Badr Abelhameed Dhia Jafar v. Vatican Challenge 2017, LLC

• Court: Court of Chancery of Delaware
• Decided: March 4, 2022
• Docket: CA No. 2020-0151-SG
• Status: Published

Opinion

COURT OF CHANCERY OF THE SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE VICE CHANCELLOR 34 THE CIRCLE GEORGETOWN, DELAWARE 19947

Date Submitted: February 16, 2022 Date Decided: March 4, 2022

David A. Dorey, Esq. Vatican Challenge 2017, LLC Brandon W. McCune, Esq. c/o Delaware Secretary of State BLANK ROME LLP 401 Federal Street, Suite 4 1201 N. Market Street, Suite 800 Dover, Delaware 19901 Wilmington, Delaware 19801

Alisa E. Moen, Esq. Brian Gottesman, Esq. MOEN LAW LLC GABELL BEAVER LLC 2961 Centerville Road, Suite 350 1207 Delaware Avenue, #2 Wilmington, Delaware 19808 Wilmington, Delaware 19806

RE: Badr Abdelhameed Dhia Jafar v. Vatican Challenge 2017, LLC, C.A. No. 2020-0151-SG Dear Counsel:

The Plaintiff and the former Receiver in this matter, Alisa Moen, Esq.,

have filed cross-motions for reargument of my Letter Opinion of February 8,

2022.1 The Receiver was appointed on behalf of the Plaintiff in the underlying

books-and-records action, but the Order appointing her (the “Receivership Order”)

directed the Defendant corporation, which had defaulted, to pay her fees. I have

held the Defendant in contempt for its failure to pay the Receiver’s fees. A dispute

arose between the Plaintiff and the Receiver about whether the Plaintiff is

1 Jafar v. Vatican Challenge 2017, LLC, 2022 WL 365142 (Del. Ch. Feb. 8, 2022). responsible for those fees in light of the failure of the Defendant to comply. The

Receiver moved to compel the Plaintiff to pay her fees (the “Fee Motion”). In the

Letter Opinion, I found that the Plaintiff was responsible for the Receiver’s fees

incurred pursuant to her role in this matter, but not for fees-on-fees; that is, not for

the cost of attempting to collect her fees and costs from the Plaintiff, including by

litigating the Fee Motion.2

The Plaintiff’s Motion for Reconsideration3 (the “Plaintiff’s Motion”) asks

me to reconsider my holding in the Letter Opinion that the Plaintiff is responsible

for the Receiver’s fees incurred in this matter. In the Receiver’s “Motion for

Clarification and Reconsideration”4 (the “Receiver’s Motion”), the Receiver seeks

her legal fees in connection with litigation over whether the Plaintiff should be

responsible for her substantive fees. For the reasons below, I find that neither

party has articulated grounds for reargument.

In the Fee Motion, the Receiver alleged litigation misconduct against her on

the part of the Plaintiff, which I found insufficient to justify shifting fees-on-fees

under the American Rule that each party should bear its own fees. In the

Receiver’s Motion, the Receiver clarifies that she was not citing bad faith litigation

to avoid the American Rule, but instead in an attempt to shift the costs of the fee

2 Jafar, 2022 WL 365142, at *4–6. 3 Actually, a motion for reargument under Court of Chancery Rule 59(f). 4 Again, a motion for reargument under Rule 59(f). 2 litigation from the Plaintiff to Plaintiff’s Counsel. I considered the allegations of

litigation misconduct and found it insufficient to shift fees, however; this applies to

both Plaintiff and its Counsel. As I pointed out in the Letter Opinion, nothing

therein relieved the Defendant from its obligation to compensate the Receiver,

including her fees-on-fees as appropriate.

The Receiver’s main point in the Receiver’s Motion appears to be that she

was not a litigant, but instead an officer of the Court who deserved payment. I

agree, and ordered payment, after a finding of contempt, against the Defendant.

