Posts in Fiduciary Duty

Court of Chancery Grants Summary Judgment In Favor Of Defendants Alleged To Have Breached Their Fiduciary Duties By Approving Asset Sale Likely To Result In Zero Value To Equity Owners

Blackmore Partners, L.P. v. Link Energy LLC, C.A. No. 454-N, 2005 WL 2709639 (Del. Ch. Oct. 14, 2005). Plaintiff Blackmore Partners L.P. instituted cause of action against Defendant Link Energy LLC and its directors, alleging breaches of fiduciary duty in connection with the sale of Link's assets for a price likely to leave zero value to Link's equity investors. Defendants moved for summary judgment. More › Share

Court of Chancery Grants Plaintiff's Motion To Amend Derivative Complaint Against Director-Defendants For Insider Trading

Zimmerman v. Braddock, C.A. No. 18473-NC, 2005 WL 2266566 (Del. Ch. Sept. 8, 2005). Plaintiff, a shareholder of priceline.com, Inc., moved for leave to amend his derivative complaint against directors of Priceline based upon three defendants' alleged insider trading and misappropriation of confidential information. Defendants argued amendment would be futile. More › Share

Court of Chancery Holds Plaintiff's Breach Of Fiduciary Duty Claims Fail And Defendant's Loan and Veil Piercing Claims Fail

Ruggerio v. Poppiti, C.A. No. 18961, 2005 WL 2622716 (Del. Ch. Oct. 5, 2005). Plaintiff, who was limited partner of partnership and sole stockholder of corporation controlled by Defendants, alleged that Defendants failed to report or account to him regarding his ownership interest in the entities, breached their fiduciary duties and commingled assets. Defendants counterclaimed for money loaned by limited partnership to corporation. More › Share

Court of Chancery Enjoins Consummation Of Purchase Agreement Pending Arbitration

Flight Options Int'l, Inc. v. Flight Options, LLC, C.A. No. 1459-N, 2005 WL 2335353 (Del. Ch. Sept. 20, 2005). Plaintiff sought preliminary injunction against consummation of Purchase Agreement pending arbitration of its substantive disputes with Defendant. More › Share

Court of Chancery Dismisses Consumer's Fiduciary Duty Claim Against Online Brokerage, Stating that the Scope and Existence of any Duty is Governed by Their Contract

Weil v. Morgan Stanley DW Inc., 877 A.2d 1024 (Del. Ch. 2005). Plaintiff consumer brought an action on behalf of himself and others similarly situated alleging that defendant Morgan Stanley breached its fiduciary duties and that HarrisDirect, the buyer of its online brokerage business, aided and abetted in the breach. The two defendants moved to dismiss under Rule 12(b)(6) for failure to state a claim. More › Share

Court of Chancery Grants Preliminary Injunction Against Majority Stockholder Seeking to Purchase Additional Shares for a Penny Each in an Attempt to Convert Some of its Debt to Equity

Flight Options Int'l, Inc. v. Flight Options, LLC, C.A. No. 1459-N, 2005 WL 2335353 (Del. Ch. July 11, 2005). Plaintiff Flight Options International, Inc. ("FOI") sought a preliminary injunction against defendant Flight Options LLC ("the Company"), a Delaware limited liability company. More › Share

Court of Chancery Finds Genuine Issue of Material Fact Regarding Disinterestedness of Board of Acquisition Target

IN RE FREEPORT-MCMORAN SULPHUR, INC. SHAREHOLDER LITIGATION., C.A. No. 16729, 2005 WL 1653923 (Del.Ch. June 30, 2005) In a shareholder class action, the plaintiffs sought relief alleging an unfair exchange ratio in a stock-for-stock merger of two public companies. The defendants moved for summary judgment. The Court of Chancery denied Defendant's Motion. More › Share

Court of Chancery Denies Motion for Temporary Injunction Where Breakup Fee Is Alleged To Be Too High

In re Toys "R" Us Shareholder Litigation, C.A. No. 1212-N, 877 A.2d 975 (Del. Ch. June 24, 2005) The Court of Chancery considered a motion to enjoin a vote of the stockholders of Toys "R" Us, Inc. to consider approving a merger with an acquisition vehicle formed by a group led by Kohlberg Kravis Roberts & Co. Pursuant to the terms of the merger agreement, the Toys "R" Us stockholders would receive $26.75 per share for their shares. The $26.75 per share merger consideration constituted a 123% premium over the price of TRU stock when merger negotiations began in January 2004. Plaintiffs charged the board did not act reasonably in pursuit of the highest attainable value. The Court of Chancery denied the motion to enjoin a stockholder vote on the proposed merger, saying stockholders could stop the merger by voting if they thought it was unfair More › Share

