COURT OF CHANCERY

OF THE

SAM GLASSCOCK III

VICE CHANCELLOR

STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE

34 THE CIRCLE

GEORGETOWN, DELAWARE 19947

Date Submitted: April 2, 2019

Date Decided: April 4, 2019

David E. Ross, Esquire

Bradley R. Aronstam, Esquire

Ross Aronstam & Moritz LLP

100 S. West Street, Suite 400

Wilmington, DE 19801

Andrew White, pro se

William B. Chandler III, Esquire 

Wilson Sonsini Goodrich & Rosati 

8 West Laurel Street

Georgetown, DE 19947

Re: GMF ELCM Fund L.P., et al. v. ELCM HCRE GP LLC, et al.

C.A. No. 2018-0840-SG

Dear Counsel and Mr. White:

This Letter Opinion follows the Rule to Show Cause hearing, held on March 

29, 2019 at 9:30 am. I begin with a brief recitation of the facts relevant to this 

Opinion; I note that, after several days of hearings,1there is far more evidence than 

warrants discussion in this Opinion of limited scope.

 

1 These hearing days did not occur consecutively, as Mr. White failed to appear at our first 

scheduled hearing on January 30, 2019. 
2

I. BACKGROUND

This litigation involves a business that acquires and operates nursing homes, 

which once operated facilities in several states. The business consists of a 

complicated web of entities (the “Vehicles”). For purposes of this Opinion, rather 

than delve into the nuances of the business’s organizational chart, I note only that 

some of these entities are wholly-owned by Defendant Andrew White. The Plaintiffs 

are investors in the Vehicles.

The Vehicles are, simply put, in trouble. They are battling litigation and stateinitiated proceedings in a number of other states, most notably Vermont and North 

Carolina.2 This is not merely a case of an entity that needs a receiver to manage its 

business or to assist in winding up its affairs. The nature of this business is nursing 

care, and as a result, negligent or incompetent leadership affects vulnerable people, 

whose lives are affected by these Vehicles’ fates; residents at the nursing homes, 

whose health, care, and wellbeing depend on the Vehicles’ proper management. 

Though yet unproven in this case, there are allegations that the delivery of food for 

the residents has been interrupted. There is evidence that residents’ rent checks have 

gone uncashed, leaving them to question whether their housing is assured. There is 

evidence that residents have been “evacuated”

3

from certain facilities. There is 

 

2 Vermont appointed a receiver over the nursing homes in that state; the Vehicles lost their ability 

to operate nursing homes in North Carolina.

3 This is Mr. White’s own phrasing. See Feb. 14, 2019 Hr’g Tr., at 338:21.
3

evidence that employees who provide direct care to residents have, on multiple 

occasions, not been paid on time—sometimes days or even weeks late. I note this 

not to suggest that cases involving other business entities lack importance, nor that 

they cannot also be disruptive of human lives—they can be, and often are. What I 

do mean to suggest is that the exigencies of this particular business compel 

especially focused attention.

In light of this, the Plaintiffs—who, again, are investors in the Vehicles—filed 

suit on November 11, 2018, alleging breach of fiduciary duties and breach of 

contract. Along with the Complaint, they filed a Motion to Expedite and a Motion 

to Appoint a Receiver Pendente Lite. I entered an Interim Status Quo Order on 

December 12, 2018. A hearing on the Motion to Appoint a Receiver Pendente Lite 

was rescheduled on numerous occasions between December 2018 and January 2019, 

and was ultimately held on January 30, 2019. Various discovery motions were filed 

in the interim. On January 17, 2019, the Defendants filed a Motion to Stay the 

proceedings pending decision from a Vermont court regarding nursing facilities 

there; I denied the Motion to Stay on January 18, 2019. 

