Court Of Chancery Orders New Arbitrator

Lynn v. Ullrich, C.A. 7098-ML-VCN (September 12, 2013)

This decision ordered the parties to pick a new arbitrator when the prior arbitrator concluded he was biased.  Why anyone would argue this seems odd.

When A Request For An Injunction Does Not Preempt Arbitration

Shareholder Representative Services LLC v. ExlService Holdings Inc., C.A. 8367-VCG (August 27, 2013)

Arbitration clauses often have an exemption for suits for injunctive relief. Yet just asking for an injunction in the complaint may not avoid the need to arbitrate, as this decision holds. Apparently, when the injunction is just to enforce the terms of the contract and not to prevent irreparable harm, the claim must still go to arbitration.

Court Of Chancery Explains Injunction Out Clause In Arbitration Agreement

Medicis Pharmaceutical Corporation v. Anacor Pharmaceuticals Inc., C.A. 8095-VCP (August 12, 2013)

Agreements to arbitrate disputes often have an "out clause" that permits the parties to seek judicial relief by way of an injunction.  The scope of such a clause is the focus of this opinion that explains when a party may still file suit even after the other party has demanded arbitration.

Supreme Court Decides Who Decides

Viacom International Inc. v. Winshall, C.A. 513, 2012 (Del.  July 16, 2013)

When there is an argument over whether part of a dispute is subject to the Court or the arbitrator's judgment, there has been considerable confusion.  The classic formulation of the test is:

Issues of substantive arbitrability are gateway questions relating to the scope of an arbitration provision and its applicability to a given dispute, and are presumptively decided by the court. Procedural arbitrability issues concern whether the parties have complied with the terms of an arbitration provision, and are presumptively handled by arbitrators.  These issues include whether prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate have been met, as well as allegations of waiver, delay, or a like defense to arbitrability.

In this Supreme Court decision, the Court adopts this test at first and then seems to back away from it for a new test of its own.  The new test seems to be whether the dispute is simply part of the overall controversy.  If it is, then the arbitrator decides it.  Now that may be a misguided view of the holding, but it is the best that I can do.

Court Of Chancery Explains Limits Of Review Of Appraiser Decision

Senior Housing Capital LLC v. SHP Senior Housing Fund LLC, C.A. 4586-CS (May 13, 2013)

This decision explains the limits on any substantive review of an appraisal determination the Court will undertake when the parties' agreement limits that review.  it is an excellent overview of the way in which parties may decide how much judicial review they want in such cases.

Court of Chancery Explains Willie Gary

Li v. Standard Fiber LLC, C.A. 8191-VCN (March 28, 2013)

Who decides if a dispute is subject to arbitration? The Delaware Supreme Court decision in the Willie Gary case sets the way to resolve this question.  However, those rules are often hard to interpret. This decision explains Willie Gary in a useful way.

Master In Chancery Upholds Arbitration Award

Garda USA Inc. v. SPX Corporation, C.A. 7115-ML (February 7, 2013)

When may an arbitrator's award be vacated?  Of course, that is determined by the applicable  arbitration statute.  However, that begs the question as the statutes are not easy to apply in this area. This decision explains when the arbitrator award may be vacated for a manifest violation of the law.

Court Of Chancery Upholds Duty To Arbitrate Of Alter Ego

Legend National Gas II Holdings LP v. Hargis, C.A. 7213-VCP (September 28, 2012)

When a non-party to a contract is still bound by its arbitration provision is surprisingly often litigated. This decision reviews the past law and reiterates that a non-party may need to arbitrate when it is the alter ego of the a party that agreed to the arbitration clause, such as a successor partnership.

Court of Chancery Discusses The Role of a Stockholder Representative In Arbitration Proceedings

Pryor v. IAC/Interactivecorp, C.A. 6884-CS (June 7, 2012)

What is the role of a "stockholder representative" in an arbitration proceeding?  When there are many parties to an agreement, it is common for the parties on one side (such as the selling stockholders entitled to an earn out payment) to chose one of their bretheren to act for them all.  While most assume that the representative chosen has the right to call the shots in the arbitration, her role may be much more.  This decision explains why that may be important.  It holds that notice to the representative that begins the period in which an appeal may be filed also counts as notice to all the parties the chosen one represented.  Hence, if she does not file a timely appeal,  the others may not do so later.  Moreover, the decision suggests that only the representative may argue the merits of an appeal.

