Opinion
C.A. No. 12207-NC
Submitted: December 13, 1999
Decided: March 16, 2000
I have reviewed Lane's request for reargument of this Court's letter opinion dated November 17, 1999 in which I granted Defendant Cancer Treatment Centers of America, Inc.'s ("CTCA") motion to dismiss. While Lane fails to demonstrate that I have misapprehended the law, I conclude that I had improperly interpreted or overlooked the facts underlying this dispute in a way which affects the outcome of the decision. Therefore, his motion for reargument is granted.
Lane v. Cancer Treatment Centers of America, Inc. , Del. Ch., C.A. No. 12207-NC, Steele, V.C (Nov. 17, 1999).
My Order of November 17, 1999, granted CTCA's motion to dismiss for failure to prosecute under Court of Chancery Rule 41(e). I cited Lane's failure to take action to prosecute this 1991 Delaware action from 1997 until September 10, 1999, two months after CTCA filed its 41(e) motion on June 15, 1999. I did not find good reason for Lane's delay. While this Delaware action languished, Lane was litigating an appraisal action in Oklahoma against the same majority shareholder that is the subject of this litigation. However, the Oklahoma action involved a separate corporation, not the Delaware corporation named in this suit. The Oklahoma court ruled against Lane and an appeal followed. Lane claimed that the pursuit of the Oklahoma action satisfactorily explained the delay in litigating the Delaware action and inferentially constituted good reason for me to exercise my discretion in favor of denying the Motion to Dismiss for Failure to Prosecute. It is well-settled that this Court may, upon application of a party and after reasonable notice, dismiss a cause when no action has been taken for one year unless good reason can be shown for the inaction. Whether good reason has been shown is a determination to be made within the sound discretion of this Court.
In order to succeed on this motion, Lane must demonstrate that I have either overlooked a decision or principle of law that would have a controlling effect on my decision to dismiss the case, or demonstrate that I misapprehended the law or facts in such a way that affected the outcome of the decision. The facts outlined below lead me to conclude that I did misapprehend the facts.
Mainiero v. Microbyx Corp. , Del. Ch., C.A. No. 14228-NC, Steele, V.C. (Sept. 18, 1996).
Lane fails, however, to identify any principle of law that this Court may have overlooked that would have a controlling effect on the decision to dismiss this case. Lane cites several non-controlling cases which suggest that actions should be dismissed only under "severe circumstances." CTCA, however, correctly argues that the decision to dismiss a case for lack of prosecution is inherently discretionary and the cases offered by Lane are not controlling. Rule 41(e)'s purpose is to weed out, on motion, with notice and an opportunity to be heard, cases which languish without action for more than one year. When, in response to a motion which asserts no action for more than one year, a party shows good reason for the delay, discretion should be liberally exercised to allow the case to proceed on the merits.
Lane cites the following cases supporting his position that dismissal for lack of prosecution is appropriate only under "severe" circumstances: Richman v. General Motors Corp. , 437 F.2d 196, 199 (1st Cir. 1971); Dunphy v. McKee , 134 F.3d 1297, 1299 (7th Cir. 1998); and, Spencer v. Doe , 139 F.3d 107, 112 (2d Cir. 1998).
Apart from cases with differently worded rules from other jurisdictions, Lane relies on Landes v. Wolf as the standard for dismissal for failure to prosecute. This reliance is misplaced for a number of reasons. Landes , which stands for the proposition that the moving party must show more than mere inaction for one year to induce the court to exercise its discretion favoring dismissal, is a 1953 Supreme Court case interpreting Superior Court Rule 41(e). Rule 41(e) of this Court, however, interpreted by Vice Chancellor Balick in 1995, requires that the non-moving party show good reason for inaction or delay of one year or more when a party moves to dismiss for failure to prosecute.
Landes v. Wolf , 96 A.2d 344 (1953).
Id .
Bernard v. State Farm Fire and Casualty Co. , Del. Ch., C.A. No. 10975, order, Balick, V.C. (July 25, 1995).
Lane's motion also asserts principles of law that were not included in his response to CTCA's motion to dismiss. Lane's new legal theory raised for the first time on reargument suggests that this Court implement less drastic sanctions than dismissal with prejudice and provides a litany of factors this Court should consider in determining whether to dismiss for lack of prosecution. The litany of factors include: (1) lack of prejudice to CTCA; (2) willful or bad faith conduct on the part of Lane; (3) merits of the claim; (4) satisfactory explanation for the delay; (5) availability of less drastic sanctions. I know of no Delaware cases that accept Lane's proffered factors as a paradigm for dismissal for failure to prosecute or even as road signs to guide the Court's exercise of discretion. Lane also asserts the patently obvious, but uncompelling fact, that dismissal would cause an "unduly" harsh result in that he would suffer complete forfeiture of the fair share value of his shares to be appraised.
CTCA argues that new legal theories can not be introduced on reargument. I agree. Even if Lane's arguments on the law were valid and persuasive, they were not raised in response to CTCA's motion to dismiss. Rule 59(f) bars the introduction of new issues on a motion for reargument. As draconian and egregious as Lane suggests dismissal may be, arguments that he failed to address earlier cannot now be considered on a motion for reargument.
See also Stein , supra at 4.
