Justia Delaware Supreme Court Opinion Summaries

LKQ Corporation, a Delaware corporation in the auto salvage and recycled parts business, designated certain employees as "Key Persons" eligible for Restricted Stock Units (RSUs) through RSU Agreements. These agreements included non-competition clauses and provisions for forfeiture of RSUs and any stock issued if the employee competed with LKQ within nine months post-departure. Robert Rutledge, a plant manager at LKQ, signed these agreements and received stock under them. In April 2021, Rutledge resigned and joined a competitor shortly after.LKQ sued Rutledge in Illinois federal court for breach of contract and unjust enrichment, seeking to enjoin him from working for a competitor and to recover proceeds from the sale of LKQ stock. The district court dismissed the unjust enrichment claim and granted summary judgment for Rutledge on the contract claims, holding that the non-competition provisions were unreasonable restraints of trade under Illinois law and unenforceable under Delaware law, based on the Court of Chancery's decision in Ainslie v. Cantor Fitzgerald, L.P.The United States Court of Appeals for the Seventh Circuit affirmed the district court's dismissal of the unjust enrichment claim and the summary judgment ruling on the Restrictive Covenant Agreements. However, it was uncertain about the enforceability of the RSU Agreements' forfeiture-for-competition provisions under Delaware law, especially after the Delaware Supreme Court reversed the Court of Chancery's decision in Cantor Fitzgerald. The Seventh Circuit certified two questions to the Delaware Supreme Court regarding the applicability of Cantor Fitzgerald outside the limited partnership context.The Delaware Supreme Court held that the principles from Cantor Fitzgerald, which endorse the employee choice doctrine and prioritize freedom of contract, apply beyond the limited partnership context, including to RSU agreements. The court emphasized that forfeiture-for-competition provisions do not restrict competition or an employee's ability to work and should be treated as enforceable terms subject to ordinary breach of contract defenses. View "LKQ Corp. v. Rutledge" on Justia Law

In the early morning of June 22, 2022, Luis Coello called 911 after a vehicle crash. When officers arrived, they found Coello in pain and lying on the ground. Officer Miller asked Coello to sit down for medical reasons and requested his license as part of the accident investigation. Coello, still in pain, began to walk away, prompting Miller to ask him to stay. Officers Braun and Strickland arrived and questioned Coello, who indicated he only spoke Spanish. Coello admitted to driving the vehicle involved in the crash. He was not arrested at the scene but was later indicted on charges of Vehicular Homicide, Vehicular Assault, and Unreasonable Speed.The Superior Court of Delaware denied Coello's motion to suppress his statements made at the crash scene, ruling that he was not in custody for Miranda purposes and thus not entitled to Miranda warnings. The court found that the questioning was part of a routine, on-scene investigation and that Coello's statements were voluntary. Coello was subsequently convicted of all charges.On appeal, Coello argued that his statements should have been suppressed as they were obtained in violation of the Fifth Amendment and the Delaware Constitution. The Supreme Court of Delaware reviewed the case and held that Coello was not in Miranda custody during the on-scene questioning. The court emphasized that the questioning was part of a routine investigation and that Coello was not physically restrained or arrested at the scene. Therefore, the court affirmed the Superior Court's decision to deny the motion to suppress and upheld Coello's conviction. View "Coello v. State" on Justia Law

