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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Court Of Chancery Awards Nominal Damages For Breach Of Fiduciary Duty
The Ravenswood Investment Company LP v. The Estate Of Bassett S. Winmill, C.A. No. 3730-VCS (Del. Ch. Mar. 21, 2018)
It is easy to assume that some form of meaningful relief must be available when a fiduciary bears the burden of proving a self-dealing transaction is entirely fair, but fails to carry it. But that is not always true, as this decision shows. For instance, as happened here, if stock options were issued for inadequate consideration, the plaintiff still needs to prove actual damages or that rescission would be appropriate under the circumstances. A failure to do so could foreclose meaningful relief and result in only nominal damages. We can put it no better than the Court did: “[T]here is [an] important lesson to be learned from this case. While this court endeavors always to remedy breaches of fiduciary duty, especially breaches of the duty of loyalty, and has broad discretion in fashioning such remedies, it cannot create what does not exist in the evidentiary record, and cannot reach beyond that record when it finds the evidence lacking. Equity is not a license to make stuff up.”