Court Opinion

ID: 4191123
Source: CourtListenerOpinion
Date Created: 2017-07-31 17:06:40.821276+00
Date Added: 2024-06-11T14:39:51.457164
License: Public Domain

COURT OF CHANCERY
                                      OF THE
    SAM GLASSCOCK III           STATE OF DELAWARE                     COURT OF CHANCERY COURTHOUSE
     VICE CHANCELLOR                                                           34 THE CIRCLE
                                                                        GEORGETOWN, DELAWARE 19947

                              Date Submitted: May 12, 2017
                               Date Decided: July 31, 2017

    Michael Hanrahan, Esquire                       Rolin P. Bissell, Esquire
    Paul A. Fioravanti, Jr., Esquire                Elena C. Norman, Esquire
    Samuel L. Closic, Esquire                       Tammy L. Mercer, Esquire
    Eric J. Juray, Esquire                          Benjamin M. Potts, Esquire
    Prickett, Jones & Elliott, P.A.                 Young Conaway Stargatt & Taylor, LLP
    1310 North King Street                          1000 North King Street
    Wilmington, DE 19801                            Wilmington, DE 19801

                                                    David E. Ross, Esquire
                                                    John A. Eakins, Esquire
                                                    Ross Aronstam & Moritz LLP
                                                    100 South West Street
                                                    Wilmington, DE 19801

                 Re:    In Re Energy Transfer Equity L.P. Unitholder Litigation,
                        Consolidated Civil Action No. 12197-VCG

Dear Counsel:

         This letter addresses the two issues that the parties identified as outstanding

following my Memorandum Opinion of February 28, 2017 on the parties’ cross

motions for partial summary judgment. The underlying dispute arises from the

Defendants’ participation in an alleged discriminatory and self-dealing transaction.1

1
  Defined terms in this letter have the same meaning assigned to them in the Memorandum Opinion
issued on the parties’ cross-motions. The Memorandum Opinion can be referenced for a detailed
recitation of the parties’ dispute. See In Re Energy Transfer Equity L.P. Unitholder Litigation,
2017 WL 782495 (Del. Ch. Feb. 28, 2017).
After review of the parties’ supplemental submissions, including Plaintiffs’ final

submission of May 12, 2017, I find that summary judgment with respect to the

remaining issues is properly denied because a full record would assist the Court in

reaching an appropriate decision.2 I note that this case is proceeding shortly to a trial

that, regardless of my decision here, will require resolution of various legal and

factual disputes arising out of several intertwined provisions of the applicable LPA.

       First, the Defendants seek via summary judgment, essentially, a declaration

that failure to receive Special Approval for a conflicted transaction, under a safe

harbor provision of the LPA, is not, in and of itself, a breach of the LPA. They point

out that, generally, optional safe harbors are just that: optional, not mandatory,

contractual provisions. Failure to pursue such options, accordingly, is of itself not

typically a breach. The specific factual situation here, however, includes both the

Defendants’ affirmative undertaking to seek safe harbor and certain other provisions

of the LPA that cross-reference, and potentially trigger, according to the Plaintiffs,

an obligation to conform to the safe harbor provision. Importantly, the Defendants

contend that they did comply with the Special Approval process of the safe harbor

provision, Section 7.9 of the LPA. Such considerations weigh in favor of declining

2
 See In re El Paso Pipeline Partners, L.P. Derivative Litig., 2014 WL 2768782, at *8–9 (Del. Ch.
June 12, 2014) (explaining that there is no “right” to summary judgment and that the Court may
exercise its discretion to deny summary judgment when a more full record would be helpful to
“clarify the law or its application”) (citations omitted).
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to issue the Defendants’ desired pronouncement here. If the Defendants are correct

that they complied with Section 7.9, the declaration they seek would be advisory.

Moreover, to the extent the issue must be resolved, the effect of failure to receive

Special Approval under this unique contract is best decided on a full factual record

where the alleged interrelation of the provisions and proven facts at trial can be

decided and interpreted in harmony.

         Second, the Defendants’ request to dismiss the Unitholder Defendants as non-

parties to the LPA is also denied. The Defendants point out that the Plaintiffs’ theory

is contractual breach; the Defendants argue that the Unitholder Defendants are not

bound by the LPA as a matter of law.           The Plaintiffs allege the Unitholder

Defendants were not passive recipients but rather active participants in the alleged

improper issuance, and point to language in the LPA under which, in their view,

contractual liability does attach to the Unitholder Defendants under the facts they

intend to prove at trial.3 I also note that these individuals received the bulk (over

85%) of the purported improper issuance, and rescissory damages and similar

equitable relief is sought here. To preserve my ability to grant full relief, whether it

is contractual or equitable, and in light of the controlling language of this LPA and

facts of this case, decision on this issue is also inappropriate, I believe, sans a full

record.

3
    See, e.g., Pls’ Answering Br. 39–44.
                                           3
    To the extent the foregoing requires an Order to take effect, IT IS SO

ORDERED.

                                       Sincerely,

                                       /s/ Sam Glasscock III

                                       Sam Glasscock III

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