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Showing 120 posts in Jurisdiction.

Chancery Dismisses Action for Declaratory and Injunctive Relief for Lack of Subject Matter Jurisdiction on Grounds that the Proposed Declaratory Judgments Would Provide an Adequate Remedy at Law


Qlarant, Inc. v. IP Commercialization Labs, LLC, C.A. No. 2021-0574-MTZ (Del. Ch. Jan. 25, 2022)
Pursuant to an asset purchase agreement, the plaintiff buyer purchased assets from a seller and several of its affiliates. Despite another company asserting that it owned twenty percent of the seller, the agreement represented that the seller had only two individual shareholders. The company that claimed it was a shareholder filed an action in Maryland challenging the asset purchase transaction. In turn, the plaintiff buyer filed an action in the Court of Chancery seeking declaratory judgments that the company was not a shareholder of the seller at the time of the agreement and that the asset-purchase transaction had been validly consummated. The plaintiff also asked the Court to permanently enjoin the company from asserting it was a shareholder of the seller. More ›

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Non-Resident Asset Managers Found Not To Be “Acting Managers” Subject To Personal Jurisdiction Under Delaware LLC Act

Posted In Chancery, Jurisdiction, LLCs, Personal Jurisdiction


Dlayal Holdings, Inc. v. Gracey, C.A. 2020-1070-LWW (Del. Ch. Dec. 27, 2021)
Under 6 Del. C. § 18-109(a), serving as the manager of a Delaware LLC constitutes consent to be served through the company’s registered agent for all Delaware proceedings “involving or relating to the [company’s] business ... or a violation by the manager ... of a duty” to the company or its members. By its terms, the statute applies not only to formal managers identified in the company’s governing documents but also to acting managers – that is, persons who “participate[] materially in the management” of the company. This case clarifies what constitutes material participation under § 18-109(a). More ›

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Superior Court Upholds Claims that Entities Transferred Funds in Violation of Agreements with Creditor

Posted In Business Torts, CCLD, Jurisdiction, Superior Court


CIBC Bank USA v. JH Portfolio Debt Equities, LLC, C.A. No. N18C-07-130 EMD CCLD (Del. Super. June 2, 2021)

Plaintiff CIBC Bank USA (“CIBC”) entered into a credit agreement with a group of borrowers to provide them with a revolving line of credit that was secured via a security agreement, which granted CIBC a priority interest in certain collateral. Under the security agreement, the borrowers agreed not to take any actions that would materially impair the collateral, or to permit any of their subsidiaries to amend their organizational documents to adversely affect the interests of CIBC. CIBC also entered into acknowledgment agreements with the borrowers’ joint venture partners, under which those partners agreed not to amend their own agreements with the borrowers without CIBC’s consent. More ›

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Chancery Declines to Enforce Forum Selection Provision Actively Hidden From Defendant During Transaction

Posted In Chancery, Forum Selection Provisions, Jurisdiction


UBEO Holdings, LLC et al. v. Drakulic, C.A. No. 2020-0669-KSJM (Del. Ch. Apr. 30, 2021)
Generally, Delaware courts will enforce the terms an executed agreement, even against a party claiming not to have read the terms before signing. This rule applies with full force to forum selection provisions in which a contracting party consents to jurisdiction in a particular forum. As this case shows, however, rare exceptions exist. More ›

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Court of Chancery Finds Agreements Unenforceable for Lack of Assent, Dismisses Remaining Claims for Lack of Personal Jurisdiction

Posted In Breach of Contract, Jurisdiction, LLC Agreements

Eagle Force Holdings, LLC v. Campbell, C.A. No. 10803-VCMR (Del. Ch. Aug. 29, 2019).

Parties to a contract must provide evidence of an overt manifestation of assent for a contract to be enforceable under Delaware law. Upon remand from the Delaware Supreme Court, the Court of Chancery found such assent to be lacking and dismissed the remaining claims for lack of personal jurisdiction. More ›

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Chancery Explains the Rule “Equity will not Enjoin a Libel” – and its Limited Exception

Posted In Chancery, Defamation/Libel, Injunctions, Jurisdiction

Preston Hollow Capital LLC v. Nuveen LLC, C.A. No. 2019-0169-SG (Del. Ch. Aug. 13, 2019).

