Justia Delaware Supreme Court Opinion Summaries

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Philip Shawe and his mother, Shirley Shawe, filed an interlocutory appeal of an August 13, 2015 Chancery Court opinion and July 18, 2016 order appointing a custodian to sell TransPerfect Global, Inc., a Delaware corporation. After a six-day trial the Court issued an opinion concluding that the “warring factions” were hopelessly deadlocked as stockholders and directors. The court carefully considered three alternatives to address the dysfunction and deadlock, and in the end decided that the circumstances of the case required the appointment of a custodian to sell the company. On appeal, the Shawes did not challenge the Court’s factual findings; instead, Philip Shawe claimed for the first time on appeal that the court exceeded its statutory authority when it ordered the custodian to sell a solvent company. Alternatively, Shawe contended that less drastic measures were available to address the deadlock. Shirley Shawe argued for the first time on appeal that the custodian’s sale of the company might result in an unconstitutional taking of her one share of TransPerfect Global stock. The Supreme Court disagreed with the Shawes and affirmed the Chancery Court’s judgment. View "Shawe v. Elting" on Justia Law

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Philip Shawe appealed a Chancery Court order sanctioning him for misconduct throughout litigation with his current business partner and former romantic partner, Elizabeth Elting. After an evidentiary hearing, the Chancery Court found that Shawe deleted documents from his computer, recklessly failed to safeguard his cell phone, improperly gained access to Elting’s e-mails, and lied multiple times under oath. The court also found that Shawe’s improper conduct impeded the administration of justice, unduly complicated the proceedings, and caused the court to make false factual findings. The Court ordered Shawe to pay 100% of the fees Elting incurred in connection with bringing the motion for sanctions, and 33% of the fees she incurred litigating the merits of the case, awarding Elting a total of $7,103,755 in fees and expenses. Shawe appealed, arguing: (1) the Court erred by finding that he acted in bad faith when he deleted the files from his laptop and failed to safeguard his cell phone; (2) the Court erred for failing to afford him criminal due process protections before sanctioning him for “perjury”; and (3) the Court erred by awarding Elting an excessive fee. After review, the Supreme Court found no errors and affirmed. View "Shawe v. Elting" on Justia Law

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The plaintiff was a limited partner/unitholder in a publicly-traded master limited partnership (“MLP”). The general partner proposed that the partnership be acquired through merger with another limited partnership in the MLP family. The seller and buyer were indirectly owned by the same entity, creating a conflict of interest. The general partner in this case sought refuge in two of the safe harbor conflict resolution provisions of the partnership agreement: “Special Approval” of the transaction by an independent Conflicts Committee, and “Unaffiliated Unitholder Approval.” The plaintiff alleged in its complaint that the general partner failed to satisfy the Special Approval safe harbor because the Conflicts Committee was itself conflicted. The general partner moved to dismiss the complaint and claimed that, in the absence of express contractual obligations not to mislead investors or to unfairly manipulate the Conflicts Committee process, the general partner need only satisfy what the partnership agreement expressly required: to obtain the safe harbor approvals and follow the minimal disclosure requirements. The Court of Chancery “side-stepped” the Conflicts Committee safe harbor, but accepted the general partner’s argument that the Unaffiliated Unitholder Approval safe harbor required dismissal of the case. The court held that, even though the proxy statement might have contained materially misleading disclosures, fiduciary duty principles could not be used to impose disclosure obligations on the general partner beyond those in the partnership agreement, because the partnership agreement disclaimed fiduciary duties. On appeal, the plaintiff argued that the Court of Chancery erred when it concluded that the general partner satisfied the Unaffiliated Unitholder Approval safe harbor, because he alleged sufficient facts to show that the approval was obtained through false and misleading statements. The Supreme Court determined that the lower court focused too narrowly on the partnership agreement’s disclosure requirements. “Instead, the center of attention should have been on the conflict resolution provision of the partnership agreement.” The Supreme found that the plaintiff pled sufficient facts, that neither safe harbor was available to the general partner because it allegedly made false and misleading statements to secure Unaffiliated Unitholder Approval, and allegedly used a conflicted Conflicts Committee to obtain Special Approval. Thus, the Court reversed the Court of Chancery’s order dismissing Counts I and II of the complaint. View "Dieckman v. Regency GP LP, Regency GP LLC" on Justia Law

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In 2001, Luis E. Reyes was convicted of two counts of Murder in the First Degree, two counts of Possession of a Firearm During the Commission of a Felony, and two counts of Conspiracy in the First Degree in what came to be known as the "Rockford Park Murders." For these crimes, he was sentenced to death, which was affirmed on direct appeal to the Delaware Supreme Court. On March 25, 2004, Reyes filed a timely motion for postconviction relief. Twelve years later, after a lengthy procedural process, during which the trial judge retired and the postconviction proceeding was assigned to his successor, the Superior Court issued an opinion granting Reyes' motion and vacating his convictions and sentences. The Superior Court found that several errors occurred during the guilt phase of Reyes' trial. The Superior Court also found that Reyes' trial attorneys were ineffective for failing to establish that certain testimony was based on hearsay; by failing to calling certain witnesses; failing to request a "missing evidence" jury instruction; and by failing to offer into evidence statements a witness made in an interview with one of Reyes' trial attorneys. In addition, Reyes contends that his trial attorneys were ineffective in ways not ruled upon by the Superior Court. The State claims that the Superior Court committed error in all of its rulings. The State also contended that the other ineffective assistance of counsel claims asserted by Reyes were without merit. After careful consideration of all the issues presented, the Delaware Supreme court concluded the State was correct. The Superior Court's grant of Reyes' postconviction motion was reversed. View "Delaware v. Reyes" on Justia Law

