In the recent DGCL Section 220 books and records decision of The City of Cambridge Retirement System v. Universal Health Services, Inc.C.A. No. 2017-0322-SG (Del. Ch. Oct. 12, 2017), the Court of Chancery considered the propriety of a condition imposed by the defendant corporation in a confidentiality agreement that any subsequent litigation relying on corporate records produced in the action be deemed to incorporate by reference all such records produced (the “Incorporation Condition”).  Stated differently, the defendants and/or its directors wished to be able to rely on all documents produced in the books and records action to move to dismiss an anticipated derivative action.

Vice Chancellor Glasscock upheld the Incorporation Condition.  Section 220(c) of the Delaware General Corporation Law (“DGCL”) conveys on the Court discretion to “prescribe any limitations or conditions” on the inspection of corporate records by a demanding stockholder “as the Court may deem just and proper.”  8 Del. C. § 220(c).

The Court noted that “imposition of such a condition has been found appropriate in previous cases in this Court under Section 220, on the ground that it appropriately permits a defendant to respond to ‘cherry-pick[ed] documents’ that are taken ‘out of context,’ by pointing the Court to other documents already produced for assistance in determining the reasonableness of inferences drawn in any follow-on complaint.” Slip op., at 6.  The Court held that an incorporation condition “provides a remedy for the unreasonable anti-contextual use of a limited subset of the documents produced, in support of a complaint untenable when examined under the full universe of documents obtained.”  Id. at 6-7.

Plaintiff objected on the grounds that a defendant may manipulate the universe of documents by producing only a self-selected subset of documents of its choosing, without any punishment for failing to produce harmful documents.  The Court observed that the same could be said of a motion for summary judgment, in which a defendant wrongfully withholds documents in bad faith.  Vice Chancellor Glasscock posed the question: “does the risk of such potential malfeasance outweigh the benefits of allowing the court to eliminate complaints involving misleading citations to a limited subset of records?”  Id. at 8.  The answer was no.  The Incorporation Condition of the confidentiality agreement was upheld by the Court under 8 Del. C. § 220(c).

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the recent decision of Mehta v. Kaazing CorporationC.A. No. 2017-0087-JRS (Del. Ch. Sept. 29, 2017), Vice Chancellor Slights examined a stockholder’s books and records request upon a Delaware corporation pursuant to 8 Del. C. § 220.  This opinion provides a useful roadmap for parties and practitioners seeking to inspect corporate books and records of a Delaware corporation.

Background

By way of brief background, plaintiff Vikram Mehta is a stockholder of Kaazing Corporation (“Kaazing”). He served as Kaazing’s CEO from October 2013 to April 2015, when he was terminated from that position by Kaazing’s board of directors.

Among other things, what led to Mehta’s books and records demand was alleged misstatements by the company concerning its financial well-being to stockholders.  For example, in February 2016, Kaazing’s CEO informed shareholders that the Company “ended 2015 with a very strong Q4.”  This communication allegedly caused shareholders to invest further into the Company.

However, on March 25, 2016, Kaazing delivered a very different message to its stockholders when it informed them of the need to engage in a $1 million bridge financing so that the Company could continue to operate.  According to Mehta, the note associated with the Series 1 bridge financing contained terms favorable to the lender to the detriment of the Company and its shareholders. Without prior notice to shareholders, the Company’s 2016 bridge financing note was thereafter amended twice to allow for investments of up to $2 million.

After certain shareholders (including Mehta) expressed concern regarding the impact of the Series 1 financing on their investment, Kaazing held a shareholder meeting in September 2016, to provide information concerning the Series 1 financing. During this meeting, Mehta and other similarly-situated shareholders again received an invitation to participate in the Series 1 financing on the condition that they sign certain documents that Mehta believed may relinquish shareholder rights under Kaazing’s Investors’ Rights Agreement. Mehta declined to participate. The Series 1 financing led to a dilutive conversion of Mehta’s 506,124 shares of Series B-1 preferred stock to 10,616 shares of common stock.

