Deciding an issue of first impression, the Delaware Court of Chancery recently ruled that even though it imposed fees, after trial, for bad faith litigation as an exception to the American Rule, and that ruling was affirmed by the Delaware Supreme Court, the trial court was without power to impose additional fees, subsequent to the Supreme Court’s decision, for what was alleged to be an appeal pursued in bad faith. In The Marilyn Abrams Living Trust v. Pope Investments LLC, C.A. No. 1289-VCL (Del. Ch. May 29, 2018), the Court of Chancery explained that only the Delaware Supreme Court can impose fees for an appeal pursued in bad faith and that a party seeking such fees needs to file a separate motion pursuant to Supreme Court Rule 20(f).
That appellate procedure should be contrasted with a few cases where the Supreme Court remanded a case to the Chancery Court directing that the trial court consider whether fees should be assessed based on the rulings of the high court–for conduct occurring in the trial court. Also distinguished in the decision were cases involving a “fee-shifting contractual provision” or a statute that allowed for the award of fees, neither of which applied in this matter. This case is an example of the challenge of prevailing on an exception to the American Rule that each party pays for their own fees.