Articles Posted in Business Law

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The Court of Chancery granted Defendant’s motion to dismiss Plaintiff’s complaint to vacate or modify an arbitration award for failure to state a claim, holding that there was no reasonably conceivable evident material miscalculation or evident material mistake in the arbitrator’s report. In 2017, Plaintiff and Company entered into a Securities Purchase Agreement. In 2018, under the dispute resolution provision of the agreement, Plaintiff and the Company engaged in mandatory, binding arbitration regarding the Company’s total accounts receivable reserve (the Total AR Reserve). The arbitrator issued a report determining the Total AR Reserve was $661,165. Plaintiff then filed a complaint to vacate or modify the arbitration award, arguing that the arbitrator made an evident material miscalculation or evident material mistake in his determination of the Total AR Reserve. The Court of Chancery disagreed and granted Defendant’s motion to dismiss. View "CLP Toxicology, Inc. v. Casla Bio Holdings LLC" on Justia Law

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In this dispute regarding the commercialization of a patent covering a method for pooling insurance policies the Court of Chancery granted Defendants’ motion for judgment on the pleadings in which they argued that they did not owe any of the contractual or fiduciary obligations that Plaintiff sought to enforce, holding that Defendants were entitled to judgment as a matter of law. Plaintiff brought this action asserting claims for breach of contract and breach of fiduciary duties related to Defendants’ business development of a patent-holding entity and Defendants’ failure to provide certain information to Plaintiff. The Court of Chancery granted Defendants’ motion for judgment on the pleadings, thus mooting Plaintiff’s motion to compel and motion for default judgment, holding That Defendants carried their burden to show that Plaintiff could prove no set of facts in support of his claims that would entitle him to relief and that Defendants were entitled to judgment as a matter of law. View "Ross v. Institutional Longevity Assets LLC" on Justia Law

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The Court of Chancery granted Defendants’ motion to dismiss for failure to make a pre-suit demand and failure to state a claim for relief Plaintiffs’ second amended complaint asserting a claim for breach of fiduciary duty and seeking the appointment of a receiver, holding that the motion to dismiss was properly granted. Specifically, the Court held (1) Count I of the amended complaint asserting a claim for breach of fiduciary duty must be dismissed based on Plaintiff’s failure to make a pre-suit demand on some of the defendants; and (2) Count II of the amended complaint seeking the appointment of a receiver failed to state a claim for relief. View "Stritzinger v. Barba" on Justia Law

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At issue was the availability of appraisal rights under section 262 of the Delaware General Corporation Law. Section 262 affords stockholders of Delaware corporations a statutory remedy for appraisal of their shares under certain circumstances. The statute provides that appraisal rights shall be available only for the shares of stock of a “constituent corporation” in a merger or consolidation, and the process for determining a stockholder’s entitlement to appraisal contemplates that the stockholder will relinquish its shares in the merger of consolidation. In the instant case, Dr. Pepper Snapple Group, Inc. and Keurig Green Mountain, Inc. agreed to combine their businesses. Dr Pepper stated that Dr Pepper stockholders would not have appraisal rights under section 262 in connection with the proposed transaction. Two stockholder plaintiffs filed this action challenging that decision. The Court of Chancery held (1) the term “constituent corporation” as used in section 262 means an entity actually being merged or combined and not the parent of such an entity, and therefore, Dr Pepper’s stockholders do not have a statutory right to appraisal under section 262(b) because Dr Pepper is not a constituent corporation; and (2) Dr Pepper stockholders are not entitled to appraisal because they are retaining their shares in connection with the proposed transaction. View "City of North Miami Beach General Employees’ Retirement Plan v. Dr Pepper Snapple Group, Inc." on Justia Law

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The Court of Chancery concluded that Plaintiffs were entitled to specific performance of a call provision of a joint venture agreement, holding that Plaintiffs prevailed on the merits by clear and convincing evidence, and the equities supported relief. Plaintiffs had the right to call partnership interests in a series of joint ventures from Defendants. Plaintiffs called those interest sin 2014. With respect to the majority of the joint ventures, the contractual consideration for the call transactions was required to be units (Mills Units) by a defunct real estate investment trust. Plaintiffs sought to tender their own similar, but not identical, units (Simon Units). The Court of Chancery determined that the applicable joint venture agreements did not provide for such consideration. With respect to one joint venture, however, the Court of Chancery concluded that the Simon Units were valid tender because they were the units of a successor to Mills and they provided substantially the same rights as the Mills Units under the joint venture agreement, and a balancing of the equities favored an order of specific performance. View "Simon-Mills, LLC v. Kan Am USA XVI Ltd. Partnership" on Justia Law