On the eve of the hearing on the Motion to Appoint a Receiver Pendente Lite, 

then-counsel for the Defendants informed the Court that Mr. White would be unable 

to attend because he had been admitted to the hospital and had not been cleared to 

travel to Delaware; as such, he could not testify at the hearing on January 30. Given 
4

that the hearing had already been rescheduled (by my count, at least three times, and 

on at least one occasion due to Mr. White’s schedule and preferences), and given 

that Mr. White’s counsel was present and ready to proceed, I informed the parties 

that the evidentiary hearing would commence without Mr. White. After that day’s

testimony, and based on evidence generated at that hearing, on January 30, 2019 I 

ordered that an interim receiver be appointed. I ordered that when Mr. White was 

able to travel, the evidentiary hearing would continue, at which time he could testify, 

and that I would then consider whether a receiver should be appointed pendente lite. 

With the parties’ agreement, I appointed William B. Chandler III (the “Receiver”) 

to serve as interim receiver on February 7, 2019, and ordered specifically that Mr. 

White cooperate with the Receiver, so that the Receiver could efficiently operate the 

business pending a decision on appointment pendente lite. 

The continued evidentiary hearing was held on February 14 and 15, 2019. Mr. 

White appeared; however, his testimony was, frankly, disturbing. It was often 

rambling and, to my mind, non-linear. Moreover, parts of the testimony were 

incomprehensible, and Mr. White needed frequent reminders to slow down and 

speak clearly for the court reporter. Based in part on Mr. White’s testimony, I found 

it appropriate to maintain the interim receivership pending briefing, which has yet 

to occur. 
5

On February 26, 2019, the Receiver requested an office conference, which 

was held on February 28. At that time, the Receiver described his interactions with 

Mr. White and expressed serious concern about the Vehicles’ operation. The 

Receiver detailed instances where Mr. White was unresponsive to the Receiver’s

requests for information, instances where the Receiver had been blindsided with 

matters needing immediate attention (but of which he was informed only at the last 

minute), such as approving payroll, and instances where Mr. White acted 

unprofessionally toward the Receiver. Mr. Chandler indicated that Mr. White had 

not yet provided him with access to the Vehicles’ bank accounts. Mr. Chandler also 

requested to withdraw as receiver. Mr. White’s counsel attended, but was unable to 

explain White’s lack of cooperation to my satisfaction.

I indicated that I would grant the Receiver’s motion to withdraw as soon as a

successor receiver was identified. I also asked the Receiver to produce a list of the 

documents and information that would be necessary for a receiver to operate the 

Vehicles successfully, and I ordered Mr. White to produce those documents by a 

time certain, once identified. If he did not produce them in a timely fashion, I 

indicated that I would issue a Rule to Show Cause why he should not be held in 

contempt. Mr. Chandler filed the list of necessary items on March 1. I ordered Mr. 

White to produce that information by March 11, 2019. 
6

Meanwhile, on March 6, the Defendants’ counsel filed a Motion to Withdraw 

their representation. On March 11, I ruled that the Defendants should find successor 

counsel in a timely fashion, and then I would grant the Motion to Withdraw. 

On March 12, the Receiver informed the Court that Mr. White had not 

complied with the Court’s Order and had not produced the information necessary 

for a receiver by March 11. In a letter on March 13, Mr. White represented, through 

counsel, that he had “substantially compl[ied] with the Receiver’s March 1, 2019 

Requests.” As later evidence indicated, this was not so, although some information 

had been produced.

On March 12, the Plaintiffs amended their Complaint to seek judicial 

dissolution of the Vehicles. 

Also on March 12, Mr. Chandler filed a Motion to Modify the Order 

Appointing Receiver Pendente Lite, to allow the Receiver to make a capital call on 

the Vehicles’ partners, and specifically Mr. White. As he was still without access to 

the Vehicles’ bank accounts, Mr. Chandler had directed Mr. White to deposit nursing 

home patients’ rent checks in a certain account, to be used by the Receiver to pay 

employees. Instead, in direct contravention of the Receiver’s directive, Mr. White 

deposited the checks into an account for one of his own entities, stating that the 

money was owed to him. This money was unavailable to the Receiver, who 

accordingly could not pay wages to the employees. On March 13, I ordered Mr. 
7

White (via his entities) to repay the money he had diverted within 24 hours. He did 

not. On March 14, I again ordered Mr. White to repay the money he had diverted 

from the Vehicles.4 On March 14, I gave the Defendants two weeks to retain 

successor counsel.

