Court Opinion

ID: 2798219
Source: CourtListenerOpinion
Date Created: 2015-05-04 14:01:54.111536+00
Date Added: 2024-06-11T12:13:11.983644
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
                       IN AND FOR NEW CASTLE COUNTY
AVAYA, INC.,                                  )
                                              )
                   Plaintiff,                 )
                                              )
             v.                               ) C.A. No. N14C-03-052 EMD CCLD
                                              )
CHARTER COMMUNICATIONS                        )
HOLDING COMPANY, LLC and                      )
CHARTER COMMUNICATIONS, INC.,                 )
                                              )
                   Defendants.                )

 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS CHARTER
      COMMUNICATIONS HOLDING COMPANY, LLC AND CHARTER
     COMMUNICATIONS, INC.’S RENEWED MOTION TO STAY ACTION
            IN FAVOR OF PENDING NEW JERSEY ACTION

       This 1st day of May, 2015, upon consideration of the Motion of Defendants Charter

Communications Holding Company, LLC and Charter Communications, Inc. (collectively,

“Charter”) to Dismiss or, in the Alternative, Stay This Action in Favor of Pending New Jersey

Action (the “Motion”); Plaintiff Avaya, Inc.’s (“Avaya”) Opposition to Defendants Charter

Communications Holding Company, LLC and Charter Communications, Inc.’s Renewed Motion

to Dismiss or Stay (the “Response”); Charter’s Reply Brief in Support of Its Renewed Motion to

Dismiss, or in the Alternative, Stay This Delaware Action in Favor of Pending New Jersey

Action (the “Reply”); the Court having held a hearing and heard arguments from the parties on

the Motion, the Response and the Reply on April 13, 2015; the letter dated April 15, 2015 from

David M. Fry to the Honorable Eric M. Davis; the letter dated April 20, 2015 from Andrew D.

Cordo to the Honorable Eric M. Davis, the Court finds as follows:

       1.     The first day on which the parties could file suit in court after the mediation was

March 6, 2014. Charter and Avaya both filed suit on March 6, 2014. Avaya filed this suit (the
“Delaware Action”) electronically at 12:01 a.m.. Avaya asked for declaratory relief and

attorneys fees and costs and claimed that Charter is barred from recovery. On the same day,

Charter filed suit (the “New Jersey Action”) against Avaya in the Superior Court of New Jersey,

Law Division: Somerset County (the “New Jersey Court”). Charter could not file suit until after

the New Jersey Court operating hours on March 6, 2014 because New Jersey does not have

electronic filing. Charter asked Avaya’s counsel to accept service on that day, but Avaya’s

counsel refused. Charter served Avaya with process on March 11, 2014. Avaya did not serve

Charter until March 28, 2014.

          2.    On May 7, 2014, Charter filed a motion in New Jersey to dismiss or stay the New

Jersey Action pending the Delaware Action. On June 24, 2014, the New Jersey Court dismissed

the case, holding that the Delaware Action was the first filed action and that Charter could obtain

adequate relief in this Court. Subsequently, on October 6, 2014, the New Jersey Court

reconsidered its earlier decision and held that, under New Jersey law, the New Jersey Action was

the first filed action and that this Court could not provide Charter adequate relief in the Delaware

Action.

          3.    The New Jersey Court relied on a three-factor test under New Jersey law. Under

this test, a defendant must show that (1) there is a first-filed action in another state, (2) both

actions have the same parties, claims, and legal issues, and (3) the plaintiff has the opportunity to

obtain adequate relief in the first-filed jurisdiction. If all of the factors are met, then the burden

is moved onto the plaintiff to prove that there are “special equities” that are compelling enough

to let the New Jersey action proceed. The New Jersey Court held that the first prong was not met

because the New Jersey Action was first-filed under CTC Demolition Co. v. GMH AETC

Management/Development LLC, which states that a demand for mediation may be regarded as a

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first-filed action. 1 Further, the New Jersey Court held that the third prong of the test was not met

because Avaya could not demonstrate that Charter would have the opportunity to receive

adequate relief due to the expired statute of limitations in Delaware.

