An attorney for demolition and remediation services firm NCM Group Holdings on Wednesday asked the Delaware Supreme Court to roll back a Delaware Court of Chancery decision denying his client's attempt to modify a protective order so the company could pursue fraud claims out of state.

Ashby & Geddes director Philip Trainer Jr. made his case during oral arguments before a full panel of the state's five justices in Dover, even as he took responsibility for a mistake that has led to sanctions proceedings against NCM in the trial court.

Trainer argued that Vice Chancellor Sam Glasscock III's ruling last November had allowed environmental remediation firm LVI Group Investments to use “as a shield” a protective order, which limited the use of discovery materials only to Delaware litigation stemming from a 2014 merger that formed NorthStar Group Holdings. Trainer said Glasscock discounted NCM's need to amend the documents, and he challenged the findings that NCM could not suffer prejudice because the company knew when it agreed to the protective order that evidence could emerge that would implicate others at LVI.

The arguments were viewed through a recording posted to the Supreme Court's website.

NCM has said in court papers that discovery had turned up evidence of “pervasive and widespread” fraud by top LVI personnel before the deal closed and argued that the protective order functioned as a de facto release for the alleged wrongdoers. The company, worried that jurisdictional issues would bar individual claims in Delaware, had told Glasscock that the protective order prevented it from filing suit in New York and Illinois.

Despite those representations, NCM did file a lawsuit in New York state court last October against Greg DiCarlo and John Leonard, who now serve as NorthStar's counsel and chief operating officer, respectively.

NorthStar, which has aligned itself with LVI in the litigation, initiated sanctions proceedings in December.

On Wednesday, Justice Collins J. Seitz Jr. asked Trainer about the controversy “hanging over the case” in the Court of Chancery. Trainer responded that he had “no excuse” for the mistake, but that there was “not any conscious decision” not to inform Glasscock that NCM had filed its lawsuit in New York.

“It was an error of omission, and not commission,” Trainer said.

“I don't think that there's any evidence that people consciously chose not to tell the court, and I think it's also significant that that really does not affect this appeal because it did not affect the decision below.”

Any punishment, Trainer added, should be levied against counsel and not the client.

Bradley R. Aronstam, who argued on behalf of NorthStar and LVI, meanwhile defended Glasscock's decision, saying that the vice chancellor had acted within his discretion in denying NCM's request to amend the protective order.

Aronstam said that Glasscock explicitly discussed in his opinion NCM's need to amend the protective order, and he said that necessity was particularly clear because NCM itself had identified DiCarlo and Leonard in counterclaims last year as allegedly having specific knowledge of the supposed fraud.

“NCM did not need a crystal ball or any other magic to identify the new defendants. Again, these individuals were front and center, and NCM merely disagrees with the weight given by the court to its need,” to modify the order, said Aronstam, a partner with Ross Aronstam & Moritz.

Chief Justice Leo E. Strine Jr. said the court would take the matter under advisement.

The case, on appeal, was captioned NCM Group Holdings v. LVI Group Investments.