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Ingres Corp. v. CA, Inc., C.A. No. 4300 (Del. Dec. 1, 2010) (Justice Ridgely)

December 1, 2010

In this en banc opinion, the Delaware Supreme Court affirmed a decision by the Court of Chancery that enjoined Ingres Corporation (“Ingres”) from prosecuting its breach of contract claims against CA, Inc. (“CA”) in California, holding that deference to the prior action in California was not required given the contracts’ forum selection clauses identifying Delaware as the chosen forum.

In November 2008, Ingres brought an action for breach of contract against CA in the California Superior Court. In January 2009, CA filed an action in Delaware seeking to prevent Ingres from prosecuting the action in California and to require Ingres to perform its contractual obligations. Citing the forum selection clauses in the parties’ agreements, the Court of Chancery denied a motion by Ingres to stay the Delaware action and, after a trial, ruled substantially in favor of CA.

In this appeal that followed, the Supreme Court reaffirmed and clarified its holding in McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co., 263 A.2d 281 (Del. 1970), which held that Delaware courts should favor a motion to stay where a prior action involving the same parties and issues is pending in another capable court. The Court ruled that since the McWane principle is only a default rule of common law, a court should honor a forum selection clause agreed upon by the parties and deny a motion to stay. A court should consider a forum selection clause presumptively valid unless enforcement would be unreasonable and unjust or the clause is invalid for such reasons as fraud and overreaching, which is determined on a case-by-case basis.

The Supreme Court rejected Ingres’ argument that the Court of Chancery should have granted the motion to stay because one of the parties’ agreements did not contain a forum selection clause. The Court agreed with the Court of Chancery’s analysis, which considered the entire collection of related contracts, to conclude that the agreement lacking the clause did not supersede those that contained broad forum selection clauses.

The full opinion is available here