Also on March 14, I issued a Rule to Appear and Show Cause why Mr. White 

should not be held in contempt for failure to comply with the Court’s Order to 

cooperate with the Receiver, for his failure to produce certain documents to the 

Receiver, and for his failure to turn over certain funds to the Receiver, as well as 

why he should not be sanctioned for his uncooperative efforts hindering litigation. 

The Rule to Show Cause hearing was scheduled for March 29, 2019, at 9:30 am.5

Mr. White failed to appear at the Rule to Show Cause hearing on March 29, 

2019. The Receiver and the Plaintiffs’ counsel did appear. The Plaintiffs’ counsel 

shared with the Court an email from Mr. White, sent less than an hour before the 

hearing was to start, indicating that Mr. White would not be able to appear because 

he was ill and unable to travel. The Receiver then gave an extensive presentation, 

informing me that the funds misdirected by Mr. White had been made available to 

the Receiver, and that some information and documents, which, per earlier Orders, 

 

4 Per the Receiver’s representation at the March 29, 2019 Rule to Show Cause hearing, Mr. White 

ultimately returned the money.

5

I also scheduled argument on the appointment of a permanent receiver and judicial dissolution 

for that day. I have continued consideration of those motions, to allow Mr. White to participate.
8

Mr. White was supposed to have produced, had been made available to him, but that

others had not. He described the extensive efforts required of the Receiver’s staff in 

an effort to preserve the business, which could have been avoided had Mr. White 

timely complied with this Court’s Orders.6

The email sent by Mr. White to the Receiver and the Plaintiffs’ counsel was 

not filed by Mr. White; however, I entered it into the record as a Court exhibit. In 

the letter, Mr. White explains that he is ill and unable to travel, but not why he did 

not request a continuance of the hearing before the Plaintiffs’ counsel and the 

Receiver and his staff had prepared for the hearing and traveled to Georgetown. In 

an Order entered on March 29, I directed Mr. White to file a written explanation with 

the Court for his failure to appear at the March 29 hearing, including a physician’s 

affidavit advising that Mr. White was prohibited from traveling to the hearing (and 

the date and time the physician so advised Mr. White). This was to be completed by 

April 1, 2019, at 5:00 P.M. EDT. Mr. White did not comply with that Order. He did 

not provide the Court with any further explanation as to why he was unable to travel 

or why he was unable to give the parties notice that he would not appear at the March 

29 hearing. He did send an email (via an employee) to the Receiver at 5:08 P.M. on 

 

6 Because the two weeks allocated to Mr. White to obtain successor counsel had passed, on March 

29, 2019 I granted his counsel’s Motion to Withdraw. At this time, neither Mr. White nor the 

Defendant entities are represented by counsel.
9

April 1, asking that I be informed that he would get such information to the Court in 

the future.

Given Mr. White’s repeated failure to comply with Court orders, sanctions are 

appropriate. My reasoning follows.

II. ANALYSIS

A. Bad Faith Litigation

Generally, litigation in this Court follows the “American Rule,” where each 

side pays its own litigation costs. That said, there are some circumstances that 

warrant equitable fee shifting; namely, the so-called “bad faith exception” to the 

American Rule. The bad faith exception “applies in cases where the court finds . . . 

that a party conducted the litigation process itself in bad faith, thereby unjustifiably 

increasing the costs of litigation.”7 “Although there is no single definition of bad 

faith conduct, courts have found bad faith where parties have unnecessarily 

prolonged or delayed litigation, falsified records, or knowingly asserted frivolous 

claims.”8

I find that Mr. White has engaged in bad faith conduct that warrants shifting 

fees here. Hearing dates have been moved several times to accommodate Mr. 

