Justia Delaware Supreme Court Opinion Summaries

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At issue before the Supreme Court in this case was a Superior Court's grant of summary judgment to defendants, Fairwinds Church and Fairwinds Christian School (collectively, “Fairwinds”), in an action brought by former student Kimberly Hecksher under the Child Victim‟s Act. Hecksher sued Fairwinds under the Act, arguing that Fairwinds, a small, religious school, was grossly negligent for failing to prevent sexual abuse by Ed Sterling (her foster father and her teacher at Fairwinds), that occurred while she was a student. Hecksher alleged that Sterling's wife and fellow-Fairwinds employee, Sandy Sterling, observed Sterling abusing Hecksher on school property, and that Sandy's knowledge of and tortious failure to report the abuse should have been imputed to Fairwinds. Hecksher also argued that Fairwinds was grossly negligent for failing to have a sexual abuse prevention policy in place and for not responding to red flags that Sterling posed a serious risk to Fairwinds students. The Supreme Court disagreed with the Superior Court's grant of summary judgment, finding several instances where reasonable jurors could have found differently than did the Superior Court. The Supreme Court therefore concluded material issues of fact remained, specifically as to whether Sandy's knowledge and conduct could be imputed to Fairwinds, and whether Fairwinds was grossly negligent for failing to have any sexual abuse prevention and detection policies in place and for failing to act on red flags that Sterling posed a serious risk to female students. Accordingly, the grant of summary judgment was reversed and the case remanded for trial. View "Hecksher v. Fairwinds Baptist Church, Inc., et al." on Justia Law

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These appeals both involved damages actions by stockholder plaintiffs arising out of mergers in which the controlling stockholder, who had representatives on the board of directors, acquired the remainder of the shares that it did not own in a Delaware public corporation. Both mergers were negotiated by special committees of independent directors, were ultimately approved by a majority of the minority stockholders, and were at substantial premiums to the pre-announcement market price. Nonetheless, the plaintiffs filed suit in the Court of Chancery in each case, contending that the directors had breached their fiduciary duty by approving transactions that were unfair to the minority stockholders. In both appeals, it was undisputed that the companies did not follow the process established in "Kahn v. M&F Worldwide Corporation" as a safe harbor to invoke the business judgment rule in the context of a self-interested transaction. In both cases, the defendant directors were insulated from liability for monetary damages for breaches of the fiduciary duty of care by an exculpatory charter provision adopted in accordance with 8 Del. C. 102(b)(7). Despite that provision, the plaintiffs in each case sued the controlling stockholders and their affiliated directors, and also sued the independent directors who had negotiated and approved the mergers. The issue central to both, presented for the Supreme Court's review was whether, where the plaintiff challenges an interested transaction that is presumptively subject to entire fairness review, must plead a non-exculpated claim against the disinterested, independent directors to survive a motion to dismiss by those directors. The Court answered that question in the affirmative: a plaintiff seeking only monetary damages must plead non-exculpated claims against a director who is protected by an exculpatory charter provision to survive a motion to dismiss, regardless of the underlying standard of review for the board's conduct. The Court of Chancery in both of these cases denied the defendants' motions to dismiss because it read the Supreme Court's precedent to require doing so, regardless of the exculpatory provision in each company's certificate of incorporation. When the independent directors are protected by an exculpatory charter provision and the plaintiffs are unable to plead a non-exculpated claim against them, those directors are entitled to have the claims against them dismissed, in keeping with the Court's opinion in "Malpiede v. Townson" (and cases following that decision). Accordingly, the Court remanded both of these cases to allow the Court of Chancery to determine if the plaintiffs sufficiently pled non-exculpated claims against the independent directors. View "In Re Cornerstone Theraputics, Inc. Leal, et al. v. Meeks, et al." on Justia Law

