Court Opinion

ID: 4551002
Source: CourtListenerOpinion
Date Created: 2020-07-24 16:03:01.589793+00
Date Added: 2024-06-11T13:03:35.061117
License: Public Domain

COURT OF CHANCERY
                                    OF THE
                              STATE OF DELAWARE

                                                                417 S. State Street
JOSEPH R. SLIGHTS III                                           Dover, Delaware 19901
VICE CHANCELLOR                                                 Telephone: (302) 739-4397
                                                                Facsimile: (302) 739-6179

                             Date Submitted: July 1, 2020
                             Date Decided: July 24, 2020

     Michael A. Pittenger, Esquire                Rudolf Koch, Esquire
     Berton W. Ashman, Jr., Esquire               Kevin M. Gallagher, Esquire
     David M. Hahn, Esquire                       Ryan D. Konstanzer, Esquire
     Elizabeth M. Taylor, Esquire                 Richards, Layton & Finger, P.A.
     Potter Anderson & Corroon LLP                One Rodney Square
     1313 North Market Street                     920 North King Street
     Wilmington, DE 19801                         Wilmington, DE 19801

         Re:   The Anschutz Corporation, et al. v. Brown Robin Capital, LLC, et al.
               C.A. No. 2019-0710-JRS

 Dear Counsel:

         Plaintiff, LightEdge Holdings, LLC (“LightEdge”), has moved for reargument

 (or clarification) under Court of Chancery Rule 59(f) (the “Motion”) following the

 Court’s June 11, 2020 Memorandum Opinion (the “Opinion”). 1 In the Opinion,

 I dismissed some of the claims stated in LightEdge’s Complaint relating to its

 purchase of OnRamp Access, LLC from Sellers, but denied dismissal as to its breach

 1
   D.I. 64 (The “Motion”); The Anschutz Corp. v. Brown Robin Capital, LLC, 2020
WL 3096744 (Del. Ch. June 11, 2020). Capitalized terms in this letter opinion assume the
 same meaning as the Opinion unless otherwise defined.
The Anschutz Corporation, et al. v. Brown Robin Capital, LLC, et al.
C.A. No. 2019-0710-JRS
July 24, 2020
Page 2

of contract, common law fraud, fraudulent inducement and unjust enrichment

claims. 2 Among the counts I dismissed was Count II, which pled a “Fraudulent and

Intentional Breach of Contract” claim. I dismissed Count II principally because I

found that LightEdge had not opposed dismissal of that claim in its briefing or at

oral argument. 3

         Although LightEdge now maintains that it did, in fact, oppose dismissal of

Count II, in its Motion it advances only a “request [for] clarification that the Opinion

does not preclude Buyer from seeking to recover damages in excess of the

contractual liability cap in connection with its remaining breach of contract claims

if it can show that the Defendants engaged in ‘fraud or intentional

misrepresentation.’” 4

2
Id. at *19.
3
Id. at *5 n.76.
4
    Motion at ¶ 2.
The Anschutz Corporation, et al. v. Brown Robin Capital, LLC, et al.
C.A. No. 2019-0710-JRS
July 24, 2020
Page 3

        A motion for reargument “can be a useful tool if . . . [the judge] has failed to

respond to an argument of counsel.”5 Although I remain satisfied that Plaintiff did

not substantively oppose dismissal of Count II, I will endeavor, again, to clarify what

exactly Plaintiff must prove in order to recover damages in excess of the contractual

cap.6    In holding that LightEdge could pursue its “contractual fraud” claims,

I explained:

        Buyer’s so-called contractual fraud claims fall within the Abry
        exception. Specifically, Buyer alleges the OnRamp Insiders knew the
        representations included in Sections 2.6, 2.10, 2.11 and 2.20 were false,
        and yet made them anyway. And Buyer has explicitly prayed for
        rescission of the UPA to remedy the alleged fraud, a remedy the UPA
        forbids for breach of contract claims. As the Abry court recognized, to
        hold that Buyer can recover only capped damages for knowingly false

5
 Manti Hldgs., LLC v. Authentix Acq. Co., Inc., 2019 WL 3814453, at *1 (Del. Ch.
Aug. 14, 2019).
6
  LightEdge’s protestations that it did oppose dismissal of Count II are unconvincing. First,
it points to a sentence in its Answering Brief where it stated “the Court should deny
Defendants’ motion to dismiss in its entirety.” Motion ¶ 5. It then points to the heading
of a section of its brief that states, “LightEdge’s Breach of Contract Claims Easily Satisfy
Rule 8’s Notice Pleading Standard.” Id. Neither of these conclusory statements was
followed by any genuine attempt to rebut Defendants’ arguments that the fraudulent breach
claim as stated in Count II should be dismissed. Each of the other arguments identified by
the Motion appeared in the section of its Answering Brief discussing why its fraud claims
should not be dismissed. Id.
The Anschutz Corporation, et al. v. Brown Robin Capital, LLC, et al.
C.A. No. 2019-0710-JRS
July 24, 2020
Page 4

         contractual representations would be to countenance and immunize
         fraud.7

         Although this section of the Opinion identified only the remedy of rescission

in its treatment of LightEdge’s claim that the UPA contained intentional (fraudulent)

misrepresentations, in so doing, and consistent with the cited case law, I intended to

(and implicitly did) recognize that LightEdge can pursue extra-contractual,

rescissory-like damages if it proves the UPA itself was a vehicle for fraud.

Dismissal of Count II does not affect that conclusion. I trust this clarifies what

damages LightEdge may recover should it prove its case.

         Based on the foregoing, the Motion for Argument, to the extent it sought

clarification of the Opinion, is GRANTED.

         IT IS SO ORDERED.

                                               Very truly yours,

                                               /s/ Joseph R. Slights III

7
    Opinion at *15 (emphasis provided).