DealLawyers.com Blog

Last week, in Shore Community Energy LLC v. MassAmerican Development (Del. Ch.; 5/26), the Chancery Court addressed claims for damages following a purchaser’s failure to pay the purchase price under multiple membership interest purchase agreements and found them to be time-barred under the terms of the agreements. The facts are as follows:

Shore Community established four companies to develop solar panel farms, then entered into four MIPAs with MassAmerican, under which Shore Community agreed to sell its interests in the companies. Though the transactions closed on December 12, MassAmerican had two months thereafter to make the payments, which it failed to do. Each of the MIPAs provided that Shore Community could repurchase all the membership interests for $1.00 if MassAmerican failed to “make any required payment.” Seven months later, Shore Community filed suit and won a default judgment directing MassAmerican to transfer the interests back to Shore Community. Shore Community then filed a motion, now requesting damages for breach of the MIPAs.

But the MIPAs provided that indemnification was the exclusive remedy for any failure to perform any agreement. Plus, indemnification claims had a six-month survival period, and an indemnification notice had to be provided before the survival period expired. Vice Chancellor David said:

Closing occurred on December 12, 2024, meaning the survival period for an indemnity claim expired on June 12, 2025. The alleged breaches occurred between December 12, 2024, and March 15, 2025, within the survival period, but Plaintiff waited to file the Complaint until seven months later, on October 10, 2025. As a result, Plaintiff’s request for contract damages is time-barred under the MIPAs.

She said that plaintiffs tried to avoid this result by arguing for a reading of the MIPAs that (1) indemnity was only the exclusive remedy for that six-month period, at which point other remedies became available, and (2) the indemnity clause does not apply because its request for contract damages is really a demand for “specific performance” of MassAmerican’s contractual obligation to pay certain costs. She found that:

This argument is inconsistent with the plain language of the MIPAs, which limits Plaintiff’s monetary remedy to indemnity and requires that such remedy be sought within the six-month survival period [. . .]

Under Delaware law, the equitable remedy of specific performance does not encompass an order to pay money; instead,“[t]he purpose of specific performance is to address ‘situations where the assessment of money damages is impracticable or somehow fails to do justice.’” [. . .] The Court has already ordered specific performance by requiring MassAmerican to return the membership interests to Plaintiff. Plaintiff now seeks “Default Judgment as to Damages.” As set forth above, the MIPA forecloses this request.

– Meredith Ervine