Justia Corporate Compliance Opinion Summaries

The Court of Chancery held that Defendants-Appellants, Americas Mining Corporation (AMC), a subsidiary of Southern Copper Corporation's (Southern Peru) controlling shareholder, and affiliate directors of Southern Peru, breached their fiduciary duty of loyalty to Southern Peru and its minority stockholders by causing Southern Peru to acquire the controller’s 99.15% interest in a Mexican mining company, Minera Mexico, S.A. de C.V., for much more than it was worth (at an unfair price). The Plaintiff challenged the transaction derivatively on behalf of Southern Peru. The Court of Chancery found the trial evidence established that the controlling shareholder through AMC, "extracted a deal that was far better than market" from Southern Peru due to the ineffective operation of a special committee. To remedy the Defendants' breaches of loyalty, the Court of Chancery awarded the difference between the value Southern Peru paid for Minera ($3.7 billion) and the amount the Court of Chancery determined Minera was worth ($2.4 billion). The Court of Chancery awarded damages in the amount of $1.347 billion plus pre- and postjudgment interest, for a total judgment of $2.0316 billion. The Court of Chancery also awarded the Plaintiff's counsel attorneys' fees and expenses in the amount of 15% of the total judgment, which amounts to more than $304 million. Defendants raised five issues on appeal pertaining to their perceived errors at trial, the valuation of the shares and companies involved and the awarding of attorneys fees. Upon review, the Supreme Court determined that all of the Defendants' arguments were without merit. Therefore, the judgment of the Court of Chancery was affirmed. View "Americas Mining Corp. v. Theriault Southern Copper Corp." on Justia Law

These three consolidated appeals (all springing from a divorce granted in 1994) presented thirty-eight issues including one of first impression. A judgment creditor served writs of execution on two corporations whose restricted stock was owned by the judgment debtor, who then sold his stock back to the corporations. The chancellor dismissed the writs, holding that the sale of stock rendered them moot. Upon review of the case, the Supreme Court held that statutory restrictions on the transfer of restricted shares of corporate stock apply to both voluntary and involuntary transfers of the shares; that after a judgment creditor serves a corporation with a writ of execution regarding one of its shareholders, repurchasing the shareholder’s shares will not excuse the corporation from responding to the writ of execution by filing the statutorily required sworn statement; and that the judgment creditor may (to the extent allowed by Mississippi statutes and other applicable law) execute on all benefits due the judgment debtor by the corporation, including the purchase price of the judgment debtor’s stock. Because the Court reversed the chancellor on three issues and remanded for a new trial, and because the chancellor's resolution of those issues may affect the outcome of others, the Court held that all issues not specifically resolved in this opinion could be presented by the parties to the chancellor for adjudication.View "West v. West" on Justia Law

Defendants, State Five Industrial Park and Jean Farricielli, appealed from a trial court judgment holding them liable, after invoking both reverse and traditional veil piercing principles, for a $3.8 million judgment rendered against Jean's husband, Joseph Farricielli, and five corporations that he owned and/or controlled, in an environmental enforcement action brought by Plaintiffs, the commissioner of environmental protection, the town of Hamden, and the town's zoning enforcement officer. The Supreme Court reversed the judgment, holding that the facts that were proven in this case did not warrant reverse veil piercing, and judgment on Plaintiffs' veil piercing claims should be rendered in favor of Defendants.View "Comm'r of Envtl. Prot. v. State Five Indus. Park, Inc." on Justia Law

The parties disputed the amount that defendant, Fitracks, must advance to Noam Danenberg in connection with his defense of claims asserted against him by Aetrix, Fitracks' parent, in litigation pending before the district court (Underlying Action). They also disputed the amount that Fitracks must pay Danenberg as indemnification for this proceeding. Judgment was entered in favor of Danenberg for advancements in the amount of $292,019.91 and indemnification in the amount of $276,332.13. Interest on these amounts, compounded quarterly, shall accrue at the legal rate beginning February 27, 2012 through the date of payment. Going forward, unless modified by stipulation, the parties shall follow the procedures set forth in this opinion.View "Danenberg v. Fitracks, Inc." on Justia Law

Plaintiff filed this action against defendants claiming that defendants breached a limited partnership agreement under which another limited partnership was formed to seek out, acquire, and develop oil and gas producing properties through the use of three-dimensional seismic technology. At issue was whether the Court of Chancery abused its discretion in dismissing plaintiff's amended complaint for failure to prosecute. Plaintiff contended, that notwithstanding more than two years of inactivity, it established good cause for its failure to prosecute - change of counsel and settlement negotiations. The trial court found that plaintiff's showing was insufficient to overcome the long delay and the court found no abuse of discretion. Accordingly, the court affirmed the judgment.View "Solow v. Aspect Resources, LLC, et al." on Justia Law

