Full Opinion (html_with_citations)

      IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

SUPPI CONSTRUCTION, INC.              )
a Delaware Corporation,               )
                                      )
             Plaintiff,               )
                                      )             C.A. No. N18L-11-009 AML
       v.                             )
                                      )
EC DEVELOPMENTS I, LLC,               )
a Nevada corporation,                 )
FRONTIER BUILDING CORP.,              )
a Florida corporation,                )
PANDA RESTAURANT GROUP, INC., )
a California corporation,             )
PANDA EXPRESS, INC.,                  )
a California corporation,             )
MBOS CONCESSIONS, LLC,                )
a Delaware limited liability company, )
                                      )
             Defendants.              )


                          Submitted: September 27, 2022
                           Decided: December 8, 2022

                                      ORDER

     Upon Plaintiff’s Motion to Enforce Settlement Agreement: DENIED

      1.     The plaintiff seeks to enforce a settlement agreement it contends the

parties reached in May or June 2022. Although it is undisputed that the parties

agreed to an amount to be paid to resolve the plaintiff’s claims, they could not agree

on the scope of a release of claims. That disagreement caused the plaintiff to

represent to this Court that the action was not settled and that the plaintiff was not


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willing to engage in further discussions. Then, three weeks later, the plaintiff

purported to accept the last settlement agreement proposed by the defendant, which

the plaintiff previously had rejected as unacceptable. The question before this Court

is whether these circumstances meet the plaintiff’s burden to prove that the parties

agreed upon all essential settlement terms. Because the record does not support the

plaintiff’s position that the parties entered into an enforceable agreement, the

plaintiff’s motion is denied.

FACTUAL BACKGROUND

         2.     This action arises out of a Subcontract (the “Subcontract”) between

Defendant Frontier Building Corp. (“Frontier”) as general contractor and Plaintiff

Suppi Construction, Inc. (“Suppi”) as subcontractor. The Subcontract related to site

work for construction of a new Panda Express Restaurant at 4704 Kirkwood

Highway, Wilmington, Delaware (the “Property”).

         3.     On November 5, 2018, Plaintiff filed a complaint and statement of

mechanic’s lien (the “Complaint”) against Frontier and several other entities.1 The

Complaint sought a mechanic’s lien and an in rem judgment in the amount of

$114,647.98 against the Property. The Complaint also sought judgment in the

amount of $114,647.98 against Frontier based upon an alleged breach of the

Subcontract and against Panda Restaurant Group, Inc., Panda Express Inc. and


1
    Compl. ¶¶ 2-6.

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MBOS Concessions LLC (collectively the “Panda Entities”) under theories of

quantum meruit and unjust enrichment. Finally, the Complaint asserted a claim

against Frontier for an alleged violation of 6 Del. C. § 3501.

       4.     Trial in this matter was scheduled to begin on May 2, 2022.2 In the

weeks before trial, the parties engaged in settlement negotiations. As a result of those

efforts, the parties reached an agreement on an amount to be paid to resolve the

litigation, subject to negotiating the terms of a formal settlement agreement,

including an acceptable mutual release.3

       5.     On April 26, 2022, Plaintiff circulated a proposed settlement agreement

(the “April 26 Proposal”).4 The April 26 Proposal contained release language that

was not wholly reciprocal.          Specifically, Plaintiff’s release of claims against

Defendants expressly excluded claims for fraud and for conduct after the date of the

agreement, while Defendants’ release of claims against Plaintiff did not contain

those exclusions.5 Defendants responded on April 26 that the release language was

not acceptable.


2
  Trial in this matter was delayed several times. Trial initially was scheduled to take place on
November 29, 2021, but was rescheduled to May 2, 2022, when the parties requested additional
time for discovery and to prepare the pretrial stipulation. On February 28, 2022, Defendants’
counsel asked the Court to refer the case to mediation in advance of trial. The Court granted the
request on March 3, 2022. Then, on April 6, 2022, Defendants’ counsel requested a one-week
extension to mediate the case. The Court granted the extension.
3
  Defendants’ Response in Opposition to Plaintiff’s Motion to Enforce Settlement Agreement and
for an Award of Attorneys’ Fees (hereinafter ““Defs.’ Resp. in Opp.”) at 3, Ex A.
4
  Defs.’ Resp. in Opp. at 3, Ex. B.
5
  Id. at 3, Ex. B ¶¶ 4-5.