Posted in: Business Law

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The Court of Chancery granted Petitioner’s motion for summary judgment for dissolution of Royston, Inc. under 3 Del. C. 273 and appointed a receiver to dissolve the company, holding that the prerequisites for a judicial order of dissolution under section 273 have been met in this case because (1) there were no genuine issues of fact as to Petitioner’s ownership of fifty percent of the company, and (2) there was no evidence that Petitioner filed the petition in bad faith. The Court directed that a receiver be appointed to oversee the dissolution for the company and the wind up of the company’s affairs. View "Feldman v. YIDL Trust" on Justia Law

Posted in: Business Law

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In this action arising out of a reclassification of the shares of NRG Yield, Inc. (“Yield”), a stockholder alleged that members of the Yield board breached their fiduciary duties by approving the reclassification and that NRG Energy, Inc. (“NRG”), which managed Yield’s daily affairs, breached its fiduciary duty by causing Yield to undertake the reclassification. The Court of Chancery dismissed the complaint for failure to state a claim for relief, holding (1) the reclassification was a conflicted transaction subject to entire fairness review; (2) the analytical framework articulated in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), applied to the reclassification; and (3) that framework was satisfied in this case from the face of the pleadings. View "IRA Trust FBO Bobbie Ahmed v. Crane" on Justia Law

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In this case, the plaintiff, a stockholder of C&J Energy Services, Inc. (“C&J”), was precluded from targeting a particular stockholder to pay a fee award when the alleged benefit redounded to the benefit of all stockholders. Here, Plaintiff sought an award of attorneys’ fees for Plaintiff’s alleged role in reducing the amount of cash that C&J needed to pay Nabors Industries Ltd. in connection with a certain transaction. The beneficiary of the price reduction was C&J and, indirectly, all of its stockholders. Plaintiff asked the court to require that the estate of Joshua Comstock, who was C&J’s CEO and chairman of the board, to pay the full amount of any fee award. The Court of Chancery denied Plaintiff’s application because (1) Defendants successfully rebutted the presumption that Plaintiff’s litigation efforts caused the price reduction; and (2) Plaintiff’s demand that Comstock’s estate - or any of C&J’s other directors - pay a fee award would be inequitable and was inconsistent with the rationale of the corporate benefit doctrine. View "City of Miami General Employees' & Sanitation Employees' Retirement Trust v. C&J Energy Services, Inc." on Justia Law

Posted in: Business Law

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In a letter opinion, the Delaware Court of Chancery denied a motion for reargument regarding the court's decision on HC's motion for partial summary judgment. The court held that Myers failed to demonstrate that the court misapprehended the law or facts because its arguments rehashed arguments it raised in its opposition to HC's motion; raised entirely new arguments; or raised arguments that reflected a misapprehension of the court's decision. The court rejected Myers' argument that the court "inexplicably" and incorrectly concluded that Myers' objection to HC's first claim did not apply to items that overlap in HC's first and second claim notices; that once Myers objected to an indemnification claim, HC could not "override" Myers' objection by making another claim; and that even if Myers "irrevocably waived the right to contest distribution" of the escrow property, it may still raise "defenses" to prevent "distribution of the entire escrow amount." View "The HC Companies, Inc. v. Myers Industries, Inc." on Justia Law

Posted in: Business Law

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Plaintiff filed a verified complaint against West to inspect its books and records under Section 220 of the Delaware General Corporation Law (DGCL). The Delaware Court of Chancery held in this post-trial opinion that plaintiff has demonstrated, by a preponderance of the evidence, a credible basis from which the court can infer that wrongdoing related to the merger may have occurred. The court rejected West's argument that the Corwin doctrine would stand as an impediment to an otherwise properly supported demand for inspection under Section 220. The court explained that any contrary finding would invite defendants improperly to draw the court into adjudicating merits defenses to potential underlying claims in order to defeat otherwise properly supported Section 220 demands. Furthermore, the court should not prematurely adjudicate a Corwin defense when to do so might deprive a putative stockholder plaintiff of the ability to use Section 220 as a means to enhance the quality of his pleading. Therefore, the court ordered a judgment entered in favor of plaintiff and directed West to allow inspection of the books and records at issue. View "Lavin v. West Corp." on Justia Law