EFiled: May 28 2015 03:25PM EDT
Transaction ID 57304769
Case No. 7204-VCN
COURT OF CHANCERY
OF THE
STATE OF DELAWARE
JOHN W. NOBLE 417 SOUTH STATE STREET
VICE CHANCELLOR DOVER, DELAWARE 19901
TELEPHONE: (302) 739-4397
FACSIMILE: (302) 739-6179
May 28, 2015
Bradley R. Aronstam, Esquire Andrew D. Cordo, Esquire
Ross Aronstam & Moritz LLP Ashby & Geddes
100 South West Street, Suite 400 500 Delaware Avenue, 8th Fl.
Wilmington, DE 19801 Wilmington, DE 19801
Henry E. Gallagher, Jr., Esquire
Connolly Gallagher LLP
1000 North West Street, Suite 1400
Wilmington, DE 19801
Re: Policemen’s Annuity and Benefit Fund of Chicago, Illinois
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
Date Submitted: February 9, 2015
Dear Counsel:
Defendant DV Realty Advisors LLC (“DVRA”) seeks entry of an order of
partial final judgment under Court of Chancery Rule 54(b) regarding the Court’s
Order of November 24, 2014.1
1
See Policemen’s Annuity and Benefit Fund of Chi. v. DV Realty Advisors LLC,
2014 WL 6671118 (Del. Ch. Nov. 24, 2014) (the “Order”).
Policemen’s Annuity and Benefit Fund of Chicago, Illinois, et al.
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
May 28, 2015
Page 2
***
In August 2012, the Court determined that the Plaintiff public employment
benefit funds had properly removed DVRA as the general partner of DV Urban
Realty Partners I L.P. (the “Partnership”).2 In November 2013, the Court resolved
two contentions generally referred to as the Partnership Status Issue and the
Capital Account Issue.3 As to the Partnership Status Issue, the Court concluded
that DVRA’s general partnership interest did not convert into a limited partnership
interest following its removal as general partner. As for the Capital Account Issue,
the Court resolved a number of issues including that DVRA’s capital account
would be valued based on the fair market value of the Partnership’s assets as of
December 31, 2012, and that sums co-borrowed by DVRA or guaranteed by
DVRA would not be part of the valuation process. Disputes about the form of
implementing order resulted, but the Order, in non-final form, was entered.
2
Policemen’s Annuity and Benefit Fund of Chi. v. DV Realty Advisors LLC, 2012
WL 3548206 (Del. Ch. Aug. 16, 2012), aff’d, 75 A.3d 101 (Del. 2013). The
appeal was taken under Rule 54(b) because the Court had retained jurisdiction over
a few follow-on issues.
3
Policemen’s Annuity and Benefit Fund of Chi. v. DV Realty Advisors LLC, 2013
WL 6234202 (Del. Ch. Nov. 27, 2013).
Policemen’s Annuity and Benefit Fund of Chicago, Illinois, et al.
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
May 28, 2015
Page 3
DVRA’s pending application that the Order be treated as final for purposes of an
appeal followed.
***
Rule 54(b) provides:
When more than 1 claim for relief is presented in an action, whether
as a claim, counterclaim, cross-claim, or third-party claim, the Court
may direct the entry of a final judgment upon 1 or more but fewer
than all of the claims or parties only upon an express determination
that there is not just reason for delay and upon an express direction for
the entry of judgment.
The Court may enter a Rule 54(b) judgment when: “(1) the action involves
multiple claims or parties, (2) at least one claim or the rights and liabilities of at
least one party has been finally decided, and (3) [] there is no just reason for
delaying an appeal.”4
The Partnership Status Issue has been finally resolved, and there is nothing
that is foreseeable in future proceedings before this Court that would moot an
appeal. On the other hand, although additional proceedings required with respect
4
In re Panex Indus., Inc. S’holders’ Liquidating Trust, 1999 WL 669350, at *2
(Del. Ch. Aug. 11, 1999); see also Curtiss-Wright Corp. v. Gen. Elec. Co., 446
U.S. 1, 7-8 (1980). There are multiple claims. Whether one claim (or right of a
party) has been finally resolved and whether there is no just reason for delay of an
appeal are questions to be addressed.
