Justia Delaware Court of Chancery Opinion Summaries

In a derivative action on behalf of Hewlett-Packard Company, plaintiff accused certain HP directors of committing waste and breaching the duty of care in connection with the August 2010 termination of then-CEO, Hurd. Plaintiff contends that Hurd was not entitled to, and did not deserve, any severance upon his termination but that the directors granted Hurd a severance package estimated to be worth $40 million or more. Plaintiff also challenged the lack of a long term CEO succession plan as a breach of the directors’ duty of care. The chancellor dismissed. Under Rule 23.1, a stockholder must either make a demand on the board to instigate the legal action that the stockholder seeks to bring on the corporation’s behalf or allege with particularity why such a demand is excused. Plaintiff did not to make a presuit demand and did not adequately allege a basis to excuse presuit demand.View "Zucker v. Andreessen" on Justia Law

GRT and Marathon are engaged in attempting to convert methane gas into fuel. They entered into interrelated agreements, including a Securities Purchase Agreement (Marathon purchased $25 million of GRT’s stock), mutual licensing agreements, and a Cooperative Development Agreement, governing collaboration to develop gas-to-fuels technology. Marathon built a multi-million dollar “Demonstration Facility” to test the technology on a large scale and a smaller research facility (Pilot Unit). Under the Development Agreement, GRT obtained access the Demonstration Facility and the ability to modify the Facility, to expire on December 31, 2012. The Facility began operations in 2008. Marathon executed a run campaign and shared data with GRT. In November 2009, Marathon decided to permanently close the Facility because of operational difficulties. Marathon followed procedures prescribed by the Agreement, gave notice, and extended GRT the right to acquire the Facility. GRT did not exercise that right. Although the Facility is currently closed, the Pilot Unit is operational, and both parties continue to test there. GRT claimed breach of contract. The chancellor found that the Development Agreement is not ambiguous and does not impose an affirmative duty on Marathon to operate the Facility through December, 2012, but provides GRT protection in other ways that would be internally inconsistent with such an affirmative duty.View "GRT, Inc. v. Marathon GTF Tech., Ltd." on Justia Law

NuVasive alleges that Lanx improperly persuaded NuVasive employees and a NuVasive consultant to leave NuVasive and work for Lanx instead, in breach of agreements that the employees had with NuVasive, to misappropriate NuVasive’s trade secrets and other proprietary information. Both are medical corporations. NuVasive claimed unfair competition, tortious interference with contractual relations, tortious interference with prospective contractual relations, aiding and abetting breach of fiduciary duty, civil conspiracy, and misappropriation of trade secrets. Lanx argued that the former NuVasive employees were necessary and indispensable parties to the action because NuVasive’s claims are predicated upon their acts. The chancellor declined to dismiss. While the former employees’ interests are not adequately protected by Lanx, the chancellor reasoned that a remedy could be crafted to avoid prejudice to their interests. The former employees were not indispensable to the misappropriation claim.View "Nuvasive, Inc. v. Lanx, Inc." on Justia Law

CFG produced to defendants 5,000 pages of pleadings and court filings from an action pending in Maryland and later produced 238,000 pages worth of its own documents that it had already produced in the Maryland action. CFG produced all of the documents as Highly Confidential, so that only four of the attorneys representing defendants could review the documents. Defendants moved to vacate the designation. The court determined that defense attorneys may review the documents if they certify that during the pendency of this case they will neither be involved in the New York Litigation, nor represent any client in a matter involving the purchase or sale (including financing) of any nursing home or adult assisted living center. The Court declined to de-designate any of the documents as Highly Confidential; CFG, through its counsel, is to review, within 30 days of the date of this letter opinion, all of the Discovery Documents that refer to Beverly, and determine whether those documents are entitled to be designated Highly Confidential. View "Grunstein v. Silva" on Justia Law

After agreeing to purchase a new townhouse, the Smiths leased it back to the builder, Ryan Homes, to use for six months as a model home. Ryan Homes converted the garage into a sales office. When the Smiths took possession, they used the converted garage as additional living space. The developer sought a mandatory injunction forcing the Smiths and Ryan Homes to convert the space back to a functional garage. The chancellor ruled in favor of defendants. The recorded subdivision plan and declaration of restrictions do not prohibit conversion of a garage to living space. The partition wall of the garage conversion is not sufficiently visible to the public to trigger an architectural review requirement and fears about parking problems are overly speculative.View "Reybold Venture Grp. XI-A, LLC. v. Smith" on Justia Law

