Judge Johnston Grants Anti-Suit / Anti-Claim Injunction as Issue of First Impression
March 30, 2021
Publication| Commercial Litigation
In American International Industries v. Neslemur Company, C.A. No. N19C-04-258 MMJ CCLD, Judge Johnston considered as an issue of first impression whether there is any Delaware authority for the imposition of an anti-claim injunction, as opposed to an anti-suit injunction. American International Industries (“AII”) had acquired assets from Neslemur under an asset purchase agreement. The agreement obligated Neslemur to hold AII harmless for certain liabilities. AII later became a named defendant in tort lawsuits in at least four non-Delaware jurisdictions. AII sued Neslemur in the Superior Court of Delaware, seeking breach of contract damages and declaratory relief under the asset purchase agreement. AII also alleged crossclaims and third-party claims against Neslemur in the non-Delaware jurisdictions.
In response, Neslemur filed an action in the Delaware Court of Chancery seeking to enjoin AII from pursuing its crossclaims and third-party claims in courts outside of Delaware. Neslemur’s Chancery action was consolidated into AII’s Superior Court action and Judge Johnston was appointed Vice Chancellor for purposes of handling the proceeding. Neslemur argued that because the other actions request the same relief from Neslemur as in the Delaware suit, Neslemur was entitled to injunctive relief. AII disagreed, arguing that injunctive relief would be useless because it would not stop the tort plaintiffs from litigating their claims in the other jurisdictions.
Judge Johnston ultimately sided with Neslemur. She explained that neither party provided any Delaware authority distinguishing between an anti-suit injunction and an anti-claim injunction, and concluded that the issue was one of first impression. She proceeded to apply the same standards to both forms of relief and concluded that “the crossclaims and third-party claims in other jurisdictions present the potential for judgments inconsistent with the outcome of the Delaware litigation.” Because AII chose to litigate in Delaware, the Court reasoned, AII should not be allowed to later repudiate Delaware to obtain a strategic advantage elsewhere. Judge Johnston ultimately found that the equities balanced in Neslemur’s favor and an anti-suit injunction was necessary to protect Neslemur from vexatious or harassing litigation.
Analysis: This 10-page opinion is short in words, but long in its potential reach. Judge Johnston reinforces the primacy of first-filed actions in Delaware courts, and provides a framework for courts to consider both anti-suit and anti-claim injunctions. In the end, Judge Johnston echoed the teaching of long-standing Delaware authority suggesting that litigants who file in Delaware are expected to stay here.