Court of Chancery Arbitration Likely to Become More Prevalent

 Authored by Lewis H. Lazarus
This article was originally published in the Delaware Business Court Insider | September 28, 2011

In 2009, Delaware's General Assembly passed and Gov. Jack Markell signed legislation enabling arbitration in the Court of Chancery.  In 2010, the Court of Chancery adopted rules governing arbitration. As the statutes — 10 Del. C. §§ 349 and 351 — and rules — Court of Chancery Rules 96-98 (Arbitration Rules) — are new and arbitration requires mutual agreement, arbitration may become a more prevalent means of resolving disputes as deal lawyers increasingly require Court of Chancery arbitration for disputes arising out of merger and other agreements.

Reportedly, the current dispute between Skyworks Solutions and Advanced Analogic Technologies contains a dispute resolution clause mandating arbitration in the Court of Chancery. It is thus appropriate to review why Chancery Court arbitration is likely to become an increasingly preferred method of dispute resolution.

First, the arbitration rules permit resolution of disputes by decision-makers with the knowledge and experience of the chancellor and vice-chancellors. To be eligible for Court of Chancery arbitration, the dispute must involve at least one party that is a Delaware entity; both parties must agree to arbitration; and if the dispute is solely about monetary damages, the amount in controversy must exceed $1 million. The procedure is not available for consumer disputes. Previously, disputes solely for monetary damages were not amenable to subject matter jurisdiction in the Court of Chancery.

Second, the members of the Court of Chancery are used to resolving matters on an expedited basis. The arbitration rules contemplate that generally an arbitration hearing will be scheduled within 90 days of the filing of the petition. However, they also allow for modification of the schedule with the consent of the parties and approval of the arbitrator. The arbitration rules thus permit flexibility for the parties and arbitrator to structure the dispute resolution on a schedule that makes sense.

Third, Chancery Court arbitration proceedings are confidential. The filing of a petition for arbitration is not included on the court's docket system. The petition and all supporting documents are by rule considered confidential and not of the public record, unless there is an appeal.

Fourth, Section 351 of Title 10 expressly authorizes parties to stipulate that an arbitration award shall be final, binding and non-appealable. As the synopsis to the legislation explains, "In many matters parties desire an answer and their dispute is narrow enough that even if they cannot settle, they are willing to agree in advance to live with the outcome rendered ... ." The new statutes permit that voluntary option.

Fifth, any appeals go to the Delaware Supreme Court, a decision-making body equally acclaimed for its knowledge and experience in the prompt resolution of significant business disputes.

Sixth, for parties in disputes with foreign entities, the new statutes and arbitration rules may provide greater comfort that the arbitration award will be enforceable against a foreign entity on its home turf under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Finally, the price is right compared to private arbitration. The filing fee is $12,000, to be equally divided by the parties. For each day or partial day that the vice chancellor or master engages in arbitration after the first day of arbitration, there is a $6,000 fee, also to be equally divided by the parties.

Efficiency, confidentiality, first-rate decision-makers experienced in resolving complex business disputes — for these reasons deal lawyers should consider the benefits of Chancery Court arbitration. And as they counsel their clients to specify Chancery Court arbitration in their agreements, we can expect that it will be an increasingly utilized tool for dispute resolution.

Court Of Chancery Determines When Discovery Permitted To Vacate Award

Chartis Specialty Insurance Company v. LaSalle Bank,  C.A. 6103-VCN (July 29, 2011)

This decision discusses when a party may obtain discovery in an action seeking to vacate an arbitration award.  The short answer is "not very often."  However, discovery was granted in this case alleging arbitrator bias.

Court Of Chancery Vacated Arbitration Award That Violates Law

Donegal Mutual Ins. Co. v. Progressive Northern Ins. Co., C.A. 5049-CC (January 11, 2011)

Arbitration between insurance companies is different.  To begin with, the arbitrators are expected more than most to follow the statutory scheme they are supposed to enforce.  Here, when the arbitrator made a clear mistake of law, the Court vacated the award.  Whether it would do so in a less clear cut case involving other sorts of arbitration claims remains to be seen.

