Summary
The Delaware Court of Chancery resolves defendants’ motion to dismiss an action involving an asset purchase agreement, restrictive covenants, and related employment litigation. The court holds that the asset purchase agreement’s forum selection clause requiring submission to the exclusive jurisdiction of Delaware courts is mandatory and that plaintiffs did not waive the clause by filing separate employment-agreement claims in Florida. The court dismisses Count III because injunctive relief is a remedy rather than an independent cause of action, but otherwise denies the motion to dismiss.
Topics
Practice areas
Questions Presented
- Whether the APA's forum-selection provision, which states that an action may be instituted in Delaware courts and that each party irrevocably submits to their exclusive jurisdiction, is mandatory.
- Whether plaintiffs waived the APA forum-selection provision by filing a Florida action to enforce the separate employment agreement.
- Whether Count III, which sought injunctive relief for alleged contractual breaches without asserting an independent cause of action, stated a claim.
Holdings
- The APA's forum-selection provision is mandatory and designates Delaware as the exclusive forum for actions arising out of or based on the APA, its ancillary documents, or the contemplated transactions.
- Plaintiffs did not waive their rights under the APA forum-selection provision by filing the Collier County Litigation in Florida to enforce the separate employment agreement.
- Count III was properly dismissed because an injunction is a form of relief, not an independent cause of action.
Key quotations
“The Forum Selection Provision designates Delaware as the exclusive forum for this action and Defendants agreed not to argue otherwise.” (at 13)
“Injunctions are a form of relief, not a cause of action.” (at 16)
“For the reasons explained above, Count III of the Amended Complaint is dismissed. The Motion to Dismiss is otherwise DENIED.” (at 16)
Factual background
The parties entered into an asset purchase agreement under which plaintiffs purchased the assets of Integrity Roofing and Gutters, Inc. The APA contained a forum-selection provision allowing suit in Delaware federal or state courts while stating that each party irrevocably submitted to the exclusive jurisdiction of those courts and waived inconvenient-forum objections. Flores and Reliant also entered into a separate employment agreement containing a Florida and Southern District of Indiana forum provision. After plaintiffs terminated Flores and alleged misconduct and competition, the parties filed related lawsuits in Florida, and plaintiffs later brought this Delaware action concerning the APA.
Procedural history
Plaintiffs filed the Delaware action on September 17, 2025, and filed an amended complaint on October 17, 2025 alleging fraud in the inducement and breach of restrictive covenants in an asset purchase agreement. Defendants moved to dismiss on October 31, 2025. The court deferred ruling while proceedings concerning a preliminary injunction were pending; the parties later stipulated to a preliminary injunction, and the May 19, 2026 hearing was used for oral argument on the motion to dismiss. The court dismissed Count III but otherwise denied the motion.