Court of Chancery Denies Motion to Dismiss Complaint Where Board Materially Misled Shareholders About Search For New CEO

Shamrock Holdings, et al. v. The Walt Disney Co., et al., C.A. No. 1330-N, 2005 WL 1377490 (Del. Ch. June 6, 2005) Plaintiff dissident shareholders seek to void the result of a corporate election of directors, to compel the company to make full and fair disclosure of the CEO selection process, and (following such disclosure) compel another election of directors. Defendants filed a motion to dismiss Plaintiffs' complaint. The Court of Chancery denied the Motion. More › Share

Motion for Summary Judgment Granted Where Shareholders Ratified Internal Recapitalization

Rosser v. New Valley Corporation, et al., C.A. No. 17272-N, 2005 WL 1364624 (Del. Ch. May 27, 2005) Defendants filed a motion for summary judgment where Plaintiff alleged proposed internal recapitalization favored director shareholders. Plaintiff challenged the adequacy of the fairness opinion, the disclosures to shareholders and the sufficiency of the Proxy Statement because it failed to disclose separate valuations of New Valley's various assets and lines of business The Court of Chancery granted the Defendants' motion for summary judgment. More › Share

Court of Chancery Dismisses Stockholders' Claims Because Claims were Derivative and Demand was Not Excused

In re J.P. Morgan Chase & Co. S'holder Litig., 2005 WL 1076069 (Del. Ch. April 29, 2005), aff'd, 2006 WL 585606 (Del. Mar. 8, 2006). J.P. Morgan Chase & Co. ("JPMC") and Bank One agreed to a business combination that was expected to create the second largest financial institution in the country. JMPC paid a premium over the market share price for Bank One, effectively making JPMC the acquirer and the Bank One the target. After the merger was completed, the stockholders of the acquirer sued its directors, alleging breaches of fiduciary duty with regard to the acquisition. Their claims stemmed from the allegation that the directors paid too much for the acquired bank. The defendants moved to dismiss the complaint on the basis that the claims were derivative, not direct, and that demand was not excused. The court granted defendants motion to dismiss. More › Share

Court of Chancery Dismisses Wal-Mart's Claims Regarding Corporate-Owned Life Insurance Policies

Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 872 A.2d 611 (Del. Ch. 2005). Wal-Mart brought suit against all the parties involved in its purchase of corporate-owned life insurance ("COLI") policies. Its complaint alleged a broad range of legal and equitable claims against the insurance brokers and providers, all seeking to recover from them the losses it incurred in connection with this risky tax avoidance scheme. On consolidated motions to dismiss brought by the insurers and brokers, the court concluded that the retailer failed to state a claim upon which relief could be granted. The court, therefore, granted the defendants' motions to dismiss. More › Share

Court Of Chancery Ropes In Florida Corporation On Conspiracy Theory For Jurisdictional Nexus

Benihana of Tokyo, Inc. v. Benihana, Inc., et al., C.A. No. 550-N (Del. Ch. Feb. 28, 2005). This case deals with several motions to dismiss on several grounds, the upholding of personal jurisdiction under a conspiracy or aiding/abetting theory and plaintiff's request for a declaratory judgment. More › Share

Constructive Trusts Circumvent Limitations Period Under 10 Del. C. Section 8113

Nicholas A. Ruggerio v. Estate of Michael A. Poppiti, Sr., et al., C.A. No. 18961-NC, 2005 WL 517967 (Del. Ch. Feb. 23, 2005). This is an action for breach of fiduciary duties, commingling of assets and a failure to account involving two Delaware limited partnerships. Defendants brought an unsuccessful motion to dismiss. The court however granted their summary judgment motion for claims predating June 18, 1998 but denied judgment as to all other claims. More › Share

Defendant Fails To Rebut Presumption Of Beneficial Causation For Merger Fee Award

In re Plains Resources Inc. Shareholders Litigation, C.A. No. 071-N, 2005 WL 332811 (Del. Ch. Feb. 04, 2005). This is an action for plaintiff's attorney fees following settlement of fiduciary duty-based shareholder class actions. More › Share