Articles Posted in Delaware Supreme Court

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A Cayman Islands investment fund and two of its Delaware subsidiaries (collectively “Gramercy”) sued a bank organized under Delaware law with offices in Illinois and Bulgaria (Bulgarian-American Enterprise Fund, or “Bulgarian-American”) and an Irish bank headquartered in Dublin (Allied Irish Banks, P.L.C., or “Allied”) over claims they admitted arose under Bulgarian law and had no connection to activity that took place in Delaware. Delaware was the second forum in which Gramercy sought to press its Bulgarian claims. The first forum was Illinois, where: (i) after extensive discovery and briefing on the issue of forum non conveniens, the Circuit Court of Cook County in Chicago granted a motion to dismiss; (ii) the Illinois Appellate Court unanimously affirmed the Circuit Court’s dismissal; and (iii) the Illinois Supreme Court denied Gramercy’s petition for leave to appeal. Rather than going to Bulgaria and suing in the forum whose laws governed its claims and where its investment in Bulgarian-American took place, Gramercy sued in Delaware. Bulgarian-American and Allied filed a motion to dismiss, arguing Bulgaria was the appropriate forum for the litigation. In granting Bulgarian-American and Allied’s motion and holding that Gramercy’s suit did not merit the overwhelming hardship standard afforded to first-filed actions under Cryo-Maid, the Delaware Court of Chancery was forced to address confusing arguments about this Court’s forum non conveniens precedent, in particular, the relationship among the Delaware Supreme Court’s longstanding decisions in “CryoMaid” and “McWane,” and a more recent decision, “Lisa, S.A. v. Mayorga.” Ultimately, the Delaware Supreme Court determined the Court of Chancery correctly held that because the Delaware action was not first filed, and that to obtain dismissal on forum non conveniens grounds, Bulgarian-American and Allied did not need to show overwhelming hardship. But, because the Illinois case was no longer pending, and was not dismissed on the merits like the first-filed action in Lisa, McWane was no longer the proper focus for the Court of Chancery’s analysis. The Illinois action had relevance in the forum non conveniens analysis because it meant that analysis would not be tilted in Gramercy’s favor under the overwhelming hardship standard. But, because the Illinois action was not dismissed on its merits, but instead for forum non conveniens, it should not have shifted the Court’s focus from Cryo-Maid to McWane. Between Cryo-Maid’s overwhelming hardship standard and McWane’s discretionary standard lies an intermediate analysis that applies to situations like Gramercy’s: a straightforward assessment of the CryoMaid factors, where dismissal is appropriate if those factors weigh in favor of that outcome. View "Gramercy Emerging Markets Fund, et al. v. Allied Irish Banks, P.L.C., et al." on Justia Law

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With certain exceptions, a sex offender can rebut the presumption established by the Child Protection From Sex Offenders Act by demonstrating his compliance with the conditions in the statute. This appeal raised one issue: whether the Sex Offenders Act and its rebuttable presumption operated outside of Family Court custody proceedings. The Delaware Supreme Court concluded, as did the Family Court, that the General Assembly intended that the Act and its rebuttable presumption to operate only when the Family Court determines custody, residency, and visitation as part of a Family Court custody proceeding. The Court therefore affirmed the Family Court’s order. View "Division of Family Services v. O'Bryan" on Justia Law

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Noteholders succeeded in securing warrants that the issuer of the notes had promised as a result of the resolution of a previous event of default. When addressing the merits, the Court of Chancery held that the promise of warrants had become a right of the noteholders under the notes, as amended after the default. On that ground, the Court of Chancery awarded the noteholders the warrants they sought. The noteholders then sought to recover their attorneys’ fees based on a fee-shifting provision in the notes which entitled the noteholders to attorneys’ fees if: (1)”any indebtedness” evidenced by the notes was collected in a court proceeding; or (2) the notes were placed in the hands of attorneys for collection after default. But, the Court of Chancery denied this request and the noteholders appealed. After review, the Delaware Supreme Court found that because the warrants were a form of indebtedness that the noteholders had to collect through an action in the Court of Chancery, the noteholders were entitled to attorneys’ fees. The noteholders were also entitled to attorneys’ fees because they had to seek the assistance of counsel to collect the warrants after default. View "Washington v. Preferred Communication Systems, Inc." on Justia Law

