Justia Delaware Court of Chancery Opinion Summaries

In these cross-motions for partial summary judgment, at issue was whether ION violated the rights of its preferred stockholder, Fletcher, by causing a wholly-owned ION subsidiary to issue certain promissory notes without Fletcher's approval in connection with ION's purchase of a business. The court agreed with the parties that to determine whether the notes were securities was an issue appropriate for summary judgment. On the merits, however, the court held that it did not agree with ION's argument that all notes issued as compensation to a seller of a business by the buyer of that business were not securities. The court concluded that two of the promissory notes issued to the business seller by the ION subsidiary were not securities because they were most sensibly characterized as short-term commercial bridge financing to facilitate the closing of the acquisition transaction. But the court concluded that the third note was a security. Accordingly, the court found that Fletcher's consent rights under the Certificates were not breached by the issuance of the first two notes, but were breached when ION caused its subsidiary to issue the third note.View "Fletcher Int'l, Ltd. v. ION Geophysical Corp., et al." on Justia Law

This action involved claims of fraud and breach of fiduciary against an individual defendant, a former investment professional accused of having committed a massive fraud related to a quantitatively-based trading program that he allegedly developed to trade futures contracts. Plaintiffs, as a result of their association with defendant and Paron, the firm they founded with defendant, claimed that they have been stigmatized and thus face dismal prospects of finding employment in the financial services industry. The court found that defendant committed fraud and breached his fiduciary duties to plaintiff and Paron by making false statements of fact about his program, his investment track record, and his personal financial situation. As a result, plaintiffs were entitled to extensive damages against defendant based on their lost future earnings and other costs associated with the formation and operation of Paron. The court also awarded plaintiffs limited injunctive relief requiring defendant to destroy or return copies of Paron's trading program and to stop marketing any versions of that trading program.View "Paron Capital Mgmt., LLC, et al. v. Crombie" on Justia Law

Petitioners in this case were current beneficiaries of seven testamentary trusts. Petitioners sought orders approving the resignations of individual trustees, confirming the appointment of Northern Trust Company of Delaware as the successor corporate trustee for each trust, confirming Delaware as the situs of each trust, reforming the trust, and accepting jurisdiction over the trusts. The Court of Chancery dismissed the petitions, declining to adjudicate this multistate trust matter in deference to the courts which asserted jurisdiction over and had an ongoing supervisory role with respect to the testamentary trusts. Specifically, the Court held (1) the petitions for the 1960 and 1969 trusts should be filed in New Jersey and Texas, if appropriate; and (2) the petition for the 2005 trusts should be filed in the jurisdiction where probate matters were ongoing or refiled with supplemental information in the Court of Chancery. View "In re Peierls Family Testamentary Trusts" on Justia Law

Petitioners in this case were the current trustees of a Washington charitable trust. Petitioners petitioned the Court of Chancery for orders (1) approving their resignations, (2) confirming the appointment of Northern Trust Company of Delaware as successor trustee, (3) confirming Delaware as the situs of the trust, (4) determining that Delaware law governs the administration of the trust, (5) accepting jurisdiction over the trust, and (6) reforming the trust to include an array of additional administrative positions. The Court accepted jurisdiction over the trust for the limited purpose of considering the application for reformation and held (1) Petitioners' first four requests sought impermissible advisory opinions, and to the extent the petition sought these declarations, it was dismissed; (2) Petitioners' application for reformation was denied, as Petitioners did not advance any recognized basis for reforming the Trust; and (3) jurisdiction over the trust was not retained. View "In re Ethel F. Peierls Charitable Lead Unitrust" on Justia Law

Petitioners in this case were current beneficiaries of five inter vivos trusts. Seeking declarations designed to cause Delaware to govern the administration of the trusts so they could be reformed to take advantage of features authorized by the Delaware trust statute, Petitioners requested orders approving the resignations of individual trustees, confirming the appointment of Northern Trust Company of Delaware as the sole successor trustee for each trust, and confirming Delaware as the situs of each trust. The Court of Chancery denied the petitions, holding that the petitions failed primarily because Delaware law did not govern the trusts, as each of the trusts affirmatively selected the governing law of a different jurisdiction. View "In re Peierls Family Inter Vivos Trusts" on Justia Law

