Litigation Update
“Everyone says it’s my company”: Will Blodgett wins summary judgement in Fairstead case
Fairstead shouldn’t have canceled equity of founder-turned-competitor, court says
A summary judgment ruling that LLC duties and employment duties are not interchangeable.
Few corporate disputes turn so cleanly on a single legal distinction. The dispute between Will Blodgett and Fairstead has done so. On May 14, 2026, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued an opinion granting summary judgment to Blodgett in the case Fairstead brought against him. The opinion, first reported by The Real Deal, rests on the difference between the obligations Blodgett owed as an employee of the firm and the obligations he owed as a member of the limited liability companies that held his ownership interest.
That distinction sounds technical. It is, in fact, structural. It defines how Delaware courts evaluate founder departures from closely held real estate operating companies, and it is now the controlling fact in a litigation that has lasted years.
The procedural posture
Fairstead sued Blodgett in connection with his departure from the firm and the formation of a competing affordable housing platform. The litigation moved on parallel tracks. Some claims were sent to arbitration. Other claims, including the parties’ obligations under the LLC agreements, stayed in the Court of Chancery.
In the arbitration, Blodgett was found to have breached his employment agreement by sharing confidential information with outside parties, including his family’s office structures, during the period he was planning to leave Fairstead. That finding was not in front of Vice Chancellor Laster on summary judgment. What was in front of him were the LLC agreements that governed Blodgett’s membership interests and the question of whether Fairstead could rely on the same conduct to cancel his equity.
On that question, the court ruled for Blodgett. He had countersued and asked for a determination that the LLCs themselves had breached their obligations to him. The court agreed. The damages phase has not yet concluded, but counsel for Blodgett has signaled tens of millions of dollars at stake.
The doctrinal heart of the opinion
Vice Chancellor Laster treated Blodgett’s two roles as legally distinct. An employee owes duties of confidentiality and loyalty grounded in the employment relationship and defined by the employment agreement. A member of an LLC owes duties grounded in the LLC agreement and Delaware’s LLC Act, modified by the freedom of contract that the statute affords.
The court read the LLC agreements at issue and found that Blodgett’s conduct, while it violated the employment agreement, did not violate the LLC agreements. Crucially, Laster located the conduct in the role of employee involved in day-to-day operations, not in the role of investor or member.
That framing has two consequences. First, it forecloses Fairstead’s argument that any breach of the employment agreement automatically opens the door to canceling equity. The cancellation provisions in the LLC agreements have to be triggered by conduct that breaches the LLC agreements themselves. Second, it acknowledges what is often true in founder-led operating companies: the same individual performs multiple legal roles in the same week, and contract interpretation has to do the work of distinguishing them.
What the court said about the underlying business
Opinions in fact-heavy commercial cases often reveal what the court thinks of the witnesses. This one is no exception. Vice Chancellor Laster’s opinion described Blodgett as the operator who built Fairstead’s affordable housing arm. He “provided the vision and the energy,” ran the day to day, and assembled the team. The court did not present the planning to launch a new firm as a sin against his co-founders. It presented it as the predictable result of an unsuccessful internal restructuring effort.
That posture matters in the equity-cancellation analysis. Where the court could have characterized Blodgett’s conduct as opportunistic disloyalty, it instead described a senior operator pushing for a fair structural deal and, when refused, preparing an orderly departure.
The same factual record produced a colorful set of quotes that have been reported elsewhere, including notes in which Blodgett described himself as Fairstead’s “golden goose” and observed in conversation with co-founder Jeffrey Goldberg that “everyone says it’s my company.” The court, addressing the underlying premise of those statements, wrote that “Fairstead enjoyed considerable success, and Blodgett and Tatum believed they were chiefly responsible for it. That was true.”
How this affects operating-company partnerships
Delaware’s LLC Act is built on contractual freedom. Sophisticated parties can write the rules of their relationship and the courts will generally enforce what they wrote. The flip side of that freedom is a high standard for clarity. When an LLC agreement is going to authorize the cancellation of a member’s equity, the conditions for cancellation have to be expressed in the LLC agreement itself.
Companies and their counsel that read the Blodgett ruling will be reminded of three drafting and litigation points.
The first is structural. Where the same individuals are signatories to multiple governing documents, the documents should be aligned on the events that trigger forfeiture. If breach of an employment agreement is meant to authorize cancellation of equity, the LLC agreement has to say so plainly. Cross-references are not enough.
The second is evidentiary. In a damages phase that follows a member-side breach finding, the company’s historical valuations and capital account records matter. Blodgett’s case is likely to involve a contested valuation exercise, and the parties’ contemporaneous records will shape the result.
The third is reputational. Litigation that turns on a single legal distinction can still produce a record that defines how the parties are understood in the market. The Real Deal’s coverage of the ruling, and Vice Chancellor Laster’s description of Blodgett as the operator who built the affordable housing business, is now part of the public record on this dispute.
What happens next
Damages remain to be set. Counsel for Fairstead has signaled that the firm intends to keep contesting the outcome through remedies and potential appeals. Michael Carlinsky of Quinn Emanuel Urquhart & Sullivan told The Real Deal that “this litigation has been ongoing for years, and unfortunately may take several more years before it is resolved.”
From a doctrinal standpoint, however, the summary judgment ruling is now settled at the trial-court level. The Court of Chancery has held that Fairstead had no right to cancel Will Blodgett’s equity, that the LLCs themselves were the parties in breach, and that conduct in an employee role cannot, on the contractual record here, automatically void member-level economic rights.
For a case that has produced years of headlines and a great deal of internal correspondence, the holding is unusually clean. Member duties are not employee duties. Equity is not a forfeiture remedy for employment claims. The contracts say what they say.