Justia Delaware Court of Chancery Opinion Summaries

VTB Bank, a Ukranian bank and company, brought this lawsuit against Development Max, LLC, a Delaware limited liability company, and Navitron Projects Corp., a Panamanian corporation and managing member of Development Max, alleging fraudulent transfer, constructive fraudulent transfer, and unjust enrichment. Development Max and Navitron filed a motion to dismiss on the grounds of forum non conveniens, among other theories. The Court granted the motion with respect to VTB’s claim against Navitron but denied the motion with respect to VTB’s claim against Development Max. On reconsideration, the Court granted, without prejudice, Development Max’s motion to dismiss on grounds of forum non conveniens, holding that Ukraine, as opposed to Delaware, was the proper forum in which to litigate this dispute. View "VTB Bank v. Navitron Projects Corp." on Justia Law

Plaintiffs were members of New Media Investors II-B, LLC, which was established as a vehicle for investing in Jenzabar, Inc. In 2004, Jenzabar was recapitalized, and New Media received junior preferred stock and warrants. In 2013, the warrants lapsed. That same year, efforts to dissolve New Media were initiated, although Plaintiffs did not cash their distribution checks. Instead, they made a books and records request demanding valuation of their holdings of New Media to investigation into misconduct by the managing member of New Media and the CEO of Jenzabar and others in the course of operating New Media. The Court of Chancery granted the request in part, holding (1) Plaintiffs failed to demonstrate that investigating misconduct or wrongdoing is their proper purpose; and (2) Plaintiffs demonstrated that valuation is a proper purpose, but the inspection rights should not extend to Jenzabar, and Plaintiffs may inspect only the books and records for the years 2010 forward. View "In re New Media Books and Records Action" on Justia Law

Petitioner filed a petition to disinter the body of her daughter, believing Respondent, her daughter’s widower, murdered her daughter. Petitioner sought evidence to substantiate this belief via the disinterment and a subsequent autopsy. The daughter lived and died in Florida but was buried in a Delaware cemetery. The Court of Chancery denied the petition to disinter, holding (1) Petitioner’s exceptions to the Master’s Final Report recommending denying Petitioner’s petition were untimely and unavailing; and (2) Petitioner failed to meet the standard for exhumation by demonstrating to a reasonable certainty that disinterment will be of utility. View "Rinnier v. Gracelawn Memorial Park, Inc." on Justia Law

This case involved a dispute between Plaintiffs, Rexas Inc., Rexam PLC, and Rexas Overseas Holdings Ltd. (“Rexam”), and Defendant Berry Plastics Corp. (“Berry”) over the risks of potential pension liability. In 2014, Berry agreed to purchase Rexam’s healthcare containers and closures business and accepted responsibility for the pensions of certain employees at one of Rexam’s facilities that it was acquiring (the “Rexam Pension Plan”). Before the anticipated closing, the Pnesion Benefit Guaranty Corp. (“PBGC”) notified Rexam that it had initiated an inquiry into the Pension Plan Transfer (the “PBGC Inquiry”). As part of the closing, the parties agreed to defer the Pension Plan Transfer. After the closing, the PBGC sent an email regarding the Pension Plan Transfer. Berry then informed Rexam that it would not complete the Pension Plan Transfer because it considered the PBGC’s email evidence of a threatened legal or administrative action by the PBGC. Rexam sued Berry for breach of contract. The Court of Chancery entered judgment on the pleadings in favor of Rexam and against Berry, holding that the PBGC did not “threaten” to take action, and therefore, Berry’s performance - acceptance of the Pension Plan Transfer - was not excused because of the PBGC Inquiry. View "Rexam Inc. v. Berry Plastics Corp." on Justia Law

In 2010, El Paso Corporation (“El Paso Parent”) sold member interests in three limited liability companies to El Paso Pipeline Partners, LP (“El Paso MLP”). At the time of the sale, El Paso Parent controlled El Paso MLP through its ownership of El Paso Pipeline GP Company, LLC, the sole general partner of El Paso MLP (“El Paso GP”). In 2015, the Court of Chancery issued a post-trial decision concluding that El Paso GP breached the limited partnership agreement governing El Paso MLP by causing El Paso MLP to buy the member interests (the “Fall Dropdown”). In 2012, Plaintiff brought this action challenging the Fall Droptown. While the litigation was pending, Kinder Morgan, Inc., acquired El Paso Parent and therefore indirectly owned and controlled El Paso GP. After trial, Kinder Morgan, El Paso Parent, El Paso MLP, and El Paso GP consummated a merger that ended El Paso MLP’s separate existence as a publicly traded entity. El Paso GP moved to dismiss this litigation, arguing that because Plaintiff styled his claim as derivative the closing of the merger meant that this case must be dismissed. The Court of Chancery denied El Paso GP’s motion to dismiss, holding that the merger did not extinguish Plaintiff’s standing to pursue the claim, and therefore, this Court can implement the liability award. View "In re El Paso Pipeline Partners, L.P. Derivative Litig." on Justia Law

