Title: Delta Eta Corporation v. University of Delaware

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
DELTA ETA CORPORATION, 
§ 
 
 
 
 
 
 
§ 
 
Plaintiff Below, 
 
 
§  No. 9, 2010 
 
Appellant/Cross-Appellee, 
§ 
 
 
 
 
 
 
§  Court Below – Superior Court 
 
v. 
 
 
 
 
§  of the State of Delaware, 
 
 
 
 
 
 
§  in and for New Castle County 
UNIVERSITY OF DELAWARE, 
§  C.A. No. 07C-04-580 
 
 
 
 
 
 
§ 
 
Defendant Below,  
 
§ 
 
Appellee/Cross-Appellant. 
§ 
 
 
 
 
 
    Submitted:  July 21, 2010 
 
 
 
 
       Decided:  July 29, 2010 
 
Before STEELE, Chief Justice, HOLLAND and RIDGELY, Justices. 
 
O R D E R 
 
 
This 29th day of July, 2010, it appears to the Court that: 
 
1) 
Delta Eta Corporation (“Delta Eta”), a housing corporation 
affiliated with the Pi Kappa Alpha fraternity chapter at the University of 
Delaware (the “University”), entered into a long-term lease (“Chapter House 
Lease”) with the University for a portion of the University’s property on 
which a house for the fraternity chapter (“Chapter House”) was to be 
constructed.  On August 5, 2005, the University notified Delta Eta that it 
was exercising its option to terminate the original lease, effective June 30, 
2006.   
 
 
2
2) 
Pursuant to the reimbursement schedule arranged in connection 
with the termination of the lease (“Reimbursement Schedule”), Delta Eta 
retained A.R. Hughes & Company (“Hughes”) to appraise Delta Eta’s 
remaining leasehold interest.  The University acquiesced to the selection of 
Hughes, as the appraiser was subject to the University’s approval.  Hughes 
completed the original appraisal on June 7, 2006, concluding that Delta Eta’s 
remaining leasehold interest had a value of $800,000.  After subtracting 
from the appraisal the total amount owed to the University under the terms 
of the parties’ existing agreements, Delta Eta notified the University on 
August 31, 2006 that the University owed $768,500.  Pursuant to the 
Reimbursement Schedule, the University was required to tender this amount 
by November 29, 2006. 
 
3) 
Delta Eta, in addition to demanding the $768,500 that was 
owed under the Reimbursement Schedule also demanded payment for other 
sums to which Delta Eta claimed it was entitled.  The University denied 
responsibility for Delta Eta’s additional claims and refused to pay Delta Eta 
the $768,500 unless and until Delta Eta agreed to execute a release of all 
claims.  Delta Eta maintained that it was not required to sign a release in 
order to receive the $768,500.  Although the parties exchanged 
 
 
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correspondence about a limited form of release, in an effort to compromise, 
that issue was never resolved.   
 
4) 
On April 24, 2007, Delta Eta filed a five-count complaint.  
Count I of the complaint sought damages for non-payment of amounts due 
under the contracts between the parties.  The University’s original answer 
admitted it was obligated to pay Delta Eta $768,500, but conditioned 
payment in exchange for a full release of all claims by Delta Eta.  On July 5, 
2007, Delta Eta moved for summary judgment as to Counts I, III, IV and V 
of the Complaint.   
5) 
The University filed a motion to amend its answer.  The 
University argued that subsequent to filing its original answer, the 
University learned that the Chapter House was infested with mold that 
rendered the building virtually worthless.  The Superior Court granted the 
motion.  The amended answer asserted that the University was not obligated 
to pay the $768,500 and was entitled to have the original appraisal modified.  
On December 27, 2007, the Superior Court granted the University’s motion 
to amend, denied Delta Eta’s motion for summary judgment as to Courts III, 
IV, and V, and reserved decision as to Count I in order to permit Delta Eta to 
file an amended motion for summary judgment.  On May 2, 2008, Delta Eta 
filed its amended motion for summary judgment. 
 
