Fortis Advisors, LLC v. Dematic Corp. ( 2023 )

SUPERIOR COURT
OF THE
STATE OF DELAWARE
ABIGAIL M. LEGROW LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400
WILMINGTON, DELAWARE 19801
TELEPHONE (302) 255-0669
April 13, 2023
Jeffrey S. Goddess, Esquire Kevin J. Mangan, Esquire
Carmella P. Keener, Esquire Ericka F. Johnson, Esquire
Cooch & Taylor, P.A. Womble Bond Dickinson, LLP
The Nemours Building 1313 North Market Street, Suite 1200
1007 N. Orange Street, Suite 1120 Wilmington, DE 19801
Wilmington, DE 19801
Jack B. Jacobs, Esquire
Young Conaway Stargatt & Taylor, LLP
Rodney Square
1000 North King Street
Wilmington, DE 19899
RE: Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
Dear Counsel,
I have reviewed the parties’ supplemental briefs addressing the issues raised
in my February 2, 2023 letter to counsel. This letter opinion resolves the disputed
issues regarding interest and costs. To avoid repeating the Court’s post-trial factual
findings or this case’s tortured procedural history, the Court expressly incorporates
its December 29, 2022 post-trial opinion and the terms defined therein.
Fortis’s entitlement to prejudgment interest
Although the Court found in Fortis’s favor as to nearly all its claims, Dematic
urges the Court to deny Fortis any prejudgment interest in this case. Dematic argues
Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
April 13, 2023
Page 2
this result is warranted because: (1) Fortis failed “to follow the strict terms of the
Merger Agreement,” which delayed determination of Dematic’s obligation to pay
the Contingent Consideration; (2) Fortis’s litigation strategy delayed resolution of
this case, and Fortis should not now benefit from those delays; and (3) an award of
prejudgment interest in the amount Fortis is seeking would be inequitable. None of
these arguments supports the relief Dematic seeks.
Prejudgment interest is awarded as a matter of right in Delaware.1 It is not a
matter of judicial discretion.2 Prejudgment interest serves two purposes: (1)
compensating the plaintiff for the lost use of its money; and (2) divesting the
defendant of any benefit it received by retaining the plaintiff’s money during the
case’s pendency.3
Even if the Court had discretion to deny Fortis prejudgment interest, that result
is not warranted here. First, Dematic argues Fortis’s “failure” to follow the Merger
Agreement’s dispute resolution process and “failure” to provide adequate notice of
the calculations it was disputing means Dematic’s obligation to pay was not
triggered until the Court issued its post-trial opinion. The Court already rejected
Dematic’s argument that the Merger Agreement’s dispute resolution procedure
applied to the parties’ disputes in this case.4 The Court also alternatively concluded
Dematic waived the dispute resolution provision by failing to raise it in a timely
manner.5 The Court further held Fortis provided “timely written notice ‘setting forth
in reasonable detail its good faith basis’” for disputing Dematic’s earn-out
1
Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del. 2011).
2
Moskowitz v. Mayor and City Council of Wilmington, 391 A.2d 209, 210 (Del. 1978).
3
Brandywine Smyrna, Inc., 34 A.3d at 486.
4
See Post-Trial Memorandum Op. at 38-41.
5
Id. at 41-42.
Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
April 13, 2023
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calculation as required by the Merger Agreement.6 Dematic’s attempt to redeploy
these arguments as a basis for the Court to deny Fortis prejudgment interest fails for
all the reasons explained by the Court in its post-trial opinion.
Second, Dematic argues Fortis delayed filing this action and then engaged in
“prolonged, scorched earth discovery tactics” that postponed resolution of the
parties’ dispute. This argument is equally without merit. The Court concluded in
its post-trial opinion that the discovery issues in this case largely were attributable
to Dematic. The Court ultimately entered evidentiary presumptions as sanctions for
Dematic’s litigation conduct.7 Dematic also unsuccessfully sought to postpone trial
several times.8 The Court therefore is unmoved by Dematic’s argument that it was
prejudiced by the delayed resolution of this case or that Fortis is to blame for the
delays.
