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Del. judge tosses lawsuit over Zillow's 2013 StreetEasy purchase

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Signage is seen on the exterior of the Sussex County Court of Chancery in Georgetown, Delaware. REUTERS/Andrew Kelly

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  • Lawsuit followed Zillow's 2013 acquisition of StreetEasy
  • Judge cites "extreme tardiness" of claims from co-founder of StreetEasy operator

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(Reuters) - A Delaware state judge dismissed a lawsuit on Tuesday that alleged the house-hunting platform Zillow Inc wrongfully withheld payments from the co-founder of NMD Interactive Inc, operator of StreetEasy, which Zillow acquired in 2013.

Vice Chancellor Lori Will said the three-year statute of limitations on the claims, which were brought by Douglas Chertok and his investment firm Vast Ventures LLC, had already run out.

“No extraordinary circumstances or tolling doctrines save the plaintiffs’ claims from being barred by their extreme tardiness,” Will wrote in her opinion.

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An attorney for Zillow declined to comment. Representatives for Zillow and Chertok’s lead counsel did not immediately respond to requests for comment.

Zillow closed its $50 million acquisition of New York-focused real estate site StreetEasy in August 2013, according to a press release.

Chertok refused to sign letters required to receive payment for his shares because he would have had to waive his right to pursue legal claims against Zillow and NMD over the merger, according to Chertok's October 2019 complaint.

At the time the merger closed, Chertok was also in the midst of appealing sanctions he faced for attempting to vacate a settlement agreement resolving a separate lawsuit NMD had filed against him, according to Tuesday's opinion.

Chertok later sued Zillow in October 2019, six years after the merger closed, to recover $6.37 million he says he and his venture fund were owed as merger consideration.

Chertok said the company imposed conditions inconsistent with NMD’s incorporation certificate in withholding payments, per Tuesday's opinion, while Zillow said the merger agreement is the operative contract governing the plaintiffs' ability to collect.

Zillow moved to dismiss the suit last year, arguing that breach of contract claims have to be brought within three years of when the alleged violations occurred.

The case is Chertok v. Zillow Inc, Delaware Court of Chancery, No. 2019-0849.

For Chertok: Michael Maimone of Barnes & Thornburg

For Zillow: Geoffrey Grivner of Buchanan Ingersoll & Rooney

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Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes. Reach her at sierra.jackson@thomsonreuters.com

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