Bastion Restaurant Group LLC v. Gaudelet

SUPERIOR COURT
OF THE
STATE OF DELAWARE
PAUL R. WALLACE LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400
WILMINGTON, DELAWARE 19801
(302) 255-0660

Submitted: December 6, 2024
Decided: December 17, 2024

Tammy L. Mercer, Esquire Robert K. Beste, Esquire
Richard J. Thomas, Esquire SMITH, KATZENSTEIN & JENKINS LLP
Andrew J. Czerkawski, Esquire 1000 North West Street, Suite 1501
YOUNG CONAWAY STARGATT & Wilmington, Delaware 19801
TAYLOR, LLP
1000 N. King Street Gaddi Goren, Esquire
Wilmington, Delaware 19801 MEISTER SEELIG & FEIN PLLC
125 Park Avenue, 7th Floor
David Baay, Esquire New York, New York 10017
L. Andrew S. Riccio, Esquire
Emily Brait, Esquire
BAKER & MCKENZIE LLP
452 Fifth Avenue
New York, New York 10018

RE: Bastion Restaurant Group LLC v. Alexandre Gaudelet
C.A. No. N24C-06-190 PRW CCLD
Plaintiff’s Motion to Dismiss
Defendant’s Motion to Stay

Dear Counsel:
This Letter Decision and Order resolves Plaintiff Bastion’s Motion to Dismiss

and Defendant Gaudelet’s Motion to Stay. For the reasons now explained, Bastion’s

Motion to Dismiss (D.I. 17) is GRANTED, in part, and DENIED, in part.

Mr. Gaudelet’s Motion to Stay (D.I. 22) is GRANTED.
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I. FACTUAL BACKGROUND1

A. THE RESTAURANT, THE LEASE, AND THE GUARANTY

Defendant Alexandre Gaudelet was a principal of InvestHospitality LLC

(“IH”).2 IH created L’Atelier NYC LLC (“L’Atelier”) to own and operate a

restaurant called “L’Atelier de Joel Robuchon” in New York City.3

On November 1, 2016, L’Atelier entered into a lease agreement with 85 Tenth

Avenue Associates (“Landlord”).4

Mr. Gaudelet personally guaranteed the lease (the “Guaranty”).5 An

unexecuted version of the Guaranty is incorporated into the lease as Exhibit D.6 The

Guaranty provides that Mr. Gaudelet’s liability is “primary,” and that the Landlord

does not need to first seek recourse against L’Atelier.7

B. BASTION ACQUIRES THE RESTAURANT.

In May 2018, Plaintiff Bastion Restaurant Group LLC (“Bastion”) (f/k/a Crest

1
The Court delivers this decision mindful that the parties are fully versed in the factual and
procedural background of this litigation, as well as the arguments each makes on the instant
motions. This writing, therefore, will only touch on the specifics of those as needed here.
2
Compl. ¶ 10.
3
Id.
4
Id. ¶ 11.
5
Id. ¶ 12.
6
Guaranty (D.I. 18 at Ex. B).
7
Id. ¶ 3.
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Restaurant Acquisition, LLC), a Delaware limited liability company, acquired all

interests in IH, via a Unit Purchase Agreement (“Agreement”).8

C. TERMS OF THE AGREEMENT

Pursuant to the Agreement, Bastion sought to release Mr. Gaudelet from the

Guaranty.9

Specifically, Section 6.2 provides:

Alex Gaudelet Indemnity. [Bastion] hereby agrees to indemnify,
defend and hold harmless Alex from and against any and all
Damages incurred or sustained by, or imposed upon, Alex
resulting from, related to or arising out of any breach of
the . . . Guaranty, dated as of November 1, 2016, Alex Gaudelet
in favor of 85 Tenth Avenue Associates, L.L.C. . . . .10
“Damages” is defined as:

All actual damages, costs, liabilities, obligations, fines, penalties,
expenses and fees, including reasonable attorneys’ and other
professional fees and expenses; provided, that “Damages” shall
not include . . . damages related to items set forth on the
Company Disclosure Schedules . . . .11

The Company Disclosure Schedule is attached to the Agreement and includes

8
Compl. ¶ 13. See also Agreement (D.I. 21 at Ex. 2).
9
Agreement (Recitals).
10
Id. at Section 6.2.
11
Id. at Article 1 (Definitions).
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in Schedule 3.12 a list of L’Atelier’s leased real property.12 This section lists all

leases by L’Atelier, any related agreements, and includes the Guaranty.13

D. THE LANDLORD TERMINATES THE LEASE AND INITIATES
THE NEW YORK ACTION.

As a result of the pandemic, the restaurant was allegedly not able to meet its

obligations under the lease. In turn, the Landlord initiated the New York Action in

