Court Opinion

ID: 6328972
Source: CourtListenerOpinion
Date Created: 2022-03-31 21:02:08.735721+00
Date Added: 2024-06-11T09:21:24.509819
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

JOHN D. ARWOOD, et al.,                            )
                                                   )
                  Plaintiffs,                      )
       v.                                          ) C.A. No. 2019-0904-JRS
                                                   )
AW SITE SERVICES, LLC,
                                                   )
                  Defendant.                       )
                                                   )
AW SITE SERVICES, LLC,                             )
                                                   )
                  Counterclaim Plaintiff,          )
      v.                                           )
                                                   )
JOHN D. ARWOOD, et al.,
                                                   )
                 Counterclaim Defendants,          )
      and                                          )
                                                   )
STEVEN C. GOODE,                                   )
                 Third-Party Defendant.            )
                                                   )

 ORDER GRANTING PLAINTIFFS’ MOTION FOR REARGUMENT ON
        PRE-JUDGMENT INTEREST AND COURT COSTS

      Plaintiffs and Counterclaim Defendants, John D. Arwood, Together Waste,

Inc., A.W. Waste Management, Inc., Dumpster.Me, LLC, Dumpster.Me of

Wake County, LLC, Portable Toilet Rental Company, Inc., and Arwood Waste, Inc.,

and Plaintiff Arwood Site Services, Inc. (collectively, “Plaintiffs”), having

submitted their Motion for Reargument on Pre-Judgment Interest and Court Costs

(the “Motion”); Defendant/Counterclaim Plaintiff, AW Site Services, LLC (“AW”)

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having submitted its opposition to the Motion; and the Court having considered the

submissions and arguments of the parties, it appears to the Court that:

         1.     Plaintiffs seek reargument of the Court’s decision that AW is entitled

to pre-judgment interest and prevailing party costs over and above the contractual

cap of $3.9 million for recoverable “Losses” (as defined) set forth in the operative

Asset Purchase Agreement (“APA”).1 Plaintiffs maintain that the $3.9 million cap

is inclusive of all interest and costs; AW counters that the cap does not include

interest on, or costs relating to, judgments secured following the successful

prosecution, as opposed to defense or settlement, of claims asserted under the APA.

         2.     The Court may grant reargument when it has “overlooked a controlling

decision or principle of law that would have controlling effect, or [] has

misapprehended the law or the facts so that the outcome of the decision would be

different.”2 “Where the motion merely rehashes arguments already made by the

parties and considered by the Court when reaching the decision from which

reargument is sought, the motion must be denied.”3 Likewise, reargument will be

1
    APA § 7.2(c)(iii)(A).
2
  Those Certain Underwriters at Lloyd’s, London v. Nat’l Installment Ins. Servs.,
2008 WL 2133417, at *1 (Del. Ch. May 21, 2008) (stating the requisite grounds for
granting reargument).
3
 Wong v. USES Hldg. Corp., 2016 WL 1436594, at *1 (Del. Ch. Apr. 5, 2016) (citing
Lewis v. Aronson, 1985 WL 21141, at *2 (Del. Ch. June 7, 1985)).

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denied when the motion raises arguments that should have been made in connection

with the underlying decisions.4

          3.    As an initial matter, AW argues that the Motion should be denied

because it raises arguments not advanced before or during trial. I disagree. The

$3.9 million cap has been a feature of this litigation from the outset. Indeed, AW’s

fraud claim was prompted by the fact that claims of fraud are excepted from the cap.5

And Plaintiffs pointed to the cap in the pre- and post-trial briefing as support for

their argument that AW was entitled to no more than a $3.9 million recovery.6 While

it is true that neither party parsed the relevant language to the degree they have in

connection with the Motion, I am satisfied that the effect of the contractual cap on

recovery under the APA is not newly presented such that reargument is unavailable.

          4.    Turning to the merits of the Motion, Section 7.2(c)(iii)(A) of the APA

provides that “the maximum amount of Losses” recoverable under certain indemnity

provisions of the APA “shall be Three Million Nine Hundred Thousand Dollars.”7

In turn, the APA defines “Losses” to mean, in relevant part: “any loss, Liability,

4
    Id.
5
    APA § 7.2(c)(iii)(A).
6
 See, e.g., D.I. 162 at 29 (Plaintiffs’ Pretrial Brief); D.I. 205 at 47, 49, 54 (Plaintiffs’
Answering Post-Trial Brief).
7
    APA § 7.2(c)(iii)(A).

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demand, claim, action, cause of action, cost, damage, deficiency, Tax, penalty, fine

or expense, whether or not arising out of third-party claims (including interest,

penalties, attorneys’, accountants’ and other professionals’ fees and expenses, court

costs and all amounts paid in investigation, defense or settlement of any of the

foregoing)[.]”8 According to AW, this definition makes clear that any interest or

costs incurred in the prosecution, as opposed to defense or settlement, of a claim is

excluded from the definition of “Losses” and, therefore, not subject to the $3.9

million cap. Here again, I disagree.

