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Plaintiffs Peter Brinckerhoff and his trust, were long-term investors in Enbridge Energy Partners, L.P. (“EEP”), a Delaware master limited partnership (“MLP”). A benefit under Delaware law of this business structure was the ability to eliminate common law duties in favor of contractual ones, thereby restricting disputes to the four corners of the limited partnership agreement (“LPA”). This was not the first lawsuit between Brinckerhoff and the Enbridge MLP entities over a conflicted transaction. In 2009, Brinckerhoff filed suit against most of the same defendants in the current dispute, and challenged a transaction between the sponsor and the limited partnership. Enbridge, Inc. (“Enbridge”), the ultimate parent entity that controlled EEP’s general partner, Enbridge Energy Company, Inc. (“EEP GP”), proposed a joint venture agreement (“JVA”) between EEP and Enbridge. Brinckerhoff contested the fairness of the transaction on a number of grounds. After several rounds in the Court of Chancery leading to the dismissal of his claims, and a trip to the Delaware Supreme Court, Brinckerhoff eventually came up short when the Court of Chancery’s ruling that he had waived his claims for reformation and rescission of the transaction by failing to assert them first in the Court of Chancery was affirmed. A dispute over the Clipper project would again go before the Court of Chancery. In 2014, Enbridge proposed that EEP repurchase Enbridge’s interest in the Alberta Clipper project excluding the expansion rights that were part of the earlier transaction. As part of the billion dollar transaction, EEP would issue to Enbridge a new class of EEP partnership securities, repay outstanding loans made by EEP GP to EEP, and, amend the LPA to effect a “Special Tax Allocation” whereby the public investors would be allocated items of gross income that would otherwise be allocated to EEP GP. According to Brinckerhoff, the Special Tax Allocation unfairly benefited Enbridge by reducing its tax obligations by hundreds of millions of dollars while increasing the taxes of the public investors, thereby undermining the investor’s long-term tax advantages in their MLP investment. The Court of Chancery did its best to reconcile earlier decisions interpreting the same or a similar LPA, and ended up dismissing the complaint. On appeal, Brinckerhoff challenged the reasonableness of the Court of Chancery’s interpretation of the LPA. The Supreme Court agreed with the defendants that the Special Tax Allocation did not breach Sections 5.2(c) and 15.3(b) governing new unit issuance and tax allocations. But, the Court found that the Court of Chancery erred when it held that other “good faith” provisions of the LPA “modified” Section 6.6(e)’s specific requirement that the Alberta Clipper transaction be “fair and reasonable to the Partnership.” View "Brinckerhoff v. Enbridge Energy Company, Inc., et al." on Justia Law

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At issue before the Supreme Court in this case was the Family Court’s determination that only one-third of a substantial bonus paid to Wife after separation but before divorce qualified as marital property. According to the Family Court, because two-thirds of the bonus payment was subject to forfeiture after the couple’s divorce, only one-third of the bonus was actually earned during the marriage and qualified as marital property. The Supreme Court reversed the Family Court’s decision because the entire bonus was earned during the marriage and qualified as marital property. “Although Wife’s bonus might have been subject to forfeiture post-divorce, it was nonetheless earned … during the marriage.” The case was remanded for the Family Court to determine how to equitably divide the full bonus amount. View "King v. Howard" on Justia Law

Posted in: Family Law

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Wife Leslie Lankford appealed a family court order awarding her alimony. In an ancillary order, the family court found that Wife was dependent on her ex-husband, Evan Lankford, Jr. and therefore entitled to alimony. On reargument, the court recalculated Wife’s income and expenses and determined that Wife was not dependent on Husband for the purposes of alimony based solely on Wife’s monthly surplus of $260. She appealed. After review, the Supreme Court held that the family court abused its discretion by basing its dependency determination solely on one of the statutory factors provided in 13 Del. C. sec. 1512(c). Accordingly, the Court reversed and remanded this case back to the family court for reconsideration of dependency in light of all relevant factors enumerated in Section 1512(c). View "Lankford v. Lankford" on Justia Law