March 2022, naming L’Atelier and Mr. Gaudelet as defendants.14

The New York Action’s complaint alleges that, pursuant to the lease, the

Landlord gave Mr. Gaudelet and L’Atelier notice of default and notice of

termination of the lease.15 Further, that complaint alleges that neither party paid rent

after the alleged termination date.16 That complaint also alleges that Mr. Gaudelet

is jointly and severally liable.17

II. PROCEDURAL HISTORY

In June 2024, Bastion filed its Complaint here, asserting one count seeking a

12
Agreement at Schedule 3.12, Section 3.12(b).
13
Id.
14
Opening Brief (“Op. Br.”), Ex. A (D.I. 18).
15
Op. Br., Ex. A. ¶¶ 9, 12.
16
Id. ¶ 16.
17
Id. ¶¶ 33, 37, 41.
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declaratory judgment (“Count I”).18 Mr. Gaudelet answered and asserted two

counterclaims, for breach of the Agreement (“Counterclaim I”) and a declaratory

judgment (“Counterclaim II”).19

Bastion responded with a Motion to Dismiss the Counterclaims.20 Along with

Mr. Gaudelet’s answering brief, he filed his Motion to Stay.21 Bastion filed its reply

supporting its motion to dismiss and opposing stay application.22 After Mr. Gaudelet

replied,23 the Court heard argument.24

III. STANDARD OF REVIEW

Under Superior Court Civil Rule 12(b)(6), a party can move to dismiss for

failure to state a claim upon which relief can be granted.25 In resolving a Rule

12(b)(6) motion, the Court “(1) accept[s] all well-pleaded factual allegations as true;

(2) accept[s] even vague allegations as ‘well pleaded’ if they give the opposing party

notice of the claim, (3) draw[s] all reasonable inferences in favor of the non-moving

18
See generally Compl.
19
Answer and Counterclaims (D.I. 14).
20
Motion to Dismiss (D.I. 17).
21
Answering Brief (“Ans. Br.”) (D.I. 21); Motion to Stay (D.I. 22).
22
Reply (D.I. 26).
23
Reply in Support of Motion to Stay (D.I. 31).
24
D.I. 32.
25
Del. Super. Ct. Civ. R. 12(b)(6).
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party, and (4) [will not dismiss a claim] unless the [claimant] would not be entitled

to recover under any reasonably conceivable set of circumstances.”26 Delaware’s

pleading standard is “minimal.”27 And dismissal is inappropriate unless “under no

reasonable interpretation of the facts alleged could the [counterclaims] state a claim

for which relief might be granted.”28

IV. PARTIES’ CONTENTIONS

A. COUNTERCLAIM I

With respect to Counterclaim I for breach of contract, Bastion pens three

arguments for dismissal. First, Bastion insists that Mr. Gaudelet’s request for

indemnification is premature because, as yet, there is no judgment against

Mr. Gaudelet in the New York Action.29 Second, that Mr. Gaudelet has failed to

state a claim for breach because he can’t allege he has suffered any Agreement-

defined “Damages”; that definition excludes anything mentioned on the Company

Disclosure Schedule, and that schedule includes the Guaranty.30 Third, even if

26
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011).
27
Cent. Mortg., 27 A.3d at 536 (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 895 (Del. 2002)).
28
Unbound P’rs Ltd. P’ship v. Invoy Hldgs. Inc., 251 A.3d 1016, 1023 (Del. Super. Ct. 2021)
(internal quotation marks omitted); see Cent. Mortg., 27 A.3d at 537 n.13 (“Our governing
‘conceivability’ standard is more akin to ‘possibility’ . . . .”).
29
Op. Br. at 7-8.
30
Id.
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Mr. Gaudelet were able to properly allege damages, the Agreement’s

indemnification provision only applies when Mr. Gaudelet is being sued for a

“breach” of the Guaranty, and the Landlord in the New York Action hasn’t alleged

any such breach.31

Mr. Gaudelet counters that Counterclaim I is ripe because Bastion has asserted

in its own Complaint that a controversy exists. This, he says, has waived Bastion’s

attempted affirmative defense.32 In the alternative, if the Court disagrees and finds

that questions regarding indemnification are premature, then Mr. Gaudelet asks the

