Tag Archives: fiduciary-duty

Breach of Limited Partnership Agreement Leads to Damages of $171 Million

Although Delaware courts have been consistent in affirming the general principle that default fiduciary duties may be contractually modified in the context of Delaware limited partnerships by the limited partnership agreement, In re El Paso Pipeline Partners, L.P. Derivative Litigation, C.A. No. 7141-VCL (Del. Ch. April 20, 2015), serves as a reminder that transactions may … Continue Reading

Chancery Denies Expedited Proceedings for Challengers of Dell Deal

In re Dell Inc. Shareholder Litigation, No. 8329, hearing transcript released (Del. Ch. June 27, 2013). In a ruling from the bench, the Court of Chancery denied a request for expedited proceedings requested by challengers of the pending deal involving Dell. The plaintiffs failed to convince the court that they had a “colorable claim” that … Continue Reading

Supreme Court Underscores Non-Waivable Contractual Duty of Good Faith and Fair Dealing Regardless of Presumptions in Agreement

Gerber v. Enterprise Products Holdings, LLC, Del. Supr., No. 46, 2012 (June 10, 2013). Issue Presented:  This seminal Delaware Supreme Court decision addresses the important, nuanced issue of whether a contract provision that presumes good faith can preclude a claim for a breach of the implied covenant of good faith and fair dealing. Short Answer: … Continue Reading

BJR Protected Allegedly Interested Director Transaction; When Section 220 Tolls Statute of Limitations

Sutherland v. Sutherland, C.A. No. 2399-VCN (Del. Ch. May 30, 2013). Issue Addressed:  Whether certain directors violated their fiduciary duties by benefiting from a system of charging for administrative expenses for personal matters that was more favorable to certain directors. Short Answer:  No. Background: Many prior Delaware decisions in this long-running internecine family business dispute have … Continue Reading

Key Corporate and Commercial Delaware Decisions for First Five Months of 2013

Among the key corporate and commercial Delaware decisions that we have highlighted on these pages during the first five months of 2013, the following decisions either clarified existing Delaware law or announced new law on important substantive or procedural topics. This is a supplement to the annual review of cases we have provided on this … Continue Reading

Chancery Applies Business Judgment Rule to Freezeout by Majority Shareholder

In Re MFW Shareholder Litigation, C.A. No. 6566-CS (Del. Ch. May 29, 2013). Issue Addressed: What standard of review should apply to a going-private merger conditioned upfront by the controlling stockholder on approval by both a properly empowered, independent committee and an informed, uncoerced majority-of-the-minority vote. Short Answer: When a controlling stockholder merger has, from the … Continue Reading

Insider Trading Claim against Kohlberg Kravis Roberts & Co. Allowed to Proceed

In re: Primedia, Inc., Shareholders Litigation, Cons., C.A. No. 6511-VCL (Del. Ch. May 10, 2013). Issue Addressed:  Whether insider trading claim based on state law should be allowed to proceed despite motion to dismiss by special litigation committee. Short Answer:  Motion to dismiss denied. Brief Background Details of this case were previously highlighted on these … Continue Reading

U.S. Supreme Court Addresses Discharge of Judgment for Breach of Fiduciary Duty

Bullock v. BankChampaign, N.A., No. 11-1518, 2013 U.S. LEXIS 3521 (U.S. May 13, 2013) Issue Addressed: This U.S. Supreme Court opinion considered whether a director found liable for a breach of fiduciary duty could discharge his debts related to that breach in Bankruptcy Court pursuant to 11 U.S.C. § 523(a)(4) of the Bankruptcy Code. The … Continue Reading

Delaware Fiduciary Duty of Disclosure Explained by Chancery

In re Wayport, Inc. Litigation, Cons., C.A. No. 4167-VCL (Del. Ch. May 1, 2013). Issues Addressed: Among the several issues addressed in this case, the most noteworthy is a fulsome discussion and restatement of the fiduciary duty of disclosure that directors and majority shareholders owe to other existing shareholders from whom they are purchasing or selling … Continue Reading

