Showing 14 posts from November 2014.
Failure to Include Acceleration Clause Costly
This article was originally published in the On cross-motions for partial summary judgment, the Delaware Court of Chancery, in Knutkowski v. Cross, C.A. No. 4889-VCG (Oct. 13, 2014), found that certain payments due under a promissory note were barred by the applicable statute of limitations where the note called for repayment of the loan in installments, but did not include an acceleration clause. The plaintiff asserted various equitable and legal claims, and, with respect to the legal claim for recovery under the note, the court found that 6 Del. C. Section 3-118(a) barred the recovery of any payments that were due more than six years before the plaintiff initiated the action. As the note did not include an acceleration clause, the plaintiff was not in a position to accelerate the amounts due and seek a recovery of the full amount of the note. More ›
ShareCourt Of Chancery Explains Rule 23.1 Standards
Court Of Chancery Explains Bad Faith Claim
Court Of Chancery Explains Third Party Beneficiary Standing
United Health Alliance LLC v. United Medical LLC, C.A. 7710-VCP (November 20, 2014) This decision has a good explanation of when a non-party to a contract may seek to enforce its terms as a third party beneficiary.
ShareCourt Of Chancery Explains The Implied Covenant Rules
Court Of Chancery Explains The Conspiracy Theory Of Jurisdiction
James Semple to Speak at Delaware Legal Ethics Seminar
Delaware Continues Struggle Over Multijurisdictional Litigation
Authored By Edward M. McNally This article was originally published in the Delaware Business Court Insider | November 19, 2014 Delaware's courts continue to struggle with the problem of how to control multiple suits in multiple jurisdictions, over the same basic dispute. Just recently, the Delaware Supreme Court explained how the lower courts should deal with this problem, in its decision in The North River Insurance v. Mine Safety Appliances, 2014 Del. LEXIS 527 (Del. Nov. 6, 2014). The Supreme Court's careful analysis is worth reviewing. More › ShareCharles H. Toliver, IV Presented Justice Thurgood Marshall Award
Court Of Chancery Upholds Novel Fiduciary Breach Case
New Jersey District Court Rejects Shareholder Derivative Action Based on Cybersecurity Breach
In Palkon v. Holmes, C.A. No. 2:14-CV-01234 (SRC) (October 20, 2014), the United States District Court for the District of New Jersey dismissed with prejudice a shareholder derivative action arising from three distinct breaches of Wyndham Worldwide Corporation (“Wyndham”). The Court granted the Defendant Directors’ Motion to Dismiss pursuant to Rules 23.1(b) and 12(b)(6) of the Federal Rules of Civil Procedure. The matter was resolved on demand-refusal grounds, but the opinion provides fresh guidance to corporate boards in how to address their exposure to risk based on cybersecurity breaches and shareholder actions arising from those breaches. Specifically, the decision highlights the importance of independent advice and of making a record of board review of policies and procedures to address the threat of a cyber-security breach. As this decision illustrates, boards who seek independent legal and other advice and who make an appropriate record of reviewing policies for addressing the risk of cyber-security breaches are more likely to be able to withstand a shareholder derivative claim for breach of fiduciary duty. More ›
ShareCourt Of Chancery Explains Amendment-By-Merger Doctrine
In re Kinder Morgan Inc. Corporate Reorganization Litigation, C.A. 10093-VCL (November 5, 2014)
This decision explains the Amendment-By-Merger Exception that is found in alternative entity agreements. The purpose of the Exception is to be sure that a merger agreement that has the affect of amending the operating agreement gets the same vote, including class votes, that an equivalent amendment to the operating agreement would require under the terms of the operating agreement. Such clauses try to prevent a merger agreement from being used, as is done for corporations, to amend the basic deal set out in the parties' agreement.
The decision also has an interesting discussion of what constitutes an amendment to an operating agreement, a point that is not always clear.
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