The Marilyn Abrams Living Trust v. Pope Investments LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
THE MARILYN ABRAMS LIVING TRUST, )
)
Plaintiff, )
)
v. ) C.A. No. 12829-VCL
)
POPE INVESTMENTS LLC, POPE )
INVESTMENTS II, LLC, and CHINA ALARM )
HOLDINGS ACQUISITION LLC, )
)
Defendants. )
OPINION
Date Submitted: May 16, 2018
Date Decided: May 29, 2018
Thomas E. Hanson, Jr., BARNES & THORNBURG LLP, Wilmington, Delaware; Jeffrey
R. Blackwood, BRADLEY ARANT BOULT CUMMINGS LLP, Jackson, Mississippi;
Attorneys for Plaintiff.
Jonathan M. Stemerman, ELLIOTT GREENLEAF, P.C.; Attorney for Defendants.
LASTER, V.C.
The Marilyn Abrams Living Trust (the “Trust”) sought books and records from the
defendant entities (the “Companies”). The Trust made multiple requests for information,
but the Companies denied each request in its entirety. The Trust filed this action and
prevailed at trial. In addition to ruling in the Trust’s favor on the merits,1 my post-trial
decision found that the Companies had raised bad-faith arguments to contest the Trust’s
clearly established right to information, thus warranting an award of expenses under the
bad-faith exception to the American Rule.2
1
See Dkt. 38.
2
See Dkt. 38 at 14-16. This decision uses the term “expenses” to encompass both
attorneys’ fees and amounts paid out of pocket to third parties, which are sometimes
colloquially called “expenses.” Although the terms are often used interchangeably and
without precision, the law generally distinguishes among costs, fees, and expenses. See 10
Charles Alan Wright et al., Federal Practice and Procedure § 2666 (2014). “Costs” refers
to “taxable costs under Rule 54(d) . . . and represents those expenses, including, for
example, court fees, that a court will assess against a litigant.” Id.; accord Scion
Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund (Scion II), 68
A.3d 665, 686-88 (Del. 2013) (discussing 10 Del. C. § 5106). “Fees” refers to “those
amounts paid to the court or one of its officers for particular charges that typically are
delineated by statute,” such as “docket fees, clerk’s and marshal’s charges, and witness’
fees.” Wright et al., supra, § 2666. “Expenses” encompasses “all the expenditures actually
made by a litigant in connection with the action,” including attorneys’ fees and out-of-
pocket expenses paid to third parties. Id. The Delaware General Corporation Law likewise
uses “expenses” to refer broadly to all of the expenditures actually incurred by a litigant in
connection with the action, including attorneys’ fees. See, e.g., 8 Del. C. § 145(a)-(c);
Meyers v. Quiz-DIA LLC, 2018 WL 1363307, at *1 n.3 (Del. Ch. Mar. 16, 2018).
1
After the Companies pursued a motion for reargument, which was denied, the
parties conferred regarding the amount of the award. They could not agree, so the Trust
moved to quantify it. I granted the Trust a total award of $317,717.20.3
The Companies appealed, challenging both the outcome on the merits and the award
of expenses. The Delaware Supreme Court affirmed.4
The Trust has now moved to recover additional expenses. The Trust seeks a total of
$94,583.58, comprising (i) $65,574.78 incurred successfully defending the appeal and (ii)
$29,008.80 incurred at the trial level that the Trust had not been able to submit as part of
its previous application. The Companies oppose the motion in its entirety.
Whether the Trust can recover these categories of expenses at this time appears to
present issues of first impression under Delaware law. This decision concludes that when
a trial court has awarded a party expenses under the bad-faith exception to the American
Rule, and that party subsequently defends the trial court’s ruling successfully on appeal,
the trial court lacks authority after the appeal to award the expenses that the party incurred
defending the appeal. This decision similarly concludes that when a trial court has awarded
a party expenses under the bad-faith exception to the American Rule, and the litigation runs
its course at the trial level, resulting in a judgment that is final for purposes of appeal, then
that party cannot subsequently ask the trial court for a supplemental award if it later realizes
3
See Dkt. 57.
4
See Pope Invs. LLC v. Marilyn Abrams Living Tr., 177 A.3d 69, 2017 WL 6398168(Del. Dec. 15, 2017) (TABLE).
2
that it left certain expenses out of its previous request or determines that it subsequently
incurred additional amounts at the trial level. The Trust’s application is therefore denied.
