Brace Industrial Contracting, Inc. v. Peterson Enterprises, Inc.

• Court: Court of Chancery of Delaware
• Decided: December 10, 2015
• Docket: CA 11189-VCG
• Status: Published

Opinion

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

2 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.

3 Sincerely,

/s/ Sam Glasscock III

Sam Glasscock III