Justia Corporate Compliance Opinion Summaries

Plaintiffs, a majority group of limited partners of Magic 2 x 52 Limited Partnership appealed their post-judgment motion to pierce the corporate veil of several corporate Defendants and to recover punitive damages. The Limited Partners' investment in the Magic partnership did not go as planned, and they initiated this lawsuit, seeking to remove Magic Corporation as the general partner of the partnership and requesting monetary damages. The Limited Partners also sought to pierce the corporate veil of the corporate Defendants to hold Kenneth Herslip personally liable for the corporate Defendants' conduct and to recover punitive damages. May 2010 amended judgment awarded Magic Partnership $146,153.99 against Magic Corporation, B K Properties, and Herslip Construction; awarded Magic Partnership $144,263.80, and prejudgment interest of $77,783.88, against Magic Corporation and Herslip Construction; and awarded Magic Partnership costs and disbursements of $46,201.47 against Magic Corporation, B K Properties, and Herslip Construction. None of the parties appealed from the May 2010 judgment. The Limited Partners' subsequent efforts to collect on the judgment were unsuccessful. In June 2010, both Herslip Construction and Magic Corporation filed for bankruptcy under chapter 7. The district court denied the Limited Partners' post-judgment motion, concluding they had not shown an appropriate basis for granting their request to pierce the corporate veil and to recover punitive damages. The court stated its prior opinion after trial had specifically denied the plaintiffs' requests to pierce the corporate veil and to recover punitive damages with a detailed analysis. The court concluded the May 2010 amended judgment was final as to all issues decided by the court after trial and refused to revisit piercing the corporate veil and punitive damages.View "Watts v. Magic 2 x 52 Management, Inc." on Justia Law

Plaintiffs brought their Verified Complaint asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing against defendant. J.P.Morgan also asserted a claim for attorneys' fees and costs under an option agreement that J.P. Morgan and defendant entered into, which was the contract central to the dispute. Defendant moved to dismiss pursuant to Court of Chancery Rule 12(b)(6). The court held that J.P. Morgan has failed to state a claim that defendant breached the express terms of the Option Agreement and therefore, defendant's motion to dismiss was granted as to Count I. Defendant's motion to dismiss was denied as to Count II because J.P. Morgan's allegations, taken together, were sufficient to state a claim of the implied covenant. Finally, defendant's motion to dismiss was denied as to Count III where J.P. Morgan could eventually be the prevailing party in this action.View "JPMorgan Chase & Co. v. American Century Co." on Justia Law

Microsoft asserted a total of eight claims, derivatively or directly, against defendants for breach of fiduciary duty, usurpation of corporate opportunity, rescission, conspiracy, and aiding and abetting. Defendants, various companies and an individual associated with the restructuring of Vadem, a computer technology company formed under the laws of the British Virgin Islands, contended that Microsoft lacked standing to bring derivative claims on behalf of Vadem. Defendants also argued, among other things, that the court lacked personal jurisdiction over defendants and that Microsoft's claims were untimely. The court concluded that Microsoft was required to, but did not, seek leave from the High Court of the British Virgin Islands before bringing a derivative suit on behalf of Vadem. As a result, Microsoft lacked standing as to the six derivative claims it asserted. The court also found that, as to the two remaining counts in the complaint, those claims were time-barred. Therefore, the court granted the motion to dismiss.View "Microsoft Corp. v. Vadem, Ltd., et al." on Justia Law

This was an appraisal proceeding brought pursuant to 8 Del. C. 262. Petitioners, former shareholders and managers of a prison healthcare detention company, sought appraisal of their shares following an all cash acquisition of the company for $40 million. The court found that the fair value of Just Care as of September 30, 2009 was $34,244,570. The parties shall cooperate to determine the amount of the interest award in accordance with the rulings in the opinion and petitioners shall present, on notice, an appropriate proposed order of final judgment specifying, among other things, the corresponding fair value per common share and per Series A preferred share within 10 days.View "Gearreald v. Just Care, Inc." on Justia Law

This dispute arose from the merger between plaintiff's start-up company, LaneScan, and VSAC. Plaintiffs complained that the Merger improperly deprived them of their Notes and that a return of capital provision was inappropriately excised from LaneScan's Amended and Restated Limited Liability Company Operating Agreement in conjunction with the merger. For damages, plaintiffs requested a return of their original investment in LaneScan with pre- and post-judgment interest, attorneys' fees and expenses. The court granted plaintiffs' request for a declaratory judgment with respect to the Notes and the Security Agreement, and it reserved decision on plaintiffs' request for an award of legal fees and expenses related to the Notes Claims, to the extent such request was based upon section 2.3 of the Notes and plaintiffs' successful showing on the declaratory judgment claim. The court ruled in favor of defendants with respect to all of plaintiffs' other claims.View "Dawson v. Pittco Capital Partners, L.P." on Justia Law

