Case Title: Reid v. Spazio, et al.

Citation: 

Docket Number: 199, 2008

State: delaware

Court: Delaware Supreme Court

Date: 2009-04-09T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
DENNIS A. REID, 
§ 
 
 
§ 
No. 199, 2008 
 
Plaintiff Below- 
§ 
 
Appellant, 
§ 
Court Below: Court of Chancery 
 
 
§ 
of the State of Delaware. 
v. 
 
§ 
 
 
§ 
ALENIA SPAZIO, ALCATEL ALENIA § 
C.A. No. 2874 
SPACE ITALIA S.p.A. (f/k/a ALENIA § 
SPAZIO) and FINMECCANICA S.p.A., § 
 
 
§ 
 
 
Defendants Below- 
§ 
 
Appellees. 
§ 
 
Submitted:  January 14, 2009 
Decided:  April 9, 2009 
 
Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS, and 
RIDGELY, Justices, constituting the Court en Banc. 
 
 
Upon appeal from the Court of Chancery.  REVERSED AND REMANDED. 
 
 
Ian Connor Bifferato, Esquire and David W. deBruin, Esquire of Bifferato 
Gentilotti LLC, Wilmington, Delaware; Of Counsel: Derek Y. Brandt, Esquire of 
SimmonsCooper LLC, East Alton, Illinois, and Andrea Bierstein, Esquire and 
Thomas I. Sheridan, III, Esquire (argued) of Hanly Conroy Bierstein Sheridan 
Fisher & Hayes, LLP, New York, New York for appellant. 
 
 
Allen M. Terrell, Jr., Esquire and Harry Tashjian, IV, Esquire of Richards, Layton 
& Finger, P.A., Wilmington, Delaware; Of Counsel: John P. Cooney, Jr., Esquire 
(argued), George Sirignano, Esquire, and Tatiana Martins, Esquire of Davis Polk & 
Wardwell, New York, New York for appellees. 
 
 
RIDGELY, Justice: 
 
2
Plaintiff-Appellant Dennis Reid appeals from the Court of Chancery’s 
dismissal of his complaint against Defendant-Appellees on grounds that it was 
barred by the applicable statute of limitations and by laches.  Reid makes two 
arguments on appeal.  First, he contends that his claim is preserved by the 
Delaware Savings Statute.1  Second, he contends that his claim is not barred by 
laches.  We find that Reid’s claim is preserved by the Delaware Savings Statute 
and that the Court of Chancery erred in dismissing the complaint.  Accordingly, we 
reverse. 
I. Facts and Procedural History 
This matter arises out of a joint venture between U.S. Russian 
Telecommunications LLC (“USRT”), a Delaware limited liability company, and 
Alenia Spazio, Alcatel Alenia Space Italia, S.p.A. (f/k/a Alenia Spazio) and 
Finmeccanica, S.p.A. (collectively, the “Appellees”), Italian companies, to pursue 
a business opportunity assisting Russia in replacing its aging and obsolete 
commercial satellites.  Reid alleges that in late 1999, the Appellees conspired to 
breach and did breach the joint venture agreement and appropriated this 
opportunity for themselves, cutting USRT out of the venture entirely.  This was 
accomplished by the formation, by the Appellees’ agents and alleged co-
conspirators, of a new Delaware entity, USRT Holdings LLC (“Holdings”). 
                                          
 
1 10 Del. C. § 8118(a). 
 
3
Reid, a minority shareholder of both USRT and Holdings, brought suit in 
Texas on his own behalf and derivatively on behalf of the companies.  Reid’s 
initial complaint, filed on May 16, 2001 in federal court in the Southern District of 
Texas, was dismissed by agreement of the parties on March 6, 2002 for lack of 
diversity sufficient for federal subject matter jurisdiction.  On March 11, 2002, 
Reid filed suit against Appellees in state court in Harris County, Texas.  Appellees 
moved for a special appearance to contest personal jurisdiction.  Finding a 
sufficient basis for jurisdiction, the Harris County District Court denied Appellees’ 
motion on March 13, 2003.  Appellees filed an interlocutory appeal to the 
Fourteenth Court of Appeals of Texas.  On December 23, 2003, that court reversed 
the trial court and ordered the case remanded with instructions to dismiss the 
claims against Appellees for lack of personal jurisdiction.2  Reid moved for 
rehearing en banc, which the Texas appellate court denied on April 8, 2004. 
Reid then petitioned the Supreme Court of Texas for review of the 
intermediate appellate court’s order.  The court denied that petition on August 26, 
2005 and, on March 10, 2006, also denied Reid’s motion for rehearing.  The case 
was then remanded to the trial court, which entered an order of dismissal on April 
                                          
