Middlecap Associates, LLC v. The Town of Middletown

• Court: Court of Chancery of Delaware
• Decided: February 2, 2023
• Docket: C.A. No. 2022-0234-MTZ
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

MIDDLECAP ASSOCIATES, LLC ) ) Petitioner, ) ) v. ) C.A. No. 2022-0234-MTZ ) THE TOWN OF MIDDLETOWN, a ) Municipal corporation of the State of ) Delaware, THE TOWN OF ) MIDDLETOWN TOWN COUNCIL, ) the governing body of the Town of ) Middletown, and KENNETH L. ) BRANNER, JR., JAMES REYNOLDS, ) AARON BLYTHE, JAMES ROYSTON, ) DREW CHAS, ROBERT MCGHEE and ) ROBERT STOUT, in their individual ) and official capacities as Member of the ) Town of Middletown Town Council ) ) Respondents. )

ORDER GRANTING MOTION TO DISMISS

WHEREAS:

A. Petitioner Middlecap Associates, LLC has asked this Court of equity

for a declaratory judgment and injunction against the above-listed Respondents to

remedy what Petitioner alleges was an arbitrary, capricious, factually unsupported,

and legally erroneous denial of a conditional use permit, which Petitioner alleges

should have been granted under the governing town code (the “Town Code”).

Petitioner also alleges procedural defects, including ex parte communications

between Respondents and persons opposed to the conditional use. On March 11, 2022, Petitioner brought three counts for declaratory judgment, two of which allege

violations of the town code and the Delaware code, and a fourth count for injunctive

relief “compelling the Respondents to approve the Petitioner’s Application.”1 The

complaint relies on “Article IV, Section 10 of the Delaware Constitution of 1987,

as amended, 10 Del. C. § 341, 10 Del. C. § 6501-6502, and this Court’s equitable

cleanup doctrine” for subject matter jurisdiction.2

B. On May 11, Respondents moved to dismiss, asserting this Court lacks

subject matter jurisdiction over Petitioner’s declaratory judgment claims that need

not be enforced by an injunction, and that Petitioner’s allegations fail to satisfy the

criteria for injunctive relief (the “Motion to Dismiss”).3 The parties briefed the

Motion to Dismiss and I took it under advisement on January 31, 2023.4

AND NOW this 2nd day of February, 2023, IT IS ORDERED that the

Motion is GRANTED and the Complaint is dismissed subject to being transferred

to the Superior Court under 10 Del. C. § 1902.

1. As a prefatory matter, because an injunction is a remedy rather than a

cause of action, I consider Petitioner’s complaint to be seeking three declaratory

judgments and an injunction based on violations of governing positive law and the

1 Docket Item (“D.I.”) 1 ¶ 49. 2 Id. ¶ 3. 3 D.I. 5. 4 D.I. 9, 13, 14.

2 Respondents’ obligations in considering a conditional use permit. I therefore take

on the Motion to Dismiss, including the argument that Petitioner has not fairly pled

the need for an equitable remedy, under Court of Chancery Rule 12(b)(1).

Petitioner bears the burden of establishing that the Court has subject matter

jurisdiction over its claims.5

2. Earlier today, my chambers issued Delta Eta v. Mayor & Council of

the City of Newark, C.A. No. 2021-1106-MTZ, D.I. 45 (Del. Ch. Feb. 2, 2023). In

that opinion, I did my best to explain that this Court lacks subject matter jurisdiction

over cases like this one, in which the petitioner seeks a declaratory judgment

enforced by an injunction to remedy and reverse the allegedly wrongful denial of a

conditional use permit application. This type of claim is a legal claim based on

statutory rights, but without a specific grant of statutory jurisdiction. To secure this

Court’s jurisdiction, the claim must require equitable relief due to the absence of an

adequate remedy at law. Delta Eta explains that this Court will lack jurisdiction

where a plaintiff fails to plead an injunction is needed to prevent future harm, or is

otherwise necessary to enforce a declaratory judgment as against governmental

actors, who our law presumes will comply with any declaratory judgment.6 It also

5 Maloney-Refaie v. Bridge at Sch., Inc., 2008 WL 2679792, at *7 (Del. Ch. July 9, 2008). 6 See In re COVID-Related Restrictions on Religious Servs., 285 A.3d 1205, 1233 (Del. Ch. 2022).

3 explains that where a writ of certiorari is available, the plaintiff bears the burden of

establishing that writ cannot afford an adequate remedy at law.

3. My reasoning and conclusions in Delta Eta apply with equal force to

this matter. The denial of Petitioner’s conditional use permit was a quasi-judicial

act, guided by Town Code requirements for a conditional use allowed in the C-3

Zoning districts. For the reasons stated in Delta Eta, a writ of certiorari is or was

available to Petitioner.

4. The parties’ briefing does not address the issue of whether a writ of

certiorari issued by the Superior Court could provide an adequate remedy.

Nevertheless, I find that a writ of certiorari is or was available, and capable of

affording an adequate remedy at law. Accordingly, this Court lacks subject matter

jurisdiction over Petitioner’s claims.

5. Additionally, Petitioner argues that a declaratory judgment

invalidating the denial of Petitioner’s application affords an inadequate remedy

because without an injunction, Petitioner must reapply and potentially face another

wrongful denial. It appears to me that Petitioner could have sought a declaration

that it was entitled to the conditional use permit based on the record before the Town

of Middletown Town Council, which would have obviated the need for injunctive

relief.7 Petitioner’s reliance on Gibson v. Sussex County Council does not mandate

7 See In re COVID-Related Restrictions, 285 A.3d at 1233.

4 a different outcome.8 Gibson found that under the facts and circumstances of the

case, the exercise of equitable jurisdiction was “justifiable,” and does not stand for

the proposition that this Court will always have jurisdiction over challenges to the

denial of conditional use permits.9 Petitioner has failed to demonstrate that a

declaratory judgment could not provide full and fair relief under the circumstances

of this case.

6. I do not reach whether Petitioner has stated a claim for monetary

damages or a basis to shift attorneys’ fees. Those matters must be decided by a

court with subject matter jurisdiction to do so.

/s/ Morgan T. Zurn Vice Chancellor Morgan T. Zurn

8 877 A.2d 54 (Del. Ch. 2005). 9 Id. at 79–80.