Respondent was a former corporation that for several decade was involved in the business of plastering and spray insulating. Due to the nature of its business, Respondent had been subject to hundreds of asbestos-related tort suits. The corporation dissolved in 1999. Petitioners subsequently filed an action seeking the appointment of a receiver for Respondent based on the perceived existence of undistributed assets in the form of liability insurance coverage. After examining Delaware's corporate scheme of dissolution, the Court of Chancery granted Respondent's motion for summary judgment, holding (1) Respondent was not amenable to asbestos-related tort suits commenced more than ten years after its dissolution; and (2) consequently, under the circumstances, the insurance contracts were valueless, and therefore, the appointment of a receiver was unnecessary. View "In re Krafft-Murphy Co., Inc." on Justia Law

This case addressed the allegations of a minority unitholder in a privately held medical device company. The unitholder, the former CEO of the company, became a minority stakeholder after accepting investments in the company in exchange for units after he sold some of his own units. After the board of directors caused the company to enter into several financing transactions, the unitholder filed this action against the board. The unitholder alleged (1) the transactions were in breach of the company's operating agreement, and by undertaking the transactions, the directors also breached their fiduciary duties, and (2) certain unitholders breached fiduciary duties and they and their affiliates aided and abetted the directors' breach of fiduciary duties. The court of chancery held (1) the directors exceeded their authority in engaging in the financing transactions, but they did not breach the fiduciary duties they owed thereunder when they engaged in the transactions; and (2) the directors' breach caused no damage and all defendants were entitled to indemnification notwithstanding the directors' breach of the company's operating agreement. View "Zimmerman v. Crothall" on Justia Law

A stockholder of Republic, a Delaware corporation that engages in waste hauling and waste disposal, filed a derivative suit based on Republic’s compensation decisions: that a payment to O’Connor was made without consideration and was, therefore, wasteful; that an incentive payment to O’Connor was wasteful because it was not tax-deductible and rendered Republic’s compensation plan not tax-deductible; that Directors paid themselves excessive compensation; that Directors breached their duty of loyalty and wasted corporate assets by awarding a certain type of stock option; and that Directors improperly awarded employee bonuses because the requirements of the bonus scheme under which the bonuses were awarded were not met. The chancellor dismissed all but the claim arising from the board’s granting itself stock awards.View "Frank David Seinfeld v. Donald W. Slager, et al." on Justia Law

A 2007 conveyance of commercial property in Milton was characterized by mistakes, starting with an error-filled purchase offer, so that the deed ultimately conveyed a residential parcel that was not owned by the seller at the time of conveyance and that the seller did not intend to convey. In an opinion characterized as “unpleasant to write,” the chancellor declared the purported conveyance a nullity and noted that the “matter has been litigated far beyond what a rational evaluation of its costs and potential benefits would dictate.” The chancellor found that the deed, purporting to transfer the residential parcel, was altered by the buyer’s attorney, to the detriment of the seller and without the effective consent of the seller and was ineffective to convey any property. The actual deed signed by the parties contained a reference to the residential parcel by tax number, but omitted that property from the metes and bounds description. View "Point Mgmt., LLC v. MacLaren, LLC" on Justia Law

Husband died intestate in 2008. A woman, claiming to be his wife, was appointed as administrator of the estate. Petitioner, who resides in the Peoples’ Republic of China, alleged that she was the surviving spouse and sought an elective share. The petition was dismissed. According to petitioner, the first stipulation of dismissal was based upon counsel’s belief that the parties had reached a settlement, and the second stipulation of dismissal was to allow parallel litigation in Pennsylvania. Unable to resolve that litigation, petitioner filed the instant action in May 2011. In her belated response to a motion to dismiss, petitioner alleged that she was not informed of husband’s death for several weeks, and was not timely notified of appointment of the administrator. The court declined to set aside the dismissal. No petition for an extension of time for election was filed during the sixth-month period. The first petition was filed more than five months after the limitations period had expired, and the current petition was filed nearly two years after the limitations period had expired.View "in Re: Ren Xiong Estate" on Justia Law