 
2 See Alenia Spazio, S.p.A. v. Reid, 130 S.W.3d 201, 222-23 (Tex. App. 2003), cert. denied, 127 
S.Ct. 136 (2006). 
 
4
11, 2006.3  On June 8, 2006, Reid petitioned the United States Supreme Court for a 
writ of certiorari.  His petition was denied on October 2, 2006.4 
On April 9, 2007, just over six months after the denial of his certiorari 
petition, Reid commenced this action in the Court of Chancery, relying on Title 10, 
section 8118(a), the Delaware Savings Statute.  Appellees moved to dismiss the 
action as time-barred and on personal jurisdiction grounds.  The Court of Chancery 
granted the motion.  The court explained that, although the action might be timely 
under the fourth prong of the Savings Statute, it was prohibited by the sixth prong, 
which, it found, better fit the facts of this case.  Applying the sixth prong, the court 
found that the one-year grace period during which Reid could file a timely action 
in Delaware expired on March 10, 2007, one year after the Supreme Court of 
Texas denied Reid’s motion for rehearing and one month before the present action 
was commenced.  The Court of Chancery further held that the affirmative defense 
of laches also barred Reid’s claim, because the claim would be barred by the 
statute of limitations and there were no mitigating circumstances.  In addition, the 
court noted the length of time between the challenged conduct and the filing of the 
action as well as the inevitability of some prejudice to Appellees’ ability to put 
forward a defense. 5 
                                          
 
3 See Reid v. USRT Holdings LLC, No. 2002-12305 (Tex. D. Ct. Apr. 11, 2006) 
4 Reid v. Alenia Spazio, S.p.A., 127 S.Ct. 136 (2006) 
5 Reid v. Siniscalchi, 2008 WL 821535, at *9-12 (Del. Ch. Mar. 27, 2008). 
 
5
Because it held the action was time-barred, the court did not reach the issue 
of personal jurisdiction.6 
II.  
Reid’s claim is preserved by the Savings Statute. 
Reid’s action arises out of conduct that allegedly occurred in 1998 or 1999. 
There is no dispute that Delaware’s three-year statutory limitations period for 
Reid’s claim has expired.7  Reid contends that his claim is nevertheless timely 
because it was preserved by the Savings Statute,8  and that the Court of Chancery 
erred in finding otherwise.  The Court of Chancery’s interpretation of a statute of 
limitations is a question of law, which we review de novo.9 
A. 
Delaware’s Savings Statute is given a broad and remedial construction. 
Delaware’s Savings Statute provides exceptions to the applicable statute of 
limitations in certain instances where the plaintiff has filed a timely lawsuit, but is 
procedurally barred from obtaining a resolution on the merits.10  Delaware first 
enacted such a statute in 1829.  By the time Delaware’s laws were codified in 
1852, the statute had assumed a form substantially similar to our modern Savings 
                                          
 
6 Id. at *12-13 & n.85. 
7 See 10 Del. C. § 8106 (providing a three-year statute of limitations of general applicability). 
8 See 10 Del. C. § 8118 (a). 
9 Christiana Care Health Servs. Inc. v. Crist, 956 A.2d 622, 629 (Del. 2008); LeVan v. 
Independence Mall, Inc., 940 A.2d 929, 932 (Del. 2007); Leatherbury v. Greenspun, 939 A.2d 
1284, 1288 (Del. 2007); Colonial Ins. Co. of Wisc. v. Ayres, 772 A.2d 177, 179 (Del. 2001). 
10 See Vari v. Food Fair Stores, New Castle, Inc., 205 A.2d 529, 530 (Del. 1964); Gosnell v. 
Whetsel, 198 A.2d 924, 926 (Del. 1964) 
 
