Tag: Fraud

Court of Chancery Dismisses Fraud Claim for Alleged Extra-Contractual Misrepresentations Based on Anti-Reliance Clause

By: Claire S. White and Rachel P. Worth

In ChyronHego Corporation, et al., v. Cliff Wight and CFX Holdings, Inc., C.A. No. 2017-0548-SG (Del. Ch. July 31, 2018), the Delaware Court of Chancery granted the defendants’ motion to dismiss the plaintiffs’ claim for extra-contractual fraud on the basis that the stock purchase agreement contained an effective anti-reliance clause that precluded such claim. The Court found that the anti-reliance clause rebutted the common law fraud element of reliance on any extra-contractual representations, as described further below.  At the same time, the Court dismissed the defendants’ motion to dismiss claims for fraud and breaches of express representations and warranties under the stock purchase agreement, finding that the plaintiffs had sufficiently pleaded the elements of these claims.

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CHANCERY COURT HOLDS THIRD PARTY IS LIKELY SUBJECT TO DELAWARE SERVICE OF PROCESS UNDER THE STATE’S LONG-ARM STATUTE AND THEREFORE THE COURT NEED NOT DETERMINE IF ADDITION AS INVOLUNTARY COUNTERCLAIM PLAINTIFF IS PROPER

By: Scott E. Waxman and Douglas A. Logan

In Lilly Lea Perry v. Dieter Walter Neupert and Cote d’Azur Estate Corporation, C.A. No. 2017-0290-VCL (Del. Ch. Dec. 6, 2017), the Court of Chancery held that the BGO Foundation (the “Foundation”) was a party that should be joined for just resolution of the underlying dispute between Lilly Lea Perry (“Ms. Perry”), the plaintiff, and Dieter Walter Neupert (“Mr. Neupert”) and Cote d’Azur Estate (the “Company”), the defendants. The Court of Chancery also held that because it appeared that the Foundation could be served under the Delaware Long-Arm Statute, it was not necessary for the court to consider adding the Foundation as an involuntary counterclaim plaintiff.

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Chancery Court Dismisses Inseparable Fraud Claim Based on Derivative Claims That Former Shareholders Lacked Standing To Maintain

By Scott E. Waxman and Russell E. Deutsch

In In re Massey Energy Company Derivative And Class Action Litigation, C.A. No. 5430-CB (Del. Ch. May 4, 2017), the Chancery Court dismissed both the direct class action claim for “inseparable fraud” and the derivative claim brought by the former shareholders of Massey Energy (“Massey” or the “Corporation”) against the former directors and officers of Massey for breaching their fiduciary duties by causing Massey to operate in willful disregard of safety regulations. The court dismissed the derivative claim holding that the plaintiffs were not continuous shareholders, and therefore lacked standing to bring a derivative claim after Massey merged into Alpha Natural Resources, Inc. (Alpha) in June of 2011. The court dismissed the plaintiffs’ direct claim for “inseparable fraud” claim holding that, though pled as a direct claim, it was, in fact, also a derivative claim that the plaintiffs’ lacked the standing to maintain.

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