Bhole, Inc. v. Shore Investments, Inc.
67 A.3d 444
Del.2013Background
- Lease (2004–2011) for 4313 Highway One, no acceleration clause; rent payable monthly.
- Bhole operated liquor store at Old Store; in 2009 assets and license moved to Salvation Army Building; lease not terminated.
- Pires, Highway I, Outlet Wines/Liquors acquisition of Bhole; Bhole merged into Outlet Liquors; operation moved but rent continued for five months.
- September 2009 breach: possession and operation moved; Shore sought unpaid rent for remainder of term and fees.
- Superior Court held breach by Bhole/Outlet; awarded contract damages, attorney’s fees, punitive damages; tortious interference affirmed but damages limited.
- Appeals: Court remands on acceleration-clause issue and mitigation; reverses punitive damages and tortious-interference determinations; clarifies who is liable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Measure of breach damages without acceleration clause | Shore entitled to unpaid rent for balance; no acceleration clause means potential broader recovery. | Absence of acceleration clause limits recovery to installments due as of filing/trial/judgment. | Remanded to decide proper measure of damages. |
| Mitigation of damages post-breach | Shore exercised reasonable efforts to mitigate by listing property. | Record insufficient to show reasonable mitigation. | Record insufficient; remand to augment evidence on reasonableness. |
| Who among defendants is liable for contract damages | All named entities jointly/severally liable as appropriate. | Only contracting parties should be liable; some entities not parties to lease. | Only Bhole and Outlet Liquors liable; Highway I and Pires not liable. |
| Tortious interference with the Lease | Defendants interfered with Shore’s contractual rights. | Competition and legitimate business aims; no improper interference. | Reversed as to tortious interference; no consequential damages awarded. |
| Punitive damages | Punitive damages appropriate for tortious behavior. | No tort found; punitive damages improper. | Reversed; punitive damages void; reconsider attorney’s fees on remand. |
Key Cases Cited
- Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206 (Del. 2012) (bar on veil-piercing and related assertions cited for corporate liability principles)
- Genger v. TR Investors, LLC, 26 A.3d 180 (Del. 2011) (corporate liability and contract principles cited)
- William Penn P’ship v. Saliba, 13 A.3d 749 (Del. 2011) (general contract/alternative damages principles cited)