Time is of the Essence: The Delaware Supreme Court’s Reversal of West Palm Beach Firefighters’ Pension Fund v. Moelis & Company Under the Doctrine of Laches

By Gabriella Varriale

Source: Schorr Law

1. Introduction

On January 20th, 2026, the Delaware Supreme Court reversed the Delaware Court of Chancery’s decision in West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, holding that the challenged provisions of the stockholder agreement at issue were voidable, not void, and thus subject to equitable defenses, such as laches.^[1] Consequently, the Court held that there was no reason for the plaintiff’s total delay of nine years in bringing their claim, as this is six years past the applicable statute of limitations.^[2] Under Delaware law, the doctrine of laches has two elements, which are “(i) unreasonable delay in bringing a claim by a plaintiff with knowledge thereof, and (ii) resulting prejudice to the defendant.”^[3] For the purpose of laches, a filing after the expiration of the analogous limitations period is presumptively unreasonable.^[4] When a plaintiff brings an equitable claim seeking equitable or legal relief, or a legal claim seeking equitable relief, the doctrine of laches applies to the claim.^[5]

2. The Delaware Court of Chancery Decision

            In the Delaware Court of Chancery, the plaintiff, West Palm Beach Firefighters’ Pension Fund, challenged a stockholders agreement between Moelis & Company (the “Company”) and three entities that were controlled by Ken Moelis, the CEO, Chairman, and founder of the Company.^[6] In 2014 prior to the Company’s public issuance of shares, “Moelis and the Company entered into a stockholders agreement containing an array of provisions that grant Moelis expansive rights (the ‘Challenged Provisions’),” which the plaintiff claimed violated Section 141(a) of the Delaware General Corporation Law.^[7] The plaintiff purchased his shares of the Company’s Class A common stock in 2014 and did not file this action until March 13, 2023.^[8]

The Court of Chancery decision did not evaluate the details of the Challenged Provisions or the doctrinal issues raised by them, but instead addressed the Company’s argument that the plaintiff’s claims were non-justiciable due to timing.^[9] The Company claimed that the plaintiff waited too long to bring their claim, since more than three years had passed since the Company’s IPO, which is when the stockholders agreement was originally disclosed.^[10] Additionally, more than three years had passed since the plaintiff acquired his shares, which was shortly after the IPO.^[11]

The Court of Chancery explained that “an equitable defense like laches cannot validate a void act, so the argument that the plaintiff sued too late fails because of the nature of the claim[,]” because if the Challenged Provisions violate Section 141(a) of the Delaware General Corporation Law, they are void.^[12] The arguments here do not prohibit a facial challenge to the legality of the Challenged Provisions, and “[i]f the plaintiff is correct, and the court must assume so when conducting a timeliness analysis, then the Challenged Provisions are void.”^[13] The Court stated that even assuming that laches could apply, the plaintiff did not wait too long to sue.^[14] The reasoning behind the Court’s decision was due to the ongoing nature of the wrongful conduct.^[15] The illegality of the Challenged Provisions was an ongoing event, which began when the Company executed the stockholders agreement in 2014 and persisted ever since.^[16] The Court stated that at minimum, the plaintiff could attack the then current illegality of the Challenged Provisions.^[17]

The decision reached by the Court of Chancery was that the Company’s operation under the Challenged Provisions constituted ongoing violations of Section 141(a) of the DGCL, and therefore the plaintiff’s claim was not barred by the doctrine of laches.^[18] The decision sparked a somewhat negative reaction from the public that led to the Delaware General Assembly adopting Section 122(18) of the DGCL, which authorized “the inclusion in stockholder agreements of corporate-governance provisions,” such as the ones that had been challenged as facially invalid in this case.^[19]

3. The Delaware Supreme Court’s Decision to Reverse

On January 20, 2026, The Delaware Supreme Court reversed the Court of Chancery’s decision, holding that the plaintiff’s delay in filing its complaint outside the analogous limitations period was presumptively prejudicial, and that presumption was not rebutted.^[20] The Court concluded that, to the extent that the Challenged Provisions are at odds with Section 141(a), they are voidable, not void, meaning that the “plaintiff’s claim that the provisions are facially invalid is subject to equitable defenses, including laches.”^[21]

