Refresco Beverages US Inc. v. Congo Brands Procurement LLC

• Court: Court of Chancery of Delaware
• Decided: January 16, 2025
• Docket: C.A. No. 2024-0819-MTZ
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER VICE CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734

January 16, 2025 John A. Sensing, Esquire Lisa Zwally, Esquire Potter Anderson & Corroon LLP Greenberg Traurig, LLP 1313 North Market Street, 6th Floor 222 Delaware Avenue, Suite 1600 Wilmington, DE 19801 Wilmington, DE 19801

RE: Refresco Beverages US Inc. v. Congo Brands Procurement LLC, et al., Civil Action No. 2024-0819-MTZ Dear Counsel:

In preparing for next week’s hearing on the defendants’ motion to dismiss, I

had cause to consider, as I must, whether this court of equity has subject matter

jurisdiction over the plaintiff’s claims.1 The complaint is silent as to subject matter

jurisdiction; the supplemental information sheet cites 10 Del. C. § 341.2 A review

of the complaint reveals that equitable hook cannot be based on equitable relief, as

the plaintiff seeks only damages.3 Two of its three causes of action are plainly

legal: breach of contract and promissory estoppel.4

1 See, e.g., Int’l Bus. Machs. Corp. v. Comdisco, Inc., 602 A.2d 74, 77 n.5 (Del. Ch. 1991) (“[U]nlike many jurisdictions, judges in the Delaware Court of Chancery are obligated to decide whether a matter comes within the equitable jurisdiction of this Court regardless of whether the issue has been raised by the parties.”). 2 Docket item (“D.I.”) 1. 3 D.I. 1 at 32. 4 Id. at 25–29; see AM Gen. Hldgs. LLC v. The Renco Gp., Inc., 2016 WL 4440476, at *7 n.61 (Del. Ch. Aug. 22, 2016) (“[C]laims for breach of contract seeking money damages Refresco Beverages US Inc. v. Congo Brands Procurement LLC, et al., C.A. No. 2024-0819-MTZ January 16, 2025 Page 2 of 4

I am left to conclude the plaintiff is anchoring subject matter jurisdiction in

its third count, for equitable estoppel. The defendants sought dismissal of that claim

on grounds that under New York law, it is an affirmative defense and not a cause of

action. 5 The plaintiff argued Kentucky law applies, and framed it as a cause of

action, without any citation for that label.6

While I am no expert in Kentucky law, I found published appellate authority

stating that in that jurisdiction, equitable estoppel is a defense. Akers v. Pike County

Board of Education explains, “Under the doctrine of equitable estoppel, certain

conduct by a party is viewed as being so offensive that it precludes the party from

later asserting a claim or defense that would otherwise be meritorious.”7 Sometimes

it works as an affirmative defense for the defendant against the plaintiff. Cabinet

for Health and Family Services v. Batie states, “Estoppel, like lack of standing, is an

are legal claims seeking legal relief.”); Carpenter v. Liberty Mut. Ins. Co., 2023 WL 3454692, at *2 (Del. Ch. May 15, 2023) (“A claim for promissory estoppel . . . standing alone–cannot serve as the basis for equitable jurisdiction.”). 5 D.I. 10 at 33–34. 6 D.I. 11 at 39–40. 7 171 S.W.3d 740, 743 (Ky. 2005). Refresco Beverages US Inc. v. Congo Brands Procurement LLC, et al., C.A. No. 2024-0819-MTZ January 16, 2025 Page 3 of 4

affirmative defense,” and proceeds to treat it as such. 8 It quotes Kentucky Supreme

Court authority in explaining,

“Under the doctrine of equitable estoppel, certain conduct by a party is viewed as being so offensive that it precludes the party from later asserting a claim or defense that would otherwise be meritorious.” Akers v. Pike Cty. Bd. of Educ., 171 S.W.3d 740, 743 (Ky. 2005). It is a “defensive doctrine founded on the principles of fraud, under which one party is prevented from taking advantage of another party whom it has falsely induced to act in some injurious our [sic] detrimental way.” Ping v. Beverly Enters., Inc., 376 S.W.3d 581, 594–95 (Ky. 2012). 9

Other times, equitable estoppel works to bar a defendant’s defense. 10 I do not believe

equitable estoppel is a claim or cause of action under Kentucky law. The plaintiff

makes no argument under New York law. I conclude the plaintiff’s third “cause of

action” fails to state a claim, and must be dismissed.

It follows that the plaintiff has neither pled an equitable claim nor sought

equitable relief. I see no other basis for subject matter jurisdiction under Section

8 645 S.W.3d 452, 468–69 (Ky. Ct. App. 2022). 9 Id. at 469. Other authority is in accord. Boone Cnty Sand & Gravel Co., Inc. v. Owen Cnty Rural Elec. Coop. Corp., 779 S.W.2d 224 (Ct. App. Ky. 1989) (repeatedly addressing the “defense of equitable estoppel”). 10 E.g., Williams v. Hawkins, 594 S.W.3d 189, 193 (Ky. 2020) (explaining equitable estoppel precludes a defendant from asserting a defense due to his own wrongdoing); Fluke Corp. v. LeMaster, 306 S.W.3d 55, 62–67 (Ky. 2010) (addressing whether equitable estoppel was established, which would have barred a defendant’s statute of limitation defense). Refresco Beverages US Inc. v. Congo Brands Procurement LLC, et al., C.A. No. 2024-0819-MTZ January 16, 2025 Page 4 of 4

341. What remains of this matter is hereby dismissed subject to transfer under 10

Del. C. § 1902. Next week’s hearing is cancelled.

IT IS SO ORDERED.

Sincerely,

/s/ Morgan T. Zurn

Vice Chancellor

MTZ/ms

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