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Petitioner-appellant La Mar Gunn appealed a superior court judgment declaring a tie in the November 4, 2014 general election for the Office of the Recorder of Deed for Kent County. Defendant-appellee Betty Lou McKenna moved to dismiss Gunn's election contest, arguing that Gunn failed to state a claim upon which relief could be granted. In response to McKenna's motion, Gunn argued that the petition stated a claim, and pointed to the election recount conducted by two superior court judges, "evidenced 'malconduct on the part of election officers or clerks holding the election,'" because three different county conducted by the superior court (sitting as the Board of Canvass) resulted in three different outcomes. McKenna countered that the judges sitting as the Board of Canvass were not "election officers or clerks holding the election." The superior court denied McKenna's motion to dismiss. On appeal, McKenna argued that the superior court "missed the key point" in her motion, and that the claims asserted in Gunn's petition did not fit within the jurisdictional requirements of 15 Del. C. 5941. After review, the Supreme Court concluded that Gunn's petition failed to allege any "malconduct on the part of election officers or clerks holding the election." Therefore, McKenna's motion should have been granted. This case was remanded to the superior court with directions that the judgment be vacated. View "Gunn v. McKenna" on Justia Law

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In 2013, the Superior Court granted Branch Banking and Trust Company's ("BB&T") motion for summary judgment on its foreclosure and breach of contract claims. In 2014, the Superior Court entered a final judgment order awarding damages to BB&T. The Eids failed to file a timely notice of appeal of thatorder. Instead, a little over two months after the entry of the final judgment order, the Eids filed a motion with the Superior Court under Rule 60(b) seeking vacatur of the final judgment order, contending that their counsel never received actual notice of the final judgment order. The Superior Court granted the Eids' motion to vacate. Then trial court entered a new final judgment order from which the Eids could file a timely notice of appeal. BB&T filed an appeal from the Superior Court's grant of the Rule 60(b) motion to vacate, and the Eids filed a cross-appeal of the Superior Court's grant of summary judgment in favor of BB&T. BB&T raises three issues on appeal: (1) that pursuant to Rule 77(d), the trial court lacked authority to grant the motion to vacate the final judgment order; (2) that the trial court erred as a matter of law when it applied a vague and undefined "interest of justice" standard to the motion to vacate; and (3) that the trial court abused its discretion in granting the motion to vacate because the Eids failed to establish that they were entitled to relief under Rule 60(b)(1) or (b)(6). On cross-appeal, the Eids also raised three issues: (1) that BB&T lacked standing to institute a foreclosure; (2) that the affidavit supporting the motion for summary judgment was defective; and (3) that BB&T failed to demonstrate that there were no genuine issues of material fact. After review, the Supreme Court agreed with BB&T that the trial court improperly granted the motion to vacate the final judgment, and reversed that decision. View "Branch Banking & Trust Co. v. Eid" on Justia Law

By Justia Inc
The issue this case presented for the Supreme Court's review arose from a business merger. Appellant, Lazard Technology Partners, LLC, represents former stockholders of Cyveillance, Inc. (the seller). Appellee Qinetiq North America Operations, LLC paid $40 million up-front money to the company and promised to pay up to another $40 million if the company's revenues reached a certain level. When the earn-out period ended, the revenues had not reached the level required to generate an earn-out. The seller filed suit in the Court of Chancery, arguing that the buyer breached the merger agreement. The seller also argued that the buyer violated the merger agreement‟s implied covenant of good faith and fair dealing by failing to take certain actions that the seller contended would have resulted in the achievement of revenue sufficient to generate an earn-out. After review, the Court of Chancery found that the seller had not proven that any business decision of the buyer was motivated by a desire to avoid an earn-out payment. Further, the Court found that the merger agreement's express terms were supplemented by an implied covenant. But as to whether conduct not prohibited under the contract was precluded because it might result in a reduced or no earn-out payment, the Court of Chancery held that, consistent with the language of implicated section of the merger agreement, the buyer had a duty to refrain from that conduct only if it was taken with the intent to reduce or avoid an earn-out altogether. On appeal, the seller argued the Court of Chancery misinterpreted the merger agreement. Finding no misinterpretation, the Supreme Court affirmed. View "Lazard Technology Partners v. Qinetiq North America Operations LLC" on Justia Law

