Voluminous commentary addresses the substantive differences between Delaware and Texas corporate law. Less attention is given to the practical aspects of the service provided by their respective state agencies that handle filings of corporate documents, and how prompt or “user friendly” they are. Texas recently “upped their game” by providing faster service filing options–but they still do not offer the same level of expedited services as offered by the Delaware Division of Corporations.

I co-authored an article with Aimee Czachorowski published by Bloomberg Law that addresses some of those nuances.

Delaware Keeps Business Filing Edge as Texas Starts Fast Service

In Episode 3 of the Delaware Corporate Litigation Insights Podcast, hosts Francis Pileggi & Chauna Abner are joined by Lewis Brisbois partner Aimee Czachorowski to examine three recent Delaware Court of Chancery decisions that every corporate litigator should have on their radar. The trio explore how Delaware courts are approaching forum selection clauses in the wake of recent amendments to Section 122(18) of the Delaware General Corporation Law, including when fiduciary duty claims can be contractually litigated in another jurisdiction.

The hosts also analyze what it takes to establish jurisdiction over foreign executives who oversee investor-appointed directors. Finally, they review a recent decision confirming that parties who disregard a valid forum selection clause may be required to pay the opposing party’s attorneys’ fees and costs.

Listen to the full episode for key insights on practical drafting considerations, litigation strategies, and navigating corporate governance disputes and forum selection issues in Delaware. Delaware Corporate Litigation Insights: A Lewis Brisbois Podcast – Podcast – Apple Podcasts

Two recent Delaware Court of Chancery decisions awarded fees for errant pre-litigation conduct which makes then noteworthy for that point alone, although there is much else to commend them. In the matter styled Ramadurgam v. Destiny XYZ Inc., C.A. No. 2024-0057-PAF (Del. Ch. July 23, 2026), the court awarded fees for pre-litigation conduct which the court described as an independent basis to warrant fee shifting as an element of equitable relief. Slip op. at 86.

The court highlighted in a heading to the section of the opinion on this issue that the defendants’ pre-litigation conduct was “glaringly egregious and the product of unusually deplorable behavior.” Id. at 84. The court cited to multiple authorities to support its reasoning in connection with a thorough analysis of the fiduciary duty of loyalty and how it was breached in this case. Id. at 83-88. The court underscored, however, that “not every proven breach of the duty of loyalty will justify and award of attorneys’ fees damages.” Id. at 88. The nearly 100-page opinion in its original format deserves a careful review for its extensive analysis of several issues–but the limited scope of this short blog post is to highlight the aspect of the decision on fee shifting for pre-litigation conduct.

This decision should be compared on this issue with the recent Chancery ruling in Neem International CV v. Shulman, C.A. No. 2022-0187-LWW (Del. Ch. July 30, 2026). In this short letter ruling, the court relied on the bad faith exception to the American Rule to award fees for both “egregious” pre-litigation conduct, along with obstructive behavior during discovery. The court described the defendant’s conduct as “not a mere breach of contract, but extreme disloyalty.”

Notably, this letter ruling did not use the same exact formulation of the standard applied for its reasoning that pre-litigation conduct was a basis to award fees, in addition to conduct during the litigation, because it was relying on the bad faith exception to the American Rule. Cf. Ramadurgam, Slip op. at 84.

The Reem court distinguished a case where the pre-litigation conduct gave rise to the claim. To contrast the Versata decision unsuccessfully relied on by the defendant, the court explained that the defendant’s actions in this matter “infected the litigation process and forced the plaintiff to incur substantial costs to unravel the deception” which satisfied the bad faith exception. Id. at 7 (referring to Versata Enters., Inc. v. Selectica, Inc., 5 A.3d 586, 607 (Del. 2010)).

This letter ruling also explained why fees were awarded even though only 1 of 13 causes of action were successful. The court rejected objections based on alleged excessive staffing and unreasonable hours billed to the failed claims. Id. at 8. Also noteworthy was the court’s guidance that “determining reasonableness [of fees] does not require the court to examine each time entry and disbursement.” Id. See generally Rule of Professional Conduct 1.5(a).

Bonus: The court’s opinion in Ramadurgam deserves more thorough treatment for its analysis of not only the breach of the fiduciary duty of loyalty, but also for its scholarly insights into the principles of restitution, as well as comparing rescission to a constructive trust as equitable remedies. Slip op. at 75-82. Also noteworthy is the court’s citation to historic sources from Roman law on these principles, as well as its reference to a treatise on the topic published in Italian. See footnote 291. This is the first time I recall a cite in a Chancery opinion to a treatise in a foreign language.

These highlights were prepared by Maliheh Zare, a corporate and commercial litigation associate in the Delaware office of Lewis Brisbois.

