Justia Delaware Supreme Court Opinion Summaries

The State of Delaware appealed a superior court order that affirmed a determination by the Industrial Accident Board (the Board) that Nicholas Gates was working within the course and scope of his employment when he was injured in a motor vehicle collision. At the time of the collision, Gates was employed by the State as a road-maintenance equipment operator for the Department of Transportation (DelDOT). The collision occurred while he was responding to a “call-back” after his normal work hours. He was called back to attend to a roadside accident. Gates sought workers’ compensation benefits from the State for his injury. At the hearing before the Board, the State argued that State of Delaware Merit Rule 4.16 1 and a document titled “Call-Back Pay Guidelines and Recommended Procedure” (the Call-Back Pay Guidelines) were part of Gates’s employment contract. According to these provisions, Gates was not to be paid for a call-back until he arrived at the DelDOT yard. Because Gates’s collision occurred before he arrived at the yard, the State argued, his injury occurred outside the course and scope of his employment and was, therefore, not compensable under Delaware’s Workers’ Compensation Act (the Act).3 The Board looked to the parties’ prior course of conduct to determine the terms of the employment contract and found that Gates’s injury was compensable under the Act because, based on the parties’ prior course of conduct, he “was working within the course and scope of his employment contract when the motor vehicle accident occurred.” The Superior Court affirmed the Board’s decision. The Delaware Supreme Court affirmed the Superior Court, and therefore the Board. Specifically, the Court determined the Board applied the correct legal standard and acted within its discretion in finding, based on Gates’s unrebutted testimony as to the parties’ course of conduct prior to the collision, that the terms of Gates’s employment contract established he was to be paid for a callback from the time he received the call and that, at the time of the collision, he was working within the course and scope of this contract. These factual findings were supported by substantial evidence; the Board did not err in determining that Gates’s injury was compensable under the Act. View "Delaware v. Gates" on Justia Law

Robert Nederlander, Sr. (“Robert”) controlled Nederlander of San Francisco Associates (“Nederlander”), a California general partnership. Carole Shorenstein Hays (“Carole”) and her family controlled CSH Theatres L.L.C. (“CSH”), a Delaware LLC. Nederlander and CSH each owned a fifty-percent membership interest in Shorenstein Hays-Nederlander Theatres LLC (“SHN”), a Delaware LLC that operated theaters in San Francisco under SHN’s Plan of Conversion and Operating Agreement of the Company (the “LLC Agreement”). In 2010, CSH Curran LLC, an entity that Carole co-managed, purchased the Curran Theatre in San Francisco (the “Curran”). SHN had been operating under a lease from the Curran’s then-owners, the Lurie Company, since the beginning of the partnership. Carole and her husband, Dr. Jeffrey Hays (“Jeff”) (collectively, the “Hayses”), did not extend that lease with SHN when it expired in 2014. Thereafter, the Hayses began staging productions at the Curran. In February 2014, CSH sued Nederlander in the Delaware Court of Chancery for a declaratory judgment that it had no legal obligation to renew the Curran lease. In September 2018, Nederlander sought a preliminary injunction against CSH and the Hayes to prevent them from staging two theatrical productions at the Curran (the “PI Action”). In the PI Action, Nederlander asserted four counts, but focused its injunction efforts on Count I, which asserted breach of contract claims (based upon the “provisions of Section 7.02 of the LLC Agreement or the contractual fiduciary duties owed to SHN and its members under the LLC Agreement) against all defendants in that action. The trial court denied that motion and shortly thereafter entered a partial final judgment as to Count I of Nederlander’s Complaint, pursuant to Court of Chancery Rule 54(b), to allow for an immediate appeal of the PI Decision. Nederlander argued on appeal that the trial court erred in the Declaratory Judgment Action by refusing to enforce Section 7.02(a) of the LLC Agreement against the Hayses. The Delaware Supreme Court agreed with Nederlander that the Court of Chancery misinterpreted Section 7.02(a) and that the Hayses could not stage competitive productions (not falling within Section 7.02(b)’s exceptions) at the Curran that violated its contractual duty to maximize SHN’s economic success. Accordingly, the Court reversed that aspect of the trial court’s decision. Because Nederlander did not challenge the court’s rulings in the Declaratory Judgment Action as to damages and other forms of relief, the Supreme Court declined to remand that action. Further, in view of the reversal of the trial court’s interpretation of Section 7.02(a) in the Declaratory Judgment Action, the Supreme Court ordered remand of the PI Action for further proceedings. The Court found no error with any other aspect of the trial court’s decisions. View "In Re: Shorenstein Hays-Nederlander Theatres LLC Appeals" on Justia Law

