Opinion ID: 1925175
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: The Club is a golf and country club located in Seaford, Delaware. duPont is a specialty chemical company, headquartered in Wilmington, Delaware, that conducts worldwide operations. duPont owned and operated a nylon textile manufacturing plant located in Seaford, Delaware from 1939 until November 2003, when duPont sold that business to Arteva Specialties, S.à.r.l. (Arteva). The Consent Order On February 25, 1992, several years before the parties' dealings that led to this dispute, duPont and the United States Environmental Protection Agency (EPA) entered into a Consent Order that provided for the performance of interim measures at the plant site, and also at certain leased premises, to prevent or relieve threats to human health or the environment. One such measure was an investigation of the plant facility to determine where there was any release of hazardous waste, and to identify and evaluate alternatives for corrective measures and their implementation. The Consent Order contained findings of fact to which the EPA and duPont stipulated. One finding, which is pertinent to this litigation, states: Respondent [duPont] owns and operates a nylon textile manufacturing plant located at 400 Woodland Park, Seaford, Delaware. The Plant, the property on which the plant is located and all contiguous property under the ownership or control of Respondent, is referred to in this Consent Order as the Facility. The Facility has been owned and operated by Respondent since commencement of production in 1939. [3] The Documents (1) The Deed On December 26, 1995, duPont executed a deed (the Deed) conveying to the Club approximately 100 acres of land, together with improvements (the Property), on which was located a clubhouse, swimming pool, tennis courts, a nine-hole golf course, and related facilities. The Deed contained a restriction (the Deed Restriction) that provides: Grantee [the Club], its successors and assigns, agree to limit the use of the Property for golf, country club and related purposes, so long as Grantor [duPont] continues to own its Seaford, Delaware Plant; provided, however, that this restriction shall not apply to the portion of the Property as follows: [there follows a description of 4.1578 acres of land located on Locust Street, Seaford, Delaware.] The Deed contains no definition of Seaford, Delaware Plant or Plant. [4] (2) The Ground Lease and Memorandum of Lease On November 26, 1997, the parties executed a Ground Lease wherein duPont leased two parcels of land, totaling approximately 100.5 acres (the leased premises), to the Club. On that same date, the parties executed (and later recorded) a Memorandum of Ground Lease. Paragraph 3 of the Memorandum of Ground Lease contains a Right of First Refusal that pertinently provides: DUPONT reserves a right of first refusal to match within thirty (30) days any offer to purchase the Original Parcel as defined in the Option Agreement between the parties hereto dated October 18, 1995 and the leasehold interest in the LEASED PREMISES that is acceptable to [the Club]. Said right of first refusal will terminate upon the refusal by DUPONT to purchase and/or DUPONT transfers all of its title and interest in and to the Seaford, Delaware Plant. The Ground Lease also contains a similarly worded right of first refusal, which provides ( inter alia ) that the right of first refusal will terminate upon the refusal of DUPONT to purchase and/or DUPONT transfers all of its title and interest in and to the Seaford, Delaware Plant. Neither the Ground Lease nor the Memorandum of Lease defines the terms Seaford, Delaware Plant or Plant. Section 11 of the Ground Lease does, however, contain a provision that distinguishes between the Plant and the property upon which the plant is located: DUPONT entered into a Consent order (with the Environmental Protection Agency) . . . a copy of which is attached hereto as Exhibit C to conduct RCRA Facility Investigation . . . to determine the nature and extent of any release of hazardous waste and/or hazardous constituents at certain . . . solid waste management units . . . on the DUPONT Seaford Plant property (the Site). (emphasis added). The Pre-Document Negotiations Although it is narrated out of temporal sequence, what follows is a summary of the parties' negotiations, insofar as they are disclosed by the current record, [5] that led to the drafting and execution of the Documents described above. On February 23, 1994, duPont sent to the Club a letter offering to sell to the Club certain property in Seaford, Delaware, subject to the terms set forth in the letter. The offer stated that, if DuPont should in the future divest itself entirely of the Seaford Plant, then we will agree to remove the [deed] restriction A right of first refusal was included with the letter, which stated that DuPont will relinquish the right of [first refusal] upon total divestiture of the Seaford Plant. The Club rejected duPont's initial offer, and in an April 28, 1994 memorandum, made a counteroffer that (among other things) proposed a deed restriction. The Club stated: Grantor may include in the Deed a restriction restricting use of the property to golf, country club and related purposes until the first of the following events should occur: (a) The expiration of 25 years from the date of the Deed; or (b) Grantor's total divestiture (to be defined) of the Seaford Plant. duPont accepted this counteroffer, except for the 25 year term of restriction (alternative [a]), which was deleted. On June 2, 1994, duPont's property manager, Harry S. Thomas, sent to David R. Hackett, Esquire, the Club's attorney, an Agreement of Sale and a Ground Lease to review. The Agreement of Sale provided that the Deed