Letters until discovery for this litigation.18
The Sale and Closing
In April 2011, counsel for the Heyman Defendants responded to a series of questions
asked by Ashland (“2011 Responses”).19 In the April 2011 Responses, the Heyman Defendants
13 Compl. Ex. C at ¶ 9 (“This ACO Amendment is intended to supplement the existing 1989 ACO. The provisions of this ACO Amendment shall become part of the 1989 ACO. The 1989 ACO, as amended, shall remain in full force and effect and [IES] shall continue to comply with the 1989 ACO.”). See also id. at ¶ 15 (“By the execution of this ACO Amendment, NJDEP does not release any person from any liabilities or obligations such person may have pursuant to any other applicable authority, nor does NJDEP waive any of its rights or remedies pursuant thereto.”). See also 2d Am. Compl. ¶¶ 48–49. 14 2d Am. Compl. ¶¶ 48-49. 15 Id. ¶ 110. 16 Id. ¶ 111. 17 Id. ¶ 113. 18 Id. ¶ 112. 19 Id. ¶¶ 92-93.
4 discussed the groundwater No Further Action Letter.20 The Heyman Defendants did not mention
that any on-site or off-site remediation work remained outstanding.21
After receiving the 2011 Responses, the Parties engaged in a conference call (“2011
Conference Call”).22 The April 2011 Conference Calls led Ashland to believe that all remedial
measures were taken regarding the Linden Property. Based on the representations made in the
April 2011 Conference Calls, Ashland agreed to the liability provision. Ashland contends the
Heyman Defendants hid relevant documents from Ashland. Ashland alleges that the hidden
documents “would have disclosed material information relating to the environmental condition
and status of the [Linden Property] . . . .”23
In May 2011, Ashland acquired ISP, IES, and Chemco from the Heyman Defendants for
$3.2 billion.24 This was done through a Stock Purchase Agreement, dated as of May 31, 2011
(the “SPA”) between the Heyman Defendants (as the “Seller Parties”) and Ashland (as the
“Buyer”).25 The Heyman Defendants wanted to retain the Linden Property. So, on August 23,
2011, immediately after the SPA closed, IES conveyed the Linden Property back to the Heyman
Defendants for one dollar.26 Defendant LPH operates the Linden Property.27
The SPA set out the parties’ respective obligations regarding the Linden Property. SPA
Section 2(e) to Schedule 5.19 of the SPA28 states:
In connection with the Linden Transfer, the Seller Parties shall assume all Liabilities to the extent related to or arising from or existing at the Linden Property, including Liabilities arising under or relating to (i) Environmental Laws, provided
20 Id. 21 Id. ¶ 94. 22 Id. ¶ 96. 23 Id. ¶ 204. 24 Id. ¶ 51. 25 Id. ¶¶ 51-52. 26 Id. ¶ 60. 27 Id. ¶ 58. 28 Any further reference to SPA Sections 2 and 4 of Schedule 5.19 of the SPA will omit reference to Schedule 5.19 and will be as “SPA Section 2_” or SPA Section 4_.”
5 that such Liabilities shall not include any off-site migration or disposal of Hazardous Materials from the Linden Property prior to the Closing, any claims or damages associated with any off-site migration or disposal of Hazardous Material from the Linden Property prior to the Closing, and for the avoidance of doubt, any off-site contamination of soils, groundwater or sediments, any third party superfund sites including the Newark Bay Complex, any natural resources damages or exposure claims relating to operations or discharges prior to Closing,…or (v) the Linden Transfer (including any Liabilities to the extent arising by virtue of the delivery of a limited warranty deed, but excluding any Liabilities arising out of or relating to fraudulent conveyance or similar liability), in each case, other than as set forth in the provision in clause (i) above, whether arising before, on or after the Closing Date (the “Linden Excluded Liabilities”).29
SPA Section 2(f) also discusses the Linden Property transaction—specifically the
“Linden Transfer”30—and states:
In connection with the Linden Transfer, the Seller Parties shall be responsible, at their sole cost and expense, for compliance, if applicable, with any requirements of the Industrial Site Recovery Act (“ISRA”) and, if ISRA applies to the Linden Transfer, Seller Parties shall (i) within five (5) Business Days after execution of this Agreement, make any required filings or notifications (such as a General Information Notice, as defined under ISRA) to the [NJDEP], and (ii) use reasonable best efforts to, prior to closing, make all other filings, undertake all other measures, including where required undertaking any site investigation or Remedial Action required by ISRA. In addition, the [SPA] Seller Parties shall use reasonable best efforts to amend any consent decree or other binding agreement with any Governmental Entity relating to the Linden Excluded Liabilities, and to replace or substitute any related financial assurance (including any bond or letter of credit), to include the name of the Linden Transferee following the Linden Transfer and, if permitted by NJDEP, to remove the name of ISP or any of the Companies therefrom.31
Paragraph 2 of the Contribution Agreement mirrors SPA Section 2(e).32 That is, LPH,
whose membership interests were transferred from Ashland to the Heyman Defendants, became
responsible for:
All liabilities to the extent related to or arising form or existing at the Linden Property, including Liabilities arising under or relating to (a) Environmental Laws (provided that such Liabilities shall not include any off-site migration or disposal
29 Compl. Ex. A, p. 14. (emphasis in original). 30 The “Linden Transfer” is defined in SPA Section 2(a). See Compl. Ex. A, p. 14. 31 Id. 32 Defs.’ Countercls. ¶ 51.
