Title: CCUR Holdings, Inc. v. Samuels

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
CCUR HOLDINGS, INC., 
 
Defendant Below, 
Appellant, 
 
v. 
 
CRAIG SAMUELS, 
 
Plaintiff Below, 
Appellee. 
§ 
§   
§  No. 216, 2022 
§ 
§  Court Below—Court of Chancery 
§  of the State of Delaware 
§   
§  C.A. No. 2021-0358 
§  
§ 
§ 
 
Submitted:  June 27, 2022 
Decided:  July 22, 2022 
 
Before VALIHURA, VAUGHN, and TRAYNOR, Justices. 
 
 
ORDER 
 
After consideration of the notice of appeal from an interlocutory order and its 
exhibits, it appears to the Court that: 
(1) 
The appellee, Craig Samuels, filed a class action complaint in the Court 
of Chancery against CCUR Holdings, Inc. (the “Company”) and its three directors.  
The first count of the complaint asserted that the directors breached their fiduciary 
duties in connection with a 3000:1 reverse stock split.  Specifically, it alleged that 
the transaction was the result of unfair dealing by conflicted directors and that the 
$2.86 per pre-split share that the Company paid for fractional interests remaining 
after the reverse stock split was an unfair price.  The second count of the complaint 
asserted that the Company violated Section 155 of the Delaware General 
 
2 
Corporation Law by cashing out the fractional interests for less than “fair value”1 
and that the Company should be ordered to pay the difference between $2.86 per 
share and the “fair value” of the cashed-out interests.   
(2) 
In a memorandum opinion dated May 31, 2022 (the “Opinion”),2 the 
Court of Chancery granted the defendants’ motion to dismiss the breach of fiduciary 
duty claim.  The court denied the motion to dismiss the statutory claim against the 
Company.  The court rejected the defendants’ argument that Delaware law does not 
recognize a standalone, statutory cause of action against a corporation for a violation 
of Section 155(2).3 
 
1 Section 155 provides, in pertinent part: 
A corporation may, but shall not be required to, issue fractions of a share.  If it does 
not issue fractions of a share, it shall (1) arrange for the disposition of fractional 
interests by those entitled thereto, (2) pay in cash the fair value of fractions of a 
share as of the time when those entitled to receive such fractions are determined or 
(3) issue scrip or warrants in registered form (either represented by a certificate or 
uncertificated) or in bearer form (represented by a certificate) which shall entitle 
the holder to receive a full share upon the surrender of such scrip or warrants 
aggregating a full share. 
8 Del. C. § 155. 
2 Samuels v. CCUR Holdings, Inc., 2022 WL 1744438 (Del. Ch. May 31, 2022). 
3 See id. at *12-13 (“Defendants argue that Applebaum II [Applebaum v. Avaya, Inc., 812 A.2d 
880 (Del. 2002)] and Reis [v. Hazelett Strip- Casting Corp., 28 A.3d 442 (Del. Ch. 2011)] preclude 
a stockholder from maintaining a freestanding claim asserting a violation of Section 155.  That 
argument overstates the holding of those cases.  Neither Applebaum II nor Reis expressly held that 
a stockholder could not assert a direct claim against a corporation for violating Section 155. . . .  
Reis and Applebaum II recognize that, although Section 155(2) does not entitle a stockholder 
challenging a payment of cash for fractional interests to a Section 262 appraisal, it does not 
foreclose a statutory claim in appropriate circumstances.  Where, as here, the company pays cash 
based on a market price for a stock that is not widely traded in an end stage transaction, there may 
be reason to doubt the reasonableness of that determination. . . .  Under the circumstances of this 
case, it is reasonably conceivable that the Company’s selection of a ten-day trading average of 
CCUR stock on the OTC was not fair value under Section 152(2).  This is not to say that at a later 
stage of this case the Company will not be able to establish $2.86 per share as the appropriate 
 