In January 2017, Mehta sent a Section 220 demand to Kaazing, in which he sought inspection of certain books and records to “(i) ascertain the value of his stock; (ii) ascertain whether there has been mismanagement, waste, or wrongdoing by the Company’s agents and representatives; (iii) determine what impact if any this mismanagement, waste, or wrongdoing, has had, or might have, on the value of Plaintiff’s shares of the Company; and (iv) communicate with other shareholders of the Company concerning the above.”  After some, but not all, of the demand documents were produced, Mehta filed a books and records action in the Delaware Court of Chancery in February 2017.

Analysis

At trial, Mehta continued to advance as his proper purposes the valuation of his membership interest in Kaazing and the investigation of mismanagement, waste or wrongdoing.

Regarding valuation of his stock, the Court noted that “It is settled in Delaware law that the valuation of one’s stock can be a proper purpose for the inspection of books and records if there is a particular need or reason for the valuation. In this case, however, Mehta has not demonstrated that valuing his membership interests justifies inspection since he has failed to identify any reason why he needs to value his membership interests at this time.”  Accordingly, the Court declined to provide any documents to Mehta related to this stated purpose.

Regarding the investigation of mismanagement, waste or wrongdoing, the Court was satisfied that Mehta “demonstrated a credible basis to suspect wrongdoing that justifies further investigation into mismanagement.” Mehta’s evidence of possible wrongdoing points to Kaazing’s stable financial status immediately prior to his termination and the Company’s rather sudden need for bridge financing after his termination, as well as the Board’s apparently contradictory statements in early 2016 regarding the Company’s financial success in 2015.

After determining the propriety of Mehta’s stated purposes, Vice Chancellor Slights then addressed whether the requested categories of documents were narrowly tailored to the stated purpose of investigating mismanagement or wrongdoing.

Key Takeaway:

This decision reinforces the notion that requesting documents for valuation purposes, while generally upheld as a “proper” purpose, will alone not suffice unless plaintiff also demonstrates what they plan to do with such documents.  Practically speaking, often times demand letters state that the stockholder seeks to value their shares in order to determine whether to sell their stock or purchase more stock in the company, or for tax or estate planning purposes.  However, idle curiosity will not suffice.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

The recent decision of LVI Group Investments LLC v. NCM Group Holdings LLC, C.A. No. 12067-VCG (Del. Ch. Sept. 7, 2017) addresses the concept of conspiracy theory of jurisdiction, under which which a non-resident may be subject to Delaware court jurisdiction if a co-conspirator commits an act in Delaware in furtherance of the conspiracy.

Specifically, according to the Delaware Supreme Court,

a conspirator who is absent from the forum state is subject to the jurisdiction of the court, assuming he is properly served under state law, if the plaintiff can make a factual showing that: (1) a conspiracy to defraud existed; (2) the defendant was a member of that conspiracy; (3) a substantial act or substantial effect in furtherance of the conspiracy occurred in the forum state; (4) the defendant knew or had reason to know of the act in the forum state or that acts outside the forum state would have an effect in the forum state; and (5) the act in, or effect on, the forum state was a direct and foreseeable result of the conduct in furtherance of the conspiracy.

Istituto Bancario Italiano SpA v. Hunter Eng’g Co., 449 A.2d 210, 225 (Del. 1982).

In LVI Group, Vice Chancellor Glasscock examined whether a non-resident CFO of a Delaware corporation was subject to jurisdiction in Delaware under the conspiracy theory of jurisdiction.  The Court found that plaintiff’s attempt to establish personal jurisdiction via a conspiracy theory fails because “[a] corporation cannot conspire with itself.”  Slip op. at 6.  Plaintiff alleges a conspiracy between defendant corporation, its executives and board members.  As this Court has explained, however, “a corporation generally cannot be deemed to have conspired with its officers and agents for purposes of establishing jurisdiction under the conspiracy theory.”  Id.

Plaintiff argued an exception to this rule in the Third Circuit decision of Johnston v. Baker, 445 F.2d 424 (3d Cir. 1971), because it pled that defendant CFO acted for “his own personal benefit because he was an LVI owner and was to become CFO of the new company with substantial compensation,” that is, defendant would become CFO of a new company with a “substantial” salary.

