Tyler O'Connell on Breach of Contract

Court of Chancery Holds That Exclusive Remedy Provisions Alone Are Not Enough To Bar Fraud Claims Based On Extra-Contractual...

Fortis Advisors LLC v. Johnson & Johnson, C.A. No. 2020-0881-LLW(Del. Ch. Dec. 13, 2021) - Delaware public policy respects freedom of contract, but it is also intolerant of fraud. These dueling policy aims are often pitted...more

3/28/2022 / Breach of Contract , Contract Terms , Covenant of Good Faith and Fair Dealing , Implied Covenants , Merger Agreements , Mergers

Chancery Finds Former Directors Bringing Wrongful Termination Claims Were Not Entitled to all Privileged Communications During...

SerVaas v. Ford Smart Mobility LLC, C.A. No. 2020-0909-LWW (Del. Ch. Nov. 9, 2021) - With limited exceptions, directors normally have “unfettered” access to corporate information. This decision indicates, however, that the...more

2/22/2022 / Board of Directors , Breach of Contract , Breach of Duty , Discovery , Fiduciary Duty , Privileged Communication

Chancery Rules That The Standard Of Proof For Contempt Motions Is The Preponderance Of The Evidence, Not Clear And Convincing...

inTEAM Associates, LLC v. Heartland Payment Systems, LLC, C.A. No. 11523-VCF (Del. Ch. Oct. 29, 2021) - Court of Chancery Rule 70(b) empowers the Court to hold a party in contempt for, among other things, failing to obey...more

1/11/2022 / Acquisition Agreements , Breach of Contract , Non-Compete Agreements , Non-Solicitation Agreements , Restrictive Covenants

Chancery Applies Plain Language of a Merger Covenant To Dismiss Acquirer’s Untimely Indemnification Claim and Deny Sellers’...

Supernus Pharms., Inc. v. Reich Consulting Grp., Inc., C.A. No. 2020-0217-MTZ (Del. Ch. Oct. 29, 2021) - Supernus Pharmaceuticals, Inc. acquired biotech startup Biscayne Neurotherapeutics, Inc. pursuant to a 2018 merger...more

1/11/2022 / Breach of Contract , Contract Terms , Merger Agreements , Mergers , Representations and Warranties

Chancery Dismisses Implied Covenant Claim For Former Stockholders’ Alleged Improper Demands That Company Take Actions To Achieve...

Pacira Biosciences, Inc. v. Fortis Advisors LLC, C.A. No. 2020-0694-PAF (Del. Ch. Oct. 25, 2021) - There generally cannot be a claim under the implied covenant of good faith and fair dealing for conduct that is addressed...more

1/7/2022 / Breach of Contract , Breach of Duty , Fiduciary Duty , Merger Agreements , Mergers , Shareholders

Court of Chancery Finds “Bird-Dogging” Entitles Plaintiff To Compensation Under Unjust Enrichment Theory

While parties may discuss the terms of a business arrangement, absent definite agreement on all material terms or a definite promise, these arrangements are generally unenforceable. However, as the Court of Chancery held in...more

12/22/2021 / Breach of Contract , Contract Terms , Promissory Estoppel , Unjust Enrichment

Chancery Enforces Parties’ Merger Agreement That Barred Claims Upon Termination of the Agreement

Yatra Online, Inc. v. Ebix, Inc., C.A. No. 2020-0444-JRS (Del. Ch. Aug. 30, 2021) - Agreements frequently specify how the termination of the agreement affects the parties’ rights and obligations. This case illustrates that...more

11/4/2021 / Breach of Contract , Contract Termination , Merger Agreements , Mergers

Chancery Denies Motion to Dismiss, Awaits Development of Factual Record to Rule on Laches Defense

Kim v. Coupang, LLC, C.A. No. 2020-0772-JRS (Del. Ch. Aug. 19, 2021) - If a court can rule on the affirmative defense of laches on the face of a complaint, it may grant a motion to dismiss. As this case illustrates,...more

10/19/2021 / Breach of Contract , Laches , Motion to Dismiss , Statute of Limitations

Applying Plain Contract Language, Chancery Awards $147 Million in Damages to Start-Up Company for Breach of Joint Venture...

