COURT OF CHANCERY OF THE STATE OF DELAWARE
TAMIKA R. MONTGOMERY-REEVES Leonard L. Williams Justice Center VICE CHANCELLOR 500 N. King Street, Suite 11400 Wilmington, Delaware 19801-3734
Date Submitted: October 14, 2016 Date Decided: November 18, 2016
Thad J. Bracegirdle, Esquire Jeffrey L. Moyer, Esquire Andrea S. Brooks, Esquire Travis S. Hunter, Esquire Wilks, Lukoff & Bracegirdle LLC Arun J. Mohan, Esquire 1300 N. Grant Avenue, Suite 100 Richards Layton & Finger, P.A. Wilmington, DE 19806 One Rodney Square 920 N. King Street Wilmington, DE 19801
RE: inTEAM Associates, LLC v. Heartland Payment Systems, Inc. Civil Action No. 11523-VCMR
Dear Counsel:
This Letter Opinion addresses both parties‟ motions for reargument. For the
reasons stated herein, both motions are denied.
I. BACKGROUND1
On September 30, 2016, this Court issued its Memorandum Opinion (the
“Opinion”)2 enforcing plaintiff inTEAM‟s (“Plaintiff”) and defendant Heartland‟s
(“Defendant”) non-competition agreement, as well as enforcing counterclaim
1 Terms not otherwise defined have the same meaning as in the Opinion. 2 inTEAM Associates, LLC v. Heartland Payment Systems, Inc., 2016 WL 5660282 (Del. Ch. Sept. 30, 2016). inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 2 of 7
plaintiff Heartland‟s and counterclaim defendant Goodman‟s non-solicitation
agreement. On October 7, 2016, Plaintiff filed its motion for reargument
(“Plaintiff‟s Motion”). On October 10, 2016, Defendant filed its motion for
reargument (“Defendant‟s Motion”). On October 14, 2016, both Plaintiff and
Defendant filed their oppositions to the motions.
II. ANALYSIS
In order for the Court to grant a motion for reargument, the moving party
must establish either that the court has overlooked a controlling decision or
principle of law, or that the court has misapprehended the facts or the law.3 In
order for the movant to succeed in reargument, the misapprehension of fact or law
must be material and affect the outcome of the case.4 Additionally, “[r]eargument
under Court of Chancery Rule 59(f) is only available to re-examine the existing
record; therefore, new evidence generally will not be considered on a Rule 59(f)
motion.” 5 The motion must be denied if a party is merely restating its prior
3 See, e.g., Medek v. Medek, 2009 WL 2225994, at *1 (Del. Ch. July 27, 2009); Reserves Dev. LLC v. Severn Sav. Bank, FSB, 2007 WL 4644708, at *1 (Del. Ch. Dec. 31, 2007); Nevins v. Bryan, 2006 WL 205064, at *2 (Del. Ch. Jan. 20, 2006). 4 See, e.g., Aizupitis v. Atkins, 2010 WL 318264, at *1 (Del. Ch. Jan. 27, 2010); Medek, 2009 WL 2225994, at *1; Serv. Corp. of Westover Hills v. Guzzetta, 2008 WL 5459249, at *1 (Del. Ch. Dec. 22, 2008). 5 Reserves Dev. LLC, 2007 WL 4644708, at *1; Nevins, 2006 WL 205064, at *3. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 3 of 7
arguments.6
A. Plaintiff’s Motion For Reargument
Plaintiff argues that the Court should reconsider its decision not to shift
inTEAM‟s fees to Heartland. In the Opinion, the Court held that, although fee-
shifting is permitted under Section 6.5 of the Co-Marketing Agreement, Section
11.2 limits the liability of either party to the total amount of fees paid by the other
party under the Co-Marketing Agreement. 7 The exception, under Section 11.3,
states that the limitation does not apply if the damages are caused by the “willful
misconduct” of the other party.8 inTEAM admitted it had not paid any fees under
the agreement, and the Court found that inTEAM failed to prove willful
misconduct on the part of Heartland.
