Posted by Onyekachi Ajaero
The blog discusses how the Delaware Court of Chancery’s jurisdiction over claims involving the release of escrowed funds is evolving. The court’s limited jurisdiction is first outlined, with a focus on the significance of equitable character or relief in determining the court’s subject matter jurisdiction. The Xlete case, which first established the Court of Chancery’s recognition of equitable jurisdiction over claims for the release of funds held in escrow, is cited by the author as a historical precedent. Recent rulings from the Court, which point to conflicts between the availability of sufficient legal remedies and the need for equitable relief, have cast doubt on the precedent’s ability to be applied going forward.
The blog then delves into specific cases, such as Elavon v. Electronic Transaction Systems Corp., ISS Facility Services, Inc. v. JanCo FS 2, LLC, and Buescher v. Landsea Homes Corp., where the Court of Chancery dismissed claims for lack of subject matter jurisdiction, challenging the traditional reliance on the Xlete precedent. Vice Chancellor Glasscock’s opinions highlight the need for a more nuanced interpretation of claims involving the release of escrowed funds, emphasizing the availability of declaratory judgments as adequate legal remedies and questioning the necessity of equitable relief. The author urges practitioners to consider the implications of these recent decisions, including the potential transfer of cases to the Delaware Superior Court’s Complex Commercial Litigation Division (CCLD), which has proven to be a reliable alternative for resolving complex business disputes.
The blog, taken as a whole, highlights how the Court of Chancery’s handling of cases involving the release of escrowed funds is changing and warns practitioners not to rely solely on previous decisions. The Court’s recent rulings appear to indicate a change in its position on equitable jurisdiction, which should cause parties and their attorneys to carefully consider which courthouse is best for their particular claims. The blog also emphasizes the CCLD’s increasing acceptance as a substitute forum for handling complicated business conflicts, stressing the significance of taking into account both courts’ qualifications and capacities when pursuing legal action concerning post-closing disagreements over escrowed funds.
Onyekachi is a finance and accounting major at the Stillman School of Business, Seton Hall University, Class of 2026.
Blog link: https://www.americanbar.org/groups/business_law/resources/business-law-today/2023-november/delaware-court-of-chancery-calls-into-question-equitable-jurisdiction/