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P. Clarkson Collins, Jr.

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Showing 45 posts by P. Clarkson Collins, Jr..

Chancery Denies Sellers’ Request for Dismissal, Finding That Fraud Claims Were Timely Filed and Properly Pled

Agspring Holdco, LLC v. NGP X US Holdings, L.P., C.A. No. 2019-0567-AGB (Del. Ch. July 30, 2020)

This opinion concerns a buyer’s attempt to plead fraud in connection the acquisition of a business. The Court denied in the main the defendants’ motion to dismiss the fraud claims brought in connection with private equity firm American Infrastructure Partners’ (the “Buyer”) $300 million acquisition of Agspring LLC (the “Company”), which was then almost entirely owned by NGP X US Holdings, LLP (“NGP”), another private equity firm.  More ›

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Chancery Addresses Burdens for Valuation-Related Books-and-Records Inspections, While Finding Defendant’s Asserted Lack of Records Supported Mismanagement-Related Inspection

Woods v. Sahara Enterprises, Inc., C.A. No. 2020-0153-JTL (Del. Ch. July 22, 2020)

This decision concerning statutory inspection rights under Section 220 of the Delaware General Corporation Law clarifies the requirements of a proper valuation purpose, involves a unique twist concerning a mismanagement-investigation purpose, and provides a helpful summary on the potential scope of books-and-records inspections. More ›

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The Court of Chancery Enforces Fee-Shifting Provision Against Unsuccessful Petitioner Who Also Had Waived its Appraisal Remedy in the Parties’ Stockholder Agreement

The Court of Chancery’s latest decision in the Manti Holdings, LLC, et al. v. Authentix Acquisition Company, Inc., C.A. No. 2017-0887-SG (Del. Ch. 8/11/20) stockholder appraisal litigation provides additional clarity about the ability of corporate constituents to modify by agreement the rights associated with the statutory appraisal remedy, 8 Del. C. § 262. In a previous decision in the case Vice Chancellor Glasscock denied a stockholder’s appraisal petition holding that an advance waiver of statutory appraisal rights in a stockholder agreement is permitted under Delaware law as long as the relevant contractual provisions are clear and unambiguous. In its latest decision, the Court ruled that a prevailing party fee-shifting provision in the stockholder agreement did not contravene Delaware law and was likewise enforceable. More ›

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Chancery Dismisses Action Involving Unusual Issue of Personal Jurisdiction

Sustainability Partners LLC, v. Jacobs, C.A. No. 2019-0742-SG (Del. Ch. June 11, 2020)

In this action involving “an unusual issue of personal jurisdiction,” plaintiff Sustainability Partners LLC (“SP” or the “Company”) sought a declaratory judgment that defendant, a former SP employee (the “Defendant” or “Jacobs”), had no rights under a purported oral agreement between the Defendant and the Company. Despite the fact that Jacobs was not a signatory, the Company claimed that there was personal jurisdiction over Jacobs pursuant to the forum selection clause in the Company’s Operating Agreement based on a theory of equitable estoppel. The Court of Chancery disagreed and dismissed the action for lack of personal jurisdiction pursuant to Chancery Court Rule 12(b)(2).  More ›

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In Post-Trial Opinion, Chancery Finds for Defendant, Rejecting Claims Alleging Breach of Purchase Agreement and Right to “Board Packages”

Braga Investment & Advisory, LLC v. Yenni Income Opportunities Fund I, L.P., C.A. No. 2017-0393-AGB (Del. Ch. June 8, 2020)

In this post-trial opinion, the Court of Chancery held in favor of defendant Yenni Income Opportunities Fund I, L.P. (the “Fund”) finding that the Fund was not required to obtain the signature of Braga Investment & Advisory, LLC (“Braga”) as a “Buyer” when it executed a side letter agreement (the “Side Letter”), nor had the Fund breached a co-investment agreement by denying Braga access to certain materials in connection with its position as a board observer. More ›

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CCLD Addresses Ripeness Doctrine and the “Stranger Rule” in Tortious Interference Claims, Partially Dismisses Claims for Breach of Corporate-Owned Group Variable Life Insurance Policies

