Justia Business Law Opinion Summaries

Appellant Quadrant Structured Products Company appealed the Court of Chancery's dismissal of its complaint. Quadrant holds certain Notes issued by Athilon Capital Corp., an allegedly insolvent Delaware corporation. The Notes are long term obligations covered by two separate trust indentures that are governed by New York law. Defendants EBF & Associates, LP, Athilon Structured Investment Advisors ('ASIA'), an affiliated EBF entity, Athilon's board of directors, and Athilon itself, all which indirectly own 100% of Athilon's equity. The Court of Chancery granted defendants' motion to dismiss Quadrant's complaint on the ground that all claims alleged were barred for failure to comply with the 'no-action' clauses in the Athilon trust indentures. In both cases the cited by the Court of Chancery applied New York law, and held that those bondholder actions were barred by the no-action clauses of the respective trust indentures that governed the bonds at issue. Quadrant appealed to the Delaware Supreme Court. The Delaware Court remanded the case to the Court of Chancery with directions to analyze the significance under New York law (if any) of the differences between the wording of the no-action clauses at issue in the two cited cases and in this case. In its Report, the Court of Chancery held that: (i) 'the language of the Athilon no-action clause distinguishe[d] this case from [the two cited cases],' and (ii) the motion to dismiss should have been denied except as to two (and part of a third) of the ten Counts of the Quadrant complaint. After its re-review, the Delware Supreme Court concluded that the resolution of this case depended on dispositive and unsettled questions of New York law that, in its view, were properly answered in the first instance by the New York Court of Appeals. View "Quadrant Structured Products Co., Ltd. v. Vertin, et al." on Justia Law

Walter A. Winshall, as representative of the former stockholders of Harmonix Music Systems, Inc., sued to block the merger between Harmonix and Viacom International, Inc. The Court of Chancery dismissed Winshall's complaint against Viacom and Harmonix for failing to state a legally cognizable claim for relief, declared that Viacom was not entitled to indemnification from the selling shareholders for alleged breaches of representations and warranties contained in the Merger Agreement, and ordered payment of the escrowed portion of the merger cash consideration owed by Viacom to the shareholders. Winshall appealed the portion of the final judgment dismissing Count I of his complaint. Viacom cross-appealed the portion of the judgment relating to Counts II and III of the complaint, in which the court determined that Viacom was not entitled to indemnification and directed that the escrowed funds be paid to the shareholders. Finding no error or abuse of discretion, the Supreme Court affirmed the judgment of the Court of Chancery in its entirety. View "Winshall v. Viacom International, Inc., et al." on Justia Law

A question of Delaware law was certified from the United States Court of Appeals for the Ninth. The issue focused on whether under the "fraud exception" to Delaware's continuous ownership rule, shareholder plaintiffs may maintain a derivative suit after a merger that divests them of their ownership interest in the corporation on whose behalf they sue by alleging that the merger at issue was necessitated by, and is inseparable from, the alleged fraud that is the subject of their derivative claims. The Delaware Court answered that question in the negative. View "Arkansas Teacher Retirement System, et al. v. Countrywide Financial Corporation, et al." on Justia Law

Plaintiff appealed a Court of Chancery order that granted summary judgment and dismissed his suit on laches grounds. The underlying dispute arose over capital investments plaintiff made in two companies. Upon review, the Supreme Court concluded plaintiff's arguments made on appeal lacked merit, however, the Court reversed and remanded on different grounds. View "Levey v. Brownstone Asset Management, LLP, et al." on Justia Law

Defendant-appellant DV Realty Advisors LLC appealed a Court of Chancery declaratory judgment that plaintiffs-appellees properly removed DV Realty as the General Partner of Chicago-based Delaware limited partnership DV Urban Realty Partners I, L.P. In its two issues raised before the Supreme Court on appeal, DV Realty DV Realty argued: (1) the Court of Chancery improperly found that the Limited Partners believed in good faith that because of untimely delivered audited financial statements, removing DV Realty was necessary for the best interest of the partnership; and, (2) "Red Flag Issues" raised by an advisor were not sufficient to support a finding that the Limited Partners removed DV Realty in good faith. Upon review, the Supreme Court concluded that both of DV Realty's arguments were without merit. View "DV Realty Advisors LLC v. Policemen's Annuity & Benefit Fund of Chicago, et al." on Justia Law

