Justia Corporate Compliance Opinion Summaries

OCV supplies equipment and licenses software for in-room hotel entertainment and sought a judgment of $641,959.54 against Roti, the owner of companies (Markwell, now defunct) that owned hotels to which OCV provided services. The district judge granted summary judgment, piercing the corporate veil, but rejecting a fraud claim. The Seventh Circuit reversed. While the Markwell companies were under-funded, OCV failed to treat the companies as separate businesses and proceed accordingly in the bankruptcy proceedings of one of the companies and made no effort to determine the solvency of the companies. View "On Command Video Corp. v. Roti" on Justia Law

The Trustee filed this action against former directors and officers of Bancshares. The directors also all formerly served as the officers and directors of the Bank, a wholly owned subsidiary of Bancshares. The court held that the Trustee could pursue her claims only as to the directors' alleged improper subordination of Bancshares' LLC interest. Therefore, the court reversed and remanded the district court's judgment as to that claim, but affirmed its judgment in all other respects. Accordingly, the court held that the district court did not err in granting the directors' motion to dismiss except as to the claim for subordination of the LLC interest of Bancshares. View "Beach First National Bancshare v. Anderson" on Justia Law

National Elevator, lead plaintiff on behalf of investors who purchased VeriFone stock, appealed the dismissal of its securities fraud class action. National Elevator alleged that VeriFone, the CEO and former Chairman of the Board of Directors, and the company's former CFO and Executive Vice President, violated sections 10(b), 20(a), and 20A of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), 78t-1(a), and 78t(a), and Securities and Exchange Commission Rule 10-b, 17 C.F.R. 240.10b-5(b), in connection with a December 2007 restatement of financial results. The court held that National Elevator adequately pleaded violations of section 10B and Rule 10b as to all defendants; its section 20A claim against the individual defendants was sufficiently pled; but the section 20(a) claim was properly dismissed. Accordingly, the court affirmed in part and dismissed in part. View "National Elevator Industry Pension Fund v. VeriFone Holdings, Inc., et al" on Justia Law

Carleton, LLC appealed a superior court order that denied its motion to vacate and set aside articles of dissolution filed by MTS Development Corporation (MTS) and that denied its renewed motion to enforce creditor status. At issue at trial was the valuation of Carleton, LLC's half ownership interest in MTS which Adrienne Balagur sought to acquire. After the trial court valued the ownership interest, Balagur moved to terminate Carleton, LLC's rights and status as a shareholder of MTS. The trial court granted this motion, and held that Carleton, LLC would be considered a creditor of MTS until it received money for the shares purchased. MTS then filed a notice of intention ot adopt article of dissolution. Carleton objected, moving to vacate or set aside the articles. Carleton argued that Adrienne Balagur's election to purchase Carleton's shares was irrevocable, and that the shareholders could not validly authorize the articles of dissolution. The trial court denied Carleton's motion, but agreed that an accounting of MTS' books and records should occur. On appeal, Carleton contended that the trial court erred in decision denying its motion and making it an MTS creditor. Finding no error, the Supreme Court affirmed the trial court's decision. View "Carleton, LLC v. Balagur" on Justia Law

In 2008 Robert Rude, then a sitting Cook Inlet Region, Inc. (CIRI) director, and three other candidates ran as an independent “New Alliance” slate for positions on the CIRI board of directors. Shortly before the election, CIRI filed suit, claiming that the New Alliance proxy materials contained materially misleading statements. Rude and his co-defendants counterclaimed, alleging that CIRI’s election procedures were unfairly tilted toward the interests of the current board and that the directors had improperly refused to disclose shareholder and corporate information to Rude and the other New Alliance candidates. The superior court granted summary judgment on all claims and counterclaims in favor of CIRI. As a result, the New Alliance proxies were voided, and Rude was not re-elected to the board. Rude appealed the rulings both on CIRI’s claims and his counterclaims. Although Rude’s claims were technically moot, the Supreme Court addressed them insofar as they potentially affected prevailing party status. Because no issue of material fact existed as to the claims at issue and because CIRI is entitled to judgment as a matter of law, the Supreme Court affirmed the superior court. In a separate appeal, Rude challenged four other rulings of the superior court: (1) the award of attorney’s fees to CIRI; (2) denial of his Rule 60(b) motion for relief from judgment; (3) the superior court’s exclusion of exhibits filed with that motion; and (4) dismissal of New Alliance as a party to this suit. Because the superior court did not abuse its discretion in any of these rulings, the Supreme Court affirmed the superior court in all respects. View "Rude v. Cook Inlet Region, Inc." on Justia Law

