Agspring, LLC v. NGP X US Holdings, L.P. ( 2022 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
417 S. State Street
JOSEPH R. SLIGHTS III Dover, Delaware 19901
VICE CHANCELLOR Telephone: (302) 739-4397
Facsimile: (302) 739-6179
Date Submitted: October 4, 2021
Date Decided: January 19, 2022
Joseph C. Schoell, Esquire James M. Yoch, Jr., Esquire
Faegre Drinker Biddle & Reath LLP Kevin P. Rickert, Esquire
222 Delaware Avenue, Suite 1410 Young Conaway Stargatt & Taylor, LLP
Wilmington, DE 19801 1000 North King Street
Wilmington, DE 19801
Re: Agspring, LLC v. NGP X US Holdings, L.P.
C.A. No. 2019-1021-JRS
Dear Counsel:
This Letter Opinion addresses Plaintiff, Agspring, LLC’s Motion for
Summary Judgment, Declaratory Judgment, and to Vacate the Arbitration Award
(“Agspring’s Motion”), and Defendant, NGP X US Holdings, L.P.’s Motion for
Summary Judgment to Confirm Arbitration (“NGP’s Motion”). For the reasons
explained below, Agspring’s Motion is DENIED and NGP’s Motion is GRANTED.
I. BACKGROUND
In 2012, Defendant, NGP X US Holdings LP (“NGP”), Randal Linville and
Bradley Clark formed Agspring, LLC (“Agspring”), a company focused on
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agricultural supply chains. NGP owned approximately 98% of Agspring’s
membership interests.1 In connection with the formation of Agspring, the parties
entered into two agreements in 2012 that are relevant here: the Limited Liability
Company Agreement of Agspring, LLC (the “LLC Agreement”) and the Advisory
Services, Reimbursement and Indemnification Agreement (the “Services
Agreement”) (together, the “2012 Agreements”).2 The LLC Agreement governed
Agspring’s operations, and the Services Agreement called for NGP to provide
advisory services to Agspring for $75,000 a year.3 These agreements governed the
relationship between NGP and Agspring and contained certain advancement,
arbitration and indemnification rights that are central to this dispute.4
1
Am. Verified Compl. (“Compl.”) (D.I. 61) ¶ 4.
2
Id.
3
Compl. Ex. B-1, B-2.
4
Compl. Ex. B-1 at 34–35, 47–49; Compl. Ex. B-2 at 2–6.
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A. The AIM Transaction and the Aftermath
In December of 2015, NGP sold its interest in Agspring to American
Infrastructure MLP Funds (“AIM”) (the “Transaction”) under a Membership
Interest Purchase and Contribution Agreement (the “MIPCA”).5 To consummate
the Transaction, AIM created Agspring, LP, which was later converted into
Agspring Holdco, LLC (“Holdco”), a plaintiff in a related action pending in this
Court.6 The financing for the Transaction was provided by LVS II SPE XVIII,
LLC, HVS V, LLC, and TOBI XXI, LLC, each of which is also a plaintiff in the
related action.7
5
Compl. ¶ 1.
6
C.A. 2019-0567-JRS.
7
Am. Compl. (“Sale Action Compl.”) (D.I. 28) (C.A. 2019-0567-JRS) ¶ 3. In the related
litigation, Plaintiffs allege, among other things, that NGP, Clark and Linville made
fraudulent representations and warranties in the MIPCA. Sale Action Compl. ¶¶ 4–10.
Specifically, it is alleged that Defendants knew that the financial outlook for Agspring’s
operating subsidiaries had taken a significant turn for the worse pre-closing and instructed
Agspring employees to doctor financial projections to achieve the numbers necessary for
the deal to close. Sale Action Compl. ¶¶ 6–7. For example, Plaintiffs allege that
Defendants forecasted $33 million in EBITDA to Plaintiffs in late November 2015 when,
just six months later, the actual EBITDA was only $701,900. Sale Action Compl. ¶ 10.
