Delaware Court of Chancery.

A Connecticut investment management firm is fighting to keep its $25 million fraud and breach-of-contract suit stemming from a high-profile Chancery Court appraisal case in Delaware, arguing that a proposed move to Illinois federal court would improperly deprive the firm of its chosen venue for litigation.

The suit, filed by Verition Partners Master Fund, accuses Chicago-based litigation services firm Coherent Economics of failing to disclose disparaging remarks that expert witness W. Bradford Cornell made about the firm's appraisal claims in a suit over the fair value of AOL Inc. after it was acquired by telecommunications giant Verizon in a $4.4 billion deal in June 2015.

According to court documents, Cornell had initially called the appraisal-seekers' appraisal case “shitty” in pretrial emails as he positioned himself to serve as Verizon's expert witness, but later flipped to the petitioner's side to settle a personal “grudge” when Verizon decided to hire a different expert to testify on its behalf.

In its complaint, Verition said the allegedly undisclosed comments were a “ticking time bomb” that eventually exploded at trial when company attorneys used them to attack Cornell's credibility on cross-examination. Verition claimed that the ordeal torpedoed its case and led Vice Chancellor Sam Glasscock III to value its AOL shares at $48.70, well below the $68.98 mark that Verition had argued for.

In a further blow to appraisal-seekers, Glasscock eventually scaled back the valuation to $47.08 last August, following post-trial briefing in the case.

Verition's suit, filed in Delaware federal court, sought $25.2 million in damages, plus $5.5 million in interest, that Verition said it would have received had Glasscock accepted its much higher valuation.

Cornell, Bradford and co-defendant San Marino Business Partners LLC moved last month to transfer the case to a federal court in Chicago, citing two lawsuits that claimed Verition had waived its claims as part of a settlement between Coherent and Verition's Grant & Eisenhofer attorneys in the appraisal case.

The defendants argued in a court filing that the venue change was warranted under Delaware's “first-filed rule,” which generally allows for cases to be transferred when related cases are already pending in a separate jurisdiction.

“In the prior-filed consolidated Illinois actions, defendants seek a declaratory judgment that the exact same claims asserted by Verition in the Delaware action were released and settled and confirmed in a written document,” defense attorneys from SFNR wrote in a Feb. 27 brief.

“As such, all of the claims and matters raised in the Delaware action can be resolved in a single proceeding in the Northern District of Illinois,” they said.

On Wednesday, Verition responded by calling the Illinois suits “anticipatory filings” meant to improperly “deprive Verition of its intended forum” in Delaware. The firm said that it had explicitly warned the defendants before they filed the Illinois cases that it was planning to file suit in Delaware over Cornell's “undisclosed bias and grudge.”

“From this correspondence, defendants knew that an action against them under Delaware law would be forthcoming. In these circumstances, the court should decline to apply the first-filed rule in favor of the anticipatory actions and instead maintain this case in Delaware, where it was intended,” Verition's Schlam Stone & Dolan attorneys wrote.

The attorneys also argued that “the critical facts underpinning” Verition's case had all occurred in Delaware, and only one of the five parties to the suit resided in Chicago.

Verition is represented by Erik S. Groothuis and Vera M. Kachnowski of Schlam Stone in New York and David A. Jenkins of Smith, Katzenstein & Jenkins in Wilmington.

The defendants are represented by Norman T. Finkel, Richard M. Goldwasser, William R. Klein and Matthew P. Tyrrell of SFNR and Peter M. Spingola, Robert J. Shapiro and John M. Owen of Chapman Spingola in Chicago. Shaun Michael Kelly and Ryan Patrick Newell of Connolly Gallagher and Alexandra Rogin of Eckert Seamans Cherin & Mellott are acting as local counsel.

The case, which has been assigned to U.S. District Judge Colm F. Connolly, is captioned Verition Partners Master Fund v. Cornell.