IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE MORROW PARK HOLDING LLC )

)

CONSOLIDATED

C.A. No. 2017-0036-PAF

MEMORANDUM OPINION

Date Submitted: April 2, 2020

Date Decided: June 22, 2020

Brian E. Farnan and Michael J. Farnan, FARNAN LLP, Wilmington, Delaware; 

Marc L. Newman, Christopher D. Kaye, and Mahde Y. Abdallah, THE MILLER 

LAW FIRM, P.C., Rochester, Michigan; Attorneys for Plaintiffs and 

Counterclaim Defendants Jonathan Holtzman, Village Green Residential 

Properties, L.L.C., and VGM Clearing, LLC, and Counterclaim Defendant City 

Club Apartments, LLC.

Richard P. Rollo, Travis S. Hunter, Angela Lam, and John T. Miraglia

RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Alan S. 

Loewinsohn and Kerry Schonwald, LOEWINSOHN FLEGLE DEARY SIMON 

LLP, Dallas, Texas; Attorneys for Defendants and Counterclaim Plaintiffs CCI 

Historic, Inc., Compatriot Capital Inc., VG ECU Holdings, LLC, Village Green 

Holding, LLC, and Village Green Management Company, LLC.

FIORAVANTI, Vice Chancellor
2

The parties in this action are real estate developers that are in the process of 

dividing jointly owned businesses in Pittsburgh, Pennsylvania as part of a 

“business divorce.” One of the businesses to be divided was the Morrow Park City 

Apartments (the “Apartments” or the “Property”). To accomplish that division, the 

parties established limited liability companies with operating agreements 

governing the development and financing of the Apartments. These agreements 

contemplated that one of the two developers would purchase the Apartments from 

the other after they had been substantially completed and occupied. The 

agreements also established a process for determining the purchase price.

In 2016, one of the developers, Village Green Residential Properties, L.L.C.

(“VGRP”), sought to exercise its right to acquire the Apartments by purchasing the 

interests of two of the defendants. Disagreements over the valuation process 

ensued, culminating in VGRP filing this action. The initial complaint sought

specific performance and an injunction to enforce VGRP’s purchase rights. The 

Court entered an injunction essentially maintaining the status quo until a final 

judgment as to the purchase price.

Since then, the disputes have grown. This litigation has expanded with the 

addition of new parties, claims, counterclaims, and third-party claims. There has 

also been related litigation in this Court and elsewhere. Most notably, during the 

course of this action, one of the defendants purchased the Apartments pursuant to 
3

an order entered by a Pennsylvania court. The division of the sale proceeds is 

among the many issues to be resolved in this case. 

The parties have filed cross-motions for partial summary judgment. For the 

reasons explained below, the motions are largely denied. The Court concludes that 

there are genuine disputes of material fact warranting denial of summary judgment 

on some of the issues. Two other factors have influenced the Court’s decision to 

deny, for the most part, the cross-motions for summary judgment. First, the 

discovery record was still being developed after the parties had completed briefing 

the motions. Second, trial is scheduled for July 2020. These additional factors 

warrant denial of the motions on certain claims and issues so that the Court may 

“inquire more thoroughly into the facts in order to clarify application of the law.” 

AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 444 (Del. 

2005). 

I. BACKGROUND

This Memorandum Opinion will only address those facts necessary to 

address the issues presented in the cross-motions for summary judgment. The 
4

following facts are drawn from the verified amended pleadings1 and the materials 

presented in support of the parties’ summary judgment motions. 

The summary judgment record includes more than 100 exhibits, including 

deposition transcripts, some of which were submitted after the parties had 

completed briefing.2

 When the parties argued their cross-motions for summary 

judgment, fact and expert discovery had not yet been completed. Multiple motions 

to compel remained outstanding, and several depositions were noticed to take place 

after the parties presented oral argument on the motions.

3

 Trial is currently 

scheduled to take place on July 13-17, 2020.

A. The Parties and the Ownership Structure of the Morrow Park 

City Apartments

Plaintiffs’ side of this dispute is composed of Jonathan Holtzman 

(“Holtzman”) and certain affiliated companies: Plaintiff VGRP, Plaintiff VGM 

 1 The parties’ operative pleadings are the Holtzman Parties’ Master Consolidated and 

Amended Verified Complaint (Dkt. 250) (hereinafter, “Compl.”) and the Compatriot 

Parties’ Master Consolidated Counterclaim (Dkt. 265) (hereinafter, “Countercl.”). 

2 Two key witnesses, Robert Platt and Mark Van Kirk, were deposed after summary 

judgment briefing was completed. The parties submitted their deposition transcripts on 

the eve of oral argument and cited passages during argument, further contributing to a 

suboptimal summary judgment posture in a non-expedited case. 

3 See Dkt. 437 (Compatriot Parties’ amended notice of deposition of Tom Frazee for May 

11, 2020); Dkt. 428 (Compatriot Parties’ notice of deposition of Jeff Rothbart for May 

11, 2020); Dkt. 425 (Holtzman Parties’ notice of deposition of Paul Rowsey for June 4, 

2020); Dkt. 426 (Holtzman Parties’ notice of deposition for Heather Kreager for June 5, 

2020); Dkt. 423 (Compatriot Parties’ notice of deposition of Roger Remblake for June 2, 

2020 and Alan Greenberg for June 25, 2020). 
5

Clearing, LLC (formerly known as Village Green Management Clearing 

Company) (“VGM Clearing”), and Counterclaim Defendant City Club 

Apartments, Inc. (“CCA” and, collectively with Holtzman, VGRP, and VGM 

Clearing, the “Holtzman Parties”). 

The Compatriot Parties form the other side of the dispute: Defendants and 

Counterclaim Plaintiffs CCI Historic, Inc. (“CCI”), VG ECU Holdings, LLC (“VG 

ECU”), Compatriot Capital, Inc. (“Compatriot”), Village Green Holding, LLC 

(“Village Green Holding”), and Village Green Management Company, LLC

(“Village Green Management” and, collectively with CCI, VG ECU, Compatriot, 

and Village Green Holding, the “Compatriot Parties”).

In 2011, CCI invested as a fifty-percent owner in the Village Green family 

of companies. The Holtzman family previously owned the Village Green family of 

companies and used the companies to develop and manage multifamily housing. 

By 2016, the relationship between the parties had deteriorated. To effectuate their 

separation, Village Green Holding, VGM Clearing, VGRP, CCI, VG ECU, and 

Holtzman entered into a Redemption Agreement, dated February 1, 2016 (the 

“Redemption Agreement”).

4

 Under the Redemption Agreement, Holtzman 

received the option to acquire corporate entities that controlled two then-unfinished 

 4 The Redemption Agreement is attached as Exhibit 8 to the Holtzman Parties’ Opening 

Brief in support of their Motion for Partial Summary Judgment. 
6

properties, the Apartments and Southside Works, upon the fulfillment of certain 

conditions related to the two properties’ construction and occupancy. The 

Redemption Agreement includes provisions for the development and ownership of 

the Apartments, including the formation of a jointly owned and managed “New 

Company” to hold membership interests in the Apartments.

5

The parties to the Redemption Agreement formed Morrow Park Holding, 

LLC (“MP Holding”) as the “New Company.” As a result, MP Holding became

the parent entity of a chain of entities that held the Apartments, as illustrated in the 

following chart: 

 5 Redemption Agreement § 1.1(a)(iv).
7

MP Holding is co-managed by VGRP and CCI; they, along with VG ECU 

are the three members of MP Holding.

6

 At the next tier down, MP Holding is the 

majority owner and manager of VG Morrow Park Capital LLC (“MP Managing”). 

Compatriot, the 100% owner of CCI, is the minority owner of MP Managing. At 

the third tier down, MP Managing is the majority owner and manager of Morrow 

Park City Apartments, LLC (“MP Operating”). MP Operating was previously 

 6 VGRP and CCI own an equal number of Class B Preferred Units and Common Units of 

MP Holding. Non-managing member VG ECU owns Executive Common Units. See 

Compatriot Parties’ Opening Br. Ex. B Schedule A.
8

minority owned by non-managing investor L.A.V. Associates, LP (“L.A.V.”). 

L.A.V. sold its interests to CCI in March 2019 through an intermediate holding 

company, LAV MP Holding. MP Operating owned the Apartments until CCI 

purchased them, as described below.

In April 2017, L.A.V. instituted an action in the Court of Common Pleas of 

Allegheny County, Pennsylvania, No. GD-17-006216 (the “Pennsylvania Action”). 

The Pennsylvania court entered an order empowering a Special Master to “conduct 

and conclude a sale process” for the Apartments.

7

 The Special Master

recommended that the Apartments be sold to CCI with the net proceeds of the sale 

to be held by the Register in Chancery pending the outcome of this action. The 

Pennsylvania court accepted the Special Master’s recommendation.

8

 Accordingly,

CCI purchased the Apartments, and the net proceeds of the sale are held by the 

Register in Chancery pending the resolution of this action.

9

 The Holtzman Parties 

have appealed the Pennsylvania court’s order authorizing the sale to CCI.10 

 7 Holtzman Parties’ Answering Br. Ex. 35 ¶ 4. 

8 Compatriot Parties’ Answering Br. Ex. BB ¶ 3 (“The Special Master’s March 5, 2019 

recommendation for this Court to approve the sale of [the Apartments to CCI] . . . is 

accepted. The Court hereby authorizes the Special Master to accept the Offer for MPCA 

and proceed to close the sale in accordance with its terms.”). 

9 See Holtzman Parties’ Ans. to Countercl. ¶¶ 30-44.

10 Dkt. 424 (letter from the Holtzman Parties stating that “there is an appeal pending by 

the Holtzman parties challenging the lower court’s ruling which authorizes the special 

master to sell the Morrow Park Property to [CCI].”). 
9

B. The Operating Agreements

The cross-motions for summary judgment center on the parties’ respective 

contractual rights and obligations under the operating agreements of MP Holding

(the “MP Holding Operating Agreement”) and MP Managing (the “MP Managing 

Operating Agreement”).

11 To briefly summarize the contractual claims at issue,

the Holtzman Parties argue that the Compatriot Parties breached the MP Holding 

Operating Agreement by interfering with VGRP’s contractual right to purchase 

CCI’s membership interest in MP Holding and Compatriot’s membership interest 

in MP Managing (the “VGRP Purchase Right”). The Holtzman Parties also argue 

that the Compatriot Parties breached the MP Managing Operating Agreement by 

refusing to approve a permanent mortgage for the Apartments to replace the 

existing construction loan. The parties also dispute the Compatriot Parties’

entitlement to preferred returns on their membership interests in MP Holding, MP 

Managing, and MP Operating. Each side contends that they are entitled to partial 

summary judgment on some of these claims. It is useful at this point to introduce

some of the contractual provisions that are central to this dispute. 

 11 The MP Holding Operating Agreement and MP Managing Operating Agreement are 

attached as Exhibits B and C to the Compatriot Parties’ Opening Brief in Support of 

Motion for Partial Summary Judgment. 
10

1. The MP Holding Operating Agreement Purchase Right

The first area of dispute concerns the VGRP Purchase Right and whether the 

Compatriot Parties interfered with VGRP’s exercise of that right. 

