COURT OF CHANCERY
OF THE
STATE OF DELAWARE
KATHALEEN ST. JUDE MCCORMICK LEONARD L. WILLIAMS JUSTICE CENTER
CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
October 16, 2026
J. Clayton Athey, Esq. Itshak On
Prickett, Jones & Elliott, P.A. Keren-Or On
1310 N. King Street 24 Haavoda St.
Wilmington, Delaware 19801 Tel-Aviv, Israel 6382132
Re: Kevin Kulak v. Itshak (“Itzik”) On, et al.,
C.A. No. 2023-0011-KSJM
Dear Counsel, Mr. On, and Ms. On,
This decision addresses seven motions: Defendants’ Motion for Recusal and
Random Re-Assignment;1 Defendants’ Motion for Reargument;2 Defendants’ Motion
for Relief from Judgment;3 Defendants’ Motion for Leave to Submit the Supplemental
Declaration of Patrick Devlyn;4 Plaintiff’s Motion for Voluntary Dismissal of
Derivative Claim and for Final Judgment;5 and Plaintiff’s First and Second Motions
for Sanctions.6
I assume the reader’s familiarity with this action and refer to my letter decision
issued on April 24, 2026, (the “April 24 Letter Decision”) for the factual background.7
1 C.A. No. 2023-0011-KSJM Docket (“Dkt.”) 162.
2 Dkt. 163.
3 Dkt. 167.
4 Dkt. 174.
5 Dkt. 173.
6 Dkts. 55, 111.
7 Dkt. 161.
C.A. No. 2023-0011-KSJM
October 16, 2026
Page 2 of 14
The parties have engaged in extensive motion practice, and I have ruled from the
bench or issued letter decisions to resolve their disputes.8 Most recently, I issued the
April 24 Letter Decision, where I denied Defendants’ various motions and Plaintiff’s
motion to strike, entered summary judgment for Plaintiff on Plaintiff’s fraudulent
inducement claim, denied Plaintiff’s motion for summary judgment as to Plaintiff’s
claim for breach of fiduciary duty, and resolved to hold Plaintiff’s two Motions for
Sanctions under advisement.9
I concluded the April 24 Letter Decision with words of caution directed to
Defendants, explaining that Rule 11 gives me discretion to act when parties fail to
meet acceptable standards of litigation conduct.10 I stated that I did not wish to
impose sanctions and would prefer that Defendants proceed in a more focused and
disciplined manner.11 But I warned Defendants that I would not hesitate to enter
sanctions under Rule 11 if Defendants’ troubling litigation conduct continued.12
8 Dkt. 88 at 20:3–26:18 (ruling from the bench on aspects of cross-motions for sanctions and taking under advisement remaining issues and motions); Dkt. 89 (resolving remaining issues raised by cross-motions for sanctions, denying Defendants’ motion to compel, and addressing Defendants’ motion to limit deposition and Plaintiff’s fee request); Dkt. 109 (denying Defendants’ motion to recuse); Dkt. 161 (resolving multiple motions and holding Plaintiff’s two motions for sanctions in abeyance).
9 Dkt. 161.
10 Id. at 34–35.
11 Id.
12 Id.
C.A. No. 2023-0011-KSJM
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Defendants did not heed my warning. Instead, they filed three additional
motions within a month of the April 24 Letter Decision.13 Plaintiff responded to each
of the motions.14 Plaintiff also moved to voluntarily dismiss his derivative claim for
breach of fiduciary duty, which would effectively resolve all pending claims.15
Defendants then filed another motion, forcing Plaintiff to respond.16
Defendants’ motions are denied, and Plaintiff’s motion for voluntary dismissal
is granted. This decision also denies Plaintiff’s two pending sanctions motions.
I. DEFENDANTS’ MOTIONS
A. Motion For Recusal And Random Re-Assignment
The impartiality of the presiding judge “is a fundamental principle of the
administration of justice.”17 The Delaware Supreme Court has held that “[a]s a
matter of due process, a litigant is entitled to neutrality on the part of the presiding
judge[,] but the standards governing disqualification also require the appearance of
impartiality.”18
Determining whether the presiding judge has a personal bias or prejudice
requires that the court engage in a two-part analysis.19 First, “[s]he must, as a matter
