This is a follow-up to an earlier post, Fact-Gathering and Credibility Assessments Require A Trial. The point there was that some disputes cannot be resolved on paper. When the facts are contested and the outcome depends on whom you believe, a court needs witnesses in a room.
A decision from the Delaware Court of Chancery last week is the natural sequel, and it carries a sharper edge. The trial happened. Two days of it. And the case turned not on the judge disbelieving anyone, but on a question nobody asked.
The Case
In Greenfield One III GmbH & Co. KG v. Chaney, C.A. No. 2024-0663-LWW (Del. Ch. Oct. 9, 2026), Vice Chancellor Lori W. Will issued a post-trial opinion in a dispute between seed investors and a startup founder.
The company, Fancurve, sold digital soccer jerseys as NFTs. In late 2021 it raised a seed round of roughly 40 identical SAFEs. Greenfield, a German venture firm, led with $2.5 million and signed a Side Letter alongside the founders. Section 1 of that Side Letter required the company to use the proceeds to finance its business. Section 4 required the founder, Chris Chaney, to devote substantially all of his professional efforts to the company.
In January 2022, Chaney used approximately $2.7 million of company funds to pay off two personal loans — about $1.46 million on one, $1.25 million on the other. The company was left with under $1 million and missed its milestones. The NFT market collapsed that spring. Chaney did not paper the transfers until November 2022, when his attorney — who also represented the company — drafted a backdated promissory note, a pledge agreement, and a board consent. When he told Greenfield the company was winding down, he attributed the shortfall to raising only $4 million of a $6.25 million target. The court found that explanation false.
The facts, in other words, were not sympathetic.
Chaney won.
Why He Won
Judgment was entered in his favor on the only claim tried against him, and he was declared the prevailing party entitled to his reasonable fees and costs under a fee-shifting clause the Side Letter incorporated. Greenfield’s own fee request against him was denied.
Two things explain the outcome, and only one of them is about the trial.
The first is contract architecture. Section 1’s use-of-funds obligation ran to “the Company,” not to Chaney personally. The court observed that these sophisticated parties plainly knew how to bind the founders individually, because they did exactly that elsewhere in the same document — in Sections 2, 4, and 19. The omission from Section 1 was presumed intentional, and the court declined to rewrite the agreement to supply a personal obligation the parties had not negotiated. The same reasoning disposed of the information-rights and observer provisions.
That left Section 4, the time commitment, as the only duty Chaney personally owed. And here is where the earlier post’s theme returns with a twist.
The Fact That Went Unrebutted
The court made no explicit credibility determinations. On the decisive question, it simply accepted Chaney’s testimony that he had done no substantial outside work and that his remaining advisory roles consumed very little time. It accepted that testimony because Greenfield’s counsel did not cross-examine him on it and offered no contrary evidence. The opinion describes the testimony as having “gone unrebutted.”
The trial record was not thin. Two fact witnesses testified live, three deposition transcripts came in, and the parties submitted 167 joint exhibits. The court nonetheless resolved the dispute on the burden of proof rather than on who seemed more believable. Greenfield had to prove a breach of Section 4 by a preponderance of the evidence. It did not.
So the earlier post’s proposition holds, and needs a corollary. Yes — contested facts and credibility assessments require a trial. But a trial resolves only the facts someone actually contests. An unflattering record does not try itself. If the sole personal obligation in the case is a time-commitment covenant, that covenant is the whole case, and the cross-examination has to go there.
Two More Lessons Worth The Price Of Admission
Ask for the remedy by name. The company defaulted, which established its liability. But the court refused to award rescission, holding that the complaint’s general prayer for damages and equitable relief gave no notice that a rescissory remedy was sought. Rule 55(b)(1) does not permit a default judgment that differs in kind from the relief pleaded. A catch-all prayer is not a remedy. If you want rescission, disgorgement, or restitution, plead it specifically — and plead it early, because a default forecloses the chance to amend into it.
Expect a but-for discount on damages. The court applied reliance damages under Restatement § 349 and began with Greenfield’s $2.5 million — but it did not end there. Testimony established that the NFT market had fallen 80% to 90% in 2022 and that there was no demand for the product. The business would have failed even if every dollar had been spent properly. Greenfield’s but-for position was therefore its share of the remaining assets under the SAFE liquidation waterfall, not the value of a going concern. The court did apply the wrongdoer rule to place the residual uncertainty on the defaulting company, and declined to deduct unproven losses. Still, the direction of travel is clear: a plaintiff suing over a venture that was going to fail anyway recovers the delta, not the investment.
Where It Stands
This is not over. Damages against the company are reserved pending supplemental submissions on the waterfall, the value of the promissory note as a corporate asset, and the overlap with the SAFE claims. The fee application against Chaney is also pending.
But the lesson for anyone heading toward trial is already available, and it is uncomfortable. Getting to trial is the hard part most litigants worry about. Trying the one issue the case actually turns on is the part that decides it.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, real estate, and other issues. He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