However, Vice Chancellor Glasscock noted that “[c]ourts interpreting the personal reasons exception of Johnston . . . have read it to mean a personal animus and/or desire for financial benefit other than one’s corporate salary.”  Slip op. at 6. Moreover, “[n]owhere in . . . Johnston is there any suggestion that the desire to protect or enhance one’s salary makes an agent sufficiently independent of the corporation to be capable of conspiring with it.”  Id. at 6-7.

Accordingly, the Court found that personal jurisdiction over the non-resident CFO cannot be premised on plaintiff’s conspiracy theory.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the latest development in the ongoing TransPerfect dispute, the Court of Chancery denied Ms. Shawe’s application for interlocutory appeal, in the opinion of Shawe v. TransPerfect Global, Inc., C.A. No. 2017-0306-AGB (Del. Ch. Sept. 7, 2017).

By way of background, on August 13, 2015, the Court granted Elizabeth Elting’s petition to appoint a custodian (“the Custodian”) to sell TransPerfect Global, Inc. (“TPG” or the “Company”) under 8 Del. C. § 226 in order to remedy the dysfunction in the co-founders’ management of the Company and the deadlocks at the board and stockholder level.

In June 2016, Court accepted, with certain modifications, the Custodian’s recommendation for a proposed plan of sale for the Company, and issued an implementing order in July 2016 (the “Sale Order”). On February 13, 2017, the Supreme Court affirmed the post-trial decision and the Sale Order.

Ms. Shawe filed the latest action on April 20, 2017, asserting a claim under Section 211(c) of the DGCL to compel TPG to hold an annual meeting of stockholders.  Elting then filed a motion to enforce the Sale Order and for sanctions, asserting that the Section 211 action violated the Sale Order. The Court ordered the parties to engage in mediation before former Chancellor Chandler.

After mediation reached an impasse, on August 4, 2017, the Court issued a letter decision granting Elting’s motion to enforce the Sale Order, denying Elting’s motion for sanctions, and denying Ms. Shawe’s motion to expedite.  The Court found that Shawe’s Section 211 action was to remove the Custodian and end the sale process, which was inconsistent with the Sale Order, and that ordering a stockholders’ meeting “would be a futile exercise”.

Ms. Shawe applied for an interlocutory appeal of the August 4th ruling, which was opposed by Elting and the Company.

Chancellor Bouchard denied the application for interlocutory appeal.  The application is governed by Supreme Court Rule 42(b)(i), which provides that an interlocutory appeal will not be certified “unless the order of the trial court decides a substantial issue of material importance that merits appellate review before a final judgment.”  Del. S. Ct. Rule 42(b)(i).

The Court found that the August 4th ruling did not decide a substantial issue of material importance, but rather was the logical consequence of enforcing the Sale Order.  The Court also found that scheduling a stockholders’ meeting may jeopardize the sale process, and that no considerations of justice would be served by granting interlocutory review.  Stay tuned for further updates in the TransPerfect dispute.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the recent decision of Carl Zeiss Vision, Inc. v. REFAC Holdings, Inc., C.A. No. 11513-VCS (Del. Ch. Aug. 24, 2017), Vice Chancellor Slights denied a motion to vacate an arbitration award.  Noting that the “standard of judicial review with respect to such applications is among ‘the narrowest . . . in all of American jurisprudence'”, the Court found unconvincing defendants’ argument that the arbitration panel “eviscerate[d] the essential term” of the agreement sua sponte and then “permit[ted] the agreement to remain in effect after gutting that term.”  The Court was not inclined to permit a “do over” of the arbitration.

In declining defendants’ motion to vacate the award, the Court noted that the Federal Arbitration Act (“FAA”) “require(s) reviewing courts to give practically the highest degree of deference, short of ‘untouchable,’ recognized in the law to an arbitrator’s award. Indeed, to overturn an award, the court must be satisfied that ‘there [is] absolutely no support at all in the record justifying the arbitrator’s determinations.'”

Key Takeaway

This decision reinforces the notion that overturning an arbitration award is a “near[] vertical climb”.  Although arbitration has the benefits of confidentiality and potentially limited discovery and speed, the downfall for the losing party is the difficulty in overturning an award.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

The Delaware Supreme Court has just reached a decision that highlights the importance of taking the time to review your estate planning documents each and every year to ensure that the documents still fit, and not inadvertently allowing your testamentary plans to be changed. The decision affirmed an August 2016 Court of Chancery opinion.

