Justia Delaware Court of Chancery Opinion Summaries

American Messaging Services, LLC (AMS) purchased an ownership interest in DocHalo, LLC. The parties entered into an agreement establishing the terms of their business relationship. After AMS discovered that DocHalo had contacted some of AMS’s sales personnel about joining DocHalo and had unilaterally reached out to some of AMS’s customers, AMS filed a complaint alleging breach of contract, breach of the implied covenant of good faith and fair dealing, misappropriation of trade secrets, and tortious interference with contractual relations. AMS sought a temporary restraining order seeking DocHalo from contacting its customers and sales personnel. The Court of Chancery denied the motion, holding that while AMS established colorable claims against DocHalo, it did not appear to face imminent and irreparable harm that would justify extraordinary relief. View "Am. Messaging Servs., LLC v. DocHalo, LLC" on Justia Law

While boating, Defendant discovered a nearly fifteen-acre parcel of land that was landlocked, wooded, and partially submerged. The tax records for the parcel listed it as either “unknown owner” or “owner unknown.” Defendant determined to claim the property and began to use the property by visiting it regularly and paying taxes on the property. Plaintiffs later filed this action alleging that Defendant interfered with the quiet enjoyment of their property and slandered their title and seeking a declaration that they were the legal and rightful owners of the land. Defendant counterclaimed, requesting a declaratory judgment that he had acquired the disputed lands by adverse possession. The Court of Chancery granted judgment for Defendant, holding that Defendant established title to the property by adverse possession. View "Tumulty v. Schreppler" on Justia Law

Plaintiffs were four Delaware-domiciled captive insurance companies. The State Insurance Commissioner prosecuted their claims as their receiver in liquidation, alleging fraudulent conduct on the part of the companies’ president, breach of fiduciary duty on the part of the other directors of the corporation, and, as to the companies’ auditors and their administrative management company, aiding and abetting breaches of fiduciary duty, breach of contract, and negligence. The Court of Chancery dismissed in part the claims against the auditors and their company, holding (1) the doctrine of in pari delicto applies in this case and effectively bars the relevant claims against those defendants; (2) Plaintiffs’ claims for breach of contract and negligence are dismissed on grounds of in pari delicto, but the fiduciary duty exception to in pari delicto covers Plaintiffs’ claims for aiding and abetting a breach of fiduciary duty; and (3) Plaintiffs’ motion to dismiss their claims for aiding and abetting against each of the auditors and the administrative management company is denied, except as they relate to the auditor that was retained second. View "Hon. Karen Stewart v. Wilmington Trust SP Servs., Inc." on Justia Law

In 2014, Defendant First Aviation Services, Inc., a Delaware corporation, completed a 10,000-to-1 reverse stock split, which eliminated the interests of Plaintiff, a former stockholder of First Aviation. Four days later, the First Aviation directors adopted a non-reciprocal fee-shifting bylaw purporting to create fee exposure for former stockholders of the company and their attorneys in any challenge to the reverse stock split. Ten days later, Plaintiff brought this action against First Aviation and its directors (collectively, Defendants) on behalf of himself and a class of former First Aviation stockholders who had been similarly cashed out, alleging that the reverse stock split was unfair. Plaintiff subsequently amended his complaint to challenge the bylaw. Defendants argued that the bylaw was enforceable in this case. Plaintiff moved for partial judgment on the pleadings that the bylaw did not apply here. The Court of Chancery granted Plaintiff’s motion, holding that because the bylaw was adopted after Plaintiff was cashed out of First Aviation by operation of the reverse stock split, the bylaw did not apply to this case. View "Strougo v. Hollander" on Justia Law

In 2004, Plaintiff retained Law Firm in connection with an action to inspect the books and records of certain defendants. Law Firm served as counsel in this litigation through the filing of claims against other defendants. In 2011, Law Firm withdrew as counsel. When some defendants prevailed at trial, the Court concluded that Law Firm should be awarded attorneys’ fees and expenses. Law Firm then moved to intervene, attaching a petition for a charging lien based on $766,166 in unpaid fees and expenses incurred in representing Plaintiff during the earlier stages of this litigation. The Court of Chancery granted the motion for leave to intervene, holding that Law Firm had an interest relating to the subject of the action, and Law Firm’s application was timely. View "Sutherland v. Sutherland" on Justia Law

