Chancery Trims Contract Claims in Post-Merger Dispute
In Re P3 Health Group Holdings, LLC, Consol. C.A. 2021-0518-JTL (Del. Ch. Oct. 31, 2022)
Plaintiff Hudson Vegas Investment SPV, LLC asserted various claims after its minority interest in Defendant P3 Health Group Holdings, LLC was wiped out in a business combination between P3 and a SPAC. The Court of Chancery has issued several decisions in the case; this one dealt with Hudson’s various claims for breach of P3’s LLC agreement.
In a decision reflecting the specifics of the LLC agreement and the complained-of transactions, the Court dismissed several claims that did not survive the merger and dismissed all claims against defendants who were not parties to the LLC agreement. The Court also rejected one of Hudson’s claims under the implied covenant of good faith and fair dealing because the Court could not conclude that the parties would have agreed upon the allegedly missing term given how the agreement treated conceptually similar situations.
But the Court permitted Hudson to pursue claims challenging whether Hudson received the full amount of compensation due, whether certain merger-related transactions designed to permit another interest-holder to obtain favorable tax treatment violated the LLC agreement, and whether Hudson’s information rights were violated. Notably, on this last set of claims, the Court rejected the defendants’ argument that Hudson needed to plead specific damages with respect to violation of its information rights. In the Court’s view, it was enough under Delaware law that Hudson pleaded the other elements of breach of contract, as well as resulting (if unquantified) harm.Share