Martin Floreani v. Flosports, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MARTIN FLOREANI, )
CHRISTINA FLOREANI, and )
CHARLENE FLOREANI, )
)
Plaintiffs, )
)
v. ) C. A. No. 2023-0684-LM
)
FLOSPORTS, INC., )
)
Defendant. )
ADDENDUM TO POST-TRIAL FINAL REPORT ADDRESSING
PLAINTIFFS’ REQUEST FOR DISCOVERY AND LEAVE TO FILE A
MOTION FOR ATTORNEYS’ FEES AND COSTS
WHEREAS:
A. On April 12, 2024, Plaintiffs filed a Notice of Exceptions to my Post-
Trial Final Report (the “Notice”), issued April 9, 2024.1
B. In the Notice, Plaintiffs’ state that they “take exception with the Report
not addressing Plaintiffs’ requests related to attorneys’ fees and discovery in advance
of a motion for attorneys’ fees.”2
C. On April 15, 2024, I filed a letter to counsel, staying the exceptions
pending my addendum report on the request.3
1
Docket Item (“D.I”) 59.
2
D. I. 60.
3
D. I. 62.
NOW, THEREFORE, IT IS HEREBY ORDERED, this 25th day of April,
2024, as follows:
1. The request is GRANTED in part and DENIED in part.
2. Delaware generally follows the American Rule that each party bears
their own fees and costs.4 An equitable exception permits fee shifting for bad faith
litigation tactics.5 Bad faith is applied in “extraordinary circumstances” applying
the “glaringly egregious standard” to a parties’ conduct when considering fee-
shifting.6 This court has found bad faith where the defendant’s conduct forced the
plaintiff to file suit to secure a clearly defined right.7 This court has also dictated
that “overly aggressive” litigation strategies which serve to obstruct a § 220
plaintiff's clear statutory rights may warrant fee shifting under the bad-faith
exception to the American Rule.8
3. In its pre-trial brief, Plaintiffs request discovery into bad faith and leave
to file a motion for attorneys’ fees. Specifically, Plaintiff seeks discovery of
Defendant’s communications regarding it’s “refusal to satisfy the Plaintiffs’ Section
4
McNeil v. McNeil, 798 A.2d 503, 514 (Del. 2002).
5
Rice v. Herrigan-Ferro, 2004 WL 1587563, at *1 (Del. Ch. July 12, 2004).
6
Pettry v. Gilead Scis., Inc., 2020 WL 6870461, at *29 (Del. Ch. Nov. 24, 2020), judgment
entered, (Del. Ch. 2020).
7
McGowan v. Empress Ent. Inc., 791 A.2d 1, 4 (Del. Ch. 2000).
8
Dearing v. Mixmax, Inc., 2023 WL 2632476, at *5 (Del.Ch. Mar. 23, 2023).
2
220 demands… .”9 Plaintiffs allege that Defendant has engaged in “overly
aggressive defense campaigns” with “massive resistance.”10 Plaintiff cites excessive
discovery in this action with sixty-seven individual document requests across two
sets of requests for production of documents, thirty-nine interrogatories across two
sets of interrogatories, two depositions; specific forensic email discovery requiring
twenty-four search terms totaling 131,637 emails; bad faith in opposing counsel’s
behavior during a plaintiff’s deposition; and a suspiciously timed grant of Plaintiff
Martin Floreani’s request to transfer his shares in FloSports from MMF (where he
was the principal and MMF was named in the original complaint), to his individual
name—the approval lead to an Amended Complaint which was ultimately
challenged.11
4. While the allegations may warrant a credible basis for fee shifting, I am
not going to allow additional discovery. The “glaringly egregious” standard for bad
faith contradicts the notion that Plaintiffs’ need discovery of Defendant’s internal
communications regarding its initial refusal of the demand, to support Plaintiff’s
motion for attorneys’ fees. Moreover, I find discovery has been sufficient to uncover
the needs of this summary proceeding.
9
D. I. 60.
10
Pl. Pre-trial Br. at 15 (D. I. 47).
11
Id. at 15-16.
3
5. Accordingly, Plaintiffs’ request for discovery into the Defendant’s
internal communications regarding the denial of the Section 220 demands is
DENIED. For reasons discussed above, fee shifting may be appropriate here.
Plaintiffs request for leave to file a motion for attorneys’ fees and costs is
GRANTED. Plaintiff is permitted to move for costs and attorneys’ fees within 30
days of the final report becoming an Order of the Court.
6. In light of the Defendant’s Notice of Exceptions to the Post-Trial Final
Report,12 the 30 days is stayed pending the final resolution of the Defendant’s
exceptions.
7. This is a final report. Exceptions may be taken within three business
days pursuant to Court of Chancery Rule 144 (d)(2).13
IT IS SO ORDERED.
/s/ Loren Mitchell
Loren Mitchell
Magistrate in Chancery
12
D.I. 61.
13
See Ct. Ch. R. 144(d)(2) (“In actions that are summary in nature or in which the Court
has ordered expedited proceedings, any party taking exception shall file a notice of
exceptions within three days of the date of the report.”).
4