Court Opinion

ID: 9390467
Source: CourtListenerOpinion
Date Created: 2023-04-27 17:03:38.340572+00
Date Added: 2024-06-11T17:18:34.735612
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

NAVIENT SOLUTIONS, LLC,                  )
                                         )
             Plaintiff/                  )
             Counterclaim Defendant,     )
                                         )
                 v.                      ) C.A. No. N20C-04-005 AML
                                         )
BPG OFFICE PARTNERS XIII IRON            )
HILL LLC and OFFICE PARTNERS             )
XIII IRON HILL LLC,                      )
                                         )
             Defendants/                 )
             Counterclaim Plaintiffs.    )

                         Submitted: February 10, 2023
                           Decided: April 27, 2023

                 POST-TRIAL MEMORANDUM OPINION

R. Karl Hill, Esq., and James S. Green, Jr., Esq. of SEITZ, VAN OGTROP &
GREEN, P.A., Wilmington, Delaware, Attorneys for Plaintiff/Counterclaim
Defendant Navient Solutions, LLC.

Jeffrey M. Weiner, Esq. of LAW OFFICES OF JEFFREY M. WEINER,
Wilmington, Delaware, Attorney for Defendants/Counterclaim Plaintiffs BPG
Office Partners XIII Iron Hill LLC and Office Partners XIII Iron Hill LLC.

LeGrow, J.
      The parties to this action entered into a lease agreement for a commercial

property in Delaware. The parties’ relationship throughout most of the lease term

appeared civil and cooperative. Near the end of the lease term, the tenant paid to

replace a cooling tower at the property and demanded repayment of the unamortized

costs from the landlord as required by the lease. The landlord, however, refused to

pay. Shortly thereafter, the tenant initiated this action seeking reimbursement for

the costs it expended to replace the cooling tower, and the landlord asserted a

counterclaim against the tenant. The counterclaim sought costs for items at the

property that the tenant allegedly was required to repair or replace during the term

of the lease.

      The parties and the Court undertook a three-day bench trial. Before trial

began, the landlord conceded it owed the tenant the cost for the replacement cooling

tower. The tenant therefore prevails on its breach claim. Trial focused on the

landlord’s counterclaim against the tenant. After considering all the evidence, the

Court enters judgment for the landlord with respect to replacement costs for two of

the four item groups at issue in the counterclaim. But the landlord did not carry its

burden with respect to the other two item groups. The Court therefore will enter

partial judgment in the tenant’s favor on the counterclaim. The Court additionally

finds the tenant is the prevailing party and is entitled to attorneys’ fees and expenses

under the terms of the commercial lease.

                                           1
                                      I. BACKGROUND

       Trial took place in this action over the course of three days. Twelve witnesses

testified virtually. The parties submitted post-trial briefs addressing factual and legal

issues. These are the facts as the Court finds them after assessing the witnesses’

credibility and weighing the evidence.1

    A. The Parties

       Plaintiff/Counterclaim Defendant Navient Solutions, LLC (“Navient”) filed

this commercial landlord-tenant breach of contract action.2 Navient is a Delaware

limited liability company and was formerly known as Sallie Mae, Inc.3

Defendants/Counterclaim Plaintiffs BPG Office Partners XIII Iron Hill LLC and

Office Partners XIII Iron Hill LLC (collectively, “BPG”) are two Delaware limited

liability companies.4       BPG asserted a breach of contract counterclaim against

Navient.5

    B. The Commercial Property and the Lease Agreement

       The Iron Hill Corporate Center is a three-building office complex in Newark,

Delaware (the “Office Complex”).6 The Office Complex was constructed between

1
  The factual background in this post-trial decision cites: C.A. No. N20C-04-005 AML docket
entries (by “D.I.” number); trial exhibits (by “JX” number); the trial transcript (“Trial Tr.” by day
“I-III”); and stipulated facts set forth in the parties’ Joint Pre-Trial Order (“PTO”).
2
  See Compl. ¶ 1 (D.I. 1).
3
  Id. ¶ 2.
4
  Id. ¶¶ 3-4.
5
  PTO § 2(aa).
6
  Id. § 2(a).
                                                 2
1990 and 1992 and has three wings.7 BPG acquired the Office Complex on March

31, 2008.8 On the same date, BPG leased one wing of the Office Complex—the

“Blue Wing”—to Bank of America.9 In August 2010, Bank of America subleased

the Blue Wing to Sallie Mae, Inc. with anticipated delivery to occur on or before

November 1, 2010.10 On November 20, 2012, Sallie Mae, Inc. (now Navient) and

BPG entered into a commercial lease agreement for the Blue Wing with Navient as

the tenant and BPG as the landlord (the “Lease Agreement”).11 The Blue Wing is

the subject of this action; it is a three-floor building with approximately 85,563

rentable square feet.12

    C. Language of the Lease Agreement

       The claims and counterclaims in this action assert various breaches of the

Lease Agreement. Several provisions in the Lease Agreement are at issue in this

case. Section 4 of the Lease Agreement, titled “Condition of Premises,” explains

Navient inspected the Blue Wing, accepted it (less the “Common Areas”) in an “as-

is” condition, and did not rely on any representations by BPG.13                       Section 4

specifically states:

7
  Id. § 2(b).
8
  Id. § 2(c).
9
  See id. § 2(c)-(d); Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 4 (D.I. 57).
10
   PTO § 2(d); JX 2.
11
   PTO § 2(f); JX 3 (a copy of the Lease Agreement).
12
   PTO § 2(e).
13
   JX 3 § 4.
                                                  3
       Subject to [BPG’s] obligation, if any, to perform Landlord’s Tenant
       Improvement Work, the Premises [defined as the Blue Wing,
       “exclusive of the Common Areas”] are accepted by [Navient] in ‘as-is’
       condition and configuration without any representations or warranties
       by [BPG]. [Navient] agrees that it has inspected the Premises and the
       [Blue Wing] and has agreed to lease the Premises as a result of
       [Navient’s] own investigations and reviews, and not in reliance of any
       representation or warranty made by [BPG] or by anyone on [BPG’s]
       behalf.14

       Section 6 is titled “Surrender; Alterations and Repairs.” Section 6(a) governs

part of Navient’s obligations at the expiration of the Lease Agreement.15 Section

6(a) states in pertinent part: “At the expiration or other termination of this Lease,

[Navient] shall deliver the Premises with all improvements located thereon (except

as otherwise herein provided) in good repair and condition, reasonable wear and tear

resulting from the Permitted Use and damage due to casualty expected . . . .”16

       Section 6(i) establishes Navient’s obligations relating to repairs,

replacements, and restorations. Section 6(i) states:

       [Navient] shall take good care of the Premises and keep them free from
       waste and nuisance of any kind. [Navient] shall keep the Premises,
       including the Alterations installed by [Navient], in good condition and
       shall undertake and be responsible for all repairs, replacements,
       restorations and renewals necessary to keep and maintain such good
       condition, except as provided in Section 15(g) below. If [Navient] fails
       to commence the repairs described above within ten (10) business days
       after the occurrence of the damage or injury, [BPG] may, upon five (5)
       business days’ prior written notice to [Navient], at its option to make
       such repairs, and [Navient] shall, within thirty (30) days of its receipt

14
   Id.; see also id. at Basic Lease Provisions (3) (defining “Premises”).
15
   JX 3 § 6(a).
16
   Id.
                                                 4
           of [BPG’s] written demand therefor (together with reasonable
           supporting documentation), pay [BPG] the cost therefor. The
           performance by [Navient] of its obligations to maintain and make
           repairs to any Building Systems within and exclusively serving the
           Premises (for which [Navient] is responsible pursuant to the terms
           hereof) shall be conducted only by contractors and subcontractors
           reasonably approved by [BPG] in writing.17
           Section 6(j) memorializes Navient’s obligations to repair the Blue Wing and

caps unamortized reimbursements. Section 6(j)(i) states Navient:

           agrees, at [Navient’s] sole cost and expense, to maintain, repair and
           replace all Building Systems exclusively serving the Building in good
           order and repair, and [BPG] hereby grants [Navient] an irrevocable
           license during the Term of the Lease . . . to access and modify all
           portions of the Building . . . necessary to perform [Navient’s]
           obligations hereunder . . . ; provided, however, that [Navient] shall
           repair any damage to the Building or Land caused by the existence of
           such rights (normal wear and tear and damage due to casualty
           expected). In the event all or any portion of the Building Systems
           exclusively serving the Building requires replacement during the Term,
           [Navient] shall undertake the same at its sole cost and expense, and such
           replacement shall be accomplished, in a Class-A manner, using
           materials and equipment consistent with that found in comparable
           office buildings in the Wilmington, Delaware metropolitan area.
           However, notwithstanding the foregoing . . . , if (1) the portion of the
           Building Systems being replaced (the “Replacement Item”) has a useful
           life extending beyond the Lease Term . . . , and (2) the cost of such
           Replacement Item would otherwise constitute a capital repair or
           replacement cost [if] such items were purchased by or on behalf of
           [BPG], then the cost of such Replacement Item shall be amortized over
           the useful life thereof at a rate of eight percent (8%) per annum, and
           [Navient] shall receive an amount from [BPG] at the expiration or
           sooner termination of the Lease equal to the then-remaining
           unamortized cost of such Replacement Item (the “Unamortized
           Reimbursement”).18

