Background
In 2021, Servicios Funerarios purchased Grupo Gayosso from Advent International under a transaction agreement that included a Guarantee with a Delaware forum selection clause and covenants not to sue. Despite these provisions, Servicios Funerarios sued Advent in Mexican federal court. Advent responded by filing suit in Delaware Court of Chancery for breach of the Guarantee.
Vice Chancellor Will previously issued opinions enjoining the Mexican lawsuit for violating the forum selection clause and finding breaches of the covenants not to sue, release, and non-recourse provisions. In a May 12, 2026 opinion, the court granted Advent’s partial summary judgment motion on damages, awarding reasonable attorneys’ fees and costs incurred defending the Mexican lawsuit as expectation damages.
Servicios Funerarios moved for reargument, contending the court failed to conduct a reasonableness analysis when awarding the fee damages. Advent opposed the motion.
The Court’s Holding
Vice Chancellor Will denied the motion for reargument, finding that Servicios Funerarios failed to meet the heavy burden required under Court of Chancery Rule 59(c). The court held that a motion for reargument will be denied unless the moving party identifies an overlooked controlling principle of law or demonstrates that the court misapprehended material facts affecting the outcome.
The court rejected Servicios Funerarios’ reargument on two independent grounds. First, the defendant impermissibly raised new arguments for the first time—specifically relying on Mahani v. Edix Media Group, Inc. and the Delaware Lawyers’ Rules of Professional Conduct Rule 1.5(a)—that were absent from its original summary judgment briefing. Second, even addressing those arguments on the merits, the court found them unavailing. The awarded fees constitute expectation damages for breach of contract, not fee-shifted litigation costs under a contractual fee-shifting provision. Therefore, Rule 1.5(a)’s reasonableness requirement does not apply. The court had sufficient evidentiary basis—1,500 pages of color-coded invoices with detailed summaries, appendices, sworn affidavits, and payment records—to conclude the damages were commercially reasonable.
The court emphasized that calculating damages lies within the trial court’s discretion, and a motion for reargument that merely critiques the exercise of that discretion is inappropriate. Servicios Funerarios identified no overlooked controlling principle or material fact that would affect the outcome.
Key Takeaways
- Attorneys’ fees incurred defending an unauthorized foreign lawsuit may be recovered as expectation damages for breach of a forum selection clause.
- Expectation damages for breach of contract are not subject to the same reasonableness analysis required for contractual fee-shifting provisions.
- Courts need not apply professional conduct rules to foreign counsel’s billing practices when assessing expectation damages.
- Motions for reargument cannot be used to raise new arguments or to relitigate issues already considered; the moving party must meet a heavy burden by identifying overlooked controlling law or material facts.
Why It Matters
This decision clarifies the distinction between expectation damages and fee-shifting provisions in Delaware contract law. Parties relying on forum selection clauses and covenants not to sue can recover the full costs of defending unauthorized litigation without requiring a hindsight reasonableness review of counsel’s billing practices. This strengthens the enforceability of such protective provisions in acquisition agreements and guarantees.
The opinion also reinforces procedural strictures on reargument motions, establishing that defendants cannot circumvent the ordinary rules of briefing by raising novel arguments in reargument proceedings. This protects finality and prevents parties from using reargument as a second bite at appellate review.