Court to stay this proceeding with respect to any indemnification-related claims.33

Further, Mr. Gaudelet argues that a ripe controversy exists because Agreement

Section 6.2 requires Bastion to defend him in—not just indemnify him for—the

New York Action.34 Second, Mr. Gaudelet argues that he has stated a claim for

breach of the Agreement and has properly alleged damages because Section 6.2 of

the Agreement itself explicitly references the Guaranty, and thus as a matter of

contract interpretation it would not make sense that the parties intended to exclude

31
Id. at 8.
32
Ans. Br. at 18.
33
Id. at 22.
34
Id. at 18-19.
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it from Section 6.2’s purview via listing it on the Company Disclosure Schedule

attached to the Agreement.35 Third, Mr. Gaudelet argues that the New York Action

is alleging a breach of the Guaranty against him; the complaint in that action has not

alleged that he is liable for any reason other than his role as Guarantor.36 Further,

Mr. Gaudelet argues that Agreement Section 6.2 should be read in the disjunctive

such that the clauses “resulting from,” “related to” and “arising out of any breach”

are separate.37

B. COUNTERCLAIM II

Bastion argues that Counterclaim II is duplicative of Count I, and thus should

be dismissed for efficiency purposes.38

Mr. Gaudelet responds that Counterclaim II differs from Count I in that

Counterclaim II includes a request that the Court declare that Bastion has a duty to

defend Mr. Gaudelet in the New York Action, as opposed to just indemnify

Mr. Gaudelet for any judgment that may result.39

35
Id. at 11-14.
36
Id. at 17.
37
Id. at 16.
38
Op. Br. at 9.
39
Ans. Br. at 22-23.
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V. DISCUSSION

A. THE INDEMNIFICATION ISSUES ARE NOT RIPE.

Delaware’s Declaratory Judgment Act empowers the Court to “declare rights,

status and other legal relations whether or not further relief is or could be claimed.”40

But the Court often looks to see if there is an extant actual controversy before

exercising declaratory judgment jurisdiction.41 For an actual controversy to exist the

case must be ripe.42 “As to indemnity claims, Delaware courts decline to enter a

declaratory judgment until there is a judgment against the party seeking it. What is

more, indemnification claims do not accrue until the underlying claim is finally

decided.”43

Here, as both parties admit, the New York Action is still pending and no

judgment has been entered against Mr. Gaudelet. Thus, any determination of

Bastion’s indemnification obligations under the Agreement is premature. While

Mr. Gaudelet suggests that Bastion has “waived” this argument by its own complaint

asserting that there is a controversy to be resolved now, ripeness is an issue of

40
DEL. CODE ANN. tit. 10, § 6501 (2024).
41
Ham v. LinQuest Corp., 2024 WL 1850518, at *7 (Del. Super. Ct. Apr. 18, 2024).
42
Id.
43
Id.
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justiciability. And the Court always retains its ability to consider such justiciability

issue at any time.44

B. GRANTING MR. GAUDELET’S MOTION TO STAY WOULD PROMOTE AN
ORDERLY AND EFFICIENT ADMINISTRATION OF JUSTICE.

The Court has discretion over whether to grant a motion to stay.45 In deciding

on a stay, the Court should consider principles of comity and orderly and efficient

administration of justice.46 In the context of staying indemnification claims, when

underlying proceedings have commenced that could potentially trigger coverage,

then an injury is “imminent” and the Court often stays actions to allow the

underlying proceedings to conclude.47

As outlined above, the New York Action has been pending for about two

years. And it’s just that action’s resolution that is the potential trigger of Bastion’s

indemnification obligations. If the New York Action results in a judgment against

Mr. Gaudelet, then there’s a substantial likelihood that the Court will need to decide

Bastion’s indemnification obligations. The alternative to staying the

44
Emp’rs Ins. Co. of Wausau v. First State Orthopaedics, P.A., 312 A.3d 597, 613 (Del. 2024).
45
Yellow Pages Grp., LLC v. Ziplocal, LP, 2015 WL 358279, at *4 (Del. Super. Ct. Jan. 27,
2015) (staying indemnification claim where that claim was not yet ripe).
46
Id.
47
Lima USA, In. v. Mahfouz, 2021 WL 5774394, at *14 (Del. Super. Ct. Aug. 31, 2021)
(collecting cases).
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indemnification claims would be to dismiss them. But that then would likely result

in the parties just filing again in this Court at the conclusion of the New York Action.

