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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Showing 9 posts from November 2005.
Dweck v. Nassar, C.A. No. 1353-N, 2005 WL 3272363 (Del. Ch. Nov. 23, 2005). Plaintiff alleged that she and Defendant orally agreed as co-founders that corporation would have a four-member board of directors and that each party would appoint two directors. Plaintiff alleged that this agreement was later reduced to written drafts but never finalized or signed. Plaintiff further alleged that Defendant, who owned 52.5% of the corporation's outstanding stock, breached this agreement and his fiduciary duties when he terminated Plaintiff as CEO and President, installed his unqualified nephew in her stead, and added a fifth member to the board. Plaintiff also sought appointment of custodian under 8 Del.C. -226, suggesting that the company's board, when properly constituted with two directors per side, would be deadlocked. Defendant moved for partial judgment on the pleadings. More ›
Actions Filed Four Months Apart Treated as Contemporaneous Filings for Purposes of Forum Non Conveniens AnalysisRapoport v. The Litigation Trust of MDIP Inc., C.A. No. 1035-N, 2005 WL 3277911 (Del. Ch. Nov. 23, 2005). Former directors moved to dismiss breach of fiduciary duty action brought against them by bankruptcy liquidation trust in Delaware District Court for lack of subject-matter jurisdiction. That same day, the former directors filed a parallel action in the Court of Chancery seeking a declaration that they did not breach their fiduciary duties in connection with the conduct challenged in the District Court action. Four months later, the directors' motion to dismiss was granted. The following day, the trust re-filed its breach of fiduciary duty action in Ohio state court. The directors moved to enjoin the trust from prosecuting the Ohio action. The trust cross-moved to stay or dismiss the Chancery action. The court denied both parties' motions. More ›
Books-and-Records Action Dismissed Where No Credible Evidence to Justify Investigation of Alleged MisconductSeinfeld v. Verizon Communications, Inc., C.A. No. 1100-N, 2005 WL 3272365 (Del. Ch. Nov. 23, 2005). Shareholder sought to compel inspection of books and record under 8 Del.C. -220 related to three senior executives' compensation, which Plaintiff claimed to be excessive and wasteful. Plaintiff's complaint claimed that those executives received total compensation of $205 million for ostensibly performing the same services as co-chief executives. The complaint also alleged that Verizon's long-term bonus plan was amended shortly after at least two of the three employee contracts were entered into, which caused a further increase in the executives' total compensation. After discovery, the parties cross-moved for summary judgment, and the court granted judgment in the company's favor. More ›
Portions of Lawsuit Alleging Breach of Fiduciary Duty and Waste Dismissed Based Res Judicata, Laches, and Failure to State a ClaimOrloff v. Shulman, C.A. No. 852-N, 2005 WL 3272355 (Del. Ch. Nov. 23, 2005). Dissident shareholder group filed individual and derivative complaint alleging that director defendants violated their fiduciary duties and committed waste by mismanaging and misappropriating corporate assets and by disseminating misleading information to the corporation's minority shareholders. Complaint further alleged that Defendants self-interestedly adopted an advancement bylaw and exculpatory charter provision. Defendants moved to dismiss based on res judicata, laches, lack of standing, forum non conveniens, failure to state a claim, and failure to plead facts excusing demand under Court of Chancery Rule 23.1. More ›
Superior Court Finds Defendant Acted in Good Faith When it Terminated Asset Purchase Agreement Pursuant to Provision of Contract Allowing for Termination if Defendant Could be Exposed to Asbestos Liability
Rohn Industries, Inc. v. Platinum Equity LLC, 887 A.2d 983 (Del. Super. Ct. 2005), aff'd in part, rev'd in part, No. 591, 2005, 2006 WL 2988698 (Del. Oct 20, 2006). The plaintiff, the seller, sued the buyer for breach of an asset purchase agreement that was governed by New York law. The agreement contained a provision that allowed the purchaser to terminate the deal if the purchaser "determines in good faith that there is a reasonable basis in law and in fact to conclude" that the buyer "could reasonably be anticipated to have any . . . material liability for any asbestos-related claim." Following a non-jury trial, the Superior Court found for the defendant, holding that the defendant acted in good faith. More ›