Court Opinion

ID: 3218505
Source: CourtListenerOpinion
Date Created: 2016-06-29 20:08:01.949765+00
Date Added: 2024-06-11T14:30:46.270020
License: Public Domain

EFiled: Jun 29 2016 01:47PM EDT
                                                       Transaction ID 59209624
                                                       Case No. 10287-VCS
                            COURT OF CHANCERY
                                  OF THE
                            STATE OF DELAWARE

                                                                  417 S. State Street
JOSEPH R. SLIGHTS III                                          Dover, Delaware 19901
 VICE CHANCELLOR                                              Telephone: (302) 739-4397
                                                              Facsimile: (302) 739-6179

                                  June 29, 2016

 Sidney S. Liebesman, Esquire                 David L. Finger, Esquire
 Montgomery, McCracken, Walker                Finger & Slanina, LLC
     & Rhoads, LLP                            One Commerce Center
 1105 North Market Street, Suite 1500         1201 N. Orange Street, 7th Fl.
 Wilmington, DE 19801                         Wilmington, DE 19801

 Robert D. Goldberg, Esquire                  Kathleen M. Miller, Esquire
 Biggs and Battaglia                          Smith, Katzenstein & Jenkins LLP
 921 North Orange Street                      1000 West Street, Suite 1501
 Wilmington, DE 19801                         Wilmington, DE 19801

        Re:    Smollar v. Potarazu
               C.A. No. 10287-VCS
               Date Submitted: May 23, 2016

 Dear Counsel:

        VitalSpring Technologies, Inc. (“VitalSpring”) stockholders, Britt Family

 Investments LLC, Jeff Waters, and the Kenneth F. Logue Revocable Declaration

 of Trust DTD (“Movants”) have brought a Motion to Intervene as representative
Smollar v. Potarazu
C.A. No. 10287-VCS
June 29, 2016
Page 2

plaintiffs in this derivative action pursuant to Court of Chancery Rule 24 (the

“Motion”). The Motion currently stands unopposed.1

         Intervention as of right is appropriate, pursuant to Court of Chancery

Rule 24, “when the applicant claims an interest relating to the . . . transaction

which is the subject of the action and . . . the disposition of the action may . . .

impede the applicant’s ability to protect that interest, unless the applicant’s interest

is adequately represented by existing parties.”2       As VitalSpring stockholders,

Movants have an “interest” in pursuing VitalSpring’s claims of wrongdoing

(including breach of fiduciary duty, misappropriation of assets and waste) against

the defendant, Sreedhar Potarazu, as initially asserted in a complaint filed by

Marvin Smollar in October 2014.3

1
 Tr. of Oral Arg. on Pl.’s Mot. for an Interim Award of Att’ys’ Fees and Expenses; Britt
Family Investors LLC, Jeff Waters, and the Kenneth F. Logue Revocable Decl. of Trust
DTD’s Am. Mot. to Intervene, at 65.
2
    Ct. Ch. R. 24.
3
  See United Rentals, Inc. v. RAM Hldgs., Inc., 2007 WL 4327770, at *1 (Del. Ch.
Nov. 29, 2007) (“Consideration of an intervener’s standing is implicit in the court’s
analysis of the elements of Rule 24.”).
Smollar v. Potarazu
C.A. No. 10287-VCS
June 29, 2016
Page 3

         By opinion and order of today’s date, the Court has granted a motion to

disqualify Mr. Smollar and his counsel from further participation in this litigation.

Consequently, Movants’ interests are no longer “adequately represented by

existing parties.”4 Their ability to protect their interests, as well as the interests of

all similarly situated VitalSpring stockholders, in pursuing a final resolution of this

action will be impaired unless and until another representative plaintiff intervenes.

Accordingly, Movants are entitled to intervene as a matter of right, and the Motion

must be granted.5

         IT IS SO ORDERED.

                                                 Very truly yours,

                                                 /s/ Joseph R. Slights III

4
    Ct. Ch. R. 24.
5
  Michelson v. Duncan, 1980 WL 273542, at *2 (Del. Ch. Apr. 1, 1980) (allowing the
movant to intervene as a matter of right following former plaintiff’s disqualification, and
holding that because he has the right to intervene, “he should not be compelled to
undergo discovery, at this time, as to issues other than the issue of whether he is in fact
now a stockholder of [the company] and was such at the time of the transactions which
are the subject of this suit”).