Justia Delaware Court of Chancery Opinion Summaries

This was an advancement proceeding based on related litigation before the Court of Chancery under 8 Del. C. 205 and 225 and an action in California. At issue in this matter was whether a former director and officer of a corporation was entitled to summary judgment on his request for advancement of fees and expenses from the corporation incurred in the 205/225 action and the California litigation. The Court granted the motion for summary judgment, holding that the former director and officer was entitled to advancement from the corporation as to the 205/225 action and the California action. View "In re Genelux Corp." on Justia Law

In this action under 8 Del. C. 205 and 225, the Court of Chancery was asked to determine the outcome of an annual election of directors based on its resolution of disputes over whether certain shares of stock were validly issued or lacked consideration. Plaintiffs were the company, which issued the stock, and a director-stockholder, who invested in the company and participated in executing a plot to remove the intervenor as CEO. Plaintiffs asked the Court to set aside the Intervenor’s election of Defendants, two directors, at the company’s most recent annual meeting. The Court of Chancery concluded that Defendants were validly elected and entitled to the declaratory relief they sought, holding (1) section 205 does not permit an enumerated party to petition the Court to declare invalid and defective any corporate act or stock; (2) some of Plaintiffs’ arguments were waived or time-barred; and (3) none of the grounds advanced by Plaintiffs provided a sufficient basis to grant them the requested relief. View "In re Genelux Corp." on Justia Law

This action arose from Selling Source, LLC’s acquisition of assets from Interpid Investments, LLC. Intrepid sought an order requiring Selling Source to pay it thirty percent of the aggregate distributions disbursed in several fiscal quarters preceding an “earn-out adjustment.” The Court of Chancery entered summary judgment in favor of Selling Source and against Intrepid, except that Selling Source’s motion was denied to the limited extent that Interpret sought recovery based on cash distributions, holding that that there was no dispute of material fact and that controlling contractual provisions were not ambiguous and must be read as Selling Source argued. View "Intrepid Invs., LLC v. Selling Source, LLC" on Justia Law

In 2015, Red Clay Consolidated School District (Red Clay) sought approval from voters to increase certain school-related property taxes. The referendum passed. Plaintiffs were residents of Red Clay who opposed the tax increase but did not vote because they were unable to access the polls. Plaintiffs brought this complaint asserting that Red Clay deprived them of their right to vote without due process of law and denied them equal protection, in violation of the Fourteenth Amendment, and that Red Clay violated Del. Const. art. I, 3, which states that all elections shall be free and equal. Specifically, Plaintiffs asserted that Red Clay raised impediments to voting by elderly and disabled residents, who Red Clay believed would oppose the tax increase. Red Clay filed a motion to dismiss the complaint for failure to state a claim. The Court of Chancery denied Red Clay’s motion, concluding that Plaintiffs pled sufficient facts to move beyond the pleading stage. View "Young v. Red Clay Consolidated Sch. Dist." on Justia Law

This action challenged the monthly assessments collected by Delaware Manufactured Home Relocation Authority under the Manufactured Home Owners and Community Owners Act. In 2004, the Authority set a monthly assessment on landlords and tenants of manufactured home communities. The Act provided that the Authority’s board eliminate or revise the assessment by January 2006. Plaintiffs brought this action seeking relief from the assessment and reimbursement of already collected assessments because the Authority did not eliminate the assessment after January 2006. The Court of Chancery concluded that the statutory immunity of 25 Del. C. 7011(b)(3) protected the Authority and its board from civil liability, at least until the filing of this action. At issue here was whether the notice of the board’s failure to comply with the Act and Delaware’s Freedom of Information Act provided by the complaint in this action meant that the continued collection of the assessment was the product of bad faith conduct. The Court of Chancery concluded that Defendants were entitled to summary judgment, holding (1) the Authority’s board was not acting in bad faith when it believed its actions had avoided the problems posed by the January 2006 trigger date; and (2) the Authority’s conduct after its board received the complaint was not in bad faith, and therefore, the Authority retained its immunity defense. View "Ridgewood Manor II, Inc. v. Del. Manufactured Home Relocation Auth." on Justia Law

