Posts in CCLD

Superior Court Addresses Scope of Privilege Waiver in Dispute Involving The American Bottling Company, Coke, and Bodyarmor

The American Bottling Co. v. BA Sports Nutrition, LLC et. al, C.A. No: N19C-03-048-AML CCLD (Del. Super. Feb. 11, 2021)

Delaware courts generally uphold the attorney-client privilege, including by recognizing waivers that are limited in scope. But they also police selective disclosures to ensure fairness using doctrines like the “partial waiver doctrine,” under which a partial disclosure of a privileged communication may waive privilege as to the entire communication, and the “at issue” exception, under which privilege may be waived by injecting a particular privileged communication or broader issue into the litigation. Applying these doctrines in The American Bottling Company decision, the Delaware Superior Court’s Complex Commercial Litigation Division defined the scope of a party’s tactical waiver broader than that party contended was appropriate. More ›

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Superior Court Applies Affiliate Privilege Doctrine To Dismiss Tortious Interference Claim Against Controller, While Sustaining Fraud Claims Against LLC Managers

Surf’s Up Legacy Partners, LLC v. Virgin Fest, LLC, C.A. No. N19C-11-092 PRW CCLD (Del. Super. Jan. 13, 2021)

In adjudicating a dispute over a scuttled deal in the music festival industry, the Delaware Superior Court applied the so-called affiliate privilege doctrine, which can immunize a controller from tort liability for its affiliates’ contractual breaches, and addressed the viability of fraud claims against individual managers of certain LLCs. More ›

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Party Uniquely Escapes An Arbitration Provision, While The Court Reminds Us That Bootstrapped Fraud Claims Are Impermissible In Delaware

AluminumSource, LLC v. LLFlex, LLC, C.A. No: N18C-07-231-EMD CCLD (Del. Super. Jan. 21, 2021)

Delaware courts commonly enforce (and support) arbitration provisions, submitting disputes under the governing contract to a third-party neutral. Equally common is the dismissal by Delaware courts of fraud claims “bootstrapped” to a breach of contract based on allegations that a contracting party never intended to perform its obligations. This recent decision from the Superior Court’s Complex Commercial Litigation Division is the unique case where, on the first issue, an arbitration provision was found unenforceable due to impossibility of performance. On the second issue, this case confirms settled law that bootstrapped fraud claims are impermissible in Delaware. More ›

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Superior Court Dismisses Tortious Interference with Contract Claim against Corporate Officer

American Bottling Co. v. Repole, C.A. No. N19C-03-048 AML CCLD (Del. Super. Dec. 30, 2020)

This case illustrates that a Delaware court will dismiss a claim against an officer for tortious interference with a contract to which his or her company is a party unless a plaintiff can assert non-conclusory allegations that the officer acted outside the scope of his or her agency. In this case, the plaintiff and defendant-company were parties to a distribution agreement. The plaintiff brought a claim for tortious interference with contract against the CEO and chairman of the defendant-company claiming that the CEO terminated the agreement to enrich himself and his management team to the detriment of the plaintiff.  More ›

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Superior Court CCLD Awards Sanctions For Unprepared Rule 30(b)(6) Deponent

Fortis Advisors, LLC v. Dematic Corp., C.A. No. N18C-12-104 AML [CCLD] (Del. Super. Nov. 18, 2020)

As this decision illustrates, Delaware trial courts have a variety of sanction options available when it comes to violations of court orders or discovery rules, such as the failure to adequately prepare a Rule 30(b)(6) deponent. Any sanction must be “just and reasonable” and tailored to the breaching party’s culpability and the complaining party’s prejudice. More ›

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Superior Court CCLD Grants Anti-Suit Injunction

American International Industries v. The Neslemur Company, C.A. No. N19C-04-258 MMJ CCLD (Del. Super. Dec. 10, 2020)

