Opinion ID: 1481578
Heading Depth: 1
Heading Rank: 3

Heading: Court of Chancery Opinions and Final Order

Text: The background facts of the January 17, 1986 negotiations, which for the most part are not disputed, were set out by the Court of Chancery in a post-trial opinion, prior to the entry of its Final Order, as follows: On Friday, January 17, 1986, Mr. Borisoff and Mr. Richards negotiated a settlement of the Belzbergs' appraisal claim over the telephone. Mr. Borisoff first proposed that the Belzbergs would receive $20 per share, with no interest, for all their shares. Mr. Richards counter-offered, on a take-it-or-leave-it basis, that the Belzbergs receive the original merger consideration of $2 and one IPU per share for 50% of their shares and $20 per share, plus interest, for the remaining 50% of their shares. After conferring with the Belzbergs, Mr. Borisoff counter-proposed that the Belzbergs receive the original merger consideration for 25% of their shares and the $20 settlement price for 75% of their ENSTAR shares. Mr. Richards re-emphasized that his 50-50 offer was made on a take-it-or-leave-it basis, which required acceptance that day. After again conferring with the Belzbergs, Mr. Borisoff again called Mr. Richards and told him that his clients would accept the 50-50 offer if the payment of the Belzbergs' counsel fees were included. Mr. Richards agreed. Mr. Richards then restated the terms of the agreement and requested that the Belzbergs' shares be delivered to his office in Wilmington by the following Monday, January 20, 1986. In re ENSTAR Corp., 593 A.2d at 547. The Court of Chancery concluded, in its pretrial opinion, that the terms of the settlement were certain: The Belzbergs were to receive the same $20 per share, plus interest, settlement consideration that ENSTAR's other dissenting shareholders were to receive for 50% of their shares. For their remaining shares, they were to receive the original merger consideration which consisted of $2 and one Indonesian Participating Unit per share. Additionally, ENSTAR, through Mr. Richards, agreed to pay the Belzbergs' attorney fees. The record reflects that the Court of Chancery made two other significant factual findings. The first finding, in its post-trial opinion, was that [a]t no time during the course of these negotiations did anyone representing the Belzbergs disclose to ENSTAR, or its counsel, that the Belzbergs' shares had actually been sent to ENSTAR in October of 1984. In re ENSTAR Corp., 593 A.2d at 547. Second, the Court of Chancery concluded, in its pretrial opinion, that when the agreement was reached between ENSTAR and the Belzbergs, there was no mention that the original merger consideration including the subsequent IPU dividends had already been received by the Belzbergs.... The Court of Chancery's post-trial opinion granted the Belzbergs' motion to specifically enforce the settlement agreement, notwithstanding its finding that the prior surrender of the Belzbergs' shares in exchange for the payment of the merger consideration had never been discussed by Richards and Borisoff. In its pretrial opinion, the Court of Chancery simply stated [p]resumably those sums [the merger consideration] could have been returned to Enstar. It is noteworthy, however, that the post-trial opinion did not specify the terms pursuant to which the agreement would be enforced. Id. at 554. Negotiations between the parties, as to the terms to be included in an appropriate form of order, were unsuccessful and each party submitted its own proposal. The Final Order entered by the Court of Chancery was entitled Order and Final Judgment for Specific Performance. It purported to specifically enforce the parties' agreement but, in fact, setoff the Belzbergs' prior receipt of the merger consideration against the settlement consideration, even though that had not been discussed by the parties. The Final Order of the Court of Chancery, in part, provided: Respondent ENSTAR Corporation (ENSTAR) shall pay to First City Financial Corp., Ltd., First City Trust Company, Marc Belzberg and Abraham Farbstein (hereafter the Belzbergs) the sum of $1,439,041.50, calculated at $20 per share for 78,414 shares with interest thereon at 10% from September 24, 1984, (1) less $2 per share distributed in cash to the Belzbergs for 78,414 shares following the merger, (2) less the total of all distributions received by the Belzbergs since the time of the merger on 78,414 Indonesian Participating Units, and (3) less interest at 10% per annum on each of the foregoing distributions from the day of receipt of each such distribution by plaintiffs, with the foregoing computations of interest running through May 1, 1991. ENSTAR shall pay the sum specified in paragraph 1 to the Belzbergs on the later of (a) the 31st day from the date of this Order and Final Judgment and (b) delivery by the Belzbergs to ENSTAR of certificates duly endorsed to ENSTAR representing 78,414 Indonesian Participating Units (the Units); provided, [3] however, that such sum shall be reduced by the amount of any distributions made on the Units and interest on such distributions from May 1, 1991 until delivery of such certificates to ENSTAR. (emphasis added). Thus, the record reflects that although the Court of Chancery opined that the parties had reached an agreement which was specifically enforceable, its ultimate disposition, as set forth in its Final Order, was a determination that it would be inequitable to specifically enforce that agreement according to its terms.