Last will and testament
Copyright: stuartburf / 123RF Stock Photo

Edward J. Burke named Mildred, his wife of then 13 years, as his Power of Attorney on March 17, 1998 and on that same date, executed his Will.  Under his Will, Edward left the Virginia property that he then owned to the Trustee of the Trust established under his Will.  Edward directed the Trustee to allow his daughter to live on the Virginia property for three years and then directed the Trustee to sell the Virginia property.  The income from that sale was to go to Mildred for life and after Mildred’s death the remaining sum was to be distributed to his four children.  Edward left the residue of his estate to Mildred.

In 2012, Edward sold the Virginia property for $150,000 and deposited the net proceeds into a separate and new bank account that was in his name alone.  According to his son, Kevin, Edward had repeatedly told his children that these funds were being held for them in accordance with the 1998 Will and testimony was offered to prove that Edward had repeatedly denied Mildred’s request to gain access to this account because he wanted the funds to go to his children.  Edward became sick and had quadruple heart bypass surgery in January 2013.  Around this time, Mildred added her name as a joint owner to the account using the Durable Power of Attorney, according to Kevin without her husband’s knowledge or consent.

Edward died on October 10, 2013, leaving to survive him, Mildred (after having been married for 28 years), and his four children from his first marriage including Kevin.

Since nothing was in Edward’s name alone upon Edward’s death, Mildred did not probate Edward’s estate and due to her retitling of Edward’s account (which held the proceeds from the sale of the Virginia property) the Virginia sale proceeds passed by operation of law to Mildred.

Kevin sued his step-mother alleging that Edward had purposefully segregated the proceeds from the sale of the Virginia property with the intent to preserve the funds for his children.  Mildred alleged (and Master Ayvazian agreed) that Edward had changed his testamentary plan when he sold the Virginia property under the doctrine of ademption.  Further, the Court held, that even if Edward had not known about or approved of Mildred’s adding herself to the account, and even if the Court held that Mildred had to return the money from the account to the estate, the money would have flowed under the Will into the residuary clause, thereby ending up in Mildred’s hands anyway as she was the sole remainder beneficiary.

Master Kim E. Ayvazian relied upon In the Matter of Estate of Hobson, 456 A.2d 800 (1982):

The Court in Hobson held that:

“[U]nder Delaware law, when a testator has sold real estate during her lifetime, such disposition works an ademption of the specific devise in her Will.  Consequently, the rights of devisees do not attach by way of substitution to the proceeds of its sale or to other property subsequently acquired by the testator. Moreover, in Delaware the rule of ademption is not dependent on the apparent intention of the testator.  In fact, the application of the rule may, in many instances, defeat the intention of the testator. ” (Emphasis added.)

What did Edward actually intend?  Tough to say since Edward cannot testify.  But clearly, if Edward’s intent is not important, then it really doesn’t matter.  Even if Kevin could have proven that his father intended to or meant to leave this money to his children, this would not have been enough for the children to inherit the sales proceeds because:

  1. The Durable Personal Power of Attorney was sufficiently broad to enable Mildred to retitle the funds jointly thereby defeating Edward’s supposed intent.
  2. Edward had not changed his Will after the sale of the Virginia property and since Mildred was the residuary beneficiary, then the money from the sale would have flowed through to the residue to Mildred, not to the children.

Assuming that Edward wanted this money to go to his children, what could Edward have done to ensure that the proceeds from the sale of his Virginia property actually went to his children?

Edward had a smaller account with a daughter as joint owner but Mildred removed the daughter’s name from this account before Edward’s death so this account, too, went to Mildred.

How could Edward have ensured that the money went to his children?

Edward should have reviewed his Will after the sale of the Virginia property, and prepared a Codicil to leave the proceeds from the sale of the Virginia property to his children.

Edward should have also revised his Durable Power of Attorney to thwart Mildred’s right to add her name to this account.  As shown by this case, Durable Powers of Attorney are powerful documents – under which it is possible to completely change someone’s testamentary scheme.

