COURT OF CHANCERY
OF THE
STATE OF DELAWARE
417 S. State Street
JOSEPH R. SLIGHTS III Dover, Delaware 19901
VICE CHANCELLOR Telephone: (302) 739-4397
Facsimile: (302) 739-6179
Date Submitted: December 19, 2017
Date Decided: December 29, 2017
R. Judson Scaggs, Jr., Esquire Michael J. Barrie, Esquire
Ryan D. Stottmann, Esquire Stephen M. Ferguson, Esquire
Morris, Nichols, Arsht & Tunnell LLP Benesch, Friedlander, Coplan
1201 North Market Street & Aronoff, LLP
Wilmington, DE 19899 222 Delaware Avenue, Suite 801
Wilmington, DE 19801
Re: The HC Companies, Inc. v. Myers Industries, Inc.
C.A. No. 12671-VCS
Dear Counsel:
This Letter Opinion addresses Myers Industries, Inc.’s and MYE Canada
Operations Inc.’s (together, “Myers”) motion for reargument regarding the Court’s
decision on The HC Companies, Inc.’s (“HC”) motion for partial summary
judgment. For the reasons that follow, the motion is denied.
HC moved for an order declaring that it was entitled to escrow property set
aside as part of an asset purchase agreement (the “Purchase Agreement”)1 and
1
Aff. of Jason Reed in Support of HC’s Mot. for Partial Summ. J., Ex. 1 (“Purchase
Agreement”).
The HC Companies, Inc. v. Myers Industries, Inc.
C.A. No. 12671-VCS
December 29, 2017
Page 2
escrow agreement (the “Escrow Agreement”).2 The Escrow Agreement required
Myers to object to HC’s indemnification claims within 10 days of receiving a claim
notice by stating in writing its bases for objecting.3 The Court ruled that Myers had
failed to object to HC’s second claim notice within the specified 10-day window,
and thus had “irrevocably waived the right to contest the distribution” of the escrow
property.4
In order to succeed on a motion for reargument, the moving party must
demonstrate that the Court “‘misapprehended the law or the facts so that the outcome
of the decision would be affected.’”5 “[T]he court’s focus on a motion under
Rule 59(f) is solely on the facts in the record at the time of the decision.”6 When
2
Aff. of Jason Reed in Support of HC’s Mot. for Partial Summ. J., Ex. 2 (“Escrow
Agreement”).
3
Escrow Agreement § 1.3(c)(i); HC Companies, Inc. v. Myers Indus., Inc., C.A. 12671-
VCS, slip op. at 13–16 (Del. Ch. Dec. 5, 2017) (“Op. _”).
4
Op. at 16 (quoting Escrow Agreement § 1.3(c)(i)).
5
Bear Stearns Mortg. Funding Tr. 2006–SL1 v. EMC Mortg. LLC, 2015 WL 139731, at *8
(Del. Ch. Jan. 12, 2015) (quoting Miles, Inc. v. Cookson Am., Inc., 677 A.2d 505, 506
(Del. Ch. 1995)).
6
Ambase Corp. v. City Investing Co., 2001 WL 167698, at *1 (Del. Ch. Feb. 7, 2001)
(citations omitted).
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C.A. No. 12671-VCS
December 29, 2017
Page 3
“the motion for reargument represents a mere rehash of arguments already
made . . . the motion must be denied.”7 “[And a] party may not present a new
argument for the first time in a motion for reargument.”8 With these standards in
mind, the motion must be denied because Myers either: (1) rehashes arguments it
raised in its opposition to HC’s motion; (2) raises entirely new arguments; or
(3) raises arguments that reflect a misapprehension of the Court’s decision.
First, Myers argues that the Court “inexplicably” and incorrectly concluded
that Myers’ objection to HC’s first claim notice did not apply to items that overlap
in HC’s first and second claim notices.9 The Court addressed this issue squarely on
Page 15 of its decision, noting that the basis for Myers’ objection to HC’s first claim
notice was that it lacked detail, and finding HC unambiguously addressed that
7
Miles, 677 A.2d at 506.
8
inTEAM Assoc., LLC v. Heartland Payment Sys., Inc., 2016 WL 6819734, at *2 (Del. Ch.
Nov. 18, 2016).
9
Def. Myers’ Mot. for Reargument 4–5. Myers also claims that it “did not argue that the
notices were the same.” Id. at 4 n.2 (emphasis in original). It did. E.g., Def. Myers’
Answering Br. in Opp’n to Pl.’s Mot. for Partial Summ. J. (“Myers’ Answering Br.”) 2,
20; Tr. at 41:16–18 (“And I would suggest, Your Honor, that if you take the two claim
notices, that you will find that they are substantially materially the same.”) (emphasis
supplied).
The HC Companies, Inc. v. Myers Industries, Inc.
