Chancery Denies Motion for Interlocutory Appeal

Israel Discount Bank of New York v. First State Depository Company, LLC, C.A. No. 7237-VCP (Del. Ch. Oct. 31, 2012).

Why is this case blogworthy: It features prior Delaware precedent to support the position that trial court decisions on arbitrability are not considered the types of disputes that warrant interlocutory review by the Delaware Supreme Court.

Background: This case, at its simplest level, deals with a dispute over the alleged mishandling of precious collateral pledged for a loan, and related issues, for which the court granted injunctive relief earlier in the year. Prior Chancery decisions in this case that provide background on this internecine battle, were highlighted on these pages here and here.

Highlights of Ruling

  • Initially, the court observes that Supreme Court Rule 42 sets the standard applicable to deciding a motion for an interlocutory appeal, which requires the trial court to have already determined “a substantial issue” and “established a legal right”. Plus, the movant must satisfy one of five additional criteria listed in Rule 42.
  • Procedurally, it remains worth reiterating that the applicant must navigate a bifurcated process. First, the trial court decides the motion for an interlocutory appeal. Next, regardless of the trial court’s decision on the motion for interlocutory appeal, the Supreme Court makes its own separate decision, in its sole discretion. If the trial court denies the motion, that is only one of several factors the Supreme Court considers. Bottom line: Generally, even if the trial court grants the motion, the Supreme Court can still deny the interlocutory appeal. So, too, the trial court can deny the motion, but the Supreme Court can still accept the interlocutory appeal. See footnotes 3-5.
  • In this case however, prior Delaware cases have provided the following guidance that militates against interlocutory appeals where, as in this matter, the prime issue being appealed on an interlocutory basis is one of arbitrability: “The Supreme Court and this Court have repeatedly found that determinations of arbitrability do not relate to the merits of a claim, and, thus, do not determine a substantial issue under Rule 42.” (i.e., will not receive interlocutory review.) See footnotes 11 and 12.
  • The court also found that a legal right was not established and none of the other criteria required to satisfy Rule 42 were present.
  • Lastly, I note with pleasure that this letter ruling is a mercifully short 10-pages, a mere blurb in relation to the average length of most Chancery decisions