13 Dkts. 162, 163, 167.
14 Dkts. 164, 168, 170.
15 Dkt. 173.
16 Dkts. 174, 176.
17 Los v. Los, 595 A.2d 381, 383 (Del. 1991).
18 Id. (citing Ungar v. Sarafite, 376 U.S. 575, 588 (1964)).
19 Id. at 384–85.
C.A. No. 2023-0011-KSJM
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of subjective belief, be satisfied that [s]he can proceed to hear the cause free of bias
or prejudice concerning that party.”20 “Second, even if the judge believes that [s]he
has no bias, situations may arise where, actual bias aside, there is the appearance of
bias sufficient to cause doubt as to the judge’s impartiality.”21 Delaware’s approach
to recusal “reflects an obvious tenet: that there is a duty incumbent on judges not to
unreasonably burden fellow judges by recusing in response to a weak argument for
disqualification.”22
Under this test, recusal is not warranted. I am satisfied that I can continue to
hear this action free of bias and prejudice. And there have been no circumstances
that have created an appearance of bias sufficient to cast doubt as to my impartiality.
Instead of identifying issues relevant to recusal, Defendants argue that I relied
on inaccurate facts in the April 24 Letter Decision.23 I did not. Defendants’ motion
is based on stenographical errors in the transcript that were promptly corrected by
the Chief Court Reporter at Defendants’ request. In fact, a copy of the corrected
transcript was sent to Defendants the same day that Defendants sent a consolidated
errata to the Chief Court Reporter.24 I had the corrected transcript when I issued my
20 Id.
21 Id. at 385 (citing State v. Walberg, 325 N.W.2d 687, 692 (Wis. 1982)).
22 State v. Desmond, 2011 WL 91984, at *12 (Del. Super. Jan. 5, 2011) (internal
quotation marks omitted), aff’d, 29 A.3d 245 (Del. 2011) (TABLE).
23 See generally Dkt. 162.
24 Dkt. 168, Ex. A.
C.A. No. 2023-0011-KSJM
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decision. The Chief Court Reporter also advised that if Defendants believed there
were additional inaccuracies to contact my chambers on how to proceed. Defendants
did not do so until after I issued the April 24 Letter Decision.
Defendants’ Motion for Recusal is denied. I also see no basis for reassignment,
which I can grant at my discretion. Defendants’ Motion for Reassignment is denied.
B. Motion For Reargument
Defendants seek reargument under Court of Chancery Rule 59(f).25 Under
Court of Chancery Rule 59(f), “[t]he Court will deny a motion for reargument ‘unless
the Court has overlooked a decision or principle of law that would have a controlling
effect or the Court has misapprehended the law or the facts so that the outcome of
the decision would be affected.’”26 A motion for reargument is “not a mechanism for
litigants to relitigate claims already considered by the court, or to raise new
arguments that they failed to present in a timely way.”27 If a motion for reargument
“merely rehashes arguments already made by the parties and considered by the
25 Dkt. 163. Rule 59 was amended after the motion was filed, eliminating Rule 59(f) effective June 1. The operative rule governing reargument is now Rule 59(c). 26 Nguyen v. View, Inc., 2017 WL 3169051, at *2 (Del. Ch. July 26, 2017) (quoting
Stein v. Orloff, 1985 WL 21136, at *2 (Del. Ch. Sep. 26, 1985)).
27 Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 975581, at *1
(Del. Ch. Mar. 4, 2010) (footnote and internal quotation marks omitted) (first quoting Am. Legacy Found. v. Lorillard Tobacco Co., 895 A.2d 874, 877 (Del. Ch. 2005)), aff’d, 7 A.3d 485 (Del. 2010) (TABLE); and then citing Oliver v. Boston Univ., 2006 WL 4782232, at *1 (Del. Ch. Dec. 8, 2006)).
C.A. No. 2023-0011-KSJM
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Court” in rendering the decision for which reargument is sought, the motion must be
denied.28 On a motion for reargument, the movant bears a “heavy burden.”29
Defendants have not identified any law or fact that I misapprehended. The
motion for reargument is denied.
C. Motion For Relief From Judgment
Defendants argue that relief from judgment is warranted under Rule 60(b)(3)
and the catchall provision under Rule 60(b)(6).30
Rule 60(b)(3) permits a court to relieve a party from a judgment in the event of
intrinsic or extrinsic fraud, misrepresentation, or other misconduct of an adverse
party.31 Rule 60(b) motions are not opportunities for a do-over or an appeal.32 Nor
are Rule 60(b) motions granted easily.33 The court will exercise its discretion to deny
an application under Rule 60(b)(3) “if it is merely an attempt to relitigate the case or
if the court otherwise concludes that fraud or misrepresentation has not been
28 Wong v. USES Hldg. Corp., 2016 WL 1436594, at *1 (Del. Ch. Apr. 5, 2016).
29 In re ML/EQ Real Est. P’ship Litig., Consol., 2000 WL 364188, at *1 (Del. Ch. Mar.
22, 2000).
