Justia Delaware Court of Chancery Opinion Summaries

Articles Posted in Real Estate & Property Law

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Plaintiffs bought a townhouse condominium unit from Defendant. After the sale, repairs of leaks in the other condominium units caused by poor construction required the condominium board to collect special assessments in the amount of $65,000 from each unit holder, including Plaintiffs. Recoupment from the builder offset the sum, but Plaintiffs remained out-of-pocket over $40,000. Plaintiffs sued Defendant, alleging fraud and equitable fraud due to Defendant's allegedly insufficient disclosures made to Plaintiffs before the sale. The Court of Chancery entered judgment in favor of Defendant, holding (1) Plaintiffs failed to prove Defendant committed common-law fraud because they failed to show Defendant misrepresented or omitted some material fact before the sale of the condominium; and (2) rescission was not warranted under the facts of this case, and therefore, equitable fraud was inappropriate. View "Grzybowski v. Tracy" on Justia Law

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This action came before the Court of Chancery on a petition for a decree of distribution in an estate matter. Petitioner and his sister, Respondent, were the intestate heirs of their mother's estate. Ordinarily the estate would be divided evenly between the two of them. Petitioner argued, however, that his sister was not entitled to any additional funds from the estate because (1) she benefited when the estate's property was sold and the proceeds were used to pay off a mortgage she owed on the property, which had the effect of decreasing the amount available in the estate for distribution to the heirs, and (2) Respondent's actions as administratrix depleted the value of the estate. The Court of Chancery ordered that all of the assets in the estate should be distributed to Petitioner, concluding that, after accounting for the benefit Respondent received when the mortgage was paid off, and the loss caused to the estate by the breach of Respondent's fiduciary duties, there were no funds remaining in Respondent's share of the estate. View "In re Riley" on Justia Law

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Plaintiff filed a complaint seeking the partition by sale of property owned by her deceased father and distribution of the proceeds to the three cotenants, herself, her sister Claudia, and her brother Benjamin. Claudia filed a counterclaim and cross-claim against Plaintiff, Benjamin, Benjamin's wife, Homeowners Loan Corporation (HLC), and Mortgage Electronic Registration Systems (MERS) for, among other things, a declaratory judgment that she had a life estate in the property. The Court of Chancery found in favor of Plaintiff and her request for a partition of the property. Claudia was then evicted from the property by a trustee appointed by the court to oversee the sale of the property. Thereafter, Plaintiff sought reimbursement for several expenses. HLC and MERS sought attorneys' fees and rent payments. The Court of Chancery awarded a total of $12,098 to Plaintiff for attorneys' fees, rent payments, funeral expenses, and trustee's fees. The Court also awarded $2,166 in rent payments to HLC and MERS and requested an itemized list of fees incurred as a result of Claudia's behavior that was found to be vexatious or in bad faith. View "Brown v. Wiltbank" on Justia Law

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Plaintiff entered into a lease with Defendant containing optional renewal terms. The parties disputed whether the option was properly exercised. Defendant then informed Plaintiff that if it failed to vacate the leasehold, Defendant would pursue legal action. Plaintiff brought this action to forestall that eventuality. At issue in this case was whether the Court of Chancery can exercise jurisdiction over what is essentially a real estate possession action, notwithstanding that the Legislature has vested exclusive jurisdiction over such matters with the Justice of the Peace Courts. The Court of Chancery granted Defendant's motion to dismiss, concluding (1) the Court does not have jurisdiction, under the facts of this case, to enjoin Defendant from seeking relief from the Justice of the Peace Court in this matter where that court has exclusive jurisdiction; and (2) a claim does not exist in equity to nullify Defendant's contractual rights arising from Plaintiffs' purported failure to timely exercise an option. View "Heartland Del. Inc. v. Rehoboth Mall Ltd. P'ship" on Justia Law

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This action involved a dispute between certain members of two Delaware real estate holding companies, Defendant Companies and the Companies' manager, Rubin Schron. Plaintiffs, MICH and SEEVA Entites, originally brought an action against Schron and Schron-affiliated entities in New York (the MICH/SEEVA action) alleging breaches of fiduciary duty and of the Companies' operating agreements. In response, Schron filed an opposing action in New York against the MICH and SEEVA entities' majority owners and controllers, alleging breaches of fiduciary duty and legal malpractice. The New York court dismissed the MICH/SEEVA action, holding that the operating agreements required all claims against the Companies to be brought in Delaware. Plaintiffs then filed this action, which Schron moved to stay or dismiss. The Chancery Court granted Defendants' motion to stay this action in favor of Schron's first-filed New York action. Plaintiffs then filed combined motions for reconsideration and certification of an interlocutory appeal. The Chancery Court held that, with the exception of Plaintiffs' claim regarding Defendants' withholding of certain distributions allegedly owed to Plaintiffs, Plaintiffs' motion should be denied because Plaintiffs did not demonstrate that relief was warranted. View "MICH II Holdings LLC v. Schron" on Justia Law

