Archives: Chancery Court Updates

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Chancery Addresses “Commercially Reasonable Efforts” Standard

When the phrase “commercially reasonable efforts” appears as a standard of performance in contracts, it seems predetermined to generate litigation, and the recent Court of Chancery decision in Himawan v. Cephalon, Inc., C.A. No. 2018-0075-SG (Del. Ch. Dec. 28, 2018), supports that observation. Although the agreement in this case had a contractual definition for “commercially reasonable efforts”, prior … Continue Reading

Chancery Rules on Limits of Forum-Selection Clauses in Corporate Documents

A recent seminal decision of the Delaware Court of Chancery must be included in the lexicon of every lawyer who wants to understand the boundaries of Delaware law on forum-selection clauses in corporate documents. In the case of Sciabacucchi v. Salzberg, C.A. No. 2017-0931-JTL (Del. Ch. Dec. 19, 2018), the Court determined that a forum-selection clause … Continue Reading

Chancery Addresses When Extrinsic Evidence Allowed

A recent Court of Chancery decision explains when an agreement will be deemed ambiguous such that extrinsic evidence will be allowed, and related contract interpretation principles. Key Issue Addressed: The court, in Zayo Group, LLC v. Latisys Holdings, LLC, C.A. No. 12874-VCS (Del. Ch. Nov. 26, 2018), described the “real controversy” in the matter as … Continue Reading

Court Determines Scope of Release

The Delaware Court of Chancery recently resolved an issue about the scope of a release that was part of a settlement agreement. In Merging Europe Growth Fund, L.P. v. Figlus, C.A. No. 7936-VCMR (Del. Ch. Dec. 10, 2018), the court considered cross-motions to enforce a settlement agreement. One way to describe this case is “a … Continue Reading

Chancery Describes Minimum Standards of Attorney Conduct

The Delaware Court of Chancery recently had occasion to describe the important norms that lawyers are expected to follow, and the minimum standards of attorney conduct imposed on both Delaware and non-Delaware counsel who enter their appearance in a matter before the Court. See Lendus, LLC v. Goede, C.A. 2018-0233-SG (Del. Ch. Dec. 10, 2018). This case is noteworthy for a few reasons. … Continue Reading

Court Dissolves LLC Based on “Not Reasonably Practicable” Standard

Why This Decision is Noteworthy: By comparison to some of the other corporate and commercial litigation issues addressed by the Court of Chancery, there remains a relatively modest number of court decisions that address whether an LLC should be dissolved based on the statutory standard that it is “not reasonably practicable” to carry on the LLC.  … Continue Reading

Chancery Describes Penalties Available for Discovery Violations

The Court of Chancery recently explained the public policy reasons for enforcing discovery rules and scheduling deadlines, as well as explaining the types of penalties available for failure to comply with discovery obligations or deadlines. The key takeaways from the decision in Terramar Retail Centers, LLC v. Marion #2-Seaport Trust U/A/D June 21, 2002, C.A. … Continue Reading

Corwin Case Does Not Apply When Stockholder Vote Not Fully-Informed

A recent Chancery decision in the matter of In Re Tangoe Inc. Stockholders Litigation, Consol. No. C.A. 2017-0650-VCS (Del. Ch. Nov. 20, 2018), explained when the Corwin standard does not apply to cleanse a stockholder-approved transaction.  Under Corwin, the Delaware Supreme Court held that the business judgment rule is invoked as the appropriate standard of review … Continue Reading

Chancery Upholds Board’s Rejection of Pre-Suit Demand

This synopsis was prepared by Mitchell Mengden, a law student at the Georgetown University Law Center. A recent Delaware Court of Chancery opinion outlines the applicable standards when challenging a board’s decision to reject a pre-suit demand. In Busch v. Richardson, C.A. No 2017-0868-AGB, (Del. Ch. Nov. 14, 2018), the court upheld a board’s decision to … Continue Reading

Non-Signatory May Enforce Forum-Selection Clause

A recent Delaware Court of Chancery decision recognized that a non-signatory to an agreement may enforce the provisions of a forum-selection clause under certain conditions. Although this holding is counterintuitive, there are other Delaware decisions which recognize that in some circumstances a non-signatory to an agreement may either enjoy the benefits of that agreement or … Continue Reading

Chancery Increases Bond Posted for Injunction; Explains Document Review Protocols

