Justia Delaware Supreme Court Opinion Summaries

In 2003, Zubin Mehta and Gregory Shalov formed Finger Lakes Capital Partners as an investment vehicle to own several operating companies. Mehta and Shalov contacted Lyrical Partners L.P. to participate in their venture. The parties signed a term sheet covering their overall relationship, as well as topics relating to two specific investments. On the advice of counsel, Finger Lakes held each of its portfolio companies as separate limited liability companies with separate operating agreements. Over the course of a decade, the companies did not perform as expected. Finger Lakes asked Lyrical for additional capital. The parties agreed to allow Lyrical to “clawback” its investment money as added protection for its continued investment in the enterprise. Only one investment performed well and generated a substantial return when it was sold. The others failed or incurred substantial losses. The parties disagreed about how the proceeds from the one profitable investment should have been distributed under the network of agreements governing their business relationship. The Court of Chancery held that the proceeds should have been distributed first in accordance with the operating agreement governing the investment in the profitable portfolio company; the term sheet and clawback agreement would then be applied to reallocate the distribution under their terms. Finger Lakes argued on appeal that the profitable investment entity’s operating agreement superseded the overarching term sheet and clawback agreement; even if the clawback agreement was not superseded, the Court of Chancery applied it incorrectly; Lyrical could not recover its unpaid management fees through a setoff or recoupment; and, the Court of Chancery improperly limited Finger Lakes’ indemnification to expenses incurred until Finger Lakes was awarded a partial judgment on the pleadings, instead of awarding indemnification for all expenses related to these proceedings. With one exception, the Supreme Court affirmed the Court of Chancery’s judgment with respect to that court's interpretation of the operating agreements. The Supreme Court found, however, that the Court of Chancery erred when it held that Lyrical could use setoff or recoupment to recover time-barred management fees. Further, Lyrical could not assert its time-barred claims by way of recoupment because the defensive claims did not arise from the same transaction as Finger Lakes’ claims. View "Finger Lakes Capital Partners, LLC v. Honeoye Lake Acquisition, LLC" on Justia Law

This issue this case presented for the Supreme Court's review centered on whether the collateral source rule should apply when Medicaid pays for an injured party’s medical expenses. The Delaware Supreme Court held that, when Medicaid has paid an injured party’s medical expenses, the collateral source rule cannot be used to increase an injured party’s recovery of past medical expenses beyond those actually paid by Medicaid. "As with Medicare, the difference is unnecessary to make the injured party whole because it is paid by no one." Appellant Jennifer Smith, was injured in two car collisions. Although employed when her injuries occurred, Smith qualified for Medicaid coverage. At first, her treating physician sought to recover his standard charges of $22,911 from the proceeds of any personal injury settlement. But later, the treating physician opted to forego his original billed amount, and instead billed Medicaid for his charges. Medicaid paid the treating physician $5,197.71, and asserted a lien in that amount on the proceeds of any recovery by settlement or lawsuit. When all was netted out, the Superior Court entered judgment against the defendants jointly and severally for $49,911. Relying on the applicable case law, the trial court determined that “Delaware case law is clear that the collateral source rule does not apply to Medicaid or Medicare write-offs.” In its decision here, the Delaware Supreme Court refused to extend operation of the collateral source rule and affirmed the superior court's judgment. Also affirmed was the Superior Court’s ruling that future medical expenses were not subject to Medicaid reimbursement limitations. "Unlike Medicare, Medicaid coverage is income dependent, and might not be available if a plaintiff improves her financial position to a living wage and secures other insurance. Because of the uncertainty of future coverage, Medicaid benefits cannot be used to limit a plaintiff’s future medical expenses." View "Smith v. Mahoney" on Justia Law

