Archive: June 2019

Chancery Court Enforces Privileged Communications Provision to Protect Seller Following Merger

By David Forney and Mark Hammes

In Shareholder Representative Services LLC v. RSI Holdco, LLC, C.A. No. 2018-0517-KSJM (Del Ch. May 29, 2019) the Court of Chancery held that a privileged communications provision in a merger agreement protected the pre-merger communications between the seller and the seller’s legal counsel in spite of the buyer’s insistence that the privilege had transferred in the merger or had been waived.

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CHANCERY COURT APPLIES AND AFFIRMS DELAWARE’S CORPORATE OPPORTUNITY DOCTRINE

By Annette Becker and Frank Mazzucco

In Personal Touch Holding Corp. v. Felix Glaubach, C.A. No. 11199-CB (Del. Ch. February 25, 2019), the Delaware Court of Chancery (the “Court”) found that, by personally pursuing and closing a real estate acquisition in which his employer was also interested, a corporate officer and director had, under Delaware’s corporate opportunity doctrine, breached his fiduciary duty of loyalty. 

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CHANCERY COURT DISMISSES COMPLAINT, FINDING THAT THE PARTIES’ FORUM SELECTION CLAUSE IS MANDATORY AND ENFORCEABLE

By: Elisabeth Yandell McNeil, Adrienne Wimberly, and Jeremy Crites

In Germaninvestments AG v. Allomet Corp., C.A. No. 2018-0666-JRS (Del. Ch. May 23, 2019), the Delaware Court of Chancery (the “Court”) granted the defendants’ motion to dismiss the action brought to determine the appropriate venue for dispute resolution, finding that the forum selection clause agreed upon by the parties in the agreement that was the subject of the dispute was both mandatory and enforceable, meaning that the action must be brought exclusively in Vienna, Austria.

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CHANCERY COURT FINDS THAT FAILURE TO EXERCISE THE APPROPRIATE DEGREE OF DILIGENCE IN BRINGING CLAIMS CAN RESULT IN THEM BEING TIME BARRED AT THE MOTION TO DISMISS STAGE

By: David Lehman and Calvin Kennedy

In Richard Forman v. CentrifyHealth Inc. et al., C.A. No. 2018-0287-JRS (Del. Ch. April 25, 2019), the Court of Chancery found that a stockholder’s failure to exercise the “degree of diligence” which fairness requires and delay in prosecuting claims was sufficient grounds to bar by laches a variety of claims; the standard used by the Court to determine the unreasonableness of the plaintiff’s delay was the analogous statute of limitations period for the respective claim. The Court also found that the plaintiff’s claims of fraud and unjust enrichment that were not barred sufficiently alleged specific misrepresentations, justifiable reliance on those misrepresentations, and the defendants’ gains resulting from the misrepresentations.

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