Justia Delaware Court of Chancery Opinion Summaries

T.J. Rodgers served on Cypress Semiconductor Corporation a demand to inspect certain books and records under 8 Del. C. 220. Rodgers founded Cypress, served as its president and CEO for thirty-four years, and beneficially owned approximately 2.35 percent of Cypress’ outstanding common stock. Rodgers asserted that his primary purpose for seeking inspection of the demanded materials was to investigate possible mismanagement. Cypress agreed to provide Rodgers certain requested materials but otherwise denied the demand. Rodgers then filed a complaint to compel the production of the books and records requested in his demand. The Court of Chancery entered judgment in Rodgers’ favor, holding that Rodgers established a proper purpose for his demand. View "T.J. Rodgers v. Cypress Semiconductor Corp." on Justia Law

Plaintiffs brought this action to obtain advancement of legal fees to which they were allegedly entitled pursuant to an LLC agreement of Empire Merchants, LLC. Plaintiffs were defendants in a separate action brought by Empire in the United State District Court of the Eastern District of New York. Empire filed a motion to dismiss this action under Court of Chancery Rule 12(b)(3) for improper venue and Court of Chancery Rule 12(b)(6) for failure to state a claim. The Court of Chancery granted the motion to dismiss, holding that Plaintiffs’ complaint must be dismissed under Rule 12(b)(3) for improper venue based on the clear and unambiguous language of the forum selection provision contained in the LLC agreement. View "Merinoff v. Empire Merchants, LLC" on Justia Law

The three underlying legal actions, involving breach of contract, breach of fiduciary duty, stock valuation, bankruptcy, and appeals, took place in Illinois. Plaintiffs, including attorneys involved in the underlying actions, sought to indemnification in post-trial proceedings. Defendant is a Delaware corporation with offices in Illinois. The Delaware Court of Chancery awarded plaintiffs $79,540.14 for pursuing the post-trial action and $241,492.50 for the Illinois proceedings, plus 20% of the expenses they incurred enforcing their indemnification right through this proceeding. The court cited the corporations’ bylaws, under which the plaintiffs are entitled to mandatory if indemnification would be permitted under the Delaware General Corporation Law and Section 145(a) of that law. View "Dore v. Sweports Ltd." on Justia Law

A 16-count complaint alleged conspiracy to funnel valuable pharmaceutical interests away from an entity in which the Plaintiff, CelestialRX, LLC, is a member. The claims include allegedly improper self-dealing by two members of a three-member LLC. On motions to dismiss and for summary judgment, the Delaware Chancery Court rejected a claim that plaintiffs had contractually released certain claims and analyzed the LLC agreement to conclude that good faith—a subjective standard, applies separately to both the transaction and to the conflicted party’s analysis of whether it is “fair and reasonable,” but must be read consistently with the purpose of specific standards, which is to permit conflicted transactions in certain circumstances. The court urged the parties to mediate the dispute. View "CelestialRX Investments, LLC.v. Krivulka" on Justia Law

IBM's proposed purchase of Merge Healthcare was supported by a vote of close to 80% of Merge stockholders. Former Merge stockholders sought post-closing damages against the company’s directors for what they alleged was an improper sale process. Merge did not have an exculpation clause in its corporate charter, so its directors have potential liability for acts violating their duty of care, in the context of an allegedly less-than-rigorous sales process. The Delaware Court of Chancery dismissed. Demonstrating such a violation of the duty of care is not trivial: it requires a demonstration of gross negligence, but it is less formidable than showing disloyalty. Regardless of that standard, the uncoerced vote of a majority of disinterested shares in favor of the merger cleansed any such violations, raising the presumption that the directors acted within their proper business judgment. View "In Re Merge Healthcare Inc. Stockholder Litigation" on Justia Law