This action was before the court on a motion to preliminarily enjoin an all-cash negotiated tender offer for all of the shares of a biopharmaceutical company. Plaintiffs, shareholders of the target company, claimed that the offer was for an unfair price and was the result of an unfair and flawed sales process. Plaintiffs also claimed that the solicitation materials recommending the tender offer contained materially false and misleading information. As a result, plaintiffs sought to have the tender offer enjoined before its consummation. The court concluded that plaintiffs have failed to show a reasonable likelihood that they would succeed in proving that the challenged transaction was unfair or that the directors breached their fiduciary duties of care or loyalty, including their disclosure obligations, in approving the transaction. Therefore, the court denied plaintiffs' motion to preliminarily enjoin the tender offer.View "In re Micromet, Inc. Shareholders Litigation" on Justia Law

This case involved Bancorp's agreement to sell BankAtlantic to BB&T. Plaintiffs, institutional trustees, sued to enforce debt covenants that prohibited Bancorp from selling "all or substantially all" of its assets unless the acquirer assumed the debt. The evidence at trial established that Bancorp was selling substantially all of its assets, and BB&T had not agreed to assume the debt. The ensuing event of default would result in the debt accelerating. Bancorp could not pay the accelerated debt. Because this eventuality would inflict irreparable harm on plaintiffs, the court entered contemporaneously an order permanently enjoining Bancorp from consummating the sale.View "In re BankAtlantic Bancorp, Inc. Litigation" on Justia Law

This matter involved a stockholders' suit over the proposed takeover of Delphi by TMH. Based upon the record, the court found that plaintiffs have demonstrated a likelihood of success on the merits at least with respect to the allegations against defendant. However, because the deal represented a large premium over market price, because damages were available as a remedy, and because no other potential purchaser had come forth or seemed likely to come forth to match, let alone best, the TMH offer, the court could not find that the balance of the equities favored an injunction over letting the stockholders exercise their franchise, and allowing plaintiffs to pursue damages. Therefore, the court denied plaintiff's request for a preliminary injunction.View "In re Delphi Financial Group Shareholder Litigation" on Justia Law

Series C-1 preferred shareholders, claiming that the forced conversion of their shares was unlawful, sued Omneon in the Superior Court for breach of contract. Those shareholders, as plaintiffs, claimed that, because the conversion of their preferred shares was integral to Harmonic's acquisition of Omneon, the conversion was part of a "Liquidation Event" under Omneon's certificate of incorporation, that entitled the shareholders to the liquidation "preference" payable for their shares. The Superior Court granted summary judgment in favor of Omneon, holding that under the plain language of Omneon's certificate of incorporation, only one series of preferred stock - the Series A-2.2 - was legally entitled to a liquidation preference payout. The shareholders were not entitled to a liquidation payout because the Series C-1 preferred shares had been validly converted into common stock before the Omneon-Orinda merger took place. The court agreed and concluded that the conversion was not part of a "Liquidation Event" as defined by Omneon's charter. Therefore, the court affirmed the judgment.View "Berkeley VI C.V., et al. v. Omneon, Inc." on Justia Law

Plaintiff brought his Second Amended Complaint asserting various claims against former business associates, including his former fellow members and Board of Managers members of Aeosphere and two companies with which Aeosphere purportedly had business dealings, Flakt Woods and SEMCO. All of plaintiff's claims related to the dissolution of Aeosphere, which he argued was wrongfully undertaken by the other Managers in order to remove him from a cutting-edge and potentially lucrative fragrance business. Plaintiff further asserted that Flakt Woods and SEMCO aided and abetted breaches of fiduciary duty and were otherwise complicit in these wrongful actions. Flakt Woods and SEMCO moved for dismissal. The court concluded that it did not have personal jurisdiction over Flakt Woods or SEMCO, and that, even if it had personal jurisdiction over SEMCO, the Complaint failed to state a claim upon which relief could be granted against SEMCO. Therefore, plaintiff's claims against Flakt Woods and SEMCO were dismissed. Counts II, IV, and V of the Counterclaims were also dismissed for failure to state a claim upon which relief could be granted.View "Matthew v. Laudamiel, et al." on Justia Law