Justia Delaware Court of Chancery Opinion Summaries

On this motion to dismiss, plaintiff stockholders argued that they stated a claim for breach of fiduciary duty because a controlling stockholder refused to consider an acquisition offer that would have cashed out all the minority stockholders of defendant Synthes, Inc. but required the controlling stockholder to remain as an investor in Synthes. Instead, the controlling stockholder worked with the other directors of Synthes and ultimately accepted a bid made by Johnson & Johnson for sixty-five percent stock and thirty-five percent cash, and consummated a merger on those terms. The controlling stockholder received the same treatment in the merger as the other stockholders. The Court of Chancery dismissed the complaint, holding that the facts pled did not support an inference that there was any breach of fiduciary duty on the part of the controlling stockholder or members of the board of directors. View "In re Synthes, Inc. S'holder Litig." on Justia Law

Defendants presented themselves as president and vice president of ESG, Inc. in order to purchase assets from the predecessor of Plaintiff, Envo, Inc. Unfortunately, after the assets had been transferred, Defendants learned that ESG did not exist. Defendants kept the assets, however, and used them to run a business under the name Environmental Solutions Group, Inc. Defendants subsequently refused to pay Envo for the assets. Envo filed this claim under the doctrine of promissory estoppel and other legal and equitable doctrines, claiming it was damaged by Defendants' action. The Chancery Court found (1) Defendants and Environmental Solutions Group were liable to Envo under the doctrine of promissory estoppel; and (2) Envo was entitled to damages in an amount equal to the purchase price of the assets, plus pre-judgment interest, post-judgment interest, and costs. View "Envo, Inc. v. Walters" on Justia Law

This action involved a dispute between certain members of two Delaware real estate holding companies, Defendant Companies and the Companies' manager, Rubin Schron. Plaintiffs, MICH and SEEVA Entites, originally brought an action against Schron and Schron-affiliated entities in New York (the MICH/SEEVA action) alleging breaches of fiduciary duty and of the Companies' operating agreements. In response, Schron filed an opposing action in New York against the MICH and SEEVA entities' majority owners and controllers, alleging breaches of fiduciary duty and legal malpractice. The New York court dismissed the MICH/SEEVA action, holding that the operating agreements required all claims against the Companies to be brought in Delaware. Plaintiffs then filed this action, which Schron moved to stay or dismiss. The Chancery Court granted Defendants' motion to stay this action in favor of Schron's first-filed New York action. Plaintiffs then filed combined motions for reconsideration and certification of an interlocutory appeal. The Chancery Court held that, with the exception of Plaintiffs' claim regarding Defendants' withholding of certain distributions allegedly owed to Plaintiffs, Plaintiffs' motion should be denied because Plaintiffs did not demonstrate that relief was warranted. View "MICH II Holdings LLC v. Schron" on Justia Law

At an L.O.M. stockholders’ meeting, stockholders raised concerns about sufficiency of notice, accuracy of proxy materials, and lack of current financial information. In response to a stockholder’s request, the President of L.O.M., Matthews, adjourned the meeting. Matthews and “numerous stockholders” departed. L.O.M.’s counsel then announced that the meeting had not adjourned and that a recess was being taken. A director then purported to preside over a resumed meeting, at which challenged directors were allegedly elected. The challenged directors took a number of actions, including approving L.O.M.’s 2012 stock option plan and firing Matthews. Defendants assert that after the meeting resumed, votes were counted, and challenged directors were elected by about 56% of outstanding shares; after the meeting, the challenged directors sent the stockholders a letter that informed the stockholders of the meeting’s results. In an action to determine the composition of the board, the chancellor denied a motion to dismiss. The chancellor acknowledged sympathy for defendants’ “real argument,” that in attempting to ratify the vote for the challenged directors, a majority of shares outstanding have, in effect, been voted for the challenged directors and that adjournment of the meeting was simply an attempt by Matthews to preserve himself in office. View "Gentili v. L.O.M. Med. Int'l, Inc." on Justia Law

