Judge Davis Denies Motion to Dismiss, Transfers Case to Court of Chancery

April 11, 2017

Publication

In Haney v. Blackhawk Network Holdings, Inc., C.A. No. N16C-03-231-EMD-CCLD, Judge Davis denied defendant Blackhawk Network Holdings, Inc.’s (“Blackhawk”) motion to dismiss for improper venue and transferred the case to the Court of Chancery. Plaintiff George Haney (“Haney”), sellers’ representative of Cardlab, Inc., initiated a breach of contract action seeking declarations that Blackhawk did not make a timely request for payment from an escrow account and that Haney was entitled to the remaining funds in the escrow account.

In its motion to dismiss, Blackhawk argued that the parties’ two agreements required the action to be brought in the Court of Chancery. Additionally, Blackhawk claimed that transferring the case to the Court of Chancery would promote judicial efficiency because of pending litigation between the parties in that court. In response, Haney contended that the forum selection clause was facially invalid and that the Court of Chancery would not have jurisdiction because he was not seeking equitable relief. Haney also argued that Blackhawk waived its right to challenge venue because it did not include the challenge in its first motion to dismiss.

The Court determined that Haney’s complaint essentially requested specific performance because if the escrow agent did not act after the Court’s declaration, Haney would need an order to force disbursement by the escrow agent. Judge Davis also held that the Court of Chancery would have jurisdiction under the clean-up doctrine to promote judicial efficiency.

Analysis: This case highlights the interrelationship between the Superior Court and the Court of Chancery, demonstrating that the CCLD judges will scrutinize the subject matter at issue to determine whether the action should be transferred to the Court of Chancery. Whether the claim sounds in law or in equity, Delaware courts will provide a venue for litigants to obtain a prompt, fair, and careful disposition of complex business disputes.