Blue Bell Creameries USA, Inc. suffered a listeria outbreak in early 2015, causing the company to recall all of its products, shut down production at all of its plants, and lay off over a third of its workforce. Three people died as a result of the listeria outbreak. Pertinent here, stockholders also suffered losses because, after the operational shutdown, Blue Bell suffered a liquidity crisis that forced it to accept a dilutive private equity investment. Based on these unfortunate events, a stockholder brought a derivative suit against two key executives and against Blue Bell’s directors claiming breaches of the defendants’ fiduciary duties. The complaint alleges that the executives breached their duties of care and loyalty by knowingly disregarding contamination risks and failing to oversee the safety of Blue Bell’s food-making operations, and that the directors breached their duty of loyalty. The defendants moved to dismiss the complaint for failure to plead demand futility. The Court of Chancery granted the motion as to both claims. The Delaware reversed: "the mundane reality that Blue Bell is in a highly regulated industry and complied with some of the applicable regulations does not foreclose any pleading-stage inference that the directors’ lack of attentiveness rose to the level of bad faith indifference required to state a 'Caremark' claim. ... The complaint pled facts supporting a fair inference that no board-level system of monitoring or reporting on food safety existed." View "Marchand v. Barnhill, et al." on Justia Law

Two cases consolidated for review by the Delaware Supreme Court involved automobile accidents. John Henry and Charles Fritz sustained injuries in accidents while operating employer-owned vehicles during the course of their employment. In both cases, the accidents were allegedly caused by a third-party tortfeasor. Both employees received workers’ compensation from their respective employers’ insurance carriers. In each case, the vehicle was covered by an automobile liability insurance policy issued to the employer by Cincinnati Insurance Company. The superior court issued an order in Henry’s case first, finding the exclusive-remedy provision in the Delaware Workers’ Compensation Act in effect at the time of his accident precluded Henry from receiving underinsured motorist benefits under the Cincinnati policy. Following that decision, the Fritz court granted Cincinnati’s motion for summary judgment on the same ground. Henry and Fritz argued on appeal to the Delaware Supreme Court that the superior court erred in finding the Act’s exclusivity provision precluded them from receiving underinsured motorist benefits through the automobile liability policies their respective employers purchased from Cincinnati. The Supreme Court agreed both trial courts erred in finding the Act’s exclusivity provision prevented underinsured motorist benefits. The Court reversed and remanded for further proceedings. View "Henry v. Cincinnati Insurance Co." on Justia Law

The City of Lewes and its Historic Preservation Commission approved Ernest and Deborah Nepa’s plans to renovate a house in the historic district. The Nepas violated the conditions of the approvals by building a two story addition on the back of the house and increasing its already nonconforming setbacks from neighboring properties. After the City discovered the violations and issued a stop work order, the Nepas applied to the City’s board of adjustment for three area variances to complete the unauthorized addition; the board turned them down. The Nepas appealed the variance denials to the Superior Court, arguing that the City Code provision used by the board to evaluate their variance applications conflicted with a more lenient state law addressing municipal variances. The Superior Court agreed and reversed the board’s decision. On appeal, the City argued the Superior Court erred because the state statute relied on, 22 Del. C. 327(a)(3), only prohibited the City from loosening the state law requirements for granting a variance. The City was thus free to require stricter standards. The Delaware Supreme Court agreed with the City and reversed the Superior Court’s decision. “As long as the variance standards applied by the City of Lewes’ board of adjustment meet the minimum state statutory standards, nothing in the state statute prohibits the City, through its board of adjustment, from applying variance standards stricter than those set by the State.” View "City of Lewes & The Board of Adjustment v. Nepa" on Justia Law

Tiffany Greenfield appealed after the lawsuit she filed on behalf of minor Ethan Ford, was dismissed. Greenfield alleged that the defendants, who worked for the Delaware Division of Family Services (“DFS”), contributed in some way (as case workers, others as managers and supervisors) to four faulty investigations of reports that Ford and his half-sister, Autumn Milligan, were being abused and neglected by their mother, Tanasia Milligan. According to Greenfield’s complaint, the defendants’ dereliction of duty resulted in the tragic death of Autumn and permanent and irreversible damage to Ford that she averred necessitated long-term physical care and psychological services. The Delaware Supreme Court determined that Ford’s guardian sought redress from individuals who were charged with protecting him but who were unable to do so. "Those same individuals, however, are also required to preserve and foster the family unit, which creates an obvious tension between their duties that requires the exercise of judgment. Under such circumstances, our law requires that complaints against such individuals be written to a higher standard. We agree with the Superior Court that Greenfield’s complaint did not satisfy that standard and therefore affirm." View "Greenfield v. DFS Director Miles, et al." on Justia Law