This matter involved a former presidential yacht whose owner (the LLC) and its sole member (together, Plaintiffs) co-induced Defendant by means of fraud to extend the owner a loan with the yacht as collateral. Under the operative loan documents, Defendant had the option to purchase up to a 100 percent interest in either the LLC or the yacht itself. Plaintiffs brought this case to enjoin Defendant from pursuing its rights in connection with the loan. Once the fraud came to light, Plaintiffs entered a stipulated order in default judgment (the judgment order). The judgment order provided that Defendant was entitled to exercise its rights under the loan documents, specifically including the option, and provided for the appointment of an independent counsel to determine outstanding current and potential liabilities of the LLC and the yacht. The judgment order retained the Court of Chancery’s jurisdiction to hear disputes arising out of the interpretation and enforcement of the order. The parties disagreed about the conclusions of the independent counsel concerning liabilities that may constitute liens against the LLC or the yacht. The Court of Chancery held (1) Defendant must exercise its option within sixty days of this letter opinion at the default option price as defined by the judgment order; and (2) the deduction for the liabilities used in reaching the default option price are as stated in the report of the independent counsel. View "Sequoia Presidential Yacht Group LLC v. FE Partners, LLC" on Justia Law

In a related case, a receiver was appointed for Silicon Valley Innovation Company, LLC (SVIC), whose only assets were contingent claims against SVIC’s former officer and directors. The receiver filed two cases involving two defendants who were the plaintiffs in this case. Plaintiffs requested from SVIC advancement for their legal expenses by virtue of their previous employment agreements with SVIC. After the request was denied Plaintiffs commenced this advancement action. The parties ultimately stipulated to Plaintiffs’ entitlement to advancement and the validity of the employment agreements. At issue in this case was to what extent Plaintiffs’ advancement claims were entitled to priority as against the other claims asserted against SVIC in the receivership. The Court of Chancery held that SVIC was entitled to entry of an order declaring that Plaintiffs’ advancement claims were not entitled to administrative priority but, rather, should be treated on par with the claims of other unsecured creditors and paid pro rata. View "Andrikopoulos v. Silicon Valley Innovation Co., LLC" on Justia Law

Seller entered into a purchase agreement with Buyer for the sale of certain equipment. The purchase agreement included an arbitration clause. Buyer eventually assigned its assets for the benefit of creditors to Assignee. Assignee sold Buyer’s tangible assets but retained choses in action. Assignee later brought a complaint in arbitration seeking damages for breach of the purchase agreement. The arbitrator concluded that Assignee had standing to bring the action and that the purchase agreement conferred jurisdiction upon him to hear the matter. Seller then brought this action seeking to enjoin the arbitration. The Court of Chancery dismissed this matter for lack of subject matter jurisdiction, concluding that a complete contractual remedy existed in arbitration. View "CVD Equip. Corp. v. Dev. Specialists, Inc." on Justia Law

This matter involved the creation of a subsidiary, AbbVie, Inc., by Abbott Laboratires, the transfer of assets and liabilities to AbbVie and, as part of that transfer, mutual general releases of liability between the entities. Plaintiffs, in their capacity as AbbVie stockholders, sought to pursue derivatively a claim against certain of both Abbott’s and AbbVie’s directors for breach of fiduciary duties in connection with their approval of the releases. The Court of Chancery granted Defendants’ motions to dismiss, holding (1) Plaintiffs lacked statutory standing to derivatively sue Defendants on behalf of AbbVie for breach of duty in connection with the releases because they were not AbbVie stockholders at the time of the alleged wrong; and (2) the equitable considerations were too tenuous to support the equitable exception to 8 Del. C. 327 set forth in Shaev v. Wyly. View "In re AbbVie Inc. Stockholder Derivative Litig." on Justia Law

Plaintiff, a stockholder of Orbitz Worldwide, Inc., asserted four derivative claims challenging the fairness of the terms of a services agreement Orbitz entered into with a group of entities affiliated with Travelport Limited. Plaintiff alleged that Travelport owned forty-eight percent of Orbitz and thus controlled Orbitz when it signed the agreement. Plaintiff’s primary claims were that Travelport breached its fiduciary duty as a controlling stockholder by causing Orbitz to enter into the agreement on unfair terms and that Orbitz’s directors breached their fiduciary duties by approving the agreement. Defendants moved to dismiss the claims for failure to make a demand or to adequately plead demand is excused and for failure to state a claim upon which relief may be granted. The Court of Chancery granted the motions to dismiss, holding that demand was not excused as to any of Plaintiff’s derivative claims because Plaintiff failed to raise a reasonable doubt that at least half of the directors on Orbitz’s board could have exercised impartial business judgment in responding to a demand. View "Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera" on Justia Law