Because the Delaware Supreme Court decides so few cases, it is not uncommon to believe it will jump at the chance to decide an issue it has not seen before. Two recent decisions from the court, however, highlight the important procedural limitations imposed by Supreme Court Rule 8 on the court’s ability to decide issues before it, even the novel or interesting ones. In both of these decisions, the Supreme Court declined to address unsettled questions of Delaware law because the appellant failed to raise the argument made on appeal to the Delaware Court of Chancery. More importantly, the Supreme Court also revealed that it looks at the “interests of justice” exception to Rule 8 more narrowly in a corporate or commercial case, making it more important that all of the relevant arguments are presented to the trial court or well planned on appeal.
In Huatuco v. Satellite Healthcare, CA No. 8465-VCG (Del. Ch. Dec. 9, 2013), the defendant moved to dismiss the plaintiff’s petition for judicial dissolution of a limited liability company on the grounds that the operating agreement expressly limited the members to only the rights set forth in the agreement but omitted the right to seek judicial dissolution. The plaintiff argued that this language applied only to the rights set forth in that particular section of the agreement, and therefore did not bar judicial dissolution. The plaintiff also argued that the Chancery Court’s decision in R&R Capital v. Buck & Doe Run Valley Farms, CA No. 3803-CC (Del. Ch. Aug. 19, 2008), which held that the right to seek a judicial dissolution in the Delaware Limited Liability Company Act may be modified by contract, was distinguishable because the defendant did not prove the waiver was knowing and voluntary as required by R&R Capital. The Chancery Court disagreed with the plaintiff’s contractual interpretation and found that R&R Capital did not require proof of a knowing and voluntary waiver, particularly given the plain language of the agreement.