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A grand jury issued a 54 count indictment charging defendant-appellant Otis Phillips, Jeffrey Phillips, and fourteen other co-defendants with gang related crimes relating to criminal activity of the "Sure Shot" street gang. Otis was charged with three counts of first degree murder, first degree attempted murder, gang participation, conspiracy, reckless endangerment, possession of firearms, assault and criminal mischief. The superior court denied severance motions and instead conducted a joint capital trial of Otis and Jeffrey lasting 21 days. The jury acquitted Otis of one possession charge and conspiracy, but convicted on everything else. Otis would later be sentenced to death for the first degree murder charge, life imprisonment plus an additional 130 years for everything else. Otis appealed. Finding that Otis' death sentence had to be vacated, the Supreme Court remanded this case for resentencing on the murder charge only. The Court affirmed the remaining sentences, finding no reversible error in the superior court's judgment. View "Phillips v. Delaware" on Justia Law

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A grand jury issued a 54 count indictment charging defendant-appellant Jeffrey Phillips, Otis Phillips, and fourteen other co-defendants with gang related crimes relating to criminal activity of the "Sure Shot" street gang. Jeffrey was charged with two counts of first degree murder, first degree attempted murder, gang participation, first degree conspiracy, reckless endangerment, possession of firearms, assault and criminal mischief. The superior court denied severance motions and instead conducted a joint capital trial of Otis and Jeffrey lasting 21 days. The jury acquitted Jeffrey of assault and conspiracy charges, but convicted on everything else. Jeffrey would later be sentenced to life imprisonment plus an additional 72 years. Jeffrey appealed. Finding none of Jeffrey's arguments had merit, the Supreme Court affirmed his convictions. View "Phillips v. Delaware" on Justia Law

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This dispute centered on subrogation claims Victoria Insurance Company and Nationwide Insurance Company asserted against the City of Wilmington. This appeal presented a question of first impression before the Supreme Court: whether, under Delaware's motor vehicle insurance statute governing subrogation disputes among insurers and self-insurers, the losing party may appeal de novo to the Superior Court from an adverse arbitration award. In considering consolidated motions to dismiss two such appeals filed by the City against the insurers, the Superior Court determined that 21 Del. C. 2118(g)(3), which mandated arbitration for subrogation disputes arising between insurers and self-insurers, did not provide a right to appeal. Because the statute unambiguously provided for appeals from mandatory arbitration of subrogation disputes between insurers and self-insurers, the Supreme Court reversed. View "City of Wilmington v. Nationwide Insurance Co." on Justia Law

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This appeal centered on a dispute over when a charging lien could be imposed on a judgment to recover unpaid attorney's fees. The Vice Chancellor supplemented the prerequisites for a charging lien to confine an attorney to her unpaid fees that are directly connected to the recovery she obtained on her client‘s behalf. But, that supplement was, in the Delaware Supreme Court's view, inequitable because it denies an attorney full compensation for the work she contracted to do on behalf of her client and thus undermines the utility of a charging lien in encouraging counsel to provide legal services to clients by ensuring them that their contractual right to a fee will be upheld by the judiciary. Accordingly, the Court reversed. View "Katten Muchin Rosenman LLP v. Sutherland" on Justia Law
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The Court of Chancery held that a conflicts committee approved a conflict transaction that it did not believe was in the best interests of the limited partnership it was charged with protecting. A problem emerged for the derivative plaintiff (who won at trial), because after trial but before any judicial ruling on the merits, the limited partnership was acquired in a merger. The claims brought by the plaintiff were thus transferred to the buyer in the merger. Plaintiff’s standing was extinguished, and his only recourse was to challenge the fairness of the merger by alleging that the value of his claims was not reflected in consideration of the merger. The Court of Chancery rejected defendants’ argument that plaintiff’s claims were considered when the limited partnership merged. However, the Supreme Court reversed the Court of Chancery: plaintiff’s claims were, and remained, derivative in nature. Derivative plaintiffs do not make claims belonging to them individually. Here, the derivative plaintiff only sought monetary relief for the limited partnership. Plaintiff lost standing to continue his derivative action when the merger closed. View "El Paso Pipeline GP Company, LLC, et al. v. Brinckerhoff" on Justia Law

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Andrew Lloyd appeals his convictions for racketeering and other offenses related to his role in a Delaware heroin trafficking ring. He raised four issues on appeal: (1) the Superior Court abused its discretion by giving a jury instruction that did not adequately define “enterprise” according to the Delaware RICO statute; (2) the State presented insufficient evidence to prove that Lloyd was engaged in an “association-in-fact” enterprise under the RICO statute; (3) the State improperly vouched for and bolstered certain witnesses’ testimony by asking several of the witnesses about the contents of their plea agreements; and (4) the cumulative effect of the errors violated his due process rights. After a careful review of the record on appeal, the Delaware Supreme Court found no merit to any of these claims. Accordingly, the Court affirmed the Superior Court’s judgment. View "Lloyd v. Delaware" on Justia Law