Chancery Enforces Non-Competition Agreement

Simplexity, LLC v. Zeinfeld, C.A. No. 8171-VCG (Del. Ch. April 5, 2013) (Redacted Version) Issue Addressed:  This case involves a dispute between two companies over the hiring of the former CEO of Simplexity, Andrew Zeinfeld.  (The publication of this opinion was delayed while confidential data was redacted.) Short Overview Simplexity contends that Zeinfeld’s employment with … Continue Reading

Chancery Addresses Right to Direct Claim for Dilution of Minority Shareholders

Carsanaro v. Bloodhound Technologies, Inc., C.A. No. 7301-VCP (Del. Ch. March 15, 2013). This 76-page Chancery decision addresses issues that include the following: (1) when a claim for dilution of minority shares can be pursued directly instead of, or in addition to, derivately; (2) restrictions imposed by DGCL Section 160 on the right to redeem … Continue Reading

Duties of Directors of Insolvent Company Addressed

Edgewater Growth Capital Partners LP v. HIG Capital, Inc., C.A. 3601-CS (Del. Ch., Feb. 28, 2013). This 70-page decision provides useful and extensive analysis of the duties of directors of an insolvent corporation and related claims against a private equity shareholder who enforced its foreclosure rights. The court dismissed the claims and found that the foreclosure … Continue Reading

Chancery Addresses Default Fiduciary Duties in LLC and Advancement Issues

Zimmerman v. Crothall, C.A. No. 6001-VCP (Del. Ch. Jan. 31, 2013) Issue Presented  This 74-page opinion addresses the allegations of a minority unitholder in an LLC who asserts claims that the directors breached their fiduciary duties in connection with several financing transactions. Brief Overview  Zimmerman claimed that the challenged transactions should be analyzed under the … Continue Reading

LP Agreement Bars Fiduciary Duty Claims

Gerber v. EPE Holdings LLC, C.A. No. 3543-VCN (Del. Ch. Jan. 18, 2013). Short Overview In this 37-page decision, the Court of Chancery dismissed breach of fiduciary duty claims.  The Court declined to impose default fiduciary duties upon the entity’s partners based on a limited partnership agreement that waived all common law fiduciary duties in … Continue Reading

Chancery Grants Relief on Both Fiduciary Duty and Contract Claims Against Member of Joint Venture

In Re: Mobilactive Media, LLC, Consol. C.A. No. 5725-VCP (Del. Ch., Jan. 25, 2013).  What this Case is About:  This decision addresses claims between two members of a joint venture based on both breach of contract and breach of fiduciary duty.  Both claims were allowed to proceed and both claims prevailed as non-duplicative.  The Court also … Continue Reading

Key Delaware Corporate and Commercial Decisions in 2012

Noteworthy 2012 Corporate and Commercial Decisions from Delaware’s Supreme Court and Court of Chancery. By: Francis G.X. Pileggi and Kevin F. Brady. Introduction This is the eighth year that we are providing an annual review of key Delaware corporate and commercial decisions. During 2012, we reviewed and summarized over 200 decisions from Delaware’s Supreme Court … Continue Reading

No Damages Proven for Breach of Fiduciary Duty by Director Leaking Data

Shocking Technologies, Inc. v. Michael, C.A. No. 7164-VCN (Del. Ch. Oct. 1, 2012). Issues addressed: (1) Whether a dissident director may leak confidential data as part of his battle with the majority of directors, without breaching the duty of loyalty? (2) When a director breaches his duty of loyalty by leaking confidential data, but no … Continue Reading

Key Corporate and Commercial Decisions in the 2nd and 3rd Quarters of 2012

Key corporate and commercial decisions that we have highlighted, with commentary, over the last few months (roughly the 2nd and 3rd quarters of 2012), are compiled at the hyperlinks below for the convenience of our readers. Supreme Court Upholds $2 Billion Judgment and $300 Million Fee Award LP Member Protected from Self-Interested Transaction by Terms of LP Agreement … Continue Reading

Abolishment of Ultra Vires Doctrine with Exceptions

Southeastern Pennsylvania Transportation Authority v. Volgenau, C.A. No. 6354-VCN (Del. Ch. Aug. 31, 2012). Issue Presented:  Whether Section 124 of the Delaware General Corporation Law (DGCL) prevented a claim for breach of fiduciary duty against the directors in connection with a merger that was in violation of the provisions of the Certificate of Incorporation? Short … Continue Reading