Justia Business Law Opinion Summaries

Defendants presented themselves as president and vice president of ESG, Inc. in order to purchase assets from the predecessor of Plaintiff, Envo, Inc. Unfortunately, after the assets had been transferred, Defendants learned that ESG did not exist. Defendants kept the assets, however, and used them to run a business under the name Environmental Solutions Group, Inc. Defendants subsequently refused to pay Envo for the assets. Envo filed this claim under the doctrine of promissory estoppel and other legal and equitable doctrines, claiming it was damaged by Defendants' action. The Chancery Court found (1) Defendants and Environmental Solutions Group were liable to Envo under the doctrine of promissory estoppel; and (2) Envo was entitled to damages in an amount equal to the purchase price of the assets, plus pre-judgment interest, post-judgment interest, and costs. View "Envo, Inc. v. Walters" on Justia Law

This action involved a dispute between certain members of two Delaware real estate holding companies, Defendant Companies and the Companies' manager, Rubin Schron. Plaintiffs, MICH and SEEVA Entites, originally brought an action against Schron and Schron-affiliated entities in New York (the MICH/SEEVA action) alleging breaches of fiduciary duty and of the Companies' operating agreements. In response, Schron filed an opposing action in New York against the MICH and SEEVA entities' majority owners and controllers, alleging breaches of fiduciary duty and legal malpractice. The New York court dismissed the MICH/SEEVA action, holding that the operating agreements required all claims against the Companies to be brought in Delaware. Plaintiffs then filed this action, which Schron moved to stay or dismiss. The Chancery Court granted Defendants' motion to stay this action in favor of Schron's first-filed New York action. Plaintiffs then filed combined motions for reconsideration and certification of an interlocutory appeal. The Chancery Court held that, with the exception of Plaintiffs' claim regarding Defendants' withholding of certain distributions allegedly owed to Plaintiffs, Plaintiffs' motion should be denied because Plaintiffs did not demonstrate that relief was warranted. View "MICH II Holdings LLC v. Schron" on Justia Law

At an L.O.M. stockholders’ meeting, stockholders raised concerns about sufficiency of notice, accuracy of proxy materials, and lack of current financial information. In response to a stockholder’s request, the President of L.O.M., Matthews, adjourned the meeting. Matthews and “numerous stockholders” departed. L.O.M.’s counsel then announced that the meeting had not adjourned and that a recess was being taken. A director then purported to preside over a resumed meeting, at which challenged directors were allegedly elected. The challenged directors took a number of actions, including approving L.O.M.’s 2012 stock option plan and firing Matthews. Defendants assert that after the meeting resumed, votes were counted, and challenged directors were elected by about 56% of outstanding shares; after the meeting, the challenged directors sent the stockholders a letter that informed the stockholders of the meeting’s results. In an action to determine the composition of the board, the chancellor denied a motion to dismiss. The chancellor acknowledged sympathy for defendants’ “real argument,” that in attempting to ratify the vote for the challenged directors, a majority of shares outstanding have, in effect, been voted for the challenged directors and that adjournment of the meeting was simply an attempt by Matthews to preserve himself in office. View "Gentili v. L.O.M. Med. Int'l, Inc." on Justia Law

Petitioners sought appraisal of their shares in CKx, under Section 262 of the Delaware General Corporation Law. CKx was acquired by an affiliate of Apollo through a 2011 merger. Fox Broadcasting is not a party to the litigation and was not involved in the merger, but has an agreement with a subsidiary of CKx, 19TV, for the right to broadcast the American Idol television program, which provided substantial revenues to CKx before the merger. Petitioners moved for an order compelling Fox to produce deposition testimony as well as several categories of documents relating to American Idol, Fox’s contracts and contract negotiations with 19TV and FremantleMedia . The chancellor denied the motion except as to the categories of documents and deposition testimony that Fox has agreed to produce. With respect to a request that would require Fox to produce documents relating to Fox’s internal valuation and financial information regarding its negotiations with CKx in connection with an agreement to broadcast American Idol, the court stated that the marginal relevance of the information is outweighed by the potential harm the disclosure of that information would cause Fox and the presence of non-confidential, more probative information already in the record. View "Huff Fund Inv. P'ship v. CKx Inc." on Justia Law

In a derivative action on behalf of Hewlett-Packard Company, plaintiff accused certain HP directors of committing waste and breaching the duty of care in connection with the August 2010 termination of then-CEO, Hurd. Plaintiff contends that Hurd was not entitled to, and did not deserve, any severance upon his termination but that the directors granted Hurd a severance package estimated to be worth $40 million or more. Plaintiff also challenged the lack of a long term CEO succession plan as a breach of the directors’ duty of care. The chancellor dismissed. Under Rule 23.1, a stockholder must either make a demand on the board to instigate the legal action that the stockholder seeks to bring on the corporation’s behalf or allege with particularity why such a demand is excused. Plaintiff did not to make a presuit demand and did not adequately allege a basis to excuse presuit demand. View "Zucker v. Andreessen" on Justia Law

A stockholder of Republic, a Delaware corporation that engages in waste hauling and waste disposal, filed a derivative suit based on Republic’s compensation decisions: that a payment to O’Connor was made without consideration and was, therefore, wasteful; that an incentive payment to O’Connor was wasteful because it was not tax-deductible and rendered Republic’s compensation plan not tax-deductible; that Directors paid themselves excessive compensation; that Directors breached their duty of loyalty and wasted corporate assets by awarding a certain type of stock option; and that Directors improperly awarded employee bonuses because the requirements of the bonus scheme under which the bonuses were awarded were not met. The chancellor dismissed all but the claim arising from the board’s granting itself stock awards. View "Frank David Seinfeld v. Donald W. Slager, et al." on Justia Law

Plaintiff, both individually and as the trustee of several trusts that she directed, asserted claims against defendants arising out of her decision to invest in Lord Baltimore. Defendants moved to dismiss all of the claims asserted against them. The court held that defendants' motion to dismiss was granted, except to plaintiff's claim that there was an implied covenant in the Shareholders' Agreement requiring that repurchase proposals be presented to and considered by the Board, which was not dismissed. View "Blaustein v. Lord Baltimore Capital Corp." on Justia Law

This was a declaratory judgment action under 6 Del. C. 111 to determine the duties, obligations, and liabilities, if any, of a Delaware limited liability company to one of its initial members. The court concluded that a clear forum selection clause in Todd's employment agreement with RWI (N.M.), which closely paralleled a similar provision in a related Stock Purchase Agreement (SPA), precluded the court from determining what effect, if any, Todd's termination from RWI (N.M.) had upon, at least, a subset of RWI (Del.) units he previously held. As a result, the court lacked the ability to determine definitely whether Todd continued to hold any interest in RWI (Del.), at least until a court in New Mexico resolved Todd's ownership of this subset of units. Therefore, the court stayed the action as a matter of judicial efficiency and in deference to the apparent intent of the contracting parties in favor of the proceedings pending in New Mexico. View "RWI Acquisition LLC v. Todd" on Justia Law

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