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On October 1, 2018, Clark and Linville prevailed in an arbitration against
Agspring GP, Agspring LP’s general partner, and obtained an award compensating
them for amounts owed “in connection with their resignation.”8 Agspring GP
claimed it had no assets, and Holdco (formerly Agspring LP) refused to cover the
award.9 In January 2019, Clark and Linville sued Agspring, Agspring GP, Holdco
and others in Kansas state court, attempting to collect the arbitration award and
asserting related causes of action.10
Holdco brought its suit regarding the Transaction in April 2019.11 A month
later, NGP demanded advancement and indemnification from Agspring under the
2012 Agreements.12 Agspring refused. On December 13, 2019, NGP initiated an
arbitration against Agspring to enforce its advancement rights as required by the
8
Compl. ¶ 26.
9
Compl. ¶¶ 26–27; Def. NGP X US Hldgs., L.P.’s Corrected Omnibus Br. Regarding
Arbitration Award and Other Matters (“NGP Omnibus Br.”) (D.I. 78) at 7; id. Ex. 13.
10
Compl. ¶ 26; NGP Omnibus Br. at 7.
11
Compl. ¶ 22.
12
Compl. ¶ 24.
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2012 Agreements.13 In response, Agspring filed this action and sought an
injunction preventing NGP from prosecuting its arbitration claims, arguing that the
MIPCA superseded the 2012 Agreements and required NGP to bring its
advancement and indemnification claims in Delaware courts.14 On March 23, 2020,
after briefing and a hearing, the Court denied the request for injunctive relief and
ruled that the parties “evinced a clear and unmistakable intention [in the 2012
Agreements] to arbitrate the issue of arbitrability.”15
B. The Arbitration Orders
After briefing and oral argument, the arbitration panel entered Interim-
Award #1.16 There, the panel concluded that the 2012 Agreements’ arbitration
provisions survived the Transaction and governed the advancement dispute
13
Compl. ¶¶ 31–32.
14
Compl. ¶¶ 34–35.
15
NGP Omnibus Br. Ex. 23 (Agspring, LLC v. NGP X US Hldgs., L.P., 2019-1021-AGB,
at 14:1–3 (Del. Ch. Mar. 23, 2020) (TRANSCRIPT) (Bouchard, C.)).
16
NGP Omnibus Br. Ex. 28 (“Interim-Award 1”).
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between the parties.17 In reaching that conclusion, the panel held the following:
the merger and integration clauses in the MIPCA did not preclude enforcement of
the 2012 Agreements’ arbitration provisions because the MIPCA dealt with
different parties and subject matter; the MIPCA’s forum selection clause did not
apply to the arbitration claims; the 2012 Agreements provided for the assignment
and survival of the advancement rights; and Defendants did not waive their
advancement rights by not disclosing them in the MIPCA’s schedules even though
the MIPCA required disclosure of indemnity contracts, claims of rights, and
encumbrances.18
In Order #2, entered on March 10, 2021, the arbitration panel reiterated that
the arbitration clauses in the 2012 Agreements were in full force and effect and
asked the parties to submit briefing on a narrow set of issues.19 In doing so, the
panel expressly rejected Agspring’s argument that, even if the arbitration provisions
17
Id. at 1.
18
Id. at 8–17.
19
NGP Omnibus Br. Ex. 30 (“Order 2”).
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survive, the MICPA’s exclusive jurisdiction provision required NGP’s claims to be
adjudicated in Delaware.20
In Order #3, among other things, the arbitration panel highlighted the
summary nature of advancement proceedings, noting that Delaware courts “have
required advancement while the parties litigate the validity of the underlying
agreements that provide for advancement and indemnification.”21 In this regard,
the panel observed that Agspring could attempt to recoup improperly paid
advancement funds in a plenary proceeding.22
Then, in Order #5,23 the panel held that the clear and unambiguous terms of
the Services Agreement entitled NGP to advancement from Agspring in connection
with the Kansas litigation, the arbitration and both of the actions filed in this court.24
20
Id. at 3–4.
21
NGP Omnibus Br. Ex. 24 (“Order 3”) at 3.
22
Id. at 5 (relying on Trascent Mgmt. Consulting, LLC v. Bouri, 152 A.3d 108, 110
(Del. 2018)).
23
Order #4 addressed a scheduling issue. NGB Omnibus Br. Ex. 47.
24
NGP Omnibus Br. Ex. 33 (“Order 5”) at 4.