17
     Id. § 6(i).
18
     Id. § 6(j)(i).
                                              5
           Section 6(j)(ii) further explains Unamortized Reimbursements and states:

           Notwithstanding the foregoing . . . , in no event shall the Unamortized
           Reimbursement exceed $300,000 in the aggregate; provided, however,
           that so long as such replacement otherwise satisfies clauses (1) and (2)
           of subsection [(j)](i) above, the foregoing limitation shall not apply with
           respect to any replacement of the cooling tower (and its component
           parts) serving the Premises HVAC systems, the cost of which shall be
           amortized over the useful life thereof at a rate of eight percent (8%) per
           annum and [Navient] shall receive an amount from [BPG] at the
           expiration or sooner termination of the Lease equal to the then-
           remaining unamortized cost thereof.19
           Exhibit E to the Lease Agreement creates a “Tenant Fund” that Navient was

permitted to use for improvements to the premises. Exhibit E states:

           (a) [BPG] hereby grants to [Navient] an allowance for completion of
           the Tenant Improvements in an amount up to, but not in excess of One
           Million Two Hundred Eighty-three Thousand Five Hundred Twenty
           Dollars ($1,283,520.00) (the “Tenant Fund”). In addition to the Tenant
           Fund, [BPG] shall provide [Navient] (upon the presentation of
           reasonably acceptable documentation) with an allowance of up to, but
           not in excess of, Six Thousand Eight Hundred Forty-five and 44/100
           Dollars ($6,845.44) for an architectural “test-fit”. The Tenant Fund
           shall be used for: (i) Payment of the cost of preparing the Space Plans
           and Working Drawings, including architectural/design, mechanical,
           electrical, plumbing and structural drawings and of all other aspects
           necessary to complete the Space Plans and Working Drawings; (ii) The
           payment of plan checking by government authorities and for permits
           and license fees relating to construction of the Tenant Improvements;
           and (iii) Construction and Installation of the Tenant Improvements,
           including, without limitation, the following: (aa) Installation within the
           Premises of all partitioning, doors, floor coverings, ceilings, wall
           coverings and painting, millwork and similar items; (bb) All electrical
           wiring, lighting, fixtures, outlets and switches, and other electrical work
           to be installed within the Premises; (cc) The furnishing and installation
           of all duct work, terminal boxes, diffusers and accessories required for

19
     Id. § 6(j)(ii).
                                               6
          the completion of the heating, ventilation and air conditioning systems
          within the Premises, including the cost of meter and key control for
          after-hour air conditioning; (dd) Any additional [Navient] requirements
          including, but not limited to, odor control, special heating, ventilation
          and air conditioning, noise or vibration control or other special systems;
          (ee) All fire and life safety control systems such as fire, walls,
          sprinklers, halon, fire alarms, including piping, wiring and accessories,
          installed within the Premises; (ff) All plumbing, fixtures, pipes and
          accessories to be installed within the Premises; (gg) Testing and
          inspection costs; and (hh) General conditions and contractor’s fees.20

          Section 13 of the Lease Agreement, titled “Remedies and Termination Upon

Tenant Default,” defines BPG’s options if Navient defaulted under the Lease.

Section 13(b)(vi) states:

          (b) During the existence of an Event of Default, [BPG] shall have the
          right (but not any duty) to exercise one or more of the following
          remedies, as well as any other remedies available at law or in equity:
          (vi) [BPG] may enter upon the Premises, without being liable for
          prosecution or any claim of damages therefor, and cure the default, and
          [Navient] agrees to reimburse [BPG] on demand for any expenses
          including, without limitation, reasonable attorneys’ fees which [BPG]
          may incur in effecting such cure and [Navient] further agrees [BPG]
          shall not be liable for any damages resulting to [Navient] from such
          action.21

          In a similar vein regarding legal fees, Section 28(q) states: “In the event of

any litigation between [BPG] and [Navient], the unsuccessful party as determined

by a court of competent jurisdiction shall reimburse the successful party for all legal

20
     Id., Ex. E § II(3)(a).
21
     Id. § 13(b)(vi).
                                              7
fees and expenses incurred by the successful party in prosecuting or defending any

such action.”22

     D. Maintenance at the Blue Wing of the Office Complex

       Navient services student loans; in connection with that operation, Navient

operated a call center at the Blue Wing.23 At its peak, the Blue Wing housed between

600 and 700 Navient employees.24 Navient occupied all three floors of the Blue

Wing until it started to reduce operations there in 2017.25 Navient first vacated the

third floor; it then vacated the second floor.26 Navient fully vacated the Blue Wing

by the end of 2019, which gave Navient enough time to remove furniture and

equipment before the Lease Agreement terminated on February 29, 2020.27 BPG’s

counterclaim in this action relates to four areas of Blue Wing equipment and

maintenance: (1) a transformer, (2) heat pumps, (3) rooftop fresh air units, and (4)

elevators.

       1. The Cooling Tower

       Navient initiated this action and brought a claim for breach of the Lease

Agreement.28 Specifically, Navient replaced the cooling tower and its component

22
   Id. § 28(q).
23
   Trial Tr. II at 54-55 (Muffler).
24
   Id. at 55 (Muffler).
25
   PTO § 2(o).
26
   Id.
27
   See Trial Tr. II at 57 (Muffler); see also PTO § 2(x) (stipulating that the Lease term expired
February 29, 2020).
28
   Compl. ¶¶ 10-19.
                                               8
parts between April and May 2019.29 The total unamortized cost of replacing the

cooling tower and its component parts was $503,822.72.30 The Lease Agreement

specified the cost of the replacement “shall be amortized over the useful life thereof

at a rate of eight (8%) per annum and [Navient] shall receive an amount from [BPG]

at the expiration or sooner termination of the Lease equal to the then-remaining

unamortized cost of such Replacement Item [i.e., the cooling tower].”31

        On January 28, 2020, Navient demanded $503,822.72 from BPG for the then-

unamortized cost of the cooling tower replacement.32 The Lease Agreement states

BPG “shall be deemed to be in default of this Lease if [BPG] fails to make any

payments to [Navient] required under this Lease and such failure continues for ten

(10) days after written notice from [Navient] to [BPG].”33 The Lease Agreement

expired on February 29, 2020.34 On March 3, 2020, Navient provided written notice

that BPG was in default of its obligations under the Lease Agreement for failing to

reimburse Navient for the unamortized costs of the cooling tower replacement.35

BPG denied its obligation to reimburse the cooling tower costs until shortly before

trial, when BPG acknowledged it owed Navient that amount.36

29
   PTO § 2(t).
30
   Id.
31
   JX 3 § 6(j)(i)-(ii).
32
   PTO § 2(v); JX 32 at NAV0001526.
33
   JX 3 § 14-A(a).
34
   PTO § 2(x).
35
   Id. § 2(y).
36
   Id. § 2(u); see also JX 3 § 6(j)(i)-(ii).
                                               9
       2. Transformer

       BPG’s first claim for costs relates to a transformer Navient replaced during

the Lease term. On October 13, 2014, a transformer blew; that transformer was

installed at the time the Blue Wing was constructed.37 Shortly thereafter, Navient

personnel contacted Ralph Rossi of BPG via email to notify him of the transformer

issue.38 Mr. Rossi responded and cited Lease Agreement Sections 6(j)(i)-(iii).39

Based on that contractual language, Mr. Rossi took the position that Navient was

responsible for the “repair/replacement [of the transformer] and the capital

replacement would be amortized over its useful life,” whereupon BPG would

reimburse Navient for the unamortized cost at the end of the Lease Agreement

term.40

       The next day, Stephanie Yates from Navient emailed Mr. Rossi with a

“strategy proposed by Premium Power Services for setting the transformer in a

permanent solution.”41 The Premium Power strategy included replacement of the

transformer and adjustments to the concrete pad on which the transformer rested.42

