Eric Hacker at Morris James LLP

Chancery Finds Breach of Fiduciary Duty Where Defendant Resorted to Extra-Contractual Self-Help

Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Post-trial Memorandum Opinion) Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Letter...more

8/17/2021 / Board of Directors , Breach of Duty , Bylaws , Fiduciary Duty , Shareholders

Chancery Rejects Plaintiff’s Attempt to Recharacterize Pre-Suit Demands

The Raj & Sonal Abhyanker Fam. Tr. v. Blake, C.A. No. 2020-0521-KSJM (June 17, 2021) - Court of Chancery Rule 23.1 presents a would-be derivative plaintiff with two exclusive options: make a pre-suit demand on the board to...more

7/13/2021 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Delaware Court of Chancery Applies Direct/Derivative Distinction In Voting Context

Clifford Paper, Inc. v. WPP Investors, LLC, 2021 WL 2211694 (Del. Ch. Jun. 1, 2021) - The disenfranchisement of an investor with voting or consent rights often is considered to be a direct harm, thus permitting the...more

6/23/2021 / Breach of Contract , Breach of Duty , Duty of Loyalty , Fiduciary Duty , Investors

For the First Time, the Court of Chancery Recognizes the Viability of Reverse Veil-Piercing in Rare Circumstances

In a case of first impression, Vice Chancellor Joseph R. Slights III in Manichaean Capital, LLC v. Excela Technologies, Inc., C.A. No. 2020-0601-JRS (Del. Ch. May 25, 2021) refused to dismiss a claim to use reverse...more

6/9/2021 / Corporate Veil , Limited Liability Company (LLC) , Mergers , Piercing the Corporate Veil , Shareholders

Chancery Rules Corporation Cannot Offset Wife’s Recoupment Against Husband’s Advancement Simply Because the Pair Signed a Single...

Perryman v. Stimwave Tech. Inc., C.A. 2020-0079-SG (Del. Ch. Apr. 15, 2021) - Section 145 of DGCL permits corporations to grant advancement rights to persons who may be entitled to indemnification so that they may fund...more

5/3/2021 / Advancement , Delaware General Corporation Law , Indemnification , Recoupment

Chancery Enjoins Prosecution of Fraudulent Inducement and Declaratory Judgment Claims Based on Exclusive Delaware Forum Provision

SPay, Inc. v. Stack Media Inc. k/n/a JLC2011, Inc., et al., CA No. 2020-0540-JRS (Del. Ch. Mar. 23, 2021) - To obtain a preliminary anti-suit injunction, a movant must show (1) a reasonable likelihood of success on the...more

4/20/2021 / Asset Purchase Agreements , Breach of Contract , Fiduciary Duty , Forum Selection , Fraudulent Inducement , Restrictive Covenants

Chancery Appoints Amicus Curaie to Provide Independent Guidance Regarding Unopposed Petition to Revive Defunct Corporation for Use...

In re Forum Mobile, Inc., C.A. 2020-0346-JTL (Del. Ch. Mar. 18, 2021) - The Court of Chancery has the inherent authority to appoint an amicus curaie if the Court believes it would benefit from a more fulsome presentation...more

4/15/2021 / Board of Directors , Custodians , Delaware General Corporation Law , Securities and Exchange Commission (SEC)

Chancery Holds Prior Rulings in Appraisal and Securities Litigation Do Not Bar New Columbia Pipeline Fiduciary Duty Action

In re Columbia Pipeline Group, Inc. Merger Litigation, C.A. No. 2018-0484-JTL (Del. Ch. Mar. 1, 2021) Certain judicial doctrines, including collateral estoppel and stare decisis, promote efficiency and finality by barring...more

4/6/2021 / Appraisal , Breach of Duty , Collateral Estoppel , Fiduciary Duty , Mergers

Chancery Allows McDonald’s to Pursue Claims Against Ex-CEO, Finding Separation Agreement’s Integration Clause Does Not Bar Them

McDonald’s Corp. v. Easterbrook, C.A. 2020-0658-JRS (Del. Ch. Feb. 2, 2021) - Delaware has a strong public policy against fraud. Consequently, parties who seek to bar extra-contractual fraud claims must expressly provide...more

3/3/2021 / Breach of Duty , Fiduciary Duty , Fraud , Separation Agreement

Delaware Supreme Court Concludes Out-of-Pocket Damages Are the Default Remedy for Fraudulent Misrepresentation Absent an...

