IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ALEXIS STOMBAUGH,
Plaintiff,
v.
ASHBURN HOMES, INC. and
SOBROOK, LLC,
Defendants.
ASHBURN HOMES, INC. and C.A. No. 2022-0076-CDW
SOBROOK, LLC,
Counterclaim
Plaintiffs,
v.
ALEXIS STOMBAUGH,
Counterclaim
Defendant.
POSTTRIAL REPORT
Date Submitted: February 26, 2026
Date Decided: July 8, 2026
Gary R. Dodge, CURLEY, DODGE, FITZGERALD & FUNK, LLC, Dover,
Delaware; Patrick C. Gallagher, JACOBS & CRUMPLAR, P.A., New Castle, Delaware; Counsel for Plaintiff and Counterclaim Defendant Alexis Stombaugh
Peter K. Schaeffer, Jr., AVENUE LAW, Dover, Delaware; Counsel for
Defendants and Counterclaim Plaintiffs Ashburn Homes, Inc. and Sobrook, LLC
WRIGHT, M.
This is a case that should not have gone to trial. A buyer entered into a
contract with a developer to buy a home that the developer would build. An
executed addendum to the contract forbade the developer from escalating the
purchase price of the property after breaking ground. The developer did it
anyway. The buyer sought answers but received no response from the
developer. Instead, the developer wrongly accused the buyer of breaching the
contract and purported to terminate the contract unilaterally.
Before, during, and after trial, the defendants dug in their heels. They
dismissed any notion of responsibility and continued to maintain that
everything they did was within their rights. Defendants’ owner, in an attempted
“gotcha,” asserted that the wrongful escalation was retracted when it never was.
He put this whole dispute at the feet of his counsel and the buyer.
In this posttrial report, I conclude that the contracting defendant breached
the contract between the parties without justification and the buyer is, therefore,
entitled to specific performance. I further recommend that the buyer’s attorney
fees be shifted to the defendants.
I. BACKGROUND
These are the facts as the court finds them after trial. The facts are drawn
from 54 trial exhibits (including two deposition transcripts) and live testimony
from eight fact witnesses and two expert witnesses. 1
A. The Parties
Plaintiff and counterclaim defendant Alexis Stombaugh (“Stombaugh”)
is a Delaware resident who, in 2020, was looking to buy a home in Kent
County. 2 Defendant and counterclaim plaintiff Ashburn Homes, Inc.
(“Ashburn”) is a property-development company that builds homes in Kent
County. 3 Defendant and counterclaim plaintiff Sobrook, LLC (“Sobrook”) is a
holding company that owns the land in Riverview that Ashburn developed. 4
Nonparty Jordan Ashburn (“Mr. Ashburn”) is the owner of Ashburn and
Sobrook’s managing member. 5
1 Volume I of the trial transcript (pages 1–272) is at Docket Number 65, and Volume
II of the trial transcript (pages 273–382) is at Docket Number 80. Trial transcript citations are in the form of “Trial Tr. ___.” The parties did not submit a single set of joint trial exhibits, so trial exhibits are cited as “PX __” and “DX __.” 2 See Trial Tr. 13–16, 70–71.
3 See id. 153–155.
4 See id. 154, 303.
5 Id. 303.
-2-B. Stombaugh Picks the Property
Stombaugh focused her search for a home on the Riverview subdivision
of Frederica, Delaware, where Ashburn was building homes.6 Ashburn worked
with Rush Home Realty to list its Riverview homes for sale. 7 Ashburn only
communicated to buyers of its homes through its realtors. 8
By mid-January 2021, Stombaugh had selected a lot in Riverside and a
model home to be built on the lot (“Property”). 9 She worked with Rush Homes
Realty, through its agents, Bert Ferguson (“Ferguson”) and Marcus Rush
(“Rush”), to execute the sale of the lot and construction of the Property. 10
During this period, Ferguson requested information on specific “options,
upgrades and other selections,” for the Property, including “tile selections for
the master bathroom for the [Property].” 11 Stombaugh provided the requested
information and, on January 28, selected tiling for the master bathroom. 12
6 Id. 15–16.
7 Id. 155, 158.
8 See id. 324.
9 See id. 17–18.
10 See id. 40.
11 Pl. Alexis Stombaugh’s Opening Post Trial Br. (“Pl.’s Opening Br.”), Dkt. 71 at 3
(citing Trial Tr. 18).
12 PX 21 at P-389.
-3-Stombaugh made her tiling selection by sending a picture of a different
Ashburn home’s shower tiling to Ferguson. 13 She chose “the Calcutta tile, [a]
white tile with gray veining.” 14 Ferguson confirmed that her tile selection
would be reflected in the eventual contract for the Property.15
1. The Agreement of Sale
On March 3, the parties executed the Agreement of Sale for the purchase
of the Property (“Agreement”). 16 The Agreement reflects a base purchase price
of $334,900 and a total price (including options and discounts) of $350,411. 17
The Agreement “emphasize[s] that time is of the essence for” two parts
of the transaction: (1) Stombaugh’s mortgage application and commitment;
and (2) Stombaugh’s option selections for the home.18 The Agreement requires
options for the home to be selected “within 14 days” of the Agreement’s
execution. 19 Stombaugh’s failure to comply with these deadlines constitutes a
default on the agreement. 20 If Stombaugh defaults, the Agreement gives
Ashburn the right to (1) cancel the transaction and retain Stombaugh’s deposit,
13 See Trial Tr. 19–20; see also PX 21.
14 See Trial Tr. 23, 42.
15 PX 21 at P-389.
16 PX 11 at P-332 to P-341.
17 Agreement ¶ 5.
18 Id. ¶ 7.
19 Id. ¶ 7(2).
20 Id. ¶¶ 15, 20.
-4-(2) seek specific performance of the Agreement, and (3) exercise any other
right or remedy available at law. 21
Additionally, the Agreement gives Ashburn discretion to terminate the
contract in three situations: (1) “[Ashburn] determine[s] that [Stombaugh’s]
Mortgage Approval: (a) does not meet the requirements of this Agreement;
(b) was not obtained within the required time; (c) is conditional or non-binding;
or (d) [Stombaugh] do[es] not make a reasonable effort to obtain a mortgage;”
(2) “[Ashburn] determine[s] that for reasons beyond [its] control, [Ashburn]
cannot achieve Substantial Completion within a reasonable period of time after
the Estimated Date of Substantial Completion; or” (3) “[Ashburn] [is] not able
to obtain all necessary public or private approvals and permits within a
reasonable time.” 22 If Ashburn terminates the Agreement and Stombaugh is not
at fault, Ashburn must return to Stombaugh whatever money she actually
paid. 23
2. The Addendums
The parties executed several addendums with the Agreement, three of
which are important here. First, the parties executed the Addendum to Contract
for Sale and Purchase, which reflected the options and selections Stombaugh
21 Id. ¶ 15.
22 Id. ¶ 16.
23 Id.
-5-chose for the Property. 24 Second, the parties executed the “Selection Time
Limit Addendum,” which gave the deadlines for Stombaugh’s selections in
order “to eliminate any additional costs and to best meet completion
schedules.” 25 The Selection Time Limit Addendum also reflects Ashburn’s
commitment to scheduling four specific meetings with Stombaugh before
settlement of the Property.26 These meetings included a pre-drywall meeting.27
Third, the parties executed the “Price Escalation Addendum.”28 This addendum
explains that, although “an escalation charge may be added to [Stombaugh’s]
purchase price prior to the start of construction . . . [,] [n]o additional escalation
charges will be added once [Ashburn] ha[s] broken ground on the start of
construction.” 29 As with the Agreement, the parties executed these addendums
on March 3, 2021. 30
24 PX 11 at P-347. Stombaugh included an additional form, dated January 22, 2021,
which reflects her tiling selection. PX 13. This form and the Addendum to Contract for Sale and Purchase describe Stombaugh’s tile section only as “4x6 tile.” They do not provide the color of the tiling or that the tiling is “Calcutta” tiling. See PX 11, 13. 25 PX 11 at P-342 to P-343. Relevant here, the addendum says “All options must be
submitted within 14 days after the Agreement of Sale is ratified.” Id. at P-342. It essentially duplicates the 14-day options deadline language in the Agreement. See Agreement ¶ 7.
