Court Opinion

ID: 4648517
Source: CourtListenerOpinion
Date Created: 2020-12-31 20:02:40.447725+00
Date Added: 2024-06-11T08:01:14.208114
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ROBERT LENOIS, on behalf of )
himself and all other similarly situated
                            )
stockholders of ERIN ENERGY )
CORPORATION, and derivatively on
                            )
behalf of ERIN ENERGY       )
CORPORATION,                )
                            )
       Plaintiff,           )
                            )
    v.                      )                C.A. No. 11963-VCF
                            )
KASE LUKMAN LAWAL, LEE P.   )
BROWN, WILLIAM J. CAMPBELL, )
J. KENT FRIEDMAN, JOHN      )
HOFMEISTER, IRA WAYNE       )
MCCONNELL, HAZEL R.         )
O’LEARY, and CAMAC ENERGY )
HOLDINGS LIMITED,           )
                            )
       Defendants,          )
                            )
    and                     )
                            )
ERIN ENERGY CORPORATION,    )
                            )
       Nominal Defendant.   )

                          MEMORANDUM OPINION
                       Date Submitted: September 30, 2020
                        Date Decided: December 31, 2020
Michael J. Barry, Rebecca Musarra, GRANT & EISENHOFER, P.A., Wilmington,
Delaware; Gordon Z. Novod, GRANT & EISENHOFER, P.A., New York, New
York; Peter B. Andrews, Craig J. Springer, Jessica Zeldin, David M. Sborz,
ANDREWS & SPRINGER LLC, Wilmington, Delaware; Jeremy Friedman,
Spencer Oster, David Tejtel, FRIEDMAN OSTER & TEJTEL PLLC, New York,
New York; Attorneys for Plaintiff Robert Lenois and Ronald J. Sommers, Chapter
7 Trustee.

Myron T. Steele, Matthew F. Davis, Jaclyn C. Levy, POTTER, ANDERSON &
CORROON LLP, Wilmington, Delaware; David T. Moran, Christopher R.
Bankler, JACKSON WALKER L.L.P., Dallas, Texas; Attorneys for Defendants
Kase Lukman Lawal and CAMAC Energy Holdings Limited.

David J. Teklits, Kevin M. Coen, MORRIS, NICHOLS, ARSHT & TUNNELL
LLP, Wilmington, Delaware; Mark Oakes and Ryan Meltzer, NORTON ROSE
FULBRIGHT US LLP, Austin, Texas; John Byron, NORTON ROSE
FULBRIGHT US LLP, Houston, Texas; Attorneys for Defendants Lee P. Brown,
William J. Campbell, J. Kent Friedman, and Nominal Defendant Erin Energy
Corporation.

Srinivas M. Raju, Robert L. Burns, Matthew D. Perri, RICHARDS, LAYTON &
FINGER, P.A., Wilmington, Delaware; Greg Waller, HUNTON ANDREWS
KURTH L.L.P., Houston, Texas; Attorneys for Defendants John Hofmeister, Ira
Wayne McConnell, and Hazel O’Leary.

FIORAVANTI, Vice Chancellor

                                      2
      On November 7, 2017, this court issued a Memorandum Opinion dismissing

Plaintiff Robert Lenois’s derivative claims on behalf of Erin Energy Corporation

(“Erin” or the “Company”) against certain of Erin’s directors and its controlling

stockholders (“Defendants”) for failure to plead demand futility (the “Memorandum

Opinion”). Lenois appealed the dismissal. While the appeal was pending, Erin filed

for bankruptcy, initially under Chapter 11, and later converted into a liquidation

under Chapter 7. The bankruptcy resulted in an automatic stay of the appeal.

      During the pendency of the appeal, Lenois and his counsel convinced Erin’s

bankruptcy trustee, Ronald J. Sommers (the “Trustee”), that the claims in this action

have merit and should be pursued. The Trustee recognized, however, that due to the

passage of time, asserting the claims in a separate action could give rise to a defense

of laches. Thus, the Trustee retained Lenois’s counsel and filed a motion in this

action to be substituted for Lenois as plaintiff. At the same time, the Trustee and

Lenois (“Movants”) also filed a motion for relief from judgment under Court of

Chancery Rule 60(b) (the “Motion for Relief”). After this court questioned whether

it had jurisdiction to consider the motions due to the pendency of the appeal, the

Trustee filed motions in the Delaware Supreme Court to vacate the Memorandum

Opinion and substitute the Trustee for the Company as the real party in interest to

pursue the action on Erin’s behalf. Defendants opposed the motions and moved to

dismiss the appeal as moot. The Supreme Court dismissed the appeal as moot,

                                          3
denied the Trustee’s motions for substitution and vacatur, and remanded to this court

for consideration of the previously filed motion for substitution and Motion for

Relief.

         Following dismissal of the appeal, the Trustee filed an Amended Motion for

Substitution and Realignment (the “Motion to Substitute” and, along with the

Motion for Relief, the “Motions”) seeking to substitute the Trustee for the Company,

instead of Lenois, and to realign the Trustee as plaintiff so that Erin may directly

pursue in this action the claims that Lenois had previously asserted. This opinion

resolves the Motions.

I.       BACKGROUND
         The facts recited in this opinion are drawn from Plaintiff Lenois’s Complaint

(the “Complaint” or “Compl.”), the Supplement to the Complaint, the Memorandum

Opinion, and the parties’ submissions in support of and in opposition to the Motions.

This opinion summarizes the allegations of the Complaint and the Memorandum

Opinion to the extent necessary to address the pending Motions.

         A.    Erin and the Challenged Transactions

         Erin is an oil and gas exploration company. Kase Lukman Lawal was the

Company’s Chairman and Chief Executive Officer.1 At the time of the challenged

transactions, Lawal is alleged to have been the Company’s controlling stockholder.

1
    Compl. ¶ 11.
                                           4
Lawal and his family owned a majority of CAMAC International Limited (“CIL”),

which indirectly owns 100% of Defendant CAMAC Energy Holdings Limited

(“CEHL”). Lawal and CEHL owned 58.86% of the Company’s outstanding shares

prior to the transactions challenged in Lenois’s Complaint.

      In June 2013, Public Investment Corporation Limited (“PIC”), a quasi-public

South African pension fund manager, and Lawal, on behalf of Allied Energy Plc

(“Allied”), a wholly owned subsidiary of CEHL, negotiated a transaction through

which PIC would invest $300 million in the Company in exchange for a 30%

ownership stake in Erin. Erin would then transfer the money invested by PIC and

additional Erin stock to Allied in exchange for certain oil assets held by Allied (the

“Assets”).

      On June 14, 2013, Allied and PIC presented the proposed transactions to the

Erin board of directors (the “Board”). On June 17, 2013, the Board formed a Special

Committee consisting of Defendants John Hofmeister, Ira Wayne McConnell, and

Hazel R. O’Leary to consider and negotiate the proposal.

