Justia Delaware Supreme Court Opinion Summaries

Defendant-appellant Cameron Pierce was convicted after a bench trial on two counts of Robbery First Degree, two counts of Wearing a Disguise During the Commission of a Felony, and two counts of Felony Theft. The Superior Court sentenced Pierce to a total of 60 years at Level 5 incarceration, suspended after 6 years, to be followed by probation. Pierce appealed, arguing: (1) the superior court erred in admitting palmprint evidence because it lacked the requisite foundation for admission; and (2) the superior court’s verdict was not supported by evidence sufficient to identify Pierce as the suspect who robbed Silverside Discount Liquors. Finding no merit in either of Pierce’s claims of error, the Delaware Supreme Court affirmed the judgment of conviction. View "Pierce v. Delaware" on Justia Law

This appeal arose from a dispute over a Stock Purchase Agreement (“SPA”) formed between Valley Joist BD Holdings, LLC (“VJ Holdings”) and EBSCO, Industries Inc. (“EBSCO”). In December 2017, EBSCO sold all of its stock in Valley Joist, Inc. to VJ Holdings. After closing, VJ Holdings discovered structural defects in one of the buildings acquired as part of the transaction. In July 2018, VJ Holdings sought indemnification from EBSCO through the procedure outlined in the SPA. Two years after receiving no response to the notice, VJ Holdings filed suit in the Superior Court for breach of contract and fraud in the inducement. The Superior Court granted EBSCO’s motion to dismiss the fraud claim for failure to plead sufficient facts to satisfy Superior Court Civil Rule 9(b). The court also dismissed the breach of contract claim as barred under the SPA’s one-year contractual statute of limitations. VJ Holdings appealed: (1) challenging whether it pled sufficient facts to show pre-closing knowledge of fraud; and (2) challenged whether the Superior Court properly relied on a bootstrapping doctrine to dismiss the fraud claim. The Delaware Supreme Court reversed, finding that the allegations in the complaint, when viewed in the light most favorable to the non-moving party, lead to a reasonable inference that EBSCO knew of the structural defects in the building at the time of closing the SPA, contrary to its representation in the SPA that the building was in good operating condition and repair. As for the bootstrapping argument, the Supreme Court determined the Superior Court did not rely on a bootstrapping doctrine to dismiss the fraud claim. View "Valley Joist BD Holdings, LLC v. EBSCO Industries, Inc." on Justia Law

After a jury trial, Noranda Aluminum Holding Corporation, an aluminum-products manufacturer, won a judgment against its insurance companies for more than $28 million. The Delaware Supreme Court affirmed, and the Superior Court awarded Noranda post-judgment interest at 6 percent (the same rate as pre-judgment interest) because that was the legal rate in effect when the insurance liability first arose. On appeal, Noranda argued the Superior Court should have used an interest rate of 7.5 percent, which was the legal rate on the date judgment was entered. To this, the Supreme Court agreed, holding that, in 6 Del. C. section 2301(a)'s final sentence, the judgment entered by the Superior Court in Noranda’s favor “shall, from the date of the judgment, bear post-judgment interest of 5% over the Federal Reserve discount rate[.]” Because the Federal Reserve discount rate was 2.5 percent on October 17, 2019, the date the Superior Court entered judgment, the Supreme Court reversed and remanded with instructions to award Noranda post-judgment interest at 7.5 percent. View "Noranda Aluminum Holding Corporation v. XL Insurance America, Inc." on Justia Law

At the heart of the State’s prosecution of defendant Karieem Howell for numerous drug and weapons offenses was the testimony of Brian Caldwell: a witness who had agreed to cooperate with the prosecution in return for a favorable plea agreement. During Howell’s trial, the trial judge instructed Howell’s jurors, at the beginning of Caldwell’s damning testimony, that they could not consider Caldwell’s agreement with the prosecution in weighing his credibility. The State conceded the court’s instruction was legally erroneous. But, because Howell’s lawyer did not object to the instruction, the Delaware Supreme Court was limited to review the mistake for plain error - an error that so affected Howell’s substantial rights that his failure to object would be excused. The State contended that the strength of the evidence independent of Caldwell’s testimony and the correct instructions regarding witness credibility provided to the jury at the close of evidence suffice to erase any prejudice that Howell might have suffered because of the erroneous instruction. The Supreme Court's review of the trial record persuaded it otherwise, finding Caldwell’s testimony was "pivotal evidence" upon which the jury’s determination of key elements of the crimes charged likely turned. "Without Caldwell’s testimony, the prosecution’s case was susceptible to doubt; with it - if the jury found it credible - the likelihood of conviction increased dramatically. The trial court’s instruction, however, unduly restricted the jury’s assessment of Caldwell’s credibility and undermined the fairness of Howell’s trial." Therefore, the Court reversed Howell's convictions and remanded to the Superior Court for a new trial. View "Howell v. Delaware" on Justia Law