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Starting in April 2021, NGP began submitting advancement claims to
Agspring. Rather than pay the full amount of the claim, or half the amount while
disputing the claim as provided for in Order #5,25 Agspring refused NGP’s claims
in their entirety. According to Agspring, it lacks sufficient liquidity to pay
advancement and is essentially insolvent.26
C. The Motions at Issue
On April 26, 2021, Agspring brought a motion for summary judgment,
declaratory judgment, and to vacate the arbitration award so that it could “present
25
Id. at 8 (“If Agspring believes that the amounts claimed for advancement are
unreasonable, it may file an opposition. Agspring will pay the undisputed amount
contemporaneously with its response. If Agspring disputes more than 50% of the amount
claimed, it will pay 50% of the amount sought, and NGP’s counsel shall hold the amount
exceeding the undisputed amount in its escrow account pending resolution of the dispute
regarding the contested portion.”).
26
E.g., Combined Reply Br. in Supp. of Agspring Holdco, LLC’s Mots. to Am. the Compl.
and for Prelim. Inj. and Agspring, LLC’s Mot. for Declaratory J. and to Vacate the
Arbitration Award (“PRB”) (D.I. 84) at 24. (“NGP will likely cause Agspring, which it
sold to Holdco, to be rendered inoperable and/or to file bankruptcy through its
advancement demand for more than $7 million. Agspring’s Chief Financial Officer has
sworn this to be true and explained that Agspring’s assets are all subject to liens.
Moreover, the Verified Complaint states Agspring defaulted on a Material Loan in
October 2018 and remains in default. NGP has been provided audited financial statements
in discovery which support Agspring’s dire financial circumstances.”).
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Agspring’s arguments regarding its rights under the MIPCA in one place, ideally to
obtain relief from this Court, but at a minimum, to resolve this case to final
judgment such that Agspring can take an appeal.”27 Specifically, Agspring asks this
Court to vacate the arbitration order awarding advancement to NGP because the
arbitration panel: “(1) acted without jurisdiction; (2) rewrote [the] language of the
MIPCA; (3) disregarded the longstanding rule that a later agreement between the
same parties controls over conflicting provisions in an earlier agreement; and
(4) ignored the doctrine of quasi-estoppel.”28
Agspring also asks the Court to enter a declaratory judgment that: “(1) NGP
is estopped from enforcing advancement against Agspring because it failed to
disclose that right in the MIPCA; (2) NGP must specifically perform according to
the indemnification procedures in Article IX of the MIPCA and stop its efforts to
enforce the Services Agreement; and (3) the JAMS arbitration panel lacks
27
Pl.’s Opening Br. in Supp. of its Mot. for Summ. J., Declaratory J., and to Vacate the
Arbitration Award (“POB”) (D.I. 62) at 3.
28
Id. at 4.
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jurisdiction under the Services Agreement in light of the MIPCA—the later-in-time
contract between the parties.”29
On May 13, 2021, NGP filed an answer and verified counterclaim, along with
a competing motion for summary judgment to confirm the arbitration panel’s
award.30
II. ANALYSIS
The parties present the two sides of the arbitration coin––Agspring seeks to
vacate the arbitrators’ orders while NGP seeks to have the orders confirmed.
I address those issues first before addressing the remaining (peripheral) issues
presented in the cross-motions.
A. Vacatur Standard of Review
By seeking to vacate an arbitrator’s final order, Agspring has chosen to climb
a nearly vertical hill. “[A] court’s review of an arbitration award is one of the
29
Id. at 3–4.
30
D.I. 70–71.
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narrowest standards of judicial review in all of American jurisprudence.”31
“Arbitration awards . . . are not lightly disturbed, and ‘[c]ourts must accord
substantial deference to all decisions of arbitrators.’”32 “To successfully convince
the Court to vacate the award of an arbitration panel, the movant must show
‘something beyond and different from a mere error in the law or failure on the part
of the arbitrators to understand or apply the law.’”33 Indeed, our Supreme Court
has been quite clear on this point. “[Q]uestionable legal support or a misreading of
the law alone are insufficient to vacate an arbitration award.”34
Delaware courts condone vacatur only “where the arbitrator acts in ‘manifest
disregard’ of the law,” meaning that “the arbitrator (1) knew of the relevant legal
principles, (2) appreciated that this principle controlled the outcome of the disputed
31
TD Ameritrade, Inc. v. McLaughlin, Piven, Vogel Sec., Inc., 953 A.2d 726, 732
(Del. Ch. 2008) (citing Way Bakery v. Truck Drivers, Local No. 164, 363 F.3d 590, 593
(6th Cir. 2004)).