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Philip Shawe appealed a Chancery Court order sanctioning him for misconduct throughout litigation with his current business partner and former romantic partner, Elizabeth Elting. After an evidentiary hearing, the Chancery Court found that Shawe deleted documents from his computer, recklessly failed to safeguard his cell phone, improperly gained access to Elting’s e-mails, and lied multiple times under oath. The court also found that Shawe’s improper conduct impeded the administration of justice, unduly complicated the proceedings, and caused the court to make false factual findings. The Court ordered Shawe to pay 100% of the fees Elting incurred in connection with bringing the motion for sanctions, and 33% of the fees she incurred litigating the merits of the case, awarding Elting a total of $7,103,755 in fees and expenses. Shawe appealed, arguing: (1) the Court erred by finding that he acted in bad faith when he deleted the files from his laptop and failed to safeguard his cell phone; (2) the Court erred for failing to afford him criminal due process protections before sanctioning him for “perjury”; and (3) the Court erred by awarding Elting an excessive fee. After review, the Supreme Court found no errors and affirmed. View "Shawe v. Elting" on Justia Law

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The Court of Chancery held that a conflicts committee approved a conflict transaction that it did not believe was in the best interests of the limited partnership it was charged with protecting. A problem emerged for the derivative plaintiff (who won at trial), because after trial but before any judicial ruling on the merits, the limited partnership was acquired in a merger. The claims brought by the plaintiff were thus transferred to the buyer in the merger. Plaintiff’s standing was extinguished, and his only recourse was to challenge the fairness of the merger by alleging that the value of his claims was not reflected in consideration of the merger. The Court of Chancery rejected defendants’ argument that plaintiff’s claims were considered when the limited partnership merged. However, the Supreme Court reversed the Court of Chancery: plaintiff’s claims were, and remained, derivative in nature. Derivative plaintiffs do not make claims belonging to them individually. Here, the derivative plaintiff only sought monetary relief for the limited partnership. Plaintiff lost standing to continue his derivative action when the merger closed. View "El Paso Pipeline GP Company, LLC, et al. v. Brinckerhoff" on Justia Law

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A jury found that plaintiffs-appellants Andrew and April Rash "sustained one or more injuries proximately caused by" negligence on the part of defendant-appellee Justin Moczulski following an auto accident. However, the jury returned a zero verdict. Plaintiffs moved for a new trial. The Superior Court denied the motion for a new trial but imposed an additur of $10,000. Plaintiffs appealed, arguing: (1) the trial court’s denial of their motion for a new trial was an abuse of discretion; and (2) the award of$10,000 for additur was unreasonable. Defendants, Moczulski and Diamond Materials, LLC, cross-appealed, contending that the motion for a new trial should have been denied without additur. After review, the Supreme Court found that there were significant disputed issues concerning the nature and extent of Mr. Rash’s injuries as well as alleged failure on his part to mitigate his injuries through treatment. In its order denying plaintiffs’ motion for a new trial, the trial court observed that “the exact nature and extent of Plaintiff’s injury [and] Plaintiff’s failure to mitigate his injuries through treatment made identifying and compensating the injury quite problematic,” an observation with which the Supreme Court agreed. Under the circumstances of this case, the Court found no abuse of discretion in the trial court’s decision to award an additur. View "Rash v. Moczulski" on Justia Law