The case involves Sunder Energy, LLC (Sunder), a solar sales dealer, and its former employee, Tyler Jackson, along with several other defendants. Sunder sought to enforce restrictive covenants against Jackson, who had joined a competitor, Solar Pros LLC, and allegedly recruited Sunder employees to the new company. The restrictive covenants were part of Sunder's operating agreement, which Jackson signed without negotiation or full understanding of its terms.The Court of Chancery of the State of Delaware denied Sunder's motion for a preliminary injunction to enforce the restrictive covenants. The court found the covenants unenforceable for two reasons: they originated from an egregious breach of fiduciary duty by Sunder's principals, and they were facially unreasonable. The court also declined to "blue pencil" the covenants to make them reasonable, citing the overbroad and oppressive nature of the restrictions. Additionally, the court ruled that Utah law governed Sunder's tortious interference claim against Jackson's new employers, which effectively dismissed that claim under Utah law.The Supreme Court of the State of Delaware reviewed the case and affirmed the Court of Chancery's decision in part and reversed it in part. The Supreme Court agreed that the Court of Chancery did not abuse its discretion in refusing to blue pencil the restrictive covenants, given the lack of negotiation, minimal consideration, and the overbroad nature of the covenants. The Supreme Court also upheld the application of Utah law to the tortious interference claim. However, the Supreme Court reversed the Court of Chancery's ruling that the operating agreement was unenforceable as a matter of law, stating that such a determination exceeded the scope of the preliminary injunction stage and should await a complete factual record. View "Sunder Energy, LLC v. Jackson" on Justia Law

The case involves an ex-wife, Stephanie P. Shilling, attempting to enforce an agreement with her ex-husband, Ebon T. Shilling, regarding the sale of her interest in a property acquired during their marriage. The ex-husband offered to purchase the ex-wife's interest via email, and she accepted the offer. However, the Family Court found that the email exchanges did not result in an enforceable contract because the parties did not adequately manifest their intent to be bound and the exchanges did not contain all material contractual terms.The Family Court of the State of Delaware previously reviewed the case. The court found that there was no enforceable contract between the parties because the email exchanges lacked a meeting of the minds and did not include all material terms. Additionally, the court concluded that signing a formal written agreement was a condition precedent to the contract, and even if there was a contract, the ex-wife acquiesced in the ex-husband's repudiation by continuing to negotiate.The Supreme Court of the State of Delaware reviewed the case and disagreed with the Family Court's findings. The Supreme Court found that the email exchanges did form an enforceable contract as they contained a clear offer and acceptance, and the parties intended to be bound by the terms discussed in the emails. The court also determined that the signing of a formal written agreement was not a condition precedent to the contract. Furthermore, the Supreme Court found that the ex-wife did not acquiesce in the ex-husband's repudiation. Consequently, the Supreme Court reversed the Family Court's judgment and remanded the matter for further proceedings to determine appropriate relief in light of the enforceable contract. View "Shilling v. Shilling" on Justia Law

In this case, the defendant was convicted of first-degree murder, possession of a firearm during the commission of a felony, and possession of a firearm by a person prohibited. The key facts involve a shooting incident in Wilmington, Delaware, where the victim, Lionel Benson, was shot and later died from complications related to his injuries. The police investigation identified the defendant as the shooter based on statements from witnesses who later recanted their testimonies at trial.The Superior Court of Delaware admitted prison communications between the defendant and another inmate, which were used to show a conspiracy to dissuade witnesses from testifying. The court also admitted redacted statements from a key witness, which the defendant argued created a false impression and hampered his defense. The jury found the defendant guilty on all charges, and he was sentenced to life imprisonment plus additional years for the firearm charges.The Supreme Court of Delaware reviewed the case and affirmed the Superior Court's decisions. The court held that the prison communications were admissible under the co-conspirator exclusion from hearsay and as evidence of the defendant's identity and intent. The court also found that the redactions to the witness's statements did not violate the defendant's due process rights or constitute plain error. Additionally, the court upheld the reasonable doubt jury instruction, finding it consistent with constitutional requirements and previous case law.The Supreme Court of Delaware concluded that the Superior Court did not abuse its discretion in its evidentiary rulings and that the defendant's convictions were supported by the evidence presented at trial. The court affirmed the defendant's convictions and sentences. View "Burrell v. State" on Justia Law

