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LCT Capital, LLC v. NGL Energy Partners LP

Superior Court of Delaware

December 5, 2019

LCT CAPITAL, LLC, Plaintiff,
v.
NGL ENERGY PARTNERS LP and NGL ENERGY HOLDINGS LLC, Defendants.

          Submitted: May 8, 2019

         Defendants' Post-Trial Motion for Judgment as a Matter of Law or, in the Alternative, for a New Trial and Motion to Amend the Judgment DENIED IN PART, GRANTED IN PART

          Steven T. Margolin, Esquire; Gregory E. Stuhlman, Esquire; Brittany M. Guisini, Esquire; Greenberg Traurig, LLP, Attorneys for Defendants.

          Hal S. Shaftel, Esquire; Obiamaka P. Madubuko, Esquire; Daniel Friedman, Esquire; Greenberg Traurig, LLP, Attorneys for Defendants.

          Robert J. Katzenstein, Esquire; David A. Jenkins, Esquire; Kathleen M. Miller, Esquire; Smith, Katzenstein & Jenkins LLP, Attorneys for Plaintiff.

          MEMORANDUM OPINION

          WILLIAM C. CARPENTER, J.

         Before the Court is Defendants NGL Energy Partners LP and NGL Energy Holdings LLC's (collectively, "NGL" or "Defendants") Post-Trial Motion for Judgment as a Matter of Law or, in the Alternative, for a New Trial and Motion to Amend the Judgment. Plaintiff LCT Capital ("Plaintiff or "LCT") has also filed a Motion for Attorneys' Fees and Costs, as well as an Application for (I) Costs and (II) Pre-Judgment Interest and Setting the Post-Judgment Per-Diem Interest Rate.

         The Court has rehashed the factual background of this case several times in its prior opinions, so for the purposes of these Motions, it will only provide a brief recitation of the facts.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In July 2014, NGL acquired the company TransMontaigne, a refined petroleum products distributor, from Morgan Stanley. This acquisition and the role of outside advisors, specifically investment banking company LCT Capital and its CEO Lou Talarico ("Talarico"), are at the center of this ongoing dispute. Plaintiff LCT played a large and pivotal role in NGL's acquisition of TransMontaigne and, as a result, it sought unique payment for its services. As evidenced throughout this litigation, NGL's CEO Mike Krimbill ("Krimbill") did not deny that LCT played a significant role in the TransMontaigne acquisition that justified a fee beyond what is normally utilized in the industry and attempts were made to negotiate a special finder's fee for LCT's services. Unfortunately, instead of doing what would be good business practice and clearly setting forth the apparent agreement in a written document, the parties spent over a year "dancing around" the fee issue and discussing how the commitment made by Defendants' CEO could be accomplished. With no progress and Krimbill's failure to live up to his commitment, LCT initiated the instant litigation in August 2015. LCT filed its Amended Complaint on September 29, 2015.

         On July 19, 2018, the Court dismissed Plaintiffs breach of contract and unjust enrichment claims, but allowed two remaining claims to proceed to trial-quantum meruit and fraudulent misrepresentation. A jury trial took place from July 23, 2018 until August 1, 2018. After the close of evidence, Defendants moved for a directed verdict on LCT's fraudulent misrepresentation claim, arguing that:

(a) LCT had not sought or proved any separate or additional damages for fraud beyond compensation for its services; (b) the jury's predicate finding about the value of those services was determinative on the damages question; and (c) LCT's damages presentation created a significant risk of jury confusion, especially if there was a second damages blank.[1]

         The Court initially reserved decision, expressing concerns about the damages for quantum meruit and fraudulent misrepresentation being the same, but later denied Defendants' motion. The jury later found for Plaintiff on both claims and returned a verdict awarding LCT $4 million for quantum meruit and a separate $29 million for fraudulent misrepresentation.

         Presently, the Defendants have utilized both avenues of potential relief following an adverse verdict from a civil jury trial, having filed a motion for judgment as a matter of law pursuant to Superior Court Civil Rule 50(b), and in the alternative, for a new trial. On April 11, 2019, the Court heard oral arguments on Defendants' Motion.

         Plaintiff has also filed a post-trial Motion for Attorneys' Fees and Costs and an Application for (I) Costs and (II) Pre-Judgment Interest and Setting the Post-Judgment Per-Diem Interest Rate. This is the Court's decision on all outstanding Motions.

