Justia Business Law Opinion SummariesArticles Posted in Delaware Court of Chancery
Polychain Capital LP v. Pantera Venture Fund II LP
The Court of Chancery granted summary judgment in favor of Respondents and confirmed a May 10, 2021 arbitration award, holding that this court was obliged to grant Respondents' cross-motion for summary judgment to confirm the award.Respondent commenced an arbitration proceeding against Petitioner asserting several claims relating to amendments to the parties' LLC agreement. After the arbitrator issued decisions, Petitioner filed a petition to vacate the award in part. Respondent and affiliated entities filed a counterclaim to confirm the arbitration award. All parties moved for summary judgment. The Court of Chancery granted summary judgment in favor of Respondents and confirmed the arbitration award, holding that Petitioner's challenges to the award failed. View "Polychain Capital LP v. Pantera Venture Fund II LP" on Justia Law
MHP Management, LLC v. DTR MHP Management, LLC
The Court of Chancery granted Plaintiff's motion for summary judgment seeking an order confirming the arbitration panel's award in this case and denied Defendants' motion for summary judgment seeking to vacate the award, holding that there was no basis to vacate the arbitration panel's award.Defendants initiated arbitration proceedings against Plaintiff to challenge the validity of unsuitability determination that Plaintiff issued to Defendants under the parties' agreement. The arbitration panel determined that the unsuitability determination was valid. This litigation followed. The Court of Chancery confirmed the arbitration award, holding that Defendants were not entitled to relief on their allegations of error. View "MHP Management, LLC v. DTR MHP Management, LLC" on Justia Law
Evans v. Avande, Inc.
Evans served as CEO and a director of Avande, a privately held Delaware corporation that provides medical claims management services to insurance companies and healthcare organizations. Following Evans’s termination, Avande performed an audit and discovered suspect transactions undertaken by Evans while he was serving as CEO. Avande filed suit, alleging breach of fiduciary duty based on alleged self-dealing transactions and improper expenditures and tortious interference, defamation, and conversion based on acts that Evans allegedly committed after his termination. Evans was found liable for about $65,000 in damages, plus interest. Evans demanded advancement for expenses incurred in connection with the action.The Delaware Chancery court entered judgment in favor of Avande. Avande established that there is no causal link between Evans’s status as a former officer of Avande and the tortious inference and defamation claims; those claims solely concerned Evans’s post-termination conduct. Avande demonstrated that Evans did not succeed but was found liable. View "Evans v. Avande, Inc." on Justia Law
Garfield v. Allen
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
Metro Storage International LLC v. Harron
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
JER Hudson GP XXI LLC v. DLE Investors, LP
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 re Rehabilitation of Scottish RE (U.S.), Inc.
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
Hawkins v. Daniel
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
In re Forum Mobile, Inc.
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
Florida Chemical Company, LLC v. Flotek Industries, Inc.
The Court of Chancery granted in part an anti-suit injunction sought by a buyer and a parent corporation with whom the buyer contracted to acquire a wholly owned subsidiary (the Company) to bar the seller and its subsidiary from pursuing their claims in a Texas lawsuit, holding that the forum selection provision in the stock purchase agreement applied.Under the stock purchase agreement, the buyer contracted with a Company and caused the Company to enter into a supply agreement with a wholly owned subsidiary of the seller. The stock purchase agreement contained a forum selection provision. The seller signed the stock purchase agreement and did not sign the supply agreement. The seller's subsidiary signed the supply agreement but did not sign the stock purchase agreement. The seller and its subsidiary later filed a lawsuit in Texas state court seeking rescission of the supply agreement. The buyer and the Company then brought this action asking the court to apply the forum selection provision in the stock purchase agreement to the claims implicating the supply agreement. The Court of Chancery granted the request for an anti-suit injunction against the seller and against a non-signatory signatory, holding that an injunction was warranted. View "Florida Chemical Company, LLC v. Flotek Industries, Inc." on Justia Law