Justia Delaware Supreme Court Opinion Summaries

This appeal involved a breach of contract claim arising out of an indemnitee’s refusal to repay money advanced pursuant to an LLC Agreement. Under the Agreement, a Person was entitled to indemnification if the Person acted in good faith and in a manner believed to be in or not opposed to the best interests of the Company. The indemnification payments were further conditioned on the Person’s written undertaking to repay all amounts advanced under the LLC Agreement if it was later determined that the Person did not satisfy the standard of conduct, and thus, was not entitled to indemnification. New Wood Resources operated a plywood and veneer manufacturing facility in Mississippi known as Winston Plywood & Veneer LLC (“WPV”). Dr. Richard Baldwin (“Baldwin”) served as a manager of New Wood starting in September of 2013, and served as a member of New Wood’s Board of Managers. Baldwin was asked to invest in New Wood, and to oversee the revitalization of a newly acquired plywood mill in Louisville, Mississippi. The WPV manufacturing facility in Louisville had been dormant for years and was in need of repair. New Wood began to make repairs so that it could operate a mill. However, prior to the WPV facility’s completion, the facility was destroyed by an EF-4 tornado. WPV received funding from FEMA, and Baldwin took the lead role on behalf of New Wood to restore the WPV facility and transform it into a functioning and profitable plywood manufacturing facility. In 2016, just before the WPV mill was set to begin operations, Baldwin was terminated from his position as the President and General Manager of WPV. The Delaware Court addressed the narrow issue of whether the LLC Agreement pertinent here contained an implied covenant of good faith that would require the determination of a Person’s entitlement to indemnification to be made in good faith. After review of the Agreement, the Court held that it did. It therefore reversed and remanded this case for further proceedings. View "Baldwin v. New Wood Resources LLC" on Justia Law

Appellant DeJoynay Ferguson pled guilty to one count of Murder by Abuse or Neglect in the First Degree, six counts of Child Abuse in the First Degree, and two counts of Child Abuse in the Second Degree. The plea was made pursuant to a plea agreement under which the State entered a nolle prosequi as to other remaining charges. The sentencing judge imposed a sentence of life in prison. He also sentenced her to ten years at Level V on each of the Child Abuse in the First Degree charges, suspended after two years on each. He sentenced her to probation on the two counts of Child Abuse in the Second Degree. Ferguson appealed her sentences, contending the sentencing judge sentenced her for the sole purpose of retribution; that he sentenced her with a closed mind; that he was unwilling to consider the mitigation evidence and arguments she presented; and that her sentence violated her right to due process. Finding no reversible error, the Delaware Supreme Court affirmed the Superior Court. View "Ferguson v. Delaware" on Justia Law

Under New Castle County, Delaware's Unified Development Code, heavy industrial uses were permitted as of right on land zoned for heavy industry or HI. On August 27, 2019, New Castle County Council adopted Ordinance 19-046 amending the Code, then stating that property owners with HI-zoned property had to obtain a special use permit from the County before expanding Heavy Industry use of their property. Croda, Inc. filed a complaint in the Court of Chancery to enjoin enforcement of Ordinance 19-046, claiming, among other things, that Ordinance 19-046 was invalid because the Ordinance title did not put Croda and the public on notice of the substance of the zoning amendment in violation of state and county law and federal due process guarantees. The Court of Chancery dismissed Croda’s state law claims as untimely under the state sixty-day statute of repose and rejected its constitutional claims because Croda did not have a vested right in a zoning category. On appeal to the Delaware Supreme Court, Croda claimed the Court of Chancery erred because the alleged lack of proper notice tolled the statute of repose, and it did not have to show a vested right to state a procedural due process claim. The Supreme Court affirmed the Court of Chancery’s judgment: the statute of repose was not subject to tolling. "And while our reasoning is different than that of the Court of Chancery, Croda’s procedural due process claim fails because those protections do not apply to the County’s legislative acts adopting the Ordinance." View "Croda Inc. v. New Castle County" on Justia Law

