N.K.S. Distributors, Inc. v. Tigani, et al., C.A. No. 4640-VCP (Del. Ch. May 7, 2010), read letter decision here. Although this short letter decision decided a motion to compel, it came on the last day of a two-week trial in this case that relates to a battle for control of a substantial Delaware-based business owned by a local Delaware family. The local newspaper had a story on the two-week trial in this case here, which provides more factual background on this control contest between father and son over a large wholesaler. When the post-trial decision comes out, this will be another example of the many Delaware decisions that involve closely-held companies of considerabe size, owned by the second or third generation of a family that is now locked in a dispute over ownership or control of the enterprise.
This particular letter decision involves the trust that serves as the majority shareholder of the company, and the motion to compel filed by the son who is a contingent beneficiary. The Court determined that the trustee, who is the father of the moving party, was protected by the attorney/client privilege from disclosing advice or documents from the father’s lawyer. The Court’s reasoning was twofold. First, unlike the Riggs case cited by the son, in this case the son was only a contingent beneficiary and the father could remove him as a beneficiary. Also, at the time the advice was given, it was not given for the benefit of the beneficiary. Rather, the advice and documents sought in this motion were provided primarily for the benefit of the trustee individually, and unlike other cases where the ultimate client whom the legal advice was provided for was the beneficiary, the circumstances of this case were different. Thus, the motion to compel was denied.