Justia Delaware Supreme Court Opinion Summaries

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Two questions of law were certified to the Delaware Supreme Court by the United States Court of Appeals for the Eleventh Circuit: (1) when faced with an action brought by an estate under 18 Del. C. 2704(b), an innocent downstream investor in a stranger-originated life insurance (“STOLI”) policy, or its securities intermediary, could assert certain defenses under the Delaware Uniform Commercial Code; and (2) whether downstream investors in a STOLI policy could sue to recover any premiums they paid. The Court answered question one in the negative: in the sui generis context of STOLI schemes, these defenses are not available. The Court answered question two in the affirmative: yes, if the party being sued can prove its entitlement to those premiums under a viable legal theory. View "Wells Fargo Bank v. Estate of Phyllis M. Malkin" on Justia Law

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Delmarsh, LLC, a real-estate company, owned six lots in Bowers, Delaware. The lots had long been designated as wetlands on the State Wetlands Map. The Department of Natural Resources and Environmental Control (“DNREC”) removed a portion of the lots from the Wetlands Map in 2013 at Delmarsh’s request. In June 2019, Delmarsh requested that DNREC designate the remaining portion of the lots as non-wetlands. DNREC denied the request, and Delmarsh appealed to the Environmental Appeals Board (“the Board”). The Board affirmed DNREC’s denial. Delmarsh appealed to the Superior Court, arguing that refusal to reclassify the lands as non-wetlands, constituted a taking. The Superior Court affirmed the Board’s decision. The Delaware Supreme Court affirmed: At the time DNREC turned down Delmarsh’s request to de-designate the remainder of the lots as wetlands, the lots were zoned C/A: Conservation–Agriculture. Instead of focusing on the economic impact of the de-designation on the lots as zoned at the time of DNREC’s decision, Delmarsh relied exclusively on the economic impact on the lots as later rezoned to R-1—single-family residential housing. “By its own admission, the rezoning to residential occurred after the denial of its DNREC application. Delmarsh did not offer any argument or evidence that DNREC’s refusal to redesignate the lots caused them to lose any value while they were zoned as C/A. In the absence of such evidence, the Superior Court held correctly that no taking occurred.” View "Delmarsh, LLC v. Environmental Appeals Board of the State of Delaware" on Justia Law

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In a bench trial, a Delaware superior court found Appellant Tajiir Patterson guilty of invasion of privacy for filming a sexual encounter with D.L. and distributing the video over social media without her consent. The court sentenced Patterson to two years at Level V incarceration, suspended for twelve months at Level III probation. As part of the investigation, the Police extracted data, including over 9,000 photos, from D.L.’s cell phone. Patterson’s counsel was permitted to inspect these photos. The encounter occurred in late 2017, and nearly three years passed between the time of the recording and the trial. Because D.L.’s appearance had changed significantly during that time, the State sought to introduce “Photo 1” into evidence to show her appearance at the time of the recording. Patterson’s counsel objected because Photo 1 was not disclosed in discovery. The trial judge sustained the objection, ruling that photos not disclosed in discovery would be inadmissible, but photos contained within the cell phone extraction would be admissible. The State then sought to introduce “Photo 2” into evidence, which was of D.L. from 2017 and was included in the cell phone extraction. Patterson’s counsel objected. Photo 2 was admitted into evidence. Patterson seeks reversal of his conviction, contending that the State violated its discovery obligations by not flagging the importance of the 2017 photos of D.L. and by not providing a copy of all the photos in D.L.’s phone. Patterson argued the trial court abused its discretion by allowing Photo 2 into the record given the State’s alleged discovery violation. Finding the State did not violate its discovery obligation, the Delaware Supreme Court concluded the trial court did not abuse its discretion in admitting Photo 2 into evidence. View "Patterson v. Delaware" on Justia Law

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Appellant Nicholas Kroll appealed the Court of Chancery’s dismissal of his complaint. Kroll was terminated from his position as a police officer for the City of Wilmington (the “City”) on the ground that he failed to comply with a departmental requirement that he reside in the City. A second ground was that he violated a departmental regulation regarding dishonesty by giving a false or inaccurate address on annual, required residency affidavits. After his dismissal, he filed suit seeking a declaratory judgment that the City, its police department, and its mayor, in his official capacity, breached the police Collective Bargaining Agreement (the “CBA”) and his right to due process by modifying the definition of the term “residence” in October 2017, and applying the modified definition to him without giving the Fraternal Order of Police an opportunity to bargain the new definition on behalf of its members. The modification, Kroll argued, was material to the decision to terminate his employment. He also sought an injunction reinstating him as a City police officer with back pay. Appellees moved to dismiss, arguing the Court of Chancery lacked jurisdiction over the complaint’s subject matter. The Appellees argued, in part, that Kroll had an adequate remedy at law in the form of a petition for a writ of certiorari, which was within the jurisdiction of the Superior Court. Appellees had not argued that Kroll’s complaint fell within the CBA grievance procedure (that issue was raised sua sponte by the Court of Chancery in its ruling). The parties agreed the disciplinary action taken against Kroll was not subject to the grievance procedure set forth in the CBA. Appellees agreed the Court of Chancery committed legal error by basing its decision on the CBA’s grievance procedure. They urged the Delaware Supreme Court, however, to affirm on the alternative grounds for dismissal that were asserted in the Court of Chancery. Finding the Court of Chancery did not address Appellees' arguments, the Supreme Court reversed judgment and remanded for further proceedings. View "Kroll v. City of Wilmington" on Justia Law

