Archive: June 4, 2019

CHANCERY COURT FINDS THAT FAILURE TO EXERCISE THE APPROPRIATE DEGREE OF DILIGENCE IN BRINGING CLAIMS CAN RESULT IN THEM BEING TIME BARRED AT THE MOTION TO DISMISS STAGE

By: David Lehman, Calvin Kennedy, and Sean Boyle

In Richard Forman v. CentrifyHealth Inc. et al., C.A. No. 2018-0287-JRS (Del. Ch. April 25, 2019), the Court of Chancery found that a stockholder’s failure to exercise the “degree of diligence” which fairness requires and delay in prosecuting claims was sufficient grounds to bar by laches a variety of claims; the standard used by the Court to determine the unreasonableness of the plaintiff’s delay was the analogous statute of limitations period for the respective claim. The Court also found that the plaintiff’s claims of fraud and unjust enrichment that were not barred sufficiently alleged specific misrepresentations, justifiable reliance on those misrepresentations, and the defendants’ gains resulting from the misrepresentations.

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