Articles Posted in Delaware Court of Chancery

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The Court of Chancery granted Defendants’ motion to dismiss for failure to make a pre-suit demand and failure to state a claim for relief Plaintiffs’ second amended complaint asserting a claim for breach of fiduciary duty and seeking the appointment of a receiver, holding that the motion to dismiss was properly granted. Specifically, the Court held (1) Count I of the amended complaint asserting a claim for breach of fiduciary duty must be dismissed based on Plaintiff’s failure to make a pre-suit demand on some of the defendants; and (2) Count II of the amended complaint seeking the appointment of a receiver failed to state a claim for relief. View "Stritzinger v. Barba" on Justia Law

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The Court of Chancery granted Defendants’ motion to dismiss for failure to prosecute and denied Plaintiff’s cross-motion for a default judgment for failure to file an answer or opening brief, holding that because Plaintiff took no action for a period of one year and failed to give good reason for his inaction, the case must be dismissed pursuant to Rule 41(b) of the Court of Chancery Rules. Plaintiff filed this action on February 16, 2017. Defendants filed a motion to dismiss on March 31, 2017, and on April 21, 2017 Defendants sent Plaintiff an email seeking a briefing schedule. Plaintiff did not contact Defendants and did not file anything else in this action until June 29, 2018, after Defendants moved to dismiss the action. The Court of Chancery granted the motion, holding that the action must be dismissed for failure to prosecute and that Plaintiff’s motion for default judgment failed. View "Guy v. Mette" on Justia Law

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When a trial court has awarded a party expenses under the bad-faith exception to the American Rule and that party defends the trial court’s ruling successfully on appeal, the trial court lacks authority to award the expenses that the party has incurred in defending the appeal. Further, when a trial court has awarded a party expenses under the bad-faith exception to the American Rule and the litigation results in a judgment that is final for purposes of appeal, that party cannot subsequently ask the trial court for a supplemental award if it realizes that it left certain expenses out of its previous request or determines that it subsequently incurred additional amounts at the trial level. Here, Plaintiff prevailed at trial. The Court of Chancery’s post-trial decision found that Defendants raised bad-faith arguments to contest Plaintiff’s claim, thus warranting an award of expenses under the bad-faith exception to the American Rule. Defendants appealed, and the Delaware Supreme Court affirmed. Plaintiff then moved to recover additional expenses, comprising expenses incurred successfully in defending the appeal and expenses incurred at the trial level that Plaintiff had not been able to submit as part of its previous application. The Court of Chancery denied the application for the reasons set forth above. View "Marilyn Abrams Living Trust v. Pope Investments LLC" on Justia Law

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Plaintiff loaned money to GSM Nation, LLC in a series of transactions. Plaintiff later filed a complaint against GSM Nation and others, alleging, among other claims, breach of contract for failure to repay the loans. Defendants moved to dismiss the case for lack of subject matter jurisdiction, arguing that the complaint merely sought to collect a debt, and damages provided an adequate remedy at law. The Court of Chancery granted the motion to dismiss for lack of subject matter jurisdiction, holding that the court lacked subject matter jurisdiction over Plaintiff’s claims because the complaint did not assert any equitable claims, and an adequate remedy existed at law. View "Yu v. GSM Nation, LLC" on Justia Law

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Plaintiffs filed an amended stockholder derivative complaint alleging that the Qualcomm Inc. board’s knowing disregard for “red flags” resulted in violations of the Foreign Corrupt Practices Act and a U.S. Securities and Exchange Commission cease-and-desist order. Defendants filed a motion to dismiss under County of Chancery Rule 23.1 for failure to make a demand or allege that demand would be futile. The Court of Chancery granted Defendants’ motion to dismiss under Rule 23.1, holding that the complaint failed to allege demand futility as to count one for breach of fiduciary duty claim for improper oversight, count two for waste against the individual defendants, and count three for unjust enrichment against the individual defendants. View "In re Qualcomm Inc. FCPA Stockholder Derivative Litigation" on Justia Law

