Reid v. Spazio
| Decision Date | 09 April 2009 |
| Docket Number | No. 199, 2008.,199, 2008. |
| Citation | 970 A.2d 176 |
| Parties | Dennis A. REID, Plaintiff Below-Appellant, v. Alenia SPAZIO, Alcatel Alenia Space Italia S.p.A. (f/k/a Alenia Spazio) and Finmeccanica S.p.A., Defendants Below-Appellees. |
| Court | Supreme Court of Delaware |
Court Below: Court of Chancery of the State of Delaware, C.A. No. 2874.
Upon appeal from the Court of Chancery. REVERSED AND REMANDED.
Ian Connor Bifferato, Esquire and David W. deBruin, Esquire of Bifferato Gentilotti LLC, Wilmington, Delaware; Of Counsel: Derek Y. Brandt, Esquire of SimmonsCooper LLC, East Alton, Illinois, and Andrea Bierstein, Esquire and Thomas I. Sheridan, III, Esquire (argued) of Hanly Conroy Bierstein Sheridan Fisher & Hayes, LLP, New York, New York, for appellant.
Allen M. Terrell, Jr., Esquire and Harry Tashjian, IV, Esquire of Richards, Layton & Finger, P.A., Wilmington, Delaware; Of Counsel: John P. Cooney, Jr., Esquire (argued), George Sirignano, Esquire, and Tatiana Martins, Esquire of Davis Polk & Wardwell, New York, New York, for appellees.
Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS, and RIDGELY, Justices, constituting the Court en Banc.
Plaintiff-Appellant Dennis Reid appeals from the Court of Chancery's dismissal of his complaint against Defendant-Appellees on grounds that it was barred by the applicable statute of limitations and by laches. Reid makes two arguments on appeal. First, he contends that his claim is preserved by the Delaware Savings Statute.1 Second, he contends that his claim is not barred by laches. We find that Reid's claim is preserved by the Delaware Savings Statute and that the Court of Chancery erred in dismissing the complaint. Accordingly, we reverse.
This matter arises out of a joint venture between U.S. Russian Telecommunications LLC ("USRT"), a Delaware limited liability company, and Alenia Spazio, Alcatel Alenia Space Italia, S.p.A. (f/k/a Alenia Spazio) and Finmeccanica, S.p.A. (collectively, the "Appellees"), Italian companies, to pursue a business opportunity assisting Russia in replacing its aging and obsolete commercial satellites. Reid alleges that in late 1999, the Appellees conspired to breach and did breach the joint venture agreement and appropriated this opportunity for themselves, cutting USRT out of the venture entirely. This was accomplished by the formation, by the Appellees' agents and alleged co-conspirators, of a new Delaware entity, USRT Holdings LLC ("Holdings").
Reid, a minority shareholder of both USRT and Holdings, brought suit in Texas on his own behalf and derivatively on behalf of the companies. Reid's initial complaint, filed on May 16, 2001 in federal court in the Southern District of Texas, was dismissed by agreement of the parties on March 6, 2002 for lack of diversity sufficient for federal subject matter jurisdiction. On March 11, 2002, Reid filed suit against Appellees in state court in Harris County, Texas. Appellees moved for a special appearance to contest personal jurisdiction. Finding a sufficient basis for jurisdiction, the Harris County District Court denied Appellees' motion on March 13, 2003. Appellees filed an interlocutory appeal to the Fourteenth Court of Appeals of Texas. On December 23, 2003, that court reversed the trial court and ordered the case remanded with instructions to dismiss the claims against Appellees for lack of personal jurisdiction.2 Reid moved for rehearing en banc, which the Texas appellate court denied on April 8, 2004.