6 of Hazardous Materials from the Linden Property prior to the Closing, any claims or damages associated with any off-site migration or disposal of Hazardous Material from the Linden Property prior to the Closing, and for the avoidance of doubt, any off-site contamination of soils, groundwater or sediments, any third party superfund sites including the Newark Bay Complex, any natural resources damages or exposure claims relating to operations or discharges prior to Closing).33
SPA Section 3.26 is a No Other Representations or Warranties Provision. Section 3.26 states:
Except for the representations and warranties contained in this Agreement, none of the Seller Parties nor any of their respective Affiliates (including the Companies), nor any of their respective stockholders, trustees, directors, officers, employees, Affiliates, advisors, members, fiduciaries, agents or representatives, nor any other Person has made or is making any other representation or warranty of any kind or nature whatsoever, oral or written, express or implied, with respect to the Seller Parties, their respective Affiliates, the Business, the Companies, the Shares, this Agreement or any Ancillary Agreement or the Transactions, including any relating to the financial condition, results of operations, assets or Liabilities of any of the foregoing entities. Except for the representations and warranties contained in this Agreement and other than for fraud, (a) each Seller Party disclaims, on behalf of itself, and its Affiliates (including the Companies), any other representations or warranties, whether made by any of the Seller Parties, any of their respective Affiliates (including the Companies), any of their respective stockholders, trustees, directors, officers, employees, Affiliates, advisors, members, fiduciaries, agents or representatives or any other Person, . . .
On June 3, 2011, an attorney prepared a memorandum (the “ISRA Memorandum”)
discussing the implications of New Jersey law relating to the properties acquired under the SPA.
Specifically, the ISRA Memorandum states:
The Linden NJ property owned by ISP Environmental Services, Inc. is vacant land. Although at one time it was the location of an operating chemical plant, operations ceased there in approximately 1991. A filing under ISRA for the cessation of operations was made prior to that time, and in 2002, NJDEP approved a site wide Remedial Action Workplan, which was fully implemented. A No Further Action Letter was issued for the soils on the site and it is anticipated that a No Further Action Letter will be issued shortly for the ground water.
Once the filing was made for the cessation of operations at the Linden site, and the site was shut down, and the NJDEP approved a site wide Remedial Action Workplan, the facility is no longer considered an industrial establishment for ISRA purposes pursuant to N.J.A.C. 7:26B-1.4. Attached hereto are the comments to the
33 Id.
7 adoption N.J.A.C. 7:26B-1.4 published at 29 N.J.R. 4913(a) clarifying that it is the NJDEP’s policy that after the issuance of a Remedial Action Workplan, the property is no longer an industrial establishment for purposes of ISRA.34
The parties closed on the SPA on August 23, 2011.
The Heyman Defendants’ “Reasonable Best Efforts”
On July 18, 2011, prior to closing on the SPA, IES notified NJDEP of the pending
Linden Property transfer, and advised NJDEP that IES (or any ISP affiliate) would not be
associated with the Linden Property after August 25, 2011.35 The letter did not advise NJDEP
that LPH was required to become a party on the ACO and that IES was to be removed.36
Subsequent to closing, LPH performed affirmative duties under the ACO. It replenished
the outstanding letter of credit.37 LPH made payments to New Jersey to comply with its portion
of the ACO.38 In addition, LPH applied for Remedial Action Permits (“RAPs”) for soil and
groundwater at the Linden Property.39 On February 17, 2012, NJDEP issued RAPs for soil and
groundwater at the Linden Property to LPH only.40 IES is not mentioned in either RAP.41
On July 3, 2012, LPH’s Environmental Compliance manager requested from NJDEP a
full satisfaction compliance letter.42 LPH did not mention IES, ISP, or Chemco in its letter.43
On December 23, 2013, NJDEP denied LPH’s full compliance request.44 NJDEP’s letter
34 Mot., Ex. 9. 35 2d Am. Compl. ¶ 62; see also Compl., Ex. D. 36 2d Am. Compl. ¶ 63. 37 See id. at ¶¶ 62, 64. 38 Id. ¶ 68. 39 Id. 40 Id. ¶ 69 (“The reference site name on that permit and on correspondence from NJDEP forwarding the permit to LPH on that date is ‘Linden Property Holdings LLC/Former GAF Chemical Corporation Site.’”). 41 Id. ¶ 70. 42 Id. ¶ 74. 43 Id. 44 Id. ¶ 75.
8 specifically required an investigation, ecological risk assessment, and remediation of off-site
contamination.45
On January 21, 2014, LPH again requested a full satisfaction letter from NJDEP.46 LPH
also mentioned, purportedly for the first time, that IES transferred the Linden Property to LPH,
and LPH had taken over on-site responsibilities.47 LPH also alleged that IES was responsible for
any off-site remediation pursuant to the ACO.48
On February 7, 2014, LPH’s in-house counsel advised Ashland that additional remedial
work, including an ecological risk assessment, remained.49 Ashland contends this is the first
time the Heyman Defendants advised Ashland that off-site work remained. Ashland contends
that Heyman Defendants had been aware of the off-site requirements since 2007.50
Ashland responded on February 18, 2014.51 Ashland requested that, pursuant to the SPA,
LPH: (i) amend the ACO to add LPH as a party; (ii) obtain NJDEP approval to remove IES from
that ACO; (iii) obtain an extension of the statutory deadline to complete remediation
investigations; and (iv) complete all work necessary to comply with the ACO.52 Ashland also
requested that, pursuant to the SPA, the Heyman Defendants copy Ashland on all future
correspondence and submissions to the NJDEP.53 The Heyman Defendants did not seek an
extension of the statutory deadline to complete work. So, Ashland retained a Licensed Site
Remediation Professional (“LSRP”).54 On March 19, 2014, Ashland’s LSRP submitted a
