Osco Motors Company LLC v. Marine Acquisition Corp et al

Filing 38

MEMORANDUM ORDER Adopting except as inconsistent with this Memorandum Order 34 REPORT AND RECOMMENDATIONS. The MOTION to Dismiss (D.I. 21 ) is Granted in Part and Denied in Part. The Motion to Stay (D.I. 21 ) is DENIED. Plaintiff is Granted Leave to File an Amended Complaint so long as the amended complaint is filed no later than January 30, 2014. Signed by Judge Richard G. Andrews on 1/16/2014. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
OSCO MOTORS COMPANY LLC, et al.,
Plaintiffs,

v.

Civil Action No. 13-868-RGA

MARINE ACQUISITION CORP, et al.,
Defendants.
MEMORANDUM ORDER
The Magistrate Judge has filed a Report and Recommendation. (D.I. 34). Defendants
have filed objections, to which the Plaintiffs have responded. (D.I. 35, 37). The matter is now
before this Court.
Findings of fact are reviewed for clear error. Review of the factual determinations is
limited to the record that was before the magistrate judge. Determinations of applicable legal
standards are reviewed for error. There are also decisions that involve the exercise of discretion,
and discretionary decisions are reviewed for abuse of discretion. "This deferential standard of
review is 'especially appropriate where the Magistrate Judge has managed this case from the
outset and developed a thorough knowledge ofthe proceedings."' Cooper Hospital/University

Med Ctr. v. Sullivan, 183 F.R.D. 119, 127 (D.N.J. 1998) (quoting another District ofNew Jersey
case).
The grant of a stay is a discretionary decision. I do not believe recommending that the
stay be denied was an abuse of discretion. Further, given the timetable that seems to be
occurring with the arbitration (see D.l. 37, at p. 1 n.2), the issue, while not actually moot, will
likely be moot very shortly.

On the breach of contract claim, while the confidentiality agreement does not say "use," it
would be a strange agreement that allowed the Defendants to use the confidential information to
the detriment of Plaintiffs. Thus, while it is possible that the Court might adopt a contract
interpretation as Defendants request, it cannot be said that the breach of contract claim is
implausible viewing the allegations of the amended complaint, including the contract itself, in
the light most favorable to the Plaintiffs.
On the breach of the duty to negotiate in good faith, Plaintiffs' amended complaint is
quite unclear as to exactly (or even generally) what its theory is. (See D.I. 19, ~~ 80-89; see also

id. ~~ 29, 41-42). The complaint seems to say that the Letter of Intent 1 provided for the
confidentiality of exchanged information, with the Defendants not to disclose the negotiations,
Defendants to have exclusivity and to do the due diligence timely.

(!d.,~~

81-83). Defendants

realized from the exchanged information that there might be economic advantages to not
purchasing Plaintiffs, and therefore did not make the purchase. (!d.,

~~

85-88). The Report and

Recommendation concludes, based on the earlier letter of intent (D.I. 25), that the letter of intent
creates an express duty to negotiate in good faith. (D.I. 34 at 25). While that conclusion seems
more than reasonable in the Rule 12(b)(6) context, I cannot conclude that Count 4 actually
alleges that, and am somewhat doubtful that it alleges a breach of that covenant either.
Therefore, I will dismiss Count 4 with leave to refile.
Thus, this

/h

fL.
day of January 2014, the Objections (D.I. 35) are OVERRULED IN

PART AND SUSTAINED IN PART. The conclusions ofthe Report and Recommendation

1

There were two letters of intent. The amended complaint does not specify which letter
of intent it is referring to in Count 4. The Report and Recommendation refers to the letters of
intent. (D.I. 34 at 11 ).

(D.I. 34) are ADOPTED except as inconsistent with this Memorandum Order. The motion to
dismiss (D.I. 21) is GRANTED IN PART (dismissing Counts 2 and 4) and DENIED IN PART
(not dismissing Counts 3). The motion to stay (D.I. 21) is DENIED. Plaintiff is GRANTED
LEAVE TO FILE AN AMENDED COMPLAINT so long as the amended complaint is filed

not later than January 30, 2014. The Court will SCHEDULE a Rule 16 conference about two
months from now.