SUPERIOR COURT OF THE STATE OF DELAWARE PAUL R. WALLACE LEONARD L. WILLIAMS JUSTICE CENTER JUDGE 500 N. KING STREET, SUITE 10400 WILMINGTON, DELAWARE 19801 (302) 255-0660
Submitted: December 6, 2024 Decided: December 17, 2024
Tammy L. Mercer, Esquire Robert K. Beste, Esquire Richard J. Thomas, Esquire SMITH, KATZENSTEIN & JENKINS LLP Andrew J. Czerkawski, Esquire 1000 North West Street, Suite 1501 YOUNG CONAWAY STARGATT & Wilmington, Delaware 19801 TAYLOR, LLP 1000 N. King Street Gaddi Goren, Esquire Wilmington, Delaware 19801 MEISTER SEELIG & FEIN PLLC 125 Park Avenue, 7th Floor David Baay, Esquire New York, New York 10017 L. Andrew S. Riccio, Esquire Emily Brait, Esquire BAKER & MCKENZIE LLP 452 Fifth Avenue New York, New York 10018
RE: Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD Plaintiff’s Motion to Dismiss Defendant’s Motion to Stay
Dear Counsel: This Letter Decision and Order resolves Plaintiff Bastion’s Motion to Dismiss
and Defendant Gaudelet’s Motion to Stay. For the reasons now explained, Bastion’s
Motion to Dismiss (D.I. 17) is GRANTED, in part, and DENIED, in part.
Mr. Gaudelet’s Motion to Stay (D.I. 22) is GRANTED. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 2 of 17
I. FACTUAL BACKGROUND1
A. THE RESTAURANT, THE LEASE, AND THE GUARANTY
Defendant Alexandre Gaudelet was a principal of InvestHospitality LLC
(“IH”).2 IH created L’Atelier NYC LLC (“L’Atelier”) to own and operate a
restaurant called “L’Atelier de Joel Robuchon” in New York City.3
On November 1, 2016, L’Atelier entered into a lease agreement with 85 Tenth
Avenue Associates (“Landlord”).4
Mr. Gaudelet personally guaranteed the lease (the “Guaranty”).5 An
unexecuted version of the Guaranty is incorporated into the lease as Exhibit D.6 The
Guaranty provides that Mr. Gaudelet’s liability is “primary,” and that the Landlord
does not need to first seek recourse against L’Atelier.7
B. BASTION ACQUIRES THE RESTAURANT.
In May 2018, Plaintiff Bastion Restaurant Group LLC (“Bastion”) (f/k/a Crest
1 The Court delivers this decision mindful that the parties are fully versed in the factual and procedural background of this litigation, as well as the arguments each makes on the instant motions. This writing, therefore, will only touch on the specifics of those as needed here. 2 Compl. ¶ 10. 3 Id. 4 Id. ¶ 11. 5 Id. ¶ 12. 6 Guaranty (D.I. 18 at Ex. B). 7 Id. ¶ 3. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 3 of 17
Restaurant Acquisition, LLC), a Delaware limited liability company, acquired all
interests in IH, via a Unit Purchase Agreement (“Agreement”).8
C. TERMS OF THE AGREEMENT
Pursuant to the Agreement, Bastion sought to release Mr. Gaudelet from the
Guaranty.9
Specifically, Section 6.2 provides:
Alex Gaudelet Indemnity. [Bastion] hereby agrees to indemnify, defend and hold harmless Alex from and against any and all Damages incurred or sustained by, or imposed upon, Alex resulting from, related to or arising out of any breach of the . . . Guaranty, dated as of November 1, 2016, Alex Gaudelet in favor of 85 Tenth Avenue Associates, L.L.C. . . . .10 “Damages” is defined as:
All actual damages, costs, liabilities, obligations, fines, penalties, expenses and fees, including reasonable attorneys’ and other professional fees and expenses; provided, that “Damages” shall not include . . . damages related to items set forth on the Company Disclosure Schedules . . . .11
The Company Disclosure Schedule is attached to the Agreement and includes
8 Compl. ¶ 13. See also Agreement (D.I. 21 at Ex. 2). 9 Agreement (Recitals). 10 Id. at Section 6.2. 11 Id. at Article 1 (Definitions). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 4 of 17
in Schedule 3.12 a list of L’Atelier’s leased real property.12 This section lists all
