Justia Delaware Court of Chancery Opinion Summaries

The Court of Chancery denied Defendants' motion to dismiss this complaint for failure to state a claim upon which relief could be granted, holding that Plaintiff's claims were ripe and that the complaint stated claims for breach of contract, breach of fiduciary duty, and unjust enrichment.Plaintiff, a stockholder of a company, brought this lawsuit alleging that Defendants breached the terms of an equity compensation plan, that Defendants breached their fiduciary duties, and unjust enrichment. Defendants moved to dismiss the complaint in its entirety, arguing that none of Plaintiff's claims were ripe and that Plaintiff failed to state a claim. The Court of Chancery denied the motion to dismiss, holding that Defendants' attacks on the complaint were unavailing. View "Garfield v. Allen" on Justia Law

The Court of Chancery granted Defendants' motion to dismiss the amended complaint against them under Court of Chancery Rule 12(b)(2) for lack of personal jurisdiction, holding that this Court lacked personal jurisdiction.To establish personal jurisdiction, Plaintiffs relied on sections 3104(c)(1) and 3014(c)(3) of Delaware's Long-Arm Statute and the conspiracy theory of jurisdiction. The Court of Chancery dismissed the claims without prejudice, holding (1) both theories of jurisdiction required a forum-related act or omission; (2) Plaintiffs did not adequately allege a forum-related act or omission; and (3) Plaintiffs' interpretation of section 3014(c)(3) was unsupported by caselaw. View "SDF Funding LLC v. Fry" on Justia Law

The Court of Chancery granted Defendants' partial motion to dismiss Plaintiffs' amended complaint, holding that Plaintiffs did not satisfy the statutory definition of "creditor" as required to have standing to pursue their amended claims under the Delaware Uniform Fraudulent Transfer Act (DUFTA).Defendant Genworth Life Insurance Company (GLIC) wrote a line of long-term care (LTC) insurance policies. Plaintiffs, a putative class of GLIC LTC policyholders and GLIC insurance agents who sold LTC policies, alleged that fraudulent transfers jeopardized GLIC's ability to pay LTC claims to its policyholders and LTC commissions to its insurance agents. Plaintiffs later amended their complaint to add three new claims challenging the distribution of certain proceeds as intentional and constructive fraudulent transfers. The Court of Chancery granted Defendants' partial motion to dismiss, holding that Plaintiffs' new DUFTA claims failed because they were not "claims" under DUFTA. View "Burkhart v. Genworth Financial, Inc." on Justia Law

The Court of Chancery entered a final judgment awarding Plaintiffs relief in this business dispute, holding that Plaintiffs proved that James Harron breached a duty of loyalty he owed to certain companies.Harron and the brothers Blair and Matthew Nagel formed Metro Storage International, LLC, and Harron served as the president. During his tenure, Harron provided consulting services to another client and assisted that client by disclosing confidential information belonging to Metro International and its affiliates. Later, the Nagel brothers backed Harron's new venture by forming Metro Storage LATAM LLC (together with Metro International, the Companies). Harron subsequently left the Companies, taking confidential documents belonging to the Companies. Thereafter, the Nagel brothers caused the Companies and their affiliates to file this action against Harron. The Court of Chancery granted judgment in favor of Plaintiffs, holding that Plaintiffs proved that Harron breached confidentiality restrictions in the Companies' governing agreements and violated the Stored communications Act. View "Metro Storage International LLC v. Harron" on Justia Law

The Court of Chancery found for Plaintiff on all counts and counterclaim counts in this case involving affordable rental housing property held by a limited partnership, holding that the new limited partner lacked caused to remove the general partner.At issue was affordable housing projects in a federal program that were held by a Delaware limited partnership. Plaintiffs were the partnership and general partner and Defendant was a new limited partner. Defendant sought either a sale of the property or a buyout of its partnership interests, and when the general partner refused to cooperate, the limited partner attempted to remove the general partner for cause. The general partner sought a declaratory judgment that its removal was invalid, and the limited partner asserted counterclaims for, inter alia, breach of contract. The Court of Chancery found in favor of Plaintiffs on all counts, holding (1) the limited partner failed to prove that the general partner breached its modified judiciary duties or the limited partnership agreement; and (2) therefore, the limited partner lacked cause to remove the general partner. View "JER Hudson GP XXI LLC v. DLE Investors, LP" on Justia Law