26 Selection Time Limit Addendum at P-342.
27 Id.
28 PX 12.
29 Price Escalation Addendum.
30 See Agreement at P-343, P-347; Price Escalation Addendum.
-6-C. Stombaugh Prepares for Closing
Stombaugh selected color options for the home on March 7, during a
meeting with Ferguson. 31 At the meeting, Ferguson did not inform Stombaugh
of any other options that she needed to make. 32 To Stombaugh, her transaction
was proceeding as planned.
Stombaugh obtained a mortgage commitment on March 10. 33 The
mortgage bore an interest rate of 2.750% and was locked for the duration of the
commitment, which expired on April 2, 2021. 34 Stombaugh timely submitted
the mortgage commitment and nobody from Ashburn or Rush Home Realty
notified her of any issues with the mortgage. 35
On August 17, Stombaugh met with Ferguson and Rush for a preconstruction meeting at the Property. 36 By then, Ashburn had broken ground
on the Property. 37 At the meeting, Rush asked Stombaugh if she had met with
nonparty L&L Tile Company (“L&L”) to make her carpeting and tile
31 Trial Tr. 37.
32 Id.This is consistent with testimony from Ashburn’s representative, Jacqueline McCann (“McCann”), who testified that selections like colors, trim, and tile are not covered by the 14-day deadline and simply need to be done by the preconstruction meeting. See Trial Tr. 163–64. McCann was the corporate officer who signed the Agreement for Ashburn.
33 PX 43.
34 Id. at P-461.
35 See Trial Tr. 80–81.
36 Id. 38–39.
37 See id.
-7-selections. 38 Stombaugh—who had never before received notice of L&L’s
participation in the options-selection process—said she had not. 39 This
prompted Rush to contact McCann to ask her if L&L had ever contacted
Stombaugh. 40 McCann responded that L&L had not, and stated:
That was my fault. I didn’t send [Stombaugh’s]
information to L&L. I just sent it to them. Give
them a couple of days to get this into the system and
they’ll reach out to [Stombaugh]. 41
McCann sent Stombaugh’s information to L&L by email and wrote: “I
forgot to send this to your office. Can we get these buyer’s [sic] scheduled
ASAP to make selections. Please see L&L contact sheet, house plans, colored
flooring sheet, etc.” 42 L&L promptly contacted Stombaugh and scheduled an
options-selection meeting with her for August 21, 2021. 43
1. The Tiling Selection
At the options-selection meeting, Larry Mocadlo (“Mocadlo”) of L&L
informed Stombaugh that the meeting was the time for Stombaugh to make
upgrades to any selections for the Property. 44 Mocadlo and Stombaugh
38 Id. 39.
39 Id.
40 See id.
41 PX 26.
42 Id.
43 Trial Tr. 40.
44 Id. 41.
-8-discussed Stombaugh’s tile selections. Mocadlo was unaware that Stombaugh
had already selected the Calcutta tiling for her master shower because Ashburn
did not include it in the paperwork that it sent to L&L. 45 He informed
Stombaugh that the Calcutta tiling she chose in January would require an
additional upgrade not reflected in the Agreement’s price.46 But Mocadlo could
not give Stombaugh a specific upgrade price at that time. He told Stombaugh
the upgrade price would need to be resolved before they could execute a formal
option selection agreement.47 He also told Stombaugh they would proceed with
selecting the rest of her options. 48
Between August and November 2021, Stombaugh wrote to Mocadlo
numerous times to request an update on the tiling upgrade price. Mocadlo’s
responses were minimal and vague. Stombaugh did not receive a specific
estimate for the increased tile price until September, when Mocadlo informed
her that the tiling upgrade would cost “almost $2000.” 49 After this, however,
Mocadlo again became unresponsive.
45 Id. 41–42.
46 Id.
47 Id. 42.
48 Id.
49 PX 39 at P-451.
-9-On November 15, Mocadlo told Stombaugh that her desired tiling would
require another escalation—this time, “an additional $416.00.” 50 Mocadlo
added that, if Stombaugh desired floor-to-ceiling tiling, it “would cost an
additional $395.00.” 51 On November 20, L&L sent to Stombaugh a formal
selection agreement for the tiling. 52 Stombaugh signed the agreement on the
same day. 53
2. The Property Price Escalation
Separately, on October 22, McCann told Rush of a price escalation
Ashburn sought to impose on the purchase of the Property. McCann
acknowledged that Ashburn “started construction on this home without . . .
providing the escalation charge to be added to the contract.” 54 She
acknowledged that Ashburn “should not have started this home without . . .
providing this information prior to the breaking of ground.” 55 But she
explained to Rush that Ashburn needed to impose a $42,363 price escalation on
50 Id. at P-450.
51 Id. at P-451.
52 See PX 14. The agreement is dated “August 21, 2021.” Id.
53 Id.
54 PX 32 at P-431.
55 Id.
- 10 -the sale. 56 At trial, McCann testified, under questioning from defendants’
counsel, “I’m sure I discussed it with [Mr. Ashburn], and I sent it.” 57
Ferguson informed Stombaugh of the requested price escalation. 58
Because Ashburn had already broken ground on the Property, Stombaugh was
understandably confused about the escalation and asked to contact Ashburn
directly to discuss it. 59 Stombaugh contacted McCann by phone and email on
October 22, October 25, and October 26, but received no response each time. 60
Ferguson later informed Stombaugh that Ashburn was refusing to proceed with
the Agreement until the parties resolved the attempted price escalation. 61
At trial, Mr. Ashburn conceded the Price Escalation Addendum
unambiguously prohibited Ashburn from increasing costs after it broke ground
on the Property. 62 He suggested sending this was a mistake, and that once
Ashburn understood “after the fact” the price escalation was unenforceable, he
56 Id.
57 Trial Tr. 252. Mr. Ashburn, for his part, said he did not recall the conversation but
McCann would have no reason to lie about it. Id. 340.
58 PX 33 at P-434.
59 Id. at P-435.
60 PX 34. Mr. Ashburn maintained at trial that the reason Ashburn ignored Stombaugh’s communications was because she had copied her counsel on emails so Ashburn would, in turn, only communicate with Stombaugh through its own counsel. See, e.g., Trial Tr. 347.
61 See Trial Tr. 74.
62 See id. 307, 338–39.
- 11 -instructed counsel (defendants’ trial counsel here) to retract it. 63 Defendants
did not offer any contemporaneous evidence to support this bare assertion and
did not address it during posttrial briefing or at posttrial argument. 64
On October 29, defendants’ counsel wrote to Stombaugh’s counsel.
Defendants’ counsel asserted that Stombaugh defaulted on the Agreement by
purportedly failing to timely make options selections. 65 Defendants’ counsel
insisted Ashburn had the right to terminate the Agreement and that
Stombaugh’s purported failure entitled defendants to retain her deposit. 66
Defendants’ counsel told Stombaugh she could receive her deposit back if she
agreed to terminate the Agreement. 67 Counsel for Stombaugh and Defendants
traded correspondence on this issue into November. 68
In January 2022, still anticipating her purchase of the Property would
close, Stombaugh obtained a new mortgage commitment, at a rate of 3.625%.69
Despite this, the parties’ dispute over the price escalation and Stombaugh’s
63 See id.
64 The court does not find this testimony to be credible. There was nothing accidental
about what Ashburn did. McCann testified the price escalation notice was sent intentionally, knowing they had already broken ground, after she talked to Mr. Ashburn about it. Id. 252.
65 PX 16 at P-359.
66 Id.
67 Id.
68 Id.
69 Trial Tr. 365.
- 12 -purported default led to the transaction stalling and construction on the Property
stopping. Stombaugh testified that, because of this, the Property stayed “open
to the elements” after November 2021, until the Property’s eventual completion
in late 2024. 70 The parties never conducted the pre-drywall inspection of the
Property and Stombaugh has yet to attend a final walkthrough. 71
D. Recent Developments
Still in need of a home, in 2023, Stombaugh purchased a different
property in Magnolia. 72 Stombaugh executed a mortgage for the home with
Capital Bank Home Loans (“Capital Bank”), through its agent, Mr. Joe
Gensoli. 73 She still wants to purchase the Property but now as an investment
property—one that she can “rent . . . out and hopefully be able to have . . . as a
passive income.” 74 Stombaugh testified that she could pay a down payment for
the Property of up to $85,000.75
Stombaugh’s previous commitments for the Property have expired. In
2024, Capital Bank issued Stombaugh a mortgage preapproval letter for the
70 Id. 70.
71 See id. 73.
72 Id. 71.
73 See id. 97–98.
74 Id. 71.
75 See id. 72.
- 13 -Property.76 The loan amount requires a 10% down payment and its principal
bears an interest rate of 6.375%. 77
Capital Bank issued the 2024 preapproval letter to Stombaugh while it
was still unclear whether she would use the Property as her primary residence.78
Since then, however, Stombaugh has chosen to use the Property for investment
purposes. Accordingly, Capital Bank issued Stombaugh updated mortgage
terms reflecting the Property’s investment purpose. The updated terms require
a 20% down payment and would carry an interest rate of 7.5%. 79 Gensoli
testified Capital Bank can issue the new mortgage within 21 days of this
action’s resolution. 80
II. PROCEDURAL POSTURE
On January 24, 2022, Stombaugh filed the original complaint. 81 On
February 11, Stombaugh filed a notice of lis pendens in the Kent County
Recorder of Deeds office. 82 On February 16, Stombaugh filed the amended
76 PX 44. Gensoli reviewed and prepared the letter but had his processor, Lisa Deal,
sign the letter. Trial Tr. 102. Gensoli maintains this is Capital Bank’s standard practice. Id.
