Justia Delaware Court of Chancery Opinion Summaries

Plaintiffs bought a townhouse condominium unit from Defendant. After the sale, repairs of leaks in the other condominium units caused by poor construction required the condominium board to collect special assessments in the amount of $65,000 from each unit holder, including Plaintiffs. Recoupment from the builder offset the sum, but Plaintiffs remained out-of-pocket over $40,000. Plaintiffs sued Defendant, alleging fraud and equitable fraud due to Defendant's allegedly insufficient disclosures made to Plaintiffs before the sale. The Court of Chancery entered judgment in favor of Defendant, holding (1) Plaintiffs failed to prove Defendant committed common-law fraud because they failed to show Defendant misrepresented or omitted some material fact before the sale of the condominium; and (2) rescission was not warranted under the facts of this case, and therefore, equitable fraud was inappropriate. View "Grzybowski v. Tracy" on Justia Law

Petitioners, residents of New Castle County, befriended a stray dog called Maggie. They later turned Maggie over to the Kent County Society for the Prevention of Cruelty to Animals (SPCA). Subsequently, Petitioners told the SCPA they would like to adopt Maggie. After concluding that the SPCA had euthanized Maggie, Petitioners filed this action, seeking to compel the SPCA to comply with the state's Shelter Standards Law, including strict compliance with its euthanasia requirements. The SPCA moved to dismiss the action, claiming, among other things, that Petitioners lacked standing to pursue their claims. The Court of Chancery dismissed the action, concluding that Petitioners failed to satisfy the "legally protected interest" element of standing because they did not own Maggie, and their statement of interest to adopt Maggie was not sufficient to create a reasonably conceivable legally protected interest in Maggie. View "Gittman-Crowther v. Kent County Society for the Prevention of Cruelty to Animals" on Justia Law

Defendant was a Delaware corporation. Plaintiff was a purported minority stockholder of the corporation. Plaintiff served Defendant with a letter requesting inspection of its books and records pursuant to Del. Code Ann. 8, 220 and attached a sworn affidavit affirming he was a beneficial owner of Defendant's stock. When Defendant failed to respond to Plaintiff's request, Plaintiff filed this action demanding the books and records. Defendant filed a motion to dismiss, contending that Plaintiff failed to comply with the procedural requirements of section 220 because Plaintiff failed to provide adequate evidence of his beneficial ownership of company stock at the time he sent his inspection demand. The Court of Chancery granted the motion, holding that Plaintiff's sworn affidavit attesting he was an owner of company stock was insufficient evidence of beneficial ownership. View "Barnes v. Telestone Techs. Corp." on Justia Law

Plaintiffs owned a house trailer on a leased lot in Defendants' trailer park. Plaintiffs desired to sell their trailer to a third party, which required a transfer of the lot lease to the purchaser. Defendants refused to approve the lease transfer unless Plaintiffs agreed to pay for the removal of an abandoned oil tank on the leasehold. Plaintiffs filed this action for damages and injunctive relief, contending Defendants' demands violated the lease agreement. More than one year after Plaintiffs served discovery requests, Defendants moved to dismiss the action with prejudice for failure to prosecute. The Court of Chancery granted the motion, holding that because Plaintiffs declined the opportunity to go forward, the case was dismissed with prejudice. View "Valdes v. MCH Mariner's Cove, LLC" on Justia Law

Employee was employed by the State's Department of Services for Children, Youth, and their Families (Department). After Employee was injured during the course and scope of his employment, the Department concluded that Employee did not make a sufficient return to work and terminated him. Employee's termination was subject to arbitration under the collective bargaining agreement between the Department and Council 81, the exclusive bargaining agent for certain Department employees. The arbitrator upheld Employee's termination, finding just cause for Employee's dismissal. Council 81, acting on behalf of Employee, challenged the arbitrator's decision. The Court of Chancery granted summary judgment for the State, holding that Council 81 failed to offer a recognized basis for setting aside the contractually bargained for arbitrator's decision. View "Council 81, AFL-CIO v. State" on Justia Law

