Justia Delaware Court of Chancery Opinion Summaries

In this opinion, the Court of Appeals suggested reconsidering the holding of CompoSecure, LLC v. CardUX, LLC (CompoSecure II), 206 A.3d 807 (Del. 2018), and permitting a court of equity to consider equitable defenses to a breach of contract claim even when the parties have used the word "void" to describe the consequence of contractual noncompliance.Defendant, a co-founder and member of XRI Investment Holdings LLC (XRI), formed GH Blue Holdings, LLC as a single-member LLC and then transferred all of his Class B units in XRI to Blue (the Blue Transfer). Defendant sought to comply with a provision in the LLC agreement that governed XRI's internal affairs that generally prohibited members from transferring their member interests by evoking an exception for a transfer to a "Permitted Transferee." XRI alleged that the Blue Transfer was void ab initio and never became effective, and Defendant responded that XRI's claim was barred by the equitable defense of acquiescence. The Court of Chancery held (1) there was no impediment to a defendant raising a defense of acquiescence in response to a legal claim; and (2) this decision sets out the rationale for a court to reconsider the holding in CompoSecure II so that the Delaware Supreme Court may consider it in connection with any appeal. View "XRI Investment Holdings LLC v. Holifield" on Justia Law

The Court of Chancery held that the petition in this case alleging that Respondent, a former teacher, befriended and manipulated a woman, now deceased, through coercion into receiving millions of dollars of the woman's inheritances should be dismissed in full, with prejudice.Petitioner filed a verified petition to, among other things, invalidate will and trust agreements, for breach of a fiduciary duty, and demand for accounting. Respondent filed a motion to dismiss. The Court of Chancery granted the motion, holding (1) most of Petitioner's claims were either expressly time barred or sought a collateral attack on the incontestable final wishes of the decedent and that there was no viable basis for tolling the applicable limitations; and (2) Petitioner did not have standing to assert her remaining claims. View "Rambo v. Fischer" on Justia Law

The Court of Chancery held Gregory Holifield violated an agreement by forming GH Blue Holdings, LLC (Blue) as a single-member LLC and then transferring all of his Class B units in XRI Investment Holdings, LLC (XRI), of which he was a co-founder and member, to Blue (the Blue Transfer) was void while the law required this result, it was contrary to the equities of the case.The LLC agreement that governed XRI's internal affairs (the LLC agreement) contained a provision generally prohibiting members from transferring their member interests (the No Transfer Provision) and that any such transfer is void. XRI asserted that the Blue Transfer was void ab initio and never became effective, and Holifield responded that XRI's claim was barred by the equitable defense of acquiescence. The Court of Chancery agreed with Holifield, holding Holifield satisfied all of the requirements to prove the defense of acquiescence. In this decision, the Court set out rationale to support an approach to the issue that does not currently reflect Delaware law and ordered the parties to submit a final order as to form. View "XRI Investment Holdings LLC v. Holifield" on Justia Law

The Court of Chancery denied Jessica Puathasnanon's motion to dismiss this action pursuant to Rule 12(b)(2), holding that Puathasnanon was subject to personal jurisdiction in Delaware for purposes of the claims asserted in this case.Hudson Vegas Investment SPV, LLC sued various defendants, including Puathasnanon, the general counsel and chief legal officer of P3 Health Group Holdings, LLC, asserting that Puathasnanon breached the fiduciary duties she owed to P3 and its members. Puathasnanon filed a motion to dismiss, asserting that the court could not exercise personal jurisdiction over her. The Court of Chancery denied the motion to dismiss, holding that the exercise of personal jurisdiction over Puathasnanon comported with minimum standards of due process. View "In re P3 Health Group Holdings, LLC" on Justia Law