77 PX 44 at P-465.
78 See Trial Tr. 107–08.
79 See id. 112.
80 See id. 115.
81 Dkt. 1.
82 Notice of Filing of Lis Pendens Pursuant to 25 Del. C. § 1605, Dkt. 5.
- 14 -complaint. 83 The amended complaint asserts defendants’ breach of the
Agreement and seeks specific performance of the Agreement. 84 Stombaugh
also seeks damages stemming from interest differential between her past and
present mortgages. 85
On July 7, defendants filed their amended answer and counterclaim. 86
Defendants’ counterclaim asks the court to declare (1) Stombaugh “failed to
make option selections within the required time” and (2) this purported failure
“allows, at Defendant Ashburn’s election, to declare the Sales Agreement void,
and in addition, allows forfeiture of Plaintiff’s deposits.” 87
On May 29, 2024, defendants filed the “Motion for Mandatory
Cancellation of Lis Pendens Pursuant to 25 Del. C. § 1606, or in the alternative,
for Settlement within Thirty (30) Days of 16 Douglas Drive, Frederica,
Delaware 19946.” 88 As the name suggests, the motion generally requested
either cancellation of the lis pendens on the Property or “an order requiring
closing on the Property within thirty (30) days of the date of the Order[.]” 89
83 Verified Am. Compl. (“Am. Compl.”), Dkt. 4.
84 Id. ¶ 1.
85 See id., Req. for Relief ¶ 2.
86 Dkt. 8.
87 Id. at 23–24.
88 Dkt. 25.
89 Id., Req. for Relief ¶¶ A–B.
- 15 -The parties briefed the motion and the court heard oral argument on July 18. 90
On July 19, the court denied the motion. 91 As for defendants’ requested order
for prompt settlement, the court explained such a request “essentially asks the
[c]ourt to force a piecemeal resolution without [Stombaugh]’s buy-in.” 92
On January 9, 2025, the court held the first day of trial on the parties’
claims. 93 On March 18, the court held a second day of trial to allow parties to
finish examining their witnesses. 94 The parties filed posttrial briefs through
September.95 On February 26, 2026, the court heard oral argument and took the
matter under advisement. 96
III. ANALYSIS
Stombaugh asserts a claim of breach of contract against defendants. She
seeks (1) an order of specific performance requiring defendants to comply with
the Agreement; (2) specific damages reflecting the interest differential between
her past and present mortgages; and (3) an award of attorney fees. 97
Defendants, in turn, seek a declaration that Stombaugh failed to timely select
90 See Dkt. 33.
91 Dkt. 34.
92 Id.
93 Dkt. 63.
94 Id.
95 Dkts. 71–74.
96 Dkt. 79.
97 Pl.’s Opening Br. 58.
- 16 -options and, as such, defendants can terminate the Agreement. 98 I begin with
defendants’ counterclaim.
A. The Counterclaim
Defendants argue that Stombaugh breached the Agreement by failing to
timely select her options through L&L. 99 Defendants point to the “time is of
the essence” language in paragraph 7 of the Agreement, note that Delaware
courts routinely enforce such language, and say it is fatal to Stombaugh’s
claims here because she did not select her tile within 14 days. 100 Near the end
of trial, defendants unveiled a new argument for why Stombaugh allegedly
breached the Agreement’s “time is of the essence” clause: Stombaugh failed to
maintain a valid mortgage commitment throughout the pendency of the parties’
dispute over the Property. 101 Both arguments fail.
1. The Purported 14-Day Options Deadline
Defendants’ argument that Stombaugh breached the Agreement’s “time
is of the essence” clause by not selecting her tile within 14 days fails for at least
three reasons.
98 See Posttrial Opening Br./Answering Br. of Defs./Countercl. Pls. (“Defs.’ Opening
Br.”), Dkt. 72 at 15.
99 See id. 33.
100 See Posttrial Reply Br. of Defs./Countercl. Pls. (“Defs.’ Reply Br.”), Dkt. 74 at 11,
27–33.
101 Trial Tr. 315–17; see also Defs.’ Opening Br. 15, 18–20.
- 17 -First, the argument fails because the 14-day options deadline did not
apply to Stombaugh’s tile selection, as McCann, the Ashburn officer who
signed the Agreement, testified. 102 Items like color, trim, and tile did not need
to be done until the preconstruction meeting. 103
Second, even if Stombaugh needed to select tile within 14 days of
signing the Agreement, she did. In fact, she selected tile before the Agreement
was signed. 104 The Agreement says only that options (however defined) must
be selected within 14 days; it does not say that any options, once selected, may
never be changed.105 Defendants drafted the Agreement and the addendums,106
so ambiguities and gaps in their language must be construed against defendants:
“If the contractual language at issue is ambiguous
and if [one party] did not negotiate for the
agreement’s terms, [Delaware courts] apply the
contra proferentem principle and construe the
ambiguous terms against the drafter.” If “the
articulation of contract terms . . . appears to have
been entirely within the control of one party . . . that
party bears full responsibility for the effect of those
terms.” This is because “[a]s the entity in control of
102 Trial Tr. 163–64.
103 Id.
104 PX 21 at P-388 to P-389. Defendants now concede Stombaugh made her initial tile selection by the time the parties signed the Agreement. See Defs.’ Opening Br. 7 (“Petitioner made her initial option[s] selections as to the bathroom at issue on March 3, 2021.”).
105 See Selection Time Limit Addendum at P-342.Structural changes, on the other hand, “will not be made after plans have been submitted for [the] construction permit[.]” Id.
106 See Trial Tr. 91–92, 252–53.
- 18 -the process of articulating the terms of the
[agreements], it [is] incumbent on the [drafter] to
make their terms clear.”
Leo Invs. H.K. Ltd. v. Tomales Bay Cap. Anduril III, L.P., 342 A.3d 1166, 1209
(Del. Ch. 2025) (first quoting Norton v. K-Sea Transp. P’rs L.P., 67 A.3d 354,
360 (Del. 2013); then quoting SI Mgmt. L.P. v. Wininger, 707 A.2d 37, 43 (Del.
1998); and then quoting Juul Labs, Inc. v. Grove, 238 A.3d 904, 911 (Del. Ch.
2020)).
Third, there is a heavy amount of inequity in defendants’ position that
further counsels against accepting their self-serving interpretation of the
Agreement and the addendums. Defendants concede Stombaugh made “initial
options selections” on March 3, 2021, 107 but then insist that the only way
Stombaugh could comply with the 14-day options deadline was by working
with L&L. 108 This is dirty pool. The Agreement and the addendums do not
mention L&L. 109 Defendants and their agents said nothing about L&L when
the parties signed the Agreement,110 and they did not even remember to connect
Stombaugh and L&L until months later. 111 There was no way for Stombaugh
to know on March 3, 2021 that defendants believed she had 14 days to meet
107 Defs.’ Opening Br. 7.
108 Id. 15–16.
109 See generally PX 11.
110 See Trial Tr. 91–92.
111 See id. 39–40, 91–93, 167–74.
- 19 -with L&L, because the only parties that knew L&L had a role to play—
defendants and their agents—stayed silent. 112 Defendants having withheld the
information from Stombaugh, it would be inequitable to allow them to profit
from that withholding.
