Justia Civil Procedure Opinion Summaries

Plaintiffs-appellants were two of three founding owners, investors, and directors of Energy Efficient Equity, Inc. (“E3” or the “Corporation”), a Delaware corporation operating in the property-assessed, clean-energy financing industry. After a series of financing transactions with WR Capital Partners, LLC (“WR Capital”), plaintiffs filed suit against WR Capital and its representatives. Among other claims, plaintiffs alleged that defendants breached their fiduciary duties and were unjustly enriched when they negotiated and approved the financing transactions that allowed them to take control of E3 from the founders. During the litigation, plaintiffs entered into a settlement agreement and two stock repurchase agreements. Plaintiffs settled with some of the defendants in exchange for payments and the sale of the plaintiffs’ stock to E3. The Settlement Agreement contained a release, but carved out claims that the plaintiffs wanted to continue to pursue against the non-settling WR Capital and its representatives. An inconsistency between the agreements arose, however, because the Stock Repurchase Agreements transferred “all of Seller’s right, title, and interest” in E3 stock while only the Settlement Agreement contained a carve out for claims against the non-settling defendants (the “Release Carve Out”). After the partial settlement, the Court of Chancery granted defendants’ motion to dismiss, finding plaintiffs could not import the Settlement Agreement’s Release Carve Out into the Stock Repurchase Agreements; plaintiffs lost standing to pursue their direct breach of fiduciary duty claims when they sold their E3 stock; and plaintiffs’ unjust enrichment claims were duplicative of their breach of fiduciary duty claims and traveled with the sale of E3 stock. On appeal, plaintiffs argued the Court of Chancery should have found that the Stock Repurchase Agreements incorporated by reference the Settlement Agreement. If that was the case, plaintiffs claimed they could preserve their claims against the remaining defendants. In the alternative, plaintiffs fell back on the argument that their breach of fiduciary duty claims were personal and did not attach to the stock sold as part of the settlement. In addition, they argued the unjust enrichment claims were independent of the breach of fiduciary duty claims. The Delaware Supreme Court affirmed the Court of Chancery: while plaintiffs had an argument that the parties intended to treat the three agreements as a unitary transaction through incorporation by reference, the Settlement Agreement’s Release Carve Out confilcted with the complete transfer of all right, title, and interest in the plaintiffs’ E3 stock under the Stock Repurchase Agreements. In the event of a conflict, the Stock Repurchase Agreements plainly stated their terms controlled. Plaintiffs’ remaining claims were also part of the rights accompanying the E3 stock sale, and the unjust enrichment claim traveled with the E3 stock when repurchased by E3. View "Urdan v. WR Capital Partners, LLC" on Justia Law

Appellants ACW Corporation (a.k.a. Arby’s, (Arby’s)) and Eastern Alliance Ins. Co., as Subrogee of Shanara Devon Waters (“Waters”), appealed the grant of summary judgment in favor of Appellees, Christopher Maxwell (“Maxwell”) and Donegal Mutual Ins. Co. (a.k.a. Donegal Ins. Group). Eastern Alliance was Arby’s’ workers’ compensation carrier. It paid Waters, an Arby’s employee, a $12,500 commuted, lump-sum workers’ compensation benefit to settle her workers’ compensation claims for injuries she received in a work-related motor vehicle accident caused by Maxwell. Arby’s and Eastern Alliance then brought this suit against Maxwell and his auto insurer, Donegal, under 19 Del. C. 2363, claiming that they were entitled to recover the $12,500 lump-sum payment from them. Maxwell and Donegal denied liability, though they acknowledged that under the Workers’ Compensation Act Arby’s and Eastern Alliance could assert a claim against Maxwell for damages that Waters would be entitled to recover against Maxwell in an action in tort. They argued, however, that Maxwell was not liable for the lump-sum payment because it was a settlement of potential or future workers’ compensation claims and did not include any damages that Waters would have been entitled to recover against Maxwell in an action in tort. Arby’s and Eastern Alliance argued that 19 Del. C. 2363(e) allowed them to recover from Maxwell “any amounts paid or payable [to Waters] under the Workers’ Compensation Act” in connection with the Maxwell accident, and that the lump-sum benefit was an amount paid to Waters under the Act. The Superior Court agreed with Maxwell, and after finding that Arby’s and Eastern Alliance failed to offer evidence that any of the $12,500 lump-sum benefit was for damages which Waters would be able to recover in a tort action against Maxwell, granted summary judgment in Maxwell’s and Donegal’s favor. Finding no reversible error in that judgment, the Delaware Supreme Court affirmed. View "ACW Corporation v. Maxwell" on Justia Law

In 2017, Sibanye Gold Ltd. (“Sibanye”) acquired Stillwater Mining Co. (“Stillwater”) through a reverse triangular merger. Under the terms of the merger agreement, each Stillwater share at closing was converted into the right to receive $18 of merger consideration. Between the signing and the closing of the merger, the commodity price for palladium (which Stillwater mined) increased by nine percent, improving Stillwater’s value. Certain former Stillwater stockholders dissented to the merger, perfected their statutory appraisal rights, and pursued this litigation. During the appraisal trial, petitioners argued the flawed deal process made the deal price an unreliable indicator of fair value and that increased commodity prices raised Stillwater’s fair value substantially between the signing and closing of the merger. In 2019, the Delaware Court of Chancery issued an opinion, holding that the $18 per share deal price was the most persuasive indicator of Stillwater’s fair value at the time of the merger. The court did not award an upward adjustment for the increased commodity prices. Petitioners appealed the Court of Chancery’s decision, arguing that the court abused its discretion when it ignored the flawed sale process and petitioners’ argument for an upward adjustment to the merger consideration. After review of the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court found no reversible error and affirmed the Court of Chancery. View "Brigade Leveraged Capital Structures Fund Ltd v. Stillwater Mining Co." on Justia Law

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

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

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

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

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

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

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