The Delaware Court of Chancery recently reaffirmed that minority members of a manager‑managed Delaware LLC generally do not owe fiduciary duties to the company or its other members in Ruby Hollow, LLC v. Tharp & Assocs., LLC, No. 2024‑0318‑DG (LWW), 2026 WL 2085808 (Del. Ch. July 20, 2026).

The defendant, Tharp and Associates, LLC, held a 7% membership interest in Ruby Hollow, LLC and was not a manager.  Ruby Hollow was manager-managed, with two managers each holding 31% of its membership interests.  Id. at *1.  Ruby Hollow alleged that Tharp breached fiduciary duties by concealing information concerning operational failures at a mining site, that Tharp allegedly oversaw, from Ruby Hollow’s managers.  Id.

Earlier in the litigation, Magistrate in Chancery Gibbs dismissed the operative complaint for failure to plead facts showing a transaction that Tharp controlled under the theory of “transaction-specific control,” which refers to a doctrine requiring allegations that a minority stockholder “exercised actual control over the board of directors during the course of a particular transaction.” No. 2024‑0318‑DG (LWW), Dkt. 33, at 12, 16-17 (Jan. 29, 2026) (citation omitted).

No Control and No Fiduciary Duty

Vice Chancellor Will however declined to engage with the “transaction-specific control” concept or to apply it to the minority members of a manager-managed LLC who lacked “the structural or functional authority necessary to be treated as a controlling member.”  2026 WL 2085808, at *3.  The Court explained that to establish fiduciary duty, “a minority investor must possess ‘such formidable voting and managerial power that they, as a practical matter, are no differently situated than if they had majority voting control.’”  Id. (emphasis in original) (citations omitted).  Where a minority member’s membership interest is considerably smaller than those of the managing members and it lacks no other contractual control over the LLC, the notion of the minority member’s control is impossible as a matter of law.  Id.

Because Tharp held only a 7% interest and lacked any contractual rights conferring control over Ruby Hollow, the Court concluded that it could not, as a matter of law, be treated as a controlling member subject to fiduciary duties.  Accordingly, the Court rejected Ruby Hollow’s attempt to impose fiduciary obligations based on allegations that Tharp had provided “unfaithful service.”  Id. at *4.

Takeaways

The key takeaway is that under Delaware law, in a manager-managed LLC, a non-managing minority does not owe fiduciary duties to the LLC or its members absent facts showing actual control comparable to majority ownership.  When seeking relief against minority LLC members, one should consider contractual or tort causes of action rather than relying solely on fiduciary‑duty claims.

The less than common excuse for a plaintiff not satisfying a required element of a breach of contract claim known as the prevention doctrine was addressed in the recent Delaware Court of Chancery decision styled World Energy, LLC v. Air Products and Chemicals, Inc., C.A. No. 2025-0912-MTZ (Del. Ch. July 6, 2026). The court addressed a breach of contract claim where the plaintiff unsuccessfully tried to explain its inability to establish one of the elements of a claim for breach of contract—namely that the plaintiff performed its own obligations under the contract.

Highlights

  • The prevention doctrine is an excuse for a plaintiff not satisfying an element of a breach of contract claim that the plaintiff performed its obligations under the contract because the defendant’s failures to fulfill its obligations under the contract either prevented the plaintiff, or relieved the plaintiff, from performing its own contractual duties. Slip op. at 19-24.
  • The court explained why none of the reasons provided or the facts alleged by the plaintiff justified its own non-performance of its contractual obligations notwithstanding its allegations of non-performance by the counterparty.
  • The court also reasoned that daily communications between the parties about “moving forward with work on a project” cannot be reasonably interpreted as a definite promise such that it would satisfy a required element of either promissory estoppel or equitable estoppel. Slip op. at 32-34.
  • The court explained why claims for mutual mistake and reformation were also rejected based on the facts alleged. Slip op. at 34-38.

The U.S. Supreme Court’s decision last month in Wolford v. Lopez, clarified prior U.S. Supreme Court decisions on the proper interpretation of the Second Amendment. Some courts continue to defy the supreme law of the land on this issue.

In the Wolford decision, the country’s highest court admonished the Hawaii Supreme Court that there is no separate standard of minimum rights under the U.S. Constitution for individual states. The basic principle of federalism remains well-settled that federal law provides the minimum rights that each state must provide. Although states can provide additional rights, they cannot provide fewer rights than what the United States Supreme Court or applicable federal appellate courts determine to be the minimum rights guaranteed by the U.S. Constitution.

The Hawaii Supreme Court was reversed in the Wolford case based on Hawaii’s particularly contumacious interpretation of their own laws in nearly open defiance of U.S. Supreme Court controlling authority on the Second Amendment.