Fourth, and finally, even if March 17, 2021 was Stombaugh’s deadline
and even if she failed to meet it, defendants still lose. “Time is of the essence”
clauses simply do not work the way defendants contend. They have
approached this case as if violation of such a clause turns the contract into an
open-ended option for the non-breaching party, who can continue to perform
under the contract as long as it suits them, then declare the contract void and
walk away as soon as it does not. But that is wrong. “[T]ime [is] of the
essence may be waived by inconsistent conduct subsequent to the time fixed for
performance.” Goldstein v. Buiano, 1962 WL 69603, at *1 (Del. Ch. Oct. 31,
1962). “After a contractual time limit has lapsed, a party may not, for months,
act as if the contract remains in effect and then suddenly treat the time limit as
critical and the contract as void when performance under the contract is not
rendered as that party had hoped.” Keyser v. Curtis, 2012 WL 3115453, at *10
(Del. Ch. July 31, 2012). That is precisely what defendants did here. They
112 This assumes defendants actually held this view before they needed a defense to
Stombaugh’s breach of contract claim. McCann’s trial testimony suggests otherwise. See id. 163–64.
- 20 -have waived the “time is of the essence” clause even if Stombaugh triggered it
by failing to make options selections with L&L by March 17, 2021. 113
In short, defendants cannot credibly maintain Stombaugh defaulted by
failing to select her options and upgrades through L&L. Stombaugh first
selected her tiling in January 2021 and Ferguson confirmed he would include
her selections in the Agreement.114 Stombaugh then confirmed those selections
with L&L in August, after Ashburn finally connected Stombaugh and L&L. 115
This is all that could reasonably be required of Stombaugh under circumstances
where defendants knew they held the cards and did not show their hand.
2. Defendants’ Untimely Mortgage Commitment
Argument
As noted, on the second day of trial, months after discovery closed116 and
the court granted the parties’ pretrial order, 117 defendants unveiled a new
113 Defendant’s reliance on the Agreement’s non-waiver clause does not help them
here. See Agreement ¶ 24 (“The start of any activity by us in connection with the Property is not to be deemed a waiver of any of our rights under this Agreement[.]”); Defs.’ Opening Br. 24–25, 32–33; Defs.’ Reply Br. 15–16. “[T]he law is clear that non-waiver clauses are not iron-clad protections that preclude courts from holding [a party] responsible for their post-contracting behavior.” In re Coinmint, LLC, 261 A.3d 867, 899 (Del. Ch. 2021) (quoting Viking Pump, Inc. v. Liberty Mut. Ins. Co., 2007 WL 1207107, at *28 n.116 (Del. Ch. Apr. 2, 2007)); see also Rehoboth Mall L.P. v. NPC Int’l, Inc., 953 A.2d 702, 703 (Del. 2008) (“The landlord argues that the lease’s ‘no waiver’ provision allows the landlord to enforce the tenant’s past defaults at any time. We disagree. The no waiver provision allows the landlord to strictly enforce future defaults notwithstanding its acquiescence in past defaults.”). 114 See PX 21 at P-389.
115 See Trial Tr. 39–42.
116 See Dkt. 45 ¶ 1(c).
- 21 -argument for why Stombaugh allegedly breached the Agreement’s “time is of
the essence” clause: Stombaugh failed to maintain a valid mortgage
commitment throughout the pendency of the parties’ dispute over the
Property.118
I will not dwell long on this argument. Defendants raise the issue far too
late for me to consider it. They should have raised it in their counterclaim, but
did not. 119 They should have raised it during discovery, but did not. 120 They
should have identified it in the pretrial order as an issue that remained to be
litigated, but did not. 121 They could have questioned Stombaugh about it at
117 Dkt. 59.
118 Trial Tr. 315–17; see also Defs.’ Opening Br. 15, 18–20.
119 See Dkt. 8, Countercl. ¶¶ 1–4 (identifying as the basis for the counterclaim only
“Plaintiff[‘s] fail[ure] to make option selections within the required time”). 120 Defendants did not raise the mortgage commitment letter in their responses to
Stombaugh’s interrogatories. See PX 7; see also Marshall Fam. Props., LLC v. Fusco, 2026 WL 221459, at *4 (Del. Ch. Jan. 28, 2026) (“The Supreme Court ‘has long recognized the purpose of discovery is to advance issue formulation, to assist in fact revelation and to reduce the element of surprise at trial.’”) (quoting Levy v. Stern, 1996 WL 742818, at *2 (Del. Dec. 20, 1996) (ORDER)).
121 Defendants did not identify the validity of Stombaugh’s mortgage commitment as
an issue to be tried in the pretrial order. See Dkt. 59 at 8–10; see also Zhou v. Deng, 2022 WL 1024809, at *2 (Del. Ch. Apr. 6, 2022) (finding waiver when parties failed to raise arguments in their pleadings or in the pretrial order and stating “[b]y that time, the opposing party has already shaped his trial plans, and it is simply too late and unfair to expect him meaningfully to confront the arguments so close to (or after) trial.”) (citations omitted); ABC Woodlands, L.L.C. v. Schreppler, 2012 WL 3711085, at *3 (Del. Ch. Aug. 15, 2012) (finding party waived an argument by not raising it in the pretrial order); New Start Hldgs., LLC v. Zhou, 2024 WL 4039440, at *16 n.250 (Del. Ch. Sept. 4, 2024) (“[T]he pretrial order is meant to be an ‘efficacious’ and ‘salutary’ aid for the Court ‘toward sifting the issues in order that the suit will go to trial only on questions involving honest disputes of fact or law.’”) (citations omitted).
- 22 -trial, but did not. 122 Defendants waived this argument. 123 The court will not
consider it now. 124
* * *
For all of these reasons, I recommend judgment in favor of Stombaugh
on defendants’ counterclaim.
B. Breach of Contract
“To prove a breach of contract, the plaintiffs must demonstrate (1) the
existence of a contract, (2) the breach of an obligation imposed by the contract,
and (3) resulting damages.” O’Connor v. Beachy Keen Servs., LLC, 2025 WL
801165, at *2 (Del. Ch. Mar. 13, 2025) (citing Kuroda v. SPJS Hldgs., L.L.C.,
971 A.2d 872, 883 (Del. Ch. 2009)). Stombaugh has met each element.
1. The Existence of a Contract
It is undisputed that the Agreement is a valid contract. In exchange for
consideration of $350,411, Ashburn agreed to transfer to Stombaugh the deed
122 See Trial Tr. 74–82, 370.
123 The Agreement’s non-waiver clause does not help defendants here either. See supra note 113.
124 Not only did defendants engage in improper trial-by-ambush, their multi-year,
unreasonable, and prejudicial delay in raising Stombaugh’s mortgage commitment as a defense means they are also guilty of laches. See Whittington v. Dragon Gp., LLC, 991 A.2d 1, 7 (Del. 2009) (“Laches is an unreasonable delay by a party, without any specific reference to duration, in the enforcement of a right, and resulting in prejudice to the adverse party.”). The court notes, also, that Stombaugh was told by Ferguson, the Rush Realty agent who served as the official go-between for Stombaugh and defendants, that her March 2021 mortgage commitment letter would remain valid throughout construction, and defendants never asked Stombaugh for an updated mortgage commitment. Trial Tr. 80–81, 366–67.
- 23 -to the constructed Property.125 The Agreement obligated Ashburn to
substantially complete the Property’s construction, “in any case, on or before
two (2) years from the Agreement of Sale Date.” 126 Once substantial
completion occurred, Ashburn must select and notify Stombaugh of the “date,
time, and place for Settlement.” 127
Moreover, through the Selections Time Limit Addendum, Ashburn
agreed to schedule a pre-drywall meeting for Stombaugh to attend. 128 And
through the Price Escalation Addendum, Ashburn agreed not to escalate the
purchase price after ground broke on the Property.129
2. The Breach
Stombaugh argues defendants breached the Agreement by refusing to
engage with her after Ashburn’s improper price escalation. 130 Stombaugh
maintains defendants’ failure to schedule a pre-drywall meeting before drywall
installation is further evidence of defendants’ breach. 131 I conclude Ashburn
125 See Agreement 2 (“SETTLEMENT”).
126 Id. ¶ 13.
127 Id. ¶ 12.
128 Id. at 11.
129 PX 12.
130 See Am. Compl. ¶ 71.
131 See Pl.’s Opening Br. 36.
- 24 -breached the Agreement. Sobrook cannot have breached the Agreement
because it was not part of it. 132
a. Ashburn Repudiated the Agreement
“A repudiation of a contract is an outright refusal by a party to perform a
contract or its conditions.” W. Willow Bay Ct., LLC v. Robino-Bay Ct. Plaza,
LLC, 2009 WL 458779, at *5 (Del. Ch. Feb. 23, 2009) (quoting PAMI-LEMB I
Inc. v. EMB-NHC, L.L.C., 857 A.2d 998, 1014 (Del. Ch. 2004)). “A party may
repudiate an obligation through statements when its language, reasonably
interpreted, indicates that it will not or cannot perform[.]” Id. (citations
omitted). “An attempt to renegotiate terms will not constitute repudiation
absent an unqualified refusal to perform unless the non-repudiating party
accedes.” Id. (citing HIFN, Inc. v. Intel Corp., 2007 WL 1309376, at *12 (Del.