In late 2013, Steven Baynum broke into his estranged wife’s residence and physically accosted her and her new romantic partner. Approximately one year later, a Superior Court jury found Baynum guilty of first-degree burglary, third-degree assault, offensive touching, and a host of other crimes. After Baynum was sentenced as a habitual offender to 17 years, he appealed and the Delaware Supreme Court affirmed his convictions. Baynum then moved for postconviction relief under Superior Court Criminal Rule 61 claiming, among other things, that his trial counsel provided ineffective assistance of counsel in violation of his rights under the Delaware and United States Constitutions. The Superior Court denied Baynum’s motion, and he once again appealed to the Supreme Court. On appeal, Baynum argued: (1) his lawyers should have asked the trial court to instruct the jury to consider the charge of offensive touching as a lesser-included offense of third-degree assault in connection with his attack on the romantic partner, which would have had the possibility of a lighter sentence, and the corresponding acquittal of the more serious third-degree assault charge would have undermined the State’s prosecution of the first-degree burglary charges, which also had a physical-injury component; and (2) his counsel during his direct appeal made a prejudicial mistake by not appealing the trial court’s refusal to grant a mistrial following the State’s introduction of improper opinion testimony from one of the lead detectives. The Superior Court rejected both of Baynum’s claims. The Delaware Supreme Court agreed with Baynum on his first claim, and reversed the denial of postconviction relief as to the third-degree assault and first-degree burglary convictions. However, the Court disagreed with Baynum on his ineffective-assistance claim against his appellate counsel: the Court saw no reasonable probability that it would have reversed Baynum’s convictions on the ground that the Superior Court should have ordered a mistrial in the wake of the detective’s testimony, which was offered in response to similar testimony elicited by Baynum and was the subject of a curative instruction. The Court therefore affirmed the denial of postconviction relief as to the balance of Baynum’s convictions. View "Baynum v. Delaware" on Justia Law

This appeal centered on a manufactured housing community owner’s attempt to raise the rent for its homeowner–tenants after installing a new water filtration system and commissioning a report on market rents for comparable manufactured housing communities. After the homeowners petitioned for an arbitration under the Rent Justification Act, the arbitrator concluded that the rent increase was justified. On appeal, however, the Superior Court reversed on the grounds that the community owner did not establish that the installation of the water filtration system “was an increase in its costs” or that the expenditure caused “its original expected return [to] decline[].” The community owner appealed the Superior Court’s decision. The Delaware Supreme Court found after its review of this matter that the Superior Court overruled the arbitrator’s order allowing the rent increase, finding that the community owner “would have had to offer evidence about its original costs and original expected return and how the expenditure . . . altered that relationship.” Because that reasoning grafted onto the Act a requirement that the statute did not contain, the Supreme Court reversed the Superior Court’s judgment and remanded the case for the entry of a judgment affirming the arbitrator’s order. View "Sandhill Acres MHC, LC v. Sandhill Acres Home Owners Association" on Justia Law

Appellant-father Garrett Irwin appealed a Family Court order granting appellee-mother Jenny Shelby sole custody and primary residential placement of their two children. Father argued: (1) the Family Court abused its discretion by siding with the mother’s treating psychologist instead of relying on the expert requested by the father; and (2) the Family Court’s order granting sole custody and primary placement to the mother was against the weight of the evidence and an abuse of discretion. According to Father, the court drew all inferences in Mother’s favor, minimized her mental health and substance abuse issues while giving undue weight to Father’s history of drug use, ignored the mother’s role in their physical altercations, and was generally biased against him. Furthermore, Father expressed concern the Family Court judge was biased in favor of Mother. Although it might have weighed the evidence differently and come to a different conclusion, the Delaware Supreme Court found the Family Court’s factual determinations were adequately supported by the record, thus affirming its judgment. View "Irwin v. Shelby" on Justia Law

In 2008, Invenergy Wind LLC, a wind energy developer, was raising money for a Series B investment round, and Leaf Clean Energy Company (“Leaf Parent”), an investment fund, expressed interest. After extensive negotiations, Leaf Parent invested $30 million in Invenergy Series B notes through a vehicle called Leaf Invenergy Company (“Leaf”). The agreement governing the Series B notes gave noteholders such as Leaf the right to convert to equity and incorporated an LLC agreement that the noteholders and Invenergy would execute upon conversion. The Series B Note Agreement and the Series B LLCA also included provisions that prohibited Invenergy from conducting a “Material Partial Sale” without Leaf’s consent unless Invenergy paid Leaf a premium called a “Target Multiple.” Although the parties renegotiated several aspects of their agreements with one another over the next few years, the consent provisions persisted in substantially similar form into a Third Amended and Restated LLC Agreement, which was the operative agreement in this dispute. Leaf filed suit after Invenergy closed a $1.8 billion asset sale - a transaction that Invenergy conceded was a Material Partial Sale - without first obtaining Leaf’s consent or redeeming Leaf’s interest for the Target Multiple. After a trial, the Court of Chancery concluded that, although Invenergy had breached the Material Partial Sale consent provisions, Leaf was not entitled to the Target Multiple. The court then awarded only nominal damages because, according to the court, Invenergy had engaged in an “efficient breach.” The Court of Chancery directed the parties to complete a buyout of Leaf’s interests pursuant to another LLC Agreement provision that Invenergy had invoked after Leaf had filed suit. The Delaware Supreme Court disagreed with the Court of Chancery’s interpretation of the consent provision and its award of nominal damages and therefore reversed. Because Invenergy conducted a Material Partial Sale without Leaf’s consent and without paying Leaf the Target Multiple, Leaf was entitled to the Target Multiple as contractual damages. The Court awarded Leaf the Target Multiple in damages on condition that it surrenderd its membership interests in Invenergy. View "Leaf Invenergy Co. v. Invenergy Renewables LLC" on Justia Law