COURT OF CHANCERY
OF THE
SAM GLASSCOCK III
VICE CHANCELLOR
STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
July 14, 2022
Steven L. Caponi, Esquire Rudolf Koch, Esquire
Matthew B. Goeller, Esquire John O’Toole, Esquire
K&L Gates LLP Richards Layton & Finger P.A.
600 N. King Street, Suite 901 920 N. King Street
Wilmington, DE 19801 Wilmington, DE 19801
RE: Valhalla Partners II, LP., et al. v. Vistar Media, Inc.
C.A. No. 2019-0202-SG
Dear Counsel:
This brief Letter Opinion resolves the Plaintiffs’ “Renewed Motion for Leave
to File Second Amended Complaint.”1 The matter has been fully briefed.2 For the
reasons that follow, the motion is granted.
The action involves a dispute over the Plaintiffs’ rights as holders of
convertible notes (the “Notes”). The proposed amendment would present two new
theories. One is that a “conversion event” affecting the Notes occurred in July 2021.3
1
Pls.’ Renewed Mot. for Leave to File Second Am. Compl., Dkt. No. 190 [hereinafter “Pls.
Mot.”].
2
See id.; Def.-Countercl. Pl. Vistar Media, Inc.’s Opp’n to Pls.’ Renewed Mot. for Leave to File
Second Am. Compl., Dkt. No. 194 [hereinafter “Opp’n”]; Pls.’ Reply Supp. Renewed Mot. for
Leave to File Second Am. Compl., Dkt. No. 196.
3
Pls. Mot. at 5.
The Defendant has not specifically opposed this amendment, 4 and consistent with
this Court’s liberal amendment policy, 5 the proposed amendment is permitted.
More problematic is the Plaintiffs’ proposal to add a claim for reformation of
the Notes. The Plaintiffs had earlier proposed an amendment raising this claim,6
which I found to lack any pleading specificity as required to justify reformation.7
Accordingly, I denied the amendment as futile, without prejudice to the Plaintiffs’
seeking to renew the motion with a more particularized pleading. 8 They have done
so here.
The Defendant again opposes the amendment on grounds of futility.9 They
suggest that I apply, essentially, a motion-to-dismiss analysis here. I decline to do
so, noting that the pleadings have been supplemented so that the Defendant is aware
of the factual circumstances that the Plaintiffs will rely on to substantiate that
reformation is justified. In other words, the Defendant is on notice of the claim that
it must defend. The notice pleading function is satisfied, and I decline to convert the
response to a motion to dismiss given the state of litigation, which is far advanced.
4
See generally Opp’n.
5
See, e.g., Houseman v. Sagerman, 2022 WL 598977, at *3 (Del. Ch. Mar. 1, 2022) (citations
omitted).
6
See Pls.’ Mot. for Leave to File a Second Am. Compl., Dkt. No. 103.
7
2-24-2021 Oral Arg. Regarding Pls.’ Mot. to Amend and the Ct.’s Ruling, Pls.’ Mot. to Compel
Produc. of Docs., and Pls.’ Mot. to Compel Docs. Withheld as Privileged 31:1–32:11, Dkt. No.
124.
8
See id.
9
See Opp’n 6–14.
2
The latter fact underscores the Defendant’s second ground for objection:
undue delay and resulting prejudice. 10 It is true that the amendment comes late in
the process, and that discovery has closed. 11 This must be balanced against the
overarching purpose of the Court, which is to do justice on a full record. Cogent
here is that the Defendant was aware of the reformation theory via the initial motion
to amend, which sought to add reformation to the complaint. 12 The parties dispute
whether, subsequently, the matter of reformation was adequately addressed in
discovery.
In my view, the outcome most consistent with justice is to allow the
amendment to the complaint, and to (1) allow the Defendant—to the extent it finds
it appropriate—to seek leave to reopen discovery, which shall be granted upon a
showing that the amendment so requires, and (2) to allow the Defendant to seek to
shift fees for discovery costs that would have been avoided had the Plaintiffs acted
with appropriate alacrity. I note that any such latter request will require a showing
that (1) delay was unreasonable, (2) the Defendant was not on notice of the need for
the discovery, and (3) avoidable costs were incurred, accordingly.
10
Id. at 5–6.
11
Id. at 1.
12
See, e.g., Pls.’ Mot. for Leave to File a Second Am. Compl., Dkt. No. 103.
3
To the extent the foregoing requires an order to take effect, IT IS SO
ORDERED. An order permitting the amendment is attached.
Sincerely,
/s/ Sam Glasscock III
Vice Chancellor
4
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
Valhalla Partners II, L.P., James J.
Pallotta, Great Oaks Venture Fund LP,
Scott Becker, Advancit Capital I, LP, C.A. No. 2019-0202-SG
Eniac Ventures II, L.P., Eniac
Ventures, L.P., DFJ Mercury II, L.P.,
DFJ Mercury II Affiliates Fund, L.P.,
Occam’s Razor, LLC, Gordon Su,
Brent Buntin, Ocean Assets LLC,
Draper Associates Riskmasters III,
LLC, and Robert Horwitz,
Plaintiffs/Counterclaim
Defendants,
v.
Vistar Media, Inc.,
Defendant/Counterclaim
Plaintiff.
ORDER
This 14th day of July 2022, upon consideration of the Renewed Motion for
Leave to File Second Amended Complaint (the “Motion”) filed by Plaintiffs
Valhalla Partners II, L.P., James J. Pallotta, Great Oaks Venture Fund LP, Scott
Becker, Advancit Capital I, LP, Eniac Ventures II, L.P., Eniac Ventures, L.P., DFJ
Mercury II, L.P., DFJ Mercury II Affiliates Fund, L.P., Occam’s Razor, LLC,
Gordon Su, Brent Buntin, Ocean Assets LLC, Draper Associates Riskmasters III,
LLC, and Robert Horwitz (“Plaintiffs”), and finding good cause for the relief sought
therein, IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED; and
2. Plaintiffs shall file the amended pleading, which was attached as
Exhibit A to the Motion, within 3 business days of entry of this Order.
/s/ Sam Glasscock III
Vice Chancellor Sam Glasscock III