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Plaintiffs brought this action to obtain advancement of legal fees to which they were allegedly entitled pursuant to an LLC agreement of Empire Merchants, LLC. Plaintiffs were defendants in a separate action brought by Empire in the United State District Court of the Eastern District of New York. Empire filed a motion to dismiss this action under Court of Chancery Rule 12(b)(3) for improper venue and Court of Chancery Rule 12(b)(6) for failure to state a claim. The Court of Chancery granted the motion to dismiss, holding that Plaintiffs’ complaint must be dismissed under Rule 12(b)(3) for improper venue based on the clear and unambiguous language of the forum selection provision contained in the LLC agreement. View "Merinoff v. Empire Merchants, LLC" on Justia Law

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This letter opinion addressed Third-Party Defendants’ motions to dismiss Third-Party Plaintiffs’ amended third-party complaint. The Third-Party Defendants advanced four bases on which the amended complaint should be dismissed, including lack of personal jurisdiction, failure to state a claim, failure to comply with Court of Chancery Rule 23.1, and an unreasonable delay in bringing the amended complaint. The Court of Chancery granted the Third-Party Defendants’ motions to dismiss, holding that the Third-Party Plaintiffs’ claims were time-barred because the Third-Party Plaintiffs failed to identify a tolling doctrine or extraordinary circumstances sufficient to avoid application of laches. View "CMS Inv. Holdings, LLC v. Castle" on Justia Law

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In 2015, Plaintiff, a stockholder of Tradeworx, Inc., requested a declaratory judgment that shares issued in 2000 to WisdomTree Investments, Inc. were void because they were issued in exchange for future services, a practice that, at the time, was prohibited under certain provisions of the Delaware General Corporation Law and the Delaware Constitution. WisdomTree moved to dismiss the complaint for failure to state a claim. The Court of Chancery granted WisdomTree’s motion, holding that Plaintiff’s claim was barred under the doctrine of laches because the claim exceeded the analogous statutory limitations period by almost twelve years. View "Kraft v. Wisdomtree Invs., Inc." on Justia Law

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Plaintiffs and Defendants were members of Trinity School of the Bible, a Delaware not-for-profit corporation, and members of Trinity’s board. When disagreements arose among the Board members, Plaintiffs filed this complaint alleging a series of mismanagement claims against Defendants. Plaintiffs represented themselves in the matter. The Court of Chancery dismissed the complaint without prejudice, holding (1) Plaintiffs’ claims were derivative in nature and, therefore, belonged to Trinity; and (2) because a derivative plaintiff seeking to enforce rights on behalf of a corporation must be represented by counsel, the complaint is dismissed. View "Trinity Sch. of Bible Trustees v. Trinity Sch. of Bible Officers" on Justia Law

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Tuscan filed suit against defendant, alleging conflict with and misconduct by defendant surrounding his termination from Tuscan. Defendant asserts Tuscan’s records indicate Tuscan’s majority stockholder and director, Anne Jacobi, misappropriated and misspent Tuscan’s funds. Defendant seeks leave to file a third party complaint against Jacobi, which in turn seeks an accounting, for Jacobi to repay any misappropriated funds to Tuscan, and for Jacobi to cause Tuscan to remit to defendant his share of Tuscan’s assets, or in the alternative to appoint defendant as Tuscan’s receiver. The court denied the motion. The court concluded that, because this case is still in the pleading stage and no immediate relief is sought, and Jacobi has not alleged any prejudice from joinder other than being forced to address the claims against her, it is hard to imagine any prejudice from consolidation. The court asked the parties to provide their positions on consolidating Tuscan v. Capaldi with the claims against Jacobi in letters of no more than two pages, to be submitted along with any exceptions to the draft report. View "Tuscan Construction, Inc. v. Capaldi" on Justia Law