Reid then petitioned the Supreme Court of Texas for review of the intermediate appellate court's order. The court denied that petition on August 26, 2005 and, on March 10, 2006, also denied Reid's motion for rehearing. The case was then remanded to the trial court, which entered an order of dismissal on April 11, 2006.3 On June 8, 2006, Reid petitioned the United States Supreme Court for a writ of certiorari. His petition was denied on October 2, 2006.4
On April 9, 2007, just over six months after the denial of his certiorari petition, Reid commenced this action in the Court of Chancery, relying on Title 10, section 8118(a), the Delaware Savings Statute. Appellees moved to dismiss the action as time-barred and on personal jurisdiction grounds. The Court of Chancery granted the motion. The court explained that, although the action might be timely under the fourth prong of the Savings Statute, it was prohibited by the sixth prong, which, it found, better fit the facts of this case. Applying the sixth prong, the court found that the one-year grace period during which Reid could file a timely action in Delaware expired on March 10, 2007, one year after the Supreme Court of Texas denied Reid's motion for rehearing and one month before the present action was commenced. The Court of Chancery further held that the affirmative defense of laches also barred Reid's claim, because the claim would be barred by the statute of limitations and there were no mitigating circumstances. In addition, the court noted the length of time between the challenged conduct and the filing of the action as well as the inevitability of some prejudice to Appellees' ability to put forward a defense.5
Because it held the action was time-barred, the court did not reach the issue of personal jurisdiction.6
Reid's claim is preserved by the Savings Statute.
Reid's action arises out of conduct that allegedly occurred in 1998 or 1999. There is no dispute that Delaware's three-year statutory limitations period for Reid's claim has expired.7 Reid contends that his claim is nevertheless timely because it was preserved by the Savings Statute,8 and that the Court of Chancery erred in finding otherwise. The Court of Chancery's interpretation of a statute of limitations is a question of law, which we review de novo.9
Delaware's Savings Statute provides exceptions to the applicable statute of limitations in certain instances where the plaintiff has filed a timely lawsuit, but is procedurally barred from obtaining a resolution on the merits.10 Delaware first enacted such a statute in 1829. By the time Delaware's laws were codified in 1852, the statute had assumed a form substantially similar to our modern Savings Statute.11 Currently, the Savings Statute is codified in Title 10, section 8118(a), which provides as follows:
If in any action duly commenced within the time limited therefor in this chapter, [1] the writ fails of a sufficient service or [2] return by any unavoidable accident, or [3] by any default or neglect of the officer to whom it is committed; or [4] if the writ is abated, or the action otherwise avoided or defeated by the death of any party thereto, or for any matter of form; or [5] if after a verdict for the plaintiff, the judgment shall not be given for the plaintiff because of some error appearing on the face of the record which vitiates the proceedings; or [6] if a judgment for the plaintiff is reversed on appeal or a writ of error; a new action may be commenced, for the same cause of action, at any time within one year after the abatement or other determination of the original action, or after the reversal of the judgment therein.12
The Savings Statute reflects a public policy preference for deciding cases on their merits.13 This Court has recognized that "[the statute] confers upon litigants an absolute right to file a new action under certain conditions, and that one of those conditions is not leave of court."14 The statute is remedial in nature and is liberally construed.15 Although a court may not graft additions or limitations onto the statute "under the guise of construction," we have held that it is to be construed by giving due consideration to notions of equity.16
At issue in this case is whether discretionary appeals are encompassed within the sixth prong of the Savings Statute. If the sixth prong includes discretionary appeals, then Reid's claim was timely filed in Delaware.17 The Court of Chancery held that the statute was tolled during discretionary appeals, but did not include discretionary appeals to the United States Supreme Court.18 Reid argues that the same considerations that compelled the trial court's conclusion that the Savings Statute should apply to discretionary appeals within the judicial system—discouraging placeholder lawsuits, judicial economy, and defendant's awareness of plaintiff's intention to press his claims—apply with equal force to discretionary appeals to the United States Supreme Court. He asserts that the court erred by distinguishing between the two types of discretionary appeals, and that the grace period provided by Section 8118(a) should not commence until all appeals are resolved, including appeals as of right and those dependent upon a higher court's discretion. Appellees contend that the grace period should be tolled only during the pendency of appeals as of right.
We previously explained in Gosnell v. Whetsel19 "that [Section 8118(a)] is designed to allow a plaintiff ... one year to file a second cause of action following a final judgment adverse to his position if such judgment was not upon the merits of the cause of action." Therefore, we held that the commencement of the grace period was tolled during the defendant's appeal. However, appeals from adverse final determinations in civil actions in the Superior Court and the Court of Chancery are taken as of right to this Court. Consequently, Gosnell did not specifically address the effect of discretionary appeals on the grace period. Thus, the issue before us is one of first impression in Delaware.
We hold that the Delaware Savings Statute applies with equal force to discretionary appeals. Section 8118(a) is better interpreted to suspend the running of the grace period during the pendency of all appeals, for...
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