Blgh Holdings LLC v. Enxco Lfg Holding, LLC
41 A.3d 410
| Del. | 2012Background
- BLGH sold Beacon Landfill Gas Holdings to enXco for $12 million plus a potential $1.25 million bonus under the UPA.
- Bonus triggered if Conectiv termination occurs and the final Shell-EnXco transaction conforms to Section 6.1(f) by December 15, 2010.
- Shell letter of intent (Exhibit E) and Exhibit A terms set forth indicative terms subject to modification in final agreement.
- Final Shell-EnXco contract differed: 10-year term, lower initial price ($8.91/MMBtu) with no guaranteed increases, and fixed delivery capacity, unlike the indicative terms.
- Shell LOI permitted modifications to indicative terms; consummation required negotiation of a definitive agreement by a stated deadline.
- Superior Court granted summary judgment for enXco; BLGH appealed arguing no material difference was required for bonus entitlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Section 1.7 require final terms to be substantially identical to the Shell LOI? | BLGH contends no material similarity required; final terms may differ. | enXco argues final terms must be substantially identical to the indicative terms. | No; Flexibility allowed; final terms need not be substantially identical. |
| What does 'outlined' mean in Section 1.7 and Section 6.1(f)? | BLGH argues 'outlined' should be read as defined by 6.1(f) and Shell LOI with possible changes. | enXco contends 'outlined' requires close adherence to Shell LOI terms. | 'Outlined' means defined by or referenced in 6.1(f); not a rigid match to terms. |
| Does the Shell LOI's modification permission control entitlement to the bonus? | BLGH relies on LOI allowing modifications, so final terms need not mirror LOI. | enXco asserts that deviations negate the bonus. | LOI's modification authorization supports entitlement if final agreement falls within the scope of Section 1.7. |
| Is there an implicit requirement that final terms be materially similar to the indicative terms? | BLGH emphasizes no such implicit requirement exists in the UPA. | enXco relies on a material similarity standard to deny the bonus. | No implied material-similarity standard; the final agreement satisfied Section 1.7. |
| Did the Shell-Beacon transaction satisfy Section 1.7 despite term differences? | BLGH asserts the Shell-Beacon transaction fulfilled the outlined transaction. | enXco argues differences undermine the bonus. | Yes; the final agreement constituted the transaction outlined, triggering the bonus. |
Key Cases Cited
- Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 (Del. 1992) (contract interpretation de novo when plain terms unambiguous)
- E.I. du Pont de Nemours and Co. v. Shell Oil Co., 498 A.2d 1108 (Del.1985) (read contracts as a whole, give effect to all provisions)
- Royal Indem. Co. v. Alexander Indus., Inc., 211 A.2d 919 (Del.1965) (read documents incorporated by reference together with the primary contract)
- Estate of Osborn v. Kemp, 991 A.2d 1153 (Del.2010) (avoid interpreting contract to make language meaningless or illusory)