30 Dkt. 167.
31 Ct. Ch. R. 60(b)(3).
32 Erste Asset Mgmt. GmbH v. Hees, 341 A.3d 1008, 1020–21 (Del. 2025) (quoting
Carlyle Inv. Mgmt. LLC v. Nat’l Indus. Gp. (Hldg.), 2012 WL 4847089, at *5 (Del. Ch. Oct. 11, 2012), aff’d, 67 A.3d 373 (Del. 2013)).
33 Id. at 1020 (citing MCA, Inc. v. Matsushita Elec. Indus. Co., Ltd., 785 A.2d 625,
634–35 (Del. 2001)).
C.A. No. 2023-0011-KSJM
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established.”34 Defendants have not identified any fraud, misrepresentation, or
misconduct by Plaintiff as required by Rule 60(b)(3).35
Rule 60(b)(6) permits the court to relieve a party from judgment for any other
reason that justifies relief.36 The Rule 60(b)(6) standard is stringent, and courts must
find “extraordinary circumstances” before granting relief.37 “Rule 60(b)(6) does not
apply when one party has made a deliberate choice to handle a case in a certain way,
suffers an adverse result, and therefore seeks to adopt a new strategy.”38 For relief
under Rule 60(b)(6), Defendants rehash their argument made in the motion for
recusal and point to transcript errors that were promptly corrected.39 Defendants
were given an opportunity to contact my chambers if they believed there were any
additional inaccuracies in the transcript but chose not to do so until after I issued the
April 24 Letter Decision.40 Defendants made a “deliberate choice to handle a case in
a certain way” and thus cannot use a Rule 60(b)(6) motion to relitigate an adverse
34 Franklin v. Glenhill Advisors LLC, 2023 WL 569192, at *10 (Del. Ch. Jan. 27, 2023)
(quoting Wilson v. Montague, 19 A.3d 302, 2011 WL 1661561, at *3 (Del. May 3, 2011) (ORDER)).
35 See Dkt. 167 at 3–4.
36 Ct. Ch. R. 60(b)(6).
37 Carlyle, 2012 WL 4847089, at *13 (first citing Bachtle v. Bachtle, 494 A.2d 1253,
1256 (Del. 1985); and then citing Scureman v. Judge, 1998 WL 409153, at *5 (Del. Ch. June 26, 1998)).
38 Id. at *13
39 See Dkt. 167, Exs. A–D.
40 Dkt. 168, Ex. A.
C.A. No. 2023-0011-KSJM
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result.41 Defendants therefore have failed to show extraordinary circumstances to
warrant relief under Rule 60(b)(6).
Defendants’ motion for relief under Rules 60(b)(3) and 60(b)(6) is denied.
D. Motion For Leave To Submit Supplemental Declaration
Defendants seek leave to submit the Supplemental Declaration of Patrick
Devlyn.42 A court will allow such request when doing so is in the interests of fairness
and substantial justice, but such matters are ultimately left to the court’s discretion.43
Because denying this motion and granting Plaintiff’s motion, as explained below, will
give finality to both parties, the motion is denied.
II. PLAINTIFF’S MOTIONS
A. Motion For Voluntary Dismissal, Final Judgment, And Fees
On September 16, 2026, Plaintiff filed a motion asking the court to dismiss his
derivative claim against Defendants without prejudice, enter a final judgment on
Count I of the Complaint that was granted partial summary judgment, shift fees, and
grant the sanctions motions.44
41 See Carlyle, 2012 WL 4847089, at *13.
42 Dkt. 174.
43 Whittington v. Dragon Gp., LLC, 2012 WL 3089861, at *3 (Del. Ch. July 20, 2012)
(quoting Lola Cars Int’l Ltd. v. Krohn Racing, LLC, 2010 WL 1818907, at *1 (Del. Ch. Apr. 23, 2010)).
