Posts in Rules of Procedure

Chancery Addresses Pleading-Stage Arguments for Dismissal in LLC Dispute

Principal Growth Strategies LLC v. AGH Parent LLC, C.A. 2019-0431-JTL (Del. Ch. January 25, 2024)
This decision provides helpful guidance to practitioners to address pleading-stage arguments for dismissal. The plaintiff asserted fiduciary claims against the controller and manager of a Delaware LLC, who allegedly engineered an asset-swap transaction at the expense of the LLC. The Court of Chancery largely denied the motions to dismiss. More ›

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Applying New Rule 23.1, Chancery Establishes Leadership Structure in Fox Derivative Litigation

In re Fox Corp. Deriv. Litig., C.A. 2023-0418-JTL (Del. Ch. Dec. 29, 2023).
The newly amended Court of Chancery Rule 23.1 identifies factors for a court to consider when resolving a litigation leadership dispute. In this case, which is the first decision to apply the amended Rule, the Court of Chancery carefully balanced those factors and identified the lead plaintiff and the lead counsel. More ›

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Chancery Finds Wholly Generic Objections to Discovery Requests Result in Waiver and Fee-Shifting

Bocock v. Innovate Corp., C.A. No. 2021-0224-PAF (Del. Ch. Dec. 6, 2023)
In this recent letter opinion, Vice Chancellor Fioravanti considered whether the plaintiffs’ failure to provide specific objections to discovery requests in a timely manner resulted in the waiver of those objections. More ›

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Imposing “A Remedy Of First Impression,” Chancery Divests Party Of Stock Ownership As A Post-Judgment Contempt Sanction Under Rule 70.

In re Stream TV Networks, Inc. Omnibus Agreement Litig., C.A. No. 2020-0776-JTL (Del. Ch. Oct. 3, 2022)
Court of Chancery Rule 70 speaks to the Court’s discretion in fashioning sanctions for failure to comply with a Court order. This expressly includes the authority to divest a party of personal property over which the Court has jurisdiction. In what the Court of Chancery termed a “remedy of first impression,” the Court in this case divested a party of stock in a Delaware corporation as a sanction for failure to comply with a partial final judgment requiring it to transfer legal title of assets, including that stock, to the opposing party. More ›

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After Entry of Default Judgment, Chancery Grants Leave to Amend Complaint to Add a New Claim for Reverse Veil-Piercing Against Two New Defendants

P.C. Connection, Inc. v. Synygy Ltd., C.A. No. 2020-0869-JTL (Del. Ch. Jan. 10, 2022)
After entry of a default judgment for liability, but before entry of a judgment awarding relief, the Court of Chancery granted the plaintiff leave to amend the complaint to add a new claim for reverse veil-piercing against two new entity defendants under Court of Chancery Rule 15(a). The Court found that the liberal Rule 15(a) standard regarding amendments to complaints applied – rather than the relatively stringent requirements for setting aside a judgment under Rules 59 and 60 – because the Court had only entered judgment on liability and had not yet determined the appropriate relief, and thus, the judgment was not final. More ›

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Delaware Supreme Court Permits Substitution of Bankruptcy Trustee as Plaintiff to Resolve “Procedural Conundrum”

Lenois v. Lawal, No. 33, 2021 (Del. Dec. 9, 2021)
A company’s bankruptcy filing during an appeal of a dismissal of a derivative action presents questions of who, if anyone, has the standing to pursue the company’s potential claims. As this case shows, Delaware is loathe to permit such claims to abate merely because the procedural path forward is unclear. More ›

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Presented with Documents Outside the Pleadings, Chancery Converts Motion To Dismiss to Motion for Summary Judgment and Allows Discovery

Totta v. CCSB Fin. Corp., C.A. No. 2021-0173-KSJM (Del. Ch. Oct. 20, 2021)
While the Court may take judicial notice of the contents of materials like newspaper articles, public filings and websites for certain purposes, it generally may not do so to establish the truth of their contents. Where, as here, a party relies on documents outside the pleadings, the Court may convert a motion to dismiss into a motion for summary judgment, and therefore deny the motion. More ›

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Chancery Applies Rule 15(aaa), Declines to Revive Dismissed Claims under the Law of the Case Doctrine

Sciabacucchi v. Malone, C.A. No. 11418-VCG (Del. Ch. Aug. 18, 2021).
Court of Chancery Rule 15(aaa) provides that, if a plaintiff files an answering brief opposing a Rule 12(b)(6) or Rule 23.1 motion, a decision granting the motion is with prejudice unless the court “for good cause shown, shall find that dismissal with prejudice shall not be just under all the circumstances.” In this decision, the court applied that rule and the law of the case doctrine to deny a motion to amend to reassert dismissed claims. More ›

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Chancery Permits Service By Email Upon Singaporean Defendants

