Title: BHEP GP I, LLC, et al. v. Kentucky Retirement Systems, et al.

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
BHEP GP I, LLC; BHEP GP II, LLC; 
BHEP GP II-B, LLC; BHEP GP III, LLC; 
BAY HILLS CAPITAL 
MANAGEMENT, LLC; BAY HILLS 
EMERGING PARTNERS I, L.P.; BAY 
HILLS EMERGING PARTNERS II, 
L.P.; BAY HILLS EMERGING 
PARTNERS, II-B, L.P.; and BAY HILLS 
EMERGING PARTNERS III, L.P., 
 
Plaintiffs Below- 
Appellants, 
 
v. 
 
KENTUCKY RETIREMENT 
SYSTEMS; KENTUCKY 
RETIREMENT SYSTEMS 
INSURANCE FUND; and KENTUCKY 
RETIREMENT SYSTEMS PENSION 
FUND, 
 
Defendants Below- 
Appellees. 
§ 
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§   No. 352, 2018 
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§   Court Below:  Court of Chancery 
§   of the State of Delaware 
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§   C.A. No. 2018-0234 
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Submitted: July 23, 2018 
Decided: 
August 1, 2018 
 
Before STRINE, Chief Justice; VALIHURA and TRAYNOR, Justices. 
 
 
O R D E R 
 
Upon consideration of the notice of interlocutory appeal and the supplemental 
notice of interlocutory appeal, it appears to the Court that: 
 
 
2 
(1) 
The plaintiffs below (“the Plaintiffs”) are four Delaware limited 
partnerships and their respective general partners.  They filed the action below 
against the limited partner and two related entities (“the Defendants”) to obtain 
declarations that the general partners were improperly removed and that they 
continue as the rightful managers of the limited partnerships.  The Defendants 
moved to dismiss the complaint on the ground that a forum selection clause in the 
relevant entity agreements requires the Plaintiffs to litigate the dispute in Kentucky.  
The Court of Chancery issued a memorandum opinion on July 2, 2018 (“the 
Memorandum Opinion”), denying the Defendants’ motion to dismiss on the ground 
that the purported forum selection clause was a permissive consent to jurisdiction 
clause.  But, the Memorandum Opinion stayed the Delaware action in favor of a 
contemporaneous action1 filed by the Defendants in Kentucky. 
 (2) 
The Plaintiffs filed an application for certification to take an 
interlocutory appeal of the Memorandum Opinion in the Court of Chancery on July 
6, 2018.  The Appellees filed their response in opposition on July 16, 2018.   
(3) 
The Court of Chancery denied the certification application on July 23, 
2018.  In denying certification, the Court of Chancery noted that the Memorandum 
                                                 
1 See Memorandum Opinion at 16-17.  The Court of Chancery noted that the Delaware action was 
filed eight days before the Kentucky action.  But, exercising its discretion under settled Delaware 
law, the Court of Chancery chose not to afford first-filed deference to the Delaware action and 
instead deemed the lawsuits simultaneously-filed. 
 
 
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Opinion did not, as the Plaintiffs argued, involve a novel question of law or create a 
conflict in the law.  The Court also rejected the Plaintiffs’ argument that 
interlocutory review would serve considerations of justice.  As the Court noted, the 
Kentucky and Delaware actions overlap substantially, the parties are functionally 
identical, and both actions require resolution of contract claims involving a complex 
long-term relationship between parties who agreed that their disputes would be 
decided under Kentucky law.  Under the circumstances, the Court of Chancery held 
that the Memorandum Opinion involved an exercise of the Court’s discretion, did 
not decide “a substantial issue of material importance,”2 and did not warrant 
interlocutory review before the entry of a final judgment.   
(4) 
The grant or denial of an application for interlocutory review is within 
the Court’s discretion.  This case involves a dispute over the governance of a 
Delaware limited partnership with an unusual governing agreement that contains not 
just a choice of forum clause pointing to Kentucky, but also a choice of law provision 
pointing to Kentucky.   Contemporaneous litigation in Kentucky is ongoing, and the 
Court of Chancery exercised its discretion to stay the case in light of that litigation, 
and to avoid the potential for conflicting rulings and inefficiency.   Recognizing that 
the rare admixture created by the partnership agreement could give rise to potentially 
important public policy issues depending on the ultimate direction the disputes 
                                                 
2 Del. Supr. Ct. R. 42(b). 
 
 
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among the parties take, and without signaling any agreement or disagreement with 
any part of the Court of Chancery’s decision to stay that might be viewed as relevant 
to those potential issues, we decline to accept an interlocutory appeal to consider 
whether to second-guess its view that it was prudent and efficient to stay this 
action.   Precisely because this is such an unusual situation, the Court of Chancery 
did not reach any of the embedded issues, and the parties did not brief them, 
accepting this appeal seems to us to hazard more than it promises in terms of 
justice.   At bottom, the Vice Chancellor simply stayed his case in favor of a 
contemporaneous action pending in another forum, and one which both parties, even 
the plaintiffs who filed in Delaware, admit has a legitimate interest in the matter 
given the unusual provisions in the partnership agreement, provisions the plaintiffs 
have never objected to or challenged as invalid, even as of the time they filed their 
Delaware action.     
NOW, THEREFORE, IT IS HEREBY ORDERED that the within 
interlocutory appeal is REFUSED.  The Plaintiffs’ motion to expedite is moot. 
 
 
 
 
 
 
BY THE COURT:  
 
 
 
 
 
 
 
 
/s/ Leo E. Strine, Jr. 
 
 
 
 
 
 
 
 
Chief Justice