Delaware Business Litigation Report

Superior Court Holds that a Partial Motion to Dismiss Tolls the Answering Deadline for Both Challenged and Unchallenged Claims

Unbound Partners Ltd. P’ship v. Invoy Holdings Inc., C.A. No. N20C-09-302 PRW CCLD (Del. Super. Mar. 17, 2021)
In the Delaware Superior Court, a defendant does not concede or default on, and is not required to answer, unchallenged claims in a complaint subject to a partial motion to dismiss during the pendency of the motion to dismiss.

This important ruling providing procedural guidance on tolling of the answering deadline arose from an action for breach of a promissory note. Under the note, failure to pay by the maturity date resulted in either the doubling of the principal due, or conversion of the amount due into preferred stock. After defendant failed to make payments, plaintiff filed a complaint with two claims, the first based on the doubled principal and the second based on interest and the original principal. Defendant only moved to dismiss the first claim. During the pendency of the partial motion to dismiss, defendant did not answer the second claim in the complaint, despite 10 Del. C. § 3901, which requires defendants in note actions to answer by affidavit. 

The Superior Court denied plaintiff’s motion for summary judgment and default judgement on the second claim. Although defendants are required to answer suits on promissory notes by affidavit, Section 3901 does not address the procedure for a pre-answer motion to dismiss. Motions to dismiss are, instead, governed by Superior Court Civil Rule 12, which expressly incorporates Section 3901 but does not address motions for partial dismissal. Joining the majority of federal courts, the Court held that a Rule 12(b) pre-answer motion tolls the answering deadline for both challenged and unchallenged claims during the pendency of a partial motion to dismiss. The Court reasoned that tolling generally was warranted in a partial motion to dismiss because of the difficulty in navigating potential conflicting court schedules for challenged and unchallenged claims, and the difficulty in determining the scope of discovery during the pendency of a partial motion to dismiss. The Court noted, however, that in its discretion for reasons of expediency, a court may nevertheless order the filing of an answer to a complaint’s unchallenged claims during the pendency of a partial motion to dismiss.

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