Opinion
Civil Action No. 6920-VCG
02-01-2012
Poppiti v. Conaty and Curran
Seth A. Niederman Austen C. Endersby Fox Rothschild LLP Stephani J. Ballard Law Offices of Stephani J. Ballard, LLC Stephen W. Spence Stephen A. Spence Phillips Goldman & Spence PA
SAM GLASSCOCK III
VICE CHANCELLOR
Seth A. Niederman
Austen C. Endersby
Fox Rothschild LLP
Stephani J. Ballard
Law Offices of Stephani J. Ballard, LLC
Stephen W. Spence
Stephen A. Spence
Phillips Goldman & Spence PA
Dear Counsel:
This letter shall constitute my decision on Defendant Thomas P. Conaty IV's Motion to Dismiss for Lack of Subject Matter Jurisdiction. Conaty & Curran LLC ("the Company") was a law firm formed on December 15, 2006, pursuant to the Delaware Limited Liability Company Act. Thomas P. Conaty IV and James P. Curran ("the Defendants") are both lawyers who were members of the Company. On September 13, 2010, the Defendants decided to part ways and dissolve the Company according to the terms of its Operating Agreement and 6 Del. C. § 18-801. The Plaintiff, Vincent J. Poppiti, was appointed the Liquidating Trustee of the Company.
Compl. ¶ 4; 6 Del. C. §§ 18-101 et. seq.
Compl. ¶ 5.
The Liquidating Trustee brought this action to resolve a dispute over potential company assets. His complaint states that the Company had previously filed suit against the Catholic Diocese of Wilmington, Inc. ("CDOW") on behalf of 10 individuals alleged to have been sexually abused by employees of the CDOW. That litigation was stayed on October 18, 2009, because the CDOW filed for Chapter 11 Bankruptcy; however, on July 28, 2011, the U.S. Bankruptcy Court "confirmed the CDOW's Chapter 11 amended Plan of Reorganization" which resolved and settled the lawsuit against the CDOW. The fee award from that suit was granted after the dissolution of the Company, and the matter before this Court concerns a disagreement between the parties about to whom the fee award belongs.
Id. at ¶ 14.
Id. at ¶¶ 16-17.
Id. at ¶¶ 20-33.
Defendant Conaty contends that this Court is without subject matter jurisdiction to decide that question, which he characterizes as one of contract. The Court of Chancery is a court of limited jurisdiction. This Court may only entertain matters which fall within its equitable jurisdiction or as otherwise provided by statute. Here, the underlying dispute requires the interpretation of the LLC's Operating Agreement and whether it dictates that the CDOW fee award is property of the Company or of Defendant Conaty as an individual. Jurisdiction over such disputes is provided by 6 Del C. § 18-111, which confers jurisdiction to this Court over matters involving the "interpretation and enforcement of limited liability company agreement[s]."
International Business Machines Corp. v. Comdisco, Inc., 602 A.2d 74, 78 (Del. Ch. 1991).
In re Arzuaga-Guevara, 794 A.2d 579, 584-87 (Del. 2001).
6 Del C. § 18-111; see also Elf Atochem N. America., Inc. v. Jaffari, 727 A.2d 286, 292 (Del. 1999) (explaining that the Limited Liability Company Act, 6 Del. C. §§ 18-101 et. seq., "established the Court of Chancery as the default forum" for resolving LLC disputes). I also note that there may be other bases for this Court's jurisdiction. See 6 Del. C. § 18-803.
Although this litigation may contain issues that are outside of the Court's statutory or equitable jurisdiction, once the Court's jurisdiction has been properly invoked the Court may determine all issues pursuant to its ancillary jurisdiction.
Acierno v. Goldstein, 2004 WL 1488673, at *4 (Del. Ch. June 25, 2004); see also Medek v. Medek, 2008 WL 4261017, at *3 (Del. Ch. Sept. 10, 2008) ("The Court of Chancery ... routinely decides controversies that encompass both equitable and legal claims." (quoting Nicastro v. Rudegeair, 2007 WL 4054757, at *2 (Del.Ch. Nov.13, 2007))).
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For the above reasons, Defendant Conaty's Motion to Dismiss for Lack of Subject Matter Jurisdiction is denied.
IT IS SO ORDERED.
Sincerely,
________________________
Sam Glasscock III
Vice Chancellor