Court Opinion

ID: 2827143
Source: CourtListenerOpinion
Date Created: 2015-08-13 18:09:58.026028+00
Date Added: 2024-06-11T11:31:24.554511
License: Public Domain

SAM GLASSCOCK IN COURT OF Cl-IANCERY COURTHOUSE

VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947

 
 

 

 

 

 

 

 

  

 

 

 

 

 

 
 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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several months to consider the residual issues in the Rule 12(c) Motion as laid out
in the Plaintiffs” letter of February 6th, and despite my clear preface to the parties
at the June 3rd oral argument that, due to my interpretation of the indemniﬁcation
provisions, “to the extent I ﬁnd that any portion of the ﬁve [C]laim [C]ertiﬁcates is
facially invalid [under Section 8.8(a)], the [D]efendant has lost its right to seek
indemniﬁcation for the events covered by that portion.”24 Rather, the Defendant
proceeded with its argument on the various issues concerning the facial validity of
the ﬁve Claim Certiﬁcates without a single reference to Section 8.10, seemingly
under the assumption, shared by the Plaintiffs and myself, that such facial validity
was governed by Section 8.8(a) whether the events underlying these Claim
Certiﬁcates constituted Third Party Claims or not. Having failed to raise at oral
argument the contentions now serving as the foundation for its Motion for
Reargument, it could be said that those arguments are untimely and the Motion

must be denied.25 However, I need not determine whether the Defendant’s

2“ Oral Arg. Tr. 2322—6 (June 3, 2015).

25 See, e.g., Oliver v. Boston Univ., 2006 WL 4782232, at *3 (Del. Ch. Dec. 8, 2006) (“The reach
ofa motion for reargument is limited. It ‘may not be grounded on a new issue or contention that
could have been raised at trial.’ That, however, is what the [defendants] now attempt to do.
Accordingly, this aspect of their motion for reargument must also be denied.” (quoting Magid v.
Acceptance Ins. Co., 2001 WL 1641238, at *1 (Del.Ch. Dec.10, 2001)). The Defendant argues
that it has not waived its contentions on reargument because it made the same contentions in its
answering brief in opposition to the Plaintiffs’ Rule 12(c) Motion. Def. and Countercl.-Pl. Al
Jazeera America Holdings 1, lnc.’s Reply Br. in Further Supp. oflts Mot. for Reargument at 3. I
note that, while the Defendant’s answering briefin opposition to the Motion for Judgment on the
Pleadings could reasonably be interpreted to argue that Section 8.8 does not govern claims for
indemniﬁcation involving Third Party Claims, it does not appear that this brief advanced the

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to accomplish different purposes. As such, I do not ﬁnd it necessary, or
appropriate, to bend the plain language of one provision in order to reconcile it
with the language of the other. Instead, the disparity between the terms would
indicate, if anything, that the parties iritended there to be a difference between the
certiﬁcation required by the Defendant in the context of submitting a claim for
indemniﬁcation against the escrow account and of providing notice of a Third
Party Claim to the Members’ Representative so that he could elect to participate in
or control its defense.

For these reasons, I ﬁnd the Defendant’s arguments in its Motion for
Reargument to be unsupported by the Merger Agreement. The Defendant has not
shown that my bench ruling as to the may/will issue arose from a misapprehension
of the facts or the law, let alone that such a misapprehension would have changed
the course of that ruling. The Motion for Reargument is denied.

C. Motion for Judgment on the Pleadings

I now turn to the issues remaining in the Plaintiffs’ Motion for Judgment on
the Pleadings. In considering a motion brought under Rule 12(0) for judgment on
the pleadings, the court must “view the facts pleaded and the inferences to be
drawn from such facts in a light most favorable to the non-moving party.”32 The

moving party is entitled to judgment on the pleadings “only when no material issue

32 Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, 11, LR, 624 A.2d 1 199, 1205
(Del. 1993).

