Justia Delaware Supreme Court Opinion Summaries

Appellants Jeffrey Sheldon and Andras Konya, M.D., Ph.D., alleged in the Delaware Court of Chancery that several venture capital firms and certain directors of IDEV Technologies, Inc. (“IDEV”) violated their fiduciary duties by diluting the Appellants’ economic and voting interests in IDEV. Appellants argued their dilution claims were both derivative and direct under Gentile v. Rosette, 906 A.2d 91 (Del. 2006) because the venture capital firms constituted a “control group.” The Court of Chancery rejected that argument and held that Appellants’ dilution claims were solely derivative. Because Appellants did not make a demand on the IDEV board or plead demand futility, and because Appellants lost standing to pursue a derivative suit after Abbott Laboratories purchased IDEV and acquired Appellants’ shares, the court dismissed their complaint. On appeal, Appellants raised one issue: that, contrary to the Court of Chancery’s holding, they adequately pleaded that a control group existed, rendering their claims partially “direct” under Gentile. Therefore, according to Appellants, their complaint should not have been dismissed. The Delaware Supreme Court agreed with the Court of Chancery’s determination that Appellants failed to adequately allege that the venture capital firms functioned as a control group. Accordingly, the Supreme Court affirmed dismissal of the complaint with prejudice. View "Sheldon, et al. v. Pinto Technology Ventures, L.P., et al." on Justia Law

Parke Bancorp (“Parke”) made a loan to 659 Chestnut LLC (“659 Chestnut”) in 2016 to finance the construction of an office building in Newark, Delaware. 659 Chestnut pleaded a claim in the Superior Court for money damages in the amount of a 1% prepayment penalty it had paid under protest when it paid off the loan. The basis of 659 Chestnut’s claim was that the parties were mutually mistaken as to the prepayment penalty provisions of the relevant loan documents. Parke counterclaimed for money damages in the amount of a 5% prepayment penalty, which it claimed was provided for in the agreement. After a bench trial, the Superior Court agreed with 659 Chestnut and entered judgment in its favor. After review, the Delaware Supreme Court reversed and directed entry of judgment in Parke’s favor on 659 Chestnut’s claim. Although Parke loan officer Timothy Cole negotiated on behalf of Parke and represented to 659 Chestnut during negotiations that there was a no-penalty window, the parties stipulated that: (1) everyone knew that Cole did not have authority to bind Parke to loan terms; and (2) everyone also knew that any terms proposed by Cole required both final documentation and approval by Parke’s loan committee. It was evident to the Supreme Court that 659 Chestnut did not offer clear and convincing evidence that Parke’s loan committee agreed to something other than the terms in the final loan documents. Accordingly, it Directed entry of judgment for Parke. View "Parke Bancorp Inc., et al. v. 659 Chestnut LLC" on Justia Law

Plaintiff Alex Tiger and John Dowling decided to revive the Boast tennis apparel brand. The pair started Boast Investors, LLC, which would later be converted into the named defendant in this case, BAI Capital Holdings, Inc. (“BAI”), as well as Branded Boast, LLC. Boast Investors owned a majority interest in Branded Boast, which in turn purchased the Boast intellectual property from tennis player Bill St. John’s holding company, Boast, Inc. Over the next several years, Tiger and Dowling had several conflicts in managing Boast Investors. Tiger and Dowling attempted to resolve their disagreements through negotiations but were not able to do so. In late 2014, Tiger delivered his first 8 Del. C. 220 (Delaware General Corporation Law "Section 220") demand to BAI, requesting 22 categories of documents. The stated purposes of Tiger’s inspection demand were to, among other things, value his shares, investigate potential mismanagement, and investigate director independence. BAI responded with a proposed confidentiality agreement, which would have Tiger from using BAI documents in subsequent litigation. Tiger rejected this proposal. BAI made a revised proposal that prohibited use of the documents in litigation other than derivative actions. Tiger then requested that BAI produce all documents that were not confidential, but BAI demurred. In 2017, Tiger sent a second Section 220 demand. BAI again offered Tiger the opportunity to review Tiger’s demanded documents but once again asked Tiger to sign a confidentiality agreement. As before, Tiger asked BAI to produce all non-confidential materials, but BAI again asked for a confidentiality agreement. In a report that was adopted by the Court of Chancery, a Master in Chancery held that books and records produced to a stockholder under Section 220 were “presumptively subject to a ‘reasonable confidentiality order.’” And in response to the stockholder’s request for a time limitation on such a confidentiality order, the Master responded that, because the stockholder had not demonstrated the existence of exigent circumstances, confidentiality should be maintained “indefinitely, unless and until the stockholder files suit, at which point confidentiality would be governed by the applicable court rules.” After the Court of Chancery adopted the Master’s Report, the stockholder appealed. The Delaware Supreme Court held that, although the Court of Chancery may condition Section 220 inspections on the entry of a reasonable confidentiality order, such inspections were not subject to a presumption of confidentiality. Furthermore, when the court, in the exercise of its discretion, enters a confidentiality order, the order’s temporal duration was not dependent on a showing of the absence of exigent circumstances by the stockholder. "Rather, the Court of Chancery should weigh the stockholder’s legitimate interests in free communication against the corporation’s legitimate interests in confidentiality." Nevertheless, although the Supreme Court disagreed with the Master’s formulation of the principles governing confidentiality in the Section 220 inspection context, the confidentiality order that the Court of Chancery ultimately entered seemed reasonable, and not an abuse of discretion, given the facts and circumstances of this case. View "Tiger v. Boast Apparel, Inc." on Justia Law