leases by L’Atelier, any related agreements, and includes the Guaranty.13
D. THE LANDLORD TERMINATES THE LEASE AND INITIATES THE NEW YORK ACTION.
As a result of the pandemic, the restaurant was allegedly not able to meet its
obligations under the lease. In turn, the Landlord initiated the New York Action in
March 2022, naming L’Atelier and Mr. Gaudelet as defendants.14
The New York Action’s complaint alleges that, pursuant to the lease, the
Landlord gave Mr. Gaudelet and L’Atelier notice of default and notice of
termination of the lease.15 Further, that complaint alleges that neither party paid rent
after the alleged termination date.16 That complaint also alleges that Mr. Gaudelet
is jointly and severally liable.17
II. PROCEDURAL HISTORY
In June 2024, Bastion filed its Complaint here, asserting one count seeking a
12 Agreement at Schedule 3.12, Section 3.12(b). 13 Id. 14 Opening Brief (“Op. Br.”), Ex. A (D.I. 18). 15 Op. Br., Ex. A. ¶¶ 9, 12. 16 Id. ¶ 16. 17 Id. ¶¶ 33, 37, 41. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 5 of 17
declaratory judgment (“Count I”).18 Mr. Gaudelet answered and asserted two
counterclaims, for breach of the Agreement (“Counterclaim I”) and a declaratory
judgment (“Counterclaim II”).19
Bastion responded with a Motion to Dismiss the Counterclaims.20 Along with
Mr. Gaudelet’s answering brief, he filed his Motion to Stay.21 Bastion filed its reply
supporting its motion to dismiss and opposing stay application.22 After Mr. Gaudelet
replied,23 the Court heard argument.24
III. STANDARD OF REVIEW
Under Superior Court Civil Rule 12(b)(6), a party can move to dismiss for
failure to state a claim upon which relief can be granted.25 In resolving a Rule
12(b)(6) motion, the Court “(1) accept[s] all well-pleaded factual allegations as true;
(2) accept[s] even vague allegations as ‘well pleaded’ if they give the opposing party
notice of the claim, (3) draw[s] all reasonable inferences in favor of the non-moving
18 See generally Compl. 19 Answer and Counterclaims (D.I. 14). 20 Motion to Dismiss (D.I. 17). 21 Answering Brief (“Ans. Br.”) (D.I. 21); Motion to Stay (D.I. 22). 22 Reply (D.I. 26). 23 Reply in Support of Motion to Stay (D.I. 31). 24 D.I. 32. 25 Del. Super. Ct. Civ. R. 12(b)(6). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 6 of 17
party, and (4) [will not dismiss a claim] unless the [claimant] would not be entitled
to recover under any reasonably conceivable set of circumstances.”26 Delaware’s
pleading standard is “minimal.”27 And dismissal is inappropriate unless “under no
reasonable interpretation of the facts alleged could the [counterclaims] state a claim
for which relief might be granted.”28
IV. PARTIES’ CONTENTIONS
A. COUNTERCLAIM I
With respect to Counterclaim I for breach of contract, Bastion pens three
arguments for dismissal. First, Bastion insists that Mr. Gaudelet’s request for
indemnification is premature because, as yet, there is no judgment against
Mr. Gaudelet in the New York Action.29 Second, that Mr. Gaudelet has failed to
state a claim for breach because he can’t allege he has suffered any Agreement-
defined “Damages”; that definition excludes anything mentioned on the Company
Disclosure Schedule, and that schedule includes the Guaranty.30 Third, even if
26 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011). 27 Cent. Mortg., 27 A.3d at 536 (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 895 (Del. 2002)). 28 Unbound P’rs Ltd. P’ship v. Invoy Hldgs. Inc., 251 A.3d 1016, 1023 (Del. Super. Ct. 2021) (internal quotation marks omitted); see Cent. Mortg., 27 A.3d at 537 n.13 (“Our governing ‘conceivability’ standard is more akin to ‘possibility’ . . . .”). 29 Op. Br. at 7-8. 30 Id. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 7 of 17
Mr. Gaudelet were able to properly allege damages, the Agreement’s
indemnification provision only applies when Mr. Gaudelet is being sued for a
“breach” of the Guaranty, and the Landlord in the New York Action hasn’t alleged
any such breach.31
Mr. Gaudelet counters that Counterclaim I is ripe because Bastion has asserted
in its own Complaint that a controversy exists. This, he says, has waived Bastion’s
attempted affirmative defense.32 In the alternative, if the Court disagrees and finds
that questions regarding indemnification are premature, then Mr. Gaudelet asks the
Court to stay this proceeding with respect to any indemnification-related claims.33
Further, Mr. Gaudelet argues that a ripe controversy exists because Agreement