The Court of Chancery dismissed without prejudice Plaintiffs' complaint, holding that the action generally lacked an actual controversy and Plaintiffs sought what amounted to an advisory opinion and that the single portion of the dispute that appeared ripe failed to state a claim upon which relief could be granted.In their complaint, Plaintiffs disputed a company's interpretation of certain provisions in an LLC agreement, The first count was a breach of contract claim seeking a determination regarding the construction of the LLC agreement, and the other count was also styled as a breach of contract claim seeking a declaration that restrictive covenants in certain sections of the LLC agreement were overbroad and unenforceable under Delaware law. Defendant moved to dismiss the complaint under Court of Chancery Rules 12(b)(1) and 12(b)(6), arguing that no justiciable controversy existed. The Court of Chancery granted the motion, holding (1) the claim in count one was unripe, and the claim in count two did not present a justiciable dispute; and (2) the purchase notice claim in count one is dismissed without prejudice under Rule 12(b)(6). View "Klein v. ECG Topco Holding, LLC" on Justia Law

The Court of Chancery granted summary judgment in favor of Respondents and confirmed a May 10, 2021 arbitration award, holding that this court was obliged to grant Respondents' cross-motion for summary judgment to confirm the award.Respondent commenced an arbitration proceeding against Petitioner asserting several claims relating to amendments to the parties' LLC agreement. After the arbitrator issued decisions, Petitioner filed a petition to vacate the award in part. Respondent and affiliated entities filed a counterclaim to confirm the arbitration award. All parties moved for summary judgment. The Court of Chancery granted summary judgment in favor of Respondents and confirmed the arbitration award, holding that Petitioner's challenges to the award failed. View "Polychain Capital LP v. Pantera Venture Fund II LP" on Justia Law

In this dispute over whether homeowners may park a commercial van at and on their property in Bear, Delaware, the Court of Chancery held that the van was expressly permitted and that judgment should be entered in favor of the homeowners.Plaintiff was responsible for maintaining a private open space within a development. Property within the development was subject to restrictions set forth in a declaration of restrictions and an amendment to the declaration. Defendants were accused of violating a restriction on prohibited vehicles. Plaintiff filed the underlying complaint seeking a mandatory injunction to remove Defendants' van from the property. The Court of Chancery held that judgment should be entered in Defendants' favor because the van was expressly permitted under the amendment. View "Estates of Red Lion Maintenance Corp. v. Broome" on Justia Law

The Court of Chancery granted summary judgment in favor of the State of Delaware and against the City of Seaford in the State's action seeking injunctive relief prohibiting the enforcement of the City's ordinance entitled "Ordinance Relative to Abortion" and a declaratory judgment that the ordinance was invalid, holding that the ordinance was preempted by Delaware law.In 2021, the City enacted the ordinance, which mandates that all fetal remains resulting from an abortion or miscarriage be cremated or interred. In its lawsuit, the State argued that the ordinance conflicted with state law, making it invalid under the doctrine of preemption. The Court of Chancery granted relief, holding that the ordinance conflicted with Delaware's statutory scheme requiring an official record of death before human remains can be cremated or interred. View "State v. City of Seaford" on Justia Law

The Court of Chancery granted Plaintiff's motion for summary judgment seeking an order confirming the arbitration panel's award in this case and denied Defendants' motion for summary judgment seeking to vacate the award, holding that there was no basis to vacate the arbitration panel's award.Defendants initiated arbitration proceedings against Plaintiff to challenge the validity of unsuitability determination that Plaintiff issued to Defendants under the parties' agreement. The arbitration panel determined that the unsuitability determination was valid. This litigation followed. The Court of Chancery confirmed the arbitration award, holding that Defendants were not entitled to relief on their allegations of error. View "MHP Management, LLC v. DTR MHP Management, LLC" on Justia Law

Evans served as CEO and a director of Avande, a privately held Delaware corporation that provides medical claims management services to insurance companies and healthcare organizations. Following Evans’s termination, Avande performed an audit and discovered suspect transactions undertaken by Evans while he was serving as CEO. Avande filed suit, alleging breach of fiduciary duty based on alleged self-dealing transactions and improper expenditures and tortious interference, defamation, and conversion based on acts that Evans allegedly committed after his termination. Evans was found liable for about $65,000 in damages, plus interest. Evans demanded advancement for expenses incurred in connection with the action.The Delaware Chancery court entered judgment in favor of Avande. Avande established that there is no causal link between Evans’s status as a former officer of Avande and the tortious inference and defamation claims; those claims solely concerned Evans’s post-termination conduct. Avande demonstrated that Evans did not succeed but was found liable. View "Evans v. Avande, Inc." on Justia Law