This post was prepared by Aimee Czachorowski of the Delaware office of Lewis Brisbois.
The Court of Chancery’s recent Memorandum Opinion in DiDonato v. Campus Eye Management, LLC, C.A. No. 2023-0671-LWW (Del. Ch. Jan. 31, 2024), covers a great deal of ground in addressing a wide variety of defenses raised in connection with a claim under 6 Del. C. Section 18-110 to confirm whether the plaintiff remained as a manager of the LLC, but of particular interest is the Court’s discussion of whether the defendant should be held in contempt for violating the Court’s status quo order.
The Court explained that Court of Chancery Rule 70(b) provides “broad latitude to remedy violations of its orders” and clearly set forth the requirements for a movant seeking such an order. By a preponderance of the evidence, a movant must show the contemnors violated an order of the Court of which they had notice and by which they were bound and the violation must be a failure to obey the Court in a meaningful way. If that burden is met, the burden then shifts “to the contemnors to show why they were unable to comply with the order.”
After briefing and argument, the Court found the defendant in contempt of its status quo order and, as a remedy, rather than unwinding the transaction at issue, awarded fees incurred by the plaintiff in bringing the motion.