Justia Delaware Court of Chancery Opinion Summaries

In these cross-motions for partial summary judgment, at issue was whether ION violated the rights of its preferred stockholder, Fletcher, by causing a wholly-owned ION subsidiary to issue certain promissory notes without Fletcher's approval in connection with ION's purchase of a business. The court agreed with the parties that to determine whether the notes were securities was an issue appropriate for summary judgment. On the merits, however, the court held that it did not agree with ION's argument that all notes issued as compensation to a seller of a business by the buyer of that business were not securities. The court concluded that two of the promissory notes issued to the business seller by the ION subsidiary were not securities because they were most sensibly characterized as short-term commercial bridge financing to facilitate the closing of the acquisition transaction. But the court concluded that the third note was a security. Accordingly, the court found that Fletcher's consent rights under the Certificates were not breached by the issuance of the first two notes, but were breached when ION caused its subsidiary to issue the third note.View "Fletcher Int'l, Ltd. v. ION Geophysical Corp., et al." on Justia Law

This action involved claims of fraud and breach of fiduciary against an individual defendant, a former investment professional accused of having committed a massive fraud related to a quantitatively-based trading program that he allegedly developed to trade futures contracts. Plaintiffs, as a result of their association with defendant and Paron, the firm they founded with defendant, claimed that they have been stigmatized and thus face dismal prospects of finding employment in the financial services industry. The court found that defendant committed fraud and breached his fiduciary duties to plaintiff and Paron by making false statements of fact about his program, his investment track record, and his personal financial situation. As a result, plaintiffs were entitled to extensive damages against defendant based on their lost future earnings and other costs associated with the formation and operation of Paron. The court also awarded plaintiffs limited injunctive relief requiring defendant to destroy or return copies of Paron's trading program and to stop marketing any versions of that trading program.View "Paron Capital Mgmt., LLC, et al. v. Crombie" on Justia Law

Entities affiliated with ASB sued to reform the capital-event waterfall provisions in a series of agreements governing real estate joint ventures managed by affiliates of The Scion Group. The erroneously drafter provisions called for Scion to receive incentive compensation know as a "promote" even if the joint ventures lost money. Scion sought to enforce the agreements as written, and its affiliates advanced counterclaims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and breach of contract. The court found that plaintiffs have proven their entitlement to reformation by clear and convincing evidence and entered a judgment in their favor of defendants' counterclaims.View "ASB Allegiance Real Estate Fund, et al. v. Scion Breckenridge Managing Member, LLC, et al." on Justia Law

This case began as a control dispute in which the managing member of Oculus Capital Group, LLC sought to block the non-managing member from attempting to take over the managerial role. After a stipulated order and assorted rulings, the control dispute was largely resolved. What remained were the non-managing member's counterclaims, which sought damages from the managing member and its human controller based on the actions they took that caused the relationship between the parties to deteriorate and led to the control dispute. The plaintiffs moved to dismiss the counterclaims. The Court of Chancery (1) granted the motion to dismiss the breach of contract claim in part; (2) granted the motion to dismiss the aiding and abetting the breaches of the operating agreement claim in part; (3) denied the motion on the breach of default of fiduciary duty claim as to one of plaintiffs and stayed the count as to the other plaintiff pending arbitration; (4) denied the motion to dismiss the gross negligence claim as to one of the plaintiffs and granted the motion as to the other plaintiff; and (5) granted the motion to dismiss the declaratory judgment. View "Feeley v. NHAOCG, LLC" on Justia Law

This case concerned a dispute between a Netherlands holding company and an Italian businessman. The businessman made a loan to the holding company for a joint venture. The joint venture eventually went into bankruptcy and defaulted on its loan obligations, including the loan from the businessman. The businessman filed this action alleging, among other things, that the holding company induced him to make the loan by representing that it would support and continue to back the joint venture. The holding company denied making those representations or having any obligations to the businessman. The holding company moved for summary judgment on multiple grounds. The Court of Chancery (1) found the businessman's claims were not barred for lack of standing; (2) denied summary judgment on the ground of laches; (3) denied summary judgment on the holding company's English statute of frauds defense; (4) granted summary judgment in the holding company's favor on the businessman's Italian law claim for breach of implied or oral contract and his Dutch law claim; and (5) granted the holding company's motion for summary judgment regarding the businessman's claim for unjust enrichment. View "Vichi v. Koninklijke Philips Elecs., N.V." on Justia Law

