Justia Contracts Opinion Summaries

Articles Posted in Delaware Court of Chancery
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The Court of Chancery held that management of a Delaware corporation does not have the authority unilaterally to preclude a director of the corporation from obtaining the corporation's privileged information.This dispute concerned obtaining access to privileged communications among management of a company, its in-house counsel, and its outside counsel. The company, acting by and under the direction of a special committee of the company's board of directors, filed an action against a corporation and an L.P. alleging that the defendants breached contractual obligations they owed to the company. The special committee sought access to the privileged communications in order to oppose the company's motion for leave to voluntarily dismiss the complaint. The Court of Chancery held that the members of the special committee were entitled to discovery of the privileged communications. View "In re WeWork Litigation" on Justia Law

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The Court of Chancery dismissed Plaintiff's complaint for declaratory relief and injunctive relief against the City Library of Wilmington for failure to state a claim, holding that the complaint failed to state a claim for breach of contract.After Plaintiff was banned from various sections of the Library, he filed this complaint seeking to enjoin the Library from banning him and from suspending his privileges. Plaintiff further sought to induce the Library to enforce Library regulations and asked that the Court "rewrite the organizational chart of the Library." The Library filed a motion to dismiss the complaint. The Court of Chancery granted the motion, holding that Plaintiff's count for breach of contract did not state a claim on which relief could be granted. View "Brown v. City Library of Wilmington" on Justia Law

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The Court of Chancery granted in part and denied in part the motion for partial summary judgment filed by Applied Energetics, Inc. (the Company) on its claims against George Farley, the Company's former director and principal executive officer, and AnneMarieCo, LLC, holding that Farley lacked authority to issue himself twenty-five million shares and grant himself an annual salary of $150,000 per year but that the Company was not entitled to summary judgment on Farley's counterclaims.The Company asserted several claims based on Farley's actions. Farley filed counterclaims against the Company for breach of contract, for unjust enrichment, and to validate his actions under section 205 of the Delaware General Corporation Law. The Company moved for partial summary judgment. The Court of Chancery granted the motion in part and denied it in part, holding (1) because Farley was the Company's sole remaining director when he issued himself stock and granted himself compensation, Farley's actions were invalid; (2) because the Company had the corporate power to issue shares and compensate its officers and directors Farley's acts could be validated under section 205; (3) the Court had the power to validate Farley's decision to grant himself a salary; and (4) evidence could support Farley's claim for compensation under a theory of quantum merit. View "Applied Energetics, Inc. v. Farley" on Justia Law

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The Court of Chancery granted in part and denied in part Defendants' motion to dismiss Plaintiff's complaint brought in an effort to collect on an unpaid judgment, holding that one claim must be dismissed as untimely.JPMorgan Chase Bank, N.A. sued Data Treasury Corporation (DTC) and obtained a final judgment against DTC for $69 million. JPMorgan bought this action in an effort to collect on its judgment. DTC moved to dismiss all of JPMorgan's claims on a variety of grounds. JPMorgan claimed that DTC's directors should be liable for dividends DTC paid its stockholders after DTC licensed its patents to someone other than JPMorgan in violation of DTC's obligation to tell JPMorgan under a license agreement. JP Morgan also claimed it was entitled to recover the distributions because they were fraudulent transfers. The Court of Chancery held (1) JPMorgan had standing as a creditor of DTC to assert a claim under Section 174 to recover for itself and other creditors of DTC the dividends DTC paid; (2) the six-year limitations period in 8 Del. C. 174 is a statute of repose. The court thus finds that JPMorgan’s Section 174 claim must be dismissed as untimely; and (3) all of JPMorgan’s fraudulent transfer claims were timely filed. View "JPMorgan Chase Bank, N.A. v. Ballard" on Justia Law