                                               3
          6.     On April 28, 2022, Plaintiff circulated another proposed settlement

agreement (the “April 28 Proposal”). The April 28 Proposal eliminated the exclusion

for fraud but continued to exclude a release of potential claims against Defendants

arising out of any conduct occurring after the date of the settlement agreement.6 In

other words, the release Plaintiff proposed to give Defendants still was not

reciprocal. Defendants refused to accept the April 28 Proposal.

          7.     Later that day, the Court conducted a status and pretrial conference (the

“Pretrial Conference”). During the Pretrial Conference, the parties represented to the

Court that they had been unable to settle the case because they could not reach an

agreement on the terms of a release. Counsel agreed they were not prepared to try

the case on May 2nd. As a result of this update, the Court ordered the parties to reach

a settlement or participate in a further round of mediation by May 20, 2022. If the

parties were unable to resolve the case by May 20th, the Court would provide counsel

a new trial date.7

          8.     On May 11, 2022, Defendants circulated a revised proposed settlement

agreement (the “May 11 Proposal”). The May 11 Proposal struck the non-reciprocal

release language favoring Plaintiff and added additional language related to the

scope of the mutual release. Defendants’ proposal struck the release language that



6
    Id. at 3, Ex. C ¶ 4.
7
    Judicial Action Form, D. I. 113.

                                              4
expressly excluded claims arising in the future, and specifically listed “Contract”

and “Contract Work” as included within the release.8 On May 19, 2022, in response

to the May 11 Proposal, Plaintiff advised Defendants that “the edits proposed by the

defendants are not acceptable to Suppi.”9

       9.      On May 20, 2022, the parties provided a status update to the Court (the

“May 20 Status Report”).10 The May 20 Status Report informed the Court that the

parties had not been able to agree upon the settlement language. Plaintiff advised the

Court that Plaintiff had provided its “definitive position on settlement language.”

Defendants stated Plaintiff’s proposed settlement language was unreasonable and

Defendants remained willing to mediate.

       10.     Three weeks later, without any further discussion between the parties,

Plaintiff sent Defendants a signed copy of the previously rejected May 11 Proposal,

which Plaintiff edited to include a new proposed payment date of June 30, 2022.

Defendants responded on June 27, 2022. In their response, Defendants stated

Plaintiff had rejected the May 11 Proposal, and payment on the terms now requested

by Plaintiff should not be expected.

       11.     The Court convened another status conference on July 12, 2022. During

that conference, Plaintiff took the position that the matter was settled upon Plaintiff

8
 Defs.’ Resp. in Opp. at 3, Ex. D ¶ 4.
9
  Id. at 4, Ex. E.
10
   Id. at 4, Ex. F.


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signing the May 11 Proposal. For that reason, Plaintiff argued further mediation was

not warranted. Plaintiff filed this Motion to Enforce the Settlement Agreement (the

“Motion”) on July 27, 2022. Plaintiff’s Motion also seeks an award of attorneys’

fees. The parties argued the Motion on September 27, 2022, after which the Court

took the Motion under advisement.

ANALYSIS

       12.    The issue before the Court is whether the parties reached a binding

settlement agreement. Delaware courts encourage negotiated resolutions to

contested cases, and settlement agreements are enforceable as contracts.11 As the

party seeking to enforce the purported agreement, Plaintiff bears the burden of

proving the existence of a contract by a preponderance of the evidence.12 In

determining whether Plaintiff has met its burden, the Court must inquire:

       whether a reasonable negotiator in the position of one asserting the
       existence of a contract would have concluded, in that setting, that the
       agreement reached constituted agreement on all of the terms that the
       parties themselves regarded as essential and thus that that agreement
       concluded the negotiations . . . .13




11
   Schwartz v. Chase,
2010 WL 2601608
, at *4 (Del. Ch. Jun. 29, 2010); Asten, Inc. v. Wangner
Sys. Corp.,
1999 WL 803965
, at *1 (Del. Ch. Sept. 23, 1999).
12
   Schwartz,
2010 WL 2601608
, at *4.
13
   Loppert v. WindsorTech, Inc.,
865 A.2d 1282, 1285
 (Del. Ch. 2004) (quoting Leeds v. First
Allied Conn. Corp.,
521 A.2d 1095, 1097
 (Del. Ch. 1986)).

