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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

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Court of Chancery Explains Some Consequences For Violating Forum Selection Agreement

CMS Investment Holdings LLC  v. Castle, C.A. 9468-VCMR (August 19, 2016)

This is a significant decision because it explains how filing suit somewhere other than in the contractually-designated jurisdiction does not toll the time to sue in the proper jurisdiction. Hence, if the improperly-filed suit is dismissed, it may be too late to bring suit in the proper jurisdiction.

Delaware Supreme Court Limits Jurisdiction Over Registered Corporations

Posted In Jurisdiction

Genuine Parts Company v. Cepec,  No. 528, 2015 (April 18, 2016)

Under Delaware law, an entity doing any business in Delaware must register to do so and thereby appoint a registered agent to receive process. For years this was held to confer general jurisdiction over that entity, even for claims that did not arise out of the business it did in Delaware. This decision reverses that old law and confines jurisdiction over non-Delaware entities to claims that arise out of what they have done in Delaware. Of course, there are still exceptions to that general rule, such as when an entity expressly agrees to jurisdiction in Delaware.

Delaware Supreme Court Clarifies Director/Officer Implied Consent Statute and Rejects Hana Ranch

Posted In Jurisdiction

Hazout v. Tsang Mun Ting, No. 353, 2015 (Del. February 26, 2016)

Rejecting the Court of Chancery’s narrow reading of the director/officer implied consent statute in Hana Ranch, Inc. v. Lent, 424 A.2d 28, 30 (Del. Ch. 1980), an interpretation that had been followed by lower courts for decades, the Delaware Supreme Court ruled that a non-resident officer sued in Delaware is subject to personal jurisdiction in actions brought “by or on behalf of, or against” the corporation if that officer “is a necessary or proper party” to the case, even if the case does not involve an alleged breach of the officer’s fiduciary or statutory duties. More ›

Court Of Chancery Explains Section 205 Jurisdiction

Posted In Jurisdiction

Knoll Capital Management LP v. Advaxis Inc., C.A. 11417-VCN (January 29, 2016)

Under the fairly new provisions of Section 205 of the DGCL, the Court may validate certain “defective corporate acts,” including “any act or transaction purportedly taken by or on behalf of the corporation that is … within the power of a corporation …, but is void or voidable due to a failure of authorization.”  More ›

Court Of Chancery Dismisses Case On Forum Grounds Against A Delaware Entity

Posted In Jurisdiction

VTB Bank v. Navitron Projects Corp, C.A. 8514-VCN (December 29, 2015)

This is the rare decision where a suit against a Delaware entity is dismissed on the basis that Delaware is a too inconvenient forum. When foreign law is both unclear and will establish the basis for any relief, a foreign plaintiff may find it hard to sue in Delaware unless the suit contains the allegation that the very formation of the Delaware entity is part of the alleged wrong.

Court Of Chancery Explains When To Uphold Delaware As A Forum

Posted In Jurisdiction

Pipal Tech Ventures Private Ltd. v. Moengage Inc., C.A. 10381-VCG (December 17, 2015)

This decision applies Delaware’s forum non conveniens law to a suit against a Delaware corporation arising out of events in India. The analysis is helpful for other cases because it deals with all the various factors to be considered, such as availability of discovery in a foreign country.  As a result, it is a precedent for upholding jurisdiction over a Delaware entity is proper even if the events occurred far away.

Court Of Chancery Explains Jurisdiction For Veil-Piercing

Posted In Jurisdiction

Doberstein v G-P Industries Inc., C.A. 9995-VCP (October 30, 2015)

This is an interesting decision for its discussion on what must be pled to obtain Chancery jurisdiction in a claim seeking to pierce the corporate veil. It is not enough to just allege the entity was used to defraud. Rather, the complaint must meet the more exacting standards set out in this opinion.

Court Of Chancery Explains Jurisdiction

Posted In Jurisdiction

Mirosoft Corporation v. Patent Revenue Partners LLC, C.A. 8092-VCP (October 15, 2015)

It is often assumed that merely by registering an entity in Delaware as part of a business transaction that you have become subject to the jurisdiction of the Delaware courts. But as this decision points out, that is not as simple as you might think. More ›

Court of Chancery Explains Jurisdiction Despite Declaratory Judgment

Posted In Jurisdiction

Doe v. Coupe,  C.A. No. 10983-VCP (July 14, 2015)

It is often contended that the availability of a declaratory judgment in Superior Court to determine the parties’ rights may deprive the Court of Chancery of jurisdiction to grant an equitable remedy such as an injunction. After all, it is assumed that the parties will obey the decision of the Court in deciding their rights. More ›

Superior Court Extends Jurisdiction Under The Director Long Arm Statute

Ting v. Silver Dragon Resources, Inc., No. 14C-12-067 WCC (June 3, 2015)

It is conventional wisdom that the director long arm statute only confers jurisdiction for breaches of fiduciary duty. Yet as this decision points out, that limitation is not firmly grounded in the words of the statute. Hence, this decision may expand the sort of claims for which a director may be subject to Delaware court jurisdiction when the tort or other claim  is only “related and predicated” on conduct that implicates a breach of fiduciary duty.

Court Of Chancery Confirms Jurisdiction Over Escrows

East Balt LLC v. East Balt US LLC, C.A. 10462-VCN (May 28, 2015)

There are often disputes over funds held in escrow under earn out or indemnification provisions in various deals. This decision confirms that the Court of Chancery will take jurisdiction over a suit seeking specific performance of the distribution provision of the escrow agreement. This seems particularly desirable because that Court has the most experience with why such escrows are put in place and has resolved many such disputes in the past.

Court Of Chancery Retains Suit After Martinez Ruling

Posted In Jurisdiction

VTB Bank v. Navitron Projects Corp,. C.A. 8514-VCN (April 28, 2014)

After the Delaware Supreme Court's Martinez decision dismissing a case on forum grounds, some thought that Delaware might reject other cases as well. This decision limits Martinez's scope and makes it clear that Delaware entities will be subject to Delaware jurisdiction in the circumstances where the activities of the entity "implicates [the Court of Chancery's] fundamental and immutable responsibility to supervise the entities chartered and formed under Delaware law."  While that mandate is clearly limited to some set of cases less than the universe of disputes a corporation may be subject to, what is covered remains to be seen.

District Court Clarifies Who Is A Manager

Posted In Jurisdiction

Wakley Limited v. Ensotran LLC, C.A. 12-728-GMS (March 18, 2014)

Under the Delaware LLC Act, a manager or a person who acts like a manager is subject to jurisdiction in Delaware in a breach of duty case arising out of her management.  Because the LLC agreement usually sets out who is a "manager," that is usually not disputed.  However, it is often less clear who had exercised management duties sufficient to be subject to jurisdiction in Delaware. This decision helps decide that question. It points out that just being named an officer is not enough to submit to jurisdiction and that the nature of the defendant's' duties compared to what it is alleged she did improperly may also be determinative.  In other words, if you "managed" X project but are sued for what you did on the Y project, there is no jurisdiction over you..

Court Of Chancery Clarifies Jurisdiction

Posted In Jurisdiction

Darby Emerging Markets Fund L.P. v. Ryan,  C.A. 8381-VCP (November 27, 2013)

This decision clarifies the Court of Chancery's jurisdiction under the clean up doctrine and when a contract subject to specific performance has not yet been breached.