In its motion, inTEAM states it “argued consistently that Section 11.2 of the
CMA does not limit [Heartland]‟s liability because [Heartland]‟s breaches of the
CMA resulted from willful misconduct.”9 First, inTEAM presented this argument
6 Guzzetta, 2008 WL 5459249, at *1; Reserves Dev. LLC, 2007 WL 4644708, at *1; Nevins, 2006 WL 205064, at *3. 7 inTEAM, 2016 WL 5660282, at *27. 8 Co-Marketing Agreement § 11.3. 9 Pl.‟s Mot. for Reargument 4. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 4 of 7
in support of its claim for damages, not fee-shifting.10 In that argument, inTEAM
stated that “the record proves that [Heartland] intentionally and maliciously
refused to honor its obligations.” 11 inTEAM pointed to no specific facts or
evidence in the record to support its conclusory statement. Second, inTEAM
identifies no fact or law that the Court misapprehended. Instead, inTEAM points
to evidence of the partnership between Heartland and Colyar as proof of
Heartland‟s willful misconduct, as well as an e-mail discussing a product,
Nutrikids, that is not subject to the Co-Marketing Agreement and, therefore, not
relevant to the issue of damages for breach of the Co-Marketing Agreement. The
Court considered all evidence presented at trial and determined that inTEAM did
not meet its burden of proving willful misconduct in Heartland‟s breach of the Co-
Marketing Agreement. As inTEAM‟s motion only discusses evidence the Court
already examined and found did not show willful misconduct, inTEAM‟s motion
for reargument is denied.
B. Defendant’s Motion For Reargument
Heartland‟s motion presents two grounds for reargument: (1) the Court
incorrectly calculated the time period of the injunction against Goodman by not
10 Pl.‟s Opening Post-Trial Br. 69-71. 11 Id.at 69; see also Pl.‟s Opening Pre-Trial Br. 46-47. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 5 of 7
incorporating Section 11(f) of the Consulting Agreement; and (2) the Court
incorrectly calculated the length of the injunction against Heartland by beginning
the calculation on the date a Colyar executive contacted Heartland.
In regards to the injunction against Goodman, Heartland points the Court to
a tolling provision in the Consulting Agreement, which states the time periods
discussed in the non-solicitation provision “shall not include any period(s) of
violation or period(s) of time required for litigation to enforce the covenants set
forth herein.”12 Heartland did not mention this provision or make this argument at
any time prior to the motion for reargument. 13 A party may not present a new
argument for the first time in a motion for reargument.14 Thus, the argument is
waived, and the motion for reargument is denied.
In regards to the injunction against Heartland, Heartland argues that one e-
mail from a Colyar executive should not trigger the beginning of Heartland‟s
breach of the Co-Marketing Agreement based on the Court‟s analysis of
12 JX-22 § 11(f). 13 See Def.‟s Pre-Trial Opening Br. 52-53; Def.‟s Post-Trial Opening Br. 49-51. 14 Oliver v. Boston Univ., 2006 WL 4782232, at *1 (Del. Ch. Dec. 8, 2006) (“„[N]ew arguments that have not previously been raised cannot be considered for reargument.‟” (quoting Lane v. Cancer Treatment Ctrs. of Am., Inc., 2000 WL 364208, at *1 (Del. Ch. Mar. 16, 2000))); see also Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 975581, at *1 (Del. Ch. Mar. 4, 2010). inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 6 of 7
inTEAM‟s alleged breach of the Co-Marketing Agreement. Specifically, the Court
held that one e-mail stating inTEAM was “looking at adding a POS feature” to its
software was not enough to prove by a preponderance of the evidence that
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COURT OF CHANCERY OF THE STATE OF DELAWARE
TAMIKA R. MONTGOMERY-REEVES Leonard L. Williams Justice Center VICE CHANCELLOR 500 N. King Street, Suite 11400 Wilmington, Delaware 19801-3734
Date Submitted: October 14, 2016 Date Decided: November 18, 2016
Thad J. Bracegirdle, Esquire Jeffrey L. Moyer, Esquire Andrea S. Brooks, Esquire Travis S. Hunter, Esquire Wilks, Lukoff & Bracegirdle LLC Arun J. Mohan, Esquire 1300 N. Grant Avenue, Suite 100 Richards Layton & Finger, P.A. Wilmington, DE 19806 One Rodney Square 920 N. King Street Wilmington, DE 19801
RE: inTEAM Associates, LLC v. Heartland Payment Systems, Inc. Civil Action No. 11523-VCMR
Dear Counsel:
This Letter Opinion addresses both parties‟ motions for reargument. For the
reasons stated herein, both motions are denied.
