In Houseman v. Sagerman, C.A. No. 8897-VCG (Del. Ch. Nov. 19, 2015), the Delaware Court of Chancery described the form of remedy known as a quasi-appraisal. The Court of Chancery explained that quasi-appraisal is not itself a cause of action, but is instead a remedy that, where appropriate, awards stockholders damages based on the going-concern value of their previously owned stock upon a finding of a breach of fiduciary duty, such as a duty to disclose. See In Re Orchard Enters., Inc., S’holder Litig., 88 A.3d 1, 42 (Del. Ch. 2014) (The Delaware Supreme Court and the Court of Chancery have consistently upheld the view that “quasi-appraisal damages are available when a fiduciary breaches its duty of disclosure in connection with a transaction that requires a stockholder vote”). See generally 8 Del. C. § 262(d)(1) (requiring a written demand for appraisal to be submitted to the corporation before the taking of the vote on the merger). See also § 262(e), (a stockholder has 120 days after the merger, among other requirements, to commence an appraisal proceeding if a written demand had been previously been made on a timely basis).
The court conducted an analysis of the equitable doctrine of laches in this corporate litigation involving claims by a stockholder in connection with a merger and related transactions. The doctrine provides that a plaintiff’s request for equitable relief may be barred when he unreasonably delays in seeking that relief, and such delay has prejudiced the defendant. The court found that laches applied to bar claims in this case.
The court noted that each of the attorneys in this case made cross accusations against each other for an alleged breach of the duty of candor. The court observed that if counsel are alleging ethical violations that do not affect the administration of justice, as appears to be the case in this matter, the proper forum for the review of that claim is the Delaware Disciplinary Counsel and not the Court of Chancery.
Supplement: The Chancery Daily, the unparalleled chronicler of “all things Chancery”, in its edition of Nov. 24, 2015, provided additional insight about this case regarding comments from the bench during a hearing on a discovery dispute in which the court counseled the attorneys for both sides to “think twice” before making the type of accusations referred to above in the Practice Note.