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Pursuant to the Ownership Interest Purchase Agreement dated April 23, 2014 (the “Agreement”), Appellant North American Leasing, Inc. purchased Appellant NASDI, LLC, and Appellant Yankee Environmental Services, LLC. NASDI was in the business of providing demolition and site redevelopment services throughout the United States. The seller was Appellee NASDI Holdings, LLC, which before the sale, possessed all ownership interests in NASDI and Yankee. Great Lakes Dredge and Dock Corporation (“Great Lakes”), the parent company of NASDI Holdings, agreed that performance and payment bonds on existing projects being performed by NASDI and Yankee at the time of the sale would remain in place for the duration of each project. The Agreement also provided that North American Leasing, NASDI, Yankee, and Appellant Dore & Associates Contracting, Inc. (“Dore”), would indemnify NASDI Holdings and its affiliates for any losses arising from those bonds that Great Lakes agreed would remain in place on existing projects. After the sale of NASDI and Yankee was completed, Great Lakes incurred losses from performance and payment bonds on a project known as the Bayonne Bridge project. The Defendants have taken the position throughout this litigation that they have no obligation to indemnify the Plaintiffs because the Plaintiffs’ claims notices were untimely under the Agreement. The Court of Chancery rejected the Defendants’ contention and entered judgment against the Defendants for the total amount of the Plaintiffs’ claim. Finding no reversible error in this judgment, the Delaware Supreme Court affirmed. View "North American Leasing, Inc. v. NASDI Holdings, LLC" on Justia Law

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This appeal involved a challenge to how Geico General Insurance Company (“GEICO”) processed insurance claims under 21 Del. C. 2118. Section 2118 provided that certain motor vehicle owners had to obtain personal injury protection (“PIP”) insurance. Plaintiffs, all of whose claims for medical expense reimbursement under a PIP policy were denied in whole or in part, were either GEICO PIP policyholders who were injured in automobile accidents or their treatment providers. Plaintiffs alleged GEICO used two automated processing rules that arbitrarily denied or reduced payments without consideration of the reasonableness or necessity of submitted claims and without any human involvement. Plaintiffs argued GEICO’s use of the automated rules to deny or reduce payments: (1) breached the applicable insurance contract; (2) amounted to bad faith breach of contract; and (3) violated Section 2118. Having reviewed the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court affirmed the Superior Court’s ruling that the judiciary had the authority to issue a declaratory judgment that GEICO’s use of the automated rules violated Section 2118. The Supreme Court also affirmed the Superior Court’s judgment as to the breach of contract and bad faith breach of contract claims. The Court concluded, however, that the issuance of the declaratory judgment was improper. View "GEICO General Insurance Company v. Green" on Justia Law

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Shelley Droz alleged that her husband, Eric Droz, used an arc grinding machine to resurface brake drum shoes that contained asbestos. She claimed the arc grinder manufacturer, Hennessy, knew that the grinding process generated asbestos dust, and Hennessy had a duty under Washington State law to warn about the dangers of asbestos dust exposure. Eric Droz died of mesothelioma while the litigation was pending. The Superior Court granted Hennessy’s summary judgment motion, holding that once Hennessy showed that the arc grinder could be used with asbestos-containing and asbestos-free brake drum shoes, the burden shifted to Ms. Droz to show that Mr. Droz used asbestos-containing brake drum shoes with the arc grinder. The court agreed with Hennessy that Droz did not offer sufficient evidence of exposure to brake drum shoe asbestos dust to counter Hennessy’s summary judgment motion. The issues for the Delaware Supreme Court were whether the Superior Court misapplied Superior Court Rule 56’s burden-shifting framework and, once the burden shifted to the plaintiff to raise a genuine issue of material fact, whether Ms. Droz came forward with evidence demonstrating that Mr. Droz used asbestos-containing brake drum shoes with the arc grinder. The Supreme Court found the Superior Court properly allocated the summary judgment burdens. But the Court reversed, finding Ms. Droz met her burden to raise a genuine issue of material fact whether Mr. Droz was exposed to asbestos dust from using the arc grinder with asbestos-containing brake drum shoes. View "Droz v. Hennessy Industries, LLC" on Justia Law

