Delaware Business Litigation Report

Court of Chancery Grants Plaintiffs' Motion for Judgment on the Pleadings on Claim for Attorneys' Fees and Expenses Incurred in Bringing Action

Lillis v. AT&T Corp., C.A. No. 717-N, 2006 WL 1468709 (Del. Ch. May 22, 2006). Plaintiffs moved pursuant to Court of Chancery Rule 12(c) for judgment on the pleadings on one count of their complaint, which sought attorneys' fees and expenses incurred in bringing the case. Plaintiffs were former officers and directors of MediaOne Group, Inc. Plaintiffs received stock options and non-stock qualified stock option contracts as part of their employment by MediaOne. In 2000, Defendant AT&T acquired MediaOne and agreed to honor the terms of MediaOne's compensation programs, including the programs at issue. Prior to the acquisition, Plaintiffs signed changed control of agreements with MediaOne guaranteeing that they would continue to receive compensation promised by predecessor companies and that if they had to bring litigation to enforce any rights under the agreements, they would be reimbursed for all legal fees. In June 2001, AT&T spun off the wireless division, which then merged with Cingular. In connection with the Cingular merger, Plaintiffs' stock options were cancelled. Plaintiffs instituted this action, asserting breach of contract and negligent misrepresentation claims against the defendants. Plaintiffs moved for judgment on the pleadings on their claim that they were entitled to attorneys' fees and expenses incurred in bringing the action pursuant to the change of control agreements. The Court found there were no material issues of fact and that Plaintiffs were entitled to judgment as a matter of law. The Court rejected AT&T's argument that the change of control agreements only applied to the narrow issue of whether Plaintiffs received options at the time of a change of control. According to the Court, the language of the change of control agreements was broader than AT&T's overly narrow reading and encompassed the claims at issue. The Court granted Plaintiffs' motion for judgment on the pleadings. Share