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Feldman v. YIDL Trust

Court of Chancery of Delaware

May 4, 2018

YIDL TRUST, Respondent.



         A. On March 5, 2018, the court granted petitioner Benjamin Feldman's motion for summary judgment under Court of Chancery Rule 56 for dissolution of Royston, Inc. ("Royston" or the "Company") under 8 Del. C. § 273 and appointed a Receiver to dissolve the Company.[1]

         B. On April 6, 2018, the Receiver submitted a plan of dissolution for Royston (the "Plan"), which the court approved on April 9, 2018.[2]

         C. In a letter dated April 17, 2018, Howard Feldman, a trustee of respondent YIDL Trust (the "Trust"), requested that the court "dismiss the case and . . . direct [the Receiver] to stop any actions" due to "two new revelations."[3] First, Howard argued for the first time that the estate of his deceased son, Andrew Feldman, legally owns 100% of Royston's stock, since the stock was never properly transferred from Andrew's estate to "[his] and [his] wife's name."[4] Thus, according to Howard, he and Roberta never had the ability to transfer subsequently 50% of the Company's stock to Benjamin. Second, Howard alerted the court that the Company "is in a forfeited condition" and thus "cannot do any business or operate as a[n] active corporation."[5] Howard appears to argue that the fact that Royston is in forfeiture precludes the Receiver from effectuating the Plan.

         D. On April 26, 2018, Benjamin opposed Howard's request that the court modify its decision and order appointing a receiver to wind-up the affairs of Royston.[6]

         NOW THEREFORE, the court having considered the parties' submissions, IT IS HEREBY ORDERED, this 4th day of May, 2018, as follows:

         1. Although neither of the parties referred to Court of Chancery Rule 60 in their recent submissions, this rule provides the appropriate framework to consider Howard's April 17, 2018 request, because he seeks relief from the court's order granting summary judgment in Benjamin's favor on March 5, 2018 and the implementing order for the Plan entered on April 9, 2018.

         2. Under Court of Chancery Rule 60(b), "the Court may relieve a party or a party's legal representative from a final judgment, order, or proceeding" for certain enumerated reasons:

(1) Mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud . . ., misrepresentation or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.

         Howard's request potentially implicates the second and sixth grounds for relief in Rule 60(b).

         3. First, Howard suggests that the information in his letter regarding the stock transfer and the Company's corporate status is newly discovered evidence. To succeed under Rule 60(b)(2), the moving party must show that:

[1] the newly discovered evidence has come to his knowledge since the trial; [2] that it could not, in the exercise of reasonable diligence, have been discovered for use at the trial; [3] that it is so material and relevant that it will probably change the result if a new trial is granted; [4] that it is not merely cumulative or impeaching in character; and [5] that it is reasonably possible that the evidence will be produced at the trial.[7]

         Here, Howard fails to offer any reason why he could not, through the exercise of reasonable diligence, have discovered the evidence submitted with his April 17 letter concerning the purported "two new revelations" before the court ruled on Benjamin's motion for summary judgment.

         4. With respect to the first matter, the record reflects that Andrew passed away about nine years ago, in May 2009, [8] and that Howard was able to properly handle the transfer of certain other assets from Andrew's estate.[9] Howard provides no reason why he did not previously raise the issue of a purported defect in the stock transfer from Andrew's estate to the Trust so as to call into question the legitimacy of the subsequent transfer of 50% of the Company's stock from the Trust to Benjamin.

         5. With respect to the second matter, Howard and his attorney originally acquired a registered agent for Royston, so Howard and/or his attorney presumably were aware of any notifications from Royston's registered agent that payment was due for its services or any notices from the Delaware Secretary of State ...

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