I. BACKGROUND1
On September 30, 2016, this Court issued its Memorandum Opinion (the
“Opinion”)2 enforcing plaintiff inTEAM‟s (“Plaintiff”) and defendant Heartland‟s
(“Defendant”) non-competition agreement, as well as enforcing counterclaim
1 Terms not otherwise defined have the same meaning as in the Opinion. 2 inTEAM Associates, LLC v. Heartland Payment Systems, Inc., 2016 WL 5660282 (Del. Ch. Sept. 30, 2016). inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 2 of 7
plaintiff Heartland‟s and counterclaim defendant Goodman‟s non-solicitation
agreement. On October 7, 2016, Plaintiff filed its motion for reargument
(“Plaintiff‟s Motion”). On October 10, 2016, Defendant filed its motion for
reargument (“Defendant‟s Motion”). On October 14, 2016, both Plaintiff and
Defendant filed their oppositions to the motions.
II. ANALYSIS
In order for the Court to grant a motion for reargument, the moving party
must establish either that the court has overlooked a controlling decision or
principle of law, or that the court has misapprehended the facts or the law.3 In
order for the movant to succeed in reargument, the misapprehension of fact or law
must be material and affect the outcome of the case.4 Additionally, “[r]eargument
under Court of Chancery Rule 59(f) is only available to re-examine the existing
record; therefore, new evidence generally will not be considered on a Rule 59(f)
motion.” 5 The motion must be denied if a party is merely restating its prior
3 See, e.g., Medek v. Medek, 2009 WL 2225994, at *1 (Del. Ch. July 27, 2009); Reserves Dev. LLC v. Severn Sav. Bank, FSB, 2007 WL 4644708, at *1 (Del. Ch. Dec. 31, 2007); Nevins v. Bryan, 2006 WL 205064, at *2 (Del. Ch. Jan. 20, 2006). 4 See, e.g., Aizupitis v. Atkins, 2010 WL 318264, at *1 (Del. Ch. Jan. 27, 2010); Medek, 2009 WL 2225994, at *1; Serv. Corp. of Westover Hills v. Guzzetta, 2008 WL 5459249, at *1 (Del. Ch. Dec. 22, 2008). 5 Reserves Dev. LLC, 2007 WL 4644708, at *1; Nevins, 2006 WL 205064, at *3. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 3 of 7
arguments.6
A. Plaintiff’s Motion For Reargument
Plaintiff argues that the Court should reconsider its decision not to shift
inTEAM‟s fees to Heartland. In the Opinion, the Court held that, although fee-
shifting is permitted under Section 6.5 of the Co-Marketing Agreement, Section
11.2 limits the liability of either party to the total amount of fees paid by the other
party under the Co-Marketing Agreement. 7 The exception, under Section 11.3,
states that the limitation does not apply if the damages are caused by the “willful
misconduct” of the other party.8 inTEAM admitted it had not paid any fees under
the agreement, and the Court found that inTEAM failed to prove willful
misconduct on the part of Heartland.
