Ernest Simons – Delaware Docket

DELAWARE COURT OF CHANCERY LIMITS MEMBER’S SOLE AND EXCLUSIVE RIGHT TO CAUSE COMPANY TO UNDERTAKE A QUALIFIED IPO TO MERE RIGHT OF APPROVAL

May 04 2020

In Williams Field Services Group, LLC v. Caiman Energy II, LLC, et al., C.A. No. 2019-0350-JTL (Del. Ch. Sep. 25, 2019), the Delaware Court of Chancery considered the parties’ competing requests for declaratory judgments. The dispute reduced to disagreements over the parties’ respective rights under an LLC agreement with respect to a proposed initial public offering. In this post-trial decision, the Court ruled that the defendants had the authority to implement certain steps in the proposed IPO, but not others, and ordered the parties to prepare a form of final order consistent with its rulings.

Court of Chancery Compels Production of Some, but not all, Books and Records for Plaintiff’s Permitted Purposes

Mar 07 2018

By Scott Waxman and Ernest Simons

In Aloha Power Company, LLC v. Regenesis Power, LLC, the Court of Chancery granted in part and denied in part plaintiff’s action to compel inspection and production of certain books and records pursuant to provisions in the defendant’s operating agreement and the Delaware Limited Liability Company Act. The Court held that the operating agreement expressly required production of certain books and records without demand for inspection and determined whether there existed a proper purpose for inspection for the remaining demanded books and records.

Court of Chancery Grants Motion for Judgment on the Pleadings Finding No Implied Condition as to the Accuracy of Information in Financial Reports

Jan 19 2018

By: John Blair and Ernest Simons

In Greenstar IH Rep, LLC and Gary Segal v. Tutor Perini Corporation, the Court of Chancery granted the plaintiff’s motion for judgment on the pleadings and motion to dismiss counterclaims in a breach of contract suit arising out of the sale of GreenStar Services Corporation to Tutor Perini Corporation (“Tutor Perini”) in 2011 (the “Acquisition”). The merger agreement that memorialized the Acquisition (the “Merger Agreement”) provided Greenstar IH Rep, LLC (“Plaintiff”) a right to receive post-closing earn out consideration from Tutor Perini (“Earn-Out Payments”) over a five year period in the event that certain pre-tax profit milestones were reached on an annual basis. Tutor Perini made Earn-Out Payments in the first and second years following the Acquisition, but declined Plaintiff’s demand for Earn-Out Payments in the third, fourth, and fifth years. As such, Plaintiff filed a complaint seeking damages relating to Tutor Perini’s failure to make Earn-Out Payments; Tutor Perini counterclaimed alleging fraud and a right to offset any harm caused by fraud.

Court of Chancery Denies Motion To Dismiss Claim Alleging Breach of Fiduciary Duty Involving Option Grants to Directors and Voting Agreement

Aug 17 2017

By: Cartwright Bibee and Ernest Simons

In Williams v. Ji, C.A. No. 12729-VCMR (Del. Ch. June 28, 2017), the Delaware Court of Chancery denied Defendants’ motion to dismiss, holding that the option and warrant grants and voting agreements in question were subject to entire fairness and that the Defendant directors had not carried their burden at that stage. The Defendants also moved to stay in favor of an earlier filed case in the Court, but the motion was denied as moot because the earlier filed case had settled.

Testimony Regarding Timeliness of Election to Continue an LLC Found to be Untrustworthy, Resulting in LLC Dissolution

Jul 06 2017

By: Scott Waxman and Ernest Simons

In Delaware Acceptance Corporation, CACV of Colorado, LLC and 202 Investments, Inc., v. Estate of Frank C. Metzner, the Court of Chancery removed the executrix of an estate for breaching her fiduciary duty to a creditor of the estate. The case hinged on the authenticity of several documents, which if found to be forged would lead to the dissolution of an LLC and a distribution of its assets. The Court of Chancery found that the executrix was not a credible witness, and, therefore, it could not trust the authenticity of documents that she presented in support of the continued existence of the LLC. Read More

Delaware Court Of Chancery Ruling Provides a Cautionary Tale for Investment Fund Directors Seeking to Monetize Their Investment

Jun 14 2017

Delaware Court Of Chancery Ruling Provides a Cautionary Tale for Investment Fund Directors Seeking to Monetize Their Investment

By Jill B. Louis and Ernest L. Simons

In The Frederick Hsu Living Trust v. ODN Holding Corp., et al., one of the founders of ODN Holding Corporation (the “Company”) filed suit against the controlling stockholder, the board and certain officers of the Company for cash redemptions of preferred stock allegedly made in violation of statutory and common law instead of using the Company’s cash to maximize the value of the Company for the long term benefit of all stockholders. The Delaware Court of Chancery granted defendants’ motions to dismiss claims of waste and unlawful redemption. However, the Court of Chancery denied defendants’ motions to dismiss claims of breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, and unjust enrichment finding that the allegations of the Plaintiff supported a reasonable inference that the entire fairness standard would apply and that individual defendants may have acted in bad faith.

Chancery Court considers who should decide whether certain disputes are arbitrable — the court or an arbitrator selected by the parties?

Apr 12 2017

By: John Blair & Ernest Simons

In Greenstar IH Rep, LLC and Gary Segal v. Tutor Perini Corporation, Civil Action No. 12885-VCS (Del. Ch. Ct. February 23, 2017), the Delaware Court of Chancery granted in part and denied in part defendant’s motion for preliminary injunction, holding that the Court lacks subject matter jurisdiction to decide the question of substantive arbitrability when an employment agreement contains a broad arbitration provision that evidences the parties intent to arbitrate arbitrability.

Author:Ernest Simons