This appeal concerned the 2015 annual meeting of stockholders held by Preferred Communications Systems, Inc. (PCSI). In advance of the meeting, five members of the Preferred Investors Association (the Association) signed a letter distributed to PCSI’s investors that stated their opposing to the reelection of the incumbent members of PCSI’s the board of directors. Three of the incumbent directors lost their seats. These former directors brought suit against the Association and the members who signed the letter, alleging defamation. Defendants moved to dismiss the claim for failure to state a claim. The Court of Chancery granted the motion as to a subset of statements made in the letter, holding (1) Delaware’s anti-SLAPP statute does not apply; (2) Plaintiffs are limited-purpose public figures; and (3) it is reasonably conceivable that a subset of the letter’s statements were defamatory and made with actual malice. View "Agar v. Judy" on Justia Law

Plaintiff brought this action opposing the use of portions of a former industrial park in the City of Lewes, now owned by the state. This action involved a lease of a portion of that property to the City and a sublease from Lewes to a non-profit that maintained a dog park on the property. At a regularly scheduled city council meeting, the Lewes City Council voted to approve an amendment to the sublease to the non-profit, which added an access road to the sublease. In his complaint, Plaintiff alleged numerous violations of the Delaware Freedom of Information Act (FOIA). The Court of Chancery granted the motion to dismiss of the Mayor, the City Council, and the City, holding that a violation of FOIA did not occur here. View "Lechliter v. Becker" on Justia Law

At issue in this case was a bylaw adopted by Paylocity Holding Corporation purporting to shift to a stockholder who files an internal corporate claim outside of Delaware without the company’s consent attorneys’ fees and expenses incurred by the company in connection with the claim if the stockholder does not achieve the full remedy sought. Here, a Paylocity stockholder sought a declaration that the bylaw was invalid under Sections 109(b) and 102(b)(6) of the Delaware General Corporation Law. Defendants moved to dismiss the complaint as unripe and for failure to state a claim for relief. The Court of Chancery held (1) Plaintiff’s claims are ripe for review; (2) Plaintiff’s challenge under Section 109(b) states a claim for relief; and (3) Plaintiff’s remaining two claims are dismissed because Plaintiff did not demonstrate that the bylaw violates Section 102(b)(6) and because Plaintiff failed to state a claim for relief with regard to these claims. View "Solak v. Paylocity Holding Corp." on Justia Law

Charles and Melissa Dalton obtained a loan from Household Finance Corporation II that was secured by a mortgage on their property. The Daltons received a trial period plan pursuant to a Trial Period Plan Agreement. The Daltons’ loan was later sold to LSF9 Master Participation Trust, and the servicing of the Daltons’ loan was transferred to Caliber Home Loans, Inc. The Daltons filed this action against LSF9 and Caliber alleging, inter alia, breach of the Trial Period Plan Agreement and seeking a preliminary and permanent injunction enjoining LSF9 and Caliber from terminating the Daltons’ loan modification. The Court of Chancery dismissed all claims against LSF9 and Caliber, holding (1) LSF9 and Caliber were not parties nor successors in interest to the Trial Period Plan Agreement; (2) LSF9 and Caliber were not parties to the consent orders between Household Finance and the United States Department of the Treasury; (3) the Daltons failed to state a claim for unjust enrichment; and (4) the Daltons failed to allege a reasonable probability of success on the merits or imminent threat of irreparable injury. View "Dalton v. Household Finance Corp., II" on Justia Law

This lawsuit involved a loan agreement between Lender and Borrowers. The agreement gave Lender an option to purchase the collateral for the loan - the famous ex-Presidential Yacht Sequoia. A valuation of the Sequoia for purposes of securing the loan was established via fraud on the part of Borrowers. The claims and counterclaims arising out of the loan agreement were eventually resolved by a settlement entered as a court order. The only issue remaining for the Court of Chancery was to oversee the computation of the amount due Borrowers from Lender should Lender elect to acquire the Sequoia. Lender agreed to a minimum option price of zero dollars. The Court of Chancery found the option price to be zero dollars. View "The Sequoia Presidential Yacht Group LLC v. FE Partners LLC" on Justia Law