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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Superior Court Denies Summary Judgment in Breach of Contract Action
Posted In Breach of ContractFuller v. Gemini Ventures, LLC, C.A. No. 05C-06-019-RFS (Del. Super. Ct. Oct. 2, 2006). Plaintiff moved for summary judgment on its breach of contract claim, notwithstanding another agreement (the "Release") subsequently executed between the parties that purported to release each of them from any claims related to the contract and cancel the terms of the contract. Defendant Gemini Ventures, LLC, a Delaware limited liability company formed for the purpose of owning a restaurant in the Rehoboth Beach, Delaware area, entered into a contract with plaintiffs to purchase a restaurant business and related inventory that plaintiffs owned and operated in that area. The parties executed a bill of sale (the "Contract") that included an addendum with three contingencies. One of the contingencies required defendant, after a "satisfactory review," to assume the lease on the property on which the restaurant was located. The lease contained a clause that allowed the lessor to demolish and rebuild the restaurant upon the acquisition of certain adjoining properties. Defendant secured the lessor's promise that demolition would not begin until the fall of 2005. Just before the November 1, 2004 closing date of the Contract, the lessor informed defendant that demolition would begin in the spring. Rather than sue to enforce the lease as written, defendant sought to terminate it instead. In early October 2004, after learning of the spring demolition date, the parties signed the Release, which returned defendant's deposit for plaintiffs' restaurant business under the Contract, released each of the parties from any claims related to the Contract, and declared the Contract to be "null and void and of no effect." Plaintiff then brought an action for breach of contract, and moved for summary judgment on its claims that the defendant owed the full Contract price for the restaurant inventory, that all conditions precedent to the Contract were met, and that the Release was unenforceable because it was unsupported by consideration and was the product of fraud and misrepresentation. Defendant contended that summary judgment was inappropriate because there were issues of material fact as to whether a modification to the Contract reduced the sale price, whether plaintiffs owned certain inventory they were purporting to sell, and because the Release was validly executed and barred any claims based on the Contract. The court denied plaintiffs' motion, holding that adequate consideration supported the Release but finding that there were issues of material fact as to whether the defendant made misrepresentations when the parties executed the Release, whether the plaintiffs owned all of the restaurant inventory that they were purporting to sell under the Contract, and whether the Contract had been validly amended to reduce the price for the inventory from $150,000 to $75,000.