Chancery Confirms Operation of Savings Statute and Tortious Interference Framework in Dispute Involving Fiduciaries with Competing Creditor Interests

Morris James LLP

Skye Mineral Invs., LLC v. DXS Capital (U.S.) Ltd., C.A. No. 2018-0059-JRS (Del. Ch. July 28, 2021)

Delaware’s savings statute—10 Del. C. § 8118(a)—protects claims from being time-barred where they were timely brought in an incorrect forum. Here, the Court of Chancery applied the savings statute in the context of claims alleging that, in a course of conduct dating back to 2013, majority LLC members managed the company to protect their affiliate’s status as a senior secured creditor and drive the company into bankruptcy, all to eliminate the minority members’ interests.

Granting a motion to dismiss many of the claims based on laches, the Court rejected the minority members’ request that the Court toll the analogous statute of limitations on the basis of an overarching narrative of wrongdoing even if discrete claims were time-barred. The Court found that the savings statute preserved one minority member’s tortious interference claim because that member timely had brought the parallel claim in an earlier bankruptcy proceeding. In declining to apply it to other members’ similar claims, the Court reasoned that the savings statute only applies when the parties in the later-filed action are identical unless a change in parties is nominal or the interests represented are identical.

The Court also considered what it indicated may be a novel issue in Delaware case law: whether the requirement that tortious interference with contracts occur “without justification” may be satisfied in circumstances where a fiduciary to a debtor allegedly acted in bad faith to prefer the interests of a creditor in which the fiduciary has a financial interest. Answering the question in the affirmative, the Court reasoned the minority member sufficiently had pled that the defendant’s alleged abuse of his fiduciary position at the debtor constituted inappropriate means to protect the legitimate interests of the creditor, his affiliate. Accordingly, the Court denied the motion to dismiss in this respect. 

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