Court Opinion

ID: 3205459
Source: CourtListenerOpinion
Date Created: 2016-05-20 16:02:48.180276+00
Date Added: 2024-06-11T14:03:21.293176
License: Public Domain

COURT OF CHANCERY
                                      OF THE
    SAM GLASSCOCK III           STATE OF DELAWARE                       COURT OF CHANCERY COURTHOUSE
     VICE CHANCELLOR                                                              34 THE CIRCLE
                                                                           GEORGETOWN, DELAWARE 19947

                               Date Submitted: May 19, 2016
                                Date Decided: May 20, 2016

    Martin S. Lessner, Esquire                        Daniel A. Dreisbach, Esquire
    Richard J. Thomas, Esquire                        Richard P. Rollo, Esquire
    Young Conaway Stargatt & Taylor, LLP              J. Scott Pritchard, Esquire
    One Rodney Square                                 Andrew J. Peach, Esquire
    1000 North King Street                            John F. Mezzanotte, Jr., Esquire
    Wilmington, DE 19801                              Richards Layton & Finger, P.A.
                                                      One Rodney Squire
                                                      920 King Street
                                                      Wilmington, DE 19801

                 Re:    Edwards v. Edwards, Civil Action No. 12066-VCG

Dear Counsel:

         I have reviewed your letters submitted on May 19, 2016 regarding the scope

of issues to be tried during the trial commencing June 20, 2016 scheduled in this

matter.1 The Plaintiffs contend that two issues related to Count I of their Verified

Complaint should be decided at that trial.2 As described by the Plaintiffs, those

issues are:

         Issue No. 1: Does the Stockholders Agreement provide that the price
         to exercise the Option is the purchase price of a bona fide, third party

1
  This case is being coordinated and heard in connection with Dunn-Edwards v. Edwards, C.A.
No. 12135-VCG, pursuant to Court of Chancery Rule 42.
2
  Count I seeks a declaratory judgment that no “Option” (as defined in Plaintiffs’ Verified
Complaint) held by the Defendants has been triggered. The Plaintiffs have represented, and the
Defendants agree, that it is not necessary to resolve Count II of Plaintiffs’ Verified Complaint at
the June trial.
       purchaser . . . (assuming arguendo the Option still exists), or is it some
       lower formula price as Peter consistently has maintained? . . .

       Issue No. 2: Have the statements or conduct of [Plaintiffs] or anyone at
       the Company breached the Stockholders Agreement (or induced such a
       breach)? 3

The Defendants contend that they have mooted all of Count I by conceding via letter

of May 12, 2016 that the Option has not been triggered by any “act, event, or

occurrence” to date.4 I agree.

       During oral argument on Defendants’ Motion to Dismiss, held on May 10,

2016, I specified which issues will go forward to trial in June, on an expedited basis,

as follows:

       This is really about Count I and what should go forward at the hearing.
       It seems to me that with respect to the question of whether an option
       has already been triggered by what happened with the potential acquirer
       is something that needs to be determined in June. We need to get that
       teed up to get it determined. . . . If there are other parts involving
       declaratory judgments about potential things that could happen, those
       can wait. I will defer ruling on a motion to dismiss until we come to
       that portion of the action. I am not sure at this point, and I don’t know
       that it makes any sense for me to spend judicial resources trying to
       figure out what the outer limits of the declaratory judgment which can
       legitimately be sought are because we’re not going to hear that at this
       hearing. . . . I am only going to hear this narrow [issue]—the effect of
       past behavior on current ownership at this upcoming hearing.5

3
  Letter from Pls’ Counsel, at 6–7, Edwards v. Edwards, C.A. No. 12066-VCG (Del. Ch. May 19,
2016), Trans. ID 59030450.
4
  Letter from Defs’ Counsel, at 2, Edwards v. Edwards, C.A. No. 12066-VCG (Del. Ch. May 12,
2016), Trans. ID 59001684.
5
  May 10, 2016 Oral Argument Tr. 44–46.
                                             2
I made clear that I will not hear any issues relating to any “potential” future trigger

of the Option at the June trial. In light of Defendants’ May 12 letter conceding that

“the Option . . . has not be[en] triggered by any act, event, or occurrence to date,”

the Defendants are judicially estopped from contending otherwise, and the issue of

past action triggering the Option is moot. Resolution of Issues 1 and 2 as described

by the Plaintiffs, therefore, necessarily concerns a hypothetical future trigger of the

Option. I have already ruled that I will not hear these issues at the June trial. Should

I determine at trial that the Section 251(g) merger was valid, and that the

Stockholders Agreement is therefore void, the issues raised here by Plaintiffs will

be moot; if not moot, these issues can be addressed at a later date. In this regard, the

Plaintiffs may wish to consider an amendment to their Verified Complaint, as

discussed at the hearing on May 10.

       I note also that, to the extent the Plaintiffs seek reargument of the May 10

ruling, such a motion is untimely under Court of Chancery Rule 59(f).6

       IT IS SO ORDERED.

                                                     Sincerely,

                                                     /s/ Sam Glasscock III

                                                     Sam Glasscock III

6
  Del. Ct. Ch. R. 59(f) (“A motion for reargument . . . may be served and filed within 5 days after
the filing of the Court’s opinion or the receipt of the Court’s decision.”).
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