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Ivize of Milwaukee, LLC v. Compex Litig. Support, LLC

Court of Chancery of Delaware

January 20, 2009, Submitted; April 27, 2009, Decided

C.A. No. 3158-VCL, C.A. No. 3406-VCL

Opinion

MEMORANDUM OPINION

LAMB, Vice Chancellor.

The purchaser of a litigation support company brings this action over an alleged breach of a representation in an asset purchase agreement to the effect that the company to be purchased operated only in the usual and ordinary course from April 1, 2007 until the closing date of the transaction. During that time period, the company's employees made plans to start a competing entity in violation of their noncompetition agreements, solicited the key salespeople (who represented the essence of the business), met to discuss the business of the competing entity during business hours on the company's premises, rerouted certain of the company's business to the competing entity, stole or destroyed  [*2] customer records, and stole company equipment. Following trial, the court finds that the representation that the company being sold had been operating in the usual and ordinary course was clearly not true at the time it was made, and thus the sellers breached the asset purchase agreement. Nevertheless, because the purchaser failed to structure the transaction to secure the services of the key salespeople (and, thus, the goodwill) and failed to prove the amount of damages owed to it, the court will award only nominal damages. The asset purchase agreement, however, also includes a fee shifting provision and, because it prevailed on its breach of contract claim, the purchaser is entitled to attorneys' fees and costs.

A. The Parties

These two actions, C.A. No. 3158-VCL (the "Milwaukee Action") and C.A. No. 3406-VCL (the "Kansas City Action"), were tried together on October 2 and 3, 2008. 1

The plaintiff in the Milwaukee Action is Ivize of Milwaukee, LLC, a Delaware limited liability company with its principal place of business in Milwaukee, Wisconsin. The plaintiff in  [*3] the Kansas City Action is Ivize of Kansas City, LLC, a Delaware limited liability company with its principal place of business in Kansas City, Missouri. Ivize Milwaukee and Ivize Kansas City are indirect subsidiaries of Ivize, LLC, a provider of litigation support services headquartered in Charlotte, North Carolina. Ivize, through its subsidiaries, operates approximately 30 service facilities in various locations across the country.

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2009 Del. Ch. LEXIS 55 *; 2009 WL 1111179

IVIZE OF MILWAUKEE, LLC, a Delaware limited liability company, Plaintiff, v. COMPEX LITIGATION SUPPORT, LLC, a Delaware limited liability company, and COMPEX LEGAL SERVICES, INC., a Delaware corporation, Defendants.

Notice: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

Subsequent History: Costs and fees proceeding at Ivize of Milwaukee v. Compex Litig. Support, 2009 Del. Ch. LEXIS 251 (Del. Ch., June 24, 2009)

CORE TERMS

lease, employees, damages, purchase agreement, closing date, negotiate, customers, asset purchase agreement, attorney's fees, Facilities, parties, costs, representations, qualifier, goodwill, landlord, lessors, nominal damages, CONTRACTS, employment agreement, transition, breached, litigation support, ordinary course, mitigate, planned, space, non competition agreement, accounts receivable, contractual

Business & Corporate Compliance, Breach, Breach of Contract Actions, Elements of Contract Claims, Evidence, Burdens of Proof, Allocation, Contracts Law, Contract Interpretation, General Overview, Affirmative Defenses, Fraud & Misrepresentation, Damages, Types of Damages, Consequential Damages, Preponderance of Evidence, Measurement of Damages, Foreseeable Damages, Benefit of the Bargain, Nominal Damages, Civil Procedure, Costs & Attorney Fees, Costs, Remedies, Avoidable Consequences, Attorney Fees & Expenses, Basis of Recovery, American Rule, Contract Conditions & Provisions