Chancery Grants Preliminary Injunction, Admonishes Defendant for Engaging in “Self-Help”
Buckeye Partners, L.P. v. GT USA Wilmington, LLC, C.A. No. 2020-0255-JTL (Del. Ch. May 20, 2020)
To obtain a preliminary injunction, a plaintiff must demonstrate (i) a reasonable probability of success on the merits, (ii) a threat of irreparable harm if an injunction is not granted, and (iii) that the balance of the equities favors the issuance of an injunction. Revlon, Inc. v. MacAndrews & Forbes Hldgs., Co., 506 A.2d 173, 179 (Del. 1986).
Here, the plaintiff (“Plaintiff”) leased dock space at the Port of Wilmington (the “Port”) from the defendant landlord (“Defendant”). Plaintiff offloads and stores liquid petroleum at the Port by transferring the petroleum from tanker ships into storage tanks at the Port. Plaintiff’s customers enter the Port facilities via a private road and retrieve the petroleum with tanker trucks. After Defendant acquired the Port in 2019, it implemented a new series of fees relating to stevedoring activities that were purportedly not covered under the existing lease agreement (the “Lease”) between Plaintiff and Defendant. Under Plaintiff’s interpretation of the agreement, however, Plaintiff was not stevedoring (defined as hiring an entity to load or unload a vessel). Plaintiff further argued that the Lease (executed in 2008) already authorized all of the activities in which Plaintiff was engaged. Defendant maintained its position that the Lease did not cover stevedoring, that Plaintiff was engaged in stevedoring, and that Plaintiff owed Defendant fees for doing so. To force Plaintiff to pay, Defendant blocked Plaintiff’s customers’ access to the Port, causing Plaintiff to file for a temporary restraining order (“TRO”) and a preliminary injunction. Plaintiff argued that Defendant breached the Lease by blocking customer access to the Port. Defendant argued that customer access to the Port was not covered by the Lease. The Court issued a same-day TRO in favor of Plaintiff on April 6, 2020, restoring the status quo prior to the blockade. This opinion considered the preliminary injunction.
The Court found that Plaintiff had a reasonable probability of success on the merits regarding the contract interpretation issue. Specifically, the Court found that it was likely that the parties intended the access to the Port to be provided by the Lease because, though the Lease was ambiguous on this point, the parties’ course of conduct showed customers accessed the Port through Defendant’s road for 12 years, which was “strong evidence that the Lease includes a right to use [the road].” Furthermore, the Court reiterated Delaware precedent that the implied covenant of good faith and fair dealing implies into contracts “those terms that the parties would have agreed to during their original negotiations if they had thought to address them.” The Court determined that it was “reasonably probable that if the parties had thought to address the issue when negotiating the Lease, they would have agreed that the Landlord could not block [customers] from using [the road].” The Court also reasoned that the law generally prohibits landlords from using self-help, rather than seeking relief through normal legal processes. That is, “[i]n a civil society, courts exist to resolve this type of dispute.”
The Court also found Plaintiff had shown irreparable harm because Plaintiff’s customers could not access the Port, resulting in immediate and potentially permanent damage to Plaintiff’s “reputation, goodwill, and customer relationships." Balancing the hardships and equities, the Court lastly determined that returning the parties to the status quo prior to the blockade did not threaten any harm Defendant that it had not already been incurring for more than 12 years, but that “without an injunction, [Plaintiff faced] a threat of irreparable harm to its business.” In light of the above, the Court granted the injunction in favor of the Plaintiff.Share