The Delaware Supreme Court recently ruled against an appeal from Fairstead Capital Management LLC in a case involving former employee William Blodgett. The court's decision, issued on September 10, 2026, means that the ongoing litigation regarding Blodgett's employment and the cancellation of his interests in the company will continue without interruption. This ruling impacts the parties involved and clarifies the legal landscape regarding employment agreements and member interests in limited liability companies (LLCs).
Fairstead Capital Management LLC and its affiliate, FCM Affordable LLC, are the plaintiffs in this case. They are involved in a dispute with William Blodgett, who was previously employed by Fairstead. The conflict arose after Fairstead terminated Blodgett's employment in September 2021, claiming he had breached his employment agreement. Blodgett, however, argued that Fairstead wrongfully canceled his interests in the company, which he believed he was entitled to under the terms of his employment agreement.
The case began in the Court of Chancery of the State of Delaware after Blodgett filed for arbitration in May 2022. He sought a determination that he had not breached the employment agreement and that Fairstead did not have the right to cancel his interests. In August 2022, Fairstead responded by filing a lawsuit, alleging that Blodgett had breached the LLC agreements governing their business relationship. The Court of Chancery ruled that the disputes regarding the employment agreement needed to be resolved through arbitration, while the claims related to the LLC agreements would proceed in the court.
After an arbitration award was issued on April 2, 2025, the arbitrator found that Blodgett had indeed breached the employment agreement but ruled that Fairstead could not cancel all of Blodgett's interests, only those related to pending transactions. Following this, both parties filed for summary judgment in the Court of Chancery, which issued a decision on May 13, 2026. The court ruled in favor of Blodgett, stating that he had not breached the LLC agreements and that Fairstead did not have the right to cancel his interests.
In the ruling, the court stated, "Blodgett was entitled to summary judgment on Plaintiffs’ claims because he ‘did not take any action as a member that could support a breach of [the LLC agreements].’" The court also noted that the LLC agreements did not permit the cancellation of Blodgett's interests. However, the court did not determine the amount of damages Blodgett was entitled to receive.
Following the court's ruling, Fairstead sought an interlocutory appeal, which would allow them to challenge the decision before the final judgment was issued. They requested the court to certify this appeal under Supreme Court Rule 42, but the Court of Chancery denied their motion on June 29, 2026. The court stated that the case was nearing the damages phase and could be resolved quickly.
The Delaware Supreme Court reviewed the request for an interlocutory appeal and ultimately decided to refuse it. The court explained that the application for such a review did not meet the strict standards required for certification. They agreed with the Court of Chancery's assessment that there were no exceptional circumstances justifying an interlocutory review and that the potential benefits of such a review did not outweigh the inefficiencies it would cause.
Chief Justice Collins J. Seitz, Jr., who presided over the decision, stated that the court concluded, "Applications for interlocutory review are addressed to the sound discretion of the Court." The court's refusal to accept the appeal means that the case will continue in the lower court, focusing on determining the damages owed to Blodgett.
This ruling has significant implications for both parties. For Blodgett, it reinforces his position in the ongoing litigation and allows him to pursue damages without further delays. For Fairstead, the decision means they must continue to engage in litigation over the matter, likely incurring additional legal costs.
Going forward, the case will proceed to determine the amount of damages Blodgett is entitled to receive. The court has not yet set a timeline for this phase of the proceedings. As of now, there are no indications that this case will be appealed further, as the Supreme Court has already ruled on the matter of the interlocutory appeal.