In Park7 Student Housing, LLC v. PR III/Park7 SH Holdings, LLC, 2025-0167-MTZ (Del. Ch. June 20, 2025), the Delaware Court of Chancery denied the plaintiffs’ request for a temporary restraining order (TRO) that would have blocked the sale of six student housing properties, finding that the plaintiffs had waited too long to pursue equitable relief. Vice Chancellor Morgan Zurn held that the plaintiffs had created “an emergency of their own making” by failing to act with appropriate urgency after filing their complaint, and concluded that the plaintiffs’ claim for equitable and injunctive relief was barred under the doctrine of laches.
The parties’ dispute arose from a failed transaction in which the plaintiffs, Park7 Student Housing, LLC, and others sought to buy the properties at issue pursuant to a purchase agreement that included a negotiated waiver of their right of first refusal (ROFR) to buy the properties. That agreement was later terminated. After the termination of the purchase agreement, the defendants (the owners and sellers of the properties) began negotiating a sale of the properties to a third party. The plaintiffs learned of these negotiations and that the defendants had signed a letter of intent with the third-party purchaser in January 2025. In February 2025, the plaintiffs filed a complaint in the Court of Chancery, alleging that the new transaction was engineered to deprive them of their contractual rights, including the previously waived ROFR. Although the plaintiffs initiated the lawsuit in February 2025, they did not seek a TRO at that time (but did file a motion to expedite with their complaint). Soon thereafter, the plaintiffs asked the Court to defer its decision on their request for expedition and filed an amended complaint later in February. The amended complaint also requested injunctive relief, but the plaintiffs still did not seek a TRO or request expedition.
Over the following months, the defendants proceeded to negotiate and execute a new purchase agreement with the third-party buyer. The plaintiffs continued to litigate the matter at a standard pace, despite being aware of these developments. However, once the new purchase agreement had been signed, the plaintiffs sought leave to file a second amended complaint, along with a TRO and an expedited schedule. The Court granted this motion, allowing the plaintiffs to proceed with filing a second amended complaint, a motion for a TRO, and a request for expedition.
In response to the plaintiffs’ request for a TRO, the defendants argued that the doctrine of laches should bar the plaintiffs’ motion. The Court agreed and denied the motion for a TRO. As a general matter, laches will bar equitable relief where “the plaintiff waited an unreasonable amount of time before bringing the suit and the delay unfairly prejudices the defendant.” In addition, the three required elements to successfully prove a laches defense are knowledge by the claimant, an unreasonable delay in bringing the claim, and resulting prejudice to the defendant. The Court rejected the plaintiffs’ argument that their claim for injunctive relief was not ripe until the final purchase agreement had been executed. According to the Court, the plaintiffs were on notice of the potential sale to the third party as early as January 2025, knew their ROFR was eliminated in April 2024, and knew that the purchase agreement between the defendants and them had terminated in October 2024. Thus, the Court found that the plaintiffs could have taken prompt steps to seek relief. By failing to do so, and waiting until May 2025 to seek the TRO, they allowed a third-party interest to finalize. The Court found the plaintiffs’ delay to be unreasonable and further found that the delay prejudiced the defendants and the third-party purchaser.
This case offers a reminder that the timing of a request for equitable relief may be equally as important as its merits. Parties that file complaints but do not move quickly to seek a TRO or expedited relief should not expect the Court of Chancery to ignore this delay and grant a plaintiff’s wishes, especially when a third party’s interests have begun to vest.
*Clay Horowitz, a summer associate at the firm not yet admitted to the bar, contributed to this alert.