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In this construction dispute, the Court of Chancery granted Defendant’s motion to dismiss Plaintiffs’ complaint seeking to vacate or modify an arbitration award for failure to state a claim and denying Plaintiffs’ motion for summary judgment, holding that the arbitrator did not exceed the scope of his authority or act in manifest disregard of the law when he awarded Defendant damages.In their first claim, Plaintiffs argued that the arbitrator’s interpretation of the provisions in the contract between the parties regarding the total cost of the construction project evidences a manifest disregard for the law. In their second claim, Plaintiffs argued that the arbitrator exceeded his authority and acted in manifest disregard of the law when he issued an award for fees and expenses to Defendant. The Court of Chancery disagreed, holding that the arbitrator did not act in manifest disregard of the law in either respect. View "Stempien v. Marnie Properties, LLC" on Justia Law

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In this dispute regarding the commercialization of a patent covering a method for pooling insurance policies the Court of Chancery granted Defendants’ motion for judgment on the pleadings in which they argued that they did not owe any of the contractual or fiduciary obligations that Plaintiff sought to enforce, holding that Defendants were entitled to judgment as a matter of law.Plaintiff brought this action asserting claims for breach of contract and breach of fiduciary duties related to Defendants’ business development of a patent-holding entity and Defendants’ failure to provide certain information to Plaintiff. The Court of Chancery granted Defendants’ motion for judgment on the pleadings, thus mooting Plaintiff’s motion to compel and motion for default judgment, holding That Defendants carried their burden to show that Plaintiff could prove no set of facts in support of his claims that would entitle him to relief and that Defendants were entitled to judgment as a matter of law. View "Ross v. Institutional Longevity Assets LLC" on Justia Law

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The Court of Chancery held that an asset purchase agreement between the parties in this case required the parties to arbitrate their dispute over the net working capital of the assets that Defendant brought from Plaintiff, thus granting Plaintiff’s motion for summary judgment.Before the Court, Defendant argued that the parties agreed to an expert determination of certain narrow disputes but not to binding arbitration. The Court of Chancery disagreed, holding (1) the contract language was unambiguous and manifested an intent to require the parties to arbitrate their disputes; and (2) there was no basis to rule that a failure to include arbitration rules in an arbitration clause invalidates the arbitration clause or changes the distinction between procedural and substantive arbitrability. View "Agiliance, Inc. v. Resolver SOAR, LLC" on Justia Law

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The Court of Chancery granted Defendant’s motion to dismiss this complaint alleging that Defendant breached an earnest agreement for lack of subject matter jurisdiction, holding that the complaint did not seek equitable relief and that an adequate remedy existed at law.This complaint focused on Defendant’s purported breaches of the earnest agreement that the parties entered into on the same day they entered into a stock purchase agreement. Defendant moved to dismiss the complaint for lack of subject matter jurisdiction. The Court of Chancery granted the motion, holding that Defendant’s failure to perform its obligations under the earnest agreement could be remedied with money damages, and because Plaintiff had an adequate remedy at law, the Court lacked subject matter jurisdiction over this matter. View "Quarum v. Mitchell International, Inc." on Justia Law

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The Court of Chancery granted Defendants’ motion to dismiss Plaintiff’s claims for breach of fiduciary duty, waste, and unjust enrichment and dismissed the complaint with prejudice as to the named plaintiff because the claims were released as a part of a settlement agreement.Plaintiff brought these claims derivatively on behalf of Viacom Inc. challenging Viacom’s payment of approximately $13 million of compensation to its founder and then-chairman from 2014 to 2016 when Viacom’s directors purportedly knew that he was incapacitated and incapable of doing his job. The Court of Chancery held that the plain terms of the release in the settlement agreement entered into by Viacom in 2016 barred litigation of the derivative claims asserted in this case. View "Feuer v. Dauman" on Justia Law

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Plaintiff, the owner of a commercial property, filed suit against Defendant, a special servicer that handled the default side of loan servicing for its affiliate, after Plaintiff unsuccessfully sought to purchase a loan taken out to refinance existing debt on its property in an effort to avoid default. Plaintiff sought specific performance of a pre-negotiation agreement and injunctive relief to enjoin Defendant from foreclosing on the property until good faith negotiations occur under the pre-negotiation contract. The Court of Chancery granted Defendant’s motion to dismiss the complaint for failure to state a claim for relief, holding that each count of the complaint failed to state a claim for relief. View "Windsor I, LLC v. CWCapital Asset Management LLC" on Justia Law