                                      COURT OF CHANCERY
                                              OF THE
                                      STATE OF DELAWARE

TAMIKA R. MONTGOMERY-REEVES                                        New Castle County Courthouse
      VICE CHANCELLOR                                              500 N. King Street, Suite 11400
                                                                  Wilmington, Delaware 19801-3734


                               Date Submitted: February 2, 2016
                                 Date Decided: May 4, 2016




       John M. LaRosa, Esquire                     Joseph C. Handlon, Esquire
       Law Office of John M. LaRosa                Department of Justice
       Two East 7th Street                         State of Delaware
       Suite 302                                   Deputy Attorneys General
       Wilmington, DE 19801-3707                   Carvel State Building
                                                   820 North French Street, 6th Floor
                                                   Wilmington, DE 19801

             RE:   First State Towing, LLC and Katharine E. Morris v. Div. of State
                   Police, Dep’t of Safety and Homeland Sec., State of Delaware, et al.
                   Civil Action No. 11045-VCMR

       Dear Counsel:

             This Letter Opinion addresses the defendants’ motion to dismiss the

       plaintiffs’ complaint (the “Complaint”).        For the reasons stated below, the

       defendants’ motion to dismiss is granted.

       I.    BACKGROUND
             Subject to certain qualifications, the Delaware Code authorizes “[a]ny police

       officer of this State, or a county or municipality therein, while in the performance

       of duty, [to] remove, store or cause to be removed or stored from any public

       highway, right-of-way, street or alley, at the owner’s or operator’s expense, any
First State Towing v. Div. of State Police
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motor vehicle, trailer or part thereof,”1 and further requires the Delaware

Department of Safety and Homeland Security (“DSHS”) to promulgate regulations

governing the selection of towers (the “Towing Regulations”).2 These Towing

Regulations define “Approved Tower” as “a towing operator that has applied to the

Division of State Police for certification and been approved by the Division after

meeting all criteria for approval, including but not limited to the inspection of the

operator’s tow vehicle(s).”3 Each Approved Tower must complete and submit a

renewal form to its assigned troop each January.

      Plaintiffs, First State Towing, LLC (“FST”) and Katharine E. Morris, FST’s

President, majority owner, and operator, submitted an application to Defendant

Division of State Police, Department of Safety and Homeland Security, State of

Delaware (“Delaware State Police” or “DSP”), to become an Approved Tower as

early as 2000, were approved on or about January 2, 2001, and were assigned a

Troop Area (“Troop Area 6”) patrolled by Delaware State Police Troop 6 (“Troop

6”). As of the filing of the Complaint on May 20, 2015, Defendant Colonel

Nathaniel McQueen, Jr. was the superintendent of DSP and its highest-ranking

1
      21 Del. C. § 6901(a).
2
      Id. § 6901(c).
3
      2 Del. Admin. § 1301 (“Towing Regulations”).
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officer, and Defendant John Doe was the current Troop Commander of Troop 6

(together with DSP, “Defendants”).

      The purpose of the Towing Regulations is “to protect and promote public

safety and to maintain hazard-free streets and highways by: requiring tow vehicles

and equipment to meet minimum specifications; requiring tow truck operators to

be licensed and insured and to hire only competent and responsible drivers; and by

creating a more equitable and uniform system of handling towing calls.”4 The

Towing Regulations provide as follows:

            6.1 Based on the needs of public safety, the Troop
            Commander may designate part of the Troop Area as a
            Special Assigned Area to be served by one or more
            Approved Towers taking into account such criteria as,
            but not limited to, motor vehicle accident statistics;
            traffic patterns; and other criteria relating to the response
            time of towing companies; the density of approved
            towing companies; and prior history of reliable and
            expeditious towing services.

            6.2 Each Troop Commander shall have the discretion,
            based on the needs of public safety, to designate one or
            more Approved Towers to provide all non-consensual
            towing services in either the Troop Area or a Special
            Assigned Area. The Troop Commander shall establish
            the number of Approved Towers based on the need to
            maintain adequate and timely public services to minimize
            management of a rotation system.            The Troop

4
      Towing Regulations § 1.0.
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             Commander may revise the number of approved Towers
             if he or she finds that the public is not being
             appropriately served by the existing number of towers.