Section 6.2 requires Bastion to defend him in—not just indemnify him for—the
New York Action.34 Second, Mr. Gaudelet argues that he has stated a claim for
breach of the Agreement and has properly alleged damages because Section 6.2 of
the Agreement itself explicitly references the Guaranty, and thus as a matter of
contract interpretation it would not make sense that the parties intended to exclude
31 Id. at 8. 32 Ans. Br. at 18. 33 Id. at 22. 34 Id. at 18-19. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 8 of 17
it from Section 6.2’s purview via listing it on the Company Disclosure Schedule
attached to the Agreement.35 Third, Mr. Gaudelet argues that the New York Action
is alleging a breach of the Guaranty against him; the complaint in that action has not
alleged that he is liable for any reason other than his role as Guarantor.36 Further,
Mr. Gaudelet argues that Agreement Section 6.2 should be read in the disjunctive
such that the clauses “resulting from,” “related to” and “arising out of any breach”
are separate.37
B. COUNTERCLAIM II
Bastion argues that Counterclaim II is duplicative of Count I, and thus should
be dismissed for efficiency purposes.38
Mr. Gaudelet responds that Counterclaim II differs from Count I in that
Counterclaim II includes a request that the Court declare that Bastion has a duty to
defend Mr. Gaudelet in the New York Action, as opposed to just indemnify
Mr. Gaudelet for any judgment that may result.39
35 Id. at 11-14. 36 Id. at 17. 37 Id. at 16. 38 Op. Br. at 9. 39 Ans. Br. at 22-23. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 9 of 17
V. DISCUSSION
A. THE INDEMNIFICATION ISSUES ARE NOT RIPE.
Delaware’s Declaratory Judgment Act empowers the Court to “declare rights,
status and other legal relations whether or not further relief is or could be claimed.”40
But the Court often looks to see if there is an extant actual controversy before
exercising declaratory judgment jurisdiction.41 For an actual controversy to exist the
case must be ripe.42 “As to indemnity claims, Delaware courts decline to enter a
declaratory judgment until there is a judgment against the party seeking it. What is
more, indemnification claims do not accrue until the underlying claim is finally
decided.”43
Here, as both parties admit, the New York Action is still pending and no
judgment has been entered against Mr. Gaudelet. Thus, any determination of
Bastion’s indemnification obligations under the Agreement is premature. While
Mr. Gaudelet suggests that Bastion has “waived” this argument by its own complaint
asserting that there is a controversy to be resolved now, ripeness is an issue of
40 DEL. CODE ANN. tit. 10, § 6501 (2024). 41 Ham v. LinQuest Corp., 2024 WL 1850518, at *7 (Del. Super. Ct. Apr. 18, 2024). 42 Id. 43 Id. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 10 of 17
justiciability. And the Court always retains its ability to consider such justiciability
issue at any time.44
B. GRANTING MR. GAUDELET’S MOTION TO STAY WOULD PROMOTE AN ORDERLY AND EFFICIENT ADMINISTRATION OF JUSTICE.
The Court has discretion over whether to grant a motion to stay.45 In deciding
on a stay, the Court should consider principles of comity and orderly and efficient
administration of justice.46 In the context of staying indemnification claims, when
underlying proceedings have commenced that could potentially trigger coverage,
then an injury is “imminent” and the Court often stays actions to allow the
underlying proceedings to conclude.47
As outlined above, the New York Action has been pending for about two
years. And it’s just that action’s resolution that is the potential trigger of Bastion’s
indemnification obligations. If the New York Action results in a judgment against
Mr. Gaudelet, then there’s a substantial likelihood that the Court will need to decide
Bastion’s indemnification obligations. The alternative to staying the
44 Emp’rs Ins. Co. of Wausau v. First State Orthopaedics, P.A., 312 A.3d 597, 613 (Del. 2024). 45 Yellow Pages Grp., LLC v. Ziplocal, LP, 2015 WL 358279, at *4 (Del. Super. Ct. Jan. 27, 2015) (staying indemnification claim where that claim was not yet ripe). 46 Id. 47 Lima USA, In. v. Mahfouz, 2021 WL 5774394, at *14 (Del. Super. Ct. Aug. 31, 2021) (collecting cases). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 11 of 17
indemnification claims would be to dismiss them. But that then would likely result
in the parties just filing again in this Court at the conclusion of the New York Action.
