Stephen Davis v. ExpicentRx, Inc.

── Stephen Davis v. ExpicentRx, Inc. ── Court: Court of Chancery of Delaware Date: April 28, 2026 Category: General 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 April 28, 2026 Thomas P. Will, Esquire Thad J. Bracegirdle, Esquire Phillip Reytan, Esquire Justin C. Barrett, Esquire Morris, Nichols, Arsht & Tunnell LLP Bayard, P.A. 1201 North Market Street 600 North King Street, Suite 400 Wilmington, Delaware 19801 Wilmington, Delaware 19801 RE: Stephen Davis v. EpicentRx, Inc., C.A. No. 2024-0365-LM (LWW) Dear Counsel, This letter resolves defendant EpicentRx, Inc.’s exceptions to a Magistrate in Chancery’s March 2, 2026 bench ruling on plaintiff Stephen Davis’s motions for contempt and to appoint a receiver (the “Ruling”).1 In the Ruling, the Magistrate appointed a limited-purpose receiver over EpicentRx to enforce the payment of contempt sanctions and fees-on-fees arising from EpicentRx’s repeated violations of a Fitracks advancement order. The defendant takes exception to the Ruling, arguing that the appointment of a receiver was unwarranted. I agree. Because EpicentRx cured the underlying 1 See Tr. of Rulings of the Ct. (Dkt. 92) (“Ruling”). C.A. No. 2024-0365-LM (LWW) April 28, 2026 Page 2 of 7 advancement arrearage before the Ruling, the coercive purpose of a receivership had already been achieved. At that point, appointing a receiver was no longer necessary to coerce compliance with the advancement order but functioned as a disproportionate means to collect collateral penalties. The exceptions are therefore granted, and the appointment of the receiver is vacated. I. BACKGROUND Davis is a former corporate secretary of EpicentRx.2 In April 2022, he was named as a defendant in a California action.3 After EpicentRx refused to advance his legal fees, Davis filed this action. In September 2024, Chancellor McCormick granted summary judgment in Davis’s favor on his entitlement to advancement.4 A Fitracks order was entered in December 2024.5 In April 2025, the case was reassigned to Magistrate Mitchell.6 EpicentRx failed to satisfy its obligations under the Fitracks order. It cycled through various excuses for its nonpayment, ranging from California wildfires to insurance coverage disputes. The Magistrate held EpicentRx in contempt in 2 Verified Compl. for Advancement (Dkt. 1) ¶ 4. 3 Id. ¶ 18; see EpiRx, L.P. v. EpicentRx, Inc., 37-2022-00015228-CU-BT-CTL (Cal. Super. Apr. 25, 2022). 4 See Dkts. 26-27. 5 Dkt. 31. 6 Dkt. 32. C.A. No. 2024-0365-LM (LWW) April 28, 2026 Page 3 of 7 September 2025 and assessed a $5,000 fine.7 When EpicentRx continued to withhold payment, the Magistrate issued a second contempt order in October 2025, imposing over $45,000 of retroactive fines and escalating daily fines of $2,500.8 In December 2025 and January 2026, Davis filed his third and fourth motions for contempt and requested the appointment of a receiver.9 On February 12, 2026— one day before the original hearing date on those motions—EpicentRx wired Davis nearly $270,000.10 This payment satisfied all undisputed fees and expenses incurred in the underlying California action through December 15, 2025, plus interest and fees-on-fees requested in Davis’s first demand under the Fitracks order.11 The payment did not, however, cover approximately $425,000 in accrued daily fines, the initial $5,000 sanction, or fees-on-fees incurred by Davis in litigating the contempt motions.12 On March 2, 2026, the Ma