IN RE: NAVIDEA BIOPHARMACEUTICALS LITIGATION

Background

Navidea Biopharmaceuticals, Inc. sued Michael Goldberg for breach of contract, breach of the duty of good faith and fair dealing, breach of fiduciary duty, and a declaration of the parties’ contractual rights and obligations. Goldberg asserted counterclaims against Navidea and claims against Macrophage Therapeutics, Inc., which the opinion identifies as a Navidea subsidiary.

The court previously dismissed Navidea’s breach-of-fiduciary-duty claim against Goldberg and ruled that Goldberg was entitled to indemnification for reasonable legal fees incurred defending that claim. In an August 24, 2020 order, the court also ruled that Goldberg was entitled to advancement of reasonable legal fees incurred defending Navidea’s remaining claims, provided he gave the required undertaking to repay the money if he was ultimately found not entitled to indemnification under Navidea’s bylaws. The court had earlier declined to exercise additional jurisdiction over Goldberg’s request for advancement of fees incurred in the separate Delaware Chancery Court proceeding involving Macrophage’s claims.

After a trial in that separate proceeding, the Delaware court rejected Macrophage’s conversion claim but found that Goldberg breached his duty of loyalty to Macrophage’s stockholders. It awarded Macrophage nominal damages of $1.00 and declined to award it attorneys’ fees, according to the opinion.

Motion for reconsideration

Navidea moved for reconsideration of the August 24, 2020 order. It argued that the Delaware ruling was new evidence or reflected changed circumstances. Navidea relied on a provision in its bylaws stating that indemnification could not be made for a claim or matter as to which the person had been adjudged liable to the corporation. Navidea argued that the Delaware ruling effectively adjudged Goldberg liable to Navidea because Navidea was Macrophage’s majority stockholder. It asked the court to end Goldberg’s right to advancement and require him to repay the $1,237.50 that Navidea had already advanced.

Goldberg argued that Navidea’s position rested on a false premise: the Delaware court found him liable to a different party on a different claim involving different conduct. He maintained that the Delaware ruling did not establish that he was liable to Navidea or eliminate his right to advancement in this case.

Magistrate Judge Freeman recommended denying Navidea’s motion because it was untimely and lacked merit. Both Goldberg and Navidea filed objections. The district court reviewed the challenged portions under the standards governing objections to a magistrate judge’s report and recommendation. Because Navidea’s objections repeated its earlier arguments, the court reviewed the recommendation for clear error. The court declined to decide whether Navidea’s motion was timely because it was plainly meritless.

Court’s analysis and ruling

Judge Caproni agreed that Navidea had not shown that reconsideration was needed to prevent a seriously unjust result. The court emphasized that Navidea was not a party to the Delaware proceeding and that the two cases involved different types of claims arising from different conduct. Navidea’s case involved contract-related claims based on an alleged breach of the August Agreement, while the Delaware proceeding involved conversion and breach-of-fiduciary-duty claims based on Goldberg’s alleged transfer of Macrophage’s intellectual-property rights to a new corporation.

The court held that Navidea had provided no new evidence showing that the Delaware ruling applied to the parties and issues in this case. It also held that the Delaware court’s finding that Goldberg breached his duty of loyalty to Macrophage’s stockholders was not an adjudication that Goldberg was liable to Navidea on the separate claims pending before the court. The court noted that the Delaware ruling could have consequences concerning whether some issues were already decided, but Navidea had not presented that issue through the motion before the court.

The court adopted the magistrate judge’s report and recommendation in part. It denied Navidea’s motion for reconsideration on the merits, declined to reject or strike the report’s nonbinding discussion of the Delaware ruling, and left the August 24, 2020 order in full effect. The court did not address Goldberg’s requests that Navidea begin payments under the advancement protocol or that Goldberg receive fees and costs for opposing the motion because those requests were outside the scope of the reconsideration motion and the report.

The court ordered Goldberg to submit, by April 8, 2022, a properly supported application for advancement covering reasonable fees incurred from November 13, 2020, through the date of the application. The application must include billing records detailing the time spent litigating each of Navidea’s remaining claims. The court stated that failure to comply would likely result in a determination that Goldberg had withdrawn his advancement motion with prejudice as a sanction for failing to comply with court orders.