45 Id. 46 Id. ¶ 83. 47 Id. 48 Id. 49 Id. ¶ 85. 50 Id. 51 Id. ¶ 90. 52 See id. 53 See id. 54 Id. ¶ 91.
9 Remedial Investigation Complete Timeframe Extension Form, and obtained an extension of the
statutory deadline to complete remedial work.55
On April 9, 2014, LPH wrote to the NJDEP. LPH argued that, under the SPA, it agreed
to assume on-site liabilities and Ashland assumed off-site liabilities under the ACO.56 Further,
LPH contended that all on-site remediation was complete.57 On December 18, 2014, the NJDEP
informed LPH that: a) its liabilities were not limited to on-site, and b) it was obligated to
complete a remedial investigation pursuant to the Spill Act and N.J.S.A. 58:10B-1.3 as the
property owner.58
On July 23, 2015, the Office of the Attorney General of New Jersey advised LPH that its
$7,744,000 remediation source established in 2011 was solely “a replacement of the [remediation
funding source] originally required by the ACO for remediation of the entire site, including
remediation of offsite contamination.”59 The Office of the Attorney General advised that the
NJDEP was authorized to draw upon the $7,744,000 remediation source to complete remediation
of the off-site liabilities.60 Concurrently, the NJDEP sent Ashland and GAF (and its successors)
a Demand for Stipulated Penalties for the parties’ collective failure to comply with the ACO.61
The Litigation
Ashland filed their complaint (the “Complaint”) against the Heyman Defendants on
October 20, 2015. The Complaint sought a declaratory judgment for: (i) breach of contract –
against Heyman Defendants; (ii) breach of implied covenant of good faith and fair dealing –
against Heyman Defendants; (iii) unjust enrichment – against Heyman Defendants; (iv) cost
55 Id. ¶ 126. 56 Id. ¶ 88. 57 See id. 58 See id. ¶ 93. 59 Id. ¶ 94. 60 Id. 61 Id. ¶ 109.
10 recovery and contribution under the Spill Act – against LPH; and (v) unjust enrichment – against
LPH.
Ashland filed an amended complaint (the “First Amended Complaint”) on December 3,
2015. The First Amended Complaint alleged the same five causes of action asserted in the
Complaint. The claims relate to purported obligations of the Heyman Defendants in connection
with SPA Schedule 5.19 and purported responsibility for the investigation, remediation, and
cleanup costs regarding environmental contamination of the Arthur Kill, an off-site location.
Neither the Complaint nor the First Amended Complaint mentions the ISRA Memorandum.
On January 6, 2016, the Heyman Defendants filed their Answer to the Complaint and
Counterclaims. The Counterclaims assert six causes of action related to the same off-site
liabilities associated with the LPH Property. Counts II and III of the Counterclaims are (i)
Breach of Contract and (ii) Declaratory Judgment – Breach of Contract claims asserted by the
SPA Seller Successor Parties and RFH against Ashland in light of Ashland’s purported breach of
Section 2(e) of Schedule 5.19 of the SPA. Counterclaim Count V alleged liability under the Spill
Act.
On October 26, 2017, Ashland filed its Second Amended Complaint. The Second
Amended Complaint seeks: (1) declaratory judgment for breach of contract; (2) breach of the
implied covenant of good faith and fair dealing; (3) fraud; (4) unjust enrichment against
Heyman; (5) cost recovery and contribution under the Spill Act; and (6) unjust enrichment
against LPH. The Second Amended Complaint is fifty-eight pages long and contains two
hundred and thirty-six allegations.
11 On November 15, 2017, the Heyman Defendants filed the Motion. On December 18,
2017, Ashland filed the Opposition. On January 9, 2018, the Heyman Defendants filed the
Reply.
On February 19, 2018, the Court held a hearing (the “Hearing”) on the Motion,
Opposition, and Reply. The Court took the matter under advisement.
III. PARTIES’ CONTENTIONS
A. THE SECOND AMENDED COMPLAINT COUNT III
Count III alleges that the Heyman Defendants made fraudulent misrepresentations and/or
omissions of fact regarding the environmental condition and remediation of the Linden
Property.62 Ashland alleges that Heyman Defendants: (i) made misleading statements and/or
omissions of fact in the Pre-SPA Representations/Omissions, notwithstanding a duty to make a
full and fair disclosure; (ii) made false representations of fact when they provided the ISRA
Memorandum on June 3, 2011, which misrepresented that NJDEP approved a “site-wide” Redial
Action Workplan and that Workplan was fully implemented; and (iii) purposefully withheld
documents from Ashland that showed NJDEP had not approved a site-wide Remedial Action
Workplan, the ACO was not complete because cleanup was not fully implemented, and there
were significant unmet obligations under the ACO.63 Ashland contends that the Heyman
Defendants’ misrepresentation and omission occurred prior to execution of the SPA and in the
period between execution of the SPA and closing.64
62 2d Am. Compl. ¶¶ 92-121. 63 Id. ¶ 199-201. 64 See, e.g., Id. ¶¶ 93-97 and ¶¶ 101-107.
12 B. MOTION
The Heyman Defendants argue that: (i) Ashland cannot allege a fraud claim premised on
the ISRA Memorandum after the SPA was executed; (ii) Ashland cannot sustain any fraud claim
premised on extra-contractual omissions; (iii) Ashland’s fraud claim must be dismissed because
it is inconsistent with its contractual allegations; and (iv) Ashland’s fraud claim must fail because
the damages are duplicative of its breach of contract damages.
C. OPPOSITION
Ashland argues that: (i) the fraud claim is timely; (ii) Heyman Defendants attempt to
insert facts outside the second amended complaint; (iii) Count III is adequately pled; (iv) the
SPA permits a fraud claim based upon extra-contractual representations; and (v) Count III is pled
in the alternative to the breach of contract claim.
IV. STANDARD OF REVIEW
A. 12(B)(6) FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
Upon a motion to dismiss, the Court (i) accepts all well-pleaded factual allegations as
true, (ii) accepts even vague allegations as well-pleaded if they give the opposing party notice of
the claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv) only
dismisses a case where the plaintiff would not be entitled to recover under any reasonably
conceivable set of circumstances.65 However, the court must “ignore conclusory allegations that
lack specific supporting factual allegations.”66
65 See Central Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 227 A.3d 531, 536 (Del. 2011); Doe v. Cedars Academy, No. 09C-09-136, 2010 WL 5825343, at *3 (Del. Super. Oct. 27, 2010). 66 Ramunno v. Crawley, 705 A.2d 1029, 1034 (Del. 1998).
13 B. 9(B) FRAUD PLED WITH PARTICULARITY
Under Superior Court Civil Rule 9(b), a plaintiff must plead fraud and negligence with
particularity.67 “The purpose of [Rule 9(b)] is to apprise the adversary of the acts or omissions
by which it is alleged that a duty has been violated.”68 To plead fraud or negligence with the
particularity required by Rule 9(b), a plaintiff must include the “time, place, contents of the
alleged fraud or negligence, as well as the individual accused of committing the fraud” or
negligence.69
As a preliminary matter, the Court finds that the Second Amended Complaint has
pleaded fraud with sufficient particularity.