The Supreme Court clarified that because the claims as to the Challenged Provisions were merely voidable, as opposed to void, they are subject to equitable defenses, such as laches.^[22] Because the Challenged Provisions were voidable, they were not outside of the Company’s authority to adopt under the DGCL.^[23] The Company claimed that each of the Challenged Provisions “could have been lawfully implemented through the certificate of incorporation under § 102(b)(1) and § 141(a) of the DGCL[,]” to which the Court agreed.^[24]

The Court found that the plaintiff’s claims did in fact accrue in 2014, as “[a] cause of action accrues—and, thus, the statute of limitations begins to run— upon the commission of the wrongful act giving rise to the cause of action.”^[25] In this case, the wrongful act giving rise to the cause of action was the stockholders agreement that was effectuated in 2014, nine years prior to the start of this litigation.^[26] The Court ultimately reversed the Court of Chancery’s decision, finding that the decision was erroneous.^[27]

4. Conclusion and Implications

            The Delaware Supreme Court’s decision in this case stands for the proposition that litigants must be aware of the applicable statute of limitations and timely file their claims in order to have a decision made on their case claim. Plaintiffs who are seeking equitable relief from the courts must not unreasonably delay in filing their claims, or they will risk losing their chance at obtaining relief, as the plaintiff did here. This decision clearly establishes that facial challenges to contested corporate governance provisions must be brought within the applicable statute of limitation, which is within three years of the provision’s adoption.^[28]

About the Author

Gabriella is a second-year law student at Widener University Delaware Law School and a staff editor for Volume 51 of the Delaware Journal of Corporate Law. She graduated from Pennsylvania State University in 2024, earning a bachelor’s degree in political science. While in law school, Gabriella interned for the Delaware Court of Chancery during her 1L summer in 2025 and will be a 2026 2L summer associate at Kelley Drye & Warren LLP in New York, New York. Outside of law school, Gabriella enjoys walking, baking, and spending time with friends and family.

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^[1] Moelis & Co. v. W. Palm Beach Firefighters’ Pension Fund, No. 340, 2024, 2026 WL 184868, at *10 (Del. Jan. 20, 2026).

^[2] Id. at *16.

^[3] Levey v. Brownstone Asset Mgmt., L.P., 76 A.3d 764, 769 (Del. 2013).

^[4] Id.

^[5] Id.

^[6] W. Palm Beach Firefighters’ Pension Fund v. Moelis & Co., 310 A.3d 985, 991 (Del. Ch. 2024), rev’d, No. 340, 2024, 2026 WL 184868 (Del. Jan. 20, 2026).

^[7] Id.

^[8] Id. at 993.

^[9] Id. at 991.

^[10] W. Palm Beach Firefighters’ Pension Fund, 310 A.3d at992.

^[11] Id.

^[12] Id. at 992, 994.  

^[13] Id. at 992. 

^[14] W. Palm Beach Firefighters’ Pension Fund, 310 A.3d at 992.

^[15] Id.

^[16] Id.

^[17] Id.

^[18] W. Palm Beach Firefighters’ Pension Fund, 310 A.3d at 1003; See also Collin B. Davis, et al., Delaware Supreme Court Reverses and Vacates Moelis as Time-Barred, Gibson Dunn (Jan. 26, 2026), https://www.gibsondunn.com/delaware-supreme-court-reverses-and-vacates-moelis-as-time-barred/.

^[19] Davis et al., supra note 18.

^[20] Moelis & Co. v. W. Palm Beach Firefighters’ Pension Fund, No. 340, 2024, 2026 WL 184868, at *17 (Del. Jan. 20, 2026).

^[21] Id. at *10.

^[22] Id.

^[23] Id.

^[24] Moelis & Co., 2026 WL 184868, at *10.

^[25] Id.

^[26] Id. at *2.

^[27] Id. at *17.

^[28] Carleen Bongat, Delaware Court Kills Pension Fund’s Nine-Year Challenge to Moelis & Company Control, InvestmentNews (Jan. 21, 2026), https://www.investmentnews.com/regulation-legal-compliance/delaware-court-kills-pension-funds-nine-year-challenge-to-moelis-company-control/264921.