Court Opinion

ID: 9963549
Source: CourtListenerOpinion
Date Created: 2024-04-25 18:02:32.950698+00
Date Added: 2024-06-11T08:24:52.421735
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

MARTIN FLOREANI,                                 )
CHRISTINA FLOREANI, and                          )
CHARLENE FLOREANI,                               )
                                                 )
                      Plaintiffs,                )
                                                 )
         v.                                      )      C. A. No. 2023-0684-LM
                                                 )
FLOSPORTS, INC.,                                 )
                                                 )
                      Defendant.                 )

       ADDENDUM TO POST-TRIAL FINAL REPORT ADDRESSING
     PLAINTIFFS’ REQUEST FOR DISCOVERY AND LEAVE TO FILE A
             MOTION FOR ATTORNEYS’ FEES AND COSTS

WHEREAS:

         A.     On April 12, 2024, Plaintiffs filed a Notice of Exceptions to my Post-

Trial Final Report (the “Notice”), issued April 9, 2024.1

         B.     In the Notice, Plaintiffs’ state that they “take exception with the Report

not addressing Plaintiffs’ requests related to attorneys’ fees and discovery in advance

of a motion for attorneys’ fees.”2

         C.     On April 15, 2024, I filed a letter to counsel, staying the exceptions

pending my addendum report on the request.3

1
    Docket Item (“D.I”) 59.
2
    D. I. 60.
3
    D. I. 62.
         NOW, THEREFORE, IT IS HEREBY ORDERED, this 25th day of April,

2024, as follows:

         1.    The request is GRANTED in part and DENIED in part.

         2.    Delaware generally follows the American Rule that each party bears

their own fees and costs.4 An equitable exception permits fee shifting for bad faith

litigation tactics.5 Bad faith is applied in “extraordinary circumstances” applying

the “glaringly egregious standard” to a parties’ conduct when considering fee-

shifting.6 This court has found bad faith where the defendant’s conduct forced the

plaintiff to file suit to secure a clearly defined right.7 This court has also dictated

that “overly aggressive” litigation strategies which serve to obstruct a § 220

plaintiff's clear statutory rights may warrant fee shifting under the bad-faith

exception to the American Rule.8

         3.    In its pre-trial brief, Plaintiffs request discovery into bad faith and leave

to file a motion for attorneys’ fees. Specifically, Plaintiff seeks discovery of

Defendant’s communications regarding it’s “refusal to satisfy the Plaintiffs’ Section

4
    McNeil v. McNeil, 798 A.2d 503, 514 (Del. 2002).
5
    Rice v. Herrigan-Ferro, 2004 WL 1587563, at *1 (Del. Ch. July 12, 2004).
6
 Pettry v. Gilead Scis., Inc., 2020 WL 6870461, at *29 (Del. Ch. Nov. 24, 2020), judgment
entered, (Del. Ch. 2020).
7
    McGowan v. Empress Ent. Inc., 791 A.2d 1, 4 (Del. Ch. 2000).
8
    Dearing v. Mixmax, Inc., 2023 WL 2632476, at *5 (Del.Ch. Mar. 23, 2023).
                                             2
220 demands… .”9              Plaintiffs allege that Defendant has engaged in “overly

aggressive defense campaigns” with “massive resistance.”10 Plaintiff cites excessive

discovery in this action with sixty-seven individual document requests across two

sets of requests for production of documents, thirty-nine interrogatories across two

sets of interrogatories, two depositions; specific forensic email discovery requiring

twenty-four search terms totaling 131,637 emails; bad faith in opposing counsel’s

behavior during a plaintiff’s deposition; and a suspiciously timed grant of Plaintiff

Martin Floreani’s request to transfer his shares in FloSports from MMF (where he

was the principal and MMF was named in the original complaint), to his individual

name—the approval lead to an Amended Complaint which was ultimately

challenged.11

          4.     While the allegations may warrant a credible basis for fee shifting, I am

not going to allow additional discovery. The “glaringly egregious” standard for bad

faith contradicts the notion that Plaintiffs’ need discovery of Defendant’s internal

communications regarding its initial refusal of the demand, to support Plaintiff’s

motion for attorneys’ fees. Moreover, I find discovery has been sufficient to uncover

the needs of this summary proceeding.

9
    D. I. 60.
10
     Pl. Pre-trial Br. at 15 (D. I. 47).
11
     Id. at 15-16.
                                              3
         5.     Accordingly, Plaintiffs’ request for discovery into the Defendant’s

internal communications regarding the denial of the Section 220 demands is

DENIED. For reasons discussed above, fee shifting may be appropriate here.

Plaintiffs request for leave to file a motion for attorneys’ fees and costs is

GRANTED. Plaintiff is permitted to move for costs and attorneys’ fees within 30

days of the final report becoming an Order of the Court.

         6.     In light of the Defendant’s Notice of Exceptions to the Post-Trial Final

Report,12 the 30 days is stayed pending the final resolution of the Defendant’s

exceptions.

         7.     This is a final report. Exceptions may be taken within three business

days pursuant to Court of Chancery Rule 144 (d)(2).13

         IT IS SO ORDERED.

                                                /s/ Loren Mitchell
                                                Loren Mitchell
                                                Magistrate in Chancery

12
     D.I. 61.
13
  See Ct. Ch. R. 144(d)(2) (“In actions that are summary in nature or in which the Court
has ordered expedited proceedings, any party taking exception shall file a notice of
exceptions within three days of the date of the report.”).
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