Delaware Court Interprets “Including”

Delaware Court Interprets “Including”

      In a decision rendered last week by the Delaware Superior Court (the Superior Court is the court of general jurisdiction in Delaware) interpreted the phrase “including”. Triumph Arrow Structures-Tulsa, LLC v. Spirit Aero Systems, Inc., C.A. No. N17C-11-262 MMJ CCLD (Del. Sup. Ct. Aug. 8, 2018).

      Triumph, pursuant to an asset purchase agreement (the “APA”) acquired from Sprint two wing supply programs for Gulfstream. Spirit, as the seller, retained responsibility for the Excluded Liabilities as defined under the APA. The dispute would term on what constitutes a Excluded Liability. Triumph, the purchaser argued that “any matter set forth in schedule 3.19(b) in the definition of Excluded Liabilities, enlarges, and does not limit, what falls within the definition. That schedule 3.19(b) in turn incorporated Attachment 3.19(b), it setting forth the warranty claims that are at the core of this dispute.

      In response, Spirit argued that a separate provision of the agreement required that Triumph, as purchaser, assume all warranty liabilities, and that those claims listed on Schedule 3.19(b) should be treated as an exclusive list of those known claims for which it retained exposure.

      The court would ultimately find that the subject provisions are clear and unambiguous, and that the “includes” should be treated as expanding, and not limiting, the items described on the schedule. Rather:

Triumph agreed to assume “all Warranty Liabilities.” That assumption explicitly excludes Known Claims. Spirit agreed to retain Excluded Liabilities. Excluded Liabilities include Liabilities arising from Known Claims. Excluded Liabilities include any matter set forth on Schedule 3.19(b), which is a Liability arising out of any lawsuit, proceeding, claim, arbitration, mediation, governmental inquiry, or investigation pending as of the closing.

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Spirit is required to “pay, perform, discharge or otherwise satisfy” all Liabilities arising from Known Claims. Liabilities include matters set forth in schedule 3.19(b), which incorporates Attachment 3.19(b). The Court cannot determine at this juncture whether every single matter on Attachment 3.19(b) is a “Liability arising out of any lawsuit, proceeding, claim, arbitration, mediation, governmental inquiry, or investigation pending as of the closing …” Slip op at 8-9, footnotes omitted.