V. DISCUSSION
A. FRAUD AND STATUTE OF LIMITATIONS
To plead a claim of fraud, plaintiff must show:
(1) a false representation, usually one of fact . . .; 2) the defendant's knowledge or belief that the representation was false, or was made with reckless indifference to the truth; 3) an intent to induce the plaintiff to act or to refrain from acting; 4) the plaintiff's action or inaction taken in justifiable reliance upon the representation; and 5) damage to the plaintiff as a result of such reliance.70
In Delaware, there are three types of fraud: “(1) false statements represented as truth; (2) active
concealment of facts which prevents the other party from discovering them; and (3) silence in the
face of a duty to speak.”71
67 Super. Ct. Civ. R. 9(b). 68 Mancino v. Webb, 274 A.2d 711, 713 (Del. Super. 1971). 69 See TrueBlue, Inc., v. Leeds Equity Partners IV, LP, 2015 WL 5968726, at *6 (Del. Super. Sept. 25, 2015) (quoting Universal Capital Mgmt., Inc. v. Micco World, Inc., 2012 WL 1413598, at *2 (Del. Super. Feb. 1, 2012)). 70 Hauspie v. Stonington Partners, Inc., 945 A.2d 584, 586 (Del. 2008) (quoting Gaffin v. Teledyne, Inc., 611 A.2d 467, 472 (Del.1992)). 71 DRR, L.L.C. v. Sears, Roebuck & Co., 949 F. Supp. 1132, 1137 (D. Del. 1996).
14 The statute of limitations for fraud in Delaware is three years.72 “The statute of
limitations begins to run when a plaintiff’s claim accrues, which occurs at the moment of the
wrongful act. . . .”73 For fraud, the statute of limitations begins to run when the fraud is
“successfully perpetrated.”74
The statute of limitations may toll when premised on an inherently unknowable injury.
However, tolling only applies “in certain narrowly carved out limited circumstances when the
facts at the heart of the claim are so hidden that a reasonable plaintiff could not timely discover
them.”75 The statute of limitations is tolled “where the injury is inherently unknowable and the
claimant is blamelessly ignorant of the wrongful act and the injury complained of.”76 The Court
will consider if there were “red flag[s] that clearly and unmistakably would have led a prudent
person of ordinary intelligence to inquire” and obtain discovery relating to the claim.77
If tolled, the statute of limitations begins to run “upon the discovery of facts constituting
the basis of the cause of action or the existence of facts sufficient to put a person on inquiry
which, if pursued, would lead to the discovery of such facts.”78 “These facts must usually be
observable or objective factors that would alert laymen to the problem.”79 However, the mere
existence of documents accessible to the public will not automatically preclude tolling.80
72 10 Del. C. § 8106; see also SPA § 9.8 stating that Delaware law governs; Pivotal Payments Direct Corp. v. Planet Payment, Inc., 2015 WL 11120934, at *3 (Del. Super. Dec. 29, 2015) (stating that “the general rule is that the forum state’s statute of limitations applies.”). 73 Airport Bus. Ctr. V LLLP v. Sun Nat. Bank, 2012 WL 1413690, at *7 (Del. Super. Mar. 6, 2012). 74 Playtex, Inc. v. Columbia Cas., 1993 WL 390469, at *3 (Del. Super. Sept. 20, 1993). 75 AM Gen. Hldg. LLC v. Renco Grp., Inc., 2016 WL 4440476, at *13 (Del. Ch. Aug. 22, 2016). 76 Island Farm, Inc. v. Master Sidlow & Assocs., P.A., 2007 WL 2758775, at *2 (Del. Super. Sept. 20, 2007) (internal quotations omitted). 77 Coleman v. Price WaterhouseCoopers LLC, 854 A.2d 838, 843 (Del. 2004). 78 Id. at 842. 79 Island Farm, 2007 WL 2758775, at *2. 80 See Boyce v. Blenheim at Bay Pointe, LLC, 2014 WL 8623125, at *3 (Del. Super. Dec. 30, 2014).
15 Superior Court Civil Rule 15(c)(2) allows, under certain circumstances, a subsequently
asserted claim to relate back to the date of the original pleading. When the original complaint
filed in the case gave notice to the defendant of all the facts which will be relied upon at the trial,
the claim arises from the same occurrence described in the original complaint, and the plaintiff
will rely on the same operative facts, then the amendment will relate back to the date of the
original pleading.81 To relate back to the original pleading, the determinative factor is whether
the defendant should have had notice from the original pleadings that the plaintiff’s new claim
may have been asserted against the defendant.82
For Count III, Ashland alleges the fraud occurred between April and the closing of the
SPA. Absent tolling, any fraud claim is barred as of August 23, 2014. This case was filed on
October 20, 2015—outside the three-year statute of limitations. Ashland filed the Second
Amended Complaint on October 26, 2017—which is the first time Ashland asserts the fraud
claim. Therefore, Ashland’s fraud claim is barred unless it was tolled.
In this case, Ashland contends that the Heyman Defendants made statements about the
Linden Property that indicated NJDEP would not require any additional remediation efforts with
respect to that property. Based on those representations, Ashland entered into SPA. Although
the 2005 and 2007 NJDEP letters were matters of public record, Ashland alleges it did not
conduct an inquiry into the property based on the representations made by the Heyman
Defendants.83 Ashland did not fully perform independent environmental due diligence on the
Linden Property. Ashland, instead, relied upon responses made by the Heyman Defendants to
81 See Rogers v. Delaware Power & Light Co., 95 A.2d 842 (Del. 1953); see also Oakes v. Gilday, 351 A.2d 85 (Del. Super. 1976) (the amended pleading must arise out of the same conduct, transaction or occurrence set forth in the original pleading to relate back). 82 Bissell v. Papastavros’ Assocs. Medical Imaging, 626 A.2d 856 (Del. Super. 1993). 83 See Playtex, 1993 WL 390469, at *5 (“The requirement of diligence is only meaningful . . . when facts exist that would excite the inquiry of a reasonable person . . . Due diligence is not required in the abstract. Plaintiffs are not under a duty continually to scout around to uncover claims which they have no reason to suspect they might have.”).