3 
(3) 
The Company asked the Court of Chancery to certify an interlocutory 
appeal from the Opinion under Supreme Court Rule 42.  The Company argued that 
the Opinion decided a substantial issue of material importance—namely, whether a 
stockholder may maintain a “standalone statutory claim” against a corporation under 
Section 155(2) for the corporation’s alleged failure to pay fair value for fractional 
interests.  Addressing the Rule 42(b)(iii) factors, the Company argued that (i) the 
Opinion involved a legal question of first impression;4 (ii) the Opinion created “at 
least tension, if not an outright conflict,” regarding the question of law;5 (iii) the 
question of law at issue relates to the construction and application of Section 155, 
which this Court should settle on an interlocutory basis;6 (iv) interlocutory review 
might terminate the litigation;7 and (v) interlocutory review would serve 
considerations of justice.8 
(4) 
On June 21, 2022, the Court of Chancery denied the application for 
certification.  The court determined that the Opinion had decided a substantial issue 
of material importance but concluded that the likely benefits of interlocutory review 
 
payment for cashed-out fractional interests.  At this stage, however, giving Plaintiff the benefit of 
all reasonable inferences, the court cannot conclude that Plaintiff has failed to state a claim under 
Section 155(2).” (citation to briefing omitted)). 
4 DEL. SUPR. CT. R. 42(b)(iii)(A). 
5 Notice of Appeal from Interlocutory Order, Exhibit 2, at 8 (citing DEL. SUPR. CT. R. 42(b)(iii)(B) 
(“The decisions of the trial courts are conflicting upon the question of law . . . .”)). 
6 DEL. SUPR. CT. R. 42(b)(iii)(C). 
7 Id. R. 42(b)(iii)(G). 
8 Id. R. 42(b)(iii)(H). 
 
4 
would not outweigh the probable costs, such that interlocutory review would be in 
the interests of justice.9  First, the court concluded that the Opinion did not involve 
a question of law resolved for the first time in this State, because “[i]t is well 
established that a stockholder may assert direct claims for violation of a statute”10 
and previous decisions relating to Section 155 did not foreclose a standalone claim 
asserting a violation of Section 155(2).11  Second, the court disagreed with the 
Company’s contention that previous decisions are conflicting on the question of law 
at issue.12  Third, the court agreed that the question of law relates to the construction 
and application of a Delaware statute but was not persuaded that the issue should be 
settled by this Court on an interlocutory basis.13  Fourth, the Court of Chancery 
agreed with the Company that interlocutory review would terminate the litigation if 
this Court determined that a statutory claim under Section 155(2) is not cognizable.14  
Fifth, the court determined that an interlocutory appeal would not serve 
considerations of justice because the question at issue is not a frequently recurring 
one and, contrary to the Company’s argument, interlocutory review of the Court of 
Chancery’s denial of the motion to dismiss would not provide “‘guidance regarding 
 
9 Id. R. 42(b)(iii). 
10 Notice of Appeal from Interlocutory Order, Exhibit 4, at 6. 
11 Id. at 7. 
12 Id. at 7-8. 
13 Id. at 8. 
14 Id. 
 
5 
the nature of any appraisal available under Section 155’” because such guidance 
would be advisory at the motion to dismiss stage.15  Concluding that the likely 
benefits of interlocutory review did not outweigh the probable costs, the court 
declined to certify the interlocutory appeal.16 
(5) 
We agree with the Court of Chancery that interlocutory review is not 
warranted in this case.  Applications for interlocutory review are addressed to the 
sound discretion of this Court.17  In the exercise of its discretion and giving great 
weight to the trial court’s view, this Court has concluded that the application for 
interlocutory review does not meet the strict standards for certification under 
Supreme Court Rule 42(b).  Exceptional circumstances that would merit 
interlocutory review of the decision of the Court of Chancery do not exist in this 
case,18 and the potential benefits of interlocutory review do not outweigh the 
inefficiency, disruption, and probable costs caused by an interlocutory appeal.  We 
agree with the Court of Chancery that further proceedings in that court will enable 
the courts to fully consider the issues presented in this case. 
 
 
15 Id. at 9-10 (quoting the application for certification of interlocutory appeal). 
16 Id. at 11-12. 
17 DEL. SUPR. CT. R. 42(d)(v). 
18 Id. R. 42(b)(ii). 
 
6 
NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is 
REFUSED. 
BY THE COURT: 
/s/  James T. Vaughn, Jr. 
 
 
 
 
 
 
Justice