32
Id. (citing Kashner Davidson Sec. Corp. v. Mscisz, 531 F.3d 68, 70 (1st Cir. 2008)).
33
Id. at 732–33 (citing Westerbeke Corp. v. Daihatsu Motor Co., Ltd., 304 F.3d 200, 208
(2d Cir. 2002)).
34
Auto Equity Loans of Del., LLC v. Baird, 232 A.3d 1293, 2020 WL 2764752, at *3
(Del. 2020) (TABLE).
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issue, and (3) nonetheless willfully flouted the governing law by refusing to
apply it.”35 With respect to decisions grounded in contract interpretation, “as long
as the arbitrator is even arguably construing or applying the contract and acting
within the scope of his authority, that a court is convinced that he committed serious
error does not suffice to overturn his decision.”36
B. Agspring Offers No Basis to Vacate the Arbitration Panel’s Orders
Agspring argues the arbitrator’s orders should be vacated on four grounds:
(1) the panel acted without jurisdiction, (2) the panel altered the unambiguous
language of the MIPCA, (3) the panel disregarded the rule that the most recent
contract controls, and (4) the panel disregarded the doctrine of quasi-estoppel.
As explained below, none of these grounds justify vacatur.
First, the arbitration panel did not show manifest disregard for the law or act
outside of its jurisdiction when it determined that the advancement claim was
35
SPX Corp. v. Garda USA, Inc., 94 A.3d 745, 750 (Del. 2014) (citing Paul Green Sch.
of Rock Music Franchising, LLC v. Smith, 389 Fed. App’x 172, 177 (3d Cir. 2010)).
36
Id. (citing United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38
(1987)) (alterations omitted).
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arbitrable. Last year, this Court deferred the substantive arbitrability question to
the arbitrator when it ruled that the parties “evinced a clear and unmistakable
intention to arbitrate the issue of arbitrability.”37 That decision vested the arbitrator
with jurisdiction.38
Second, Agspring’s argument that the panel “altered and amended” the
language of the MIPCA is misplaced and falls well short of the kind of error that
would justify vacatur.39 Agspring asserts that the panel altered Section 10.11 of the
MIPCA in reaching its determination that the MIPCA’s forum selection clause did
not supersede the arbitration clauses in the 2012 Agreements. Section 10.11(b)
states that the parties submit to the exclusive jurisdiction of Delaware courts
37
NGP Omnibus Br. Ex. 23 (Agspring, LLC v. NGP X US Hldgs., L.P., 2019-1021-AGB,
at 14:1–3 (Del. Ch. Mar. 23, 2020) (TRANSCRIPT) (Bouchard, C.)).
38
Agspring argues that “[t]his Court is not bound by its earlier decision that arbitrability
under the 2012 Agreements must be decided by the arbitrator.” PRB at 35. That argument
ignores both the law of the case doctrine and that Chancellor Bouchard’s determination
that substantive arbitrability should be decided by the arbitrator in this case was a correct
application of settled Delaware law. See generally Ins. Corp. of Am. v. Barker, 628 A.2d
38, 40–41 (Del. 1993) (explaining and applying law of the case doctrine).
39
PRB at 35–38.
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“with respect to any dispute arising out of or relating to this Agreement or any of
the transactions contemplated hereby, and each Party irrevocably agrees that all
claims in respect of such dispute or proceeding” will be heard in Delaware courts.40
According to Agspring, the panel “omitted” the language “all claims in respect of
such dispute or proceeding” from its analysis.
Agspring’s characterization of the panel’s decision is misguided given that
the panel cited the forum selection provision in its entirety.41 That fact aside, the
language Agspring says was ignored does not change the panel’s analysis and
resulting conclusion that the forum selection clause does not mention the 2012
arbitration clauses, or that a prior agreement involving one entity, in certain
circumstances, may continue to govern the rights and obligations of a successor
entity, even when the successor entity enters into subsequent agreements that touch
on the same subject matter.42 Nor can it be said that the phrase “all claims in respect
40
Interim-Award 1 at 10; Compl. Ex. B-3 (“MIPCA”) § 10.11(b).
41
Interim-Award 1 at 10.
42
Id. at 12–13.
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of such dispute or proceeding” necessarily broadens the phrase “any dispute arising
out of or relating to this agreement,” and certainly not to the extent where the panel
egregiously flouted the law by failing to construe the phrase in that manner.