The Court of Chancery in several recent decisions has addressed the limited circumstances in which it may have jurisdiction to enjoin future speech.  See, e.g., Perlman v. Vox Media, Inc., 2019 WL 2647520 (Del. Ch. Jun. 27, 2019); Organovo Hldgs., Inc. v. Dimitrov, 162 A. 3d 102 (Del. Ch. 2017).  Here, Vice Chancellor Glasscock explains the maxim “[e]quity will not enjoin a libel” and the limited potential exceptions.  In particular, and subject to constitutional free speech limitations, Chancery may enjoin future speech in the nature of “trade libel” as a remedy for a separate “non-speech” business tort over which it has jurisdiction. More ›

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Formulaic Recitations of Equitable Jurisdiction Are Not Enough for Court of Chancery Jurisdiction

Posted In Chancery, Equitable Defenses and Remedies, Jurisdiction

Athene Life and Annuity Co. v. Am. Gen. Life Ins. Co., C.A. No. 2018-0244-SG (Del. Ch. July 31, 2019).

The Court of Chancery is a court of limited jurisdiction. It maintains subject matter jurisdiction only for (i) equitable claims, (ii) when equitable relief is sought and no adequate remedy is available at law, or (iii) where a statute confers jurisdiction.  Applying well-recognized equitable jurisdiction principles, the Court dismissed this breach of contract action.  Although Plaintiffs sought equitable relief in the form of specific performance and an injunction, their request for equitable relief was merely a “formulaic incantation” rather than substantive.  Applying a realistic assessment of the nature of the wrong alleged and the remedy available at law, the Court concluded that a legal remedy for the breach of contract claim was available in the form of a declaratory judgment and damages, and fully adequate. Normally when a court issues a declaratory judgment establishing the parties’ respective contract rights, the court will not presume that the defendant will fail to abide by the court’s ruling in the future requiring an injunction to secure performance. A real threat of continuing injury must be shown, which was absent here. More ›

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Court of Chancery Holds it Lacks Subject Matter Jurisdiction over Defamation Claims

Posted In Chancery, Jurisdiction

Stephen G. Perlman, Rearden LLC, and Artemis Networks, LLC v. Vox Media, Inc., C. A. No. 10046-VCS (Del. Ch. June 27, 2019).

Unlike most U.S. states and the federal legal system, Delaware retains the historic distinction between courts of law and courts of equity.   In the absence of a statute granting it jurisdiction over specific claims, the Delaware Court of Chancery has subject matter jurisdiction only where a complaint (i) states an equitable claim, or (ii) seeks an equitable remedy in circumstances where there is no adequate remedy at law.  Here, the Court of Chancery held that it lacks subject matter jurisdiction to adjudicate defamation claims. Specifically, entrepreneur and inventor Stephen G. Perlman and his companies asserted claims of defamation against Vox Media, Inc., and requested relief that included a mandatory injunction requiring the removal of the offending articles from Vox’s websites, a public retraction, and compensatory damages.  In response to Vox’s motion for summary judgment, the Court followed its recent decision in Organovo Hlds., Inc. v. Dimitrov, 162 A.3d 102 (Del. Ch. 2017) (Laster, V.C.) and concluded that “in connection with a claim for defamation, the Court of Chancery, in all instances, lacks subject matter jurisdiction to adjudicate the questions of whether a defendant made a false statement about the plaintiff and whether it did so with actual malice.” (emphasis added). Organovo explained that these factual questions have historically been reserved for juries rather than judges, and these determinations are best suited for adjudication by a court of law.  Plaintiffs’ effort to couple their defamation claims with requests for equitable relief in the form of an injunction directed at past defamatory statements did not confer equitable jurisdiction, because declaratory relief and money damages generally are adequate remedies at law for defamation claims. The Court explained that equity will intervene to provide injunctive relief only in situations where the defamation claim has been adjudicated in a court of law and legal relief has failed to preclude ongoing publication or is otherwise inadequate.  Accordingly, because it lacked subject matter jurisdiction, the Court dismissed the plaintiffs’ claims, but gave the plaintiffs the option to transfer the case to Delaware’s Superior Court, a court of law. 

