Invictus Special Situations Master I, L.P. v. Invictus Global Management, LLC
C.A. No. 2023-1099-NAC
| Del. Ch. | Jun 30, 2025Background
- Invictus Special Situations Master I LP (the Fund), a Cayman Islands fund with ERISA investors/assets, filed suit against its former management and general partner (Delano, Patel, IGM, Invictus GP) for breach of contract, alleging retention of nearly $10M and information after their removal.
- Defendants counterclaimed for advancement of legal fees, asserting entitlement under partnership/management agreements governed by Delaware law.
- The Fund raised an ERISA defense, asserting that ERISA Section 1110 voids advancement of defense costs to fiduciaries from plan assets, referencing Third Circuit authority (Koresko).
- Jurisdictional disputes occurred, including removal to federal court and remand, with both courts ultimately proceeding despite unresolved federal preemption questions.
- The Delaware Chancery Court granted partial summary judgment for the Fund, holding the advancement provisions void under ERISA § 1110, vacating prior summary judgment for defendants’ advancement rights.
- Defendants moved for interlocutory appeal of the ERISA ruling under Delaware Supreme Court Rule 42, citing unresolved, novel questions and a circuit split.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is advancement of legal fees void under ERISA § 1110 where fiduciaries are accused of breaching fund documents? | Advancement provisions void per Third Circuit in Koresko; ERISA prohibits use of plan assets for defense costs of fiduciaries | Delaware law entitles them to advancement; ERISA § 1110 does not apply absent ERISA fiduciary breach claim; circuit split exists | Advancement provisions are void under ERISA § 1110 per Third Circuit (Koresko) and not enforceable here |
| Does Chancery Court have subject matter jurisdiction given possible federal preemption? | Jurisdiction proper; claims not completely preempted per District Court ruling | Jurisdiction improper; ERISA preempts state law claims/defenses, depriving Chancery Court of authority | Court moved past its concerns due to District Court remand but recognized unsettled jurisdiction |
| Is interlocutory review warranted under Rule 42 given novelty and importance? | Not necessary, ordinary litigation should proceed | Necessary due to novel, significant federal/state law intersection, procedural complexity, and potential to terminate litigation | Interlocutory appeal certified—exceptional circumstances, substantial benefits outweigh costs |
| Does ERISA preempt all of the Fund's claims and bar prejudgment interest? | No; raises claim for prejudgment interest as allowed by law | Yes; ERISA preempts Fund’s claims and prejudgment interest claim is barred by waiver/Cayman law | Not ruled upon; deferred pending appeal of ERISA advancement issue |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (federal preemption under ERISA is limited, not triggered by mere federal defenses)
- Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (ERISA’s enforcement remedies interpreted broadly)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (congressional intent to provide exclusive federal remedies under ERISA)
- Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (scope of ERISA preemption)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (expansive scope of ERISA preemption clause)