Justia Delaware Supreme Court Opinion Summaries

The issue this appeal presented for the Delaware Supreme Court’s review asked for a determination of whether premiums paid on insurance policies declared void ab initio for lack of an insurable interest should be returned. Geronta Funding argued Delaware law required the automatic return of all premiums paid on the void policy. Brighthouse Life Insurance Company argued a party must prove entitlement to restitution. The trial court agreed with Brighthouse and relied on the Restatement (Second) of Contracts to determine whether Geronta was entitled to restitution. Specifically, the court held that Geronta could obtain restitution if it could prove excusable ignorance or that it was not equally at fault. Applying this test, the court ruled that Geronta was only entitled to the return of the premiums it paid after alerting Brighthouse to the void nature of the policy at issue. Geronta appealed this ruling, arguing that the court erred when it adopted the Restatement instead of automatically returning the premiums, erred in its actual application of the Restatement, even assuming that is the proper test, and erred by precluding certain testimony from Geronta witnesses. Because this was a matter of first impression, the Supreme Court adopted restitution under a fault-based analysis as framed by the Restatement as the test to determine whether premiums should be returned when a party presents a viable legal theory, such as unjust enrichment, and seeks the return of paid premiums as a remedy. The Court held, however, that despite applying the Restatement, the Superior Court’s application of the Restatement failed to account for the relevant questions encompassed by that approach. The Supreme Court reversed the trial court’s holdings regarding entitlement to premiums and remanded for further consideration, but found no fault in the Superior Court preclusion of certain testimony from Geronta’s witnesses. View "Geronta Funding v. Brighthouse Life Insurance Company" on Justia Law

In 2021, appellant Javon Pollard was convicted of numerous drug-related charges. Pollard appealed, arguing that the Superior Court committed plain error by not sua sponte suppressing evidence obtained during an allegedly illegal search of his vehicle in violation of his constitutional rights under the Fourth Amendment of the United States Constitution and Article I, Section 6 of the Delaware Constitution. To the Delaware Supreme Court, the State urged the Supreme Court not to consider Pollard’s appeal because he failed to properly raise this argument below. The State further argued that Pollard’s challenges also failed because there was sufficient probable cause to justify the search. The Supreme Court agreed Pollard did not fairly raise the argument below. Regardless, Pollard also lost on the merits because the search did not violate either the United States or Delaware Constitutions. View "Pollard v. Delaware" on Justia Law

An objector appealed a Delaware Court of Chancery decision approving a litigation settlement for claims alleging excessive non-employee director compensation. Initially, the parties agreed to a preliminary settlement and presented it to the Court of Chancery for approval. The Court of Chancery sided with the objector and refused to approve a non-monetary settlement of the derivative claims. The court also awarded the objector fees. After the court denied a motion to dismiss, the parties came up with a new settlement that included a financial benefit to the corporation. The objector renewed his objection, this time arguing that the new settlement improperly released future claims challenging compensation awards and that the plaintiff was not an adequate representative for the corporation’s interests. The Court of Chancery approved the new settlement and refused to award the objector additional attorneys’ fees. On appeal to the Delaware Supreme Court, the objector argued the court erred by: (1) approving an overbroad release; (2) approving the settlement without finding that the plaintiff was an adequate representative of the corporation’s interests; and (3) reducing the objector’s fee because the court believed it would have rejected the original settlement agreement without the objection. Though the Supreme Court acknowledged the Court of Chancery and the parties worked diligently to bring this dispute to a close, it reversed the judgment because the settlement agreement released future claims arising out of, or contemplated by, the settlement itself instead of releasing liability for the claims brought in the litigation. View "Griffith v. Stein" on Justia Law

The issue this case presented for the Delaware Supreme Court's review centered on whether the First Amendment barred claims for defamation and tortious interference with contract against a defendant who, in an email to a law firm, described as “shockingly racist” a lawsuit filed by one of the firm’s partners in his personal capacity. The suit aimed to preserve a nearby high school’s “Indian” mascot. The partner, who claimed to have lost his position with the law firm because of the email, sued his detractor, contending that the characterization of his lawsuit was demonstrably false and pled four causes of action, including defamation and tortious interference with contract. The partner’s detractor, in response, contended her statements about the partner were opinions protected by the First Amendment’s Free Speech Clause. The Superior Court agreed with the detractor and dismissed the partner’s tort action. The Supreme Court agreed with the trial court: the statements at issue did not on their face contain demonstrably false statements of fact, nor did they imply defamatory and provably false facts. "As statements concerning an issue of public concern, moreover, they are entitled to heightened First Amendment protection and cannot form the predicate of the plaintiff’s tort claims." View "Cousins v. Goodier" on Justia Law

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