Main Menu

Showing 47 posts in Injunctions.

Court Of Chancery Expands Entitlement To Injunction

Posted In Injunctions

AM General Holdings LLC v. The Renco Group Inc., C.A. 7639-VCN (December 21, 2012)

This is an interesting decision because it may extend the circumstances where the Court of Chancery will issue a preliminary mandatory injunction requiring the payment of money.  It is often said, perhaps wrongly, that there is an adequate remedy by the award of damages that precludes issuing an injunction requiring such a payment.  Here, however, the parties' contract contained a provision recognizing that irreparable harm would occur if the payment was not made and the failure to make the payment also frustrated a key provision in the parties' contract governing how their entity would be operated.  That was enough to get the injunction.

Share

Court Of Chancery Enjoins Loan Restructuring

Posted In Injunctions

Trilogy Portfolio Company Inc. v. Brookfield Real Estate Financial Partners LLC,  C.A. 7161-VCP (January 13, 2012)

This decision is an example of the growing Court of Chancery litigation over enforcement of loan agreements.  The court reviewed the recent deicisions over when to issue an injunction or instead leave the parties to a damages remedy.  Here the decision is affected by the procedural stance of the litigation because the burden the plaintiff must bear is somewhat less at the TRO stage and the decision fully explains how that affected its conclusion to issue an injunction.

Share

Court Of Chancery Enjoins Suit In Another Jurisdiction

Posted In Injunctions

ASDC Holdings LLC v. The Richard J. Malouf 2008 All Smiles Grantor Retained Annuity Trust,  C.A. 6562-VCP (September 14, 2011)

Frequently a contract will have a provision selecting Delaware as the forum to litigate any dispute.  What happens then when a case is filed elsewhere and one party seeks to enforce the forum selection clause by an injunction in Delaware against the prosecution of the other litigation?   Well, this decision tells us the result and resolves possible conflicting holdings in other courts including the Delaware Supreme Court.  Briefly:

1. The Court of Chancery will grant the injunction if the forum selection clause properly confers jurisdiction in Delaware courts.  Note that this means that selecting the Court of Chancery may not work if the dispute is not subject to equitable jurisdiction in that court.  Better to select  "any" court with jurisdiction in Delaware over the subject matter of the dispute.

2. The forum selection clause must be broad enough to include any dispute "arising out of" or "related" to the dispute.  A narrower clause may not work.

Share

Court Of Chancery Denies Relief Over Two Week Delay

Posted In Injunctions

CNL-AB LLC v. Eastern Property Funds I SPE (MSREF) LLC ,C.A. 6137-VCP (January 28,  2011)

This decision again illustrates how fast a claim may be barred by inaction.  Here two weeks passed after the plaintiff  was on notice of its claim before suit was filed.  Too late the Court said to ask for an injunction.

Share

Court of Chancery Explains When It Will Appoint A Receiver

Posted In Injunctions

Pope Investments LLC v. Benda Pharmaceutical Inc. ,C.A. 5171-VCP ( December 15, 2010)

When a Delaware corporation becomes insolvent, it is possible to have the Court of Chancery appoint a receiver to take over its management.  Possible, but not easy as this decision shows.  Assuming that insolvency is proved, a receiver will be appointed when it will serve a "beneficial purpose".  What that translates into is when there is no real alternative to protect creditors effectively.

When it is possible to use the usual methods of enforcing a judgment or there are other, less dramatic remedies available, a receiver is not warranted.  For example, if the plaintiff has the right to appoint directors, then it should use the statutory remedy to force a stockholder meeting and the election of those directors.

Finally, to the extent the plainitff's case is based on what it alleges to be corporate abuses by current management, it needs to first prove those abuses before the court will appoint a receiver. After all, the extent of the abuse has to be determined before the remedy may be crafted.

Behind all this cautionary approach is the natural reluctance of any court to be dragged into the everyday management of a business.  For once a receiver is appointed, the court knows that every dispute over what the receiver does is probably going to end up before the court for resolution.  That is not fun.

Share

Court Of Chancery Enjoins Termination Of Supply Contract

Posted In Injunctions

Arkema v The Dow Chemical Company, C.A. 5479-VCP ( May 14, 2010)

When the economy is in stress, contracts to supply materials at a fixed price seem to be broken more often. This decision explains what you have to show to get  a TRO against the breaking of such a contract by the supplier.  In short, it is not easy but can be done when the ability to "cover" is not available.

Share

Court of Chancery Enjoins Violation of Non-Compete

Posted In Injunctions

Zrii LLC v. Wellness Acquisition Group, Inc., C.A. 4374-VCP (September 21, 2009).

This is an interesting case because of the limitations on the remedy imposed for violating a non-competition agreement. The decision illustrates the rule that no matter how wrong the conduct, the remedy of an injunction will be limited to stopping the competition for the period provided for in the agreement. Of course, a damage remedy is also available.

Share

Court of Chancery Denies TRO for Laches

Posted In Injunctions

Topspin Partners L.P. v. Rocksolid Systems. Inc., C.A. 4275-VCL (Del. Ch. Jan. 21, 2009)

 

This decision illustrates the sometimes forgotten Delaware rule that if you get a TRO you better act fast. Here the plaintiff sat on its rights for ten months and the Court, while finding that irreparable harm might occur and that the claims appeared meritorious, denied immediate relief because of the delay.