Appellant Greenville Country Club, through its workers’ compensation carrier, Guard Insurance (“Guard”), appealed a Superior Court Order affirming a decision of the Industrial Accident Board (the “Board”). While working for Greenville Country Club, Jordan Rash suffered injuries to his lumbar spine in two separately compensable work accidents. The first accident occurred in 2009 while the country club was insured by Guard Insurance Group. The second accident occurred in 2012 while the country club was insured by Technology Insurance (“Technology”). In 2014, Rash filed two Petitions to Determine Additional Compensation, one against Guard and one against Technology. After a hearing, the Board determined that the condition at issue was a recurrence of the 2009 work injury and not an aggravation of the 2012 work injury, and concluded that Guard was therefore wholly liable for the additional compensation to Rash. Guard appealed, arguing: (1) the Board failed to properly apply the rule for determining successive carrier liability; and (2) there was no substantial evidence to support the Board’s finding that Rash fully recovered from the 2012 accident or that his ongoing condition was solely caused by the 2009 work accident. After review, the Delaware Supreme Court found no error in the Board’s decision, and that the decision was supported by substantial evidence. Accordingly, the Court affirmed the Board's decision. View "Greenville Country Club (Guard Insurance) v. Greenville Country Club (Technology Insurance)" on Justia Law

Defendant Tyrone Redden appealed the Superior Court’s Order denying his Amended Motion for Postconviction Relief. At issue in this appeal were two out-of-court statements introduced at Redden’s trial. In his Motion, Redden argued that his trial counsel was ineffective for failing to object to the statements after the State failed to ask each witness whether his or her out-of-court statement was truthful. Redden further argued that his appellate counsel was ineffective for failing to raise the same issue on direct appeal. The Superior Court denied the Amended Motion, holding that Redden’s claims were procedurally barred. After review, the Supreme Court agreed with the Superior Court that Redden’s claims were procedurally barred and affirmed the denial of Redden’s Motion. View "Redden v. Delaware" on Justia Law

The State appealed the grant of post-conviction relief to defendant-appellee Damone Flowers. The Superior Court recognized that Flowers post-conviction motion was untimely under Criminal Rule 61(i)(1) because he filed it three years after his conviction became final. However, the Superior Court invoked an exception to the procedural bars as a basis for addressing Flowers' motion on the merits. At the time of Flowers' second motion for relief, the bars to relief in Rule 61(1)(1)-(3) did not apply "to a colorable claim that there was a miscarriage of justice because of a constitutional violation that undermined the fundamental legality, reliability, integrity or fairness of the proceedings leading to the judgment of conviction." After its review, the Supreme Court concluded Flowers' second motion for relief was indeed untimely and that the exception was improperly invoked by the Superior Court. Accordingly, the Court reversed the Superior Court. View "Delaware v. Flowers" on Justia Law

Robert Ovens appealed the Superior Court’s reversal of the Delaware Human Relations Commission’s award of damages, attorney’s fees, and costs to Ovens based on the Commission’s determination that a prison was a place of "public accommodation." The Commission found that the Department of Correction (“DOC”), through its operation of Sussex Correctional Institution (“SCI”), violated section 4504(a) of the Delaware Code (known as theEqual Accommodations Law), by not providing equal accommodations to Ovens, who was deaf, while he was incarcerated. After review of the issue, the Delaware Supreme Court concluded that a prison was not a place of "public accommodation" as contemplated by the law. "Ovens’ argument hinges on his assertion that a prison is a state agency, and therefore, it falls under the second sentence of section 4502(14), which includes state agencies, local government agencies, and state-funded agencies in the definition of a place of public accommodation. But, he ignores that the second sentence of section 4502(14) cannot be decoupled from the critical language in the first." View "Ovens v. Danberg" on Justia Law

At issue in this appeal was whether five beneficiaries of a Delaware trust could recover on their $88 million judgment against the individual trust established by a brother to one beneficiary and uncle to the rest. The judgment arose from the trustee's alleged bad faith and willful misconduct in handling the estate. A Master held that a spendthrift clause in the trustee's Trust precluded the beneficiaries from obtaining relief against the Trustee's interest. The Court of Chancery found that the beneficiaries' notice of exceptions to the Master's final report on the spendthrift issue was late, and that they forfeited their right to challenge the ruling. The beneficiaries appealed, arguing the Court of Chancery erred by not considering the merits to the beneficiaries' exceptions to the Master's ruling on the spendthrift issue. View "Mennen. v. Fiduciary Trust International of Delaware" on Justia Law

