Chancery Court Defines De Novo Standard of Review for Appeals of Receiver’s Decisions Disallowing Claims
By: Jessica Pearlman and Will Smith
In B.E. Capital Management Fund LP v. Fund.Com Inc., C.A. No. 12843-VCL (Del. Ch. October 4, 2017), the Delaware Court of Chancery denied an appeal from a receiver’s decision disallowing a claim for breach of contract against a company in receivership. The Court held that the appropriate standard of review for an appeal of a receiver’s decision was de novo as to both law and facts, and in particular, that the Court had discretion to consider additional evidence not presented on record to the receiver. Applying this standard, the Court upheld the receiver’s decision, but on different grounds. The Court ruled that the breach of contract claim was time-barred by the doctrine of laches, not the contract’s choice-of-law provision, as choice-of-law provisions must expressly reference statutes of limitations to apply to statutes of limitations.