The Court of Chancery dismissed a class action complaint that objected to the merger of a limited partnership with its general partner's controller. The plaintiff-limited partner's complaint alleged that the general partner (its controller) and its directors took actions during and preceding the merger negotiations that breached the contractual duties the partnership agreement. Upon review, the Supreme Court concluded that the plaintiff's allegations that the independent directors failed to negotiate effectively did not permit a reasonable inference that the independent directors breached their duty to act with subjective good faith. Therefore the Supreme Court affirmed dismissal of the complaint. View "Allen v. Encore Energy Partners, L.P., et al." on Justia Law

The issue before the Supreme Court in this case was whether an arbitration determination should have been vacated because the arbitrator refused to consider certain evidence. The arbitrator concluded he lacked authority to decide whether a particular issue was arbitrable. Because the Court of Chancery inconsistently resolved arbitrability questions that came before it, the matter was appealed to the Supreme Court. Upon further review, the Supreme Court concluded that in this case, the trial court was correct in holding that neither party's claim provided a good enough reason to vacate the arbitration determination. View "Viacom International Inc. v. Winshall" on Justia Law

In 2011, the Board of Cosmetology and Barbering suspended Petitioner Randall Richardson's license due to his leasing work space to his wife who Petitioner knew did not have a valid license. A Hearing Officer recommended a fine and a 90-day suspension of Petitioner's license. The Board voted to adopt the Hearing Officer’s recommendations. The Superior Court affirmed the Board’s decision. On appeal, Petitioner argued: (1) the Board failed to create a complete record for the Supreme Court to review on appeal; (2) the Board failed to properly appoint the Hearing Officer to his case; (3) the Board failed to consider exceptions to the Hearing Officer’s recommendation; (4) the Board erred in suspending Petitioner's license because he only violated the requirements of his Shop License; and (5) the Hearing Officer lacked statutory authority to conduct hearings involving potential license suspensions. Upon review, the Supreme Court concluded that the Hearing Officer had the authority to act and that the Board had the authority to suspend Petitioner's License. However, the Court agreed that the Board created an insufficient record for appellate review. Accordingly, the Superior Court's judgment was vacated and the matter remanded for further proceedings. View "Richardson v. Board of Cosmetology & Barbering" on Justia Law

Tenant-Defendant Bhole, Inc. terminated its commercial lease before the lease expired. Before the end of the lease, Plaintiff-landlord Shore Investments, Inc. filed suit to recover the entire unpaid rent for the balance of the term. The lease agreement did not contain an acceleration clause. Upon review of the matter, the Supreme Court found that though defendants breached the lease, the trial court erred by not considering the lease did not have an acceleration clause. The trial court's award of damages and attorney's fees was inappropriate, and its decision regarding the landlord's claim for tortious interference with the lease (with a punitive damages award) was also made in error. The Supreme Court reversed the trial court and remanded the case for further proceedings. View "Bhole, Inc., at al. v. Shore Investments, Inc." on Justia Law

Plaintiff Joel Gerber held limited partnership (LP) units in Enterprise GP Holdings, L.P. He sued on behalf of two classes of former public holders of LP units in Enterprise, challenging the sale of a subsidiary and a merger with another. Defendants successfully moved the trial court to dismiss Plaintiff's complaint, and Plaintiff appealed. Upon review, the Supreme Court concluded the trial court erred in dismissing the complaint. The Court affirmed in part, reversed in part, and remanded the case for further proceedings. View "Gerber v. Enterprise Products Holdings,LLC " on Justia Law