             6.3 If there are more than one Approved Tower for the
             Troop Area or Special Assigned Area, they shall be
             placed on a rotating list and shall be called by the Troop
             duty officer to remove a wrecked, disabled, stolen or
             abandoned vehicle, or a vehicle following an arrest,
             according to the tower’s placement on a Troop towing
             rotation list for that area and according to the tow vehicle
             classification for the size of the vehicle to be towed.
             Approved Towers will be called in succession from the
             top of the list.5

      FST is one of Troop 6’s five Approved Towers. Troop 6 utilizes Special

Assigned Areas, to which only one Approved Tower is assigned, rather than a

rotating list. In 2002, after the owner of a then-Approved Tower, Colemery’s, was

accused of committing gun crimes, DSP revoked Colemery’s Approved Tower

status and reassigned its Special Assigned Area to FST. The next day, however,

DSP divided that area and assigned the newly created Special Assigned Areas to

two other Approved Towers, leaving FST without any Special Assigned Area.

Plaintiffs protested for two years until, in 2004, DSP assigned FST a small Special

Assigned Area and promised to give FST an area comparable to those assigned to

the other Troop 6 Approved Towers within one year.

5
      Id. §§ 6.1-6.3.
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      Plaintiffs allege that, to this day, Defendants have not assigned FST, the only

female-owned towing company in Delaware, additional territory. Additionally, all

male-owned Approved Towers tow vehicles for more than one Troop, whereas

Plaintiffs are the only Approved Tower assigned to just one Troop. Further, when

the Christiana Mall parking lot “most recently” became available, it was assigned

to B & F Towing (“B & F”). In fact, Plaintiffs allege that B & F removes the most

towable vehicles from Troop Area 6, while FST receives the fourth most calls from

Troop 6.6 This is despite the fact that FST’s average response times are within the

acceptable limit of thirty minutes, but the response times of B & F average forty-

five minutes or longer. Plaintiffs seem to suggest that B & F’s favored status

might result from its owner’s relationship to certain state employees. Specifically,

the owner of B & F has a male relative who is a retired State Trooper previously

assigned to Troop 6, and B & F also employed at least one Delaware State Police

officer part-time until he retired recently.

      Plaintiffs allege that they have lost and continue to lose tens of thousands of

dollars in revenues each month as a result of Defendants’ refusal to implement an

equitable and uniform system of handling towing calls in the Troop Area, which

6
      For example, in a three day period, B & F commonly receives thirty calls from
      Troop 6 while Plaintiffs only receive one call.
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Plaintiffs argue is a failure to comply with the Towing Regulations. Plaintiffs state

that over the past fourteen years, from 2002 to the present, they made numerous

efforts (both on their own and with the help of state legislators in Dover) to resolve

this issue, including contacting prior Captains at Troop 6, the Colonel of the

Delaware State Police, and the DSHS, but Defendants transferred away the

Captains at Troop 6 who attempted to remedy this issue.            Plaintiffs contend

Defendants unlawfully exclude Plaintiffs and use male-owned businesses instead.

II.   PROCEDURAL HISTORY AND CONTENTIONS

      On May 20, 2015, Plaintiffs filed their three-count Complaint. Count I

alleges violations of 21 Del. C. § 6901 and 2 Del. Admin. § 1301; Count II alleges

Defendants discriminate against Morris on the basis of her sex and against FST as

a minority-owned business in violation of the Equal Protection Clause of the

Fourteenth Amendment and 42 U.S.C. § 1983; and Count III alleges Defendants

treat Plaintiffs differently for arbitrary or malicious reasons and without rational

basis in violation of the Equal Protection Clause of the Fourteenth Amendment and

