AM General Holdings LLC. v. The Renco Group, Inc. -and- The Renco Group, Inc. v. MacAndrews AMG Holdings LLC ( 2016 )

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: September 20, 2016
Date Decided: November 10, 2016
Stephen P. Lamb, Esquire Kevin G. Abrams, Esquire
Meghan M. Dougherty, Esquire J. Peter Shindel, Jr., Esquire
Paul, Weiss, Rifkind, Wharton Abrams & Bayliss LLP
& Garrison LLP 20 Montchanin Road, Suite 200
500 Delaware Avenue, Suite 200 Wilmington, DE 19807
Wilmington, DE 19801
Thad J. Bracegirdle, Esquire Joel Friedlander, Esquire
Wilks, Lukoff & Bracegirdle, LLC Friedlander & Gorris, P.A.
4250 Lancaster Pike, Suite 200 1201 N. Market Street, Suite 2200
Wilmington, DE 19805 Wilmington, DE 19801
Re: AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
Dear Counsel:
The Court issued its Memorandum Opinion granting MacAndrews AMG
Holdings LLC’s (“MacAndrews AMG”) motion for partial summary judgment on
August 22, 2016. In doing so, the Court determined that certain breach of contract
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 2
claims asserted by the Renco Group, Inc. (“Renco”) against MacAndrews AMG
were time barred. Renco did not move for reargument under Court of Chancery
Rule 59(f). Instead, on September 6, 2016, fifteen days after the Court issued the
Memorandum Opinion, Renco filed a Motion to Alter, Amend or Revise the
Court’s Order Granting Partial Summary Judgment (“the Motion”). In the Motion,
Renco argues that the Court’s decision “was based on . . . fundamental legal
errors.”1 The Motion is denied for two independent reasons.
First, the Motion is procedurally improper. Rule 59(f) requires that motions
for reargument “be served and filed within 5 days after the filing of the Court’s
opinion.” For reasons it has elected not to explain or justify, Renco chose not to
timely file a motion for reargument even though it clearly could and should have
done so as the proper means to bring the alleged “legal errors” to the Court’s
1
The Renco Group, Inc.’s Br. in Supp. of Its Mot. to Alter, Amend or Revise the Court’s
Order Granting Partial Summ. J. (“Renco Br.”) at 2.
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 3
attention.2 Renco cannot “circumvent” Rule 59(f)’s five-day deadline “by labeling
[its] motion as one to alter or amend the judgment[.]”3
Renco’s effort to style its time-barred motion for reargument as a motion to
alter or amend the Court’s “judgment” under Rule 59(e) fails for an additional, and
more fundamental, procedural reason. The Court has not yet entered a judgment.
The Memorandum Opinion is an interlocutory order that dismissed only a portion
of Renco’s breach of contract claims. Neither Rule 59(e) nor Rule 60(b) are proper
vehicles to seek reconsideration of an interlocutory order of the Court that has yet
to be entered as a judgment.4
2
See PNC Bank v. Marty’s Mobile Homes, Inc., 2001 WL 849866, at *1 (Del. Ch.
July 10, 2001) (“The Court will grant an applicant’s motion for reargument where it
appears that the ‘Court has overlooked a decision or principal of law that would have a
controlling effect or the Court has misapprehended the law or the facts so that the
outcome of the decision would be affected.”).
3
Nicholson v. Sullivan, 637 A.2d 828 (TABLE), 1993 WL 542297, at *1 (Del. Dec. 6,
1993).
4
See Cantor Fitzgerald, L.P. v. Cantor, 2001 WL 536911, at *2 (Del. Ch. May 11, 2001)
(noting that a motion to amend a judgment under Rule 59(e) or Rule 60(b) is not
procedurally proper when the Court has not yet issued a final order).
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 4
Renco’s untimely attempt to seek reargument of the Memorandum Opinion
is procedurally improper. For this reason alone, it must be denied.5
Second, the Motion is wrong on the merits. The Court concluded that
certain of Renco’s claims were time barred and that Renco’s efforts to invoke the
time of discovery rule or equitable tolling as a basis to avoid the statute of
limitations for breach of contract missed the mark. Renco argues that the Court
improperly imposed upon Renco a duty to inquire whether its business partner,
MacAndrews AMG, was complying with its contractual obligations, and also
improperly concluded that equitable tolling applied only in instances where a
fiduciary relationship existed between the contracting parties.6 Both arguments
mischaracterize the Court’s analyses and holdings.