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WenDover, is a Delaware corporation that operates a Wendy franchise in Rehoboth Beach. Defendant RMLP owns the Rehoboth Mall Shopping Center, where the restaurant is located. Heartland leased land from the RMLP and then subleased the land to WenDover. In 2006, the parties disagreed whether Heartland had properly exercised the lease’s second renewal term. To resolve that dispute, Heartland agreed to pay the third renewal term’s rental rate during the second renewal term, and RMLP forgave any noncompliance with the renewal provisions of the lease. RMLP contends that Heartland did not provide notice and exercise the option for the third term, informed Heartland that Heartland was occupying the leasehold under an at-will tenancy and demanded that Heartland vacate. Heartland sought to enjoin RMLP from seeking eviction from the Justice of the Peace Court. The chancellor determined that the court lacked jurisdiction over what “is essentially a real estate possession action,” over which the legislature has vested exclusive jurisdiction over such matters with the Justice of the Peace Courts. View "Heartland DE Inc. v. Rehoboth Mall Ltd P'ship" on Justia Law

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This derivative action challenged a series of related-party transactions. Defendants moved for judgment on the pleadings, contending that laches barred the bulk of the claims. Defendants were partly right, laches barred the challenges to certain stock options granted in 2004 and 2005. Laches also barred a portion of the challenge to compensation received under certain employment agreements and rent-free sublease. With respect to these claims, the doctrine applied to the extent the compensation was paid and rent-free space provided before March 18, 2008. The doctrine did not apply to the extent that compensation was paid and rent-free space provided on or after March 18, 2008. On a final set of claims, the court granted plaintiffs leave to replead because although the complaint alleged facts sufficient to invoke the doctrine of equitable tolling, the pleading failed to identify when plaintiffs subsequently found out about the self-dealing transactions. View "Buerger, et al. v. Apfel, et al." on Justia Law

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Plaintiff sued the State to challenge a demand for payment made by the State under Delaware's escheat law, 12 Del. C. 1101, et seq. The State countersued, seeking a declaration that the sums demanded from plaintiff were proper and authorized under the Statute. Both parties moved for partial judgment on the pleadings. The court found that the rebates at issue fit comfortably within two of the "specifically enumerated" items of property listed in section 1198(11) and therefore granted the State's motion for partial judgment on the pleadings and denied plaintiff's cross-motion. Although the pleadings did not paint a clear picture of the form in which the rebates were issued by plaintiff to its customers, plaintiff's counsel conceded at oral argument that the rebates were issued as either negotiable "checks" or "credits." As such, the rebates consisted of specifically enumerated items of property under section 1198(11), and the State's claims could not be barred by any statute of limitations. View "Staples, Inc. v. Cook, et al." on Justia Law

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This action was before the court on a motion for a temporary restraining order (TRO) to enjoin the consummation of a proposed restructuring of a mortgage loan secured by certain resorts properties in Mexico and the Bahamas. Holders of more senior participations claim that the proposed transaction unfairly benefited the junior holder at the expense of the more senior holders in direct contravention of the terms of the agreements controlling the debt. The senior holders further claimed that if the proposed transaction was allowed to close, they would suffer irreparable harm through the loss of certain rights and guaranties under the new terms of the loan. The court concluded that the senior holders have stated colorable claims and made a sufficient showing that they would suffer imminent harm if the proposed transaction were allowed to close. Further, the court found that this potential irreparable harm outweighed the harm that would result to the junior holders by delaying the closing for a few weeks until a preliminary injunction could be heard. Accordingly, the court granted the TRO. View "Trilogy Portfolio Co., LLC, et al. v. Brookfield Real Estate Financial Partners, et al." on Justia Law

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This matter involved the adoption of a land use comprehensive plan by the Kent County Levy Court. Petitioners, landowners, argued that the ordinance adopting the plan worked a zoning change on their properties because, pursuant to the land use map incorporated in the plan, the density of the permissible development of the properties was significantly reduced. Petitioners alleged numerous violations of constitutional and statutory law arising of the alleged downzoning of the properties. The county moved to dismiss, arguing that the matter was not ripe for adjudication because the plan and land use map were planning documents only and did not change Petitioners' property rights. The Chancery Court denied the motion to dismiss, holding (1) because land use maps have the force of law, and the county may not permit development of the properties except in conformity with the new land use map, Petitioners had suffered a diminution in their ability to develop the properties, assuming the factual allegation of their petition were true; and (2) therefore, Petitioners' allegations were ripe for consideration. View "Farmers for Fairness v. Kent County Levy Court" on Justia Law