In 2017, the Delaware Court of Chancery held that Plaintiff Robert Lenois had pled with particularity that the controlling stockholder of Erin Energy Corporation (“Erin” or the “Company”) had acted in bad faith. It further held that Lenois had pled either “very serious claims of bad faith” or “a duty of care claim” against the remainder of Erin’s board in connection with two integrated transactions. In those transactions, the controller allegedly obtained an unfair windfall by selling certain Nigerian oil assets to Erin. The trial court dismissed the derivative claims on standing grounds (i.e., holding that demand was not excused). Lenois appealed that decision. During the pendency of the appeal, Erin voluntarily filed for bankruptcy. The Chapter 7 Trustee obtained the permission of the Bankruptcy Court to pursue, on a direct basis, the claims that had been asserted in the Lenois action in the Court of Chancery. As a result of the bankruptcy proceedings, which vested the Trustee with control over the claims, the Delaware Supreme Court determined that the sole issue on appeal was moot. The case was remanded to the Court of Chancery to resolve two pending motions — a Rule 60(b) motion and the Trustee’s motion pursuant to Rule 25(c) to be substituted for nominal defendant Erin and then realigned as plaintiff (the “Realignment Motion”). The Court of Chancery denied the Rule 60(b) motion and summarily denied the Rule 25(c) motion. Here, the Supreme Court reversed, holding the Court of Chancery should have granted the Trustee’s Substitution and Realignment Motion. View "Lenois v. Lukman" on Justia Law

MAPS Hotel and Resorts One LLC (the “Buyer”) agreed to purchase fifteen hotel properties from AB Stable VIII LLC (the “Seller”) for $5.8 billion. In response to the pandemic and without securing the Buyer’s consent, the Seller made drastic changes to its hotel operations, due in part to the damage the pandemic inflicted on the hospitality industry. The transaction was also plagued by problems with fraudulent deeds covering some of the hotel properties. The Buyer eventually called off the deal, relying on the Seller’s failure to comply with the sale agreement. The Seller sued in the Delaware Court of Chancery to require the Buyer to complete the transaction. The Court of Chancery concluded that the Buyer could terminate the sale agreement because the Seller breached a covenant and a condition in the sale agreement. According to the court, the Seller violated the ordinary course covenant by failing to operate in the ordinary course of its business - closing hotels, laying off or furloughing thousands of employees, and implementing other drastic changes to its business - without the Buyer’s consent. Additionally, a condition requiring title insurance for the hotel properties failed because the title insurers’ commitment letters had a broad exception covering the fraudulent deeds, and the Buyer did not cause the failure. On appeal, the Seller argued it satisfied the Ordinary Course Covenant because the covenant did not preclude it from taking reasonable, industry-standard steps in response to the pandemic; the court’s ruling negated the parties’ allocation of pandemic risk to the Buyer through the Material Adverse Effect provision; and its breach of the notice requirement in the covenant was immaterial. The Seller also claimed the Court of Chancery gave too expansive a reading to the exception in the title insurance condition, or, alternatively, that the court incorrectly found that the Buyer did not contribute materially to its breach. The Delaware Supreme Court affirmed the Court of Chancery’s judgment, finding the court concluded correctly that the Seller’s drastic changes to its hotel operations in response to the COVID-19 pandemic without first obtaining the Buyer’s consent breached the ordinary course covenant and excused the Buyer from closing. Because the Seller’s failure to comply with the ordinary course covenant was dispositive of the appeal, the Supreme Court did not reach whether the Seller also breached the title insurance condition. View "AB Stable VIII LLC v. Maps Hotels and Resorts One LLC" on Justia Law

In 2005, Sweetwater Point, LLC (“Sweetwater”) paid more than $8 million for two parcels of land. Lehman Brothers Holdings, Inc. (“Lehman”) provided a $6 million loan to fund the purchase. Shortly before closing, Sweetwater learned that the State had a claim to a de minimis portion of one of the parcels. Although the State’s claim did not appear in the sellers’ chain of title, Sweetwater decided to go forward with the sale. In 2009, the State filed a lawsuit claiming it had superior title to the entire parcel of land. In May 2017, the Court of Chancery held that the State had superior title to the parcel. Approximately one year later, Sweetwater and Lehman filed separate lawsuits against the sellers. The Superior Court dismissed both actions, holding that the claims were time-barred. Sweetwater and Lehman appealed, arguing that their claims were timely because the statute of limitations did not begin to run until the Court of Chancery held that the State had superior title to the parcel. The Delaware Supreme Court affirmed the Superior Court: the three-year statute of limitations established under 10 Del. C. 8106 applied to each claim. "Each claim accrued at closing, and any tolling of the claims ceased, at the latest, when the State asserted ownership over the land, placing Sweetwater and Lehman on inquiry notice of the injury. That occurred more than three years before Sweetwater and Lehman filed their complaints in the Superior Court. Accordingly, each of the claims filed below is time-barred." View "Lehman Brothers Holdings v. Kee, et al." on Justia Law