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With this in mind, I turn to Section 8.8(a), which provides that a valid Claim
Certiﬁcate commencing a claim for indemniﬁcation on the escrow account mustfi

(i) stat[e] that an Indemniﬁed Party has incurred or paid, or that it

reasonably believes it will incur or pay Damages;

(ii) stat[e] the amount of such Damage (which, in the case of Damages

not yet incurred or paid, may be the maximum amount reasonably

believed by [the Defendant] to be demanded by a third party, incurred

or paid); and

(iii) specify[] in reasonable detail (based upon the information then

possessed by [the Defendant]) the nature of the claim to which such

Damages are related.46
I have already found in my June 3rd bench ruling that the DISH Claim Certiﬁcate
and the DirecTV Claim Certiﬁcate comply with subsection (iii); each includes
reasonable detail about the nature of the claims for indemniﬁcation asserted
therein, including the “placeholder” claims. Thus, I need only consider here
whether the “placeholder” claims in the DISH Claim Certiﬁcate and the DirecTV
Claim Certiﬁcate comply with subsections (i) and (ii).

With regard to subsection (i), I have already determined, at oral argument
and again above on reargument—that the DirecTV Claim Certiﬁcate does not
satisfy the subsection (i) requirement because the Defendant did not certify that it
believed it “will” incur Damages as a result of the alleged MFN violation, but I
also resolved that the parties could develop a factual record as to whether that

defect was material such that it nulliﬁes the corresponding portions of that Claim

-._-.7.——_D_

46 Gallagher Aff. Ex. A § 8.8(a);
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obligations in its contracts with those afﬁliate distributors, and the requirement to
annually certify compliance with the MFN obligations;” and that, as a result of
DISH’s allegations, certain of the Company’s representations and warranties in the
Merger Agreement concerning its compliance with its MFN obligations were
untrue.9 The DISH Claim Certiﬁcate asserts that, as a result of these alleged
breaches of representations and warranties, the Defendant has incurred $1.37
million in attorneys’ fees and expenses and may incur an additional $5 million in
future attorneys’ fees and expenses, and that it may be required to make payments
of up to $40 million, “as each of the [three other] afﬁliate distributors with
applicable MFN rights may assert, as DISH has done, that it is entitled to the ‘same
0

ﬂat fee cash payment?“

B. Motion for Reargument

I ﬁrst turn to the Defendant’s Motion for Reargument. “To prevail on a
motion for reargument under Rule 59(f), the moving party must demonstrate either
that the court overlooked a decision or principle of law that would have controlling

effect or that the court misapprehended the facts or the law such that the outcome

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of the decision would be different. A court will not grant a motion for

reargument if the motion is merely a rehash of arguments already made or if the

bConhpl. Ex._2. - i i '—
101d
" Zutrau v. Jansing, 2014 WL 690146], at *2 (Del. Ch. Dec. 8, 2014).,

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The Defendant seeks reargument of my June 3rd bench ruling as to one such issue,
“[w]hether the . . . DirecTV claim certiﬁcate[] [is] facially defective as to those
Damages which Al Jazeera says it ‘may incur’ because [it] fail[s] to state that Al
Jazeera reasonably believes it ‘will’ incur Damages, as required by Section
8.8(a)(i).”15 As to that issue, I denied the Plaintiffs’ Rule 12(c) Motion, ﬁnding
that, although the DirecTV Claim Certiﬁcate does not comply with the
unambiguous contract language in Section 8.8(a)(i), the determination of whether
this defect should invalidate the Claim Certiﬁcate must await further factual
development as to whether the defect is material:

The parties bargained for and agreed to an escrow account system
that required a certiﬁcation that in the buyer’s good-faith opinion, it
was reasonable that there would be damages, “will,” not “may.”
“May” is a substantially, it seems to me, different term, requiring a
substantially different determination on the point of view of the buyer,
and it wasn’t, as I see it, what was bargained for. What was bargained
for was the use of the word “will.”

. . . [H]aving used “may” in the context of the particular claim
certiﬁcate that is at issue, it is clear it was not in compliance with the
contract, but the question is[,] is it a material defect which prevents
the claim certiﬁcate from being effective. I suspect that it is. But this
is a motion for judgment on the pleadings, and I am going to allow the
buyer to put on evidence to demonstrate to me, if it can, that it is not a
material defect in the context of the claim that is actually presented.

To be clear, I don’t think the contract is ambiguous, and it is clear
there is a lack of full compliance with the contractual language, and I
am not rewriting the contract. What I need to determine is whether

_-—L.'———

 

'5 Letter to the Court from Gregory V. Varallo dated February 6, 2015 ﬂ 5. This issue originally
also concerned the AT&T Claim Certiﬁcate but was mooted as to that Claim Certiﬁcate by my
ruling on one of the other issues presented on June 3rd. See Oral Arg. Tr. 76:14—21 (June 3,
2015).

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