Holifield v. XRI Investment Holdings LLC
Annotate this CaseDefendants-appellants and cross-appellees, Gregory Holifield (“Holifield”) and GH Blue Holdings, LLC (“Blue”), appealed a Court of Chancery memorandum opinion in favor of plaintiff- appellee and cross-appellant, XRI Investment Holdings LLC (“XRI”). The issue this case presented was whether Holifield validly transferred his limited liability membership units in XRI to Blue on June 6, 2018. The resolution of that issue bore on the ultimate dispute between the parties (not at issue here) on whether XRI validly delivered to Holifield a strict foreclosure notice purporting to foreclose on the XRI membership units, or whether such notice was incorrectly delivered to him because Blue was, in fact, the owner of the units following the transfer. Following a one-day trial, the Court of Chancery determined that the transfer of the units from Holifield to Blue was invalid because it was not a permitted transfer under XRI’s limited liability company agreement, which provided that noncompliant transfers of XRI interests were “void.” The trial court, in interpreting the Delaware Supreme Court's holding in CompoSecure, L.L.C. v. CardUX, LLC, 206 A.3d 807 (Del. 2018), held that the use of the word “void” in XRI’s LLC agreement rendered the transfer incurably void, such that affirmative defenses did not apply. Despite this holding, the trial court, in dicta, further found that XRI had acquiesced in the transfer. The Delaware Supreme Court affirmed Court of Chancery’s judgment with respect to the Blue Transfer, but reversed the judgment insofar as it precluded XRI’s recovery for breach of contract damages and recoupment of legal expenses advanced to Holifield. The Court held that the trial court’s finding of acquiescence as to only one of the alleged breaches did not bar either remedy, and the Court remanded the case for the trial court to make further determinations.
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