I. EXPENSES INCURRED ON APPEAL
The Trust seeks in its application to recover expenses incurred defending the
Companies’ appeal. As the Trust sees it, the appeal was frivolous and a continuation of the
Companies’ bad-faith resistance to the Trust’s requests for books and records.
In my view, a trial court lacks authority to award expenses incurred on appeal on
the theory that the appeal was frivolous, absent some direction by the Delaware Supreme
Court to undertake that task. Supreme Court Rule 20(f) recognizes that “[t]he Court may
in any case involving a frivolous appeal, enter a special order assessing costs . . . as justice
may require.”5 The reference to “[t]he Court” is to the Delaware Supreme Court, not other
courts.
Trial courts in this state do not generally enforce the Delaware Supreme Court’s
rules. The only high court rules that this court typically applies are Supreme Court Rules
41 and 42, which address, respectively, the process by which a trial court certifies a
question of law for the Delaware Supreme Court’s consideration and the process by which
a trial court certifies an interlocutory appeal. Both rules speak directly to the trial court and
tell the trial court what to do. They do not imply that a trial court has jurisdiction to
5
Supr. Ct. R. 20(f).
3
administer other rules. If anything, the specific direction to the trial court in Rules 41 and
42 implies the opposite about other Supreme Court rules.
For the contrary proposition, the Trust relies on four cases: Gatz Properties, LLC v.
Auriga Capital Corp.,6 Scion Breckenridge Managing Member, LLC v. ASB Allegiance
Real Estate Fund,7 Wheeler v. Wheeler,8 and Council of Wilmington Condominium v.
Wilmington Avenue Associates, L.P.9 None of these decisions resemble the scenario
presented here.
In Gatz, the Delaware Supreme Court directed the trial court to consider an
application for expenses based on an allegedly frivolous appeal. The appellees in Gatz
moved before the Delaware Supreme Court to recover expenses under Supreme Court Rule
20(f). The Delaware Supreme Court noted that “[t]his Court has authority to award attorney
fees in appropriate cases.”10 But the high court chose to have the Court of Chancery address
the application in the first instance, explaining:
In this case, however, whether the appellants acted in bad faith
in pursuing this appeal is a question possibly requiring findings
of fact that are better addressed by the Court of Chancery. We,
therefore, deny the appellees’ motion without prejudice to their
6
59 A.3d 1223 (Del. 2012) (per curiam).
7
68 A.3d 665 (Del. 2013).
8
636 A.2d 888 (Del. 1993).
9
1999 WL 1223792 (Del. Super. Nov. 3, 1999).
10
Gatz, 59 A.3d at 1223.
4
right to pursue in the Court of Chancery their claim for attorney
fees on appeal.11
The superior tribunal in Gatz thus determined that the trial court should assess the Rule
20(f) application in the first instance because of likely factual issues. In my view, the Gatz
case does not suggest that a trial court always has the ability to consider a post-appeal
application for expenses based on a claim that the appeal was frivolous for purposes of
Rule 20(f). It rather illustrates the obvious fact that that the Delaware Supreme Court can
delegate to this court the task of taking the first cut at ruling on a Rule 20(f) application. In
this case, the Trust did not make a Rule 20(f) application before the Delaware Supreme
Court, and the Delaware Supreme Court did not instruct this court to take a first cut at
ruling on a Rule 20(f) application.
The Scion decision did not involve an allegedly frivolous appeal; it involved a
remand to consider an alternative basis for expense-shifting at the trial level. Originally, at
the trial level, the plaintiffs sought to recover their expenses under prevailing-party
provisions in the governing agreements, and I granted the application.12 On appeal, the
Delaware Supreme Court held that the prevailing-party provisions did not apply.13 The
high court then turned to the appellees’ argument that there were separate and independent
bases to affirm the fee award, either as an award pursuant to 10 Del. C. § 5106 or under the
11
Id. (footnote omitted).
12
See ASB Allegiance Real Estate Fund v. Scion Breckenridge Managing Member,
LLC (Scion I), 50 A.3d 434, 447 (Del. Ch. 2012).
13
Scion II, 68 A.3d at 683-84.
