Justia Civil Procedure Opinion Summaries

The two equal stockholders of UIP Companies, Inc. were deadlocked and could not elect new directors. One of the stockholders, Marion Coster, filed suit in the Court of Chancery and requested appointment of a custodian for UIP. In response, the three-person UIP board of directors — composed of the other equal stockholder and board chairman, Steven Schwat, and the two other directors aligned with him— voted to issue a one-third interest in UIP stock to their fellow director, Peter Bonnell, who was also a friend of Schwat and long-time UIP employee (the “Stock Sale”). Coster filed a second action in the Court of Chancery, claiming that the board breached its fiduciary duties by approving the Stock Sale. She asked the court to cancel the Stock Sale. After consolidating the two actions, the Court of Chancery found what was apparent given the timing of the Stock Sale: the conflicted UIP board issued stock to Bonnell to dilute Coster’s UIP interest below 50%, break the stockholder deadlock for electing directors, and end the Custodian Action. Ultimately, however, the court decided not to cancel the Stock Sale. The Delaware Supreme Court reversed the Court of Chancery on the conclusive effect of its entire fairness review and remanded for the court to consider the board’s motivations and purpose for the Stock Sale. "If the board approved the Stock Sale for inequitable reasons, the Court of Chancery should have cancelled the Stock Sale. And if the board, acting in good faith, approved the Stock Sale for the 'primary purpose of thwarting' Coster’s vote to elect directors or reduce her leverage as an equal stockholder, it must 'demonstrat[e] a compelling justification for such action' to withstand judicial scrutiny." View "Coster v. UIP Companies, Inc." on Justia Law

Appellant, Concerned Citizens of the Estates of Fairway Village, was an unincorporated association composed of people who own property in Fairway Village (the “Community”), a planned residential community located in Ocean View, Delaware. Appellants Julius and Peggy Solomon, Edward Leary, Kenneth and Denise Smith, and Terry and Carmela Thornes (collectively, the “Homeowners”) owned properties in the Community and were members of Concerned Citizens of the Estates of Fairway Village. Appellee Fairway Cap, LLC was the Community's developer. Demand for vacant townhomes in the Community was weaker than the developers expected. In the winter of 2016, Fairway Cap, LLC hired a real estate consultant who recommended converting unsold townhome lots into a rental community. Fairway Cap, LLC accepted the advice, secured funding, and began working on the rental properties. Appellee Fairway Village Construction, Inc. was an entity involved in the construction. The Homeowners discovered the plan after seeing an advertisement for “The Reserve at Fairway Village,” a forthcoming rental community. The Homeowners raised various objections to the rental community, including that the proposed units did not conform with existing dwellings and would lower property values. The Town of Ocean View and Fairway Cap, LLC rejected all the objections, concluding that the planned construction complied with the housing code and was allowed under the Community’s governing documents. This appeal presented two questions for the Delaware Supreme Court's review: (1) whether the Court of Chancery erred by holding that the Community’s governing documents allowed the developer to build rental properties; and (2) whether the Court of Chancery erred by awarding damages for a wrongful injunction after releasing the bond posted with the court. Finding no reversible error, the Supreme Court affirmed the Court of Chancery's judgment. View "Concerned Citizens of the Estates of Fairway Village v. Fairway Cap" on Justia Law

The Delaware Department of Finance served an administrative subpoena on AT&T Inc. to produce records relating to a financial audit. AT&T refused to produce all of the requested records. The Department responded by filing a complaint in the Court of Chancery to enforce the subpoena. AT&T defended by claiming, among other things, that the subpoena exceeded the Department’s authority and was overbroad. The Court of Chancery held that, although the Department validly issued the subpoena, AT&T “met its burden to show that the scope of the subpoena is so expansive that enforcement would constitute an abuse” of the court’s process. The court noted that it had offered the Department the opportunity to supplement the record to explain why the subpoena should be enforced as written, but the Department declined the invitation. The court therefore quashed the subpoena in its entirety. The Department appealed the court’s decision. The Delaware Supreme Court affirmed the Court of Chancery’s judgment. Recognizing that the procedural and substantive aspects of administrative subpoena enforcement were issues of first impression in Delaware, the Supreme Court adopted the procedures and substance followed by the federal courts in administrative subpoena enforcement proceedings. Because the Court announced new procedural and substantive standards governing administrative subpoenas, it allowed the Department to serve a new subpoena on AT&T that complied with the guidance in the Court’s opinion. View "Delaware Dept of Finance v. AT&T Inc." on Justia Law