In its motion, inTEAM states it “argued consistently that Section 11.2 of the
CMA does not limit [Heartland]‟s liability because [Heartland]‟s breaches of the
CMA resulted from willful misconduct.”9 First, inTEAM presented this argument
6 Guzzetta, 2008 WL 5459249, at *1; Reserves Dev. LLC, 2007 WL 4644708, at *1; Nevins, 2006 WL 205064, at *3. 7 inTEAM, 2016 WL 5660282, at *27. 8 Co-Marketing Agreement § 11.3. 9 Pl.‟s Mot. for Reargument 4. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 4 of 7
in support of its claim for damages, not fee-shifting.10 In that argument, inTEAM
stated that “the record proves that [Heartland] intentionally and maliciously
refused to honor its obligations.” 11 inTEAM pointed to no specific facts or
evidence in the record to support its conclusory statement. Second, inTEAM
identifies no fact or law that the Court misapprehended. Instead, inTEAM points
to evidence of the partnership between Heartland and Colyar as proof of
Heartland‟s willful misconduct, as well as an e-mail discussing a product,
Nutrikids, that is not subject to the Co-Marketing Agreement and, therefore, not
relevant to the issue of damages for breach of the Co-Marketing Agreement. The
Court considered all evidence presented at trial and determined that inTEAM did
not meet its burden of proving willful misconduct in Heartland‟s breach of the Co-
Marketing Agreement. As inTEAM‟s motion only discusses evidence the Court
already examined and found did not show willful misconduct, inTEAM‟s motion
for reargument is denied.
B. Defendant’s Motion For Reargument
Heartland‟s motion presents two grounds for reargument: (1) the Court
incorrectly calculated the time period of the injunction against Goodman by not
10 Pl.‟s Opening Post-Trial Br. 69-71. 11 Id.at 69; see also Pl.‟s Opening Pre-Trial Br. 46-47. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 5 of 7
incorporating Section 11(f) of the Consulting Agreement; and (2) the Court
incorrectly calculated the length of the injunction against Heartland by beginning
the calculation on the date a Colyar executive contacted Heartland.
In regards to the injunction against Goodman, Heartland points the Court to
a tolling provision in the Consulting Agreement, which states the time periods
discussed in the non-solicitation provision “shall not include any period(s) of
violation or period(s) of time required for litigation to enforce the covenants set
forth herein.”12 Heartland did not mention this provision or make this argument at
any time prior to the motion for reargument. 13 A party may not present a new
argument for the first time in a motion for reargument.14 Thus, the argument is
waived, and the motion for reargument is denied.
In regards to the injunction against Heartland, Heartland argues that one e-
mail from a Colyar executive should not trigger the beginning of Heartland‟s
breach of the Co-Marketing Agreement based on the Court‟s analysis of
12 JX-22 § 11(f). 13 See Def.‟s Pre-Trial Opening Br. 52-53; Def.‟s Post-Trial Opening Br. 49-51. 14 Oliver v. Boston Univ., 2006 WL 4782232, at *1 (Del. Ch. Dec. 8, 2006) (“„[N]ew arguments that have not previously been raised cannot be considered for reargument.‟” (quoting Lane v. Cancer Treatment Ctrs. of Am., Inc., 2000 WL 364208, at *1 (Del. Ch. Mar. 16, 2000))); see also Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 975581, at *1 (Del. Ch. Mar. 4, 2010). inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 6 of 7
inTEAM‟s alleged breach of the Co-Marketing Agreement. Specifically, the Court
held that one e-mail stating inTEAM was “looking at adding a POS feature” to its
software was not enough to prove by a preponderance of the evidence that
inTEAM had begun a “running start” on the point-of-sale software. 15 Heartland
argues the Court nevertheless used one e-mail to find inTEAM met its burden to
prove a breach on Heartland‟s side. In determining whether Heartland breached
the Co-Marketing Agreement, however, the Court did not rely on one e-mail alone;
rather there was systemic behavior that led the Court to its conclusion.16 The e-
mail served as an element, among others, to inform the Court of when this breach
began, not whether it occurred. 17 Heartland‟s argument does not point to any
misapprehension of law or facts. The Court reviewed the entire trial record and
used its “broad flexibility and discretion” in determining the length of the
injunction.18 Therefore, Heartland‟s motion for reargument is denied.
15 inTEAM, 2016 WL 5660282, at *25. 16 Id. at *17-18. 17 Id. at *17-18, *27. 18 Id. at *26. inTEAM v. Heartland C.A. No. 11523-VCMR November 18, 2016 Page 7 of 7
III. CONCLUSION
For the aforementioned reasons, inTEAM‟s motion for reargument is
DENIED, and Heartland‟s motion for reargument is DENIED.
IT IS SO ORDERED.
Sincerely,
/s/Tamika Montgomery-Reeves
Vice Chancellor
TMR/jp