Topic: Forum Selection Clauses

CHANCERY COURT GRANTS MOTION FOR PRELIMINARY INJUNCTION REGARDING ENFORCEMENT OF FORUM SELECTION CLAUSE

By: Scott Waxman and Greyson Blue

In Village Green Holding, LLC, et al. v. Jonathan Holtzman, et al., Vice Chancellor Tamika Montgomery-Reeves granted plaintiff Village Green Holding, LLC’s (“Village Green”) motion for preliminary injunction regarding the enforcement of a forum selection clause and defendant Jonathan Holtzman’s (“Holtzman”) attempt to litigate a dispute in a separate forum. In rendering its decision, the Court illustrated the circumstances under which it will enjoin litigation that is pending in an alternate forum pursuant to a contract’s forum selection clause.

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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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