Durham v. Grapetree LLC ( 2019 )

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: May 2, 2019
Date Decided: June 3, 2019
Andrew C. Durham, pro se John G. Harris, Esquire
4805 Randolph Drive Berger Harris LLP
Annandale, VA 22003 1105 N. Market Street, 11th Floor
Wilmington, DE 19801
Re: Durham v. Grapetree, LLC, C.A. No. 2018-0174-SG
Dear Counsel:
At the center of this litigation is a family LLC that holds but one asset, a piece
of rental property located in Saint Lucia. Four of the siblings, James, Jeff, Dee, and
Davis, Jr.,1 are manager-members, and the fifth, Plaintiff Andrew C. Durham, is a
member and not a manger. In 2018, Mr. Durham brought this litigation, his second
suit2 against Grapetree, LLC (“Grapetree”) to compel inspection of books and
records under Section 18-305 of the Delaware Limited Liability Company Act.
Myriad motions have been filed to date; for a more complete factual and procedural
history, I refer the interested reader to my January 31, 2019 Letter Opinion. 3
1
I use first names to refer to the Plaintiff’s siblings to avoid confusion; no disrespect is intended.
I refer to the Plaintiff as “Mr. Durham.”
2
In 2011, the LLC settled a books and records case filed by Mr. Durham and his brother, Davis,
Jr. Mr. Durham has since filed numerous other suits against his siblings and the LLC, all relating
to the LLC.
3
2019 WL 413589 (Del. Ch. Jan. 31, 2019).
On January 31, 2019, I issued a Letter Opinion, granting in part and denying
in part the Plaintiff’s books and records requests. At trial, Grapetree argued that
many of the items Mr. Durham sought to inspect had already been provided to him;
I made no findings as to the information already available to the Plaintiff. Instead, I
merely found that as an LLC member, Mr. Durham was entitled to access certain
categories of information, to the extent he was not already able to do so. Grapetree
sought attorney’s fees; I did not opine on attorney’s fees at that time. Instead, I noted
that “[i]f Grapetree, in light of my decision here, continues to seek fees, counsel
should so inform me, and I will address that request.” 4
On February 20, 2019, Grapetree filed a Motion for Attorney’s Fees and
Costs. The Plaintiff filed his Answer on March 12, 2019. Grapetree informed the
Court that it did not wish to file a reply, and the matter was submitted on May 2,
2019.
Grapetree cites to the LLC’s Operating Agreement as the basis for shifting
attorney’s fees. The Operating Agreement provides:
In the event that any Member (hereinafter, a “Claiming Member”)
asserts or initiates any action, suit or proceeding, whether of a civil or
criminal nature, against the Company and/or any Managing Member …
and the Claiming Member does not obtain a judgment on the merits that
substantially achieves, in substance and amount, the full remedy
sought, the Claiming Member shall be obligated to reimburse the
Company . . . for all fees, costs, and expense of every kind and
description (including, but not limited to, all reasonable attorneys’ fees
4
Id. at *5.
2
and other [] litigation expenses) that the [Company] may incur in
connection with such action, suit or proceeding. 5
Grapetree submits that the Operating Agreement warrants fee shifting because Mr.
Durham did not substantially achieve the result he sought in filing this action. Per
Grapetree, my January 31 Opinion granted only six out of Mr. Durham’s thirty-two
claims; Grapetree “successfully defended against over 80% of the Plantiff’s
inspection demands.”6
In his answering brief, Mr. Durham does not address the LLC’s Operating
Agreement. Instead, he opposes an award of attorney’s fees and costs on a variety
of other grounds: ongoing misappropriation within the LLC; the “fact” that
Grapetree is “in default on the Court’s 1/31/19 order;” that it is premature to consider
fee requests because the books and records “inquiries are far from over;” that there
are new books and records inquiries that remain unanswered; that Grapetree’s
calculation regarding which party primarily prevailed is flawed; that Grapetree “fails
to ‘count’ valuable production not requested;” that it is the quality, not the quantity,
of the granted requests that I should consider; that the playing field is not level, given
that Mr. Durham has chosen to proceed pro se; and that the LLC could have avoided
this expense by pursuing mediation or hiring a different lawyer. 7
5
Grapetree, LLC’s Trial Br. in Opp’n to Pl.’s Compl. to Compel Inspection of Books and Records,
Ex. C, at ¶ 14.
6
Def.’s Mot. for Partial Attorney’s Fees and Costs, ¶ 10.
7
See Pl.’s Andrew Durham’s Answering Br. to Def.’s Mot. for Partial Attorney’s Fees and Costs.
3
As I explained in my January 31, 2019 Letter Opinion, books and records
requests are summary actions. This litigation will soon be brought to a close; I have
already determined whether Mr. Durham is entitled to the books and records
inspection sought in his Complaint. Thus, contrary to Mr. Durham’s contentions,
now is the time to decide whether Grapetree is entitled to attorney’s fees. 8
Delaware law is contractarian in nature; parties are held to their bargains.
Here, the LLC agreement explicitly provides that where a member brings suit against
Grapetree and is not predominately successful, Grapetree is entitled to recover its
attorney’s fees and costs. Although Mr. Durham was successful on some of his
demands for inspection, the January 31, 2019 Opinion “denied the greater part of
Andrew’s requests, as unnecessary to a proper purpose or overbroad, or as not
seeking existing documents.”9 There is no ambiguity in the contract’s language,
which I assume was provided for just this situation: where one member of this family
LLC engages in litigation with the LLC, the bulk of which is unsupported,
unreasonable, or frivolous. Further, Mr. Durham’s choice to proceed pro se is not a
defense, and has in fact led to much inefficient litigation. The cost of that choice
8
Also on March 12, 2019, Mr. Durham filed a “Motion to Compel Books & Records Demand #2.”
He described it as “a new motion again intending to open the LLC’s books and records to
inspection.” As I explained in my January 31, 2019 Letter Opinion, the scope of books and records
actions is generally set by demand on the entity; and any resulting litigation is not in the nature of
an ongoing expedition, in the course of which a plaintiff may to continue to seek new categories
of information. I have already decided the books and records issue in this case. Accordingly, I
shall not consider Mr. Durham’s “Motion to Compel Books & Records Demand #2.”
9
2019 WL 413589, at *4.
4
should not fall on the LLC, under the terms of the LLC agreement. Accordingly,
Grapetree is entitled to its reasonable attorney’s fees and costs.
Grapetree has not submitted evidence supporting its fees and costs to date, nor
has it provided the Court with a monetary amount of the award it seeks. Grapetree
should submit such to the Court by June 14, 2019, supported by affidavit, along with
a proposed final order. Mr. Durham may submit comments on the fee request by
June 24, 2019. Once this issue is resolved, this case will be closed.
In conclusion, Grapetree is entitled to its reasonable attorney’s fees and costs,
in an amount that will be determined upon examination of relevant evidence, to be
provided by Grapetree. To be clear, the animus among the family factions here runs
both ways. A minority—nearly twenty percent10—of the Plaintiff’s requests were
successful. I am not shifting fees here under the bad faith exception to the American
Rule, but solely under the LLC agreement, to which each member of Grapetree is a
party. To the extent the foregoing requires an Order to take effect, IT IS SO
ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock II
10
This figure, meager though it is, overstates Mr. Durham’s successes; much of the material sought
in the “winning” twenty percent of claims appears to have been available to Mr. Durham before
trial.
5