In the case of Wagamon v. Dolan, C.A. No. 5594-VCG (Del. Ch. Apr. 20, 2012), the Court of Chancery reviewed Defendant William Krieg’s motion for summary judgment pursuant to Court of Chancery Rule 56. This dispute involves the winding up of a joint venture, Internet Working Technologies, Inc. (“INT”) owned by Allan Wagamon and David B. Dolan. Initially, Wagamon sought dissolution of INT under 8 Del. C. § 273. In a separate action, since consolidated, Dolan alleged that Wagamon looted INT to Dolan’s detriment. Specifically, Dolan alleged that Wagamon diverted assets belonging to INT to his solely-owned business, Wagamon Technology Group LLC (“WTG”).
Krieg is a CPA and an employee of Orth and Kowalick P.A. (“O & K”). O & K was hired to provide accounting services to INT. According to Dolan’s Complaint, Krieg is the accountant who provided those services on behalf of O & K. Krieg initially moved to dismiss the complaint, which was granted in part and denied in part.
The allegations of the Complaint that survived Krieg’s Motion to Dismiss are: (i) that Wagamon breached duties to Dolan in not allowing him to participate in the business of INT and in not providing his share of corporate distributions; (ii) that Wagamon and Krieg improperly valued INT to further Wagamon’s attempt to purchase it from Dolan; and (iii) that Wagamon and Krieg converted assets of INT to WTG and encumbered INT with debt to reduce its value. Through the motion for summary judgment, Krieg alleged that Dolan failed to plead a cause of action against him and that no evidence of record, viewed in the light most favorable to Dolan, can establish the liability of Krieg to Dolan.
The Court found that Krieg’s motion for summary judgment simply reiterated the perceived deficiencies of the Complaint as detailed in his motion to dismiss, without demonstrating the absence of genuine issues of material fact. Moreover, Krieg failed to supplement his motion with an affidavit demonstrating the lack of such issues. Further, given that discovery was ongoing and no scheduling order had been entered, the Court deferred ruling on the Motion for Summary Judgment until discovery is complete.
This case is significant by demonstrating that a movant seeking summary judgment should not merely recount the standard under Court of Chancery Rule 56, and should make an effort to supplement such motion with appropriate affidavit(s). Otherwise, the Court will likely hold that the movant failed to meet his, her or its burden of demonstrating the absence of genuine issues of material fact required to support the granting of summary judgment.