Anti-suit injunctions are an extraordinary form of relief. This decision illustrates the narrow circumstances where one may be warranted. Here, plaintiff American International Industries (“AII”) entered into an Asset Purchase Agreement (“APA”) with The Neslemur Company (“Neslemur”), in which the assets AII acquired later gave rise to third-party product liability claims against AII involving asbestos-contaminated talcum powder across the United States. AII sued Neslemur in the Delaware Superior Court for contractual indemnification under the APA. AII then sought to join Neslemur as a defendant in several pending tort actions in other jurisdictions, including California and New Jersey, seeking statutory and common law indemnification, as well as contribution. In response, Neslemur sought an anti-suit injunction in Delaware against AII to prevent AII from pursuing its indemnification claims in jurisdictions other than Delaware. More ›

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Delaware Superior Court Applies Law-of-the-Case Doctrine and Collateral Estoppel to a Prior Chancery Proceeding

Preston Hollow Capital LLC v. Nuveen LLC, C.A. No. N19C-10-107-MMJ [CCLD] (Del. Super. Dec. 15, 2020)

Plaintiff and defendants competed as institutional investors in the high-yield municipal bond market. Seeking to impair plaintiff’s standing in the marketplace, defendants made statements to broker-dealers critical of plaintiff. In turn, plaintiff sent defendants a cease-and-desist letter. In response, defendants sent letters to broker-dealers that suggested defendants would not participate in investments with broker-dealers who continued to do business with plaintiff. Plaintiff then filed suit in the Court of Chancery, which held that defendants had committed tortious interference with prospective business relations, but dismissed plaintiff’s defamation claim, and transferred this claim to the Superior Court. More ›

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CCLD Holds Indemnification Provision Does Not Cover First-Party Claims

Ashland LLC v. Samuel J. Heyman 1981 Continuing Trust for Lazarus S. Heyman, C.A. No. N15C-10-176 EMD CCLD (Del. Super. Ct. Nov. 10, 2020)

This case illustrates that Delaware courts will follow the “American Rule” that parties must pay their own legal fees unless they otherwise agree. In this case, the parties’ Stock Purchase Agreement (“SPA”) required defendants to indemnify against “Losses” – which was defined to include reasonable attorneys’ fees and expenses. The Court previously had found that the defendants breached a section of the SPA. Plaintiff then sought to recover as “Losses” its attorneys’ fees and expenses in proving the breach. The Court reasoned that indemnification provisions are presumed not to provide for fee-shifting in claims between the parties (first-party claims) absent a clear and unequivocal articulation of that intent. While there is no specific language that must be used, the SPA here contained a separate, relatively straightforward and narrower prevailing party fee-shifting provision, which did not apply to the claims at issue. Because the indemnification provision did not clearly support fee-shifting for first-party claims, and because the plaintiff was not entitled to attorneys’ fees based on the straightforward fee-shifting provision to which the parties had agreed, the Court granted defendants’ motion for summary judgment that plaintiff was not entitled to recover its attorneys’ fees and expenses under the indemnification provision.

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Superior Court Rejects Insurers’ Motions to Dismiss Coverage Dispute Based upon Ripeness and Lack of Personal Jurisdiction

Energy Transfer Equity, L.P. v. Twin City Fire Insurance Co., et al., C.A. No. N19C-11-009 EMD CCLD (Del. Super. Ct. Sept. 25, 2020)

Energy Transfer Equity, L.P. v. Twin City Fire Insurance Co., et al., C.A. No. N19C-11-009 EMD CCLD (Del. Super. Ct. Sept. 28, 2020) 

Plaintiffs-Insureds sought declaratory relief and damages for Defendants-Insurers anticipatory breach of directors’ and officers’ insurance policies. Defendant Twin City Fire Insurance Co. issued the primary policy, and the remaining Defendants issued excess coverage policies. Plaintiffs specifically sought insurance coverage related to litigation in the Court of Chancery (“Dieckman Action”), in which trial had occurred but no decision had been issued. More ›

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Superior Court Dismisses Successor-by-Merger’s Claims Where Underlying Contract Contained Anti-Assignment Clause

MTA Royalty Corp. v. Compania Minera Pangea, S.A. DE C.V., C.A. No. N19C-11-228 AML CCLD (Del.  Super. Sept. 16, 2020)

Plaintiff’s predecessor-in-interest conveyed mineral rights to Defendant. Under the agreement, Defendant owed a conditional additional $1 million at a future date. Before the payments became due, the predecessor was merged out of existence. As a result, Defendant asserted it had no obligation to pay the additional amount because the sale agreement included an anti-assignment provision that barred assignment absent Defendant’s consent, which was lacking. More ›

