Justia Delaware Court of Chancery Opinion Summaries

A former officer and director of two Delaware companies filed an action for mandatory advancement from those companies of the legal fees and expenses he incurred in underlying litigation between the parties in a Pennsylvania federal court, seeking indemnification from January 2013. Defendants filed a motion to dismiss, contending that Plaintiff lacked standing to pursue advancement and indemnification from them because he was entitled to and had been receiving mandatory advancement from his new employer or client through at least the end of 2012. Defendants contended that because Plaintiff had incurred no out-of-pocket expenses, he had no standing to seek advancement from them. The Court of Chancery (1) granted the motion to dismiss as to any legal fees and expenses incurred since January 2013 that had been paid by Plaintiff’s current employer or client on the ground that Plaintiff lacked standing to pursue those claims; and (2) denied the motion to dismiss with respect to any fees and expenses incurred since January 2013 that had not been paid by the co-indemnitor, holding that Plaintiff was entitled to advancement from at least one defendant that clearly owed a mandatory advancement and indemnification obligation to Plaintiff. View "Pontone v. Milso Indus. Corp." on Justia Law

Defendants, collectively referred to as “InterDigital,” and LG Electronics, Inc. entered into a non-disclosure agreement, titled “Agreement Governing Confidential Settlement Communications (the NDA), after LG filed a demand for arbitration with the International Centre for Dispute Resolution. InterDigital claimed that the parties did not intend to prevent the submission of pre-NDA evidence to the arbitral tribunal and disclosed in its brief to the tribunal alleged settlement communications. LG then filed this action seeking injunctive relief compelling InterDigital to withdraw its brief, claiming that InterDigital breached the NDA by submitting the documents to the arbitrators. InterDigital moved to dismiss LG’s complaint in favor of arbitration, asking the Court of Chancery to exercise its discretion under the doctrine established in McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co. to dismiss the action in favor of the earlier-filed arbitral proceeding. The Court of Chancery dismissed the action in favor of the earlier-filed arbitral proceeding under the McWane doctrine, concluding that this case met the McWane doctrine’s requirements. View "LG Elecs., Inc. v. Interdigital Commc’ns, Inc." on Justia Law

Plaintiff sought attorneys’ fees and legal expenses from Defendants, two corporations and her two brothers, after successfully pursuing a books and records action under Del. Code Ann. tit. 8, 220 and after filing a complaint alleging derivative and double-derivative claims against Defendants. Although the Defendants substantially prevailed on Plaintiff’s derivative claims, Plaintiff sought attorneys’ fees and costs for her attorneys’ litigation efforts arising from the section 220 action and from overcoming a special litigation committee’s investigation and recommendation to terminate the litigation. Plaintiff sought approximately $1.4 million. In response, Defendants argued that Plaintiff achieved only minimal, therapeutic benefits and should only be awarded $25,000 for her litigation efforts. The Court of Chancery concluded that Plaintiff should be awarded attorneys’ fees and expenses of $275,000, as Plaintiff’s litigation efforts brought about some positive benefits for the companies involved, although those benefits were not as valuable as Plaintiff had argued. View "Sutherland v. Sutherland" on Justia Law

At issue in this case was a trust (“the Raiff Trust”) that had expired under the terms of the trust instrument that established the trust. The trust was funded with shares of Jenzabar, Inc. At the time of this litigation, the Raiff Trust continued to hold shares of Jenzabar stock on behalf of its beneficiary. Plaintiff, trustee of a trust holding stock in Jenzabar, brought derivative claims related to a bonus payment for Jenzabar’s CEO and Chairman. The Raiff Trust moved to intervene in the litigation. Defendants filed a motion to dismiss, arguing that the trust lacked the capacity to prosecute this action on behalf of Jenzabar because it had no beneficial or economic interest in Jenzabar. The Court of Chancery granted Defendants’ motion to dismiss, holding that the trust could take only actions related to preserving its assets for purposes of distribution and wind-up, together with those actions for which the trust instrument specifically provided, which did not include the maintenance of the derivative litigation contemplated in this action. View "In re Jenzabar, Inc. Derivative Litigation" on Justia Law