5
bad-faith exception to the American Rule. The Delaware Supreme Court rejected the
potential application of Section 5106,14 but left open the possibility of fee shifting under
the bad-faith exception. Rather than ruling in the first instance on that theory, the high court
remanded the case so that I could address it in the first instance.15
At the same time, the high court denied an “informal application for an award of
attorneys’ fees for this appeal,” made in a single sentence of the appellees’ answering
appellate brief.16 The high court reasoned that it would not rule on such a request “in the
absence of a formal motion made and presented in accordance with the Supreme Court
rules.”17 Scion thus does not imply that a trial court has the power to consider an application
for expenses based on an allegedly frivolous appeal. It rather indicates that the Delaware
courts will not entertain an application for expenses for an allegedly frivolous appeal
without a formal Rule 20(f) motion. In terms of the further proceedings on remand, the
Scion decision illustrates a trial court’s obligation to address an issue in accordance with
the Delaware Supreme Court’s mandate. In this case, the Trust did not make a Rule 20(f)
motion, and the Delaware Supreme Court did not remand the case with instructions for me
to consider any alternative bases for shifting expenses.
14
See id. at 683-88.
15
Id. at 688.
16
Id.17
Id. (internal quotation marks omitted) (quoting Gatz, 59 A.3d at 1222 n.96).
6
The Wheeler decision involved a prolonged divorce proceeding in the Family Court
that witnessed an improvident interlocutory appeal, a subsequent appeal from the final
judgment, and a further appeal after the Family Court ruled on a series of ancillary matters.
At each stage, the Family Court ruled in favor of the husband, and the wife appealed. The
Delaware Supreme Court dismissed the improper interlocutory appeal, affirmed the Family
Court’s ruling on the merits, and affirmed the Family Court’s rulings on the ancillary
matters. After each appeal, the Family Court granted the husband’s motion for the expenses
incurred litigating the appeal. After the final award, the wife appealed again, contending
that the Family Court lacked jurisdiction to award expenses for an appeal. The Delaware
Supreme Court affirmed all of the Family Court’s awards, citing a statute that gives the
Family Court authority to shift expenses from one party to another.18 The high court held
that “[t]he unambiguous language of the statute confers original jurisdiction upon the
Family Court to award attorney’s fees following an appeal to this Court” and that “[t]he
Family Court’s jurisdiction to award attorney’s fees following an appeal is not dependent
upon a remand from this Court.”19 In this case, there is no similar statute that would give
this court jurisdiction to award expenses following an appeal.
Last, in Wilmington Condominium, the Superior Court extended the logic of
Wheeler to a situation in which a party recovered expenses at the trial level pursuant to a
18
See Wheeler, 636 A.2d at 890 (citing 13 Del. C. § 1515).
19
Id.
7
prevailing-party provision in an agreement. After the party prevailed again on appeal, the
party returned to the trial court and sought additional expenses. The trial court concluded
that the contractual prevailing-party provision continued to operate and entitled the party
to recover expenses for prevailing on appeal.20 In this case, the Trust has not cited a
prevailing-party provision that could operate to the same effect.
None of the Trust’s cases support the proposition that this court has inherent
authority to entertain an application to recover expenses for a frivolous appeal. The cases
instead suggest that unless a party moves for expenses pursuant to Rule 20(f), and unless
the Delaware Supreme Court instructs the trial court to address the motion in the first
instance, the trial court lacks jurisdiction to consider the application. A trial court may,
however, award expenses if the party seeking them has an independent right of recovery,
such as pursuant to a statute (Wheeler) or a contractual prevailing-party provision
(Wilmington Condominium). The Trust invokes this court’s inherent authority, which is
unavailing.
Federal authority points to the same conclusion.21 In Cooter & Gell v. Hartmarx
20
Wilmington Condo., 1999 WL 1223792, at *2; accord New Castle Auto Auction
& Consignments, Inc. v. Riley, 2017 WL 2676966, at *2 (Del. Com. Pl. Apr. 17, 2017).
21
See Plummer v. Sherman, 861 A.2d 1238, 1242 (Del. 2004) (“[T]he Delaware
Rules of Civil Procedure are patterned after the Federal Rules of Civil Procedure. We
therefore find certain federal cases appropriate for determining the proper interpretation of
the Delaware Rules of Civil Procedure.”).
8
Corp.,22 the United States Supreme Court considered whether a district court that had
awarded sanctions against a defendant for asserting a counterclaim that violated Rule 11
of the Federal Rules of Civil Procedure could grant the injured plaintiff the additional
expenses that the plaintiff incurred defending the award on appeal. The Court held that the
district court lacked the necessary authority because Rule 11 applied only to trial court
proceedings, not to appeals, and that “[i]f the appeal of a Rule 11 sanction is itself frivolous,
Rule 38 gives appellate courts ample authority to award expenses.”23 Rule 38 of the Federal
Rules of Appellate Procedure addresses awards of expenses for frivolous appeals in a
manner analogous to Delaware Supreme Court Rule 20(f). The highest court in the land
did not view the district court as having independent authority to administer Rule 38.