Athene Life and Annuity Co., et al. v. Am. Gen. Life Ins. Co., et al., C.A. No. N 19C-10-055 PRW CCLD (Del. Super. May 18, 2020)

Policy holders (the “Plaintiffs”) brought a suit against American General Life Insurance, Co. (“American General”) for breach of corporate-owned group variable life insurance policies (the “Policies”) and against certain related entities managing the Policies, ZC Resource Investment Trust (“ZCRIT”) and ZC Resource LLC (“ZC Resource”) (together with ZCRIT, “ZC Defendants”) (together with ZCRIT and American General, “Defendants”) for tortious interference with contract. When the Defendants moved to dismiss, the Delaware Superior Court’s Complex Commercial Litigation Division (“CCLD”) granted the motion in part on ripeness grounds and denied it in part. More ›

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Chancery Declines to Follow Transcript Ruling, Finds Plaintiff is Entitled to Advancement of Fees Incurred in Underlying Action Pre-Undertaking

Posted In Advancement

Day v. Diligence, Inc., C.A. No. 2020-0076-SG (Del. Ch. May 7, 2020)

By letter ruling, the Court of Chancery held that plaintiff, a director and former officer of the entity defendant, (“Plaintiff”), was entitled to the advancement of attorneys’ fees incurred prior to Plaintiff’s submission of an undertaking. Defendant, Diligence, Inc. (“Defendant”), argued that a recent Transcript Ruling in the Court of Chancery, Salomon v. Kroenk Sports & Entertainment, LLC, C.A. No. 2019-0858-JTL (Del. Ch. Feb. 26, 2020), supported the proposition that advancement rights do not ripen prior to the provision of an undertaking, and therefore, Plaintiff was not entitled to the advancement of pre-undertaking fees. The Court found that Defendant’s interpretation of Salomon was “not persuasive as a matter of doctrine or the Delaware General Corporation Law,” noting that neither the language of nor the policy behind Section 145(e) of the DGCL “limit advancement to sums incurred post-undertaking.” Moreover, the Court noted that Transcript Rulings, as a general matter, have no precedential value and “at most” offer “persuasive authority." For these reasons, the Court ruled for the Plaintiff and denied Defendant’s objection to the advancement of Plaintiff’s fees.

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Delaware Supreme Court Reverses Chancery in Dispute Involving Dueling Transfer Restrictions

Borealis Power Holdings Inc. v. Hunt Strategic Utility, LLC, No. 68, 2020 (Del. May 22, 2020)

The Delaware Supreme Court, reviewing the purportedly conflicting provisions of two agreements de novo, reversed the judgment of the Court of Chancery regarding which of the transfer restrictions in the agreements applied to a proposed sale of shares. The Court’s opinion provides important guidance on the interpretation and construction of contractual restrictions on transfer. More ›

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Chancery Provides Guidance on Rule 23.1 “With Particularity” Pleading Standard in Continuing Investors Bancorp Stock Awards and Options Dispute

Elburn v. Albanese, C.A. No. 2019-0774-JRS (Del. Ch. Apr. 21, 2020)

Finding that the stockholder plaintiff (the “Plaintiff”) had satisfied the Rule 23.1 “with particularity” pleading standard, the Court of Chancery declined to dismiss claims challenging an alleged quid pro quo arrangement between certain officers and the board of directors (the “Board”) at Investors Bancorp, Inc. (the “Company”) that had the effect of undoing and rendering meaningless the settlement (the “Settlement”) of a previous derivative action.  More ›

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Chancery Dismisses Claims Seeking to Compel a Dividend Declaration and for Breach of the Duty of Care

Buckley Family Trust v. McCleary, C.A. No. 2018-0903-AGB (Del. Ch. Mar. 31, 2020).

This case involved a minority stockholder in a Subchapter S corporation seeking relief as a result of its dissatisfaction with management’s operating performance and the company’s unwillingness to pay dividends, matters which defendants contended were well within the exercise of their business judgment. The Court of Chancery granted defendants’ motion to dismiss the complaint. More ›

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Chancery Applies Borrowing Statute, Dismisses Plaintiff’s Fraud Claims as Time-Barred

CHC Investments, LLC v. FirstSun Capital Bancorp, C.A. No. 2018-0353-KSJM, (Del. Ch. Mar. 23, 2020).

