Justia Delaware Court of Chancery Opinion Summaries

In this investment fund complex dispute brought by former partners causing two LLCs to file suit for breach of the LLC agreements after the fund principal commenced an arbitration the Court of Chancery held that, absent a further arbitration agreement, the parties must litigate the claims asserted in this action in the district court.The employment agreement of the fund principal contained a mandatory agreement to arbitrate all claims relating to his employment. The fund principal's partners eventually terminated him for cause for allegedly violating his employment agreement and, as a consequence, for canceling the fund principal's member interests in the LLC. Thereafter, the fund principal commenced an arbitration in which he sought to litigate whether he had breached his employment agreement. The former partners refused to arbitrate and then brought this suit seeking a permanent injunction barring the fund principal from arbitrating the breaches of the LLC agreements. The Court of Chancery held that the LLCs were bound by the arbitration agreement and that the court must decide which claims must be litigated and which claims were arbitrable. View "Fairstead Capital Management LLC v. Blodgett" on Justia Law

The Court of Chancery denied Defendants' motion to dismiss this action asserting that the management team (or sponsor) and directors of a special acquisition company (SPAC) breached their fiduciary obligations, holding that it was reasonably conceivable that Defendants breached their fiduciary duties.For a SPAC organized as a Delaware corporation, stockholders are assured that the SPAC's fiduciaries will abide by certain standards of conduct. Plaintiff, a stockholder, filed a putative class action alleging that Defendants undertook a value destructive deal that generated returns for the sponsor while impairing stockholders' ability to decide whether to redeem or to invest in the post-merger company. Defendants filed a motion to dismiss. The Court of Chancery denied the motion, holding that the complaint stated reasonably conceivable claims against Defendants in counts one, two, and three. View "Delman v. GigAquisitions3, LLC" on Justia Law

The Court of Chancery dismissed for lack of subject matter jurisdiction this case brought by Plaintiffs, two religious leaders, challenging restrictions that the Governor imposed on houses of worship during the COVID-19 pandemic, holding that Plaintiffs failed to show any basis for relief.Plaintiffs asserted that they suffered harm as a result of the challenged restrictions and that the restrictions triggered, but could not survive, strict scrutiny. Plaintiffs sought as a remedy a declaration that the challenged restrictions were unconstitutional and a permanent injunction prohibiting the Governor from implementing similar restrictions in the future. The Court of Chancery granted the Governor's motion to dismiss, holding that Plaintiffs did not establish a reasonable apprehension that the Governor would engage in conduct that would warrant a permanent injunction and therefore did not make the necessary showing. View "In Re Covid-Related Restrictions On Religious Services" on Justia Law

The Court of Chancery granted Plaintiff's motion for the issuance of a letter of request to obtain the assistance of the central authority in Switzerland to obtain electronic data that Swiss investigators seized from the law office of defendant Dieter Neupert while investigating whether Neupert falsified evidence in a Switzerland civil proceeding, holding that Plaintiff was entitled to relief.In granting the motion, the Court of Chancery held that Plaintiff showed that issuance of the letter of request was warranted. Specifically, the Court concluded that Plaintiff met her burden of convincing the issuing court to ask a foreign court for assistance by showing that the letter of request was targeted and appropriate, that it would be difficult to obtain the information through other means, that the crime/fraud exception to privilege issues applied, and that Neupert would not produce the discovery materials if he had them. View "In re Cote d'Azur Estate Corp." on Justia Law

The Court of Chancery granted Selling Stockholders' motion for partial judgment on the pleadings in this action brought after Corporation sold assets to Buyer and Buyer placed a portion of the consideration in escrow to fund any purchase price adjustment and to secure indemnification obligations, holding that there was no contractual basis for maintaining the funds in escrow.The asset purchase agreement in this case appointed Corporation's former CEO as the sellers' representative for purposes of making decisions about the escrowed funds, but the period for holding the escrowed funds had expired, and no claims against the escrowed funds remained outstanding. Selling Stockholders' filed this action against the former CEO asserting a series of claims designed to compel the release of the escrowed funds. The Court of Chancery granted relief, holding (1) the former CEO must exercise his discretionary authority over the release of the escrowed funds, but he must exercise that authority consistent with the implied covenant of good faith and fair dealing; and (2) the order implementing this ruling will provide for the release of funds from escrow on a date not earlier than sixty days after the judgment becomes final. View "American Healthcare Administrative Services, Inc. v. Aizen" on Justia Law

