Delaware Court of Chancery Clarifies Standards for Revision under Rule 59(e)

This case summary was prepared in substantial part by Matthew Arnold.

In The Renco Group, Inc. v. MacAndrews AMG Holdings LLC,[1] Renco filed a Motion to Alter, Amend or Revise pursuant to Del. Ct. Ch. R. 59(e), seeking revision of the Court of Chancery’s partial summary judgment dismissing certain of the Plaintiff’s breach of contract claims.  The Court of Chancery denied the motion both on the merits and because of improper procedure.
 
First, the Court denied the motion because it was improper procedurally.  Vice Chancellor Slights stated that Renco “clearly could and should have” filed a Rule 59(f) Motion for Reargument within five days after the Court’s opinion.  He further states that Renco “cannot circumvent Rule 59(f)’s deadline by labeling its motion as one to alter or amend the judgment.”  Additionally, Slights dismisses the motion because the Court has not entered a judgment, only partial summary judgment.  Rule 59(e) is not a proper vehicle to seek reconsideration of an interlocutory order without a judgment.  Since Renco did not file a Motion to Alter within five-days, and there is no judgment, it was improper procedurally.
 
Second, Vice Chancellor Slights dismissed the Motion on the merits.  Renco tried to argue that the Court improperly imposed upon Renco a duty to inquire whether MacAndrews was complying with contractual obligations and that equitable tolling applied only in instances where a fiduciary relationship existed between the parties.  Renco believed that the Court needed to identify red flags that would have put Renco on notice of potential breach before determining whether the time of discovery applied.  Vice Chancellor Slights rejected this argument because the Court did reveal red flags.  Therefore, the contractual rights Renco bargained for with MacAndrews coupled with the red flags should have been enough for Renco to access books and records.
 
In regards to equitable tolling, Renco argued that 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 plaintiff relies in good faith upon the faithful performance of its contractual counterparty.”  Vice Chancellor Slights, again, rejected this argument and said the court addressed this argument in their summary judgment ruling because Renco focused on the argument in opposition to the Defendant’s summary judgment motion.  Regardless, Vice Chancellor Slights stated that having concluded that the alleged injury was not inherently unknowable as a matter of undisputed fact, he remains satisfied that Renco cannot avail itself of equitable tolling (“ignorance of cause of action will not toll the statute, absent concealment of fraud, or unless the injury is inherently unknowable and the claimant is blamelessly ignorant of the wrongful act and the injury complained of”).[2]

Court of Chancery Rules 59(e) and (f) read as follows:

(e) Motion to alter or amend a judgment. -- A motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment.
(f) Rearguments. -- A motion for reargument setting forth briefly and distinctly the grounds therefor may be served and filed within 5 days after the filing of the Court's opinion or the receipt of the Court's decision. A copy of the motion shall also be delivered by the moving party to the Judge to whom the matter has been assigned. Within 5 days after service of the motion any opposing party may serve and file a short answer to each ground asserted in the motion and shall deliver a copy thereof to the Judge assigned.

 

 



[1] The Renco Group, Inc. v. MacAndrews AMG Holdings LLC, C.A. No. 7639-VCS (Nov. 10, 2016).
[2] Id. (citing Coleman v. PricewaterhouseCoopers, LLC, 854 A.2d 838, 842 (Del. 2004)).

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