                                             6
It is the parties’ overt manifestations of assent, rather than their subjective intent,

that controls the determination of whether an agreement was reached on all material

terms.14

       13.     Delaware law requires a contract to contain all material terms in order

to be enforceable, and specific performance only will be granted when an agreement

is clear, definite, and a court does not need to supply essential contract terms.15

When settlement terms are left to future negotiation, as they were in this case, the

enforceability of an agreement depends on “the relative importance and severability

of the matter left to the future.”16 The relative importance of a term is by its nature a

fact-intensive inquiry. The absence of an agreement on a particular term has been

found to be immaterial where other terms in the parties’ agreement allow the Court

to enforce the parties’ bargain.17 Where, however, the unresolved terms are material

and the parties’ intent cannot be gleaned from other aspects of the agreement, no

enforceable contract exists.18




14
   United Health All., LLC v. United Med., LLC,
2013 WL 6383026
, at *6 (Del. Ch. Nov. 27,
2013).
15
   Ramone v. Lang,
2006 WL 905347
, at *10 (Del. Ch. Apr. 3, 2006).
16
   Asten, Inc.,
1999 WL 803965
, at *2.
17
   Spacht v. Cahall,
2016 WL 6298836
, at *4 (Del. Super. Ct. Oct. 27, 2016) (citing Asten, Inc.,
1999 WL 803965
, at *2–3 (concluding unresolved administrative issue as to how to effect division
of proceeds paid in kind rather than in cash did not constitute omission of material term); Hendry
v. Hendry,
1998 WL 294009
, at *2 (Del. Ch. June 3, 1998) (holding exact property line description
was not an essential term because other terms of the contract allowed the Court to enforce the
parties' agreement)).
18
   Spacht,
2016 WL 6298836
, at *4 (citing Schwartz,
2010 WL 2601608
, at *10-11).

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      14.    Plaintiff advances two independent theories in support of its Motion.

First, Plaintiff contends the parties reached a settlement on May 11, 2022, because

they agreed to all material terms on that date. According to Plaintiff, the scope of the

release language was not a material term and therefore the parties’ failure to agree

as to the precise scope of a release does not preclude a finding that a settlement was

reached. In order to resolve this argument, the Court must determine whether the

scope of the release language was “so essential to the bargain that to enforce the

promise would render enforcement of the rest of the agreement unfair.”19

      15.    Plaintiff argues that on May 11, 2022, when Defendants removed from

the release the exclusion for claims arising after the date of the settlement agreement

and listed “Contract” and “Contract Work” as part of the release,20 Defendants did

not request any other substantive edits to the language the parties had negotiated. As

such, Plaintiff contends, the parties had a meeting of the minds and were in

agreement on all other terms and language as of that date.21 Plaintiff maintains the

only issue left to negotiate was whether the release contained any carve out for

claims arising in the future.22 According to Plaintiff, Defendants’ attempt to expand

the release to include future claims was of no material significance because “[t]he



19
   Asten, Inc.,
1999 WL 803965
, at *2.
20
    Plaintiff’s Motion to Enforce Settlement Agreement and for an award of Attorneys’ Fees
(hereinafter “Pl.’s Mot.”) at 2, Ex. A, ¶ 4.
21
   Id. at 2.
22
   Id. at 2-3.