C.A. No. 12671-VCS
December 29, 2017
Page 4
objection in its second claim by providing additional detail.10 The Court also
observed that objections to indemnification claims, under the Escrow Agreement,
are tied to the “corresponding Claim Notice,” and thus Myers’ only timely objection
was tied to the first claim notice, not the second claim notice.11 Myers’ rehashed
argument is based on a misapprehension of the Court’s decision and the Escrow
Agreement.12
Second, Myers argues that once it objected to an indemnification claim
(creating a “Disputed Claim”) HC could not “override” Myers’ objection by making
another claim.13 It also contends that the Court did not “cite any contractual
10
Op. at 13–15 & n.38; Escrow Agreement § 1.3(c)(i) (providing that Myers’ objection
notice “shall include a statement of the reason or basis” for Myers’ objection). Because
Myers’ basis for rejecting HC’s first claim notice was that it lacked detail, under the terms
of the Escrow Agreement, Myers could not “stand on its original objection” after HC made
efforts to provide additional detail. Op. at 15 n.38. A responsive objection, if an objection
was to be made, was required.
11
Op. at 15.
12
To the extent Myers seeks to reargue that its objection to the second claim notice was
timely, that argument was raised in its opposition to HC’s motion for partial summary
judgment and the Court rejected it. Op. at 13–16. Again, that is not a proper basis for
reargument. Miles, 677 A.2d at 506 (“Where, as here, the motion for reargument represents
a mere rehash of arguments already made . . . the motion must be denied.”).
13
Def. Myers’ Mot. for Reargument 5 (quoting Escrow Agreement § 1.3(c)(i)).
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December 29, 2017
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language . . . that supports [the opposite] conclusion.”14 Myers seeks to rehash an
argument that the Court rejected based on the clear terms of Section 1.3(c)(i) of the
Escrow Agreement.15 HC was free to make more than one claim, and once the claim
notice was served, Myers was obligated to object to that claim within 10 days, which
it did not do.16
Third, Myers makes a new argument that it could have (but did not) raise in
response to HC’s motion for partial summary judgment. It appears to argue that
even if Myers “irrevocably waived the right to contest distribution” of the escrow
property,17 it may still raise “defenses” to prevent “distribution of the entire escrow
14
Id.
15
Op. at 15 (“Section 1.3(c)(i) provides that Myers was obligated timely to ‘contest [the]
Indemnification Claim(s)’ and further provides that if it did not do so, it lost the right to
‘contest the distribution of that portion of the Escrow Property specified in the
corresponding Claim Notice.’ This language unambiguously requires that Myers object
to claims as made and makes clear that objections raised will be tied to ‘the corresponding
Claim Notice.’ The language also reveals that the parties anticipated HC might make more
than one claim. Thus, Myers’ first objection (the only timely objection) was tied to the
‘corresponding’ First Claim Notice and did not carry over to the Second Claim Notice.”)
(emphasis in original).
16
Id. at 15–16 (quoting Escrow Agreement § 1.3(c)(i)).
17
Escrow Agreement § 1.3(c)(i) (emphasis supplied).
The HC Companies, Inc. v. Myers Industries, Inc.
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amount.”18 This argument is both untimely and flawed as a matter of contract
construction.19 Myers fails to explain how raising a “defense” to the distribution of
escrow funds is different from “contesting” a distribution. I can discern no
meaningful distinction. As the Court previously determined, Myers “irrevocably
waived the right to contest distribution” of the escrow property, and HC is entitled
to the full amount of the escrow property under the plain terms of the Escrow
Agreement.20 That waiver extends to “raising defenses” to the distribution(s) as
well. With that said, to be clear, this decision, like the Court’s earlier decision,
18
Def. Myers’ Mot. for Reargument 2–3, 6–7 (emphasis supplied).
19
The Court addressed Myers’ original argument that HC’s delay in providing notice
caused it to “forfeit[] its rights and defenses” under Section 8.05(c) of the Purchase
Agreement. Myers’ Answering Br. at 25 (quoting Purchase Agreement § 8.05(c)); Op. at
20–21 (same). Myers now claims that the Court’s discussion was an incorrect
interpretation of the Escrow Agreement. Def. Myers’ Mot. for Reargument 2–3, 6–7
(arguing that “nothing in the Escrow Agreement addresses waiver of Myers’
defenses . . . .”). As noted, this is a new argument that Myers is raising for the first time
on this motion and is, therefore, an improper basis for reargument. inTEAM Assoc., 2016
WL 6819734, at *2 (“A party may not present a new argument for the first time in a motion
for reargument.”).
20
Op. at 16, 22–23.
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expresses no opinion as to the parties’ rights and obligations regarding HC’s claim
for amounts in excess of the escrow property.21
For the reasons discussed above, Myers’ motion for reargument is DENIED.
IT IS SO ORDERED.
Very truly yours,
/s/ Joseph R. Slights III
21
Id. at 22 n.56. Myers takes issue with the Court’s analogizing Section 1.3(c)(i) of the
Escrow Agreement to a short statute of limitations. Def. Myers’ Mot. for Reargument 6.
Of course, Section 1.3(c)(i) is not literally a statute of limitations; the Court simply noted
that the “parties structured [it] in a way that resembles” one. Op. at 22 n.55.