COURT OF CHANCERY

OF THE

STATE OF DELAWARE

KATHALEEN ST. JUDE MCCORMICK

CHANCELLOR

LEONARD L. WILLIAMS JUSTICE CENTER

500 N. KING STREET, SUITE 11400

WILMINGTON, DELAWARE 19801-3734

July 13, 2023

Richard I. G. Jones

John G. Harris

Michael W. McDermott

Harry W. Shenton IV

Berger Harris LLP

1105 North Market Street, 11th Floor

Wilmington, Delaware 19801

William M. Lafferty

Thomas W. Briggs, Jr.

Miranda N. Gilbert

Morris, Nichols, Arsht & Tunnel LLP

1201 North Market Street

Wilmington, Delaware 19801

Re: HControl Holdings LLC et al. v. Antin Infrastructure Partners 

S.A.S., C.A. No. 2023-0283-KSJM

Dear Counsel:

This letter decision resolves the plaintiffs’ motion for a new trial pursuant to Court 

of Chancery Rule 59(a).1 The motion is denied.

As set out in greater detail in the May 29, 2023 Post-Trial Memorandum Opinion, 

the plaintiffs (“Sellers”) own a group of Florida broadband companies collectively referred 

to as “OpticalTel.” They filed this action to force Antin Infrastructure Partners S.A.S. and 

affiliated entities (“Buyers”) to buy OpticalTel pursuant to a Merger Agreement. I entered 

post-trial judgment in favor of Buyers, finding that they validly terminated the Merger 

Agreement. The key finding was that one of Sellers’ former employees, Rafael Marquez, 

owned “phantom equity” under a Software Agreement that required HControl Corporation 

1 C.A. No. 2023-0283-KSJM, Docket (“Dkt.”) 154 (“Sellers’ Mot.”); see also HControl 

Hldgs. LLC v. Antin Infrastructure P’rs S.A.S., 2023 WL 3698535 (Del. Ch. May 29, 2023) 

(“Post-Trial Mem. Op.”). Defined terms used in this letter have the meaning ascribed to 

them in the Post-Trial Memorandum Opinion.
C.A. No. 2023-0283-KSJM

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Page 2 of 9

to pay Marquez “5% ownership of HControl Corporation to be distributed upon a 

liquidation event.”2 Because of Marquez’s phantom equity, Sellers’ Capitalization 

Representations were inaccurate, entitling Buyers to terminate the Merger Agreement.

This case proceeded at record pace, even for this court. Both sides requested 

expedition. Sellers moved to expedite proceedings when they filed their complaint on 

March 6, 2023, because they were “at risk of imminent harm and losing their bargainedfor rights each day that passes without the transaction closing.”3

 Buyers requested final 

resolution in advance of their debt financing commitment’s expiration on June 9, 2023.

4

 

The parties’ agreed-upon schedule culminated in a three-day trial that took place from May 

10 through 12, 2023.5 Post-trial briefing concluded on May 22, 2023.

6

I issued the PostTrial Memorandum Opinion on May 29, 2023, and entered a final order and judgment on 

May 31, 2023.7 I issued my decision on May 29 to permit Sellers time to seek appeal

before the June 9 expiration date. Instead, on June 5, 2023, Sellers moved for a new trial.8

2 Post-Trial Mem. Op. at *8.

3 Dkt. 2 ¶ 8.

4 See Dkt. 93 ¶ 135.

5 Dkts. 134–36.

6 Dkt. 137 (Sellers’ Opening Post-Trial Br.); Dkt. 138 (Buyers’ Opening Post-Trial Br.); 

Dkt. 141 (Sellers’ Answering Post-Trial Br.); Dkt. 144 (Buyers’ Answering Post-Trial Br.).

7 Dkt. 153.

8 See Sellers’ Mot. Rule 59(b) requires that a motion for a new trial “shall be served not 

later than 10 days after the entry of the judgment.” Ct. Ch. R. 59(b). Sellers’ motion was 

thus timely, and Buyers do not dispute this point.
C.A. No. 2023-0283-KSJM

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Rule 59(a) allows this court to grant a new trial “on all or part of the issues for any 

of the reasons for which rehearings have heretofore been granted in suits in equity.”9 

Whether to grant a new trial lies in the trial court’s discretion.

10

 To obtain a new trial under 

Rule 59(a), “the disappointed litigant must show that manifest injustice otherwise would 

result.”11 “Requests for new factual findings are not considered routine.”

12

 This general 

rule stems from the understanding that “while every litigant is required to make ‘the fullest 

possible preparation of his case before trial . . . disappointment over the result [frequently] 

spurs the applicant to that diligence which he should have exercised before trial.’”13 A 

movant cannot simply argue that they did not realize that they should have allocated more 

trial preparation to an issue: “This type of strategic second-guessing is not a basis for a new 

trial under Delaware law.”14 

Sellers seek a new trial to present additional evidence on the definition of “phantom 

equity.”

