Namdar v. Fried
340 A.3d 1184
Del. Ch.2025Background
- David Namdar, an executive and investor in Immutable Holdings, entered into a settlement and employment agreement with the company, which included a Delaware-exclusive forum selection clause and a fee-shifting provision.
- After disputes with other company executives, Namdar sued Fried, Long, and Immutable Holdings in Puerto Rico, rather than Delaware, alleging multiple claims related to his removal and treatment.
- Defendants moved to dismiss the Puerto Rico action based on the forum selection clause. The Puerto Rico court agreed and dismissed the case, holding Delaware was the exclusive forum.
- Namdar then brought similar claims in Delaware. In response, Immutable Holdings counterclaimed for breach of the forum selection clause, seeking as damages the costs incurred defending the Puerto Rico action.
- Namdar moved to dismiss this counterclaim, arguing that Delaware law does not permit damages measured by litigation expenses incurred enforcing a forum selection clause.
- The Delaware Chancery Court was asked to resolve whether such damages are available and if the American Rule on litigation costs bars recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages for breach of forum selection clause | Damages unavailable; only injunctive relief per Ingres; El Paso overruled | Damages proper under El Paso; Ingres did not overrule El Paso on damages | Damages are available; El Paso remains good law on this point |
| American Rule bars litigation expense damages | The American Rule prohibits recovery of litigation expenses as damages | Expenses are expectation damages, not enforcement costs; American Rule doesn't bar recovery | American Rule does not bar recovery—expenses are expectation damages, not fee-shifting |
| Exclusive remedy of injunctive relief | Injunctive relief is the sole appropriate remedy | Parties may be awarded both injunction and damages to ensure complete relief | Injunction plus damages for prior harm—in addition to, not instead of, injunction |
| Failure to seek costs/fees in Puerto Rico | Company lost right to damages by not seeking them in Puerto Rico court | Forum selection clause allows recovery in Delaware; right to elect remedy and forum | No requirement to pursue costs in Puerto Rico; contractual right to litigate in Delaware |
Key Cases Cited
- El Paso Nat. Gas Co. v. TransAmerican Nat. Gas Corp., 669 A.2d 36 (Del. 1995) (held that damages for breach of forum selection clause may include litigation expenses in a foreclosed forum)
- Ingres Corp. v. CA, Inc., 8 A.3d 1143 (Del. 2010) (affirmed specific enforcement of forum selection clauses, but did not eliminate damages remedy)
- Nat'l Indus. Grp. (Hldg.) v. Carlyle Inv. Mgmt. L.L.C., 67 A.3d 373 (Del. 2013) (distinguished El Paso, reinforced enforceability of forum selection clauses through equitable relief)
- Mahani v. Edix Media Gp., Inc., 935 A.2d 242 (Del. 2007) (explained American Rule on litigation expenses)