 
4
 
6) 
By Opinion and Order dated October 31, 2008, the Superior 
Court granted Delta Eta’s amended motion for summary judgment, finding 
that the University was not entitled to a modification of the original 
appraisal and that there was no genuine issue of material fact remaining as to 
Count I.  The Superior Court held that the University owed Delta Eta 
$768,500, the original appraised value of the Chapter House.  On March 17, 
2009, the parties stipulated to the dismissal of Counts II, III, IV and V, all of 
the remaining Counts in the complaint. 
 
7) 
On September 11, 2009, the Superior Court issued a letter 
opinion on pre-judgment interest.  Delta Eta then moved for clarification as 
to the date upon which interest began to accrue.  On December 30, 2009, the 
Superior Court issued an order that stated “interest is to run from ninety days 
following October 31, 2008, the date on which the [Superior] Court entered 
an order finding for Plaintiff.” 
 
8) 
Delta Eta appeals the Superior Court’s decision on pre-
judgment interest.  The University cross-appeals from the Superior Court’s 
summary judgment decision in favor of Delta Eta and from the Superior 
Court’s decision on pre-judgment interest. 
 
9) 
We have concluded that the Superior Court’s decision that 
granted Delta Eta’s motion for summary judgment as to Count I should be 
 
 
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affirmed on the basis of and for the reasons stated in its opinion dated 
October 31, 2008.   
 
10) 
Delta Eta argues that pre-judgment interest begins to accrue on 
the date the University should have made payment of the $768,500, as full 
reimbursement for the early termination of the Chapter House Lease.  The 
Reimbursement Schedule called for payment within ninety days of the 
appraised amount being communicated to the University.  The ninety-day 
period ended on November 29, 2006, and it is from that date Delta Eta 
contends that pre-judgment interest runs.  The University claims that 
payment was not due on November 29, 2006, because it had a right to insist 
upon a release of claims. 
 
11) 
Although the University wanted to resolve all matters with 
Delta Eta when it made the early termination payment, the lease did not 
require Delta Eta to sign either a specific or a general release.  The contract 
provides that the University will pay the reimbursement “for the early 
transfer of title to and possession of the Chapter House . . . .”   The contract 
also provides “such Reimbursement shall be paid within ninety (90) days of 
the date when the amount thereof has been established and communicated to 
the University.”  The “established Reimbursement” was defined as “an 
 
 
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amount calculated as follows:  [setting forth appraisal procedure].”  The 
amount was calculated to be $768,500.   
 
12) 
In a Delaware action based on breach of contract or debt, pre-
judgment interest is awarded as a matter of right.1  “The general rule is that 
interest starts on the date when payment should have been made.”2  
Applying the foregoing principles to this case, we hold that since the 
reimbursement amount was established on August 31, 2006, pre-judgment 
interest should have been awarded from November 29, 2006 (ninety days 
after August 31, 2006).   
 
NOW, THEREFORE, IT IS HEREBY ORDERED that the judgments 
of the Superior Court are affirmed in part and reversed in part.  This matter 
is remanded for further proceedings in accordance with this order.  
 
 
 
 
 
 
BY THE COURT: 
 
 
 
 
 
 
 
/s/ Randy J. Holland 
 
 
 
 
 
 
Justice 
 
                                          
 
1 Metro. Mut. Fire Ins. Co. v. Carmen Holding Co., 220 A.2d 778, 781-82 (Del. 1966); 
Moskowitz v. Mayor and Council of Wilmington, 391 A.2d 209, 211 (Del. 1978); Rollins 
Envtl. Servs., Inc. v. WSMW Indus., Inc., 426 A.2d 1363, 1366 (Del. Super. 1980); 
Citadel Holding Corp. v. Roven, 603 A.2d 818, 826 (Del. 1992); Hercules, Inc. v. AIU 
Ins. Co., 784 A.2d 481, 508 (Del. 2001).   
2 Metro. Mut. Fire Ins. Co. v. Carmen Holding Co., 220 A.2d at 782.