Court Opinion

ID: 4449750
Source: CourtListenerOpinion
Date Created: 2019-10-24 15:02:48.313268+00
Date Added: 2024-06-11T14:46:11.536959
License: Public Domain

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