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rule in Delaware is that a release cannot apply to future conduct.”23 Therefore,

according to the Plaintiff, there was nothing of consequence left to negotiate after

Defendants made the May 11 Proposal, and an enforceable settlement had been

reached.24

       16.     Second, Plaintiff argues that even if the parties did not reach an

agreement on May 11th, the parties came to a meeting of the minds on June 13th when

Plaintiff accepted the May 11 Proposal.25 On June 13, 2022, Plaintiff responded to

its own May 19th email, writing to Defendants that “Suppi has decided to sign

Defendants’ last form of settlement agreement.”26 Plaintiff signed a “clean” copy of

the May 11 Proposal and changed the payment deadline to June 30, 2022.27 Plaintiff

claims that other than the change in the payment deadline, Plaintiff accepted the May

11 proposal as presented by Defendants, which was a “mirror image acceptance.”28

       17.     Defendants, on the other hand, argue no enforceable agreement was

reached because (1) the language of the release was an essential settlement term

upon which the parties did not agree, and (2) Plaintiff’s rejection of the May 11

23
   Id. at 3 (citing UniSuper Ltd. v. News Corp.,
898 A.2d 344, 348
 (Del. Ch. 2006)).
24
   Id. at 2.
25
   Id. at 3-4, ¶¶ 8-9. On May 19, 2022, Plaintiff responded to Defendants’ May 17th email inquiring
about a response to the proffered edits to the release reflected in the May 11 Proposal. Plaintiff
stated that “the edits proposed by [D]efendants are not acceptable.” According to Plaintiff,
Defendants did not respond to this correspondence by indicating that the May 11 Proposal was
withdrawn or that Defendants’ position had changed before June 13, 2022, when Plaintiff
responded to its own email and accepted the May 11 Proposal. Pl’s. Mot. at 3.
26
   Id. at 2, Ex. F.
27
   Id. at 4.
28
   Id.

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Proposal foreclosed Plaintiff’s ability to accept it later.29 As to Plaintiff’s first

argument, Defendants contend the parties’ words and actions establish that the

release language was an essential, unresolved settlement term.30 Defendants assert

that on two occasions (April 28 and May 20), the parties advised the Court that

settlement had not been reached because the parties were unable to agree on the

terms of the release.31 Defendants further contend Plaintiff’s argument concerning

the practical and legal significance of the release carve-outs does not affect the

materiality of the release language to the parties.32 Moreover, Defendants assert the

carve-out language’s significance to Plaintiff was evidenced by its insistence that

the future claims language remain in the proposed settlement agreement.33

       18.     As to Plaintiff’s second argument, Defendants contend Plaintiff

expressly rejected the May 11 Proposal on May 19, 2022, and Plaintiff advised

Defendants and the Court that the terms of its April 28 Proposal contained Plaintiff’s

definitive position on settlement language.34 Defendants contend Plaintiff’s express

rejection of the May 11 Proposal and subsequent statement that it only would accept

the release language in the April 28 Proposal was a rejection and counteroffer that




29
   Defs.’ Resp. in Opp. at 5-6.
30
   Id. at 5.
31
   Id.
32
   Id. at 6.
33
   Id.
34
   Id.

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terminated Plaintiff’s power to accept the May 11 Proposal.35 Defendants therefore

contend Plaintiff’s attempt to accept the May 11 Proposal on June 13, 2022 is

unenforceable and no agreement exists between the parties.36

        19.      Neither of Plaintiff’s arguments satisfy its burden on this Motion. First,

the record unequivocally establishes the parties had not reached a binding settlement

agreement on May 11, 2022. Plaintiff informed the Court on April 28, 2022 at the

Pretrial Conference that no settlement agreement had been reached as of that date.37

On May 11, 2022, Defendants circulated a revised proposed settlement agreement.

That May 11 Proposal changed the scope of the release Plaintiff previously

proposed.

        20.      On May 19, 2022, in response to the May 11 Proposal, Plaintiff advised

Defendants that “the edits proposed by the defendants are not acceptable to Suppi.”38

On May 20, 2022, Plaintiff reported to the Court that the parties had not been able

to resolve their remaining disagreements, and Plaintiff had provided its definitive

position on settlement language.39 As of May 20, 2022, Plaintiff’s conduct did not

objectively manifest an intent to be bound by Defendants’ May 11 Proposal.




