Justia Delaware Supreme Court Opinion Summaries

United Technologies Corp. appealed a Court of Chancery judgment holding that the court did not have the authority to impose a specific condition on a books and records inspection under section 220(c) of the Delaware General Corporation Law (DGCL). United Technologies had sought to restrict the use of any information garnered from an inspection by a shareholder, Lawrence Treppel, to legal action in a Delaware court. The Court of Chancery denied the corporation's request, determining that such a limitation “is not the type of restriction that 220(c) seeks to impose.” On appeal, United Technologies argued that the court did have the authority, under the statute itself and the line of cases interpreting it, to impose the requested limitation, and the court erred by not doing so in this case. The Supreme Court reversed and remanded, finding that the plain text of section 220 provided broad power to the Court of Chancery to condition a books and records inspection. The court erred in determining that it lacked authority under the statute to impose the requested restriction. The Supreme Court remanded the case so that the Court of Chancery could consider in the first instance whether, in its discretion, it should impose such a restriction based on the specific facts in this case. View "United Technologies Corp. v. Treppel" on Justia Law

Gail and Scott Helm filed a personal injury action against Gallo Realty, Inc., one of its real estate agents, and 206 Massachusetts Ave, LLC (owner of the property). The Helms rented a beach house at 206 Massachusetts Avenue in Lewes for a week in 2010. As Gail descended the stairs, she fell and sustained injuries. Gail sought to recover damages based on claims of negligence and breach of contract; Scott claimed loss of consortium. The Superior Court granted defendants' motions for summary judgment, dismissing the Helms' claims. The Helms appealed, arguing: (1) the Superior Court erred in granting defendants' motion for summary judgment on the issue of primary risk assumption and comparative negligence as a matter of law; (2) the Superior Court erred in holding that an indemnification clause provision in the lease protected defendants from liability; and (3) the Superior Court erred in granting summary judgment on the contract claims. After review, the Supreme Court concluded the Superior Court applied both the doctrine of primary assumption of risk and the doctrine of comparative negligence incorrectly. The record reflected that the Superior Court never specifically based its decision on the indemnification clause. The Superior Court's initial ruling in favor of defendants was only on the negligence claims. Furthermore, the Supreme Court found that the record reflected that the Superior Court's dismissive rulings on the Helms' contract claim was "cursory and inextricably intertwined" with its erroneous rulings on the negligence claims. As such, the Supreme Court reversed the Superior Court and remanded this case for further proceedings. View "Helm v. 206 Massachusetts Avenue,LLC" on Justia Law

Defendant-appellant Bernardo McKinney appealed a superior court judgment convicting him for possessing a firearm by a person prohibited (PFBPP). On appeal, he argued the trial court erred when it denied his motion to suppress evidence, because the affidavit in support of the search of his residence lacked probable cause. The warrant issued on a confidential informant's statement to police that the informant purchased marijuana from a white woman with blue eyes, and previously purchased from a black man, both of whom lived at McKinney's apartment. The police determined that McKinney's girlfriend was a white woman with blue eyes, and McKinney was a black man. The warrant was found to have no discussion of the informant's reliability, and had no police corroboration of criminal activity at the apartment. The Supreme Court concluded that these missing statements were fatal to the search warrant. Finding merit to McKinney's argument on appeal, the Supreme Court reversed the superior court and remanded the case for further proceedings. View "McKinney v. Delaware" on Justia Law

Plaintiffs City of Miami General Employees and Sanitation Employees Retirement Trust brought a class action on behalf of itself and other stockholders in C&J Energy Services, Inc. (C&J) to enjoin a merger between C&J and a division of its competitor, Nabors Industries Ltd. The proposed transaction was unusual in that C&J, a U.S. corporation, would acquire a subsidiary of Nabors, which was domiciled in Bermuda, but Nabors will retain a majority of the equity in the surviving company. To obtain more favorable tax rates, the surviving entity, C&J Energy Services, Ltd. (New C&J), would be based in Bermuda, and thus subject to lower corporate tax rates than C&J currently paid. To temper Nabors' majority voting control of the surviving company, C&J negotiated for certain protections, including a bye-law guaranteeing that all stockholders would share pro rata in any future sale of New C&J, which could only be repealed by a unanimous stockholder vote. C&J also bargained for a “fiduciary out” if a superior proposal was to emerge during a lengthy passive market check, an unusual request for the buyer in a change of control transaction. Although the Court of Chancery found that the C&J board harbored no conflict of interest and was fully informed about its own company's value, the court determined there was a "plausible" violation of the board's "Revlon" duties because the board did not affirmatively shop the company either before or after signing. On that basis, the Court of Chancery enjoined the stockholder vote for 30 days, despite finding no reason to believe that C&J stockholders would not have a fair opportunity to evaluate the deal for themselves on its economic merits. The Court of Chancery's order also required C&J to shop itself in violation of the merger agreement between C&J and Nabors, which prohibited C&J from soliciting other bids. The Supreme Court held that the preliminary injunction had to be supported by a finding by the Court of Chancery that plaintiffs demonstrated a reasonable probability of success on the merits. The Court of Chancery made no such finding here, and the analysis that it conducted rested on the erroneous proposition that a company selling itself in a change of control transaction is required to shop itself to fulfill its duty to seek the highest immediate value. "To blue-pencil a contract as the Court of Chancery did here is not an appropriate exercise of equitable authority in a preliminary injunction order. That is especially true because the Court of Chancery made no finding that Nabors had aided and abetted any breach of fiduciary duty, and the Court of Chancery could not even find that it was reasonably likely such a breach by C&J's board would be found after trial." Accordingly, the judgment of the Court of Chancery was reversed. View "C&J Energy Services, Inc. v. City of Miami General Employees' Retirement Trust" on Justia Law