16 specific inquiries sent by Ashland. Based on those answers, Ashland believed there were no
outstanding requirements by the NJDEP regarding the Linden Property. In addition, Ashland
alleges that the Heyman Defendants took affirmative steps to conceal from Ashland any
documents that would reveal the material misrepresentations or omissions, including the
withholding of letters from NJDEP sent in 2005 and 2007, shipping of documents related
environmental regulatory documents regarding the Linden Property to outside vendors and ISP’s
outside environmental counsel without notifying Ashland, concealing the existence of related
documents in a warehouse in Bellville, New Jersey.84 In addition, LPH communicated with
NJDEP after August 25, 2011 but did not notify Ashland of these communications and potential
liability until February 7, 2014.85 As alleged, these facts are sufficient to support a claim that the
statute of limitations was tolled until sometime from December 23, 2013—the date Ashland
received a letter from the NJDEP stating that the Linden Property was not in compliance with the
ACO.86
However, the fraud claim is still time barred unless it relates back to the original
Complaint. Ashland does not allege fraud in the original Complaint. In fact, Ashland first
asserts its fraud claim in the Second Amended Complaint which Ashland filed on October 26,
2017. The Court finds that the original Complaint sufficiently put the Heyman Defendants on
notice of a potential fraud claim. In the original Complaint, Ashland asserts that the Heyman
Defendants withheld documents, including the 2005 and 2007 NJDEP Letters.87
84 See, e.g., 2d Am. Compl. ¶¶ 111, 113-117, 120, and 121. 85 See, e.g., Id. ¶¶ 65-68. 86 See id (discussing Bordon v. Paul Revere Life Ins. Co., 935 F.2d 370 (1st Cir. 1991)) (stating “that the prior back complaint was inherently unknowable in view of the information provided on the application . . . [plaintiff] made no mention of back problems in response to questions on the application designed to elicit such information.”). 87 Compl. ¶ 66-67.
17 While the original Complaint does not mention the April 2011 Conference Calls leading
to the execution of the SPA, the original Complaint does discuss LPH’s actions in dealing with
NJDEP between closing and December 23, 2013 without informing Ashland of these actions.
The original Complaint and the First Amended Complaint filed on December 3, 2015 do not
mention the ISRA Memorandum or the April 2011 Conference Calls. Although Ashland did not
mention the ISRA Memorandum of April 2011 Conference Calls in the first two complaints,
these statements related to the same transaction and occurrence involving the omission of the
2005 and 2007 NJDEP Letters raised earlier. Therefore, under Rule 15(c)(2), Ashland can rely
on the ISRA Memorandum or the April 2011 Conference Calls.
Ashland also argues that the concealment of the ISRA Memorandum further
demonstrates the fraud by the Heyman Defendants as part of a continuing fraud. The Heyman
Defendants’ failure to disclose the ISRA Memorandum furthers Ashland’s tolling argument.
Had the ISRA Memorandum properly been disclosed, Ashland contends that it would have
contradicted statements made during the Conference Call about no outstanding environmental
liability.
B. ISRA MEMORANDUM AFTER THE SPA IS EXECUTED
i. Ashland received ISRA Memorandum after execution of the SPA
A plaintiff cannot rely on a misrepresentation made after the parties executed an
agreement for a fraudulent inducement claim. Fraudulent statements made after the execution of
an agreement “relate to the performance of the contract, not the inducement of the contractual
relationship.88 Statements made after the formation of the contract “are better addressed by
applicable contract law.”89 In fact, this Court has stated “[a] claim for fraudulent inducement
88 Abbot Labs. v. Owens, 2014 WL 8407613, at *8-9 (Del. Super. Sept. 15, 2014). 89 Brasby v. Morris, 2007 WL 949485, at *7-8 (Del. Super. Mar. 29, 2007).
18 accrues when the fraudulent statements were made, which must be on or before the date when
the parties entered into the contract.”90
The SPA is dated May 31, 2011.91 The ISRA Memorandum is dated June 3, 2011.92 It
appears that Ashland could not have received a draft of the ISRA Memorandum before they
signed the SPA. Further, Ashland has not contended that the ISRA Memorandum was part of
negotiations and only executed a few days after the SPA. Because a party many not rely on
information provided after a contract is executed to maintain a fraudulent inducement claim,
Ashland should not be allowed to pursue their fraud claim relating to the ISRA Memorandum
alone. However, Ashland does allege it relied on the ISRA Memorandum in the time between
execution of the SPA and closing. As such, it appears that the ISRA Memorandum is part of the
alleged continuing fraud. Ashland argues that Heyman Defendants told a partial truth and hid
contradictory information. As alleged, the ISRA Memorandum further supports the alleged
fraud because it gave Ashland incorrect and incomplete information that furthered the
information provided during the Conference Call. Although the ISRA Memorandum could not
be the sole basis of the fraud claim, the ISRA Memorandum is relevant in relation to the
omissions and statements made during the Conference Call.
90 Pivotal Payments Direct Corp. v. Planet Payment, Inc., 2015 WL 11120934, at *4 (Del. Super. Dec. 29, 2015). 91 Mot., Ex. 4. 92 Mot., Ex. 9.
