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The HC Companies, Inc. v. Myers Industries, Inc.

Court of Chancery of Delaware

December 29, 2017

The HC Companies, Inc.
v.
Myers Industries, Inc.

          Date Submitted: December 19, 2017

          R. Judson Scaggs, Jr., Esquire Ryan D. Stottmann, Esquire Morris, Nichols, Arsht & Tunnell LLP

          Michael J. Barrie, Esquire Stephen M. Ferguson, Esquire Benesch, Friedlander, Coplan & Aronoff, LLP

          JOSEPH R. SLIGHTS III VICE CHANCELLOR

         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 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 "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 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 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 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, 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.

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