Shockingly, after the recent Wolford decision, the Hawaii Supreme Court issued another decision that double-downed on their contemptible insistence on furthering their own view of the law regardless of what the U.S. Supreme Court established as minimum federal rights. They went so far as to suggest that their non-compliance was due to the U.S. Supreme Court being racist in its interpretation of constitutional rights in several recent decisions by the high court.

The Delaware Supreme Court recently interpreted issues regarding the enforcement of Delaware state securities laws in Swan Energy, Inc. v. Investor Protection Unit, No. N24C-03-071 (Del. Supr., July 16, 2026). Delaware’s high court distinguished a U.S. Supreme Court decision regarding the availability of jury trials and determined based on the specific facts, claims and procedural posture of the case involved that a jury trial was not an applicable right under the circumstances.

A recent Delaware Court of Chancery decision provides a cautionary tale about the issues raised by AI hallucinations in a court filing. In Leiske v. Kidd, C.A. No. 2025-0426-CDW (LWW) (Del. Ch. July 1, 2026), the court addressed a court filing with AI hallucinations and analyzed potential consequences.

Noteworthiness of This Case

This short post intentionally does not identify the lawyers or the law firm involved, but instead provides highlights and a few takeaways from this ruling that have relevance to all litigators who use AI, or who encounter its use by other parties. Although there are other Chancery decisions that address AI hallucinations, and the court cites to other cases around the country that have dealt with the issue, this letter ruling provides noteworthy guidance about how to address this problem when it happens, and how to avoid the problem.

Brief Background

The background of this case involved an advancement suit that was decided by a Magistrate Judge in Chancery who awarded advancement. The Vice Chancellor then reviewed this matter to decide exceptions to the Magistrate’s final report on advancement–and more importantly for this blog post addressed the AI issues.

Highlights

  • The issue presented to the court was how to address the problem of an answering brief that contained “fictitious citations, fabricated quotations, and hallucinated legal propositions.” See footnote 2 and accompanying text.
  • The problems were exacerbated because, according to the court, when a corrected brief was filed, the corrected version did not cure all of the hallucinated or incorrect statements of law, nor did it correct the inaccurate descriptions of the cited cases. Rather it merely removed quotation marks and attributed “the oversight to a paralegal’s review.” Slip op. at 2.
  • The attorney who filed the brief with hallucinations double-downed after the issue was presented to the court, and insisted on “the accuracy of the underlying legal propositions” and stated that the “cited authorities are real and support the arguments advanced” while accusing opposing counsel of “using the GenAI errors to gain a litigation advantage.” Slip op. at 3.
  • In its analysis, the court referred to Court of Chancery Rule 11(b) that requires an attorney presenting a pleading or written motion to the court to certify that the “legal contentions made are warranted by existing law,” and emphasizing that an attorney’s signature on a court filing is a certification to the tribunal. Id. at 4.
  • In this case the court found that although using GenAI in court filings is “not inherently problematic,” counsel in this case acknowledged that the GenAI output was “not verified” before the brief was filed. Id. See also footnote 16 (referring to prior Chancery decision addressing the use of GenAI).
  • The court explained that hallucinated legal propositions raise an inference of a Rule 11(b) violation. That rule requires counsel to show cause why sanctions should not issue in this situation. See footnote 19 (citing the cases in other jurisdictions involving sanctions for submitting hallucinated GenAI citations).
  • The court expressed its concern raised by the errors in the initial filing being compounded by the counsel’s response after the errors were identified.
  • The court referred to Rule 11(c)(1) that provides for a law firm to be held jointly responsible for violations committed by its partners, associates or employees. Slip op. at 6.
  • The court required an affidavit from the lawyer involved—and his firm—to provide a detailed explanation about how GenAI was used in this instance and what the firm’s written policies and guidelines on the use of GenAI by its attorneys and staff that were in place at the time that this mistake occurred, as well as requiring other detailed averments.

Takeaways

If a document filed with the court is found to contain errors, whether based on GenAI or other reasons, the lawyer must immediately:

  • 1) notify the court promptly and submit a completely correct version of the court filing soon as possible;
  • 2) take full responsibility for the mistake, and
  • 3) explain to the court how the mistake occurred—and steps taken to make sure it does not happen again.

Postscript

  • Although the counsel involved in this imbroglio won on the merits of the advancement action, the AI problem dwarfs any success on the merits. The problem occurred in a filing that was made in January of 2026, and seven months later the problem is only getting worse.
  • The next phase of this saga is a final decision on whether to award sanctions that the court will make after receiving from the lawyer and the firm involved affidavits last week that the court required to explain why sanctions should not be imposed.