          4.      After the October 6, 2014 decision by the New Jersey Court, on November 3,

2014, Charter filed the Motion. Avaya opposed the Motion through the Response. On January

21, 2015, Avaya filed an action in the Delaware Court of Chancery to enjoin the New Jersey

Action.

          5.      The Court has considered a number of uncontested facts. In September 2006,

Ronald A. Katz Technology Licensing, L.P. filed a suit for patent infringement against Charter,

among others. Charter purportedly told Avaya about the law suit, but Avaya claimed that the

suit was the result of Charter mixing Avaya with non-Avaya products. Under the Master

Purchase/Service Agreement, Charter and Avaya were to negotiate in good faith in case of a

dispute. If that failed after forty-five days, Charter and Avaya were to go through non-binding

mediation with the American Arbitration Association. If the mediation was unsuccessful, then

the parties could begin an arbitration or litigation. Here, Charter alerted Avaya to the dispute in

April 2013 and they had an unsuccessful mediation in February 2014.

          6.      The Court has also considered that the statute of limitations in New Jersey is six

years compared to three years in Delaware. 2 Absent tolling, Charter’s cause of action against

Avaya may be time-barred in Delaware; however, Charter can pursue its cause of action in New

Jersey because, in New Jersey, the statute of limitations has not run yet. Charter is incorporated

in Delaware and its principal places of business appear to be in Missouri. Charter does not

presently do business in and has no employees in New Jersey. Avaya is incorporated in

1
    CTC Demolition Co. v. GMH AETC Mgmt./Development LLC, 34 A.3d 1258 (N.J. Super. Ct. App. Div. 2012).
2
    N.J. STAT. ANN. § 2A:14-1; 10 DEL. CODE ANN. §§ 8106, 8121.

                                                      3
Delaware. Avaya initially identified its principal place of business in New Jersey, but Avaya

amended its complaint in the Delaware Action on May 13, 2014 to identify California as its

principal place of business.

        7.       In Delaware, a trial court may use its discretion when deciding whether to stay or

dismiss a case in favor of another jurisdiction’s action. 3 When the Supreme Court reviews a case

for abuse of discretion, it decides whether the Superior Court’s “findings and conclusions . . . are

supported by the record and are the product of an orderly and logical deductive process.” 4

        8.       This Court must now decide whether to defer to the decision by the New Jersey

Court and stay the case or to conduct its own legal analysis on whether the Delaware Action or

the New Jersey Action was filed first. The Court may follow the doctrine of comity, which

applies when two courts have “concurrent jurisdiction over the same matter.” 5 The doctrine is

not a legal rule but “an expression of one state's entirely voluntary decision to defer to the policy

of another, especially in the face of a strong assertion of interest by the other jurisdiction.” 6 A

court may use its discretion to stay a matter if the same matter is pending in a different court

because a court “should not assume to disturb another court's disposition of a controversy unless

there are good reasons for doing so.” 7

        9.       The Delaware Supreme Court recently applied the doctrine of comity in two

related cases, First Health Settlement Class v. Chartis Specialty Insurance Company and Corvel

Corporation v. Homeland Insurance Company of New York. 8 First Health depended on whether

the Delaware Supreme Court should defer to an interpretation of a Louisiana statute by the

3
  Williams Gas Supply Co. v. Apache Corp., 594 A.2d 34, 37 (Del. 1991).
4
  Id.
5
  16 AM. JUR. 2D Conflict of Laws § 11 (2015).
6
  Id. (internal footnotes omitted).
7
  Id.
8
  Corvel Corp. v. Homeland Ins. Co. of N.Y., 2015 WL 1021459 (Del. Mar. 6, 2015); First Health Settlement Class
v. Chartis Specialty Ins. Co., 2015 WL 1021443 (Del. Mar. 6, 2015).

