As a reminder to infrequent readers, the purpose of this blog is to highlight key decisions of the Court of Chancery and Delaware Supreme Court, primarily in the areas of corporate and commercial law. In order to maintain my practice at the same time I maintain this blog, time constraints often require that I merely note the case and the key issues addressed in the case, and invite the reader to access the entire opinions for their own further review. This is such a time. Here below are blurbs on 4 recent Chancery Court decisions:
1)Griffin Corporate Services, Inc. v. Jacobs, et al.
In the context of a Motion to Dismiss, this Chancery Court case discussed the elements of both tortious interference with prospective business relationships and tortious interference with existing business contracts. The court also found standing for a claim under the Delaware Deceptive Trade Practices Act and allowed those claims to proceed based on misrepresentations to third parties in connection with the clients of a former employer. This case involved multiple parties sorting out the aftermath of the sale of a service company that provided Delaware holding company services and the fallout from employees who left after the sale. The case also includes a claim that a Confidentiality Agreement was requested from a competitor who the selling company had no intention of selling to, but who merely wanted to restrict their ability (by means of the Confidentiality Agreement), to take employees from the selling company, for deceptive reasons. The court also allowed claims to proceed against individuals who asserted a defense that they were merely acting in their official capacity as officers of the corporation, but the court noted that there are instances where individuals can be personally liable even if acting in their official capacity.
2)Chambers v. Genesse and Wyoming, Inc.
This Chancery Court case involved the interpretation of two agreements in cross-motions for summary judgment in connection with a “earn-out” formula. The recent addition of Chancery Court Rule 56(h) did not apply to these cross-motions for summary judgment because the competing motions did not include over-lapping arguments about the same facts which both parties would admit were not in dispute. The court viewed this case as a pure contract interpretation case with no need to review parol evidence. A key issue in the case was the applicability of EBITDA (Earnings before Interest Taxes Depreciation and Amortization). However the court noted that even the experts in the case agree that there is no clearly defined definition to apply that standard, although it is commonly used. The court also determined that no weight would be given to the expert testimony of one party’s “litigation construct” that was created after the fact for a “lawsuit inspired reimagining of history,” to justify a position not contemporaneously created. The court observed that it did not want to contribute to what was already a boon to litigation practices from earn-out contracts that resulted in disputes.
3)Homan v. Turoczy
This Chancery Court opinion includes a very detailed and lengthy recitation of the facts involving the sale and purchase of a small business. Rescission was sought for alleged fraudulent misrepresentations that caused plaintiff to enter into the contract. After an extensive anlaysis of the facts, the court observed basic principles such as: “Delaware law takes contracts and written representations seriously” and expects parties to abide by them, and claims based on contrary oral representations are suspect, especially with an integration clause. The court also rejected claims for equitable fraud and “interstitial” breach of the covenant of good faith and fair dealing.
4)Ft. James Corp., et al. v. Geoffrey Beck, et al.
This Chancery Court case addressed the “first-filed rule” and stayed this Delaware action pending a decision of the Ninth Circuit Court of Appeals. This case had its origin in claims that were initially filed in Bankruptcy Court in California involving a bankruptcy trustee. The court based its decision on the Delaware McWane line of cases and the Barton federal doctrine.
The full text of these cases is available at the court’s website here.