In a recent Delaware Court of Chancery decision that addressed claims of breach of contract and fraud in connection with the sale of a business, the Court announced that Delaware law allows for sandbagging, which can be described as allowing a buyer of a business to sue for breach of a representation made in an
Chancery Court Updates
Chancery Decision Addresses Advancement Issues
The recent Delaware Court of Chancery decision in Krauss v. 180 Life Sciences Corp., C.A. No. 2021-0714-LWW (Del. Ch. Mar. 7, 2022), addressed nuances of advancement law that will be useful to those who labor in the field of corporate litigation dealing with these issues that are crucial to officers and directors.
The key…
Chancery Explains Exception to First-Filed Rule
A recent Chancery decision provided three reasons why the first-filed rule, sometimes known as the McWane Doctrine, would not be followed, based on the procedural history and facts in the case styled: In re Lordstown Motors Corp. Stockholders Litigation, C.A. No. 2021-1066-LWW (Del. Ch. Mar. 7, 2022). The Court first explained that the…
Chancery Explains: Typical Indemnification Clause Not Exception to American Rule
In a short letter ruling, with widespread applicability, the Court of Chancery explained in Paul Elton, LLC v. Rommel Delaware, LLC, et al., C.A. No. 2019-0750-KSJM (Del. Ch. Mar. 16, 2022), that typical indemnification provisions ordinarily:
“are presumed not to require reimbursement for attorneys’ fees incurred as a result of substantive litigation between the
…
Chancery Refuses to Pierce Veil of LLC
A recent Court of Chancery decision underscores the difficulty, at least in Delaware, of attempting to disregard the separate existence of a legal entity, sometimes referred to as “piercing the corporate veil”—though in the case styled Verdantus Advisors, LLC v. Parker Infrastructure Partners, LLC, C.A. No. 2020-0194-KSJM, Order (Del. Ch. Mar. 2, 2022), the…
Chancery Clarifies ‘Anti-Bootstrapping Rule’ for Tandem Claims of Breach of Contract and Fraud
A recent Court of Chancery decision acknowledged the “muddled” status (before this decision) of Delaware case law on the anti-bootstrapping doctrine, which has been covered in several decisions highlighted on these pages. The opinion in Levy Family Investors, LLC v. Oars + Alps, LLC, C.A. No. 2021-0129-JRS, Memo. Op. (Del. Ch. Jan. 27, 2022),…
Motion for Reargument Granted
A recent Court of Chancery letter ruling is noteworthy because it granted a motion for reargument. Over the last 17 years that I have been highlighting cases on this blog, I can count on my fingers the number of motions for reargument that have been granted. This is one of those rare birds. Tygon …
Revlon Exception to Rosson Derivative Rule
A recent Delaware Chancery decision is noteworthy for its application of the Revlon exception to the recent statement of Delaware law in the Rosson case–a Supreme Court opinion[1] declaring that equity-dilution or overpayment claims are derivative, except when there is also a change of control in which event it would be a direct claim. …
Recent Chancery Ruling Underscores Basics of Stockholder Right to Demand Corporate Records under DGCL § 220
A recent Delaware Court of Chancery ruling in Wagner v. Tesla, Inc., C.A. No. 2021-1090-JTL, transcript ruling (Del. Ch. Jan. 19, 2022), has sharpened the “tools at hand” that the Delaware courts have long exhorted corporate litigators to use before filing a plenary lawsuit–namely, DGCL § 220, which is the basis for the right of…
Prospects Brighten for Reverse Merger Petitions
This post was prepared by Delaware lawyer Evan Williford, an experienced corporate litigator, who practices with The Williford Firm LLC.
In re Forum Mobile, Inc., C.A. No. 2020-0346-JTL (Del. Ch., Feb. 3, 2022), a recent Chancery ruling, suggests that the Court may grant future valid petitions which revive defunct corporations with publicly traded stock…