         II. STANDARD OF REVIEW

         Pursuant to Superior Court Civil Rule 50(b):

Whenever a motion for a judgment as a matter of law made at the close of all the evidence is denied or for any reason is not granted, the Court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion.... If a verdict was returned, the Court may ... allow the judgment to stand or may reopen the judgment and either order a new trial or direct the entry of judgment as a matter of law.[2]

         Under Rule 50, this Court is required to view the evidence in the light most favorable to the nonmoving party.[3] Utilizing that standard this Court "must determine whether the evidence and all reasonable inferences that can be drawn therefrom" could justify a jury verdict in favor of the Plaintiff.[4] In order to find for the moving party, this Court must find that '"there is no legally sufficient evidentiary basis for a reasonable jury to find for [the non-mo vant].'"[5] Thus, "the factual findings of a jury will not be disturbed if there is any competent evidence upon which the verdict could reasonably be based."[6]

         "A motion for a new trial under Rule 59 may be joined with a renewal of the motion for judgment as a matter of law, or a new trial may be requested in the alternative."[7] In considering a motion for new trial, the Court should give the jury's verdict "enormous deference, "[8] and "should not set aside a verdict...unless, on review of all the evidence, the evidence preponderates so heavily against the jury verdict that a reasonable jury could not have reached the result."[9] "A new trial should be granted only when the great weight of the evidence is against the jury verdict."[10]

         III. DISCUSSION

         Even though the Defendants are legally allowed to file a motion for judgment as a matter of law and a motion for new trial, the Delaware Supreme Court has held:

A motion for judgment notwithstanding the verdict and a motion for a new trial are not interchangeable since they serve entirely different purposes. When passing on a motion for judgment as a matter of law, the court does not weigh the evidence but rather, views the evidence in a light most favorable to the non-moving party and, drawing all reasonable inferences therefrom, determines if a verdict may be found for the party having the burden. In contrast, when considering a motion for a new trial, the court weighs the evidence in order to determine if the verdict is one which a reasonably prudent jury would have reached.[11]

         While several legal arguments were advanced by Defendants with regard to each Motion, when one looks to the heart of the dispute, there are really only two issues. First, under the Motion for Judgment standard, the issue is whether the evidence supported the fraudulent misrepresentation claim. The second is whether the damage award is one that a reasonable jury would have reached, which determines whether a new trial is warranted. Applying these standards and the Delaware Supreme Court's holding, the Court will now address these arguments.

         A. MOTION FOR JUDGMENT AS A MATTER OF LAW

         Defendants contend that the fraudulent misrepresentation claim should have been dismissed at the summary judgment stage and not have been permitted to go to trial. Defendants argue that there was no justifiable reliance based on the evidence and that the Court used the wrong legal standard when analyzing this claim in its Memorandum Opinion.[12] Defendants also assert that the Court erred by allowing negligent or innocent misrepresentation language to be included in the jury instructions.[13]

         While the Court questions the appropriateness of reviewing after trial an issue relating to its prior Opinion, the Court disagrees with Defendants and finds that the legal standard in its Memorandum Opinion was correct. The Court stated that, for fraudulent misrepresentation, a defendant's representation does not need to be overt.[14] It went on to state that:

[r]ather, a defendant's deliberate concealment of a material fact or silence in the face of a duty to speak is sufficient for a claim of intentional misrepresentation. Moreover, the term 'misrepresentation' is sufficiently broad to encompass fraudulent, negligent, or even innocent statements.[15]

         None of this language conflicts with the Second Restatement of Contracts or with the Delaware Supreme Court's previous holdings. In fact, a 1960 Delaware Supreme Court case held that, in a fraud claim, the deceiver need not have knowledge of his/her false representation, rather a deceiver must ". . . recklessly make the representation without heed for its validity, or makes it under circumstances not justifying belief in its truth."[16] Additionally, the Second Restatement of Contracts, states that:

[a] misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker
(a) knows or believes that the assertion is not in accord with the facts, or
(b) does not have the confidence that he states or implies in the truth of the assertion, or
(c) knows that he does not have the basis that he states or implies for the assertion.[17]

         This is no different from what the Court stated. The Court simply rephrased the wording for the purposes of its Opinion. The ...


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