Court Of Chancery Explains When A Non Party May Be Made To Arbitrate

Kuroda v. SPJS Holdings, L.L.C. , C.A. 4030-CC (November 30, 2010)

Of course the parties to an agreement may be compelled to arbitrate any dispute if that is what their agreement provides.  But when may a non-party to an agreement with an arbitration clause also be made to arbitrate a dispute with one of the parties?   The short answer is not too often.

This decision carefully explains the exceptions to the rule that only the parties to the arbitration agreement may be made to go to arbitration. The exceptions are: (1) incorporation by reference, (2) assumption, (3) agency, (4) veil piercing/alter ego, (5) third-party beneficiary and (6) equitable estoppel.

Court Of Chancery Holds Post Merger Dispute Resolution Procedure Is An Arbirtation

SRG Global Inc. v. Robert Family Holdings Inc., C.A. 5314-VCP (November 30, 2010)

Merger agreements or asset purchase agreements frequently include provisions for resolving post merger disputes.  This is particularly true when there is an escrow to cover contingent claims. In this decision, the Court holds that an agreement to submit such a dispute to an "expert " to resolve is the same thing as agreeing to arbitrate the dispute.  As a result, all the law governing what the arbitrator is to decide applies, including what facts he may consider in rendering his decision.

Court Of Chancery Explains Equitable Remedy Carve Out

GTSI Corp. v. Eyak Technology LLC, C.A. 5815-VCL (November 15, 2010)

There seems to be one constant issue in decisions dealing with motions to stay court proceedings in favor of arbitration -- who decides if the claims are subject to arbitration, the court or the arbitrators.  Under Delaware law, absent an express provision directly dealing with that question, a reference in the parties' agreement to arbitration rules that provided the arbitrator decides that issue will be upheld.

Sometime litigants try to get around that result by pointing to provisions in their agreement that leave certain disputes to the courts to decide and then argue the claims in dispute fall within that exception.  One such frequent carve out is the Equitable Remedy Provision.  That sort of provision permits a court to grant an injunction to avoid harm while the dispute is in arbitration.  This decision holds that carve out does not swallow the whole, at least in this case.  As a result, the court granted the stay.

Court Of Chancery Denies Arbitration Of Post Merger Dispute

Avnet Inc. v H.I.G. Source, Inc., C.A. 5266-VCP (September 29, 2010)

In this definitive review of when post merger arbitration is required, the Court held that it would determine the issue of arbitrability, not the arbitrator. While affected by the gross delay in seeking arbitration, the decision is noteworthy more for its careful analysis of the case law dealing with such merger agreements and the types of disputes they submit to arbitration.

Court Of Chancery Declines To Interfere In Arbitration

SOC-SMG, Inc. v. Day & Zimmermann, Inc. , C.A. 5375-VCS (September 15, 2010)

It should come as no surprise that the Court of Chancery will not interfere in an on-going arbitration proceeding by issuing discovery orders or disqualifying counsel.

Court Of Chancery Upholds Arbitration Of Statutory Remedy

Aris Multi-Strategy Fund L.P v. Southridge Partners LP, C.A. 5422-CC (May 21, 2010)

It is sometimes believed that remedies such as the right to inspect a company's records are not subject to an arbitration clause.  Wrong.  This decisions upholds arbitration of such claims in a variety of contexts.

Court Of Chancery Discusses Scope Of Arbitration

RBC Capital Markets Corp. v. Thomas Weisel Partners LLC, C.A. 4709-VCN (February 25, 2010)

Many decisions discuss when arbitration is required by an agreement.  This one deals with the rarer problem of what claims may be presented to arbitrators in a matter that the parties concede must be arbitrated.  The Court will usually leave that decision to the arbitrators in the first instance, but will at least consider if a claim is so far outside  the scope of the arbitration clause that its presentation should be barred.

Court Of Chancery Bars Late Statutory Contribution Claim

Global Link Logistics Inc. v. Olympus Growth Fund III, L.P., C.A. 4444-VCP (January 29, 2010)

 If you are a co-defendant in an arbitration case with a claim for contribution, you had better assert it in the arbitration proceedings. Otherwise, you may lose the right under the Joint Tortfeasors Act to make your co-defendant pay more than his pro rata share. This result follows under this decision because the Act requires the cross claim be asserted before "judgment" is rendered and the arbitration award counts as a judgment for that purpose.

