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

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Showing 8 posts in Statute of Limitations.

Court of Chancery Explains Conspiracy Jurisdiction and Inquiry Notice Rules

Posted In Jurisdiction, Statute of Limitations

iBio v. Fraunhoffer Gesellschaft, C.A. No. 2017-0790-TMR (Del. Ch. Dec. 10, 2018)

This decision has two helpful analyses.  First, it addresses the conspiracy theory of jurisdiction under the well-known Instituto Bancario decision, which permits a Delaware court to exercise jurisdiction over a defendant based on the Delaware acts of its co-conspirators.  Notably, the plaintiff in this case was a Delaware entity with its principal place of business in the State, providing a jurisdictional hook for that theory.  Second, it explains when a plaintiff is on inquiry notice so as to end any tolling period and start the statute of limitations clock.

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

Posted In 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.

Delaware District Court Explains Tolling Based on Books and Records Inspection

Posted In Books and Records, Statute of Limitations

Norman v. Elkin, C.A. No. 06-005-LPS (D. Del. Sept. 4, 2018)

Litigation seeking to inspect a corporation’s records under Section 220 of the DGCL might toll the statute of limitations for certain claims under the right circumstances.  There are important limits to this form of tolling.  For example, it is not automatic and will only apply to claims that are the subject of the inspection demand.  This decision does a good job of explaining these limits and the factors a court will consider in determining whether inspection-based tolling should apply.  It otherwise examines and applies the law on the statute of limitations and issues of inquiry notice.

Delaware Superior Court Explains When Statute Of Limitations Accrues

Posted In Statute of Limitations

Black Diamond Hope House Inc. v. U&I Investments LLC, C.A. K15C-12-034 JJC (May 22, 2018)

If a contract spells out when the time to sue under it starts to run, the time of discovery rule does not apply. Instead, the contract provision for accrual of a claim governs.

Court Of Chancery Explains Limitations Period In Equity

Posted In Breach of Contract, Statute of Limitations

Bioveris Corporation v. Meso Scale Diagnostics, C.A. No. 8692-VCMR (Nov. 2, 2017)

Some assume that a statute of limitations will not apply in the Court of Chancery. But as this decision illustrates, that is an oversimplification. The Court of Chancery may well use the same statute of limitations period applicable in an action at law, by analogy, under the equitable doctrine of laches.  This is especially true when the claim is a legal one seeking legal relief.  This decision also illustrates an important point regarding claim accrual.  When a claim arises out of an obligation to make a series of payments over time, it is possible the Court will start to run the laches period from the first non-payment. In other words, subsequent non-payments might not constitute a new claim with a new limitations period or otherwise lengthen the time period to sue.

Delaware Supreme Court Explains Setoff And Recoupment

Posted In Breach of Contract, Statute of Limitations

Finger Lakes Capital Partners LLC v. Honeoye Lake Acquisition LLC, No. 42, 2016 (November 14, 2016)

This decision explains the difference between a defendant’s right of setoff and recoupment. The key difference is that the right of setoff arises out of an independent transaction, while recoupment must be based on the same facts that support the main claim. Another difference concerns the statute of limitations.  Setoff is subject to a three-year statute of limitations, while time-barred claims can be considered for recoupment when they arise out of the same factually-related transaction as the plaintiff’s claim.   

Court Of Chancery Explains How To Decide Whether A Claim Is Time-Barred By Statute or By Laches

Posted In Statute of Limitations

Kraft v. WisdomTree Investments Inc., C.A. 10816-CB (August 3, 2016)

There is often some confusion over how the Court of Chancery will determine when a plaintiff has filed its action too late.  A statute of limitations may apply directly or the doctrine of laches may apply and then apply the same statute by analogy.  Through a careful historical analysis, the Chancellor explains how to decide, while also noting some tension in the case law.  The answer, whether statute or laches, controls what arguments are available to the dilatory plaintiff.

Court Of Chancery Confirms Limitations For Indemnification Claim

Posted In Statute of Limitations

Branin v. Stein Roe Investment Council LLC, C.A. 8481-VCN (July 31, 2015)

This decision confirms that the statute of limitations on a claim for indemnification does not begin to run until the underlying litigation is concluded. Indeed, equitable tolling may also extend the time when a suit may be filed.