Justia Delaware Supreme Court Opinion Summaries

Appellant North River Insurance Company appealed the Court of Chancery’s denial of its request for permanent injunctive relief. This multi-forum litigation concerned policies issued by North River to a safety products company, Mine Safety Appliances Company (“MSA”). North River issued thirteen policies to MSA covering periods from August 28, 1972 through April 1, 1986. MSA was defending against thousands of personal injury claims allegedly caused by defects in its mine safety equipment. MSA sought coverage under North River’s policies as well as from several other insurers. The issue this case presented for review was whether North River’s coverage under these policies was “triggered” (a matter of Pennsylvania law) was being litigated, along with its claims against other insurers, in federal and state courts in Pennsylvania, the Delaware Superior Court and in certain later-filed cases in West Virginia. North River requested that the Delaware Court of Chancery permanently enjoin MSA from prosecuting the later-filed claims in West Virginia and from assigning to any tort claimants the right to recover under any insurance policy issued by North River to MSA. During the course of this appeal, North River narrowed its focus to the assignment issue. Finding no reversible error in the Court of Chancery's denial, the Delaware Supreme Court affirmed that decision. View "The North River Insurance Co. v. Mine Safety Appliances Co." on Justia Law

The issue this case presented to the Delaware Supreme Court centered on the circumstances under which an arbitration award could be vacated where it was argued that the arbitrator manifestly disregarded the law. The parties to a corporate acquisition agreed to arbitrate disputes about the acquired company’s balance sheet on the effective date of the transaction. They retained an arbitrator to decide whether a workers' compensation reserve had been calculated correctly. The arbitrator decided, without any analysis, that there would be no adjustment to the balance sheet. The Court of Chancery vacated the arbitrator's decision, finding that the arbitrator did not follow the relevant provision of the parties’ share purchase agreement. But the test for “manifest disregard for the law” was not whether the arbitrator misconstrued the contract (even if the contract language is clear and unambiguous). "To vacate an arbitration award based on 'manifest disregard of the law,' a court must find that the arbitrator consciously chose to ignore a legal principle, or contract term, that is so clear that it is not subject to reasonable debate." Because the record did not support such a finding, the arbitrator’s award was reinstated. View "SPX Corporation v. Garda USA, Inc., et al." on Justia Law

In 2006, Michael and Connie Jo Zimmerman obtained two separate commercial loans from Eagle National Bank, the predecessor in interest to Customers Bank. The Zimmermans later defaulted on these loans and entered into a forbearance agreement. In addition to the Forbearance Agreement, the Zimmermans each executed a Disclosure for the Confession of Judgment acknowledging that a Confession of Judgment provision in the Forbearance Agreement had been called to their attention, that they understood that the provision permitted Customers Bank to enter judgment against them without notice or opportunity for a hearing, and that the waiver of the right to notice and a hearing was knowing, intelligent, and voluntary. The Forbearance Agreement also provided that all notices, requests, demands, and other communications were to be sent to the Zimmermans at an address in Dover, Delaware with a copy sent to their attorney. Based on the Warrant of Attorney to Confess Judgment in the Forbearance Agreement, Customers Bank filed a complaint seeking the entry of a judgment by confession against the Zimmermans. The Zimmermans opposed the entry of a judgment by confession and a hearing was held where the Zimmermans argued, among other things, that at the time the Forbearance Agreement was executed they were residents of Florida and that Customers Bank had not complied with the requirements for entry of judgment by confession against a non-resident under Rule 58.1. The Zimmermans also argued that they did not knowingly, intelligently, and voluntarily waive their right to notice and a hearing before judgment could be entered against them. After deliberation, the superior court found the Zimmermans’ waiver of their right to notice and a hearing had been knowing, intelligent, and voluntary, and entered judgment by confession against the Zimmermans. The Zimmermans appealed. Finding no reversible error, the Supreme Court affirmed. View "Crothall, et al. v. Zimmerman, et al." on Justia Law

The issue this case presented to the Delaware Supreme Court centered on whether coverage existed under certain management liability insurance policies. A bankruptcy trust sought a determination that those insurance policies covered potential future expenses and liabilities that might have arisen out of pre-bankruptcy wrongful acts allegedly committed by the insured debtor company’s directors and officers. XL Specialty Insurance Company and certain excess insurance carriers, appealed a Superior Court order denying their motion to dismiss the action. They claimed that the plaintiff-appellee, WMI Liquidating Trust lacked standing to prosecute its coverage claims, and, that the dispute did not present a ripe "actual controversy" susceptible of adjudication. Because the Supreme Court held that the Trust’s complaint must be dismissed on ripeness grounds, it did not reach the issue of standing. The parties’ dispute was not ripe because it has not yet assumed a concrete or final form. View "XL Specialty Insurance Co., et al. v. WMI Liquidating Trust" on Justia Law

