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Showing 7 posts from August 2021.

Chancery Explains Pleading Standard and Sustains Unjust Enrichment Claim Related to Plaintiff’s Forfeiture of LLC Acquisition Rights


Angel v. Warrior Met Coal, Inc., C.A. No. 2019-0235-SG (Del. Ch. Jun. 30, 2021)

Under Delaware’s notice pleading standard, a plaintiff’s claim will survive a motion to dismiss if it is “reasonably conceivable” that the plaintiff might prevail. The Court here explained that test is whether a “claim’s success seems possible to a rational objective observer.” Notwithstanding this plaintiff-friendly standard, Delaware courts will dismiss a claim if a plaintiff fails to plead all necessary elements. More ›

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Chancery Finds Breach of Fiduciary Duty Where Defendant Resorted to Extra-Contractual Self-Help


Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Post-trial Memorandum Opinion)

Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Letter Opinion)
Delaware law provides several remedies for a party who believes that a contractual breach has occurred. But extra-contractual self-help is usually not one. As this case demonstrates, the choice to seek direct retribution, rather than legal recourse, may constitute a breach of a director’s duty of loyalty. A related decision also considered and rejected the argument that formal board authorization was needed for a corporation to commence litigation.  More ›

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Section 225 Action Filed Eight Months After Removal Barred by Laches


Simple Global, Inc. v. Banasik, C.A. No. 2018-0809-PAF (Del. Ch. June 24, 2021)
Under Delaware law, a director or officer who disputes her removal as such may be subject to equitable defenses if she does not proceed promptly to contest it.  Here, plaintiff Simple Global was owned by three stockholders, one of which, defendant Banasik, was removed as a director and officer by the others in June 2018.  In November 2018, Simple Global sued Banasik for breach of fiduciary duty, to which Banasik responded in April 2019 by, among other things, filing a counterclaim under Section 225 of the DGCL asserting he was not properly removed as a director.  More ›

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Chancery Addresses Claims Arising Out of LLC Dispute Involving Parallel Venture

Posted In Chancery, LLCs


Largo Legacy Group, LLC v. Evens Charles, C.A. No. 2020-0105-MTZ (Del. Ch. June 30, 2021)
In this LLC dispute, an investor in a hotel development company alleged that the company principals breached the operating agreement and their fiduciary duties by implementing a fraudulent scheme whereby a parallel venture, that they owned and controlled, was provided with certain adjacent land and company funds in a manner that improperly advantaged the parallel venture and the principals while harming the plaintiff. The plaintiff also alleged that the defendants had breached their fiduciary and contractual duties by refusing to provide it with financial information that it was entitled to under the operating agreement. The defendants moved to dismiss. The Court of Chancery, finding, as an initial matter, that laches did not block the claims, held that while plaintiff had failed to plead its fraud claim with adequate particularity, it had properly pled both its breach of fiduciary duty claim in connection with the alleged scheme and its breach of contract claim in connection with the company’s refusal to provide certain financial information. In addition to dismissing the fraud claim, the Court also dismissed plaintiff’s duplicative breach of fiduciary duty claim relating to the withheld financial information.  More ›

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Chancery Dismisses Conclusory Allegations of Gross Negligence and Disloyalty Against Oracle Officers and Directors Related to Alleged Controlled, Self-Dealing NetSuite Acquisition


In re Oracle Corp. Derv. Litig., C.A. No. 2017-0337-SG (Del. Ch. June 21, 2021)
While Delaware maintains a notice pleading standard, this decision reflects that conclusory allegations of breach of fiduciary duty leveled against officers and directors of a Delaware corporation may be found insufficient to state a claim. More ›

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Superior Court Enforces $48 Million Liquidated Damages Provision


Smart Sand Inc. v. US Well Servs. LLC, C.A. No. N19C-01-144 PRW CCLD (Del. Super. June 11, 2021)

A liquidated damages provision is enforceable under Delaware law if: (1) damages are uncertain at the time of contracting; and (2) the liquidated damages are reasonable. Courts will examine the parties’ intent at the time of contracting in determining whether a liquidated damages provision is enforceable. More ›

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Chancery Holds That Claim Based on Purposeful Tanking of Merger Agreement Earnout Is Breach of Contract Claim


Shareholder Representative Services LLC v. Albertson’s Companies, C.A. No. 2020-0710-JRS (Del. Ch. June 7, 2021)

Many merger agreements include earnout provisions under which the stockholders in the acquired company are entitled to additional consideration upon the occurrence of certain financial milestones. In this case, the Court of Chancery analyzed and considered the appropriate way to plead claims that the acquirer purposefully operated the company to miss earnout milestones. More ›

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