In this case, the parties contested control of certain assets. Plaintiffs brought this action against Defendants for breach of a partnership agreement, breach of the covenant of good faith and fair dealing, equitable rescission, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, fraud, and civil conspiracy to commit fraud. Defendants sought implementation of a status quo order permitting a defendant-corporation to disburse funds for two distinct purposes: for payment of “administration fees” and for payment of legal fees to defend itself in this case. Plaintiffs sought implementation of a status quo order preventing these additional disbursements. The Court of Chancery (1) approved Defendants’ request to pay administration fees, holding that the administration fees were necessary to maintain the assets in the defendant-corporation’s control; and (2) rejected Defendants’ request to pay their legal fees with the disputed assets. View "Capital Link Fund I, LLC v. Capital Point Mmgt., LP" on Justia Law

Plaintiffs - George Polk, Tulum Management USA LLC, and RED Capital Investments LP - brought this action on behalf of nominal defendant RED Parent LLC against Defendants - certain members of the RED Parent Board of Managers, Recycled Energy Development LLC and RED Investment LLC - alleging breach of fiduciary duty and breach of contract. Earlier, RED Parent filed an action in Illinois in regard to essentially the same facts upon which the Delaware action claims were brought. In the Delaware action, Plaintiffs sought advancement, indemnification, and fees on fees incurred in both the Illinois action and the case at bar. The Court of Chancery denied Defendants’ motion to dismiss in favor of the Illinois action but granted Defendants’ motion to stay in favor of the Illinois action as to the valuation and fiduciary duty claims and retained jurisdiction over the Delaware action, holding (1) the parties and issues in the Delaware and Illinois actions are functionally identical; and (2) the Illinois court is capable of rendering prompt and complete justice. View "Tulum Mgmt. USA LLC v. Casten" on Justia Law

At issue in this case was the sale of a portfolio company, Double E Parent LLC, by Prairie Capital III, LP and Prairie Capital III, private equity funds. The buyer was Double E Holding Corp. (“Buyer”), an acquisition vehicle formed by Incline Equity Partners, III, LP (“the Incline Fund”). A Stock Purchase Agreement (“SPA”) governed the transaction. Prairie Capital III, which served as the Sellers’ Representative under the SPA, later sued Buyer to compel the release of funds from escrow. The Incline Fund intervened. Thereafter, Incline Fund and Buyer asserted counterclaims and cross-claims for, inter alia, fraud and aiding and abetting fraud against the Prairie Funds and related individuals and two claims for indemnification under the SPA against the Sellers’ Representative. The counterclaim defendants filed a motion to dismiss the fraud-related claims and one of the two counts seeking indemnification. The Court of Chancery (1) granted the motion to dismiss to the extent that the Buyer and the Incline Fund grounded their fraud-related claims on omissions outside of the SPA and certain representations within the SPA; (2) granted the motion as to one aspect of the challenged indemnification claim; and (3) otherwise denied the motion to dismiss. View "Prairie Capital III, LP v. Double E Holding Corp." on Justia Law

Plaintiffs filed a complaint alleging that Merrill Lynch aided and abetted Director Defendants in the breach of their fiduciary duty of care. The Court of Chancery issued a memorandum opinion denying Merrill Lynch’s motion to dismiss the complaint. Merrill Lynch subsequently moved for reargument, contending that its motion to dismiss should be granted based on a Delaware Supreme Court decision issued one day after the memorandum opinion in this case was issued. The Court of Chancery granted Merrill Lynch’s motion for reargument, and dismissed the complaint with prejudice as to the aiding and abetting claim against Merrill Lynch, holding (1) the Court incorrectly applied the Revlon enhanced scrutiny standard of review rather than the business judgment rule standard of review when it reviewed the complaint to determine whether it adequately alleged that the Director Defendants breached their fiduciary duties; and (2) upon reconsideration, Plaintiffs had not alleged sufficient facts to make it reasonably conceivable that the Director Defendants breached their duty of care. View "In re Zale Corp. Stockholders Litig." on Justia Law

In this derivative action, Plaintiff, a Facebook, Inc. stockholder, challenged the 2013 decision of Facebook’s board of directors to approve compensation for its outside, non-management directors, who comprised six of the eight directors on Facebook’s board. Plaintiff brought claims against the directors ("Defendants”) for breach of fiduciary duty, unjust enrichment, and waste of corporate assets. After the lawsuit was filed, Mark Zuckerberg, who controlled over sixty-one percent of the voting power of Facebook’s common stock and did not receive the 2013 compensation, expressed his approval in a deposition and an affidavit of the disputed compensation for the non-management directors. Defendants sought summary judgment against the fiduciary duty and unjust enrichments claims, arguing that because Zuckerberg ratified the compensation, the standard of review governing that transaction shifted from the entire fairness standard of review to the business judgment presumption. The Court of Chancery denied Defendant’s motion for summary judgment with regard to the fiduciary duty and unjust enrichment claims, holding (1) the entire fairness standard applies to the directors’ approval of the 2013 compensation; and (2) Defendants failed to demonstrate that the board’s compensation decisions were entirely fair. However, because Plaintiff failed to state a reasonably conceivable claim for waste, that claim was dismissed. View "Espinoza v. Zuckerberg" on Justia Law