Section 10.10(a) of the MP Holding Operating Agreement gives VGRP the 

right to purchase CCI’s membership interest in MP Holding and Compatriot’s 

membership interest in MP Managing once the Apartments have been substantially 

completed and occupied. The agreement refers to this as “Stabilization”: 

(a) VGRP Purchase Right. From and after the date of this Agreement and 

upon the occurrence of Stabilization with respect to the apartment project 

owned and operated by [MP Operating], VGRP shall have the first right to 

purchase from CCI and Compatriot, as applicable, and such Persons shall 

have the obligation to sell to VGRP, the entirety of both of (i) CCI’s 

Membership Interests in the Company and (ii) Compatriot’s membership 

interest in [MP Managing] on the terms hereinafter provided in this Section 

10.10. For purposes of this Agreement, “Stabilization” shall be defined as 

(x) [the Apartments] been substantially completed (subject only to punch list 

items that do not directly limit occupancy of units) and (y) such apartments 

having been at least 93% leased and occupied for at least 45 days. The 

property manager of such apartments, designated as such by the CoManaging Members, shall send prompt written notice to the Members at 

such time as Stabilization shall have occurred with respect to [the 

Apartments] (the “Notice of Stabilization”). VGRP must notify CCI in 

writing not later than 60 days after its receipt of the Notice of Stabilization 

whether or not it intends to exercise its purchase rights under this Section 

10.10(a).12 

Section 10.10(c) provides CCI a similar, secondary right to purchase 

VGRP’s membership interest in MP Holding in the event that “VGRP determines 

 12 MP Holding Operating Agreement § 10.10(a).
11

not to so exercise such purchase rights, or it fails to timely provide the written 

notice referenced in Section 10.10(a)” (the “CCI Purchase Right”).13 

Sections 10.10(b) and (d) provide that upon exercise of either purchase right, 

the purchaser shall pay an amount based on an “Appraised Value” of the 

Apartments.

14 Schedule C to the MP Holding Operating Agreement (the 

“Appraisal Schedule”) prescribes the process of determining the Appraised Value. 

If the parties cannot reach agreement on an Appraised Value within fifteen days of 

the exercise of either purchase right, the Appraisal Schedule requires a threeappraiser process to establish the Appraised Value: 

As used herein, the term “Appraised Value” shall mean the fair market value 

of [the Apartments] as determined by an appraisal conducted as follows: 

1. CCI and VGRP (“Parties”) shall mutually seek to determine the 

Appraised Value of [the Apartments] for a fifteen (15) day period after the 

exercise of the VGRP Purchase Right or the CCI Purchase Right, as 

applicable. If the Parties are unable to reach an agreement within such 

period, then CCI shall designate an appraiser for the purpose of establishing 

the Appraised Value of [the Apartments], and shall give notice thereof in 

writing to VGRP (“Notification”). Within ten (10) days after CCI gives the 

Notification, VGRP shall designate a second appraiser for establishing the 

Appraised Value of [the Apartments], and shall give notice thereof in 

writing to CCI. If VGRP shall fail to timely appoint an appraiser, the 

appraiser appointed by CCI shall select the second appraiser within ten (10) 

days after VGRP[’s] failure to appoint. 

 13 Id. § 10.10(c).

14 Id. § 10.10(b), (d). 
12

2. The two appraisers so appointed shall appoint a mutually agreed third 

appraiser within ten (10) days following the selection of the second 

appraiser. If the two appraisers so appointed shall not be able to agree on the 

selection of a third appraiser within ten (10) days after the two initial 

appraisers have been appointed, then either appraiser, on behalf of both, may 

request such appointment by the head of the local chapter of the Appraisal 

Institute. The appraisers shall specialize in the appraisal of real estate 

projects similar to [the Apartments] in the region where [the Apartments] are 

located, shall have no less than five years’ experience in such field and shall 

be recognized as ethical and reputable. No appraiser shall have any personal 

or financial interest as would disqualify such appraiser from exercising an 

independent and impartial judgment as to the value of [the Apartments]. The 

Appraised Value of [the Apartments] shall be equal to the average of the 

valuations of [the Apartments] as determined by the appraisers; provided, 

however, that if any appraiser’s valuation for [the Apartments] deviates by 

more than ten percent (10%) from the average of the valuation of the other 

two appraisers for [the Apartments], the Appraised Value shall be 

determined by using the average of the other two appraisers’ valuations. The 

cost of any such appraisals shall be paid by the Company. The appraisals 

shall be submitted to CCI and VGRP within thirty (30) days after the panel 

of three (3) appraisers is constituted. The decision of the appraisers shall be 

binding on the Members.15

2. The MP Managing Operating Agreement and the Business 

Plan

The second area of dispute concerns the financing of the Apartments. 

According to the Holtzman Parties, the parties would generally finance a project’s 

construction with a construction loan, and when the project was complete, they 

would convert to “permanent” financing and secure a permanent loan.16 In their 

motion for partial summary judgment, the Holtzman Parties argue that the MP 

 15 Id. Schedule C.

16 Id.; Holtzman Parties’ Opening Br. Exs. 1 ¶ 6.3(a), 2 ¶ 6.3, 3 ¶ 6.3(a), 4 ¶ 6.3, 5 ¶6.3.
13

Managing Operating Agreement unambiguously requires the Compatriot Parties to 

approve financing for the Apartments by way of a permanent mortgage17 at an 80% 

loan-to-value ratio and that the Compatriot Parties breached the contract by 

refusing to do so. The Compatriot Parties argue that the MP Managing Operating 

Agreement does not obligate any Compatriot Party to approve a permanent 

mortgage.

The Holtzman Parties focus their argument on a Business Plan, which is 

Exhibit B to the MP Managing Operating Agreement. Section 2.8(c) of the MP 

Managing Operating Agreement references the Business Plan: 

The Manager, in connection with the Development Company, has prepared a 

business plan attached as Exhibit B hereto (the “Business Plan”), which has 

been approved by Compatriot and incorporates (i) an acquisition and initial 

construction and development for costs related to the acquisition, design, 

development and lease-up of the Project (“Development Budget”), and (ii) a 

site plan for the [Apartments]. Any material changes or deviations from the 

Business Plan must be approved by Compatriot.18 

 17 The parties use the term “permanent financing” throughout their briefing. For clarity 

and consistency, I have adopted the term “permanent mortgage,” which is the phrase used 

in the MP Managing Operating Agreement. See MP Managing Operating Agreement § 

6.2 (“the Members have approved a permanent mortgage for the Project, on market terms 

and conditions from an institutional lender, subject to the following factors . . . . “); id. at 

Ex. B (containing a table describing a “Permanent Mortgage Upon Stabilization”). 

18 Id. § 2.8(c). Prior to the Redemption Agreement, the Manager of MP Managing was 

Village Green Holding. The Redemption Agreement made MP Holding the Manager of 

MP Managing. See Holtzman Parties’ Opening Br. 7 n.1; Compatriot Parties’ Answering 

Br. 9.
14

The Business Plan is broken into numerous subsections, each composed of a 

series of tables. The subsections are entitled “General and Operating 

Assumptions,” “Development Timing and Cost Assumptions,” “Equity and Debt 

Capitalization,” “Equity Pricing / Projected Returns” and a “Development 

Budget.”19 As part of the section entitled “Equity and Debt Capitalization,” the 

Business Plan includes a table contemplating a “Permanent Mortgage Upon 

Stabilization,” as follows: 

20

The Holtzman Parties also cite Section 6.2 of the MP Managing Operating 

Agreement as further evidence of an unambiguous contractual obligation for

 19 MP Managing Operating Agreement Ex. B. 

20 Id. 
15

Compatriot to approve financing at an 80% loan-to-value ratio. Section 6.2(a)

references the Business Plan and prohibits MP Holding, as the Manager of MP 

Managing, from “[a]dopt[ing], amend[ing] or modify[ing] all or any portion of the 

Business Plan” without the prior written approval of Compatriot, except with 

respect to certain immaterial expenditures.21 Section 6.2(e) also references the 

Business Plan and prohibits MP Holding from entering into any loan secured by 

MP Managing’s assets, except that MP Holding may enter into a permanent 

mortgage that satisfies certain conditions as approved by the Members of MP 

Managing (i.e., MP Holding and Compatriot).

22

In pertinent part, Section 6.2 states:

6.2 Limitations on Authority of Manager. Notwithstanding anything to the 

contrary contained in this Agreement (other than as expressly permitted in 

this Section 6.2), without the prior written approval of Compatriot, the 

Manager shall not have the power to do any of the following either directly 

or on behalf of the Project Owner (each, a “Major Decision”):

(a) Adopt, amend or modify all or any portion of the Business Plan or 

Annual Plan, or vary from the limitations set forth therein; provided, 

however, the Manager may make adjustments to individual cost and expense 

line items set forth on the Operating Budget without the approval of 

Compatriot . . . .

* * *

 21 Id. § 6.2(a). 

22 Id. § 6.2(e). 
16

(e) . . . subject all or any portion of the Company's or Project Owner's 

property (including, without limitation, the Project) to any mortgage, lien, or 

other encumbrance or pledge any Company or Project Owner assets; 

provided, pursuant to the Business Plan, the Members have approved a 

permanent mortgage for the Project, on market terms and conditions from an 

institutional lender, subject to the following factors: (1) an amount up to 

80% loan to value (which value shall be ascertained at the time the 

permanent mortgage is being applied for); (2) non-recourse, with no 

guaranties by any party other than customary non-recourse carve-out 

guaranty by the Borrower or Village Green, (3) have a minimum term of 7 

years, (4) amortization of not less than 25 years, (5) debt service coverage 

ratio of not less than 1.2 (with amortization), and (6) not more than 2 years 

interest-only payments.23

a. The Preferred Return Provisions

The operating agreements of MP Holding, MP Managing, and MP Operating 

each provide their investors, including certain of the Compatriot Parties, rights to 

accrue returns on their investments (the “Preferred Returns”).

24 The parties dispute 

whether the Compatriot Parties are entitled to accrue Preferred Returns during the 

pendency of this action. The Holtzman Parties challenge the Compatriot Parties’ 

right to accruals because of (1) the Compatriot Parties’ opposition to the Holtzman 

Parties’ proposed injunction at the outset of this action, which would have required 

 23 Id. § 6.2(a), (e).

24 The Compatriot Parties seek a declaration that the “(i) 9% Preferred Return in MP 

Operating was validly accrued, is accruing, and will continue to accrue until termination 

of MP Operating; (ii) [the] 13% Preferred Return in MP Managing was validly accrued, 

is accruing, and will continue to accrue until termination of MP Managing; and (iii) [the] 

10% Preferred Return in MP Holding was validly accrued, is accruing, and will continue 

to accrue until termination of MP Holding [Operating] Agreement.” See Compatriot 

Parties’ Opening Br. 36 & nn. 12-14 (citing Compatriot Parties’ Opening Br. Exs. B §§ 

4.3, 13.1; C §§ 5.2(a), 11.3(d); RR §§ 9.2, 9.3, 13.4).
17

CCI and Compatriot to sell their interests to VGRP pursuant to the VGRP Purchase 

Right, thereby ending their entitlement to the Preferred Returns, and (2) the 

Compatriot Parties’ alleged breach of the MP Managing Operating Agreement by 

refusing to agree to a permanent mortgage.