         5.    Delaware courts interpret the clear and unambiguous terms of a contract

according to their plain meaning.9 When interpreting a contract, our “courts may

not by construction add or excise terms, nor distort the meaning of those used and

thereby make a new contract for the parties under the guise of interpreting the

writing.”10 In this instance, the definition of “Losses” is susceptible to but one

reasonable construction and is, therefore, unambiguous.11

8
    APA § 1.1 (“Loss”).
9
 GMG Cap. Invs., Ltd. Liab. Co. v. Athenian Venture P’rs I, Ltd. P’ship, 36 A.3d 776, 779
(Del. 2012).
10
   Union Fire Ins. Co. of Pittsburgh, P.A. v. Pan American Energy, LLC, 2003 WL 1432419
at *4 (Del. Ch. March 19, 2003).
11
  See Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1195
(Del. 1992).

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         6.     AW’s construction would have the Court conclude that the parties

intended the phrase “. . . including interest, penalties, attorneys’, accountants’ and

other professionals’ fees and expenses, court costs and all amounts paid in

investigation, defense or settlement of any of the foregoing” to mean that only

interest and costs incurred in the defense or settlement of an action under the APA

qualify as “Losses.” That is not a reasonable construction for at least two reasons.

         7.     First, contrary to its plain meaning, AW construes the term “including”

as a term of exclusion when it is, in fact, a term of inclusion. Black’s Law Dictionary

defines include: “to contain as part of something. The participle including typically

indicates a partial list.”12 Delaware courts similarly view “including” as “a term of

enlargement, and not of limitation.”13 Other courts are in accord.14 As relevant here,

the term “including” that introduces the parenthetical language AW relies upon

reveals that the portions of the definition beyond the parenthetical are not limited by

the parenthetical. That means the broad language “any loss, Liability, demand,

12
     Black’s Law Dictionary, Include (11th ed. 2019).
13
 Concord Steel, Inc. v. Wilm. Steel Processing Co., Inc., 2008 WL 902406, at *7 (Del. Ch.
Apr. 3, 2008) (citation omitted).
14
   See, e.g., City of Phila. v. AG of the United States, 916 F.3d 276, 287 (3d Cir. 2019)
(“This clause, however, is preceded by the word "including," which is used to denote
something that is within a larger whole.”); City of Providence v. Barr, 954 F.3d 23, 41
(1st Cir. 2020) (“In both lay and legal usage, "include" generally signifies that what follows
is a subset of what comes.”).

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claim, action, cause of action, cost, damage, deficiency, Tax, penalty, fine or

expense” that appears at the outset of the definition remains intact. And that

language would appear to encompass AW’s claim for interest and costs regardless

of what is said in the parenthetical.15

      8.     Second, and more importantly, AW ignores the “and” that appears

within the parenthetical. The word "and" is conjunctive, in its commonly accepted

meaning, and its presence indicates an intent to join, not to exclude.16 As applied

here, the “and” in the parenthetical reveals that “Loss” “include[es]” the “interest,

penalties, attorneys’, accountants’ and other professionals’ fees and expenses, court

costs” recovered or incurred by a party, whether in the prosecution or defense of an

indemnifiable claim, “and” “all amounts paid in investigation, defense or settlement

15
   AW contends that this construction would render the “including” parenthetical mere
surplusage in violation of a settled canon of contract construction regularly applied in
Delaware. See JJS, Ltd. v. Steelpoint CP Hldgs., LLC, 2019 WL 5092896, at *6 (Del. Ch.
Oct. 11, 2019) (observing that “[c]ontractual interpretation operates under the assumption
that the parties never include superfluous verbiage in their agreement, and that each word
should be given meaning and effect by the court”) (quoting NAMA Hldgs., LLC v.
World Mkt. Ctr. Venture, LLC, 948 A.2d 411, 419 (Del. Ch. 2007), aff’d, 945 A.2d 594
(Del. 2008)). Not so. The parenthetical language adds clarity to the broad terms that
precede it; it does not, however, needlessly parrot those terms.
16
  See Concord Steel, Inc. v. Wilm. Steel Processing Co., Inc., 2008 WL 902406, at *7
(Del. Ch. Apr. 3, 2008); Silver Lake Office Plaza, LLC v. Lanard & Axilbund, Inc.,
2014 WL 595378, at*7 (Del. Super. Ct. Jan. 17, 2014).

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of any of the foregoing.”17 That is the only reasonable construction of the “Losses”

definition.

         9.    Given that the Court’s award of pre-judgment interest and court costs

over and above the $3.9 million cap is not consistent with the APA’s unambiguous

definition of “Losses,” the award reflects a “misapprehension of the facts” that

affected the outcome the case.18 The Motion, therefore, must be GRANTED. The

Court’s final judgment will not include an award of pre-judgment interest or court

costs as AW’s proven damages have consumed the $3.9 million contractual cap.

         IT IS SO ORDERED.

                                                      /s/ Joseph R. Slights III
                                                Vice Chancellor Joseph R. Slights III

Dated: March 31, 2022

17
     APA § 1.1 (“Loss”).
18
     Those Certain Underwriters at Lloyd’s, London, 2008 WL 2133417, at *1.

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