Chancery Denies Motion to Dismiss, Awaits Development of Factual Record to Rule on Laches Defense

Morris James LLP

Kim v. Coupang, LLC, C.A. No. 2020-0772-JRS (Del. Ch. Aug. 19, 2021)

If a court can rule on the affirmative defense of laches on the face of a complaint, it may grant a motion to dismiss.  As this case illustrates, however, when a laches defense cannot be determined from the complaint, resolving that defense may have to await the development of the factual record.

Here, the plaintiff sought declaratory relief and specific performance in connection with claims that the defendant owed him profits units from a 2011 employment agreement.  The defendant moved to dismiss the plaintiff’s claims on the basis of laches.  The court first examined whether it could consider an email that the plaintiff had incorporated by reference in his complaint to identify when the claims accrued.  The court found that it could consider the email to confirm that it said what the complaint alleged it said, but not to make a finding of fact or to draw inferences that were contrary to inferences reasonably drawn from the allegations of the complaint itself.  Thus, comparing the allegations of the complaint to the content of the email, the court was unable to determine the accrual date of the plaintiff’s claims.  Next, the court examined whether the complaint clearly revealed a date on which the claims accrued.  In its review of the complaint, the court identified several possible accrual dates.  While it was possible the alleged breach had occurred sooner, it also was possible that the defendant had not repudiated its obligation to issue profits units until shortly before the complaint was filed, as the plaintiff alleged.  Accordingly, the court held that it was not able to adjudicate the laches defense in the motion to dismiss.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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