Court Opinion

ID: 4532151
Source: CourtListenerOpinion
Date Created: 2020-05-06 20:03:04.257152+00
Date Added: 2024-06-11T12:31:45.541552
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

FIRMENICH INCORPORATED,       )
                              )
     Plaintiff,               )
                              ) C.A. No. N19C-01-320 MMJ [CCLD]
            v.                )
                              )
NATURAL FLAVORS, INC., HARRIS )
STEIN, HEBERT STEIN, JASON    )
STEIN, JOCELYN MANSHIP, and   )
JULIE WEISMAN,                )
                              )
     Defendants.              )

                                 Submitted : April 30, 2020
                                  Decided: May 6, 2020

                      ORDER DENYING LEAVE TO APPEAL
                       FROM INTERLOCUTORY ORDER

       (1)     Defendants have moved for an order certifying an interlocutory appeal

to the Delaware Supreme Court. The determination of whether to certify an

interlocutory appeal lies within the discretion of the Court and is analyzed under the

criteria set forth in Supreme Court Rule 42(b). 1 An interlocutory appeal will not be

certified unless the Court finds that its decision: (1) determines a substantial issue;

(2) establishes a legal right; and (3) satisfies one of the five criteria set forth in Rule

1
 See, e.g., Tortuga Cas. Co. v. Nat’l Fire Ins. Co. of Pittsburgh, 1991 WL 247813, at *2 (Del.);
State v. Superior Court, 141 A.2d 468, 471 (Del. 1968).

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42(b)(i)-(v). Under Rule 42(b)(i), the Court may look to the criteria established by

Rule 41.

      (2)    In this action, Plaintiff amended its Complaint to plead in the

alternative: (1) fraud in the inducement; (2) unjust enrichment; and (3) breach of

contract.   In addition to damages for breach of contract, Plaintiff now seeks

rescissory damages for its fraud claim

      (3)    By Opinion dated April 7, 2020, this Court held:

             Under the facts pled in this case, the Court finds that
             Firmenich’s Amended Complaint for rescissory damages
             sufficiently distinguishes the breach of contract claim
             from the fraudulent inducement claim. It does not appear
             to the Court to matter whether the difference in damages
             is based on the actual method of calculation, or whether
             the difference in actual recoverable damages constitutes a
             legal distinction. The Court finds that the fraud and
             contract claims alleged in this case may proceed in a
             parallel manner.
             THEREFORE, Natural Flavors’ Motion to Dismiss
             Count I – Fraud is hereby DENIED.
             IT IS SO ORDERED.

      (4)    Defendants' Application for Certification of an Interlocutory Appeal

argues that the "mere request" for rescissory damages in the Complaint is not enough

to overcome the bar against duplicative damages. Defendants submit that this is a

"novel question of law that not only relates to a substantial issue of material

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importance in this action, but also affects the fraud claims asserted by other litigants

across Delaware's dockets." Additionally, interlocutory review will significantly

affect the scope of liability and discovery and "set the framework" for a potential

settlement.

          (5)     Plaintiff opposes certification of the interlocutory appeal. Plaintiff

contends that the Court did not decide an issue of material importance or a novel

question of law. Further, permitting the fraud and contract claims to proceed in a

parallel manner will be consistent with considerations of justice, and dismissal of

the fraud claim will not establish a basis for termination of the litigation.

          (6)     The Court finds that the April 7, 2020 Opinion determines a substantial

issue and establishes a legal right.2 Additionally, the trial courts appear to be in

conflict on the question of law. 3 In its previous Opinion dated October 29, 2019,

the Court held that a fraud carve-out provision in the relevant asset purchase

agreement permits Plaintiff to pursue fraud claims and that the claims in the

Complaint withstood the bootstrapping bar.            However, the fraud claims were

dismissed pursuant to the duplicative damages bar. Plaintiff amended its Complaint

to add a request for rescissory damages. The Court examined the legal precedent on

2
    Supr. Ct. R. 42(b).
3
    Supr. Ct. R. 42(b)(iii)(B).
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the narrow issue of whether the addition of rescissory damages distinguishes fraud

damages from contract damages. The Court was unable to construct a seamless trail

of legal analysis on this issue. The Court held that the rescissory damages were

sufficiently distinguishable from the breach of contract damages so that the claims

could proceed in a parallel manner.

         (7)    Nevertheless, the Court cannot find that review of the interlocutory

order may terminate the litigation4 or otherwise serve consideration of justice 5.

Permitting Plaintiff's fraud and breach of contract claims to proceed in parallel is a

decision on a procedural issue for purposes of discovery and case management. It

appears to the Court that alleged breaches of the representations and warranties are

at the heart of both the contract and fraud claims. Therefore, there should be no

meaningful difference in discovery or the evidence presented at trial. Although

contract damages are capped by the agreement, Plaintiff disputes that dismissal of

fraud claim will form the basis for settlement of the litigation.

         THEREFORE, Defendants have failed to demonstrate that Delaware

Supreme Court Rule 42(b) requires that the Court exercise its discretion to certify

4
    Supr. Ct. R. 42(b)(iii)(G).
5
    Supr. Ct. R. 42(b)(iii)(H).
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interlocutory appeal. The Application for Certification of an Interlocutory Appeal

is hereby DENIED.

      IT IS SO ORDERED.

                                          Mary M. Johnston
                                     The Honorable Mary M. Johnston

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