Entities affiliated with ASB sued to reform the capital-event waterfall provisions in a series of agreements governing real estate joint ventures managed by affiliates of The Scion Group. The erroneously drafter provisions called for Scion to receive incentive compensation know as a "promote" even if the joint ventures lost money. Scion sought to enforce the agreements as written, and its affiliates advanced counterclaims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and breach of contract. The court found that plaintiffs have proven their entitlement to reformation by clear and convincing evidence and entered a judgment in their favor of defendants' counterclaims.View "ASB Allegiance Real Estate Fund, et al. v. Scion Breckenridge Managing Member, LLC, et al." on Justia Law

This case began as a control dispute in which the managing member of Oculus Capital Group, LLC sought to block the non-managing member from attempting to take over the managerial role. After a stipulated order and assorted rulings, the control dispute was largely resolved. What remained were the non-managing member's counterclaims, which sought damages from the managing member and its human controller based on the actions they took that caused the relationship between the parties to deteriorate and led to the control dispute. The plaintiffs moved to dismiss the counterclaims. The Court of Chancery (1) granted the motion to dismiss the breach of contract claim in part; (2) granted the motion to dismiss the aiding and abetting the breaches of the operating agreement claim in part; (3) denied the motion on the breach of default of fiduciary duty claim as to one of plaintiffs and stayed the count as to the other plaintiff pending arbitration; (4) denied the motion to dismiss the gross negligence claim as to one of the plaintiffs and granted the motion as to the other plaintiff; and (5) granted the motion to dismiss the declaratory judgment. View "Feeley v. NHAOCG, LLC" on Justia Law

This case concerned a dispute between a Netherlands holding company and an Italian businessman. The businessman made a loan to the holding company for a joint venture. The joint venture eventually went into bankruptcy and defaulted on its loan obligations, including the loan from the businessman. The businessman filed this action alleging, among other things, that the holding company induced him to make the loan by representing that it would support and continue to back the joint venture. The holding company denied making those representations or having any obligations to the businessman. The holding company moved for summary judgment on multiple grounds. The Court of Chancery (1) found the businessman's claims were not barred for lack of standing; (2) denied summary judgment on the ground of laches; (3) denied summary judgment on the holding company's English statute of frauds defense; (4) granted summary judgment in the holding company's favor on the businessman's Italian law claim for breach of implied or oral contract and his Dutch law claim; and (5) granted the holding company's motion for summary judgment regarding the businessman's claim for unjust enrichment. View "Vichi v. Koninklijke Philips Elecs., N.V." on Justia Law

This action came before the Court of Chancery on a petition for a decree of distribution in an estate matter. Petitioner and his sister, Respondent, were the intestate heirs of their mother's estate. Ordinarily the estate would be divided evenly between the two of them. Petitioner argued, however, that his sister was not entitled to any additional funds from the estate because (1) she benefited when the estate's property was sold and the proceeds were used to pay off a mortgage she owed on the property, which had the effect of decreasing the amount available in the estate for distribution to the heirs, and (2) Respondent's actions as administratrix depleted the value of the estate. The Court of Chancery ordered that all of the assets in the estate should be distributed to Petitioner, concluding that, after accounting for the benefit Respondent received when the mortgage was paid off, and the loss caused to the estate by the breach of Respondent's fiduciary duties, there were no funds remaining in Respondent's share of the estate. View "In re Riley" on Justia Law

The State and its agencies were parties to collective bargaining agreements that provided for overtime compensation after 37.5 hours of work per week and, in some cases, a career ladder which promoted employees based on certain requirements. In 2009, the State changed the minimum for overtime hours from 37.5 to forty hours per week and temporarily froze the career ladder. In response, the union filed two unfair labor practice charges for the State's failure to negotiate in good faith. The public employment relations board dismissed both charges. The Court of Chancery affirmed, holding (1) the State is not required to bargain over nonmandatory subjects; and (2) overtime compensation issues here are nonmandatory subjects of collective bargaining. View "Am. Fed'n of State, County, & Mun. Employees v. State" on Justia Law