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Supreme Court Reverses Appraisal Opinion

By Francis G. X. Pileggi, Esq.

In Crescent/Mach I Partners L.P. v. Dr. Pepper Bottling Co. of Texas, (Del. Supr., December 1, 2008), read opinion here, the Delaware Supreme Court (in a rare occurrence) reversed the Chancery Court on a procedurally unusual basis in an appraisal case that was previously highlighted on this blog here. (That summary also includes links to prior opinions in the case). In a nutshell, the Supreme Court reversed the opinion of the trial court that had merely fixed a computational error pursuant to Rule 60(a). The High Court's reasoning was based primarily on the fact that the case had already been settled, so the matter was moot. The appellate opinion also includes a short explanation of the Discounted Cash Flow method of valuation (DCF) that was used by the trial court.

 The parties entered into a settlement shortly after the trial court entered a final judgment in the appraisal case and after the trial court dismissed a related fiduciary duty claim. After the settlement, one of the parties applied to the trial court under Chancery Court Rule 60 to modify what it argued was a clerical error in the computation (which was discovered by a disinterested person who was writing an article about the case). The opposing party argued that the error was substantive. The trial court relied on  In re IBP, S’holders Litig., 793 A.2d 396, 397 (Del. Ch. 2002), aff’d by Tyson Foods v. Aetos Corp., 818 A.2d 145, 148 (Del. 2003).

Delaware's High Court reasoned that:

IBP is inapposite. The IBP court’s pronouncement that judicial decisions are public documents was for the purpose of explaining why a party cannot use a settlement to seek vacatur of pre-settlement rulings. Although judicial decisions are public records, that fact cannot empower a court to modify a judgment rendered moot by settlement, even if the judgment contains errors. To hold otherwise would distort the doctrine of mootness and undercut the finality of settlements.

Also included in this opinion is a useful discussion of the impact, if any, of a recorded decision that precedes a settlement, as well as "justiciability" and "mootness" in general. Compare generally, a recent Chancery Court decision about vacatur highlighted here.

Full post as published by Delaware Corporate and Commercial Litigation Blog on December 02, 2008 (boomark / email).