Opinion ID: 1930614
Heading Depth: 1
Heading Rank: 2

Heading: Trial Court Standard of Review on Summary Judgment in Reformation Cases

Text: The final order and judgment of the Court of Chancery entered on March 21, 2001, [5] is based upon the decision embodied in the transcript of the trial judge's three-page bench ruling of March 13, 2001. [6] The trial court concluded that given the evidentiary standard that parties seeking reformation must satisfy, I must conclude that on this record that the showing that must be made to overcome this motion for summary judgment simply has not been made.... [7] The trial court concluded that while there is some evidence as to what plaintiffs believed the deal was, there is no clear and convincing evidence. [8] The trial judge also found that on the summary judgment record in this case there was no evidence from which one can draw an inference that there will be clear and convincing evidence at a trial, that the parties reached an agreement that the proceeds of the option and warrant exercise would be paid to the selling stockholders. [9] The Court of Chancery concluded that there was no evidence in the summary judgment record from which one can infer that the attorneys representing both sides were incapable of reading the agreement or mistaken as to what the agreement provided on the narrow question of who would receive the proceeds of the exercise of the options and warrant. [10] The trial court found that this latter issue is a critical inference the Court would have to make in order to conclude that there exists a triable issue on the reformation claim. [11] The decision of the Court of Chancery raises two main issues that are before us on this appeal. The first issue is the standard of review the trial court should apply on summary judgment in a reformation case. The second issue is whether the Court of Chancery properly applied that standard of review to the facts in the record here in its determination that there was no triable issue of material fact. In this section we deal with the first issue. In the final section we deal with the second main issue. The first question is one of law. [12] The Court of Chancery concluded that: (1) [W]hile there is some evidence as to what plaintiffs believed the deal was, there is no clear and convincing evidence; and (2) Nor can one draw an inference that there will be clear and convincing evidence at trial. [13] Cerberus contends that the Court of Chancery applied an erroneous legal standard. Cerberus argues that, so long as they was some evidence to support its claim, the Court of Chancery was bound to rule that summary judgment was inappropriate. Apollo argues that the Court of Chancery was correct in holding that, even if Cerberus put forth some evidence in support of its claim, summary judgment was appropriate if no reasonable finder of fact could conclude that the evidence proffered on the summary judgment record was clear and convincing. Some courts apply the substantive burden of proof at the summary judgment stage. Others do not. The leading case articulating the impact of the substantive burden of proof on summary judgment is Anderson v. Liberty Lobby, Inc. [14] In that case, the United States Supreme Court ruled that a trial court could indeed take the substantive evidentiary standard into consideration when ruling on a summary judgment motion. [15] Although this Court has cited Liberty Lobby favorably in the past, [16] we have never had occasion to consider adopting its main holding. Other jurisdictions have split on the question of whether to adopt the Liberty Lobby standard. Many states have adopted it, [17] and it appears to be the majority rule. [18] Some states have explicitly rejected it in favor of the traditional standard, [19] which is that a trial court need only ask whether the affidavits have created a genuine issue of material fact, not whether they do so in light of the burden of proof.... [20] We believe the common sense approach is consistent with Liberty Lobby. Accordingly, we hold that the trial court must determine whether the plaintiffs on the summary judgment record proffered evidence from which any rational trier of fact could infer that plaintiffs have proven the elements of a prima facie case by clear and convincing evidence. [21] An analogy to the criminal jurisprudence is apt. [22] The prosecution's case will survive a motion for judgment of acquittal and must be presented to the jury if any rational juror could find, from the evidence and inferences therefrom, in the light most favorable to the state, that the defendant is guilty beyond a reasonable doubt. [23] It is not permissible for the trial judge, in either a criminal case or a civil case (regardless of the ultimate substantive burden), to weigh the evidence or to resolve conflicts arising from pretrial documents, affidavits, depositions or other evidence. [24] That is the job of the trier of fact (whether it is to be a bench trial or a jury trial) after hearing all the evidence, including live witness testimony that, as here, may be in conflict. This is an axiom of the judicial process [25] and applies unless the parties have stipulated that the paper record shall constitute the trial record. [26] The question is whether any rational finder of fact could find, on the record presented to the Court of Chancery on summary judgment viewed in the light most favorable to the non-moving party, that the substantive evidentiary burden had been satisfied. In this case that substantive burden is that each of the elements of a claim of reformation must be proven by clear and convincing evidence. The judge who decides the summary judgment motion may not weigh qualitatively or quantitatively the evidence adduced on the summary judgment record. The test is not whether the judge considering summary judgment is skeptical that plaintiff will ultimately prevail. If the matter depends to any material extent upon a determination of credibility, summary judgment is inappropriate. If a rational trier of fact could find any material fact that would favor the non-moving party in a determinative way (i.e., that the clear and convincing standard could be met at trial), summary judgment is inappropriate. If a trial court must weigh the evidence to a greater degree than to determine that it is hopelessly inadequate ultimately to sustain the substantive burden, summary judgment is inappropriate. In fact, Liberty Lobby itself suggested that trial courts should act . . . with caution in granting summary judgment... [and] the trial court may . . . deny summary judgment in a case where there is reason to believe that the better course would be to proceed to a full trial. [27] Finally, a point of terminology should be made. In our view, the inquiry is not whether any reasonable juror would find the substantive evidentiary burden satisfied. Rather, the test is whether any rational juror could do so. As noted, the criminal law cases employ the adjective rational in describing the hypothetical fact-finder. [28] Some civil cases use the term reasonable [29] while others use the term rational. [30] Thus the use of rational in describing the hypothetical factfinder would avoid any connotation that the reviewing court would be applying any qualitative judgment or objective reasonableness test in deciding when a case should go to the fact-finder. Stated differently, the judge as gate-keeper merely considers whether the finder of fact could come to a rational conclusion either way, not whether that conclusion would be objectively reasonable.