Court of Chancery Imposes Severe Sanctions for Refusal to Arbitrate

Aveta Inc. v. Bengoa, C.A. 3598-VCL (December 24, 2009)

After the entry of an order compelling arbitration, the defendant delayed the arbitration and even sought to re-litigate the underlying suit compelling arbitration. The Court was not impressed and found the defendant in contempt, imposing severe sanctions.

Court of Chancery Declines to Upset Unusual Arbitration Ruling

Zurich America Insurance Company v. St. Paul Surplus Lines Inc., C.A. 4095-VCP (December 10, 2009, revised April 14, 2010)

In this case, the Court of Chancery declined to upset an arbitrator's decision and explained the limits on the Court's review of arbitration awards. Here, that limit applied even when the arbitrator had declined to rule based on his decision that he lacked jurisdiction.

Court of Chancery Holds Arbitrator Decides Limitations Defense

Lefkowitz v. HWF Holdings LLC, C.A. 4381-VCP (November 11, 2009)

The Delaware Arbitration Act has a unique provision that permits the Court of Chancery to enjoin an arbitration when the claim asserted is barred by a statute of limitations. However, to get into Court, the arbitration agreement must be governed by Delaware's Arbitration Act. If it is not, then this unique remedy is not available, and it is up to the arbitrator to decide if the claim is barred on limitations grounds.

This decision also contains an excellent discussion of when the Delaware Arbitration Act applies and, when it does, to what extent its provisions control.

Court of Chancery Explains Limits of Review of Arbitration Award

World-Win Marketing Inc. v. Ganley Management Co., C.A. 3905-CC (August 18, 2009).

The extent to which a court will review an arbitration award is a tricky question. The court may do so when the arbitrator exceeds his authority. But, what does that really mean? This decision explains this vague standard of review.

In general, if the decision seems grounded in the facts presented to the arbitrator and is within the subjects that she may deal with under the parties agreement to arbitrate, the decision will be upheld even if the court would have decided the matter differently.

Superior Court Holds Chancery Has Exclusive Jurisdiction To Appoint Arbitrator

Firemen's Insurance Co. v. Birch Pointe Condo. Assoc., Inc., C.A. No. 08C-04-081 JAP (Del. Super. Dec. 17, 2008).

In this decision, the Superior Court ruled sua sponte that it lacked subject matter jurisdiction over an action seeking declaratory relief and requesting the appointment of an arbitrator. The court held that under 10 Del. C. § 5704 the Court of Chancery has exclusive jurisdiction to appoint an arbitrator when the parties’ agreed upon method of appointment fails for any reason.   

Court of Chancery Upholds Post Merger Arbitration

Aveta Inc. v. Bengoa, C.A. 3598-VCL (Del. Ch. Dec. 11, 2008)

 

It is now common to provide for post merger payouts and the arbitration of any disputes about those payouts. This case illustrates the problem of what happens when one party feels it does not have enough information to go into arbitration where discovery may be limited. The Court held that when the obligation to arbitrate is not conditioned on the receipt of information, arbitration will be ordered and the parties will be left to deal with the arbitrators over information exchange issues.

 

The answer is to provide clearly for adequate information exchange rights in the arbitration.

 

 

Court of Chancery Set Rules to Uphold Arbitration Awards

TD Ameritrade, Inc. v. McLaughlin, C.A. 3603-CC (July 24, 2008)

This decision set out in detail when the Court of Chancery may set aside an arbirtation award. Not surprisingly, the answer is not very often. The only part of the award set aside was due to an obvious math error. The Court upheld the rest of the award even against an attack that the award was manifestly contrary to law.

The analysis of how to determine if the award is contrary to law is particularly instructive.

Court of Chancery Interprets Limitations Law on Arbitration Demands

Personnel Decisions Inc. v. Business Planning Systems Inc., C.A. 3213-VCS (Del. Ch. May 5, 2008)

The Delaware Arbitration Act has a statute of limitations that is not found in some other arbitration acts. Here the court held that a demand for arbitration was barred by that limitation and as a result, arbitration would be enjoined. The decision is particularly important in setting out when the limitations period begins to expire.

