Court Opinion

ID: 2811202
Source: CourtListenerOpinion
Date Created: 2015-06-24 16:05:02.662344+00
Date Added: 2024-06-11T12:23:43.992093
License: Public Domain

COURT OF CHANCERY
OF THE
STATE OF DELAWARE

COURT OF CHANCERY COURTHOUSE
34 THE CIRCLE
GEORGETOWN, DELAWARE 19947

SAM GLASSCOCK Ill
VICE CHANCELLOR

Date Submitted: June 5, 2015
Date Decided: June 24, 2015

William M. Kelleher, Esq.
Phillip A. Giordano, Esq.
Gordon, Fournaris & Mammarella, PA.

1925 Lovering Avenue
Wilmington, DE 19806

Michael F. Bonkowski, Esq.
Nicholas J. Brannick, Esq.
Cole Schotz PC.

500 Delaware Avenue, Suite 1410
Wilmington, DE 19801

John A. Elzufon, Esq. Theodore A. Kittila, Esq.
Elzufon, Austin, Tarlov & Mondell, P.A. Anthony A. Rickey, Esq.

300 Delaware Avenue, Suite 1700 Greenhill Law Group, LLC
PO. Box 1630 1000 N. West Street, Suite 1200
Wilmington, DE 19899—1630 Wilmington, DE 19801

Re: Horsey v. Horsey & Sons, Inc. et a],
Civil Action No. 8972—VCG

Dear Counsel:

This Letter Opinion represents my consideration of the Plaintiff’ s Motion for
Attorneys’ Fees and Costs Incurred in Pursuing Summary Judgment on Count I of
the Amended Complaint and Count V of the Counterclaim (the “Motion”). The
Motion involves the meaning of Section 11 of the Stock Restriction Agreement
(“the Agreement”) that lies at the heart of this case. The Agreement concerns the
rights of the principals in a family business, Horsey & Sons, Inc. (the “Company”).
Section 11 of the Agreement provides that “compensation” shall be paid to the

principals the Company, including the Plaintiff, and that compensation cannot be

 

modiﬁed or reduced except in situations not pertinent here. Nonetheless, the
Defendants caused the Company to stop making compensation payments to the
Plaintiff. The Defendants argued in their opposition to the Plaintiff’s Motion for
Summary Judgment regarding the meaning of Section 11 of the Agreement that
“compensation” meant remuneration for work performed and, since the Plaintiff
was no longer working for the company, he was not entitled to compensation under
Section 11; further, the Defendants argued that the intent of the parties represented
in the Agreement was that there be no “compensation” for any individual who
ceased working for the family business.

In my Bench Decision of February 24, 2015, I found that the language of
Section 11 was unambiguous and required ongoing payment to the Plaintiff. The
Plaintiff now seeks shifting of lawyer fees incurred in successfully seeking
summary judgment on this limited issue, under the bad faith exception to the
American Rule on fees. Under the latter rule, of course, each litigant bears his own
fees. In cases of subjective bad faith litigation, the Court has the discretion to shift
fees in vindication of its ability to control its docket and in recognition of the
unjust effect of vexatious litigation tactics.

The Plaintiff bases his motion on the fact that David Horsey repeatedly
testiﬁed at deposition that his intent in the Agreement was that Section 11 provide

payments to members only if they continued to work with the company. The

 

 

Plaintiff notes that another witness, Mr. Braun, who was involved in drafting the
Agreement at David’sl direction, testiﬁed that David’s intent in including the
language limiting reduction of compensation was to protect minority members and
provide “salary for life.” Obviously, the testimony of Braun and David are
inconsistent. From this, the Plaintiff argues strenuously that subjective bad faith
has been demonstrated; that the argument that “compensation” meant “salary for
work performed” was a sham, a knowing falsehood designed only to defeat the
Plaintiff’s rights under the Agreement; and the record is sufﬁcient for me to shift
fees with respect to this issue on an interlocutory basis, notwithstanding the fact
that trial on the remaining issues in the case is scheduled for August 10, 2015
through August 14, 2015,.

The Defendants, for their part, deny that David’s deposition testimony or the
litigation positions that they espoused were done in subjective bad faith or
embodied conscious and deliberate lies. They point out that inconstant testimony
alone does not necessarily demonstrate bad faith on the part of either witness,
much less prove bad faith on David’s part

It seems prudent to me to defer decision on the shifting of fees until the
conclusion of this matter. I note that that conclusion is fast approaching, that I will

have a better feel for the credibility of the individuals involved after seeing their

1 I use ﬁrst names to designate members of the Horsey family to avoid confusion; no disrespect
is intendedm