Posted in: Family Law

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Noteholders succeeded in securing warrants that the issuer of the notes had promised as a result of the resolution of a previous event of default. When addressing the merits, the Court of Chancery held that the promise of warrants had become a right of the noteholders under the notes, as amended after the default. On that ground, the Court of Chancery awarded the noteholders the warrants they sought. The noteholders then sought to recover their attorneys’ fees based on a fee-shifting provision in the notes which entitled the noteholders to attorneys’ fees if: (1)”any indebtedness” evidenced by the notes was collected in a court proceeding; or (2) the notes were placed in the hands of attorneys for collection after default. But, the Court of Chancery denied this request and the noteholders appealed. After review, the Delaware Supreme Court found that because the warrants were a form of indebtedness that the noteholders had to collect through an action in the Court of Chancery, the noteholders were entitled to attorneys’ fees. The noteholders were also entitled to attorneys’ fees because they had to seek the assistance of counsel to collect the warrants after default. View "Washington v. Preferred Communication Systems, Inc." on Justia Law

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Philip Shawe and his mother, Shirley Shawe, filed an interlocutory appeal of an August 13, 2015 Chancery Court opinion and July 18, 2016 order appointing a custodian to sell TransPerfect Global, Inc., a Delaware corporation. After a six-day trial the Court issued an opinion concluding that the “warring factions” were hopelessly deadlocked as stockholders and directors. The court carefully considered three alternatives to address the dysfunction and deadlock, and in the end decided that the circumstances of the case required the appointment of a custodian to sell the company. On appeal, the Shawes did not challenge the Court’s factual findings; instead, Philip Shawe claimed for the first time on appeal that the court exceeded its statutory authority when it ordered the custodian to sell a solvent company. Alternatively, Shawe contended that less drastic measures were available to address the deadlock. Shirley Shawe argued for the first time on appeal that the custodian’s sale of the company might result in an unconstitutional taking of her one share of TransPerfect Global stock. The Supreme Court disagreed with the Shawes and affirmed the Chancery Court’s judgment. View "Shawe v. Elting" on Justia Law

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Philip Shawe appealed a Chancery Court order sanctioning him for misconduct throughout litigation with his current business partner and former romantic partner, Elizabeth Elting. After an evidentiary hearing, the Chancery Court found that Shawe deleted documents from his computer, recklessly failed to safeguard his cell phone, improperly gained access to Elting’s e-mails, and lied multiple times under oath. The court also found that Shawe’s improper conduct impeded the administration of justice, unduly complicated the proceedings, and caused the court to make false factual findings. The Court ordered Shawe to pay 100% of the fees Elting incurred in connection with bringing the motion for sanctions, and 33% of the fees she incurred litigating the merits of the case, awarding Elting a total of $7,103,755 in fees and expenses. Shawe appealed, arguing: (1) the Court erred by finding that he acted in bad faith when he deleted the files from his laptop and failed to safeguard his cell phone; (2) the Court erred for failing to afford him criminal due process protections before sanctioning him for “perjury”; and (3) the Court erred by awarding Elting an excessive fee. After review, the Supreme Court found no errors and affirmed. View "Shawe v. Elting" on Justia Law

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The plaintiff was a limited partner/unitholder in a publicly-traded master limited partnership (“MLP”). The general partner proposed that the partnership be acquired through merger with another limited partnership in the MLP family. The seller and buyer were indirectly owned by the same entity, creating a conflict of interest. The general partner in this case sought refuge in two of the safe harbor conflict resolution provisions of the partnership agreement: “Special Approval” of the transaction by an independent Conflicts Committee, and “Unaffiliated Unitholder Approval.” The plaintiff alleged in its complaint that the general partner failed to satisfy the Special Approval safe harbor because the Conflicts Committee was itself conflicted. The general partner moved to dismiss the complaint and claimed that, in the absence of express contractual obligations not to mislead investors or to unfairly manipulate the Conflicts Committee process, the general partner need only satisfy what the partnership agreement expressly required: to obtain the safe harbor approvals and follow the minimal disclosure requirements. The Court of Chancery “side-stepped” the Conflicts Committee safe harbor, but accepted the general partner’s argument that the Unaffiliated Unitholder Approval safe harbor required dismissal of the case. The court held that, even though the proxy statement might have contained materially misleading disclosures, fiduciary duty principles could not be used to impose disclosure obligations on the general partner beyond those in the partnership agreement, because the partnership agreement disclaimed fiduciary duties. On appeal, the plaintiff argued that the Court of Chancery erred when it concluded that the general partner satisfied the Unaffiliated Unitholder Approval safe harbor, because he alleged sufficient facts to show that the approval was obtained through false and misleading statements. The Supreme Court determined that the lower court focused too narrowly on the partnership agreement’s disclosure requirements. “Instead, the center of attention should have been on the conflict resolution provision of the partnership agreement.” The Supreme found that the plaintiff pled sufficient facts, that neither safe harbor was available to the general partner because it allegedly made false and misleading statements to secure Unaffiliated Unitholder Approval, and allegedly used a conflicted Conflicts Committee to obtain Special Approval. Thus, the Court reversed the Court of Chancery’s order dismissing Counts I and II of the complaint. View "Dieckman v. Regency GP LP, Regency GP LLC" on Justia Law