5
See Pinkert v. Wion, 431 A.2d 1269 (Del. 1981) (motion for reargument must be filed
within five days of the issuance of the opinion or it is time barred).
6
Renco Br. at 2–3.
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 5
According to Renco, the Court denied Renco the opportunity to invoke the
time of discovery exception to the statute of limitations because Renco failed
affirmatively to inquire into or investigate MacAndrews AMG’s potential breaches
of contract even though the operative contract gave it rights to do so. Renco
argues that the Court needed to identify potential “red flags” or “signals” that
would have put Renco on inquiry notice of a potential breach before it could
determine as a matter of law that the time of discovery exception did not apply. 7
The argument is based on a flawed factual premise. As the Court made clear in the
Memorandum Opinion, the undisputed factual record did reveal “red flags” or
“signals” that MacAndrews AMG was charging to the GEP business ER&D costs
and expenses in a manner that Renco alleges breached the operative contract
between the parties.8 These facts, when coupled with the contractual rights Renco
bargained for to obtain direct access to MacAndrews AMG’s books and records,
7
Id. at 2.
8
See Am. Gen. Hldgs., LLC v. The Renco Gp., Inc., 2016 WL 4440476, at *4–5 n.32, 33,
34 & 35, 14–15 (Del. Ch. Aug. 22, 2016). The Court has adopted conventions utilized in
the Memorandum Opinion.
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 6
take this case outside of the limited realm of cases where Delaware courts will
excuse a plaintiff’s failure to timely pursue its legal remedies because its injuries
were inherently unknowable.
Renco also contends that the Court improperly determined that Renco could
not invoke the doctrine of equitable tolling because MacAndrews AMG owed no
fiduciary duties to Renco. According to Renco, the Court incorrectly concluded
that equitable tolling applies only in instances where the plaintiff in good faith
relied upon the faithful conduct of a fiduciary when, in fact, the doctrine also
applies to instances where the plaintiff relies in good faith upon the faithful
performance of its “contractual counterparty.”9
The Memorandum Opinion’s treatment of Renco’s equitable tolling
argument focused on the lack of a fiduciary relationship between Renco and
MacAndrews AMG because that is what Renco focused on in its opposition to
9
Renco Br. at 3.
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 7
MacAndrews AMG’s motion.10 Renco did not advance the argument it is making
now regarding the applicability of the equitable tolling doctrine to purely
contractual relationships when it initially opposed MacAndrews AMG’s motion for
partial summary judgment; indeed, the case Renco principally relies upon here to
support its argument, Coleman v. PricewaterhouseCoopers, LLC,11 appears
nowhere in its Opposition. In any event, having concluded that the alleged injury
was not inherently unknowable as a matter of undisputed fact, and that Renco was
not “blameslessly ignorant,” I remain satisfied that Renco cannot avail itself of
equitable tolling regardless of whether it bases its supposed reliance on a fiduciary
or contractual relationship with MacAndrews AMG.12
10
See The Renco Gp., Inc.’s Mem. of Law in Opp’n to MacAndrews AMG Hldgs. LLC’s
Mot. for Partial Summ. J. (“Opposition”), at 39 (“For example, ‘[u]nder the theory of
equitable tolling, the statute of limitations is tolled for claims of wrongful self-dealing . . .
where a plaintiff reasonably relies on the competence and good faith of a fiduciary.”).
11
854 A.2d 838 (Del. 2004). See Renco Br. at 24-25.
12
See Coleman, 854 A.2d at 842 (holding that “[i]gnorance of the cause of action will not
toll the statute, absent concealment or fraud, or unless the injury is inherently
unknowable and the claimant is blamelessly ignorant of the wrongful act and the injury
complained of.”).
AM General Holdings LLC v. The Renco Group, Inc.
C.A. No. 7639-VCS
The Renco Group, Inc. v. MacAndrews AMG Holdings LLC
C.A. No. 7668-VCS
November 10, 2016
Page 8
Based on the foregoing, the Motion is DENIED.
IT IS SO ORDERED.
Very truly yours,
/s/ Joseph R. Slights III