In the recent decision of Searchlight CST, L.P. v. MediaMath Holdings, Inc., C.A. No. 2020-0652-SG (Del. Ch. Sept. 28, 2020), the Delaware Court of Chancery granted Defendant MediaMath Holdings, Inc.’s (“Defendant”) motion for summary judgment in connection with a contract dispute over a provision limiting the amount of indebtedness Defendant is able to incur.

According to the opinion, Plaintiff Searchlight CST, L.P. (“Plaintiff”) is an investor in the Defendant. In connection with its purchase of preferred stock, it contracted for a limit on the amount of indebtedness that Defendant is able to incur. Defendant is in the process of negotiating a new credit facility.  Plaintiff contends that the Defendant is contractually prohibited from entering the facility without its consent.

Plaintiff moved for a TRO and expedited proceedings of the action, to enjoin Defendant from consummating the transaction at issue.  In response, Defendant moved for summary judgment in its favor.

Upon review of the contract and each side’s interpretation thereof, the Court held that the contract does not require Defendant to obtain the Plaintiff’s consent before entering or borrowing under the proposed credit facility, up to $100 million.

The Court noted that while each side had differing views of the contract language at issue, the language was unambiguous (a point on which the parties agreed), and therefore the Court was able to rule on the language without considering extrinsic evidence.

As the Court noted, “[a] contract is not rendered ambiguous simply because the parties do not agree upon its proper construction. Rather, an ambiguity exists [w]hen the provisions in controversy are fairly susceptible of different interpretations or may have two or more different meanings.”  Slip op. at 18-19 (quoting GMG Capital Investments, LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 780 (Del. 2012)).

Previously, the Court had ruled upon Defendants’ motion to seal the entirety of the upcoming TRO hearing, which the Court summarily denied in a one page ruling.  A recent blog post concerning this ruling can be found here.

Accordingly, the Court granted Defendant’s Motion for Summary Judgment, and ruled that the TRO request is moot.

Carl D. Neff is a partner with the law firm of Pierson Ferdinand LLP, and practices in Delaware. You can reach Carl at (302) 482-4244 or at carl.neff@pierferd.com.