6
Statute.11  Currently, the Savings Statute is codified in Title 10, section 8118(a), 
which provides as follows: 
If in any action duly commenced within the time limited 
therefor in this chapter, [1] the writ fails of a sufficient service or [2] 
return by any unavoidable accident, or [3] by any default or neglect of 
the officer to whom it is committed; or [4] if the writ is abated, or the 
action otherwise avoided or defeated by the death of any party thereto, 
or for any matter of form; or [5] if after a verdict for the plaintiff, the 
judgment shall not be given for the plaintiff because of some error 
appearing on the face of the record which vitiates the proceedings; or 
[6] if a judgment for the plaintiff is reversed on appeal or a writ of 
error; a new action may be commenced, for the same cause of action, 
at any time within one year after the abatement or other determination 
of the original action, or after the reversal of the judgment therein.12 
The Savings Statute reflects a public policy preference for deciding cases on 
their merits.13  This Court has recognized that “[the statute] confers upon litigants 
an absolute right to file a new action under certain conditions, and that one of those 
conditions is not leave of court.”14  The statute is remedial in nature and is liberally 
construed.15  Although a court may not graft additions or limitations onto the 
statute “under the guise of construction,” we have held that it is to be construed by 
giving due consideration to notions of equity.16 
 
                                          
 
11 Compare 7 Del. Laws 266 (1829) and Del. C. 1852 § 2752 with 11 Del. C. § 8118(a). 
12 10 Del. C. § 8118(a) (bracketed numbers added to reflect the “prongs” used by the Court of 
Chancery). 
13 Vari, 205 A.2d at 531; Gosnell, 198 A.2d at 927; Howmet Corp. v. City of Wilmington, 285 
A.2d 423, 427 (Del. Super. 1971); Bishop v. Wilds’ Adm’r, 1 Del. (1 Harr.) 87 (Del. Super. 1832) 
14 Giles v. Rodolico, 140 A.2d 263, 266 (Del. 1958). 
15 See Gosnell, 198 A.2d at 927; see also Vari, 205 A.2d at 531; Howmet, 285 A.2d at 427. 
16 Vari, 205 A.2d at 531; see Giles, 140 A.2d at 267. 
 
7
B. 
Section 8118(a) encompasses discretionary appeals. 
At issue in this case is whether discretionary appeals are encompassed 
within the sixth prong of the Savings Statute.  If the sixth prong includes 
discretionary appeals, then Reid’s claim was timely filed in Delaware.17  The Court 
of Chancery held that the statute was tolled during discretionary appeals, but did 
not include discretionary appeals to the United States Supreme Court.18  Reid 
argues that the same considerations that compelled the trial court’s conclusion that 
the Savings Statute should apply to discretionary appeals within the judicial 
system—discouraging placeholder lawsuits, judicial economy, and defendant’s 
awareness of plaintiff’s intention to press his claims—apply with equal force to 
discretionary appeals to the United States Supreme Court.  He asserts that the court 
erred by distinguishing between the two types of discretionary appeals, and that the 
grace period provided by Section 8118(a) should not commence until all appeals 
are resolved, including appeals as of right and those dependent upon a higher 
court’s discretion.  Appellees contend that the grace period should be tolled only 
during the pendency of appeals as of right. 
                                          
 
17 Reid’s petition for writ of certiorari to the United States Supreme Court was denied on October 
2, 2006.  Reid’s Delaware action was filed April 9, 2007, within the one-year grace period.  
18 As the Court of Chancery noted, references to “tolling” the Savings Statute’s operation may be 
somewhat inapt; instead, the question of when the grace period begins to run is answered by 
determining when “abatement or other determination” or “reversal” occurs under the statute. 
 
