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Kurz, et al. v. Holbrook, et al., C.A. No. 5019-VCL (Del. Ch. 7/29/10)

July 29, 2010

In this letter opinion, the Court of Chancery declined to certify an interim award of fees and expenses to be paid by EMAK Worldwide, Inc. (“EMAK”) as a partial final judgment pursuant to Rule 54(b). On July 19, 2010, the Court of Chancery granted plaintiff’s application for an interim fee award, which order was subsequently challenged by EMAK on the grounds that the Court of Chancery cannot direct payment unless such order is certified as a partial final judgment. Specifically, EMAK argued that such order would be “contrary to basic notions of justice” to issue such order “without any right of EMAK to be heard on appeal prior to the payment.” 

The Court began its analysis by reviewing the circumstances under which an interim award of attorneys’ fees may be granted, and observed that whatever the underlying circumstances, an interim award of fees does not hang in suspension until the entry of a final judgment. Vice Chancellor Laster noted that the Delaware Supreme Court has implicitly recognized the Court of Chancery’s inherent power to enforce its orders and direct timely payment of the same. For example, in Minna v. Energy Coal S.p.A., 984 A.2d 120 (Del. 2009), the Supreme Court affirmed the Court of Chancery’s entry of a default judgment as a consequence for the plaintiff’s failure to pay attorneys’ fees awarded as a discovery sanction. In that case, there was no suggestion that the Court of Chancery lacked the authority to require payment of the fee award prior to the entry of a final judgment. Vice Chancellor Laster also cited as support the Delaware Supreme Court’s opinion in Pollard v. The Placers, Inc., 692 A.2d 879 (Del. 1997), wherein the Supreme Court declined to entertain a separate appeal from an interim fee award. In that case, the Supreme Court noted that the “aggrieved party has the assurance that an unappealable interlocutory order is preserved for review upon the entry of a final judgment.” The Supreme Court’s decision in Pollard also comports with the strong policy against piecemeal appeals and in favor of judicial efficiency. In light of the foregoing, the Court of Chancery determined that an immediate right of appeal was neither required nor warranted and that the fee award can be reviewed on appeal from the final order in the case.

The full opinion is available here