Opinion
C.A. No. N15C-08-109 WCC CCLD
12-23-2019
LCT CAPITAL, LLC, Plaintiff, v. NGL ENERGY PARTNERS LP and NGL ENERGY HOLDINGS LLC, Defendants.
Steven T. Margolin, Esquire; Gregory E. Stuhlman, Esquire; Brittany M. Guisini, Esquire; Greenberg Traurig, LLP, 1007 North Orange Street, Suite 1200, Wilmington, DE 19801. Attorneys for Defendants. Hal S. Shaftel, Esquire; Obiamaka P. Madubuko, Esquire; Daniel Friedman, Esquire; Greenberg Traurig, LLP, 200 Park Avenue, New York, NY 10166. Attorneys for Defendants. Robert J. Katzenstein, Esquire; David A. Jenkins, Esquire; Kathleen M. Miller, Esquire; Smith, Katzenstein & Jenkins LLP, 1000 West Street, Suite 1501, Wilmington, DE 19801. Attorneys for Plaintiff.
Plaintiff's Application for Certification of an Interlocutory Appeal to the Supreme Court of Delaware Pursuant to Supreme Court Rule 42 - GRANTED
Defendants' Application for Certification of an Interlocutory Appeal - GRANTED IN PART, DENIED IN PART
ORDER
Steven T. Margolin, Esquire; Gregory E. Stuhlman, Esquire; Brittany M. Guisini, Esquire; Greenberg Traurig, LLP, 1007 North Orange Street, Suite 1200, Wilmington, DE 19801. Attorneys for Defendants. Hal S. Shaftel, Esquire; Obiamaka P. Madubuko, Esquire; Daniel Friedman, Esquire; Greenberg Traurig, LLP, 200 Park Avenue, New York, NY 10166. Attorneys for Defendants. Robert J. Katzenstein, Esquire; David A. Jenkins, Esquire; Kathleen M. Miller, Esquire; Smith, Katzenstein & Jenkins LLP, 1000 West Street, Suite 1501, Wilmington, DE 19801. Attorneys for Plaintiff. CARPENTER, J.
Plaintiff LCT Capital, LLC ("Plaintiff" or "LCT") and Defendants NGL Energy Partners LP and NGL Energy Holdings LLC (collectively, "NGL" or "Defendants") have both moved for an Order certifying an appeal under Delaware Supreme Court Rule 42 of this Court's Memorandum Opinion ("Opinion") of December 5, 2019. That Opinion denied Defendants' Post-Trial Motion for Judgment as a Matter of Law but granted a new trial on the issue of damages. This is the Court's decision regarding the Applications filed by both parties.
LCT Capital, LLC, V. NGL Energy Partners LP & NGL Energy Holdings LLC, 2019 WL 6896463 (Del. Super. Ct. Dec. 5, 2019).
1. The determination of whether to certify an interlocutory appeal lies within the discretion of the Court and is analyzed under the criteria set forth in Supreme Court Rule 42(b). When deciding whether to certify an interlocutory appeal, the Court must consider: (1) the eight factors listed in Delaware Supreme Court Rule 42(b)(iii); (2) the most efficient and just schedule to resolve the case; and (3) whether and why the likely benefits of interlocutory review outweigh the probable costs, such that interlocutory review is in the interests of justice. If the balance of these considerations is uncertain, the trial court should refuse to certify the interlocutory appeal.
Dep't of Nat. Res. & Envtl. Control v. Mountaire Farms of Delaware, Inc., 211 A.3d 138, 138 (Del. 2019).
Chemtura Corp. v. Certain Underwriters at Lloyd's, 2016 WL 3960282, at *1 (Del. Super. Ct. July 20, 2016).
2. In the Court's December 5, 2019 Memorandum Opinion, it found that the precise issue of whether an enforceable contract is required in order for a plaintiff to recover benefit-of-the-bargain damages in a fraud case was unsettled. After reviewing relevant case law, the Court found:
A review of the cases clearly reflects that where there is a formal contractual relationship between the parties, benefit-of-the-bargain damages can be obtained. This is not surprising as, in most cases, the contractual agreement has occurred as a result of, or been influenced by, the fraudulent conduct. It is only fair then to allow the aggrieved party to recover what would have been the bargain without the fraud. Unfortunately, the facts here do not fit the traditional benefit-of-the-bargain case law as there is no formal agreement to "affirm" and thus seek the benefit of the contract nor is there any contract to "rescind" to restore the parties to status quo ante.
