In Cobalt Operating LLC v. James Crystal Enterprises, LLC, 2007 WL 2142926 (Del. Ch., July 20, 2007), read opinion here, the Chancery Court provides a lengthy recitation of this intensely factual battle between a buyer and a seller of a radio station. The buyer claimed that the material representations of the seller about cash flow (on which the purchase price was based), were fraudulent and in breach of the agreement. After a week long trial, the court agreed with the buyer’s arguments. As for the damages it awarded for breach of contract, here is the money quote from the court’s opinion:
Moreover, when a contract or agreement is silent as to the remedy for a breach, the Court of Chancery has the discretion to award any form of legal or equitable relief and is not limited to awarding contract damages for breach of the agreement.
In addition to the difference between the amount of the purchase price compared to the "real value" of the company (without the fraudulent mispresentations), the court awarded attorneys’ fees and pre-judgment interest. Although the fee award was based on indemnification and fees clauses in the agreement, the court noted that it may have awarded substantial fees in any event in light of what it referred to as many baseless arguments of the defendant. The court also voided an equity interest the seller had in the acquiring entity as well as cancelling other debt obligations as part of the original transaction.
SUPPLEMENT: Not visible in the Westlaw version of the opinion above, here is the original version of the court’s opinion, which has a photo described as "Rose Mary’s Stretch", which is a photo of former President Nixon’s loyal secretary. Presumably it is a reference to the court’s skepticism about the positions of the defendants after trial, much like, presumably, the skepticism about the explanation for the missing segments of some of the Nixon tapes.