LCT Capital, LLC v. NGL Energy Partners, LLP, App. Nos. 565,2019 & 568,2019 (Del. Jan. 28, 2021) - Delaware law recognizes both benefit-of-the-bargain damages and out-of-pocket damages as remedies for fraudulent...more

2/25/2021 / Breach of Contract , Damages , Fraud , Misrepresentation , Motion for Judgment

Chancery Dismisses Stockholder’s Claim that Directors Provided Materially-Deficient Notice of their Intent to Use Equity Bonus...

Pascal v. Czerwinski, C.A. No. 2020-0320-SG (Del. Ch. Dec. 16, 2020) - This decision concerned a motion to dismiss a stockholder’s direct claim that Director-Defendants breached their duties by providing a...more

2/9/2021 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Plaintiff’s Failure to Plead Demand Futility Leads to Dismissal of Caremark Claims Against MoneyGram Directors

Richardson v. Clark, C.A. No. 2019-1015-SG (Del. Ch. Dec. 31, 2020) - Under Court of Chancery Rule 23.1, a derivative plaintiff’s must make a demand on the corporation’s board of directors unless the plaintiff can plead...more

2/9/2021 / Breach of Duty , Caremark claim , Demand Futility , Dismissals , Fiduciary Duty

Chancery Modifies Confidentiality Order to Permit Assertion of Plenary Claims in Appraisal Action

Harris v. Harris FRC Corp., C.A. No. 2019-0736-JTL (Del. Ch. Jan. 7, 2021) - Under Rule 5.1, the Court of Chancery may enter a confidentiality order upon a showing of good cause that such an order is necessary to protect...more

2/9/2021 / Appraisal , Books & Records , Breach of Duty , Confidentiality Agreements , Fiduciary Duty , Section 220 Request

Chancery Excuses Demand Where General Partner and its Controller Faced Substantial Likelihood of Liability

Lipman v. GBP Capital Holdings, LLC, C.A. No. 2020-0054-SG (Del. Ch. Nov. 18, 2020) - In derivative actions, a plaintiff must either make a pre-suit demand or plead with particularity why demand should be excused. As this...more

1/25/2021 / Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Limited Partnerships

Chancery Invokes Internal Affairs Doctrine to Dismiss Dispute Over Former Delaware Corporation Brought Over Two Years After Its...

Sylebra Capital Partners Master Fund, LTD v. Perelman, et. al., C.A. No. 2019-0843-JRS (Del. Ch. Oct. 9, 2020) - Defendant Scientific Games Corporation (the “Company”) is a gaming and lottery company that reincorporated in...more

12/2/2020 / Board of Directors , Breach of Duty , Bylaws , Fiduciary Duty , Internal Affairs Doctrine , Motion to Dismiss

Superior Court Rejects Insurers’ Motions to Dismiss Coverage Dispute Based upon Ripeness and Lack of Personal Jurisdiction

Energy Transfer Equity, L.P. v. Twin City Fire Insurance Co., et al., C.A. No. N19C-11-009 EMD CCLD (Del. Super. Ct. Sept. 28, 2020) - Plaintiffs-Insureds sought declaratory relief and damages for Defendants-Insurers...more

11/25/2020 / D&O Insurance , Insurance Industry , Insurance Litigation , Motion to Dismiss , Personal Jurisdiction

Superior Court Dismisses Successor-by-Merger’s Claims Where Underlying Contract Contained Anti-Assignment Clause

MTA Royalty Corp. v. Compania Minera Pangea, S.A. DE C.V., C.A. No. N19C-11-228 AML CCLD (Del. Super. Sept. 16, 2020) - Plaintiff’s predecessor-in-interest conveyed mineral rights to Defendant. Under the agreement,...more