Lisa Davis and her son, Brandon Zoladkiewicz, were involved in a car accident with an uninsured drunk driver, resulting in Davis's death and Brandon's serious injuries. Davis and her husband, Mark Ginsberg, had separate but nearly identical insurance policies from the same carrier, each with uninsured motorist coverage of $100,000 per person and $300,000 per accident. Ginsberg, individually and as executor of Davis's estate, and Ron Zoladkiewicz, as guardian ad litem for Brandon, sought coverage from both policies. The insurance carrier agreed to pay the coverage limit for one policy but refused to combine or stack the two policies.The Superior Court of Delaware dismissed the plaintiffs' complaint, agreeing with the insurance carrier that the Delaware Insurance Code limited coverage to one policy when the policies were issued by the same insurer to insureds in the same household. The court found that the statute allowed anti-stacking provisions and that the policies' provisions were not ambiguous enough to permit stacking.The Supreme Court of Delaware reversed the Superior Court's decision. The court held that the Delaware Insurance Code does not prohibit stacking of underinsured/uninsured motorist coverage policies issued by the same carrier to insureds in the same household. Instead, the Code requires that the court limit coverage to the highest limit of liability set by either insurance policy. The court found that the policies were ambiguous because they contained conflicting provisions regarding stacking. Interpreting the ambiguity in favor of the insureds, the court allowed stacking of the policies. Additionally, the court determined that the releases signed by Ginsberg and Brandon Zoladkiewicz did not preclude recovery under the Ginsberg Policy. The case was remanded to the Superior Court to determine the amount recoverable under the Ginsberg Policy. View "Ginsberg v. Harleysville Worcester Insurance Company" on Justia Law

GMG Insurance Agency filed a legal malpractice claim against Margolis Edelstein, alleging professional negligence in Margolis's representation of GMG in a non-compete action brought by Lyons Insurance Agency in the Court of Chancery. GMG claimed that Margolis's inadequate handling of discovery and failure to develop a proper factual record led to GMG's unfavorable position in the litigation. GMG eventually settled the case for $1.2 million after a key employee, Howard Wilson, recanted his prior testimony in an affidavit that was detrimental to GMG's defense.The Superior Court of Delaware granted summary judgment in favor of Margolis Edelstein, finding that Margolis's representation did not fall below the applicable standard of care. The court also concluded that Wilson's affidavit was a superseding cause that broke the causal chain linking Margolis's alleged negligence to GMG's claimed damages. GMG appealed this decision.The Delaware Supreme Court reviewed the case and found that the Superior Court erred in its judgment. The Supreme Court held that there were material disputed facts regarding whether Margolis deviated from the requisite standard of care. The court also found that the Superior Court failed to address GMG's contention that, but for Margolis's alleged negligence, GMG would have prevailed on all claims in the Court of Chancery litigation. Additionally, the Supreme Court concluded that the Superior Court erred in determining that Wilson's affidavit was a superseding cause as a matter of law.The Delaware Supreme Court reversed the Superior Court's judgment and remanded the case for further proceedings, emphasizing that the issues of negligence and causation should be resolved by a jury. View "GMG Insurance Agency v. Edelstein" on Justia Law

The case involves Rakiim Strickland, who was captured on surveillance video in possession of an assault weapon and discharging it in the direction of another person. Strickland, a convicted felon prohibited from possessing a firearm, was charged with possession of a firearm and ammunition by a person prohibited. At trial, the State presented video evidence showing Strickland with the weapon, which the jury viewed without objection from Strickland. Strickland was convicted and sentenced to 35 years in prison.Strickland appealed, arguing that the trial judge should have instructed the jury, sua sponte, to consider the video evidence only for identifying the person in possession of the firearm, not for any other improper purposes. He also contended that the trial court abused its discretion by allowing the prosecution to introduce evidence of two firearm-related convictions of a defense witness, which he claimed did not involve crimes of dishonesty.The Supreme Court of the State of Delaware reviewed the case. The court held that the video evidence was admissible as it directly proved the charged possessory offense and did not fall under the rule governing other, uncharged bad acts. The court found no plain error in the trial court’s failure to give a limiting instruction sua sponte. Regarding the defense witness's prior convictions, the court determined that any error in admitting the convictions was harmless, as the witness's credibility was already compromised by his relationship with Strickland and his other admissible conviction.The Supreme Court of the State of Delaware affirmed Strickland’s convictions. View "Strickland v. State" on Justia Law

