Title: DiLoreto v. Tiber Holding Corporation
Citation: N/A
Docket Number: 155, 2001
State: Delaware
Issuer: Delaware Supreme Court
Date: October 23, 2001

IN THE SUPREME COURT OF THE STATE OF DELAWARE
MICHAEL DILORETO and
§
ANDREW DILORETO,
§
§
Plaintiffs Below,
§ No. 155, 2001
Appellants,
§
§ Court Below: Court of Chancery
v.
§ of the State of Delaware in and 
§ for New Castle County 
TIBER HOLDING CORPORATION,§ C. A. No. 16564
§
Defendant Below,
§
Appellee.
§
Submitted: October 10, 2001
Decided:
October 23, 2001
Before WALSH, BERGER, and STEELE, Justices.
Appeal from Court of Chancery.  AFFIRMED.
Ronald A. Brown, Jr., Esquire, Prickett, Jones & Elliott, Wilmington,
Delaware, for Appellants.
Sean P. McDevitt, Esquire and Joseph S. Naylor, Esquire, Pepper
Hamilton LLP, Wilmington, Delaware and Of Counsel: Thomas E. Zemaitis,
Esquire (argued), Pepper Hamilton LLP, Philadelphia, Pennsylvania, for
Appellee.
PER CURIAM:
2
This is an appeal from a decision of the Court of Chancery on cross
motions for summary judgment by appellants/plaintiffs-below Michael and
Andrew DiLoreto (“DiLoretos”) and appellee/defendant-below Tiber Holding
Corporation (“Tiber”).  DiLoretos are minority shareholders in Tiber, a
closely-held Delaware corporation.  DiLoretos brought suit against Tiber
seeking specific performance of provisions in Tiber’s Certificate of
Incorporation and bylaws which entitled them to “put” their shares to Tiber
for repurchase.  
The Court of Chancery awarded DiLoretos specific performance of the
mandatory buyback provision, subject to Tiber's potential setoff against
certain judgments in favor of Tiber and against DiLoretos.  Because the
parties were unable to agree on the value of the shares to be repurchased, the
Court of Chancery appointed a Special Master to determine that value and the
extent of any setoff in Tiber’s favor.  Id.  The  Special Master’s report was
approved and adopted by the Court of Chancery on February 20, 2001, over
DiLoretos’ objection.  
On appeal, DiLoretos argue that the Court of Chancery erred in (i)
finding that the bylaws unambiguously established a formula resulting in a
3
repurchase price of $27,493.33 per share for DiLoretos’ Tiber stock; (ii)
allowing Tiber to setoff the full amount it will owe to DiLoretos for the
repurchase of their shares against outstanding judgments Tiber has against
DiLoretos; and (iii) ordering DiLoretos to consummate the repurchase
transaction by delivering their stock certificates to Tiber.
Upon review of the record and the contentions of the parties, we
conclude that the Court of Chancery’s ruling that there is no ambiguity in the
term “financial statement” as used in the applicable bylaws is supported by the
record.  We agree with the Court of Chancery that a reasonable shareholder
would expect to have its shares value based upon the consolidated, audited,
annual financial statements of the corporation rather than a year-end balance
sheet prepared in conjunction with the corporation’s annual tax return,
particularly where that balance sheet double counts the assets of the
corporation and its subsidiaries.
We also find no error in the trial court’s recognition, as a setoff, of the
final judgment secured by Tiber against DiLoretos in a prior proceeding
arising out of the misuse by DiLoretos of the corporation’s assets.  In fixing
the amount of the setoff, the Court of Chancery was not required to consider
4
the potential tax liability of the shareholders who sought specific performance
to require the corporation to repurchase their shares.  With respect to the
Court of Chancery’s ruling that  DiLoretos’ attorney’s charging lien does not
have precedence over the prior Tiber judgments, we deem it unnecessary to
endorse a bright line rule based on priority in time.  The rationale for
permitting attorneys to assert a charging lien is the promotion of justice and
equity.  Royal Ins. Co. v. Simon, Del. Ch., 174 A. 444, 446 (1934).  The
allowance of a charging lien by the Court of Chancery requires a balancing
of the equities, including, as here, the knowledge of the attorney at the time
of the entry of any contingent fee agreement of the potential setoff available
to Tiber.  Appellate review of that ruling is based on an abuse of discretion
standard.  Here, the Court of Chancery examined all the circumstances of the
fee arrangement, including the priority of the judgment, in refusing to
recognize a charging lien.  Clearly, there was no abuse of that discretion and
accordingly we affirm.
Finally, we find no merit in DiLoretos’ contention that, notwithstanding
the grant of specific performance, they may choose the time for surrender of
their stock certificates.  Had DiLoretos sought a ruling on their entitlement to
5
put their shares they could have sought a declaratory judgment that the
buyback provisions were valid and enforceable. DiLoretos secured the relief
they originally requested after requiring Tiber to defend the litigation.
DiLoretos have cited no authority, nor are we aware of any, which permits a
party seeking specific performance based on present entitlement to dictate the
terms of performance.  The Court of Chancery acted within its discretion in
ordering the delivery of the shares, properly endorsed, within a limited period
of time.
The judgment of the Court of Chancery is AFFIRMED.