19 ii. ISRA Memorandum contained SPA Seller Parties’ Opinion
Generally, opinions cannot form the basis of a claim for fraud.93 The “mere expressions
of opinion as to probable future events cannot be deemed fraud or misrepresentation.”94
However, a claim for fraud may be appropriate if one “provide[s] a false representation of one’s
opinion.”95 Additionally, “even an opinion may rise to the level of a misstatement of fact.”96
Particularly where the person rendering an opinion has “special or superior knowledge.”97
The mere fact that a material statement is in the form of an opinion . . . is not necessarily conclusive as to whether it must be treated as such, or whether it can be regarded as a representation of fact, because an opinion may carry with it the implication that the maker is aware of facts that support or justify that opinion. Where a recipient does not know the facts, he may justifiab[ly] rely upon [the] implied assertions and recover on the basis of a misrepresentation of implied fact.98
But, “[w]hether or not [a] sales agents expressed ‘opinions’ or outright misleading facts is a
question of fact, and cannot be determined on a Motion to Dismiss.”99
The ISRA Memorandum states that “in 2002, NJDEP approved a site wide Remedial
Action Workplan, which was fully implemented. A No Further Action Letter was issued for the
soils on the site and it is anticipated that a No Further Action Letter will be issued shortly for the
ground water.”100 The Heyman Defendants’ counsel prepared the ISRA Memorandum for
Ashland. The ISRA Memorandum seems to explain the possible implications of New Jersey’s
ISRA statute regarding the transfer of property, including the Linden Property. The statements
93 See BAE Sys. N.A. Inc. v. Lockheed Martin Corp., 2004 WL 1739522, at *7 (Del. Ch. Aug. 3, 2004); Trenwick Am. Litig. Tr. v. Ernst & Young, L.L.P., 906 A.2d 168, 209 (Del. Ch. 2006), aff'd sub nom. Trenwick Am. Litig. Tr. v. Billett, 931 A.2d 438 (Del. 2007) (finding that “statements of expectation or opinion about the future of the company and the hoped for results of business strategies . . . are generally not actionable under Delaware law”). 94 Mentis v. Delaware Am. Life Ins. Co., 1999 WL 744430, at *7 (Del. Super. July 28, 1999), on reargument, 1999 WL 1240818 (Del. Super. Nov. 5, 1999) (citing Biasotto v. Spreen, 1997 WL 527956 (Del. Super. July 30, 1997)). 95 BAE Sys., 2004 WL 1739522, at *7 n.50. 96 Tam v. Spitzer, 1995 WL 510043, at *8 (Del. Ch. Aug. 17, 1995). 97 Id. 98 RHA Constr., Inc. v. Scott Engr., Inc., 2013 WL 3884937, at *3 (Del. Super. July 24, 2013). 99 Mentis, 1999 WL 744430, at *7. 100 Mot., Ex. 9.
20 made in the ISRA Memorandum may consist of opinion, however, the statements about the
Linden Property appear to be sufficiently definite to be a fact or a fact relied on to form the
opinions contained in the ISRA Memorandum. As such, this is a question of fact not appropriate
to decide on a motion.
C. EXTRA-CONTRACTUAL OMISSIONS
i. Ashland can rely on omissions to advance its fraud claim
Omissions cannot support a claim for fraud in the absence of a fiduciary relationship. In
a transactional setting between two equally represented and sophisticated parties, no such
relationship exists. “Because a party in an arms’ length contractual setting begins the process
without any affirmative duty to speak, any claim of fraud in an arms’ length setting necessarily
depends on some form of representation.”101 “A fraud claim in that setting cannot start from an
omission.”102 In fact, “[a]bsent a special relationship, a party is under no duty to disclose ‘facts
of which he knows the other is ignorant’ even if ‘he further knows the other, if he knew of them,
would regard [them] as material in determining his course of action in the transaction in
question.”103
However, “if a party in an arms’ length negotiation chooses to speak, then it cannot
lie.”104 “[O]nce a party speaks, it also cannot do so partially or obliquely such that what the
party conveys becomes misleading.”105 Further, a party may need to disclose information “in
order to prevent statements actually made from becoming misleading.”106
101 Prairie Capital III, L.P. v. Double E Hldg. Corp., 132 A.3d 35, 52 (Del. Ch. 2015). 102 Id. 103 Id. (quoting Prop. Assoc. 14 v. CHR Hldg. Corp., 2008 WL 963048, at *6 (Del. Ch. April 10, 2008)); Restatement (Second) of Torts § 551 cmt. a. 104 Prairie, 132 A.3d at 52 (citing Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del. 1983)). 105 Id. 106 Stephenson, 462 A.2d 1074.
21 “A party may use external sources of information to plead that a contractually identified
fact was false or misleading, but a party cannot point to extra-contractual information and escape
the contractual limitation by arguing that the extra-contractual information was incomplete.”107
Therefore, for an arms’ length deal, “contractual provisions that identify the representations on
which a party exclusively relied define the universe of information that is in play for purposes of
a fraud claim.”108
During the April 2011 Conference Call, Heyman Defendants represented that “a barrier
wall had been installed and a pump-and-treat remedy was in place.”109 The Heyman Defendants
“further represented that reserves were in place for 20 years of operation and maintenance of
completed remedial measures.”110 Ashland contends that the Heyman Defendants did not
mention “any ongoing on-site or off-site remediation, or any one-site or off-site remediation that
107 Prairie, 132 A.3d at 52. 108 Id; see also FdG Logistics LLC v. A&R Logistics Hldgs., Inc., 131 A.3d 842, 859 (Del. Ch. 2016) (quoting Abry Partners V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1057 (Del. Ch. 2006)) (stating there is a “need to strike an appropriate balance between holding sophisticated parties to the terms of their contracts and simultaneously protecting against the abuses of fraud.”); TrueBlue, Inc. v. Leeds Equity Partners IV, LP, 2015 WL 5968726, at *6 (Del. Super. Sept. 25, 2015) (Integration clauses “must clearly state that the parties disclaim reliance upon extra- contractual statements.”). In balancing the public policy against fraud with the ability of sophisticated parties to contract for integration clauses, Delaware Courts have:
consistently [ ] respected the law's traditional abhorrence of fraud in implementing this reasoning. Because of that policy concern, we have not given effect to so-called merger or integration clauses that do not clearly state that the parties disclaim reliance upon extra-contractual statements. Instead, we have held, as in Kronenberg, that murky integration clauses, or standard integration clauses without explicit anti-reliance representations, will not relieve a party of its oral and extra-contractual fraudulent representations. The integration clause must contain “language that ... can be said to add up to a clear anti-reliance clause by which the plaintiff has contractually promised that it did not rely upon statements outside of the contract's four corners in deciding to sign the contract.” This approach achieves a sensible balance between fairness and equity—parties can protect themselves against unfounded fraud claims through explicit anti-reliance language. If parties fail to include unambiguous anti-reliance language, they will not be able to escape responsibility for their own fraudulent representations made outside of the agreement's four corners.