C. The Appraisal and Financing Negotiations Begin

According to the Holtzman Parties, they and the Compatriot Parties

generally agreed upon a strategy to maximize leverage on the properties they 

jointly developed by financing a property’s construction or rehabilitation with an 

initial construction loan and then, after the completion of the project, replacing the 

construction loan with a permanent mortgage. All funds borrowed through the 

permanent mortgage in excess of the construction loan would be distributed to the 

investors in a property, with the borrower repaying the permanent mortgage

through revenues from renting the property.25 

The record reflects that, as early as March 2016, even before MP Holding 

was established, the parties had begun the process of obtaining a permanent 

mortgage for the Property from Freddie Mac with Holliday Fenoglio Fowler, L.P. 

 25 Holtzman Parties’ Opening Br. 3-4; see also Dkt. 435, Tr. at 5:23-6:16 (“This is how 

the parties functioned for many years.”).
18

(“HFF”) as a borrower representative.

26 In May 2016, while efforts to obtain a 

permanent mortgage through Freddie Mac were ongoing, the parties established 

MP Holding. As described above, under the MP Holding Operating Agreement, 

VGRP could exercise the VGRP Purchase Right once the Property reached 

Stabilization. 

On September 23, 2016, VGRP provided a Notice of Stabilization to CCI

stating that the Apartments had reached Stabilization.

27 The VGRP Purchase Right 

enabled VGRP to exercise its purchase right within sixty days of providing the 

Notice of Stabilization (in this case, on or before November 22, 2016).28 The 

 26 Compatriot Parties’ Opening Br. Ex. D at CCI587126 (“What do you need to go out to 

Freddie and how early will they commit in their early rate lock program? We have 

explained the entire situation at VG with them so they know the deal so it may be 

beneficial to get this started with them as the mortgage will help us determine how the 

entire asset will move forward.”). 

27 Holtzman Parties’ Opening Br. Ex. 9. 

28 MP Holding Operating Agreement § 10.10(a) (“VGRP must notify CCI in writing not 

later than 60 days after its receipt of the Notice of Stabilization whether or not it intends 

to exercise its purchase rights under this Section 10.10(a).”). 
19

parties began negotiating over the Appraised Value at or around the time that 

VGRP delivered the Notice of Stabilization.29 

During the parties’ early negotiations, Jonathan Holtzman proposed that the 

parties establish the purchase price based upon the Freddie Mac appraisal to be 

obtained for the mortgage application.

30 After exchanging further proposals, the 

Compatriot Parties ultimately rejected using a single appraisal.

31 On September 

30, 2016, Compatriot’s Mark Van Kirk sent an email to VGRP’s counsel Jonathan 

Borenstein saying “both parties should proceed with the 3-appraisal procedure 

already agreed upon in the Morrow Park documents.”32 Borenstein responded on 

October 5, 2016: “In terms of the appraisal process we each initiated appraisals, 

and use the mortgage appraisal as the third? I think its [sic] consistent with the 

 29 The Appraisal Schedule provides that the parties “shall mutually seek to determine the 

Appraised Value of the [Apartments] for a fifteen (15) day period after the exercise of the 

VGRP Purchase Right or the CCI Purchase Right, as applicable.” MP Holding Operating 

Agreement Schedule C. The cross-motions for summary judgment and the fact record 

submitted to the Court at this point suggest that the parties acted as though this fifteenday period to reach agreement on the Appraised Value began upon issuance of the Notice 

of Stabilization on September 23, 2016 rather than VGRP’s subsequent notice of the 

exercise of its purchase right in November 2016. See Compatriot Parties’ Opening Br. 

Ex. H (stating on September 30, 2016 that the period to reach consensus on the Appraised 

Value “still has another 8 days to run.”). The Appraisal Schedule suggests, however, that 

the appraisal period arguably began after VGRP provided notice that it was exercising its 

appraisal right within sixty days after providing Notice of Stabilization, not upon 

providing Notice of Stabilization. 

30 Compatriot Parties’ Opening Br. Ex. H at CCI459657 and CCI459655. 

31 See id. at CCI459654.

32 Id.
20

document, and it could be expedient?”33 Borenstein made clear that he had not 

raised that idea with Holtzman, but wanted to know what Van Kirk thought about 

it.34

The parties selected their respective appraisers in October 2016. On October 

10, 2016, CCI contacted Brian Flanagan of Property Valuation Advisors about 

potentially acting as its appraiser. Flanagan told CCI that he had already been 

retained by VGRP.

35 On October 18, 2016, CCI retained Todd Albert of Colliers 

International Valuation & Advisory Services, LLC (“Colliers”).36 

On October 19, 2016, CCI notified Borenstein via email that CCI had 

chosen Albert as its appraiser.37 On the same date, Robert Platt, Chief Investment 

Officer of CCA, responded on behalf of VGRP and notified CCI that VGRP had 

chosen Flanagan as its appraiser. Both sides represented that their respective 

appraisers satisfied the qualification requirements in the MP Holding Operating 

 33 Id.

34 Id.

35 Compatriot Parties’ Opening Br. Ex. I.

36 Compatriot Parties’ Opening Br. Ex. J. 

37 Compatriot Parties’ Opening Br. Ex. K. at CCI460516. As the parties do in their 

briefing, the Court generally refers to the appraisers by the name of the individuals 

involved in the appraisal as opposed to the entities with which they are affiliated.
21

Agreement.

38 The appraisers did not select a third appraiser within ten days of 

their designation, as contemplated by the Appraisal Schedule. 

In his email notifying CCI that VGRP had selected Flanagan, Platt wrote:

As discussed, we have proposed using the mortgage loan appraisal for the 

third appraisal, in lieu of having these two appraisers select a third. If you 

do not wish to pursue that, then both designated appraisers must be 

instructed to begin working on the appointment of the third appraiser.39

In response, CCI wrote: 

Thanks, Rob. Using the mortgage loan appraisal is ok with us as long as the 

lender will give both parties a copy of the appraisal. I looked up Property 

Valuation Advisors on the internet and it appears that they are a small 

company based in Chicago, if my research is correct. Would you please 

confirm with them that they have appraised multifamily in Pittsburgh and 

give us examples of same?40

The Compatriot Parties contend that these emails (the “October 19 Emails”) 

amended the Appraisal Schedule to require the use of the mortgage appraisal as the 

third appraisal.

Platt responded and informed CCI that Property Valuation Advisors 

represented to VGRP that they “work in PA and eastern OH on a recurring basis 

 38 Id. at CCI460515-6. 

39 Id. at CCI460516.

40 Id. at CCI460515. 
22

and most major Midwestern cities.”41 Platt’s response did not further address the 

use of the mortgage appraisal. 

D. The Appraisal Negotiations Break Down

On November 8, 2016, Holtzman applied for financing from Freddie Mac in 

the form of a $47 million loan, with a loan-to-value ratio of 80%.42 Apparently 

unbeknownst to the Holtzman Parties, soon after Holtzman applied for financing, 

HFF retained Albert (CCI’s appraiser) to perform the appraisal for the Freddie Mac 

loan.43 The Compatriot Parties became aware that Albert would be performing the 

appraisal for the Freddie Mac loan shortly after HFF had retained him, because 

Albert requested permission to use the information that CCI had provided to him

for his Freddie Mac loan appraisal.

44 

On November 18, 2016, Holtzman emailed CCI a written notice of VGRP’s 

exercise of the VGRP Purchase Right, effective as of November 22, 2016.45 On 

the same date, CCI acknowledged receipt of the notice and proposed that each 

party and “the third-party appraiser” should reveal the “3 appraisers’ values” the 

 41 Holtzman Parties’ Answering Br. Ex. 14 at CCI060457. 

42 Compatriot Parties’ Opening Br. Ex. L. See id. at VGRP02094360 (specifying 

“Estimated Loan Amount” and “Maximum LTV”).

43 Compatriot Parties’ Opening Br. Ex. N. See also Dkt. 425, Tr. at 10:10-13 (“That was 

not disclosed to my client. And as soon as we found that out, we objected.”). 

44 Compatriot Parties’ Opening Br. Ex. O. 

45 Compatriot Parties’ Opening Br. Ex. P at CCI264665. 
23

following week.46 Holtzman replied: “We should follow the signed documents. 

We do not have three appraisals . . . . There have not been any changes to our 

documents. Please do not represent that there have been.”47 CCI responded that, 

“[w]e are following the documents. The documents require three appraisals. I am 

not representing that there have been any changes to the documents.”48

On November 23, 2016, VGRP and CCI exchanged appraisals. VGRP’s 

appraisal from Flanagan reflected a market value for the Property in fee simple as 

of November 2, 2016 of $54.6 million.

49 CCI’s appraisal from Albert reflected a 

market value for the Property as of October 27, 2016 of $59 million.50 On 

November 29, 2016, HFF sent to VGRP a draft Freddie Mac mortgage appraisal 

from Colliers reflecting a market value for the Property as of November 22, 2016 

 46 Id. at CCI264664-5.

47 Id. at CCI264664. 

48 Id.

49 Compatriot Parties’ Opening Br. Ex. Q

50 Compatriot Parties’ Opening Br. Ex. R (email transmitting the Albert appraisal on 

November 23, 2016); Countercl. ¶ 25 (Compatriot Parties alleging that “in January 2017, 

it was CCI's position that the Appraised Value should be determined by averaging the 

First Appraisal and Third Appraisal. Since the amount in those two appraisals, which was 

$59,000,000, was the same, the average produces the sum of $59,000,000 as the 

Appraised Value.”). 
24

of $59 million.51 The Freddie Mac mortgage appraisal was signed by Albert and 

by Clay Cassidy, a Senior Valuation Specialist from Colliers.52

After exchanging appraisals, the parties sought to reach agreement on the 

fair value of the Apartments but failed to do so. On December 5, 2016, VGRP told 

Compatriot that “[t]he two appraisers should be instructed to immediately select a 

third appraiser, per the document. If you do not wish to do that, we would ask that 

you make an offer (in writing) and we will respond.”53 Compatriot responded the 

following day that it “is convinced that we have only two good appraisals for 

Morrow Park, ours and the one for the lender, both at $59 million.”54 Compatriot 

argued that Flanagan did not “meet the standards set forth in [the Appraisal]

Schedule.”55 On December 8, 2016, VGRP objected to Compatriot’s arguments, 

noting that “[w]hen we proposed the idea of using the loan appraisal for the third 

appraiser, we were unaware that the lender would be using the same appraiser.”56 

 51 Compatriot Parties’ Opening Br. Ex. W. 

52 Id. at VGRP02193900. Based on the Compatriot Parties’ Opening Brief, this appears 

to be the appraisal that the Compatriot Parties contend should serve as the third appraisal. 

Compatriot Parties’ Opening Br. 17-20.