                                                       4
Louisiana Court of Appeals from collateral litigation. 9 In a 3-2 decision with a dissent, the

Delaware Supreme Court adopted the Louisiana court’s interpretation, instead of using Delaware

law. 10 Both the majority and the dissent addressed the doctrine of comity. The Court

acknowledged that “[c]omity permits one state to give effect to the laws of a sister state, not out

of obligation, but out of respect and deference.” 11 The dissent agreed that comity is important

and that courts should try to avoid conflicting rulings. 12 The dissent disagrees with the majority

because the Louisiana court should have shown comity to Delaware courts 13 and because

following what the Louisiana court decided would be “demonstrably unfair” to the parties. 14

The Corvel decision is nearly identical to the First Health decision. 15

         10.       This Court is going to apply the doctrine of comity here and stay this action in

deference to the New Jersey Action. The New Jersey Court has already decided that the New

Jersey Action is the first filed action and that the matter should proceed in New Jersey. In this

case, staying the Delaware Action out of deference to the New Jersey court would avoid

confusion, particularly on the issue of whether the New Jersey Action or the Delaware Action

was filed first. As stated by the Delaware Supreme Court, the doctrine of comity is important

and courts should try to avoid issuing conflicting rulings on the same issue. 16

         11.       The Court does need to clarify some matters that were discussed in the New

Jersey Court’s October 6, 2014 decision. This Court is a court of law and does not provide

affirmative equitable relief as that jurisdiction lies exclusively with the Delaware Court of

9
  First Health, 2015 WL 1021443, at *3-6.
10
   Id. at *4-5.
11
   Id. at *4.
12
   Id. at *6.
13
   “Had the Louisiana trial court itself showed comity by staying its hand after the Delaware Superior Court made
the first ruling in the coverage issue and letting this case run its course to finality, the conflict the Majority Opinion
is trying to avoid would not have arisen in the first instance.” Id. at *12.
14
   Id.
15
   Corvel, 2015 WL 1021459.
16
   First Health, 2015 WL 1021443, at *6.

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Chancery. However, the Court does have available to it what the New Jersey Court described as

“equitable defenses” and the ability to apply equitable tolling doctrines. Rule 8 of the Superior

Court Civil Rules expressly lists available affirmative defenses. 17 Under Rule 8, the Court

recognizes defenses that were once considered “purely equitable defenses in nature,” including

laches. 18 Moreover, the Court has the power to toll the statute of limitation under a number of

theories including, among others, under (i) the discovery rule, (ii) fraudulent concealment, and

(iii) equitable tolling. 19

         12.      As was stated by the Court at the hearing on the Motion, the Court is unclear why

the attorneys for the parties did not provide readily available Delaware case law on these issues

to assist the New Jersey Court when it made its decision on October 6, 2014. 20 Accordingly, as

part of this Order, this Court is requiring Charter’s counsel to provide this Order to the New

Jersey Court.

         13.      The Court will stay this action. However, the Court finds no reason to dismiss

this action until a final resolution is reached in the New Jersey Action. 21

         IT IS ORDERED that the Motion is GRANTED in part and DENIED in part. In

addition, counsel for Charter is to provide a copy of this Order to the Superior Court of New

Jersey, Law Division: Somerset County within ten (10) days.

                                                                /s/ Eric M. Davis
                                                                Eric M. Davis
                                                                Judge
17
   Super. Ct. Civ. R. 8(c).
18
   See, e.g., John Petroleum, Inc. v. Parks, C.A. No. 06C-10-039 FSS, 2010 WL 3103391, at *7 (Del. Super. June 4,
2010); USH Ventures v. Global Telesystems Group, Inc., 796 A.2d 7, 18-20 (Del. Super. 2000).
19
   Van Lake v. Sorin CRM USA, Inc., C.A. No. 12C-04-036 JRJ CCLD, 2013 WL 1087583, at * 7-8. (Del. Super.
Feb. 15, 2013).
20
   See Del. Rules of Prof’l Conduct R. 3.3(2)(stating that an attorney must disclose to the tribunal legal authority in
the controlling jurisdiction known by the lawyer to be directly adverse to the position of the client).
21
   This is consistent with the argument made by Charter in the New Jersey Action on reconsideration that the New
Jersey Court should not have dismissed the New Jersey Action with prejudice.

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