Borsody v. Gibson, C.A. No. 2023-1205-BWD (Del. Ch. June 11, 2025)
The plaintiff was the chairman and co-founder of a medical device company. In October 2019, two other stockholders exercised their majority voting power to remove plaintiff as a director. Two new directors then joined the board. In December 2019, the plaintiff sought to exercise stock options. The company refused to recognize the exercise, even though the company’s counsel concluded that the plaintiff had legitimate claims to stock options. In 2023, the plaintiff filed a lawsuit against the new directors, alleging that they had breached their fiduciary duties by failing to allow the exercise of his stock options and by ratifying the past actions of officers, including the allegedly wrongful removal of plaintiff from the board and falsification of corporate records. The plaintiff also alleged that the new directors had aided and abetted breaches of fiduciary duties by the other officers.
The Court of Chancery concluded that the fiduciary duty claims against the new directors were largely time-barred. The plaintiff’s claims had accrued in late 2019, but he filed his suit more than three years later, beyond the analogous statute of limitations. The Court declined to apply equitable tolling, given that (1) the complaint failed to plead facts supporting the conclusory assertion that the new directors had participated in a plot to oust plaintiff, and (2) regardless of any role the new directors had in a plot, the plaintiff was on notice of his claims in 2019. The Court further reasoned that the company’s failure to recognize plaintiff’s stock options was a claim governed exclusively by contract, not one arising from fiduciary obligations. The Court also held that the plaintiff had failed to state a claim for any failure by the new directors to investigate or redress past conduct of other fiduciaries, given the 8 Del. C. § 102(b)(7) exculpation provision in the company’s charter, and the complaint’s lack of any allegations of disloyal or bad-faith conduct by the new directors. Finally, the Court dismissed the aiding and abetting claim as time-barred and for insufficiently pleading that the new directors had substantially assisted a breach of fiduciary duty that allegedly occurred prior to their board service.
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