In Gerber v. ECE Holdings, LLC, C.A. No. 3543-VCN (Del. Ch. Sept. 29, 2011), the Court of Chancery addressed a motion to both amend and supplement a complaint.
The differences between a motion to supplement and a motion to amend a complaint, as well as whether Rule 15 (aaa) bars a motion to amend after an answering brief has been filed in reply to a motion to dismiss.
This case involved a challenge to a purchase by Enterprise GP Holdings, L.P. (“EPE”) of Texas Eastern Product Partners, LLC (“Teppco GP”), from EPE’s controller. While those claims were pending, EPE merged into another entity. In light of the merger, the plaintiff sought to both supplement and amend his complaint.
Court of Chancery Rules 15 (a) and 15 (d) encourage amendments when there is no prejudice. However, Rule 15 (aaa) is a “custom rule” in Chancery that forces a plaintiff to make a binary choice when confronted by a motion to dismiss: (i) either stand on one’s complaint and file an answering brief to oppose the motion to dismiss; or (ii) amend the complaint before a response to the motion to dismiss is submitted. Only in exceptional circumstances will the court allow a motion to amend after an answering brief is filed in response to a motion to dismiss, and no such circumstances existed here. Moreover, there was no showing that it “would not be just under all the circumstances” for the dismissal to be with prejudice, as provided under Rule 15 (aaa).
The defining difference between amended and supplemental pleadings under Court of Chancery Rule 15 is that supplemental pleadings deal with events that occurred after the pleading to be revised was filed. Amendments deal with events that occurred prior to the filing. There was no inexcusable delay or prejudice shown that would prevent the Court from granting the motion to supplement.
EPE, the entity on whose behalf the original claims were brought, no longer exists. The Court observed that:
“… in the corporate context, there are at least some instances in which an action originally brought on behalf of a corporation may be brought by the corporation’s former shareholders after the corporation has been merged out of existence.” See cases cited at footnotes 13 and 14.