Court of Chancery Explains Scope of Arbitration Agreement

Brown v. T-Ink, LLC ,C.A. No. 3190-VCP (December 18, 2007).

Delaware courts have recently issued several decisions dealing with the scope of an agreement to arbitrate. This is yet another. The opinion is interesting for its explaination of the Delaware approach to determining whether it is for the arbitrator or the court to decide if an issue is subject to arbitration. Generally, that issue will be decided by the court unless there is a clear indication in the agreement that the arbitrator is to decide such questions. As this decision points out, references to the AAA rules and language including "all controversies" arising out of the parties' relationship indicate that an arbitrator should decide such issues.

Court of Chancery Upholds Very Broad Arbitration Clause

Ornero v. Country Grove Investment Group LLC, C.A. No. 2245-VCS (October 12, 2007).

In this case the contract required arbitration of any dispute between the parties arising from "any other cause", not just from a cause related to their contract. The Court upheld the claim that even a suit on a dispute unrelated to the contract containing the arbitration clause was within this broad arbitration agreement.

Court of Chancery Holds Arbitrator Decides If Claim Is Arbitrable

Baypo Limited Partnership v. Technology JV, C.A. No. 2693-VCL (October 10, 2007).

Many arbitration clauses contain provisions that permit a court to grant injunctive relief.  These are used because of a fear that the arbitration panel may not have that power and that sort of relief may be needed, such as to enforce a noncompetition clause. Notwithstanding the presence of such clause, this decision upholds the usual Delaware rule that it is up to the arbitrators to decide if an issue is subject to the arbitration provision. Of course, that does not mean they decide if a court may hear an application for an injunction.

Court of Chancery Stays Suit In Favor of Arbitration

Friendly Ghost Enterprises LLC v. McWilliams, C.A. No. 2935-VCN (July 27, 2007). Sometimes fiduciary duty claims are mixed in with claims that are subject to an arbitration provision. The issue then is whether the nonarbitration claims for breach of fiduciary duty are to be stayed in favor of arbitrating the other claims first. Here, the Court granted a stay because the resolution of the fiduciary duty claims and the claims for dissolution and a receiver would be illuminated by the resolution of the claims to be arbitrated.

Court of Chancery Defers to Arbitration Panel

Wilmington Paper Corp. v. ANDA Management LLC, C.A. No. 2568-VCN (May 14, 2007).

When a dispute is subject to an arbitration agreement, it is often the case that immediate relief is needed to protect the parties in the period before the arbitration is decided. While sometimes an arbitration panel may have the power to issue orders that provide that relief, that is not always the case. Here, the Court of Chancery issued a status quo order that limited  management powers while an arbitration panel was being formed and was to review the disputes.

Status quo orders are thus a way to deal with problems that occur before the arbitrators can decide what to do. Note, however, that the Court limited the status quo order to the period before the arbitrators could act.

Court of Chancery Explains Third Party Obligation To Arbitrate

NAMA Holdings, LLC v. Related World Market Center LLC, C.A. No. 2755 (Del. Ch. April 27, 2007).

The rights and obligations of a third party beneficiary to a contract are not clear. This decision illustrates that uncertainty and resolves the issues of when a third party beneficiary may be compelled to arbitrate a dispute.

The Court held that a third party beneficiary may be compelled to arbitrate a dispute when the agreement provides that the right the third party seeks to enforce is subject to the arbitration provisions of the agreement. In addition, the theory of equitable estoppel will compel a third party to arbitrate if it has received a direct benefit from the contracts' performance such that it would be inequitable to refuse to comply with the general intent of the agreement that disputes are to be arbitrated.

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Superior Court Grants Motion to Dismiss Claims Raised in Arbitration, Denies Motion to Dismiss Separate Breach of Contract

Mehiel v. Solo Cup Company, No. 06C-01-169-JEB, 2007 WL 901637 (Del. Super. Ct. Mar. 26, 2007).

