REM OA Holdings, LLC v. Northern Gold Holdings, LLC

Court of Chancery of Delaware·Decided October 19, 2023·No. 2022-0582-LWW·Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER VICE CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734

Date Submitted: September 28, 2023 Date Decided: October 19, 2023

Thomas W. Briggs, Jr., Esquire Martin S. Lessner, Esquire Alexandra M. Cumings, Esquire Elisabeth S. Bradley, Esquire Alec Hoeschel, Esquire M. Paige Valeski, Esquire Morris, Nichols, Arsht Young Conaway Stargatt & Tunnell LLP & Taylor, LLP 1201 North Market Street 1000 North King Street Wilmington, Delaware 19801 Wilmington, Delaware 19801

RE: REM OA Holdings, LLC, et al. v. Northern Gold Holdings, LLC, C.A. No. 2022-0582-LWW

Dear Counsel:

I write regarding Northern Gold Holdings, LLC’s Motion for

Reconsideration (the “Motion”) pursuant to Court of Chancery Rule 59(f). The

Motion concerns my September 20, 2023 Post-Trial Memorandum Opinion (the

“Post-Trial Opinion”). The Motion is denied for the reasons that follow.

I. BACKGROUND

The facts of this case are described in detail in the Post-Trial Opinion.1 In

that decision, I granted judgment for plaintiffs REM OA Holdings, LLC and SIFT

1 Post-trial Mem. Op. (Dkt. 198) (“Post-trial Op.”). Capitalized terms in this letter have the definitions set forth in the Post-Trial Opinion. C.A. No. 2022-0582-LWW October 19, 2023 Page 2 of 7

Fixed US002, LLC. I concluded that immediately before the Capital Raise, SIFT

Fixed was a 2.5% member of the Company, REM OA was a 48.75% member of

the Company, and Northern Gold was a 48.75% member of the Company.2

In coming to this conclusion, I considered whether Northern Gold authorized

the issuance of warrants to SIFT in approving the Commitment Letter. I addressed

the enforceability of the Warrant Agreement, and considered whether its terms

materially differ from the Commitment Letter that Northern Gold authorized.3

And I held that the Commitment Letter was “expressly subject to future ‘definitive

documentation’” and superseded by the Warrant Agreement, “which contains an

integration clause.”4

Northern Gold has now moved for reconsideration. It argues that the

“Commitment Letter unambiguously provided the material terms and conditions

for issuing the Warrants” and that, because Northern Gold “did not enter into an

agreement containing pre-emptive rights” as addressed in the Commitment Letter,

the court erred in finding that the subsequent Warrant Agreement was validly

2 Id. at 76. 3 Id. at 66. This argument was given limited attention by Northern Gold in its 106-page post-trial answering brief. See Northern Gold’s Post-trial Answering Br. (Dkt. 183) 60. It is the sole focus of the Motion. 4 Post-trial Op. 66. C.A. No. 2022-0582-LWW October 19, 2023 Page 3 of 7

entered into by the Company.5 The plaintiffs oppose the Motion because, among

other reasons, the matter was squarely addressed in the Post-Trial Opinion.6

II. ANALYSIS

“The manifest purpose of all Rule 59 motions is to afford the Trial Court an

opportunity to correct errors prior to appeal.”7 The movant bears a “heavy

burden.”8 “To succeed and obtain reargument, the moving party must demonstrate

that the Court’s decision was predicated upon a misunderstanding of a material fact

