Ameristar Casinos Inc. v. Resorts International Holdings LLC, C.A. No. 3685-VCS (Del. Ch. May 11, 2010), read opinion here.
Was a lack of full disclosure regarding a substantially increased tax liability both fraud and a breach of factual representations in the context of a Purchase Agreement to buy a casino, when the assessment became known after the Purchase Agreement was signed but was not fully disclosed prior to the closing? Answer: The claims were allowed to proceed to trial.
This decision should be read by anyone who seeks to argue that lack of adequate disclosure of a liability in connection with a Purchase Agreement was either fraud or a breach of representations made in the agreement.
The Court discussed the detailed facts that were not disclosed prior to the closing but which arose during the 3-month period after the Purchase Agreement was signed. See pages 9 and 10.
The following key points were addressed.
• The equitable fraud claim was rejected due to the absence of a request for any equitable remedy and the absence of any fiduciary relationship, but common law fraud claims were allowed to proceed.
• Claims for quantum meruit and unjust enrichment were dismissed because the terms of the Purchase Agreement governed the dispute of the parties.
• The Court engaged in a detailed factual analysis to explain why the claims for the breach of representations were allowed to proceed and why the Motion to Dismiss of those claims was denied.