The Cooter & Gell decision also considered and rejected a related theory under
which one line of decisions from the United States Courts of Appeals had awarded
expenses that a party incurred successfully defending a Rule 11 sanction on appeal. Those
decisions held that the party incurred the expenses on appeal because of the sanctioned
pleading; hence the injured party should be able to recover those expenses and be made
whole for the sanctioned conduct.24 The United States Supreme Court disagreed, endorsing
instead the view of other circuits and holding that “[i]f the district court imposes Rule 11
22
496 U.S. 384 (1990).
23
Id. at 407.
24
See id. at 406 (describing decisions issued by the United States Courts of Appeals
for the First and Seventh Circuits).
9
sanctions on the plaintiff, and the plaintiff appeals, the expenses incurred in defending the
award on appeal are directly caused by the district court’s sanction and the appeal of that
sanction, not by the plaintiff’s initial filing in district court.”25 The highest court in the land
observed that this outcome “accords with the policy of not discouraging meritorious
appeals” and also would help avoid “the undesirable effect of encouraging additional
satellite litigation.”26 The Court recognized that its holding meant that a litigant who
benefited from a Rule 11 award would have to spend its own money to defend the award,
but viewed that outcome as “a natural concomitant of the American Rule.”27
The Cooter & Gell decision is not binding as to matters of Delaware law.
Nevertheless, I find its reasoning persuasive, both for sanctions awarded under Rule 11 and
for awards of expenses under the bad-faith exception to the American Rule.
In my view, the Trust cannot recover the expenses it incurred litigating the
Companies’ appeal to the Delaware Supreme Court. That aspect of its motion is denied.
II. ADDITIONAL TRIAL-LEVEL EXPENSES
The Trust’s application also seeks to recover additional expenses incurred at the trial
level before the appeal. The Trust either was billed for the pertinent amounts after it filed
its motion or incurred the amounts after I quantified the award.
25
Id. (describing decisions issued by the United States Courts of Appeals for the
Fourth and Ninth Circuits).
26
Id. at 408.
27
Id.10
In my view, a trial court lacks authority to award additional expenses under the bad-
faith exception to the American Rule after entering a judgment that has become final for
purposes of appeal. This is particularly true after the appeal has concluded, resulting in the
final disposition of the case.
Since 1991, the Delaware Supreme Court has held that a final order remains
interlocutory until any outstanding applications for expenses has been adjudicated.28 A trial
court therefore cannot defer ruling on an application for expenses until after the merits
appeal is completed, unless the trial court first certifies its merits ruling as interlocutory or
as a partial final judgment pursuant to Court of Chancery Rule 54(b).29 In the ensuing
appeal from a final order, the Delaware Supreme Court can review both the merits and the
28
See Emerald P’rs v. Berlin, 811 A.2d 788, 790-91 (Del. 2001) (“This Court has
consistently held, and recently reaffirmed, that a judgment on the merits is not final until
an outstanding application for an award of attorney’s fees has been decided.”); accord
Lipson v. Lipson, 799 A.2d 345, 348 (Del. 2001); Gaffin v. Teledyne, Inc., 602 A.2d 1081,
1991 WL 181488, at *1 (Del. 1991) (TABLE); Moskowitz v. Moskowitz, 588 A.2d 1142,
1991 WL 32164, at *1 (Del. 1991) (TABLE). Before these decisions, the Court of
Chancery had on occasion deferred considering an application for fees and expenses until
after the outcome of the appeal on the merits, resulting in two potential appeals. See, e.g.,
Campbell v. Caravel Acad., Inc., 1989 WL 25804, *1 (Del. Ch. Mar. 16, 1989) (resolving
“the issue of attorney fees and costs” following the Delaware Supreme Court’s affirmance
of the decision resolving the merits because “[c]osts and attorney fees are best addressed
after the appellate process is completed”).
29
See In re Del Monte Foods Co. S’holders Litig., 2011 WL 2535256, at *7 n.2
(Del. Ch. June 27, 2011).
