United States District Court, S.D. New York
MEMORANDUM OPINION AND ORDER
M. FURMAN, UNITED STATES DISTRICT JUDGE
Opinion and Order entered on November 8, 2017, familiarity
with which is assumed, the Court addressed two questions: (1)
whether Defendants Charles Merinoff and Gregory Baird are
entitled to advancement by Plaintiff Empire Merchants, LLC
(“Empire”) of their fees and costs in connection
with defending a lawsuit brought by Empire in the Eastern
District of New York (the “E.D.N.Y.Action”); and
(2) whether Merinoff and Baird are liable to Empire for the
fees and costs it incurred as a result of their breach of a
forum-selection clause in filing another lawsuit, in the
Delaware Court of Chancery (the “Delaware
Action”). (Docket No. 62 (“November 8, 2017
Opinion”)). The Court ruled in Empire's favor on
both questions. A little more than one week later, on
November 16, 2017, the Court rejected a request from
Defendants to immediately resolve the question of whether
they are entitled to indemnification for the fees and costs
they incurred in the E.D.N.Y.Action prior to Empire's
amendment of its complaint in that case to remove certain
claims. (Docket No. 64 (“November 16, 2017
Order”)). The Court held that adjudication of that
question should be deferred pending further developments in
the E.D.N.Y. Action. (See id.). Merinoff and Baird
now move for reconsideration of both of those decisions.
(Docket Nos. 65, 68). In the alternative, they move, pursuant
to Rule 12(c) of the Federal Rules of Civil Procedure, for
judgment on the pleadings on the question of whether they are
entitled to advancement of their fees and costs for defending
the E.D.N.Y. Action prior to amendment of Empire's
complaint. (Docket No. 68).
for reconsideration are governed principally by Federal Rule
of Civil Procedure 59(e) and Local Civil Rule 6.3, which are
meant to “ensure the finality of decisions and to
prevent the practice of a losing party examining a decision
and then plugging the gaps of a lost motion with additional
matters.” Medisim Ltd. v. BestMed LLC, No.
10-CV-2463 (SAS), 2012 WL 1450420, at *1 (S.D.N.Y. Apr. 23,
2012). “The major grounds justifying reconsiderations
are ‘an intervening change in controlling law, the
availability of new evidence, or the need to correct a clear
error or prevent manifest injustice.'” Terra
Sec. ASA Konkursbo v. Citigroup, Inc., 820 F.Supp.2d
558, 560 (S.D.N.Y. 2011) (quoting Virgin Atl. Airways,
Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d
Cir. 1992)). “It is well established that the rules
permitting motions for reconsideration must be narrowly
construed and strictly applied so as to avoid repetitive
arguments on issues that have been considered fully by the
[C]ourt.” SOHC, Inc. v. Zentis Food Sols. N. Am.,
LLC, No. 14-CV-2270 (JMF), 2014 WL 6603951, at *1
(S.D.N.Y. Nov. 20, 2014) (alteration in original) (internal
quotation marks omitted). Indeed, a motion for
reconsideration “is not a vehicle for relitigating old
issues, presenting the case under new theories, securing a
rehearing on the merits, or otherwise taking a second bite at
the apple.” Analytical Surveys, Inc. v. Tonga
Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (internal
quotation marks omitted). Ultimately, a “district court
has broad discretion in determining whether to grant a
motion” for reconsideration. Baker v. Dorfman,
239 F.3d 415, 427 (2d Cir. 2000).
against these stringent standards, Merinoff and Baird's
principal motion for reconsideration falls short. First, with
respect to Empire's contract claim, Defendants simply
rehash arguments they previously made concerning whether
Delaware law allows a party to recover attorney's fees
and costs as damages for breach of a forum-selection clause.
(Compare Docket No. 66 (“Defs' First
Br.”), at 7-12, with Docket No. 46
(“Defs' Initial Br.”), at 13-14). Were the
Court writing on a blank slate, it might well agree with
Defendants that the American rule (providing that each party
bears its own costs) should carry the day. Cf. Brown
Rudnick, LLP v. Surgical Orthomedics, Inc., No.