Richard Cushner was convicted by jury of third-degree burglary and two counts of criminal mischief. Cushner contended on appeal that the trial court erred in denying his motion for judgment of acquittal because the only evidence connecting him to the crimes was a handprint that was discovered on the outside of a storage trailer he allegedly burglarized. Relying on Monroe v. Delaware, 652 A.2d 560 (1995), Cushner contended the motion should have been granted because the State failed to present sufficient evidence to establish that his handprint was impressed at the time the crimes were committed. After review, the Delaware Supreme Court concluded “Monroe” was distinguishable and that the evidence in this case was sufficient to sustain Cushner’s conviction. View "Cushner v. Delaware" on Justia Law

CompoSecure, L.L.C., a manufacturer of metal credit cards, sought to invalidate the Sales Representative Agreement (the “Sales Agreement”) it signed with CardUX, LLC. The Delaware Court of Chancery held in a February 2018 post-trial decision that the Sales Agreement had not been properly approved under CompoSecure’s Amended and Restated Limited Liability Company Agreement, but that CompoSecure had impliedly ratified the Sales Agreement by its conduct. CompoSecure appealed. In a November 2018 opinion, the Delaware Supreme Court agreed with the trial court’s analysis as far as it went, but remanded to the trial court to answer a potentially outcome-determinative question that it had not answered: whether the Sales Agreement was a “Restricted Activity” under the LLC Agreement. If it was a Restricted Activity, the Supreme Court noted that the Sales Agreement would have been void and unenforceable. In its report on remand, the Court of Chancery held that the Sales Agreement was not a Restricted Activity, and thus, the Sales Agreement was not void. The Supreme Court agreed with the Court of Chancery’s conclusions, and affirmed. View "Composecure, L.L.C. v. Cardux, LLC f/k/a Affluent Card, LLC" on Justia Law

When police arrested appellant Roderick Brown (aka “Mumford”) for drug dealing and money laundering, they also seized several cars and tens of thousands of dollars. Brown petitioned for the return of that property, but after an evidentiary hearing, the Superior Court denied the bulk of Brown’s claims. Brown then filed this appeal. Because the Delaware Supreme Court concluded the State failed to meet its burden for the seizure of two of Brown’s cars, it reversed in part. View "Brown v. Delaware" on Justia Law

Ohio residents Craig Richards and his wife Gloria filed suit against defendants in the Delaware, claiming that Mr. Richards’ exposure to asbestos-containing products at home and in the workplace caused his mesothelioma. The parties agreed that Ohio law applied to this case. To make the causal link between Mr. Richards’ asbestos exposure and his disease, the Richards served an expert report relying on a cumulative exposure theory, meaning that every non-minimal exposure to asbestos attributable to each defendant combined to cause Mr. Richards’ injury. After the Richards served their expert report, the Ohio Supreme Court decided Schwartz v. Honeywell International, Inc. , 102 N.E.3d 477 (Ohio 2018). In Schwartz, the Ohio Supreme Court rejected an expert’s cumulative exposure theory for a number of reasons, including its inconsistency with an Ohio asbestos causation statute. The Richards’ attorneys became aware of the Schwartz decision during summary judgment briefing. Instead of asking for leave to serve a supplemental expert report based on another theory of causation, the Richards argued in opposition to summary judgment that the Ohio asbestos causation statute and the Schwartz decision did not require any expert report. According to the Richards, as long as there was factual evidence in the record showing, in the words of the Ohio statute, the manner, proximity, frequency, and length of exposure to asbestos, summary judgment should have been denied. The Superior Court disagreed and held that, to defeat summary judgment, the Richards had to still offer expert medical evidence of specific causation, meaning that the asbestos exposure attributable to each defendant caused Mr. Richards’ mesothelioma. The Superior Court also denied reargument and found untimely the Richards’ later attempt to supplement their expert report. The Richards appealed the Superior Court’s dismissal rulings, arguing that the court misinterpreted Ohio law, and should have granted them leave to supplement their expert report after the court’s summary judgment rulings. As the Delaware Supreme Court read the Ohio asbestos causation statute and Ohio Supreme Court precedent, neither the Ohio General Assembly nor the Court intended to abrogate the general rule in Ohio in toxic tort cases that a plaintiff must provide expert medical evidence “(1) that the toxin is capable of causing the medical condition or ailment (general causation), and (2) that the toxic substance in fact caused the claimant’s medical condition (specific causation).” Thus, the Supreme Court determined the Superior Court correctly concluded expert medical evidence on specific causation had to be offered by the Richards to avoid summary judgment. The Superior Court also did not abuse its discretion in denying reargument and the Richards’ request to supplement their expert report after the court’s summary judgment ruling. View "Richards v. Copes-Vulcan, Inc., et al." on Justia Law

