TAVISTOCK CIVIC ASSOCIATION, INC. Defendant Below, Appellant,
JAMES W. OWEN JR. and JANA OWEN, Plaintiffs Below, Appellee.
Submitted: October 23, 2019
Below-Court of Chancery of the State of Delaware C. A. No.
SEITZ, Chief Justice; VAUGHN, and TRAYNOR, Justices.
F. TRAYNOR JUSTICE
3rd day of December 2019, after careful consideration of the
parties' briefs and the record on appeal, it appears to
the Court that the March 26, 2019 letter opinion of the Court
of Chancery awarding Appellees the recoverable expenses they
incurred in connection with a motion to compel discovery
under Court of Chancery Rule 37(a)(4)(C) should be affirmed
on the basis of and for the reasons stated in the letter
underlying dispute concerned a fence. Appellees James W.
Owen, Jr. and Jana L. Owen ("Appellees" or the
"Owens") purchased a home in the Tavistock
Community, a deed-restricted community in which "[no] .
. . fence shall be commenced, erected or maintained"
unless approved in writing by Appellant Tavistock Civic
Association, Inc. ("Appellant" or
"Tavistock"). According to Tavistock, before the
Owens purchased their home, they asked the Tavistock board
whether they could erect a six-foot tall stockade privacy
fence on the property. Tavistock's board said no, and the
Owens purchased the property anyway. Nevertheless, on January
25, 2017, the Owens submitted an application to the Tavistock
board seeking permission to build the six-foot tall privacy
fence they had previously inquired about. Tavistock's
board denied the Owens' application, explaining that
Tavistock had a "long standing practice" of
allowing only certain types of fences, and those only up to
four feet tall, in order to "preserve the open feel of
the community." As litigation progressed, Tavistock
continued to maintain that it had "uniformly upheld the
deed restrictions regarding fences from April 9, 1984, to the
Accordingly, the Owens sought discovery dating back to 1984,
including identification and production of "all
documents that reference or relate in any way to all requests
by residents of Tavistock . . . for a fence on their
property."Tavistock responded to the discovery
requests with the specific objection that the requests sought
"information without any limitation to the time period
relevant to [the] matter" and offered to "produce
documents created, received or obtained only within three (3)
years of the filing of the Complaint."
Owens filed a motion to compel under Court of Chancery Rule
37 (the "Motion to Compel" or the
"Motion"), requesting that the Court of Chancery
order Tavistock to "conduct a complete and thorough
search of all its records and documents, whether in the
custody of current Board Members or past Board Members, or
elsewhere." The Owens also requested attorneys'
fees in connection with the Motion.
Court of Chancery granted in part and denied in part the
Motion to Compel, and denied attorneys' fees without
prejudice, noting that "fees and costs will be handled
pursuant to 10 Del. C. § 348(e) at the
conclusion of this action."The Court found that, because
Tavistock, in its defense, asserted that it had consistently
enforced the deed restriction on fences since April 9, 1984,
discovery was appropriate going back to that date. But the
court also found that certain interrogatories that the Owens
had propounded and that were the subject of the Motion to
Compel were protected by privilege.
Shortly after the Court of Chancery's order was entered,
Tavistock's board decided to moot the Owens'
complaint in order to avoid discovery costs by amending the
board's fence policy and approving the Owens'
Owens then petitioned for all of their costs and legal
fees. After a hearing, the Court of Chancery
granted attorneys' fees in the amount of $5, 000.00 in
connection with the Motion to Compel under Court of Chancery
Rule 37(a)(4)(C). Tavistock appealed.
review the Court of Chancery's award of attorneys'
fees for abuse of discretion.
Rule 37(a)(4) authorizes an award of fees and sanctions in
relation to a motion to compel under three scenarios: (A)
fees for the movant if the motion is granted (subsection
(A)); (B) fees for the opposition if the motion is denied
(subsection (B)); and (C) discretionary allocation if the
motion is granted in part and denied in part (subsection
(C)). Under both subsections (A) and (B), the
award of fees is warranted unless the Court finds
that the losing party was "substantially justified"
in opposing or making the motion to compel or that other
circumstances make an award of expenses unjust.
While subsection (C) does not explicitly require an analysis
of whether the positions taken by a party against whom fees
and expenses are sought are "substantially
justified," implicitly it does. Otherwise, for instance,
a party who is substantially justified in opposing the
entirety of a motion to compel-but, despite that
justification, is unsuccessful as to a portion of its
opposition-could arguably be liable for fees related to the
unsuccessful portion, merely based on a partial lack of
success. That, in our view, is not how Rule 37(a)(4) is
structured. Instead, reading subsections (A), (B), and (C)
together, Rule 37(a)(4) only allows for the shifting of fees
in favor of a successful party-either a movant or opposing
party-when its adversary's position ...