      On November 18, 2013, after five months of negotiations with Lawal and

Allied,2 the Special Committee approved and recommended to the Board a series of

related transactions with PIC and Allied (the “Transactions”). The Transactions

2
 The specifics of the Special Committee negotiation process are not material for purposes
of the pending Motions.
                                           5
provided for: (1) PIC to invest $270 million in Erin in exchange for approximately

377 million shares of Erin; (2) Erin to pay $170 million in cash and provide a $50

million convertible subordinated note to Allied; and (3) Erin to issue additional stock

and a stock dividend, ultimately resulting in post-closing Erin ownership of

approximately 30% for PIC, 60% for Allied/CEHL, and 13% for other

stockholders.3 The Transactions also provided that Allied would fund the drilling

costs of a particular well (with Erin to bear the costs of completion for the well) and

that certain contract rights would be terminated in exchange for Erin’s agreement to

make two $25 million payments to Allied.4 The Board approved the Transactions,

with Lawal and Defendant Lee P. Brown recusing themselves.

          On January 15, 2014, Erin filed a proxy statement with the United States

Securities and Exchange Commission (the “SEC”) recommending that Erin

stockholders approve certain proposals necessary to effectuate the Transactions (the

“Proxy”). On February 13, 2014, Erin held a special meeting of stockholders to vote

on a Transfer Agreement, a Share Purchase Agreement, and an amendment to the

Company’s certificate of incorporation.5 The proposals were subject to approval by

3
    Compl. ¶ 85.
4
Id.
5
    Memorandum Opinion at 24.
                                          6
a majority of the minority of stockholders. Each of the proposals received the

requisite stockholder approvals, and the Transactions closed about a week later. 6

         B.        The Complaint

         On July 30, 2015, nearly a year-and-a-half after the Transactions closed,

Lenois made a stockholder demand to inspect Erin’s books and records pursuant to

8 Del. C. § 220. Counsel for Lenois and Erin negotiated and ultimately agreed upon

the scope of the production in response to the demand.7 Erin produced minutes and

presentations of Board meetings and other records specifically requested by Lenois.

Lenois did not request any version of the contracts related to the Transactions or any

attachments to the contracts.8

         On February 5, 2016, Lenois filed a Complaint against Defendants asserting

direct claims on behalf of a class of Erin stockholders and derivative claims on behalf

of the Company. The Complaint alleged that certain of the Company’s directors (the

“Director Defendants”), Lawal, and CEHL breached their fiduciary duties by

approving the Transactions. The Complaint contained four counts. Counts I and II

were styled as derivative claims: Count I asserted a derivative claim for breach of

fiduciary duty against Lawal and CEHL as the Company’s controlling stockholders,

6
Id. at 24–25.
7
    Dkt. 118, Affidavit of Mark Oakes ¶¶ 3–9 (“Oakes Aff.”).
8
Id. ¶¶ 8–10.
                                             7
and Count II asserted a derivative claim for breach of fiduciary duty against the

Company’s directors for permitting Lawal to steer the transaction process. Counts

III and IV were styled as class action claims: Count III asserted a direct claim for

breach of fiduciary duty against the Company’s directors and Count IV asserted a

direct claim against Lawal as a controlling stockholder for aiding and abetting the

other directors’ breaches of fiduciary duty.9

          The Complaint alleged that the Transactions were subject to and could not

withstand entire fairness review because they were transactions between the

Company and its controlling stockholder.10 The Complaint branded the Special

Committee process as “fatally flawed,”11 accusing the Special Committee of relying

on conflicted management, 12 lacking time to properly consider the complex

transactions presented, 13 being misled and threatened by Lawal, and not being fully

informed.14

          One allegation regarding the Special Committee is central to the pending

Motions. The Proxy represented that Allied had acquired the Assets in 2012 for

9
    Compl. ¶¶ 112–139.
10
Id. ¶¶ 108–111.
11
 Id. ¶¶ 4, 106.
12
 Id. ¶¶ 39–48.
13
 Id. ¶ 46.
14
     See, e.g., id. ¶¶ 35, 54, 68, 72.
                                          8
“$250 million in cash subject to certain adjustments.”15 On April 7, 2017, Lenois

moved to supplement his Complaint with new allegations based on information

obtained through a recent publicly filed question-and-answer session at a

stockholder meeting of Eni, S.p.A. (“Eni”), the parent company of the original owner

of the Assets, Nigerian Agip Exploration Limited (“NAE”). 16 In that question-and-

answer session, Eni disclosed that Allied only paid NAE $100 million of the $250

million owed for the Assets, with the remainder “the subject of recovery by means

of a legal action.”17 Based upon that newly obtained information, Lenois alleged the

Special Committee acted in bad faith by knowingly disclosing that Allied acquired

the Assets for “$250 million in cash subject to certain adjustments.” 18 On May 23,

2017, the court granted Lenois’s motion to supplement the Complaint because

Lenois had “no reasonable way . . . to ascertain the information” in the question-and-

answer session until the disclosure of the question-and-answer session.19

         C.      The Memorandum Opinion
         In the Memorandum Opinion dated November 7, 2017, the court granted

Defendants’ motions to dismiss. As to the derivative claims, the court determined

15
     See id. ¶ 31; Proxy at 21.
16
     Dkt. 62.
17
Id. Ex. A ¶ 3.
18
     Proxy at 21.
19
     Dkt. 74.
                                          9
that the Complaint was “replete with allegations of bad faith conduct against Lawal,”

but concluded the Complaint and documents incorporated by reference reflected a

Special Committee that “retained reputable, independent legal and financial

advisors, resisted attempts to rush the process, pushed back on numerous deal terms,

and obtained materially better terms.” 20 Thus, the court held that Lenois failed to

plead demand was futile because he failed to show that a “majority of the board

face[d] a substantial likelihood of liability for non-exculpated claims.” 21 The court

further held that Lenois’s direct claims for breach of fiduciary duty arising from

allegedly materially false disclosures failed because the alleged injury was to the

Company.22

         On November 20, 2017, Plaintiff filed a notice of appeal to the Supreme

Court.

         D.     Erin Enters Bankruptcy
         On January 31, 2018, the Nigerian military landed on oil platforms leased by

Erin Petroleum Nigeria, Ltd. (“EPNL”) and seized the Assets (the “Seizure”).23 The

Nigerian authorities acted pursuant to a final judgment in an arbitration proceeding

(the “Arbitration”) which found that Allied and CIL failed to pay the agreed-upon

20
     Memorandum Opinion at 3–4.
21
Id. at 5–6 (citing Aronson v. Lewis, 473 A.2d 805, 815 (Del. 1984)).
22
     Memorandum Opinion at 6.
23
     Mot. for Relief ¶ 2.
                                              10
purchase price of the Assets acquired from NAE in 2012.24 The Seizure forced Erin

to cease operations, and Erin filed for bankruptcy on April 25, 2018.25 Erin notified

the Supreme Court of the bankruptcy, and on April 27, 2018, the Supreme Court

informed the parties that the appeal would be stayed as a result of the bankruptcy.26

           On April 24, 2018, Erin filed with the SEC a Form 8-K containing a

description of the Seizure (the “April 2018 8-K”).27 In the April 2018 8-K, Erin

disclosed that the Seizure resulted from a Nigerian court order enforcing a “Final

Award” by the London Court of International Arbitration (the “LCIA”).28 The April

2018 8-K disclosed that the Arbitration was denominated LCIA Arbitration No.