Policemen’s Annuity and Benefit Fund of Chicago, Illinois, et al.
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
May 28, 2015
Page 4
to the Capital Account Issue are not likely to alter or moot the determinations the
Court has already made, the Capital Account Issue has not been finally resolved.
When DVRA framed this issue, it sought judgment against the Partnership for
$2,574,747.5 Whether there will be future disputes regarding that number, based
on, for example, various real estate appraisals, is uncertain, but DVRA defined its
claim as one for a specific sum and this proceeding has not yet advanced to the
point where any particular number can be confirmed.
The Court turns to the question of whether there is “no just reason” for
delaying an appeal. This is a matter for the Court’s discretion. Judicial efficiency
and the equities involved guide the exercise of that discretion. 6 The status of
DVRA, as a limited partner or as a holder of some sort of equity interest in the
Partnership, deserves appellate assessment. In addition, an Illinois action, filed by
DVRA, is currently stayed pending resolution of DVRA’s claim to limited partner
status in this proceeding; DVRA’s status will presumably determine whether or not
it may pursue a derivative action.
5
DVRA’s Combined Response Br. Regarding Its Status as a Limited P’r and
Opening Br. in Supp. of Mot. for Determination of Capital Account 22.
6
Curtiss-Wright, 446 U.S. at 8.
Policemen’s Annuity and Benefit Fund of Chicago, Illinois, et al.
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
May 28, 2015
Page 5
The follow-on issues, primarily related to valuation, are not especially well-
defined. Maybe very little remains or maybe some sort of appraisal process will be
required. A valuation effort might turn out to be costly and time-consuming. An
appeal of the Capital Account Issue would provide guidance for the parties as to
what topics are necessary for final determination of this issue (or if this issue even
needs to be resolved) and perhaps would avoid unnecessary time and expense.
That benefit, however, is almost always present after the Court has made one of
those “fork-in-the-road” decisions which will set the path for future proceedings.
Finally, behind almost every application under Rule 54(b) lies some concern about
piecemeal appeals. In short, the relevant factors do not tip strongly in either
direction.
***
The Order addressed two issues: one, the Partnership Status Issue, arguably
would deserve Rule 54(b) treatment; the other, the Capital Account Issue, arguably
would not deserve such treatment because it is not yet final and there is no good
reason to break it up into separate sub-issues for repetitive appellate review. In a
sense, appellate-conferred certainty is routinely desirable, but there is no material
Policemen’s Annuity and Benefit Fund of Chicago, Illinois, et al.
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
May 28, 2015
Page 6
countervailing prejudice to DVRA if appellate review awaits conclusion of the
proceedings in this Court. Given the overall context of this litigation, dividing it
up would provide little immediate benefit that would distinguish it from other
proceedings with an intermediate decision that one side wants to contest on appeal.
The more efficient approach would be to present the dispute fully and completely
to the appellate court. The Delaware Supreme Court has already heard one appeal
of a Rule 54(b) judgment during the course of this litigation, and there is no
significant policy that would be served by burdening it yet again. In essence,
DVRA is at that point where it should decide whether it wants to challenge, in
general terms, the valuation, or whether it wants to bring the proceedings in this
Court to closure in order to allow for a full and complete final appeal of the
outcome.
***
Accordingly, for the foregoing reasons, as a result of the exercise of the
Court’s discretion, DVRA’s Motion for Entry of Partial Final Judgment is denied.
Policemen’s Annuity and Benefit Fund of Chicago, Illinois, et al.
v. DV Realty Advisors LLC; C.A. No. 7204-VCN
May 28, 2015
Page 7
IT IS SO ORDERED.
Very truly yours,
/s/ John W. Noble
JWN/cap
cc: Register in Chancery-K