Chancery Applies First-Filed Rule to Stay Case

Baden-Wurttenberg v. Walton Seattle Mezz Holdings VI-B, LLC, C.A. No. 7933-VCG (Del. Ch. April 1, 2013).

This decision applies the familiar first-filed rule, and on that basis stayed this action in favor of a prior-filed lawsuit in the state of Washington 

Very Short Overview

This case involves the growing phenomenon in corporate litigation of multiple suits involving common facts proceeding simultaneously in multiple jurisdictions.  Although the Court of Chancery has expressed a strong interest that Delaware has in adjudicating matters involving the internal affairs of corporate citizens, when a first-filed action does not involve Delaware law or the internal governance of a Delaware entity, the Court carefully considers principles of comity and judicial economy that might support deference to the court overseeing the first-filed action, particularly, as here:  “Where that court has enjoined a Delaware plaintiff from taking actions that would impinge upon the operation of an order that the court has put in place.”  See generally, McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281, 283 (Del. 1970).

Because this decision applies a well-settled rule and the facts are not especially noteworthy, and because the agreements involved in this case are governed by New York law, the reader is directed to the 29-page opinion if the latest iteration of the first-filed rule is of interest.

In closing, the court reasoned that “Delaware has no particular interest in this case.”  Nonetheless, although the defendants requested a dismissal, the Court exercised its discretion sua sponte in ordering a stay, and retained jurisdiction in the event that the court in Washington refrains from acting on issues that had been presented in Delaware.