The question before me on the Fee Motion, however, was whether the Plaintiff

must pay the Receiver’s fees despite the fact that my Orders had placed

responsibility for payment of the Receiver on the Defendant, and not the Plaintiff.

For all the reasons in the Letter Opinion, I found that equity so required. However,

in that dispute over fees, the Plaintiff and the Receiver were in a litigation posture,

as demonstrated by the Fee Motion, and as reflected by the Receiver’s assertion

that she has incurred almost $42 thousand dollars5 in this litigation to recoup

$96,768.60 in substantive fees. For the reasons set out in the Letter Opinion,

equity does not support shifting this cost to the Plaintiff.

5 As explained below, this may include fees incurred in an attempt to cause the Defendant to comply with the Receivership Order, which are payable by the Plaintiff. 3 Motions for reargument are designed to remedy a situation where the Court

has misunderstood a material fact, or misapplied established law, in a way that

affected the outcome of a decision.6 As neither is present here, the Receiver’s

Motion is DENIED to the extent that it seeks reargument.

I note that the Receiver’s duties under the Receivership Order involved

enforcing compliance with the Receivership Order itself, including the Defendant’s

obligation under the Receivership Order to pay her fees and costs.7 Accordingly,

although the fees and costs incurred by the Receiver in attempting to collect her

fees in this matter from the Plaintiff are fees-on-fees subject to the American Rule,

any fees and costs incurred by the Receiver in attempting to collect from the

Defendant fall within the scope of her receivership duties, for which the Plaintiff is

responsible. In the Letter Opinion, I noted that it was unclear whether certain of

the Receiver’s fees and costs, such as those incurred in connection with a

“mediation statement,” were fees-on-fees or fees and costs incurred in connection

with the Receiver’s duties in this matter.8 To the extent that they were incurred in

attempting to collect from the Plaintiff, they are fees-on-fees subject to the

American Rule, and I decline to shift them to the Plaintiff. To the extent they were

incurred in attempting to collect from the Defendant, they were incurred pursuant

6 Feuer v. Zuckerberg, 2021 WL 5174098, at *1 (Del. Ch. Nov. 8, 2021). 7 Order ¶¶ 1, 5, Dkt. No. 21. 8 Jafar, 2022 WL 365142, at *6. 4 to the Receivership Order, and equity requires the Plaintiff to pay them.

Accordingly, the Receiver’s Motion for clarification is GRANTED to the extent

that this paragraph serves to clarify the Letter Opinion.

As to the Plaintiff’s Motion, the Plaintiff merely repeats the same arguments

he made in opposition to the Fee Motion: that the Receiver’s fees are

unreasonable, and should be borne by the Defendant, or the Defendant’s manager

personally. I rejected those arguments in the Letter Opinion. Where a motion for

reargument “merely rehashes arguments already made by the parties and

considered by the Court when reaching the decision from which reargument is

sought, the motion must be denied.”9 Accordingly, the Plaintiff’s Motion is

DENIED. To the extent that the Plaintiff’s Motion seeks a stay of the order

enforcing the Letter Opinion, and this opinion, that request is DENIED.

For the forgoing reasons, the Receiver’s Motion is GRANTED IN PART

and DENIED IN PART. The Plaintiff’s Motion is DENIED. As required by the

Letter Opinion, the Receiver has filed an updated affidavit of her fees and costs

incurred in this matter, excluding (i) fees-on-fees and (ii) fees incurred after

September 2, 2021, along with an accompanying proposed order. To the extent

9 Zuckerberg, 2021 WL 5174098, at *1 (quoting Wong v. USES Holding Corp., 2016 WL 1436594, at *1 (Del. Ch. Apr. 5, 2016)). 5 that the clarification in this opinion requires an amendment to that affidavit and

proposed order, the Receiver should file an amended proposed order promptly.

IT IS SO ORDERED.

Sincerely,

/s/ Sam Glasscock III

Sam Glasscock III

cc: All counsel of record (by File & ServeXpress)