8
We previously explained in Gosnell v. Whetsel19 “that [Section 8118(a)] is 
designed to allow a plaintiff … one year to file a second cause of action following 
a final judgment adverse to his position if such judgment was not upon the merits 
of the cause of action.”  Therefore, we held that the commencement of the grace 
period was tolled during the defendant’s appeal.  However, appeals from adverse 
final determinations in civil actions in the Superior Court and the Court of 
Chancery are taken as of right to this Court.  Consequently, Gosnell did not 
specifically address the effect of discretionary appeals on the grace period.  Thus, 
the issue before us is one of first impression in Delaware. 
We hold that the Delaware Savings Statute applies with equal force to 
discretionary appeals.  Section 8118(a) is better interpreted to suspend the running 
of the grace period during the pendency of all appeals, for several reasons.  First, 
the Savings Statute has a remedial purpose and is to be liberally construed.  
Second, allowing a plaintiff to bring his case to a full resolution in one forum 
before starting the clock on his time to file in this State will discourage placeholder 
suits, thereby furthering judicial economy.  Prosecuting separate, concurrent 
lawsuits in two jurisdictions is wasteful and inefficient.  Third, the prejudice to 
defendants is slight because in most cases, a defendant will be on notice that the 
plaintiff intends to press his claims.  These considerations apply with equal force 
                                          
 
19 198 A.2d at 926. 
 
9
whether the appeal is discretionary or of right.  We find no persuasive reason to 
draw a line which excludes petitions for writ of certiorari to the United States 
Supreme Court.20  Therefore, Reid’s complaint was timely under the sixth prong of 
the Savings Statute and the Court of Chancery erred when it dismissed the 
complaint as barred by the statute of limitations.21 
III.  
The affirmative defense of laches 
does not appear on the face of the complaint. 
Reid next contends that the Court of Chancery erred in concluding that his 
claim was barred by laches.  This issue was raised on Appellees’ motion to 
dismiss; therefore, we review de novo to determine whether the trial judge erred as 
a matter of law in formulating or applying legal precepts.22  We must draw all 
reasonable factual inferences in favor of the plaintiff.  Dismissal is appropriate 
                                          
 
20 Only four courts have directly addressed the issue of the effect of the certiorari procedure on 
the applicable savings statute.  Although three of the four have concluded that the grace period 
does not toll while a petition to the United States Supreme Court is pending, the ratio decidendi 
of these cases is that such appeals are discretionary.  Because the Delaware Savings Statute 
applies to discretionary appeals, these cases are not persuasive.  Compare Grider v. USX Corp., 
847 P.2d 779, 783-85 (Okla. 1993) (holding grace period allowed by Oklahoma savings statute 
does not begin until after a decision is made by U.S. Supreme Court) with Owens v. Hewell, 474 
S.E.2d 740, 742 (Ga. 1996) (holding petition for writ of certiorari to U.S. Supreme Court does 
not toll Georgia  savings statute because such review is discretionary), Clark v. Velsicol Chem. 
Corp. 431 S.E. 2d 227, 229-230 (N.C. Ct. App. 1993) (same), and Kendrick v. City of Eureka, 82 
Cal. App. 4th 364, 371 (Cal. Ct. App. 2000) (same).   
21 Because the Delaware Savings Statute applies to Reid’s discretionary appeal, Reid’s argument 
that his claim is also saved under the fourth prong is moot. 
22 Feldman v. Cutaia, 951 A.2d 727, 730-31 (Del. 2008) (quoting Dunlap v. State Farm Fire & 
Cas. Co., 878 A.2d 434, 438 (Del. 2005)); accord Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 901 
A.2d 106, 112 (Del. 2006); VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 610 (Del. 
2003). 
 
10
only if it appears “with reasonable certainty that, under any set of facts that could 
be proven to support the claims asserted, the plaintiff would not be entitled to 
relief.”23 
Laches is an equitable defense born from the longstanding maxim “equity 
aids the vigilant, not those who slumber on their rights.”24  Although there is no 
hard and fast rule as to what constitutes laches, it is generally defined as an 
unreasonable delay by the plaintiff in bringing suit after the plaintiff learned of an 
infringement of his rights, thereby resulting in material prejudice to the 
defendant.25  Therefore, “laches generally requires the establishment of three 
things: first, knowledge by the claimant; second, unreasonable delay in bringing 
the claim, and third, resulting prejudice to the defendant.”26 
Although both laches and statutes of limitation operate to time-bar suits, the 
limitations of actions applicable in a court of law are not controlling in equity.27  A 
court of equity moves upon considerations of conscience, good faith, and 
                                          