Plaintiff, both individually and as the trustee of several trusts that she directed, asserted claims against defendants arising out of her decision to invest in Lord Baltimore. Defendants moved to dismiss all of the claims asserted against them. The court held that defendants' motion to dismiss was granted, except to plaintiff's claim that there was an implied covenant in the Shareholders' Agreement requiring that repurchase proposals be presented to and considered by the Board, which was not dismissed. View "Blaustein v. Lord Baltimore Capital Corp." on Justia Law

This was a declaratory judgment action under 6 Del. C. 111 to determine the duties, obligations, and liabilities, if any, of a Delaware limited liability company to one of its initial members. The court concluded that a clear forum selection clause in Todd's employment agreement with RWI (N.M.), which closely paralleled a similar provision in a related Stock Purchase Agreement (SPA), precluded the court from determining what effect, if any, Todd's termination from RWI (N.M.) had upon, at least, a subset of RWI (Del.) units he previously held. As a result, the court lacked the ability to determine definitely whether Todd continued to hold any interest in RWI (Del.), at least until a court in New Mexico resolved Todd's ownership of this subset of units. Therefore, the court stayed the action as a matter of judicial efficiency and in deference to the apparent intent of the contracting parties in favor of the proceedings pending in New Mexico.View "RWI Acquisition LLC v. Todd" on Justia Law

In these cross-motions for partial summary judgment, at issue was whether ION violated the rights of its preferred stockholder, Fletcher, by causing a wholly-owned ION subsidiary to issue certain promissory notes without Fletcher's approval in connection with ION's purchase of a business. The court agreed with the parties that to determine whether the notes were securities was an issue appropriate for summary judgment. On the merits, however, the court held that it did not agree with ION's argument that all notes issued as compensation to a seller of a business by the buyer of that business were not securities. The court concluded that two of the promissory notes issued to the business seller by the ION subsidiary were not securities because they were most sensibly characterized as short-term commercial bridge financing to facilitate the closing of the acquisition transaction. But the court concluded that the third note was a security. Accordingly, the court found that Fletcher's consent rights under the Certificates were not breached by the issuance of the first two notes, but were breached when ION caused its subsidiary to issue the third note.View "Fletcher Int'l, Ltd. v. ION Geophysical Corp., et al." on Justia Law

This action involved claims of fraud and breach of fiduciary against an individual defendant, a former investment professional accused of having committed a massive fraud related to a quantitatively-based trading program that he allegedly developed to trade futures contracts. Plaintiffs, as a result of their association with defendant and Paron, the firm they founded with defendant, claimed that they have been stigmatized and thus face dismal prospects of finding employment in the financial services industry. The court found that defendant committed fraud and breached his fiduciary duties to plaintiff and Paron by making false statements of fact about his program, his investment track record, and his personal financial situation. As a result, plaintiffs were entitled to extensive damages against defendant based on their lost future earnings and other costs associated with the formation and operation of Paron. The court also awarded plaintiffs limited injunctive relief requiring defendant to destroy or return copies of Paron's trading program and to stop marketing any versions of that trading program.View "Paron Capital Mgmt., LLC, et al. v. Crombie" on Justia Law

Entities affiliated with ASB sued to reform the capital-event waterfall provisions in a series of agreements governing real estate joint ventures managed by affiliates of The Scion Group. The erroneously drafter provisions called for Scion to receive incentive compensation know as a "promote" even if the joint ventures lost money. Scion sought to enforce the agreements as written, and its affiliates advanced counterclaims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and breach of contract. The court found that plaintiffs have proven their entitlement to reformation by clear and convincing evidence and entered a judgment in their favor of defendants' counterclaims.View "ASB Allegiance Real Estate Fund, et al. v. Scion Breckenridge Managing Member, LLC, et al." on Justia Law