This case arose from defendant’s acquisition of SF Holdings and relates to disagreements over the amount of SF Holdings’ working capital adjustments and, by extension, its purchase price. The plaintiff, chairman and CEO of SF Holdings, brought this action in his capacity as the shareholders’ representative for fraud in the inducement, breach of contract, and unjust enrichment. 

Shortly after the parties entered into the merger agreement—and days before closing—they found themselves deadlocked and unable to reach an agreement on the working capital adjustments. To resolve their differences, the parties appointed a neutral auditor as provided in the merger agreement, which further stated that the auditor’s decision would be final, binding, and conclusive, making no mention of appeal or reconsideration. The auditor resolved several issues in favor of the purchasing company (defendant), and plaintiffs’ action followed.

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Court of Chancery Gives Arbitration Award Finality

Country Life Homes Inc. v. Shaffer, C.A. No. 2288-S (Del. Ch. January 31, 2007).

It is sometimes asked if an arbitration award really has the finality of res judicata. This decision holds that the first arbitration award in a dispute is a final award that bars any later arbitration award by another tribunal.  The Court did permit the party opposing the first award to contest the jurisdiction of that arbitrator. When that challenge failed, so did that party's case.

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Court of Chancery Upholds Arbitration For Tobacco Case

State of Delaware v. Philip Morris USA, Inc. C.A. No. 2088-N (December 12, 2006).

By this decision Delaware joins the vast majority of other states in ordering arbitration over the disputes arising out of the State's agreement with tobacco companies.

Federal Court Grants Renewal of Motion To Demonstrate Jurisdiction

Remote Solutions Co., Ltd. v. FGH Liquidating Corp., Civil Action No. 06-004-KAJ, 2006 WL 3498657 (D. Del. Dec. 5, 2006).

Plaintiff filed a Motion for Reconsideration and to Amend the Court’s earlier Memorandum Order in which it denied the plaintiff’s motion to vacate or modify an arbitration award for failing to demonstrate a proper basis for subject matter jurisdiction. The plaintiff now sought to have the Court amend its order so it could cure the jurisdictional defect. The Court granted the motion to the extent that the plaintiff could renew its prior motion to vacate or modify the arbitration award by demonstrating proper subject matter jurisdiction.

The Court also permitted the motion to relate back to the date of the original filing. It further permitted the defendant to move independently for confirmation of the arbitration award regardless of the course of action chosen by plaintiff.

Court of Chancery Finds Limit On Advancement Rights

Majkowski v. American Imaging Management Services LLC, C.A. No. 1797-N (Del. Ch. December 6, 2006).

The right to have attorneys fees paid in advance of the final result in litigation is illustrated by this recent decision. The Court held that an agreement to "hold harmless" does not give the right to advancement of legal fees. Instead, "hold harmless" language only confers the right to be indemnified at the end of the litigation.

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Federal Court Affirms Arbitration Award That Included Share Valuation By Agreement

Millennium Validation Services, Inc. v. Thompson, C.A. No. 02-1430 (GMS), 2006 WL 3159821 (D. Del. Nov. 3, 2006).

Plaintiff, a Delaware corporation, and defendant filed motions to vacate/modify and confirm the arbitration award respectively. The Court granted the defendant’s motion to confirm the award. Defendant Thompson and two others founded Millennium Validation Services, Inc. (“Millennium”) with equal shareholding. Due to some differences, the two other members sought to compel defendant Thompson to withdraw from Millennium, by triggering some clauses under their Shareholder Agreement (“Agreement”). Subsequently, plaintiff sought to buy-out the defendant’s shareholding, with its valuation computed under the Agreement. In the interim, the plaintiff discovered through its agents that defendant was allegedly violating the terms of his non compete provisions of the Agreement because he was employed by a competitor. Plaintiff therefore suspended its buy-out of his shares.

Plaintiff then filed suit for breach of contract and interference with prospective contractual relations and the defendant cross-claimed for breach of fiduciary duty. Thereafter, the parties stipulated to binding arbitration. The independent arbitrator denied the plaintiff’s claims for lost profits, breach of contract and tortious interference and ordered it to pay defendant a far greater amount representing the buy-out value of his shares and accumulated interest, in addition to a loan that the defendant had advanced the plaintiff company. The arbitrator declined to amend or modify the award and the above cross-motions ensued.