Key Takeaway:

Take the time to review your estate planning documents each and every year to ensure that the documents still fit your family and do not inadvertently let your testamentary plans get changed by anyone other than you.

In the recent decision of In re: GR Burgr, LLC; GR US Licensing, LP v. Rowen Seibel, C.A. No. 12825-VCS (Del. Ch. Aug. 25, 2017), Vice Chancellor Slights entered an order judicially dissolving a Delaware limited liability company under Section 18-802 of the Delaware LLC Act. This decision provides an excellent roadmap for parties or practitioners seeking the judicial dissolution of a Delaware LLC.

Background

Here, petitioner GR US Licensing, LP (an entity affiliated with Gordon Ramsay) (“GRUS”), partnered with Respondent, Rowen Seibel, to form GR BURGR, LLC (“GRB” or the “Company”) for the purpose of developing and operating first-class burger-themed restaurants.  The only revenue-generating business GRB has launched since its formation was with an affiliate of Caesars Entertainment Corporation (“Caesars”), where GRB licensed and sublicensed certain trademarks and other intellectual property for Caesars’s use in a burger-themed restaurant in the Planet Hollywood Resort & Casino in Las Vegas, Nevada (“Planet Hollywood”).

In 2016, Seibel was convicted of a felony tax-related offense, after which Caesars terminated the parties’ agreement, finding that Seibel was an “unsuitable person” as defined in the parties agreement with Caesars.  According to Caesars, any further business relationship with Seibel, or any business with which he is affiliated, would place Caesars in violation of Nevada gaming regulations.  In part based on this development, GRUS (and Ramsay) sought to dissolve GRB and to disassociate from Respondent Seibel.

Analysis

Petitioner moved for judgment on the pleadings, stating that the facts admitted by Seibel demonstrate as a matter of law that dissolution is warranted under Section 18-802.  Section 18-802 provides: “On application by or for a member or manager the Court of Chancery may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with a limited liability company agreement.”  The Court stated that “not reasonably practicable” standard does not require a petitioner to “show that the purpose of the limited liability company has been ‘completely frustrated.’”  Rather, “[t]he standard is whether it is reasonably practicable for [the company] to continue to operate its business in conformity with its LLC Agreement.”

The Court found that dissolution was warranted, and granted Petitioner’s motion for judgment on the pleadings.  The Court stated that given the admitted facts,  “the notion that the deadlock might somehow be broken in the future is simply not reasonably conceivable. Ramsay, and his entity GRUS, no longer want to be associated with Seibel due to his felony tax-related conviction and the reputational damage that will flow from their continued connection with him. This circumstance will not change as future events unfold.”  The Court went on to state that each party entered the venture under the presumption that the other was an honorable actor.  “This presumption was shattered when Seibel was convicted of a felony, especially one involving dishonesty.”

Further, the Court reiterated the significance that deadlock played.  Here, GRUS and Seibel are both 50% owners of GRB, each was entitled to appoint one manager, all decisions of the managers must be unanimous, and there was no method to break deadlock.  These factors were each considered by the Court in determining whether to dissolve the LLC.

Key Takeaway

While the involuntary dissolution of a Delaware limited liability company is a “discretionary remedy” that is granted “sparingly”, operating agreements that provide for 50/50 control over an LLC, with no means to break deadlock, will increase the chances that a Court will consider dissolution.  For example, in a 50/50 LLC, the Court may look to the factors of Section 273 of the DGCL by analogy to determine whether dissolution is warranted.  See prior post discussing the application of DGCL 273 to 50/50 LLCs.  To safeguard against this possibility, therefore, parties to an operating agreement should consider ways to avoid such deadlock, in order to minimize the possibility of involuntary dissolution by the Court of Chancery.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the latest of a wave of appraisal opinions issued in Delaware, on August 1st, the Delaware Supreme Court reversed the highly-publicized DFC Global appraisal ruling, in DFC Global Corporation v. Muirfield Value Partners, L.P.No. 518, 2016 (Del. Ch. Aug. 1, 2017).

