Mudrick Capital Management L.P. v. QuarterNorth Energy, Inc.

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734

January 12, 2026

Bradley R. Aronstam, Esquire Blake Rohrbacher, Esquire
Roger S. Stronach, Esquire Kevin M. Gallagher, Esquire
Benjamin M. Whitney, Esquire Matthew W. Murphy, Esquire
Ross Aronstam & Moritz LLP John M. O’Toole, Esquire
1313 North Market Street, Suite 1001 Christine J. Chen, Esquire
Wilmington, Delaware 19801 Elizabeth J. Freud, Esquire
Kevin M. Kidwell, Esquire
Benjamim O. Allen, Esquire
Richards, Layton & Finger, P.A.
920 North King Street
Wilmington, Delaware 19801

RE: Mudrick Capital Management L.P. et al. v. QuarterNorth Energy Inc.,
C.A. No. 2024-0106-LWW

Dear Counsel,

I write regarding defendant QuarterNorth Energy Inc.’s request for leave to

move for partial summary judgment.1 The plaintiffs oppose the request.2 After

considering the parties’ correspondence, the request is denied.

Summary judgment may be appropriate where “there is no genuine issue as to

any material fact and . . . the moving party is entitled to a judgment as a matter of

1
Letter Requesting Leave to Move for Partial Summ. J. (Dkt. 147) (“Def.’s Letter Req.”).
2
Letter Opposing Leave to Move for Partial Summ. J. (Dkt. 149) (“Pls.’ Opp’n Letter”).
C.A. No. 2024-0106-LWW
January 12, 2026
Page 2 of 4

law.”3 “There is no ‘right’ to a summary judgment.”4 The court may, in its

discretion, deny summary judgment if it decides that “it is desirable to inquire into

and develop the facts more thoroughly at trial in order to clarify the law or its

application.”5

QuarterNorth seeks partial summary judgment on three issues: (1) that

plaintiffs Mudrick Capital Management L.P. and Ellington Management Group lack

standing because they are not warrant holders; (2) that the plaintiffs’ “bad faith”

claim fails because they lack evidence showing QuarterNorth’s board was

controlled; and (3) that the warrant agreements did not mandate the use of a trading

price to determine fair market value of one QuarterNorth share. None of these issues

are suited for resolution on summary judgment.

First, motion practice is unnecessary to resolve the standing issue. The

plaintiffs concede that Mudrick and Ellington are not “Holders” under the warrant

3
Ct. Ch. R. 56(c).
4
Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002).
5
In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2014 WL 2768782, at *9 (Del. Ch.
June 12, 2014).
C.A. No. 2024-0106-LWW
January 12, 2026
Page 3 of 4

agreements and have agreed to dismiss them as parties.6 The parties should file a

stipulation to that effect.7

Second, the bad faith dispute is best resolved after a trial. Although

QuarterNorth focuses on a purported lack of board control, the plaintiffs respond

that their claim sounds in contract rather than fiduciary duty.8 According to the

plaintiffs, the claim hinges on whether the board’s valuation determination was

“commercially reasonable” and “made in good faith” under the warrant agreements.9

Whether the board’s determination met these standards is a fact-intensive question.

Finally, it would be inefficient to explore summary judgment on the valuation

issue. QuarterNorth asserts that the warrant agreements do not “mandate” the use

of trading prices, but the plaintiffs clarify that they are arguing market data was

“commercially unreasonable” under the circumstances of this case.10 A summary

judgment ruling on whether specific inputs were mandated would be advisory

because the ultimate question of reasonableness would remain in dispute.

6
See Pls.’ Opp’n Letter 5.
7
See Def.’s Letter Regarding Req. for Leave to Move for Partial Summ. J. (Dkt. 151); Pls.’
Letter Regarding January 8 Letter (Dkt. 152).
8
Compare Def.’s Letter Req. 2-3, with Pls.’ Opp’n Letter 5.
9
Pls.’ Opp’n Letter 2-3.
10
Compare Def.’s Letter Req. 4-6, with Pls.’ Opp’n Letter 5-6.
C.A. No. 2024-0106-LWW
January 12, 2026
Page 4 of 4

Accordingly, the request for leave to move for partial summary judgment is

denied. IT IS SO ORDERED.

Sincerely yours,

/s/ Lori W. Will

Lori W. Will
Vice Chancellor