Topic: Equitable Estoppel

COURT BALKS AT ARTFUL PLEADING: COURT OF CHANCERY LACKED SUBJECT MATTER JURISDICTION TO HEAR ACTION FOR COLLECTION OF DEBT

By Scott E. Waxman and Max E. Kaplan

In Yu v. GSM Nation, LLC, C.A. No. 12293-VCMR (Del. Ch. July 7, 2017), the Court of Chancery dismissed the complaint for lack of subject matter jurisdiction.  Looking at the complaint holistically, the Court found plaintiff’s nominal pleading of equitable claims and relief insufficient to create jurisdiction where the alleged non-repayment of debt could be adequately remedied at law.

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Chancery Court Holds Merger Agreement’s Forum Selection Clause Trumps Stockholders Agreement

By Jamie Bruce and Mark Hammes

Chancery Court finds that three individual stockholders, as beneficiaries of a merger agreement, were equitably estopped from challenging the valid forum selection clause contained therein despite the fact that they did not personally sign the merger agreement.

In McWane, Inc. v. Lanier, C.A. No. 9488-VCP (Del. Ch. January 30, 2015) (Parsons, V.C.), the Chancery Court denied a motion to dismiss or stay from three individual defendant stockholders who argued that the Court lacked personal jurisdiction over them in a dispute regarding whether certain representations and warranties in a merger agreement were violated.  The court determined that a forum selection clause in a stockholders agreement they had personally signed was trumped by the forum selection clause in the merger agreement that they had not personally signed.  The court determined that not only was the clause in the stockholders agreement merely permissive compared to the merger agreement’s mandatory language, but also that the stockholders agreement fundamentally related to the merger agreement, and the defendants, as beneficiaries of the merger agreement, were equitably estopped from challenging the forum selection clause in the merger agreement.

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