 
23 Feldman, 951 A.2d at 731 (quoting VLIW Tech., 840 A.2d at 610-11)); accord Bell Atlantic 
Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1969 (2007). 
24 See 2 POMEROY’S EQUITY JURISPRUDENCE §§ 418, 419 (5th ed. 1941); accord Adams v. 
Jankouskas, 452 A.2d 148, 157 (Del. 1982). 
25 U.S. Cellular Inv. Co. v. Bell Atlantic Mobile Sys., Inc., 677 A.2d 497, 502 (Del. 1996); see 
also Homestore, Inc. v. Tafeen, 888 A.2d 204, 210 (Del. 2005); Fike v. Ruger, 752 A.2d 112 
(Del. 2000); Wright v. Scotton, 121 A. 69, 72-73 (Del. 1923); Hudson v. Layton, 5 Del. (5 Harr.) 
74, 1848 WL 815, at *13 (Del. 1848).  See generally 2 POMEROY, supra note 25, § 419. 
26 Homestore, 888 A.2d at 210 (citing Fike, 752 A.2d at 113); accord Hudak v. Procek, 806 A.2d 
140, 158 (Del. 2002) (Holland, J., dissenting); U.S. Cellular, 677 A.2d at 502. 
27 Adams, 452 A.2d at 157; see also 2 POMEROY, supra note 25, § 419a. 
 
11
reasonable diligence.28  Thus, although a statute of limitations defense is premised 
solely on the passage of time, the lapse of time between the challenged conduct 
and the filing of a suit to prevent or correct the wrong is not, in itself, 
determinative of laches.29  Instead, the laches inquiry is principally whether it is 
inequitable to permit a claim to be enforced, the touchstone of which is 
inexcusable delay leading to an adverse change in the condition or relations of the 
property or the parties.30  “Under ordinary circumstances, a suit in equity will not 
be stayed for laches before, and will be stayed after, the time fixed by the 
analogous statute of limitations at law; but, if unusual conditions or extraordinary 
circumstances make it inequitable to allow the prosecution of a suit after a briefer, 
or to forbid its maintenance after a longer period than that fixed by the statute, the 
[court] will not be bound by the statute, but will determine the extraordinary case 
in accordance with the equities which condition it.”31     
In holding that Reid’s claim was barred by laches, the Court of Chancery 
erroneously assumed that the statute of limitations barred Reid’s action and found 
no extraordinary circumstances that warranted equitably extending the time to file.  
                                          
 
28 See Smith v. Clay, (1767) 3 Brown Ch. 639 n. (Camden, L.Ch.); accord Bowman v. Wathen, 
42 U.S. (1 How.) 189, 193 (1843); Hudak, 806 A.2d at 158; Adams, 452 A.2d at 157. 
29 Adams, 452 A.2d at 157 (quoting Federal United Corp. v. Havender, 11 A.2d 331, 343 (Del. 
1940)); see also U.S. Cellular, 677 A.2d at 502; 2 POMEROY, supra note 25, § 419d. 
30 Id.; see also 2 POMEROY, supra note 25, § 419d 
31 Wright, 121 A. at 72-73; see also Adams, 452 A.2d at 157; U.S. Cellular, 677 A.2d at 502; 
2 POMEROY, supra note 25, § 419a 
 
12
Because we have held that Reid’s action was timely under the analogous statute of 
limitations by virtue of the Delaware Savings Statute, we examine the issue of 
laches from the opposite point of view.  That is, Reid’s action will be barred by 
laches only if unusual conditions or extraordinary circumstances make it 
inequitable to allow the prosecution of his claim within the time allowed by law. 
In ruling on a motion to dismiss under Court of Chancery Rule 12(b)(6), the 
Court is generally limited to facts appearing on the face of the pleadings.  
Accordingly, affirmative defenses, such as laches, are not ordinarily well-suited for 
treatment on such a motion.32  Unless it is clear from the face of the complaint that 
an affirmative defense exists and that the plaintiff can prove no set of facts to avoid 
it, dismissal of the complaint based upon an affirmative defense is inappropriate.33 
                                          
