COURT OF CHANCERY OF THE STATE OF DELAWARE

M ORGAN T

. Z URN V ICE C HANCELLOR L EONARD L. W ILLIAMS J USTICE C ENTER 500 N. K ING S TREET , S UITE 11400 W ILMINGTON , D ELAWARE 19801

- 3734 January 18, 2023

C hristopher D. Loizides , Esquire Loizides
, P.A

. 1225 King Street, Suite 800 W ilmington, DE 19801

RE : Fintech Consulting LLC v. TSR , Inc. , et al. , Civil Action N o. 2023

- 0030

- M TZ

De ar Counsel :

I write with regard to plaintiff Fintech Cons ul ti ng LLC ’ s Verified Complaint
(the “ Verified Co mplaint ” ) filed on January 12 , 2023. 1 Plaintiff also filed a motion

to expedite
, 2 which are all too common in this Court, and a motion to dismiss its
own complai n t, which is quite unusual. 3 The defendants in t h is action have not yet
appeared

.
Plaintiff s eeks rel ief from a share purchase agreement ( “ SPA ” ) by which

Plainti ff purchase d stock in defendant TSR, Inc. Th e SPA included a forum

selection c lause, which reads:

1 D oc ket Item ( “ D.I. ” ) 1 [hereina f ter Compl. ]

. 2 D.I

. 11.

3 D.I. 14

.Fintech Consulting LLC v. TSR, Inc. , et al.
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E ach of the Par ties

. . . irrevo cabl y and unconditionally consents and submits itself and its pro perties and assets in any action, suit or proceeding arising out of or with res pect to this Agreement and the transactions contemplated hereby to the exclusive general jurisd iction of the Cou rt o f Chancery of the State of Delaware and any state app ellate c ourt therefrom within the State of Delaware (or, if t he Court of Chancery of th e State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware ) (the “Chosen Courts”)

. . . . 4

Plaintiff i nitially filed some version of its cla im s in New Jersey f ederal

c ourt. On December 7, 202 2
, that district court di smissed Plaintif f ’ s complaint

pursuant to the above forum selection cla use. Weeks pa ssed

.
T hen Plaintiff filed the Verified Complaint in th is Court
, asserting claims

for common law fraud and violations of the S ecurities and Exchange Act of 1934
( the “ E xchange Act ” )

. Not one hour later, Plaintiff filed a motion to dismiss for

lack of subject matter jurisd iction
, empha t ic that this Court lacks subject matter
jurisdi ction over its Exchange A ct claim

. 5 Plaintiff seeks an order from this Court
dismissing its Exchange Act claim so that it can refi le in a federal f orum, free and

4 Id. at Ex. A § 5.11 (emphasis om itted).

5 D.I. 14 ; see Com pl. ¶ 3 ( “ Plaint iff’s p rinc ipal cause of action aris e s under section 1 0(b) of the Exchange Act o f 1934

. . . and Securities and Exc hange Commission Rule 10b

- 5

. . . over which United States District Courts have jurisdiction to the e xclusion of state courts pursuant to Sec tion 27 of the Exchange Act

. . . . ” ) ; D.I. 11 ¶ 6 ( “ [ T] he issue is not one abou t which reasonable minds could diff er [
, ] [f] ederal law is cr ystal clear that the Federal Cou r ts hold exclusive jur i sdiction over claims arising under the 34 Act

. ” ); D.I

. 14 at 6 ( “ [T] his Court must immediatel y dis m iss that claim f or lack of subject matter jurisdiction. ” ).Fintech Consulting LLC v. TSR, Inc. , et al.
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clear of any affirma tive defense based on the SPA ’ s forum selecti on cl ause

.
Plaintiff demand s that I schedule a hearing and resolve its motion to dismiss bef ore
February 1, 2023
, so that it can refile before the statute of limitations runs on its

claim.

I will not advise Plaintiff on the proper way to find a forum

. T his was not

it. 6 Under Court of Chancery Rule 11, w hen a Delaware lawyer files a claim

before this Court, that lawyer is certifying that to the best of her knowledge
,
information and belie f, that claim is warranted. 7 But Plaintiff ’ s counse l here

knows a nd be lieves Plaintiff ’ s claims are not warranted

. In Plaintiff ’ s view, it is

“ crystal clear ” that thi s Court lacks jur isdiction over its claims

— as Plaintiff put it,

“ the issue is no t one about whi ch reaso nable minds could differ

. ” 8

N oncompliance with R ule 1 1 risks a referr al to the Office of Dis ciplinary

Couns el , or, if the proceedings are prejudiced, san ctions by this Court

. 9 But a s I

6 Unfortunately, t his is not the first ti me in recent history that a plaintiff has taken this self

- sabotage ap proach to litigation. See MXY H ldgs

. LLC v. All J

s Greenspace LLC
, C .A. No. 2022

- 0220

- MTZ (Del. Ch. ) , D.I. 2 5 (lett er to c ounse l regardin g a plaintiff ’ s request that I grant a moti on to dismiss).

