Articles Posted in Delaware Court of Chancery

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Organovo Holdings, Inc. (the Company) filed suit against Georgie Dimitrov, asserting claims for, inter alia, libel, negligence, and tortious interference with prospective economic advantage. The complaint also sought an injunction. The Court of Chancery ultimately held that Dimitrov had defaulted. Before this court had entered a final order, Dimitrov entered a limited appearance and moved to vacate the default judgment, arguing that the court lacked subject matter jurisdiction over the dispute. The Court of Chancery granted the motion to vacate the default judgment, holding that the court lacked subject matter jurisdiction over the complaint because none of the complaint’s claims were equitable claims, and none of the equitable remedies that the Company cited supported the existence of jurisdiction in this court. View "Organovo Holdings, Inc. v. Dimitrov" on Justia Law

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This appeal concerned the 2015 annual meeting of stockholders held by Preferred Communications Systems, Inc. (PCSI). In advance of the meeting, five members of the Preferred Investors Association (the Association) signed a letter distributed to PCSI’s investors that stated their opposing to the reelection of the incumbent members of PCSI’s the board of directors. Three of the incumbent directors lost their seats. These former directors brought suit against the Association and the members who signed the letter, alleging defamation. Defendants moved to dismiss the claim for failure to state a claim. The Court of Chancery granted the motion as to a subset of statements made in the letter, holding (1) Delaware’s anti-SLAPP statute does not apply; (2) Plaintiffs are limited-purpose public figures; and (3) it is reasonably conceivable that a subset of the letter’s statements were defamatory and made with actual malice. View "Agar v. Judy" 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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The underlying action in this case took place in a California court and resulted in a jury award of compensatory damages of $22.3 million in favor of Sierra Railroad Company and against Patriot Rail Company LLC. The jury also awarded punitive damages and exemplary damages in favor of Sierra. Sierra moved to amend the California judgment to add Gary Marino, the former Chairman, President and CEO of Patriot Rail, as a judgment debtor. Marino subsequently commenced this action seeking advancements of attorneys’ fees and expenses for the claims asserted against him in the post-judgment motion. The Court of Chancery granted summary judgment in favor of Marino, holding that Marino was entitled to some, but not all, of the fees and expenses that he has and will incur defending against the post-judgment motion. View "Marino v. Patriot Rail Co. LLC" on Justia Law

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Augustus Evans, who was incarcerated, filed two actions that he sought to bring in Chancery against Bayer Corp. and Johnson & Johnson Co. alleging that he had been injured by pharmaceutical products manufactured and sold by Defendants. Evans sought to proceed in forma pauperis. The Court of Chancery denied the motions to proceed in forma pauperis, holding that Evans could not establish jurisdiction in the Court because Evans’ claims neither sought equitable relief nor involved equitable subject matter and because the statutory bases recited by Evans did not support equitable jurisdiction, and therefore, permitting Evans to proceed in forma pauperis in the Court would be futile. View "Evans v. Bayer Corp." on Justia Law

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Xcell Energy and Coal Company, LLC (Xcell) defaulted on its loan obligations to a creditor. Through a court-appointed receiver, Xcell alleged that its past manager and member were liable for their mismanagement and misconduct that allegedly caused the defaults. Xcell asserted claims for breach of fiduciary duty and waste against Energy Investment Group (EIG) and Polo Investments, LLC (Polo) and for aiding and abetting, tortious interference with a contract, and waste against Edmod DiClemente (together with EIG and Polo, the Moving Defendants). The Moving Defendants filed a motion to dismiss for failure to state a claim. The Court of Chancery granted the Moving Defendants’ motion to dismiss for failure to allege the requisite elements to state a claim against the Moving Defendants. View "Xcell Energy & Coal Co., LLC v. Energy Inv. Group, LLC" on Justia Law

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The party to an exclusive marketing, license, and distribution agreement (licensee) brought contract and tort claims in California against the other parties to that agreement and their affiliated companies (licensors). The defendants in that action, including the licensors, were the plaintiffs in this action. Plaintiff sought a declaratory judgment that the agreement was properly terminated and injunctive relief relating to the agreement's confidentiality and termination provisions. Defendant asserted counterclaims for breach of contract, among other claims. The Court of Chancery awarded the licensee damages against the licensors, their parent, and a sister company, holding (1) those plaintiffs who were parties to the agreement breached the non-compete provision of that agreement or the implied covenant of good faith and fair dealing, and those plaintiffs and a sister company were liable in tort for tortious interference with contract; (2) the additional named plaintiffs were not liable in contract or tort; (3) the agreement was properly terminated, and Defendant was required to comply with the agreement's termination and confidentiality provisions; and (4) both parties' requests for attorneys' fees were denied. View "eCommerce Indus., Inc. v. MWA Intelligence, Inc." on Justia Law

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Plaintiffs bought a townhouse condominium unit from Defendant. After the sale, repairs of leaks in the other condominium units caused by poor construction required the condominium board to collect special assessments in the amount of $65,000 from each unit holder, including Plaintiffs. Recoupment from the builder offset the sum, but Plaintiffs remained out-of-pocket over $40,000. Plaintiffs sued Defendant, alleging fraud and equitable fraud due to Defendant's allegedly insufficient disclosures made to Plaintiffs before the sale. The Court of Chancery entered judgment in favor of Defendant, holding (1) Plaintiffs failed to prove Defendant committed common-law fraud because they failed to show Defendant misrepresented or omitted some material fact before the sale of the condominium; and (2) rescission was not warranted under the facts of this case, and therefore, equitable fraud was inappropriate. View "Grzybowski v. Tracy" on Justia Law

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Respondent was a former corporation that for several decade was involved in the business of plastering and spray insulating. Due to the nature of its business, Respondent had been subject to hundreds of asbestos-related tort suits. The corporation dissolved in 1999. Petitioners subsequently filed an action seeking the appointment of a receiver for Respondent based on the perceived existence of undistributed assets in the form of liability insurance coverage. After examining Delaware's corporate scheme of dissolution, the Court of Chancery granted Respondent's motion for summary judgment, holding (1) Respondent was not amenable to asbestos-related tort suits commenced more than ten years after its dissolution; and (2) consequently, under the circumstances, the insurance contracts were valueless, and therefore, the appointment of a receiver was unnecessary. View "In re Krafft-Murphy Co., Inc." on Justia Law

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This case began as a control dispute in which the managing member of Oculus Capital Group, LLC sought to block the non-managing member from attempting to take over the managerial role. After a stipulated order and assorted rulings, the control dispute was largely resolved. What remained were the non-managing member's counterclaims, which sought damages from the managing member and its human controller based on the actions they took that caused the relationship between the parties to deteriorate and led to the control dispute. The plaintiffs moved to dismiss the counterclaims. The Court of Chancery (1) granted the motion to dismiss the breach of contract claim in part; (2) granted the motion to dismiss the aiding and abetting the breaches of the operating agreement claim in part; (3) denied the motion on the breach of default of fiduciary duty claim as to one of plaintiffs and stayed the count as to the other plaintiff pending arbitration; (4) denied the motion to dismiss the gross negligence claim as to one of the plaintiffs and granted the motion as to the other plaintiff; and (5) granted the motion to dismiss the declaratory judgment. View "Feeley v. NHAOCG, LLC" on Justia Law