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Court of Chancery Partially Grants Defendants' Motion To Dismiss Complaint

Chrin v. Ibrix Inc., C.A. No. 20587, 2005 WL 2810599 (Del. Ch. Oct. 19, 2005). Plaintiff, a co-founder, stockholder and former employee of Defendant Ibrix, Inc., brought a complaint against Ibrix and Steven Orszag, a co-founder and chairman of the Ibrix board of directors, asserting claims relating to his termination and a stock repurchase agreement. Defendants moved to dismiss the complaint. Plaintiff, Orszag and another agreed to form a company to develop network storage device. They entered into a founders' equity distribution agreement ("FED") providing, among other things, that Plaintiff would receive a certain percentage of the equity. Following incorporation of Ibrix, Plaintiff signed a Founders Stock Purchase Agreement ("SPA") pursuant to which he received approximately 7.6% of Ibrix's common stock and agreed that Ibrix could repurchase if Plaintiff was terminated for cause. After Ibriz terminated Plaintiff and sought to repurchase his stock, Plaintiff alleged claims relating to the SPA and FED and that he was not terminated for cause as required by the SPA. Defendants moved to dismiss the claims under Court of Chancery Rule 12(b)(6). The Court found that Plaintiff failed to state a claim for all of his claims, except his claims that: (1) Ibrix breached the SPA by repurchasing a portion of his Ibrix shares because he was not terminated for cause as defined in the SPA; and (2) Ibrix breached the implied covenant of good faith and fair dealing by failing to disclose to him why he was terminated for cause. The Court dismissed all but those claims. Subsequently, the Court denied a motion for clarification and reargument or, alternatively, alteration or amendment. Chrin v. Ibrix Inc., C.A. No. 20587, 2005 WL 3334270 (Del. Ch. Nov. 30, 2005). http://courts.delaware.gov/opinions/(shflcr452r1gon3zewev0555)/download.aspx?ID=69110