Delaware Business Litigation Report

Court of Chancery Holds For Defendant-Corporation On Untimely Stock-Options Claim

Richard W. Vague v. Bank One Corporation, et al., C.A. No. 18741, 2006 WL 290299 (Del. Ch. Feb. 01, 2006). In this post-trial opinion, the court examines an untimely claim on stock-options against employer-corporation after expiration of contractually agreed limitations period and the corporation's claim against another employee for violation of duties related to the claim of options. The plaintiff-employee was the director, president and CEO of a financial institution. The institution approved a stock-option plan favoring senior officers like plaintiff. FUSA then merged with Bank One Corporation and the plaintiff continued in an officer capacity. Subsequently, Bank One was the surviving entity in yet another merger, this time with First Chicago NBD. The options survived these mergers. The instant opinion relates to the plaintiff's mistaken belief that he could elect to subscribe to the stock-options after the option's expiration. The court examined the contract provisions and held that it was unambiguous. The court also held that plaintiff's reliance on claims of negligent and innocent misrepresentation on the limitations dates were unfounded. Plaintiff also could not prove that his reliance on the alleged misrepresentations was reasonable. The court examined three alleged misrepresentations that led to the time-bar and found they were all without merit. Placing the blame squarely on the plaintiff's shoulders for the mishap, the court explained that the plaintiff's accountant-agent was charged with the responsibility to manage plaintiff's investments and had failed to discharge his duties adequately leading to plaintiff's loss. Thus, his failures could not be deflected to the corporation by alleging equitable principles. The court dismissed claims of fiduciary duty violations, equitable estoppel and contributory negligence. Finally, the court held against the corporation on the third-party claim because it was predicated on the plaintiff's claim and that employee's alleged duty violations. Authored by: Raj Srivatsan 302-888 6831 rsrivatsan@morrisjames.com Share