Justia Business Law Opinion Summaries

The issue before the Supreme Court in this case centered on a general partner's obligations under a limited partnership agreement. The plaintiffs alleged that the general partner obtained excessive consideration for its incentive distribution rights when an unaffiliated third party purchased the partnership. Notably, the plaintiffs did not allege that the general partner breached the implied covenant of good faith and fair dealing. Upon review of the matter, the Supreme Court concluded that the limited partnership agreement's conflict of interest provision created a contractual safe harbor, not an affirmative obligation. Therefore, the general partner needed only to exercise its discretion in good faith, as the parties intended that term to be construed, to satisfy its duties under the agreement. The general partner obtained an appropriate fairness opinion, which, under the agreement, created a conclusive presumption that the general partner made its decision in good faith. Therefore we the Supreme Court affirmed the Court of Chancery's dismissal of the complaint. View "Norton v. K-Sea Transportation Partners, L.P., et al." on Justia Law

Plaintiff–Appellee PharmAthene, Inc., and Defendant–Appellant SIGA Technologies, Inc., are both Delaware corporations engaged in biodefense research and development. SIGA appealed the Vice Chancellor's finding that it breached a contractual obligation to negotiate in good faith and was liable under the doctrine of promissory estoppel. The Supreme Court reaffirmed that where parties agree to negotiate in good faith in accordance with a term sheet, that obligation to negotiate in good faith is enforceable. Where a trial judge makes a factual finding that the parties would have reached an agreement but for the defendant's bad faith negotiation, the Court held that a trial judge may award expectation damages. In regard to the facts of this case, the Court reversed the Vice Chancellor's promissory estoppel holding because a promise expressed in a fully enforceable contract cannot give rise to a promissory estoppel claim. The Court also reversed the Vice Chancellor's equitable damages award based on his factual conclusion that the parties would have reached an agreement. The case was remanded for further proceedings in light of the Court's decision in this opinion. View "Siga Technologies, Inc. v. Pharmathene, Inc." on Justia Law

In a reformation action concerning cash flow distributions in three real estate joint venture agreements, the Supreme Court held that the Vice Chancellor properly reformed the agreements on the basis of unilateral mistake and knowing silence by the other party. "Negligence in discovering an alleged mistake does not bar a reformation claim unless the negligence is so significant that it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. Ratifying a contract does not create an equitable bar to reformation unless the ratifying party had actual knowledge of the mistake giving rise to the reformation claim." In this matter, the Court reversed the Vice Chancellor's fee award because a contractual fee-shifting provision incorporating the words "incurred" and "reimburse" did not apply where counsel for the party seeking fees represented the party free of charge to avoid a malpractice claim. View "Scion Breckenridge Managing Member, LLC, et al. v. ASB Allegiance Real Estate Fund, et al." on Justia Law

The issue before the Supreme Court in this matter was whether the Chancery Court was required to dismiss a Delaware derivative complaint after a California federal court entered final judgment dismissing the same complaint brought by different stockholders. The Chancery Court determined it was not required to give preclusive effect to the California judgment. Upon review, the Supreme Court held that the Chancery Court erred in its determination: (1) the lower court held as a matter of Delaware law that the stockholder plaintiffs in the two jurisdictions were not in privity with one another; (2) that the California stockholders were not adequate representatives of the defendant corporation; (3) California law controlled the issue, and derivative stockholders were in privity with one another because they acted on behalf of the corporation; and (4) the Chancery Court adopted a presumption of inadequacy without the record to support it. Accordingly, the Supreme Court reversed and remanded. View "Pyott v. Louisiana Municipal Police Employees' Retirement System" on Justia Law

In 2006, a German bank organized two affiliated entities under Delaware law. One sold a class of securities (Trust Preferred Securities) as part of the bank's effort to raise capital. In 2009, the bank acquired a second German bank by merger, whereby the bank assumed an obligation of the acquired bank to make certain payments with respect to a class of the acquired bank's securities. The bank made those payments in 2009 and 2010. In 2010, Plaintiff, who is the Property Trustee for the holders of the acquiror bank's Trust Preferred Securities sued claiming the 2009 and 2010 payments on the acquired bank's securities (which was a "Parity Security") triggered a contractual obligation by the bank to make comparable payments on the Trust Preferred Securities. The bank argued that it had no such contractual obligation. On cross motions for summary judgment, the Court of Chancery rejected the Trustee's claim on the basis that, because the 2009 and 2010 payments were not made on "Parity Securities," the bank had no obligation to make payments on the Trust Preferred Securities. Because the Supreme Court disagreed and concluded that the Court of Chancery erred, the Court reversed and remanded with instructions to enter final judgment for the Trustee. View "Bank of New York Mellon v. Commerzbank Capital Funding Trust II" on Justia Law

Pro se appellant Holly Noel-Liszkiewicz appealed a superior court's decision to affirm the Industrial Accident Board's denial of her claim for worker's compensation benefits. Appellant was a customer service representative for Employer La-Z-Boy before being laid off. Almost two years after the lay off, Appellant petitioned the board seeking compensation for occupational asthma, pulmonary fibrosis, and respiratory failure allegedly caused by exposure to chemicals at La-Z-Boy’s facility. La-Z-Boy denied that Applicant suffered any illness or injury that was causally related to her work. Finding Appellant's arguments to be without merit, the Supreme Court affirmed both the Board and the superior court. View "Noel-Liszkiewicz v. La-Z-Boy" on Justia Law