In the interests of comity and efficiency, Mr. Gaudelet’s Motion to Stay is
GRANTED.
C. MR. GAUDELET HAS ADEQUATELY PLED A BREACH OF THE AGREEMENT.
To plead a breach-of-contract claim, a party must allege: (1) the existence of
a contract; (2) a breach of the contract; and (3) damages suffered as a result of the
breach.48
1. Bastion’s interpretation of the Agreeement’s definition of “Damages” isn’t the only reasonable interpretation. Bastion insists that Mr. Gaudelet cannot plead damages because the
Agreement’s definition of “Damages” precludes any damages resulting from the
Guaranty.49 This argument stems from the fact that “Damages” as used in
Agreement Section 6.2 is defined to exclude any damages related to items set forth
on the Company Disclosure Schedules.50 The Guaranty is listed on the Company
Disclosure Schedule attached to the Agreement.51 But, as Mr. Gaudelet points out,
48 VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003); Ham, 2024 WL 1850518, at *8. 49 Op. Br. at 7. 50 Agreement at Article 1 (Definitions). 51 Id. at Schedule 3.12, Section 3.12(b). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 12 of 17
this is in conflict with the explicit wording of Section 6.2. So, the Court must
interpret this Agreement provision.
Contract interpretation is a question of law that might be resolved on a motion
to dismiss.52 To succeed though, the movant’s interpretation must be “the only
reasonable construction as a matter of law.”53 Otherwise, for purposes of deciding
a 12(b)(6) motion, the language must be resolved in the non-movant’s favor.54
Specific language in a contract controls over general language, and when in conflict,
the specific language typically qualifies the general language.55 Interpretations that
render a provision meaningless, or yield absurd results, must be rejected.56
Agreement Section 6.2 specifically states that Bastion agrees to indemnify
and defend Mr. Gaudelet for “any and all Damages” he incurs “resulting from,
related to or arising out of any breach” of the Guaranty. If Bastion’s interpretation
of “Damages” is adopted, then this provision is essentially meaningless. And the
52 E.g., Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1030 (Del. Ch. 2006) (“Under Delaware law, the proper interpretation of language in a contract is a question of law. Accordingly, a motion to dismiss is a proper framework for determining the meaning of contract language.”). 53 VLIW Tech., 840 A.2d at 615 (citation omitted). 54 Id.; Veloric v. J.G. Wentworth, Inc., 2014 WL 4639217, at *8 (Del. Ch. Sept. 18, 2014) (“At the motion to dismiss stage, ambiguous contract provisions must be interpreted most favorably to the non-moving party.”). 55 Urvan v. Ammo, Inc., 2024 WL 863688, at *21 (Del. Ch. Mar. 14, 2024). 56 E.g., Manti Holdings, LLC v. Authentix Acquisitions Co., 261 A.3d 1199, 1211 (Del. 2021). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 13 of 17
Court won’t adopt an interpretation of the Agreement that renders any of its
provisions meaningless.57 With the context of the Agreement’s recitals indicating a
desire to “release” Mr. Gaudelet from the Guaranty,58 the Guaranty’s inclusion on
the Company Disclosure Schedule is as likely an oversight as it was intended. Thus,
Bastion has not carried its burden of showing that its read of Section 6.2 is the only
reasonable construction.
2. Section 6.2 should be read in the disjunctive, and even if it isn’t, the New York Action, as it relates to Mr. Gaudelet, pertains to a breach of the Guaranty. Bastion argues, based on its reading of Section 6.2, that for the Agreement’s
indemnification provision to be triggered, the New York Action needs to assert a
breach of the Guaranty. While there is no hard-and-fast rule for this interpretation,
generally courts read “and” as conjunctive while reading “or” as disjunctive. 59 So
in the norm, Agreement Section 6.2 would be read as requiring Bastion to indemnify
and defend Mr. Gaudelet from damages “resulting from” the Guaranty, “related to”
the Guaranty, and “arising out of any breach” of the Guaranty. As such, the New
York Action clearly would be covered.
57 Id. 58 Agreement (Recitals). 59 Weinberg v. Waystar, Inc., 294 A.3d 1039, 1045 (Del. 2023). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 14 of 17
But even if read in the conjunctive as Bastion suggests, such that the complaint
in the New York Action would need to assert a breach of the Guaranty for Bastion’s
obligations under Section 6.2 to be triggered, Counterlclaim I is still adequately pled.