Appellant Wild Meadows MHC, LLC challenged the Superior Court’s dismissal of its petition for a writ of prohibition. The Wild Meadows manufactured home community (the “Community”) owned by Appellant, was located in Dover, Delaware. The Community was governed by the Manufactured Home Owners and Community Owners Act and its subsection commonly known as the Rent Justification Act (the “Act”). Appellee Intervenor/Respondent Wild Meadows Homeowners’ Association (the “HOA”) represented these homeowners. Multiple homeowners rejected Wild Meadows’ rent increase and, through the HOA, filed a petition with the Delaware Manufactured Home Relocation Authority (the “Authority”). The Authority appointed Appellee David J. Weidman, Esquire as the arbitrator under the Act. Before the scheduled arbitration, the HOA requested financial information from Wild Meadows relating to the Community’s recent revenue and costs. Wild Meadows refused to provide this information. The HOA moved to compel discovery and a motion for summary judgment with Weidman. In his initial decision, Weidman granted discovery of any financial documents that Wild Meadows intended to rely upon at arbitration, but he denied the HOA’s motion to compel the production of additional financial documents from Wild Meadows. Determining he could compel discover, Weidman ordered Wild Meadows to submit a proposed confidentiality agreement, and ordered the HOA to submit any comments on the draft. After taking both parties' comments into consideration, Weidman issued a final confidentiality agreement, rejecting many of the changes the HOA proposed. Wild Meadows refused to sign the confidentiality agreement and filed the underlying application for a writ of prohibition in the Superior Court. Wild Meadows argued to the Delaware Supreme Court that the Superior Court erroneously held that the arbitrator appointed under Delaware’s Rent Justification Act had authority to compel discovery and impose a confidentiality agreement upon parties concerning discovery material. Finding no reversible error in the Superior Court's judgment, the Supreme Court affirmed. View "Wild Meadows MHC, LLC v. Weidman" on Justia Law

A Delaware superior court affirmed decisions by the Delaware Secretary of State (the “Secretary”) and the Delaware Board of Medical Licensure and Discipline (the “Board”) to revoke Dr. Nihar Gala’s medical license and controlled substance registration (“CSR”). The court upheld the Board’s and Secretary’s decisions after finding that substantial evidence existed to support the issued discipline. On appeal, Gala argued: (1) the Board’s decision to deliberate “behind closed doors” rendered the record incomplete for judicial review; (2) the Board and the Secretary were biased; and (3) the Board’s and the Secretary’s decisions to revoke his medical license and CSR were not supported by substantial evidence. The Delaware Supreme Court found the the Board and Secretary's decisions were supported by substantial evidence and were free from legal error. Accordingly, it affirmed the superior court. View "Gala v. Bullock" on Justia Law

In 2011, Appellants Eric Monzo and Dana Spring Monzo purchased a homeowners insurance policy issued by Appellee Nationwide Property & Casualty Co. (“Nationwide”). The policy contained standard exclusions for water damage and earth movement, along with optional water backup coverage. In July 2017, a heavy thunderstorm destroyed a pedestrian bridge and retaining wall located at the Monzos’ residence. A pair of engineering reports prepared after the storm indicated that a combination of water backups from drainage systems, scouring of supporting earth embankments, heavy rain, and tree debris caused the damage. The Monzos filed a claim with Nationwide, seeking coverage under the homeowners insurance policy. Nationwide denied coverage, and the Monzos sued. The court granted summary judgment for Nationwide, holding that the policy’s earth movement and water damage exclusions applied. The Monzos appealed, arguing the Superior Court erred by granting summary judgment too early in the discovery process, misinterpreting the policy, and denying a motion for post-judgment relief. Having reviewed the briefs and record on appeal, the Delaware Supreme Court: (1) affirmed the Superior Court’s holding that Nationwide was entitled to summary judgment regarding the collapsed bridge; (2) reversed the Superior Court’s holding that Nationwide was entitled to summary judgment regarding the retaining wall; and (3) affirmed the Superior Court’s denial of the Monzos’ post-judgment motion. View "Monzo v. Nationwide Property & Casualty Insurance Co." on Justia Law

In 2014, appellant and cross-appellee LCT Capital, LLC (“LCT”) helped appellee and cross-appellants NGL Energy Partners, LP and NGL Energy Holdings LLC (collectively, “NGL”) acquire TransMontaigne, a refined petroleum products distributor. LCT played an "unusually" valuable role in the transaction. The transaction generated $500 million in value for NGL, more than double the $200 million price that NGL paid to acquire TransMontaigne. NGL’s CEO Mike Krimbill represented on several occasions that LCT would receive an unusually large investment banking fee, but the parties failed to reach an agreement on all of the material terms. After negotiations broke down completely, LCT filed suit seeking compensation for its work under several theories, including quantum meruit and common law fraud. At trial, LCT presented a unitary theory of damages that focused on the value of the services that it provided, measured by the fee that Krimbill proposed for LCT’s work. Nonetheless, the jury verdict sheet had two separate lines for damages awards, one for the quantum meruit claim and another for the fraud claim. The jury found NGL liable for both counts, awarded LCT an amount of quantum meruit damages equal to a standard investment banking fee, and awarded LCT a much larger amount of fraud damages approximately equal to the unusually large fee that Krimbill proposed. Following post-trial briefing, the superior court set aside the jury’s awards and ordered a new trial on damages. LCT and NGL both filed interlocutory appeals of the superior court’s order. On appeal, LCT argued that benefit-of-the-bargain damages were available without an enforceable contract. On cross-appeal, NGL argued the superior court erred by ordering a new trial on damages because the jury’s quantum meruit award fully compensated LCT for its harm. NGL also argued it was entitled to judgment as a matter of law on the fraud claim. Finally, NGL argued the superior court provided the jury with erroneous fraudulent misrepresentation jury instructions. After review, the Delaware Supreme Court found LCT was not entitled to benefit-of-the-bargain damages and that the Superior Court did not abuse its discretion by ordering a new trial on quantum meruit damages. Nonetheless, the Supreme Court also held the superior court abused its discretion by ordering a new trial on fraud damages because LCT did not assert any independent damages to support its fraud claim. Accordingly, the Court affirmed in part and reversed in part the superior court’s judgment. View "LCT Capital, LLC v. NGL Energy Partners LP" on Justia Law