Mr. Rossi responded that BPG was “OK with this plan” but needed further

37
   JX 5; Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 8 (D.I. 58); Defs.’/Countercl. Pls.’
Post-Trial Opening Br. at 10-11.
38
   JX 5.
39
   Id.
40
   Id. at NAV0002296.
41
   JX 6; see also JX 7 (displaying a copy of the Premium Power plan).
42
   JX 6.
                                               10
assurances before signing off on it.43 These assurances included: (1) “[c]uts on the

transformer being installed”; (2) a letter from a Premium Power engineer that the

course of action “is to code and industry standard”; (3) a design by Premium Power

relating to the length of the feeders; and (4) a written plan that included when the

feeders would be replaced.44 Navient’s Paul Smith emailed Mr. Rossi and stated

Navient addressed all requirements; Mr. Smith asked for permission to proceed.45

There was further clarification that the concrete pad would need to be leveled at

some point.46 BPG’s general counsel advised Mr. Rossi that BPG would be required

to provide a report to BPG’s lender that detailed the work performed and ensured

the work complied with the Lease Agreement, namely that the work was undertaken

in a “Class A manner.”47 Mr. Rossi notified Navient of BPG’s general counsel’s

concerns and also told Navient that if the report showed additional recommendations

to bring the work to such a standard, Navient would be obligated to implement those

recommendations under the Lease Agreement’s terms.48 Mr. Rossi then told Navient

it was approved to move forward with the work.49

43
   Id.
44
   Id.
45
   JX 8.
46
   JX 12.
47
   JX 8.
48
   Id.
49
   Id.
                                        11
       Later in the day on October 14, 2014, the blown transformer was replaced.50

The concrete pad on which the replacement transformer rested was fitted with metal

shims in an attempt to level the transformer in compliance with applicable code and

the transformer manufacturer’s installation instructions.51 The replacement

transformer had a larger capacity than the original but had a two-position switching

arrangement as opposed to the original four-position switch.52 On October 14, 2014,

Premium Power’s Jeff Donnelly emailed Mr. Rossi and stated the “transformer

needs to be level and sealed in order to operate properly.        [Premium Power

recommends] leveling the transformer at a later date under normal circumstances.”53

On October 24, 2014, Premium Power issued an updated report. The original report

stated the transformer replacement was intended to be a “temporary” transformer,

but the updated report stated the replacement was intended to be a “replacement”

transformer.54

       Navient paid $70,000 for the replacement transformer.55 The parties disputed

whether Navient or BPG was ultimately responsible for the cost of the replacement

transformer.56 Those discussions continued for three years, until October 13, 2017,

50
   JX 12.
51
   Trial Tr. II at 237-39 (Alderson).
52
   Id. at 244 (Alderson).
53
   JX 12.
54
   JX 7; JX 9.
55
   PTO § 2(j).
56
   Id. § 2(k).
                                        12
when Chris Buccini from BPG sent an email to Joseph Muffler from Navient and

stated “[a]s per our discussion on the phone, [BPG] will credit [Navient] $35k of

rent . . . towards reimbursement of the approx[imately] $70k transformer that

[Navient] replaced at [the Blue Wing] a few years ago.”57 Mr. Muffler accepted that

offer via email.58 Nevertheless, BPG claims it is entitled to $140,000 because

Navient did not meet its contractual obligation to install a four-position switch and

a permanent level concrete pad under the transformer.

       3. Heat Pumps

       The second group of items at issue in BPG’s counterclaim was the heat pumps

for the Blue Wing. After the Lease Agreement ended, BPG employed Edward

Levering and Keith Nelson, both from Air Management and Design LLC, to survey

approximately 123 heat pumps at the Blue Wing.59 Messrs. Levering and Nelson

were expert witnesses for BPG at trial.60 On June 18, 2020, after this case was filed,

Mr. Levering submitted his first heat pump evaluation; the evaluation recommended

that “all the systems that have passed their useful life . . . should be replaced.”61 Mr.

Levering based this “useful life” analysis on a handbook published by the American

Society of Heating, Refrigerating and Air-Conditioning Engineers (“ASHRAE”),

57
   JX 24.
58
   Id.
59
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 12; Defs.’/Countercl. Pls.’ Post-Trial
Opening Br. at 23.
60
   PTO § 6.
61
   JX 39.
                                             13
which contains a median life expectancy chart for building components at issue in

BPG’s counterclaim. The median life expectancy for “commercial water-to-air”

heat pumps is 19 years.62 On March 18, 2021, Mr. Levering submitted a more

detailed evaluation of the heat pumps.63 This evaluation provided an itemized list

of, inter alia, each heat pump, the repair cost, the replacement cost, and each pump’s

date of manufacture.64 Again, Mr. Levering recommended that any heat pump that

exceeded the 19-year median useful life should be replaced.65 Mr. Levering’s

calculation for the total cost of replacement was $405,800.66

       Mr. Levering identified 25 of 123 heat pump units as non-operational at the

time of his evaluation.67 Mr. Levering stated 11 of the 25 non-operational heat pump

units were below their median life expectancy, and these 11 heat pumps should be

repaired (rather than replaced) at an estimated cost of $28,750.68 Mr. Levering stated

14 of the 25 non-operational heat pumps exceeded their median life expectancy and

should be replaced at a cost of $107,100.69 Additionally, Mr. Levering identified 38

heat pumps that—although operational—exceeded their median life expectancy, and

62
   JX 49 at 12.
63
   JX 48.
64
   Id.
65
   Id.
66
   Id.
67
   Trial Tr. I at 48-49 (Levering).
68
   JX 48.
69
   See id. It appears the repair cost for these 14 units would be $42,500. See id.
                                                14
he proposed replacing these units based solely on the fact they all were more than

19 years old.70 The cost to replace these 38 units would be $298,600.71

       Scott Frenck, an engineer and expert witness for BPG, testified he

recommended replacing, rather than repairing, any heat pump units that exceed the

ASHRAE median life expectancy.72 Mr. Frenck’s expert report and testimony were

grounded in Mr. Levering’s findings.73

       Navient called its own expert, Howard Alderson, an engineer who testified

there was no reason to replace a heat pump based solely on its age.74 Mr. Alderson

testified the heat pumps at the Blue Wing as of 2021 were well maintained.75

Navient also called Joe Testerman; Mr. Testerman worked at the Blue Wing as a

Raven Services76 employee from January 2012 until the end of 2017, and Mr.

Testerman then performed the same work as an independent contractor for Navient

from January 2018 through the end of 2019.77 Mr. Testerman performed “repairable

70
   See id.
71
   See id.
72
   Trial Tr. I at 103-04 (Frenck).
73
   Id.
74
   Trial Tr. II at 252 (Alderson).
75
   Id. at 246-47 (Alderson). Mr. Alderson’s expert report opined the standard of care for the heat
pump units was met by Navient. JX 65 at 13.
76
   Raven Services (“Raven”) was a third-party maintenance and engineering company hired by
Navient to maintain the Blue Wing. Trial Tr. II at 57-58 (Muffler); Id. at 136-38 (Outen). Raven
performed systematic and regular maintenance on the HVAC systems, the cooling tower, and
related components. Trial Tr. II at 57-58 (Muffler); Id. at 136-38 (Outen). Navient entered into
service contracts with Raven and paid Raven approximately $250,000 for services through the end
of 2017. JX 32 at NAV0001610-36.
77
   Trial Tr. II at 145-47 (Outen); Id. at 187-88, 202-05 (Testerman).
                                               15
maintenance” at the Blue Wing.78 Mr. Testerman testified that when he left the Blue

Wing in 2019, all HVAC systems were operating.79

       Additionally, Navient called Clay Outen as a witness. Mr. Outen has been a

director of facility operations for Navient in Delaware since 2015. 80 Mr. Outen

testified Raven was responsible for facility maintenance at the Blue Wing.81 Mr.

Outen confirmed Raven inspected and replaced heat pump units.82 Mr. Outen

testified 18 to 20 heat pump units were replaced during the time he was responsible

for the Blue Wing.83 Mr. Outen also testified four or five new heat pump units were

left at the Blue Wing as extra stock when the Lease Agreement expired.84

       4. Rooftop Air Units

       BPG’s counterclaim also included costs related to rooftop air units. The Blue

Wing has two “Dectron rooftop makeup air units.”85 These rooftop air units provide

makeup air for the Blue Wing, but BPG’s inspection showed the units were not

operational when Navient left the Blue Wing because the controls never were

programmed for the new controllers installed on the rooftop air units.86 The rooftop

78
   Id. at 189 (Testerman).
79
   Id. at 221-22 (Testerman).
80
   Id. at 131-33 (Outen).
81
   Id. at 136 (Outen).
82
   Id. at 137 (Outen).
83
   Id. at 142 (Outen).
84
   Id. at 143 (Outen).
85
   Trial Tr. I at 63 (Nelson).
86
   Id. at 75 (Nelson).
                                         16
air units were installed around 2000.87 The ASHRAE median life expectancy of

rooftop air units is 15 years.88

        Mr. Frenck, BPG’s witness, testified the rooftop air units should have been

replaced based solely on the fact the units exceeded their median life expectancy.89