This dispute concerned an underlying breach of fiduciary duty case that was coordinated with an appraisal proceeding, both arising out of a take-private transaction involving Dole Food Company, Inc. (Dole). During the proceedings, Defendants identified a corporation as their expert witness on the subject of Dole’s value at the time of the transaction. Plaintiffs objected, arguing that an expert witness must be a biological person. The Court of Chancery agreed with Plaintiffs, holding that an expert witness must be a biological person, and therefore, Defendants could not rely on the corporation that they designated to serve as their expert witness. View "In re Dole Food Co., Inc. Stockholder Litig." on Justia Law

The parties in this case, two corporations, were parties to a Development Agreement. Defendant claimed Plaintiff owed it approximately $60 million under the Development Agreement. Plaintiff sought a declaration that it did not owe Defendant any money, and Defendant sought reformation of the Development Agreement. After two years of discovery, and as the trial approached, the parties filed a Joint Pretrial Stipulation and Proposed Order (the Proposed Order) identifying fifteen facts as admitted and not requiring proof at trial (the Admitted Facts). Plaintiff moved to have the Court of Chancery declare that certain facts were Admitted Facts and to require Defendant to meet and confer in good faith about additional Admitted Facts. The Court granted the motion, holding (1) facts Defendant admitted in its answer, in its responses to requests for admissions, and drawn from its sworn interrogatory responses constituted Admitted Facts, and Defendant should not have objected to their inclusion in the Proposed Order; and (2) Defendant did not confer in good faith regarding Admitted Facts as required by Ch. Ct. R. 16. View "Itron, Inc. v. Consert, Inc." on Justia Law

This complaint concerned the T-65 X-wing fighter plane, a fictional vehicle created in connection with the movie Star Wars Episode IV: A New Hope. Walt Disney Company owned the trademark for the fictional vehicle. Plaintiff developed a marketing plan pursuant to which Disney would license to a non-party the right to use the X-wing name and appearance, the non-party would develop the vehicle in the appearance of an X-wing (the “Flying Car”), and Plaintiff would raise the funds for development of the Flying Car. Plaintiff planned on promoting the Flying Car via tie-ins to Disney’s new Star Wars movie to be released in 2017. Plaintiff made an unsolicited proposal involving Star Wars marketing to Disney, but Disney responded that it was not interested in his proposal. Plaintiff filed this complaint against Disney and its CEO and Board Chairman, claiming that Defendants were “stalling the next evolution of human transportation on this planet.” The individual Defendants, both residents of California, moved to dismiss for lack of jurisdiction, and all Defendants moved to dismiss for failure to state a claim. The Court of Chancery granted the motions, holding that Plaintiff failed to perfect jurisdiction over the individual Defendants and failed to state a claim against any of the Defendants. View "Alfred v. Walt Disney Co." on Justia Law

Maurice J. Moyer Academic Institute (“New Moyer”) is a charter school in the City of Wilmington that serves some of the most economically disadvantaged students in the state. In 2014, the Department of Education, Secretary of Education, and Delaware Board of Education (collectively, Defendants) decided to revoke New Moyer’s charter in June 2016, one year before the charter expired. Defendants based their decision on the fact that New Moyer was the lowest performing charter school in the State based on the State’s testing standards. Plaintiffs - the operator of New Moyer, parents representing several of the school’s students, and the City - sought a preliminary injunction to enjoin Defendants from revoking New Moyer’s charter. The Court of Chancery denied Plaintiffs’ motion for a preliminary injunction, concluding that Plaintiffs failed to demonstrate (1) a reasonable probability that they were denied due process under the Fourteenth Amendment with respect to the decision to revoke the school’s charter; and (2) that Defendants did not exercise due diligence and good faith when they determined that New Moyer failed to satisfy criteria set forth in the Charter School Act. View "In re The New Maurice J. Moyer Academy Inc." on Justia Law

Plaintiff served as the Chairman and CEO of Smashburger Master LLC until his termination in early 2014. Smashburger subsequently informed Plaintiff that it was redeeming Plaintiff’s units in the company. Plaintiff disagreed with Smashburger’s valuation of the units and demanded that Smashburger provide him with documents from specific categories of business and financial records. Smashburger refused Plaintiff’s request on the grounds that it had already redeemed all of Plaintiff’s units, thus terminating Plaintiff's status as a member of Smashburger and precluding him from properly demanding inspection. Plaintiff then filed a complaint against Smashburger. The Court of Chancery granted Smashburger’s motion to dismiss, concluding that Plaintiff was no longer a member of Smashburger when he demanded inspection, and Delaware law does not provide pertinent inspection rights to former LLC members. View "Prokupek v. Consumer Capital Partners LLC" on Justia Law