Justia Civil Procedure Opinion Summaries

Articles Posted in Delaware Supreme Court
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Windsor I, LLC appealed a superior court's decision to grant defendants' CWCapital Asset Management LLC (“CWCAM”) and U.S. Bank National Association (“U.S. Bank”) motion to dismiss. Windsor owned a 48,000 square foot commercial property and building encumbered by debt eventually held by U.S. Bank. In 2015, after learning that the Property’s sole tenant intended to vacate, Windsor sought special servicing to refinance the debt. After nearly two years of negotiation and litigation, CWCAM, the special servicer, offered to sell the loan to Windsor in a proposed transaction for $5,288,000, subject to credit committee approval. The credit committee, however, rejected the transaction, and Defendants filed a foreclosure action against Windsor in 2017. Defendants thereafter held an online auction to sell the loan. A Windsor representative participated in the auction. After the auction, Defendants sold the loan to a third party, WM Capital Partners 66 LLC (“WM Capital”), and Windsor ultimately paid $7.4 million to WM Capital in full satisfaction of the loan. In its action seeking relief based upon quasi-contractual theories of promissory estoppel and unjust enrichment, Windsor alleged that but for the credit committee’s arbitrary rejection of the proposed transaction, Windsor would have purchased the note and loan nearly a year earlier for over $2,112,000 less than it paid to WM Capital. The Superior Court ultimately held that Windsor failed to state claims for promissory estoppel and unjust enrichment, and that the claims were barred because Windsor’s representative had agreed to a general release as part of an auction bidding process. Finding no reversible error, the Delaware Supreme Court affirmed dismissal. View "Windsor I, LLC v. CWCapital Asset Mgmt, LLC" on Justia Law

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A superior court determined State Farm Mutual Auto Insurance Company and State Farm Fire and Casualty Company’s (collectively, “State Farm”) payment practices with Spine Care Delaware, LLC (“SCD”) for medical fees incurred by its Personal Injury Protection (“PIP”) insureds in connection with covered multi-injection spine procedures contravened 21 Del. C. 2118(a)(2). When State Farm received SCD’s charges for a multi-injection procedure performed on one of its PIP insureds, it unilaterally applied a Multiple Payment Reduction (“MPR”) to the charges for injections after the first injection in a manner consistent with Medicare guidelines, paying SCD less than what it charged. SCD sought a declaration that State Farm's application of its MPRs was inconsistent with section 2118(a)(2)’s requirement of reasonable compensation for covered medical expenses, and sought a declaration that State Farm had to pay SCD any reasonable amount charged for PIP-related medical expenses, without applying MPRs. Both parties then moved for summary judgment. The superior court held that State Farm failed to show that the MPR reductions correlated to reasonable charges for the multiple-injection treatments, and thus contravened section 2118(a)(2). On appeal, State Farm contended the superior court incorrectly placed the burden of proof on State Farm to demonstrate that its application of MPRs was reasonable, and that SCD failed to meet its burden of demonstrating that State Farm’s application of MPRs was a failure to pay reasonable and necessary expenses under the statute. Alternatively, State Farm argued that even if it had the burden of proof, it satisfied that burden. The Delaware Supreme Court agreed with State Farm's first premise, that the superior court erred in assigning State Farm the burden of proof. Judgment was reversed and the matter remanded for further proceedings. View "State Farm v. Spine Care Delaware" on Justia Law

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Mother and Father appealed a Family Court order terminating their parental rights to Giselle, who was four months old when the Family Court first ordered her removed from the parents’ care. The court found Giselle was at risk of chronic and life threatening abuse based on the previous unexplained serious injuries to her older sibling. The Family Court also found Mother and Father failed to plan for Giselle’s physical needs and her mental and emotional health and development. Mother and Father challenged the sufficiency of the evidence supporting the termination of parental rights and raised a number of constitutional arguments on appeal. Finding the arguments lacked merit, the Delaware Supreme Court affirmed the Family Court’s judgment. View "Sierra v. DSCYF" on Justia Law