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CCLD Finds Insurer’s Advancement Obligation Triggered Prior to Final Non-Appealable Damages Judgment

Ferrellgas Partners L.P v. Zurich American Insurance Company, C.A. No. N19C-05-275 MMJ CCLD (Del. Super. Aug. 20, 2020)

The Superior Court of Delaware, Complex Commercial Litigation Division recently expanded on its advancement jurisprudence regarding litigation fees and costs due under director and officer insurance policies. The insured brought a declaratory judgment action against two insurers in a tower of coverage. Judge Mary M. Johnston declared, on summary judgment, that the insured was entitled to advancement of reasonable attorneys’ fees and costs from one of the insurers. More ›

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Superior Court Reinforces Established Delaware Insurance Coverage Law that Settlement of a Claim for Less than Policy Limits Attaches to Excess Policies

Pfizer, Inc. v. U.S. Specialty Insurance Company, C.A. No. N18C-01-310 PRW CCLD (Del. Super. Aug. 28, 2020)
On cross-motions for summary judgment in a director and officer insurance coverage dispute, the Superior Court of Delaware, Complex Commercial Litigation Division, reaffirmed the Delaware principle, also known as a the Stargatt Rule, that a settlement of a policy between an insured and an insurer for less than the policy limit amounts to satisfaction of such policy. Thus, excess policies attach irrespective of whether the insured collected the full amount of the primary policies.  More ›

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CCLD Applies Anti-Reliance Provisions, Dismisses Buyer’s Fraud Claims

Infomedia Group, Inc. v. Orange Health Solutions Inc., C.A. No. N19C-10-212 AML CCLD (Del. Super. Ct. July 31, 2020)

This case is a strong reminder that Delaware will enforce anti-reliance clauses to bar claims for fraud where sophisticated parties voluntarily agree to the anti-reliance clauses. Here, plaintiff Infomedia Group, Inc., d/b/a Carenet Health Services entered into an asset purchase agreement (the “Purchase Agreement”) with defendant Orange Health Solutions, Inc. (“Citra”).  More ›

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CCLD Bars Tort Claims Overlapping with Contract Claims under Economic Loss Doctrine

GEA Sys. N. Am. LLC v. Golden State Foods Corp., C.A. No. N18C-11-242 EMD CCLD (Del. Super. Ct. June 8, 2020)

This case illustrates the extent to which the economic loss doctrine bars tort claims arising out of the same transaction as claims for breach of contract. In this case, plaintiff GEA Systems North America LLC (“GEA”) sold defendant Golden State Food Corp. (“Golden State”) three industrial freezers for use in Golden State’s hamburger patty facility. Golden State argued, among other things, that the freezers did not meet the production figures that GEA promised and GEA failed properly to install or repair the freezers. For this alleged misconduct, Golden State brought claims for negligence, fraudulent inducement, and intentional misrepresentation as well as for breach of contract. On a motion to dismiss, the Delaware Superior Court held that the economic loss doctrine barred the fraudulent inducement and intentional misrepresentations claims, but not the claims for negligence and gross negligence. More ›

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CCLD Offers Guidance on the Application of Tolling Doctrines to M&A Agreement Clauses Modifying the Statute of Limitations for Representations and Warranties Claims

AssuredPartners of Virginia, LLC v. Sheehan, C.A. No. N19C-02-175 AML CCLD (Del. Super. Ct. May 29, 2020)

A disgruntled buyer brought suit against its seller for breaches of representations and warranties four years after the execution of the applicable asset purchase agreement (“APA”). The APA contained a clause providing that certain representations and warranties survived for two (2) years post-closing except for those fraudulently given, which survived from closing until sixty days after expiration of the applicable statute of limitations. The defendant-sellers sought dismissal of the breach claims as untimely, requiring Judge Abigail M. LeGrow of the Superior Court of Delaware to determine whether the doctrine of tolling applied to the APA’s survival clause and if the parties intended to contractually extend the statute of limitations for fraudulent representation claims under 10 Del. C. § 8106(c). More ›

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