On a motion to dismiss plaintiff’s claims for fraud, the Delaware Court of Chancery applied Delaware’s three-year statutory limitations period rather than Texas’s four-year period and dismissed plaintiff’s claims as time-barred. Narrowly interpreting the Delaware Supreme Court’s holding in Saudi Basic Indus. Corp. v. Mobil Yanbu Petrochemical Co., 866 A.2d 1, 16-18 (Del. 2005), the Court found that, except in circumstances where a party is forced to bring claims in Delaware, under Delaware’s “borrowing statute,” the shorter of Delaware’s statute of limitations and that of the foreign jurisdiction will apply.  More ›

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The Court of Chancery Dismisses Effort to Plead Around Rule 23 in CEO's Attempt to Escape Alleged Oversight Failures

Judges and commentators frequently characterize Caremark claims (claims seeking to hold directors liable for damages resulting from grossly inadequate reporting regimes or oversight) as the most difficult kind of breach of fiduciary claim to assert with success. In a recent Court of Chancery opinion in David Shabbouei v. Laurent Potdevin, et al. and Lululemon Athletica, Inc., C.A. No. 2018-0847-JRS (Del. Ch. Apr. 2, 2020), Vice Chancellor Slights rejected the plaintiff’s effort to recharacterize what was essentially an inadequate Caremark claim into a self-interested, unfair dealing claim against the Board arising from its termination of a CEO accused of sexual misconduct. Dismissing the claim under a straight-forward Rule 23.1 analysis of demand futility, the court found the allegations did not support an inference that the Board’s decision to make a severance agreement rather than terminate the CEO for cause resulted from the Board’s desire to insulate itself from claims that it had exercised inadequate oversight over the CEO’s conduct. More ›

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Superior Court Dismisses Fraud Claim Improperly Boot-Strapped to Breach of Contract Claim

Posted In Fraud Claims

Cont’l Fin. Co., LLC, v. ICS Corp., C.A. No. N19C-07-184 AML (Del. Super. Feb. 20, 2020).

This case represents another example of the application of the “bootstrap doctrine” to define the limits of a contract party’s ability to assert a fraud claim against a counter-party. Ruling on a 12(b)(6) motion to dismiss, the Superior Court permitted plaintiff’s breach of contract claim to proceed but granted dismissal of plaintiff’s fraud claim. The Court reasoned the fraud claim was impermissibly boot-strapped to a breach of a contractual duty, and the plaintiff failed plead damages distinct from those allegedly resulting from the contractual breach.  More ›

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Claims Alleging that Icahn Entities Schemed to Buy Out Minority Unitholders on the Cheap Survive Motion to Dismiss

In re CVR Refining, LP Unitholder Litig., Consol. C.A. No. 2019-0062-KSJM (Del. Ch. Jan. 31, 2020).

The Court of Chancery declined at the pleadings stage to dismiss claims for breach of a governing limited partnership agreement (the “Agreement”) and tortious interference alleging that entities controlled by Carl Icahn (the “Icahn Entities”) engaged in a multi-step scheme designed to artificially deflate the market price of CVR Refining L.P.’s (the “Partnership”) common units and facilitate an involuntary buyout that conferred a windfall on the Icahn Entities. More ›

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Chancery Finds Liquidated Damages Clause for Breach of Non-Compete Unenforceable

Lyons Ins. Agency, Inc. v. Wark, C.A. No. 2017-0348-SG (Del. Ch. Jan. 28, 2020). 

In this decision on cross-motions for summary judgment, the Delaware Court of Chancery held that a liquidated damages clause for a breach of a covenant not to compete in an employment contract (the “Non-Compete”) was unenforceable on public policy grounds. The Court noted that while Delaware will enforce a non-compete that is “reasonably tied to the interests of the employer,” liquidated damages clauses that are “untethered to the losses caused by ex-employee competition,” are unenforceable contractual penalties. More ›

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pcollins@morrisjames.com
T 302.888.6990
P. Clarkson Collins, Jr. has more than 40 years of litigation experience in complex corporate, commercial, and fiduciary matters in both jury and non-jury trials. Clark is a Fellow in …
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