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In 2001, Luis E. Reyes was convicted of two counts of Murder in the First Degree, two counts of Possession of a Firearm During the Commission of a Felony, and two counts of Conspiracy in the First Degree in what came to be known as the "Rockford Park Murders." For these crimes, he was sentenced to death, which was affirmed on direct appeal to the Delaware Supreme Court. On March 25, 2004, Reyes filed a timely motion for postconviction relief. Twelve years later, after a lengthy procedural process, during which the trial judge retired and the postconviction proceeding was assigned to his successor, the Superior Court issued an opinion granting Reyes' motion and vacating his convictions and sentences. The Superior Court found that several errors occurred during the guilt phase of Reyes' trial. The Superior Court also found that Reyes' trial attorneys were ineffective for failing to establish that certain testimony was based on hearsay; by failing to calling certain witnesses; failing to request a "missing evidence" jury instruction; and by failing to offer into evidence statements a witness made in an interview with one of Reyes' trial attorneys. In addition, Reyes contends that his trial attorneys were ineffective in ways not ruled upon by the Superior Court. The State claims that the Superior Court committed error in all of its rulings. The State also contended that the other ineffective assistance of counsel claims asserted by Reyes were without merit. After careful consideration of all the issues presented, the Delaware Supreme court concluded the State was correct. The Superior Court's grant of Reyes' postconviction motion was reversed. View "Delaware v. Reyes" on Justia Law

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A grand jury issued a 54 count indictment charging defendant-appellant Otis Phillips, Jeffrey Phillips, and fourteen other co-defendants with gang related crimes relating to criminal activity of the "Sure Shot" street gang. Otis was charged with three counts of first degree murder, first degree attempted murder, gang participation, conspiracy, reckless endangerment, possession of firearms, assault and criminal mischief. The superior court denied severance motions and instead conducted a joint capital trial of Otis and Jeffrey lasting 21 days. The jury acquitted Otis of one possession charge and conspiracy, but convicted on everything else. Otis would later be sentenced to death for the first degree murder charge, life imprisonment plus an additional 130 years for everything else. Otis appealed. Finding that Otis' death sentence had to be vacated, the Supreme Court remanded this case for resentencing on the murder charge only. The Court affirmed the remaining sentences, finding no reversible error in the superior court's judgment. View "Phillips v. Delaware" on Justia Law

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A grand jury issued a 54 count indictment charging defendant-appellant Jeffrey Phillips, Otis Phillips, and fourteen other co-defendants with gang related crimes relating to criminal activity of the "Sure Shot" street gang. Jeffrey was charged with two counts of first degree murder, first degree attempted murder, gang participation, first degree conspiracy, reckless endangerment, possession of firearms, assault and criminal mischief. The superior court denied severance motions and instead conducted a joint capital trial of Otis and Jeffrey lasting 21 days. The jury acquitted Jeffrey of assault and conspiracy charges, but convicted on everything else. Jeffrey would later be sentenced to life imprisonment plus an additional 72 years. Jeffrey appealed. Finding none of Jeffrey's arguments had merit, the Supreme Court affirmed his convictions. View "Phillips v. Delaware" on Justia Law