In this appeal, the issue before the Supreme Court was whether a derivative complaint challenging a corporate board's decision to pay certain executive bonuses without adopting a plan that could make those bonuses tax deductible states a claim for waste. The trial court concluded that the complaint failed to allege with particularity, that the board's decision not to implement a so-called "Section 162(m)" plan was a decision that no reasonable person would have made. Upon review, the Supreme Court agreed and affirmed the trial court's decision. View "Freedman v. Adams, et al." on Justia Law

Defendants-Appellants National Grange Mutual Insurance Company and The Main Street Insurance Group (collectively "NGM") appealed a Superior Court's grant of summary judgment in favor of Plaintiff-Appellee Elegant Slumming, Inc. in this property insurance coverage dispute. NGM raised two claims on appeal: (1) NGM contended the trial court erred in finding that the property insurance policy at issue requires only "some evidence," rather than "physical evidence," to show what happened to lost property; (2) and that the trial court erred in finding the amount of Elegant Slumming’s attorney’s fees reasonable. Upon review, the Supreme Court found that the trial court erred in concluding that testimonial evidence, by itself, fulfills the "physical evidence" requirement of the policy, and that Elegant Slumming did present physical evidence in addition to testimonial evidence to show what happened to the lost property and therefore coverage was not barred by the policy exclusion. Furthermore, the Court found no abuse of discretion in the award of attorney’s fees pursuant to statute in this case. Accordingly, the Court affirmed. View "National Grange Mutual Insurance Co. v. Elegant Slumming, Inc." on Justia Law

Appellant BVF Partners L.P. ("BVF") appealed a Chancery Court certification of Appellee New Orleans Employees' Retirement System ("NOERS") as class representative in this action challenging the acquisition of Celera Corporation ("Celera") by Quest Diagnostics, Inc. ("Quest"). BVF also appealed the Court of Chancery's approval of a class action settlement without an opt out right for BVF between NOERS and Defendants-Appellees Richard H. Ayers, Jean-Luc Belingard, William G. Green, Peter Barton Hutt, Gail M. Naughton, Kathy Ordonez, Wayne I. Roe, Bennett M. Shapiro, Celera Corporation, Quest Diagnostics Incorporated, and Spark Acquisition Corporation ("Spark"). BVF contended that the Court of Chancery erred in certifying NOERS as the class representative, because NOERS lacked standing to represent the class. BVF argued that when NOERS sold its stock in Celera on the public market (before the merger was actually consummated and nearly a year before the Court of Chancery certified the class) NOERS no longer had a legally cognizable stake in the outcome of the litigation. BVF raised multiple other grounds for why the Court of Chancery erred in certifying NOERS as class representative, including that NOERS was uniquely susceptible to equitable defenses and was therefore an improper class representative. Even if that certification was proper, BVF argued that the Court of Chancery should have exercised its discretionary powers to allow BVF to opt out of the class in order to pursue its individual claims for monetary damages against the defendants. Upon review, the Supreme Court agreed with the Court of Chancery that NOERS had standing to represent the class. The Court declined to adopt a rule of law that a shareholder class representative in a breach of fiduciary duty action must own stock in the corporation continuously through the final class certification. With regard to BVF's other arguments regarding NOERS' certification as class representative, the Court found them "unconvincing." The Court concluded that the Court of Chancery did not abuse its discretion in certifying the class, however, there was merit to BVF's claim that the Court of Chancery should have exercised its discretion to allow BVF to opt out of the shareholder class under the circumstances of this case. Accordingly, the Court affirmed in part and reversed in part. View "In Re Celera Corporation Shareholder Litigation, et al. v. New Orleans Employees' Retirement System, et al." on Justia Law

The plaintiff-appellants, Bruce Bermel and Pamela Jurga, as husband and wife, appealed the final judgment of the Superior Court granting the motion for summary judgment of the defendant-appellee, Liberty Mutual Fire Insurance Company. The appellants contended that the Superior Court erred by granting summary judgment in favor of Liberty. Bermel was injured in an automobile accident when his personal motorcycle was struck head-on by another driver. Bermel, then an employee of the Siemens Corporation, contended that the business policy issued to Siemens by Liberty on a company car that was assigned for his business and personal use, provided him with $100,000 in underinsured motorist coverage even when he was operating a non-work vehicle in circumstances unrelated to his employment. Bermel brought this action for underinsured benefits (“UIM”) against Liberty arguing: (1) that the Liberty Policy covering the company car he used was personal to him, even though Siemens was the named insured; (2) that he was entitled to personally access the Liberty Policy because Siemens automatically deducted a nominal fee from his paycheck for his personal use of the vehicle assigned to him that was insured by the Liberty Policy; and (3) that the Liberty Policy was ambiguously drafted and should have been construed in his favor. Upon review, the Supreme Court concluded that the Superior Court correctly found Siemens, and not Bermel, to be the named insured on the Liberty Policy, that the nominal fee charged to Bermel by Siemens for the use of the car did not make Bermel a named insured under the Liberty Policy, and that the Liberty Policy was unambiguous. Therefore, the judgments of the Superior Court were affirmed. View "Bermel v. Liberty Mutual Fire Insurance Co." on Justia Law