would include a restriction restricting the use of all but a portion of the property along Locust Street to golf and country club related activities for as long as DUPONT continues to own any of DUPONT's Seaford, Delaware Plant. Although the counteroffer and acceptance would have required that the restriction remain until duPont's total divestiture of the Seaford plant, the proposed Agreement of Sale did not use the term total divestiture. Nor was the Right of First Refusal mentioned in either the Agreement of Sale or the Ground Lease. The negotiations continued throughout the summer of 1994. In a September 27, 1994 letter from the Club's attorney to Fred Ayers, duPont's then property manager, the Club's counsel summarized the Club's understanding of the transaction terms upon which the parties had agreed as of August 26, 1994. That letter referenced the Deed Restriction and the Right of First Refusal and discussed the inclusion of the total divestiture language in the counteroffer and acceptance. Thereafter, further negotiations took place to amend the current lease of the Club's property to add an option to purchase, and also to provide for an interim lease pending the exercise of the option. In a January 5, 1995 letter, duPont expressed its nonbinding intention to enter into a lease amendment with an option to purchase. In response, the Club, on January 10, 1995, submitted a new offer in which the Club again used the total divestiture language in relation to the Deed Restriction and the Right of First Refusal. In a February 24, 1995 letter, the Club's counsel offered to prepare the option agreement with the long term lease and interim lease, but duPont did not accept counsel's offer to do so. In a March 7, 1995 letter, the Club requested that the option to purchase include the Right of First Refusal contained in the June 24, 1994 revised Agreement of Sale, which included the above-described total divestiture language. This provision also stated that DuPont's total divestiture shall mean when DuPont no longer holds legal interest in the DuPont Plant Property. duPont rejected this proposed language, and instead chose to use the language that appears in the definitive Deed Restriction and the Right of First Refusal, throughout all future drafts of the Documents. That Deed Restriction language provides that the restriction will apply as long as GRANTOR [DuPont] continues to own its Seaford, Delaware Plant. The Right of First Refusal language provides that it will terminate upon refusal by DUPONT to purchase and/or DUPONT transfers all of its title and interest in and to the Seaford, Delaware Plant. Similar language appears in the Right of First Refusal contained in the Ground Lease. Sale of the Seaford, Delaware Plant to Arteva On November 16, 2003, duPont and Arteva entered into a Purchase Agreement wherein duPont sold to Arteva all Improvements, Equipment, and other [DuPont] Business Assets utilized in the business activities of the nylon business comprising the Textiles and Interiors business segment of DuPont . . . located in Seaford, Delaware. [6] The transaction was consummated with the execution and delivery of an April 30, 2004 instrument of assignment and bill of sale, a March 30, 2004 ground lease, and an April 30, 2004 memorandum of ground lease. Under the ground lease, duPont leased the Seaford, Delaware Plant Site (as defined in the Ground Lease) to Arteva. The memorandum of ground lease stated that the leased land is also known as the Seaford Plant Site. In this transaction, duPont retained title to the Seaford Plant Site for purposes of remediating the Existing Contamination as defined in the Arteva transaction documents. Unlike the Ground Lease with the Club, the ground lease with Arteva provided that, upon satisfaction of certain conditions specified in the purchase agreement, the Arteva ground lease will terminate and title to the land upon which the plant is located and the other leased premises shall be transferred by duPont to Arteva. The Club Agrees To Sell A Portion Of The Property And duPont Invokes The Deed Restriction And The Right of First Refusal On July 16, 2004, the Club entered into a contract with East Bay Homes, LLC and Vision Builders, Inc. (the Developers) to sell a portion of the Property consisting of about 3.35 acres of land. After the Club gave duPont notice of the prospective sale, duPont wrote a letter to the Club on October 5, 2005, taking the position that until duPont actually sells the land, the Deed Restriction and Right of First Refusal remain in effect. Additionally, on December 16, 2004, duPont notified the Club that the Club had failed to abide by, and thus was in default of, the terms of the Right of First Refusal contained in the Ground Lease. On December 16, 2004, the Club, through its counsel, responded to duPont. The Club took the position that it was not in default of the Ground Lease, because the Deed Restriction and Right of First Refusal had terminated when duPont sold its Seaford, Delaware nylon plant operation to Arteva in 2003. The Club offered, nonetheless, to sell to duPont a portion of the Property on the same terms proposed by the Developers. duPont did not respond to that offer, and by letter dated January 11, 2005, asserted that the Club's position was unsupportable. Thereafter, the Club filed an action in the Superior Court seeking a declaration that the Deed Restriction and the Right of First Refusal are unenforceable against the Club, because the terms Plant and Seaford, Delaware Plant, as used in the Documents do not include the land underlying the plant facility. duPont interposed a counterclaim, seeking a contrary declaration, and that the Deed Restriction and the Right of First Refusal continue to be applicable and enforceable.