Fulton Bank, N.A. v. River Rock, LLC

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
Fulton Banl<, N.A.,
Plaintiff,
V. C.A. No.: Nl7C-lZ-l()8 SKR
River Rock, LLC, Key Properties
Group, LLC, Country Life Hornes, Inc.,
Elrner G. Fannin, and Mary Ann Fannin,
Defendants.
ORDER DENYING APPLICATION
TO CERTIFY AN INTERLOCUTORY APPEAL
This 7th day of September, 2018, upon consideration of Defendants’
Applicationl under Supreme Court Rule 42 for an order certifying an interlocutory
appeal from this Court’s Order, issued on July 19, 2018,2 denying Defendants’
Motion to Amend Answer to Assert Counterclaims (the “Application”), and
Plaintist Opposition thereto3, it appears to the Court that:
l. Plaintiff Fulton Bank, N.A. (“Plaintifi”) filed the instant action against
Defendants River Rock, LLC, et al. (“Defendants”), to recover amounts allegedly
owed on Comniercial Loan No. XxXXX67-9()Ol (the “Account”). Six months after
1 Defendants’ Application for Certification of Interlocutory Appeal (Trans. ID. 623 77261).
2‘See July 19, 2018 Judicial Action Form (Trans. ID. 62257099). The Court did not issue a Written
order, but issued its ruling orally at the hearing See Transcript of July 19, 2018 Hearing (Trans.
ID. 62290338).
3 Trans. ID. XX-XXXXXXX. -' \“'
they filed their Answer, Defendants moved to amend the Answer to assert
counterclaims against Plaintiff (“Motion to Assert Counterclaims”). In the proposed
counterclaims, Defendants sought to recover alleged overpayments made by them
on the Account. They contended that the overpayments were caused by Plaintiff's
mismanagement of the Account.
2. On July 19, 2018, the Court denied Defendants’ Motion to Assert
Counterclaims and found that Defendants’ prior knowledge of the alleged
overpayments precluded them from asserting the proposed compulsory
counterclaims by amendment (“July 19 Order”). Defendants then filed a Motion for
Reargument, which the Court also denied. 4 On August 23, 2018, Defendants filed
this Application for certification of an interlocutory appeal of the July 19 Order
pursuant to Supreme Court Rule 42 (“Rule 42”).
3. In considering whether to certify an interlocutory appeal under Rule 42,
the Court must: (1) determine that the order to be certified for appeal “decides a
substantial issue of material importance that merits appellate review before a final
judgment;”5 (2) decide whether to certify via consideration of the eight factors listed
in Rule 42(b)(iii);6 (3) consider the Court’s own assessment of the most efficient and
4 For a more detailed factual and procedural background surrounding Defendants’ Motion to
Amend, see the Court’s August 13, 2018 Memorandum Order denying Defendants’ Motion for
Reargument. Trans. ID. 62340583.
5 Del. Supr. Ct. R. 42(b)(i).
6 The eight Rule 42(b)(iii) factors are:
just Schedule to resolve the case;7 and (4) identify whether and why the likely
benefits of interlocutory review outweigh the probable costs, such that interlocutory
review is in the interests of justice.8
4. Defendants maintain that their Application meets the criteria set forth in
Rules 42(b)(i) and 42(b)(iii)(H). The Court must first determine whether the July
19 Order decided a substantial issue of this case. To meet the “substantial issue of
material importance” prong under Rule 42(b)(i), the question decided must go to the
merits of the case, and not to collateral matters.9 The Court agrees with Defendants
that the proposed counterclaims, which concern the ultimate balance on the Account,
(A) The interlocutory order involves a question of law resolved for the first time in this
State;
(B) The decisions of the trial courts are conflicting upon the question of law;
(C) The question of law relates to the constitutionality, construction, or application of a
statute of this State, which has not been, but should be, settled by this Court in advance of
an appeal from a final order;
(D) The interlocutory order has sustained the controverted jurisdiction of the trial court;
(E) The interlocutory order has reversed or set aside a prior decision of the trial court, a
jury, or an administrative agency from which an appeal was taken to the trial court which
had decided a significant issue and a review of the interlocutory order may terminate the
litigation, substantially reduce further litigation, or otherwise serve considerations of
justice;
(F) The interlocutory order has vacated or opened a judgment of the trial court;
(G) Review of the interlocutory order may terminate the litigation; or
(H) Review of the interlocutory order may serve considerations of justice.
7 Id.
8 Ia'. Those “probable costs” are informed, in part, by Rule 42(b)(ii), i.e., interlocutory appeals
“disrupt the normal procession of litigation, cause delay, and can threaten to exhaust scarce party
and judicial resources. ” Del. Supr. Ct. R. 42(b)(ii).
9 Almah LLC v. Lexington Ins. Co., 2016 WL 3521880, at *2 (Del. Super. Jun. 20, 2016) (internal
citations oinitted).
relate to the merits of this case. So, by denying Defendants’ request for leave to
assert the proposed counterclaims, the July 19 Order decided a substantial issue.
5. However, this Application does not otherwise meet the standards for
certification Among the eight Rule 42(b)(iii) factors, Defendants rely solely on
42(b)(iii)(H), i.e., the interlocutory review may serve considerations of justice.
Defendants repeated the same arguments they had made numerous times in arguing
their Motion to Assert Counterclaims and Motion for Reargument, that they did not
become aware of the substance of those compulsory counterclaims until after they
filed the Answer. But the Court has pointed out that Defendants’ contentions are
belied by their own pleadings filed in other cases.]O Defendants have failed to refute
this finding in the Application, nor have they shown that the requested interlocutory
appeal would serve considerations of justice on any other grounds. Hence,
Defendants fail to meet Rule 42(b)(iii)(H). The other Rule 42(b)(iii) factors are not
applicable to this case.
6. lt is well~established that interlocutory appeals are not routine, but rather
appropriate only in “exceptional” circumstancesll When the Court denied
Defendants’ Motion to Assert Counterclaims, it did not resolve any novel or
exceptional issues. It simply applied Superior Court Civil Rules 13(f) and 15 as they
10 See August 13, 2018 Memorandum Order, at 3-4, 6.
ll Del. Supr. Ct. R. 42(b)(ii).
4
are customarily and routinely construed. Hence, the Court does not believe
certification would promote the most efficient and just schedule to resolve the case.
Nor will the likely benefits of interlocutory review outweigh the probable costs. The
Court finds, therefore, that Defendants have failed to meet the strict standards for
certification under Rule 42.
For the foregoing reasons, Defendants’ Application to Certify an Interlocutory
Appeal from the Court’s July 19, 2018 Order is DENIED.
1T Is so oRi)EREi). (
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