About This Blog

Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

Morris James Blogs

Links

Photo of Delaware Business Litigation Report Alberto E. Chávez
Attorney
achavez@morrisjames.com
302-888-6812
View Bio
Alberto E. Chávez  is an associate in the Business Litigation Group focusing on commercial litigation and corporate and fiduciary litigation. In law school, he simultaneously …

Showing 2 posts by Alberto E. Chávez.

Superior Court Complex Commercial Litigation Division Holds Settlements Arising out of Dole Stockholder Litigations Constitute “Loss” Under Insurance Policies  

Arch Insurance Co. v. Murdock, C.A. No. N16C-01-104 (EMD)(CCLD) (Del. Super. May 7, 2019).

Image Business InsuranceAfter trial and an adverse judgment in the amount for $148 million for breach of the duty of loyalty in a going private merger In re Dole Food Co., Inc. S’holder Litig., C.A. No. 8703-VCL (Del. Ch.), the liable defendants David Murdock, Dole Food Company, Inc. and DFC Holdings, LLC settled the claims by having Murdock pay the full award plus interest. The defendants then were sued by six of their excess insurance carriers, seeking a declaratory judgment that they did not have to fund the settlement. Among other reasons, the insurers asserted that the settlement payment representing the actual fair value of the merger consideration did not constitute a “Loss” under the policy. Defendants counterclaimed seeking declaratory judgment that the insurers breached the policies by refusing to pay for the Court of Chancery settlement as well as the settlement in San Antonio Fire & Police Pension Fund v. Dole Food Co., Inc., No. 1:15-CV-01140 (D. Del.).  This decision grants in part and denies in part the parties’ cross-motions for summary judgment.  Applying the rules of interpretation applicable to insurance policies, a unique and complex type of contract, the Court determined the settlement payments constituted a “Loss” covered within the policies but genuine issues of material fact remained as to whether the insureds breached a written consent provision and a cooperation clause in the policies.

Delaware Supreme Court Rejects Stock Price Appraisal Award in Aruba Networks

Verition Partners Master Fund, Ltd. v. Aruba Networks, Inc., No. 368, 2018 (Del. Apr. 17, 2019).

Image business valuationIn a closely-followed appeal from the Court of Chancery’s appraisal decision in the Aruba Networks case, the Delaware Supreme Court reversed the trial court’s fair value award of $17.13 per share and directed that the court-below enter judgment at the deal-price-less-synergies value of $19.10 per share.  The Supreme Court found that the lower court abused its discretion when, because of the difficulty of estimating the amount of the buyer’s synergy value in the $24.67 deal price, it determined that Aruba’s pre-announcement, “unaffected” stock price was the best evidence of fair value.  In so ruling, the Supreme Court provides important guidance about how to account for synergies arising from the expectation of the merger when determining the “fair value” of a going concern under Delaware’s appraisal statute in Section 262 of the DGCL. More ›