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Akrout v. Jarkoy

Court of Chancery of Delaware

September 19, 2018

Nabil Akrout
Roman Jarkoy, Vladimir Bobrovsky, Boris Kalk, and Intelligent Security Systems International, Inc.

          Submitted: August 13, 2018

          David L. Finger, Esquire Finger & Slanina, LLC

          Kenneth J. Nachbar, Esquire Alexandra M. Cumings, Esquire Morris, Nichols, Arsht & Tunnell LLP

         Dear Counsel:

         Plaintiff has moved for reargument under Court of Chancery Rule 59(f) (the "Motion") following the Court's July 10, 2018, memorandum opinion (the "Opinion") in which the Court addressed several case dispositive motions.[1]This is the Court's ruling on the Motion.

         Factual and Procedural Background

         In the Opinion, the Court resolved: (1) Plaintiff's motion for default judgment against Intelligent Security Systems International, Inc. ("ISSI"); (2) Roman Jarkoi's[2]motion to dismiss Count I (breach of fiduciary) of the operative complaint[3]; and (3) Plaintiff's motion for default judgment against Vladimir Bobrovsky and Boris Kalk, the non-responding Individual Defendants. The Court denied Plaintiff's motion for default judgment against ISSI, a dissolved entity, because the claims were brought outside of the three-year period for post-dissolution winding-up set forth under 8 Del. C. § 278. As for the motion to dismiss Count I, the Court granted that motion because the breach of fiduciary duty claim was clearly barred by laches. Finally, the Court dismissed all Counts against Bobrovsky and Kalk, thus mooting Plaintiff's motion for default judgment against these defendants, on the ground that the former directors of ISSI should not be made to answer claims against, or arising out of their service to, a dissolved entity when those claims are brought outside of the statutory winding-up period.

         Plaintiff now moves to reargue the Court's denial of the motion for default judgment against the dissolved corporation. For the reasons that follow, Plaintiff's Motion must be denied.

         The Standard

         "A motion for reargument under Court of Chancery Rule 59(f) will be denied unless the court has overlooked a controlling decision or principle of law that would have controlling effect, or the court has misapprehended the law or the facts so that the outcome of the decision would be different."[4] Reargument motions may not be deployed to re-litigate already litigated matters nor to advance arguments or present evidence that could have been raised before the previous judgment.[5] Stated differently, a motion for reargument may not direct the court to new matters beyond "the existing record, "[6] or simply rehash arguments already made.[7]

         The Contentions

         As noted, the Motion focuses on the Court's holding that Plaintiff improperly brought his claims against all Defendants beyond the statutory winding-up period following ISSI's dissolution.[8] Plaintiff asserts that he had no occasion to raise his proffered basis to challenge the Court's holding in this regard either in his briefs or at the various oral arguments on his motions because the Court did not focus on this issue until after the motions were submitted for decision. Accordingly, the Court's decision on the statutory winding-up period, as a matter of law, is ripe for reargument.[9]

         As for the merits, Plaintiff maintains that his Complaint cannot be deemed untimely under the statutory three-year post-dissolution winding-up period because the deadline to file within the winding-up period fell on a Sunday. Accordingly, under either Court of Chancery Rule 6 or the so-called "Sunday Rule," Plaintiff contends that his filing deadline was extended to the following Monday.[10] Rule 6 states, in relevant part: "In computing any period of time . . . by these Rules, by order of Court, or by any applicable statute, the day of the act, event, or default after which the designated period of time begins to run is not to be included, [and] [t]he last day of the period so computed shall be included, unless [it] is a Saturday, Sunday or other legal holiday. . . ."[11] According to Plaintiff, Rule 6 applies to Section 278 because there is no evidence that the General Assembly intended that Section 278 would not be subject to the rule.[12] With this guidance in mind, Plaintiff argues that because the expiration of three years following the filing of the certificate of dissolution fell on a Sunday, the filing of the complaint against the dissolved entity would be timely if made on the following business day.

         Citing In re Citadel Industries, the Court concluded that the General Assembly, in fact, did intend that the three year statutory winding-up period be calculated as precisely three years, not more or less than three years.[13] In response, Plaintiff argues "Rule 6(a) does not restrict itself to statutes of limitation, but instead applies to all . . . 'applicable statute[s]' includ[ing] statutes setting deadlines for filing documents with the court."[14] Moreover, Plaintiff states, even if Rule 6 does not apply to Section 278, the "Sunday Rule" applies to extend a deadline that expires on a Sunday to the either the following Monday or following business day.[15] Relying on Nelson v. Frank E. Best Inc., Plaintiff argues that because Section 278 defines the relevant time using years, instead of days, the General Assembly must have intended for the "Sunday Rule" to apply.[16]

         For his part, Jarkoi contends the Motion should be denied on two alternative threshold grounds before the Court even reaches the merits. First, Jarkoi points out that, notwithstanding the Court's express direction, Plaintiff inexplicably failed on two separate occasions to file an affidavit reflecting notice to and service upon ISSI with regard to his motion for default judgment. This failure, Jarkoi maintains, justified the Court's denial of the motion for default judgment on procedural grounds.[17] Second, Jarkoi maintains that the Motion is procedurally barred because it is nothing more than a rehash of arguments already considered and rejected in the Opinion.[18]

         To the extent the Court is inclined to consider the Motion on the merits, Jarkoi argues that the case law makes clear that neither Rule 6(a) nor the "Sunday Rule" applies to Section 278.[19] Jarkoi cites specifically to In re Citadel where the court held that the three-year winding-up period "begins to run as of the date of the filing ...

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