A recent string of decisions have found that the deal price of a merger, when there was an arm’s length transaction achieved after a well-structured and robust sales process, may be the best evidence of “fair value” of the merger proceeds at issue.  This decision reinforces this notion, although the Supreme Court declined to go so far as declaring a bright-line rule.

In DFC Global, the Delaware Supreme Court reversed a Court of Chancery ruling that payday lender DFC Global Corp. (“DFC” or the “Company”) was sold for an amount less than fair value in 2014.  Last year, Chancellor Bouchard determined that the fair value of the petitioners’ 4.6 million DFC shares was $10.21 each, a roughly 7 percent increase over the deal price.  For a discussion of the lower court’s decision, click here.

This was one of two decisions in 2016, where the Court of Chancery found fair value to be greater than the deal price.  In the other decision, In re: Appraisal of Dell Inc., C.A. No. 9322-VCL (Del. Ch. May 31, 2016), Vice Chancellor Laster found fair value to be 22% greater than the deal price, which stood for the premise that deal price is not a fair value indicator in the context of a management-led buyout.  The Dell decision is similarly pending before the Delaware Supreme Court.  For a review of this decision, click here.

In reversing the Court of Chancery, the High Court found that reversible error had been committed by only according a one-third weighting of the deal price to the valuation of DFC’s common stock.  Under these circumstances, the deal price should have been accorded greater emphasis.  The Supreme Court further addressed the ability of the market to reflect regulatory impact on the stock price, and rejected the trial court’s conclusions that regulatory upheaval justified a downward weighting of the deal price.  The Supreme Court ordered the Court of Chancery to explain its weighting methodology on remand.

Stay tuned for the Delaware Supreme Court’s decision in Dell.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the letter opinion of Windsor I, LLC v. CWCapital Asset Management LLC, C.A. No. 12977-CB (Del. Ch. July 31, 2017), the Court of Chancery determined the enforceability of an agreement to negotiate, under Maryland law.  Plaintiff is the owner of a commercial property in Wilmington, Delaware, and Defendant is a special servicer that handles the default side of loan servicing for its affiliate.

Plaintiff requested that its loan be transferred to special servicing in anticipation of its large commercial tenant terminating the lease on the property.  Thereafter, the parties negotiated a Pre-Negotiation Agreement, after which time the parties engaged in settlement negotiations to purchase the loan on the property at issue.

Plaintiff filed a complaint seeking specific performance and injunctive relief, to compel Defendant to comply with the terms of the Pre-Negotiation Agreement contained in the parties’ Mortgage and Security Agreement to refinance existing debt on the property at issue.  Plaintiff asserted that the terms of the Pre-Negotiation Agreement were not upheld by Defendant.

The Court granted Defendant’s motion to dismiss, finding that there was no binding obligation in the Pre-Negotiation Agreement to negotiate.  Further, the Court rejected Plaintiff’s assertion that Defendant violated the implied covenant of good faith and fair dealing.  This is so because even if there was an obligation to negotiate, “such an obligation would be so inherently vague as to be unenforceable.”  Citing Maryland authority, the “overwhelming weight of authority holds that courts will not enforce an agreement to negotiate a contract.”

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

Effective August 1, 2017, an amendment to Court of Chancery Rule 171(f) will go effective, setting forth word limitations for non-dispositive motions, and letters to the Court.  Under the amendment, motions filed with the Court–excluding those filed under Rules 12, 23, 23.1, 56 and 65, along with pre-trial and post-trial briefs–are subject to a more restrictive word count.  Motions impacted by this rule are to be filed without an opening brief, and may not exceed 3,000 words.  Oppositions likewise may not exceed 3,000 words, and replies shall not exceed 2,000 words.  The word limitation for motions filed under Rules 12, 23, 23.1, 56 and 65, along with pre- and post-trial briefs, remain the same (14,000 for opening and answering briefs, 8,000 for reply briefs).

In addition, the amendment changes the manner in which an attorney certifies compliance with the word count.  The word count must be stated in the signature block of the filed document governed by Rule 171(f), as opposed to filing a separate certification.

Finally, letters to the Court may not exceed 1,000 words. The amendment states that such letters should be used for “logistical and scheduling issues” and not for substantive relief.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.