Mr. Frenck, however, conceded these rooftop air units could be repaired rather than

replaced.90 Mr. Frenck’s expert report indicated these rooftop air units were “in

average condition with some repairs needed.”91 Mr. Levering and Mr. Nelson also

testified these rooftop air units could be repaired rather than replaced.92 Mr. Frenck’s

estimated cost to repair both rooftop air units totaled $8,400,93 while BPG’s

estimated cost to replace the rooftop air units is between $217,200 and $240,000.94

        5. Elevators

        Finally, BPG counterclaimed for costs associated with the Blue Wing

elevators. Exhibit H to the Lease Agreement confirms the Blue Wing’s second floor

corridor, “together with the stairwell and elevator at the end of such corridor

providing service to the garage facility . . . is considered part of the Premises for the

87
   Id. at 117 (Frenck); JX 49 at 6.
88
   JX 49 at App. A.
89
   Trial Tr. I at 115-16 (Frenck).
90
   Id.
91
   JX 49 at 6.
92
   Trial Tr. I at 41 (Levering); Id. at 95 (Nelson).
93
   JX 49 at App. B.
94
   JX 43; JX 48.
                                                  17
purposes of this Lease [Agreement].”95 The elevator systems at the Blue Wing were

manufactured and installed in 1990.96

       Mark DeCocinis, a senior associate at VDA Elevator and Escalator Consulting

and expert witness for BPG, prepared an expert report after the elevators at the Blue

Wing were surveyed in March 2021.97 Mr. DeCocinis testified, consistent with his

report, that the elevators should be modernized within three years of the date of his

report.98   In other words, Mr. DeCocinis recommended the elevators undergo

modernization by March 2024.99 Mr. DeCocinis did not recommend upgrades in

2021 because, in his view, piecemeal upgrades were not an optimal plan for

elevators.100 Mr. DeCocinis found the “operating performance” of the existing

elevators to be “fair,” and he further stated “some adjustments and improvements

[were] required.”101

       Navient contracted with ThyssenKrupp Elevator Corporation to maintain the

elevators at the Blue Wing during the lease.102 Under the contract between Navient

and ThyssenKrupp in existence when the Lease Agreement expired, ThyssenKrupp

performed “regular preventative maintenance, full coverage of parts and repair and

95
   JX 3, Ex. H § 15(a).
96
   JX 50.
97
   See id.
98
   Trial Tr. II at 43 (DeCocinis).
99
   Id.
100
    Id. at 43-44 (DeCocinis).
101
    JX 50; Trial Tr. II at 41-43 (DeCocinis).
102
    JX 32 at NAV0001665; Trial Tr. II at 59 (Muffler).
                                              18
replacement . . . , [and] quality assurance.”103 Jeff Wilmington of Navient testified

Navient paid ThyssenKrupp for its services through the end of the Lease.104 Mr.

Wilmington testified Navient received the last certificate of compliance for the

elevators in June 2019; that certificate was valid for one year.105

         Between June 9 and 10, 2015, ThyssenKrupp submitted three work orders to

Navient related to controller boards, door edges, and a solid state starter. 106 BPG

complains there is no proof Navient paid for any of these three work orders.107 None

of those items, however, forms the basis of BPG’s counterclaim relating to the

elevators. Instead, BPG alleges that in September 2020 it had to repair a bracket in

one elevator for $3,345.108

      E. Litigation

         Navient sued BPG in April 2020.109 Navient’s sole cause of action alleged

BPG breached the Lease Agreement by failing to reimburse Navient for the

unamortized cost of replacing the cooling tower.110 Navient sought $503,822.72,

103
    Trial Tr. II at 101 (Wilmington).
104
    Id. at 102 (Wilmington).
105
    Id. at 102-03 (Wilmington).
106
    JX 32 at NAV0001671-76.
107
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 58. Navient disputes this allegation and directs
the Court to JX 62. Navient argues JX 62 establishes the “proposal for the control boards was
accepted and paid by Navient.” Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 21; see also
JX 62.
108
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 58; JX 46 (displaying copy for elevator repair
service proposal with a payment of $3,345).
109
    D.I. 1.
110
    See Compl. ¶ 21.
                                                 19
which the parties agree was the unamortized cost of the tower when the Lease

expired.111 BPG answered and asserted a counterclaim and affirmative defenses.112

BPG’s counterclaim alleged Navient breached the Lease Agreement by failing to:

(1) maintain, repair, and/or replace heat pump units; (2) maintain, repair, and/or

replace the rooftop air units; (3) properly replace the blown transformer and install

a permanent pad to level the transformer; and (4) maintain and repair the elevators.113

BPG requested $817,845 from Navient.114 Navient asserted affirmative defenses to

the counterclaim.115

        Before trial, BPG agreed Navient is owed $503,822.72 for the replacement of

the cooling tower.116 BPG continued, however, to maintain its counterclaim.117

      F. Procedural History and Parties’ Contentions

        The Court held a three-day bench trial that began on May 9, 2022.118 The trial

was limited in scope to BPG’s counterclaim. After trial, the parties filed post-trial

briefs addressing the merits of BPG’s counterclaim.119 The Court held post-trial oral

111
     See id. Navient also requested attorneys’ fees, expenses, collection costs, pre- and post-
judgment interest, and Court costs. Id.
112
    Answer & Countercl. (D.I. 6).
113
    Id.
114
    Id.; Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 61. BPG also requests pre- and post-
judgment interest, attorneys’ fees, and other costs. See Defs.’/Countercl. Pls.’ Post-Trial Opening
Br. at 61.
115
    Answer to Countercl. (D.I. 8).
116
    PTO § 2(z).
117
    Id.
118
    See Trial Trs. (D.I. 53-55).
119
    See D.I. 57-60.
                                               20
argument on February 10, 2023.120 This Post-Trial Memorandum Opinion addresses

BPG’s counterclaim, which is the only remaining substantive issue in the case.

       1. BPG’s Contentions

       The parties’ post-trial briefs set forth their arguments regarding BPG’s breach

of contract counterclaim. BPG contends the Court should enter judgment in its favor

in the amount of $817,845, itemized as: (1) $434,500 for heat pumps, (2) $240,000

for rooftop air units, (3) $140,000 for the transformer and pad, and (4) $3,345 for

the elevators.121 BPG also contends it is entitled to pre- and post-judgment interest,

attorneys’ fees, and other costs.122

       BPG contends the evidence at trial demonstrated Navient breached the Lease

Agreement in four ways.            First, BPG maintains Navient breached the Lease

Agreement by failing to maintain, repair, and/or replace heat pumps at the Blue

Wing.123 Specifically, BPG asserts the evidence demonstrated BPG is entitled to:

(1) $28,750 to repair 11 non-operational heat pumps that had not exceeded their

median life expectancy; (2) $107,100 to replace 14 non-operational heat pumps that

exceeded their median life expectancy; and (3) $298,600 to replace 38 heat pumps

that were operational but exceeded their median life expectancy.124 Second, BPG

120
    D.I. 62.
121
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 61.
122
    Id.
123
    See id. at 32.
124
    Id.
                                                21
maintains Navient breached the Lease Agreement by failing to maintain, repair,

and/or replace two rooftop air units.125 Specifically, BPG asserts it is entitled to

$240,000 to repair or replace the rooftop air units because Navient did not properly

maintain and modernize them during the Lease period.126 Third, BPG contends

Navient breached the Lease Agreement by replacing the Blue Wing’s transformer

with a “2-position switch rather than a 4-position switch” and by installing

“makeshift metal to keep the [transformer] unit level on the [supporting] pad.”127

BPG asserts it is entitled to $140,000 because Navient installed an improper

transformer.128 Fourth, BPG contends Navient breached the Lease Agreement by

failing to maintain and repair the elevators at the Blue Wing.129 BPG asserts it is

entitled to $3,345 because BPG had to repair a bracket associated with an elevator

that was Navient’s responsibility under the Lease Agreement.130

       BPG additionally contends it is entitled to fee shifting because it is the

“successful party” in this action and therefore is entitled to reimbursement of its legal

fees and expenses under Lease Agreement Section 28(q).131

125
    Id. at 44.
126
    Id. at 45-47.
127
    Id. at 49.
128
    Id. at 56, 61.
129
    Id. at 57.
130
    Id. at 58.
131
    Id. at 59-60. BPG also argues Navient is not entitled to recoupment under the Lease Agreement
if BPG is successful on its counterclaim, which Navient sets forward as an affirmative defense.
See Defs.’/Countercl. Pls.’ Post-Trial Reply Br. at 24 (D.I. 59).
                                               22
       2. Navient’s Contentions

       It is now undisputed that Navient is entitled to $503,822.72 for the

unamortized cost incurred when it replaced the cooling tower at the Blue Wing.132

What remains in dispute is whether that amount should be set-off, in whole or in

part, by BPG’s counterclaim. Navient contends BPG did not prove either liability

or damages with respect to its counterclaim. First, Navient maintains BPG failed to

establish Navient breached the Lease Agreement with respect to the heat pumps.133

