262 A.3d 1066
Del. Ch.2021Background
- ADM agreed to buy Florida Chemical Company (the Company) from Flotek Parent under a Purchase Agreement (SPA) that attached a substantively final Terpene Supply Agreement (TSA) and required Flotek Parent to deliver an executed TSA at closing.
- The SPA contained an exclusive Delaware forum-selection clause covering proceedings “arising out of or relating to” the SPA, “any other Transaction Document,” and agreements contemplated thereby; the TSA itself had no forum clause.
- Flotek Parent caused the Company and Flotek Sub (a Flotek Parent wholly owned subsidiary) to execute the TSA; Flotek Parent signed the SPA, Flotek Sub signed the TSA; the transaction closed and ADM acquired the Company.
- Disputes over performance and renegotiation of the TSA led Flotek Parent and Flotek Sub to sue ADM and the Company in Texas, asserting contract and tort claims (including breach of the TSA and requests for rescission).
- ADM and the Company sued in Delaware and moved for an anti-suit injunction to bar prosecution in Texas of claims covered by the SPA’s Delaware forum clause, asking enforcement against Flotek Parent and (as a non-signatory) Flotek Sub.
- Court held: the SPA’s forum clause plainly covers claims arising out of or relating to the TSA; it binds Flotek Parent as a signatory; it also binds Flotek Sub under equitable and promissory estoppel (declining to apply a restrictive “same-agreement” rule); the court enjoined prosecution in Texas of causes 3, 4, 5, 8 and 9 but denied relief as to the Theft-of-Services claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the SPA forum clause cover claims arising out of or relating to the TSA? | SPA language expressly covers "any Proceeding arising out of or relating to" the SPA and any Transaction Document (which includes the TSA). | TSA integration clause supersedes SPA’s forum clause or limits scope. | Held: SPA’s plain language and integration clause read together show the SPA’s forum clause reaches TSA claims. |
| Can the SPA forum clause bind the non-signatory Flotek Sub? | Yes — binding under equitable estoppel (direct benefits) and promissory estoppel/foreseeability (parent controlled subsidiary). | No — non-signatory isn’t party and shouldn’t be bound absent signature; SPA can’t impose terms on third parties. | Held: Flotek Sub is bound under estoppel doctrines (direct-benefit + foreseeability). |
| Should the court apply the “same-agreement” rule limiting enforcement to claims that arise under the agreement containing the clause? | No — the rule would truncate the parties’ chosen language and permit evasion; courts should enforce the clause’s plain scope once estoppel applies. | Yes — prior dicta/cases require that the agreement containing the forum clause be the same agreement that gives rise to the claim against the non-signatory. | Held: Court declines to apply the same-agreement rule; enforces the clause according to its plain terms. |
| Which Texas claims fall within the SPA forum clause and may be enjoined? | All claims that arise out of or relate to the TSA (including breach, rescission, tortious-interference-related claims and aiding/abetting). | Some statutory or purely statutory claims (e.g., Theft-of-Services) are unrelated and should proceed in Texas. | Held: Anti-suit injunction issued as to causes 3 (tortious interference), 4 (aiding/abetting), 5 (breach of TSA), 8 (civil conspiracy/rescission), and 9 (declaratory/rescission theories). Theft-of-Services claim is not covered and was not enjoined. |
Key Cases Cited
- Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728 (Del. 2006) (principles for contractual interpretation and effectuation of parties’ intent)
- In re Viking Pump, Inc., 148 A.3d 633 (Del. 2016) (contract construed as whole; interpretive rules)
- Parfi Hldg. AB v. Mirror Image Internet, Inc., 817 A.2d 149 (Del. 2002) (fraud-in-the-inducement/rescission claims can fall within forum clauses tied to the induced contract)
- Abry P’rs, L.P. v. F & W Acq. LLC, 891 A.2d 1032 (Del. Ch. 2006) (broad "relating to" language can reach tort claims seeking rescission)
- E.I. du Pont de Nemours & Co. v. Shell Oil Co., 498 A.2d 1108 (Del. 1985) (contracts must be construed together and given effect as a whole)
- Chicago Bridge & Iron Co. N.V. v. Westinghouse Elec. Co. LLC, 166 A.3d 912 (Del. 2017) (read contracts in their commercial context)
- Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983) (third-party beneficiaries invoking contract benefits may be bound by forum/arbitration clauses)
- Indus. Elecs. Corp. v. iPower Distrib. Gp., Inc., 215 F.3d 677 (7th Cir. 2000) (third-party-beneficiary principles and limits on imposing arbitration/forum clauses on non-signatories)