Friendly Ghost Enterprises, LLC v. McWilliams, 2007 WL 2198767 (Del. Ch., July 27, 2007), read opinion here. It is unusual but not unprecedented for the Chancery Court to change its opinion based on a Motion for Reargument pursuant to Chancery Court Rule 59(f). This is one of those rare cases. In sum, the court conceded that it construed too narrowly the decision of Parfi Holding AB v. Mirror Image Internet, Inc., 817 A.2d 149 (Del. 2002), cert. denied 538 U.S. 1032 (2003)("Parfi I"), in light of the following decisions: Parfi Holding AB v. Mirror Image Internet, Inc., 842 A.2d 1245 (Del. Ch. 2004)("Parfi II"), aff’d in pertinent part, 2007 WL 1451506 (Del Ch., May 17, 2007)("Parfi III"). (A short blog summary of Parfi III can be read here.) In Parfi III, the Delaware Supreme Court clarified that: " Parfi I did not address, directly or indirectly, the trial court’s inherent authority to control its docket or the propriety of it staying the Delaware action."
Here, the court initially allowed arbitration and Chancery Court proceedings to be pursued at the same time, in light of requests for the appointment of a custodian and dissolution–which are considered summary proceedings under the DGCL, (see footnote 6), and that such actions "lie at the core of the [Chancery] Court’s responsibilities under the Delaware General Corporation Law and the arbitration provision was not as clear as one might hope."
Nonetheless, the court concluded after reargument that it would be more efficient, and more consistent with the Parfi decisions, to stay the Chancery action and allow the arbitration to proceed.