Ch. May 2, 2007)) (emphasis added).
The Price Escalation Addendum imposed on Ashburn the plain
obligation to not add “additional escalation charges . . . once [Ashburn] ha[s]
broken ground on the start of construction.” 133 The record is clear Ashburn
132 See, e.g., Wallace ex rel. Cencom Cable Income P’rs II, L.P. v. Wood, 752 A.2d
1175, 1180 (Del. Ch. 1999) (“It is a general principle of contract law that only a party to a contract may be sued for breach of that contract.”) (citing Crabtree v. Tristar Auto. Gp., Inc., 776 F. Supp. 155, 166 (S.D.N.Y. 1991)); see also Agreement 9 (signatures). Even though Sobrook is not a named party to the Agreement, Mr. Ashburn testified that specific performance of the Agreement would result in Sobrook directly transferring the Property to Stombaugh. See Trial Tr. 337. 133 PX 12.
- 25 -knew of this obligation but nevertheless attempted to impose a price escalation
after it broke ground on the Property, and thus breached the Agreement.134 Nor
is there any tangible, credible evidence Ashburn ever retracted the escalation,
just Mr. Ashburn’s self-serving trial testimony. 135 Ashburn repudiated the
Agreement when, after its wrongful escalation, it (1) refused to engage with
Stombaugh, (2) wrongfully declared her in default, and (3) threatened to retain
her deposit if she chose not to terminate the Agreement herself. 136
b. Ashburn’s Other Breaches
The Selections Time Limit Addendum imposed on Ashburn the plain
obligation to schedule a pre-drywall meeting with Stombaugh. 137 Ashburn
never did this. 138 If, as Mr. Ashburn insists, Ashburn has always been ready to
perform the Agreement, 139 it failed to be here.
Ashburn also failed to settle the Property with Stombaugh within the
time the Agreement required. Although it appears conceded that, by 2024,
134 See Trial Tr. 338–39.
135 See id. 307, 339.
136 See PX 16 at P-360 (“Please let me know Ms. Stombaugh’s decision within five
business days. Should there be no response within this time period, Ashburn will elect its contractual right to terminate the Sales Agreement and retain Ms. Stombaugh’s deposit(s).”); see also Trial Tr. 74.
137 Agreement 11.
138 See Trial Tr. 73.
139 See id. 310.
- 26 -construction of the Property’s exterior was complete, 140 it may not be the case
that the Property was substantially completed under the Agreement because,
again, Ashburn failed to notify Stombaugh of an impending settlement of the
Property.141
In more ways than one, Ashburn breached its obligations under the
Agreement. The second element of Stombaugh’s breach claim is therefore
established.
c. Defendants Fail to Defend the Breaches
Defendants defend their breach in two ways. As previously addressed,
defendants argued Stombaugh’s own breach entitled them to terminate the
Agreement. I have rejected that claim. Defendants’ other argument is that,
under paragraph 25 of the Agreement, Ashburn was not bound by Ferguson’s
statement that Ashburn was delaying performance until the price escalation
issue resolved. 142
Paragraph 25 of the Agreement states, in full:
140 See id. 70.
141 See Agreement 2 (“SUBSTANTIAL COMPLETION: When an occupancy permit
is issued by the local building authority; or when the Home is otherwise habitable.”), ¶ 12 (“Settlement will take place upon Substantial Completion at a date, time, and place that we select. * * * We will give you at least ten (10) days prior notice of the date, time and place for Settlement.”) (emphasis added).
142 See Trial Tr. 75–76; Defs.’ Opening Br. 27 (“Emails in evidence are devoid of any
communication indicating apparent agency that would lead [Stombaugh] to believe Ferguson had authority to make decisions in violation of paragraph 25.”).
- 27 -(25) No Other Agreements: Except as provided in
your Ashburn Home Warranty Program, and except
for applicable statutory warranties, we make no other
representations or warranties of any kind, express or
implied, with regard to the Property, and no other
representation or warranty of any kind, express or
implied, forms a basis of the bargain between you
and us. If requested, you agree to sign at settlement
under this Agreement of Sale a written instrument
confirming your consent to exclude and modify the
express warranties relating to the Property. We
make no oral or written agreements or
representations, directly or indirectly, connected with
this Agreement of Sale except as set forth in this
Agreement of Sale. We make no oral or written
agreements or representations, directly or indirectly,
connected with this Agreement of Sale except as set
forth in this Agreement of Sale. We make no
representation concerning any land adjacent to or
near the Property. We will not be bound by any
representations or promises made by any salesperson
or other person unless they are included in this
Agreement of Sale. By including the following
terms, we are making them a part of this Agreement
of Sale[.] 143
Defendants argue that this language shields them from a finding that
Ashburn wrongly imposed a price escalation because Ferguson, a Rush Home
Realty employee, conveyed the escalation request to Stombaugh. 144 The
argument fails because paragraph 25 concerns representations that “form[] a
basis of the bargain,” i.e., representations regarding the terms of the Agreement
that induced Stombaugh to execute it. Paragraph 25 does not extend to post143 Agreement ¶ 25.
144 Defs.’ Opening Br. 27.
- 28 -execution representations made during the course of performance at the
principal’s (i.e., Ashburn’s) direction. 145
Ashburn breached its obligations under the Agreement. Defendants
failed to sufficiently defend Ashburn’s breach.
2. The Resulting Damage
Ashburn’s breach of the Agreement damaged Stombaugh.
Fundamentally, Stombaugh has “been deprived of the home [she] chose and
contracted to purchase.” O’Connor, 2025 WL 801165, at *3. Even if the court
orders specific performance of the Agreement, Stombaugh will be financing the
transaction with a higher interest rate than she initially secured for the home.
This, too, constitutes damage. See Stephenson v. Capano Dev. Co., 462 A.2d
1069, 1077 (Del. 1983). Accordingly, Stombaugh established the third element
of her breach of contract claim. She prevails on her claim against Ashburn.
B. Specific Performance
Stombaugh seeks specific performance of the Agreement. As explained
by the Supreme Court of Delaware in Osborn ex rel. Osborn v. Kemp:
145 See Airborne Health, Inc. v. Squid Soap, LP, 984 A.2d 126, 140 (Del. Ch. 2009)
(“The purpose of an anti-reliance provision is to make clear what information the contracting party did and did not rely upon when entering into the transaction.”) (emphasis added); Abry P’rs V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1059 (Del. Ch. 2006) (“The integration clause must contain ‘language that . . . can be said to add up to a clear anti-reliance clause by which the plaintiff has contractually promised that it did not rely upon statements outside the contract’s four corners in deciding to sign the contract.”) (quoting Kronenberg v. Katz, 872 A.2d 568, 593 (Del. Ch. 2004), aff’d, 867 A.2d 902 (Del. 2005)).
- 29 -A party must prove by clear and convincing
evidence that he or she is entitled to specific
performance and that he or she has no adequate legal
remedy. A party seeking specific performance must
establish that (1) a valid contract exists, (2) [s]he is
ready, willing, and able to perform, and (3) that the
balance of equities tips in favor of the party seeking
performance.
991 A.2d 1153, 1158 (Del. 2010) (citations omitted). As an initial matter,
Stombaugh has sufficiently established that she lacks an adequate remedy at
law. “The Agreement—a contract for the sale of real property—‘is the
quintessential contract for which specific performance is available.’”
O’Connor, 2025 WL 801165, at *3. Indeed, “specific performance of a real
estate sale contract is often the only adequate remedy for a breach by the seller,
except in rare circumstances.” Szambelak v. Tsipouras, 2007 WL 4179315, at
*7 (Del. Ch. Nov. 19, 2007).