The panel also held that the MIPCA’s forum selection clause did not apply
to the arbitration claims. Here again, it concluded that “there may be circumstances
when a prior entity agreement continues to govern the rights and obligations of a
signatory and a successor entity despite the existence of a new entity agreement.”43
The panel then analogized this court’s opinion in Griffin, noting that the MIPCA’s
forum selection clause does not mention the 2012 Agreements, nor does the
language “arising out of or relating to this Agreement”44 “logically govern disputes
arising from earlier contracts or agreements.”45 Again, the panel’s analysis does
not come close to a manifest disregard of our law. Instead, it reflects the panel’s
43
Id. at 12 (citing 3850 & 3860 Colonial Blvd., LLC v. Griffin, 2015 WL 894928, at *5
(Del. Ch. Feb. 26, 2015)).
44
MIPCA § 10.11(b).
45
Interim-Award 1 at 13.
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commitment to follow precedent to inform its interpretation of disputed contractual
language.
Agspring then argues that the panel substantially erred by “completely
ignor[ing] Article IX when it ruled on NGP’s request for advancement” and
“allow[ed] NGP to assert a claim unavailable to it under the MIPCA.”46 But the
panel found that NGP’s advancement claim was not “a dispute arising out of or
relating to” the MIPCA, but arose instead under the Services Agreement, and thus
the MIPCA did not supersede the Services Agreement with respect to
advancement.47 Under that interpretation, Article IX would not be controlling. This
holding is a matter of contract interpretation about which, at best, reasonable minds
might differ, not a manifest disregard of our law justifying vacatur.
The same analysis and outcome apply to Agspring’s claims that the panel
“read out of the MIPCA NGP’s promise that it had released and delivered Agspring
46
POB at 37.
47
Interim-Award 1 at 13 (“[The 2012 Services Agreement] governed NGP’s provision of
advice and services to Agspring. The MIPCA governs NGP’s sale of its membership
interests in Agspring, a different subject.”).
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free and clear of any encumbrances” and “that it had no claims against the
company.”48 The panel rejected Agspring’s argument that NGP’s failure to specify
the 2012 Services Agreement in the schedules rendered that contract terminated and
unenforceable. In doing so, the panel expressly considered the parties’ arguments
before finding that “NGP’s failure to list the 2012 Agreements” on the schedules
“did not waive its rights under the agreements’ arbitration clauses.”49
The panel’s analysis on this point is admittedly thin. Still, the panel noted
that “NGP addressed Agspring’s argument in a brief to the Chancery Court,” where
NGP argued that “Agspring failed to produce any evidence suggesting that NGP
agreed to waive its express right to a four-year indemnification under the 2012
Services Agreement,” and that “NGP would not be obliged to list the agreement if
it believed that Agspring’s continuing indemnification obligations would likely not
meet the $200,000 threshold.”50 This shows, at minimum, that the panel considered
48
POB at 37–38.
49
Interim-Award 1 at 16.
50
Id.
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NGP’s arguments and found them persuasive. Again, reasonable minds may differ
on the holding, but that is a far cry from providing a basis for vacatur.
Third, Agspring argues that the panel’s “editing” of the MIPCA enabled them
“to ignore black letter Delaware law that the later-in-time agreement between the
same parties controls to the extent it conflicts with an earlier agreement.”51 While
I agree that Agspring has accurately stated Delaware law,52 the panel determined
that the contracts related to a different subject matter in certain material respects
and, therefore, did not conflict.53 I cannot say the panel’s interpretation of the
agreements is so unreasonable that the language of the MIPCA was utterly
disregarded and rewritten.
Finally, Agspring asserts that the Court should vacate the arbitration award
because the panel refused to consider the doctrine of quasi-estoppel. Agspring
51
POB at 38.
52
See, e.g., County Life Homes, Inc. v. Shaffer, 2007 WL 333075, at *5 (Del. Ch. Jan. 31,
2007) (“When a later-in-time contract addresses the same issues . . . , it will prevail in the
absence of evidence to the contrary.”).
53
Interim-Award 1 at 10–13.