By Justia Inc
ev3, Inc., the buyer of Appriva Medical, Inc., appealed a jury verdict that held it breached its contractual obligations to Appriva's former shareholders, who gave up their shares in the merger. The merger agreement between ev3 and Appriva provided for the bulk of the payments to the Appriva shareholders to be contingent upon the timely accomplishment of certain milestones toward the approval and marketability of a medical device that Appriva was developing. After it became clear that the milestones were not going to be achieved, the former Appriva shareholders sued, arguing that the full amount of contingency payments was due because ev3 had breached its obligation under the merger agreement to fund and pursue the regulatory milestones in its "sole discretion, to be exercised in good faith." But instead of confining itself to that argument, Appriva also contended that ev3 had breached a provision of a non-binding letter of intent that had been signed by the parties early in their negotiations. That non-binding provision stated that ev3 "will commit to funding based on the projections prepared by its management to ensure that there is sufficient capital to achieve the performance milestones." At many points during the trial, ev3 attempted to convince the Superior Court that the non-binding letter of intent should not have been used to interpret or contradict the clear terms of a clause in the merger agreement. Nevertheless, Appriva was permitted to argue to the jury that ev3 not only failed to act in good faith under the agreement, but that it breached a "promise" to honor the Funding Provision contained in the letter of intent. On appeal, ev3 argued that the Superior Court erred by permitting Appriva to argue that the Funding Provision in the non-binding letter of intent continued to bind ev3, and also that the non-binding letter of intent modified the "sole discretion" standard in the merger agreement. After review, the Supreme Court concluded the Superior Court erred by accepting Appriva‘s position that the non-binding Funding Provision within the letter of intent was admissible to affect the meaning of the merger agreement. Furthermore, by its plain terms, the merger agreement overrode any other provision in the Agreement to the contrary. "Thus, whether or not the letter of intent survived for some purposes, any provisions that conflicted with [section] 9.6 were without force and effect." View "EV3, Inc. v. Lesh" on Justia Law
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This dispute arose from a contract signed by the parties in 2006, the Wireless Patent License Agreement, which provided for arbitration as the mechanism to resolve any claims arising under that Agreement. LG Electronics, Inc. sought a declaration in the Court of Chancery that InterDigital Communications, Inc., InterDigital Technology Corporation, and IPR Licensing Inc. that InterDigital had breached a nondisclosure agreement between the parties by disclosing confidential information during a pending arbitration proceeding. The Court of Chancery granted InterDigital's motion to dismiss, holding that all of LG's claims were properly before the arbitral tribunal, and deferred to the "first-filed proceeding" based on the factors established by the Delaware Supreme Court in "McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co." After review, the Supreme Court agreed that the McWane doctrine applied in this case, and that it supported dismissing LG's claims. View "LG Electronics, Inc. v. InterDigital Communications, Inc." on Justia Law

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This case stemmed from crimes committed by defendant-appellant Rashie Harris at two barbershops on different dates. After a jury trial, Harris was found guilty of the following offenses: Attempted Murder First Degree, eight counts of Robbery First Degree, two counts of Burglary Second Degree, Unlawful Sexual Contact First Degree, Kidnapping Second Degree, eleven counts of Possession of a Firearm During the Commission of a Felony, Carrying a Concealed Deadly Weapon, Endangering the Welfare of a Child, Possession of a Non-Narcotic Schedule I Controlled Substance, and Resisting Arrest. The Superior Court also found Harris guilty of two counts of Possession of a Deadly Weapon by a Person Prohibited. Harris was sentenced as a habitual offender and sentenced to Level V incarceration for the balance of his natural life plus 524 years for his felony charges, and three years and five days for his misdemeanor charges. Prior to trial, the defense filed a Motion to Sever Charges, a Motion to Suppress the Photo Lineup Identification, and a Motion to Suppress the Show-up Identification. After conducting a hearing and receiving post-hearing submissions, the trial court denied all three motions. After trial but before the verdict, the defense moved for reconsideration of and reargument on the denial of the Motion to Suppress the Show-up Identification. The Superior Court reserved judgment until after the verdict. Following a jury verdict of guilty on all counts, the pending Motion for Reargument was converted into a Motion for a New Trial. After hearing oral arguments, the Superior Court denied the motion. On appeal, Harris argued that the Superior Court erred in denying his Motion for a New Trial. He contended that the admission into evidence of his show-up identification by witnesses to the incident in question violated his Due Process rights. The Supreme Court disagreed and affirmed the trial court's judgment. View "Harris v. Delaware" on Justia Law