11
award of expenses, as it did here, and can pass on both the propriety of the award and the
amount.30
To my mind, this legal framework counsels against permitting subsequent
applications for additional expenses. For one, the subsequent application is inconsistent
with the earlier final order being final. For another, the possibility of a follow-on
application at the trial level undermines the Delaware Supreme Court’s ability to review
the amount of the award of expenses, because the award could increase later. One answer
to that problem might be to permit a second appeal after any additional award, but that
solution would result in piecemeal appeals, which is contrary to Delaware Supreme Court
policy.31 The high court’s requirement that applications for expenses be addressed before
an order becomes final for purposes of appeal appears designed to minimize the potential
30
See, e.g., RBC Capital Mkts., LLC v. Jarvis, 129 A.3d 816, 876-79 (Del. 2015);
Biolase, Inc. v. Oracle P’rs, L.P., 97 A.3d 1029, 1036 (Del. 2014); Crombie v. Paron
Capital Mgmt., LLC, 62 A.3d 1223, 2013 WL 1087643, at *1 (Del. 2013) (TABLE); SIGA
Techs., Inc. v. PharmAthene, Inc., 67 A.3d 330, 352-53 (Del. 2013); Black v. Staffieri, 2013
WL 1045221, at *1 (Del. 2013) (TABLE); Ams. Mining Corp. v. Theriault, 51 A.3d 1213,
1252-62 (Del. 2012); Reserves Dev. LLC v. Crystal Props., LLC, 986 A.2d 362, 369 (Del.
2009); Brown v. Lacey, 670 A.2d 1336, 1995 WL 715633, at *2 (Del. Oct. 30, 1995)
(TABLE).
31
See Hill Int’l, Inc. v. Opportunity P’rs L.P., 119 A.3d 30, 36-37 (Del. 2015)
(discussing “our long established policy against piecemeal appeals” and “reiterat[ing] our
policy against piecemeal appeals”); Tyson Foods, Inc. v. Aetos Corp., 809 A.2d 575, 580
(Del. 2002) (“The policy underlying the final judgment rule is one of efficient use of
judicial resources through disposition as a whole, rather than piecemeal.”); see also Supr.
Ct. R. 42(b)(ii) (“Interlocutory appeals should be exceptional, not routine, because they
disrupt the normal procession of litigation, cause delay, and can threaten to exhaust scare
party and judicial resources.”).
12
for multiple appeals in the same case, with one appeal from the merits and another from
the award of expenses. Permitting a later application for additional expenses would
reintroduce this possibility.
As a general rule, the federal courts take a different approach to order finality by
treating a trial court decision on the merits as final for purposes of appeal even if a party
may file (or has filed) an application for expenses. 32 When the application involves a
motion for Rule 11 sanctions, however, the United State Court of Appeals for the Third
Circuit has adopted a supervisory rule requiring that the Rule 11 motion be adjudicated
before the judgment becomes final.33 The court reasoned that “[s]wift disposition of a Rule
11 motion is essential so that any ensuing challenge to it might be included with the appeal
on the merits.”34 Although other federal courts have taken a different approach,35 the Third
32
Fed. R. Civ. P. 54 advisory committee’s notes to 1993 amendment (“Filing a
motion for fees under this subdivision does not affect the finality or the appealability of a
judgment, though revised Rule 58 provides a mechanism by which prior to appeal the court
can suspend the finality to resolve a motion for fees. If an appeal on the merits of the case
is taken, the court may rule on the claim for fees, may defer its ruling on the motion, or
may deny the motion without prejudice . . . [until] after the appeal has been resolved.”).
33
See Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 99 (3d Cir. 1988).
34
Id.35
See, e.g., Cmty. Elec. Serv. of L.A., Inc. v. Nat’l Elec. Contractors Ass’n, Inc., 869
F.2d 1235, 1242 (9th Cir. 1989) (declining to follow Lingle and permitting filing of Rule
11 application after entry of final order), abrogated on other grounds by Townsend v.
Holman Consulting Corp., 929 F.2d 1358 (9th Cir. 1990). The Third Circuit has not
extended its supervisory rule to applications under 28 U.S.C. § 1927, instead permitting a
Section 1927 application to be filed within a reasonable time after judgment has been
entered. In re Schaefer Salt Recovery, Inc., 542 F.3d 90, 101-02 (3d Cir. 2008); accord
Steinert v. Winn Gp., Inc., 440 F.3d 1214, 1223 (10th Cir. 2006). Section 1927 provides as
13
Circuit’s supervisory rule enforces an appellate regime for Rule 11 sanctions that resembles
Delaware’s. That policy choice reinforces my view that the amount awarded under the bad-
faith exception to the American Rule should be determined before an order becomes final
for purposes of appeal so that the appellate tribunal, here the Delaware Supreme Court, can
pass upon both the legitimacy of the award and the amount.
