A recent Delaware Court of Chancery decision should be read by every lawyer who issues formal legal opinion letters—and those who litigate issues involving them. In Bandera Master Funds LP v. Boardwalk Pipeline Partners, LP, C.A. No. 2018-0372-JTL (Del. Ch. Sept. 9, 2024), the court amplified its earlier post-trial opinion, highlighted on these pages, after remand from the Delaware Supreme Court, whose decision was also highlighted on these pages.
This 116-page opinion deserves careful study for its thoughtful and scholarly analysis of the issues surrounding a formal legal opinion letter that was issued in connection with the exercise of a call right pursuant to a complex set of prerequisites in a limited partnership agreement.
The limited purpose of this short blog post is to highlight selected notable excerpts of the opinion to encourage interested readers to review the whole decision.
Highlights
- The court discusses the terms of art and the important distinction between a “reasoned” and “non-reasoned” formal opinion letter, as well as a “non-explained” or “clean” opinion letter. Slip op. at 40.
- The court emphasizes the key differences between the common practice of non-Delaware lawyers opining on “straightforward” issues of Delaware law—but observing also that non-Delaware attorneys do not regularly opine on “complex” issues of unsettled or complex issues of Delaware law. See Slip op. at 42 and footnote 80.
- The opinion features copies of handwritten notes and marginalia—imbedded into the court’s decision—of the lawyers who prepared the formal opinion letter at issue. This emphasizes the importance to the court’s analysis of all the backup documents as well as the emails and notes created in connection with drafting the formal opinion letter. Slip op. at 23 and 26.
- The court emphasized that in its prior opinion it did not conduct a de novo review of the formal opinion letter at issue, but it did review objective facts to determine bad faith, and it cited to scholarly articles for examples of how one’s conduct can reveal one’s state of mind in connection with surrounding circumstances. See Slip op. at 59-67 and footnotes 159-160.
- The court explained that in its prior opinion it only referred to one of the law firms involved as issuing a formal opinion letter in bad faith, and it cited to scholarship and academic studies about observations confirming the truism that: even big-law lawyers are humans and can succumb to pressures to please clients. See Slip op. at 50-53 and footnotes 109-117.
- The court underscored that its decision “should not have any negative impact on the practice of rendering opinions.” See Slip op. at 78. In part, this conclusion is buttressed by the reality that lawyers rendering formal opinion letters should expect to support the basis for their opinions if litigation ensues. See generally footnote 212 (referring in a different context to why a board consent must be unanimous).
- The court provided an always useful restatement of the elements of claims for: (i) tortious interference with contract, see Slip op. at 89-93; (ii) breach of the implied covenant of good faith and fair dealing, see Slip op. at 99-104; as well as (iii) restating the elements of an unjust enrichment claim, see Slip op. at 115.
Takeaway:
This blog post discusses a recent court decision that provides detailed analysis on the issuing of formal legal opinion letters. The court decision emphasizes the differences between various types of opinion letters and highlights the importance of supporting documents in drafting these letters. The decision also restates the elements of certain related claims.