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At issue in this case was whether the Superior Court abused its discretion by declining to exercise its mandamus jurisdiction to remedy various alleged violations of the Law Enforcement Officers’ Bill of Rights (LEOBOR). Petitioners-appellants Shawn Brittingham and Christopher Story sought mandamus relief for several alleged violations of LEOBOR while they were police officers with the Georgetown Police Department (GPD). Respondents-appellees Town of Georgetown, Georgetown Chief of Police William Topping, and Captain Ralph Holm moved for summary judgment. The Superior Court granted the motion, thereby denying Brittingham and Story’s petition. In 2007, Chief Topping issued an oral order prohibiting GPD officers from meeting or speaking with the mayor or members of the Town Council to discuss internal police business without first obtaining his permission and going through the chain of command. In spite of this order, seven off-duty officers met with a Town Council member at her home to discuss police department issues. Captain Holm learned of the meeting, and informed appellants and the other officers involved that they were being investigated for violating GPD Rules and Regulations. A written reprimand was offered to each officer. Rather than accept the reprimand, appellants elected to request a hearing as to the allegations made against them (namely, for insubordination) with the Criminal Justice Council (CJC). The panel found substantial evidence to support the insubordination charge. Chief Topping imposed discipline against appellants: Brittingham received a four-week suspension without pay and a fourteen-day reduction in rank, and placed on disciplinary probation for a year; Story received a two-week suspension without pay, a seven-day reduction in rank, and disciplinary probation of a year. The officers appealed to the Town's Disciplinary Action Appeals Board, which upheld the CJC panel. Appellants filed a civil complaint against appellees, claiming (amongst other things) a violation of their First Amendment rights. On appeal, appellants argued that the process afforded them did not comply with LEOBOR, and that their only remedy was a mandamus writ ordering vacatur of the resulting disciplinary decisions. Appellees responded that they did not violate LEOBOR, that Appellants’ claims are now moot, and that the Superior Court did not abuse its discretion in denying the requested relief. After review, the Supreme Court found that Brittingham and Story were correct that a technical violation of LEOBOR occurred, but the Court rejected their claims as to all other alleged violations. However, as to the one meritorious claim, the matter was moot because neither Brittingham nor Story were then-employed by the GPD, and because the relief they sought was not relief that was available to them in a mandamus proceeding. Accordingly, the Court affirmed the Superior Court’s decision as to all claims but one, and as to that claim, the Court held that the claim was moot. View "Brittingham v. Town of Georgetown" on Justia Law

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Bell Helicopter Textron Inc. appealed a Superior Court order determining that Texas law should govern litigation involving a helicopter that crashed in Mexico in 2010. Despite the presumption in the Restatement (Second) of Conflicts that the law of the place where the injury occurred should govern the dispute, the Superior Court found that Texas law had the most significant relationship to the liability, damages, and remedies at issue. The court also opined that Texas law would be easier to apply than Mexican law because there would be no need to hire interpreters. In this interlocutory appeal to the Delaware Supreme Court, Bell argued that Mexican law was more appropriate because the decedents were all Mexican citizens, their relatives bringing this suit are all Mexican citizens, the helicopter was owned by a Mexican company, and it had been operated solely within Mexico for over thirty years when it crashed. Because the governing Restatement test to determine which sovereign's law to apply strongly favors Mexico, the Delaware Court reversed: in this case, those principles unambiguously favor applying Mexican law to the liability, damages, and remedies at issue. View "Bell Helicopter Textron, Inc. v. Arteaga" on Justia Law