Clark v. Teeven Holding Co., Inc.

• Decision Date: 07 October 1992
• Docket Number: No. 11763,11763
• Citation: 625 A.2d 869
• Court: Court of Chancery of Delaware
• Parties: Edwin H. CLARK, II, Secretary, Department of Natural Resources and Environmental Control of the State of Delaware, Plaintiff, v. TEEVEN HOLDING COMPANY, INC., a Delaware corporation, Defendant/Third-Party Plaintiff, v. M & M CLEANERS, INC., a Delaware corporation, The Estate of Grace W. McCambridge, Dorothy Ann Rash, Grace Rose McElwee, Karen Regina Blevins, Newark Cleaners and Dyers, Inc., a Delaware corporation, James H. Cox and Aldona L. Cox, Third-Party Defendants. Civ. A. . Submitted:

Page 869

625 A.2d 869

Edwin H. CLARK, II, Secretary, Department of Natural

Resources and Environmental Control of the State

of Delaware, Plaintiff, v. TEEVEN HOLDING COMPANY, INC., a Delaware corporation, Defendant/Third-Party Plaintiff, v. M & M CLEANERS, INC., a Delaware corporation, The Estate of

Grace W. McCambridge, Dorothy Ann Rash, Grace Rose McElwee,

Karen Regina Blevins, Newark Cleaners and Dyers, Inc., a

Delaware corporation, James H. Cox and Aldona L. Cox,

Third-Party Defendants.

Civ. A. No. 11763.

Court of Chancery of Delaware New Castle County.

Submitted: Oct. 7, 1992.

Decided: Dec. 16, 1992.

On Certain Third-Party Defendants' Motion to Dismiss Defendant/Third-Party Plaintiff's Third-Party Complaint: Granted.

Kevin P. Maloney, Deputy Atty. Gen., Department of Natural Resources and Environmental Control, Wilmington, for plaintiff.

Richard J. Abrams, Robert W. Whetzel, and Peter L. Frattarelli, Richards, Layton & Finger, Wilmington, for defendant/third-party plaintiff Teeven Holding Co., Inc.

Michael J. Goodrick, and Richard L. Abbott, Theisen, Lank, Mulford & Goldberg, P.A., Wilmington, for third-party defendants, M & M Cleaners, Inc., Dorothy Ann Rash, Grace Rose McElwee, Karen Regina Blevins and The Estate of Grace W. McCambridge.

Anthony G. Flynn, Young, Conaway, Stargatt & Taylor, Wilmington, for third-party defendants Newark Cleaners and Dyers, Inc., James H. Cox and Aldona L. Cox.

HARTNETT, Vice Chancellor.

This controversy arose because the purchaser of a parcel of real estate, Teeven Holding Company, Inc. ("Teeven"), discovered that the lands it purchased were contaminated by seepage from an underground storage tank.

Teeven and the State then entered into a Consent Agreement providing for the removal of the contaminant. Immediately after the Consent Agreement was entered into, the State brought this suit to enjoin Teeven from violating a state environmental statute. A judgment by consent was then entered by this Court.

Subsequently, Teeven joined in this suit certain third-party defendants, and sought to assert money damages against them arising from the contamination.

The third-party defendants have now moved to dismiss this action as to them alleging that this Court does not have jurisdiction to hear the claims asserted by the third-party plaintiff (Teeven) because the third-party complaint essentially alleges a claim for money damages for which there is an adequate remedy at law.

The motion to dismiss the third-party complaint must be granted because there is an adequate remedy at law for all the third-party claims.

I

On August 15, 1988, defendant/third-party plaintiff Teeven Holding Company, Inc. (Teeven) purchased property located on E. Main Street in Newark, Delaware from third-party defendant, the Estate of Grace W. McCambridge. Prior to the purchase of the property by Teeven, the other third-party defendants allegedly had owned the property or had conducted a dry cleaning business on the property. After taking title to the property, Teeven discovered underground storage tanks and notified the Delaware Department of Natural Resources and Environmental Control ("the Department") of its intent to remove the tanks. During the course of removing the tanks, soil samples were taken that revealed that the subsurface soils had been contaminated by petroleum products and tetrachlorethane. Teeven and the Department then agreed to a remedial plan to reduce the contaminants in the subsurface soils and groundwater. Teeven also agreed to carry out remediation of the soils and groundwater in accordance with the remedial plan. This agreement was incorporated into a Consent Order between Teeven and the Department dated October 10, 1990. Two days later the State, through the Secretary of the Department, brought this suit alleging that Teeven had violated the Delaware Environmental Protection Act, 7 Del.C. Ch. 60 and the Delaware Underground Storage Tank Act ("Storage Tank Act"), 7 Del.C. Ch. 74. Despite that Teeven had already agreed to the remedial action, the complaint contained a request for an injunction requiring Teeven to remediate the property in accordance with the remedial plan contained in the Consent Order. On the day after suit was filed, because the Consent Order was agreed to by the parties, this Court entered it as an Order of the Court.