13-CV-4348 (JMF), 2014 WL 3439620, at *12-14 (S.D.N.Y. July
15, 2014) (concluding that New York's highest court would
not allow a party to recover attorney's fees and costs as
damages for breach of a forum-selection clause). And if the
Court had authority to certify the question to the Delaware
Supreme Court, it might well do so. But the Court's task
was - and is - to determine whether the Delaware Supreme
Court has ruled on the question and, to the extent it has
not, to “predict” how that court “would
resolve” the question, giving “the fullest weight
to pronouncements of the state's highest court” and
“proper regard to relevant rulings of the state's
lower courts.” Runner v. N.Y. Stock Exchange,
Inc., 568 F.3d 383, 386 (2d Cir. 2009) (quoting
Travelers Ins. Co. v. Carpenter, 411 F.3d 323, 329
(2d Cir. 2005)). Nothing in Defendants' motion persuades
the Court that it performed that task erroneously, let alone
that it did so in a manner that would be grounds for
Merinoff and Baird seek an impermissible second bite at the
apple in taking issue with the Court's denial of their
claim to advancement. Significantly, they do not (and cannot)
dispute that Delaware law permits the removal of claims by
way of amendment “to moot an advancement
dispute.” (November 8, 2017 Opinion 7-8 (citing
cases)). Nor do (or can) they dispute that the cases upon
which they themselves rely - even in their motion for
reconsideration - ultimately decided the question of
advancement based on the operative pleadings, not the
withdrawn claims. See, e.g., Zaman v. Amedeo
Holdings, Inc., C.A. No. 3115 (VCS), 2008 WL 2168397, at
*26 (Del. Ch. May 23, 2008) (noting that it is
“relevant” that the “overall theme of the
[amended complaint] is consistent with the prior complaints,
” but analyzing the allegations of the amended
complaint to determine advancement). Instead, they simply
take issue with the Court's determination that none of
Empire's amended claims alleges or requires, as a matter
of law, the existence or breach of any duty arising from
Defendants' roles at Empire. That is, Defendants'
motion for reconsideration is based on little more than
disagreement regarding which side of the mootness line
Empire's amended complaint falls. Disagreement with the
Court's decision alone is not a basis for
reconsideration. See, e.g., Analytical
Surveys, 684 F.3d at 52.
arguments for reconsideration of the Court's November 16,
2017 Order deferring adjudication of their request for
indemnification with respect to their pre-amendment fees and
costs are also wanting. (Docket No. 69 (“Defs'
Second Br.”)). In that Order, the Court held that
adjudicating Merinoff and Baird's indemnification claim
at this time would be premature, as “further
proceedings in the E.D.N.Y. Action could affect this
Court's determination” of whether the “carve
out” for acts “of fraud, bad faith or willful
misconduct” would apply. (November 16, 2017 Order 1).
Contrary to Merinoff and Baird's assertions, that
decision is not “inconsistent” with the
Court's November 8, 2017 Opinion, as the Court explicitly
refrained from reaching the question of whether the
“carve out” provision applied. (November 8, 2017
Opinion 9 n.4). Additionally, Defendants are plainly wrong in
contending that the ongoing proceedings in the E.D.N.Y.
Action will necessarily have no bearing on the question of
whether the “carve out” applies. And in any
event, it is black letter law that “indemnification
claims do not typically ripen until after the merits
of an action have been decided, and all appeals have been
resolved.” Hampshire Grp., Ltd. v. Kuttner,
C.A. No. 3607 (VCS), 2010 WL 2739995, at *53 (Del. Ch. July
that said, Defendants' motions are meritorious in one
respect: to the extent they seek a ruling that they are
entitled to advancement (rather than
indemnification) of their fees and expenses relating to
litigation of Empire's pre-amendment claims. (Defs'
Second Br. 9-12). The parties dispute whether that question
was decided by the Court in its November 8, 2017 Opinion.
(Docket No. 71, at 31-32; Defs' Second Br. 11-12). But
that dispute is ultimately irrelevant because, whether the
issue is properly raised by way of a motion for
reconsideration or by way a motion for judgment on the
pleadings, the Court concludes that Merinoff and Baird are
entitled to advancement of their pre-amendment fees and
expenses. As a threshold matter, the fact that those fees and
expenses have already been incurred does not defeat a claim
of advancement. See, e.g., Mooney, 2015 WL
3413272, at *2, 5 (noting that the plaintiff had received
advancement for litigation related to “now-abandoned
allegations”); Imbert v. LCM Interest Holding
LLC, C.A. No. 7845 (ML), 2013 WL 1934563, at *10 (Del.
