Justia Delaware Court of Chancery Opinion Summaries

This action arose out of a dispute between two companies involved in the development of pharmaceuticals. Plaintiff was a biodefense company engaged in the development and commercialization of medical countermeasures against biological and chemical weapons and defendant was also a biodefense company that concentrated on the discovery and development of oral antiviral and antibacterial drugs to treat, prevent, and complement vaccines for high-threat biowarfare agents. The court rejected plaintiff's claim that defendant breached a binding license agreement, but found that defendant did breach its obligations to negotiate in good faith and that defendant was liable to plaintiff under the doctrine of promissory estoppel. The court rejected defendant's claim that plaintiff breached its obligation to negotiate in good faith. The court denied plaintiff's claims for specific performance of a license agreement with the terms set forth in the time sheet or, alternatively, for a lump sum award of its expectation damages. The court concluded, however, that plaintiff was entitled to share in any profits relied on from the sale of the drug in question, after an adjustment for the upfront payments it likely would have had to make had the parties negotiated in good faith a license agreement in accordance with the terms of the term sheet. In addition, plaintiff was entitled to recover from defendant a portion of the attorneys' fees and expenses plaintiff incurred in pursuing the action. View "PharmAthene, Inc. v. SIGA Technologies, Inc." on Justia Law

This action arose from a transaction involving the sale of equity in a Texas-based dental practice management company to a Chicago-based private equity firm. At issue was whether the purchasers' ability to raise the forum selection clause issue in Texas provided them with an adequate remedy at law, undermining the basis for equity jurisdiction, and if not, whether the terms of the forum selection clause were broad enough to reach the Texas claims. The court held that the forum selection clause did not provide purchasers an adequate remedy at law, and therefore, the court had subject matter jurisdiction over their claims. The court also held that the forum selection clause here, which applied to any claims arising under or relating to the transaction, was sufficiently broad in scope that the purchasers were likely to succeed in showing that it provided exclusive jurisdiction in Delaware over the claims brought by the sellers in Texas. Accordingly, the court granted purchasers' motion for preliminary injunction. View "ASDC Holdings, et al. v. The Richard J. Malouf 2008 All Smiles Trust, et al." on Justia Law

In this action brought pursuant to 8 Del. C. 225, plaintiffs sought a determination that certain written consents validly removed defendant directors and replaced them with a new slate. Defendant directors contended that they could not be removed or a new slate elected without the consent of a majority of the Series B Preferred Stock. Applying enhanced scrutiny, the court held that defendant directors breached their fiduciary duties when issuing the Series B Preferred Stock where, although they honestly believed they were acting in the best interests of the company, they breached their duty of loyalty by structuring the stock issuance to prevent an insurgent group from waging a successful proxy contest. Therefore, the class provision could not be given effect and the written consents validly elected a new board. View "Johnston, et al. v. Pedersen, et al." on Justia Law

This post-trial opinion determined the voting membership of GnB, LLC, a Delaware limited liability company. The parties disputed whether Firehouse Gallery, LLC, a Florida limited liability company, was a voting member of GnB. The parties also disputed whether GnB possessed an exclusive license to use the first-tier, generic domain name candles.com; held an option to purchase candles.com; and owned other assorted domain names relating to the candles business. The court held that Firehouse and plaintiff, who controlled GnB, each held a 50% voting membership interest; GnB owned the exclusive license and option to purchase candles.com and the other domain names; and plaintiff and defendant, the current principal of Firehouse, each breached their fiduciary duty of loyalty to GnB and must account for the profits and personal benefits they received. The court held that defendant was not otherwise liable to GnB or plaintiff. Because all of the litigants engaged in misconduct that could support fee-shifting, the doctrine of unclean hands applied with particular salience. Accordingly, the court held that all parties would bear their own fees and costs. View "Phillips v. Hove, et al." on Justia Law

