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Court of Chancery Explains Interplay of Laches Defense, the Statute of Limitations and “Extraordinary Circumstances” Excusing Late Filings

Winklevoss Capital Fund, LLC v. Shaw, C.A. No. 2018-0398-JRS (Del. Ch. Mar. 1, 2019)

As this decision explains, the Court of Chancery will apply the equitable doctrine of laches (untimeliness) at the pleadings stage to dismiss a claim when it is clear on a claim’s face that it is untimely and equity would not be offended by dismissing it. This is especially true where the claims at issue are common law claims for common law remedies, but were filed after the statute of limitations provided by law.  The decision also explains the burden to plead facts sufficient to toll the statute of limitations under Delaware law, as well as when “unusual conditions” or “extraordinary circumstances” might excuse late-filed claims, with discussion of the factors Delaware courts consider in making that assessment.   Here, the claims found to be untimely were the defendants’ counterclaims.  While the Court dismissed those claims, it also explained that Delaware law allowed defendants to rely on the underlying allegations in support of an affirmative defense to offset any damages award in the plaintiffs’ favor under the circumstances.