The Delaware Court of Chancery is a court of equity with limited jurisdiction. Contrary to what some may assume, not all corporate and commercial litigation can be heard in this famous court. (Delaware’s trial court of general jurisdiction is the Superior Court.) A recent opinion has practical application for litigators to the extent that it applies the well-traveled, but not often well understood, nuances of the limited scope of the equitable jurisdiction of the Delaware Court of Chancery. Yu v. GSM Nation, LLC, C.A. No. 12293-VCMR (Del. Ch. July 7, 2017).  This letter decision explains the three ways to secure equitable jurisdiction, but the court reminds practitioners that the mere incantation of key words invoking equitable relief will not suffice.

The background of this case includes a request to pierce the corporate veil, about which the Court of Chancery has exclusive jurisdiction. In addition to serving as an example of how difficult it is to successfully pierce the corporate veil, this decision explains why the Superior Court could provide adequate relief to the plaintiff by providing a money judgment.  There was insufficient detail in the pleadings to explain why a money judgment could not be paid, and therefore the court dismissed the complaint with leave to refile or transfer the case to the Superior Court within 60 days pursuant to 10 Del. C. § 1902. See generally footnotes 7, 9 and 10 regarding equitable jurisdiction, and also 10 Del. C. § 342, re: Chancery’s limited jurisdiction.

Also of practical application is the discussion by the court in this letter ruling of the exclusive jurisdiction that Chancery has over equitable fraud claims, but in this case there was no basis for an equitable fraud claim. The use of the words alone to allege equitable fraud claims is not enough.

In addition, the court explained that in some instances the Superior Court and the Court of Chancery may both entertain claims for unjust enrichment, but if the unjust enrichment claim, as in this case, is merely a contract-related theory of recovery that accompanies a breach of contract allegation, then the claim is only legal, and not equitable. See footnote 25.