In 2012, then-Vice President Joseph Biden donated his Senatorial papers to the University of Delaware. The donation was made pursuant to a gift agreement that placed certain restrictions on the University’s ability to make the Senatorial Papers publicly available. In April 2020, Judicial Watch, Inc. and The Daily Caller News Foundation (“DCNF”) (collectively, “Appellants”) submitted requests under the Delaware Freedom of Information Act (“FOIA”) to access the Papers and any records relevant to or discussing the Papers. The University denied both requests, stating that the Papers were not subject to FOIA because the Papers did not meet the definition of “public records” and because the full Board of Trustees never discussed the Papers. Appellants then filed separate petitions with the Office of the Attorney General of the State of Delaware challenging the University’s denial of their requests. The Deputy Attorney General issued individual opinions to Judicial Watch and DCNF concluding that the University had not violated FOIA because the records Appellants requested were not subject to FOIA. Appellants appealed to the Superior Court, which affirmed the Deputy Attorney General’s opinions. Appellants appealed the Superior Court’s ruling to the Delaware Supreme Court. Having reviewed the briefs, the record on appeal, and after oral argument, the Supreme Court concluded the Superior Court properly interpreted the definition of “public record,” and did not erroneously shift the burden of proof to the Appellants. However, the Court concluded the University failed to carry its burden of justifying its denial of the Appellants’ FOIA requests, based on the record. Furthermore, the Court granted the Superior Court leave to reconsider the request for fees and costs, to the extent it deemed that necessary. Thus, judgment was affirmed in part, reversed in part, and remanded for further proceedings. View "Judicial Watch, Inc. v. University of Delaware" on Justia Law

Verisign, Inc. claimed large net operating loss deductions on its 2015 and 2016 Delaware income tax returns, which reduced its bill to zero in both years. The Division of Revenue reviewed the returns and found that Verisign’s use of net operating losses violated a longstanding, but non-statutory, Division policy. Under the policy, a corporate taxpayer that filed its federal tax returns with a consolidated group was prohibited from claiming a net operating loss deduction in Delaware that exceeded the consolidated net operating loss deduction on the federal return in which it participated. The Division applied the policy, determined that Verisign had underreported its income, and assessed the company $1.7 million in unpaid taxes and fees. After Verisign’s administrative protest of the assessment was denied, it appealed to the Superior Court. The Superior Court held that the policy violated the Uniformity Clause of Article VIII, section 1 of the Delaware Constitution. The Delaware Supreme Court agreed with the Superior Court that the Division’s policy was invalid, but it affirmed on alternate grounds: the policy exceeded the authority granted to the Division by the General Assembly in 30 Del. C. sections 1901– 1903. As a result, the Court declined to reach Verisign’s constitutional claims. View "Director of Revenue v. Verisign, Inc." on Justia Law

In 2001, Lavastone Capital LLC (Lavastone) entered into an agreement with Coventry First LLC (Coventry) to purchase “life settlements” – life-insurance policies sold on the secondary market. One was that of Beverly Berland. Lincoln Financial (Lincoln) issued the policy to Berland in 2006. But Berland did not act alone in acquiring it. A few months before, she approached a business called “Simba.” As Simba pitched it, the transaction allowed clients to “create dollars today by using a paper asset, (a life insurance policy not yet issued from a major insurance carrier insuring your life)” by selling it on the secondary market. Clients did not need to put up any money upfront. Instead, they got nonrecourse loans to finance the transactions, which allowed them to make all necessary payments without tapping into personal funds. The only collateral for the loan was the life-insurance policy itself. Berland agreed to participate in several transactions with Simba, profiting greatly. Lavastone kept the policy in force, paying all relevant premiums to Lincoln Financial. Upon Berland’s death more than seven years later, Lincoln paid Lavastone $5,041,032.06 in death benefits under the policy. In December 2018, Berland’s estate filed a complaint against Lavastone in the District Court, seeking to recover the death benefits that Lavastone received under 18 Del C. 2704(b). In 2020, the parties filed cross-motions for summary judgment. In 2021, the District Court certified the three questions of law to the Delaware Supreme Court. The Supreme Court responded: (1) a death-benefit payment made on a policy that is void ab initio under 18 Del. C. 2704(a) and PHL Variable Insurance Co. v. Price Dawe 2006 Insurance Trust was made “under [a] contract” within the meaning of 18 Del. C. 2704(b); (2) so long as the use of nonrecourse funding did not allow the insured or his or her trust to obtain the policy “without actually paying the premiums” and the insured or his or her trust procured or effected the policy in good faith, for a lawful insurance purpose, and not as a cover for a wagering contract; and (3) an estate could profit under 18 Del. C. 2704(b) where the policy was procured in part by fraud on the part of the decedent and the decedent profited from the previous sale of the policy, if the recipient of the policy benefits cannot establish that it was a victim of the fraud. View "Lavastone Capital LLC v. Estate of Beverly E. Berland" on Justia Law