ATP Tour, Inc. (ATP) operates a global professional men’s tennis tour. Its members include professional men’s tennis players and entities that own and operate professional men’s tennis tournaments. Two of those entities are Deutscher Tennis Bund (DTB) and Qatar Tennis Federation. ATP is governed by a seven-member board of directors, of which three are elected by the tournament owners, three are elected by the player members, and the seventh directorship is held by ATP’s chairman and president. In 2007, ATP’s board voted to change the Tour schedule and format. Under the board’s “Brave New World” plan, the Hamburg tournament, which the Federations owned and operated, was downgraded from the highest tier of tournaments to the second highest tier, and was moved from the spring season to the summer season. Displeased by these changes, the Federations sued ATP and six of its board members in the United States District Court for the District of Delaware, alleging both federal antitrust claims and Delaware fiduciary duty claims. After a ten-day jury trial, the District Court granted ATP’s and the director defendants’ motion for judgment as a matter of law on all of the fiduciary duty claims, and also on the antitrust claims brought against the director defendants. The jury then found in favor of ATP on the remaining antitrust claims. Four questions of Delaware law were certified to the Supreme Court from the U.S. District Court for the District of Delaware when the Federations appealed. The questions centered on the validity of a fee-shifting provision in a Delaware non-stock corporation’s bylaws. The provision, which the directors adopted pursuant to their charter-delegated power to unilaterally amend the bylaws, shifts attorneys’ fees and costs to unsuccessful plaintiffs in intra-corporate litigation. The federal court found that the bylaw provision’s validity was an open question under Delaware law and asked under what circumstances such a provision was valid and enforceable. Although the Delaware Supreme Court could not directly address the bylaw at issue, it held that fee-shifting provisions in a non-stock corporation’s bylaws could be valid and enforceable under Delaware law. In addition, bylaws normally apply to all members of a non-stock corporation regardless of whether the bylaw was adopted before or after the member in question became a member. View "ATP Tour, Inc., et al. v. Deutscher Tennis Bund, et al." on Justia Law

Defendant-appellant Christiana Mall, LLC appealed the Superior Court’s finding of substantial prejudice. Plaintiff-appellee Emory Hill and Company appealed the Superior Court’s finding of excusable neglect and a meritorious defense with respect to the claim of quantum meruit. Upon review of the dispute, the Supreme Court concluded that Christiana’s failure to file a timely answer to the Complaint was not due to excusable neglect. The Court affirmed the trial court's order but on different reasons. View "Christiana Mall, LLC v. Emory Hill and Company" on Justia Law

Plaintiff-appellant RBC Capital Markets, LLC (RBC) appealed a Superior Court judgment dismissing its claims against the defendant-appellees U.S. Education Loan Trust IV, LLC and Education Loan Trust IV. RBC sued the Defendants in the Court of Chancery in 2011, alleging that Defendants had been paying excessive fees from the Trust. The court dismissed the Chancery action as barred by the Trust Indenture’s "no-action" clause. Then in 2012, RBC filed this case, claiming that the Defendants had unlawfully failed to pay interest owed to RBC under the Issuer notes that RBC held. The Superior Court dismissed, finding: (1) the complaint failed to state a claim upon which relief can be granted; and (2) that the earlier Court of Chancery judgment of dismissal precluded RBC’s claim as res judicata. Upon review, the Supreme Court concluded the Superior Court erred in dismissing the case. The Court held that RBC’s complaint satisfied Delaware’s "reasonable conceivability" pleading standard, that the claim was not barred by the Trust Indenture’s no-action clause, and that on the current record it could not be determined as a matter of law that RBC’s Superior Court claim was precluded as res judicata. View "RBC Capital Markets, LLC, et al. v. Education Loan Trust IV, et al." on Justia Law

A plaintiff who was injured in an accident sought PIP benefits from an insurance carrier. The Superior Court applied Delaware's current three-part test and analyzed: (1) "whether the vehicle was an 'active accessory' in causing the injury," (2) "whether there was an act of independent significance that broke the causal link between use of the vehicle and the injuries inflicted," and (3) "whether the vehicle was used for transportation purposes." After concluding that the insured vehicle was not used for transportation purposes, the court granted the insurance carrier's motion for summary judgment. Upon reexamination of the statutory framework for PIP coverage, the Supreme Court concluded that the test's "transportation purposes" element should have been rejected. Therefore, the Court reversed the Superior Court judgment and remanded the case for further proceedings.View "Kelty v. State Farm Mutual Automobile Insurance Co." on Justia Law

The issue before the Supreme Court in this case centered on whether a minority stockholder in a closely held corporation had a right to a non-conflicted board decision on whether to repurchase her shares. That stockholder argued that such a right exists, under common law fiduciary duty principles and under the implied covenant of good faith and fair dealing. The Court of Chancery found that the common law did not impose any duties on directors to consider buying out minority stockholders. The trial court also found that, given the language in the repurchase provision of the stockholders agreement, the implied covenant of good faith and fair dealing did not create any duty to negotiate a reasonable repurchase price. The Supreme Court agreed and affirmed the trial court. View "Blaustein v. Lord Baltimore Capital Corp." on Justia Law

The Superior Court dismissed the underlying complaint in this case based solely upon its determination that a 2011 Settlement Agreement barred the Plaintiffs’ claims as constituting an impermissible collateral attack on a 2009 Insurance Agreement. The Superior Court did not address the sufficiency of the Plaintiffs’ allegations supporting their claims. In this appeal, Plaintiffs contended that the Superior Court should not have dismissed their claims because the 2011 Settlement Agreement was reasonably susceptible to the Plaintiffs’ interpretation. Therefore, extrinsic evidence of the parties’ intent was necessary to resolve any dispute over the 2011 Settlement Agreement’s terms. After its review, the Supreme Court concluded the Superior Court erred in holding that, as a matter of law, the 2011 Settlement Agreement unambiguously precluded the Plaintiffs from asserting the claims that are at issue in this action. The intent of the parties in negotiating the 2011 Settlement Agreement was a factual question inappropriate for resolution on a Rule 12(b)(6) motion to dismiss. View "Nicholas, et al. v. National Union Fire Insurance Co. of Pittsburgh, PA, et al." on Justia Law