42 U.S.C. § 1983. The Complaint seeks a judgment declaring Defendants’ acts to

be in violation of Plaintiffs’ rights under constitutional, statutory, and regulatory

law; a mandatory injunction directing Defendants to (1) implement a rotating list

of all Approved Towers for Troop 6 and to place Plaintiffs at the top of the rotating
First State Towing v. Div. of State Police
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list of Approved Towers, (2) call FST to remove the next wrecked, disabled, stolen

or abandoned vehicle, or a vehicle following an arrest, located in the Troop Area 6,

and (3) continue to call FST to remove towable vehicles in succession according to

FST’s placement on the rotating list and equally as often as the other Approved

Towers; a judgment against Defendants, jointly and severally, for compensatory

damages,    lost   revenue,   decreased       earnings   opportunities,   humiliation,

embarrassment, injury to reputation, emotional distress, and other pecuniary and

non-pecuniary losses and permanent injuries; and award Plaintiffs attorneys’ fees,

costs, and pre- and post-judgment interest.

      On August 10, 2015, Defendants moved to dismiss Plaintiffs’ Complaint on

several bases. First, Defendants contend the Delaware statutory and regulatory

claims should be dismissed under Court of Chancery Rule 12(b)(6) because no

private cause of action is available to enforce any perceived rights under the

statute. Second, Defendants assert that sovereign immunity bars the action. Third,

Defendants argue that Plaintiffs’ claims are time-barred.         Fourth, Defendants

contend that the Complaint fails to state an equal protection claim. Fifth, and

finally, Defendants contend that the case should be dismissed under Court of

Chancery Rules 12(b)(7) and 19(b) for failure to join all Troop 6 Approved
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Towers.    Several of these grounds are strong and potentially dispositive, but

because Plaintiffs’ claims are time-barred, I limit my discussion to that issue.

       Plaintiffs argue Defendants’ laches defense fails because it is a factual

inquiry not well-suited for a motion to dismiss; no unreasonable delay, change of

position, or prejudice occurred; any analogous statute of limitations was tolled

until Plaintiffs were on inquiry notice that other towers were receiving more calls;

and the continuing violation doctrine preserves the § 1983 claims. On September

10, 2015, in support of their argument that no unreasonable delay occurred,

Plaintiffs attached an affidavit and a purported contract (the “Supplemental

Materials”) to their Answering Brief attempting to explain how they gained

knowledge of the facts underlying their cause of action during the winter of 2014.

Defendants argue that the Court should disregard the Supplemental Materials and

consider only the well-pled facts in the Complaint.

III.   STANDARD OF REVIEW
       The standard of review for dismissal pursuant to Rule 12(b)(6) is well

established. Delaware applies the reasonable conceivability standard, under which

a motion to dismiss will be denied if a plaintiff’s well-pled factual allegations

would entitle him or her to relief under any reasonably conceivable set of
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circumstances.7     The Court accepts all well-pled facts as true and draws all

reasonable inferences in favor of plaintiffs.8 The Court, however, need not accept

conclusory allegations unsupported by specific facts or draw unreasonable

inferences in favor of plaintiffs.9

      I decline to accept and consider the Supplemental Materials purporting to

explain how Plaintiffs gained knowledge of facts underlying their causes of action

in the winter of 2014. Plaintiffs could have amended their Complaint or filed a

motion to amend in conformity with Court of Chancery Rule 15, but chose not to

do so. Furthermore, even if I consider the Supplemental Materials (and I do not),

the facts alleged therein relating to the dates on which Plaintiffs learn of the

alleged discrimination largely are contrary to those pled in the Complaint.

Therefore, I consider only the well-pled facts of the Complaint and all reasonable

inferences drawn therefrom in Plaintiffs’ favor.