53 Compatriot Parties’ Opening Br. Ex. CC at CCI021683. 

54 Id. at CCI021682. 

55 Id. 

56 Id. at CCI021681. 
25

While the parties seemed to be at an impasse, the two appraisers selected a 

third appraiser. On December 19, 2016, Flanagan wrote to Albert “regarding 

picking a third appraiser for the assignment” and asked if he “ha[d] any 

recommendations.”57 On December 30, 2016, Flanagan notified VGRP that he and 

Albert had agreed upon Paul Griffith of Integra Realty Resources-Pittsburgh as the 

third independent appraiser, and that Griffith had agreed to be the third appraiser.58 

On January 5, Holtzman notified CCI of the two appraisers’ agreement to use 

Griffith as the third appraiser.59 Apparently mystified, the Compatriot Parties 

asked Albert about his involvement in selecting a third appraiser.60 The following 

day, Compatriot sent an email to Holtzman disputing his portrayal of an agreement 

to select Griffith as a third appraiser. CCI stated that the parties had previously 

agreed to use the mortgage appraisal as the third appraisal and that Holtzman’s 

attempt to use a “fourth appraisal” constituted a breach of the MP Operating 

Agreement.61 Griffith did not prepare an appraisal of the Property. 

 57 Holtzman Parties’ Answering Br. Ex. 26 at VGRP02124373. 

58 Holtzman Parties’ Answering Br. Ex. 27.

59 Compatriot Parties’ Opening Br. Ex. DD at CCI024565. 

60 Holtzman Parties’ Answering Br. Ex. 29. 

61 Compatriot Parties’ Opening Br. Ex. DD & Holtzman Parties’ Opening Br. Ex. 13. 
26

E. This Action Begins 

With the closing deadline for the VGRP Purchase Right fast approaching, 

VGRP filed this action on January 17, 2017. VGRP also sought a temporary 

restraining order requiring CCI and Compatriot to sell their respective interests in 

MP Holding and MP Operating to VGRP pursuant to the VGRP Purchase Right. 

Towards that end, VGRP sought a mandatory injunction requiring completion of 

the third appraisal and consummation of the VGRP Purchase Right. CCI opposed 

the motion and proposed entry of a preliminary injunction. The Court denied 

VGRP’s request for a mandatory injunction because VGRP had only satisfied the 

standard for a preliminary injunction. On January 20, 2017, the Court entered an

order that the parties refer to as the “Status Quo Order,” which, among other 

things, provides that the parties cannot transfer the membership interests at issue 

until thirty days after a non-appealable judgment as to the Appraised Value.62 

F. Holtzman Seeks a Permanent Mortgage

On January 18, 2017, the day after VGRP initiated this action, Holtzman 

executed a mortgage loan commitment as the borrower for the Freddie Mac loan 

on behalf of MP Operating (the “January 2017 Financing Commitment).

63 The 

January 2017 Financing Commitment contemplated an 80% loan-to-value ratio at 

 62 Dkt. No. 12. The order does not expressly state that it is a status quo order, but the 

parties and the Court have referred to it as such.

63 Compatriot Parties’ Opening Br. Ex. GG. 
27

the origination of the loan.64 Five days later, on January 23, 2017, the Holtzman

Parties caused the January 2017 Financing Commitment to become binding on 

behalf of MP Operating and provided a deposit to lock in the interest rate.65 The 

Holtzman Parties thereafter caused HFF to extend the January 2017 Financing 

Commitment.66

On March 2, 2017, the Holtzman Parties sent a version of the January 2017 

Financing Commitment to the Compatriot Parties and requested that CCI execute a 

consent resolution approving the financing.67 The Compatriot Parties refused to 

consent to the financing.

II. STANDARD OF REVIEW

Under Court of Chancery Rule 56, summary judgment “shall be rendered 

forthwith” if “there is no genuine issue as to any material fact and . . . the moving 

party is entitled to judgment as a matter of law.” Ct. Ch. R. 56(c). The Court must 

 64 Id. at CCI031600. 

65 Compatriot Parties’ Opening Br. Ex. II at VGRP02061418.

66 Compatriot Parties’ Opening Br. Exs. JJ & KK. 

67 Compatriot Parties’ Opening Br. Ex. LL at VGRP02078429. The Holtzman Parties 

appear to have used an earlier version of the financing commitment with this letter. The 

Compatriot Parties cite a later version of the financing commitment in their motion for 

partial summary judgment executed by HFF. Compatriot Parties’ Opening Br. Ex. GG at 

2. Neither party has argued that there is any substantive difference between the financing 

proposals.
28

view the facts in the light most favorable to the non-moving party.68 Similarly, and 

applicable here, “[w]hen opposing parties make cross motions for summary 

judgment, neither party’s motion will be granted unless no genuine issue of 

material fact exists and one of the parties is entitled to judgment as a matter of 

law.”69 Any request for summary judgment “‘must be denied if there is any 

reasonable hypothesis by which the opposing party may recover, or if there is a 

dispute as to a material fact or the inferences to be drawn therefrom.’”70 

“There is no ‘right’ to a summary judgment.”71 Accordingly, “the court 

may, in its discretion, deny summary judgment if it decides upon a preliminary 

examination of the facts presented that it is desirable to inquire into and develop 

the facts more thoroughly at trial in order to clarify the law or its application.”72

III. ANALYSIS

This opinion first considers the parties’ motions for summary judgment on 

their core contractual claims. These claims relate to: (1) the VGRP Purchase Right; 

(2) refusal to consent to a permanent mortgage for the Apartments; and (3) the 

 68 Merrill v. Crothall-Am., Inc., 606 A.2d 96, 100 (Del. 1992). 

69 Shuba v. United Servs. Auto Ass’n, 77 A.3d 945, 947 (Del. 2013) (internal citations 

omitted). 

70 In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2014 WL 2768782, at *8 (Del. Ch. June 

12, 2014) (quoting Vanaman v. Milford Mem’l Hosp., Inc., 272 A.2d 718, 720 (Del. 

1970)).

71 Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002). 

72 In re El Paso, 2014 WL 2768782, at *9 (citations omitted).
29

Compatriot Parties’ entitlement to the Preferred Returns. This opinion next 

addresses the Compatriot Parties’ motion for summary judgment on the Holtzman 

Parties’ related claims for breach of the implied covenant of good faith and fair 

dealing, promissory estoppel, tortious interference with contract and business 

relations, and civil conspiracy. Lastly, this opinion addresses the Compatriot 

Parties’ argument that the Holtzman Parties lack standing to challenge either the 

sale of the Apartments to CCI in the Pennsylvania Action or the sale of the minority 

interest in MP Operating from L.A.V. to LAV MP Holding because none of the 

Holtzman Parties is a member of MP Operating.

A. Appraisal Process Claims

The Compatriot Parties argue that they are entitled to summary judgment on 

VGRP’s breach of contract claim (Compl. Count I), the Holtzman Parties’ specific 

performance claim (Compl. Count XIII), and the Compatriot Parties’ declaratory 

judgment claim (Countercl. Count V) as they relate to the appraisal process. 

Specifically, the Compatriot Parties argue: (1) VGRP was not entitled to exercise 

the VGRP Purchase Right based on Flanagan’s appraisal because Flanagan was not 

validly licensed to perform the appraisal; (2) VGRP and CCI amended the 

Appraisal Schedule by agreeing to use the Freddie Mac mortgage appraisal 

performed by Colliers as the third appraisal; and (3) even in the absence of any 
30

contractual amendment, an appraisal value was never set because a third appraiser 

was not validly selected.73

The Court denies the Compatriot Parties’ motion for summary judgment on 

the appraisal process issues because the Compatriot Parties have not established

their right to judgment as a matter of law.

1. Flanagan’s Qualifications

The Appraisal Schedule describes the required qualifications for appraisers 

as follows: 

The appraisers shall specialize in the appraisal of real estate projects similar 

to [the Apartments] in the region where [the Apartments] are located, shall 

have no less than five years’ experience in such field and shall be recognized 

as ethical and reputable. No appraiser shall have any personal or financial 

interest as would disqualify such appraiser from exercising an independent 

and impartial judgment as to the value of [the Apartments].74

The Compatriot Parties’ summary judgment papers do not dispute that 

Flanagan met these requirements. Instead, according to the Compatriot Parties, 

VGRP could not validly rely on Flanagan’s appraisal because Flanagan only held a 

“Pennsylvania Temporary Practice Permit.” According to the Compatriot Parties, 

the permit only authorized Flanagan to provide appraisals as part of a “Federallyrelated transaction” and, therefore, the permit did not license him to conduct the 

 73 Compatriot Parties’ Opening Br. 29-35.

74 MP Holding Operating Agreement Schedule C.
31

appraisal of the Apartments.75 This argument fails because, as the Compatriot 

Parties admit, the Appraisal Schedule does not require the appraisers to hold any 

particular permit, certification, or license.76 

Under the plain language of the Appraisal Schedule, an individual could 

satisfy the requirements in the Appraisal Schedule by “specializ[ing] in the 

appraisal of real estate similar to [the Apartments] in the region where [the 

Apartments] are located,” “have five years’ experience,” and “be recognized as 

ethical and reputable.”77 

The Compatriot Parties cite no law supporting their argument that VGRP 

could not validly rely on Flanagan’s appraisal. The Compatriot Parties cite two 

cases from the Commonwealth Court of Pennsylvania for the proposition that any 

real estate-related financial transaction “requires an appraisal [to] be conducted by 

an appraiser with a real estate appraiser license.”78 Neither case addresses whether 

two sophisticated parties may agree to resolve a valuation dispute involving real 

estate utilizing an appraiser who does not possess a particular license or permit—

 75 Compatriot Parties’ Opening Br. 30-32. 

76 Dkt. 435, Tr. at 82-83. 

77 MP Holding Operating Agreement Schedule C. It is noteworthy that CCI tried to 

retain Flanagan after VGRP had already done so and that the challenge to his 

qualifications was not made until after he submitted his appraisal. 

78 Compatriot Parties’ Opening Br. 31-32 (citing King v. West Penn Power Co., 946 A.2d 

184, 187-88 (Pa. Commw. Ct. 2008), and McGaffic v. Redevelopment Auth. of City of 

New Castle, 732 A.2d 663, 672 (Pa. Commw. Ct. 1999)).
32

temporary or otherwise. Instead, the two cited cases involve individuals offering 

expert testimony at trial. In both cases, the court held that a trial court may consider 

expert testimony regarding the valuation of a property in a condemnation

proceeding even if the expert is not licensed.79 Those cases are not controlling here. 

The parties here agreed upon specific qualifications for the appraisers. Holding a 

particular license was not one of them. Thus, there is a genuine issue of material

fact as to whether Flanagan was sufficiently qualified to serve as an appraiser under 

the contract. Therefore, the Compatriot Parties are not entitled to judgment as a 

matter of law that Flanagan’s appraisal was invalid under the terms of the Appraisal 

Schedule.

80 

2. The Amendment to the MP Holding Operating Agreement

The Compatriot Parties argue they are entitled to a partial summary 

judgment declaring that the parties amended the Appraisal Schedule to the MP 

 79 King, 946 A.2d at 187 (“Condemnee first argues that the trial court erred in concluding 

that a qualified valuation expert testifying in a condemnation proceeding must possess a 

real estate appraiser license. We agree.”); McGaffic, 732 A.2d at 673 (holding that the 

Pennsylvania statute requiring state certification for nonfederally-related appraisals did 

not apply to the appraisal at issue and that the “lack of certification did not operate to 

disqualify” the challenged expert). Further, the Compatriot Parties only argue that 

Flanagan’s appraisal exceeded the scope of his permit. Even assuming that Flanagan’s 

appraisal exceeded the scope of his permit, the Compatriot Parties have not established 

that VGRP could not rely on his appraisal as a matter of law. 