35
   Id. at 6-7.
36
   Id. at 7.
37
   Id. at 3, ¶5.
38
   Id. at 4, Ex. E.
39
   Id. at 4, Ex. F.

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         21.     Although Plaintiff now contends the scope of the release was not a

material term, this Court must consider the parties’ overt manifestations of assent,

rather than their subjective intent, to determine whether they reached an agreement

on all material terms.40          The parties’ conduct during the negotiation period

demonstrated the materiality of the release to both sides. Plaintiff repeatedly

informed the Court that it had not reached an agreement with Defendants because

the release language was not resolved. These representations show that the parties

did not believe they had formed an enforceable agreement. Whether the scope of a

release would be “material” in all cases is not an issue this Court needs to resolve.

Here, the parties’ communications among themselves and to the Court established

that the scope of the release was material to them and was the single issue preventing

them from advising the Court that a settlement had been reached. Neither side

indicated in May 2022 that the scope of the release was not material.

         22.     Moreover, Plaintiff’s argument in the Motion that the parties’

disagreement regarding the scope of the release was irrelevant because settled

Delaware law controlled the issue does not alter the materiality of the release to the

parties or their unequivocal representations to the Court that no settlement had been

reached. Plaintiff contends the only issue left to negotiate was whether the release




40
     Spacht,
2016 WL 6298836
, at *2 (citing United Health All., LLC,
2013 WL 6383026
, at *6).

                                               12
contained any carve out for claims arising in the future.41 Even if Plaintiff’s view of

the caselaw regarding future claims is correct, however, what matters is the parties’

objective manifestations of intent. At the time of the parties’ communications

regarding the scope of the release, Plaintiff continued to resist agreeing to settlement

terms that the Plaintiff now contends were immaterial. This new view of the parties’

negotiations cannot revise the otherwise unambiguous record regarding Plaintiff’s

position and representations in May 2022.

       23.     As to Plaintiff’s alternative theory, Plaintiff rejected the May 11

Proposal and therefore could not accept it in June 2022. It is a basic tenet of contract

law that an offer, once rejected, cannot be accepted unless renewed.42 In Plaintiff’s

view, it accepted the Defendant’s May 11 Proposal on June 13th as a mirror image

acceptance. But Plaintiff’s express rejection of the May 11 Proposal on May 19th and

later statement that it only would accept the release language in the April 28 Proposal

was a rejection and counteroffer that terminated Plaintiff’s power to accept the May

11 Proposal on June 13th.

       24.     Plaintiff nevertheless argues Defendants never formally withdrew their

offer and Plaintiff therefore retained the power to accept it.43 Plaintiff has not cited


41
   Pl.’s Mot. at 2-3.
42
   PAMI–LEMB I Inc. v. EMB–NHC, L.L.C.,
857 A.2d 998, 1015
 (Del. Ch. 2004) (by making a
counteroffer, party rejected the initial offer and terminated its power to accept that offer); see also
Ramone,
2006 WL 905347
, at *10 (Delaware has adopted the mirror-image rule, which requires
an acceptance to be identical to an offer).
43
   Pl.’s Mot. at 3.

                                                  13
to any caselaw requiring an offeror to formally withdraw an offer that already has

been rejected. Once Plaintiff rejected the May 11 Proposal on May 19th, there was

no pending offer for Defendant to withdraw or for Plaintiff to accept. Defendants

never renewed the May 11 Proposal. Defendants’ statement to the Court on May 20 th

expressing a willingness to engage in another round of mediation was not an

unambiguous renewal of the terms of the May 11 Proposal. In short, on June 13th,

there was no open offer for Plaintiff to accept, and Plaintiff’s attempt to do so could

not bind Defendants.

      25.    For the foregoing reasons, Plaintiff has not established by a

preponderance of the evidence that the parties formed a settlement agreement, and

the Plaintiff’s Motion to Enforce the Settlement Agreement therefore is DENIED.

In accordance with the Court’s order on April 28, the parties shall schedule an in-

person mediation to be held by January 20, 2023. Counsel shall provide the Court

with an update on January 23, 2023. If the case has not resolved by that date, a new

trial date will be established. IT IS SO ORDERED.



                                               /s/ Abigail M. LeGrow
                                               Abigail M. LeGrow, Judge




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