Abry, 891 A.2d at 1058-59 (quoting Kronenberg v. Katz, 872 A.2d 568, 592–93 (Del. Ch. 2004)). 109 2d Am. Compl. ¶ 97. 110 Id.
22 would be required going forward.”111 Ashland understood the Heyman Defendants
representations to mean that there “were no significant unmet environmental liabilities associated
with the [Linden Property].”112
At the Hearing, Ashland noted that it asked for information about the remediation efforts
of the Property. The Heyman Defendants told Ashland to look at the data room for any
information. There were no documents indicating that further action was needed for the
Property. Because information was missing from the data room and statements made during the
Conference Call, Ashland relied upon those omissions and statements when it entered into the
SPA.
Ashland sufficiently pleaded the fraud claim and may rely upon the omissions and the
Conference Call in its case. These omissions and representations are sufficient for a fraud claim.
Based on the allegations, the Heyman Defendants could not provide a half-truth during the due
diligence process of the SPA. Heyman Defendants reliance on the merger clause of the SPA
fails as well. Ashland argues that Heyman Defendants made representations during the
Conference Calls that indicated there was no outstanding liability for the Property. Then,
Ashland searched the data room and did not find contradictory evidence. The 2005 and 2007
NJDEP Letters were not included in the data room. Then, after the parties executed the SPA, but
before closing, Heyman Defendants provided the ISRA Memorandum that further indicated there
was no outstanding liability for the Property. Based on this claim, Ashland may rely upon the
Conference Calls, the omissions of the NJDEP Letters from the data room, and the ISRA
Memorandum in the face of the merger clause in the SPA to further the fraud claim.
111 Id. 112 Id. ¶ 98.
23 ii. Ashland properly pleaded the omissions and statements during the Conference Call with particularity
Under Superior Court Civil Rule 9(b), a plaintiff must plead fraud and negligence with
particularity.113 “The purpose of [Rule 9(b)] is to apprise the adversary of the acts or omissions
by which it is alleged that a duty has been violated.”114 To plead fraud or negligence with the
particularity required by Rule 9(b), a plaintiff must include the “time, place, contents of the
alleged fraud or negligence, as well as the individual accused of committing the fraud” or
negligence.115
Ashland sufficiently pleads fraud under Rule 9(b) relating to the April 2011 Conference
Calls. During the April 2011 Conference Call, Heyman Defendants represented that “a barrier
wall had been installed and a pump-and-treat remedy was in place.”116 The Heyman Defendants
“further represented that reserves were in place for 20 years of operation and maintenance of
completed remedial measures.”117 Ashland contends that the Heyman Defendants did not
mention “any ongoing on-site or off-site remediation, or any one-site or off-site remediation that
would be required going forward.”118 Ashland understood the Heyman Defendants
representations to mean that there “were no significant unmet environmental liabilities associated
with the [Linden Property].”119
Ashland sufficiently pleads fraud under Rule 9(b) relating to the April 2011 Conference
Calls and undisclosed information.
113 Super. Ct. Civ. R. 9(b). 114 Mancino v. Webb, 274 A.2d 711, 713 (Del. Super. 1971). 115 See TrueBlue, Inc., 2015 WL 5968726, at *6 (quoting Universal Capital Mgmt., Inc. v. Micco World, Inc., C.A. No. N10C-07-039-RRC, 2012 WL 1413598, at *2 (Del. Super. Feb. 1, 2012)). 116 2d Am. Compl. ¶ 97. 117 Id. 118 Id. 119 Id. ¶ 98.
24 Ashland sufficiently pleaded reliance upon April 2011 Conference Calls and the 2005
and 2007 NJDEP Letters. The April 2011 Conference Calls led Ashland to believe that all
remedial measures were taken regarding the Linden Property. As such, Ashland agreed to the
liability provisions contained in the SPA based on those representations. Further, based on the
representations made in the April 2011 Conference Calls, and lack of the hidden documents,
Ashland agreed to the liability provision. The 2005 and 2007 NJDEP Letters “would have
disclosed material information relating to the environmental condition and status of the [Linden
Property] . . . .”120
D. ASHLAND’S FRAUDULENT INDUCEMENT CLAIM, PLEADED IN THE ALTERNATIVE, IS NOT INCONSISTENT WITH THE CONTRACTUAL ALLEGATIONS
Delaware Superior Court Rule 8(e)(2) allows a plaintiff to “set forth two or more
statements of a claim or defense alternately or hypothetically, either in one count or defense or in
separate counts or defenses. . . . The party may also state as many separate claims or defenses as
the party has regardless of consistency. All statement shall be made subject to the obligations set
forth in Rule 11.”
“A fraud claim can be based on representations found in a contract, however, ‘where an
action is based entirely on a breach of the terms of a contract between the parties, and not on a
violation of an independent duty imposed by law, a plaintiff must sue in contract and not in
tort.’”121 A plaintiff “cannot bootstrap” a claim for a breach of contract into a claim of fraud
merely by alleging that a contracting party never intended to perform its obligations” or “simply
120 Id. ¶ 204. 121 ITW Glob. Investments Inc. v. Am. Indus. Partners Capital Fund IV, L.P., 2015 WL 3970908, at *6 (Del. Super. June 24, 2015) (citing Ameristar Casinos, Inc. v. Resorts Int’l Hldg., LLC, 2010 WL 1875631, at *11 (Del. Ch. June 24, 2010)).
25 by adding the term fraudulently induced to a complaint.”122 Essentially, a fraud claim alleged
contemporaneously with a breach of contract claim may survive, so long as the claim is based on
conduct that is separate and distinct from the conduct constituting breach.”123 Allegations that
are focused on inducement to contract are ‘separate and distinct’ conduct.”124
In this case, Ashland did not explicitly state that their breach of contract and Count III are
pleaded in the alternative. However, Ashland has conceded that they pleaded their breach of
contract and fraud claims in the alternative. Further, Ashland alleges that the Heyman
Defendants made false representations or omissions prior to entering into the SPA.
