News & Analysis as of

Covenant of Good Faith and Fair Dealing Breach of Duty Fiduciary Duty

Winstead PC

Court Affirmed The Removal Of An Executor For Gross Mismanagement

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In Gordon v. Gordon, a couple created a revocable trust and named a friend, who provided financial advice, as successor trustee. No. 03-22-00454-CV, 2024 Tex. App. LEXIS 3611 (Tex. App.—Austin May 23, 2024, no pet. history)....more

Morris James LLP

Chancery Invokes the Implied Covenant to Invalidate Shareholder Rights Plan

Morris James LLP on

Whitestone REIT Operating Partnership L.P. v. Pillarstone Capital REIT, C.A. No. 2022-0607-LWW (Del. Ch. Jan. 25, 2024) - In Delaware, the implied covenant of good faith and fair dealing is inherent in all contracts and...more

Goodwin

Second Circuit Rules that Syndicated Loans Are Not “Securities” Under State and Federal Law

Goodwin on

On August 24, 2023, the U.S. Court of Appeals for the Second Circuit in Kirschner unanimously  held that notes evidencing syndicated loans do not plausibly qualify as “securities” covered by state and federal securities laws...more

Robson & Robson, P.C.

The Hazards of 'Weaponizing' Capital Call and Dilution Provisions

Robson & Robson, P.C. on

There are many ways that an owner of a closely-held business can use their superior financial resources to gain an advantage over their co-owners in a dispute. One common way is the use of a capital call provision to dilute...more

ArentFox Schiff

Claims Narrowed in Jack Nicklaus Non-Competition Case Over IP Sale

ArentFox Schiff on

On April 12, 2023, a Manhattan judge in the lawsuit regarding the sale of golf legend Jack Nicklaus’s intellectual property portfolio narrowed the claims against Nicklaus. In 2007, Nicklaus sold his intellectual property...more

Patton Sullivan Brodehl LLP

Conspiracy and Aiding & Abetting: Non-Manager Liability for Breach of LLC Fiduciary Duties

LLC managers owe fiduciary duties of loyalty, care, and good faith and fair dealing to both the LLC and the LLC’s members. (Corp Code §17704.09.)  One of the most common claims in LLC litigation is “breach of fiduciary duty”...more

Farrell Fritz, P.C.

Joint Venture Agreements: For Better or For Worse; In Profit or In Loss

Farrell Fritz, P.C. on

Just like a bride and groom vow to join together for better or for worse, commercial parties joining together through a joint venture must make a similar promise to share in profits and losses. ...more

Morris James LLP

Chancery Sustains Founders’ Implied Covenant Claim For “Bad Faith” Termination To Deprive Them Of Contingent Compensation,...

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Servaas v. Ford Smart Mobility LLC, C.A. No. 2020-0909-LWW (Del. Ch. Aug. 25, 2021) - Delaware common law requires that contracts be read on their own terms. Accordingly, contracts cannot be “combined” to supply missing...more

Farrell Fritz, P.C.

“Intentional” Breach of Fiduciary Duty Defeats Operating Agreement’s Exculpatory Clause

Farrell Fritz, P.C. on

Last week, Peter Mahler blogged about a recent decision holding that a minority shareholder’s claim against its majority co-owners for breach of fiduciary duty in connection with a sale of the business to a third party...more

Morris James LLP

Implied Covenant of Good Faith and Fair Dealing Saves Employee’s Claim for Improper Termination Under Company’s LLC Agreement

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Smith v. Scott, C.A. No. 2020-0263-JRS (Del. Ch. Apr. 23, 2021) - The Delaware LLC Act provides that fiduciary duties may be expanded or limited by the provisions of an LLC agreement. If the agreement is silent, then...more

Cadwalader, Wickersham & Taft LLP

Something Special, April 2021 | Issue No. 23 - Don’t Be Cruel: Appellate Division Upholds Waiver of Fiduciary Duties But Denies...

Can contracting parties waive all common law fiduciary duties? That was one of the questions presented to the New York Supreme Court, Appellate Division, First Department (the “Court”) in 111 West 57th Investment LLC, on...more

Kramer Levin Naftalis & Frankel LLP

Kirschner v. JPMorgan Chase Holds that Syndicated Bank Loans Are Not Securities

On May 22, Judge Gardephe granted a motion to dismiss in Kirschner v. JPMorgan Chase Bank, N.A., a case that, among other things, considered whether the origination and distribution of a syndicated bank loan is subject to...more

Bowditch & Dewey

Lender Liability During COVID-19

Bowditch & Dewey on

During an interview with Bloomberg TV on March 6th, Lawrence Summers, former Secretary of the U.S. Treasury, observed: “Economic time has stopped but financial time has not stopped.” An incisive summary as any of the current...more

Winstead PC

Federal District Court Holds That A Former Director Of Nonprofit Did Not Have Standing To Sue For The Board’s Breach Of Fiduciary...