The case involves a dispute over the control of Byju’s Alpha, Inc., a Delaware subsidiary of Think and Learn Private Ltd. (T&L), an Indian company. Byju’s Alpha entered into a $1.2 billion loan agreement with GLAS Trust Company LLC (GLAS) as the administrative and collateral agent. The agreement required Whitehat, another T&L subsidiary, to become a guarantor, contingent on approval from the Reserve Bank of India (RBI). However, changes in RBI regulations made it impossible for Whitehat to obtain the necessary approval.The Court of Chancery of Delaware held a trial and ruled that Timothy R. Pohl was the sole director and officer of Byju’s Alpha, following actions taken by GLAS to enforce its rights under the loan agreement. The court found that the failure of Whitehat to accede as a guarantor constituted a breach of the loan agreement, allowing GLAS to take control of Byju’s Alpha’s shares and appoint Pohl as the sole director and officer.The Delaware Supreme Court reviewed the case and affirmed the Court of Chancery’s decision. The Supreme Court held that the amendments to the loan agreement explicitly defined Whitehat’s failure to accede as a “Specified Default,” entitling GLAS to enforce its remedies. The court also rejected the impossibility defense, concluding that the changes in RBI regulations were foreseeable and could have been guarded against in the contract. The court found that the sophisticated parties involved should have anticipated the regulatory changes and included provisions to address such risks.In conclusion, the Delaware Supreme Court affirmed the lower court’s ruling that Pohl was the sole director and officer of Byju’s Alpha, and that GLAS was entitled to enforce its remedies under the loan agreement due to the breach caused by Whitehat’s failure to accede as a guarantor. View "Ravindran v. GLAS Trust Company LLC" on Justia Law

In this case, SARN SD3 LLC ("SD3") brought a breach of contract action against Czechoslovak Group A.S. ("CSG") regarding an option contract for shares in RETIA A.S. ("RETIA"). The contract stipulated that if CSG ceased to own a majority of RETIA before SD3's call option expired, CSG would pay SD3 a "Penalty Amount" based on an "Independent Valuation" of RETIA. CSG sold RETIA, triggering the Penalty Amount, but disputes arose over access to valuation information, leading SD3 to file suit.The Superior Court of Delaware granted SD3's entitlement to the Penalty Amount and calculated the Independent Valuation as the average of two valuations from Big Four accounting firms, despite CSG's objections. The court later determined that SD3's valuation was independently determined and in good faith. SD3 then filed a Rule 37 Motion for sanctions, alleging CSG withheld important valuation documents, but the court denied the motion, suggesting SD3 seek relief under Rule 60(b) for newly discovered evidence. SD3's subsequent Rule 60 Motion was also denied, as the court found the documents were not newly discovered and no exceptional circumstances warranted relief.The Delaware Supreme Court reviewed the case and affirmed the Superior Court's decisions. The Supreme Court held that the contract's provisions were clear and unambiguous, not requiring judicial inquiry into the valuation methodologies. The court also found no abuse of discretion in the Superior Court's handling of the Rule 37 and Rule 60 motions, as SD3 had the documents in question well before the summary judgment ruling and failed to demonstrate due diligence. Additionally, the Supreme Court upheld the Superior Court's decision to convert the judgment to U.S. dollars using the exchange rate as of the valuation date, rejecting SD3's arguments for a different conversion date. View "Czechoslovak Group A.S. v. SARN SD3 LLC" on Justia Law