Title: Guggenheim Funds Investment Advisors, LLC, et al. v. JB and Margaret Blaugrund Foundation

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
GUGGENHEIM FUNDS 
INVESTMENT ADVISORS, LLC, 
RANDALL C. BARNES, ANGELA 
BROCK-KYLE, THOMAS F. 
LYDON, JR., RONALD A. 
NYBERG, SANDRA G. SPONEM, 
RONALD E. TOUPIN, JR., and 
AMY J. LEE, 
 
Defendants Below, 
Appellants, 
 
v. 
 
JB and MARGARET BLAUGRUND 
FOUNDATION, 
 
Plaintiff Below, 
Appellee. 
§ 
§   
§  No. 88, 2023 
§   
§  Court Below—Court of Chancery  
§  of the State of Delaware 
§   
§  C.A. No. 2021-1094 
§ 
§ 
§ 
§ 
§ 
§ 
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§ 
§ 
§ 
§ 
 
  Submitted:    March 20, 2023 
 
 
 
 
       Decided:   March 30, 2023  
 
Before SEITZ, Chief Justice; VAUGHN and TRAYNOR, Justices. 
 
ORDER 
 
 
 
Upon consideration of the notice of interlocutory appeal, the supplemental 
notice of interlocutory appeal, and the exhibits, it appears to the Court that: 
(1) 
This interlocutory appeal arises from the Court of Chancery’s denial of 
a motion to dismiss.  Plaintiff Below-Appellee JB and Margaret Blaugrund 
Foundation (“Plaintiff”), a former stockholder of Fiduciary/Claymore Energy 
Infrastructure Fund (“the Fund”), filed an amended complaint asserting direct and 
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derivative claims against Defendant Below-Appellee Guggenheim Funds 
Investment Advisors, LLC, the Fund’s investment advisor, and the individual 
defendants below-appellees, who were members of the Fund’s Board of Trustees 
(collectively, “Defendants”).  Plaintiff alleged that Defendants’ reckless 
management of the Fund resulted in the Fund losing approximately 80% of its net 
assets in February and March 2020 and adjusting its net asset value down by more 
than 40% in November 2020 because of a tax error. 
(2) 
After the Fund issued supplemental disclosures regarding a merger and 
merged into another investment fund, Plaintiff had only one remaining claim—that 
Defendants breached their fiduciary duties by failing to obtain any value for the 
derivative claims as part of the merger.  Defendants moved to dismiss, arguing that 
Plaintiff’s claim was barred by the fully informed and uncoerced stockholder vote 
approving the merger under Corwin v. KKR Fin. Holdings LLC1 and failed to state 
a claim. 
(3) 
In a bench ruling, the Court of Chancery held that, even assuming 
Corwin applied, it was reasonably conceivable at the pleading stage that based on 
the unusual facts of the case the merger vote was structurally coerced.  Without a 
cleansing vote, the court found that it was reasonably conceivable entire fairness 
 
1 125 A.3d 304 (Del. 2015). 
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applied to the merger and that it was reasonably conceivable Defendants breached 
their fiduciary duties of care and loyalty.  The court therefore denied Defendants’ 
motion to dismiss.   
(4) 
On March 6, 2023, Defendants filed an application for certification of 
an interlocutory appeal.  Plaintiff opposed the application.  On March 17, 2023, the 
Court of Chancery denied the application for certification.    
(5) 
In denying certification, the court first found that the interlocutory order 
did not decide a substantial issue of material importance because it did not adjudicate 
the merits of Plaintiff’s breach-of-fiduciary claim.  The court next considered the 
Rule 42(b)(iii) criteria that Defendants relied upon.  As to Rule 42(b)(iii)(A) (a 
question of law resolved for the first time), the court rejected Plaintiff’s 
characterization of the interlocutory order and found that the order simply applied 
settled precedent to unusual facts.   The court also rejected Plaintiff’s reliance on 
Rule 42(b)(iii)(B) (conflicting trial court decisions on the question of law) because 
the outcome of the order was the result of the unusual fact pattern, not the application 
of different legal standards.  The court recognized that interlocutory review could 
terminate the litigation under Rule 42(B)(iii)(G), but that was the case with every 
order denying a motion to dismiss and was insufficient by itself to justify 
interlocutory review.  As to Rule 42(B)(iii)(H) (review of the interlocutory order 
may serve of considerations of justice), the court found that interlocutory review of 
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the fact-intensive, pleading stage analysis in the order would not clarify the law for 
business and legal communities as Defendants contended.    
(6) 
Applications for interlocutory review are addressed to the sound 
discretion of the Court.2  In determining whether to accept an interlocutory appeal, 
this Court may consider all relevant factors, including the trial court’s decision about 
whether to certify an interlocutory appeal.3  We agree with the Court of Chancery 
that the Rule 42(B)(iii) criteria, with the exception of Rule 42(B)(iii)(G), do not 
weigh in favor of interlocutory review and that the potential benefits of interlocutory 
review do not outweigh the inefficiency, disruption, and probable costs caused by 
an interlocutory appeal. 
NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is 
REFUSED.   
BY THE COURT: 
 
 
 
 
 
 
 
/s/ Gary F. Traynor  
 
 
 
 
 
 
Justice 
 
2 Supr. Ct. R. 42(d)(v). 
3 Id.