The Delaware Court of Chancery recently addressed a litany of claims that the buyer of a business breached its contractual and fiduciary duties by diverting new deals that deprived the sellers from reaching milestones in the purchaser’s new entity that would have triggered increased value. 

In MALT Family Trust v. 777 Partners LLC, C.A. No. 2022-0652-MTZ (Del. Ch. Nov. 13, 2023), the court addressed a long list of claims that provide corporate litigators with a refresher course on basic claims and defenses often encountered in Delaware’s court of equity in connection with the sale of a business.

This short blog post will provide highlights by way of bullet points.


  • The court recited the familiar elements of a claim for fraudulent inducement, as well as the specificity requirement of Rule 9(b) for fraud claims. See Slip op. at 10.
  • The court reviewed the well-settled Delaware law on the objective theory of contract interpretation.  See Slip op. at 15.
  • The court explained that the LLC agreement did not include any of the alleged express representations or warranties on which the Plaintiff’s allegations were based. Nor was the purpose clause a “representation or warranty.” See also the court’s application of the contract interpretation principle known by the Latin phrase: expressio unius est exclusio alteris. See Slip op. at 17.
  • The court observed that an LLC agreement is not required to have a “purpose clause,” but that if a purpose clause limits the scope of authorized activity of the LLC, only the company can breach that clause. In this matter, the allegations were against the individual members.  Slip op. at 17-20.
  • Court of Chancery Rule 8 allows duplicative claims in the alternative to be pled, but a nuanced approach applies when the breach of the implied covenant of good faith and fair dealing is contradicted by the expressed terms in an agreement.  Slip op. at 22-25.
  • The well-settled principle that fiduciary duties of an LLC manager and controllers of the LLC must be waived with specific clarity supported the court’s reasoning that the corporate opportunity doctrine was not waived.  Slip op. at 27-31.
  • This opinion regales the reader with a quote and citation to a reference book that should be on the shelves of every corporate and commercial litigator.  At footnote 101 of the opinion, the court cited to Justice Antonin Scalia’s book that he co-authored with Bryan Garner entitled:  Reading Law: The Interpretation of Legal Texts 126-27 (2012). In that same footnote the court also cited to Kenneth A. Adams, “A Manual of Style for Contract Drafting,” Section 13.631 (Fifth Ed. 2023). The citations were for the purpose of interpreting a clause that included the word “Notwithstanding.”  The specific quote from the Scalia book was: 

“A dependent phrase the begins with notwithstanding indicates that the main clause that it introduces or follows derogates from the provision to which it refers.” 

The court interpreted that clause in a section involving fiduciary duties to conclude that the parties did not intend to waive fiduciary duties relating to the usurpation of “other business interests and activities.”