The Court held that the limited grounds on which the arbitration award could have been vacated were absent in the present matter. Here, the plaintiff alleged that the arbitrator had exceeded his powers by revaluing the shares of the defendant, a matter solely governed by the Agreement. This argument was dismissed because the parties had agreed to arbitration of the entire dispute – a term that included the valuation of the shares too. Similarly, the Court found that plaintiff’s non-compete violation and other claims failed to assert any grounds for vacating the arbitration award. Finally, the Court dismissed plaintiff’s argument that it was impermissible for the arbitrator to order a subsequent hearing to determine attorney fees and costs because there was no authoritative support for that contention.

Homebuyers' Claims Against Builder Dismissed Based on Arbitration Clause

Zeleny v. Thompson Homes At Centreville, Inc. C.A. No. 05-12-224 SCD (Del. Super. Ct. July 10, 2006).

Buyers of a newly constructed home sued the builder for breach of contract, breach of warranty, and negligence arising out of water leaks and other defects in their home. The court granted defendant's motion to dismiss on the ground that the parties' contract required the dispute to be submitted to binding arbitration.

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Court of Chancery Grants Motion for Summary Judgment in Favor of Arbitration of Dispute

Delta & Pine Land Co. v. Monsanto Co., C.A. No. 1970-N, 2006 WL 1510417 (Del. Ch. May 24, 2006).

Plaintiff moved for summary judgment on its claim for arbitration of a dispute with Defendant.

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Court of Chancery Grants Motion to Enforce Confidentiality Provisions of Rule 174

Delaware TCMP3 Partners LLP v. Centerpoint Corp., C.A. No. 170-N, 2006 WL 1388751 (Del. Ch. May 10, 2006).

Parties to a mediation agreement moved to enforce the confidentiality provisions of Court of Chancery Rule 174.

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Court of Chancery Finds Violation of GAAP Claim Subject to Arbitration Because Claim was Actually Breach of Warranty and Representation

OSI Systems, Inc. v. Instrumentarium Corp., C.A. No. 1374-N, 2006 WL 656993 (Del. Ch. Mar. 14, 2006).

In this case, plaintiff buyer and defendant seller in the sale of a business argued over the type of contractual arbitration that should be used to solve a disagreement over the form of arbitration each preferred. The Court of Chancery granted seller's motion on the pleadings because buyer's claims were for breaches of representations and warranties, which fell under the indemnity provisions of the contract and the form of arbitration set forth in those provisions must be used by buyer.

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Court Of Chancery Holds That Unlike Corporations, LLC Agreements Can Mandate Arbitration For Fiduciary Breach Claims

Douzinas, et al. v. American Bureau of Shipping, Inc., et al., C.A. No. 1496-N (Del. Ch. Jan. 24, 2006) (published at 888 A.2d 1146 (Del. Ch. 2006).

Minority shareholders brought a breach of fiduciary duty action against the managing member of the LLC. Additionally, they plead aiding and abetting conspiracy and unjust enrichment claims against defendants' affiliate entities. Relying on Delaware Supreme Court precedent, the defendants insist all claims require mandatory arbitration under the LLC agreement. The court agreed.

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Court Of Chancery Holds That Contractually Agreed Issues Of Substantive Arbitrability Are For Judicial Resolution

Willie Gary LLC. v. James & Jackson LLC., C.A. No. 1781, 2006 WL 75309 (Del. Ch. Jan. 10, 2006), aff'd, (Del. Mar. 14, 2006)(Berger, J.)

Plaintiff sought to enjoin defendant to remedy an alleged breach of the LLC Agreement and to specifically enforce the defendant's alleged promise to guarantee a debt of the LLC. Alternatively, plaintiff sought to dissolve the entity in which he owned 80% of stock because of an alleged decisional deadlock.

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Court Enforces Provision in Merger Agreement Permitting Arbitration of Disputed Representation-and-Warranty and Working-Capital Claims

Mehiel v. Solo Cup Co., C.A. No. 1596-N, 2005 WL 3074723 (Del. Ch. Nov. 3, 2005).

