This post was prepared by Justin M. Forcier, an associate in the Wilmington, Delaware office of Eckert Seamans.
The recent decision of the Court of Chancery in REJV5 AWH Orlando, LLC v. AWH Orlando Member, LLC, C.A. No. 2017-JRS (Del. Ch. Feb. 28, 2018), is a reminder of how rarely interlocutory appeals are granted.
Background: This dispute arises out of a limited liability agreement (the “Agreement”) that both Plaintiff and Defendant entered into in 2015. Plaintiff claims in its complaint that the Agreement grants it an unqualified right to remove Defendant as a manager if Defendant failed to complete a hotel-redevelopment project, which Defendant failed to do. Plaintiff moved for partial summary judgment on the pleadings and the court ruled that Plaintiff’s interpretation was correct under the plain language of the Agreement, but granted Defendant leave to amend its answer. Instead, Defendant filed an application for interlocutory appeal pursuant to Rule 42 and alternatively a motion to enter final judgment pursuant to Rule 54.
Analysis: The court reiterated that interlocutory appeals are only certified by the trial court, then in a separate analysis they are either denied or granted by the Delaware Supreme Court when a “substantial issue of material importance . . . merits appellate review before a final judgment.” And in this matter, the court issued a Status Quo Order that mandated Defendant stay in its position as a manager until the resolution of the case. Therefore, the Court of Chancery held appellate review is not necessary prior to the final resolution of the case.
The court also denied Defendant’s alternative argument–that partial final judgment should be entered based on Rule 54(b). The court noted that such requests should be granted sparingly. Such an award is only warranted when: (1) the action involves multiple parties or claims; (2) at least one claim or the rights of one party has been fully decided; and (3) there is no reason to delay appeal.
Although the court decided certain issues of contract interpretation in the decision appealed from or alternatively, the subject of a motion for partial final judgment, it did not decide issues of damages or attorneys’ fees that are still pending. Once those issues are decided, the court stated that they should be appealed together. Therefore, the motion for partial final judgment was denied.