44 Dkt. 173.
C.A. No. 2023-0011-KSJM
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1. Voluntary Dismissal
Whether to permit voluntary dismissal under Rule 41(a)(2) is a discretionary
matter for this court.45 “In exercising its discretion, the court considers whether
dismissal would cause the defendants to suffer plain legal prejudice.” 46 Relevant
factors include: (1) the defendants’ effort and expense in preparation for trial;
(2) excessive delay and lack of diligence on the part of the plaintiff in prosecuting the
action; (3) insufficient explanation for the need to take a dismissal; and (4) any
summary judgment filed by the defendants.47 The court must deliver substantial
justice to both parties.48
The factors support granting Plaintiff’s request for voluntary dismissal.
Defendants have spent comparatively less funds in defending this action.
Defendants’ counsel withdrew from this matter in early 2024,49 and Defendants have
chosen to proceed self-represented. Plaintiff has litigated this matter promptly, so
there is no record of excessive delay or lack of diligence by Plaintiff. Plaintiff has
spent his own financial resources litigating this matter on behalf of an allegedly
45 Paragon Techs., Inc. v. Ocean Power Techs., Inc., 2024 WL 4235638, at *1 (Del. Ch.
Sep. 19, 2024).
46 Id. (internal quotation marks omitted) (quoting Draper v. Paul N. Gardner Defined
Plan Tr., 625 A.2d 859, 863 (Del. 1993)).
47 Id. (quoting Draper, 625 A.2d at 864).
48 In re Marriott Hotel Props. II Ltd. P’ship Unitholders Litig., 1997 WL 589028, at *6
(Del. Ch. Sep. 17, 1997).
49 Dkt. 54.
C.A. No. 2023-0011-KSJM
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defunct company and has determined that it is no longer financially or practically
feasible for Plaintiff—that is an adequate explanation for dismissal. There are no
dispositive motions pending. Dismissal would result in substantial justice for the
parties.
Rule 23.1(d)(3)(A) permits dismissal without notice if the dismissal is to be
without prejudice.50 Because Plaintiff seeks to dismiss the derivative claim without
prejudice, I find that notice is not required.
Plaintiff’s motion to voluntarily dismiss Count II of the Complaint is granted.
2. Entry Of Final Judgment
Plaintiff requests an entry of final judgment on Count I of fraudulent
inducement,51 for which I granted summary judgment in the April 24 Letter
Decision.52
Under Rule 54(b), the court may direct entry of judgment as to one or more,
but fewer than all, claims or parties only if the court expressly determines that there
is no just reason for delay.53 Entering final judgment on Plaintiff’s fraudulent
inducement claim would start the clock for Defendants’ time to appeal and following
any appeal, allow Plaintiff to recover. Therefore, there is no just reason for delay and
50 Ct. Ch. R. 23.1(d)(3)(A).
51 Dkt. 173.
52 See Dkt. 161 at 14–20.
53 Ct. Ch. R. 54(b).
C.A. No. 2023-0011-KSJM
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final judgment on Count I can be entered. Plaintiff’s request for pre- and postjudgment interest is also granted.
3. Fees
Delaware courts follow the American Rule that each party is expected to pay
its own attorneys’ fees regardless of the outcome of the litigation. This court,
however, retains the ability to shift fees when faced with vexatious litigation conduct
“to deter abusive litigation and to protect the integrity of the judicial process.” 54 This
court may award fees “in its discretion . . . ‘where equity requires.’”55 This court has
used fee-shifting as “a method for reducing and appropriately allocating the costs of
vexatious behavior sufficiently serious that justice requires such mitigation.”56 This
exception is frequently referred to as the “bad faith” exception to the American rule,
although the exception itself is perhaps more expansive, and there is “no single,
comprehensive definition of ‘bad faith’ that will justify a fee-shifting award.”57 To
capture the sorts of vexatious activities that the bad-faith exception is intended to
address, this court employs the “glaring egregiousness” standard.58
54 Montgomery Cellular Hldg. Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005).
55 Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund,
68 A.3d 665, 687 (Del. 2013) (quoting Burge v. Fidelity Bond and Mortg. Co., 648 A.2d 414, 421 (Del. 1994)).
56 Martin v. Harbor Diversified, Inc., 2020 WL 568971, at *1 (Del. Ch. Feb. 5, 2020).
57 Montgomery Cellular, 880 A.2d at 227.
58 See, e.g., RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 879 (Del. 2015) (affirming
this court’s evaluation of fee shifting under the “glaring egregiousness” standard); Isr. Disc. Bank of N.Y. v. First State Depository Co., 2013 WL 2326875, at *28–29 (Del. Ch. May 29, 2013) (applying the “glaring egregiousness” standard in assessing C.A. No. 2023-0011-KSJM
October 16, 2026
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Delaware courts have shifted fees for glaringly egregious conduct, such as
forcing a plaintiff to file suit to “secure a clearly defined and established right,”59
“unnecessarily prolong[ing] or delay[ing] litigation, falsif[ying] records, or knowingly
assert[ing] frivolous claims.”60
Although there is a fine line between glaringly egregious conduct and an
aggressive litigation position, Defendants crossed the line in this case. Failing to
heed my warning, Defendants filed three motions within a month of the April 24
Letter Decision challenging the decision and a fourth later, forcing Plaintiff to spend
more financial resources to respond and needlessly increasing the cost of litigation
for Plaintiff.