Plaintiff, a Delaware taxpayer, asserted claims against defendant, the State of Delaware Auditor of Accounts, for claims related to defendant's alleged noncompliance with 29 Del. C. 2906(f), which stated, in part, that the "Auditor of Accounts shall conduct postaudits of local school district tax funds budget and expenditures annually" and for claims related to defendant's alleged violation of Delaware's Freedom of Information Act (FOIA), 29 Del. C. ch. 100., by failing to provide plaintiff with copies of certain employee time sheets which he duly requested. The court held that it lacked subject matter jurisdiction over the audit claims and the FOIA claims must be dismissed because of plaintiff's failure to exhaust administrative remedies. View "Korn v. State of Delaware Auditor of Accounts R. Thomas Wagner, Jr." on Justia Law

This matter involved the interpretation of a limited liability company operating agreement. Petitioner (Showell) was a member of an accounting firm (Hoyt) and respondents (Pusey and Hatter) were the remaining members of the LLC at the time. In early 2007, Showell "retired" from Hoyt. Showell subsequently asked the court to construe the provisions of the Hoyt Operating Agreement to determine what value, if any, Showell was due for his interest in Hoyt as a consequence of his departure from the company. The court held that Showell was entitled to receive his share of the liquidation value of Hoyt as of the date of his "retirement" from the company. View "Showell v. William H. Pusey, Richard H. Hatter and Robert M. Hoyt & Co., LLC" on Justia Law

This matter came before the court on a Petition for Partition of a five acre parcel of land. The property had been sold by a Trustee, the Trustee's Return had been accepted, and the proceeds of the sale had been placed in escrow. The property was owned in common by petitioner and her five co-tenants. Petitioner had filed a claim against the proceeds of the sale for her attorney's fees and to reimburse her for the cost of an appraisal of the property she ordered in connection with her partition request. The court held that there was no common benefit that had been accomplished for the co-tenants and therefore, the application of the "common benefit" exception to the American Rule was not warranted and each party must bear his own attorneys' fees. The court also held that the appraisal was obtained at the request of and for the benefit of petitioner, who wished to sell her interest. Therefore, the cost must be borne by petitioner. View "Moore v. Davis, et al." on Justia Law

Plaintiff alleged that defendant had a personal bank account at Fulton Financial Corporation (Fulton), of which his wife could be a joint holder. Plaintiff sought a temporary restraining order enjoining both defendant and his wife from using the funds or removing them from Fulton, pending a final disposition of its claim that the funds were wrongfully removed by defendant from plaintiff's account. The court held that while the complaint stated a colorable claim, the court was unpersuaded that irreparable harm would result absent the entry of a restraining order, ex parte. The court also held that where, as here, the plaintiff sought to freeze the funds of an account legally held, not only by the alleged wrongdoer but jointly by an innocent third party, a request for ex parte action raised concerns of due process. Therefore, since plaintiff failed to show that irreparable harm would occur absent entry of a temporary restraining order ex parte, the court deferred decision on the restraining order request pending service and an opportunity for defendant to be heard. View "Smart Home, Inc. v. Selway, et al." on Justia Law

This action was dismissed under Rule 41(c) in a March 9, 2011 order. Plaintiff subsequently moved to vacate the court's dismissal under Rule 60(b)(6) on the ground that he did not receive the requisite notice under Rule 41(e). The court held that had plaintiff made even the smallest of efforts to prosecute the case for the more than two years that preceded the court's order, the clerical mistake regarding his address would have been detected and corrected. Therefore, the court held that because the record indisputably showed that plaintiff had taken no action in this case for over two years, the court denied his motion to vacate under Rule 60(b)(6). View "Solow v. Aspect Resources, LLC, et al." on Justia Law

Plaintiff filed a motion seeking approval of its appointment of James Gallagher as its "Designated Consultant" pursuant to the Stipulation and Order for the Production and Exchange of Proprietary Information entered by the court on February 22, 2010. Defendant objected to Gallagher's designation. The court held that because the terms of the order did not prevent the selection of a likely fact witness as a Designated Consultant - and the order did not otherwise prevent Gallagher's designation - and because compensating Gallagher as a Designated Consultant (and not as a fact witness) would not violate the Delaware Lawyers' Rules of Professional Conduct, plaintiff's Motion to Approve Designated Consultant was granted. View "BAE Sys. Info. and Elec. Sys. Integration Inc. v. Lockheed Martin Corp." on Justia Law