 
32 Malpiede v. Townson, 780 A.2d 1075, 1082-83 (Del. 2001); see also Merrill Lynch Trust Co., 
FSB v. Campbell, 2007 WL 2069867, at *3 (Del. Ch. July 11, 2007). 
33 See Malpiede, 780 A.2d at 1083; Merrill Lynch, 2007 WL 2069867, at *3.  Cf. Worldcom, Inc. 
v. Graphnet, Inc., 343 F.3d 651, 657-58 (3d Cir. 2003) (Because facts necessary to establish 
affirmative defenses had to come from matters outside complaint and thus did not appear on face 
of complaint, neither affirmative defense could be adjudicated on Rule 12(b)(6) motion); 
Robinson v. Johnson, 313 F.3d 128, 135 (3d Cir. 2002) (limitations defense may be raised on a 
motion under Rule 12(b)(6)“only if the time alleged in the statement of a claim shows that the 
cause of action has not been brought within the statute of limitations”) (emphasis added); Lennon 
v. Seaman, 63 F. Supp. 2d 428, 438-39 (S.D.N.Y. 1999) (court may consider defense of laches 
on motion to dismiss when it is clear on face of complaint and when it is clear that plaintiff can 
prove no set of facts to avoid insuperable bar).  See generally 5B CHARLES ALAN WRIGHT & 
ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357 (“As the case law makes clear, 
the complaint also is subject to dismissal under Rule 12(b)(6) when its allegations indicate the 
existence of an affirmative defense that will bar the award of any remedy; but for this to occur, 
the applicability of the defense has to be clearly indicated and must appear on the face of the 
pleading to be used as the basis for the motion.”) 
 
13
Viewing the record in the light most favorable to Reid, there are no unusual 
conditions or extraordinary circumstances, apart from the length of the Texas 
litigation.  Although nearly a decade elapsed from the time his cause of action 
accrued until Reid filed this action in 2007, most of that delay is attributable to the 
Texas litigation itself and the appeals which followed.  Far from sitting on his 
rights, Reid promptly and vigorously pursued them—with both parties seeking 
appellate review of adverse rulings.34   
Taking all inferences in favor of Reid, we must infer that he has acted in 
good faith and with reasonable diligence.  As a result of the Texas litigation, 
Appellees have been on notice for years that Reid intended to pursue his rights 
vigorously.  While the passage of time inevitably results in some prejudice to all 
parties, our General Assembly has provided a reasonable extension of one year for 
certain claims that are preserved by the Savings Statutes so they may be decided on 
their merits.35  Here, the affirmative defense of laches does not clearly appear from 
the allegations of the complaint.  Specifically, the complaint itself does not show 
unusual conditions or extraordinary circumstances that make it inequitable to allow 
                                          
 
34 Appellees’ argue that Reid should have abandoned the Texas litigation and filed suit in 
Delaware as early as 2003, when the intermediate appellate court reversed the trial court’s 
judgment in his favor.  However, this argument accepted would encourage the wasteful and 
inefficient placeholder litigation that the Savings Statute is designed to prevent. 
35 Cf. Chaplake Holdings, Ltd. v. Chrysler Corp., 766 A.2d 1, 6 (Del. 2001) (“Statutes of 
limitation are designed to avoid the undue prejudice that could befall defendants, after the 
passage of an unreasonable amount of time….”) 
 
14
the prosecution of Reid’s claim.  Accordingly, the Court of Chancery erred in 
dismissing the complaint as barred by laches under Rule 12(b)(6).36 
IV. Conclusion 
The judgment of the Court of Chancery is REVERSED and this matter is 
REMANDED for further proceedings consistent with this Opinion. 
                                          
 
36 See Harman v. Masoneilan, Inc., 442 A.2d 487, 501-03 (Del. 1982) (reversing Court of 
Chancery’s ruling on a motion to dismiss that plaintiff’s claim was barred by laches when the 
plaintiff’s complaint raised at least a justiciable issue as to the timeliness of the suit and the court 
went outside the complaint to obtain facts on which to base its ruling).