80 See Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1035 (Del. Ch. 2006) 

(“[C]ourts should be most chary about implying a contractual protection when the 

contract easily could have been drafted to expressly provide for it.”). 
33

Holding Operating Agreement. The Compatriot Parties contend VGRP and CCI 

amended the Appraisal Schedule to use the Freddie Mac mortgage appraisal as the 

third appraisal. 

For the parties to have amended the Appraisal Schedule, they must have 

mutually assented to the amendment.

81 The Compatriot Parties cite the October 19 

Emails as evidence of mutual assent to use the mortgage appraisal as the third 

appraisal.82 That evidence, along with Platt’s deposition testimony that VGRP 

“agreed that we would use the lender’s appraisal,” does suggest that the parties 

validly amended the Appraisal Schedule to use the appraisal for the Freddie Mac 

loan as the third appraisal.83 

Yet there is other evidence indicating the parties had not mutually assented 

to use the mortgage appraisal as the third appraisal. On November 18, 2016, CCI 

wrote to Holtzman and stated that VGRP, CCI, and the “third-party appraiser” 

should reveal the “3 appraisers’ values” the following week.84 Perhaps 

understandably confused by the short time frame in which CCI was contemplating 

 81 Cont'l Ins. Co. v. Rutledge & Co., 750 A.2d 1219, 1232 (Del. Ch. 2000) (“Any 

amendment to a contract, whether written or oral, relies on the presence of mutual assent 

and consideration.”). 

82 Compatriot Parties’ Opening Br. Ex. K (“[W]e have proposed using the mortgage loan 

appraisal for the third appraisal, in lieu of having these two appraisers select a third.”). 

83 Dkt. 416 Ex. A, Platt Dep. 67:19-24. 

84 Compatriot Parties’ Opening Br. Ex. P at CCI264664-5. 
34

exchanging a third appraisal, Holtzman stated that “[t]here have not been any 

changes to our documents. Please do not represent that there have been.”85 

Compatriot’s Mark Van Kirk responded: “We are following the documents. The 

documents require three appraisals. I am not representing that there have been any 

changes to the documents.”86 These emails are inconsistent with an amendment to 

the Appraisal Schedule to use the mortgage appraisal as the third appraisal. 

Furthermore, if the parties had amended the Appraisal Schedule, Flanagan and 

Albert would not have needed to select Griffith.87 Based on this record and 

drawing all reasonable inferences in favor of the Holtzman Parties, the Court 

cannot conclude as a matter of law that the parties amended the Appraisal 

Schedule. 

Even if the parties had amended the Appraisal Schedule, the Compatriot 

Parties have not established that the parties amended the independence 

requirements described in paragraph 2 of the Appraisal Schedule. Paragraph 1 of 

the Appraisal Schedule governs the selection of the two appraisers and their 

 85 Id. at CCI264664. 

86 Id. 

87 The Compatriot Parties argue that Griffith was appointed too late, that Holtzman was 

not authorized unilaterally to retain Griffith on behalf of MP Holding, and that Griffith 

never ultimately prepared an appraisal. See Compatriot Parties’ Opening Br. 21. The 

Compatriot Parties do not argue, however, that Albert was not authorized to select a third 

appraiser or that his selection was otherwise invalid.
35

selection of a third appraiser. Paragraph 2 of the Appraisal Schedule states that 

“[n]o appraiser shall have any personal or financial interest as would disqualify 

such appraiser from exercising an independent and impartial judgment as to the 

value of the [Apartments].”88 The Compatriot Parties argue that the Holtzman 

Parties’ offer to use the mortgage appraisal as the third appraisal was not 

conditioned on any independence requirement and, therefore, the parties effectively 

erased paragraph 2. It is also reasonable to infer, however, that the parties only 

modified the process to select a third appraiser in paragraph 1 and did not intend to 

modify the independence requirements in paragraph 2. Thus, if the parties amended 

the Appraisal Schedule to use the mortgage appraisal, the independence 

requirement could nevertheless disqualify Albert as a valid third appraiser because 

there is a material dispute of fact regarding whether Albert satisfied the 

independence requirements.

89 Accordingly, the Compatriot Parties are not entitled 

to a summary judgment that the parties amended the Appraisal Schedule in the MP 

Holding Operating Agreement. 

3. The Lack of a Third Appraiser

The Compatriot Parties argue that, even if there were no amendment to the 

Appraisal Schedule, Albert and Flanagan did not appoint a third appraiser within 

 88 MP Holding Operating Agreement Schedule C. 

89 See Holtzman Parties’ Answering Br. 38-40.
36

ten days after they were appointed, as provided in the Appraisal Schedule and, thus,

there is no valid third appraisal for the VGRP Purchase Right.90 This argument fails 

because it assumes that the Compatriot Parties did not breach any contract by 

causing the failure of the appraisal process. Further, the record could support a 

finding that both VGRP and CCI agreed through their course of conduct that the 

ten-day period for appointing appraisers set forth in the Appraisal Schedule would 

not restrict the nomination of the third appraiser.91 In any event, this Court has 

already ruled that damages could include judgment as to the Appraised Value. The 

 90 Compatriot Parties’ Opening Br. 35. 

91 It appears that the parties often did not strictly comply with the deadlines and other 

provisions of the Appraisal Schedule. In addition to arguably beginning the appraisal 

process on an earlier date than contemplated by the Appraisal Schedule, see supra at 

n.29, the parties were not supposed to exchange appraisals until after a third appraiser 

was empaneled and had conducted an appraisal of the Property. See MP Holding 

Operating Agreement Schedule C ¶ 1 (“The appraisals shall be submitted to CCI and 

VGRP within thirty (30) days after the panel of three (3) appraisers is constituted.”). 

Nevertheless, the parties exchanged appraisals from just two appraisers on November 23, 

2016, before the two appraisers had selected a third appraiser. More consequentially, the 

record implies that at least one (if not both) of the parties effectively prevented its 

respective appraiser from selecting a third appraiser while the parties sought to reach 

agreement on the fair value of the Apartments. See Holtzman Parties’ Answering Br. Ex. 

30 (Compatriot asking Albert “were you provided with the relevant provisions of the 

LLC Agreement and did you know you were selecting a third appraiser for the purposes 

set forth in the LLC Agreement? Obviously we did not provide you with the relevant 

positions of the LLC agreement but I wanted to see if you were provided anything from 

the other appraiser and you knew at any level why Mr. Flanagan was approaching you 

and asking for your recommendations of other appraisers”); Compatriot Parties’ Opening 

Br. Ex. CC (Holtzman noting that the parties should instruct both appraisers to select a 

third appraiser in December 2016). In the context of this case, these largely unheralded 

deviations from the contractual process underscore the need for a fuller record before 

adjudicating the contract claims.
37

Court’s Status Quo Order permits “a final, non-appealable judgment as to the 

Appraised Value.”92 Just as the Status Quo Order contemplated that the Court 

could issue a judgment as to the Appraised Value at the outset of this action over 

three years ago, it remains possible that VGRP may be entitled to a judgment 

through which the appraisal process resumes or the appraised value of the 

Apartments is otherwise determined by the Court.

B. Were Any of the Compatriot Parties Obligated to Approve the 

Freddie Mac Financing?

Both the Holtzman Parties and the Compatriot Parties seek summary 

judgment in their favor on the Holtzman Parties’ claim that the Compatriot Parties 

breached the MP Managing Operating Agreement by obstructing the Freddie Mac 

financing.93 The Holtzman Parties contend that the MP Managing Operating 

Agreement unambiguously required the Compatriot Parties to approve the Freddie 

Mac financing, and their failure or refusal to do so breached the contract. The 

Compatriot Parties argue they owed no contractual obligation to approve any 

financing, and even if they did, the financing did not meet the contractual 

requirements for approval. The Compatriot Parties further argue that no breach 

occurred because VGRP requested consent from the wrong Compatriot Party and 

 92 Dkt. 12 ¶ 2. 

93 Compl. Count I. 
38

that Holtzman made certain inaccurate representations to Freddie Mac in obtaining 

the financing proposal. 

As discussed below, the parties have not satisfied their burden to obtain

summary judgment on this issue. Furthermore, additional factual development 

would be helpful to the Court in resolving this claim.

1. The Contractual Provisions for Financing the Apartments

Neither side has adequately established CCI’s and Compatriot’s contractual 

obligations to approve permanent mortgage financing, if any. 

a. The Holtzman Parties’ Interpretation of the

Financing Provisions

None of the provisions in the MP Managing Operating Agreement expressly

and unambiguously obligated Compatriot or CCI (as a Member of MP Holding) to 

approve the Freddie Mac financing on the basis that the Freddie Mac financing 

contemplated a loan at an 80% loan-to-value ratio. Section 2.8(c) to the MP 

Managing Operating Agreement incorporates a Business Plan that had been 

approved by Compatriot and required Compatriot’s approval to revise the Business 

Plan: 

The Manager, in connection with the Development Company, has prepared a 

business plan attached as Exhibit B hereto (the “Business Plan”), which has 

been approved by Compatriot and incorporates (i) an acquisition and initial 

construction and development for costs related to the acquisition, design, 

development and lease-up of the Project (“Development Budget”), and (ii) a 
39

site plan for the [Apartments]. Any material changes or deviations from the 

Business Plan must be approved by Compatriot.94

The Business Plan does not unambiguously state that Compatriot or CCI is

obligated to approve any financing at an 80% loan-to-value ratio. Among many 

other details, the Business Plan contains a table of terms illustrating a permanent 

mortgage, without any language expressly obligating any party to approve the 

permanent mortgage described therein.

Section 6.2 prohibits MP Holding, as the Manager of MP Managing, from 

undertaking certain actions without prior written approval from Compatriot. 

Section 6.2(a) prohibits MP Holding from “adopt[ing], amend[ing] or modify[ing] 

the Business Plan” unless the transactions at issue fall below a certain materiality 

threshold. Section 6.2(e) prohibits MP Holding from encumbering the Company, 

subject to an exception for a permanent mortgage on certain terms:

pursuant to the Business Plan, the Members have approved a permanent 

mortgage for the Project, on market terms and conditions from an 

institutional lender, subject to the following factors: (1) an amount up to 

80% loan to value (which value shall be ascertained at the time the 

permanent mortgage is being applied for); (2) non-recourse, with no 

guaranties by any party other than customary non-recourse carve-out 

guaranty by the Borrower or Village Green, (3) have a minimum term of 7 

years, (4) amortization of not less than 25 years, (5) debt service coverage 

ratio of not less than 1.2 (with amortization), and (6) not more than 2 years 

interest-only payments.

 94 MP Managing Operating Agreement § 2.8(c). 
40

Section 6.2(e) does not unambiguously require CCI or Compatriot to 

approve any permanent mortgage in an amount up to an 80% loan-to-value ratio. 

Instead, Section 6.2(e) permits MP Holding (which is co-managed by VGRP and 

CCI) to obtain a permanent mortgage that satisfies all of the terms listed without 

Compatriot’s approval. The Compatriot Parties argue that the Freddie Mac 

financing did not satisfy all of the terms listed in Section 6.2(e).