Defendant-appellant Joel Stevenson appealed convictions for first- and second-degree unlawful sexual contact and two counts of sex offender unlawful sexual conduct with a child. On appeal of those convictions, Stevenson argued that the trial court abused its discretion in admitting certain out-of-court statements of three child witnesses rebutting defendant's allegation that the State improperly influenced the witnesses' testimony. After review of the record, the Delaware found no merit to defendant's arguments and affirmed his convictions. View "Stevenson v. Delaware" on Justia Law

This was a case between the owner of a manufactured homes community, Bon Ayre Land, LLC (Landowner), and an association that represented the affected homeowners, Bon Ayre Community Association (HOA) about what Delaware law required the Landowner to show to increase rent above inflation. Their dispute arose under Chapter 70 of Title 25 of the Delaware Code, commonly known as the "Rent Justification Act." To raise rent by more than inflation, the Act set out three conditions a landowner had to satisfy. One condition required the owner show that the proposed increase was directly related to operating, maintaining or improving the manufactured home community, and justified by one or more factors listed under subsection (c). The one factor at issue here was market rent: that rent which would result from market forces absent an unequal bargaining position between the community owner and the home owners. Among its many arguments, the Landowner argued that the Superior Court erred in giving effect to the word "and," and that the Landowner ought to have been allowed to justify a rent increase based on market rent alone. The Landowner admitted that it failed to present any evidence of its proposed rent increases being directly related to operating, maintaining or improving the community. But, the Landowner argued that the Act could not be read sensibly as it was plainly written and that the term "and" in section 7042(a)(2) should have been read as "or." Contrary to the Landowner's argument, the Delaware Supreme Court found nothing "absurd" about the use of "and" in joining section 7042's three conditions. "Consistent with proper principles of interpretation, the Superior Court gave effect to the clear language of the Act and gave it an interpretation that is consistent with the Act's stated purpose." Because the Landowner concededly made no showing that its proposed rental increase was directly related to operating, maintaining or improving the community, the Superior Court properly reversed the arbitrator's ruling that the Landowner could raise rents in excess of CPI-U. View "Bon Ayre Land, LLC v. Bon Ayre Community Association" on Justia Law

Viking Pump, Inc. and Warren Pumps, LLC sought to recover under insurance policies issued to a third company, Houdaille Industries, Inc. In the 1980's, Viking and Warren acquired pump manufacturing businesses from Houdaille. As a result, Viking and Warren were confronted with potential liability flowing from personal injury claims made by plaintiffs alleging damages in connection with asbestos exposure claims dating back to when the pump manufacturing businesses were owned by Houdaille. Houdaille had purchased occurrence-based primary and umbrella insurance from Liberty Mutual Insurance Company. Above the Liberty umbrella layer, Houdaille purchased layers of excess insurance. In total, Houdaille purchased 35 excess policies through 20 different carriers (the "Excess Policies"). Viking and Warren sought to fund the liabilities arising from the Houdaille-Era Claims using the comprehensive insurance program originally purchased by Houdaille. The insurance companies that issued the Excess Policies (the "Excess Insurers") contended that Viking and Warren were not entitled to use the Excess Policies to respond to the claims. The Excess Insurers also disputed the extent of any coverage available, particularly with respect to defense costs. The Supreme Court held, after careful consideration of the policies at issue: (1) the Superior Court correctly held that the 1980-1985 Liberty Primary Policies were exhausted; (2) the Superior Court held that 33 of the Excess Policies at issue in this appeal provided coverage to Viking and Warren for their defense costs, with many payments contingent on insurer consent; (3) the Court of Chancery correctly held that there were valid assignments of insurance rights to Warren and Viking under the Excess Policies; (4) the Superior Court was affirmed in part and reversed in part with respect to its determination of the Excess Policies' coverage for defense costs; and (5) the Superior Court erred with respect to the trigger of coverage under the Excess Policies. View "In Re Viking Pump, Inc. and Warren Pumps, LLC Insurance Appeals" on Justia Law