Specifically, Navient contends the evidence at trial demonstrated Navient fulfilled

all maintenance and repair obligations with respect to the heat pumps.134 Navient

further argues Mr. Alderson’s testimony established there was no way to show

Navient caused the deficiencies in the non-operational heat pumps.135 And Navient

maintains Mr. Levering’s testimony regarding replacing heat pumps when they

exceeded their median life expectancy was disputed by Mr. Frenck’s testimony to

the contrary.136 Second, Navient asserts BPG failed to establish Navient breached

the Lease Agreement with respect to the rooftop air units because BPG’s claim was

premised entirely on its contention that the units required replacement once they

132
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 34. Navient inadvertently refers to the sum
as $503,922.72, but it is clear from Navient’s briefing that it seeks $503,822.72. See, e.g., id. at 1,
3, 33 (noting Navient seeks the sum demanded in the Complaint, which is $503,822.72).
133
    Id. at 26.
134
    Id. at 27, 29.
135
    Id. at 28.
136
    Id. at 29.
                                                 23
passed their median life expectancy, even though BPG’s experts admitted the units

could be repaired, rather than replaced.137

       Third, Navient contends BPG did not prove Navient breached the Lease

Agreement with respect to the transformer. Navient claims the evidence shows:

BPG was notified immediately when the transformer blew; BPG was involved in the

process and strategy to find a replacement transformer; BPG approved Premium

Power’s plan to install a replacement, which included construction of fabricated

metal shims to level the transformer; and BPG offered no evidence that the

transformer is not operating properly.138              Navient alternatively argues BPG’s

counterclaim relating to the transformer is barred by Delaware’s three-year statute

of limitations because BPG knew about the replacement transformer in October

2014.139 Fourth, Navient contends BPG offered no evidence that any defect relating

to the bracket in the elevator occurred during Navient’s occupancy or that Navient’s

alleged lack of maintenance caused the need to repair that bracket.140

       Navient additionally argues that if BPG is successful on its counterclaim,

“Navient shall receive a reimbursement of those costs from BPG as the landlord

calculated as ‘then remaining unamortized cost’ of the replacement item.”141 Like

137
    Id. at 29-30.
138
    Id. at 24-25.
139
    Id. at 26.
140
    Id. at 30.
141
    Pl.’s/Countercl. Def.’s Post-Trial Sur-Reply Br. at 3 (D.I. 60); see also Pl.’s/Countercl. Def.’s
Post-Trial Answering Br. at 31-32.
                                                24
BPG, Navient also contends it is entitled to fee shifting under the Lease Agreement.

Navient argues it is the successful party in this action because: (1) it was successful

on its claim relating to the unamortized cost for the cooling tower replacement, and

(2) BPG is unsuccessful on its counterclaim.142 Navient further contends that even

if BPG partially succeeds on its counterclaim, Navient remains the successful party

because it “prevailed on the predominance of all of the issues.”143

                                       II. ANALYSIS

        With those factual findings and the parties’ contentions in mind, the Court

turns to resolving the ultimate claims in this case. Each party bears the burden of

proving their respective claims and defenses by a preponderance of the evidence.144

      A. Navient prevails on its claim to recover the unamortized costs of the
         cooling tower.

        Navient initiated this action and brought a claim for breach of the Lease

Agreement.145 Specifically, Navient replaced the cooling tower and its component

parts between April and May 2019.146 When the Lease expired, the remaining

unamortized cost of replacing the cooling tower and its component parts was

142
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 32-33.
143
    Id. at 33.
144
    See, e.g., Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967) (defining the preponderance of
the evidence standard); see also Oberly v. Howard Hughes Med. Inst., 472 A.2d 366, 390 (Del.
Ch. 1984), abrogated on other grounds, Staats by Staats v. Lawrence, 576 A.2d 663, 666-67 (Del.
Super. 1990).
145
    Compl. ¶¶ 10-19.
146
    PTO § 2(t).
                                               25
$503,822.72.147 Pursuant to Sections 6(j)(i)-(ii) of the Lease Agreement, BPG

agreed to reimburse Navient for replacing “Building Systems,” which included the

cooling tower.148 The Lease Agreement specified the cost of the replacement “shall

be amortized over the useful life thereof at a rate of eight (8%) per annum and

[Navient] shall receive an amount from [BPG] at the expiration or sooner

termination of the Lease equal to the then-remaining unamortized cost of such

Replacement Item [i.e., the cooling tower].”149

        On January 28, 2020, Navient notified BPG of Navient’s request for the

amount of $503,822.72 for the then-unamortized cost of the cooling tower

replacement.150 The Lease Agreement states BPG “shall be deemed to be in default

of this Lease if [BPG] fails to make any payments to [Navient] required under this

Lease and such failure continues for ten (10) days after written notice from [Navient]

to [BPG].”151 The Lease Agreement expired on February 29, 2020.152 On March 3,

2020, Navient provided written notice to BPG that it was in default of its obligations

under the Lease Agreement for failing to reimburse Navient for the unamortized cost

147
    Id.
148
    Id. § 2(u); see also JX 3 § 6(j)(i)-(ii).
149
    JX 3 § 6(j)(i)-(ii).
150
    PTO § 2(v); JX 32 at NAV0001526.
151
    JX 3 § 14-A(a).
152
    PTO § 2(x).
                                                26
of the cooling tower replacement.153 BPG concedes Navient is owed $503,822.72

for the replacement of the cooling tower and its component parts.154

        Navient therefore is entitled to judgment in its favor on its claim for the

unamortized cost for the cooling tower replacement plus prejudgment interest,

accruing as of March 17, 2020, which is ten business days after Navient sent BPG

notice of default.155

      B. BPG’s claim relating to the transformer is barred by the statute of
         limitations.
        The original transformer at the Blue Wing blew in October 2014. 156 On

October 14, 2014, after discussions and approval by BPG, Navient replaced the

transformer and fitted the concrete pad on which the transformer rests with metal

shims in an attempt to level the transformer.157 The replacement transformer was

originally marked as a “temporary” transformer, but the contractor, Premium Power,

later issued an updated report stating the transformer was a “replacement”

153
    Id. § 2(y).
154
    Id. § 2(z).
155
    See Delta Eta Corp. v. Univ. of Delaware, 2010 WL 2949632, at *2 (Del. July 29, 2010) (“‘The
general rule [in a breach of contract action] is that interest starts on the date when payment should
have been made.’” (quoting Metro. Mut. Fire Ins. Co. v. Carmen Hldg. Co., 220 A.2d 778, 782
(Del. 1966)); Balooshi v. GVP Global Corp., 2022 WL 576819, at *14 (Del. Super. Feb. 25, 2022)
(“In contract actions, pre-judgment interest is computed from the date of the breach.” (citing
Citadel Hldg. Corp. v. Roven, 603 A.2d 818, 826 (Del. 1992)).
156
    JX 5; Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 8; Defs.’/Countercl. Pls.’ Post-Trial
Opening Br. at 10-11.
157
    JX 12; Trial Tr. II at 237-40 (Alderson).
                                                27
transformer.158 Navient paid $70,000 for the replacement transformer, but later

received rent credit for half that amount.159

       BPG contends Navient breached the Lease Agreement by installing a 2-

position switch transformer (as opposed to the existing 4-position or multiple 2-

position) and by installing a makeshift metal support (as opposed to a permanent

level concrete pad).160 BPG claims it suffered $140,000 in damages as a result of

Navient’s transformer replacement.161 Navient responds that BPG failed to establish

by a preponderance of the evidence that Navient breached the Lease Agreement with

respect to the transformer.162 Navient alternatively argues that BPG’s counterclaim

relating to the transformer is barred by Delaware’s three-year statute of limitations

because BPG knew about the replacement transformer in October 2014.163

       There is a three-year statute of limitations for breach of contract claims in

Delaware.164 Generally, a breach of contract claim must be brought within three

years “from the date that the cause of action accrued.”165 Breach of contract claims

158
    JX 7; JX 9.
159
    PTO § 2(j).
160
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 56.
161
    Id. at 61.
162
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 24-25.
163
    Id. at 26.
164
    10 Del. C. § 8106 (2023).
165
    Levy v. Brownstone Asset Mgmt., LP, 76 A.3d 764, 768 (Del. 2013) (citation omitted).
                                              28
accrue “as soon as the breach occurs, even if the aggrieved plaintiff is ignorant of

the breach.”166

       Even assuming a breach occurred, BPG’s claim for the transformer is barred

by Delaware’s three-year statute of limitations. The record reflects BPG was aware

of Navient’s detailed plans to replace the transformer and level its concrete pad no

later than October 14, 2014.167              BPG received Premium Power’s plan for

replacement, and BPG stated Navient was “approved to move forward with [its]

work.”168 Accordingly, BPG was required to bring this claim no later than October

14, 2017.169 BPG did not assert this claim until June 26, 2020, when it filed its

Answer and Counterclaim.170 BPG’s claim relating to the transformer therefore is

time-barred.

