Opinion ID: 1887503
Heading Depth: 2
Heading Rank: 12

Heading: Summary Judgment in Favor of Viking on the Contract Claim

Text: The parties filed cross motions for summary judgment. On October 22, 2008, the Vice Chancellor granted Viking summary judgment on Olson's breach of contract claim. The Vice Chancellor first found that the statute of frauds applies to LLC operating agreements. The Delaware statute of frauds states that parties must reduce to writing, and the defending party must have signed, any agreement that cannot be completed within one year from its making. [7] The Vice Chancellor held that the statute of frauds prevents enforcement of oral LLC agreements that require more than one year to complete. [8] Second, the Vice Chancellor found that all amounts except the first earnout payment cannot possibly be calculated until after one year following the alleged agreement and that substantive obligations and restrictions extending for multiple years would be placed on [Halvorsen] and Ott by the unsigned Founders operating agreement. [9] Thus, the Vice Chancellor concluded that the earnout provision in the unsigned Founders operating agreement fell within the statute of frauds and, thus, was unenforceable. Third, the Vice Chancellor determined that Olson did not satisfy the multiple-writings exception to the statute of frauds. The Vice Chancellor found that the liquidation agreement did not unambiguously reference the unsigned Founders operating agreement. [10] The Vice Chancellor further found that none of the documents Olson identifies clearly refer to either the unsigned Founders operating agreement or the earnout provision. The Vice Chancellor concluded that [w]ithout a clear and specific reference in a signed writing to the unsigned Founders operating agreement containing the earnout provision, there is insufficient evidence to bring the Founders operating agreement under the umbrella of the multiple writings exception. [11] Thus, the Vice Chancellor held that the unsigned Founders agreement violates the one-year rule of the statute of frauds and granted summary judgment in favor of Viking on Olson's breach of contract claim.