Shareholder sent Corporation a formal written demand requesting access to twenty-two categories of Corporation's books and records. Corporation rejected the demand. Shareholder subsequently brought a books and records action under section 220 of the Delaware General Corporation Law. Corporation disputed the propriety of the purposes advanced by Shareholder and the ultimate scope of any court-ordered inspection of its books and records. The Court of Chancery held (1) Shareholder demonstrated a proper purpose for some of its books and records requests and demonstrated that it was entitled to inspect some of those books and records in aid of its proper purposes; and (2) otherwise, Shareholder's application under section 220 was denied. View "Rock Solid Gelt Ltd. v. SmartPill Corp." on Justia Law

Plaintiff Southeastern Pennsylvania Transportation Authority (SEPTA), a former stockholder of Defendant SRA International, Inc. (SRA), challenged the merger of SRA and affiliates of Defendant Providence Equity Partners LLC. SRA and several members of its board of directors (Individual Defendants) before the merger moved for judgment on the pleadings on Count IV of the complaint, which alleged that the merger was invalid and that by approving the invalid merger, the Individual Defendants breached their fiduciary duty of loyalty to the public stockholders of SRA. The Court of Chancery held (1) SEPTA's claim that the merger was invalid failed as a matter of law, as the merger was effectively deemed valid; but (2) at this stage, the Individual SRA Defendants were not entitled to judgment on SEPTA's claim that they breached their fiduciary duties, as the conduct of the fiduciaries who approved the merger may still be challenged on the basis that it was carried out in violation of SRA's certificate of incorporation. View "Se. Pa. Transp. Auth. v. Volgenau" on Justia Law

Two lawsuits alleging violations of the federal securities laws were filed against Hecla Mining Company in federal court. In this action, Plaintiffs, alleged holders of a number of Hecla shares, sued derivatively to recover on behalf of Hecla the damages that the Company had suffered and will suffer from the federal securities actions and the safety violations. Defendants, several individuals associated with the Company, moved to dismiss for failure to make demand or adequately plead demand futility. The Court of Chancery granted the motion and dismissed the complaint with prejudice and without leave to amend as to the named plaintiff, holding that Plaintiffs failed to provide adequate representation for Hecla. The Court noted, however, that the dismissal of Plaintiffs' complaint should not have preclusive effect on the efforts of other stockholders to investigate potential claims and, if warranted, to file suit. View "South v. Baker" on Justia Law

After a dispute resulting in a call for the resignation of several members of the Hockessin Community Center's board of directors, the Center filed a complaint seeking a determination of the lawful board of the Center. The complaint also sought damages and equitable relief under theories of breach of contract, breach of fiduciary duty, and secondary liability, based on Defendants' status as directors. The Court of Chancery named the lawful members of the board and the board president in its opinion, concluding (1) the disputed directors did not disqualify themselves and cease to be directors by failing to attend three board meetings in a row; (2) the disputed directors were not validly removed pursuant to a director-removal right in an agreement; (3) several of the defendant directors did not resign from the board; (4) although the Center failed to follow corporate formalities when adding certain directors, the directors validly served on the board as de facto directors; (5) a resolution adding five other non-defendants to the board was invalid; and (6) the actions taken at meetings at which the disputed directors reconstituted the board were partially valid. View "Hockessin Cmty. Ctr., Inc. v. Swift " on Justia Law

Plaintiff's complaint sought a judicial declaration that the individuals Plaintiff elected to the board of a corporation were invalidly elected and constituted the entirety of the corporation's board of directors. After Defendant Gary Loyd participated in the process for several months, and after resolution was impeded by delays, Loyd moved for judgment on the pleadings arguing that Plaintiff's complaint failed to state a claim against him because he did not purport to be a director, officer, or shareholder of the corporation. The Court of Chancery denied Loyd's motion, holding that the complaint stated a claim against Loyd, as the allegations in the complaint were well-pleaded and the evidence supported the allegation the Loyd had asserted direct or indirect control over the corporation. View "Aequitas Solutions, Inc. v. Anderson" on Justia Law