This derivative suit was brought by the named plaintiff, a stockholder in United Technologies Corporation (UTC), on behalf of UTC. The plaintiff alleged that the UTC board of directors caused UTC to misrepresent violations of export controls by two of its subsidiaries to the federal government. Defendants were the members of the UTC board at the time of the complaint and the former chairman and CEO of UTC. The plaintiffs, however, failed to allege that any of the individuals other than the CEO and the first-named defendant were not independent. The Court of Chancery dismissed the complaint with prejudice as to the named plaintiff on the ground that the plaintiff failed to plead facts supporting an inference that a majority of the board faced a substantial likelihood of personal liability. View "Harold Grill 2 IRA v. Chenevert" on Justia Law

Plaintiffs, stockholders in Chevron and FedEx, sued the boards of Chevron and FedEx for adopting forum selection bylaws providing that the forum of litigation relating to the companies' internal affairs should be conducted in Delaware. The cases were consolidated. Defendants filed a motion for judgment on the pleadings on Plaintiffs' claims that (1) the bylaws were statutorily invalid because they were beyond the boards' authority under the Delaware General Corporation Law, and (2) the bylaws were contractually invalid and therefore could not be enforced like other contractual forum selection clauses. The Court of Chancery granted Defendants' motion, holding (1) the bylaws were facially valid as a matter of statutory law; and (2) the bylaws were valid and enforceable contractual forum selection clauses. View "Boilermakers Local 154 Ret. Fund v. Chevron Corp." on Justia Law

A holding company (Company) whose equity was solely owned by Defendant owned forty-three percent of M&F Worldwide (MFW). Company offered to purchase the rest of the corporation's equity in a going private merger. The merger was conditioned on both independent committee approval and a majority-of-the-minority vote. A special committee was formed, which picked its own legal and financial advisors. After the committee successfully negotiated with Company to raise its bid by $1 per share, the merger was approved by the majority of the stockholders unaffiliated with the controlling stockholder (the minority stockholders). Company, Defendant, and other directors of MFW were sued by stockholders, who alleged that the merger was unfair. The Court of Chancery granted Defendants' motion for summary judgment, holding that when a controlling stockholder merger has, from the time of the controller's first overture, been subject to (i) negotiation and approval by a special committee of independent directors empowered to say no, and (ii) approval by an uncoerced, fully informed vote of majority of the minority investors, the business judgment rule standard of review applies, under which the Court was required to dismiss the challenge to the merger in this case. View "In re MFW S'holders Litig." on Justia Law

The board of directors of Primedia, Inc. adopted a resolution approving a merger agreement among Primedia, TPG Capital, and TPG's wholly owned acquisition subsidiaries. Primedia's majority stockholder, KKR, approved the merger agreement. At the time the transaction closed, Linda Kahn and a co-plaintiff were litigating a derivative action on Primedia's behalf, alleging that KKR traded on inside information when it purchased shares of Primedia's preferred stock and seeking disgorgement of KKR's profits under Brophy v. Cities Service Co. In this class action, Kahn and her co-plaintiff alleged that the terms of the merger were unfair because the Primedia directors failed to obtain any value for the Brophy claim. Specifically, they argued that the merger conferred a special benefit on KKR because KKR knew it was highly unlikely that any acquirer would pursue the Brophy claim. Plaintiffs also challenged a provision in the merger agreement limiting the Primedia board's ability to change its recommendation that stockholders vote in favor of the merger. The Court of Chancery (1) dismissed Defendants' motion to dismiss as to the fairness claim because Plaintiffs had standing to pursue the claim and pled a reasonably conceivable theory; and (2) otherwise granted the motion. View "In re Primedia, Inc. S'holders Litig." on Justia Law

The plaintiffs sued for damages arising out of their sales of stock in Wayport, Inc. After the defendants' motion to dismiss in part was granted, the litigation proceeded to trial against the remaining defendants on claims for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, common law fraud, and equitable fraud. The court of chancery (1) entered judgment in favor of plaintiff Brett Stewart and against defendant Trellis Partners Opportunity Fund in the amount of $470,000; and (2) otherwise entered judgment against the plaintiffs and in favor of the defendants. View "In re Wayport, Inc." on Justia Law