Based on the above, the Court concludes that to get damages under the benefit-of-the-bargain concept, the contractual bargain must have been created and formalized. Without such structure, the discussions between the parties are simply negotiating positions to which a meeting of the mind has not been finalized. While perhaps incredibly unfair to the unique factual setting of this case in light of the reprehensible conduct of the Defendants, the Court must find you do not get the bargain if it is not clearly created.
LCT Capital, LLC, 2019 WL 6896463, at *7.
3. The parties first contend that the Court's December 5, 2019 Memorandum Opinion determined a substantial issue of material importance. The Court agrees. As reflected in the Opinion, the jury was asked to determine damages relating to two claims made by Plaintiff. They awarded $4 million on the quantum meruit claim and $29 million on the fraudulent misrepresentation claim. It is fair to conclude that the $29 million awarded equated to LCT's valuation of the appropriate fee that the parties had been negotiating, excluding a tax catch up provision that was also asserted. Defendants argued that the $29 million award represented a "benefit-of-the-bargain" award for which there was no formal contract between the parties. The Court agreed that a formal contractual relationship needed to be created to obtain benefit damages and ordered a new trial to allow the jury to decide the true value of the services provided by Plaintiff.
See Defs.' Application for Certification of an Interlocutory Appeal at 1. See Pl.'s Application for Certification of an Interlocutory Appeal to the Supreme Court of Delaware Pursuant to Supreme Court Rule 42 at 1.
4. If the Supreme Court decides that Plaintiff is entitled to benefit-of-the-bargain damages on the fraudulent misrepresentation claim, the jury's verdict would be supported by the evidence and the Court's decision to order a new trial on damages would be unnecessary. As such, in addition to resolving a substantial issue of material importance, it may terminate the litigation or otherwise serve considerations of justice.
5. Defendants also request that the Court certify the issues of whether the jury instruction on fraudulent misrepresentation was correct and whether the evidence supported Plaintiff's fraud claim. The Court does not believe these issues merit interlocutory review by the Supreme Court. They are not significant issues of material importance and can fairly and appropriately be addressed if Defendants appeal the final verdict to the Supreme Court in this matter. The evidence of Defendants' misrepresentation was overwhelming and supported the jury's verdict. Defendants' other assertion that Plaintiff did not justifiably rely on the statements of Defendants' CEO is simply unsupported. As the Court found in its Opinion:
In fact, the evidence was overwhelming that Krimbill failed to be candid and honest in his dealings with Plaintiff, he misled Talarico regarding his authority to authorize the compensation they agreed to, and he continued the pattern of misrepresentation for a significant period of time. While Talarico may have been foolish and naive to rely upon Krimbill's representation without a clear written agreement, there is no doubt that Krimbill took advantage of the situation to Plaintiff's detriment. Even sophisticated businessmen have the right to expect some semblance of honesty and candor in their dealings, and Krimbill's conduct fell way below any reasonable ethical standards. It was not unreasonable for Talarico to believe Krimbill could deliver on the compensation they discussed and to rely on those representations.While perhaps the related issues asserted by Defendants are appropriate appeal matters once the trial is concluded, they do not rise to the "exceptional" level required to invoke the unusual process of an interlocutory appeal. As such, the Court will not certify those issues to the Delaware Supreme Court.
LCT Capital, LLC, 2019 WL 6896463, at *4. --------
6. Therefore, pursuant to Delaware Supreme Court Rule 42, the Court will certify only Plaintiff's and Defendants' Applications relating to awarding of benefit-of-the-bargain damages in a tort claim in which there is no contractual relationship between the parties. It denies Defendants' application to include for interlocutory review the question of whether the Court's jury instruction was proper or whether Plaintiff sufficiently relied upon Defendants' fraudulent misrepresentation.
IT IS SO ORDERED this 23rd day of December, 2019.
/s/_________
Judge William C. Carpenter, Jr.