Chancery Clarifies Doctrine of Acquiescence; Bars Relief
Lehman Brothers Holdings, Inc. v. Spanish Broadcasting System, Inc., Cons., C.A. No. 8321-VCG (Del. Ch. Feb. 25, 2014)
Why litigators should care about this decision: The Court of Chancery in this opinion candidly acknowledged that the case law in Delaware on the doctrine of acquiescence suffers from a lack of clarity and has been “inconsistently applied”. Slip op. at 22. This decision provides a public service by stating the elements and contours of the doctrine in a more coherent and fulsome manner. (This doctrine was recently addressed in passing as part of another recent Chancery decision that addressed many other substantive issues and which was highlighted on these pages.) This opinion also compares and contrasts this doctrine with the separate doctrine of laches.
- This case was presented on cross motions for summary judgment in connection with a claim for breach of contract related to a Certificate of Designation
- The court observed that the doctrine of acquiescence in Delaware has “… rarely been addressed in a thorough, doctrinally-satisfying manner.” This opinion did not intend to fill that void but it came close anyway.
- Unlike laches that only bars equitable relief, acquiescence may bar both equitable and legal relief as a result of inaction or silence on the part of the plaintiff.
- Footnote 54 recited several different iterations of the doctrine of acquiescence and footnote 56 refers to it as a variation on estoppel.
- Five elements of acquiescence were described in this opinion as:
(1) the plaintiff remained silent (2) with knowledge of her rights (3) and with knowledge or expectation that the defendant would likely rely on her silence (4) the defendant knew of the plaintiff’s silence, and (5) the defendant in fact relied to her detriment on the plaintiff’s silence. (citations omitted). [compare recent decision linked above where no reliance was required.]
- Even though the applicable statute of limitations for a breach of contract action at law in Delaware is three years, and the claims in this case were filed within that three year period, the court reasoned that the doctrine of acquiescence, as explained in this 33-page ruling based on the facts of this case, “estopped” the plaintiff from receiving the relief sought.