Glen Allen Farm, LLC v. New Castle Cnty.

GLEN ALLEN FARM, LLC, Petitioner, v. NEW CASTLE COUNTY, a Political subdivision of the State of Delaware,and MATTHEW S. MEYER, individually and in his official capacity as the CountyExecutive for New Castle County, TRACY SURLES, individuallyand in her official capacity as the General Manager of Public Works for New Castle County;and RICHARD E. HALL, individually and in his official capacity as theGeneral Manager of Land Use for New Castle County, Respondents.

C.A. No. 2019-0425-PAF

COURT OF CHANCERY OF THE STATE OF DELAWARE

Date Submitted: June 3, 2020

September 29, 2020

MEMORANDUM OPINION

Sidney S. Liebesman, E. Chaney Hall, and Wali W. Rushdan, FOX ROTHSCHILD LLP, Wilmington, Delaware; Attorneys for Petitioner.

Max B. Walton and Lauren P. DeLuca, CONNOLLY GALLAGHER LLP, Wilmington, Delaware; Brian J. Merritt, NEW CASTLE COUNTY OFFICE OF LAW, New Castle, Delaware; Attorneys for Respondents.

FIORAVANTI, Vice Chancellor

Nearly two decades ago, a group of property owners in southern New Castle County sought to develop their property into a residential development. The property owners entered into an agreement with developer Toll Brothers, Inc. ("Toll Brothers") that contained several contingencies, one of which was obtaining sewer service from the County. The County rejected the development application. Toll Brothers and the owners of one of the properties in the group filed an action against the County and certain County officials in the United States District Court for the District of Delaware seeking to compel the County to provide sewer service to their property (the "Federal Action"). The parties to the Federal Action settled their dispute in 2010, which is memorialized in a settlement agreement with the County (the "Settlement Agreement"). The Settlement Agreement obligates the County to build a sewer main and provide sanitary sewer service to all of the properties if certain conditions are met. The County's obligations to build the sewer main expire on July 1, 2021, unless certain conditions in the Settlement Agreement are satisfied by that date.

Petitioner Glen Allen Farm, LLC ("Petitioner" or "GAF") was among the property owners that had signed on to the Toll Brothers development agreement. GAF was not a party in the Federal Action and is not a signatory to the Settlement Agreement. Nevertheless, GAF's property would be among the properties obtaining sanitary sewer service if the County were to provide sewer service under the termsof the Settlement Agreement. In this action, GAF seeks to enforce the Settlement Agreement against the County and certain County government officials (collectively, "Respondents"), contending that GAF is a third-party beneficiary to that agreement. GAF makes no secret of its objective:

Petitioner has been approached by one or more prospective purchasers of the Property whom have indicated that they would be willing to purchase the Property, at a premium, if Petitioner can confirm the County still intends to honor its obligation under the Settlement Agreement to provide sanitary sewer service to the Property.

Compl. ¶ 31. GAF seeks an order compelling the County to perform under the Settlement Agreement if GAF, a purchaser of its property, or a developer other than Toll Brothers satisfies the terms of the Settlement Agreement that obligate the County to provide sanitary sewer service to GAF's property. Respondents have moved to dismiss the complaint. Their primary argument is that the Petitioner's claims are not ripe for resolution. This Opinion resolves the motion to dismiss in favor of Respondents.

I. BACKGROUND

The facts recited in this opinion are drawn from Petitioner's Verified Amended Complaint ("Complaint" or "Compl."), documents incorporated by reference or integral thereto, and matters to which the Court may take judicial notice.

A. The Parties

GAF is a Delaware limited liability company and the owner of record of approximately 141 acres of undeveloped farmland located on the northern side of Port Penn Road in New Castle, Delaware (the "Property").¹

Petitioner seeks relief from the County and three County government officials: Respondent Matthew S. Meyer (individually and in his capacity as the County Executive for the County), Respondent Tracy Surles (individually and in her capacity as the General Manager of Public Works for the County), and Respondent Richard E. Hall (individually and in his capacity as the General Manager of Land Use for the County).²

Under Delaware law, the County has "all powers which, under the Constitution of [Delaware], it would be competent for the General Assembly to grant by specific enumeration, and which are not denied by statute[.]"³ The County hasauthority over zoning and the power to regulate land use within the territory of New Castle County.⁴ The County's authority includes the power "to act upon all matters pertaining to sewers, sewerage disposal plants, trunk line sewers and sewerage systems generally."⁵