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argued to the panel that this doctrine barred NGP from asserting its advancement
rights because NGP took inconsistent positions regarding potential advancement
obligations in the MIPCA, on the one hand, and in the Services Agreement, on the
other. But, as NGP points out, the panel consciously limited its decision to the
advancement stage and the face of the 2012 Agreements.54 Contrary to Agspring’s
argument, the panel’s refusal to consider a merits-based argument in an effort to
avoid expanding a summary advancement proceeding is not tantamount to
“ignor[ing] the law.”55
For all these reasons, I decline to vacate any of the arbitration panel’s orders.
C. Plaintiff’s Request for Summary Judgment and Declaratory Judgment
Must Be Denied
Agspring seeks summary judgment and declaratory judgment on several
grounds: (1) JAMS has no jurisdiction in light of the MIPCA, (2) the MIPCA
prevents enforcement of the advancement provision of the Services Agreement, and
54
Order 3 at 4–7.
55
POB at 39; see SPX Corp., 94 A.3d 745, 750 (holding that to justify vacatur, the
arbitrator’s order must reflect a “manifest disregard of the law”).
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(3) NGP is estopped from enforcing the advancement provision of the undisclosed
Services Agreement. As explained below, the Court’s confirmation of the
arbitration panel’s orders necessarily results in denial of Agspring’s motions for
summary and declaratory judgment.
“Delaware courts give valid and final arbitration awards ‘the same effect as
a court’s judgment under the doctrine of res judicata.’”56 NGP argues that claim
preclusion prevents re-litigation of issues decided by the arbitration panel. I agree.57
56
Global Link Logistics, Inc. v. Olympus Growth Fund III, L.P., 2010 WL 338214, at *4
n.30 (Del. Ch. Jan. 29, 2010) (citing Mehiel v. Solo Cup Co., 2007 WL 901637, at *5
(Del. Super. Ct. Mar. 26, 2007)); see also Cooper v. Celente, 1992 WL 240419, at *5–6
(Del. Super. Ct. Sept. 3, 1992) (“This Court decides that an arbitration award such as the
one issued in this dispute has res judicata effect on subsequent litigation efforts in the
courts. This holding is in accordance with Delaware’s strong public policy in favor of
arbitration . . . .”).
57
In its Reply Brief, Agspring argues that neither issue nor claim preclusion apply.
PRB at 28–32. It argues that the arbitration panel’s holding was narrow and that it only
addressed the MIPCA’s effect on the obligation to arbitrate, not advancement. Id. at 29.
I cannot agree that “[n]one of the Panel’s orders implicitly made findings or depended on
deciding Agspring’s rights under the MIPCA.” Id. at 30–31. As noted, the panel expressly
considered specific provisions of the MIPCA in determining that the 2012 Agreements’
arbitration provisions survived and governed the advancement dispute before eventually
holding that those agreements entitled NGP to advancement. Interim-Award 1 at 7–17.
Moreover, despite Agspring’s assertion that “Agspring’s claims fall within the exclusive
jurisdiction of this court,” the arbitration provisions and ultimately the contractual
advancement rights were submitted for interpretation and application at arbitration—
where Agspring lost. PRB at 32. In order to give proper effect to the arbitration award,
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“The doctrine of res judicata provides that a final judgment on the merits bars
further claims by the same parties or their privies based on the same cause of
action.”58 As explained below, the arguments made by Agspring to the arbitration
panel and those proffered here are essentially identical.
First, Agspring argues that the panel did not have jurisdiction because of the
MIPCA. Agspring makes several arguments in support of this premise. It argues
that the MIPCA governs NGP’s claims for advancement, not the 2012 Agreements,
because the MIPCA is the later-in-time agreement. But, as noted above, the
arbitration panel explicitly rejected this argument.
Agspring also argues that the panel did not have jurisdiction because the
MIPCA superseded the 2012 LLC Agreements. Again, the arbitration panel
considered this very argument and found it unpersuasive. In so doing, it held that
this Court must deny Agspring’s motions. See, e.g., Meso Scale Diagnostics, LLC v.
Roche Diagnostics GmbH, 62 A.3d 62, 90 (Del. Ch. 2013) (finding the arbitration panel’s
determination was “entitled to issue-preclusive effect”); LG Elecs., Inc. v. InterDigital
Commc’ns, Inc., 98 A.3d 135, 138 (Del. Ch. 2014) (noting that “for purposes of issue and
claim preclusion, this court has treated an arbitration as a prior action”).