White’s schedule, and on two separate occasions, Mr. White has failed to appear at 

 

7 Beck v. Atlantic Coast PLC, 868 A.2d 840, 851 (Del. Ch. 2005).

8

Johnson v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 546 (Del. 1998).
10

a scheduled hearing. Prior to the January 30 evidentiary hearing, Mr. White’s 

counsel did not notify the Court that Mr. White would not appear until the day before 

the hearing was to take place. Notably, Mr. White’s reported refusal to cooperate

with the Receiver necessitated that I issue a Rule to Show Cause, returnable at 9:30 

A.M. on March 29, 2019. It was not until the Plaintiffs’ counsel and the Receiver 

had arrived at the courthouse for the March 29 hearing that Mr. White informed 

them that he would not attend. I offered Mr. White the opportunity to present 

argument and a physician’s affidavit in mitigation, and he did not. To the extent Mr. 

White is ill, that is unfortunate, and the Court will obviously accommodate litigants 

in that regard. Mr. White, however, has shown repeated disregard for the time and 

efforts of litigants, counsel, the Receiver, and the Court—not to mention the 

Plaintiffs’ financial expenditures caused thereby. This cannot stand unremedied.

Accordingly, I find it appropriate to shift to Mr. White the Plaintiffs’ 

attorneys’ fees and expenses incurred in connection with the March 29, 2019 

hearing. The Plaintiffs should provide an affidavit showing the time incurred in this 

regard, including travel and preparation time.

B. Contempt

Given Mr. White’s failure to comply with my Orders to cooperate with the 

Receiver, to provide specific information and documents to the Receiver, and to 

appear to show cause, I find Mr. White in civil contempt of this Court. 
11

There are two types of contempt, civil contempt and criminal contempt. In 

distinguishing between civil and criminal contempt, the form of punishment is not 

determinative.9 Rather, the difference between the two is the “character and 

purpose” of the sanction; civil contempt is remedial, whereas criminal contempt is 

punitive.10 In practice, the line between civil and criminal contempt can be murky. 

To that point, I find Vice Chancellor Laster’s analysis particularly helpful: 

The distinction between criminal and civil contempt is often cloudy at 

best but there are commonly used parameters for distinguishing the 

two.” The fact that a party faces imprisonment as a potential sanction 

does not mean that the contempt is necessarily criminal. Rather, the 

distinction turns on the purpose of the sanction and the means of 

purging it. “[W]here the primary purpose is to punish, a contempt 

proceeding is criminal in character and, where the primary purpose is 

to coerce, it is civil.” Issuing an arrest warrant and confining a party 

falls under the heading of civil contempt if the court contemplates 

“confining [the] contemnor indefinitely until he complies with an 

affirmative command.” “Conversely, a fixed term of imprisonment is 

punitive and criminal if it is imposed retrospectively for a past act of 

disobedience, and cannot be avoided or abated by subsequent 

compliance with the court’s order.”11

This case bears some similarity to Deutsch v. ZST Digital Networks, Inc., a 

books and records action. To summarize the facts Deutsch, the defendants did not 

appear in court, and a receiver was ultimately appointed. The defendants repeatedly 

 

9 Both imprisonment and fines can be used as a sanction for either civil or criminal contempt. See 

Allen v. Div. of Child Support Enforcement ex rel. Ware, 575 A.3d 1176, 1179, n.5 (Del. 1990); 

DiSabatino v. Salicete, 671 A.2d 1344, 1349–50 (Del. 1994).

10 See United Mine Workers of Am. v. Bagwell, 512 U.S. 821 (1994).

11 Deutsch v. ZST Digital Networks, Inc., 2018 WL 3005822, at *13 (Del. Ch. June 14, 2018) (first 

quoting City of Wilm. v. Gen. Teamsters Local Union 326, 321 A.2d 123, 125 (Del. 1974); then 

quoting id.; then quoting DiSabatino, 671 A.2d at 1350; then quoting id.).
12

failed to comply with the receiver’s requests. This Court issued various orders 

imposing sanctions, before ultimately holding the defendants in civil contempt for 

failure to comply and indicating that if they did not comply within six days’ time, 

the Court would consider issuing warrants for the defendants’ arrest. In his opinion, 

Vice Chancellor Laster noted that issuing arrest warrants would constitute civil 

contempt, because that remedy would seek to compel the defendants to comply with 

the receiver’s requests.12

A finding of contempt must meet certain due process requirements. In cases 

of civil contempt, due process demands that the party be afforded notice and an 

opportunity to be heard.