132498 and that the Arbitration began in 2016. Based on the LCIA arbitration

number disclosed in the April 2018 8-K, Lenois and his counsel ascertained that the

arbitration began in 2013, rather than 2016, as the April 2018 8-K stated.29

           Following the public disclosure in the April 2018 8-K, Lenois investigated the

Transfer Agreement further. Lenois and his counsel found a reference in the

Transfer Agreement to “NAE Claims” which were “described on Allied Disclosure

24
Id.
25
 Id.
26
     No. 482, 2017, Dkt. 40.
27
     Mot. for Relief ¶ 8.
28
Id.
29
 Id. ¶ 9.
                                             11
Schedule 4.5.” 30 Through the Trustee, Lenois obtained a copy of the Transfer

Agreement containing Schedule 4.5, which contains the following disclosure:

          On September 18, 2013, [NAE] filed its request with the LCIA in
          London for arbitration (Arbitration No. 132498) against [Allied and
          CIL]. The claim against Allied is a debt claim, in respect of allegedly
          unpaid debts under the Sale and Purchase Agreement dated December
          20, 2011, as amended, under which Allied purchased [the Assets] (the
          “NAE SPA”). The debt claim relates to payments of Adjustments (as
          defined in the NAE SPA) of the purchase price under the NAE SPA
          and costs arising from the agreed Oyo 5 well production log and gas
          shut-off intervention program . . . . The amounts claimed by NAE in
          relation to the Adjustments, as at [sic] 9 September 2013, were
          $52,263,995.54 . . . . 31

          According to Movants, a transcript of the Arbitration proceeding filed in

Erin’s bankruptcy proceeding in May 2018 revealed that Allied was to pay NAE an

initial $100 million for the Assets, with the remaining $150 million payable in three

$50 million installments. 32 The transcript of the Arbitration proceeding indicates

that Allied did not pay any of the installments. 33 Based on the inclusion of the NAE

Claims in the Transfer Agreement, Movants contend that the Director Defendants

30
Id. ¶ 23.
31
  Transfer Agreement Schedule 4.5. The Transfer Agreement and Schedule 4.5 thereto
are contained in Exhibit 9 to the Motion for Relief.
32
     Mot. for Relief ¶ 26.
33
Id. Ex. 10.
                                            12
knew that Allied “had not paid the agreed upon purchase price” of $250 million

when the Director Defendants approved the Transactions. 34

         On July 12, 2018, the United States Bankruptcy Court for the Southern

District of Texas converted Erin’s bankruptcy into a Chapter 7 case and appointed

Sommers as Erin’s Trustee.

         E.     Procedural History

         On July 11, 2019, Lenois and the Trustee filed the Motion for Relief in this

court. The Trustee also filed a Motion for Substitution to be substituted for Lenois

as the plaintiff in this action (the “Original Motion for Substitution”). The parties

briefed those motions, and on March 3, 2020, the court heard oral argument.35 At

oral argument, the court requested supplemental briefing on whether this court had

jurisdiction to consider the pending motions given the pendency of Lenois’s appeal.

         On March 17, 2020, the Trustee filed in the Supreme Court a Motion to Vacate

Dismissal and Remand. In the Motion to Vacate Dismissal and Remand, the Trustee

requested that the Supreme Court vacate this court’s order dismissing the derivative

claims and to remand the action for further proceedings. The Trustee also filed a

Motion to Substitute Party and Realign Trustee as Plaintiff, seeking to substitute the

Trustee for Erin as the real party in interest and to realign the Trustee as a plaintiff

34
     Mot. for Relief ¶ 25.
35
     Dkt. 141 (the “First Oral Arg. Tr.”).
                                             13
to pursue directly in this action the claims that Lenois had previously asserted

derivatively.

         Defendants opposed the motion to vacate the dismissal and the motion

permitting the Trustee to substitute as the plaintiff in this action. Defendants

maintained that Lenois and the Trustee lacked standing to pursue the appeal, that the

motion to vacate should be denied, that the Trustee should not be allowed to

substitute for Erin to pursue claims directly after having sought to substitute for

Lenois in this court, and that the appeal was moot.

         On May 18, 2020, the Supreme Court dismissed the appeal as moot and

remanded the action to this court for further proceedings consistent with the Supreme

Court’s Order (the “Remand Order”).36              In so holding, the Supreme Court

“decline[d] to order vacatur” as requested by the Trustee, explaining:

         [T]he issue of whether the plaintiff-stockholder was excused from
         making demand in order to bring derivative fiduciary-duty claims does
         not determine the Trustee’s right to bring those fiduciary-duty claims.
         Rather the Trustee’s right to proceed will more appropriately be
         determined by the Court of Chancery in the first instance, in the context
         of the motions that are pending before that court, including the motion
         for relief from judgment.37

36
     No. 482, 2017, Dkt. 59.
37
Id. (citing Pepper v. Litton, 308 U.S. 295, 307 (1939), and Police & Fire Ret. Sys. of City
of Detroit v. Callen, 2012 WL 1594881, at *2 (Del. May 7, 2012)).
                                             14
         On May 20, 2020, this court permitted the parties to file supplemental

submissions to address the pending motions in light of the Remand Order. Later the

same day, the Trustee filed the Motion to Substitute. The Motion to Substitute seeks

to substitute the Trustee for Erin as the real party in interest and to realign the Trustee

as the plaintiff to pursue directly in this action the claims previously asserted

derivatively on behalf of Erin. 38

         After briefing on the Motion for Relief and the Motion to Substitute, the court

heard oral argument on August 27, 2020.39 On September 30, 2020, the Trustee

filed a supplemental submission in support of the Motion to Substitute.

II.      ANALYSIS

         Movants have filed two motions:           (1) to substitute the Trustee for the

Company as a party and then realign the Trustee as plaintiff and (2) for relief from

judgment under Court of Chancery Rule 60(b)(2), (3), and (6). At oral argument,

Movants’ counsel acknowledged that, for the Trustee to take over the derivative

claims and to litigate them in this action, they need to prevail on the Rule 60(b)

motion.40 Movants have not argued that the Trustee can prosecute Lenois’s claims

38
  The Motion to Substitute differs from the Original Motion for Substitution because the
Trustee is seeking to substitute itself for Erin rather than Lenois.
39
     Dkt. 155 (the “Second Oral Arg. Tr.”).
40
   See Second Oral Arg. Tr. 20 (“THE COURT: You have to get past Rule 60(b) in order
to take over the claims in this action. Right? MR. TEJTEL: Yes, Your Honor. Yes, Rule
60(b) would need to be -- we would need relief under Rule 60(b) to proceed, most likely.”).
                                              15
in this action if the Memorandum Opinion is not vacated. The Remand Order also

indicates that the Trustee’s ability to proceed is contingent upon the Motion for

Relief: “[T]he Trustee’s right to proceed will more appropriately be determined by

the Court of Chancery in the first instance, in the context of the motions that are

pending before that court, including the motion for relief from judgment.” Remand

Order ¶ 5. Accordingly, this opinion first addresses the Motion for Relief and then

considers the Motion to Substitute.

