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After Entry of Default Judgment, Chancery Grants Leave to Amend Complaint to Add a New Claim for Reverse Veil-Piercing Against Two New Defendants

P.C. Connection, Inc. v. Synygy Ltd., C.A. No. 2020-0869-JTL (Del. Ch. Jan. 10, 2022)
After entry of a default judgment for liability, but before entry of a judgment awarding relief, the Court of Chancery granted the plaintiff leave to amend the complaint to add a new claim for reverse veil-piercing against two new entity defendants under Court of Chancery Rule 15(a). The Court found that the liberal Rule 15(a) standard regarding amendments to complaints applied – rather than the relatively stringent requirements for setting aside a judgment under Rules 59 and 60 – because the Court had only entered judgment on liability and had not yet determined the appropriate relief, and thus, the judgment was not final.

The Court determined that amending the complaint after entry of the default judgment would not prejudice either the existing defendants or the proposed two new defendants. The Court noted that changing the legal or factual landscape as to the existing defendants while still maintaining the default judgment could offend due process because the existing defendants may not have defaulted if they knew that a particular factual allegation would be deemed true or a different claim would be asserted against them. Here, however, the plaintiff was not seeking to add new claims against the existing defendants or to introduce new factual allegations that would be deemed true as a result of the default judgment. The Court concluded that allowing leave to amend would also not cause prejudice against the proposed defendants because the plaintiff would still have to serve the proposed defendants, and they would have an opportunity to respond to the amended complaint.



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