Clark v. Teeven Holding Co., Inc.
1992 Del. Ch. LEXIS 268, 1992 WL 494618, 625 A.2d 869 (1992)
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Rule of Law:
The Delaware Court of Chancery, as a court of limited equity jurisdiction, may not hear claims for which an adequate remedy at law, such as money damages, is available. The court will not exercise discretionary 'clean-up' jurisdiction over purely legal claims unless they are intertwined with a substantial, pending equitable controversy.
Facts:
- On August 15, 1988, Teeven Holding Company, Inc. ('Teeven') purchased a parcel of real estate from the Estate of Grace W. McCambridge.
- Prior to Teeven's purchase, other parties (the 'third-party defendants') had allegedly owned the property or operated a dry cleaning business on it.
- After purchasing the property, Teeven discovered underground storage tanks.
- During the removal of the tanks, soil samples revealed that the subsurface soils were contaminated with petroleum products and tetrachloroethane.
- Teeven entered into a Consent Agreement with the Delaware Department of Natural Resources and Environmental Control ('the Department'), agreeing to a remedial plan to clean up the contamination.
Procedural Posture:
- The State of Delaware sued Teeven Holding Company, Inc. in the Delaware Court of Chancery, seeking an injunction to compel remediation of contaminated property.
- On October 13, 1990, the court entered a final judgment by consent, incorporating the remedial plan agreed upon by the State and Teeven.
- On October 19, 1990, Teeven filed a third-party complaint in the same action against the Estate of Grace W. McCambridge and other previous owners and operators of the property.
- Teeven's third-party complaint sought money damages, contribution, and indemnification for the remediation costs it was obligated to incur.
- Teeven later amended its complaint to add claims under the Delaware Hazardous Substance Cleanup Act and the Delaware Underground Storage Tank Act.
- Certain third-party defendants filed a motion to dismiss Teeven's third-party complaint for lack of subject matter jurisdiction, arguing an adequate remedy at law existed.
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Issue:
Does the Delaware Court of Chancery have subject matter jurisdiction over a third-party complaint seeking money damages through claims of contribution, indemnification, and restitution, when an adequate remedy at law exists for those claims and the original equitable claim in the case has already been resolved?
Opinions:
Majority - Hartnett, Vice Chancellor
No, the Court of Chancery lacks subject matter jurisdiction over the third-party complaint because an adequate remedy at law exists for all of Teeven's claims. The Court of Chancery is a court of limited jurisdiction and is statutorily barred from hearing matters where a sufficient remedy may be had by common law or statute in another court. A claim-by-claim analysis shows that each of Teeven's claims—for strict liability, fraud, contribution, indemnity, restitution, and statutory cost recovery—ultimately seeks money damages, which is a remedy readily available in the Superior Court, Delaware's law court of general jurisdiction. The right to contribution among joint tort-feasors, for example, is a statutory right created long after 1776 and has no historical roots in equity. While the court has discretion under the 'clean-up doctrine' to hear legal claims that are ancillary to a pending equitable claim, that doctrine does not apply here because the original equitable claim for an injunction was resolved by a final consent judgment two years prior. With no active equitable controversy remaining, there is no basis to retain jurisdiction over these purely legal third-party claims.
Analysis:
This opinion strongly reaffirms the strict jurisdictional division between Delaware's Court of Chancery (equity) and the Superior Court (law). It demonstrates that the court will look past the labels a plaintiff applies to its claims (e.g., 'restitution') to the substance of the relief sought. If the ultimate goal is monetary compensation, the claim belongs in a court of law. The decision also clarifies the limits of the 'clean-up doctrine,' establishing that it cannot be used to bootstrap purely legal claims onto a case where the equitable component has already been fully resolved and is no longer an active controversy. This serves as a critical guide for litigants on the importance of filing claims in the proper forum within Delaware's bifurcated judicial system.
