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Barnaby Grzaslewicz

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Showing 25 posts by Barnaby Grzaslewicz.

Chancery Rules That The Standard Of Proof For Contempt Motions Is The Preponderance Of The Evidence, Not Clear And Convincing Evidence


inTEAM Associates, LLC v. Heartland Payment Systems, LLC, C.A. No. 11523-VCF (Del. Ch. Oct. 29, 2021)
Court of Chancery Rule 70(b) empowers the Court to hold a party in contempt for, among other things, failing to obey an injunctive order. The standard of proof required to obtain a contempt order has not been uniformly applied. This recent decision applies the preponderance of the evidence standard, in contrast to certain decisions over the past decade applying the clear and convincing evidence standard. More ›

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Delaware Court of Chancery Holds That Scope of Director and Officer Indemnification Under D&O Policy Is Within Exclusive Jurisdiction Of The Delaware Superior Court


Ernesto Rodriguez et al. v. Great American Insurance Company, C.A. No. 2020-0387-JRS (Del. Ch. Oct. 20, 2021)
The Court of Chancery’s subject matter jurisdiction is limited, and arises in three circumstances: (1) the complaint asserts an equitable claim; (2) the complaint seeks an equitable remedy and there is no adequate remedy at law; or (3) jurisdiction is vested in the Court of Chancery by statute. In this recent decision, the Court of Chancery held that its limited subject matter jurisdiction did not extend to determine the scope of a Delaware corporation’s directors and officers (D&O) insurance policy. More ›

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Chancery Dismisses Derivative Claims That Private Equity Sponsors Comprised A Control Group


Patel v. Duncan, C.A. No. 2020-0418-MTZ (Del. Ch. Sept. 30, 2021)
For stockholders to comprise a control group, the alleged group members must be connected in some “legally significant way – such as by contract, common ownership, agreement or another arrangement – to work together toward a shared goal.” Sheldon v. Pinto Tech. Ventures, L.P., 220 A.3d 245, 251-52 (Del. 2019). There must be “an indication of an actual agreement, although it need not be formal or written.” Id. Here, the court dismissed a claim alleging that two private equity funds comprised a control group that agreed to cause the corporation to engage in two unfair, self-interested transactions as a quid pro quo arrangement between them. Specifically, the plaintiff alleged they agreed to cause the corporation to overpay in two successive transactions in which the counterparties who benefitted unfairly were affiliates of the respective private equity funds.  More ›

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Delaware Court of Chancery Enjoins Arbitration, Holds It Has Subject Matter Jurisdiction to Decide Substantive Arbitrability In Face Of Competing Arbitration Provisions


AffiniPay, LLC, et al. v. West, C.A. No. 2021-0549-LWW (Del. Ch. Sept. 17, 2021)
As a general matter, Delaware courts retain jurisdiction to determine substantive arbitrability – that is, whether claims are subject to arbitration under the relevant arbitration clause. Delaware courts will defer to arbitrators’ determinations of such issues, however, where the parties’ contract reflects their “clear and unmistakable” intent to do so, a standard that may be met by, among other things, contractual language that “all disputes” are submitted to arbitration and the incorporation of official arbitration rules that empower arbitrators to decide arbitrability. Here, because the parties’ dispute implicated multiple agreements with competing and conflicting arbitration clauses assigning arbitrability to different arbitrators, the Court of Chancery retained jurisdiction to determine arbitrability. The Court granted a preliminary injunction preventing arbitration from proceeding in the arguably incorrect forum. More ›

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Delaware Superior Court Holds That Claim For Gross Negligence Against Corporate Managers Is An Equitable Claim For Breach Of Fiduciary Duty Over Which It Lacks Subject Matter Jurisdiction


Techview Investments Ltd., v. Amstar Poland Property Fund I, L.P., C.A. No. N20C-11-229 EMD CCLD (Del. Super. Ct. Aug. 31, 2021)
The court's ability to hear actions is limited by their jurisdiction – both jurisdiction over parties and jurisdiction over claims.  This recent decision from the Delaware Superior Court’s Complex Commercial Litigation Division provides guidance on (1) the scope of contractually granted personal jurisdiction; and (2) subject matter jurisdiction for claims of gross negligence against corporate managers in Delaware. More ›

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Chancery Sustains Founders’ Implied Covenant Claim For “Bad Faith” Termination To Deprive Them Of Contingent Compensation, Reasoning That Contracts Cannot Be Combined And Must Be Read On Their Own Terms, But The Implied Covenant May Provide Missing Terms


Servaas v. Ford Smart Mobility LLC, C.A. No. 2020-0909-LWW (Del. Ch. Aug. 25, 2021)
Delaware common law requires that contracts be read on their own terms.  Accordingly, contracts cannot be “combined” to supply missing terms.  However, the implied covenant and good faith and fair dealing can, in certain circumstances, supply these missing terms.  More ›

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Chancery Applies Rule 15(aaa), Declines to Revive Dismissed Claims under the Law of the Case Doctrine


