Kolokotrones v. Ninja Metrics, Inc. ( 2017 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
417 S. State Street
JOSEPH R. SLIGHTS III Dover, Delaware 19901
VICE CHANCELLOR Telephone: (302) 739-4397
Facsimile: (302) 739-6179
Date Submitted: November 13, 2017
Date Decided: December 18, 2017
Megan Ward Cascio, Esquire Thad J. Bracegirdle, Esquire
Morris, Nichols, Arsht & Tunnell LLP Wilks, Lukoff & Bracegirdle, LLC
1201 North Market Street 4250 Lancaster Pike, Suite 200
Wilmington, DE 19801 Wilmington, DE 19805
Re: Kolokotrones v. Ninja Metrics, Inc.
C.A. No. 12413-VCS
Dear Counsel:
I have reviewed the parties’ submissions with respect to Defendant’s motion
to dismiss. After carefully considering the matter, I have determined that a hearing
on the motion will not be necessary. The motion to dismiss is denied, the motion
for reargument on Plaintiff’s motion for judgment on the pleadings is denied and I
will today enter an order implementing the October 11, 2016, bench ruling on the
motion for judgment on the pleadings.
Plaintiff, Mark Kolokotrones, filed his Verified Complaint on June 3, 2016,
in which he sought a declaration under 8 Del. C. § 145(c) that he was entitled to
Kolokotrones v. Ninja Metrics, Inc.
C.A. No. 12413-VCS
December 18, 2017
Page 2
advancement of his legal fees from Defendant, Ninja Metrics, Inc., in connection
with his defense of a cross-claim in an action pending in California, and “fees on
fees” in connection with his prosecution of this advancement action.1 On July 8,
2016, Plaintiff filed a motion for judgment on the pleadings. I heard that motion on
August 3, 2016.2 The parties requested, if possible, that I render my decision in
advance of formal settlement discussions that were to occur with regard to the
California action. To accommodate that request, I delivered my decision on
Plaintiff’s motion for judgment in a bench ruling on October 11, 2016.3 In that
ruling, I granted Plaintiff’s motion and awarded him advancement of his litigation
expenses as well as “fees on fees.”4 I directed the parties to confer and submit an
implementing order.5
1
Compl. ¶ 1.
2
DI 15.
3
DI 18, Kolokotrones v. Ninja Metrics, Inc., C.A. No. 12413-VCS (Del. Ch. Oct. 11, 2016)
(TRANSCRIPT) (hereinafter “Ninja Metrics”).
4
Id. at 22.
5
Id. at 23–24.
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C.A. No. 12413-VCS
December 18, 2017
Page 3
No such order was submitted.6 Instead, I received Defendant’s motion for
reargument on October 18, 2016, which Plaintiff opposed by brief filed on
October 20, 2016.7 Four days later, on October 24, 2016, before I could deliver my
decision on the motion for reargument, I received notice of Defendant’s filing for
bankruptcy and a corresponding stay of this matter pending the resolution of the
bankruptcy proceedings.8
Status reports supplied by the parties in August of this year, upon my request,
informed me that the bankruptcy was still pending and that Defendant had
voluntarily dismissed its cross-claim in the California proceedings.9 On October 13,
2017, I received notification from Plaintiff’s counsel that the bankruptcy court
granted relief from the automatic stay so that Plaintiff could “prosecute, to final
6
Plaintiff submitted a proposed order on October 14, 2016, informing me of the parties’
inability to join in an order. DI 19, 20. Defendant also submitted an order along with its
motion for reargument. DI 23.
7
DI 21, 25.
8
DI 27.
9
DI 29, 30.
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C.A. No. 12413-VCS
December 18, 2017
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judgment or other final resolution” the proceedings in this Court.10 On October 25,
2017, Defendant filed its motion to dismiss this matter on grounds of mootness.11
To bring about a “final resolution” of this matter, as contemplated by the
bankruptcy court in granting relief from the stay, I first address Defendant’s still
outstanding motion for reargument. That motion is denied. I was on the verge of
denying the motion at the time Defendant filed its notice of bankruptcy. The
arguments in the motion for reargument simply rehash those made in opposition to
the motion for judgment on the pleadings, and those arguments were addressed in
my October 11 bench ruling.12 Defendant has failed to demonstrate that I
10
DI 34 (Notice of Relief from Automatic Stay) (“Movant is granted relief from the
automatic stay under Bankruptcy Code Section 362(a)(1) to prosecute, to final judgment
or other final resolution including any appeals, the claims asserted in the case of Mark
Kolokotrones v. Ninja Metrics, Inc., C.A. No. 12413-VCS, Court of Chancery of the State
of Delaware. This Court shall retain jurisdiction to determine the allowance or
disallowance of the claims asserted by Mark Kolokotrones against Ninja Metrics, Inc.
under the Bankruptcy Code.”).