 

Share

Court of Chancery Explains When Delay Is Not A Bar

Posted In Injunctions

Ginsburg v. Philadelphia Stock Exchange, C.A. No. 2202-CC (May 31, 2007).

It is often thought that even a short delay in seeking injunctive relief may bar a claim. Certainly in the case of claims to rescind a corporate transaction, any delay may be fatal. However, when the Court is satisfied that the plaintiff has been diligent, it is less likely to punish the delay that occurs in following the command of the Delaware Supreme Court to use the right to review corporate records before filing suit.

In this decision, the plaintiff knew he objected to the sale of securities by the PHLX and filed a demand to review its records on that sale. A year after the sale, he sued to have it rescinded. The Court denied the motion of the defendants for summary judgment on the claim for rescission because much of the delay in suing was attributed to the time the PHLX took in producing the documents the plaintiff had sought to review. In short, if you follow the rules to use the tools at hand you may get the time to do so.

Share

Court of Chancery Enforces Non-Compete Agreement

Posted In Injunctions

Hough Associates Inc. v. Hall, C.A. No. 2385-N (Del. Ch. January 17, 2007).

While it is common for the courts to enforce non-compete agreements against the signatories to those agreements, it is less common for third parties to get dragged into the enforcement as well. Here, when a non-party to the agreement knew of its terms, actively assisted in the violation of the agreement and would itself have profited from that violation, the Court of Chancery had little pause in holding the agreement should be enforced against that third party.

Share

Court of Chancery Grants Ten Year Injunction

W.L. Gore & Associates, Inc. v. Wu, C.A. No. 263-N (Del. Ch. September 15, 2006). The extent to which a court will enjoin the violation of a confidentiality agreement covering trade secrets is often questioned. In this decision, the Court of Chancery issued an injunction that for ten years barred the defendant from working in a business that might permit him to use the trade secrets he had stolen from his employer. In part, the remedy was based on the useful life of the stolen materials. More › Share

Court of Chancery Expands Duty To Act in Good Faith

Horizon Personal Communications, Inc. v. Sprint Corp., C.A. No. 1518-N, 2006 WL 2337592 (Del. Ch. Aug. 4, 2006). There is no duty that is more often cited and so little understood as that requiring a contracting party to act in good faith and deal fairly with the other contracting parties. In this case the Court of Chancery exhaustively examined the contract between the parties, determined what was required to act in good faith, and fairly awarded an injunction to preclude a breach of that duty. In doing so, the Court's analysis provides a road map for tracking the duty to act in good faith in the performance of a contract. More › Share

District Court Enjoins Plaintiff from Initiating Third-Party Proceedings Against Defendants and from Pursuing Global Settlement Strategy in Pending Asbestos Cases

Flowserve Corp. v. Burns Int'l Servs. Corp., C.A. No. 04-1294-JJF, 2006 WL 739886 (D. Del. Mar. 22, 2006). Plaintiff filed a complaint seeking a declaratory judgment of its right to indemnification in asbestos litigation under the terms of a stock purchase agreement executed by its predecessor-in-interest, which had acquired a subsidiary of Borg-Warner Corp. ("BWC"). Defendant Burns International Services Corp. ("Burns"), which had purchased BWC's insurance assets at a liquidation sale, filed a counterclaim alleging that its indemnification obligations to plaintiff only arose out of a later letter agreement, and that once BWC's insurance was exhausted, plaintiff had to pay the costs of defending and resolving the asbestos claims. During the pendency of the instant case, plaintiff informed Burns that (i) it had terminated the counsel chosen by Burns to defend the asbestos claims; (ii) it was choosing its own counsel; and (iii) it was directing its new counsel to file third-party complaints against defendants and to pursue global settlements in the underlying asbestos cases (together, the "threatened actions"). Burns then sought a temporary restraining order and preliminary injunction to enjoin plaintiffs from taking the threatened actions. More ›

Share

Court of Chancery Denies Motion For Expedited Preliminary Injunction Hearing For Lack of "Colorable Claim" Demonstrating Imminent Irreparable Harm

Madison Real Estate Immobbilien-Anlagegesellschaft Beschrankt Haftende KG v. GENO One Financial Place L.P. and GENO Auslandsimmobilien GmbH, No. Civ.A. No. 1928-N, 2006 WL 456779 (Del. Ch. Feb. 22, 2006). The plaintiff is a German entity organized under that country's laws, as is the second named German limited liability defendant. The latter party is also a general partner in the first defendant entity. The plaintiff was one of two bidders that made an unregulated tender offer for a part of the first-named defendant's Delaware limited partnership interest. Plaintiff filed a motion in the Court of Chancery for expedited injunction proceedings, seeking to enjoin the defendant's general partner from approving any transfer agreements related to the tender offers. More › Share

Court of Chancery Grants Expedited Injunction Proceedings In Interested Merger's Disclosure Claim

In re Serena Software, Inc. S'holders Litig., C.A. No. 1777-N, 2006 WL 375599 (Del. Ch. Feb. 09, 2006). This is a motion for expedited proceedings for a preliminary injunction pertaining to certain disclosure claims not made public in SEC-filed proxy statements soliciting shareholder vote for an agreement for sale of the corporation at $24 per share. Class actions were earlier filed in the Delaware Court of Chancery and California's Superior Court challenging the sale transaction as a director-interested one. More › Share
Back to Page