      A.     The Motion for Relief

      Court of Chancery Rule 60(b) states, “[o]n motion and upon such terms as are

just, the Court may relieve a party or a party’s legal representative from a final

judgment, order, or proceeding.” Ct. Ch. R. 60(b). Rule 60(b) lists six potential

grounds for relief. Id. The Motion for Relief seeks to vacate the order of dismissal

based upon three of them: “newly discovered evidence,” (Rule 60(b)(2)) “fraud,”

(id. at 60(b)(3)); or “any other reason justifying relief from the operation of the

judgment” (id. at 60(b)(6)).

      In determining whether to grant a motion under Court of Chancery Rule 60(b),

the Court considers Rule 60(b)’s two purposes: “[t]he first is ensuring the integrity

of the judicial process and the second, countervailing, consideration is the finality of

judgments.” MCA, Inc. v. Matsushita Elec. Indus. Co., Ltd., 785 A.2d 625, 634–35

(Del. 2001). “Because of the significant interest in preserving the finality of

                                          16
judgments, Rule 60(b) motions are not to be taken lightly or easily granted.” Id. at

635. “The determination whether to grant a motion for relief pursuant to Rule 60(b)

rests in the sound discretion of the trial court.” Joseph v. Shell Oil Co., 1985 WL
21146, at *1 (Del. Ch. June 6, 1985); Grobow v. Perot, 1990 WL 146, at *5 (Del.

Ch. Jan. 3, 1990) (same). “Rule 60(b) is a remedy for circumstances in which new

evidence shows that an injustice is clearly threatened.” Credit Lyonnais Bank

Nederland, N.V. v. Pathe Commc’ns Corp., 1996 WL 757274, at *4 (Del. Ch. Dec.

20, 1996).

             1.     Court of Chancery Rule 60(b)(2)

      Under Court of Chancery Rule 60(b)(2), a court may provide relief from a

final judgment on the basis of “newly discovered evidence.” Ct. Ch. R. 60(b)(2).

To prevail under this subsection of Rule 60(b), the movant must show “(1) the newly

discovered evidence has come to his knowledge since the judgment; (2) that it could

not, in the exercise of reasonable diligence, have been discovered for use before the

judgment; (3) that it is so material and relevant that it will probably change the result;

(4) that it is not merely cumulative or impeaching in character; and (5) that it is

reasonably possible that the evidence will be produced at the trial.”               Okla.

Firefighters Pension & Ret. Sys. v. Corbat, 2018 WL 1254958, at *1 (Del. Ch. Mar.

12, 2018) (internal quotations and bracketing omitted). To qualify as “newly

discovered evidence” for purposes of Rule 60(b)(2), the evidence must “have been

                                           17
in existence and hidden at the time of judgment.” Bachtle v. Bachtle, 494 A.2d 1253,

1255–56 (Del. 1985).

      The “newly discovered evidence” that Movants offer as the reason to vacate

the court’s dismissal order is Schedule 4.5 to the Transfer Agreement, which

discloses the existence of the Arbitration. Movants argue that Schedule 4.5 to the

Transfer Agreement was neither publicly filed nor produced in response to Lenois’s

demand for books and records and that it reflects that the entities which sold the

Assets to Allied (which then sold the Assets to the Company) were subject to the

Arbitration.   According to Movants, Schedule 4.5 reveals that the Director

Defendants must have known that the disclosure in the Proxy that Allied had

acquired the Assets in 2012 for “$250 million in cash subject to certain adjustments”

was false. Movants argue that the existence and nature of the Arbitration was “so

material and relevant” that it would have changed the result of the Memorandum

Opinion. In particular, Movants argue that the Memorandum Opinion stated that

“Plaintiff likely would have very serious claims of bad faith against Director

Defendants” if the “Special Committee did know that Lawal Allied did not actually

‘pay $250 million in cash’ for the Assets and intentionally misled stockholders in

the Proxy.” Mot. for Relief ¶¶ 17, 32–33.

      For the following reasons, even assuming that disclosure of the Arbitration

would have been sufficiently material to potentially alter the result of the

                                         18
Memorandum Opinion, the existence of the Arbitration was not “newly discovered”

evidence to the Trustee, and Lenois has failed to demonstrate that he could not have

discovered the existence of the Arbitration had he exercised “reasonable diligence.”

Corbat, 2018 WL 1254958, at *1.

                    a.     The Trustee Stands in the Shoes of Erin and the
                           Arbitration Is Not “Newly Discovered Evidence” By
                           Erin.
      The court will not grant relief from a final judgment under Court of Chancery

Rule 60(b)(2) if the “evidence was in the possession of the party seeking to introduce

it as ‘newly discovered.’” Wimbledon Fund LP v. SV Special Situations LP, 2011
WL 378827, at *5 (Del. Ch. Feb. 4, 2011). Schedule 4.5 was within Erin’s

possession, 41 and Erin’s knowledge is imputed to the Trustee. See In re IH 1, Inc.

Miller v. Kirkland & Ellis LLP, 2016 WL 6394296, at *41 (D. Del. Sept. 28, 2016)

(“[A]s Indalex’s trustee, plaintiff stands in the shoes of the company and Indalex’s

knowledge . . . is imputed to plaintiff.”). Indeed, “[b]ecause the trustee stands in the

shoes of the debtor when bringing these claims, the trustee is ‘subject to the same

defenses as could have been asserted by the defendant had the action been instituted

by the debtor.’” Id. at *13 (D. Del. Sept. 28, 2016) (quoting Official Comm. of

Unsecured Creditors v. R.F. Lafferty & Co., Inc., 267 F.3d 340, 356 (3d Cir. 2001)).

41
  Mot. for Relief ¶ 24 (“On May 30, 2019, Trustee was able to produce an execution copy
of the Transfer Agreement, complete with Schedule 4.5.”).
                                          19
Because Schedule 4.5 was not “newly discovered” by Erin and the Trustee, the

Trustee’s request for relief from judgment pursuant to Rule 60(b)(2) is denied.

       To avoid the imputation of the Company’s knowledge to the Trustee, Movants

urge the court to treat Schedule 4.5 as “newly discovered evidence” for equitable

reasons. See Reply in Support of Mot. for Relief at 6 n.16 (arguing that imputing

knowledge to the Trustee would “foreclose trustees from ever bringing newly-

discovered claims concealed by faithless fiduciaries”); Second Oral Arg. Tr. 35–36

(same). Movants cite no case law in which a court has treated a bankruptcy trustee’s

knowledge as distinct from the knowledge of the bankrupt entity. In addition, there

is no equitable reason to treat Erin’s knowledge as distinct from that of the Trustee

because, for the reasons next discussed, I am not persuaded that Lenois exercised

reasonable diligence warranting relief from the Memorandum Opinion or that the

nondisclosure of Schedule 4.5 was the result of fraud.42

42
   It is questionable whether Lenois has standing to pursue the Motion for Relief. See
Police & Fire Ret. Sys. of City of Detroit v. Callen, 2012 WL 1594881, at *2 (Del. May 4,
2012) (“We agree that Ambac’s bankruptcy filing, by operation of law, divested [the
stockholder-plaintiff] of standing to pursue Ambac’s claims derivatively, unless and until
[the stockholder-plaintiff] is authorized to do so by the Bankruptcy Court.”) (footnote
omitted) (cited in Remand Order ¶ 5 n.5). The Trustee, however, appears to possess
standing to pursue the Motion for Relief. See Ct. Ch. R. 60(b) (permitting the Court of
Chancery to relieve a party or its legal representative from a final judgment); see also
Heyman v. M.L. Mktg. Co., 116 F.3d 91, 95 (4th Cir. 1997) (analyzing analogous Federal
Rule of Civil Procedure 60(b) and noting that a bankruptcy trustee is a legal representative
for purposes of Rule 60(b)).
                                            20
                    b.    Lenois Could Have Discovered the Existence of the
                          Arbitration Before the Memorandum Opinion Had He
                          Exercised Reasonable Diligence.