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Since 2010, appellant Mark Spanakos has tried to gain control over and revive Hawk Systems, Inc., a void Delaware corporation, by filing a series of direct and derivative actions in Florida against former Hawk Systems insiders and taking several steps outside of court to establish himself as the Company’s majority stockholder and sole director. Spanakos was successful in his direct Florida litigation, having won a Partial Final Judgment in one action and favorable Summary Judgment rulings in another. Spanakos’s derivative claims in the third Florida action, however, were stayed to allow Spanakos to clarify his standing to pursue those claims. Accordingly, in 2018 Spanakos filed suit in the Delaware Court of Chancery seeking: (1) a declaration that he controlled a majority of the voting shares of Hawk Systems and that he was the validly elected, sole director and officer of Hawk Systems; or (2) in the alternative, an order compelling the company to hold an annual election of directors under 8 Del. C. sections 223(a) and 211(c). Following a trial, briefing, and post-trial argument, the Court of Chancery denied both of Spanakos’s requests for relief, ruling that he had not carried his burden of proof to obtain any of the relief that he sought. On appeal, Spanakos argues that the Court of Chancery abused its discretion when it declined to order a stockholders’ meeting for the election of directors despite the fact that Spanakos satisfied the elements of Section 211. Having reviewed the record on appeal and the court’s opinion below, the Delaware Supreme Court found the Court of Chancery did not abuse its discretion when it declined to compel a stockholders’ meeting given the unique facts of this case. View "Spanakos v. Page, et al." on Justia Law

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Appellants Nancy and Scott Hart sued Daniel Parker alleging tort damages from an automobile accident caused by Parker. Before the Harts filed their complaint, Parker passed away. The Harts were unsure as to whether Parker was still alive when they filed their complaint and named both Parker and the Estate of Daniel Parker (the “Estate”) as defendants. Appellee, the Estate, moved to dismiss the Harts’ complaint on numerous grounds. The Superior Court granted the Appellee’s motion, holding that the complaint was time-barred by 12 Del. C. 2102(a). On appeal, the Harts challenged the Superior Court’s order dismissing their claims against the Estate and argued that the Superior Court erred as a matter of law when it held that the Harts’ claims were time-barred by Section 2102(a). The Delaware Supreme Court concurred the Harts’ claims were not time-barred by Section 2102(a). The Court therefore reversed the dismissal, and remanded this matter back to the Superior Court for further proceedings. View "Hart v. Parker" on Justia Law

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Appellants Nancy and Scott Hart brought suit alleging tort damages from an automobile accident caused by Daniel Parker. Before the Harts filed their complaint, Daniel Parker passed away. The Harts were unsure as to whether Parker was still alive when they filed their complaint and named both Parker and the Estate of Daniel Parker (the “Estate”) as defendants. The Appellee-Estate moved to dismiss the Harts’ complaint on numerous grounds. The Superior Court granted the Appellee’s motion, holding that the complaint was time-barred by 12 Del. C. 2102(a). On appeal, the Harts challenged the Superior Court’s order dismissing their claims against the Estate and argued that the Superior Court erred as a matter of law when it held that the Harts’ claims were time-barred by Section 2102(a). The Delaware Supreme Court agreed that the Harts’ claims were not time-barred by Section 2102(a), reversed the dismissal, and remanded to the Superior Court for further proceedings. View "Hart v. Parker" on Justia Law

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Appellant, Overstock.com, Inc. (Overstock) appealed a superior court judgment awarding Appellees/Plaintiff-Relator William French and the State of Delaware (Plaintiffs), $22,000 in civil penalties and $7,266,412.94 in treble damages for violations of the Delaware False Claims and Reporting Act (the DFCRA or the Act). Plaintiffs alleged Overstock engaged in what they described as a scam to evade its obligation to escheat balances owed on abandoned gift cards to the Delaware State Escheator. It did so, they claimed, by making it falsely appear that its gift cards were held by an Ohio company, not Overstock. It was undisputed that Overstock did not file escheat reports or pay the money value of abandoned gift cards to the Delaware Escheator during the years in question. The case was tried before a jury on a theory that Overstock violated the Act between 2010 to 2013. Overstock raised several claims on appeal, but the Delaware Supreme Court addressed only one. Overstock contended the superior court misinterpreted the Act and erred by instructing the jury that the knowing failure to file escheat reports when required to do so was no different than actively making a false statement. Overstock contended that the failure to file such reports does not satisfy the Act’s requirement that a false record or statement be made or used to avoid, conceal or decrease an obligation to pay money to the Government. Furthermore, Overstock contended it did not make or use any false record or statement in connection with gift cards that violated the Act. The Supreme Court agreed that the evidence failed to establish the making or use of a false record or statement in violation of the Act. Accordingly, the superior court’s judgment was reversed and the matter remanded for further proceedings. View "Overstock.com, Inc. v. State" on Justia Law