In 2010, Appellants Meso Scale Diagnostics, LLC and Meso Scale Technologies, LLC (collectively “Meso”) filed suit in Delaware against Appellee entities Roche Diagnostics GmbH, Roche Diagnostics Corp., Roche Holding Ltd., IGEN LS LLC, Lilli Acquisition Corp., IGEN International, Inc., and Bioveris Corp. (collectively “Roche”), all of which were affiliates or subsidiaries of the F. Hoffmann -- La Roche, Ltd. family of pharmaceutical and diagnostics companies. Meso alleged two counts of breach of contract. Roche prevailed at trial, and the Delaware Supreme Court affirmed the judgment in 2014. Then in 2019, Meso brought a new action asking the court to reopen the case, vacate the judgment entered after trial, and order a new trial. Meso alleged that the Vice Chancellor who decided its case four years earlier had an undisclosed disabling conflict, namely, that Roche’s counsel had been simultaneously representing him in an unrelated federal suit challenging the constitutionality of Delaware’s law providing for confidential business arbitration in the Court of Chancery (“Section 349”). In that federal litigation, which ended in 2014, the Chancellor and Vice Chancellors of the Court of Chancery, as the parties responsible for implementing the challenged statute, were nominal defendants. The Court of Chancery denied relief and dismissed the action. Meso appealed. Finding no reversible error, the Delaware Supreme Court affirmed dismissal. View "Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH" on Justia Law

In 2011, Dr. Natwarlal Ramani, M.D. performed a colonoscopy on William King. At a follow up visit on April 26, 2011, Dr. Ramani recommended that King return for his next colonoscopy in three to five years. King followed that advice and returned to Dr. Ramani for another colonoscopy five years later, in 2016. The March 2016 colonoscopy could not be completed because a cancerous growth had formed in King’s colon. He died a few months later. In April 2018, the Plaintiffs, Monica King Anderson, the Estate of William King, Stephanie King, Heather Guerke, and Amber Withrow, filed this wrongful death action, claiming that Dr. Ramani was negligent in advising King that he did not need a follow-up colonoscopy until as long as five years after the one done in April 2011. Given King’s medical history, they alleged, the standard of care required Dr. Ramani to advise King to return for his next colonoscopy in three years. The negligent advice, they further alleged, resulted in a delay in the diagnosis and treatment of colon cancer which ultimately led to King’s death. Defendants-appellants, Dr. Ramani, GI Associates of Delaware, P.A., and Advance Endoscopy Center, LLC, moved for summary judgment, arguing Plaintiffs' action was barred by the statute of limitations. The Superior Court found that the continuous negligent medical treatment doctrine applied to the facts of this case, and held that under that doctrine the statute did not begin to run until March 26, 2016, thus making Plaintiffs' suit timely filed. The Delaware Supreme Court granted certiorari review of the Superior Court's ruling. After review, the Supreme Court the continuous negligent medical treatment doctrine did not apply. The Court rejected Plaintiffs' contention the Court should have adopted a limited time-of-discovery rule in cancer cases. Plaintiffs' constitutional arguments were not ripe unless and until it was determined this case was, in fact, barred by the statute of limitations. "On remand, the Defendants are free to pursue their statute of limitations defense. If they do, the Superior Court should make a factual determination as to when the date of injury occurred and apply § 6856 to that finding accordingly. If the Superior Court determines that the action is barred by [18 Del. C. section 6856], the Plaintiffs may present their constitutional arguments there." View "GI Associates of Delaware v. Anderson" on Justia Law

Plaintiff-Appellant Dean Sherman appealed a superior court's grant of summary judgment in favor of Defendant-Appellee Stephen P. Ellis, Esquire. The appeal presented two issues: (1) whether the traditional “but for” test for proximate cause applied in a “transactional” legal negligence case, or whether it is sufficient that the alleged negligence creates an increased risk of future damages; and (2) whether the evidence satisfied the summary judgment requirement that there be no genuine issue as to any material fact. As to the first issue, the Delaware Supreme Court concluded the traditional “but for” test, not a risk of future damages test, was the appropriate test for determining proximate cause. As to the second issue, the Court concluded the evidence, viewed in the light most favorable to Sherman, raised a genuine issue of material fact, and that summary judgment should have been denied. This second conclusion required that the superior court's judgment be reversed and the case remanded for further proceedings. View "Sherman v. Ellis" on Justia Law