7
      Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.2d 531, 537
      & n. 13 (Del. 2011).
8
      Id. at 536.
9
      Price v. E.I. duPont de Nemours & Co., Inc., 26 A.3d 162, 166 (Del. 2011).
First State Towing v. Div. of State Police
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IV.   LACHES ANALYSIS
      “[A]ffirmative defenses, such as laches, are not ordinarily well-suited for

treatment on [a Rule 12(b)(6) motion to dismiss].” 10 Nevertheless, laches can be

applied at the pleadings stage if “the complaint itself alleges facts that show that

the complaint is filed too late.”11 Under Delaware law, laches bars a cause of

action if a plaintiff waited an unreasonable length of time before asserting the

claim and the delay unfairly prejudiced the defendant.12 Laches requires the Court

to determine whether a defendant can show three elements: “first, knowledge by

the claimant; second, unreasonable delay in bringing the claim; and third, resulting

prejudice to the defendant.”13

      Because equity generally follows the law,14 “a party’s failure to file within

the analogous period of limitations will be given great weight in deciding whether


10
      Reid v. Spazio, 970 A.2d 176, 183 (Del. 2009); see also Capano v. Capano, 2014
      WL 2964071, at *7 (Del. Ch. June 30, 2014) (“Thus, motions to dismiss based
      upon laches are not routinely granted . . . .”).
11
      Kahn v. Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. 1993).
12
      Bean v. Fursa Capital P’rs, LP, 2013 WL 755792, at *4 (Del. Ch. Feb. 28, 2013).
13
      Whittington v. Dragon Gp., L.L.C., 991 A.2d 1, 8 (Del. 2009) (citation omitted).
14
      See State ex rel. Brady v. Pettinaro Enters., 870 A.2d 513, 527 (Del. Ch. 2005)
      (“[W]hen claims are barred by a controlling statute of limitations, a court of equity
      need not engage in a traditional laches analysis.”).
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the claims are barred by laches.”15 The analogous period for an action based on a

statute is three years,16 and claims brought for violation of the United States

Constitution pursuant to 42 U.S.C. § 1983 are subject to a two-year statute of

limitations.17

      A.      Plaintiffs Knew of Their Claims, but Unreasonably Delayed
      The Complaint itself alleges facts that show it was filed long after Plaintiffs’

claims accrued and the analogous statute of limitations expired. All of the specific

facts Plaintiffs plead to support their causes of action occurred in or before 2005, at

the latest.      In short, FST became an Approved Tower in 2001; Defendants

assigned, then unassigned, a large Special Assigned Area to FST in 2002; and

Plaintiffs protested for two years until Defendants assigned FST a small Special

Assigned Area in or around 2004 and promised to give FST an area comparable to


15
      Whittington, 991 A.2d at 9 (citing Adams v. Jankouskas, 452 A.2d 148, 157 (Del.
      1982)); In re Sirius XM S’holder Litig., 2013 WL 5411268, at *4 (Del. Ch. Sept.
      27, 2013) (“[A] filing after the analogous statute of limitations has run cannot be
      justified except in the ‘rare’ and ‘unusual’ circumstances that a recognized tolling
      doctrine excuses the late filing.”) (citing Gordon Scott Levey v. Brownstone Asset
      Mgmt., 76 A.3d 764, 772 (Del. 2013); IAC/InterActiveCorp v. O’Brien, 26 A.3d
      174, 177-78 (Del. 2011); Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital
      Hldgs. LLC, 2012 WL 3201139, at *15 (Del. Ch. Aug. 7, 2012)).
16
      See 10 Del. C. § 8106(a) (“[N]o action based on a statute . . . shall be brought after
      the expiration of 3 years from the accruing of the cause of such action.”).
17
      Parker v. Gadow, 893 A.2d 964, 968 (Del. 2006).
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those assigned to the other Troop 6 Approved Towers within one year, i.e., in or

before 2005. Accordingly, the Complaint pleads that Plaintiffs objectively were

aware that Defendants were using Special Assigned Areas instead of a rotating list

as early as 2002 and that the size of their Special Assigned Area was smaller and

the number of towing calls they received was lower than those of other Approved

Towers in or before 2005 at the latest.

