Background
Kevin Kulak sued Itshak On and others, asserting fraudulent inducement and a derivative breach-of-fiduciary-duty claim. In an April 24, 2026 letter decision, the Court granted Kulak summary judgment on fraudulent inducement, denied summary judgment on the fiduciary-duty claim, and held Kulak’s sanctions motions under advisement.
After that decision, the defendants—then self-represented—moved for recusal and reassignment, reargument, relief from judgment, and leave to submit a supplemental declaration. Kulak opposed those motions and sought to dismiss the remaining derivative claim without prejudice, enter final judgment on the fraudulent-inducement claim, recover certain fees, and obtain sanctions.
The Court’s Holding
Chancellor McCormick denied each of the defendants’ motions. The recusal request rested on alleged transcript inaccuracies, but the Court found that the pertinent stenographical errors had been promptly corrected before the April 24 decision issued. The reargument and Rule 60 requests did not identify a misapprehended controlling fact or law, fraud or misconduct by Kulak, or extraordinary circumstances warranting relief.
The Court granted Kulak’s request to voluntarily dismiss the sole remaining derivative claim without prejudice and without notice, finding no plain legal prejudice to defendants. It also directed entry of final judgment under Rule 54(b) on the fraudulent-inducement claim, including pre- and post-judgment interest. The Court awarded Kulak the fees and expenses incurred responding to the recusal motion, the Rule 60 motion, and the motion to submit the supplemental declaration, concluding that defendants’ repeated post-decision filings crossed into vexatious litigation conduct. It denied Kulak’s two sanctions motions because dismissal left no opportunity to develop the fuller record the Court had anticipated.
Key Takeaways
- Corrected transcript errors, without more, did not establish actual or apparent judicial bias.
- Rule 59 reargument and Rule 60 relief cannot be used to relitigate an adverse decision.
- The Court may shift targeted fees for vexatious post-decision motion practice even while denying separate sanctions motions.
Why It Matters
The decision illustrates the Court of Chancery’s willingness to bring finality to protracted litigation while policing duplicative post-decision motions. It also distinguishes between sanctions and equitable fee shifting: although the Court denied formal sanctions when the remaining claim was voluntarily dismissed, it still required defendants to reimburse fees caused by specified vexatious filings.