166
    Intermec IP Corp. v. TransCore, LP, 2021 WL 3620435, at *21 (Del. Super. Aug. 16, 2021)
(citing Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 319 (Del. 2004)).
167
    See JX 5 (s email chain between Navient and BPG on October 13, 2014, explaining that the
transformer at the Blue Wing needed to be replaced); JX 6 (email chain between Navient and BPG
discussing Premium Power’s plan to replace the transformer); JX 8 (October 14, 2014 email from
Mr. Rossi of BPG to Navient stating Navient was “approved to move forward with their work”).
168
    JX 6; JX 8.
169
    See 10 Del. C. § 8106 (“[N]o action based on a promise . . . shall be brought after the expiration
of 3 years from the accruing of the cause of such action.”); Cont’l Fin. Co., LLC v. ICS Corp.,
2020 WL 836608, at *4 (Del. Super. Feb. 20, 2020) (“Generally, the statute of limitations ‘begins
to run when a plaintiff’s claim accrues[,] which occurs at the moment of the wrongful act and not
when the effects of the act are felt even if the plaintiff is ignorant of the cause of action.’”
(alteration in original) (quoting Silverstein v. Fischer, 2016 WL 3020858, at *4 (Del. Super. May
18, 2016)).
170
    See Answer & Countercl.
                                                 29
         BPG argues its claim for the transformer did not accrue until the Lease term

ended.171     BPG, however, offers neither textual nor caselaw support for this

argument. BPG’s cause of action accrued at the time the transformer blew, or at

least when the Premium Power plan was implemented,172 both of which occurred

more than five years before BPG filed its counterclaim.

      C. BPG is entitled to the repair costs for the 25 non-operational heat pumps.
         After the Lease ended, BPG employed Messrs. Levering and Nelson to survey

the approximately 123 heat pumps in the Blue Wing.173 Mr. Levering identified 25

heat pumps that were non-operational.174 Of those 25, 11 pumps were below median

life expectancy, and Mr. Levering testified they could be repaired at an estimated

total cost of $28,750.175 Fourteen of the 25 non-operational heat pumps exceeded

their median life expectancy, and Mr. Levering opined they should be replaced at an

estimated cost of $107,100.176

         BPG contends Navient breached the Lease Agreement by failing to maintain,

repair, and/or replace heat pumps at the Blue Wing. BPG asserts the evidence

171
    See Defs.’/Countercl. Pls.’ Post-Trial Reply Br. at 20-21.
172
    See Intermec IP Corp., 2021 WL 3620435, at *21 (“[T]he statute [of limitations in a contract
action] is triggered as soon as the breach occurs, even if the aggrieved [party] is ignorant of the
breach.” (citing Wal-Mart Stores, Inc., 860 A.2d at 319).
173
     Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 12; Defs.’/Countercl. Pls.’ Post-Trial
Opening Br. at 23.
174
    Trial. Tr. I at 48-49 (Levering).
175
    JX 48.
176
    Id. It appears the repair cost for these 14 units would be $42,500. See id.
                                               30
demonstrated BPG is entitled to: (1) $28,750 to repair 11 non-operational heat

pumps that had not exceeded their median life expectancy; (2) $107,100 to replace

14 non-operational heat pumps that had exceeded their median life expectancy; and

(3) $298,600 to replace 38 heat pumps that were operational but had exceeded their

median life expectancy.177 Navient counters that BPG failed to establish Navient

breached the Lease Agreement with respect to the heat pumps. Navient contends

the evidence shows Navient maintained and repaired the heat pumps in accordance

with the terms of the Lease Agreement.178 Navient argues BPG did not show

Navient caused any deficiencies in the heat pumps such that Navient is responsible

for any costs associated with the units.179

       To prove Navient breached the Lease Agreement with respect to the heat

pumps, BPG must demonstrate (1) the existence of a valid contract, (2) breach of an

obligation imposed by that contract, and (3) resulting damages.180 The parties do

not dispute the Lease Agreement is a valid contract. Section 6(j)(i) established

Navient’s obligations with respect to “Building Systems exclusively serving the

Building.”181 Navient admits the heat pumps fall within the language of Section

177
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 32.
178
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 27.
179
    Id. at 28.
180
    McCoy v. Cox, 2007 WL 1677536, at *1 (Del. Super. June 11, 2007) (citing VLIW Tech., LLC
v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)).
181
    JX 3 § 6(j)(i).
                                            31
6(j)(i).182 Section 6(j)(i) required Navient, at its “sole cost and expense, to maintain,

repair and replace all Building Systems exclusively serving the Building in good

order and repair.”183

       The Court here focuses on the 25 heat pumps that Mr. Levering found to be

non-operational. Of those, Mr. Levering opined the 11 that were within their life

expectancy could be repaired for $28,750.184 Mr. Levering also found 14 of the 25

non-operational heat pumps exceeded their median life expectancy and should be

replaced for $107,100.185 Mr. Levering testified these 14 heat pumps could be

repaired for $42,500, but Mr. Levering stated repairing these 14 heat pumps could

be difficult because the units are “obsolete [and] parts are hard to get.”186

       Navient asserts it is not responsible for any repair or replacement costs

because Mr. Alderson testified there was no way to establish whether any of the

repairs were the consequence of issues that arose when Navient was the tenant.187

This argument is not persuasive. Mr. Levering initially reported on the heat pumps

on June 18, 2020,188 approximately three-and-a-half months after the Lease ended.

Mr. Levering’s invoices to BPG indicate he surveyed the heat pumps during

182
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 31-32.
183
    JX 3 § 6(j)(i).
184
    JX 48; Trial Tr. I at 47 (Levering).
185
    JX 48; Trial Tr. I at 19 (Levering).
186
    Trial Tr. I at 19-20 (Levering).
187
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 28.
188
    JX 39.
                                               32
February and March 2020.189 To the extent Navient argues the need for repairs

occurred after the Lease ended, the evidence shows otherwise. Further, the Lease

Agreement required Navient to “maintain, repair and replace” any heat pumps that

required maintenance,190 and Navient accepted the Blue Wing “in ‘as-is’ condition

and configuration without any representations or warranties by” BPG.191 The Lease

therefore required Navient to “maintain, repair and replace” any heat pumps that

needed maintenance regardless of whether the need arose before the Lease started.

Accordingly, Navient breached the Lease with respect to the non-operational heat

pumps.

        BPG therefore is entitled to the cost of repair for the 11 non-operational units

that had not exceeded their median life expectancy. Additionally, with respect to

the 14 non-operational heat pumps that exceeded their life expectancy, BPG is

entitled to the cost to repair those 14 units. BPG did not establish the 14 heat pumps

need to be replaced rather than repaired. To the contrary, nothing in the language of

the Lease Agreement required Navient to replace, rather than repair, systems based

on their median life expectancy. Rather, the Lease referred broadly to Navient’s

obligation to “maintain, repair and replace all Building Systems exclusively serving

189
    See JX 40.
190
    JX 3 § 6(j)(i).
191
    Id. § 4.
                                           33
the Building in good order and repair.”192 This language gave Navient discretion

to determine whether a system should be repaired or replaced, limited only by the

requirement that the systems remain in “good order and repair.” If BPG wanted to

impose a particular industry standard on Navient’s obligation to keep systems “in

good order and repair,” it could have drafted language to that effect. A reasonable

tenant would elect to repair the 14 units for a cost close to one-third (1/3) the

replacement cost.

       For the same reason, BPG failed to establish Navient breached the Lease with

respect to the 38 heat pumps that were operational but beyond their median life

expectancy.193 Mr. Levering recommended replacing these 38 heat pumps solely

because they exceeded their median life expectancy.194 The Court does not find this

recommendation persuasive. Mr. Frenck, BPG’s witness, testified that he would not

recommend replacing a heat pump solely because it exceeded its median life

expectancy.195 Mr. Alderson, Navient’s witness, provided similar testimony.196

BPG did not establish heat pumps that exceeded their median life expectancy but

otherwise were operational had to be replaced under either the terms of the Lease

Agreement or the parties’ course of performance.

192
    Id. § 6(j)(i) (emphasis added).
193
    See JX 48; Trial Tr. I at 50 (Levering).
194
    JX 48; Trial Tr. I at 50 (Levering).
195
    Trial Tr. I at 113 (Frenck).
196
    Trial Tr. II at 252 (Alderson).
                                               34
      D. BPG is entitled to recover the repair costs for the rooftop air units.