A recent Delaware Court of Chancery bench ruling provides guidance on two important procedural topics that do not enjoy a robust body of case law to illuminate the nuances that practitioners must be familiar with in connection with certain aspects of Chancery litigation. In the matter styled: In Re Morrow Park Holding LLC, Cons., C.A. No. 2017-0036-TMR (Del. … Continue Reading

Prior Material Breach No Defense When Contract Benefits Retained

A recent Delaware Court of Chancery opinion explained the risks associated with using prior material breach of a contract as a defense. In the matter of Post Holdings Inc. v. NPE Seller Rep LLC, C.A. No. 2017-0772-AGB (Del. Ch. Oct. 29, 2018), a complaint by the buyer of a business based on alleged fraud and misrepresentation sought indemnification … Continue Reading

Chancery Finds Breach of Fiduciary Duty But No Damages

In connection with analyzing claims that certain defendants aided and abetted breaches of the directors’ fiduciary duties, a recent Court of Chancery opinion provides an exemplary recitation of important fundamental principles of Delaware corporate law. The court’s decision in the case of In re PLX Technologies Inc. Stockholders Litigation, Cons. C.A. No. 9880-VCL (Del. Ch. Oct. 16, … Continue Reading

Chancery Imposes Anti-Suit Injunction to Enforce Forum Clause

In connection with a business divorce involving several inter-related entities and two key agreements among the parties that impacted the issues disputed, the Delaware Court of Chancery in Village Green Holding, LLC v. Holtzman, C.A. No. 2018-0631-TMR (Del. Ch. Oct. 5, 2018), enforced the forum selection clause that selected Delaware courts, and imposed an anti-suit injunction to prevent … Continue Reading

Chancery Allows Termination of Merger Agreement Based on Material Adverse Change

The Delaware Court of Chancery recently issued an epic decision that serves as a mini-treatise on several topics of importance to corporate and commercial litigators including: (1) interpretation of material adverse change clauses or material adverse effect clauses in merger agreements; and (2) the meaning and application of the phrase “commercially reasonable efforts” or “reasonable best … Continue Reading

Chancery Rules on Two Covenants Not to Compete

In the first of two decisions on the same day addressing two separate covenants not to compete, in Lyons Insurance Agency, Inc. v. Wilson, C.A. No. 2017-0092-SG (Del. Ch., Sept. 28, 2018), the Delaware Court of Chancery explained the essential elements for enforceability of a non-competition provision in an agreement. The second case highlighted below deals with … Continue Reading

Chancery Remedies Fraudulent Inducement in Formation of New Entity

A recent Delaware Court of Chancery decision provided remedies in connection with the formation of a business entity by two entrepreneurs based on the court’s finding that the equity, and employment agreement, given to one of the businessmen was based on fraudulent representations. Trascent Management Consulting, Inc. v. Bouri, C.A. No. 10915-VCMR (Del. Ch. Sept. 10, … Continue Reading

Chancery Filings Now Due at 5:00 p.m. Eastern Time in Non-Expedited Cases

As foreshadowed earlier in a post about a recent Delaware Supreme Court Order whose purpose was to promote a better work-life balance for lawyers and their staff, the Court of Chancery recently amended its Rule 79.2 to require most filings to be made by 5:00 p.m. Eastern Time in non-expedited cases. This does not apply to initial filings … Continue Reading

Few Court Filings Meet Confidentiality Requirements

For those who need to understand the prerequisites for, and limitations of, maintaining court filings as confidential, the recent Delaware Court of Chancery opinion must be read in the matter styled:  In re Appraisal of Columbia Pipeline Group, Inc., Cons. C.A. No. 12736-VCL (Del. Ch. Aug. 30, 2018). Issue addressed: This decision describes when documents … Continue Reading

Chancery Interprets Certificate of Designations for Preferred Stock Rights

A recent Delaware Court of Chancery decision provides many useful statements of Delaware corporate law. The opinion in the matter of  Cedarview Opportunities Master Fund, L.P. v. Spanish Broadcasting System, Inc., C.A. No. 2017-0785-AGB (Del. Ch. Aug. 27, 2018), extends to 57-pages, but for purposes of this short blog post, I intend to highlight only … Continue Reading

LLCs are Not Only Creatures of Contract

The Delaware Court of Chancery recently addressed the challenged removal of an LLC manager and the validity of written consents. In Godden v. Franco, C.A. No. 2018-0504-VCL (Del. Ch. Aug. 21, 2018), the court explained several important principles that the Delaware courts use to analyze issues in the LLC context and interpretive rules involving LLC … Continue Reading
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