In the interests of comity and efficiency, Mr. Gaudelet’s Motion to Stay is

GRANTED.

C. MR. GAUDELET HAS ADEQUATELY PLED A BREACH OF THE AGREEMENT.

To plead a breach-of-contract claim, a party must allege: (1) the existence of

a contract; (2) a breach of the contract; and (3) damages suffered as a result of the

breach.48

1. Bastion’s interpretation of the Agreeement’s definition of “Damages”
isn’t the only reasonable interpretation.
Bastion insists that Mr. Gaudelet cannot plead damages because the

Agreement’s definition of “Damages” precludes any damages resulting from the

Guaranty.49 This argument stems from the fact that “Damages” as used in

Agreement Section 6.2 is defined to exclude any damages related to items set forth

on the Company Disclosure Schedules.50 The Guaranty is listed on the Company

Disclosure Schedule attached to the Agreement.51 But, as Mr. Gaudelet points out,

48
VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003); Ham, 2024 WL
1850518, at *8.
49
Op. Br. at 7.
50
Agreement at Article 1 (Definitions).
51
Id. at Schedule 3.12, Section 3.12(b).
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this is in conflict with the explicit wording of Section 6.2. So, the Court must

interpret this Agreement provision.

Contract interpretation is a question of law that might be resolved on a motion

to dismiss.52 To succeed though, the movant’s interpretation must be “the only

reasonable construction as a matter of law.”53 Otherwise, for purposes of deciding

a 12(b)(6) motion, the language must be resolved in the non-movant’s favor.54

Specific language in a contract controls over general language, and when in conflict,

the specific language typically qualifies the general language.55 Interpretations that

render a provision meaningless, or yield absurd results, must be rejected.56

Agreement Section 6.2 specifically states that Bastion agrees to indemnify

and defend Mr. Gaudelet for “any and all Damages” he incurs “resulting from,

related to or arising out of any breach” of the Guaranty. If Bastion’s interpretation

of “Damages” is adopted, then this provision is essentially meaningless. And the

52
E.g., Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1030 (Del. Ch. 2006)
(“Under Delaware law, the proper interpretation of language in a contract is a question of law.
Accordingly, a motion to dismiss is a proper framework for determining the meaning of contract
language.”).
53
VLIW Tech., 840 A.2d at 615 (citation omitted).
54
Id.; Veloric v. J.G. Wentworth, Inc., 2014 WL 4639217, at *8 (Del. Ch. Sept. 18, 2014) (“At
the motion to dismiss stage, ambiguous contract provisions must be interpreted most favorably to
the non-moving party.”).
55
Urvan v. Ammo, Inc., 2024 WL 863688, at *21 (Del. Ch. Mar. 14, 2024).
56
E.g., Manti Holdings, LLC v. Authentix Acquisitions Co., 261 A.3d 1199, 1211 (Del. 2021).
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Court won’t adopt an interpretation of the Agreement that renders any of its

provisions meaningless.57 With the context of the Agreement’s recitals indicating a

desire to “release” Mr. Gaudelet from the Guaranty,58 the Guaranty’s inclusion on

the Company Disclosure Schedule is as likely an oversight as it was intended. Thus,

Bastion has not carried its burden of showing that its read of Section 6.2 is the only

reasonable construction.

2. Section 6.2 should be read in the disjunctive, and even if it isn’t, the New
York Action, as it relates to Mr. Gaudelet, pertains to a breach of the
Guaranty.
Bastion argues, based on its reading of Section 6.2, that for the Agreement’s

indemnification provision to be triggered, the New York Action needs to assert a

breach of the Guaranty. While there is no hard-and-fast rule for this interpretation,

generally courts read “and” as conjunctive while reading “or” as disjunctive. 59 So

in the norm, Agreement Section 6.2 would be read as requiring Bastion to indemnify

and defend Mr. Gaudelet from damages “resulting from” the Guaranty, “related to”

the Guaranty, and “arising out of any breach” of the Guaranty. As such, the New

York Action clearly would be covered.

57
Id.
58
Agreement (Recitals).
59
Weinberg v. Waystar, Inc., 294 A.3d 1039, 1045 (Del. 2023).
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But even if read in the conjunctive as Bastion suggests, such that the complaint

in the New York Action would need to assert a breach of the Guaranty for Bastion’s

obligations under Section 6.2 to be triggered, Counterlclaim I is still adequately pled.

