Spencer v. Dextral Capital LP
This text of Spencer v. Dextral Capital LP (Spencer v. Dextral Capital LP) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
JASON SPENCER, ) ) Plaintiff, ) ) v. ) C.A. No. N17C-11-044 JAP ) DEXTRAL CAPITAL LP, et. al, ) ) Defendants. ) )
Upon Defendants’ Motion to Dismiss: GRANTED
ORDER
On this 1st day of May 2018, having considered Defendants’
motion to dismiss the Complaint, and Plaintiff’s opposition thereto,
it appears to the Court that:
1. In this suit Plaintiff Jason Spencer, a resident of Dallas,
Texas, claims that the defendants, Dextral Capital LP and Dextral
Capital Management Fund LP, owe him over one million dollars in
unpaid wages, bonuses, health care insurance, and the like.
Dextral has moved to dismiss the Complaint on the basis that
Spencer’s suit is barred by the doctrine of res judicata. Because
this matter comes before the court on a motion to dismiss, the court will treat each well-pled factual allegation as true and will give
Plaintiff the benefit of all reasonable inferences arising from those
facts.1
2. Spencer alleges he became a managing director of Dextral
in June of 2009. His duties included, among other things, “being
responsible for the day to day operations of both Dextral Capital LP
and Dextral Capital Management Fund LP, raising capital, fund
investment management and monitoring, ensuring SEC
compliance, reporting to the investors, and handling investor
questions, concerns, tax reporting, statements, and distribution
requests as needed.”2
3. By 2011, the relationship had apparently soured.
According to the Complaint, “one of Defendants’ officers, Ken
Talbert, attempted to terminate Plaintiff’s employment on the [sic]
November 11, 2011 by providing written notice of that intention.”3
Spencer contends that he was contractually entitled to continue his
position with Dextral until such time as Dextral and its parent LLC
were dissolved, and therefore, his termination was ineffective.
1 See In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006). 2 Complaint ¶5. 3 Id. at ¶9. 2 4. Not long after “attempting to terminate Plaintiff’s
employment” Dextral filed suit against him in Texas alleging
multiple counts of defalcations by Spencer. The Texas District
Court conducted a bench trial and found in favor of Dextral. It
concluded Spencer stole large amounts of money from Dextral.
According to the Texas court, “Spencer’s conversion,
misappropriation, and theft of partnership monies of Dextral . . .
constituted theft of fiduciary property under the Texas Penal
Code.”4
5. Res judicata is a familiar doctrine in American law. “The
doctrine of res judicata is venerable and well-established in our
legal history, having been traced back to Roman law and
implemented in English law in the twelfth century.”5 Under the
doctrine, “a party is foreclosed from bringing a second suit based on
the same cause of action after a judgment has been entered in a
prior suit involving the same parties.”6
6. Spencer argues that the doctrine does not apply because
the issue of his employment agreement was never litigated in the 4 Ex. B to Defendants’ Motion to Dismiss (District Court’s “Findings of Fact and Conclusions of Law”). 5 LaPoint v. AmerisourceBergen Corp., 970 A.2d 185, 191 (Del. 2009). 6 Betts v. Townsends, Inc., 765 A.2d 531, 534 (Del. 2000).
3 Texas case, and the Texas court lacked jurisdiction over the case.
He is wrong on both counts. His first objection—the contention
that his employment agreement was never litigated—is premised on
the questionable assumption that the Texas court never considered
his employment agreement and that the Texas dispute was only
about Spencer’s rights and obligations under the Limited
Partnership Agreement. Contrary to Spencer’s contention, the
Texas court alluded to his employment status on several occasions.
For example, it wrote that “as an employee, manager and/or agent
Jason Spencer owed fiduciary duties to Dextral.”7 It then
concluded Defendants had “properly terminated Jason Spencer
from all authority to act on behalf of Dextral.”8
7. Assuming that Spencer is correct that the Texas court
never considered the employment relationship, his case is still
barred because the employment contract issues could have been
presented in the Texas matter. Spencer’s argument is predicated
upon the proposition that a party claiming the benefits of res
judicata must show that the issues in the earlier case “were the
7 Ex. B to Defendants’ Motion to Dismiss (District Court’s “Findings of Fact and Conclusions of Law”) (emphasis added). 8 Id.
4 same as the case at bar.” But, the Delaware Courts have held that
“[t]he res judicata doctrine operates to bar only later claims that
could have been brought at the time of an earlier asserted claim.”9
In LaPoint v. AmerisourceBergen Corp.,10 the Supreme Court wrote:
Res judicata exists to provide a definite end to litigation, prevent vexatious litigation, and promote judicial economy. “The procedural ‘bar of res judicata extends to all issues which might have been raised and decided in the first suit as well as to all issues that actually were decided.’” “In essence, the doctrine of res judicata serves to prevent a multiplicity of needless litigation of issues by limiting parties to one fair trial of an issue or cause of action which has been raised or should have been raised in a court of competent jurisdiction.”11
In LaPoint, the Supreme Court quoted with approval a Second
Circuit opinion applying Delaware law, in which the Court of
Appeals held:
[I]f the pleadings framing the issues in the first action would have permitted the raising of the issue sought to be raised in the second action, and if the facts were known, or could have been known to the plaintiff in the second action at the time of the first action, then the claims in the second action are precluded.12
8. The allegations in the Complaint leave no doubt that at
the time of the filing of the Texas case Spencer knew, or should
have known, of his employment contract claims. The Texas
9 RBC Capital Markets, LLC v. Educ. Loan Tr. IV, 87 A.3d 632, 646 (Del. 2014) (emphasis added). 10 970 A.2d 185 (Del. 2009). 11 Id. at 191-92 (internal citations omitted). 12 Id. at 193 (quoting Ambase Corp. v. City Investing Co. Liquidating Trust, 326 F.3d 63, 73 (2d Cir. 2003)) (emphasis in original). 5 Complaint was filed in December of 2011. By that time, Spencer
knew that “[h]e had never been paid since his employment began
during the previous two years of his employment,”13 and that
Defendants had “attempted to terminate” him.14 Spencer points to
nothing that he learned after the Texas case which gave rise to an
employment claim where none had previously existed.
Therefore, Defendant’s motion to dismiss with prejudice is
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Spencer v. Dextral Capital LP, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spencer-v-dextral-capital-lp-delsuperct-2018.