         The Blue Wing had two rooftop air units.197 These units were installed in

2000, and they had an ASHRAE median life expectancy of 15 years.198 The

evidence at trial showed the units were not operational when Navient’s Lease ended

because the controls never were programmed for new controls installed on those

units.199 It appears from the record that the first evaluation of the rooftop air units

occurred on July 15, 2020.200 Mr. Frenck testified the rooftop air units should be

replaced solely because they exceeded their median life expectancy,201 but he also

conceded the units could be repaired instead, as did Mr. Levering and Mr. Nelson.202

Mr. Frenck estimated the total cost to repair both rooftop air units is $8,400.203 The

estimated cost of replacing both units was between $217,200 and $240,000.204

         BPG’s claim with respect to the rooftop air units requires the Court to

determine whether Navient breached the Lease Agreement, and, if so, whether BPG

197
    See Trial Tr. I at 63 (Nelson).
198
    JX 49; Trial Tr. I at 117 (Frenck).
199
    Trial Tr. I at 75 (Nelson).
200
    See JX 43.
201
    Trial Tr. I at 115-16 (Frenck).
202
    Id.; Id. at 41 (Levering); Id. at 95 (Nelson).
203
    JX 49 at App. B (showing the cost to repair one unit is $2,600, and the cost to repair the other
unit is $5,800); see also Trial Tr. I at 41 (Levering) (noting that Appendix B to JX 49 covers the
repair costs for, inter alia, the rooftop air units). Mr. Frenck authored the HVAC Building
Assessment numbered as JX 49. See Trial Tr. I at 102 (Frenck).
204
     JX 43 (noting in Mr. Nelson’s report that the cost to replace the two rooftop air units is
$217,200); JX 48 (noting in Messrs. Levering and Nelson’s report that the replacement cost is
“$240,000.00 for both units”).
                                                35
suffered damages.205 Navient admits the rooftop air units fall within the language of

Section 6(j)(i),206 which required Navient, at its “sole cost and expense, to maintain,

repair and replace all Building Systems exclusively serving the Building in good

order and repair.”207     Mr. Frenck testified the rooftop units were “in average

condition with some repairs needed” at the time of his inspection.208 Messrs. Nelson

and Levering both testified the rooftop air units did not need to be replaced but

instead could be repaired.209 The Court finds Navient breached the Lease Agreement

by failing to maintain the rooftop air units in compliance with the standards set forth

in Section 6(j)(i). The Court additionally finds BPG did not establish the rooftop air

units need to be replaced; rather, the evidence establishes these rooftop air units

could be repaired. BPG therefore is entitled to the cost of repair set forth in Mr.

Frenck’s expert report, which is $8,400.210

      E. BPG is not entitled to any repair or replacement costs relating to the Blue
         Wing elevators.

         The Blue Wing’s elevator systems are comprised of two passenger elevators

and one freight elevator, all of which were installed in 1990.211 Navient employed

205
    Cox, 2007 WL 1677536, at *1 (citing VLIW Tech., 840 A.2d at 612).
206
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 31-32.
207
    JX 3 § 6(j)(i).
208
    Trial Tr. I at 118 (Frenck); JX 49 at 6.
209
    Trial Tr. I at 41 (Levering); Id. at 95 (Nelson).
210
    JX 49 at App. B.
211
    JX 50.
                                             36
ThyssenKrupp to maintain the elevators at the Blue Wing.212           ThyssenKrupp

performed regular preventative maintenance.213 Mr. Wilmington of Navient testified

that the last certificate of compliance for the elevators was issued in June 2019, and

that certificate was valid for one year.214 BPG emphasized at trial that ThyssenKrupp

submitted three work orders to Navient in June 2015 for controller boards, door

edges, and a solid state starter.215 BPG asserts there is no evidence Navient paid

these invoices.216 But that is not BPG’s claim for breach relating to the elevators;

rather, BPG asserts that in September 2020 it had to repair a bracket in one elevator

for $3,345.217

      The Lease Agreement required Navient to maintain the elevators at the Blue

Wing. The Court therefore must determine whether BPG proved the bracket needed

repair at the time the Lease ended. BPG has not established any lack of maintenance

by Navient caused the need for the bracket repair. To prevail on its breach of

contract claim, BPG had to prove Navient breached the Lease Agreement and the

“breach caused the loss.”218      Stated differently, BPG did not prove by a

preponderance of the evidence that the need to repair the bracket arose at or before

212
    JX 32 at NAV0001665; Trial Tr. II at 59 (Muffler).
213
    Trial Tr. II at 101 (Wilmington).
214
    Id. at 102-03 (Wilmington).
215
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 57-58.
216
    Id. at 58.
217
    Id.; JX 46.
218
     LaPoint v. AmerisourceBergen Corp., 2007 WL 1309398, at *7 (Del. Ch. May 1, 2007)
(quoting Tanner v. Exxon Corp., 1981 WL 191389, at *2 (Del. Super. July 23, 1981)).
                                         37
the time the Lease ended. Indeed, the weight of the evidence is to the contrary.

Navient employed ThyssenKrupp to conduct “regular preventative maintenance, full

coverage of parts and repair and replacement . . . , [and] quality assurance.” 219 Mr.

Wilmington testified Navient paid ThyssenKrupp for its services through the end of

the Lease term.220 And Mr. Wilmington testified Navient received a certificate of

compliance from New Castle County for the Blue Wing elevators in June 2019,

which was valid for one year.221 There is no apparent link between the June 2015

work orders and the September 2020 bracket repair. Further, Mr. DeCocinis’s

testimony does not change the outcome. Mr. DeCocinis, BPG’s expert, testified the

elevators should undergo modernization by March 2024, but that the operating

performance of the elevators was “fair.”222 Nothing in the Lease Agreement required

Navient to modernize or upgrade building systems that were otherwise operational.

       BPG therefore has failed to carry its burden to prove it is entitled to $3,345

for the elevator bracket repair.

219
    Trial Tr. II at 101 (Wilmington).
220
    Id. at 102 (Wilmington). Navient also disputes BPG’s allegation that Navient did not pay the
June 2015 invoices. See Pl.’s/Countercl. Def.’s Answering Br. at 21 (directing the Court to JX 62
and stating Navient paid for the control board issue).
221
    Trial Tr. II at 102-03 (Wilmington).
222
    Id. at 41-43 (DeCocinis); JX 50.
                                               38
      F. Navient’s Recoupment Affirmative Defense fails under the Lease
         Agreement’s plain language.
        Navient contends that for any portion of BPG’s counterclaim on which BPG

is successful, Navient is entitled to recoupment of BPG’s award under the terms of

the Lease Agreement.223 Based on the Court’s above findings, that means Navient

believes it is entitled to recoupment for the repair costs of the heat pumps and rooftop

air units.224 Navient essentially maintains that even if, as required by the Lease

Agreement, Navient paid to repair the non-operational heat pumps and the two

rooftop air units, Navient would be entitled to have BPG reimburse (as an

Unamortized Reimbursement) Navient for that cost up to $300,000. As Navient puts

it, “[a]ny judgment [for BPG] less than $300,000 would be essentially null.”225

        Section 6(j)(i) states in pertinent part:

        In the event all or any portion of the Building Systems exclusively
        serving the Building requires replacement during the Term, [Navient]
        shall undertake the same at its sole cost and expense, and such
        replacement shall be accomplished, in a Class-A manner, using
        materials and equipment consistent with that found in comparable
        office buildings in the Wilmington, Delaware metropolitan area.
        However, notwithstanding the foregoing . . . , if (1) the portion of the
        Building Systems being replaced (the “Replacement Item”) has a useful
        life extending beyond the Lease Term . . . , and (2) the cost of such
        Replacement Item would otherwise constitute a capital repair or
        replacement cost [if] such items were purchased by or on behalf of
        [BPG], then the cost of such Replacement Item shall be amortized over

223
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 31-32.
224
    The Court found BPG is entitled to repair costs on certain heat pumps and the rooftop air units.
Navient notes that both the heat pumps and rooftop air units fall within Section 6(j)(i). See
Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 31.
225
    Id. at 32.
                                                39
       the useful life thereof at a rate of eight percent (8%) per annum, and
       [Navient] shall receive an amount from [BPG] at the expiration or
       sooner termination of the Lease equal to the then-remaining
       unamortized cost of such Replacement Item (the “Unamortized
       Reimbursement”).226
Section 6(j)(ii) caps the “Unamortized Reimbursement” at $300,000 for “Building

Systems” other than the cooling tower.227

       Navient raised “setoff and/or recoupment” as its Eighth Affirmative

Defense.228 Navient only argued recoupment in its post-trial briefing.229 “Setoff and

recoupment are related but different defenses.”230 Setoff is a defense “by which the

defendant acknowledges the justice of the plaintiff’s demand, but sets up a defense

of his own against the plaintiff, to counterbalance it either in whole or in part.”231

