Court Opinion

ID: 9556195
Source: CourtListenerOpinion
Date Created: 2023-08-16 16:05:47.423341+00
Date Added: 2024-06-11T16:41:28.342407
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

 JP MORGAN CHASE BANK, N.A.,                §
 JPMORGAN CHASE & CO., and                  §
 TAPD, LLC,                                 § No. 261, 2023
                                            §
       Defendants Below,                    § Court Below - Court of Chancery
       Appellants,                          § of the State of Delaware
                                            §
       v.                                   § C.A. No. 2022-1179
                                            §
 CHARLIE JAVICE,                            §
                                            §
       Plaintiff Below,                     §
       Appellee.                            §

                              Submitted: July 24, 2023
                              Decided:   August 16, 2023

Before TRAYNOR, LEGROW, and GRIFFITHS, Justices.

                                          ORDER

      Upon consideration of the amended notice of interlocutory appeal and the

exhibits, it appears to the Court that:

      (1)    This interlocutory appeal arises from an advancement action. Plaintiff

below-appellee, Charlie Javice, is the former CEO of defendant below-appellant

TAPD, LLC (“Frank”). In 2021, defendant below-appellant JP Morgan Chase &

Co. acquired Frank through a wholly owned subsidiary, defendant below-appellant

JPMorgan Chase Bank, N.A. (“JPMorgan Bank”). Javice continued to work for

Frank after the merger closed. In the summer of 2022, JPMorgan Bank began to

question the legitimacy of a customer list whose accuracy Javice verified during the
merger negotiations. JPMorgan Bank launched an investigation and later terminated

Javice for cause. Javice demanded advancement and indemnification in connection

with the investigation, which the defendants denied.

      (2)     On December 20, 2022, Javice filed an action for advancement in the

Court of Chancery. Shortly thereafter, JPMorgan Bank filed a federal action against

Javice and others for fraud and securities fraud. Javice also demanded advancement

in connection with the federal action, which the defendants denied.

      (3)    The parties stipulated to resolve the issue of Javice’s entitlement to

advancement on cross-motions for summary judgment. Javice argued that she was

entitled to advancement under multiple sources, including Frank’s bylaws and the

merger agreement. Relying on language in the merger agreement Javice signed in

her capacity as Frank’s CEO and a resignation letter she signed before closing, the

defendants argued that Javice had waived her advancement rights.

      (4)    On May 8, 2023, the Court of Chancery issued a bench ruling granting

Javice’s motion and denying the defendants’ motion.         The court rejected the

defendants’ waiver argument, emphasizing that Javice was not a party to the merger

agreement containing the waiver language on which the defendants relied. The court

recognized that Javice was an intended thirty-party beneficiary to certain provisions

of the merger agreement, but noted that parties to an agreement cannot unilaterally

waive a third-party beneficiary’s separate and independent rights.        As to the

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language in Javice’s resignation letter, the court concluded that language did not

accomplish the waiver the defendants argued they intended. The court held Javice

was entitled to advancement and directed the parties to confer on an order

establishing the protocol for submission of invoices in accordance with Danenberg.

v. Fitracks.1 The court entered the parties’ stipulated Fitracks order on June 27,

2023.

        (5)   On June 29, 2023, the defendants filed an application for certification

of an interlocutory appeal. Javice opposed the application. On July 13, 2023, the

Court of Chancery denied the application for certification.

        (6)   In denying certification, the Court of Chancery first found that the

resolution of the cross-motions for summary judgment determined a main question

of law relating to the merits of the case and therefore decided a substantial issue.

The court next considered the Rule 42(b)(iii) criteria upon which the defendants

relied. As to Rule 42(b)(iii)(A) (question of law resolved for the first time), the court

held its bench ruling applied existing waiver law and did not, as defendants argued,

create a new legal standard for waiver. The court found that Rule 42(b)(iii)(B)

(conflicting trial court decisions on the question of law) did not support certification

because none of the cases the defendants relied upon were in conflict with the bench

1
  58 A.3d 991, 1003-04 (Del. Ch. 2012) (establishing process for making and resolving
advancement demands).

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ruling. Turning to Rule 42(b)(iii)(C) (question of law relating to a statute that has

not been, but should be, settled before appeal of final order), the court found that the

defendants had not shown why resolution of the statutory interpretation arguments

defendants raised should be resolved before the trial court issued a final order.

          (7)    The court agreed with the defendants that Rule 42(B)(iii)(G) (resolution

of the interlocutory ruling may terminate the litigation) weighed in favor of

certification. As to Rule 42(B)(iii)(H) (review of the interlocutory order may serve

considerations of justice), the court held that the defendants rehashed arguments the

court already concluded did not weigh in favor of certification. Finally, the court

rejected the defendants’ argument that the benefits of interlocutory review

outweighed the costs based on what the defendants contended was the high

likelihood that Javice would be unable to repay the advanced expenses in the event

of a reversal on appeal. The court described this argument as inconsistent with

Delaware policy on advancement and inefficient in view of the frequency with which

advancement disputes arise in the Court of Chancery.

          (8)    Applications for interlocutory review are addressed to the sound

discretion of the Court.2 In the exercise of its discretion and giving due weight to

Court of Chancery’s analysis, this Court has concluded that the application for

interlocutory review does not meet the strict standards for certification under Rule

2
    Supr. Ct. R. 42(d)(v).
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42(b). We agree with the Court of Chancery that most of the Rule 42(b)(iii) criteria

do not weigh in favor of interlocutory review and that the potential benefits of

immediate review do not outweigh the inefficiency, disruption, and probable costs

caused by an interlocutory appeal.

      NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is

REFUSED.

                                             BY THE COURT:

                                             /s/ Abigail M. LeGrow
                                             Justice

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