As outlined above, Mr. White has, on numerous occasions, flouted this 

Court’s Orders by simply refusing to comply. In contravention of this Court’s 

February 7, 2019 Order, Mr. White has continually refused to cooperate with the 

Receiver. First, he has refused to timely supply the Receiver with the documents 

and information necessary to operate the Vehicles effectively. Second, he has 

treated the Receiver with disrespect. Third, he has disobeyed the Receiver’s clear 

directives, i.e., by depositing checks into his own entities’ bank accounts rather than 

the Vehicles’ bank accounts.

 

12 Id.
13

Moreover—and most egregiously—Mr. White failed to appear at the Rule to 

Show Cause hearing. The fact that Mr. White gave absolutely no prior indication—

not to this Court, nor to the Plaintiff’s counsel, nor to the Receiver—that he would 

not appear led to waste of time and effort. He subsequently disobeyed this Court’s 

Order, which required him to provide a written explanation as to why he did not 

appear and why he did not give notice that he would not appear. 

With respect to the Rule to Show Cause hearing, Mr. White’s due process 

rights have been satisfied. He was given notice in this Court’s March 14, 2019 Rule 

to Appear and Show Cause.13 That Order identified Mr. White by name and stated 

the reasons why he could be held in contempt. It notified Mr. White of the date, 

time, and location of the hearing. He was given an opportunity to respond at that 

hearing, which was held on March 29, 2019. He did not take advantage of that 

opportunity. In my Order of March 29, 2019, I gave Mr. White an opportunity to 

explain his absence, and directed him to inform the Court by April 1, 2019 why he 

did not appear at the March 29 hearing. Again, Mr. White did not comply.

As such, and considering the relatively brief—but nevertheless dramatic—

history of this case, I find Mr. White in civil contempt of this Court’s March 

February 7, 2019 Order, which required Mr. White to cooperate with the Receiver. 

 

13 See id. (“the Order to Show Cause already provided adequate notice to the [Defendants] to 

satisfy due process”).
14

I also find Mr. White in civil contempt of my March 13, 2019 Order requiring Mr. 

White to make certain documents available to the Receiver. As a sanction, I direct 

Mr. White, personally, to pay the portion of the Receiver’s fees, as well as costs and 

expenses, that were caused by Mr. White’s lack of cooperation, including those fees 

and expenses associated with the March 29 hearing. Mr. Chandler should provide 

the Court with a statement of those fees, costs, and expenses, representing that 

portion of the Receiver’s fees that would have been avoided, but for Mr. White’s

contemptuous failure to comply.

To be clear, this is not a punitive sanction. Mr. White will have to cooperate 

with a receiver or custodian going forward. His behavior must change; otherwise,

the business may be irremediably harmed. In addition, as I have pointed out above, 

the nursing home patients’ well-being renders the smooth operation of the 

receivership particularly compelling. Nothing I have done, to this date, has caused 

Mr. White to take his responsibilities seriously. This sanction is designed to ensure 

that he does so going forward, or else he will face further sanctions.

To summarize, Mr. White must pay the Plaintiffs’ reasonable attorneys’ fees

and expenses in connection with attending the March 29, 2019 hearing. Mr. White 

must also pay the Receiver’s fees and expenses that were incurred as a result of Mr. 

White’s uncooperative behavior. The amounts remain to be determined. To the 

extent the foregoing requires an order to take effect, IT IS SO ORDERED.
15

Sincerely,

/s/ Sam Glasscock III

Vice Chancellor