In negotiations leading up to a merger in which Brookfield Property Partners, L.P. and its affiliates acquired GGP, Inc., Brookfield became concerned over the number of GGP stockholders who might seek appraisal under 8 Del. C. § 262. Brookfield sought to include in the merger agreement an appraisal-rights closing condition that would allow it to terminate the transaction if a specified number of GGP shares demanded appraisal. But a special committee of GGP directors charged with negotiating the terms of the merger agreement opposed this condition, and Brookfield relented. According to former GGP stockholders, GGP’s directors, urged on by Brookfield, structured the merger so that the GGP stockholders’ appraisal rights were eviscerated. The GGP stockholders claimed that, by divorcing the appraisal remedy from the large pre-closing dividend and linking it to a meager “per share merger consideration,” Brookfield and the GGP directors led them to believe that a fair value determination in an appraisal proceeding would be limited to the value of post-dividend GGP. This description of appraisal rights, coupled with other descriptions of how the transaction was to be effected, led the stockholders to believe that their appraisal rights had either been eliminated or so reduced as to be meaningless. And by agreeing to do this, they said, the GGP directors, with the aid of Brookfield, breached their fiduciary duties. The stockholders sued. The Court of Chancery concluded that, because it could consider the pre-closing dividend as a “relevant factor” under the appraisal statute, the defendants’ structuring of the merger did not deny the stockholders their right to seek appraisal. The Delaware Supreme Court reversed the Court of Chancery: "the disclosures, having described the merger and appraisal rights in a confusing manner, did not provide the stockholders the information they needed to decide whether to dissent and demand appraisal. ... it is reasonably conceivable to us that GGP’s directors, aided and abetted by Brookfield, consciously crafted the transaction and the related disclosures in such a way as to deter GGP’s stockholders from exercising their appraisal rights." View "In Re GGP, Inc. Stockholder Litigation" on Justia Law

Jack Lingo Asset Management (“Lingo”) owned and occupied property at 240 Rehoboth Avenue in Rehoboth Beach, Delaware. The second story only covered a portion of the first, leaving a flat roof over the rest of the ground floor. In 2018, Lingo wanted to convert the second floor from residential to office space. As part of this project, it sought permission from the City of Rehoboth Beach (the “City”) to build an unroofed, railed walkway extending from the second floor over the flat roof to a stairway leading down to Christian Street. The exit walkway would not be visible from the main thoroughfare. The City denied Lingo’s application, finding the railings surrounding the walkway would technically expand the Gross Floor Area of 240 Rehoboth Avenue under Section 270 of the City's Zoning Code. This expansion would, in turn, require Lingo to provide an additional parking spot, which it had no room to do. Lingo appealed the denial. The Board of Adjustment of the City of Rehoboth Beach affirmed in two decisions, and the Superior Court agreed. The Delaware Supreme Court reversed, finding that the Rehoboth Zoning Code in effect at the time of Lingo’s application did not clearly and unambiguously establish that the proposed egress structure would increase the Gross Floor Area of 240 Rehoboth Avenue. Applying settled canon that zoning ambiguities be construed in the property owner's favor, the Supreme Court vacated the Board's decision. View "Jack Lingo Asset Management, LLC v. Board of Adjustment of the City of Rehoboth Beach" on Justia Law

In a final judgment, the Delaware Court of Chancery ordered NVIDIA Corporation (“NVIDIA” or the “Company”) to produce books and records to certain NVIDIA stockholders under Section 220 of the Delaware General Corporation Law. In the underlying action, the stockholders alleged certain NVIDIA executives knowingly made false or misleading statements during Company earnings calls that artificially inflated NVIDIA’s stock price, and then those same executives sold their stock at inflated prices. As such, the stockholders sought to inspect books and records to investigate possible wrongdoing and mismanagement at the Company, to assess the ability of the board to consider a demand for action, to determine whether the Company’s board members were fit to serve on the board, and to take the appropriate action in response to the investigation. In resisting the request, NVIDIA argued the stockholders were not entitled to the relief they sought because: (1) the scope of the original demands failed to satisfy the form and manner requirements; (2) the documents sought at the trial were not requested in the original demands; (3) the stockholders failed to show a proper purpose; (4) the stockholders failed to show a credible basis to infer wrongdoing; and (5) the requests were overbroad and not tailored to the stockholders’ stated purpose. The Court of Chancery rejected these arguments and ordered the production of two sets of documents—certain communications with the CEO and certain specific sets of emails. The Delaware Supreme Court held: (1) the stockholders’ original demands did not violate Section 220’s form and manner requirements; (2) the stockholders did not expand their requests throughout litigation; (3) the Court of Chancery did not err in holding that sufficiently reliable hearsay evidence may be used to show proper purpose in a Section 220 litigation, but did err in allowing the stockholders in this case to rely on hearsay evidence because the stockholders’ actions deprived NVIDIA of the opportunity to test the stockholders’ stated purpose; (4) the Court of Chancery did not err in holding that the stockholders proved a credible basis to infer wrongdoing; and (5) the documents ordered to be produced by the Court of Chancery were essential and sufficient to the stockholders’ stated purpose. Thus, the judgment of the Court of Chancery is affirmed in part, reversed in part, and remanded for further proceedings. View "NVIDIA Corporation v. City of Westland Police & Fire Retirement System" on Justia Law