      Movants’ Rule 60(b)(2) motion is denied because the purportedly “newly

discovered evidence” was contained in a schedule attached to the Transfer

Agreement and could have been discovered before the court issued the

Memorandum Opinion if Lenois had exercised reasonable diligence.

      Erin filed the Transfer Agreement with the SEC as an exhibit to Erin’s Form

8-K announcing the Transactions. In Section 1.2 of the Transfer Agreement, Allied

represented and warranted that the interests transferred through the Transfer

Agreement were free of “any material adverse contractual obligations,” subject to

certain exceptions. Transfer Agreement § 1.2. However, Allied retained all rights

to “any claim or counterclaim that they may have asserted or may be entitled to assert

against NAE . . . in any action, including the Actions described in Allied Disclosure

Schedule 4.5 (collectively, the ‘NAE Claims’).” Id. Schedule 4.5 is also referenced

in Section 4.5 of the Transfer Agreement, which is a representation and warranty by

Allied regarding pending or threatened litigation against Allied and its affiliates.

Section 4.5 states that Schedule 4.5 contains a list of actions pending or threatened

against Allied that relate to the interests transferred through the Transfer Agreement.

Transfer Agreement § 4.5. The Transfer Agreement references litigation between

NAE and Allied disclosed at Schedule 4.5 no less than four times. Id. §§ 1.2, 4.5;

                                          21
see also id. §§ 6.1(b)(vi) (referencing “current actions between the Allied Parties

and NAE or the NAE Claims, all of which are disclosed on Allied Disclosure

Schedule 4.5”), 10.2 (referencing actions “whether pending or threatened, described

in Allied Disclosure Schedule 4.5”).

        These sections of the Transaction Agreement informed Lenois there was

litigation between Allied and NAE. The Transaction Agreement also informed

Lenois that the litigation was disclosed at Schedule 4.5. Lenois contends, however,

that investigating potential litigation between Allied and NAE disclosed in the

Transfer Agreement would not have constituted reasonable diligence because the

Transfer Agreement only disclosed affirmative claims by Allied against NAE, and

not claims by NAE against Allied. See Reply in Support of Mot. for Relief ¶ 9. In

support of this argument, Lenois cites the definition of “NAE Claims,” which is “any

claim or counterclaim that [Allied or Lawal] may have asserted or may be entitled

to assert against NAE.” See id. (citing Transfer Agreement § 1.2). According to

Lenois, he should not be faulted “for not divining the relevance of concealed

materials and suing to force their production.” Reply in Support of Mot. for Relief

¶ 21.

        Lenois’s justification is not tenable because the Transfer Agreement indicates

that Schedule 4.5 could contain disclosures regarding claims by NAE against Allied,

in addition to claims by Allied against NAE. Section 6.1(b)(vi) references “current

                                          22
actions between the Allied Parties and NAE or the NAE Claims, all of which are

disclosed on Allied Disclosure Schedule 4.5.” Transfer Agreement § 6.1(b)(vi). The

reference to “current” actions indicates that there were extant actions between Allied

and NAE, which could have (and did) include actions by NAE against Allied. In

addition, the definition of “NAE Claims” at Section 1.2 of the Transfer Agreement

references potential “counterclaims” by Allied against NAE. Investigating Allied’s

counterclaims would have revealed the existence of the Arbitration because Allied

asserted a counterclaim against NAE in the Arbitration that was disclosed in

Schedule 4.5.     Transfer Agreement Schedule 4.5 (“Allied has asserted a

counterclaim that, in breach of Article 7.1 of the PSC, NAE failed to carry out the

approved Work Programmes . . . and [is] seeking damages occasioned by NAE’s

breaches, which are currently expected to considerably exceed US$500 million.”).

Even if the Transfer Agreement only purported to disclose claims by Allied against

NAE, any litigation between NAE or Allied—regardless of who initiated the

litigation as a procedural matter—should have been investigated in the exercise of

“reasonable diligence” because any such action could have related to the Assets. In

short, Lenois could not reasonably have concluded that Schedule 4.5 only disclosed

claims by Allied against NAE that were unrelated to the Assets.

      Lenois could have obtained Schedule 4.5 had he pursued it from Erin in his

books and records demand. It is an attachment to a key transaction contract. If

                                         23
Lenois had requested and pursued Schedule 4.5 to the Transfer Agreement through

his books and records demand, Erin would have produced it, or would have been

required to produce it. See KT4 Partners LLC v. Palantir Techs., Inc., 203 A.3d
738, 751–52 (Del. 2019) (“[A] stockholder with a proper purpose ‘should be given

access to all of the documents in the corporation’s possession, custody or control,

that are necessary to satisfy that proper purpose.’”) (quoting Saito v. McKesson

HBOC, Inc., 806 A.2d 113, 114–15 (Del. 2002)).                 Lenois, however, never

specifically requested Schedule 4.5 (or any other schedule to the Transfer

Agreement). 43 Lenois thus chose to proceed without investigating the Transfer

Agreement’s disclosures regarding litigation between Allied and NAE, even after

supplementing his Complaint to allege that Allied paid NAE $100 million of the

$250 million owed for the Assets, with the remainder “the subject of recovery by

means of a legal action.” 44

         Lenois’s choice to not investigate litigation between Allied and NAE does not

warrant relief under Rule 60(b)(2). To be sure, Lenois’s motion would have stood

on marginally better ground if he had at least pressed for the production of Schedule

43
   Oakes Aff. ¶ 10 (counsel for Erin prior to the bankruptcy attesting that, “[a]t no point
following the initial 220 Demand, and through dismissal of this lawsuit, did counsel for
Mr. Lenois request that Erin Energy produce any version of the transaction documents,
including any schedules to the Transfer Agreement.”). Lenois did not dispute this
statement.
44
     See Dkt. 26.
                                            24
4.5 and been rebuffed, or if the Company represented that it was irrelevant to the

stated purposes of the demand and that Lenois then relied upon that representation.