During divorce proceedings between Daniel Kloiber (Dan) and Beth Ann Kloiber the Kentucky Family Court issued status quo orders that restricted Dan in his capacity as a human being over whom the Kentucky Family Court had personal jurisdiction, thereby restricting Dan’s actions as special trustee of the Daniel Kloiber Dynasty Trust and sole manager of three LLCs. Dan subsequently resigned from his positions and appointed Nick Kloiber as special trustee. Nick proceeded to take action contrary to the status quo orders, and the Kentucky Family Court issued a rule to show cause why Nick should not be held in contempt. PNC Delaware Trust Company (PNC), the trustee of the Dynasty Trust, and Nick filed petitions seeking instructions and declarations from the Court of Chancery, arguing that the Kentucky Family Court improperly asserted jurisdiction over the trustee, special trustee and trust and was requiring them to take actions contrary to their fiduciary duties. The Court of Chancery denied Nick’s application for a temporary restraining order (TRO) to prevent Beth from seeking to enforce the status quo orders, including the pending rule to show cause, holding that, because the Kentucky Family Court was not interfering with the Court’s jurisdiction, Nick lacked a colorable claim on which to base a TRO. View "In re Daniel Kloiber Dynasty Trust " on Justia Law

Plaintiff and three individual defendants worked together as principals in a financial services boutique. After plaintiff resigned, he sought a declaration that he continues to own equity stakes in two of the entities. The court concluded that plaintiff withdrew from the entities as of January 26, 2006; because plaintiff only presented evidence a trial sufficient for the court to determine the value of his capital accounts and did not present any evidence of the fair value of his interests, the most plaintiff can receive is the value of his capital accounts; and, therefore, plaintiff is awarded $35,042.67, plus pre- and post-judgment interest from January 6, 2006, until the date of payment. View "Levey v. Brownstone Asset Mgmt., LP, et al." on Justia Law

This memorandum opinion concerns the business divorce between Comerica and Global concerning the joint venture they established in 1996 to process credit and debit card transactions called Alliance. The court found that Comerica is entitled to receive the information it has requested in connection with the wind up of Alliance but that the expense of assisting in the transfer of such information to Comerica and its new payment processor should be borne by Alliance as an expense of the wind up. The court also concluded that cause existed for the Court to intervene in the wind up and to appoint a liquidating trustee to oversee that process to ensure that it is completed promptly and in an orderly manner. View "Comerica Bank v. Global Payments Direct, Inc., et al." on Justia Law

Defendant, the president, sole director, and majority stockholder of a private Delaware corporation specializing in proxy servicing, hired Plaintiff to work for the company in the early 2000s. Beginning in 2004, Plaintiff and Defendant were the sole stockholders of the company. Defendant fired Plaintiff in 2007. In 2012, Plaintiff commenced this action, asserting derivative claims challenging numerous actions taken by Defendant in the course of running the company. Plaintiff then amended her complaint to add claims challenging the propriety in a reverse stock split executed by Defendant in which he cashed out Plaintiff’s shares. The Court of Chancery held (1) Plaintiff succeeded in demonstrating that Defendant breached his fiduciary duties to the company in certain instances; (2) Plaintiff failed to prove her claim that Defendant executed the reverse stock split for the bad faith purpose of depriving Plaintiff of derivative standing; (3) Defendant violated 8 Del. C. 155 by failing to provide fair value for Plaintiff’s fractional shares in the reverse stock split; and (4) Plaintiff failed to prove that Defendant engaged in equitable fraud or negligent misrepresentation. View "Zutrau v. Jansing" on Justia Law

Augustus Evans, who was incarcerated, filed two actions that he sought to bring in Chancery against Bayer Corp. and Johnson & Johnson Co. alleging that he had been injured by pharmaceutical products manufactured and sold by Defendants. Evans sought to proceed in forma pauperis. The Court of Chancery denied the motions to proceed in forma pauperis, holding that Evans could not establish jurisdiction in the Court because Evans’ claims neither sought equitable relief nor involved equitable subject matter and because the statutory bases recited by Evans did not support equitable jurisdiction, and therefore, permitting Evans to proceed in forma pauperis in the Court would be futile. View "Evans v. Bayer Corp." on Justia Law

Plaintiff, Bishop Macram Max Gassis, was the former Chairman of the Board of Directors of Sudan Relief Fund, Inc., formerly known as Bishop Gassis Sudan Relief Fund, Inc. The Court of Chancery found that the Board’s decision to remove Plaintiff as director of the Fund neither violated the Fund’s bylaws nor constituted a breach of fiduciary duty. This opinion concerned remaining issues involving allegations that, after Plaintiff was removed as Chairman and member of the corporation, the corporation used, without authorization, Plaintiff’s trademarked property - Plaintiff’s name and likeness - to raise funds for its charitable purposes. Plaintiff, however, sued only individual directors of the Fund, not the corporation itself. The Court of Chancery granted Defendants’ motion to dismiss as to Plaintiff’s claims based on use of his trademarks, holding that there were no allegations in the complaint that could sustain a claim that Defendants personally misappropriated Plaintiff’s name and likeness to their own use or that Defendants took actions to cause the corporation to improperly exploit Plaintiff’s name and likeness. View "Gassis v. Corkery" on Justia Law