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In re Morrow Park Holding LLC

Court of Chancery of Delaware

March 28, 2018

In re Morrow Park Holding LLC

          ORDER DENYING MOTION TO DISMISS COUNTERCLAIMS

          Tamika Montgomery-Reeves Vice Chancellor

         WHEREAS, on February 1, 2016, Counterclaim and Third-Party Plaintiff CCI Historic, Inc. ("CCI Historic"), Counterclaim Defendant Village Green Residential Properties, LLC ("Village Green Residential"), Third-Party Defendant VGM Clearing, LLC ("VGM Clearing"), Third-Party Defendant Jonathan Holtzman, and Village Green Holding LLC ("VG Holding") entered into a Redemption Agreement (the "Redemption Agreement");

         WHEREAS, on January 17, 2017, Village Green Residential filed a complaint against CCI Historic, Compatriot Capital Inc., VG ECU Holdings LLC, and Morrow Park Holding LLC (the "First Action");

         WHEREAS, on April 20, 2017, CCI Historic filed the First Amended Verified Counterclaims and Third Party Claims against Village Green Residential, VGM Clearing, and Holtzman;

         WHEREAS, on April 20, 2017, VG Holding filed a complaint against Village Green Residential, VGM Clearing, Holtzman, and City Club Apartments, LLC in a separate action (the "Second Action");

         WHEREAS, on May 10, 2017, Village Green Residential moved under Court of Chancery Rule 12(b)(1) to dismiss Counts II and III of the counterclaims for lack of subject matter jurisdiction or, in the alterative, to sever and transfer Counts II and III of the counterclaims to the Superior Court;

         WHEREAS, on October 10, 2017, the Court consolidated the First Action and the Second Action;

         WHEREAS, on December 13, 2017, the Court heard oral argument on the motion;

         NOW, THEREFORE, THE COURT HEREBY FINDS AND ORDERS AS FOLLOWS:

         1. The Court has reviewed the parties' briefs, supporting submissions, and the applicable law.

         2. The Motion to Dismiss or Bifurcate/Remove Proceedings is DENIED.

         3. The Court of Chancery "can acquire subject matter jurisdiction over a case in three ways: (1) the invocation of an equitable right; (2) the request for an equitable remedy when there is no adequate remedy at law; or (3) a statutory delegation of subject matter jurisdiction." Testa v. Nixon Unif. Serv., Inc., 2008 WL 4958861, at *2 (Del. Ch. Nov. 21, 2008) (quoting Medek v. Medek, 2008 WL 4261017, at *3 (Del. Ch. Sept.10, 2008)).

         4. CCI Historic contends that the Court has jurisdiction over the counterclaims under Section 18-111 of the Limited Liability Company Act ("Section 18-111"), which grants the Court of Chancery subject matter jurisdiction over:

Any action to interpret, apply or enforce the provisions of a limited liability company agreement, or the duties, obligations or liabilities of a limited liability company to the members or managers of the limited liability company, or the duties, obligations or liabilities among members or managers and of members or managers to the limited liability company, or the rights or powers of, or restrictions on, the limited liability company, members or managers, or any provision of this chapter, or any other ...

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