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In March 2012, First Solar, Inc. stockholders filed a class action lawsuit against the company alleging that it violated federal securities laws by making false or misleading public disclosures ("Smilovits Action"). National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) provided insurance coverage for the Smilovits Action under a 2011–12 $10 million “claims made” directors and officers insurance policy. While the Smilovits Action was pending, First Solar stockholders who opted out of the Smilovits Action filed what has been referred to as the Maverick Action. The Maverick Action alleged violations of the same federal securities laws as the Smilovits Action, as well as violations of Arizona statutes and claims for fraud and negligent misrepresentation. In this appeal the issue presented for the Delaware Supreme Court's review was whether the Smilovits securities class action, and a later Maverick follow-on action were related actions, such that the follow-on action was excluded from insurance coverage under later-issued policies. The Superior Court found that the follow-on action was “fundamentally identical” to the first-filed action and therefore excluded from coverage under the later-issued policies. The Supreme Court found that even though the court applied an incorrect standard to assess the relatedness of the two actions, judgment was affirmed nonetheless because under either the erroneous “fundamentally identical” standard or the correct relatedness standard defined by the policies, the later-issued insurance policies did not cover the follow-on action. View "First Solar, Inc. v. National Union First Insurance Company of Pittsburgh, PA" on Justia Law

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Claimant Christina Zayas, a paratransit bus driver, sued her employer, DART/State of Delaware (“Employer”), for injuries she sustained in a 2016 work incident where a passenger physically assaulted her (the “Incident”). In 2019, Zayas underwent left shoulder arthroscopic surgery performed by Dr. Evan Crain (“Dr. Crain”). After the surgery, Zayas was placed on total disability from May 2019 through October 2019. Zayas filed Petitions to Determine Additional Compensation Due relating to the Incident. Specifically, she sought payment of medical expenses, total disability benefits, and acknowledgement of the compensability of the surgery Dr. Crain performed in 2019. Zayas’ hearing was scheduled for November 2019. Prior to the Hearing, the parties stipulated that the limited issue in dispute was whether the May 2019 surgery was causally related to the Incident. The Board held that Zayas failed to meet her burden of proof that the surgery in 2019 was causally related to the Incident. Notably, although the Board had excluded them, the Board stated in its Decision that Medical Records by Zayas' physician were admissible. A review of the record indicated the Medical Records were never admitted into evidence; and the Superior Court did not consider this inconsistency, or the issues Zayas had raised regarding the medical testimony and records. Nevertheless, the Superior Court affirmed the Board’s decision and found that substantial evidence existed to support the Board’s legal conclusions. On appeal, Zayas again argued the Board erred by not admitting her Medical Records and that it abused its discretion by admitting the Employer's expert's deposition testimony during the Hearing. The Delaware Supreme Court concluded that because Dr. Tadduni, the Employer's expert, refused to answer relevant questions, Zayas was deprived of the opportunity to elicit relevant information. "In essence, Dr. Tadduni unilaterally determined that he would not answer questions concerning Dr. Cary’s treatment of Zayas. In admitting Dr. Tadduni’s testimony, and simultaneously excluding the Medical Records, the Board’s actions prevented Zayas from adequately presenting her case, violated fundamental notions of fairness, and thereby abused its discretion." As a result, the Supreme Court reversed and remanded the Superior Court's judgment, and remanded for further proceedings. View "Zayas v. Delaware" on Justia Law

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In Section 9(e) of a settlement agreement between Cox Communications and Sprint Corporation (T-Mobile U.S., Inc.'s predecessor-in-interest, Cox agreed that, before it offered wireless mobile services to its customers, it would enter into a “definitive” exclusive provider agreement with Sprint “on terms to be mutually agreed upon between the parties for an initial period of 36 months[.]” Cox and Sprint never entered into such a partnership. After T-Mobile finalized a purchase of Sprint in April 2020, the combined entity bid for Cox’s business, but Cox decided to partner with Verizon. After hearing that it would not be Cox’s exclusive partner, T-Mobile accused Cox of breaching the Settlement Agreement. Cox sued T-Mobile in Delaware's Court of Chancery, seeking a declaration that Section 9(e) was either an unenforceable “agreement to agree” or a Type II preliminary agreement requiring Cox and T-Mobile to negotiate in good faith. According to Cox, it was free to partner with Verizon because these good-faith negotiations failed. Shortly before trial, Cox also suggested that whatever Section 9(e) means, T-Mobile could not enforce it because the Settlement Agreement was between Cox and Sprint, and Cox never consented to an assignment. T-Mobile filed a compulsory counterclaim for breach of contract. In support of this claim, T-Mobile offered that Section 9(e) meant that, although Cox was not obligated to provide wireless mobile services, if it wished to do so, it had to first enter into an exclusive provider agreement with T-Mobile as the conceded successor-in-interest to Sprint. For T-Mobile, the failure of the parties’ attempt to negotiate the definitive terms of the agreement meant that Cox could not enter the wireless mobile market at all. The Court of Chancery agreed with T-Mobile and permanently enjoined Cox from “partnering with any mobile network operator other than T-Mobile to provide Wireless Mobile Service before entering into an agreement with T-Mobile. The Delaware Supreme Court disagreed with the Court of Chancery, finding the Settlement Agreement was a Type II preliminary agreement that obligates the parties to negotiate open items in good faith. The judgment was reversed, the injunction vacated, and the matter remanded so that the Court of Chancery could determine whether Cox and T-Mobile discharged their obligations to negotiate in good faith. View "Cox Communications, Inc. v. T-Mobile US, Inc." on Justia Law