11
DI 41.
12
Preferred Invs., Inc. v. T & H Bail Bonds, 2013 WL 6123176, at *4 (Del. Ch. Nov. 21,
2013) (“[M]otions for reargument must be denied when a party merely restates its
prior arguments.”). Defendant raises the following arguments in its motion for reargument:
(1) that the well-pled facts in the pleadings before this Court, along with the facts pled in
support of the California cross-claim, support a finding that Plaintiff is seeking
advancement with unclean hands and (2) in the alternative, that the Court should preserve
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C.A. No. 12413-VCS
December 18, 2017
Page 5
misapprehended a material fact or misapplied the law and, therefore, has not justified
relief under Rule 59(f).13
With that outstanding motion resolved, I turn next to Defendant’s motion to
dismiss. That motion is also denied. In the motion to dismiss, Defendant argues
that this matter is moot because the underlying claim that gave rise to any
advancement right has since been dismissed, and any claim for fees that were
incurred in defense of that action must now be brought as an indemnification claim
in the bankruptcy court. Plaintiff’s argument, however, ignores two important facts:
First (and foremost), this matter was fully and finally decided on October 11, 2016,
with my rendering of a ruling granting Plaintiff’s motion for judgment.14 The only
act required to implement that order was the ministerial act of actually entering an
Defendant’s ability to scrutinize Plaintiff’s fee and expense submissions. DI 21. Those
arguments were raised in the briefing on the underlying motion and addressed in the
October 11 bench ruling. Def.’s Answering Br. in Opp’n to Pl.’s Mot. for J. on the
Pleadings 18–19, 20–22; Opening Br. in Supp. of Pl.’s Mot. for J. on the Pleadings 24–26;
Reply Br. in Further Supp. of Pl.’s Mot. for J. on the Pleadings 12–15; Ninja Metrics,
at 13–17, 19–21.
13
Adams v. Calvarese Farms Maintenance Corp., 2011 WL 383862, at *3 (Del. Ch.
Jan. 13, 2011).
14
Ninja Metrics, at 3.
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C.A. No. 12413-VCS
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implementing order. Defendant’s attempt to exploit his procedural machinations as
a means to prevent Plaintiff from receiving the benefit of the victory he earned on
October 11 finds no support in the law or in equity.15 Second, Plaintiff also earned
“fees on fees” in connection with his prosecution of his advancement right. The
dismissal of the California cross-claim cannot, under any view of the world, moot
that claim.
I can see no basis to allow Defendant to avoid a final determination of this
matter, and permit it to relitigate issues that the parties have fully litigated and I have
already decided, simply because the Court did not have time to enter an
15
See Underbrink v. Warrior Energy Servs. Corp., 2008 WL 2262316, at *15 (Del. Ch.
May 30, 2008) (“Although Warrior’s defenses and counterclaim are colorable, were I now
to deny Harrison and Underbrink’s advancement request because of their success in the
underlying litigation, I effectively would reward Warrior for pressing its counterclaim and
other defenses, which have drawn out this advancement action. It would be inequitable to
deny advancement to Harrison and Underbrink because they ultimately succeeded in
portions of the Texas Proceeding shortly before the conclusion of this advancement action.
This is especially true when the prolonged nature of this action is due, in part, to Warrior’s,
and not Plaintiffs’, litigation strategy.”); Infinity Inv’rs Ltd. v. Takefman, 2000 WL 130622,
at *5 (Del. Ch. Jan. 28, 2000), opinion clarified, 2000 WL 268302 (Del. Ch. Feb. 17, 2000)
(“A decision to dismiss this claim merely because the defendants purported to resign after
their removal, while allowing them to question the validity of the conversion and
subsequent election in this or another jurisdiction, would reward gamesmanship. As equity
looks to the intent rather than to the form, this Court should not permit parties to manipulate
procedural rules for the purpose of avoiding resolution on the merits.”).
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implementing order before a stay of the litigation was entered. Based on the
foregoing, I deny both the motion for reargument and the motion to dismiss. An
order implementing the final decision in this matter, as provided in my bench ruling
on October 11, 2016, is attached to this letter and will be entered on the docket today.
Very truly yours,
/s/ Joseph R. Slights III