Duncan v. STTCPL, LLC, K16C-12-020 JJC

Background

Duncan owned a Harrington, DE gas station; leased it in 1994 and the lease included an indemnity clause requiring lessee to indemnify lessor for property damage arising from lessee’s tenancy.
In ~1999–2000 STTCPL assumed the lease (assignment) and Duncan consented via an Assignment and Lease Modification that preserved the indemnity clause.
DNREC discovered lead contamination pre-2009 (Project ID K0804036). In May 2009 Duncan and STTCPL executed a Settlement Agreement in which Duncan assumed responsibility for future investigation/remediation tied to specified DNREC project IDs but the agreement contained both broad release language and a limiting clause (Paragraph 9) restricting Duncan’s assumption to environmental matters “currently identified by DNREC.”
In January 2012 DNREC issued a new Notice of Violation (same Project ID K0804036) alleging gasoline/unleaded contamination related to underground storage tanks. STTCPL later settled with DNREC in 2014 for $70,000; DNREC then billed Duncan for an additional $492,014.
Duncan sued STTCPL for breach of the lease indemnity (and for unpaid rent ~ $48,000) and sued Coastal Tank & Pump for negligent tank removal (and STTCPL vicariously). STTCPL and Coastal moved to dismiss under Rule 12(b)(6).
The court treated the 2009 Settlement Agreement and the 2012 DNREC notice as integral to the complaint, construed ambiguities in the non‑movant’s favor, and denied the motions to dismiss as to breach of contract (indemnity and unpaid rent) and negligence claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2009 Settlement Agreement barred Duncan’s claim for indemnity for the 2012 DNREC notice	The Settlement Agreement’s Paragraph 9 limits Duncan’s assumption to matters identified by DNREC in 2009, so the 2012 contamination is a new matter and STTCPL must indemnify	The Settlement Agreement’s broad release clauses (e.g., ¶8) cover all future claims including the 2012 notice, so Duncan released his claims	Denied dismissal: contract ambiguous or reasonably read for Duncan; at pleading stage Duncan could conceivably recover
Whether DNREC’s 2012 notice is the same pre‑existing contamination	Duncan: 2012 notice implicates unleaded gasoline contamination not the prior lead contamination; sampling post‑dating the 2009 agreement supports inference of new contamination	STTCPL: same Project ID and settlement with DNREC indicate same matter	Court: factual record unclear; reasonable inference for Duncan exists at pleading stage
Whether STTCPL’s $70,000 payment to DNREC extinguished alleged unpaid rent ($48,000) claim	Duncan: He never authorized STTCPL to pay escrowed rent to DNREC; rent remains unpaid	STTCPL: Part of its payment to DNREC represented escrowed rent paid on Duncan’s behalf	Denied dismissal: no lease before court; factual dispute; plausible Duncan could recover
Sufficiency of negligence claim against Coastal and vicarious liability of STTCPL	Duncan: Coastal negligently returned contaminated soil to the excavation, worsening contamination; alleges duties and damages ($492,014) with specificity	STTCPL: Duncan contractually released environmental claims; negligence allegations are conclusory, lacking proximate cause and damages specificity	Denied dismissal: complaint pleaded duty, specific wrongful act, causation inference, and damages sufficiently under Rule 9(b) for notice purposes

Key Cases Cited

Spence v. Funk, 396 A.2d 967 (Del. 1978) (pleading standards; accept well‑pleaded allegations as true)
VLIW Technology, L.L.C. v. Hewlett‑Packard Co., 840 A.2d 606 (Del. 2003) (ambiguities in contract construed in favor of the non‑movant on motion to dismiss)
Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162 (Del. 2011) (court will not accept conclusory allegations unsupported by specific facts)
Nw. Nat’l Ins. Co. v. Esmark, Inc., 672 A.2d 41 (Del. 1996) (contract interpretation principles)
Council of Dorset Condo Apartments v. Gordon, 801 A.2d 1 (Del. 2002) (give effect to every term of instrument when possible)
Fisher v. Townsends, Inc., 695 A.2d 53 (Del. 1997) (respondeat superior and vicarious liability principles)
Shively v. Klein, 551 A.2d 41 (Del. 1988) (negligence pleading particularity under Rule 9(b))