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Court of Chancery Addresses Personal Jurisdiction and Negligent Misrepresentation Claims Involving Accounting Firm KPMG

Posted In Jurisdiction, Misrepresentation

Otto Candies LLC v. KPMG LLP, C.A. No. 2018-0435-MTZ (Del. Ch. Feb. 28, 2019) (Zurn, V.C.).

This decision grants a motion to dismiss by accounting firm KPMG on jurisdictional and substantive grounds in litigation involving creditors and bondholders of a KPMG client. The plaintiffs claimed fraud by the company and its bank. They sued several KPMG entities, and sought over $1 billion in damages, claiming they relied to their detriment on KPMG’s audits. While the decision involved various interesting aspects, two are particularly noteworthy. More ›

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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.

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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.

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Delaware Superior Court Clarifies Jurisdiction Over Negligent Representation Claims

Posted In Jurisdiction

Wypie Investments LLC v. Homschek, C.A. N14C-08-140 WCC CCLD (March 28, 2018)

This decision clarifies that negligent representation claims can only be brought in the Delaware Court of Chancery. The opinion is also a useful review of the law on when opinions and projections may be used as the basis for a fraud claim. The short answer is that mere opinions and projections disclosed as just that are not generally sufficient to show fraud.

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Court Of Chancery Explains Expanded Jurisdiction Under Director Consent Statute

Posted In Jurisdiction

LVI Group Investments LLC v. NCM Group Holdings LLC, C.A. No. 12067-VCG (Del. Ch. Mar. 28, 2018)

In Hazout v. Tsang Mun Ting, 134 A.3d 274 (Del. 2016), the Delaware Supreme Court expanded the basis for personal jurisdiction over nonresident directors and officers of Delaware corporations under 10 Del. C. § 3114, the so-called director consent statute.  Hazout overruled long-standing Court of Chancery precedent that narrowly construed Section 3114’s “necessary or proper party” clause to actions alleging the director or officer had breached a fiduciary duty owed to the corporation.  This decision is notable because it explains and applies Section 3114’s expanded scope.  

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Court of Chancery Rejects Conspiracy Theory of Jurisdiction At Summary Judgment Stage

Posted In Jurisdiction

Reid v. Siniscalchi, C.A. No. 2874-VCS (January 30, 2018)

The facts underlying this summary judgment decision are rather remarkable.  The case is long-pending, and involved years of jurisdictional discovery granted for the purpose of allowing the plaintiff to explore its pleading-stage theory of personal jurisdiction under the so-called conspiracy theory.  The gist of that theory is that a Delaware court can exercise personal jurisdiction over all co-conspirators when one commits an act in the State that is central to carrying out the conspiracy.  It is a theory oft-invoked but rarely satisfied.  And, as this decision demonstrates, it is a theory that could be subject to some abuse by a clever litigant.  In this case, the evidence ultimately showed that the plaintiff misled the Court by claiming to be the victim of a Delaware-based conspiracy, when, in fact, the plaintiff was the architect of the very wrongdoing used to advance his conspiracy theory.  Thus, some ten years into the litigation, the non-resident defendant was dismissed from the case based on a lack of personal jurisdiction.   

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Court Of Chancery Explains Conspiracy Jurisdiction

Posted In Jurisdiction

Perry v. Neupert, C.A. 2017-0290-VCL (December 6, 2017)

The conspiracy theory of jurisdiction developed in the Istituto Bancario decision is often misunderstood, for good reasons. This decision explains the theory in a careful and detailed way that is useful for those trying to obtain jurisdiction over non-residents of Delaware.

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