Under the circumstances here, however, Lenois had “ample opportunity” to obtain

production of Schedule 4.5 prior to the Memorandum Opinion, but he did not

exercise “reasonable diligence.” Accordingly, Movants are not entitled to relief

under Court of Chancery Rule 60(b)(2). Concord Steel, Inc. v. Wilmington Steel

Processing Co., Inc., 2010 WL 3931097, at *5 (Del. Ch. Oct. 7, 2010) (denying

motion for relief under Court of Chancery Rule 60(b)(2) because the litigant had

“ample opportunity” to request production of the allegedly “newly discovered”

evidence); In re U.S. Robotics Corp. S’holders Litig., 1999 WL 160154, at *11–12

(Del. Ch. Mar. 15, 1999) (denying a motion to vacate pursuant to Court of Chancery

Rule 60(b)(2) because the purportedly new evidence “could have easily been

discovered by class counsel through the discovery process”).

            2.     Court of Chancery Rule 60(b)(3)
      Under Court of Chancery Rule 60(b)(3), the court may vacate a final judgment

“where a party has engaged in fraud or misrepresentation that prevents the moving

party from fairly and adequately presenting his or her case.” MCA, 785 A.2d at 639.

“To succeed on a claim under Rule 60(b)(3) . . . , the movant must ordinarily do so

by proof of clear and convincing evidence and within a reasonable time after the

final judgment has been entered.” In re U.S. Robotics Corp. S’holders Litig., 1999

                                        25
WL 160154, at *12 (Del. Ch. Mar. 15, 1999); see also MCA, 785 A.2d at 639 (“A

party seeking to vacate an order on the ground that his or her opponent effectuated

a fraud on the court bears a heavy burden . . . [and] requires a showing of ‘the most

egregious conduct involving a corruption of the judicial process itself.’”) (quoting

Wright & Miller, 11 Fed. Prac. & Proc. Civ. § 2870 (3d ed.)).

      Movants’ arguments under Rules 60(b)(2) and (3) have the same factual

basis—alleged failure to produce information that would have revealed the

arbitration and that Allied had not paid the entire $250 million cash purchase price

when it acquired the Assets. Compare Mot. for Relief ¶¶ 31–34, with id. ¶ 36.

According to Movants, Defendants engaged in fraud by omitting the Arbitration

from the Proxy, erroneously stating in the April 2018 8-K that the Arbitration began

in 2016, and withholding Schedule 4.5 from Lenois during negotiations on his

books-and-records demand. Reply in Support of Mot. for Relief ¶ 21.45 Movants

further argue that Defendants committed a fraud on the court by arguing that Lenois

had not adduced evidence that the Director Defendants knew that they were making

a false disclosure when they disclosed that Allied paid $250 million to NAE for the

Assets in the Proxy. Id.

45
  In addition to failing to demonstrate fraud by clear and convincing evidence, the
Trustee’s Rule 60(b)(3) motion fails for the same reasons as his Rule 60(b)(2) motion,
because Erin was in possession of Schedule 4.5 and could not have been defrauded by its
nondisclosure. See supra Part II.A.1.a.
                                          26
         Movants have not established fraud by “clear and convincing evidence” to

prevail on the Motion for Relief. In re U.S. Robotics Corp. S’holders Litig., 1999
WL 160154, at *12 (Del. Ch. Mar. 15, 1999). There is no evidence, let alone clear

and convincing evidence, that Defendants acted with scienter in omitting the

Arbitration from the Proxy or by stating that the Arbitration began in 2016 rather

than 2013 in the April 2018 8-K. In addition, Movants have not established that

Defendants intentionally concealed Schedule 4.5 from Lenois. On the contrary, as

discussed above, the record reflects that Lenois did not pursue production of

Schedule 4.5 to the Transfer Agreement despite knowing that information relating

to litigation between Allied and NAE was contained therein.           In that regard,

Defendants’ failure to disclose potentially inculpatory information to Lenois does

not constitute a fraud on the court under these circumstances. See Wright & Miller,

11 Fed. Prac. & Proc. Civ. § 2870 (3d ed.) (“[T]he courts have refused to invoke this

concept in cases in which the wrong, if wrong there was, was only between the

parties in the case and involved no direct assault on the integrity of the judicial

process. Nondisclosure by a party or the party’s attorney has not been enough.”).

There is therefore no basis to grant relief from the dismissal order on the grounds of

fraud.

                                         27
             3.     Court of Chancery Rule 60(b)(6)

      Court of Chancery Rule 60(b)(6) provides that the court may issue relief from

a final judgment for “any other reason justifying relief from the operation of the

judgment.” Ct. Ch. R. 60(b)(6).

      Relief under Rule 60(b)(6) is an extraordinary remedy, and the standard
      under Rule 60(b)(6) is more exacting than any other ground for relief
      provided for in the Rule. That is, in order for a party to succeed under
      Rule 60(b)(6), the party must make a showing of [an] extraordinary
      situation or circumstances.

Wimbledon Fund LP, 2011 WL 378827, at *6 (internal citations omitted); see also

Stonewall Ins. Co. v. Nat’l Gypsum Co., 1992 WL 51567, at *6 (S.D.N.Y. Mar. 9,

1992) (interpreting analogous Federal Rule of Civil Procedure 60(b)(6) and

observing that “[r]elief under Rule 60(b)(6) . . . is properly invoked only where there

are extraordinary circumstances justifying relief, when the judgment may work an

extreme hardship, and when the asserted grounds for relief are not recognized in

clauses (1)–(5) of the Rule”).

      Movants argue that, in addition to the allegedly fraudulent conduct that

formed the basis for Movants’ request for relief pursuant to Court of Chancery Rule

60(b)(3), Erin’s bankruptcy constitutes the “extraordinary” circumstance necessary

to justify relief pursuant to Court of Chancery Rule 60(b)(6). Mot. for Relief ¶ 29;

Reply in Support of Mot. for Relief ¶¶ 4–5. To that end, Movants’ “Justification for

Relief” under Rule 60(b)(6) in the Motion for Relief is reduced to a single paragraph:

                                          28
       The challenged Transactions and related misconduct directly
       contributed to Erin’s bankruptcy. Trustee now controls the derivative
       claims, believes they should be prosecuted, and waives the Rule 23.1-
       based argument pursuant to which the Court dismissed the claims.
       None of those facts or circumstances existed or were known at the time
       of the Opinion. Further, those circumstances could not have been
       addressed by other procedural means, and due to their existence,
       “manifest injustice” would occur if relief were not granted.

Mot. for Relief ¶ 29. Thus, the sole basis for relief under Rule 60(b)(6) originates

from the transfer of control of the derivative claims from the Company to the Trustee

as a result of the bankruptcy.46

       Erin’s bankruptcy is not an extraordinary event requiring relief under Rule

60(b)(6). Movants have cited no authority for the proposition that the mere transfer

of the right to assert previously dismissed derivative claims through a bankruptcy

trustee warrants relief under Rule 60(b)(6). The relief that the Trustee seeks here

would also have broad implications in the bankruptcy context and beyond. The

transfer of authority to assert corporate claims also occurs in corporate mergers

under 8 Del. C. § 259. Lewis v. Anderson, 477 A.2d 1040, 1044 (Del. 1984) (holding

derivative plaintiff’s claim against individual defendants was a “property right” of

the corporation that became an asset of the surviving corporation following a

46
   Movants have not established that Defendants acted fraudulently or in bad faith so as to
warrant relief under Court of Chancery Rule 60(b)(3), which is a separate analysis from
the consideration of Rule 60(b)(6). See Stonewall, 1992 WL 51567, at *6 (observing that
relief under Rule 60(b)(6) is only proper where the “asserted grounds for relief are not
recognized” in other clauses of the analogous Federal Rule of Civil Procedure).
                                            29
merger); see generally II Edward P. Welch et al., Folk on the Delaware General

Corporation Law § 259.03, at 9-146 to 147 (6th ed. 2020) (explaining that under

Section 259 “the right of action is an asset that passes to the surviving corporation

along with the other assets of the constituent corporation”). Similarly, the decision

as to whether to assert a corporate claim can change depending upon the makeup of

the board. See, e.g., Valeant Pharm. Int’l v. Jerney, 921 A.2d 732, 735 (Del. Ch.