or a misapplication of the law.”9 “[A] motion for reargument is ‘not a mechanism

for litigants to relitigate claims already considered by the court[.]’”10

5 Def. and Counterclaim Pl. N. Gold Hldgs., LLC’s Mot. for Reargument of the Court’s Sept. 20, 2023 Mem. Op. (Dkt. 199) (“Reargument Mot.”) 6-7. 6 Pls.’ Opp’n to N. Gold Hldgs., LLC’s Mot. for Reargument of the Court’s Sept. 20, 2023 Mem. Op. (Dkt. 201) (“Pls.’ Opp’n”) 3. 7 Ramon v. Ramon, 963 A.2d 128, 136 (Del. 2008) (quoting Hessler, Inc. v. Farrell, 260 A.2d 701, 702 (Del. 1969)). 8 ITG Brands, LLC v. Reynolds Am., Inc., 2022 WL 16825874, at *1 (Del. Ch. Nov. 7, 2022) (quoting In re ML/EQ Real Est. P’ship Litig., 2000 WL 364188, at *1 (Del. Ch. Mar. 22, 2000)); see also Manti Hldgs., LLC v. Authentix Acq. Co., Inc. 2019 WL 3814453, at *1 (Del. Ch. Aug. 14, 2019) (observing that motions for reargument are “rarely fruitful”). 9 Fisk Ventures, LLC v. Segal, 2008 WL 2721743, at *1 (Del. Ch. July 3, 2008) (citation omitted), aff’d, 984 A.2d 124 (Del. 2009) (TABLE). 10 Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 975581, at *1 (Del. Ch. Mar. 4, 2010) (citation omitted), aff’d, 7 A.3d 485 (Del. 2010); see Brace Indus. Contr., Inc. v. Peterson Enters., Inc., 2018 WL 3360584, at *1 (Del. Ch. July 10, 2018) (quoting ML/EQ Real Est., 2000 WL 364188, at *1 (Del. Ch. Mar. 22, 2000)). C.A. No. 2022-0582-LWW October 19, 2023 Page 4 of 7

Northern Gold’s contentions do not meet Rule 59’s high bar.

Northern Gold avers that “[t]o the extent the Court stated that the Warrant

Agreement superseded the Commitment Letter,” it was in error “because the

Warrant Agreement does not cover the same subject matter as the Commitment

Letter [as] it does not include the material term/condition of the pre-emptive rights

agreement.”11 It further asserts that the “pre-emptive rights term/condition in the

Commitment Letter was a material term for issuing Warrants and it cannot be

ignored or not considered.”12 In other words, Northern Gold believes that I

misapprehended the law because, in its view, the Warrant Agreement does not

supersede the Commitment Letter. If that were so, Northern Gold would not have

authorized the issuance of warrants to SIFT absent a preemptive rights agreement.

This argument was addressed and rejected in my Post-Trial Opinion.13 The

Motion fails for that reason alone.14

11 Reargument Mot. 6-7. 12 Id. 13 Post-trial Op. at 66 n.353 (“Northern Gold argues that other terms of the Commitment Letter were unmet: that there was no ‘recapitalization of the Company’ and that the ‘Company, the Warrant holders and other members of the Company’ did not ‘enter into an agreement containing Co-Sale, Drag-along and Pre-emptive rights customary and consistent with transactions of this type.’ But the parties entered into the superseding Warrant Agreement.”) (citation omitted). C.A. No. 2022-0582-LWW October 19, 2023 Page 5 of 7

The Motion must also be denied because my decision was not predicated on

a misapprehension of facts. The Commitment Letter and the Warrant Agreement

cover the same subject matter: the $10 million transaction with SIFT to purchase a

promissory note with a warrant allowing SIFT to purchase 2.5% of the Company’s

units at an exercise price of $0.01 per unit.15 The Warrant Agreement’s silence on

a “term/condition of the pre-emptive rights agreement” as contemplated by the

Commitment Letter does not require a finding otherwise.16

The Commitment Letter “was expressly subject to future ‘[d]efinitive

documentation’ and ‘ancillary documents . . . to be executed prior to disbursement

of proceeds.’”17 The May 2021 Consent also authorized the Company to enter

agreements contemplated by the Commitment Letter “with such changes as the

Member or Officer, as applicable, deem[ed] in his sole discretion advantageous to

the Company.”18 It follows that the Company was permitted to enter into a

14 Nguyen v. View, Inc., 2017 WL 3169051, at *1 (Del. Ch.

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