Delaware Court of Chancery Orders Prompt Trial on Books and Records Case

Delaware Court of Chancery Orders Prompt Trial on Books and Records Case

Lavi v. Wideawake Deathrow Entertainment LLC, C.A. No. 5779-VCS (Del. Ch. Jan. 18, 2011), read letter ruling here.

Issue Addressed

The issue decided by the Court of Chancery in this books and records action under Section 18-305 of the Delaware Limited Liability Company Act was whether a motion to dismiss the complaint should be granted in light of the multiple documents that were attached to the motion that went beyond what the Court could properly consider at the early stages of the summary proceeding. Thanks to counsel for the plaintiff, David L. Finger, a Delaware litigator, for forwarding this letter ruling to us.

Brief Overview of Decision

This short 3-page letter ruling can be most efficiently summarized in classic bullet point fashion as follows:

1) The Court emphasizes in several parts of the ruling that books and records actions in Delaware are summary proceedings that should receive prompt trial dates.

2) The author of the letter ruling in this case does not favor dispositive motions in books and records cases, in light of their nature as summary proceedings, "when a trial can take place within two months of filing" a complaint, (although, in the past, other members of the Court have granted dispositive motions in books and records cases).

3) The Court provides pointed instruction on motion practice to the extent that a motion to dismiss under Rule 12(b)(6) is contrasted with a motion for summary judgment. Specifically, the Court explained that when documents beyond those contained or referenced in the pleadings are attached to a motion to dismiss, it is converted into a motion for summary judgment.

4) The Court explained that it could not properly consider all the documents attached to the motion of the defendant through either judicial notice or otherwise. Instead, the Court denied the motion and ordered the parties to submit a proposed schedule for a prompt trial "as is contemplated in books and records actions."

Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Fox Rothschild LLP.