On October 19, 1990, Teeven filed a third-party complaint against the third-party defendants alleging that they were liable to Teeven for any remediation costs incurred by it pursuant to the Consent Order. In the third-party complaint it was alleged that the third-party defendants were liable to Teeven under several legal theories and Teeven prayed for a declaratory judgment and money damages. On May 26, 1992, this Court granted Teeven leave to amend its complaint to join additional third-party defendants and to add an additional claim under the provisions of the Delaware Hazardous Substance Cleanup Act ("Hazardous Substance Act"), 7 Del.C. Ch. 91, seeking relief similar to that sought in the original third-party complaint.

On December 27, 1991, one of the third-party defendants M & M Cleaners, Inc. filed a motion to dismiss the third-party complaint for lack of subject matter jurisdiction pursuant to Chancery Court Rule 12(b)(1) on the grounds that this Court lacked subject matter jurisdiction over the underlying action filed by the Department against Teeven and that, in any case, Teeven has an adequate remedy at law for its third-party claims. Third-party defendants Dorothy Ann Rash, Karen Regina Blevins, Newark Cleaners & Dyers, Inc., James H. Cox and Aldona L. Cox have joined in that motion.

II

This Court as a court of limited jurisdiction exercises jurisdiction only "over all matters and causes in equity". 10 Del.C. § 341. It has the same jurisdiction as the English High Court of Chancery had in 1776. Glanding v. Industrial Trust Co., Del.Supr., 45 A.2d 553, 555-56 (1945). duPont v. duPont, Del.Supr., 85 A.2d 724 (1951). This Court thus has jurisdiction to hear such traditional, equitable matters as trusts and fiduciary relations. It also has jurisdiction to hear claims where the law courts cannot afford an adequate remedy. Thus, this Court exercises jurisdiction over matters where an injunction is sought. 1 POMEROY, Equity Jurisprudence § 139 (5th ed. 1951).

This Court may also exercise jurisdiction in matters that were unknown in 1776 but where there is today no adequate remedy in any other court. Severns v Wilmington Medical Center, Inc., Del.Supr., 421 A.2d 1334 (1980).

The General Assembly may also expand the jurisdiction of the Court of Chancery beyond the bounds of the jurisdiction of the English High Court of Chancery as it existed in 1776 by adding jurisdiction by statute. See, e.g., 8 Del.C. § 225 (granting authority to Court of Chancery to adjudicate results of corporate elections).

10 Del.C. § 342 provides:

The Court of Chancery shall not have jurisdiction to determine any matter wherein sufficient remedy may be had by common law, or statute, before any other court or jurisdiction of this State.

The Delaware Supreme Court in Glanding v. Industrial Trust Co., Del.Supr., 45 A.2d 553 (1945), held that the predecessor to 10 Del.C. § 342 merely represented a legislative declaration of a traditional maxim by which equity courts defined their jurisdiction and that the statute "did not operate as a restriction or limitation of the exercise of equitable jurisdiction. Id. at 557. Therefore, the Court held that if the subject matter of a claim was within the jurisdiction of the English High Court of Chancery in 1776, this Court's jurisdiction over that subject matter would not be divested by the General Assembly granting jurisdiction over it to another court of this State unless it was clear the General Assembly intended to abrogate the jurisdiction of the Court of Chancery. Id. at 559-60. Absent a manifestation of such intent, the Court held that a person could elect to proceed either in the Court of Chancery or the other court in which the General Assembly had granted jurisdiction. Id. at 560. See also, duPont v. duPont, Del.Supr., 85 A.2d 724 (1951).

Similar reasoning applies in situations in which the law courts assume jurisdiction over a right or remedy that was traditionally equitable. As Judge Rodney observed:

[Chancery] will not allow itself to be ousted of any part of its original jurisdiction because a court of law happens to fall in love with the same or a similar jurisdiction.

Glanding v. Industrial Trust Co., Del.Supr., 45 A.2d at 565 (1945) (Rodney, J., dissenting) (quoting Fox v. Wharton, 5 Del.Ch. 200 (1878). See, 1 POMEROY, Equity Jurisprudence §§ 276-81 (5th ed. 1941). Compare, Schlusser, Reiver, Hughes & Sisk v. Carter, Del.Ch., C.A. 10679-NC, Allen, C. (April 12, 1989) (interpleader not independent basis of equity jurisdiction because it is available in Superior Court).

While a court of equity may not be deprived of its jurisdiction simply because a court of law has expanded its jurisdiction into a particular area, equitable jurisdiction may be abandoned. 1 POMEROY, Equity Jurisprudence § 281a (5th ed. 1941). For example, a court of equity will no longer entertain a suit simply because it is brought by the assignee of a debt or of a chose in action. Id., Illinois Finance Co. v. Interstate Rural Credit Ass'n, Del.Ch., 101 A. 870 (1917). Similarly, while courts of equity may originally have had jurisdiction over all instances of fraud, equity today will assume jurisdiction over fraud only when other equitable relief--such as equitable rescission--is sought. Hegarty v. American Commonwealths Power Corp., Del.Ch., 163 A. 616 (1932); McCLINTOCK, Equity § 84 (1948).

Equity may also, at its discretion, exercise concurrent jurisdiction over a purely legal claim for which there is an adequate remedy at law in the course of deciding other claims for which equity jurisdiction exists. Getty Ref. &...