E. DUPLICATIVE DAMAGES
“Delaware courts have consistently held that to successfully plead a fraud claim, the
allegedly defrauded plaintiff must have sustained damages as a result of a defendant’s [allegedly
fraudulent] action. . . . [T]he damages allegations may not simply rehash the damages allegedly
caused by the breach of contract.”125 “Failure to plead separate damages is an independent
ground for dismissal.”126 However, the “mere addition of punitive damages . . . is not enough to
distinguish it from the contract damages.”127
Ashland argues that the damages are distinct. The damages relating to the breach of
contract are based on the loss of bargaining power. For breach of contract, Ashland seeks
declarations that the Heyman Defendants must: (1) conduct all environmental investigation and
remediation efforts required by NJDEP at the Property; (2) add themselves or LPH to the ACO;
122 Furnari, 2014 WL 1678419, at *8 (quoting Narrowstep Inc. v. Onstream Media Corp., 2010 WL 5422405, at *15 (Del. Ch.2010)). 123 Furnari, 2014 WL 1678419, at *8. 124 ITW Glob., 2015 WL 3970908, at *6 (quoting Osram Sylvania Inc. v. Townsend Ventures, LLC, 2013 WL 6199554, at *16–17 (Del. Ch.2013)). 125 Cornell Glasgow, LLC v. La Grange Props. LLC, 2012 WL 2106945, at *8-9 (Del. Super. June 6, 2012). 126 EZLinks Golf, LLC v. PCMS Datafit, Inc., 2017 WL 1312209, at *6 (Del. Super. Mar. 13, 2017) as corrected (Mar. 1, 2017). 127 Id.
26 (3) request that NJDEP remove IES, ISP, and any other ISP affiliates from the ACO; (4) comply
with ISRA; (5) reimburse Ashland for all costs and penalties incurred in connection with the
cleanup of the Property; and (6) immediately undertake all environmental investigation and
remediation efforts of the Property necessary to comply with the ACO, ISRA, and New Jersey
law.
However, the fraud damages are calculated to restore the status quo. Ashland seeks
compensatory damages in the amount Ashland expended for investigative and remediation
activities at the Property in addition to punitive damages. Ashland concedes that Count III is
pleaded in the alternative to the breach of contract claim. Since the claims are pleaded in the
alternative, the claims “would never co-exist at final judgment and are, therefore, not
duplicative.”128
In this case, Ashland’s damages for breach of contract and fraud appear duplicative.
Although claims may co-exist if the damages are distinct in the two counts, here, the fraud
damages for the investigative and remediation activities at the Linden Property is subsumed in
the breach of contract claim. Further, Ashland does not explicitly seek recession of the contract
based on any fraudulent statements or omissions.
However, the breach of contract claim and fraud claim are pleaded in the alternative.129
Ashland alleges that the Heyman Defendants misled Ashland prior to the execution of the SPA,
128 Opp. at 35. 129 Modern Mgt. Co. v. Wilson, 997 A.2d 37, 44 (D.C. App. 2010) (“Here, Wilson sought alternative recovery under several different statutes for the appellants' conduct, specifically asserting that the transaction was an unconscionable loan or, in the alternative, if the jury decided that the transaction was not a loan, a fraudulent sale. Therefore, the trial court did not err in refusing to require Wilson to elect her remedies prior to trial.”); Countrywide Home Loans, Inc. v. Thitchener, 192 P.3d 243, 248 (Nev. 2008) (“While plaintiffs are permitted to plead alternative or different theories of relief based on the same facts, plaintiffs may not recover more than their “total loss plus any punitive damages assessed.” Here, although the verdict form instructed the jury to ‘award the total amount of the Plaintiffs' damages without awarding any duplicative damages’ and contained separate categories of damages corresponding to each of the Thitcheners' surviving claims—breach of contract, negligence, trespass, and conversion—the record shows that the jury failed to heed this instruction.”).
27 hid information from Ashland, and then sent a misleading document after the execution of the
SPA. These allegations go beyond a simple breach of contract claim were the Heyman
Defendants did not intend to comply with the terms of the SPA. Therefore, the breach of
contract claim and fraud claim are different at this stage in litigation. The Heyman Defendants
may later readdress the alternative pleadings.
VI. CONCLUSION
The Court has been actively involved in this civil action.130 As presented to date, the
Court sees an arms’-length contractual transaction negotiated by sophisticated parties who were
represented by attorneys. The Linden Property transaction is not the most material aspect of the
SPA.131 While alleging claims for fraud and unjust enrichment and alike, both parties constantly
refer to the SPA to support their claims. The parties, rightfully, rely on the pleading
requirements and legal standards of the Superior Court Civil Rules to assert their causes of
action. The Court continues to believe, however, that focused discovery on the contractual
issues would allow for summary resolution of the claims asserted in this civil action.132
For the reasons stated above, the Court DENIES the Motion.
IT IS SO ORDERED
/s/ Eric M. Davis Eric M. Davis, Judge cc: File&ServeXpress
130 See Ashland LLC v. The Samuel Heyman 1981 Continuing Trust, C.A. No. N15C-10-176 EMD CCLD, 2017 WL 1216788 (Del. Super. March 31, 2017); Ashland LLC v. The Samuel Heyman 1981 Continuing Trust, C.A. No. N15C-10-176 EMD CCLD, 2017 WL 1224506 (Del. Super. March 30, 2017); Ashland LLC v. The Samuel Heyman 1981 Continuing Trust, C.A. No. N15C-10-176 EMD CCLD, 2017 WL 1191099 (Del. Super. March 29, 2017). 131 Under the SPA, Ashland acquired ISP, IES and Chemco from the Heyman Defendants for $3.2 billion. 2d Am. Compl. ¶ 51. 132 See, e.g., Ashland LLC, 2017 WL 1191099, at *6-7.
28 29