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In Garcia v. Communities in Schools of Brazoria County, a director sued a nonprofit’s board for breach of fiduciary duty arising from his removal. 2019 U.S. Dist. LEXIS 97017 (S. D. Tex. June 10, 2019)....more

Morris James LLP

Chancery Finds Adequately Pled Breach of Fiduciary Duty Based on Course of Disruptive Conduct

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Klein v. Wasserman, C. A. No. 2017-0643-KSJM (Del. Ch. May 29, 2019). The typical claim for breach of fiduciary duty arises out of a single transaction or event, or several closely-related transactions or events. ...more

Allen Matkins

The Fiduciary Duties Of A Nevada LLC Manager May Be limited Indeed!

Allen Matkins on

When the Nevada legislature enacted the state's limited-liability company act, it did not prescribe the fiduciary duties, if any, owed by managers.  As I observed...more

Shook, Hardy & Bacon L.L.P.

Zillow Sues Rival Compass Alleging IP Theft And Breach Of Contract Over Its Artificial Intelligence, Machine Learning, And Cloud...

Switching from defense to offense, Zillow Group, Inc., best known for its residential real estate marketplace technology, recently filed a lawsuit in the U.S. District Court for the Western District of Washington alleging a...more

Faegre Drinker Biddle & Reath LLP

Testing the Limits of Sole Discretion – Delaware Supreme Court Holds That Implied Covenant of Good Faith and Fair Dealing Applied...

The Delaware Supreme Court recently affirmed the dismissal of a co-founder’s claim that a private equity investor and its affiliated managers breached the implied covenant of good faith and fair dealing in connection with the...more

White and Williams LLP

Delaware Court of Chancery Orders Investment Fund and Manager to Pay Over $20 Million in Damages for Demise of Tech Company

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On July 6, 2018, the Delaware Court of Chancery imposed $20.3 million in damages on Georgetown Basho Investors, LLC (Georgetown), an investment fund, its President and Managing Member, Chester Davenport, and Board member...more

Fox Rothschild LLP

Chancery Dismisses Claims That Are Duplicative Of Breach Of Contract Claim

Fox Rothschild LLP on

In the recent decision of Edinburgh Holdings, Inc. v. Education Affiliates, Inc., C.A. No. 2017-0500-JRS (Del. Ch. June 6, 2018), the Delaware Court of Chancery considered whether claims for breach of contract, breach of...more

Faegre Drinker Biddle & Reath LLP

You Get What You Bargain For – Delaware Chancery Court Ruling Reinforces Limitations of Implied Covenant of Good Faith and Fair...

A recent Delaware Chancery Court opinion highlights the flexibility of alternative entities such as limited liability companies, the court’s focus on enforcing contracts as written, and the limited circumstances in which the...more

Carlton Fields

Dismissal of Individual Claims Cap Insurer’s Winning Streak in Action Challenging FIA Product Features

Carlton Fields on

In May, the Southern District of California handed ING a win in a case involving allegations that the company targeted seniors with annuities that hid an embedded derivative structure that made them worth less than promised....more

Winstead PC

Court Holds That Board Of Trustees Of A Nonprofit Do Not Owe The Same Duties As A Trustee Of A Trust

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In Young v. Heins, Young brought third-party claims against the board of trustees of a nonprofit home owner association for breach of fiduciary duty, breach of the duty of good faith and fair dealing, breach of contract,...more

Winstead PC

Court Dismisses Fiduciary Claim Between Mortgagor and Mortgagee

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In Fornesa v. HSBC Bank USA, N.A., plaintiff sought a damage award against a defendant mortgagor for compensatory and punitive damages, based on alleged predatory lending practices. 2016 Bankr. LEXIS 2011 (S.D. Tex. May 13,...more

Orrick - Trade Secrets Group

The Gloves Are Off: Competing Biopics Battle For Hollywood Purse

Hollywood’s heavy-hitters often enter the ring over unauthorized biographies. Elizabeth Taylor famously invoked her rights of publicity and privacy in an attempt to shut down an unofficial docudrama about her life; Clint...more

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