      B.     Tolling Doctrines Do Not Apply
      Plaintiffs’ claims presumptively will be barred unless a tolling doctrine

exists that would justify the late filing.18 “[A] cause of action ‘accrues’ under

Section 8106 at the time of the wrongful act, even if the plaintiff is ignorant of that

cause of action.”19 Plaintiffs bear the burden of pleading facts demonstrating that a

tolling doctrine applies.20 But “no theory will toll the statute beyond the point

where the plaintiff was objectively aware, or should have been aware, of facts



18
      Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 363845, at *6
      (Del. Ch. Jan. 27, 2010) (“In the absence of an applicable tolling doctrine, a claim
      cannot be pressed in the Court of Chancery if the statute of limitations has
      passed.”), aff’d, 7 A.3d 485 (Del. 2010).
19
      Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 62 A.3d 62, 77 (Del.
      Ch. 2013).
20
      Smith v. Mattia, 2010 WL 412030, at *3 (Del. Ch. Feb. 1, 2010); Albert v. Alex.
      Brown Mgmt. Servs., Inc., 2005 WL 1594085, at *19 (Del. Ch. June 25, 2005).
First State Towing v. Div. of State Police
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giving rise to the wrong.”21 Here, Plaintiffs argue that the doctrine of inherently

unknowable injuries, equitable tolling, and the continuing violation doctrine

preserve their claims.

       The inherently unknowable injury doctrine, which tolls the limitations

period until a plaintiff has reason to know that a wrong was committed,22 is facially

inapplicable because Plaintiffs pled that they knew a wrong was committed by

2005, at the latest.

       Plaintiffs’ equitable tolling argument fails for the same reason. Plaintiffs

argue that, “[u]nder the theory of equitable tolling, the statute . . . is tolled for

claims of wrongful self-dealing, even in the absence of actual fraudulent

concealment, where a plaintiff reasonably relies on the competence and good faith

of a fiduciary.”23 Defendants challenge whether equitable tolling can apply to

these claims, but I need not resolve that dispute because if any of Plaintiffs’

theories toll the limitations period, “it is tolled only until the plaintiff discovers (or

exercising reasonable diligence should have discovered) his injury. Thus, the


21
       Capano, 2014 WL 2964071, at *9 (citing In re Tyson Foods, Inc., 919 A.2d 563,
       585 (Del. Ch. 2007)).
22
       In re Dean Witter P’ship Litig., 1998 WL 442456, at *5 (Del. Ch. July 17, 1998).
23
       Pls.’ Answering Br. 42 (citing Dean Witter, 1998 WL 442456, at *6).
First State Towing v. Div. of State Police
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limitations period begins to run when the plaintiff is objectively aware of the facts

giving rise to the wrong, i.e., on inquiry notice.”24 Plaintiffs’ effort to invoke the

equitable tolling doctrine fails because they pled that they objectively were aware

of the conduct they now allege was wrongful by 2005 at the latest.

      Finally, Plaintiffs rely on federal case law to argue that the continuing

violation doctrine preserves their § 1983 claims, stating as follows:

             Here, Defendants are engaging in a prohibited course of
             conduct by refusing to create a more equitable and
             uniform system of handling towing calls still to this day.
             Alternatively, their conduct in providing an inequitable
             and non-uniform system with significantly more calls to
             B & F is a continuing practice. Thus, the two year
             limitations period for § 1983 claims runs from the date of
             the last alleged violation. Here, Plaintiffs allege that
             “[a]s a result, an inequitable and non-uniform system of
             handling towing calls in the Troop Area remains in place
             to this day.”25

      The United States Court of Appeals for the Third Circuit applies the

continuing violation doctrine to Section 1983 claims.26 “To allege a continuing

24
      Dean Witter, 1998 WL 442456, at *6 (citations omitted).
25
      Pls.’ Answering Br. 47 (quoting Compl. ¶ 76).
26
      Gould v. Council of Bristol Borough, 2014 WL 296944, at *1 (E.D. Pa. Jan. 27,
      2014), aff’d sub nom., Gould v. Borough, 615 F. App’x 112 (3d Cir. 2015); see,
      e.g., Cowell v. Palmer Twp., 263 F.3d 286 (3d Cir. 2001); Centifanti v. Nix, 865
      F.2d 1422 (3d Cir. 1989); Burnette v. City of Phila., 2003 WL 21293682, at *2
      (E.D. Pa. Jan. 14, 2003).
First State Towing v. Div. of State Police
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violation, the plaintiff must show that all acts which constitute the claim are part of

