Paul Elton, LLC v. Rommel Delaware, LLC et al.
C.A. No. 2019-0750-KSJM
COURT OF CHANCERY OF THE STATE OF DELAWARE
November 22, 2022
KATHALEEN ST. JUDE MCCORMICK, CHANCELLOR
LEONARD L. WILLIAMS JUSTICE CENTER, 500 N. KING STREET, SUITE 11400, WILMINGTON, DELAWARE 19801-3734
Megan Ix Brison
Pinckney, Weidinger, Urban & Joyce LLC
2 Mill Road, Suite 204
Wilmington, DE 19806
“J” Jackson Shrum
Jack Shrum, P.A.
919 N. Market Street, Suite 1410
Wilmington, DE 19801
Dear Counsel:
Defendants Rommel Delaware, LLC, Rommel Motorsports Delaware, Inc., and David Rommel (together, “Defendants“) have moved pursuant to Court of Chancery Rules
A dispute arose during the Appraisal Process. The Purchase Agreement provides that if the parties cannot agree on the value of the Additional Space after a sale, they shall each “select аn appraiser to complete an appraisal of the value of the lease of the Additional Space.”5 If the two appraisals are less than 5% divergent in value, “then the average of the two appraisals shall be the price.”6 If the two appraisals are more than 5% divergent, however, “then the two appraisers shall . . . select a third appraiser and the average of thе two closest appraisals shall be” the value of the Additional Space.7 The parties selected their respective appraisers and obtained appraisals, but the appraisаl were more than 5% divergent.8 Plaintiff‘s appraiser valued the Additional Space at $5.6 million,9 and Defendants’ appraiser valued the Additional Space at $1.74 million.10
Defendants’ appraiser relied instead on an August 9, 2010 plat of the property entitled “Paul Elton LLC, 2160 New Castle Avenue” showing “the majority of the property in support of the existing dealership building and its site improvements, with a” 1.25-acre “potential pad site” at the northeast corner.14 Defendаnts’ appraiser considered it “abundantly clear from the lease agreement language that the primary use of the property
Once the parties realized that the valuations were more than 5% divergent, they began negotiating a stipulation governing the process for engaging the third appraiser.17 The negotiations failed, and the parties filed competing motions for entry of a second оrder governing the appraisal process.18 Those cross-motions forced me to reevaluate the question of what constitutes Additional Space.
Defendants argued that the definition of Additional Space provided the third appraiser all necessary authority and guidance to complete the third appraisal, obviating the need for court intervention.19 Because Defendants’ argument spoke, in essence, to the subject-matter jurisdiction of this court to interpret the meaning of Additional Space, I
I then analyzed Plaintiff‘s argument that the size of the Additional Space had already been revealed through Plaintiff‘s motion for summаry judgment. Ruling in Plaintiff‘s favor, I held that the Additional Space referred to the 2.5 acres as represented by Plaintiff.21 I then gave Defendants two options.22 One was to double Defendants’ appraised value for the 1.25 acres. The other was to allow Dеfendants to commission a new appraisal of the 2.5 acres. I asked Defendants to report on their position “within five days.”23
On the sixth business day after I issued the August 3, 2022 Letter Opinion, Defendants filed their Motions pursuant to Court of Chancery Rules
Where a court has not issued a final order, neither the requirements for Rule
Under Rule
Defendants advance two arguments under Rule
Defendants’ first argument does not work. Defendants argue that I erred by looking beyond the plain languagе of the Purchase Agreement to extrinsic evidence when interpreting the meaning of “Additional Space.”32 They further say that the record of extrinsic evidence was incomplete because I prеcluded discovery pending resolution of Plaintiff‘s motion for summary judgment.33 They submitted a supplemental affidavit of Mr. Rommel asserting facts disputing the evidentiary weight of the Exploratory Resubdivision Plan.34 Based on that affidavit, Defendants argue that the Exploratory Resubdivision Plan was a “non-final plan for the later development of the property and not any actual information regarding the operations of the dealership on the property in April 2018, the operative date of the appraisal, or afterwards.”35
The problem with Defendants’ argument is that “[r]eargument under Rule
Defendants’ second argument fails for the same reason. Had Defendants raised disputes of material fact at the summary judgment phase, I might have given greater thought to their request for further discovery. But they did not, and I will not consider them now.
With their motions, Defendants alternatively requested sixty days to conduct a new appraisal. Although Defendants’ request was untimely (because it was not “within five business days”40), it is granted, but on a truncated timeline given the delay caused by my
In its opposition to the motions, Plaintiff requested fee-shifting in сonnection with “Defendants’ obstreperous litigation conduct.”41 A cynic might agree with Plaintiff, given that the motions were quite broad and further delayed Plaintiff‘s requested relief. I am willing, however, to give Defendants the benеfit of the doubt. Although Defendants’ arguments ultimately fail, Plaintiff has not shown that Defendants have done more than take a zealous litigation posture. The request for fee-shifting is denied.
IT IS SO ORDERED.
Sincerely,
/s/ Kathaleen St. Jude McCormick
Kathaleen St. Jude McCormick
Chancellor
cc: All counsel of record (by File & ServeXpress)