95 Because the MP 

Managing Operating Agreement does not unambiguously require either 

Compatriot or CCI to approve an 80% loan-to-value permanent mortgage, the 

Holtzman Parties have not established as a matter of law that any of the 

Compatriot Parties were obligated to accept the Freddie Mac financing.

b. The Compatriot Parties’ Interpretation of the

Financing Provisions

The Compatriot Parties argue that Compatriot and CCI owed no obligation 

to approve any permanent mortgage on any terms because the Business Plan does 

not obligate any Compatriot Party to affirmatively do anything; instead, it only

 95 Compatriot Parties’ Opening Br. 43-45.
41

operates to limit MP Holding as the Manager of MP Managing.96 In the plainest 

terms, the Compatriot Parties argue that “[t]he Business Plan did not impose any 

obligations.”97 That is a reasonable construction of the contract, but it is not the 

only one. The inclusion of the Business Plan can be reasonably read to obligate 

the parties to act consistently with the Business Plan. The Business Plan describes 

the anticipated development and financing of the Apartments in detail, and it 

contemplates that the parties would obtain a permanent mortgage for the 

Apartments.

98 It is a reasonable reading of the contract that Compatriot and CCI 

 96 See MP Managing Operating Agreement §§ 2.8(c) (“Any material changes or 

deviations from the Business Plan must be approved by Compatriot.”), 6.2(a) (prohibiting 

the Manager from adopting, amending or modifying “all or any part of the Business 

Plan” without Compatriot’s written consent), 6.2(e) (prohibiting the Manager from 

encumbering the Company without Compatriot’s written consent except with respect to a 

permanent mortgage satisfying certain criteria); see also MP Holding Operating 

Agreement § 5.5 (permitting CCI to act in a self-interested manner as a member of MP 

Holding). 

97 Compatriot Parties’ Reply Br. 27 n.10. 

98 Section 2.8(c) states that Compatriot “approved the Business Plan,” and the same 

section permits immaterial changes to the Business Plan without Compatriot’s approval. 

MP Managing Operating Agreement § 2.8(c). The Business Plan also defines MP 

Holding’s authority to manage MP Managing without Compatriot’s consent, which could 

indicate that MP Holding (as co-managed by VGRP and CCI) was contractually 

obligated to undertake affirmative action to develop and finance the Property in a manner 

consistent with the Business Plan. See, e.g., MP Managing Operating Agreement §§ 

6.2(b) (permitting the Manager to sell property “in accordance with the approved 

Business Plan”), 6.2(d) (permitting the Manager to conduct repairs or capital 

improvements “approved in or contemplated by the Business Plan” under certain 

circumstances), 6.2(c) (describing an approved permanent mortgage by the Members 

“pursuant to the Business Plan”), 6.2(l) (permitting the Manager to enter into material 

contracts for legal, accounting, engineering and other services “to the extent the costs of 

which are set forth in the approved Business Plan”). 
42

were required to materially comply with the Business Plan, including by approving 

a permanent mortgage on materially similar terms to the one described therein.99

Because the Holtzman Parties argue that any differences between the Freddie Mac 

mortgage and the permanent mortgage described in the Business Plan and Section 

6.2(e) of the MP Managing Operating Agreement are immaterial,100 summary 

judgment is inappropriate on this claim. GMG Capital Invs., LLC v. Athenian 

Venture P’rs I, L.P., 36 A.3d 776, 784 (Del. 2012) (“We reaffirm that, in a dispute 

 99 See MP Managing Operating Agreement § 2.8(c) (“The Manager, in connection with 

the Development Company, has prepared a business plan attached as Exhibit B hereto 

(the “Business Plan”), which has been approved by Compatriot . . . . Any material 

changes or deviations from the Business Plan must be approved by Compatriot.”). The 

Compatriot Parties argue that any authority that MP Holding had under the MP Managing 

Operating Agreement was still subject to CCI’s right to act in its own self-interest as a 

co-manager of MP Holding. MP Holding Operating Agreement § 5.1 (requiring 

decisions of MP Holding to be unanimously approved by its members). It is possible, as 

the Compatriot Parties argue, that Compatriot and CCI effectively negotiated the 

contracts so that Compatriot had a veto right on operations at the MP Managing level and 

CCI had a redundant veto right at the MP Holding level. The Compatriot Parties 

acknowledge, however, that the contractual right to act in their own self-interest is not 

without limits. See Dkt. 435, Tr. at 98:20-99:21. In addition, applying CCI’s right to act 

in its own self-interest in this context arguably renders the contract language regarding 

Compatriot’s approval of the Business Plan and the permission given to MP Holding to 

make immaterial “changes or deviations from the Business Plan” without approval by 

Compatriot into surplusage. In re Shorenstein Hays-Nederlander Theaters LLC Appeals, 

213 A.3d 39, 56 (Del. 2019) (“We interpret contracts as a whole and we will give each 

provision and term effect, so as not to render any part of the contract mere surplusage, 

and will not read a contract to render a provision or term meaningless or illusory.”)

(internal quotations omitted).

100 See Holtzman Parties’ Answering Br. 49 (arguing that any “inconsistencies between 

the Freddie Mac loan commitment and the Business Plan raise a fact issue” and that these 

inconsistencies are “immaterial issues that could be easily remedied”). But see Dkt. 435, 

Tr. at 18:20-22 (stating that the permanent mortgage “complies in all respects to the 

language that’s set forth in the [MP Managing Operating Agreement].”).
43

over the proper interpretation of a contract, summary judgment may not be 

awarded if the language is ambiguous and the moving party has failed to offer 

uncontested evidence as to the proper interpretation.”). 

The Compatriot Parties also raise numerous factual and legal issues 

concerning the interrelationship between the Business Plan, Section 6.2 of the MP 

Managing Operating Agreement, Section 5.5 of the MP Holding Operating 

Agreement, and the factual circumstances surrounding the Freddie Mac loan.101 

There are genuine issues of material fact as to whether the Holtzman Parties 

properly sought consent for the Freddie Mac mortgage and whether the mortgage 

proposal was properly obtained. The Compatriot Parties argue that Holtzman 

asked only CCI to consent (in its capacity as co-manager of MP Holding) rather 

than requesting consent of Compatriot—whose consent was required under Section 

6.2 if the permanent mortgage did not satisfy the terms in Section 6.2(e).

102 Yet 

Compatriot’s counsel sent an email to Holtzman in March 2017 acknowledging 

that Compatriot had been asked to consent to the Freddie Mac mortgage.103 The 

Compatriot Parties minimize the import of this exchange and argue that the email 

cannot “fairly be read as suggesting the Holtzman Parties ever sought Compatriot’s 

 101 See, e.g., Dkt. 435, Tr. 53-58. 

102 Compatriot Parties’ Answering Br. 33-34.

103 Compatriot Parties’ Answering Br. Ex. S. 
44

written approval under Section 6.2(e),”104 but the Court cannot make those 

inferences in favor of the Compatriot Parties at this stage. These communications 

present a disputed issue of material fact. 

The factual and legal determinations to be made are further complicated by 

the fact that this litigation began after a permanent mortgage had been approved.

105 

At the time the Freddie Mac loan appraisal was sought, the parties were proceeding 

as though VGRP would be purchasing Compatriot’s and CCI’s interests in MP 

Holding. The Court’s January 2017 Status Quo Order changed that dynamic by 

preventing a sale of any party’s membership interest until 30 days after a final 

judgment in this action. Thus, in early March 2017, with the construction loan on 

the Apartments coming due in May 2017, the Holtzman Parties wrote to the 

Compatriot Parties’ counsel seeking “permanent financing [to] achieve the 

business plan” through the Freddie Mac loan, and attached a loan commitment 

letter. Holtzman’s counsel stated: “Because the loan was originally secured in 

connection with the buy-out of CCI Historic’s interest, the loan documents will 

need to be conformed based on the current ownership structure. We are confident 

 104 Compatriot Parties’ Answering Br. 35 n.13. The Compatriot Parties referenced that 

argument in its reply brief in support of summary judgment. See Compatriot Parties’ 

Reply Br. 26-27 (referencing the Compatriot Parties’ answering brief in opposition to the

Holtzman Parties’ motion for summary judgment at pages 25-45). 

105 See MP Managing Operating Agreement § 6.2(e). 
45

that Freddie Mac will support this modification.”106 On March 6, 2017, counsel 

for CCI and Compatriot rejected that request, stating, among other things, that 

“Compatriot does not approve the financing.”107 On April 3, 2017, Compatriot’s 

CEO sent an email to Holtzman and explained that “[w]e rejected that proposed 

loan because, among other reasons, we felt that the loan amount comprised too 

much leverage at this point in the market cycle, not to mention that the loan terms 

you gave us didn’t even contemplate Compatriot’s continuing ownership in the 

property.”108 He also stated that Compatriot, as the authorized person for one of 

the co-managers of MP Holding, supported extending the existing construction 

loan for one year, and attached a signed notice extending the construction loan.109 

In sum, the issue of whether CCI breached a contractual obligation to 

approve permanent financing for the Apartments is fact-intensive and, as noted 

above, there are genuine issues of material fact that require denial of the 

 106 Compatriot Parties’ Answering Br. Ex. R.

107 Compatriot Parties’ Answering Br. Ex. S.

108 Compatriot Parties’ Answering Br. Ex. U. The Compatriot Parties argue that 

Holtzman acted improperly in obtaining approval from Freddie Mac because Holtzman 

inaccurately represented to Freddie Mac that he had the authority to bind MP Operating. 

However, the Compatriot Parties have not offered any legal argument explaining why the 

purportedly inaccurate representations to Freddie Mac would invalidate any obligation on 

the part of Compatriot to approve the financing. For example, the Compatriot Parties 

offer no evidence that Freddie Mac sought to withdraw the proposed financing as a 

consequence of the purported misrepresentations or that approving the proposed 

financing would have been futile. 

109 Id.
46

Compatriot Parties’ motion as to some of the grounds upon which they seek 

summary judgment on the financing issues. The Court also concludes further 

development of the factual record at trial will “help clarify the application of the 

law to the circumstances of the case.” Bouchard v. Braidy Indus., Inc., 2020 WL 

2036601, at *16 (Del. Ch. Apr. 28, 2020) (declining to grant summary judgment 

where each side “raised a bloody onslaught of arguments concerning the 

effectiveness of” certain actions). That is particularly so where, as here, additional 

factual discovery has occurred after briefing and argument on the motions for 

summary judgment. See In re Energy Transfer Equity L.P. Unitholder Litig., 2017 

WL 782495, at *15 (Del. Ch. Feb. 28, 2017) (declining to grant summary 

judgment on a question involving contract construction where the “record [was] 

incomplete, or in dispute, on issues helpful to [the court’s] analysis”).

C. The Preferred Returns

Both parties seek summary judgment on the issue of the Compatriot Parties’ 

right to the Preferred Returns. 

