COURT OF CHANCERY OF THE S AM G LASS C OCK III

V ICE C HANCELLOR STATE OF DELAWARE C OURT OF C HANCERY C OURTHOUSE 34 T HE C IRCLE G EORGETOWN , D ELAWARE 19947 Date Submitted: July 22, 2021

Date Decided: July 26, 2021

Kevin R. Shannon , Esq. Christopher N. Kelly , Esq. Daniel M. Rusk, IV , Esq. Potter Anderson & Corroon LLP 1313 N. Market Street Hercules Plaza, 6th Floor Wilmington, Delaware 19801 Rudolf Koch , Esq. Kevin M. Gallagher , Esq. Daniel E. Kaprow , Esq. Richards, Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801
RE: RPFG Holdings, LLC v. Freedom Mortgage Corporation , C.A. No. 2020

- 0161

- SG Dear Counsel: On April 6, 2021, I heard oral argument on the Plaintiff’s Motion to Dismiss the Defendant’s counterclaim. 1 The Defendant’s counterclaim seeks “ damages in the full amount of the Indemnity Letter of Credit” for the Plaintiff’s alleged breaches of the Merger Agreement between the parties

. 2 The Plaintiff argue d that the

co unterclaim w as released under an agreement entered into by the parties in connection with a partial settlement in this matter

. 3 At oral argument, I asked

1 4

- 6

- 21, Oral Arg. a nd Rulings of the Court on Pl.’s Mot. to Dismiss Def.’s Countercl., Dkt. No. 189 [hereinafter “MTD Tr.”]. 2 Def. ’s Am. Answer to the Verifie d Am. Compl. And Verified Countercl., at Prayer for Relief ¶ A, Dkt. No. 170 [hereinafter “Countercl.”]. 3 See generally Pl.’s Mot. to Dismiss Def.’s Verified Countercl., Dkt. No 168.2 counsel whether the counterclaim could also be brought as a defense

— specifically, as a setoff to the Plaintiff’s claim for damages

. 4 Counsel had not considered that question, and t he Plaintiff did not concede that the counterclaim could be brought as

a setoff at the time. 5 At the conclusion of the argument , I told the parties that the dispute over the Defendant’s counterclaim should be decided after limited discovery in way of a motion for summary judgment. The parties conducted that discovery and submitted cross

- motions for partial summary judgment, which I heard on July 22, 2021.
D uring the argument for the motions for summary judgment, I again raised the issue of whether the counterclaim could be brought as a setoff defense. 6 This time, the parties agreed that it could. 7 Moreover, a review of the extrinsic evidence relied on by both parties make s it clear that the Defendant intended to retain the right, at least, to prove damages to set against any proved by the Plaintiff. In light of those facts, I indicated that it might be in the interests of efficiency to defer decision on the cross

- motions until after a trial record was created. The Plaintiff, in opposition to that contention , noted that any set off would require the Defendant to prove that it w as actually damaged by the Plaintiff’s alleged

4 MTD Tr. 9

– 11. 5 MTD Tr. 11. 6 7

- 22

- 21, Rough Tr. of Oral Arg. on Cross

- Mots. for Partial Summ. J., at 45 [hereinafter “MSJ Tr.”]. 7 MSJ Tr. 45, 62.3 breaches of the Merger Agreemen t. 8 I agree. But the point is th a t the Defendant is under the same burden of proof if it pursue s an affirmative claim , as well. In other words, if I enter summary judgment for the Defendant on the viability of its affirmative claim, the Defendant will attempt to present evidence of damages at trial. If I enter summary judgement for the Plaintiff on the affirmative claim, the Defendant nonetheless will attempt to present evidence of damages at trial. Consideration of the cross

- motions at this time, in other words, will not eliminate issues for trial, and will be of marginal utility. Interests of efficiency are not greatly

se r ved by this motion practice, I conclude. Additionally, I note, addressing this issue of whether the Defendant ’ s affirmative clai ms were waived in connection with the settlement would result in an opinion that is akin to advisory. Now that it is clear that the Defendant ’ s claim can be brought , in any event , as a setoff, consideration of whether the affirmative claim has been waived only becomes necessary if it proves, after trial, that the Defendant ha s damages greater than those proved by the Plaintiff. Only if such a delta exists will it matter if the Defendant ’ s damages are affirmative or merely a set

- off. Accordingly, any decision on the nature of the Defendant’s claim for damages

— whether it can be an affirmative claim or must be a defense

— is unripe, contingent

8 MSJ Tr. 62.4 as it is on the ultimate proof of an excess of the Defendant ’ s damages over the Plaintiff ’ s
. For those reasons , I decline to address the nature of the Defendant ’ s claim at this time. Having said that, I note that c ounsels’ efforts in briefing and presenting the cross

- motions for summary judgment are com mendable , and I do not consider the efforts wasted; to the contrary, I found the briefing and argument helpful and illuminating. I now consider this issue to be fully submitted and, should I need to resolve it, I will have no need for further submissions

. Until that time comes, however, I reserve decision on t he cross

- motions

. To the extent the foregoing requires an order to take effect, it is SO
ORDERED. Sincerely, /s/ Sam Glasscock III Sam Glasscock III

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