Justia Delaware Court of Chancery Opinion Summaries

Plaintiffs bought a townhouse condominium unit from Defendant. After the sale, repairs of leaks in the other condominium units caused by poor construction required the condominium board to collect special assessments in the amount of $65,000 from each unit holder, including Plaintiffs. Recoupment from the builder offset the sum, but Plaintiffs remained out-of-pocket over $40,000. Plaintiffs sued Defendant, alleging fraud and equitable fraud due to Defendant's allegedly insufficient disclosures made to Plaintiffs before the sale. The Court of Chancery entered judgment in favor of Defendant, holding (1) Plaintiffs failed to prove Defendant committed common-law fraud because they failed to show Defendant misrepresented or omitted some material fact before the sale of the condominium; and (2) rescission was not warranted under the facts of this case, and therefore, equitable fraud was inappropriate. View "Grzybowski v. Tracy" on Justia Law

Plaintiffs owned a house trailer on a leased lot in Defendants' trailer park. Plaintiffs desired to sell their trailer to a third party, which required a transfer of the lot lease to the purchaser. Defendants refused to approve the lease transfer unless Plaintiffs agreed to pay for the removal of an abandoned oil tank on the leasehold. Plaintiffs filed this action for damages and injunctive relief, contending Defendants' demands violated the lease agreement. More than one year after Plaintiffs served discovery requests, Defendants moved to dismiss the action with prejudice for failure to prosecute. The Court of Chancery granted the motion, holding that because Plaintiffs declined the opportunity to go forward, the case was dismissed with prejudice. View "Valdes v. MCH Mariner's Cove, LLC" on Justia Law

Plaintiffs, stockholders in Chevron and FedEx, sued the boards of Chevron and FedEx for adopting forum selection bylaws providing that the forum of litigation relating to the companies' internal affairs should be conducted in Delaware. The cases were consolidated. Defendants filed a motion for judgment on the pleadings on Plaintiffs' claims that (1) the bylaws were statutorily invalid because they were beyond the boards' authority under the Delaware General Corporation Law, and (2) the bylaws were contractually invalid and therefore could not be enforced like other contractual forum selection clauses. The Court of Chancery granted Defendants' motion, holding (1) the bylaws were facially valid as a matter of statutory law; and (2) the bylaws were valid and enforceable contractual forum selection clauses. View "Boilermakers Local 154 Ret. Fund v. Chevron Corp." on Justia Law

The board of directors of Primedia, Inc. adopted a resolution approving a merger agreement among Primedia, TPG Capital, and TPG's wholly owned acquisition subsidiaries. Primedia's majority stockholder, KKR, approved the merger agreement. At the time the transaction closed, Linda Kahn and a co-plaintiff were litigating a derivative action on Primedia's behalf, alleging that KKR traded on inside information when it purchased shares of Primedia's preferred stock and seeking disgorgement of KKR's profits under Brophy v. Cities Service Co. In this class action, Kahn and her co-plaintiff alleged that the terms of the merger were unfair because the Primedia directors failed to obtain any value for the Brophy claim. Specifically, they argued that the merger conferred a special benefit on KKR because KKR knew it was highly unlikely that any acquirer would pursue the Brophy claim. Plaintiffs also challenged a provision in the merger agreement limiting the Primedia board's ability to change its recommendation that stockholders vote in favor of the merger. The Court of Chancery (1) dismissed Defendants' motion to dismiss as to the fairness claim because Plaintiffs had standing to pursue the claim and pled a reasonably conceivable theory; and (2) otherwise granted the motion. View "In re Primedia, Inc. S'holders Litig." on Justia Law

The plaintiffs sued for damages arising out of their sales of stock in Wayport, Inc. After the defendants' motion to dismiss in part was granted, the litigation proceeded to trial against the remaining defendants on claims for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, common law fraud, and equitable fraud. The court of chancery (1) entered judgment in favor of plaintiff Brett Stewart and against defendant Trellis Partners Opportunity Fund in the amount of $470,000; and (2) otherwise entered judgment against the plaintiffs and in favor of the defendants. View "In re Wayport, Inc." on Justia Law

GRT and Marathon are engaged in attempting to convert methane gas into fuel. They entered into interrelated agreements, including a Securities Purchase Agreement (Marathon purchased $25 million of GRT’s stock), mutual licensing agreements, and a Cooperative Development Agreement, governing collaboration to develop gas-to-fuels technology. Marathon built a multi-million dollar “Demonstration Facility” to test the technology on a large scale and a smaller research facility (Pilot Unit). Under the Development Agreement, GRT obtained access the Demonstration Facility and the ability to modify the Facility, to expire on December 31, 2012. The Facility began operations in 2008. Marathon executed a run campaign and shared data with GRT. In November 2009, Marathon decided to permanently close the Facility because of operational difficulties. Marathon followed procedures prescribed by the Agreement, gave notice, and extended GRT the right to acquire the Facility. GRT did not exercise that right. Although the Facility is currently closed, the Pilot Unit is operational, and both parties continue to test there. GRT claimed breach of contract. The chancellor found that the Development Agreement is not ambiguous and does not impose an affirmative duty on Marathon to operate the Facility through December, 2012, but provides GRT protection in other ways that would be internally inconsistent with such an affirmative duty.View "GRT, Inc. v. Marathon GTF Tech., Ltd." on Justia Law

NuVasive alleges that Lanx improperly persuaded NuVasive employees and a NuVasive consultant to leave NuVasive and work for Lanx instead, in breach of agreements that the employees had with NuVasive, to misappropriate NuVasive’s trade secrets and other proprietary information. Both are medical corporations. NuVasive claimed unfair competition, tortious interference with contractual relations, tortious interference with prospective contractual relations, aiding and abetting breach of fiduciary duty, civil conspiracy, and misappropriation of trade secrets. Lanx argued that the former NuVasive employees were necessary and indispensable parties to the action because NuVasive’s claims are predicated upon their acts. The chancellor declined to dismiss. While the former employees’ interests are not adequately protected by Lanx, the chancellor reasoned that a remedy could be crafted to avoid prejudice to their interests. The former employees were not indispensable to the misappropriation claim.View "Nuvasive, Inc. v. Lanx, Inc." on Justia Law

Plaintiff, both individually and as the trustee of several trusts that she directed, asserted claims against defendants arising out of her decision to invest in Lord Baltimore. Defendants moved to dismiss all of the claims asserted against them. The court held that defendants' motion to dismiss was granted, except to plaintiff's claim that there was an implied covenant in the Shareholders' Agreement requiring that repurchase proposals be presented to and considered by the Board, which was not dismissed. View "Blaustein v. Lord Baltimore Capital Corp." on Justia Law

This was a declaratory judgment action under 6 Del. C. 111 to determine the duties, obligations, and liabilities, if any, of a Delaware limited liability company to one of its initial members. The court concluded that a clear forum selection clause in Todd's employment agreement with RWI (N.M.), which closely paralleled a similar provision in a related Stock Purchase Agreement (SPA), precluded the court from determining what effect, if any, Todd's termination from RWI (N.M.) had upon, at least, a subset of RWI (Del.) units he previously held. As a result, the court lacked the ability to determine definitely whether Todd continued to hold any interest in RWI (Del.), at least until a court in New Mexico resolved Todd's ownership of this subset of units. Therefore, the court stayed the action as a matter of judicial efficiency and in deference to the apparent intent of the contracting parties in favor of the proceedings pending in New Mexico.View "RWI Acquisition LLC v. Todd" 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