Archives: Chancery Court Updates

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Chancery Provides Comprehensive Explanation of the Broad Scope and Flexibility of its Equitable Remedial Powers

The most comprehensive description in a Delaware decision in several decades of the broad and flexible authority of the Court of Chancery to fashion an appropriate customized equitable remedy was provided, with bountiful citations to authority and treatises, in the recent decision styled In Re Oxbow Carbon LLC Unitholder Litigation, C.A. No. 12447-VCL (Del. Ch. Aug. … Continue Reading

Chancery Instructs on Anti-Reliance Clauses that Bar Extra-Contractual Fraud Claims

The Delaware Court of Chancery recent provided explicit guidance to drafters of M&A agreements and those that litigate such agreements, to the extent that it provides clarion instruction on the prerequisites for contractual clauses that will bar extra-contractual claims for fraud. In the case styled ChyronHego Corporation v. Wight, C.A. No. 2017-0548-SG (Del. Ch. July 31, … Continue Reading

Chancery Explains Limitations on Right of Directors to Corporate Information

In the latest iteration of the ongoing litigation involving CBS Corporation and its controlling stockholder, the Court of Chancery recently provided a textbook summary of the general rule that directors have the right to unfettered access to corporate data, with three general exceptions. In the case styled In re CBS Corporation Litigation, Consol. C.A. No. … Continue Reading

Court of Chancery Explains the Phrase “Sound Business Practices” in L.P. Agreement

A recent Delaware Court of Chancery opinion explained the meaning of undefined terms in a limited partnership agreement which required the general partner in the Limited Partnership to use “best efforts” and “sound business practices.” In connection with claims that the general partner breached the agreement, the court in Wenske v. Blue Bell Creameries, Inc., … Continue Reading

Chancery Addresses Indemnification Claim

The Delaware Court of Chancery in Daugherty v. Highland Capital Management, L.P., C.A. No. 2017-0488-SG (Del. Ch. June 29, 2018), primarily addressed the issue of laches and equitable tolling that constituted the majority of the 29-page decision, but the last two pages relating to indemnification are the most memorable aspects of the opinion.  The procedural history … Continue Reading

Chancery Applies Entire Fairness Standard to Transaction with Controller

A recent Court of Chancery opinion provides a useful reiteration of the reasons why the entire fairness standard will apply to a transaction between a controller and a controlled corporation. The case of In Re Hansen Medical, Inc. Stockholders Litigation, C.A. No. 12316-VCMR (Del. Ch. June 18, 2018), arose from a squeeze-out merger.  The court addressed … Continue Reading

Chancery Awards Interim Fees Based on Fee-Shifting Contract Provision

A recent letter ruling of the Delaware Court of Chancery awarded interim fees based on a fee-shifting contract provision, prior to the final conclusion of the case, based on pre-trial rulings on issues covered by the fee-shifting clause. In Sparton Corporation v. O’Neil, C.A. No. 12403-VCMR (Del. Ch. June 18, 2018), the court addressed that fee issue … Continue Reading

Court of Chancery Has Power to Issue Bench Warrant for Violation of Court Order

The recent Delaware Court of Chancery opinion in Deutsch v. ZST Digital Networks, Inc., C.A. No. 8014-VCL (Del. Ch. June 14, 2018), addresses the court of equity’s authority to issue arrest warrants to enforce its orders. But because it involves facts that are so unusual, for purposes of a short blog post, the only aspect of the decision that is … Continue Reading

Court Explains When Dual Claims for Breach of Fiduciary Duty and Breach of Contract Can Be Pursued

In a recent Delaware Court of Chancery decision in Edinburgh Holdings, Inc. v. Education Affiliates, Inc., C.A. No. 2017-0500-JRS (Del. Ch. June 6, 2018), the court addressed certain procedural rules that should be of interest to corporate and commercial litigators to the extent that the court explains when certain causes of action may or may … Continue Reading

Chancery Defines Key Principles of Corporate Litigation

A recent decision of the Delaware Court of Chancery provides useful definitions and explanations for well-established principles applicable to corporate litigation. The opinion in Steinberg v. Bearden, C.A. No. 2017-0286-AGB (Del. Ch. May 30, 2018), involves claims that a board of directors and two of its officers breached their fiduciary duties by making or permitting … Continue Reading

Chancery Denies TRO: Prevents Minority from Limiting Rights of Controlling Redstone Family

In a high-profile expedited control contest covered on the front page of The Wall Street Journal and most of the major media outlets covering business, law or Hollywood, the Court of Chancery denied the request for a TRO by a minority stockholder that sought to thwart the efforts of the Redstone family from exercising its … Continue Reading

Chancery Addresses Contractually-Defined Fiduciary Duty in LLC Agreement

A recent Delaware Court of Chancery decision addressed claims against the manager of an LLC that required the interpretation of an exculpatory clause and contractually-defined fiduciary duties in the LLC Agreement. MHS Capital LLC v. Goggin, C.A. No. 2017-0449-SG (Del. Ch. May 10, 2018). Brief Background Facts: The detailed facts of this opinion fill about … Continue Reading

Missed Notice Deadline Bars Contract Claim for Escrow Funds

A recent decision of the Delaware Court of Chancery provides a cautionary tale for corporate and commercial litigation practitioners about the importance of complying with contractual notice deadlines. In PR Acquisitions, LLC v. Midland Funding LLC, C.A. No 2017-0465-TMR (Del. Ch. April 30, 2018), the court barred a claim made for funds held in escrow … Continue Reading

Dissolved LLC Revived Due to Inadequate Reserves for Claims

Any commercial or corporate litigator who needs to pursue claims against a dissolved entity should read the recent Delaware Court of Chancery opinion in Capone v. LDH Management Holdings LLC, C.A. No. 11687-VCG (Del. Ch. April 25, 2018). In essence, the court nullified the certificate of cancellation that had dissolved the LLC in this case because … Continue Reading

Mere Act of Forming Delaware Entity Not Basis for Personal Jurisdiction

A recent decision from the Delaware Court of Chancery provides practical insights into the requirements for imposing personal jurisdiction in Delaware over non-residents involved in the formation of a Delaware entity. The act of forming a Delaware entity only, without more, is not sufficient to impose personal jurisdiction in Delaware over a non-resident involved in the formation. The … Continue Reading

Chancery Addresses Scope of Director Consent Statute and Civil Conspiracy Claims

In the context of cross-claims of fraudulent inducement by parties to a merger, the Court of Chancery discussed several principles of Delaware law that serve as useful references for those involved in corporate and commercial litigation.  The opinion in LVI Group Investments, LLC v. NCM Group Holdings, LLC, C.A. No. 12067-VCG (Del. Ch. Mar. 28, … Continue Reading

Delaware Contract Interpretation Principles

Recent decisions of the Delaware courts have provided arguments for considering a broader approach to the more traditional “four corners of the document” view of contract interpretation for so-called unambiguous agreements.  The recent Chancery decision in Plaze, Inc. and Apollo Aerosole Industries LLC v. Callas, C.A. No. 2017-0432-TMR (Del. Ch. Mar. 29, 2018), addresses contract … Continue Reading

Chancery Discusses Revlon in Context of Granting Option to Sell Company

The Delaware Court of Chancery addressed a bevy of basic corporate litigation principles in the context of claims challenging the actions of directors, and determining which standards of review apply, and which procedural prerequisites need to be satisfied. In Carr v. New Enterprise Associates, Inc., C.A. No. 2017-0381-AGB (Del. Ch. Mar. 26, 2018), claims for … Continue Reading
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