15 They acknowledge that their motion is not based on newly “discovered”

evidence. Instead, Sellers contend that a new trial is necessary to prevent manifest injustice

9 Ct. Ch. R. 59(a).

10 Manichaean Cap., LLC v. SourceHOV Hldgs., Inc., 2020 WL 3097678, at *3 (Del. Ch. 

June 11, 2020).

11 Zutrau v. Jansing, 2014 WL 6901461, at *2 (Del. Ch. Dec. 8, 2014) (quoting Adams v. 

Calvarese Farms Maint. Corp., 2011 WL 383862, at *1 n.3 (Del. Ch. Jan. 13, 2011)).

12 St. Thomas v. Conference, 1996 WL 361513, at *1 (Del. Ch. June 24, 1996).

13 Cole v. Kershaw, 2000 WL 1336724, at *2 (Del. Ch. Sept. 5, 2000) (quoting In re 

Missouri-Kansas Pipe Line Co., 2 A.2d 273, 277 (Del. 1938)).

14 Manichaean, 2020 WL 3097678, at *4.

15 Sellers’ Mot. ¶¶ 18–21.
C.A. No. 2023-0283-KSJM

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because “Buyers’ late-breaking injection of their phantom-equity argument deprived 

Sellers of the chance to fully litigate the issue.”16 

This court has addressed similar arguments under the “affirmative proof of 

diligence” standard for newly discovered evidence. In Manichaean, for example, Vice 

Chancellor Slights denied a Rule 59(a) motion based on a legal regulation discovered posttrial, holding that the regulation did not give rise to “manifest injustice” where nothing 

prevented the movant from “directing its expert to address the issue or otherwise making 

this argument at trial.”17 

Decisions of the federal district courts of the Third Circuit interpreting the 

analogous Federal Rule are also instructive.

18

 Under Federal Rule 59(a), a motion for a 

new trial in a nonjury case “should be based upon manifest error of law or mistake of fact, 

and a judgment should not be set aside except for substantial reasons.”19 “In order to show 

clear error or manifest injustice, the [movant] must base its motion on arguments that were 

16 Dkt. 156 (“Sellers’ Reply”) ¶ 1.

17 2020 WL 3097678, at *4. 

18 See Fed. R. Civ. P. 59(a)(1)(B) (“The court may, on motion, grant a new trial on all or 

some of the issues—and to any party—as follows: . . . after a nonjury trial, for any reason 

for which a re-hearing has heretofore been granted in a suit in equity in federal court”).

19 11 Charles A. Wright, Arthur R. Miller, and Mary Kay Kane, Federal Practice and 

Procedure—Civil § 2804 (3d ed. 2012); see also Mala v. Crown Bay Marine, Inc., 2011 

WL 4590788, at *2 (D.V.I. July 22, 2011) (“A motion for a new trial in a nonjury case 

should be based upon error of law or mistake of fact on the face of the record.”); Sabinsa 

Corp. v. Creative Compounds, LLC, 2012 WL 194123, at *2 (D.N.J. Jan., 23, 2012) (“In 

non-jury cases, the granting of a new trial is usually reserved for instances in which the 

trial was infected with manifest errors of law or fact.” (internal citations omitted)).
C.A. No. 2023-0283-KSJM

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previously raised but were overlooked by the court—parties are not free to relitigate issues 

that the Court has already decided.”20

Nothing prevented Sellers from making arguments concerning phantom equity at 

trial. Sellers were aware of Buyers’ theory that Marquez’s interest violated Section 4.02. 

Sellers take issue with the fact that Buyers’ notices of breach and termination did not 

expressly cite the phantom equity provision in Section 4.02. As the expedited timeline 

suggests, however, Buyers responded to the Marquez situation as more facts became 

available. The February 6, 2023 notice of breach informed Sellers that Buyers viewed 

Marquez’s interest as violating Section 4.02.21 Buyers’ subsequent letters also cite Section 

4.02 as the basis for Sellers’ breach.22 While Sellers correctly note that these notices do 

not explicitly reference “phantom equity,” they placed Sellers on notice that Buyers viewed 

Marquez’s interest as violating the Capitalization Representations. 

On May 3, 2023, Buyers explicitly referenced phantom equity as a basis for breach 

in their pretrial brief. Sellers should have been well-acquainted with Section 4.02 by this 

point, and they had a full week (the same amount of time I took to write the Post-Trial 

Memorandum Opinion after the close of post-trial briefing) to prepare additional evidence 

related to phantom equity before trial. 

20 Robertshaw v. Pudles, 2014 WL 1789307, at *4 (E.D. Pa. May 6, 2014) (quoting United 

States v. Jasin, 292 F. Supp. 2d 670, 676 (E.D. Pa. 2003)).

21 See JX-344.

22 See JX-411; JX-492.
C.A. No. 2023-0283-KSJM

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It also seems that, at least to some extent, Sellers and their expert anticipated the 

phantom equity theory before pre-trial briefing. In an earlier draft of his report, Professor 

Steven Davidoff Solomon referenced other merger agreements that Greenberg had 

prepared and how they defined similar equity securities.23 When Professor Solomon used 

two examples that included the phrase “phantom stock,” Sellers’ counsel replied: “Section 

4.02 of our agreement says phantom stock – so is highlighting use of that term in another 

agreement as a distinguishing factor actually helpful to us?”24 In other words, phantom 

equity’s presence in Section 4.02 was not a surprise to Sellers. They just decided to focus 

their trial preparation efforts elsewhere.