2007) (“The litigation was initiated as a stockholder derivative action but, following

a change in control of the board, a special litigation committee of the board of

directors chose to realign the corporation as a plaintiff. As a result, with the approval

of the court, the company took over control of the litigation.”). Thus, granting

Movants’ Motion for Relief under Rule 60(b)(6) would enable companies to disturb

the finality of judgments merely because of a commonplace change in control. This

would “result in many final judgments becoming the subject of Rule 60(b) motions

to vacate,” and therefore the Motion for Relief must be denied. See Wright & Miller,

7C Fed. Prac. & Proc. Civ. § 2864 (3d ed.) (“Courts have found few narrowly-

defined situations that clearly present ‘other reasons justifying relief.’”); TV58 Ltd.

P’ship v. Weigel Broad. Co., 1994 WL 114809, at *2 (Del. Ch. Mar. 23, 1994)

(denying a motion to vacate pursuant to Rule 60(b) because entering the motion

would permit frequent challenges to adverse judgments).

                                           30
      Movants also overlook that the Company could have sought to realign Erin as

the plaintiff prior to the entry of judgment in this action and to pursue claims directly

against Defendants in this action or a different action. See, e.g., Telxon Corp. v.

Bogomolny, 792 A.2d 964, 972–73 (Del. Ch. 2001) (discussing whether a direct

claim was barred by statute of limitations after company “convert[ed] the derivative

action to a direct action” before the resolution of a motion to dismiss). Erin chose

not to do so. Instead, Erin successfully obtained a final judgment in this court

preventing Lenois from taking control of and litigating those claims on behalf of the

Company in this action.

      Furthermore, Movants have not satisfied their burden to establish that granting

relief from the Memorandum Opinion is necessary to permit claims by the Company

against Defendants. Nat’l Indus. Grp. (Hldg.) v. Carlyle Inv. Mgmt. L.L.C., 67 A.3d
373, 386 (Del. 2013) (holding that Rule 60(b)(6) permits relief under “circumstances

that could not have been addressed using other procedural methods, [that] constitute

an extreme hardship, or [when] manifest injustice would occur if relief were not

granted.” (internal quotations omitted)). There is nothing in the Memorandum

Opinion that prevents the Trustee from attempting to assert direct claims on behalf

                                           31
of the Company in another action.47 Asserting direct claims in a different action

would not cause “extreme hardship” or “manifest injustice,” especially because the

Company always possessed the authority to assert claims against Defendants.48

Indeed, at oral argument, counsel for Movants noted that the Trustee may not

ultimately attempt to assert claims by the Company against Defendants. See Second

Oral Arg. Tr. 63 (counsel for Movants arguing that “[w]e don’t know what decision

will be made by the corporation, but the Chancery Court needs to retain jurisdiction

to deal with any issues that may arise depending on the avenue taken by the

corporation.”). Granting relief from judgment in this circumstance to permit the

Trustee to potentially assert a claim in this action “depending on the avenue taken

by the corporation” would exercise an extraordinary power in the service of an

inchoate claim. The Trustee laments that enforcement of the judgment would

“squander an asset of the bankruptcy estate and be inequitable to Erin and its

47
  Defendants do not contend that the final order in this action would prevent the Company,
through the Trustee, from asserting the claims in this action in a separate action. See
Second Oral Arg. Tr. 45 (“THE COURT: Is it your argument, Counsel, that the company
could not assert these claims through the trustee in a separate action? MR. BANKLER:
Certainly not, Your Honor. The trustee has control over the company's estate and could
assert whatever claims that it thought was appropriate.”). Defendants argued in their
briefing that the Trustee should be judicially estopped from opposing dismissal of Lenois’s
derivative claims because Erin moved to dismiss Lenois’s complaint. Because the court is
denying the Motion for Relief and because Defendants have acknowledged that Erin could
assert claims in a different action, this opinion does not address Defendants’ judicial
estoppel argument.
48
  The parties have not briefed the merits of whether claims asserted by the Trustee in a
separate action would be time-barred, and the court expresses no opinion on that issue.
                                            32
creditors.” Mot. for Relief ¶ 5. But nothing in the judgment purports to prevent the

Company from pursuing claims against persons who caused the Company to

“squander an asset” of the Company or the bankruptcy estate by not timely pursuing

the company’s claims that Lenois originally sought to pursue over the Company’s

objection.

      Acknowledging that they lack direct legal authority supporting the basis for

their Rule 60(b)(6) motion, Movants seek to draw support from the Remand Order.

Movants argue that the Remand Order implies that the dismissal of Lenois’s

complaint for failure to plead demand futility does not preclude the Trustee from

advancing direct claims against Defendants in this action. In the court’s view,

Movants read too much into the Remand Order. Movants contend the Remand Order

“strongly supports relief under Rule 60(b)(6) based on Trustee’s control over and

desire to prosecute the previously-derivative Action.”      Plaintiff and Trustee’s

Supplemental Submission ¶ 3. In particular, Movants argue that the Remand Order’s

citation to Stotland v. GAF Corp., 469 A.2d 421, 423 (Del. 1983), requires vacatur

of the Memorandum Opinion under Rule 60(b)(6). See Plaintiff and Trustee’s

Supplemental Submission ¶¶ 3, 17–24; Remand Order ¶ 4 n.2 (holding that the

appeal must be dismissed and citing Stotland).

      I   disagree.     The   Supreme     Court’s   Remand     Order   reflects   an

acknowledgement, and Defendants do not contend otherwise, that the Trustee has

                                        33
control over the claims previously asserted in the Lenois action. The Remand Order

did not state that the Trustee can pursue those claims in this action, which is subject

to a final judgment. Instead, in my view, the Remand Order left for this court to

decide whether Movants could satisfy Rule 60(b) and pursue the previously asserted

derivative claims in this action. Indeed, Movants’ counsel did not disagree that the

Trustee’s ability to pursue the claims in this action required Movants to prevail on

their Rule 60(b) motion.49

       The Remand Order’s citation to Stotland does not compel this court to grant

relief under Rule 60(b). In Stotland, the stockholder plaintiff’s derivative suit was

dismissed for failure to plead demand futility. Between the date of the final

judgment and the initiation of his appeal, the stockholder made a derivative demand

urging the board to pursue the claims that plaintiff had asserted in the derivative

action. During the appeal, the board created a special committee to consider the

plaintiff’s demand. The company moved to dismiss the appeal as moot because the

plaintiff conceded that the demand was not excused. In response, the plaintiff took

issue with the qualifications and independence of the special committee members.