The Court of Chancery granted in part a motion for emergency post-judgment relief filed by Stream TV Networks, Inc. seeking an order canceling Hawk Investment Holding, Ltd.'s ownership of 1,000 shares of Technovative Media Inc.'s common stock, holding that Hawk and SeeCubic, Inc. engaged in contumacious conduct warranting relief.In this action, Stream argued that SeeCubic and Hawk acted in concert to transfer one hundred percent of the shares at issue from SeeCubic to Hawk and that this conduct was contumacious because the court had made clear in several rulings that SeeCubic was required to transfer its assets to Stream. The Court of Chancery held (1) SeeCubic and Hawk engaged in contumacious conduct, and Shad Stastney pulled the strings; and (2) as a remedy, this Court cancels Hawk's purported ownership of the shares and vested ownership in Stream. View "In re Stream TV Networks, Inc. Omnibus Agreement Litigation" on Justia Law

In this opinion, the Court of Appeals suggested reconsidering the holding of CompoSecure, LLC v. CardUX, LLC (CompoSecure II), 206 A.3d 807 (Del. 2018), and permitting a court of equity to consider equitable defenses to a breach of contract claim even when the parties have used the word "void" to describe the consequence of contractual noncompliance.Defendant, a co-founder and member of XRI Investment Holdings LLC (XRI), formed GH Blue Holdings, LLC as a single-member LLC and then transferred all of his Class B units in XRI to Blue (the Blue Transfer). Defendant sought to comply with a provision in the LLC agreement that governed XRI's internal affairs that generally prohibited members from transferring their member interests by evoking an exception for a transfer to a "Permitted Transferee." XRI alleged that the Blue Transfer was void ab initio and never became effective, and Defendant responded that XRI's claim was barred by the equitable defense of acquiescence. The Court of Chancery held (1) there was no impediment to a defendant raising a defense of acquiescence in response to a legal claim; and (2) this decision sets out the rationale for a court to reconsider the holding in CompoSecure II so that the Delaware Supreme Court may consider it in connection with any appeal. View "XRI Investment Holdings LLC v. Holifield" on Justia Law

The Court of Chancery held that the petition in this case alleging that Respondent, a former teacher, befriended and manipulated a woman, now deceased, through coercion into receiving millions of dollars of the woman's inheritances should be dismissed in full, with prejudice.Petitioner filed a verified petition to, among other things, invalidate will and trust agreements, for breach of a fiduciary duty, and demand for accounting. Respondent filed a motion to dismiss. The Court of Chancery granted the motion, holding (1) most of Petitioner's claims were either expressly time barred or sought a collateral attack on the incontestable final wishes of the decedent and that there was no viable basis for tolling the applicable limitations; and (2) Petitioner did not have standing to assert her remaining claims. View "Rambo v. Fischer" on Justia Law

The Court of Chancery held Gregory Holifield violated an agreement by forming GH Blue Holdings, LLC (Blue) as a single-member LLC and then transferring all of his Class B units in XRI Investment Holdings, LLC (XRI), of which he was a co-founder and member, to Blue (the Blue Transfer) was void while the law required this result, it was contrary to the equities of the case.The LLC agreement that governed XRI's internal affairs (the LLC agreement) contained a provision generally prohibiting members from transferring their member interests (the No Transfer Provision) and that any such transfer is void. XRI asserted that the Blue Transfer was void ab initio and never became effective, and Holifield responded that XRI's claim was barred by the equitable defense of acquiescence. The Court of Chancery agreed with Holifield, holding Holifield satisfied all of the requirements to prove the defense of acquiescence. In this decision, the Court set out rationale to support an approach to the issue that does not currently reflect Delaware law and ordered the parties to submit a final order as to form. View "XRI Investment Holdings LLC v. Holifield" on Justia Law

The Court of Chancery denied Jessica Puathasnanon's motion to dismiss this action pursuant to Rule 12(b)(2), holding that Puathasnanon was subject to personal jurisdiction in Delaware for purposes of the claims asserted in this case.Hudson Vegas Investment SPV, LLC sued various defendants, including Puathasnanon, the general counsel and chief legal officer of P3 Health Group Holdings, LLC, asserting that Puathasnanon breached the fiduciary duties she owed to P3 and its members. Puathasnanon filed a motion to dismiss, asserting that the court could not exercise personal jurisdiction over her. The Court of Chancery denied the motion to dismiss, holding that the exercise of personal jurisdiction over Puathasnanon comported with minimum standards of due process. View "In re P3 Health Group Holdings, LLC" on Justia Law