Appellant Wilbur Medley, appealed a superior court's denial of his motion for sentence modification. Medley was convicted after pleading guilty to second degree burglary pursuant to an agreement. In challenging his sentence, Medley argued: (1) the superior court improperly delegated its sentencing authority because DOC staff and court administrative staff amended his original sentence order to strip him of 563 days of credit time; and (2) the sentencing judge denied his right to be present with counsel for sentencing when the judge, sua sponte and without a hearing, issued the amended sentence. After review, the Delaware Supreme Court rejected Medley’s contentions and affirmed the denial of sentence modification. View "Medley v. Delaware" on Justia Law

In 2012, Craig Melancon was shot three times: once from a .22 caliber firearm, and twice from what appeared to be a .38 revolver. A friend, Anthony Coursey, and another bystander, Marla Johnson, saw two hooded individuals running from the scene. Coursey later identified one of the fleeing men as Reuel Ray. Ray was charged with, and ultimately convicted of, felony murder, attempted robbery, and related crimes, for which he received a life sentence plus 20 years. He appealed those convictions to the Delaware Supreme Court, claiming that the trial court erred by: (1) not granting a mistrial after a juror expressed concerns for her safety; and (2) not providing the jury with certain cautionary instructions, neither of which Ray requested, following the denial of Ray’s mistrial request. In 2017, the Supreme Court affirmed Ray’s convictions. Soon after that, Ray moved for postconviction relief claiming: (1) the State’s failure to disclose that, approximately one month before Ray’s trial, it had dismissed a criminal charge then pending against a key prosecution witness violated his due process rights under Brady v. Maryland; (2) his trial counsel’s inadequate pretrial investigation, which failed to uncover the witness’s pending charge and its eventual dismissal, constituted ineffective assistance of counsel in violation of Ray’s right to counsel and due process; and (3) his counsel failed to provide effective representation at trial and on appeal by allowing an obviously flawed jury instruction on the elements of felony murder to guide the jury’s deliberations. The Superior Court rejected each of Ray’s arguments. The Supreme Court determined that the Superior Court’s erroneous felony-murder instruction and Ray’s counsel’s failure to object or to raise the error on direct appeal warranted a new trial on the felony-murder charge and the related firearm charge. The Supreme Court rejected, however, Ray’s contention that the State’s Brady violation justified relief as to all his convictions. Because those convictions were not influenced by the flawed felony-murder instruction and were supported by abundant evidence independent of the putatively biased witness’s testimony, the Court expressed confidence in them. View "Ray v. Delaware" on Justia Law

Kevin Diep, a stockholder of El Pollo Loco Holdings, Inc. (“EPL”), filed derivative claims against some members of EPL’s board of directors and management, as well as a private investment firm. The suit focused on two acts of alleged wrongdoing: concealing the negative impact of price increases during an earnings call and selling EPL stock while in possession of material non-public financial information. After the Delaware Court of Chancery denied the defendants’ motion to dismiss, the EPL board of directors designated a special litigation committee of the board (“SLC”) with exclusive authority to investigate the derivative claims and to take whatever action was in EPL’s best interests. After a lengthy investigation and extensive report, the SLC moved to terminate the derivative claims. All defendants but the private investment firm settled with Diep while the dismissal motion was pending. The Court of Chancery granted the SLC’s motion after applying the two-step review under Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981). Diep appealed, but after its review of the record, including the SLC’s report, and the Court of Chancery’s decision, the Delaware Supreme Court found that the court properly evaluated the SLC’s independence, investigation, and conclusions, and affirm the judgment of dismissal. View "Diep v. Trimaran Pollo Partners, L.L.C." on Justia Law

Zelda Sheppard appealed a superior court’s affirmance of an Industrial Accident Board (“IAB” or “Board”) decision granting Allen Family Foods’ (“Employer”) Petition for Review (“Petition”). The IAB determined that Sheppard’s prescribed narcotic pain medications were no longer compensable. Sheppard sought to dismiss the Petition at the conclusion of Employer’s case-in-chief during the IAB hearing, arguing that the matter should have been considered under the utilization review process. After hearing the case on the merits, the IAB disagreed, holding that Employer no longer needed to compensate Sheppard for her medical expenses after a two-month weaning period from the narcotic pain medications. On appeal, Sheppard argued the IAB erred as a matter of law when it denied Sheppard’s Motion to Dismiss Employer’s Petition because Employer failed to articulate a good faith change in condition or circumstance relating to the causal relationship of Sheppard’s treatment to the work injury. Accordingly, Sheppard argued that the Employer was required to proceed with the utilization review process before seeking termination of her benefits. The Delaware Supreme Court determined the IAB’s decision was supported by substantial evidence, therefore the superior court’s decision was affirmed. View "Sheppard v. Allen Family Foods" on Justia Law