Symbiont.io, Inc. v. Ipreo Hldgs., LLC, C.A. No. 2019-0407-JTL (Del. Ch. Aug. 13, 2021) - Delaware is a pro-contractarian state. When fashioning an award for a breach of contract, a Delaware court can consider: (1) the...more

10/14/2021 / Board of Directors , Breach of Contract , Joint Venture , Non-Compete Agreements

Chancery Sustains Founders’ Implied Covenant Claim For “Bad Faith” Termination To Deprive Them Of Contingent Compensation,...

Servaas v. Ford Smart Mobility LLC, C.A. No. 2020-0909-LWW (Del. Ch. Aug. 25, 2021) - Delaware common law requires that contracts be read on their own terms. Accordingly, contracts cannot be “combined” to supply missing...more

10/12/2021 / Acquisitions , Breach of Contract , Breach of Duty , Breach of Implied Contract , Covenant of Good Faith and Fair Dealing , Fiduciary Duty

Company Did Not Breach Mandatory Redemption Provision Where Special Committee Determined Company Lacked Funds To Redeem All...

Cont’l Investors Fund LLC v. TradingScreen, Inc., C.A. No. 10164-VCL (Del. Ch. July 23, 2021) - A holder of preferred stock often possesses redemption rights that permit the stockholder to require a company to repurchase...more

9/29/2021 / Breach of Contract , Preferred Shares , Right of Redemption , Special Committees

Chancery Finds Equitable Defenses Bar LLC Dilution and Redomestication Claims, and Holds it Lacks Jurisdiction to Dissolve a...

In re Coinmint, LLC, C.A. No. 2019-0983-MTZ (Del. Ch. Aug. 12, 2021) - This decision illustrates that, in specific circumstances, the equitable defenses of waiver, acquiescence, and estoppel may preclude a party from...more

9/27/2021 / Breach of Contract , Dissolution , LLC Agreements , Subject Matter Jurisdiction

Superior Court’s Complex Commercial Litigation Division Reaffirms Delaware’s Public Policy Against Intra-Contractual Fraud

Aveanna Healthcare, LLC v. Epic/Freedom LLC, N20C-08-055 AML CCLD (July 29, 2021). Under Delaware law, parties may agree contractually to disclaim reliance – and potential liability for fraud – based on false...more

9/21/2021 / Breach of Contract , Commercial Litigation , Fraud , Purchase Agreement

Chancery Explains Pleading Standard and Sustains Unjust Enrichment Claim Related to Plaintiff’s Forfeiture of LLC Acquisition...

Angel v. Warrior Met Coal, Inc., C.A. No. 2019-0235-SG (Del. Ch. Jun. 30, 2021) - Under Delaware’s notice pleading standard, a plaintiff’s claim will survive a motion to dismiss if it is “reasonably conceivable” that the...more

8/20/2021 / Breach of Contract , Breach of Duty , Fiduciary Duty , Limited Liability Company (LLC) , Pleading Standards , Unjust Enrichment

Superior Court Enforces $48 Million Liquidated Damages Provision

Smart Sand Inc. v. US Well Servs. LLC, C.A. No. N19C-01-144 PRW CCLD (Del. Super. June 11, 2021) - A liquidated damages provision is enforceable under Delaware law if: (1) damages are uncertain at the time of contracting;...more

8/9/2021 / Breach of Contract , Breach of Implied Contract , Counterclaims , Damages , Liquidated Damages

Chancery Holds That Claim Based on Purposeful Tanking of Merger Agreement Earnout Is Breach of Contract Claim

Shareholder Representative Services LLC v. Albertson’s Companies, C.A. No. 2020-0710-JRS (Del. Ch. June 7, 2021) - Many merger agreements include earnout provisions under which the stockholders in the acquired company are...more

8/3/2021 / Breach of Contract , Earn-Outs , Merger Agreements , Mergers

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

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...more

7/23/2021 / Breach of Contract , Covenant of Good Faith and Fair Dealing , Implied Covenants , Personal Jurisdiction

