Paige Capital Management, LLC v. Lerner Master Fund, LLC
2011 Del. Ch. LEXIS 70
| Del. Ch. | 2011Background
- Paiges (Paige Capital Management and related entities) dispute with Lerner Fund over withdrawal rights and gates under limited partnership and revenue sharing agreements.
- Lerner Fund seeks to withdraw its capital; Paiges threaten gates to restrict withdrawal and to seek indemnification in litigation.
- March 2010 Letter from Christopher Paige threatens to continue management and costs unless Lerner Fund settles; potential breach of fiduciary duties is alleged.
- Lerner Fund counterclaims include breach of fiduciary duty and judicial dissolution; Paiges object to admission of March 2010 Letter as privileged.
- Trial court previously denied Paiges’ motion to exclude the March 2010 Letter; case centers on whether the letter is admissible evidence of fiduciary breach.
- Court analyzes scope of absolute litigation privilege and Rule 408 in the Delaware context; ultimately holds the March 2010 Letter admissible to prove fiduciary breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of the absolute litigation privilege | Lerner Fund argues privilege does not bar admission for fiduciary breach. | Paiges argue privilege should bar all admission of the letter. | Not barred; letter admissible to show breach. |
| Whether privilege extends to pre-litigation threats | Paiges contend privilege covers pre-litigation threats to immunize such conduct. | Lerner Fund argues extensions to pre-litigation threats are improper. | Do not extend; threats of future wrongful action not immunized. |
| Rule 408 applicability | Lerner Fund asserts Rule 408 does not bar admission when used to prove wrongful conduct during settlement. | Paiges contend Rule 408 excludes settlement-related statements used to prove liability. | Rule 408 does not bar admission for proving fiduciary breach. |
Key Cases Cited
- Barker v. Huang, 610 A.2d 1341 (Del. 1992) (absolute privilege largely defamation-related; limits scope to claims arising from statements in litigation)
- Denoble v. Dupont Merck Pharm. Co., 703 A.2d 643 (Del. 1997) (Delaware treatment of privilege and pre-litigation communications; context in related proceedings)
- Wollam v. Brandt, 154 Or.App. 156, 961 P.2d 219 (Or. App. 1998) (outside Delaware; cited for broader privilege rationale in other jurisdictions)