Background
William Blodgett helped start the affordable-housing business Fairstead in 2013. Under an employment agreement with a Fairstead entity, he provided investment-advisory services and received, among other compensation, 15% of the carried interest Fairstead earned in each deal. Fairstead implemented that right by giving him membership interests in Fairstead Capital Management LLC and FCM Affordable LLC.
After Fairstead terminated Blodgett in 2021 and purported to cancel his interests, the parties pursued disputes in arbitration and the Court of Chancery. An arbitrator found that Blodgett had breached his employment agreement but that the agreement permitted cancellation only of interests in pending transactions, not all of his interests. On cross-motions for summary judgment, the Court of Chancery ruled that Blodgett had not breached the LLC agreements through conduct as a member and that those agreements did not permit cancellation of the interests. Damages remained unresolved.
Fairstead sought a partial final judgment or, alternatively, certification of an interlocutory appeal. The Court of Chancery denied both requests and recommended against immediate appellate review because the remaining damages phase could be completed promptly.
The Court’s Holding
The Delaware Supreme Court refused the interlocutory appeal. Exercising its discretion under Supreme Court Rule 42, the court concluded that Fairstead’s application did not satisfy the strict standards for interlocutory review.
The court emphasized that little remained to be resolved before the parties could appeal from a final order. It found no exceptional circumstances warranting immediate review and determined that the potential benefits of an interlocutory appeal did not outweigh the resulting inefficiency, disruption, and probable costs. The order did not decide the merits of the Court of Chancery’s rulings concerning the LLC agreements or Blodgett’s interests.
Key Takeaways
- The Delaware Supreme Court declined immediate review because the case was close to a final, appealable judgment.
- Rule 42 imposes strict requirements, and no exceptional circumstances justified interlocutory review here.
- The Court of Chancery’s liability rulings remain in place while it determines Blodgett’s damages, but their merits were not reviewed by the Supreme Court.
Why It Matters
The order reinforces Delaware’s preference for appellate review after entry of a final judgment, particularly when only a limited damages phase remains. A party’s disagreement with significant summary-judgment rulings does not itself establish the exceptional circumstances required for interlocutory review.