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Hunt Strategic Utility Investment, L.L.C. (“Hunt”) owned a one-percent stake in Texas Transmission Holdings Corporation (“TTHC”), a utility holding company. The remaining ninety-nine percent was split equally between the Borealis entities (Borealis Power Holdings, Inc. and BPC Health Corporation, together, “Borealis”) and Cheyne Walk Investment PTE LTD (“Cheyne Walk”); neither Borealis nor Cheyne Walk owned a majority stake in TTHC, each owned 49.5%. TTHC wholly owned Texas Transmission Finco LLC, which wholly owned Texas Transmission Investment LLC (“TTI”). TTI in turn owned 19.75% of Oncor Electric Delivery Company LLC (“Oncor”). The remaining 80.25% of Oncor is held by Sempra Texas Holdings Corp. (“STH) and Sempra Texas Intermediate Holding Company, LLC (“STIH” and, together with STH, “Sempra”). This dispute involved a purported conflict between two separate contracts binding two discrete sets of parties who owned Oncor. Hunt’s sale of its one-percent stake is subject to the TTHC Shareholder Agreement (the “TTHC SA”), which gives Borealis and Cheyne Walk a right of first offer in the event that Hunt wishes to sell (the “ROFO”). But Sempra argued the sale was also subject to a separate contract - the Oncor Investor Rights Agreement (the “Oncor IRA”) - which provided Sempra with a right of first refusal (the “ROFR”) in the event Oncor LLC units were transferred. The Court of Chancery decided in Sempra’s favor, holding that Hunt’s sale of its 1% stake in TTHC was also a “transfer” of Oncor LLC units, as defined in the Oncor IRA. The court thus held Hunt’s proposed sale triggered Sempra’s ROFR, which preempted Borealis’s ROFO because the source of the ROFO was the TTHC SA, which itself stated that enforcement of the TTHC SA could not breach the Oncor IRA. After a de novo review of the language of both the TTHC SA and the Oncor IRA, the Delaware Supreme Court concluded the Oncor IRA, which, by its terms, restricted transfers by Oncor’s Minority Member (TTI) and not by Hunt, did not apply to Hunt’s sale of its interest in TTHC. The Court therefore reversed the judgment of the Court of Chancery. View "Borealis Power Holdings Inc. v. Hunt Strategic Utility Invesment" on Justia Law

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The issue raised on appeal to the Delaware Supreme Court centered on the validity of a provision in several Delaware corporations’ charters requiring actions arising under the federal Securities Act of 1933 (the “Securities Act” or “1933 Act”) to be filed in a federal court. Blue Apron Holdings, Inc., Roku, Inc., and Stitch Fix, Inc. were all Delaware corporations that launched initial public offerings in 2017. Before filing their registration statements with the United States Securities and Exchange Commission (the “SEC”), each company adopted a federal-forum provision. Appellee Matthew Sciabacucchi bought shares of each company in its initial public offering or a short time later. He then sought a declaratory judgment in the Court of Chancery that the FFPs were invalid under Delaware law. The Court of Chancery held that the FFPs were indeed invalid because the “constitutive documents of a Delaware corporation cannot bind a plaintiff to a particular forum when the claim does not involve rights or relationships that were established by or under Delaware’s corporate law.” The Supreme Court disagreed and reversed, finding that such a provision could survive a facial challenge under Delaware law. View "Salzberg v. Sciabacucchi" on Justia Law

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In this appeal, the issue presented for the Delaware Supreme Court's review was whether the Superior Court abused its discretion when it accepted the Special Master’s report denying the plaintiffs a second extension to move the trial date. To warrant the extension, the plaintiffs had to show good cause. According to the court, the plaintiffs failed to show good cause because they were not diligent in meeting Texas law requirements for asbestos exposure claims, the time pressures faced by counsel were foreseeable, counsel should not have missed deadlines, and, under the circumstances, refusing to grant another trial date extension was not unfair. On appeal, the plaintiffs tried to switch to a new standard to evaluate the Superior Court’s decision. The Delaware Supreme Court, however, declined to do so. "The Superior Court applied the law correctly and based its findings on the record and reason. There was no abuse of discretion, and we affirm." View "In RE: Asbestos Litigation" on Justia Law