Current Month (June 2026)
Court of Chancery Interprets Delaware APA’s Forum Selection Clause Containing Both Mandatory and Permissive Language
By Lisa R. Stark, Hirschler Fleischer
In a recent decision, Kelly Roofing Holdings, LLC v. Flores, C.A. No. 2025-1049-BWD (Del. Ch. June 4, 2026), the Court of Chancery enforced a Delaware forum selection provision contained in an asset purchase agreement, finding the forum selection clause to be mandatory rather than permissive. The forum selection clause stated that an action arising out of the asset purchase agreement or the transactions contemplated thereby “may be instituted” in a Delaware federal or state court, and each party “irrevocably submits to the exclusive jurisdiction of such courts in any such” action.
On January 15, 2025, plaintiffs entered into an Asset Purchase Agreement (“APA”) under which defendants agreed to sell to plaintiffs the assets of Integrity Roofing and Gutters, Inc., a Florida corporation that repairs roofs and gutters for commercial and residential buildings. After executing the APA, plaintiffs allegedly discovered that defendants failed to disclose material liabilities, litigation, contracts and a fraudulent invoicing, bribery, and kickback scheme. At the same time as entering into the APA, plaintiffs entered into an employment agreement with defendant Chantelle A. Flores to govern the terms of Flores’s employment as president of the acquired business after the transaction. Thereafter, plaintiffs sued individual defendant Flores under the employment agreement in Florida and then brought this action in Delaware for, among other things, fraudulent inducement with respect to the APA.
Defendants move to dismiss the Delaware complaint, arguing that (1) the Court should defer to the first-filed action in Florida, and (2) the APA’s forum selection provision, under which the parties agreed to submit to the “exclusive jurisdiction” of the Delaware courts, was not mandatory because it stated that an action arising from the APA “may be instituted in the federal courts of the United States of America or the courts of the state of Delaware” (emphasis added). The Court disagreed with the defendants, citing prior decisions that found that any permissive language related only to whether the action is filed in state or federal court while the reference to “exclusive jurisdiction” plainly made the provision mandatory.
Delaware Chancery Tests New Section 144 Protections in Compensation Challenge
By Tanya Pahwa, FBT Gibbons
In Patrick Ayers v. William P. Foley, et al., the Delaware Court of Chancery delivered one of the first substantive interpretations of the recently amended 8 Del. C. § 144, addressing the statute’s application to executive and director compensation decisions at Fidelity National Financial, Inc. (“FNF”). The ruling offers important guidance for practitioners advising boards on interested-director transactions and compensation governance.
The case involved a derivative action challenging two compensation decisions made by FNF. First, the plaintiff contested a one-time $50 million equity grant awarded to FNF founder and nonexecutive chairman William P. Foley II to incentivize his continued service to the Company (“Equity Grant”). The award was approved by the board’s Compensation Committee and subsequently reviewed by the Related Person Transactions Committee after consideration of market benchmarking data and legal advice. Second, the plaintiff challenged compensation increases and equity awards granted to FNF’s nonemployee directors, alleging that the awards were excessive in light of the Company’s financial performance (“NED Compensation”). The plaintiff asserted claims for breach of fiduciary duty and unjust enrichment.
With respect to the Equity Grant, the Court applied the Delaware Supreme Court’s Zuckerberg demand-futility test, which determines whether a stockholder may pursue a derivative claim without first demanding that the board initiate the litigation. The Court held that the plaintiff failed to plead particularized facts showing that a majority of FNF’s directors either benefited from the transaction, faced a substantial likelihood of liability, or lacked independence. Accordingly, demand was not excused, and the claims challenging the Equity Grant were dismissed. In reaching this conclusion, the Court analyzed Delaware’s recently amended 8 Del. C. § 144(d)(2), which affords directors of public companies a heightened presumption of disinterestedness. Relying primarily on allegations of overlapping board service and indirect co-investment relationships with Foley, the plaintiff failed to plead facts sufficient to overcome the heightened presumption that the remaining directors acted independently and without conflict.
With respect to the NED Compensation, the Court held that because the directors were effectively approving their own compensation, the claims were subject to entire fairness review rather than the business judgment rule’s presumptive protections. The Court applied 8 Del. C. § 144(a)(3), finding that its statutory fairness inquiry mirrors Delaware’s common-law entire fairness standard requiring directors or controlling shareholders to prove that a transaction is entirely fair in both process and price, especially when conflicts of interest exist. The Court found that the plaintiff had sufficiently alleged that the directors awarded themselves compensation that significantly exceeded peer-group levels despite the Company’s relatively weaker financial performance, allowing the fiduciary duty claims to proceed against the Compensation Committee members who approved the awards. By contrast, the Court dismissed the claims against directors who merely received the compensation, noting that under Delaware law a passive recipient may be held liable only where the complaint plausibly alleges that the director knowingly accepted improper compensation.
Ayers v. Foley provides early guidance on Delaware’s amended 8 Del. C. § 144, reinforcing strong protections for independent directors while confirming that director self-compensation remains subject to close judicial scrutiny under the entire fairness standard.
The author thanks Christopher Viceconte, a partner in FBT Gibbons LLP’s Delaware office, for his valuable review of the Delaware law aspects of this article.
North Carolina Business Court Determines Which State’s Law to Apply in Valuation Dispute
By Shawn Garrett, Garrett, PLLC; Ashley Oldfield, Rayburn Cooper & Durham, P.A.
On June 23, 2026, the North Carolina Business Court issued its opinion in a case stemming from a disagreement around the valuation of an ownership interest in Wilson Holding Company, LLC (“Holding”). In Healthcare Foundation of Wilson v. DLP Healthcare, LLC, Healthcare Foundation of Wilson (“Foundation”), one of the two members of Holding, exercised a contractual option to sell the entirety of its membership interest in Holding. This “put option” required the other member, DLP Healthcare (“DLP”), to purchase Foundation’s interest in Holding. The put agreement defined the purchase price as a percentage of Holding’s appraised value. Over time, Foundation lost faith in DLP’s management of the hospital, and in August 2024, Foundation exercised its put option. Holding engaged an appraiser, but shortly before the appraiser issued its final report, DLP objected to the valuation date used and Holding’s manager, DLP Partner (the parent of DLP), directed the appraiser not to issue the final report. Foundation contends that Holding challenged the valuation date and halted the appraisal process because DLP was unwilling to pay the value of Foundation’s interest, which was anticipated at around $55 million. This lawsuit followed.
Central to the dispute is whether the parties, through a series of communications, agreed to a specific valuation date of December 31, 2024. Looking to the parties’ agreements to determine which state’s laws govern the dispute, the Court determined that North Carolina law governs the alleged valuation date agreement, while Delaware law governs the operating agreement and put agreement. In its 12(b)(6) motion to dismiss, DLP argued that the valuation date agreement is not a valid contract because it lacked mutual assent. Applying North Carolina law, the Court held that whether mutual assent is established and whether a contract was intended between the parties are questions for the trier of fact. The Court further held that the amended complaint alleged sufficient facts that met the relatively low 12(b)(6) bar allowing the case to proceed.
Foundation also alleged a breach of fiduciary duty against DLP Partner and aiding and abetting breach of fiduciary duty against DLP. The Court first determined that Delaware law applied to these claims pursuant to the internal affairs doctrine. Foundation alleged that DLP Partner stood to indirectly benefit from stopping the appraisal and therefore was acting in its self-interest by doing so. These allegations were sufficient to state a claim for breach of fiduciary duty. The aiding and abetting claim also survived based on allegations that DLP had used its influence as a close affiliate to instigate DLP Partner’s decision to halt the appraisal.
