Delaware Complex Commercial Litigation Division Law Update
February 16, 2017
Welcome to the inaugural edition of the electronic Richards, Layton & Finger Superior Court Complex Commercial Litigation Division quarterly update. The Superior Court’s Complex Commercial Litigation Division (“CCLD”) was created in 2010 as the complementary business court to Delaware’s world-renowned Court of Chancery. It was designed to expeditiously resolve large commercial disputes. Richards, Layton & Finger attorneys helped draft the initial report creating the CCLD and the subsequent implementing orders. Two Richards, Layton & Finger attorneys are members of the advisory committee for the CCLD.
There are four judges on the division, and each case is specially assigned to one of the judges, who manages the case from filing to final resolution. The hallmark of the CCLD is flexible scheduling and expedited case resolution. Most of the cases assigned to the CCLD are commercial disputes between companies where the amount in controversy is in excess of $1 million. In 2016, 53 cases were filed in the CCLD, and since inception, the CCLD has resolved some of the largest cases in Delaware. See, e.g., Viking Pump Inc. vs Century Indemnity Co. et al., C.A. No. N10C-06-141. Access to the CCLD’s website, which has sample case management orders and other administrative directives, can be found HERE.
We have had the pleasure of working with many of you on matters filed here, and we hope this update will help you stay abreast of the recent developments in Delaware. If you have any questions about any of the decisions listed below or the CCLD in general, please let us know.
Judge Johnston Grants Defendants’ Motion for Summary Judgment on Statute of Limitations Grounds
In Fabian v. BGC Holdings, L.P., C.A. No. N14C-03-037-MMJ-CCLD, Judge Johnston granted defendants BGC Holdings, L.P. (“BGCH”) and BGC Partners, Inc.’s (“BGCP”) motion for summary judgment, and held that plaintiff Larry D. Fabian’s (“Fabian”) claims were barred by the statute of limitations. Fabian, a former BGCP employee, initiated the lawsuit on March 5, 2014 against the defendants, alleging that the defendants wrongfully forfeited the partnership units he had acquired in BGCH upon his termination of employment with BGCP to work for a competing entity.
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Judge Davis Holds Insurers Have Valid Controversy Against Insureds but Are Barred from Subrogation Against Defendants as a Matter of Law
In Arch Insurance Co., et al. v. Murdock et al., C.A. No. N16C-01-104-EMD-CCLD, Judge Davis granted in part and denied in part the defendants’ motion to dismiss, holding that there was a valid controversy between the plaintiffs (excess insurance carriers) and the defendants (the insureds) regarding the funding of a settlement for an underlying lawsuit. Judge Davis also held that the plaintiffs were barred from subrogation against the defendants as a matter of law.
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Judge Johnston Holds Fee-Shifting Provision Does Not Apply to First-Party Actions
In Deere & Company v. Exelon Generation Acquisitions, LLC, C.A. No. N13C-07-330-MMJ-CCLD, Judge Johnston held that plaintiff Deere & Company (“Deere”) was not entitled to indemnification for attorneys’ fees by defendant Exelon Generation Acquisitions (“Exelon”), but that Deere was entitled to litigation costs and pre-judgment interest that began to accrue as of December 18, 2012. Deere initiated litigation against Exelon for breach of an agreement entered into as part of the sale of Deere’s wind energy business to Exelon. The Court ultimately granted Deere’s motion for summary judgment, leading Deere to file an application for fees, expenses, and interest.
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Judge Johnston Holds Liquidated Damages Provision Enforceable but Denies Summary Judgment Regarding Defendants’ Obligations
In CRS Proppants LLC v. Preferred Resin Holding Company, LLC, C.A. No. N15C-08-111-MMJ-CCLD, Judge Johnston granted in part and denied in part the plaintiff’s motion for summary judgment, holding that the liquidated damages provision in the purchase and sale agreement (the “PSA”) between the parties was enforceable and that the defendant’s obligations under the PSA were not excused by commercial impracticability or frustration of purpose. However, Judge Johnston also concluded that certain conduct may nonetheless be excused due to an ambiguous term in the PSA.
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Judge Carpenter Denies Defendants’ Motion to Dismiss, Finding Defendants’ Arguments Premature
In LCT Capital, LLC v. NGL Energy Partners LP, C.A. No. N15C-08-109-WCC-CCLD, Judge Carpenter denied the defendants’ motion to dismiss, noting that the “vast majority of NGL’s arguments advocating for dismissal are simply premature.” Plaintiff LCT Capital, LLC (“LCT”) initiated a breach of contract action against defendants NGL Energy Partners LP and NGL Energy Holdings LLC (collectively, “NGL”) arising from NGL’s alleged failure to pay LCT for its services regarding NGL’s acquisition of TransMontaigne, Inc. Specifically, LCT argued that NGL’s CEO, H. Michael Krimbill (“Krimbill”), agreed that NGL would pay LCT a finder’s fee in the form of a 2% ownership interest in NGL Energy Holdings LLC, an agreement to pay LCT’s taxes, and an option to purchase an additional 3% interest in NGL Energy Holdings LLC. In the alternative, LCT alleged that NGL was unjustly enriched by LCT’s services, including LCT’s negotiations with Morgan Stanley in connection with NGL’s TransMontaigne, Inc. acquisition, LCT’s assistance to NGL in closing and post-closing matters, and LCT’s efforts in bringing the acquisition opportunity to NGL’s attention, creating $500 million of value in NGL Energy Holdings LLC.
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Judge Davis Determines Date of Exhaustion of Insurance Policies Based on Policies’ Plain Language
In CNH Industrial America LLC v. American Casualty Company of Reading, Pennsylvania, C.A. No. N12C-07-108-EMD-CCLD, Judge Davis concluded that the insurance policies between plaintiff CNH Industrial America LLC (“CNH”) and defendant Travelers Indemnity Company (“Travelers”) were exhausted as a matter of law as of Travelers’ July 6, 2015 payment of the remaining policy limits of liability owed under each policy. CNH filed a declaratory judgment and breach of contract case against defendant insurance companies (including Travelers), alleging that Travelers breached its duty to defend CNH in underlying asbestos litigation. In the course of the action between CNH and Travelers, Travelers made a payment of $1.6 million to CNH for indemnity and defense costs while CNH’s motion for partial summary judgment against Travelers regarding exhaustion of the governing insurance policy was still pending. A payment of $1 million was made for defense costs up to the date of the last settlement, and $600,000 was paid for indemnity.
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Judge Davis Denies Motion to Dismiss but Bars Plaintiffs’ Contractual Claims
In JCM Innovation Corp. v. FL Acquisition Holdings, Inc., C.A. No. N15C-10-255-EMD-CCLD, Judge Davis granted in-part and denied in part defendants FL Acquisition Holdings, Inc. and American Capital Ltd.’s motion to dismiss plaintiffs JCM Innovation Corp. and JCM American Corporation’s (collectively, “JCM”) complaint relating to JCM’s purchase of FutureLogic Group, Inc. (“FutureLogic”) from the defendants. JCM initiated the action alleging that the defendants fraudulently induced JCM into buying FutureLogic, intentionally misrepresented the viability of FutureLogic’s product (Gen3: a casino gaming printer), willfully sold JCM a defective product, and breached the asset purchase agreement between the parties.
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