Delaware Court of Chancery Applies Direct/Derivative Distinction In Voting Context

Clifford Paper, Inc. v. WPP Investors, LLC, 2021 WL 2211694 (Del. Ch. Jun. 1, 2021) - The disenfranchisement of an investor with voting or consent rights often is considered to be a direct harm, thus permitting the...more

6/23/2021 / Breach of Contract , Breach of Duty , Duty of Loyalty , Fiduciary Duty , Investors

Chancery Orders Specific Performance of Deal, Despite Lack of Debt Financing, Finding that COVID-Related Business Decline Was Not...

Snow Phipps Grp., LLC v. KCake Acquisition, Inc., 2020-0282-KSJM (Del. Ch. Apr. 30, 2021) - In Snow Phipps, the Court of Chancery refused to allow a private equity buyer with pandemic-related cold feet to back out of its...more

6/15/2021 / Breach of Contract , Contract Terms , Merger Agreements , Mergers

Chancery Shifts Attorneys’ Fees, Reasoning Perjury Is Bad Faith Per Se

Lyons Ins. Agency Inc. v. Wilson, C.A. No. 2017-0092-SG (Del. Ch. Apr. 29, 2021). In this action, the Court of Chancery noted that it heard “perhaps the most cogent, and certainly the briefest, argument for fee shifting...more

6/2/2021 / Breach of Contract , Employment Contract , Fee-Shifting , Non-Compete Agreements , Restrictive Covenants

Chancery Refuses to Enforce Alleged Contractual Rights Not Obtained at the “Negotiating Table”

Obsidian Fin. Grp., LLC v. Identity Theft Guard Solutions, Inc., C.A. No: 2020-0485-JRS (Del. Ch. Apr. 22, 2021) - Delaware is “more contractarian” than many other jurisdictions. Accordingly, as this case illustrates, a...more

5/26/2021 / Breach of Contract , Earn-Outs , Merger Agreements , Mergers , Motion to Dismiss

Chancery Dismisses Unripe Contribution Claim but Finds That Corporate Director and Officer Adequately Pled Right to...

Wunderlich v. B. Riley Fin., Inc. et al., C.A. No: 2020-0453-PAF (Del. Ch. Mar. 24, 2021) - Delaware corporations may provide indemnification rights to their directors and officers either through the corporation’s...more

4/20/2021 / Breach of Contract , Indemnification , Mergers , Motion to Dismiss

Chancery Confirms that the Implied Covenant Imposes a “Good Faith” Component to an Agreement to Negotiate

DG BF, LLC v. Ray, C.A. No. 2020-0459-MTZ (Del. Ch. Mar. 1, 2021) - The Operating Agreement for an LLC involved in the cannabis industry provided for a five-member board of managers, with one Independent Manager appointed...more

4/15/2021 / Breach of Contract , Breach of Implied Contract , Limited Liability Company (LLC) , Motion to Dismiss , Operating Agreements

Chancery Finds After Trial That $10 Billion Unit-for-Unit Merger Was “Fair and Reasonable” Under Partnership Agreement

Dieckman v. Regency GP LP, C.A. No. 11130-CB (Del. Ch. Feb. 15, 2021) - This matter concerned limited partners’ challenge under the governing limited partnership agreement to an acquisition of the partnership by another...more

3/18/2021 / Breach of Contract , Covenant of Good Faith and Fair Dealing , Mergers , Partnership Agreements , Partnerships

Delaware Choice of Law Provision in Stock Purchase Agreement Does Not Eliminate Claim for Fraud under California Securities Act

Swipe Acquisition Corp. v. Krauss, C.A. No. 2019-0509-PAF (Del. Ch. Jan. 28, 2021) - This decision concerned a motion to dismiss a claim for fraud under the California Securities Act, which the defendants argued was...more

2/15/2021 / Breach of Contract , Choice-of-Law , Fraud , Stock Purchase Agreement

Tyler O'Connell

Morris James LLP

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