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

This case is also a good reminder that issues of subject matter jurisdiction can be raised by the parties or sua sponte by the Court at any time during the litigation.  This action was a successor action to a case first brought in 2013 that the Court dismissed without prejudice on ripeness  grounds.  No party raised the issue in the prior action.  The Court raised the issue in this action sua sponte during oral argument on a motion to dismiss.  It rejected the argument that judicial efficiency or waiver should override the Court’s limited jurisdiction predicate.