Neil Smith v. Promonotory Financial Group, LLC

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: October 23, 2019
Date Decided: October 24, 2019
David A. Jenkins, Esquire Bruce E. Jameson, Esquire
Laurence V. Cronin, Esquire Eric J. Juray, Esquire
Smith Katzenstein & Jenkins LLP Prickett, Jones & Elliott, P.A.
1000 West Street, Suite 1501 1310 North King Street
Wilmington, DE 19899 Wilmington, DE 19801
Re: Neil Smith, et al. v. Promontory Financial Group, LLC, et al.
Civil Action No. 11255-VCG
Dear Counsel:
This Letter Opinion addresses which Defendant, Promontory Financial
Group, LLC (“Promontory”) or Promontory Growth and Innovation, LLC (“PGI”),
must pay Plaintiff Neil Smith the amount owed pursuant to my April 30, 2019
Memorandum Opinion.1 I reserved judgment on this question at Oral Argument on
October 23, 2019.
The Letter of Intent (“LOI”) requires that Smith receive “over a period not to
exceed 5 years 50% of the then going business value of [PGI] minus [Smith’s]
services, the value to be decided between the parties at the time thereof.”2 However,
1
Mem. Op., D.I. 80. This Letter Opinion relies on the facts adopted in the Memorandum
Opinion.
2
Id. at 6.
the LOI does not specify who must pay Smith. The parties to the LOI were Smith
and Eugene Ludwig, the founder and CEO of Promontory. I find that Promontory,
as the assignee of Ludwig, is responsible for this payment.
Promontory, rather the PGI, must pay under the plain language of the LOI.
Under general contract principles, “only a party to a contract may be sued for breach
of that contract.”3 However, “[w]hen interpreting a contract, the Court will give
priority to the parties’ intentions as reflected in the four corners of the agreement.”4
The LOI specifies three events that trigger payment to Smith: death, incapacity or
voluntary withdrawal. In both the case of Smith’s death or incapacity, the LOI
explicitly made a non-party to the contract, PGI, liable for payment. The LOI did
not do so in the case of Smith’s voluntary withdrawal. In the absence of plain
language shifting responsibility for payment upon Smith’s voluntary withdrawal
from Promontory to PGI, I find no justification to hold PGI, a non-party, responsible
for such payment.
To the extent the foregoing requires an Order to take effect, IT IS SO
ORDERED.
3
Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 172 (Del. 2002)
(quoting Wallace v. Wood, 752 A.2d 1175, 1180 (Del. Ch. Oct. 12, 1999)).
4
GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 779 (Del. 2012)
(quoting Paul v. Deloitte & Touche, LLP, 974 A.2d 140, 145 (Del. 2009)).
2
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
3