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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 Meghan A. Adams
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Showing 20 posts by Meghan A. Adams.

Delaware Superior Court Explains When Mutual Mistake Voids A Contract

659 Chestnut LLC v. Parke Bancorp Inc., C.A. N17-05-114 MMJ (December 6, 2018)

This is an interesting decision because it deals with the rare instance when a party can prove a mutual mistake as to a contract’s terms so as to avoid having to comply with those terms. Here both a borrower and a loan officer clearly agreed a loan could be repaid without penalty. The actual loan documents had a prepayment penalty that the borrower did not read before signing. The Court held the borrower was excused from catching that penalty clause given the assurance he had there was no prepayment penalty.

Delaware Superior Court Applies “But For” Test To Decide In What Capacity A Director Acted

Posted In Case Summaries, CCLD

Goggin v. National Union Fire Insurance Company Of Pittsburgh, PA., C.A.. N17C-10-083-PRW-CCLD (November 30, 2018)

D & O insurance covers actions taken by a director. However, when a director acts on behalf of another entity in dealing with the insured company, it is not always easy to decide if the claim against him arises out of his role as a company director. This decision applies a “but for” test in this way. If the claim would not exist “but for” the conduct on behalf of the other, non-insured entity, then the claim is not based on the director’s conduct as a director of the insured entity and the "capacity” exclusion applies to deny coverage.  This result turns in part on the specific language of the policy that insured against conduct “solely” taken as a director.

Superior Court Holds that Judgment Creditors Required to Renew Judgments Every Five Years Under 10 Del. C. § 5072

Posted In Case Summaries

Mergenthaler v. Triumph Mortgage Corp., C.A. No. 09C-09-203-AML (November 26, 2018)

This case with a tortured history presented an interesting issue regarding when a creditor is required to renew a judgment in the Superior Court.  The Court held that plaintiff (the judgment creditor) was required to renew the judgment after five years pursuant to 10 Del. C. § 5072.  Although the creditor did not renew its judgment within five years, the Court granted the creditor’s motion to renew the judgment retroactively because of the prior practice of not requiring such motions until ten years after a judgment’s entry, and the creditor’s failure was not attributable to his negligence because of intervening events, including a Supreme Court ruling, that occurred.

Delaware Superior Court Explains Privity Rule For Claim Preclusion

Posted In Case Summaries, CCLD

The Washington House Condominium Association Of Owners v. Daystar Sills Inc., C.A. N15C-01-108 WCC CCLD (November 13, 2018)

This is an interesting decision because it explains when there is privity between parties so as to preclude a claim that one party has resolved previously. Briefly, there needs to be a common interest between the parties without any conflicting interest that would make the settling party an improper representative of the other party.  In this action, the Court held that because of newly discovered evidence, the Court could no longer find that the parties were in privity, and it reversed its prior decision dismissing plaintiffs’ claims against one of the defendants on res judicata grounds.

Delaware Supreme Court Reverses Superior Court in Holding that Insured’s Claim Barred by the Statute of Limitations

Homeland Ins. Co. of New York v. CorVel Corp., No. 60, 2018 (Del. Nov. 20, 2018)

CorVel filed a complaint in the Delaware Superior Court in May 2015 arising out of a settlement of the underlying actions in January 2011.  The Supreme Court held that CorVel’s bad faith claim began to run in 2011, when CorVel settled an underlying arbitration and related class action.  Because CorVel did not file suit until January 2011, the applicable three-year statute of limitations barred CorVel’s claim.  The Supreme Court held that once CorVel could plead the necessary elements of a prima facia claim under Lousiana’s Bad Faith Statue, the cause of action accrued for purposes of Delaware’s statute of limitations.  In doing so, the Supreme Court held that it was not necessary for CorVel to actually obtain a ruling that the Homeland policy covered the claims before it could proceed with its bad faith action.

Federal District Court Explains PSLRA Requirements For Lead Plaintiff and Counsel

Posted In Securities

Wigginton v. Advance Auto Parts Inc., CA 18-212 MN (D. Del. November 2, 2018)

This is an excellent review of how the District Court will analyze the requirements of the PSLRA in selecting the lead plaintiff and lead counsel in a securities litigation. Briefly, the plaintiff with the most at stake should take the lead with its chosen counsel so long as it is qualified by past experience to do so. That such a plaintiff may have acted in 5 or more other securities cases is not disqualifying.

Delaware Superior Court Explains When Implied Covenants Triggered

The GWO Litigation Trust v. Sprint Solutions Inc., C.A. N17C-06-356 PRW CCLD (October 25, 2018)

While every contract has an implied covenant requiring the parties to act fairly and in good faith, it is not always easy to know how that applies in a given case. This decision is a good example of how the court will approach that issue. It finds that the contract impliedly limited the right of a party to compete with an entity it had formed with another party to exploit a business opportunity.