Defendants-Appellants Gary Salamone, Mike Dura and Robert Halder (collectively, the “Management Group”) appealed a Court of Chancery Memorandum Opinion and Order and Final Judgment. This case involved a dispute between two competing sets of stockholders and directors about the composition of the board of Westech Capital Corporation, a financial services holding company headquartered in Austin, Texas. Both parties brought actions in the Court of Chancery pursuant to 8 Del. C. section 225, each contending that their respective slates of directors were the valid board. The heart of the case for both sides was the interpretation of a Voting Agreement signed by the purchasers of Westech Series A Preferred stock in September 2011. According to John Gorman, IV, the founder of the company and its majority stockholder, the Voting Agreement provided for a per share scheme and entitled him to remove and designate new directors, as he attempted to do in 2013. According to the Management Group, the Voting Agreement provided for a per capita scheme. Because Gorman’s attempt to remove and replace directors was not approved by a majority of the (individual) holders of the preferred stock (as opposed to the holders of a majority of shares), they argued that Gorman’s attempts to change the board composition were invalid. Both parties filed section 225 actions. The two cases were consolidated, with Gorman as plaintiff and the Management Group as defendants. The Court of Chancery’s Memorandum Opinion held that one clause of the Voting Agreement set forth a per capita scheme to designate directors, but another contested provision set forth a per share scheme to designate directors. Thus, the Court of Chancery determined that Gorman’s actions were only partially valid, and that the Westech board consisted of two members of the Gorman slate and two members of the Management slate, with three vacant seats. Both parties appealed to the Delaware Supreme Court, arguing that the Court of Chancery’s decision was partially incorrect. The Court did not agree with either side's arguments on appeal and affirmed the Court of Chancery’s ruling that Section 1.2(b) of the Voting Agreement set forth a per share scheme and Section 1.2(c) set forth a per capita scheme. However, the Court concluded that the Court of Chancery erred in holding that the directors designated pursuant to Section 1.2(c) could be removed by the vote of the majority of the shares held by the Key Holders. Instead, under the plain language of Section 1.4(a), the Key Holders, as the “Person[s]” entitled to nominate the Key Holder Designees, are the only “Person[s]” entitled to remove the Key Holder Designees. Put more broadly, the plain language of Section 1.2 and Section 1.4(a) suggests that the designation and removal provisions were intended to be symmetrical. In reaching its conclusions, the Supreme Court held that certain of the Court of Chancery’s factual findings were clearly erroneous. However, these errors were not of sufficient force to affect the Court of Chancery’s overall conclusions regarding Sections 1.2(b) and 1.2(c). Accordingly, the Supreme Court affirmed in part and reversed in part. View "Salamone v. Gorman" on Justia Law

Following a six-day trial, a jury convicted Sirron Benson of Murder First Degree and Possession of a Firearm During the Commission of a Felony in connection with the 2011 shooting death of Braheem Curtis. Benson was sentenced to a term of life imprisonment as to Murder First Degree and twenty years at Level V to be served consecutively as to Possession of a Firearm During the Commission of a Felony. On appeal, Benson argued: (1) it was plain error for the trial judge not to issue a curative instruction sua sponte when the prosecutor, in his rebuttal summation, stated that Benson’s intent to cause death could be inferred from the weapon used to perpetrate the crime; and (2) the trial judge committed reversible error by failing to give a cautionary instruction relating to the testimony of an informant witness who was receiving a benefit from the State in exchange for his testimony. Finding no merit to either of Benson’s arguments, the Supreme Court affirmed. View "Benson v. Delaware" on Justia Law