Greenstar, LLC v. Heller
934 F. Supp. 2d 672
D. Del.2013Background
- Greenstar filed suit in 2010 against Heller and THI for alleged nondisclosures in the sale of the Northampton recycling Facility.
- Greenstar seeks to offset damages related to MBG stockpiles against a $11.41 million promissory note part of the purchase price.
- The matter proceeded to a bench trial in 2012; court authorizes damages and fees under Fed. R. Civ. P. 52(a) and Delaware contract law.
- The Asset Purchase Agreement (APA) included several representations and warranties, an exclusion of certain liabilities, and a fee-shifting provision for attorney fees.
- DEP oversight and enforcement history of MBG stockpiles began years before closing; DEP never issued formal sanctions against Heller or Greenstar, but pursued removal plans and monitoring; Greenstar later upgraded the glass plant and contracted Coplay to remove stockpiles.
- At trial, the court held Heller breached certain representations and Greenstar incurred deductible damages related to the MBG stockpiles, treating those as Excluded Liabilities under the APA; court awarded indemnification and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract—environmental matters under 3.21(k). | Greenstar contends Heller failed to disclose DEP-related environmental documents. | Heller argues the documents do not show an environmental issue under 3.21(k). | No breach of 3.21(k); MBG not an Environmental Law nor Environmental Claim under the clause. |
| Breach of contract—compliance with laws under 3.17. | Heller failed to disclose DEP communications and potential regulatory issues. | Disclosure was not required to reveal DEP efforts that did not culminate in formal action. | Breach found of 3.17(a) (disclosure of conditions that might violate a Legal Requirement). |
| Breach of contract—absence of undisclosed liabilities under 3.7. | Heller had undisclosed liabilities related to DEP commitments to process MBG at a rate and report to DEP. | No undisclosed liabilities above the threshold. | Breach found of 3.7; MBG processing obligations constituted Liabilities. |
| Breach of contract—disclosure under 3.26. | Heller's omissions rendered representations under 3.21, 3.17 misleading. | Disclosures were adequate or not material to the deal. | Breach found of 3.26; omissions were material to Greenstar’s decision-making. |
| Indemnification and damages—Excluded Liabilities and §6.1/§6.2 interplay. | MBG stockpiles are Excluded Liabilities or caused Losses due to misrepresentations. | MBG stockpiles do not relate to Environmental Claims and were not excluded liabilities. | Indemnification awarded under §6.1 for Excluded Liabilities; damages offset against Note: $401,345.28. |
Key Cases Cited
- Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 (Del. 1992) (contract interpretation guiding meaning of terms and ambiguity)
- Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228 (Del. 1997) (contract interpretation and reasonable expectations)
- GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776 (Del. 2012) (prioritizing party intentions in contract construction)
- Paul v. Deloitte & Touche, LLP, 974 A.2d 140 (Del. 2009) (contract interpretation and disclosure obligations)
- H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129 (Del. 2003) (standards for evaluating breach/disclosure under contracts)
- Bomarko, Inc. v. Int'l Telecharge, Inc., 794 A.2d 1161 (Del. Ch. 1999) (damages and reasonable estimates where exact figures unknown)
- Abry Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032 (Del. Ch. 2006) (fee shifting and prevailing party considerations)
- Kuroda v. SPJS Holdings LLC, 971 A.2d 872 (Del. Ch. 2009) (knowledge standards and disclosure)