Moving to the elements, the court has already determined a valid
contract, the Agreement, exists between Stombaugh and Ashburn. I discuss the
remaining two elements below.
1. Ready, Willing, and Able
Stombaugh has shown by clear and convincing evidence she is ready,
willing, and able to perform. First, she has complied in all respects with her
end of the Agreement. Second, she has received a new, conditional loan
- 30 -commitment for the Property.146 Third, she has enough liquid cash to make a
down payment on the Property. 147
Defendants argue that Stombaugh needs more than this to show she is
ready, willing, and able to perform the Agreement. 148 Citing the Supreme
Court’s opinion in Osborn ex rel. Osborn v. Kemp, defendants argue that “[a]
buyer who is dependent on uncommitted financing or who cannot demonstrate
access to the full purchase funds is not ‘able to perform.’” 149 This argument
misstates the holding in Osborn and thus fails.
In Osborn, the Supreme Court upheld the determination that a buyer was
ready, willing, and able to perform even though “he did not have the necessary
financing at the time of trial” in the Court of Chancery. 991 A.2d 1153, 1161
(Del. 2010). The Supreme Court explained that Delaware courts “permit the
parties a reasonable time to obtain financing and conclude the transaction”
unless doing so would be inconsistent with a “time is of the essence” clause in
the contract. Id. (citing WILLISTON ON CONTRACTS § 67:15 (4th ed. 2009)).
Quoting Williston on Contracts, the court explained “[a] purchaser will be
deemed ready and able to perform . . . where the agreement is subject to
financing, and the purchaser is able to obtain it.” Id. at 1161 n.26.
146 See Trial Tr. 112–15.
147 See id. 72.
148 See Defs.’ Answering Br. 12.
149 Defs.’ Reply Br. 23.
- 31 -Here, the Agreement contains a “time is of the essence” clause that
required Stombaugh to obtain and deliver to Ashburn a mortgage commitment
within 30 days of the Agreement’s execution. 150 She did. 151 So the
Agreement’s “time is of the essence” clause was satisfied. Giving Stombaugh a
reasonable amount of time now to obtain financing and conclude the
transaction is consistent with the Supreme Court’s ruling in Osborn and an
appropriate remedy for Ashburn’s breach of the Agreement. Capital Bank has
indicated that Stombaugh will be able to receive her loan within 21 days of this
action’s resolution. 152 Stombaugh has thus put herself in a position to procure
financing for the Property in a timely manner under the Agreement. She is
ready, willing, and able to perform.
2. The Balance of Equities
Balancing the equities requires the court to “consider whether ‘specific
performance of a validly formed contract would cause even greater harm than it
would prevent.’” White v. Russell, 2023 WL 3191746, at *7 (Del. Ch. May 2,
2023) (quoting Hastings Funeral Home, Inc. v. Hastings, 2022 WL 16921785,
at *8 (Del. Ch. Nov. 14, 2022)). Here, the balance of equities tilts decisively in
Stombaugh’s favor.
150 Agreement ¶ 7(1)(b).
151 See PX 43.
152 Trial Tr. 115.
- 32 -The parties executed a contract. Stombaugh performed her obligations
under it. Ashburn chose to escalate the purchase price despite knowing it was
prohibited from doing so. 153 When Stombaugh took issue with this, Ashburn
tried to bully her into dropping the issue by falsely accusing her of breaching
the Agreement. 154 And when that failed, Ashburn simply stopped dealing with
Stombaugh. 155
Defendants did not show that they would be harmed from specific
performance of the Agreement. 156 They argue the equities balance in their
favor because Stombaugh “defaulted on crucial terms of the contract;
meanwhile, Defendants, despite being ready to perform, have been left holding
an empty property for years in a rising market[.]” 157 As explained, Stombaugh
did not breach the Agreement by failing to timely select her options. And to the
extent defendants argue that the Property’s appreciated value tips the equities in
their favor, they are incorrect as a matter of law. 158
153 See, e.g., PX 32 at P-431.
154 See PX 16 at P-359 to P-360.
155 See Trial Tr. 52.
156 See Osborn, 991 A.2d at 1161 (“When balancing the equities, we must be
convinced that specific enforcement of a validly formed contract would not cause even greater harm than it would prevent.”) (citation modified).
157 Defs.’ Reply Br. 24.
158 See, e.g., Osborn, 991 A.2d at 1162 (“We do not discount that beach front property
has appreciated over the span of twenty years, however, the ‘mere increase in land values, unaccompanied by other circumstances showing inequity, is not such hardship
- 33 -In short, the balance of equities tilts decisively toward Stombaugh. The
third element of specific performance is established. The court thus grants
Stombaugh’s request for specific performance of the Agreement.
C. The Requested Damages
In addition to specific performance, Stombaugh seeks damages stemming
from the interest rate differential between the interest rate she had obtained in
2021 versus the interest rate she would have to pay today to finance the
Property’s purchase. 159
“This court may ‘award damages or pecuniary compensation along with
specific performance when the decree as awarded does not give complete and
full relief.’” O’Connor, 2025 WL 801165, at *4 (quoting Tri State Mall
Assocs. v. A.A.R. Realty Corp., 298 A.2d 368, 371 (Del. Ch. 1972)). “In the
context of real estate transactions, interest rate differentials have been awarded
as damages for breach of contract and as ancillary relief in actions for specific
performance.” Stephenson, 462 A.2d at 1077 (collecting cases). This is
because, often, “[t]he increased financing cost is a predictable consequence of
the vendor’s delay in completing the transaction.” Id. (collecting cases).
That said, Stombaugh’s request for damages is only ancillary to her
primary request for specific performance. See id. “[I]n decreeing specific
as justifies a court of equity in denying specific performance.”) (quoting Cunningham v. Esso Standard Oil Co., 118 A.2d 611, 614 (Del. 1955)).
159 See, e.g., Pl.’s Opening Br. 58.
- 34 -performance [this court] will adjust the equities of the parties in such a manner
as to put them as nearly as possible in the same position as if the contract had
been performed according to its terms.” Tri State Mall Assoc. v. A.A.R. Realty
Corp., 298 A.2d 368, 371-72 (Del. Ch. 1972) (emphasis in original). In doing
so, “the [c]ourt must consider the gains enjoyed by the parties over the [period
of breach] by reason of their failure to exchange the consideration required
under the contract.” Vaughan v. Creekside Homes, Inc., 1994 WL 586833, at
*2 (Del. Ch. Oct. 7, 1994).
Absent Ashburn’s breach of the Agreement, Stombaugh would have
purchased the Property in late 2021 or early 2022 with a 30-year mortgage at an
interest rate of 3.625%. 160 Now, the interest rate available to her to obtain a
mortgage on the Property is much higher. 161 This is, in the Stephenson court’s
words, a “predictable consequence” of the breach, so some measure of relief
would ordinarily be equitable and appropriate.
But that is not the end of the inquiry. As the court explained in Tri State,
equity’s role is to put the parties, not just Stombaugh, in the positions they
would have been in had the transaction been performed in late 2021 or early
2022. See Tri State, 1994 WL 586833, at *2. Had Ashburn conveyed the
Property in late 2021 or early 2022, Stombaugh would have paid Ashburn
160 Trial Tr. 364–66.
161 Id. 112.
- 35 -$350,411 and Ashburn would have been able to use those funds for the ordinary
sort of things that a builder will do with the proceeds—such as paying
subcontractors and suppliers, and reinvesting or distributing net profits.162
In the Vaughan court’s words, it appears defendants here enjoyed no
“gains” by reason of the failure to convey the Property in late 2021 or early
2022. Defendants have received no rent or profits from the Property, and they
have, presumably, been incurring the normal expenses associated with
ownership, such as maintenance, taxes, and insurance, that Stombaugh would
have paid upon acquiring ownership. Stombaugh, for her part, gained from
being able to use the unpaid purchase price to purchase her primary residence,
and she will gain from being able to acquire the Property at a substantial
discount to its current appraised value. 163 See Vaughan, 1994 WL 586833, at
*2–3.164
162 See Hastings Funeral Home, Inc. v. Hastings, 2022 WL 16921785, at *9 (Del. Ch.
Nov. 14, 2022) (“In addition, if delivery had occurred, Hastings would have received the sale proceeds from HFH on January 25, 2021, and he is entitled to a credit for interest on the unpaid purchase money since January 25, 2021 . . . . [P]re-judgment interest at the legal rate on the $850,000.00 sale price should be added for the same period.”).