Lane also makes several factual assertions that were already addressed or involve allegations not originally raised in response to CTCA's motion to dismiss. Lane argues that he diligently took several steps to advance his interests and has valid reasons for the delay. Among the reasons proffered by Lane are his inability to retain local counsel after the split with former co-plaintiff Randall L. Pittman and the distractions caused by litigation of the Oklahoma action. After the resolution of the Oklahoma action, Lane asserts that he diligently took steps to prosecute the Delaware action including attempts to obtain local counsel and serving discovery on CTCA on September 10, 1999, two months after CTCA filed its motion to dismiss.
Pittman settled his Delaware action on July 27, 1999. Under the terms of the settlement proposal, Lane was given 30 days to settle this action. Lane declined to settle.
CTCA argues that Lane is merely restating the same facts considered on the motion to dismiss and making new factual allegations inappropriate on a motion for reargument. I agree with CTCA.
I already fully evaluated the apparent delay caused by the appraisal action in Oklahoma and the apparent delay caused by Lane's split with Pittman. I gave appropriate consideration to Lane's filing of discovery after CTCA filed the Motion to Dismiss. I did not "misapprehend" those facts, I simply found them to be unpersuasive and insufficient to support good reason for delay as contemplated by our Rule 41(e).
All of the above notwithstanding, after a more careful review of the docket entries documenting the parties actions and reflection upon the way in which the unique "culture" of this Court affects case processing, I conclude that the inaction contemplated by our Rule 41 (e) can not be charged to Lane alone here. For better or worse, unlike Superior Court whose mechanistic, jackbooted, lockstep procedural practices reflect the demands of an overwhelming docket and a body of legal practioners whose expertise varies widely, the Court of Chancery allows its almost cultish band of licensed advocates to self-monitor the progress of the cases in which they appear. As a result, a motion to dismiss for inaction under our Rule 41(e) and the fratricide its filing implies rarely surfaces. The Superior Court's Prothonotary, on the other hand, regularly generates a computer spew notifying counsel that cases have languished for more than a year and that if no action is taken within thirty days the Court will dismiss them sua sponte. We, like languid, lonely, layabouts, however, merely look once a year at our docket, determine which cases reflect no action for more than one year and then request "status reports." Routinely, more often than not stemming from unconcealed annoyance at being troubled by the need to reply, counsel return forms with highly illuminating information such as (my personal favorites) "discovery ongoing" or "settlement negotiations taking place." Satisfied that we have made our best efforts to police the litigation asphalt jungle, we turn back to the demands of our daily work, gratified co-conspirators in the legal masque suggesting that matters in our unique little world are progressing nicely. In reality, we have no clue what is happening with the cases and do not demand to know.
When I reviewed the virtual docket to determine whether it, rather than the papers submitted by counsel, reflected inaction, I discovered the following:
1. Counsel had regularly submitted status reports upon request with the last filed on February 28, 1998; and,
2. On May 14, 1998 "Respondent," CTCA, served notice that it had (finally) responded to "Petitioners'" (Lane and Pittman) Jan. 17, 1996 request for supplementation of discovery responses.
Consideration of these facts appearing in the docket, when combined with my understanding of how this Court discharges its case management responsibilities, leads me to conclude that counsel would have been excused from filing a status report in the beginning of 1999 because the docket would have reflected CTCA's tardy but completed action in response to Lane's 1996 request on May 14, 1998. There would have been "action" within the year and no status report requested. I have every reason to believe, based upon counsels' past years' filings on this same record that upon request, a status report would have been filed and if it had been, there would have been no basis for a motion to dismiss alleging inaction between May 14, 1998 and the June 15, 1999 motion to dismiss. Filing sham status reports have constituted "action" for years in this Court.
I readily concede that counsels' dates for certain actions and those reflected in the docket are not the same. I further recognize that from September 16, 1996 until September 10, 1999 Lane took no affirmative step to prosecute this action. Nonetheless, CTCA's tortoise like response to discovery and the Court of Chancery's lethargic case management practices all contributed to nothing more than a perception of inactivity. Therefore, I can not find on this record a basis for concluding that Lane's less than aggressive pursuit of this cause constituted the type of inaction contemplated by our Rule 41(e). To the extent my November 17, 1999 letter opinion failed to reflect a careful examination of the docket and failed to give sufficient thought to this Court's case management practices, it misapprehended the facts and is, therefore, vacated.
The fact that I reach a different conclusion today for the reasons given does not intimate a change in my view of the legal standard which applies to our consideration of Rule 41(e) motions nor does it suggest that Lane's good cause factual arguments about litigation in Oklahoma or difficulties with witnesses or co-plaintiffs have merit. They decidedly do not. I, however, can not see Lane or its counsel punished by the drastic sanction of dismissal when the circumstances underlying the management of this case fall so far short of an acceptable standard.
Conclusion
Lane fails to convince me that I overlooked a decision or principle of law that would have a controlling effect on the decision to dismiss the case or that I misapprehended the law. Nevertheless, the record convinces me that I did misapprehend the facts in a way which would affect the outcome of the decision. Therefore, Lane's motion for reargument is granted . The November 17, 1999 letter opinion is vacated.
IT IS SO ORDERED.