The Supreme Court dismissed the appeal as moot and remanded with specific

49
   See Second Oral Arg. Tr. 20 (“THE COURT: You have to get past Rule 60(b) in order
to take over the claims in this action. Right? MR. TEJTEL: Yes, Your Honor. Yes, Rule
60(b) would need to be -- we would need relief under Rule 60(b) to proceed, most likely.”).
                                            34
instructions to retain jurisdiction until the Special Litigation Committee acted on the

stockholder plaintiff’s demand.

      The Supreme Court in Stotland, as in the Remand Order, recognized the

company’s authority to control company claims that a stockholder previously

asserted—but was not permitted to pursue—derivatively.              Unlike in Stotland,

however, the Remand Order did not direct the court to retain jurisdiction and

expressly reserved the question of how any claim would proceed for resolution by

this court.   Remand Order ¶ 5 (“[T]he Trustee’s right to proceed will more

appropriately be determined by the Court of Chancery in the first instance, in the

context of the motions that are pending before that court, including the motion for

relief from judgment.”). Here, Movants have not established sufficient grounds for

relief from judgment under any subsection of Court of Chancery Rule 60(b).

Accordingly, the Motion for Relief is denied.

      B.      The Trustee’s Motion to Substitute

      The Trustee has moved pursuant to Court of Chancery Rules 17 and 25(c) to

be substituted for Erin as the real party in interest and to be realigned as the plaintiff

                                           35
in this action.50 Court of Chancery Rule 25(c) states that, “in case of any transfer of

interest, the action may be continued by or against the original party, unless the Court

upon motion directs the person to whom the interest is transferred to be substituted

in the action or joined with the original party.” Ct. Ch. R. 25(c). The decision of

whether to grant a motion to substitute is “committed to the Court's discretion under

Court of Chancery Rule 25(c).” Stornawaye Capital LLC v. Smithers, 2010 WL
673291, at *2 (Del. Ch. Feb. 12, 2010); see also Wright & Miller, 7C Fed. Prac. &

Proc. Civ. § 1958 (3d ed.) (analyzing the analogous Federal Rule of Civil Procedure

and stating: “An order of joinder is merely a discretionary determination by the trial

court that the transferee’s presence would facilitate the conduct of the litigation.”).

Substituting a trustee for the debtor-in-possession “is purely a matter of discretion

with the Court.” Schock Bros., Inc. v. Raskin, 1991 WL 166076, at *2 (Del. Super.

50
   Motion to Substitute at 1–2. The Trustee labels the Motion to Substitute as an amended
motion, seeking to amend his July 11, 2019 motion to substitute for Lenois under Court of
Chancery Rule 25(c). See Dkt. 145. In reality, the motion is a new motion to substitute
for the Company and realign the Company as plaintiff. The Trustee first filed the motion
in the Supreme Court on March 7, 2017. See No. 482, 2017, Dkt. 50. The Supreme Court
denied the motion. The Trustee then filed the motion in this court on May 20, 2020, three
days after the Supreme Court issued its Remand Order. Dkt. 145.
                                           36
July 24, 1991) (citing Super. Ct. Civ. R. 25(c)).51 Because substitution under Rule

25(c) is a procedural device that does not ordinarily alter the substantive rights of

the parties, the primary basis for deciding the motion is whether substitution would

“facilitate the conduct of the case.” Luxliner P.L. Exp., Co. v. RDI/Luxliner, Inc.,

13 F.3d 69, 71 (3d Cir. 1993). The court’s exercise of discretion is “rooted in

considerations of convenience and economy.” See Comm’ns Imp. Exp., S.A. v.

Republic of Congo, 118 F. Supp. 3d 220, 231 (D.D.C. 2015).

       Rule 25(c) substitution would not “facilitate the conduct of the case” because

the Memorandum Opinion is a final judgment that is no longer subject to appeal and

51
  The Trustee argues that Court of Chancery Rule 17 compels substitution. Rule 17 directs
that “[e]very action shall be prosecuted in the name of the real party in interest.” Ct. Ch.
R. 17(a). “‘Rule 17(a) applies where there has been a transfer of interest prior to
commencement of suit, whereas Rule 25(a) applies where there has been a transfer of
interest during the pendency of an action.’” Stornawaye Capital, 2010 WL 673291, at *2
(quoting Schock Bros., 1991 WL 166076, at *1); see also Crocheron v. State Farm Fire
and Cas. Co., 621 B.R. 659, 665 (E.D. Mich. Sept. 22, 2020) (holding that substitution for
a bankruptcy trustee under Federal Rule of Civil Procedure 17 was appropriate when the
bankruptcy occurred prior to the commencement of litigation). Because the Company’s
interest in this action was transferred to the Trustee after the commencement of the suit,
Rule 17 is inapplicable.
                                            37
the denial of the Motion for Relief brings this action to a close.52 The Motion to

Substitute is therefore denied. Comm’ns Imp. Exp., 118 F. Supp. 3d at 231 (“In light

of this circumstance and the provision that a Rule 25(c) substitution has no bearing

on the substantive rights of the parties, there is no reason to grant [the] motion for

substitution.”).

III.   CONCLUSION

       For the foregoing reasons, the Motion to Substitute and the Motion for Relief

are denied.

       IT IS SO ORDERED.

52
   Movants contend that “a bankruptcy trustee’s substitution in litigation involving the
debtor relates back to the original filing date, despite any timeliness concerns.” Reply in
Support of the Motion to Substitute ¶ 8 (citing In re Engelbrecht, 368 B.R. 898, 902 (M.D.
Fla. 2007) & Solomon v. Buckley, 86 F.R.D. 464, 467 (E.D. La. 1980)). After the
completion of briefing, the Trustee submitted Crocheron v. State Farm Fire and Cas. Co.,
621 B.R. 659 (E.D. Mich. Sept. 22, 2020), explaining that “it addresses whether a court
may substitute a trustee for a debtor as the real party-in-interest after the limitations period
has run.” Dkt. 156. In Crocheron, the United States District Court for the Eastern District
of Michigan permitted a bankruptcy trustee to be substituted for an individual asserting a
breach of contract claim against an insurer. The individual had declared bankruptcy prior
to filing the breach of contract claim, and the bankruptcy trustee had mistakenly instructed
the individual to sue in her individual capacity. Crocheron, 621 B.R. at 661. The court in
Crocheron held that the bankruptcy trustee could be substituted pursuant to Federal Rule
of Civil Procedure 17(a) and the substitution was not barred by the statute of limitations.
Id. at 665. Crocheron is factually inapposite for numerous reasons, including because it
does not involve the substitution and realignment of a trustee in the place of a derivative
plaintiff or substitution and realignment after dismissal of a complaint for failure to plead
demand futility. Further, as noted above, the parties have not briefed—and this opinion
therefore does not address—whether any pleading by the Trustee in a new action would
relate back to Lenois’s pleadings in this action.
                                              38