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

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Photo of Delaware Business Litigation Report Jonathan G. Strauss
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jstrauss@morrisjames.com
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Jonathan G. Strauss is a partner in Morris James’ Business Transactions, Strategic Planning and Counseling Practice, a group that has been involved in over $50 billion in financings …

Showing 3 posts by Jonathan G. Strauss.

Superior Court CCLD Denies Bad Faith Counterclaim Against Insurance Companies

Posted In CCLD

Arch Insurance Co. v. Murdock, C.A. No. N16C-01-104 (EMD) (CCLD) (Del. Super. May 1, 2019).

 In this matter between Dole Food Company and its Insurers, Dole sought coverage under their D&O policies for two underlying cases in the Court of Chancery and the District Court for the District of Delaware.  The Insurers refused coverage and filed this declaratory judgment action.  The Complex Commercial Litigation Division of Delaware’s Superior Court granted summary judgment in favor of the Insurers as to Dole’s counterclaim that the Insurers had breached the implied covenant of good faith and fair dealing in denying coverage.  Despite disputed facts, the Court held that it should not submit the question of bad faith refusal to pay Dole’s claims to a jury because the Insurers had reasonable grounds for relying on their defenses to liability.  The Court found that the Insurers had several well-reasoned arguments for denying coverage based on various clauses contained in the insurance policies, including the Fraud Exclusion, the Written Consent Provision, and the Cooperation Clause.

Superior Court CCLD Holds that Contract Defenses Can Be Applied to a Declaratory Judgment Action

Posted In CCLD

Bobcat North America, LLC v. Inland Waste Holdings, LLC, C.A. No. N17C-06-170 (PRW) (CCLD) (Del. Super. Apr. 26, 2019).

Under Delaware law, contract defenses can apply to a declaratory judgment action when the action is one based on legal rather than equitable claims.  In this matter, the Complex Commercial Litigation Division of Delaware’s Superior Court partially granted Bobcat’s partial motion for summary judgment stemming from its acquisition of a waste management business from Inland.  Bobcat sought a declaratory judgment that it was entitled to claw-back / redeem an equity payment under the parties’ purchase agreement (the “UPA”) because the necessary condition to prevent the claw-back did not occur.  Inland countered with the affirmative contract based defenses of impossibility/impracticability and prevention of performance.

Because Bobcat’s claim was based solely on a contract provision, which made it a legal claim, Inland’s contract defenses of prevention of performance and impossibility were applicable to the claim.  Nonetheless, the Court found that the UPA was unambiguous in its terms.  Inland knowingly assumed the risk that the condition preventing the claw-back might not occur and the terms of the UPA stated that if the condition did not occur, Bobcat could automatically redeem the equity.  Therefore, the Court rejected Inland’s affirmative defenses as a matter of law and granted Bobcat’s motion for summary judgment on its claim to redeem the equity payment.

Delaware Proposes Updates to Its LLC Statute Regarding Series LLCs

On April 6, the Delaware Corporation Law Section of the Delaware Bar Association proposed some major and minor amendments to the Delaware Limited Liability Company Act. If introduced in and approved by the Delaware General Assembly and the governor, one of the most significant changes will involve the provisions of the act dealing with series limited liability companies (series LLCs). The proposed amendments are intended to clarify the characteristics of series LLCs and further facilitate their use. More ›