Justia Business Law Opinion Summaries

This action involved claims by plaintiffs (Paron and, together with McConnon and Lyons) against defendant. McConnon, Lyons, and defendant co-founded Paron to manage client accounts using a software-based futures trading strategy defendant had developed. Plaintiffs accused defendant of fabricating records and making other false statements concerning the trade software, fraudulently inducing McConnon and Lyons to form Paron, and breaching fiduciary duties to Paron. This memorandum opinion addressed several outstanding procedural issues raised after trial concerning the post-trial briefing and the exhibits to be considered as part of the record. The court overruled in part and sustained in part Crombie's various objections to a number of plaintiffs' trial exhibits; denied Crombie's motion to reopen the record and admit additional evidence; denied Crombie's request that the court disregard plaintiffs' post-trial brief and award sanctions against them; denied Crombie's recent motion for involuntary dismissal; and considered the matter fully submitted and ripe for a final determination on the merits.

This action was before the court on a motion for a temporary restraining order (TRO) to enjoin the consummation of a proposed restructuring of a mortgage loan secured by certain resorts properties in Mexico and the Bahamas. Holders of more senior participations claim that the proposed transaction unfairly benefited the junior holder at the expense of the more senior holders in direct contravention of the terms of the agreements controlling the debt. The senior holders further claimed that if the proposed transaction was allowed to close, they would suffer irreparable harm through the loss of certain rights and guaranties under the new terms of the loan. The court concluded that the senior holders have stated colorable claims and made a sufficient showing that they would suffer imminent harm if the proposed transaction were allowed to close. Further, the court found that this potential irreparable harm outweighed the harm that would result to the junior holders by delaying the closing for a few weeks until a preliminary injunction could be heard. Accordingly, the court granted the TRO.

This case involved the dispute between Gila Dweck, the CEO, director, and 30% stockholder in Kids International Corporation (Kids) and Albert Nasser, the Chairman and controlling stockholder of Kids. Dweck and Nasser accused each other of breaching their fiduciary duties and Nasser asserted third-party claims for breach of fiduciary duty against Dweck's colleagues Kevin Taxin, Kids' President, and Bruce Fine, Kids' CFO and corporate secretary. The court found that Dweck and Taxin breached their fiduciary duties to Kids by establishing competing companies that usurped Kids' corporate opportunities and converted Kids' resources; Dweck further breached her fiduciary duties by causing Kids to reimburse her for personal expenses; Fine breached his fiduciary duties by abdicating his responsibility to review Dweck's expenses and signing off on them wholesale; Dweck, Taxin, and Fine breached their duties by, inter alia, transferring Kids' customer relationships and business expectancies to their competing companies; and Dweck, Taxin, and Fine were liable to Kids for the damages they caused by their breaches of duty. The court largely rejected Dweck's breach of fiduciary duty claims against Nasser. Nevertheless, Nasser failed to carry his burden of proving that it was entirely fair for Kids to pay him a consulting fee that compensated him equally with Dweck when he performed no work for kids. Nasser was liable to Kids for those fees. Dweck also established her entitlement to an accounting from Nasser for some of the amount in cash that Kids had on hand at the time of the split.

When Morgan Joseph Holdings, an investment bank in which Petitioners held preferred stock, merged with another investment bank, Petitioners demanded appraisal instead of exchanging their shares. At issue was (1) the correct interpretation of Morgan Joseph's certificate of incorporation and whether the automatic redemption of the stock under the certificate was a mandatory redemption that was not subject to a requirement that Morgan Joseph have excess cash available; and (2) whether the automatic redemption right afforded to the stock holders was irrelevant to the fair value analysis in an appraisal. The Chancery Court granted Petitioners' motion for partial summary judgment, holding (1) under the certificate, automatic redemptions were not subject to an excess cash requirement; and (2) the automatic redemption was relevant to the Court's determination of fair value in an appraisal proceeding.

Petitioners argued that defendants - who were the then-parent company and directors of Aristotle Corporation - breached their fiduciary duties by not disclosing all material facts in connection with a short-form merger under 8 Del. C. 253. At issue was whether petitioners, who already had the right to seek appraisal in connection with a section 253 merger, could add an additional claim alleging that the directors breached their fiduciary duty to disclose the material facts necessary for the stockholders to determine whether to seek appraisal when the only purpose of pressing the disclosure claim was to give petitioners the redundant right of a "quasi" version for something that they already possessed? Because petitioners have not alleged that they have suffered any cognizable injury that gave rise to standing, and because they were therefore asking in these unique circumstances for an improper advisory decision, the court granted defendants' motion to dismiss.

This derivative suit was brought against the Grupo Mexico subsidiary that owned Minera, the Grupo Mexico-affiliated directors of Southern Peru, and the members of the Special Committee, alleging that the Merger at issue was entirely unfair to Southern Peru and its minority stockholders. The court concluded that the transaction was unfair and remedied the unfairness by ordering the controller to return to the NYSE-listed company a number of shares necessary to remedy the harm. The court applied a conservative metric because of plaintiff's delay, which occasioned some evidentiary uncertainties and which subjected the controller to lengthy market risk.

This was an action to inspect the books and records of a corporation under 8 Del. C. 220. A shareholder brought this action after a series of reports and events, including the resignation of the company's independent auditor, raised suspicions that the company had engaged in fraud and falsified its financial statements. The court found that the shareholder had established proper purposes to inspect the books and records of the company. Therefore, the court granted the shareholder's demand as to the documents at issue, but only to the extent the documents were necessary for one of his proper purposes. The court also denied the company's request to stay this action.

Plaintiffs filed this lawsuit on behalf of a class of stockholders of Occam. Defendants moved for sanctions against all plaintiffs other than Derek Sheeler for trading on the basis of confidential information obtained in this litigation. With respect to Michael Steinhardt and the funds, the motion was granted. Consistent with prior rulings by this court when confronted with representative plaintiffs who have traded while serving in a fiduciary capacity, Steinhardt and the funds were dismissed from the case with prejudice, barred from receiving any recovery from the litigation, required to self-report to the SEC, directed to disclose their improper trading in any future application to serve as lead plaintiff, and ordered to disgorge profits. With respect to Herbert Chen, the motion was denied.

Plaintiff challenged two transactions in this purported class action brought on behalf of the former public holders of LP units of EPE. On behalf of the first of the two purported classes, plaintiff challenged EPE's sale of Teppco GP to Enterprise Products (the 2009 Sale). On behalf of the second purported class, plaintiff challenged the merger of EPE into a wholly-owned subsidiary of Enterprise Products (the Merger). Defendants moved to dismiss all claims, or in the alternative, to stay this action pending the resolution of a related case. The court held that plaintiff had standing to bring the claims asserted in Counts I, III, and V on behalf of the public holders of EPE LP units who continuously held their units from the date of the 2009 Sale through the effective date of the Merger. However, all six counts were dismissed for failure to state a claim. Accordingly, defendants' motion to dismiss was granted.

Great-West asserted claims against defendants in an eight count complaint and the court granted defendant's motion to dismiss in part. At issue are the remaining counts of the complaint which revolve around Section 12.2(c) of the LP Agreement. The court held that Great-West's motion for partial summary judgment was denied, except as to Count I, which was granted. Great-West was entitled to a declaration that the Expense Assumption could not increase until TH Lee had negotiated in good faith. Defendants' motion for summary judgment was denied as to Counts II and VII, and granted as to Counts IV, V, and VI. Great-West's claims for mistake and fraud failed as a matter of law.