Finally, Dematic argues the amount of prejudgment interest Fortis is
demanding would be inequitable given the Court’s finding that Dematic’s
interpretation of a key contractual term at issue in the case was “at least plausible.”
Dematic points to no authority supporting the conclusion that prejudgment interest
should be denied simply because a defendant raises a plausible defense at trial.
Fortis demanded prejudgment interest in its complaint.9 Fortis could not demand a
particular amount of prejudgment interest until judgment was entered, since that
calculation necessarily depends on both the amount of the judgment and the date it
is entered. But Dematic was aware of the amount of damages Fortis was seeking
6
Id. at 39.
7
Id. at 21-28.
8
See, e.g., D.I. 164, 176.
9
Compl. ¶ 20(B).
Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
April 13, 2023
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and the legal rate of interest in Delaware. Under those circumstances, the dollar
amount of the interest that ultimately accrued does not make the award inequitable.
The calculation of prejudgment interest
The parties agree that any prejudgment interest awarded by the Court should
be at a fixed rate and should be set at the legal rate, which is 5% over the Federal
Reserve discount rate.10 The parties dispute when prejudgment interest should begin
to accrue, although Dematic did not propose any date other than the date the Court
issued its post-trial opinion. The Court finds that prejudgment interest should be
awarded as of March 15, 2017 for the total Contingent Consideration awarded by
the Court after trial.
The general rule is that prejudgment interest accrues from the date payment
was due to the plaintiff because “full compensation requires an allowance for the
detention of the compensation awarded and interest is used as a basis for measuring
that allowance.”11 When the underlying obligation at issue in a case arises from a
contract, courts look to the contract to determine the date prejudgment interest
should accrue. The Merger Agreement required Dematic to deliver to Fortis an
Earn-Out Notice setting forth Dematic’s good faith calculation of the Contingent
Consideration.12 Payment of the Earn-Out Merger Consideration was due three
business days after Fortis received the Earn-Out Notice.13 Fortis received the Earn-
Out Notice in this case on March 10, 2017, meaning payment of the Earn-Out
Merger Consideration was due March 15, 2017. As to the Escrow Amount, the
parties have not provided a clear date when payment of that amount would have been
10
See Fortis Supp. Br. at 8-9; Dematic Supp. Br. at 2.
11
Moskowitz v. Mayor and City Council of Wilmington, 391 A.2d 209, 210 (Del. 1978).
12
JX 6 § 3.1(h)(ii).
13
Id. (g)(iii).
Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
April 13, 2023
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due had Dematic calculated it correctly. Fortis suggests the obligation accrued on
March 10, 2017. The Court finds March 15, 2017 to be the most reasonable date.
Although Dematic might plausibly argue the obligation to pay the Escrow Amount
accrued in April 2017,14 that later date would prejudice Dematic because the Federal
Reserve discount rate increased to 1.50% as of March 16, 2017.15 Accordingly, the
Court adopts March 15, 2017 as the accrual date for the entire Contingent
Consideration obligation.
The calculation of post-judgment interest
Fortis is entitled to post-judgment interest as a matter of right under 6 Del. C.
§ 2301(a).16 Dematic, however, argues post-judgment interest must be calculated
“solely upon the principal amount of the award, absent the pre-judgment interest.”17
The authority Dematic cites for that principle, however, is inapplicable.18 Several
recent cases make clear that, subject to a court’s discretion to order otherwise, “a
party is [] entitled to post-judgment interest until the date of payment on an amount
that includes both the amount of the judgment and the amount of prejudgment
interest.”19 Federal cases interpreting an analogous federal statute agree with that
14
Dematic sent its EBITDA Adjustment claim to the escrow agent on April 6, 2017. JX 28.
15
See Fortis Supp. Br., Ex. 1.
16
See Noranda Aluminum Holding Corp. v. XL Insur. Am., Inc., 269 A.3d 974, 978 (Del. 2021)
(holding Section 2301(a) establishes the statutory amount of post-judgment interest in a breach of
contract dispute).
