Complex Commercial Litigation Update
August 7, 2019
Publication
In the second quarter of 2019, the CCLD judges handled numerous contract cases and, in a series of opinions, reinforced that the implied covenant of good faith and fair dealing should be applied “sparingly.” There was also a multi-week jury trial in a case involving a dispute over a business acquisition. Such M&A disputes are now common in the CCLD, and in this case, the plaintiff was able to prevail on its claim of fraudulent inducement in connection with the transaction. Finally, effective July 1, 2019, the Superior Court adopted new rule amendments to more closely align its rules with the Federal Rules on proportionality of discovery. For more information about the CCLD, please visit our website.
Jury Awards $82.1 Million in Damages for Fraudulent Inducement in M&A Transaction
On June 24, 2019, Judge Carpenter (formerly one of the four CCLD panel members) concluded a jury trial in Bracket Holding Corp. v. Express Scripts, Inc., C.A. No. N15C-02-233 WCC CCLD. The genesis of the instant dispute began in 2012 when Express Scripts, Inc. expressed interest in acquiring United BioSource LLC.
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Judge Davis Dismisses Implied Covenant Claim, but Allows Contract Claims to Proceed Despite the Contract’s Purported Limitation on Damages
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Judge Wallace Allows Contract Claims to Proceed while Dismissing Duplicative Implied Covenant Claims and Addressing Novel Issue Regarding Application of the Economic Loss Doctrine to Intentional Torts
In a lengthy bench ruling, Judge Wallace partially granted and partially denied a plaintiff’s motion to dismiss a first-amended counterclaim, and denied a motion to strike an affirmative defense. Smart Sand, Inc. v. US Well Services LLC, C.A. No. N19C-01-144 PRW [CCLD] involved a dispute over a contract for frac sand.
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Judge LeGrow Stays Action to Allow Court of Chancery to Address Jurisdictional Issues
In Lennox Industries Inc. & Allied Air Enterprises LLC v. Alliance Compressors LLC, C.A. No. N19C-03-045 AML [CCLD] (the “CCLD action”), Judge LeGrow denied a motion to dismiss and stayed a first-filed CCLD action to allow the Court of Chancery to consider a competing motion in a later-filed action.
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Judge Johnston Concludes Vague Allegations of “Illegal Activity” Are Insufficient under Delaware’s Pleading Standards and Implied Covenant of Good Faith and Fair Dealing Claim Is Duplicative of Contract Claim
In West v. Access Control Related Enterprises, LLC, et al, C.A. No. N17C-11-137 MMJ [CCLD], Judge Johnston granted in part and denied in part a motion to dismiss. The case arose from the termination of William West, CFO and COO of Access Control Related Enterprises, LLC (“ACRE”). Prior to West’s termination, LLR Equity Partners (“LLR”) purchased a controlling interest in ACRE.
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Judge LeGrow Analyzes Stock Purchase Agreement and Dismisses Claims Related to Breach of Non-Solicitation Clause due to Plaintiff’s Failure to Plead Affiliate Status
In P&TI Acquisition Company, Inc., v. Morgenthaler Partners VII, LP, et al., C.A. No. N18C-08-059 AML [CCLD], Judge LeGrow dismissed breach of contract and breach of the implied covenant of good faith and fair dealing claims against all defendants. This case stemmed from the plaintiff’s purchase of PhilTem Holdings, Inc. from the defendants in 2012 under a stock purchase agreement that included a non-solicitation clause.
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