Ch. May 7, 2013) (holding that if plaintiff could not seek
advancement for responding to a withdrawn claim, “a
company [could] assert claims against a former fiduciary,
dismiss those claims without prejudice before the fiduciary
obtains advancement, and then force the fiduciary to prove
his entitlement to indemnification without the benefit of the
advancement claims for which he bargained”). In
addition, as the Court held in the November 8, 2017 Opinion,
the original complaint in the E.D.N.Y. Action raised claims
against Merinoff and Baird “by reason of the
fact” that they were officers of Empire. (November 16,
2017 Order 2). It is true that the parties continue to
litigate whether the bad faith “carve out”
applies to defeat Defendants' claim for indemnification,
but that dispute (with respect to which the Court intimates
no view at this time) does not affect the right to
advancement under either Delaware law or the terms of the
parties' contract. See, e.g., Fillip v.
Centerstone Linen Servs., LLC, C.A. No. 8712 (ML), 2013
WL 6671663, at *7 (Del. Ch. Dec. 11, 2013) (acknowledging
that it is “implicit under settled law” that
“advancement is required even if an official is accused
of fraud or bad faith, and . . . that the advancement right
would be subject to the official's obligation to repay
the amounts advanced if he was finally determined to have
committed such fraud or bad faith acts” (internal
quotation marks omitted)); cf. Homestore, Inc. v.
Tafeen, 888 A.2d 204, 212 (Del. 2005) (“The right
to advancement is not dependent on the right to
indemnification.”). Indeed, were it otherwise, the
language in the contract that requires Defendants to repay
any amounts they are advanced if it is ultimately determined
that they are not entitled to indemnification would be
Defendants' motions for reconsideration or, in the
alternative, partial judgment on the pleadings are denied,
except to the extent that they seek a ruling that they are
entitled to advancement for their fees and expenses in
connection with litigating Empire's pre-amendment claims.
The parties shall promptly meet and confer to discuss the
amount to which Defendants are entitled on that score and, if
that amount is disputed, a means to resolve the dispute. The
parties shall file a joint letter addressing those issues
within two weeks of the date of this Memorandum Opinion and
Clerk of Court is directed to terminate Docket Nos. 65 and
 Merinoff and Baird contend - as they
did in the initial round of briefing, (see Defs'
Initial Br. 14) - that Delaware law permits attorneys'
fees only “where there is already a contractual
fee-shifting provision” in the relevant contract.
(Defs' First Br. 9 (emphasis omitted)). To that end, they
assert that El Paso Natural Gas Co. v. TransAmerican
Natural Gas Corp., 669 A.2d 36, 40 (Del. 1995), in which
the Delaware Supreme Court held that the plaintiff
“could raise the forum selection clause in the
Settlement Agreement as a defense . . . and, if successful,
recover the costs of that litigation, ” involved such a
fee-shifting provision. Notably, that assertion finds no
support in the Delaware Supreme Court's own opinion or in
the opinion of the lower court. See id.; El Paso
Nat. Gas Co. v. TransAmerican Nat. Gas Corp., C.A. No.
13278, 1994 WL 248195, at *3 (Del. Ch. May 31, 1994).
Instead, the sole support for Defendants' assertion
appears to be a passing reference, without citation, in
Solak v. Sarowitz, 153 A.3d 729, 742 (Del. Ch.
2016). Given other lower court precedent, see, e.g.,
Cornerstone Brands, Inc. v. O'Steen, No. CIV.A.
1501-N, 2006 WL 2788414, at *4 (Del. Ch. Sept. 20, 2006), and
the bases to distinguish Solak, (see
November 8, 2017 Opinion 11), that is not enough for the
Court to reverse course.
 Merinoff and Baird also argue, for the
first time, that “amending a pleading only moots
advancement” under Delaware law “where there is a
bright-line distinction between advanceable and
non-advanceable claims.” (Defs' First Br. 20).
“It is black letter law that a motion for
reconsideration may not be used to advance new . . .
arguments not previously presented to the Court . . .
.” Nat'l Union Fire Ins. Co. of Pittsburgh v.
Las Vegas Prof'l Football Ltd. P'ship, 409 F.
App'x 401, 403 (2d Cir. 2010) (summary order) (internal
quotation marks omitted). In any event, Merinoff and
Baird's argument is without merit, as they point to no
case holding that such a distinction is a prerequisite to the
denial of advancement. See, e.g., Mooney v. Echo
Therapeutics, Inc., C.A. No. 10054 (VCP), 2015 ...