At issue in this case was a Family Court order adjudging appellant Joseph Baker, Jr., a minor child, delinquent for having committed an act of Rape in the Second Degree. Initially, Baker was charged with three counts of Rape in the Second Degree. Count Two was voluntarily dismissed by the State before trial. At trial, the Family Court judge found Baker delinquent on Count One and acquitted him on Count Three. On appeal, Baker argued the judgment of delinquency for the one count of Rape in the Second Degree should be reversed because of evidentiary errors made by the Family Court judge at trial. The Delaware Supreme Court agreed that errors were made and reversal was required. View "Baker v. Delaware" on Justia Law

Appellant "Arthur Stoner," appealed a Family Court order finding him delinquent of Robbery in the Second Degree and Conspiracy in the Second Degree. On appeal, he argued: (1) the finding that he committed Conspiracy in the Second Degree violated his right to due process because it was based on a finding that he violated an uncharged subsection of the conspiracy statute; (2) there was insufficient evidence to find him delinquent of Robbery in the Second Degree, specifically, the Family Court misconstrued a part of the robbery statute, 11 Del. C. 831(b); and (3) 11 Del. C. 512(1), the subsection of the conspiracy statute under which he was found delinquent, was unconstitutionally vague because it does not expressly include the requirement of an overt act. The State agreed that the Family Court erred when it found Stoner delinquent for violating an uncharged subsection of the conspiracy statute, and recommended vacating that charge. Because the State conceded error and agreed Stoner’s adjudication of delinquency as to Conspiracy in the Second Degree should have been vacated, the Delaware Supreme Court accepted its concession and did not discuss Stoner’s first contention. For this same reason, Stoner’s third contention, that 11 Del. C. 512(1) was unconstitutionally vague, was not be addressed. The Court only addressed Stoner’s contentions relating to the Family Court’s finding of delinquency for Robbery in the Second Degree. To that end, the Supreme Court remanded this case back to the trial court for additional findings with regard to the robbery charge. View "Stoner v. Delaware" on Justia Law

Late one evening in October 2017, Wilmington Police Officer Matthew Rosaio was on patrol with other officers when he observed two men walking on a nearby sidewalk. One of the men, Murray, was walking with his right arm canted and pinned against the right side of his body, specifically the right front portion of his body. The other man, Lenwood Murray-Stokes, was walking normally. The manner in which Murray was walking made Officer Rosaio suspicious that Murray was carrying a concealed firearm in his waistband on his right side. The officer began drawing his weapon and instructed Murray to show his hands. Murray appeared to reach for his waistband area. The officer then pointed his weapon at Murray and instructed him to not reach for his waistband and to get on the ground. Murray complied. The officer then asked Murray whether he had anything in his possession. Murray replied that he had a firearm in his waistband. The officer located the firearm in Murray’s waistband on his right side and seized it. Murray was charged with Carrying a Concealed Deadly Weapon, Possession of a Firearm by a Person Prohibited, and Possession of Ammunition by a Person Prohibited. He filed a motion to suppress the discovery of the firearm from use as evidence at trial, arguing that the officer did not have a reasonable, articulable suspicion that Murray had committed or was about to engage in any illegal activity to justify detaining him or probable cause to arrest him. The Superior Court agreed and granted the motion to suppress. The Delaware Supreme Court concluded the officer performed a legitimate Terry stop, and therefore the motion to suppress should have been denied. View "Delaware v. Murray" on Justia Law