The Compatriot Parties seek a summary judgment declaring that the 

Preferred Returns under the MP Holding Operating Agreement, MP Managing 

Operating Agreement, and the MP Operating Operating Agreement continue to 
47

accrue until the termination of the respective agreements or the entities.110 As the 

Compatriot Parties tacitly acknowledge, however, if the Compatriot Parties are 

liable for breach of contract or breach of the implied covenant of good faith and fair 

dealing by refusing to approve the Freddie Mac financing, it is possible that the 

Compatriot Parties’ rights to the Preferred Returns could have terminated prior to 

the present.111 Because the Court denies summary judgment as to the Holtzman 

Parties’ breach of contract claims, the Compatriot Parties are not entitled to a 

declaration at the summary judgment stage that the Preferred Returns have

continued to accrue. Accordingly, the Compatriot Parties’ motion for declaratory 

relief as to their rights to accrue Preferred Returns (Counterclaim Count IX) is 

denied.

The Holtzman Parties’ motion for summary judgment on this issue 

(Complaint Count XIII) must also be denied. According to the Holtzman Parties, 

the doctrine of judicial estoppel precludes the Compatriot Parties from obtaining the

Preferred Returns after the Status Quo Order.

112 “Judicial estoppel is an ‘equitable 

 110 Compatriot Parties’ Opening Br. 36-40.

111 Compatriot Parties’ Opening Br. 38 (“As discussed in the below argument sections, 

however, Sections 6.2(e) and (f) were not breached, and the implied covenant is not 

implicated.”). 

112 Holtzman Parties’ Opening Br. 21-22.
48

doctrine invoked by a court at its discretion.’”113 Judicial estoppel applies where 

“(i) ‘a litigant advances a position inconsistent with a position taken in the same or 

earlier legal proceeding’ and (ii) ‘the court was persuaded to accept the previous 

argument as a basis for its earlier ruling.’”114 It is designed to protect the integrity 

of the judicial process by ‘prohibiting parties from deliberately changing positions 

according to the exigencies of the moment.’”115 

Here, the Compatriot Parties opposed a mandatory injunction requiring CCI 

and Compatriot to sell their membership interests pursuant to the VGRP Purchase 

Right. In lieu of a mandatory injunction, the Compatriot Parties argued for (and 

obtained) an injunction preserving the parties’ rights with respect to the VGRP 

Purchase Right and the CCI Purchase Right (the exercise of which is necessarily 

contingent on the exercise of the VGRP Purchase Right). The Compatriot Parties’ 

counterclaim seeks a declaration that the Compatriot Parties are entitled to the 

 113 Banther v. State, 977 A.2d 870, 884 (Del. 2009) (quoting New Hampshire v. Maine, 

532 U.S. 742, 750 (2001)). 

114 In re Rural/Metro Corp. Stockholders Litig., 102 A.3d 205, 246 (Del. Ch. 2014) 

(quoting VIII-Hotel II P Loan Portfolio Hldgs., LLC v. Zimmerman, 2013 WL 5785290, 

at *3 (Del. Super. Sept. 19, 2013)). 

115 In re Silver Leaf, L.L.C., 2004 WL 1517127, at *2 (Del. Ch. June 29, 2004) (quoting 

New Hampshire v. Maine, 532 U.S. 742, 743 (2001)); see also Motorola Inc. v. Amkor 

Tech., Inc., 958 A.2d 852, 859-60 (Del. Oct. 8, 2008) (“The doctrine is meant to protect 

the integrity of the judicial proceedings.”); see generally Donald J. Wolfe, Jr. & Michael 

A. Pittenger, Corporate and Commercial Practice in the Delaware Court of Chancery § 

15.02(d), at 15-12 (2d ed. 2019) (“The doctrine of judicial estoppel is intended 

fundamentally to preserve the integrity of the courts and prevent miscarriages of justice 

by focusing on the relationship of the parties to the judicial system.”). 
49

Preferred Returns during the injunction. These positions are logically consistent:

the Compatriot Parties’ position is that they did not breach any contract and,

therefore, they are entitled to (1) exercise the CCI Purchase Right after the 

expiration of the Status Quo Order, and (2) obtain the Preferred Returns that

continued to accrue while they were prevented from exercising the CCI Purchase 

Right by operation of the Status Quo Order. Because the Compatriot Parties’ 

position as to their entitlement to the Preferred Returns has not been inconsistent, 

the Compatriot Parties are not judicially estopped from seeking Preferred Returns.

D. The Implied Covenant of Good Faith and Fair Dealing Claim

The implied covenant of good faith and fair dealing inheres in every contract 

governed by Delaware law and requires “‘a party in a contractual relationship to 

refrain from arbitrary or unreasonable conduct which has the effect of preventing 

the other party to the contract from receiving the fruits’ of the bargain.”116 

“[T]he implied covenant only applies where a contract lacks specific language 

governing an issue and the obligation the court is asked to imply advances, and 

does not contradict, the purposes reflected in the express language of 

the contract.” Alliance Data Sys. Corp. v. Blackstone Capital P’rs V L.P., 963 

A.2d 746, 770 (Del. Ch. 2009), aff'd, 976 A.2d 170 (Del. 2009). “The doctrine 

 116 Dunlap v. State Farm Fire and Cas. Co., 878 A.2d 434, 442 (Del. 2005) (quoting 

Wilgus v. Salt Pond Inv. Co., 498 A.2d 151, 159 (Del. Ch. 1995)). 
50

thus operates only in that narrow band of cases where the contract as a whole 

speaks sufficiently to suggest an obligation and point to a result, but does not speak 

directly enough to provide an explicit answer.” Airborne Health, Inc. v. Squid 

Soap, LP, 984 A.2d 126, 146 (Del. Ch. 2009).

As the Delaware Supreme Court has recently stated:

The implied covenant of good faith is a cautious enterprise that is best 

understood as a way of implying terms in the agreement, whether employed 

to analyze unanticipated developments or to fill gaps in the contract’s 

provisions. Delaware's implied duty of good faith and fair dealing is not an 

equitable remedy for rebalancing economic interests after events that could 

have been anticipated, but were not, that later adversely affected one party to 

a contract. Rather, the covenant is a limited and extraordinary legal remedy. 

As such, the implied covenant does not apply when the contract addresses 

the conduct at issue, but only when the contract is truly silent concerning the 

matter at hand. Even where the contract is silent, an interpreting court 

cannot use an implied covenant to re-write the agreement between the 

parties, and should be most chary about implying a contractual protection 

when the contract could easily have been drafted to expressly provide for it.

 

Oxbow Carbon & Minerals Hldgs., Inc. v. Crestview-Oxbow Acquisition, Inc., 202 

A.3d 482, 506-07 (Del. 2019) (internal quotations and citations omitted); see also 

id. at 504 n.93. 

As a threshold matter, the Compatriot Parties argue that the Holtzman 

Parties have failed to allege a breach of the implied covenant in their Complaint. 

The Compatriot Parties correctly note that the Holtzman Parties’ Complaint does 

not contain a specific count asserting the implied covenant of good faith and fair 
51

dealing. Nevertheless, the Complaint,117 the Holtzman Parties’ discovery 

responses,118 and their brief in opposition to the Compatriot Parties’ motion for 

partial summary judgment119 establish the factual foundation for the Holtzman 

Parties’ claim that the Compatriot Parties breached the implied covenant. At this 

stage, this is sufficient for the Holtzman Parties’ implied covenant claim to proceed 

because the Holtzman Parties have provided fair notice of the claim.120 

 117 See, e.g., Compl. ¶¶ 13-15, 95.

118 See, e.g., Compatriot Parties’ Opening Br. Ex. PP (Interrogatory Responses 8, 36, 39, 

50, 106). 

119 See Holtzman Parties’ Answering Br. 50-52 (“Holtzman bargained for his buyout 

rights and the three independent-appraisal process; Compatriot obstructed the process in 

order to forestall the buyout. And Holtzman bargained for a Business Plan with 80 

percent financing; Compatriot obstructed it and denied Holtzman the bargained-for 

distribution”).

120 In HOMF II Inv. Corp v. Altenberg, 2020 WL 2529806, at *36-41 (Del. Ch. May 19, 

2020), this Court recently considered whether a fraudulent inducement claim could 

proceed despite the failure to separately plead that legal theory as a count in the 

pleadings. The Court held that “the failure of the amended complaint to address [the 

claim] would not have foreclosed the plaintiffs from conducting discovery into these 

issues or seeking to prove a fraudulent inducement claim at trial, if the plaintiffs had 

given Altenberg fair notice that they intended to do so.” 

Here, the Compatriot Parties have fair notice of the basis for the implied covenant claim 

because, among other reasons, the parties have joined issue on this claim in their 

respective summary judgment briefing. See HOMF II, 2020 WL 2529806, at *37 

(analyzing Court of Chancery Rule 15(b) by analogy to the Federal Rules of Civil 

Procedure and noting that the analogous federal rule “contemplate[s] that the parties will 

identify the issues for decision through discovery, motions for summary judgment, and 

‘the use of pretrial conferences and pretrial orders under Rule 16.’”) (quoting 6A Charles 

Allen Wright et al., Federal Practice and Procedure § 1219 (3d ed. 2004 & Supp. 

2020)).
52

As to the Appraisal Schedule, the Court concludes that further development 

of and inquiry into the factual record is desirable to clarify the application of the 

facts to the law concerning the implied covenant. As described above, the

summary judgment record suggests that the parties may have tacitly agreed to 

depart from the terms of the Appraisal Schedule with respect to some of its 

provisions.121 In the absence of a fuller record, it is not clear what legal import the 

parties’ course of conduct has on the implied covenant claims. As with the breach 

of contract claims, the record of selective compliance with the Appraisal Schedule 

renders summary judgment on the implied covenant of good faith and fair dealing 

inadvisable. Furthermore, if as the Compatriot Parties contend the parties amended 

the Appraisal Schedule to permit use of the Freddie Mac mortgage appraisal as the 

third appraisal, the October 19 Emails do not expressly address whether the 

mortgage appraisal could be provided by the same appraiser that provided CCI’s 

appraisal.122 Drawing all reasonable inferences in favor of VGRP, it is possible 

that that CCI breached the implied covenant of good faith and fair dealing by 

failing to comply with obligations implied by the parties’ agreed-upon threeappraiser process.

 121 Supra at n.90.

122 Dkt. 416 Ex. A, Platt Dep. 66:23-67:6 (“[W]e were not aware nor was anyone aware 

at the time that that appraisal was going to be the same as CCI’s, which we never would 

have agreed to.”).
53

The Court also denies the Compatriot Parties’ motion as to whether their

refusal to approve a permanent mortgage breached the implied covenant of good 

faith and fair dealing. As noted above, the MP Managing Operating Agreement is 

ambiguous as to what obligations the Business Plan imposed upon the Compatriot 

Parties, if any. In the event that neither party prevails in establishing whether the 

MP Managing Operating Agreement imposed obligations on the Compatriot 

Parties to approve a permanent mortgage through the Business Plan, it is possible 

the Business Plan implied an agreement that the parties would enter into a 

permanent mortgage on terms consistent with those set forth in the Business Plan. 

At this stage, the Court cannot foreclose the Holtzman Parties’ argument that the 

Compatriot Parties breached the implied covenant of good faith and fair dealing by 

refusing to consent to the Freddie Mac financing. 

The application of the implied covenant is “rare and fact-intensive” and 

“turn[s] on issues of compelling fairness.” Cincinnati SMSA Ltd. P’rship v. 