potential fee shifting); eBay Domestic Hldgs., Inc. v. Newmark, 16 A.3d 1, 46–48 (Del. Ch. 2010) (same); In re Charles Wm. Smith Tr., 1999 WL 596274, at *2–4 (Del. Ch. July 23, 1999) (same).
59 McGowan v. Empress Ent., Inc., 791 A.2d 1, 4 (Del. Ch. 2000) (quoting Abex v. Koll
Real Estate Gp., Inc., 1994 WL 728827, at *20 (Del. Ch. Dec. 22, 1994)) (“If McGowan had a clearly established legal right to inspect Empress's books and records, and Empress's conduct forced him to bring this action to secure that right, then the defendant can be found to have acted in bad faith and be ordered to pay the plaintiff's legal fees and expenses.”); accord. Donnelly v. Keryx Biopharms., Inc., 2019 WL 5446015, at *6 (Del. Ch. Oct. 24, 2019); Norman v. US MobilComm, Inc., 2006 WL 1229115, at *4 (Del. Ch. Apr. 28, 2006).
60 RBC Cap. Mkts., LLC v. Educ. Loan Tr. IV, 2016 WL 703852, at *3 (Del. Super.
Feb. 17, 2016) (quoting Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 546 (Del. 1998)); ASB Allegiance Real Estate Fund v. Scion Breckenridge Managing Member, LLC, 2013 WL 5152295, at *10 (Del. Ch. Sep. 16, 2013) (quoting Beck v. Atl. Coast PLC, 868 A.2d 840, 851 (Del. Ch. 2005)); In re SS & C Techs., Inc. S’holders Litig., 948 A.2d 1140, 1150 (Del. Ch. 2008) (quoting Johnston, 720 A.2d at 546).
C.A. No. 2023-0011-KSJM
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Although Delaware courts have described the bad faith standard as
“subjective,” this court has shifted fees based on litigation conduct without launching
a fact-intensive investigation into the offending party’s state of mind.61 Moreover,
where this court shifts fees to curb and correct for overly vexatious litigation behavior,
a showing of glaringly egregious litigation conduct is enough. To the extent that a
finding of bad faith is necessary, then the court can infer bad faith based on the
litigation conduct alone. In this case, such an inference is appropriate.
Plaintiff requests fees and expenses he incurred responding to Defendants’
Motion for Recusal, Motion for Leave to Submit the Supplemental Declaration, and
Motion for Relief from Judgment under Rule 60. The fee requests are granted.
B. Motion For Sanctions
There are two pending sanctions motions. In his first motion for sanctions,
Plaintiff argues that Defendants spoliated evidence and sought an adverse inference
on that basis.62 I took that motion under advisement to allow the trial record and
arguments to inform a resolution. I also held Plaintiff’s second motion in abeyance
to allow development of a fuller record.63
61 See, e.g., McGowan, 791 A.2d at 4 (holding that the defendant “acted in subjective
bad faith by failing to honor its promises to produce its books and records, and later by opposing [the plaintiff’s] § 220 action to enforce his legal right to inspect those books and records,” despite there being no record of the defendant’s state of mind). 62 See Dkt. 161 at 26.
63 Id. at 29.
C.A. No. 2023-0011-KSJM
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Because this decision grants Plaintiff’s voluntary dismissal of the only
remaining claim in his complaint, there is no reason or opportunity for development
of a fuller record. Accordingly, the sanctions motions are denied.
III. CONCLUSION
Defendants’ motions are denied. Plaintiff’s motion for voluntary dismissal is
granted and Plaintiff’s First and Second Sanctions Motions are denied. Plaintiff is
instructed to submit a proposed form of final order implementing this decision.
Sincerely,
/s/ Kathaleen St. J. McCormick
Chancellor
cc: All counsel of record (by File & ServeXpress)