Following the closing on a merger, several disputes developed between the shareholder representative of an acquired company and the acquirer involving working-capital-adjustment issues and the accuracy of seller's representations and warranties. The merger agreement contained two separate arbitration provisions for working capital adjustment disputes and disputes regarding the parties' respective representations and warranties. The acquirer first attempted to submit its disputes with the shareholder representative to arbitration as working-capital claims. The arbitrator refused to consider those claims, however, based on the acquirer's failure to comply with certain procedural requirements. In response, the acquirer submitted the same claims to the separate arbitrator for representation-and-warranty claims. The shareholder representative subsequently filed a complaint asking the court to issue an injunction barring the second arbitrator from hearing the disputed claims.

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Court of Chancery Vacates Arbitration Panel's Award

Travelers Ins. Co. v. Nationwide Mut. Co., C.A. No. 20418, 2005 WL 2896713 (Del. Ch. Oct. 25, 2005).

Plaintiff, insurer of motorist, sued Defendant, insurer of tortfeasor, to enforce arbitration award. Defendant moved for summary judgment.

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Court of Chancery Enjoins Consummation Of Purchase Agreement Pending Arbitration

Flight Options Int'l, Inc. v. Flight Options, LLC, C.A. No. 1459-N, 2005 WL 2335353 (Del. Ch. Sept. 20, 2005).

Plaintiff sought preliminary injunction against consummation of Purchase Agreement pending arbitration of its substantive disputes with Defendant.

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Federal Court Enforces Foreign Arbitral Award Without Permitting Counterclaim

China Three Gorges Project Corp. v. Rotec Industries, Inc., No. Civ. A. 04-1510 JJF, 2005 WL 1813025 (D.Del. Aug. 2, 2005).

This action involves a Petition to Confirm a Foreign Arbitral Award filed by Petitioner China Three Gorges Project Corporation ("China Gorges") and respondent's Motion to Dismiss or in The Alternative, To Modify The Foreign Arbitral Award. The Court granted the petition to confirm the award and denied the respondent's motions.

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Superior Court Grants Defendant's Motion to Dismiss and Finds that Clause in Construction Contract Required Arbitration

Tekmen & Co. v. Southern Builders, Inc., C.A. No. 04C-03-007 RFS, 2005 WL 1249035 (Del. Super. Ct. May 25, 2005).

The defendant contracted to build a hotel on the plaintiff's property. Following completion of the structure, the defendant had to return on numerous occasions to repair leaks. Eventually, the plaintiff filed a complaint, arguing that it was entitled to compensatory and punitive damages for breach of contract, negligence, and breach of warranty. The defendant moved to dismiss, claiming that under the terms of the contract all disputes must first be submitted to the architect and any remaining claims must be heard in binding arbitration. The court granted the defendant's motion to dismiss.

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Court of Chancery Enforces Arbitration Clause of LLC Agreement Because Claims "Arose Under" the Agreement

CAPROC Manager, Inc. v. The Policemen's & Firemen's Retirement System of the City of Pontiac, 2005 WL 937613 (Del. Ch. April 18, 2005).

This case stemmed from a dispute between shareholders of the Delaware limited liability company, CAPROC LLC, which is governed by a Limited Liability Company Agreement. Defendants sought to remove CAPROC Manager as the Managing Shareholder of CAPROC and purport to have done so by a majority shareholder vote. In response to Defendants' actions, CAPROC Manager and CAPROC brought this suit for, among other things, entry of a status quo order and a declaration under 6 Del. C. - 18-110 that CAPROC Manager remain the Managing Shareholder of CAPROC. The court granted Defendants motion to dismiss in favor of arbitration because Plaintiffs' claims were subject to arbitration under the LLC Agreement.

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Court of Chancery Holds Limitation Act In 10 Del. C. 8111 And Not 8106 Applies For "Other [Work] Benefits"

Little Switzerland, Inc. v. Patrick J. Hopper, C.A. No. 590 (Del. Ch. Jan. 24, 2005)(published at 867 A.2d 955).

This case involved a request for an injunction filed by the employer-corporation seeking to stop an arbitration of a contractual claim by a plaintiff-employee. The employee sought significant payments under a Change in Control transaction that allegedly triggered a clause vesting the right to payment in the employee. The court held the claim was time-barred under 10 Del. C. §8111 and not 10 Del. C. §8106.

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