Cincinnati Bell Cellular Sys. Co., 708 A.2d 989, 992 (Del. 1998). Given the 

incomplete factual record, the Court is unable to resolve the implied covenant 

issues at this stage. Accordingly, this portion of the Compatriot Parties’ motion is 

denied. 
54

E. The Promissory Estoppel Claim

In Count II of the Complaint, the Holtzman Parties allege they were 

damaged by relying upon statements from a representative of the Compatriot 

Parties that induced them to pursue the loan commitment to acquire CCI’s interest. 

The Compatriot Parties seek summary judgment on this claim and contend that 

these statements do not support a claim for promissory estoppel. 

To prove a claim for promissory estoppel, a plaintiff must demonstrate that

“(i) a promise was made; (ii) it was the reasonable expectation of the promisor to 

induce action or forbearance on the part of the promisee; (iii) the promisee

reasonably relied on the promise and took action to his detriment; and (iv) such 

promise is binding because injustice can be avoided only by enforcement of the 

promise.”123 A party seeking to establish promissory estoppel must do so by clear 

and convincing evidence. Envo, Inc. v. Walters, 2012 WL 2926522, at *10 (Del.

Ch. July 18, 2012), aff’d, 2013 WL 1283533 (Del. Mar. 28, 2013) (TABLE).

In their complaint and their summary judgment papers, the Holtzman Parties 

base their claim for promissory estoppel on a single representation.124 That 

representation was a September 30, 2016 email from Mark Van Kirk, a Senior 

Vice President of CCI, to Jonathan Borenstein, an attorney for VGRP, stating that 

 123 Lord v. Souder, 748 A.2d 393, 399 (Del. 2000). 

124 Compl. ¶¶ 167-173; Holtzman Parties’ Answering Br. 53-54. 
55

there “is nothing stopping [Holtzman] from proceeding with his loan application 

immediately and exercising his purchase right now or in the near future.”125 That

representation cannot independently support a claim of promissory estoppel. The 

statement that there “is nothing stopping [Holtzman] from proceeding with his loan 

application” cannot be reasonably interpreted as a definite and certain promise that 

the Compatriot Parties would approve any eventual loan.126 

At oral argument, the Holtzman Parties raised a second representation in 

support of their claim for promissory estoppel, arguing that the “statements that are 

set forth in the agreements themselves” constitute statements upon which they rely 

for promissory estoppel.127 The Holtzman Parties now contend that the Business 

Plan is a “promise” that estops the Compatriot Parties from refusing to approve the 

Freddie Mac financing if it is ultimately determined that the Business Plan is “no 

 125 Holtzman Parties’ Answering Br. Ex. 6 at VGRP02027462.

126 “The promise must be a real promise—mere expressions of expectation, opinion, or 

assumption are insufficient. The promise must also be reasonably definite and certain.” 

Territory of U.S. Virgin Islands v. Goldman, Sachs & Co., 937 A.2d 760, 804 (Del. Ch. 

2007), aff’d, 956 A.2d 32 (Del. 2008) (TABLE); see also State v. Simpson, 1990 WL 

143837, at *2 (Del. Ch. Sept. 24, 1990) (“An essential element of promissory estoppel is 

that the promisor’s representation must be reasonably definite and certain so that the 

intentions of the parties can be ascertained.”). 

127 Dkt. 435, Tr. at 41:15-43:24. 
56

longer a binding contract.”128 This second basis for promissory estoppel was not 

alleged in the Complaint, nor was it raised in the Holtzman Parties’ brief in 

opposition to summary judgment. Therefore, it is waived. See Emerald P’rs v. 

Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed 

waived.”); Winshall v. Viacom Int’l, Inc., 55 A.3d 629, 642 (Del. Ch. 2011) (ruling 

that an argument raised for the first time at a hearing was “not fairly or timely 

presented and was waived”), aff’d, 76 A.3d 808 (Del. 2013); accord Hill v. LW 

Buyer, LLC, 2019 WL 3492165, at *6 n.65 & *11 n.108 (Del. Ch. July 31, 2019). 

Because the Holtzman Parties did not identify a promise that could reasonably be 

inferred to form the basis of a promissory estoppel claim, the Compatriot Parties’ 

motion for partial summary judgment on Count II of the Complaint is granted.

F. Tortious Interference with Business Relations and Contract

In Count X of the Holtzman Parties’ Complaint, Jonathan Holtzman, 

individually and derivatively on behalf of VGRP, asserts a claim against the 

Compatriot Parties for tortious interference in prospective business relations and 

tortious interference with contracts. The elements of a claim for tortious 

 128 Id. at 41:21-42:20 (“If [the Business Plan] is no longer a binding contract, it, 

nonetheless, constitutes a clear and definite promise to get to 80 percent financing.”). 

Of course, the promissory estoppel claim could not survive if it were based on a valid 

contract. SIGA Technologies, Inc. v. PharmAthene, Inc., 67 A.3d 330, 348 (Del. 2013) 

(“Promissory estoppel does not apply, however, where a fully integrated, 

enforceable contract governs the promise at issue.”).
57

interference with prospective business relations are “(a) the reasonable probability 

of a business opportunity, (b) the intentional interference by defendant with that 

opportunity, (c) proximate causation, and (d) damages.” Malpiede v. Townson, 

780 A.2d 1075, 1099 (Del. 2001) (internal citations omitted). “Under Delaware 

law, the elements of a claim for tortious interference with a contract are: ‘(1) a 

contract, (2) about which defendant knew, and (3) an intentional act that is a 

significant factor in causing the breach of such contract, (4) without justification, 

(5) which causes injury.’” Bhole, Inc. v. Shore Invs., Inc., 67 A.3d 444, 453 (Del. 

2013) (quoting Irwin & Leighton, Inc. v. W.M. Anderson Co., 532 A.2d 983, 992 

(Del. Ch. 1987)) (emphasis omitted). 

The Compatriot Parties argue that the Holtzman Parties have not pleaded or 

identified a “specific party or specific business opportunity” supporting a claim for 

tortious interference with a prospective business relationship.129 The Compatriot 

Parties also argue that the Holtzman Parties have not identified a specific contract

supporting a claim for tortious interference with a contract.130 In both their 

Complaint and Answering Brief, however, the Holtzman Parties cite specific 

 129 Compatriot Parties’ Opening Br. 52-53. 

130 Id. 53-54. 
58

parties, business opportunities, and contracts that form the basis of their claim for 

tortious interference.131 

Although the information provided by the Holtzman Parties may not be as 

specific as the Compatriot Parties would like, the Compatriot Parties have not 

persuaded the Court that they are entitled to judgment as a matter of law. The

Compatriot Parties must establish that there is no “‘reasonable hypothesis’” upon 

which the Holtzman Parties could recover upon this theory.132 The Compatriot 

Parties have not met that burden. The Compatriot Parties’ motion for summary 

judgment on this Count is denied.

G. The Civil Conspiracy Claim

The Compatriot Parties are entitled to summary judgment on the Holtzman 

Parties’ claim of civil conspiracy.133 The elements of a civil conspiracy claim are: 

“(1) [a] confederation or combination of two or more persons; (2) [a]n unlawful act 

done in furtherance of the conspiracy; and (3) [a]ctual damage.”134 

 131 See Holtzman Parties’ Answering Br. 54-57; Compl. ¶¶ 231-34.

132 In re El Paso, 2014 WL 2768782, at *9 (quoting Vanaman v. Milford Mem'l Hosp., 

Inc., 272 A.2d 718, 720 (Del. 1970)).

133 The Complaint mislabels two counts as Count XII (Conspiracy and Declaratory 

Judgment) and does not contain a Count XI. The Court will refer to the Conspiracy 

Count as Count XI and the Declaratory Judgment Count as Count XII. 

134 Nicolet, Inc. v. Nutt, 525 A.2d 146, 149-50 (Del. 1987). 
59

In support of their civil conspiracy claim, the Holtzman Parties only cite to 

paragraphs of their Complaint.

135 The cited paragraphs of the Complaint do not 

contain any non-conclusory allegations that a civil conspiracy existed between any 

of the Compatriot Parties to injure Holtzman, and the Holtzman Parties do not cite

evidence in the record to support the claim that such a conspiracy existed.

136 They 

also do not point to evidence that any “unlawful act” was performed “in 

furtherance of the conspiracy,” as required to prove civil conspiracy.137 

Accordingly, because there is no disputed issue of material fact and the Compatriot 

Parties are entitled to judgment on this claim as a matter of law, summary 

judgment on this claim is granted. 

H. Challenge to the L.A.V. Sale and the Apartment Sale

As noted above, two transactions occurred during the pendency of this 

action: (1) CCI purchased L.A.V.’s minority interest in MP Operating through an 

intermediary entity, LAV MP Holding, LLC, and (2) CCI purchased the 

Apartments after a sale process conducted pursuant to an order in the Pennsylvania 

 135 Holtzman Parties’ Answering Br. 58 (citing Compl. ¶¶ 2, 94, 208-09, 223, 229). 

136 See Am. Capital Acq. P’rs, LLC v. LPL Hldgs., Inc., 2014 WL 354496, at *12 (Del. 

Ch. Feb. 3, 2014) (granting a motion to dismiss a civil conspiracy claim because 

Plaintiffs only generally alleged that defendants conspired with each other to commit 

tortious interference and “the general rule that a corporation cannot conspire with its 

wholly-owned subsidiaries . . . must apply”). 

137 The Holtzman Parties only cite conclusory allegations from the Complaint. See 

Holtzman Parties’ Answering Br. 58 (citing Compl. ¶¶ 2, 94, 223, 229). 
60

Action. In their Complaint, the Holtzman Parties allege that the L.A.V. transaction 

violated Section 10.5 of the operating agreement of MP Operating (the “MP 

Operating Operating Agreement”), which states that “no . . . sale . . . or other 

transfer by a Member of its interest in the Company, or in any part thereof, or in all 

or any part of the assets of the Company shall be permitted without the express 

written consent of the other Member(s).”138 

The Compatriot Parties argue that the Holtzman Parties do not have standing 

to pursue any claim resulting from a breach of the MP Operating Operating 

Agreement because none of the Holtzman Parties is a member of MP Operating. 

The Holtzman Parties counter, however, by asserting they are third party 

beneficiaries to the MP Operating Operating Agreement.139 

Neither side has adequately briefed this issue.140 Accordingly, it “appears 

desirable to inquire more fully into the facts in order to clarify application of the 

law.”141 Summary judgment on this part of Count XII of the Complaint is denied.

 138 Compl. ¶¶ 121-22, 211. Compatriot Parties’ Opening Br. Ex. RR § 10.5. Prior to 

L.A.V.’s sale of its minority interests in MP Operating, the Members of MP Operating 

were MP Managing and L.A.V. 

139 Holtzman Parties’ Answering Br. 59. 

140 See Schultz v. QuantPower, Inc., 2018 WL 4492576, at *3 (Del. Ch. Sept. 19, 2018) 

(denying cross-motions for partial summary judgment as to claims that were not briefed 

adequately). 

141 AeroGlobal, 871 A.2d at 444.
61

IV. CONCLUSION

For the foregoing reasons, the Compatriot Parties’ motion for partial 

summary judgment is denied in part and granted in part. The Holtzman Parties’ 

motion for partial summary judgment is denied. Counsel shall provide a form of 

order consistent with this Memorandum Opinion.