Justia Delaware Court of Chancery Opinion Summaries

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

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

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

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

This dispute arose from the merger between plaintiff's start-up company, LaneScan, and VSAC. Plaintiffs complained that the Merger improperly deprived them of their Notes and that a return of capital provision was inappropriately excised from LaneScan's Amended and Restated Limited Liability Company Operating Agreement in conjunction with the merger. For damages, plaintiffs requested a return of their original investment in LaneScan with pre- and post-judgment interest, attorneys' fees and expenses. The court granted plaintiffs' request for a declaratory judgment with respect to the Notes and the Security Agreement, and it reserved decision on plaintiffs' request for an award of legal fees and expenses related to the Notes Claims, to the extent such request was based upon section 2.3 of the Notes and plaintiffs' successful showing on the declaratory judgment claim. The court ruled in favor of defendants with respect to all of plaintiffs' other claims. View "Dawson v. Pittco Capital Partners, L.P." on Justia Law