Superior Court of Delaware CCLD Finds 6 Del. C. 1-308 Permits Parties to Reserve Their Rights Without Pleading Duress

Posted In CCLD

Huntsman International LLC v. Dow Chemical Co., C.A. No. N17C-11-242-WCC-CCLD (Del. Super. Oct. 3, 2018)

In this decision by the Complex Commercial Litigation Division, the Court held, for the first time, that under 6 Del. C. 1-308, a party may make a payment with a reservation of rights under without having to plead duress.  The Court held that this section was designed to permit parties to a contract – like the plaintiff here – to continue performance even while a dispute between parties is unresolved.  In doing so, the Court held that Section 1-308 superseded the Supreme Court’s decision in Western Natural Gas Company v. Cities Service Gas Company, 201 A.2d 164 (Del. 1964) in that respect. 

Delaware Superior Court Narrows Jurisdiction In Mass Tort Litigation

Posted In Jurisdiction

In Re: TALC Product Liability Litigation, C.A. N17C-03-054 TAL (September 10, 2018)

This is an important decision that applies recent United States Supreme Court jurisdiction cases to a non-resident’s Delaware complaint. While the opinion carefully reviews a string of such cases ending with Bristol-Meyers Squibb Co. v. Superior Court of California that is worth reading, the bottom line is that it holds that a non-resident of Delaware cannot bring a tort claim against a non-Delaware entity unless she can show its actions in Delaware that directly lead to her injury. This may effectively end the past practice of filing mass tort litigation in the Delaware Superior Court on behalf of non-residents of Delaware, at least against non-Delaware entities.

Delaware Superior Court Explains When Expert Opinion Is Admissible

Posted In Daubert/Experts

The State of Delaware v. Card Complaint LLC, C.A. N13C-06-289 PRW CCLD (August 29, 2018)

This is an excellent summary of the law governing the admissibility of an expert opinion. It is particularly useful in dealing with non-scientific opinions that are based on experience in an industry.

Superior Court CCLD explains “Wrongful” Conduct in Tortious Interference Claim

Posted In Case Summaries, CCLD

KT4 Partners LLC v. Palantir Technologies Inc., C.A. No. 17C-12-212 EMD CCLD (August 22, 2018)

A claim for tortious interference with a contractual relationship must include an allegation that the conduct complained about was itself wrongful. This decision explains what is such “wrongful” conduct and concludes that the use of confidential information to contact a party to a contract to dissuade it from going forward is such wrongful conduct.

Delaware Superior Court Explains Impact Of European Data Rules On Forum Motion

Posted In Discovery

Ethica Corporate Finance S.r.L. v. Dana Incorporated, C.A. No. N17C-10-145 EMD CCLD (August 16, 2018)

Under the Cryo-Maid decision, a forum non conveniens motion must consider the impact on a defendant forced to litigate in Delaware when discovery is needed in a foreign land.  Here the Court considered the impact of the recent amendments to the Italian Data Protection Code on discovery and found that it did not impose an undue hardship under the facts present in this case. This may become more important as those European laws on privacy protection start to be considered for their effect on litigation outside of the EU.

Delaware Superior Court Upholds Recovery Of Insurance Defense Costs

Posted In Case Summaries

Catlin Specialty Insurance Company v. CBL & Associates Properties Inc., C.A. No. N16C-07-166 PRW CCLD (August 9, 2018)

This is an important decision because it upholds the right of an insurance company to recover defense costs it advanced when it is later determined there was no insurance coverage for the underlying litigation. While the opinion applies Tennessee law, some parts of the opinion suggest that the Court would reach the same result if Delaware law applied. That is so even though the Court recognized that permitting such a recovery is the minority positon in the United States. The opinion is also useful for its explanation of how an insurer may preserve its right to recover those advances by making it clear that it is advancing the costs subject to its right to recover them later if a court decides there was no insurance  coverage.

Federal District Court Explains Incorporation By Reference Rules

Posted In Case Summaries

Askari v. Pharmacy Corporation of America, C.A. 16-1123-RGA (D. Del. August 8, 2018)

It is not always clear when two agreements are to be read as one. This is because incorporating one agreement into a second agreement may not be explicit. This decision sets out the principles under Delaware law that govern how to decide if two agreements should be read together, including that there must be an “explicit manifestation of intent” to incorporate one document into another.

Federal District Court Dismisses Contradictory Claims

Posted In Case Summaries

Hiller & Associates LLC v. Garden Fresh Restaurants LLC, C.A. 18-152-VAC-MPT (D. Del. August 9, 2018)

This is an interesting decision because it dismisses a counterclaim that is contradicted by the claimant’s answer to the complaint. Thus it goes beyond the normal rule that requires a factual pleading to be accepted as true when considering a motion to dismiss.