17
Dematic Supp. Br. at 12.
18
Dematic cites CEDE & Co. v. Cinerama, Inc., 1994 WL 1753202, at *1 n.1 (Del. Ch. Dec. 6,
1994), which was a statutory appraisal case with interest governed by 8 Del. C. § 262, and In re
Bracket Holding Corp. Litig., 2020 WL 764148, at *14 (Del. Super. Feb. 7, 2020) and Permint v.
Kia Motors Am., Inc., 2022 WL 2443009, at *2 (Del. Super. Jun. 23, 2022), which were tort actions
governed by 6 Del. C. § 2301(d).
19
BTG Int’l., Inc. v. Wellstat Therapeutics Corp., 2017 WL 4151172, at *21 (Del. Ch. Sept. 29,
2017). See also CertiSign Holding, Inc. v. Kulikovsky, 2018 WL 2938311, at *29 (Del. Ch. Jun.
7, 2018); Miller v. Trimont Global Real Estate Advisors, LLC, 587 F.Supp.3d 170, 200-01 (D. Del.
2022).
Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
April 13, 2023
Page 6
principle.20 Accordingly, Fortis is entitled to post-judgment interest on the sum of
the principal amount of the judgment and the accrued prejudgment interest.
Fortis’s Bill of Costs
Dematic objects to two items in Fortis’s Bill of Costs.21 First, Dematic objects
to the $3,200 requested as costs for Fortis’s expert witness’s deposition. The Court
agrees with Dematic that Fortis has not provided sufficient documentation
supporting the amount of that request.22 The invoice attached as Exhibit B to Fortis’s
Bill of Costs shows Fortis’s expert spent nine undifferentiated hours preparing for
his deposition and testifying at it. Fortis seeks a portion of that amount without
explaining its calculation. Accordingly, the Court will allow costs of $1,300 for the
expert’s trial testimony, which is appropriately documented.
Second, Dematic objected to the $786 in copying costs for the trial exhibits,
arguing “the cost of presenting trial exhibits is traditionally borne by the party
presenting the evidence.”23 The Court agrees with Dematic; the costs of copying the
trial exhibits cannot be recovered under Superior Court Rule 54.24
20
Osterneck v. Ernst & Whinney, 489 U.S. 169, 175 (1989); Skretvedt v. E.I. duPont de Nemours,
372 F.3d 193, 217 (3d Cir. 2004); CIGNEX Datamatics, Inc. v. Lam Research Corp., 2021 WL
212692, at *3 (D. Del. Jan. 21, 2021).
21
See D.I. 239.
22
See Kirkwood v. United Servs. Auto. Ass’n, 1995 WL 44513, at *2 (Del. Super. Jan. 18, 1995)
(citing Sliwinski v. Duncan, 1992 WL 21132 (Del. Jan. 15, 1992) for the proposition that the
burden is on the party requesting compensation to provide sufficient documentation to enable the
trial court to determine a reasonable amount of compensation for an expert’s testimony)).
Moreover, Fortis did not establish that the deposition was entered into evidence, which appears to
be a prerequisite for recovering deposition costs. See Super. Ct. R. 54(h); DeSantis v. Gardiner,
2020 WL 240209, at *4-5 (Del. Super. Jan. 10, 2020).
23
Dematic Supp. Br. at 13.
24
See Sliwinski v. Duncan, 1992 WL 21132, at *4 (Del. Jan. 15, 1992) (“the cost of presenting []
trial exhibits at trial [] are traditionally borne by the party presenting the evidence.”).
Fortis Advisors, LLC v. Dematic Corp.
C.A. No. N18C-12-104 AML CCLD
April 13, 2023
Page 7
Accordingly, the Court finds Fortis is entitled to the following costs for
litigating this case:
Court Costs ………………………………………………. $2,824.00
Expert Witness Fee ………………………………………. $1,300.00
Fortis shall file a proposed final order and judgment within three business
days incorporating the rulings set forth above.
IT IS SO ORDERED.
Sincerely,
/s/ Abigail M. LeGrow
Abigail M. LeGrow, Judge