In this case involving the receivership that Scottish Re (U.S.), Inc. (the Company) was placed under the Court of Chancery held that, when seeking court approval for the Company's rehabilitation plan, the Insurance Commissioner of the State of Delaware will not need to demonstrate that the rehabilitation plan meets the "Liquidation Standard" discussed in this opinion.The Commissioner proposed a rehabilitation plan, but the parties could not agree on the standard that the court would apply when determining whether to approve the rehabilitation plan. Specifically at issue was whether the Commissioner would have to prove that he validly determined that the rehabilitation plan treated each claimant at least as well as the claimant would fare in a liquidation of the Company, a component known as the Liquidation Standard and whether the court should require compliance with the Liquidation Standard as a matter of common law. The Court of Chancery held (1) the statutory scheme does not require compliance with the Liquidation Standard; and (2) common law does not require compliance with the Liquidation Standard. View "In re Rehabilitation of Scottish RE (U.S.), Inc." on Justia Law

The Court of Chancery granted a motion sought by the Insurance Commissioner of the State of Delaware (the Commissioner) asking the Court of Chancery to permit Scottish Re (U.S.) Inc. (the Company), a delinquent insurer, to make payments to a subset of primary insurers (cedents) for a portion of their losses, holding that the Commissioner was authorized to cause the Company to make the payments.The Company, a reinsurer, entered into reinsurance agreements with cedents in which the Company agreed to pay a portion of the losses that their insurers suffered. The Company was later placed in receivership, and the Commissioner was appointed as receiver. The Company stopped paying its cedents for the losses they incurred while the cedents continued to make premium payments to the Company. The Commissioner asked the Court to permit the company to make the payments tissue before the approval of a rehabilitation plan. The Court of Chancery granted the motion, holding that the Commissioner established a prima facie case sufficient for the Court to grant the motion. View "In re Rehabilitation of Scottish RE (U.S.), Inc." on Justia Law

This decision held that an irrevocable proxy did not run with majority shares and that a transfer restriction applied to any sale to an affiliate but not to a sale to a third party.A Delaware limited partnership (Partnership) dissolved in 2021. At issue was the seventy-five percent shares (Majority Shares) that the Partnership owned of the issued and outstanding equity of a corporation. More than two decades ago, the previous owner of the Majority Shares executed an irrevocable proxy granting three individuals the authority to vote the Majority Shares (the Irrevocable Proxy), and when the Partnership acquired the Majority Shares, it bound itself to the Irrevocable Proxy. Plaintiff sought a declaratory judgment that the Irrevocable Proxy, from which Defendants benefitted, did not run with the Majority Shares and that the Partnership can sell the shares clear of the Irrevocable Proxy. The Court of Chancery held (1) the Irrevocable Proxy did not run with the Majority Shares; (2) a transfer restriction in the addendum to the Irrevocable Party applied to any sale to an affiliate, but not to a sale to a third party; and (3) any judicial declaration at this stage would constitute an advisory opinion. View "Hawkins v. Daniel" on Justia Law

The Court of Chancery denied the petition filed by Synergy management Group LLC seeking to have its president appointed as a custodian for Forum Mobile, Inc., a defunct Delaware corporation, holding that Synergy was not entitled to the petition.Synergy sought to revive Forum as a blank check company and, through a reverse merger, begin a new business that could access the public markets. In its petition, Synergy relied on section 226(a)(3) of the Delaware General Corporation Law providing that the Court of Chancery may, upon the application of any stockholder, appoint a custodian for a corporation when the corporation has abandoned its business and failed to take timely steps to dissolve, liquidate, or distribute its assets. The Court of Chancery denied the petition, holding that section 226(b) does not contemplate that a custodian appointed under section 226(a)(3) could revivify the corporation. View "In re Forum Mobile, Inc." on Justia Law

In this longstanding property dispute between neighbors, the Court of Chancery held that Plaintiffs failed to establish a prescriptive easement of land owned by Defendant, and entered judgment in favor of Defendant on all counts.This dispute stemmed from the neighbors' shared drainage system and the actions of Defendants that caused drainage problems and flooding on both lots. Plaintiffs filed a complaint against Defendant that included four counts all based on Plaintiffs' prescriptive easement theory. After a trial, the Court of Chancery denied relief, holding that Plaintiffs failed to establish the necessary elements of a prescriptive easement by clear and convincing evidence. View "Jones v. Collison" on Justia Law