Posts in Business Torts

Court Of Chancery Explains Promissory Fraud

Boulden v. Albiorix Inc., C.A. 7051-VCN (January 31, 2013, rev. Feb. 7, 2013)

Plaintiffs often try to allege fraud by claiming that the defendant made a promise that he did not intend to keep.  As this decision points out, that mere allegation is not good enough to state a claim. Rather, the complaint must allege facts that support the allegation the promise was made all the while with the intent to not keep it.  For example, if the promisor lacked the means to keep his promise or had no reasonable expectation of getting the means to do so, then it might be said he lied when he said what he could not deliver.

This decision also has an excellent analysis of the conspiracy theory of jurisdiction.

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Court Of Chancery Explains Requirements For Expedition

APC Workforce Solutions LLC v. Gary D. Nelson Associates Inc., C.A. 7672-VCP (July 23, 2012)

When a plaintiff is able to show a "colorable claim" and that absent prompt relief it will suffer "irreparable harm," the Court of Chancery will expedite a hearing on its claims. However, exactly what that all means varies from case to case.  This is a good example of such a showing to obtain expedition in a breach of contract case.

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Supreme Court Determines What Constitutes Wrongful Interference With Contract

WaveDivision Holdings LLC v. Highland Capital Management L..P. , No. 649, 2011 (July 19, 2012)

This decision establishes Delaware law on what constitutes a wrongful interference with another's contract.  Thus, it resolves several unsettled questions, such as concluding that a proper motive trumps an improper motive to interfere with a contract's performance.

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Court Of Chancery Upholds Power To Enjoin Employment

NuVasive Inc. v. Lanx, Inc.,  C. A. 7266-VCG (July 11, 2012)

Litigation to restrain the employment of former employees is often complicated by jurisdictional issues. This decision resolves some of those issues by holding that a Delaware court may restrain a Delaware corporation from employing a former employee of the plaintiff even when that employee is not himself subject to the jurisdiction of the Delaware courts.

This decision, coupled with the enforcement of the choice of Delaware law clauses in other employment decisions, means that Delaware is a preferred forum for such litigation.

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Court Of Chancery Interprets Release

Travelers Casualty And Surety Company v. Sequa Corporation,  C.A. 7055-VCG (May 29, 2012)

This decision involved an interesting argument over the scope of a release.  As is common, the release was signed on behalf of a parent company and all its subsidiaries. To escape the scope of the release, a subsidiary argued that it was only bound to release the same claims that its parent had, but not any claims that were unique to the subsidiary.  The Court sidestepped that argument because in any case the release did not cover the claims asserted by the subsidiary.  However, this stands as a warning to better draft releases that cover all entities in a control group.

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Court Of Chancery Explains Burden Of Proof In Accounting Case

Whittington v. Dragon Group LLC, C.A. 2291-VCP (May 25, 2012)

This decision explains how to apply the burden of proof in an accounting case.  Merely producing a cancelled check is not enough.

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Superior Court Limits Savings Clause

Huffington v. T.C. Group LLC, C.A. N11C-01-030-JRJ-CCLD  (April 18, 2012)

Delaware has a savings statute that generally prevents the statute of limitations from expiring when a case is dismissed for technical reasons and then refiled in the right court.  But, as this decision points out, the savings statute has a much narrower scope than some might believe.  Thus, when as here, a case is filed in a jurisdiction other than that chosen by the parties in their contract and then dismissed for having violated the forum selection clause, the savings statute does not apply.

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Court Of Chancery Limits Fraudulent Inducement Claims

Schonfeld Group Holdings LLC v. Trillium Holdings LLC, C.A. 6759-VCL (March 6, 2012)

It occurs more than you might think that a party to a release later claims that the release is not binding because she was fraudulently induced to sign it.  Applying recent New York law, here the Court holds that if the release covers "unknown claims," then it cannot be set aside by an claim that it was fraudulently induced.

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Court Of Chancery Clarifies Pleading Rules For Bad Faith Claims

Clean Harbors Inc. v. Safety-Kleen Inc.,  C.A. 6117-VCP (December 9, 2011)

This decision clarifies the detail that must be pled to assert a claim that the defendant acted in "bad faith."  The short answer is that any set of facts that warrants such an inference is enough to state such a claim.

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Superior Court Explains Physical Evidence Requirement

Elegant Slummimg Inc. v. NGM,  C.A. 810C-11-013-RFS (November 30, 2011)

This scholarly review of Delaware law explains the "physical evidence requirement" in some insurance policies. 

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CCLD Explains Pleading Rules For Fraud

Brevet Capital Special Opportunities Funds L.P. v. Fourth Third LLC, C.A. N10C-12-071 JRS (CCLD)

The Superior Court's Complex Commercial Civil Division is issuing more and more opinions in the various matters that are now becoming ripe for decision.  Here the Court explains when both fraud and breach of contract claims may be filed in the same case and how to adequately plead the fraud count under the particularity standard required.

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Delaware Superior Court Recognizes New Tort Theory

Allen Family Foods Inc. v. Capital Carbonic Corporation , C.A. N10C-10-313 JRS CCLD (March 31, 2011)

In this decision the Delaware Superior Court declined to follow federal precedent and adopted the liability theory of the Restatement (Second) of Torts Section 766A. Under that Section, a claim is permitted for interfering with a plaintiff's contract rights with a third party even when the contract is not broken.  This is different from a more typical interference claim where the third party refuses to perform because of some wrongful act.

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Court Of Chancery Calculates Interest On A Judgment

Gentile v. Rossette, C.A. 20213-VCN (September 10, 2010)

A frequently asked question is how does the Court of Chancery determine the interest due on a judgment when the Court is not bound by the legal rate imposed by other courts.  This decision explains how the Court searches for a fair rate.

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Court Of Chancery Explains Damage Calculations

Gentile v. Rossette, C.A. 20213-VCN (May 28, 2010)

The calculation of damages for the wrongful conversion of convertible stock is not easy.  This decision explains how.

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Court Of Chancery Awards Big Damages In Stealing Business Case

Beard Research Inc. v Kates, C.A. 1316-VCP (April 23, 2010) This is an excellent primer on how to litigate a business tort case arising out of an employee's stealing all your confidential information and using it to lure away your customers to his new firm. It also includes a good outline on how to prove damages.  What we found particularly interesting is the interplay between a trade secret claim and a claim for breach of fiduciary duty.  You can have both in one case.  Of course, the elements of proof vary but together these prove an efficient way to maximize a recovery. Share