Justia Contracts Opinion Summaries

Plaintiffs, a majority group of limited partners of Magic 2 x 52 Limited Partnership appealed their post-judgment motion to pierce the corporate veil of several corporate Defendants and to recover punitive damages. The Limited Partners' investment in the Magic partnership did not go as planned, and they initiated this lawsuit, seeking to remove Magic Corporation as the general partner of the partnership and requesting monetary damages. The Limited Partners also sought to pierce the corporate veil of the corporate Defendants to hold Kenneth Herslip personally liable for the corporate Defendants' conduct and to recover punitive damages. May 2010 amended judgment awarded Magic Partnership $146,153.99 against Magic Corporation, B K Properties, and Herslip Construction; awarded Magic Partnership $144,263.80, and prejudgment interest of $77,783.88, against Magic Corporation and Herslip Construction; and awarded Magic Partnership costs and disbursements of $46,201.47 against Magic Corporation, B K Properties, and Herslip Construction. None of the parties appealed from the May 2010 judgment. The Limited Partners' subsequent efforts to collect on the judgment were unsuccessful. In June 2010, both Herslip Construction and Magic Corporation filed for bankruptcy under chapter 7. The district court denied the Limited Partners' post-judgment motion, concluding they had not shown an appropriate basis for granting their request to pierce the corporate veil and to recover punitive damages. The court stated its prior opinion after trial had specifically denied the plaintiffs' requests to pierce the corporate veil and to recover punitive damages with a detailed analysis. The court concluded the May 2010 amended judgment was final as to all issues decided by the court after trial and refused to revisit piercing the corporate veil and punitive damages.

Plaintiffs brought their Verified Complaint asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing against defendant. J.P.Morgan also asserted a claim for attorneys' fees and costs under an option agreement that J.P. Morgan and defendant entered into, which was the contract central to the dispute. Defendant moved to dismiss pursuant to Court of Chancery Rule 12(b)(6). The court held that J.P. Morgan has failed to state a claim that defendant breached the express terms of the Option Agreement and therefore, defendant's motion to dismiss was granted as to Count I. Defendant's motion to dismiss was denied as to Count II because J.P. Morgan's allegations, taken together, were sufficient to state a claim of the implied covenant. Finally, defendant's motion to dismiss was denied as to Count III where J.P. Morgan could eventually be the prevailing party in this action.

Microsoft asserted a total of eight claims, derivatively or directly, against defendants for breach of fiduciary duty, usurpation of corporate opportunity, rescission, conspiracy, and aiding and abetting. Defendants, various companies and an individual associated with the restructuring of Vadem, a computer technology company formed under the laws of the British Virgin Islands, contended that Microsoft lacked standing to bring derivative claims on behalf of Vadem. Defendants also argued, among other things, that the court lacked personal jurisdiction over defendants and that Microsoft's claims were untimely. The court concluded that Microsoft was required to, but did not, seek leave from the High Court of the British Virgin Islands before bringing a derivative suit on behalf of Vadem. As a result, Microsoft lacked standing as to the six derivative claims it asserted. The court also found that, as to the two remaining counts in the complaint, those claims were time-barred. Therefore, the court granted the motion to dismiss.

This matter involved allegations of breach of duty made by a common stockholder of a Delaware statutory trust against the trustee of that trust, as well as claims by the stockholder against those entities she alleged aided and abetted the breach. Plaintiff failed to make a pre-suit demand against defendant trustees, who she conceded were independent and disinterested when they took the actions complained of. The court found that plaintiff's claims were derivative and not direct. To survive a motion to dismiss in these circumstances under Section 3816 of the Delaware Statutory Trust Act (DSTA), 12 Del. C. 3816, a plaintiff must plead particularized facts raising a reasonable doubt that the actions of the trustees were taken honestly and in good faith. Because a careful reading of the complaint disclosed that plaintiff failed to so plead, her complaint must be dismissed.