B. The Planned Development of the Port Penn Assemblage

The Property is part of a sanitary sewer district for the southern portion of the County designated as the County Southern Sewer Service Area (the "SSSA").⁶ In 2003, the County Council, the legislative branch of the County government, passed a resolution affirming the County's commitment to construct a sewer system in the SSSA.⁷

In the early 2000s, Petitioner and four other owners of contiguous land entered into a development agreement with Toll Brothers to create a large residential home tract within the SSSA named the "Port Penn Assemblage."⁸ The Toll Brothers development agreement with the Port Penn Assemblage was subject to contingencies, including that the County would provide sewer service sufficient for the development.⁹ According to the Complaint, Toll Brothers and the Port Penn Assemblage, including Petitioner, relied upon representations from the County that the SSSA would receive sewer service.¹⁰

After developing engineering plans and conducting due diligence, Toll Brothers submitted a land development application to the County for the Port Penn Assemblage (the "Application").¹¹ The County rejected the Application.¹² Toll Brothers and the property owners of the Port Penn Assemblage pressed the County to make public sewer service available for the Port Penn Assemblage.¹³

In November 2007, Toll Brothers and Gary and Gale Warren, the owners of the Warren Farm—a property in the Port Penn Assemblage—filed litigation againstthe County in an action captioned Warren et al. v. New Castle Cty., C.A. No. 07-725-SLR-LPS (D. Del.) (i.e., the Federal Action) to compel the County to process the Application and to provide sewer service necessary to service the development contemplated by the Application. On June 26, 2008, the Magistrate Judge, now-Chief Judge Leonard P. Stark, issued a report and recommendation recommending dismissal of the Federal Action. See Warren v. New Castle Cty., 2008 WL 2566947 (D. Del. 2008).

C. The Settlement Agreement

The County, Gary Warren, Gale Warren, and Toll Brothers entered into the Settlement Agreement, dated November 29, 2010, providing for a settlement of their disputes, including the Federal Action.¹⁴ The Settlement Agreement defines the Warrens and Toll Brothers as the "Developer."¹⁵

In Paragraph 1 of the Settlement Agreement, the County agreed that the properties in the Port Penn Assemblage could connect to the County sewer system in the SSSA and that the County would provide guaranteed sewer capacity to those properties.¹⁶ The Settlement Agreement identifies, using Tax Parcel Numbers, theproperties that may connect to the County sewer system.¹⁷ Petitioner's Property is among the properties identified in the Settlement Agreement. The County further agreed that "[t]his guaranteed sewer capacity shall be available even if the Developer or the property owners abandon the applications for the [then-pending development plans] and pursue other development options for the Properties."¹⁸

Under the Settlement Agreement, the County and the Developer each has obligations to construct sewer infrastructure to connect the Port Penn Assemblage to the County's sewer system. Paragraph 2 addresses the County's side of the equation and, in pertinent part, states that "[t]he County agrees to construct, at its own cost and expense, a force main line from the current central core facilities in the SSSA," at a location "just east of the existing SSSA central core boundary."¹⁹ The Settlement Agreement defines the sewer line referenced in Paragraph 2 as the "County Force Main."²⁰ Under the Settlement Agreement, the Developer or the property owners may provide notice of commencement of physical construction of sewer service infrastructure to connect to the County Force Main (defined in Paragraph 3 of the Settlement Agreement as "Developer's InfrastructureImprovements") to trigger the County's obligation to begin construction of the County Force Main.²¹ The County's obligation to provide sewer capacity and to build the County Force Main expires on July 1, 2021 "unless Developer has connected two or more owner/renter occupied housing units to the County's Force Main by such date."²²

Paragraph 3 addresses the Developer's obligation to construct infrastructure improvements to connect to the County Force Main. Under Paragraph 3, the Developer is responsible for constructing Developer's Infrastructure Improvements from the Properties to the County Force Main at its own cost and expense, and is to do so "in accordance with all applicable laws, regulations, standards, and policies."²³ Paragraph 3 further obligates the Developer to apply for and receive approval for "all sewer infrastructure construction" from all applicable governmentalauthorities.²⁴ The Settlement Agreement also provides Toll Brothers an extension of time to complete its Application to develop the Port Penn Assemblage, but it does not limit the Developer or the property owners "from pursuing other...