Opinion ID: 6350020
Heading Depth: 3
Heading Rank: 2

Heading: SeeCubic’s Motion for Summary Judgment.

Text: On January 19, 2021, SeeCubic moved for summary judgment and filed its opening brief. SeeCubic’s motion for summary judgment sought the following relief: a declaratory judgment that the Omnibus Agreement is valid and binding, a permanent injunction ordering Stream and the Rajans to comply with the Omnibus Agreement, and a judgment against the Rajans for converting the assets identified in the Omnibus Agreement. Stream filed its answering brief on February 17, 2021, relying exclusively on the briefs it filed in connection with the parties’ cross motions seeking preliminary injunctive relief. Before the parties completed the briefing, Stream and the Rajans filed for 48 Id. (citing Warner Commc’ns Inc. v. Chris-Craft Indus., Inc., 583 A.2d 962, 969 (Del. Ch.), aff’d, 567 A.2d 419, 1989 WL 136971 (Del. Oct. 18, 1989) (TABLE)). 49 In a footnote, the court addressed Stream’s “conclusory” claim that the Omnibus Agreement was an Acquisition under the Charter. According to the court, “[t]he Omnibus Agreement does not contemplate a consolidation or merger, which are specific types of transactions having independent legal significance,” and therefore part (A) of the definition of Acquisition did not apply. Id. at 1044 n.24. The court reasoned that the Omnibus Agreement also did not “result in the transfer of any of Stream’s voting power,” and therefore part (B) of the definition of Acquisition did not apply. Id. “By process of elimination” the court determined that “perhaps Stream [thought] the Omnibus Agreement contemplate[d] a ‘reorganization.’” Id. However, the court determined that “Stream would have to provide authorities delineating the content of the term and why it could encompass the Omnibus Agreement” as well as “explain why that concept would trigger a stockholder vote when the definition of ‘Asset Transfer’ did not.” Id. 19 bankruptcy, resulting in an automatic stay of the proceedings before the Court of Chancery.50 The bankruptcy court dismissed the case as a bad faith filing, and described it as an effort “to gain a tactical litigation advantage that is a part of a continued pattern of effort to nullify, undermine, and/or interfere with the [O]mnibus [A]greement, vitiate the purpose and effect of the Chancery Court’s order, and to maintain ownership and control over the assets of the debtor . . . .”51 On September 23, 2021, the Court of Chancery granted, in part, SeeCubic’s motion for summary judgment.52 The SJ Order granted summary judgment in SeeCubic’s favor declaring the Omnibus Agreement to be valid and binding. The court also granted SeeCubic’s motion for a permanent injunction and converted the preliminary injunction into a permanent injunction. Finally, the court denied SeeCubic’s motion as to the conversion claim because the court found that the summary judgment record did not support it. 50 Stream TV, 2021 WL 5816820, at ; A043 (Dkt. 126). 51 Stream TV, 2021 WL 5816820, at  (alterations in original); B36–37 (Bankruptcy Ruling at 13–14). On May 27, 2021, after the bankruptcy stay lifted, Mathu Rajan filed a pro se letter application claiming that the P.I. Opinion was the product of fraud. Stream TV, 2021 WL 5816820, at ; A048 (Dkt. 138). On June 4, 2021, Mathu filed a formal motion to set aside the P.I. Opinion. Stream TV, 2021 WL 5816820, at ; A049 (Dkt. 143). Then, on September 15, 2021, the Rajans had a third-party seek to intervene and file additional motions. Stream TV, 2021 WL 5816820, at ; A057 (Dkt. 183). The very next day, on September 16, 2021, the Rajans filed another motion to modify the preliminary injunction. Stream TV, 2021 WL 5816820, at ; A058 (Dkt. 185). The court rejected the Rajans’ various efforts to set aside the P.I. Opinion, prompting the Court of Chancery’s statement that “litigation chaos” seemed to be the Rajans’ strategy. Stream TV, 2021 WL 5816820, at . 52 See generally Stream TV, 2021 WL 4352732 (granting in part SeeCubic’s motion for summary judgment as to the validity of the Omnibus Agreement and its request for a permanent injunction). 20 3. Stream and the Rajans Move for Partial Final Judgment, Appeal to This Court, and Move to Modify or Stay the Permanent Injunction Pending Appeal. On September 28, 2021, Stream and the Rajans moved to have the Court of Chancery enter the SJ Order as a partial final judgment and to stay SeeCubic’s conversion claim, which the court granted on November 10, 2021.53 On November 12, 2021, Stream and the Rajans noticed this appeal. On the same day, Stream and the Rajans moved to modify or stay the permanent injunction pending appeal. The court denied both requests.54 The court denied Stream’s request to modify the permanent injunction because “[t]here have not been any significant changes in the status quo” since the court entered comparable relief in the form of a preliminary injunction on December 8, 2020.55 After analyzing the four factors from Kirpat, Inc. v. Delaware Alcoholic Beverage Control Commission that guide a trial court’s discretion to grant or deny a stay, the court concluded that a stay was unwarranted. 56 In doing so, the Court of Chancery elaborated on its reasoning that Section 271 did not supersede the common law’s recognition that directors could sell the assets of an insolvent firm without stockholder approval. 53 See generally Stream TV, 2021 WL 5240591 (entering partial final judgment under Rule 54(b)). 54 See Stream TV, 2021 WL 5816820, at . 55 Id. 56 Id. at . This Court identified the four factors in Kirpat, Inc. v. Delaware Alcoholic Beverage Control Comm’n, 741 A.2d 356 (Del. 1998). 21 H. The Parties’ Contentions on Appeal. Stream raises four arguments on appeal. First, it contends that the Class Vote Provision unambiguously requires Class B stockholder approval and renders Section 271’s default voting rule irrelevant. Second, Stream contends that the Court of Chancery erred by looking first to Section 271 prior to construing the Charter. Stream further asserts that the court bypassed the Charter’s plain terms in order to apply a “board only” common law insolvency exception to Section 271. Third, Stream contends that Section 271 superseded any such common law exceptions assuming, arguendo, that such an exception did exist. Finally, Stream argues that the ruling, as a matter of public policy, would upset Delaware’s contractarian focus and the predictable application of Section 271.