Skye Mineral Investors, LLC v. DXS Capital (U.S.) Ltd., C.A. No. 2018-0059-JRS (Del. Ch. Jul. 15, 2021).
Delaware’s long-arm statute permits service of process on a foreign defendant by personal service, by mail with signed return receipt, by means authorized by the foreign jurisdiction where service is to occur, or “[a]s directed by a court.” 10 Del. C. § 3104(d). In this decision, the Court of Chancery confirms that each of the grounds is an independent basis for effecting service, and alternative methods of service are appropriate so long as they are “reasonably calculated to give actual notice.” More ›

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Chancery Lacks Jurisdiction to Grant Injunction While Superior Court Appeal Is Pending

Vama F.Z. Co. v. WS02, Inc., C.A. No. 2020-0141-JRS (Del. Ch. Mar. 29, 2021)
This case illustrates that the Court of Chancery lacks subject matter jurisdiction to issue an injunction pending appeal of another court’s rulings, and where the plaintiff has adequate remedies at law.  More ›

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Chancery Dismisses Action For Plaintiffs’ Failure to Join Indispensable Parties

Germaninvestments AG and Richard Herrling, individually and on behalf of AHMR GmbH v. Allomet Corporation and Yanchep LLC, C.A. No. 2018-0666-JRS (Del. Ch. Nov. 20, 2020)

Under Court of Chancery Rule 12(b)(7), a defendant may move for dismissal because of a failure to join an indispensable party as described in Rule 19. Rule 19 provides that such parties include persons who, “(1) in the person’s absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person’s absence may (i) as a practical matter, impair or impede the person’s ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.” If such a person exists in the controversy, the Court may join the person if feasible. If joinder is not feasible, Rule 19(b) requires the Court to “determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.” Rule 19(b) offers a nonexclusive list of factors to consider when determining whether the action can proceed without the absent party’s involvement. Under Rule 12(h)(2), motions to dismiss for failure to join indispensable parties may be raised up to and including trial, and are not automatically waived as a result of not raising the argument in the first instance. More ›

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Court of Chancery Denies Rule 5.1 Request to Maintain Confidential Treatment for Allegedly Defamatory Statements

Manhattan Telecommunications Corp. v. Granite Telecommunications, LLC, C.A. No. 2020-0468 JRS (Del. Ch. Nov. 19, 2020)
The Court of Chancery denied a motion for continued confidential treatment of allegedly defamatory statements detailed in the plaintiff’s complaint for, inter alia, defamation, tortious interference, and trade libel. In response to a challenge raised by an interested party, a law professor and blogger, to the confidential treatment, the plaintiff filed a motion to continue confidential treatment of the complaint and its exhibits. The interested party opposed the plaintiff’s motion and argued that he intended to use the redacted information to discuss on his blog and potentially for a law review article. More ›

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Chancery Dismisses Defendants From Action Against Their Own Wishes, Describing the Matter as an “Erewhon-like” Inversion of the Parties’ Typical Positions

Stimwave Technologies Inc. v. Laura Tyler Perryman, C.A. No. 2019-1003-SG (Del. Ch. Nov. 17, 2020)

Under Court of Chancery Rule 41(a), a Delaware plaintiff may voluntarily dismiss its own complaint without prejudice, provided that (i) the defendant has not yet filed an answer; (ii) the defendant has not yet filed a motion for summary judgment; and (iii) the defendant has not filed a motion to dismiss which has been answered by the plaintiff. In accordance with the abovementioned standards, where a defendant (1) files a motion to dismiss, and (2) the plaintiff thereafter submits an answering brief in opposition to that motion, the plaintiff may no longer voluntarily dismiss the action while that motion is pending. More ›

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Chancery Rebukes Party for “Distracting” and “Detrimental” Rule 11 Arguments

POSCO Energy Co., Ltd. v. FuelCell Energy, Inc., C.A. No. 2020-0713-MTZ (Del. Ch. Oct. 22, 2020)

Under Court of Chancery Rule 15, a Delaware plaintiff may request leave from the Court to amend or supplement a complaint. Leave to grant such motions is “liberally granted, unless, in a narrowly construed exception, there is inexcusable delay and prejudice to the defendant.” This opinion involves an unsuccessful opposition to a motion to amend based, in part, on the argument that the original pleading violated Rule 11.   More ›

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Even Though Evidence Supports Plaintiffs’ Fraudulent Inducement Claim, Chancery Denies Relief Where Plaintiff Never Gave Defendant Fair Notice of Claim Prior to Trial

HOMF II Investment Corp. v. Altenberg, C.A. No. 2017-0293-JTL (Del. Ch. May 19, 2020)

Due process requires that a plaintiff provide the defendant with fair notice of the plaintiff’s claims. As this recent post-trial decision shows, the failure to give fair notice can procedurally bar recovery -- even when the trial evidence establishes that the claims have substantive merit. More ›

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