163 Defendants presented credible and unopposed evidence that as of November 2024
the Property was worth $95,589 more than when the parties first executed the Agreement. See Trial Tr. 224; see also DX 6 (November 17, 2024 Appraisal Report). 164 In Vaughan, the court identified “three distinct ‘returns’” from the parties’ failure
to close the transaction and convey the property in exchange for payment of the purchase price: (1) seller’s receipt of rental income; (2) buyers’ ability to use the unpaid purchase price for other purposes; and (3) the property’s appreciation in value. 1994 WL 586833, at *2. The court declined to award seller interest on the unpaid purchase price because the buyers were willing to let the seller retain the rental
- 36 -In short, if the court is to put the parties “nearly as possible in the same
position as if the contract had been performed according to its terms,” 165 the
court needs to account for both the present value of the interest rate differential
and interest on the unpaid purchase price. Doing that here is essentially a wash.
Stombaugh asserts that the present value of the interest rate differential is
$83,656.13. 166 An award of simple interest on the unpaid purchase price at the
legal rate of interest from early 2022 through today is $82,784.60.167 Adding to
the difficulties here, Stombaugh did not provide all of the necessary inputs to
calculate the present value of the interest differential—there is no evidence in
the record as to what down payment Stombaugh would have been required to
income instead of paying it over. See id. (“[D]uring the period of nonperformance, both parties benefited from their use of the assets they had contracted to exchange. Therefore, an order that requires them to exchange those assets now, while permitting them to retain the benefits produced by those assets, is fair and equitable, because neither party would gain at the expense of the other.”) (emphasis in original). 165 Tri State, 298 A.2d at 371–72.
166 PX 45.
167 The legal rate of interest in Delaware is 5% over the federal discount rate.
See 6
Del. C. § 2301(a). The federal discount rate between March 16, 2020 and March 17, 2022 was 0.25%. See Federal Reserve Discount Window, Primary and Secondary Credit Rates, https://www.frbdiscountwindow.org/-/media/documents/primary secondary.xlsx?sc_lang=en&hash=B65867DA7B6731BF73623F3417357B9A; see also Federal Reserve Bank of St. Louis, Rates Related to Monetary Policy, THE FRED® BLOG (Apr. 15, 2024), https://fredblog.stlouisfed.org/2024/04/rates-relatedto-monetary-policy/ (explaining that the Federal Reserve’s primary credit rate is “often referred to as the discount rate”). Using a date range of January 1, 2022 through June 30, 2026, simple interest on the purchase price of the Property is $82,784.60. Compounded monthly, the interest would be $93,152.72. The court did the calculations itself using Microsoft Excel.
- 37 -make on the mortgage in late 2021 or early 2022, so the actual amount of that
loan is unproven. 168
In considering the equities of an ancillary damages award, I conclude
Stombaugh has gained greater benefit than defendants from the delayed
performance of the Agreement. Indeed, it does not appear that respondents
gained anything from their refusal to perform. Specific performance of the
Agreement is warranted, but an award of interest-differential damages, in light
of the foregoing, would amount to a windfall for Stombaugh that equity does
not permit. 169 I therefore decline to award Stombaugh interest-differential
damages.
D. The Request for a Court-Supervised Inspection Right
Stombaugh also requests “an Order requiring Defendants to permit
Plaintiff access to the Property,” with “contractors and other professionals of
her choice to confirm the structure meets the terms of the Agreement and has
168 Stombaugh testified only to the interest rate (3.625%) and the points she would
have paid (1.25). See Trial Tr. 364–66. Stombaugh’s March 2021 commitment letter (PX 43) identifies a 5% down payment, but also reflects a different interest rate, so its utility here is unclear. And her expert, Dr. Butkiewicz, used a 10% down payment amount for his calculations, see PX 45, but the record does not explain where the 10% came from. The figures for the new mortgage are also unclear. Stombaugh’s expert assumed a 6.375% interest rate and 10% down payment (see id.), but on the first day of trial Gensoli testified that the interest rate was then 7.5% with a 20% down payment (see Trial Tr. 112).
169 Cf. Hastings Funeral Home, 2022 WL 16921785, at *9 (“And, ‘equity may require
a party to pay interest on the purchase price as a condition to obtaining specific performance where one party would otherwise inequitably receive a windfall at the other’s expense.”) (quoting Vaughan, 1994 WL 586833, at *3) (emphasis in original).
- 38 -been completed in a manner consistent with local industry standards[.]” 170
Stombaugh notes that “the Residence sat unfinished for some period of time
between 2021 and 2024[.]” 171 During that time, she “observed the [Property]’s
garage door [was] open and moss growing on the” Property’s exterior. 172
Stombaugh argues that this, together with Ashburn’s “wrongful escalation of
the price,” should entitle her to receive these a professional home inspection
and air quality inspection. 173
Defendants object to this request. They argue that granting Stombaugh’s
request would require the court to “supervise a personal service,” which goes
against “longstanding policy.”174 Defendants also argue that Stombaugh would
have an adequate remedy at law—a damages claim—if Stombaugh discovers
defects in the Property. 175
I agree with Stombaugh that her request is not one for court supervision
of a personal service. Stombaugh plainly requests the court order respondents
to facilitate pre-transfer access to the Property. 176 That is a request for
170 Dkt. 57 at 2.
171 Pl. Alexis Stombaugh’s Answering/Reply Post-Tr. Br. (“Pl.’s Reply Br.”), Dkt. 73
at 54.
172 Id.
173 Id. 55.
174 Defs.’ Reply Br. 22.
175 Id.
176 See Pl.’s Reply Br. 54–55 (“Because the Residence sat unfinished for some period
of time between 2021 and 2024, during which time Alexis observed the Residence’s
- 39 -injunctive relief separate from Stombaugh’s request for specific performance of
the Agreement. It does not require defendants’ agents do any inspection
themselves.
I award Stombaugh the relief sought. Defendants promised Stombaugh
four meetings during construction: (1) a pre-construction meeting prior to
breaking ground; (2) a pre-drywall meeting; (3) a pre-final walk meeting at
least one week before settlement; and (4) a final walk meeting on the day of
settlement. 177 The pre-drywall meeting is important—it is the homebuyer’s
final chance, after framing, electrical, plumbing, and HVAC (heating,
ventilation, and air-conditioning) are “roughed in,” to “identify and correct any
observed material defects before they become hidden behind drywall, where
they could be more costly and challenging to address.” Int’l Assoc. of Certified
Home Inspectors, Pre-Drywall Inspection Standards of Practice,
https://www.nachi.org/sop-pre-drywall.htm (Mar. 6, 2025). 178
garage door open and moss growing on the outside of the Residence, she requests an opportunity to have a more detailed inspection.”).
177 Agreement 11.
178 See also Katherine Lutge, How Pre‑Drywall Inspections Work in New Construction Homes, HOMES.COM (Feb. 25, 2026) (“It’s very important to identify and address any underlying issues before installing the drywall, or the buyer may face costly problems later.”); Carolina Premier Inspections, Pre-Drywall Inspections, https://www.carolinaphi.com/pre-drywall-inspections (“This is a narrow window of time that provides a certified home inspector the only opportunity to examine the ‘bones’ of the house—identifying structural defects, safety hazards, or installation errors that would be permanently hidden once the walls close up.”).
- 40 -As Stombaugh notes, defendants’ unilateral decision to complete
construction without any input from Stombaugh while in breach of the
Agreement means no pre-drywall meeting is possible. 179 The pre-final walk
meeting is, however, still possible and required under the Agreement. The only
question is what it should entail. I find, under the circumstances of this case,
where the Property sat unfinished for several years, during which Stombaugh
observed the Property’s garage door open and mold growing on the Property’s
external surfaces, 180 and where defendants did not give Stombaugh the predrywall meeting the Agreement requires, that Stombaugh’s request to have a
home inspector and air quality inspector, both of her choosing, inspect the
Property prior to closing is appropriate.
