Opinion
C.A. No. 12885-NC.
Submitted: December 21, 2000.
Decided: January 12, 2001. Filed: January 17, 2001
Thomas A. Beck, Esquire, RICHARDS, LAYTON FINGER, Wilmington, DE.
R. Bruce McNew, Esquire, TAYLOR McNEW, Wilmington, DE.
Robert J. Kriner, Jr., Esquire, CHIMICLES TIKELLIS, Wilmington, DE.
Dear Counsel:
This is my decision on Plaintiff John Norberg's Motion for Reargument, pursuant to Court of Chancery Rule 59(f), of the Court's Memorandum Opinion and Order which granted Defendants' Motion for Summary Judgment and denied, inter alia Mr. Norberg's Motion for Summary Judgment. The Court held inter alia that Mr. Norberg acquiesced in the cash-out merger transaction when he tendered his shares and accepted the merger consideration. For the reasons set forth below, I am denying the motion for reargument.
Norberg v. Security Storage Co. of Washington, Del. Ch., C.A. No. 12885, Steele, J. (Sept. 19, 2000) ("Mem. Op.").
I have carefully reviewed the briefs of the parties on their cross-motions for summary judgment, the Memorandum Opinion of the Court, the motion for reargument, the various memoranda and correspondence addressing that motion, and the oral arguments of counsel on December 21, 2000. I am not persuaded that the Court overlooked a decision or principle of law that would have a controlling effect or that the Court misapprehended the law or the facts so that the outcome of the Court's decision, i.e., to grant summary judgment in Defendants' favor on the ground that Mr. Norberg acquiesced in the merger transaction when he tendered his shares for the merger consideration, would be affected.
Miles v. Cookson, Del. Ch., 677 A.2d 505, 506 (1995); State of Wisconsin Investment Board v. Peerless Systems Corp., Del. Ch., CA. No. 17637, Chandler, C. (Jan. 5, 2001).
The doctrine of acquiescence may work harshly at times. The teaching ofBershad is straightforward: A shareholder who tenders his shares and accepts the benefits of a transaction will be barred from seeking equitable relief if the shareholder at the time of his tender was adequately informed of the material facts relevant to the underlying transaction.
Bershad v. Curtiss-Wright Corp., Del. Supr., 535 A.2d 840, (1987).
Id. at 848.
At the time Mr. Norberg tendered, he was represented by experienced counsel and had been at the forefront of this litigation for a period of approximately 17 months since he filed his complaint "replete with allegations of false and misleading disclosures concerning the value of Security Storage and the fairness of the consideration." Mr. Norberg points to Iseman for the proposition that a shareholder's filing of a complaint does not, ipso facto, demonstrate knowledge of the material facts. That a shareholder filed a complaint, without more, does not necessarily evidence the requisite knowledge. However, in Iseman, there was only a very brief time between the filing of the amended complaint and the tendering of the shares. Here, Mr. Norberg tendered his shares 17 months after the filing of his complaint which details Defendants' allegedly inappropriate conduct.
Norberg at 16.
Iseman v. Liquid Air Corp., Del. Ch., C.A. No. 9694, Berger, V. C. (Feb. 11, 1993).
The reason for Mr. Norberg's decision to tender his shares was explained during argument on the motion for reargument. His shares were held by his IRA custodian. When the IRA custodian refused to continue holding the shares after termination of the appraisal proceedings, Mr. Norberg was confronted with the unhappy choice of: (i) taking custody of his shares and suffering adverse tax consequences; or (ii) accepting the merger consideration. He chose the latter. However, unfortunate the choice, it was Mr. Norberg's choice. The fact that his IRA custodian may have placed him in a difficult position does not alter the status of his knowledge of Defendants' alleged conduct or the simple fact that his decision was voluntary.
Mr. Norberg also suggests that he should not have to bear the loss of interest on the proceeds of his shares while this litigation moves forward. Although it cannot be denied that this litigation has proceeded slowly, the decision whether to accept the merger consideration always involves, at least to some extent, the potential loss of interest on the merger consideration.
In short, despite a thorough review of the record and careful consideration of Mr. Norberg's contentions, I can find no basis for concluding that this Court was mistaken in either ascertaining or relying upon the material facts not in dispute. Furthermore, I am unable to find any basis for concluding that the Court misapplied or misunderstood the applicable law in any way.
Accordingly, Mr. Norberg's motion for reargument is denied.
Because the defense of acquiescence is case dispositive, I need not, and do not, reach the defense of waiver, the alternate basis for the Court's decision.
IT IS SO ORDERED.
Very truly yours, JWN