Sellers did allocate some of their trial time to phantom equity. Sellers’ counsel 

questioned their fact witness Ravi Purohit about his understanding of phantom equity.25 

Sellers’ counsel also asked Professor Solomon to explain his understanding of phantom 

equity.26 On cross-examination, Sellers’ counsel asked both Christopher Turek and Marc 

Reiser about Buyers’ claims related to phantom equity.27 Again, it is hard for Sellers’ 

counsel to claim injustice from surprise when they elicited topical testimony at trial.

23 JX-710.

24 Id. at 51; see also id. at 65 (counsel stating, “Same comment re phantom stock. That 

phrase is in section 4.02. So I’m not sure highlighting it as a distinguishing factor of other 

agreements is helpful.”).

25 Trial Tr. at 14:9–15:6 (Purohit).

26 Id. at 407:8–408:24 (Solomon).

27 Id. at 682:2–24 (Turek); id. at 797:10–15 (Reiser). 
C.A. No. 2023-0283-KSJM

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Moreover, the court did not overlook Sellers’ arguments as to timing and waiver. 

Sellers argued in post-trial briefing that Buyers waived any phantom equity theory by their 

“late-breaking” introduction of the argument in pretrial briefing.28 I rejected this argument 

in the Post-Trial Memorandum Opinion, noting that the highly expedited nature of this case 

rendered Buyers’ phantom equity theory timely.29 Further, I acknowledged that Sellers 

had the opportunity to respond to this theory at trial and through post-trial briefing, which 

they did.30 Sellers cannot demonstrate manifest injustice by repackaging their prior 

arguments on waiver just because they were unsuccessful the first time. 

Precedent from this court favors rejecting Sellers’ motion. As discussed above, in

Manichaean, former Vice Chancellor Slights addressed a respondent’s motion for a new 

trial in an appraisal proceeding.31 In his post-trial opinion, the Vice Chancellor found that 

the petitioners won the expert battle, meaning that restricted stock units (“RSUs”) should 

not be included in the total number of outstanding shares because their vesting was 

speculative. The respondent moved for a new trial, arguing that additional evidence 

regarding the treatment of vested but unsettled RSUs would require a different outcome. 

The Vice Chancellor disagreed. He reasoned that the respondent’s proposed new evidence 

28 Sellers’ Opening Post-Trial. Br. at 41; see also Sellers’ Answering Post-Trial Br. at 5.

29 See Post-Trial Mem. Op. at *27 (“This case revved up from filing to trial in under two 

months—the complaint was filed on March 6, 2023, and the pretrial briefs were filed on 

May 3, 2023. It is hard to fault Buyers for not formulating all of their legal theories 

earlier.”).

30 Id.

31 Manichaean, 2020 WL 3097678, at *1.
C.A. No. 2023-0283-KSJM

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was neither new nor outcome-determinative. Since the respondent’s alleged manifest 

injustice was merely that it “now wishes it had made a separate argument concerning 

unsettled RSUs, rather than merely focusing on unvested RSUs, during its trial 

presentations,” the respondent had failed to demonstrate the need for a new trial.32

This court similarly denied a motion for a new trial in Zutrau v. Jansing.

33

 There, 

the plaintiff sued the president and sole director of the nominal defendant corporation. 

While the plaintiff was an employee, the president granted her an equity interest. When 

the plaintiff left the company, the president executed a reverse stock split that cashed out 

the plaintiff’s interest. In its post-trial opinion, the court denied the plaintiff’s request for 

rescission of the reverse stock split or dissolution of the company. The plaintiff moved for 

a new trial, citing “new” evidence that the president had conditioned the equity grant on 

her having a relationship with him. As the plaintiff admitted, however, her counsel already 

knew about those underlying facts and made a tactical decision not to present the evidence 

at trial. The court concluded that the plaintiff “may have a bone to pick with her attorneys 

on that point, but it does not provide a legitimate basis for retrying this case.”34

The same outcome makes sense here. As reflected in their own discovery materials, 

trial testimony, and post-trial briefing, Sellers’ counsel knew Buyers might argue that

Marquez’s interest fell within the definition of phantom equity. The need to move fast 

32 Id. at *4.

33 2014 WL 6901461, at *1.

34 Id. at *4.
C.A. No. 2023-0283-KSJM

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required the litigants to make strategic decisions, and Sellers chose to focus on other issues. 

That choice does not outweigh the interest of finality in a post-trial judgment. 

Sellers’ motion for a new trial is denied.

Sincerely,

/s/ Kathaleen St. Jude McCormick

Kathaleen St. Jude McCormick

Chancellor

cc: All counsel of record (by File & ServeXpress)