the same unlawful . . . practice and that at least one act falls within the applicable

limitations period.”27    “[A] continuing violation is occasioned by continual

unlawful acts, not continual ill effects from an original violation,” and “[t]he focus

of the . . . doctrine is on affirmative acts of the defendants.”28 However, “discrete

[violations] are not actionable if time barred, even when they are related to acts

alleged in timely filed charges.”29

      Here, the affirmative acts of which Plaintiffs complain occurred over ten

years ago when (1) Defendants assigned FST a large Special Assigned Area one

day and took it away the next, and (2) Defendants gave FST a small Special

Assigned Area and promised to assign FST a larger Special Assigned Area within

a year, which never happened. Plaintiffs also allege that DSP “frequently” assigns

additional areas within the Troop 6 Area or the state to B & F and that DSP

transferred Captains away from Troop 6 when they attempted to remedy Plaintiffs’




27
      Mandel v. M & Q Packaging Corp., 706 F.3d 157, 165-66 (3d Cir. 2013).
28
      Cowell, 263 F.3d at 293 (emphasis added); Sameric Corp. of Del., Inc. v. City of
      Phila., 142 F.3d 582, 599 (3d. Cir. 1998).
29
      Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113 (2002).
First State Towing v. Div. of State Police
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grievances, but the Complaint fails to plead facts placing those affirmative acts

specifically within the statute of limitations.

      Further, allegations that Defendants are allowing an inequitable and non-

uniform system to remain in place to this day exemplifies the “ill effects from an

original violation” that the Third Circuit does not consider a continuing violation,

rather than the affirmative acts on which the Third Circuit’s analysis focuses.

Thus, taking the well-pled facts of the Complaint and drawing all reasonable

inferences therefrom in favor of Plaintiffs, I conclude Plaintiffs have not satisfied

their burden of demonstrating that the continuing violation doctrine preserves their

§ 1983 claims.

      C.     Plaintiffs’ Unreasonable Delay Prejudiced Defendants
      Finally, Plaintiffs’ failure to file within the analogous statute of limitations

prejudiced Defendants. Such prejudice arises primarily from the extent to which

facts and circumstances change, witnesses retire or relocate, and memories fade

over the course of fifteen years. For example, to defend against Plaintiffs’ claim

that the current system is discriminatory, Defendants would have to explain how

Troop Area 6 evolved since 2001 and justify Approved Tower applications and

area assignments during that period, which includes establishing the motivations

and decision-making processes of unnamed officials. More specifically, Plaintiffs
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plead that an unnamed person promised them a larger Special Assigned Area in

2004 and that multiple unnamed Captains at Troop 6 attempted to remedy the issue

over the years. Defendants cannot fairly be expected to defend adequately against

Plaintiffs’ claims more than ten years after the analogous statutes of limitations

ran. In addition, Plaintiffs seek damages for the entire fifteen-year period; had they

filed suit before 2015, Defendants could have avoided significant losses by taking

interim corrective action.30 Accordingly, Plaintiffs’ claims are barred by laches.

V.    CONCLUSION
      Defendants established that the Complaint itself alleges facts that show it

was filed too late, and Plaintiffs failed to carry their burden of pleading facts

demonstrating that tolling applies. Therefore, Defendants’ motion to dismiss is

granted.

      IT IS SO ORDERED.

                                                Sincerely,

                                                /s/ Tamika Montgomery-Reeves

                                                Vice Chancellor

TMR/jp

30
      See, e.g., Fike v. Ruger, 752 A.2d 112, 114 (Del. 2000) (holding that the plaintiffs’
      unreasonable delay in bringing its claims prejudiced the defendants by preventing
      them from avoiding significant losses).
