The focus of this blog is Delaware corporate and commercial law, primarily from the Delaware Court of Chancery and Delaware Supreme Court. Also included periodically are similar cases of import from other courts in Delaware, as well as related commentary and decisions of interest to business litigators.
My practice here is to summarize the above described key Delaware cases as they are published. Althought the following cases from the last month or so were worth summarizing, they were not important enough to post earlier. Also, in order to "catch up", due to the recent press of business for paying clients, I am summarizing the following 3 cases together for convenience only.
Crescent-Mach I Partnership, L.P. v. Turner, 2007 WL 1342263 (Del. Ch. May 2, 2007), read opinion here. This is an appraisal action that also included fiduciary duty claims regarding a merger. Both cases were tried together. Especially noteworthy is footnote 64 of the Court’s opinion where the court makes an honest assessment of its limitations in appraisal actions. The court dismissed the fiduciary duty claims and after careful and thorough analysis determined the appraised value to be $32.31 per share compared with the $25.00 per share merger price.
MBKS Company Limited v. Reddy, 2007 WL 1310185 (Del. Ch., April 30, 2007), read opinion here. This case dealt with the difference between “void” and “voidable” stock in connection with problems that arose regarding the issuance of stock. See DGCL Sections 152, 153 and 242. The Court also addressed the requirement of written amendments to the Certificate of Incorporation in order to “cancel” existing shares.
UPDATE: This Reddy case discusses the 2004 amendment to DGCL Section 152 that expands the definition of adequate consideration for the issuance of shares to include "any benefit to the corporation". However, the court did not directly address, and I am not aware of any cases that have yet directly addressed, the adequacy of consideration that was formerly described as infirm under the old version of the statute, but that is not prohibited under the current version of the statute.
NAMA Holdings LLC v. Related World Market Center LLC, 2007 WL 1500027 (Del. Ch. April 27, 2007), read opinion here.This case dealt with a Delaware Limited Liability Company that was a third-party beneficiary to, and sued to enforce terms in, an Operating Agreement which was for its benefit but to which it was not a party. The Court determined that because the disputes at issue did not come with ambit of the arbitration language of the applicable agreement and because the LLC could not be equitably bound to the arbitration provisions, the LLC was permitted to press its contractual claims in the Chancery Court. See also footnote 15: motion to dismiss based on an arbitration clause goes to the court’s subject matter jurisdiction and is properly reviewed under Court of Chancery Rule 12(b)(1).