E. Attorney Fees
Stombaugh requests “reimbursement of her attorneys’ fees and costs in
light of” defendants’ “bad faith behavior both before and during this
litigation.” 181
Delaware courts follow the American Rule, which means that “litigants
are normally responsible for paying their own costs.” Mahani v. Edix Media
Gp., Inc., 935 A.2d 242, 245 (Del. 2007). An exception to the American Rule
179 Trial Tr. 187.
180 Id. 69–70, 187.
181 Pl.’s Reply Br. 69.
- 41 -is where a party litigates an action in bad faith. See, e.g., New Start Hldgs.,
LLC v. Zhou, 2024 WL 4039440, at *30 (Del. Ch. Sep. 4, 2024) (quoting
Kaung v. Cole Nat’l Corp., 884 A.2d 500, 506 (Del. 2005)). “Fee shifting
under the bad faith exception may be appropriate ‘if a prevailing party
demonstrates that the losing defendants: [(1)] engaged in bad faith conduct that
increased the costs of the litigation; or [(2)] engaged in pre-litigation conduct of
a sufficiently egregious nature.’” Enhabit, Inc. v. Nautic P’rs IX, L.P., 2024
WL 4929729, at *43 (Del. Ch. Dec. 2, 2024) (quoting HMG/Courtland Props.,
Inc. v. Gray, 749 A.2d 94, 124 (Del. Ch. 1999)). “To find bad faith, a party
must have acted in subjective bad faith, which involves a higher or more
stringent standard of proof, i.e., clear evidence.” Hastings Funeral Home, 2022
WL 16921785, at *11 (citation modified). Stombaugh has shown clear
evidence of Defendants’ bad faith conduct sufficient to warrant fee shifting.
1. Pre-Litigation Conduct
“A litigant’s conduct must rise to a level of ‘glaring egregiousness’
before this court will find bad faith for purposes of shifting fees, and ‘merely
being adjudicated a wrongdoer . . . is not enough to justify fee shifting.’” In re
Will of Grooms, 2025 WL 1587960, at *2 (Del. Ch. June 5, 2025) (quoting
eBay Domestic Hldgs., Inc. v. Newmark, 16 A.3d 1, 47 (Del. Ch. 2010)). This
court has previously found a defendant’s conduct glaringly egregious when it
forces a plaintiff to file suit to secure a clearly defined and established right.
- 42 -See Pettry v. Gilead Scis., Inc., 2021 WL 3087027, at *1 (Del. Ch. July 22,
2021) (quoting McGowan v. Empress Ent., Inc., 791 A.2d 1, 4 (Del. Ch. 2000)).
I conclude that defendants’ pre-litigation conduct was glaringly egregious.
Defendants escalated the purchase price of the Property despite clear
knowledge that doing so was in contravention of the Agreement. 182 Their
agents refused to engage with Stombaugh when she attempted to resolve the
issue amicably. 183 Instead of engaging, defendants threatened Stombaugh with
termination of the Agreement and retention of her deposit, and falsely accused
her of breaching the Agreement by failing to timely select options for the
Property through L&L. 184
Ashburn’s pre-litigation actions—its bullying tactics, repudiation of its
obligations, and assertion of the plainly frivolous counterclaim—caused
Stombaugh to initiate this litigation to secure her bargained-for rights.
Ashburn’s pre-litigation actions were glaringly egregious and justify an award
of attorney fees.
2. Litigation Conduct
“Courts have found bad faith for the conduct of litigation ‘where parties
have unnecessarily prolonged or delayed litigation, falsified records or
182 See, e.g., PX 32 at P-431.
183 See Trial Tr. 52.
184 See supra Part III.A.
- 43 -knowingly asserted frivolous claims.’” Hastings Funeral Home, 2022 WL
16921785, at *11 (quoting Kaung v. Cole Nat’l Corp., 884 A.2d 500, 506 (Del.
2005)). Here, I conclude that defendants’ conduct in the litigation justifies fee
shifting.
In fairness to defendants, I first note that defendants did not
unnecessarily prolong or delay this litigation. Defendants, albeit obliquely,
proposed a settlement with Stombaugh.185 Additionally, Stombaugh did not
clearly show that defendants falsified records during this action.
Defendants’ counterclaim and defense, however, smacks of frivolity.
Defendants insisted on litigating Stombaugh’s purported breach of the
Agreement’s “time is of the essence” clause regarding tile selection and L&L
all the way through trial despite (1) their own agent and witness (McCann)
making it clear there was no basis in the Agreement to support defendants’
argument that Stombaugh was contractually obligated to select her final tiling
options through L&L by March 17, 2021, 186 and (2) clear and indisputable
evidence neither defendants nor their agents did not connect Stombaugh and
L&L until long after the purported March 17 tile selection deadline. 187
185 Dkt. 25.
186 See Trial Tr. 163–64.
187 See, e.g., PX 26.
- 44 -To make matters worse, defendants’ arguments shifted over time. On the
second day of trial, defendants tacked on a new theory for why Ashburn was
entitled to terminate the Agreement: Stombaugh’s mortgage commitment was
not satisfactory under the Agreement. 188 Defendants’ shifting contentions
further indicate a bad faith attempt to defend Ashburn’s indefensible breach of
the Agreement. 189
But the frivolity of defendants’ defense reached its zenith with the Price
Escalation Addendum. On the first day of trial, McCann testified defendants
deliberately imposed the price increase even though they knew they had already
broken ground, and she was sure she discussed this with Mr. Ashburn before
moving forward. 190 Then, six weeks later, on the second day of trial, Mr.
Ashburn testified he had known Ashburn could not impose the price escalation
and he directed defendants’ counsel to withdraw it sometime before litigation
188 See Trial Tr. 315–17; see also Defs.’ Opening Br. 18–19; Defs.’ Reply Br. 11–14,
22–24.
189 See Pearl Cty. Elevator, Inc. v. Gieseke, 2021 WL 1099230, at *20 (Del. Ch. Mar.
23, 2021) (“Writing for the Seventh Circuit, Judge Posner observed that . . . when ‘[a] party . . . hokes up a phony defense to the performance of his contractual duties and then when that defense fails (at some expense to the other party) tries on another defense for size [he] can properly be said to be acting in bad faith.’”) (quoting Harbor Ins. Co. v. Cont’l Bank Corp., 922 F.2d 357, 363 (7th Cir. 1990)); see also Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 546 (Del. 1998) (“Since the Defendants constructed their entire defense in bad faith, the Court of Chancery did not abuse its discretion in awarding Vendel his full reasonable attorney[] fees.”). 190 Trial Tr. 252.
- 45 -was filed. 191 The record is clear that no such retraction was ever made. So one
of two things must be true: (1) Mr. Ashburn testified truthfully, defendants’
counsel ignored his direction, and defendants forced Stombaugh to litigate this
issue despite knowing they did not have a good faith basis to maintain the
defense; or (2) Mr. Ashburn testified untruthfully, he never gave that direction
to defendants’ counsel, and the testimony is a misguided attempt to deflect
blame onto defendants’ counsel without providing any evidence to back up the
assertion. Whichever of these is true, it is litigation “so strained and wholly at
odds with the operative reality that it [falls] outside the bounds of good faith
advocacy.” In re Grupo Dos Chiles LLC, 2006 WL 2507044, at *2 (Del. Ch.
Aug. 17, 2006) (citing Ct. Ch. R. 11).
* * *
Defendants’ pre-litigation conduct was glaringly egregious. Defendants’
insistence on asserting their baseless breach defense and counterclaim cost the
parties and the court time and the expenditure of valuable resources.
Defendants’ unwillingness to yield to reality constitutes bad faith litigation
conduct and warrants fee shifting. Accordingly, I grant Stombaugh’s request
for fee shifting.
191 Id. 338–39.
- 46 -IV. CONCLUSION
For the foregoing reasons, Stombaugh has shown her entitlement to an
order of specific performance directing defendants to convey the Property to
her. I decline to grant her additional damages request, but grant her request for
a more thorough inspection of the Property prior to conveyance. Defendants’
counterclaim fails, and I recommend Stombaugh’s fees be shifted to
defendants. Stombaugh must submit a Rule 88 affidavit if the parties cannot
agree on the reasonableness of her attorney fees. Stombaugh is the prevailing
party, so I award her costs under Court of Chancery Rule 54(d).
This is a Report under Court of Chancery Rule 144(b)(1). Because the
court has awarded Stombaugh attorney fees in an amount to be determined, this
Report does not conclude this action so it is not a Final Report. 192 Exceptions
to this report are stayed pending entry of my Final Report.
192 See Delaware Bay Surgical Servs., P.A. v. Swier, 869 A.2d 327 (Del. Feb. 15,
2005) (TABLE) (“This Court consistently has held that that a judgment on the merits is not final until an outstanding related application for an award of attorneys fees has been decided.”) (citing Lipson v. Lipson, 799 A.2d 345, 348 (Del. 2001)).
- 47 -