Havens v. Leong ( 2022 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
WARREN HAVENS, §
§
Petitioner Below, § No. 25, 2022
Appellant, §
§ Court Below—Court of Chancery
v. § of the State of Delaware
§
ARNOLD LEONG, § C.A. No. 2021-0033
§
Defendant Below, §
Appellee, §
§
and §
§
SKYBRIDGE SPECTRUM §
FOUNDATION, §
§
Nominal Defendant Below, §
Appellee. §
Submitted: January 21, 2022
Decided: February 7, 2022
Before SEITZ, Chief Justice; VALIHURA and TRAYNOR, Justices.
ORDER
After consideration of the notice of appeal from an interlocutory order, the
documents attached thereto, and the Court of Chancery docket, it appears to the
Court that:
(1) The appellant, Warren Havens, has petitioned this Court to accept an
interlocutory appeal from two orders of the Court of Chancery: (i) an order dated
December 3, 2021, which stayed the action until litigation pending in another
jurisdiction is concluded, and (ii) an order dated December 23, 2021, which denied
Havens’s motion for reargument. On January 13, 2021, Havens filed in the Court of
Chancery a petition for judicial dissolution of Skybridge Spectrum Foundation, a
Delaware nonprofit, nonstock corporation. In 1999, Havens and the appellee Arnold
Leong established a business in which they transferred valuable radio spectrum
licenses that they acquired from the Federal Communications Commission, in part
through the use of Skybridge and seven Delaware limited liability companies that
are affiliated with Skybridge. In 2002, Leong sued Havens in the Superior Court of
California in Alameda County (the “California Court”) regarding the operation of
the business; in 2003, Havens compelled Leong to arbitrate the dispute under
arbitration clauses in some of the entities’ LLC agreements. Havens, Leong, and the
entities have been involved in litigation in various jurisdictions over the ensuing two
decades.
(2) On November 16, 2015, the California Court appointed a receiver to
take control and possession of Skybridge and the LLCs. The court also enjoined
Havens from interfering with the receiver’s management of the entities and from
acting on behalf of the entities. In an August 2019 decision that became part of a
final arbitration award issued on June 12, 2020, an arbitrator in the arbitration
proceeding awarded Leong more than $18 million in damages and more than $15
million in attorneys’ fees against Havens and the entities. The arbitrator also
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determined that the LLCs should be dissolved and their proceeds sold and distributed
to Havens and Leong in accordance with their respective 50.1% and 49.9% equity
interests in the LLCs. The California Court confirmed the arbitration award on June
4, 2021, and ordered the receiver to begin to administer the dissolution of the entities.
The court also permanently enjoined Havens from interfering with the discharge of
the receiver’s duties and from starting, continuing, or enforcing any suit or
proceeding in the name of any or all of the entities.
(3) Havens then filed the petition for dissolution of Skybridge in the Court
of Chancery. The petition sought dissolution under Section 273 of the Delaware
General Corporation Law, which governs dissolution of a Delaware corporation that
has “only 2 stockholders each of which own 50% of the stock therein.”1 Skybridge
and Leong moved to dismiss or, alternatively, to stay the action in favor of the action
in the California Court. After carefully applying the McWane doctrine2 and the
three-factor McWane test,3 the Court of Chancery stayed the action pending the
conclusion of the litigation in the California Court, which has been ongoing for
1
8 Del. C. § 273(a).
2
McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281 (Del. 1970).
3
See LG Electronics, Inc. v. InterDigital Commc’ns, Inc., 114 A.3d 1246, 1252 (Del. 2015)
(“Delaware courts considering a motion to stay or dismiss in favor of a previously filed action
have applied McWane’s three-factor test: (1) is there a prior action pending elsewhere; (2) in a
court capable of doing prompt and complete justice; (3) involving the same parties and the same
issues? If all three criteria are met, McWane and its progeny establish a strong preference for the
litigation of a dispute in the forum in which the first action was filed.” (internal quotations
omitted)).
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years—in part because of conduct by Havens that other courts have found to be
vexatious—and is nearing its end. Havens moved for reargument, which the Court
of Chancery denied.
(4) Havens then filed an application for certification of an interlocutory
appeal. The application asserted that the Court of Chancery’s orders decided a
substantial issue of material importance4 and that the stay would cause delay and
exhaust party and judicial resources. Aside from a conclusory assertion that
interlocutory review would “serve the considerations of justice,”5 the application did
not address which of the criteria set forth in Rule 42(b)(iii) would warrant the
certification of an interlocutory appeal. Nevertheless, the Court of Chancery
carefully reviewed each of the Rule 42(b)(iii) criteria and determined that
interlocutory review was not warranted. As to whether interlocutory review would
serve considerations of justice, the court recognized that denial of interlocutory
review would effectively preclude any further judicial review of the stay, but
concluded that considerations of justice nevertheless weighed against interlocutory
review. Among other things, the court observed that trial courts have broad
discretion to manage their dockets, including by staying litigation on the basis of
4
See DEL. SUPR. CT. R. 42(b)(i) (“No interlocutory appeal will be certified by the trial court or
accepted by this Court unless the order of the trial court decides a substantial issue of material
importance that merits appellate review before a final judgment.”).
5
Id. R. 42(b)(iii)(H).
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comity or efficiency, and emphasized the lengthy litigation history between the
parties and Havens’s previous attempts to thwart those proceedings through legal
maneuvering. The court concluded that the likely benefits of interlocutory review
do not outweigh the probable costs and the most efficient and just means of resolving
the parties’ dispute would be to respect the orders entered in the California litigation
allow that litigation to conclude before proceeding.
(5) We agree that interlocutory review is not warranted in this case.
Applications for interlocutory review are addressed to the sound discretion of this
Court.6 In the exercise of its discretion and giving great weight to the trial court’s
view, this Court has concluded that the application for interlocutory review does not
meet the strict standards for certification under Supreme Court Rule 42(b).
Exceptional circumstances that would merit interlocutory review of the Superior
Court’s decision do not exist in this case,7 and the potential benefits of interlocutory
review do not outweigh the inefficiency, disruption, and probable costs caused by
an interlocutory appeal.8 Moreover, Havens has not set forth a good-faith argument
that interlocutory review is warranted by any of the criteria set forth in Rule
42(b)(iii). Allowing the litigation to conclude in the California Court will serve
considerations of justice by most efficiently bringing the parties’ lengthy litigation
6
Id. R. 42(d)(v).
7
Id. R. 42(b)(ii).
8
Id. R. 42(b)(iii).
5
to an end. To the extent that any issues remain for the Court of Chancery’s
determination following the conclusion of the California litigation, the Court of
Chancery’s order allows for a prompt and fair resolution of those remaining issues.
NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is
REFUSED.
BY THE COURT:
/s/ Collins J. Seitz, Jr.
Chief Justice
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