When a party seeks to recover expenses on a basis other than Rule 11, the Federal
Rules of Civil Procedure provide that the party seeking expenses must file a motion to that
effect within fourteen days after the judgment is entered, unless a statute or court order
establishes a different framework.36 The notes of the Advisory Committee suggest several
purposes for the short filing period. One is to ensure “that the opposing party is informed
of the claim before the time for appeal has elapsed.”37 Another is to afford “an opportunity
for the trial court to resolve fee disputes shortly after trial, while the services performed are
freshly in mind.”38 The short time period “also enables the court in appropriate
follows: “Any attorney or other person admitted to conduct cases in any court of the United
States or any Territory thereof who so multiplies the proceedings in any case unreasonably
and vexatiously may be required by the court to satisfy personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of such conduct.” 28 U.S.C. §
1927.
36
Fed. R. Civ. P. 54(d)(2)(B)(i). For example, the Equal Access to Justice Act
creates a statutory scheme for filing fee petitions. See Scafar Contr., Inc. v. Sec’y of Labor,
325 F.3d 422 (3d Cir. 2003).
37
Fed. R. Civ. P. 54 advisory committee’s notes to 1993 amendment.
38
Id.14
circumstances to make its ruling on a fee request in time for any appellate review of a
dispute over fees to proceed at the same time as review on the merits of the case.”39
These policy interests apply equally to the Delaware courts, but must be evaluated
within a regime in which the Delaware Supreme Court has held that an order is not final
until the trial court has ruled on any fee application. In my view, for purposes of Delaware
law, these policy interests counsel in favor of not entertaining further applications for
expenses after an order has become final. First, the federal policy interest in facilitating the
possibility of a single, comprehensive appeal dovetails with the Delaware Supreme Court’s
preference for unitary appeals. Second, the federal policy interest in giving a party notice
of the expense application before that party must decide whether to appeal translates readily
to the Delaware system. Although it did not matter in this case, a party might well take into
account its liability for expenses when deciding whether or not to appeal. A party that
chooses to forgo an appeal should not be exposed to a later application that would
significantly increase its liability. Third, although the federal concern about promoting
prompt review strikes me as a secondary consideration, it is nevertheless relevant. A post-
final-order application, particularly one filed after an appeal is over, may arrive after the
trial court’s recollection of the proceedings has dimmed. While the trial court could refresh
39
Id.15
its recollection about the case, that step comes at a cost of judicial resources that could be
expended on other matters.40
Conversely, limiting a party to the amount of the award that it obtains before the
appeal has the salutary effect of incentivizing counsel to bill their time, secure invoices
from third-party suppliers, and otherwise bring the case to a conclusion. If a party needs
more time before filing an application, it can request it.
Inevitably, there will be some frictional costs and slack in the system, and that will
translate into a party bearing some portion of trial-level expenses that it otherwise might
have recovered. No system will be perfect. In my view, a framework that limits a party to
the expenses it sought and was awarded under the bad-faith exception to the American
Rule before the final judgment was rendered results in a more efficient litigation regime.
This decision need not address whether the same outcome would apply to a follow-
on application for costs. The Delaware Supreme Court has held that a pending application
for costs does not undermine the finality of a judgment, rendering that aspect of the analysis
40
Cf. Blue Hen Mechanical, Inc. v. Christian Brothers Risk Pooling Trust, 117 A.3d
549, 550 (Del. 2015) (declining to entertain cause of action for malicious prosecution for
an array of policy reasons, including that adjudicating a second lawsuit, after the entry of
final judgment in the first, would result in “the least efficient and least just approach to
addressing alleged bad faith conduct” because it would “encourage litigants feeling
victimized by undignified litigation conduct to file a new suit, likely before anew judge,”
and that “even if the same judge who heard the original litigation that was supposedly
tainted by malice heard the second suit, she would need to revive her memory and
knowledge of the record at that later date”).
16
inapplicable.41 Nor would the same outcome necessarily hold for a follow-on application
for expenses under a statute or contract that provides for recovery. Delaware precedent
permits post-remand applications to recover expenses incurred on appeal under statutory
or contractual prevailing-party provisions, which suggests a different calculus.42 In this
case, the Trust recovered expenses under the bad-faith exception to the American Rule,
and this decision is limited to that scenario.
In my view, the Trust cannot recover additional expenses it incurred at the trial level
before its appeal to the Delaware Supreme Court. That aspect of its motion is also denied.
41
See Emerald P’rs, 811 A.2d at 791.
42
See Wheeler, 636 A.2d at 890; Wilmington Condo., 1999 WL 1223792, at *2.
17