Recoupment “is a species of defense somewhat analogous to [setoff] . . . but the

defense of recoupment goes to the reduction of the plaintiff’s damages for the reason

that [plaintiff] has not complied with the cross obligations arising under the same

contract.”232

226
    JX 3 § 6(j)(i).
227
    Id. § 6(j)(ii).
228
    Answer to Countercl. at 4.
229
    See Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 31-32; Pl.’s/Countercl. Def.’s Post-Trial
Sur-Reply Br. at 4-5.
230
    Finger Lakes Cap. P’rs, LLC v. Honeoye Lake Acquisition, LLC, 151 A.3d 450, 453 (Del.
2016).
231
    Id. (internal quotation marks and citation omitted).
232
    Id. (internal quotation marks and citation omitted).
                                                40
         The Court finds Navient failed to carry its burden to prove by a preponderance

of the evidence that it is entitled to recoupment. First, the relevant Lease terms refer

only to Navient’s right to be reimbursed for the unamortized cost of a “Replacement

Item.” The Court has not found that Navient was required to replace any Building

System, only that it was required to repair certain systems. Second, even if Section

6(j)(i) applied to repair costs, Navient did not elicit testimony regarding the amount

of unamortized costs to which Navient believes it is entitled for the heat pumps and

the rooftop air units. In its post-trial briefing, Navient points only to Mr. Alderson’s

expert report.233 Mr. Alderson’s report contains his opinions as to what BPG owes

Navient under the Lease Agreement for various costs regarding the heat pumps and

rooftop air units.234 This evidence is probative of Navient’s contention, but it is not

enough. The Court does not find Mr. Alderson’s report sufficient for Navient to

carry its burden regarding the unamortized repair costs. Navient therefore is not

entitled to recoupment costs under Section 6(j) of the Lease Agreement.

      G. Navient is entitled to recover its attorneys’ fees as the prevailing party.

         Section 28(q) of the Lease Agreement states “[i]n the event of any litigation

between [BPG] and [Navient], the unsuccessful party as determined by a court of

233
    Pl.’s/Countercl. Def.’s Post-Trial Sur-Reply Br. at 5 (citing JX 65). Navient provided more
record citations for the transformer, but the transformer is not at issue because BPG’s claim on the
transformer is barred by the statute of limitations.
234
    See, e.g., JX 65 at 11 (opining on water source heat pumps and makeup air units); see also id.,
Ex. H (displaying Mr. Alderson’s opinions on amortization/depreciation calculations).
                                                41
competent jurisdiction shall reimburse the successful party for all legal fees and

expenses incurred by the successful party in prosecuting or defending any such

action.”235 Navient contends it is the successful party in full on its affirmative claim,

and even if BPG is partially successful on its counterclaim, Navient still prevails on

the majority of the issues.236 BPG contends that unless Navient achieves a net

principal recovery of “1 cent more than 50%” of Navient’s affirmative claim, then

BPG is the prevailing party.237

       “Delaware generally follows the American Rule, under which litigants are

responsible for their own attorneys’ fees, regardless of the outcome of the

lawsuit.”238 An exception to the American Rule applies “in contract litigation that

involves a fee shifting provision.”239 In those cases, Delaware courts generally

enforce a contractual agreement to shift fees.240 Absent “qualifying language that

fees are to be awarded claim-by-claim or on some other partial basis, a contractual

provision entitling the prevailing party to fees will usually be applied in an all-or-

235
    JX 3 § 28(q).
236
    Pl.’s/Countercl. Def.’s Post-Trial Answering Br. at 33.
237
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 60.
238
    Bako Pathology LP v. Bakotic, 288 A.3d 252, 280 (Del. 2022) (quoting Alaska Elec. Pension
Fund v. Brown, 988 A.2d 412, 417 (Del. 2010)).
239
    Mahani v. Edix Media Grp., Inc., 935 A.2d 242, 245 (Del. 2007); see also Bako Pathology LP,
288 A.3d at 280 (citing Mahani).
240
    Bako Pathology LP, 288 A.3d at 280 (quoting SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d
330, 352 (Del. 2013)).
                                              42
nothing manner.”241       In such an all-or-nothing case, the Court analyzes the

“predominance in the litigation” to determine the prevailing party. 242 “To establish

predominance, the party must prevail on the case’s chief issue[s].” 243

       There were two chief issues in this action: (1) Navient’s claim for breach of

the Lease Agreement with respect to the cooling tower reimbursement; and (2)

BPG’s counterclaim for breach of the Lease Agreement with respect to the

transformer, heat pumps, rooftop air units, and elevators. As to the first issue,

Navient indisputably is the prevailing party. BPG conceded shortly before trial that

it owed Navient $503,822.72 for replacement of the cooling tower.244 With respect

to the second issue, the Court also finds Navient is the prevailing party. BPG sought

$817,845 from Navient based on: (a) $434,500 for the heat pumps, (b) $240,000 for

the rooftop air units, (c) $140,000 for the transformer, and (d) $3,345 for the

elevator.245 The Court has determined BPG is entitled to a total of $79,650: $8,400

to repair the rooftop air units and $71,250 to repair the non-operational heat pumps

($28,750 for the 11 non-operational pumps within their life expectancy, and $42,500

241
    AFH Hldg. & Advisory, LLC v. Emmaus Life Scis., Inc., 2014 WL 1760935, at *2 (Del. Super.
Apr. 16, 2014) (quoting West Willow-Bay Ct., LLC v. Robino-Bay Ct. Plaza, LLC, 2009 WL
458779, at *8 (Del. Ch. Feb. 23, 2009)).
242
    Duncan v. STTCPL, LLC, 2020 WL 829374, at *15 (Del. Super. Feb. 19, 2020) (citing Mrs.
Fields Brand, Inc. v. Interbake Foods LLC, 2018 WL 300454, at *2 (Del. Ch. Jan. 5, 2018)).
243
    Id. (citing 2009 Caiola Fam. Tr. v. PWA, LLC, 2015 WL 6007596, at *33 (Del. Ch. Oct. 14,
2015)); see also id. (noting that there can be more than one chief issue in a case).
244
    PTO § 2(z).
245
    Defs.’/Countercl. Pls.’ Post-Trial Opening Br. at 61.
                                             43
for the 14 non-operational pumps past their life expectancy). The Court therefore

finds Navient prevailed on BPG’s counterclaim because it successfully defended

more than 90% of the damages BPG sought.

       The Court recognizes there are circumstances “where ‘no party may be

regarded as having prevailed.’”246 For example, in Vianix Delaware LLC v. Nuance

Communications, Inc.,247 the Court of Chancery held “there was no prevailing party

and decline[d] both parties’ requests for attorneys’ fees and costs” where each side

won “on several claims and contentions” and one party recovered “what may be

millions of dollars in damages, but far less than it claimed.”248 But that is not the

case here. Instead, Navient recovered more than what this Court has found sufficient

to be the “prevailing party.”249 The Court therefore finds BPG is the “unsuccessful

party” under Section 28(q) of the Lease Agreement, and Navient is the successful

party entitled to “all legal fees and expenses incurred . . . in prosecuting [and]

defending” this action.250

246
    Duncan, 2020 WL 829374, at *15 (quoting Vianix Delaware LLC v. Nuance Commc’ns, Inc.,
2010 WL 3221898, at *28 (Del. Ch. Aug. 13, 2010)).
247
    2010 WL 3221898, at *28 (Del. Ch. Aug. 13, 2010).
248
    Id. at *29.
249
    See, e.g., AFH Hldg. & Advisory, LLC, 2014 WL 1760935, at *2-3 (finding one party was the
prevailing party where that party was successful on the core breach of contract claim, and
additionally finding that even though that party voluntarily dismissed fraud claims, it was still the
prevailing party under the “all-or-nothing” approach).
250
    JX 3 § 28(q).
                                                44
                                   CONCLUSION

      For the reasons explained above, Navient is entitled to judgment in the amount

of $503,822.72, plus costs, interest, and attorneys’ fees, less $79,650 for the repair

costs of the 25 non-operational heat pumps and the repair costs of the two rooftop

air units. Navient is entitled to pre-judgment interest on the net principal amount,

with interest accruing as of March 17, 2020. BPG has proved its counterclaim by a

preponderance of the evidence with respect to repairing (not replacing) the 25 non-

operational heat pumps and the two rooftop air units, and the Court therefore enters

judgment in BPG’s favor as to these portions of the counterclaim. BPG has not

proved its counterclaim by a preponderance of the evidence with respect to the

transformer and the elevator, and the Court therefore enters judgment in Navient’s

favor as to these portions of the counterclaim. If there are any open issues not

addressed by this post-trial opinion, the parties shall notify the Court by letter within

five calendar days. Otherwise, Navient shall prepare a conforming form of order

and file it with the Court within ten calendar days. If BPG objects to the form of

order, it shall so advise the Court by letter within two days of filing. The appeal

period for this post-trial opinion shall not begin to run until the final order is entered

as an order of the Court.

                                           45