In resolving this dispute between the controlling member–manager and the minority investors of a Delaware Limited Liability Company (LLC), the Supreme Court interpreted the LLC's governing instrument as a contract that adopted the equitable standard of entire fairness in a conflict of interest transaction between the LLC and its manager. The Court held that the manager violated that contracted-for fiduciary duty by refusing to negotiate with a third-party bidder and then by causing the company to be sold to himself at an unfair price in a flawed auction that the manager himself engineered. The Court affirmed the trial court's damages award solely on contractual grounds, and affirmed the court’s award of attorneys' fees. View "Gatz Properties, LLC v. Auriga Capital Corp., et al." on Justia Law

Attorneys Jordan and Moses formed a two-member partnership in 2003 for an indefinite term and in 2006, Jordan communicated to Moses that he was contemplating ending the relationship, and later that month, stated that he was doing so. At issue was whether the Court of Appeals applied the proper legal analysis to the claim of wrongful dissolution of a partnership. Given that the Court of Appeals cited the disapproved language regarding "new prosperity" under Wilensky v. Blalock, it was unclear whether that court considered the evidence as indicative solely of Jordan's state of mind at the time he decided to dissolve the partnership, with a coincident intent to deprive Moses of some unidentified prospective business opportunity of the partnership, or whether the Court of Appeals considered the above evidence as showing that Jordan intended, through the dissolution, to retain a fee that was misappropriated from partnership funds. Accordingly, the court reversed the judgment of the Court of Appeals and remanded the case to that court for further proceedings. View "Jordan v. Moses" on Justia Law

This matter involved allegations of breach of duty made by a common stockholder of a Delaware statutory trust against the trustee of that trust, as well as claims by the stockholder against those entities she alleged aided and abetted the breach. Plaintiff failed to make a pre-suit demand against defendant trustees, who she conceded were independent and disinterested when they took the actions complained of. The court found that plaintiff's claims were derivative and not direct. To survive a motion to dismiss in these circumstances under Section 3816 of the Delaware Statutory Trust Act (DSTA), 12 Del. C. 3816, a plaintiff must plead particularized facts raising a reasonable doubt that the actions of the trustees were taken honestly and in good faith. Because a careful reading of the complaint disclosed that plaintiff failed to so plead, her complaint must be dismissed.View "Protas v. Cavanagh, et al." on Justia Law

Chicago issued plaintiff, Downtown Disposal, notices for violating ordinances pertaining to dumpsters and requiring Downtown Disposal to appear at administrative hearings on various dates. When Downtown Disposal failed to appear, the department of administrative hearings entered default judgments for costs and penalties. Van Tholen, president of Downtown Disposal, moved to set aside the judgments, alleging the company did not receive notice. At a consolidated hearing, Van Tholen advised the hearing officer that for five years, Downtown Disposal had made several attempts to change its address on file with the city, but the city had not changed its records. The hearing officer rejected the argument. Van Tholen filled out and signed pro se complaints for administrative review, using preprinted forms supplied by the clerk’s office. Attorney Boonstra later filed appearances on behalf of Downtown Disposal. The trial court dismissed, holding that actions filed by nonattorneys on behalf of a corporation are null and void. The appellate court reversed and remanded. The Illinois Supreme Court affirmed. An attorney’s signature was not jurisdictional and its absence did not render the proceedings null and void. Application of the nullity rule would be harsh since no purpose underlying the rule was implicated and an alternative remedy was available. View "Downtown Disposal Servs. Inc. v. City of Chicago" on Justia Law

Gary Fordham, David Thompson, and Venture Sales, LLC appealed a chancery court order that dissolved Venture Sales pursuant to Mississippi Code Section 79-29-802 (Rev. 2009). Walter Ray Perkins owned 27.7 acres of land. Sometime in the late 90s, he was approached by Fordham and Thompson about a potential business venture involving his land. Perkins, Fordham, and Thompson eventually agreed that Fordham and Thompson would acquire the 438 acres of land that adjoined Perkins's land; the parties would combine their respective land, along with some cash, and form a venture to develop the land. Following the contributions, the operating agreement of Venture Sales was revised to reflect the arrangement. The parties signed the new operating agreement in 2000. In February 2010, Perkins filed an application for judicial dissolution of Venture Sales. Following a trial, the chancellor found that, based on the property's history, the company's inability to get funding for development, and the uncertainty regarding the economic climate in the area, it was not reasonably practicable to carry on the business of Venture Sales. The chancellor therefore ordered the company dissolved. Upon review, the Supreme Court determined that the chancellor's decision to order the dissolution of Venture Sales was not an abuse of discretion: substantial evidence existed supporting the chancellor's determination that it was not reasonably practicable for Venture Sales to carry on business in conformity with its operating agreement.View "Venture Sales, LLC v. Perkins" on Justia Law