58
Hercules Inc. v. AIU Ins. Co., 783 A.2d 1275, 1278 (Del. 2000).
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NGP’s arbitration rights under the 2012 Agreements survived NGP’s assignment
of its interest in Agspring. The panel observed that “Section 5.5(d) of the 2012 LLC
Agreement expressly provides for the survival of NGP’s indemnification rights
after NGP should cease to be a member.”59 It also distinguished Agspring’s cited
authority, noting that the principal case Agspring relied upon “is inapposite because
the agreement under consideration did not contain a survival provision.”60 The
panel exhibited a detailed analysis not worthy of vacatur, and Agspring cannot
relitigate that issue here.
Agspring then relies on the MIPCA’s integration clause, arguing that it
extinguished any right to arbitrate because it “supersede[s] all prior negotiations,
agreements and understandings of the Parties with respect to the subject matter
hereof.”61 Here again, the panel has already decided this question, holding that the
MIPCA and the 2012 Agreements were between different parties and addressed
59
Interim-Award 1 at 14.
60
Id. at 15.
61
MIPCA § 10.2.
Agspring, LLC v. NGP X US Holdings, L.P.
C.A. No. 2019-1021-JRS
January 19, 2022
Page 23
different subject matters, so the integration clause did not supersede the
2012 Agreements.
Second, Agspring argues that the MIPCA prevents enforcement of the
advancement provision of the Services Agreement. Specifically, Agspring argues
that NGP agreed the MIPCA provides “the sole and exclusive remedy” regarding
that agreement and that advancement under an undisclosed Services Agreement is
not among the remedies contained in the MIPCA. But again, as noted above, the
panel dealt with this contention in its ruling.62
Finally, Agspring argues that it is entitled to a declaratory judgment that NGP
is estopped from enforcing the advancement provision of the undisclosed Services
Agreement. In making this claim, Agspring says that NGP has maintained an
inconsistent position by representing in the MIPCA that it disclosed all indemnity
contracts “involving the potential exposure of any [Agspring entity] after the date
62
See Interim-Award 1 at 12–13 (holding that the 2012 Agreements are not superseded
by the MIPCA because they “governed NGP’s provision of advice and services to
Agspring” while “[t]he MIPCA governs NGP’s sale of its membership interests in
Agspring, a different subject”).
Agspring, LLC v. NGP X US Holdings, L.P.
C.A. No. 2019-1021-JRS
January 19, 2022
Page 24
of this agreement of more than $200,000,”63 that it did not have “any claim or right
against Agspring” except for those contained in Schedule 4.23,64 and that it
delivered Agspring “free and clear of all of Encumbrances.”65
But, as noted, the panel held that NGP’s failure to disclose the
2012 Agreements in the schedules did not waive its rights under the
2012 Agreements’ arbitration provisions.66 Although the panel did not expressly
address Agspring’s estoppel arguments, implicit in its holding is that it was
appropriate for NGP to assert arbitration and advancement rights under the
2012 Agreements despite the MIPCA’s language. And, importantly, Agspring
made its estoppel argument to the panel, and the panel specifically noted the
threshold nature of advancement proceedings and limited its analysis to a facial
63
MIPCA § 4.5(a)(xvi).
64
MIPCA § 4.23.
65
MIPCA § 5.1(a).
66
Interim-Award 1 at 16.
Agspring, LLC v. NGP X US Holdings, L.P.
C.A. No. 2019-1021-JRS
January 19, 2022
Page 25
reading of the 2012 Agreements. Not only was that approach proper but, more to
the point, it did not reflect a “manifest disregard of our law.”67
III. CONCLUSION
Because I am satisfied the arbitration panel did not commit error justifying
vacatur, and there is no legal or factual basis to revisit the arbitration panel’s orders,
Agspring’s Motion must be DENIED and NGP’s Motion must be GRANTED. The
parties shall confer and submit a form of implementing order and final judgment
within ten (10) days.
Very truly yours,
/s/ Joseph R. Slights III
67
See SPX Corp., 94 A.3d 745, 750; see also Order 3 at 6 (observing that “[t]he Delaware
Chancery Court has also ruled that advancement proceedings should be summary in nature
because ‘a delay in recognizing advancement rights may ultimately render those rights
illusory’”) (citing Perryman v. Stimwave Techs., Inc., 2020 WL 2465720, at *4 (Del. Ch.
May 13, 2020)).