The Guaranty provides that Mr. Gaudelet’s liability is “primary” and that the

Landlord doesn’t need to first exhaust all remedies against L’Atelier.60 The New

York Action’s complaint alleges that, pursuant to the lease, the Landlord gave

Mr. Gaudelet notice of default and notice of termination of the lease.61 Further, the

complaint alleges that neither party paid rent after the alleged termination date.62

And the complaint also alleges that Mr. Gaudelet is jointly and severally liable.63

Thus, by alleging failure to remit payment when notified, the complaint in the New

York Action states a claim against Mr. Gaudelet for breach of the Guaranty.

In addition, the Guaranty is also incorporated into the lease as Exhibit D.64

Reading the New York Action’s complaint in the light most favorable to

Mr. Gaudelet, any references therein to a breach of the lease could be read as also

alleging a breach of the Guaranty.

60
Guaranty ¶ 3.
61
Op. Br., Ex. A ¶¶ 9, 12.
62
Id. at ¶ 16.
63
Id. at ¶¶ 33, 37, 41.
64
Op. Br., Ex. B.
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3. Mr. Gaudelet’s claim for breach of Bastion’s duty to defend is ripe
and adequately pled.

The duty to defend is a separate obligation from the duty to indemnify and

arises when an allegation in the underlying complaint shows a potential for

liability.65

Again, any claim for breach of Bastion’s duty to indemnify is premature. But

Mr. Gaudelet also alleges a breach of Bastion’s duty to defend him in the New York

Action.66 This claim is ripe because, as discussed above, the complaint in the New

York Action demonstrates that Mr. Gaudelet may be found liable thereunder.

Mr. Gaudelet alleges that he has “incurred significant legal fees” because of

Bastion’s refusal to defend him in the New York Action as required by Agreement

Section 6.2.67 This is sufficient to plead a breach of Bastion’s duty to defend.68

Accordingly, the Motion to Dismiss is DENIED as to Counterclaim I.

D. COUNTERCLAIM II IS DUPLICATIVE OF COUNTERCLAIM I.

To survive dismissal, a declaratory count must be distinct from the affirmative

65
Laguelle v. Bell Helicopter Textron, Inc., 2014 WL 2699880, at *7 (Del. Super. Ct. June 11,
2014).
66
Answer and Counterclaims ¶¶ 31, 35, 36.
67
Id. at ¶ 37.
68
Yellow Pages Grp., LLC, 2015 WL 358279, at *3 (“Allegations are well-pled if they place the
defendant on notice of the claim.”).
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counts such that a decision on the affirmative counts would not resolve the

declaratory count.69

While the parties briefed whether Counterclaim II is duplicative of Count I,

the obvious deficiency is that Counterclaim II is duplicative of Counterclaim I.

Counterclaim I asserts that Bastion is in breach of its obligations to indemnify

and defend Mr. Gaudelet under Agreement Section 6.2. Counterclaim II asks the

Court to declare that same Section 6.2 obligates Bastion to indemnify and defend

him. There is no daylight between these two claims; resolution of Counterclaim I

would fully resolve Counterclaim II. Counterclaim II, therefore, is duplicative.

Thus, Bastion’s Motion to Dismiss is GRANTED as to Counterclaim II. As

this dismissal is not a matter of pleading deficiency, the Court need not grant leave

to amend, as any such amendment would be futile.70

VI. CONCLUSION

For the foregoing reasons:
- Bastion’s Motion to Dismiss (D.I. 17) is GRANTED as to
Counterclaim II and DENIED as to Counterclaim I; and

- Mr. Gaudelet’s Motion to Stay (D.I. 22) is GRANTED. The parties

69
Blue Cube Spinco LLC v. Dow Chem. Co., 2021 WL 4453460, at *15 (Del. Super. Ct. Sept.
29, 2021).
70
Clark v. State Farm Mut. Auto. Ins. Co., 131 A.3d 806, 811 (Del. 2016) (“[L]eave to amend
should be denied when the proposed amendment would be futile.”).
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shall file a written status report alerting the Court if any judgment is
entered against Mr. Gaudelet in the New York Action. That status
report shall be filed within 21 days of the entry of such judgment
and the Court will then hold a status conference with the parties on
next steps to be taken in this matter.

IT IS SO ORDERED.
/s/ Paul R. Wallace
_______________________
Paul R. Wallace, Judge
cc: All Counsel via File and Serve