Source: https://www.morrisjames.com/blogs-Delaware-Business-Litigation-Report,archives-2015-2
Timestamp: 2019-04-25 19:45:21+00:00

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Showing 15 posts from February 2015.
In The Matter Of Bermor Inc., C.A. 8401-VCL (February 9, 2015) This decision reinforces that the joint venture statute for Delaware corporations, Section 273, requires the Court to dissolve the entity upon a deadlock. Absent extraordinary circumstances amounting to a fraud, the Court has no discretion to do otherwise.
Walther v. ITT Educational Services Inc., C.A. 8273-MA (February 10, 2015) When a stockholder seeks to inspect a company's records based on alleged wrongdoing, it is necessary to also show that wrongdoing has led to some damage to the entity. Otherwise, the inspection will be denied.
Lewis v. AimCo Properties L.P., C.A. 9934-VCP (February 10, 2015) This decision enforces an arbitration clause in an LLC agreement even when the claim asserted a breach of fiduciary duty. While not surprising in itself, the decision may also have broader implications about whether a bylaw with an arbitration provision may be enforced in a breach of fiduciary duty case.
Virtus Capital L.P. v. Eastman Chemical Company, C.A. 9808-VCL (February 11, 2015) This is a very useful decision because of its detailed explanation of the conspiracy theory of jurisdiction, which was first adopted in the famous Istituto Bancario case. As the decision makes clear, breaches of fiduciary duty claims are particularly suited for that theory and do not violate the corporate shield doctrine.
The Renco Group Inc. v. MacAndrews AMG Holdings LLC, C.A. 7668-VCN (January 29, 2105) This decision explains how various liability theories in a complaint relate to one another so as not to be duplicative. For example, a breach of fiduciary duty claim will be dismissed when it relies on the same facts as a breach of contract claim. Moreover, a claim for violation of the duty to act in good faith and fairly may survive when it alleges a failure to uphold the reasonable expectations of the parties as to how a contract would operate. Note, however, that it would be a mistake to think that you can plead a violation of the covenant to act fairly in a very contract-based case. In a decision one day after Renco, the Court dismissed a claim based on the covenant when the contract language spelled out how the contract was to be implemented in more detail, leaving no gap for the covenant to fill. See Fortis Advisors LLC v. Dialog Semiconductor PLC, C.A. 9522-CB (January 30, 2015).
Fortis Advisors LLC v. Dialog Semiconductor PLC, C.A. 9522-CB (January 30, 2015) When a contract spells out that its obligations are to be carried out in a "commercially reasonable best efforts" manner, it will be harder to argue there is any gap that the covenant of good faith and fair dealing may fill. That means the claim based on the implied covenant may be dismissed leaving the court to ponder what is "commercially reasonable." This decision needs to be read in conjunction with The Renco Group Inc. v. MacAndrews AMG Holdings LLC, C.A. 7668-VCN (January 29, 2015) upholding a similar claim.
Ellis v. OTLP GP, LLC, C.A. 10495-VCN (January 30, 2015) Not infrequently a plaintiff will argue that 2 transactions are so interrelated that his rights have been violated by structuring the deal to take 2 steps to accomplish it. An example is this case of a purchase of a controlling interest at a premium followed by a cash out merger at a discount. This is a hard road to travel and this decision explains what is needed to make the court consider 2 steps as if they were one. Briefly, one must be dependent on the other in such a way as to make the deal not possible unless both occurred.
In Re Numoda Corporation Shareholders Litigation, C.A. 9163-VCN (January 30, 2015) This is an important decision because it explains the effect of the new Sections 204-205 to the DGCL. Those provisions permit the correction of corporate actions that failed to comply with the requirements of the DGCL, such as having a board resolution before issuing stock. The decision holds that the Court's authority is limited to when some actual "action" has occurred, not just a "water cooler discussion" and there must be some real evidence to confirm that action was intended to have the consequences the plaintiff asks the Court to confirm.
In Re Appraisal Of Ancestry.com Inc., C.A. 8173-VCG (January 30, 2015) After a complete analysis of the usual issues in an appraisal case involving a DCF valuation, the Court here concluded that the result was close enough to the actual price paid in the merger to warrant adoption of the merger price as fair value. The merger followed an extensive market shop and lengthy negotiations that gave the Court confidence the agreed-to value was fair.
McWane Inc. v. Lanier, C.A. 9488-VCP (January 30, 2015) This decision explains how a non-party to a contract with a Delaware forum selection clause may still be subject to the Court's jurisdiction under an equitable estoppel theory. Briefly, if you claim benefits under that contract, you may be barred from contesting its forum selection provision.
ReCor Medical Inc. v. Warnking, C.A. 7387-VCN (January 30, 2015) This decision orders compound interest on an attorney fee award and explains why, even if that is not always to be done.

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