Sciabacucchi v. Malone, C.A. No. 11418-VCG (Del. Ch. Aug. 18, 2021).
Court of Chancery Rule 15(aaa) provides that, if a plaintiff files an answering brief opposing a Rule 12(b)(6) or Rule 23.1 motion, a decision granting the motion is with prejudice unless the court “for good cause shown, shall find that dismissal with prejudice shall not be just under all the circumstances.” In this decision, the court applied that rule and the law of the case doctrine to deny a motion to amend to reassert dismissed claims. More ›

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Chancery Finds Equitable Defenses Bar LLC Dilution and Redomestication Claims, and Holds it Lacks Jurisdiction to Dissolve a Foreign Entity


In re Coinmint, LLC, C.A. No. 2019-0983-MTZ (Del. Ch. Aug. 12, 2021)
This decision illustrates that, in specific circumstances, the equitable defenses of waiver, acquiescence, and estoppel may preclude a party from challenging otherwise voidable actions. In addition, deciding an issue of first impression, the Court held that it lacks subject matter jurisdiction to equitably dissolve a non-Delaware business entity. More ›

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Superior Court’s Complex Commercial Litigation Division Reaffirms Delaware’s Public Policy Against Intra-Contractual Fraud


Aveanna Healthcare, LLC v. Epic/Freedom LLC, N20C-08-055 AML CCLD (July 29, 2021).
Under Delaware law, parties may agree contractually to disclaim reliance – and potential liability for fraud – based on false extra-contractual statements. Delaware public policy, however, does not allow a party to disclaim liability for fraudulent statements within the parties’ contract. In addition, an owner who knowingly causes a company to make misrepresentations may be personally liable for fraud, even though an agreement provides such representations are made by “the company.” More ›

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Chancery Shifts Fees, Finds That Defendant’s Litigation Tactics in Books and Records Case Crossed The Line Between Aggressive Litigation And Glaringly Egregious Conduct


Pettry, et al. v. Gilead Sciences, Inc., C.A. Nos. 2020-0132-KSJM; 2020-0138-KSJM; 2020-0155-KSJM; 2020-0173-KSJM (Del. Ch. July 22, 2021).
Delaware follows the American Rule: all litigants pay their own attorneys’ fees, no matter the outcome of the litigation. In rare cases where a litigant’s conduct is “glaringly egregious,” Delaware courts will make an exception and shift fees. This is known as the “bad faith” exception.
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Chancery Dismisses Conclusory Allegations of Gross Negligence and Disloyalty Against Oracle Officers and Directors Related to Alleged Controlled, Self-Dealing NetSuite Acquisition


In re Oracle Corp. Derv. Litig., C.A. No. 2017-0337-SG (Del. Ch. June 21, 2021)
While Delaware maintains a notice pleading standard, this decision reflects that conclusory allegations of breach of fiduciary duty leveled against officers and directors of a Delaware corporation may be found insufficient to state a claim. More ›

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Chancery Holds That Claim Based on Purposeful Tanking of Merger Agreement Earnout Is Breach of Contract Claim


Shareholder Representative Services LLC v. Albertson’s Companies, C.A. No. 2020-0710-JRS (Del. Ch. June 7, 2021)

Many merger agreements include earnout provisions under which the stockholders in the acquired company are entitled to additional consideration upon the occurrence of certain financial milestones. In this case, the Court of Chancery analyzed and considered the appropriate way to plead claims that the acquirer purposefully operated the company to miss earnout milestones. More ›

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Chancery Reasons That Board’s Decision To Address Alleged “Red Flags” Related To Pending Litigation, After Litigation Is Resolved, Is Not Bad Faith For Caremark Purposes


Pettry v. Smith et al., C.A. No. 2019-0796-JRS (Del. Ch. June 28, 2021)

As discussed in Caremark and its progeny, fiduciary duties require directors to monitor the business and affairs of a corporation. Here, the Court of Chancery addressed the issue of oversight liability in the context of a Board’s decision, despite “red flags,” to delay certain additional remedial actions pending resolution of directly related litigation. More ›

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Delaware Supreme Court Explains Delaware’s Intermediate Forum Non Conveniens Standard Under Gramercy


GXP Capital, LLC v. Argonaut Manufacturing Services, Inc. et al
., Nos. 247, 2020 and 248, 2020 (Del. May, 20, 2021)
Delaware has three standards for forum non conveniens motions. The two more commonly addressed are Cryo-Maid, which favors first-filed Delaware actions, and McWane, which favors first-filed litigation pending elsewhere. The third standard, Gramercy, consists of neutrally balancing the well-established forum non conveniens factors as between a later-filed Delaware action and another available forum. This decision clarifies Gramercy in the context of a Delaware action stayed in favor of an available alternate jurisdiction where no action was yet pending. More ›

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bgrzaslewicz@morrisjames.com
T 302.888.6827
Barnaby Grzaslewicz is an attorney in the Corporate and Commercial Litigation Practice Group. He focuses his practice on counseling and litigation involving corporations and other …
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