The Guaranty provides that Mr. Gaudelet’s liability is “primary” and that the
Landlord doesn’t need to first exhaust all remedies against L’Atelier.60 The New
York Action’s complaint alleges that, pursuant to the lease, the Landlord gave
Mr. Gaudelet notice of default and notice of termination of the lease.61 Further, the
complaint alleges that neither party paid rent after the alleged termination date.62
And the complaint also alleges that Mr. Gaudelet is jointly and severally liable.63
Thus, by alleging failure to remit payment when notified, the complaint in the New
York Action states a claim against Mr. Gaudelet for breach of the Guaranty.
In addition, the Guaranty is also incorporated into the lease as Exhibit D.64
Reading the New York Action’s complaint in the light most favorable to
Mr. Gaudelet, any references therein to a breach of the lease could be read as also
alleging a breach of the Guaranty.
60 Guaranty ¶ 3. 61 Op. Br., Ex. A ¶¶ 9, 12. 62 Id. at ¶ 16. 63 Id. at ¶¶ 33, 37, 41. 64 Op. Br., Ex. B. Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 15 of 17
3. Mr. Gaudelet’s claim for breach of Bastion’s duty to defend is ripe and adequately pled.
The duty to defend is a separate obligation from the duty to indemnify and
arises when an allegation in the underlying complaint shows a potential for
liability.65
Again, any claim for breach of Bastion’s duty to indemnify is premature. But
Mr. Gaudelet also alleges a breach of Bastion’s duty to defend him in the New York
Action.66 This claim is ripe because, as discussed above, the complaint in the New
York Action demonstrates that Mr. Gaudelet may be found liable thereunder.
Mr. Gaudelet alleges that he has “incurred significant legal fees” because of
Bastion’s refusal to defend him in the New York Action as required by Agreement
Section 6.2.67 This is sufficient to plead a breach of Bastion’s duty to defend.68
Accordingly, the Motion to Dismiss is DENIED as to Counterclaim I.
D. COUNTERCLAIM II IS DUPLICATIVE OF COUNTERCLAIM I.
To survive dismissal, a declaratory count must be distinct from the affirmative
65 Laguelle v. Bell Helicopter Textron, Inc., 2014 WL 2699880, at *7 (Del. Super. Ct. June 11, 2014). 66 Answer and Counterclaims ¶¶ 31, 35, 36. 67 Id. at ¶ 37. 68 Yellow Pages Grp., LLC, 2015 WL 358279, at *3 (“Allegations are well-pled if they place the defendant on notice of the claim.”). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 16 of 17
counts such that a decision on the affirmative counts would not resolve the
declaratory count.69
While the parties briefed whether Counterclaim II is duplicative of Count I,
the obvious deficiency is that Counterclaim II is duplicative of Counterclaim I.
Counterclaim I asserts that Bastion is in breach of its obligations to indemnify
and defend Mr. Gaudelet under Agreement Section 6.2. Counterclaim II asks the
Court to declare that same Section 6.2 obligates Bastion to indemnify and defend
him. There is no daylight between these two claims; resolution of Counterclaim I
would fully resolve Counterclaim II. Counterclaim II, therefore, is duplicative.
Thus, Bastion’s Motion to Dismiss is GRANTED as to Counterclaim II. As
this dismissal is not a matter of pleading deficiency, the Court need not grant leave
to amend, as any such amendment would be futile.70
VI. CONCLUSION
For the foregoing reasons: - Bastion’s Motion to Dismiss (D.I. 17) is GRANTED as to Counterclaim II and DENIED as to Counterclaim I; and
- Mr. Gaudelet’s Motion to Stay (D.I. 22) is GRANTED. The parties
69 Blue Cube Spinco LLC v. Dow Chem. Co., 2021 WL 4453460, at *15 (Del. Super. Ct. Sept. 29, 2021). 70 Clark v. State Farm Mut. Auto. Ins. Co., 131 A.3d 806, 811 (Del. 2016) (“[L]eave to amend should be denied when the proposed amendment would be futile.”). Bastion Restaurant Group LLC v. Alexandre Gaudelet C.A. No. N24C-06-190 PRW CCLD December 17, 2024 Page 17 of 17
shall file a written status report alerting the Court if any judgment is entered against Mr. Gaudelet in the New York Action. That status report shall be filed within 21 days of the entry of such judgment and the Court will then hold a status conference with the parties on next steps to be taken in this matter.
IT IS SO ORDERED. /s/ Paul R. Wallace _______________________ Paul R. Wallace, Judge cc: All Counsel via File and Serve