Gary Fordham, David Thompson, and Venture Sales, LLC appealed a chancery court order that dissolved Venture Sales pursuant to Mississippi Code Section 79-29-802 (Rev. 2009). Walter Ray Perkins owned 27.7 acres of land. Sometime in the late 90s, he was approached by Fordham and Thompson about a potential business venture involving his land. Perkins, Fordham, and Thompson eventually agreed that Fordham and Thompson would acquire the 438 acres of land that adjoined Perkins's land; the parties would combine their respective land, along with some cash, and form a venture to develop the land. Following the contributions, the operating agreement of Venture Sales was revised to reflect the arrangement. The parties signed the new operating agreement in 2000. In February 2010, Perkins filed an application for judicial dissolution of Venture Sales. Following a trial, the chancellor found that, based on the property's history, the company's inability to get funding for development, and the uncertainty regarding the economic climate in the area, it was not reasonably practicable to carry on the business of Venture Sales. The chancellor therefore ordered the company dissolved. Upon review, the Supreme Court determined that the chancellor's decision to order the dissolution of Venture Sales was not an abuse of discretion: substantial evidence existed supporting the chancellor's determination that it was not reasonably practicable for Venture Sales to carry on business in conformity with its operating agreement.

This case involved a challenge to certain issuances of preferred units and convertible debt by a start-up medical products company. The founder, former CEO, and current common member of the company challenged the issuances, claiming they were self-interested transactions designed to benefit the company's directors and venture capital sponsors by unfairly diluting its common members. Defendants moved for summary judgment on all counts. The court found that plaintiff failed to adduce sufficient evidence to support a reasonable inference that defendants' actions in approving the challenged issuances were grossly negligent or reckless. Therefore, the court granted summary judgment to defendants on plaintiff's duty of care claims. As for the duty of loyalty claims, the court found that defendants failed to establish that the transactions were not self-interested or that they warranted protection under the safe harbor provisions of the company's operating agreement. Therefore, the court denied summary judgment on these claims. Finally, because the court found the operating agreement ambiguous on the issue of whether defendants were permitted to authorize additional common units or new series of units without approval by a majority of the common members, the court denied summary judgment on plaintiff's breach of contract claim under Count VI.

This was a class action brought on behalf of the common unit holders of a publicly-traded Delaware limited partnership. In March 2011, the partnership agreed to be acquired by an unaffiliated third party at a premium to its common units' trading price. The merger agreement, which governed the transaction, also provided for a separate payment to the general partner to acquire certain partnership interests it held exclusively. The court concluded that defendants' approval of the merger agreement could not constitute a breach of any contractual or fiduciary duty, regardless of whether the conflict committee's approval was effective. The court also found that the disclosures authorized by defendants were not materially misleading. Therefore, plaintiffs could not succeed on their claims under any reasonable conceivable set of circumstances and defendants' motion to dismiss was granted.

This action principally challenged the purported removal of Ak-Feel, a Delaware limited liability company, as the sole managing member of Oculus, also a Delaware limited liability company. Section 18-109(a) of the Delaware Limited Liability Company Act (LLC Act), 6 Del. C. 18-109(a), empowered the court to exercise personal jurisdiction over NHA, a New York limited liability company, for purposes of the courts asserting breaches of duty to Oculus. Once jurisdictionally present in Delaware for these claims, NHA was subjected to the court's jurisdiction for the other claims as well, all of which arose out of a common nucleus of operative fact and related to actions NHA took purportedly on behalf of Oculus. The individual defendants, by contrast, have raised sufficient questions about the court's jurisdictional reach to warrant deferring a ruling on the motion pending jurisdictional discovery and further briefing. Therefore, the motion to dismiss was denied.

This derivative action challenged a series of related-party transactions. Defendants moved for judgment on the pleadings, contending that laches barred the bulk of the claims. Defendants were partly right, laches barred the challenges to certain stock options granted in 2004 and 2005. Laches also barred a portion of the challenge to compensation received under certain employment agreements and rent-free sublease. With respect to these claims, the doctrine applied to the extent the compensation was paid and rent-free space provided before March 18, 2008. The doctrine did not apply to the extent that compensation was paid and rent-free space provided on or after March 18, 2008. On a final set of claims, the court granted plaintiffs leave to replead because although the complaint alleged facts sufficient to invoke the doctrine of equitable tolling, the pleading failed to identify when plaintiffs subsequently found out about the self-dealing transactions.

Continental sold its food and beverage metal can and can-end technology to Crown via a stock purchase agreement (SPA) in March 1990. The parties disputed the extent of each other's resultant liabilities, as defined by the indemnity provision in the SPA in concurrent binding arbitration and judicial proceedings. Continental subsequently appealed the grant of summary judgment and the district court's denial of its motion to reconsider or alter or amend its judgment. The court found that Continental failed to meet its burden of proving it was not afforded a full and fair opportunity to litigate the meaning of the indemnity provision. Therefore, the district court correctly determined that Continental was precluded from further litigating the provision's meaning, properly granted summary judgment in favor of Crown, and did not abuse its discretion in denying Continental's motion to reconsider.