7 Ct. Ch . R. 11 (b)

. 8 D.I. 11 ¶ 6

. 9 See Crumplar v. Superior Ct. ex rel. New Castle Cnty.
, 56 A.3d 1000, 1010 (Del. 2012) ;
se e also In re A bbott , 92 5 A.2d 482, 486

– 87 (Del. 2007) ( reason ing conduct violated Delaware Ru l es of Profession al Conduct Rule 8.4 where it “ caused a waste of judicialFintech Consulting LLC v. TSR, Inc. , et al.
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read the Delaware Supreme Court ’ s instructions in Crumplar v. Sup erior Court ex
rel. New Castle County
, trial c our ts a re no t to enf orce the Delaware Rules of

Professional Conduct, or the trial court ’ s Rule 11, unless and until the attorney has
engaged in conduct that “ prejudices the fairness of the proceedings, such that it
adversely affects the fair and eff ic ie nt adm inis trat i on of justice

. ” 10 Given that the

defendant s ha ve not yet ap peare d, I cannot conclude that the “ fairness ” of this
action has been prejudiced . And so, for now, I simply note that the Exchange Act

claim never should have been filed here in th e first place.

resources that otherwise would be devoted to the merits of other cases before th e Superior Court ” ).

10 5 6 A.3d 10 00 (Del . 20 12); see also Appeal of Inf o technology , Inc. , 582 A.2d 215, 216

– 17 (Del. 1990) ; Ct. Ch. R. 11 (c)

. Certainly, Crumplar prohibits a trial court from sanctioning counsel for a Rule 11 violation absent such prejudice and without due proces s

. T he t ext of Rule 11 (c)(1) also compels “ not ice and a reasonable opportunity to respond ” before the Court can “ determine [] that [ Rule 11(b) ] has been violated. ” Ct. Ch. R. 11(c)

. And a cons ervative reading of Crumplar equates finding a violation with sanctioni ng. Id. at 1 0 05 ( considering th e standard the trial court judge should have used to evaluat e counsel ’ s conduct “ w h en deciding whether Rule 11 sanctions are appropriate ” ); id. at 1008 (equating “ violat[ing ] Rule 11 ’ s objective standard ” with

“ fac[ ing] Rule 11 sanctio ns ” ); id. at 1009

– 1 0 ( “ ext en [ding] ” Infotechnology ’ s restriction on trial courts “ app l[ying] ” the Rules of Professional Conduc t to Rule 11 ) ; id. a t 1011 (requiring heightened procedural protection when a trial judg e “ raise[s] Rule 11 ” s ua spont e

— not just R ule 11(c) (1)(B)); id. at 1012 ( requiring a n evidentiary hearing and argument “ for trial judge s to assess [attorneys ’ ] credibility and impose Rule 11 sanctions ” (emphasis added) )

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“ It is within the discretion of this Court to grant or deny an application to
expedite proceedings. ” 11 Th is Court has finite resources that a re stretched thin to

handle warranted suits. I cannot allow th ose resources to be wasted by devotin g

them to hyper

- exp edit ed consideration of a claim P laintiff k n ew was frivolous

when filed. Additionally, Plaintiff has not even attempted to argue that either

claim is colorable, whic h is a required showing to receive expedited trea tment :
rather, he seeks exp edition on the ba sis that his claim is frivolous

. 12 The Court will

address Plaintiff ’ s motion to dismiss i n the ordinary course. Plaintiff ’ s m oti on to
expedite is DENIED

.

Sincerely,

/s / Mo rgan T. Zurn

Vice Chancell or

MTZ/m s

cc : All Coun sel of Record, v ia Fi l e & S e rve Xpress

11 Corp. Prop. Assocs. 8, L.P. v. AmerSig Graphics, Inc.
, 1993 WL 499005, at *1 (Del. Ch. Nov. 17, 1993) ; Ortsman v. Green
, 2007 WL 702475, at *2 (Del. Ch. Feb. 28, 2007) ( “ The court recognizes that there is no automatic right to expedition

. ” )

. 12 D.I. 11 at 2

– 3; Giammargo v. Snapple Beverage Corp.
, 1994 WL 6726 98, at *2 (Del. Ch . Nov . 15, 1994)

.