Paul Elton, LLC v. Rommel Del., C. A. 2019-0750-KSJM

CourtCourt of Chancery of Delaware
Writing for the CourtKathaleen St. Jude McCormick Chancellor
PartiesPaul Elton, LLC v. Rommel Delaware, LLC et al.,
Docket NumberC. A. 2019-0750-KSJM
Decision Date22 November 2022

Paul Elton, LLC
v.

Rommel Delaware, LLC et al.,

C. A. No. 2019-0750-KSJM

Court of Chancery of Delaware

November 22, 2022


Elizabeth Wilburn Joyce Megan Ix Brison Pinckney, Weidinger, Urban & Joyce LLC

“J” Jackson Shrum Jack Shrum, P.A.

Dear Counsel:

Defendants Rommel Delaware, LLC, Rommel Motorsports Delaware, Inc., and David Rommel (together, "Defendants") have moved pursuant to Court of Chancery Rules 59(e), 59(f), and/or 60(b) for reargument of the court's letter opinion dated August 3, 2022, to reopen discovery, or, in the alternative, to complete a new appraisal of the 2.5 acres of Additional Space at issue.[1] Plaintiff has opposed these motions and moved for fee-shifting.[2] For the reasons that follow, the motions for reargument and to reopen discovery are denied, but Defendants' alternative request for leave to complete a new appraisal of the 2.5 acres of Additional Space is granted. Plaintiff's request for fee-shifting is denied.

1

By way of background, on December 30, 2021, I issued an order finding Defendants liable on summary judgment for breach of Plaintiff's Proceeds Right arising out of several agreements between the parties.[3] As relief, I ordered Defendants to specifically perform their obligation to participate in the Appraisal Process.[4]

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 an 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 the two closest appraisals shall be" the value of the Additional Space.[7] The parties selected their respective appraisers and obtained appraisals, but the appraisal 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]

2

Part of the discrepancy in appraisal values derived from the appraisers' different understandings of the term "Additional Space," defined in the Purchase Agreement as "additional space on the Property which is not required for the operations of the primary tenant of the Property."[11] To identify the Additional Space on the 5.75-acre lot, Plaintiff's appraiser reviewed "[t]he land development application for the proposed Royal Farms site [that] was submitted to the New Castle County Planning Department in August 2017 and the final plan [that] was recorded on June 28, 2018, subsequent to the retrospective date of value."[12] Based on these site plans, Plaintiff's appraiser found that 3.25 acres of the Property supported "the existing improvements," including the former Harley-Davidson dealership, while the remaining 2.5 acres supported "the proposed Royal Farms improvements."[13] Plaintiff's appraiser thus identified the 2.5 acres as the Additional Space subject to appraisal.

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] Defendants' appraiser considered it "abundantly clear from the lease agreement language that the primary use of the property

3

was the dealership and that no 'additional use' should degrade or minimize the value of that primary business operation."[15] Because the 2.5-acre pad site for the Royal Farms location was double the size of the site in the 2010 plat, and because building the 2.5-acre site "required demolition of the dealership improvements," Defendants' appraiser valued the 1.25-acre pad site as the Additional Space.[16]

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 order 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

4

considered it first, and concluded that interpreting the contractual term was a matter left to the court and not contractually delegated to the third appraiser.[20]

I then analyzed Plaintiff's argument that the size of the Additional Space had already been revealed through Plaintiff's motion for summary 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 Defendants 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 59(f), 59(e), and 60(b).[24]

Where a court has not issued a final order, neither the requirements for Rule 60(b) nor Rule 59(e) are met.[25] Because the August 3, 2022 Letter Opinion was interlocutory

5

rather than final, neither Rule 59(e) nor 60(b) apply. Therefore, I only consider Defendants' Motions under the standard iterated in Court of Chancery Rule 59(f).

Under Rule 59(f), "[t]he Court will deny a motion for reargument 'unless the Court has overlooked a decision or principle of law that would have a controlling effect or the Court has misapprehended the law or the facts so that the outcome of the decision would be affected.'"[26] If a motion for reargument "merely rehashes arguments already made by the parties and considered by the Court" in rendering the decision for which reargument is sought, the motion must be denied.[27] On a motion for reargument, the movant bears a "heavy burden."[28]

Defendants advance two arguments under Rule 59(f). They first argue that I erred in the August 3, 2022 Letter Opinion by...

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