Petitioners sought appraisal of their shares in CKx, under Section 262 of the Delaware General Corporation Law. CKx was acquired by an affiliate of Apollo through a 2011 merger. Fox Broadcasting is not a party to the litigation and was not involved in the merger, but has an agreement with a subsidiary of CKx, 19TV, for the right to broadcast the American Idol television program, which provided substantial revenues to CKx before the merger. Petitioners moved for an order compelling Fox to produce deposition testimony as well as several categories of documents relating to American Idol, Fox’s contracts and contract negotiations with 19TV and FremantleMedia . The chancellor denied the motion except as to the categories of documents and deposition testimony that Fox has agreed to produce. With respect to a request that would require Fox to produce documents relating to Fox’s internal valuation and financial information regarding its negotiations with CKx in connection with an agreement to broadcast American Idol, the court stated that the marginal relevance of the information is outweighed by the potential harm the disclosure of that information would cause Fox and the presence of non-confidential, more probative information already in the record. View "Huff Fund Inv. P'ship v. CKx Inc." on Justia Law

IQ Holdings, Inc. (IQ Holdings) filed a petition seeking appraisal of its shares in American Commercial Lines Inc. (American). Both of the parties engaged financial experts. IQ Holdings retained David Fuller, and American retained Melissa Knoll. Believing that IQ Holdings improperly revised and supplemented its expert report after the discovery cutoff, American moved to strike the revised portions and to preclude Fuller from testifying about them. The Court of Chancery concluded that Fuller's revised portion of his report was excluded and he was precluded from testifying about it, and ordered that IQ Holdings serve a revised expert report showing how returning the analysis to the original version changed Fuller's valuation. View "IQ Holdings, Inc. v. Am. Commercial Lines Inc." on Justia Law

This case arose when Martin Marietta sought to purchase all of Vulcan's outstanding shares (Exchange Offer). At issue was the meaning of confidentiality agreements entered into by both parties. The court found in favor of Vulcan on its counterclaims for breach of the non-disclosure agreement (NDA) (Count I), and the joint defense and confidentiality agreement (JDA)(Count II), and against Martin Marietta on its claim that it did not breach the NDA (Count I). Martin Marietta shall be enjoined for a period of four months from prosecuting a proxy contest, making an exchange or tender offer, or otherwise taking steps to acquire control of Vulcan shares or assets. During that period, it is also enjoined from any further violations of the NDA and JDA. Vulcan shall submit a conforming final judgment within five days, upon approval as to form by Martin Marietta. View "Martin Marietta Materials, Inc. v. Vulcan Materials Co." on Justia Law

Plaintiffs brought their Verified Complaint asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing against defendant. J.P.Morgan also asserted a claim for attorneys' fees and costs under an option agreement that J.P. Morgan and defendant entered into, which was the contract central to the dispute. Defendant moved to dismiss pursuant to Court of Chancery Rule 12(b)(6). The court held that J.P. Morgan has failed to state a claim that defendant breached the express terms of the Option Agreement and therefore, defendant's motion to dismiss was granted as to Count I. Defendant's motion to dismiss was denied as to Count II because J.P. Morgan's allegations, taken together, were sufficient to state a claim of the implied covenant. Finally, defendant's motion to dismiss was denied as to Count III where J.P. Morgan could eventually be the prevailing party in this action. View "JPMorgan Chase & Co. v. American Century Co." on Justia Law

Microsoft asserted a total of eight claims, derivatively or directly, against defendants for breach of fiduciary duty, usurpation of corporate opportunity, rescission, conspiracy, and aiding and abetting. Defendants, various companies and an individual associated with the restructuring of Vadem, a computer technology company formed under the laws of the British Virgin Islands, contended that Microsoft lacked standing to bring derivative claims on behalf of Vadem. Defendants also argued, among other things, that the court lacked personal jurisdiction over defendants and that Microsoft's claims were untimely. The court concluded that Microsoft was required to, but did not, seek leave from the High Court of the British Virgin Islands before bringing a derivative suit on behalf of Vadem. As a result, Microsoft lacked standing as to the six derivative claims it asserted. The court also found that, as to the two remaining counts in the complaint, those claims were time-barred. Therefore, the court granted the motion to dismiss. View "Microsoft Corp. v. Vadem, Ltd., et al." on Justia Law

This was an appraisal proceeding brought pursuant to 8 Del. C. 262. Petitioners, former shareholders and managers of a prison healthcare detention company, sought appraisal of their shares following an all cash acquisition of the company for $40 million. The court found that the fair value of Just Care as of September 30, 2009 was $34,244,570. The parties shall cooperate to determine the amount of the interest award in accordance with the rulings in the opinion and petitioners shall present, on notice, an appropriate proposed order of final judgment specifying, among other things, the corresponding fair value per common share and per Series A preferred share within 10 days. View "Gearreald v. Just Care, Inc." on Justia Law