Bonus Supplement

In one of my recent ethics columns (that I have been writing for the last 25 years) for the national publication of the American Inns of Court called The Bencher, I discuss other court decisions that have addressed similar issues with problematic court filings that contained AI hallucinations.

Our latest episode of the Delaware Corporate Litigation Insight podcast is now available. Our guest for this episode is our partner, Sean Brennecke.

We discuss recent decisions of the Delaware Court of Chancery on dissolution of an LLC; whether Delaware or Texas bylaws apply after the recent domestication of Tesla in Texas; as well as a summary proceeding under Section 225 to determine proper corporate directors. We plan to do these podcasts twice a month and hope to have a wide range of guests.

A recent Delaware Court of Chancery opinion is required reading for those interested in the important distinction between corporate acts that are void as compared to voidable. In a 100-plus page decision in connection with approving a class action settlement and attorneys’ fees, the Court of Chancery engages in a deep doctrinal dive and scholarly analysis into the void versus voidable distinction in corporate acts.

In the process the court provides a mini treatise on the impact of the recent Delaware Supreme Court decision in Moelis on various aspects of Delaware law and the public policy implications of the new rule for the void v. voidable distinction.

In Dollens v. Goosehead Insurance, Inc., C.A. No. 2022-1018-JTL (Del. Ch. June 30, 2026), the court provides noteworthy guidance on the wide-ranging impact of the Delaware Supreme Court decision in W. Palm Beach Firefighters’ Pension Fund v. Moelis & Co., 2026 WL 184868 (Del. Jan. 20, 2026).

This decision requires careful review for its cornucopia of clarifications of important nuances of several aspects of Delaware corporate law but my purpose in this short blog post is to merely provide highlights to whet the appetite of serious practitioners and followers of corporate law.

Highlights

  • This Court of Chancery decision clarifies the Supreme Court’s new test for voidness in the Moelis decision, and describes the doctrine of “hypothetical legal significance” as the new approach to identify voidable (not void) corporate acts, which is a tip of the hat to the doctrine of independent legal significance. The new doctrine looks to whether the corporation hypothetically could have achieved the result it sought. Slip op. at 3-4.
  • The Court of Chancery also observes that the concept of incurable contract voidness has been abrogated legislatively. See footnote 9.
  • The court clarifies the basic difference between void and voidable. Slip op. at 21-22.
  • The court addressed the recent amendments to DGCL § 122(18) regarding the interface of governance agreements with the requirements of Section 141(a), but noted that the recent amendments did not apply to pending cases like this one. See footnote 7.
  • Nonetheless, the court discusses the impact of that amendment on the broader public policy and doctrinal implications of the void v. voidable issue. One of the many benefits of this decision is that it explains and clarifies not only the Supreme Court ‘s decision on Moelis but its application to and implication in various aspects of corporate law.
  • In particular, the Court of Chancery explains the current definition for voidness in light of the Moelis decision. Slip op. at 27-30.
  • The court provides guidance about how governance agreements can be included in corporate charters to avoid Section 141(a) issues and how that relates to the new doctrine of hypothetical legal significance. Slip op. at 29-34.
  • The Court of Chancery teaches that the Supreme Court in Moelis “implicitly rejected” the “concept of a core area of board power that even the charter could not regulate—or at least cannot regulate without the party holding the charter-based right taking on the fiduciary duties that the directors would otherwise owe.” Slip op. at 39-40. See also footnotes 88-90.
  • The court elucidates the impact of the hypothetical legal significance doctrine on several Delaware law principles—and identifies several cases that are abrogated by the Moelis decision. Slip op. at 48, et seq.
  • The court provides a comparison of the doctrine of hypothetical legal significance, which does not require a corporate act, with the Validation Amendments codified at DGCL §§ 204-205, which do require a corporate act before the defective act can be fixed or remedied.
  • The court lauded the new doctrine of hypothetical legal significance as a helpful “spring cleaning” of some older statements of the law about voidness as that concept was used in prior cases. Slip op. at 58-61.
  • The court predicted that the impact of the hypothetical legal significance doctrine on various Section 141(a) issues will be less predictable. Slip op. at 61.
  • The Court of Chancery opined that the Moelis decision promotes a more contractarian view of corporate governance and allows more opportunities to constrain or tailor fiduciary duties. Slip op. at 72-80.
  • In connection with its analysis of whether the class action settlement should be approved and what amount of attorneys’ fees should be awarded, the court observed that some practitioners are now charging close to or more than $3,000 an hour and that a lodestar rate of about $1,500 per hour would equate to what some junior partners are charging. Slip op. at 103-104.