Archives: Chancery Court Updates

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Mere Act of Forming Delaware Entity Not Basis for Personal Jurisdiction

A recent decision from the Delaware Court of Chancery provides practical insights into the requirements for imposing personal jurisdiction in Delaware over non-residents involved in the formation of a Delaware entity. The act of forming a Delaware entity only, without more, is not sufficient to impose personal jurisdiction in Delaware over a non-resident involved in the formation. The … Continue Reading

Chancery Addresses Scope of Director Consent Statute and Civil Conspiracy Claims

In the context of cross-claims of fraudulent inducement by parties to a merger, the Court of Chancery discussed several principles of Delaware law that serve as useful references for those involved in corporate and commercial litigation.  The opinion in LVI Group Investments, LLC v. NCM Group Holdings, LLC, C.A. No. 12067-VCG (Del. Ch. Mar. 28, … Continue Reading

Delaware Contract Interpretation Principles

Recent decisions of the Delaware courts have provided arguments for considering a broader approach to the more traditional “four corners of the document” view of contract interpretation for so-called unambiguous agreements.  The recent Chancery decision in Plaze, Inc. and Apollo Aerosole Industries LLC v. Callas, C.A. No. 2017-0432-TMR (Del. Ch. Mar. 29, 2018), addresses contract … Continue Reading

Chancery Discusses Revlon in Context of Granting Option to Sell Company

The Delaware Court of Chancery addressed a bevy of basic corporate litigation principles in the context of claims challenging the actions of directors, and determining which standards of review apply, and which procedural prerequisites need to be satisfied. In Carr v. New Enterprise Associates, Inc., C.A. No. 2017-0381-AGB (Del. Ch. Mar. 26, 2018), claims for … Continue Reading

The Business Judgment Rule and DGCL Section 144

A recent decision of the Delaware Court of Chancery discusses the interplay between the business judgment rule and section 144 of the Delaware General Corporation Law (DGCL). Section 144 provides some defenses to what would otherwise be easily challenged, conflicted transactions involving directors. Professor Stephen Bainbridge, well known to readers of this blog and often … Continue Reading

Non-Compete Clause Not Enforced Due to Prior Breach of Employer

A recent Delaware Court of Chancery decision is helpful for anyone seeking to defend or enforce a non-compete agreement that prohibits a former employee from competing with her former employer. In the case of Physiotherapy Corporation v. Moncure, C.A. No. 2017-03960-TMR (Del. Ch. Mar. 12, 2018), the court refused to enforce a non-compete provision against … Continue Reading

Court Denies Application for Interlocutory Appeal or Alternatively Entry of Partial Final Judgment Pursuant to Rule 54(d).

This post was prepared by Justin M. Forcier, an associate in the Wilmington, Delaware office of Eckert Seamans. The recent decision of the Court of Chancery in REJV5 AWH Orlando, LLC v. AWH Orlando Member, LLC, C.A. No. 2017-JRS (Del. Ch. Feb. 28, 2018), is a reminder of how rarely interlocutory appeals are granted. Background: … Continue Reading

Derivative Suit Dismissed Despite Board’s Failure to Follow Best Practices

The best way to explain the noteworthiness, for those engaged in corporate litigation, of the recent Delaware Chancery decision in Wilkin v. Narachi, C.A. No. 12412-VCMR (Del. Ch. Feb. 28, 2018), is to quote from the Court’s introduction: “This case … is a prime example of the difference between a best practice and a legal obligation  … Continue Reading

Chancery Grants Books and Records Request Based on Allegations in DOJ Complaint

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Court of Chancery recently granted a Section 220 request for corporate records based almost entirely upon allegations contained in a complaint lodged by the U.S. Department of Justice (“DOJ”) against UnitedHealth., in the matter of In re UnitedHealth Group, Inc. Section 220 … Continue Reading

Court Imposes Penalties for Failure to Fulfill Discovery Obligations

The Delaware Court of Chancery recently issued a decision that should be required reading for any lawyer that practices before it, whether they be Delaware counsel or non-Delaware counsel admitted pro hac vice, and whether they engage in corporate and commercial litigation or other types of cases before the court.  In the matter styled: In … Continue Reading

Chancery Interprets “Reasonable Efforts” Clause

Several recent Delaware decisions, as noted on these pages earlier this week here, and commented on here, have added to the case law that still only amounts to a relatively modest body of law in Delaware, interpreting the phrase: “reasonable efforts” and various permutations on that phrase, often found in post-closing earn out disputes but prevalent in … Continue Reading

Collection of Cases on Earn Out Disputes

A recent article on The Harvard Law School Corporate Governance Blog collected decisions, mostly based on Delaware law, that address Earn Out disputes, which generally involve agreements for the sale of a company that allow for post-closing payments subject to various milestones or revenue targets being satisfied. Commonly, the buyer of the company is required to use a … Continue Reading

Chancery Addresses Commercially Reasonable Efforts and Pre-Judgment Interest

A recent Delaware Court of Chancery opinion addressed issues that are of importance to commercial and corporate litigators. In CompoSecure, L.L.C. v. CardUX, LLC f/k/a Affluent Card, LLC, C.A. No. 12524-VCL (Del. Ch. revised Feb. 12, 2018), the court provided a thorough analysis of a contract dispute in a post-trial ruling that primarily relied on New Jersey … Continue Reading

Chancery Rejects Conspiracy Theory of Personal Jurisdiction

Although Delaware recognizes the conspiracy theory as a basis for personal jurisdiction, in Reid v. Siniscalchi, C.A. No. 2874-VCS (Del. Ch. Jan. 30, 2018), the court found insufficient elements of that basis for imposing jurisdiction, after extensive discovery was permitted.  This short overview of this 44-page decision will focus on the bullet points that would be … Continue Reading

Court of Chancery Rejects Efforts to Seek Attorneys’ Fees from Stockholder of Insolvent Corporation

In deciding an issue of first impression, the Delaware Court of Chancery in City of Miami General Employees’ and Sanitation Employees’ Retirement Trust v. C&J Energy Service, Inc., et al., C.A. No. 9980-CB (Del. Ch. January 23, 2018), addresses several principles that should be of interest to corporate litigators: A fee award, such as one … Continue Reading

Fraudulent Transfer Claims Allowed to Proceed After Account Drained

The letter ruling by the Delaware Court of Chancery in Daugherty v. Highland Capital Management, C.A. No. 2017-0488-SG, (Del. Ch. January 16, 2018), provides a helpful description of the elements of a fraudulent transfer claim and their application to facts involving efforts to escape collection efforts. Background Facts: The essential background facts involve allegations that … Continue Reading

Chancery Refuses Invitation to Apply Garner Exception to Attorney-Client Privilege

Anyone interested in the most complete and recent explanation of the Garner exception to the attorney-client privilege needs to read the Delaware Court of Chancery’s ruling in Buttonwood Tree Value Partners, L.P. et al. v. R.L. Polk & Co., Inc., et al., C.A. No. 9250-VCG (Del. Ch. Jan. 10, 2018). This letter ruling addresses a … Continue Reading

Chancery Rejects Contract-Based Claim for Attorneys’ Fees

Anyone seeking attorneys’ fees in Delaware based on a “prevailing party clause” in an agreement–who has not been completely and unequivocally vindicated in that litigation, needs to read the Chancery court ruling in the case styled: The Mrs. Fields Brand, Inc. v. Interbake Foods LLC, C.A. No. 12201-CB (Del. Ch. Jan. 5, 2018). In essence, citing … Continue Reading