11/23/2020 / Anti-Assignment Clauses , Breach of Contract , Buyers , Mergers , Sellers

Chancery Dismisses Claim for Breach of Fiduciary Duty Where Parties’ Commercial Relationship Was One of Ordinary Care

Nieves v. Insight Building Co., LLC, C.A. No. 2019-0464-SG (Del. Ch. Aug. 4, 2020) - The Court of Chancery used an unlikely vehicle — a dispute over stormwater drainage — to further explain the limits of common law...more

10/1/2020 / Breach of Duty , Building Permits , Construction Industry , Fiduciary Duty

Chancery Rejects Bid to Jettison USACafes and its Holding That, Absent Agreement to the Contrary, the Controllers of a Corporate...

Fannin v. UMTH Land Development, L.P. (In re: United Development Funding III, L.P.), C.A. No. 12541-VCF (Del. Ch. Jul. 31, 2020). The Court of Chancery has concluded that in certain situations, equity will, by default,...more

9/8/2020 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Limited Partnerships

Delaware Supreme Court Holds That Limited Partnership Agreement That Includes Certain Books and Records Language From Section...

Murfrey v. WHC Ventures, LLC, App. No. 294, 2019 (Del. Supr. Jul. 13, 2020) - Drafters of alternative entity agreements frequently cite to, or quote, statutory language to describe the parties’ obligations. But, the...more

9/3/2020 / Books & Records , DE Supreme Court , Delaware General Corporation Law , Limited Partnership Agreements , Limited Partnerships , Section 220 Request

Court Finds LLC Manager Consent Statute Authorizes Personal Jurisdiction for Tort Claims Related to the Company, Not Just Alleged...

CLP Toxicology, Inc. v. Casla Bio Holdings LLC, C.A. 2018-0783-PRW (Del. Ch. Jun. 29, 2020) & NC18C-10-332 PRW CCLD (Del. Super. Jun. 29, 2020) - In both the corporation and LLC contexts, Delaware law employs consent...more

8/5/2020 / Breach of Duty , Corporate Officers , Fiduciary Duty , Limited Liability Company (LLC) , Personal Jurisdiction

Chancery Dismisses Challenge to Top Executives’ Stock Awards in Disney-Fox Merger, Finds Plaintiff Lacks Standing to Pursue...

Brokerage Jamie Goldenberg Komen Rev TRU U/A 06/10/08 Jamie L Komen Trustee for the Benefit of Jamie Goldenberg Komen v. Breyer, C.A. No. 2018-0773-AGB (Del. Ch. June 26, 2020) - Following a merger that alters a...more

8/4/2020 / Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders , Standing

Even Though Evidence Supports Plaintiffs’ Fraudulent Inducement Claim, Chancery Denies Relief Where Plaintiff Never Gave Defendant...

HOMF II Investment Corp. v. Altenberg, C.A. No. 2017-0293-JTL (Del. Ch. May 19, 2020) - Due process requires that a plaintiff provide the defendant with fair notice of the plaintiff’s claims. As this recent post-trial...more

6/30/2020 / Breach of Contract , Breach of Duty , Fiduciary Duty , Fraudulent Inducement

Superior Court Stays First-Filed Declaratory Judgment Action in Nokia Technology Dispute

Nokia Solutions v. Collison Comm., Inc., C.A. No. N19C-10-262 AML CCLD (Del. Super. Apr. 30, 2020) - Delaware law recognizes several doctrines intended to respect principles of comity and the efficient administration of...more

6/3/2020 / Breach of Contract , Declaratory Judgments , Jurisdiction , Stays

In a Books and Records Action, Court Critiques Defendant’s Motion to Dismiss, and Declines to Order Inspection of Documents Not...

Paraflon Investments, Ltd. v. Linkable Networks, Inc., C.A. No. 2017-0611-JRS (Del. Ch. Apr. 3, 2020). Sometimes it bears repeating that Section 220 actions are intended to be summary proceedings to evaluate a...more

5/14/2020 / Books & Records , Motion to Dismiss , Section 220 Request , Shareholder Litigation , Shareholders

Eric Hacker

Morris James LLP

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