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Court of Chancery Addresses Contractual Fiduciary Duties, Secondary Liability, and Banker Liability in the MLP Context

Posted In LP Agreements

Mesirov v. Enbridge Energy Company, C.A. No. 11314-VCS (Del. Ch. Aug. 29, 2018)

This is the latest decision in a long-running saga in the master limited partnership (MLP) context involving Enbridge Energy.  The Court of Chancery had previously dismissed the complaint for failure to state a claim.  The Delaware Supreme Court reversed that dismissal while providing important guidance on properly construing contractual fiduciary duties in the MLP context.  The defendants moved to dismiss the amended complaint on remand.  This is the Court of Chancery’s decision granting in part and denying in part that motion. 

The decision is particularly helpful for the Court’s explanation of contractual fiduciary duties in the MLP context: on one hand, who may owe them under a MLP agreement’s terms and be directly liable and, on the other, who may be charged with secondary liability.  The decision also is important because, in upholding an aiding and abetting a breach of fiduciary duty claim against a financial advisor, it explains the type of allegations that can support an oft-pled but rarely satisfied theory of liability against investment bankers.