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In this case, a large Georgia corporation that properly registered to do business in Delaware was sued in Delaware over claims having nothing to do with its activities in Delaware. Adhering to the interpretation given to Delaware's registration statutes, the Superior Court held that, notwithstanding the U.S. Supreme Court's decision in "Daimler AG v. Bauman," the foreign corporation consented to Delaware's general jurisdiction merely by registering to do business in Delaware. After review, the Delaware Supreme Court concluded that after "Daimler," it was "not tenable to read Delaware's registration statutes" in the same way as the Superior Court did in "Sternberg v. O'Neil … Delaware cannot exercise general jurisdiction over it consistent with principles of due process. Furthermore, the plaintiffs concede that they cannot establish specific jurisdiction over the nonresident defendant under the long-arm statute or principles of due process. Therefore, the plaintiffs' claim must be dismissed for lack of personal jurisdiction. Accordingly, we reverse the Superior Court‘s judgment." View "Genuine Parts Co. v. Cepec, et al." on Justia Law

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A group of New York-based third party payor health insurers (“TPPs”) that provided prescription drug benefits to union members appealed a Superior Court judgment dismissing with prejudice their second amended complaint. At issue were claims brought by the TPPs under various state consumer fraud laws against AstraZeneca Pharmaceuticals LP, and Zeneca Inc. (collectively “AstraZeneca”). The TPPs alleged that AstraZeneca falsely advertised its more expensive patented prescription drug "Nexium" as superior to the less expensive generic drug "Prilosec," causing the TPPs to overpay for Nexium when generic Prilosec would have sufficed. After conducting an extensive choice of law analysis, the Superior Court determined that New York law controlled the TPPs’ claims. The court then held that the TPPs failed to state a claim under New York’s consumer fraud statute for failure to allege legally sufficient causation. The TPPs appealed, arguing the Superior Court's choice of law analysis was flawed, and that the Superior Court's causation analysis was equally flawed. After a careful review of the record on appeal, the Delaware Supreme Court affirmed the ultimate judgment of the Superior Court, finding it not necessary to discuss whether the Superior Court correctly analyzed the choice of law issue, because under either state consumer fraud statute the TPPs could not recover damages as a matter of law. View "Teamsters Local 237 Welfare Fund, et al. v. AstraZeneca Pharmaceuticals LP" on Justia Law

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In this appeal, Mary DiFebo argued that the Superior Court erred by dismissing her amended petition seeking review of a Board of Adjustment decision that granted a variance application for two land plots located near DiFebo's home to be subdivided into four flag lots. The Superior Court had two related reasons for dismissing the amended petition: (1) that DiFebo had not named the owners of the two properties that were the subject of the Board's proceeding within the thirty-day statute of limitations for commencing a petition challenging a Board decision, and for that reason alone she was foreclosed from proceeding; (2) alternatively, the court found that DiFebo had not met the requirements for relation back under Superior Court Civil Rule 15(c)(3). The Supreme Court concluded that the Superior Court correctly determined that DiFebo did not satisfy all of Rule 15(c)(3)'s requirements to have her amended petition relate back to her initial filing. Accordingly, the Supreme Court affirmed dismissal of DiFebo's amended petition. View "DiFebo v. Board of Adjustment of New Castle County, et al." on Justia Law

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Plaintiffs-appellants DeShaun Ketler and Brittany Ketler appealed a Superior Court order granting Defendant-appellee PFPA, LLC’s (“PlanetFitness”) motion for judgment on the pleadings. DeShaun Ketler was injured while using exercise equipment in a Planet Fitness facility. The Ketlers claim that the injuries were caused by negligence on the part of Planet Fitness. The Superior Court found that the Ketlers claim was barred by a signed release of liability. It determined that a release which allowed a party to avoid liability for its own negligence was permissible under Delaware Law if the release is unambiguous, not unconscionable, and not against public policy. It further determined that the release satisfied all three criteria. On appeal, the Ketlers argued the Superior Court erred because the release is ambiguous, unconscionable, and against public policy. Finding no reversible error, the Supreme Court affirmed. View "Ketler v. PFPA, LLC" on Justia Law